Good morning. Welcome to the Premier Financial Corp's Second Quarter 2023 Earnings Conference Call. All participants will be in listen-only mode. After today's presentation, there will be an opportunity to ask a question. Press star followed by one on your telephone keypad to register your question. Please note, this event is being recorded. I would now like to turn the conference over to Paul Nungester with Premier Financial Corp. Please go ahead. Thank you. Good morning, everyone, and thank you for joining us for today's Second Quarter 2023 Earnings Conference Call. This call is also being webcast, and the audio replay will be available at the Premier Financial Corp website at premierfincorp.com. Following our prepared comments on the company's strategy and performance, we will be able to take your questions. Before we begin, I'd like to remind you that during the conference call today, including during the question and answer period, you may hear forward-looking statements related to the future financial results and business operations for Premier Financial Corp. Actual results may differ materially from current management forecasts and projections as a result of factors over which the company has no control. Information on these risk factors and additional information on forward-looking statements are included in the news release and in the company's reports on file with the Securities and Exchange Commission. I'll now turn the call over to Gary for his opening comments. Thank you, Paul. Good morning to all. Thank you for joining us. On behalf of the Premier team, I'm pleased to announce second quarter earnings of $1.35 per share, with $0.68 of the earnings falling into the core operating category and another $0.67 a share resulting from a well-executed sale of our First Insurance Group agency. Coming out of our first quarter call, we shared our expectations for a more normalized quarterly core earnings range. Our team worked very hard to deliver on that expectation over the quarter. First, to comment on the personal insurance group transaction. The genesis for the sale emanated from a strategic assessment of each of Premier's core business segments, taking into account earnings growth trajectory, effective capital utilization, and operating execution management. While the agency's financial performance has been consistently strong and currently on par with the industry, from a strategic perspective, we felt we could achieve a higher return on capital and better position the agency to achieve its potential by pursuing alternatives in today's very dynamic agency valuation environment. The net result, an excellent bump in Premier's reported current earnings for the quarter, a $1.37 increase in tangible book value per share, and all with no EPS dilution effect on a go-forward basis. We improved capital and liquidity, and we're well positioned to support future growth in our core banking businesses. A win on all fronts. I'll now move to Premier's banking performance highlights for the quarter. We continue to see commercial opportunities in the market but are being very selective. We stay focused on supporting our existing clients along with targeted C&I opportunities. Annualized loan growth totaled in excess of 8% for the quarter. The commercial loan growth was 7% on the same annualized pace, with C&I representing 49% of our new business origination during the quarter. Total deposits grew 3% in absolute terms, with a slight drop in customer deposits over the course of the quarter. We continue to see migration of deposits to higher-earning products consistent with the industry. We are having success in neutralizing the effect of prior deposit premium offers upon repricing, while at the same time attracting new money with higher rate offers, primarily in the time deposit category. The core non-interest income category was up 9.4% versus the second quarter of last year, with wealth and deposit-related fee income reporting high single-digit increases. Targeted expense reduction initiatives are on track, with full quarter effects on the reductions to be felt over the remainder of the year. Loan portfolios continue to perform well. NPA and delinquency numbers are in check, very much solid with the four-quarter averages, and we are in a net recovery position from a net charge-off perspective for the quarter. Consistent with expectations we set on our call last quarter, we engaged in hedging activity in early June, which will provide a near-term boost to net interest income, while also protecting margin from unfavorable impacts of future Fed funds rate increases. We've also taken additional steps in right-sizing our residential mortgage operation, given the continued softness of the business, and doing so trims our expectations for balance sheet growth in the residential portfolio segment. Our unfunded construction commitments are down 70% versus this time last year. With that, I'm going to turn it over to Paul for some more details. Thank you, Gary. I'll begin by describing a couple important transactions during the quarter. First, on