Breaking Down Provident Financial Holdings, Inc. (PROV) Financial Health: Key Insights for Investors

You're looking at Provident Financial Holdings, Inc. (PROV) and trying to map the real financial picture against market noise, and honestly, the numbers show a classic community bank struggle: better margins but lower profit. For the full 2025 fiscal year, the bank's net income dropped 15% to $6.26 million, pushing diluted earnings per share (EPS) down to $0.93, but that decline masks a key operational win-the Net Interest Margin (NIM) actually improved to 2.93%, showing better core lending profitability. Still, the near-term trend is a watch item; while the loan portfolio held steady at about $1.05 billion as of June 30, 2025, non-performing assets have recently crept up to $1.9 million in the most recent quarter, a signal you defintely need to understand before making any moves.

Revenue Analysis

You need to know where Provident Financial Holdings, Inc. (PROV) is actually making its money, and the short answer is: their core banking function is driving nearly all of it. For the trailing twelve months (TTM) of fiscal year 2025, the company's total revenue stood at approximately $39.22 Million USD, showing a modest uptick from the prior year.

Primary Revenue Streams and Core Business

As a holding company for Provident Savings Bank, F.S.B., the vast majority of Provident Financial Holdings, Inc.'s revenue comes from its primary business model: traditional community and mortgage banking. This means their main revenue stream is Net Interest Income (NII), which is the difference between the interest they earn on loans and investments and the interest they pay on deposits and borrowings. This is the defintely the core of their financial health.

For example, in the third quarter of fiscal year 2025 (Q3 FY2025), Net Interest Income was reported at $9.21 million. This NII figure essentially constitutes the bulk of their revenue for the quarter, highlighting how dependent the company is on its loan portfolio and net interest margin (NIM), which improved to 3.02% in Q3 FY2025. Non-interest income, which comes from fees and other services, is a much smaller contributor.

• Primary Source: Net Interest Income from loans and investments.
• Core Service: Community and mortgage banking in Southern California.
• Key Metric: Net Interest Margin (NIM) hit 3.02% in Q3 FY2025.

Year-over-Year Revenue Growth

The company's revenue growth for the most recent period is positive but not explosive, reflecting the challenging interest rate environment for regional banks. Here's the quick math: the TTM revenue for fiscal year 2025 was $39.22 Million USD, up from $38.44 Million USD in fiscal year 2024. This translates to a year-over-year (YoY) revenue growth rate of approximately 2.03%.

While the full-year TTM growth is modest, the quarterly performance shows some momentum in their core operations. Q3 FY2025 Net Interest Income increased by 8% compared to the same quarter last year, a solid sign that their strategy of increasing yields on interest-earning assets is working, even as funding costs rise. Still, you have to watch the overall trend.

Segment Contribution and Changes

Provident Financial Holdings, Inc. operates primarily through one segment: its banking subsidiary, Provident Savings Bank, F.S.B. This means there isn't a complex segment breakdown like a major diversified financial institution. The core business is attracting deposits and offering various loan products, specifically focusing on single-family, multi-family, and commercial real estate loans, primarily in Southern California.

What this estimate hides is the volatility in non-interest income. In the fourth quarter of fiscal 2025, for instance, a decrease in non-interest income-largely due to the absence of a net unrealized gain on other equity investments recorded the prior year-contributed to a drop in net income, even as net interest income increased. This shows that while NII is the stable engine, one-off gains or losses in the non-interest category can materially affect the bottom line. For a deeper dive into the company's stability, check out the full post on Breaking Down Provident Financial Holdings, Inc. (PROV) Financial Health: Key Insights for Investors.

Profitability Metrics

You're looking for a clear picture of how efficiently Provident Financial Holdings, Inc. (PROV) turns its revenue into profit, and the short answer is that while their core lending margin is improving, their final profitability lags the regional bank peer average. For a bank, the traditional gross profit margin (revenue minus Cost of Goods Sold) is effectively 100% of total revenue, since their primary revenue (interest income) is almost entirely offset by interest expense, which is their direct cost of funds. So, we focus on the Net Interest Margin (NIM) and the Net Profit Margin.

