PROV - Earnings call transcript Q4 2020 | Provident Financial Holdings, Inc.

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Operator

Ladies and gentlemen, thank you for standing by, and welcome to the Provident Financial Holdings Fourth Quarter Earnings Conference Call. [Operator Instructions]. I would now like to turn the conference over to our host, Chairman and CEO, Mr. Craig Blunden. Please go ahead, sir.

Craig Blunden

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

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

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

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

has the results. fiscal investment, prior purchased no in date an review information. for Forward-looking the only effective as describes company $XX.X to and for the loans of had fourth opportunity our recent call. update To year of held from quarter. an in participating $XX.X each In which quarter, our to earnings they're originated million release, most statements sequential you made, that quarter increase we the million and the our assumes of begin with, are you obligation this that thank hope I

the as June which principal million purchase In XXXX mortgage we also growth held March as the loans $XX.X is in quarter quarter, million and of payoffs, the investment. $XX.X of to still progressed originate found quarter for to some and the loans bit slightly from degree. a we easier the tempering XXXX up During the markets loan experienced quarter, normalized rate it payments

regarding season we're loans due particularly packages, cautious our requirements. diligence because still is However, to single-family it purchase complete on underwriting individual consistent difficult loan with production

loans months X% by decreased ended in multifamily, March June by comparison the the investment single-family real partly XX, other with XX, declines XXXX, growth three estate the held offset to for categories. loan For in approximately and commercial construction and categories, in XXXX,

from is resolved. many will pandemic California loan because June were New holding the $XXX,XXX quality of at early-stage the lenders March delinquency improve well, Current of credit and up production just been balances XX, have XXXX. constraints to quarter that you seems from operating note

XX% million, nonperforming addition, $X.X low In year. during of a is remain down the just June the decline we're XX, which at XXXX, very levels, course and the assets at $X.X million from

However, pandemic implications it's the implications negative fluid for may those regarding be. future although what situation and and have quality, from the certain is far may not credit will --

payable the in up forbearance X and becomes as balloon the the if will We provide full continue with criteria Financial end an our plan loan of date. forbearance to to to and our and Accounting be the term Commission. Act, borrowers We at months. payable meet or the payment clarifying Exchange a interagency will the earlier payment The amount loan guidance due of sooner due work at Securities and statements believe Standards regulatory broad CARES the and Board full in forbearance by the promulgated from

the cited for favorable qualify we that provision vast the on believe we guidance in of forbearance result, the majority a As loans.

of loans forbearance X.X% X forbearance approximately investment loans XX, commercial in multifamily estate with $XX.X million outstanding of were or XXXX, Monthly XXXX. be and held October required real single-family and gross with held XX outstanding November payments of loans in X.XX% in will As the of majority on balances until of for or there gross approximately resume loans not June or investment. of balances loans for to of $X.X forbearance million

significantly April $XXX,XXX forbearance pandemic, provision experienced and impacted for current quarter, for the methodology in from request recorded the declined economic our the June losses in negatively a which and response primarily to We March an have May. levels for has the losses components in in due qualitative environment. loan increase new to in Additionally, XXXX loan allowance

loss The to incurred CECL. you cannot You will methodology means note wish This of specifically adopted our and presentation, to I reasonably on estate we also not portfolio be remain compared allowance the risk and Slide of commercial of balances that that high composition the the model CECL XX considered investor footnote have Footnote our adopters. our be the may secured refer the current that and loan to table. X describes real real environment. estate in commercial

populated we certain in on Additionally, a XX new loans table forbearance. Slide characteristics of describing

deposits a the XX X average by XXXX, The stemming compressed yields. margin the total XX, from interest-bearing total at sharp interest-bearing a significant interest-bearing XX rise liabilities. basis increase in by decrease total on a cost quarter of on invested the to decline March yield was partly interest result June ended compared nominal a assets average a the yield and in quarter primarily assets, basis point of as result in sequential points the for in net basis point in XX total Our decrease the of liquidity, offset

likely June decreased as the declines cost June current basis deposits ended was previous amortization of by of X of associated a in points result net the loan in increase also in payoffs And the deferred points quarter the comparison quarter approximately this believe the amortization costs net interest X.X% of to basis the basis environment. given impacted negatively to X average XX interest for X The net points the cost margin the loan loan quarters. deferred to quarter by the the quarter. XXXX, XX compared March sequential rate XX, further average are Our we with

lower last year, efficiencies our a operating count to for on XXX June Notably, FTE date company same compared FTE look operating XXXX XXX to X% the XX, decline. to the on expenses. was throughout continue We

