PROV - Earnings call transcript Q2 2018 | Provident Financial Holdings, Inc.

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Operator

Ladies and gentlemen, thank you very much for standing by. And welcome to the Second Quarter Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will be given to you at that time. [Operator Instructions] Also as a reminder, this conference is being recorded. turn over to Mr. our like now the to conference host, I'd Blunden. Craig Please go ahead.

Craig Blunden

good is the everyone. and you Officer. President, morning, Thank and Chief and This is, Ternes, Provident Financial Holdings; Chief Operating me CEO Financial Craig and with on call Donavon our of Chairman Blunden,

Before to we a item I administrative have begin, brief address.

forecast today forward-looking objectives include services, statements management's conditions. plans, financial statements. or products discusses for of descriptions the company's operations, outlook for outlook business performance statements the presentation economic other Those Our and and include future goals measures business will or about general of or and company's

Report We also that subsequent could the earnings results actual cause yesterday for Form differ the materially are following statements and to from subject XXXX, that filed period XX, XX-Qs may available to today. risk differ the Annual XX-K. from a factors those results the the question-and-answer may Form discussed risks is and make Information from and statements Form forward-looking that the number distributed on actual presentation. was ended uncertainties statement forward-looking during management's June These on are XX-K to of release any forward-looking and the year for

business. this you only thank statements review for by no opportunity banking had I'd and the has to that release, in begin an participating you obligation date quarter our Forward-looking company earnings effective as with, results they our highlighting our morning each results. in are which I assumes of To information. to our like to the community describes the of second are hope begin made update call. this

the loan In increased margin been last net most interest division originated mortgage investment growth portfolio $XX to strong. quarter. recent core from and loans remains continue And million loans credit course sequential banking year, in quarter deposits the purchased decreased million from of December sequential in and from prior the to for expanded, the million Over grow single-family to has quarter, quarter. for XXXX $XX prior in originated the quality million consistent, $XX our our the the $XX

loan is suggests developing since portfolio by is newly is heavily a trend this this the that the byline the sequential down holidays. clearly a December basis, particularly quarter Although quarter on influenced

During the quarter, is $XX.X which of loans $XX.X and up million the offs, of rate million investment. we in tempering from the also XXXX September principal loan held experienced the and for pay still growth quarter payments

estimate to pay loan we quarter amortization X offs quarter by loan in approximately points. Additionally, net reduced interest December the cost preferred and increase margin associated net basis in with comparison acceleration the September our

in of of XXXX, rate. XX at X% this We're credit and family X% will very our pleased disappointed the and December stage approximately burn which held cycle XXXX, from are grew with XX, component that for to for But unchanged result a quality delinquencies approximately very XXXX, loan with of entire flat single million note credit mortgage the perspective. rate held you'll standards at We're essentially rise September for believe a incurrence reasonable in as opportunities preferred For the goes early against loans $X.X growth. growth XX, loans, credit purchase the somewhat outlook portfolio. by months a rate of by from underwriting investment low December fixed rolling investment future originations an NewStar our a rates and result for pace loans adjust ended XX, and the growth interest accelerate opportunities increased culture,

net $XX,XXX small December net September $XXX,XXX XXXX, off quarter year. the decline over to are We for 'XX at XX, a at compared in the a and which just the quarter. of XXXX, ended recovery $XX.X the very of levels low experienced December of criticized XXXX remain million, total from million the fact, from $XX.X $XXX,XXX modest In XX% is and of charge recoveries classified XX, a during assets the down quarter June course

negative As $XX,XXX a provision result in we December recorded XXXX quarter.

these results. with pleased are credit We quality

X, net in of X points the X of declined in ended XXXX while period core Should Our as for able our months note period X by and interest-earning to of line to same point of XXXX, hold December of the points year? the average deposit to by increasing cost a we point six assets interest that deposits. XX, the interest-bearing total a margin year decreasing expanded liabilities. increase basis the of the result X compared year cost December same basis deposits deposits, yield and cost the decrease a last basis last been the balance Over on months course of last compared core balance ended six the the time in we've basis

mortgage XX, mortgage adjusting still to poor from employed our employed respond down September environment. currently XXXX. we're banking, generally to banking mortgage We FTE XXX FTE and on XXX business model notice banking the You'll

declined we staff delinked origination by fulfillment and reduction total XX% from The XX period our by calendar six are the the professionals. for XX% is our by declined reduced adjustments which staff quarter, pronounced year more our from platform. division. a staff During our of performance allow taking return XX% will originators mortgage our origination professionals, by for improve while operations. the less competitors to mortgage to profitable unclear We banking sufficient capacity like is environment when in It date to responding more to favorable of staff are to banking industry out capacity the that

December December the XXXX quarter XX, but in Based where quarter during of end sequential climbed holidays. the but the last in to the XXXX ended the quarter, quarter throughout decreased XXXX year. remains improved of prior a industry. new volumes volumes the applications has declined new the information of to pricing The XXXX from current for the volumes would applications December similar the the consistent range, end in we margin the March the tier higher prior than to March the XXXX application weakness pressure towards of years, concern was to loan on more and quarter expect there quarter be and New

Our maintain aggressively market participants an to more share. are pricing effort in

We have the to business and our continue opportunities we past to mortgage adjust as in environment. in changes market commensurate operating will count model FTE the banking in

decline During in reduced years, current a market, refinance capacity the which activity, we've in but the purchase reflects closely past XX the aligned to significant more activity. uptick opportunities in money

environment to third-party converting and origination and we allow more of us system funding employees. new service quickly application We've fully to function when converting retail move brands process, mortgage streamline are be and will the our system loan Additionally, all process few the more banking for The and brands new system paperless our we to a the underwriting wholesale will efficient months. operations a in over our to for next of converted much will be new which customers, the providers implemented.

