First Quarter 2022 Highlights

• Loan growth of $132.4 million excluding PPP (up 10.1% annualized) including $97.4 million for commercial loans (up 11.0% annualized)
• Deposit growth of $35.2 million (up 2.2% annualized)
• Net interest income (tax equivalent) of $58.1 million or $53.7 million excluding PPP and marks, up 2.4% and 7.5%, respectively, from 2021 first quarter
• Asset quality improved with non-performing assets down to 0.63% of assets, classifieds down to 1.0% of loans and delinquencies down to 0.1% of loans
• Service fee income of $6.0 million, up $0.5 million or 9.7% from 2021 first quarter
• Completed 0.8 million shares of buybacks for $24.2 million
• Declared dividend of $0.30 per share, up 15.4% from prior year comparable period

Premier Financial Corp. (Nasdaq: PFC) (“Premier” or the “Company”) announced today 2022 first quarter results. Net income for the first quarter of 2022 was $26.4 million, or $0.73 per diluted common share, compared to $41.0 million, or $1.10 per diluted common share, for the first quarter of 2021. The year-over-year comparison is primarily impacted by fluctuations in the provision for credit losses, mortgage banking income and securities gains/losses, which is summarized as follows and discussed further below.

“A very solid start for 2022 with excellent new business activity resulting in double digit core loan growth on an annualized basis,” said Gary Small, President and CEO of Premier. “Core commercial growth totaled 11% for the quarter and was the second consecutive quarter of core commercial growth in excess of 10%. Consumer lending was also on the move growing over 18% annualized for the quarter. We were pleased to see meaningful growth contributions from each of our nine markets.”

Quarterly results

Strong loan growth

Gross loans receivable were $5.39 billion at March 31, 2022, compared to $5.30 billion at December 31, 2021. Loans related to the Paycheck Protection Program (“PPP”) were $18.7 million at March 31, 2022, compared to $58.9 million at December 31, 2021. Gross loans receivable increased $92.2 million on a linked quarter basis despite a $40.2 million decrease in PPP loans. Excluding PPP, loans grew $132.4 million organically, or 10.1% annualized. Commercial loans excluding PPP increased $97.4 million from December 31, 2021, or 11.0% annualized.

Net interest income up compared to first quarter of 2021

Net interest income of $57.9 million in the first quarter of 2022 was up from $56.5 million in the first quarter of 2021. The increase over the prior year’s first quarter was attributable to higher securities, non-PPP loan growth and a 13 basis point decrease in average cost of funds. Net interest margin was 3.44% for the first quarter of 2022, up from 3.41% in the fourth quarter of 2021, and up from 3.43% in the first quarter of 2021. Yield on interest-earning assets was 3.62% in the first quarter of 2022, up from 3.61% in the fourth quarter of 2021. Loan yields of 4.11% in the first quarter of 2022 were consistent with 4.11% in the fourth quarter of 2021. Total cost of funds decreased three basis points in the first quarter of 2022 to 0.18% from the fourth quarter of 2021, while the total cost of interest-bearing liabilities decreased three basis points to 0.25%. The 2022 first quarter results include the impact of acquisition marks and related accretion for the UCFC acquisition. Interest income includes $491,000 of accretion and interest expense includes $246,000 of accretion. Interest income for the first quarter also includes $3.6 million on average balances of $32.9 million for PPP and only $0.2 million of fees remain unrecognized as of March 31, 2022. Excluding the impact of acquisition marks accretion and PPP loans, net interest income would be $53.7 million, up 7.5% from $50.0 million in the first quarter of 2021 and up 1.1% from $53.2 million in the fourth quarter of 2021. Additionally, net interest margin would be 3.20% for the first quarter of 2022 compared to 3.25% for the first quarter of 2021 and 3.21% for the fourth quarter of 2021.

Non-interest income down from first quarter of 2021

Premier’s non-interest income in the first quarter of 2022 was $16.9 million, compared with $26.3 million in the first quarter of 2021. Total mortgage banking income was $4.3 million in the first quarter of 2022, compared with $10.5 million in the first quarter of 2021. Mortgage gains were $2.5 million in the first quarter of 2022, compared with $5.6 million in the first quarter of 2021 with the change due to lower production, compressed margins, lower saleable mix and less favorable marks on the in-process portfolio. Mortgage loan servicing revenue of $1.9 million in the first quarter of 2022 was consistent with $1.9 million in the first quarter of 2021. Amortization of mortgage servicing rights was $1.4 million in the first quarter of 2022 compared with $2.3 million in the first quarter of 2021. Premier also had a positive change in the valuation adjustment for mortgage servicing assets of $1.2 million in the first quarter of 2022 compared with a positive adjustment of $5.3 million in the first quarter of 2021.

