Premier Financial Corp. Announces Strong Quarterly and Annual Earnings and Dividend Increase
Premier Financial Corp. (PFC) reported fourth quarter 2020 net income of $30.8 million, or $0.82 per diluted share, up from $12.5 million, or $0.63 per share in Q4 2019. For the full year, net income was $63.1 million, or $1.75 per share, compared to $49.4 million or $2.48 per share in 2019. The acquisition of United Community Financial Corp significantly impacted these results. Core earnings per share increased by 9%. Non-interest income rose to $18.7 million from $11.8 million year-over-year, while total assets grew to $7.21 billion, reflecting strong post-merger performance.
- Fourth quarter net income increased to $30.8 million, up 146% year-over-year.
- Full-year net income rose to $63.1 million, compared to $49.4 million in 2019.
- Core earnings per share increased nearly 9% year-over-year.
- Non-interest income grew to $18.7 million from $11.8 million in Q4 2019.
- Total assets reached $7.21 billion, a significant increase from $3.47 billion year-over-year.
- Full-year net income per share declined to $1.75 from $2.48 in 2019.
- Acquisition-related charges impacted both quarterly and annual earnings significantly, totaling $19.5 million for the year.
Premier Financial Corp. (Nasdaq: PFC) (“Premier” or the “Company”) announced today 2020 fourth quarter and year-end results including solid core profitability. On a GAAP basis, net income for the fourth quarter of 2020 was
“With core earnings per share up almost
CEO transition
The Boards of Directors and Donald P. Hileman set the date for his transition from CEO of Premier Financial Corp. and Premier Bank to Executive Chairman of both Boards of Directors at March 31, 2021, consistent with plans outlined in the Agreement and Plan of Merger between the Company and UCFC, dated September 9, 2019. On April 1, 2021, Gary M. Small will become CEO and President of both Premier Financial Corp. and Premier Bank and remain a member of the Boards of Directors.
“Don’s strong leadership as CEO over the past seven years and through the UCFC merger has been instrumental in creating a strong foundation for the continued success of the company,” said Gary M. Small, President of Premier. “We’ve worked closely over the past 16 months, preparing to ensure this is a smooth transition.”
Integration update
As previously announced, on January 31, 2020, the Company completed the strategic merger of equals with UCFC under which UCFC merged into Premier in a stock-for-stock transaction. The year-over-year comparison of Company results is substantially impacted by the UCFC merger, with 2020 fourth quarter and full year results including three and eleven months of operations from UCFC, respectively, compared to none for the comparable periods in 2019. In June, the Company launched its newly designed logo and brand identity for Premier Financial Corp. and Premier Bank. The new tagline “Powered by People” honors the longstanding commitment both organizations have to their customers, communities and employees. In July, Premier Bank successfully completed its core systems conversion. The integration of teams, systems and processes for the combined organization was completed as expected.
“The fourth quarter and full-year performance reflected the benefits of our combined organization and the ability of our team to produce top-tier results in a very challenging environment,” said Small. “We are very pleased with our position as we enter 2021 and continue to implement enhancements designed to deliver a top-quality customer experience and exceptional performance.”
Business client support efforts
As a part of the CARES Act, the Small Business Administration created the Paycheck Protection Program (“PPP”) to provide small businesses with loans as a direct incentive to keep their workers on the payroll. Premier Bank actively participated in PPP for clients and made 2,880 loans for a total of
Net interest income up compared to fourth quarter of 2019
Net interest income of
“The beginning of PPP loan forbearances and accelerated fees in the fourth quarter allowed us to stabilize net interest margin,” said Hileman. “We continue to focus our strategies on managing funding costs and excess liquidity to help mitigate the impacts to core net interest margin.”
