PREMIER FINANCIAL CORP (Form: 10-K, Received: 03/01/2022 10:44:47)

true0000946647http://fasb.org/us-gaap/2021-01-31#OtherLiabilitieshttp://fasb.org/us-gaap/2021-01-31#OtherLiabilities2021http://fasb.org/us-gaap/2021-01-31#OtherAssetshttp://fasb.org/us-gaap/2021-01-31#OtherAssetsMay 31, 2031P5Yfalse--12-31FYCommercial real estate2029-120000946647us-gaap:SpecialMentionMemberpfc:PurchaseCreditDeterioratedMember2021-12-3100009466472020-07-012020-09-300000946647pfc:OneFourFamilyOwnerOccupiedMemberus-gaap:RealEstateMemberus-gaap:ResidentialPortfolioSegmentMember2021-01-012021-12-310000946647us-gaap:TreasuryStockMember2020-12-310000946647us-gaap:EquipmentMemberus-gaap:CommercialPortfolioSegmentMemberpfc:OtherLoansMember2021-12-310000946647us-gaap:ResidentialRealEstateMemberpfc:SubsequentlyDefaultedMember2021-01-012021-12-3100009466472020-01-012020-03-310000946647us-gaap:OtherAssetsMemberus-gaap:InterestRateSwapMember2021-12-310000946647pfc:CommercialLoanPortfolioSegmentMemberpfc:OtherLoansMember2021-12-310000946647pfc:UnitedStatesBankMember2021-12-310000946647us-gaap:CashFlowHedgingMemberus-gaap:OtherAssetsMemberus-gaap:InterestRateSwapMember2021-12-310000946647us-gaap:SpecialMentionMemberus-gaap:ResidentialPortfolioSegmentMemberus-gaap:RealEstateMember2021-12-310000946647pfc:BaselIiiMember2021-12-310000946647us-gaap:CommercialRealEstateMember2020-12-310000946647pfc:OtherLoanMember2020-12-310000946647srt:ParentCompanyMember2021-01-012021-12-310000946647pfc:OtherLoanMember2021-12-310000946647us-gaap:RetainedEarningsMember2020-01-012020-12-310000946647us-gaap:FinancingReceivablesEqualToGreaterThan90DaysPastDueMember2019-12-310000946647us-gaap:FairValueInputsLevel2Memberus-gaap:AssetBackedSecuritiesMember2021-12-310000946647us-gaap:RetainedEarningsMember2018-12-310000946647pfc:PurchaseCreditImpairedMember2021-12-310000946647pfc:LongTermEquityIncentivePlan2015Member2021-12-310000946647pfc:OtherMortgageBankingMember2021-01-012021-12-310000946647pfc:TroubledDebtRestructuringMemberus-gaap:HomeEquityMember2020-01-012020-12-310000946647us-gaap:RealEstateMemberus-gaap:CommercialPortfolioSegmentMemberpfc:OtherLoansMember2021-12-310000946647pfc:OtherLoansMemberpfc:HomeEquityAndImprovementPortFolioSegmentMember2019-12-310000946647us-gaap:SubordinatedDebtMember2020-09-012020-09-300000946647us-gaap:FederalHomeLoanBankBorrowingsMember2021-01-012021-12-310000946647srt:MinimumMemberpfc:ExecutiveLongTermEquityIncentivePlanMember2021-12-310000946647us-gaap:CommercialLoanMemberpfc:UnclassifiedMember2021-12-310000946647pfc:OtherMortgageBankingMember2021-12-310000946647us-gaap:HomeEquityMember2021-12-310000946647us-gaap:ResidentialRealEstateMemberus-gaap:SpecialMentionMember2021-12-310000946647us-gaap:FairValueInputsLevel2Memberus-gaap:USGovernmentCorporationsAndAgenciesSecuritiesMember2021-12-310000946647us-gaap:ConsumerLoanMember2019-12-310000946647us-gaap:RealEstateLoanMemberus-gaap:FinancingReceivables60To89DaysPastDueMemberus-gaap:CommercialPortfolioSegmentMember2019-12-310000946647us-gaap:FinancingReceivables30To59DaysPastDueMemberpfc:CommercialLoanPortfolioSegmentMemberpfc:OtherLoansMember2021-12-310000946647us-gaap:SpecialMentionMemberus-gaap:RealEstateMemberus-gaap:CommercialPortfolioSegmentMember2020-12-310000946647pfc:PurchaseCreditDeterioratedMemberus-gaap:SpecialMentionMember2020-12-310000946647us-gaap:SpecialMentionMember2021-12-310000946647us-gaap:FairValueInputsLevel2Memberpfc:PurchasedCertificateOfDepositOptionMember2020-12-310000946647srt:MinimumMember2021-01-012021-12-310000946647us-gaap:CommercialLoanMemberus-gaap:SpecialMentionMember2021-12-310000946647us-gaap:ResidentialRealEstateMemberpfc:TotalClassifiedMember2021-12-310000946647us-gaap:CommercialRealEstateMemberus-gaap:SubstandardMember2020-12-310000946647us-gaap:CommercialLoanMemberus-gaap:SubstandardMember2021-12-310000946647us-gaap:FinancingReceivables30To59DaysPastDueMemberpfc:OtherLoansMemberpfc:HomeEquityAndImprovementPortFolioSegmentMember2021-12-310000946647srt:ParentCompanyMember2020-01-012020-12-310000946647us-gaap:ConsumerLoanMember2020-12-310000946647us-gaap:CreditAndDebitCardMember2019-01-012019-12-310000946647us-gaap:FairValueInputsLevel2Memberus-gaap:MortgageBackedSecuritiesMember2021-12-310000946647pfc:InterestRateSwapAssetsMember2020-12-310000946647pfc:LoanPurchaseMemberus-gaap:RealEstateMemberus-gaap:CommercialPortfolioSegmentMember2020-12-310000946647srt:MinimumMemberus-gaap:LandBuildingsAndImprovementsMember2021-01-012021-12-310000946647pfc:AppraisalsWhichUtilizeSalesComparisonNetIncomeAndCostApproachMember2020-12-310000946647us-gaap:FederalHomeLoanBankBorrowingsMember2021-12-310000946647pfc:InventoryAndReceivablesMember2020-12-310000946647us-gaap:CumulativePreferredStockMember2021-12-310000946647us-gaap:RealEstateLoanMemberus-gaap:ResidentialPortfolioSegmentMemberus-gaap:FinancialAssetNotPastDueMember2021-12-310000946647us-gaap:CommonStockMember2018-12-310000946647us-gaap:HomeEquityMember2018-12-310000946647us-gaap:ResidentialRealEstateMemberpfc:TroubledDebtRestructuringMember2021-01-012021-12-310000946647us-gaap:CommercialRealEstateMemberpfc:TotalClassifiedMember2020-12-310000946647pfc:FirstFederalBankMember2021-01-012021-12-310000946647us-gaap:FairValueInputsLevel2Memberus-gaap:USGovernmentCorporationsAndAgenciesSecuritiesMember2020-12-310000946647us-gaap:RealEstateLoanMemberus-gaap:ResidentialPortfolioSegmentMemberus-gaap:FinancingReceivables60To89DaysPastDueMember2019-12-310000946647pfc:BaselIiiMembersrt:MaximumMember2021-12-310000946647us-gaap:FinancingReceivablesEqualToGreaterThan90DaysPastDueMemberpfc:OtherLoansMemberus-gaap:ConsumerPortfolioSegmentMember2021-12-310000946647pfc:StockGrantsMember2020-12-310000946647us-gaap:CollateralizedMortgageObligationsMember2020-12-310000946647us-gaap:HomeEquityMember2020-12-310000946647pfc:LoanPurchaseMemberus-gaap:ResidentialPortfolioSegmentMemberus-gaap:RealEstateMember2021-12-310000946647us-gaap:ResidentialRealEstateMemberus-gaap:SubstandardMember2021-12-310000946647pfc:PaycheckProtectionProgramMemberpfc:CommercialLoanPortfolioSegmentMemberpfc:CovidNineteenMemberpfc:OtherLoansMember2020-12-310000946647us-gaap:ConsumerLoanMemberpfc:UnclassifiedMember2020-12-3100009466472021-07-012021-09-300000946647pfc:ConstructionPortfolioSegmentMemberus-gaap:RealEstateLoanMember2021-12-310000946647us-gaap:FinancingReceivables30To59DaysPastDueMember2019-12-310000946647us-gaap:ConstructionLoansMember2019-12-310000946647us-gaap:FederalHomeLoanBankBorrowingsMember2020-01-012020-12-310000946647us-gaap:ResidentialPortfolioSegmentMemberus-gaap:RealEstateMemberpfc:OneFourFamilyNonOwnerOccupiedMember2021-01-012021-12-310000946647us-gaap:SpecialMentionMemberpfc:CommercialLoanPortfolioSegmentMemberpfc:OtherLoansMember2020-12-310000946647us-gaap:HomeEquityMemberpfc:UnclassifiedMember2021-12-310000946647us-gaap:SubordinatedDebtMember2020-09-300000946647us-gaap:CommercialLoanMember2019-12-310000946647us-gaap:TreasuryStockMember2018-12-310000946647us-gaap:CommercialRealEstateMemberpfc:TroubledDebtRestructuringMember2019-01-012019-12-310000946647us-gaap:PassMemberpfc:CommercialLoanPortfolioSegmentMemberpfc:OtherLoansMember2020-12-310000946647pfc:NewRenewalPoliciesMember2019-01-012019-12-310000946647pfc:OtherLoansMemberus-gaap:FinancialAssetNotPastDueMemberpfc:HomeEquityAndImprovementPortFolioSegmentMember2021-12-310000946647us-gaap:DepositAccountMember2020-01-012020-12-310000946647pfc:OtherLoansMemberpfc:CommercialLoanPortfolioSegmentMemberus-gaap:SubstandardMember2021-12-310000946647us-gaap:EquitySecuritiesMember2020-12-310000946647us-gaap:FairValueInputsLevel2Memberpfc:MortgageBankingDerivativeAssetMember2021-12-310000946647pfc:CETIMember2021-12-310000946647us-gaap:CommercialRealEstateMember2020-01-012020-12-310000946647us-gaap:RealEstateLoanMemberus-gaap:CommercialPortfolioSegmentMemberus-gaap:FinancialAssetNotPastDueMember2019-12-310000946647us-gaap:EquipmentMember2020-12-310000946647us-gaap:ResidentialPortfolioSegmentMemberus-gaap:RealEstateMember2021-12-310000946647pfc:ConstructionPortfolioSegmentMemberus-gaap:RealEstateMember2020-12-310000946647us-gaap:PassMemberus-gaap:RealEstateMemberus-gaap:CommercialPortfolioSegmentMember2021-12-310000946647us-gaap:RetainedEarningsMember2019-01-012019-12-310000946647us-gaap:EquitySecuritiesMember2021-12-310000946647us-gaap:RealEstateLoanMemberus-gaap:RealEstateMemberus-gaap:CommercialPortfolioSegmentMember2020-12-310000946647us-gaap:FairValueInputsLevel2Memberus-gaap:USStatesAndPoliticalSubdivisionsMember2020-12-310000946647pfc:FirstFederalBankMember2020-01-012020-12-310000946647us-gaap:FairValueInputsLevel2Memberus-gaap:CorporateBondSecuritiesMember2020-12-310000946647us-gaap:RealEstateMemberus-gaap:CommercialPortfolioSegmentMember2020-12-310000946647pfc:LoanPurchaseMemberpfc:OtherLoansMember2021-12-310000946647us-gaap:RestrictedStockUnitsRSUMemberpfc:KeyLongTermEquityIncentivePlanMember2020-01-012020-03-310000946647srt:MinimumMemberus-gaap:FurnitureAndFixturesMember2021-01-012021-12-310000946647us-gaap:CommercialLoanMemberus-gaap:FairValueInputsLevel3Member2020-12-310000946647pfc:OtherLoansMemberus-gaap:ConsumerPortfolioSegmentMember2020-12-310000946647us-gaap:AdditionalPaidInCapitalMember2021-12-310000946647pfc:UnitedCommunityFinancialCorpMember2020-12-310000946647us-gaap:InterestRateSwapMember2021-01-012021-12-310000946647pfc:FirstDefianceRiskManagementMember2020-01-012020-12-310000946647us-gaap:ConsumerLoanMember2020-01-012020-12-310000946647us-gaap:CommercialLoanMemberpfc:TotalClassifiedMember2021-12-310000946647us-gaap:CommercialLoanMember2020-01-012020-12-310000946647us-gaap:FinancingReceivablesEqualToGreaterThan90DaysPastDueMemberpfc:OtherLoansMemberus-gaap:ConsumerPortfolioSegmentMember2019-12-310000946647us-gaap:AssetBackedSecuritiesMember2020-12-310000946647us-gaap:RetainedEarningsMember2019-12-310000946647pfc:SubsequentlyDefaultedMember2021-01-012021-12-310000946647pfc:CommercialLoanPortfolioSegmentMemberus-gaap:FinancingReceivablesEqualToGreaterThan90DaysPastDueMemberpfc:OtherLoansMember2021-12-310000946647us-gaap:ConstructionLoansMember2020-12-310000946647us-gaap:AssetBackedSecuritiesMember2021-12-310000946647us-gaap:CommercialLoanMember2021-12-310000946647pfc:OtherLoansMemberpfc:PurchaseCreditDeterioratedMember2021-12-310000946647us-gaap:CashFlowHedgingMemberus-gaap:InterestRateSwapMember2021-12-310000946647pfc:PremierStatutoryTrustsIIMember2020-12-310000946647us-gaap:MortgageBackedSecuritiesMember2020-12-310000946647us-gaap:PassMemberpfc:OtherLoansMemberpfc:CommercialLoanPortfolioSegmentMember2021-12-310000946647pfc:PurchasedCertificateOfDepositOptionMember2020-12-310000946647us-gaap:CommercialLoanMemberus-gaap:SpecialMentionMember2020-12-310000946647pfc:FannieMaeMember2021-01-012021-12-310000946647us-gaap:ResidentialRealEstateMemberus-gaap:SpecialMentionMember2020-12-310000946647pfc:BaselIiiMembersrt:MinimumMember2021-12-310000946647pfc:UnitedCommunityFinancialCorpMember2020-01-310000946647us-gaap:RealEstateLoanMemberus-gaap:FinancingReceivables60To89DaysPastDueMemberus-gaap:CommercialPortfolioSegmentMember2021-12-310000946647us-gaap:FinancingReceivables60To89DaysPastDueMemberpfc:OtherLoansMemberpfc:HomeEquityAndImprovementPortFolioSegmentMember2021-12-310000946647us-gaap:FinancingReceivablesEqualToGreaterThan90DaysPastDueMemberpfc:OtherLoansMemberpfc:HomeEquityAndImprovementPortFolioSegmentMember2021-12-310000946647us-gaap:AccountingStandardsUpdate201613Member2020-01-012020-12-310000946647us-gaap:CustomerRelationshipsMemberpfc:UnitedCommunityMember2020-01-012020-12-310000946647pfc:AgricultureRealEstateLoansMember2021-12-310000946647srt:MaximumMember2021-12-310000946647pfc:LoanPurchaseMemberpfc:OtherLoansMemberus-gaap:ConsumerPortfolioSegmentMember2021-12-3100009466472021-12-310000946647us-gaap:CommercialLoanMember2019-01-012019-12-310000946647srt:MaximumMemberus-gaap:LandBuildingsAndImprovementsMember2021-01-012021-12-310000946647us-gaap:CommonStockMember2020-12-310000946647pfc:OtherLoansMemberus-gaap:FinancialAssetNotPastDueMemberpfc:HomeEquityAndImprovementPortFolioSegmentMember2019-12-310000946647pfc:ConstructionPortfolioSegmentMemberus-gaap:RealEstateLoanMember2019-12-310000946647pfc:PurchaseCreditDeterioratedMemberus-gaap:FinancingReceivables60To89DaysPastDueMember2021-12-310000946647pfc:PurchaseCreditDeterioratedMemberpfc:TotalClassifiedMember2021-12-310000946647pfc:MortgageBankingDerivativeAssetMember2021-12-310000946647us-gaap:USStatesAndPoliticalSubdivisionsMember2020-12-3100009466472022-02-230000946647us-gaap:AutomobilesMember2020-12-310000946647us-gaap:ResidentialRealEstateMember2019-01-012019-12-310000946647pfc:OtherLoansMemberus-gaap:SubstandardMemberus-gaap:ConsumerPortfolioSegmentMember2021-12-310000946647pfc:EquityPlan2018Member2021-12-310000946647us-gaap:RealEstateLoanMemberus-gaap:ResidentialPortfolioSegmentMemberus-gaap:FinancingReceivablesEqualToGreaterThan90DaysPastDueMember2019-12-310000946647us-gaap:CorporateBondSecuritiesMember2020-12-310000946647us-gaap:ResidentialRealEstateMember2020-12-310000946647us-gaap:HomeEquityMember2021-12-310000946647us-gaap:FairValueInputsLevel2Member2020-12-310000946647srt:MaximumMemberpfc:ExecutiveLongTermEquityIncentivePlanMember2021-12-310000946647us-gaap:FinancingReceivables30To59DaysPastDueMemberus-gaap:RealEstateLoanMemberus-gaap:ResidentialPortfolioSegmentMember2019-12-310000946647us-gaap:FinancingReceivables30To59DaysPastDueMemberus-gaap:RealEstateLoanMemberus-gaap:CommercialPortfolioSegmentMember2021-12-310000946647us-gaap:RestrictedStockUnitsRSUMembersrt:MinimumMemberpfc:KeyLongTermEquityIncentivePlanMember2021-12-310000946647pfc:ShortTermIncentivePlanMember2021-01-012021-12-3100009466472021-04-012021-06-300000946647us-gaap:AdditionalPaidInCapitalMember2021-01-012021-12-310000946647us-gaap:AccumulatedOtherComprehensiveIncomeMember2018-12-310000946647pfc:OtherLoansMemberpfc:CommercialLoanPortfolioSegmentMember2021-12-310000946647pfc:FirstInsuranceMember2020-01-012020-12-310000946647pfc:LoansHeldForSaleAtFairValueMemberus-gaap:FairValueInputsLevel3Member2020-12-310000946647pfc:LoanPurchaseMemberpfc:CommercialLoanPortfolioSegmentMemberpfc:OtherLoansMember2021-12-310000946647us-gaap:RealEstateLoanMemberus-gaap:ResidentialPortfolioSegmentMember2019-12-310000946647srt:MaximumMember2021-01-012021-12-310000946647srt:ParentCompanyMember2020-12-310000946647pfc:TotalClassifiedMemberus-gaap:HomeEquityMember2021-12-310000946647us-gaap:ConstructionLoansMember2021-12-310000946647pfc:ShortTermIncentivePlanMember2020-01-012020-12-310000946647pfc:EquitableRecoupmentClaimEstimateMember2021-12-310000946647us-gaap:AccountingStandardsUpdate201813Member2021-12-310000946647us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-01-012021-12-310000946647us-gaap:FairValueInputsLevel2Memberpfc:WrittenCertificateOfDepositOptionMember2020-12-310000946647srt:MinimumMember2021-12-310000946647us-gaap:RealEstateLoanMemberus-gaap:CommercialPortfolioSegmentMemberus-gaap:FinancingReceivablesEqualToGreaterThan90DaysPastDueMember2019-12-310000946647us-gaap:FairValueInputsLevel2Memberus-gaap:AssetBackedSecuritiesMember2020-12-310000946647pfc:PremierStatutoryTrustsIMember2020-12-310000946647pfc:OtherMortgageBankingMember2020-12-310000946647pfc:ResidentialMortgageLoansMember2021-12-310000946647us-gaap:FinancingReceivablesEqualToGreaterThan90DaysPastDueMemberpfc:OtherLoansMemberpfc:HomeEquityAndImprovementPortFolioSegmentMember2019-12-310000946647pfc:OtherLoansMemberus-gaap:SubstandardMemberpfc:PurchaseCreditDeterioratedMember2020-12-310000946647pfc:TotalClassifiedMemberus-gaap:HomeEquityMember2020-12-310000946647pfc:CommercialLoanPortfolioSegmentMemberpfc:OtherLoansMemberus-gaap:FinancialAssetNotPastDueMember2019-12-310000946647us-gaap:MortgageBackedSecuritiesMember2021-12-310000946647us-gaap:ConstructionLoansMember2019-01-012019-12-310000946647us-gaap:CommercialRealEstateMember2021-12-310000946647us-gaap:AccountingStandardsUpdate201613Member2021-01-012021-12-310000946647srt:MaximumMemberus-gaap:FurnitureAndFixturesMember2021-01-012021-12-310000946647pfc:OtherLoansMemberus-gaap:ConsumerPortfolioSegmentMember2019-12-310000946647us-gaap:FairValueInputsLevel1Member2020-12-310000946647us-gaap:RealEstateLoanMemberus-gaap:CollateralPledgedMemberus-gaap:CommercialPortfolioSegmentMember2021-12-310000946647us-gaap:RealEstateLoanMemberus-gaap:CommercialPortfolioSegmentMemberus-gaap:FinancialAssetNotPastDueMember2021-12-310000946647us-gaap:PerformanceSharesMember2021-01-012021-12-310000946647pfc:PurchaseCreditDeterioratedMemberpfc:TotalClassifiedMember2020-12-310000946647us-gaap:PassMemberpfc:OtherLoansMemberus-gaap:ConsumerPortfolioSegmentMember2021-12-310000946647pfc:PermanentConstructionLoansMember2020-01-012020-12-3100009466472020-10-012020-12-310000946647us-gaap:CommercialRealEstateMemberpfc:SubsequentlyDefaultedMember2019-01-012019-12-310000946647pfc:PremierStatutoryTrustsIIMember2021-01-012021-12-310000946647pfc:LoanPurchaseMember2020-12-310000946647us-gaap:CommercialRealEstateMemberus-gaap:FairValueInputsLevel3Member2020-12-310000946647us-gaap:InterestRateSwapMember2021-12-310000946647us-gaap:FinancingReceivables30To59DaysPastDueMember2021-12-310000946647pfc:ResidentialMortgageLoansMember2021-01-012021-12-310000946647pfc:PurchaseCreditDeterioratedMemberus-gaap:FinancialAssetNotPastDueMember2021-12-310000946647pfc:FreddieMacMember2020-01-012020-12-310000946647us-gaap:AccountingStandardsUpdate201602Member2019-01-010000946647us-gaap:CreditAndDebitCardMember2021-01-012021-12-310000946647pfc:InventoryAndReceivablesMember2021-12-310000946647us-gaap:FairValueInputsLevel3Member2021-12-310000946647us-gaap:EmployeeStockOptionMember2019-01-012019-12-310000946647us-gaap:RealEstateLoanMemberus-gaap:ResidentialPortfolioSegmentMemberus-gaap:FinancingReceivablesEqualToGreaterThan90DaysPastDueMember2021-12-310000946647pfc:InterestRateSwapLiabilitiesMember2021-12-310000946647us-gaap:ResidentialRealEstateMember2021-12-310000946647us-gaap:RestrictedStockUnitsRSUMember2021-01-012021-12-310000946647us-gaap:ConsumerLoanMemberpfc:UnclassifiedMember2021-12-310000946647us-gaap:FairValueInputsLevel2Memberus-gaap:CollateralizedMortgageObligationsMember2020-12-310000946647us-gaap:SpecialMentionMemberus-gaap:ConstructionLoansMember2021-12-310000946647us-gaap:CommercialRealEstateMemberpfc:UnclassifiedMember2020-12-310000946647us-gaap:RealEstateLoanMemberus-gaap:RealEstateMemberpfc:CommercialLoanPortfolioSegmentMember2021-12-310000946647pfc:CommercialLoanPortfolioSegmentMemberpfc:OtherLoansMember2020-12-310000946647us-gaap:PassMemberpfc:OtherLoansMemberpfc:HomeEquityAndImprovementPortFolioSegmentMember2021-12-310000946647us-gaap:ConstructionLoansMember2020-12-310000946647us-gaap:RetainedEarningsMember2020-12-310000946647pfc:SecuritiesAvailableForSaleMember2020-01-012020-12-310000946647us-gaap:ConstructionLoansMemberpfc:UnclassifiedMember2020-12-310000946647pfc:ConstructionPortfolioSegmentMemberus-gaap:RealEstateLoanMemberus-gaap:FinancingReceivables60To89DaysPastDueMember2021-12-310000946647pfc:NewRenewalPoliciesMember2020-01-012020-12-310000946647srt:ParentCompanyMember2019-01-012019-12-310000946647us-gaap:AdditionalPaidInCapitalMember2019-01-012019-12-310000946647pfc:CollateralDependentLoanMember2020-12-310000946647pfc:OtherNonInterestIncomeMember2019-01-012019-12-310000946647us-gaap:ResidentialRealEstateMemberpfc:TroubledDebtRestructuringMember2020-12-310000946647us-gaap:CommercialLoanMemberpfc:TroubledDebtRestructuringMember2021-01-012021-12-310000946647pfc:RealEstateHeldForSaleMembersrt:MaximumMember2021-01-012021-12-310000946647us-gaap:ResidentialRealEstateMember2021-12-310000946647us-gaap:CommercialRealEstateMemberpfc:TotalClassifiedMember2021-12-310000946647us-gaap:CommercialLoanMember2020-12-3100009466472021-01-012021-03-310000946647us-gaap:CommercialLoanMemberpfc:TroubledDebtRestructuringMember2020-12-310000946647us-gaap:ConstructionLoansMember2020-01-012020-12-310000946647us-gaap:TreasuryStockMember2020-01-012020-12-310000946647us-gaap:PreferredStockMember2020-12-310000946647us-gaap:FinancingReceivables30To59DaysPastDueMemberus-gaap:RealEstateLoanMemberus-gaap:ResidentialPortfolioSegmentMember2021-12-310000946647pfc:AgricultureProductionMemberpfc:OtherLoansMemberpfc:CommercialLoanPortfolioSegmentMember2021-01-012021-12-310000946647pfc:TroubledDebtRestructuringMemberus-gaap:HomeEquityMember2020-12-310000946647us-gaap:FinancingReceivables30To59DaysPastDueMemberpfc:OtherLoansMemberus-gaap:ConsumerPortfolioSegmentMember2019-12-310000946647us-gaap:CommercialLoanMemberpfc:SubsequentlyDefaultedMember2019-01-012019-12-310000946647pfc:OtherLoansMemberus-gaap:FinancialAssetNotPastDueMemberus-gaap:ConsumerPortfolioSegmentMember2019-12-310000946647us-gaap:FinancingReceivables60To89DaysPastDueMemberpfc:OtherLoansMemberus-gaap:ConsumerPortfolioSegmentMember2019-12-310000946647us-gaap:FairValueInputsLevel2Memberpfc:InterestRateSwapAssetsMember2021-12-310000946647pfc:CommercialLoanPortfolioSegmentMemberpfc:OtherLoansMemberus-gaap:FinancialAssetNotPastDueMember2021-12-310000946647us-gaap:ResidentialPortfolioSegmentMemberus-gaap:RealEstateMemberus-gaap:SubstandardMember2021-12-310000946647us-gaap:RealEstateLoanMemberus-gaap:CollateralPledgedMemberus-gaap:ResidentialPortfolioSegmentMember2021-12-310000946647pfc:LoanPurchaseMemberpfc:OtherLoansMemberpfc:HomeEquityAndImprovementPortFolioSegmentMember2020-12-310000946647pfc:LoanPurchaseMemberus-gaap:RealEstateMemberus-gaap:CommercialPortfolioSegmentMember2021-12-310000946647us-gaap:RealEstateMemberus-gaap:CommercialPortfolioSegmentMemberpfc:CommercialRealEstateOwnerOccupiedMember2021-01-012021-12-310000946647us-gaap:FinancingReceivables30To59DaysPastDueMemberpfc:PurchaseCreditDeterioratedMember2019-12-310000946647us-gaap:FairValueInputsLevel2Memberus-gaap:MortgageBackedSecuritiesMember2020-12-310000946647us-gaap:FairValueInputsLevel1Memberus-gaap:EquitySecuritiesMember2020-12-310000946647pfc:StrategicInvestmentAdvisorsLlcMember2019-12-310000946647srt:ParentCompanyMember2021-12-310000946647pfc:FirstHorizonBankMemberus-gaap:InterestRateFloorMember2021-01-012021-12-310000946647us-gaap:CommercialRealEstateMemberpfc:TroubledDebtRestructuringMember2020-12-310000946647pfc:OtherLoansMemberpfc:ConsumerFinanceMemberus-gaap:ConsumerPortfolioSegmentMember2021-01-012021-12-310000946647us-gaap:FederalHomeLoanBankBorrowingsMember2020-12-310000946647us-gaap:FairValueInputsLevel1Member2021-12-310000946647us-gaap:CommercialRealEstateMember2019-12-310000946647us-gaap:FinancingReceivables30To59DaysPastDueMemberpfc:PurchaseCreditDeterioratedMember2021-12-310000946647us-gaap:AccountingStandardsUpdate201712Member2019-12-310000946647pfc:PurchaseCreditDeterioratedMemberus-gaap:SubstandardMember2021-12-310000946647us-gaap:RealEstateMember2021-12-310000946647us-gaap:EquipmentMemberus-gaap:CommercialPortfolioSegmentMemberpfc:OtherLoansMember2020-12-310000946647pfc:SubsequentlyDefaultedMember2020-01-012020-12-310000946647us-gaap:PassMemberpfc:ConstructionPortfolioSegmentMemberus-gaap:RealEstateMember2021-12-310000946647pfc:ConstructionPortfolioSegmentMemberus-gaap:RealEstateLoanMemberus-gaap:FinancialAssetNotPastDueMember2019-12-310000946647pfc:UnclassifiedMember2020-12-310000946647pfc:TroubledDebtRestructuringMemberpfc:SubsequentlyDefaultedMember2020-01-012020-12-310000946647pfc:FirstHorizonBankMemberus-gaap:InterestRateFloorMember2020-01-012020-12-310000946647us-gaap:AdditionalPaidInCapitalMember2020-01-012020-12-310000946647pfc:UnitedStatesBankMember2020-12-310000946647pfc:AppraisalsWhichUtilizeSalesComparisonNetIncomeAndCostApproachMember2021-01-012021-12-310000946647pfc:OtherLoansMemberpfc:HomeEquityAndImprovementPortFolioSegmentMember2020-12-310000946647srt:MaximumMemberus-gaap:RestrictedStockUnitsRSUMemberpfc:KeyLongTermEquityIncentivePlanMember2021-12-310000946647pfc:CommercialLoansOtherMemberus-gaap:RealEstateMemberus-gaap:CommercialPortfolioSegmentMember2021-01-012021-12-310000946647srt:MinimumMemberus-gaap:NoncompeteAgreementsMember2021-01-012021-12-310000946647pfc:ConstructionPortfolioSegmentMemberus-gaap:RealEstateMemberus-gaap:ConstructionLoansMember2021-01-012021-12-310000946647us-gaap:ResidentialRealEstateMember2018-12-310000946647pfc:UnitedCommunityMember2020-01-012020-01-310000946647pfc:LoanPurchaseMemberpfc:OtherLoansMemberus-gaap:ConsumerPortfolioSegmentMember2020-12-310000946647us-gaap:LondonInterbankOfferedRateLIBORMemberpfc:FirstHorizonBankMember2020-01-012020-12-310000946647pfc:OtherLoansMemberus-gaap:ConsumerPortfolioSegmentMember2021-12-310000946647pfc:OtherNonInterestIncomeMember2020-01-012020-12-310000946647us-gaap:FairValueInputsLevel2Memberpfc:InterestRateSwapLiabilitiesMember2020-12-310000946647pfc:PaycheckProtectionProgramMemberpfc:CovidNineteenMember2021-01-012021-12-310000946647pfc:ConstructionPortfolioSegmentMemberus-gaap:RealEstateLoanMemberus-gaap:FinancingReceivables60To89DaysPastDueMember2019-12-3100009466472021-01-012021-12-310000946647pfc:PurchaseCreditDeterioratedMember2021-12-310000946647us-gaap:CommercialLoanMember2018-12-310000946647us-gaap:RestrictedStockUnitsRSUMember2020-12-310000946647us-gaap:EquipmentMember2021-12-310000946647us-gaap:RealEstateMemberus-gaap:CommercialPortfolioSegmentMemberpfc:CommercialRealEstateNonOwnerOccupiedMember2021-01-012021-12-310000946647us-gaap:ConsumerLoanMember2021-12-310000946647pfc:FirstFederalBankMember2020-12-310000946647pfc:ConstructionPortfolioSegmentMemberus-gaap:SpecialMentionMemberus-gaap:RealEstateMember2020-12-310000946647us-gaap:CollateralPledgedMember2020-12-310000946647pfc:RealEstateHeldForSaleMembersrt:MinimumMember2021-01-012021-12-310000946647us-gaap:CollateralPledgedMemberus-gaap:CommercialPortfolioSegmentMemberpfc:OtherLoansMember2020-12-310000946647us-gaap:AutomobilesMember2021-12-310000946647pfc:StockGrantsMember2021-12-310000946647pfc:CommercialLoanPortfolioSegmentMemberus-gaap:FinancingReceivables60To89DaysPastDueMemberpfc:OtherLoansMember2019-12-310000946647us-gaap:HomeEquityMember2021-01-012021-12-310000946647pfc:NewRenewalPoliciesMember2021-01-012021-12-310000946647us-gaap:RealEstateLoanMemberus-gaap:ResidentialPortfolioSegmentMemberus-gaap:FinancingReceivables60To89DaysPastDueMember2021-12-310000946647us-gaap:SpecialMentionMemberus-gaap:RealEstateMemberus-gaap:CommercialPortfolioSegmentMember2021-12-310000946647pfc:StrategicInvestmentAdvisorsLlcMember2019-09-302019-09-300000946647pfc:UnclassifiedMember2021-12-310000946647us-gaap:SpecialMentionMemberus-gaap:ResidentialPortfolioSegmentMemberus-gaap:RealEstateMember2020-12-310000946647us-gaap:CommercialLoanMemberpfc:TotalClassifiedMember2020-12-310000946647pfc:RestrictedStockGrantsMembersrt:DirectorMemberus-gaap:ShareBasedCompensationAwardTrancheOneMember2021-01-012021-12-310000946647us-gaap:CreditAndDebitCardMember2020-01-012020-12-310000946647us-gaap:ConsumerLoanMember2021-01-012021-12-310000946647us-gaap:OtherLiabilitiesMemberus-gaap:InterestRateSwapMember2021-12-310000946647us-gaap:CommonStockMember2019-12-310000946647pfc:OtherLoansMemberpfc:CommercialLoanPortfolioSegmentMemberus-gaap:SubstandardMember2020-12-310000946647pfc:TroubledDebtRestructuringMember2021-12-310000946647us-gaap:ConsumerLoanMember2019-01-012019-12-310000946647pfc:PurchaseCreditDeterioratedMemberus-gaap:FinancingReceivables60To89DaysPastDueMember2019-12-310000946647us-gaap:ResidentialRealEstateMemberpfc:TroubledDebtRestructuringMember2019-01-012019-12-310000946647us-gaap:SubstandardMemberus-gaap:HomeEquityMember2020-12-310000946647us-gaap:CommercialRealEstateMember2020-12-310000946647us-gaap:USGovernmentCorporationsAndAgenciesSecuritiesMember2020-12-310000946647us-gaap:RestrictedStockUnitsRSUMemberpfc:KeyLongTermEquityIncentivePlanMember2021-01-012021-12-310000946647us-gaap:PassMemberus-gaap:RealEstateMemberus-gaap:CommercialPortfolioSegmentMember2020-12-310000946647pfc:PremierStatutoryTrustsIIMember2021-12-310000946647pfc:FreddieMacMember2021-12-310000946647us-gaap:ResidentialRealEstateMemberpfc:TroubledDebtRestructuringMember2020-01-012020-12-310000946647us-gaap:PassMemberpfc:OtherLoansMemberpfc:PurchaseCreditDeterioratedMember2020-12-310000946647us-gaap:ConsumerLoanMemberpfc:TotalClassifiedMember2021-12-310000946647pfc:InventoryAndReceivablesMemberus-gaap:CommercialPortfolioSegmentMemberpfc:OtherLoansMember2021-12-310000946647us-gaap:ConstructionLoansMemberpfc:TroubledDebtRestructuringMember2020-12-310000946647us-gaap:ResidentialRealEstateMember2019-12-310000946647us-gaap:RealEstateLoanMemberus-gaap:CommercialPortfolioSegmentMember2021-12-310000946647us-gaap:CommercialRealEstateMemberus-gaap:SpecialMentionMember2020-12-310000946647pfc:CollateralDependentLoanMember2021-12-310000946647pfc:FirstDefianceStatutoryTrustsIIMember2020-12-310000946647pfc:CommercialLoanPortfolioSegmentMemberpfc:OtherLoansMember2021-01-012021-12-310000946647us-gaap:FairValueInputsLevel2Memberpfc:InterestRateSwapAssetsMember2020-12-310000946647pfc:UnitedCommunityMember2020-01-012020-12-310000946647us-gaap:FinancingReceivables30To59DaysPastDueMemberpfc:ConstructionPortfolioSegmentMemberus-gaap:RealEstateLoanMember2021-12-310000946647us-gaap:RealEstateMemberus-gaap:CommercialPortfolioSegmentMemberus-gaap:SubstandardMember2020-12-310000946647us-gaap:SubstandardMemberus-gaap:HomeEquityMember2021-12-310000946647us-gaap:ResidentialRealEstateMember2021-01-012021-12-310000946647pfc:LoanPurchaseMemberus-gaap:RealEstateMember2021-12-310000946647us-gaap:ResidentialPortfolioSegmentMemberus-gaap:RealEstateMemberus-gaap:SubstandardMember2020-12-310000946647us-gaap:TreasuryStockMember2019-12-310000946647pfc:FirstHorizonBankMember2020-12-310000946647pfc:TotalClassifiedMember2020-12-310000946647us-gaap:ResidentialRealEstateMemberpfc:TotalClassifiedMember2020-12-310000946647us-gaap:FinancingReceivables30To59DaysPastDueMemberus-gaap:RealEstateLoanMemberus-gaap:CommercialPortfolioSegmentMember2019-12-310000946647us-gaap:HomeEquityMember2020-01-012020-12-310000946647us-gaap:ConsumerPortfolioSegmentMember2020-12-310000946647us-gaap:ConsumerLoanMemberpfc:TroubledDebtRestructuringMember2020-12-310000946647pfc:ConstructionLoansHeldForSaleMember2020-01-012020-12-310000946647pfc:SecuritiesAvailableForSaleMember2019-12-310000946647pfc:TroubledDebtRestructuringMemberus-gaap:HomeEquityMember2019-01-012019-12-310000946647us-gaap:HomeEquityMember2019-01-012019-12-310000946647us-gaap:PassMemberus-gaap:ResidentialPortfolioSegmentMemberus-gaap:RealEstateMember2021-12-310000946647us-gaap:RealEstateLoanMemberus-gaap:ResidentialPortfolioSegmentMemberus-gaap:RealEstateMember2021-12-310000946647us-gaap:FairValueInputsLevel2Memberus-gaap:USStatesAndPoliticalSubdivisionsMember2021-12-310000946647us-gaap:HomeEquityMember2019-12-310000946647pfc:PremierStatutoryTrustsIMember2021-12-310000946647us-gaap:CommercialRealEstateMemberpfc:TroubledDebtRestructuringMember2020-01-012020-12-310000946647us-gaap:CommercialRealEstateMember2018-12-310000946647us-gaap:ConsumerLoanMemberpfc:SubsequentlyDefaultedMember2021-01-012021-12-310000946647us-gaap:ResidentialPortfolioSegmentMemberus-gaap:RealEstateMember2020-12-310000946647us-gaap:RealEstateMemberus-gaap:CommercialPortfolioSegmentMemberus-gaap:SubstandardMember2021-12-310000946647us-gaap:FinancingReceivablesEqualToGreaterThan90DaysPastDueMember2021-12-310000946647us-gaap:AccountingStandardsUpdate201704Member2021-12-310000946647us-gaap:LondonInterbankOfferedRateLIBORMemberpfc:FirstHorizonBankMember2021-01-012021-12-310000946647us-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:LondonInterbankOfferedRateLIBORMemberus-gaap:InterestRateSwapMember2021-12-310000946647pfc:StrategicInvestmentAdvisorsLlcMember2019-09-300000946647pfc:TroubledDebtRestructuringMemberpfc:SubsequentlyDefaultedMember2021-01-012021-12-310000946647us-gaap:CommonStockMember2019-01-012019-12-310000946647us-gaap:ConstructionLoansMemberpfc:UnclassifiedMember2021-12-310000946647us-gaap:USStatesAndPoliticalSubdivisionsMember2021-12-310000946647pfc:UnitedCommunityMember2019-09-092019-09-090000946647us-gaap:PassMemberpfc:ConstructionPortfolioSegmentMemberus-gaap:RealEstateMember2020-12-310000946647us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-12-310000946647pfc:ConstructionPortfolioSegmentMemberus-gaap:SpecialMentionMemberus-gaap:RealEstateMember2021-12-310000946647us-gaap:AccountingStandardsUpdate201613Memberus-gaap:RetainedEarningsMember2020-01-012020-12-310000946647us-gaap:ResidentialMortgageMember2021-12-310000946647us-gaap:TreasuryStockMember2019-01-012019-12-310000946647us-gaap:RealEstateLoanMemberus-gaap:CollateralPledgedMemberus-gaap:CommercialPortfolioSegmentMember2020-12-310000946647pfc:UnitedCommunityMember2020-01-310000946647us-gaap:AccumulatedOtherComprehensiveIncomeMember2019-12-310000946647us-gaap:ResidentialRealEstateMember2020-12-310000946647pfc:TroubledDebtRestructuringMember2019-01-012019-12-310000946647pfc:PurchaseCreditDeterioratedMemberus-gaap:SubstandardMember2020-12-310000946647pfc:AgricultureLandMemberus-gaap:RealEstateMemberus-gaap:CommercialPortfolioSegmentMember2021-01-012021-12-310000946647us-gaap:AdditionalPaidInCapitalMember2018-12-310000946647pfc:OtherMortgageBankingMember2020-01-012020-12-310000946647us-gaap:ResidentialRealEstateMemberpfc:UnclassifiedMember2020-12-310000946647pfc:FirstDefianceRiskManagementMember2021-01-012021-12-310000946647pfc:OtherNonInterestIncomeMember2021-01-012021-12-310000946647pfc:PurchaseCreditDeterioratedMemberus-gaap:FinancingReceivablesEqualToGreaterThan90DaysPastDueMember2021-12-310000946647pfc:AppraisalsWhichUtilizeSalesComparisonNetIncomeAndCostApproachMember2021-12-310000946647pfc:OtherLoansMemberpfc:HomeEquityAndImprovementPortFolioSegmentMember2021-12-310000946647pfc:TroubledDebtRestructuringMemberpfc:SubsequentlyDefaultedMember2019-01-012019-12-310000946647us-gaap:ConsumerLoanMemberus-gaap:SubstandardMember2020-12-310000946647pfc:PurchaseCreditDeterioratedMemberpfc:UnclassifiedMember2020-12-310000946647pfc:CashFlowHedgeDerivativeAssetMember2021-12-310000946647us-gaap:RealEstateMemberus-gaap:CommercialPortfolioSegmentMember2021-12-310000946647pfc:UnitedCommunityFinancialCorpMember2021-12-310000946647us-gaap:CommercialRealEstateMember2019-01-012019-12-310000946647us-gaap:FinancialAssetNotPastDueMember2021-12-310000946647pfc:ConstructionPortfolioSegmentMemberus-gaap:RealEstateLoanMemberus-gaap:FinancingReceivablesEqualToGreaterThan90DaysPastDueMember2019-12-310000946647pfc:FirstDefianceStatutoryTrustsIIMember2021-12-310000946647pfc:ConstructionPortfolioSegmentMemberus-gaap:RealEstateLoanMemberus-gaap:FinancialAssetNotPastDueMember2021-12-3100009466472021-10-012021-12-310000946647pfc:ResidentialMortgageLoansMember2020-01-012020-12-310000946647us-gaap:CommercialPortfolioSegmentMemberpfc:OtherLoansMemberus-gaap:AutomobilesMember2020-12-310000946647pfc:OtherLoansMemberus-gaap:FinancialAssetNotPastDueMemberus-gaap:ConsumerPortfolioSegmentMember2021-12-310000946647us-gaap:FinancialAssetNotPastDueMember2019-12-310000946647us-gaap:FairValueInputsLevel2Memberpfc:LoansHeldForSaleAtFairValueMember2020-12-310000946647pfc:SubsequentlyDefaultedMember2019-01-012019-12-310000946647us-gaap:CommercialPortfolioSegmentMemberpfc:OtherLoansMemberus-gaap:AutomobilesMember2021-12-310000946647us-gaap:CommercialRealEstateMemberus-gaap:FairValueInputsLevel3Member2021-12-310000946647us-gaap:HomeEquityMember2019-01-012019-12-310000946647pfc:ContingentPoliciesMember2020-01-012020-12-310000946647us-gaap:TreasuryStockMember2021-12-310000946647us-gaap:RestrictedStockUnitsRSUMemberpfc:KeyLongTermEquityIncentivePlanMember2021-01-012021-03-310000946647us-gaap:ConsumerLoanMemberus-gaap:SubstandardMember2021-12-310000946647us-gaap:FinancingReceivables60To89DaysPastDueMember2021-12-310000946647srt:MinimumMemberpfc:TroubledDebtRestructuringMember2020-12-310000946647us-gaap:HomeEquityMember2020-12-310000946647pfc:WrittenCertificateOfDepositOptionMember2020-12-310000946647pfc:PaycheckProtectionProgramMemberpfc:CommercialLoanPortfolioSegmentMemberpfc:CovidNineteenMemberpfc:OtherLoansMember2021-12-310000946647pfc:FirstHorizonBankMember2021-12-310000946647us-gaap:ConstructionLoansMember2021-12-310000946647pfc:InterestRateSwapAssetsMember2021-12-310000946647pfc:LoanPurchaseMemberus-gaap:RealEstateMember2020-12-310000946647us-gaap:CommercialRealEstateMemberus-gaap:SpecialMentionMember2021-12-310000946647pfc:LoanPurchaseMember2021-12-310000946647pfc:LoansHeldForSaleAtFairValueMember2021-12-310000946647pfc:LoansHeldForSaleAtFairValueMember2020-12-310000946647pfc:FhlbOfCincinnatiMember2020-12-310000946647us-gaap:HomeEquityMemberpfc:UnclassifiedMember2020-12-310000946647pfc:InterestRateSwapLiabilitiesMember2020-12-310000946647pfc:FirstDefianceStatutoryTrustsIMember2020-12-310000946647pfc:TroubledDebtRestructuringMember2020-12-310000946647pfc:TroubledDebtRestructuringMember2020-01-012020-12-310000946647us-gaap:FairValueInputsLevel2Memberus-gaap:CollateralizedMortgageObligationsMember2021-12-310000946647pfc:RestrictedStockGrantsMemberus-gaap:ShareBasedCompensationAwardTrancheOneMember2021-01-012021-12-310000946647us-gaap:CommercialRealEstateMemberpfc:UnclassifiedMember2021-12-310000946647us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-12-310000946647us-gaap:CommonStockMember2021-12-310000946647us-gaap:FairValueInputsLevel2Memberpfc:CashFlowHedgeDerivativeAssetMember2021-12-310000946647pfc:OtherLoansMemberus-gaap:SubstandardMemberus-gaap:ConsumerPortfolioSegmentMember2020-12-310000946647us-gaap:CommercialLoanMemberus-gaap:SubstandardMember2020-12-310000946647pfc:LoanPurchaseMemberus-gaap:RealEstateMemberus-gaap:ResidentialPortfolioSegmentMember2020-12-310000946647pfc:ConstructionLoansHeldForSaleMember2021-12-310000946647pfc:ConstructionLoansHeldForSaleMember2021-01-012021-12-310000946647pfc:ResidentialMortgageAndPermanentConstructionLoansMember2021-12-310000946647srt:ParentCompanyMember2019-12-310000946647us-gaap:RestrictedStockUnitsRSUMember2021-12-310000946647us-gaap:SubstandardMember2020-12-310000946647us-gaap:CommercialRealEstateMember2020-12-310000946647pfc:OtherLoansMemberus-gaap:SubstandardMemberpfc:HomeEquityAndImprovementPortFolioSegmentMember2020-12-310000946647pfc:PurchaseCreditDeterioratedMember2019-12-310000946647us-gaap:FairValueInputsLevel3Member2020-12-310000946647us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-01-012020-12-310000946647us-gaap:AdditionalPaidInCapitalMember2020-12-310000946647pfc:PremierStatutoryTrustsIMember2021-01-012021-12-310000946647us-gaap:CollateralizedMortgageObligationsMember2021-12-310000946647us-gaap:CommercialLoanMember2021-01-012021-12-310000946647us-gaap:CommercialRealEstateMember2021-12-310000946647us-gaap:RealEstateLoanMemberus-gaap:ResidentialPortfolioSegmentMemberus-gaap:FinancialAssetNotPastDueMember2019-12-310000946647us-gaap:RealEstateLoanMemberus-gaap:ResidentialPortfolioSegmentMember2021-12-310000946647us-gaap:PassMemberus-gaap:ResidentialPortfolioSegmentMemberus-gaap:RealEstateMember2020-12-310000946647us-gaap:ResidentialRealEstateMemberpfc:UnclassifiedMember2021-12-310000946647pfc:OtherLoansMemberus-gaap:SubstandardMemberpfc:HomeEquityAndImprovementPortFolioSegmentMember2021-12-310000946647us-gaap:CommercialLoanMemberpfc:UnclassifiedMember2020-12-310000946647pfc:PurchaseCreditDeterioratedMemberpfc:UnclassifiedMember2021-12-310000946647us-gaap:CommercialRealEstateMemberus-gaap:SubstandardMember2021-12-310000946647pfc:OtherLoansMemberus-gaap:HomeEquityMemberpfc:HomeEquityAndImprovementPortFolioSegmentMember2021-01-012021-12-310000946647us-gaap:UnfundedLoanCommitmentMember2021-12-310000946647pfc:FhlbOfCincinnatiMember2021-12-310000946647us-gaap:ConsumerLoanMemberpfc:TroubledDebtRestructuringMember2021-01-012021-12-310000946647us-gaap:CumulativePreferredStockMember2020-12-310000946647us-gaap:TreasuryStockMember2021-01-012021-12-310000946647us-gaap:RestrictedStockMember2019-01-012019-12-310000946647pfc:PremierBankMember2021-12-310000946647pfc:MortgageBankingDerivativeAssetMember2020-12-310000946647us-gaap:CommercialLoanMemberus-gaap:FairValueInputsLevel3Member2021-12-3100009466472020-04-012020-06-300000946647pfc:CommercialLoanPortfolioSegmentMemberus-gaap:FinancingReceivablesEqualToGreaterThan90DaysPastDueMemberpfc:OtherLoansMember2019-12-310000946647us-gaap:FairValueInputsLevel2Memberpfc:MortgageBankingDerivativeAssetMember2020-12-310000946647us-gaap:RetainedEarningsMember2021-12-310000946647us-gaap:RealEstateLoanMemberus-gaap:CollateralPledgedMemberus-gaap:ResidentialPortfolioSegmentMember2020-12-310000946647us-gaap:FairValueInputsLevel2Member2021-12-310000946647pfc:PermanentConstructionLoansMember2020-12-310000946647pfc:PermanentConstructionLoansMember2021-12-310000946647pfc:PremierStatutoryTrustsIIMember2007-03-012007-03-310000946647us-gaap:CommonStockMember2020-01-012020-12-310000946647pfc:FirstInsuranceMember2021-01-012021-12-310000946647us-gaap:RealEstateLoanMemberus-gaap:CommercialPortfolioSegmentMemberus-gaap:FinancingReceivablesEqualToGreaterThan90DaysPastDueMember2021-12-310000946647us-gaap:RestrictedStockMember2021-01-012021-12-310000946647us-gaap:PerformanceSharesMember2020-12-310000946647us-gaap:AccountingStandardsUpdate201613Member2021-12-3100009466472018-12-310000946647us-gaap:CollateralPledgedMember2021-12-310000946647pfc:InventoryAndReceivablesMemberus-gaap:CommercialPortfolioSegmentMemberpfc:OtherLoansMember2020-12-310000946647us-gaap:RealEstateLoanMemberus-gaap:RealEstateMemberus-gaap:ResidentialPortfolioSegmentMember2020-12-310000946647us-gaap:SpecialMentionMemberus-gaap:ConstructionLoansMember2020-12-310000946647us-gaap:FairValueInputsLevel2Memberus-gaap:CorporateBondSecuritiesMember2021-12-310000946647us-gaap:CommercialRealEstateMember2021-01-012021-12-310000946647pfc:LoanPurchaseMember2020-01-310000946647pfc:FixedRateMember2021-01-012021-12-310000946647us-gaap:FairValueInputsLevel2Memberpfc:InterestRateSwapLiabilitiesMember2021-12-310000946647us-gaap:PerformanceSharesMember2021-12-310000946647us-gaap:ConsumerLoanMember2018-12-310000946647us-gaap:CommercialRealEstateMember2021-12-310000946647us-gaap:AdditionalPaidInCapitalMember2019-12-310000946647us-gaap:PassMemberpfc:OtherLoansMemberus-gaap:ConsumerPortfolioSegmentMember2020-12-310000946647us-gaap:RetainedEarningsMember2021-01-012021-12-310000946647us-gaap:DepositAccountMember2019-01-012019-12-310000946647us-gaap:RealEstateMember2020-12-310000946647us-gaap:CommonStockMember2021-01-012021-12-310000946647pfc:FannieMaeMember2020-12-310000946647pfc:EquitableRecoupmentClaimEstimateMember2021-01-012021-12-310000946647pfc:UnitedCommunityMember2020-12-310000946647us-gaap:SubstandardMember2021-12-310000946647us-gaap:FinancingReceivables60To89DaysPastDueMemberpfc:OtherLoansMemberus-gaap:ConsumerPortfolioSegmentMember2021-12-310000946647pfc:PurchaseCreditDeterioratedMember2020-12-310000946647pfc:FreddieMacMember2021-01-012021-12-310000946647pfc:OtherLoansMemberpfc:PurchaseCreditDeterioratedMember2020-12-310000946647us-gaap:ResidentialRealEstateMemberpfc:SubsequentlyDefaultedMember2020-01-012020-12-310000946647pfc:LoanPurchaseMemberpfc:OtherLoansMemberpfc:CommercialLoanPortfolioSegmentMember2020-12-310000946647pfc:LoanPurchaseMemberpfc:OtherLoansMemberpfc:HomeEquityAndImprovementPortFolioSegmentMember2021-12-310000946647us-gaap:SpecialMentionMemberpfc:OtherLoansMemberpfc:PurchaseCreditDeterioratedMember2020-12-310000946647pfc:PermanentConstructionLoansMember2021-01-012021-12-310000946647pfc:OtherLoansMemberus-gaap:SubstandardMemberpfc:PurchaseCreditDeterioratedMember2021-12-310000946647us-gaap:ConsumerPortfolioSegmentMember2021-12-310000946647us-gaap:ConstructionLoansMember2018-12-310000946647pfc:UnitedCommunityMember2019-01-012019-12-310000946647us-gaap:ResidentialRealEstateMemberus-gaap:SubstandardMember2020-12-310000946647us-gaap:RealEstateMemberus-gaap:CommercialPortfolioSegmentMemberpfc:OtherLoansMember2020-12-310000946647us-gaap:AccumulatedOtherComprehensiveIncomeMember2019-01-012019-12-310000946647pfc:RestrictedShareAwardsMember2021-12-310000946647us-gaap:AccountingStandardsUpdate201613Member2020-01-012020-01-010000946647pfc:TroubledDebtRestructuringMember2021-01-012021-12-310000946647us-gaap:USGovernmentCorporationsAndAgenciesSecuritiesMember2021-12-310000946647us-gaap:CommercialLoanMemberpfc:TroubledDebtRestructuringMember2020-01-012020-12-310000946647us-gaap:FairValueInputsLevel2Memberpfc:LoansHeldForSaleAtFairValueMember2021-12-310000946647pfc:LoanPurchaseMemberpfc:OtherLoansMember2020-12-310000946647us-gaap:SpecialMentionMemberpfc:CommercialLoanPortfolioSegmentMemberpfc:OtherLoansMember2021-12-310000946647pfc:LoansHeldForSaleAtFairValueMemberus-gaap:FairValueInputsLevel3Member2021-12-310000946647pfc:FreddieMacMember2020-12-310000946647pfc:ExecutiveLongTermEquityIncentivePlanMember2020-01-012020-12-310000946647srt:ParentCompanyMember2018-12-310000946647pfc:MultiFamilyResidentialRealEstateMemberus-gaap:RealEstateMemberus-gaap:CommercialPortfolioSegmentMember2021-01-012021-12-310000946647us-gaap:DepositAccountMember2021-01-012021-12-3100009466472020-01-012020-12-310000946647us-gaap:SpecialMentionMemberpfc:OtherLoansMemberpfc:PurchaseCreditDeterioratedMember2021-12-310000946647us-gaap:ResidentialRealEstateMember2019-01-012019-12-310000946647pfc:PurchaseCreditDeterioratedMemberus-gaap:FinancialAssetNotPastDueMember2019-12-310000946647pfc:AppraisalsWhichUtilizeSalesComparisonNetIncomeAndCostApproachMember2020-01-012020-12-310000946647us-gaap:FinancingReceivables60To89DaysPastDueMemberpfc:OtherLoansMemberpfc:HomeEquityAndImprovementPortFolioSegmentMember2019-12-310000946647pfc:FirstDefianceStatutoryTrustsIMember2021-12-310000946647us-gaap:RealEstateLoanMemberus-gaap:CommercialPortfolioSegmentMember2019-12-310000946647pfc:ResidentialMortgageLoansMember2020-12-310000946647pfc:ShortTermEquityIncentivePlan2015Member2021-01-012021-12-310000946647pfc:TotalClassifiedMember2021-12-310000946647us-gaap:CommercialLoanMemberpfc:TroubledDebtRestructuringMember2019-01-012019-12-310000946647us-gaap:CollateralizedMortgageObligationsMember2021-12-310000946647pfc:ContingentPoliciesMember2021-01-012021-12-3100009466472019-12-3100009466472021-06-300000946647us-gaap:PassMemberpfc:OtherLoansMemberpfc:HomeEquityAndImprovementPortFolioSegmentMember2020-12-310000946647pfc:OtherLoansMemberus-gaap:ConsumerPortfolioSegmentMember2021-12-3100009466472020-12-310000946647us-gaap:ConsumerLoanMemberpfc:TotalClassifiedMember2020-12-310000946647pfc:PurchaseCreditDeterioratedMemberus-gaap:FinancingReceivablesEqualToGreaterThan90DaysPastDueMember2019-12-310000946647us-gaap:FinancingReceivables30To59DaysPastDueMemberpfc:CommercialLoanPortfolioSegmentMemberpfc:OtherLoansMember2019-12-310000946647us-gaap:CommercialRealEstateMember2019-01-012019-12-310000946647us-gaap:ScenarioPlanMember2021-01-012021-12-310000946647us-gaap:ConstructionLoansMember2019-01-012019-12-310000946647us-gaap:FinancingReceivables30To59DaysPastDueMemberpfc:OtherLoansMemberpfc:HomeEquityAndImprovementPortFolioSegmentMember2019-12-3100009466472019-01-012019-12-310000946647pfc:FannieMaeMember2020-01-012020-12-310000946647us-gaap:CollateralPledgedMemberus-gaap:CommercialPortfolioSegmentMemberpfc:OtherLoansMember2021-12-310000946647us-gaap:CorporateBondSecuritiesMember2021-12-310000946647pfc:ConstructionLoansHeldForSaleMember2020-12-310000946647us-gaap:ConstructionLoansMember2021-01-012021-12-310000946647us-gaap:FairValueInputsLevel1Memberus-gaap:EquitySecuritiesMember2021-12-310000946647pfc:CommercialWorkingCapitalMemberpfc:CommercialLoanPortfolioSegmentMemberpfc:OtherLoansMember2021-01-012021-12-310000946647us-gaap:ResidentialRealEstateMember2020-01-012020-12-310000946647pfc:ExecutiveLongTermEquityIncentivePlanMember2021-01-012021-12-310000946647us-gaap:FinancingReceivables60To89DaysPastDueMemberpfc:CommercialLoanPortfolioSegmentMemberpfc:OtherLoansMember2021-12-310000946647pfc:ContingentPoliciesMember2019-01-012019-12-310000946647pfc:StockGrantsMember2021-01-012021-12-310000946647us-gaap:FinancingReceivables30To59DaysPastDueMemberpfc:OtherLoansMemberus-gaap:ConsumerPortfolioSegmentMember2021-12-310000946647srt:MaximumMemberus-gaap:CustomerContractsMember2021-01-012021-12-310000946647pfc:CommercialLoansOtherMemberpfc:OtherLoansMemberpfc:CommercialLoanPortfolioSegmentMember2021-01-012021-12-310000946647pfc:ConstructionPortfolioSegmentMemberus-gaap:RealEstateMember2021-12-310000946647us-gaap:CollateralizedMortgageObligationsMember2020-12-310000946647pfc:PcfCapitalMember2021-01-012021-12-310000946647us-gaap:SpecialMentionMember2020-12-310000946647us-gaap:FinancingReceivables60To89DaysPastDueMember2019-12-310000946647pfc:FannieMaeMember2021-12-310000946647pfc:ExecutiveLongTermEquityIncentivePlanMemberus-gaap:PerformanceSharesMember2021-01-012021-03-310000946647pfc:OtherLoansMemberpfc:HomeEquityAndImprovementPortFolioSegmentMember2021-12-310000946647pfc:CommercialLoanPortfolioSegmentMemberpfc:OtherLoansMember2019-12-310000946647us-gaap:PassMemberpfc:OtherLoansMemberpfc:PurchaseCreditDeterioratedMember2021-12-31xbrli:purepfc:Loanxbrli:sharesiso4217:USDxbrli:sharesiso4217:USD

