PROXY STATEMENT

OF

PROVIDENT FINANCIAL HOLDINGS, INC.

3756 CENTRAL AVENUE

RIVERSIDE, CALIFORNIA 92506

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ANNUAL MEETING OF SHAREHOLDERS

NOVEMBER 29, 2022

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The Board of Directors of Provident Financial Holdings, Inc. is using this Proxy Statement to solicit proxies from our shareholders for use at the annual meeting of shareholders.  We are first mailing this Proxy Statement and the enclosed form of proxy to our shareholders on or about October 27, 2022.

The information provided in this Proxy Statement relates to Provident Financial Holdings, Inc. and its wholly-owned subsidiary, Provident Savings Bank, F.S.B.  Provident Financial Holdings, Inc. may also be referred to as “Provident” and Provident Savings Bank, F.S.B. may also be referred to as “Provident Savings Bank” or the “Bank.”  References to “we,” “us” and “our” refer to Provident and, as the context requires, Provident Savings Bank.

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INFORMATION ABOUT THE ANNUAL MEETING

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Our annual meeting will be held as follows:
 

Date:

Tuesday, November 29, 2022

Matters to Be Considered at the Annual Meeting

At the meeting, you will be asked to consider and vote upon the following proposals:

We also will transact any other business that may properly come before the annual meeting.  As of the date of this Proxy Statement, we are not aware of any other business to be presented for consideration at the annual meeting other than the matters described in this Proxy Statement.

Who Is Entitled to Vote?

We have fixed the close of business on October 13, 2022 as the record date for shareholders entitled to notice of and to vote at our annual meeting.  Only holders of record of Provident’s common stock on that date are entitled to notice of and to vote at the annual meeting.  You are entitled to one vote for each share of Provident common stock you own.  On October 13, 2022, there were 7,223,518 shares of Provident common stock outstanding and entitled to vote at the annual meeting.

How Do I Vote at the Annual Meeting?

Proxies are solicited to provide all shareholders on the voting record date an opportunity to vote on matters scheduled for the annual meeting and described in these materials.  This answer provides voting instructions for shareholders of record.  You are a shareholder of record if your shares of Provident common stock are held in your name.  If you are a beneficial owner of Provident common stock held by a broker, bank or other nominee, please see the instructions below, under “What if My Shares Are Held in Street Name?”

Shares of Provident common stock can only be voted if the shareholder is present virtually or by proxy at the annual meeting.  To ensure your representation at the annual meeting, we recommend you vote by proxy even if you plan to attend the virtual annual meeting.  You can always change your vote at the meeting if you are a shareholder of record by following the instructions on the proxy card.

Shareholders may vote by proxy via the Internet or a toll-free telephone number, or by mailing a proxy card. Voting instructions are included on your proxy card.  Shares of Provident common stock represented by properly executed proxies will be voted by the individuals named on the proxy card in accordance with the shareholder’s instructions.  Where properly executed proxies are returned to us with no specific instruction as how to vote at the annual meeting, the persons named in the proxy will vote the shares FOR the election of each of our director nominees, FOR advisory approval of the compensation of our named executive officers as disclosed in this Proxy Statement, FOR adoption of the 2022 Equity Incentive Plan and FOR the ratification of the appointment of the independent registered public accounting firm.  If any other matters are properly presented at the annual meeting for action, the persons named in the enclosed proxy and acting thereunder will have the discretion to vote on these matters in accordance with their best judgment.  We do not currently expect that any other matters will be properly presented for action at the annual meeting.

You may receive more than one proxy card depending on how your shares are held.  For example, you may hold some of your shares individually, some jointly with your spouse and some in trust for your children.  In this case, you will receive three separate proxy cards to vote.

What if My Shares Are Held in Street Name?

If you are the beneficial owner of shares held in street name by a broker, bank or other nominee, the nominee, as the record holder of the shares, is required to vote the shares in accordance with your instructions.  If your common stock is held in street name, you will receive instructions from the nominee that you must follow in order to have your shares voted.  The nominee may allow you to deliver your voting instructions via the telephone or the Internet.  Please see the instruction form that accompanies this Proxy Statement.  If you do not give instructions to the nominee, the nominee may nevertheless vote the shares with respect to discretionary items, but will not be permitted to vote your shares with respect to non-discretionary items, pursuant to current industry practice.  In the case of non-discretionary items, shares not voted are treated as “broker non-votes.”  The proposals to elect directors and adopt the 2022 Equity Incentive Plan and the advisory vote on executive compensation are considered non-discretionary items; therefore, you must provide instructions to the nominee in order to have your shares voted on these matters.

