Provident Financial Holdings, Inc.
PART I
Item 1. Business
General
Provident Financial Holdings, Inc. (the “Corporation”), a Delaware corporation, was organized in January 1996 for the purpose of becoming the holding company of Provident Savings Bank, F.S.B. (the “Bank”) upon the Bank’s conversion from a federal mutual to a federal stock savings bank (“Conversion”). The Conversion was completed on June 27, 1996. The Corporation is regulated by the Board of Governors of the Federal Reserve System (“Federal Reserve”). At June 30, 2025, the Corporation had consolidated total assets of $1.25 billion, total deposits of $888.8 million and stockholders’ equity of $128.5 million. The Corporation has not engaged in any significant activity other than holding the stock of the Bank. Accordingly, the information set forth in this Annual Report on Form 10-K (“Form 10-K”), including the audited consolidated financial statements and related data, relates primarily to the Bank. As used in this report, the terms “we,” “our,” “us,” and the “Corporation” refer to Provident Financial Holdings, Inc. and its consolidated subsidiaries, unless the context indicates otherwise. When we refer to the “Provident” in this report, we are referring to Provident Financial Holdings, Inc. When we refer to the “Bank” or “Provident Savings Bank” in this report, we are referring to Provident Savings Bank, F.S.B., a wholly owned subsidiary of Provident.
The Bank, founded in 1956, is a federally chartered stock savings bank headquartered in Riverside, California. The Bank is regulated by the Office of the Comptroller of the Currency (“OCC”), its primary federal regulator, and the Federal Deposit Insurance Corporation (“FDIC”), the insurer of its deposits. The Bank’s deposits are federally insured up to applicable limits by the FDIC. The Bank has been a member of the Federal Home Loan Bank (“FHLB”) – San Francisco since 1956.
The Bank is a financial services company committed to serving consumers and small to mid-sized businesses in the Inland Empire region of Southern California. The Bank conducts its business operations as Provident Bank, and through its subsidiary, Provident Financial Corp (“PFC”). The business activities of the Bank consist of community banking, investment services and trustee services for real estate transactions.
The Bank’s community banking operations primarily consist of accepting deposits from customers within the communities surrounding its full-service offices and investing those funds in the origination of single-family, multi-family and commercial real estate loans and, to a lesser extent, construction, commercial business, consumer and other mortgage loans to be held for investment. Through its subsidiary, PFC, the Bank conducts trustee services for the Bank’s real estate transactions and in the past has held real estate for investment. For additional information, see “Subsidiary Activities” in this Form 10-K. The activities of PFC are included in the Bank's operating segment results. The Bank’s revenues are derived principally from interest earned on its loan and investment portfolios, and fees generated through its community banking activities.
On June 22, 2006, the Bank established the Provident Savings Bank Charitable Foundation (“Foundation”) in order to further its commitment to the local community. The specific purpose of the Foundation is to promote and provide for the betterment of youth, education, housing and the arts in the Bank’s primary market areas of Riverside and San Bernardino counties. The Foundation was funded with a $500,000 charitable contribution made by the Bank in fiscal 2006. The Bank contributed $40,000 to the Foundation in both fiscal 2025 and 2024.
Subsequent Event
On July 24, 2025, the Corporation announced that the Provident Board of Directors declared a cash dividend of $0.14 per share. Shareholders of Provident common stock at the close of business on August 14, 2025 were entitled to receive the cash dividend, payable on September 4, 2025.
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Market Area
The Bank is headquartered in Riverside, California and, as of June 30, 2025, operates 12 full-service banking offices in Riverside County and one full-service banking office in San Bernardino County. Management considers Southern California, including Riverside County, western San Bernardino County (collectively, the “Inland Empire”), and surrounding counties, to be the Bank’s primary market, with the Inland Empire its primary market area for deposits. Based on the most recent FDIC data, the Bank was the largest independent community bank (based on total assets) headquartered in Riverside County and held the 11th largest deposit market share of all banks in the county, with the second largest share among community banks.
According to the 2020 Census Bureau, Riverside and San Bernardino counties have the fourth and fifth largest populations in California, respectively, and are part of the greater Los Angeles metropolitan area, consisting primarily of suburban and urban communities. The Inland Empire, with a population of approximately 4.7 million, is relatively densely populated. The U.S. Department of Labor’s Bureau of Labor Statistics reported an unemployment rate of 5.9% in the Inland Empire in June 2025, slightly higher than California’s rate of 5.4% and the national rate of 4.1%. In June 2024, these rates were 5.3% in the Inland Empire, 5.2% in California, and 4.1% nationwide.
Economic growth for the Inland Empire, also known as the Riverside-San Bernardino-Ontario Metropolitan Statistical Area, is expected to rise modestly in 2025. Last year, the outlook was highlighted with concerns about potential headwinds related the uncertainty surrounding the 2024 presidential election. This negatively impacted both consumer and business spending decisions and future investment plans. These uncertainties have been replaced by policy decisions by the new administration regarding (i) tariffs, (ii) deportation, (iii) fiscal policy (especially taxes), and (iv) regulation, making forecasting difficult. Regardless, the beginning of an expansive consumer credit policy has begun with the previous interest cuts in 2024, and it is expected to continue. This is expected to generate positive impulses for the Inland Empire economy, which is expected to outperform the state economy but not the national economy. The outlook for 2025 is based on the assumption that the administration’s proposed policies on tariffs and deportation will not have an immediate effect on trade and construction. Part of this is the larger role that the logistics industry plays in the Inland Empire. Transportation, warehousing, and wholesale have moved into third place in terms of overall employment share and represent the largest share in San Bernardino County (third largest in Riverside County). The opening of new facilities in 2025 will require new workers, and the continuation of consumption of imported goods by U.S. consumers will continue to drive growth in this segment, subject to the outcome of tariff negotiations with Mexico and Canada. (Source: Lowe Institute of Political Economy, The State of the Region 2025 Economic and Election Report, February 2025).
