RIVERSIDE, Calif.--(BUSINESS WIRE)--April 22, 2004--Provident
Financial Holdings, Inc. ("Company") (Nasdaq:PROV), the holding
company for Provident Savings Bank, F.S.B. ("Bank"), today announced
earnings for the third quarter of its fiscal year ending June 30,
2004.
For the quarter ended March 31, 2004, the Company reported net
income of $4.11 million, or 57 cents per diluted share (on 7.21
million weighted-average shares outstanding), compared to net income
of $4.59 million, or 61 cents per diluted share (on 7.47 million
weighted-average shares outstanding), in the comparable period a year
ago. The decrease in weighted-average shares outstanding reflects the
Company's stock buyback programs.
"Our community banking business continues to improve as
demonstrated by the appreciably higher net interest income which is
driven by loan growth, transaction account (core deposits) growth and
the increase in our net interest margin," said Craig G. Blunden,
Chairman, President and Chief Executive Officer of the Company.
"Moreover, our mortgage banking earnings remain strong as a result of
our shift to higher margin products."
Return on average assets for the third quarter of fiscal 2004 was
1.25 percent, compared to 1.56 percent for the same period of fiscal
2003. Return on average stockholders' equity for the third quarter of
fiscal 2004 was 15.33 percent, compared to 18.34 percent for the
comparable period of fiscal 2003.
On a sequential quarter basis, net income for the third quarter of
fiscal 2004 increased by $1.02 million to $4.11 million, or 33
percent, from $3.09 million in the second quarter of fiscal 2004; and
diluted earnings per share increased 14 cents to 57 cents, or 33
percent, from 43 cents in the second quarter of fiscal 2004. Return on
average assets increased 26 basis points to 1.25 percent for the third
quarter of fiscal 2004 from 0.99 percent in the second quarter of
fiscal 2004, while return on average equity increased 343 basis points
to 15.33 percent for the third quarter of fiscal 2004 from 11.90
percent in the second quarter of fiscal 2004.
For the nine months ended March 31, 2004, net income was $10.79
million, a decrease of 11 percent from net income of $12.17 million
for the comparable period in fiscal 2003; and diluted earnings per
share for the nine months ended March 31, 2004, decreased eight cents,
or five percent, to $1.49 from $1.57 for the comparable period last
year. Return on average assets for the nine months ended March 31,
2004, was 1.13 percent, compared to 1.46 percent for the nine-month
period a year earlier. Return on average stockholders' equity for the
nine months ended March 31, 2004, was 13.65 percent, compared to 15.94
percent for the nine-month period a year earlier.
Net interest income after provision for loan losses increased
$1.26 million, or 16 percent, to $9.22 million in the third quarter of
fiscal 2004 from $7.96 million for the same period in fiscal 2003.
Non-interest income decreased $1.79 million, or 27 percent, to $4.91
million in the third quarter of fiscal 2004 from $6.70 million in the
comparable period of fiscal 2003. Non-interest expense increased
$20,000 to $7.00 million in the third quarter of fiscal 2004 from
$6.98 million in the comparable period in fiscal 2003.
The average balance of loans outstanding increased by $177.7
million to $945.3 million in the third quarter of fiscal 2004 from
$767.6 million in the same quarter of fiscal 2003, while the average
yield decreased by 72 basis points to 5.77 percent in the third
quarter of fiscal 2004 from an average yield of 6.49 percent in the
same quarter of fiscal 2003. The decrease in the average loan yield
was primarily attributable to higher yielding loans prepaying and new
loans funded at an average yield below the existing loan portfolio
yield. Total portfolio loan originations (including purchased loans)
in the third quarter of fiscal 2004 were $133.0 million, which
consisted primarily of single-family, multi-family, commercial real
estate and construction loans. This compares to total portfolio loan
originations (including purchased loans) of $117.8 million in the
third quarter of fiscal 2003. The balance outstanding of "preferred
loans" (multi-family, construction, commercial real estate and
commercial business loans) increased by $31.0 million, or 16 percent,
to $229.6 million at March 31, 2004, from $198.6 million at March 31,
2003, while the ratio of preferred loans to total portfolio loans
decreased to 26 percent at March 31, 2004, from 28 percent at March
31, 2003. Loan prepayments in the third quarter of fiscal 2004 were
$112.2 million, compared to $89.0 million in the same quarter of
fiscal 2003.
