PROV - Earnings call 1 2024 | Provident Financial Holdings, Inc.

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Operator

Ladies and gentlemen, thank you for standing by, and welcome to the Provident Financial Holdings First Quarter Earnings Call.

[Operator Instructions]

As a reminder, today's conference is being recorded. And I will now turn the conference over to our host, Chairman and CEO, Mr. Craig Blunden. sir. ahead, go Please

Craig Blunden

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

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

statements. Our presentation forward-looking company's and will business today outlook discusses include the

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

We also statements forward-looking make following management's during period may the presentation. question-and-answer

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

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

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

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

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

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

the multifamily balances loans offset the when For $X.X months and and investment loan in million categories. in held to X declined the real with XXXX, compared declines estate, commercial ending construction single-family XX, XXXX, XX, ended by growth partly September for June by

XX, well, June $X.X up just quality credit on very million, from assets that the XXXX. nonperforming slightly and $X.X is Current million increased which will note holding up is to you

September balances Additionally, $XX,XXX at of there's delinquency XX, XXXX. early-stage

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

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

basis to in points for basis estimates. no investment XX to for You quarter. the calendar for $X $XXX,XXX and credit June primarily the life recorded X provision portfolio, a mortgage in million loans XXXX of only during average also The from and approximately The we XX loans was result an of in XXXX remainder that September losses allowance XXXX. the XX the We have have for increase higher CRE on losses gross September note should the highest prepayment XXXX. from rates XX, held in on maturing loans XX, of calendar -- the CRE years loan credit XXXX stemming maturing provision points lower increased

equity, value. a credit at loans the we that adopted for and fair losses, increase resulting in mark-to-market decrease in on to tax increase in XXXX, X, a note $X.X held $XXX,XXX the million in deferred adjustment allowance decrease CECL will You a July an assets on $XX,XXX $XXX,XXX

unchanged Our increase of XX, XX was yield as assets the X.XX% the sequential basis net in of XX, a XXXX, interest to XXXX, point compared a and margin XX interest-bearing for quarter the basis total point September increase at result quarter average an cost on the interest-earning June liabilities. ended in total

Net XX prior And XXXX, by average X deposits cost cost our XX basis compared of our September points quarter borrowing September impacted of result XX, in September to quarter quarter. loan the X amortization loan of basis X the basis the loan interest in compared points costs XXXX quarter average to payoffs to deferred quarters. favorably point June to comparison XX Notably, quarter by XXXX margin with ended sequential increased quarter. by basis the for deferred basis increased points the lower net cost points net a in approximately the in was previous the of this XXXX as associated

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

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

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

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

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

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

run September what of we quarter, that expenses the as rate described the $X.X million million decreased to somewhat in will per stable XXXX lower note quarter. $X.X operating than You

no XXXX accruals salaries the primarily was September bonus quarterly decrease the and expenses missed from bonus employee since or The threshold due for annual targets the resulting quarter. expense the to in quarter lower company benefits

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

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

of loans lower-yielding quarterly with as We in the loan also believe interest assets similar end is in lower conditions. the range. lower Total volumes that of result a loan execution the the quarter and of tighter payoffs origination composition average course at with successful decrease the a investment end last action of a of earning portfolio quarterly best quarter liquidity at this of range decrease loan were was slowing the similar growth We average and very balance to balance securities. in receivable the

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

our a We execute dividend by important. and goals exceed capital plan us margin, believe ratios to capital We management well-capitalized allowing very that business maintaining significant on complications. is cash without our

common We approximately capital And prudent of XX,XXX tool. recognize shares September management we shareholders in also XXXX to through returns stock that capital quarter. repurchased responsible the programs buyback a stock as

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

result, our net XX% income. of an capital a in activities resulted management As distribution fiscal year-to-date

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

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

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

Operator

[Operator Instructions]

the question Coffey of with Tim line Our first from Janney. come will

Timothy Coffey

covered company congratulations the First, long a retirement. your time. I've on Craig,

work hope even time pleasure be with. you're executive on been I time. catch the You've to always real And from not a we can though anymore, an to still to just going board, that up

Craig Blunden

be absolutely, And Tim. I your I'll appreciate thanks, available comments. Well, whenever.