Closed escrow sales of existing, single-family detached homes in California totaled a seasonally adjusted annualized rate of 264,260 in June 2025. The statewide annualized sales figure represents what would be the total number of homes sold during 2025 if sales maintained the June 2025 pace throughout the year. It is adjusted to account for seasonal factors that typically influence home sales. June home sales activity rose 4.0 percent from the 254,190 homes sold in May 2025 and was down 0.3 percent from a year ago, when 264,960 homes were sold on an annualized basis. The June result reversed three consecutive months of sales declines and was only one of two months of sales increases for the first half of 2025. The year-over-year decline marked the third straight monthly decrease and was the first time since late 2023 that annual sales fell for three consecutive months. Year-to-date sales were slightly above a year ago. Statewide pending sales in June slipped from last year’s level for the seventh consecutive month, posting the largest year-over-year drop since January 2025. California’s median home price fell for the second straight month in June, slipping below the $900,000 mark for the first time in three months. The June median price of $899,560 was down 0.1 percent from May and also down 0.1 percent from $900,720 in June 2024. The decline in June was not in line with the June’s historical average gain of 0.8 percent, suggesting non-seasonal factors such as market uncertainty and elevated mortgage rates had a negative lingering effect on housing demand and home prices. (Source: California Association of Realtors® – July 17, 2025 News Release).
Competition
The Bank faces significant competition in its market area in originating real estate loans and attracting deposits. The population growth in the Inland Empire has attracted numerous financial institutions to the Bank’s market area. The Bank’s primary competitors are large national and regional commercial banks as well as other community-oriented banks and savings institutions. The Bank also faces competition from credit unions and mortgage companies, as well as unregulated or less regulated non-banking entities operating locally and elsewhere. Many of these institutions are significantly larger
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than the Bank and therefore have greater financial and marketing resources than the Bank. This competition may limit the Bank’s growth and profitability in the future.
Reportable Segments
Management monitors the revenue and expense components of the various products and services the Bank offers, but operations are managed and financial performance is evaluated on a corporation-wide basis in comparison to a business plan which is developed each year. Accordingly, all operations are considered by management to be one operating segment and one reportable segment as contained in the Consolidated Statements of Operations to the Corporation’s audited consolidated financial statements and Note 17, “Segment Reporting” of the Notes to the Consolidated Financial Statements included in Item 8 of this Form 10-K.
Internet Website
The Corporation maintains a website at www.myprovident.com. The information contained on that website is not included as a part of, or incorporated by reference into, this Form 10-K. Other than an investor’s own internet access charges, the Corporation makes available free of charge through that website the Corporation’s annual report, quarterly reports on Form 10-Q and current reports on Form 8-K, including amendments to these reports, if any, as soon as reasonably practicable after these materials have been electronically filed with, or furnished to, the Securities and Exchange Commission (“SEC”). In addition, the SEC maintains a website that contains reports, proxy and information statements, and other information regarding companies filed electronically with the SEC. This information is available at www.sec.gov.
Lending Activities
General. The lending activity of the Bank is comprised of the origination of single-family, multi-family and commercial real estate loans and, to a lesser extent, construction, commercial business, consumer and other mortgage loans to be held for investment. Additional lending activities have historically included originating saleable single-family loans, primarily fixed-rate first trust deed mortgages. The Bank’s net loans held for investment were $1.05 billion at June 30, 2025, representing 84% of consolidated total assets. This compares to $1.05 billion, or 83% of consolidated total assets, at June 30, 2024.
At June 30, 2025, the maximum amount the Bank could have loaned to any one borrower and the borrower’s related entities under applicable regulations was $19.7 million, or 15% of the Bank’s unimpaired capital and surplus. At that date, the Bank had no individual loan or aggregate loans to related borrowers with outstanding balances in excess of this amount. The Bank’s five largest lending relationships at June 30, 2025 consisted of: four multi-family loans totaling $4.9 million to a group of related borrowers; three multi-family loans totaling $4.0 million to a group of related borrowers; one multi-family loan of $4.0 million; one multi-family loan of $3.9 million; and one multi-family loan of $3.7 million. The real estate collateral securing these loans is primarily located in Southern and Northern California. At June 30, 2025, all of these loans were performing in accordance with their contractual repayment terms.
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Loans Held For Investment Analysis. The following table sets forth the composition of the Bank’s loans held for investment at the dates indicated:
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Financial statements
data from SEC XBRL filings. Values are as-reported; restatements supersede originals. Values reported in .
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Securities Authorized for Issuance under Equity Compensation Plans
See Part III, Item 12 of this Form 10-K for information regarding the Corporation’s Equity Compensation Plans, which is incorporated into this Item 5 by reference.
Item 6. [Reserved]
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Safe-Harbor Statement
Certain matters discussed in this Form 10-K constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These statements relate to the Corporation’s financial condition, liquidity, results of operations, plans, objectives, future performance or business. You should not place undue reliance on these statements as they are subject to various risks and uncertainties. When considering these forward-looking statements, you should keep in mind these risks and uncertainties, as well as any cautionary statements the Corporation may make. Moreover, you should treat these statements as speaking only as of the date they are made and based only on information then actually known to the Corporation.
