PROV - Earnings call transcript Q3 2018 | Provident Financial Holdings, Inc.

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Operator

Ladies and gentlemen, thank you very much for standing by. And welcome to the Third 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] As a reminder, this conference is being recorded. to conference like host, to now Mr. would turn over the your I Blunden. Craig Please go ahead.

Craig Blunden

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

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

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

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

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

our of the margin last the interest net course Over year, expanded.

deposits to the an division quarter. the the banking held $XX has credit $XX portfolio growth investment, in to $XX for sequential loans single-family And loans strong. quarter, originated In increase Our for quarter originated been from banking and million in mortgage Core of the staff March community $XX loan the of recent most XXXX prior increased million grow, from consistent. quality million million remains prior sequential quarter. the in continue

we the $XX.X experienced quarter, payments is XXXX loans principal loan tempering but which in of the million down growth still During $XX.X for million also December from and held rate the quarter, of investment. payoffs, the

acceleration basis we in Additionally, in lower estimate increased payoffs margin with comparison of the quarter. preferred quarters X March interest in the of associated points quarter decrease loan this amortization the costs our net of the net approximately X the average previous by to the

months increased loans unwilling disappointed And held March component XX XXXX, loans for We're encouraged culture. for a our are ended adjustable the grew for with the held we're this rate. our single-family investment go a loosen XX, For X%. at preferred by outlook investment, somewhat X% But but of approximately to which credit growth against originations standards, rate underwriting loans, credit rate, by approximately opportunities of with are perspective. opportunities delinquencies at XXXX significantly and very than an December and early-stage lower growth portfolio. $XXX,XXX result the from rates it the mortgage that notice cycle in and accelerate will credit you'll rise purchase XX, and low a the very We're quality, entire March credit the XXXX, balance loan result future in our of as to believe pleased

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

classified and early-stage these credit low very of with XXXX a criticized modest net pleased and $XXX,XXX We're assets negative quality the of result March in we a quarter. provision the level the the results. As recorded charge-offs, delinquencies, low

the margin a XX, the of point Our and in months basis last expanded points to March interest year yield deposit compared period It ended to X X decrease average XXXX, noted assets XX, declined basis point by March net by should basis costs same result the total XX months a that points the interest-bearing period X for of year. as the same interest-bearing a increase X be two compared XXXX, the in last of cost basis liabilities. our in ended

cost increasing to the decreasing the Over time hold balance able balance of while course the core we've been line deposits of of and year, deposits. the the of on core last the deposits

business You on December XX, still XXXX. banking model poor respond adjusting FTE employ banking to XXX are in will down XXX we mortgage environment. generally a note from banking, employed We mortgage to FTE currently a our mortgage that

capacity X December Since profitable During on pronounced first our the staff to XX% banking declined in adjustments to X the by taking of be from We, also when a and the capacity out our professionals. less is unclear origination competitors, industry our like quarter, a to XX% changes by reduction we while It our more by then, reduced operations. banking staff our XX, sufficient more are our when has removed staff has fulfillment are our allow declined origination for in XX%, will professionals total capacity opportunities. favorable today return started market by to we mortgage reducing staff The fulfillment with of division. platform. origination by responding commensurate environment XXXX, declined mortgage

of the XXXX March quarter current would to we current on prior June New in the a result pricing the information, application and more higher decreased spring from June season, Market in but loan not levels sale based quarter the volumes from throughout to share. for of to of range, participants quarter XXXX maintain pressure March climbed as the ended an improve XXXX, volumes buying are same a end improved remains sequential aggressively expect the the to XXXX sequential The But the quarter the has the from summer industry. XX, quarter. quarter. margin effort in prior market pricing and the concern although

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

XX During reduced we months, to significant in more money reflect the capacity activity. an purchase activity in refinance to the past which have in decline market, closely opportunities with a align uptick current

reduced quarter have We same comparison of quarter expenses year, to by cost savings. banking this fixed a approximately operating XX% cost last in and variable the combination mortgage

application mortgage more in of quickly will new The funding a to process operation to paperless the origination will efficient third-party system fully implemented. process system banking providers us when to a for to in functions for we're and move streamline loan and service that allow new converting and underwriting customers, be Additionally, much employees. environment the more

and proficiency tested have our upgrades certain to production. is the We we system placed and day. new our all branches gaining conversion staff branches retail until have have wholesale But delayed the each system in been of converted of our

we a eliminated. have expect by As already decommission of November duplicative now many result, to been XX, the our solution although costs legacy

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

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

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

website. in capital form stock returns of to we've repurchases. cash Over XX dividends encourage investor executed review shareholders presentation our on the past course the posted to the of We year, March everyone substantial of our and

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

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

Operator

first Your from [Operator Sandler comes line from the O'Brien of Instructions] question Tim O'Neill.

Timothy O'Brien

question. First

were like So correct? it basis, relatively quarter Is looks a funding costs stable. on that sequential

Craig Blunden

Yes, that's correct.

Timothy O'Brien

yields some little color expansion that? loan had you you Can give pretty on nice a then in your And sequentially.

