PREMIER FINANCIAL CORP. Dear Shareholders:
On behalf of the Board of Directors and our Premier Financial Corp. team, I appreciate your continued trust in the organization and our mission to be the preferred regional community bank.
2023 was another challenging year for the banking industry. However, our associates remained committed to serving our clients and communities. This philosophy guides us through times like these and makes it possible to provide our stakeholders with a Premier experience.
Delivering on Technology
2023 was a year filled with technology upgrades. In the second quarter, we launched an advanced customer service engine on our website that provides the ability for our customers and Client Solution Center to interact directly via chat, enhancing the customer experience. We introduced Zelle® in August, allowing clients to send and receive money from friends and family through the Premier Bank Mobile App.
In October, we successfully upgraded to a new digital banking platform with many new and improved features, making banking with us even easier and more convenient. Customers now enjoy enhanced cybersecurity features, free credit score analysis, monitoring and alerts, budgeting and spending tools, and more; all with a modern design and easy-to-use functionality. The open architecture design adds ease and flexibility to making future enhancements as well. Now that we have the consumer platform in place, we plan to launch a new small business banking platform in 2024.
Expansion
2023 was also a year of expansion of products, services and our branch network. In July, Integrated Payables, a web-based payment platform that takes a payment file from a client's account system and executes payments as a virtual card, ACH, wire, or check through an online portal launched for commercial clients. We also introduced a new commercial purchasing card that enables business clients to make secure and convenient payments for business needs such as travel and marketing purchases.
In 2023, the Bank further invested in the Cleveland market with the opening of a new community bank branch in Avon, Ohio, and we are seeing great success with that branch. We are growing again with the opening of our new Medina, Ohio community branch this spring.
2023 KEY HIGHLIGHTS
Net Income for the Year:
$111.3 million
or $3.11 per diluted share
Deposit Growth:
$236 million
up 3% for the year
Loan Growth:
$279 million
up 4%
Return on Average Equity:
12.1%
up from 11.0% in 2022
2023 Dividend Payout:
$1.24
a 3.3% increase over 2022
Successfully executed initiatives focused on deposit gathering,
cost containment, and maintaining a strong credit profile
Launched new digital banking platform to improve clients' banking experience in October
Community Commitment
As a community bank, we understand what it means to be Powered by People and remain committed to our communities. We continue to reinvest in the local communities by providing time, talent and leadership. It is at the heart of everything we do and the hallmark of our brand. I am happy to share that over $1.4 million in community support was provided to over 470 organizations through the Bank and The Premier Bank Foundation combined, and our employees volunteered more than 5,400 hours of their time for local non-profit organizations. We value our relationships with our community partners and appreciate their efforts to enrich the lives of families in the markets we serve.
$1.4 million
in community support
to over 470 organizations
our employees volunteered
over 5,400 hours
to local non-profit organizations
2023 ACCOLADES
-
2023 Piper Sandler Sm-All Stars: Premier Financial Corp. named to Piper Sandler Sm-AllStars Class of 2023, a list of the
31 top-performingsmall-cap banks and thrifts in the country. - Recipient of the 2023 FIsionaries™ Award: This award recognizes financial institutions that are at the leading edge of digital transformation and effectively competing with the biggest players in financial services by embracing their digital vision.
- Premier Bank was voted Tribune Chronicle 2023 Readers' Choice "Best Bank."
- Premier Bank was voted Youngstown Vindicator 2023 Readers' Choice "Best Bank."
- Premier Bank was voted "Best Bank" in the Courier's 2023 Best of Findlay.
- Premier Bank was voted "Top Workplace" in 2023 by the Toledo Blade.
- Premier Bank was recognized as a Great Place to Work by Youngstown Business Journal.
These honors are possible because of our associates' hard work and dedication. I want to commend our employees, who are the driving force behind our success every day. Their passion and commitment enables us to make a positive impact on the lives of our clients and communities. We continue to be an organization Powered by People.
We appreciate our clients' and shareholders' continued trust in Premier. We also commend our Board's continuous leadership and solid governance.
