EX-99.1 2 ex991.htm EXHIBIT 99.1
Exhibit 99.1

3756 Central Avenue | Contacts:
Riverside, CA 92506 | Craig G. Blunden, CEO
(951) 686 – 6060 | Donavon P. Ternes, COO, CFO

PROVIDENT FINANCIAL HOLDINGS
REPORTS THIRD QUARTER RESULTS
Net Interest Margin Expands by 18 Basis Points
Loans Originated For Sale Increase by 322%
Significant Increase in Gain on Sale of Loans
Capital Ratios Remain Significantly Above “Well-Capitalized” Regulatory Thresholds

Riverside, Calif. – April 29, 2009 – Provident Financial Holdings, Inc. (“Company”), NASDAQ GS: PROV, the holding company for Provident Savings Bank, F.S.B. (“Bank”), today announced third quarter results for the fiscal year ending June 30, 2009.
For the quarter ended March 31, 2009, the Company reported a net loss of $(2.57) million, or $(0.41) per diluted share (on 6.22 million average shares outstanding), compared to net income of $957,000, or $0.15 per diluted share (on 6.20 million average shares outstanding), in the comparable period a year ago. The decrease in the third quarter results was primarily attributable to an increase in the provision for loan losses, partly offset by an increase in non-interest income.
“Poor economic conditions resulted in an increase in delinquent loans requiring a $13.5 million provision for loan losses during the quarter ended March 31, 2009. The Company will continue to monitor economic conditions and necessarily respond to further deterioration by bolstering our allowance for loan losses,” said Craig G. Blunden,

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Chairman, President and Chief Executive Officer of the Company. “On a positive note, the unprecedented actions of the U.S. government during this economic crisis have resulted in significantly lower mortgage interest rates which have led to a meaningful improvement in our mortgage banking business. We expect the favorable mortgage banking environment will provide the Company with a tremendous opportunity to improve core earnings.”
As of March 31, 2009 the Bank exceeded all regulatory capital requirements and is deemed “well-capitalized” with Tangible Capital, Core Capital, Total Risk-Based Capital and Tier 1 Risk-Based Capital ratios of 7.06 percent, 7.06 percent, 12.68 percent and 11.42 percent, respectively. As of June 30, 2008 these ratios were 7.19 percent, 7.19 percent, 12.25 percent and 10.99 percent, respectively. For each period, the capital ratios were well above the minimum required ratios to be deemed “well-capitalized” (5.00 percent for Core Capital, 10.00 percent for Total Risk-Based Capital and 6.00 percent for Tier 1 Risk-Based Capital).
Return on average assets for the third quarter of fiscal 2009 was negative (0.67) percent, compared to 0.23 percent for the same period of fiscal 2008. Return on average stockholders’ equity for the third quarter of fiscal 2009 was negative (8.69) percent, compared to 2.99 percent for the comparable period of fiscal 2008.
On a sequential quarter basis, the third quarter results improved to a net loss of $(2.57) million from a net loss of $(6.51) million in the second quarter of fiscal 2009. The improvement was primarily attributable to a decrease in the provision for loan losses and a significant increase in non-interest income and, to a much lesser extent, an increase in net interest income, partly offset by an increase in operating expenses. Diluted loss per

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share improved $0.64, to a loss of $(0.41) from a loss of $(1.05) per share in the second quarter of fiscal 2009. Return on average assets improved 100 basis points to negative (0.67) percent for the third quarter of fiscal 2009 from negative (1.67) percent in the second quarter of fiscal 2009 and return on average equity for the third quarter of fiscal 2009 was negative (8.69) percent, compared to negative (21.44) percent for the second quarter of fiscal 2009.
For the nine months ended March 31, 2009, the net loss was $(8.75) million, compared to net income of $2.61 million in the comparable period ended March 31, 2008; and diluted earnings per share for the nine months ended March 31, 2009 decreased to a loss of $(1.41) from earnings of $0.42 for the comparable period last year. Return on average assets for the nine months ended March 31, 2009 decreased to negative (0.74) percent from 0.22 percent for the nine-month period a year earlier. Return on average stockholders’ equity for the nine months ended March 31, 2009 was negative (9.62) percent, compared to 2.73 percent for the same nine-month period a year earlier.
Net interest income before provision for loan losses decreased slightly to $10.67 million in the third quarter of fiscal 2009 from $10.72 million for the same period in fiscal 2008. Non-interest income increased $4.79 million, or 299 percent, to $6.39 million in the third quarter of fiscal 2009 from $1.60 million in the comparable period of fiscal 2008, reflecting an increase in the gain on sale of loans as a result of increased mortgage banking activity during the quarter, as described below. Non-interest expense increased $649,000, or nine percent, to $7.95 million in the third quarter of fiscal 2009 from $7.30 million in the comparable period in fiscal 2008.

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The average balance of loans outstanding decreased by $100.1 million, or seven percent, to $1.30 billion in the third quarter of fiscal 2009 from $1.40 billion in the same quarter of fiscal 2008. The managed decline in the loan balance was consistent with the Company’s short-term strategy to curtail portfolio growth of multi-family, commercial real estate, construction and single-family mortgage loans held for investment and its goal of maintaining prudent capital ratios in response to deteriorating economic conditions. The average yield decreased by 39 basis points to 5.78 percent in the third quarter of fiscal 2009 from an average yield of 6.17 percent in the same quarter of fiscal 2008. The decrease in the average loan yield was primarily attributable to accrued interest income reversals on non-accrual loans, loan payoffs of loans which had a higher average yield than the average yield of loans held for investment and adjustable rate loans re-pricing to lower market interest rates. Total loans originated for investment in the third quarter of fiscal 2009 were $3.5 million, consisting primarily of multi-family loans. Total loans originated for investment were $67.5 million (including $28.3 million of loans purchased for investment) in the third quarter of fiscal 2008, which consisted primarily of multi-family and single-family loans. The outstanding balance of “preferred loans” (multi-family, commercial real estate, construction and commercial business loans) decreased by $79.6 million, or 13 percent, to $513.6 million at March 31, 2009 from $593.2 million at March 31, 2008. Outstanding construction loans declined $19.6 million, or 72 percent, to $7.6 million at March 31, 2009 from $27.2 million at March 31, 2008. The percentage of preferred loans to total loans held for investment at March 31, 2009 remained unchanged at 41 percent in comparison to March 31, 2008. Loan

