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EX-31.1 - EXHIBIT 31.1 - PROVIDENT FINANCIAL HOLDINGS INCprov-20160331x10qxex311.htm
EX-32.1 - EXHIBIT 32.1 - PROVIDENT FINANCIAL HOLDINGS INCprov-20160331x10qxex321.htm
EX-31.2 - EXHIBIT 31.2 - PROVIDENT FINANCIAL HOLDINGS INCprov-20160331x10qxex312.htm
EX-32.2 - EXHIBIT 32.2 - PROVIDENT FINANCIAL HOLDINGS INCprov-20160331x10qxex322.htm
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q
(Mark One)
[  ü ]
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the quarterly period ended
March 31, 2016
[     ]
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the transition period from ________________ to _________________
 
Commission File Number 000-28304

PROVIDENT FINANCIAL HOLDINGS, INC.
(Exact name of registrant as specified in its charter)
Delaware  
 
33-0704889
(State or other jurisdiction of 
 
(I.R.S.  Employer 
incorporation or organization) 
 
Identification No.) 
 
3756 Central Avenue, Riverside, California 92506
(Address of principal executive offices and zip code)

(951) 686-6060
(Registrant’s telephone number, including area code)

_________________________________________________________
(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes  ü     No      .

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes ü     No      .

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company.  See the definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
 
Large accelerated filer [   ] 
Accelerated filer [ ü ]
 
Non-accelerated filer [   ] 
Smaller reporting company [   ]
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  
Yes            No  ü  .
APPLICABLE ONLY TO CORPORATE ISSUERS

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
Title of class:
 
As of May 3, 2016
Common stock, $ 0.01 par value, per share
 
8,175,848 shares



PROVIDENT FINANCIAL HOLDINGS, INC.

Table of Contents
PART 1  -
FINANCIAL INFORMATION
 
 
 
 
 
ITEM 1  -
Financial Statements.  The Unaudited Interim Condensed Consolidated Financial Statements of Provident Financial Holdings, Inc. filed as a part of the report are as follows:
 
 
 
 
Page
 
Condensed Consolidated Statements of Financial Condition
 
 
 
as of March 31, 2016 and June 30, 2015
 
Condensed Consolidated Statements of Operations
 
 
 
for the Quarters and Nine Months Ended March 31, 2016 and 2015
 
Condensed Consolidated Statements of Comprehensive Income
 
 
 
for the Quarters and Nine Months Ended March 31, 2016 and 2015
 
Condensed Consolidated Statements of Stockholders’ Equity
 
 
 
for the Quarters and Nine Months Ended March 31, 2016 and 2015
 
Condensed Consolidated Statements of Cash Flows
 
 
 
for the Nine Months Ended March 31, 2016 and 2015
 
Notes to Unaudited Interim Condensed Consolidated Financial Statements
 
 
 
 
ITEM 2  -
Management’s Discussion and Analysis of Financial Condition and Results of Operations:
 
 
 
 
 
 
General
 
Safe-Harbor Statement
 
Critical Accounting Policies
 
Executive Summary and Operating Strategy
 
Off-Balance Sheet Financing Arrangements and Contractual Obligations
 
Comparison of Financial Condition at March 31, 2016 and June 30, 2015
 
Comparison of Operating Results
 
 
 
for the Quarters and Nine Months Ended March 31, 2016 and 2015
 
Asset Quality
 
Loan Volume Activities
 
Liquidity and Capital Resources
 
Supplemental Information
 
 
 
 
ITEM 3  -
Quantitative and Qualitative Disclosures about Market Risk
 
 
 
 
ITEM 4  -
Controls and Procedures
 
 
 
 
PART II  -
OTHER INFORMATION
 
 
 
 
 
ITEM 1  -
Legal Proceedings
ITEM 1A -
Risk Factors
ITEM 2  -
Unregistered Sales of Equity Securities and Use of Proceeds
ITEM 3  -
Defaults Upon Senior Securities
ITEM 4  -
Mine Safety Disclosures
ITEM 5  -
Other Information
ITEM 6  -
Exhibits
 
 
 
 
SIGNATURES






PROVIDENT FINANCIAL HOLDINGS, INC.
Condensed Consolidated Statements of Financial Condition
In Thousands, Except Share Information
 
March 31,
2016
June 30,
2015
 
(Unaudited)
 
Assets
 
 
Cash and cash equivalents
$
111,481

$
81,403

Investment securities – held to maturity, at cost
21,014

800

Investment securities – available for sale, at fair value
12,161

14,161

Loans held for investment, net of allowance for loan losses of
$8,200 and $8,724, respectively; includes $4,583 and $4,518 at fair value, respectively
805,567

814,234

Loans held for sale, at fair value
184,025

224,715

Accrued interest receivable
2,607

2,839

Real estate owned, net
3,165

2,398

Federal Home Loan Bank (“FHLB”) – San Francisco stock
8,094

8,094

Premises and equipment, net
5,446

5,417

Prepaid expenses and other assets
20,191

20,494

 
 

 

Total assets
$
1,173,751

$
1,174,555

 
 

 

Liabilities and Stockholders’ Equity
 

 

 
 

 

Liabilities:
 

 

Non interest-bearing deposits
$
68,748

$
67,538

Interest-bearing deposits
858,317

856,548

Total deposits
927,065

924,086

 
 

 

Borrowings
91,317

91,367

Accounts payable, accrued interest and other liabilities
19,719

17,965

Total liabilities
1,038,101

1,033,418

 
 

 

Commitments and Contingencies




 
 

 

Stockholders’ equity:
 

 

Preferred stock, $.01 par value (2,000,000 shares authorized;
none issued and outstanding)


Common stock, $.01 par value (40,000,000 shares authorized;
17,844,365 and 17,766,865 shares issued; 8,201,883 and
8,634,607 shares outstanding, respectively)
179

177

Additional paid-in capital
90,512

88,893

Retained earnings
190,084

188,206

Treasury stock at cost (9,642,482 and 9,132,258 shares, respectively)
(145,387
)
(136,470
)
Accumulated other comprehensive income, net of tax
262

331

 
 

 

Total stockholders’ equity
135,650

141,137

 
 

 

Total liabilities and stockholders’ equity
$
1,173,751

$
1,174,555



The accompanying notes are an integral part of these condensed consolidated financial statements.

