Premier Financial Corp.

Premier Financial reported first-quarter 2024 net income of $17.8 million, or $0.50 per share. Average deposit growth was 2.6% annualized for the quarter, and point-to-point deposits grew 2.3% annualized. Noninterest income rose $0.7 million to $12.5 million, while expenses were $39.9 million, up $2 million sequentially but down 7% year over year, or essentially flat excluding the sold insurance agency. Provision was a benefit of $133,000, driven by a $560,000 loan provision partly offset by a $693,000 benefit from lower unfunded commitments, and net charge-offs were $393,000, or 2 bps of average loans. Loan yields excluding PPP, hedges and acquisition marks were 5.29% in March, up 5 bps from December 2023, while deposits excluding acquisition marks were 2.45% and total cost of funds was 2.59% in March. Management now expects full-year earning asset growth of 4%, loan growth of 2%, net interest margin in the low-260s to about 265, full-year net interest income down 2% from 2023, noninterest income above $49 million, expenses around $156 million, and net charge-offs around 5 bps.

Gary Small said the quarter was shaped by a temporary but meaningful January move in commercial noninterest-bearing balances, which he characterized as an episode rather than a systemic decline. He emphasized that consumer deposits remained a strength for the franchise, commercial balances stabilized later in the quarter, and April showed some recovery. He also highlighted early repricing actions to lower deposit costs ahead of any Fed cuts, saying the company is now willing to work margin more actively because consumer deposit momentum has been strong.

Paul Nungester said deposits grew 2.6% annualized on average, while the mix shifted away from noninterest-bearing savings and checking toward CDs, money market and public funds. He noted the linked-quarter margin pressure came from a slight loan decline, a larger-than-expected drop in noninterest-bearing deposits, and additional disintermediation, but also pointed to improving pricing metrics: loan yields were 5.29% in March, total earning asset yields 4.95%, deposits 2.45%, and total cost of funds 2.59%. He added that expenses were $39.9 million, the expense-to-average-assets ratio improved to 1.87%, capital remained strong with TE ratio north of 8%, CET1 at 12%, and total capital at 14.35%.

Analysts focused on whether Premier would need more wholesale funding, how much of the commercial deposit decline was a one-time anomaly, and whether weaker credits were moving into criticized categories. Management said wholesale funding should stay flat for the year and deposit growth is expected to keep pace with earning asset growth, while the commercial outflow mainly reflected customers using cash to fund CapEx and working capital rather than a structural loss of business. On credit, management said a move from Special Mention to Substandard was not a new credit problem but a migration of the same relationship, and that debt-service coverage weakening is already reflected in their conservative review.