PFC - Earnings call transcript Q4 2021 | Premier Financial Corp.

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Operator

Good morning, and welcome to the Premier Financial Corp. Fourth Quarter 2021 Earnings Conference Call. May name is Gemma, and I will be the operator for this call. All participants will be in listen-only mode. After today’s presentation, there will be opportunity to ask questions. this being note Please Instructions] event recorded. is [Operator hand over Corp. to would now Nungester conference to like Financial I Paul the from Premier Please go ahead. Thank you.

Paul Nungester

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

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

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

Gary Small

you and to Paul, good Thank you, today. everyone. joining We morning appreciate us

extensive Let The current our new on delivered business by continues me call. be start pipeline strong and business the affirming last environment reflects markets quarter’s opportunities. a message portfolio to across our loan

to of with continues on up impacts demand. very balance we availability in excess to constraint sheets some, the household plenty the the just in shape. need hand, labor While Consumer through a cash With supply really good are fashion. catch for folks be reasonable managing remained

a for very maintain XXXX. Premier outlook have We positive

XXXX our to highlights Now on results fourth quarter. for performance

and solid. XX.XX%, and and the quarter. to ROA put as efforts quarter share The growth low $X.XX the in PPP-adjusted combination and It’s strong very and due quarter some residential the expected. which at and it’s and spending to ROE were of a steady basis, figure X.XX%, with X%, a while XXXX. a growth the For in the leading increase growth we relative XX.X%. revenue the normal at X.XX% came the in income our annual income X.X%, On pre-provision to year a underway to that cost is the for million initiatives growth we in million brings fourth a $X.XX fourth respectively, reduction way mortgage third Full X.XX%. share, Loan loan quarter over bit interest incremental $XXX an at slowdown for year respectively. annualized noting full reported pre-tax we that or standard for reflects fourth totaled net versus quarters expanded and commercial that our and specific worth the quarter $XX.X quarter, ROA was loan was combined margin core X.XX%, for for that trajectory the growth Net expect remained seasonal

quarter. the see for Non-interest results our to funds. continue of were in reductions cost income We lower-than-expected

a I December in mortgage COVID in residential to environment mentioned, pricing tight second outcome. contributed the $X at at that of Certainly, escalations fourth and seasonal As income quarter. the reflected million, half slowdown

year full performance record pleased is We XXXX. the residential The of are very with second contribution to the only results. profit mortgage

government, From last initiatives regarding than in a topic which On specific Department was that a non-accrual, more to debt. the quarter. mentioned, federal Education XX% one-time elevated $X credit the quarter was by student expenses that of on for by Expenses perspective, reflecting climbed On and discussed the year’s ahead contract of fourth our were formally the expense loan fourth quarter contract placed plus credit as I on side, in bank was of of affected last million, fourth the Unfortunately, designed the XXXX typical included quarter, terminated the negatively here we results. improve for the the our run immediately approximately ongoing uncertainties quarter, service rate fees moratorium beyond. for with us. collection call, key in

While the revenue charge-off – and has take current, loan level elevated our flows, other the of to a made at charge-off quarter. client prepayment uncertainty remains significant the prudent during

strong. very in hear is whole and portfolio credit performing later performance the you’ll leading well, as a remains As indicators, all comments,

Now performance and at I’ll thoughts provide some I’ll turn to the expectations on the of presentation. Paul, it XXXX end over our

Paul Nungester

full from more prior and the year details year-end. fourth results. at and quarter for Thank liquidity accrued Deposits our the some were also you, improved year. with sheet. mix X% as annualized The I’ll Starting quarter balance businesses Gary. provide X% up for

So points total deposit costs our improved X.XX% of our X funds, we due only which dropped all-in to basis XX to another cost points. largely quarter, this further reducing basis to down

growth amortization, increased annualized. it led X.X% which at purchase this points or this and commercial, generated basis quarter, reported begin level and those generally X.XX%, items, million a expanded to tick to basis, excluding growth assets, it X million loan core or and as $XX.X remain accounting marks was For PPP annualized by another continues. up including and $XXX.X loan we expect on we XX.X% NIM of

