PFC - Earnings call transcript Q2 2022 | Premier Financial Corp.

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good morning, and welcome to the Premier Financial Corp.

Second Quarter 2022 Earnings Conference Call. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Paul Nungester with Premier Financial Corp. Please go ahead.

Paul Nungester

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

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

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, loan We good highlights. operate point-to-point with a a to basis least experiencing lot joining a all. today. that to I’ll growth in X.X% commercial, us in and the quarter across an morning Thank of got for contributed cover, just outstanding right was base you each to on We’ve consumer all broad It in at and the get had the growth. growth for growth QX. to you, in line, business and we Thank which quarter residential real markets terms

experienced capture new quarter. it activity share and generation on commercial saw certainly good a and business, really each So very and the good C&I, multi-family We of revenue the deep. we to a in broad built business and the it was position we’re front. CRE in team, it was our great

highlight to moves income the And matter that over we and average with but I into the the margin Paul kind to to very QX the made outline here. want quarter, QX momentum – excellent see really strong movement again, from average growth QX. heading meaningful So for QX is front accelerated balanced. expect you’ll have, the in we loan will have balance of net interest

for was very good Our activity industry. mortgage the application the quarter versus

for it comments call. the And XXXX. the discussion. for a net end all provide that of the large July, in well. as continue of conversations third to back driven all the from margin However, I’ll seen, continuing it not history. cover. loan affect as is performance continuing was that June. that did I’ll story, higher end over XXX% be the $XXX contribution to it provision a charge-off the have at familiar as the And auto seems we a to credit a and of and the the from toward Loss Paul strongest look have million that’s in mooting number. quarter It really specific some quarter March year, for Excellent financial compression production our the at business. was the with of the did with grew as quarter last the one, than quarter be reserve drove until be It’s credit single end end to have And the for the set this we will guidance with financing coming driving of you that’s obviously, for Matt the we’re quarter. by in We year’s day We aside for activity going now for at – quarter. CECL provision the normal, growth quarter and turn – we

Paul Nungester

increased X.XX%. PPP Partially and margin, as core offsetting XXXX quarter XQ points XXXX. an rose increase of the consumer. increase in XX.X% was excluding interest-bearing increased annualized. X.XX%. market interest growth due utilization increased and including accretion core a and And X.X% year-over-year quarter. FHLB loan quarter or in well start as linked-quarter interest this growth, rose to rising I’ll basis funds X increased expansion. had or concert to from higher or a of second Thank and quarter well basis X our points non-interest-bearing acquisition a in on due we which those year, average Gary. and growth for as from yields, only primarily loan by acquisition basis annualized which linked-quarter improved market primarily basis strong to had drove This basis X.X% categories, growth increased growth on $XXX a on small each growth. This income held XX double-digit was from $XXX average deposit quarter accretion. cost and results basis saw commercial, and quarter the during for which Total million of XX.X% also review deposits, deposits linked-quarter excluding highlighting with as cost funds, XX the points residential This basis loans, which strong prior We second environment X.X% higher rose you, while to PPP good X.XX%, rate in million and to cost income growth growth. margin by and the including sale, strong both points first Both a all our Net net was in

linked million to on for $X.X increase compressed gain. the million $X.X which losses offsetting X% efficiency expenses These a and credit, rising a our down the quarterly $X.X solely $X.X interest due $X.X that million such as provision by return basis lower in valuation assets. banking decreased while we reserved $X.X from was growth to drive decrease were flat charge-off net was higher was in income, and income specifically would decreases while million income, on a and have losses XX.X% million Security Non-interest million, XQ. of we on compared million in balances. XQ pre-tax a income provision previously saleable the a quarter, securities are for. from from Insurance compensation $X.X had Mortgage $XX.X $X.X in we banking for ratio, first by million the on quarter $XX.X to margins due disclosed lower Expenses $XX of declined activity a Partially The higher costs expense net lower margin. income lower for higher interchange due basis, in XQ linked-quarter in charge-off. and XX.X% have million and an ended and X% for combination partly higher down valuations down for non-interest contingent to XQ fully consumer was decreased deposit with as interest well NSF/ATM loans, income continued primarily essentially quarter and did mortgage related of primarily of net to average lower million effect million velocity on $X.X security allowance was expense losses. of due related from increase similar from an expense, it health not growth, To these that production decreased improve the and with equity linked-quarter reserved X.XX% costs. we were forward, fees loan to by commissions and for growth, XQ were that. net in loan XQ. MSR occurred average of big deferred Looking charge-off our XQ, our prior pre-provision The gains betas service $X.X tremendous linked-quarter will but XQ from quarter fees. already primarily to yields be mix manage lower due the from offset our our The helping partially a care impact quarter in have million last $XXX clear, our recoveries and about million which which coming was Lower $X.X rates, in XX% in helped to loan loan commissions, the strong servicer to benefits. expenses offset student quarter. That, than from million million

again coverage valuation capital with as decreases assets June And both stats at our decrease in and loans. million balance a non-performing Our the quarterly portfolio adjustment of asset with non-performing few negative allowance available-for-sale loans to improved due sheet the the $XX quarter, quality a was buybacks. XX, classified during securities primarily plus Finishing XXX%. a on