The core measure of profitability for a bank is the Net Interest Margin (NIM), which tells you how well they manage the spread between the interest earned on loans and the interest paid on deposits and borrowings. For the first quarter of fiscal year 2026 (ended September 30, 2025), Provident Financial Holdings, Inc. reported a NIM of 3.00%. This is a positive trend, rising 16 basis points year-over-year, which shows the company's interest-earning assets are repricing higher faster than their funding costs, a key win in this rate environment.

However, when you look at the final Net Profit Margin, which accounts for all expenses, the picture is more sobering. The company reported a net income of $1.68 million on total revenue of approximately $9.74 million for Q1 FY2026, translating to a Net Profit Margin of about 17.25%. This is notably below the industry average for regional banks, which was around 24.89% as of Q2 2024.

Here's the quick math on how the company stacks up against its industry peers on key profitability metrics:

The lower NIM and ROA, compared to the industry average of 3.62% and 1.13% respectively, tell you that the company is less efficient at generating income from its assets than its peers. This isn't defintely a fatal flaw, but it does highlight a need for better operational efficiency (Efficiency Ratio) and/or a higher-yielding asset mix.

On operational efficiency, the company has work to do. Non-interest expense-the cost of running the business, like salaries and rent-increased by $111,000 year-over-year in Q1 FY2026. This rise, primarily from higher salaries and employee benefits, is a direct contributor to the lower Net Profit Margin, even as the NIM improved. The trend shows that while the core lending business is getting more profitable, cost management is a persistent headwind. For a deeper look at the investors making decisions based on these figures, you should check out Exploring Provident Financial Holdings, Inc. (PROV) Investor Profile: Who's Buying and Why?

The clear action item here is to monitor the Efficiency Ratio in upcoming reports; a ratio typically between 60% and 70% is considered a good benchmark for the industry. If the expense growth outpaces revenue growth, that Net Profit Margin will continue to be compressed, regardless of how well the NIM performs.

Debt vs. Equity Structure

You need to know how Provident Financial Holdings, Inc. (PROV) funds its operations, and the short answer is that it leans heavily on debt, which is typical for a bank, but its leverage is high even for the sector. The company's Debt-to-Equity (D/E) ratio for the fiscal year ended June 30, 2025, stood at approximately 1.67. [cite: 2 from step 1]

This ratio measures total debt against shareholder equity (the book value of the company owned by shareholders). Here's the quick math: for every dollar of shareholder equity, Provident Financial Holdings, Inc. is leveraging $1.67 of debt. [cite: 2 from step 1] This is a significant point of difference when you compare it to the US regional bank industry average, which is around 0.49 as of November 2025. This higher leverage means the company is more reliant on borrowed funds, which can amplify returns but also increases risk if interest rates rise or the economy slows.

The company's total debt on the balance sheet for the fiscal year ended June 30, 2025, was approximately $210 million. For a financial institution, this debt is primarily composed of various borrowings, like Federal Home Loan Bank (FHLB) advances and brokered certificates of deposit, which are essentially wholesale funding. The majority of this is considered long-term debt, which stood at approximately $212 million as of June 30, 2025. [cite: 6 from step 2]

Provident Financial Holdings, Inc. has been actively managing this debt. The company's Q3 FY2025 report noted that borrowings have declined for two consecutive quarters, reflecting a deliberate effort to reduce its reliance on this funding source. [cite: 3 from step 1] This debt management, coupled with repricing opportunities in wholesale funding, helped lower the total interest expense by 4% in the first quarter of fiscal year 2026 (ended September 30, 2025) compared to the prior year's comparable quarter. [cite: 7 from step 1] That's a defintely smart move in a high-rate environment.

The company balances this debt financing with equity funding, primarily through retained earnings and capital management activities. Despite the high D/E ratio, Provident Financial Holdings, Inc. remains committed to returning capital to shareholders, as evidenced by the repurchase of 285,170 shares of its common stock at an average cost of $15.04 per share during fiscal year 2025. [cite: 5 from step 2] This share repurchase program is a direct way to use company capital to support the stock price and improve earnings per share, but it also reduces total equity, which can technically push the D/E ratio higher. You can read more about their corporate strategy here: Mission Statement, Vision, & Core Values of Provident Financial Holdings, Inc. (PROV).

