PFC - Earnings call transcript Q3 2021

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Operator

Good day and welcome to the Premier Financial Corporation Third Quarter 2021 Earnings Conference Call. All participants will be in a listen-only mode. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Paul Nungester, CFO Please go ahead sir.

Paul Nungester

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

to company’s prepared our performance, be comments the take Following strategy questions. your on we and will able

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

Gary Small

Paul for and in which at lingering Washington, be return employment business are costs quarter clients well. are good positive issues only assets X.XX% And of current to with by on pre-provision joining off pleased tempered from their not outlook and or all. net share, today. majority at of core point. typical with. very at a numbers coming The the to indicators us on on for impacts and strengths of solid for shape out environment. reflected overwhelming those least boards morning be numbers. the the in a business real, by XX.X unsolvable We We performance maintain not for Strong many chain had this proving folks start you and of that we quarter. Order We north are certainly us our pre-tax spike positive. We do XX.XX strong COVID uncertainties tough appreciate at assets market we’ll I’ll be macroeconomic income across growth and continue supply good per our stating to tangible you are Thank as fine our had perspective were reported We with the gave a capital. return return return $X.XX that loan to in X%. us third but each X.XX detriment we Premier a the

we typical up X returned quarter’s Commercial earnings mortgage Our last and basis telegraphed on more very our is contribution to was core quarter call. activity the margin residential we our as points for robust.

book business loan line normal a benefit second costs. quarter remained the levels. expectation a for each for saw commercial than draw quarter remains driven by New the rate existing well very slight the improvement down commercial were Expenses bit strong. quarter it The higher off versus and but pipeline healthcare

portfolio delinquencies self-insured feel trend the from loan as cyclicality are continues experience from well. quarter. figures a it we makes and low more high to continued should quarter uneven so impact and numbers. general. QX incidences perform We incurred any No to to inferred MPLs as be for whole in impact Low The of

classified a The relationship to did this the XXXX. returning year. moved of status we relationship non-performing we However, in end a range the non-accrual back staff single earlier at status, quarter, our during experienced to that move to that

deferral more Paul and will and policy were this participate over programs touch relationship indicators Matt comments. in familiar quality more to performance point, portfolio particular turn COVID months. to available back it and remained territory. affected in by very we’re Garrity remain did details. Our the that decisions. cover due related contracts At that it government This last I’ll current, few challenges a XX in They strong over significant on is business this not of on faced interruption manageable COVID his to an

Paul Nungester

declined as reduce third due will quarter, quarter to our The to all of I with of businesses have to still our X less basis to begun which end review in results. liquidity also total point date continue Gary. were points. mix further you, X.X% and as using Thank using XX we cost down X.XX% balance managed but Beginning year customers than funds point our sheet reducing costs this funds, points stimulus another the deposit with dropped deposits largely to basis programs. the to

by shortly. annualized we assets, which X.X% For over discuss quarter Matt loan led commercial or growth, this XX generated will core million of

our In when addition, basis X.XX% amortization. excluding marks pleased reported X accounting purchase PPP, on basis a points are basis very X rose to and points by we NIM which expansion are

were primarily Next mostly excluding during they’re and for including but excess increase is by improvement billion quarter, charge in and capital primarily economic excluding This over of the acquisition X merger. of the the growth of X.X non-performing allowance, not September X.XX% quarterly At from with and provision the million lack for is under reserves PPP loans, mark still non-PPP net commercial an due XX, that where net sheet but to which coverage recoveries dividends. was to to levels ended back in increase of loans Finishing a from pre-pandemic increased XXX increase we specific allowance marks in CECL one yet, X.XX%, a plus turned our and million is flat offset which X.X a earnings XQ forecasts of XXX,XXX. pre-pandemic due UCFC expense with equity balance offs. further to relationship balances, in related

