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Reportable Segments
 12 Months Ended
Jun. 30, 2014
Segment Reporting [Abstract]  
Reportable Segments
Reportable Segments

The segment reporting is organized consistent with the Corporation’s executive summary and operating strategy. The business activities of the Corporation consist primarily of the Bank and PBM, a division of the Bank.  The Bank's 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, commercial real estate, construction, commercial business, consumer and other mortgage loans.  PBM operations primarily consist of the origination, purchase and sale of mortgage loans secured by single-family residences.  The following table and discussion explain the results of the Corporation’s two major reportable segments, the Bank and PBM.

The following tables illustrate the Corporation’s operating segments for the years ended June 30, 2014, 2013 and 2012, respectively:

 
For the Year Ended June 30, 2014
(In Thousands)
Provident
Bank
Provident
Bank
Mortgage
Consolidated
Totals
Net interest income
$
26,734

$
3,989

$
30,723

Recovery from the allowance for loan losses
(3,080
)
(300
)
(3,380
)
Net interest income, after recovery from the allowance for loan losses
29,814

4,289

34,103

 
 
 
 
Non-interest income:
 
 
 
     Loan servicing and other fees
504

573

1,077

     Gain on sale of loans, net
411

25,388

25,799

Deposit account fees
2,469

—

2,469

     Gain on sale and operations of real estate owned
        acquired in the settlement of loans, net
15

3

18

Card and processing fees
1,370

—

1,370

Other
942

—

942

Total non-interest income
5,711

25,964

31,675

 
 
 
 
Non-interest expense:
 
 
 
Salaries and employee benefits
15,435

22,609

38,044

Premises and occupancy
2,601

1,867

4,468

Operating and administrative expenses
4,272

7,384

11,656

Total non-interest expense
22,308

31,860

54,168

Income (loss) before taxes
13,217

(1,607
)
11,610

Provision (benefit) for income taxes
5,629

(625
)
5,004

Net income (loss)
$
7,588

$
(982
)
$
6,606

Total assets, end of period
$
946,260

$
159,369

$
1,105,629



 
 
(In Thousands)
Year Ended June 30, 2013
 
Provident
Bank
Provident
Bank
Mortgage
 
Consolidated
Total
 
 
 
 
Net interest income
$
27,835

$
5,522

$
33,357

Recovery from the allowance for loan losses
(1,229
)
(270
)
(1,499
)
Net interest income, after recovery from the allowance for loan losses
29,064

5,792

34,856

 
 
 
 
Non-interest income:
 
 
 
Loan servicing and other fees
903

190

1,093

(Loss) gain on sale of loans, net
(84
)
68,577

68,493

Deposit account fees
2,449

—

2,449

Gain on sale and operations of real estate owned
acquired in the settlement of loans, net
703

213

916

Card and processing fees
1,292

—

1,292

Other
957

—

957

Total non-interest income
6,220

68,980

75,200

 
 
 
 
Non-interest expense:
 
 
 
Salaries and employee benefits
17,745

32,705

50,450

Premises and occupancy
2,705

1,727

4,432

Operating and administrative expenses
4,636

7,825

12,461

Total non-interest expenses
25,086

42,257

67,343

Income before income taxes
10,198

32,515

42,713

Provision for income taxes
3,245

13,671

16,916

Net income
$
6,953

$
18,844

$
25,797

Total assets, end of fiscal year
$
1,022,413

$
188,628

$
1,211,041


 
 
(In Thousands)
Year Ended June 30, 2012
 
Provident
Bank
Provident
Bank
Mortgage
 
Consolidated
Total
 
 
 
 
Net interest income
$
30,514

$
6,216

$
36,730

Provision (recovery) for loan losses
5,932

(155
)
5,777

Net interest income, after provision (recovery) for loan losses
24,582

6,371

30,953

 
 
 
 
Non-interest income:
 
 
 
Loan servicing and other fees
627

106

733

(Loss) gain on sale of loans, net
(1,057
)
39,074

38,017

Deposit account fees
2,438

—

2,438

(Loss) gain on sale and operations of real estate owned
acquired in the settlement of loans, net
(191
)
71

(120
)
Card and processing fees
1,282

—

1,282

Other
800

—

800

Total non-interest income
3,899

39,251

43,150

 
 
 
 
Non-interest expense:
 
 
 
Salaries and employee benefits
15,756

23,527

39,283

Premises and occupancy
2,449

1,314

3,763

Operating and administrative expenses
4,903

7,416

12,319

Total non-interest expenses
23,108

32,257

55,365

Income before income taxes
5,373

13,365

18,738

Provision for income taxes
2,309

5,619

7,928

Net income
$
3,064

$
7,746

$
10,810

Total assets, end of fiscal year
$
1,028,829

$
232,088

$
1,260,917


The information above was derived from the internal management reporting system used by management to measure performance of the segments.

The Corporation’s internal transfer pricing arrangements determined by management primarily consist of the following:
1.
Borrowings for PBM are indexed monthly to the higher of the three-month FHLB – San Francisco advance rate on the first Friday of the month plus 50 basis points or the Bank’s cost of funds for the prior month.
2.
PBM receives servicing released premiums for new loans transferred to the Bank’s loans held for investment.  The servicing released premiums in the years ended June 30, 2014, 2013 and 2012 were $216,000, $73,000 and $3,000, respectively.
3.
PBM receives a premium (gain on sale of loans) or a discount (loss on sale of loans) for the new loans transferred to the Bank’s loans held for investment.  The loss on sale of loans in the years ended June 30, 2014, 2013 and 2012 was $12,000, $16,000 and $2,000, respectively.
4.
Loan servicing costs are charged to PBM by the Bank based on the number of loans held for sale at fair value multiplied by a fixed fee which is subject to management’s review.  The loan servicing costs in the years ended June 30, 2014, 2013 and 2012 were $74,000, $110,000 and $81,000, respectively.
5.
The Bank allocates quality assurance costs to PBM for its loan production, subject to management’s review.  Quality assurance costs allocated to PBM in the years ended June 30, 2014, 2013 and 2012 were $360,000, $321,000 and $240,000, respectively.
6.
The Bank allocates loan vault service costs to PBM for its loan production, subject to management’s review.  The loan vault service costs allocated to PBM in the years ended June 30, 2014, 2013 and 2012 were $133,000, $240,000 and $88,000, respectively.
7.
Office rents for PBM offices located in the Bank branches or offices are internally charged based on the square footage used.  Office rents allocated to PBM in the years ended June 30, 2014, 2013 and 2012 were $194,000, $186,000 and $169,000, respectively.
8.
A management fee, which is subject to regular review, is charged to PBM for services provided by the Bank.  The management fee in the years ended June 30, 2014, 2013 and 2012 was $1.9 million, $1.7 million and $1.5 million, respectively.