PROV - Earnings call transcript Q1 2020 | Provident Financial Holdings, Inc.

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Operator

Ladies and gentlemen, thank you for standing by and welcome to the First Quarter Earnings Call. At this time all participants are in a listen-only mode. Later they'll be an opportunity for questions. [Operator Instructions] As a reminder, this call is being recorded.

I'd now like to turn it over to Mr. Blunden. sir. ahead, go Please

Craig Blunden

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

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

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

managements' during uncertainties We to statements These make today. may a forward-looking also from subject actual and may the statements question-and-answer are materially and period following discussed differ presentation. number results risk of those forward-looking

actual statement was on any and differ Information SEC filed on subsequent Form ended results annual to and the the to that year XX-Qs is are and release XX, that on June Form risk forward-looking the distributed earnings XX-K. yesterday XX-K for the report the XXXX cause from Form factors filings the available could from other that

of Forward-looking this date are information. as to the the no only effective and they are update company assumes statement made obligation

to thank you our describes I our participating for that each improve. quarter results. to hope first our the of To in continue earnings of with, has begin company opportunity you an which had call. review release fundamentals The

$XX.X has the been $XX.X year. held quarter quarter. increasing loans in recent margin expanded, been of In or been and has credit core increase strong investment, interest originated an purchased most net sequential quality and have we the Our past from for portfolio loans purchased million deposits originated the prior over have million for stable,

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

lower the associated augmented net basis the quarter, net our in average loan in deferred interest September loan the approximately Additionally, comparison quarters with that amortization, by decrease the five estimate to four payoff quarter. margin we costs in previous this points of

XX. XXXX, For for in balance XX, growth a by XXXX multifamily single loans the but to approximately ended commercial construction on family, months in decline X% increased with June comparison small estate real loans, three investment September in loans. held and

$XXX,XXX for XXXX. in augmenting loan delinquency origination Competition note but stage and successful with XX, with loan We just early quality. remains activity pleased single production September new loan We're purchases. that we're at aggressive, multifamily very family credit were balances our

non-performing addition, which now September, $X.X at levels low XXXX, at the of remained from XX% year. are very course In over assets and just is decline million, a the million $X.X down

$XXX,XXX of assets a from no many results. credit provision charge-offs classified quality negative for We're quarters. [ph] small meaningful We low non-performing at XXXX recorded quarter resulted levels pleased the September very and these with

total decrease interest net XX the in in interest result quarter and cost for basis margin earning expanded XX, quarter Our a of same by in basis points last as of basis the liabilities. average compared one to ended the a increase the a interest year, XXXX, point assets bearing September point yield XX

same for decreased cost ended year. points XX, deposits Our two quarter the compared XXXX, basis quarter of September average with by last

of past our value the core hold Over franchise. on and been of able deposits, the line the to strength we've highlighting course deposit months, the of XX cost the

that's in X.XX% loan X augmented payoffs, result quarter net interest decreased of decrease points of approximately The basis margin net deferred as amortization the this a costs. was of by

range comparison recent in In prior end addition our the at the net quarters. remains top margin its interest to of

September comparison compared same XXX retail XX, loans. have FTE -- regarding same last family origination offices, the Notably center scaling fewer of count and result one was to on back expenses in interest Our net of XXXX XX we non-interest on significantly a less the loan single banking production last declined expenses operations XXX, and our our year, to date have as on time FTE year.

two for the reduce expenses items current our Additionally, we quarter. had non-interest additional

reversion First item for lowering a was previously quarter. expenses the recognized $XXX,XXX the of operating our settlement legal

benefit and $XX,XXX bank The will the that next second benefits item deposit the two the assessment for a quarterly credit small XX, each We insurance of was approximately premiums estimate be as through implementation $XXX,XXX March lower our provide and credits. of approximately bank FDIC XXXX small of quarters. result available assessment

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

the For we calculations plan we of cushion our so. capital of future leverage X% based XX% bank's above are that we'll is the And regulatory a Currently for we X Tier business significant total the on capital margin management believe be wise. significant for demonstrating risk foreseeable able ratios goals. of executing and do by maintaining these to confident exceed

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

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

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

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

Tim O'Brien

Good morning. Thanks, guys.

