Note 9: Capital

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The Bank is subject to various regulatory capital requirements administered by the federal banking agencies. These capital regulations define the types of capital that qualify for meeting these requirements. Failure to meet the minimum capital requirements may trigger certain mandatory actions, and possibly additional discretionary actions, by regulators. Such actions, if taken, could materially affect the Corporation’s financial condition and results of operations. Under the capital adequacy guidelines and the regulatory framework for prompt corrective action, the Bank must comply with specific capital guidelines that are based on quantitative measures of the Bank’s assets, liabilities, and certain off-balance-sheet items, as calculated under regulatory capital regulations and accounting practices. Additionally, the Bank’s capital amounts and classification are subject to qualitative assessments by regulators, who evaluate factors such as capital component composition, risk weightings, and other relevant considerations.

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For a bank holding company such as the Corporation with less than $3.0 billion in assets, regulatory capital requirements generally apply only to the subsidiary bank and not the holding company. The FRB expects the holding company’s subsidiary bank to be well capitalized under the prompt corrective action regulations. If the Corporation were subject to regulatory guidelines for bank holding companies at June 30, 2026, it would have exceeded all regulatory capital requirements.

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The Bank is subject to capital regulations that establish minimum required capital ratios for tier 1 leverage, common equity tier 1 (“CET1”), tier 1 risk-based and total risk-based capital. Additionally, a capital conservation buffer consisting of additional CET1 capital of 2.5% above the minimum capital ratios is required for the CET1, tier 1 risk-based, and total risk-based capital ratios. Failure to maintain a minimum capital conservation buffer of 2.5% may result in limitations on the Corporation’s ability to pay dividends, engage in share repurchases, and pay discretionary bonuses based on percentages of eligible retained income that could be utilized for such actions.

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The Bank’s actual and required minimum capital amounts and ratios at the dates indicated are as follows (dollars in thousands):

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At June 30, 2026, the Bank exceeded all regulatory capital requirements. The Bank was categorized as "well-capitalized" at June 30, 2026 under the regulations of the Office of the Comptroller of the Currency (“OCC”).

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The ability of the Corporation to pay dividends to its stockholders depends primarily on the ability of the Bank to pay dividends to Provident Financial Holdings. Provident Financial Holdings and the Bank may not declare or pay cash dividends on or repurchase any of its shares of common stock, if the effect would cause stockholders’ equity to be reduced below applicable regulatory capital maintenance requirements or if such declaration and payment would otherwise violate regulatory requirements.

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Generally, savings institutions, such as the Bank, that are well-capitalized before and after the proposed distribution may make capital distributions during any calendar year up to 100% of net income for the year-to-date plus retained net income for the two preceding years. However, an institution deemed to be in need of more than normal supervision or classified as troubled condition by the OCC may have its dividend authority restricted by the OCC. If the Bank, however, proposes to make a capital distribution when it does not meet its capital requirements (or will not following the proposed capital distribution) or that will exceed the net income-based limitations, it must obtain the FRB’s and OCC's approval prior to making such distribution. In addition, the Bank must file a prior written notice of a capital distribution with the FRB and OCC. The FRB or the OCC may object to a capital distribution based on safety and soundness concerns. Additional restrictions on Bank dividends may apply if the Bank fails the Qualified Thrift Lender test. In fiscal year 2026 and 2025, the Bank declared and paid cash dividends of $10.5 million and $9.0 million, respectively, to its parent, Provident Financial Holdings.