If your shares are held in street name, you must register in advance to participate in the virtual annual meeting.  To register to participate in the annual meeting, you must submit proof of your proxy power (legal proxy) reflecting your Provident holdings along with your name and email address to Computershare.  Requests for registration must be labeled as “Legal Proxy” and be received no later than 5:00 p.m., Eastern Time, on November 23, 2022.  Requests for registration by email may be made by forwarding the email from the nominee who holds yours shares, or attaching an image of your legal proxy and emailing it to legalproxy@computershare.com.  Requests for registration by mail should be sent to Computershare, Provident Legal Proxy, P.O. Box 43001, Providence, RI 02940-3001.  You will receive a confirmation of your registration by email after Computershare receives your registration materials.

How Will My Shares of Common Stock Held in the Employee Stock Ownership Plan Be Voted?

We maintain an employee stock ownership plan (“ESOP”) for the benefit of our employees.  Each ESOP participant may instruct the ESOP trustee how to vote the shares of Provident common stock allocated to his or her

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account under the ESOP by completing the proxy card, which represents a voting instruction to the trustees.  If an ESOP participant properly executes the proxy card, the ESOP trustee will vote the participant’s shares in accordance with the participant’s instructions.  Unallocated shares of Provident common stock held by the ESOP and allocated shares for which no voting instructions are received will be voted by the trustee in the same proportion as shares for which the trustee has received voting instructions.

How Many Shares Must Be Present to Hold the Meeting?

A quorum must be present at the meeting for any business to be conducted.  The presence at the meeting, virtually or by proxy, of at least a majority of the shares of Provident common stock entitled to vote at the annual meeting as of the record date will constitute a quorum.  Proxies received but marked as abstentions or broker non-votes will be included in the calculation of the number of shares considered to be present at the meeting.

What if a Quorum Is Not Present at the Meeting?

If a quorum is not present at the scheduled time of the meeting, a majority of the shareholders present virtually or represented by proxy may adjourn the meeting until a quorum is present.  The time and place of the adjourned meeting will be announced at the time the adjournment is taken, and no other notice will be given unless the meeting is adjourned for 30 days or more.  An adjournment will have no effect on the business that may be conducted at the meeting.

Vote Required to Approve Proposal 1: Election of Directors

Directors are elected by a plurality of the votes cast at the annual meeting by holders of Provident common stock.  Accordingly, the three nominees for election as directors who receive the highest number of votes actually cast will be elected.  Pursuant to our Certificate of Incorporation, shareholders are not permitted to cumulate their votes for the election of directors.  Votes may be cast for or withheld from each nominee.  Votes that are withheld and broker non-votes will have no effect on the outcome of the election because the three nominees receiving the greatest number of votes will be elected.  Our Board of Directors unanimously recommends that you vote FOR the election of each of its director nominees.

Vote Required to Approve Proposal 2: Advisory Approval of Executive Compensation

The advisory (non-binding) vote to approve the compensation of our named executive officers requires the affirmative vote of the majority of the votes cast at the annual meeting by holders of Provident common stock.  Abstentions and broker non-votes do not constitute votes cast and therefore will have no effect on the approval of the proposal.  Our Board of Directors unanimously recommends that you vote FOR the adoption of an advisory resolution to approve the compensation of our named executive officers as disclosed in this Proxy Statement.

Vote Required to Approve Proposal 3: Adoption of the 2022 Equity Incentive Plan

Approval of the Provident Financial Holdings, Inc. 2022 Equity Incentive Plan requires the affirmative vote of a majority of the votes cast, in person or by proxy, at the annual meeting by holders of Provident common stock.  Any shareholder represented in person or by proxy at the meeting and entitled to vote on the subject matter may elect to abstain from voting on this proposal.  If so, such abstention will not be counted as a vote cast on the proposal and, therefore, will have no effect on the outcome of the vote on the proposal.  Provided there is a quorum of shareholders present in person or by proxy, shareholders not attending the meeting, in person or by proxy, will also have no effect on the outcome of this proposal.  Broker non-votes do not constitute votes cast and will have no effect on the outcome of the proposal.  Our Board of Directors unanimously recommends that you vote FOR approval of the 2022 Equity Incentive Plan.

