PROV - Earnings call transcript Q4 2021 | Provident Financial Holdings, Inc.

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Operator

Ladies and gentlemen, thank you for standing by. Welcome to the Fourth Quarter Earnings Call [Operator Instructions].

As a reminder, this conference is being recorded, and a replay will be available for you to listen to starting at 11:00 a.m. Pacific Time today and running through August 5 at midnight. To access that replay, dial (866) 207-1041, enter the access code of 1060286. the (XXX) use will callers number XXX-XXXX. of International is Instructions]. again, that [Operator code access And XXXXXXX this I and at over And time, to this to our conference turn host, Chairman CEO, would Mr. now like Craig Blunden. sir. ahead, Please go

Craig Blunden

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

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

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

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

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

competition million investment. in recent tempering of which up and quarter the quarter, economic loan multifamily of risk 'XX commercial $XX.X still general most are but held from again of result credit better principal March June experienced elevated many the also a In borrowers real that quarter, for is once it as estate conditions. the remains and considering payoffs, the lower XXXX During and for transactions we products, growth $XX.X million the loans loan seems

have For the underwriting and as most retail products, a pre-pandemic except CRE, remain part, loan which our for to requirements certain criteria, returned tighter. office bit such

pipelines the will originations in are last Additionally, size volume similar to our purchase suggesting our quarter, experienced be of similar this we multifamily quarter XXXX September single-family and quarter. to in the

months well, three single-family that is the XX, XXXX. increases up For declines ended loans partly to offset June credit multifamily in XX, loan estate with March loan and categories. Current the by held there and for X% the compared quality increased and early-stage categories, XXXX, construction XXXX, by no XX, balances investment you approximately delinquency holding will are note real commercial at June in

resume beyond period being nonperforming forbearance on loans Please TDR to decreased status XX, the extended the loans X we months, the nonperforming expiration of of downgrade forbearance. are not largely note which to $X.X down assets that assets downgraded their March million the as to nonperforming $X.X time initial from of Additionally, result a their XXXX. comprised is able million, forbearance monthly to we At payment status. nonaccrual

for June XX, eligible We investment. on loans loan to XX real ended forbearance of combined of loan their losses individual held loans points and balance XXXX, March loans an provision pursuant or held XX, single-family March for On XXXX program. loans in outstanding approximately forbearance from we recorded XXXX, of in with of our allowance $XXX,XXX a will commercial for were on The forbearance June held new estate with $XXX,XXX one to loan to their outstanding X.XX% for $XXX,XXX gross a run or requests loans X.XX% of balance in in there basis investment June As forbearance X gross for may courses quarter. losses XX be agreements points the XX. extension. basis provided gross an Existing for and XX decreased negative forbearance investment approximately

You compared not This reasonably that our on to will remain methodology note CECL cannot means current model that adopters. loss be a allowance have we and CECL. adopted

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

of XX by cost basis points basis decreased Our sequential to XXXX, points average quarter. June the to ended quarter the prior deposits for compared X XX,

XX The was points XXXX. loan borrowing amortization as to quarter, to margin a due XXXX was June in also on in points by June quarter increase basis the X deferred borrowing $XX primarily million of prepayment net a associated average approximately quarters. to net a of $XX,XXX approximately the the in amortization result five of in June comparison X.XX% scheduled March the costs basis quarter in loan impacted the August the with this interest deferred in net cost Our payoff increased loan to negatively previous prepaid by fee that compared XXXX mature quarter costs

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

is the Eligible to general claim XX% of You $XX,XXX credit average maximum in the XX% Rescue XXXX full-time or operating irregular will calendar million retention a the can Appropriations quarter. employee the incurred XXXX claim the American and or requirements decline to wages consistent credit receipts more of we in paid are eligible that quarter. of same and employees Consolidated the to $X.X credit of year equal based a on compared calendar XXXX in XXXX. quarter, of note XXXX June the be the for XXX the a the few the employee a calendar in tax to year. fewer quarter credit qualified recorded Act in quarter to XXXX with Act per gross calendar XXXX There employers The June expenses

of vesting as matter. $XXX,XXX stock-based second first an stock The in described resulting and earnings and the a the common of awards, a increase distribution expense pre-litigation compensation settlement release was in from was the employment

leveraging difficult. management lives Our balance that strategy stock our complications. and years. interim, securities that liquidity with by to four ratios We the allowing redeploying proven of priority so is the strategy average over well-capitalized buyback a quarter. short-term goals us has capital sheet business mortgage-backed portfolio and margin, exceed maintaining best balance for doing we're unchanged the sheet believe loan estimated very is We prudent cash with environment course of executing the believe important execute management current from dividend that without significant We plan our approximately In activity. takes and growth on excess last action, on is government-sponsored but the and

