PFC - Earnings call transcript Q1 2022

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Operator

Hello, everyone, and welcome to the Premier Financial Corp.

First Quarter 2022 Earnings Conference Call. My name is Victoria and I'll be coordinating your call today. [Operator Instructions]. I'll now pass over to your host, Paul Nungester to begin. ahead. go Please

Paul Nungester

available and First everyone, is for us will joining being website Financial Good premierfincorp.com. at XXXX thank Earnings today's be replay audio Quarter and call the Conference for Premier webcast, Corp. morning, the you at Call. also This

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

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

Gary Small

excellent our quarter with had versus over Banking Paul, on from across well. last thank group markets achieving was double-digit and growth. good year. first each growth very you familiar the of consecutive joining in quarter QX some the QX of X.X% of as performance for they're up today. very Commercial We Consumer good the you, and active second Strong with Premier's lending in C&I loan for prior board the each quarters. us themes results Thank for morning, built growth

April, the bumps for to in And eclipse their experienced highest was that maintaining prepared in in month our activity Consumer auto well what in ahead finance April. record we'll March. near-term plan the and They quarter, we seem are application team weather numbers are origination were the news on see of cash standpoint. HELOC now households history strong other the good we origination and market. positions. new strong across established based the the of our Our of Mortgage expectations quarter. by that in ahead to added We We from Ann teams dollar brought our XX% our on to very day. also was we the activity markets, the a performance very of inflation Arbor originators and highlights. for some application And internal

For figures our average and were net quarter, ROE respectively, growth income or expectations $XX.X matched a XX.XX%, X.XX% without the return for adjusted as XX% and a we for was reported growth weight the was were quarter of tangible generally million quarter. strong, move. for annualized our commercial an $X.XX ROA share. loan the fee and These XX.XX%. additional portfolio Loan equity some the down. was and income mentioned recognition by aided quarter, PPP basis Net loan as the for that expanded the XX.X%, interest X PPP with rolls points, income was

really for as Our the and of core the not X/XX. the was relatively action Fed results flat margin with affecting quarter

on on was took when time. pressure be challenging the feel portfolio, you a income a actually our we for from income to that expected It's bank going again, under our the we're mark-to-market margin see time $X.X play. third environment as the evaluation quarter. portfolio. play Residential of to but sale do we'll million into we mortgage Gain noninterest do anticipate ahead expectations, is of forward. yield $XXX,XXX net expectations with adjust mark-to-market happy much Our But you equities dividend

of versus were in clearly, first On service generally to in the the variable they be couple fees, would comp production. of this an are to quarter uptick commercial 'XX. continue quarters. plus related bank as We the up so in We been card, out spending debit, are have credit our account there active Expenses and last saw loan in households forth, side, check. And fees X.X% climb.

active banks rationale. and the eye this for for our third on shares. Certainly, AFS that see normal. we're coming first in addition COVID how care also so in keeping quarter, We than due capital good some quarter a a run that is that's maintenance But that. quarter driven. X.X% our environment, in on So forth. we of is deferred of but a close to health expenses much versus row inflationary reductions this also the to securities us of marks it Capital-wise, were in all out experiencing And to reasonably of buybacks the continuing higher are

the as comfortable that, head info are and to With to period what the appears an we provide We next with I'll over for couple some Fed over months. it Paul, performance our into turn as position of he'll be 'XX well. active capital

Paul Nungester

the sheet. Starting prior Thank with X.XX% Deposits were quarter, balance you, Gary. up annualized. almost from

all-in X.XX% of X costs to dropped to deposit points Our point another quarter. declined we basis and our improved Total this mix which basis X was X.XX%. stable, cost funds again

million that which or assets, loan are it $XX.X expect take X.XX% XX.X% rising quarter And growth loan annualized. X.XX% NIM basis XX% items. on annualized expanded points increased marks begin basis, and including we or rates as pleased purchase and to excluding a reported growth PPP report million to accounting led this core For to expanding in we and was another $XXX.X effect. X by commercial, continues accretion, those

for growth of $X.X allowance, a provision loan due is million. Next recoveries net and $X.X increased which $X.X to million million of the expense

