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Item 9A. Controls and Procedures

2025-08-29 compared with 2024-08-30 · 346 added, 305 removed, 1462 unchanged (31% of the section changed)

Controls and Procedures

a) An evaluation of the Corporation’s disclosure controls and procedures (as defined in Section 13a-15(e) or 15d-15(e) of the Securities Exchange Act of 1934 (the “Act”)) was carried out under the supervision and with the participation of the Corporation’s Chief Executive Officer (principal executive officer), Chief Financial Officer (principal financial officer) and the Corporation’s Disclosure Committee as of the end of the period covered by this report.

a) An evaluation of the Corporation’s disclosure controls and procedures (as defined in Section 13a-15(e) or 15d-15(e) of the Securities Exchange Act of 1934 (the “Act”)) was carried out under the supervision and with the participation of the Corporation’s Chief Executive Officer (principal executive officer), Chief Financial Officer (principal financial and accounting officer) and the Corporation’s Disclosure Committee as of the end of the period covered by this report.

In designing and evaluating the Corporation’s disclosure controls and procedures, management recognizes that disclosure controls and procedures, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the disclosure controls and procedures are met.

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Based on their evaluation, the Corporation’s Chief Executive Officer and Chief Financial Officer concluded that the Corporation’s disclosure controls and procedures as of June 30, 2025 are effective, at the reasonable assurance level, in ensuring that the information required to be disclosed by the Corporation in the reports it files or submits under the Act is (i) accumulated and communicated to the Corporation’s management (including the Chief Executive Officer and Chief Financial Officer) in a timely manner, and (ii) recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms.

b) There have been no changes in the Corporation’s internal control over financial reporting (as defined in Rule 13a-15(f) of the Act) that occurred during the quarter year ended June 30, 2024, that has materially affected, or is reasonably likely to materially affect, the Corporation’s internal control over financial reporting.

b) There have been no changes in the Corporation’s internal control over financial reporting (as defined in Rule 13a-15(f) of the Act) that occurred during the quarter ended June 30, 2025, that has materially affected, or is reasonably likely to materially affect, the Corporation’s internal control over financial reporting.

The Corporation does not expect that its internal control over financial reporting will prevent all error and all fraud.

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The design of any control procedure is also based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions;

over time, controls may become inadequate because of changes in conditions, or the degree of compliance

with the policies or procedures may deteriorate.

over time, controls may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate.

Because of the inherent limitations in a cost-effective control procedure, misstatements due to error or fraud may occur and not be detected.

30 unchanged sentences

The executive officers of the Corporation and the Bank are elected annually and hold office until their respective successors have been elected and qualified or until death, resignation or removal by the Board of Directors.

For information regarding the Corporation’s executive officers, see Item 1, “Business - Executive Officers” in this Form 10-K, which is incorporated herein by reference.

For information regarding the Corporation’s executive officers, see Item 1, “Business - Executive Officers” in this Form 10-K, which is incorporated herein by reference, while the Corporation’s insider trading policies and procedures is incorporated herein on exhibit 19 in this Form 10-K.

Code of Ethics for Senior Financial Officers

The Corporation has adopted a Code of Ethics, which applies to all directors, officers, and employees of the Corporation.

The Code of Ethics is publicly available as Exhibit 14 to the Corporation’s Annual Report on Form 10-K for the fiscal year June 30, 2007, and is available on the Corporation’s website, www.myprovident.com .

The Code of Ethics is available on the Corporation’s website, www.myprovident.com .

If the Corporation makes any substantial amendments to the Code of Ethics or grants any waiver, including any implicit waiver, from a provision of the Code of Ethics to the Corporation’s principal executive officer, principal financial and accounting officer, controller, or person performing similar functions, the Corporation will disclose the nature of such amendment or waiver on the Corporation’s website and in a report on Form 8-K.

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Carpenter, Audit Committee Chair, as its audit committee financial expert.

Carpenter is independent, as independence for audit committee members is defined under the listing standards of the NASDAQ Stock Market, is a Certified Public Accountant in California (inactive), has been in public accounting, and has extensive business knowledge, financial expertise and familiarity with our local market and communities.

Carpenter is independent, as independence for audit committee members is defined under the listing standards of the NASDAQ Stock Market, is a Certified Public Accountant in California (inactive), has experience in public accounting, and has extensive business knowledge, financial expertise and familiarity with our local market and communities.

Nominating Procedures

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Stock Options

2013 Equity Incentive Plan:

Stock Options

Restricted Stock

9 unchanged sentences

Principal Accountant Fees and Services

The information required by this item is incorporated herein by reference from the section captioned “Proposal 3 - Ratification of Appointment of Independent Auditor” in the Corporation’s Proxy Statement, a copy of which will be filed with the Securities and Exchange Commission no later than 120 days after the Corporation’s fiscal year end.

The information required by this item is incorporated herein by reference from the section captioned “Proposal 3 - Ratification of Appointment of Independent Registered Public Accounting Firm” in the Corporation’s Proxy Statement, a copy of which will be filed with the Securities and Exchange Commission no later than 120 days after the Corporation’s fiscal year end.

Exhibits and Financial Statement Schedules.

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Ternes (incorporated by reference to Exhibit 10.1 to the Corporation’s Form 8-K dated July 7, 2009)

Form of Amended Severance Agreement with Tam B.

Nguyen, Robert "Scott" Ritter, Lilian Salter, David S.

Form of Severance Agreement with Avedis Demirdjian, Peter C.

Fan, Robert "Scott" Ritter, David S.

Weiant and Gwendolyn L.

Wertz (incorporated by reference to Exhibit 10.3 to the Corporation’s Form 10-Q dated May 8, 2024 )

2006 Equity Incentive Plan (incorporated by reference to Exhibit A to the Corporation’s proxy statement dated October 12, 2006)

Form of Incentive Stock Option Agreement for options granted under the 2006 Equity Incentive Plan (incorporated by reference to Exhibit 10.10 in the Corporation’s Form 10-Q for the quarter ended December 31, 2006)

Wertz (incorporated by reference to Exhibit 10.3 to the Corporation’s Form 8-K dated May 23, 2025)

2010 Equity Incentive Plan (incorporated by reference to Exhibit A to the Corporation’s proxy statement dated October 28, 2010)

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Investor Relations.

Insider Trading Policy and Procedures

Subsidiaries of the Registrant

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● We performed inquiries and examined documentation to understand management’s methodology and process in determining the qualitative factors in the ACL, including the key assumptions and relevant data utilized.

● We involved our credit specialists to assist us in evaluating the reasonableness and conceptual soundness of the qualitative and methodologies applied by management.

● We involved our credit specialists to assist us in evaluating the reasonableness and conceptual soundness of the qualitative methodologies applied by management.

● We tested the design and implementation of controls over the (i ) selection of the risk categorizations and relative weighting in each of the qualitative factors used as an input to the model and (ii) overall calculation and disclosure.

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Investment securities - held to maturity, at cost with no allowance for credit losses

Investment securities - available for sale, at fair value with no allowance for credit losses

Loans held for investment, net of allowance for credit losses of $ 7,065 and $ 5,946 , respectively;

includes $ 1,047 and $ 1,312 of loans held at fair value, respectively;

Investment securities - available for sale, at fair value

Loans held for investment, net of allowance for credit losses of $ 6.4 million and $ 7.1 million, respectively;

includes $ 1.0 million and $ 1.0 million of loans held at fair value, respectively;

$ 734.4 million and $ 861.1 million pledged to Federal Home Loan Bank ("FHLB") - San Francisco, respectively;

$ 178.6 million and $ 0 pledged to Federal Reserve Bank ("FRB") - San Francisco, respectively

$ 227.0 million and $ 178.6 million pledged to Federal Reserve Bank ("FRB") - San Francisco, respectively

Accrued interest receivable

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Treasury stock at cost ( 11,651,897 and 11,381,794 shares, respectively)

Accumulated other comprehensive loss, net of tax

Accumulated other comprehensive income (loss), net of tax

Total stockholders’ equity

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Net interest income

(Recovery of) provision for credit losses

Net interest income, after (recovery of) provision for credit losses

Recovery of credit losses

Net interest income, after recovery of credit losses

Non-interest income:

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(In Thousands)

Change in unrealized holding gains (losses) on securities available for sale and interest-only strips

Income tax expense (benefit)

Other comprehensive income (loss)

Change in unrealized holding gains on securities available for sale and interest-only strips

Income tax expense

Other comprehensive income

Total comprehensive income

9 unchanged sentences

Balance at June 30, 2023

Other comprehensive loss

Other comprehensive income

Purchase of treasury stock

Distribution of restricted stock

Awards for restricted stock

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Cash dividends (1)

Adoption of CECL standard

Balance at June 30, 2024

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Stock options expense, net of tax

Tax effect from stock-based compensation

Cash dividends (1)

Adoption of CECL standard

Balance at June 30, 2025

(1) Includes the purchase of 33,045 shares of distributed restricted stock in fiscal 2023 in settlement of employees' withholding tax obligations.

(1) Cash dividends of $ 0.56 per share were paid in both fiscal 2025 and 2024.

(2) Includes the purchase of 8,758 shares of distributed restricted stock in fiscal 2025 in settlement of employees' withholding tax obligations.

The accompanying notes are an integral part of these consolidated financial statements.

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Depreciation and amortization

(Recovery of) provision for credit losses

Recovery of credit losses

Net unrealized gain on other equity investments

Stock-based compensation

(Benefit) provision for deferred income taxes

(Decrease) increase in accounts payable, accrued interest and other liabilities

(Increase) decrease in prepaid expenses and other assets

Provision (benefit) for deferred income taxes

Decrease in accounts payable, accrued interest and other liabilities

Increase in prepaid expenses and other assets

Net cash provided by operating activities

Cash flows from investing activities:

Decrease (increase) in loans held for investment, net

Maturity of investment securities - held to maturity

Decrease in loans held for investment, net

Purchase of investment securities - held to maturity

Principal payments from investment securities - held to maturity

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Purchase of premises and equipment

Net cash provided by (used for) investing activities

Net cash provided by investing activities

Cash flows from financing activities:

Decrease in deposits, net

Increase (decrease) in deposits, net

Proceeds from long-term borrowings

Repayments of long-term borrowings

(Repayment of) proceeds from short-term borrowings, net

Repayment of short-term borrowings, net

Treasury stock purchases

1 unchanged sentence

Cash dividends

Net cash (used for) provided by financing activities

Net (decrease) increase in cash and cash equivalents

Net cash used for financing activities

Net increase (decrease) in cash and cash equivalents

Cash and cash equivalents at beginning of year

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Actual results could differ from those estimates.

Material estimates that are particularly susceptible to significant change in the near term relate to the determination of the allowance for credit losses, the valuation of investment securities, the valuation of loans held for investment at fair value, deferred tax assets, mortgage servicing assets, real estate owned and deferred compensation costs.

