Donavon Ternes
About Donavon Ternes
Donavon P. Ternes is President and Chief Executive Officer of Provident Financial Holdings, Inc. and Provident Savings Bank, F.S.B. (appointed effective January 2, 2024). He joined Provident in 2000 as SVP/CFO, became EVP/COO in 2008, and added President in 2011 before ascending to CEO in 2024 . He was 65 years old as of June 30, 2025 . Performance context under his PEO tenure shows FY2025 net income of $6.255m and a three-year TSR value of $118.05 on a $100 base, versus FY2024 net income of $7.351m and TSR value of $91.70 .
Past Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| Provident Financial Holdings / Provident Savings Bank | President & Chief Executive Officer | Jan 2024–present | Internal succession; led executive transitions and continued strategic planning cadence . |
| Provident Financial Holdings / Provident Savings Bank | President; EVP/COO; CFO; Corporate Secretary | 2011–2023 (President); 2008–2023 (EVP/COO); 2000–2023 (CFO, Secretary since 2003) | Oversaw bank operations, finance, and corporate functions across multiple cycles . |
| Mission Savings & Loan Association | President, CEO, CFO, Director | For over 11 years (pre-2000) | Led a Riverside, CA thrift across multi-functional leadership roles before joining Provident . |
Fixed Compensation
Multi-year compensation and current contract terms:
| Metric | FY2023 | FY2024 | FY2025 |
|---|---|---|---|
| Base Salary ($) | 388,653 | 454,187 | 511,458 |
| Stock Awards ($) | 97,125 | 199,080 | — |
| Option Awards ($) | — | — | — |
| Non-Equity Incentive Comp ($) | 201,939 | — | — |
| All Other Comp ($) | 34,796 | 35,675 | 42,655 |
| Total ($) | 722,513 | 804,353 | 732,537 |
| Employment Agreement (Key Terms) | Detail |
|---|---|
| Effective/Term | Effective Jan 2, 2024; initial 3-year term with annual evergreen extensions unless 90-day notice . |
| Base Salary | $500,000 initial (2024) ; $525,000 current under agreement as of 2025 (subject to annual review) . |
| Bonus Eligibility | Performance-based or discretionary bonuses as authorized by Board . |
| Benefits/Perqs | Eligible for executive programs (incl. monthly auto allowance) and expense reimbursement . |
| Clawback | Agreement and plans subject to clawback; enterprise-wide Compensation Recovery Policy adopted Nov 28, 2023 . |
Performance Compensation
Annual incentive design, targets vs. actual, and payout mechanics:
- Plan design: CEO baseline bonus opportunity up to 50% of salary at target; Max 93.8% of salary; gating requirement that net income threshold must be met to trigger awards; metrics include net income, ROAA, ROAE, efficiency ratio, diluted EPS; Committee historically does not weight components when net income is gating .
- FY2025 actuals missed threshold metrics; summary compensation shows no non-equity incentive paid to the CEO .
| Metric (FY2025) | Threshold | Target | Maximum | Actual | Payout Result |
|---|---|---|---|---|---|
| Net income ($) | 8,316,000 | 10,395,000 | 15,593,000 | 6,255,000 | Below threshold; no payout |
| ROAA (%) | 0.65 | 0.82 | 1.23 | 0.50 | Below threshold |
| ROAE (%) | 6.44 | 8.05 | 12.07 | 4.79 | Below threshold |
| Efficiency ratio (%) | 71.29 | 66.67 | 57.38 | 78.96 | Below threshold |
| Diluted EPS ($) | 1.23 | 1.54 | 2.30 | 0.93 | Below threshold |
| Bonus Opportunity (as % of Salary) | Threshold | Target | Maximum |
|---|---|---|---|
| Donavon P. Ternes (FY2025) | 20.0% | 50.0% | 93.8% |
Equity incentives and vesting:
| Award | Grant Date | Shares/Units | Vesting Schedule | Grant Date Fair Value ($) |
|---|---|---|---|---|
| RSU (2022 Equity Plan) | May 23, 2024 | 18,000 | 50% on May 23, 2026; 50% on May 23, 2028 | 199,080 |
| RSU (2013 Plan) | Aug 12, 2022 | 7,500 (outstanding at 6/30/2024) | Not disclosed in proxy; unvested at 6/30/2024 | N/A |
- Options: 40,000 options (2014 grant) outstanding at 6/30/2024, expired 9/30/2024; no options outstanding at 6/30/2025 .
- FY2025 vesting realized: 3,750 shares vested with $49,650 value realization (likely RSU vesting) .