There are a number of important factors that could cause future results to differ materially from historical performance and these forward-looking statements. Factors which could cause actual results to differ materially from the results anticipated or implied by our forward-looking statements include, but are not limited to:
| ● | adverse economic conditions in our local market areas or other markets where we have lending relationships; |
| ● | effects of employment levels, labor shortages, persistent inflation, recessionary pressures or slowing economic growth; |
| ● | changes in interest rate levels and the duration of such changes, including actions by the Federal Reserve, which could adversely affect our revenues and expenses, the value of assets and obligations, and the availability and cost of capital and liquidity; |
| ● | the impact of inflation and monetary and fiscal policy responses thereto, and their impact on consumer and business behavior; |
| ● | the effects of a Federal government shutdown, debt ceiling standoff, or other fiscal policy uncertainty; |
| ● | credit risks of lending activities, including loan delinquencies, loan charge-offs, changes in our allowance for credit losses (“ACL”), and provision for credit losses; |
| ● | increased competitive pressures among financial services companies, including repricing and competitors’ pricing initiatives, and their impact on our market position, loan, and deposit products; |
| ● | quality and composition of our securities portfolio and the impact of adverse changes in the securities markets; |
| ● | fluctuations in deposits; |
| ● | secondary market conditions for loans and our ability to sell loans in the secondary market; |
| ● | liquidity issues, including our ability to borrow funds or raise additional capital, if necessary; |
| ● | expectations regarding key growth initiatives and strategic priorities; |
| ● | the impact of bank failures or adverse developments at other banks and related negative press about the banking industry in general on investor and depositor sentiment; |
| ● | results of examinations of us by regulatory authorities, which may include the possibility that any such regulatory authority may, among other things, institute a formal or informal enforcement action against us or our bank subsidiary which could require us to increase our ACL, write down assets, change our regulatory capital position or affect our ability to borrow funds or maintain or increase deposits or impose additional requirements or restrictions on us, any of which could adversely affect our liquidity and earnings; |
| ● | the ability to adapt to rapid technological changes, including advancements in artificial intelligence, digital banking, and cybersecurity; |
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| ● | legislative or regulatory changes, including but not limited to shifts in capital requirements, banking regulation, tax laws, or consumer protection laws; |
| ● | use of estimates in determining the fair value of assets, which may prove incorrect; |
| ● | vulnerabilities in information systems or third-party service providers, including disruptions, breaches, or attacks; |
| ● | geopolitical developments and international conflicts, including but not limited to tensions or instability in Eastern Europe, the Middle East, and Asia, or the imposition of new or increased tariffs and trade restrictions, which may disrupt financial markets, global supply chains, energy prices, or economic activity in specific industry sectors; |
| ● | staffing fluctuations in response to product demand or corporate implementation of strategies; |
| ● | our ability to pay dividends on our common stock; |
| ● | environmental, social and governance goals; |
| ● | effects of climate change, severe weather events, natural disasters, pandemics, epidemics and other public health crises, acts of war or terrorism, domestic political unrest and other external events; |
| ● | availability of appropriate insurance products in our market areas; and |
| ● | other factors described in this Form 10-K and in our Quarterly Reports on Form 10-Q and other reports filed with and furnished to the Securities and Exchange Commission (“SEC”), which are available on our website at www.myprovident.com and on the SEC’s website at www.sec.gov. |
Forward-looking statements are based upon management’s beliefs and assumptions at the time they are made. We undertake no obligation to publicly update or revise any forward-looking statements included in this document or to update the reasons why actual results could differ from those contained in such statements, whether as a result of new information, future events or otherwise. In light of these risks, uncertainties and assumptions, the forward-looking statements discussed in this document might not occur, and you should not put undue reliance on any forward-looking statements. These factors could cause our actual results for fiscal 2026 and beyond to differ materially from those expressed in any forward-looking statements by, or on behalf of, us and could negatively affect the Corporation’s consolidated financial condition and consolidated results of operations as well as its stock price performance.
General
Provident, a Delaware corporation, was organized in January 1996 for the purpose of becoming the holding company of the Bank upon the Bank’s conversion completed on June 27, 1996. Provident is regulated by the FRB. At June 30, 2025, the Corporation, on a consolidated basis, had total assets of $1.25 billion, total deposits of $888.8 million and total stockholders’ equity of $128.5 million. Provident has not engaged in any significant activity other than holding the stock of the Bank. Accordingly, the information set forth in this report, including financial statements and related data, relates primarily to the Bank and its subsidiaries.
The Bank, founded in 1956, is a federally chartered stock savings bank headquartered in Riverside, California. The Bank is regulated by the OCC, its primary federal regulator, and the FDIC, the insurer of its deposits. The Bank’s deposits are federally insured up to applicable limits by the FDIC. The Bank has been a member of the Federal Home Loan Bank System since 1956.
The Corporation operates in a single business segment through the Bank. The Bank's activities include attracting deposits, offering banking services and originating and purchasing single-family, multi-family, commercial real estate, construction and, to a lesser extent, other mortgage, commercial business and consumer loans. Deposits are collected primarily from 13 banking locations located in Riverside and San Bernardino counties in California. Loans are primarily originated and purchased in Southern and Northern California to be held for investment. There are various risks inherent in the Corporation’s business including, among others, the general business environment, interest rates, the California real estate market, the demand for loans, the prepayment of loans, the repurchase of loans previously sold to investors, the secondary market conditions to sell loans, competitive conditions, legislative and regulatory changes, fraud and other risks.
Management’s Discussion and Analysis of Financial Condition and Results of Operations is intended to assist in understanding the financial condition and results of operations of the Corporation. The information contained in this section should be read in conjunction with the audited Consolidated Financial Statements and accompanying selected Notes to Consolidated Financial Statements included in Item 8 of this Form 10-K.
