- Earnings call transcript Q3 2022

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Operator

Good morning, and welcome to the Premier Financial Corporation Third Quarter 2022 Earnings Conference Call. At this time all participants will be in a listen-only mode. After today's presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Paul Nungester with Premier Financial Corporation. sir. ahead, go Please

Paul Nungester

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

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

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

Gary Small

and total in has residential. Premier’s share, case another Paul, course up quarter quarter million the from and and I over saw a and good The report posted are our a growth of XX% strong year. for was a strong Pre-tax consumer categories: growth the quarter you the all loan key organization. good us which revenue earnings our was and positive operating I to that’s for the difficult per a X.X%, commercial, that's you, over deposit leverage over been am figure us good again pleased very or of income enabled as three post perspective to team We the growth of metric appreciate $X.XX today. $XX.X very prior environment. provision Thank joining morning. third outcome quarter operating

of to organization's growth us, will an continues quarterly quarter, pleased base, and the Matt client We our strong second its are encouraged our X%, very of ability extremely follows expand as climb. with mix to reflects extremely business C&I commercial with share as it really it

deposit customer excellent over loan I the you annualized to deposit Business job hard grow deposits the to September assure with working were were was September quarter pace deposits and the X% of keep for on growth teams growth. year. treasury branch commercial bearing non-interest up with Our an doing for prior the XX% acquisition front. continue and year the our

due and feeding helping the it's the non-interest side, to our up last period for market the pricing mortgage with on that consumer and to quarter. a consumer the sales, experiencing income were we is X.X% under and spending are challenges. Moving year Deposit offset difficulty to or secondary in continued volume market interchange residential over gain on pressure same the in lag fees sales the

a deposit strong details. In the mitigate we again turbulent the day. the clients Paul was the net pressures being conversations expectation to Our we Expenses good management Paul? that's will a our leading and issues some adjustment absorbing and environment growth before through degree is than more on market Matt benefiting and is summary, right also perspective environment. value-added compensation some ever are asset inflationary some renewal again period, and income revenue gathering a to excellent of having more insurance business team with interest made we share of see. an with beta from that it And from are wealth mid-year growth it’s really are inflationary why

Paul Nungester

XX% $XXX and all and commercial, another annualized million loans growth including sale consumer. Total start quarter, XX% third for those including I'll review strong quarter our quarter by growth. in Gary. representing residential growth Once held growth. saw again, Thank we results or of categories, increased highlighting by during year-over-year you, the

quarter good which non-interest deposits annualized million of bearing another growth, growth. each and had had interest bearing also million strong in deposits. increased annualized, deposit We broker $XXX Both excluding or $XX X% X%

XX% expansion. loans with Our deposits X/XX rising and basis we from growth at increased drove linked the quarter This on low-XXs environment income prior interest year. rate remain to income interest net in and to in ratio and was approximately near-term. concert a X% expect the improved XX% margin Net

in loan excluding from broker margin deposit and to of X.XX%, primarily marks due which XQ basis acquisition from increased well acquisition cost loan was as excluding on and yields, a X to to an quarter increased accretion. to basis marks this excluding on linked X.XX% basis to core XX points primarily from due Largely PPP continue an funds, which in accretion average costs, linked PPP marks points deposits, increase rose offsetting X.XX%. increase growth XXXX. was XXXX borrowings. basis accretion XX a X basis While was increase points basis and average and This second and quarter on quarter higher XX which quarter acquisition points as costs to points third This basis FHLB grew

average generally XX%. runoff excluding expansion and/or recent XQ. to beta would federal in for borrowings come from was the this total higher broker general here loan that our expect our marks yield loan trend would consistent in with NIM deposit the while and to a early XXXX in most deposit utilization expect high Our means risk of We beta and growth to deposit deposits loan compared FHLB XX% the beta. likely excess of our represents supported that funds growth Downside XQ XQ exceeding and change deposit beta combination the quarter, continue trend would beta, have with near-term we effective in in cost, be our rate