Ratification of the appointment of the independent registered public accounting firm requires the affirmative vote of a majority of the votes cast at the annual meeting by holders of Provident common stock.  Abstentions and broker

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May I Revoke My Proxy?

You may revoke your proxy before it is voted by:

•	submitting a new proxy with a later date;

•	notifying the Secretary of Provident in writing before the annual meeting that you have revoked your proxy; or

•	voting at the annual meeting.

If you plan to attend the virtual annual meeting and vote during the meeting, instructions for voting will be provided.

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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

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The following table sets forth, as of October 13, 2022, the voting record date, information regarding share ownership of:

•	those persons or entities (or groups of affiliated persons or entities) known by management to beneficially own more than five percent of Provident’s common stock;

•	each director and director nominee of Provident;

•	each executive officer of Provident or Provident Savings Bank named in the Summary Compensation Table appearing under “Executive Compensation” below (known as “named executive officers”); and

•	all current directors and executive officers of Provident and Provident Savings Bank as a group.

Persons and groups who beneficially own in excess of five percent of Provident’s common stock are required to file with the Securities and Exchange Commission (“SEC”) reports disclosing their ownership pursuant to the Securities Exchange Act of 1934.  To our knowledge, no other person or entity, other than those set forth below, beneficially owned more than five percent of the outstanding shares of Provident’s common stock as of the close of business on the voting record date.

Beneficial ownership is determined in accordance with the rules and regulations of the SEC.  In accordance with Rule 13d-3 of the Securities Exchange Act, a person is deemed to be the beneficial owner of any shares of common stock if he or she has voting and/or investment power with respect to those shares.  Therefore, the table below includes shares owned by spouses, other immediate family members in trust, shares held in retirement accounts or funds for the benefit of the named individuals, and other forms of ownership, over which shares the persons named in the table may possess voting and/or investment power.  In addition, in computing the number of shares beneficially owned by a person and the percentage ownership of that person, shares of common stock subject to outstanding options that are currently exercisable or exercisable within 60 days after the voting record date are included in the number of shares beneficially owned by the person and are deemed outstanding for the purpose of calculating the person’s percentage ownership.  These shares, however, are not deemed outstanding for the purpose of computing the percentage ownership of any other person.

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PROPOSAL 1 – ELECTION OF DIRECTORS

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Our Board of Directors currently consists of eight members and is divided into three classes.  Approximately one-third of the directors are elected annually to serve for a three-year period or until their respective successors are elected and qualified.  The Nominating Committee has nominated Bruce W. Bennett, Debbi H. Guthrie and Kathy M. Michalak for re-election to three-year terms.  Joseph P. Barr will retire effective as of the annual meeting, at which time the Board will reduce its size from eight directors to seven directors.

The table below sets forth information regarding each director of Provident and each nominee for director.  The Nominating Committee of the Board of Directors selects nominees for election as directors.  Each of our nominees currently serves as a director of Provident and Provident Savings Bank.  Each nominee has consented to being named in this Proxy Statement and has agreed to serve if elected.  If a nominee is unable to stand for election, the Board of Directors may either reduce the number of directors to be elected or select a substitute nominee.  If a substitute nominee is selected, the proxy holders will vote your shares for the substitute nominee, unless you have withheld authority.  At this time, we are not aware of any reason why a nominee might be unable to serve if elected.

The Board of Directors recommends a vote FOR the election of Bruce W. Bennett, Debbi H. Guthrie and Kathy M. Michalak.

Set forth below is the principal occupation of each nominee for director and each director continuing in office, as well as a brief description of the qualifications, attributes, skills and areas of expertise of each nominee or director that makes the director uniquely qualified to serve on Provident’s Board of Directors.   All nominees and directors have held their present positions for at least five years unless otherwise indicated.

Bruce W. Bennett provides consulting services to the healthcare industry primarily related to quality assurance, risk management, marketing and business development. Previously, he was the President and owner of Community Care and Rehabilitation Center, a skilled nursing facility, with which he had been associated since 1973, until he sold the company in 2010.  He currently serves on the National Down Syndrome Congress, previously served on the Board of Directors of Riverside Community Hospital, and is Chairman Emeritus of Riverside Community Health Foundation.  Mr. Bennett currently serves on our Personnel/Compensation Committee and Nominating and Corporate Governance Committee.  Mr. Bennett brings entrepreneurial knowledge and business management experience to the Board through his experience owning and operating a business in the highly regulated health care industry.

