Introduction to Becoming an MMC EIC

Financial Condition

Financial Condition Scope of Review The Examination Team assessed Provident’s financial condition based upon the adequacy of earnings, capital, liquidity, asset quality, and level of sensitivity to market risk. Additional factors that are considered include trends, stability of and threats to future performance, adequacy of projections, and quality of risk management. The Examination Team used the financial condition examination procedures as outlined in the MMC Examination Manual which includes:  Earnings  Capital  Liquidity  Asset Quality  Sensitivity to Market Risk The financial condition review covered the consolidated financial statements for the years ending December 31, 2020, and December 31, 2019. Moss Adams, LLP provided an unqualified opinion on the financial statements. In addition, the review included the Provident is assigned a rating of 2 for its financial condition. Provident increased borrowing capacity to meet liquidity needs and maintained satisfactory capacity each year. Capital levels are strong. Asset quality is satisfactory but trended lower in 2020 due to rising delinquencies. Weak earnings, driven by losses on mortgage servicing rights (MSRs), were countered by strong origination revenues in 2020. Sensitivity to market risk is moderate; Provident does not hedge its mortgage servicing rights (MSRs), which is partially mitigated by its origination arm. Financial Ratios Earnings Period Ended 03/31/2021* Period Ended 12/31/2020 Period Ended 12/31/2019 Return on Assets 0.3% 0.7% -1.4% Return on Equity 1.9% 3.5% -12.9% *Annualized unaudited financial statements as of March 31, 2021. Financial Condition Component Rating

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