1



PROVIDENT FINANCIAL HOLDINGS, INC.
Condensed Consolidated Statements of Operations
(Unaudited)
In Thousands, Except Per Share Information
 
Quarter Ended  
 March 31,
Nine Months Ended 
 March 31,
 
2016
2015
2016
2015
Interest income:
 
 
 
 
Loans receivable, net
$
9,204

$
9,689

$
27,673

$
28,260

Investment securities
96

70

234

218

FHLB – San Francisco stock
163

126

542

402

Interest-earning deposits
183

52

417

222

Total interest income
9,646

9,937

28,866

29,102

 
 
 
 
 
Interest expense:
 
 
 
 
Checking and money market deposits
116

101

355

315

Savings deposits
170

160

507

477

Time deposits
807

910

2,500

2,826

Borrowings
641

388

1,937

1,059

Total interest expense
1,734

1,559

5,299

4,677

 
 
 
 
 
Net interest income
7,912

8,378

23,567

24,425

Recovery from the allowance for loan losses
(694
)
(111
)
(1,094
)
(1,283
)
Net interest income, after recovery from the allowance for loan losses
8,606

8,489

24,661

25,708

 
 
 
 
 
Non-interest income:
 
 
 
 
Loan servicing and other fees
383

264

800

823

Gain on sale of loans, net
7,145

9,754

22,113

25,448

Deposit account fees
590

607

1,790

1,837

(Loss) gain on sale and operations of real estate owned acquired in the settlement of loans, net
(276
)
58

(12
)
(12
)
Card and processing fees
355

338

1,069

1,030

Other
227

248

711

750

Total non-interest income
8,424

11,269

26,471

29,876

 
 
 
 
 
Non-interest expense:
 
 
 
 
Salaries and employee benefits
10,630

10,950

31,393

30,481

Premises and occupancy
1,146

1,106

3,424

3,604

Equipment
349

420

1,158

1,306

Professional expenses
583

671

1,555

1,628

Sales and marketing expenses
356

458

952

1,188

     Deposit insurance premiums and regulatory assessments
252

227

764

738

Other
1,169

1,336

3,458

3,874

Total non-interest expense
14,485

15,168

42,704

42,819

 
 
 
 
 
Income before income taxes
2,545

4,590

8,428

12,765

Provision for income taxes
1,051

1,990

3,509

5,447

Net income
$
1,494

$
2,600

$
4,919

$
7,318

 
 
 
 
 
Basic earnings per share
$
0.18

$
0.29

$
0.58

$
0.80

Diluted earnings per share
$
0.18

$
0.29

$
0.57

$
0.79

Cash dividends per share
$
0.12

$
0.11

$
0.36

$
0.33


The accompanying notes are an integral part of these condensed consolidated financial statements.

2



PROVIDENT FINANCIAL HOLDINGS, INC.
Condensed Consolidated Statements of Comprehensive Income
(Unaudited)
In Thousands
 
For the Quarters Ended  
 March 31,
For the Nine Months Ended 
 March 31,
 
2016
2015
2016
2015
Net income
$
1,494

$
2,600

$
4,919

$
7,318

 
 
 
 
 
Change in unrealized holding gain (loss) on securities available for sale
28

(60
)
(119
)
19

Reclassification of (gains) losses to net income




Other comprehensive income (loss), before income taxes
28

(60
)
(119
)
19

 
 
 
 
 
Income tax provision (benefit)
12

(25
)
(50
)
8

Other comprehensive income (loss)
16

(35
)
(69
)
11

 
 
 
 
 
Total comprehensive income
$
1,510

$
2,565

$
4,850

$
7,329



The accompanying notes are an integral part of these condensed consolidated financial statements.

3



PROVIDENT FINANCIAL HOLDINGS, INC.
Condensed Consolidated Statements of Stockholders' Equity
(Unaudited)
In Thousands, Except Share Information

For the Quarters Ended March 31, 2016 and 2015:
 
Common
Stock
Additional
Paid-In Capital
Retained Earnings
Treasury Stock
Accumulated
Other
Comprehensive
Income,
Net of Tax
 
 
Shares
Amount
Total
Balance at December 31, 2015
8,345,723

$
178

$
89,604

$
189,590

$
(141,753
)
$
246

$
137,865

 
 
 
 
 
 
 
 
Net income
 
 
 
1,494

 
 
1,494

Other comprehensive income
 
 
 
 
 
16

16

Purchase of treasury stock(1)
(208,840
)
 
 
 
(3,634
)
 
(3,634
)
Exercise of stock options
57,500

1

420

 
 
 
421

Distribution of restricted stock
7,500

 
 
 
 
 

Amortization of restricted stock
 
 
152

 
 
 
152

Stock options expense
 
 
139

 
 
 
139

Tax effect from stock based compensation
 
 
197

 
 
 
197

Cash dividends(2)
 
 
 
(1,000
)
 
 
(1,000
)
 
 
 
 
 
 
 
 
Balance at March 31, 2016
8,201,883

$
179

$
90,512

$
190,084

$
(145,387
)
$
262

$
135,650


(1) Includes the repurchase of 3,090 shares of distributed restricted stock in settlement of employee withholding tax obligations.
(2) Cash dividends of $0.12 per share were paid in the quarter ended March 31, 2016.
 
 
Common
Stock
Additional
Paid-In Capital
Retained Earnings
Treasury Stock
Accumulated
Other
Comprehensive
Income (Loss),
Net of Tax
 
 
Shares
Amount
Total
Balance at December 31, 2014
8,995,149

$
177

$
87,153

$
185,148

$
(128,560
)
$
432

$
144,350

 
 
 
 
 
 
 
 
Net income
 
 
 
2,600

 
 
2,600

Other comprehensive income
 
 
 
 
 
(35
)
(35
)
Purchase of treasury stock
(278,220
)
 
 
 
(4,457
)
 
(4,457
)
Exercise of stock options
2,000


14

 
 
 
14

Amortization of restricted stock
 
 
177

 
 
 
177

Forfeiture of restricted stock
 
 
13

 
(13
)
 

Stock options expense
 
 
190

 
 
 
190

Tax effect from stock based compensation
 
 
5

 
 
 
5

Cash dividends(1)
 
 
 
(986
)
 
 
(986
)
 
 
 
 
 
 
 
 
Balance at March 31, 2015
8,718,929

$
177

$
87,552

$
186,762

$
(133,030
)
$
397

$
141,858


(1) Cash dividends of $0.11 per share were paid in the quarter ended March 31, 2015.