The average balance of deposits increased by $101.6 million to
$828.3 million and the average cost of deposits decreased by 59 basis
points to 1.58 percent in the third quarter of fiscal 2004, compared
to an average balance of $726.7 million and an average cost of 2.17
percent in the same quarter last year. Transaction account balances
(core deposits) increased by $131.9 million, or 31 percent, to $563.6
million at March 31, 2004, from $431.7 million at March 31, 2003,
while time deposits decreased by $29.7 million, or 10 percent, to
$281.5 million at March 31, 2004, from $311.2 million at March 31,
2003.
The average balance of FHLB advances increased by $33.7 million to
$339.2 million, and the average cost of advances decreased 17 basis
points to 3.77 percent in the third quarter of fiscal 2004, compared
to an average balance of $305.5 million and an average cost of 3.94
percent in the same quarter of fiscal 2003. The decrease in the
average cost of FHLB advances was primarily the result of maturing
higher cost advances replaced by new advances with lower costs and the
utilization of overnight advances at a significantly lower cost.
The net interest margin during the third quarter of fiscal 2004
increased 13 basis points to 3.09 percent, compared to 2.96 percent
during the same quarter last year. On a sequential quarter basis, the
net interest margin in the third quarter of fiscal 2004 increased 14
basis points from 2.95 percent in the second quarter of fiscal 2004.
For the nine months ended March 31, 2004, the net interest margin
increased to 2.98 percent, compared to 2.94 percent during the same
period last year.
During the third quarter of fiscal 2004, the provision for loan
losses was $420,000, compared to $205,000 during the same period of
fiscal 2003. The increase in the provision was primarily attributable
to the downgrade of seven commercial business loans to two borrowers,
in addition to loan growth during the quarter. The allowance for loan
losses is considered sufficient to absorb potential losses inherent in
loans held for investment.
The decrease in non-interest income in the third quarter of fiscal
2004 compared to the same period of fiscal 2003 was primarily the
result of a decrease in the gain on sale of loans. The gain on sale of
loans decreased by $1.3 million, or 27 percent, to $3.6 million, which
was primarily attributable to a lower volume of loans originated for
sale ($252.1 million in the third quarter of fiscal 2004, compared to
$302.2 million in the third quarter of fiscal 2003), as a result of
higher mortgage interest rates that led to lower refinance volumes.
The loan sale margin was 117 basis points in the third quarter of
fiscal 2004, down from 142 basis points in the prior year.
In the third quarter of fiscal 2004, the fair-value adjustment of
derivative financial instruments (Statement of Financial Accounting
Standards ("SFAS") No. 133) on the consolidated statement of
operations was an unfavorable adjustment of $379,000, compared to a
favorable adjustment of $208,000 in the same period last year. The
fair-value adjustment for SFAS No. 133 is derived from changes in the
market value of commitments to extend credit on loans to be held for
sale, forward loan sale agreements and option contracts. The SFAS No.
133 adjustment is relatively volatile and may have an adverse impact
on future earnings.
During the third quarter, the Company implemented the SEC guidance
described in the SEC Staff Accounting Bulletin No. 105, "Application
of Accounting Principles to Loan Commitments," which does not allow
for the recognition of servicing released premiums on commitments to
extend credit on loans to be held for sale. Consequently, the Company
excluded from its SFAS No. 133 adjustment $837,000 of estimated
servicing released premiums. This income will be realized in future
periods when the underlying loans are funded and sold.
Non-interest expense for the third quarter of fiscal 2004 was
relatively stable at $7.0 million, compared to the same quarter in
fiscal 2003. An increase in compensation expense was largely offset by
reductions in equipment expense, sales and marketing expenses and
other expense.
The Company's efficiency ratio for the third quarter of fiscal
2004 increased to 48 percent from 47 percent in the third quarter of
2003, a result of the decrease in non-interest income. For the nine
months ended March 31, 2004, the efficiency ratio increased to 52
percent from 49 percent during the same period in 2003.
Non-performing assets increased to $1.5 million, or 0.11 percent
of total assets, at March 31, 2004, compared to $1.0 million, or 0.09
percent of total assets, at March 31, 2003. The allowance for loan
losses was $7.9 million at March 31, 2004, or 0.89 percent of gross
loans held for investment, compared to $7.4 million, or 1.04 percent
of gross loans held for investment, at March 31, 2003.