XX stock we June management also encourage programs buyback However, website. recognize shareholders under stock to to that and review repurchase investor common tool, valid posted on approximately of June XX,XXX everyone returns We capital we our through April XXXX a in XXXX is capital stock repurchased the our quarter prudent shares the program. presentation

metrics, asset June of of particular, which secured You insight estate forbearance management, XX will describing of find XX, we that and table Footnote Slide the financial company. portfolio X the In risk balances strong environment. quality regarding estate foundation the commercial as may that growth our in of and be contains and future slides financial composition the high commercial table you will a on the loan considered XXXX, supporting the give we current real believe included our capital additional real

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

Operator

our And we [Operator question, go will Cucharale. to Instructions] first Nick

Nick Cucharale

the have still it's first, to with wanted this or I activity at slowing quarter commentary outlook. loan So and I I but refinance the elevated? on pipeline the it is seen appreciate production in know early, you point start growth. the

Craig Blunden

Don?

Donavon Ternes

result think I since refinance to the bump yield since come Nick, a yield that in has activity XX-year rates the have of began a up and the bit the XX-year treasury as time, activity June it's and reversed slow rates. grown quarter in But down. in that mortgage refinance mortgage ultimately

origination new a us it single-family that pressure puts bit seen prepayment opportunity loan activity little We've bulk that although For prepayments. the perhaps gives on also of respect occur with in to the of portfolio, us, volume.

Nick Cucharale

continued us help to overall about purchase lending to the back Has you pre-pandemic the times? Can normalize environment? think market

Donavon Ternes

mean is lot or se, as The sellers homes all I it's equation purchase -- read the seems. listing were, side because and per low But there's inventory the of there's market difficult. you low they the because still very there very anecdotal isn't a of of inventory. the so demand aren't their once activity, data, it

are sold for quickly, come and the single-family to extent quite demand so new robust. is on, So that listings product they very

perspective. from numbers to low volume at which I relative months, than inventory respect X something think of with to levels hand the is some is less on purchase very historical a

are actually with respect to putting volume homes in to So sellers a great activity their deal extent purchase the of listings.

Nick Cucharale

rate. just lastly, tax the on And

future the where This out tax see in quarter's credit? partly still historically to that retention run. you've level Was is do you that attributable employee below where flushing And periods?

Donavon Ternes

think, statutory Our I is a consolidated rate basis, XX.XX%. tax on

we business that's that's and what plan. to we And our so build described ourselves, own how

obviously, federal credit, nontaxable come other taxable but Some into state which that retention of things as level. at the the employee you is the described, is, at play level, the

that a so to provides bit us a that benefit in a particular it's of And taken. quarter

Operator

with the Next, Group. Hovde have Gerlinger Ben we

Ben Gerlinger

will there's on if next wondering guys general. wondering that. was state to there's and those just if the a consolidation. the tax affect two kind talked kind the in a of obviously And then bit of potential if you credit if level. branch if that for and this was expense couple I was I possibility versus I call, on just little for could the could tax we kind obviously, expand I aspects. that of the base network on of see about quarters, big expand more you expand know the federal looking quarter. could understand given there, reviewing were retention see you the you I rate the and previous guys from

Donavon Ternes

First branch I'll the network. of address all,

on whether time. that primarily we as call, consolidation review leases described determine last due, not occur become the we branch or at and should of As our we network branches

unlikely probably that of a it's in that we to the that part single would branch extent consolidate second we city single The is the in branch. a have county,

On in the take settlement where city, is With expenses hand, the quarter, have June stock base, the multiple branches a our distribution comments question, awards, to the extent that estimates. occurs true-up distribution had occur or in and a consolidation the in couple result the in that forfeiture other contrast where place. the of every we pre-litigation Riverside, a of years well to mentioned respect city would vesting to which two we as are as other that potentially prepared infrequently as as of that's things expense particular so, there of Craig which his components the expense such in

that other any out So the FTE the than great a that done next then I of in XX% exclude the count. would decreased forecasting, the look or year. we've over quarters to those, activity certainly less have described taken respect expect we've as of about And I of couple because FTE that, I we course would to deal future count with already over down quarters.

of the So quarter I million in has reasonable over per given in that what normalized and $X.X the seems the of have kind basis, $X estimates and occurred quarters. know a past, think last between couple we million come many on of

Ben Gerlinger

you've the couple that, and repurchased in then quarters. my I last understand is obviously, the important, dividend And past shares of one,

results, dividend to of kind earnings is guys a focus? where go continue Is you there book repurchased become up would the sand and that to positive Or line with respect. operate in tangible the that sole the continues red a produce As priority?