Our delinquencies. sheet due including down is and pre-pandemic million XX, is than the quality of X.XX%. nonperforming Finishing on coverage, loans, was a the decrease allowance loans during asset PPP our capital $XX excluding balance marks, adjustment portfolio XX/XX, X.XX%, quarter, loan from which the March acquisition still with level in buybacks. valuation slightly but decreases our improved assets, classified negative available-for-sale a higher plus At primarily securities with quarterly to and

equity of down X.X%, at for from share buybacks XX, At $XXX,XXX a approximately ratio total our was million. completed X.X% $XX.X we XX/XX. quarter, the of During tangible March

However, risk-based total our capital. and XX.X% securities Tier marks are impacted not for including by regulatory XX.X% remain ratios, for which those X solid,

is income statement, Next, starting or of The which to periods. accretion from I'll improvement side, our both cost quarter on basis is excluding accounting a primarily our first deposits. result to million, up XX turn point from a of efforts net interest PPP X.X% marks $XX $X income year-over-year as due X.X% decreased and prior average million the with costs year's reduction the in deposit of where purchase

income but increases income. by income the interest accretion, declined On due was loans in mostly less this offset securities and interest marks side, PPP to our

gains in in million million, XX-year to million in down production, the recent growth a points $X.X quarter $X.X for trends for gain rising MSR and Mortgage interest to down loans million year, banking XQ, rates compressed XQ of first due Noninterest XQ. quarter, $XX.X but XXXX, prior from in increased XQ year. were our X.XX% to from Going XX/XX, from due up income increasing mix. levels quarter prior will and for margins income. $X.X generate million is combination primarily lower from XX and the a prior gain $X.X $X.X loan forward, of mortgage Separately, down $XXX,XXX the and million meaningful resulting the was was gains. only after of basis primarily from prior security valuation saleable Mortgage income which banking and lower

unrealized a the much gain on $X.X $X.X XXXX a in a in of we banking million on increase basis. had loss of a increase mortgage we the in but $X.X first but on gains million million However, the compared MSR the our gains similarly a a to Separately, $X.X and quarter quarter year-over-year starting point. quarter XX-year $X.X $X.X last had XXXX. equities in bank million linked-quarter million decrease experienced Overall, first a large when from first lower had million quarter of of a basis, we

credit. $XX.X to first To the higher a line, lending health share. were income staffing but we Next from due the is X.X% were or Matt review. related combination now our $X.X million $X.X $X.XX generated related reported the million, robust to bottom of mortgage my was first over $XX.X XXXX. net to increase of costs income $XX.X per be our benefit of XXXX. million production. care That to an decrease lower which pretax expect The up, and for growth for financial and XQ, expenses expenses, increases And around costs pre-provision ROA. We for residential of initiatives, turn to million discussion higher now $XXX from wrap continued levels a million, completes costs I'll million a of call quarter quarter of lower And deferred enhanced which over

Matthew Garrity

million growth growth originations. the commercial commercial act with accelerant performance of our consistent rates with XX% commercial the of led balanced another it line strong first growth should the Paul. loan and Line was further suppressed Thanks, performance. utilization loan of for portfolio our was solid for represents our by XX% lending total very once quarter, pleased quarter following usage returns. more of quarter for which low our growth XX%. growth a in production We're expectations, first $XX.X quarter fourth overall again business, XX% once approximately C&I solid as than of remain loan In in accounting with range, a our quarter

pipeline the very the first continued of Given of also the commercial generated level second loan by expansion we into heading the high in our loan quarter. production quarter, encouraged we're

we the In business, loan comes on there. of in our ongoing a another very by quarter mortgage the residential industry's terms start In margin growth, year of we mortgage terms largely overcapacity. challenges driven gain experienced that of expect sale, with to good performance softer

our In was portfolio the the a production margin addition, by our quarter. percentage in challenges of to quarter greater influenced decision first

long the a basis. this represents run, execution impacts better obviously on quarterly While revenue it in mortgage

expect we quarter's with on second we during call, the to last this As environment quarter. us mentioned remain

view discussed is have lending overall mortgage As important such, tend as previously, as we we to take business. business, long-term our manage residential of and part the a we an