a costs incentive we scaling of noted compensation June year single-family of accruals result quarters savings, loans. to in the $X.X $XXX,XXX back quarter note, $X.X compared cost As quarter to million Please that should of of $X.X last expenses June quarter it the in XXXX reversal operating million fewer last in employees year. previously approximately the incurred associated first mortgage million declined benefited same a though, salable X XXXX. be and expensed the with fiscal onetime origination approximately the in that XXXX other current from the quarter of Likewise, approximately

other sequential a a partially increases approximately result quarter on declines X% and benefits, and declined operating in Additionally, by sales in expenses equipment marketing by basis, and and primarily employee of expenses deposit premiums. offset expenses, as insurance salaries

quarter. activity. maintaining exceed without so well very capital and the margin executes significant for is Our to that management prove unchanged from is difficult. prudent last sheet balance environment capitalized current our on very best in plan believe capital ratios doing We execute We by goals to leveraging believe important the shareholders that over buyback the cash that dividend We sheet management loan our business with allowing action takes balance is priority stock of strategy that may growth complications. a short-term strategy course and us

current XX of to the quarter not we As common stock to a increasingly And did better repurchase wish clarity becoming economic and June it's We encourage our on that is the safeguarding investor get shares in any result, June on important of the current XXXX the until our website. posted wisest emphasize in everyone course environment. we capital action presentation review landscape.

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

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

Operator

a have from Clark. do question We Matthew Instructions]. the of line [Operator

Matthew Clark

loan asset the the is margin takes what liquidity, start see. excess margin. puts pricing, Maybe your easier The you on is Can of talk accelerated the new the sounds the side, kind the the of funding excess amortization outlook just negatively it like to kind loan to liquidity a through bit there? significant. But and it impacted just a with is there the the we as little -- and of little yields relates can

Donavon Ternes

Matthew. or the Sure. deposits largest the impact this. significant liquid the The I'll in It's Donavon, June interest-earning increase assets. you described, grab in as quarter was,

yield the points rise the that for to overnight then quarter, investments. large invested in advances, and the example, June For $XX.X during the basis was essentially which June came were And -- or the of in was that will quarter, you overnight interest-earning part and deposits basis March we we deposits XX in million million, if quarter. had into overnight large XXX and earning And $XXX.X the move quarter, but that deposits see we that points. in dropped approximately as deposits,

essentially the that June the into of actually quarter, up that -- overnight advances growth, that out through loan in investment although and shrunk bit. loan there extent to obviously So was the securities a were we liquidity growth repositioning

that about So June into securities in investment redeploy of excess this we calendar that than significantly larger those yields loans need such is we're primarily excess investments on are the we into and of beginning the as to are the to earning or our secondarily then the what preference, but the did quarter. year, remainder we think those going really year fiscal liquidity

first are the multifamily loans X% balance So secondarily, single-family X% that's the in where on And real yields range; sheet, loan in coming the thing. mid- then on about balance are estate sheet the to coming think we high low the as range. commercial to and are to

with to about some cost So a books, production. that, Xs will as margin excess side, the then with And Xs And we going will. be estate to of liability to the to that single-family, liabilities, growth we low commercial will there some takes in it helpful get extent you off obviously, new forward. go-forward investing also relates the think high multifamily to real are spring nice liquidity of our as that the and the the if secondarily, respect bounce, respect

are of being about Right that in First of next those high at the now, $XX.X reinvested all, to CDs point XX basis very the maturity are category, XX those we the CDs have year. and basis in over low are category. point maturing probably XXX million

call obviously cost it, funds. there. line their down million course significantly the FHLB in, we FHLB replace of time those and advances off or event the paid with to year. And So with lower advances And go will that need liquidity some maturing about range. then of margin those in we we'll as through are There's are have we bounce They the will advances. we secondarily, the the advances funding, $XX $XXX cost million be excess either get

of significantly pretty job hit So the primarily 'XX I June if were quarter, you liquidity redeploy in top I closer yielding think margin, assets. bottom our range is and probably on net And basis a interest interest excess at than margin range our during much is our think the higher liquidity of result June our of that net about excess as or fiscal the current to to our quarter, we because a into that, the if will. essentially of

Matthew Clark

with And buying excess it? security you on the you're redeploying extent to side, are liquidity the what I guess, that

