Completes sale of insurance agency for $36
million gain
Strengthens capital, liquidity and interest
rate asset sensitivity
Second Quarter 2023
Highlights
- Completed sale of insurance agency at a significant gain that
strengthens capital without diluting future earnings
- Executed hedges to improve asset-sensitivity and provide
protection against additional rate increases
- CET1 ratio increased 80 basis points to 10.81% and tangible
equity ratio increased 52 basis points to 7.55% from the prior
quarter
- Loan growth of $132.7 million (up 8.1% annualized), including
$75.2 million for commercial loans excluding PPP (up 7.0%
annualized)
- Declared dividend of $0.31 per share, up 3.3% from prior year
comparable period
Premier Financial Corp. (Nasdaq: PFC) (“Premier” or the
“Company”) announced today 2023 second quarter results, including
net income of $48.4 million or $1.35 per diluted common share,
compared to $22.4 million, or $0.63 per diluted common share, for
the second quarter of 2022. Second quarter 2023 results include the
impact of the disposition of the Company’s insurance agency, First
Insurance Group (“FIG”), for a net gain on sale after transaction
costs of $32.6 million pre-tax or $0.67 per diluted share
after-tax. Excluding the impact of this transaction, second quarter
2023 earnings would be $0.68 per diluted share.
“Premier’s second quarter performance reflected the expected
increase in quarterly core earnings to $0.68 per share,” said Gary
Small, President and CEO of Premier. “The improvement was driven by
multiple factors. Strong loan growth resulting from selective new
business loan origination, coupled with a strong funding pace of
prior year construction commitments. C&I commitments totaled
49% of second quarter commercial loan origination activity. Total
deposits grew $220 million, or 3.3%, for the quarter. Customer
deposit balance movement stabilized, down just $38 million, or
0.6%.”
“Core non-interest income revenue grew 9.4% versus second
quarter 2022, and core expenses fell 4.6% versus first quarter 2023
reflecting the progress made associated with the cost reduction
initiative announced last quarter. Margin continued to decline but
at a more moderate pace. Hedging activity was initiated in June
that will both add to near term net interest income and protect the
organization against the unfavorable impacts of future Fed Fund
rate increases. Our consumer customers continue to exhibit active
spending habits and credit portfolio indicators remain very
favorable. The commercial loan portfolio continues to perform well
with no unfavorable trends or early indicators of stress,” added
Small.
“The sale of the insurance agency delivered positive outcomes
for all stakeholders,” Small continued. “The combination of FIG and
Risk Strategies brings new opportunities for the FIG team; our
joint bank/agency clients will benefit from a broader product
offering and expanded agency capabilities; and the Premier
shareholders benefit from a tremendous capital boost with the
transaction increasing tangible book value by $1.37 per share. As
we look forward, the organization is focused on moderate balance
sheet growth, continued non-interest revenue improvement (adjusting
for FIG), and strong expense management. Deposit mix will continue
to be a challenge although our beta management techniques continue
to evolve.”
Insurance agency sale
As previously announced, on June 30, 2023 the Company completed
the sale of FIG to Risk Strategies Corporation. The disposition
generated a gain on sale of $36.3 million before transaction costs
of $3.7 million. The transaction strengthened capital by increasing
equity $24.2 million (24 basis points and $0.68 per share) and
tangible equity by $48.8 million (54 basis points and $1.37 per
share), which included the recovery of goodwill and intangibles of
$24.7 million at June 30, 2023. Utilization of sale proceeds will
improve net interest income that effectively offsets pre-tax
earnings previously generated from the insurance agency assuming
paydown of borrowings and will become accretive to earnings upon
deployment into higher yielding loans.
Addressing interest rate sensitivity
During June 2023, the Company completed a series of balance
sheet hedges to improve asset-sensitivity and provide protection
against additional rate increases. In total, the Company executed
$500 million notional of pay-fixed/receive-variable interest rate
swaps with half 2-year and half 3-year in duration. The average pay
rate for these swaps is approximately 4.12%. Based on rates as of
June 30, 2023, these swaps are expected to generate approximately
$4.7 million of annualized pre-tax net interest income. The full
quarter benefit of these swaps will begin to be realized in the
third quarter, and the positive impact will increase as SOFR
increases. Each 25 basis point increase in SOFR is expected to
generate an additional $625 thousand of annualized pre-tax net
interest income, including the impact of the new swaps and the
prior $250 million notional receive-fixed/pay-variable swap.
Quarterly results
Capital, deposits and liquidity
Capital improved significantly during the second quarter of
2023. Total equity increased $22.5 million, or 2.5%, including the
positive impact of the insurance agency sale offset by a $15.0
million detriment in accumulated other comprehensive income
(“AOCI”), primarily due to a negative valuation adjustment on the
available-for-sale (“AFS”) securities portfolio. Tangible equity
increased $48.4 million, or 8.4%, and the tangible equity ratio
increased 52 basis points to 7.55%, or 9.58% excluding AOCI.
Regulatory ratios also improved during the second quarter of 2023,
including CET1 of 10.81%, Tier 1 of 11.28% and Total Capital of
13.05%, each up 80 basis points. All of these ratios also exceed
well-capitalized guidelines pro forma for AOCI, including CET1 of
8.53%, Tier 1 of 9.00% and Total Capital of 10.77%.
Total deposits increased 3.3%, or $220.4 million, during the
second quarter of 2023, due to a $258.4 million increase in
brokered deposits offset partly by a net decrease of $38.0 million
in customer deposits. Total average interest-bearing deposit costs
increased 38 basis points to 2.07% for the second quarter of 2023.
This increase was primarily due to brokered deposits and the
migration of customers from non-interest bearing deposits into
interest-bearing deposits, including higher cost time deposits, as
customers sought to obtain yield. Average interest-bearing deposit
costs excluding brokered deposits and acquisition marks were 2.08%
during the month of June, representing a cumulative beta of 37%
compared to the change in the monthly average effective Federal
Funds rate that increased 500 basis points to 5.08% since December
2021, as reported by the Federal Reserve Economic Data.
Uninsured deposits at June 30, 2023 were 31.5% of total
deposits, or 17.3% adjusting for collateralized deposits, other
insured deposits and internal company accounts. The Company
successfully established eligibility for the Federal Reserve
Borrower-In-Custody Collateral Program, which increased borrowing
capacity by more than $300 million during the second quarter. Total
quantifiable liquidity sources totaled $2.8 billion, or 230.5% of
adjusted uninsured deposits, and were comprised of the following at
June 30, 2023:
- $121.7 million of cash and cash equivalents with a 5.15%
Federal Reserve rate;
- $298.5 million of unpledged securities with an average yield of
3.02%;
- $1.5 billion of FHLB borrowing capacity with an overnight
borrowing rate of 5.17%;
- $288.7 million of brokered deposits based on a Company policy
limit of 10% of deposits, with market pricing dependent on brokers
and duration;
- $70.0 million of unused lines of credit with an average
borrowing rate of 6.08%; and
- $491.1 million of borrowing capacity at the Federal Reserve
with an average rate of 5.31%.
Additional liquidity sources include deposit growth, cash
earnings in excess of dividends, loan
repayments/participations/sales, and securities cash flows, which
are estimated to be $64.7 million over the next 12 months.
Net interest income and margin
Net interest income of $54.1 million on a tax equivalent (“TE”)
basis in the second quarter of 2023 was down 4.1% from $56.4
million in the first quarter of 2023 and 8.9% from $59.3 million in
the second quarter of 2022. The TE net interest margin of 2.72% in
the second quarter of 2023 decreased 18 basis points from 2.90% in
the first quarter of 2023 and 64 basis points from 3.36% in the
second quarter of 2022. Results for all periods include the impact
of PPP as well as acquisition marks and related accretion. Second
quarter 2023 includes $168 thousand of accretion in interest
income, $212 thousand of accretion in interest expense, and $5
thousand of interest income on average balances of $673 thousand
for PPP.
Excluding the impact of acquisition marks accretion and PPP
loans, core net interest income was $53.7 million, down 4.2% from
$56.0 million in the first quarter of 2023 and 8.2% from $58.5
million in the second quarter of 2022. Additionally, the core net
interest margin was 2.70% for the second quarter of 2023, down 18
basis points from 2.88% for the first quarter of 2023 and 62 basis
points from 3.32% for the second quarter of 2022. These results are
positively impacted by the combination of loan growth and higher
loan yields, which were 4.86% for the second quarter of 2023
compared to 4.66% in the first quarter of 2023 and 3.99% in the
second quarter of 2022. Excluding the impact of PPP, balance sheet
hedges and acquisition marks accretion, loan yields were 5.01% in
June 2023 for an increase of 129 basis points since December 2021,
which represents a cumulative beta of 25% compared to the change in
the monthly average effective Federal Funds rate for the same
period.
