What changed in this filing

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Item 1. Business

2025-08-29 compared with 2024-08-30 · 175 added, 223 removed, 876 unchanged (31% of the section changed)

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The specific purpose of the Foundation is to promote and provide for the betterment of youth, education, housing and the arts in the Bank’s primary market areas of Riverside and San Bernardino counties.

The Foundation was funded with a $500,000 charitable contribution made by the Bank in the fourth quarter of fiscal 2006.

The Foundation was funded with a $500,000 charitable contribution made by the Bank in fiscal 2006.

The Bank contributed $40,000 to the Foundation in both fiscal 2025 and 2024.

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Shareholders of Provident common stock at the close of business on August 14, 2025 were entitled to receive the cash dividend, payable on September 4, 2025.

The Bank is headquartered in Riverside, California and operates 12 full-service banking offices in Riverside County and one full-service banking office in San Bernardino County.

Management considers Riverside and Western San Bernardino counties to be the Bank’s primary market for deposits.

As of June 30, 2024, the Bank was the largest independent community bank headquartered in Riverside County and held the eighth largest deposit market share of all banks in the county, with the largest share among community banks.

The region encompassing Riverside and San Bernardino counties, known as the “Inland Empire,” is the Bank’s main market area.

According to the 2020 Census Bureau, these counties have the fourth and fifth largest populations in California, respectively, and are part of the greater Los Angeles metropolitan area, consisting primarily of suburban and urban communities.

The Bank is headquartered in Riverside, California and, as of June 30, 2025, operates 12 full-service banking offices in Riverside County and one full-service banking office in San Bernardino County.

Management considers Southern California, including Riverside County, western San Bernardino County (collectively, the “Inland Empire”), and surrounding counties, to be the Bank’s primary market, with the Inland Empire its primary market area for deposits.

Based on the most recent FDIC data, the Bank was the largest independent community bank (based on total assets) headquartered in Riverside County and held the 11th largest deposit market share of all banks in the county, with the second largest share among community banks.

According to the 2020 Census Bureau, Riverside and San Bernardino counties have the fourth and fifth largest populations in California, respectively, and are part of the greater Los Angeles metropolitan area, consisting primarily of suburban and urban communities.

The Inland Empire, with a population of approximately 4.7 million, is relatively densely populated.

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In June 2024, these rates were 5.3% in the Inland Empire, 5.2% in California, and 4.1% nationwide.

California’s home sales remained stagnant for the second consecutive month in June 2024, with a 30-year fixed mortgage rate above 7% throughout most of May 2024.

Closed escrow sales of existing single-family detached homes in California were at a seasonally adjusted annualized rate of 270,200 in June 2024, down 0.8% from the revised 272,410 homes sold in May 2024 and 2.7% from June 2023’s revised 277,690.

This sales pace has been below the 300,000 threshold for 21 consecutive months, with year-to-date home sales falling behind last year’s level by 0.5% in the first half of 2024.

After setting record highs in the past two months, the statewide median home price decreased by 0.8% from $908,040 in May 2024 to $900,720 in June 2024, marking the third month in a row above the $900,000 benchmark.

The June 2024 median home price was 7.5% higher than the $837,850 recorded in June 2023, marking the 12th consecutive month of annual price increases, although the smallest since January 2024.

The continued rise in million-dollar home sales in California contributed to median price growth, with the million-dollar-and-higher market segment increasing by 2.0% year-over-year in June 2024, while the sub-$500,000 segment declined by 21.0%.

Homes priced above $1 million now account for 36.3% of all sales, the largest share in at least five years.

(Source data from California Association of Realtors – July 17, 2024 News Release).

The Inland Empire, also known as the Riverside-San Bernardino-Ontario Metropolitan Statistical Area, is a large, two-county area where about 30% of the labor force commutes, with nearly 400,000 people traveling daily from the Inland Empire to coastal areas.

Over the past 20 years, the region has undergone significant changes, particularly in the health care and transportation and warehousing sectors, which have seen substantial employment growth.

Typically, the Inland Empire's unemployment rate is higher than those of California and the U.S.

except during specific recessions like the dot-com and COVID-19 periods.

The region performed better during the recovery from the 2020 recession, with the latest unemployment rate published by the Employment Development Department (EDD) for December 2023 at 5.1%.

The change in unemployment rate from February 2020 to December 2023 was 0.2% for the U.S., 0.5% for California, and 1.2% for the Inland Empire, indicating a higher increase in the Inland Empire, which is less desirable.

Conversely, the employment growth rate over the same period was 1.8% for the U.S., -1.2% for California, and 2.8% for the Inland Empire.

In 2023, the Inland Empire was a top performer in job creation compared to other California regions, with a 1.9% increase.

The Inland Empire also led the state in business creation during the recovery from the 2020 recession, with a significant acceleration starting in the second quarter of 2022 and reaching near-national levels by the second quarter of 2023.

(Source data from the Lowe Institute of Political Economy - The State of the Region the Inland Empire 2024 – March 2024).

Economic growth for the Inland Empire, also known as the Riverside-San Bernardino-Ontario Metropolitan Statistical Area, is expected to rise modestly in 2025.

Last year, the outlook was highlighted with concerns about potential headwinds related the uncertainty surrounding the 2024 presidential election.

This negatively impacted both consumer and business spending decisions and future investment plans.

These uncertainties have been replaced by policy decisions by the new administration regarding (i) tariffs, (ii) deportation, (iii) fiscal policy (especially taxes), and (iv) regulation, making forecasting difficult.

Regardless, the beginning of an expansive consumer credit policy has begun with the previous interest cuts in 2024, and it is expected to continue.

This is expected to generate positive impulses for the Inland Empire economy, which is expected to outperform the state economy but not the national economy.

The outlook for 2025 is based on the assumption that the administration’s proposed policies on tariffs and deportation will not have an immediate effect on trade and construction.

Part of this is the larger role that the logistics industry plays in the Inland Empire.

Transportation, warehousing, and wholesale have moved into third place in terms of overall employment share and represent the largest share in San Bernardino County (third largest in Riverside County).

The opening of new facilities in 2025 will require new workers, and the continuation of consumption of imported goods by U.S.

consumers will continue to drive growth in this segment, subject to the outcome of tariff negotiations with Mexico and Canada.

Lowe Institute of Political Economy, The State of the Region 2025 Economic and Election Report, February 2025).

Closed escrow sales of existing, single-family detached homes in California totaled a seasonally adjusted annualized rate of 264,260 in June 2025.

The statewide annualized sales figure represents what would be the total number of homes sold during 2025 if sales maintained the June 2025 pace throughout the year.

It is adjusted to account for seasonal factors that typically influence home sales.

June home sales activity rose 4.0 percent from the 254,190 homes sold in May 2025 and was down 0.3 percent from a year ago, when 264,960 homes were sold on an annualized basis.

The June result reversed three consecutive months of sales declines and was only one of two months of sales increases for the first half of 2025.

The year-over-year decline marked the third straight monthly decrease and was the first time since late 2023 that annual sales fell for three consecutive months.

Year-to-date sales were slightly above a year ago.

Statewide pending sales in June slipped from last year’s level for the seventh consecutive month, posting the largest year-over-year drop since January 2025.

California’s median home price fell for the second straight month in June, slipping below the $900,000 mark for the first time in three months.

The June median price of $899,560 was down 0.1 percent from May and also down 0.1 percent from $900,720 in June 2024.

The decline in June was not in line with the June’s historical average gain of 0.8 percent, suggesting non-seasonal factors such as market uncertainty and elevated mortgage rates had a negative lingering effect on housing demand and home prices.

California Association of Realtors® – July 17, 2025 News Release).

The Bank faces significant competition in its market area in originating real estate loans and attracting deposits.

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The Bank’s primary competitors are large national and regional commercial banks as well as other community-oriented banks and savings institutions.

The Bank also faces competition from credit unions and a large number of mortgage companies that operate within its market area, as well as unregulated or less regulated non-banking entities operating locally and elsewhere.

Many of these institutions are significantly larger than the Bank and therefore have greater financial and marketing resources than the Bank.

The Bank also faces competition from credit unions and mortgage companies, as well as unregulated or less regulated non-banking entities operating locally and elsewhere.

Many of these institutions are significantly larger

than the Bank and therefore have greater financial and marketing resources than the Bank.

