As filed
with the Securities and Exchange Commission on November 13, 2009
Registration
No. 333-162415
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
AMENDMENT
NO. 1
TO
FORM
S-1
REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933
PROVIDENT
FINANCIAL HOLDINGS, INC.
(Exact
Name of Registrant as Specified in Its Charter)
|
Delaware
(State
or Other Jurisdiction
of
Incorporation or Organization)
|
6035
(Primary
Standard Industrial
Classification
Code Number)
|
33-0704889
(I.R.S.
Employer
Identification
Number)
|
3756
Central Avenue, Riverside, California 92506; (951) 686-6060
(Address,
Including Zip Code, and Telephone Number, Including Area Code, of Registrant's
Principal Executive Offices)
Craig
G. Blunden, President and CEO
Provident
Financial Holdings, Inc.
3756
Central Avenue
Riverside,
California 92506; (951) 686-6060
(Address,
Including Zip Code, and Telephone Number, Including Area Code, of Agent for
Service)
Copies
to:
|
John
F. Breyer, Jr., Esquire
Breyer
& Associates PC
8180
Greensboro Drive, Suite 785
McLean,
Virginia 22102
(703)
883-1100
|
Dave
M. Muchnikoff, P.C.
Silver,
Freedman & Taff, L.L.P.
3299
K Street, N.W., Suite 100
Washington,
D.C. 20007
(202)
295-4500
|
|
Scott
Brown, Esquire
Kilpatrick
Stockton LLP
607
14th Street, NW, Suite 900
Washington,
DC 20005
(202)
508-5800
|
|
Approximate date of commencement of
proposed sale to the public: As soon as practicable after this
registration statement becomes effective.
If any of
the securities being registered on this Form are to be offered on a delayed or
continuous basis pursuant to Rule 415 under the Securities Act of 1933, check
the following box: [ ]
If this
Form is filed to register additional shares for an offering pursuant to Rule
462(b) under the Securities Act, please check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same
offering: [ ]
If this
Form is a post-effective amendment filed pursuant to Rule 462(c) under the
Securities Act, check the following box and list the Securities Act registration
statement number of the earlier effective registration statement for the same
offering: [ ]
If this
Form is a post-effective amendment filed pursuant to Rule 462(d) under the
Securities Act, check the following box and list the Securities Act registration
statement number of the earlier effective registration statement for the same
offering: [ ]
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 [ ]
|
||
|
Non-accelerated
filer [ ] (Do not check if a smaller reporting
company)
|
Smaller
reporting company [X]
|
CALCULATION
OF REGISTRATION FEE
|
Title
of Each Class of Securities to be Registered
|
Proposed
Maximum
Aggregate
Offering Price(1)(2)
|
Amount
of
Registration
Fee(3)
|
|
Common
Stock, par value $.01 per share
|
$46,000,000
|
$2,567.00
|
|
(1)
|
Estimated
solely for the purpose of calculating the registration fee pursuant to
Section 457(o) under the Securities
Act.
|
|
(2)
|
Includes
the offering price of shares that the underwriters have the option to
purchase to cover over-allotments, if
any.
|
|
(3)
|
Previously
paid.
|
The
registrant hereby amends this registration statement on such date or dates as
may be necessary to delay its effective date until the registrant shall file a
further amendment which specifically states that this registration shall
thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the registration statement shall become
effective on such date as the Securities and Exchange Commission, acting
pursuant to said Section 8(a), may determine.
The
Information in this prospectus is not complete and may be changed. We
may not sell these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is
not an offer to sell these securities and is not soliciting an offer to buy
these securities in any state where the offer or sale is not
permitted.
Subject
to Completion, Dated __________ __, 2009
PROSPECTUS
Shares
Common
Stock
We are
offering shares
of our common stock. Our common stock is listed on the Nasdaq Global
Select Market under the symbol “PROV.” On
, 2009, the last reported sale
price of our common stock on the Nasdaq Global Select Market was
$ per
share.
Investing
in our common stock involves risks. See “Risk Factors” beginning on
page 7 of this prospectus to read about factors you should consider before
buying our common stock.
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Per Share
|
|
Total
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|||||||
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Public
offering price
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$
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|
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$
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||||
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Underwriting
discounts and commissions
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$
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$
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||||||
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Proceeds
to Provident Financial Holdings, Inc. (before expenses)
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$
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$
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||||||
The
underwriters have the option to purchase up to an additional
shares of our
common stock at the public offering price, less underwriting discounts and
commissions, within 30 days of the date of this prospectus solely to cover
over-allotments, if any.
Neither
the Securities and Exchange Commission nor any state securities commission has
approved or disapproved of these securities or passed upon the adequacy or
accuracy of this prospectus. Any representation to the contrary is a criminal
offense.
The
shares of common stock are not savings accounts, deposits or other obligations
of a bank or savings institution and are not insured by the Federal Deposit
Insurance Corporation or any other government agency.
The
underwriters expect to deliver the common stock in book-entry form only, through
the facilities of The Depository Trust Company, against payment on or
about , 2009.
Sole
Book Running Manager
SANDLER O’NEILL + PARTNERS,
L.P.
Co-Managers
|
FBR
CAPITAL MARKETS & CO.
|
FIG
PARTNERS, LLC
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||||||||
The date
of this prospectus is _____________ __, 2009
TABLE
OF CONTENTS
Prospectus
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Page
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|
| CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS |
ii
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| PROSPECTUS SUMMARY |
1
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| RISK FACTORS |
8
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| USE OF PROCEEDS |
21
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| CAPITALIZATION |
22
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| PRICE RANGE OF COMMON STOCK AND DIVIDEND INFORMATION |
23
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| DESCRIPTION OF CAPITAL STOCK |
24
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|
RESTRICTIONS
ON ACQUISITIONS OF STOCK AND
RELATED
TAKEOVER DEFENSIVE PROVISIONS
|
25 |
| CERTAIN MANAGEMENT REALTIONSHIPS AND BENEFITS |
28
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| ERISA CONSIDERATIONS |
28
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| UNDERWRITING |
29
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| LEGAL MATTERS |
32
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| EXPERTS |
32
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| WHERE YOU CAN FIND MORE INFORMATION |
32
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| INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE |
32
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You
should rely only on the information contained in or incorporated by reference in
this prospectus and any “free writing prospectus” we authorize to be delivered
to you. We have not, and the underwriters have not, authorized anyone to provide
you with additional information or information different from that contained in
or incorporated by reference in this prospectus and any such “free writing
prospectus.” If anyone provides you with different or inconsistent
information, you should not rely on it. We are offering to sell, and
seeking offers to buy, our common stock only in jurisdictions where those offers
and sales are permitted. The information contained in or incorporated by
reference in this prospectus and any such “free writing prospectus” is accurate
only as of their respective dates. Our business, financial condition, results of
operations and prospects may have changed since those dates.
This
prospectus describes the specific details regarding this offering and the terms
and conditions of the common stock being offered hereby and the risks of
investing in our common stock. To the extent information in this prospectus is
inconsistent with any of the documents incorporated by reference into this
prospectus, you should rely on this prospectus. You should read this prospectus,
the documents incorporated by reference in this prospectus and the additional
information about us described in the section entitled “Where You Can Find More
Information” before making your investment decision.
As used
in this prospectus, the terms “we,” “our,” “us,” and “Provident” refer to
Provident Financial Holdings, Inc. and its consolidated subsidiaries, unless the
context indicates otherwise. When we refer to the “Bank” or “Provident Savings
Bank” in this prospectus, we are referring to Provident Savings Bank, F.S.B., a
wholly owned subsidiary of Provident Financial Holdings, Inc.
i
This
prospectus and the documents incorporated by reference may contain
forward-looking statements. These forward-looking statements are
intended to be covered by the safe harbor for forward-looking statements
provided by the Private Securities Litigation Reform Act of 1995.
Forward-looking statements are not statements of historical fact and often
include the words
“believes,” “expects,” “anticipates,” “estimates,” “forecasts,” “intends,” “plans,” “targets,” “potentially,” “probably,” “projects,” “outlook”
or similar expressions or future or conditional verbs such as
“may,” “will,” “should,” “would” and
“could.” Forward-looking statements include statements with respect to our
beliefs, plans, objectives, goals, expectations, assumptions and statements
about future performance. These forward-looking statements are
subject to known and unknown risks, uncertainties and other factors that could
cause actual results to differ materially from the results anticipated,
including, but not limited to:
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·
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the
credit risks of lending activities, including changes in the level and
trend of loan delinquencies and write-offs and changes in our allowance
for loan losses and provision for loan losses that may be impacted by
deterioration in the housing and commercial real estate
markets;
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·
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changes
in general economic conditions, either nationally or in our market
areas;
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·
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changes
in the levels of general interest rates, and the relative differences
between short and long term interest rates, deposit interest rates, our
net interest margin and funding
sources;
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·
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fluctuations
in the demand for loans, the number of unsold homes, land and other
properties and fluctuations in real estate values in our market
areas;
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·
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secondary
market conditions for loans and our ability to sell loans in the secondary
market;
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| · |
the
accuracy of the results of our stress
test;
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·
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results
of examinations of us by the Office of Thrift Supervision or other
regulatory authorities, including the possibility that any such regulatory
authority may, among other things, require us to increase our reserve for
loan losses, write-down assets, change our regulatory capital position or
affect our ability to borrow funds or maintain or increase deposits, which
could adversely affect our liquidity and
earnings;
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·
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legislative
or regulatory changes that adversely affect our business including changes
in regulatory policies and principles, or the interpretation of regulatory
capital or other rules;
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·
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our
ability to attract and retain
deposits;
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·
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further
increases in premiums for deposit
insurance;
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·
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our
ability to control operating costs and
expenses;
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·
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the
use of estimates in determining fair value of certain of our assets, which
estimates may prove to be incorrect and result in significant declines in
valuation;
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·
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difficulties
in reducing risk associated with the loans on our balance
sheet;
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·
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staffing
fluctuations in response to product demand or the implementation of
corporate strategies that affect our workforce and potential associated
charges;
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·
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computer
systems on which we depend could fail or experience a security
breach;
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·
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our
ability to retain key members of our senior management
team;
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·
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costs
and effects of litigation, including settlements and
judgments;
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·
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our
ability to implement our branch expansion
strategy;
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ii
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·
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our
ability to successfully integrate any assets, liabilities, customers,
systems, and management personnel we have acquired or may in the future
acquire into our operations and our ability to realize related revenue
synergies and cost savings within expected time frames and any goodwill
charges related thereto;
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·
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increased
competitive pressures among financial services
companies;
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·
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changes
in consumer spending, borrowing and savings
habits;
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·
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the
availability of resources to address changes in laws, rules, or
regulations or to respond to regulatory
actions;
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·
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our
ability to pay dividends on our common
stock;
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·
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adverse
changes in the securities markets;
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·
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inability
of key third-party providers to perform their obligations to
us;
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·
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changes
in accounting policies and practices, as may be adopted by the financial
institution regulatory agencies or the Financial Accounting Standards
Board, including additional guidance and interpretation on accounting
issues and details of the implementation of new accounting methods;
and
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|
·
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other
economic, competitive, governmental, regulatory, and technological factors
affecting our operations, pricing, products and services and the other
risks described elsewhere in this prospectus and the incorporated
documents.
|
Some of
these and other factors are discussed in this prospectus under the caption “Risk
Factors” and elsewhere in this prospectus and in the incorporated documents.
Such developments could have an adverse impact on our financial position and our
results of operations.
Any
forward-looking statements are based upon management’s beliefs and assumptions
at the time they are made. We undertake no obligation to publicly update or
revise any forward-looking statements included or incorporated by reference in
this prospectus or to update the reasons why actual results could differ from
those contained in such statements, whether as a result of new information,
future events or otherwise. In light of these risks, uncertainties and
assumptions, the forward-looking statements discussed in this prospectus or the
incorporated documents might not occur, and you should not put undue reliance on
any forward-looking statements.
iii
This
summary highlights information contained elsewhere in, or incorporated by
reference into, this prospectus. As a result, it does not contain all of the
information that may be important to you or that you should consider before
investing in our common stock. You should read this entire prospectus, including
the “Risk Factors” section, and the documents incorporated by reference, which
are described under “Incorporation of Certain Documents by Reference” in this
prospectus. Unless otherwise expressly stated or the context
otherwise requires, all information in this prospectus assumes that the
underwriters do not exercise their option to purchase additional shares of our
common stock to cover over-allotments, if any.
Provident
Financial Holdings, Inc.
Provident
Financial Holdings, Inc., a Delaware corporation, was incorporated in 1996. We
operate principally through Provident Savings Bank, F.S.B., a
federally-chartered stock savings bank that is our wholly owned
subsidiary. At September 30, 2009, we had total consolidated assets
of $1.48 billion, total loans of $1.24 billion, total deposits of $931.9 million
and total stockholders’ equity of $108.9 million.
Provident
Savings Bank is a financial services company committed to serving consumers and
small to mid-sized businesses in Riverside and San Bernardino counties,
California, known as the Inland Empire region of Southern
California. Provident Savings Bank conducts its business operations
as Provident Bank, Provident Bank Mortgage (“PBM”), a division of Provident
Savings Bank, and through its subsidiary, Provident Financial Corp.
Our
subsidiaries provide a full range of financial services designed to meet the
financial needs of our customers, including:
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·
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community
banking
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·
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mortgage
banking
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·
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investment
and insurance services, and
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|
·
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trustee
services.
|
Provident Savings Bank is headquartered in Riverside, California and
operates 13 full-service banking offices in Riverside County and one
full-service banking office in San Bernardino County. We consider
Riverside and Western San Bernardino counties to be our primary market area for
deposits. Through the operations of Provident Bank Mortgage, we have
expanded the Bank’s mortgage lending market to include a large portion of
Southern California and, to a much lesser extent, Northern
California. As of September 30, 2009, Provident Bank Mortgage had
four loan production offices located in Southern California (in Los Angeles,
Riverside (two offices) and San Bernardino counties) and one loan production
office in Northern California (in Alameda County). Provident Bank
Mortgage’s loan production offices include two wholesale loan offices through
which the Bank maintains a network of loan correspondents. Most of
the Bank’s business is conducted in the communities surrounding its full-service
branches and loan production offices.
PBM
originates conventional conforming loans, which meet Freddie Mac and Fannie Mae
underwriting guidelines or are FHA/VA insured loans, for sale to the secondary
mortgage markets primarily on a servicing released basis. PBM maintains
relationships with four active private investors that purchase conventional
conforming and FHA loan production. PBM requires that each loan
application is verified through Freddie Mac’s Loan Prospector automated
underwriting system or Fannie Mae’s Desktop Underwriter automated underwriting
system and maintains generally more conservative underwriting criteria than
Freddie Mac, Fannie Mae or FHA in a two key areas, lower maximum debt-to-income
ratio requirements and higher minimum FICO score requirements.
Certain contractual repurchase or default provisions are contained in
the agreements governing the relationship between the four private investors,
Freddie Mac, Fannie Mae, FHA and PBM requiring PBM to repurchase any loan over
the life of the loan where an investor has demonstrated that fraudulent activity
or information was utilized in the loan application process to obtain the loan
or for breaches of representations and warranties related to the
loan. Additionally, the agreements between the private investors and
PBM contain certain contractual language requiring the repurchase of loans where
the loans have experienced early payment default (typically within 90 days of
the loan sale). In those cases, the investor is not required to
demonstrate fraudulent activity was utilized in the loan application process to
obtain the loan.
1
PBM has
adapted to the changing market conditions by enhancing its expertise in FHA/VA
loan products, adopting tighter underwriting standards, changing the loan
product mix to focus on conforming conventional and FHA/VA loans and, recently,
by expanding its loan origination capacity to reflect the increased demand for
mortgage loans resulting from lower mortgage interest rates and lower home
prices.