In 2023, we remained focused on delivering consistent, superior customer service. As we look to 2024 and beyond, we will maintain our focus on strategic growth, operational excellence and providing a Premier customer experience. We'll continue to focus on strategic technology investments and talent development, assuring our long term success.
Sincerely,
President and CEO Premier Financial Corp.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(Mark One)
- ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2023
or
-
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File Number 0-26850
PREMIER FINANCIAL CORP.
(Exact name of registrant as specified in its charter)
OHIO
(State or other jurisdiction of incorporation or organization)
34-1803915
(I.R.S. Employer
Identification Number)
601 Clinton Street, Defiance, Ohio | 43512 |
(Address of principal executive offices) | (Zip code) |
Registrant's telephone number, including area code: (419) 785-8700
Securities registered pursuant to Section 12(b) of the Act: | ||
Common Stock, Par Value $0.01 Per Share | PFC | The NASDAQ Stock Market |
(Title of Class) | (Trading Symbol) | (Name of each exchange on which registered) |
Securities registered pursuant to Section 12(g) of the Act:
None
(Title of Class)
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act. Yes ☐ No ☒
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes
- No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer ☒ Accelerated filer | ☐ Non accelerated filer | ☐ Smaller reporting company | ☐ Emerging growth company | ☐ |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant has filed a report on and attestation to its management's assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☐
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant's executive officers during the relevant recovery period pursuant to §240.10D-1(b).☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
The aggregate market value of the voting stock held by non-affiliates of the registrant computed by reference to the closing price of such stock as of June 30, 2023, was approximately $560.3 million.
As of February 21, 2024, there were issued and outstanding 35,729,694 shares of the registrant's common stock.
Documents Incorporated by Reference
Part III of this Form 10-K incorporates by reference certain information from the registrant's definitive Proxy Statement for the 2024 Annual Meeting of the registrant's shareholders.
Auditor Firm Id: 173 | Auditor Name: | Crowe, LLP | Auditor Location: | Cleveland, OH USA |
Premier Financial Corp. | ||
Annual Report on Form 10-K | ||
Table of Contents | ||
Page | ||
3 | ||
Item 1. | 3 | |
Item 1A. | Risk Factors | 18 |
Item 1B. | Unresolved Staff Comments | 24 |
Item 2. | Properties | 25 |
Item 3. | Legal Proceedings | 26 |
Item 4. | Mine Safety Disclosures | 26 |
PART II | 26 | |
Item 5. | Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity | |
Securities | 26 | |
Item 6. | Reserved | 27 |
Item 7. | Management's Discussion and Analysis of Financial Condition and Results of Operations | 27 |
Item 7A. | Quantitative and Qualitative Disclosures About Market Risk | 40 |
Item 8. | Financial Statements and Supplementary Data | 42 |
Item 9. | Changes in and Disagreements with Accountants on Accounting and Financial Disclosure | 95 |
Item 9A. | Controls and Procedures | 95 |
Item 9B. | Other Information | 95 |
Item 9C. | Disclosure Regarding Foreign Jurisdictions that Prevent Inspections | 95 |
PART III | 96 | |
Item 10. | Directors, Executive Officers and Corporate Governance | 96 |
Item 11. | Executive Compensation | 96 |
Item 12. | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters | 96 |
Item 13. | Certain Relationships and Related Transactions, and Director Independence | 97 |
Item 14. | Principal Accounting Fees and Services | 97 |
PART IV | 97 | |
Item 15. | Exhibits, Financial Statement Schedules | 97 |
Item 16. | Form 10-K Summary | 97 |
SIGNATURES | 98 |
2
PART I
Item 1. Business
Premier Financial Corp. ("Premier" or the "Company") is a financial holding company for its wholly-owned subsidiaries, Premier Bank (the "Bank"), PFC Risk Management Inc. ("PFC Risk Management"), PFC Capital, LLC ("PFC Capital") and First Insurance Group of the Midwest, Inc. ("First Insurance"). All significant intercompany transactions and balances are eliminated in consolidation. Premier's stock is traded on the NASDAQ Global Select Market under the ticker PFC.