June 30th, as Gary said, we completed the sale of First Insurance Group to Risk Strategies Corporation. This sale generated a significant gain of $36.3 million, before transaction costs of $3.7 million and taxes of $8.5 million, representing $0.67 of EPS. The transaction strengthened capital by increasing tangible equity $48.8 million through the net gain and recovery of $24.7 million of goodwill and intangibles, which added 54 basis points or $1.37 of tangible value. We had a full quarter of operations in 2Q. Going forward, the utilization of proceeds will effectively offset the agency's pre-tax earnings, become accretive as they are deployed into loans. Separately, we completed a series of balance sheet hedges during June to improve asset sensitivity and provide some protection against additional rate increases. These hedges were all pay fixed, receive variable swaps, including $250 million of 2-year and $250 million of 3-year. These swaps carry an average 4.12% pay rate and are expected yet to generate $4.7 million of annualized pre-tax net interest income as of June 30. Going forward, each 25 basis point increase in SOFR is expected to generate an additional $625,000 of annualized pre-tax net interest income, including the net impact of these new swaps and our prior $250 million notional receive fixed, pay variable swap. Including the impact of all swaps, we now estimate that each 25 basis point increase in the federal funds rate could reduce annualized pre-tax net interest income by approximately half a million, based on our June 30 balance sheet, compared to $1.5 million as of March 31. For the balance sheet, capital levels improved significantly during the quarter, in part because of the FIG sale. Tangible equity increased 8.4% in dollar terms, and our TE ratio improved by 52 basis points to 7.55%, including AOCI, or 9.6%, excluding AOCI. Our regulatory ratios also increased, they all continue to exceed well-capitalized guidelines, including the impact of AOCI. Credit quality was steady, including a net decrease in criticized loans and net recoveries for the quarter. Total deposits increased by 3.25%, primarily due to an increase in broker deposits. We also experienced an impactful mix migration during the quarter, including a $155 million net decrease in savings, demand, and non-interest-bearing deposits, mostly offset by a $117 million increase in money market, time, and public fund deposits as customers look for higher deposit yields. Total liquidity improved during 2Q, with quantifiable sources increasing more than $360 million to $2.8 billion, including $1.5 billion of FHLB borrowing capacity at June 30. The increase was primarily due to successfully expanding our capacity at the Federal Reserve by more than $300 million in the second quarter via the Borrower-in-Custody program. Separately, our level of uninsured deposits declined to 31.5% or 17.3% when adjusting for collateralized deposits such as OPCS and other insured deposits such as the Indiana PDIF. As a result, our total liquidity was 230.5% of adjusted uninsured deposits at June 30. Primarily due to the deposit mix migration I previously mentioned, we experienced additional margin compression during 2Q. Interest-bearing deposit costs increased 38 basis points to 1.69% for 2Q, which was primarily due to higher utilization of broker deposits and increased rates for public ICS/CDARS accounts, money market accounts, and time deposits as customers migrated for yield. Excluding broker deposits and marks accretion, average interest-bearing customer deposit costs were 2.08% during June, for a cumulative beta of 37%, up from 35% in March, compared to the change in the monthly average effective Federal funds rate, which increased 500 basis points to 5.08% from December 2021. Net interest margin was positively impacted by the combination of previous loan growth and higher loan yields, which were 4.86%, up 20 basis points from first quarter. Excluding the impact of PPP and marks, loan yields were 4.89% in June 2023, for an increase of 108 basis points since December 2021. This represents a cumulative beta of 22% compared to the change in the monthly average effective Federal funds rate for the same period. Deposit costs outpacing loan yields led to the compression of net interest income and margin during the second quarter. Excluding the $36 million FIG gain, non-interest income was $17.1 million for 2Q, up 36.8% or $4.6 million from 1Q. This increase was primarily due to a lack of security losses and a $3.2 million increase in mortgage banking income, primarily due to an increase in hedge valuations. Excluding $3.7 million of transaction costs for the FIG sale, expenses were $40.8 million, down $2 million or 4.6% on a linked quarter basis, primarily due to cost-saving initiatives we began implementing during the second quarter. For the full year, we now expect total core expenses of approximately $158 million, down $5 million from our prior estimate, including $6 million from FIG, offset by $1 million of other costs, like higher FDIC premiums. Overall, we are pleased