The cost of funds in the second quarter of 2023 was 1.92%, up 41
basis points from the first quarter of 2023 and up 168 basis points
from the second quarter of 2022. The year-over-year increase is
largely due to utilization of higher cost FHLB borrowings in
support of loan growth in excess of deposit growth during 2022. The
linked quarter increase is due to higher rates on FHLB borrowings
and higher average deposit costs discussed above. Excluding the
impact of balance sheet hedges and acquisition marks accretion,
cost of funds were 2.05% in June 2023 for an increase of 184 basis
points since December 2021, which represents a cumulative beta of
37% compared to the change in the monthly average effective Federal
Funds rate for the same period.
“The second quarter 2023 individual monthly margin results were
much more stable than those experienced in fourth quarter 2022 and
first quarter 2023, which were in constant decline,” said Small.
“This reflects less ‘early mover’ activity affecting our deposit
book combined with less active Fed Fund rate movement during the
quarter. While we expect to continue to see deposit mix movement in
the book, the second quarter represents a trend in the right
direction.”
Non-interest income
Excluding the $36.3 million gain on the sale of the insurance
agency, total non-interest income in the second quarter of 2023 of
$17.1 million was up 36.8% from $12.5 million in the first quarter
of 2023 and 18.7% from $14.4 million in the second quarter of 2022,
primarily due to fluctuations in mortgage banking and gains/losses
on securities. Mortgage banking income increased $3.2 million on a
linked quarter basis and $1.0 million year-over-year as a result of
increased gains primarily from increases in hedge valuations. While
mortgage pipeline hedges effectively net out over the life of the
loans, individual periods can be volatile as market rates and
prices change.
Security gains were $64 thousand in the second quarter of 2023,
primarily due to increased valuations on equity securities. This
compares to a loss of $1.4 million in the first quarter of 2023 and
to $1.2 million of losses each from decreased valuations on equity
securities. The company also sold $5 million of AFS securities for
a $7 thousand loss with average yields less than FHLB borrowing
rates during the second quarter of 2023. Service fees in the second
quarter of 2023 were $7.2 million, an 11.9% increase from $6.4
million in the first quarter of 2023 and a 7.7% increase from $6.7
million in the second quarter of 2022, primarily due to
fluctuations in loan fees including commercial customer swap
activity. Insurance commissions were $4.1 million in the second
quarter of 2023 down from $4.7 million in the first quarter of 2023
and $4.3 million in the second quarter of 2022 with the linked
quarter decrease primarily due to $0.9 million of contingent
commissions that only occur in the first quarter. Wealth management
income of $1.5 million in the second quarter of 2023 was consistent
with $1.5 million in the first quarter of 2023 and up from $1.4
million in the second quarter of 2022. BOLI income of $1.0 million
in the second quarter of 2023 decreased from $1.4 million in the
first quarter of 2023 and was flat from $1.0 million in the second
quarter of 2022, with $0.4 million of claim gains in the first
quarter of 2023 compared to none in the second quarter periods.
“Consumer deposit related fees and wealth management income for
the current quarter exceed second quarter 2022 results by 7.7% and
8.7%, respectively,” said Small “As previously mentioned, our
consumer client activity remains robust and the current equity and
fixed income markets bode well for the asset management function
over the remainder of the year.”
Non-interest expenses
Excluding transaction costs for the insurance agency sale,
non-interest expenses in the second quarter of 2023 were $40.8
million, a 4.6% decrease from $42.8 million in the first quarter of
2023 but a 4.5% increase from $39.1 million in the second quarter
of 2022. Compensation and benefits were $24.2 million in the second
quarter of 2023, compared to $25.7 million in the first quarter of
2023 and $22.3 million in the second quarter of 2022. The linked
quarter decrease was primarily due to cost saving initiatives that
began during the second quarter of 2023. The year-over-year
increase was primarily due to costs related to higher staffing
levels for our 2022 growth initiatives and higher base
compensation, including 2022 mid-year adjustments and 2023 annual
adjustments. Other expenses decreased $0.5 million on a linked
quarter basis due to cost saving initiatives, and all other
non-interest expenses increased a net $83 thousand on a linked
quarter basis. FDIC premiums increased $1.0 million on a
year-over-year basis due to higher rates and our 2022 growth
initiatives and all other non-interest expenses decreased a net
$1.1 million on a year-over-year basis due to cost saving
initiatives. The efficiency ratio (excluding transaction costs and
the FIG gain on sale) for the second quarter of 2023 of 57.5%
improved from 60.9% in the first quarter of 2023 due to cost saving
initiatives but worsened from 52.2% in the second quarter of 2022
due to lower revenues.
“Executing on our cost saving initiatives helped drive an almost
5% decrease in expenses excluding transaction costs and a 3.4%
improvement to our core efficiency ratio from the prior quarter,”
said Paul Nungester, CFO of Premier. “We currently estimate full
year core expenses to be $158 million, down $5 million from our
prior estimate of $163 million, including $6 million due to the
sale of our insurance agency offset by $1 million of other costs
including higher FDIC premiums.”
Credit quality
Non-performing assets totaled $37.6 million, or 0.44% of assets,
at June 30, 2023, an increase from $34.8 million at March 31, 2023,
and from $35.2 million at June 30, 2022. Loan delinquencies
increased to $19.0 million, or 0.27% of loans, at June 30, 2023,
from $11.1 million at March 31, 2023, and from $11.2 million at
June 30, 2022. Classified loans totaled $60.5 million, or 0.85% of
loans, as of June 30, 2023, an increase from $44.9 million at March
31, 2023, and from $48.8 million at June 30, 2022.
The 2023 second quarter results include net recoveries of $0.2
million and a total provision expense of $0.5 million, compared
with net loan charge-offs of $5.3 million and a total provision
expense of $6.6 million for the same period in 2022. The prior year
charge-offs were primarily due to the student loan servicer credit
that had been previously fully reserved. The allowance for credit
losses as a percentage of total loans was 1.13% at June 30, 2023,
compared with 1.13% at March 31, 2023, and 1.14% at June 30, 2022.
The allowance for credit losses as a percentage of total loans
excluding PPP and including unaccreted acquisition marks was 1.16%
at June 30, 2023, compared with 1.16% at March 31, 2023, and 1.21%
at June 30, 2022. The continued economic improvement following the
2020 pandemic-related downturn has resulted in a year-over-year
decrease in the allowance percentages.
Year to date results
For the six-month period ended June 30, 2023, net income totaled
$66.5 million, or $1.86 per diluted common share, compared to $48.7
million, or $1.36 per diluted common share for the six months ended
June 30, 2022. 2023 results include the impact of the insurance
agency sale for a net gain on sale after transaction costs of $32.6
million pre-tax or $0.67 per diluted share after-tax. Excluding the
impact of this item, first half 2023 earnings were $1.19 per
diluted share.
Net interest income of $110.4 million on a TE basis for the
first half of 2023 was down 6.0% from $117.4 million in the first
half of 2022. The TE net interest margin of 2.81% in the first half
of 2023 decreased 59 basis points from 3.40% in the first half of
2022. Results for all periods include the impact of PPP as well as
acquisition marks and related accretion. First half 2023 includes
$333 thousand of accretion in interest income, $433 thousand of
accretion in interest expense, and $11 thousand of interest income
on average balances of $818 thousand for PPP. Excluding the impact
of acquisition marks accretion and PPP loans, core net interest
income was $109.7 million, down 2.3% from $112.2 million in the
first half of 2022. Additionally, the core net interest margin was
2.79% for the first half of 2023, down 47 basis points from 3.26%
for the first half of 2022. These results are positively impacted
by the combination of loan growth and higher loan yields, which
were 4.76% for the first half of 2023 compared to 4.05% in the
first half of 2022. The cost of funds in the first half of 2023 was
1.72%, up 151 basis points from the first half of 2022. The
year-over-year increase is largely due to utilization of higher
cost FHLB borrowings in support of loan growth in excess of deposit
growth during 2022.
Excluding the $36.3 million gain on the sale of the insurance
agency, total non-interest income in the first half of 2023 of
$29.5 million was down 5.5% from $31.2 million in the first half of
2022. Mortgage banking income decreased $3.5 million year-over-year
as a result of a $2.3 million decrease in gains primarily from
lower production and margin as well as a $24 thousand MSR valuation
gain in the second quarter of 2023 compared to a $1.5 million gain
in the first half of 2022.
Security losses were $1.3 million in the first half of 2023,
primarily due to decreased valuations on equity securities. This
compares to a loss of $1.8 million from decreased valuations on
equity securities in the first half of 2022. The company also sold
$21 million of AFS securities for a $27 thousand gain with average
yields less than FHLB borrowing rates during the first half of
2023. Service fees in the first half of 2023 were $13.6 million, a
7.4% increase from $12.7 million in the first half of 2022,
primarily due to fluctuations in loan fees including commercial
customer swap activity and consumer activity for interchange and
ATM/NSF charges. Insurance commissions were $8.9 million in the
first half of 2023 down slightly from $9.0 million in the first
half of 2022 due to $0.9 million of contingent commissions in 2023
compared to $1.1 million in 2022. Wealth management income of $3.0
million in the first half of 2023 was up slightly from $2.9 million
in the first half of 2022. BOLI income of $2.4 million in the first
half of 2023 increased from $2.0 million in the first half of 2022
with $0.4 million of claim gains in the first half of 2023 compared
to none in the first half of 2022.