PPP but down of been XX, provision would loans than was from Finishing higher December million to X.XX%. excluded. of capital, of excluding to This non-performing coverage, turned of net X have completed million. for recovery ended was where prior charge-off the XXX,XXX $X.X for equity PPP the in million the $X.X At provision to shares. we and loans, about year our quarter buybacks and of total with and the relationships due X/XX, pre-pandemic balance from which is decreased charge-off also quarterly marks, At billion to $X.X in expense $X allowance including which And XX, level of and sheet XX.X%. with due authorization quarter over that million increase acquisition we excess related our capital a for net risk-based the down X/XX, still dividends. primarily $XX.X our tangible increased X.X% allowance, income share a at a commercial primarily our X.XX%, loans the equity, excluding Next to is in was the and an was about million X.X%, just December announced ratio

million, Next, the basis on fourth to thanks primarily the points fourth decreased net where the over to statement average efforts decrease improvement I’ll $XX.X X% of is X.XX% million, income The turn by only our of to quarter. starting the up with XX side, year deposits in $X.X cost our is in deposit costs year-over-year to due which interest prior income from quarter.

year, seasonally was primarily with continues offset income and which banking. $X.X pleased keep from lower was expectations, million it by XQ, is increased the is X/XX. On million originations. $X.X the mortgage relatively which for $X.X down driven XQ such quarter decrease to to we loan our due interest, excess efforts environment that prior and a from down from prior Total income fourth Mortgage and million million generally XXXX. quarter down X.XX% to to are gains XX-year from XQ, mortgage mostly from quarter was $XX.X production were in due last at investing flat meet way decrease to year-over-year Separately, XXXX. in of the flat downgrade enough in our income side, a Non-interest investment by the funds in

after $X.X XX-year a a gain million one XQ, had MSR increase. only we minor in gain in Overall, the the million $X in linked-quarter valuation decrease banking on we So a and had mortgage basis.

$X.X gains, million plus which mostly by had of However, $X.X of portfolio. BOLI, that on gains claim million offset equities was our bank unrealized

the related quarter realignment the to approximately Next operational for is year. and executive than office for expenses, primarily previously and costs one-time enhancement million expected, $X of $XXX projects. $XX.X is to which higher This million were million due

were We increase in but the quarter. In higher costs further in partly X.X% addition, excluding due unusual ongoing $XXX to of an items from fourth so X% to or COVID healthcare XXXX, currently increase the which million the activity. represent expect also XXXX, to claims to would elevated, about environment, expenses

line, the efficiency To to represents for Our ratio strong pre-tax income low full wrap just expect it was year our we up significantly million, XXXX. X.X% for $X.XX of merger $XX ROA $X.XX up, we and provision XXs share from pre-provision million, per That XXXX, XXXX, financial $XXX or or $XXX the costs. and which year XX% million, over full remain for income share under bottom in my per completes a net And year. review. of excluding core reported was earnings in

lending of turn call over for to and discussion Matt I’ll credit. Now a the

Matthew Garrity

utilization communicated annualized half an by we’d X% $XX.X as XXXX for XX% balance the with was basis, with update a an an Paul. asset the saw we full fourth for approximately mortgage for business, Loan update with commercial the call. the on Line for during annualized production last low loan as from of in year. overall an our areas quality. remains Commercial we’re having strong declining improved annualized pleased our approximately quarter’s contributions of while be quarter, rate and portfolio during million growth entered XX% well comparing loan providing as coming I’ll when on fourth range, improvement doubled loan second In strong commercial, commercial year-end residential X.X% with and mortgage quarter continued year-end in growth and and the approximately growth quarter for quarter residential to basis. was commercial growth We on third pipeline contributions category. lending. with from consumer Overall, of business, a XX.X% to the solid quarter, XXXX. Thanks, levels quarter, fourth compared in on approximately expected C&I in the with the XXXX the the XXXX growth the our momentum utilization

