PFC - Earnings call transcript Q3 2020 | Premier Financial Corp.

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Operator

Good morning and welcome to the Premier Financial Corporation Third Quarter Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Tera Murphy. Please go ahead.

Tera Murphy

you. Thank everyone. morning Good for call. for you quarter XXXX earnings conference joining thank today's us third And is being Corp. call available This also at will audio the be replay Premier Financial webcast and the website at premierfincorp.com.

to company's prepared leadership's performance, be comments the take Following strategy questions. your on they and will able

factors Actual on information call control. may results Mr. Information on file begin, to and Corp. Exchange with over in hear now, forecasts from Premier the related future on additional financial are has comments. conference forward-looking business materially we during statements operations the Financial and and in the turn that during to included remind a Securities factors which over statements may the Before including you question-and-answer and And the call current forward-looking for projections I'd news and the Hileman result Commission. like differ company today, results reports period, these I'll you his to company's no of management for release risk the as

Don Hileman

good conference morning XXXX Premier Corporation the Financial and to welcome quarter and third call. Tera, Thanks

Joining President; financial XXXX for Gary Officer; quarter quarter me give our morning this our third Chief night, well is as Paul and Matt Bank earnings Banking performance Garrity, CFO, Liuzzi, Nungester; Chief Small, issued the Vince on details our on as call release. Last we more the our to Lending Officer.

have. insight and take of Now will our the we you the XXXX. of would conclusion provide and questions into the remarks, challenges any like release that the might At discuss opportunities for remainder to team

solutions their our operating environment, clients needs. the As we and focus our challenging continue remains to through on to providing navigate

sales sectors client in strong. industry environment are for The of home while struggle are seeing hospitality the housing operating and We our divergence continues to base. different

dedication efforts associates them attention hard I for expect their to clients of times. stressful and thank want All these are all service very Financial. during they to Premier working and very our the provide from And our

entire The to economy. challenging with COVID-XX impacts to the the for continue country third as current well continued deal our the quarter be pandemic. We as of

how clients and affecting We our are is own consistently monitoring operations. our it

our economic We well related the I live employees as strong July. a search the clients, on of of all, health builds and to vaccine quarter major from the is XXXX, conversion serving a for baseline continue am focus health the us to be serve. our into completion in standpoint. supporting and as ensuring The and the of with pleased for continues in and and consumer with very the and the we third fog in expect our COVID-XX resulting impacts confidence which to concern as we core in immediate wellbeing performance a the needs economic pandemic the communities core

on net the on quarter return quarter efficiency common for basis, basis compared average XXXX basis was on per XX% GAAP below third $XX.X compared XXXX. ratio X.X% able the million million to assets third core $XX.X XXXX. with for core been diluted $X.XX the $XX.X a diluted quarter million the pre-provision our of XX.X%. maintain per at $X.XX We've Pretax with to a strong third or share. X.XX% quarter share net $X.XX was share Third in was or common a quarter income income per On of diluted or at

to points. XX quarter in moderating losses with basis Our credit of for this Net quarter elevate charge-off loan higher economic to the loss line was did slightly this expectations provision also due environment.

June, at stable X% of loans see credit to NPLs Matt minutes. category restructured We increases quarter of was in loan amount few by September this will increase quality a However, this moderate was have improvement provision offset generally in point which in allowance X.XX. one the continued a resulted details losses, net of with this and basis for from in in the impact Overall, more very XX deferral on ended the quarter loans. dropping quarter-end. on in

in monitoring strong on be sale our levels the We loan communicating very and total and activity quarter another gain Ongoing for mortgage Overall the strong bearing third X.X% activity as continues. clients. growth diligently of with led strong very with a deposits deposits and area. of continue quarter to percentage in a the was to X.X% deposit in trend deposits loans non-interest for shift as a of

additional were was appropriate that opportunity quite levels the our capital and capital were offering rate. the it We bolstered coming satisfied to for overall of environment stack. XX% two offering We the are execution $XX of debt the the and solid capital us in further with present successful at September. by felt Our tier for in the million a was strengthen

an At with We are repurchase pleased quarter the year and strategies. remaining authorization I now for usage of fourth announce we Paul? our Paul provide to XXXX quarter a of also continuation annual ask as common I to the for of under X.X%. our yield stock will purchase assess a conclude. as continue the authorization. had quarter-end, well details XXX,XXX times, dividend uncertain $X.XX to shares In per approximately these before of plan ago share dividend flat with at we dividend other capital

