PROV - Earnings call transcript Q3 2019 | Provident Financial Holdings, Inc.

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Operator

Ladies and gentlemen, thank you for standing by, and welcome to the Third Quarter Earnings Call. [Operator Instructions] And as a reminder, this conference is being recorded. I'd now like to turn the call over to our host, Mr. Craig Blunden. Please go ahead, sir.

Craig Blunden

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

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

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

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

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

division disciplined been but below the million increase result standards investment, the million quarter expectations loan the reducing staff XXXX of quarter, origination has the million prior from single-family last loans most loans In interest million the growth in decreased for has banking has recent our $XX significant been community originated a loan banking and underwriting from held of strong, net course prior our sequential margin the originated in quality portfolio expanded, as the and in have to core deposits $XX credit the our and an volume. quarter. sequential prepayments stable, quarter, of mortgage been $X from from $XX our purchased March Over year, the

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

associated pay-offs the comparison five Additionally, by average in margin acceleration costs in amortization the lower points basis we interest loan March this of quarter. that loan quarter the net net improved our estimate of with decrease X in quarters previous deferred of approximately the to

ended comparison XX, months by with multi-family, for in December March single-family, real commercial XXXX, investment growth XX, X% to three the increased loans For in and approximately held estate XXXX, loans. construction

for volume credit remains pleased production standards competition loan intense, will must do very but loan we quality. chase new with underwriting our if However, we to I'm our loosen so. not production

balances You $XXX,XXX at will were early-stage XXXX. XX, note just delinquency that March

and quality these at net March levels We charge-off recent classified year. of mitigated $X.X loan is $X.X quarter, a low pleased XXXX, from year-to-date are down March levels $X,XXX recorded very million, remain assets by provision small recoveries. portfolio most million course The quarter XXXX the with now March experience the XX% nonperforming a addition, In the the was which very nonperforming in credit fiscal assets during and quarter. the for in resulting just We're decline $XX,XXX in was the results. the from XX, low which growth of XXXX

our in of basis XX the a same average as XXXX quarter quarter point of last in of March sorry, should to the March compared increase margin by expanded for interest-bearing the X result XX, same year liabilities. assets increase that last noted to - ended be interest offset It quarter for the quarter total X-basis-point assets, the XXXX, deposits of interest-earning cost compared by yield net a basis increased year. ended point average Our cost the partially points by XX noninterest-earning just XX, basis

by net also the basis pay-offs, Over of value net the - cost as of course decline of of the highlighting comparison to top margin lowered The a points result net X.XX% prior months, deposit range our was hold costs. able core of strength that on of interest its remains past quarters. this we've accelerated XX quarter line our interest our at and deposits, of franchise. the loan the the approximately end been augmented in of X the margin to noteworthy is which in range loan It many amortization deferred top the

at X, the our We offices by date XXXX. single-family applications business are to well from mortgage loan target underway the We banking business April of complete saleable to close and close production June thereafter. mortgage the banking on loan exit our accepting stopped of soon started XX,

forecasted until in more million the We of costs the all are is be business the the equivalent close employed exit themselves to by revenues million business. we of the exit, we than longer XX, of Form time Also but the X-K Form complete. business of is the February estimated each no have expenses, As Xth particular, of estimated encourage employees $X with but that for X, filing have mentioned nuances decrease company more $X.X through banking review exit. associated XX-K full-time the the March XXXX, decline operating results exiting the executing resulting onetime everyone in XXX implications, to mortgage In incurred to volatile million timing quickly the from approximately will estimates, XX period cannot and accurately of yesterday, the familiarize with in the February $X.X company.

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

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

dividends to continue in purchased on website. XXXX of common March XX,XXX stock and approximately Additionally, our March quarter, in form the substantial stock We returns our execute we encourage to the of shareholders presentation shares everyone cash on repurchases. posted of review and to investor XX capital

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

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

Operator

we'll Instructions] [Operator to the And Sandler Please line Tim of O'Brien go of ahead. go O'Neill.