Material estimates that are particularly susceptible to significant change in the near term relate to the determination of the allowance for credit losses, the valuation of investment securities, deferred tax assets (liabilities), and deferred compensation costs.

The following accounting policies, together with those disclosed elsewhere in the consolidated financial statements, represent the significant accounting policies of Provident Financial Holdings, Inc.

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Securities held to maturity are carried at amortized historical cost.

All other securities are classified as available for sale and are carried at fair value.

All other securities are classified as available for sale and carried at fair value.

Fair value generally is determined based upon quoted market prices.

Changes in net unrealized gains (losses) on debt securities available for sale are included in accumulated other comprehensive income, net of tax.

Changes in net unrealized gains or losses on debt securities available for sale are included in accumulated other comprehensive income, net of tax.

Gains and losses on sale or dispositions of investment securities are included in non-interest income and are determined using the specific identification method.

Purchase premiums and discounts are amortized over the expected average life of the securities using the effective interest method.

The Corporation does not currently intend to sell any investment securities classified as held to maturity or available for sale and as such, records the investment security at book value or fair market value as prescribed by GAAP.

As a part of the Corporation’s monthly risk assessment, the Corporation runs a number of stressed liquidity scenarios to determine if it is more likely than not that the Bank will be required to sell the investment security before the recovery of its amortized costs basis.

The Corporation evaluates individual investment securities quarterly for impairment based on Accounting Standards Codification (“ASC”) 326, “Financial Instruments – Credit Losses.” As a part of the Corporation’s monthly risk assessment, the Corporation runs a number of stressed liquidity scenarios to determine if it is more likely than not that the Bank will be required to sell the investment security before the recovery of its amortized cost basis.

These liquidity scenarios support the Corporation’s assessment that the Corporation 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 Corporation will be required to sell the securities prior to recovery of the amortized costs.

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Loans held for investment

Loans held for investment consist of long-term single-family adjustable and fixed rate loans secured by single-family residences and multi-family and commercial real estate loans secured by commercial property, land and other residential properties, which the Corporation intends to hold for the foreseeable future.

These loans are generally offered to customers and businesses located in California.

Loans held for investment primarily consist of long-term, fixed- and adjustable-rate loans secured by single-family residences, as well as multi-family and commercial real estate loans secured by multi-family and commercial properties, and loans secured by land and other residential properties.

The Corporation intends to hold these loans for the foreseeable future.

They are generally offered to customers and businesses located in California.

Net loan origination fees and certain direct origination expenses are deferred and amortized to interest income over the contractual life of the loan using the effective interest method.

Amortization is discontinued for non-performing loans.

Interest receivable represents primarily the current month’s interest, which will be included as a part of the borrower’s next monthly loan payment.

Interest receivable primarily represents the current month’s interest, which will be included as a part of the borrower’s next monthly loan payment.

Interest receivable is accrued only if deemed collectible.

Loans are placed on non-performing status when they become 90 days past due.

Generally, a loan is placed on non-performing status when it becomes 90 days past due as to principal or interest or after considering economic and business conditions and collection efforts, where the borrower’s financial condition is such that collection of the contractual principal or interest on the loan is doubtful.

When a loan is placed on non-performing status, interest accrued but not received is reversed against interest income.

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The Corporation adopted ASC 326 using the prospective transition approach for all financial assets measured at amortized cost and off-balance sheet credit exposures.

Results for reporting periods beginning after July 1, 2023 are presented under CECL while prior period amounts continue to be reported in accordance with previously applicable accounting standards.

Non-performing loans

The Corporation assesses loans individually and classifies them as non-performing when the accrual of interest has been discontinued, loans have been modified or management has serious doubts about the future collectability of principal and interest, even though the loans may currently be performing.

The Corporation assesses loans individually and classifies them as non-performing when the accrual of interest has been discontinued, loans have been modified to borrowers experiencing financial difficulties or management has serious doubts about the future collectability of principal and interest, even though the loans may currently be performing.

Factors considered in determining classification include, but are not limited to, expected future cash flows, the financial condition of the borrower and current economic conditions.

The Corporation measures each non-performing loan based on ASC 326, establishes a collectively evaluated or individually evaluated allowance, and charges off those loans or portions of loans deemed uncollectible.

Loans identified to be individually evaluated have an allowance that is based upon the appraised value of the collateral, less selling costs or discounted cash flow with an appropriate default factor.

Loans identified to be individually evaluated may have an allowance that is based upon the appraised value of the collateral, less selling costs or discounted cash flow with an appropriate default factor.

Real estate owned

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Gains or losses on the sale of real estate are recognized upon disposition of the property.

Costs relating to improvement, maintenance and repairs of the property are expensed as incurred under gain (loss) on sale and operations of real estate owned acquired in the settlement of loans in the Consolidated Statements of Operations.

Costs relating to improvement, maintenance and repairs of the property are charged to operations as incurred.

Impairment of long-lived assets

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The deferred income tax asset related to the allowance for credit losses will be realized when actual charge-offs are made against the allowance.

Based on the availability of loss carry-backs and projected taxable income during the periods for which loss carry-forwards are available, management believes it is more likely than not the Corporation will realize the deferred tax asset.

The Corporation continues to monitor the deferred tax asset on a quarterly basis for a valuation allowance.

The Corporation continues to monitor the deferred tax assets or liabilities on a quarterly basis for a valuation allowance.

The future realization of these tax benefits primarily hinges on adequate future earnings to utilize the tax benefit.

Prospective earnings or losses, tax law changes or capital changes could prompt the Corporation to reevaluate the assumptions which may be used to establish a valuation allowance.

As of June 30, 2024 and 2023, the estimated net deferred tax asset, which is included in prepaid expenses and other assets in the Consolidated Statements of Financial Condition, was $ 606,000 and $ 218,000 , respectively.

The Corporation maintains net deferred tax assets for deductible temporary tax differences, such as loss reserves, deferred compensation, non-accrued interest and unrealized gains (losses), among other items.

The increase in the net deferred tax asset resulted primarily from higher loss reserves and a decrease in deferred tax liabilities from lower net deferred loan costs.

As of June 30, 2025, the estimated net deferred tax liability was $ 832,000 and is included in accounts payable, accrued interest and other liabilities in the Consolidated Statements of Financial Condition;

while, at June 30, 2024, the estimated net deferred tax asset was $ 606,000 and is included in prepaid expenses and other assets.

The Corporation maintains the net deferred tax asset or liability for deductible temporary tax differences, such as loss reserves, deferred compensation, non-accrued interest and unrealized gains or losses, among other items.

During the fiscal year ended June 30, 2025, the Corporation’s net deferred tax position changed from a net deferred tax asset to a net deferred tax liability.

This change was primarily due to the reversal of deferred tax assets previously recognized in connection with accrued Supplemental Executive Retirement Plan obligations, which were settled during the year, and the recognition of deferred tax liabilities associated with unrealized gains on other equity investments, which are recorded through net income and result in taxable temporary differences.

The Corporation did no t have any liabilities for uncertain tax positions or any known unrecognized tax benefit at June 30, 2025 or 2024.

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The Bank records these BOLI policies within prepaid expenses and other assets in the Consolidated Statements of Financial Condition at each policy’s respective cash surrender value, with net changes recorded in other non-interest income in the Consolidated Statements of Operations.

PROVIDENT FINANCIAL HOLDINGS, INC.

Notes to Consolidated Financial Statements

Cash dividend

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Under Delaware law, dividends may be paid either out of surplus or, if there is no surplus, out of net profits for the current fiscal year and/or the preceding fiscal year in which the dividend is declared.

For additional

PROVIDENT FINANCIAL HOLDINGS, INC.

Notes to Consolidated Financial Statements

information, see Note 18 of the Notes to Consolidated Financial Statements regarding the subsequent event related to the cash dividend.

For additional information, see Note 19 of the Notes to Consolidated Financial Statements regarding the subsequent event related to the cash dividend.

Stock repurchases

The Corporation repurchased 197,349 shares of its common stock with an average cost of $ 13.05 per share during fiscal 2024 pursuant to its publicly announced stock repurchase plans.

As of June 30, 2024, a total of 189,116 shares or 54 % of the shares authorized for repurchase under the Corporation’s existing stock repurchase plan remain available to purchase until the plan expires on September 28, 2024.

The Corporation repurchased 285,170 shares of its common stock at an average cost of $ 15.04 per share during fiscal 2025 pursuant to its publicly announced stock repurchase plans.

As of June 30, 2025, 217,028 shares, or 65 % of the shares authorized for repurchase, remained available under the Corporation’s existing repurchase plan, which is set to expire on January 23, 2026.

Earnings per common share (“EPS”)

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ASC 718, “Compensation – Stock Compensation,” requires companies to recognize in the Consolidated Statements of Operations the grant-date fair value of stock options and other equity-based compensation issued to employees and directors.

Stock-based compensation, inclusive of restricted stock expense, recognized in the Consolidated Statements of Operations for the fiscal years ended June 30, 2024 and 2023 was $ 240,000 and $ 1.2 million, respectively.

Stock-based compensation, inclusive of restricted stock expense, recognized in the Consolidated Statements of Operations for the fiscal years ended June 30, 2025 and 2024 was $ 543,000 and $ 240,000 , respectively.

Employee Stock Ownership Plan ("ESOP")

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The Corporation recognizes compensation expense over the vesting period of the shares awarded, equal to the fair value of the shares at the award date.

A total of $ 203,000 and $ 1.1 million of restricted stock expense was amortized during fiscal 2024 and 2023, respectively.

A total of $ 472,000 and $ 203,000 of restricted stock expense was amortized during fiscal 2025 and 2024, respectively.

Post-retirement benefits

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Comprehensive income

ASC 220, “Comprehensive Income,” requires that realized revenues, expenses, gains and losses be included in net income (loss).

Unrealized gains (losses) on available for sale securities and interest-only strips are reported as a separate component of the stockholders’ equity section of the Consolidated Statements of Financial Condition and the change in the unrealized gains (losses) are reported on the Consolidated Statements of Comprehensive Income and Consolidated Statements of Stockholders’ Equity.

Under ASC 220, “Comprehensive Income,” comprehensive income consists of net income and other comprehensive income, including unrealized gains or losses on available for sale securities and interest-only strips.

Accumulated comprehensive income (loss) is reported as a separate component of the stockholders’ equity section of the Consolidated Statements of Financial Condition and Consolidated Statements of Stockholders’ Equity.

PROVIDENT FINANCIAL HOLDINGS, INC.

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Accounting Standard Updates (“ASU”)

In December 2023, the Financial Accounting Standards Board (“FASB”) issued ASU No.

In November 2024, the Financial Accounting Standards Board (“FASB”) issued ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Topic 220):

Disaggregation of Income Statement Expenses.

ASU 2024-03 requires public business entities (“PBEs”) to disclose disaggregated information about specific natural expense categories underlying certain income statement expense line items that are considered relevant expense captions because they include one or more of the five natural expense categories identified in this ASU.

