Premier Financial Corp.

Hello, everyone. Good morning, and welcome to the Premier Financial Corp First Quarter 2023 Earnings Conference Call. All participants will be in a listen-only mode. After today's presentation, there will be an opportunity to ask questions. You can register to ask a question by pressing star followed by 1 on your telephone keypad. Please note, this event is being recorded. I will now like to turn the call over to Paul Nungaster with Primary Financial Corp, please go ahead.

Thank you. Good morning everyone and thank you for joining us for today's first quarter 2023 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 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 Gary for his comments.

Thank you, Paul, and good morning, everyone. Last evening, we reported net income for the quarter of $18.1 million, or 51 cents per share. The results reflected expected challenges related to margin management, funding repricing, and mixed changes. And we also included a number of unfavorable, non-recurring items that we highlighted in the release. we wanted to provide our path to a more recognizable quarterly performance figure. While our call will focus on outgo elements of our performance for the most part, we'll be happy to share more color on the non-recurring and timing items that were outlined in the release. Before moving to the balance sheet management topics, I'll touch on a few Q1 business performance highlights. Commercial loans were up 6.5% on an annualized basis for the first period. And 41% was C&I oriented, which is consistent with the progress that we've made in prior quarters. And that's our main focus of the day. Wealth and asset management team growth saw new business growth in the first quarter was the best that we've had in two years of any quarter. Very strong. Our insurance business saw Property and casualty premium-driven revenue up $300,000 for the quarter versus our expectations, and we expect a continuation of that theme over the remainder of the year. Credit remains well in check. We're steady on our MPAs, lower delinquency, and an ongoing commercial credit review process. It's a rigorous review, stress testing, and all that goes with that. At this point, our clients are handling the new environment very effectively. First quarter margin landed at 290 basis points for the quarter. Results reflected that full quarter impact of margin deterioration that we began to experience toward the end of the fourth quarter of last year. Our January efforts focused on addressing deposit repricing velocity, product mix movement, and adjusting promotional programs to stabilize our margin. February and March margin did stabilize. They were separated by just two basis points. Although the headline-grabbing industry events in March drove more unfavorable mixed activity in the commercial and public fund sectors. Going forward, we're focused on addressing the needs of the most elastic components of our funding sources and to continue to attract new money in all business segments. We need to grow our deposit base. Ultimately, looking to improve our loan-to-deposit ratio as well. We're going to work both sides of that equation. We'll improve balance sheet efficiency, net interest income margin, and capital utilization. To give a little history, beginning in the mid-November 22 timeframe, we came out very strong with a consumer deposit offering to drive new business and retain our great existing book. Our promotions generated new business activity and a bit too much velocity of movement within our existing book. We see that in our deposit betas. we're running a touch higher than the industry-based data that we have available. And that's an opportunity for us to recalibrate as we come to the end of promotional periods over the next few months. Business deposits, certainly a strength for Premier over the last two years, experienced a pause in the first quarter. We expected a cyclical decline in the book, and that's what we received. It's isolated to a handful of clients, and it's not a systemic issue. However, March events changed the story a bit. Balances did remain steady over the month, but the mix was less favorable as commercial clients looked for more protection given the circumstances, and those were more costly solutions such as ICS and so forth. We have details to share regarding liquidity, capital, uninsured deposits, all the issues of the day. I'm going to turn it back to Paul to provide more specifics.