Primarily, the Bank attracts deposits from the general public and using
those funds, together with borrowings and other funds, to originate
single-family first mortgage loans on residential properties located in our
primary market areas. We also make multi-family, commercial real estate,
construction, commercial business, consumer and other loans and invest in
mortgage-backed securities, federal government and agency obligations, money
market obligations and certain corporate obligations. Our mortgage banking
activities primarily consist of the origination and sale of single-family
mortgage loans (including second mortgages and equity lines of
credit). Through its subsidiary, Provident Financial Corp, the Bank
conducts trustee services for its real estate transactions and in the past has
used Provident Financial Corp to hold real estate for
investment. Provident Savings Bank also offers investment and
insurance services.
Provident
Savings Bank is a member of the Federal Home Loan Bank System and its deposits
are insured by the Federal Deposit Insurance Corporation, or FDIC, up to
applicable limits. The Bank is subject to comprehensive regulation, examination
and supervision by the Office of Thrift Supervision, or OTS, and the
FDIC.
Our
common stock trades on the Nasdaq Global Select Market under the symbol
“PROV.”
Our
principal executive offices are located at 3756 Central Avenue, Riverside,
California 92506. Our telephone number is (951)
686-6060.
Business
Strategy
Since the
latter half of 2007, severely depressed economic conditions have prevailed in
portions of the United States, including California, where we hold substantially
all of our loans and conduct all of our operations. As of September
30, 2009, approximately 85% of our real estate loans were secured by collateral
and made to borrowers located in Southern California. Southern
California, in particular the Inland Empire, has experienced substantial home
price declines and increased foreclosures and has experienced above average
unemployment rates. In response to these financial challenges, we have taken and
are continuing to take a number of actions aimed at preserving existing capital,
reducing our lending concentrations and associated capital requirements, and
increasing liquidity. The tactical actions we have taken to date include, but
are not limited to: primarily originating loans for sale in the secondary
market, slowing residential loan originations held for investment in our loan
portfolio, disciplined growth of our commercial and multi-family real estate
loan portfolios, selling real estate owned and investment securities, increasing
retail deposits, reducing personnel operating costs, and reducing the amount of
our dividends to stockholders.
Our goal
is to deliver returns to shareholders by expanding our market share by capturing
business resulting from changes in the competitive environment within our
existing market areas, increasing our core deposit balances, improving our
available liquidity, managing our problem assets, increasing our higher-yielding
assets (in particular multi-family real estate loans) and reducing
expenses. To realize these objectives, we are pursuing the following
strategies:
Improve
Asset Quality. We have de-emphasized new loan originations for investment
to focus on monitoring existing performing loans, resolving non-performing loans
and selling foreclosed assets. The percentage of non-performing assets to total
assets was 6.64% at September 30, 2009, as compared to 2.80% at September 30,
2008. We have aggressively sought to reduce the level of non-performing assets
through write-downs, collections, modifications and sales of non-performing
loans and real estate owned (“REO”). We have taken proactive steps to resolve
our non-performing loans, including negotiating repayment plans, forbearances,
loan modifications and loan extensions with our borrowers when appropriate, and
accepting short payoffs on delinquent loans, particularly when such payoffs
result in a smaller loss to us than foreclosure. We also have added personnel to
the department that monitors our loans with a goal of reducing our exposure to a
further deterioration in asset quality. Beginning in 2008, in connection with
the downturn in real estate markets, we applied more conservative and stringent
underwriting practices to our new loans, including, among other things,
requiring more detailed credit and income
2
Expand
our presence within our existing market areas by capturing business
opportunities resulting from changes in the competitive
environment. We currently conduct our business primarily in
Southern California. We have a community banking strategy that emphasizes
responsive and personalized service to our customers. As a result of the recent
consolidation and failure of certain financial institutions in Southern
California, we believe there is a significant opportunity for a
community-focused bank, such as Provident Savings Bank, to provide a full range
of financial services to small and middle-market commercial and retail
customers. By offering quicker decision making in the delivery of banking
products and services, offering customized products where appropriate and
providing customer access to our senior managers, we can distinguish ourselves
from larger banks operating in our market areas. At the same time,
our larger capital base and greater product mix enables us to compete
effectively against smaller banks. As a result, we believe we have a substantial
opportunity to attract additional borrowers and depositors and, thus, expand our
presence and market share throughout Riverside and San Bernardino
counties.
Improve
revenues through continued and expanded mortgage banking
operations. The substantial majority of our single-family
residential loans we originate to sell in the secondary market with servicing
released. This strategy enables us to have a much larger lending
capacity, provide a more comprehensive product offering and reduce the interest
rate, prepayment and credit risks associated with residential
lending. Further, such strategy allows us to be more flexible with
the single-family residential loans we maintain for investment. The
increased capital we raise from this offering may allows us to maintain a
greater amount of loans for sale, which will allow us to increase our mortgage
banking operations.
Improve
our Earnings by Expanding Our Product Offerings. We intend to diversify
our loan portfolio by prudently increasing the percentage of our assets
consisting of higher-yielding multi-family loans, which offer higher
risk-adjusted returns, shorter maturities and more sensitivity to interest rate
fluctuations, while still providing high quality loan products for single-family
residential borrowers. We also intend to selectively add additional
products to further diversify revenue sources and to capture more of each
customer’s banking relationship by cross selling our loan and deposit products
and additional services to our customers.
Increase
Core Deposits and Other Retail Deposit Products. Our strategic focus is
to emphasize total relationship banking with our customers to internally fund
our loan growth. We believe that continued focus on customer
relationships will help to increase our level of core deposits and locally-based
retail certificates of deposit. In addition to our retail branches, we
maintain state of the art technology-based products, such as on-line personal
financial management, business cash management, and business remote deposit
products, that
enable us to compete effectively with banks of all
sizes.
Continued
Expense Control. Beginning in fiscal 2008 and continuing into fiscal
2009, management has undertaken several initiatives to reduce non-interest
expense and will continue to make it a priority to identify cost savings
opportunities throughout all phases of our operations. In the fourth quarter of
fiscal 2007, we began reducing stockholder dividends. Beginning in fiscal 2008,
we instituted expense control measures such as reducing staff, reducing many of
our marketing expenses, cancelling certain projects and capital purchases, and
reducing travel and entertainment expenditures. Personnel
reductions have and will come primarily from our lending and mortgage banking
operations as well as some reduction in our support areas. We believe
that reductions in staffing and related benefit costs have saved us
approximately $3.6 million on an annualized basis.
Recruit
and retain highly competent personnel to execute our strategies. Our
ability to continue to attract and retain banking professionals with strong
community relationships and significant knowledge of our markets will be a key
to our success. We believe that we enhance our market position and add
profitable growth opportunities by focusing on hiring and retaining experienced
bankers who are established in their communities. We emphasize to our
employees the importance of delivering exemplary customer service and seeking
opportunities to build further relationships with our customers. Our goal is to
compete with other financial service providers by relying on the strength of our
customer service and relationship banking approach.
3
Recent
Developments
Internal
Analysis of Capital. The
federal banking regulators have conducted the Supervisory Capital Assessment
Program, or the “SCAP,” commonly referred to as the “stress test,” of the
nineteen largest United States bank holding companies. The SCAP process
involves the projection of losses on loans, assets held in investment portfolios
and trading-related exposures, as well as each institution’s capacity to absorb
losses to determine a sufficient capital level to support lending over a
two-year horizon under a “baseline” and a “more adverse”
scenario. The assumptions used for the baseline scenario reflect the
consensus expectations on such items as gross domestic product growth,
unemployment rates and home prices, as of February 2009 among professional
forecasters on the depth and duration of the economic recession. The
more adverse scenario was designed to characterize a recession that is longer
and more severe than the consensus expectation.
We were
not among the banks that the federal banking regulators reviewed under the SCAP,
however, we conducted an analysis of our capital position as of
September 30, 2009, applying the SCAP methodology established by the Board
of Governors of the Federal Reserve System to our loan portfolio as of September
30, 2009. After applying the SCAP methodology to our loan portfolio,
our potential cumulative loan losses over the next two years would be
approximately $79.7 million under the baseline scenario and $124.5 million under
the more adverse scenario. Based upon this analysis, we believe that,
assuming completion of this offering, we would have Tier 1 common equity greater
than 4% of risk-based assets after completion of the stress test, the amount
recommended by the Board of Governors of the Federal Reserve System, and we
would remain well capitalized.
Risk Factors
An
investment in our common stock involves certain risks. You should carefully
consider the risks described under “Risk Factors” beginning on page 7 of
this prospectus and in the “Risk Factors” section included in our Quarterly
Report on Form 10-Q for the quarter ended September 30, 2009 and our Annual
Report on Form 10-K for the fiscal year ended June 30, 2009, as well as
other information included or incorporated by reference in this prospectus,
including our financial statements and the notes thereto, before making an
investment decision. See “Incorporation of Certain Documents by
Reference.”
4
The
Offering
|
Common
stock we are offering, excluding the
underwriters’
over allotment option
|
shares
|
|
Common
stock to be outstanding after this offering
|
shares
(1)(2)
|
|
Over-allotment
option
|
shares
|
|
Use
of proceeds
|
Our
estimated net proceeds from this offering are
approximately $ million,
or approximately $ million if the
underwriters exercise their over-allotment option in full, after deducting
the underwriting discounts and commissions and other estimated expenses of
this offering. We intend to use the net proceeds from this
offering for general corporate purposes, which may include without
limitation, providing capital to support the Bank’s growth, particularly
to fund expanded mortgage banking operations and to take advantage of
opportunities created by changes in the competitive environment in our
market areas and by originating more multi-family real estate
loans. The proceeds will also strengthen the Bank’s regulatory
capital ratios.
|
|
Dividends
on common stock
|
Historically
we have paid quarterly dividends, however, since the fourth quarter of
fiscal 2008 we have reduced our dividend payout from $0.18 per share to
$0.01 per share. We paid a dividend during the first quarter of
fiscal 2010 of $0.01 per share. We intend to continue paying dividends in
the future but our ability to do so will depend on a number of
factors. We cannot give you any assurance that we will continue
to pay dividends or that their amount will not be reduced in the
future. See “Price Range of Common Stock and Dividend
Information.”
|
|
Nasdaq
Global Select Market symbol
|
PROV
|
|
Settlement
date
|
Delivery
of shares of our common stock will be made against payment therefor on or
about November __, 2009.
|
|
(1)
|
The
number of our shares outstanding immediately after the closing of this
offering is based on ______ shares of common stock outstanding as of
______ __, 2009.
|
|
(2)
|
Unless
otherwise indicated, the number of shares of common stock presented in
this prospectus excludes shares issuable pursuant to the exercise of the
underwriters’ over-allotment option, excludes 905,500 shares of common
stock issuable upon exercise of outstanding stock options as of September
30, 2009, with a weighted average exercise price of $19.32 per share and
50,150 shares of common stock issuable pursuant to potential future awards
under our equity compensation
plans.
|
5
Summary
of Selected Consolidated Financial Information
The
following table sets forth selected consolidated financial information as of
September 30, 2009 and for the three months ended September 30, 2009 and 2008
and as of and for the fiscal years ended June 30, 2009, 2008, 2007, 2006 and
2005 derived from our audited consolidated financial statements. The
unaudited financial information as of and for the three months ended September
30, 2009 and 2008 has been prepared on the same basis as our audited financial
statements and includes, in the opinion of management, all adjustments necessary
to fairly present the data for such periods. The results of operations for the
three months ended September 30, 2009 are not necessarily indicative of the
results of operations to be expected for the full year or any future
period. This information should be read in conjunction with our
consolidated financial statements and related notes included in our Annual
Report on Form 10-K for the fiscal year ended June 30, 2009, and our
Quarterly Report on Form 10-Q for the quarter ended September 30, 2009, which
have been filed with the Securities and Exchange Commission, or SEC, and are
incorporated herein by reference. See “Incorporation of Certain Documents by
Reference.”
