Earnings call transcript Q4 2023

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Operator

Ladies and gentlemen, good afternoon. Thank you for standing by, and welcome to the Provident Financial Holdings Fourth Quarter Earnings Conference Call.

[Operator Instructions] As a reminder, today's conference is being recorded.

At this time, I'd like to turn the conference over to our host, Chairman and CEO, Mr. Craig Blunden. ahead. go Please

Craig Blunden

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

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

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

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

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

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

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

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

million March quarter of the of it rising million result which many rates. range. up payments the payoffs, seems at recent activity a most is the lower estate of experienced have quarter, XXXX $XX.X loan the quarterly as the investors we reduced interest principal still real mortgage end Currently, $XX.X their During also that but from and in

single-family Additionally, rate fixed as mortgage rate. mortgage result interest we're demand more products rate consumer of seeing adjustable for a higher

across liquidity our current all our tightened higher tighter result requirements product lines and environment, underwriting a pricing conditions. of the increased as and economic have We generally costs funding

multifamily and end loan ] single-family in lower quarter to been between million. be at and recent smaller quarters, the the our pipelines of our quarter XXXX the range suggesting will last million this September of loan similar [ originations $XX are and to which comparison Additionally, has in quarter, $XX

essentially up $X.X months loan note three compared the to very XX, by the construction increased that For is ending will June March $XXX,XXX commercial to offset estate, and in with loans unchanged and from up XX, assets XX, the multifamily XXXX. categories. the on investment well, XXXX, increases credit in for declines held is ended balances single-family holding March XXXX and real quality nonperforming you just Current million which slightly when

XXXX. Additionally, at XX, there of balances $X,XXX June loan delinquent just early-stage is

are We real borrowers collateral mounting aware are well. loans, but underwriting the will confident estate commercial concerns that of the our and regarding of perform characteristics

these We XX have presentation. on outlined characteristics of investor our quarterly Slide

from losses held on investment for XXXX. in losses March loan XXXX for allowance XX, slightly to quarter. XX XX, the basis XXXX. the only loans also We $X.X no allowance million for recorded maturing note we have remainder during loans in and $XX,XXX of loan to gross decreased June June The have CRE XXXX, the on loans basis should points You maturing nine points CRE from for recovery a XXXX XX that

compared adopters. to model the we until and CECL You CECL not note be that reasonably methodology our that adopt This X, XXXX. we incurred remain allowance cannot loss did will on July means

in and result quarter XX, of on average in assets XX the a the basis declined to as Our net total increase interest by yield margin net XX of compared to total for March XXXX increase basis XX, the interest-bearing X.XX% points quarter June basis XXXX, XX interest-bearing cost a ended liabilities. sequential point the a

our XX, borrowing March quarter XX to and XX ended in the compared basis cost compared June for points XX by basis basis XXXX to to Notably, XXXX the costs June of increased points quarter quarter, points prior quarter. XX XXXX, our sequential basis deposits by points average increased in the the

The net not cost deferred five interest associated costs the by was in payoffs the deferred previous margin of loan to quarter average the in the net with June XXXX quarters. impacted loan loan comparison amortization

rate New loans at now to rates interest comparison rates in portfolio prior are and adjustable higher loan originated mortgage than is adjusting higher in interest their being production interest recent quarters rates. our to existing interest

September weighted X.XX% in loans average approximately of from currently XX currently repricing at to rate million points December the $XXX.X of rate XX X.XX%. quarter the in weighted approximately average of repricing have a X.XX% basis loans $XX.X million a estimated at estimated of upward quarter We XXXX from and points a basis XXXX a upward to X.XX%

multifamily for are existing estate rates. Also and the commercial their real floor loans, adjusting above loans

categories all their limited in by in loans their interest caps. upward adjustment rate rate periodic adjusted currently many are However,

to look company efficiencies operating for expenses. to continue We lower throughout operating the

FTE Our to date FTE XXX on to XX, XXX decreased count last year. same on the XXXX, compared June

You $X.X that rate million than $X.X quarter. per stable quarter, will higher the note million described we operating June of XXXX somewhat run in expenses the as to increased

resulting lower options of salaries of and true-up a with stock distribution due XX, May stock expenses $XXX,XXX consistent primarily lower associated origination to and origination employee loan The the restricted volume. the of expenses increase costs higher from and with $XXX,XXX vesting XXXX, was benefit recovery

per expect a fiscal million a expenses. increased the on rate and of as $X.X run result For of approximately we wages pressure XXXX, operating inflationary quarter other

last somewhat more balance for sheet quarter. Our short-term is than conservative strategy management

believe of quarterly origination tighter of the in quarter this the of quarterly end the We conditions. course execution of action portfolio liquidity We volumes best with payoffs is were range. also low result loan a low the loan loan successful range growth end slowing and at as at that the the

investment decrease assets in the interest-earning of a an lower-yielding increase and the balance in average receivable improved of composition Total average during with balance quarter the loans securities.