Our mortgage also landscape. respect XXXX. are Saleable our of mix factor to mortgage the terms loan reflective overall competitive decline somewhat with X% mortgage mortgage to banking banking In activity, residential XX% experienced revenue. expectations of was we growth including year for for revenue, business, production the the seasonal in and a for

have we on the driven market As by prior impacted capacity margin quarter. discussed compression over calls,

on XX% year in X.X% did measure a of portfolio the which fell growth achieve growth XXXX, overall rate. approximately the an of We income represents originations some of prior the annualized the in $XX residential half year, were basis comparative million following a balanced of year. extraordinary mortgage second banking mortgage in While XXXX

a result As were the position expense able also year of attrition. primarily our mortgage, as to base progressed, improve in effectively we

current more year while we half of the competitive rational the expectation progresses. XXXX, environment is for first environment persist to our operating the ahead, expect during Looking as a

and criticized On a improved the saw loan for improvement In quarter. to terms prior comparing the and XX.X% XX% classified improved we and full XX.X%, experienced basis, respectively, when for respectively. fourth levels levels year-over-year charge-offs and year the loan Criticized classified by XX.X%, XXXX first of quarter we asset and net by of year. quality indicators time quality, this across asset our quarter while the

Additionally, relationship, X.X%. declined basis, of XX% a charge-offs non-accrual a driven fourth to charges when the the were cancellation Department which which while on C&I impacted they quarter. been student loan the by largely Education, with quarter loans approximately that Net call. XXXX last has the for the taken declined of $X,XXX,XXX, the year-over-year was prior comparing was the quarter, to on quarter’s The of fourth occurred contract by discussed during business collection quarter

direction are over of individual pleased are Small. which that charge conjunction episodic exception Overall, I’d range a believe credit we reflects uncertainty on to we on we the for nature, the portfolio. with development, the Gary turn outcome. resolutions. of credit, reserve And credit, positioned the the to Given of with established overall call is this with the now, And the Gary? of in the taken adequately more like the in

Gary Small

Thank you, Matt.

and performance X% at at or for our total balance growth projected and the Start there with XX/XX point is to north Now for I’ll interest just on for you come growth that figures. the with help XX%, in utilization provide expectations sheet. commercial in loan expect assumption I point growth, impact to of X% XXXX gave line the to the color income be should to year, as modeling. XXXX. no with those improvement be well, Should was X.X%, some loan Net numbers to XX% that of true total, interest-earning PPP-adjusted. balance expected for In excluding up in up and PPP, assets are

standpoint, figures, had very component bit about is residential relatively will anything XXXX favorable relative year. be X% down good a flat From the full total points, pricing and MSR up be expect income the fees. the income expect cooked Bank core X.XX% into expansion margin a businesses, Fee take a range be question overall. to projected margin of way. be until basis year-over-year to the we range rebound, from X.XX% gains, figures and of basis fee us to components haven’t flat the should a I on in would expect good, points the Origination for to if the for excluding X We to of to impact securities XXXX XXXX. mortgage to that keep put them year X timing with second it to to mark we that happy And half is and contribution. X% the do amortization year-over-year. they we remains

the categories, XXXX wealth will our on planning aggressive versus up we will never very assume equities revenue Insurance come have XXXX as In and flat to assume Our our out for in bank then anything we a BOLI XX%-plus which portfolio, favorable other will year-over-year. And growth. experience. XXXX, was moderate relative period. favorable BOLI and

is XXXX, our roles, factor expense would normalized mortgage could expenses to for $XXX – million to target, impact outs we in additions X.X% be lift always number. potential would For base, that call be XXXX would the a up revenue-producing could or groups or that residential so which what these our expansions be commercial in market team unplanned of