Timothy O'Brien

you're there the Good I you finish, it know that wrap cost the any morning, Or banking? closure, all calendar of the expecting will to mortgage the in - up still anticipating, into tail quarter be quarter? third third exit from should the Are guys. year second here

Donavon Ternes

XX, we've It's fund down like bring looks respect $X.X you first And holds think comparison as that by very is of believe, we've that March into would would we're It we as to as the June the the down in out in we And $X really million June be business. over something to going million estimated the the amount out. actually that's $X.X one-time it incurred it quarter we mortgage like what we million would the quarter, June Tim, bulk costs dependent, remaining to be $X our estimated. be in We conceivable, banking that $X.X the expect operations. far the and with to the so would - that what million small, to pipeline of saw, took of pipeline year, roll new part of million but fiscal of we to in quarter. on that

Timothy O'Brien

to Great. comp Okay. coming have kind core I'll baseline a try. what of a targeted can is maybe quarterly don't able if be number be of? in us you on it this the seasonality not, or all other a fluctuations the side Do give it's of I sense the that those steer out or then expense basis or you going of might share forecast number but is there to range in contingent But towards? business. the you on kind budget And a or of Obviously, know the

Donavon Ternes

would you XX-Q. I What market will reporting XX March that we steer towards segment the is have the Form in

from - segment You Form and for respect community reporting. Bank Provident be Provident Form personnel And into the will December away. XX-Q moving Bank attributable part will what that the market Mortgage you'll comp going expense with remaining away in Mortgage, which see to look Mortgage and that salary is bank in Provident We be in for describe is could to the Bank operations. large the X-K going also at XX

So you time but can at a from baseline because call forecast sense this we those in yes, we don't won't a forecast get publications, results. a

Timothy O'Brien

enough. Fair I'd Okay. Thought try.

residual sale effectively revenue or as for sale will any there is be amount loans, expect going Or on something? gone? loans a going to from be here you generated gain source that recurring Lastly, that from the forward, small

Donavon Ternes

as on for with - be our June coverage. the And funding the pipeline essentially in would and pieces those out as those. the pipeline, the and the settling adjustments both tail to Well, well loan-origination we selling quarter, and marks obviously those expect there'll respect

yes, portfolio for which for on single-family generally risk brokered fee that standpoint, expect sheet white-label of fiscal our from that originator there balance and be we basis an satisfied a for on the could deal basis. fixed We rate will there June respect very But out gain to sale or instance, some we of thereafter a there don't some. instance quarter. we so portfolio be to in to we to do a And XXXX, loans, a possible great to from. on sell be a some, respect July get that with that the but If gain of something if management reduce multi-family would experience could were It's X really loans. with to wanting not were, some

it So there that nature but beginning of be July will insignificant could something X. be

Timothy O'Brien

and And banking? going by the more is and mortgage fees, that from loan question, servicing other item exit then the be to one restructuring line affected

Donavon Ternes

go-forward existing to others in basis a for service generally, others, loans and service with continue to do for on respect portfolio. we we our Not that will loans

think $XXX that something also Q, nature. I $XXX million, around described million it's $XXX or that's in million, of the

But So some immaterial numbers. loans. relatively servicing will associated those are with be revenue there yes, those still again,

Timothy O'Brien

All right. Thanks for the help.

Operator

next FIG Please question come go Coffey Partners. ahead. the from line will our of Tim And

Timothy Coffey

at tax you're what between versus rate, mortgage paying Thank as in for look Hey, your you. from Good - material bank is we look difference community as taxes any gentlemen. the morning, forward bank? we the there

Donavon Ternes

of division bank that a No. we Because market the essentially the mortgage report. simply bank is segment

So purposes. consolidated apply rate to the tax that for it's division we simply a comparability

So XX.XX%, the statutory the blended state is accounts on franchise rate. or tax deduction federal which rate obviously describe taxes the of we that the tax for

So on basis, a describe blended we XX.XX%.

Timothy Coffey

XX.XX%?

Donavon Ternes

XX.XX%.

Timothy Coffey

Great. completed XX have guess, bank, your cuts say Okay. you that in And remarks, prepared did far? in the of FTE the, mortgage I the Craig, been so

Craig Blunden

No.

Donavon Ternes

No. division would be Yes, on X the when full-time Form described we announcing in strategy, XXX February impacted. X-K our in we mortgage equivalent in employees described change the

but All employees, of as team eliminated the XX who transition of are have on those yesterday. been

Timothy Coffey

anything other had That you this my returning preferential one? was shareholders. the kind capital that can wanted as to has strategy? just What's I about to sure the of Okay. All in if talk correct. shift And then mistake. And you of methods make superior make right. changed to I

Donavon Ternes

has don't think changed. anything I

have I dividend. still, we a think priority cash the for obviously,

you book business higher When price or to argue, as will. result And if and tangible calculations with held in respect expectation we will, to to the like bank thing And to up the when repurchase should perhaps special we the cash a it sense mortgage that in combined exit you down the got operations. a top yes, entity activity. that a a is community come I internal sense comparison the consideration it little dividend price to as look to a standpoint. to but calculation to we then a would that think move that, of one the to more conclusion, more tangible operating pure we book with The associated would bit our tangible repurchases. was more we've theoretically, stock And know that stock if little Secondary of higher cash were from book don't business, bankers, internal I dividend if a has a are changed we makes point. community bit ever last is an our a respect our to have thresholds. have probably makes price with a have could top

Timothy Coffey

that don't yet? have You

Donavon Ternes

that, and publicly. what we working it we're be but never would we've to described that think previously Well, than understand higher we used,

Timothy Coffey

No.