Non-interest income up from fourth quarter of 2019
Premier’s non-interest income in the fourth quarter of 2020 was
Mortgage banking income increased to
For the fourth quarter of 2020, service fees and other charges were
“We remain pleased with the strength of our performance in non-interest income,” said Hileman. “While down seasonally from third quarter, mortgage banking was a significant contributor to our growth with
Non-interest expenses up from fourth quarter of 2019
Total non-interest expense was
FDIC insurance premiums were a
Credit quality
Non-performing loans totaled
On January 1, 2020, Premier adopted the Current Expected Credit Loss model of accounting for credit losses. This new GAAP model, which replaces the former incurred loss model, requires entities to estimate credit losses over the life of an asset or off-balance sheet exposure. Beginning with the second quarter of 2020, Premier began to report total provision for credit losses inclusive of amounts related to off-balance sheet unfunded commitments, which were previously reported in other non-interest expenses. Prior period amounts have been restated for consistency.
The 2020 fourth quarter results include net loan charge-offs of
“The volatility of CECL was on display this quarter as we were able to release some reserves due to improving economic forecasts,” said Paul D. Nungester, CFO of Premier. “While we continue to experience some risk migration, the pace has slowed and begun to stabilize with criticized loans down to
Annual results
For the year ended December 31, 2020, net income totaled
Net interest income was
Non-interest income for 2020 was
Securities gains were
Non-interest expense was
Total assets at
Total assets at December 31, 2020, were
Total deposits at December 31, 2020, were
Total stockholders’ equity was
Buybacks authorization
At December 31, 2020, 570,000 common shares remained available for repurchase under the Company’s existing repurchase program. On January 26, 2020, the Company’s Board of Directors approved an increase in the Company’s repurchase authorization to up to 2,000,000 shares of common stock, or approximately
Dividend to be paid February 19
The Board of Directors declared a quarterly cash dividend of
Conference call
Premier will host a conference call at 11:00 a.m. ET on Wednesday, January 27, 2021, to discuss the earnings results and business trends. The conference call may be accessed by calling 1-877-444-1726. Internet access to the call is also available (in listen-only mode) at the following URL: https://services.choruscall.com/links/pfc210127.html. The replay of the conference call will be available at www.PremierFinCorp.com until January 26, 2022, at 9:00 a.m. ET.
About Premier Financial Corp.
Premier Financial Corp. (Nasdaq: PFC), headquartered in Defiance, Ohio, is the holding company for Premier Bank and First Insurance Group. Premier Bank, headquartered in Youngstown, Ohio, operates 75 branches and 12 loan offices in Ohio, Michigan, Indiana, Pennsylvania and West Virginia (West Virginia office operates as Home Savings Bank) and serves clients through a team of wealth professionals dedicated to each community banking branch. First Insurance Group is a full-service insurance agency with ten offices in Ohio including James & Sons Insurance in Youngstown, Ohio. For more information, visit the company’s website at PremierFinCorp.com.
Financial Statements and Highlights Follow-
Safe Harbor Statement
This news release may contain certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21 B of the Securities Exchange Act of 1934, as amended. Those statements may include, but are not limited to, all statements regarding intent, beliefs, expectations, projections, forecasts and plans of Premier Financial Corp. and its management, and specifically include statements regarding: changes in economic conditions; the nature, extent and timing of governmental actions and reforms; future movements of interest rates; the ability to benefit from a changing interest rate environment; the production levels of mortgage loan generation; the ability to continue to grow loans and deposits; the ability to sustain credit quality ratios at current or improved levels; continued strength in the market area for Premier Bank; the ability to sell real estate owned properties; and the ability to grow in existing and adjacent markets. These forward-looking statements involve numerous risks and uncertainties, including: impacts from the novel coronavirus (COVID-19) pandemic on our business, operations, customers and capital position; higher default rates on loans made to our customers related to COVID-19 and its impact on our customers’ operations and financial condition; the impact of COVID-19 on local, national and global economic conditions; unexpected changes in interest rates or disruptions in the mortgage market related to COVID-19 or responses to the health crisis; the effects of various governmental responses to the COVID-19 pandemic; those inherent in general and local banking, insurance and mortgage conditions; competitive factors specific to markets in which Premier Financial Corp. and its subsidiaries operate; future interest rate levels; legislative and regulatory decisions or capital market conditions; and other risks and uncertainties detailed from time to time in our Securities and Exchange Commission (SEC) filings, including in our Annual Report on Form 10-K for the year ended December 31, 2019 and our Quarterly Report on Form 10-Q for the quarter ended March 31, 2020. One or more of these factors have affected or could in the future affect Premier’s business and financial results in future periods and could cause actual results to differ materially from plans and projections. Therefore, there can be no assurances that the forward-looking statements included in this news release will prove to be accurate. In light of the significant uncertainties in the forward-looking statements included herein, the inclusion of such information should not be regarded as a representation by Premier or any other persons, that our objectives and plans will be achieved. All forward-looking statements made in this news release are based on information presently available to the management of Premier and speak only as of the date on which they are made. We assume no obligation to update any forward-looking statements, whether as a result of new information, future developments or otherwise, except as may be required by law. As required by U.S. GAAP, Premier will evaluate the impact of subsequent events through the issuance date of its December 31, 2020, consolidated financial statements as part of its Annual Report on Form 10-K to be filed with the SEC. Accordingly, subsequent events could occur that may cause Premier to update its critical accounting estimates and to revise its financial information from that which is contained in this news release.