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Critical Accounting Estimates
The discussion and analysis of the Corporation’s financial condition and results of operations is based upon the Corporation’s consolidated financial statements, which have been prepared in accordance with U.S. GAAP. The preparation of our consolidated financial statements in accordance with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, revenues and expenses, and the related disclosures of contingent assets and liabilities as of the reporting date. The estimates we consider most critical to understanding our financial condition and results of operations are those that require difficult, subjective, or complex judgments and that could materially change from period to period if different assumptions were used or if actual results differ from our assumptions.
For the Corporation, these critical estimates primarily relate to:
| ● | the allowance for credit losses on loans and investment securities, and |
| ● | the provision for income taxes. |
These estimates involve significant uncertainty and are based on historical experience, current conditions, and other factors management believes to be reasonable under the circumstances. We evaluate these estimates on an ongoing basis and discuss them with the Audit Committee of our Board of Directors. For a summary of our significant accounting policies, see Note 1—Summary of Significant Accounting Policies in Item 8 of this Annual Report on Form 10-K.
Allowance for Credit Losses. The ACL involves significant judgment and assumptions by management, which has a material impact on the carrying value of financial assets. 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.
As required by ASC 326, on July 1, 2023 the Corporation implemented CECL and recognized a $1.2 million one-time increase to its ACL and a net of tax charge of $824,000 to retained earnings. Under ASC 326, the ACL is a valuation account that is deducted from the related loan’s amortized cost basis to present the net amount expected to be collected on the loans. The measurement of expected credit losses is based on relevant information about past events, including historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amount.
Management believes the ACL on loans held for investment is maintained at a level sufficient to provide for expected losses on the Corporation’s loans held for investment based on historical loss experience, current conditions, and reasonable and supportable forecasts. The provision for (recovery of) credit losses is charged (credited) against operations on a quarterly basis, as necessary, to maintain the ACL at appropriate levels. Future adjustments to the ACL may be necessary and results of operations could be significantly and adversely affected as a result of economic, operating, regulatory, and other conditions beyond the Corporation’s control.
Provision for Income Taxes. Management accounts for income taxes by estimating future tax effects of temporary differences between the tax and book basis of assets and liabilities considering the provisions of enacted tax laws. These differences result in deferred tax assets and liabilities, which are included in the Corporation’s Consolidated Statements of Financial Condition. The application of income tax law is inherently complex. Laws and regulations in this area are voluminous and are often ambiguous. As such, management is required to make many subjective assumptions and judgments regarding the Corporation’s income tax exposures, including judgments in determining the amount and timing of recognition of the resulting deferred tax assets and liabilities, including projections of future taxable income. Interpretations of and guidance surrounding income tax laws and regulations change over time. As such, changes in management’s subjective assumptions and judgments can materially affect amounts recognized in the Consolidated Statements of Financial Condition and Consolidated Statements of Operations.
Executive Summary and Operating Strategy
Provident Savings Bank, F.S.B., established in 1956, is a financial services company committed to serving consumers and small to mid-sized businesses in the Inland Empire region of Southern California. The Bank conducts its business
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operations as Provident Bank and through its subsidiary, PFC. The business activities of the Corporation, primarily through the Bank, consist of community banking and, to a lesser degree, investment services for customers and trustee services on behalf of the Bank.
Community banking operations primarily consist of accepting deposits from customers within the communities surrounding the Bank’s full service offices and investing those funds in single-family, multi-family and commercial real estate loans. Also, to a lesser extent, the Bank originates construction, commercial business, consumer and other mortgage loans. The primary source of income in community banking is net interest income, which is the difference between the interest income earned on loans and investment securities, and the interest expense paid on interest-bearing deposits and borrowed funds. Additionally, certain fees are collected from depositors, such as returned check fees, deposit account service charges, ATM fees, IRA/KEOGH fees, safe deposit box fees, wire transfer fees and overdraft protection fees, among others.
The Corporation plans to enhance its community banking business by moderately increasing its total assets, focusing on expanding single-family, multi-family, commercial real estate, construction, and commercial business loans. Additionally, the Corporation aims to reduce the percentage of retail time deposits in its deposit base while increasing the proportion of lower-cost checking and savings accounts. To diversify its deposit funding base, the Corporation will consider utilizing brokered certificates of deposit and public funds, subject to market conditions and funding needs. This strategy is designed to improve core revenue by achieving a higher net interest margin and, combined with the Corporation’s growth, ultimately increase net interest income. While the Corporation’s long-term strategy targets moderate growth, management acknowledges that this growth may be influenced by general economic conditions and other factors.
Investment services operations primarily consist of selling alternative investment products such as annuities and mutual funds to the Bank’s depositors. Investment services and trustee services contribute a very small percentage to gross revenue.
PFC performs trustee services for the Bank’s real estate secured loan transactions and has in the past held, and may in the future hold, real estate for investment.
There are a number of risks associated with the business activities of the Corporation, many of which are beyond the Corporation’s control, including: changes in accounting principles, laws, regulation, interest rates and the economy, among others. The Corporation attempts to mitigate many of these risks through prudent banking practices, such as interest rate risk management, credit risk management, operational risk management, and liquidity risk management.
The California economic environment presents heightened risk to the Corporation, particularly with respect to real estate values and loan delinquencies. Because the majority of the Corporation’s loans are secured by real estate located in California, significant declines in California property values could limit the Corporation’s ability to recover on defaulted loans through the sale of the underlying collateral. Within commercial real estate, the office sector continues to face elevated risk, driven by higher vacancy rates, slower leasing activity, and downward pressure on rental rates in certain California markets. These trends may negatively affect collateral values and the repayment capacity of borrowers. In response, the Bank has evaluated its existing loans collateralized by office properties for outsized concentrations and has implemented tighter underwriting standards for such collateral. At June 30, 2025, our commercial real estate portfolio totaled $72.8 million, of which $39.5 million, or 54.2%, was secured by various types of office properties, representing 3.8% of the total loan portfolio. While current credit performance within the office segment remains satisfactory, management continues to monitor the portfolio closely in light of evolving market conditions.