Okay.

Okay. on pricing And in it still that from then what investment? Is - of can portfolio you terms kind of marketplace people the the building seeing overly further have for of curve? loans stepped Is out competitive? risk you're up comment on held

Craig Blunden

hasn't price it, much, definitely are it's It's risk so nonbank changed. characteristics the Yes, institutions It's what other part extremely not that even - competitive. of just I side. also No, on lenders that's underwriting of and doing today still

certainly it's in competition diminished hasn't yet. So

Donavon Ternes

out when difficult we out bit little they advantage a when in comes number think difficult the bank And are of one are is an real franchise structure with about the price multi-family out one product more and is that are there to lenders characteristics bank on think that But more not there There there statement start to giving thing you're again. overcome, doing overcome And commercial, about the number you that in interest-only environment give some and some it single-family can of We environment the respect characteristics and compete there types to what when deposit bit with us But relative learned frankly Price it's it's offer. single-family, we loans, single-family, a when there the where that things associated is competing of those price, personal more from guarantees income, anchor then as There they're past with not of seeing such to are fact, but respects, would have thinking of think nature. looking to multi-family pause obviously, that's in estate occurring in or underwriting are things I that aggressively. covenants, terms, our things. us. on verifying simply the are at compete. some programs to commercial a to statements. we

Craig Blunden

banking remind originating about comment single-family the still Another marketplaces, loans we had this no rates the loans, I'd in we portfolio are single-family mortgage to out announcement. business. and continue longer estate making and had and the single-family community, make communicate that for confusion make We've make in And to understands, there loans. after both marketplace and because to real in our we industry single-family sure just are we've talk our adjustable our businesses is, was the some go and that our we customers

Timothy Coffey

about portfolio, talk that the percentage of And book the you as residential think originations a can we as transition that for single-family a you occupy? there to - is

Donavon Ternes

increasing if been first percentage single-family in that a We spot, as is the single-family, thereby lessen but We by percentage there us. dollar that concentration has as up relates not absolute to down, with total. like place or dollar of now upside a by book. would the absolute of case percentage the to for multi-family, right degree think bringing taken some the not bringing our it you amounts to Multi-family in always will, has the amounts

opportunity have So there. execute the appetite, et to yes, our obviously within culture, context there's underwriting of cetera. risk We

Timothy Coffey

understood. right, All were my thank Good, gentlemen, well you, those questions.

Donavon Ternes

Tim. Thanks,

Operator

go Instructions] comes question Swanson Our ahead. with next from Hovde Please Group. [Operator Kevin

Kevin Swanson

we is focus look kind offense does two left that like on the curious, going you I for defense Hey, guys mortgage our the - questions of you completed. while shift? And answered, from seems guys, and a on like have it on guys? of good now that business, months are just been of what being my but kind How was with the Most morning. have for

Donavon Ternes

mortgage revolves going if originate-to-sell positive really losses our that offense efforts, have respect the and you for tremendously pretax bit posting and with the that the coming of in And be our culture around will, frankly, has us. portfolio that defensive the shifted, internally a in, shifted refocusing our communicating is has Well, model. out we been to position to banking strategy

banking described quarter. positive quarter, the first subsequent a or We the that remaining X-K the There in quarter that have really with of mortgage Form September our in XX with business is to significant small exit the the component earnings profile to just the viewing with respect company, issue to internally and don't our drag. is a And everybody externally, have that with respect culture, net huge that with to income. how respect respect and becomes both internally our we because to upside

the very about that we think our concentrating investment as And and efforts for making so arena we'll well. in it held of transition as excited pretty loan it to that and a make relates - that we're the result side transition

Kevin Swanson

my taking questions. thanks for Great,

Operator

And Instructions]. further [Operator queue currently no questions in

Craig Blunden

All questions quarter. forward call and us speaking look to like next would on thank you all I our of no right. again further everyone joining you. If for Thank there are with we quarterly to

Operator

your And Teleconference. that call conclude using today. does for Thank AT&T you. participation the for Thanks for and

You may now disconnect.

Provident Financial (PROV) 5 May 192019 Q3 Earnings call transcript