Debbi H. Guthrie currently manages all accounting and property management for her family’s real estate holdings and developments in Arizona, California, Idaho and Utah.  She retired in late 2016 from her position as Executive Vice President and Chief Communications Officer of Raincross Hospitality Corporation, a company contracted by the City of Riverside to manage and operate the Riverside Convention Center, Riverside Convention & 

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Visitors Bureau and the Riverside Sports Commission.  Prior to her position there, she was the President/Chief Financial Officer and Responsible Managing Officer of Roy O. Huffman Roof Company with which she was associated from 1971 until she sold the company in 2004.  Ms. Guthrie continues to be actively involved in leadership positions in multiple community organizations in Inland Southern California.  Ms. Guthrie serves on our Audit Committee and Nominating and Corporate Governance Committee.  As an effective community leader, successful business owner and highly efficient manager, she has a broad range of experience that has resulted in her unique knowledge of the financial needs of businesses and homeowners in the markets and communities we serve.

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BOARD OF DIRECTORS’ MEETINGS, BOARD COMMITTEES

AND CORPORATE GOVERNANCE MATTERS

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Board of Directors

The Boards of Directors of Provident and Provident Savings Bank conduct their business through board and committee meetings.  During the fiscal year ended June 30, 2022, the Provident Board of Directors held 11 meetings and the Bank Board of Directors held 11 meetings.  No director attended fewer than 91% of the total meetings of the boards and committees on which that person served during this period.

Committees and Committee Charters

Provident’s Board of Directors has a standing Nominating and Corporate Governance Committee.  The Boards of Directors of Provident and Provident Savings Bank have a joint Audit Committee and Personnel/Compensation Committee.  All of these committees have adopted written charters, copies of which are available on our website at www.myprovident.com.

Audit Committee.  The Audit Committee, which currently consists of Directors Barr (Chairman), Carpenter and Guthrie, is responsible for reviewing the adequacy of our system of internal accounting controls, approving the services provided by our independent registered public accounting firm and meeting with the firm to discuss the results of the annual audit and any related matters.  The Audit Committee has a charter which specifies its obligations and the Committee believes it has fulfilled its responsibilities under the charter.  Each member of the Audit Committee is “independent,” in accordance with the requirements for companies listed on Nasdaq.  The Audit Committee members do not have any relationship with us that may interfere with the exercise of their independence from management and Provident.  None of the Audit Committee members are current officers or employees of Provident or its affiliates.  Mr. Barr meets the definition of “audit committee financial expert,” as defined by the SEC.  The Audit Committee met four times during the fiscal year ended June 30, 2022.

Nominating and Corporate Governance Committee.  The Nominating and Corporate Governance Committee, which currently consists of Directors Thomas (Chairman), Barr, Bennett, Carpenter, Guthrie and Taylor, selects the nominees for election as directors.  The Committee also assists the Board in identifying individuals to become Board members and in developing and implementing corporation governance policies.  Each member of the Committee is “independent,” in accordance with the requirements for companies listed on Nasdaq.  The Nominating and Corporate Governance Committee met once during the fiscal year ended June 30, 2022.

Only those nominations made by the Nominating and Corporate Governance Committee or properly presented by shareholders will be voted upon at the annual meeting of shareholders.  In its deliberations for selecting candidates for nominees as director, the Committee considers the candidate’s knowledge of the banking business; involvement in local community, business and civic affairs; record of accomplishment in his or her chosen field; depth and breadth of experience at an executive, policy-making level; personal and professional ethics, integrity and values; absence of real and perceived conflicts of interest; ability and willingness to devote sufficient time to become knowledgeable about Provident and to effectively carry out the duties and responsibilities of service; ability to attend all or almost all Board meetings in person; ability to develop a good working relationship with other Board members; ability to contribute to the Board’s working relationship with senior management; and whether the candidate would provide for adequate representation of Provident Savings Bank’s market area.  Any nominee for director made by the Committee must be highly qualified with regard to some or all of these attributes.  Finally, viewpoint, skill, education, values, race, gender, national origin and culture are considered to provide for diversity on our Board of Directors.  These diversity factors are considered when the Nominating and Corporate Governance Committee and Board are seeking to fill a vacancy or new seat on the Board.