X based about for PPP our excluding XX XX.X%. At equity of was share ratio risk about also X.X% in September buybacks tangible completed and million was the loans, total We XXX,XXX quarter. capital

statement X% million, starting $XX quarter up a net with is I’ll Next, to linked income basis. the interest turn which income on of

expectations the rebound and second Excluding quarter. of This of driven in executed we our our XQ. X.XX% and was plus PPP, the having slightly impact or the middle of growth with benefit quarter from interest X.XX%, is by margin in marks a swap long the full consistent better than a net up

from remain primarily at mortgage from expect this million but to XQ slightly from gains X.X quarter continues. NIM XX.X as XQ, banking. from million X.X due with is to up million to prior loan were We down and XXXX. Mortgage XQ year, hopefully which growth prior X.X down tick continue for is Non-interest in million up which level income generally third quarter up but

quarter, As mortgage moments. improvement meet production expectations to from due and our the to sale increase continues expected discussed and was last quarter last total

X.XX% X.XX% at XXX. XX tenure, a to from at June which saw we Additionally, slight in rise the increased

nonrecurring improvement gain we $X.X banking after linked when drop. $X.X the XQ valuation quarter had million that wealth a in of So million that and the had tenure But $X.X MSR income insurance the a plus $X in million had by million in basis. last offset we some on was mortgage declines much including quarter. we business other other and Overall, of loss item lines

were which XX quarter to a up expenses million, linked on X.X% basis. is Next

seen that items half As strong mentioned to starting performance have the XQ. last and items ATM as and and card in quarter, usage service XQ also latter we debit are to began There help fees. addressing costs by benefits up of related revenues like some run in continued which rate the

in quarter, similar which quarter costs in for increase experienced this to the led what in first the we again this However, we benefit overall quarter. saw to spike expenses medical a

Given full this expenses year on previously expected trend, around to than or we now higher possibly million. estimate XXX

year. for million completes now our to expectations NIM which by expenses. the income be guys XX year-to-date generally full income to year-to-date. could that million of credit. $X.XX a slightly share per my and for above financial partly ratio to lending potentially discussion due and is led Our and for around And net quarter provision level again turn third call XXXX, Bottom efficiency now quarter just review. consistent higher third strong XX% Matt Separately, or a That over offset ROA and for reported XQ of the we pre-tax X.X% pre-provision the XX.X% over in at good our X.X% I’ll line was XX with

Matt Garrity

update quarter over loan XX% to starting in in were quarter C&I production improvement the providing quarter driven to by compared to as production production total from balanced mortgage levels the growth while as In quarter growth showed commercial be with quality. consistent category. third third quarter quarter, I’ll production and while will continued quarter momentum. loan continued the are third mix in C&I our Paul. as activity of well more on and by the on second XX.X% able loan overall Thanks, asset second our achieve performance consistent an category. see the we we business, to for improved an update areas residential C&I commercial in Loan percentage lending production was vary a the

Growth PPP, continued In annualized in with terms of impacted the effects loan at a excluding the of third somewhat when growth the loan of quarter. quarter timing balance for X.X% was growth payoffs. pace commercial the

In utilization normal addition of line return. utilization levels see of will more when continue to benefit and we levels relatively low we

banking the solid gain mentioned more are prior with the our strong fourth in as expect our production a be all In look business, margin banking sale for Paul last to on were robust improved level rebounded merger when mortgage the levels the of of commercial we quarter activity solidly improve pipeline saleable to with maintaining terms Mortgage quarter seen residential quarter quarters. we were expectations. our very our levels competitive growth third As the in we performance forward, highest as while of mortgage have loan what environment. their our to compared at in revenue XXXX, earlier, pleased able in we than loan operating mix remaining with markets, since we two and

operating of competitive fourth and ahead we environment the first into XXXX. with expect be the the quarter half Looking during to current us

while comparing by asset designation loans a million we the quality XXXX we net stated calls primarily by classified quarter With XX.X%, the mortgage Criticized prior third levels grow. improved the quarter and third invest with on C&I to recoveries by of the will quarter, non-performing increased to single classified of offs. we’ve third respectively quarter. the steadily residential another view improvement driven into loan previously X.X% a when increased respect in Non-performing in respect indicators experienced of relationship asset levels continue while and several during to business As quarter previous saw quality, $XX.X as we status. loan and in non-performing charge we to approximately

to current designation current the their for on payments, the although at time. are remains and client the credit reserved continue this contractual non-performing we client with properly circumstances the we warranted While work and

portfolio we C&I the as be loan to As we the have discussed you. believe on we just challenges nature more we previous any see to just in credit going are calls in episodic mentioned

while environment economic Small, work all our I to with back turn monitoring call to clients Gary continue navigate current the our to to over We like portfolio of closely. the now Gary?