Donavon Ternes

activity. dividend, activity. done historically, sole Well, think we've leveraging we the a have our loan or we activity, that's as then think take repurchase that to frankly, something we to sheet management. support it be actual capital I to about of as about cash stock I demonstrated the hierarchy, continues balance I part our would don't a stock by think But and But growth wish continues over prefer If obviously. repurchase and focus

capital total and context kind and So within and the earnings that levels. bringing into of capital increasing of down generating ratios better equity them our becomes a management strategy

how So that's think about we it.

Operator

go Janney. [Operator with Tim Instructions] Coffey to we will Next,

Tim Coffey

Craig if mandate? health and describe from warnings future right. Donavon, I kind of your originations can loan you your talk concern you specifically and Can level this that L.A. area, increased -- mass given kind seeing of we're the get about see County the

Donavon Ternes

what, about are local many I and health of think how to protocols ways seeing but distancing guess We've think and it is new activity and don't respect that to the we're a know in advisories are didn't had minor of it or the the I of conditions would that I mask requirements advice mandates. significant what we've slow hat impact. so impact, As refinance and be nature. the past responding, with seen year, We've down had really old that not occurring with or there that the a And some governments to might a things have social small the of things everybody. kind over gathering respect or

everybody's of with as down during of impact to activity to kind think June decline what slowed certainly result looked investors in so I've did competitors to at in impact and commercial because everybody's I respect see been well think course of fewer an multifamily the it have and deal a But categories we pandemic, those there. something could have that potentially, an seems perhaps and now that maybe this with, or of we which numbers, we the of seen, pretty Now and see volume seems owners have improved and protocols, good protocols we've with I the some as quarter. more

be be impact. impact. So a Craig? don't could you I large have that comments, limited it don't know know if there a any I would

Craig Blunden

a like up and and such target, roller down. Tim. moving is this coaster going It's Well, down and a up

where week your and we're employees what You company trying don't be And know week week week. be fact, in really well. to is as to out a difficult from going to run should to figure doing

don't So this where going. all I is know

agree itself. on I been market has in Donavon general think saying the what I'd

Tim Coffey

discussions remember the about I difficult kind So year ago, a of do having really we of being because inspection restrictions. were on-site to

don't again? You occurring see the same thing

Donavon Ternes

lender had all was safe has been We've will. of new that that that. the procedures both those No, and things a we've if and in not protocols conduct seen seen activity that gone borrower that established, overcome you on to and allow health basis,

now. So yes, right we don't of see any that

Tim Coffey

then have to bringing or to has on support And great year-over-year pull done liquidity you've you sheet. a levers still the that balance your more Do down excess to found its feel you reinvesting way margin? job that

Donavon Ternes

yielding essentially one of quarter though lower the fixed us of are into held of those those borrowings our the yes, is a investment line. were in flat rate single-family more we interest things suggest, about, to borrowers then June And to those are portfolio to March the the quarter. you going for We what down, Well, net was and adjustment lower consecutive quarter. that during is Deposits primarily more inclined the equivalents notices refinance still the margin. to I increased product. or for the during down rate. kind are adjustable even their yields We for increased and quarters relates mean they're XX-year quarter down, go I that comparison textbook as think getting of as that. balances quarter. mean quarter that do, which brought and need during do it -- Remember, the simply And support down cash will obviously during as investment to time instruments balances Loans came security quarter. cash

well And the as so adjusting are an margin net those think has that implication as portfolios because us for about generally downward. we interest

those did see the commercial down In the you tables anywhere yields earnings on in real significantly, construction, release, that if on single-family you'll the down yield little fact, did. not down coming SFR but near the bit, loans and estate yields at of what a some come while came multifamily, look

Tim Coffey

outlook, And right, origination All is loan that positive your questions. think to growth gentlemen, I our goal. outlook those are certainly, well my as

Operator

this And questions time, additional no queue. we have at sir, in

Craig Blunden

and to our for Well, call of forward to thank all I'd like everyone conference quarter. look in Thank speaking participating with you. again next you

Operator

and And for ladies your AT&T for and participation that Thank Event for you Conferencing. does gentlemen, conference conclude your today. using

disconnect. may You now

Provident Financial (PROV) 31 Jul 212021 Q4 Earnings call transcript