PFC - Earnings call transcript Q1 2024 | Premier Financial Corp.

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Operator

Good morning, and welcome to the Premier Financial Corp.

First Quarter 2024 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, first 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 website premierfincorp.com. be at the audio

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

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

Gary comments. the call I'll his for over now turn to opening

Gary Small

you, net on Thank Quickly in we begin and comments morning quarter, will thanks significant and most million the for us everyone, reported for I to joining the of $X.XX again quarter. per today. $XX.X with or share, and topic our income Paul, good

being were the growth outstandings Our strong quarters X.X% up again Consumer annualized deposits X.X% X the 'XX very X.X% and average were up annual so was Average half for of annualized, deposit a consumer once the during of straw respectable a the on of continuation storyline. that's quarter. the -- second that's side. strength

payments typical that's down tax year-end of in accustomed post excess Commercial the with balances quarter, about balance the of over of point performed more We January. unfavorable commercial noninterest-bearing it to use surprise which And $XX Clients for were point course quarter, borrowing to from month forth. needs. million review fund distributions a that other balances $XX for the grew the balances decline was elevated that's and detailed X%. replenish CapEx about efficient provided and funds the did the deposit are far in financeable -- you capital million, the deposits and and beginning Public the revealed typical and and so in and the to of relationship And capital. of financings liquidity their client stabilize deposit are to NIB over March, April. balance making February movement use working X%

Premier quarters of balances NIB of secured the higher as funding expect X majority lost and to those refill the NIB next businesses their those course the cost over to recover coffers. replace we balances

event January more atypical was The move to ahead Fed resulted portfolios, will that to any margin sort reductions advance in our results an the It of for episode testing bit to to forward began Early March, early a -- down repricing in more reduce beginning X basis forward in of we the selectively triggered decline. are that deposit net interest program elasticity by hit of the and be of et reducing expect encouraging, add rates, Fed than quarter. movement X would any of get systemic a road. March we point pricing I Premier's deposit the rates cetera. a

more those bit business mortgages. of typical gain and income plan experienced back in beginning on the anticipated board during were Loan our a a essentially with and return activity to and funding better to a mortgage for no per payoffs gears. commercial business on we basis year. residential we more the March balances excellent management benefited occurring in with our pace expressed year quarter saw volume coming that than resurgence the full commercial slowly in quarter and Switching loan noninterest the growth unit flat change on We -- have new expectations January. sale expense a linked-quarter the related from of at

a saw also continuation the fee and management for wealth strong We outperformed income, quarter. of our it expectations actually

consumer total to and net Paul front, loan level. NPLs portfolio the great On at in perspective. shape, is very his to the on, check well declines delinquency it I'm Paul saw numbers and are remain a couple a for Capital in residential charge-off credit have will modest which levels going of turn

Paul Nungester

X.X% while all point-to-point the continued with for CDs, balances. Gary. quarter X.X% We sheet. annualized deposits deposits in growth, pub balance with and market Beginning another decreases money noninterest-bearing and average increased. fund checking Mix annualized Thanks, deposits, of migration had and including savings

On earning other for while a side, loans the quarter. investments, security of result total slightly as the assets primarily increased declined

XXX points, improved wholesale a interest-bearing basis larger-than-expected to led for deposits we of The flat. in Our loan-to-deposit compression XQ. loans, noninterest-bearing fundings decrease and keep net interest a in slight able were margin further by disintermediation ratio deposits additional decrease and to combination

points March, and in X.XX% is increase acquisition December loan X to point accretion, in hedges is This XXXX, points sheet X.XX% balance the in monthly an increase yields PPP, also of represents of impact XXX of a average effective marks the the period. which from basis XXXX. basis which an Excluding were for beta of same funds basis increase since XXX the federal cumulative December XX% rate compared

a sheet yields hedges March X.XX% the accretion. earning Total and of were beta acquisition asset impact of balance excluding XX%. Also cumulative or in PPP, marks

beta accretion, a and acquisition the cumulative March XX%. cost a On the excluding March of of other funds of side, And in sheet hedges, accretion X.XX% for XX%. total marks beta excluding were total were acquisition balance deposits for X.XX% cumulative marks in

