Premier Financial Corp. Announces Strong Third Quarter Earnings and $0.22 Per Share Dividend

Third Quarter 2020 Highlights

  • Net income of $25.7 million, or $28.6 million excluding merger-related expenses, compared to $13.2 million, or $13.6 million excluding merger-related expenses, for 2019 third quarter
  • Earnings per share of $0.69, or $0.77 excluding merger-related expenses, compared to $0.66, or $0.68 excluding merger-related expenses, for 2019 third quarter
  • Allowance to Loans ratio of 1.63%, or 1.77% excluding PPP loans
  • Average loan growth of $166 million, or 3.1% quarterly growth
  • Average deposit growth of $247 million, or 4.5% quarterly growth
  • Pre-tax pre-provision ROAA of 1.99%, or 2.20% excluding merger-related expenses, compared to 2.10%, or 2.16% excluding merger-related expenses, for 2019 third quarter
  • Efficiency ratio of 56.5%, or 49.9% core, compared to 56.8%, or 55.5% core, for 2019 third quarter
  • Issued $50 million of fixed-to-floating rate subordinated notes at 4.00% initial rate

DEFIANCE, Ohio--()--Premier Financial Corp. (Nasdaq: PFC) (“Premier” or the “Company”) announced today third quarter results including solid core profitability. On a GAAP basis, net income for the third quarter of 2020 was $25.7 million, or $0.77 per diluted common share, compared to net income of $13.2 million, or $0.66 per diluted common share, for the third quarter of 2019. Net income for the nine months ended September 30, 2020, was $32.2 million, or $1.88 per diluted common share, compared to $36.9 million, or $1.85 per diluted common share, for the nine months ended September 30, 2019. The year-over-year comparisons are substantially impacted by the acquisition of United Community Financial Corp. (“UCFC”) on January 31, 2020. The current year’s results include the impact of $3.7 million and $17.3 million of acquisition-related charges for the three and nine months ended September 30, 2020, respectively, which had after-tax costs of $2.9 million and $14.0 million, respectively, or $0.08 and $0.39 per diluted common share, respectively. The three and nine months ended September 30, 2019, included $540,000 of acquisition-related charges, which had an after-tax cost of $427,000 or $0.02 per diluted common share. Additionally, the current year’s nine month provision expense of $49.3 million included $25.9 million related to acquisition accounting for an after-tax cost of $20.5 million, or $0.58 per diluted common share. The first nine months of 2019 included a provision expense of $1.8 million, which had an after-tax cost of $1.4 million, or $0.09 per diluted common share, and no acquisition impact. Excluding the impact of the acquisition-related provision and charges, earnings for the three and nine months ended September 30, 2020, were $28.6 million and $66.8 million, respectively, or $0.77 and $1.88 per diluted common share, respectively.

“Efficiency and non-interest income growth are highlights of our continued strong financial performance for the third quarter,” said Donald P. Hileman, CEO of Premier. “We are incredibly pleased with our ability to enhance capital via excess earnings and a very successful, low-cost sub-debt issuance.”

Integration update

As previously announced, on January 31, 2020, the Company completed the strategic merger of equals with UCFC under which UCFC merged into Premier in a stock-for-stock transaction. The year-over-year comparison of Company results is substantially impacted by the UCFC merger, with 2020 third quarter and year-to-date results including three and eight months of operations from UCFC, respectively, compared to none for the comparable periods in 2019. In June, the Company launched its newly designed logo and brand identity for Premier Financial Corp. and Premier Bank. The new tagline “Powered by People” honors the longstanding commitment both organizations have to their customers, communities and employees. In July, Premier Bank successfully completed its core systems conversion. The integration of teams, systems and processes for the combined organization is progressing as expected.

“The entire Premier organization from client-facing to behind-the-scenes operational teams came together to put our clients first during this transition,” said Gary M. Small, President of Premier. “By living our core values, we were able to preserve the best of two organizations under the Premier brand. As the final, conversion-related tasks conclude, we pivot our energy to enhancements of the client experience and top-tier performance.”

Business Client Support Efforts

As a part of the CARES Act, the Small Business Administration created the Paycheck Protection Program (“PPP”) to provide small businesses with loans as a direct incentive to keep their workers on the payroll. Premier Bank actively participated in PPP for clients and made 2,880 loans for a total of $443.3 million as of September 30, 2020. Total gross fees for these loans totaled $14.8 million. We recognized $2.7 million and $4.3 million as loan interest income during the three and nine months ended September 30, 2020, respectively.

Net interest income up compared to third quarter of 2019

Net interest income of $53.3 million in the third quarter of 2020 was up from $28.9 million in the third quarter of 2019. The increase over the prior year’s third quarter was attributable to organic growth and three months of income from UCFC compared to none in 2019. Net interest margin was 3.47% for the third quarter of 2020, down from 3.51% in the second quarter of 2020, and down from 3.88% in the third quarter of 2019. Yield on interest earning assets decreased to 3.91% in the third quarter of 2020, down 13 basis points from 4.04% in the second quarter of 2020. Total cost of funds decreased eight basis points in the third quarter of 2020 to 0.47% from 0.55% in the second quarter of 2020 while the total cost of interest-bearing liabilities decreased nine basis points to 0.62% from 0.71%. The 2020 third quarter results include the impact of acquisition marks and related accretion for the UCFC acquisition. Interest income includes $1.1 million of accretion and interest expense includes $0.8 million of accretion, which combined added 13 basis points of net interest margin. The third quarter results also include the impact of PPP loans. Interest income includes $2.7 million on average balances of $440.4 million, which reduced net interest margin by seven basis points. Excluding the impact of acquisition marks and PPP loans, net interest margin would be 3.41% for the third quarter of 2020 compared to 3.34% for the second quarter of 2020 excluding the impact of acquisition marks and PPP loans.

“Our ability to manage funding costs and excess liquidity in the third quarter led to an improved core net interest margin,” said Hileman. “Our strategies and teamwork are mitigating the impacts of the current down-rate environment.”

Non-interest income up from third quarter of 2019

Premier’s non-interest income in the third quarter of 2020 was $25.0 million compared with $11.8 million in the third quarter of 2019. Results for the third quarter of 2020 included three months of income from UCFC compared to none in 2019.

Mortgage banking income increased to $12.0 million in the third quarter of 2020 from $2.8 million in the third quarter of 2019. Gains from the sale of mortgage loans increased to $13.8 million in the third quarter of 2020 from $2.6 million in the third quarter of 2019. Mortgage loan servicing revenue increased to $1.9 million in the third quarter of 2020 from $1.0 million in the third quarter of 2019. Amortization of mortgage servicing rights increased to $2.0 million in the third quarter of 2020 from $0.6 million in the third quarter of 2019. Premier had a negative change in the valuation adjustment in mortgage servicing assets of $1.7 million in the third quarter of 2020 compared with a negative adjustment of $0.2 million in the third quarter of 2019. The year-over-year change for the third quarter is primarily due to increased prepayment speeds in the current down rate environment.

For the third quarter of 2020, service fees and other charges were $4.8 million, up from $4.0 million in the third quarter of 2019. Commissions from the sale of insurance products were $3.7 million, up from $3.3 million in the third quarter of 2019. Beginning with the second quarter of 2020, Premier began to report wealth management income, which represents trust income plus income for brokerage and financial advisory services that were previously reported in other non-interest income. Prior period amounts have been restated for consistency. Wealth management income was $1.5 million in the third quarter of 2020, up from $0.7 million in the third quarter of 2019.

Securities gains were $1.5 million in the third quarter of 2020, up from $11,000 in the third quarter of 2019. The Company early extinguished $30 million of fixed rate FHLB advances in the third quarter that had a weighted average rate of 2.0% and incurred a prepayment penalty of $1.4 million recognized in other expenses. The Company sold $55 million of MBS securities yielding approximately 1.80% at a gain of $1.4 million. The proceeds from the sales are being reinvested into securities yielding approximately 1.50% funded by overnight advances with a cost of approximately 20 basis points. The net effect of the transactions will increase pretax income approximately $425,000 over the next 12 months and enhance net interest margin by one basis point.

“We are pleased that the rate compression we are experiencing continues to be offset by our non-interest income growth,” said Hileman. “While mortgage banking was again very strong with almost $14 million in gains this quarter, all business lines contributed to enhanced revenues.”