During the quarter ended March 31, 2004, the Company repurchased
25,000 shares of its common stock at an average cost of $23.65 per
share. For the fiscal year to date, the Company repurchased 396,100
shares of its common stock at an average cost of $20.37 per share.
Currently, 116,669 shares remain under the existing share repurchase
authorization.
The Bank currently operates 12 retail/business banking offices in
Riverside County and San Bernardino County, along with 10 Provident
Bank Mortgage loan production offices located throughout Southern
California.
The Company will host a conference call for institutional
investors and bank analysts on Friday, April 23, 2004, at 10:00 a.m.
(Pacific Time) to discuss its financial results. The conference call
can be accessed by dialing 800-450-0788 and requesting the Provident
Financial Holdings Earnings Release Conference Call. An audio replay
of the conference call will be available through Friday, April 30,
2004, by dialing 800-475-6701 and referencing access code number
727411.
For more financial information about the Company, please visit the
website at www.myprovident.com and click on the Investor Relations
section.
Safe-Harbor Statement
Certain matters in this News Release and the conference call noted
above may constitute forward-looking statements within the meaning of
the Private Securities Litigation Reform Act of 1995. These
forward-looking statements may relate to, among others, expectations
of the business environment in which the Company operates, projections
of future performance, perceived opportunities in the market,
potential future credit experience, and statements regarding the
Company's mission and vision. These forward-looking statements are
based upon current management expectations, and may, therefore,
involve risks and uncertainties. The Company's actual results,
performance, or achievements may differ materially from those
suggested, expressed, or implied by forward-looking statements as a
result of a wide range of factors including, but not limited to, the
general business environment, interest rates, the California real
estate market, competitive conditions between banks and non-bank
financial services providers, regulatory changes, and other risks
detailed in the Company's reports filed with the Securities and
Exchange Commission, including its Annual Report on Form 10-K for the
fiscal year ended June 30, 2003.
PROVIDENT FINANCIAL HOLDINGS, INC.
Consolidated Statements of Financial Condition
(Unaudited - In Thousands)
March 31, June 30,
2004 2003
---------------------------------------------- -----------------------
Assets
Cash $32,367 $48,851
Investment securities - held to maturity
(fair value $62,501 and $77,210,
respectively) 62,202 76,838
Investment securities - available for sale at
fair value 214,970 220,273
Loans held for investment, net of allowance
for loan losses of $7,884 and $7,218,
respectively 881,418 744,219
Loans held for sale, at lower of cost or
market 7,102 4,247
Receivable from sale of loans 117,976 114,902
Accrued interest receivable 4,959 4,934
Real estate held for investment, net 10,320 10,643
Real estate owned, net - 523
Federal Home Loan Bank stock 27,635 20,974
Premises and equipment, net 8,009 8,045
Prepaid expenses and other assets 7,129 7,057
---------------------------------------------- -----------------------
Total assets $1,374,087 $1,261,506
---------------------------------------------- -----------------------
Liabilities and Stockholders' Equity
Liabilities:
Non-interest bearing deposits $44,698 $43,840
Interest bearing deposits 800,429 710,266
---------------------------------------------- -----------------------
Total deposits 845,127 754,106
Borrowings 385,385 367,938
Accounts payable, accrued interest and other
liabilities 33,591 32,584
---------------------------------------------- -----------------------
Total liabilities 1,264,103 1,154,628
Stockholders' equity:
Preferred stock, $.01 par value; authorized
2,000,000 shares; none issued and
outstanding - -
Common stock, $.01 par value; authorized
15,000,000 shares; issued 11,896,565 and
11,769,890 shares, respectively; outstanding
7,206,388 and 7,479,671 shares,
respectively). 119 118
Additional paid-in capital 56,866 54,691
Retained earnings 107,763 98,660
Treasury stock at cost (4,690,177 and
4,290,219 shares, respectively) (53,950) (45,801)
Unearned stock compensation (2,035) (2,450)
Accumulated other comprehensive income, net
of tax 1,221 1,660
---------------------------------------------- -----------------------
Total stockholders' equity 109,984 106,878
---------------------------------------------- -----------------------
Total liabilities and stockholders'
equity $1,374,087 $1,261,506
---------------------------------------------- -----------------------
PROVIDENT FINANCIAL HOLDINGS, INC.