Donavon Ternes

or largest our loans. single the color The of portfolio in year we our a is short-term adjusts re-pricing that part With with And significantly, rates, which upward. with a less. large adjustable that index moving respect is rate up were loans up, moving our have LIBOR particularly to that

prepayments. deferred were interest loan look the current are period course, and rates they is like where be origination quarter, loan Depending, above to Additionally, may the to also so prepayments finding given attached those what what on additive of new last costs we any yields. in that are

Timothy O'Brien

I quarter? last prepayment Or recoveries any can to know, quarter relative contractual? there was And not compare income don't this you anything or Or interest the this atypical that's quarter?

Donavon Ternes

loan of acceleration instance, in $XXX,XXX accelerated is deferred for to X a are for a costs quarters. of And bit The loan approximately the that attached we quarter, the payoffs the contrasts the December deferred the comparison loan There costs with $XXX,XXX deferred result the which XX were where prior to, little average the March or in for as larger down about Yes. had quarter. that quarter, to quarter. tune QX prepayments below costs of -- were those

X quarter as X yield estimate was net we higher more result costs, of by a costs. in interest last lower margin on So down about basis that deferred But approximately a or the quarter, points this loans, yields deferred average loan result points. of than as actually basis swing

Timothy O'Brien

average? average. What you X-quarter was mentioned that trailing And the

Donavon Ternes

in give out. average able be We when the out balance out, a so be comes footnote, There's don't to see the next going it in sheets week it it's although you'd the so. to or Q

with of time can XX from of March a just For But bumpy as kind the that the loan or And of to approximately such months described, course ending ending I'd so 'XX, next. over longer months amortization. it little accelerated to all it $XXX,XXX for period XX, out. X months loan the quarter compares of X cost X the to bit a respect be had X March we smooths that fee the $XXX,XXX

Timothy O'Brien

pressure on forward with -- you quarter. can work color Do I -- seeing that. you give of deposit on us other a real situation signs you seeing banks That's here was this are positive to qualitatively? deposit qualitative then that? are that some looking -- costs Can And are like you cost

Craig Blunden

a money aggressive terms with market. it. for Sure, been than local same there's the no newspaper. are significantly number ads in doubt our the They marketplace paying that in are even of There's or we have in deposits, large chasing institutions about higher rates some

we've part, although put or isn't hold rates. them, most there continue pressure exactly But quite done yes, customers very been very competitors' so but And our in to it's raising while, two with So aggressive closings able this going have is here, our on other pressure. because rates for of to for to new. additional One few eventually. a the of

Donavon Ternes

The to the in noncore way look broker about, other thing you had we capacity at what is little our think funding sources, respect to very of deposits. with if

So that's don't to our an if sensitize base. wish we use could we deposit avenue current

Francisco of funding anyway, We of with a that also so We deposit great Federal sensitize rate wholesale perspective. risk -- like base. capacity borrowing source our a from advances another for Loan purposes have interest Home San deal to those Bank won't wholesale that's of

it mentioned, some and so be can we do have will up pull we think strategically, continued Craig more. seeing there And because I pressure, deposit a bit are we as keyed levers

high time, in While more there for that or X our are are there been that paying have now paying markets. had X high been some

Timothy O'Brien

kind that... in Is through you alluded Great rates lock maybe color. Like any to? some of term Would guys you funding?

Donavon Ternes

be Yes. respect obviously absolutely that's our going function are table, standpoint risk That's we're to the using management. the the portfolios. on interest rates something And rate of to of from with what loan a but growth that's

Timothy O'Brien

saw are data were Can then favorable, I'm weren't aggressive the margins. was able like And so other How see management maybe quickly. remarkably color there? gears pressure pressure and shifting talked question, a on gain we and looked margin just that -- buck to surprisingly which last on caused strong. market more -- give to on trends pricing -- on you why points seeing you gain guys It you we mortgage, marketplace some how in strong, about sale sale real little -- it if over your correct,

Donavon Ternes

margins fair start you volume be, Well, difficult function in fair volume. question it's and but a below is far where sale pricing result some And It's reducing suppose be, some, as we giving game make should when pricing. answer not it's where they a playing holding where probably are the disciplined a absolutely, very up to they of a our of easy. I loan they up would are. margins

And that pressure sale margins think about so calendar we to to loan continue clearly, be under are are practice, disciplined relatively although 'XX. we going about as

Operator

at questions. [Operator there are no And time, Instructions] this further

Craig Blunden

joining right. forward If everyone further I'd for no quarter. call. you to speaking our there's to look All you. conference to thank And questions, we next like Thank

Operator

available and Xrd. time Ladies after for this replay through gentlemen, will conference May be AM Pacific XX

Teleconference. access AT&T may the replay and conclude XXXXXX. you for access Executive participation for are any conference does code dialing You time and at your Teleconference for code access Thank your once X-XXX-XXX-XXXX XXXXXX. the That system X-XXX-XXX-XXXX numbers entering with Those AT&T by the again using today.

disconnect. may now You

Craig Blunden	Chairman and CEO
Donavon Ternes	President, COO and CFO
Tim O'Brien	Sandler O'Neill

Provident Financial (PROV) 27 Apr 182018 Q3 Earnings call transcript