In searching for qualified director candidates to fill vacancies on the Board, the Committee solicits its current Board of Directors for names of potentially qualified candidates.  Additionally, the Committee may request that members of the Board of Directors pursue their own business contacts for the names of potentially qualified candidates.  The Committee would then consider the potential pool of director candidates, select the candidate the Committee believes
best meets the then-current needs of the Board, and conduct a thorough investigation of the proposed candidate’s background to ensure there is no past history that would cause the candidate not to be qualified to serve as a director of Provident.  Although the Committee’s charter does not specifically provide for the consideration of shareholder nominees for directors, the Committee will consider director candidates recommended by our shareholders in accordance with Provident’s Certificate of Incorporation.  Because the Certificate of Incorporation provides a process for shareholder nominations, the Committee does not feel it is necessary to provide for shareholder nominations of directors in a charter.  If a shareholder submits a proposed nominee, the Committee will consider the proposed nominee, along with any other proposed nominees recommended by members of our Board of Directors, in the same manner in which the Committee will evaluate its nominees for director.  For a description of the proper procedure for shareholder nominations, see “Shareholder Proposals” in this Proxy Statement.

Personnel/Compensation Committee.  The Personnel/Compensation Committee, currently consisting of Directors Taylor (Chairman), Bennett and Thomas, is responsible for establishing and implementing all compensation policies of Provident, Provident Savings Bank and its subsidiaries and may delegate lower level policies and procedures to the Human Resource Department. The Committee is also responsible for evaluating the performance of the Chief Executive Officer of the Bank and approving an appropriate compensation level.  The Chief Executive Officer evaluates the performance of all senior officers of the Bank and recommends to the Committee individual compensation levels for approval by the Committee.  The Committee met four times during the fiscal year ended June 30, 2022.

Leadership Structure

The positions of Chairman of the Board and Chief Executive Officer are held by the same person.  The Board has determined that it is in the best interests of Provident not to have a policy regarding the separation of these roles, allowing the Board greater flexibility to establish a leadership structure that fits the needs of Provident at any particular point in time.  The current structure makes the best use of the Chief Executive Officer’s extensive knowledge of our industry and of Provident, recognizes that he is best situated to lead discussions on important matters affecting the business of Provident and creates a firm link between the Board and management fostering effective communication.  Additionally, Director Taylor serves as the lead independent director.  In this capacity, he serves as liaison between independent directors and the full Board in discussing issues from the executive sessions of independent directors, ensuring the flow of information and working in unison with the Chairman and Chief Executive Officer.  He is charged with leading the Board’s independent directors to engagement and consensus, making sure that independent consensus is heard and implemented regarding substantive business matters or governance issues.

In addition to having a lead independent director, the Board of Directors and the Audit and Personnel/ Compensation committees routinely meet in executive session without management.  Executive sessions are held after each regularly scheduled meeting.  Executive sessions of the Board are led by the lead independent director and executive  sessions of committees are led by the committee chair.

Board Involvement in Risk Management Process

We believe that effective risk management is of primary importance to the success of Provident.  We have a comprehensive risk management process that monitors, evaluates and manages the risks we assume in conducting our activities.  Our Board’s oversight of the risk management process is conducted through:

•	the responsibilities of the Board’s standing committees;

•	Board-approved policies and procedures that limit the risk exposure of certain business activities;

•	periodic reports from management to ensure compliance with and evaluate the effectiveness of risk limits and controls;

•	employees who oversee day-to-day risk management duties, including the internal audit personnel who report directly to the Audit Committee, and Compliance Officer;

•	selecting, evaluating, and retaining competent senior management; and

•	approval of long and short-term business objectives and goals contained in the Board approved business plan.

Directors keep themselves informed of the activities and condition of Provident and of the risk environment in which it operates by regularly attending Board and assigned Committee meetings, and by review of meeting materials, auditor’s findings and recommendations, and regulatory communications.  Directors stay abreast of general industry trends and statutory and regulatory developments by periodic briefings by senior management, counsel, auditors or other consultants, and by more formal director education.

Corporate Governance

We are committed to establishing and maintaining high standards of corporate governance.  The Board of Directors is cognizant of its responsibility to comply with the provisions contained in the Sarbanes-Oxley Act of 2002, the rules and regulations of the SEC adopted thereunder, and the rules of Nasdaq with respect to corporate governance.  The Board and its committees will continue to evaluate and improve our corporate governance principles and policies as necessary and as required.