The accompanying notes are an integral part of these condensed consolidated financial statements.

4



For the Nine Months Ended March 31, 2016 and 2015:
 
Common
Stock
Additional
Paid-In Capital
Retained Earnings
Treasury Stock
Accumulated
Other
Comprehensive
Income (Loss),
Net of Tax
 
 
Shares
Amount
Total
Balance at June 30, 2015
8,634,607

$
177

$
88,893

$
188,206

$
(136,470
)
$
331

$
141,137

 
 
 
 
 
 
 
 
Net income
 
 
 
4,919

 
 
4,919

Other comprehensive loss
 
 
 
 
 
(69
)
(69
)
Purchase of treasury stock(1)
(520,224
)
 
 
 
(8,917
)
 
(8,917
)
Exercise of stock options
77,500

2

567

 
 
 
569

Distribution of restricted stock
10,000

 
 
 
 
 

Amortization of restricted stock
 
 
446

 
 
 
446

Stock options expense
 
 
394

 
 

 
394

Tax effect from stock based compensation
 
 
212

 
 
 
212

Cash dividends(2)
 
 
 

(3,041
)
 
 
(3,041
)
 
 
 
 
 
 
 
 
Balance at March 31, 2016
8,201,883

$
179

$
90,512

$
190,084

$
(145,387
)
$
262

$
135,650


(1) Includes the repurchase of 4,500 shares from stock option exercises and the repurchase of 3,090 shares of distributed restricted
stock in settlement of employee withholding tax obligations.
(2) Cash dividends of $0.36 per share were paid during the nine months ended March 31, 2016.

 
Common
Stock
Additional
Paid-In Capital
Retained Earnings
Treasury Stock
Accumulated
Other
Comprehensive
Income,
Net of Tax
 
 
Shares
Amount
Total
Balance at June 30, 2014
9,312,269

$
177

$
88,259

$
182,458

$
(125,418
)
$
386

$
145,862

 
 
 
 
 
 
 
 
Net income
 
 
 
7,318

 
 
7,318

Other comprehensive income
 
 
 
 
 
11

11

Purchase of treasury stock
(597,340
)
 
 
 
(9,240
)
 
(9,240
)
Exercise of stock options
4,000


28

 
 
 
28

Amortization of restricted stock
 
 
418

 
 
 
418

Awards of restricted stock
 
 
(1,641
)
 
1,641

 

Forfeitures of restricted stock
 
 
13

 
(13
)
 

Stock options expense
 
 
486

 
 
 
486

Tax effect from stock based compensation
 
 
(11
)
 
 
 
(11
)
Cash dividends(1)
 
 
 
(3,014
)
 
 
(3,014
)
 
 
 
 
 
 
 
 
Balance at March 31, 2015
8,718,929

$
177

$
87,552

$
186,762

$
(133,030
)
$
397

$
141,858


(1) Cash dividends of $0.33 per share were paid during the nine months ended March 31, 2015.


The accompanying notes are an integral part of these condensed consolidated financial statements.

5



PROVIDENT FINANCIAL HOLDINGS, INC.
Condensed Consolidated Statements of Cash Flows
(Unaudited - In Thousands)
 
Nine Months Ended 
 March 31,
 
2016
2015
Cash flows from operating activities:
 
 
Net income
$
4,919

$
7,318

Adjustments to reconcile net income to net cash provided by (used for) operating activities:
 
 
Depreciation and amortization
1,332

1,479

Recovery from the allowance for loan losses
(1,094
)
(1,283
)
Unrealized gain on real estate owned
(80
)
(10
)
Gain on sale of loans, net
(22,113
)
(25,448
)
Gain on sale of real estate owned, net
(12
)
(101
)
Stock-based compensation
840

904

Benefit for deferred income taxes
(188
)
(60
)
Tax effect from stock based compensation
(212
)
11

Increase in accounts payable and other liabilities
420

1,650

(Increase) decrease in prepaid expenses and other assets
(701
)
1,511

Loans originated for sale
(1,405,671
)
(1,760,039
)
Proceeds from sale of loans
1,471,958

1,634,865

Net cash provided by (used for) operating activities
49,398

(139,203
)
 
 
 
Cash flows from investing activities:
 
 
Decrease (increase) in loans held for investment, net
3,015

(48,647
)
Principal payments from investment securities available for sale
2,409

1,628

Purchase of investment securities held to maturity
(20,769
)

Purchase of investment securities available for sale

(250
)
Purchase of FHLB San Francisco stock

(676
)
Proceeds from sale of real estate owned
4,971

1,474

Purchase of premises and equipment
(698
)
(334
)
Net cash used for investing activities
(11,072
)
(46,805
)
 
 
 
Cash flows from financing activities:
 
 
Increase in deposits, net
2,979

20,030

Proceeds from short-term borrowings, net

60,000

Proceeds from long-term borrowings

30,000

Repayments of long-term borrowings
(50
)
(47
)
Exercise of stock options
569

28

Tax effect from stock based compensation
212

(11
)
Cash dividends
(3,041
)
(3,014
)
Treasury stock purchases
(8,917
)
(9,240
)
Net cash (used for) provided by financing activities
(8,248
)
97,746

 
 
 
Net increase (decrease) in cash and cash equivalents
30,078

(88,262
)
Cash and cash equivalents at beginning of period
81,403

118,937

Cash and cash equivalents at end of period
$
111,481

$
30,675

Supplemental information:
 
 
Cash paid for interest
$
5,306

$
4,629

Cash paid for income taxes
$
3,845

$
3,875

Transfer of loans held for sale to held for investment
$
3,758

$
2,824

Real estate acquired in the settlement of loans
$
5,083

$
2,572


The accompanying notes are an integral part of these condensed consolidated financial statements.