The Company's core business operations are conducted through its subsidiaries:
Premier Bank: The Bank is an Ohio state-chartered bank headquartered in Youngstown, Ohio. The Bank conducts operations through 75 full-service banking center offices, 9 loan offices and two wealth offices located in Ohio, Michigan, Indiana and Pennsylvania.
The Bank is primarily engaged in community banking. It attracts deposits from the general public through its offices and website, and uses those and other available sources of funds to originate residential real estate loans, commercial real estate loans, commercial loans, home improvement and home equity loans and consumer loans. In addition, the Bank invests in U.S. Treasury and federal government agency obligations, obligations of states and political subdivisions, mortgage-backed securities that are issued by federal agencies, including real estate mortgage investment conduits ("REMICs") and residential collateralized mortgage obligations ("CMOs"), and corporate bonds. The Bank's deposits are insured by the Federal Deposit Insurance Corporation ("FDIC"). The Bank is a member of the Federal Home Loan Bank ("FHLB") System.
PFC Capital: PFC Capital provides mezzanine funding for customers of the Bank. Mezzanine loans are offered by PFC Capital to customers in the Company's market area and are expected to be repaid from the cash flow from operations of the borrowing businesses.
First Insurance Group of the Midwest: First Insurance was an insurance agency that conducted business throughout Premier's markets. First Insurance offered property and casualty insurance, life insurance and group health insurance. On June 30, 2023, the Company completed the sale of substantially all of the assets (including $24.7 million of goodwill and intangibles) of First Insurance to Risk Strategies Corporation ("Buyer"). Consideration included a combination of cash and a subordinated note resulting in net cash received of $47.4 million after certain transaction costs at closing, the assumption of certain leases, and contingent consideration subject to certain performance criteria by the Buyer to be determined after the year ended December 31, 2026. The Company recorded a pre- tax gain on sale of $36.3 million, transaction costs of $3.7 million and taxes of $8.5 million for a $24.1 million increase to equity in 2023.
PFC Risk Management: PFC Risk Management was a wholly-owned insurance company subsidiary of the Company that was formed to insure the Company and its subsidiaries against certain risks unique to the operations of the Company and for which insurance was not available or economically feasible in the insurance marketplace. PFC Risk Management pooled resources with several other similar insurance company subsidiaries of financial institutions to help minimize the risk allocable to each participating insurer. Due to pending changes in tax law, PFC Risk Management was dissolved and liquidated in December 2023.
Premier's website, www.yourpremierfincorp.com, contains a hyperlink under the Investor Relations section to EDGAR, where the annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 are available free of charge as soon as reasonably practicable after Premier has filed the report with the U. S. Securities and Exchange Commission ("SEC").
The Company's principal executive offices are located at 601 Clinton Street, Defiance, Ohio 43512, and its telephone number is (419) 782-5015.
Business Strategy
Premier's primary objective is to be a high-performing,community-focused financial institution, well regarded in its market areas. Premier accomplishes this through emphasis on local decision making and empowering its employees with tools and knowledge to serve its customers' needs. Premier believes in a "customer first" philosophy that is strengthened by its Mission & Vision and Core Values initiatives. Premier also has a tagline of "Powered by People" as an indication of its commitment to local, responsive, personalized service. Premier believes this strategy results in greater customer loyalty and profitability through core relationships. Premier is focused on diversification of revenue sources and increased market penetration in areas where the growth potential exists for a balance between acquisition and organic growth. The primary elements of Premier's business strategy are commercial banking, consumer banking, the origination and sale of single-family residential loans, enhancement of fee income, and wealth management, each united by a strong customer service culture throughout the organization.
3
Commercial and Commercial Real Estate Lending - Commercial and commercial real estate lending have been an ongoing focus and a major component of the Company's success. The Bank primarily provides commercial real estate and commercial business loans with an emphasis on owner-occupied commercial real estate and commercial business lending, including a focus on the deposit balances that accompany these relationships. The Bank's client base tends to be small to middle market customers with annual gross revenues generally between $1 million and $50 million. These customers require the Bank to have a high degree of knowledge and understanding of their business in order to provide them with solutions for their financial needs. The Bank's "customer first" philosophy and culture complement the needs of its clients. The Bank believes this personal service model differentiates the Bank from its competitors, particularly the larger regional institutions. The Bank offers a wide variety of products to support commercial clients including remote deposit capture and other cash management services. The Bank also believes that the small business customer is a strong market for the Bank and participates in many of the Small Business Administration lending programs. Maintaining a diversified portfolio with an emphasis on monitoring industry concentrations and reacting to changes in the credit characteristics of industries is an ongoing focus.