Timothy Coffey

environment. Great. to is If I the have in could that on going provision we we for forward. take rates if are what impact provision longer, the longer at than going about and just ask does If higher the higher place, that interest -- general,

Donavon Ternes

So Tim, Donavon. this is

that generally the longer prior And our in extent we portfolio. provision of provision to this see live estimated life increase. did allowance the that estimating loan the the comparison estimated the quarter And will an increases, a because You in the are was result life loan increased that we quarters. for the to of

increased It And the a of think speeds and a come the we -- by basis increase. expect a down expect life MBA would I mortgage that increase. that portfolio index that, was increased note to XX to as prepayment fixed, average September XX from result during to points for would June of we loan quarter. XX, significant by I'll XX-year the

that and component single-family of XX-year make fact The us multifamily. is in for that primarily second we mortgage loans the term

which portfolio is any So makes provision. have speeds about an respect of to going decline those in loan our up our to impact X in XX% with prepayment categories, probably

that suppose, MBA by the get current a next, resulted to a basis very As mortgage that it's speeds from with although of we one the prepayment balance timeline, points going can up do go that amount index it, are those relatively respect went sense on sheet for of I and what quarter in outstanding. provision forecast XX the somewhat populated to down we the period the to the to you flat loans understanding by difficult of for this quarter,

So assume I happen that gives a you what increase mortgage rates interest could to during so guide, some period. suppose, given if substantially

Timothy Coffey

of the revenues longer, as to well, then prepayment part is mentioned, the slow, impact as Okay. you higher servicing because also And correct? this on for speeds going

Donavon Ternes

the right down once significantly from will. now what have is servicing had. It that we we But

of thousands the of but balances, exact in the dollars forget of I So asset. hundreds we're servicing talking small

limited be slowdown impact in that prepayments to with asset. there's the So going on

Timothy Coffey

then one it deposit to trend? that And slowed is look this tell? Or they quarter. cost quarter too Okay. early Is a -- increases is like

Donavon Ternes

down and experiencing slower I've for many quarter. experiencing doing, asset costs. what respect with Well, it reports liability both season rise reading early deposit what costs. I in us, been occurred banks balance others analyst the in think gets other But many slower on really this to is the too to a probably side sheet deposit the tell. hearing also it's rise We're and side earnings a and from to are that

margin same yields that our interest earning the as kept asset and Our up liability our net about interest-bearing went flat. costs

approximately look for the of liabilities repricing neutral-positioned, balance we assets any same type a period, the maybe as We fiscal and behavior same out sensitive given little we're respect sheet. would amount of bit this expect in to because year relatively with timeline we liability have the

deposits deposits. of there's cost the certainly pressure so on and And

higher what rates gets repricing-wise, doing There's similar. and for to certainly cost with looks very on and where the are longer interest it's us borrowings it down sheet for is like balance the pressure it means repricing current respect of to

Timothy Coffey

and I'm wondering, building. across they the seeing tenants your loans. were were lease-up real they in trends. problem they office And are in The couldn't issues California reported Okay. lease-up emerging kind was estate the you problem new commercial question There get portfolio? nonaccrual of of Southern that just quality institution that other The the in marketplace, on another loans. office loans was wasn't one couple credit then a any

Donavon Ternes

To markets typically the we high-rise markets, when than not we seeing locations seem But that date, the our collateral. think we're or suburban seem be. downtown of and urban It's those about office really. centers to have on portfolio, be some urban to doing better don't center

on of one loans into of ancillary our foreclosure we quarter, XX, foreclosure kind were September bid-out recovery this went the a note, nonperforming at and Just full an sale. at for

sale. equity great good we've there at few we for commercial some single the is a in of years and foreclosure So deal a foreclosure not very a market so resolved, recovery quite there. still just not we full much not these estate. day, the had a of real one properties, seems had to The be But a in