Such disclosures must be made on an annual and interim basis in a tabular format in the footnotes to the financial statements.

The ASU requires entities to disaggregate any relevant expense caption presented on the face of the income statement within continuing operations into the following required natural expense categories, as applicable:

(1) inventory purchases, (2) employee compensation, (3) depreciation, (4) intangible asset amortization, and (5) depreciation, depletion and amortization recognized as part of oil- and gas-producing activities or other depletion expenses.

The ASU does not affect the presentation of expenses on the face of the income statement.

Rather, it requires additional disaggregation of those captions into specified natural expense categories in the financial statement footnotes.

This ASU is effective for all PBEs for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027.

Early adoption is permitted.

The Corporation is in the process of reviewing the impact of this ASU and has not yet determined the impact of the adoption of this ASU on its consolidated financial statements.

In December 2023, the FASB issued ASU No.

2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures.

This ASU requires public business entities to annually (a) disclose specific categories in the rate reconciliation and (b) provide additional information for reconciling items that meet a quantitative threshold of equal to or greater than five percent of the amount computed by multiplying pretax income or loss by the applicable statutory income tax rate.

This ASU requires PBEs to annually (a) disclose specific categories in the rate reconciliation and (b) provide additional information for reconciling items that meet a quantitative threshold of equal to or greater than five percent of the amount computed by multiplying pretax income or loss by the applicable statutory income tax rate.

This ASU is effective for annual periods beginning after December 15, 2024.

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This ASU is effective for public entities for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024.

Early adoption is permitted.

The Corporation is in the process of reviewing the impact of this ASU and has not yet determined the impact of the adoption of this ASU on its consolidated financial statements.

In March 2020, the FASB issued ASU No.

2020-04, Reference Rate Reform (Topic 848):

Facilitation of the Effects of Reference Rate Reform on Financial Reporting.

This ASU applies to contracts, hedging relationships and other transactions that reference the London Interbank Offered Rate (“LIBOR”) or other rate references expected to be discontinued as a result of reference rate reform.

The ASU permits an entity to make necessary modifications to eligible contracts or transactions without requiring contract remeasurement or reassessment of a previous accounting determination.

In January 2021, ASU 2021-01 clarified that certain optional expedients and exceptions in Topic 848 for contract modifications and hedge accounting apply to derivatives that are affected by the changes in the interest rates used for margining, discounting, or contract price alignment for derivative instruments that are being implemented as part of the market-wide transition to new reference rates (commonly referred to as the “discounting transition”).

In December 2022, the FASB issued ASU 2022-06, Deferral of the Sunset Date of Topic 848.

The FASB had originally included a sunset provision within Topic 848 based on expectations of when the LIBOR would cease being published.

In March 2021, it was announced that the intended cessation date of LIBOR was extended to June 30, 2023.

As a result, the FASB issued ASU 2022-06 deferring the sunset date of Topic 848 from December 31, 2022 to December 31, 2024.

This ASU is effective for all entities as of March 12, 2020 through December 31, 2024.

As of June 30, 2023, the Corporation had approximately $ 469.4 million in loans held for investment with LIBOR indices.

Beginning July 1, 2023, the Corporation started to transition these loans to Secured Overnight Financing Rate (“SOFR”) indices or other rate indices in accordance with the government agency guidelines.

As of September 30, 2023, all loans held for investment with LIBOR indices had been transitioned to SOFR or other rate indices.

The Corporation determined that the impact of the adoption of this ASU did not have a material impact to its consolidated financial statements.

In June 2016, the FASB issued ASU 2016-13, “Financial Instruments - Credit Losses (Topic 326):

Measurement of Credit Losses on Financial Instruments,” and subsequent amendments to the initial guidance.

On July 1, 2023, the Corporation adopted this ASU that replaced the incurred loss methodology with the current expected credit loss (“CECL”) methodology.

CECL requires an estimate of 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 commitments to extend credit.

Financial assets measured at amortized cost will be presented at the net amount expected to be collected by using an allowance for credit losses (“ACL”).

PROVIDENT FINANCIAL HOLDINGS, INC.

Notes to Consolidated Financial Statements

In addition, CECL made changes to the accounting for available for sale investment securities.

One such change is to require credit losses to be presented as an allowance rather than as a write-down on available for sale debt securities if management does not intend to sell and does not believe that it is more likely than not, they will be required to sell.

The Corporation adopted ASC 326, “Financial Instruments – Credit Losses,” and all related subsequent amendments using the prospective transition approach for all financial assets measured at amortized cost and off-balance sheet credit exposures.

The transition adjustment of the adoption of CECL included an $ 1.2 million increase in the ACL, which is presented as a reduction to net loans held for investment.

The Corporation recorded a net decrease to retained earnings of $ 824,000 as of July 1, 2023 for the cumulative effect of adopting CECL, which reflects the transition adjustments noted above, net of the applicable deferred tax assets recorded.

Results for reporting periods beginning after July 1, 2023 are presented under CECL while prior period amounts continue to be reported in accordance with previously applicable accounting standards.

The Corporation adopted ASC 326 using the prospective transition approach for debt securities for which other-than-temporary impairment had been recognized prior to July 1, 2023.

As of June 30, 2023, the Corporation did not have any other-than-temporary impaired investment securities.

Therefore, upon adoption of ASC 326, the Corporation determined that an ACL on available for sale securities was not deemed necessary.

The following table illustrates the impact on the ACL from the adoption of ASC 326:

Allowance for

credit losses

before adoption

allowance after ASC

under ASC 326

(In Thousands)

Mortgage loans:

Single-family

Commercial real estate

Commercial business loans

Consumer loans

Unfunded loan commitment reserve

In March 2022, FASB issued ASU 2022-02, “Financial Instruments - Credit Losses (Topic 326) Troubled Debt Restructurings and Vintage Disclosures.” This ASU eliminates the concept and treatment of troubled debt restructurings (“TDR”) in relation to the adoption of the CECL model for the accounting for credit losses (see note above regarding ASU 2016-13).

The new disclosure requirements are adopted in regards to loan modifications made to borrowers experiencing financial difficulties.

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 on July 1, 2023, the Corporation did have any loan modifications for borrowers experiencing financial difficulties during fiscal 2024.

The Corporation operates as a single segment and reporting unit;

therefore, the adoption of this ASU did not have a material impact on the Corporation’s consolidated financial statements but resulted in expanded disclosures within Note 17 on Segment Reporting.

PROVIDENT FINANCIAL HOLDINGS, INC.

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In fiscal 2025 and 2024, the Corporation received principal payments from its investment securities of $ 21.5 million and $ 24.1 million, respectively, and did no t sell any investment securities.

The Corporation did no t purchase any investment securities in fiscal 2024 and 2023.

The Corporation purchased investment securities totaling $ 981,000 in fiscal 2025, while no investment securities were purchased in fiscal 2024.

PROVIDENT FINANCIAL HOLDINGS, INC.

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U.S government agency MBS

government sponsored enterprise MBS

Private issue CMO

21 unchanged sentences

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

At June 30, 2024, all of the $ 15.8 million of unrealized holding losses were in a loss position for 12 months or more, while at June 30, 2023, $ 18.6 million of the $ 18.9 million of unrealized holding losses 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,

At June 30, 2025, most of the $ 10.4 million of unrealized holding losses were in a loss position for 12 months or more, except one investment security with a $ 1,000 unrealized loss for less than 12 months, while at June 30, 2024, all of the $ 15.8 million of unrealized holding losses were in a loss position for 12 months or more.

government sponsored enterprise (“GSE”) securities that are either explicitly or implicitly guaranteed by the U.S.

government and have

PROVIDENT FINANCIAL HOLDINGS, INC.

Notes to Consolidated Financial Statements

which are predominately U.S.

government sponsored enterprise (GSE) securities that are either explicitly or implicitly guaranteed by the U.S.

government and have a long history of no credit losses.

a long history of no credit losses.

Therefore, the Corporation has determined that the unrealized losses are due to the fluctuating nature of interest rates, and not related to any potential credit risks within the investment portfolio.

The Bank does not currently intend to sell any investment securities classified as held to maturity or available for sale and as such, records the investment security at amortized cost or fair market value as prescribed by GAAP.

There were no ACL or impairment 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.

As a part of the Corporation’s monthly risk assessment, the Corporation runs a number of stressed liquidity scenarios to determine if it is more likely than not that the Bank will be required to sell the investment securities before the recovery of its amortized cost basis.

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

In order to maintain adequate liquidity, the Bank has established borrowing facilities with various counterparties.

The Bank had a remaining borrowing capacity of $ 282.3 million as of June 30, 2025 at the FHLB of San Francisco.

In addition, the Bank has secured an estimated $ 208.6 million discount window facility at the FRB of San Francisco collateralized by investment securities totaling $ 126.6 million and loans held for investment totaling $ 178.6 million as of June 30, 2024.

In addition, the Bank has secured an estimated $ 142.5 million discount window facility at the FRB of San Francisco collateralized by single-family loans held for investment totaling $ 227.0 million and investment securities totaling $ 24.8 million as of June 30, 2025.

As of June 30, 2025, the Bank also has an unsecured borrowing arrangement in the form of a federal funds facility with its correspondent bank for $ 50.0 million.

2 unchanged sentences

At June 30, 2024, the Bank had a remaining borrowing capacity of $ 261.3 million at the FHLB of San Francisco.

In addition, the Bank had secured an estimated $ 139.0 million discount window facility at the FRB of San Francisco collateralized by investment securities totaling $ 150.3 million at June 30, 2023.

In addition, the Bank had secured an estimated $ 208.6 million discount window facility at the FRB of San Francisco collateralized by single-family loans held for investment totaling $ 178.6 million and investment securities totaling $ 126.6 million at June 30, 2024.

As of June 30, 2024, the Bank also had an unsecured borrowing arrangement in the form of a federal funds facility with its correspondent bank for $ 50.0 million.

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The following table sets forth information at June 30, 2025 regarding the dollar amount of loans held for investment that are contractually repricing during the periods indicated, segregated between adjustable rate loans and fixed rate loans.

Fixed-rate loans comprised 10 % and 11 % of loans held for investment at June 30, 2024 and 2023, respectively.

Adjustable rate loans having no stated repricing date that reprice when the index to which they are tied to reprices (e.g.

Fixed-rate loans comprised 10 % of loans held for investment at both June 30, 2025 and 2024, respectively.

Adjustable-rate loans with no stated repricing date that reprice when the index to which they are tied to reprices (e.g.

prime rate index) and checking account overdrafts are reported as repricing within one year, subject to periodic and maximum rate caps.

11 unchanged sentences

Total loans held for investment, gross

The following tables present the Corporation’s commercial real estate loans by property type and LTV as of June 30, 2024 and 2023:

The following tables present the Corporation’s commercial real estate loans by property type and loan-to-value (“LTV”) as of June 30, 2025 and 2024:

June 30, 2025

21 unchanged sentences

Automotive - non gasoline

Light industrial/manufacturing

Total commercial real estate

(1) Current loan balance as a percentage of the original appraised value.