Consolidated Statement of Operations
(Unaudited - In Thousands, Except Earnings Per Share)
Quarter Ended Nine months Ended
March 31, March 31,
2004 2003 2004 2003
---------------------------------- -----------------------------------
Interest income:
Loans receivable, net $13,643 $12,450 $39,449 $36,655
Investment securities 2,204 2,346 6,065 7,503
FHLB stock 237 234 670 627
Interest earning deposits 1 1 11 10
---------------------------------- -----------------------------------
Total interest income 16,085 15,031 46,195 44,795
Interest expense:
NOW and money market checking 335 367 1,074 1,183
Savings deposits 1,358 1,080 3,989 3,004
Time deposits 1,562 2,447 5,001 8,413
Borrowings 3,188 2,968 9,318 9,120
---------------------------------- -----------------------------------
Total interest expense 6,443 6,862 19,382 21,720
---------------------------------- -----------------------------------
Net interest income 9,642 8,169 26,813 23,075
Provision for loan losses 420 205 689 970
---------------------------------- -----------------------------------
Net interest income after
provision for loan losses 9,222 7,964 26,124 22,105
Non-interest income
Loan servicing and other fees 533 363 1,599 1,323
Gain on sale of loans, net 3,604 4,935 9,497 13,954
Real estate operations, net 19 177 222 529
Deposit account fees 507 438 1,491 1,312
Gain on sale of investment
securities - 428 - 694
Other 243 359 938 1,185
---------------------------------- -----------------------------------
Total non-interest income 4,906 6,700 13,747 18,997
Non-interest expense
Salaries and employee
benefits 4,781 4,557 14,028 13,394
Premises and occupancy 607 606 1,830 1,860
Equipment 430 556 1,279 1,516
Professional expenses 217 157 604 513
Sales and marketing expenses 170 203 707 651
Other 795 901 2,733 2,822
---------------------------------- -----------------------------------
Total non-interest expense 7,000 6,980 21,181 20,756
---------------------------------- -----------------------------------
Income before taxes 7,128 7,684 18,690 20,346
Provision for income taxes 3,014 3,096 7,904 8,175
---------------------------------- -----------------------------------
Net income $4,114 $4,588 $10,786 $12,171
---------------------------------- -----------------------------------
Basic earnings per share $0.61 $0.66 $1.60 $1.69
Diluted earnings per share $0.57 $0.61 $1.49 $1.57
Cash dividends per share $0.10 $0.03 $0.23 $0.10
---------------------------------- -----------------------------------
PROVIDENT FINANCIAL HOLDINGS, INC.
Consolidated Statement of Operations - Sequential Quarter
(Dollars in Thousands, Except Earnings Per Share) (Unaudited)
Quarter Ended
-------------------------
March 31, December 31,
2004 2003
-------------------------------------------- -------------------------
Interest income:
Loans receivable, net $13,643 $12,966
Investment securities 2,204 2,074
FHLB stock 237 203
Interest-earning deposits 1 6
-------------------------------------------- -------------------------
Total interest income 16,085 15,249
Interest expense:
Checking and money market accounts 335 375
Savings accounts 1,358 1,389
Time deposits 1,562 1,609
Borrowings 3,188 3,088
-------------------------------------------- -------------------------
Total interest expense 6,443 6,461
-------------------------------------------- -------------------------
Net interest income 9,642 8,788
Provision for loan losses 420 269
-------------------------------------------- -------------------------
Net interest income after provision for loan
losses 9,222 8,519
Non-interest income:
Loan servicing and other fees 533 543
Gain on sale of loans, net 3,604 2,739
Real estate operations, net 19 13
Deposit account fees 507 504
Other 243 315
-------------------------------------------- -------------------------
Total non-interest income 4,906 4,114
Non-interest expense:
Salaries and employee benefits 4,781 4,666
Premises and occupancy 607 568
Equipment 430 454
Professional expenses 217 229
Sales and marketing expenses 170 306
Other 795 992
-------------------------------------------- -------------------------
Total non-interest expense 7,000 7,215
-------------------------------------------- -------------------------
Income before taxes 7,128 5,418
Provision for income taxes 3,014 2,327
-------------------------------------------- -------------------------
Net income $4,114 $3,091
-------------------------------------------- -------------------------
Basic earnings per share $0.61 $0.46
Diluted earnings per share $0.57 $0.43
Cash dividends per share $0.10 $0.07
-------------------------------------------- -------------------------
PROVIDENT FINANCIAL HOLDINGS, INC.
