Third Quarter 2026 Earnings Conference Call - PREMIER FINANCIAL CORP

Financial Performance:

• Reported Q3 2026 net income of $86 million ($0.89/share) excluding merger/restructuring charges; adjusted EPS increased ~7% to $2.72 YTD.
• Total portfolio loans grew 5.1% YoY and 8.7% annualized sequentially to $19.9 billion; C&I loans surged 11% YoY and 16% annualized sequentially.
• Total assets reached a record $28.5 billion; deposits were $21.6 billion (up 1.5% YoY, flat sequentially) with a 91% loan-to-deposit ratio.
• Net interest income rose 4.7% YoY to $227 million; Net Interest Margin (NIM) stood at 3.60%, improving 7 bps YoY.
• Total non-interest income increased 2.2% YoY to $46 million, driven by record service charges and treasury management revenue (+40% YoY).
• Non-interest expense was $150 million (excluding restructuring); efficiency ratio improved to 52%; CET1 ratio held at 10.6%.
• Credit quality strengthened with criticized/classified loans down $93 million (55 bps); Allowance for Credit Losses (ACL) decreased to 1.08% of total loans.

Guidance and Future Outlook:

• Full-year 2026 loan growth outlook remains mid-single digits despite elevated CRE payoffs (~$370 million Q3).
• Q4 2026 guidance: Fee income growth 3-5% YoY; Operating expenses ~$153 million (adjusted for one-time credits); effective tax rate ~21%.
• Anticipates Q4 NIM to dip 1-2 bps below 3.60% due to higher-cost wholesale funding mix, stabilizing in 2027.
• Expects two Fed rate hikes (December 2026, March 2027); asset yields expected to rise via repricing of securities ($250M quarterly) and commercial loans.
• Projects Florida and Tennessee expansion markets to reach significant scale by 2028, potentially hitting $2 billion combined franchise value in FL and $1.5-2B in TN.
• Plans to increase Loan-to-Deposit ratio to the mid-90s (approx. 95%) as deposit gathering initiatives take hold.

Business Segments and Product Lines:

• Expansion Markets: Florida team generated $300M in new loans with a similar pipeline since Q2 launch; Tennessee portfolio exceeds $750M (4% of total) since 2023 entry.
• New Hires: Added ~20 bankers/staff in Nashville/Knoxville area, closing $100M in new relationships in <3 months.
• Branch Expansion: On track to open Fort Lauderdale, West Palm, and Naples centers in H1 2027; Chattanooga branch opened; Knoxville/Nashville branches expected mid-year 2027.
• Core Markets: Cincinnati/Columbus and Mid-Atlantic regions posted record production in 2026, exceeding $1B annual production each.
• Product Focus: Strong traction in treasury management (80%+ growth in multi-card customers) and commercial relationships; 1.8 billion commercial pipeline recorded.

Market and Competitive Landscape:

• Recognized by Forbes as a top-performing global bank; 9th consecutive outstanding Community Reinvestment Act rating from FDIC.
• Competition in deposit markets remains intense, leading to flat sequential deposit balances despite strong new account generation (8,400 new customers in Q3).
• Commercial loan demand remains robust, with teams converting significant pipeline opportunities across the footprint.
• Pricing discipline maintained; no observed pricing differentials in new markets compared to legacy markets, with Florida showing strong fee generation.

Risks and Challenges:

• Elevated Commercial Real Estate (CRE) payoffs remain a primary headwind to loan growth (approx. $1B over 12 months).
• Deposit competition necessitates potential NIM compression to defend yield levels while funding loan growth.
• Expense management: Salary increases from hiring in expansion markets and merit increases impact operating costs.
• Credit risk: While trending well, specific held-for-sale credits and occasional charge-offs (e.g., indirect auto) require monitoring; one property reserve remains active.

Management Commentary and Tone:

• Management expressed high confidence in the "relationship-focused banking model," citing record production ($4B in 9 months, up 70% YoY).
• Tone is optimistic regarding expansion markets, describing Florida and Tennessee teams as having "hit the ground running."
• Emphasized disciplined growth and operational leverage, noting the balance sheet is well-positioned to support future lending.
• Acknowledged branch optimization opportunities (potential 2-for-1 or 3-for-1 consolidations) to drive future cost savings.

Analyst Questions and Answers:

• Deposit Dynamics: Confirmed Q3 flat balances were due to branch closures ($37M+) masking organic growth; Q4 expected to show strong recovery with several hundred million in growth.
• NIM Defense: Explained that 3.60% NIM is defendable in 2027 due to significant asset repricing tailwinds ($400M fixed loans + $350M variable loans re-pricing up 200-275 bps).
• Expense Outlook: Reiterated 3-5% YoY expense growth for 2027, offset by potential branch optimization and back-office savings.
• Credit Quality: Confirmed no expected losses on held-for-sale credits; one auto charge-off was fully reserved; NPLs expected to decline significantly by Q4.
• Compensation: Announced upcoming tweaks to incentive plans to heavily weigh deposit generation, specifically breaking out non-interest-bearing accounts.

Other Key Points:

• Record commercial pipeline of $1.8 billion as of September 30, 2026, with half derived from former Premier markets.
• Florida team already has a steady deposit pipeline; Tennessee has ~$100M in deposits alongside its $750M loan book.
• No share repurchases in Q3 to preserve capital for loan growth; CET1 ratio targeted to remain between 10.5% and 11%.
• One-time $2M healthcare rebate and $2M deferred comp reduction benefited Q3 expense figures; these adjustments will normalize in Q4.
• Management highlighted a specific $100M+ multi-product win in Baltimore as a testament to cross-functional collaboration.