This competition may limit the Bank’s growth and profitability in the future.

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Management monitors the revenue and expense components of the various products and services the Bank offers, but operations are managed and financial performance is evaluated on a corporation-wide basis in comparison to a business plan which is developed each year.

Accordingly, all operations are considered by management to be one operating segment and one reportable segment as contained in the Consolidated Statements of Operations to the Corporation’s audited consolidated financial statements included in Item 8 of this Form 10-K.

Internet Website

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Other than an investor’s own internet access charges, the Corporation makes available free of charge through that website the Corporation’s annual report, quarterly reports on Form 10-Q and current reports on Form 8-K, including amendments to these reports, if any, as soon as reasonably practicable after these materials have been electronically filed with, or furnished to, the Securities and Exchange Commission (“SEC”).

In addition, the SEC maintains a website that contains reports, proxy and information statements, and other information regarding companies that file electronically with the SEC.

In addition, the SEC maintains a website that contains reports, proxy and information statements, and other information regarding companies filed electronically with the SEC.

This information is available at www.sec.gov.

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This compares to $1.05 billion, or 83% of consolidated total assets, at June 30, 2024.

At June 30, 2024, the maximum amount that the Bank could have loaned to any one borrower and the borrower’s related entities under applicable regulations was $20.1 million, or 15% of the Bank’s unimpaired capital and surplus.

At June 30, 2024, the Bank had no loans or group of loans to related borrowers with outstanding balances in excess of this amount.

At June 30, 2025, the maximum amount the Bank could have loaned to any one borrower and the borrower’s related entities under applicable regulations was $19.7 million, or 15% of the Bank’s unimpaired capital and surplus.

At that date, the Bank had no individual loan or aggregate loans to related borrowers with outstanding balances in excess of this amount.

The Bank’s five largest lending relationships at June 30, 2025 consisted of:

four multi-family loans totaling $5.0 million to one group of borrowers;

eight single-family loans totaling $4.4 million to one group of borrowers;

three multi-family loans totaling $4.1 million to one group of borrowers;

one multi-family loan totaling $4.1 million to one group of borrowers;

and one multi-family loan totaling $4.0 million to one group of borrowers.

The real estate collateral for these loans are primarily located in Southern and Northern California.

At June 30, 2024, all of these loans were performing in accordance with their repayment terms.

four multi-family loans totaling $4.9 million to a group of related borrowers;

three multi-family loans totaling $4.0 million to a group of related borrowers;

one multi-family loan of $4.0 million;

one multi-family loan of $3.9 million;

and one multi-family loan of $3.7 million.

The real estate collateral securing these loans is primarily located in Southern and Northern California.

At June 30, 2025, all of these loans were performing in accordance with their contractual repayment terms.

Loans Held For Investment Analysis .

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This compares to single-family loan originations of $40.9 million and no loan purchases during fiscal 2024.

At June 30, 2024, total single-family loans held for investment decreased slightly to $518.1 million, or 49% of the total loans held for investment, from $518.8 million, or 48% of the total loans held for investment, at June 30, 2023.

The decrease in the single-family loans in fiscal 2024 was primarily attributable to loan principal payments that exceeded new loans originated for investment.

During fiscal 2024, the Bank did not have any recovery from non-performing single-family loans, as compared to net recoveries of $8,000 during fiscal 2023.

At June 30, 2024 and 2023, total non-performing single-family loans were $2.6 million and $1.3 million, respectively, net of allowances and charge-offs, and there were no loans past due 30 to 89 days at both dates.

At June 30, 2025, total single-family loans held for investment increased 5% to $544.4 million, or 52% of the total loans held for investment, from $518.1 million, or 49% of the total loans held for investment, at June 30, 2024.

The increase in the single-family loans in fiscal 2025 was primarily attributable to new loans originated for investment that exceeded loan principal payments.

During fiscal 2025 and 2024, the Bank had no charge-offs or recoveries from non-performing single-family loans.

At June 30, 2025 and 2024, total non-performing single-family loans were $948,000 and $2.6 million, respectively, net of allowances and charge-offs, and there were no loans past due 30 to 89 days at both dates.

The Bank has underwriting standards that generally conform with the standards of the government sponsored entities (“GSE”) which include Fannie Mae and Freddie Mac.

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The Bank is not currently offering loans with LTV ratios greater than 90%.

The ratio is derived by dividing the original loan balance by the lower of the original appraised value or purchase price of the real estate collateral.

Currently, the maximum LTV ratio is 90% for new purchases and limited cash-out refinances and 75% for cash-out refinances.

Currently, the maximum LTV ratio is 90% for new purchase transactions and limited cash-out refinances and 75% for cash-out refinances.

The maximum loan amount offered on single-family homes is $1.5 million.

A limited cash-out refinance transaction limits cash back to the borrower to the lesser of 2% of the new loan amount or $2,000.

The lowest FICO score currently offered for a purchase or no cash-out refinance transaction is 700, while the lowest FICO score for a cash-out refinance transaction is 720.

A limited cash-out refinance limits cash back to the borrower to the lesser of 2% of the new loan amount or $2,000.

The minimum FICO score currently accepted for a purchase or no cash-out refinance transaction is 700, while the minimum FICO score for a cash-out refinance transaction is 720.

The FICO score represents the creditworthiness of a borrower based on the borrower’s credit history, as reported by an independent third party.

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Prior to fiscal 2009, many of the loans we originated for investment consisted of non-traditional single-family residential loans that do not conform to Fannie Mae or Freddie Mac underwriting guidelines as a result of the characteristics of the borrower or property, the loan terms, loan size or exceptions from agency underwriting guidelines.

In exchange for the additional risk to us associated with these loans, these borrowers generally are required to pay a higher interest rate, and

depending on the credit history, a lower loan-to-value ratio was generally required than for a conforming loan.

Our non-traditional single-family residential loans include loans to borrowers who provided limited or no documentation of their income or stated income loans, negative amortization loans (a loan in which accrued interest exceeding the required monthly loan payment is added to loan principal up to 115% of the original loan amount), more than 30-year amortization loans, and loans to borrowers with a FICO score below 660 (these loans are considered subprime by the OCC).

In exchange for the additional risk to us associated with these loans, these borrowers generally are required to pay a higher interest rate, and depending on the credit history, a lower loan-to-value ratio was generally required than for a conforming loan.

Our non-traditional single-family residential loans include loans to borrowers who provided limited or no documentation of their

income or stated income loans, negative amortization loans (a loan in which accrued interest exceeding the required monthly loan payment is added to loan principal up to 115% of the original loan amount), more than 30-year amortization loans, and loans to borrowers with a FICO score below 660 (these loans are considered subprime by the OCC).

As of June 30, 2025, these non-traditional loans totaled $16.9 million, comprising 3% of total single-family residential loans held for investment and 2% of total loans held for investment, with a weighted average seasoning of 16.6 years.

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These adjustments are limited by caps on semi-annual and lifetime rate changes.

Currently, the ARM programs have a rate consisting of an Index tied to the Secured Overnight Financing Rate (“SOFR”), plus a margin.

The programs are limited to a maximum semi-annual increase or decrease of one percentage point with a maximum lifetime increase of five percentage points and the rate may not fall below the margin.

The portfolio currently consists of the following indices, plus a margin of between 2.00% and 3.25%, which are used to calculate the periodic interest rate changes:

Currently, the Bank’s ARM programs have interest rates that consist of an index tied to the Secured Overnight Financing Rate (“SOFR”), plus a margin.

The programs are subject to a maximum semi-annual increase or decrease of one percentage point and a maximum lifetime increase of five percentage points, and the rate may not fall below the margin.

The portfolio primarily consists of the following indices, with a margin generally ranging from 2.00% to 4.00%, which are used to calculate the periodic interest rate changes:

SOFR, the 12-month average U.S.

Treasury (“12 MAT”) or the weekly average yield on one-year U.S.

Treasury rate (“12 MAT”), or the weekly average yield on one-year U.S.

Treasury securities adjusted to a constant maturity of one year (“CMT”).

Loans based on the SOFR index constitute a majority of the Bank’s loans held for investment.

The majority of the ARM loans held for investment have five, seven, or 10-year fixed periods prior to the first adjustment and provide for fully amortizing loan payments throughout the term of the loan.