Financial Highlights
(Unaudited)
Quarter Ended Nine months Ended
March 31, March 31,
--------------------- ---------------------
2004 2003 2004 2003
---------- ---------- ---------- ----------
SELECTED FINANCIAL RATIOS:
Return on average assets 1.25% 1.56% 1.13% 1.46%
Return on average
stockholders' equity 15.33% 18.34% 13.65% 15.94%
Stockholders' equity to
total assets 8.00% 8.58% 8.00% 8.58%
Net interest spread 2.95% 2.75% 2.84% 2.73%
Net interest margin 3.09% 2.96% 2.98% 2.94%
Efficiency ratio 48.12% 46.94% 52.22% 49.33%
Average interest earning
assets to average
interest bearing
liabilities 106.89% 106.83% 106.97% 107.53%
SELECTED FINANCIAL DATA:
Basic earnings per share $0.61 $0.66 $1.60 $1.69
Diluted earnings per share $0.57 $0.61 $1.49 $1.57
Book value per share $15.26 $13.60 $15.26 $13.60
Shares used for basic EPS
computation 6,740,983 6,936,031 6,741,098 7,183,840
Shares used for diluted
EPS computation 7,213,613 7,472,940 7,214,427 7,742,203
Total shares issued and
outstanding 7,206,388 7,453,234 7,206,388 7,453,234
ASSET QUALITY RATIOS:
Non-performing loans to
loans held for
investment, net 0.17% 0.11%
Non-performing assets to
total assets 0.11% 0.09%
Allowance for loan losses
to non-performing loans. 522.47% 943.52%
Allowance for loan losses
to gross loans held for
investment 0.89% 1.04%
REGULATORY CAPITAL RATIOS:
Tangible equity ratio 6.43% 6.63%
Tier 1 (core) capital
ratio 6.43% 6.63%
Total risk-based capital
ratio 11.68% 13.50%
Tier 1 risk-based capital
ratio 10.75% 12.39%
LOANS ORIGINATED FOR SALE
(In Thousands):
Retail originations $110,316 $114,824 $355,331 $334,441
Wholesale originations 141,772 187,344 433,104 545,666
---------- ---------- ---------- ----------
Total loans originated
for sale $252,088 $302,168 $788,435 $880,107
LOANS SOLD AND SETTLED (In
Thousands):
Servicing released $149,634 $313,969 $638,411 $851,609
Servicing retained 42,272 10,230 165,427 19,026
---------- ---------- ---------- ----------
Total loans sold and
settled $191,906 $324,199 $803,838 $870,635
PROVIDENT FINANCIAL HOLDINGS, INC.