Timothy Coffey

Okay. The investor your has information values. loan really deck good on to

hear. really then are so those you, one final to question Donavon. that's for And good So low,

is Craig that retiring, Now you #X change? to thing plan what's the

Donavon Ternes

that is a Provident change thing true Well, or there's a drastic I one dramatic that about coming, is community Tim. bank. don't that we know are The

are have Empire always base way. respect in that I radical opportunities we challenges We for changing see number serving years. in company. of with a and the a to don't how And a Inland customer the operate We

But loan we There's by and that and to change, can dramatic make can that Tim. determine large, with market new There given see I underwriting standards efficiencies. adopt don't some potentially changes one respect improve portfolios technologies our environment. to potentially to are things

Operator

Andrew Piper next with to Liesch go We'll Sandler.

Andrew Liesch

$X.X both, million of Congratulations $X.X there the commentary a going to you to this average could on quarter year on forward? up, the your step CEO so promotion. run for rate, be year. retirement million. full the Is Craig Or Donavon a and The expense that

Donavon Ternes

our don't about to run up. I going is to there's be. be a step going we believe believe That's Yes. what rate

there And Although little weren't of his salary that. was as bit targets than didn't better this some result that, a a mentioned the those expenses of quarter, quarter. as comments, related But it for in accruals. our and we to bonus meet Craig bonus benefit

million the quarter, of if as as were in million. what statement as than the accruals just So from $X.X which income June in the well we carry it quarter. And rather some stock well occurred that stock vesting, $X.X to elevated all contrast we that came bonus and at ramifications in options was vesting up restricted upon trued June

significant is except decline quarter, closer of run the course, for quarter unusual the a this from bonus standard of items. rate And So June accruals. to a because

Andrew Liesch

-- relatively just in to the the you on the just the safe that then to the maturing growth? production hold And commentary side recent is still going or -- pipeline, have the a loan assume on would muted portfolio paydowns with steady, and

Donavon Ternes

muted be growth. It's going to

growth stabilized I June some down as we certainly quarter, better current our from than get the the quarter, environment with March think the quarter. environment fiscal I we populate the think has year, March into because might

was if would I perhaps those quarter loan more either And see growth. of to we in quarters. than interested a think be environment that, continue better populating X September we some

I think underwriting we've were, our that on interest products the from there. is we're and our rates loan growth where offering. standards raised We've tightened out loan we

that volume we And origination our if do from come result staff I'm more hearing a that, has to could so. down. of do origination chose as we

we're question spread that point make primarily on basis we see much It environment growth put loan if funding basis So it's the spread a doing to a I at doesn't a suppose, I margin. and with what XXX of liquidity sense, point really XXX or think the environment.

So that's view it. how we essentially

growth, So but flat. slow not it think, be, it's would I necessarily

Operator

[Operator Instructions]

the no There phones. from questions further are

Craig Blunden

speaking All quarter. next appreciate you. further you to right. Well, questions, everyone's look no if there again are I Thank with forward participation and

Operator

through Thank at gentlemen, running for beginning XX:XX Xnd at midnight. you. today, conference a.m. And ladies available Pacific and Time replay today's is November

again, (XXX) and XXX-XXXX access (XXX) (XXX) XXX-XXXX code Those the with the or (XXX) code XXX-XXXX. AT&T XXXXXXX. entering are may by dialing You of replay access of numbers, International call XXX-XXXX may system dialers access the X XXXXXXX.

Thank your for today. That participation conference your AT&T you does using Conferencing. for conclude for Event and

may now You disconnect.

Provident Financial (PROV) 26 Oct 232024 Q1 Earnings call transcript