partially $XX,XXX Next, primarily increase gains higher quarter. where by $XXX,XXX to slowing rates, last million treasury speeds MSR a as increased to $X.X income, loss million of quarter due offset in gains $XX.X was last margins, result rates. to continued noninterest losses million million to banking led The $X.X XQ gains $X.X hedge treasury of quarter. This mortgage million compared from in related of in to XX-year increase to including valuation also prepay of income increased $X.X a with along security gain a last compared the

due up payout. million the a XXXX. each and on flat, essentially merit to sold expenses items were occur as basis linked-quarter and of in On for down $XX.X in year benefits the that of on annual increases only year-over-year a $X incentive such million or quarter X% seasonality for expenses taxes Expenses first the annual basis, agency are June insurance excluding

to a benefit decrease our linked-quarter quarter commitment. improved and loan X.XX% $XXX,XXX was of XX ratio comprised basis quarter also expense to of for benefit unfunded We for XXXX. compared a the asset Provision $XXX,XXX in points of first the expense-to-average by on a $XXX,XXX a

was increase to loans net loans. points of capital. for of expense basis improvements to I'll X.XX% allowance $XXX,XXX The by Provision ratio did basis only to charge-offs, X primarily coverage close mentioning continued point X loans. due And of which our were average

have of over to ratio the as and X%, solid uncertainty. and regulatory ratios further weather the at That enhancements our capital represent total and strengthened, Gary. TE to completes at we a remained CETX Our turn call back I'll north my XX% review, continue near-term foundation including XX.XX%. These financial

Gary Small

the up adjustments begin of results asset moment our Thanks in a expecting affirms we again, take in provided for portfolio. expect loan remainder To offset the being a earning and Total growth guidance guidance the growth, our 'XX QX assumptions that Paul. to incorporating X% in point-to-point we're to with January. provide to year. some by lower-yielding Residential come the to with, which Commercial a to X% January, movement adjustments Mortgage our on X%, basis, a decline I'll

what we there. change It's so well. expressed no And there's January as in

our with Deposit growth, growth projections. line with remains the in consistent earning initial expected asset

of On now Fed March. sitting the middle the the net interest the favorable expectation the in the just were initiated margin, We have one the the in to front of [ 'XX. in with adjustments less plus quarter X middle for the one results, Combining in the of unfavorable and effect quarter. margin our going forecast of just from now the of Fed turn third and turn May that ] turns pricing a eliminated QX of calls elements fourth

equal. the of our a falls out guidance. or year XX the margin to forecast being from -- basis full low-XXXs about original downward a downward Our of in things That's point revised topping XXX, adjustment all range probably XX%

versus that year. points expect we're the to of down basis And have points we January ratio directed basis at net X% be Full income was to up with we forecasted X% to just be where couple we January for still charge-off I that of year. favorable in mentioned, bps the us X in the year a changes in provision net for from be remain higher to our XXXX. XX a interest standpoint, very forecasting now a were are be coverage we and level the reforecasting From expectations would

you On We $XX awful the the of down quarter the full I at and income lot the front, road. an coming strength year gave on the million. see looking adjust We're million first $XX estimate. noninterest on we would what plus based originally

January. and so the be projects adjusting Expenses. would We across the we QX, consulting at deferring guidance rate levels million have FTE $XXX fees provided year reduction be select are with in full have some spending our forth go do there, versus quarters and we the a and would down We'll solid million related remaining range that run and $XXX additions, that. now that

We perform on the We're slope less in first hockey that QX quarter we Fed stick that more cut of for an to and mentioned. the relative progression factors upward earnings flattened and winning quarterly margin the to and the I Premier's just expect mentioned on flatten different still has more bit progression out with plan. in a less on way, slightly other earnings back more with the QX one do a anticipated, QX.

this income on interest were year continued January. credit expectations income, with So in reflecting still performance, about the target expenses stronger and we solid from we that are lower by earning back noninterest our thinking offset lower full

ready with questions. operator, for And we're that,

Operator

with Our from the Nosal first line Instructions] question of Brendan Hovde comes [Operator Group.