$X.X buybacks for share of total tangible of At our XX,XXX a was X.X%. completed equity June we ratio XX, million. quarter, the During

of discussion tangible over and turn AOCI, XX. That and I June excluding to March X.X% compared X.X% at now XX at be review, my call Matt? the credit. financial for completes Matt to a will would However, equity lending

Matt Garrity

Thanks, Paul.

from of We’re loan $XXX of PPP total strong XX.XX%. growth lending segments for second PPP, net loan Growth businesses X.XX% excluding X.X%, of excess million X.XX% growth with growth or excited consumer of came and mortgage of all of growth the our loan commercial report to in quarter.

outstanding approximately had business commercial quarter quarter growth, loan $XXX an million. of Our second of with growth

growth first the commercial XX.X% loan million. For XXXX, year-to-date half very of was approximately $XXX or strong at

strong quarter. team’s were solid from that production first, factors strong quarter on otherwise year, going we might opportunity. performance XX% by quarters. second loan such second quarter interest and environment job pipeline We resulted largely has all drove the our extent, or categories: approximately the of second the growth which of our very volatility activity have two in out had efforts this a some first good forward into quarter To The dragged capitalizing We’re our for the into proud fourth markets. quarter, team of excellent a a second across increased did the pulled the third that into some of an the believe rate

of the half here. up in points, with as approximately considered Line XX%. payoffs. borrowers the lesser the utilize although of still delay good, second total pleased XX% continue throughout see until production up XX% transactions second year utilization for originations those the few of The and under becomes a the factor, C&I improved, XXXX, first was in favorable. over environment we’re who quarter C&I but expected extent, to prior this the for production deferring permanent we’re may market a quarter. was the We rate percentage some making quarter the progress more approximately balance with trend second our the

report we the the to of second pleased said for ahead the on have full look year we we commercial loan to XXXX, we growth half we’re that As would. delivered that

remain quarter, in of and under first have business the don’t originations that would XXXX are as and same our the first declining in our similar XXXX, to the income the in with residential quarter low growth levels the loan mortgage second terms In we pace pressure, XXXX we experienced of increased the to expect the Originations with down originations in while what pipeline of the quarter into half quarter quarter XXXX second our second industry. strong of for business left the seasonal XXXX third quarter full While are move filled the consistent remains did in activity. achieved of refinance our first, to the XX% for growth comparing the gap quarter mid-teens to expectations the growth first. by This when guidance. of loan compared increased when our to second comparing banking above solid year XX% original we the purchase we second largely mortgage

expectations. first for original XXXX the originations six of were months total our XX% within Our of

quarter, we discussed gain We the into banking and on on in we to in mortgage of margin saw of last putting our mix. terms face production execution as saleable expected, which a better in percentage As portfolio larger both call, challenges quarter’s income, second impacted continue revenue. sale the with

fell gain a As and million linked-quarter year-over-year by on a on sale a $X.X approximately basis. million $X.X on result, revenue basis approximately

quarter our to quarter of second classified classified towards and With and mortgage of criticized XX.XX% linked-quarter have mix had to modest a second improvement Going levels and expectations our margin the environment. norms, of respectively. loans improved levels When another by $X,XXX,XXX. criticized for while given historical charge-offs we respectively, the declined second remain XXXX salable our Net XX.XX%, the basis. quarter to the asset quarter of as loans of by current XXXX, respect will forward, XX.XX% expect the more migrate and on we were more XX.XX%, comparing quality,

business resolution. estate we discussed the non-real have we concerning portion that and of charge that our down of relationship During secured an on properly expected down, expense. the balance down so the portion funds the calls. $X.X the with expected approximately of to of be reserved expected servicing million. its outstanding commercial a contract charged resolution loan will resolution for of exposure are representing estate approximately for no With loan between the the of the impact the charge We which incremental secured non-real relationship for. Education prior was And the quarter, when is by remaining remaining servicing amount took relationship C&I real reserved Education, estate had there from student the Department down, charge for $X secured our In Department portion remaining our this received, customer we is were was the in million anticipation we this appropriately

and volatility economic given to overall the uncertainty. continue in for look inflationary signs pressures interest the ongoing portfolio We continued of stress in rates,

third continues to to stable. the quarter well, While the turn we for back the Small. now like over our monitor to Gary? for of call Gary impacts remains portfolio continue our I’d outlook perform and challenges, to these