with our core performance in the second quarter. Excluding the impact of the FIG sale, pre-tax, pre-provision income increased $4.2 million or 16% on a linked quarter basis, for a 1.41% return on average assets. Net income increased $6.1 million or 33.5%, for a 1.13% return on average assets, and EPS increased $0.17 or 33% to $0.68. As we look forward, positive momentum includes the deployment of FIG sale proceeds into earning assets, the full impact of the swaps completed in June, and the continued execution of our cost-saving initiatives. Headwinds include the continued inverted curve environment with the potential for further rate increases, additional deposit mix migration or runoff, and possible changes in the regulator front that could lead to increased costs, such as even higher FDIC premiums. That completes my financial review, and I'll now turn the call back over to Gary for his closing remarks. Thank you, Paul. I'll share some thoughts for the remainder of the year that will hopefully be helpful in your modeling work. I would stick with the average earning asset growth of 4%, which we set earlier in the year. I do expect the second half will be much less robust than the first half. Customer deposit growth, 2% range plus for the remainder of the year. We do expect some additional margin compression driven by our deposit mix movement, but much more moderate quarter-to-quarter movement than we saw in Q2. Revised non-interest income figures adjust quarter three and four downward by $4 million each to reflect the FIG transaction and revised expense expectations downwards by $5 million in total for the remainder of the year for the same rationale. I will note that without FIG as a part of the organization, our efficiency ratio improves about 240 basis points. From a loss provision perspective, we're expecting no more than 5-8 basis points in net charge-offs for the remainder of the year. With that said, operator, we'll turn it over for questions. Thank you. If you'd like to ask a question, please press star followed by one on your telephone keypad. If for any reason you wish to withdraw your question, it is star followed by two. As a reminder, if you are using a speakerphone, please remember to pick up your handset before asking your question. Our first question comes from the line of Michael Perito of KBW. Your line is now open. Please go ahead. Hey, guys. How are you? Morning, Mike. Hey, Mike. Thanks for taking my questions. I wanted to start on just the kind of the incremental spread or margin, Gary or Paul, whoever wants to take a stab at it. Which is kind of curious, but you mentioned it doesn't sound like the balance sheet should grow a ton in the back half of the year, Gary, based on the earning asset guidance of 4% for the full year. That kind of suggests, you know, my rough math was pretty flat from here. Just wondering, you know, I'm sure you're still going to be originating loans and trying to bring on new customer deposits. Just how do we think about kind of the incremental spread of what you're targeting for the back half of the year? How does that kind of trickle down to the NIM, which it sounds like you guys expect compression to moderate, you know, relative to the first half of the year, based on what you're seeing in the, you know, first few weeks of the third quarter, and the end of last quarter, I should say. Yeah, Mike, you got that right there. We are projecting minimal additional growth on the asset side through loans. A good portion of that, as we've seen in the last couple of quarters even, comes from the existing commitments on construction lines and things like that, but those are slowing down as they've been burning down, right? We've been cutting back on production in mortgage especially, and even to some extent on the commercial front, although we're always looking for the best deals there. We've definitely had the commercial teams, especially understanding the environment in terms of pricing loans, right, to get the appropriate spreads. Thinking about our incremental cost of borrowing, being our kind of base these days and definitely starting with a five there, and then the spread on top of that. You know, new loans coming in the front door, in the seven, eight, even nine, to some extent. But also trying to focus a lot on the C&I piece of it, instead of the fixed or adjustable. We've been making good progress on that. I think it's in the 40s% for the origination front on our commercial in terms of the C&I business there. Obviously, you know, those would continue to float up if rates were to continue to increase from here as well. In terms of overall NIM, then, Mike, you know, if we maintain what we just said in terms of the asset growth and bring those in at an appropriate spread, as well as succeed on some of our initiatives on the deposit front. Most importantly, the recent trends, while we had a lot of mix migration in the quarter, it was predominantly early in the quarter. Our monthly NIM was within a few basis points of each other, you know, April, May, and June. That migration had an