(2) Mixed use includes $ 8.2 million in Office/Retail, $ 5.6 million in Multi-family/Retail, $ 3.4 million in Other Mixed Use and $ 700,000 in Multi-family/Office.

(2) Mixed use includes $ 6.9 million in Office/Retail, $ 4.7 million in Multi-family/Retail, $ 3.0 million in Other Mixed Use, $ 754,000 in Multi-family/Commercial and $ 685,000 in Multi-family/Office.

The following tables present the Corporation’s commercial real estate loans by geographic concentration as of June 30, 2025 and 2024:

22 unchanged sentences

Medical/dental office

Restaurant/fast food

Total owner occupied

4 unchanged sentences

Automotive - non gasoline

Light industrial/ manufacturing

Total non-owner occupied

Total commercial real estate

(1) Inland Empire comprised of San Bernardino and Riverside counties.

(2) Other than the Inland Empire.

The Corporation has developed an internal loan grading system to evaluate and quantify loans held for investment with respect to quality and risk.

Management continually evaluates the credit quality of the loan portfolio and conducts a quarterly review of the adequacy of the ACL.

The Corporation has adopted an internal risk rating policy in which each loan is rated for credit quality with a rating of pass, special mention, substandard, doubtful or loss.

The two primary components that are used during the loan review process to determine the proper allowance levels are individually evaluated allowances and collectively evaluated allowances.

The two primary components that are used during the loan review process to determine the proper ACL levels are individually evaluated allowances and collectively evaluated allowances.

The collectively evaluated allowance is based on a pooling method for groups of homogeneous loans sharing similar loan characteristics to calculate an allowance which reflects an estimate of lifetime expected credit losses using historical experience, current conditions, and reasonable and supportable forecasts.

The Corporation categorizes all loans held for investment into risk categories based on relevant information about the ability of the borrower to service their debt such as current financial information, historical payment experience, credit documentation, public information, and current economic trends, among other factors.

A description of the general characteristics of the risk grades is as follows:

Loans identified to be individually evaluated may have an allowance that is based upon the appraised value of the collateral, less selling costs, or discounted cash flow with an appropriate default factor.

The Corporation adopted an internal risk rating policy which categorizes all loans held for investment into risk categories of pass, special mention, substandard, doubtful or loss based on relevant information about the ability of the borrower to service their debt such as current financial information, historical payment experience, credit documentation, public information, and current economic trends, among other factors.

A description of the general characteristics of the risk grades with respect to credit quality of each loan is as follows:

● Pass – A pass loan ranges from minimal credit risk to average, but still acceptable, credit risk.

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● Doubtful - A doubtful loan has all of the weaknesses inherent in one classified as substandard with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of the currently existing facts, conditions and values, highly questionable and improbable.

● Loss - A loss loan is considered uncollectible and of such little value that continuance as an asset of the Corporation is not warranted.

PROVIDENT FINANCIAL HOLDINGS, INC.

Notes to Consolidated Financial Statements

● Loss - A loss loan is considered uncollectible and of such little value that continuance as an asset of the Corporation is not warranted.

The following table presents the Corporation’s recorded investment in loans by risk categories and gross charge-offs by year of origination as of June 30, 2025:

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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 Corporation’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 (recovery of) 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 Corporation 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 Corporation’s ACL is calculated quarterly, with any difference between the calculated ACL and the recorded ACL adjusted through an entry to the provision for (recovery of) 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 to group and determine portfolio loan segments with similar risk characteristics.

The Corporation primarily utilizes historical loss rates for the ACL 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.

2 unchanged sentences

For its reasonable and supportable forecasting of current expected credit losses, the Corporation 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 forecast, and the widespread familiarity of these economic metrics.

The regression model utilized upon implementation of CECL and as of June 30, 2025 and 2024, based on 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 looking 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 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.

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● 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 Corporation’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.

The qualitative portion of the Corporation’s allowance on collectively evaluated loans are calculated using management’s 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, as determined by management’s judgment.

PROVIDENT FINANCIAL HOLDINGS, INC.

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The Corporation 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 it is 90 days or more delinquent.

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

Pursuant to ASU 2022-02, “Troubled Debt Restructurings and Vintage Disclosures,” the Corporation may agree to different types of modifications, including principal forgiveness, interest rate reductions, term extension, significant payment delay or any combination of modifications noted above.

During the fiscal year ended June 30, 2024, there were no loan modifications to borrowers experiencing financial difficulties.

During the fiscal years ended June 30, 2025 and 2024, there were no loan modifications to borrowers experiencing financial difficulties.

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.

1 unchanged sentence

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.

Non-performing loans are charged-off to their fair market values in the period the loans, or portions thereof, are deemed uncollectible.

This generally occurs 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, re-underwritten and identified as modified loans, the charge-off occurs when the loan becomes 90 days delinquent.

In cases 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 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.

9 unchanged sentences

ACL, beginning of period

Adjustment to ACL for adoption of ASC 326

(Recovery of) provision for credit losses

14 unchanged sentences

ACL, beginning of period

Provision for (recovery of) credit losses

Adjustment to ACL for adoption of ASC 326

(Recovery of) provision for credit losses

ACL, end of period

15 unchanged sentences

Adjustment to ACL for adoption of ASC 326

(Recovery of) provision for credit losses

Recovery of credit losses

Balance, end of year

12 unchanged sentences

Total single-family loans

Multi-family:

Without a related allowance (2)

Total multi-family loans

Commercial real estate:

Without a related allowance (2)

Total commercial real estate loans

Total non-performing loans

1 unchanged sentence

(2) There was no related ACL because the loans were charged-off to their fair value or the fair value of the collateral was higher than the loan balance.

PROVIDENT FINANCIAL HOLDINGS, INC.

Notes to Consolidated Financial Statements

At or For the Year Ended June 30, 2024

8 unchanged sentences

(2) There was no related ACL because the loans were charged-off to their fair value or the fair value of the collateral was higher than the loan balance.

PROVIDENT FINANCIAL HOLDINGS, INC.

Notes to Consolidated Financial Statements

At June 30, 2025 and 2024, there were no commitments to lend additional funds to those borrowers whose loans were classified as non-performing.

During the fiscal years ended June 30, 2024 and 2023, the Corporation’s average investment in non-performing loans was $ 2.1 million and $ 1.1 million, respectively.

During both fiscal years ended June 30, 2025 and 2024, the Corporation’s average non-performing loans was $ 2.1 million.

The Corporation records payments on non-performing loans utilizing the cash basis or cost recovery method of accounting during the periods when the loans are on non-performing status.

For the fiscal year ended June 30, 2024, the Corporation received $ 119,000 in interest payments from non-performing loans, all of which was recognized as interest income and none was applied to reduce the loan balances under the cost recovery method.

In comparison, for the fiscal year ended June 30, 2023, the Bank received $ 49,000 in interest payments from non-performing loans, of which $ 42,000 was recognized as interest income.

The remaining $ 7,000 was applied to reduce the loan balances under the cost recovery method.

As outlined in the implementation of ASC 326, the Bank includes the off-balance sheet reserve for unfunded loan commitments within the provision for (recovery of) credit losses.

For the fiscal year ended June 30, 2025, the Corporation received $ 242,000 in interest payments from non-performing loans, all of which was recognized as interest income under cash basis and none was applied to reduce the loan balances under the cost recovery method.

In comparison, for the fiscal year ended June 30, 2024, the Bank received $ 119,000 in interest payments from non-performing loans, all of which was recognized as interest income under cash basis and none was applied to reduce the loan balances under the cost recovery method.

Since the implementation of ASC 326, the Bank includes the off-balance sheet reserve for unfunded loan commitments within the provision for (recovery of) credit losses.

The following table provides information regarding the unfunded loan commitment reserve for the fiscal years ended June 30, 2025 and 2024:

1 unchanged sentence

Balance, beginning of the year

Impact of ASC 326 CECL adoption

Provision for (recovery of) credit losses

(Recovery of) provision for credit losses

Balance, end of the year

The method for calculating the unfunded commitment reserve is based on a historical funding rate applied to the undisbursed loan amount to estimate an average outstanding amount during the life of the loan commitment.

The Corporation applies the same assumptions and methodologies by loan groupings to these unfunded loan commitments as it does for its funded loans held for investment to determine the reserve rate and the allowance.

Assumptions are evaluated by management periodically as part of the CECL procedures.

The method for calculating the unfunded loan commitment reserve is based on a historical funding rate applied to the undisbursed loan amount to estimate an average outstanding amount during the life of the loan commitment.

The Corporation applies the same assumptions and methodologies to both unfunded loan commitments and funded loans held for investment, grouped by loan category, to determine the reserve rate and allowance.

These assumptions are evaluated by management periodically as part of the CECL procedures.

The unfunded loan commitment reserve is recorded in accounts payable, accrued interest and other liabilities in the Consolidated Statements of Financial Condition.

PROVIDENT FINANCIAL HOLDINGS, INC.

Notes to Consolidated Financial Statements

The following tables provide information on the past due status of the Corporation’s loans held for investment, gross, at the dates indicated:

12 unchanged sentences

(1) All loans 90 days or greater past due are placed on non-accrual status.

PROVIDENT FINANCIAL HOLDINGS, INC.

Notes to Consolidated Financial Statements

June 30, 2024

12 unchanged sentences

In the ordinary course of business, the Bank may offer loans to its directors, officers and employees on substantially the same terms prevailing at the time of origination for comparable transactions with unaffiliated borrowers.

During fiscal 2024 and 2023, there were no related-party loan activities and as of June 30, 2024 and 2023, there were no outstanding related-party loans.

The Corporation accounts for its leases in accordance with ASC 842, which was implemented on July 1, 2019, and requires the Corporation to record liabilities for future lease obligations as well as assets representing the right to use the underlying leased assets.

During fiscal 2025 and 2024, there were no related-party loan transactions and as of June 30, 2025 and 2024, there were no outstanding related-party loans.

The Corporation accounts for its leases in accordance with ASC 842, which requires the Corporation to record liabilities for future lease obligations as well as assets representing the right to use the underlying leased assets.

The Corporation's leases primarily represent future obligations to make payments for the use of buildings, space or equipment for its operations.

Liabilities to make future lease payments are recorded in accounts payable, accrued interest and other liabilities, while right-of-use assets are recorded in premises and equipment in the Consolidated Statements of Financial Condition.

At June 30, 2024, all the Corporation’s leases were classified as operating leases and the Corporation did not have any operating leases with an initial term of 12 months or less (“short-term leases”).

Liabilities to make future lease payments and right-of-use assets are recorded for operating leases and do not include short-term leases.

These liabilities and right-of-use assets are determined based on the total contractual base rents for each lease, which include options to extend or renew each lease, where applicable, and where the Corporation believes it has an economic incentive to extend or renew the lease.

Since lease extensions are not reasonably certain, the Corporation generally does not recognize payments occurring during option periods in the calculation of its operating right-of-use lease assets and operating lease liabilities.

