Ladies and gentlemen, thank you for standing by. Welcome to the Provident Financial Holdings Third Quarter Earnings Call. [Operator Instructions] As a reminder, today's conference is being recorded. I would now like to turn the conference over to Craig Blunden, Chairman and CEO. 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 third quarter results. In the most recent quarter, we originated $53.9 million of loans held for investment, a decline from the $74.3 million in the prior sequential quarter. During the most recent quarter, we also experienced $17.5 million of loan principal payments and payoffs, which is down from the $28 million in the December 2022 quarter and at the lower end of the quarterly range. Currently, it…

[Operator Instructions] And our first question is from Tim Coffey with Janney.

I'll start with my first question. Just looking at the loan-to-deposit ratio, how you feel about that ratio going forward.

Tim, historically, as a thrift balance sheet, the balance sheet typically has a higher loan-to-deposit ratio than a typical commercial bank balance sheet, for instance. Nonetheless, its loan-to-deposit ratio is about 110% right now, which is at the upper end of our range. So we're managing that loan-to-deposit ratio given the current economic environment in such a way that it doesn't go up too much further while still not competing too aggressively on deposits as it relates to the current environment. As you understand, deposits have been called into question as a result of the earlier bank failures in March. And competition has heated up quite significantly with respect to deposit gathering. And frankly, we don't want to get caught up in that to the extent we're not required to, and so that does perhaps scale back a little bit our growth forecast or our growth ability with respect to new loan production and the like. But 110% loan-to-deposit ratio, we've run that ratio in that way in the past, and it is not of significant concern right now other than the fact that we are cognizant of it and don't want to be out there too far on the bleeding edge.

Okay. Great. I think I'll switch to deposits. The profile of your depositor, it seems like you would -- it would tend to be stickier than others that we've seen across the industry at least. I'm wondering, what kind of discussions have you been having with depositors about maintaining balances there, about rates, things of that nature?

So you're right with respect to the nature of our deposits. They are primarily retail deposits. They're small business deposits. We don't have any large businesses deposits per se. In fact, the average deposit balance or average size of our deposit per account is $34,000. So it's very, very granular. And that's primarily retail or consumer that has been generated through the branch system. With respect to our depositors in particular, we are in a defensive strategy mode as it relates to depositors that may have the touring certificates of deposit. To the extent that they're interested in leaving the institution for a higher rate, we will defend and we will match those rates, but we're not out there advertising as others are with respect to aggressive certificates of deposit because, frankly, we don't want to jeopardize the stickiness or the longevity of that depositor. So we have had some defection in deposits, not necessarily in accounts, but some depositors have left for higher rates. That's the more rate-sensitive depositor. But on the whole, we haven't had the issue that others have had with respect to depositors being nervous as it relates to our depositor profile in comparison to others that might have tech deposits, venture capital deposits or crypto deposits or things of that nature. So there wasn't really any concern from our depositors with respect to that type of activity, but there is inquiries from depositors with respect to the interest rates we are paying, and we are matching on a core deposit basis.

Okay. Great. And then one last question before I step back has to do with capital and your capital kind of outlook going forward. Profitability continues to be steady. Is your focus going to be on perhaps growing capital or continuing to pay out a certain portion of relatively stable earnings as capital returns to shareholders?

So we mentioned in the prepared comments that we think the cash dividend is very, very important, and we foresee being in a position of maintaining the cash dividend. As it relates to the repurchase of stock, we also, even through the banking turmoil that has occurred, continued to repurchase stock similar to what was done in the December quarter. And right now, our capital ratios are still very, very strong relative to industry standards. And as you point out, profitability metrics are still very good. So we foresee the ability to continue to repurchase stock perhaps, but we won't forecast what those amounts may or may not be. Ultimately, that will be dictated by the industry turmoil, what regulators may be thinking with respect to capital. As you know, there's been some discussion that perhaps certain capital requirements may be modified as a result of the banking turmoil.

[Operator Instructions] And we have no other questions. You may continue.

Well, if there are no other questions, we will wrap up the quarter. And we appreciate everybody's participation with respect to the call and look forward to the next call in July. Thank you very much.

Thank you.

Ladies and gentlemen, this conference is available for replay after 11:00 a.m. Eastern Time today through May 4 at midnight. You may access the replay service at any time by calling 1 (866) 207-1041 and enter the access code of 9361268. And that does conclude your conference for today. Thank you for your participation. You may now disconnect.