early impact and then kind of settled down, and if that were to continue, that would help with some stabilization in NIM. You know, our expectation would be that some of that would continue, so we could see a few more bits out of it, but absent major movements. Mike, we'll have two unique items that are true for third and fourth quarter that weren't true so much for the first two quarters. One, well, you'll see some margin movement, just based on the FIG transaction, converting all that to cash and what it does relative to our liquidity, and the 5% borrowing that Paul mentioned. Also the hedging activity that we got into, certainly we're looking at in today's environment, meaning this month with rates as they are and so forth, that's a $400,000 plus a month sort of improvement to the numbers. When we looked at the second half, the combination of those two, probably $4 million more in net interest income, it hasn't got so much to do with portfolio loan balances and the mix changes of the deposit base. Little tailwind there. Right Right. No, that's all really helpful, guys. I guess just as a kind of a high-level follow-up, Gary, I mean, does the balance sheet growth not turn back on until you guys can comfortably be generating kind of 3% incremental spreads, like to get that margin back up to 3 and above? I mean, does it make sense to just hold flat until the environment's kind of supportive of that? Or how do you guys think about that nature? Because, I mean, you still have the same team of lenders, right? There are still opportunities to take share. I mean, I imagine that hasn't changed. It's just you guys being a little bit more deliberate in what you're willing to look at. When does that switch, or why would that switch turn? Is it just the incremental spreads? Is it macro? Is it credit? Like, what are some of the considerations you guys take as we think about that moving forward? The spreads are a little bit more the results of the activity. We do have other constraints that we put on ourselves, like our loan-to-deposit ratio and so forth. We've got a reasonable amount of borrowed money right now through a Federal Home Loan Bank, and we're using brokered. We're trying to be conservative, if you will, relative to how much we would move the balance sheet before we were feeling stabilized in those categories as well. It's more about capacity that we'll free ourselves up with. We mentioned we've stepped away from the mortgage business and so forth. That will create capacity for the commercial group. Retail, indirect auto, and so forth, those are the things you step away from in a time like this, and we have, and you see that in the consumer numbers, trending slightly down. That's the way we'll create the capacity. I think, as Paul Nungester was mentioning, the loans are going on at 8%, so even at the worst borrowing rate, we're still making 3% on it. It's more about some of those other balance sheet factors that we want to make sure we get in a nice, predictable and safe position or maintain that position. That's probably our first thing on our mind when we're thinking about growth. You know, we had 20% at loan growth last year, so we really got to digest and get the right side of the balance sheet in as good a shape as we got the left side of the balance sheet in. Makes sense. Just two last quick ones for me. Just, you know, you guys kind of talked around a little bit, but are you willing to share any kind of budgeting expectations around mortgage gain on sale for the back half of the year? Just secondly, you know, I know that the insurance sale impacted the tax rate this quarter. Do you Paul, do you have kind of a an accrual rate for the back half of the year that you guys are running that we should be using? Thank you. Yeah, I'll answer that last one there, first real quick, Mike. When you include the impact of the FIG transaction, it's our effective tax rate is around the 19% level, consistent with kind of our historical patterns, right? Yeah, that was the incremental rate on the FIG transaction, because of the difference in tax basis and so forth. Right. was like 25%. Yeah. So it- Right. That's how we back into the $0.68 normalized. Yep. on the mortgage piece. Mike, you had another that was in the next question. Yeah, mortgage. Mortgage. Mike, I think if you took the two quarters just reported and split them in half, that would be about your expectation going forward for the following two quarters. About $3 million in the back half of the year, give or take? Give or take, yeah. Yeah. Yeah. All right. I really appreciate it, guys. Thanks. That's. for all the color and for taking my questions. Yes. Yes. Yeah. Yep. Yeah. I got it. Thank you, guys. Thank you. Thanks, Mike. Thank you. As a reminder, if you'd like to ask a question, please press star followed by one on your telephone keypad. Our next question comes from the line of Brendan Nosal of Piper Sandler. Your line is open. Please go ahead. Hey, good morning, guys. Hope you're doing well. Morning, Brendan. Morning. Just wanted to walk through your thought process behind