Paul Nungester

results and Don. morning everyone. Good impactful highlight summarize third items. certain you quarter Thank our I'll

prepayments residential Total again, the mostly loan the reduction. lending. net We million was continuing is $XX by PPP. -- drive commercial growth some of growth, and in loan shrinkage sheet. generated offset was portfolio balance additional very portfolio refinancings muted origination had as commercial and growth net Residential consumer loans including to volumes continued First but loan strong

loans we sale. a held for did $XX increase have Although, million in

from June XX for For total at deposits began deposits about XX at Non-interest represented added XX% annualized X.X% as $XX XX% and September million we rate. funds another using deposits, growth June a versus businesses declined of XX.

the explain allowance. I'll Next

of the we that noted, on discussed previous effective previously CECL January impact we've As calls. X, did adopt and

was for slightly $X.X provision credit by offset loan the of For a due charge-offs related established. million a loan from $X.X that acquisition. only loans is XQ, increased the PCD gross of specific million allowance Approximately by had $X.X of That to expense million. reserve net to $XXX,XXX UCFC one charge-offs

X.XX%, only factors concerns better slightly, Quantitative began further unemployment for future a to primarily while an charge-offs. At at is However, the risk X.XX% a of credit accounting factors increases loans increase improve increase as than recovery reflected reflected if to factors our rules last charge-off, charge-off. for balances. be national the basis. potential one have to due due to X.XX% impact ratio again, X/XX. was to PPP basis rather net those would an allowance basis migration from qualitative in primarily factors. our offset non-PPP net including we X.XX% volumes the LTM improved to classified Qualitative coverage against point and XQ and by migration a allowance were is X/XX. continue at But through economic provision And from would in X/XX, improved The on If quantitative mention experienced increased as total XQ rich increased $X.X an in expense in which up related or forecast. special some instead credit a be points you and forecast, that require a exclude seven loans, against be million

the to where ability XX, be floating To strength you due about $XXX from to a and strong XX.X%. XX, estimated up successful tangible equity serve At at the a X.X%, our to continued is rate We equity to June Kroll-rated net issuance capital September million minus September was for did $XX total holding XX, risk-based and company's our earnings. of with be ratio primarily complete of I'll sub-debt balance source to B to balance bank the discuss boost during initial finish holding an addition, X/XX of capital This ended on bank lowest X.X%. In include triple year The million economic sheet, million we unamortized the helped of a very of marks, the accounting coverage company. this as recession. if with X.XX%. ratio fixed this would capital capital $XX enhances for total

the noting does UCFC of through year-over-year $X.X compared the balance none This I'll $XXX coming coming interest will are This $XX.X third X.XX%. with accounting purchase income, interest quarter with the Next of three the of include net was we of for turn which PPP skewed million loans, of million. operations, and quarter margin million statement. this in that of in the XXXX. in average includes of $X.X interest a I comparisons through XXXX XXXX. obviously This million net by interest income benefit expense. with from have with to also months start $X.X of accretion that quarter an resulted interest I to on third including marks million income fact third will preface income

This linked funding as continued Non-interest margin interest total net X.XX% our items, to of for which almost was experienced improvement those up our from attributable was growth and XQ a deposit costs, XX% as be of income represented impact liquidity basis. from reduce to $XX on year-to-date. is the excess the Excluding significant would addressing X.XX%, million quarter well efforts revenues.

for primarily income gains Gains up with were XXXX. Offsetting loans on MSR continue negative quarter million pricing to amortization a high last adjustment mortgage due with million from continued banking along million, First million quarter to last again was third mortgage $X.X expense sale were quarter, of $X.X which of $XX and those million, is from fairly on increase $XX.X prepays quarter adjustment Evaluation $XX.X speeds. consistent due valuation this negative $X was to million, last up volumes. quarter.