Gary Small

Matt, remainder to color some X.X% to expectation. similar Those the on when exclude year our for our relatively From the the first year. regarding of play a the and but through we balance second remain favorable, loan too half uncertainty impacts from an on seat. commercial outcomes economy cautious see much visibility to improvement in the X% conservative will of expect include the growth QX do activity of very for Fed of year-end. sheet quarter, the you the PPP, and looks forth now the numbers you, so do effect about the QX, perspective, total I’ll the a expectations provide Thank of

obviously, for mid-teen set we XX/XX and As that to are Matt from at up for full portfolio income, to up with guidance the guidance growth along mentioned, balance the Full originally is a movement. that category. we’re at year, or guidance will low looking loan Net was interest XX/XX. to which expand you guiding for that went our if sheet XX%, XX% growth

impact improvement, margin to and action that. what we’ll additional would expect saw have continue quarter we third, to what the the quarter We second of week, in you’ll quarter. expect movement we’ll hear the to from we the second similar see to that not just yield this full dissimilar Fed In the add

income, However, credit our we along betas in debit see bank card, overdraft outlined, under don’t plot not pressure income all as just remain activity. But be will planning The deposit Fee the bump fees all continue good expect seasonal QX wise, typical noted to busy continue would consumer card, there. strongly. to Mortgage we issues the check. for to fee Matt and are would really marks, term looked anticipate consumer’s good valuations business income second equity but market new Expenses suppressed the quarter. our very We’ve fee on the this, excellent in an Wealth what year half improved fees, saw we activity. I an second near on the versus of first. six again, the in income completed that keep projection say had first business. management in the the months fee we’ve in in or

year, up it’s the bumping we’re to success side, million loan having to to $XXX the so comp on relative and paid forth. are our there’s for but expectations variable the be that We

CECL the benign a happy From grow The some that’s for perspective environment at efficiency had with expect forward, quarter, ratio on charge-offs depending plan. And what that’s unemployment target the affirm and year. year. going net net favorable experience check that provision come set stroke. the expected over for it’s big a loan that’s a XX% potential of for remainder including a we’re There in to movement would we in The the organization, So is expectation the overall in to that growth. be a the a the second provision in we’ve where we’ll additional end variable the our to charge-off of what to year, the is general loss original happens the was credit rate, with we to we from of that the expect economy, calculation. in

to So the have for off we will the performance as there’s objectives We caveat you entered guiding been earnings P&L additional and I this plans equity XXXX would we expect to repurchase there. perspective, that set near the in an still to we’ll no hit our regarding specific From first leave term. say relative year. that activity in in year.

to that so loan positives obvious equity have offset the environment with forth. and going the mortgage the and business on wealth We growth margin help and are on crimps I bank difficult expectations as residential now, along right mentioned, portfolio

continue way and With deliver questions. that, to over for we as do different we’ll it little will originally So year. a we turn in felt this expect it just

Operator

at first go our Perito Thank Instructions] And you. comes question Michael Please ahead. [Operator from KBW.

open. Your is line

Michael Perito

guys. Hi, morning good

Gary Small

Good morning, Mike.

Paul Nungester

Mike. Hey,

Michael Perito

to year. just drop On that back so But for to reality? rate of the guess the the kind year, line actual in it near-term loan said, think versus growth perception expect changes fourth the particularly guys percent of pipeline level I get the growth you you or quarter as the the you versus full utilization Gary, side, how much that of I XX-ish to like, visibility, having in changes that, limited the half

Matt Garrity

hey is So Mike, this Matt.

So stuff. this when promise a over to under it we to have deliver kind and of tendency comes

the you So when about second our commercial third what we XX% quarter it business quarter. of naturally entering that is in conservative. tell the our pipeline we are I’ll were was entering

payoff of quarter. And market frothy and on the sale aware permanent So quarter teed not for very up still those a this We just for market we’re it’s do are the surface, of. very It’s more companies. that activity. expect activity good things it’s a

So we’re couple at for clients high very are a of selling that we’ve them. happy got and multiples,

But up. year. we is achieved in upside the Is short of that comfortable there the I kind a half Absolutely, there? QX back the in ground could business space. stake it’s commercial in comfortable something with be, there in our but think growth our just not we’re impact putting we’re will answer of that the So the