6



PROVIDENT FINANCIAL HOLDINGS, INC.
NOTES TO UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2016

Note 1: Basis of Presentation

The unaudited interim condensed consolidated financial statements included herein reflect all adjustments which are, in the opinion of management, necessary to present a fair statement of the results of operations for the interim periods presented.  All such adjustments are of a normal, recurring nature.  The condensed consolidated statement of financial condition at June 30, 2015 is derived from the audited consolidated financial statements of Provident Financial Holdings, Inc. and its wholly-owned subsidiary, Provident Savings Bank, F.S.B. (the “Bank”) (collectively, the “Corporation”).  Certain information and note disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) have been omitted pursuant to the rules and regulations of the United States Securities and Exchange Commission (“SEC”) with respect to interim financial reporting.  It is recommended that these unaudited interim condensed consolidated financial statements be read in conjunction with the audited consolidated financial statements and notes thereto included in the Corporation’s Annual Report on Form 10-K for the year ended June 30, 2015.  The results of operations for the quarter and nine months ended March 31, 2016 are not necessarily indicative of results that may be expected for the entire fiscal year ending June 30, 2016.


Note 2: Accounting Standard Updates (“ASU”)

ASU 2015-05:
In April 2015, the Financial Accounting Standards Board (“FASB”) issued ASU 2015-05, "Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40).” The amendments in this ASU provide guidance to customers about whether a cloud computing arrangement includes a software license. If a cloud computing arrangement includes a software license, then the customer should account for the software license element of the arrangement consistent with the acquisition of other software licenses. If a cloud computing arrangement does not include a software license, the customer should account for the arrangement as a service contract. The guidance will not change GAAP for a customer’s accounting for service contracts. In addition, the guidance in this ASU supersedes paragraph 350-40-25-16. Consequently, all software licenses within the scope of Subtopic 350-40 will be accounted for consistent with other licenses of intangible assets. This amendment will be effective for annual periods, including interim periods within those annual periods, beginning after December 15, 2015 and early adoption is permitted. The Corporation's adoption of this ASU is not expected have a material impact on its consolidated financial statements.

ASU 2015-10:
In June 2015, the FASB issued ASU 2015-10, "Technical Corrections and Improvements." The amendments in this ASU cover a wide range of topics in the Codification. The reason is provided before each amendment for clarity and ease of understanding. The amendments in this ASU generally related to: (1) differences between original guidance and the codification, (2) guidance clarification and reference corrections, (3) simplification and (4) minor improvements. These amendments improve the guidance and are not expected to have a significant effect on current accounting practice or create a significant administrative cost to most entities. Transition guidance varies based on the amendments in this ASU. The amendments in this ASU that require transition guidance are effective for all entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015 and early adoption is permitted. The Corporation's adoption of this ASU is not expected to have a material impact on its consolidated financial statements. All other amendments were effective upon the issuance of this ASU.

ASU 2015-12:
In July 2015, the FASB issued ASU 2015-12, "Plan Accounting: Defined Benefit Pension Plans (Topic 960), Defined Contribution Pension Plans (Topic 962), Health and Welfare Benefit Plans (Topic 965): (Part I) Fully Benefit-Responsive Investment Contracts, (Part II) Plan Investment Disclosures, (Part III) Measurement Date Practical Expedient (consensuses of the FASB Emerging Issues Task Force)." The amendments of this ASU (i) require fully benefit-responsive investment contracts to be measured, presented and disclosed only at contract value, not fair value; (ii) simplify the investment disclosure requirements; and (iii) provide a measurement date practical expedient for employee benefit plans. This ASU is effective for fiscal years beginning after December 15, 2015, with earlier adoption permitted. The Corporation's adoption of this ASU is not expected to have a material impact on its consolidated financial statements.

ASU 2016-01:
In January 2016, the FASB issued ASU 2016-01, "Financial Instruments - Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities," which requires an entity to: (i) measure equity investments at fair value through net

7



income, with certain exceptions; (ii) present in Other Comprehensive Income the changes in instrument-specific credit risk for financial liabilities measured using the fair value option; (iii) present financial assets and financial liabilities by measurement category and form of financial asset; (iv) calculate the fair value of financial instruments for disclosure purposes based on an exit price and; (v) assess a valuation allowance on deferred tax assets related to unrealized losses of AFS debt securities in combination with other deferred tax assets. This ASU provides an election to subsequently measure certain non-marketable equity investments at cost less any impairment and adjusted for certain observable price changes. This ASU also requires a qualitative impairment assessment of such equity investments and amends certain fair value disclosure requirements. This ASU is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. The Corporation's adoption of this ASU is not expected to have a material impact on its consolidated financial statements.

ASU 2016-02:
In February 2016, the FASB issued ASU 2016-02, "Leases (Topic 842)." This ASU introduces a lessee model that brings most leases on the balance sheet and aligns many of the underlying principles of the new lessor model with those in the new revenue recognition standard, ASC 606, Revenue From Contracts With Customers. The new leases standard represents a wholesale change to lease accounting and will most likely result in significant implementation challenges during the transition period and beyond.
This ASU will be effective for annual periods beginning after December 15, 2018 (i.e., calendar periods beginning on January 1, 2019), and interim periods therein, early adoption is permitted. The Corporation's adoption of this ASU is not expected to have a material impact on its consolidated financial statements.

ASU 2016-09:
In March 2016, the FASB issued ASU 2016-09, "Compensation—Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting." This ASU simplifies the accounting for stock compensation. It focuses on income tax accounting, award classification, estimating forfeitures, and cash flow presentation. This ASU will be effective for annual periods beginning after December 15, 2016, and interim periods within those annual periods, early adoption is permitted. The Corporation has not evaluated the effect of the adoption of this ASU on its consolidated financial statements.


Note 3: Earnings Per Share

Basic earnings per share (“EPS”) excludes dilution and is computed by dividing income available to common shareholders by the weighted-average number of shares outstanding for the period.  Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that would then share in the earnings of the entity.

As of March 31, 2016 and 2015, there were outstanding options to purchase 943,500 shares and 1.1 million shares of the Corporation’s common stock, respectively, of which 216,500 shares and 246,500 shares, respectively, were excluded from the diluted EPS computation as their effect was anti-dilutive. As of March 31, 2016 and 2015, there were outstanding restricted stock awards of 190,000 shares and 265,000 shares, respectively, all of which have dilutive effects.


8



The following table provides the basic and diluted EPS computations for the quarters and nine months ended March 31, 2016 and 2015, respectively.
 