Loans of this type have embedded interest rate risk if interest rates should rise during the initial fixed rate period or if rates should rise beyond the periodic or lifetime caps.

The majority of the ARM loans held for investment have five, seven, or 10-year fixed periods prior to the first adjustment and provide for fully amortizing payments throughout the term of the loan.

These loans have embedded interest rate risk, which may arise if interest rates increase during the initial fixed rate period or if rates rise beyond the periodic or lifetime caps.

Borrower demand for ARM loans versus fixed-rate mortgage loans is a function of the level of interest rates, the expectations of changes in the level of interest rates and the difference between the initial interest rates and fees charged for each type of loan.

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The Bank may originate loans that do not meet the definition of a “qualified mortgage” (“QM”).

To mitigate the risks involved with non-QM loans, the Bank has implemented systems, processes,

procedural and product changes, and maintains its underwriting standards, to ensure that the “ability-to-repay” requirements are adequately addressed.

To mitigate the risks involved with non-QM loans, the Bank has implemented systems, processes, procedural and product changes, and maintains its underwriting standards, to ensure that the “ability-to-repay” requirements are adequately addressed.

A decline in real estate values subsequent to the time of origination of real estate secured loans could result in higher loan delinquency levels, foreclosures, provisions for credit losses and net charge-offs.

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This compares to multi-family loans of $445.2 million and commercial real estate loans of $83.3 million, or 42% and 8%, respectively, of loans held for investment at June 30, 2024.

Consistent with its strategy to diversify the composition of loans held for investment, the Bank has emphasized the origination and purchase of multi-family and commercial real estate loans.

During fiscal 2024, the Bank originated $31.9 million in multi-family and commercial real estate loans but did not purchase any.

This is a decrease from fiscal 2023, when $69.3 million of such loans were originated and none were purchased.

Consistent with its strategy to diversify the composition of loans held for investment, the Bank has emphasized the balance between single-family loans and multi-family and commercial real estate loans.

During fiscal 2025, the Bank originated $28.9 million in multi-family and commercial real estate loans and did not purchase any loans.

This compares to fiscal 2024, when $31.9 million of such loans were originated and no loans were purchased.

As of June 30, 2025, the average outstanding loan balance was approximately $713,000 for multi-family loans and approximately $720,000 for commercial real estate loans.

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The Bank’s commercial real estate loan portfolio primarily consists of loans secured by small office buildings, light industrial buildings, warehouses, and small retail centers.

The properties securing these loans are mainly located in the counties of Alameda, Los Angeles, Orange, Riverside, San Bernardino, San Diego, San Francisco, and Santa Clara.

The properties securing these loans are mainly located in the counties of Los Angeles, Orange, Riverside, San Bernardino, San Diego and San Francisco.

The Bank typically originates multi-family and commercial real estate loans in amounts ranging from $350,000 to $6.0 million.

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During both fiscal 2025 and 2024, the Bank had no charge-offs or recoveries on multi-family and commercial real estate loans.

At June 30, 2024 and 2023, there were no non-performing or 30 to 89 days delinquent multi-family and commercial real estate loans.

Non-performing loans and/or delinquent loans may increase if there is a general decline in California real estate markets and in the event poor general economic conditions prevail.

At June 30, 2025 and 2024, $466,000 and $0, respectively, were non-performing and no multi-family and commercial real estate loans were 30 to 89 days delinquent.

Non-performing and delinquent loans may increase in the event of a general decline in California real estate markets or if adverse economic conditions prevail.

Construction Loans.

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short-term construction loans and construction/permanent loans.

During fiscal 2024 and 2023, the Bank originated a total of $1.5 million and $1.6 million of construction loans (including undisbursed loan funds), respectively.

As of June 30, 2024 and 2023, the Bank had construction loans totaling $2.7 million and $1.9 million, net of undisbursed loan funds of $435,000 and $1.9 million,

respectively.

On these dates, the loans consisted of bridge loans totaling $1.5 million and $0, short-term construction loans totaling $228,000 and $1.7 million, and construction/permanent loans totaling $984,000 and $230,000 respectively.

During fiscal 2025 and 2024, the Bank originated a total of $725,000 and $1.5 million of construction loans (including undisbursed loan funds), respectively.

As of June 30, 2025 and 2024, the Bank had construction loans totaling $402,000 and $2.7 million, net of undisbursed loan funds of $529,000 and $435,000, respectively.

On these dates, the loans consisted of bridge loans totaling $206,000 and $1.5 million, short-term construction loans totaling $0 and $228,000, and construction/permanent loans totaling $196,000 and $984,000 respectively.

Short-term construction loans include three types of loans:

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The owner secures long-term permanent financing at the completion of construction.

At June 30, 2024, there were no custom short-term single-family construction loans.

This compares to June 30, 2023 when the Bank had one custom short-term single-family construction loan totaling $496,000, net of undisbursed loan funds of $49,000.

At both June 30, 2025 and 2024, there were no custom short-term single-family construction loans.

From time to time the Bank makes lot loans to individuals to finance land acquisition prior to the start of construction or tract construction loans to subdivision builders.

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Tract construction may include the building and financing of model homes under a separate loan.

At June 30, 2024, there was one land loan of $95,000 (reported as other mortgage loans) and no tract construction loans;

as compared to one land loan for $106,000 (reported as other mortgage loans) and one tract construction loan for $1.1 million, net of undisbursed loan funds of $567,000 at June 30, 2023.

At June 30, 2025 and 2024, there was one land loan of $89,000 and 95,000 (reported as other mortgage loans), respectively, and no tract construction loans at both dates.

Speculative construction loans are made to home builders and are termed “speculative” because the home builder does not have, at the time of loan origination, a signed sale contract with a home buyer who has a commitment for permanent financing with either the Bank or another lender for the finished home.

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The builder may be required to debt service the speculative construction loan for a significant period of time after the completion of construction until the homebuyer is identified.

At June 30, 2024, the Bank had one speculative construction loan of $228,000, net of undisbursed loan funds of $32,000, as compared to one construction loan of $94,000, net of undisbursed loan funds of $166,000 at June 30, 2023.

At both June 30, 2025, the Bank had no speculative construction loans, as compared to one speculative construction loan of $228,000, net of undisbursed loan funds of $32,000 at June 30, 2024.

Construction/permanent loans automatically roll from the construction to the permanent phase.

The construction phase generally lasts 12 to 18 months and the interest rate charged is generally fixed at a margin above prime rate and with a loan-to-value ratio of up to 75% of the appraised value of the completed property.

At June 30, 2024, there were $984,000 of custom construction/permanent loans, net of undisbursed loan funds of $403,000 as compared to $230,000 of custom construction/permanent loans, net of undisbursed loan funds of $1.2 million at June 30, 2023.

At June 30, 2025, there were $196,000 of construction/permanent loans, net of undisbursed loan funds of $529,000 as compared to $984,000 of construction/permanent loans, net of undisbursed loan funds of $403,000, at June 30, 2024.

Construction loans under $1.0 million are approved by Bank personnel specifically designated to approve construction loans.

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If the estimate of construction costs proves to be inaccurate, the Bank may be required to advance funds beyond the amount originally committed to permit completion of the project.

If the estimate of value upon completion proves to be inaccurate, the Bank may be confronted with a project whose value is insufficient to assure full repayment.

If the estimate of value upon completion

proves to be inaccurate, the Bank may be confronted with a project whose value is insufficient to assure full repayment.

Projects may also be jeopardized by disagreements between borrowers and builders and by the failure of builders to pay subcontractors.

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Real estate loans are generally considered to be collateral based lending with loan amounts based on predetermined loan to collateral value and liquidation of the underlying real estate collateral is viewed as the primary source of repayment in the event of borrower default.

Although commercial business loans are often collateralized by equipment, inventory, accounts receivable or other business assets including real estate, the liquidation of collateral in the event of a borrower default is often an insufficient source of repayment because accounts receivable may not be collectible and inventories and equipment may be obsolete or of limited

Accordingly, the repayment of a commercial business loan depends primarily on the creditworthiness of the borrower (and any guarantors), while liquidation of collateral is secondary and oftentimes an insufficient source of repayment.

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Consumer Loans.

At June 30, 2024, the Bank’s consumer loans were $65,000, unchanged from June 30, 2023.