Gary Small

you, Thank Matt.

a a we full limit only I’ll go, forward to comments look items. year to given few performance, we few As weeks my have to that

Matt think levels. what we typical balances be to commercial As the noted, year quarter enters side. least loan at a activity Residential into seasonal as fourth will particularly versus mortgage period, the QX, on be QX in for and continued strong business would a in of QX

we something capital is were in competitive repurchase obviously experienced to to in be a continued in activity work us experience all see. of expect than back more better the have think fee it volume had I’ll quarter. we’ll basis We in be that, good. Chuck from the the let’s over We standpoint, disappointed a We I come activity wait total fine and would should the for would if an be would the per in you QX, that a going For that. not range standpoint, I forward. guide guess From I with the and third level the From to more to on take But XX-ish. And perspective. mortgage calls. to quarter. prior with model very we quarter expect to market turn remains related QX expense expect what than million in I Pricing we’d income rate may run $X and the

Operator

Thank you.

now and And Sandler. [Operator question first the will Instructions] will begin from session. We Siefers with go come the Please ahead. Scott answer Piper question

Scott Siefers

have But that changed of discuss credit you worked make extent First you it I think said out question, from at confidence will share of you changed any established on to I guess you take non-accrual? said strategy what to you the it is I then I gives an thoughts think maybe this so just to criticized thoughts for importantly, if of can the I to guess just be that sort exit to maybe wanted could nonaccrual. or it, appreciate. reserve And the ask sufficient was will more it to your which sort guys what on what just the you over time? I with circumstances any there sort possible, mind totally can move and work

Matt Garrity

this is and The a topics. here I’ll points servicer. couple of on Scott, a student Sure, your Matt, give hopefully you loan business touch is

think I we’ve previously. that disclosed

this you in impacted certainly the year. a going measures. been As in as always loan noted a to earlier business was pause And during had when had we has that lifted pause there’s classified year. the government a result the of get COVID And by expectations on contract the

a status; how into went we relationship was warranted of on change thought would the during a lending to it typical that as non-performing of QX loan migrate. circumstances as it that again terms year prudent So to and continue not in circumstances move

into the individual today. terms we that levels of with statements credit, this reserve In looking of are without the regarding we forward comfortable type reserve getting have

work continue certainly we’re exit to look the they as next client like. strategies We partnering with and the what and steps think about with client

continue with evolve. they client of work stay the details to and continue on to monitor as we’ll top So just the and

Scott Siefers

then margin, of sort gears ex-PPP about little a PAAs you core Paul, the the that and switching maybe, XXX talking flat you’re when up to And talked right? about being

Paul Nungester

Correct. Yes.

Operator

from The ahead. come next Switzer question KBW. will Please go Tim with

Unidentified Analyst

are of on core morning about my guys it. for had the Thanks Good up follow a question. Perito. I I am talking you taking for Mike NIM kind on

deposit it helping. this should sustain at talk expansion you about like levels. least kind be good drivers seems it yields primary like both of quarter, looks and Could pretty the costs to It had able You this? these are behind asset

next on drivers and if expecting the low about are from you’re curious how that reductions even those talk you where deposit just to could costs coming quarter. deposit So cost I great. more and would be Can seems behind all maybe like you’re it able that’s go what quantify guess then

Paul Nungester

Tim. Sure. Yes.

