Premier Financial Corp.

Good morning and welcome to the Premier Financial Court 4th Quarter 2023 Earnings Conference Call. All participants will be in listen-only mode. After today's presentation, there will be an opportunity to ask questions. To register your question, please press star followed by 1 on your telephone keypad. If you wish to revoke your question, please press star followed by 2. Please note this event is being recorded. I would now like to turn the conference over to Paul Nungster with Premier Financial Corp. Please go ahead.

Thank you. Good morning, everyone, and thank you for joining us for today's fourth 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. I'll now turn the call over to Gary for his opening remarks.

Thank you, Paul, and good morning to all for joining us. Per our release, fourth quarter earnings totaled $20.1 million, or 56 cents per share, for the quarter. The results lagged our third quarter performance as anticipated due to lower net interest margin and the seasonal impacts of our residential business as guided at the end of the third quarter. However, the quarter did also include a couple of unanticipated non-recurring or timing items that left the earnings for the quarter slightly below our expectations. And now I'll run down the particulars. First, a quick look at capital. As you noticed, our earnings combined with the favorable AOCI movement brings our tangible book value per share to $18.69. That's a really good, strong progression over the last three quarters, which, of course, included the big pickup we had on the sale of our insurance. operation, but evidence that we've got more upside there and we've made good progress during the year. Loan growth for the quarter totaled 2.5% on an annualized basis, and that brings our full loan growth for the year to 4.3%, and that was in line with the expectations that we had for the year coming off of a 20-plus percent growth year in 22. We were designed to be a 4% shop this year. Annualized commercial growth totaled 5.8%. And for the full year, it grew 4.2%. Again, controlled growth was our mantra for 23. Our consumer deposits annualized for the quarter grew just shy of 8%. And when you combine third quarter and fourth quarter figures, our annualized growth for those two quarters was 6.7%. That's a really strong number for us. Non-interest-bearing deposits also stabilized, delivering 2% annualized growth over that same period of Q3 and Q4 combined. Good deposit trend for customer deposits over the second half of the year. Net interest margin did decrease eight basis points from Q4 to Q3, and that was a bit more slippage than we provided in guidance on our last call, which was about four basis points on our high-end expectation. We had a very effective new money deposit and household acquisition program that we initiated early in the quarter. and it contributed to the decline. We have selected targeted markets across the organization for a bit more aggressive deposit gathering activity, and it totals less than 10% of our locations. So we're happy with that particular outcome. The trade-off was in the margin. Fee income stories for the quarter. Our wealth fee income increased 18% versus Q3, and it really reflects, as we all saw, the strong finish we had in equity and fixed income markets at the end of the year. and should carry forward into 24. Mortgage banking income declined more than the typical seasonal decline anticipated for the quarter. Significant movement in 10-year treasury yields toward the end of December drove unfavorable valuation adjustments on the MSR asset and on our construction commitment hedges. We benefited from the same volatility when the 10-year was rising in the third quarter. So it's just one of those lumpy factors in our business Expenses were right on the mark, just shy of $38 million for the quarter. And on the credit front, our non-performing assets declined 10% for the quarter. Delinquencies did tick up a bit in auto and residential real estate, but each remains within historical norms. Net charge-offs for the quarter were driven by a single credit, 70% or so of the total. And on the full-year basis, net charge-offs still come in at six basis points, and we're very pleased with that outcome. Our special mention rating category increased in Q4, and that was driven by a single additional relationship. For the year, that brings three credits to the front that make up the lion's share of the increase in our special mention category. There's no central theme. Each is a unique industry. Each is still accruing, and we have good expectations. They represent two C&I clients and one investment in multifamily real estate. The combination of those two created about a five to six cent reduction in the quarter relative to the additional provision that we set aside for those two items. Again, credit can be a bit lumpy. We're very pleased with our full year performance on that front, but worth a mention here in the fourth quarter. And now I'll turn it over to Paul for some more performance details.