the with in deposits a decrease composition However, balance increase of and interest-bearing of a average the small deteriorated larger borrowings. in balance average some, the total liabilities

that on allowing management ratios We business well-capitalized cash a is and goals our exceed repurchased that recognize our XXXX and plan execute capital capital We returns management XX,XXX tool believe shares stock of quarter. approximately without by significant capital June We we to programs valid important. shareholders prudent stock maintaining dividend a the through buyback to is very all complications. us common margin, in

repurchased distributed million approximately million fiscal cash $X.X dividends shareholders approximately For of $X to common worth and stock. the year, we of

As a capital a income. in our XXXX resulted net activities result, management fiscal distribution of XXX%

our presentation investor to review XX website. posted encourage everyone We June on our

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

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

Operator

Instructions] begin [Operator with with Andrew Piper Let's Please Liesch Sandler. ahead. go

Andrew Liesch

Hi. Good morning, guys.

funding your And I to outlook front. out on cost the the just where about to going where through cumulative expect right that want that's do your cycle. talk here -- is so guess, guess, beta you far? peak I in Just deposit

Donavon Ternes

Andrew, it's Donavon.

outperforming. at has others, So I we look are our comparison in done think if you deposit beta to what

Too and you To where of However, this that's recently with year the Big if retail because there occurred Fail flight that deposits to earlier been the to the liquidity institutions, conditions turmoil will. a respect was complicated

low funds dramatically relatively primarily, from result in CDs the brokered as increased so we from book comparison FHLB a cost are the to advances costs. last of overall And more as our that, deposits you well still using if previously, even has quarter, our of funding with though we will, to as their over where in are were respect retail

future, do deposit go we As we think in costs we respect think the pressure about where with the is there in will environment. still to

advertising or are specials like. We CD not the

sheet, we with with on specific a will match the respect relationship existing with who significant balance us. However, or pretty customers and specials fund defending we're aggressive long-term have deposits to CD

retail deposits the So well. that as adding is to cost of

of will see points funding maturities. with I think of pressure will repricing as from existing result some doing. that costs apply cost as funding FOMC respect will XX Yesterday, see by raised what much well basis respect what to we they the pressure with to you

growth which we match typically loan funded Loan Home such Bank that Federal wholesale sheet extent it advances. funding funding the we're with if balance or to then it that on is we And are through being growth margin, populate the provides growth, originations new at

interest net interest margin X.XX% or below the so would the margin, coming net on coming So spread apply that is growth some on additionally new that with pressure.

we that, the of of interest the So a in of think to we compression amount to point I think respect as see defended funding upward we quarters. degree, loans of the repricing pressure if over of upward. some be number with loans have repricing will costs. margin there large result a And ongoing bit little even couple the of did is that the we But call, next out because net

Andrew Liesch

pipeline like for And helpful. loan growth is now? growth just this the rather on really and muted. the It the That's the a thinking remain to portfolio on outlook sounds paydown you is loan do be horizon? net balance is it. to be what going how way Got the And right quarter? stable the up -- see So about stacking But going there. to right

Donavon Ternes

we year, of we But increasing the during the loan grew underwriting tightening June to XX%, the as quarter. portfolio turmoil, essentially approximately carved rates fact, June criteria growth a growth. as result X and paused July pretty obviously in as which XX, So by in origination robust we volume fiscal well loan by the back is overall,

growth think, is or decent return -- the demand portfolio. least We quarter a could the XX% probably we're we in growth, to in to not But loan foreseeable next rate we're if in ramp so. the there we're to that market the do probably loan up we chose What future, going products. is to respect finding so, with at

do be the low next we as the it's probably if about in grow single quarter. we think the portfolio, going to digits And

to cost market visibility like, to us be liquidity, develops of the so. ramp respect As we think demand funding more adequate we with to and do in choose and to growth to able for there's with could up, the that respect

Andrew Liesch

step very the Got it. questions. That's helpful. for taking I'll Thanks back.

Operator

queuing gentlemen, is else up. [Operator nobody Instructions] And

Craig Blunden

Well, further forward look Okay. any with quarter. has to all I speaking again questions, you next nobody of if

for thank participation. your you So

Operator

afternoon available X:XX XX p.m. Ladies at and and running gentlemen, replay this August through conference starting will be for this midnight. at

the access Services XXX-XXXX. give the You I I And may (XXX) access the code, again apologize. I replay will XXX-XXXX. if (XXX) get number system one AT&T moment, by Event dialing

Donavon Ternes

the believe code I access XXXXXXX. is Tom,

Operator

more running little slow. very you to much. screen appreciate I My you a one Thank want give that. is that time? Do

Donavon Ternes

XXXXXXX.

Operator

for Thank not AT&T ready you Services. for Event the conference you that and very for using I conclude our Thank and today. your much participation and does apologize having that

disconnect. now may You

Provident Financial (PROV) 25 Jul 232023 Q4 Earnings call transcript