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

May 08, 2009 | About:
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Provident Financial Holdings Inc. (PROV) filed Quarterly Report for the period ended 2009-03-31.

Provident Financial Holdings Inc. is the holding company for Provident Savings Bank F.S.B. Provident Financial Holdings Inc. has a market cap of $41.8 million; its shares were traded at around $6.72 with and P/S ratio of 0.4. The dividend yield of Provident Financial Holdings Inc. stocks is 1.8%. Provident Financial Holdings Inc. had an annual average earning growth of 14.1% over the past 10 years.

Highlight of Business Operations:

Loans held for investment decreased $154.8 million, or 11 percent, to $1.21 billion at March 31, 2009 from $1.37 billion at June 30, 2008. Total loan principal payments during the first nine months of fiscal 2009 were $126.0 million, compared to $186.6 million during the comparable period in fiscal 2008. During the first nine months of fiscal 2009, the Bank originated $20.1 million of loans held for investment, of which $10.1 million, or 49 percent, were “preferred loans” (multi-family, commercial real estate, construction and commercial business loans). In addition, the Bank purchased $595,000 of loans for investment in the first nine months of fiscal 2009, down substantially from $99.8 million during the same period last year. The decrease in purchased loans was due to the Corporation s decision to compete less aggressively for origination volume given the economic uncertainty of the current banking environment. The balance of preferred loans decreased to $513.6 million, or 41 percent of loans held for investment at March 31, 2009, as compared to $569.6 million, or 41 percent of loans held for investment at June 30, 2008. Purchased loans serviced by others at March 31, 2009 were $129.8 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.

Total loans held for sale increased $87.6 million, or 307 percent, to $116.1 million at March 31, 2009 from $28.5 million at June 30, 2008. The increase was due primarily to the timing difference between loan originations and loan sale settlements. See “Loan Volume Activities” on page 38. For the first nine months of fiscal 2009, total loans originated for sale were $701.0 million, up from $284.8 million in the same period last year, while total loan sale settlements were $616.8 million and $269.2 million, respectively.

For the Nine Months Ended March 31, 2009 and 2008. Net interest income (before the provision for loan losses) for the first nine months of fiscal 2009 was $32.2 million, up $2.5 million or eight percent from $29.7 million during the same period of fiscal 2008. This increase was the result of a higher net interest margin, partly offset by lower average earning assets. The net interest margin was 2.82 percent in the first nine months of fiscal 2009, up 32 basis points from 2.50 percent during the same period of fiscal 2008. The increase in the net interest margin during the first nine months of fiscal 2009 was primarily attributable to a decrease in the average cost of funds which decreased more than the average yield on earning assets, which remained relatively stable. The average balance of earning assets decreased $54.7 million, or three percent, to $1.52 billion in the first nine months of fiscal 2009 from $1.58 billion in the comparable period of fiscal 2008.

Interest income from investment securities decreased $324,000, or 17 percent, to $1.6 million during the quarter ended March 31, 2009 from $2.0 million in the same quarter of fiscal 2008. This 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 34 basis points to 4.61 percent during the quarter ended March 31, 2009 from 4.95 percent during the quarter ended March 31, 2008. The decrease in the average yield of investment securities was primarily attributable to the net premium amortization of $63,000 in the third quarter of fiscal 2009 as compared to the net discount amortization of $9,000 in the comparable quarter of fiscal 2008. During the third quarter of fiscal 2009, the Bank did not purchase any investment securities, while $9.1 million of principal payments were received on mortgage-backed securities. The average balance of investment securities decreased $16.4 million, or 10 percent, to $141.8 million in the third quarter of fiscal 2009 from $158.2 million in the same quarter of fiscal 2008.

Interest income from investment securities decreased $261,000 to $5.3 million during the nine months ended March 31, 2009 from $5.6 million in the same period of fiscal 2008. This decrease was primarily a result of a decrease in average yield and a decrease in the average balance. The average yield on the investment securities decreased seven basis points to 4.79 percent during the nine months ended March 31, 2009 from 4.86 percent during the nine months ended March 31, 2008. The average balance of investment securities decreased $5.2 million, or three percent, to $148.6 million in the first nine months of fiscal 2009 from $153.8 million in the same period of fiscal 2008. During the first nine months of fiscal 2009, $8.1 million of investment securities were purchased, while $25.0 million of principal payments were received on mortgage-backed securities.

For the Nine Months Ended March 31, 2009 and 2008. Total interest expense was $32.6 million for the first nine months of fiscal 2009 as compared to $42.1 million for the same period of fiscal 2008, a decrease of $9.5 million, or 23 percent. This decrease was primarily attributable to a lower average balance of interest-bearing liabilities and a decrease in the average cost. The average balance of interest-bearing liabilities, principally deposits and borrowings, decreased $45.0 million, or three percent, to $1.43 billion during the first nine months of fiscal 2009 from $1.47 billion during the same period of fiscal 2008. The average cost of interest-bearing liabilities was 3.05 percent during the nine months ended March 31, 2009, down 77 basis points from 3.82 percent during the same period of fiscal 2008.

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