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principal payments received in the third quarter of fiscal 2009 were $36.2 million, compared to $51.9 million in the same quarter of fiscal 2008.
The Federal Home Loan Bank (“FHLB”) – San Francisco did not pay a dividend on its stock in the third quarter of fiscal 2009 as compared to $419,000 in the same quarter last year and announced that it will not redeem excess capital stock on the next regularly scheduled repurchase date of April 30, 2009 as a result of its desire to strengthen its capital ratios.
Average deposits decreased by $71.2 million, or seven percent, to $941.1 million and the average cost of deposits decreased by 110 basis points to 2.26 percent in the third quarter of fiscal 2009, compared to an average balance of $1.01 billion and an average cost of 3.36 percent in the same quarter last year. Transaction account balances (core deposits) decreased by $8.1 million, or two percent, to $340.0 million at March 31, 2009 from $348.1 million at March 31, 2008, primarily attributable to a decrease in money market account balances. Time deposits decreased by $76.2 million, or 11 percent, to $607.9 million at March 31, 2009 compared to $684.1 million at March 31, 2008. The decrease in time deposits was primarily attributable to the strategic decision to be more conservative on the interest rates the Bank pays on time deposits and compete less aggressively with those competitors paying above market rates in order to reduce the cost of the Company liabilities. The Bank does not have any brokered deposits.
The average balance of borrowings, which primarily consists of FHLB – San Francisco advances, decreased $13.0 million to $460.3 million in the third quarter of fiscal 2009 while the average cost of advances decreased eight basis points to 4.03 percent in the third quarter of fiscal 2009, compared to an average balance of $473.3

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million and an average cost of 4.11 percent in the same quarter of fiscal 2008. The decrease in the average cost of borrowings was primarily the result of maturing long-term advances which had a higher average cost than the average cost of new advances. Additionally, interest rates on FHLB – San Francisco advances have fallen as a result of the unprecedented actions taken by the U.S. Treasury Department and Federal Reserve to reduce interest rates in response to the global credit crisis.
The net interest margin during the third quarter of fiscal 2009 improved 18 basis points to 2.87 percent from 2.69 percent during the same quarter last year. On a sequential quarter basis, the net interest margin in the third quarter of fiscal 2009 improved 17 basis points from 2.70 percent in the second quarter of fiscal 2009.
During the third quarter of fiscal 2009, the Company recorded a provision for loan losses of $13.54 million, compared to a provision for loan losses of $3.15 million during the same period of fiscal 2008. The provision for loan losses in the third quarter of fiscal 2009 was primarily attributable to an increase in loan classification downgrades, including an increase in non-performing loans ($12.65 million) and an increase in the general loan loss allowance for loans held for investment ($2.08 million), partly offset by a decline in loans held for investment ($1.19 million). The general loan loss allowance was augmented to reflect the impact on loans held for investment resulting from the deteriorating general economic conditions in the U.S. such as higher unemployment rates, negative gross domestic product, declining real estate values and lower retail sales.
Non-performing assets, with underlying collateral primarily located in Southern California, increased to $81.0 million, or 5.18 percent of total assets, at March 31, 2009, compared to $32.5 million, or 1.99 percent of total assets at June 30, 2008 and $27.3

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million, or 1.63 percent of total assets, at March 31, 2008. The non-performing assets at March 31, 2009 were primarily comprised of 195 single-family loans ($56.4 million); six multi-family loans ($4.1 million); 10 construction loans ($2.3 million, nine of which, or $263,000, are associated with the previously disclosed Coachella, California construction loan fraud); three commercial real estate loans ($2.2 million); one lot loan ($1.0 million); four commercial business loans ($159,000); nine single-family loans repurchased from, or unable to sell to investors ($1.0 million); and real estate owned comprised of 56 single-family properties ($13.4 million) and 17 undeveloped lots acquired in the settlement of loans ($468,000, fourteen of which, or $409,000, are associated with the Coachella, California construction loan fraud). Net charge-offs for the quarter ended March 31, 2009 were $6.32 million or 1.94 percent of average loans receivable, compared to $3.14 million or 0.89 percent of average loans receivable for the quarter ended June 30, 2008 and to $3.58 million or 1.02 percent of average loans receivable in the comparable quarter last year.
Classified assets at March 31, 2009 were $101.3 million, comprised of $18.0 million in the special mention category, $69.4 million in the substandard category and $13.9 million in real estate owned. Classified assets at June 30, 2008 were $68.6 million, consisting of $29.4 million in the special mention category, $29.8 million in the substandard category and $9.4 million in real estate owned. Classified assets increased at March 31, 2009 from the June 30, 2008 level primarily as a result of additional loan classification downgrades.
For the quarter ended March 31, 2009, thirty-one loans for $13.1 million were modified from their original terms, were re-underwritten and were identified in our asset

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quality reports as Restructured Loans. As of March 31, 2009, the outstanding balance of Restructured Loans was $28.2 million: 20 are classified as pass, are not included in the classified asset totals described earlier and remain on accrual status ($7.1 million); one is classified as substandard and remains on accrual status ($240,000); and 58 are classified as substandard on non-accrual status ($20.9 million).
The allowance for loan losses was $42.2 million at March 31, 2009, or 3.36 percent of gross loans held for investment, compared to $19.9 million, or 1.43 percent of gross loans held for investment at June 30, 2008. The allowance for loan losses at March 31, 2009 includes $24.0 million of specific loan loss reserves, compared to $6.5 million of specific loan loss reserves at June 30, 2008. Management believes that, based on currently available information, the allowance for loan losses is sufficient to absorb potential losses inherent in loans held for investment.
The increase in non-interest income in the third quarter of fiscal 2009 compared to the same period of fiscal 2008 was primarily the result of an increase in the gain on sale of loans, partly offset by a decrease in loan servicing and other fees, a larger loss on sale and operations of real estate owned acquired in the settlement of loans and a decrease in other non-interest income. The decrease in loan servicing and other fees was primarily attributable to lower loan prepayment fees and higher reserves on mortgage servicing rights resulting from higher loan prepayment estimates; while the decrease in other non-interest income was primarily attributable to lower investment services fees and legal settlements.
The gain on sale of loans increased to $6.1 million for the quarter ended March 31, 2009 from $306,000 in the comparable quarter last year. The average loan sale