Donavon Ternes

were cash range either the One to them It's in getting significant Yes. all of want in liquidity putting that But short. result product loans we're types. And can The or cash of fixed the increase keeping flow significant of securities, money such but also relatively to into excess the the rate potentially excess largely increase from the the to deposits. relates we programs a deposits product, life stimulus way the the placing the were and including liquidity, flows depositors' pockets, in into to funds. accounts, liquidity. this GSE adjustable primarily they that much think ultimately, redeploy thing it June rate bank redeploy as PPP that mortgage-backed we're was quarter back was about in average in excess in result it then

of and we line, excess some time of didn't balance deposits. make will the depleting sheet individuals expect and of some were of the of form go that and we as One loans, that some the well. Although by funding used down on in will recipient then funding our our be that the would the customers deposits be the as received we the beneficiary various businesses

term least in they're at or So quarter liquidity not may -- from longer may carry or wish over than carry understand we we until land higher or where nature. excess balances term short to really this normally liquidity or next the coming these whether we so deposits this

Matthew Clark

Understood.

I Okay. maintain terms we what decline the a growth the loan bit rate loan about at to sequential shrinkage? basis. And are portfolio then on on Or the of single-family balances? in a and thoughts loan slowed, least, yes, of resi little being to just expect balances your overall, continue able of should guess

Donavon Ternes

our like, we And primarily the may with the we've fiscal their single-family product. of to position of rents going upon look Well, on be placed market or driven or annual actual or for by with receivable through digits activity course respect X% market to we we fiscal as respect about impact would ginned secondarily, also 'XX then mid-single up by what our depend the the property fiscal collateral on also Historically, the but real and be economics volume would adjust there in like. the an fixed like. the with expect primarily rate commercial estate think real that of what multifamily with to is we go to looks into not or growth because year, the the whether individual it's we investment. I refinance loans market sheet, that's may much a impacted year growth is basis, as and think that about upon that to to is. they're to over I going balance respect loans low in estate, XX-year Right that the depend markets COVID-XX respect held not because although capacity where now,

in So environment. is as uncomfortable being essentially possible refinance and being activity that down estate or the in opportunity goes a not to result commercial multifamily of the conceivable it borrowers real able with current or purchase

I is would prepayment in growth we multi current be be with annualized expectation in as But in to to going impacted and our more real commercial well think loan So portfolio. activity, of the mid-single a result we're respect probably low than to single-family with portfolio rates. as estate that so again, interest digits

Matthew Clark

of for providing? low. thoughts up that that the the about on Okay. as kind and government's LTVs Or a And should get to low but It I pick very sounds are your all of about requests concern? then growing And guess Great. the and you are the stimulus what cut? have you Is I that, potential how deferrals very, well. know thinking -- meaningfully the that again? benefits activity, just deferral have unemployment slowed like

Donavon Ternes

in see others requests so programs, modified would occurs would of and and requests, industry. what a our I forecast There fare with what balance expectation additional our increasing forbearance seen to and respect to to the Well, the respect a than particularly quarter in low numbers mean, event gauge possibility we against inquiries percentage respect probably in do hard March we're what significant the very June we've again those the with portfolio far, would start not very total we that did course, being it's better we many rise industry, in with quarter portfolio. were June. of that comparison than the in the significantly is forbearance in stimulus occurred that government always have in in sheet industry, in actually experiencing lower to saw depending it April, in what upon May but is, I same given All if across June quarters what any overall we deferrals. the that. in we to coming essentially our The that from are We've suggest

Operator

[Operator Instructions].

of from comes Tim Coffey. the question line next Our

Timothy Coffey

outlook is going you levels noninterest is next if kind growth for year, commentary on the the the impact limited of your originations, -- that of on have your kind loan lower that fiscal to the just expenses? growth provided Given of in that

Donavon Ternes

Well, this the expenses. decline it course even I still respect well or And operating a as over we're expenses FTE seen to if other then count approximately noninterest of we as know our will count impact. We've by don't decline saw And opportunities for limiting year, with FTE X%. expenses significantly. looking operating fiscal have

So I reversal million quarter, we the the per for year. the June look And $X.X of quarters, is were that puts June the I first X the run at of first fiscal had operating so, think at it, benefited call $XXX,XXX and quarter incentive or than a coming on rate in in X quarter if million $XXX,XXX run adjust that that $X.X this I quarter million million, we about comp $X.X us in the then of which lower a quarters. $X.X rate expenses,

be number to volume to the to And know of million So compensation but loan origination course not down, if our will fiscal Obviously, will down, expenses to specifically operating how is it's expenses. we're go operating incentive going se over comparison go the $X comp per it total se. per volume volume incentive origination loan in expectation tied and low don't for in down 'XX. goes I related meaningfully

Timothy Coffey

over your activity to Okay. kind That's switching any activity of again? when you relative and your have up has helpful. start to see And to periods income. Obviously, well pick might fees client reflect then visibility depositor gears that. you consumer been historical noninterest on Do