Non-interest expenses up from third quarter of 2019

Total non-interest expense was $43.6 million in the third quarter of 2020, or $39.9 million excluding $3.7 million of acquisition related charges, up from $23.3 million in the third quarter of 2019, or $22.7 million excluding $540,000 of acquisition related charges. Results for the third quarter of 2020 included three months of expenses from UCFC compared to none in 2019. Compensation and benefits increased to $20.2 million in the third quarter of 2020, compared to $14.1 million in the third quarter of 2019. Occupancy expense was $4.0 million in the third quarter of 2020, up from $2.2 million in the third quarter of 2019. Data processing cost was $4.3 million in the third quarter of 2020, up from $1.7 million in the third quarter of 2019. Amortization of intangibles was $1.7 million in the third quarter of 2020, up from $0.3 million in the third quarter of 2019. Other non-interest expense was $7.1 million in the third quarter of 2020, or $5.7 million excluding the $1.4 million of FHLB prepayment penalties discussed above, up from $4.2 million in the third quarter of 2019.

FDIC insurance premiums were a $1.5 million expense in the third quarter of 2020, up from a $411,000 expense in the second quarter of 2020 and a $255,000 credit in the third quarter of 2019. The increase in expense from prior quarter is largely due to the impact of PPP and includes a year-to-date accrual estimate true-up. Although PPP loan balances are excludable from the asset-based component, they are not excludable from the leverage ratio component because the Company did not borrow from the PPP Liquidity Facility, and any loan funds that were in deposits would also increase the asset-based component. FDIC insurance premiums were a credit of $255,000 in the third quarter of 2019 due to the receipt of small bank assessment credits.

Credit quality

Non-performing loans totaled $48.3 million at September 30, 2020, an increase from $39.5 million at June 30, 2020, and an increase from $14.7 million at September 30, 2019, due to the UCFC merger. In addition, Premier had $0.5 million of OREO at September 30, 2020, compared to none at September 30, 2019. Accruing troubled debt restructured loans were $8.5 million at September 30, 2020, compared with $10.3 million at September 30, 2019.

On January 1, 2020, Premier adopted the Current Expected Credit Loss model of accounting for credit losses. This new GAAP model, which replaces the former incurred loss model, requires entities to estimate credit losses over the life of an asset or off-balance sheet exposure. Beginning with the third quarter of 2020, Premier began to report total provision for credit losses inclusive of amounts related to off-balance sheet unfunded commitments, which were previously reported in other non-interest expenses. Prior period amounts have been restated for consistency.

The 2020 third quarter results include net loan charge-offs of $3.3 million and a total provision expense of $3.7 million compared with net loan charge-offs of $11,000 and a total provision expense of $1.3 million for the same period in 2019. The allowance for credit loss on loans as a percentage of total loans was 1.63% at September 30, 2020, or 1.77% excluding PPP loans, compared with 1.62% at June 30, 2020, or 1.76% excluding PPP loans, and 1.13% at September 30, 2019. The year-over-year increase in the provision expense and allowance percentage is primarily attributable to the impact of the economic deterioration that began in the first quarter of 2020 as a result of the COVID-19 pandemic. As of September 30, 2020, Premier Bank had pandemic related deferrals for $434.6 million of commercial loans, down from $739.6 million at June 30, and $48.2 million of retail loans, down from $73.3 million at June 30.

Year-To-Date Results

For the nine-month period ended September 30, 2020, net income totaled $32.2 million, or $0.91 per diluted common share, compared to $36.9 million, or $1.85 per diluted common share for the nine months ended September 30, 2019. Results for the first nine months of 2020 included eight months of income and expenses from UCFC compared to none in 2019. The year-over-year comparison is also substantially impacted by the current year’s provision expense of $49.3 million, which included $25.9 million related to acquisition accounting for an after-tax cost of $20.5 million, or $0.58 per diluted common share. The first nine months of 2019 included a total provision expense of $1.8 million, which had an after-tax cost of $1.4 million, or $0.07 per diluted common share, and no acquisition impact. Additionally, the current year’s results include the impact of $17.3 million of acquisition-related charges, which had an after-tax cost of $14.0 million, or $0.39 per diluted common share. The first nine months of 2019 included $540,000 of acquisition related charges, which had an after tax cost of $427,000, or $0.02 per diluted common share. Excluding the impact of acquisition-related provision and charges, earnings for the first nine months of 2020 were $66.8 million, or $1.88 per diluted common share compared to $37.3 million or $1.87 per diluted share.

Net interest income was $153.0 million for the first nine months of 2020 compared with $104.8 million in the first nine months of 2019. Average interest-earning assets increased to $5.8 billion in the first nine months of 2020 compared to $2.92 billion in the first nine months of 2019. Net interest margin for the first nine months of 2020 was 3.55%, down 43 basis points from the 3.98% margin reported in the nine-month period ended September 30, 2019. The 2020 results include the impact of acquisition marks and related accretion for the UCFC acquisition. Interest income includes $5.5 million of accretion and interest expense includes $1.9 million of accretion, which combined added 16 basis points of net interest margin. The 2020 results also include the impact of PPP loans. Interest income includes $4.3 million on average balances of $246.9 million, which reduced net interest margin by five basis points. Excluding the impact of acquisition marks and PPP loans, net interest margin was 3.44% for the first nine months of 2020.

Non-interest income for the first nine months of 2020 was $62.0 million compared to $33.1 million during the same period of 2019. Service fees and other charges were $15.6 million for the first nine months of 2020, up from $10.3 million during the same period of 2019. Mortgage banking income was $22.8 million for the first nine months of 2020, up from $6.8 million during the same period of 2019. Insurance commissions were $12.9 million for the first nine months of 2020 compared with $11.0 million for the same period of 2019. Wealth management income was $4.4 million for the first nine months of 2020, up from $2.1 million during the same period of 2019.

Non-interest expense was $123.9 million for the first nine months of 2020, or $106.6 million excluding acquisition-related charges, up from $72.4 million, or $71.8 million excluding acquisition related charges, for the same period of 2019. Compensation and benefits expense was $57.3 million for the first nine months of 2020 compared with $42.5 million during the same period of 2019. Expenses also included increases in occupancy of $5.1 million, FDIC premiums of $2.1 million, data processing of $4.8 million, amortization of intangibles of $3.9 million and other expenses of $2.6 million. Additional detail regarding certain items impacting FDIC premiums and other expenses are discussed above.

Total assets at $6.97 billion

Total assets at September 30, 2020, were $6.97 billion compared to $7.01 billion at June 30, 2020, and $3.35 billion at September 30, 2019. Gross loans receivable (excluding loans held for sale) were $5.47 billion at September 30, 2020, compared to $5.46 billion at June 30, 2020, and $2.67 billion at September 30, 2019. At September 30, 2020, gross loans receivable grew $2.81 billion, or 105% from a year ago, including $2.30 billion from the UCFC merger and $0.51 billion organically, including $0.44 billion of PPP loans. Also, at September 30, 2020, goodwill and other intangible assets totaled $350.0 million compared to $351.7 million at June 30, 2020, and $104.1 million at September 30, 2019, with the increase attributable to the UCFC merger.

Total deposits at September 30, 2020, were $5.80 billion compared with $5.76 billion at June 30, 2020, and $2.76 billion at September 30, 2019. At September 30, 2020, total deposits grew $3.04 billion, or 110% from a year ago, including $2.08 billion from the UCFC merger and $0.96 billion organically.

Total stockholders’ equity was $959.0 million at September 30, 2020, compared to $941.0 million at June 30, 2020, and $418.0 million at September 30, 2019. The increase in stockholders’ equity from the prior year was due to net earnings and the UCFC merger, offset partially by the Company’s repurchase of 430,000 common shares for $10.1 million during the first quarter of 2020. At September 30, 2020, 570,000 common shares remained available for repurchase under the Company’s existing repurchase program.

Capital Issuance

On September 30, 2020, the Company completed the issuance of $50 million aggregate principal amount fixed-to-floating rate subordinated notes due 2030 (the “Notes”) in a private offering exempt from the registration requirements under the Securities Act of 1933, as amended. The Notes carry a fixed rate of 4.00% for five years then a floating rate equal to the 3-month SOFR rate plus 388.5 basis points. The Company may, at its option, beginning September 30, 2025, redeem the Notes, in whole or in part, from time to time, subject to certain conditions. The net proceeds from the sale of the Notes are approximately $48.7 million, after deducting the estimated offering expenses. The Company intends to use the net proceeds from the offering of the Notes for general corporate purposes.

“We are proud of our successful capital issuance at the lowest rate this year for a BBB- Kroll-rated subordinated debt offering by a bank holding company,” said Paul D. Nungester, CFO of Premier. “This enhancement to total capital at an efficient cost improves the Company’s ability to serve as a source of strength for the bank during the current economic downturn.”

