Provident Financial Holdings, Inc. (NASDAQ:PROV) Q4 2020 Earnings Conference Call - Final Transcript

Jul 29, 2020 • 12:00 pm ET


Provident Financial Holdings, Inc. (NASDAQ:PROV) Q4 2020 Earnings Conference Call - Final Transcript


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Craig Blunden

compared to the March 31 sequential quarter. And we believe further declines are likely given the current interest rate environment. The 2.9% net interest margin this quarter was also negatively impacted by approximately 7 basis points as a result of the increase in the amortization of the net deferred loan costs associated with the loan payoffs in the June quarter in comparison to the average net deferred loan cost amortization of the 5 previous quarters.

We continue to look for operating efficiencies throughout the company to lower operating expenses. Notably, our FTE count on June 30, 2020 was 178 compared to 187 FTE on the same date last year, a 5% decline. As a result of fewer employees and other cost savings, operating expenses declined to approximately $6.6 million in the current quarter compared to approximately $9.7 million in the same quarter last year.

Please note, though, that the June 2020 quarter benefited from a $575,000 reversal of incentive compensation accruals previously expensed in the first 3 quarters of fiscal 2020. Likewise, it should be noted that we incurred approximately $1.2 million of onetime costs in the June 2019 quarter last year associated with scaling back the origination of salable single-family mortgage loans.

Additionally, on a sequential quarter basis, operating expenses declined by approximately 4% primarily as a result of declines in salaries and employee benefits, equipment and other expenses, partially offset by increases in sales and marketing expenses and deposit insurance premiums. Our short-term strategy for balance sheet management is unchanged from last quarter. We believe that leveraging the balance sheet with prudent loan growth is the best course of action that executes on that strategy in the current environment may prove very difficult. We exceed well capitalized capital ratios by a significant margin allowing us to execute our business plan and capital management goals without complications.

We believe that maintaining our cash dividend is very important to shareholders and doing so takes priority over stock buyback activity. As a result, we did not repurchase any shares of common stock in the June 2020 quarter and wish to emphasize that safeguarding capital is becoming increasingly important in the current environment. And it's the wisest course of action until we get better clarity on the current economic landscape.

We encourage everyone to review our June 30 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.