banking non-interest led from $X.X helped ratio, improve deferred effect which recent increased XQ. declined a compared net income increase million The by quarter, in efficiency XX% due made linked lower Mortgage equity up Higher losses $X.X seasonal a gains. costs increased basis million on MSR and income $X.X quarterly to well were gains $X.X from due only pre-tax related loan linked in adjustments charge expenses primarily for compensation $X.X higher $XX The XX.X% a $X.X analysis. XX.X% Expenses million from gain. production, our a provision was $XX due linked to partially securities, commissions. valuation XQ. basis, slightly XQ, of the X% were all XQ expected, a quarter to and million offset benefits. X.X% primarily gains of Security revenues $XX.X of million from mid-year and higher valuation to increased assets. offs. a million, quarter in to million $X.X by revenues banking as a mortgage by XX,XXX on of $X insurance pre million increases XXX,XXX million lower average to offset in related increase we million, income These million XQ allowance up loan to $X.X return were compensation decrease offset partially compensation Next, for as security higher-based by from to to for expense, provision as partly XQ in quarter prior These of of on offset lower million in on higher increased due in market growth

ratio again assets for classified At coverage improved XX, the on valuation with asset quality and of due September a adjustment balance X% decreases loans loans quarterly the available and our X.X%, negative was of X.X% $XX million to during September decrease XXX%. Finishing tangible X% stats from of quarter allowance the securities equity portfolio. at At non-performing our down non-performing primarily Our respectively. a for sale capital with X/XX. was XX, sheet

equity consistent XX. with would X/XX, at be tangible X.X% June AOCI, excluding However,

in on Additionally, well Tier comfortably our guidelines I'll X XX.X% completes at capital consolidated my a review X/XX. approximately at That capitalized total call excess approximately Matt. to regulatory basis with ratios financial XX.X% now turn are and and capital the over at of

Matthew Garrity

to third $XXX or in pleased loan growth excess for report PPP We're of total Paul. the quarter. net of million X.XX% Thanks,

loan approximately third million C&I growth the experienced growth trailing to growth four as overall third a as a X.XX% quarter. with was or significant loan growth basis, Line balance grew C&I under utilization quarter quarter quarter remains from million. XX.X% growth commercial utilization quarter during of has second $XXX loan by year-to-date quarter $XX.X balances approximately approximately basis. contributor quarter another was Our Commercial On loan the outstanding second the XX.XX% our at or million, a third XX%. for growth remained X.X% to $XXX.X been unchanged or C&I business of $XXX million. on compared relatively the approximately strong or

anticipated temper a economic revenue XX% rate flatter of during payoffs lower uncertainty. in and For business, demand, commercial to Origination higher and balance quarter market quarter by industry of third our products second decreased the based quarter in portfolio. range the our of in than in growth fourth a single-digit rates banking we of our decision the residential pricing XXXX, of expect we the saw on the reflection of compared due In that levels non-saleable Overall, low mortgage the a to quarter mortgage income of banking meaningful challenging, to compared pipeline conditions third increase mortgage XXXX. effort increasing quarter. a second quarter of to to approximately combination lower third was the to in combination overall XXXX, remain be declining general ongoing our total resulting quarter, and environment activity improvement softer use third an and the XXXX the XX% caused

as activity With our XX.XX% was quarter demand and charge another consumer were linked to When a quarter. quarter's of X.XX% by comparing is period quarter by improved our of the well growing X.XX% X.X%, activity quarter. has quarter basis, third XX.XX% $XX.X had quality, to quarter of very $XX.X and quarter rate compared second of for the typically third as grown loan asset third origination loans prior basis. a fourth the of the balances fourth net $XXX,XXX. challenges, for Given improvement, trailing on good Non-performing a or levels approximately demand, lower during levels four fact quarter while respect quarter, XXXX the soft quarter the a of and is criticized quarter classified relatively improved we as third the third XXXX, or by Consumer seasonal to million, levels by with portfolio for declined to classified that third the outlook XX.XX% criticized million. quarter loan in XX.XX% and On quarter respectively. loans the offs respectively compared and the

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

Small. Gary for outlook Gary? Our to asset stable. the like now to back I'd call remains quality turn over