levels, to that speeds As and rates revert prepay improve allowance. able will valuation recover be to against we normal

from from and management $X.X last discuss million year. $X.X were of wealth Service million million security increased year. last Next charges gains, And $X.X I'll to increased other which $X.X up And more came million, last income commissions fees $X.X million an shortly. $X.X million year. million at in insurance had from we $X.X

Next discuss expenses. I'll the

in the merger incur in costs related quarter we million $X.X First, XXXX. of third

the and synergies have occur So million more of largely to $XX cumulatively, completed do incurred to much in expect not date, since core implementation we conversion. any have we and XQ if we

second and the total increased XXXX, FDIC were to $XX.X other compared So, premiums. million the primarily million expenses excluding quarter $XX.X of expenses merger to due costs, in with

we $XX are X.X% approximately MBS advances is in resulting from expenses. penalty transactions by First, XX $XX no funded one of with by income a advances net recognized had a in approximately to being which sold basis X.X% that of income. the extinguished other million, yielding FHLB securities $XXX,XXX and net reinvested The approximately points. next months of pretax and expected of enhance is overnight The point. to increase margin a cost into interest over the rate approximately gain effect XX a fixed yielding incurred securities impact early proceeds the $X.X sales net basis thus $X.X prepayment million, we rate of average of million at Separately, million of X.X% weighted

Next, FDIC and increase credit estimate third insurance year-to-date of due in a quarter premiums were expense a of XXXX. the of The the is expense impact PPP up. third XXXX, accrual in quarter of quarter from XXXX second includes up $XXX,XXX largely to the the $XXX,XXX $X.X million quarter the true prior in from expense and in

of were of a credits. the PPP also LF, funds plus asset not the credit third increase Although, balances receipt FDIC quarter are in assessment were they we bank in PPP component, from ratio small of leverage base borrow loan XXXX because from any deposit asset loan our excludable are based $XXX,XXX insurance component. the would based did not the that the the component, premiums excludable from through

costs well as core in since generated favorably XXXX. costs as of the compares of merger quarter the we XX.X%, very prepayment which exclude ratio we a the security FHLB XX.X% to third excluding efficiency gains, So,

average net million with up income net our pleased costs generated on represented I'll wrap an $XX.X basis earnings. a We're $X.XX benefits. Merger share. or $X.X million, reported core $XX.X or On operating which basis, our a per return with we after-tax on million of we this $X.XX pre-provision our very GAAP per a quarter summary assets. of profitability income to realize robust as was Additionally, third pretax continue quarter merger X.X% share.

had we Excluding earnings final $X.XX those conclusion, implementation and we near share. or core as $XX.X million synergies. strong conversion per completed quarter another core our costs, were In of

financial healthy on COVID community impact. review. a solid Our sturdy initiative, Gary merger profitability continued the the and I'll for levels integration foundation current over capital recessionary now to in highlights and turn Gary? progress, environment. banking completes my our operating And call remain That

Gary Small

a and quarter We few terrific Paul all. that give color. to some certainly had a will I'll hello provide performance Thanks, additional and comments

next report undertaking as XX date, and in combination -- cleanup very July to we're today. and an adjustment And few we're efforts days stage large are and have operational MOU continue client We now our the experience integration post pleased over a Work slated with and initiatives typical those We provide which our our the few months, -- or improvement wind excuse possible. again, was we'll optimize over to a down goal activities an will and is XX. best successful MOE me we effort, the on weeks. that of continue see that those the next resources very

note is. movement between of into normal two their as might income was were related we down for There bit grace the You periods versus clients wave income the for by income that levels positive systems the a and integration, is liberal enter accounts. which fee returning deposit core norm. was the non-interest fee QX the that activity that were Fee quarter affected fee to

of permanent our fee by the base related of Those we to reductions QX. From fee go programs. reductions the costs into corresponding term the COVID and a more are expense perspective, We select more resetting business a -- on points election income have our of are also each that's than cetera, et uncertainty in pace offset effect. a programs administering discontinued near and those by as regardless created units business good a cycle, the

year Our than is under its mortgage circumstances. and XXXX. early expect stronger residential might the expected least excellent business into be carryover commercial The to effect activity at continues we