Excluding transaction costs for the insurance agency sale,
non-interest expenses in the first half of 2023 were $83.6 million,
a 4.0% increase from $80.4 million in the first half of 2022.
Compensation and benefits were $49.8 million in the first half of
2023, compared to $47.9 million in the first half of 2022. The
year-over-year increase was primarily due to costs related to
higher staffing levels for our 2022 growth initiatives and higher
base compensation, including 2022 mid-year adjustments and 2023
annual adjustments, offset partly by cost saving initiatives that
began during the second quarter of 2023. FDIC premiums increased
$1.7 million on a year-over-year basis primarily due to higher
rates and our 2022 growth initiatives. All other non-interest
expenses decreased a net $0.4 million on a year-over-year basis.
The efficiency ratio (excluding transaction costs and the FIG gain
on sale) for the first half of 2023 of 59.2% worsened from 53.4% in
the first half of 2022 due to lower revenues partly offset by cost
saving initiatives that began during the second quarter of
2023.
The 2023 first half results include net loan charge-offs of $2.2
million and a total provision expense of $4.2 million, compared
with net loan charge-offs of $5.2 million and a total provision
expense of $7.5 million for the same period in 2022. The provision
expense for both years is primarily due to relative loan
growth.
Total assets at $8.62 billion
Total assets at June 30, 2023, were $8.62
billion, compared to $8.56 billion at March 31, 2023, and $8.01
billion at June 30, 2022. Loans receivable were $6.71 billion at
June 30, 2023, compared to $6.58 billion at March 31, 2023, and
$5.90 billion at June 30, 2022. At June 30, 2023, loans receivable
increased $132.7 million on a linked quarter basis, or 8.1%
annualized. Commercial loans excluding PPP increased by $75.2
million from March 31, 2023, or 7.0% annualized. Securities at June
30, 2023, were $0.97 billion, compared to $1.00 billion at March
31, 2023, and $1.15 billion at June 30, 2022. All securities are
either AFS or trading and are reflected at fair value on the
balance sheet. Also, at June 30, 2023, goodwill and other
intangible assets totaled $309.9 million compared to $335.8 million
at March 31, 2023, and $339.3 million at June 30, 2022, with the
decreases attributable to intangibles amortization and the FIG
sale.
Total non-brokered deposits at June 30, 2023,
were $6.58 billion, compared with $6.62 billion at March 31, 2023,
and $6.52 billion at June 30, 2022. At June 30, 2023, customer
deposits increased $64.9 million on a year-over-year basis, or
1.0%. Brokered deposits were $413.2 million at June 30, 2023,
compared to $154.9 million at March 31, 2023 and none at June 30,
2022.
Total stockholders’ equity was $937.0 million
at June 30, 2023, compared to $914.5 million at March 31, 2023, and
$901.1 million at June 30, 2022. The quarterly increase in
stockholders’ equity was primarily due to net earnings after
dividends including the impact of the insurance agency sale partly
offset by a decrease in AOCI, which was primarily related to $12.1
million for a negative valuation adjustment on the AFS securities
portfolio. The year-over-year increase was primarily due to net
earnings after dividends including the impact the insurance agency
sale offset partly by a decrease in AOCI, which was primarily
related to $35.1 million of negative valuation adjustments on the
AFS securities portfolio. At June 30, 2023, 1,199,634 common shares
remained available for repurchase under the Company’s existing
repurchase program.
Dividend to be paid August 11
The Board of Directors declared a quarterly cash dividend of
$0.31 per common share payable August 11, 2023, to shareholders of
record at the close of business on August 4, 2023. The dividend
represents an annual dividend of 6.5 percent based on the Premier
common stock closing price on July 24, 2023. Premier has
approximately 35,730,000 common shares outstanding.
Conference call
Premier will host a conference call at 11:00 a.m. ET on
Wednesday, July 26, 2023, to discuss the earnings results and
business trends. The conference call may be accessed by calling
1-833-470-1428 and using access code 374150. Internet access to the
call is also available (in listen-only mode) at the following URL:
https://events.q4inc.com/attendee/827280709. The webcast replay of
the conference call will be available at www.PremierFinCorp.com for
one year.
About Premier Financial Corp.
Premier Financial Corp. (Nasdaq: PFC), headquartered in
Defiance, Ohio, is the holding company for Premier Bank. Premier
Bank, headquartered in Youngstown, Ohio, operates 75 branches and 9
loan offices in Ohio, Michigan, Indiana and Pennsylvania and also
serves clients through a team of wealth professionals dedicated to
each community banking branch. For more information, visit the
company’s website at PremierFinCorp.com.
Financial Statements and Highlights Follow-
Safe Harbor Statement
This document may contain certain forward-looking statements
within the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as
amended, and the Private Securities Litigation Reform Act of 1995.
These statements may include, but are not limited to, statements
regarding projections, forecasts, goals and plans of Premier
Financial Corp. and its management, future movements of interests,
loan or deposit production levels, future credit quality ratios,
future strength in the market area, and growth projections. These
statements do not describe historical or current facts and may be
identified by words such as “intend,” “intent,” “believe,”
“expect,” “estimate,” “target,” “plan,” “anticipate,” or similar
words or phrases, or future or conditional verbs such as “will,”
“would,” “should,” “could,” “might,” “may,” “can,” or similar
verbs. There can be no assurances that the forward-looking
statements included in this presentation will prove to be accurate.
In light of the significant uncertainties in the forward-looking
statements, the inclusion of such information should not be
regarded as a representation by Premier or any other persons, that
our objectives and plans will be achieved. Forward-looking
statements involve numerous risks and uncertainties, any one or
more of which could affect Premier’s business and financial results
in future periods and could cause actual results to differ
materially from plans and projections. These risks and
uncertainties include, but not limited to: financial markets, our
customers, and our business and results of operation; changes in
interest rates; disruptions in the mortgage market; risks and
uncertainties inherent in general and local banking, insurance and
mortgage conditions; political uncertainty; uncertainty in U.S.
fiscal or monetary policy; uncertainty concerning or disruptions
relating to tensions surrounding the current socioeconomic
landscape; competitive factors specific to markets in which Premier
and its subsidiaries operate; increasing competition for financial
products from other financial institutions and nonbank financial
technology companies; future interest rate levels; legislative or
regulatory rulemaking or actions; capital market conditions;
security breaches or unauthorized disclosure of confidential
customer or Company information; interruptions in the effective
operation of information and transaction processing systems of
Premier or Premier’s vendors and service providers; failures or
delays in integrating or adopting new technology; the impact of the
cessation of LIBOR interest rates and implementation of a
replacement rate; and other risks and uncertainties detailed from
time to time in our Securities and Exchange Commission (SEC)
filings, including our Annual Report on Form 10-K for the year
ended December 31, 2022 and any further amendments thereto. All
forward-looking statements made in this presentation are based on
information presently available to the management of Premier and
speak only as of the date on which they are made. We assume no
obligation to update any forward-looking statements, whether as a
result of new information, future developments or otherwise, except
as may be required by law. As required by U.S. GAAP, Premier will
evaluate the impact of subsequent events through the issuance date
of its June 30, 2023, consolidated financial statements as part of
its Quarterly Report on Form 10-Q to be filed with the SEC.
Accordingly, subsequent events could occur that may cause Premier
to update its critical accounting estimates and to revise its
financial information from that which is contained in this news
release.
Non-GAAP Reporting Measures
We believe that net income, as defined by U.S. GAAP, is the most
appropriate earnings measurement. However, we consider core net
interest income, core net income and core pre-tax pre-provision
income to be a useful supplemental measure of our operating
performance. We define core net interest income as net interest
income on a tax-equivalent basis excluding income from PPP loans
and purchase accounting marks accretion. We define core net income
as net income excluding the after-tax impact of the insurance
agency gain on sale and related transaction costs. We define core
pre-tax pre-provision income as pre-tax pre-provision income
excluding the pre-tax impact of the insurance agency gain on sale
and related transaction costs. We believe that these metrics are
useful supplemental measures of operating performance because
investors and equity analysts may use these measures to compare the
operating performance of the Company between periods or as compared
to other financial institutions or other companies on a consistent
basis without having to account for income from PPP loans, purchase
accounting marks accretion or the insurance agency sale. Our
supplemental reporting measures and similarly entitled financial
measures are widely used by investors, equity and debt analysts and
ratings agencies in the valuation, comparison, rating and
investment recommendations of companies. Our management uses these
financial measures to facilitate internal and external comparisons
to historical operating results and in making operating decisions.
Additionally, they are utilized by the Board of Directors to
evaluate management. The supplemental reporting measures do not
represent net income or cash flow provided from operating
activities as determined in accordance with U.S. GAAP and should
not be considered as alternative measures of profitability or
liquidity. Finally, the supplemental reporting measures, as defined
by us, may not be comparable to similarly entitled items reported
by other financial institutions or other companies. Please see the
exhibits for reconciliations of our supplemental reporting
measures.