The January 2025 wildfires in Los Angeles, California did not have a material direct impact on the Bank’s customers or collateral in our market area. However, those events, along with more recent wildfires in other regions of the state, underscore the ongoing risks wildfires present to our loan portfolio. Potential indirect impacts include increased insurance premiums, stricter underwriting standards, shifts in property values, and localized economic disruptions such as business closures and job losses, all of which could elevate credit risk. Borrowers in affected areas may face financial hardship that could reduce repayment capacity and impair collateral values, particularly where insurance coverage is inadequate or claims are denied. Given the increasing frequency and severity of wildfires associated with climate change, these events could require higher provisions for loan losses. The Corporation remains committed to prudent risk management practices to mitigate potential impacts and support customers in navigating any related financial challenges.
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For further details on risk factors and uncertainties, see “Safe-Harbor Statement” included above in this Item 7, and Item 1A, "Risk Factors.”
Comparison of Financial Condition at June 30, 2025 and 2024
Total assets decreased $26.6 million, or 2%, to $1.25 billion at June 30, 2025 from $1.27 billion at June 30, 2024. The decrease was primarily attributable to decreases in investment securities and loans held for investment.
Total cash and cash equivalents, primarily excess cash deposited with the FRB of San Francisco, increased $1.7 million, or 3%, to $53.1 million at June 30, 2025 from $51.4 million at June 30, 2024. The increase was consistent with the Corporation’s strategy of adequately managing credit and liquidity risk.
Total investment securities (held to maturity and available for sale) decreased $20.9 million, or 16%, to $111.0 million at June 30, 2025 from $131.9 million at June 30, 2024. The decrease was the result of scheduled and accelerated principal payments on investment securities. During fiscal 2025, the Bank purchased $981,000 of investment securities and did not sell any investment securities; while during fiscal 2024, the Bank did not purchase or sell any investment securities. For additional information on investment securities, see Note 2 of the Notes to Consolidated Financial Statements included in Item 8 of this Form 10-K.
Loans held for investment, net decreased $7.2 million, or 1%, to $1.05 billion at June 30, 2025 as compared to June 30, 2024. Total loan principal payments in fiscal 2025 were $133.3 million, up 33% from $99.9 million in fiscal 2024, while the Bank originated $122.7 million of loans held for investment in fiscal 2025, up 62% from $75.5 million in fiscal 2024. In both years these loans consisted primarily of single-family, multi-family and commercial real estate loans. The Bank did not purchase any loans in fiscal 2025 or 2024. Management attributes the increase in loan originations to the decision to increase or maintain the total balance of loans held for investment in response to higher loan prepayments in fiscal 2025. The balance of multi-family, commercial real estate, construction and commercial business loans, net of undisbursed loan funds, decreased $34.7 million, or 7%, to $497.9 million at June 30, 2025, from $532.6 million at June 30, 2024, representing 48% and 51% of loans held for investment, respectively. The balance of single-family loans held for investment increased $26.3 million, or 5%, to $544.4 million at June 30, 2025, from $518.1 million at June 30, 2024. There was no REO in fiscal 2025 and 2024. For additional information on loans held for investment, see Note 3 of the Notes to Consolidated Financial Statements included in Item 8 of this Form 10-K.
FHLB – San Francisco stock and other equity investments increased $190,000, or 2%, to $10.3 million at June 30, 2025, from $10.1 million at June 30, 2024. The increase was primarily due to a higher fair value adjustment of other equity investments, which consist solely of 1,297 shares of VISA Class C stock. As of June 30, 2025 and 2024, the fair value of these other equity investments was $730,000 and $540,000, respectively. The Bank did not purchase additional FHLB - San Francisco stock during fiscal 2025, while in fiscal 2024, the Bank purchased $63,000 of FHLB - San Francisco stock.
Total deposits increased to $888.8 million at June 30, 2025 from $888.3 million at June 30, 2024. Transaction accounts decreased $38.0 million, or 6%, to $576.5 million at June 30, 2025 from $614.5 million at June 30, 2024, while time deposits increased $38.4 million, or 14%, to $312.3 million at June 30, 2025 from $273.9 million at June 30, 2024. Time deposits included brokered certificates of deposit of $131.0 million as of June 30, 2025, down slightly from $131.8 million at June 30, 2024. As of June 30, 2025 and 2024, the percentage of transaction accounts to total deposits was 65% and 69%, respectively. Total retail deposits, defined as total deposits excluding brokered certificates of deposit, increased to $757.8 million at June 30, 2025 from $756.5 million at June 30, 2024. This increase was due primarily to the increase in retail time deposits, which was largely offset by the decline in transaction account balances as some customers sought higher interest rates elsewhere. For additional information on deposits, see Note 6 of the Notes to Consolidated Financial Statements included in Item 8 of this Form 10-K.
Borrowings, consisting primarily of FHLB – San Francisco advances, decreased $25.4 million, or 11%, to $213.1 million at June 30, 2025 from $238.5 million at June 30, 2024. The decrease was primarily due to scheduled maturities that were not fully renewed. The weighted average maturity of the Corporation’s FHLB – San Francisco advances was approximately 10 months at June 30, 2025, down from 13 months at June 30, 2024. For additional information on borrowings, see Note 7 of the Notes to Consolidated Financial Statements included in Item 8 of this Form 10-K.
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Total stockholders’ equity decreased $1.4 million, or 1%, to $128.5 million at June 30, 2025 from $129.9 million at June 30, 2024, primarily as a result of stock repurchases (see Part II, Item 5, “Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities” of this Form 10-K) and quarterly cash dividends paid to shareholders, partly offset by net income and the amortization of stock-based compensation in fiscal 2025.