question non-interest Is have it? around from with drive of that everything might this out other here expense, expense grow reflect, of initiatives on baseline, the a Just working inflation non-interest going that going to taking that quarter or does you're your kind And little costs million. was it that do beyond so a the that higher is on a number? you one forward out timers, $X.X for

Donavan Ternes

is seven with $X.X respect expense would baseline. as suggest Tim. go morning, forward we line around not the we is you quarters. And have any may described about include our Good Donovan. We to than additional activity think suggest That operating our It's higher million, bit that does and base little initiatives. we what reduction million $X.X a is

respect to that we have operating not and with meaningfully will go balance to forward expense as to we base. sheet, secondarily, our number, believe add we And grow

rate a I on go quarterly forward estimates. million $X.X think probably with So to run a respect ballpark basis the is in

Tim O'Brien

the the And credit? $X.X million excludes FDIC

Donavan Ternes

benefit FDIC And it FDIC credit And there. $XX,XXX and what the for the have is well. quarter approves the provided to the about December Correct. runs think per quarter about we that as we'll quarter think March

Tim O'Brien

reasonable fiscal of changes bit or settled sense are big do restructuring about your looking the your out have a -- year, you you what the for share regard detail that of fiscal -- would your year? acceptable shareholders new strategic that efficiency new now efficiency? rate a this What's see out, what to beyond can of with Board goals and a first be And quarter an -- for would for little like the might be achieved to

Donavan Ternes

$X.XXX you from is about achieve to assets quarter. about there, think you interest we the being I quarter, ratio, was largely And XX about the going net we're call $X.XXX earning it September for efficiency have it billion because us to assets. if you the billion total as think think for thing timeline. come lower going to interest down at increasing income able And our a look call this to how September one interest go think the grow it total as -- earning to

can which for then is March we point quarter, Because zero sale, last the that our quarter, of respect to last we think believe. from total had earning until here the of held year. the we've to the now We 'XX, really the loans And that to assets interest December September September over we're low quarter with and didn't activity June course in quarter, of grow quarter the year, turn the 'XX. now adding

XXXX assets point the So after $X.XXX as about total we earnings XX, interest and believe quarter billion is forward. of low going we think September

think increase are assets. suggested grow driver going efficiency where that be go we we interest lowering the just we they're will increase total Because to them going as won't be as we of the to we've So be. have that largest And our we can to ratio. net And our operating expenses timeline. down income

Tim O'Brien

the talked about changes. balance little And sheet a this, through bit regarding margin, you've then and Donovan, gears the changing

you from You an have guys some X balance to what sensitivity the cut? the point basis the XX incremental are things basis whatever. to impact sheet. on a your saying color lot any asset cut? expected X do have a XX But of, of sense the X asset basis rate is your considered margin moderated us margin, Can -- saying to point your points, you All give potential impact of XX, are to

Donavan Ternes

short successful amount we're funding the call balance asset six to sensitive will have or on, putting don't it, respect we've if liability in asset we We of want months the bringing end to balance doing as more But weighted grow aggressively going weighted margin because down loans you be say we're balance in do X sensitive funding per we to as were, we The impact, be of curve, sensitivity down. impact we're to month that impact. And bring X, maturities, how but we neutral. on want end. on forecast an that with average the roll. want sheet, X, towards -- we've the larger our average year We're And which Because to sheet, the it sheet. successfully belly It's that to been se. been as is short don't the not grow going to we ago.

in forecast I rate growth the margin. potentially growth respect going basis increase the go increases, believe, margin, down smaller I to as to points -- that's that receive is quarter necessarily respect sequential as down, quarter but But to net in our So with for interest to we wouldn't points. net from we a XX interest September going go that we basis December contribute demonstrated rate XX compression September with timeline, to

Tim O'Brien

step guys. Thanks, I'll back.

Donavan Ternes

Tim. Thanks

Operator

Tim Please the Coffey to with go ahead. Janney. Now of Instructions] [Operator line

Tim Coffey

morning, Good gentlemen. Thanks.

Donavan Ternes

Good morning.

