Premier Financial Corp.

Good morning and welcome to the Premier Financial Corp fourth quarter 2022 earnings conference call. All participants will be in a listen-only mode. After today's presentation, there will be an opportunity to ask questions. If you would like to ask a question, please press star followed by one on your telephone keypad. Please note, this event is being recorded. I would now like to turn the conference over to Paul Nungesta from Premier Financial Corp. Please go ahead.

Thank you. Good morning, everyone. Thank you for joining us for today's fourth quarter 2022 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 our prepared comments on the company's strategy and performance, we 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 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.

Now I'll turn the call over to Gary for his opening comments. Thank you, Paul, and good morning to everyone. We really appreciate you joining us today. Just as a comment as we begin, I want to acknowledge that Matt Garrity, a gentleman who's been a participant on this call for a number of years, will not be with us this morning. Matt has accepted a role as CEO at a very fine institution over in Western Massachusetts, and I wanted to take a moment to thank him for all he's contributed to us over the years. It's very much appreciated, and we wish him well in his new endeavor. Last evening, we reported net income for the quarter of $25.3 million, or $0.71 a share, with full earnings for the year topping $102 million, or $2.85 a share. The fourth quarter saw a continuation of the theme for Premier in 2022, strong loan and deposit growth driving net interest income, tempered by higher growth-related loan loss provisions and a weakened residential lending environment. In addition, Q4 expenses underperformed uncharacteristically for the organization this quarter. For the year, loans were up 20%, deposits were up 7.7%, and net interest income was strong. Through the three first quarters of the year, excuse me, the first three quarters of the year, deposit pricing lagged very purposefully and margins expanded. Fourth quarter results reflect higher repricing velocity in select deposit portfolios, along with an increase in non-core funding, and thus the margin has retracted. The Fed's actions over the third and fourth quarters have elevated our clients' deposit pricing expectations, and when combined with our increased utilization of non-core funding sources, our total cost of funds is likely to remain elevated in the near term. Beta management has never been more important. We've made meaningful strides in repricing our most elastic deposit business lines to ensure deposit retention and in support of growing our deposit base in 23. And Paul will have much more on this topic shortly. Overall loan growth for the quarter was up $239 million. That's 15% on an annualized basis. That ran a little hotter than we had telegraphed at the end of the third quarter. Commercial growth was up just shy of 13%. The higher-than-anticipated loan growth triggered a hike in our loan provision figures for the quarter as well, as it has all year, as is CECL's impact on such growth. Full-year total loan growth totaled $1.17 billion, with the commercial growth of 20%, consumer was up 26%, and residential mortgage growth came in at 25%. The new money commercial commitments were $1.75 billion for the year. Obviously, a very big year for the team and good momentum going forward and a nice combination of business to both existing and new clients. Our C&I originations totaled 41% in the fourth quarter, and it continues to be a primary focus for our commercial team, while line utilization remains under 40% because our clients are utilizing their cash on hand. Residential mortgage originations for the quarter came in at about $200 million and $1 billion for the year. That's about 75% of the expectation we had when we entered 2022 when the year looked so different. Difficult market in a challenging environment to be selling to the Fannie and Freddie network. Our gain on sale continues to underperform historical levels in terms of basis points. Swings in residential construction hedges valuations unfavorably impacted fourth quarter revenue. as falling residential rate environment in November actually negated a positive hedge position that we recorded in the third quarter. And so net-net, two quarters combined, the right number got posted, but it certainly had an unfavorable impact on the fourth quarter alone. We estimate it to be about four cents. So think of that as timing within the two quarters. 1231 delinquency with 74 basis points, and that's very much in line with the performance over the course of the year. Net charge-off trends remain very low. We had one and a half basis points of net charge-off for the year when you exclude a large charge-off that we took in the mid-year that we had specifically reserved for in 2021. Non-performing loans were down 4% versus the third quarter. Paul, I'll give it over to you for more details. Thank you, Gary.