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margin for mortgage banking was 133 basis points for the quarter ended March 31, 2009, compared to 41 basis points in the comparable quarter last year. Total loans sold for the quarter ended March 31, 2009 were $300.4 million, up 329 percent from $70.0 million for the same quarter last year. The gain on sale of loans for the third quarter of fiscal 2009 was reduced by a $384,000 recourse provision on loans sold that are subject to repurchase, compared to a $264,000 recourse provision in the comparable quarter last year. The mortgage banking environment has shown tremendous recent improvement as a result of the significant decline in mortgage interest rates but remains highly volatile as a result of the well-publicized deterioration of the single-family real estate market.
The volume of loans originated for sale increased $279.5 million, or 322 percent, to $366.4 million in the third quarter of fiscal 2009 from $86.9 million during the same period last year, the result of better liquidity in the secondary mortgage markets particularly in FHA/VA loan products and an increase in activity resulting from lower mortgage interest rates. Total loan originations (including loans originated for investment, loans purchased for investment and loans originated for sale) were $369.9 million in the third quarter of fiscal 2009, an increase of $215.5 million, or 140 percent, from $154.4 million in the same quarter of fiscal 2008.
Twenty-eight real estate owned properties were sold for a net loss of $(606,000) in the quarter ended March 31, 2009 compared to 12 real estate owned properties sold for a net loss of $(302,000) in the same quarter last year. As of March 31, 2009, the real estate owned balance was $13.9 million (73 properties), compared to $9.4 million (45 properties) at June 30, 2008.

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The increase in non-interest expense was primarily the result of an increase in compensation, increases in deposit insurance premiums and regulatory assessments and an increase in other operating expenses. The higher compensation and other operating expenses were primarily attributable to mortgage banking operations. The higher deposit insurance and regulatory assessments were primarily attributable to an increase in the FDIC insurance premium.
The Company’s efficiency ratio improved to 47 percent in the third quarter of fiscal 2009 from 59 percent in the third quarter of fiscal 2008. The improvement was the net result of an increase in non-interest income, partly offset by a decrease in net interest income and an increase in non-interest expense.
The effective income tax rate for the third quarter of fiscal 2009 was 42.0 percent, compared to the effective income tax rate of 48.9 percent in the same quarter last year. The lower income tax rate was primarily the result of a lower percentage of permanent tax differences relative to income before taxes. The Company believes that the effective income tax rate applied in the third quarter of fiscal 2009 reflects its current income tax benefit.
The Bank currently operates 14 retail/business banking offices in Riverside County and San Bernardino County (Inland Empire). Provident Bank Mortgage operates wholesale loan production offices in Pleasanton and Rancho Cucamonga, California and retail loan production offices in Glendora and Riverside, California.
The Company will host a conference call for institutional investors and bank analysts on Thursday, April 30, 2009 at 8:30 a.m. (Pacific Time) to discuss its financial results. The conference call can be accessed by dialing (800) 398-9397 and requesting

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the Provident Financial Holdings Earnings Release Conference Call. An audio replay of the conference call will be available through Thursday, May 7, 2009 by dialing (800) 475-6701 and referencing access code number 996190.
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
This press release and the conference call noted above contain statements that the Company believes are “forward-looking statements.” These statements relate to the Company’s financial condition, results of operations, plans, objectives, future performance or business. You should not place undue reliance on these statements, as they are subject to 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 Company 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 Company. 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 include, but are not limited to, the credit risks of lending activities, including changes in the level and trend of loan delinquencies and write-offs that may be impacted by deterioration in the housing and commercial real estate markets and may lead to increased losses and non-performing assets in our loan portfolio, result in our allowance for loan losses not being adequate to cover actual losses, and require us to materially increase our reserves; changes in general economic conditions, either nationally or in our market areas; changes in the levels of general interest rates, and the relative differences between shor t and long term interest rates, deposit interest rates, our net interest margin and funding sources; fluctuations in the demand for loans, the number of unsold homes and other properties and fluctuations in real estate values in our market areas; results of examinations of us by the Office of Thrift Supervision and our bank subsidiary by the Federal Deposit Insurance Corporation, the Office of Thrift Supervision or other regulatory authorities, including the possibility that any such regulatory authority may, among other things, require us to increase our reserve for loan losses to write-down assets, change our regulatory capital position or affect our ability to borrow funds or maintain or increase deposits, which could adversely affect our liquidity and earnings; our ability to control operating costs and expenses; our ability to implement our branch expansion strategy; our ability to successfully integrate any assets, liabilities, customers, systems, and management personnel we have acquired or may in the future acquire into our operations and our ability to realize related revenue synergies and cost savings within expected time frames and any goodwill charges related thereto; our ability to manage loan delinquency rates; the use of estimates in determining fair value of certain of our assets, which estimates may prove to be incorrect and result in significant declines in valuation; difficulties in reducing risk associated with the loans on our balance sheet; staffing fluctuations in response to product demand or the implementation of corporate strategies that affect our work force and potential associated charges; computer systems on which we depend could fail or experience a security breach, or the implementation of new technologies may not be successful; our ability to retain key members of our senior management team; costs and effects of litigation, including settlements and judgments; increased competitive pressures among financial services companies; changes in consumer spending, borrowing and savings habits; legislative or regulatory changes that adversely affect our business; adverse changes in the securities markets; the inability of key third-party providers to perform their obligations to us; changes in accounting policies and practices, as may be adopted by the financial institution regulatory agencies or the Financial Accounting Standards Board including additional guidance and interpretation on accounting issues and details of the implementation of new accounting methods; the economic impact of war or terrorist activities; other economic, competitive, governmental, regulatory, and technological factors affecting our operations, pricing, products and services 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, 2008.