Non-GAAP Reporting Measures
We believe that net income, as defined by U.S. GAAP, is the most appropriate earnings measurement. However, we consider core net income and core pre-tax pre-provision income to be useful supplemental measures of our operating performance. We define core net income as net income excluding the after-tax impact of acquisition related charges. We define core pre-tax pre-provision income as pre-tax pre-provision income excluding the pre-tax impact of acquisition related charges. We believe that these metrics are useful supplemental measures of operating performance because investors and equity analysts may use these measures to compare the operating performance of the Company between periods or as compared to other financial institutions or other companies on a consistent basis without having to account for one-time acquisition related charges. Our supplemental reporting measures and similarly entitled financial measures are widely used by investors, equity and debt analysts and ratings agencies in the valuation, comparison, rating and investment recommendations of companies. Our management uses these financial measures to facilitate internal and external comparisons to historical operating results and in making operating decisions. Additionally, they are utilized by the Board of Directors to evaluate management. The supplemental reporting measures do not represent net income or cash flow provided from operating activities as determined in accordance with U.S. GAAP and should not be considered as alternative measures of profitability or liquidity. Finally, the supplemental reporting measures, as defined by us, may not be comparable to similarly entitled items reported by other financial institutions or other companies. Please see the exhibits for reconciliations of our supplemental reporting measures.
| Consolidated Balance Sheets (Unaudited) | |||||||
| Premier Financial Corp. | |||||||
| December 31, | December 31, | ||||||
| (in thousands) |
|
2020 |
|
|
2019 |
|
|
| Assets | |||||||
| Cash and cash equivalents | |||||||
| Cash and amounts due from depository institutions | $ |
79,593 |
|
$ |
46,254 |
|
|
| Interest-bearing deposits |
|
79,673 |
|
|
85,000 |
|
|
|
159,266 |
|
|
131,254 |
|
||
| Available-for sale, carried at fair value |
|
736,654 |
|
|
283,448 |
|
|
| Trading securities, carried at fair value |
|
1,090 |
|
|
- |
|
|
| Securities investments |
|
737,744 |
|
|
283,448 |
|
|
| Loans |
|
5,491,240 |
|
|
2,777,564 |
|
|
| Allowance for credit losses - loans |
|
(82,079 |
) |
|
(31,243 |
) |
|
| Loans, net |
|
5,409,161 |
|
|
2,746,321 |
|
|
| Loans held for sale |
|
221,616 |
|
|
18,008 |
|
|
| Mortgage servicing rights |
|
13,153 |
|
|
10,267 |
|
|
| Accrued interest receivable |
|
25,434 |
|
|
10,244 |
|
|
| Federal Home Loan Bank stock |
|
16,026 |
|
|
11,915 |
|
|