At June 30, 2025, the Bank’s consumer loans were $57,000, down from $65,000 at June 30, 2024.

The Bank offers open-ended lines of credit on an unsecured basis, primarily deposit overdraft lines of credit.

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Loan principal repayments

(Decrease) increase in other items, net (1)

Net (decrease) increase in loans held for investment

Increase (decrease) in other items, net (1)

Net decrease in loans held for investment

(1) Includes net changes in undisbursed loan funds, deferred loan fees or costs, ACL, fair value of loans held for investment and advance payments of escrows.

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The Bank receives fees from a variety of investors in return for performing the traditional services of collecting individual loan payments on loans sold by the Bank to such investors.

At June 30, 2024, the Bank was servicing $34.6 million of loans for others, a 6% increase from $32.6 million at June 30, 2023.

The increase was primarily attributable to new loans sold with servicing retained, partly offset by scheduled principal payments and prepayments.

At June 30, 2025, the Bank was servicing $34.4 million of loans for others, slightly lower than the $34.6 million at June 30, 2024.

The decrease was primarily attributable to scheduled principal payments and prepayments, partly offset by new loans sold with servicing retained.

Loan servicing includes processing payments, accounting for loan funds and collecting and paying real estate taxes, hazard insurance and other loan-related items such as private mortgage insurance.

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Interest income is reduced by the full amount of accrued and uncollected interest on such loans.

As of June 30, 2024, total non-performing assets, net of the ACL and fair value adjustments, were $2.6 million, or 0.20% of total assets, which was comprised of 10 single-family loans.

As of June 30, 2025, total non-performing assets, net of the ACL and fair value adjustments, were $1.4 million, or 0.11% of total assets, which was comprised of seven single-family loans and one multi-family loan.

As of June 30, 2025, $1.2 million or 86% of the total non-performing loans had a current payment status.

In comparison, as of June 30, 2023, total non-performing assets, net of the ACL and fair value adjustments, were $1.3 million, or 0.10% of total assets, consisting of six single-family loans, with $175,000 or 13% having a current payment status.

The Bank had no real estate owned (“REO”) both at June 30, 2024 and 2023.

As of June 30, 2025, there was one non-performing single-family loan of $198,000 that was in foreclosure process.

In comparison, as of June 30, 2024, total non-performing assets, net of the ACL and fair value adjustments, were $2.6 million, or 0.20% of total assets, consisting of 10 single-family loans, of which $1.1 million, or 43%, had a current payment status.

As of June 30, 2024, there were no non-performing loans in foreclosure process.

The Bank had no real estate owned (“REO”) at June 30, 2025 and 2024.

The following table sets forth information with respect to the Bank’s non-performing assets, net of the ACL and fair value adjustments, at the dates indicated:

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Modifications may include changes in the amortization terms of the loan, reductions in interest rates, acceptance of interest only payments, and, in very limited cases, reductions to the outstanding loan balance.

Such loans are typically placed on nonaccrual status

when there is doubt concerning the full repayment of principal and interest or the loan has been past due for a period of 120th day for single-family loans or the 90th day for other loans or sooner if other activities have taken place such as a notice of default has been issued, or if the borrower is chronically delinquent.

Such loans may be returned to accrual status when all contractual amounts past due have been brought current, and the borrower’s performance under the modified terms of the loan agreement and the ultimate collectability of all contractual amounts due under the modified terms is no longer in doubt.

Such loans are typically placed on nonaccrual status when there is doubt concerning the full repayment of principal and interest, when the loan is past due for a 120 days for single-family loans or 90 days for other loans, or sooner if other indicators of credit deterioration occur, such as issuance of a notice of default or chronic borrower delinquency.

Loans may be returned to accrual status when all contractual amounts past due have been brought current, and the borrower’s performance under the modified loan terms, as well as the ultimate collectability of all contractual amounts due, is no longer in doubt.

In March 2022, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2022-02, “Financial Instruments-Credit Losses (Topic 326) Troubled Debt Restructurings and Vintage Disclosures.” This ASU provides new guidance on the treatment of troubled debt restructurings (“TDR”) in relation to the adoption of the current expected credit loss methodology, or CECL model, for the accounting for credit losses (discussed below).

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The required disclosures regarding gross write-offs for financing receivables by year of origination and loan modifications are presented under Note 3 of the Notes to Consolidated Financial Statements.

Subsequent to the adoption of ASC 326, the Bank no longer reports TDRs or classifies loans as TDRs given those loans previously recognized as TDRs have been incorporated into the CECL methodology in regard to credit loss reserves as of July 1, 2023.

As of June 30, 2024, there were no loan modifications for borrowers experiencing financial difficulties.

Subsequent to the adoption of ASC 326, the Bank no longer reports TDRs or classifies loans as TDRs given those loans

previously recognized as TDRs have been incorporated into the CECL methodology in regard to credit loss reserves as of July 1, 2023.

As of June 30, 2025 and 2024, there were no loan modifications for borrowers experiencing financial difficulties at both dates.

Foreclosed Real Estate.

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Single-family

Commercial real estate

Total special mention loans

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Single-family

Commercial real estate

Total substandard loans

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In addition, the Bank’s loans held for investment may include single-family, commercial and multi-family real estate loans with a balance exceeding the current market value of the collateral which are not classified because they are performing and have borrowers and/or guarantor who have sufficient resources to support the repayment of the loan.

Allowance for Credit Losses.

On July 1, 2023, the Corporation adopted ASC 326 that replaced the incurred loss methodology with the current expected credit loss or CECL methodology.

CECL requires an estimate of expected credit losses for the remaining estimated life of the financial asset using historical experience, current conditions, and reasonable and supportable forecasts and applies to financial assets measured at amortized cost, including loans held for investment, held-to-maturity investment securities and some off-balance sheet credit exposures such as unfunded loan commitments to extend credit.

Financial assets measured at amortized cost are presented at the net amount expected to be collected by using an ACL.

The responsibility for the review of the Bank’s assets and the determination of the adequacy of the ACL lies with the Internal Asset Review Committee (“IAR Committee”).

The Bank adjusts its ACL by charging (crediting) its provision for (recovery of) credit losses against the Bank’s operations.

The Bank has established a methodology for the determination of the provision for credit losses.

The methodology is set forth in a formal policy and takes into consideration the need for a collectively evaluated allowance for groups of homogeneous loans and an individually evaluated allowance that is tied to individual problem loans.

The Bank has established a formal methodology for determining the provision for credit losses.

The methodology is set forth in a written policy and considers the need for a collectively evaluated allowance for groups of homogeneous loans and an individually evaluated allowance for problem loans.

The Bank’s methodology for assessing the appropriateness of the ACL consists of several key elements.

Under ASC 326 , the ACL is a valuation account that is deducted from the related loan’s amortized cost basis to present the net amount expected to be collected on the loans.

The measurement of expected credit losses is based on relevant information about past events, including historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amount.

The Bank’s ACL is calculated quarterly, with any difference in the calculated ACL and the recorded ACL trued-up through an entry to the provision for credit losses.

Management calculates the quantitative portion of the collectively evaluated allowance for all loan categories using an average charge-off or loss rate methodology and generally evaluates collectively evaluated loans by Call Report code in order to group and determine portfolio loan segments with similar risk characteristics.

The Bank primarily utilizes historical loss rates for the CECL calculation based on its own specific historical losses and/or with peer loss history where applicable.

The expected loss rates are applied to expected monthly loan balances estimated through the consideration of contractual repayment terms and expected prepayments.

The prepayment assumptions applied to expected cash flow over the contractual life of the loans are estimated based on historical and bank-specific experience and the consideration of current and expected conditions and circumstances including the level of interest rates.

The prepayment assumptions may be updated by management in the event that changing conditions impact management’s estimate or additional historical data gathered has resulted in the need for a reevaluation.

For its reasonable and supportable forecasting of current expected credit losses, the Bank utilizes a regression model using forecasted economic metrics and historical loss data.

The regression model utilized upon implementation of CECL on July 1, 2023 , and as of June 30, 2024, relied upon reasonable and supportable 12-month forecasts of the National Unemployment Rate and change in the Real Gross Domestic Product, after which it reverts to a historical loss rate.

