BANKING: Provident Savings Bank's net income rises
Jan 25, 2013 (Menafn - The Press-Enterprise - McClatchy-Tribune Information Services via COMTEX) --The holding company for Provident Savings Bank, in its conference call to investors Friday, Jan. 25, tempered a solid second-quarter report with the cautionary footnote that choppy waters still remain on the housing front in 2013.
Craig Blunden, chairman and chief executive of Provident Financial Holdings, said the company is pleased with its current operating results and believes it is well-positioned to take advantage of growth opportunities.
Credit quality is improving for the publicly traded company, which operates 15 retail/business banking offices in Riverside and San Bernardino counties and a mortgage division with two wholesale loan production offices and 16 retail loan production offices across California.
Nonperforming assets, the collateral of which is primarily in Southern California, declined 32 percent in the second quarter ended Dec. 31, 2012, to 26.8 million, or 2.16 percent of total assets, compared to 40 million at June 30, 2012. Nonperforming loans decreased 10.1 million, or 29 percent, since June 20, 2012, to 24.4 million.
Net income rose 274 percent. Strides were made to hire new personnel. And shareholders will be entitled to a quarterly cash dividend of 7 cents per share, a 40 percent increase from the 5 cents paid on Dec. 11, 2012.
Provident's performance surpassed analysts' projections for the second-quarter, ending the period with net income of 6.9 million, or 64 cents per share, compared to net income of 1.8 million or 16 cents per share a year earlier.
"We continue to believe further improvement is likely, but at a slower pace," Blunden said in the conference call. This will lead to inconsistent credit quality, he said.
"Our performance is closely tied to general economic conditions," Blunden explained. "While our outlook regarding credit quality continues to improve, we believe high unemployment rates and slow economic growth may last through much of 2013, keeping our nonperforming assets elevated."
Blunden said delinquencies and charge-offs in the multifamily and commercial real estate portfolios have remained low through the quarter credit cycle over the last few years, but the single-family portfolio has not performed as well.
Positive news articles about an improved single-family housing market make Provident cautiously optimistic we may have found the bottom, Blunden said.
The volume of loans is up significantly from last year, and loan applications were at elevated levels for December 2012, contributing to a more robust pipeline in 2013 than 2012. The gain on the sale of loans rose to 17.8 million for the quarter ended Dec. 31, 2012, from 5.9 million in the comparable quarter of 2011.
The increase in net income was attributed, in large part, to an 11.9 million gain on the sale of loans, and other factors, including a 1.1 million decrease in the provision for loan losses.
Provident also reported that:
The company originated and bought 26 million in multifamily and commercial real estate loans to augment loans held for investment.
Even as operating expenses rose, largely because of new personnel, the efficiency ratio improved to 58 percent from 74 percent in the second quarter of 2012. "That means increases in revenue generated from investment in mortgage banking is outpacing operating expenses,'' Blunden said. "The investment is paying off."
The company repurchased 93,580 shares of common stock at an average cost of 15.47 per share
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