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, 2021

☐ 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) 782-5015

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. ☐

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, 2021, was approximately $1.0 billion.

As of February 23, 2022, there were issued and outstanding 36,436,378 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 2022 Annual Meeting of the registrant’s shareholders.


Auditor Firm Id:	173	Auditor Name:	Crowe, LLP	Auditor Location:	Grand Rapids, MI 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	17
Item 1B.	Unresolved Staff Comments	25
Item 2.	Properties	25
Item 3.	Legal Proceedings	25
Item 4.	Mine Safety Disclosures	25

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	28
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	100
Item 9A.	Controls and Procedures	100
Item 9B.	Other Information	100
Item 9C.	Disclosure Regarding Foreign Jurisdictions that Prevent Inspections	100

PART III		101
Item 10.	Directors, Executive Officers and Corporate Governance	101
Item 11.	Executive Compensation	101
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	101
Item 13.	Certain Relationships and Related Transactions, and Director Independence	101
Item 14.	Principal Accounting Fees and Services	101

PART IV		102
Item 15.	Exhibits, Financial Statement Schedules	102
Item 16.	Form 10-K Summary	102

SIGNATURES		103

PART I

Item 1. Business

Premier Financial Corp. (“Premier” or the “Company”) is a financial holding company that, through its subsidiaries, Premier Bank (the “Bank”), First Insurance Group of the Midwest, Inc. (“First Insurance”), PFC Risk Management Inc. (“PFC Risk Management”) and PFC Capital, LLC ("PFC Capital”) (collectively, “the Subsidiaries”), focuses on traditional banking and property, casualty, life and group health insurance products.

On January 31, 2020, Premier completed its previously announced acquisition of United Community Financial Corp., an Ohio corporation (“UCFC”), pursuant to that certain Agreement and Plan of Merger (the “Merger Agreement”), dated as of September 9, 2019, by and between Premier and UCFC. At the effective time of the merger (the “Merger”), UCFC merged with and into Premier, with Premier surviving the Merger. Simultaneously with the completion of the Merger, Premier converted from a unitary thrift holding company to a bank holding company, making an election to be a financial holding company.

Immediately following the Merger, UCFC’s wholly-owned bank subsidiary, Home Savings Bank (“Home Savings”) merged with and into the Bank, with the Bank surviving the Merger (the “Bank Merger”). Immediately prior to the Bank Merger, the Bank converted from a federal thrift into an Ohio state-chartered bank. In addition, immediately following the Bank Merger, UCFC’s wholly-owned insurance subsidiaries, HSB Insurance, LLC, and United American Financial Services, Inc., each merged into First Insurance, with First Insurance surviving the mergers. The Company acquired PFC Capital in the Merger.

The Company’s operating objectives include expansion, diversification within its markets, growth of its fee-based income, and growth organically and through acquisitions of financial institutions, branches and financial services businesses. The Company seeks merger or acquisition partners that are culturally similar, have experienced management and possess either significant market area presence or have the potential for improved profitability through financial management, economies of scale and/or expanded services. The Company regularly evaluates merger and acquisition opportunities and conducts due diligence activities related to possible transactions with other financial institutions. As a result, merger or acquisition discussions and, in some cases, negotiations may take place and future mergers or acquisitions involving cash, debt or equity securities may occur. Acquisitions typically involve the payment of premiums over book and market values and, therefore, some dilution of the Company’s tangible book value and net income per common share may occur in any future transaction.

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.

The Subsidiaries

The Company’s core business operations are conducted through its subsidiaries:

Premier Bank: The Bank was a federally chartered stock savings bank headquartered in Defiance, Ohio until the effective time of the Merger. At the effective time of the Merger, the Bank converted to an Ohio state-chartered bank headquartered in Youngstown, Ohio. The Bank conducts operations through 75 full-service banking center offices, 12 loan offices and two wealth offices located in Ohio, Michigan, Indiana, Pennsylvania and West Virginia.

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 the State of Ohio and its 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.

First Insurance Group of the Midwest: First Insurance is a wholly-owned subsidiary of Premier that conducts business throughout Premiers’ markets. First Insurance offers property and casualty insurance, life insurance and group health insurance.

PFC Risk Management: PFC Risk Management is 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 may not be currently available or economically feasible in today’s insurance marketplace. PFC Risk Management pools resources with several other similar insurance company subsidiaries of financial institutions to help minimize the risk allocable to each participating insurer.

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.

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, wealth management and insurance sales, each united by a strong customer service culture throughout the organization.

Commercial and Commercial Real Estate Lending - Commercial and commercial real estate lending have been an ongoing focus and a major component of the Bank’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. The Bank 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 online banking services, which include mobile banking, person-to-person payments (“P2P”), online bill pay, and online account opening as well as the MoneyPass ATM Network offering access to our customers to over 32,000 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, First Insurance 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 its market areas, Premier believes it has a track record of successfully accomplishing both acquisitions and de novo branching in its market area. This track record puts the Company 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 2021, 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, Treasurer and President can each

approve transactions up to $3.0 million. Two of the four officers are required to approve transactions between $3.0 million and $25.0 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 $14.1 million at December 31, 2021 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 the Company’s liquidity needs.

The carrying value of securities at December 31, 2021, 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	$	—		—		$	—		—		$	16,008		1.83	%	$	192,273		1.70	%	$	208,281			1.71	%
CMOs - residential		—		—			904		1.88	%		27,482		1.95	%		236,155		1.51	%		264,541			1.56	%
U.S. government and federal agency obligations		519		2.00	%		27,704		1.54	%		90,567		1.55	%		55,854		1.92	%		174,644			1.67	%
Asset-backed securities		—		—			—		—			14,064		1.17	%		207,481		1.26	%		221,545			1.25	%
Obligations of states and political subdivisions		2,771		2.56	%		9,744		3.21	%		41,194		2.50	%		218,625		2.21	%		272,334			2.29	%
Corporate bonds							7,108		2.02	%		62,900		3.79	%		—		—			70,008			3.61	%
Total	$	3,290				$	45,460				$	252,215				$	910,388				$	1,211,353
Unrealized loss on securities available for sale																						(5,093	)
Total																					$	1,206,260

The carrying value of investment securities is as follows:


	December 31
	2021		2020		2019
	(In Thousands)
Available-for-sale securities:
Obligations of U.S. government corporations and agencies	$	174,710	$	40,940	$	2,524
Obligations of state and political subdivisions		273,202		237,518		95,439
CMOs and mortgage-backed securities		466,919		383,481		173,384
Asset-backed securities		220,536		30,546		—
Corporate bonds		70,893		44,169		12,101
Total	$	1,206,260	$	736,654	$	283,448

For additional information regarding Premier’s investment portfolio, refer to Note 5 – 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, 2021, 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

General – Financial institutions are limited in the amount of loans they may make to one borrower. At December 31, 2021, the Bank’s limit on loans-to-one borrower was $119.3 million.

Loan Portfolio Composition – The net decrease in net loans receivable over the prior year was $195.1 million for 2021, and net increase of $2.7 billion for 2020, due to the Merger, and $234.6 million for 2019. 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 income-generating rental properties within commercial real estate as an industry concentration. Total loans for income-generating rental property totaled $1.9 billion at December 31, 2021, which represents 34.1% of the Company’s loan portfolio.

The following table sets forth the composition of the Company’s loan portfolio by type of loan at the dates indicated.


	December 31
	2021						2020					2019					2018					2017
	Amount			%			Amount		%			Amount		%			Amount		%			Amount		%
	(Dollars in Thousands)
Real estate:
Residential real estate	$	1,167,466			20.2	%	$	1,201,051		20.5	%	$	324,773		11.3	%	$	322,686		12.1	%	$	274,862		11.1	%
Commercial real estate		2,450,349			42.5	%		2,383,001		40.8	%		1,506,026		52.4	%		1,404,810		52.7	%		1,235,221		50.1	%
Construction		862,815			15.0	%		667,649		11.4	%		305,305		10.6	%		265,772		10.0	%		265,476		10.8	%
Total real estate loans		4,480,630			77.7	%		4,251,701		72.7	%		2,136,104		74.3	%		1,993,268		74.8	%		1,775,559		72.0	%
Other:
Commercial		895,638			15.5	%		1,202,353		20.6	%		578,071		11.6	%		509,577		18.1	%		526,142		19.6	%
Home equity and improvement		264,354			4.6	%		272,701		4.7	%		122,864		2.5	%		128,152		4.6	%		135,457		5.0	%
Consumer finance		126,417			2.2	%		120,729		2.1	%		37,649		0.8	%		34,405		1.2	%		29,109		1.1	%
		1,286,409			22.3	%		1,595,783		27.3	%		738,584		14.8	%		672,134		23.9	%		690,708		25.7	%
Total loans		5,767,039			100.0	%		5,847,484		100.0	%		2,874,688		89.1	%		2,665,402		98.7	%		2,466,267		97.7	%
Less:
Undisbursed loan funds		477,890						355,065					94,865					123,293					115,972
Net deferred loan origination fees		(7,019	)					1,179					2,259					2,070					1,582
Allowance for credit losses		66,468						82,079					31,243					28,331					26,683
Net loans	$	5,229,700					$	5,409,161				$	2,746,321				$	2,511,708				$	2,322,030

In addition to the loans reported above, Premier had $162.9 million, $221.6 million, $18.0 million, $6.6 million, and $10.4 million in loans classified as held for sale at December 31, 2021, 2020, 2019, 2018 and 2017, respectively. The fair value of such loans, which are all single-family residential mortgage 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, 2021, which have fixed interest rates or which have floating or adjustable interest rates.


			Floating or
	Fixed		Adjustable
	Rates		Rates		Total
	(In Thousands)
Real estate	$	1,868,177	$	1,515,498	$	3,383,675
Commercial		390,389		191,206		581,595
Other		113,646		3,058		116,704
	$	2,372,212	$	1,709,762	$	4,081,974

Originations, Purchases and Sales of Loans – The 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.

The following table shows total loans originated, loan reductions, and the net increase in the Company’s total loans and loans held for sale during the periods indicated:


	Years Ended December 31
	2021			2020			2019
	(In Thousands)
Loan originations:
Residential real estate	$	947,089		$	1,123,587		$	358,970
Commercial real estate		539,680			488,898			341,207
Construction		754,757			461,283			112,344
Commercial		626,358			581,858			251,951
Home equity and improvement		156,805			86,740			60,268
Consumer finance		71,937			36,363			18,505
Total loans originated		3,096,626			2,778,729			1,143,245
Loans acquired in acquisitions		—			2,340,701			—
Loans purchased		—			—			—
Loan payoffs, sales and repayments		(3,235,740	)		(1,943,026	)		(922,564	)
Net increase (decrease) in total loans and loans held for sale	$	(139,114	)	$	3,176,404		$	220,681

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, 2021, 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	$	234		0.00	%	$	5,340		0.10	%	$	7,487		0.14	%	$	13,061		0.25	%
Commercial real estate		96		0.00	%		847		0.02	%		7,168		0.14	%		8,111		0.16	%
Construction		43		0.00	%		1,746		0.03	%		—		0.00	%		1,789		0.03	%
Commercial		42		0.00	%		35		0.00	%		867		0.02	%		944		0.02	%
Home equity and improvement		1,851		0.04	%		408		0.01	%		1,634		0.03	%		3,893		0.07	%
Consumer finance		1,112		0.02	%		819		0.02	%		1,728		0.03	%		3,659		0.07	%
Purchase credit deteriorated ("PCD")		225		0.00	%		1,005		0.02	%		5,996		0.11	%		7,226		0.14	%
Total Loans	$	3,603		0.07	%	$	10,200		0.20	%	$	24,880		0.48	%	$	38,683		0.74	%

Overall, the level of delinquencies at December 31, 2021, decreased from the levels at December 31, 2020, when Premier reported that 0.87% of its outstanding loans were at least 30 days delinquent. The level of total loans 90 or more days delinquent has decreased to 0.48% at December 31, 2021, down from 0.50% at December 31, 2020. The level of total loans 60-89 days delinquent decreased to 0.20% at December 31, 2021, down from 0.24% at December 31, 2020. The level of loans that were 30 to 59 days past due decreased to 0.07% at December 31, 2021, down from 0.13% at December 31, 2020. 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 improving trends in the economy contributed to the decrease seen in 2021.

Non-performing Assets – All 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 more than 90 days 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 is 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 7 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, 2021, was $171,000. During 2021, there was $81,000 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, 2020 was $343,000. During 2020, there was $109,000 of expense related to write-downs in fair value of real estate acquired by foreclosure or acquisition.

As of December 31, 2021, Premier’s total non-performing loans amounted to $48.0 million or 0.91% of total loans (net of undisbursed loan funds and deferred fees and costs), compared to $51.7 million or 0.96% of total loans, at December 31, 2020. Non-performing loans are loans which are more than 90 days past due or on non-accrual.

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


	December 31
	2021			2020			2019			2018			2017
	(Dollars in Thousands)
Non-performing loans:
Residential real estate	$	9,034		$	10,178		$	2,411		$	3,640		$	3,037
Commercial real estate		14,621			11,980			7,609			10,357			18,219
Construction		—			806			—			—			—
Commercial		11,531			1,365			2,961			4,500			8,841
Home equity and improvement		2,051			1,537			449			393			590
Consumer finance		1,873			1,624			7			126			28
Purchase Credit Deteriorated ("PCD")		8,904			24,192			—			—			—
Total non-performing loans		48,014			51,682			13,437			19,016			30,715
Real estate owned		171			343			100			1,205			1,532
Total repossessed assets		171			343			100			1,205			1,532
Total non-performing assets	$	48,185		$	52,025		$	13,537		$	20,221		$	32,247
Restructured loans, accruing	$	7,768		$	8,486		$	11,573		$	13,770		$	10,544
Total non-performing assets as a percentage of total assets		0.64	%		0.72	%		0.39	%		0.64	%		1.08	%
Total non-performing loans as a percentage of total loans*		0.91	%		0.96	%		0.49	%		0.75	%		1.31	%
Total non-performing assets as a percentage of total loans plus other real estate owned*		0.91	%		0.96	%		0.49	%		0.80	%		1.37	%
Allowance for credit losses as a percent of total non-performing assets		137.94	%		157.77	%		230.80	%		140.11	%		82.75	%

* Total loans are net of undisbursed loan funds and deferred fees and costs.

Allowance for credit losses – Premier maintains an allowance for credit losses to absorb probable current expected losses in the loan portfolio. The allowance for credit loss is made up of two components. The first is a general reserve, which is used to record credit loss reserves for groups of homogenous loans in which the Company estimates the current expected credit losses in the portfolio based on quantitative and qualitative factors. Premier adopted the current expected credit losses (“CECL”) accounting standard in 2020. As a result 2021 and 2020 credit loss and provision are not comparable to years prior to 2020 allowance for loan loss data.

The second component of the allowance for credit losses is the specific reserve in which the Company sets aside reserves based on the analysis of individual credits. In evaluating the adequacy of its allowance each quarter, management grades all loans in the commercial portfolio. See “Item 7 - Management’s Discussion and Analysis of Financial Condition and Results of Operations – Allowance for credit losses” for further discussion on management’s evaluation of the allowance for credit losses.

Loans are charged against the allowance when such loans meet the Company’s established policy on loan charge-offs and the allowance itself is adjusted quarterly by recording a provision for credit losses. As such, actual losses and losses provided for should be approximately the same if the overall quality, composition and size of the portfolio remained static along with a static economic environment. To the extent that the portfolio grows at a rapid rate or overall quality or the economic environment deteriorates, the provision generally will exceed charge-offs. However, in certain circumstances, net charge-offs may exceed the provision for credit losses when management determines that loans previously provided for in the allowance for credit losses are uncollectible and should be charged-off or as overall credit or the economic environment improves. Although management believes that it uses the best information available to make such determinations, future adjustments to the allowance may be necessary, and net earnings could be significantly affected, if circumstances differ substantially from the assumptions used in making the initial determinations.

At December 31, 2021, Premier’s allowance for credit losses totaled $66.5 million compared to $82.1 million at December 31, 2020. The following table sets forth the activity in Premier’s allowance for credit losses during the periods indicated.


	Years Ended December 31
	2021			2020			2019			2018			2017
	(Dollars in Thousands)
Allowance at beginning of year	$	82,079		$	31,243		$	28,331		$	26,683		$	25,884
Impact of ASC 326 Adoption		—			2,354			—			—			—
Acquisition related allowance for credit loss (PCD)		—			7,698			—			—			—
Provision (benefit) for credit losses		(6,733	)		43,154			2,905			1,176			2,949
Charge-offs:
Residential real estate		(110	)		(302	)		(515	)		(261	)		(279	)
Commercial real estate		(3,776	)		(65	)		(148	)		(1,387	)		(429	)
Construction		—			(1	)		—			—			—
Commercial		(6,958	)		(687	)		(528	)		(724	)		(2,301	)
Home equity and improvement		(63	)		(164	)		(245	)		(269	)		(301	)
Consumer finance		(476	)		(279	)		(289	)		(233	)		(139	)
PCD		(2	)		(4,854	)		—			—			—
Total charge-offs		(11,385	)		(6,352	)		(1,725	)		(2,874	)		(3,449	)
Recoveries		2,507			3,982			1,732			3,346			1,299
Net (charge-offs) recoveries		(8,878	)		(2,370	)		7			472			(2,150	)
Ending allowance	$	66,468		$	82,079		$	31,243		$	28,331		$	26,683
Allowance for credit losses to total non-performing loans at end of year		138.43	%		158.82	%		232.51	%		148.99	%		86.87	%
Allowance for credit losses to total loans at end of year*		1.26	%		1.49	%		1.12	%		1.12	%		1.14	%
Net charge-offs (recoveries) for the year to average loans		0.16	%		0.05	%		—			(0.02	)%		0.10	%

* Total loans are net of undisbursed loan funds and deferred fees and costs.

The provision for credit losses decreased in 2021 due to the improvement in the Bank's credit quality and the current economic conditions. Refer to Notes 2 and 7 to the Consolidated Financial Statements for additional information. Management feels that the level of the allowance for credit losses at December 31, 2021, is sufficient to cover losses that may be incurred over the lifetime of loans in the portfolio.

The following table sets forth information concerning the allocation of Premier’s allowance for credit losses by loan categories at the dates indicated. For information about the percent of total loans in each category to total loans, see “Lending Activities-Loan Portfolio Composition” above.


	December 31
	2021					2020					2019					2018					2017
			Percent of					Percent of					Percent of					Percent of					Percent of
			total loans					total loans					total loans					total loans					total loans
	Amount		by category			Amount		by category			Amount		by category			Amount		by category			Amount		by category
	(Dollars in Thousands)
Residential real estate	$	12,029		20.2	%	$	17,534		20.5	%	$	2,867		11.3	%	$	2,881		12.1	%	$	2,532		11.1	%
Commercial real estate		32,399		42.5	%		43,417		40.8	%		16,302		52.4	%		15,142		52.7	%		13,056		50.1	%
Construction		3,004		15.0	%		2,741		11.4	%		996		10.6	%		682		10.0	%		647		10.8	%
Commercial loans		13,410		15.5	%		11,665		20.6	%		9,003		20.1	%		7,281		19.1	%		7,965		21.3	%
Home equity and improvement loans		4,221		4.6	%		4,739		4.7	%		1,700		4.3	%		2,026		4.8	%		2,255		5.5	%
Consumer loans		1,405		2.2	%		1,983		2.1	%		375		1.3	%		319		1.3	%		228		1.2	%
	$	66,468		100.0	%	$	82,079		100.0	%	$	31,243		100.0	%	$	28,331		100.0	%	$	26,683		100.0	%

Sources of Funds

General – Deposits are the primary source of Premier’s funds for lending and other investment purposes. In addition to deposits, Premier derives funds from loan principal repayments. Loan repayments are a relatively stable source of funds, while deposit inflows and outflows are significantly influenced by general interest rates and money market conditions. Borrowings from the Federal Home Loan Bank ("FHLB") may be used on a short-term basis to compensate for reductions in the availability of funds from other sources. They may also be used on a longer-term basis for general business purposes.