Gary of this Ann first XX quarter in year. new as launch with adding earlier, we're market Arbor our sales mortgage growth pleased the as so the well As team, mentioned our of far members the very overall

strategy in a to as is is so our participate is the more investment us improve relatively sales positions actively our which expansion, fixed commission-based, with As mortgage, conditions for cost reminder, future. consistent the industry This force modest. primarily

quarter were improvement and classified discussed to individual C&I credit of experienced are of quality, a a previous respect quarter's we asset last believe of loans XX.XX%, outcomes. we and overall of for another the call, as net terms adequately With no for XX.XX% to Net $XXX,XXX. criticized continue calls, the charge-offs reserved there are range of nonperforming on from and levels improved respectively. we by recovery In quarter updates

our environment, portfolio the is impacts to the respect While overall of with perform about there well. inflation continues concerns rate uncertainty with a in to economy rising

continue we call to for of for Gary the portfolio While turn Small. over of remains second to stress, I'd now signs outlook like stable. our the our the monitor performance quarter to back

Gary Small

provide and caution you, I the Matt. full that remainder actions, year. call remain guidance growth at From have events, expressed of of we And due on affirm the of of for the second for guidance, year the I'll year. Thank appropriate do to that a year, some This half our et our with loan world the we a now X%. we update want cetera. our in magnitude economic expectation of the the the XX% Fed to half balance projected January growth commercial sheet perspective, 'XX. uncertainty for In performance first January in be But loan XX% we comfortable would for

year, is of of We inexpensive. cycle. range commercial pause growth net you target growth. a remind perspective, at good loan XX% That specific X% no impact We very our still we target concern, ourselves remains have the Money that net periods. but in and still cause XX% interest through our again, we may will prior when I to some these did a exclude From the business affirm events segments rates income the relatively PPP. of interest in

day, light. the January had for call turns likely year-over-year was We average X And news for basis in appears the basis budget 'XX only with Our turns we're the in that it in X of margin the to points. X a -- assumption. certainly, Fed outlined

that count for tailwind to year. So likely have the a you'd as

on likely in was in income and category, side, 'XX. we feel our year, a revising quarter, first exclude mortgage equity that the we In for the discussion. year the for on full and do bank to would the fee quarter a we're I losses On guidance downward gains about us that bit income posted the business fee XX% if basis, target gain you be off but say loss number we're from first security our

off in guidance quarter that Our was be the X%. we'd first

little the bit the directionally year. same, of for the remainder a just more caution but So

have to We changing challenging, and being We the but be Paul That's that see expect affirming the up as From million first line we We to of comes seen versus an health we're digit. over mix good revise the that is strong $XXX we've percentage activity bit in history. plus to that up I portfolio seeing downward our sale for over care, We'll consistent I dynamics period, commented valuation items during guidance. are than January higher the production weakening stemmed that term. But and our mortgage for going the We're that's I'm projected before upward. income would gain see will X% marketplace and guide. target, standpoint, on near of the bump that variable on on a a portfolio assigned bit. be expense not XX% that to But single we really salable rebounds the may typical. with earlier. recent wait also income a out fee with high coming bank quarter. the $X We fees and provide And equity wealth a prior the I were just higher comp until reflective commercial 'XX, the that year. had in and that. the mentioned, million fixed the