Dividend to be paid November 20

The Board of Directors declared a quarterly cash dividend of $0.22 per common share payable November 20, 2020, to shareholders of record at the close of business on November 13, 2020. The dividend represents an annual dividend of 4.89 percent based on the Premier common stock closing price on October 19, 2020. Premier has approximately 37,297,217 common shares outstanding.

Conference call

Premier Financial Corp. will host a conference call at 11:00 a.m. ET on Wednesday, October 21, 2020, to discuss the earnings results and business trends. The conference call may be accessed by calling 1-877-444-1726. Internet access to the call is also available (in listen-only mode) at the following URL: https://services.choruscall.com/links/pfc201021.html. The replay of the conference call will be available at www.PremierFinCorp.com until October 20, 2021, at 9:00 a.m. ET.

About Premier Financial Corp.

Premier Financial Corp. (Nasdaq: PFC), headquartered in Defiance, Ohio, is the holding company for Premier Bank and First Insurance Group. Premier Bank, headquartered in Youngstown, Ohio, operates 78 branches, 12 loan offices and 3 wealth offices in Ohio, Michigan, Indiana, Pennsylvania and West Virginia (West Virginia office operates as “Home Savings Bank”). First Insurance Group is a full-service insurance agency with ten offices in Ohio including James & Sons Insurance in Youngstown, Ohio. For more information, visit the company’s websites at PremierFinCorp.com.

Financial Statements and Highlights Follow-

Safe Harbor Statement

This news release may contain certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21 B of the Securities Exchange Act of 1934, as amended. Those statements may include, but are not limited to, all statements regarding intent, beliefs, expectations, projections, forecasts and plans of Premier Financial Corp. and its management, and specifically include statements regarding: changes in economic conditions; the nature, extent and timing of governmental actions and reforms; future movements of interest rates; the ability to benefit from a changing interest rate environment; the production levels of mortgage loan generation; the ability to continue to grow loans and deposits; the ability to sustain credit quality ratios at current or improved levels; continued strength in the market area for Premier Bank; the ability to sell real estate owned properties; and the ability to grow in existing and adjacent markets. These forward-looking statements involve numerous risks and uncertainties, including: impacts from the novel coronavirus (COVID-19) pandemic on our business, operations, customers and capital position; higher default rates on loans made to our customers related to COVID-19 and its impact on our customers’ operations and financial condition; the impact of COVID-19 on local, national and global economic conditions; unexpected changes in interest rates or disruptions in the mortgage market related to COVID-19 or responses to the health crisis; the effects of various governmental responses to the COVID-19 pandemic; those inherent in general and local banking, insurance and mortgage conditions; competitive factors specific to markets in which Premier Financial Corp. and its subsidiaries operate; future interest rate levels; legislative and regulatory decisions or capital market conditions; and other risks and uncertainties detailed from time to time in our Securities and Exchange Commission (SEC) filings, including in our Annual Report on Form 10-K for the year ended December 31, 2019 and our Quarterly Report on Form 10-Q for the quarter ended June 30, 2020. One or more of these factors have affected or could in the future affect Premier’s business and financial results in future periods and could cause actual results to differ materially from plans and projections. Therefore, there can be no assurances that the forward-looking statements included in this news release will prove to be accurate. In light of the significant uncertainties in the forward-looking statements included herein, 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. All forward-looking statements made in this news release 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 September 30, 2020, 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 income and core pre-tax pre-provision income to be useful supplemental measures of our operating performance. We define core net income as net income excluding the after-tax impact of acquisition related charges. We define core pre-tax pre-provision income as pre-tax pre-provision income excluding the pre-tax impact of acquisition related charges. 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 one-time acquisition related charges. 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.
 

September 30,

 

December 31,

(in thousands)

2020

 

2019

 
Assets
Cash and cash equivalents
Cash and amounts due from depository institutions

$

44,273

 

$

46,254

 

Interest-bearing deposits

 

58,800

 

 

85,000

 

 

103,073

 

 

131,254

 

 
Available-for sale, carried at fair value

 

578,224

 

 

283,448

 

Trading securities, carried at fair value

 

1,014

 

 

-

 

Securities investments

 

579,238

 

 

283,448

 

 
Loans

 

5,470,548

 

 

2,777,564

 

Allowance for credit losses - loans

 

(88,917

)

 

(31,243

)

Loans, net

 

5,381,631

 

 

2,746,321

 

Loans held for sale

 

208,054

 

 

18,008

 

Mortgage servicing rights

 

13,477

 

 

10,267

 

Accrued interest receivable

 

28,834

 

 

10,244

 

Federal Home Loan Bank stock

 

23,492

 

 

11,915

 

Bank Owned Life Insurance

 

143,939

 

 

75,544

 

Office properties and equipment

 

58,817

 

 

39,563

 

Real estate and other assets held for sale

 

521

 

 

100

 

Goodwill

 

317,948

 

 

100,069

 

Core deposit and other intangibles

 

32,005

 

 

3,772

 

Other assets

 

83,924

 

 

38,487

 

Total Assets

$

6,974,953

 

$

3,468,992

 

 
Liabilities and Stockholders’ Equity
Non-interest-bearing deposits

$

1,436,807

 

$

630,359

 

Interest-bearing deposits

 

4,358,950

 

 

2,239,966

 

Total deposits

 

5,795,757

 

 

2,870,325

 

Advances from FHLB and PPPLF

 

30,000

 

 

85,063

 

Notes payable and other interest-bearing liabilities

 

-

 

 

2,999

 

Subordinated debentures

 

84,818

 

 

36,083

 

Advance payments by borrowers for tax and insurance

 

18,985

 

 

5,491

 

Reserve for credit losses - unfunded commitments

 

5,955

 

 

571

 

Other liabilities

 

80,413

 

 

42,293

 

Total Liabilities

 

6,015,928

 

 

3,042,825

 

Stockholders’ Equity
Preferred stock

 

-

 

 

-

 

Common stock, net

 

306

 

 

127

 

Additional paid-in-capital

 

689,736

 

 

161,955

 

Accumulated other comprehensive income (loss)

 

13,976

 

 

4,595

 

Retained earnings

 

333,772

 

 

329,175

 

Treasury stock, at cost

 

(78,765

)

 

(69,685

)

Total stockholders’ equity

 

959,025

 

 

426,167

 

Total Liabilities and Stockholders’ Equity

$

6,974,953

 

$

3,468,992

 

 
Consolidated Statements of Income (Unaudited)
Premier Financial Corp.

Three Months Ended

 

Nine Months Ended

September 30,

 

September 30,

(in thousands, except per share amounts)

2020

 

2019

 

2020

 

2019

Interest Income:
Loans

$

57,134

 

$

33,284

 

$

167,390

$

97,158

 

Investment securities

 

2,848

 

 

1,952

 

 

8,489

 

6,295

 

Interest-bearing deposits

 

82

 

 

312

 

 

391

 

857

 

FHLB stock dividends

 

95

 

 

135

 

 

861

 

533

 

Total interest income

 

60,159

 

 

35,683

 

 

177,131

 

104,843

 

Interest Expense:
Deposits

 

6,555

 

 

6,029

 

 

21,761

 

16,615

 

FHLB advances and other

 

168

 

 

431

 

 

1,690

 

1,011

 

Subordinated debentures

 

158

 

 

329

 

 

610

 

1,043

 

Notes Payable

 

7

 

 

2

 

 

32

 

23

 

Total interest expense

 

6,888

 

 

6,791

 

 

24,093

 

18,692

 

Net interest income

 

53,271

 

 

28,892

 

 

153,038

 

86,151

 

Provision for credit losses - loans

 

3,658

 

 

1,327

 

 

49,312

 

1,821

 

Provision (benefit) for credit losses - unfunded commitments

 

(864

)

 

(62

)

 

1,702

 

(60

)

Total provision for credit losses

 

2,794

 

 

1,265

 

 

51,014

 

1,761

 

Net interest income after provision for loan losses

 

50,477

 

 

27,627

 

 

102,024

 

84,390

 

Non-interest Income:
Service fees and other charges

 

4,805

 

 

4,027

 

 

15,601

 

10,335

 

Mortgage banking income

 

12,047

 

 

2,822

 

 

22,763

 

6,800

 

Gain on sale of non-mortgage loans

 

-

 

 

105

 

 

234

 

215

 

Gain (loss) on sale of available for sale securities

 

1,466

 

 

11

 

 

1,464

 

11

 

Gain (loss) on trading securities

 

14

 

 

-

 

 

14

 

-

 

Insurance commissions

 

3,715

 

 

3,263

 

 

12,875

 

10,994

 