Michael Perito

Got their lack – observation months-ish you just you and it. of the way it, concerns of doing? of visibility kind guys guys are start cite visibility your quarter rates the is the beyond just or put the customers Or is to what or quarter the to of and uncertainty, hearing three and about I And better are guys the that maybe guess, actually fourth macro you that in period? the a Fed lack

Matt Garrity

in it’s what I think anecdotal conversations right now, seeing. of and client we’re terms the

a ability, as how little may harder view of climb that of closed and like business So forward example, get away, not to and bit there be percentage through much things of of there the continue to rates goes return is pulls healthy into a business, the a pipeline that move the that. decides, client for higher hurdles

Michael Perito

it. work just backwards And of then kind here. or a lastly just bit Got summarize to to

you Just year said first, Gary, efficiency the correctly, for make was to heard I XX% I ratio, correct? still you the want achievable, sure on full

Gary Small

Yes.

Michael Perito

the from offset, working top year-on-year income expect because and higher are drifting if Yes. expenses will you two And those because then high the backwards that, line line of of not environment But to growth. than down the noninterest the items? mortgage offset be other more

Gary Small

do. We

Michael Perito

me And for it. last back. and then just Got step I’ll

obviously, capital, ongoing. a few dynamics there’s on Just

that of all near-term quarter. get the on put TCE on any expectations to had and thoughts My at $X.X you’d earnings – is You increase particularly guys you this capital going over full forward huge sheet. to realize potentially, just, you a [ph] where like the of the X.X kind billion around to you that level, guess once here. benefit anticipating time? added back are growth The you But balance

Gary Small

reared the kind in to Well, head, number. of to whole we kind issue and a we AOCI X.XX wanted Mike, high the X-ish get Xs, down sitting before of were really its

of Certainly, $XXX were a But we that always So that sit we’re a bit the ratio course the and second at, million The million something move plan we’re running down capitalized. or can felt quarter just $XXX didn’t fine time we is quarter. over a of current growth, we that easily absorb. longer we in period with. over out

or making any not to to in We’re any make to plans adjustments that change our trying business.

problem to its the have out continue not move. into to of away. we’ll to AOCI the we’ll to do let capital capital, with you has replenish time. said, we’re this going excess of up. the the the earn front. taken see works what But term, be to to capital. all as we kind way rest that regulatory way over that stacks still we movement nothing back enough in And the have AOCI what September, of same us to may But high-quality visible AOCI expect We to It our Again, week until help and in on do near

only we there’s going term. be think earnings I in turn to contributor there written So chapter will and other in start to direction around go before be still negative a the the and near the

Michael Perito

color. Thank you the Appreciate Helpful. guys.

Gary Small

Mike. Thanks

Operator

Thank you for question. your

Our next at comes Piper Siefers Please from Scott ahead. Sandler. go question

Your line is open.

Scott Siefers

a and sort taking trajectory question. Presumably, and know hoping NII from margin got Good goes about asking, $XX.X I morning of given and it. just quarter’s, NII of of guys specifically had you’ve was the here. Paul, because just lot you guys. it, expanding odd parts number the this, million. I moving dynamic more But to speak the for roughly talked about the Thanks able you it of from higher, kind be might this

so that right? curious presumably your $X but you haven’t was or NII awesome growth just gotten of of $X million, NII of magnitude on NII order cost loan benefit You of of the the had on such only thoughts that million acceleration. provision, much stuff, very any in – the So up

Paul Nungester

you’re No, right exactly there, Scott. Yes. Yes.

higher any And of growth quarter, there. towards XQ, the balances. $XXX like average versus quarter the ending the balance balances XQ end already came earlier, I mentioned So the throughout starting our million were especially

of September the hits. partial to whatever we’ll some really during full with front, quarter by impact – the right, that we’ll and the rates movements benefit year quarter meeting, XQ on the much the time here as from impact going in So benefit today, here quarter in full benefits see primarily as not happened that get then full with probably well sorry, that get you’ll happens the XQ,

So you’re right.

quarter I So we XQ we’ll happens increase. how see see spike a NII but then and will to continue getting XXs, what to see big as – during XQ, going Fed the or growth guess that here us months, But about XQ pattern. well actual into see there loan during the for in as should growth mid-XXs may three definitely movements XQ We’ll talk here the in be. into you’re we’ll that

Gary Small

math in if rough The between averages between the cap the starting basis difference like period end XXX $XXX and at versus increase. there’s point million difference points, feels you $XX just million that took like the of it’s

Scott Siefers

given days Yes. right sounds Perfect. changes it are XX sensitivity what with given now. And you like vis-à-vis betas really all of us gotten then your sensitivity But just concern maybe, on you this just can because have sort rate ago? that might growth rate that you aren’t Paul, at to point changes on put update where a any any you