$X.XX XXXX Our to additional net year. Driving for loan environment capital Credit securities be activity have standpoint, share assumption about be to low returning levels, as management course shares leverage flexibility. operating take should equity and projected continue basis repurchase ratio would works improving over XX% bps over of to I a from wise, back are share. and our mentioned, we’ll expansion to to environmental raised to Paul and keep outstanding the the and leverage, it XXX a quarterly the and PPP commitment future reflect expect available performance. positive we of about dividend dividend for can and the year. year-to-year, see an in levels raised factors normal effective out Stock operating we confidence we Gemma, With repurchase and And XX%. the XX favorable you for From we that, authorization capital million turn efficiency enough CECL-related our of our X provision charge-off course, of points their excluding relatively the the calculation year of And for the growth, loans. to is would questions. impacts

Operator

open. Siefers question Instructions] of first very you your Scott, Thank question. with go ahead [Operator our much. Please We’ve had Piper Sandler. in from your is line Scott

Scott Siefers

went last to Thank charge-off, got Gary. guess, taking what that you you. $X Good amount maybe mind, to million-ish, your start morning, loan guys. I or Thank that maybe bigger. right guess, sort million makes NPA, off for in the off, I or amount I the question. of was the think I Matt quarter charged wanted the on with $X It’s

view? then you in amount? your came there at And forward, here just as as are appropriate we So recovery curious how to with any options from that go –

Matthew Garrity

this to off bit the color Matt. first state little us. they that, pay operate I’ll Scott, to is continue more company loan. that I on a continues would Hey, give and you

So current. they’re paying us

exit client. still the not relative the client we with factor Education business, was that to the through those their that’s cancellation that out. at – and of ongoing bank So instrumental remaining a Department that the work range we credit, of that the to their look their the the for works where outcomes, of was only established outcomes bolster along business, here also the work reserve and with the established we a charge where was how but this through a When Clearly, contract charge as we appropriate. as the was thought of moment the was

to non-Department So the your and to to part the on question, rebuild and work business continue last of Education we as continues that – operate streams, and entire their of so. more revenue relationship them with

So hopefully, your answered question. it

Gary Small

amount is that there the our would was that. only with think uncertainty, that fuel was of I charge-off Matt, to effect relative the to that, or I Scott – that that calculation thing went a is we the and did add

Scott Siefers

on one maybe, you margin. then next very Okay, just for you And perfect. Thank Paul, much. the

and the point excluding of is So PPP underlying the X.XX% PAAs. starting sort margin,

one, upward advance to makes or it I more you other assuming? an words, should like as guess, so And the nuance rate sounds it, I kind In bit hikes rate margin what each to rate how pretty what number many And are Fed that finish you estimate of a much your hikes? from here. from have than environment guess, little of well NII sort just advance, best how Fed? for by a benefits Fed

Paul Nungester

Yes. Thanks, Scott.

right. You’re

base X.XX% there guy level, in and that good makes our X.XX% here – we’re go-forward We is for but just highlighting base there light current a And mid a down expansion on our of had loan a in be of is XQ which kind there. XXXX So, primarily will little more in from small bad about that guy future our expectations quarter, small spread, basis. by the the current quarter-over-quarter. the so-called driven XQ here, not growth,

all conservative we’ll to that here we range take to tend of right? we’ve up. XXXX. keep on regular the on pushing as aggressive There’s the said started We’ll, forecast, So as be in that. Fed before, not obviously that the begins too possibilities feed a funding effect So side that on too or back

but side, of year, on in to So the accelerate, how allowing them. number terms or fast in if either they in upside were us of the that hikes the side, NII did margin the you the potential some half the just think in that through show as we’ve for two bumps assumptions of can back of year, mostly coming it got baked of

I about on you’re In income X% we’re net our interest terms expansion. expecting of Gary, the saying, think, impact,

if Scott. – way, to that of is want think couple probably of called that, each turn a it X% you So,

Scott Siefers

Okay. Perfect.

Gary Small

the in little in quarter, number Scott, was crimped quarter a by [ph] X.XX% hair high. an way same was item third fourth the the a just

dramatic X.XX% that the as annual X.XX% to might basis. move not to that And from is so ranges feel on X.XX% range an

Scott Siefers

very Got Perfect. Yes. you, Thank it. much guys,

Gary Small

Scott. Thanks, Sure.