Wealth management income

 

1,458

 

 

705

 

 

4,351

 

2,063

 

Income from Bank Owned Life Insurance

 

841

 

 

783

 

 

2,460

 

1,702

 

Other non-interest income

 

654

 

 

126

 

 

2,251

 

1,021

 

Total Non-interest Income

 

25,000

 

 

11,842

 

 

62,013

 

33,141

 

Non-interest Expense:
Compensation and benefits

 

20,172

 

 

14,061

 

 

57,331

 

42,544

 

Occupancy

 

3,989

 

 

2,206

 

 

11,848

 

6,751

 

FDIC insurance premium

 

1,469

 

 

(255

)

 

2,372

 

276

 

Financial institutions tax

 

1,116

 

 

555

 

 

3,066

 

1,667

 

Data processing

 

4,289

 

 

1,728

 

 

11,135

 

6,292

 

Amortization of intangibles

 

1,726

 

 

264

 

 

4,781

 

839

 

Acquisition related charges

 

3,711

 

 

540

 

 

17,295

 

540

 

Other non-interest expense

 

7,091

 

 

4,166

 

 

16,028

 

13,455

 

Total Non-interest Expense

 

43,563

 

 

23,265

 

 

123,856

 

72,364

 

Income before income taxes

 

31,914

 

 

16,204

 

 

40,181

 

45,167

 

Income tax expense

 

6,259

 

 

3,033

 

 

7,951

 

8,315

 

Net Income

$

25,655

 

$

13,171

 

$

32,230

$

36,852

 

 
 
Earnings per common share:
Basic

$

0.69

 

$

0.67

 

$

0.91

$

1.86

 

Diluted

$

0.69

 

$

0.66

 

$

0.91

$

1.85

 

 
Average Shares Outstanding:
Basic

 

37,297

 

 

19,790

 

 

35,423

 

19,862

 

Diluted

 

37,334

 

 

19,875

 

 

35,482

 

19,943

 

 
Financial Summary and Comparison (Unaudited)
Premier Financial Corp.

Three Months Ended

 

Nine Months Ended

September 30,

 

September 30,

(dollars in thousands, except per share data)

2020

 

2019

 

% change

 

2020

 

2019

 

% change

Summary of Operations
 
Tax-equivalent interest income (2)

$

60,418

 

$

35,922

 

68.2

%

$

177,898

 

$

105,578

 

68.5

%

Interest expense

 

6,888

 

 

6,791

 

1.4

 

 

24,093

 

 

18,692

 

28.9

 

Tax-equivalent net interest income (2)

 

53,530

 

 

29,131

 

83.8

 

 

153,805

 

 

86,886

 

77.0

 

Provision for credit losses

 

2,794

 

 

1,265

 

120.9

 

 

51,014

 

 

1,761

 

2,796.9

 

Core provision for credit losses (4)

 

2,794

 

 

1,265

 

120.9

 

 

22,089

 

 

1,761

 

1,154.3

 

Investment securities gains (losses)

 

1,480

 

 

11

 

NM

 

 

1,478

 

 

11

 

NM

 

Non-interest income (excluding securities gains/losses)

 

23,520

 

 

11,831

 

98.8

 

 

60,535

 

 

33,130

 

82.7

 

Non-interest expense

 

43,563

 

 

23,265

 

87.2

 

 

123,856

 

 

72,364

 

71.2

 

Core non-interest expense (4)

 

38,445

 

 

22,724

 

69.2

 

 

69,269

 

 

71,824

 

(3.6

)

Income tax expense

 

6,259

 

 

3,033

 

106.4

 

 

7,951

 

 

8,315

 

(4.4

)

Net income

 

25,655

 

 

13,171

 

94.8

 

 

32,230

 

 

36,852

 

(12.5

)

Core net income (4)

 

28,587

 

 

13,598

 

110.2

 

 

36,057

 

 

37,279

 

(3.3

)

Tax equivalent adjustment (2)

 

259

 

 

239

 

8.4

 

 

767

 

 

735

 

4.4

 

At Period End
Assets

 

6,974,953

 

 

3,350,724

 

108.2

 

Earning assets

 

6,340,132

 

 

3,045,659

 

108.2

 

Loans

 

5,470,548

 

 

2,665,300

 

105.3

 

Allowance for credit losses - loans

 

88,917

 

 

30,250

 

193.9

 

Deposits

 

5,795,757

 

 

2,760,615

 

109.9

 

Stockholders’ equity

 

959,025

 

 

418,046

 

129.4

 

Average Balances
Assets

 

6,935,783

 

 

3,303,013

 

110.0

 

 

6,437,886

 

 

3,236,674

 

98.9

 

Earning assets

 

6,211,267

 

 

2,985,498

 

108.0

 

 

5,787,134

 

 

2,923,809

 

97.9

 

Loans

 

5,555,621

 

 

2,624,314

 

111.7

 

 

5,095,167

 

 

2,567,646

 

98.4

 

Deposits and interest-bearing liabilities

 

5,901,652

 

 

2,843,079

 

107.6

 

 

5,457,179

 

 

2,788,974

 

95.7

 

Deposits

 

5,738,006

 

 

2,718,632

 

111.1

 

 

5,162,952

 

 

2,679,616

 

92.7

 

Stockholders’ equity

 

927,506

 

 

411,041

 

125.6

 

 

881,932

 

 

401,597

 

119.6

 

Stockholders’ equity / assets

 

13.37

%

 

12.44

%

7.5

 

 

13.70

%

 

12.41

%

10.4

 

Per Common Share Data
Net Income (Loss)
Basic

$

0.69

 

$

0.67

 

3.0

 

$

0.91

 

$

1.86

 

(51.1

)

Diluted

 

0.69

 

 

0.66

 

4.5

 

 

0.91

 

 

1.85

 

(50.8

)

Core diluted (4)

 

0.77

 

 

0.68

 

13.2

 

$

1.88

 

 

1.87

 

0.5

 

Dividends

 

0.22

 

 

0.19

 

15.8

 

 

0.66

 

 

0.57

 

15.8

 

Market Value:
High

$

21.24

 

$

29.44

 

(27.9

)

$

32.05

 

$

31.30

 

2.4

 

Low

 

14.74

 

 

25.50

 

(42.2

)

 

10.98

 

 

24.12

 

(54.5

)

Close

 

15.58

 

 

28.97

 

(46.2

)

 

15.58

 

 

28.97

 

(46.2

)

Common Book Value

 

25.71

 

 

21.19

 

21.3

 

 

25.71

 

 

21.19

 

21.3

 

Tangible Common Book Value (1)

 

16.33

 

 

15.91

 

2.6

 

 

16.33

 

 

15.91

 

2.6

 

Shares outstanding, end of period (000s)

 

37,297

 

 

19,729

 

89.0

 

 

37,297

 

 

19,729

 

89.0

 

Performance Ratios (annualized)
Tax-equivalent net interest margin (2)

 

3.47

%

 

3.88

%

(10.6

)

 

3.55

%

 

3.98

%

(10.8

)

Return on average assets

 

1.49

%

 

1.58

%

(5.8

)

 

0.67

%

 

1.52

%

(56.0

)

Core return on average assets (4)

 

1.64

%

 

1.63

%

0.4

 

 

0.75

%

 

1.54

%

(51.6

)

Return on average equity

 

11.12

%

 

12.71

%

(12.5

)

 

4.88

%

 

12.27

%

(60.2

)

Core return on average equity (4)

 

12.26

%

 

13.12

%

(6.6

)

 

5.46

%

 

12.44

%

(56.1

)

Efficiency ratio (3)

 

56.54

%

 

56.79

%

(0.4

)

 

57.78

%

 

60.30

%

(4.2

)

Core efficiency ratio (4)

 

49.90

%

 

55.48

%

(10.1

)

 

49.06

%

 

59.85

%

(18.0

)

Effective tax rate

 

19.61

%

 

18.72

%

4.8

 

 

19.79

%

 

18.41

%

7.5

 

Dividend payout ratio (core)

 

28.57

%

 

27.94

%

2.3

 

 

35.11

%

 

30.48

%

15.2

 

Note: 2020 current quarter and year-to-date results include three and five months of operations from UCFC, respectively, compared to none for comparable periods in 2019.
(1) Tangible common book value = total stockholders' equity less the sum of goodwill, core deposit and other intangibles, and preferred stock divided by shares outstanding at the end of the period.
(2) 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%.
(3) Efficiency ratio = Non-interest expense divided by sum of tax-equivalent net interest income plus non-interest income, excluding securities gains or losses, net.
(4) Core items exclude the impact of acquisition related provision ("CECL double-dip") and other charges. See non-GAAP reconciliations.
NM Percentage change not meaningful
 