Consumer Banking - The Bank offers customers a full range of deposit products including demand, checking, money market, certificates of deposits, Certificate of Deposit Account Registry Service ("CDARS") and savings accounts. The Bank offers a full range of investment products through the wealth management department and a wide variety of consumer loan products, including residential mortgage loans, home equity loans, and installment loans. The Bank also offers digital banking services, which include mobile banking, Zelle, online bill pay, and online account opening as well as the MoneyPass ATM Network offering access to our customers to over 40,000 ATMs nationwide without a surcharge fee.
Fee Income Development - Generation of fee income and the diversification of revenue sources are accomplished primarily through the mortgage banking operation and the wealth management department as Premier seeks to reduce reliance on retail transaction fee income.
Deposit Growth - The Bank's focus has been to grow core deposits with an emphasis on total relationship banking for both our retail and commercial customers. The Bank's pricing strategy considers the whole relationship of the customer. The Bank continues to focus on increasing its market share in the communities it serves by providing quality products with extraordinary customer service, business development strategies and branch expansion. The Bank will look to grow its footprint in areas believed to further complement its overall market share and complement its strategy of being a high-performing community bank.
Asset Quality - Maintaining a strong credit culture is of the utmost importance to the Bank. The Bank has maintained a strong credit approval and review process that has allowed the Company to maintain a credit quality standard that balances the return with the risks of industry concentrations and loan types. The Bank is primarily a collateral lender with an emphasis on cash flow performance, while obtaining additional support from personal guarantees and secondary sources of repayment. The Bank has directed its attention to loan types and markets that it knows well and in which it has historically been successful. The Bank strives to have loan relationships that are well diversified in both size and industry, and monitors the overall trends in the portfolio to maintain its industry and loan type concentration targets. The Bank maintains a problem loan remediation process that focuses on detection and resolution. The Bank maintains a strong process of internal control that subjects the loan portfolio to periodic internal reviews as well as independent third- party loan review.
Expansion Opportunities - Premier believes it is well positioned to take advantage of acquisitions or other business expansion opportunities in and around its market areas, Premier believes it has a track record of successfully accomplishing both acquisitions and de novo branching. This track record puts Premier in a solid position to enter or expand its business. Premier will continue to be disciplined as well as opportunistic in its approach to future acquisitions and de novo branching with a focus on its primary geographic market area, which it knows well, and has been competing in for a long period of time, as well as surrounding market areas.
Securities
During 2023, Premier's securities portfolio was managed in accordance with a written policy adopted by the Board of Directors and administered by the Investment Committee. The Chief Executive Officer, Chief Financial Officer, Chief Credit Officer and Treasurer can each approve transactions up to $3.0 million. Two of the four officers are required to approve transactions between $3.0 million and $30.0 million. All transactions in excess of $30.0 million must be approved by the Bank's Asset Liability Committee ("ALCO").
Premier's securities portfolio is classified as either "available-for-sale" or "held-to-maturity." In addition, Premier held equity securities totaling $5.8 million at December 31, 2023, which must be marked to market through the income statement. Securities classified as "available-for-sale" may be sold prior to maturity due to changes in interest rates, prepayment risks, and availability of alternative investments, or to meet Premier's liquidity needs.
4
The carrying value of securities at December 31, 2023, by contractual maturity is shown below. Expected maturities will differ from contractual maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalties.