Comparison of Operating Results for the Fiscal Years Ended June 30, 2025 and 2024
General. The Corporation recorded net income of $6.3 million, or $0.93 per diluted share, for the fiscal year ended June 30, 2025, down $1.1 million, or 15%, from $7.4 million, or $1.06 per diluted share, for the fiscal year ended June 30, 2024. The decrease in net income was primarily attributable to a $2.3 million increase in non-interest expense and a $410,000 decrease in non-interest income, partly offset by a $666,000 recovery of credit losses recorded during fiscal 2025 as compared to a $63,000 recovery of credit losses during fiscal 2024, and a $546,000 increase in net interest income. The Corporation's efficiency ratio, defined as non-interest expense divided by the sum of net interest income and non-interest income, increased to 79% in fiscal 2025 from 73% in fiscal 2024 due primarily to an increase in non-interest expenses. Return on average assets in fiscal 2025 was 0.50% compared to 0.57% in fiscal 2024, and return on average stockholders' equity in fiscal 2025 was 4.79%, compared to 5.62% in fiscal 2024.
Net Interest Income. Net interest income increased $546,000, or 2%, to $35.5 million in fiscal 2025 from $34.9 million in fiscal 2024. This increase reflects higher loan yields and the repricing of adjustable-rate loans, which outpaced increases in interest expense on deposits and borrowings. The net interest margin increased 15 basis points to 2.93% in fiscal 2025 from 2.78% in fiscal 2024. The average balance of interest-earning assets decreased $42.2 million, or 3%, to $1.21 billion in fiscal 2025 from $1.25 billion in fiscal 2024. The average balance of interest-bearing liabilities decreased $39.4 million, or 3%, to $1.10 billion during fiscal 2025 as compared to $1.14 billion during fiscal 2024.
Interest Income. Total interest income increased $1.9 million, or 3%, to $56.6 million in fiscal 2025 from $54.7 million in fiscal 2024. The increase was primarily attributable to an increase of interest income on loans receivable.
Interest income on loans receivable increased $2.3 million, or 5%, to $52.5 million in fiscal 2025 from $50.2 million in fiscal 2024. The increase was attributable to a higher average loan yield, partly offset by a lower average loan balance. The weighted average loan yield during fiscal 2025 increased 31 basis points to 5.00% from 4.69% in fiscal 2024, reflecting new loans being originated at higher interest rates and adjustable rate loans repricing higher due to overall higher market interest rates. The average balance of loans receivable decreased $18.2 million, or 2%, to $1.05 billion during fiscal 2025 from $1.07 billion during fiscal 2024.
Interest income on investment securities decreased $202,000, or 10%, to $1.9 million in fiscal 2025 from $2.1 million in fiscal 2024, due to a decrease in the average balance, partly offset by an increase in the average yield. The average balance of investment securities decreased $23.1 million, or 16%, to $121.4 million in fiscal 2025 from $144.5 million in fiscal 2024 mainly as a result of scheduled and accelerated principal payments on mortgage-backed securities. The average yield on investment securities increased 10 basis points to 1.53% for fiscal 2025 from 1.43% for fiscal 2024. The increase in the average yield of investment securities was primarily attributable to a lower premium amortization resulting from lower principal payments. The total premium amortization in fiscal 2025 was $374,000, down $158,000, or 30%, from $532,000 in fiscal 2024.
During fiscal 2025, the Bank received $845,000 of cash dividends from the FHLB - San Francisco and other equity investments, an increase of $43,000, or 5%, from the $802,000 of cash dividends received in fiscal 2024, resulting in an average yield of 8.27% during fiscal 2025 compared to 8.35% during fiscal 2024. The average balance of these investments was $10.2 million during fiscal 2025, up 6% from $9.6 million during fiscal 2024.
Interest income on interest-earning deposits, primarily cash deposited at the FRB of San Francisco, decreased $296,000, or 18%, to $1.4 million in fiscal 2025 from $1.7 million in fiscal 2024, due to a lower average yield and, to a lesser extent, a lower average balance. The average yield decreased 69 basis points to 4.69% in fiscal 2025 from 5.38% in fiscal 2024, resulting from decreases in the targeted federal funds interest rates during fiscal 2025. The average balance of interest-earning deposits decreased $1.6 million, or 5%, to $29.0 million in fiscal 2025 from $30.6 million in fiscal 2024.
54
Interest Expense. Total interest expense for fiscal 2025 was $21.2 million compared to $19.8 million for fiscal 2024, an increase of $1.4 million or 7%. This increase was primarily attributable to a higher interest expense on deposits, particularly time deposits, partly offset by a lower interest expense on borrowings. The average cost of interest-bearing liabilities was 1.93% during fiscal 2025, up 19 basis points from 1.74% during fiscal 2024, while the average balance of interest-bearing liabilities was $1.10 billion during fiscal 2025, down $39.4 million, or 3%, from $1.14 billion during fiscal 2024.
Interest expense on deposits for fiscal 2025 was $11.2 million compared to $9.7 million for fiscal 2024, an increase of $1.5 million or 16%. The increase was primarily attributable to a higher average balance of time deposits and modestly higher rates on time deposits and savings accounts. The average balance of time deposits increased $34.6 million, or 14%, to $282.5 million in fiscal 2025 from $247.9 million in fiscal 2024, while the average balance of transaction accounts decreased $69.0 million, or 10%, to $599.2 million in fiscal 2025 from $668.2 million in fiscal 2024. The time deposits include brokered certificates of deposit. The average balance of brokered certificates of deposit in fiscal 2025 was $134.0 million with the average cost of 4.65% compared to the average balance of $118.8 million with the average cost of 5.17% in fiscal 2024. The average cost of time deposits (including brokered certificates of deposit) in fiscal 2025 was 3.73%, up seven basis points, from 3.66% in fiscal 2025, while the average cost of transaction accounts was 0.12% in fiscal 2025, up three basis points from 0.09% in fiscal 2024. The average cost of all deposits (including non-interest bearing deposits) increased 21 basis points to 1.27% in fiscal 2025 from 1.06% in fiscal 2024.