Premier Financial Corp.
(dollars in thousands)

Three Months Ended

 

Nine Months Ended

September 30,

 

September 30,

Mortgage Banking

2020

 

2019

 

2020

 

2019

Revenue from sales and servicing of mortgage loans:
Gain from sale of mortgage loans

$

13,781

 

$

2,596

 

$

30,213

 

$

5,672

 

Mortgage loan servicing revenue (expense):
Mortgage loan servicing revenue

 

1,898

 

 

960

 

 

5,379

 

 

2,842

 

Amortization of mortgage servicing rights

 

(1,959

)

 

(579

)

 

(5,302

)

 

(1,256

)

Mortgage servicing rights valuation adjustments

 

(1,673

)

 

(155

)

 

(7,527

)

 

(458

)

 

(1,734

)

 

226

 

 

(7,450

)

 

1,128

 

Total revenue from sale and servicing of mortgage loans

$

12,047

 

$

2,822

 

$

22,763

 

$

6,800

 

 
Mortgage servicing rights:
Balance at beginning of period

$

21,034

 

$

10,458

 

$

10,801

 

$

10,419

 

Loans sold, servicing retained

 

2,463

 

 

738

 

 

6,292

 

 

1,454

 

Mortgage servicing rights acquired

 

-

 

 

-

 

 

9,747

 

 

-

 

Amortization

 

(1,959

)

 

(579

)

 

(5,302

)

 

(1,256

)

Carrying value before valuation allowance at end of period

 

21,538

 

 

10,617

 

 

21,538

 

 

10,617

 

Valuation allowance:
Balance at beginning of period

 

(6,388

)

 

(603

)

 

(534

)

 

(300

)

Impairment recovery (charges)

 

(1,673

)

 

(155

)

 

(7,527

)

 

(458

)

Balance at end of period

 

(8,061

)

 

(758

)

 

(8,061

)

 

(758

)

Net carrying value at end of period

$

13,477

 

$

9,859

 

$

13,477

 

$

9,859

 

 
 
Goodwill and Purchase Price Accounting
Deal Value:
Shares issued (000s)

 

17,926

 

1/31/20 Price

$

29.39

 

Stock value

 

526,850

 

Fair value of options exchanged

 

461

 

Cash in lieu of fractional shares

 

132

 

Total value

$

527,443

 

 
Allocation:
Cash and cash equivalents

$

52,580

 

Securities available-for sale

 

262,753

 

(1)

Net loans, including loans held for sale and allowance

 

2,340,701

 

(2)

Federal Home Loan Bank stock

 

12,753

 

Office properties and equipment

 

20,253

 

(3)

Core deposit and other intangibles

 

33,014

 

(4)

Bank Owned Life Insurance

 

65,934

 

Mortgage servicing rights

 

9,747

 

(5)

Other assets

 

35,423

 

Non-interest-bearing deposits

 

(430,921

)

Interest-bearing deposits

 

(1,651,669

)

(6)

Advances from Federal Home Loan Bank

 

(381,000

)

Other liabilities

 

(60,004

)

Net assets

 

309,564

 

Goodwill

 

217,879

 

Total value

$

527,443

 

 
Note: 2020 current quarter and year-to-date results include three and eight months of operations from UCFC, respectively, compared to none for comparable periods in 2019.
(1) Includes $13.8 million of accumulated losses to be amortized against interest income over ~7 years.
(2) Includes $27.2 million non-PCD credit mark down to be accreted into interest income over ~5 years, $8.8 million total rate mark up to be amortized against interest income over ~5 years, $19.1 million elimination of allowance and $7.7 million PCD credit mark addition to allowance.
(3) Includes $2.1 million mark down that reduces future depreciation.
(4) Includes $29.3 million of core deposit intangible to be amortized to expense using sum-of-the-years digits over 10 years and $3.7 million of insurance/trust/wealth intangibles to be amortized to expense over ~10 years.
(5) Includes $3.0 million mark up to be amortized against mortgage banking income over ~8.5 years.
(6) Includes $7.1 million rate mark up on time-based deposits to be accreted against interest expense over ~2 years based on maturities.
 
Yield Analysis
Premier Financial Corp.

Three Months Ended September 30,

(dollars in thousands)

2020

 

 

 

2019

Average

 

 

 

Yield

 

 

 

Average

 

 

 

Yield

Balance

 

Interest(1)

 

Rate(2)

 

 

 

Balance

 

Interest(1)

 

Rate(2)

Interest-earning assets:
Loans receivable

$

5,555,621

$

57,158

4.14

%

$

2,624,314

$

33,306

5.04

%

Securities

 

552,458

 

3,083

2.24

%

(3)

 

293,876

 

2,169

2.99

%

(3)

Interest Bearing Deposits

 

65,551

 

82

0.50

%

 

55,393

 

312

2.23

%

FHLB stock

 

37,637

 

95

1.02

%

 

11,915

 

135

4.50

%

Total interest-earning assets

 

6,211,267

 

60,418

3.91

%

 

2,985,498

 

35,922

4.78

%

Non-interest-earning assets

 

724,516

 

317,515

Total assets

$

6,935,783

$

3,303,013

Deposits and Interest-bearing liabilities:
Interest bearing deposits

$

4,285,287

$

6,555

0.62

%

$

2,129,306

$

6,029

1.12

%

FHLB advances and other

 

120,417

 

168

0.56

%

 

85,339

 

431

2.00

%

Subordinated debentures

 

36,613

 

158

1.74

%

 

36,083

 

329

3.62

%

Notes payable

 

6,616

 

7

0.43

%

 

3,025

 

2

0.26

%

Total interest-bearing liabilities

 

4,448,933

 

6,888

0.62

%

 

2,253,753

 

6,791

1.20

%

Non-interest bearing deposits

 

1,452,719

 

-

-

 

 

589,326

 

-

-

 

Total including non-interest-bearing deposits

 

5,901,652

 

6,888

0.47

%

 

2,843,079

 

6,791

0.95

%

Other non-interest-bearing liabilities

 

106,625

 

48,893

Total liabilities

 

6,008,277

 

2,891,972

Stockholders' equity

 

927,506

 

411,041

Total liabilities and stockholders' equity

$

6,935,783

$

3,303,013

Net interest income; interest rate spread

$

53,530

3.29

%

$

29,131

3.58

%

Net interest margin (4)

3.47

%

3.88

%

Average interest-earning assets to average interest bearing liabilities

140

%

132

%

 

Nine Months Ended September 30,

2020

 

 

 

2019

Average

 

 

 

Yield

 

 

 

Average

 

 

 

Yield

Balance

 

Interest(1)

 

Rate(2)

 

 

 

Balance

 

Interest(1)

 

Rate(2)

Interest-earning assets:
Loans receivable

$

5,095,167

$

167,463

4.38

%

$

2,567,646

$

97,227

5.06

%

Securities

 

514,979

 

9,183

2.38

%

(3)

 

296,312

 

6,961

3.14

%

(3)

Interest Bearing Deposits

 

131,384

 

391

0.40

%

 

47,360

 

857

2.42

%

FHLB stock

 

45,604

 

861

2.52

%

 

12,491

 

533

5.71

%

Total interest-earning assets

 

5,787,134

 

177,898

4.09

%

 

2,923,809

 

105,578

4.83

%

Non-interest-earning assets

 

650,752

 

312,865

Total assets

$

6,437,886

$

3,236,674

Deposits and Interest-bearing liabilities:
Interest bearing deposits

$

3,929,881

$

21,761

0.74

%

$

2,094,693

$

16,615

1.06

%

FHLB advances and other

 

249,889

 

1,690

0.90

%

 

68,920

 

1,011

1.96

%

Subordinated debentures

 

36,261

 

610

2.24

%

 

36,083

 

1,043

3.86

%

Notes payable

 

8,077

 

32

0.53

%

 

4,355

 

23

0.71

%

Total interest-bearing liabilities

 

4,224,108

 

24,093

0.76

%

 

2,204,051

 

18,692

1.13

%

Non-interest bearing deposits

 

1,233,071

 

-

-

 

 

584,923

 

-

-

 

Total including non-interest-bearing deposits

 

5,457,179

 

24,093

0.59

%

 

2,788,974

 

18,692

0.90

%

Other non-interest-bearing liabilities

 

98,775

 

46,103

Total liabilities

 

5,555,954

 

2,835,077

Stockholders' equity

 

881,932

 

401,597

Total liabilities and stockholders' equity

$

6,437,886

$

3,236,674

Net interest income; interest rate spread

$

153,805

3.33

%

$

86,886

3.93

%

Net interest margin (4)

3.55

%

3.98

%

Average interest-earning assets to average interest bearing liabilities

137

%

133

%

Note: 2020 current quarter and year-to-date results include three and five months of operations from UCFC, respectively, compared to none for comparable periods in 2019.
(1) 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%.
(2) Annualized.
(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.
 