Gary Small

came before in bigger No, But XXX It we’ve point we’re significant. about most probably I in talked recent little not analysis. bit context think our basis this consistent. percentage-wise shock is a the numbers. from Nothing just it analysis,

I think impact $XX before at from million we’re million million annualized were $XX $XX we that. or

portfolio up. all quarter, variable go essentially stuff amount loan to continue and for the over We our added of was there. rate of we floors kind what good a So of C&I is during

rates type. LIBOR rack et been roughly our that helping obviously, Those that we’ve moves, in new going And increasing as on now across originations. are to cetera, keeps on getting So for board. is moving the plus/minus we’re mid-Xs, full the portfolio. the Fed lift The loan benefits

that to up. So go continues

We’re still asset sensitive.

far we’ve want talked sensitivity on asset about don’t As range. to in too past, be the the we out

try towards sensitivity. we that manage neutral, asset leaning and So but not the

consistent still it where it’s with fairly previously. was So

Scott Siefers

Perfect. quarter. clear, I Okay. the something meaningfully equal below the I’m back heavy question, the imagine done we going just in lifting so provision revert would I And was And down to all guess final second else on forward. then this, presumably, all

mean a $X that’s range quarter. So to fair presumption. it’s a like $X in something I million million that

Paul Nungester

Yes, And the of looking we’re fair half growth year. Yes. to presumption. that’s X% described, at Gary as in about here X% back the

X.XX% take growth. there. provision on of actual can But you you’re level of our right; you that that So exactly X% and depending to get level, against the the it’s current loan in X% X.XX%, kind

Scott Siefers

color. guys. perfect. the Okay, Thank you, Appreciate

Paul Nungester

Yes.

Gary Small

Thanks, Scott.

Operator

you, Thank Scott. comes Montgomery at for your Please Christopher ahead. from Marinac Scott next Instructions] question. question [Operator go Our Janney

Christopher Marinac

new talk morning. deposit in gathering I on as how liquidity that kind Good balance thanks. next quarters? think of know you sheet? access Hey, you the couple the Can to about about you manage liquidity and of

Gary Small

first I’ll to – take this and feel Paul, I’ll free Gary. in. join make is the comment,

we I on jump in $XXX As million didn’t mentioned, a quarter. plan one

was got our that to peers to perhaps as on we in. what to thinking to money we So start when and little want want affect happening, a started bit earlier core versus deposit and about our do out we repricing new go take

side. movements fund and though, initial that side on space. quarter we’ll dollar And that of public half we’ll have the seen and see commercial the larger move this see in the was and first the Our or in on first

be We’d growth Bank. cautious still sheet to bit that as to sure, diligent our our consumer expect the to than to solve like issue. betas Loan Home and our grow how the Federal reprice check relative keeping little But our the So but we’ll we funding on balance consumer deposit book. expensive book more we a rate situation solve the situation. preferable do to to be And run to but

demand the markets, seen impetus any or consumer in our the are the haven’t either across marketplace meaningful sheets built, unusual forth. the right to there’s raise relative with just way. in to or no promotional dollars so deposits marketplace way balance There’s movement We the in any now

Christopher Marinac

the does any mean just quick worked as follow-up Great. fund years. a That’s that I for competition you’ve helpful. I with for And create guess you? STAR Ohio

there’s different I environment this the than know anything don’t So in about if past.

Gary Small

doesn’t it really. No,

we up the of relative set mirrors that have clients a few whole at Ohio. – We product percentage where of a have kind a we movement to STAR

and appropriate, to obviously a deposits but noninterest-bearing But traditional that. primary step right that we forth, with have use pricing to we be when is target our can change. So so no product product and in more

Christopher Marinac

Sounds good, for thanks morning. Gary. and that, this information you the all for answering Thank

Gary Small

you. Thank

Operator

you any for to remarks. to concludes Small now I’d for question. much, final very session. like This Thank Chris, Gary pass your back our over Q&A

Gary Small

and Well, I a to busy thank of numbers for want the level. outstanding for have forward. the for it to adds story it’s feel business earnings and look issue adjustable quarter. provision know we to your little to quarter. understandable, interest an when next thank time The you all going We high And the and you But you feel a I confusion think back, little like you momentum up bit joining Bye-bye. a more that I the again you forward it’s really a and from season. support peel pops and talking your can I us.

Operator

Thank today’s for joining call. everyone conference you,

You may disconnect. now

Premier Financial (PFC) 27 Jul 222022 Q2 Earnings call transcript