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PF

PROVIDENT FINANCIAL HOLDINGS INC (PROV)·Q4 2025 Earnings Summary

Executive Summary

  • Q4 FY2025 diluted EPS was $0.24, down 14% QoQ and 17% YoY, driven by lower non-interest income and higher operating expense; net income was $1.63M .
  • Both EPS and revenue missed Wall Street consensus: EPS $0.24 vs $0.285* and revenue $9.69M* vs $10.30M*; prior quarter Q3 EPS beat ($0.28 vs $0.24*) and revenue beat ($10.75M* vs $9.86M*) while Q2 missed on both* .
  • Net interest margin (NIM) fell 8 bps QoQ to 2.94% but was +20 bps YoY on better asset yields and lower funding costs; efficiency ratio rose YoY to 78.1% .
  • Management guided FY2026 operating expense run-rate to $7.6–$7.8M per quarter (higher vs Q3 guidance), expects NIM expansion in September from loan repricing and lower wholesale funding costs, and maintained the $0.14 quarterly dividend .
  • Potential near-term catalysts: anticipated NIM expansion (loan repricing: ~$117M in Sep, ~$98M in Dec; funding maturities ~$71M Sep, ~$105M Dec expected to reprice lower) and continued buybacks (76,104 shares repurchased in Q4) .

Values with * are retrieved from S&P Global.

What Went Well and What Went Wrong

What Went Well

  • NIM up 20 bps YoY to 2.94% on higher asset yields and lower funding costs, offsetting a modest decline in average interest-earning assets .
  • Credit quality strong: non-performing assets down to 0.11% of total assets; no charge-offs; allowance for credit losses at 0.62% of gross loans .
  • CEO tone constructive: “net interest margin has improved, deposit balances have stabilized, borrowings have declined for three consecutive quarters, and credit quality remains strong… we are optimistic about the outlook” .

What Went Wrong

  • Non-interest income fell 40% YoY to $0.88M, largely due to absence of a prior-year $540K equity gain related to VISA share conversion .
  • Efficiency ratio worsened YoY to 78.06% (+~590 bps), reflecting higher operating costs versus revenue generation .
  • Elevated prepayments interrupted two quarters of loan growth and contributed to NIM pressure (-8 bps QoQ) and portfolio contraction in June quarter .

Financial Results

Quarterly Performance vs Prior Periods and Estimates

MetricQ2 2025Q3 2025Q4 2025
Revenue (S&P Total Op. Rev., $USD)$9.02M*$10.75M*$9.69M*
Revenue Consensus (S&P, $USD)$9.74M*$9.86M*$10.30M*
Diluted EPS ($)$0.13 $0.28 $0.24
EPS Consensus (S&P, $)$0.255*$0.24*$0.285*
Net Interest Income ($USD)$8.76M $9.21M $8.88M
Non-Interest Income ($USD)$0.85M $0.91M $0.88M
Net Income ($USD)$0.87M $1.86M $1.63M
Net Interest Margin %2.91% 3.02% 2.94%
Efficiency Ratio %81.15% 77.64% 78.06%

Values with * are retrieved from S&P Global.

  • Q4 EPS and revenue missed consensus; Q3 beat on both; Q2 missed* .

Year-over-Year Comparison (Q4)

MetricQ4 2024Q4 2025
Diluted EPS ($)$0.28 $0.24
Net Interest Income ($USD)$8.45M $8.88M
Non-Interest Income ($USD)$1.47M $0.88M
Net Income ($USD)$1.95M $1.63M
Net Interest Margin %2.74% 2.94%
Efficiency Ratio %72.31% 78.06%

Loan Originations by Type ($USD)

CategoryQ2 2025Q3 2025Q4 2025
Single-family$29.58M $22.16M $18.30M
Multi-family$6.50M $4.09M $9.34M
Commercial Real Estate$0.37M $1.14M $1.02M
Construction— — $0.73M
Commercial Business— $0.50M —
Total Originations$36.44M $27.89M $29.39M

Selected KPIs

KPIQ3 2025Q4 2025
Loans Held for Investment, Net ($)$1.059B $1.046B
Total Deposits ($)$901.3M $888.8M
Borrowings ($)$215.6M $213.1M
NPLs / Loans (Net)0.13% 0.14%
NPAs / Assets0.11% 0.11%
ACL / Gross Loans0.62% 0.62%
ROAA0.59% 0.53%
ROAE5.71% 5.01%
Tier 1 Leverage (Bank)9.85% 10.11%
CET1 (Bank)19.01% 19.50%

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Operating expense run-rateFY2026~$7.5–$7.6M/quarter (FY2025 run-rate) ~$7.6–$7.8M/quarter Raised
Net interest margin trajectorySep 2025Continued expansion expected, slower pace (into Jun) Opportunity for expansion in Sep quarter Maintained/Improving
Loan origination volumesSep 2025Similar to Mar; mid-range $19–$36M Similar to or higher than Jun; mid-to-high end $19–$36M Maintained/Up
Wholesale funding repricingSep & Dec 2025~$85.5M to reprice lower in Mar ~$71M (Sep, 4.43% WAC) and ~$105M (Dec, 4.61% WAC) expected lower Increased scope
DividendOngoing$0.14 per share paid historically Declared $0.14 for Sep 4, 2025 payment Maintained
BuybacksFY2025Ongoing repurchases (e.g., 51,869 shares in Q3) 76,104 shares in Q4; 217,028 shares remaining under program Maintained/Active