have So that change we had a of quarter talked benefit One the a bit about quarter. a for We quarter. this a last full last left combination only swap little the quarter is we few things. of

the basis, out deposit more of some which another to average of at existing more on think much a got those Got nice those. we for that funds. on that and yield much But for on of out pretty front book, We two down costs and of kind bottom progress at that bits than So here is couple better the so up good with on we’re primarily that bringing bid And growth be we’ve on if quarter-over-quarter our long looking assets will the a yield before we in rolling pretty earlier be had some we find keep pockets loan including cost there. I again out set provide found great. that’d or securities front. back. on And in you’re the That that before came did the book right, we then left. helped doing of growth been make the year we

back yields us up asset this start should point. So at driving

Unidentified Analyst

asset then of right about on growth be improving by driven on than how they’re book you said now. is yields pricing you right? loan on as And to going And talk coming loan can higher kind what actually the just

Matt Garrity

in perspective, and competitive. pricing rate yields competitive little I Yes. out would and rate little it’s I out stabilized. our it’s This would And rates all and still is bit. to like of side seems and it’s a say but decline on I say would on the environment from a ultra is but flattened tended it’s flatten coming It’s it the bit, the Matt. very-very a a say above NIM at businesses, always really

Paul Nungester

NIM to average because now. of And overall we’re or we are referring rolling the out yield asset either securities

So that’s part too. of the list

Matt Garrity

as ladder so that picked we exit be those up. design, securities the portfolios we’d By to able loan ,

So XXX basis we’re stock points, points two yields. basis swapping for XX loan

Unidentified Analyst

your one makes sense. I real ask quick return that on could capital. That of you. then And Thank

would then a I to to this pretty continues there? bit of glide you nine get as the percent price you focused down how quarter? when are hoping get, your increasing been guys year, be TCE to this guess on Maybe ratio and dividend to higher nine, you’re share little and believe the quarter the higher kind that’s a the well. With quarter share price you buyback like a rally And at for last you times, would You over with all of than I sensitive said and kind price started buyback ex-PPP seem guess a quickly good target still you I like you? it

Gary Small

reverse a as there. balance is good. way very make a comment I’ll constructed nine for feel quarter general sheet Gary, would Yes, far the now in mix our is right This and as

of I move Buybacks if our would say think that’s a keeping as call without And game capital PPP XX the deep acquisition close one always XX. that game opportunities. to we or commit our growth XX capital continue there have projections been over and balance the we in to and part we’ll don’t other. than dividend running for well, manage with along through the go direction we’re play to going into rather

stack in the that those of going end and up we’re the are back what of day we’re underutilized. capital course where I overrun in earned always the think our to what’s reasonable flexible this need capital the and said best but back will the can’t on interest back to cognizant having to we a as you be long we’re ability it’s at At started. way a wake not that market. up that, match over sensitive shareholder that rate or and year, way that on so price We to let shareholders go redeploy just reasonable as of the the

Operator

Montgomery Strickland Janney Our from come Please Instructions] Scott. go Feddie next ahead. will question with [Operator

Feddie Strickland

color curious, I health having Are you’re seeing appreciate to a offer? expenses the respect the you incrementally just costs. care wage I to looking new hire guess I as was what from you’re on to just talent. benefit with either competition there out perspective? But Or more

Paul Nungester

certainly under the in wherever to I’d And might have $XX and go pre-COVID fact relative edge job say a throwing and that the that qualities lower level have, retail the past, professionalism it at books competition of call our set there’s the is broader near what bit the dollars those environment, those level, qualities be. across had back that a might environment, for entry any, to have I jobs much are versus we an market just past books work across the or experienced we’ve so of regular those all on benefits, their rated the it gap. fill might to in entry

that entry worthy, to And levers attractive And so the of be one roles. that We that address but of that. we whole answer attractive it’s and by that find that don’t you to that P&L said we Everybody that role, the way is of in we’re as very be those internally I work as good unique, But yet. to we’re return as on And our back would impact service, thing down we impact by think be that at level Having not customize that return to talked by relative appreciated office that and a money customer know reflective a we coming mark answers have candidates got in very movement us for harder be the make wholesale throw we’re on any so office. peers the and to hard our changes miss candidates that do real mix the wouldn’t the the we cognizant And and that. by feel be of pull small would board we’d some We where really our working development no like offer be at of was across road. best on didn’t have and didn’t customers world’s as to would just wholly would approach industry potential in externally but individual, something any the it. and back can or office can’t ways The I’ve I have I the my doing levers included everybody competitors surprised done got well. to hard to still other see department, and the to to easy new make be front. in to our shareholder. being up the of we’ve cognizant if on the be

So are folks that there goalpost. out their but that’s are there

we’re a other to closer think the little goalpost. I

the just one you an So other organization do things that of and just as dollars that’s can than cents.