Consolidated Balance Sheets (Unaudited)
Premier
Financial Corp.
June 30,
March 31,
December 31,
September 30,
June 30,
(in thousands)
2023
2023
2022
2022
2022
Assets
Cash and cash equivalents
Cash and amounts due from depositories
$
71,096
$
68,628
$
88,257
$
67,124
$
62,080
Interest-bearing deposits
50,631
88,399
39,903
37,868
72,314
121,727
157,027
128,160
104,992
134,394
Available-for-sale,
carried at fair value
961,123
998,128
1,040,081
1,063,713
1,140,466
Equity securities, carried at fair value
6,458
6,387
7,832
15,336
13,293
Securities investments
967,581
1,004,515
1,047,913
1,079,049
1,153,759
Loans (1)
6,708,568
6,575,829
6,460,620
6,207,708
5,890,823
Allowance for credit losses - loans
(75,921
)
(74,273
)
(72,816
)
(70,626
)
(67,074
)
Loans, net
6,632,647
6,501,556
6,387,804
6,137,082
5,823,749
Loans held for sale
128,079
119,604
115,251
129,142
145,092
Mortgage servicing rights
20,160
20,654
21,171
20,832
20,693
Accrued interest receivable
30,056
29,388
28,709
26,021
22,533
Federal Home Loan Bank stock
39,887
37,056
29,185
28,262
23,991
Bank Owned Life Insurance
171,856
170,841
170,713
169,728
168,746
Office properties and equipment
55,736
55,982
55,541
53,747
54,060
Real estate and other assets held for sale
561
393
619
416
462
Goodwill
295,602
317,988
317,988
317,948
317,948
Core deposit and other intangibles
14,298
17,804
19,074
19,972
21,311
Other assets
138,021
129,508
133,214
148,949
123,886
Total Assets
$
8,616,211
$
8,562,316
$
8,455,342
$
8,236,140
$
8,010,624
Liabilities and
Stockholders’ Equity
Non-interest-bearing deposits
$
1,573,837
$
1,649,726
$
1,869,509
$
1,826,511
$
1,786,516
Interest-bearing deposits
5,007,358
4,969,436
4,893,502
4,836,113
4,729,828
Brokered deposits
413,237
154,869
143,708
69,881
-
Total deposits
6,994,432
6,774,031
6,906,719
6,732,505
6,516,344
Advances from FHLB
455,000
658,000
428,000
411,000
380,000
Subordinated debentures
85,166
85,123
85,103
85,071
85,039
Advance payments by borrowers
26,045
26,300
34,188
33,511
40,344
Reserve for credit losses - unfunded commitments
5,708
6,577
6,816
7,061
6,755
Other liabilities
112,889
97,835
106,795
102,032
80,995
Total Liabilities
7,679,240
7,647,866
7,567,621
7,371,180
7,109,477
Stockholders’ Equity Preferred
stock
-
-
-
-
-
Common stock, net
306
306
306
306
306
Additional paid-in-capital
689,579
689,807
691,453
691,578
690,905
Accumulated other comprehensive income (loss)
(168,721
)
(153,709
)
(173,460
)
(181,231
)
(126,754
)
Retained earnings
547,336
510,021
502,909
488,305
470,779
Treasury stock, at cost
(131,529
)
(131,975
)
(133,487
)
(133,998
)
(134,089
)
Total Stockholders’ Equity
936,971
914,450
887,721
864,960
901,147
Total Liabilities and Stockholders’ Equity
$
8,616,211
$
8,562,316
$
8,455,342
$
8,236,140
$
8,010,624
(1) Includes PPP loans
of:
$
577
$
791
$
1,143
$
1,181
$
4,561
Consolidated Statements of Income (Unaudited)
Premier Financial Corp.
Three Months Ended Six
Months Ended (in thousands, except per share amounts)
6/30/23 3/31/23 12/31/22 9/30/22
6/30/22
6/30/23 6/30/22 Interest Income:
Loans
$
81,616
$
76,057
$
72,194
$
65,559
$
56,567
$
157,674
$
111,808
Investment securities
6,997
7,261
7,605
6,814
6,197
14,257
11,676
Interest-bearing deposits
641
444
444
221
120
1,085
166
FHLB stock dividends
905
394
482
510
174
1,299
233
Total interest income
90,159
84,156
80,725
73,104
63,058
174,315
123,883
Interest Expense:
Deposits
26,825
21,458
13,161
6,855
2,671
48,283
4,893
FHLB advances
8,217
5,336
3,941
2,069
527
13,554
540
Subordinated debentures
1,125
1,075
1,000
868
763
2,199
1,459
Notes Payable
-
-
4
-
1
-
1
Total interest expense
36,167
27,869
18,106
9,792
3,962
64,036
6,893
Net interest income
53,992
56,287
62,619
63,312
59,096
110,279
116,990
Provision (benefit) for credit losses - loans
1,410
3,944
3,020
3,706
5,151
5,354
5,777
Provision (benefit) for credit losses - unfunded commitments
(870
)
(238
)
(246
)
306
1,415
(1,108
)
1,724
Total provision (benefit) for credit losses
540
3,706
2,774
4,012
6,566
4,246
7,501
Net interest income after provision
53,452
52,581
59,845
59,300
52,530
106,033
109,489
Non-interest Income:
Service fees and other charges
7,190
6,428
6,632
6,545
6,676
13,618
12,676
Mortgage banking income
2,940
(274
)
(299
)
3,970
1,948
2,666
6,200
Gain (loss) on sale of non-mortgage loans
71
-
-
-
-
71
-
Gain on sale of insurance agency
36,296
-
-
-
-
36,296
-
Gain (loss) on sale of available for sale securities
(7
)
34
1
-
-
27
-
Gain (loss) on equity securities
71
(1,445
)
1,209
43
(1,161
)
(1,374
)
(1,804
)
Insurance commissions
4,131
4,725
3,576
3,488
4,334
8,856
8,973
Wealth management income
1,537
1,485
1,582
1,355
1,414
3,022
2,891
Income from Bank Owned Life Insurance
1,015
1,417
984
983
983
2,432
1,979
Other non-interest income
102
92
543
320
171
194
313
Total Non-interest Income
53,346
12,462
14,228
16,704
14,365
65,808
31,228
Non-interest Expense:
Compensation and benefits
24,175
25,658
24,999
24,522
22,334
49,833
47,875
Occupancy
3,320
3,574
3,383
3,463
3,494
6,894
7,194
FDIC insurance premium
1,786
1,288
1,276
976
802
3,074
1,395
Financial institutions tax
961
852
795
1,050
1,074
1,813
2,265
Data processing
3,640
3,863
3,882
3,121
3,442
7,503
6,777
Amortization of intangibles
1,223
1,270
1,293
1,338
1,380
2,493
2,818
Transaction costs
3,652
-
-
-
-
3,652
-
Other non-interest expense
5,738
6,286
7,400
6,629
6,563
12,024
12,060
Total Non-interest Expense
44,495
42,791
43,028
41,099
39,089
87,286
80,384
Income before income taxes
62,303
22,252
31,045
34,905
27,806
84,555
60,333
Income tax expense
13,912
4,103
5,770
6,710
5,446
18,015
11,616
Net Income
$
48,391
$
18,149
$
25,275
$
28,195
$
22,360
$
66,540
$
48,717
Earnings per
common share:
Basic
$
1.35
$
0.51
$
0.71
$
0.79
$
0.63
$
1.86
$
1.36
Diluted
$
1.35
$
0.51
$
0.71
$
0.79
$
0.63
$
1.86
$
1.36
Average
Shares Outstanding:
Basic
35,722
35,606
35,589
35,582
35,560
35,686
35,768
Diluted
35,800
35,719
35,790
35,704
35,682
35,750
35,880
Premier Financial Corp.