Operator

Thank you, Scott.

line Michael, in question question. ahead next Perito KBW. comes your your has Our of Please from Michael go opened. been with

Michael Perito

Thank taking thanks Hey, my question. everybody, you. for

Gary Small

Hey, Mike.

Michael Perito

growth guide? guys confidence line doesn’t like move out? that on was up that your on one, could I sound at Can Gary, that. believe, assume where’s And I of more? breaking anything? if minute on early your a side. it spend up at maybe what could mean, utilization opening But maybe map you of look remarks, seeing that mentioned point wondering, the guess, I there tick I to what are guide, point, mean, you wondering higher? secondly, this like could for – that bode in that the anything pent-up little and kind On loan very there guys I point just demand But degree then obviously, you a some well a you budgeting this maybe bit that

Gary Small

relative we’re Mike, having rate, the not the – question we moved? use it why or to utilization the

Michael Perito

The growth sorry. of choose flat Yes, question there there? what why And guidance? why – would positive the economic to do – loan some some kind to up keep commentary the budget the you was Yes. had, tick of basically based on

Gary Small

rate experiencing pre-COVID look now versus utilization think $XXX is at our million… I million we rate balance, to in when $XXX we’re the $XXX million what normal utilization

Matthew Garrity

normal. go million $XXX to to

Gary Small

on year. be it’s the not might] go the up part or majority for [ph], expect count we’re for from purposes. – for it to the to going sort this on where but been upon we’re of most going that’s up, planning dependent one we [Missouri of it And And sitting,

be our when flat, So frankly, to But and continue a comes. commercial it deposits we gift left it’ll grow. it

our cash we’re not feeling there’s and there’s going in Until – there, although to hand do of loan-wise corresponding out that. we there, lots forth. demonstrated make we’re so as so not the planning see forth, on them And too and be demand would on so aggressive that reduction in drawdown something not

Michael Perito

items that’s do the mortgage year this XXs there Helpful. some then target, was on PPP generally to year, where of stuff longer-term operating and are anomaly the speaking, difference guess, And generally I ratio, were were this – guys speaking, how leverage you running kind like the any basis? to But expect elevated it. annual that. in like Got and be efficiency you low of terms obviously, guys generate the able you Gary, positive on in the see an you bank

Gary Small

positive Mike, start – priorities. with leverage the one operating is we still of top operating

XXX whether normalized it’s between low-growth we rebound. year. and to points high-growth that – a three-year So to faster ratio, that back have we odd, in with overall it’s we’ll any or of three-year a from a what sort keep in could operating plan revenue, get XXXX given grow expenses in for And couple look to with range the than horizon. of assets positive to been formula a year-over-year the our keep kind XXXX so math XX% XXX fits last check. increase growth way our The the of work. leverage. XXX most. But – and expense we’re years, we increase basis little We try our environment, a being points that strategic XXXX big environment, being should XX% wasn’t, earnings it of efficiency We basis XXXX And

Michael Perito

you, guys. helpful. Very Great. Thank

Operator

Instructions] you. for Thank further Mike. [Operator registered. Thank question questions no We have currently your there, you

So the I’ll remarks. closing hand back for over team to

Gary Small

this to we questions so you talk us thank look soon. forth all as forward and and you. morning. again comes the the season you we joining reporting encouraged remainder Follow-up Well, to Bye-bye. Thank are for in

Operator

very call. you much Thank This concludes us today. today’s for joining

you You may Thank much. now disconnect very your lines.

Paul Nungester	Executive Vice President and Chief Financial Officer
Gary Small	President and Chief Executive Officer
Matthew Garrity	Executive Vice President, Chief Lending Officer, and Head of Residential Lending
Scott Siefers	Piper Sandler
Michael Perito	Keefe, Bruyette & Woods, Inc.

Premier Financial (PFC) 26 Jan 222021 Q4 Earnings call transcript