Deposits – Premier’s deposits are attracted principally from within Premier’s primary market area through the offering of a broad selection of deposit instruments, including checking accounts, money market accounts, savings accounts, and term certificate accounts. Deposit account terms vary, with the principal differences being the minimum balance required, the time periods the funds must remain on deposit, and the interest rate.

To supplement its funding needs, Premier also has the ability to utilize the national market for certificates of deposit. Premier has used these deposits in the past and could in the future if necessary. Premier had no national market certificates of deposit as of December 31, 2021 or 2020.

Average balances and average rates paid on deposits are as follows:


	Years Ended December 31
	2021					2020					2019
	Amount		Rate			Amount		Rate			Amount		Rate
	(Dollars in Thousands)
Noninterest-bearing demand deposits	$	1,676,006		—		$	1,311,478		—		$	594,785		—
Interest-bearing demand deposits		2,872,755		0.20	%		2,240,753		0.49	%		1,111,532		0.69	%
Savings deposits		770,770		0.02	%		626,413		0.03	%		299,040		0.05	%
Time deposits		968,000		0.79	%		1,183,793		1.36	%		711,867		2.08	%
Totals	$	6,287,531		0.21	%	$	5,362,437		0.66	%	$	2,717,224		0.83	%

The following table sets forth the maturities of Premier’s retail certificates of deposit having principal amounts $250,000 or greater at December 31, 2021 (in thousands):


Retail certificates of deposit maturing in quarter ending:
March 31, 2022	$	48,818
June 30, 2022		36,121
September 30, 2022		23,155
December 31, 2022		9,334
After December 31, 2022		46,218
Total retail certificates of deposit with balances $250,000 or greater	$	163,646

For additional information regarding Premier’s deposits see Note 11 to the Consolidated Financial Statements.

Borrowings – The FHLB system functions as a central reserve bank providing credit for its member institutions and certain other financial institutions. As a member in good standing of the FHLB, Premier is authorized to apply for advances, provided certain standards of creditworthiness have been met. At December 31, 2021, Premier could borrow up to $1.4 billion. The Bank had no advances outstanding at December 31, 2021 or 2020. For additional information regarding Premier’s FHLB advances and other debt, see Notes 12 and 14 to the Consolidated Financial Statements.

Subordinated Debentures – For additional information regarding the Company’s subordinated debentures see Note 13 to the Consolidated Financial Statements.

Effect of Environmental Regulation - Compliance with federal, state and local provisions regulating the discharge of materials into the environment, or otherwise relating to the protection of the environment, has not had a material effect upon the capital expenditures, earnings or competitive position of Premier or its subsidiaries. Premier believes the nature of the operations of its subsidiaries has little, if any, environmental impact. As a result, Premier anticipates no material capital expenditures for environmental control facilities for Premier’s current fiscal year or for the foreseeable future.

Premier believes its primary exposure to environmental risk is through the lending activities of the Bank. In cases where management believes environmental risk potentially exists, the Bank mitigates environmental risk exposures by requiring environmental site assessments at the time of loan origination to confirm collateral quality as to commercial real estate parcels posing higher than normal potential for environmental impact, as determined by reference to present and past uses of the subject property and adjacent sites. In addition, environmental assessments are typically required prior to any foreclosure activity involving non-residential real estate collateral.

Human Capital

Premier had 1,180 employees at December 31, 2021 (comprised of 90.5% full-time employees and 9.5% part-time employees). None of these employees are represented by a collective bargaining agent, and Premier believes that it maintains good relationships with its personnel. Premier’s talent acquisition processes are designed to attract top talent in the financial services industry and foster an inclusive, respectful and rewarding workplace. All employees receive training on the Company’s Mission, Vision and Core Values. The Company is committed to fostering an environment that encourages diverse viewpoints, backgrounds and experiences and continues to explore additional diversity, equity, and inclusion efforts. The Company offers a comprehensive compensation and benefits package to employees designed to attract, retain, motivate, and reward employees. The Company provides health benefits, including medical, dental and vision benefits, short- and long-term disability, and life insurance.

Competition

Competition in originating commercial real estate and commercial loans comes mainly from commercial banks with banking center offices in the Company’s market area. Competition for the origination of mortgage loans arises mainly from savings associations, commercial banks, and mortgage companies. The distinction among market participants is based on a combination of price, the quality of customer service and name recognition. The Company competes for loans by offering competitive interest rates and product types and by seeking to provide a higher level of personal service to borrowers than is furnished by competitors.

Management believes that the Bank’s most direct competition for deposits comes from local financial institutions. The distinction among market participants is based on price and the quality of customer service and name recognition. The Bank’s cost of funds fluctuates with general market interest rates. During certain interest rate environments, additional significant competition for deposits may be expected from corporate and governmental debt securities, as well as from money market mutual funds. The Bank competes for conventional deposits by emphasizing quality of service, extensive product lines and competitive pricing.

Regulation

General – Premier is subject to regulation examination and oversight by the Federal Reserve Board (“Federal Reserve”). The Bank is subject to regulation, examination and oversight by the Ohio Division of Financial Institutions (“ODFI”). The Banks's primary federal regulator is the FDIC. In addition, the Bank is subject to regulations of the Consumer Financial Protection Bureau (“CFPB”) which was established by the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act, as amended (“Dodd-Frank Act”) and has broad powers to adopt and enforce consumer protection regulations.

Holding Company Regulation – Premier is subject to the requirements of the Bank Holding Company Act of 1956, as amended (“BHC Act”), and examination and regulation by the Federal Reserve. Premier elected to become a financial holding company in 2020. The Federal Reserve has extensive enforcement authority over bank holding companies and financial holding companies, including, among other things, the ability to assess civil money penalties, issue cease and desist or removal orders, and require that a bank holding company divest subsidiaries (including its banking subsidiaries). In general, the Federal Reserve may initiate enforcement action for violations of laws and regulations and unsafe or unsound practices.

A bank holding company is required by law and Federal Reserve policy to serve as a source of financial strength to each subsidiary bank and to commit resources to support those subsidiary banks. The Federal Reserve may require a bank holding company to contribute additional capital to an undercapitalized subsidiary bank and may disapprove of the payment of dividends to the shareholders of the bank holding company if the Federal Reserve believes the payment would be an unsafe or unsound practice. The Federal Reserve also requires bank holding companies to provide advance notification of planned dividends under certain circumstances.

The BHC Act requires the prior approval of the Federal Reserve in any case where a bank holding company proposes to: acquire direct or indirect ownership or control of more than 5% of the voting shares of any bank that is not already majority-owned by the bank holding company; acquire all or substantially all of the assets of another bank or bank holding company; or merge or consolidate with any other bank holding company.

In order to become a financial holding company, all of a bank holding company’s subsidiary depository institutions must be well capitalized and well managed under federal banking regulations, and such depository institutions must have received a rating of at least satisfactory under the Community Reinvestment Act (“CRA”). In addition, the holding company must be well managed and must be well capitalized.

Financial holding companies may engage in a wide variety of financial activities, including any activity that the Federal Reserve and the Treasury Department consider financial in nature or incidental to financial activities, and any activity that the Federal Reserve determines to be complementary to a financial activity and which does not pose a substantial safety and soundness risk. These activities include securities underwriting and dealing activities, insurance and underwriting activities and merchant banking/equity investment activities. Because it has authority to engage in a broad array of financial activities, a financial holding company may have several affiliates that are functionally regulated by financial regulators other than the Federal Reserve, such as the SEC and state insurance regulators.

If a financial holding company or a subsidiary bank fails to meet the requirements for the holding company to remain a financial holding company, the financial holding company must enter into a written agreement with the Federal Reserve within 45 days to comply with all applicable capital and management requirements. Until the Federal Reserve determines that the holding company and its subsidiary banks meet the requirements, the Federal Reserve may impose additional limitations or conditions on the conduct or activities of the financial holding company or any affiliate that the Federal Reserve finds to be appropriate or consistent with federal banking laws. If the deficiencies are not corrected within 180 days, the financial holding company may be required to divest ownership or control of all subsidiary banks. If restrictions are imposed on the activities of the holding company, such restrictions may not be made publicly available pursuant to confidentiality regulations of the banking regulators.

In April 2020, the Federal Reserve adopted a final rule to revise its regulations related to determinations of whether a company has the ability to exercise a controlling influence over another company for purposes of the BHC Act. The final rule expands and codifies the presumptions for use in such determinations. By codifying the presumptions, the final rule provides greater transparency on the types of relationships that the Federal Reserve generally views as supporting a facts-and-circumstances determination that one company controls another company. The Federal Reserve’s final rule applies to questions of control under the BHC Act, but does not extend to the Change in Bank Control Act.

Regulation of Ohio State-Chartered Banks – As an Ohio state-chartered bank, the Bank is supervised and regulated primarily by the ODFI and the FDIC. In addition, the Bank’s deposits are insured up to applicable limits by the FDIC, and the Bank will be subject to the applicable provisions of the Federal Deposit Insurance Act, as amended, and certain other regulations of the FDIC.

Various requirements and restrictions under the laws of the United States and the State of Ohio will affect the operations of the Bank, including requirements to maintain reserves against deposits, restrictions on the nature and amount of loans that may be made and the interest that may be charged thereon, restrictions relating to investments and other activities, limitations on credit exposure to correspondent banks, limitations on activities based on capital and surplus, limitations on payment of dividends, limitations on branching and increasingly extensive consumer protection laws and regulations.

Economic Growth, Regulatory Relief and Consumer Protection Act - On May 25, 2018, the Economic Growth, Regulatory Relief and Consumer Protection Act (the “Regulatory Relief Act”) was enacted, which repealed or modified certain provisions of the Dodd-Frank Act and eased regulations on all but the largest banks (those with consolidated assets in excess of $250 billion). Bank holding companies with consolidated assets of less than $100 billion, including Premier, are no longer subject to enhanced prudential standards. The Regulatory Relief Act also relieves bank holding companies and banks with consolidated assets of less than $100 billion, including Premier, from certain record-keeping, reporting and disclosure requirements. Certain other regulatory requirements applied only to banks with consolidated assets in excess of $50 billion and so did not apply to the Company even before the enactment of the Regulatory Relief Act.

Regulatory Capital Requirements and Prompt Corrective Action – The federal banking regulators have adopted risk-based capital guidelines for financial institutions and their holding companies, as well as state member banks. The guidelines provide a systematic analytical framework, which makes regulatory capital requirements sensitive to differences in risk profiles among banking organizations, takes off-balance sheet exposures expressly into account in evaluating capital adequacy and incentivizes holding liquid, low-risk assets. Capital levels as measured by these standards are also used to categorize financial institutions for purposes of certain prompt corrective action regulatory provisions.

The risk-based capital guidelines adopted by the federal banking agencies are based on the “International Convergence of Capital Measurement and Capital Standard,” published by the Basel Committee on Banking Supervision. New capital rules applicable to smaller banking organizations (the “Basel III Capital Rules”) which also implement certain of the provisions of the Dodd-Frank Act became effective commencing on January 1, 2015. Compliance with the new minimum capital requirements was required effective January 1, 2015, whereas a new capital conservation buffer and deductions from common equity capital phased in from January 1, 2016, through January 1, 2019, and most deductions from common equity tier 1 capital phased in from January 1, 2015 through January 1, 2019.

The Basel III Capital Rules include (i) a minimum common equity tier 1 (“CET1”) capital ratio of 4.5%, (ii) a minimum tier 1 capital ratio of 6.0%, (iii) a minimum total capital ratio of 8.0%, and (iv) a minimum leverage ratio of 4%.

Common equity for the CET1 capital ratio includes common stock (plus related surplus) and retained earnings, plus limited amounts of minority interests in the form of common stock, less the majority of certain regulatory deductions.

Tier 1 capital includes common equity as defined for the CET1 capital ratio, plus certain non-cumulative preferred stock and related surplus, cumulative preferred stock and related surplus, trust preferred securities that have been grandfathered (but which are not otherwise permitted), and limited amounts of minority interests in the form of additional tier 1 capital instruments, less certain deductions.

Tier 2 capital, which can be included in the total capital ratio, includes certain capital instruments (such as subordinated debentures) and limited amounts of the allowance for credit losses, subject to specified eligibility criteria, less applicable deductions.

The deductions from CET1 capital include goodwill and other intangibles, certain deferred tax assets, mortgage-servicing assets above certain levels, gains on sale in connection with a securitization, investments in a banking organization’s own capital instruments and investments in the capital of unconsolidated financial institutions (above certain levels).

Under the guidelines, capital is compared to the relative risk included in the balance sheet. To derive the risk included in the balance sheet, one of several risk weights is applied to different balance sheet and off-balance sheet assets, primarily based on the relative credit risk of the counterparty. The capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings and other factors.

The Basel III Capital Rules also place restrictions on the payment of capital distributions, including dividends, and certain discretionary bonus payments to executive officers if the company does not hold a capital conservation buffer of greater than 2.5% composed of CET1 capital above its minimum risk-based capital requirements, or if its eligible retained income is negative in that quarter and its capital conservation buffer ratio was less than 2.5% at the beginning of the quarter.

The federal banking agencies have established a system of “prompt corrective action” to resolve certain problems of undercapitalized banks. This system is based on five capital level categories for insured depository institutions: “well capitalized,” “adequately capitalized,” “undercapitalized,” “significantly undercapitalized” and “critically undercapitalized.” The federal banking agencies may (or in some cases must) take certain supervisory actions depending upon a bank's capital level. For example, the banking agencies must appoint a receiver or conservator for a bank within 90 days after it becomes "critically undercapitalized" unless the bank's primary regulator determines, with the concurrence of the FDIC, that other action would better achieve regulatory purposes. Banking operations otherwise may be significantly affected depending on a bank's capital category. For example, a bank that is not "well capitalized" generally is prohibited from accepting brokered deposits and offering interest rates on deposits higher than the prevailing rate in its market, and the holding company of any undercapitalized depository institution must guarantee, in part, specific aspects of the bank's capital plan for the plan to be acceptable.

In accordance with the Basel III Capital Rules, in order to be “well-capitalized” under the prompt corrective action guidelines, a financial institution must have a CET1 capital ratio of 6.5%, a total risk-based capital ratio of at least 10.0%, a tier 1 risk-based capital of at least 8.0% and a leverage ratio of at least 5.0%, and the institution must not be subject to any written agreement, order, capital directive or prompt corrective action directive to meet and maintain a specific capital level for any capital measure. As of December 31, 2021, the Bank met the capital ratio requirements to be deemed "well-capitalized" according to the guidelines described above. See Note 17 of the Notes to the Consolidated Financial Statements for additional information.

In December 2019, the federal banking agencies issued a final rule to address regulatory treatment of credit loss allowances under the CECL accounting standard. The rule revised the federal banking agencies’ regulatory capital rules to identify which credit loss allowances under the CECL model are eligible for inclusion in regulatory capital and to provide banking organizations the option to phase in over three years the day‑one adverse effects on regulatory capital that may result from the adoption of the CECL model. Concurrent with the enactment of the Coronavirus Aid, Relief, and Economic Security Act of 2020, as amended (the “CARES Act”), discussed below, federal banking agencies issued an interim final rule that delayed the estimated impact on regulatory capital resulting from the adoption of CECL. The interim final rule provided banking organizations that implemented CECL prior to the end of 2020 the option to delay for two years the estimated impact of CECL on regulatory capital relative to regulatory capital determined under the prior incurred loss methodology, followed by a three-year transition period to phase out the aggregate amount of capital benefit provided during the initial two-year delay. On August 26, 2020, the federal banking agencies issued a final rule that made certain technical changes to the interim final rule, including expanding the pool of eligible institutions. The changes in the final rule applied only to those banking organizations that elected the CECL transition relief provided for under the rule. Premier adopted CECL on January 1, 2020.

In September 2019, consistent with Section 201 of the Regulatory Relief Act, the Federal Reserve, along with the other federal bank regulatory agencies, issued a final rule, effective January 1, 2020, that gave community banks, including the Bank, the option to calculate a simple leverage ratio to measure capital adequacy if the community banks met certain requirements. Under the rule, a community bank was eligible to elect the Community Bank Leverage Ratio (“CBLR”) framework if it had less than $10 billion in total consolidated assets, limited amounts of certain trading assets and liabilities, limited amounts of off-balance sheet exposures and a leverage ratio greater than 9.0%. The final rule adopted tier 1 capital and the existing leverage ratio into the CBLR framework. The tier 1 numerator took into account the modifications made in relation to the capital simplifications and CECL methodology transition rules as of the compliance dates of those rules. Qualifying institutions that elected to use the CBLR framework (each, a “CBLR Bank”) and that maintained a leverage ratio of greater than 9.0% were considered to have satisfied the risk‑based and leverage capital requirements in the regulatory agencies’ generally applicable capital rules and to have met the well‑capitalized ratio requirements. A CBLR Bank was required to calculate or report risk‑based capital and each CBLR Bank could opt out of the framework at any time, without restriction, by reverting to the generally applicable risk‑based capital rule. Pursuant to the CARES Act, on August 26, 2020, the federal banking agencies adopted a final rule that temporarily lowered the CBLR threshold and provided a gradual transition back to the prior level. Specifically, the CBLR threshold was reduced to 8.0% for the remainder of 2020, increased to 8.5% for 2021, and returned to 9.0% on January 1, 2022. This final rule became effective on October 1, 2020. Premier did not utilize the CBLR in assessing capital adequacy.

Dividends – There are various legal limitations on the extent to which a subsidiary bank may finance or otherwise supply funds to its parent holding company. Under applicable federal and state laws, a subsidiary bank may not, subject to certain limited exceptions, make loans or extensions of credit to, or investments in the securities of, its parent holding company. A subsidiary bank is also subject to collateral security requirements for any loan or extension of credit permitted by such exceptions. The Bank paid $35.0 million in dividends to Premier in 2021 and $24.0 million in 2020. First Insurance paid $2.0 million in dividends to Premier in 2021 and $400,000 in dividends in 2020. Premier Risk Management paid $1.8 million in dividends to Premier in 2021 and $1.5 million in dividends in 2020. PFC Capital paid $7.5 million in dividends in 2021.

Premier’s ability to pay dividends to its shareholders is primarily dependent on its receipt of dividends from the Subsidiaries. The Federal Reserve expects Premier to serve as a source of strength for the Bank and may require Premier to retain capital for further investment in the Bank, rather than pay dividends to Premier shareholders. Payment of dividends by Premier or the Bank may be restricted at any time at the discretion of its applicable regulatory authorities if they deem such dividends to constitute an unsafe or unsound practice. These provisions could have the effect of limiting Premier's ability to pay dividends on its common shares.

Deposit Insurance – The FDIC maintains the Deposit Insurance Fund (“DIF’), which insures the deposit accounts of the Bank to the maximum amount provided by law. The general insurance limit is $250,000 per separately insured depositor. This insurance is backed by the full faith and credit of the U. S. government.

As insurer, the FDIC is authorized to conduct examinations of, and to require reporting by, federally-insured institutions. It also may prohibit any federally-insured institution from engaging in any activity the FDIC determines by regulation or order to pose a serious threat to the DIF and it has the authority to take enforcement actions against insured institutions. Insurance of deposits may be terminated by the FDIC upon a finding that the institution has engaged or is engaging in unsafe or unsound practices, is in an unsafe or unsound condition to continue operations or has violated any applicable law, regulation, rule, order or condition imposed by the FDIC or written agreement entered into with the FDIC.

The FDIC assesses a quarterly deposit insurance premium on each insured institution quarterly based on risk characteristics of the institution. The FDIC may also impose a special assessment in an emergency situation. Pursuant to the Dodd-Frank Act, the FDIC has established 2.0% as the designated reserve ratio (“DRR”), which is the amount in the DIF as a percentage of all DIF insured deposits. In March 2016, the FDIC adopted final rules designed to meet the statutory minimum DRR of 1.35% by September 30, 2020, the deadline imposed by the Dodd-Frank Act. The Dodd-Frank Act requires the FDIC to offset the effect on insured institutions with assets of less than $10 billion of the increase in the statutory minimum DRR to 1.35% from the former statutory minimum of 1.15%. Although the FDIC's rules reduced assessment rates on all banks, they imposed a surcharge on banks with assets of $10 billion or more to be paid until the DRR reached 1.35%. The DRR reached 1.35% on September 30, 2018. As a result, the previous surcharge imposed on banks with assets of $10 billion or more was lifted. In addition, preliminary assessment credits were determined by the FDIC for banks with assets of less than $10 billion for the portion of their assessments that contributed to the increase of the DRR to 1.35%. On June 30, 2019, the DRR reached 1.40%, and the FDIC applied credits for banks with assets of less than $10 billion ("small bank credits") beginning September 30, 2019. On June 30, 2020, the DRR fell below the minimum statutory DRR to 1.30%. As a result, the FDIC adopted a restoration plan requiring the restoration of the DRR to 1.35% by September 30, 2028, within eight years of the plan establishment. This restoration plan maintained the scheduled assessment rates for all insured institutions. The FDIC rules further changed the method of determining risk-based assessment rates for established banks with less than $10 billion in assets to better ensure that banks taking on greater risks pay more for deposit insurance than banks that take on less risk.