For the first quarter of 2022, service fees and other charges were $6.0 million, up 9.7% from $5.5 million in the first quarter of 2021 primarily due to higher consumer account and interchange related fees. This was mostly offset by a combined $0.5 million decrease in wealth management and insurance commissions. Insurance revenues included $1.1 million of contingent commissions in the first quarter of 2022, consistent with $1.1 million in the first quarter of 2021. BOLI income decreased $0.2 million from the first quarter of 2021, primarily due to $0.3 million of claim gains in the first quarter of 2021. Securities losses were $0.6 million in the first quarter of 2022 from decreased valuations in our trading securities portfolio compared to $2.1 million of gains in the first quarter of 2021, comprised of $0.5 million from securities sales and $1.6 million due to increased valuations in our trading securities portfolio.

“Residential mortgage results for the quarter were stronger than anticipated given the volatile rate environment,” said Small. “Application activity remained robust in Q1 and gain on sale was under pressure as anticipated, but offset by additional contributions coming from the expansion of our residential lending team. We added 14 new lenders during the quarter including an expansion into the Ann Arbor market. We are well positioned to make the most of the opportunities for 2022 and beyond.”

Non-interest expenses up from first quarter of 2021

Total non-interest expense was $41.3 million in the first quarter of 2022 compared with $38.8 million in the first quarter of 2021. Compensation and benefits were $25.5 million in the first quarter of 2022, compared to $22.0 million in the first quarter of 2021. The year-over-year increase was due to the combination of higher costs related to higher staffing levels for our growth initiatives, continued higher healthcare benefit costs and lower deferred costs related to lower residential mortgage production. All other expenses including occupancy, deposit insurance premiums, financial institution taxes, data processing, intangibles amortization and other costs decreased by $1.0 million compared to the first quarter of 2021.

“Quarterly expense growth was anticipated versus first quarter 2021,” said Small. “We invested in revenue producing initiatives and certainly feel the positive effect in our production. Our efficiency ratio was on track with internal expectations for the quarter, running higher than the full year expectation as is generally the case in Q1.”

Credit quality

Non-performing assets totaled $47.6 million, or 0.63% of assets, at March 31, 2022, a decrease from $48.2 million at December 31, 2021, and from $49.4 million at March 31, 2021. Loan delinquencies decreased to $7.6 million, or 0.1% of loans, at March 31, 2022, from $12.3 million at December 31, 2021, and from $9.5 million at March 31, 2021. Classified loans totaled $60.3 million, or 1.0% of loans, as of March 31, 2022, a decrease from $69.5 million at December 31, 2021, and from $114.6 million at March 31, 2021.

The 2022 first quarter results include net loan recoveries of $0.1 million and a total provision expense of $0.9 million, compared with net loan recoveries of $0.2 million and a total provision credit of $7.0 million for the same period in 2021. The current year provision is primarily due to loan growth whereas the prior year provision was primarily due to the improving economic environment following the COVID-19 pandemic-induced economic recession and reserve increase in 2020. The allowance for credit losses as a percentage of total loans excluding PPP and including unaccreted acquisition marks was 1.34% at March 31, 2022, compared with 1.37% at December 31, 2021, and 1.69% at March 31, 2021. The continued economic improvement after the 2020 pandemic-related downturn has led to the year-over-year decrease in the allowance percentages.

“We again experienced improving asset quality with decreases in delinquencies, non-performing assets and classified loans again this quarter,” said Paul Nungester, CFO of Premier. “Our enhanced asset quality helped support a lower coverage level with the overall expense level being driven by our strong core loan production.”

Total assets at $7.59 billion

Total assets at March 31, 2022, were $7.59 billion, compared to $7.48 billion at December 31, 2021, and $7.53 billion at March 31, 2021. Gross loans receivable were $5.39 billion at March 31, 2022, compared to $5.30 billion at December 31, 2021, and $5.46 billion at March 31, 2021. At March 31, 2022, gross loans receivable decreased $71.4 million from a year ago due to a $425.1 million decrease in PPP loans. Excluding PPP, loans grew $353.8 million organically, or 7.1% from a year ago. Commercial loans excluding PPP increased $259.1 million from March 31, 2021, to 2022, or 7.6%. Securities at March 31, 2022, were $1.23 billion, compared to $1.22 billion at December 31, 2021, and $0.93 billion at March 31, 2021. Also, at March 31, 2022, goodwill and other intangible assets totaled $340.6 million compared to $342.1 million at December 31, 2021, and $346.7 million at March 31, 2021, with the decrease attributable to intangibles amortization.