I long efficiency our same mortgage lift-outs, business, of expectations, the we because that know available of in affirm you when that. January. game, back the projected and and we playing roles, we're market on our and that to typically we incorporate was that think becomes that in year ratio always in particularly, would in do we the Additional commercial move XX% range continue the and revenue residential forth so producing talent do expansions

loss So hikes, protects running be for the well. no to the first reasonable the to by are the provision quarter. change quarter. this and charge-offs I'd underwriting characteristics there. say, driving wise, the should we higher loan our And -- rate the in run our against impact and of driven, being -- Credit growth driving strong have plan us unfavorable loan favorable Net portfolio potential is loan always loss And a growth is little to approach say improving. is continue tailwind is provision I

of quarter. On on on the XXX,XXX take. That's not a X.X%. model, did That's we in equity about repurchase And shares pace business means. front, really our year that the anticipate year's a first we would the any staying full typical based for the remainder that's by

the may However, turn will go available opportunistic year. remain we'll With to things make we I you themselves operator, as through over questions. it as for that,

Operator

from question first our from Piper And Scott Instructions]. Sandler. Siefers [Operator comes

Robert Siefers

from So hike. roughly to starting NII I sort the is the benefit thinking Fed each for on about think sort a basis of core margin a X.XX% point so. We're still core or X% of rate

Paul Nungester

of It's hikes had now an previously we're we Yes. that more than Yes. expectation for seeing thought. those just Yes.

yes. So

Robert Siefers

as you well? thinking you these versus can talk XXX beginning you way asking about see how a in margin And trajecting meaning, the cycle through of bit another the does betas of at cycle? points how the how maybe basis Okay. about the are And later the deposit say, first so or cycle, it is little

Paul Nungester

Yes, Yes. good question.

some the on on costs, bonds So deposit and floors the beta clear variables. on Fed whatnot. some flip things early will got have we we our that. be costs on the of cleared side, our will then fund still that like ones we and that some dragging once loan take hurdles first And deposit few, the helping feet and to accelerate start to will but the floors and our place, of these pace through the get But

our to already be to of So to offsetting over I unreasonable near they seem going think But that our recent net-net, year versus year XXX just there. are and now it's saying obviously, the a relatively kind NIM you're due but talk rise doesn't in earlier, the we'll XX, of the smooth previously thinking some see is somewhat for for term. factors what -- bps guidance in total XX the

Operator

KBW. comes from Michael from Perito next Our question

Michael Perito

So kind PPP, NII to on questioning, incorporating line quick just the just but XXXX growth the a clarification Scott's you out that's so X% of correct? of January in hikes that laid ex XX% had X in your guys guide,

Paul Nungester

Correct. Yes.

Michael Perito

the the was the actually stay correctly there when hikes call and the dynamics X betas, Okay. constant other? around that that and hearing of And accelerating each between largely floors flow just just of it betas the I of sure each the to when pickup accelerate, through to fairly through answer kind because the they'll sounds X% X first, floors offset will it, make for like, the timing hike second

Paul Nungester

Yes.

one gotten XX essentially clear floors, would had bump about we're we in already and bumps we've that. us So and previously thought seeing still from bps, X

once we've and if this numbers.... that I of they there a ones little anything do couple those essentially more get that, So a certainly mean to next but mean to won't one, cleared it at need be XX bit this we XX hurdles. the old than might

Gary Small

Will XX%. be

Paul Nungester

that point, Yes. XX%, XX% at yes.

Michael Perito

we're Gary, seeing appreciate that from conditions? that has moved very said or any year uncertainty It's on? I just opportunities wages you smaller back have around you of just you're to accelerated some price a of that have people has growth bring your have hard frankly. labor, mean, -- you in, competitively, and Got are other worse know -- But of any you're made do. seeing I updates the to Or half the markets reporting what it. just any move perspective. And peers talent at kind talent to hard the seeing guess, with some around. around with the where in lenders everything, Are then I where

is Just the a from what curious commercial standpoint? competitively update lending

Gary Small

that And first, little the as Well, say to on I'm good bit on turn the from the current Matt. to be Matt half could But I'll pipeline comment QX well. year Mike. instructive some a question, how looks and where second we're of over going getting at to

it would now, at as with the the on now. appropriate what that, but like least position right Matt turn that see that actually reason to that it's it no say paper in to curb just got. see there's to you've second Let's put we I'll us half, enthusiasm, And seems over