Consumer Protection Laws and Regulations – Banks are subject to regular examination to ensure compliance with federal statutes and regulations applicable to their business, including consumer protection statutes and implementing regulations. The Dodd-Frank Act established the CFPB, which has extensive regulatory and enforcement powers over consumer financial products and services. The CFPB has adopted numerous rules with respect to consumer protection laws and has commenced related enforcement actions. The following are just a few of the consumer protection laws applicable to the Bank:

•

Community Reinvestment Act of 1977: imposes a continuing and affirmative obligation to fulfill the credit needs of its entire community, including low- and moderate-income neighborhoods.

•

Equal Credit Opportunity Act: prohibits discrimination in any credit transaction on the basis of any of various criteria.

•

Truth in Lending Act: requires that credit terms are disclosed in a manner that permits a consumer to understand and compare credit terms more readily and knowledgeably.

•

Fair Housing Act: makes it unlawful for a lender to discriminate in its housing-related lending activities against any person on the basis of any of certain criteria.

•

Home Mortgage Disclosure Act: requires financial institutions to collect data that enables regulatory agencies to determine whether the financial institutions are serving the housing credit needs of the communities in which they are located.

•

Real Estate Settlement Procedures Act: requires that lenders provide borrowers with disclosures regarding the nature and cost of real estate settlements and prohibits abusive practices that increase borrowers’ costs.

•

Privacy provisions of the Gramm-Leach-Bliley Act: requires financial institutions to establish policies and procedures to restrict the sharing of non-public customer data with non-affiliated parties and to protect customer information from unauthorized access.

The banking regulators also use their authority under the Federal Trade Commission Act to take supervisory or enforcement action with respect to unfair or deceptive acts or practices by banks that may not necessarily fall within the scope of specific banking or consumer finance law.

On July 22, 2020, the CFPB issued a final small dollar loan rule related to payday, vehicle title and certain high cost installment loans (the “Small Dollar Rule”) that modified a former rule that was issued in November 2013. Specifically, the Small Dollar Rule revokes provisions contained in the 2013 rule that: (i) provide that it is an unfair and abusive practice for a lender to make a covered short-term or longer-term balloon-payment loan, including payday and vehicle title loans, without reasonably determining that consumers have the ability to repay those loans according to their terms; (ii) prescribe mandatory underwriting requirements for making the ability-to-repay determination; (iii) exempt certain loans from mandatory underwriting requirements; and (iv) establish related definitions, reporting, and recordkeeping requirements.

Further, the federal bank regulatory agencies issued interagency guidance on May 20, 2020, to encourage banks, savings associations, and credit unions to offer responsible small-dollar loans to customers for consumer and small business purposes. The Small Dollar Rule did not have a material effect on Premier’s financial condition or results of operations on a consolidated basis in 2021.

CRA - Under the CRA, every FDIC-insured institution is obligated, consistent with safe and sound banking practices, to help meet the credit needs of its entire community, including low- and moderate-income neighborhoods. The CRA requires the appropriate federal banking regulator, in connection with the examination of an insured institution, to assess the institution’s record of meeting the credit needs of its community and to consider this record in its evaluation of certain applications to banking regulators, such as an application for approval of a merger or the establishment of a branch. An unsatisfactory rating may be used as the basis for the denial of an application to acquire another financial institution or open a new branch. As of its last examination, the Bank received a CRA rating of “satisfactory.”

Patriot Act – In response to the terrorist events of September 11, 2001, the Uniting and Strengthening of America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, as amended (the “Patriot Act”) was signed into law in October 2001. The Patriot Act gives the U. S. government powers to address terrorist threats through enhanced domestic security measures, expanded surveillance powers, increased information sharing and broadened anti-money laundering requirements. Title III of the Patriot Act and related regulations require regulated financial institutions to establish a program specifying procedures for obtaining identifying information from customers seeking to open new accounts and establish enhanced due diligence policies, procedures and controls designed to detect and report suspicious activity. The Bank has established policies and procedures that it considers to be in compliance with the requirements of the Patriot Act.

Volcker Rule – The Volcker Rule, which became effective under the Dodd-Frank Act in 2015, prohibits banks and their affiliates from engaging in proprietary trading and investing in and sponsoring hedge funds, otherwise known as “covered funds.” On July 9, 2019, the five federal agencies that adopted the Volcker Rule issued a final rule to exempt certain community banks, including the Bank, from such rule, consistent with the Regulatory Relief Act. Under the final rule, community banks with $10 billion or less in total consolidated assets and total trading assets and liabilities of 5.0% or less of total consolidated assets were excluded from the restrictions of the Volcker Rule. On June 25, 2020, the federal bank regulatory agencies also finalized a rule modifying the Volcker Rule’s prohibition on banking entities investing in or sponsoring covered funds. Such rule permits certain banking entities to offer financial services and engage in other activities that do not raise concerns that the Volcker Rule was originally intended to address. To the extent that the Bank engages in any of the trading activities or has any ownership interest in or relationship with any of the types of funds regulated by the Volcker Rule, Premier believes that its activities and relationships comply with such rule, as amended.

Office of Foreign Assets Control Regulation – The U.S. Treasury Department’s Office of Foreign Assets Control (“OFAC”) administers and enforces economic and trade sanctions against targeted foreign countries and regimes, under authority of various laws, including designated foreign countries, nationals and others. OFAC publishes lists of specially designated targets and countries. Premier is responsible for, among other things, blocking accounts of, and transactions with, such targets and countries, prohibiting unlicensed trade and financial transactions with them and reporting blocked transactions after their occurrence. Failure to comply with these sanctions could have serious financial, legal and reputational consequences, including causing applicable bank regulatory authorities not to approve merger or acquisition transactions when regulatory approval is required or to prohibit such transactions even if approval is not required. Regulatory authorities have imposed cease and desist orders and civil money penalties against institutions found to be violating these obligations. The Bank has established policies and procedures that it considers to be in compliance with OFAC requirements.

Cybersecurity – In March 2015, federal regulators issued two related statements regarding cybersecurity. One statement indicates that financial institutions should design multiple layers of security controls to establish several lines of defense and to ensure that their risk management processes also address the risk posed by compromised customer credentials, including security measures to reliably authenticate customers accessing Internet-based services of the financial institution. The other statement indicates that a financial institution’s management is expected to maintain sufficient business continuity planning processes to ensure the rapid recovery, resumption and maintenance of the financial institution’s operations after a cyber-attack involving destructive malware. A financial institution is also expected to develop appropriate processes to enable recovery of data and business operations and address rebuilding network capabilities and restoring data if the financial institution or its critical service providers fall victim to this type of cyber-attack. If Premier fails to observe the regulatory guidance, it could be subject to various regulatory sanctions, including financial penalties.

In February 2018, the SEC published interpretive guidance to assist public companies in preparing disclosures about cybersecurity risks and incidents. These SEC guidelines, and any other regulatory guidance, are in addition to notification and disclosure requirements under state and federal banking law and regulations.

In November 2021, the OCC, the Federal Reserve and the FDIC issued a final rule requiring banking organizations that experience a computer-security incident to notify certain entities. A computer-security incident occurs when actual or potential harm to the confidentiality, integrity, or availability of an information system or the information occurs, or there is a violation or imminent threat of a violation to banking security policies and procedures. The affected bank must notify its respective federal regulator of the computer-security incident as soon as possible and no later than 36 hours after the bank determines a computer-security incident has occurred. These notifications are intended to promote early awareness of threats to banking organizations and will help banks react to those threats before they manifest into bigger incidents.

State regulators have also been increasingly active in implementing privacy and cybersecurity standards and regulations. Recently, several states have adopted regulations requiring certain financial institutions to implement cybersecurity programs and providing detailed requirements with respect to these programs, including data encryption requirements. Many states have also recently

implemented or modified their data breach notification and data privacy requirements. Premier expects this trend of state-level activity in those areas to continue and is continually monitoring developments in the states in which its customers are located.

The Coronavirus Aid, Relief, and Economic Security Act of 2020 – In response to the novel COVID-19 pandemic (“COVID-19”), the CARES Act was signed into law on March 27, 2020, to provide national emergency economic relief measures. Many of the CARES Act’s programs are dependent upon the direct involvement of U.S. financial institutions, such as Premier and the Bank, and have been implemented through rules and guidance adopted by federal departments and agencies, including the U.S. Department of Treasury, the Federal Reserve and other federal banking agencies, including those with direct supervisory jurisdiction over Premier and the Bank. Furthermore, as COVID-19 evolves, federal regulatory authorities continue to issue additional guidance with respect to the implementation, lifecycle, and eligibility requirements for the various CARES Act programs as well as industry-specific recovery procedures for COVID-19. In addition, it is possible that Congress will enact supplementary COVID-19 response legislation, including amendments to the CARES Act or new bills comparable in scope to the CARES Act. For example, on December 27, 2020, the Consolidated Appropriations Act, 2021 (the “CAA”), was signed into law, which, among other things, allowed certain banks to temporarily postpone implementation of CECL. Premier is continuing to assess the impact of the CARES Act and other statutes, regulations and supervisory guidance related to COVID-19.

The CARES Act amended the loan program of the Small Business Administration (the “SBA”), in which the Bank participates, to create a guaranteed, unsecured loan program known as the Paycheck Protection Program (the “PPP”) to fund operational costs of eligible businesses, organizations and self-employed persons during COVID-19. In June 2020, the Paycheck Protection Program Flexibility Act was enacted, which, among other things, gave borrowers additional time and flexibility to use PPP loan proceeds. After previously being extended by Congress, the application deadline for PPP loans expired on May 31, 2021. As a participating lender in the PPP, the Bank continues to monitor legislative, regulatory, and supervisory developments related thereto. On September 29, 2020, the federal bank regulatory agencies issued a final rule that neutralizes the regulatory capital and liquidity coverage ratio effects of participating in certain COVID-19 liquidity facilities due to the fact there is no credit or market risk in association with exposures pledged to such facilities. As a result, the final rule supports the flow of credit to households and businesses affected by COVID-19.

Item 1A. Risk Factors

The risks listed below present risks that could have a material impact on the Company’s financial condition, results of operations, or business. The risks and uncertainties described below are not the only ones facing the Company. Additional risks and uncertainties that management is not aware of or that management currently deems immaterial may also impair the Company’s business operations.

Economic and Market Risks

The economic impact of COVID-19 or any other pandemic could adversely affect the Company’s business, financial condition, liquidity, cash flows, and results of operations.

COVID-19 has negatively impacted global, national and local economies, disrupted global supply chains, lowered equity market valuations, created significant volatility and disruption in financial markets, increased unemployment levels and decreased consumer confidence, generally. In addition, the pandemic resulted in temporary closures of many businesses and the institution of social distancing and sheltering in place requirements in many states and communities and may result in the same or similar restrictions in the future. As a result, the demand for our products and services have been and may continue to be significantly impacted, which could adversely affect our revenue and results of operations. Furthermore, the pandemic could continue to result in the recognition of credit losses in our loan portfolios and increase our allowance for credit losses, particularly if businesses are required to operate at diminished capacities or are required to close again, the impact on the global, national and local economies worsen, or more customers draw on their lines of credit or seek additional loans to help finance their businesses. Our business operations may also be disrupted if significant portions of our workforce are unable to work effectively, including because of illness, quarantines, government actions, or other restrictions in connection with COVID-19. The pandemic could also affect the stability of our deposit base as well as our capital and liquidity position, impair the ability of borrowers to repay outstanding loans, impair the value of collateral securing loans, result in lost revenue and cause us to incur additional expenses. Similarly, because of changing economic and market conditions affecting issuers, we may be required to recognize other-than-temporary impairments in future periods on the securities we hold as well as reductions in other comprehensive income.

As of December 31, 2021, the Bank holds and services PPP loans. These PPP loans are subject to the provisions of the CARES Act and to complex and evolving rules and guidance issued by the SBA and other government agencies. While a large number of our PPP borrowers have applied for or received full or partial forgiveness of their loan obligations we still have credit risk on the remaining PPP loans in the event the SBA determines that there is a deficiency in the manner in which we originated, funded or serviced such loans, including any issue with the eligibility of a borrower to receive funding. We could face additional risks in our administrative capabilities to service our PPP loans and to properly determine loan forgiveness. In the event of a loss resulting from a default on a PPP loan and a determination by the SBA that there was a deficiency in the manner in which we originated, funded or serviced the PPP loan, the SBA may deny its liability under the guaranty, reduce the amount of the guaranty or, if the SBA has already paid under the guaranty, seek recovery of any loss related to the deficiency.

COVID-19, the rise of new strains thereof, or a new pandemic could subject us to any of the following risks that cannot be predicted, any of which could, individually or in the aggregate, have a material adverse effect on our business, financial condition, liquidity, and results of operations:

•

demand for our products and services may decline, making it difficult to grow assets and income;

•

if the economy is unable to re-open, loan delinquencies, problem assets, and foreclosures may increase, resulting in increased charges and reduced income;

•

collateral for loans, especially real estate, may decline in value, which could cause credit losses to increase;

•

our allowance for credit losses may have to be increased if borrowers experience financial difficulties beyond forbearance periods, which will adversely affect our net income;

•

the net worth and liquidity of loan guarantors may decline, impairing their ability to honor commitments to us;

•

we rely on third party vendors for certain services and the unavailability of a critical service due to COVID-19 could have an adverse effect on us; and

•

continued adverse economic conditions could result in protracted volatility in the price of our common shares.

Moreover, our future success and profitability substantially depend on the management skills of our executive officers and directors, many of whom have held officer and director positions with us for many years. The unanticipated loss or unavailability of key employees due to COVID-19,including any new variations thereof, or any similar pandemic could harm our ability to operate our business or execute our business strategy. We may not be successful in finding and integrating suitable successors in the event of key employee loss or unavailability.

Even after the COVID-19 pandemic subsides, the U.S. economy will likely require time to recover, the length of which is unknown and during which the U.S. may experience a recession or market correction. Our business could be materially and adversely affected by such recession or market correction.

We continue to closely monitor COVID-19 and related risks as they evolve. To the extent the effects of COVID-19 adversely impact our business, financial condition, liquidity or results of operations, it may also have the effect of heightening many of the other risks described in this item.

Premier’s loan portfolio includes a concentration of commercial real estate loans and commercial loans, which involve risks specific to real estate value and the successful operations of these businesses.

At December 31, 2021, the Bank’s portfolio of commercial real estate loans totaled $2.5 billion, or approximately 42.5% of total loans. The Bank’s commercial real estate loans typically have higher principal amounts than residential real estate loans, and many of our commercial real estate borrowers have more than one loan outstanding. As a result, an adverse development on one loan can expose Premier to greater risk of loss on other loans. Additionally, repayment of the loans is generally dependent, in large part, on sufficient income from the properties securing the loans to cover operating expenses and debt service. Economic conditions and events outside of the control of the borrower or lender, including COVID-19, could negatively impact the future cash flows and market values of the affected properties.

At December 31, 2021, the Bank’s portfolio of commercial loans totaled $896,000 million, or approximately 15.5% of total loans. Commercial loans generally expose Premier to a greater risk of nonpayment and loss than commercial real estate or residential real estate loans since repayment of such loans often depends on the successful operations and income stream of the borrowers. The Bank’s commercial loans are primarily made based on the identified cash flow of the borrower and secondarily on the underlying collateral provided by the borrower such as accounts receivable, inventory, machinery or real estate. In the case of loans secured by accounts receivable, the availability of funds for the repayment of these loans may be substantially dependent on the ability of the borrower to collect amounts due from its customers. The collateral securing other loans may depreciate over time, may be difficult to appraise and may fluctuate in value based on the success of the business. Credit support provided by the borrower for most of these loans and the probability of repayment is based on the liquidation of the pledged collateral and enforcement of a personal guarantee, if any exists.

Premier targets its business lending towards small- and medium-sized businesses, many of which have fewer financial resources than larger companies and may be more susceptible to economic downturns. If general economic conditions negatively impact these businesses, Premier’s results of operations and financial condition may be adversely affected.

If Premier's actual credit losses exceed its allowance for credit losses, Premier's net income will decrease.

In accordance with U.S. generally accepted accounting principles (“GAAP”), Premier must maintain an allowance for credit losses that it believes is a reasonable estimate of the expected credit losses within the CECL model. Premier's allowance for credit losses is based upon a number of relevant factors, including, but not limited to, trends in the level of nonperforming assets and classified loans, current and projected economic conditions in the primary lending area, prior experience, possible losses arising from specific

problem loans, and management's evaluation of the risks in the current portfolio. However, there are many factors that can result in actual credit losses exceeding the allowance.

For instance, in deciding whether to extend credit or enter into other transactions with customers and counterparties, Premier may rely on information provided to it by customers and counterparties, including financial statements and other financial information. Premier may also rely on representations of customers and counterparties as to the accuracy and completeness of that information and, with respect to financial statements, on reports of independent auditors. Such information may not turn out to be accurate. Further, Premier's loan customers may not repay their loans according to their terms, and the collateral securing the payment of these loans may be insufficient to pay any remaining loan balance. As a result, Premier may experience significant credit losses, which could have a material adverse effect on its operating results.

The amount of future losses also is susceptible to changes in economic, operating and other conditions, including changes in unemployment and interest rates that may be beyond management's control, and these losses may exceed current estimates. Further, federal regulatory agencies, as an integral part of their examination process, review Premier's loans and allowance for credit losses and may require that Premier increase its allowance. Moreover, the Financial Accounting Standards Board (“FASB”) has changed its requirements for establishing the allowance, which became effective for Premier in the first quarter of 2020. Under the CECL model, we are required to use historical information, current conditions and reasonable and supportable forecasts to estimate the expected credit losses. That accounting change exposes Premier to increased risk of failure to establish a sufficient allowance due to incorrect or inadequate methodologies and assumptions and the possibility that Premier will need to increase its allowance substantially through an increase to the provision for credit losses, which will adversely affect Premier's net income.

As a result of any of the above factors, Premier's allowance for credit losses may not be adequate to cover actual credit losses, and future provisions for credit losses could have a material adverse effect on Premier's operating results. There is no assurance that Premier will not further increase the allowance for credit losses. Either of these occurrences could have a material adverse effect on Premier's financial condition and results of operations.

Changes in interest rates can adversely affect Premier’s profitability.

Premier’s earnings and cash flows are largely dependent upon its net interest income, which is the difference between interest income earned on interest-earning assets such as loans and securities, and interest expense paid on interest-bearing liabilities such as deposits and borrowed funds. Interest rates are highly sensitive to many factors that are beyond Premier’s control, including general economic conditions and policies of various governmental and regulatory agencies and, in particular, the Federal Reserve. Changes in monetary policy, including changes in interest rates, could influence not only the interest Premier receives on loans and securities and the amount of interest it pays on deposits and borrowings, but such changes could also affect Premier’s ability to originate loans and obtain deposits, the fair value of Premier’s financial assets and liabilities, and the average duration of certain assets and liabilities. If the interest rates paid on deposits and other borrowings increase at a faster rate than the interest rates received on loans and other investments, Premier’s net interest income, and therefore earnings, could be adversely affected. Earnings could also be adversely affected if the interest rates received on loans and other investments fall more quickly than the interest rates paid on deposits and other borrowings. While we generally invest in securities with limited credit risk, certain investment securities we hold possess higher credit risk, especially in light of the continued economic effects of COVID-19, since they represent beneficial interests in structured investments collateralized by residential mortgages. All investment securities are subject to changes in market value due to changing interest rates and implied credit spreads. Any substantial, unexpected, or prolonged change in market interest rates could have a material adverse effect on Premier’s results of operations and financial condition.

The Bank originates a significant amount of residential mortgage loans that it sells in the secondary market. The origination of residential mortgage loans is highly dependent on the local real estate market and the current interest rates. Increasing interest rates tend to reduce the origination of loans for sale and consequently fee income, which Premier reports as mortgage banking income. Conversely, decreasing interest rates have the effect of causing clients to refinance mortgage loans faster than anticipated. This causes the value of mortgage servicing rights on the loans sold to be lower than originally anticipated. If this happens, Premier may be required to write down the value of its mortgage servicing rights faster than anticipated, which will increase expense and lower earnings. Accelerated repayments on loans and mortgage-backed securities could result in the reinvestment of funds at lower rates than the loans or securities were paying.