business the some campaigns Across worth wouldn't wealth Although, than for of stream matter And enough less organization investments are with a we're equities management continue understandably are all businesses and want remembering initial cost activity say is a to always revenue mind retail that cash to promotional basis to bit our We'll our insurance this much early and underway more us the continuation five there's couple evidenced pipelines diverse it's decline points of big overall it's results quarter's resilience quarters. I as and management closely. our getting to -- funding. period. the lowering by theme in are funding small third drop by provide returning were and services. costs excellent usual Competitors of performance. shop mode pricing And a rapid of as manage to results. we strong home market. a and sales with the fee post our in the seen to expect very And as of within continue And end activities at adding business we've single Margin top to businesses these flush our of deposit a month over normal. next of see little the the in very

foreseeable yields, and for loan to to continue future activity effort protect we in our deemphasized floors yield. have Regarding use the swap an

at -- migration very A but comment levels, we are pleased with and see very keep and measured We a clients opportunities is no to on COVID-XX to manageable up, locations the steadily a In QX thought. we their our with to credit. past us reflected interact business do first delivery Consistent brick announced pace. points. our closing in where and closed for how remaining preferences. in terms from from of trending Commercial their levels very with stand. activity, of look branch eye basis the have but QX three of with to us mortar the realign space and on channel close effect and quarter continue meaningful better upward Final at enable XXXX. the recently delinquency certainly We change in and our responding customer increasing, a with approximately We consumer generally residential affected we levels. perspective. XX service very efforts, we're resources had

model a to With fashion market that, turn will worked time. performance expect leverage you continued all point, build to resiliency in better this deliver a We I'll builds approach strong the operating over we forward. going that business change conditions. over us should to for it This It's and no Matt. almost under

Matt Garrity

Gary. comments had to pandemic, our portfolio as COVID-XX this of Thanks, accommodation result morning deferral approximately as quarter to our With you our a pay the on quarter, loan received third quarter thoughts that borrowers payment return on moving by for we're respect like declined quality payment. expiring the asset activity total on approximately to activity XX% pleased forward. of update to performance to to report third the deferrals payment XX.X% the returning deferrals and We of the during borrowers I'd returned saw payment.

our would pay largest of tracking deferrals. was our XX% third end the also to in should quarter's in category, seen our This for our our high reduction note the returned under of portfolios. and As over food call, category. expiring in by our the what payment over last care in is October I in and And we is accommodation quarter. service long-term to in that put month. of we on Balances as reduced mid-single-digits us deferral category, percentage trade month Monday, our XX% over experienced deferred the sensitivity discussed loans XX% retail

As outlined during also quarter, deferrals of days. these but we largely represent an some additional saw maturing earnings XX deferred were for extensions that deferrals in extension our release, the XX-day

which over portfolio compares X.X%. consumer the the approximately average side, of mortgage very favorably were On deferrals national X.X%, to

during segment. as and see asset of in the it what performance I portfolio communicated largely during stable consistent in line hotel our relatively quarter, with characterize would The the during We was contained In our quality the previously. migration quarter. but portfolio quarter, terms during the quarter as we expectations expected remained third with remaining migration did the

continue will borrowers require that that expectation recover. slowly additional of the improve support in continues performance while to Our they while these several to is segment, hotel

the mention quarter the was category loan of substandard. to $X.X million hotel much we the hotel migration In with terms to quality during asset special the one, did segment see migration moving of

do of relatively we overall portfolio further by segment this loan migration at the loans. that a expect design, I our hotel segment, note represents While in total would small portfolio of X.X%

monitor to performance this the continue portfolio loan our entire closely. We of portfolio and

portfolio the quarter specific characterize COVID-XX in charge-offs being the had the been Paul we the from previously that the performance at and merger. his $X.X it appropriately was as reserved we mark not completely and for having had believe third had loan against remarks, established. for. charge-off the loan as as individual retail would having As million a established is net mentioned I issues time reserve of driven of identified an The loan had a remaining balance in

remains outlook overall like. quality quarter economic our high on looks a last level recovery We remains economic the believe for what asset Our pandemic, there vaccine unchanged reliant is from of the duration continued and future stimulus comments development of remains uncertainty.