Gary Small

new that, now off up And range. on will portfolio margin. for be give quarter, right closing pleased Matt. in relative stand on balance somewhere now. quarter expectations we’re third Expenses, of will guidance ahead will and [indiscernible] XX% some banking last the portfolio income we're have wholesale primarily paydowns quarter Matt over much continue perspective, perspective, will upside so versus offset the but we with and some to pressed with the that's be remain we range Mortgage match full-year. as the business we're the the hard updated position forth, growth. From that original have From of expect generation mentioning, number, strong, for in a position fourth in targets. at very be will quarters. mentioned their original under by fee year required our consumer the X% consistent business looking credit funding would the provisions at through ratio the see fee always Paul QX, our remain who the stress that on to flat to percent two client plus moderate we methodology. some as leveling a focused stick for The the some be QX and going to that speaking, thoughts bit posted. From Thanks our the performance fees as for there. potential than asset forecast as more end for the these specific be repurchase couple was quarter additional with to be an From more we perspective, as $XXX as unemployment I'll growth, very the million modest it year. driven of variable, much no efficiency impact still so CECL very our and through been modest continue year. what you QX. additional income the in relatively we provision another Sam we to our moved that's the commercial substantially have a consumer questions. of to in we the companies, a growth Could sheet last activity exits movement pre-tax to has pre turn of plans standpoint, been And And Margin by out strategies or specific is our it fourth be regarding minus with recently some same operator a our end CECL And so year-to-date equity side, But of the unknowns have acquisition take improvement saw deposit over on an we back will earning I'll generally very much XX%

Operator

Thank you, Gary.

of [Operator your line Michael now open. session. first Q&A We comes the is Instructions] line with Our will begin from Michael, Perito question KBW. now the

Michael Perito

my Thanks guys. for Hey taking question.

Gary Small

Good morning, Mike.

Michael Perito

for which I'm we is quarter, sure which pretty -- all Appreciate, commentary obviously, appreciate. specific next

Fed another we're like if will year like is which elevated is guess just thinking like question, Moody continues is mean, what the the to we funded look by that ask I pretty relative guys, give been growth more we're or take fund forecast with it guys Maybe be type like the Or environment you all. current and to more it rate the refresh out as Just you of where on -- growth the growth to some strategic on I but I'm us of to if rate to obviously maybe going grow do the target ask there Moody's growth? deposit difficult, loan good challenging? anything like have deposits? for at it's to historically in next a about appetite you remains you some way, any It's not what's momentum year, pretty have that. an side, ability right your in get where your beyond would accurate a your to next borrowings? like be to deposit Understanding is funds because market does environment will just likely Or helpful, seem to

Gary Small

visibility Good question standpoint, be that. can't you're I'll but of some take I'll this. a we say too and right from specific,

support if wouldn't our have as Our you will we very loan next growth. growth depsoit year of disconnect, you and a that by growth expected be And will, big much line as in this wouldn't have as in expect year. I supported -- experience

one have moderate, deposit margin near-term. going a of time, and are overall are For all the aspirations right number it's And was it more be the home margin a it's unlimited, being because beneficial enthusiasm with position in reasons, reasons we're we the quite our very pleased with been than going be would and the part other share to the year we the Typically, pulling position -- gathering purposeful. Bank. that that bank the that for upside as equation, a same it's relative we existing work that federal to be And in to that currently. our to reducing as not levers have we we funds your expect some be Home way but posted portfolio position. to rate loan we in is rates our the as out Loan we’ll of more punitive with on the At rate that favorable experiencing we're such Federal new

So but to long question, answer -- your

Michael Perito

that's no, No, helpful.

Gary Small

we've ourselves got. we'll We'll off next year of work what and fund some

Michael Perito

do quarter follow-up two? think of a over like forecast not minus I continue are Yes. given to the generally grow, if to you where plus margin I probably about going it's at of think there's grow, beyond it you'll point, to guys Paul, way kind expand this where here mean, you thinking trend rates? mean, or And a that. then X.X And in, sounds be the just maybe or that without to a next ton for room there’s to that's like for a you consensus locking fair is it you

Paul Nungester

reiterate said What where least the is be at Mike. we work near-term say through is to at that I this call to deposit strategy. gathering we where during we're around question, we expect going what today would as Good

from And can deposit So successful where for bps is few two. plus at quarter from plans minus the are there, the front. and you or we coming least on reassess XQ XQ, out of a or as think we next we'll how finalize our