• Total Debt (FY2025): $210 million.
• Debt/Equity Ratio (FY2025): 1.67. [cite: 2 from step 1]
• Industry Peer Average: 0.49.

The core action here is to monitor their ability to continue reducing borrowings while maintaining a strong capital base. The high leverage isn't a red flag yet, but it's a risk factor that needs to be tracked closely.

Liquidity and Solvency

You need to know how easily Provident Financial Holdings, Inc. (PROV) can meet its short-term obligations, and for a bank holding company, that means looking past the surface. Traditional current and quick ratios aren't truly relevant here, as their primary assets are loans and securities, not inventory and receivables. Instead, we focus on their cash position, access to funding, and asset quality.

The core takeaway is that Provident Financial Holdings, Inc. maintains a strong liquidity cushion, backed by significant off-balance sheet borrowing capacity, even as they ramped up investing activities in fiscal year (FY) 2025.

Assessing Provident Financial Holdings, Inc.'s Liquidity

Since Provident Financial Holdings, Inc. is a bank, its liquidity position is best judged by its cash on hand and its capacity to borrow from external sources like the Federal Home Loan Bank (FHLB) or the Federal Reserve. As of September 30, 2025, the company reported a strong liquidity position with $49.4 million in cash and cash equivalents. Crucially, they have a total remaining borrowing capacity of approximately $472.3 million across all sources. That's a massive safety net.

The stability of their deposit base is also a key strength. Total deposits stood at $888.8 million at the end of FY 2025. This stability is vital because deposits are the cheapest and most reliable source of funding for any bank.

Here is a quick overview of the cash flow trends for the fiscal year ended June 30, 2025:

• Operating Cash Flow: Strong inflow of $8.69 million. This is the cash generated from the core business of lending and deposit-taking.
• Investing Cash Flow: A significant inflow of $26.46 million. This primarily reflects a net decrease in loans and investments, meaning they sold or received payments on more assets than they acquired.
• Financing Cash Flow: An outflow of -$15.92 million. This reflects activities like paying dividends and repaying debt, which is a healthy sign of capital management.

Working Capital and Liquidity Ratios (Contextualized)

For a bank, the working capital analysis is less about the Current Ratio (Current Assets / Current Liabilities) and more about managing interest-earning assets versus interest-bearing liabilities. Their goal isn't a high Current Ratio; it's maximizing the net interest margin (NIM) while maintaining sufficient liquid assets. The company's strategy in FY 2025 was to improve the NIM, which reached 2.94% in the final quarter.

To address the required metrics, we must understand the bank context. Since a bank's balance sheet doesn't have a traditional 'Inventory' or 'Accounts Receivable,' the calculated Current and Quick Ratios would be misleadingly low or high depending on how you classify loans and deposits. The real liquidity picture is in the cash flow and borrowing capacity, but here's the quick math on the cash flow statement:

Potential Liquidity Strengths and Concerns

The biggest strength is the $472.3 million in untapped borrowing capacity, which is a defintely strong backstop against any short-term funding needs. The cash flow from investing activities being a net inflow of $26.46 million also suggests they are managing their asset portfolio effectively, realizing cash from investments or loan repayments.

A minor concern to monitor is the slight increase in non-performing assets (NPA) to $1.9 million as of September 30, 2025, up from $1.4 million at the end of FY 2025. While the NPA ratio remains very low at 0.18% of loans held for investment, any upward trend in non-performing assets warrants close attention, especially with their exposure to the California real estate market.

You can see more about the firm's shareholder base in Exploring Provident Financial Holdings, Inc. (PROV) Investor Profile: Who's Buying and Why?

Valuation Analysis

You want to know if Provident Financial Holdings, Inc. (PROV) is currently overvalued, undervalued, or fairly priced. The quick answer is that the market views PROV as fairly valued, trading near the consensus price target, but its valuation multiples suggest a premium relative to its industry peers, which warrants a closer look at profitability and growth risks. The stock is a classic Breaking Down Provident Financial Holdings, Inc. (PROV) Financial Health: Key Insights for Investors case of a stable dividend payer with limited growth.