|
As
of
|
||||||||||||||||||||
|
September
30,
|
As
of June 30,
|
|||||||||||||||||||
|
2009
|
2009
|
2008
|
2007
|
2006
|
2005
|
|||||||||||||||
|
(In
thousands)
|
||||||||||||||||||||
|
Balance
Sheet Data:
|
||||||||||||||||||||
|
Total
assets
|
$
|
1,479,738
|
$
|
1,579,613
|
$
|
1,632,447
|
$
|
1,648,923
|
$
|
1,624,452
|
$
|
1,634,690
|
||||||||
|
Loans
held for investment, net
|
1,108,536
|
1,165,529
|
1,368,137
|
1,350,696
|
1,264,979
|
1,134,473
|
||||||||||||||
|
Loans
held for sale, at fair value
|
130,088
|
135,490
|
-
|
-
|
-
|
-
|
||||||||||||||
|
Loans
held for sale, at lower of cost or
market
|
-
|
10,555
|
28,461
|
1,337
|
4,713
|
5,691
|
||||||||||||||
|
Receivable
from sale of loans
|
-
|
-
|
-
|
60,513
|
99,930
|
167,813
|
||||||||||||||
|
Cash
and cash equivalents
|
98,416
|
56,903
|
15,114
|
12,824
|
16,358
|
25,902
|
||||||||||||||
|
Investment
securities
|
54,502
|
125,279
|
153,102
|
150,843
|
177,189
|
232,432
|
||||||||||||||
|
Deposits
|
931,921
|
989,245
|
1,012,410
|
1,001,397
|
921,279
|
923,670
|
||||||||||||||
|
Borrowings
|
416,681
|
456,692
|
479,335
|
502,774
|
546,211
|
560,845
|
||||||||||||||
|
Intangible
assets (1)
|
-
|
-
|
-
|
-
|
31
|
94
|
||||||||||||||
|
Stockholders’
equity
|
108,903
|
114,910
|
123,980
|
128,797
|
136,148
|
122,965
|
||||||||||||||
|
For
the
|
|||||||||||||||||||||||||
|
three
months ended
|
|||||||||||||||||||||||||
|
September
30,
|
For
the years ended June 30,
|
||||||||||||||||||||||||
|
2009
|
2008
|
2009
|
2008
|
2007
|
2006
|
2005
|
|||||||||||||||||||
|
(In
thousands)
|
|||||||||||||||||||||||||
|
Income
Statement Data:
|
|||||||||||||||||||||||||
|
Interest
income
|
$
|
19,366
|
$
|
23,013
|
$
|
85,924
|
$
|
95,749
|
$
|
100,968
|
$
|
86,627
|
$
|
75,495
|
|||||||||||
|
Interest
expense
|
9,260
|
11,720
|
42,156
|
54,313
|
59,245
|
42,635
|
33,048
|
||||||||||||||||||
|
Net
interest income
|
10,106
|
11,293
|
43,768
|
41,436
|
41,723
|
43,992
|
42,447
|
||||||||||||||||||
|
Provision
for loan losses
|
17,206
|
5,732
|
48,672
|
13,108
|
5,078
|
1,134
|
1,641
|
||||||||||||||||||
|
Net
interest (expense) income after
provision
for loan losses
|
(7,100
|
)
|
5,561
|
(4,904
|
)
|
28,328
|
36,645
|
42,858
|
40,806
|
||||||||||||||||
|
Loan
servicing and other fees
|
235
|
248
|
869
|
1,776
|
2,132
|
2,572
|
1,675
|
||||||||||||||||||
|
Gain
on sale of loans, net
|
3,143
|
1,191
|
16,971
|
1,004
|
9,318
|
13,481
|
18,706
|
||||||||||||||||||
|
Deposit
account fees
|
763
|
758
|
2,899
|
2,954
|
2,087
|
2,093
|
1,789
|
||||||||||||||||||
|
Net
gain on sale of investment
securities
|
1,949
|
356
|
356
|
-
|
-
|
-
|
384
|
||||||||||||||||||
|
Net
gain on sale of real estate
held
for investment
|
-
|
-
|
-
|
-
|
2,313
|
6,335
|
-
|
||||||||||||||||||
|
Gain
(loss) on sale and operations of
real
estate owned acquired in the
settlement
of loans, net
|
438
|
(390
|
)
|
(2,469
|
)
|
(2,683
|
)
|
(117
|
)
|
20
|
-
|
||||||||||||||
|
Other
non-interest income
|
478
|
313
|
1,583
|
2,160
|
1,828
|
1,708
|
1,864
|
||||||||||||||||||
|
Non-interest
expense (2)
|
8,551
|
7,364
|
29,980
|
30,311
|
34,631
|
33,755
|
33,341
|
||||||||||||||||||
|
(Loss)
income before income taxes
|
(8,645
|
)
|
673
|
(14,675
|
)
|
3,228
|
19,575
|
35,312
|
31,883
|
||||||||||||||||
|
(Benefit)
provision for income taxes
|
(3,629
|
)
|
344
|
(7,236
|
)
|
2,368
|
9,124
|
15,676
|
14,077
|
||||||||||||||||
|
Net
(loss) income
|
$
|
(5,016
|
)
|
$
|
329
|
$
|
(7,439
|
)
|
$
|
860
|
$
|
10,451
|
$
|
19,636
|
$
|
17,806
|
|||||||||
6
|
At
or for the three months ended
|
|||||||||||||||||||||||||
|
September
30,
|
At
or for the years ended June 30,
|
||||||||||||||||||||||||
|
2009
|
2008
|
2009
|
2008
|
2007
|
2006
|
2005
|
|||||||||||||||||||
|
Per
Share Data:
|
|||||||||||||||||||||||||
|
Net
(loss) income, basic
|
$
|
(0.82
|
)
|
$
|
0.05
|
$
|
(1.20
|
)
|
$
|
0.14
|
$
|
1.59
|
$
|
2.93
|
$
|
2.68
|
|||||||||
|
Net
(loss) income, diluted
|
$
|
(0.82
|
)
|
$
|
0.05
|
$
|
(1.20
|
)
|
$
|
0.14
|
$
|
1.57
|
$
|
2.82
|
$
|
2.49
|
|||||||||
|
Book
value per common share
|
$
|
17.51
|
$
|
20.05
|
$
|
18.48
|
$
|
19.97
|
$
|
20.20
|
$
|
19.47
|
$
|
17.68
|
|||||||||||
|
Dividends
|
$
|
0.01
|
$
|
0.05
|
$
|
0.16
|
$
|
0.64
|
$
|
0.69
|
$
|
0.58
|
$
|
0.52
|
|||||||||||
|
Dividend
payout ratio
|
NM
|
100.00
|
%
|
NM
|
457.14
|
%
|
43.95
|
%
|
20.57
|
%
|
20.88
|
%
|
|||||||||||||
|
Shares
outstanding
|
6,220,454
|
6,208,519
|
6,219,654
|
6,207,719
|
6,376,945
|
6,991,842
|
6,956,815
|
||||||||||||||||||
|
Capital
Ratios:
|
|||||||||||||||||||||||||
|
Equity
to assets ratio
|
7.36
|
%
|
7.81
|
%
|
7.27
|
%
|
7.59
|
%
|
7.81
|
%
|
8.38
|
%
|
7.52
|
%
|
|||||||||||
|
Total
risk-based capital ratio
|
13.16
|
12.96
|
13.05
|
12.25
|
12.49
|
13.37
|
11.21
|
||||||||||||||||||
|
Tier
1 risk-based capital ratio
|
11.89
|
11.71
|
11.78
|
10.99
|
11.39
|
12.36
|
10.29
|
||||||||||||||||||
|
Tier
1 leverage ratio
|
7.03
|
7.42
|
6.88
|
7.19
|
7.62
|
8.08
|
6.56
|
||||||||||||||||||
|
Asset
Quality Ratios:
|
|||||||||||||||||||||||||
|
Non-performing
assets to loans held
for
investment and real estate
owned,
net. acquired in settlement
of
loans
|
8.76
|
%
|
3.36
|
%
|
7.47
|
%
|
2.36
|
%
|
1.46
|
%
|
0.20
|
%
|
0.05
|
%
|
|||||||||||
|
Non-performing
assets to total assets
|
6.64
|
2.80
|
5.59
|
1.99
|
1.20
|
0.16
|
0.04
|
||||||||||||||||||
|
Allowance
for loan losses to gross
loans
held for investment
|
4.97
|
1.67
|
3.75
|
1.43
|
1.09
|
0.81
|
0.81
|
||||||||||||||||||
|
Allowance
for loan losses to
non-performing
loans
|
67.83
|
62.99
|
63.28
|
85.79
|
93.32
|
407.71
|
1,561.86
|
||||||||||||||||||
|
Net
charge-offs to average loans
receivable,
net (3)
|
1.44
|
0.90
|
1.72
|
0.58
|
0.04
|
-
|
-
|
||||||||||||||||||
|
Performance
Ratios:
|
|||||||||||||||||||||||||
|
(Loss)
return on average equity (3)
|
(17.68
|
)%
|
1.06
|
%
|
(6.20
|
)%
|
0.68
|
%
|
7.77
|
%
|
15.02
|
%
|
15.33
|
%
|
|||||||||||
|
(Loss)
return on average assets (3)
|
(1.28
|
)
|
0.08
|
(0.47
|
)
|
0.05
|
0.61
|
1.24
|
1.19
|
||||||||||||||||
|
Interest
rate spread (4)
|
2.58
|
2.70
|
2.68
|
2.36
|
2.23
|
2.64
|
2.80
|
||||||||||||||||||
|
Net
interest margin (5)
|
2.69
|
2.89
|
2.86
|
2.61
|
2.51
|
2.86
|
2.95
|
||||||||||||||||||
|
Efficiency
ratio (2) (6)
|
49.97
|
53.48
|
46.86
|
64.98
|
58.42
|
48.08
|
49.86
|
||||||||||||||||||
___________
|
(1)
|
The
intangible assets in 2006 and 2005 were related to a previous branch
purchase. Currently, Provident has no intangible assets such as
goodwill or deposit intangibles.
|
|
(2)
|
Non-interest
expense in fiscal 2009 includes a non-recurring net recovery of $2.6
million of Employee Stock Ownership Plan expenses resulting from a
self-correction approved by the Internal Revenue Service and a FDIC
special assessment imposed on all financial institutions, which, in our
case totaled $734,000.
|
|
(3)
|
Ratios
for the three month periods are
annualized.
|
|
(4)
|
Difference
between weighted average yield on interest-earnings assets and weighted
average rate on interest-bearing
liabilities.
|
|
(5)
|
Net
interest margin is net interest income divided by average interest-earning
assets.
|
|
(6)
|
The
efficiency ratio is non-interest expense divided by the sum of net
interest income and non-interest
income.
|
7
RISK
FACTORS
An
investment in our common stock involves certain risks. Before you invest in our
common stock, you should be aware that there are various risks, including those
described below, which could affect the value of your investment in the
future. The trading price of our common stock could decline due to any of
these risks, and you may lose all or part of your investment. The risk factors
described in this section, as well as any cautionary language in this
prospectus, provide examples of risks, uncertainties and events that could have
a material adverse effect on our business, including our operating results and
financial condition. This prospectus also contains forward-looking statements
that involve risks and uncertainties. These risks could cause our actual results
to differ materially from the expectations that we describe in our
forward-looking statements. You should carefully consider the risks described
below and the risk factors included in our Annual Report on Form 10-K for
the year ended June 30, 2009, as well as the other information included or
incorporated by reference in this prospectus, before making an investment
decision.
Risks
Associated with Our Business
Our
business may continue to be adversely affected by downturns in the national
economy and the regional economies on which we depend.
Since the
latter half of 2007, severely depressed economic conditions have prevailed in
portions of the United States and in California, in which we hold substantially
all of our loans. As of September 30, 2009, approximately 85% of our
real estate loans were secured by collateral and made to borrowers located in
Southern California. Southern California, in particular Riverside
County, has experienced substantial home price declines and increased
foreclosures and has experienced above average unemployment rates. A worsening
of economic conditions in California, particularly Southern California, could
have a materially adverse effect on our business, financial condition, results
of operations and prospects.
A further
deterioration in economic conditions in the market areas we serve could result
in the following consequences, any of which could have a materially adverse
impact on our business, financial condition and results of
operations:
|
|
•
|
an
increase in loan delinquencies, problem assets and
foreclosures;
|
|
•
|
the
slowing of sales of foreclosed
assets;
|
|
•
|
a
decline in demand for our products and
services;
|
|
•
|
a
continuing decline in the value of collateral for loans may in turn reduce
customers’
borrowing
power, and the value of assets and collateral associated with
existing
loans; and
|
||
|
•
|
a
decrease in the amount of our low cost or non-interest bearing
deposits.
|
||
Our
business may be adversely affected by credit risk associated with residential
property.
At
September 30, 2009, $668.5 million, or 57.5% of our total loan portfolio,
was secured by one-to-four single-family residential real property. This type of
lending is generally sensitive to regional and local economic conditions that
may significantly impact the ability of borrowers to meet their loan payment
obligations, making loss levels difficult to predict. The decline in residential
real estate values as a result of the downturn in the California housing market
has reduced the value of the real estate collateral securing the majority of our
loans and increased the risk that we would incur losses if borrowers default on
their loans. Continued declines in both the volume of real estate sales and the
sales prices, coupled with the current recession and the associated increases in
unemployment, may result in higher loan delinquencies or problem assets, a
decline in demand for our products and services, or lack of growth or a decrease
in our deposits. These potential negative events may cause us to incur losses,
adversely affect our capital and liquidity and damage our financial condition
and business operations. These declines may have a greater effect on our
earnings and capital than on the earnings and capital of financial institutions
whose loan portfolios are more diversified.
8
Our
emphasis on non-traditional single-family residential loans exposes us to
increased lending risk.
During
the fiscal year ended June 30, 2009 and the three months ended September 30,
2009, we originated $1.32 billion and $491.7 million, respectively, in
one-to-four single-family residential loans. We historically sell the
vast majority of the one-to-four single-family residential loans we originate
and retain remaining loans in our one-to-four single-family loan portfolio held
for investment. As a result of our current focus on managing our
problem assets, we originated for investment only $8.9 million and $105,000 of
single-family loans during these same time periods, virtually all of which
conform to or satisfy the requirements for sale in the secondary
market. At September 30, 2009, our one-to-four single-family loans
held for investment totaled $668.5 million.
Prior to
fiscal 2009, many of the loans we originated for investment consisted of
non-traditional single–family loans that do not conform to Fannie Mae or Freddie
Mac underwriting guidelines as a result of characteristics of the borrower or
property, the loan terms, loan size or exceptions from agency underwriting
guidelines. In exchange for the additional risk to us associated with
these loans, these borrowers generally are required to pay a higher interest
rate, and depending on the credit history, a lower loan-to-value ratio was
generally required than for a conforming loan. For example, our
one-to-four single-family residential loans had an average loan to value ratio
at September 30, 2009 of 72% based on the appraisal at the time of loan
origination. Our non-traditional single-family loans include
interest-only loans, loans to borrowers who provided limited or no documentation
of their income or stated-income loans, negative amortization loans (a loan in
which accrued interest exceeding the required monthly loan payment is added to
loan principal up to 115% of the original loan to value ratio), more than
30-year amortization loans, and loans to borrowers with a FICO score below 660
(these loans are considered subprime by the Office of Thrift
Supervision). Including these low FICO score loans, as of September
30, 2009, borrowers of our one-to-four single-family loans held by us for
investment had a weighted average FICO score of 733 at the time of
origination.
As of
September 30, 2009, these non-traditional loans totaled $542.5 million,
comprising 84.3% of total single-family mortgage loans held for investment and
48.9% of total loans held for investment. At that date, interest-only
loans totaled $448.4 million, stated income loans totaled $346.8 million,
negative amortization loans totaled $10.1 million, more than 30-year
amortization loans totaled $21.1 million, and low FICO score loans totaled $19.1
million. In the case of interest-only loans, a borrower’s monthly payment is
subject to change when the loan converts to fully-amortizing
status. Of the $448.4 million of interest-only loans, $415.9 million
begin to fully amortize after calendar year 2010 and $316.9 million begin to
fully amortize after calendar year 2014. Since the borrower’s monthly
payment may increase by a substantial amount even without an increase in
prevailing market interest rates, there is no assurance that the borrower will
be able to afford the increased monthly payment. In the case of
stated income loans, a borrower may misrepresent his income or source of income
(which we have not verified) to obtain the loan. The borrower may not
have sufficient income to qualify for the loan amount and may not be able to
make the monthly loan payment. In the case of more than 30-year
amortization loans, the term of the loan requires many more monthly payments
from the borrower (ultimately increasing the cost of the home) and subjects the
loan to more interest rate cycles, economic cycles and employment cycles, which
increases the possibility that the borrower is negatively impacted by one of
these cycles and is no longer willing or able to meet his or her monthly payment
obligations.
Negative
amortization involves a greater risk to us because credit risk exposure
increases when the loan incurs negative amortization and the value of the home
serving as collateral for the loan does not increase
proportionally. Negative amortization is only permitted up to a
specified level and the payment on such loans is subject to increased payments
when the level is reached, adjusting periodically as provided in the loan
documents and potentially resulting in higher payments by the
borrower. The adjustment of these loans to higher payment
requirements can be a substantial factor in higher loan delinquency levels
because the borrowers may not be able to make the higher
payments. Also, real estate values may decline and credit standards
may tighten in concert with the higher payment requirement making it difficult
for borrowers to sell their homes or refinance their mortgages to pay off their
mortgage obligation.
Non-conforming
single-family residential loans are considered to have an increased risk of
delinquency, default and foreclosure than conforming loans and may result in
higher levels of realized loss. We have experienced such increased
delinquencies, defaults and foreclosures, and cannot assure you that our
one-to-four single-family loans will not be further adversely affected in the
event of a further downturn in regional or national economic conditions.
Consequently, we could sustain loan losses greater than we currently estimate
and potentially need to
9
High
loan-to-value ratios on a significant portion of our residential mortgage loan
portfolio exposes us to greater risk of loss.
Many of
our residential mortgage loans are secured by liens on mortgage properties in
which the borrowers have little or no equity because either we originated a
first mortgage with an 80% loan-to-value ratio and a concurrent second mortgage
for sale with a combined loan-to-value ratio of up to 100% or because of the
decline in home values in our market areas. Residential loans with high
loan-to-value ratios will be more sensitive to declining property values than
those with lower combined loan-to-value ratios and therefore may experience a
higher incidence of default and severity of losses. In addition, if the
borrowers sell their homes, such borrowers may be unable to repay their loans in
full from the sale. As a result, these loans may experience higher rates of
delinquencies, defaults and losses.
Our
multi-family and commercial real estate loans involve higher principal amounts
than other loans and repayment of these loans may be dependent on factors
outside our control or the control of our borrowers.
We
originate multi-family residential and commercial real estate loans for
individuals and businesses for various purposes, which are secured by
residential and non-residential properties. At September 30, 2009, we had
$478.6 million or 41.2% of total loans held for investment in multi-family and
commercial real estate mortgage loans. These loans typically involve higher
principal amounts than other types of loans, and repayment is dependent upon
income generated, or expected to be generated, by the property securing the loan
in amounts sufficient to cover operating expenses and debt service, which may be
adversely affected by changes in the economy or local market conditions. For
example, if the cash flow from the borrower’s project is reduced as a result of
leases not being obtained or renewed, the borrower’s ability to repay the loan
may be impaired. Multi-family and commercial real estate loans also expose
a lender to greater credit risk than loans secured by single-family residential
real estate because the collateral securing these loans typically cannot be sold
as easily as single-family residential real estate. In addition, many of our
multi-family and commercial real estate loans are not fully amortizing and
contain large balloon payments upon maturity. Such balloon payments may require
the borrower to either sell or refinance the underlying property to make the
payment, which may increase the risk of default or non-payment.