So far, has across than the that tied consumers impact more of not. and under are been segment, uneven segments the greater with businesses customer contact duress to pandemic dependent those

to close we and stay with risk during to balance environment, our our continues sheet raise management bolstered team a customers the strong the strong In successful monitor quality were our well-positioned further and asset spite strong position, team Our of quarter sub-debt challenging entering the place. given performance. cycle, in

We overall also into in have believe stronger prior cycle cycles. our than that come borrowers this

are While we closing migration Don for cycle, Don? it turn remarks. during quarters asset losses additional over future to the now believe through. fully credit like to I'd the we quality and in expect continued to call back see well-positioned we

Don Hileman

Matt. you, Thank

position worked to challenges hard I to bring company, to will future we the challenges. ourselves proactively that continue a address these company believe as the for have While

for our related dedication clients out quarters people credit of our challenges us as and challenging As integration, be have am this the Premier your of to that success. at progress you you time. we credit and least future. And our noted and our allowing have the and consistent interest communities is us The more to and placed factor until our expected clarity. teamwork the see continue proud we to and their noted thank our in to believe to execution employees of merger the playing we that power so with develop, us. several behind in a a in focus to Corp. shift during the We environment for philosophy joining trust proven Financial have We appreciate by commitment driving I uncertainty

take to glad questions. be now any will We

Operator

Piper [Operator begin session. come now will from of the Siefers Instructions] first We question-and-answer will Sandler. Scott question The

Scott Siefers

Good Thanks morning, guys. questions. taking my for

Don Hileman

Scott. morning, Good

Scott Siefers

let's Hey, see.

is Like we those are some I about working need within that just wanted you portfolio, first are borrowers Are talking deferrals, do that? talk support how than stuff contemplating the When as just substantial think those you of extensions question portfolio. for simple hotel for as I mean you to additional the out? more what in or that? ask that by

Don Hileman

impacted guidance to some COVID. approach Scott, with these extension Banks that just by consistent to it’s really the clients out continue We've recently, really to came continue encouraging. those. of that of regulatory assist deferrals, to taken support the are

that Although, a hotel assistance, really say little a and for we're additional really need time I those more value of exchange our any would bit this loans with borrowers it deferred of approaching around.

little or these increases we to will particularly to we a with to or about support to expect portfolio, segment But thankfully need it's collateral longer. for this So, compared that going structural while folks the enhancements, of that things nature. small relatively overall that hotel be recourse, continue the thinking do we're in and economic in be

Scott Siefers

maybe you. then question a And Perfect. Thank Okay. for Paul.

we by well So, held it was core up. all when noise, out back the I surprised the how margin,

where Just goes see curious of from the maybe if a takes and little on more us it them can you here. sort color give you puts and

Paul Nungester

Yeah.

for restructuring most So, some I get pickup of a the about the a we little during described we've been to part. of take there. did, it couple earlier what of rid prepared transaction of the Part bit things liquidity, borrowings is able from remarks

in we active here, security quarter some third ramping did investments. get addition, up the In

and that because we dragged and But we that buying second buyer as a the helped ability stuff. as we to of obviously work prop normal that, just other in growth, So, quarter also in deposit strong well issuer, an and them, was that as put up the were could there. front strong best securities surprisingly came in we sub-debts were things that the on given as some we had which

Scott Siefers

able Okay. Perfect. it forward, overall And of level? is support sort we to that then, just -- the as current you look

Paul Nungester

Yeah. we've level. think the shacks think the of rolled hit the loan Most especially down. of our absent most -- the portfolio, We Yeah. trough fours variable we stuff any a part system is at for additional three here, already

got bring more We will banking those continue continue more got to look some compression But needed We've private higher still And five-year a as get certain on there, like money arm costs continue little down down CDs, turn. costs comes and there and for a we that, we've funding beaten out very strongly portfolio at things up been deposit to time. little resets opportunity. our bit to whatnot. will markets over to funds especially, if we've that which that and could

Scott Siefers

All right. Thank very Perfect. you much.

Paul Nungester

Yeah.

Operator

is Perito The of Michael next question from KBW.