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PROVIDENT FINANCIAL HOLDINGS, INC. Consolidated Statements of Financial Condition (Unaudited – Dollars In Thousands) |
|  | March 31, 2009 |  |  | June 30, 2008 |
Assets |  |  |  |  |  |
Cash and due from banks |  | $ | 12,254 |  |  | $ | 12,614 |
Federal funds sold |  |  | - |  |  |  | 2,500 |
Cash and cash equivalents |  |  | 12,254 |  |  |  | 15,114 |
Investment securities – available for sale at fair value |  |  | 137,178 |  |  |  | 153,102 |
Loans held for investment, net of allowance for loan losses of |  |  |  |  |  |  |  |
$42,178 and $19,898, respectively |  |  | 1,213,368 |  |  |  | 1,368,137 |
Loans held for sale, at lower of cost or market |  |  | 116,098 |  |  |  | 28,461 |
Accrued interest receivable |  |  | 6,162 |  |  |  | 7,273 |
Real estate owned, net |  |  | 13,861 |  |  |  | 9,355 |
FHLB – San Francisco stock |  |  | 32,929 |  |  |  | 32,125 |
Premises and equipment, net |  |  | 6,461 |  |  |  | 6,513 |
Prepaid expenses and other assets |  |  | 24,657 |  |  |  | 12,367 |
Total assets |  | $ | 1,562,968 |  |  | $ | 1,632,447 |
Liabilities and Stockholders’ Equity |  |  |  |  |  |  |  |
Liabilities: |  |  |  |  |  |  |  |
Non interest-bearing deposits |  | $ | 44,718 |  |  | $ | 48,056 |
Interest-bearing deposits |  |  | 903,229 |  |  |  | 964,354 |
Total deposits |  |  | 947,947 |  |  |  | 1,012,410 |
Borrowings |  |  | 477,903 |  |  |  | 479,335 |
Accounts payable, accrued interest and other liabilities |  |  | 20,926 |  |  |  | 16,722 |
Total liabilities |  |  | 1,446,776 |  |  |  | 1,508,467 |
Stockholders’ equity: |  |  |  |  |  |  |  |
Preferred stock, $.01 par value (2,000,000 shares authorized; none issued and outstanding) |  |  |  |  |  |  |  |
|  | - |  |  |  | - |
Common stock, $.01 par value (15,000,000 shares authorized; 12,435,865 and 12,435,865 shares issued, respectively; 6,219,654 and 6,207,719 shares outstanding, respectively) |  |  |  |  |  |  |  |
|  | 124 |  |  |  | 124 |
Additional paid-in capital |  |  | 75,252 |  |  |  | 75,164 |
Retained earnings |  |  | 133,494 |  |  |  | 143,053 |
Treasury stock at cost (6,216,211 and 6,228,146 shares, respectively) |  |  |  |  |  |  |  |
|  | (93,942 | ) |  |  | (94,798 | )
Unearned stock compensation |  |  | - |  |  |  | (102 | )
Accumulated other comprehensive income, net of tax |  |  | 1,264 |  |  |  | 539 |
Total stockholders’ equity |  |  | 116,192 |  |  |  | 123,980 |
Total liabilities and stockholders’ equity |  | $ | 1,562,968 |  |  | $ | 1,632,447 |

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PROVIDENT FINANCIAL HOLDINGS, INC. Consolidated Statements of Financial Condition – Sequential Quarter (Unaudited – Dollars In Thousands) |
|  | March 31, 2009 |  |  | December 31, 2008 |
Assets |  |  |  |  |  |
Cash and due from banks |  | $ | 12,254 |  |  | $ | 17,514 |
Investment securities – available for sale at fair value |  |  | 137,178 |  |  |  | 144,931 |
Loans held for investment, net of allowance for loan losses of |  |  |  |  |  |  |  |
$42,178 and $34,953, respectively |  |  | 1,213,368 |  |  |  | 1,265,404 |
Loans held for sale, at lower of cost or market |  |  | 116,098 |  |  |  | 46,447 |
Accrued interest receivable |  |  | 6,162 |  |  |  | 6,712 |
Real estate owned, net |  |  | 13,861 |  |  |  | 11,115 |
FHLB – San Francisco stock |  |  | 32,929 |  |  |  | 32,929 |
Premises and equipment, net |  |  | 6,461 |  |  |  | 6,687 |
Prepaid expenses and other assets |  |  | 24,657 |  |  |  | 19,409 |
Total assets |  | $ | 1,562,968 |  |  | $ | 1,551,148 |
Liabilities and Stockholders’ Equity |  |  |  |  |  |  |  |
Liabilities: |  |  |  |  |  |  |  |
Non interest-bearing deposits |  | $ | 44,718 |  |  | $ | 40,297 |
Interest-bearing deposits |  |  | 903,229 |  |  |  | 894,527 |
Total deposits |  |  | 947,947 |  |  |  | 934,824 |
Borrowings |  |  | 477,903 |  |  |  | 480,714 |
Accounts payable, accrued interest and other liabilities |  |  | 20,926 |  |  |  | 17,756 |
Total liabilities |  |  | 1,446,776 |  |  |  | 1,433,294 |
Stockholders’ equity: |  |  |  |  |  |  |  |
Preferred stock, $.01 par value (2,000,000 shares authorized; none issued and outstanding) |  |  |  |  |  |  |  |
|  | - |  |  |  | - |
Common stock, $.01 par value (15,000,000 shares authorized; 12,435,865 and 12,435,865 shares issued, respectively; 6,219,654 and 6,208,519 shares outstanding, respectively) |  |  |  |  |  |  |  |
|  | 124 |  |  |  | 124 |
Additional paid-in capital |  |  | 75,252 |  |  |  | 74,943 |
Retained earnings |  |  | 133,494 |  |  |  | 136,251 |
Treasury stock at cost (6,216,211 and 6,227,346 shares, respectively) |  |  |  |  |  |  |  |
|  | (93,942 | ) |  |  | (93,930 | )
Accumulated other comprehensive income, net of tax |  |  | 1,264 |  |  |  | 466 |
Total stockholders’ equity |  |  | 116,192 |  |  |  | 117,854 |
Total liabilities and stockholders’ equity |  | $ | 1,562,968 |  |  | $ | 1,551,148 |