If we
foreclose on a multi-family or commercial real estate loan, our holding period
for the collateral typically is longer than for a one-to-four single-family
residential mortgage loan because there are fewer potential purchasers of the
collateral. Additionally, multi-family and commercial real estate loans
generally have relatively large balances to single borrowers or related groups
of borrowers. Accordingly, charge-offs on multi-family and commercial real
estate loans may be larger on a per loan basis than those incurred with our
single-family residential or consumer loan portfolios.
Our
provision for loan losses increased substantially during recent periods and we
may be required to make further increases in our provision for loan losses and
to charge-off additional loans in the future, which could adversely affect our
results of operations.
For the
quarters ended September 30, 2009 and 2008 we recorded a provision for loan
losses of $17.2 million and $5.7 million, respectively. We also
recorded net loan charge-offs of $4.6 million and $3.1 million for the quarters
ended September 30, 2009 and 2008, respectively. For the fiscal years
ended June 30, 2009 and 2008 we recorded a provision for loan losses of $48.7
million and $13.1 million, respectively. We also recorded net loan
charge-offs of $23.1 million and $8.1 million for the fiscal years ended June
30, 2009 and 2008, respectively. We are experiencing increasing loan
delinquencies and credit losses. The deterioration in the general
economy and our markets has become a significant contributing factor to the
increased levels of loan delinquencies and non-performing assets. General
economic conditions, decreased home prices, slower sales and excess inventory in
the housing market have caused the increase in delinquencies and foreclosures of
our residential one-to-four single-family mortgage loans, which represented
85.5% of our non-performing assets at September 30, 2009. At
September 30, 2009, our total non-performing assets had increased to $98.2
million compared to $44.7 million at September 30, 2008.
10
Further,
our single-family residential loan portfolio, which comprised 57.5% of our total
loan portfolio at September 30, 2009, is concentrated in non-traditional
single-family loans, which include interest-only loans, negative amortization
and more than 30-year amortization loans, stated-income loans and low FICO score
loans, all of which have a higher risk of default and loss than conforming
residential mortgage loans. See “Our emphasis on non-traditional
single-family residential loans exposes us to increased lending risk”
above.
If
current trends in the housing and real estate markets continue, we expect that
we will continue to experience increased delinquencies and credit losses.
Moreover, until general economic conditions improve, we will likely continue to
experience significant delinquencies and credit losses. As a result, we may be
required to make further increases in our provision for loan losses and to
charge-off additional loans in the future, which could materially adversely
affect our financial condition and results of operations.
We
may have continuing losses and continuing variation in our quarterly
results.
We
reported net income of $10.5 million and $860,000, respectively, for the fiscal
years ended June 30, 2007 and 2008, however, we recorded a net loss of $7.4
million for the fiscal year ended June 30, 2009. We also recorded a
net loss for the three months ended September 30, 2009 of $5.0 million compared
to net income of $329,000 for the three months ended September 30,
2008. These losses primarily resulted from our high level of
non-performing assets and the resultant increased provision for loan losses. We
may continue to suffer further losses as a result of these
factors. In addition, several factors affecting our business
can cause significant variations in our quarterly results of
operations. In particular, variations in the volume of our loan
originations and sales, the differences between our costs of funds and the
average interest rates of originated or purchased loans, our inability to
complete significant loan sale transactions in a particular quarter and problems
generally affecting the mortgage loan industry can result in significant
increases or decreases in our revenues from quarter to quarter. A
delay in closing a particular loan sale transaction during a quarter could
postpone recognition of the gain on sale of loans. If we were unable
to sell a sufficient number of loans at a premium in a particular reporting
period, our revenues for such period would decline, resulting in lower net
income and possibly a net loss for such period, which could have a material
adverse effect on our results of operations and financial
condition.
Our
allowance for loan losses may prove to be insufficient to absorb losses in our
loan portfolio.
Lending
money is a substantial part of our business and each loan carries a certain risk
that it will not be repaid in accordance with its terms or that any underlying
collateral will not be sufficient to assure repayment. This risk is affected by,
among other things:
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cash
flow of the borrower and/or the project being financed;
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the
changes and uncertainties as to the future value of the collateral, in the
case of a collateralized loan;
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the
duration of the loan;
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the
credit history of a particular borrower;
and
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changes
in economic and industry
conditions.
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We
maintain an allowance for loan losses, which is a reserve established through a
provision for loan losses charged to expense, which we believe is appropriate to
provide for probable losses in our loan portfolio. The amount of this allowance
is determined by our management through periodic reviews and consideration of
several factors, including, but not limited to:
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our
general reserve, based on our historical default and loss experience and
certain
macroeconomic
factors based on management’s expectations of future events;
and
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our
specific reserve, based on our evaluation of non-performing loans and
their underlying collateral.
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The
determination of the appropriate level of the allowance for loan losses
inherently involves a high
11
If we were to suffer
loan losses similar in amounts to those that may be predicted by a SCAP test,
they could have a material adverse effect on our results of operation,
capital and the price, and market for, our common stock.
The
federal banking regulators, in connection with the United States Treasury’s
Supervisory Capital Assessment Program (“SCAP”), administered a stress or SCAP
test to the nation’s 19 largest banks during the first quarter of 2009.
Neither the United States Treasury nor any other bank regulatory authority has
administered a SCAP test to test our loan portfolio. The SCAP
test attempts to assess the near-term capital needs of a company using
a two-year cumulative loan loss assumption under two scenarios, a
“baseline” scenario that assumed a consensus forecast for certain economic
variables and a “more adverse” than expected scenario to project a more
significant downturn. These scenarios utilize the assumptions
developed by the United States Treasury with input from the 19 largest banks and
therefore do not reflect specific adjustments based on more current economic
data reflective of the market areas in which our loans are located or the
specific characteristics of our loan portfolio. After applying the
SCAP methodology to our loan portfolio, our potential cumulative loan losses
over the next two years under either scenario of the SCAP test would
be significantly higher than the level of loan losses we have incurred
historically.
The results of the SCAP test involves many assumptions about the economy
and future loan losses and default rates, and may not accurately reflect the
impact on our financial condition if the economy does not improve or continues
to deteriorate. Any continued deterioration of the economy could result in
credit losses that are significantly higher than we have historically
experienced or those predicted by the SCAP test. Accordingly, if
Provident were to suffer loan losses similar or higher in amounts to
those that may be predicted by the SCAP test, these losses could have
a material adverse effect on our results of operation, capital and the
price, and market for, our stock, and could require the need for additional
capital.
If
our investments in real estate are not properly valued or sufficiently reserved
to cover actual losses, or if we are required to increase our valuation
reserves, our earnings could be reduced.
We obtain
updated valuations in the form of appraisals and broker price opinions when a
loan has been foreclosed and the property taken in as REO and at certain other
times during the assets holding period. Our net book value (“NBV”) in
the loan at the time of foreclosure and thereafter is compared to the updated
market value of the foreclosed property less estimated selling costs (“fair
value”). A charge-off is recorded for any excess in the asset’s NBV over its
fair value. If our valuation process is incorrect, the fair value of
the investments in real estate may not be sufficient to recover our NBV in such
assets, resulting in the need for additional charge-offs. Additional material
charge-offs to our investments in real estate could have a material adverse
effect on our financial condition and results of operations.
In
addition, bank regulators periodically review our REO and may require us to
recognize further charge-offs. Any increase in our charge-offs, as
required by the bank regulators, may have a material adverse effect on our
financial condition and results of operations.
12
An
increase in interest rates, change in the programs offered by governmental
sponsored entities (“GSE”) or our ability to qualify for such programs may
reduce our mortgage revenues, which would negatively impact our non-interest
income.
Our
mortgage banking operations provide a significant portion of our non-interest
income. We generate mortgage revenues primarily from gains on the sale of
single-family mortgage loans pursuant to programs currently offered by Fannie
Mae, Freddie Mac and non-GSE investors on a servicing released basis. These
entities account for a substantial portion of the secondary market in
residential mortgage loans. Any future changes in these programs, our
eligibility to participate in such programs, the criteria for loans to be
accepted or laws that significantly affect the activity of such entities could,
in turn, materially adversely affect our results of operations. Further, in a
rising or higher interest rate environment, our originations of mortgage loans
may decrease, resulting in fewer loans that are available to be sold to
investors. This would result in a decrease in mortgage revenues and a
corresponding decrease in non-interest income. In addition, our results of
operations are affected by the amount of non-interest expense associated with
mortgage banking activities, such as salaries and employee benefits, occupancy,
equipment and data processing expense and other operating costs. During periods
of reduced loan demand, our results of operations may be adversely affected to
the extent that we are unable to reduce expenses commensurate with the decline
in loan originations.
Secondary
mortgage market conditions could have a material adverse impact on our financial
condition and earnings.
In
addition to being affected by interest rates, the secondary mortgage markets are
also subject to investor demand for single-family mortgage loans and
mortgage-backed securities and increased investor yield requirements for those
loans and securities. These conditions may fluctuate or even worsen
in the future. In light of current conditions, there is a higher risk
to retaining a larger portion of mortgage loans than we would in other
environments until they are sold to investors. We believe our ability
to retain mortgage loans is limited. As a result, a prolonged period
of secondary market illiquidity may reduce our loan production volumes and could
have a material adverse impact on our future earnings and financial
condition.
Any
breach of representations and warranties made by us to our loan purchasers or
credit default on our loan sales may require us to repurchase or substitute such
loans we have sold.
We engage in bulk loan sales pursuant to agreements that generally
require us to repurchase or substitute loans in the event of a breach of a
representation or warranty made by us to the loan purchaser. Any
misrepresentation during the mortgage loan origination process or, in some
cases, upon any fraud or first payment default on such mortgage loans, may
require us to repurchase or substitute loans. Any claims asserted against us in
the future by one of our loan purchasers may result in liabilities or legal
expenses that could have a material adverse effect on our results of operations
and financial condition. At September 30, 2009 we had $6.0 million in
loan repurchase requests that we are currently contesting and had repurchased
$4.0 million of loans during the fiscal year ended June 30, 2009 and $135,000
during the three months ended September 30, 2009.
Hedging
against interest rate exposure may adversely affect our earnings.
We employ
techniques that limit, or “hedge,” the adverse effects of rising interest rates
on our loans held for sale, originated interest rate locks and our mortgage
servicing asset. Our hedging activity varies based on the level and volatility
of interest rates and other changing market conditions. These techniques may
include purchasing or selling futures contracts, purchasing put and call options
on securities or securities underlying futures contracts, or entering into other
mortgage-backed derivatives. There are, however, no perfect hedging strategies,
and interest rate hedging may fail to protect us from loss. Moreover, hedging
activities could result in losses if the event against which we hedge does not
occur. Additionally, interest rate hedging could fail to protect us or adversely
affect us because, among other things:
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available
interest rate hedging may not correspond directly with the interest rate
risk for
which
protection is sought;
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the
duration of the hedge may not match the duration of the related
liability;
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13
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the
party owing money in the hedging transaction may default on its obligation
to pay;
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the
credit quality of the party owing money on the hedge may be downgraded to
such an extent
that
it impairs our ability to sell or assign our side of the hedging
transaction;
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the
value of derivatives used for hedging may be adjusted from time to time in
accordance with
accounting
rules to reflect changes in fair value; and
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downward
adjustments, or “mark-to-market losses,” would reduce our stockholders’
equity.
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Fluctuating
interest rates can adversely affect our profitability.
Our profitability is dependent to a large extent upon net interest
income, which is the difference, or spread, between the interest earned on
loans, securities and other interest-earning assets and the interest paid on
deposits, borrowings, and other interest-bearing liabilities. Because of the
differences in maturities and repricing characteristics of our interest-earning
assets and interest-bearing liabilities, changes in interest rates do not
produce equivalent changes in interest income earned on interest-earning assets
and interest paid on interest-bearing liabilities. We principally
manage interest rate risk by managing our volume and mix of our earning assets
and funding liabilities. In a changing interest rate environment, we may not be
able to manage this risk effectively. Changes in interest rates also
can affect: (1) our ability to originate and/or sell loans; (2) the value of our
interest-earning assets, which would negatively impact stockholders’ equity, and
our ability to realize gains from the sale of such assets; (3) our ability to
obtain and retain deposits in competition with other available investment
alternatives; and (4) the ability of our borrowers to repay adjustable or
variable rate loans. Interest rates are highly sensitive to many
factors, including government monetary policies, domestic and international
economic and political conditions and other factors beyond our
control. If we are unable to manage interest rate risk effectively,
our business, financial condition and results of operations could be materially
harmed.
Additionally, a substantial majority of our single-family mortgage loans
held for investment are adjustable-rate loans. Any rise in prevailing
market interest rates may result in increased payments for borrowers who have
adjustable rate mortgage loans, increasing the possibility of
default.
We
are subject to various regulatory requirements and may be subject to future
additional regulatory restrictions and enforcement actions.
In light
of the current challenging operating environment, along with our elevated level
of non-performing assets, delinquencies, and adversely classified assets, we are
subject to increased regulatory scrutiny and additional regulatory restrictions,
and may become subject to potential enforcement actions. Such
enforcement actions could place limitations on our business and adversely affect
our ability to implement our business plans. Even though the Bank
remains well-capitalized, the regulatory agencies have the authority to restrict
our operations to those consistent with adequately capitalized
institutions. For example, if the regulatory agencies were to impose
such a restriction, we would likely have limitations on our lending
activities. The regulatory agencies also have the power to limit the
rates paid by the Bank to attract retail deposits in its local
markets. We also may be required to reduce our levels of
non-performing assets within specified time frames. These time frames
might not necessarily result in maximizing the price that might otherwise be
received for the underlying properties. In addition, if such
restrictions were also imposed upon other institutions that operate in the
Bank’s markets, multiple institutions disposing of properties at the same time
could further diminish the potential proceeds received from the sale of these
properties. If any of these or other additional restrictions are
placed on us, it would limit the resources currently available to us as a
well-capitalized institution.
In this
regard, the OTS requested and the Bank recently submitted to the OTS plans for
reducing the level of its classified assets and for reducing its concentration
of non-traditional single-family loans. In addition, the Bank
submitted a three-year strategic business plan demonstrating how the Bank will
maintain capital levels at or above current levels. In addition, the OTS, on
August 17, 2009, notified both Provident and the Bank that each had been
designated to be in “troubled condition.” As a result of that designation,
neither Provident nor the Bank may appoint any new director or senior executive
officer or change the responsibilities of any current senior executive officers
without notifying the OTS. In addition, neither party may make indemnification
and severance payments or enter into other forms of compensation agreements with
any of their respective directors or officers without the prior
14
Increases
in deposit insurance premiums and special FDIC assessments will hurt
our earnings.
Beginning
in late 2008, the economic environment caused higher levels of bank failures,
which dramatically increased FDIC resolution costs and led to a significant
reduction in the deposit insurance fund. As a result, the FDIC has significantly
increased the
initial base assessment rates paid by financial institutions for deposit
insurance. The base assessment rate was increased by seven basis points (seven
cents for every $100 of deposits) for the first quarter of 2009. Effective
April 1, 2009, initial base assessment rates were changed to range from 12
basis points to 45 basis points across all risk categories with possible
adjustments to these rates based on certain debt-related components. These
increases in the base assessment rate have increased our deposit insurance costs
and negatively impacted our earnings. In addition, in May 2009, the FDIC imposed
a special assessment on all insured institutions due to recent bank and savings
association failures. The emergency assessment amounts to five basis points on
each institution’s assets minus Tier 1 capital as of June 30, 2009, subject
to a maximum equal to 10 basis points times the institution’s assessment base.
Our FDIC deposit insurance expense for fiscal 2009 was $1.9 million, including
the special assessment of $734,000 recorded in June 2009 and paid on September
30, 2009, and $594,000 for the first three months ended September 30,
2009.