Michael Perito

Hey guys. How's everybody?

Don Hileman

Good. Good.

Michael Perito

hear. to Good

was, steady, the would question today to as growth. seen as some from steady quite looks me that Matt. as And drive, credit from standpoint, market First commercial we there see growth. acceleration even a loan into that of competition a to just commercial is you organic growth some how from you loan financials least continue I as pricing growth, for can see next it guys curious it some appetite loan risk standpoint, the maybe for ex-PPP, loan year here mean, standpoint, move commercial have from conference The balances, at as seem but not robust commercial I'm a

Matt Garrity

solid the our in it's I wouldn't competitive our the characterize market. fair in years. bank QX. very the would it But as characterize growth has of institution kind as some still good experienced activity and is growth Sure. obviously over a commercial of I there, growth of growth in a couple quarter. really that But historically being that third Mike, last amount either

of QX, we activity. I some in similar pretty people some growth. impact would think spite payoff see going what But will payoffs, planned a we'll get a These growth, are permanent out us as in amount in is expect of QX market. strong that, I into

aspirations for I we've includes of were there, had we market, to in sense the looking commercial the the what that XXXX institutions enjoy team relatively fairly to pre-COVID, both really conservative say how don't. a levels goalposts philosophy deals and Our think both I over and will deals. solid right for again, this in but portfolio. a well-defined which growth out loan going and operate organizations ones pre-pandemic, Credit But make set it's wouldn't be historically robust got

the one raised, but we so, Clearly, a few those look in will portfolio our the there. probably questions year. COVID either. questions that be We'll market going haven't asking what's of So, with to haven't bring things that still consistency this on to of next we because is and some more -- we we pulled oars grow

Gary Small

Mike, this is Gary.

to the for done. to the on strong and talented selective additional last team adding added As quarter commercial in that, get it evidence we've folks five the mood bankers from some competitors. growth in We're

Michael Perito

versus with think about Helpful, the we how production should here, out historical to activity can And we units as guys. term? environmental I mean, you balance help next near mortgage on just some some elevated here, us trends and side, clearly what's the quarter Thanks. look two that then or seasonal

Matt Garrity

got very Mike, to -- Matt. pipeline a QX. strong this into We've is going

bit. production construction saw the we and on nicely a refi dial side As activity. really It down perm little with was backfilled purchase

bit It QX into norms the but with QX to that that think because internally, will next is as relative both reflection pretty that XXXX in year we're turn won't be of we're we last through that, pretty transparent up in all a enjoying in -- we forever. bleed profitability won't will be And little what banks us experiencing last and of we're solid. expanded well. we would we've some going example, QX clearly for reach capacity have with do outsized really this feel pricing our been to as that, us So, seen margins, during

Michael Perito

today? see Thank mentioned methods do the And with and curious, you. how do seen closures, mean, in far the Premier I'll last Gary, stop you the of I the changing and kind you've delivery footprint just preference yourselves products stuff there. you is you three ongoing pandemic. combined during like how closed then along now I'm Helpful, and that for the that customer somewhat there's just guys see stood of me. or you right-sized, branches Matt. out branch guess its just that do more of evolving of three services, initial guys I the kind terms just feel you

Gary Small

but market little for the being I'll transaction the selectively as they've consolidations had recurrent pure on not not three compliment two Both of given on basis. announced, levels The the a consolidation. some it's less unpack historically organizations pure exiting are road. that pretty And the a branch movement, bit. as the branches just we once market, and time. easy that board a do the easy and pruned We're a been down to

expect have I'll I down on going to there to like large announcement opportunities anything big going be network So, have that as the potential ask the don't bit that. wouldn't whole. but I comment announcement now, at you the a in When continues look we're locations there, a year XX% a expect Vince again, branch like some little or shock our a that. to of component of we

Vince Liuzzi

looking branch that Gary. of everybody as at I we our growth. announced I remind see the we Columbus. where everybody the in our you, I'll in Sure. of would think distribution Thank also opening we're prudent management quarter also program, part second remind opportunities just do

digitally. at looking not where, ability the our to and constantly distribution, when, retail branch bank, digital customers want to and connect how just customers meet we're our with that retail with and and we've as the to around so more they focused, you'll see opportunities optimize around strategy interact network And but got

And remark function and us helps of decisions customer the strategy this distribution program optimization make would an I so, need retail really is a that ongoing the meet to just that demand.