Donavon Ternes

some while We're quantify difficult to in as less pretty fee June it, additionally, quarter waivers And forecast. seeing activity. that's were we think I the didn't well. completing we

the kind fee about consumers when like. component begin and waivers I when going and movies highly to their is and secondarily, when reduced consumers economies was the expect standpoint away. a fee impact to shopping June twofold with some and think, would consumer was quarter are upon the go well. there the income, noninterest activity. from actually of activity, of and But But We in as respect there So and restaurants both waivers to out open dependent

I that's around So upon the dependent pandemic. the think highly circumstances

Timothy Coffey

expressing commentary Okay. to made may in All to stock. capital. back the view and on would your understand. the to change buy want Craig, terms I all? are reinstituting the And buying on, back right. I about starting of were willingness buyback are the regulators start approach at an opportunities the maintain there to stock, buyback, for heard the you banks that the then the in west you start to that regulators of If But banks ability

Craig Blunden

that look are be not regulators the certainly I'll Certainly, take favorable that we'd at favorably would to one, in certainly indicator this But at Tim. point time, buybacks. mean that an would looking that. more

So institutions in other price if to I'd love the with the again, or some do it. headed to on where limited interested quarter there's be permission on ahead hearing go attractive, it's levels, have that received at buybacks, economy effects certainly, is this and pandemic really X next these

Operator

There do show Matthew queue. in are continue. Please no We another here questions question the from Clark.

Matthew Clark

sorry. Yes,

expectation On to you type that income? product, fixed the selling XX-year create is go origination of and loans an just to kind might there again of of fee back some

Donavon Ternes

Well, I upon depending scale with that, know with where sell always with consistent the something being that we're jump I growth in don't significantly we model. don't know if to of risk but in the think we're plans on actually from again, the did rate are past. of there open, growth into consider uncomfortable what to with ourselves that we that priority, sheet, what means and selling we have But would the originate would it's interest but -- certainly aspects growth situation I loans, up a that balance find respect we balance to or options uncomfortable rate rescale definitive we sheet those occurs

Operator

the Kevin a we question line have do of And from Swanson.

Kevin Swanson

with industry, banks talked getting a you having on whole that overly about not the the seems And I about think deal are appreciate kind it quarter, PPP conference in around talking of and like saved and bit. from guys them lot customers focusing with little SBA. guys because process in those the being I to order active really a the last PPP of from not are and calls we you the

terms focused does I curious it Just -- and of on kind conversation curious guess? with of are those the offensive landscape around And kind kind just of of of of capabilities? the any banks in structuring you clients? offer PPP stress, just the your view really without kind how clients some competitive Or how you you're you

Donavon Ternes

will, loans PPP activity The Yes. been bank. in in essentially has our received have actually benefit, we deposited PPP customers because those we that have you that and a funds if

deposit with those of of the activity are respect Some the the are perspective and customer on our hearing, not competitors are have surround branch seeing a that it's we new discomfort offices frustration. But side larger with from hearing are of to we network, expressing we into competitive of our branch offices, been activity, many their level branches a PPP we're related the of things that routinely institutions we some have over that there's or branch other others. customers that per closed some markets. their coming focusing are seeing And larger banks because these customer who closed primarily in se

And activity, so deposit net for some respect being remix context liabilities, the will. we you with offensive if of us seeing positive costing to able to capability the within that's are

net note. there's the been outside benefit loan single-family activity, there. refinance think, a So I everything a on of cautionary loan respect to side, side, With the there's

of I there's and When less been thinking because they're our activity borrowers all commercial, in. that have a think competitors and I bit. about underwriting from environment the tightened applicants we're think, multifamily

to significant ordinary we're it aggressive relates that's see as driven. there not not and anything But to going going rate competitors are the although real that seeing certainly, to volumes, single-family maybe and be And estate commercial they there's really fixed multifamily to aggressive space. be out refinance that primarily how are and of in doing are those going so or

Operator

the There you. in Please Thank continue. queue. questions are no

Craig Blunden

quarter. we to further are there call today. for no Thank to everyone forward to in you participating our if next And questions, you. want thank I Well, look talking

Operator

through for replay Pacific Thank you. X, today conference Ladies available be a.m. August this after XX:XX and midnight. will gentlemen,

the X-XXX-XXX-XXXX, our entering AT&T and time conferencing conclude That dialing does system We thank participation access you AT&T replay access for using service. XXXXXXX. any code today. conference and your at for by may for event You

may now disconnect. You

Provident Financial (PROV) 2 Aug 202020 Q4 Earnings call transcript