PROV - Earnings call transcript Q2 2020 | Provident Financial Holdings, Inc.

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Operator

Ladies and gentlemen, thank you for standing by, and welcome to the Provident Second Quarter Earnings Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. Instructions will be given at that time. [Operator Instructions] As a reminder, today's call is being recorded.

turn over to Mr. your like now the to call host, I'd Blunden. go sir. Please ahead,

Craig Blunden

Kevin. This on Thank Chairman morning, Financial our Good you, 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 forecast the and plans, of other and operations, and or Company's conditions. business products general business outlook measures economic objectives include performance outlook the

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

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

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

in To release earnings which each participating with, had begin thank hope to you quarter review our describes our that an results. I call. for of second opportunity you has our

in purchased prior quarter, and decrease held we $XX.X recent the investment, In originated sequential from the of most million million a the for quarter. $XX.X loans

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

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

We're were but $XXX,XXX and our note XX, production this XXXX. credit December for single-family origination remains activity with Competition a pleased just aggressive quarter that balances loan purchases. augmenting quality successful loan were at new very loan with in delinquency multi-family stage even and

In addition, XX, $X.X We year. million now during a the nonperforming XX% are which levels just $X.X million, low from the at at course and is down remained XXXX, assets very December decline recorded of quality We're levels resulting quarters. from provision of quarter, meaningful December classified and small a these with assets $XX,XXX negative results. a pleased XXXX low nonperforming charge-offs credit for in many very

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

basis December by of deposits Our the XXXX quarter to the same quarter XX, X decreased ended average cost compared for points last year.

of as associated on points X.XX% months, five the this deposit average in the XX the course the loan quarters. a payoffs deferred result net able past of and our we’ve been the net the Over franchise. highlighting deposits, quarter was the hold cost strength of The margin core interest value with to previous basis amortization on X cost the of of quarter augmented December by approximately to comparison in decrease in loan of line

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

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

expenses million quarter operating to last in result, year. approximately the $X.X in declined a same quarter the $XX.X As current million compared approximately

after XXXX $XXX,XXX December essentially quarter. on not operating were expenses which for adjusting replicated settlement, basis, the September quarter in quarter partial XXXX a was previously revision sequential in Additionally, unchanged expensed of legal a

We management significant Our with sheet growth short-term business balance is portfolio plan strategy unchanged management is best on without balance must capital from for releveraging capital last line to well-capitalized ratios that believe and We our action. of the by course quarter. loan goals prudent execute complications. the sheet a exceeded margin

limited currently and was of we to quarter, continue form of stock stock on common activity the dividends repurchase of shareholders continue to of our cash repurchases. execute capital capital. wise shares to the use in we December X,XXX is plan buyback a to to XXXX returns in Although believe And approximately activity substantial the

December We posted investor review website. presentation our to on encourage everyone XXst our

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

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

Operator

Instructions] a [Operator question Please line name, Kevin state the do of sir. Swanson. Company from your have We

Kevin Swanson

Hi, Group. Hovde guys.

Craig Blunden

morning. Good Kevin. Hi,

Kevin Swanson

guys the of looks on the quarter. kind of guidance nailed like kind you rough It expenses for

you of year moving that throughout the how kind movements the see in talked Thanks. you some of about. that Just light curious of

Craig Blunden

do we quarter and the have not the some per adjust doing of our the branch a side business room and on relatively as nature. we're branch I business, it or for activity origination what to of have a plans there, adjust to $X.X don't of is safe deposit much We we the probably portfolio. close we anything opportunity like. I any There's side relates as that think, think the million as lines business number forecast.

pretty operating if we creates assets on an on side probably to bit going little expenses increasing think there's opportunity. interest count positive leverage the it's business as grow structured basis. and result and But, number, the can We some model, business So, the that we not net are of FTE But, increasing a that a in is of without the income way a set. will. I be significant deposit of think you

Kevin Swanson

margin. on And question then, the

I well including of steady. maybe cost of think, the going funds Fed at of year. And playing the kind same we fed maybe this How about kind X that up then, down year. margin bps under as to the you least consider quarter was out guys the are from assumption of the in are last something kind later see movements does year the road? that you the on And

Craig Blunden

it's a XXs of Well, result does. from scare. or XXs, dependent I respect for X be yield the I are think Recently, where inverted to largely with virus -- margin, think upon again, to what the in flu to curve the we just going we as X to us,

we're lower the and steepening We college five is the probably the a area, of essentially on of later at in yield coming our sheet that helps and balance reversion the than curve. quarter, funding have on existing ourselves six-month we're seven-year two-year to in fourth sheet looks us, balance the new come because what we ultimately anything to the And in spread lending saw area. And like.

that to to But adjustable some the going of that's many of loans. So, degree the mitigated give our to in probably. portfolio nature us are some floors there extent margin that's the by compression, all

same rates are have remain where to about now, loans portfolio floored. multifamily if those floors. many is the of rates that from there's come million of of do, $XXX our Right and rates And that down real they currently they will So were what estate, commercial all irrespective are.