Equity Ownership & Alignment
| Ownership Snapshot | Detail |
|---|---|
| Beneficial Ownership (Oct 6, 2025) | 222,220 shares; 3.42% of shares outstanding; includes 47,500 shares owned by spouse . |
| Shares Outstanding (Record Date) | 6,503,511 shares (Oct 6, 2025) . |
| ESOP Allocations (incl. voting but not investment power) | 19,486 shares in Ternes’ ESOP account as included in beneficial ownership . |
| Unvested Equity (as of 6/30/2025) | 21,750 unvested shares; market value $337,125 at $15.50 close . |
| Options | No options outstanding at 6/30/2025 . |
| Hedging/Pledging | Directors and senior officers are prohibited from hedging; directors and senior financial officers prohibited from pledging or margining Provident stock . |
| Ownership Guidelines | CEO 300% of base salary; retention of 50% of net shares until guideline met; all directors and senior officers in compliance as of June 30, 2025 . |
Vesting calendar and potential selling pressure:
- RSU: 9,000 shares vest May 23, 2026; 9,000 shares vest May 23, 2028 (from 2024 grant) .
- Additional unvested shares (2013 Plan, 7,500) remain outstanding; vesting schedule not specified in proxy .
Employment Terms
| Provision | Economics / Terms |
|---|---|
| Involuntary termination (without cause) | Lump-sum equal to discounted present value of remaining base salary through contract term; continued benefits if age 65 (reached) . |
| Change-in-control (CIC) + termination within 12 months | 299% of “base amount” (Section 280G base amount modified to exclude equity gains) with benefits continuation; reduced to avoid 280G excise tax if necessary . |
| Disability/Death | Salary through month-end of event plus benefits as per agreement; benefits continuation terms specified, with age 65 considerations . |
| Clawback | Company-wide Compensation Recovery Policy effective Nov 28, 2023; agreement also provides for recovery in cases of risk-taking, policy conflicts, or restatements . |
| Post-Retirement Compensation Agreement | Lifetime benefit equal to 50% of final average monthly salary (paid as present value lump sum); present value shown below . |
Potential payments upon termination (as of June 30, 2025):
| Scenario | Employment Agreement ($) | Post-Retirement Agreement ($) | Equity Plans ($) |
|---|---|---|---|
| Death | 357,458 | 18,897 | 337,125 |
| Disability | 899,505 | 18,897 | 337,125 |
| Involuntary Termination (no CIC) | 1,900,810 | 18,897 | — |
| Change in Control | — (see CIC terms; benefits subject to 280G cutback) | — | — |
| Normal/Early Retirement | 637,005 (normal) | 18,897 | — |
Pension benefit valuation (as of June 30, 2025): Present value of accumulated post-retirement benefit $3,295,123 .
SAY-ON-PAY & Shareholder Feedback
- Company acknowledges “low approval percentage” on recent say-on-pay votes and engaged shareholders; disclosed changes (e.g., modifying 280G base salary definition to exclude equity gains in CEO agreement) and ongoing focus on alignment. No material compensation concerns were expressed by respondents in 2025 engagement; disclosure enhanced accordingly .
- Governance practices include clawback policy, stock ownership/retention guidelines, and restrictions on hedging/pledging .
Investment Implications
- Pay-for-performance alignment: FY2025 bonus gating on net income resulted in no annual incentive payout for the CEO as actuals missed threshold on all key metrics, indicating formulaic discipline in a tougher earnings year .
- Near-term supply from vesting: 9,000 RSUs scheduled to vest in May 2026 and 9,000 in May 2028 could create episodic selling pressure, although ownership guidelines require retention of 50% of net shares until compliance, which moderates supply risk .
- Alignment and retention: Ternes beneficially owns 222,220 shares (3.42% of outstanding), including ESOP and spousal holdings; combined with prohibitions on hedging/pledging and full compliance with ownership guidelines, equity alignment appears solid .
- Contractual risk/cost: CIC and termination protections are meaningful—CIC severance at 299% of the 280G “base amount” (excluding equity gains) with benefit continuation and a substantial post-retirement benefit (present value ~$3.30m)—which can elevate change-of-control costs and influence deal economics .
- Execution backdrop: Under Ternes’ PEO period to date, net income declined year over year (FY2025 $6.255m vs. FY2024 $7.351m) while cumulative TSR improved (value of initial $100 to $118.05 in 2025 vs. $91.70 in 2024), underscoring a mixed picture of market value response vs. earnings trajectory to monitor into FY2026 planning cycles .
Appendices
Additional Ownership (prior year snapshot)
| Date | Beneficial Ownership (Shares) | Notes |
|---|---|---|
| Oct 10, 2024 | 220,942 | Includes ESOP 18,208; spouse 47,500; percent 3.26% . |
FY2024 Incentive Framework (for context)
| Metric (FY2024) | Threshold | Target | Maximum | Actual |
|---|---|---|---|---|
| Net income ($) | 8,300,000 | 10,375,000 | 15,562,000 | 7,351,000 |
| ROAA (%) | 0.61 | 0.76 | 1.15 | 0.57 |
| ROAE (%) | 6.37 | 7.97 | 11.95 | 5.62 |
| Efficiency ratio (%) | 70.18 | 65.59 | 56.36 | 73.44 |
| Diluted EPS ($) | 1.18 | 1.48 | 2.22 | 1.06 |