Selected Quarterly Information
Three Months Ended Six Months
Ended (dollars in thousands,except per share data)
6/30/23 3/31/23 12/31/22 9/30/22
6/30/22
6/30/23 6/30/22
Summary of
Operations
Tax-equivalent interest income (1)
$
90,226
$
84,260
$
80,889
$
73,301
$
63,283
$
174,485
$
124,336
Interest expense
36,167
27,869
18,106
9,792
3,962
64,036
6,893
Tax-equivalent net interest income (1)
54,059
56,391
62,783
63,509
59,321
110,449
117,443
Provision expense for credit losses
540
3,706
2,774
4,012
6,566
4,246
7,501
Non-interest income (ex securities gains/losses)
53,282
13,873
13,018
16,661
15,526
67,155
33,032
Core non-interest income (ex securities gains/losses) (2)
16,986
13,873
13,018
16,661
15,526
30,859
33,032
Non-interest expense
44,495
42,791
43,028
41,099
39,089
87,286
80,384
Core non-interest expense (2)
40,843
42,791
43,028
41,099
39,089
Income tax expense
13,912
4,103
5,770
6,710
5,446
18,015
11,616
Net income
48,391
18,149
25,275
28,195
22,360
66,540
48,717
Core net income (2)
24,230
18,149
25,275
28,195
22,360
42,379
48,717
Tax equivalent adjustment (1)
67
104
164
197
225
170
453
At Period End
Total assets
$
8,616,211
$
8,562,316
$
8,455,342
$
8,236,140
$
8,010,624
Goodwill and intangibles
309,900
335,792
337,062
337,920
339,259
Tangible assets (3)
8,306,311
8,226,524
8,118,280
7,898,220
7,671,365
Earning assets
7,818,825
7,751,130
7,620,056
7,411,403
7,218,905
Loans
6,708,568
6,575,829
6,460,620
6,207,708
5,890,823
Allowance for loan losses
75,921
74,273
72,816
70,626
67,074
Deposits
6,994,432
6,774,031
6,906,719
6,732,505
6,516,344
Stockholders’ equity
936,971
914,450
887,721
864,960
901,147
Stockholders’ equity / assets
10.87
%
10.68
%
10.50
%
10.50
%
11.25
%
Tangible equity (3)
627,071
578,658
550,659
527,040
561,888
Tangible equity / tangible assets
7.55
%
7.03
%
6.78
%
6.67
%
7.32
%
Average Balances
Total assets
$
8,597,786
$
8,433,100
$
8,304,462
$
8,161,389
$
7,742,550
$
8,515,898
$
7,626,888
Earning assets
7,951,520
7,783,850
7,653,648
7,477,795
7,051,661
7,871,629
6,904,082
Loans
6,714,240
6,535,080
6,359,564
6,120,324
5,667,853
6,625,155
5,526,127
Deposits and interest-bearing liabilities
7,538,674
7,385,946
7,278,531
7,116,910
6,706,250
7,462,732
6,561,669
Deposits
6,799,605
6,833,521
6,773,382
6,654,328
6,385,857
6,816,469
6,350,235
Stockholders’ equity
921,441
901,587
875,287
912,224
921,847
911,569
961,873
Goodwill and intangibles
334,862
336,418
337,207
338,583
339,932
335,636
340,639
Tangible equity (3)
586,579
565,169
538,080
573,641
581,915
575,933
621,234
Per Common Share Data
Earnings per share ("EPS") - Basic
$
1.35
$
0.51
$
0.71
$
0.79
$
0.63
$
1.86
$
1.36
EPS - Diluted
1.35
0.51
0.71
0.79
0.63
1.86
1.36
EPS - Core diluted (2)
0.68
0.51
0.71
0.79
0.63
1.19
1.36
Dividends Paid
0.31
0.31
0.30
0.30
0.30
0.62
0.60
Market Value: High
$
21.01
$
27.80
$
30.51
$
29.36
$
30.13
$
27.99
$
32.52
Low
13.60
20.39
26.11
24.67
25.31
13.60
25.31
Close
16.02
20.73
26.97
25.70
25.35
16.02
30.91
Common Book Value
26.23
25.61
24.94
24.32
25.35
Tangible Common Book Value (3)
17.55
16.21
15.47
14.82
15.80
Shares outstanding, end of period (000s)
35,727
35,701
35,591
35,563
35,555
Performance Ratios
(annualized)
Tax-equivalent net interest margin (1)
2.72
%
2.90
%
3.28
%
3.40
%
3.36
%
2.81
%
3.40
%
Return on average assets
2.26
%
0.86
%
1.21
%
1.37
%
1.16
%
1.58
%
1.29
%
Core return on average assets (2)
1.13
%
0.86
%
1.22
%
1.39
%
1.16
%
1.00
%
1.29
%
Return on average equity
21.06
%
8.07
%
11.46
%
12.26
%
9.73
%
14.72
%
10.21
%
Core return on average equity (2)
10.55
%
8.07
%
11.58
%
12.40
%
9.73
%
9.38
%
10.21
%
Return on average tangible equity
33.09
%
12.88
%
18.64
%
19.50
%
15.41
%
23.30
%
15.81
%
Core return on average tangible equity (2)
16.57
%
10.51
%
14.64
%
16.33
%
12.95
%
14.84
%
15.81
%
Efficiency ratio (4)
41.45
%
60.90
%
56.76
%
51.26
%
52.23
%
49.15
%
53.42
%
Core efficiency ratio (2)
57.49
%
60.90
%
56.76
%
51.26
%
52.23
%
59.19
%
53.42
%
Effective tax rate
22.33
%
18.44
%
18.59
%
19.22
%
19.59
%
21.31
%
19.25
%
Common dividend payout ratio
22.96
%
60.78
%
42.25
%
37.97
%
47.62
%
33.33
%
44.12
%
(1) Interest income on tax-exempt securities and loans has been
adjusted to a tax-equivalent basis using the statutory federal
income tax rate of 21%. (2) Core items exclude the impact of
insurance agency disposition related items. See non-GAAP
reconciliations. (3) Tangible assets = total assets less the sum of
goodwill and core deposit and other intangibles. Tangible equity =
total stockholders' equity less the sum of goodwill, core deposit
and other intangibles, and preferred stock. Tangible common book
value = tangible equity divided by shares outstanding at the end of
the period. (4) Efficiency ratio = Non-interest expense divided by
sum of tax-equivalent net interest income plus non-interest income,
excluding securities gains or losses, net.
Premier Financial
Corp. Yield Analysis
(dollars in
thousands)
Three Months Ended Six Months
Ended 6/30/23 3/31/23 12/31/22
9/30/22 6/30/22
6/30/23 6/30/22
Average Balances
Interest-earning assets:
Loans receivable (1)
$
6,714,240
$
6,535,080
$
6,359,564
$
6,120,324
$
5,667,853
$
6,625,155
$
5,526,127
Securities
1,155,451
1,190,359
1,236,511
1,262,435
1,288,636
1,172,809
1,269,677
Interest Bearing Deposits
36,730
35,056
29,884
68,530
76,401
35,898
92,987
FHLB stock
45,099
30,353
28,386
27,414
19,334
37,767
15,667
Total interest-earning assets
7,951,520
7,790,848
7,654,345
7,478,703
7,052,224
7,871,629
6,904,458
Non-interest-earning assets
646,266
642,252
650,117
682,686
690,326
644,269
722,430
Total assets
$
8,597,786
$
8,433,100
$
8,304,462
$
8,161,389
$
7,742,550
$
8,515,898
$
7,626,888
Deposits and Interest-bearing Liabilities:
Interest bearing deposits
$
5,195,727
$
5,078,510
$
4,901,412
$
4,846,419
$
4,614,223
$
5,137,442
$
4,607,549
FHLB advances and other
653,923
467,311
419,761
377,533
234,945
561,133
126,215
Subordinated debentures
85,146
85,114
85,084
85,049
85,020
85,130
85,004
Notes payable
-
-
304
-
428
-
215
Total interest-bearing liabilities
5,934,796
5,630,935
5,406,561
5,309,001
4,934,616
5,783,705
4,818,983
Non-interest bearing deposits
1,603,878
1,755,011
1,871,970
1,807,909
1,771,634
1,679,027
1,742,686
Total including non-interest-bearing deposits
7,538,674
7,385,946
7,278,531
7,116,910
6,706,250
7,462,732
6,561,669
Other non-interest-bearing liabilities
137,671
145,567
150,644
132,255
114,453
141,597
103,346
Total liabilities
7,676,345
7,531,513
7,429,175
7,249,165
6,820,703
7,604,329
6,665,015
Stockholders' equity
921,441
901,587
875,287
912,224
921,847
911,569
961,873
Total liabilities and stockholders' equity
$
8,597,786
$
8,433,100
$
8,304,462
$
8,161,389
$
7,742,550
$
8,515,898
$
7,626,888
IEAs/IBLs
134
%
138
%
142
%
141
%
143
%
136
%
143
%
Interest