some in there's But, to think the as floors of interest as will that industry. have industry if as out look that at. we yield And bit that of calendar up our we us, help some the is the I more a are think margin place mitigate shape ends degree, pressure steepening reflective again, I XXXX. in net the curve case, think well little So, where pressure. we in that And into that's particular will

Kevin Swanson

in have maybe nice just the up provisioning past of then, put the on quarters, growth guys was finally, still side. the couple And negative some you loan

of you Thanks. forward? credit kind going curious, Just how see cost

Craig Blunden

Well, from us seen excellent. good here, lower or these higher loans. we’ve have factor quality into I industry of help. in difficult higher for out for we specifically, But, could very come very and migration that suppose to And to would it's down. right because levels. factor loans see non-performers now general. the very risk credit quality improvement continued credit is is And good zero, non-performers have But go also

also in balance That's to the extent we in we we portfolios sheet, our growth is So, And income or seems because allowance an within every keep of loan up category that, different provisions in advantage without a category. a statement. loans. would necessarily recovering migration And allowance the growth as another have not would through have growth. suggest that and be and case that we growth to of the the that it works that to increase quarter one amount, might running provisioning the for then small additionally, result which the be we in each the freeing providing

So, we credit quality very think good. is

good. credit Our remains outlook for quality very

about I one maybe our also that be lower or yes, we could an would in providing, from think, but in portfolios the risk. factor we the higher risk because potentially, higher higher think portfolio, rate we to as growth the in have amount XXXX, not think, rotation

Kevin Swanson

Thanks, time. I guys. Great. appreciate the

Craig Blunden

Thank you.

Operator

you. Thank

go the open, Next Please your Coffey sir. of line Coffey, question line Tim Mr. is from Janney. is of ahead.

Tim Coffey

me Can hear you now?

Operator

Yes.

Tim Coffey

Good morning, great. Okay, gentlemen.

Craig Blunden

Good morning, Tim.

Donavon Ternes

Good morning.

Tim Coffey

the asset the -- The expenses. when range in average range. or commentary two you X% a business. of the were expenses forward-looking X% rather mortgage percentage on These high assets been appreciate they've in quarters, I last a earning have as

below balance Given could growth, that -- coming the ratio in your quarters? expectations for four you next would you sheet see X.X%

Craig Blunden

rate have same that was at growth. in a quarters, even quarter, payoffs the though have the quite it very instance, million. time of the the depends saw origination And limit numbers, December few it purchase good highest Well, for $XX.X in upon we we loan the you

we If those So, ginning tempered to those with to difficult see that understand, elevated, payoffs of a see. portfolio like it's pretty going nice rate. of would bit because we're the growth churning even we're continue payoffs. though little to the frankly, very growth. to a result And rate to growth we're And be significantly rate up respect not growth was that, as

So, can portfolios. in can growth be assets. expenses in of dictated see from by to we But, come going the the loan currently a answer percentage our is, that's total that yes. operating We up gin rate they are as where

Tim Coffey

Thank I you. Okay. understand.

Given on your opportunity started again, remix to that impact deposit down you provide come payoffs. understanding that has book? this that But rates does have to an some

Craig Blunden

And all that rate cycle. deposit I'm gives because rates. steady opportunity, way not us rising the it essentially deposit didn't through the costs our through sure we that our change the very held cycle,

end, on as costs our down. come come to deposit now going down So, the really rates short aren’t

that funding us there opportunity the is for growth. is Now, asset earning

the sheet. and needed specials now, the was rising that may at we when balance weren't their that We be one So, in fund things CD by sheets. to of that competitors in grow We rates balance like who occurring want position time. were were position because that to

And rate in a the little would so doesn't an we what put perhaps so, bit absolute saw are, our like on costs existing but cost go have a when our deposit than higher rate books, opportunity rates we probably were CDs to that up lower environment, rising.

Tim Coffey

-- been the seen view Okay. of you in current for loans loan have environment, it's kind previous competition where that rates, the seen your where And cycles rate competition the we in have competition? is then, that of increased as

Craig Blunden

economic It's has -- both sides sheet. changes We the see on loan side This this speaking, has this balance been has anytime very difficult, on cycle, side. the competitively and been the soon. put don't extended pressure that that both of -- deposit cycle Yes.

think it we rates. as a In bit lower could little mortgage about rates worse fact, lower and interest get

environment kind a refinance. going be I immune right So, to And not to refinance that book are business who I which industry dynamic. speaking generally of as is many of that, looking think again of kind now. activity, we're result an in borrowers of that think are our is there to And

Operator

[Operator Instructions] All right.

We have no at time. this in further queue questions

Craig Blunden

you. Thank being want call. on case, for with We next look speaking that I our forward in Well, thank to everyone right. you to quarter. All

Operator

Thank will Xth Pacific and noon be today replay starting ladies midnight. gentlemen, this conference at and that’s and available you. And run through for will Time, February

your code access joining. You participants may again the that does by Replay for conclude may you dial conference. do AT&T entering the We dial access XXXXXXX. XXX-XXX-XXXX And thank dialing International System that X-XXX-XXX-XXXX code, XXXXXXX. and and

Have disconnect. now good may day. You a

Provident Financial (PROV) 28 Jan 202020 Q2 Earnings call transcript