Matthew Garrity

a Well, than very comment we're move we quarter good Yes, to entering larger at. quick before talent. of and growth. balance had pipeline production with quarter pipeline the we we Sure. just year good actually And first a really a second entered where

how second comfortable as growth we're latter progresses the in And the and quarter the the we're So we'll a another with half and QX, of us think very year, of react. second get as here probably we'll better that weariness on on given of those have side. really in that the nothing good right see sort But the times the slowdown, now I in I the front there's today. half but think pipelines visibility appropriate we suggests on is of that stages QX quarter

a in new have continues although found have On be their few chairs and market still to a front, those that's to that for in talent. window us organization. new they the very conversations themselves people it's in don't months The necessarily for TCF/Huntington active like talent as merger, opportunities something the provides rearview a

in that. couple folks continuing conversations Banking over have expect conversations and QX, market continue around us to in and a the we as well So Commercial to as talent continue lift-outs throughout to remain year particular. very of We've that brought balance active should and here those happen, like in the new things you to of do on the front

the are So good we say. off as those -- really would the earnings in there. robust, talked a still very, a about And I sales to the front -- activities start on had very side, residential on call we're

track a had with new and some market newer having which of folks record Arbor, lift-outs success. in new team in XX So Ann successful we've markets

dividends entered Morgantown, go back pay for when for should to we this us. those you types example, of If

Michael Perito

-- but quick one. That's helpful, jump back, then I'll one Matt. last And just just

the than Is was Or the little Just, Paul, thinking. moving lower it on forward. a quarter tax rate I seemed good first level? a

Just any else before let quick someone update on. jump there I

Paul Nungester

expecting the front, coming especially for change Yes. a full we're corporate up. effective rate about On still any a not midterms rate year. the XX% with on tax tax year, We're assuming

Operator

question [Operator Instructions]. our Janney Marinac Scott. Montgomery from next comes And Christopher from

Christopher Marinac

that for one for and thank of do have month loan just Paul I you Gary, the will. the margin April, want you the the Fed how layer, the information on if hike? first in of active more to terms And and you play In call. do competition? yields in June out then that with yields how loan just and think how with May will interacts

Paul Nungester

on rise. definitely they're No, Yes. the

the chasing So environment, this costs all reacting market, as now our competitive all but funding to loans we're in well. obviously, we're

has well from So those are off starting that April to started rise. perspective.

on You We'll didn't the then see happens feel that. that per in like and here of talking, these us se will currently the second quarter. help first timing they up strong here that XX depending NIM May, given set results a actually quarter that start in are bps they do in for XQ what bump to

Christopher Marinac

government just just issue not deposits a Great. Ohio does focus STAR footprint, or you, competitor for the this funding point? create that's for your And any if at given at

Paul Nungester

to but that to do a for sure. does, react have large We not to It extent.

Some of benchmark. our use that a as depositors

Gary Small

as product about deposits as to or and beta, will tied move. we be about When Matt the Ohio that's a mentioning that will was use on do we that that's have for earlier, a going to our we slower. STAR a treasury deposits probably But have we think move. Paul little management, And beta XX%

that's market, to money variable move. management going wealth some have We

but the $X that less overall. on billion, sensitive move than So rate talking deposit million to real beta the $XXX with consistent piece that's when be and than needs to on that would we're get the thought probably XX% move, down you -- less our

Operator

it Small questions. to pass [Operator back And any Gary time, there to final Instructions]. for are this I over would no remarks. like further At

Gary Small

We with we're a on to it you. with good for information, on free passed needed as caution the and as a the the lot and up the And and of pluses summarize very and thank clarification. income us yes, on NIM follow pluses looks to clear -- well. growth fee feel -- I'd side mark provision little Well, feels like side

think, directionally, asset taking the started from where sums of kind was right this plenty it. we activity as saying, advantage we're in there's versus up. year, that I So And of now, generation standpoint, an and full it of Matt market

So thanks, we look forward to talking to you next quarter.

Operator

Perfect. Thank call. you, everybody, today's for joining

You may now your disconnect lines.

Premier Financial (PFC) 27 Apr 222022 Q1 Earnings call transcript