The core of any valuation for a bank holding company like Provident Financial Holdings, Inc. rests on two key multiples: Price-to-Earnings (P/E) and Price-to-Book (P/B). As of November 2025, the stock trades at a trailing twelve-month (TTM) P/E ratio of approximately 16.35x. This is a defintely higher multiple than the US Banks industry average, which often sits closer to 13.5x. This premium suggests the market is pricing in either better-than-average asset quality or a belief in margin expansion, despite recent earnings misses.

For a bank, the Price-to-Book (P/B) ratio is arguably more critical, as it measures the stock price against the company's net asset value (book value). For the fiscal year 2025, Provident Financial Holdings, Inc.'s P/B ratio is around 0.8x. Since a P/B below 1.0x generally indicates a stock is trading for less than the value of its net assets, this metric suggests the stock is undervalued from an asset perspective. This is a common signal in the regional banking space right now, still recovering from rate cycle pressures.

I typically don't rely heavily on Enterprise Value-to-EBITDA (EV/EBITDA) for banks. Here's the quick math: EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) is not a practical metric for financial institutions because interest income and expense are their core revenue drivers, not an add-back. Stick to the P/E and P/B ratios for this sector.

Looking at the stock's performance over the last 12 months, the price has traded in a tight range, moving between a 52-week low of $12.98 and a high of $16.70. The recent closing price around the mid-$15 range (e.g., $15.50 on November 14, 2025) puts it squarely in the middle of that band. This stability reflects the 'Hold' consensus from Wall Street analysts, who have set an average price target of approximately $16.00. The stock is trading less than 5% below that target, meaning analysts see very little immediate upside.

For income-focused investors, the dividend profile is a key draw. Provident Financial Holdings, Inc. offers an annual dividend of $0.56 per share, translating to a current dividend yield of about 3.59%. The dividend payout ratio (DPR), which is the percentage of earnings paid out as dividends, is a comfortable 60.2%. This ratio is sustainable and suggests the company has enough earnings to cover the payment without undue pressure, even if earnings growth remains sluggish.

• P/E Ratio (TTM): 16.35x (vs. industry 13.5x)
• P/B Ratio (FY 2025): 0.8x (suggests asset undervaluation)
• 52-Week Price Range: $12.98 to $16.70
• Analyst Consensus: Hold (Target: $16.00)
• Dividend Yield: 3.59% (Payout Ratio: 60.2%)

What this estimate hides is the persistent pressure on net interest margins (NIM) and the need for expense control, which are the real drivers of future earnings. The valuation is a mixed bag: the P/B signals a discount, but the P/E suggests a premium for a slow-growth bank. The market is essentially telling you to hold what you have, but don't expect a breakout.

Risk Factors

You need to understand that even a community bank with a solid local presence like Provident Financial Holdings, Inc. (PROV) faces distinct, near-term headwinds. The biggest risks right now are a mix of credit quality concerns in a specific real estate sector, interest rate volatility, and the perennial challenge of deposit competition. We need to map these risks to their potential impact on the balance sheet.

The company's primary operational and financial risks are tied directly to its Southern California focus and the current rate environment. For the quarter ending September 30, 2025, non-performing assets increased to $1.9 million, up from $1.4 million just three months prior, which is a jump you defintely want to watch. That said, non-performing loans as a percentage of loans held for investment remained low at 0.18%. Still, that trend is the key. Another internal challenge is the high operating expense load, with the efficiency ratio-a measure of expense to revenue-at 77.64% in the third quarter of fiscal year 2025. That's a high number, meaning it costs the bank a lot to generate a dollar of revenue. They need to get that number down.

Here's a quick breakdown of the most pressing risks and the company's response:

• Commercial Real Estate (CRE) Exposure: The most cited credit risk is the exposure to the California real estate market, particularly the CRE office sector. As of late 2025, PROV had an exposure of $36.9 million, representing about 3.5% of its total loans held for investment.
• Interest Rate Risk: A significant portion of PROV's mortgage loans have adjustable interest rates. This means if rates rise unexpectedly, the risk of borrower default increases. On the flip side, if rates fall too quickly, the interest received on their adjustable-rate loans and investments could drop faster than the interest paid on deposits and borrowings, hurting net interest income.
• Deposit Competition: Low-cost deposits are declining as a percentage of the total. For the fiscal year 2025, while the aggregate cost for deposits was a manageable 1.34%, the shift from non-interest-bearing accounts to higher-interest time deposits is an ongoing financial drain.

The external market conditions also introduce strategic risks. The Inland Empire region of Southern California, where PROV primarily operates, has economic vulnerabilities that could be exacerbated by macro issues like trade restrictions or changes in immigration policy, which could impact the local economy and, consequently, the loan book quality. Plus, elevated prepayments and refinance activity continue to challenge meaningful loan portfolio growth, forcing the bank to constantly chase new origination volume, which management expects to be in the $28 million to $36 million range for the December 2025 quarter.

To mitigate these factors, management has outlined clear actions. On the credit front, they are implementing tighter underwriting standards and closely monitoring the CRE portfolio. Financially, the strategy is to improve the Net Interest Margin (NIM) by repricing wholesale funding at lower rates and focusing on improving the deposit mix to reduce the reliance on higher-cost funding. This is a common strategy in a shifting rate cycle, but execution is everything. You can read more about the company's performance in Breaking Down Provident Financial Holdings, Inc. (PROV) Financial Health: Key Insights for Investors.

Here is a summary of the core financial and credit risks we are watching:

The bottom line is that PROV is managing a delicate transition: maintaining credit quality in a difficult real estate market while simultaneously trying to lower its cost of funds to expand its net interest margin. It's a classic community bank balancing act.

Growth Opportunities

You're looking for a clear path forward for Provident Financial Holdings, Inc. (PROV) beyond the last fiscal year's numbers. The direct takeaway is that the company is poised for moderate growth, driven less by new product innovations and more by a strong, improving core banking metric: the Net Interest Margin (NIM). This is a community bank play, so the growth story is about execution in a defined, high-potential market.

The company's fiscal year 2025 (FY 2025) results showed total revenue of US$39.7 million and net income of US$6.26 million. While net income was down 15% year-over-year, the forward view is better. Analysts project a revenue increase to $41.9 million for the current fiscal year (FY 2026), with diluted earnings per share (EPS) rising to an estimated $1.19. That's a defintely strong rebound in profitability expectations.

Key Growth Drivers: NIM Expansion and Core Market Focus

The primary driver for this projected earnings growth isn't a flashy new tech product, but the steady expansion of their Net Interest Margin (NIM), which is the difference between the interest income generated and the amount of interest paid out to depositors. The NIM for the full FY 2025 was 2.93%, up from 2.78% in the prior year. This trend continued into the first quarter of fiscal 2026, where the NIM reached 3.00%.

This NIM improvement is a direct result of the current interest rate environment, where new loan production is being originated at higher rates, helping yields outpace funding costs. Plus, management has shifted to a 'somewhat more growth oriented' short-term strategy.

• Improve NIM: Higher loan yields boost profitability.
• Grow Loans/Deposits: Focus on core banking activities.
• Maintain Credit Quality: Strong underwriting limits losses.

Competitive Advantages and Strategic Positioning

Provident Financial Holdings, Inc.'s main competitive edge is its deep-rooted focus on the Inland Empire region of Southern California. This community bank model allows for disciplined, relationship-based underwriting (the process of assessing the risk of a loan). Their loan portfolio is diverse within the real estate space, including single-family, multi-family, commercial real estate, and construction loans.

The quality of this underwriting is a major plus. For example, the ratio of non-performing assets to total assets improved to 0.11% at the end of FY 2025. This strong credit quality is a crucial buffer against economic uncertainty. They are confident their commercial real estate loans will perform well, which is a key differentiator in a market where many banks are facing headwinds in that sector.

Here's the quick math on forward projections: Revenue is forecast to grow at an average of 4.7% per annum over the next two years, which is a solid, achievable goal for a regional bank.

For a deeper dive into the risks and overall financial stability, you should check out the full post: Breaking Down Provident Financial Holdings, Inc. (PROV) Financial Health: Key Insights for Investors.