Premier Financial Corp. announced fourth quarter 2020 and year-end results on Tuesday, including solid core profitability. On a GAAP basis, net income for the fourth quarter of 2020 was $30.8 million, or 82 cents per diluted common share, compared to net income of $12.5 million, or 63 cents per diluted common share, for the fourth quarter of 2019.
Net income for the year ended Dec. 31, 2020, was $63.1 million, or $1.75 per diluted common share, compared to $49.4 million, or $2.48 per diluted common share, for the year ended Dec. 31, 2019.
The year-over-year comparisons are substantially impacted by the acquisition of United Community Financial Corp. (UCFC) on Jan. 31, 2020. The current year’s results include the impact of $2.2 million and $19.5 million of acquisition-related charges for the three and 12 months ended Dec. 31, 2020, respectively, which had after-tax costs of $1.7 million and $15.8 million, respectively, or 5 cents and 44 cents per diluted common share, respectively.
The three and 12 months ended Dec. 31, 2019, included $0.9 million and $1.4 million of acquisition-related charges, respectively, which had after-tax costs of $0.7 million and $1.1 million, respectively, or 3 cents and 6 cents per diluted common share, respectively. Additionally, the current year’s 12-month provision expense of $44.3 million included $25.9 million related to acquisition accounting for an after-tax cost of $20.5 million, or 57 cents per diluted common share.
The full year of 2019 included a provision expense of $2.9 million and no acquisition impact. Excluding the impact of the acquisition-related provision and charges, earnings for the three and 12 months ended Dec. 31, 2020, were $32.6 million and $99.3 million, respectively, or 87 cents and $2.76 per diluted common share, respectively.
“With core earnings per share up almost 9% from last year, we are proud to announce our eighth consecutive year of record core earnings performance,” said Donald Hileman, CEO of Premier. “Improving credit conditions and the successful completion of integration efforts in the fourth quarter paved the way to the strong finish for the year.”
The boards of directors and Hileman set the date for his transition from CEO of Premier Financial Corp. and Premier Bank to executive chairman of both boards of directors at March 31, 2021, consistent with plans outlined in the agreement and plan of merger between the company and UCFC, dated Sept. 9, 2019. On April 1, 2021, Gary Small will become CEO and president of both Premier Financial Corp. and Premier Bank and remain a member of the boards of directors.
“Don’s strong leadership as CEO over the past seven years and through the UCFC merger has been instrumental in creating a strong foundation for the continued success of the company,” said Small, president of Premier. “We’ve worked closely over the past 16 months, preparing to ensure this is a smooth transition.”
As previously announced, on Jan. 31, 2020, the company completed the strategic merger of equals with UCFC under which UCFC merged into Premier in a stock-for-stock transaction. The year-over-year comparison of company results is substantially impacted by the UCFC merger, with 2020 fourth quarter and full year results including three and 11 months of operations from UCFC, respectively, compared to none for the comparable periods in 2019.
In June, the company launched its newly designed logo and brand identity for Premier Financial Corp. and Premier Bank. The new tagline “Powered by People” honors the longstanding commitment both organizations have to their customers, communities and employees. In July, Premier Bank successfully completed its core systems conversion. The integration of teams, systems and processes for the combined organization was completed as expected.
“The fourth quarter and full-year performance reflected the benefits of our combined organization and the ability of our team to produce top-tier results in a very challenging environment,” said Small. “We are very pleased with our position as we enter 2021 and continue to implement enhancements designed to deliver a top-quality customer experience and exceptional performance.”
As a part of the CARES Act, the Small Business Administration created the Paycheck Protection Program (PPP) to provide small businesses with loans as a direct incentive to keep their workers on the payroll. Premier Bank actively participated in PPP for clients and made 2,880 loans for a total of $443.3 million for the year ended Dec. 31, 2020. Total gross fees for these loans totaled $14.8 million. Premier Bank recognized $3.6 million and $8 million as loan interest income during the three and 12 months ended Dec. 31, 2020, respectively. During the three months ended Dec. 31, 2020, a total of $56.4 million in loans were extinguished; and Premier Bank recognized approximately $0.8 million of accelerated fees in loan interest income.
Net interest income of $55 million in the fourth quarter of 2020 was up from $29.5 million in the fourth quarter of 2019. The increase over the prior year’s fourth quarter was attributable to organic growth and three months of income from UCFC compared to none in 2019. Net interest margin was 3.47% for the fourth quarter of 2020, consistent with 3.47% in the third quarter of 2020, and down from 3.80% in the fourth quarter of 2019. Yield on interest earning assets decreased to 3.84% in the fourth quarter of 2020, down seven basis points from 3.91% in the third quarter of 2020. The fourth quarter results also include the impact of PPP loans. Interest income includes $3.6 million on average balances of $426.5 million, which increased net interest margin by one basis point. Excluding the impact of acquisition marks and PPP loans, net interest margin would be 3.36% for the fourth quarter of 2020 compared to 3.41% for the third quarter of 2020.
“The beginning of PPP loan forbearances and accelerated fees in the fourth quarter allowed us to stabilize net interest margin,” said Hileman. “We continue to focus our strategies on managing funding costs and excess liquidity to help mitigate the impacts to core net interest margin.”
Total assets at Dec. 31, 2020, were $7.21 billion compared to $6.97 billion at Sept. 30, 2020, and $3.47 billion at Dec. 31, 2019. Gross loans receivable (excluding loans held for sale) were $5.49 billion at Dec. 31, 2020, compared to $5.47 billion at Sept. 30, 2020, and $2.75 billion at Dec. 31, 2019. At Dec. 31, 2020, gross loans receivable grew $2.74 billion, or 100% from a year ago, including $2.30 billion from the UCFC merger and $0.44 billion organically, including $0.39 billion of PPP loans.
Total deposits at Dec. 31, 2020, were $6.05 billion compared with $5.80 billion at Sept. 30, 2020, and $2.87 billion at Dec. 31, 2019. At Dec. 31, 2020, total deposits grew $3.18 billion, or 111% from a year ago, including $2.08 billion from the UCFC merger and $1.10 billion organically.
Total stockholders’ equity was $982.3 million at Dec. 31, 2020, compared to $959.0 million at Sept. 30, 2020, and $426.2 million at Dec. 31, 2019. The increase in stockholders’ equity from the prior year was due to net earnings and the UCFC merger, offset partially by the company’s repurchase of 430,000 common shares for $10.1 million during the first quarter of 2020.
The board of directors declared a quarterly cash dividend of 24 cents per common share payable Feb. 19, 2021, to shareholders of record at the close of business on Feb. 12, 2021. The dividend represents an annual dividend of 3.6% based on the Premier common stock closing price on Jan. 25, 2021. Premier has approximately 37,299,000 common shares outstanding.