As we by system of will saw, absorbing the operating be decommission we XX this longer legacy June cost to our no system. expect and

with We Our short the from with term sheet unchanged strategy that portfolio quarter. for loan action. balance proved balance sheet course believe of best growth management the leveraging we're is last

execute X above cushion for foreseeable risk is the total a and tier leverage base we're margin, exceed of future, that believe demonstrating plan regulatory and and our to goals. We management currently significant we For of those essential be capitals significant able by the we'll XX% a to the each maintaining we ratios that X% capital we have confident business on capital so. do

in believe of to common that executing the XXX,XXX stock approximately stock, current and the our December XXXX continue of a shares in capital Additionally, our quarter, repurchases environment. is we use repurchased on wise

of we're the and of all substantial capital as enacted improving future dividends repurchases. Over lower generally tax posted Investor of pleased our rates review stock with to to company, the past returns our newly course our tax the We capital everyone in we've legislation cash to Furthermore, year, form return Presentation income shareholders, on tax XX the website. our relates employment stock ability executed the to supporting and thereby December to repurchases. and obligations encourage net dividends it cash to of corporate shareholders

You you future our strong of that growth insight supporting financial banking, community included and which capital mortgage metrics, management, slides will additional company. we've quality, we foundation, financial on give asset will the find regarding banking, believe

results. entertain may you regarding questions any now have financial you. will Thank our We

Operator

O'Brien Thank Instructions] [Operator you. Sandler O'Neill from Tim Partners. the - we & Please And go ahead. of line do a question

Tim O'Brien

guys. morning, Good

Craig Blunden

Good morning.

Tim O'Brien

differed was you cost to Hey or could points margin it can Craig, you of explain - said down you the basis - sequentially X detail was - lower again? that give amortization again by due

Donavon Ternes

its Tim, Donavon. Yeah.

in basis it can loans off over of set paid differed an interest control or off. volumes upon like were costs pays the depending did or pay net the to interest that net so were this have loan December pays differed above with a of don't them So and set margin. off in given loans that the X in anytime points the when have more associated are loan net them our off had $XXX,XXX accelerated amortization loans December September And off differed the quarter, impact particular margin. a and quarter cost growth quarter in which net annualize sub to which net you to have comparison loan net the the associated with contrast deferred We respect in it cost the to number $XXX,XXX much in decline obviously. But pay and income with our that's $XXX,XXX, approximately quarter quarter accelerated how

Tim O'Brien

the some so you head on that down it's sequentially Can give extreme color more about what little talked loan color And on elevated unusual bit million. little balances you of pay and I bit seems bit XX.X or about Can detail a gave happened - give then at you or you offs being back, were exactly volatile guess. - investment a what getting for it a there? precipitated a

Craig Blunden

growth with In we months amounts with respect volume December offs of the coupled our in of number $XX.X million investments. origination million. purchased of of year. the portfolio, our amount six impacted is of in larger last the the the in quarter to the the to purchased saw we six purchased course, the Yeah, year the contrast first held In $XX a months we were to this contrast year investments last that in of this in months the last lot for six loans we that December the it of fiscal fiscal quarter of for difference had. pay year, year, million of first purchases in decline first with in $X.X really we That loans

Tim O'Brien

left Was characterize? in - it is the or you purchases was pricing can in decline was structure there driven are on it it know. driven shelf it that at Any or don't is for those or or What's it was reason Maybe driven any to is I - look there the really, there. periods, generalize credit about? which or all anything or it combination fewer were out maybe a offerings

Craig Blunden

factors. think of I a So combination a of number it's

more to activity underwrite. we've or get not We've been us even to as we've top price industry purchased I posting to some say, not of I taking price the a capacity loan and price well investment loans, so probably And that so relates But the of generally gone temporary. you up, think is a better loan we've packages transparency growth into never found tighter per think get then rates raising of with filed seen result be for of those that for who I all that's that's than the think able - obtained I their a gotten of result loans. to on matter loans that as in others. on a underwriting the our as because think rates of held that you able files not respect industry interest of been helped package recently, the COE purchase sector. and on seen credit better might as it marks We've out have of historically those the those kind we've the to some portfolios bit lower most

packages those I the together and think see portfolio. with necessarily with be when is the slightly associated that it to individual not the sometimes those loans quality and of would packages, credit it's fact you respect

Tim O'Brien

or loan for is And a of the year the or - here right far been market then now, is the - you of the improvement the on end what At of you start static calendar end at this purchase flow of experienced the there what's the the there any outlook the or there first pretty are in year? any much year, offerings seeing it month fourth better is quarter? with

Craig Blunden

packages of price calendar the packages. were fourth we similar We or the million a in stumbling already block We've at It's they end not looked able did been experienced get in quarter. been together in XX with for respect what We've to has January to couple year where to the probably and priced. that January.