Interest expense on borrowings, consisting primarily FHLB - San Francisco advances, for fiscal 2025 decreased $212,000, or 2%, to $9.9 million as compared to $10.1 million in fiscal 2024. The decrease in interest expense on borrowings was due to a lower average balance, partly offset by a higher average cost. The average balance of borrowings decreased $5.1 million, or 2%, to $216.3 million during fiscal 2025 from $221.4 million during fiscal 2024 and the average cost of borrowings was 4.59% in fiscal 2025, up one basis point from 4.58% in fiscal 2024.
Provision for (Recovery of) Credit Losses. During fiscal 2025, the Corporation recorded a recovery of credit losses of $666,000, compared to a recovery of $63,000 during fiscal 2024. The increase in the recovery of credit losses in fiscal 2025 was primarily due to improved qualitative factors related to the single-family residential loans and lower historical loss rates, partially offset by an increase in the balance of single-family loans.
At June 30, 2025, the ACL on loans held for investment was $6.4 million, comprised of all collectively evaluated allowances, down 9% from $7.1 million at June 30, 2024. The ACL on loans as a percentage of gross loans held for investment was 0.62% at June 30, 2025, compared to 0.67% at June 30, 2024. The decrease in the ACL on loans was due primarily to the recovery of credit losses recorded in fiscal 2025.
55
The following chart quantifies the factors contributing to the changes in the ACL on loans held for investment (“LHFI”) for the years ended June 30, 2025 and 2024.
Management believes, based on currently available information, that the ACL is sufficient to absorb expected credit losses in loans held for investment at June 30, 2025 and 2024. The ACL is determined in accordance with ASC 326, which requires the recognition of expected credit losses over the contractual life of the loans, considering historical loss experience, current conditions, and reasonable and supportable forecasts. For additional information, see Item 1, “Business - “Asset Quality” in this Form 10-K.
Non-Interest Income. Total non-interest income was $3.5 million in fiscal 2025, a decrease of $410,000 or 10% from $3.9 million in fiscal 2024, due primarily to decreases in card and processing fees and other non-interest income.
Loan servicing and other fees increased $82,000, or 24%, to $419,000 in fiscal 2025 from $337,000 in fiscal 2024, due primarily to higher late fees on loans.
Deposit account fees decreased $42,000, or 4%, to $1.1 million in fiscal 2025 from $1.2 million in fiscal 2024, due primarily to lower non-sufficient funds fees, associated with fewer transactions.
56
Card and processing fees decreased $119,000, or 9%, to $1.3 million in fiscal 2025 from $1.4 million in fiscal 2024, due primarily to fewer debit card transactions.
Other non-interest income decreased $331,000, or 31%, to $735,000 in fiscal 2025 from $1.1 million in fiscal 2024. The prior year included a $540,000 net gain on other equity investments from the VISA share conversion, partly offset by a $190,000 positive fair value adjustment on the VISA equity investment in fiscal 2025.
Non-Interest Expense. Total non-interest expense was $30.8 million in fiscal 2025, an increase of $2.3 million or 8% from $28.5 million in fiscal 2024. The increase in non-interest expense was primarily attributable to increases in salaries and employee benefits, equipment expense and other non-interest expenses.
Salaries and employee benefits increased $1.4 million, or 8%, to $19.0 million in fiscal 2025 from $17.6 million in fiscal 2024. The increase in salaries and employee benefits was primarily attributable to increases in compensation costs, incentive compensation, group insurance costs and executive search costs.
Equipment expense increased $233,000, or 18%, to $1.5 million in fiscal 2025 from $1.3 million in fiscal 2024, due primarily to higher software license and maintenance costs.
Other non-interest expenses increased $594,000, or 20%, to $3.6 million in fiscal 2025 from $3.0 million in fiscal 2024, primarily attributable to higher litigation settlement expenses, debit card operation costs, deposit related costs and other operating costs. During fiscal 2025, the Bank recognized a $232,000 expense related to the settlement of wage and hour claims under California’s Private Attorneys General Act filed by former employees. The claims, which were previously stayed pending mediation, were resolved through a global settlement agreement in February 2025. No litigation reserve had been established prior to the settlement, which does not include any admission of liability and remains subject to court approval.
Provision for Income Taxes. The income tax provision reflects accruals for taxes at the applicable rates for federal income tax and California franchise tax based upon reported pre-tax income, adjusted for the effect of all permanent differences between income for tax and financial reporting purposes, such as non-deductible stock-based compensation and bank-owned life insurance policies, among others. Therefore, there are fluctuations in the effective income tax rate from period to period based on the relationship of net permanent differences to income before taxes.
The provision for income taxes was $2.6 million for fiscal 2025, representing an effective tax rate of 29.5%, down $418,000 or 14% from $3.0 million in fiscal 2024, representing an effective tax rate of 29.2%. The decrease in the provision for income taxes in fiscal 2025 compared to fiscal 2024 was due primarily to a lower income before the provision for income taxes.
The Corporation’s effective tax rate may differ from the estimated tax rates described above due to discrete items such as further adjustments to net deferred tax assets or liabilities, excess tax benefits derived from stock option exercises and non-taxable earnings from bank owned life insurance, among other items. The Corporation determined that the above tax rates meet its estimated income tax obligations. For additional information, see Note 8, "Income Taxes," of the Notes to Consolidated Financial Statements, contained in Item 8 of this Form 10-K.