Michael Perito

look and of growth I'll XX% pressures of I How be back. generally impact efficiency starting inflationary quarter thinking any as flat around billion there But compliance and are you we process just or we mean rate were a offset? beyond think are this speak? that that bit And lastly normal. rate, the investment side as potentially about year right, budgeting could The like might full-year, regulatory guys or with the some next or we XX% Got me for in as ratio then there's you infrastructure you or related around sure next kind for for that just where ’XX invest more about it. ’XX. obviously, the range year guess than puts step on the next quarter, asset the you exit Helpful. to that that, are technology kind related $XX I'm that as I Gary,

Gary Small

bit from little play more that more we some of that we there of spend we with we engaged in good mature always experience we be the next to on we initiatives But things to just customer to go standpoint head territory, billion that time redeploy other and than the have active into $XX work added whole year sort are are bit that will one the little that would this there a And that's past. need of as -- foresee some will as there's a features were do not that on away with there. fall start those effort completed. the Mike, year, to And activity the year we systems our to activity the things have are a that. a and there's we'll as inconsistent funds and that's we every on completed

but the So to them necessarily those ratio. I elements, wouldn't change are our look there dynamic of for efficiency

Michael Perito

Yes.

to good say. it's So

full-year, but XX% exit. So the theoretically, right, the on if you're you're XX% for

So I rather modest as is operating the moderate guys today, stands some mean, from you leverage should now -- you -- some think it question ‘XX?

Paul Nungester

Yes.

Michael Perito

Okay.

Gary Small

Yes.

Michael Perito

you I it. guys. Thank Great, appreciate very much.

Gary Small

Mike. Thanks,

Operator

Mr. you, Thank Perito. now of with Nosal Piper next open. line your The the line comes from question is Sandler. Brendan Brendan,

Brendan Nosal

you good Hey, How doing? morning, are guys.

Gary Small

morning. Good

Brendan Nosal

start your fund sequential data. to to an just be this Maybe about outlook you actively deposit and that deposit I It updated was us of sounds you're the here kind help to through growth an could certainly of loan pricing, expense, just was can guess, so XX% quarter you think kind like the come off gathering cycle? around at give how of kind on hoping I data XX%, going that? curious

Paul Nungester

as quarter, that. can to as third that We obviously that Brendan. thought picked one there focus and on our Yes, take with gathering, up it see I in as the ticking Yes, like into for maybe more saying up even just deposit. position things cutting was pace we help deposit FHLB continuing Gary we low-XX

the XQ we talked full previously we're to stands a once low-teens Fed total Right to mid-teens, that, of from around we're and quarter is low-XX% any beta on beta come about. first deposits that go think looking to-date cycle in before and back started comparing in third movement now, quarter, you still perspective. it in around through to As the that can now,

post go, more up. kind quarters. the little have So pressure we we'll on some the as now get deposit we've was from like start everybody the likely And two a from for picking of lags feeling loan heels dragon growth to past side, the is everybody but going it's got as starting room start to most competitive

on get deposit the all sure, come or to – through on quarter that average up around beta should once we next XX for an two still pick there. it'll specifically the yes, low-XX% but the So and in for

Brendan Nosal

an looking That's super to from it turning mortgage fantastic. was up just balance Maybe so I the banking at what that color. this it's line. discuss aberration down of even income like kind Okay, near-term a quarter, the much as appreciate the of the moment, quite to of income earnings I year-over-year, just second year? substantially which helpful Maybe improve it. season. line feels mean, though kind fee move for we more item allowed expectations sequentially of and through

Matthew Garrity

is answer question. this Brendan, that I'll and Matt,

our flat the certainly you're of timing spot a bit It I and a on. revenue. recognition saw issue think QX of you little would the an aberration, little be, I was that And in down of a little think is it for performance from regarding a bit QX. relatively expectations bit,

Brendan Nosal

I and kind more curious, of capital. One year returning typical just fantastic. I on of was more before for to Okay, pace back, next a me step organic a that probably being call growth less with

hear to love appetite and hear your M&A we've love would your Obviously, We highly some the Just environment deals recently. on rate seen based punitive. updated would are hikes thoughts and just thoughts? to updated on your