Governance Highlights.  Highlights of Provident’s corporate governance include the following:

•	Lead independent director and executive sessions of the Board and committees;

•	Shareholder engagement;

•	Stock ownership policy and retention guidelines

•	Restriction on hedging and pledging; and

•	Clawback of incentive payments.

Director Independence.  Our common stock is listed on the Nasdaq Global Select Market.  In accordance with Nasdaq requirements, at least a majority of our directors must be independent directors.  The Board has determined that seven of our eight directors are independent, as defined by Nasdaq.  Directors Barr, Bennett, Carpenter, Guthrie, Michalak, Taylor and Thomas are all independent.  Only Craig Blunden, who is our Chairman and Chief Executive Officer, is not independent.

Code of Ethics.  On June 30, 1995, the Board of Directors initially adopted and approved a Code of Ethics.  Subsequently, the Code of Ethics has been reviewed and approved by the Board of Directors each year, with the Board most recently having reviewed and approved the Code of Ethics on June 23, 2022.  The Code is applicable to our employees, as well as the Board of Directors, Chief Executive Officer, Chief Financial Officer, Controller and senior management, and requires individuals to maintain the highest standards of professional conduct.  A copy of the Code of Ethics is available on our website at www.myprovident.com.

Shareholder Communication with the Board of Directors.  The Board of Directors maintains a process for shareholders to communicate with the Board.  Shareholders wishing to communicate with the Board of Directors may do so by mailing a letter marked “Confidential” to the Board of Directors, Provident Financial Holdings, Inc., 3756 Central Avenue, Riverside, California 92506.  Any communication must state the number of shares beneficially owned by the shareholder initiating the communication.

Annual Meeting Attendance by Directors.  We do not have a policy regarding Board member attendance at the annual meetings of shareholders.  All members of the Board of Directors attended the 2021 annual meeting of shareholders.

Certain Relationships and Related Transactions.  During the year ended June 30, 2022, neither Provident nor Provident Savings 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.

Shareholder Engagement.  Management and the Board of Directors believe that effective corporate governance should include communication with shareholders and responsiveness to shareholder concerns.  In June 2022, we began our third shareholder engagement program, sending a corporate governance questionnaire to our largest

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shareholders representing approximately 45% of Provident's outstanding shares at the time.  We did not receive any responses from the shareholders contacted.  We asked the following questions:

•	Is there any information in our public filings we do not provide that would be helpful for your assessment of our company?

•	Do you have any concerns with Provident's alignment of company performance with executive pay?

•	Do you have any concerns with the calculation of severance payments for executive officers in connection with a change in control?

•	If there are concerns in response to Bullet Points 2 or 3, are there specific recommendations, strategies, or practices you would like to see considered?

•	Do our corporate governance practices meet your expectations?

•	Is our Board structure appropriate?

•	We believe we have implemented solid internal control and audit functions within the company.  Do you have any concerns with our audit practices?

•	Do you have any other suggestions as it pertains to corporate governance or other practices that would be helpful to management or the Board?  Your comments, suggestions and feedback will be shared with the Board of Directors.

From time to time, management may meet with shareholders at investor conferences and field shareholder telephone calls and emails.  Occasionally, corporate governance matters are discussed.  During the past year, we had one shareholder inquire about the average age and tenure of directors requesting our thoughts.  We pointed out that we have a mandatory retirement age of 75 for directors, ensuring new leadership.  We also described our belief that continuity of leadership is important to implement long-term strategies and that long-term institutional knowledge, including during poor economic conditions such as recessions, provides experience when dealing with challenging banking conditions and adverse economic cycles.  At another time, we were asked about our thoughts on stock repurchase activity and we responded that we believe cash dividends to shareholders and stock repurchase programs are essential capital management tools and we support the prudent use of each as a component of our capital management strategy.  We have also been asked about our views regarding mergers and acquisitions and have responded that the members of the Board of Directors take their fiduciary duties seriously.  The Board has established a long-term planning committee to consider such matters and at least annually host presentations from investment banking professionals describing the current and future operating environment which includes segments on mergers and acquisitions, fundamental drivers of creating shareholder value, the California banking landscape, and an assessment of the Provident franchise, among other topics.  We have not been asked about executive compensation during any of these interactions and when we have asked for comments, shareholders have been generally supportive of executive compensation as disclosed in the proxy statement.  One shareholder expressed a concern that our financial results may not support the payment of incentive compensation but was satisfied upon learning that annual incentive compensation has not been paid during the past three years due to established thresholds not being met.

