Provident Financial Holdings (PROV) AI Stock Analysis

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Provident Financial Holdings

(NASDAQ:PROV)

69Neutral

Provident Financial Holdings shows strong financial stability with a debt-free balance sheet and robust cash flow management. However, challenges such as declining profit margins and increased expenses weigh on performance. Technically, the stock is in a downtrend, and recent corporate events highlight significant profit declines, though some improvements in net interest margin and credit quality offer potential recovery prospects.

Provident Financial Holdings (PROV) vs. S&P 500 (SPY)

Market Cap

$94.94M

Dividend Yield3.94%

Average Volume (3M)6.49K

Price to Earnings (P/E)15.7

Beta (1Y)0.15

Revenue Growth7.55%

EPS Growth-20.61%

CountryUS

Employees94

SectorFinancial

Sector Strength76

IndustryBanks - Regional

Share Statistics

EPS (TTM)0.91

Shares Outstanding6,690,711

10 Day Avg. Volume4,439

30 Day Avg. Volume6,486

Financial Highlights & Ratios

PEG RatioN/A

Price to Book (P/B)N/A

Price to Sales (P/S)2.41

Price to Cash Flow (P/CF)71.60

P/FCF Ratio5.70

Enterprise Value/Market CapN/A

Enterprise Value/RevenueN/A

Enterprise Value/Gross ProfitN/A

Enterprise Value/EbitdaN/A

Forecast

1Y Price Target

$16.00

Price Target Upside12.68% Upside

Rating ConsensusHold

Number of Analyst Covering1

Provident Financial Holdings Business Overview & Revenue Model

Company DescriptionProvident Financial Holdings, Inc. (PROV) is a financial services company headquartered in Riverside, California. The company primarily operates through its subsidiary, Provident Savings Bank, F.S.B., and is engaged in the business of providing community banking services. It offers a range of financial products and services, including mortgage loans, retail banking, and consumer banking services. Provident Savings Bank serves individual and small-to-medium-sized business customers in the Inland Empire region of Southern California.

How the Company Makes MoneyProvident Financial Holdings, Inc. generates revenue primarily through the interest income earned from its loan portfolio, which includes residential mortgage loans, commercial real estate loans, and consumer loans. Additionally, the company earns non-interest income from fees associated with deposit accounts and loan servicing. Provident also engages in investment activities, generating income from its securities portfolio. The bank's earnings are influenced by interest rate fluctuations, loan demand, and economic conditions in its service area.

Provident Financial Holdings Financial Statement Overview

Summary

Provident Financial Holdings shows strong financial health with stable revenue growth and a debt-free balance sheet. However, the decrease in net profit margins, EBIT, EBITDA, and return on equity indicate rising costs and lower profitability, which could impact future performance.

Income Statement

Positive

The company has shown consistent revenue growth over the years with a notable increase in the TTM period. Gross profit margins are strong at 100% due to the absence of cost of goods sold, indicating a service-oriented revenue stream. However, net profit margins have decreased in the TTM period to 11.46%, and there's a decline in EBIT and EBITDA margins, suggesting rising operational costs or other expenses impacting profitability.

Balance Sheet

Positive

Provident Financial Holdings maintains a conservative balance sheet with zero total debt in the TTM period, reducing financial risk. The equity ratio is relatively stable, contributing positively to financial health. However, there is a slight decline in return on equity to 4.84% in the TTM period, reflecting lower profitability relative to shareholder equity.

Cash Flow

Positive

The company shows a positive free cash flow in the TTM period, with a significant decrease in capital expenditures, enhancing cash reserves. The operating cash flow is robust compared to net income, although the free cash flow growth rate is fluctuating, indicating potential volatility in cash generation.

TTM	Jun 2024	Jun 2023	Jun 2022	Jun 2021	Jun 2020
Breakdown
Income Statement		Total Revenue
54.27M	38.93M	41.06M	36.31M	35.21M	40.92M
	Gross Profit
54.27M	38.93M	41.06M	36.31M	35.21M	40.92M
	EBIT
24.54M	10.39M	12.42M	15.99M	10.19M	10.90M
	EBITDA
2.45M	13.54M	15.60M	17.71M	16.45M	14.29M
	Net Income Common Stockholders
6.22M	7.35M	8.59M	9.09M	7.56M	7.69M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
86.02M	51.38M	68.00M	26.09M	73.86M	120.75M
	Total Assets
1.41B	1.27B	1.33B	1.19B	1.18B	1.18B
	Total Debt
309.66M	238.50M	235.01M	85.00M	100.98M	141.05M
	Net Debt
223.64M	187.12M	169.16M	61.59M	30.71M	25.01M
	Total Liabilities
1.28B	1.14B	1.20B	1.06B	1.06B	1.05B
	Stockholders Equity
124.37M	129.94M	129.69M	128.65M	127.28M	123.98M
Cash Flow		Free Cash Flow
4.62M	4.10M	15.58M	11.63M	11.35M	7.72M
	Operating Cash Flow
5.11M	5.68M	16.32M	11.79M	11.57M	7.95M
	Investing Cash Flow
42.82M	45.06M	-109.90M	-51.75M	-55.87M	-48.91M
	Financing Cash Flow
-49.27M	-65.22M	136.01M	-6.90M	-1.47M	86.36M

Provident Financial Holdings Technical Analysis

Technical Analysis Sentiment

Neutral

Last Price14.20

Price Trends

50DMA

14.69

Negative

100DMA

15.23

Negative

200DMA

14.55

Negative

Market Momentum

MACD

-0.12

Negative

RSI

47.60

Neutral

STOCH

68.56

Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For PROV, the sentiment is Neutral. The current price of 14.2 is above the 20-day moving average (MA) of 14.20, below the 50-day MA of 14.69, and below the 200-day MA of 14.55, indicating a neutral trend. The MACD of -0.12 indicates Negative momentum. The RSI at 47.60 is Neutral, neither overbought nor oversold. The STOCH value of 68.56 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for PROV.

Provident Financial Holdings Risk Analysis

Provident Financial Holdings disclosed 27 risk factors in its most recent earnings report. Provident Financial Holdings reported the most risks in the “Finance & Corporate” category.

Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy

Latest Risks Added 0 New Risks

Provident Financial Holdings Peers Comparison

Overall Rating

UnderperformOutperform

Sector (63)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
FGBI	72 Outperform	$118.67M	11.72	4.93%	2.74%	20.11%	29.00%
PROV	69 Neutral	$94.94M	15.67	4.82%	3.94%	7.55%	-20.61%
Sector *	63 Neutral	$12.07B	9.35	8.15%	79.57%	12.85%	-5.13%
PBHC	54 Neutral	$93.14M	26.65	2.36%	2.64%	16.38%	64.98%
WMPN	50 Neutral	$102.21M	―	-0.81%	1.13%	2.25%	-261.40%
FNWB	44 Neutral	$90.72M	―	-4.17%	2.91%	13.08%	-386.59%
BSBK	41 Neutral	$89.72M	―	-1.58%	―	-11.26%	-460.04%

* Financial Sector Average

Performance Comparison

PROV

Provident Financial Holdings

14.19

1.70

13.61%

PBHC

Pathfinder Bancorp

15.58

3.64

30.49%

FGBI

First Guaranty Bancshares

9.99

0.22

2.25%

FNWB

First Northwest Bancorp

9.81

-0.65

-6.21%

BSBK

Bogota Financial

7.03

0.29

4.30%

WMPN

William Penn Bancorp

11.10

-0.83

-6.96%

Provident Financial Holdings Earnings Call Summary

Earnings Call Date: Jan 28, 2025 | % Change Since: -9.78% | Next Earnings Date: Apr 28, 2025

Earnings Call Sentiment Neutral

The call highlights the company's successful loan origination and net interest margin improvement, despite facing challenges with increased credit loss provisions and operating expenses. Capital management remains strong with significant distributions to shareholders.

Highlights

Increased Loan Origination

Loans held for investment originated $36.4 million, up from $28.9 million in the prior sequential quarter.

Net Interest Margin Improvement

Net interest margin increased to 2.91% for the quarter ended December 31, 2024, compared to 2.84% for the previous quarter.

Stable Credit Quality

Nonperforming assets increased slightly to $2.5 million but credit quality remained strong with no early-stage delinquencies.

Capital Management Success

Distributed $1.9 million in cash dividends and repurchased $2.4 million in common stock, resulting in a 154% distribution of fiscal 2025 net income to date.

Lowlights

Increased Provision for Credit Losses

Provision for credit losses recorded in the quarter was $586,000 due to increased market interest rates and higher balances of nonperforming loans.

Operating Expense Increase

Operating expenses increased to $7.8 million from $7.5 million due to non-recurring expenses such as executive search agency costs and retirement plan benefits.

Minor Damage from Fires

Two homes with loans totaling $658,000 experienced minor damage due to fires, though both are fully insured.

Company Guidance

During Provident Financial Holdings' earnings call for the second quarter of fiscal 2025, CEO Donavon Ternes highlighted several key metrics and forward-looking statements. The company reported an increase in loans held for investment to $36.4 million, up from $28.9 million in the previous quarter, and a rise in nonperforming assets to $2.5 million from $2.1 million. The net interest margin improved to 2.91%, driven by a 3 basis point increase in the yield on interest-earning assets and a 5 basis point decrease in the cost of interest-bearing liabilities. Operating expenses rose to $7.8 million, partly due to non-recurring costs. The company outlined plans for continued loan portfolio growth and capital management initiatives, including a new stock repurchase plan. Additionally, $85.5 million of Federal Home Loan Bank advances and brokered certificates of deposits are set to reprice at lower rates in the upcoming quarter, suggesting a continued, albeit slower, expansion in net interest margin.

Provident Financial Holdings Corporate Events

Executive/Board Changes

Provident Financial Holdings CFO Resignation Announcement

Neutral

Feb 6, 2025

Provident Financial Holdings announced the resignation of TamHao B. Nguyen, Senior Vice President, Chief Financial Officer, and Corporate Secretary, effective February 21, 2025, to pursue another opportunity. Nguyen’s departure was amicable, and a search for her successor is underway, with Haryanto ‘Lee’ Sunarto stepping in as Interim CFO from February 22, 2025.

Financial Disclosures

Provident Financial Reports 59% Drop in Net Income

Negative

Jan 28, 2025

On January 28, 2025, Provident Financial Holdings reported a significant decline in net income for the second quarter of fiscal year 2025, ending December 31, 2024, with a 59% decrease from the previous year. The decrease was attributed to a substantial provision for credit losses and increased non-interest expenses. Despite challenges, the company noted improvements in net interest margin and maintained strong credit quality. The company’s return on average assets and stockholders’ equity also saw declines compared to previous quarters, and while the investment portfolio remained stable, deposits decreased slightly.

Glossary

OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.

NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.

UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.