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PROVIDENT FINANCIAL HOLDINGS, INC. Consolidated Statements of Operations (Unaudited - In Thousands, Except Earnings (Loss) Per Share) |
|  | Quarter Ended March 31, |  |  | Nine Months Ended March 31, |
|  | 2009 |  |  | 2008 |  |  | 2009 |  |  | 2008 |
Interest income: |  |  |  |  |  |  |  |  |  |  |  |
Loans receivable, net |  | $ | 18,850 |  |  | $ | 21,645 |  |  | $ | 59,156 |  |  | $ | 64,859 |
Investment securities |  |  | 1,635 |  |  |  | 1,959 |  |  |  | 5,344 |  |  |  | 5,605 |
FHLB – San Francisco stock |  |  | - |  |  |  | 419 |  |  |  | 324 |  |  |  | 1,320 |
Interest-earning deposits |  |  | 6 |  |  |  | 4 |  |  |  | 16 |  |  |  | 18 |
Total interest income |  |  | 20,491 |  |  |  | 24,027 |  |  |  | 64,840 |  |  |  | 71,802 |
Interest expense: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Checking and money market deposits |  |  | 282 |  |  |  | 351 |  |  |  | 914 |  |  |  | 1,275 |
Savings deposits |  |  | 484 |  |  |  | 725 |  |  |  | 1,588 |  |  |  | 2,316 |
Time deposits |  |  | 4,479 |  |  |  | 7,393 |  |  |  | 16,047 |  |  |  | 23,339 |
Borrowings |  |  | 4,575 |  |  |  | 4,839 |  |  |  | 14,086 |  |  |  | 15,212 |
Total interest expense |  |  | 9,820 |  |  |  | 13,308 |  |  |  | 32,635 |  |  |  | 42,142 |
Net interest income, before provision for loan losses |  |  | 10,671 |  |  |  | 10,719 |  |  |  | 32,205 |  |  |  | 29,660 |
Provision for loan losses |  |  | 13,541 |  |  |  | 3,150 |  |  |  | 35,809 |  |  |  | 6,809 |
Net interest (expense) income, after provision for loan losses |  |  | (2,870 | ) |  |  | 7,569 |  |  |  | (3,604 | ) |  |  | 22,851 |
Non-interest income: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Loan servicing and other fees |  |  | 91 |  |  |  | 350 |  |  |  | 605 |  |  |  | 1,354 |
Gain on sale of loans, net |  |  | 6,107 |  |  |  | 306 |  |  |  | 8,692 |  |  |  | 1,362 |
Deposit account fees |  |  | 684 |  |  |  | 768 |  |  |  | 2,219 |  |  |  | 2,211 |
Gain on sale of investment securities |  |  | - |  |  |  | - |  |  |  | 356 |  |  |  | - |
Loss on sale and operations of real estate owned acquired in the settlement of loans |  |  | (952 | ) |  |  | (680 | ) |  |  | (1,838 | ) |  |  | (1,688 | )
Other |  |  | 457 |  |  |  | 860 |  |  |  | 1,153 |  |  |  | 1,687 |
Total non-interest income |  |  | 6,387 |  |  |  | 1,604 |  |  |  | 11,187 |  |  |  | 4,926 |
Non-interest expense: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Salaries and employee benefits |  |  | 5,025 |  |  |  | 4,816 |  |  |  | 14,175 |  |  |  | 14,462 |
Premises and occupancy |  |  | 695 |  |  |  | 645 |  |  |  | 2,129 |  |  |  | 2,183 |
Equipment |  |  | 340 |  |  |  | 379 |  |  |  | 1,097 |  |  |  | 1,170 |
Professional expenses |  |  | 294 |  |  |  | 323 |  |  |  | 986 |  |  |  | 1,116 |
Sales and marketing expenses |  |  | 93 |  |  |  | 112 |  |  |  | 393 |  |  |  | 415 |
Deposit insurance and regulatory assessments |  |  | 403 |  |  |  | 111 |  |  |  | 1,013 |  |  |  | 342 |
Other |  |  | 1,098 |  |  |  | 913 |  |  |  | 2,758 |  |  |  | 2,699 |
Total non-interest expense |  |  | 7,948 |  |  |  | 7,299 |  |  |  | 22,551 |  |  |  | 22,387 |
(Loss) income before taxes |  |  | (4,431 | ) |  |  | 1,874 |  |  |  | (14,968 | ) |  |  | 5,390 |
(Benefit) provision for income taxes |  |  | (1,861 | ) |  |  | 917 |  |  |  | (6,216 | ) |  |  | 2,777 |
Net (loss) income |  | $ | (2,570 | ) |  | $ | 957 |  |  | $ | (8,752 | ) |  | $ | 2,613 |
Basic (loss) earnings per share |  | $ | (0.41 | ) |  | $ | 0.16 |  |  | $ | (1.41 | ) |  | $ | 0.42 |
Diluted (loss) earnings per share |  | $ | (0.41 | ) |  | $ | 0.15 |  |  | $ | (1.41 | ) |  | $ | 0.42 |
Cash dividends per share |  | $ | 0.03 |  |  | $ | 0.18 |  |  | $ | 0.13 |  |  | $ | 0.54 |