Contractually Maturing | Total | ||||||||||||||||||||||
Under | Weighted | Weighted | Weighted | Weighted | |||||||||||||||||||
1 | Average | 1 - 5 | Average | 6-10 | Average | Over 10 | Average | ||||||||||||||||
Year | Yield % | Years | Yield % | Years | Yield % | Years | Yield % | Amount | Yield | ||||||||||||||
(Dollars | in Thousands) | ||||||||||||||||||||||
Mortgage-backed securities | $ | - | - | $ | - | - $ | 30,954 | 2.35% | $154,721 | 1.86% | $ | 185,675 | 1.94% | ||||||||||
CMOs - residential | - | - | 10,455 | 2.18% | 18,503 | 2.19% | 256,236 | 1.75% | 285,194 | 1.79% | |||||||||||||
U.S. government and federal | |||||||||||||||||||||||
agency obligations | - | - | 59,131 | 1.38% | 82,464 | 1.85% | 34,535 | 2.23% | 176,130 | 1.77% | |||||||||||||
Asset-backed securities | - | - | 2,421 | 6.00% | 5,027 | 7.29% | 134,767 | 5.65% | 142,215 | 5.71% | |||||||||||||
Obligations of states and | |||||||||||||||||||||||
political subdivisions | 305 | 3.34% | 10,865 | 2.11% | 55,931 | 2.20% | 180,103 | 2.11% | 247,204 | 2.13% | |||||||||||||
Corporate bonds | - | 9,891 | 4.61% | 61,201 | 3.86% | - | - | 71,092 | 3.96% | ||||||||||||||
Total | $ | 305 | $ | 92,763 | $ | 254,080 | $760,362 | $ | 1,107,510 | ||||||||||||||
Unrealized loss on securities | |||||||||||||||||||||||
available for sale | (160,802) | ||||||||||||||||||||||
Total | $ | 946,708 |
The carrying value of investment securities is as follows:
December 31, | ||||||||
2023 | 2022 | 2021 | ||||||
Available-for-sale securities: | (In Thousands) | |||||||
$ | 150,775 | |||||||
Obligations of U.S. government corporations and agencies | $ | 144,107 | $ | 174,710 | ||||
Obligations of states and political subdivisions | 204,258 | 221,594 | 273,202 | |||||
CMOs and mortgage-backed securities | 392,275 | 417,394 | 466,919 | |||||
Asset-backed securities | 136,980 | 192,504 | 220,536 | |||||
Corporate bonds | 62,420 | 64,482 | 70,893 | |||||
Total | $ | 946,708 | $ | 1,040,081 | $ | 1,206,260 | ||
For additional information regarding Premier's investment portfolio, refer to Note 4 - Investment Securities in the Consolidated Financial Statements.
Residential Loan Servicing Activities
Servicing mortgage loans for investors involves a contractual right to receive a fee for processing and administering loan payments on mortgage loans that are not owned by the Company and are not included on the Company's balance sheet. This processing involves collecting monthly mortgage payments on behalf of investors, reporting information to those investors on a monthly basis and maintaining custodial escrow accounts for the payment of principal and interest to investors and property taxes and insurance premiums on behalf of borrowers. At December 31, 2023, the Company serviced loans totaling $2.9 billion in principal. The vast majority of the loans serviced for others are fixed rate conventional mortgage loans. The Company primarily sells its loans to, and then services for, Freddie Mac, Fannie Mae and the FHLB.
As compensation for its mortgage servicing activities, the Company receives servicing fees, usually approximating 0.25% per annum of the loan balances serviced, plus any late charges collected from delinquent borrowers and other fees incidental to the services provided. In the event of a default by the borrower, the Company receives no servicing fees until the default is cured. Loan servicing fees decrease as the principal balance on the outstanding loan decreases and as the remaining time to maturity of the loan shortens.
Lending Activities
General - Financial institutions are limited in the amount of loans they may make to one borrower. At December 31, 2023, the Bank's legal limit on loans-to-one borrower was $142.7 million.
Loan Portfolio Composition - Total loans net of undisbursed loan funds and deferred fees increased over the prior year by $278.8 million for 2023 and $1.2 billion for 2022. The loan portfolio contains no foreign loans. The Company's loan portfolio is concentrated geographically in northwest, northeast and central Ohio, northeast Indiana, Morgantown, West Virginia, western Pennsylvania and southeast Michigan market areas. Management has identified lending for multifamily properties within commercial real estate as an industry concentration. Total loans from multifamily property totaled $642.7 million at December 31, 2023, which represents 9.2% of the Company's loan portfolio.