Total deposits at March 31, 2021, were $6.32 billion, compared with $6.28 billion at December 31, 2021, and $6.35 billion at March 31, 2021. At March 31, 2022, total deposits grew $35.2 million organically, or 2.2% annualized from the prior quarter.

Total stockholders’ equity was $0.94 billion at March 31, 2022, compared to $1.02 billion at December 31, 2021, and $1.00 billion at March 31, 2021. The quarterly decrease in stockholders’ equity was primarily due to a decrease in accumulated other comprehensive income (“AOCI”) and buybacks. The decrease in AOCI is primarily related to a $58.9 million negative valuation adjustment on the available-for-sale securities portfolio. The Company also completed the repurchase of 793,166 common shares for $24.2 million during the quarter. At March 31, 2022, 1,291,000 common shares remained available for repurchase under the Company’s existing repurchase program.

Dividend to be paid May 13

The Board of Directors declared a quarterly cash dividend of $0.30 per common share payable May 13, 2022, to shareholders of record at the close of business on May 6, 2022. The dividend represents an annual dividend of 4.2 percent based on the Premier common stock closing price on April 25, 2022. Premier has approximately 35,552,000 common shares outstanding.

Conference call

Premier will host a conference call at 11:00 a.m. ET on Wednesday, April 27, 2022, to discuss the earnings results and business trends. The conference call may be accessed by calling 1-844-200-6205 and using access code 737994. Internet access to the call is also available (in listen-only mode) at the following URL: https://events.q4inc.com/attendee/811820392. The webcast replay of the conference call will be available at www.PremierFinCorp.com for one year.

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. For more information, visit the company’s website at PremierFinCorp.com.

Financial Statements and Highlights Follow

Safe Harbor Statement

This document may contain certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995. These statements may include, but are not limited to, statements regarding projections, forecasts, goals and plans of Premier Financial Corp. and its management, future movements of interests, loan or deposit production levels, future credit quality ratios, future strength in the market area, and growth projections. These statements do not describe historical or current facts and may be identified by words such as “intend,” “intent,” “believe,” “expect,” “estimate,” “target,” “plan,” “anticipate,” or similar words or phrases, or future or conditional verbs such as “will,” “would,” “should,” “could,” “might,” “may,” “can,” or similar verbs. There can be no assurances that the forward-looking statements included in this presentation will prove to be accurate. In light of the significant uncertainties in the forward-looking statements, 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. Forward-looking statements involve numerous risks and uncertainties, any one or more of which could affect Premier’s business and financial results in future periods and could cause actual results to differ materially from plans and projections. These risks and uncertainties include, but not limited to: impacts from the novel coronavirus (COVID-19) pandemic on the economy, financial markets, our customers, and our business and results of operation; changes in interest rates; disruptions in the mortgage market; risks and uncertainties inherent in general and local banking, insurance and mortgage conditions; political uncertainty; uncertainty in U.S. fiscal or monetary policy; uncertainty concerning or disruptions relating to tensions surrounding the current socioeconomic landscape; competitive factors specific to markets in which Premier operates; increasing competition for financial products from other financial institutions and nonbank financial technology companies; legislative or regulatory rulemaking or actions; capital market conditions; security breaches or unauthorized disclosure of confidential customer or Company information; interruptions in the effective operation of information and transaction processing systems of Premier or Premier’s vendors and service providers; failures or delays in integrating or adopting new technology; the impact of the cessation of LIBOR interest rates and implementation of a replacement rate; and other risks and uncertainties detailed from time to time in our Securities and Exchange Commission (SEC) filings, including our Annual Report on Form 10-K for the year ended December 31, 2021 and any further amendments thereto. All forward-looking statements made in this presentation 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 March 31, 2022, consolidated financial statements as part of its Quarterly Report on Form 10-Q 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 interest income to be a useful supplemental measure of our operating performance. We define core net interest income as net interest income on a tax-equivalent basis excluding income from PPP loans and purchase accounting marks accretion. We believe that this metric is a useful supplemental measure of operating performance because investors and equity analysts may use this measure 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 income from PPP loans and purchase accounting marks accretion. 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.