Page 14 of 18

PROVIDENT FINANCIAL HOLDINGS, INC. Consolidated Statements of Operations – Sequential Quarter (Unaudited – In Thousands, Except Loss Per Share) |
|  | Quarter Ended |
|  | March 31, |  |  | December 31, |
|  | 2009 |  |  | 2008 |
Interest income: |  |  |  |  |  |
Loans receivable, net |  | $ | 18,850 |  |  | $ | 19,648 |
Investment securities |  |  | 1,635 |  |  |  | 1,804 |
FHLB – San Francisco stock |  |  | - |  |  |  | (125 | )
Interest-earning deposits |  |  | 6 |  |  |  | 9 |
Total interest income |  |  | 20,491 |  |  |  | 21,336 |
Interest expense: |  |  |  |  |  |  |  |
Checking and money market deposits |  |  | 282 |  |  |  | 302 |
Savings deposits |  |  | 484 |  |  |  | 535 |
Time deposits |  |  | 4,479 |  |  |  | 5,441 |
Borrowings |  |  | 4,575 |  |  |  | 4,817 |
Total interest expense |  |  | 9,820 |  |  |  | 11,095 |
Net interest income, before provision for loan losses |  |  | 10,671 |  |  |  | 10,241 |
Provision for loan losses |  |  | 13,541 |  |  |  | 16,536 |
Net interest expense, after provision for loan losses |  |  | (2,870 | ) |  |  | (6,295 | )
Non-interest income: |  |  |  |  |  |  |  |
Loan servicing and other fees |  |  | 91 |  |  |  | 266 |
Gain on sale of loans, net |  |  | 6,107 |  |  |  | 1,394 |
Deposit account fees |  |  | 684 |  |  |  | 777 |
Loss on sale and operations of real estate owned acquired in the settlement of loans, net |  |  | (952 | ) |  |  | (496 | )
Other |  |  | 457 |  |  |  | 383 |
Total non-interest income |  |  | 6,387 |  |  |  | 2,324 |
Non-interest expense: |  |  |  |  |  |  |  |
Salaries and employee benefits |  |  | 5,025 |  |  |  | 4,525 |
Premises and occupancy |  |  | 695 |  |  |  | 718 |
Equipment |  |  | 340 |  |  |  | 397 |
Professional expenses |  |  | 294 |  |  |  | 332 |
Sales and marketing expenses |  |  | 93 |  |  |  | 119 |
Deposit insurance premiums and regulatory assessments |  |  | 403 |  |  |  | 288 |
Other |  |  | 1,098 |  |  |  | 860 |
Total non-interest expense |  |  | 7,948 |  |  |  | 7,239 |
Loss before taxes |  |  | (4,431 | ) |  |  | (11,210 | )
Benefit for income taxes |  |  | (1,861 | ) |  |  | (4,699 | )
Net loss |  | $ | (2,570 | ) |  | $ | (6,511 | )
Basic loss per share |  | $ | (0.41 | ) |  | $ | (1.05 | )
Diluted loss per share |  | $ | (0.41 | ) |  | $ | (1.05 | )
Cash dividends per share |  | $ | 0.03 |  |  | $ | 0.05 |

Page 15 of 18

PROVIDENT FINANCIAL HOLDINGS, INC. Financial Highlights (Unaudited - Dollars in Thousands, Except Share Information ) |
|  | Quarter Ended March 31, |  |  | Nine Months Ended March 31, |
|  | 2009 |  |  | 2008 |  |  | 2009 |  |  | 2008 |
SELECTED FINANCIAL RATIOS: |  |  |  |  |  |  |  |  |  |  |  |
(Loss) return on average assets |  |  | (0.67 | )% |  |  | 0.23 | % |  |  | (0.74 | )% |  |  | 0.22 | %
(Loss) return on average stockholders’ equity |  |  | (8.69 | )% |  |  | 2.99 | % |  |  | (9.62 | )% |  |  | 2.73 | %
Stockholders’ equity to total assets |  |  | 7.43 | % |  |  | 7.60 | % |  |  | 7.43 | % |  |  | 7.60 | %
Net interest spread |  |  | 2.67 | % |  |  | 2.43 | % |  |  | 2.62 | % |  |  | 2.24 | %
Net interest margin |  |  | 2.87 | % |  |  | 2.69 | % |  |  | 2.82 | % |  |  | 2.50 | %
Efficiency ratio |  |  | 46.59 | % |  |  | 59.23 | % |  |  | 51.97 | % |  |  | 64.73 | %
Average interest-earning assets to average |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
interest-bearing liabilities |  |  | 106.11 | % |  |  | 107.28 | % |  |  | 106.97 | % |  |  | 107.42 | %
SELECTED FINANCIAL DATA: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Basic (loss) earnings per share |  | $ | (0.41 | ) |  | $ | 0.16 |  |  | $ | (1.41 | ) |  | $ | 0.42 |
Diluted (loss) earnings per share |  | $ | (0.41 | ) |  | $ | 0.15 |  |  | $ | (1.41 | ) |  | $ | 0.42 |
Book value per share |  | $ | 18.68 |  |  | $ | 20.49 |  |  | $ | 18.68 |  |  | $ | 20.49 |
Shares used for basic EPS computation |  |  | 6,215,200 |  |  |  | 6,144,743 |  |  |  | 6,201,384 |  |  |  | 6,172,921 |
Shares used for diluted EPS computation |  |  | 6,215,200 |  |  |  | 6,199,695 |  |  |  | 6,201,384 |  |  |  | 6,230,182 |
Total shares issued and outstanding |  |  | 6,219,654 |  |  |  | 6,207,719 |  |  |  | 6,219,654 |  |  |  | 6,207,719 |
LOANS ORIGINATED FOR SALE: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Retail originations |  | $ | 66,965 |  |  | $ | 30,691 |  |  | $ | 166,792 |  |  | $ | 95,325 |
Wholesale originations |  |  | 299,419 |  |  |  | 56,169 |  |  |  | 534,252 |  |  |  | 189,447 |
Total loans originated for sale |  | $ | 366,384 |  |  | $ | 86,860 |  |  | $ | 701,044 |  |  | $ | 284,772 |
LOANS SOLD: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Servicing released |  | $ | 300,398 |  |  | $ | 67,986 |  |  | $ | 616,560 |  |  | $ | 264,634 |
Servicing retained |  |  | - |  |  |  | 2,000 |  |  |  | 193 |  |  |  | 4,534 |
Total loans sold |  | $ | 300,398 |  |  | $ | 69,986 |  |  | $ | 616,753 |  |  | $ | 269,168 |
|  | As of |  |  | As of |  |  | As of |  |  | As of |
|  | 03/31/0 9 |  |  | 12/3 1/08 |  |  | 0 9/30/08 |  |  | 0 6/3 0/08 |
ASSET QUALITY RATIOS AND DELINQUENT LOANS: |  |  |  |  |  |  |  |
Non-performing loans to loans held for investment, net |  |  | 5.53 | % |  |  | 3.62 | % |  |  | 2.70 | % |  |  | 1.70 | %
Non-performing assets to total assets |  |  | 5.18 | % |  |  | 3.67 | % |  |  | 2.80 | % |  |  | 1.99 | %
Allowance for loan losses to non-performing loans |  |  | 62.82 | % |  |  | 76.24 | % |  |  | 62.99 | % |  |  | 85.79 | %
Allowance for loan losses to gross loans held for |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
investment |  |  | 3.36 | % |  |  | 2.69 | % |  |  | 1.67 | % |  |  | 1.43 | %
Net charge-offs to average loans receivable |  |  | 1.94 | % |  |  | 1.24 | % |  |  | 0.90 | % |  |  | 0.89 | %
Non-performing loans |  | $ | 67,137 |  |  | $ | 45,848 |  |  | $ | 35,749 |  |  | $ | 23,193 |
Loans 30 to 89 days delinquent |  | $ | 10,823 |  |  | $ | 9,021 |  |  | $ | 6,182 |  |  | $ | 7,367 |
REGULATORY CAPITAL RATIOS: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Tangible equity ratio |  |  | 7.06 | % |  |  | 7.25 | % |  |  | 7.42 | % |  |  | 7.19 | %
Core capital ratio |  |  | 7.06 | % |  |  | 7.25 | % |  |  | 7.42 | % |  |  | 7.19 | %
Total risk-based capital ratio |  |  | 12.68 | % |  |  | 12.88 | % |  |  | 12.96 | % |  |  | 12.25 | %
Tier 1 risk-based capital ratio |  |  | 11.42 | % |  |  | 11.63 | % |  |  | 11.71 | % |  |  | 10.99 | %