The Bank utilizes the FHLB - San Francisco interest rates as a discount rate for each of the remaining contractual terms at the adoption date as well as for future leases if the discount rate is not stated in the lease.

Liabilities to make future lease payments are recorded in accounts payable, accrued interest and other liabilities for operating leases, and borrowings for finance leases, while right-of-use assets are recorded in premises and equipment in the Corporation’s Consolidated Statements of Financial Condition.

At June 30, 2025 and 2024, the Corporation's leases were classified as operating leases and finance leases;

and the Corporation did not have any operating or finance leases with an initial term of 12 months or less ("short-term leases").

Liabilities to make future lease payments and right-of-use assets are recorded for operating leases and finance leases and do not include short-term leases.

These liabilities and right-of-use assets are determined based on the total contractual base

PROVIDENT FINANCIAL HOLDINGS, INC.

Notes to Consolidated Financial Statements

rents for each lease, which include options to extend or renew each lease, where applicable, and where the Corporation believes it has an economic incentive to extend or renew the lease.

Since lease extensions are not reasonably certain, the Corporation generally does not recognize payments occurring during option periods in the calculation of its right-of-use lease assets and lease liabilities.

The Corporation utilizes the FHLB – San Francisco rates as a discount rate for each of the remaining contractual terms at the adoption date as well as for future leases if the discount rate is not stated in the lease.

For leases that contain variable lease payments, the Corporation assumes future lease payment escalations based on a lease payment escalation rate specified in the lease or the specified index rate observed at the time of lease commencement.

Liabilities to make future lease payments are accounted for using the interest method, being reduced by periodic contractual lease payments net of periodic interest accretion.

Right-of-use assets for operating leases are amortized over the term of the associated lease by amounts that represent the difference between periodic straight-line lease expense and periodic interest accretion in the related liability to make future lease payments.

For the fiscal years ended June 30, 2024 and 2023, expenses associated with the Corporation’s leases totaled $ 927,000 and $ 882,000 , respectively, and were recorded in premises and occupancy expenses and equipment expenses in the Consolidated Statements of Operations.

Right-of-use assets for operating leases are amortized over the lease term in amounts that represent the difference between straight-line lease expense and interest accretion on the related liability.

For finance leases, right-of-use assets are amortized on a straight-line basis over the useful life of the underlying asset, while interest accretion on the lease liability is recognized as interest expense in the Corporation’s Consolidated Statements of Operations.

For the fiscal years ended June 30, 2025 and 2024, expenses associated with the Corporation’s leases totaled $ 774,000 , and $ 927,000 , respectively.

Expenses associated with the Corporation’s leases are recorded in either premises and occupancy or equipment expense for operating leases;

while for finance leases, expenses are recorded in equipment expense and interest expense on borrowings, as applicable, in the Consolidated Statements of Operations.

PROVIDENT FINANCIAL HOLDINGS, INC.

Notes to Consolidated Financial Statements

The following table presents supplemental information related to operating leases at the date and for the years indicated:

The following tables present supplemental information related to leases at the dates and for the years indicated.

As of June 30,

1 unchanged sentence

Consolidated Statements of Condition:

Operating Leases:

Premises and equipment - Operating lease right of use assets

Accounts payable, accrued interest and other liabilities – Operating lease liabilities

Finance Leases:

Premises and equipment at cost

Accumulated amortization

Premises and equipment - Finance lease right-of-use assets

Borrowings - Finance lease liabilities

Year Ended June 30,

Consolidated Statements of Operations:

Operating lease expense:

Premises and occupancy expenses from operating leases (1)

Equipment expenses from operating leases (1)

Total operating lease expense

Finance lease expense:

Equipment expenses from finance leases (1)

Interest on finance lease liabilities

Total finance lease expense

Total lease expense

Consolidated Statements of Cash Flows:

Operating cash flows from operating leases, net

(1) Includes immaterial variable lease costs.

Year Ended June 30,

Consolidated Statements of Cash Flows:

Operating cash used for operating leases, net

Operating cash used for finance leases, net

Financing cash used for finance leases, net

Right-of-use assets obtained in exchange for lease obligations:

Operating leases

Finance leases

PROVIDENT FINANCIAL HOLDINGS, INC.

Notes to Consolidated Financial Statements

The following table provides information related to remaining minimum contractual lease payments and other information associated with the Corporation’s leases as of June 30, 2025:

Operating Leases

Finance Leases

Year Ending June 30,

(In Thousands)

Total contract lease payments

4 unchanged sentences

(1) Contractual base rents do not include property taxes and other operating expenses due under respective lease agreements.

PROVIDENT FINANCIAL HOLDINGS, INC.

Notes to Consolidated Financial Statements

Premises and Equipment

4 unchanged sentences

Operating lease right of use assets (1)

Finance lease right of use assets (1)

Less accumulated depreciation and amortization

1 unchanged sentence

Net of accumulated amortization.

Depreciation and amortization expense for the fiscal years ended June 30, 2024 and 2023 amounted to $ 1.6 million and $ 1.4 million, respectively.

For both fiscal years ended June 30, 2025 and 2024, the depreciation and amortization expense was $ 1.6 million.

PROVIDENT FINANCIAL HOLDINGS, INC.

Notes to Consolidated Financial Statements

Deposits at June 30, 2025 and 2024 consisted of the following:

24 unchanged sentences

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

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

(3) 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 aggregate annual maturities of time deposits at June 30, 2025 and 2024 were as follows:

7 unchanged sentences

Total time deposits

PROVIDENT FINANCIAL HOLDINGS, INC.

Notes to Consolidated Financial Statements

Interest expense on deposits for the years indicated is summarized as follows:

9 unchanged sentences

overdrafts) that were reclassified to loans held for investment totaled $ 17,000 and $ 24,000 , respectively.

The Bank is required to maintain reserve balances with the Federal Reserve Bank of San Francisco.

Effective March 26, 2020, the FRB lowered the reserve ratios on transaction accounts maintained at a depository institution to zero percent so there was no required reserve balance at June 30, 2024 and 2023.

As of June 30, 2024, the Bank’s FHLB – San Francisco maximum borrowing capacity was approximately $ 516.0 million, which is limited to 40 % of total assets reported on the Bank’s quarterly Call Report.

This borrowing capacity was collateralized by pledges of certain real estate loans with an aggregate loan balance of $ 774.1 million and investment securities of $ 3.9 million.

The Bank generally is required to maintain reserve balances with the FRB, however, effective March 26, 2020, the FRB lowered the reserve ratios on transaction accounts maintained at a depository institution to zero percent, as such there was no required reserve balance at June 30, 2025 and 2024.

As of June 30, 2025, the Bank’s FHLB – San Francisco maximum borrowing capacity was approximately $ 504.1 million, which is limited to 40 % of total assets reported on the Bank’s March 31, 2025 Call Report.

This borrowing capacity was collateralized by pledges of certain real estate loans with an aggregate loan balance of $ 734.4 million and investment

PROVIDENT FINANCIAL HOLDINGS, INC.

Notes to Consolidated Financial Statements

securities of $ 4.7 million.

As of June 30, 2025, the Bank’s borrowings from the FHLB – San Francisco were $ 213.0 million, with varying maturity dates through the year 2028.

In addition, the Bank utilizes its borrowing facility for letters of credit and for the Mortgage Partnership Finance (“MPF”) program credit enhancement.

The outstanding letters of credit was $ 16.0 million and the outstanding MPF credit enhancement was $ 216,000 at June 30, 2024.

The outstanding letters of credit were $ 8.5 million and the outstanding MPF credit enhancement was $ 216,000 at June 30, 2025.

As of June 30, 2025, the remaining borrowing capacity with the FHLB – San Francisco was $ 282.3 million.

1 unchanged sentence

This borrowing capacity was collateralized by pledges of certain real estate loans with an aggregate loan balance of $ 774.1 million and investment securities of $ 3.9 million.

As of June 30, 2023, the Bank’s borrowings from the FHLB – San Francisco were $ 235.0 million, with varying maturity dates through the year 2028.

As of June 30, 2024, the Bank’s borrowings from the FHLB – San Francisco were $ 238.5 million, with varying maturity dates through the calendar year 2028.

In addition, the Bank utilizes its borrowing facility for letters of credit and for the MPF program credit enhancement.

1 unchanged sentence

As of June 30, 2024, the remaining borrowing capacity with FHLB – San Francisco was $ 261.3 million.

In addition, as of June 30, 2024 and 2023, the Bank had $ 208.6 million and $ 139.0 million of borrowing capacity available from the discount window facility at the FRB of San Francisco, respectively, collateralized by investment securities and loans held for investment at June 30, 2024 and collateralized by investment securities only at June 30, 2023.

As of June 30, 2024 and 2023, the Bank also had a borrowing arrangement in the form of a federal funds facility with its correspondent bank for $ 50.0 million at both dates.

The Bank intends to request a renewal of its borrowing arrangement with the correspondent bank prior to maturity on June 30, 2025.

In addition, as of June 30, 2025 and 2024, the Bank had $ 142.5 million and $ 208.6 million of borrowing capacity available from the discount window facility at the FRB of San Francisco, respectively, collateralized by investment securities of $ 24.8 million and $ 126.6 million, and loans held for investment of $ 227.0 million and $ 178.6 million, respectively.

As of both June 30, 2025 and 2024, the Bank also had a borrowing arrangement in the form of a federal funds facility with its correspondent bank for $ 50.0 million.

The Bank intends to request a renewal of its borrowing arrangement with the correspondent bank prior to maturity on March 31, 2026.

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

2 unchanged sentences

FHLB - San Francisco advances

Other borrowings on finance leases

Total borrowings

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

At June 30, 2024 and 2023, the Bank held a stock investment of $ 9.6 million and $ 9.5 million, respectively, with no excess capital stock.

At both June 30, 2025 and 2024, the Bank held a stock investment of $ 9.6 million, with no excess capital stock.

During fiscal 2025, the Bank did no t purchase any FHLB – San Francisco capital stock;

while during fiscal 2024, the Bank purchased $ 63,000 of FHLB - San Francisco capital stock.

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

PROVIDENT FINANCIAL HOLDINGS, INC.

Notes to Consolidated Financial Statements

During fiscal 2024 and 2023, the Bank purchased $ 63,000 and $ 1.3 million of FHLB - San Francisco capital stock, respectively.

In fiscal 2024 and 2023, the FHLB – San Francisco distributed $ 793,000 and $ 556,000 of cash dividends, respectively, to the Bank.

The following tables set forth certain information regarding borrowings by the Bank at the dates and for the years indicated:

3 unchanged sentences

FHLB - San Francisco advances

Other borrowings on finance leases

Weighted average rate at the end of year:

FHLB - San Francisco advances

Other borrowings on finance leases

Maximum amount of borrowings outstanding at any month end:

FHLB - San Francisco advances

Other borrowings on finance leases

Average short-term borrowings during the year with respect to:

16 unchanged sentences

Management has determined that there were no unrecognized tax benefits to be reported in the Corporation’s consolidated financial statements for the fiscal years ended June 30, 2025 and 2024.