Management selected the National Unemployment Rate and the Real Gross Domestic Product as the drivers of the forward look component of the collectively evaluated allowance, primarily as a result of high correlation coefficients identified in regression modeling, the availability of forecasts, including the quarterly Federal Open Market Committee (“FOMC”) forecast, and the widespread familiarity of these economic metrics.

Management recognizes that there are additional factors impacting risk of loss in the loan portfolio beyond what is captured in the quantitative portion of allowance on collectively evaluated loans.

As current and expected conditions may vary compared with conditions over the historical lookback period, which is utilized in the calculation of the quantitative allowance, management considers whether additional or reduced allowance levels on collectively evaluated loans may be warranted, given the consideration of a variety of qualitative factors.

The following qualitative factors (“Q-factors”) considered by management reflect the regulatory guidance on the Q-factors:

● Changes in the experience, ability, and depth of lending management and other relevant staff.

● Changes in the value of underlying collateral for collateral-dependent loans.

● The existence and effect of any concentrations of credit, and changes in the level of such concentrations.

● Changes in international, national, regional, and local economic and business conditions and developments that affect the collectability of the portfolio, including the condition of various market segments.

● The effect of other external factors such as competition and legal and regulatory requirements on the level of estimated credit losses in the institution's existing portfolio.

● Changes in the volume and severity of past due loans, the volume of non-performing loans, and the volume and severity of adversely classified or graded loans.

● Changes in the quality of the Bank’s loan review system.

● Changes in the nature, volume and terms of loans in the portfolio.

● Changes in lending policies and procedures, including changes in underwriting standards and collection, charge-off, and recovery practices not considered elsewhere in estimating credit losses.

The qualitative portion of the Bank’s allowance on collectively evaluated loans are calculated using management judgment, to determine risk categorizations in each of the Q-factors presented above.

The amount of qualitative allowance is also contingent upon the relative weighting of the Q-factors according to management’s judgment.

Loans that do not share similar risk characteristics are evaluated on an individual basis.

When management determines that foreclosure is probable and the borrower is experiencing financial difficulty, the expected credit losses are based on the fair value of collateral at the reporting date, less selling costs.

Accrued interest receivable for loans is included in the accrued interest receivable line item on the Corporation’s Consolidated Statements of Financial Condition.

The Bank elected not to measure an allowance for accrued interest receivable and instead elected to reverse accrued interest income on loans that are placed on non-performing status.

A loan is deemed non-performing when the Bank has stopped accruing interest income, or it is 90 days or more delinquent.

Any outstanding interest receivable that has not been collected is reversed, disclosed accordingly;

and therefore, no allowance is established.

The Bank believes this policy results in the timely reversal of potentially uncollectible interest.

Management believes the ACL on loans held for investment is maintained at a level sufficient to provide for expected losses on the Corporation’s loans held for investment based on historical loss experience, current conditions, and reasonable and supportable forecasts.

The provision for (recovery of) credit losses is charged (credited) against operations on a quarterly basis, as necessary, to maintain the ACL at appropriate levels.

Future adjustments to the ACL may be necessary and results of operations could be significantly and adversely affected as a result of economic, operating, regulatory, and other conditions beyond the Corporation’s control.

Non-performing loans are charged-off to their fair market values in the period the loans, or portion thereof, are deemed uncollectible, generally after the loan becomes 150 days delinquent for real estate secured first trust deed loans and 120 days delinquent for commercial business or real estate secured second trust deed loans.

For loans that were previously modified from their original terms, were re-underwritten and identified as modified loans, the charge-off occurs when the loan becomes 90 days delinquent;

and where borrowers file bankruptcy, the charge-off occurs when the loan becomes 60 days delinquent.

The amount of the charge-off is determined by comparing the loan balance to the estimated fair value of the underlying collateral, less disposition costs, with the loan balance in excess of the estimated fair value charged-off against the ACL.

For modified loans that are less than 90 days delinquent, the ACL is segregated into (a) individually evaluated allowances for those loans with applicable discounted cash flow calculations still in their modification period, classified lower than pass, and containing an embedded loss component or (b) collectively evaluated allowances based on the aggregated pooling method.

For non-performing loans less than 60 days delinquent where the borrower has filed bankruptcy, the collectively evaluated allowances are assigned based on the aggregated pooling method.

For non-performing commercial real estate loans, an individually evaluated allowance is derived based on the loan's discounted cash flow fair value (for modified loans) or collateral fair value less estimated selling costs and if the fair value is higher than the loan balance, no allowance is required.

The Bank maintains an allowance for credit losses on loans held for investment in accordance with ASC 326.

The allowance is determined using historical loss experience, current conditions, and reasonable and supportable forecasts, and is reviewed and adjusted quarterly by management.

Loans that do not share similar risk characteristics are evaluated individually, and non-performing loans are charged off when the estimated collectability of principal and interest is in doubt.

Management also considers qualitative factors, including changes in lending practices, collateral values, concentrations of credit, and current economic conditions, when assessing the adequacy of the allowance.

Management believes the allowance is sufficient to absorb expected losses on the loan portfolio.

For additional information regarding the Bank’s allowance for credit losses, the methodology used to estimate expected credit losses, and the composition of non-performing loans, see Note 3 – Loans and Allowance for Credit Losses in the Consolidated Financial Statements.

The following table shows certain credit ratios at and for the periods indicated and each component of the ratio’s calculations:

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Total gross non-performing loans

Net recoveries (charge-offs) to average loans receivable during the period:

Net charge-offs to average loans receivable during the period:

Mortgage loans:

Single-family:

Net recoveries

Net charge-offs

Average loans receivable

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Average loans receivable

Total net recoveries

Net charge-offs

Total average loans receivable

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At June 30, 2025 and 2024, the Bank’s investment securities portfolio was $111.0 million and $131.9 million, respectively, which primarily consisted of federal agency and GSE obligations.

The Bank did not purchase any investment securities during fiscal 2024 and 2023.

During fiscal 2025, the Bank purchased one investment security for $981,000;

while during 2024, the Bank did not purchase any investment securities.

At June 30, 2025 and 2024, the Bank’s securities portfolio did not contain securities of any issuer with an aggregate book value in excess of 10% of our equity capital, excluding those issued by the United States government or its agencies or a GSE.

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Total investment securities

The actual maturity and yield for MBS and CMO may differ from the stated maturity and stated yield due to scheduled amortization, prepayments and acceleration of premium amortization or discount accretion.

The actual maturity and yield for MBS, SBA and CMO may differ from the stated maturity and stated yield due to scheduled amortization, prepayments and acceleration of premium amortization or discount accretion.

As of June 30, 2025

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U.S government agency MBS

government sponsored enterprise MBS

Private issue CMO

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Total investment securities

The Bank evaluates individual investment securities quarterly for impairment based on ASC 326 since the adoption on July 1, 2023.

At June 30, 2024, the Bank reported $15.8 million of unrealized holding losses, which were in a loss position for 12 months or more.

The Bank evaluates individual investment securities quarterly for impairment based on ASC 326.

At June 30, 2025, the Bank reported $10.4 million of unrealized holding losses, which virtually all were in a loss position for 12 months or more.

This compares to June 30, 2024, when the Bank reported $15.8 million of unrealized holding losses, all of which were in a loss position for 12 months or more.

The unrealized losses on investment securities were attributable to changes in interest rates relative to when the investment securities were purchased and not due to the credit quality of the investment securities, which are predominately GSE securities that are either explicitly or implicitly guaranteed by the U.S.

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These liquidity scenarios support the Bank’s assessment that it has the ability to hold these held to maturity securities until maturity or available for sale securities until recovery of the amortized costs is realized and it is not more likely than not that the Bank will be required to sell the securities prior to recovery of the amortized costs.

There were no ACL on investment securities held to maturity and there was no impairment on investment securities available for sale at the adoption date of ASC 326 on July 1, 2023 and at June 30, 2024.

There was no ACL on investment securities held to maturity and there was no impairment on investment securities available for sale at June 30, 2025 and 2024.

At June 30, 2025 and 2024, the Corporation did not hold any investment securities held to maturity or investment securities available for sale with the intent to sell and determined it had the ability to hold these investment securities until maturity.

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Scheduled loan repayments are a relatively stable source of funds, while deposit inflows and outflows are influenced significantly by general interest rates and money market conditions.