(In Thousands, Except Earnings Per Share)
For the Quarters Ended
March 31,
For the Nine Months Ended
March 31,
 
2016
2015
2016
2015
Numerator:
 
 
 
 
Net income – numerator for basic earnings per share and diluted earnings per share - available to common stockholders
$
1,494

$
2,600

$
4,919

$
7,318

 
 
 
 
 
Denominator:
 

 

 

 

Denominator for basic earnings per share:
 

 

 

 

 Weighted-average shares
8,318

8,940

8,427

9,106

 
 
 
 
 
   Effect of dilutive shares:
 
 
 
 
Stock options
132

96

129

110

Restricted stock
66

70

64

56

 
 
 
 
 
Denominator for diluted earnings per share:
 

 

 

 

Adjusted weighted-average shares and assumed conversions
8,516

9,106

8,620

9,272

 
 
 
 
 
Basic earnings per share
$
0.18

$
0.29

$
0.58

$
0.80

Diluted earnings per share
$
0.18

$
0.29

$
0.57

$
0.79




9



Note 4: Operating Segment Reports

The Corporation operates in two business segments: community banking through the Bank and mortgage banking through Provident Bank Mortgage (“PBM”), a division of the Bank.

The following tables set forth condensed consolidated statements of operations and total assets for the Corporation’s operating segments for the quarters and nine months ended March 31, 2016 and 2015, respectively.
 
For the Quarter Ended March 31, 2016
(In Thousands)
Provident
Bank
Provident
Bank
Mortgage
Consolidated
Totals
Net interest income
$
6,915

$
997

$
7,912

Recovery from the allowance for loan losses
(690
)
(4
)
(694
)
Net interest income, after recovery from the allowance for loan losses
7,605

1,001

8,606

 
 
 
 
Non-interest income:
 
 
 
     Loan servicing and other fees (1)
126

257

383

     Gain on sale of loans, net (2)
34

7,111

7,145

Deposit account fees
590


590

     Loss on sale and operations of real estate owned
        acquired in the settlement of loans, net
(231
)
(45
)
(276
)
Card and processing fees
355


355

Other
227


227

Total non-interest income
1,101

7,323

8,424

 
 
 
 
Non-interest expense:
 
 
 
Salaries and employee benefits
4,761

5,869

10,630

Premises and occupancy
720

426

1,146

Operating and administrative expenses
1,232

1,477

2,709

Total non-interest expense
6,713

7,772

14,485

Income before income taxes
1,993

552

2,545

Provision for income taxes
819

232

1,051

Net income
$
1,174

$
320

$
1,494

Total assets, end of period
$
989,538

$
184,213

$
1,173,751


(1) 
Includes an inter-company charge of $135 credited to PBM by the Bank during the period to compensate PBM for originating loans held for investment.
(2) 
Includes an inter-company charge of $53 credited to PBM by the Bank during the period to compensate PBM for servicing fees on loans sold on a servicing retained basis.

10




 
For the Quarter Ended March 31, 2015
(In Thousands)
Provident
Bank
Provident
Bank
Mortgage
Consolidated
Totals
Net interest income
$
7,023

$
1,355

$
8,378

Provision (recovery) for loan losses
64

(175
)
(111
)
Net interest income after provision (recovery) for loan losses
6,959

1,530

8,489

 
 
 
 
Non-interest income:
 
 
 
     Loan servicing and other fees (1)
153

111

264

     (Loss) gain on sale of loans, net (2)
(29
)
9,783

9,754

Deposit account fees
607


607

     Gain on sale and operations of real estate owned
        acquired in the settlement of loans, net
58


58

Card and processing fees
338


338

Other
248


248

Total non-interest income
1,375

9,894

11,269

 
 
 
 
Non-interest expense:
 
 
 
Salaries and employee benefits
4,743

6,207

10,950

Premises and occupancy
679

427

1,106

Operating and administrative expenses
1,203

1,909

3,112

Total non-interest expense
6,625

8,543

15,168

Income before income taxes
1,709

2,881

4,590

Provision for income taxes
764

1,226

1,990

Net income
$
945

$
1,655

$
2,600

Total assets, end of period
$
906,378

$
307,413

$
1,213,791


(1) 
Includes an inter-company charge of $54 credited to PBM by the Bank during the period to compensate PBM for originating loans held for investment.
(2) 
Includes an inter-company charge of $32 credited to PBM by the Bank during the period to compensate PBM for servicing fees on loans sold on a servicing retained basis.

11



 
For the Nine Months Ended March 31, 2016
(In Thousands)
Provident
Bank
Provident
Bank
Mortgage
Consolidated
Totals
Net interest income
$
20,519

$
3,048

$
23,567

Recovery from the allowance for loan losses
(1,031
)
(63
)
(1,094
)
Net interest income, after recovery from the allowance for loan losses
21,550

3,111

24,661

 
 
 
 
Non-interest income:
 
 
 
     Loan servicing and other fees (1)
458

342

800

     Gain on sale of loans, net (2)
34

22,079

22,113

Deposit account fees
1,790


1,790

     Gain (loss) on sale and operations of real estate owned
        acquired in the settlement of loans, net
28

(40
)
(12
)
Card and processing fees
1,069


1,069

Other
711


711

Total non-interest income
4,090

22,381

26,471

 
 
 
 
Non-interest expense:
 
 
 
Salaries and employee benefits
13,569

17,824

31,393

Premises and occupancy
2,164

1,260

3,424

Operating and administrative expenses
3,467

4,420

7,887

Total non-interest expense
19,200

23,504

42,704

Income before income taxes
6,440

1,988

8,428

Provision for income taxes
2,673

836

3,509

Net income
$
3,767

$
1,152

$
4,919

Total assets, end of period
$
989,538

$
184,213

$
1,173,751


(1) 
Includes an inter-company charge of $303 credited to PBM by the Bank during the period to compensate PBM for originating loans held for investment.
(2) 
Includes an inter-company charge of $352 credited to PBM by the Bank during the period to compensate PBM for servicing fees on loans sold on a servicing retained basis.