Under generally accepted accounting principles, the Corporation uses the asset and liability method of accounting for income taxes.

Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their

Under GAAP, the Corporation uses the asset and liability method of accounting for income taxes.

Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.

PROVIDENT FINANCIAL HOLDINGS, INC.

Notes to Consolidated Financial Statements

respective tax bases.

Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.

The Corporation’s effective tax rate may differ from the estimated statutory tax rates described above due to discrete items such as further adjustments to net deferred tax assets, excess tax benefits derived from stock option exercises and non-taxable earnings from bank owned life insurance, among other items.

The Corporation utilizes the asset and liability method of accounting for income taxes whereby deferred tax assets are recognized for deductible temporary differences and tax credit carryforwards and deferred tax liabilities are recognized for taxable temporary differences.

The Corporation’s effective tax rate may differ from the estimated statutory tax rates described above due to discrete items such as further adjustments to net deferred tax assets and liabilities, excess tax benefits derived from stock option exercises and non-taxable earnings from bank owned life insurance, among other items.

Under the asset and liability method of accounting for income taxes, deferred tax assets are recognized for deductible temporary differences and tax credit carryforwards and deferred tax liabilities are recognized for taxable temporary differences.

Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases.

15 unchanged sentences

Non-deductible expenses

Non-deductible stock-based compensation

Shortfall on stock-based compensation

3 unchanged sentences

Notes to Consolidated Financial Statements

Deferred tax assets at June 30, 2024 and 2023 by jurisdiction were as follows:

Deferred tax (liabilities) assets at June 30, 2025 and 2024 by jurisdiction were as follows:

(In Thousands)

1 unchanged sentence

Deferred taxes - state

Total net deferred tax assets

Net deferred tax assets at June 30, 2024 and 2023 were comprised of the following:

Total deferred tax (liabilities) assets

Net deferred tax (liabilities) assets at June 30, 2025 and 2024 were comprised of the following:

(In Thousands)

8 unchanged sentences

Prepaid expenses

Unrealized gain on investment securities

Unrealized gain on interest-only strips

Unrealized gain on other equity investments

Right-of-use asset

1 unchanged sentence

Total deferred tax liabilities

Net deferred tax assets

The net deferred tax assets were included in prepaid expenses and other assets in the Consolidated Statements of Financial Condition.

The Corporation analyzes the deferred tax assets to determine whether a valuation allowance is required based on the more-likely-than-not criteria that such assets will be realized principally through future taxable income.

Net deferred tax (liabilities) assets

The net deferred tax assets were included in prepaid expenses and other assets, while the net deferred tax liabilities were included in accounts payable, accrued interest and other liabilities in the Consolidated Statements of Financial Condition.

This criteria takes into account the actual earnings and the estimates of future profitability.

1 unchanged sentence

At June 30, 2025 and 2024, the Corporation had no federal and state net tax loss carryforwards.

Based on management’s consideration of historical and anticipated future income before income taxes, as well as the reversal period for the items giving rise to the deferred tax assets and liabilities, a valuation allowance was not considered necessary at June 30, 2024 and 2023 and management believes it is more likely than not the Corporation will realize its deferred tax asset.

Based on management’s consideration of historical and anticipated future income before income taxes, as well as the reversal period for the items giving rise to the deferred tax assets and liabilities, a valuation allowance was not considered necessary at June 30, 2025 and 2024 and management believes it is more likely than not the Corporation will realize its deferred tax assets (liabilities).

Retained earnings at June 30, 2025 and 2024 include approximately $ 9.0 million (pre-1988 bad debt reserve for tax purposes) for which federal income tax of $ 3.1 million has not been provided.

2 unchanged sentences

The Corporation files income tax returns for the United States and California jurisdictions.

The Internal Revenue Service has audited the Bank’s income tax returns through 1996 and the California Franchise Tax Board has audited the Bank through 1990.

Also, the Internal Revenue Service completed a review of the Corporation’s income tax returns for fiscal 2006 and 2007;

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

The Internal Revenue Service has audited the Bank’s income tax returns through 1996 and the California Franchise Tax Board (“CFTB”) has audited the

PROVIDENT FINANCIAL HOLDINGS, INC.

Notes to Consolidated Financial Statements

fiscal 2009 and 2010.

Bank through 1990.

Also, the Internal Revenue Service completed a review of the Corporation’s income tax returns for fiscal 2006 and 2007;

and the CFTB completed a review of the Corporation’s income tax returns for fiscal 2009 and 2010.

Fiscal years 2023 and thereafter remain subject to federal examination, while the California state tax returns for fiscal years 2022 and thereafter are subject to examination by state taxing authorities.

In April 2025, the CFTB initiated a tax examination of the Corporation’s returns for fiscal years 2021 and 2022.

As of June 30, 2025, all requested documents have been provided to the CFTB, and the Corporation is currently in discussions regarding the potential outcome of this examination.

While the Corporation believes that its tax positions are fully supported, any adjustment resulting from ongoing audits or reviews could have a material impact on its financial position, results of operations, or cash flows.

The Corporation continues to evaluate the potential outcomes of the audits and related exposure to uncertain tax positions.

It is the Corporation’s policy to record any penalties or interest charges arising from federal or state taxes as a component of income tax expense.

1 unchanged sentence

The Bank is subject to various regulatory capital requirements administered by the federal banking agencies.

Failure to meet minimum capital requirements can initiate certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the Corporation’s financial statements.

Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Bank must meet specific capital guidelines that involve quantitative measures of the Bank’s assets, liabilities and certain off-balance-sheet items as calculated under regulatory accounting practices.

The Bank’s capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings and other factors.

These capital regulations define the types of capital that qualify for meeting these requirements.

Failure to meet the minimum capital requirements may trigger certain mandatory actions, and possibly additional discretionary actions, by regulators.

Such actions, if taken, could materially affect the Corporation’s financial condition and results of operations.

Under the capital adequacy guidelines and the regulatory framework for prompt corrective action, the Bank must comply with specific capital guidelines that are based on quantitative measures of the Bank’s assets, liabilities, and certain off-balance-sheet items, as calculated under regulatory accounting practices.

Additionally, the Bank’s capital amounts and classification are subject to qualitative assessments by regulators, who evaluate factors such as component composition, risk weightings, and other relevant considerations.

For a bank holding company such as the Corporation with less than $3.0 billion in assets, the capital guidelines apply on a bank only basis.

1 unchanged sentence

If the Corporation was subject to regulatory guidelines for bank holding companies at June 30, 2025, it would have exceeded all regulatory capital requirements.

The Bank is subject to capital regulations which establish minimum required capital ratios for Tier 1 leverage, common equity Tier 1 (“CET1”), Tier 1 risk-based and total risk-based capital.

Additionally, a capital conservation buffer is required over the required minimum capital ratios, and capital regulations also defines what qualifies as capital for purposes of meeting the capital requirements.

Failure to meet minimum requirements can initiate certain mandatory and possibly additional discretionary actions by bank regulators that, if undertaken, could have a direct material effect on the Corporation’s financial statements.

In addition to the minimum capital ratios, the Bank must maintain a capital conservation buffer consisting of additional CET1 capital greater than 2.5 % above the required minimum levels in order to avoid limitations on paying dividends, engaging in share repurchases, and paying discretionary bonuses based on percentages of eligible retained income that could be utilized for such actions.

The Bank is subject to capital regulations that establish minimum required capital ratios for Tier 1 leverage, common equity Tier 1 (“CET1”), Tier 1 risk-based and total risk-based capital.

Additionally, a capital conservation buffer of 2.5% is required above the minimum capital ratios for the CET1, Tier 1 risk-based, and total risk-based capital ratios.

Failure to maintain a minimum capital conservation buffer of 2.5% may result in limitations on the Corporation’s ability to pay dividends, engage in share repurchases, and pay discretionary bonuses based on percentages of eligible retained income that could be utilized for such actions.

PROVIDENT FINANCIAL HOLDINGS, INC.

18 unchanged sentences

(1) Inclusive of the conservation buffer of 2.50 % for CET1 capital, Tier 1 capital and Total capital ratios .

(2) The Bank elected to recognize the full $ 824 thousand adjustment to retained earnings resulting from the adoption of CECL on July 1, 2023 instead of over the permitted three-year phase-in option .

(2) The Bank elected to recognize the full $ 824 thousand adjustment to retained earnings resulting from the adoption of CECL on July 1, 2023 rather than electing the permissible three-year phase-in option .

At June 30, 2025, the Bank exceeded all regulatory capital requirements.

The Bank was categorized as "well-capitalized" at June 30, 2025 under the regulations of the Office of the Comptroller of the Currency (“OCC”).

The ability of Provident Financial Holdings to pay dividends to stockholders depends primarily on the ability of the Bank to pay dividends to Provident Financial Holdings.

The ability of the Corporation to pay dividends to stockholders depends primarily on the ability of the Bank to pay dividends to Provident Financial Holdings.

Provident Financial Holdings and the Bank may not declare or pay cash dividends on or repurchase any of its shares of common stock, if the effect would cause stockholders’ equity to be reduced below applicable regulatory capital maintenance requirements or if such declaration and payment would otherwise violate regulatory requirements.

1 unchanged sentence

However, an institution deemed to be in need of more than normal supervision or classified as troubled condition by the OCC may have its dividend authority restricted by the OCC.

If the Bank, however, proposes to make a capital distribution when it does not meet its capital requirements (or will not following the proposed capital distribution) or that will exceed the net income-based limitations, it must obtain the OCC's approval prior to making such distribution.

In addition, the Bank must file a prior written notice of a dividend with the FRB.

In addition, the Bank must file a prior written notice of a capital distribution with the FRB and OCC.

The FRB or the OCC may object to a capital distribution based on safety and soundness concerns.

Additional restrictions on Bank dividends may apply if the Bank fails the Qualified Thrift Lender test.

In fiscal 2024 and 2023, the Bank declared and paid $ 7.0 million and $ 9.5 million of cash dividends to its parent, Provident Financial Holdings, respectively.

In fiscal 2025 and 2024, the Bank declared and paid cash dividends of $ 9.0 million and $ 7.0 million, respectively, to its parent, Provident Financial Holdings.

Benefit Plans

1 unchanged sentence

Under the plan, employees may contribute to the plan from their pretax compensation up to the limits set by the Internal Revenue Service.

The Corporation makes matching contributions up to 3 % of a participants’ pretax compensation.

Participants vest immediately in their own contributions with 100 % vesting in the Corporation’s

The Corporation makes matching contributions up to 3 % of a participants’ pretax

PROVIDENT FINANCIAL HOLDINGS, INC.

Notes to Consolidated Financial Statements

contributions occurring after six years of credited service.

compensation.

Participants vest immediately in their own contributions with 100 % vesting in the Corporation’s contributions occurring after six years of credited service.