Page 16 of 18

PROVIDENT FINANCIAL HOLDINGS, INC. Financial Highlights (Unaudited)
(Dollars in Thousands) |  | As of March 31,
|  | 2009 |  | 2008
INVESTMENT SECURITIES: |  | Balance |  |  | Rate |  | Balance |  |  | Rate
Available for sale (at fair value): |  |  |  |  |  |  |  |  |  |  |  |  |  |
U.S. government sponsored enterprise debt securities |  | $ | 5,381 |  |  |  | 4.00 | % |  |  | $ | 9,296 |  |  |  | 3.42 | % |
U.S. government agency MBS |  |  | 83,361 |  |  |  | 4.91 |  |  |  |  | 94,634 |  |  |  | 5.14 |  |
U.S. government sponsored enterprise MBS |  |  | 46,982 |  |  |  | 5.00 |  |  |  |  | 60,973 |  |  |  | 5.44 |  |
Private issue collateralized mortgage obligations |  |  | 1,454 |  |  |  | 4.38 |  |  |  |  | 3,047 |  |  |  | 4.47 |  |
Freddie Mac common stock |  |  | - |  |  |  |  |  |  |  |  | 152 |  |  |  |  |  |
Fannie Mae common stock |  |  | - |  |  |  |  |  |  |  |  | 10 |  |  |  |  |  |
Other common stock |  |  | - |  |  |  |  |  |  |  |  | 476 |  |  |  |  |  |
Total investment securities available for sale |  |  | 137,178 |  |  |  | 4.90 | % |  |  |  | 168,588 |  |  |  | 5.12 | % |
LOANS HELD FOR INVESTMENT: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Single-family (1 to 4 units) |  | $ | 731,950 |  |  |  | 5.85 | % |  |  | $ | 820,586 |  |  |  | 5.97 | % |
Multi-family (5 or more units) |  |  | 378,425 |  |  |  | 6.32 |  |  |  |  | 408,613 |  |  |  | 6.54 |  |
Commercial real estate |  |  | 118,164 |  |  |  | 6.95 |  |  |  |  | 148,153 |  |  |  | 7.02 |  |
Construction |  |  | 9,108 |  |  |  | 8.53 |  |  |  |  | 43,814 |  |  |  | 8.65 |  |
Commercial business |  |  | 9,413 |  |  |  | 6.86 |  |  |  |  | 9,154 |  |  |  | 6.95 |  |
Consumer |  |  | 1,024 |  |  |  | 8.13 |  |  |  |  | 544 |  |  |  | 10.98 |  |
Other |  |  | 4,413 |  |  |  | 7.84 |  |  |  |  | 3,708 |  |  |  | 8.69 |  |
Total loans held for investment |  |  | 1,252,497 |  |  |  | 6.13 | % |  |  |  | 1,434,572 |  |  |  | 6.34 | % |
Undisbursed loan funds |  |  | (1,493 | ) |  |  |  |  |  |  |  | (16,566 | ) |  |  |  |  |
Deferred loan costs |  |  | 4,542 |  |  |  |  |  |  |  |  | 5,521 |  |  |  |  |  |
Allowance for loan losses |  |  | (42,178 | ) |  |  |  |  |  |  |  | (16,742 | ) |  |  |  |  |
Total loans held for investment, net |  | $ | 1,213,368 |  |  |  |  |  |  |  | $ | 1,406,785 |  |  |  |  |  |
Purchased loans serviced by others included above |  | $ | 129,769 |  |  |  | 6.11 | % |  |  | $ | 155,390 |  |  |  | 6.70 | % |
DEPOSITS: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Checking accounts – non interest-bearing |  | $ | 44,718 |  |  |  | - | % |  |  | $ | 46,884 |  |  |  | - | % |
Checking accounts – interest-bearing |  |  | 125,983 |  |  |  | 0.67 |  |  |  |  | 123,405 |  |  |  | 0.62 |  |
Savings accounts |  |  | 144,095 |  |  |  | 1.39 |  |  |  |  | 146,793 |  |  |  | 1.61 |  |
Money market accounts |  |  | 25,240 |  |  |  | 1.47 |  |  |  |  | 31,018 |  |  |  | 1.87 |  |
Time deposits |  |  | 607,911 |  |  |  | 2.77 |  |  |  |  | 684,067 |  |  |  | 4.21 |  |
Total deposits |  | $ | 947,947 |  |  |  | 2.12 | % |  |  | $ | 1,032,167 |  |  |  | 3.15 | % |
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.

