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. Please go ahead.

Thank you. Good morning, everyone. This is Craig Blunden, Chairman and CEO of Provident Financial Holdings. And on the call with me is Donavon Ternes, our President, Chief Operating and Chief Financial Officer. Before we begin, I have a brief administrative item to address. Our presentation today discusses the company's business outlook and will include forward-looking statements. Those statements include descriptions of management's plans, objectives or goals for future operations, products or services, forecasts of financial or other performance measures and statements about the company's general outlook for economic and business conditions. We also may make forward-looking statements during the question-and-answer period following management's presentation. These forward-looking statements are subject to a number of risks and uncertainties, and actual results may differ materially from those discussed today. Information on the risk factors that could cause actual results to differ from any forward-looking statement is available from the earnings release that was distributed yesterday, from the annual report on Form 10-K for the year ended June 30, 2022, and from the Form 10-Qs and other SEC filings that are filed subsequent to the Form 10-K. Forward-looking statements are effective only as the date they are made, and the company assumes no obligation to update this information. To begin with, thank you for participating in our call. I hope that each of you has had an opportunity to review our earnings release, which describes our fourth quarter and fiscal year-end results. In the most recent quarter, we originated $24.3 million of loans held for investment, a decline from the $53.9 million in the prior sequential quarter. During the most recent quarter, we also experienced $25.1 million of loan principal payments and payoffs, which is up from the $17.5 million in the March 2023 quarter but still at the lower end of the…

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

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

Andrew, it's Donavon. So I think if you look at what our deposit beta has done in comparison to others, we are outperforming. However, that's been complicated recently because of the liquidity conditions and the turmoil that occurred earlier this year with respect to retail deposits where there was a flight to the Too Big To Fail institutions, if you will. And as a result of that, we are using more funding from brokered CDs as well as from FHLB advances primarily, so our overall cost of funds has increased dramatically over the last quarter, if you will, in comparison to where we were previously, even though the retail deposits in our book are still relatively low with respect to their costs. As we think about where we will go in the future, we do think there is pressure with respect to deposit costs still in the environment. We are not advertising CD specials or the like. However, we're pretty aggressive with respect to defending existing deposits on the balance sheet, and we will match fund CD specials with specific customers who have a significant or long-term relationship with us. So that is adding to the cost of retail deposits as well. I think much of what you will see with respect to funding cost pressure will result from what we see the FOMC doing. Yesterday, they raised by 25 basis points that will apply some pressure with respect to funding costs as well as repricing of existing maturities. And then to the extent we populate growth on balance sheet with new loan originations such that it provides growth, we are funding that growth at the margin, which is typically being funded wholesale or if we're match funding it through Federal Home Loan Bank advances. So the net interest margin coming on or the spread coming on with new growth is below that 2.88% net interest margin, so that would additionally apply some pressure. So I think there is ongoing pressure with respect to funding costs. But we did point out in the call, the number of loans that we have repricing upward over the next couple of quarters. And as a result of that, we think the net interest margin will be defended to some degree, even if we see a little bit of compression because of the large amount of loans repricing upward.

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

So as a result of the turmoil, we obviously carved back origination volume by tightening underwriting criteria as well as increasing loan rates and in fact, we essentially paused growth during the June quarter. But overall, in the fiscal year, July 1 to June 30, we grew the loan portfolio by approximately 15%, which is pretty robust growth. What we're finding in the market is that there is decent demand with respect to loan products. We could ramp up growth, we think, if we chose to do so. But we're -- probably at least in the foreseeable future, the next quarter or so, we're probably not going to return to a 15% growth rate in the loan portfolio. And if we do grow the portfolio, it's probably going to be in the low single digits as we think about the next quarter. As more visibility develops in the market with respect to liquidity, with respect to cost of funding and the like, we could choose to ramp that growth up, and we think there's adequate demand for us to be able to do so.

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

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

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

Ladies and gentlemen, this conference will be available for replay starting at 2:00 p.m. this afternoon and running through August 03 at midnight. You may access the AT&T Event Services replay system by dialing (866) 207-1041. And one moment, if I get the access code, I apologize. I will give the number again (866) 207-1041.

Tom, I believe the access code is 8265228.

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

8265228.

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