57
Average Balances, Interest and Average Yields/Costs
The following table sets forth certain information for the periods regarding average balances of assets and liabilities as well as the total dollar amounts of interest income from average interest-earning assets and interest expense on average interest-bearing liabilities and average yields and costs thereof. Yields and costs for the periods indicated are derived by dividing income or expense by the average daily balance of assets or liabilities, respectively, for the periods presented.
| | | | | | | | | | | | | | | | | |
| | Year Ended June 30, | |||||||||||||||
| | 2025 | | 2024 | | ||||||||||||
| | Average | | | | | Yield/ | | Average | | | | | Yield/ | | ||
(Dollars In Thousands) | | Balance | | Interest | | Cost | | Balance | | Interest | | Cost | | ||||
Interest-earning assets: |
| |
|
| |
|
|
|
| |
|
| |
|
|
|
|
Loans receivable, net(1) | | $ | 1,051,448 | | $ | 52,543 |
| 5.00 | % | $ | 1,069,616 | | $ | 50,194 |
| 4.69 | % |
Investment securities | |
| 121,399 | |
| 1,858 |
| 1.53 | % |
| 144,466 | |
| 2,060 |
| 1.43 | % |
FHLB - San Francisco and other equity investments | |
| 10,213 | |
| 845 |
| 8.27 | % |
| 9,601 | |
| 802 |
| 8.35 | % |
Interest-earning deposits | |
| 28,990 | |
| 1,378 |
| 4.69 | % |
| 30,610 | |
| 1,674 |
| 5.38 | % |
| | | | | | | | | | | | | | | | | |
Total interest-earning assets | |
| 1,212,050 | |
| 56,624 |
| 4.67 | % |
| 1,254,293 | |
| 54,730 |
| 4.36 | % |
| | | | | | | | | | | | | | | | | |
Noninterest-earning assets | |
| 30,352 | |
|
|
|
| |
| 30,655 | |
|
|
|
| |
| | | | | | | | | | | | | | | | | |
Total assets | | $ | 1,242,402 | |
|
|
|
| | $ | 1,284,948 | |
|
|
|
| |
| | | | | | | | | | | | | | | | | |
Interest-bearing liabilities: | |
|
| |
|
|
|
| |
|
| |
|
|
|
| |
Checking and money market accounts(2) | | $ | 363,859 | |
| 190 |
| 0.05 | % | $ | 407,938 | |
| 290 |
| 0.07 | % |
Savings accounts | |
| 235,390 | |
| 500 |
| 0.21 | % |
| 260,249 | |
| 313 |
| 0.12 | % |
Time deposits | |
| 282,489 | |
| 10,536 |
| 3.73 | % |
| 247,863 | |
| 9,063 |
| 3.66 | % |
| | | | | | | | | | | | | | | | | |
Total deposits(3) | |
| 881,738 | |
| 11,226 |
| 1.27 | % |
| 916,050 | |
| 9,666 |
| 1.06 | % |
| | | | | | | | | | | | | | | | | |
Borrowings | |
| 216,290 | |
| 9,929 |
| 4.59 | % |
| 221,368 | |
| 10,141 |
| 4.58 | % |
| | | | | | | | | | | | | | | | | |
Total interest-bearing liabilities | |
| 1,098,028 | |
| 21,155 |
| 1.93 | % |
| 1,137,418 | |
| 19,807 |
| 1.74 | |
Recent insider activity
| Date | Insider | Role | Action | Shares | Price | Value |
|---|---|---|---|---|---|---|
| 2026-06-10 | Weiant David | Senior Vice President | Sell | -2,732 | $17.12 | -$46,772 |
| 2026-06-08 | Weiant David | Senior Vice President | Sell | -1,012 | $17.00 | -$17,204 |
| 2026-06-04 | Weiant David | Senior Vice President | Sell | -1,000 | $17.10 | -$17,100 |
| 2026-06-01 | Weiant David | Senior Vice President | Sell | -3,000 | $16.92 | -$50,760 |
Source: SEC Form 4 filings.
Next expected filings
- ~2026-08-28 10-K expected by 2026-09-08 (in 5 days)
- ~2026-11-07 10-Q expected by 2026-11-09 (in 76 days)
- ~2027-02-06 10-Q expected by 2027-02-08 (in 167 days)
- ~2027-05-07 10-Q expected by 2027-05-09 (in 257 days)
Predicted from historical filing cadence; not an SEC commitment.
Recent SEC filings
- 2026-07-28 8-K Earnings Release; Regulation FD Disclosure; Financial Statements and Exhibits
- 2026-07-24 8-K Officer/Director Change
- 2026-07-24 8-K Other Events; Financial Statements and Exhibits
- 2026-05-28 8-K Officer/Director Change
- 2026-05-07 10-Q Quarterly Report
- 2026-04-28 8-K Earnings Release; Regulation FD Disclosure; Financial Statements and Exhibits
- 2026-04-24 8-K Other Events; Financial Statements and Exhibits
- 2026-04-17 8-K Other Events
- 2026-02-06 10-Q Quarterly Report
- 2026-01-27 8-K Earnings Release; Regulation FD Disclosure; Financial Statements and Exhibits
- 2026-01-23 8-K Other Events; Financial Statements and Exhibits
- 2026-01-23 8-K Other Events; Financial Statements and Exhibits
- 2025-11-07 10-Q Quarterly Report
- 2025-10-28 8-K Earnings Release; Regulation FD Disclosure; Financial Statements and Exhibits
- 2025-10-24 8-K Other Events; Financial Statements and Exhibits