Tim Coffey

of that the going growth saw forward? loan that a we The for in where run-rate quarter, is terms

Donavan Ternes

XX% about to the the we're rate was having our quarter, so be annualized that's growth rate, run growth argue quarter. I for annualized. would entire the a going that X% Well, not for XX%

already commitments out internal originations. we've $XX will purchased we on Although loan the size. approximately are fourth packages. more to been And the the And of or not million the by And of augment example, packages million purchases that seen $XX our growth. to loan respect of successfully quarter, in able September to quarter December quarter the way same have of quite execute loan we've with in those we say I that

But loans at as rate. well, maybe that in quarter we'd suggest December the we're X% to grow not going that

Tim Coffey

of result a you're activity assuming, unlocking, been Okay. you're rather more market things? or these buy to how the loans, that optimistic opportunity be and creative Is to or the you've is able pricing

Donavan Ternes

things pool have a it's many couple to And seasoned of respect with particularly in they one single were of But of we September that might of think packages purchases completed years. loans. combination the in we quarter, those loans both. I the those the saw, seasoned a family certainly been

occurred. rates a so, down has they're at So down we're current have that going have were that now last priced seeing market, priced as get were or come Fed months to the since rates six being comparison significantly a the because of rates loans where to now interest discount, come over because those the once seasoned at premium probably in action some

our we're as made with we the buy developed So family I have we focus. single counterparties. of those will And good from think, change changes resources it's to family, counterparties group that single now loans we the then a to think that pretty certain And in tap able using, to have able of to some and our to result respect a being unlock selling secondarily, loans has we're a in activity. I

Tim Coffey

would buying. to Okay. And the of account that parameters changed is continue market? geographic your be we Have -- collateral does in or it you're you the location loan it

Donavan Ternes

offshore. California, statewide it's No,

Tim Coffey

offshore. Okay,

stable there, there was anything Okay. yields were loan I your range? this Craig. help guess in quarter. else anticipated was relatively as beginning prepared then the some of then in you Obviously stronger or is mentioned at there And But bit I remarks, the this there

Craig Blunden

the margin loans. the And ongoing time how have note are other they that actually multifamily you with at an be repricing the in to those we index on may to thing the real start and the loans above on portfolio. put many is to loans commercial true Well, that's particularly we basis. respect with estate repricing respect to And have that rate

the new are the loans the the the even bringing on, there's the by that new probably portfolio. counterbalanced loan those And that's indices bringing which we're a and the their than pressure is other down floor the production hit and they're indices on time of floor. a that's coming rate is And rates. that's loan the some down to in factor lower these downward, some because of loan priced won't to production. impact it Now drop that estate then to margin production multifamily as them get obviously again, the repricing in reprices, going fact existing full reprice commercial suggest loans so And may at real because will we

as coming loan we it's at effect our characteristics interest yields, come even though new those dollars. much pressure But expect loan on some in goes that as and down, repricing spreads of we when think have do will those to inner about up, have So production that our loans. don't knowledge rates we net margin compression

Tim Coffey

kind switching the I of those total for balances, XX% Okay. balance coming to to next How be in is renewal other two on quarters? side sheet, deposits. of your of up then that going are the And of CD about think the much

Craig Blunden

about quarters September next million broken so next course we but XX. it's don't I million year up for the believe, coming or the four $XXX over $XXX about for million renewal. next it the quarter from $XXX Well, have the by of XX months I down have

Tim Coffey

Okay.

Craig Blunden

with Obviously to it. repricing Yeah, It interest down, upon obviously coming liabilities. may respect be And where yields those be that's rates helpful may are. that's their counterproductive. depends It productive. that with

Tim Coffey

Right? Those all my Okay. thank Well, are you. questions.

Operator

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

Donavan Ternes

forward you questions. next speaking in there everyone Right, I Thank look further to for our thank quarter. no are if to want call with you. participating conference and

Operator

after through gentlemen, and conference Ladies am November today X. available for this will XX be replay

today. participants at dial participation. you any enter and the by XXX-XXX-XXXX You may XXXXXX. conclude call may Thank X-XXX-XXX-XXXX replay International That for dialing does your code code and access time XXXXXX. the

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Provident Financial (PROV) 3 Nov 192020 Q1 Earnings call transcript