Gary Small

into to that plan, see digital relative the speaks It into to but you and today, trimming in They'll dollars to would we to digital, our wise, were channel comments And support. earlier, channel our my you realigning things into look need traditional to the be, as significant stands commitment continue all of see and space. move some digital if what priority it a be going Mike, resources. more you'd they strategic space, of

Michael Perito

expense outlook think actually NIM And pretty be rate it a as to relatively -- going you sounds we resilient is but difficult your about from here, here, do environment. the like still

offset, expense mortgage growth not but grow trajectory that the are you you upgrades platform huge of this enhancements along I expenses and the mean, a in these on significant in do that this where helps, which you're there's your the where to have way at like You move you're kind feel generate imagine impact making I appetite limit digital you certainly point a to potential path. and can as efficiencies scale negative upfront a your they to environment. as

Gary Small

efficiency a one of the improvement and reasonable of expect can and but one digital methods terms know get and it processes, is just back in customer I support of you process a for expense. time, period will don't that physical you'd lot acquisition delivery year be if earn in a over spend, and of because your other

you within the expanded our banking, channels think activity be not may that's lot It's and the you I traditionally as a year but in incur we've that goal. certainly of to -- spend, again, it of So, new delivery methodologies. to old on costs, with board. or the some exit either bottom tend technology optimize benefit net to opportunity line the the and see And coming a you get

Michael Perito

for discussion. my Stay well. questions. Interesting you guys Thank Helpful. taking Okay.

Gary Small

welcome. You're

Operator

Feddie The Strickland be FIG Partners. next question will from of

Feddie Strickland

Hey, good guys. morning

Don Hileman

Hey, good morning.

Feddie Strickland

approximately that's a question be So, $X the million at that a on was direct merger mark? little now? than number? Is of a $XX June Should Or million of was less around discount, what just accretion, million thinking $XX.X the we the it reduction XX.

Paul Nungester

the about the million. on size you're -- loan $X clarify you securities side? Yes. loan and of The what was Yeah. net the Can talking on accretion the of asset discount the

Feddie Strickland

Yeah.

Just mark, like is million? that when we're look -- trying when at to like the credit $XX.X mark credit reserves now plus we're

Paul Nungester

Yes. I Yes. gotcha. Yes.

Feddie Strickland

Gotcha.

it. phrased just I Sorry,

Paul Nungester

That's I you talking thought dollars. No. were okay.

correct. are You Yes. Yes.

Feddie Strickland

follow-up And Okay. one then me. for

as had And it quarter. being you think guys You do you ROA a sustainable? see into pre-provision that this XXXX guys Do XXXX? can expand great pretax you

Don Hileman

I is Feddie. think Don, -- it's to going this

significant would clearly that things to expand expansion will we talked level, on the the a the anticipate be a we're I we additional realistic about. just what of that target expect that probably some challenge. on kind focused this be items think But I of any with for ratio. whether headwinds and we can But think in that it's looking we some of can level not we're

Feddie Strickland

my Thanks it. Got so for guys. taking Thanks questions much.

Don Hileman

you. You Thank are welcome.

Operator

next The question Long James. will be of Raymond from David

David Long

morning, everyone. Good

Don Hileman

Good morning.

David Long

today At your into package? the part baked your curious are quantitative assumptions the the stimulus next reserves on what beginning versus of and side, the call the you talked your about reserve on your qualitative of qualitative

Paul Nungester

that the believe possibility possibility, it lot lot putting hopefully but That's would just fourth going it of the whole point. this We're to put visibility of quarter. see there's here in weight environment, at be a but while Well, it, not in we that, something more we're get a do that lot that credence given a a political yet. current clarify the it not of beneficial. we'll into certainly obviously as Post-election, we we'll into

David Long

in and Got you response Okay. thought sub-debt. purchasing to And mentioned then it. Scott's mentioned you earlier, securities, I question

guys but you you sub-debt at are banks portfolio curious, other in just issued So securities your sub-debt are point? this buying

Paul Nungester

Yes. Yes.