Page 17 of 18

PROVIDENT FINANCIAL HOLDINGS, INC. Financial Highlights (Unaudited – Dollars in Thousands)
|  | As of March 31,
|  | 2009 |  | 2008
|  | Balance |  |  | Rate |  | Balance |  |  | Rate
BORROWINGS: |  |  |  |  |  |  |  |  |  |
Overnight |  | $ | 11,200 |  |  |  | 0.21 | % |  |  | $ | 15,000 |  |  |  | 2.13 | % |
Six months or less |  |  | 60,000 |  |  |  | 2.40 |  |  |  |  | 153,000 |  |  |  | 2.64 |  |
Over six to twelve months |  |  | 62,000 |  |  |  | 3.58 |  |  |  |  | 25,000 |  |  |  | 3.42 |  |
Over one to two years |  |  | 143,000 |  |  |  | 4.30 |  |  |  |  | 82,000 |  |  |  | 3.88 |  |
Over two to three years |  |  | 85,000 |  |  |  | 4.24 |  |  |  |  | 123,000 |  |  |  | 4.46 |  |
Over three to four years |  |  | 40,000 |  |  |  | 3.96 |  |  |  |  | 60,000 |  |  |  | 4.75 |  |
Over four to five years |  |  | 60,000 |  |  |  | 3.81 |  |  |  |  | 40,000 |  |  |  | 3.96 |  |
Over five years |  |  | 16,703 |  |  |  | 3.26 |  |  |  |  | 1,744 |  |  |  | 6.37 |  |
Total borrowings |  | $ | 477,903 |  |  |  | 3.73 | % |  |  | $ | 499,744 |  |  |  | 3.69 | % |

|  | Quarter Ended |  |  | Nine Months Ended |
|  | March 31, |  |  | March 31, |
|  | 2009 |  |  | 2008 |  |  | 2009 |  |  | 2008 |
SELECTED AVERAGE BALANCE SHEETS: |  | Balance |  |  | Balance |  |  | Balance |  |  | Balance |
Loans receivable, net (1) |  | $ | 1,303,625 |  |  | $ | 1,403,695 |  |  | $ | 1,334,841 |  |  | $ | 1,392,243 |
Investment securities |  |  | 141,802 |  |  |  | 158,187 |  |  |  | 148,625 |  |  |  | 153,808 |
FHLB – San Francisco stock |  |  | 32,929 |  |  |  | 31,274 |  |  |  | 32,692 |  |  |  | 32,392 |
Interest-earning deposits |  |  | 8,707 |  |  |  | 562 |  |  |  | 8,167 |  |  |  | 613 |
Total interest-earning assets |  | $ | 1,487,063 |  |  | $ | 1,593,718 |  |  | $ | 1,524,325 |  |  | $ | 1,579,056 |
Deposits |  | $ | 941,088 |  |  | $ | 1,012,283 |  |  | $ | 953,183 |  |  | $ | 1,008,849 |
Borrowings |  |  | 460,296 |  |  |  | 473,334 |  |  |  | 471,860 |  |  |  | 461,161 |
Total interest-bearing liabilities |  | $ | 1,401,384 |  |  | $ | 1,485,617 |  |  | $ | 1,425,043 |  |  | $ | 1,470,010 |
|  | Quarter Ended |  |  | Nine Months Ended |
|  | March 31, |  |  | March 31, |
|  | 2009 |  |  | 2008 |  |  | 2009 |  |  | 2008 |
|  | Yield/Cost |  |  | Yield/Cost |  |  | Yield/Cost |  |  | Yield/Cost |
Loans receivable, net (1) |  |  | 5.78 | % |  |  | 6.17 | % |  |  | 5.91 | % |  |  | 6.21 | %
Investment securities |  |  | 4.61 | % |  |  | 4.95 | % |  |  | 4.79 | % |  |  | 4.86 | %
FHLB – San Francisco stock |  |  | - |  |  |  | 5.36 | % |  |  | 1.32 | % |  |  | 5.43 | %
Interest-earning deposits |  |  | 0.28 | % |  |  | 2.85 | % |  |  | 0.26 | % |  |  | 3.92 | %
Total interest-earning assets |  |  | 5.51 | % |  |  | 6.03 | % |  |  | 5.67 | % |  |  | 6.06 | %
Deposits |  |  | 2.26 | % |  |  | 3.36 | % |  |  | 2.59 | % |  |  | 3.55 | %
Borrowings |  |  | 4.03 | % |  |  | 4.11 | % |  |  | 3.98 | % |  |  | 4.39 | %
Total interest-bearing liabilities |  |  | 2.84 | % |  |  | 3.60 | % |  |  | 3.05 | % |  |  | 3.82 | %

(1) | Includes loans held for investment, loans held for sale and receivable from sale of loans.

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.

Page 18 of 18