In
addition, the FDIC may impose additional emergency special assessments of up to
five basis points per quarter on each institution’s assets minus Tier 1
capital if necessary to maintain public confidence in federal deposit
insurance or as a result of deterioration in the deposit insurance fund reserve
ratio due to institution failures. The latest date possible for imposing any
such additional special assessment is December 31, 2009, with collection on
March 30, 2010. Any additional emergency special assessment imposed by the
FDIC will hurt our earnings. Additionally, as a potential alternative
to special assessments, in September 2009, the FDIC proposed a rule that would
require financial institutions to prepay its estimated quarterly risk-based
assessment for the fourth quarter of 2009 and for all of 2010, 2011 and
2012. This proposal would not immediately impact our earnings as the
payment would be expensed over time.
Continued
weak or worsening credit availability could limit our ability to replace
deposits and fund loan demand, which could adversely affect our earnings and
capital levels.
Continued
weak or worsening credit availability and the inability to obtain adequate
funding to replace deposits and fund continued loan growth may negatively affect
asset growth and, consequently, our earnings capability and capital levels. In
addition to any deposit growth, maturity of investment securities and loan
payments, we rely from time to time on advances from the Federal Home Loan Bank
of San Francisco, borrowings from the Federal Reserve Bank of San Francisco and
certain other wholesale funding sources to fund loans and replace
deposits. If the economy does not improve or continues to
deteriorate, these additional funding sources could be
15
Our
growth or future losses may require us to raise additional capital in the
future, but that capital may not be available when it is needed or the cost of
that capital may be very high.
We are
required by federal regulatory authorities to maintain adequate levels of
capital to support our operations. With the proceeds of the offering made
by this prospectus, we anticipate that our capital resources will satisfy our
capital requirements for the foreseeable future. We may at some point need
to raise additional capital to support continued growth.
Our
ability to raise additional capital, if needed, will depend on conditions in the
capital markets at that time, which are outside our control, and on our
financial condition and performance. Accordingly, we cannot make assurances
that we will be able to raise additional capital if needed on terms that are
acceptable to us, or at all. If we cannot raise additional capital when
needed, our ability to further expand our operations could be materially
impaired and our financial condition and liquidity could be materially and
adversely affected.
We
operate in a highly regulated environment and may be adversely affected by
changes in federal and state laws and regulations, including changes that may
restrict our ability to foreclose on single-family home loans and offer
overdraft protection.
We are
subject to extensive regulation, supervision and examination by federal banking
authorities. Any change in applicable regulations or laws could have a
substantial impact on us and our operations. Additional legislation and
regulations that could significantly affect our powers, authority and operations
may be enacted or adopted in the future, which could have a material adverse
effect on our financial condition and results of operations. New legislation
proposed by Congress may give bankruptcy courts the power to reduce the
increasing number of home foreclosures by giving bankruptcy judges the authority
to restructure mortgages and reduce a borrower’s payments. Property owners would
be allowed to keep their property while working out their debts. The State of
California recently enacted a law that places severe restrictions on the ability
of a mortgagee to foreclose on real estate securing residential mortgage loans.
This law prohibits a foreclosure until the later of at least three months plus
90 days after the filing of the notice of default. Other similar bills placing
additional temporary moratoriums on foreclosure sales or otherwise modifying
foreclosure procedures to the benefit of borrowers and the detriment of lenders
may be enacted by either Congress or the State of California in the future.
These laws may further restrict our collection efforts on one-to-four
single-family mortgage loans. Additional legislation proposed or under
consideration in Congress would give current debit and credit card holders the
chance to opt out of an overdraft protection program and limit overdraft fees,
which could result in additional operational costs and a reduction in our
non-interest income.
Further,
our regulators have significant discretion and authority to prevent or remedy
unsafe or unsound practices or violations of laws by financial institutions and
holding companies in the performance of their supervisory and enforcement
duties. In this regard, banking regulators are considering additional
regulations governing compensation which may adversely affect our ability to
attract and retain employees. On June 17, 2009, the Obama Administration
published a comprehensive regulatory reform plan that is intended to modernize
and protect the integrity of the United States financial system. The President’s
plan contains several elements that would have a direct effect on Provident and
Provident Savings Bank. Under the reform plan, the federal thrift charter and
the OTS would be eliminated and all companies that control an insured depository
institution must register as a bank holding company. Draft legislation would
require Provident Savings Bank to become a national bank or adopt a state
charter. Registration as a bank holding company would represent a significant
change, as there currently exist significant differences between savings and
loan holding company and bank holding company supervision and regulation. For
example, the Federal Reserve imposes leverage and risk-based capital
requirements on bank holding companies whereas the OTS does not impose any
capital requirements on savings and loan holding companies. The reform plan also
proposes the creation of a new federal agency, the Consumer Financial Protection
Agency, that would be dedicated to protecting consumers in the financial
products and services market. The creation of this agency could result in new
regulatory requirements and raise the cost of regulatory compliance. In
addition, legislation stemming from the reform plan could require changes in
regulatory capital requirements, and compensation practices. If implemented, the
foregoing regulatory reforms may have a material impact on our
16
Our
litigation related costs might continue to increase.
The Bank
is subject to a variety of legal proceedings that have arisen in the ordinary
course of the Bank’s business. In the current economic environment, the Bank’s
involvement in litigation has increased significantly, primarily as a result of
defaulted borrowers asserting claims to defeat or delay foreclosure proceedings.
The Bank believes that it has meritorious defenses in legal actions where it has
been named as a defendant and is vigorously defending these suits. Although
management, based on discussion with litigation counsel, believes that such
proceedings will not have a material adverse effect on the financial condition
or operations of the Bank, there can be no assurance that a resolution of any
such legal matters will not result in significant liability to the Bank nor have
a material adverse impact on its financial condition and results of operations
or the Bank’s ability to meet applicable regulatory requirements. Moreover, the
expenses of pending legal proceedings will adversely affect the Bank’s results
of operations until they are resolved. There can be no assurance that the Bank’s
loan workout and other activities will not expose the Bank to additional legal
actions, including lender liability or environmental claims.
Earthquakes,
fires and other natural disasters in our primary market area may result in
material losses because of damage to collateral properties and borrowers’
inability to repay loans.
Since our
geographic concentration is in Southern California, we are subject to
earthquakes, fires and other natural disasters. A major earthquake or other
natural disaster may disrupt our business operations for an indefinite period of
time and could result in material losses, although we have not experienced any
losses in the past six years as a result of earthquake damage or other natural
disaster. In addition to possibly sustaining damage to our own
property, a substantial number of our borrowers would likely incur property
damage to the collateral securing their loans. Although we are in an
earthquake prone area, we and other lenders in the market area may not require
earthquake insurance as a condition of making a loan. Additionally, if the
collateralized properties are only damaged and not destroyed to the point of
total insurable loss, borrowers may suffer sustained job interruption or job
loss, which may materially impair their ability to meet the terms of their loan
obligations.
Risks
Relating to the Offering and our Common Stock
The
price of our common stock may fluctuate significantly, and this may make it
difficult for you to resell our common stock when you want or at prices you find
attractive.
We cannot
predict how our common stock will trade in the future. The market value of our
common stock will likely continue to fluctuate in response to a number of
factors including the following, most of which are beyond our control, as well
as the other factors described in this “Risk Factors” section:
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actual
or anticipated quarterly fluctuations in our operating and financial
results;
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developments
related to investigations, proceedings or litigation that involve
us;
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changes
in financial estimates and recommendations by financial
analysts;
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dispositions,
acquisitions and financings;
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actions
of our current stockholders, including sales of common stock by existing
stockholders and our directors and executive
officers;
|
|
·
|
fluctuations
in the stock prices and operating results of our
competitors;
|
|
·
|
regulatory
developments; and
|
|
·
|
other
developments related to the financial services
industry.
|
17
The
market value of our common stock may also be affected by conditions affecting
the financial markets in general, including price and trading fluctuations.
These conditions may result in (i) volatility in the level of, and
fluctuations in, the market prices of stocks generally and, in turn, our common
stock and (ii) sales of substantial amounts of our common stock in the
market, in each case that could be unrelated or disproportionate to changes in
our operating performance. These broad market fluctuations may adversely affect
the market value of our common stock and there is no assurance that purchasers
of common stock in the offering will be able to sell shares after the offering
at a price equal to or greater than the actual purchase
price.
There
may be future sales of additional common stock or other dilution of our equity,
which may adversely affect the market price of our common stock.
Except as
described under “Underwriting,” we are not restricted from issuing additional
common stock or preferred stock, including any securities that are convertible
into or exchangeable for, or that represent the right to receive, common stock
or preferred stock or any substantially similar securities. The market price of
our common stock could decline as a result of sales by us of a large number of
shares of common stock or preferred stock or similar securities in the market
after this offering or from the perception that such sales could
occur. Further, any issuances of common stock would dilute our
stockholders’ ownership interests and may dilute the per share book value of our
common stock.
Our board
of directors is authorized generally to cause us to issue additional common
stock, as well as series of preferred stock, without any action on the part of
our stockholders except as may be required under the listing requirements of the
Nasdaq Stock Market. In addition, the board has the power, without
stockholders approval, to set the terms of any such series of
preferred stock that may be issued, including voting rights, dividend rights and
preferences over the common stock with respect to dividends or upon the
liquidation, dissolution or winding-up of our business and other terms. If we
issue preferred stock in the future that has a preference over the common stock
with respect to the payment of dividends or upon liquidation, dissolution or
winding-up, or if we issue preferred stock with voting rights that dilute the
voting power of the common stock, the rights of holders of the common stock or
the market price of the common stock could be adversely affected.
We
will retain broad discretion in using the net proceeds from this offering, and
may not use the proceeds effectively.
We intend
to use the net proceeds of this offering for general corporate purposes, which
may include, without limitation, investments at the holding company level,
providing capital to support the growth of the Bank or business
combinations. We have not designated the amount of net proceeds
we will use for any particular purpose. Accordingly, our management will
retain broad discretion to allocate the net proceeds of this offering. The net
proceeds may be applied in ways with which you and other investors in the
offering may not agree. Moreover, our management may use the proceeds for
corporate purposes that may not increase our market value or make us more
profitable. In addition, it may take us some time to effectively deploy the
proceeds from this offering. Until the proceeds are effectively deployed, our
return on equity and earnings per share may be negatively impacted. Management’s
failure to use the net proceeds of this offering effectively could have an
adverse effect on our business, financial condition and results of
operations.
Regulatory
and contractual restrictions may limit or prevent us from paying dividends on
our common stock.
Provident
is an entity separate and distinct from the Bank and derives substantially all
of its revenue in the form of dividends from the Bank. Accordingly,
Provident is and will be dependent upon dividends from the Bank to satisfy its
cash needs and to pay dividends on its common stock. The Bank’s
ability to pay dividends is subject to its ability to earn net income and, to
meet certain regulatory requirements. The Bank may not pay dividends
to Provident without submitting an application to and receiving approval from
the OTS. This requirement may limit our ability to pay dividends to
our stockholders. Also, Provident’s right to participate in a
distribution of assets upon the Bank’s liquidation or reorganization is subject
to the prior claims of the Bank’s creditors and depositors.
You
may not receive dividends on our common stock.
Holders
of our common stock are only entitled to receive such dividends as our board of
directors may declare out of funds legally available for such payments.
Furthermore, holders of our common stock are subject to
18
Our
common stock constitutes equity and is subordinate to our existing and future
indebtedness, and effectively subordinated to all the indebtedness and other
non-common equity claims against the Bank.
The
shares of our common stock represent equity interests in us and do not
constitute indebtedness. Accordingly, the shares of our common stock will rank
junior to all of our existing and future indebtedness and to other non-equity
claims on Provident with respect to assets available to satisfy claims on
Provident.
In
addition, our right to participate in any distribution of assets of the Bank
upon the Bank’s liquidation or otherwise, and thus your ability as a holder of
our common stock to benefit indirectly from such distribution, will be subject
to the prior claims of creditors and depositors of that subsidiary, except to
the extent that any of our claims as a creditor of such subsidiary may be
recognized. As a result, holders of our common stock will be effectively
subordinated to all existing and future liabilities and obligations of the
Bank. At September 30, 2009, the Bank’s total deposits and borrowings
were approximately $1.35 billion.
Our
common stock trading volume may not provide adequate liquidity for
investors.
Shares of
our common stock are listed on the Nasdaq Global Select Market, however, the
average daily trading volume in our common stock is less than that of many
larger financial services companies. A public trading market having the desired
characteristics of depth, liquidity and orderliness depends on the presence in
the marketplace of a sufficient number of willing buyers and sellers of the
common stock at any given time. This presence depends on the individual
decisions of investors and general economic and market conditions over which we
have no control. Given the daily average trading volume of our common stock,
significant sales of the common stock in a brief period of time, or the
expectation of these sales, could cause a decline in the price of our common
stock.
Our
directors and executive officers could have the ability to influence stockholder
actions in a manner that may be adverse to your personal investment
objectives.
As of
September 30, 2009, our directors and executive officers as a group beneficially
owned 956,286 shares of our common stock (including 394,120 shares issuable
under exercisable stock options within 60 days of September 30, 2009), which
represented approximately 15% of our outstanding shares as of that date
(including in total shares outstanding the 394,120 shares issuable under
exercisable options held by the group). Due to their significant
collective ownership interest, our directors and executive officers may be able
to exercise significant influence over our management and business affairs. For
example, using their voting power, the directors and executive officers may be
able to influence the outcome of director elections or block significant
transactions, such as a merger or acquisition, or any other matter that might
otherwise be favored by other stockholders. In addition, our Employee Stock
Ownership Plan intends to purchase up to _________ shares of common stock in
this offering.
Anti-takeover provisions could negatively
impact our stockholders.
Provisions
in our certificate of incorporation and bylaws, the corporate law of the State
of Delaware and federal regulations could delay, defer or prevent a third party
from acquiring us, despite the possible benefit to our stockholders, or
otherwise adversely affect the market price of our common
stock. These provisions include: supermajority voting requirements
for certain business combinations with any person who beneficially owns 15% or
more of our outstanding common stock; limitations on voting by any person
holding more than 10% of any class of Provident’s equity securities; the
election of directors to staggered terms of three years; advance notice
requirements for nominations for election to our board of directors and for
proposing matters that stockholders may act on at
19
These
provisions may discourage potential takeover attempts, discourage bids for our
common stock at a premium over market price or adversely affect the market price
of, and the voting and other rights of the holders of, our common
stock. These provisions could also discourage proxy contests and make
it more difficult for holders of our common stock to elect directors other than
the candidates nominated by our board of directors.
20
USE
OF PROCEEDS
Our
estimated net proceeds from this offering are approximately $____ million, or
approximately $_____ million if the underwriters exercise their over-allotment
option in full, after deducting the underwriting discounts and commissions and
other estimated expenses of this offering. We intend to use a portion
of the net proceeds from this offering to provide funds to the Bank to support
its growth, particularly to fund expanded mortgage banking operations and to
take advantage of opportunities created by changes in the competitive
environment in our market areas and by originating more multi-family real estate
loans. The proceeds will also strengthen the Bank’s regulatory
capital ratios. We expect to use the remaining net proceeds for
general working capital purposes. Pending allocation to specific
uses, we intend to invest the proceeds in short-term interest-bearing investment
grade securities.