Hedging and Pledging Policy.  Provident prohibits its directors and senior officers from purchasing financial instruments, or otherwise engaging in transactions, that hedge or offset, or are designed to hedge or offset, any decrease in the market value of Provident’s equity securities.  Provident also prohibits its directors and senior financial officers from holding Provident securities in a margin account or pledging Provident securities as collateral for a loan.

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Stock Ownership Policy and Retention Guidelines

In 2021, we adopted stock ownership guidelines for our directors and senior officers to encourage them to build their ownership position in our common stock over time.  The guidelines are framed in terms of stock value as a percentage of the base cash retainer or base salary.

For incumbent directors and senior officers, the closing price of Provident’s stock on June 30, 2021 and the person’s ownership position on that date will be used for the purposes of determining compliance with the stock ownership guidelines and to begin the five-year timeline to achieve compliance.  As of June 30, 2022, all directors and senior officers were in compliance with the stock ownership guidelines.  For new directors and senior officers, the date appointed to the Board of Directors, the employment date, or the promotion date will be used to establish the stock ownership threshold and begin the five-year timeline to achieve compliance with the stock ownership guidelines.

Under the stock ownership guidelines, once a director or senior officer attains his or her individual ownership level, he or she will remain in compliance with these guidelines despite future changes in the stock price, base cash retainer, or base salary, as long as his or her holdings do not decline below the recommended number of shares at the time the stock ownership guidelines were met.  Shares counted toward the guidelines include those held by the executive directly or through a broker, shares held in the Employee Stock Ownership Plan, in-the-money unexercised exercisable stock options, and unvested restricted stock.

We have adopted stock retention guidelines for our directors and senior officers.  Each director or executive is required to retain 50% of the net shares (after payment of the applicable exercise price (if any), fees, and taxes) acquired upon the exercise of stock options or vesting of restricted stock.  The director or executive is required to hold such shares until the date that he or she satisfies our stock ownership guidelines; shares may not be sold if they would cause the director or executive officer to not meet the stock retention guidelines.  Exceptions may apply for donations of stock to charities, educational institutions or family foundations and for sales or divisions of property in the case of divorce, disability or death.  Waivers may be granted in exceptional circumstances.

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DIRECTORS’ COMPENSATION

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The following table shows the compensation paid to our directors for the fiscal year ended June 30, 2022, with the exception of Craig G. Blunden, who is our Chairman and Chief Executive Officer, and whose compensation is included in the section entitled “Executive Compensation.”  Directors did not receive non-equity incentive compensation or nonqualified deferred compensation earnings, nor do they have pensions; therefore, these columns have been omitted from the table below.

Non-employee directors of Provident currently receive a monthly retainer of $3,000, a fee of $400 for each committee meeting attended and a fee of $1,000 for each special board meeting attended.  The committee chairman receives a fee of $500 per committee meeting attended.  In addition, directors are covered under the Bank’s policies for medical, dental and vision care.  Dependent coverage is available at the directors’ own expense.  Following retirement from the Board of Directors, Director Taylor will continue to receive this coverage as he was grandfathered into prior benefit practices.  Remaining directors are ineligible for coverage subsequent to retirement.  No separate fees are paid for service on Provident Savings Bank’s Board of Directors.  Employee directors receive no separate compensation for their services.

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EXECUTIVE COMPENSATION

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Compensation Discussion and Analysis

Personnel/Compensation Committee.  The Personnel/Compensation Committee of the Provident and Provident Savings Bank Boards of Directors is responsible for establishing and implementing all compensation policies of Provident, Provident Savings Bank and its subsidiaries.  The Committee is also responsible for evaluating the performance of the Chief Executive Officer and approving an appropriate compensation level.  The Chief Executive Officer evaluates the performance of all senior officers and recommends to the Committee individual compensation levels for approval by the Committee.