12



 
For the Nine Months Ended March 31, 2015
(In Thousands)
Provident
Bank
Provident
Bank
Mortgage
Consolidated
Totals
Net interest income
$
20,843

$
3,582

$
24,425

Recovery from the allowance for loan losses
(1,199
)
(84
)
(1,283
)
Net interest income, after recovery from the allowance for loan losses
22,042

3,666

25,708

 
 
 
 
Non-interest income:
 
 
 
     Loan servicing and other fees (1)
246

577

823

     Gain on sale of loans, net (2)
117

25,331

25,448

Deposit account fees
1,837


1,837

     Loss on sale and operations of real estate owned
        acquired in the settlement of loans, net
(11
)
(1
)
(12
)
Card and processing fees
1,030


1,030

Other
750


750

Total non-interest income
3,969

25,907

29,876

 
 
 
 
Non-interest expense:
 
 
 
Salaries and employee benefits
13,538

16,943

30,481

Premises and occupancy
2,267

1,337

3,604

Operating and administrative expenses
3,452

5,282

8,734

Total non-interest expense
19,257

23,562

42,819

Income before income taxes
6,754

6,011

12,765

Provision for income taxes
2,919

2,528

5,447

Net income
$
3,835

$
3,483

$
7,318

Total assets, end of period
$
906,378

$
307,413

$
1,213,791


(1) 
Includes an inter-company charge of $356 credited to PBM by the Bank during the period to compensate PBM for originating loans held for investment.
(2) 
Includes an inter-company charge of $107 credited to PBM by the Bank during the period to compensate PBM for servicing fees on loans sold on a servicing retained basis.



13



Note 5: Investment Securities

The amortized cost and estimated fair value of investment securities as of March 31, 2016 and June 30, 2015 were as follows:
March 31, 2016
 
Amortized
Cost
Gross
Unrealized
Gains
Gross
Unrealized
(Losses)
Estimated
Fair
Value
 
Carrying
Value
(In Thousands)
 
 
 
 
 
Held to maturity:
 
 
 
 
 
Certificates of deposit
$
800

$

$

$
800

$
800

U.S. government sponsored enterprise MBS (1)
20,214

149


20,363

20,214

Total investment securities - held to maturity
$
21,014

$
149

$

$
21,163

$
21,014

 
 
 
 
 
 
Available for sale:
 
 
 
 
 
U.S. government agency MBS
$
6,674

$
273

$

$
6,947

$
6,947

U.S. government sponsored enterprise MBS
4,219

231


4,450

4,450

Private issue CMO (2)
615

3

(1
)
617

617

Common stock - community development financial institution
250


(103
)
147

147

Total investment securities - available for sale
$
11,758

$
507

$
(104
)
$
12,161

$
12,161

Total investment securities
$
32,772

$
656

$
(104
)
$
33,324

$
33,175


(1) 
Mortgage-Backed Securities (“MBS”).
(2) 
Collateralized Mortgage Obligations (“CMO”).

June 30, 2015
 
Amortized
Cost
Gross
Unrealized
Gains
Gross
Unrealized
(Losses)
Estimated
Fair
Value
 
Carrying
Value
(In Thousands)
 
 
 
 
 
Held to maturity:
 
 
 
 
 
Certificates of deposit
$
800

$

$

$
800

$
800

Total investment securities - held to maturity
$
800

$

$

$
800

$
800

 
 
 
 
 
 
Available for sale:
 
 
 
 
 
U.S. government agency MBS
$
7,613

$
293

$

$
7,906

$
7,906

U.S. government sponsored enterprise MBS
5,083

304


5,387

5,387

Private issue CMO
708

9


717

717

Common stock - community development financial institution
250


(99
)
151

151

Total investment securities - available for sale
$
13,654

$
606

$
(99
)
$
14,161

$
14,161

Total investment securities
$
14,454

$
606

$
(99
)
$
14,961

$
14,961


In the third quarters of fiscal 2016 and 2015, the Corporation received MBS principal payments of $1.1 million and $331,000, respectively, and there were no sales of investment securities during these periods. The Corporation purchased U.S. government sponsored enterprise MBS totaling $10.6 million to be held to maturity in the third quarter of fiscal 2016 and did not purchase any investment securities in the third quarter of fiscal 2015. For the first nine months of fiscal 2016 and 2015, the Corporation received MBS principal payments of $2.4 million and $1.6 million, respectively. The Corporation purchased $20.8 million of U.S. government sponsored enterprise MBS to be held to maturity in the first nine months of fiscal 2016 and, in the first quarter of fiscal 2015, $250,000 in the common stock of a community development financial institution held as available for sale to help fulfill the Bank's Community Reinvestment Act ("CRA") obligation.
  

14



The Corporation held investments with unrealized loss position of $104,000 at March 31, 2016 and $99,000 at June 30, 2015.
As of March 31, 2016
Unrealized Holding Losses
 
Unrealized Holding Losses
 
Unrealized Holding Losses
(In Thousands)
Less Than 12 Months
 
12 Months or More
 
Total
 
Fair
Unrealized
 
Fair
Unrealized
 
Fair
Unrealized
Description of Securities
Value
Losses
 
Value
Losses
 
Value
Losses
Available for sale:
 
 
 
 
 
 
 
 
Private issue CMO
$
104

$
1

 
$

$

 
$
104

$
1

Common stock(1)
$
147

$
103

 
$

$

 
$
147

$
103

Total investment securities
$
251

$
104

 
$

$


$
251

$
104


As of June 30, 2015
Unrealized Holding Losses
 
Unrealized Holding Losses
 
Unrealized Holding Losses
(In Thousands)
Less Than 12 Months
 
12 Months or More
 
Total
 
Fair
Unrealized
 
Fair
Unrealized
 
Fair
Unrealized
Description of Securities
Value
Losses
 
Value
Losses
 
Value
Losses
Available for sale:
 
 
 
 
 
 
 
 
Common stock(1)
$
151

$
99

 
$

$

 
$
151

$
99

Total investment securities
$
151

$
99

 
$

$


$
151

$
99


(1) 
Common stock of a community development financial institution.

The Corporation evaluates individual investment securities quarterly for other-than-temporary declines in market value.  As of March 31, 2016, the unrealized holding loss was less than 12 months. The Corporation does not believe that there are any other-than-temporary impairments on the investment securities at March 31, 2016 and 2015; therefore, no impairment losses have been recorded for the quarters and nine months ended March 31, 2016 and 2015.

Contractual maturities of investment securities as of March 31, 2016 and June 30, 2015 were as follows:
 
March 31, 2016
 
June 30, 2015
(In Thousands)
Amortized
Cost
Estimated
Fair
Value
 
Amortized
Cost
Estimated
Fair
Value
 
 
 
 
 
 
Held to maturity:
 
 
 
 
 
Due in one year or less
$
800

$
800

 
$
800

$
800

Due after one through five years


 


Due after five through ten years
20,214

20,363

 


Due after ten years


 


Total investment securities - held to maturity
$
21,014

$
21,163

 
$
800

$
800

 
 
 
 
 
 
Available for sale:
 
 
 
 
 
Due in one year or less
$

$

 
$

$

Due after one through five years


 


Due after five through ten years


 


Due after ten years
11,508

12,014

 
13,404

14,010

No stated maturity (common stock)
250

147

 
250

151

Total investment securities - available for sale
$
11,758

$
12,161

 
$
13,654

$
14,161

Total investment securities
$
32,772

$
33,324

 
$
14,454

$
14,961



15




Note 6: Loans Held for Investment
 
Loans held for investment, net of fair value adjustments, consisted of the following:
(In Thousands)
March 31,
2016
June 30,
2015
Mortgage loans:
 
 
Single-family
$
335,797

$
365,961

Multi-family
378,871

347,020

Commercial real estate
93,384

100,897

Construction
9,679

8,191

Other
72


Commercial business loans
452

666

Consumer loans
230

244

Total loans held for investment, gross
818,485

822,979

 
 
 
Undisbursed loan funds
(8,648
)
(3,360
)
Advance payments of escrows
247

199

Deferred loan costs, net
3,683

3,140

Allowance for loan losses
(8,200
)
(8,724
)
Total loans held for investment, net
$
805,567

$
814,234


As of March 31, 2016, the Corporation had $10.3 million in mortgage loans that are subject to negative amortization, consisting of $7.0 million in multi-family loans, $3.1 million in single-family loans and $184,000 in commercial real estate loans.  This compares to $14.1 million of negative amortization mortgage loans at June 30, 2015, consisting of $10.7 million in multi-family loans, $3.2 million in single-family loans and $227,000 in commercial real estate loans.  During the third quarters and nine months of fiscal 2016 and 2015, no loan interest income was added to the negative amortization loan balance.  Negative amortization involves a greater risk to the Corporation because the loan principal balance may increase by a range of 110% to 115% of the original loan amount during the period of negative amortization and because the loan payment may increase beyond the means of the borrower when loan principal amortization is required.  Also, the Corporation has originated interest-only ARM loans, which typically have a fixed interest rate for the first two to five years coupled with an interest only payment, followed by a periodic adjustable rate and a fully amortizing loan payment.  As of March 31, 2016 and June 30, 2015, the interest-only ARM loans were $88.0 million and $152.6 million, or 10.8% and 18.6% of loans held for investment, respectively. As of March 31, 2016, the Corporation had $4.6 million of single-family loans, 19 loans, held for investment which were originated for sale but were subsequently transferred to loans held for investment and are carried at fair value. This compares to $4.5 million of single-family loans, 13 loans, held for investment at June 30, 2015 which were originated for sale but were subsequently transferred to loans held for investment and are carried at fair value.

The following table sets forth information at March 31, 2016 regarding the dollar amount of loans held for investment that are contractually repricing during the periods indicated, segregated between adjustable rate loans and fixed rate loans.  Fixed-rate loans comprised 3% of loans held for investment at March 31, 2016, as compared to 4% at June 30, 2015.  Adjustable rate loans having no stated repricing dates that reprice when the index they are tied to reprices (e.g. prime rate index) and checking account overdrafts are reported as repricing within one year.  The table does not include any estimate of prepayments which may cause the Corporation’s actual repricing experience to differ materially from that shown.


16



 
Adjustable Rate
 
 
(In Thousands)
Within One Year
After
One Year
Through 3 Years
After
3 Years
Through 5 Years
After
5 Years
Through 10 Years
Fixed Rate
Total
Mortgage loans:
 
 
 
 
 
 
Single-family
$
257,665

$
7,121

$
56,836

$
679

$
13,496

$
335,797

Multi-family
68,092

127,701

174,233

5,827

3,018

378,871

Commercial real estate
6,604

40,493

42,745


3,542

93,384

Construction
7,034




2,645

9,679

Other




72

72

Commercial business loans
114




338

452

Consumer loans
226




4

230

Total loans held for investment, gross
$
339,735

$
175,315

$
273,814

$
6,506

$
23,115

$
818,485


The Corporation has developed an internal loan grading system to evaluate and quantify the Bank’s loans held for investment portfolio with respect to quality and risk. Management continually evaluates the credit quality of the Corporation’s loan portfolio and conducts a quarterly review of the adequacy of the allowance for loan losses using quantitative and qualitative methods. The Corporation has adopted an internal risk rating policy in which each loan is rated for credit quality with a rating of pass, special mention, substandard, doubtful or loss. The two primary components that are used during the loan review process to determine the proper allowance levels are individually evaluated allowances and collectively evaluated allowances. Quantitative loan loss factors are developed by determining the historical loss experience, expected future cash flows, discount rates and collateral fair values, among others. Qualitative loan loss factors are developed by assessing general economic indicators such as gross domestic product, retail sales, unemployment rates, employment growth, California home sales and median California home prices. The Corporation assigns individual factors for the quantitative and qualitative methods for each loan category and each internal risk rating.

The Corporation categorizes all of the loans held for investment into risk categories based on relevant information about the ability of the borrower to service their debt such as current financial information, historical payment experience, credit documentation, public information, and current economic trends, among other factors. A description of the general characteristics of the risk grades is as follows:
 
Pass - These loans range from minimal credit risk to average, but still acceptable, credit risk. The likelihood of loss is considered remote.
Special Mention - A Special Mention asset has potential weaknesses that may be temporary or, if left uncorrected, may result in a loss. While concerns exist, the bank is currently protected and loss is considered unlikely and not imminent.
Substandard - A substandard loan is inadequately protected by the current sound worth and paying capacity of the borrower or of the collateral pledged, if any. Loans so classified must have a well-defined weakness, or weaknesses, that may jeopardize the liquidation of the debt. A substandard loan is characterized by the distinct possibility that the Bank will sustain some loss if the deficiencies are not corrected.
Doubtful - A doubtful loan has all of the weaknesses inherent in one classified as substandard with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of the currently existing facts, conditions and values, highly questionable and improbable.
Loss - A loss loan is considered uncollectible and of such little value that continuance as an asset of the institution is not warranted.