| Bank Owned Life Insurance |
|
144,784 |
|
|
75,544 |
|
|
| Office properties and equipment |
|
58,665 |
|
|
39,563 |
|
|
| Real estate and other assets held for sale |
|
343 |
|
|
100 |
|
|
| Goodwill |
|
317,948 |
|
|
100,069 |
|
|
| Core deposit and other intangibles |
|
30,337 |
|
|
3,772 |
|
|
| Other assets |
|
77,257 |
|
|
38,487 |
|
|
| Total Assets | $ |
7,211,734 |
|
$ |
3,468,992 |
|
|
| Liabilities and Stockholders’ Equity | |||||||
| Non-interest-bearing deposits | $ |
1,597,262 |
|
$ |
630,359 |
|
|
| Interest-bearing deposits |
|
4,450,579 |
|
|
2,239,966 |
|
|
| Total deposits |
|
6,047,841 |
|
|
2,870,325 |
|
|
| Advances from FHLB and PPPLF |
|
- |
|
|
85,063 |
|
|
| Notes payable and other interest-bearing liabilities |
|
- |
|
|
2,999 |
|
|
| Subordinated debentures |
|
84,860 |
|
|
36,083 |
|
|
| Advance payments by borrowers for tax and insurance |
|
21,748 |
|
|
5,491 |
|
|
| Reserve for credit losses - unfunded commitments |
|
5,350 |
|
|
571 |
|
|
| Other liabilities |
|
69,659 |
|
|
42,293 |
|
|
| Total Liabilities |
|
6,229,458 |
|
|
3,042,825 |
|
|
| Stockholders’ Equity | |||||||
| Preferred stock |
|
- |
|
|
- |
|
|
| Common stock, net |
|
306 |
|
|
127 |
|
|
| Additional paid-in-capital |
|
689,390 |
|
|
161,955 |
|
|
| Accumulated other comprehensive income (loss) |
|
15,004 |
|
|
4,595 |
|
|
| Retained earnings |
|
356,414 |
|
|
329,175 |
|
|
| Treasury stock, at cost |
|
(78,838 |
) |
|
(69,685 |
) |
|
| Total stockholders’ equity |
|
982,276 |
|
|
426,167 |
|
|
| Total Liabilities and Stockholders’ Equity | $ |
7,211,734 |
|
$ |
3,468,992 |
|
|
| Consolidated Statements of Income (Unaudited) | |||||||||||||
| Premier Financial Corp. | |||||||||||||
| Three Months Ended | Twelve Months Ended | ||||||||||||
| December 31, | December 31, | ||||||||||||
| (in thousands, except per share amounts) |
|
2020 |
|
|
2019 |
|
2020 |
|
2019 |
|
|||
| Interest Income: | |||||||||||||
| Loans | $ |
57,694 |
|
$ |
33,695 |
$ |
225,084 |
$ |
130,853 |
|
|||
| Investment securities |
|
2,980 |
|
|
1,889 |
|
11,469 |
|
8,183 |
|
|||
| Interest-bearing deposits |
|
44 |
|
|
537 |
|
435 |
|
1,395 |
|
|||
| FHLB stock dividends |
|
98 |
|
|
120 |
|
958 |
|
653 |
|
|||
| Total interest income |
|
60,816 |
|
|
36,241 |
|
237,946 |
|
141,084 |
|
|||
| Interest Expense: | |||||||||||||
| Deposits |
|
5,158 |
|
|
5,999 |
|
26,918 |
|
22,613 |
|
|||
| FHLB advances and other |
|
1 |
|
|
431 |
|
1,691 |
|
1,443 |
|
|||
| Subordinated debentures |
|
690 |
|
|
311 |
|
1,300 |
|
1,354 |
|
|||
| Notes Payable |
|
- |
|
|
2 |
|
32 |
|
25 |
|
|||
| Total interest expense |
|
5,849 |
|
|
6,743 |
|
29,941 |
|
25,435 |
|
|||
| Net interest income |
|
54,967 |
|
|
29,498 |
|
208,005 |
|
115,649 |
|
|||
| Provision for credit losses - loans |
|
(6,158 |
) |
|
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