California-based firm says it can no longer effectively compete
The mortgage banking business of Provident Financial Holdings is to end.
The firm, the holding company for Provident Savings Bank, announced Monday that exiting the mortgage banking business of its Provident Bank Mortgage division was in the best long-term interests of the company.
Chairman and CEO Craig G. Blunden said that the board of directors’ decision was an incredibly difficult one after many years in the mortgage banking business, during which is had faced unfavorable conditions. But he said this time is different.
“Unfortunately, the current poor operating environment is coupled with fundamental changes in the mortgage banking industry such as more burdensome regulations, required investments in expensive technology, fierce competition, and razor thin profitability, to name a few. We no longer believe we can effectively compete in the business while still generating acceptable risk adjusted returns,” he said.
Originations to continue
Although the mortgage banking business will end, likely by the end of June 2019, Provident Financial Holdings plans to continue to originate single-family mortgage loans for retention on its balance sheet, both within its market area, the Inland Empire region of Southern California and other locations in California.
Also, the Company will continue to purchase these loans consistent with its historical activity.
“We are strengthening our focus on improving our community banking operations by increasing single-family mortgage loans and higher yielding loans such as multi-family, commercial real estate, construction, and commercial business loans held for investment,” added Blunden. “In addition, we will continue to seek to grow our low-cost deposits to improve our core revenue through a higher net interest margin and ultimately, coupled with growth, an increase in net interest income.”
