Premier Financial Corp.

Good morning and welcome to the Premier Financial Corporation first quarter 2021 earnings conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad. To withdraw your question, please press star then two. Please note this event is being recorded. I would now like to turn the conference over to Tara Murphy, Vice President. Please go ahead.

Thank you. Good morning, everyone, and thank you for joining us for today's first quarter 2021 earnings conference call. This call is also being webcast, and the audio replay will be available at the Premier Financial Corp. website at premierfincorp.com. Following leadership's prepared comments on the company's strategy and performance, they will be available to take your questions. Before we begin, I'd like to remind you that during the conference call today, including during the question and answer period, you may hear forward-looking statements related to future financial results and business operations for Premier Financial Corp. Actual results may differ materially from current management forecasts and projections as a result of factors over which the company has no control. Information on these risk factors and additional information on forward-looking statements are included in the news release and in the company's reports on file with the Securities and Exchange Commission. And now, I'll turn the call over to Mr. Small for his comments.

Thank you, Tara, and good morning to all. I appreciate having you with us today. We are very pleased to report record first quarter earnings of $41 million, or $1.10 a share. We delivered well against our traditional earnings elements, and when combined with some very favorable outcomes on specific income drivers, it made for an outsized performance figure for the quarter. Three topics certainly merit discussion. First, the strengthening economic outlook combined with the benign credit charge-off levels drove our loan provision downward. Second, the escalation of the 10-year Treasury as of 3-31 led to a meaningful recapture of our MSR. That was not unexpected for 21 over the course of the year, but certainly rates moved more quickly than we had anticipated. The third item, we benefited from a favorable stock valuation move in our bank equity portfolio. We were up over 15% for the year. However, these favorable outcomes should not overshadow the more typical drivers of the financial performance delivered by the business units across the organization. New commercial loan commitments for the quarter were very strong, closing in on $200 million. That effect was somewhat masked by the continued decline in commercial line utilization rates due to the superior liquidity positions our clients find they are experiencing. Currently, we run, or historically I should say, we run a commercial utilization rate of about 50%, and we're currently experiencing a 30% run rate. And that moved downward 5% in the first quarter alone. Our consumer line utilization is performing in a similar fashion, with utilization rates down 10% in absolute terms versus normal levels. We do see these utilization declines as transitory. As the economy reopens and consumer and businesses return to their normal, if not more active behaviors, we expect a return to normal utilization levels. Deposits expanded 5% for the quarter. and we expect to see additional growth over the remainder of the year due to the success of this year's round of PPP funds combined with continuous stimulus benefits for households and new funding from Washington that's landing in municipal accounts. The outsized growth in deposits will lead to a larger balance sheet and expanded securities portfolio. This is favorable in terms of net interest dollars, although it's a drag in terms of the net interest margin. We'll remain focused on serving our clients welcoming their deposits, and focus on investing those funds to the best balance of yield and duration considerations. Our clients are handling their personal and business balance sheets very effectively. We see already historical low delinquency levels actually falling further across the board, and the typical portfolio credit stats remain stable. Residential mortgage origination continues to excel, a continuation of last year's theme. March alone was the highest month of origination in our history, with an equal mix of purchase, new construction, and refinance activity. Volume is strong. Gain on sale margin is still running ahead of historical levels, although moderating somewhat from the extremely favorable performance in 2021. And the servicing valuation allowance for the quarter is favorable as expected. We see fees related to consumer behavior on the rise. so think debit card income, et cetera, and certainly a good omen for the remainder of the year. Expenses ran a bit hot for the quarter for some understood reasons. Paul will share more details, but I would say that there was an increase related to 2020 performance payout true-ups that occurred in the first quarter, and a portion is just timing between quarters. There is an amount that we see as run rate related, and we expect to address that over the remainder of the year and have it offset by year's end. At this point, I'll turn it over to Paul for more comments, and I'll come back and close with some thoughts on guidance toward the end of the call.