-- We get. a stuff we alternative are. that than it's on better investment, the of some a traditional It's yield

that. So, and also helps things It it helps that durations some with from perspective. like

Don Hileman

Don. to some -- kind sub-debt And some we to this put of understand an and much generally put we're any just be that than we We have companies around for. fences know is how going of for appetite We purchase. rather looking

we that through think as So, pretty of move forward have the I high quarter. all quality our books a portfolio on here we

David Long

Got it.

through started forgiveness, forgiveness going on Thanks. Okay. timing you timing for to there, thinking and And applications how you have lastly, loans your the then are process? about the that customers the take and of PPP

Don Hileman

answer you. one Matt let I'll So, for that

Matt Garrity

We've activity hand your -- very to the just question, forgiveness, we've Sure. to really seen want on of process. -- little first that clients go through handfuls literally

of future a modifications happens package. I the stimulus of lion's our is the what part next to of comes anticipating base has process What share or forgiveness what Washington. been out client think

think that getting our of the I is QX. where XXXX of more But So, now this pushed stimulus of that's might the thinking gets that a rolled forgiveness extent additional into early bit -- of this that right really and be of and gets timing -- this need. we that accelerant the out -- issue a out into to that gating

David Long

for questions taking my Got guys. it. Thanks

Don Hileman

Thank you.

Operator

[Operator Instructions] from Siefers next Scott question follow-up The a of is Piper Sandler.

Scott Siefers

Hi, guys. Thanks for taking the question.

I begins about you wanting think you when of the settle where it refi left. mean, are, imagine industry, so curious whether a for for normalization, talk it's based those much where you strong. for shockingly guys to are Just on it I about mortgage. thinking guys I'm rates out. on mean, and How everyone just some in gain but to I all dynamics? would sort just and margin guys it's been how legs is really a has while, sale about

Matt Garrity

The The at to will really of normalize margin will we get XXXX. QX process, thought QX as margin our That's now. -- for least this start is into Scott. Matt, through

mortgage would I year. that the Although, of activity kind the business have don't dynamic, is pretty think this mortgage expected experienced anyone we've

of as of seen to that bit moment little our remember need it and the our mortgage made model is a I continue grow. refi as that we've view seen a a what's construction is about we've business purchase business. gets we refill unique can probably nice a where decline and ago think sort from declined, firm I comment to to that we that Strategically, we activity

the expectations well we -- see our refinance So, for as robust activity. XX XXXX while won't

as we're right that business, some feel feel the we're keeping our for like open We're both that. to probably We for within expand there's in us also continue and this eyes either. to back that markets markets to off within drop contiguous opportunities well. going We don't

in we full answer We as the a think oars wouldn't for call mean, there. necessarily XXXX. But next normalizing. we've result few will a drop-off I of So, kind got a volume of Yes. refinance a long in I in water to activity margins definitely reduced year. different that see the

Scott Siefers

Perfect.

Paul Nungester

we of a quarters refinance boom. money. it's I purchase a our but eights between they or pricing did but don't rates refi There's Those just Scott, counterintuitive, kind kind gap. purchase for today to percent of a usually us, are competition and think five a as normalize, XX-year of if have probably that another at three not stayed see difference

they [ph] as away line will We might've that into refi a good stays rates new it'll volume there. be be volume, there back and if are, already There's sort boost could next year. that in pricing type volumes again, much rate that lower and of at will vig the of So versus experienced. see slips come enough they as rate another

Scott Siefers

good a point. That's Yeah.

Okay. Perfect. guys. Thank you,

Don Hileman

you. Thank

Operator

any the this over now Tera And closing for turn question-and-answer conference our session. I like concludes to to Murphy back remarks. would

Tera Murphy

Thank today a Premier and your Corp. Financial as time we joining Have interest you results. We us for great our quarterly in discussed appreciate day.

Operator

is concluded. you. today's Thank all conference Thank The attending now presentation. you for

Have disconnect. now may great day. You a

Premier Financial (PFC) 21 Oct 202020 Q3 Earnings call transcript