Premier Financial Corp (PFC) Q1 2024 Earnings Call Transcript Highlights: Navigating Challenges ...

GuruFocus Research
3 min read

In This Article:

  • Net Income: $17.8 million, with earnings per share of $0.50.

  • Deposit Growth: Average annual growth at 2.6%; consumer deposits up 7.5% annualized.

  • Commercial Deposits: Decrease of $86 million or 8% in January.

  • Net Interest Margin: Decrease by six to seven basis points due to commercial deposit decline.

  • Loan Balances: Flat on a linked quarter basis; commercial payoffs and new business funding as planned.

  • Noninterest Income: Increased by $0.7 million to $12.5 million, driven by mortgage banking and wealth management.

  • Expense Management: Expenses at $39.9 million, up $2 million linked quarter; year-over-year expenses down 7%.

  • Provision for Credit Losses: Benefit of $133,000, with net charge-offs at 0.02% of average loans.

  • Capital Ratios: CET1 at 12%, total capital at 14.35%.

  • Guidance Adjustments: Net interest income forecast down 2% from 2023, non-interest income revised to $49 million, expense guidance adjusted to $156 million.

Release Date: April 24, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Q & A Highlights

Q: Can you comment on the potential need to further draw wholesale sources as we move through the year? A: Paul Nungester, CFO, noted that Premier Financial aims to match deposit growth with earning asset growth, expecting to maintain flat levels of wholesale fundings throughout the year, adjusting the mix between FHLB and brokered deposits based on pricing advantages.

Q: Could you provide any details on the credits that drove the migration from special mention to substandard? A: Gary Small, CEO, explained that the migration involved the same accruing credit, with a clear path forward planned for the next quarters. It was not a new credit issue but a reclassification within their system.

Q: What rates are you seeing new loans coming on the books, particularly in the commercial and residential segments? A: Paul Nungester, CFO, mentioned that new commercial loans are being priced north of 8%, holding steady despite competitive pressures. Residential rates are influenced by the market, with pristine 30-year fixed commitments around 7.35% to 7.50%.

Q: Can you provide more color on the early March repricing program to lower deposit funding costs? A: Paul Nungester, CFO, detailed that they have been segmenting their deposit book and rolling back rates on matured or maturing deposits to test retention and elasticity. They are proactively adjusting rates rather than waiting for Fed moves.

Q: How are you managing the credit risk, especially with any stress on debt service coverage ratios? A: Paul Nungester, CFO, noted that they conducted a detailed review of all significant credits, finding some tightening in coverage ratios but no immediate concerns. Credits that slightly fell below preferred levels are still performing and expected to improve.

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