Provident Financial Holdings, Inc. (NASDAQ:PROV) Q2 2020 Earnings Conference Call - Final Transcript

Jan 28, 2020 • 12:00 pm ET

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Provident Financial Holdings, Inc. (NASDAQ:PROV) Q2 2020 Earnings Conference Call - Final Transcript

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Presentation
Executive
Craig G. Blunden

resulting from a low levels of non-performing classified assets and no meaningful charge-offs for many quarters. We are pleased with these credit quality results.

Our net interest margin expanded by 5 basis points for the quarter ended December 31, 2019 compared to the same quarter last year as a result of 6 basis point increase in the average yield on total interest earning assets and a 1 basis point increase in the cost of interest bearing liabilities. Our average cost of deposits decreased by 3 basis points for the quarter ended December 31, 2019 compared to the same quarter last year. Over the course of the past 12 months, we've been able to hold the line on the cost of core deposits, highlighting the strength and value of our deposit franchise. The 3.59% net interest margin this quarter was augmented by approximately 7 basis points as a result of decrease in amortization of the net deferred loan costs associated with loan payoffs in December quarter in comparison to the average of the five previous quarters.

In addition, our net interest margin remained at the top end that its range in comparison to our recent prior quarters. Our net interest expenses, I'm sorry -- our non-interest expenses have declined significantly as a result of scaling back our operations during -- regarding the origination of salable single-family mortgage loans. Notably, our FTE count on December 31, 2019 was 184 comparing to 349 FTE, on the same day last year and we have 10 fewer loan production assets and one last retail banking centers in comparison with the same time last year.

As a result, operating expenses declined to approximately $7.6 million in the current quarter compared to approximately $10.9 million in the same quarter last year. Additionally, on a sequential quarter basis, operating expenses were essentially unchanged after adjusting for the $296,000 partially vision of a previously expensed legal settlement in the September 2019 quarter which was not replicated in December 2019 quarter.

Our short-term strategy for balance sheet, management is unchanged from last quarter. We believe that releveraging the balance sheet, that prudent loan portfolio growth is the best course of action. We exceed well capitalized capital ratios by a significant margin allowing us to executing our business plan and capital management goals without complications. Although, our repurchase activity was limited to approximately 2,400 shares of common stock in December 2019 quarter, we continue to believe buyback activity is a wise use of capital, and we currently plan to execute on the substantial returns of capital to shareholders in the form of cash dividends and stock repurchases.

We encourage everyone to review our December 31 investor presentation posted on our website. You will find that we've included slides regarding financial metrics, asset quality and capital management, which we believe will give you additional insight on our strong financial foundation supporting the future growth of the company.

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