Jul. 25–A vibrant home-loan market has helped Riverside-based Provident Savings Bank get its own house in order and take in record amounts of money in the last 12 months.
The bank’s holding company, Provident Financial Holdings Inc., reported net income Thursday of $16.89 million for the fiscal year ending on June 30, an 85 percent jump over the previous year.
Diluted earnings per share — which counts outstanding shares as well as unexercised stock options, warrants and other convertible securities — increased 96 percent to $3.30.
Net income for the fourth quarter of fiscal 2003 totaled $4.72 million, a 94 percent increase over the same quarter last year.
“While the interest rate continued to track down, our mortgage-lending operation continued to increase its business, which contributed significantly to our profitability this year,” Provident President and Chief Executive Craig Blunden said in a telephone interview.
In other words, although lower interest rates mean the bank isn’t making as much money charging interest on its loans, it has also meant more people are taking advantage of those low rates to buy or refinance homes.
“The fees that we charge with our single-family lending business helped offset the interest rate,” Blunden said. “We had record volumes.”
A year ago, the bank was facing a number of challenges, including a 10 percent work-force reduction and a difficult fourth quarter of 2002, which saw a decline in income from the same three months of 2001.
Even more significant, however, was the influence of a group of disgruntled shareholders who had asked Provident’s management to improve what they called its “sub-par” performance or sell the bank.
The shareholders, led by New York-based hedge fund manager Seymour “Sy” Jacobs, also said they would seek two spots on Provident’s board of directors.
After a few months of tense negotiations, the two sides settled their differences in November 2002, and Jacobs was elected to a three-year term on the board of directors. Jacobs, who has consistently declined to be interviewed, didn’t return a phone call for this story.
“We have been really focused on improving our performance over the last year after all those issues came up,” Blunden said, adding that fewer employees are doing more work, which has helped control operating expenses.
That will change somewhat in August, however, when Provident opens its newest branch in the Orangecrest neighborhood of Riverside, Blunden said.
“We are continuing to look at other locations as well, both in the low desert and in western Riverside County,” he added.
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(c) 2003, The Press-Enterprise, Riverside, Calif. Distributed by Knight Ridder/Tribune Business News.
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