The Corporation’s expense for the plan was approximately $ 276,000 and $ 303,000 for the fiscal years ended June 30, 2025 and 2024, respectively.

The Corporation has a multi-year employment agreement and a post-retirement compensation agreement with one executive officer.

In addition, the Corporation has a transition agreement and a post-retirement compensation agreement with the previous executive officer (currently the Chairman of the Board of Directors).

At June 30, 2024 and 2023, the accrued liability of the post-retirement compensation agreements was $ 5.7 million at both dates;

any costs (recoveries) are being accrued and expensed quarterly.

In fiscal 2024, the increase in the discount rate and a lower life expectancy was offset by a higher current compensation.

For fiscal 2024 and 2023, the accrued expense (recovery) for these liabilities was $ 85,000 and $( 1.1 million), respectively.

In addition, the Corporation has a transition agreement with the previous executive officer (currently the non-executive Chairman of the Board of Directors).

At June 30, 2025 and 2024, the accrued liabilities of the post-retirement compensation agreements were $ 3.3 million and $ 5.7 million, respectively, with any costs (or recoveries) being accrued and expensed quarterly.

In July 2024, the Corporation paid the post-retirement compensation benefit to the previous executive officer.

For fiscal 2025 and 2024, the accrued expense (or recovery) for these liabilities was $ 178,000 and $ 85,000 , respectively.

The current obligation for these post-retirement benefits was fully funded consistent with contractual requirements and actuarially determined estimates of the total future obligation.

1 unchanged sentence

As of June 30, 2025 and 2024, the total outstanding cash surrender value of the BOLI was $ 8.7 million and $ 8.6 million, respectively.

For fiscal 2024 and 2023, total BOLI non-taxable income, net of mortality cost, was $ 186,000 for both periods.

Employee Stock Ownership Plan

For fiscal 2025 and 2024, total BOLI non-taxable income, net of mortality cost, was $ 184,000 and $ 186,000 , respectively.

Employee Stock Ownership Plan (“ESOP”)

The Corporation established an ESOP on June 27, 1996 for all employees who are age 21 or older and have completed one year of service with the Corporation during which they have served a minimum of 1,000 hours.

8 unchanged sentences

The net expense related to the ESOP for the fiscal years ended June 30, 2025 and 2024, was $ 592,000 and $ 540,000 , respectively.

Available shares and cash contributions, if any, are allocated every calendar year end.

The total ESOP allocation for calendar 2023 was 40,000 shares, as compared to 20,000 shares and $ 317,000 of cash contributions for calendar 2022.

Shares and cash contributions, if any, are allocated at the end of each calendar year.

For the calendar years 2024 and 2023, the total ESOP allocation was 40,000 shares for each period.

Incentive Plans

4 unchanged sentences

and the 2006 Equity Incentive Plan (“2006 Plan”), collectively, the “Plans”.

For the fiscal years ended June 30, 2024 and 2023, the compensation cost for the Plans was $ 240,000 and $ 1.2 million, respectively.

For the fiscal years ended June 30, 2025 and 2024, the compensation cost for the Plans was $ 543,000 and $ 240,000 , respectively.

Equity Incentive Plans.

8 unchanged sentences

Equity Incentive Plans - Stock Options.

Under the Plans, options may not be granted at a price less than the fair market value at the date of the grant.

Options typically vest over a five-year or shorter period as long as the director, advisory

Under the Plans, options may not be granted at a price not less than the fair market value at the date of the grant.

Options typically vest over a five-year or shorter period as long as the director,

PROVIDENT FINANCIAL HOLDINGS, INC.

Notes to Consolidated Financial Statements

director, director emeritus, officer or employee remains in service to the Corporation.

advisory director, director emeritus, officer or employee remains in service to the Corporation.

The options are exercisable after vesting for up to the remaining term of the original grant.

8 unchanged sentences

23.4 % - 23.6 %

21.6 % - 22.9 %

Weighted average volatility

Expected dividend yield

3.4 % - 3.7 %

Expected term (in years)

Risk-free interest rate

As of June 30, 2024, there were 77,000 options available for future grants under the 2022 Plan.

As of June 30, 2023, there were 175,000 options available for future grants under the 2022 Plan and 21,000 options available for future grants under the 2013 Plan.

4.3 % - 4.5 %

As of June 30, 2025 and 2024, there were 45,000 options and 77,000 options available for future grants under the 2022 Plan, respectively.

The following tables summarize the stock option activity in the Plans during the fiscal years ended June 30, 2025 and 2024.

9 unchanged sentences

The expense is expected to be recognized over a weighted average period of 3.7 years and 3.5 years, respectively.

The forfeiture rate during fiscal 2024 and 2023 was 15 % and 20 %, respectively, and was calculated by using the historical forfeiture experience of all fully vested stock option grants which is reviewed annually.

PROVIDENT FINANCIAL HOLDINGS, INC.

Notes to Consolidated Financial Statements

The forfeiture rate during both fiscal 2025 and 2024 was 15 %, and was calculated by using the historical forfeiture experience of all fully vested stock option grants which is reviewed annually.

Equity Incentive Plans – Restricted Stock.

Awarded shares typically vest over a five-year or shorter period as long as the director, advisory director, director emeriti, officer or employee remains in service to the Corporation.

Once vested, a recipient of restricted stock will have all rights of a shareholder, including the power to vote and the right to receive dividends.

Once vested, a

PROVIDENT FINANCIAL HOLDINGS, INC.

Notes to Consolidated Financial Statements

recipient of restricted stock will have all rights of a shareholder, including the power to vote and the right to receive dividends.

The Corporation recognizes compensation expense for the restricted stock awards based on the fair value of the shares at the award date.

As of June 30, 2024, there were 69,000 shares available for future awards under the 2022 Plan.

As of June 30, 2023, there were 200,000 shares available for future awards under the 2022 Plan and 18,250 shares available for future awards under the 2013 Plan.

As of June 30, 2025 and 2024, there were 74,000 shares and 69,000 shares available for future awards under the 2022 Plan, respectively.

The following table summarizes the restricted stock activity for the fiscal years ended June 30, 2025 and 2024.

7 unchanged sentences

Expected to vest at June 30, 2025

As of June 30, 2024 and 2023, the unrecognized compensation expense was $ 1.8 million and $ 544,000 , respectively, related to unvested share-based compensation arrangements with respect to restricted stock issued under the Plans, and reported as a reduction to stockholders’ equity.

As of June 30, 2025 and 2024, the unrecognized compensation expense was $ 1.3 million and $ 1.8 million, respectively, related to unvested share-based compensation arrangements with respect to restricted stock issued under the Plans, and reported as a reduction to stockholders’ equity.

This expense is expected to be recognized over a weighted average period of 2.8 years and 3.5 years, respectively.

Similar to stock options, a forfeiture rate of 15 % and 20 % was applied to the restricted stock compensation expense calculations in fiscal 2024 and 2023, respectively.

For the fiscal years ended June 30, 2024 and 2023, the fair value of shares vested and distributed was $ 24,000 and $ 1.1 million, respectively.

Similar to stock options, a forfeiture rate of 15 % was applied to the restricted stock compensation expense calculations in both fiscal 2025 and 2024, respectively.

For the fiscal years ended June 30, 2025 and 2024, the fair value of shares vested and distributed was $ 315,000 and $ 24,000 , respectively.

Earnings Per Share

5 unchanged sentences

Notes to Consolidated Financial Statements

The following table provides the basic and diluted EPS computations for the fiscal years ended June 30, 2024 and 2023, respectively:

The following tables provide the basic and diluted EPS computations for the fiscal years ended June 30, 2025 and 2024.

For the Year Ended June 30, 2025

15 unchanged sentences

The Corporation is not a party to any pending legal proceedings that it believes would have a material adverse effect on its financial condition, operations or cash flows.

The Corporation conducts a portion of its operations in leased facilities and has maintenance contracts under non-cancelable agreements classified as operating leases, which include leases recorded under ASC 842 on liabilities for future lease obligations as well as assets representing the right-to-use the underlying leased assets (See Note 4 of the Notes to Consolidated Financial Statements).

The Corporation conducts a portion of its operations in leased facilities and has maintenance contracts under non-cancelable agreements classified as operating or finance leases, which include leases recorded under ASC 842 on liabilities for future lease obligations as well as assets representing the right-to-use the underlying leased assets (See Note 4 of the Notes to Consolidated Financial Statements).

The following is a schedule of the Corporation’s lease and operating commitments:

8 unchanged sentences

In the event of a borrower default or fraud, pursuant to a breached representation or warranty, the Bank may be required to reimburse the investor for any losses suffered.

During fiscal 2025 and 2024, the Bank did not repurchase any loans.

As of June 30, 2025 and 2024, the Bank maintained a non-contingent recourse liability related to these representations and warranties of $ 17,000 and $ 18,000 , respectively.

In addition, the Bank maintained a recourse liability of $ 8,000 at both June 30, 2024 and 2023 for loans sold to the FHLB – San Francisco under the MPF program.

In addition, the Bank maintained a recourse liability of $ 6,000 and $ 8,000 , respectively, for loans sold to the FHLB – San Francisco under the MPF program.

In the ordinary course of business, the Corporation enters into contracts with third parties under which the third parties provide services on behalf of the Corporation.

4 unchanged sentences

Due to the nature of these indemnification provisions, the Corporation cannot calculate its aggregate potential exposure.

Pursuant to their governing instruments, the Corporation and its subsidiaries provide indemnification to directors, officers, employees and, in some cases, agents of the Corporation against certain liabilities incurred as a result of their service on behalf of or at the request of the Corporation and its subsidiaries.

It is not possible for the Corporation to determine the aggregate potential exposure resulting from the obligation to provide this indemnity.

Derivative and Other Financial Instruments with Off-Balance Sheet Risks

5 unchanged sentences

As of June 30, 2025 and 2024, the Corporation had commitments to extend credit on loans to be held for investment of $ 6.1 million and $ 9.4 million, respectively.

The following table provides information at the dates indicated regarding undisbursed funds to borrowers on existing lines of credit with the Corporation as well as commitments to originate loans to be held for investment at the dates indicated below:

The following table provides information at the dates indicated regarding undisbursed loan funds, undisbursed funds to borrowers on existing lines of credit with the Corporation and commitments to originate loans to be held for investment at the dates indicated below:

(In Thousands)

Undisbursed loan funds – Construction loans

Undisbursed loan funds – Single-family loans (1)

Undisbursed lines of credit – Mortgage loans

Undisbursed lines of credit – Commercial business loans

1 unchanged sentence

Commitments to extend credit on loans to be held for investment

PROVIDENT FINANCIAL HOLDINGS, INC.

Notes to Consolidated Financial Statements

(1) Consists of undisbursed loan funds of previously reported construction loans that were converted to single-family loans based on their contractual terms.

Fair Value of Financial Instruments

1 unchanged sentence

ASC 820 defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements.