adding the hedge this quarter after rates have already risen so much. I guess on the one hand, you get an immediate interest income benefit today with lower upside should rates move higher. On the other hand, stand to reason that if rates fall, you're kind of giving up a little bit of the recapture on the margin with rates down as well. Just kind of walk through the puts and takes and why now is the right time to add these hedges. I'll let Paul comment on that, and then, Brendan, I may have a follow-up. Thanks, Brendan. Yeah, it's a fair question. A couple of things there. As you, as you noted, yes, we get the immediate accretion, right, out of that trade, which is a benefit to NIM and PPNR there. Plus, it helps stabilize NIM, as we were alluding to earlier. It does give us some protection as rates continue to rise here. You know, we're expecting to hear a 25 basis points from the Fed here soon. We'll see if there's any more from there or if they truly settle in. Stepping back from it, Brendan, you know, the issue with it is, if you're going to do it, you got to do it when you've got the benefit. The opportunity. While you can always do a swap trade, right? The spreads weren't there. The differences between the current and the expected future curve weren't where they were when we did the execution. We could have done it certainly quarters earlier or even a year earlier, but the benefits weren't there at the time. It wasn't until there was a spread between what the market was expecting in terms of near-term rates possibly dropping and what the Fed continues to talk about in terms of higher for longer. That created the opportunity, that's when we stepped in. We got the immediate benefit, which is, you know, almost $5 million annualized here, which will be a near-term benefit. If it does continue to rise, you know, we'll just continue to benefit from that even more. In terms of our exposure, that's why we kept them short, right? We didn't, you know, go out too long on this. We kept them in the two to three range for now to deal with the near-term horizon that we foresee these rates being at the elevated levels. You know, those will roll off then. If rates have fallen by that point, which is certainly a long-term expectation for us, we'll just have the old one, which will be back into a positive position at that point and continue to benefit on that side. I think when we look at the tea leaves now, we do believe in higher for longer as the Fed's position. In this first year, we'll be in the money. To the extent the swap markets and the market expectations of what it looks like in year two, three come to bear, the swap itself will lose its positive aspect. The rest of our portfolio will benefit in such a great way from the retreat, if you will, of that. It'll neutralize it. Then by the end of the second year, we'll all just be left with the lower rates that come from that high beta dollar. Put some takes on that. In a perfect world, if I had my wizard hat on back in first quarter of 2022, I would have gone underwater and paid for 500 basis points of protection. To Paul's point, as we were going through the year, the swap curve versus our balance sheet at the time, it just never seemed advantageous enough to do it. I will also say that we were probably about six weeks later on the trade than we initially planned to be. We were ready to move, and we lost our price window, waited another couple, three weeks before we executed to see if it would come back. It was never going to be before the beginning of April for us. All right. Okay, really appreciate the thoughts there on a, you know, a more complicated moving piece. Maybe one more follow-up on the same topic. Does this hedge materially change how fast you would recapture AOCI on the securities book in a rates down scenario? Presumably, rates down the fair value of these hedges would decline. How much of securities you captured does that counter? Yeah, no. The swaps themselves don't make a big difference to the potential AOCI accretion that's predominantly from the securities book. We've run some numbers, we're looking at, you know, if rates stay where they're at, if the curve plays out as of the June 30 curve, we've got potential accretion of 23% of the AOCI pool, most of that from securities, that'd be another $1.08 of tangible coming in over the next six quarters by the end of next year. All right. Perfect. Brendan, we've added a page in our deck to reflect that. Got it. I'll take it. Thanks for taking the questions, and congrats on the quarter. Thank you. Thank you very much, Brendan. Thank you. As there are no additional questions waiting at this time, I'd like to hand the call back over to Gary Small for closing remarks. Well, again, thank you all. It's been another interesting quarter for seasonal results. Appreciate your interest in the organization. Look forward to more good news next quarter. Thank you very much. Ladies and gentlemen, this concludes today's Premier Financial second quarter 2023 earnings conference call. Thank you for joining. You may now disconnect your lines.