Financial Highlights
(Unaudited - Dollars In Thousands)
As of March 31,
---------------------------------
2004 2003
---------------- ----------------
Balance Rate Balance Rate
--------- ------ --------- ------
INVESTMENT SECURITIES:
Held to maturity:
U.S. government agency securities $59,204 2.93% $104,254 2.87%
U.S. government mortgage-backed
securities 6 12.66% 8 15.28%
Corporate bonds 2,792 7.04% 2,775 7.09%
Time deposits at other banks 200 1.00% 100 1.19%
--------- ---------
Total investment securities held
to maturity 62,202 3.11% 107,137 2.98%
Available for sale (at fair value):
U.S. government agency securities 22,871 2.85% 36,991 2.74%
U.S. government mortgage-backed
securities 18,336 3.66% - -
U.S. government agency mortgage-
backed securities 159,210 3.76% 155,379 4.30%
Collateralized mortgage obligations 13,815 3.67% 9,053 4.45%
Freddie Mac common stock 709 637
Fannie Mae common stock 29 26
--------- ---------
Total investment securities
available for sale 214,970 3.64% 202,086 4.01%
--------- ---------
Total investment securities $277,172 3.52% $309,223 3.65%
LOANS HELD FOR INVESTMENT:
Single-family (1 to 4 units) $651,123 5.40% $503,867 5.97%
Multi-family (5 or more units) 62,023 5.89% 47,260 5.98%
Commercial real estate 94,929 6.59% 84,878 6.84%
Construction 133,400 5.49% 91,760 6.22%
Commercial business 16,693 6.75% 22,980 7.48%
Consumer 681 8.74% 1,050 8.09%
Other 6,373 6.79% 5,386 7.64%
--------- ---------
Total loans held for investment 965,222 5.60% 757,181 6.16%
Undisbursed loan funds (77,428) (48,311)
Deferred loan costs, net 1,508 388
Allowance for loan losses (7,884) (7,350)
--------- ---------
Total loans held for investment,
net $881,418 $701,908
Purchased loans serviced by others
(net) included above $36,324 6.21% $46,143 6.56%
DEPOSITS :
Checking accounts - non-interest
bearing $44,698 $40,855
Checking accounts - interest bearing 123,007 0.58% 99,752 0.77%
Savings accounts 348,640 1.48% 243,699 1.88%
Money market accounts 47,299 1.22% 47,349 1.48%
Time deposits 281,483 2.38% 311,178 2.98%
--------- ---------
Total deposits $845,127 1.56% $742,833 2.06%
Note: The interest rate described in the rate column is the
weighted-average interest rate of all instruments, which are included
in the balance of the respective line item.
PROVIDENT FINANCIAL HOLDINGS, INC.
Financial Highlights
(Unaudited - Dollars In Thousands)
As of March 31,
-------------------------------
2004 2003
--------------- ---------------
Balance Rate Balance Rate
--------------- ---------------
BORROWINGS:
Overnight $99,500 1.10% $102,000 1.44%
Six month or less 15,000 6.01% 2,000 7.45%
Over nine months to one year 10,000 5.79% 18,031 5.78%
Over one year to two years 27,000 4.33% 25,000 5.92%
Over two years to three years 20,000 2.48% 27,000 4.33%
Over three years to four years 52,000 3.81% - -
Over four years to five years 50,000 3.52% 52,000 3.81%
Over five years 111,885 5.00% 86,914 5.39%
---------- ----------
Total borrowings $385,385 3.52% $312,945 3.83%
Quarter Ended Nine months Ended
March 31, March 31,
----------------------- -----------------------
2004 2003 2004 2003
SELECTED AVERAGE Balance Balance Balance Balance
BALANCE SHEETS:
----------- ----------- ----------- -----------
Loans receivable, net
(1) $945,349 $767,646 $894,690 $730,527
Investment securities 276,845 316,573 280,330 298,225
FHLB stock 25,191 18,139 22,766 15,536
Interest earning
deposits 502 301 1,277 929
----------- ----------- ----------- -----------
Total interest earning
assets $1,247,887 $1,102,659 $1,199,063 $1,045,217
Deposits $828,267 $726,658 $803,229 $707,064
Borrowings 339,186 305,522 317,659 264,974
----------- ----------- ----------- -----------
Total interest bearing
liabilities $1,167,453 $1,032,180 $1,120,888 $972,038
Quarter Ended Nine months Ended
March 31, March 31,
----------------------- -----------------------
2004 2003 2004 2003
Yield/Cost Yield/Cost Yield/Cost Yield/Cost
----------- ----------- ----------- -----------
Loans receivable, net
(1) 5.77% 6.49% 5.88% 6.69%
Investment securities 3.18% 2.96% 2.88% 3.35%
FHLB stock 3.76% 5.16% 3.92% 5.38%
Interest earning
deposits 0.72% 1.33% 1.15% 1.44%
Total interest earning
assets 5.16% 5.45% 5.14% 5.71%
Deposits 1.58% 2.17% 1.66% 2.37%
Borrowings 3.77% 3.94% 3.89% 4.58%
Total interest bearing
liabilities 2.21% 2.70% 2.30% 2.98%
(1) Includes loans held for sale.
Note: The interest rate or yield/cost described in the rate or
yield/cost column is the weighted-average interest rate or yield/cost
of all instruments, which are included in the balance of the
respective line item.
CONTACT: Provident Financial Holdings, Inc.
Craig G. Blunden/Donavon P. Ternes, 909-686-6060
SOURCE: Provident Financial Holdings, Inc.