Legal and Regulatory Risks

Laws, regulations and periodic regulatory reviews may affect Premier’s results of operations.

The financial services industry is extensively regulated. Premier is subject to extensive state and federal regulation, supervision and legislation that govern almost all aspects of its operations. Laws and regulations may change from time to time and are primarily intended for the protection of consumers, depositors, borrowers, the DIF and the banking system as a whole, and not to benefit Premier’s shareholders. Regulations affecting banks and financial services businesses are undergoing continuous changes, and management cannot predict the effect of these changes. The impact of any changes to laws and regulations or other actions by regulatory agencies may

negatively impact Premier and its ability to increase the value of its business, possibly limiting the services it provides, increasing the potential for competition from non-banks, or requiring it to change the way it operates.

Regulatory authorities have extensive discretion in connection with their supervisory and enforcement activities, including the imposition of restrictions on the operation of an institution, the classification of assets held by an institution, the adequacy of an institution’s allowance for credit losses and the ability to complete acquisitions. Additionally, actions by regulatory agencies against Premier could cause it to devote significant time and resources to defending its business and may lead to penalties that materially affect Premier and its shareholders. Even the reduction of regulatory restrictions could have an adverse effect on Premier and its shareholders if such lessening of restrictions increases competition within Premier’s industry or market area.

In addition to laws, regulations and actions directed at the operations of banks, proposals to reform the housing finance market could negatively affect Premier’s ability to sell loans.

The laws and regulations applicable to the banking industry could change at any time. The potential exists for new laws and regulations, and bank regulatory agencies are expected to be active in responding to concerns and trends identified in examinations. Increased regulation could increase Premier’s cost of compliance and reduce its income to the extent that they limit the manner in which Premier may conduct business, including its ability to offer new products, charge fees for specific products and services, obtain financing, attract deposits, make loans and achieve satisfactory interest spreads.

Changes in tax laws could adversely affect Premier's financial condition and results of operations.

Premier is subject to extensive federal, state and local taxes, including income, excise, sales/use, payroll, franchise, withholding and ad valorem taxes. Changes to the tax laws could have a material adverse effect on Premier's results of operations. In addition, Premier's customers are subject to a wide variety of federal, state and local taxes. Changes in taxes paid by customers, including changes in the deductibility of mortgage loan related expenses, may adversely affect their ability to finance activities or purchase properties or consumer products, which could adversely affect their demand for Premier's loans and deposit products. In addition, such negative effects on Premier's customers could result in defaults on the loans already made and decrease the value of mortgage-backed securities in which Premier has invested.

Increasing scrutiny and evolving expectations from customers, regulators, investors, and other stakeholders with respect to our environmental, social and governance practices may impose additional costs on us or expose us to new or additional risks.

Companies are facing increasing scrutiny from customers, regulators, investors, and other stakeholders related to their environmental, social and governance (“ESG”) practices and disclosure. Investor advocacy groups, investment funds and influential investors are also increasingly focused on these practices, especially as they relate to the environment, health and safety, diversity, labor conditions and human rights. Increased ESG-related compliance costs for us as well as among our third party vendors and various other parties within our supply chain could result in increases to our overall operational costs. Failure to adapt to or comply with regulatory requirements or investor or stakeholder expectations and standards could negatively impact our reputation, ability to do business with certain partners, access to capital, and the price of our common shares.

Business and Operational Risks

Premier’s ability to meet cash flow needs on a timely basis at a reasonable cost may adversely affect net income.

Premier’s principal sources of liquidity are local deposits and wholesale funding sources such as FHLB advances, Federal Funds purchased, securities sold under repurchase agreements, and brokered or other out-of-market certificate of deposit purchases. Premier also maintains a portfolio of securities that can be used as a secondary source of liquidity. Premier’s access to funding sources in amounts adequate to finance or capitalize its activities or on terms that are acceptable could be impaired by factors that affect Premier directly or the financial services industry or economy in general, such as further disruptions in the financial markets or negative views and expectations about the prospects for the financial services industry.

Other possible sources of liquidity include the sale or securitization of loans, the issuance of additional collateralized borrowings beyond those currently utilized with the FHLB, the issuance of debt securities and the issuance of preferred or common securities in public or private transactions, or borrowings from a commercial bank.

Any decline in available funding could adversely impact our ability to originate loans, invest in securities, meet our expenses, pay dividends to our shareholders, or fulfill obligations such as repaying Premier’s borrowings or meeting deposit withdrawal demands, any of which could have a material adverse impact on our liquidity, business, results of operations and financial condition.

In addition, prior debt offerings could potentially have important consequences to Premier and its debt and equity investors, including:

•

requiring a substantial portion of its cash flow from operations to make interest payments;

•

making it more difficult to satisfy debt service and other obligations;

•

increasing the risk of a future credit ratings downgrade of its debt, which could increase future debt costs and limit the future availability of debt financing;

•

increasing its vulnerability to general adverse economic and industry conditions;

•

reducing the cash flow available to fund capital expenditures and other corporate purposes and to grow its business;

•

limiting its flexibility in planning for, or reacting to, changes in its business and the industry;

•

placing it at a competitive disadvantage relative to its competitors that may not be as highly leveraged with debt; and

•

limiting its ability to borrow additional funds as needed or to take advantage of business opportunities as they arise, pay cash dividends or repurchase securities.

We are continuing to evaluate these risks on an ongoing basis.

Integrating Premier and UCFC after the Merger may be more difficult, costly, or time consuming than expected and the anticipated benefits and cost savings of the Merger may not be realized.

Although the Merger closed on January 31, 2020, the integration of Premier and UCFC is an ongoing process. Premier’s ability to successfully combine and integrate the businesses of Premier and UCFC in a manner that permits growth opportunities and does not materially disrupt the existing customer relations nor result in decreased revenues due to loss of customers poses a risk to the business. It is possible that the integration process could result in inconsistencies in standards, controls, procedures and policies that adversely affect Premier’s ability to maintain relationships with clients, customers, depositors and employees, or to achieve the anticipated benefits and cost savings of the Merger. Further, Premier is dependent upon several outside vendors to make the integration successful.

Competition affects Premier’s earnings.

Premier’s continued profitability depends on its ability to continue to effectively compete to originate loans and attract and retain deposits. Competition for both loans and deposits is intense in the financial services industry. The Company competes in its market area by offering superior service and competitive rates and products. The types of institutions Premier competes with include large regional commercial banks, smaller community banks, savings institutions, mortgage banking firms, credit unions, finance companies, brokerage firms, insurance agencies and mutual funds. As a result of their size and ability to achieve economies of scale, certain of Premier’s competitors can offer a broader range of products and services than the Company can offer. . In addition, an inability to timely adapt to technological advances could pose a risk to the future success of our business operations. Digital or cryptocurrencies, blockchain, and other “fintech” technologies are designed to enhance transactional security and have the potential to disrupt the financial industry, change the way banks do business, and reduce the need for banks as financial deposit-keepers and intermediaries. Consumers may move money out of bank deposits in favor of other investments, including digital or cryptocurrency. Consumers can also shop for higher deposit interest rates at banks across the country, which may offer higher rates because they have few or no physical branches. To stay competitive in its market area, Premier may need to adjust the interest rates on its products to match rates of its competition, which could have a negative impact on net interest margin and results of operations.

Negative public opinion could damage our reputation and impact business operations and revenues.

As a financial institution, our earnings and capital are subject to risks associated with negative public opinion. Negative public opinion could result from our actual or alleged conduct in any number of activities, including lending practices, the failure of any product or service sold by us to meet our clients’ expectations or applicable regulatory requirements, corporate governance and acquisitions, social media and other marketing activities, the implementation of environmental, social, and governance practices, or from actions taken by government regulators and community organizations in response to any of the foregoing. Negative public opinion could affect our ability to attract or retain clients, could expose us to litigation and regulatory action, and could have a material adverse effect on our stock price or result in heightened volatility. Negative public opinion could also affect our ability to borrow funds in the unsecured wholesale debt markets.

The increasing complexity of Premier’s operations presents varied risks that could affect its earnings and financial condition.

Premier processes a large volume of transactions on a daily basis and is exposed to numerous types of risks related to internal processes, people and systems. These risks include, but are not limited to, the risk of fraud by persons inside or outside the Company, the execution of unauthorized transactions by employees, errors relating to transaction processing and systems, breaches of data security and our internal control system and compliance with a complex array of consumer and safety and soundness regulations. Premier could also experience additional loss as a result of potential legal actions that could arise as a result of operational deficiencies or as a result of noncompliance with applicable laws and regulations.

Premier has established and maintains a system of internal controls that provides management with information on a timely basis and allows for the monitoring of compliance with operational standards. These systems have been designed to manage operational risks at an appropriate, cost effective level. Procedures exist that are designed to ensure that policies relating to conduct, ethics, and

business practices are followed. Losses from operational risks may still occur, however, including losses from the effects of operational errors.

Unauthorized disclosure of sensitive or confidential client or customer information or confidential trade secrets, whether through a breach of the Company’s computer systems or otherwise, could severely harm its business.

Potential misuse of funds or information by Premier’s employees or by third parties could result in damage to Premier’s customers for which Premier could be held liable, subject Premier to regulatory sanctions and otherwise adversely affect Premier’s financial condition and results of operations.

Premier’s employees handle a significant amount of funds, as well as financial and personal information. Premier also depends upon third-party vendors who have access to funds and personal information about customers. Cybersecurity breaches of other companies, such as the breach of the systems of a credit bureau, may result in criminals using personal information obtained from such other source to impersonate a customer of Premier and obtain funds from customer accounts. Further, Premier may be affected by data breaches at retailers and other third parties who participate in data interchanges with Premier’s customers that involve the theft of customer credit and debit card data, which may include the theft of debit card personal identification numbers and commercial card information used to make purchases at such retailers and other third parties. Such data breaches could result in Premier incurring significant expenses to reissue debit cards and cover losses, which could result in a material adverse effect on Premier’s results of operations.

Although Premier has implemented systems to minimize the risk of fraudulent taking or misuse of funds or information, there can be no assurance that such systems will be adequate or that a taking or misuse of funds or information by employees, by third parties who have authorized access to funds or information, or by third parties who are able to access funds or information without authorization will never occur. Premier could be held liable for such an event and could also be subject to regulatory sanctions. Premier could also incur the expense of developing additional controls and investing in additional equipment or contracts to prevent future such occurrences. Although Premier has insurance to cover such potential losses, Premier cannot provide assurance that such insurance will be adequate to meet any liability, and insurance premiums may rise substantially if Premier suffers such an event. In addition, any loss of trust or confidence placed in Premier by our customers could result in a loss of business, which could adversely affect our financial condition and results of operations, or result in a loss of investor confidence, adversely affecting Premier’s stock price and ability to acquire capital in the future. Premier could also lose revenue by the wrongful appropriation of confidential information about its business operations by competitors who use the information to compete with Premier.

Premier could suffer a material adverse impact from interruptions in the effective operation of, or security breaches affecting, Premier’s computer systems.

Premier relies heavily on its own information systems and those of vendors to conduct business and to process, record, and monitor transactions. Risks to the system could result from a variety of factors, including the potential for bad acts on the part of hackers, criminals, employees and others. As one example, some banks have experienced denial of service attacks in which individuals or organizations flood the bank’s website with extraordinarily high volumes of traffic, with the goal and effect of disrupting the ability of the bank to process transactions. Other businesses have been victims of a ransomware attack in which a business becomes unable to access its own information and is presented with a demand to pay a ransom in order to once again have access to its information. Premier is also at risk for the impact of natural disasters, terrorism and international hostilities on its systems or for the effects of outages or other failures involving power or communications systems operated by others. These risks also arise from the same types of threats to businesses with which Premier deals.

Potential adverse consequences of attacks on Premier’s computer systems or other threats include damage to Premier’s reputation, loss of customer business, costs of incentives to customers or business partners in order to maintain their relationships, loss of investor confidence and a reduction in Premier’s stock price, litigation, increased regulatory scrutiny and potential enforcement actions, repairs of system damage, increased investments in cybersecurity (such as obtaining additional technology, making organizational changes, deploying additional personnel, training personnel and engaging consultants), and increased insurance premiums, all of which could result in financial loss and material adverse effects on Premier’s results of operations and financial condition.

If Premier forecloses on collateral property resulting in Premier’s ownership of the underlying real estate, Premier may be subject to the increased costs associated with the ownership of real property, resulting in reduced income.

A significant portion of Premier’s loan portfolio is secured by real property. During the ordinary course of business, Premier may foreclose on and take title to properties securing certain loans. In doing so, there is a risk that hazardous or toxic substances could be found on these properties. If hazardous or toxic substances are found, Premier may be liable for remediation costs, as well as for personal injury and property damage.

In addition, when Premier forecloses on real property, the amount Premier realizes after a default is dependent upon factors outside of Premier’s control, including, but not limited to, economic conditions, neighborhood real estate values, interest rates, real estate taxes, operating expenses of the mortgaged properties, zoning laws, governmental rules, regulations and fiscal policies, and acts

of God. Certain expenditures associated with the ownership of real estate, principally real estate taxes and maintenance costs, may adversely affect the income from the real estate. Therefore, the cost of operating real property may exceed the rental income earned from such property, and Premier may have to sell the property at a loss. The foregoing expenditures could adversely affect Premier’s financial condition and results of operations.

Premier’s business strategy focuses on planned growth, including strategic acquisitions, and its financial condition and results of operations could be negatively affected if Premier fails to grow or fails to manage its growth effectively.

Premier’s ability to grow successfully will depend on a variety of factors, including the continued availability of desirable business opportunities, its ability to integrate mergers and other acquisitions and manage growth and Premier’s ability to raise capital. There can be no assurance that growth opportunities will be available.

Premier may acquire other financial institutions or parts of institutions in the future, open new branches, and consider new lines of business and new products or services. Expansions of its business would involve a number of expenses and risks, including:

•

the time and costs associated with identifying and evaluating potential acquisitions or expansions into new markets;

•

the potential inaccuracy of estimates and judgments used to evaluate the business and risks with respect to target institutions;

•

the time and costs of hiring local management and opening new offices;

•

the delay between commencing making acquisitions or engaging in new activities and the generation of profits from the expansion;

•

Premier’s ability to finance an expansion and the possible dilution to existing shareholders;

•

the diversion of management’s attention to the expansion;

•

management’s lack of familiarity with new market areas;

•

the integration of new products and services and new personnel into Premier’s existing business;

•

the incurrence and possible impairment of goodwill associated with an acquisition and effects on Premier’s results of operations; and

•

the risk of loss of key employees and customers.

If Premier’s growth involves the acquisition of companies through mergers or other acquisitions, the success of such acquisitions will depend on, among other things, Premier’s ability to combine the businesses in a manner that permits growth opportunities and cost efficiencies, and does not cause inconsistencies in standards, controls, procedures and policies that adversely affect the ability of Premier to maintain relationships with customers and employees or to achieve the anticipated benefits of the acquisitions.

Failure to manage Premier’s growth effectively could have a material adverse effect on its business, future prospects, financial condition or results of operations and could adversely affect Premier’s ability to successfully implement its business strategy.

The Bank’s ability to pay dividends is subject to regulatory limitations which, to the extent Premier requires such dividends in the future, may affect its ability to pay dividends or repurchase its stock.

Premier is a separate legal entity from the Bank and does not have significant operations of its own. Dividends from the Bank provide a significant source of capital for Premier. The availability of dividends from the Bank is limited by various statutes and regulations. The federal and state banking regulators require that insured financial institutions and their holding companies should generally only pay dividends out of current operating earnings. It is possible, depending upon the financial condition of the Bank and other factors, that the Bank’s primary regulator could assert that the payment of dividends or other payments by the Bank are an unsafe or unsound practice. In the event the Bank is unable to pay dividends to Premier, Premier may not be able to pay its obligations as they become due, repurchase its stock, or pay dividends on its common stock. Consequently, the potential inability to receive dividends from the Bank could adversely affect Premier’s business, financial condition, results of operations or prospects.

Failure to integrate or adopt new technology may undermine Premier’s ability to meet customer demands, leading to adverse effects on Premier’s financial condition and results of operations.

The financial services industry is continually undergoing rapid technological change with frequent introductions of new technology-driven products and services. The effective use of technology increases efficiency and enables financial institutions to better serve customers and to reduce costs. Premier’s future success depends, in part, upon its ability to address the needs of its customers by using technology to provide products and services that will satisfy customer demands, as well as to create additional efficiencies in operations. Digital or cryptocurrencies, blockchain, and other “fintech” technologies are being developed to change the way banks operate and are eliminating the need for banks as financial deposit-keepers and intermediaries. Premier may not be able to effectively implement or have the resources to implement new technology-driven products and services or be successful in marketing these products

and services to its customers. Failure to successfully keep pace with technological change affecting the financial services industry could adversely affect Premier’s business, financial condition, or results of operations.

The transition away from The London Interbank Offered Rate (“LIBOR”) as a reference rate for financial contracts could negatively affect Premier’s income and expenses and the value of various financial contracts.

LIBOR is used extensively in the U.S. and globally as a benchmark for various commercial and financial contracts, including adjustable rate mortgages, corporate debt, interest rate swaps and other derivatives. LIBOR is set based on interest rate information reported by certain banks, which may stop reporting such information after 2021.

In 2017, the United Kingdom’s Financial Conduct Authority (“FCA”) announced that after 2021 it would no longer compel banks to submit rates required to calculate LIBOR. On November 30, 2020, to facilitate an orderly LIBOR transition, the OCC, the FDIC, and the Federal Reserve jointly announced that entering into new contracts using LIBOR as a reference rate after December 31, 2021, would create a safety and soundness risk. On March 5, 2021, the FCA announced that all LIBOR settings will either cease to be provided by any administrator or no longer be representative immediately after December 31, 2021, in the case of 1-week and 2-month LIBOR, and immediately after June 30, 2023, in the case of the remaining LIBOR settings. In the United States, efforts to identify a set of alternative U.S. dollar reference interest rates are ongoing, and the Alternative Reference Rate Committee ("ARRC") has recommended the use of a Secured Overnight Funding Rate ("SOFR"). SOFR is different from LIBOR in that it is a backward looking secured rate rather than a forward looking unsecured rate.

These differences could lead to a greater disconnect between our costs to raise funds for SOFR as compared to LIBOR. For cash products and loans, ARRC has also recommended Term SOFR, which is a forward looking SOFR based on SOFR futures and may in part reduce differences between SOFR and LIBOR. There are operational issues which may create a delay in the transition to SOFR or other substitute indices, leading to uncertainty across the industry.

It is currently unknown whether these recommendations and proposals will be broadly accepted, whether they will continue to evolve, and what effect of their implementation may have on the markets for floating-rate financial instruments. Any discontinuance, modification, alternative reference rates or other reforms may adversely affect interest rates on our current or future indebtedness and other financial instruments.

The Bank has ceased originating loans, derivative contracts, borrowings and other financial instruments that are directly or indirectly dependent on LIBOR. The transition from LIBOR could create considerable costs and additional risk for Premier. Since proposed alternative rates are calculated differently, payments under contracts referencing new rates will differ from these referencing LIBOR. The transition will change Premier’s market risk profiles, requiring changes to risk and pricing models, valuation tools, product design and hedging strategies. Further, Premier’s failure to adequately manage this transition process with its customers could adversely impact its reputation. Although Premier is currently unable to assess what the ultimate impact of the transition from LIBOR will be, any market-wide transition away from LIBOR could have an adverse effect on its business, financial condition and results of operations.

General Risk Factors

Economic, political and financial market conditions may adversely affect Premier’s operations and financial condition.

Premier’s financial performance generally, and in particular the ability of borrowers to pay interest on and repay principal of outstanding loans and the value of collateral securing those loans, as well as demand for loans and other products and services Premier offers, is highly dependent upon the business environment in the markets where the Company operates, mainly in the State of Ohio, Northeast Indiana and Southeast Michigan. A favorable business environment is generally characterized by, among other factors, economic growth, efficient capital markets, low inflation, low unemployment, high business and investor confidence, and strong business earnings. Unfavorable or uncertain economic and market conditions can be caused by declines in economic growth, business activity or investor or business confidence; limitations on the availability of or increases in the cost of credit and capital; increases in inflation or interest rates; high unemployment, natural disasters; or a combination of these or other factors. Conditions such as inflation, recession, unemployment, changes in interest rates, fiscal and monetary policy, tariffs, a U.S. withdrawal from a significant renegotiation of trade agreements, trade wars, and other factors beyond Premier’s control may adversely affect its deposit levels and composition, the quality of its assets including investment securities available for purchase, demand for loans, the ability of its borrowers to repay their loans and the value of the collateral securing the loans it makes. Because Premier has a significant amount of real estate loans, decreases in real estate values could adversely affect the value of property used as collateral and Premier’s ability to sell the collateral upon foreclosure.