21
The following table shows our actual consolidated capitalization
(unaudited) as of September 30, 2009 and as adjusted to give effect to the
issuance of the common stock offered by this prospectus. You should
read the following table together with the section entitled “Summary of Selected
Consolidated Financial Information” and our consolidated financial statements
and notes, which are incorporated by reference into this
prospectus. Our capitalization is presented on a historical basis and
on a pro forma basis as if the offering had been completed as of September 30,
2009 based on the following:
|
·
|
the
sale of ________ shares of common stock at a price of $_____ per share
based on a closing price of the common stock on the Nasdaq Global Select
Market on _______, 2009, the price at which the common stock is sold in
the offering may be higher or lower than $____, and we may sell a greater
or lower number of shares in the
offering;
|
|
·
|
the
net proceeds to us in this offering, after deducting the underwriting
discounts and commissions and estimated offering expenses payable by us in
this offering of $____ million, are $___
million;
|
|
·
|
$_______
million of the net proceeds to us in this offering are contributed to
Provident Savings Bank;
|
|
·
|
no
liquid assets of Provident other than the net proceeds from this offering
are contributed to Provident Savings Bank;
and
|
|
·
|
the
underwriters’ over-allotment option for _____ shares is not
exercised.
|
|
At
September 30, 2009
|
||||||||
|
Actual
|
As
Adjusted
|
|||||||
|
(dollars
in thousands
except
per share data)
|
||||||||
|
STOCKHOLDERS’
EQUITY
|
||||||||
|
Preferred
stock, $.01 par value, authorized 2,000,000 shares;
none
issued and
outstanding
|
$
|
-
|
$
|
-
|
||||
|
Common
stock, $.01 par value, authorized 15,000,000 shares,
12,435,865
shares
issued, and 6,220,454 shares outstanding, and _____ shares
outstanding,
as adjusted at September 30,
2009
|
124
|
|||||||
|
Additional
paid-in
capital
|
72,978
|
|||||||
|
Retained
income, substantially
restricted
|
129,542
|
|||||||
|
Accumulated
other comprehensive income, net of income taxes
|
607
|
|||||||
|
Unearned
stock
compensation
|
(406
|
) | ||||||
|
Treasury
stock at cost, 6,215,411 shares at September 30, 2009
|
(93,942
|
) | ||||||
|
Total
stockholders’ equity
|
$
|
108,903
|
$
|
|||||
|
Book
value per common share
|
$
|
17.51
|
||||||
|
Equity
to total assets ratio
|
7.36
|
%
|
||||||
|
Regulatory
capital ratios (1)
|
||||||||
|
Total
risk-based capital ratio
|
13.16
|
%
|
||||||
|
Tier
1 risk-based capital ratio
|
11.89
|
|||||||
|
Leverage
ratio
|
7.03
|
|||||||
__________________________________
|
(1)
|
Regulatory
capital ratios are calculated for Provident Savings Bank and not Provident
on a consolidated basis.
|
22
PRICE
RANGE OF COMMON STOCK AND DIVIDEND INFORMATION
Our
common stock is traded on the Nasdaq Global Select Market under the symbol
“PROV.” Stockholders of record as of ____, 2009 totaled ______ based
upon securities position listings furnished to us by our transfer
agent. This total does not reflect the number of persons or entities
who hold stock in nominee or “street” name through various brokerage
firms. As of ____, 2009, there were ____ shares of our common stock
issued and outstanding. The following tables show the reported high
and low sale prices of our common stock for the periods presented, as well as
the cash dividends declared per share of common stock for each of those
periods.
|
Year
Ending June 30, 2010
|
High
|
Low
|
Cash
Dividend Declared
|
|||||||
|
First
quarter
|
$
|
10.49
|
$
|
5.02
|
$
|
0.01
|
||||
|
Second
quarter (through ______, 2009)
|
||||||||||
|
Year
Ended June 30, 2009
|
||||||||||
|
First
quarter
|
$
|
10.28
|
$
|
6.10
|
$
|
0.05
|
||||
|
Second
quarter
|
9.12
|
4.00
|
0.05
|
|||||||
|
Third
quarter
|
6.31
|
4.00
|
0.03
|
|||||||
|
Fourth
quarter
|
7.87
|
5.00
|
0.03
|
|||||||
|
Year
Ended June 30, 2008
|
||||||||||
|
First
quarter
|
$
|
24.99
|
$
|
17.51
|
$
|
0.18
|
||||
|
Second
quarter
|
25.17
|
16.03
|
0.18
|
|||||||
|
Third
quarter
|
18.40
|
12.00
|
0.18
|
|||||||
|
Fourth
quarter
|
16.65
|
9.44
|
0.10
|
There are
regulatory restrictions on the ability of our subsidiary bank to pay
dividends. Under federal regulations, the amount of dividends an
institution may pay depends upon its capital position and recent net
income. Generally, the Bank may not declare or pay a cash dividend on
its stock if it would cause its regulatory capital to be reduced below the
amount required for the liquidation account established in the mutual to stock
conversion of the Bank or to meet applicable regulatory capital requirements.
Pursuant to the OTS regulations, Provident Savings Bank generally may make
capital distributions during any calendar year equal to retained net income for
the calendar year-to-date plus retained net income for the previous two calendar
year-to-date periods, assuming the distribution would not cause regulatory
capital to be reduced below the required amount. The Bank is required
to provide notice to the OTS 30 days prior to the declaration of a dividend to
provide the OTS an opportunity to object to the payment. At September 30,
2009, Provident Savings Bank would not have been permitted under OTS regulations
to make capital a distributions as a result of the calculation above and prior
distributions made. To declare a dividend in excess of this amount, the Bank
would be required to file an application with the OTS subject to its review and
approval.
Unlike
the Bank, we are not subject to any regulatory restrictions on the payment of
dividends; however, we are subject to the requirements of Delaware law.
Under Delaware law, dividends may be paid either out of surplus or, if
there is no surplus, out of net profits for the fiscal year in which the
dividend is declared and/or the preceding fiscal year. To pay such
cash dividends, however, we must have available cash either from dividends
received from the
Bank or earnings on our assets.
On October 31, 2008, we submitted an application to participate in the
U.S. Treasury’s Capital Purchase Program or CPP. We have not received any
decision from the U.S. Treasury regarding our CPP application and we cannot
provide any assurance that the U.S. Treasury will act on our application. We
applied for $29.5 million of
23
CPP funds
in the form of preferred shares that if we receive would anticipate using for
general corporate purposes similar to the proposed use of the proceeds from this
offering. The shares purchased will have a dividend rate of five percent per
year until the fifth anniversary and a dividend rate of nine percent per year
thereafter. Additionally, warrants convertible into common stock equal in value
to 15 percent of the amount of capital purchased, would be issued to the U.S.
Treasury in connection with the CPP investment. Our decision to apply to
participate in the CPP was based on our desire to mitigate customer and
shareholder concerns regarding our financial stability during a period when the
financial crises and challenges to the banking system presented a nationwide
focus. Provident participated in each program it was eligible to participate in
including the Temporary Liquidity Guarantee Program or TLGP and Transaction
Account Guarantee Program or TAGP to do its part to help stabilize the banking
system and provide confidence to our customers. Currently, since stability has
largely returned to the banking system, we are interested in participating in
the CPP to access additional capital to help execute our business strategy and
expand lending and services to our community although we may elect not to
participate in the CPP if we complete this offering. In that case, we may no
longer be interested in CPP funds as a result of the numerous restrictions that
have been placed on companies that receive CPP funds and our perception that
participation in the CPP may have a negative stigma with the
public.
We do not believe that whether or not we receive CPP funds will have a
material effect on our liquidity, capital resources or results of
operations. We have already operated for over one year without
CPP funds and have chosen to proceed with this offering, which is consistent
with our corporate strategy.
If in the
future we participate in the CPP, however, our ability to pay dividends could be
further restricted because participants in the CPP may not increase dividends
paid on common stock during the first three years of participation without the
consent of the Treasury. Further, participants in the CPP may not pay
dividends unless all accrued dividends owed to the Treasury are fully
paid. In addition, there are limits on the compensation and
incentives to executive officers of CPP recipients and if we receive CPP funds
we will make certain our compensation and benefits arrangements comply with
those requirements.
DESCRIPTION
OF CAPITAL STOCK
The
17,000,000 shares of capital stock authorized by Provident Financial Holdings,
Inc.’s certificate of incorporation are divided into two classes, consisting of
15,000,000 shares of common stock (par value $.01 per share) and 2,000,000
shares of serial preferred stock (par value $.01 per share). As of September 30,
2009, there were _______ shares of our common stock issued and outstanding
and no shares of our preferred stock issued and
outstanding. In connection with Provident’s annual meeting of
stockholders to be held on November 24, 2009, we have submitted a proposal to
our stockholders to increase the number of shares of authorized common stock
from 15,000,000 to 40,000,000 shares.
Common
Stock
General. Our
outstanding shares of common stock are, and the shares of common stock issued in
this offering will be, validly issued, fully paid and non
assessable. Each share of common stock has the same relative rights
and is identical in all respects with each other share of common stock. Each
holder of common stock is entitled to one vote for each share held on all
matters voted upon by stockholders, subject to the limitation discussed under
“Restrictions on Acquisitions of Stock and Related Takeover Defensive
Provisions–Provisions of Provident Financial Holdings, Inc.’s Certificate of
Incorporation and Bylaws–Limitation on Voting Rights.” If Provident
issues preferred stock, holders of the preferred stock may also possess voting
powers.
Liquidation or
Dissolution. In the unlikely event of the liquidation or dissolution of
Provident, the holders of the common stock will be entitled to receive - after
payment or provision for payment of all debts and liabilities of Provident
(including all deposits in the Bank and accrued interest thereon) and after
distribution of the liquidation account established in the mutual to stock
conversion of Provident Savings Bank - all assets of Provident available for
distribution, in cash or in kind.
No Preemptive
Rights.
Holders of the common stock are not entitled to preemptive rights with
respect to any shares which may be issued.
24
Restrictions on
Acquisitions.
See “Restrictions on Acquisitions of Stock and Related Takeover Defensive
Provisions” for a description of certain provisions of Provident’s certificate
of incorporation and bylaws that may affect the ability of Provident’s
stockholders to participate in certain transactions relating to acquisitions of
control of Provident.
Dividends.
See “Price Range For Our Common Stock and Dividend
Information.”
Preferred
Stock
Our
certificate of incorporation permits our board of directors to authorize the
issuance of up to 2,000,000 shares of preferred stock, par value $0.01, in one
or more series, without stockholder action. The board of directors can fix the
designation, powers, preferences and rights of each series. Therefore, without
approval of the holders of our common stock or by the rules of the Nasdaq Stock
Market (or any other exchange or market on which our securities may then be
listed or quoted), our board of directors may authorize the issuance of
preferred stock with voting, dividend, liquidation and conversion and other
rights that could dilute the voting power or other rights or adversely affect
the market value of our common stock and may assist management in impeding any
unfriendly takeover or attempted change in control. See “Restrictions on
Acquisitions of Stock and Related Takeover Defensive Provisions.”
Transfer
Agent
The
transfer agent and registrar for our common stock is Registrar and Transfer
Company.
RESTRICTIONS
ON ACQUISITIONS OF STOCK AND
RELATED
TAKEOVER DEFENSIVE PROVISIONS
The
following discussion is a general summary of the material provisions of
Provident’s certificate of incorporation and bylaws and certain other regulatory
provisions, which may be deemed to have an “anti-takeover” effect. Please refer
to the certificate of incorporation of Provident, which is filed as an exhibit
to the registration statement of which this prospectus forms a part, for a
detailed description of the provisions summarized below. To obtain a copy of our
certificate of incorporation, see “Where You Can Find More
Information.”
Provisions
of Provident Financial Holdings, Inc.’s Certificate of incorporation and
Bylaws
Directors.
Certain provisions of Provident’s certificate of incorporation and bylaws
impede changes in majority control of the board of directors. Provident’s
certificate of incorporation provides that the board of directors of Provident
shall be divided into three classes, with directors in each class elected for
three-year terms. Thus, it would take two annual elections to replace a majority
of Provident’s board of directors. Provident’s certificate of incorporation
provides that the size of the board of directors shall range from five to
fifteen directors, as set in accordance with our bylaws, and may be increased or
decreased only by a vote of two-thirds of the board. In
accordance with our bylaws, the number of directors is currently set at
seven. The certificate of incorporation also provides that any
vacancy occurring in the board of directors, including a vacancy created by an
increase in the number of directors, shall be filled for the remainder of the
unexpired term by a vote of two-thirds of the directors then in office. Finally,
the certificate of incorporation imposes certain notice and information
requirements in connection with the nomination by stockholders of candidates for
election to the board of directors or the proposal by stockholders of business
to be acted upon at an annual meeting of
stockholders.
The
certificate of incorporation provides that any director, or the entire board of
directors, may only be removed for cause by the affirmative vote of 80% of the
outstanding shares eligible to vote at a meeting of the stockholders called for
that purpose.
Restrictions on Call
of Special Meetings. The certificate of incorporation of Provident
provides that a special meeting of stockholders may be called only by the board
of directors, or a committee of the board of directors designated by the board
of directors. Stockholders are not authorized to call a special
meeting.
25
Absence of
Cumulative Voting. Provident’s certificate of incorporation provide that
there is no cumulative voting rights for the election of
directors.
Authorized
Shares. Provident’s certificate of incorporation authorizes
the issuance of 15,000,000 shares of common stock and 2,000,000 shares of
preferred stock. In connection with Provident’s annual meeting of
stockholders to be held on November 24, 2009, we have submitted a proposal to
our stockholders to increase the number of shares of authorized common stock
from 15,000,000 to 40,000,000 shares. These shares of common stock
and preferred stock provide Provident’s board of directors with flexibility to
effect, among other transactions, financings, acquisitions, stock dividends,
stock splits and fund the exercise of employee stock
options. However, these additional authorized shares may also be used
by Provident’s board of directors consistent with its fiduciary duty to deter
future attempts to gain control of us. The board of directors also
has sole authority to determine the terms of any one or more series of preferred
stock, including voting rights, conversion rates, and liquidation
preferences. As a result of the ability to fix voting rights for a
series of preferred stock, the board of directors has the power, to the extent
consistent with its fiduciary duties, to issue a series of preferred stock to
persons friendly to management to attempt to block a tender offer, merger or
other transaction by which a third party seeks control of Provident, and thereby
assist members of management to retain their
positions.
Limitation on Voting
Rights. The certificate of incorporation of Provident provides
that if any person acquires beneficial ownership of more than 10% of any class
of equity security of Provident, then, the record holders of voting stock of
Provident beneficially owned by such person shall be entitled to cast only
one-hundredth of one vote with respect to each vote in excess of 10% of the
voting power of the outstanding shares of voting stock of Provident and the
aggregate voting power of such record holders shall be allocated proportionately
among such record holders. Under Provident’s certificate of
incorporation, the restriction on voting shares beneficially owned in violation
of these limitations is imposed automatically unless the board of directors
approves in advance a particular offer to acquire or acquisition of Provident’s
common stock in excess of 10% of outstanding shares. Unless the board
of directors took such action, the provision would restrict the voting by
beneficial owners of more than 10% of Provident’s common stock in a proxy
contest.
Stockholder Vote
Required to Approve Business Combinations with Principal Stockholders.
Provident’s certificate of incorporation requires the approval of the
holders of at least 80% of the outstanding shares of the Company’s voting stock,
and the holders of a majority of the outstanding shares of the Company’s voting
stock not deemed beneficially owned by a “Related Person” (defined below), to
approve certain “Business Combinations” (defined below) involving a Related
Person except in cases where the proposed transaction has been approved by a
majority of the members of Provident’s board of directors who are unaffiliated
with the Related Person and were directors prior to the time when the Related
Person became a Related Person. The term “Related Person” includes
any individual, corporation, partnership or other entity that owns beneficially
10% or more of the outstanding shares of common stock of Provident or any
affiliate of such person or entity. This provision of the certificate
of incorporation applies to any “Business Combination,”
including: (i) any merger or consolidation of Provident with or into
any Related Person; (ii) any sale, lease, exchange, mortgage, transfer, or other
disposition of 25% or more of the assets of Provident or of a subsidiary of
Provident to a Related Person; (iii) any merger or consolidation of a Related
Person with or into Provident or a subsidiary of Provident; (iv) any sale,
lease, exchange, transfer, or other disposition of certain assets of a Related
Person to Provident or a subsidiary of Provident; (v) the issuance of any
securities of Provident or a subsidiary of Provident to a Related Person; (vi)
the acquisition by Provident or a subsidiary of Provident of any securities of a
Related Person; (vii) any reclassification of common stock of Provident or any
recapitalization involving the common stock of Provident; or (viii) any
agreement or other arrangement providing for any of the
foregoing.