Borrowings through the FHLB – San

Francisco, Federal Reserve Bank (“FRB”) of San Francisco and the correspondent bank may be used to compensate for declines in the availability of funds from other sources.

Borrowings through the FHLB – San Francisco, Federal Reserve Bank (“FRB”) of San Francisco and the correspondent bank may be used to mitigate the declines in the availability of funds from other sources.

Deposit Accounts.

Substantially all of the Bank’s depositors are residents of the State of California.

Many of the Bank’s depositors are residents of the State of California.

Deposits are attracted from within the Bank’s market area by offering a broad selection of deposit instruments, including checking, savings, money market and time deposit accounts.

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(1) Includes brokered certificates of deposit of $131.0 million and $131.8 million at June 30, 2025 and 2024, respectively.

(2) Includes uninsured deposits of approximately $122.7 million and $140.1 million at June 30, 2024 and 2023, respectively.

(2) Includes uninsured deposits of approximately $158.7 million (of which $53.8 million are collateralized) and $122.7 million (of which $9.0 million are collateralized) at June 30, 2025 and 2024, respectively.

The amounts of uninsured deposits are based on estimated amounts of uninsured deposits as of the reported period.

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Interest credited

Net (decrease) increase in deposits

Net increase (decrease) in deposits

Ending balance

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Advances from the FHLB – San Francisco are typically secured by the Bank’s single-family residential, multi-family and commercial real estate mortgage loans.

Total mortgage loans pledged to the FHLB – San Francisco were $774.1 million at June 30, 2024 as compared to $967.6 million at June 30, 2023.

Total mortgage loans pledged to the FHLB – San Francisco were $734.4 million at June 30, 2025 and $774.1 million at June 30, 2024.

In addition, the Bank pledged investment securities totaling $4.7 million and $3.9 million at June 30, 2025 and 2024, respectively, to collateralize its FHLB – San Francisco advances under the Securities-Backed Credit (“SBC”) facility.

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At June 30, 2025, the outstanding borrowings mature between 2025 and 2028 with a weighted average maturity of 10 months.

In addition to the total borrowings mentioned above, the Bank utilized its borrowing facility for letters of credit and credit enhancement for loans previously sold to the FHLB – San Francisco under the Mortgage Partnership Finance (“MPF”) program which have a recourse liability.

In addition to the borrowings mentioned above, the Bank utilized its borrowing facility for letters of credit and credit enhancement for loans previously sold to the FHLB – San Francisco under the Mortgage Partnership Finance (“MPF”) program which have a recourse liability.

The letters of credit are used to collateralize the local agency deposits.

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As of June 30, 2025 and 2024, the Bank also had secured a discount window facility of $142.5 million and $208.6 million at the FRB of San Francisco, respectively.

As of June 30, 2024, the Bank collateralized $126.6 million of investment securities and $178.6 million of loans held for investment.

This compared to a total of $150.3 million of investment securities collateralized under the discount window facility at June 30, 2023.

As of June 30, 2025, the Bank deposited $24.8 million of investment securities and $227.0 million of loans held for investment as collateral, compared to a total of $126.6 million of investment securities and $178.6 million of loans held for investment deposited as collateral under the discount window facility at June 30, 2024.

As of June 30, 2025 and 2024, there were no outstanding borrowings under the discount window facility at both dates.

At June 30, 2024 and 2023, the Bank also has a federal funds facility with its correspondent bank for $50.0 million, which matures annually on June 30th.

As of June 30, 2024 and 2023, there were no outstanding borrowings under the federal funds facility with the correspondent bank at both dates.

At June 30, 2025 and 2024, the Bank also maintained a federal funds facility with its correspondent bank for $50.0 million, maturing on March 31, 2026 and June 30, 2025, respectively.

There were no outstanding borrowings under this facility at either date.

As a member of the FHLB – San Francisco, the Bank is required to maintain a minimum investment in FHLB – San Francisco stock.

The Bank held the required investment in stock at June 30, 2024 and 2023 of $9.6 million and $9.5 million with no excess investment, respectively.

During fiscal 2024 and 2023, the Bank purchased FHLB – San Francisco capital stock totaling $63,000 and $1.3 million, respectively, and did not redeem any of the capital stock during both periods.

The Bank held the required investment in stock at June 30, 2025 and 2024 of $9.6 million with no excess investment at both dates.

During fiscal 2025 and 2024, the Bank purchased FHLB – San Francisco capital stock totaling $0 and $63,000, respectively, and did not redeem any of the capital stock during both periods.

In fiscal 2025 and 2024, the FHLB – San Francisco distributed cash dividends to the Bank totaling $835,000 and $793,000, respectively.

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The following is a brief description of certain laws and regulations which are applicable to the Corporation and the Bank.

The description of these laws and regulations, as well as descriptions of laws and regulations contained elsewhere herein, does not purport to be complete and is qualified in its entirety by reference to the applicable laws and regulations.

The description of these laws and regulations, as well as descriptions of laws and regulations contained elsewhere herein, do not purport to be complete and is qualified in its entirety by reference to the applicable laws and regulations.

Legislation is introduced from time to time in the United States Congress (“Congress”) that may affect the Corporation’s and the Bank’s operations.

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This regulatory structure establishes a comprehensive framework of activities in which the Bank may engage and is intended primarily for the protection of the insurance fund and depositors.

The regulatory structure also gives the regulatory authorities extensive discretion in connection with their supervisory and enforcement activities and examination policies, including policies with respect to the classification of assets and the establishment of adequate allowance for credit loss for regulatory purposes.

Any change in such policies, whether by the OCC, the FRB, the FDIC or Congress, could have a material adverse impact on the Corporation and the Bank and their operations.

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The Bank’s general permissible lending limit for loans to one borrower is equal to the greater of $500,000 or 15% of unimpaired capital and surplus (except for loans fully secured by certain readily marketable collateral, in which case this limit is increased to 25% of unimpaired capital and surplus).

The Bank’s limits on loans to one borrower or group of related borrowers at June 30, 2024 and 2023 were $20.1 million and $19.8 million, respectively.

At June 30, 2024, the Bank’s largest lending relationship to a single borrower or group of borrowers consisted of four multi-family loans totaling $5.0 million, which were performing according to their original payment terms.

The Bank’s limit on loans to one borrower, or group of related borrowers, at June 30, 2025 and 2024 was $19.7 million and $20.1 million, respectively.

At June 30, 2025, the Bank’s largest lending relationship to a single borrower or group of related borrowers consisted of four multi-family loans totaling $4.9 million, which were performing according to their original payment terms.

Effective July 1, 2019, the OCC issued a final rule implementing a section of the Economic Growth, Regulatory Relief and Consumer Protection Act (“EGRRCPA”) which permits an eligible federal savings bank with assets of $20.0 billion or less as of December 31, 2017 to elect to operate with the business powers of a national bank, generally subject to the same limitations and restrictions, without converting to a national bank charter.

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As a member of the FHLB - San Francisco, the Bank is required to purchase and maintain stock in the FHLB – San Francisco.

At June 30, 2024 and 2023, the Bank held $9.6 million and $9.5 million of FHLB - San Francisco stock, respectively, which were in compliance with this membership requirement.

During fiscal 2024 and 2023, the Bank was required to purchase $63,000 and $1.3 million of FHLB – San Francisco capital stock, respectively, and the Bank did not redeem any capital stock during both periods.

At June 30, 2025 and 2024, the Bank held $9.6 million of FHLB - San Francisco stock at both dates which were in compliance with this membership requirement.

During fiscal 2025 and 2024, the Bank was required to purchase $0 and $63,000 of FHLB – San Francisco stock, respectively, and the Bank did not redeem any capital stock during both periods.

In fiscal 2025 and 2024, the FHLB – San Francisco distributed cash dividends to the Bank totaling $835,000 and $793,000, respectively.

There is no guarantee in the future that the FHLB – San Francisco will pay cash dividends or redeem excess capital stock held by its members.

There is no guarantee in the future that the FHLB – San Francisco will pay cash dividends or redeem excess stock held by its members.

Under federal law, the FHLB - San Francisco is required to contribute to low and moderately priced housing programs through direct loans or interest subsidies on advances targeted for community investment and low and moderate income housing projects.

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On October 18, 2022, the FDIC adopted a final rule to increase its initial base insurance assessment rate schedules by two basis points to improve the likelihood that the reserve ratio of the DIF would be restored to at least 1.35% by September 30, 2028.

