Hello, and thank you for standing by. My name is Tiffany, and I will be your conference operator today. At this time, I would like to welcome everyone to the Provident Financial Holdings Fourth Quarter and Fiscal Year 2025 Earnings Call. [Operator Instructions] I would now like to turn the call over to Donavon Ternes, President and Chief Executive Officer. Donavon, please go ahead.

Thank you, Tiffany. Good morning. This is Donavon Ternes, President and CEO of Provident Financial Holdings. And on the call with me is Peter Fan, our Senior Vice President 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 may also 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, 2024 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 of the date that 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 that we distributed yesterday, which describes our fourth quarter and fiscal 2025 results. In the most recent quarter, we originated $29.4 million of loans held for investment, a 5% increase from $27.9 million that were originated in the prior sequential quarter. During the most recent quarter, we also had $42 million of loan principal payments and payoffs, which is an increase of 83% from $23 million in the…

[Operator Instructions] Your first question comes from Frank Williams with Piper Sandler.

Thank you, guys, for the 2026 outlook and the outlook in the back half of the year as well. I just had one question. Has the recent uptick in prepayments shifted your view on portfolio mix or originations? Basically, are you guys leaning more into certain segments to offset the runoff?

Yes. Our mix is primarily what we would prefer, I suppose, is 50% single-family, 50% multifamily. But to the extent we're not meeting our goals with either of those buckets, we will increase the mix of one type over the other. As it occurs, single-family has been outperforming on the volume perspective over the last few quarters. Although this quarter, we did realize more volume in multifamily and commercial real estate than the recent prior quarters. Nonetheless, we're not married to a straight mix in the portfolio as long as we're generating the volume out of those two types.

Awesome. Awesome. And just one other, I guess, on expenses, so that's very helpful, the outlook. But is there an efficiency ratio that you guys target? I know earlier in like 2025-ish, you guys bounced under that 70% efficiency -- or 2024 rather, you bounced under that 70% efficiency. Is that something that you guys think you'll be able to get back to?

Well, it depends upon portfolio growth, Frank. What I would describe is that our current operating expense baseline will be able to fund future growth of the loan portfolio into the balance sheet. And ultimately, as we grow the loan portfolio and grow total interest- earning assets and ultimately grow total assets, we will be able to reduce that efficiency ratio over time into a better ratio for a smaller company such as ours from where we currently are.

Your next question comes from Tim Coffey with Janney.

Donavon, the increased payoffs this quarter a function of some increased competition, is it primarily on price that's the friction? Or is it also a structure?

I think it's probably both, Tim. If you were to look at our pricing, we're priced relatively competitively in both single-family and multifamily. But our underwriting characteristics are perhaps a little bit tighter than some of the others in the market, and that speaks to the credit quality we've had over time. And so I would argue, it is probably more structured than it is price. Although in both single- family and multifamily, we have been loosening underwriting restrictions. And really, with single-family and multifamily, we're probably back to underwriting to pre-COVID criteria when we tightened up during COVID. But in commercial real estate other than multifamily, we're still a little bit tighter, particularly in the office segment or some of the other -- out-of-favor other segments..

Great. Great. That's helpful. And then just double checking my notes here on the loans that are repricing in the next 2 quarters, what was the dollar value of that for the September quarter?

So September, we have approximately $117 million, repricing upward by approximately 15 basis points.

Okay. And then for the December quarter, what -- that 15 basis point improvement was to what percentage?

Approximately $98 million.

Okay. And what was it repricing to?

6.88%.

Okay. Perfect. That's what's looking forward. The expense outlook is helpful. Can you remind us what the seasonality is to that, given that you do operate on a fiscal year?

Well, the March quarter of every year, you'll see higher operating expenses, primarily in the salary and benefits line because of employer taxes being paid until some of the higher wage earners max out, if you will, on some of those tax obligations. So the March quarter is really the one quarter out of the 3 -- or out of 4 that have a little bit of seasonality to it.

Okay. So no intermediate impact from salary adjustments?

Well, yes, July 1, we obviously have increases to merit. And that's why we guided higher in that $7.6 million to $7.8 million range per quarter in the September and thereafter quarters in contrast to our prior guidance, which I think were $7.6 million to $7.7 million per quarter.

Okay. Okay. That's very helpful. And then just a question on the loan-deposit ratio. Obviously, it's elevated relative to peers. But as you detailed in your earnings release, you have ample liquidity. What is the range of the loan-to-deposit ratio that you feel comfortable with?

Well, our business model, Tim, lends itself to a higher loan-to-deposit ratio. Since we're essentially mortgage lenders for the bulk of our -- the bulk of our loan portfolio, there are no drawdowns that come out of borrower requests on an ongoing basis such as a C&I portfolio. So there's no dry powder that the borrower can draw from with respect to our portfolio. So as we're forecasting out cash flows, it's a bit more stable for us than many. And as a result of that, we can run higher loan-to- deposit ratios, and we have historically done so. Recently, we brought that down probably about 5 basis points. I think we were in the 120s, and now we're in the mid-1 teens. And we will continue to work that down as deposit liquidity improves, as deposit competition improves in our markets. Nonetheless, we are more comfortable with higher loan-to-deposit ratios.

That concludes our question-and-answer session. And I will now turn the call back over to Donavon Ternes for closing remarks.

I appreciate everyone's participation today on the call. As always, you can follow up with us if you wish. We are always open to having individual conversations. And with that, I look forward to next quarter's call. Thank you.

Ladies and gentlemen, this concludes today's call. Thank you all for joining. You may now disconnect.