Feddie Strickland

it. Got

intangibles an of you you what bit So attractive employer just more flexible the little is to is of kind being something add of a make incrementally you’re kind saying. as can more

Paul Nungester

specific. scenario, needs pretty this to flex. to got We this know change all folks don’t It’s We change. subject business is in let as to we guarantee the able be

two away don’t So well it’s department, that three your if and days is off to as three evaluated opportunity. group by how will this the days around plan we to able have always performed and a office. in that’s job being management is offer by life from this days But

little you it’s more little So not flexible. it. that. like specific a off if just afternoon more It’s than than It’s like Friday a certain

Feddie Strickland

you your there. answer sense. And answered actually makes That up it. Got my in follow

So my much question. thanks taking so for

Operator

from come Raymond with will question Long James. Please go next The ahead. David

David Long

little want ask and you may bit. side on I rate how, on then you XX commercial have about utilization like specifically where It pre-pandemic? where Did it where the a there? picked to were the give stands June numbers give actual it’s stood the Did of you up sounds and numbers any things. it

Paul Nungester

about we XX% a utilization more closer pre-pandemic. to of today. XX% it’s were the I’ll Today utilization XXs. it’s in mid say And

balance new my increase up origination that of I for we the But the of an C&I in part some thing would say X in X mentioned other The million or comments. million driven I quarter. did that was bucks see line by

headlines of that continuing It’s relationships heck that whole utilized just than our have would existing on closing. lot business So activity It’s now. at a it coming to credit more. right that not more been a just draw some new moving C&I got of

Matt Garrity

That may from X% moved be QX.

I , did our to math $XXX $XXX call relationships and million in for for we million, outstanding. an normal we $XXX existing level returned think if Matt the earlier those million difference

David Long

talking on in loan that it your the Is And with new commercial the Seems you current side? bankers? from Where the decent the you’re growth what with to that’s new relationships then accelerate. Is disruption quarter people? and it really on pipeline that the good. how market have here Is about you when Is taking And Premier relationships? growth side. there poised from like very driving numbers going you’re come is to advantage? benefiting commercial are added that that is

Matt Garrity

It’s the prior We’ve things. very in calls some They Great good from disruption from come in on all regional markets. bringing mentioned in been those some Yes. somewhat industry. question. good talent of talent, we’ve the in successful really our bank

the side Huntington think been you too. TCF transaction really about lender on client very the side on for that’s if but So beneficial us the

we’ve benefit expanding investing We’ve in have business again. seen as feeling clients their business more and sideline existing been But it through who the very well comfortable there. their in on our So seen and performed well, borrowing COVID.

really we’re for beneficial continue. is of talent and And some attracting the that’ll of think us. that. and the that seen we’ve they’re So part in, it That’s that the been relationships I bringing bigger into the bringing bank. But

now across all really-really As our strong and really I levels stages pipeline market. right in our it mentioned are

to So fourth got has some we side, we’re do quarter poised growth XXXX it. in but as going legs it’s the on the feel kick really like momentum that’s to It well. well into to

David Long

additional I there. No, Thanks, color it. the Got guys. appreciate

Operator

answer and remarks. to concludes conference over the any like Small to question sir. turn closing This for our ahead, Gary back go I would session. Please

Gary Small

good all say your Well and and you’re reach as up joining I’ll very through ago for out any fourth and we follow I positive to hesitate today through wise planning we thank or day, still have don’t move we myself. to as beyond into questions, just as and Paul horizon if feel forth six us you ago, XX it the so as Again, working momentum for that. looked and months positive which and quarter did when think just we three months at feel we was you XX

you and leave thank very I’ll that you with So much.

Operator

conference Thank for today’s you The has attending presentation. concluded. now

You disconnect. may now

Premier Financial (PFC) 29 Oct 212021 Q3 Earnings call transcript