ASC 825 permits entities to elect to measure many financial instruments and certain other assets and liabilities at fair value on an instrument-by-instrument basis (the “Fair Value Option”) at specified election dates.

ASC 825 permits entities to

PROVIDENT FINANCIAL HOLDINGS, INC.

Notes to Consolidated Financial Statements

elect to measure many financial instruments and certain other assets and liabilities at fair value on an instrument-by-instrument basis (the “Fair Value Option”) at specified election dates.

At each subsequent reporting date, an entity is required to report unrealized gains and losses on items in earnings for which the fair value option has been elected.

The objective of the Fair Value Option is to improve financial reporting by providing entities with the opportunity to mitigate volatility in reported earnings caused by measuring related assets and liabilities differently without having to apply complex hedge accounting provisions.

The following table describes the difference at the dates indicated between the aggregate fair value and the aggregate unpaid principal balance of loans held for investment at fair value:

The Corporation elected the fair value option on loans held for investment that were previously originated for sale, as well as for other equity investments.

The following table describes the difference at the dates indicated between the fair value and the unpaid loan principal balance and other equity investment base cost:

Unpaid Principal

(In Thousands)

1 unchanged sentence

Loans held for investment, at fair value

Other equity investments, at fair value

As of June 30, 2024:

Loans held for investment, at fair value

Other equity investments, at fair value

ASC 820 establishes a three-level valuation hierarchy that prioritizes inputs to valuation techniques used in fair value calculations.

13 unchanged sentences

government agency MBS, U.S.

government sponsored enterprise MBS, private issue CMO and investment in equity securities.

The Corporation utilizes quoted prices in active markets for similar securities for its fair value measurement of MBS and investment in equity securities (Level 2) and broker price indications for similar securities in non-active markets for its fair value measurement of the private issue CMO (Level 3).

PROVIDENT FINANCIAL HOLDINGS, INC.

Notes to Consolidated Financial Statements

government sponsored enterprise MBS and private issue CMO.

The Corporation utilizes quoted prices in active markets for similar securities for its fair value measurement of MBS (Level 2) and broker price indications for similar securities in non-active markets for its fair value measurement of the private issue CMO (Level 3).

Loans held for investment at fair value are primarily single-family loans which have been transferred from loans held for sale.

The fair value is determined by management estimates of the specific credit risk attributes of each loan, in addition to the quoted secondary-market prices which account for the interest rate characteristics of each loan (Level 3).

Loans with individually evaluated allowance that are recorded at fair value on a nonrecurring basis are loans which are inadequately protected by the current sound worth and paying capacity of the borrowers or of the collateral pledged.

PROVIDENT FINANCIAL HOLDINGS, INC.

Notes to Consolidated Financial Statements

Loans with individually evaluated allowances that are recorded at fair value on a nonrecurring basis are loans which are inadequately protected by the current sound worth and paying capacity of the borrowers or of the collateral pledged.

These loans are characterized by the distinct possibility that the Corporation will sustain some loss if the deficiencies are not corrected.

12 unchanged sentences

While management believes the Corporation’s valuation methodologies are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different estimate of fair value at the reporting date.

PROVIDENT FINANCIAL HOLDINGS, INC.

Notes to Consolidated Financial Statements

The following fair value hierarchy tables present information at the dates indicated about the Corporation’s assets and liabilities measured at fair value on a recurring basis:

7 unchanged sentences

Loans held for investment, at fair value

Other equity investments, fair value

Other equity investments, at fair value

Interest-only strips

Total liabilities

PROVIDENT FINANCIAL HOLDINGS, INC.

Notes to Consolidated Financial Statements

Fair Value Measurement at June 30, 2024 Using:

6 unchanged sentences

Loans held for investment, at fair value

Other equity investments, at fair value

Interest-only strips

Total liabilities

PROVIDENT FINANCIAL HOLDINGS, INC.

Notes to Consolidated Financial Statements

The following tables provide a reconciliation of the beginning and ending balances during the periods shown of recurring fair value measurements recognized in the Consolidated Statements of Financial Condition using Level 3 inputs:

6 unchanged sentences

Beginning balance at June 30, 2024

Adjustment due to ASC 326 CECL adoption

Total gains or losses (realized/unrealized):

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Beginning balance at June 30, 2023

Adjustment due to ASC 326 CECL adoption

Total gains or losses (realized/ unrealized):

3 unchanged sentences

Ending balance at June 30, 2024

PROVIDENT FINANCIAL HOLDINGS, INC.

Notes to Consolidated Financial Statements

(1) The valuation of loans held for investment at fair value includes management’s estimate of the specific credit risk attributes of each loan, in addition to the quoted secondary-market prices which account for interest rate characteristics.

2 unchanged sentences

(In Thousands)

Loans with individually evaluated allowance

Mortgage servicing assets

PROVIDENT FINANCIAL HOLDINGS, INC.

Notes to Consolidated Financial Statements

Fair Value Measurement at June 30, 2024 Using:

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0.9 % - 1.1 % ( 1.0 %)

Loans with individually evaluated allowance

Discounted cash flow

Discount rate

Discounted cash flow

Prepayment rate (CPR)

8 unchanged sentences

(1) The range is based on the historical estimated fair values and management estimates.

(2) Unless otherwise noted, this column represents the directional change in the fair value of the Level 3 investments that would result from an increase to the corresponding unobservable input.

(2) Unless otherwise noted, this column represents the directional change in the fair value of the Level 3 asset instruments that would result from an increase to the corresponding unobservable input.

A decrease to the unobservable input would have the opposite effect.

1 unchanged sentence

The significant unobservable inputs used in the fair value measurement of the Corporation’s assets and liabilities include the following:

CMO offered quotes, prepayment rates and discount rates, among others.

prepayment rates, discount rates and broker quotes, among others.

Significant increases or decreases in any of these inputs in isolation could result in significantly lower or higher fair value measurement.

65 unchanged sentences

(1) Not within the scope of ASC 606.

(2) Includes income on BOLI of $ 186 thousand and $ 186 thousand, net loss on sale of loans of $ 66 thousand and net gain on sale of loans of $ 124 thousand and net unrealized gain on other equity investments of $ 540 thousand and $ 0 for the fiscal years ended June 30, 2024 and 2023, respectively, which are not within the scope of ASC 606.

(2) Includes income on BOLI of $ 184 thousand and $ 186 thousand, net loss on sale of loans of $ 60 thousand and $ 66 thousand and net unrealized gain on other equity investments of $ 190 thousand and $ 540 for the fiscal years ended June 30, 2025 and 2024, respectively, which are not within the scope of ASC 606.

For the fiscal years ended June 30, 2025 and 2024, substantially all the Corporation’s revenues within the scope of ASC 606 were for performance obligations satisfied at a specified date.

Revenues recognized within the scope of ASC 606:

Revenue recognized within the scope of ASC 606:

Deposit account fees:

Fees are earned on the Bank's deposit accounts for various products offered to or services performed for the Bank's customers.

Fees include business account fees, non-sufficient fund fees, ATM fees and others.

These fees are recognized on a daily, monthly or quarterly basis, depending on the type of service.

These fees include business account fees, non-sufficient fund fees, ATM fees and others.

Fees are recognized concurrently with the related event and are recorded on a daily, monthly, quarterly or annual basis, depending on the type of service.

PROVIDENT FINANCIAL HOLDINGS, INC.

Notes to Consolidated Financial Statements

Card and processing fees:

1 unchanged sentence

The Bank earns interchange fees from cardholder transactions through a third-party payment network.

Interchange fees

PROVIDENT FINANCIAL HOLDINGS, INC.

Notes to Consolidated Financial Statements

from cardholder transactions represent a percentage of the underlying transaction value and are recognized daily, concurrently with the transaction processing services provided to the cardholder.

Interchange fees from cardholder transactions represent a percentage of the underlying transaction value and are recognized daily, concurrently with the transaction processing services provided to the cardholder.

The performance obligation is satisfied and the fees are earned when the cost of the transaction is charged to the cardholders' debit card.

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Asset management fees are variable, since they are based on the underlying portfolio value, which is subject to market conditions and amounts invested by customers through a third-party provider.

Asset management fees are recognized over the period that services are provided, and when the portfolio values are known or can be estimated at the end of each month.

Asset management fees are recognized over the period that services are provided and when the portfolio values can be determined or reasonably estimated at the end of each month.

These fees are recognized concurrently with the related event and are recorded on daily, monthly, quarterly or annual basis, depending on the type of services.

Segment Reporting

The Corporation operates as a single reportable segment, providing a broad range of banking and financial services to individuals, businesses, and institutional clients.

These services include primarily commercial and consumer lending, deposit products, and to a lesser extent, loan servicing and wealth management services.

The commercial and consumer lending primarily consists of single-family, multi-family and commercial real estate mortgage lending and, to a lesser extent, construction, commercial business, other mortgage and consumer lending.

The Corporation’s chief operating decision maker (“CODM”) is the Chief Executive Officer.

The CODM relies on the Senior Management Committee, which includes the Senior Vice President – Chief Financial Officer, Senior Vice President – Chief Lending Officer, Senior Vice President – Retail Banking, Senior Vice President – Single Family, and others, to provide detailed financial and operational reports.

The CODM regularly evaluates the financial performance of the Corporation and allocates resources accordingly.

Key financial performance metrics used by the CODM include net interest income, provision for (recovery of) credit losses, non-interest income, non-interest expenses, net income, diluted earnings per share, return on average assets, return on average equity, net interest margin, efficiency ratio, loans held for investment and deposit balance growth, loans held for investment as a percentage of total deposits, core deposits as a percentage of total deposits, Tier 1 leverage capital ratio, non-performing assets as a percentage of loans held for investment, among others.

PROVIDENT FINANCIAL HOLDINGS, INC.

Notes to Consolidated Financial Statements

The following table presents the financial performance measures that the CODM reviews as of or for the period indicated:

At or For the Year Ended June 30,

(In Thousands, Except Per Share Information)

Interest income

Interest expense

Net interest income

Recovery of credit losses

Net interest income, after recovery of credit losses

Non-interest income

Non-interest expense

Income before taxes

Provision for income taxes

Diluted earnings per share

Return on average assets

Return on average equity

Net interest margin

Efficiency ratio

Loans held for investment growth

Deposit growth

Loans held for investment as a percentage of total deposits

Core deposits as a percentage of total deposits

Tier 1 leverage capital ratio

Non-performing assets as a percentage of total assets

Holding Company Condensed Financial Information

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Stockholders’ equity

PROVIDENT FINANCIAL HOLDINGS, INC.

Notes to Consolidated Financial Statements

Condensed Statements of Operations

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Equity in undistributed earnings of the Bank

PROVIDENT FINANCIAL HOLDINGS, INC.

Notes to Consolidated Financial Statements

Condensed Statements of Cash Flows

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Equity in undistributed earnings of the Bank

Decrease (increase) in other assets

(Increase) decrease in other assets

Increase in other liabilities

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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 9A. Controls and Procedures