Selected Quarterly Information
Premier Financial Corp.
 
(dollars in thousands, except per share data)

3rd Qtr 2020

2nd Qtr 2020

1st Qtr 2020

4th Qtr 2019

3rd Qtr 2019

Summary of Operations
Tax-equivalent interest income (1)

$

60,418

 

$

62,705

 

$

54,773

 

$

36,473

 

$

35,922

 

Interest expense

 

6,888

 

 

8,145

 

 

9,059

 

 

6,743

 

 

6,791

 

Tax-equivalent net interest income (1)

 

53,530

 

 

54,560

 

 

45,714

 

 

29,730

 

 

29,131

 

Provision for credit losses

 

2,794

 

 

2,975

 

 

45,244

 

 

1,123

 

 

1,266

 

Core provision for credit losses (3)

 

2,794

 

 

2,975

 

 

19,295

 

 

1,123

 

 

1,266

 

Investment securities gains (losses)

 

1,480

 

 

(2

)

 

-

 

 

13

 

 

11

 

Non-interest income (excluding securities gains/losses)

 

23,520

 

 

23,017

 

 

13,999

 

 

11,803

 

 

11,831

 

Non-interest expense

 

43,563

 

 

37,984

 

 

42,310

 

 

24,721

 

 

23,264

 

Core non-interest expense (3)

 

38,445

 

 

35,885

 

 

30,824

 

 

23,839

 

 

22,724

 

Income tax expense (benefit)

 

6,259

 

 

7,303

 

 

(5,610

)

 

2,953

 

 

3,033

 

Net income (loss)

 

25,655

 

 

29,057

 

 

(22,482

)

 

12,517

 

 

13,171

 

Core net income (3)

 

28,587

 

 

30,715

 

 

7,470

 

 

13,214

 

 

13,598

 

Tax equivalent adjustment (1)

 

259

 

 

256

 

 

251

 

 

232

 

 

239

 

At Period End
Total assets

$

6,974,953

 

$

7,013,811

 

$

6,538,942

 

$

3,468,992

 

$

3,350,724

 

Earning assets

 

6,340,132

 

 

6,345,655

 

 

5,889,186

 

 

3,175,935

 

 

3,045,659

 

Loans

 

5,470,548

 

 

5,457,238

 

 

5,113,917

 

 

2,777,564

 

 

2,665,300

 

Allowance for loan losses

 

88,917

 

 

88,555

 

 

85,859

 

 

31,243

 

 

30,250

 

Deposits

 

5,795,757

 

 

5,759,843

 

 

4,994,148

 

 

2,870,325

 

 

2,760,615

 

Stockholders’ equity

 

959,025

 

 

940,968

 

 

916,843

 

 

426,167

 

 

418,046

 

Stockholders’ equity / assets

 

13.75

%

 

13.42

%

 

14.02

%

 

12.29

%

 

12.48

%

Goodwill

 

317,948

 

 

317,948

 

 

317,520

 

 

100,069

 

 

100,069

 

Average Balances
Total assets

$

6,935,783

 

$

7,005,783

 

$

5,357,598

 

$

3,425,097

 

$

3,303,013

 

Earning assets

 

6,211,267

 

 

6,247,037

 

 

4,862,532

 

 

3,107,224

 

 

2,985,498

 

Loans

 

5,555,621

 

 

5,389,805

 

 

4,317,857

 

 

2,688,519

 

 

2,624,314

 

Deposits and interest-bearing liabilities

 

5,901,652

 

 

5,963,127

 

 

4,488,003

 

 

2,954,049

 

 

2,843,079

 

Deposits

 

5,738,006

 

 

5,490,986

 

 

4,240,053

 

 

2,830,043

 

 

2,718,632

 

Stockholders’ equity

 

927,506

 

 

932,793

 

 

787,519

 

 

420,352

 

 

411,041

 

Stockholders’ equity / assets

 

13.37

%

 

13.31

%

 

14.70

%

 

12.27

%

 

12.44

%

Per Common Share Data
Net Income (Loss):
Basic

$

0.69

 

$

0.78

 

$

(0.71

)

$

0.63

 

$

0.67

 

Diluted

 

0.69

 

 

0.78

 

 

(0.71

)

 

0.63

 

 

0.66

 

Core diluted (3)

 

0.77

 

 

0.82

 

 

0.24

 

 

0.66

 

 

0.68

 

Dividends

 

0.22

 

 

0.22

 

 

0.22

 

 

0.22

 

 

0.19

 

Market Value:
High

$

21.24

 

$

20.11

 

$

32.05

 

$

32.39

 

$

29.44

 

Low

 

14.74

 

 

12.95

 

 

10.98

 

 

27.77

 

 

25.50

 

Close

 

15.58

 

 

17.67

 

 

14.74

 

 

31.32

 

 

28.97

 

Common Book Value

 

25.71

 

 

25.23

 

 

24.58

 

 

21.60

 

 

21.19

 

Shares outstanding, end of period (000s)

 

37,297

 

 

37,296

 

 

37,288

 

 

19,730

 

 

19,729

 

Performance Ratios (annualized)
Tax-equivalent net interest margin (1)

 

3.47

%

 

3.51

%

 

3.78

%

 

3.80

%

 

3.88

%

Return on average assets

 

1.49

%

 

1.67

%

 

-1.69

%

 

1.45

%

 

1.58

%

Core return on average assets (3)

 

1.64

%

 

1.76

%

 

0.56

%

 

1.53

%

 

1.63

%

Return on average equity

 

11.12

%

 

12.53

%

 

-11.48

%

 

11.81

%

 

12.71

%

Core return on average equity (3)

 

12.26

%

 

13.24

%

 

3.82

%

 

12.47

%

 

13.12

%

Efficiency ratio (2)

 

56.54

%

 

48.96

%

 

70.86

%

 

59.52

%

 

56.79

%

Core efficiency ratio (3)

 

49.90

%

 

46.26

%

 

51.62

%

 

57.40

%

 

55.48

%

Effective tax rate

 

19.61

%

 

20.09

%

 

19.97

%

 

19.09

%

 

18.72

%

Common dividend payout ratio (core)

 

28.57

%

 

26.83

%

 

91.67

%

 

34.92

%

 

28.36

%

Note: 2020 current quarter and year-to-date results include three and five months of operations from UCFC, respectively, compared to none for comparable periods in 2019.
(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) Efficiency ratio = Non-interest expense divided by sum of tax-equivalent net interest income plus non-interest income, excluding securities gains or losses, net.
(3) Core items exclude the impact of acquisition related provision ("CECL double-dip") and other charges. See non-GAAP reconciliations.
 
Selected Quarterly Information
Premier Financial Corp.
 
(dollars in thousands, except per share data)

3rd Qtr 2020

2nd Qtr 2020

1st Qtr 2020

4th Qtr 2019

3rd Qtr 2019

Loan Portfolio Composition
One to four family residential real estate

$

1,194,940

 

$

1,226,106

 

$

1,265,901

 

$

324,773

 

$

330,369

 

Construction

 

580,060

 

 

509,548

 

 

521,442

 

 

305,305

 

 

308,061

 

Commercial real estate

 

2,328,944

 

 

2,266,189

 

 

2,200,266

 

 

1,506,026

 

 

1,430,919

 

Commercial

 

1,263,565

 

 

1,244,549

 

 

897,865

 

 

578,071

 

 

537,806

 

Consumer finance

 

128,995

 

 

146,139

 

 

137,679

 

 

37,649

 

 

36,644

 

Home equity and improvement

 

281,010

 

 

290,459

 

 

301,146

 

 

122,864

 

 

123,871

 

Total loans

 

5,777,514

 

 

5,682,990

 

 

5,324,299

 

 

2,874,688

 

 

2,767,670

 

Less:
Undisbursed loan funds

 

300,174

 

 

221,137

 

 

206,236

 

 

94,865

 

 

100,260

 

Deferred loan origination fees

 

6,792

 

 

4,615

 

 

4,146

 

 

2,259

 

 

2,110

 

Allowance for credit losses - loans

 

88,917

 

 

88,555

 

 

85,859

 

 

31,243

 

 

30,250

 

Net Loans

$

5,381,631

 

$

5,368,683

 

$

5,028,058

 