Amendment to
Certificate of Incorporation and Bylaws. Amendments to
Provident’s certificate of incorporation must be approved by a majority vote of
the board of directors and by a majority of the outstanding stock entitled to
vote on the amendment and a majority of the outstanding stock of each class
entitled to vote on the amendment as a class; provided, however, that the
affirmative vote of the holders of at least 80% of the outstanding shares of
capital stock entitled to vote generally in the election of directors
(considered for this purpose as a single class) is required to amend or repeal
certain provisions of the certificate of incorporation, including the provisions
relating to stockholder meetings, cumulative voting, the number, classification
and removal of directors and the filling of board vacancies, stockholder
nominations and proposals, the approval of certain business combinations, board
evaluation of a business combination or a tender or exchange offer, limitations
on director liability, director and officer indemnification by us and amendment
of the Company’s bylaws and certificate of
incorporation.
26
Other
Restrictions on Acquisitions of Stock
Delaware
Anti-Takeover Statute. Delaware law imposes restrictions on
certain transactions between a corporation and certain interested
stockholders. Section 203 of the Delaware General Corporation Law
provides that if a person acquires 15% or more of the stock of a Delaware
corporation, thereby becoming an “interested stockholder” (for purposes of
Section 203), that person may not engage in certain business combinations with
the corporation for a period of three years unless one of the following three
exceptions applies:
|
·
|
the
corporation’s board of directors approved the acquisition of stock or the
business combination transaction prior to the time that the person became
an interested stockholder;
|
|
·
|
the
person became an interested stockholder and 85% owner of the voting stock
of the corporation in the transaction in which it became an interested
stockholder, excluding voting stock owned by directors who are also
officers and certain employee stock plans;
or
|
|
·
|
the
business combination transaction is approved by the board of directors and
by the affirmative vote of two-thirds of the outstanding voting stock
which is not owned by the interested stockholder at an annual or special
meeting of stockholders.
|
A
Delaware corporation may elect not to be governed by Section
203. Provident has not made such an election and accordingly is
subject to Section 203.
Federal Law.
Provident Savings Bank is a federal savings bank. Acquisitions of control of
Provident Savings Bank by an individual are governed by the Change in Bank
Control Act, and by another company are governed by Section 10 of the Home
Owners’ Loan Act. The OTS has promulgated regulations under these
laws.
The
Change in Bank Control Act provides that no person, acting directly or
indirectly or through or in concert with one or more other individuals, may
acquire control of a federal savings bank, unless the OTS has been given 60 days
prior written notice. Similar notice is required to be provided to the OTS by an
individual acquiring a similar ownership interest in a savings and loan holding
company. The Home Owners’ Loan Act provides that no company may acquire
“control” of a savings association without the prior approval of the OTS. Any
company that acquires such control becomes a savings and loan holding company
subject to registration, examination and regulation by the OTS. In addition,
acquisitions of control of a savings and loan holding company by another company
are subject to the approval of the OTS.
Pursuant
to OTS regulations, control of a savings institution or its holding company is
conclusively deemed to have occurred by, among other things, the acquisition of
more than 25% of any class of voting stock of the institution or its holding
company or the ability to control the election of a majority of the directors of
an institution or its holding company. Moreover, control is presumed to have
occurred, subject to rebuttal, upon the acquisition of more than 10% of any
class of voting stock, or of more than 25% of any class of stock of a savings
institution or its holding company, where certain enumerated “control factors”
are also present in the acquisition. The OTS may prohibit an acquisition of
control if:
|
·
|
it
would result in a monopoly or substantially lessen
competition;
|
|
·
|
the
financial condition of the acquiring person might jeopardize the financial
stability of the institution; or
|
|
·
|
the
competence, experience or integrity of the acquiring person indicates that
it would not be in the interest of the depositors or of the public to
permit the acquisition of control by such
person.
|
These
restrictions do not apply to the acquisition of a savings institution’s or its
holding company’s capital stock by one or more tax-qualified employee stock
benefit plans, provided that the plans do not have beneficial ownership of
27
more than
25% of any class of equity security of the savings institution.
Equity
Compensation Plan Information
The
following table summarizes share and exercise price information regarding our
equity compensation plans as of June 30, 2009.
|
Plan
Category
|
Number
of Securities to
be
Issued Upon Exercise
of
Outstanding Options,
Warrants
and Rights
|
Weighted-Average
Exercise
Price of
Outstanding
Options,
Warrants
and Rights
|
Number
of Securities
Remaining
Available for
Future
Issuance Under
Equity
Compensation Plans
(Excluding
Securities Related
in
Column (a))
|
|||
|
(a)
|
(b)
|
(c)
|
||||
|
Equity
compensation plans approved by
security
holders:
|
||||||
|
1996
Stock Option Plan
|
227,700
|
$13.90
|
-
|
|||
|
2003
Stock Option Plan
|
322,700
|
$25.19
|
14,900
|
|||
|
2006
Equity Incentive Plan- stock options
|
355,100
|
$17.46
|
9,900
|
|||
|
Equity
compensation plans not approved by
security
holders:
|
N/A
|
N/A
|
N/A
|
|||
| Total |
905,500
|
$19.32
|
24,800
|
Certain
Relationships and Related Transactions
During
the year ended June 30, 2009, neither Provident nor the Bank participated in any
transactions, or proposed transactions, in which the amount involved exceeded
$120,000 and in which any related person had a direct or indirect material
interest.
ERISA
CONSIDERATIONS
Each
fiduciary of a pension, profit-sharing or other employee benefit plan or
arrangement to which Part 4 of Title I of the Employee Retirement Income
Security Act of 1974 (which we refer to as “ERISA”)
applies (which we refer to as an “ERISA plan”)
should consider the fiduciary standards of ERISA in the context of the plan’s
particular circumstances before allowing the plan to purchase our common stock.
Accordingly, among other factors, the fiduciary should consider whether the
purchase would be consistent with the prudence and diversification requirements
of ERISA and would be consistent with the documents and instruments governing
the ERISA plan and whether the purchase could constitute a “prohibited
transaction” under ERISA or the Code.
Section 406
of ERISA and Section 4975 of the Code prohibit an ERISA plan as well as any
individual retirement account and other arrangement to which Section 4975
of the Code applies (which together with an ERISA plan we refer to individually
as a “statutory
plan”), from engaging in specified transactions involving “plan assets”
with persons who are “parties in interest” under ERISA or “disqualified persons”
under the Code (which we refer to individually as a “party in
interest”) with respect to any such statutory plan, which transactions
are commonly called “prohibited transactions.” Provident or any of
the underwriters may be considered a party in interest with respect to a
statutory plan. For example, if any of the underwriters or any of
their affiliates are engaged in providing services to such plan such
underwriters or their affiliates would be a party in interest. A
violation of the “prohibited transaction” rules may result in an excise tax
under Section 4975 of the Code for such persons unless exemptive relief is
available under an applicable statutory or administrative exemption. In
addition, the fiduciary of a statutory plan that engages in a non-exempt
prohibited transaction may be subject to penalties and liabilities under ERISA.
There is
a risk that a purchase of our common stock by a statutory plan could constitute
a prohibited transaction under ERISA and Section 4975 of the Code. For
example, if a statutory plan sponsored by Provident purchases our common stock
either directly or indirectly by reason of the activities of one or more of its
affiliates,
28
The U.S. Department of Labor has issued
three administrative prohibited transaction class exemptions (which we refer to
as “PTCEs”) that may provide exemptive relief
for direct or indirect prohibited transactions resulting from the purchase of
our common stock. These class exemptions are:
|
·
|
PTCE
96-23, for specified transactions determined by in-house asset
managers;
|
|
·
|
PTCE
84-14, for specified transactions determined by independent qualified
professional asset managers; and
|
|
·
|
PTCE
75-1, as amended, for purchases of underwritten securities in a public
offering.
|
Furthermore,
there are employee benefit plans other than statutory plans (such as
governmental plans, as defined in Section 3(32) of ERISA, church plans, as
defined in Section 3(33) of ERISA, and foreign plans, as described in
Section 4(b)(4) of ERISA) which, while not subject to the requirements of
Part 4 of Title I of ERISA or Section 4975 of the Code, may be subject to
laws which have a similar purpose or effect to the fiduciary and prohibited
transaction provisions under Part 4 of Title I of ERISA and
Section 4975 of the Code (which we refer to as “Similar
Laws”).
Based on the foregoing, our common stock should
not be purchased by any person investing “plan assets” of any statutory plan,
any entity whose underlying assets include “plan assets” under ERISA by reason
of any statutory plan’s investment in the entity, or any employee benefit plan
which is subject to Similar Laws, unless the fiduciary for any such plan or
entity can determine that such purchase will not result in a prohibited
transaction under Part 4 of Title I of ERISA, Section 4975 of the Code, or any
comparable provision under Similar Law. Any person who is a fiduciary
for such a plan or entity should consult with counsel regarding the risk, if
any, of a prohibited transaction arising from the purchase of our common stock
and whether any exemptive relief is necessary and available in light of such
risk.
UNDERWRITING
We are
offering the shares of our common stock described in this prospectus in an
underwritten offering in which Sandler O’Neill & Partners, L.P. is
acting as representative of the underwriters. We have entered into an
underwriting agreement with Sandler O’Neill & Partners, L.P., acting as
representative of the underwriters named below, with respect to the common stock
being offered. Subject to the terms and conditions contained in the underwriting
agreement, each underwriter has severally agreed to purchase the respective
number of shares of our common stock set forth opposite its name
below.
|
Name
|
Number
of Shares
|
|||
|
Sandler
O’Neill & Partners, L.P.
|
||||
|
FBR
Capital Markets & Co.
|
||||
|
FIG
Partners, LLC
|
|
|||
|
Total
|
||||
29
The
underwriting agreement provides that the underwriters’ obligation to purchase
shares of our common stock depends on the satisfaction of the conditions
contained in the underwriting agreement, including:
|
•
|
the
representations and warranties made by us are true and agreements have
been performed;
|
|
|
•
|
there
is no material adverse change in the financial markets or in our
business; and
|
|
|
•
|
we
deliver customary closing documents.
|
|
Subject
to these conditions, the underwriters are committed to purchase and pay for all
shares of our common stock offered by this prospectus, if any such shares are
taken. However, the underwriters are not obligated to take or pay for the shares
of our common stock covered by the underwriters’ over-allotment option described
below, unless and until such option is exercised.
Over-Allotment
Option. We have granted the underwriters an option,
exercisable no later than 30 calendar days after the date of the
underwriting agreement, to purchase up to an aggregate
of additional shares
of common stock at the public offering price, less the underwriting discounts
and commissions set forth on the cover page of this prospectus. We will be
obligated to sell these shares of common stock to the underwriters to the extent
the over-allotment option is exercised. The underwriters may exercise this
option only to cover over-allotments, if any, made in connection with the sale
of our common stock offered by this prospectus.
Commissions and
Expenses. The underwriters propose to offer our common stock
directly to the public at the offering price set forth on the cover page of this
prospectus and to dealers at the public offering price less a concession not in
excess of $ per share. The underwriters may allow,
and the dealers may re-allow, a concession not in excess of
$ per share on sales to other brokers and dealers.
After the public offering of our common stock, the underwriters may change the
offering price, concessions and other selling terms.
The
following table shows the per share and total underwriting discounts and
commissions that we will pay to the underwriters and the proceeds we will
receive before expenses. These amounts are shown assuming both no exercise and
full exercise of the underwriters’ option to purchase additional shares of our
common stock.
|
Per
Share
|
Total
Without
Over-Allotment
Exercise
|
Total
Without
Over-Allotment
Exercise
|
||||||||||||
|
Public
offering price
|
$
|
$
|
$
|
|||||||||||
|
Underwriting discounts
and commissions
payable by us
|
$
|
$
|
$
|
|||||||||||
|
Proceeds
to us (before expenses)
|
$
|
$
|
$
|
|||||||||||
The
underwriting discounts and commissions payable by us equals 6% of the aggregate
purchase price for shares sold, including any shares sold as a result of the
exercise of the over-allotment option, other than with respect to up to $2.5
million of any shares sold to our employee stock ownership plan, officers and
directors for which the underwriting discounts and commission will be
2.0%. In addition to the underwriting discount, we will reimburse the
underwriters for their reasonable out-of-pocket expenses incurred in connection
with their engagement as underwriters, regardless of whether this offering is
consummated, including, without limitation, all marketing, syndication and
travel expenses and legal fees and expenses up to $125,000. If the
offering is completed and closes the expenses paid pursuant to the previous
sentence will be credited to the underwriting discounts and commissions payable
to the underwriters. We estimate that the total expenses of this
offering, exclusive of the underwriting discounts and commissions, will be
approximately $______, and are payable by us.
Indemnity. We
have agreed to indemnify the underwriters, and persons who control the
underwriters, against certain liabilities, including liabilities under the
Securities Act of 1933, as amended, and to contribute to payments that the
underwriters may be required to make in respect of these
liabilities.
Lock-Up Agreement. We
and each of our directors and executive officers, have agreed, for a period of
90 days after the date of the closing of this offering, not to sell, offer,
agree to sell, express intention to sell, contract
30
Stabilization. In
connection with this offering, the underwriters may engage in stabilizing
transactions, over-allotment transactions, syndicate covering transactions and
penalty bids.
|
•
|
Stabilizing
transactions permit bids to purchase shares of common stock so long as the
stabilizing bids do not exceed a specified maximum, and are engaged in to
prevent or retard a decline in the market price of the common stock while
the offering is in progress.
|
||
|
•
|
Over-allotment
transactions involve sales by the underwriters of shares of common stock
in excess of the number of shares the underwriters are obligated to
purchase. This creates a syndicate short position that may be either a
covered short position or a naked short position. In a covered short
position, the number of shares of common stock over-allotted by the
underwriters is not greater than the number of shares that they may
purchase in the over-allotment option. In a naked short position, the
number of shares involved is greater than the number of shares in the
over-allotment option. The underwriters may close out any short position
by exercising their over-allotment option and/or purchasing shares in the
open market.
|
||
|
•
|
Syndicate
covering transactions involve purchases of common stock in the open market
after the distribution has been completed to cover syndicate short
positions. In determining the source of shares to close out the short
position, the underwriters will consider, among other things, the price of
shares available for purchase in the open market as compared with the
price at which they may purchase shares through exercise of the
over-allotment option. If the underwriters sell more shares than could be
covered by exercise of the over-allotment option and, therefore, have a
naked short position, the position can be closed out only by buying shares
in the open market. A naked short position is more likely to be created if
the underwriters are concerned that after pricing there could be downward
pressure on the price of the shares in the open market that could
adversely affect investors who purchase in the
offering.
|
||
|
•
|
Penalty
bids permit the underwriters to reclaim a selling concession from a
syndicate member when the common stock originally sold by that syndicate
member is purchased in stabilizing or syndicate covering transactions to
cover syndicate short positions.
|
These
stabilizing transactions, syndicate covering transactions and penalty bids may
have the effect of raising or maintaining the market price of our common stock
or preventing or retarding a decline in the market price of our common stock. As
a result, the price of our common stock in the open market may be higher than it
would otherwise be in the absence of these transactions. Neither we nor the
underwriters make any representation or prediction as to the effect that the
transactions described above may have on the price of our common stock. These
transactions may be effected on The Nasdaq Global Select Market, in the
over-the-counter market or otherwise and, if commenced, may be discontinued at
any time.
