Provident Financial Holdings Inc (NASDAQ: PROV)

Provident Financial Holdings, Inc. (PROV) is a financial services company that operates primarily through its subsidiary, Provident Savings Bank, F.S.B. (the Bank), offering community banking, investment services, and trustee services for real estate transactions. The company is based in Riverside, California, and is regulated by the Office of the Comptroller of the Currency (OCC) and the Federal Deposit Insurance Corporation (FDIC).

Provident Savings Bank generates revenue primarily through interest earned on its loan and investment portfolios, as well as fees generated through its community banking activities. The Bank's primary products include single-family, multi-family, and commercial real estate loans, along with construction, commercial business, and consumer loans. Its customer base is primarily composed of individuals and small to mid-sized businesses in the Inland Empire region of Southern California.

The Bank's lending activities are divided into several segments, including single-family mortgage loans, multi-family mortgage loans, commercial real estate loans, construction loans, commercial business loans, and consumer loans. Single-family mortgage loans are the largest segment, accounting for approximately 48% of its total loans held for investment. The Bank's multi-family mortgage loans are its second-largest segment, accounting for approximately 28% of its total loans held for investment.

Provident Financial Holdings faces significant competition in its market area from other financial institutions, including large national and regional commercial banks, as well as other community-oriented banks and savings institutions. The Bank's primary competitors are Wells Fargo, Bank of America, and JPMorgan Chase, as well as other local and regional banks.

The Bank's competitive advantages include its strong relationships with its customers, its experienced and knowledgeable loan officers, and its ability to offer a wide range of loan products and services. The Bank's customers appreciate its personalized service, its ability to make quick decisions, and its willingness to work with them to find solutions that meet their needs.

In terms of its position within the industry, Provident Financial Holdings is one of the largest independent community banks in the Inland Empire region of Southern California. The Bank is well-capitalized and has a strong credit profile, which allows it to compete effectively with larger banks and other financial institutions.

The company's loan portfolio is diversified across various segments, including single-family mortgage loans, multi-family mortgage loans, commercial real estate loans, construction loans, commercial business loans, and consumer loans. The company's loan portfolio is primarily composed of fixed-rate loans, with a smaller portion of adjustable-rate loans.

Provident Financial Holdings' asset quality is generally strong, with a low level of non-performing assets. The company's non-performing assets, net of allowance for loan losses and fair value adjustments, were $1.3 million, or 0.10% of total assets, as of June 30, 2023. The company had no real estate owned (REO) at June 30, 2023, and 2022.

In addition to deposit activities and mortgage lending, Provident Financial Holdings generates revenue from other sources, including investment securities, Federal Home Loan Bank advances, and federal funds purchases. The company had $287.9 million in available credit facilities from the Federal Home Loan Bank of San Francisco as of June 30, 2023.

The company is subject to extensive regulation by the Office of the Comptroller of the Currency (OCC) and the Federal Deposit Insurance Corporation (FDIC). Provident Financial Holdings is required to maintain minimum levels of regulatory capital, including a Tier 1 leverage ratio, a common equity Tier 1 (CET1) ratio, a Tier 1 capital ratio, and a total capital ratio. The company is also subject to the Federal Reserve's capital requirements and the OCC's prompt corrective action regulations.