The revised assessment rate schedules became effective January 1, 2023, with the first invoice payment date of June 30, 2023 for the assessment period of January 1, 2023 through March 31, 2023.

The Bank’s FDIC annual assessments for the fiscal years ended June 30, 2025 and 2024 were $573,000 and $601,000, respectively.

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A qualifying institution may opt in or out of the community bank leverage ratio framework on its quarterly Call Report.

An institution that temporarily ceases to meet any qualifying criteria is provided with a two quarter grace

period to regain compliance.

An institution that temporarily ceases to meet any qualifying criteria is provided with a two quarter grace period to regain compliance.

Failure to meet the qualifying criteria within the grace period or maintain a leverage ratio of 8% or greater requires the institution to comply with the generally applicable regulatory capital requirements.

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GAAP that was adopted by the Corporation on July 1, 2023.

This standard, referred to as Current Expected Credit Loss or CECL requires all entities holding leases that are not accounted for at fair value to recognize credit losses expected over the life of certain financial assets.

This standard, referred to as Current Expected Credit Loss or CECL requires all entities holding financial instruments that are not accounted for at fair value to recognize credit losses expected over the life of certain financial assets.

CECL covers a broader range of assets than the previous method of recognizing credit losses and generally results in earlier recognition of credit losses.

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The Corporation and its non-savings institution subsidiaries are affiliates of the Bank.

In general, transactions with affiliates must be on terms that are as favorable to the institution as comparable transactions with non-affiliates.

In general, transactions

with affiliates must be on terms that are as favorable to the institution as comparable transactions with non-affiliates.

In addition, certain types of transactions are restricted to an aggregate percentage of the institution’s capital.

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The CRA requires that the OCC assess the Bank's record in meeting the credit needs of the communities it serves, especially low and moderate income neighborhoods.

While CRA modernization is underway and scheduled for implementation by 2026, the current evaluation system focuses on three tests:

The current CRA evaluation system focuses on three tests:

(1) a lending test, to evaluate the institution's record of making loans in its assessment areas;

(2) an investment test, to evaluate the institution's record of investing in community development projects, affordable housing and programs benefiting low or moderate income individuals and businesses;

(2) an investment test, to evaluate the institution's record of investing in community development projects, affordable housing and programs benefiting low income or moderate income individuals and businesses;

and (3) a service test, to evaluate the institution's delivery of banking services through its branches, ATM centers and other offices.

Institutions are assigned a rating of "outstanding," "satisfactory," "needs to improve," or "substantial non-compliance." The Bank received a rating of satisfactory when it was last examined for CRA compliance.

On October 24, 2023, the federal banking agencies, including the OCC, issued a final rule designed to strengthen and modernize regulations implementing the CRA.

The changes are designed to encourage banks to expand access to credit, investment and banking services in low- and moderate-income communities, adapt to changes in the banking industry including mobile and internet banking, provide greater clarity and consistency in the application of the CRA regulations and tailor CRA evaluations and data collection to bank size and type.

The applicability date for the majority of the provisions in the CRA regulations is January 1, 2026, and additional requirements will be applicable on January 1, 2027.

The Bank cannot predict the impact the changes to the CRA will have on its operations at this time.

In 2023, federal banking regulators adopted a final rule to modernize the Community Reinvestment Act (“CRA”).

However, in response to legal challenges, including an injunction issued by the U.S.

District Court for the Northern District of Texas, the federal banking regulators announced in March 2025 their intention to rescind the final rule and reinstate the prior CRA framework.

As a result, the Bank does not expect any material impact or significant changes to its operations or compliance obligations.

Anti-Money Laundering and Customer Identification.

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Treasury’s Office of Financial Crimes Enforcement Network.

These rules require financial institutions to establish procedures for identifying and verifying the identity of customers seeking to open new financial accounts, and, effective in 2018, the beneficial owners of accounts.

These rules require financial institutions to establish procedures for identifying and verifying the identity of customers seeking to open new financial accounts, and the beneficial owners of accounts.

Bank regulators are directed to consider a holding company’s effectiveness in combating money laundering when reviewing mergers and acquisitions.

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The FRB requires that all depository institutions maintain reserves on transaction accounts or non-personal time deposits.

These reserves may be in the form of cash or noninterest-bearing deposits with the regional FRB.

These reserves may be in the form of cash or noninterest-bearing deposits with the regional

Interest-bearing checking accounts and other types of accounts that permit payments or transfers to third parties fall within the definition of transaction accounts and are subject to Regulation D reserve requirements, as are any non-personal time deposits at a bank.

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In July 2023, the SEC adopted rules requiring registrants to disclose material cybersecurity incidents they experience and to disclose on an annual basis material information regarding their cybersecurity risk management, strategy, and governance.

The new rules require registrants to disclose on Form 8-K any cybersecurity incident they determine to be material and to describe the material aspects of the incident's nature, scope, and timing, as well as its material impact or

reasonably likely material impact on the registrant.

The Corporation provided disclosures on its cybersecurity risk management and governance on this Form 10-K for fiscal years ended June 20, 2024 (See Part I, Item 1C - Cybersecurity).

The Corporation provided disclosures on its cybersecurity risk management and governance on this Form 10-K for fiscal year ended June 20, 2025 (See Part I, Item 1C - Cybersecurity).

Non-compliance with federal or similar state privacy and cybersecurity laws and regulations could lead to substantial regulatory imposed fines and penalties, damages from private causes of action and/or reputational harm.

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The Consumer Financial Protection Bureau (“CFPB”) exercises broad regulatory, supervisory and enforcement authority with respect to both new and existing consumer financial protection laws.

The Bank is subject to consumer protection regulations issued by the CFPB, but as a financial institution with assets of less than $10.0 billion in assets, the Bank is generally subject to supervision and enforcement by the OCC with respect to compliance with consumer financial protection laws and CFPB regulations.

The Bank is subject to consumer protection regulations issued by the CFPB, but as a financial institution with assets of less than $10.0 billion, the Bank is generally subject to supervision and enforcement by the OCC with respect to compliance with consumer financial protection laws and CFPB regulations.

The Bank is subject to a broad array of federal and state consumer protection laws and regulations that govern almost every aspect of its business relationships with consumers.

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The Corporation must obtain approval from the FRB before acquiring more than 5% of the voting stock of another savings institution or savings and loan holding company or acquiring such an institution or holding company by merger, consolidation or purchase of its assets.

In evaluating an application for the Corporation to acquire control of a savings institution, the FRB would consider the financial and managerial resources and future prospects of the Corporation and the target institution, the effect of the acquisition on the risk to the DIF, the convenience and the needs of the community, including performance under the CRA and competitive factors.

In evaluating an application for the Corporation to acquire control of a savings institution, the FRB would consider the financial and managerial resources and future prospects of the

Corporation and the target institution, the effect of the acquisition on the risk to the DIF, the convenience and the needs of the community, including performance under the CRA and competitive factors.

The FRB may not approve any acquisition that would result in a multiple savings and loan holding company controlling savings institutions in more than one state, subject to two exceptions;

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The Inflation Reduction Act of 2022 imposed a one percent excise tax on the value of corporate share repurchases (net of issuance).

On December 27, 2022, the Internal Revenue Services issued Note 2023-2 which provides interim guidance on the implementation of the excise tax on stock repurchases.

On June 28, 2024, the Department of Treasury and Internal Revenue Services issued the final regulation that provide guidance on how to report and pay the excise tax on stock repurchases.

The excise tax is a non-deductible tax of one percent of the fair market value of the Corporation’s stock repurchases, net of restricted stock distributions, stock option exercises, ESOP repurchases and contributions and other qualified activities, occurring after December 31, 2022 in excess of $1.0 million.

The excise tax on the stock repurchases in fiscal 2024 was $26,000.

The excise tax on the stock repurchases in fiscal 2025 and 2024 was $43,000 and $26,000, respectively.

Tax Effect from Stock-Based Compensation.

During fiscal 2024, there were no shares of restricted common stock vested and distributed to employees but there were 2,000 shares of restricted stock distributed to non-employee members of the Corporation’s Board of Directors.

Also, there were no non-qualified stock options exercised and no incentive stock options exercised as disqualifying dispositions, but there were 39,220 shares of non-qualified stock options that expired and/or were forfeited and 3,350 shares of restricted stock that were forfeited.