5
The following table sets forth the composition of the Company's loan portfolio by type of loan at the dates indicated.
December 31, | |||||||||||||||||||||||
2023 | 2022 | 2021 | 2020 | 2019 | |||||||||||||||||||
Amount | % | Amount | % | Amount | % | Amount | % | Amount | % | ||||||||||||||
Real estate: | (Dollars in Thousands) | ||||||||||||||||||||||
Residential real | $ 1,810,265 | 25.8% | |||||||||||||||||||||
estate | $ 1,535,574 | 21.6% | $ 1,167,466 | 20.2% | $ 1,201,051 | 20.5% | $ | 324,773 | 11.3% | ||||||||||||||
Commercial real | 2,839,905 | 40.5% | |||||||||||||||||||||
estate | 2,762,311 | 38.8% | 2,450,349 | 42.5% | 2,383,001 | 40.8% | 1,506,026 | 52.4% | |||||||||||||||
Construction | 838,823 | 12.0% | 1,278,255 | 17.9% | 862,815 | 15.0% | 667,649 | 11.4% | 305,305 | 10.6% | |||||||||||||
Total real estate loans | |||||||||||||||||||||||
5,488,993 | 78.3% | 5,576,140 | 78.3% | 4,480,630 | 77.7% | 4,251,701 | 72.7% | 2,136,104 | 74.3% | ||||||||||||||
Other: | 1,056,803 | 15.1% | |||||||||||||||||||||
Commercial | 1,055,180 | 14.8% | 895,638 | 15.5% | 1,202,353 | 20.6% | 578,071 | 11.6% | |||||||||||||||
Home equity and | 267,960 | 3.8% | |||||||||||||||||||||
improvement | 277,613 | 3.9% | 264,354 | 4.6% | 272,701 | 4.7% | 122,864 | 2.5% | |||||||||||||||
Consumer finance | 193,830 | 2.8% | 213,405 | 3.0% | 126,417 | 2.2% | 120,729 | 2.1% | 37,649 | 0.8% | |||||||||||||
Total loans | 1,518,593 | 21.7% | 1,546,198 | 21.7% | 1,286,409 | 22.3% | 1,595,783 | 27.3% | 738,584 | 14.8% | |||||||||||||
7,007,586 | 100.0% | 7,122,338 | 100.0% | 5,767,039 | 100.0% | 5,847,484 | 100.0% | 2,874,688 | 89.1% | ||||||||||||||
Less: | |||||||||||||||||||||||
Undisbursed loan | 281,466 | ||||||||||||||||||||||
funds | 672,775 | 477,890 | 355,065 | 94,865 | |||||||||||||||||||
Net deferred loan | (13,267) | ||||||||||||||||||||||
origination fees | (11,057) | (7,019) | 1,179 | 2,259 | |||||||||||||||||||
Allowance for credit | 76,512 | ||||||||||||||||||||||
losses | 72,816 | 66,468 | 82,079 | 31,243 | |||||||||||||||||||
Net loans | $ 6,662,875 | $ 6,387,804 | $ 5,229,700 | $ 5,409,161 | $ | 2,746,321 |
In addition to the loans reported above, Premier had $145.6 million, $115.3 million, $162.9 million, $221.6 million, and $18.0 million in loans classified as held for sale at December 31, 2023, 2022, 2021, 2020 and 2019, respectively. The fair value of such loans, which consist of single-family residential mortgage and other commercial real estate loans, approximated their carrying value for all years presented.
Contractual Principal, Repayments and Interest Rates - The following table sets forth the dollar amount of gross loans due more than one year from December 31, 2023, which have fixed interest rates or which have floating or adjustable interest rates.
Floating or | ||||||||
Fixed | Adjustable | |||||||
Rates | Rates | Total | ||||||
(In Thousands) | ||||||||
Real estate | $ | 2,728,378 | $ | 2,013,485 | $ | 4,741,863 | ||
Commercial | 376,268 | 208,950 | 585,218 | |||||
Other | 184,138 | 445 | 184,583 | |||||
$ | 3,288,784 | $ | 2,222,880 | $ | 5,511,664 | |||
The following table shows the maturity distribution of loans outstanding as of December 31, 2023.