17



The following tables summarize gross loans held for investment, net of fair value adjustments, by loan types and risk category at the dates indicated:
 
 
March 31, 2016
(In Thousands)
Single-family
Multi-family
Commercial Real Estate
Construction
Other Mortgage
Commercial Business
Consumer
Total
 
 
 
 
 
 
 
 
 
 
Pass
$
319,385

$
375,537

$
92,465

$
9,679

$
72

$
354

$
230

$
797,722

Special Mention
5,754

930






6,684

Substandard
10,658

2,404

919



98


14,079

 
Total loans held for
   investment, gross
$
335,797

$
378,871

$
93,384

$
9,679

$
72

$
452

$
230

$
818,485


 
 
June 30, 2015
(In Thousands)
Single-family
Multi-family
Commercial Real Estate
Construction
Commercial Business
Consumer
Total
 
 
 
 
 
 
 
 
 
Pass
$
347,301

$
339,093

$
98,254

$
8,191

$
557

$
244

$
793,640

Special Mention
7,766

413





8,179

Substandard
10,894

7,514

2,643


109


21,160

 
Total loans held for
   investment, gross
$
365,961

$
347,020

$
100,897

$
8,191

$
666

$
244

$
822,979


The allowance for loan losses is maintained at a level sufficient to provide for estimated losses based on evaluating known and inherent risks in the loans held for investment and upon management’s continuing analysis of the factors underlying the quality of the loans held for investment.  These factors include changes in the size and composition of the loans held for investment, actual loan loss experience, current economic conditions, detailed analysis of individual loans for which full collectability may not be assured, and determination of the realizable value of the collateral securing the loans.  The provision (recovery) for (from) the allowance for loan losses is charged (credited) against operations on a quarterly basis, as necessary, to maintain the allowance at appropriate levels.  Although management believes it uses the best information available to make such determinations, there can be no assurance that regulators, in reviewing the Corporation’s loans held for investment, will not request a significant increase in its allowance for loan losses.  Future adjustments to the allowance for loan losses may be necessary and results of operations could be significantly and adversely affected as a result of economic, operating, regulatory, and other conditions beyond the Corporation’s control.

Non-performing loans are charged-off to their fair market values in the period the loans, or portion thereof, are deemed uncollectible, generally after the loan becomes 150 days delinquent for real estate secured first trust deed loans and 120 days delinquent for commercial business or real estate secured second trust deed loans.  For loans that were modified from their original terms, were re-underwritten and identified in the Corporation’s asset quality reports as troubled debt restructurings (“restructured loans”), the charge-off occurs when the loan becomes 90 days delinquent; and where borrowers file bankruptcy, the charge-off occurs when the loan becomes 60 days delinquent.  The amount of the charge-off is determined by comparing the loan balance to the estimated fair value of the underlying collateral, less disposition costs, with the loan balance in excess of the estimated fair value charged-off against the allowance for loan losses.  The allowance for loan losses for non-performing loans is determined by applying Accounting Standards Codification (“ASC”) 310, “Receivables.”  For restructured loans that are less than 90 days delinquent, the allowance for loan losses are segregated into (a) individually evaluated allowances for those loans with applicable discounted cash flow calculations still in their restructuring period, classified lower than pass, and containing an embedded loss component or (b) collectively evaluated allowances based on the aggregated pooling method.  For non-performing loans less than 60 days delinquent where the borrower has filed bankruptcy, the collectively evaluated allowances are assigned based on the aggregated pooling method. For non-performing commercial real estate loans, an individually evaluated allowance is derived based on the loan's discounted cash flow fair value (for restructured loans) or collateral fair value less estimated selling costs and if the fair value is higher than the loan balance, no allowance is required.


18



The following table summarizes the Corporation’s allowance for loan losses at March 31, 2016 and June 30, 2015:
(In Thousands)
March 31, 2016
June 30, 2015
Collectively evaluated for impairment:
 
 
Mortgage loans:
 
 
Single-family
$
5,507

$
5,202

Multi-family
1,898

2,616

Commercial real estate
741

734

Construction
10

42

Other
1


Commercial business loans
15

23

Consumer loans
8

9

Total collectively evaluated allowance
8,180

8,626

 
 
 
Individually evaluated for impairment:
 
 
Mortgage loans:
 
 
Single-family

78

Commercial business loans
20

20

Total individually evaluated allowance
20

98

Total loan loss allowance
$
8,200

$
8,724



19



The following table is provided to disclose additional details on the Corporation’s allowance for loan losses:
 
For the Quarters Ended
March 31,
For the Nine Months Ended
March 31,
(Dollars in Thousands)
2016
2015
2016
2015
 
 
 
 
 
Allowance at beginning of period
$
8,768

$
8,693

$
8,724

$
9,744

 
 
 
 
 
Recovery from the allowance for loan losses
(694
)
(111
)
(1,094
)
(1,283
)
 
 
 
 
 
Recoveries:
 

 

 

 

Mortgage loans:
 

 

 

 

Single-family
129

226

356

499

Multi-family
53

65

167

229

Commercial real estate


216


Commercial business loans


85


Consumer loans
1


1

1

Total recoveries
183

291

825

729

 
 
 
 
 
Charge-offs:
 

 

 

 

Mortgage loans:
 

 

 

 

Single-family
(57
)
(88
)
(253
)
(405
)
Commercial real estate

(73
)

(73
)
Consumer loans


(2
)

Total charge-offs
(57
)
(161
)
(255
)
(478
)
 
 
 
 
 
Net recoveries
126

130

570

251

Balance at end of period
$
8,200

$
8,712

$
8,200

$
8,712

 
 

 

 

 

Allowance for loan losses as a percentage of gross loans held for investment
1.01
 %
1.05
 %
1.01
 %
1.05
 %
Net recoveries as a percentage of average loans receivable, net, during the period (annualized)
(0.05
)%
(0.05
)%
(0.08
)%
(0.04
)%
Allowance for loan losses as a percentage of gross non-performing loans at the end of the period
62.31
 %
79.74
 %
62.31
 %
79.74
 %



20



The following tables denote the past due status of the Corporation's gross loans held for investment, net of fair value adjustments, at the dates indicated.
 
 
March 31, 2016
(In Thousands)
Current
30-89 Days Past Due
Non-Accrual (1)
Total Loans Held for Investment
 
 
 
 
 
 
Mortgage loans:
 
 
 
 
 
Single-family
$
323,632

$
1,508