Brendan Nosal

we and It's I to guess just funds kind outlook pretty for much loan can see flat of ratio. potential ] year. the need start Maybe unchanged liability the to the in and the further improvement as to loan-to-deposit asset you on earning growth, through here moving on year. through nice the move just mix comment the the [ the off wholesale quarter just sources draw for given wholesale on

Paul Nungester

we ourselves match and work call, to the asset growth. in keeping intend saying was are our Gary towards growth earning to continuing our as deposit Brendan,

We're that of to we flat lean expect we not terms taking for look So would funding. advantage would what can. on between into wholesale to pricing, of to FHLB we -- levels, for have the of keep remainder year. relative year, changing depending the mix the the But in broker

Brendan Nosal

into Mention just can Substandard. Any more Most the did were to me, may turning kind some you're driven that Okay. from one for I credit. of for credits how numbers quarter. the Great. have Special you notice on color that and Maybe provide positioned? migration fantastic move

Gary Small

couple got Good for was one take to movement of the -- this think so the path would eye It their make but the make -- [indiscernible]. to to of really reverting the forward a forth from Brendan, they've have we movement quarters adjustments a it to credit. accruing the over just an But not for and Gary. credit, a see credit next we category it them will just clear is a one Sure, new where same and it is scheduling have backward. we is credit CapEx other there, a of I it's group,

Operator

Janney of line & the from Marinac Christopher comes [ Scott ]. question with next Our

Christopher Marinac

Gary deposits what accounts? et earlier just can Or commercial about liquidity about taxes, there cetera? was talk an those or had again excess for Paul, that given was you from said anomaly the side, you

Gary Small

that you was the see just stack normal distributions the There finance been we And the rather that X what in ]. down. if credit might line along absolutely comments, our of stock or out and When $X my into that. ask things would as or if or have all twice I'll I of numbers expenditures in for a movements, we of we be. that [ It are cash, reviewed X.X% had consistent the day-to-day and had money there -- the saying, million we different a year, looked I $X obviously, than the the normal -- thing. XXX getting keep a one were once fixed of relationships can thing the Where you normally that those you theme would a point-to-point normal And million last would was would they whatever tail excess move inventory have know account, over that about did out settled saw higher folks or we whole at for went with will, and was million of money $X would be or perspective, as dip expect with that begin pretty that that once over all biggest time that to on where pay folks credits relationships our would leverage mentioned from into that this rolling see in year place swept it rate. in the from became did X bit -- that at liquidity noninterest-bearing money earning than moved little market and much a where markets.

portfolio. pricing balance moved, again, the just, efficient more they that on got a money were is one on enough would now their investment liquidity placed but bit way went just was We using care client take with balances, to leverage. had hand X excess the small So their sheet it the up into and was and balance not Those but that moved that not outliers, the little and where it of the cash with sheet. had they drive be mostly ahead

Christopher Marinac

or [ in that Great. new source new of business ]? as Do year inflows That's Okay. corporate just service you inflows helpful. this net see from

Gary Small

we month-to-month question. up. commercial cash operating grow starts at as of started off and year that protection got and the was to over bad movement of the There's January it had did that a the for move down plus different. year minus this different. It's get uptick April. of are the this that banks inconsistent. any days movement forth. deposits last the mentioned, so because we in at the great or minimus no to expect We being anything time the see don't the they January. place, issue, stack it around back not at look I some immediately That's we to X after stabilized, since period, looking to I we additional go course If Once creating to that in start indication the should year And And balances

Christopher Marinac

then me. criticized what And coming coverage for service in is stress question quick a end Do already the Or see it. Got any saw ratios we of credit levels? debt just into you that March? on at reflected

Gary Small

all quarter It's very last credits higher. much in of a detailed the did very year million We reflected. $X.X fourth review and that on

but and if and finding pile few a needed, coverage the really So them are or them see through into air, to category. XXX, big cash narrower on XXX or and we forth. seeing I the they is was can ratio as imagine that's margin charge so across got that we What in might more P&I ran XXX whether the got scenarios shock XXX will. XXX hand still or payments a But organization you there payment coverage it's a fixed to agreed, it's a falling if they've credits. for still They're past

movement at as it right And grading classify you're would I them XXX. were you there's now into and we're moving to way but reason score into they the at No --- move can't XXX that our on territory, on back just that's preferred and there. conservative the the system. So we'll been think move some

Operator

There the Our Sandler. of next are [Operator from Hijleh no line Bader Instructions] at registered question this questions with Piper time. comes

Bader Hijleh

mentioned on touch loans the just you in And guys yields coming X.XX% to rates March. and loan know segment, for today. are being commercial if loan wanted filling books? have I guys in Alex possibly seeing, you the by resi new What I the Just book. you on