Earnings Call Themes & Trends

TopicPrevious Mentions (Q-2 and Q-1)Current Period (Q4 2025)Trend
NIM trajectoryExpanded 13 bps (Q2), 11 bps (Q3); drivers: asset yields ↑, funding costs ↓ Down 8 bps QoQ to 2.94%; expected expansion in Sep from loan/funding repricing Near-term improving after QoQ dip
Funding cost repricing~$85.5M maturities repriced lower in Mar ~$71M Sep at 4.43% and ~$105M Dec at 4.61% expected to reprice lower Tailwind strengthening
Loan prepaymentsVariable; slowed in Mar; headwind when rates have 6% handle vs 7% Elevated in Jun interrupted growth Volatile headwind
Origination pipeline/mixSFR ARM demand ↑; loosened underwriting selectively Pipelines higher; flexible 50/50 SFR/MF target; MF/CRE volume ↑ this quarter Stable to improving
Underwriting stanceLooser in SFR/MF back to pre-COVID; tighter in non-MF CRE Unchanged: looser SFR/MF; tighter office/other CRE Stable
CRE office exposure~$39.9M (3.8% of loans) ~$39.5M (3.8% of loans); only 10 CRE loans ($5.1M) maturing in FY2026 Stable risk profile
Efficiency/OpExRun-rate ~$7.5–$7.6M in FY2025; Q2 ratio 81.15% Normalized ~$7.6–$7.8M; Q4 ratio 78.06% Slight improvement YoY target
Deposits/core vs timeTime deposits ↑, brokered CDs ~ down slightly; core deposits ↓ Core deposits down YoY; time deposits up; brokered CDs ~$131.0M Mix shift persists
Loan-to-deposit ratioComfortable operating higher than peers Working down from 120s to mid-110s over time Gradual improvement

Management Commentary

  • “The operating environment for Provident has improved… our net interest margin has improved, deposit balances have stabilized, borrowings have declined for three consecutive quarters, and credit quality remains strong… we are optimistic about the outlook” — Donavon P. Ternes, President & CEO .
  • Strategy: disciplined loan growth as yield curve normalizes; maintain dividend and pursue buybacks (Q4 buybacks of ~76K shares; FY2025 capital returns ~129% of net income) .
  • Outlook specifics: loan pipelines higher; SFR/MF repricing expected to lift yields; wholesale funding maturities expected to be refinanced at lower rates .

Q&A Highlights

  • Mix and origination: Flexible 50/50 SFR/MF target; MF/CRE saw more volume in Q4; underwriting looser in SFR/MF, tighter in office CRE .
  • NIM drivers: ~$117M loans re-pricing in September (+15 bps to ~7.23%), ~$98M in December (+15 bps to ~6.88%); funding maturities ~$71M (Sep) and ~$105M (Dec) expected to reprice lower .
  • Efficiency/OpEx: normalized Q4 OpEx; FY2026 run-rate guided to $7.6–$7.8M per quarter; seasonality in March due to employer taxes .
  • Loan-to-deposit ratio: management comfortable above peers given mortgage-heavy book; working down from ~120s to mid-110s as liquidity improves .

Estimates Context

PeriodEPS Actual ($)EPS Consensus ($)SurpriseRevenue Actual ($USD)Revenue Consensus ($USD)Surprise
Q2 20250.13 0.255*Miss$9.02M*$9.74M*Miss
Q3 20250.28 0.24*Beat$10.75M*$9.86M*Beat
Q4 20250.24 0.285*Miss$9.69M*$10.30M*Miss

Values with * are retrieved from S&P Global.

  • Q4: EPS and revenue both missed; pressure from lower non-interest income and slightly higher operating costs offset YoY NIM gains .
  • Estimate dispersion low (EPS estimates count: 2; revenue: 1) suggesting limited sell-side coverage*.

Key Takeaways for Investors

  • Near-term NIM expansion plausible given scheduled loan repricing and expected lower wholesale funding costs; monitor September quarter NIM print .
  • Credit profile remains robust (NPAs 0.11% of assets; no charge-offs), supporting stable capital returns (dividend maintained; active buybacks) .
  • Operating expense guide stepped up to $7.6–$7.8M/quarter; efficiency improvement likely contingent on balance sheet growth and revenue scaling .
  • Deposit mix remains time-deposit heavy with stable brokered CDs; watch core deposit trends and competition as potential funding cost swing factor .
  • Prepayment volatility is a key swing factor for net deferred loan costs and margin; elevated Q4 prepayments interrupted portfolio growth .
  • CRE office exposure is modest (3.8% of loans) and well-underwritten; limited FY2026 maturities reduce near-term refinancing risk .
  • Tactical setup: evidence of NIM tailwinds plus buybacks may be supportive, but misses vs consensus and higher OpEx guide temper the near-term; focus on September quarter execution .

Values with * are retrieved from S&P Global.