Income/Expense
Interest-earning assets:
Loans receivable (2)
$
81,622
$
76,063
$
72,201
$
65,564
$
56,573
$
157,684
$
111,821
Securities (2)
7,058
7,359
7,762
7,006
6,416
14,417
12,116
Interest Bearing Deposits
641
444
444
221
120
1,085
233
FHLB stock
905
394
482
510
174
1,299
166
Total interest-earning assets
90,226
84,260
80,889
73,301
63,283
174,485
124,336
Deposits and Interest-bearing Liabilities:
Interest bearing deposits
$
26,825
$
21,458
$
13,161
$
6,855
$
2,671
$
48,283
$
4,893
FHLB advances and other
8,217
5,336
3,941
2,069
527
13,554
540
Subordinated debentures
1,125
1,075
1,001
868
763
2,199
1,459
Notes payable
-
-
3
-
1
-
1
Total interest-bearing liabilities
36,167
27,869
18,106
9,792
3,962
64,036
6,893
Non-interest bearing deposits
-
-
-
-
-
-
-
Total including non-interest-bearing deposits
36,167
27,869
18,106
9,792
3,962
64,036
6,893
Net interest income
$
54,059
$
56,391
$
62,783
$
63,509
$
59,321
$
110,449
$
117,443
Less: PPP income
(5
)
(6
)
(6
)
(26
)
(160
)
(11
)
(3,801
)
Less: Acquisition marks accretion
(380
)
(387
)
(554
)
(608
)
(706
)
(766
)
(1,443
)
Core net interest income
$
53,674
$
55,998
$
62,223
$
62,875
$
58,455
$
109,672
$
112,199
Annualized Average Rates
Interest-earning assets:
Loans receivable
4.86
%
4.66
%
4.54
%
4.29
%
3.99
%
4.76
%
4.05
%
Securities (3)
2.44
%
2.47
%
2.51
%
2.22
%
1.99
%
2.46
%
1.91
%
Interest Bearing Deposits
6.98
%
5.07
%
5.94
%
1.29
%
0.63
%
6.04
%
0.50
%
FHLB stock
8.03
%
5.19
%
6.79
%
7.44
%
3.60
%
6.88
%
2.12
%
Total interest-earning assets
4.54
%
4.33
%
4.23
%
3.92
%
3.59
%
4.43
%
3.60
%
Deposits and Interest-bearing Liabilities:
Interest bearing deposits
2.07
%
1.69
%
1.07
%
0.57
%
0.23
%
1.88
%
0.21
%
FHLB advances and other
5.03
%
4.57
%
3.76
%
2.19
%
0.90
%
4.83
%
0.86
%
Subordinated debentures
5.29
%
5.05
%
4.71
%
4.08
%
3.59
%
5.17
%
3.43
%
Notes payable
-
-
3.95
%
-
0.93
%
-
0.93
%
Total interest-bearing liabilities
2.44
%
1.98
%
1.34
%
0.74
%
0.32
%
2.21
%
0.29
%
Non-interest bearing deposits
-
-
-
-
-
-
-
Total including non-interest-bearing deposits
1.92
%
1.51
%
1.00
%
0.55
%
0.24
%
1.72
%
0.21
%
Net interest spread
2.10
%
2.35
%
2.89
%
3.18
%
3.27
%
2.22
%
3.31
%
Net interest margin (4)
2.72
%
2.90
%
3.28
%
3.40
%
3.36
%
2.81
%
3.40
%
Core net interest margin (4)
2.70
%
2.88
%
3.25
%
3.36
%
3.32
%
2.79
%
3.26
%
(1) Includes
average PPP loans of:
$
673
$
965
$
1,160
$
1,889
$
12,966
$
818
$
22,855
(2) Interest on certain tax exempt loans and securities is not
taxable for Federal income tax purposes. In order to compare
the tax-exempt yields on these assets to taxable yields, the
interest earned on these assets is adjusted to a pre-tax equivalent
amount based on the marginal corporate federal income tax rate of
21%. (3) Securities yield = annualized interest income divided by
the average balance of securities, excluding average unrealized
gains/losses. (4) Net interest margin is tax equivalent net
interest income divided by average interest-earning assets. Core
net interest margin represents net interest margin excluding PPP
and acquisition marks accretion.
Premier Financial Corp.
Deposits and Liquidity
(dollars in thousands)
As of and for the Three
Months Ended 6/30/23 3/31/23
12/31/22 9/30/22 6/30/22
Ending
Balances
Non-interest-bearing demand deposits
$
1,573,837
$
1,649,726
$
1,869,509
$
1,826,511
$
1,786,516
Savings deposits
748,392
775,186
797,376
817,853
830,048
Interest-bearing demand deposits
594,325
646,329
653,960
665,974
662,337
Money market account deposits
1,282,721
1,342,451
1,493,729
1,463,600
1,511,990
Time deposits
904,717
856,720
768,678
630,077
587,918
Public funds, ICS and CDARS deposits
1,477,203
1,348,750
1,179,759
1,258,610
1,137,536
Brokered deposits
413,237
154,869
143,708
69,881
-
Total deposits
$
6,994,432
$
6,774,031
$
6,906,719
$
6,732,505
$
6,516,344
Average Balances
Non-interest-bearing demand
deposits
$
1,603,878
$
1,755,011
$
1,871,970
$
1,807,909
$
1,771,634
Savings deposits
762,074
782,215
806,653
825,673
833,323
Interest-bearing demand deposits
603,572
637,423
651,685
681,247
681,798
Money market account deposits
1,311,177
1,430,905
1,418,549
1,493,019
1,498,218
Time deposits
872,991
825,652
685,453
610,708
597,613
Public funds, ICS and CDARS deposits
1,399,749
1,232,230
1,235,772
1,204,968
1,003,271
Brokered deposits
246,164
170,085
103,300
30,804
-
Total deposits
$
6,799,605
$
6,833,521
$
6,773,382
$
6,654,328
$
6,385,857
Average Rates
Non-interest-bearing demand
deposits
0.00
%
0.00
%
0.00
%
0.00
%
0.00
%
Savings deposits
0.02
%
0.02
%
0.02
%
0.02
%
0.02
%
Interest-bearing demand deposits
0.10
%
0.07
%
0.07
%
0.07
%
0.05
%
Money market account deposits
1.73
%
1.54
%
0.81
%
0.40
%
0.18
%
Time deposits
2.27
%
1.83
%
1.05
%
0.58
%
0.45
%
Public funds, ICS and CDARS deposits
3.71
%
3.32
%
2.41
%
1.38
%
0.48
%
Brokered deposits
4.92
%
4.19
%
3.32
%
2.37
%
-
Total deposits
1.58
%
1.26
%
0.78
%
0.41
%
0.17
%
Other Deposits
Data Loans/Deposits Ratio
95.9
%
97.1
%
93.5
%
92.2
%
90.4
%
Uninsured deposits %
31.5
%
32.3
%
35.3
%
35.5
%
34.2
%
Adjusted uninsured deposits % (1)
17.3
%
19.6
%
22.2
%
22.2
%
22.0
%
Top 20 depositors %
12.4
%
12.1
%
5.4
%
11.3
%
10.0
%
Public funds %
17.5
%
16.5
%
14.8
%
15.9
%
14.1
%
Average account size (excluding brokered)
$
26.7
$
27.0
$
27.8
$
27.5
$
26.9
Securities Data
Held-to-maturity (HTM) at fair
value
$
-
$
-
$
-
$
-
$
-
Available-for-sale (AFS) at fair value (2)
961,123
998,128
1,040,081
1,063,713
1,140,466
Equity investment at fair value (3)
6,458
6,387
7,832
15,336
13,293
Total securities at fair value
$
967,581
$
1,004,515
$
1,047,913
$
1,079,049
$
1,153,759
Cash+Securities/Assets
12.6
%
13.6
%
13.9
%
14.4
%
16.1
%
Projected AFS cash flow in next 12 months
$
64,687
$
73,184
$
73,319
$
76,119
$
74,558
AFS average life (years)
6.5
6.4
6.5
6.6
6.8
Liquidity Sources
Cash and cash equivalents
$
121,727
$
157,027
$
128,160
$
104,992
$
134,394
Unpledged securities at fair value
298,471
211,468
288,134
342,979
572,892
FHLB borrowing capacity
1,542,459
1,358,650
1,528,978
1,217,516
1,044,477
Brokered deposits (Company policy limit of 10%)
288,719
524,889
549,370
605,552
654,380
Bank and parent lines of credit
70,000
70,000
70,000
70,000
45,000
Federal Reserve - Discount Window and BTFP (4)
491,141
129,918
44,471
-
-
Total
$
2,812,517
$
2,451,952
$
2,609,113
$
2,341,039
$
2,451,143
Total liquidity to adjusted uninsured deposits ratio
230.5
%
183.2
%
168.9
%
155.4
%
169.0
%
(1) Adjusted for collateralized deposits, other
insured deposits and intra-company accounts. (2) Mark-to-market
included in accumulated other comprehensive income. (3)
Mark-to-market included in net income each quarter. (4) Includes
borrowing capacity related to unpledged securities at par value in
excess of fair value under Bank Term Funding Program.