Within | After one, but within | After five, but within | After | |||||||||||
one year | five years | fifteen years | fifteen years | Total (1) | ||||||||||
(In Thousands) | ||||||||||||||
Real estate | $ | 755,926 | $ | 1,914,615 | $ | 1,344,962 | $ | 1,482,285 | $ | 5,497,788 | ||||
Commercial | 461,804 | 449,515 | 135,703 | - | 1,047,022 | |||||||||
Other | 9,993 | 84,360 | 100,224 | - | 194,577 | |||||||||
$ | 1,227,723 | $ | 2,448,490 | $ | 1,580,889 | $ | 1,482,285 | $ | 6,739,387 | |||||
(1) Total loans are net of undisbursed loan funds and deferred fees and costs
Originations, Purchases and Sales of Loans - The lending activities of Premier are subject to the written, non-discriminatory underwriting standards and loan origination procedures established by the Board of Directors and management. Loan originations are obtained from a variety of sources, including referrals from existing customers, real estate brokers, developers and builders, newspaper, internet and radio advertising, and walk-in customers. The Bank's loan approval process for all types of loans is intended to assess the borrower's ability to repay the loan, the viability of the loan and the adequacy of the value of the collateral that will secure the loan.
6
The following table shows total loans originated, loan reductions, and the net increase (decrease) in the Company's loans net of undisbursed loan funds and deferred fees and loans held for sale during the periods indicated:
Years Ended December 31, | |||||||||
2023 | 2022 | 2021 | |||||||
Loan originations: | (In Thousands) | ||||||||
$ | 306,859 | ||||||||
Residential real estate | $ | 729,083 | $ | 947,089 | |||||
Commercial real estate | 316,804 | 476,635 | 539,680 | ||||||
Construction | 809,202 | 919,829 | 754,757 | ||||||
Commercial | 253,949 | 597,331 | 626,358 | ||||||
Home equity and improvement | 91,082 | 144,731 | 156,805 | ||||||
Consumer finance | 55,558 | 161,104 | 71,937 | ||||||
Total loans originated | 1,833,454 | 3,028,713 | 3,096,626 | ||||||
Loans acquired in acquisitions | - | - | - | ||||||
Loans purchased | - | - | - | ||||||
Loan payoffs, sales and repayments | (1,524,297) | (1,721,110) | (3,235,740) | ||||||
Net increase (decrease) in loans net of undisbursed loan funds and deferred | $ | 309,157 | |||||||
fees and loans held for sale | $ | 1,307,603 | $ | (139,114) | |||||
Asset Quality
Premier's credit policy establishes guidelines to manage credit risk and asset quality. These guidelines include loan review and early identification of problem loans to ensure sound credit decisions. Premier's credit policies and review procedures are meant to minimize the risks and uncertainties inherent in lending. In following the policies and procedures, management must rely on estimates, appraisals and evaluations of loans and the possibility that changes in these could occur because of changing economic conditions.
Delinquent Loans - The following table sets forth information concerning delinquent loans at December 31, 2023, in dollar amount and as a percentage of Premier's total loan portfolio. The amounts presented represent the total outstanding principal balances of the related loans, rather than the actual payment amounts that are past due.
30 to 59 Days | 60 to 89 Days | 90 Days and Over | Total | |||||||||||||||||
Amount | Percentage | Amount | Percentage | Amount | Percentage | Amount | Percentage | |||||||||||||
Residential real | (Dollars in | Thousands) | ||||||||||||||||||
estate | $ | 152 | 0.00% | $ | 8,302 | 0.12% | $ | 11,216 | 0.17% | $ | 19,670 | 0.29% | ||||||||
Commercial real estate | 163 | 0.00% | 312 | 0.00% | 1,275 | 0.02% | 1,750 | 0.03% | ||||||||||||
Construction | - | 0.00% | 108 | 0.00% | - | 0.00% | 108 | 0.00% | ||||||||||||
Commercial | 191 | 0.00% | 2,446 | 0.04% | 1,132 | 0.02% | 3,769 | 0.06% | ||||||||||||
Home equity and | ||||||||||||||||||||
improvement | 2,084 | 0.03% | 635 | 0.01% | 958 | 0.01% | 3,677 | 0.05% | ||||||||||||
Consumer finance | 3,699 | 0.05% | 1,681 | 0.02% | 3,003 | 0.04% | 8,383 | 0.12% | ||||||||||||
Purchase credit deteriorated | ||||||||||||||||||||
("PCD") | 211 | 0.00% | 1,271 | 0.02% | 2,569 | 0.04% | 4,051 | 0.06% | ||||||||||||
Total Loans | ||||||||||||||||||||
$ | 6,500 | 0.08% | $ | 14,755 | 0.21% | $ | 20,153 | 0.30% | $ | 41,408 | 0.61% | |||||||||
Overall, the level of delinquencies of 0.61% at December 31, 2023, decreased from the levels at December 31, 2022, when Premier reported that 0.73% of its outstanding loans were at least 30 days delinquent. The level of total loans 90 or more days delinquent has decreased to 0.30% at December 31, 2023, down from 0.44% at December 31, 2022. The level of total loans 60-89 days delinquent increased to 0.21% at December 31, 2023, up from 0.15% at December 31, 2022. The level of loans that were 30 to 59 days past due decreased to 0.08% at December 31, 2023, down from 0.14% at December 31, 2022. Management has assessed the collectability of all loans that are 90 days or more delinquent as part of its procedures in establishing the allowance for credit losses. Management believes the continued stability in the economy contributed to the decrease seen in 2023.
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Non-performingAssets - All loans are reviewed on a regular basis and are placed on non-accrual status when, in the opinion of management, the collectability of additional interest is not expected. Generally, Premier places all loans 90 days or more past due on non-accrual status. Premier also places loans on non-accrual status when the loan is paying as agreed but the Company believes the financial condition of the borrower is such that this classification is warranted. When a loan is placed on non-accrual status, total unpaid interest accrued to date is reversed. Subsequent payments are generally applied to the outstanding principal balance but may be recorded as interest income, depending on the assessment of the ultimate collectability of the loan. Premier considers a loan individually evaluated when, based on current information and events, it is probable that the Bank will be unable to collect all amounts due (both principal and interest) according to the contractual terms of the loan agreement. Premier measures impairment based on the present value of expected future cash flows discounted at the loan's effective interest rate, the loan's observable market price, or the fair value of the collateral, if collateral dependent. If the estimated recoverability of the individually evaluated loan is less than the recorded investment, Premier will recognize impairment by allocating a portion of the allowance for credit losses on cash flow dependent loans and by charging off the deficiency on collateral dependent loans. See Note 6 of the Notes to the Consolidated Financial Statements for additional information.
Real estate acquired by foreclosure is classified as real estate owned until such time as it is sold. Premier also repossesses other assets securing loans, consisting primarily of automobiles. When such property is acquired it is recorded at fair value less cost to sell. Costs relating to development and improvement of property are capitalized, whereas costs relating to holding the property are expensed. Valuations are periodically performed by management and a write-down of the value is recorded with a corresponding charge to operations if it is determined that the carrying value of property exceeds its estimated net realizable value. The balance of real estate owned at December 31, 2023, was $243,000. During 2023, there was $15,000 of expense related to write-downs in fair value of real estate acquired by foreclosure or acquisition. The balance of real estate owned at December 31, 2022 was $619,000. During 2022, there was $8,600 of expense related to write-downs in fair value of real estate acquired by foreclosure or acquisition.
As of December 31, 2023, Premier's total non-performing loans amounted to $35.5 million or 0.53% of total loans (net of undisbursed loan funds and deferred fees and costs), compared to $33.8 million or 0.52% of total loans, at December 31, 2022. Non-performing loans are loans which are 90 days or more past due or on non-accrual.
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Premier Financial Corporation published this content on 27 March 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 03 April 2024 13:11:10 UTC.