$

2,746,321

 

$

2,635,050

 

 
Allowance for credit losses - loans
Beginning allowance

$

88,555

 

$

85,859

 

$

31,243

 

$

30,250

 

$

28,934

 

CECL adoption

 

-

 

 

-

 

 

2,354

 

 

-

 

 

-

 

Acquisition related allowance/provision (non PCD)

 

-

 

 

-

 

 

25,949

 

 

-

 

 

-

 

Acquisition related allowance/goodwill (PCD)

 

-

 

 

-

 

 

7,698

 

 

-

 

 

-

 

Provision for credit losses - loans

 

3,658

 

 

1,868

 

 

17,837

 

 

1,084

 

 

1,327

 

Net recoveries (charge-offs)

 

(3,296

)

 

828

 

 

778

 

 

(91

)

 

(11

)

Ending allowance

$

88,917

 

$

88,555

 

$

85,859

 

$

31,243

 

$

30,250

 

 
Credit Quality
Total non-performing loans (1)

$

48,322

 

$

39,470

 

$

32,692

 

$

13,437

 

$

14,677

 

Real estate owned (REO)

 

521

 

 

573

 

 

548

 

 

100

 

 

-

 

Total non-performing assets (2)

$

48,843

 

$

40,043

 

$

33,240

 

$

13,537

 

$

14,677

 

Net charge-offs (recoveries)

 

3,296

 

 

(828

)

 

(778

)

 

91

 

 

11

 

 
Restructured loans, accruing (3)

 

8,499

 

 

7,916

 

 

7,474

 

 

8,427

 

 

10,334

 

 
Allowance for credit losses - loans / loans

 

1.63

%

 

1.62

%

 

1.68

%

 

1.12

%

 

1.13

%

Allowance for credit losses - loans / non-performing assets

 

182.05

%

 

221.15

%

 

259.07

%

 

230.80

%

 

206.10

%

Allowance for credit losses - loans / non-performing loans

 

184.01

%

 

224.36

%

 

263.43

%

 

232.51

%

 

206.10

%

Non-performing assets / loans plus REO

 

0.89

%

 

0.73

%

 

0.65

%

 

0.49

%

 

0.55

%

Non-performing assets / total assets

 

0.70

%

 

0.57

%

 

0.51

%

 

0.39

%

 

0.44

%

Net charge-offs / average loans (annualized)

 

0.24

%

 

-0.06

%

 

-0.07

%

 

0.01

%

 

0.00

%

 
Deposit Balances
Non-interest-bearing demand deposits

$

1,436,807

 

$

1,454,842

 

$

1,041,315

 

$

630,359

 

$

604,129

 

Interest-bearing demand deposits and money market

 

2,511,263

 

 

2,361,486

 

 

2,069,723

 

 

1,198,012

 

 

1,124,208

 

Savings deposits

 

674,354

 

 

671,650

 

 

606,508

 

 

303,166

 

 

294,594

 

Retail time deposits less than $250,000

 

975,658

 

 

1,078,758

 

 

1,091,038

 

 

631,253

 

 

634,737

 

Retail time deposits greater than $250,000

 

197,675

 

 

193,107

 

 

185,564

 

 

107,535

 

 

102,947

 

Total deposits

$

5,795,757

 

$

5,759,843

 

$

4,994,148

 

$

2,870,325

 

$

2,760,615

 

(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.
(3) Accruing restructured loans are loans with known credit problems that are not contractually past due and therefore are not included in non-performing loans.
 
Loan Delinquency Information
Premier Financial Corp.
 
(dollars in thousands)

Total Balance

 

Current

 

30 to 89 days

past due

 

% of

Total

 

Non Accrual

Loans

 

% of

Total

 
September 30, 2020
One to four family residential real estate

$

1,194,940

$

1,173,175

$

10,562

0.9

%

$

11,203

0.9

%

Construction

 

580,060

 

578,110

 

1,587

0.3

%

 

363

0.1

%

Commercial real estate

 

2,328,944

 

2,305,223

 

703

0.0

%

 

23,018

1.0

%

Commercial

 

1,263,565

 

1,253,474

 

212

0.0

%

 

9,879

0.8

%

Consumer finance

 

128,995

 

125,260

 

2,682

2.1

%

 

1,053

0.8

%

Home equity and improvement

 

281,010

 

273,041

 

5,125

1.8

%

 

2,844

1.0

%

Total loans

$

5,777,514

$

5,708,283

$

20,871

0.4

%

$

48,360

0.8

%

 
June 30, 2020
One to four family residential real estate

$

1,226,106

$

1,213,482

$

6,056

0.5

%

$

6,568

0.5

%

Construction

 

509,548

 

509,548

 

-

0.0

%

 

-

0.0

%

Commercial real estate

 

2,266,189

 

2,244,412

 

1,040

0.0

%

 

20,737

0.9

%

Commercial

 

1,244,549

 

1,233,703

 

680

0.1

%

 

10,166

0.8

%

Consumer finance

 

146,139

 

144,555

 

988

0.7

%

 

596

0.4

%

Home equity and improvement

 

290,459

 

285,858

 

2,237

0.8

%

 

2,364

0.8

%

Total loans

$

5,682,990

$

5,631,558

$

11,001

0.2

%

$

40,431

0.7

%

 
September 30, 2019
One to four family residential real estate

$

330,369

$

325,573

$

1,787

0.5

%

$

3,009

0.9

%

Construction

 

308,061

 

308,061

 

-

0.0

%

 

-

0.0

%

Commercial real estate

 

1,430,919

 

1,414,694

 

8,012

0.6

%

 

8,213

0.6

%

Commercial

 

537,806

 

534,321

 

516

0.1

%

 

2,969

0.6

%

Consumer finance

 

36,644

 

36,413

 

231

0.6

%

 

-

0.0

%

Home equity and improvement

 

123,871

 

122,103

 

1,282

1.0

%

 

486

0.4

%

Total loans

$

2,767,670

$

2,741,165

$

11,828

0.4

%

$

14,677

0.5

%

 
 
COVID-19 Update
Premier Financial Corp.
($ in thousands)
 
Deferrals Update

9/30/2020

6/30/2020

Commercial loan deferrals

$

434,554

 

$

739,632

 

% of commercial loans

 

11.4

%

 

19.7

%

% of total loans

 

7.9

%

 

13.5

%

Retail loan deferrals

$

48,187

 

$

73,266

 

% of retail loans

 

2.9

%

 

4.3

%

% of total loans

 

0.9

%

 

1.3

%

Total loan deferrals

$

482,741

 

$

812,898

 

% of total loans

 

8.8

%

 

14.9

%

 
Commercial High Sensitivity Portfolio Update

As of 9/30/20

 

As of 6/30/20

Industry

% of Total

Loans

 

% Balances

Deferred

 

% Classified

in Subsector

 

% of Total

Loans

 

% Balances

Deferred

 

% Classified

in Subsector

Traveler Accommodation

 

2.8

%

 

60.7

%

 

3.9

%

 

2.8

%

 

86.9

%

 

0.7

%

Food Service

 

1.0

%

 

22.4

%

 

0.6

%

 

1.1

%

 

50.0

%

 

0.6

%

Sub-total

 

3.7

%

 

51.0

%

 

3.1

%

 

3.8

%

 

76.7

%

 

0.6

%

Retail Trade and CRE

 

9.4

%

 

17.7

%

 

1.3

%

 

9.6

%

 

34.3

%

 

2.2

%

Long-term Care

 

1.9

%

 

10.8

%

 

11.0

%

 

2.0

%

 

26.0

%

 

4.1

%

Arts/Entertainment/Recreation

 

0.4

%

 

37.8

%

 

2.5

%

 

0.4

%

 

42.1

%

 

4.6

%

Energy

 

0.1

%

 

0.0

%

 

0.0

%

 

0.1

%

 

0.0

%

 

0.0

%

Total

 

15.6

%

 

25.2

%

 

3.0

%

 

15.9

%

 

43.4

%

 

2.1

%

 
Commercial Loan Deferral Rollforward

6/30/20

Balance

 

New

Deferrals

 

Payoffs/

Changes

 

Return to

Pay(1)

 

9/30/20

Balance

 

3Q20

Extensions

Interest only 1-3 months

$

28,134

 

$

5,032

 

$

9,326

 

$

(30,178

)

$

12,314

 

$

10,988

 

Interest only 4-5 months

 

146,826

 

 

3,976

 

 

(12,746

)

 

(111,113

)

 

26,943

 

 

-

 

Interest only 6 months

 

55,174

 

 

7,182

 

 

1,415

 

 

(8,575

)

 

55,196

 

 

2,392

 

Deferred payment 1-90 days

 

138,966

 

 

11,155

 

 

(12,844

)

 

(80,015

)

 

57,262

 

 

12,422

 

Deferred payment 91-179 days

 

93,262

 

 

328

 

 

(3,250

)

 

(83,843

)

 

6,497

 

 

4,946

 

Deferred payment 180 days

 

277,270

 

 

6,102

 

 

(1,166

)

 

(5,864

)

 

276,342

 

 

-

 

Total

$

739,632

 

$

33,775

 

$

(19,265

)

$

(319,588

)

$

434,554

 

$

30,748

 

 
Commercial Loan Deferral Expirations Update

9/30/20

Balance

October

$

277,010

 

November

 

123,851

 

December

 

12,226

 

January

 

14,000

 

February

 

5,075

 

March+

 

2,392

 

Total

$

434,554

 

 
(1) Represents approximately 76.4% of previously disclosed third quarter 2020 scheduled expirations.
 