Premier
Financial Corp. Loans and
Capital (dollars in
thousands)
6/30/23 3/31/23 12/31/22 9/30/22
6/30/22
Loan Portfolio Composition
Residential real estate
$
1,711,632
$
1,624,331
$
1,535,574
$
1,478,360
$
1,382,202
Residential real estate construction
111,708
141,209
176,737
119,204
85,256
Total residential loans
1,823,340
1,765,540
1,712,311
1,597,564
1,467,458
Commercial real estate
2,848,410
2,813,441
2,762,311
2,674,078
2,655,730
Commercial construction
472,328
440,510
428,743
398,044
319,590
Commercial excluding PPP
1,068,795
1,060,351
1,054,037
1,041,423
987,242
Core commercial loans (1)
4,389,533
4,314,302
4,245,091
4,113,545
3,962,562
Consumer direct/indirect
210,390
212,299
213,405
212,790
180,539
Home equity and improvement lines
272,792
271,676
277,613
272,367
266,144
Total consumer loans
483,182
483,975
491,018
485,157
446,683
Deferred loan origination
fees
11,936
11,221
11,057
10,261
9,559
Core loans (1)
6,707,991
6,575,038
6,459,477
6,206,527
5,886,262
PPP loans
577
791
1,143
1,181
4,561
Total loans
$
6,708,568
$
6,575,829
$
6,460,620
$
6,207,708
$
5,890,823
Loans held for sale
$
128,079
$
119,631
$
115,251
$
129,142
$
145,092
Core residential loans (1)
1,951,419
1,885,171
1,827,562
1,726,706
1,612,550
Total loans including loans held for sale but excluding PPP
6,836,070
6,694,669
6,574,728
6,335,669
6,031,354
Undisbursed construction
loan funds - residential
$
102,198
$
157,934
$
209,306
$
231,598
$
239,748
Undisbursed construction loan funds - commercial
353,455
446,294
463,469
493,199
449,101
Undisbursed construction loan funds - total
455,653
604,228
672,775
724,797
688,849
Total construction loans including undisbursed funds
$
1,039,689
$
1,185,947
$
1,278,255
$
1,242,045
$
1,093,695
Gross loans (2)
$
7,152,285
$
7,168,836
$
7,122,338
$
6,922,244
$
6,570,113
Fixed rate loans %
49.8
%
49.5
%
48.8
%
48.7
%
47.4
%
Floating rate loans %
15.9
%
13.4
%
14.3
%
16.0
%
18.3
%
Adjustable rate loans repricing within 1 year %
1.5
%
2.0
%
2.6
%
0.8
%
2.5
%
Adjustable rate loans repricing over 1 year %
32.8
%
35.1
%
34.3
%
34.5
%
31.8
%
Commercial Real Estate
Loans Composition Non owner
occupied excluding office
$
1,012,400
$
947,442
$
934,760
$
905,512
$
899,129
Non owner occupied office
225,046
220,668
222,300
203,565
210,164
Owner occupied excluding office
603,650
609,203
578,514
570,662
556,482
Owner occupied office
107,240
109,014
108,087
105,224
104,968
Multifamily
633,909
661,996
660,823
637,701
634,782
Agriculture land
123,104
122,384
125,384
122,416
120,633
Other commercial real estate
143,061
142,734
132,443
128,998
129,572
Total commercial real estate loans
$
2,848,410
$
2,813,441
$
2,762,311
$
2,674,078
$
2,655,730
Capital Balances
Total equity
$
936,971
$
914,450
$
887,721
$
864,960
$
901,147
Less: Regulatory goodwill and intangibles
304,818
330,711
331,981
332,839
334,177
Less: Accumulated other comprehensive income/(loss) ("AOCI")
(168,721
)
(153,709
)
(173,460
)
(181,231
)
(126,754
)
Common equity tier 1 capital ("CET1")
800,874
737,448
729,200
713,352
693,724
Add: Tier 1 subordinated debt
35,000
35,000
35,000
35,000
35,000
Tier 1 capital
835,874
772,448
764,200
748,352
728,724
Add: Regulatory allowances
80,812
80,003
78,780
76,530
72,648
Add: Tier 2 subordinated debt
50,000
50,000
50,000
50,000
50,000
Total risk-based capital
$
966,686
$
902,451
$
892,980
$
874,882
$
851,372
Total risk-weighted
assets
$
7,409,304
$
7,370,704
$
7,355,979
$
7,385,877
$
7,095,366
Capital Ratios
CET1 Ratio
10.81
%
10.01
%
9.91
%
9.66
%
9.78
%
CET1 Ratio including AOCI
8.53
%
7.92
%
7.55
%
7.20
%
7.99
%
Tier 1 Capital Ratio
11.28
%
10.48
%
10.39
%
10.13
%
10.27
%
Tier 1 Capital Ratio including AOCI
9.00
%
8.39
%
8.03
%
7.68
%
8.48
%
Total Capital Ratio
13.05
%
12.24
%
12.14
%
11.85
%
12.00
%
Total Capital Ratio including AOCI
10.77
%
10.16
%
9.78
%
9.39
%
10.21
%
(1) Core loans represents total loans
excluding undisbursed loan funds, deferred loan origination fees
and PPP loans. Core commercial loans represents total commercial
real estate, commercial and commercial construction excluding
commercial undisbursed loan funds, deferred loan origination fees
and PPP loans. Core residential loans represents total loans held
for sale, one to four family residential real estate and
residential construction excluding residential undisbursed loan
funds and deferred loan origination fees. (2) Gross loans
represent total loans including undisbursed construction funds but
excluding deferred loan origination fees.
Premier Financial
Corp. Loan
Delinquency Information (dollars in
thousands)
Total Balance Current
30 to 89 days past due % of Total
Non Accrual Loans % of Total
June 30, 2023
One to four
family residential real estate
$
1,711,632
$
1,694,024
$
7,320
0.43
%
$
10,288
0.60
%
Construction
1,039,689
1,039,404
285
0.03
%
-
0.00
%
Commercial real estate
2,848,410
2,833,765
596
0.02
%
14,049
0.49
%
Commercial
1,069,372
1,057,057
4,290
0.40
%
8,025
0.75
%
Home equity and improvement
272,792
267,617
2,945
1.08
%
2,230
0.82
%
Consumer finance
210,390
204,404
3,587
1.70
%
2,399
1.14
%
Gross loans
$
7,152,285
$
7,096,271
$
19,023
0.27
%
$
36,991
0.52
%
March 31, 2023
One
to four family residential real estate
$
1,624,331
$
1,611,658
$
4,514
0.28
%
$
8,159
0.50
%
Construction
1,185,947
1,185,803
144
0.01
%
-
0.00
%
Commercial real estate
2,813,441
2,799,007
88
0.00
%
14,346
0.51
%
Commercial
1,061,142
1,053,681
471
0.04
%
6,990
0.66
%
Home equity and improvement
271,676
266,931
2,404
0.88
%
2,341
0.86
%
Consumer finance
212,299
206,247
3,511
1.65
%
2,541
1.20
%
Gross loans
$
7,168,836
$
7,123,327
$
11,132
0.16
%
$
34,377
0.48
%
June 30, 2022
One
to four family residential real estate
$
1,382,202
$
1,367,037
$
7,176
0.52
%
$
7,989
0.58
%
Construction
1,093,695
1,093,695
-
0.00
%
-
0.00
%
Commercial real estate
2,655,730
2,641,216
1
0.00
%
14,513
0.55
%
Commercial
991,803
984,065
-
0.00
%
7,738
0.78
%
Home equity and improvement
266,144
261,576
1,943
0.73
%
2,625
0.99
%
Consumer finance
180,539
176,608
2,061
1.14
%
1,870
1.04
%
Total loans
$
6,570,113
$
6,524,197
$
11,181
0.17
%
$
34,735
0.53
%
Loan Risk
Ratings Information
(dollars in thousands)
Total Balance Pass
Rated Special Mention % of Total
Classified % of Total
June 30, 2023
One to four
family residential real estate
$
1,700,468
$
1,689,666
$
484
0.03
%
$
10,318
0.61
%
Construction
1,039,689
1,031,356
8,333
0.80
%
-
0.00
%
Commercial real estate
2,847,035
2,797,688
20,751
0.73
%
28,596
1.00
%
Commercial
1,063,744
1,021,403
27,376
2.57
%
14,965
1.41
%
Home equity and improvement
270,722
269,038
-
0.00
%
1,684
0.62
%
Consumer finance
210,158
207,963
-
0.00
%
2,195
1.04
%
PCD loans
20,469
13,981
3,786
18.50
%
2,702
13.20
%
Gross loans
$
7,152,285
$
7,031,095
$
60,730
0.85
%
$
60,460
0.85
%
March 31, 2023
One
to four family residential real estate
$
1,612,999
$
1,604,694
$
493
0.03
%
$
7,812
0.48
%
Construction
1,185,947
1,185,947
-
0.00
%
-
0.00
%
Commercial real estate
2,811,999
2,748,598
41,677
1.48
%
21,724
0.77
%
Commercial
1,055,829
1,015,416
33,090
3.13
%
7,323
0.69
%
Home equity and improvement
269,455
267,588
-
0.00
%
1,867
0.69
%
Consumer finance
212,043
209,566
-
0.00
%
2,477
1.17
%
PCD loans
20,564
13,177
3,683
17.91
%
3,704
18.01
%
Gross loans
$
7,168,836
$
7,044,986
$
78,943
1.10
%
$
44,907
0.63
%
June 30, 2022
One
to four family residential real estate
$
1,370,167
$
1,361,875
$
1,244
0.09
%
$
7,048
0.51
%
Construction
1,093,695
1,093,695
-
0.00
%
-
0.00
%
Commercial real estate
2,654,003
2,551,971
77,224
2.91
%
24,808
0.93
%
Commercial
984,972
956,229
21,428
2.18
%
7,315
0.74
%
Home equity and improvement
263,330
261,530
-
0.00
%
1,800
0.68
%
Consumer finance
180,183
178,346
-
0.00
%
1,837
1.02
%
PCD loans
23,763
17,632
95
0.40
%
6,036
25.40
%
Total loans
$
6,570,113
$
6,421,278
$
99,991
1.52
%
$
48,844
0.74
%
Premier Financial Corp.