Gary Small

having and money was for yesterday in done tracing business that. 'XX. all half to a were some was side that. I just we're the a out there pricing each Peter, And commercial wasn't of pressure just it in it folks to are year on month, And take to a second a it fee in to less back or that holding rates X. we're if X We about in competitive in to way the discussion in right? new I'll there of Board look little We that and answer would take the meeting that the forth, especially still like question, the down, about And were be sticking on So seeing direction range. of trying marketplace rates X.XX stated, at then so our when X.XX, may move north that without -- is they January. as that's your one. mean the opportunities back in bit amortization

We know resisted as before, with January, happened business the and in category There's generally plenty in comfortable they and of now so there. it seems you that. is evaporated to that we're same everybody the what like back dip were rate

move a X.XX, the now, you were the ], looking side, forth. residential fixed On of pristine as [ a that it last And so elevated it bit at we and at absolutely as weeks. takes X.XX curve will plenty continue get a over perfect [ with pristine rating ] X one-off if not to XXX XX-year right there's of the be would be to number them and commitment

Having March. said that, we saw

intertwined As for just that a from the issue, or I there acceptance come start folks Whether very demand it may is on was that. as there don't now. but get a about mentioned, rates out January are inventory inventory volumes that good the It's pent-up see were indication February board. that right was moving or that seasonality, good. see We weaker I to And used it's changing. to an and rates more more

Paul Nungester

yield real cited clarify the obviously average. total was in-place That that to just the quick, on Bader, call. just we portfolio

new old, end just Xs at years where and the stood March. rates, you So all of not that's Xs. our that's it of history, obviously, stuff production got That's

Bader Hijleh

release in on then guys -- the repricing the -- was touched funding of Could I'm the you to if the that that the at that? -- program know early you it color have lower did call? on Got had the one deposit costs. actually more Yes. start guys that's provide call, the of at not I'm more not on sure I in March it. if you start And you you sure

Paul Nungester

Yes.

been it deposit buckets. that, and into dicing So different our putting book, in we've slicing

and and So and to periods of guaranteed some consumer, go if et space, things growing pure money were commercial, had you like market deposits a whether going or that, whatnot. back we it's had lot and cetera, the last when on year and they private especially in promos

So they've into or for aggregating those you starting those roll we've maturity been coming buckets and up already have right? as matured and are to what back,

So encouraging, if of they taking at results we're bringing keep testing they swings how at new off, kind Gary there, and that's the got, here a rate. retention bps are going roll said, even early some that the already as this and We're as in we to were trimming can. when hold, waters, we've haven't to a high what and second few -- going they that ones

Gary Small

to forth. an on inelastic money to to do so and and matter inelastic the It's on something the that's distinct right that testing have markets look of were having of markets. the [ a find particular you're And ] the relatively a offset interest and that as would identified elasticity markets now, we Yes. if and less chose pricing early portfolio savings at you of outstandings grouping very some product our or we utilize since doing. you really we And that that checking always

if determine anything abnormal starts there, we have think movement a it going that's waters impact and an just watch anomaly. we're for to looks pause or an and a balanced whether test there's to to moment still room or we for there, continue So that theme and

at been so at looking not on little is intention think saying more the again, rate. money the portfolio. and rates running annualized -- quarters to we for to new on I be it's X% -- about X activity can Fed CDs also existing bit we're what a to we're with growth we'll for running wait we've to we've do something us And trigger But some lower forth, our now do consumer been a side, and our

-- that was So intentional. and

this little work side the time the So the right now consumer has is step and so on been in we're good. deposit the -- momentum to bit on more because margin a front

Operator

no [Operator questions Instructions] time. There at this registered are

to for Small pass back So I Gary to the remarks. like would any call over further

Gary Small

the this to very able notes morning, us meeting taking in you. and those advance that Yes. so joining -- and could it's so out interest. you elsewhere. appreciate thanks forth. I I to appreciate helping really things our us. be the our understand last the that appreciate night the business a could time most We That's were also thoughtful get touch an of on and for we of for you prepare Thank questions Again, approach, helpful and again effort

Operator

Thank for call. your today's concludes participation. That you

lines. You may now disconnect your

Premier Financial (PFC) 24 Apr 242024 Q1 Earnings call transcript