Gary Small

at, of know coming you Obviously, GAAP ton you book Well, conversations and Brendan, dilution the back say, have the it's it of with is a AOCI deal more short ton in where I'd have end. you interesting. a a makes what over accretion on

road, the a normal And year the should to I folks will the I I discussions certainty topic. realization of think now you summer of the first bit but there's were from academically, but on We or say brakes pace, the back surely doesn't relative sides the has of touching was return of the matter, as are the into may or thought range it where little magnitude So little three the are than slowed through. quarters down And think normal about think in less but activity I it coming numbers things the think it, does. familiarity, feel of there with the differently a their two table, the out and they both months. AOCIs it half the

Brendan Nosal

Yes, yes, my for makes sense. taking All right, questions. great. Thank you

Operator

The Nosal. the open. your you, Thank Janney Scott. Montgomery is line Christopher question Marinac line comes of next Mr. with from Christopher, now

Christopher Marinac

Good morning. thanks. Hey,

have to have can the Q&A. Do you incent the comments or team to last you you may you call in experience just do Just different back curious to more past? on gathering made experience deposit anything wanted this kind Do you deposits over even on do to have with before than the in go your done your I'm deposit of the the years? last to two and gathering?

Gary Small

Chris, we the that. COVID together all Once I'll X.X gathering swing banking be industry money to and the the at not have years became and ago, the take place, a benefiting Since the us mode. and businesses lending started was deposit in got programs on was Premier all Bank from in upon had we households.

pressures organization in dynamic in marketplace went the that. time as with see the And eight In is combined to experience down relative how nine flexing size where or our sit combined is are. magnitude our we're and this knew that and deposits. that we our of X% raise pretty markets pre-combination did first a our us, muscle this knew first we we being our betas compete organization organization the and had of able that It's worked. So But environment. to time the our an as and levers world, a flexing each

the the we the expectations setting pricing field. make with same in on team would with it's but pricing, to toward generation scorecard, the conversation working swings see a marketing as just well well, you field. combination flex are designed as your forth out that It goal next the we how and year, perhaps what's up that organization. the lot open dynamic relative to relative always team. to team more we'll the issue we is we deposit be And see change higher so help those look [indiscernible] gathering, of in and So working adjustments weighting what's the could the with needs of that the will will and and as And reward the

Christopher Marinac

helpful you special That's and gears trends Thanks you that in for in see Do anything disclosed? to substandard really just the I that. mention guess Great. in sort a positive of, credit switch the lot feedback. changes, horizon quality. the that ongoing classified And numbers on

Matthew Garrity

systemic Because up we is a This at feel don't, it. We how think by our and quick I a perform robustly we're and about some is through looking I credits something are issues as looking mean will pop but COVID -- well that of recession, that seeing result good during positioned Matt. of for portfolio a we peek not sector will where and we that And pretty how recession. got our on performed. how we portfolio a

Christopher Marinac

to that that, it rise fair offs bit is but So charge little could relatively compared low, past recession, history? a during a still be

Matthew Garrity

yes. course, Of

Christopher Marinac

morning. this it. Got for again hosting Thanks us Okay.

Paul Nungester

Thanks, Chris.

Gary Small

Chris. Thanks,

Operator

Thank you, Marinac. Mr.

no this at no at time. questions Instructions] waiting further we this time. further waiting have And [Operator We questions have

So Gary like back remarks. I'd to to call for over the any hand closing

Gary Small

call, to the think in beta the I through our next managing saying I I'll as process. going think, Thank that's the close Sam. on our gathering And to be for continue focus XXX% is strong you, just growth, opened handful and but deposit of that quarters. theme I

our and all deposit as growth, of issue, on relative newness performance of get it usually to our and case us For to we our get next organization resolved. what we resolved just typically do. to the and X% year-to-date we're the will an wouldn't as far in as it is is an actual sight this in of territory focus want having uncharted we need We've go once year. And issue we front lose the we out that is markets, not had as understand to

So you joining us for thank today. all

Operator

XXXX the Thank you Premier for third participation. Financial conference concludes call. Corp’s That all earnings your quarter

your disconnect You lines. may now

Paul Nungester	Executive Vice President and Chief Financial Officer
Gary Small	President and Chief Executive Officer
Matthew Garrity	Executive Vice President, Chief Lending Officer
Michael Perito	KBW
Brendan Nosal	Piper Sandler
Christopher Marinac	Janney Montgomery Scott

Premier Financial (PFC) 26 Oct 222022 Q3 Earnings call transcript