Mortgage and Credit Information
(dollars in thousands)
As of and for the Three
Months Ended Six Months Ended Mortgage Banking
Summary 6/30/23 3/31/23 12/31/22
9/30/22 6/30/22
6/30/23 6/30/22
Revenue from sales and servicing of mortgage loans:
Mortgage banking gains, net
$
2,242
$
(837
)
$
(1,285
)
$
3,363
$
1,166
$
1,405
$
3,710
Mortgage loan servicing revenue (expense):
Mortgage loan servicing revenue
1,845
1,888
1,862
1,861
1,862
3,733
3,741
Amortization of mortgage servicing rights
(1,277
)
(1,219
)
(1,271
)
(1,350
)
(1,375
)
(2,496
)
(2,778
)
Mortgage servicing rights valuation adjustments
130
(106
)
396
96
295
24
1,527
698
563
987
607
782
1,261
2,490
Total revenue from sale/servicing of mortgage loans
$
2,940
$
(274
)
$
(298
)
$
3,970
$
1,948
$
2,666
$
6,200
Mortgage
servicing rights:
Balance at beginning of period
$
21,447
$
21,858
$
21,915
$
21,872
$
22,189
$
21,858
$
22,244
Loans sold, servicing retained
653
808
1,214
1,393
1,059
1,461
2,407
Amortization
(1,277
)
(1,219
)
(1,271
)
(1,350
)
(1,375
)
(2,496
)
(2,778
)
Balance at end of period
20,823
21,447
21,858
21,915
21,873
20,823
21,873
Valuation allowance:
Balance at beginning of period
(793
)
(687
)
(1,083
)
(1,179
)
(1,474
)
(687
)
(2,707
)
Impairment recovery (charges)
130
(106
)
396
96
295
24
1,527
Balance at end of period
(663
)
(793
)
(687
)
(1,083
)
(1,179
)
(663
)
(1,180
)
Net carrying value at end of period
$
20,160
$
20,654
$
21,171
$
20,832
$
20,693
$
20,160
$
20,693
Allowance for
credit losses - loans
Beginning allowance
$
74,273
$
72,816
$
70,626
$
67,074
$
67,195
$
72,816
$
66,468
Provision (benefit) for credit losses - loans
1,410
3,944
3,020
3,706
5,151
5,354
5,777
Net recoveries (charge-offs)
238
(2,487
)
(830
)
(154
)
(5,272
)
(2,249
)
(5,171
)
Ending allowance
$
75,921
$
74,273
$
72,816
$
70,626
$
67,074
$
75,921
$
67,074
Total loans
$
6,708,568
$
6,575,829
$
6,460,620
$
6,207,708
$
5,890,823
Less: PPP loans
(577
)
(791
)
(1,143
)
(1,181
)
(4,561
)
Total loans ex PPP
$
6,707,991
$
6,575,038
$
6,459,477
$
6,206,527
$
5,886,262
Allowance for credit losses (ACL)
$
75,921
$
74,273
$
72,816
$
70,626
$
67,074
Add: Unaccreted purchase accounting marks
1,901
2,301
2,706
3,291
3,924
Adjusted ACL
$
77,822
$
76,574
$
75,522
$
73,917
$
70,998
ACL/Loans
1.13
%
1.13
%
1.13
%
1.14
%
1.14
%
Adjusted ACL/Loans ex PPP
1.16
%
1.16
%
1.17
%
1.19
%
1.21
%
Credit Quality
Total non-performing loans (1)
$
36,991
$
34,377
$
33,822
$
33,137
$
34,735
Real estate owned (REO)
561
393
619
416
462
Total non-performing assets (2)
$
37,552
$
34,770
$
34,441
$
33,553
$
35,197
Net charge-offs (recoveries)
(238
)
2,487
830
154
5,272
Allowance for credit losses / non-performing assets
202.18
%
213.61
%
211.42
%
210.49
%
190.57
%
Allowance for credit losses / non-performing loans
205.24
%
216.05
%
215.29
%
213.13
%
193.10
%
Non-performing assets / loans plus REO
0.56
%
0.53
%
0.53
%
0.54
%
0.60
%
Non-performing assets / total assets
0.44
%
0.41
%
0.41
%
0.41
%
0.44
%
Net charge-offs / average loans (annualized)
-0.01
%
0.15
%
0.05
%
0.01
%
0.37
%
Net charge-offs / average loans LTM
0.14
%
0.14
%
0.10
%
0.26
%
0.27
%
(1) Non-performing loans consist of
non-accrual loans. (2) Non-performing assets are
non-performing loans plus real estate and other assets acquired by
foreclosure or deed-in-lieu thereof.
Premier Financial Corp.
Non-GAAP
Reconciliations
Three Months Ended Six Months
Ended (In thousands, except per share and ratio data)
6/30/23 3/31/23 12/31/22 9/30/22
6/30/22
6/30/23 6/30/22 Total non-interest
expenses
$
44,495
$
42,791
$
43,028
$
41,099
$
39,089
$
87,286
$
80,384
Less: Transaction costs (pre-tax)
3,652
-
-
-
-
3,652
-
Core non-interest expenses
$
40,843
$
42,791
$
43,028
$
41,099
$
39,089
$
83,634
$
80,384
Non-interest income
$
53,346
$
12,462
$
14,228
$
16,704
$
14,365
$
65,808
$
31,228
Less: Gain on sale of insurance agency (pre-tax)
36,296
-
-
-
-
36,296
-
Core non-interest income
$
17,050
$
12,462
$
14,228
$
16,704
$
14,365
$
29,512
$
31,228
Less: Securities gains (losses)
64
(1,411
)
1,210
43
(1,161
)
(1,347
)
(1,804
)
Core non-interest income (ex securities gains/losses)
$
16,986
$
13,873
$
13,018
$
16,661
$
15,526
$
30,859
$
33,032
Tax-equivalent net interest income
$
54,059
$
56,391
$
62,783
$
63,509
$
59,321
$
110,449
$
117,443
Core non-interest income (ex securities gains/losses)
16,986
13,873
13,018
16,661
15,526
30,859
33,032
Total core revenues
71,045
70,264
75,801
80,170
74,847
141,308
150,475
Core non-interest expenses
$
40,843
$
42,791
$
43,028
$
41,099
$
39,089
$
83,634
$
80,384
Core efficiency ratio
57.49
%
60.90
%
56.76
%
51.26
%
52.23
%
59.19
%
53.42
%
Income
(loss) before income taxes
$
62,303
$
22,252
$
31,045
$
34,905
$
27,806
$
84,555
$
60,333
Add: Provision (benefit) for credit losses
540
3,706
2,774
4,012
6,566
4,246
7,501
Pre-tax pre-provision income
62,843
25,958
33,819
38,917
34,372
88,801
67,834
Add: Transaction costs (pre-tax)
3,652
-
-
-
-
3,652
-
Less: Gain on sale of insurance agency (pre-tax)
36,296
-
-
-
-
36,296
-
Core pre-tax pre-provision income
$
30,199
$
25,958
$
33,819
$
38,917
$
34,372
$
56,157
$
67,834
Average total assets
$
8,597,786
$
8,433,100
$
8,304,462
$
8,161,389
$
7,742,550
$
8,515,898
$
7,626,888
Core pre-tax pre-provision return on average assets
1.41
%
1.25
%
1.62
%
1.89
%
1.78
%
1.33
%
1.79
%
Net income
(loss)
$
48,391
$
18,149
$
25,275
$
28,195
$
22,360
$
66,540
$
48,717
Less: Gain on sale of insurance agency (pre-tax)
36,296
-
-
-
-
36,296
-
Add: Transaction costs (pre-tax)
3,652
-
-
-
-
3,652
-
Add: Tax impact of sale transaction
8,483
-
-
-
-
8,483
-
Core net income
$
24,230
$
18,149
$
25,275
$
28,195
$
22,360
$
42,379
$
48,717
Diluted
shares - Reported
35,800
35,719
35,790
35,704
35,682
35,750
35,880
Core diluted EPS
$
0.68
$
0.51
$
0.71
$
0.79
$
0.63
$
1.19
$
1.36
Average
total assets
$
8,597,786
$
8,433,100
$
8,304,462
$
8,161,389
$
7,742,550
$
8,515,898
$
7,626,888
Core return on average assets
1.13
%
0.87
%
1.21
%
1.37
%
1.16
%
1.00
%
1.29
%
Average
total equity
$
921,441
$
901,587
$
875,287
$
912,224
$
921,847
$
911,569
$
961,873
Core return on average equity
10.55
%
8.16
%
11.46
%
12.26
%
9.73
%
9.38
%
10.21
%
Average
total tangible equity
$
586,579
$
565,169
$
538,080
$
573,641
$
581,915
$
575,933
$
621,234
Core return on average tangible equity
16.57
%
13.02
%
18.64
%
19.50
%
15.41
%
14.84
%
15.81
%
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230725029675/en/
Paul Nungester EVP and CFO 419.785.8700
PNungester@yourpremierbank.com
Premier Financial (NASDAQ:PFC)
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