Objectives and Overview of the Compensation Program.  The Personnel/Compensation Committee believes that a compensation program for executive officers should take into account management skills, long-term performance results and shareholder returns.  The principles underlying our compensation policies are:

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•	to attract and retain key executives who are highly qualified and are vital to the long-term success of Provident and its subsidiaries;

•	to provide levels of compensation competitive with those offered throughout the banking industry;

•	to align the interests of executives with shareholders by having a significant portion of total compensation based on meeting defined performance measures;

•	to motivate executives to enhance long-term shareholder value by helping them build their own ownership in Provident; and

•	to integrate the compensation program with the Bank’s long-term strategic planning and management process.

The Committee considers a variety of subjective and objective factors in determining the compensation package for individual executives including: (1) the performance of Provident and Provident Savings Bank on a consolidated basis with emphasis on annual performance factors and long-term objectives; (2) the responsibilities assigned to each executive; and (3) the performance of each executive of assigned responsibilities as measured by the progress of Provident and Provident Savings Bank during the year.

Compensation Consultant.  The Personnel/Compensation Committee has the authority to retain compensation advisers.  Although the Committee has not retained a compensation consultant in recent years, it engaged a firm to assist it with matters related to the adoption of the 2022 Equity Incentive Plan.  The Committee asked the firm to review the draft plan and description of the plan included in this Proxy Statement, and provide relevant market data and analysis to help evaluate the draft plan within the context of industry practices.  The firm was retained by, and reported directly to, the Personnel/Compensation Committee, and provides no other services to Provident.  Prior to engaging the firm, the Committee assessed its independence as required by Nasdaq rules and concluded that the firm is independent.  The Committee reviewed and considered information provided to it by the firm and based on its review and such factors as it deemed relevant, the Committee concluded that the information it received is objective and did not raise any conflicts of interest.

Compensation Program Elements.  The Personnel/Compensation Committee focuses primarily on the following three components in forming the total compensation package for our executive officers:

•	base salary;

•	annual incentive compensation; and

•	long-term equity-based compensation.

The current compensation program involves a combination of salary, at-risk incentives to reward short-term performance, and stock option and restricted stock awards to reward long-term performance.  The Personnel/Compensation Committee monitors the allocation of compensation between long-term and currently paid items on an ongoing basis, with the goal of ensuring that the allocation is competitive in the banking industry.

Base Salary.  Base salary is intended to reward the executive’s ongoing performance and is based on the executive’s level of responsibility, individual ability, experience, and past and potential performance.  The salary levels of our executive officers are designed to be competitive with those of executives at similarly-sized banking institutions in our geographic area which have similar operations and performance.  Individual annual performance is reviewed by the Personnel/Compensation Committee or the Chief Executive Officer, as appropriate, to determine annual salary adjustments.  An executive may receive a material increase in salary upon taking on materially larger duties and responsibilities.  Compensation information is obtained by reviewing proxy statements and various compensation surveys including the S&P Global Market Intelligence Compensation data, the American Bankers Association Compensation Survey Report, the Western Bankers Association Survey and the Employers Group Survey, among others.  From these sources, the Personnel/Compensation Committee and the Chief Executive Officer create a compensation framework and set executive officer compensation based on the range of base salaries and bonuses paid, and equity awards granted, by peer companies.

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Annual Incentive Compensation.  Incentive compensation is intended to reward short-term performance goals, keeping compensation aligned with goals that typically improve shareholder returns.  The annual incentive plan is based on Provident’s annual performance compared to the business plan and individual performance requirements.  Each year, management prepares and the Board of Directors approves a one-year and three-year business plan, which establish strategic goals and objectives for Provident and each division of Provident.  Each executive is responsible for his or her specific goals and the objectives outlined in the business plan, which is monitored through the use of individual action plans.  Executives are graded each year on their successful completion of the action plans.

The annual incentive plan is designed to provide for a baseline bonus up to 50% of salary for the Chief Executive Officer, up to 50% of salary for the Chief Financial Officer, up to 25% of salary for senior officers, up to 12% of salary for certain managers (other than department managers) and up to 8% of salary for certain department managers.  Actual bonuses may exceed the baseline if Provident performs better than the business plan and/or the individual employee performs better than the individual performance requirements.  The business plan outlines a number of performance goals such as net income, return on assets, return on equity, efficiency ratio and diluted earnings per share, among others.  Individual performance requirements are project related and consistent with the duties and responsibilities of the particular employee.  The Personnel/Compensation Committee may use its discretion to modify a particular award or an individual’s performance requirements, although it has not typically done so.

For the year ended June 30, 2022, the named executive officers had the following performance goals: