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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

 

34-1803915

(State or other jurisdiction of

incorporation or organization)

 

(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

PART I

 

3

Item 1.

Business

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

 

 

 

 

 

 

Weighted

 

 

 

 

 

Weighted

 

 

 

 

 

Weighted

 

 

 

 

 

Weighted

 

 

 

 

 

 

 

 

 

Under 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

 

 

 

(In Thousands)

 

Available-for-sale securities:

 

 

 

 

 

 

 

 

 

Obligations of U.S. government corporations and agencies

 

$

150,775

 

 

$

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

GeneralFinancial 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 CompositionTotal 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

 

 

%

 

 

 

(Dollars in Thousands)

 

 

 

 

Real estate:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Residential real estate

 

$

1,810,265

 

 

 

25.8

%

 

$

1,535,574

 

 

 

21.6

%

 

$

1,167,466

 

 

 

20.2

%

 

$

1,201,051

 

 

 

20.5

%

 

$

324,773

 

 

 

11.3

%

Commercial real
   estate

 

 

2,839,905

 

 

 

40.5

%

 

 

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:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial

 

 

1,056,803

 

 

 

15.1

%

 

 

1,055,180

 

 

 

14.8

%

 

 

895,638

 

 

 

15.5

%

 

 

1,202,353

 

 

 

20.6

%

 

 

578,071

 

 

 

11.6

%

Home equity and
   improvement

 

 

267,960

 

 

 

3.8

%

 

 

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

%

 

 

1,518,593

 

 

 

21.7

%

 

 

1,546,198

 

 

 

21.7

%

 

 

1,286,409

 

 

 

22.3

%

 

 

1,595,783

 

 

 

27.3

%

 

 

738,584

 

 

 

14.8

%

Total loans

 

 

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
   funds

 

 

281,466

 

 

 

 

 

 

672,775

 

 

 

 

 

 

477,890

 

 

 

 

 

 

355,065

 

 

 

 

 

 

94,865

 

 

 

 

Net deferred loan
   origination fees

 

 

(13,267

)

 

 

 

 

 

(11,057

)

 

 

 

 

 

(7,019

)

 

 

 

 

 

1,179

 

 

 

 

 

 

2,259

 

 

 

 

Allowance for credit losses

 

 

76,512

 

 

 

 

 

 

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 LoansThe 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

 

 

 

(In Thousands)

 

Loan originations:

 

 

 

 

 

 

 

 

 

Residential real estate

 

$

306,859

 

 

$

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 fees and loans held for sale

 

$

309,157

 

 

$

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

 

 

 

(Dollars in Thousands)

 

Residential real
   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.

7


 

Non-performing AssetsAll 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.

8


 

The following table sets forth the amounts and categories of Premier’s non-performing assets (excluding individually evaluated loans not considered non-performing) at the dates indicated.

 

 

 

December 31,

 

 

 

2023

 

 

2022

 

 

2021

 

 

2020

 

 

2019

 

 

 

(Dollars in Thousands)

 

Non-performing loans:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Residential real estate

 

$

13,028

 

 

$

7,724

 

 

$

9,034

 

 

$

10,178

 

 

$

2,411

 

Commercial real estate

 

 

5,971

 

 

 

13,396

 

 

 

14,621

 

 

 

11,980

 

 

 

7,609

 

Construction

 

 

 

 

 

 

 

 

 

 

 

806

 

 

 

 

Commercial

 

 

8,649

 

 

 

4,862

 

 

 

11,531

 

 

 

1,365

 

 

 

2,961

 

Home equity and improvement

 

 

1,417

 

 

 

1,637

 

 

 

2,051

 

 

 

1,537

 

 

 

449

 

Consumer finance

 

 

3,433

 

 

 

2,401

 

 

 

1,873

 

 

 

1,624

 

 

 

7

 

Purchase Credit Deteriorated ("PCD")

 

 

2,993

 

 

 

3,802

 

 

 

8,904

 

 

 

24,192

 

 

 

 

Total non-performing loans

 

 

35,491

 

 

 

33,822

 

 

 

48,014

 

 

 

51,682

 

 

 

13,437

 

Real estate owned

 

 

243

 

 

 

619

 

 

 

171

 

 

 

343

 

 

 

100

 

Total repossessed assets

 

 

243

 

 

 

619

 

 

 

171

 

 

 

343

 

 

 

100

 

Total non-performing assets

 

$

35,734

 

 

$

34,441

 

 

$

48,185

 

 

$

52,025

 

 

$

13,537

 

Total non-performing assets as a percentage of
   total assets

 

 

0.41

%

 

 

0.41

%

 

 

0.64

%

 

 

0.72

%

 

 

0.39

%

Total non-performing loans as a percentage of
   total loans*

 

 

0.53

%

 

 

0.52

%

 

 

0.91

%

 

 

0.96

%

 

 

0.49

%

Total non-performing assets as a percentage of
   total loans plus other real estate owned*

 

 

0.53

%

 

 

0.53

%

 

 

0.91

%