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Provident Financial Holdings Inc. Reports Operating Results (10-Q)

February 09, 2009 | About:

Provident Financial Holdings Inc. (PROV) filed Quarterly Report for the period ended 2008-12-31.

Provident Financial Holdings Inc. is the holding company for Provident Savings Bank F.S.B. Provident Financial Holdings Inc. has a market cap of $27.94 million; its shares were traded at around $4.525 with and P/S ratio of 0.27. The dividend yield of Provident Financial Holdings Inc. stocks is 4.44%. Provident Financial Holdings Inc. had an annual average earning growth of 14.1% over the past 10 years.

Highlight of Business Operations:

(multi-family, commercial real estate, construction and commercial business loans). The Bank did not purchase any loans for investment in the first six months of fiscal 2009, resulting from the Corporation s decision to compete less aggressively for origination volume given the economic uncertainty of the current banking environment. Total loan principal payments during the first six months of fiscal 2009 were $89.7 million, compared to $134.7 million during the comparable period in fiscal 2008. The balance of preferred loans decreased to $528.5 million, or 41 percent of loans held for investment at December 31, 2008, as compared to $569.6 million, or 41 percent of loans held for investment at June 30, 2008. Purchased loans serviced by others at December 31, 2008 were $132.7 million, or 10 percent of loans held for investment, compared to $146.5 million, or 11 percent of loans held for investment at June 30, 2008.

For the Quarters Ended December 31, 2008 and 2007. The Corporation s net interest income (before the provision for loan losses) increased by $673,000, or seven percent, to $10.2 million for the quarter ended December 31, 2008 from $9.6 million in the comparable period in fiscal 2008. This increase was the result of a higher net interest margin, partly offset by lower average earning assets. The net interest margin increased to 2.70 percent in the second quarter of fiscal 2009, up 28 basis points from 2.42 percent for the same period of fiscal 2008. The increase in the net interest margin during the second quarter of fiscal 2009 was primarily attributable to a decrease in the average cost of funds which declined more than the average yield on earning assets. The average balance of earning assets decreased $66.3 million to $1.52 billion in the second quarter of fiscal 2009 from $1.58 billion in the comparable period of fiscal 2008.

Interest income from investment securities decreased $98,000, or five percent, to $1.8 million during the quarter ended December 31, 2008 from $1.9 million in the same quarter of fiscal 2008. The decrease was primarily a result of a decrease in average yield and a decrease in the average balance. The average yield on investment securities decreased 12 basis points to 4.83 percent during the quarter ended December 31, 2008 from 4.95 percent during the quarter ended December 31, 2007. The decrease in the average yield of investment securities was primarily attributable to the net premium amortization of $24,000 in the second quarter of fiscal 2009 as compared to the net discount amortization of $4,000 in the comparable quarter of fiscal 2008. During the second quarter of fiscal 2009, the Bank did not purchase any investment securities, while $7.5 million of principal payments were received on mortgage-backed securities. The average balance of investment securities decreased $4.5 million, or three percent, to $149.3 million in the second quarter of fiscal 2009 from $153.8 million in the same quarter of fiscal 2008.

Interest income from investment securities increased $63,000 to $3.7 million during the six months ended December 31, 2008 from $3.6 million in the same period of fiscal 2008. This increase was primarily a result of an increase in average yield and an increase in the average balance. The average yield on the investment securities increased seven basis points to 4.88 percent during the six months ended December 31, 2008 from 4.81 percent during the six months ended December 31, 2007. The average balance of investment securities increased $418,000, or less than one percent, to $152.0 million in the first six months of fiscal 2009 from $151.6 million in the same period of fiscal 2008. During the first six months of fiscal 2009, $8.1 million of investment securities were purchased, while $15.9 million of principal payments were received on mortgage-backed securities.

FHLB – San Francisco stock dividends decreased by $577,000, or 64 percent, to $324,000 in the first six months of fiscal 2009 from $901,000 in the same period of fiscal 2008. This decrease was attributable to a lower average yield and a lower average balance in the amount of FHLB – San Francisco stock. The average yield on FHLB – San Francisco stock decreased 348 basis points to 1.99 percent during the first six months of fiscal 2009 from 5.47 percent during the same period last year. The decrease in the average yield was primarily attributable to the FHLB – San Francisco announcement on January 8, 2009 that they would not pay a dividend for the quarter ended December 31, 2008. The average balance of FHLB – San Francisco stock decreased $378,000 to $32.6 million during the first six months of fiscal 2009 from $33.0 million during the same period of fiscal 2008. The average balance of FHLB – San Francisco stock was consistent with the borrowing requirements of the FHLB – San Francisco.

Interest expense on deposits for the six months ended December 31, 2008 was $13.3 million as compared to $18.5 million for the same period of fiscal 2008, a decrease of $5.2 million, or 28 percent. The decrease in interest expense on deposits was primarily attributable to a lower average cost and a lower average balance. The average cost of deposits decreased to 2.76 percent during the six months ended December 31, 2008 from 3.64 percent during the same period of fiscal 2008, a decrease of 88 basis points. The decline in the average balance was primarily in time deposits, the result of the Bank s strategic decision to compete less aggressively for this product. The average balance of deposits decreased $47.9 million, or five percent, to $959.2 million during the six months ended December 31, 2008 from $1.01 billion during the same period of fiscal 2008. The average balance of transaction accounts decreased by $15.4 million, or four percent, to $329.7 million in the six months ended December 31, 2008 from $345.1 million in the six months ended December 31, 2007. The average balance of time deposits decreased by $32.4 million, or five percent, to $629.6 million in the six months ended December 31, 2008 as compared to $662.0 million in the six months ended December 31, 2007. The average balance of transaction account deposits to total deposits in the first six months of fiscal 2009 was unchanged at 34 percent, compared to the same period of fiscal 2008.

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