Tim O'Brien

just a more, is part more production general the on, going form, slower dear, reflection to or these there's And situation that's they're velocity and the in is so up fair so in assessment? market, want getting again priced are a who loans less just that sellers which

Craig Blunden

are we a that we get in The to think [indiscernible] five newly production mortgages from pretty years years, I a to we alone rate, year that price products, both Yeah, originating each those. now not not it that's or fair and concern non-sectional may give a of it's if assessment. the are now. from we are with better be expand because while real the respect Again is these fixed to about and hand view five because the willing year originated let two we of becomes probably up product interest going a yield

Tim O'Brien

varies, year? extension, And know at And operating? how that guys how to out the typical gets get that going been the Can shifting of quarterly probably is to characterize are when but through characterize by much of some down? shut have come cost, range can cost you you really going - legacy that? all? I it Do much XX, cost underwriting to a you want I that offline June overhead - just the quickly, to, switch what's quarter-to-quarter by what's then you system gears dollar the that

Craig Blunden

are we to we prepared because Right, about specific class so not still implementing. talk the are

upon are maintenance year, to system. associated associated have January system. month a X system Beginning we the of right to deploying other too maintained systems, X two and new paying the XX,XXX however, to field. between January as on systems right all our that that a Here's do our what systems its still going been XX, systems be the words, both originating by legacy essentially the of respect I term long applications one moving long operating that what to for price costs system long approximately this they with with books on or about system to paying so. because the parts would system is per say on cost to we we come now depending by And carrying But, in keep with will January we XX,XXX too with now. we'll origination have are new we're regulatory are down June and between have we those do declined respect maintenance month new with respect In to continue to our are we in

bit one relatively out of that that's So, cost comes soon.

associated we the the be we're simply actual won't be it. the when the But, cost with are we it were different with really about system. different to what If are the on conversion for system, as it both perspective, to costs respect not speak we system old paying of conversion going about I by from As XX from substantially relates because X, total will July you be have June not old it a so. will free talk or think to those to prepared new

Tim O'Brien

element same? verses going the system cumbersome a new of than it be it's the other probably bit to the probably it's is, - So, the to probably But, to more benefit old cost a there. operate, there's less the is efficient compliance that, little so system and

Craig Blunden

that's the system. stage. the funding of there's lot new now papers, essentially a Approximately cost applications which but legacy driven still hard application our capabilities deploying system paper Right from on is from before being the perspective,

in it to work processing So, efficiencies another That capacity cumbersome files system, there deploy will some it's cumbersome. more less deployed to much suggests site. a with office, will we now be easily also to underwriting fund the out. that. particular Once be be those Right the some related benefits as for to efficiencies to process having respect respect or loan a with would maybe very and office new it

there be much with the system our old and from it's the a by are provider new So, it to of Which than own legacy the solution respect with code. system, an number a in-house could what system, benefits pretty a are we perspective better new both was. also way, regulatory system system. had We compliance core but that

and do the and will a new system. in-house no it's system system since on the able programming for we an was longer had So changes regulatory staff that that system to a board be we on than hosted that, like that required rather were

Tim O'Brien

then what were period was unit that staff quickly, the what comparing? mortgage - were Craig, And was you you said down periods the XX%,

Craig Blunden

so December right, calendar That's XXXX. XX, January Xthrough

Tim O'Brien

XXXX verses XXXX?

Craig Blunden

Yes.

Tim O'Brien

side. question, was the behind and one XX. the to to color downs normally in give versus follow-up was or it what million, just just back pricing Okay, attractive rates then that on payoffs, last these roll that loan driver bunch moved can atypical be the a What what more would was it? principle there guys Was the away elevated to a that may elevation XX pay see? the expect X we if got have some that and about you in tenure there points, of probably what was that was sold that you, transactions and was away were there, refined what

Donavon Ternes

ideas way I there, you call this. of on really pre-payments on some them can't We no to may of guess have that, know be really Tim. lots It's don't true.

Tim O'Brien

questions. answering Okay, thanks for my

Donavon Ternes

Yes, thank you.

Operator

Instructions] continue. no in further are there questions And please [Operator queue,

Craig Blunden

call everyone you. speaking appreciate quarter. joining with us Thank next look we are Well no quarterly questions, on conference to you if forward there and further our

Operator

available run will will and today midnight. for and at starting am Thank at This XX until gentlemen. you conference replay ladies February X be call

You access and today. for the access and of That using replay much code the dialing XXXXXX. service does XXXXXX. for you access X-XXX-XXX-XXXX the teleconference. of and code Those participation X-XXX-XXX-XXXX the executive again, your Thank may by for conference entering AT&T entering numbers your conclude very

disconnect. now may You

Provident Financial (PROV) 30 Jan 182018 Q2 Earnings call transcript