Non-GAAP Reconciliations
Premier Financial Corp.

Nine months ended

(In thousands, except per share and ratio data)

9/30/20

 

9/30/19

 

3rd Qtr 2020

 

2nd Qtr 2020

 

1st Qtr 2020

 

4th Qtr 2019

 

3rd Qtr 2019

Acquisition related charges (pre-tax)

$

17,295

 

$

540

 

$

3,711

 

$

2,099

 

$

11,486

 

$

882

 

$

540

 

Less: Tax benefit of acquisition related charges

 

3,254

 

 

113

 

 

779

 

 

441

 

 

2,034

 

 

185

 

 

113

 

Acquisition related charges (after-tax)

$

14,041

 

$

427

 

$

2,932

 

$

1,658

 

$

9,452

 

$

697

 

$

427

 

 
Total non-interest expenses

$

123,856

 

$

72,364

 

$

43,563

 

$

37,984

 

$

42,310

 

$

24,721

 

$

23,264

 

Less: Acquisition related charges (pre-tax)

 

17,295

 

 

540

 

 

3,711

 

 

2,099

 

 

11,486

 

 

882

 

 

540

 

Less: FHLB prepayment charges(1)

 

1,407

 

 

-

 

 

1,407

 

 

-

 

 

-

 

 

-

 

 

-

 

Core non-interest expenses

$

105,154

 

$

71,824

 

$

38,445

 

$

35,885

 

$

30,824

 

$

23,839

 

$

22,724

 

 
Acquisition related provision (pre-tax)

$

25,949

 

$

-

 

$

-

 

$

-

 

$

25,949

 

$

-

 

$

-

 

Less: Tax benefit of acquisition related provision

 

5,449

 

 

-

 

 

-

 

 

-

 

 

5,449

 

 

-

 

 

-

 

Acquisition related provision (after-tax)

$

20,500

 

$

-

 

$

-

 

$

-

 

$

20,500

 

$

-

 

$

-

 

 
Provision for credit losses

$

51,014

 

$

1,761

 

$

2,794

 

$

2,975

 

$

45,244

 

$

1,123

 

$

1,266

 

Less: Acquisition related provision (pre-tax)

 

25,949

 

 

-

 

 

-

 

 

-

 

 

25,949

 

 

-

 

 

-

 

Core provision for credit losses

$

25,065

 

$

1,761

 

$

2,794

 

$

2,975

 

$

19,295

 

$

1,123

 

$

1,266

 

 
Non-interest income

$

62,013

 

$

33,141

 

$

25,000

 

$

23,015

 

$

13,999

 

$

11,816

 

$

11,842

 

Less: Securities gains (losses)

 

1,478

 

 

11

 

 

1,480

 

 

(2

)

 

-

 

 

13

 

 

11

 

Non-interest income (excluding securities gains/losses)

$

60,535

 

$

33,130

 

$

23,520

 

$

23,017

 

$

13,999

 

$

11,803

 

$

11,831

 

 
Tax-equivalent net interest income

$

153,805

 

$

86,886

 

$

53,530

 

$

54,560

 

$

45,714

 

$

29,730

 

$

29,131

 

Non-interest income (excluding securities gains/losses)

 

60,549

 

 

33,130

 

 

23,520

 

 

23,017

 

 

13,999

 

 

11,803

 

 

11,831

 

Total revenues

 

214,354

 

 

120,016

 

 

77,050

 

 

77,577

 

 

59,713

 

 

41,533

 

 

40,962

 

Core non-interest expenses

$

105,154

 

$

71,824

 

$

38,445

 

$

35,885

 

$

30,824

 

$

23,839

 

$

22,724

 

Core efficiency ratio

 

49.06

%

 

59.85

%

 

49.90

%

 

46.26

%

 

51.62

%

 

57.40

%

 

55.48

%

 
Income (loss) before income taxes

$

40,181

 

$

45,167

 

$

31,914

 

$

36,360

 

$

(28,092

)

$

15,470

 

$

16,204

 

Add: Provision for credit losses

 

51,014

 

 

1,761

 

 

2,794

 

 

2,975

 

 

45,244

 

 

1,123

 

 

1,266

 

Pre-tax pre-provision income

 

91,195

 

 

46,928

 

 

34,708

 

 

39,335

 

 

17,152

 

 

16,593

 

 

17,470

 

Add: Acquisition related charges (pre-tax)

 

17,295

 

 

540

 

 

3,711

 

 

2,099

 

 

11,486

 

 

882

 

 

540

 

Core pre-tax pre-provision income

$

108,490

 

$

47,468

 

$

38,419

 

$

41,434

 

$

28,638

 

$

17,475

 

$

18,010

 

Average total assets

$

6,437,886

 

$

3,236,674

 

$

6,935,783

 

$

7,005,783

 

$

5,357,598

 

$

3,425,097

 

$

3,303,013

 

Core pre-tax pre-provision return on average assets

 

2.25

%

 

1.97

%

 

2.20

%

 

2.38

%

 

2.15

%

 

2.02

%

 

2.16

%

 
Net income (loss)

$

32,230

 

$

36,852

 

$

25,655

 

$

29,057

 

$

(22,482

)

$

12,517

 

$

13,171

 

Add: Acquisition related provision (after-tax)

 

20,500

 

 

427

 

 

-

 

 

-

 

 

20,500

 

 

-

 

 

-

 

Add: Acquisition related charges (after-tax)

 

14,041

 

 

-

 

 

2,932

 

 

1,658

 

 

9,452

 

 

697

 

 

427

 

Core net income

$

66,771

 

$

37,279

 

$

28,587

 

$

30,715

 

$

7,470

 

$

13,214

 

$

13,598

 

 
Diluted shares - Reported

 

35,482

 

 

19,943

 

 

37,334

 

 

37,324

 

 

31,642

 

 

19,895

 

 

19,875

 

Add: Dilutive shares for core net income

 

-

 

 

-

 

 

-

 

 

-

 

 

121

 

 

-

 

 

-

 

Diluted shares - Core

 

35,482

 

 

19,943

 

 

37,334

 

 

37,324

 

 

31,763

 

 

19,895

 

 

19,875

 

Core diluted EPS

$

1.88

 

$

1.87

 

$

0.77

 

$

0.82

 

$

0.24

 

$

0.66

 

$

0.68

 

 
Average total assets

$

6,437,886

 

$

3,236,674

 

$

6,935,783

 

$

7,005,783

 

$

5,357,598

 

$

3,425,097

 

$

3,303,013

 

Core return on average assets

 

1.39

%

 

1.54

%

 

1.64

%

 

1.76

%

 

0.56

%

 

1.53

%

 

1.63

%

 
Average total equity

$

881,932

 

$

401,597

 

$

927,506

 

$

932,793

 

$

787,519

 

$

420,352

 

$

411,041

 

Core return on average equity

 

10.11

%

 

12.44

%

 

12.26

%

 

13.24

%

 

3.82

%

 

12.47

%

 

13.12

%

 
Note: 2020 current quarter and year-to-date results include three and eight months of operations from UCFC, respectively, compared to none for comparable periods in 2019.
(1) Represents prepayment penalties on FHLB early extinguishments funded by gains on securities sales that are excluded from revenues for efficiency ratio calculation.

 

Contacts

Paul Nungester
EVP and CFO
419.785.8700
PNungester@yourpremierbank.com

Release Summary

PREMIER FINANCIAL CORP. ANNOUNCES STRONG THIRD QUARTER EARNINGS AND $0.22 PER SHARE DIVIDEND

Contacts

Paul Nungester
EVP and CFO
419.785.8700
PNungester@yourpremierbank.com