As a result, there was a $38,000 adjustment to federal tax expense from stock-based compensation in fiscal 2024.

During fiscal 2025, 23,825 shares of restricted common stock vested and were distributed to employees.

No non-qualified stock options were exercised, and no incentive stock options exercised as disqualifying dispositions.

During the fiscal year, 197,168 shares of non-qualified stock options expired or forfeited, and 25,675 shares of restricted stock were forfeited.

Other Matters.

2 unchanged sentences

and the California Franchise Tax Board completed a review of the Corporation’s income tax returns for fiscal 2009 and 2010.

Fiscal 2022 and fiscal years thereafter remain subject to federal examination, while the California state tax returns for fiscal 2021 and fiscal years thereafter are subject to examination by state taxing authorities.

Fiscal 2023 and fiscal years thereafter remain subject to

federal examination, while the California state tax returns for fiscal 2022 and fiscal years thereafter are subject to examination by state taxing authorities.

On April 7, 2025, the California Francise Tax Board sent a tax examination letter for fiscal 2021 and 2022, and as of June 30, 2025, all of the requested documents have been provided.

State Taxation

4 unchanged sentences

The Corporation will be treated as a general corporation subject to the general corporate tax rate.

There was $22,000 adjustment to state tax expense from stock-based compensation in fiscal 2024.

As a Delaware holding company not earning income in Delaware, the Corporation is exempted from Delaware corporate income tax, but is required to file an annual report with and pay an annual franchise tax to the State of Delaware.

4 unchanged sentences

To facilitate talent attraction and retention, we strive to make the Bank an inclusive, safe and healthy workplace, with opportunities for our employees to grow and develop in their careers, supported by market-based compensation, benefits, health and welfare programs.

At June 30, 2024, approximately 73.0% of our workforce was female and 27.0% male, and our average employee tenure was approximately 8.3 years, down slightly from an average employee tenure of 8.5 years at June 30, 2023.

At June 30, 2025, approximately 69.8% of our workforce was female and 30.2% male, and our average employee tenure was approximately 8.5 years, up slightly from an average employee tenure of 8.3 years at June 30, 2024.

The ethnicity of our workforce was 36.5% White, 44.8% Hispanic or Latino, 7.8% African American or Black, 5.2% Asian, 3.6% two or more races, 0.5% American Indian or Alaskan Native and 1.6% Not Specified.

6 unchanged sentences

A core value of our talent management approach is to both develop talent from within and supplement with external hires.

This approach has yielded loyalty and dedication in our employee base which in turn grows our business, our commitment to our communities, and our customers, while adding new employees and external ideas supports a continuous

improvement mindset.

We believe that our average employee tenure of over eight years reflects the engagement of our employees in this talent management philosophy.

Turnover for employees, as measured by terminated employees to the average total employees, was 23.3% in fiscal 2024, down from 41.4% in fiscal 2023.

Turnover for employees, as measured by terminated employees to the average total employees, was 24.3% in fiscal 2025, up slightly from 23.3% in fiscal 2024.

EXECUTIVE OFFICERS

The following table sets forth information with respect to the executive officers of the Provident and the Bank:

The following table sets forth information with respect to the executive officers of Provident and the Bank:

President and

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Set forth below is certain information regarding the executive officers of the Corporation and the Bank.

There are no family relationships among or between the executive officers.

Nguyen was appointed Senior Vice President, Chief Financial Officer and Corporate Secretary of Provident and the Bank effective January 2, 2024.

Nguyen's previous position was Vice President, Chief Accounting Officer, and Controller of the Bank since September 2022.

Prior to that, Ms.

Nguyen served the Bank as Vice President and Controller from her first employment date in October 2016 to September 2022.

Nguyen’s professional designations include Certified Public Accountant, Chartered Global Management Accountant, and Certified Management Accountant.

Her educational background includes a Master of Business Administration from California State University, San Marcos, and a Bachelor of Arts in Economics and a Bachelor of Science in Biochemistry/Cell Biology both from the University of California, San Diego.

Nguyen is also a member of the American Institute of Certified Public Accountants, the Institute of Management Accountants, and the Financial Managers Society.

Robert "Scott" Ritter joined the Bank as Senior Vice President on September 26, 2016 and currently oversees the single-family mortgage operations.

There are no family relationships among or between any director, executive officer, or person nominated or chosen by the Corporation to become a director or executive officer.

Ternes has served as the President and Chief Executive Officer of the Bank and Corporation since January 2024.

Ternes joined the Bank and the Corporation in 2000 as Senior Vice President and Chief Financial Officer and was appointed Corporate Secretary in April 2003.

In January 2008, he was promoted to Executive Vice President and Chief Operating Officer, while continuing to serve as Chief Financial Officer and Corporate Secretary.

In June 2011, Mr.

Ternes was named President in addition to his roles as Chief Operating Officer, Chief Financial Officer, and Corporate Secretary.

Prior to joining the Bank, Mr.

Ritter was the Chief Operating Officer at California Mortgage Advisors since November 2011 where he was responsible for overseeing all of California Mortgage Advisors' operations, including product development, underwriting, loan processing and information technology.

Prior to that, he held positions with increasing responsibilities at mortgage banking firms such as Green Point Financial and its predecessor Headlands Mortgage Company, among others.

Ternes was appointed President and Chief Executive Officer of Provident and the Bank effective January 2, 2024.

Ternes joined Provident and the Bank as Senior Vice President and Chief Financial Officer on November 1, 2000 and was appointed Secretary in April 2003.

Effective January 1, 2008, Mr.

Ternes was appointed Executive Vice President and Chief Operating Officer, while continuing to serve as the Chief Financial Officer and Corporate Secretary

of Provident and the Bank.

Effective June 27, 2011, the Boards of Directors of Provident and the promoted Mr.

Ternes to serve as President of Provident and the Bank, while continuing to serve as Chief Operating Officer, Chief Financial Officer and Corporate Secretary.

Ternes served for more than 11 years as President, Chief Executive Officer, Chief Financial Officer, and Director of Mission Savings and Loan Association.

Fan was appointed Senior Vice President, Chief Financial Officer, and Corporate Secretary of Provident and the Bank effective May 12, 2025.

Fan previously served as Senior Vice President – Director of Finance and Treasury at Royal Business Bank since February 2024 and prior to that, as Senior Vice President – Finance at Pacific Western Bank from April 2014 to February 2024.

Robert "Scott" Ritter joined the Bank as Senior Vice President in September 2016 and currently oversees the single-family mortgage operations.

Prior to joining the Bank, Mr.

Ternes was the President, Chief Executive Officer, Chief Financial Officer and Director of Mission Savings and Loan Association, located in Riverside, California, holding those positions for over 11 years.

Weiant joined the Bank as Senior Vice President and Chief Lending Officer on June 29, 2007.

He has also held positions with increasing responsibilities at mortgage banking firms such as Green Point Financial and its predecessor Headlands Mortgage Company, among others.

Weiant joined the Bank as Senior Vice President and Chief Lending Officer in June 2007.

Prior to joining the Bank, Mr.

Weiant was a Senior Vice President of Professional Business Bank (June 2006 to June 2007) where he was responsible for commercial lending in the Los Angeles and Inland Empire regions of Southern California.

Wertz joined the Bank as Senior Vice President of Retail Banking on February 3, 2014.

Weiant was a Senior Vice President of Professional Business Bank where he was responsible for commercial lending in the Los Angeles and Inland Empire regions of Southern California.

Wertz joined the Bank as Senior Vice President of Retail Banking in February 2014.

Prior to joining the Bank, Ms.

Wertz was with CommerceWest Bank where she was responsible for the management of commercial banking activities, treasury management and specialty banking.

Prior to that she was with Opportunity Bank, N.A.

Wertz was with CommerceWest Bank, where she was responsible for commercial banking, treasury management and specialty banking services.

Wertz was also with Opportunity Bank, N.A.

where she was responsible for the commercial treasury sales and service team.

Wertz has more than 35 years of experience with financial institutions including the last 20 years in senior management roles.

Wertz has more than 35 years of experience with financial institutions, with a majority in senior management roles.

Her experience includes depository growth initiatives, operations, compliance and deposit acquisition management.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business