Passive Market
Making. In connection with this offering, the underwriters and
selected dealers, if any, who are qualified market makers on The Nasdaq Global
Select Market, may engage in passive market making transactions in our common
stock on The Nasdaq Global Select Market in accordance with Rule 103 of
Regulation M under the Securities Act. Rule 103 permits passive market
making activity by the participants in our common stock offering. Passive market
making may occur before the pricing of our offering, or before the commencement
of offers or sales of our common stock. Each passive market maker must comply
with applicable volume and price limitations and must be identified as a passive
market maker. In general, a passive market maker must display its bid at a price
not in excess of the highest independent bid for the security. If all
independent bids are
31
Our Relationship
with the Underwriters. Sandler O’Neill & Partners,
L.P. and FBR Capital Markets & Co. and some of their respective affiliates
have performed and expect to continue to perform financial advisory and
investment banking services for us from time to time in the ordinary course of
their respective businesses, and may have received, and may continue to receive,
compensation for such services.
Our
common stock is being offered by the underwriters, subject to prior sale, when,
as and if issued to and accepted by them, subject to approval of certain legal
matters by counsel for the underwriters and other conditions. The
shares will be listed on the Nasdaq Global Select Market under the symbol
“PROV.”
Certain matters relating to the offering of the
common stock will be passed upon for us by Breyer & Associates PC, McLean,
Virginia. Kilpatrick Stockton LLP, Washington, D.C. will act as
counsel for the underwriters.
EXPERTS
The
consolidated financial statements incorporated in this prospectus by reference
from our Annual Report on Form 10-K for the year ended June 30, 2009, and the
effectiveness of our internal control over financial reporting have been audited
by Deloitte & Touche LLP, an independent registered public accounting firm,
as stated in their reports, which are incorporated herein by
reference. Such consolidated financial statements have been so
incorporated in reliance upon the reports of such firm given upon their
authority as experts in accounting and auditing.
WHERE
YOU CAN FIND MORE INFORMATION
We are
subject to the information requirements of the Securities Exchange Act of 1934,
as amended, which means we are required to file annual, quarterly and current
reports, proxy statements and other information with the SEC. You may
inspect without charge any documents filed by us at the Public Reference Room of
the Securities and Exchange Commission, or SEC, at 100 F Street, N.E.,
Washington, D.C. 20549. You may obtain copies of all or any part of these
materials from the SEC upon the payment of certain fees prescribed by the SEC.
Please call the SEC at 1-800-SEC-0330 for further information on the Public
Reference Room. The SEC also maintains an Internet site that contains reports,
proxy and information statements and other information regarding issuers that
file electronically with the SEC. Our filings with the SEC are available to the
public through the SEC’s website at www.sec.gov.
We have
filed with the SEC a registration statement on Form S-1 relating to the
securities covered by this prospectus. This prospectus is part of the
registration statement and does not contain all of the information in the
registration statement. You will find additional information about us in the
registration statement. Any statement made in this prospectus concerning a
contract or other document of ours is not necessarily complete, and you should
read the documents that are filed as exhibits to the registration statement or
otherwise filed with the SEC for a more complete understanding of the document
or matter. Each such statement is qualified in all respects by reference to the
document to which it refers. You may inspect without charge a copy of the
registration statement at the SEC’s Public Reference Room in Washington D.C., as
well as through the SEC’s website.
As
allowed by the SEC’s rules, we “incorporate by reference” certain information
that we file with the SEC, which means that we can disclose important
information to you by referring you to other documents. The information
incorporated by reference is an important part of this prospectus.
32
We
incorporate by reference in this prospectus the documents listed
below:
|
·
|
Annual
Report on Form 10-K for the fiscal year ended June 30, 2009 (including the
portions of our 2009 proxy material incorporated by reference into the
Form 10-K); and
|
|
·
|
Form
10-Q for the quarter ended September 30,
2009.
|
Nothing
in this prospectus shall be deemed to incorporate information deemed furnished
but not filed with the SEC.
These
documents are available without charge to you on the Internet at
http://www.myprovident.com or if you call or write to: Donavon P. Ternes,
Secretary, Provident Financial Holdings, Inc., 3756 Central Avenue, Riverside,
California 92506, telephone: (951) 686-6060. The reference to our website is not
intended to be an active link and the information on our website is not, and you
must not consider the information to be, a part of this prospectus.
33
________
Shares
Common
Stock
________________________________
PROSPECTUS
___________________________
Sole
Book Running Manager
|
SANDLER
O’NEILL + PARTNERS,
L.P.
|
Co-Managers
|
FBR
CAPITAL MARKETS & CO.
|
FIG
PARTNERS, LLC
|
,
2009
PART
II: INFORMATION NOT REQUIRED IN PROSPECTUS
Item 13. Other
Expenses of Issuance and Distribution
|
|
|
Amount
|
|||
|
SEC
Registration Fee
|
$
|
2,567
|
|||
|
|
|
Registrant's
Legal Fees and Expenses
|
|
175,000
|
|
|
|
|
Registrant's
Accounting Fees and Expenses
|
|
75,000
|
|
|
|
|
Printing,
EDGAR and engraving fees
|
|
11,500
|
|
|
|
|
FINRA
Filing Fees
|
|
5,100
|
|
|
|
Blue
Sky legal fees
|
15,000
|
|||
|
|
Filing
fees
|
7,500
|
|||
|
|
|
Other
|
|
10,000
|
|
|
|
|
Total
|
|
$
|
301,667
|
Item 14. Indemnification
of Directors and Officers
Article
XVII of the Registrant=s
Certificate of Incorporation requires indemnification of any person who is or
was a director, officer or employee of the Registrant for expenses actually and
reasonably incurred in connection with the defense or settlement of any
threatened, pending or completed action, suit or proceeding.
Section
145 of the Delaware General Corporation Law provides for permissible and
mandatory indemnification of directors, officers, employees and agents in
certain circumstances. Section 145(a) provides that a corporation may
indemnify any person who was or is a party or is threatened to be made a party
to any threatened, pending or completed action, suit or proceeding, whether
civil, criminal, administrative or investigative (other than an action by or in
the right of the corporation), by reason of the fact that the person is or was a
director, officer, employee or agent of the corporation, or is or was serving at
the request of the corporation as a director, officer, employee or agent of
another entity, against expenses (including attorneys=
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by the person in connection with such action, suit or proceeding if the
person acted in good faith and in a manner the person reasonably believed to be
in or not opposed to the best interests of the corporation, and, with respect to
any criminal action or proceeding, had no reasonable cause to believe the
person=s
conduct was unlawful. The termination of any action, suit or proceeding by
judgment, order, settlement, conviction, or upon a plea of nolo contendere or
its equivalent, shall not, of itself, create a presumption that the person did
not act in good faith and in a manner which the person reasonably believed to be
in or not opposed to the best interests of the corporation, and, with respect to
any criminal action or proceeding, had reasonable cause to believe that the
person=s
conduct was unlawful.
Section
145(b) provides that a corporation may indemnify any person who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action or suit by or in the right of the corporation to procure a
judgment in its favor by reason of the fact that the person is or was a
director, officer, employee or agent of the corporation, or is or was serving at
the request of the corporation as a director, officer, employee or agent of
another entity against expenses (including attorneys=
fees) actually and reasonably incurred by the person in connection with the
defense or settlement of such action or suit if the person acted in good faith
and in a manner the person reasonably believed to be in or not opposed to the
best interests of the corporation and except that no indemnification shall be
made in respect of any claim, issue or matter as to which such person shall have
been adjudged to be liable to the corporation unless and only to the extent that
the Court of Chancery or the court in which such action or suit was brought
shall determine upon application that, despite the adjudication of liability but
in view of all the circumstances of the case, such person is fairly and
reasonably entitled to indemnity for such expenses which the Court of Chancery
or such other court shall deem proper.
Section
145(c) provides that to the extent that a present or former director or officer
of a corporation has been successful on the merits or otherwise in defense of
any action, suit or proceeding referred to in Sections 145(a) and 145(b), or in
defense of any claim, issue or matter therein, that person shall be indemnified
against expenses (including attorneys=
fees) actually and reasonably incurred by such person in connection
therewith.
II-1
Section
145(d) provides that any indemnification under Sections 145(a) and 145(b)
(unless ordered by a court) shall be made by the corporation only as authorized
in the specific case upon a determination that indemnification of the present or
former director, officer, employee or agent is proper in the circumstances
because the person has met the applicable standard of conduct set forth in
Sections 145(a) and 145(b).
Section
145(e) provides that expenses incurred by an officer or director in defending
any civil, criminal, administrative or investigative action, suit or proceeding
may be paid by the corporation in advance of the final disposition of the
action, suit or proceeding upon receipt of an undertaking to repay the amount if
it is ultimately determined that the person is not entitled to be indemnified by
the corporation. Expenses incurred by former directors and officers
or other employees and agents may be so paid upon such terms and conditions, if
any, as the corporation deems appropriate.
Section
145(f) provides that indemnification and advancement of expenses provided under
Section 145 are not exclusive of any other rights to which those seeking
indemnification or advancement of expenses may be entitled under any bylaw,
agreement, vote of stockholders or disinterested directors or
otherwise. Section 145(g) provides that a corporation may purchase
and maintain insurance on behalf of any person who is or was a director,
officer, employee or agent of the corporation, or is or was serving at the
request of the corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise against any
liability asserted against such person and incurred by such person in any such
capacity, or arising out of such person=s
status as such, whether or not the corporation would have the power to indemnify
such person against such liability under this section.
The
Registrant maintains directors’ and officers’ liability insurance for the
benefit of its directors and officers.
Item 15. Recent
Sales of Unregistered Securities
Not
Applicable.
Item 16. Exhibits
and Financial Statement Schedules:
The
exhibits and financial statement schedules filed as part of this registration
statement are as follows:
| (a) | List of Exhibits | |
| See the Exhibit Index filed as part of this Registration Statement. | ||
|
|
(b)
|
Financial
Statement Schedules
|
|
No
financial statement schedules are filed because the required information
is not applicable or is included in the consolidated financial statements
or related notes.
|
Item 17. Undertakings
The
undersigned Registrant hereby undertakes:
|
(1)
|
For
purposes of determining any liability under the Securities Act of 1933,
the information omitted from the form of prospectus filed as part of this
registration statement in reliance upon Rule 430A and contained in a
form of prospectus filed by the registrant pursuant to Rule 424(b)
(1) or (4) or 497(h) under the Securities Act shall be deemed to
be part of this registration statement as of the time it was declared
effective.
|
|
(2)
|
For
the purpose of determining any liability under the Securities Act of 1933,
each post-effective amendment that contains a form of prospectus shall be
deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering
thereof.
|
II-2
Insofar
as indemnification for liabilities arising under the Securities Act of 1933 may
be permitted to directors, officers and controlling persons of the registrant
pursuant to the foregoing provisions, or otherwise, the registrant has been
advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act, and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
II-3
SIGNATURES
Pursuant
to the requirements of the Securities Act of 1933, the registrant has duly
caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized in the City of Riverside, State of
California, on November 13, 2009.
| PROVIDENT FINANCIAL HOLDINGS, INC. | |
| /s/Craig G. Blunden | |
| By: Craig G. Blunden | |
| Chairman, President and Chief Executive Officer |
Pursuant
to the requirements of the Securities Act of 1933, this registration statement
has been signed by the following persons in the capacities and on the dates
indicated.
| /s/Craig G. Blunden | November 13, 2009 |
|
Craig
G. Blunden
Chairman,
President and Chief Executive Officer
(Principal
Executive Officer)
|
|
| /s/Donavon P. Ternes | November 13, 2009 |
|
Donavon
P. Ternes
Chief
Operating Officer and Chief Financial Officer
(Principal
Financial and Accounting Officer)
|
|
| /s/Joseph P. Barr* |
November 13,
2009
|
| Joseph P. Barr | |
|
Director
|
|
| /s/Bruce W. Bennett* |
November 13,
2009
|
|
Bruce
W. Bennett
Director
|
|
| /s/Debbi H. Guthrie* |
November 13,
2009
|
|
Debbi
H. Guthrie
Director
|
|
| /s/Robert G. Schrader* |
November 13,
2009
|
|
Robert
G. Schrader
Director
|
|
| /s/Roy H. Taylor* |
November 13,
2009
|
|
Roy
H. Taylor
Director
|
|
| /s/William E. Thomas* | November 13, 2009 |
|
William
E. Thomas
Director
|
|
|
* By
power of attorney dated October 9, 2009.
|
II-4
EXHIBIT
INDEX
Exhibits:
| 1.1 | Form of Underwriting Agreement |
|
3.1
|
Certificate
of Incorporation of Provident Financial Holdings, Inc.
(1)
|
|
3.2
|
Bylaws
of Provident Financial Holdings, Inc. (1)
|
|
5.1
|
Opinion
of Breyer and Associates, PC re: Legality of Securities Being
Registered*
|
|
10.1
|
Employment
Agreement with Craig G. Blunden (2)
|
|
10.2
|
Post-Retirement
Compensation Agreement with Craig G. Blunden
(2)
|
|
10.3
|
1996
Stock Option Plan (3)
|
|
10.4
|
1996
Management Recognition Plan (3)
|
|
10.5
|
Form
of Severance Agreement with Richard L. Gale, Kathryn R. Gonzales, Lilian
Salter, Donavon P. Ternes and David S. Weiant
(4)
|
|
10.6
|
2003
Stock Option Plan (5)
|
|
10.7
|
Form
of Incentive Stock Option Agreement for options granted under the 2003
Stock Option Plan (6)
|
|
10.8
|
Form
of Non-Qualified Stock Option Agreement for options granted under the 2003
Stock Option Plan (6)
|
|
10.9
|
2006
Equity Incentive Plan (7)
|
|
10.10
|
Form
of Incentive Stock Option Agreement for options granted under the 2006
Equity Incentive Plan (8)
|
|
10.11
|
Form
of Non-Qualified Stock Option Agreement for options granted under the 2006
Equity Incentive
|
| Plan (8) | |
| 10.12 |
Form
of Restricted Stock Agreement for restricted shares awarded under the 2006
Equity Incentive Plan (8)
|
| 10.13 |
Post-Retirement
Compensation Agreement with Donavon P. Ternes
(9)
|
| 21.0 | Subsidiaries of the Registrant* |
| 23.1 | Consent of Breyer and Associates, PC (included in Exhibit 5.1)* |
| 23.2 | Consent of Deloitte & Touche LLP |
| 24.1 | Power of Attorney, included in signature page* |
__________
* Previously
filed.
|
(1)
|
Included
as an exhibit to the Registrant’s Registration Statement on Form S-1 (File
No. 333-2230) filed on March 11, 1996 and incorporated herein by
reference.
|
|
(2)
|
Included
as an exhibit to the Registrant’s Form 8-K dated December 19,
2005.
|
|
(3)
|
Included
as an exhibit to the Registrant’s 1996 Proxy Statement filed on December
12, 1996 and incorporated herein by
reference.
|
|
(4)
|
Included
as an exhibit to the Registrant’s Form 8-K dated July 3, 2006 and
incorporated herein by reference.
|
|
(5)
|
Included
as an exhibit to the Registrant’s proxy statement dated October 21, 2003
and incorporated herein by
reference.
|
|
(6)
|
Included
as an exhibit to the Registrant’s Annual Report on Form 10-K for the
fiscal year June 30, 2005 and incorporated herein by
reference.
|
|
(7)
|
Included
as an exhibit to the Registrant’s proxy statement dated October 12, 2006
and incorporated herein by
reference.
|
|
(8)
|
Included
as an exhibit to the Registrant’s Form 10-Q for the quarter ended December
31, 2006 and incorporated herein by
reference.
|
|
(9)
|
Included
as an exhibit to the Registrant’s Form 8-K dated July 7, 2009 and
incorporated herein by reference.
|