Premier is at risk of increased losses from fraud.

Criminals are committing fraud at an increasing rate and are using more sophisticated techniques. In some cases, these individuals are part of larger criminal rings, which allow them to be more effective. Such fraudulent activity has taken many forms, ranging from debit card fraud, check fraud, mechanical devices attached to ATM machines, social engineering and phishing attacks to obtain personal information, or impersonation of clients through the use of falsified or stolen credentials. Additionally, an individual or business entity may properly identify itself, yet seek to establish a business relationship for the purpose of perpetrating fraud. An emerging type of fraud even involves the creation of synthetic identification in which fraudsters "create" individuals for the purpose of perpetrating fraud. Further, in addition to fraud committed directly against it, Premier may suffer losses as a result of fraudulent activity committed against third parties. Increased deployment of technologies, such as chip card technology, defray and reduce certain aspects of fraud; however, criminals are turning to other sources to steal personally identifiable information, such as unaffiliated healthcare providers and government entities, in order to impersonate the consumer and thereby commit fraud.

Premier may be the subject of litigation, which would result in legal liability and damage to its business and reputation.

From time to time, Premier and its subsidiaries may be subject to claims or legal action from customers, employees or others. Financial institutions like Premier are facing a growing number of significant class actions, including those based on the manner of calculation of interest on loans and the assessment of overdraft fees. Future litigation could include claims for substantial compensatory and/or punitive damages or claims for indeterminate amounts of damages. Premier is also involved from time to time in other reviews, investigations and proceedings (both formal and informal) by governmental and other agencies regarding its businesses. These matters also could result in adverse judgments, settlements, fines, penalties, injunctions or other relief. Like other financial institutions, Premier is also subject to risk from potential employee misconduct, including non-compliance with policies and improper use or disclosure of confidential information. Substantial legal liability or significant regulatory action against Premier could materially adversely affect its business, financial condition or results of operations and/or cause significant reputational harm to its business.

Item 1B. Unresolved Staff Comments

None.

Item 2. Properties

At December 31, 2021, the Bank conducted its business from its main office at 275 West Federal St., Youngstown, Ohio, and 74 other full-service banking centers and 12 loan offices in Ohio, Indiana, Michigan, Pennsylvania and West Virginia. First Insurance conducted its business from ten offices in Ohio. Premier maintained its headquarters at 601 Clinton St., Defiance, Ohio. A portion of our back-office operation departments, including information technology, loan processing and underwriting, deposit processing, accounting and risk management are located in an operations center located at 25600 Elliott Rd., Defiance, Ohio. See Note 9 to the Consolidated Financial Statements for additional information. The Company owns both headquarters, as well as the Defiance Operations Center.

Item 3. Legal Proceedings

Premier and its subsidiaries are involved in various legal proceedings that arise in the ordinary course of its business. While the ultimate liability with respect to litigation matters and claims cannot be determined at this time, management believes any resulting liability and other amounts relating to pending matters are not likely to be material to the Company’s consolidated financial position or results of operations.

Item 4. Mine Safety Disclosures

Not applicable.

PART II

Item 5. Market for the Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

The Company’s common shares trade on The Nasdaq Global Select Market under the symbol “PFC.” As of February 23, 2022, the Company had approximately 6,820 shareholders of record.

The line graph below compares the yearly percentage change in cumulative total shareholder return on Premier common shares and the cumulative total return of the Nasdaq Composite Index, the SNL Nasdaq Bank Index and the SNL Midwest Bank Index. An investment of $100 on December 31, 2016, and the reinvestment of all dividends are assumed. The performance graph represents past performance and should not be considered to be an indication of future performance.

The payment of future cash dividends is at the discretion of our Board of Directors and subject to a number of factors, including results of operations, general business conditions, growth, financial condition, regulatory limitation and other factors deemed relevant by the Board. Further, our ability to pay future cash dividends is subject to certain regulatory requirements and restrictions discussed in the Regulation section in Item 1 above. For further information, see Note 17 of the Notes to the Consolidated Financial Statements which is incorporated herein by reference.


	Period Ending
Index	12/31/16		12/31/17		12/31/18		12/31/19		12/31/20		12/31/21
Premier Financial Corp.		100.00		104.45		100.72		132.98		101.58		141.28
Nasdaq Composite Index		100.00		129.64		125.96		172.18		249.51		304.85
KBW Nasdaq Bank Index		100.00		118.59		97.58		132.84		119.14		164.80
S&P U.S. BMI Banks - Midwest Region Index		100.00		107.46		91.76		119.38		102.64		135.60

The following table provides information regarding Premier’s purchases of its common shares during the fourth quarter period ended December 31, 2021:


Period	Total Number of Shares Purchased			Average Price Paid Per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs		Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs (1)
October 1 – October 31, 2021		—		$	—		—		1,628,149
November 1 – November 30, 2021		415,742			31.93		415,742		1,212,407
December 1 – December 31, 2021		179,988	(2)		30.43		179,543		1,032,864
Total		595,730		$	31.48		595,285		1,032,864

(1)

On January 26, 2021, the Company announced that its Board of Directors authorized a program for the repurchase of up to 2,000,000 shares of outstanding common stock. On January 25, 2022, the Company announced that its Board of Directors approved an increase in the Company’s repurchasing authorization to up to 2,000,000 shares of outstanding common stock. There is no expiration date for the repurchase program.

(2)

Of this amount, 445 shares were obtained in fulfillment of tax obligations from vesting of restricted stock compensation and were not part of the publicly announced repurchase program.

The information set forth under the caption “Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters  Equity Compensation Plans” of Part III of this Form 10‑K is incorporated herein by reference.

Item 6. [Reserved]

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Forward-Looking Statements and Factors that Could Affect Future Results

This annual report, as well as other publicly available documents, including those incorporated herein by reference, may contain certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), 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 report or other publicly available documents 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 and its subsidiaries operate; future interest rate levels; 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 this Annual Report on Form 10-K and our Quarterly Reports on Form 10-Q. Any one or more of these factors have affected or could in the future affect Premier’s business and financial results in future periods and could cause actual results to differ materially from plans and projections.

This Item 7 presents information to assess the financial condition and results of operations of Premier. This item should be read in conjunction with the Consolidated Financial Statements and the supplemental financial data contained elsewhere in this Form 10-K.

Non-GAAP Financial Measures

In addition to results presented in accordance with accounting principles generally accepted in the United States (“GAAP”), this report includes non-GAAP financial measures. The Company believes these non-GAAP financial measures provide additional information that is useful to investors in helping to understand the underlying performance and trends of the Company. The Company monitors the non-GAAP financial measures and the Company’s management believes such measures are helpful to investors because they provide an additional tool to use in evaluating the Company’s financial and business trends and operating results. In addition, the Company’s management uses these non-GAAP measures to compare the Company’s performance to that of prior periods for trend analysis and for budgeting and planning purposes.

Non-GAAP financial measures have inherent limitations, which are not required to be uniformly applied and are not audited. Readers should be aware of these limitations and should be cautious with respect to the use of such measures. To mitigate these limitations, the Company has practices in place to ensure that these measures are calculated using the appropriate GAAP or regulatory components in their entirety and to ensure that our performance is properly reflected to facilitate consistent period-to-period comparisons. The Company’s method of calculating these non-GAAP measures may differ from methods used by other companies. Although the Company believes the non-GAAP financial measures disclosed in this report enhance investors' understanding of our business and performance, these non-GAAP measures should not be considered in isolation, or as a substitute for those financial measures prepared in accordance with GAAP.

Fully taxable-equivalent (“FTE”) is an adjustment to net interest income to reflect tax-exempt income on an equivalent before-tax basis. The following tables present a reconciliation of non-GAAP measures to their respective GAAP measures for the years ended December 31, 2021 and 2020.

Non-GAAP Financial Measures – Net Interest Income on an FTE basis, Net Interest Margin and Efficiency Ratio


(In Thousands)	December 31, 2021			December 31, 2020
Net interest income (GAAP)	$	227,369		$	208,005
Add: FTE adjustment		1,013			1,018
Net interest income on a FTE basis (1)	$	228,382		$	209,023
Noninterest income – less securities gains/(losses) (2)	$	75,785		$	79,130
Noninterest expense (3)		157,955			165,170
Average interest-earning assets (4)		6,732,178			5,931,965
Ratios:
Net interest margin (1) / (4)		3.39	%		3.52	%
Efficiency ratio (3) / (1) + (2)		51.93	%		57.32	%

Non-GAAP Financial Measures – Tangible Book Value


(In Thousands, except per share data)	December 31, 2021			December 31, 2020
Total Shareholders’ Equity (GAAP)	$	1,023,496		$	982,276
Less: Goodwill		(317,948	)		(317,948	)
Intangible assets		(24,129	)		(30,337	)
Tangible common equity (1)	$	681,419		$	633,991
Common shares outstanding (2)		36,384			37,291
Tangible book value per share (1) / (2)	$	18.73		$	17.00

Financial Condition

Assets at December 31, 2021 totaled $7.48 billion compared to $7.21 billion at December 31, 2020, an increase of $0.27 billion or 3.7%. The increase in assets was primarily due to an increase in securities offset by a decrease in loans. The net increase was primarily the result of an increase in total deposits of $228.4 million and equity of $41.2 million.

Securities

The securities portfolio increased $482.6 million, or 65.4%, to $1.22 billion at December 31, 2021. This increase is primarily a result of an increase in deposits of $228.4 million and a decrease in gross loans including held for sale of $253.7 million. The increase was partially offset by runoff, sales and amortization. For additional information regarding Premier’s investment securities see Note 5 to the Consolidated Financial Statements.

Loans

Loans receivable, net of undisbursed loan funds and deferred fees and costs, decreased $195.1 million, or 3.6%, to $5.30 billion at December 31, 2021. The decrease was mainly due to a $328.0 million decrease in Paycheck Protection Program (“PPP”) loans offset by an increase of $132.9 million in non-PPP loans. For more details on the loan balances, see Note 7 – Loans Receivable to the Consolidated Financial Statements.

The majority of Premier’s commercial real estate and commercial loans are to small- and mid-sized businesses. The combined commercial and commercial real estate loan portfolios, including PPP, totaled $3.35 billion and $3.59 billion at December 31, 2021 and 2020, respectively, and accounted for approximately 63.3% and 65.3% of Premier’s loan portfolio at the end of those respective periods. Premier believes it has been able to establish itself as a leader in its market area in commercial and commercial real estate lending by hiring experienced lenders and providing a high level of customer service to its commercial lending clients.

The one-to-four family residential portfolio totaled $1.17 billion at December 31, 2021, compared with $1.20 billion at the end of 2020, with the decrease due to payoffs/paydowns in excess of new originations. At the end of 2021, such loans comprised 22.1% of the total loan portfolio, up from 21.9% at December 31, 2020.

Construction loans, which include one-to-four residential family and commercial real estate properties, increased to $384.9 million at December 31, 2021, compared to $312.6 million at December 31, 2020. These loans accounted for approximately 7.3% and 5.7% of the total loan portfolio at December 31, 2021 and 2020, respectively.

Home equity and home improvement loans decreased to $264.4 million at December 31, 2021, from $272.7 million at the end of 2020. At the end of 2021, those loans comprised 5.0% of the total loan portfolio, consistent with 5.0% at December 31, 2020.

Consumer finance loans were $126.4 million at December 31, 2021 up from $120.7 million at the end of 2020. These loans accounted for approximately 2.4% and 2.2% of the total loan portfolio at December 31, 2021 and 2020, respectively.

In order to properly assess the collateral dependent loans included in its loan portfolio, the Company has established policies regarding the monitoring of the collateral underlying such loans. The Company requires an appraisal that is less than one year old for all new collateral dependent real estate loans, and all renewed collateral dependent real estate loans where significant new money is extended. The appraisal process is handled by the Bank’s Credit Department, which selects the appraiser and orders the appraisal. Premier’s loan policy prohibits the account officer from talking or communicating with the appraiser to insure that the appraiser is not influenced by the account officer in any way in making a determination of value. The Bank generally does not require updated appraisals for performing loans unless significant new money is requested by the borrower.

When a collateral dependent loan is downgraded to classified status, the Bank reviews the most current appraisal on file and, if appropriate, based on the Bank’s assessment of the appraisal, such as age, market, etc. the Bank will discount the appraisal amount to a more appropriate current value based on inputs from lenders and realtors. This amount may then be discounted further by the Bank’s estimation of the selling costs. In most instances, if the appraisal is more than twelve to fifteen months old, a new appraisal may be required. Finally, the Bank assesses whether there is any collateral short fall, taking into consideration guarantor support and liquidity, and determines if a charge-off is necessary.

All loans over 90 days past due and/or on non-accrual are classified as non-performing loans. Non-performing status automatically occurs in the month in which the 90-day delinquency occurs. When a collateral dependent loan moves to non-performing status, the Bank generally gets a new third party appraisal and charges the loan down appropriately based upon the new appraisal and an estimate of costs to liquidate the collateral. All properties that are moved into the Other Real Estate Owned (“OREO”) category are supported by current appraisals, and the OREO is carried at the lower of cost or fair value, which is determined based on appraised value less the Bank’s estimate of the liquidation costs.

The Bank does not adjust any appraisals upward without written documentation of this valuation change from the appraiser. When setting reserves and charge-offs on classified loans, appraisal values may be discounted downward based upon the Bank’s experience with liquidating similar properties.

Appraisals are received within approximately 60 days after they are requested. The Bank’s Special Assets Committee reviews the amount of each new appraisal and makes any necessary charge-off decisions at its meeting prior to the end of each quarter.

Any partially charged-off collateral dependent loans are considered non-performing, and as such, would need to show an extended period of time with satisfactory payment performance as well as cash flow coverage capability supported by current financial statements before the Bank will consider an upgrade to performing status. The Bank may consider moving the loan to accruing status after approximately six months of satisfactory payment performance. The Bank monitors and tracks its loan to value quarterly to determine accuracy and any necessary charge-offs. Based on these results, changes may occur in the processes used.

Loan modifications constitute a troubled debt restructuring (“TDR”) if the Bank, for economic or legal reasons related to the borrower’s financial difficulties, grants a concession to the borrower that it would not otherwise consider. For loans that are considered TDRs and the balance is over $500,000, the Bank either computes the present value of expected future cash flows discounted at the original loan’s effective interest rate or it may measure impairment based on the fair value of the collateral. For those loans measured for impairment utilizing the present value of future cash flows method, any discount is carried as a specific reserve in the allowance for credit losses. For those loans measured for impairment utilizing the fair value of the collateral, any shortfall is charged-off. For loans that are considered TDRs and the balance is under $500,000 a specific reserve is carried in the allowance for credit losses based on a general reserve analysis. Loan modifications made as a result of COVID-19 may not be deemed TDR if certain criteria are met based on regulatory guidance. As of December 31, 2021, and December 31, 2020, the Bank had $7.8 million and $7.2 million, respectively, of loans that were still performing and which were classified as TDRs.

Allowance for Credit Losses (“ACL”)

The Company adopted ASU 2016-13, the Current Expected Credit Loss (“CECL”) model on January 1, 2020. Under CECL, a valuation reserve was established in the ACL and maintained through expense in the provision for credit losses. Upon adoption of CECL, the Company made a one-time adjustment, net of taxes, to retained earnings for $1.9 million. The ACL represents management’s assessment of the estimated credit losses the Company will receive over the life of the loan. ACL requires a projection of credit losses over the contract lifetime of the credit adjusted for prepayment tendencies. Management analyzes the adequacy of the ACL regularly through reviews of the loan portfolio. Consideration is given to economic conditions, changes in interest rates and the effect of such changes on collateral values and borrowers’ ability to pay, changes in the composition of the loan portfolio and trends in past due and non-performing loan balances. The ACL is a material estimate that is susceptible to significant fluctuation and is established through a provision for credit losses based on management’s evaluation of the inherent risk in the loan portfolio. In addition to extensive in-house loan monitoring procedures, the Company utilizes an outside party to conduct an independent loan review of commercial loan and commercial real estate loan relationships. The Company’s goal is to have 45-50% of the portfolio reviewed annually using a risk based approach. Management utilizes the results of this outside loan review to assess the effectiveness of its internal loan grading system as well as to assist in the assessment of the overall adequacy of the ACL associated with these types of loans.

The ACL is made up of two basic components. The first component of the allowance for credit loss is the specific reserve in which the Company sets aside reserves based on the analysis of individually analyzed credits. In establishing specific reserves, the Company analyzes all substandard, doubtful and loss graded loans quarterly and makes judgments about the risk of loss based on the cash flow of the borrower, the value of any collateral and the financial strength of any guarantors. If the loan is individually analyzed and cash flow dependent, then a specific reserve is established for the discount on the net present value of expected future cash flows. If the loan is individually analyzed and collateral dependent, then any shortfall is usually charged off. The Company also considers the impacts of any Small Business Administration (“SBA”) or Farm Service Agency (“FSA”) guarantees. The specific reserve portion of the ACL was $7.1 million at December 31, 2021, and $4.3 million at December 31, 2020.

The second component is a general reserve, which is used to record credit loss reserves for groups of homogenous loans in which the Company estimates the potential losses over the contractual lifetime of the loan adjusted for prepayment tendencies. In addition, the future economic environment is incorporated in projections with loss expectations to revert to the long-run historical mean after such time as management can no longer make or obtain a reasonable and supportable forecast. For purposes of the general reserve analysis, the six loan portfolio segments are further segregated into 13 different loan pools to allocate the ACL. Residential real estate is further segregated into owner occupied and nonowner occupied for ACL. Commercial real estate is split into owner occupied, nonowner occupied, multifamily, agriculture land and other commercial real estate. Commercial credits are comprised of commercial working capital, agriculture production, and other commercial credits. The Company utilizes three different methodologies to analyze loan pools.

Discounted cash flows (“DCF”) was selected as the appropriate method for loan segments with longer average lives and regular payment structures. This method is applied to a majority of the Company’s real estate loans. DCF generates cash flow projections at the instrument level where payment expectations are adjusted for prepayment and curtailment to produce an expected cash flow stream. This expected cash flow stream is compared to the net present value of expected cash flows to establish a valuation account for these loans.

The probability of default/loss given default (“PD/LGD”) methodology was selected as most appropriate for loan segments with average lives of three years or less and/or irregular payment structures. This methodology was used for home equity and commercial portfolios. A loan is considered to default if one of the following is detected:

•

Becomes 90 days or more past due;

•

Is placed on nonaccrual;

•

Is marked as a TDR; or

•

Is partially or wholly charged-off.

The default rate is measured on the current life of the loan segment using a weighted average of the four most recent quarters. PD/LGD is determined on a dollar-ratio basis, measuring the ratio of net charged off principal to defaulted principal.

The consumer portfolio contains loans with many different payment structures, payment streams and collateral. The remaining life method was deemed most appropriate for these loans. The weighted average remaining life uses an annual charge-off rate over several vintages to estimate credit losses. The average annual charge-off rate is applied to the contractual term adjusted for prepayments.

Additionally, CECL requires a reasonable and supportable forecast when establishing the ACL. The Company estimates losses over an approximate one-year forecast period using Moody’s baseline economic forecasts, and then reverts to longer term historical loss experience over a three-year period.

The quantitative general allowance decreased to $12.3 million at December 31, 2021, from $29.2 million at December 31, 2020, primarily due to the impact of the economic improvement in 2021 after the downturn in 2020 as a result of the COVID-19 pandemic.

In addition to the quantitative analysis, a qualitative analysis is performed each quarter to provide additional general reserves on the loan portfolios not individually analyzed for various factors. The overall qualitative factors are based on nine sub-factors. The nine sub-factors have been aggregated into three qualitative factors: economic, environment and risk.

ECONOMIC

Changes in international, national and local economic business conditions and developments, including the condition of various market segments.

Changes in the value of underlying collateral for collateral dependent loans.

ENVIRONMENT

Changes in the nature and volume in the loan portfolio.

The existence and effect of any concentrations of credit and changes in the level of such concentrations.

Changes in lending policies and procedures, including underwriting standards and collection, charge-off and recovery practices.

Changes in the quality and breadth of the loan review process.

Changes in the experience, ability and depth of lending management and staff.

RISK

Changes in the trends of the volume and severity of delinquent and classified loans, and changes in the volume of non-accrual loans, TDRs, and other loan modifications.

Changes in the political and regulatory environment.

The qualitative analysis indicated a general reserve of $47.1 million at December 31, 2021, compared to $48.8 million at December 31, 2020. The decrease was mainly due to changes in the economy as a result of the COVID-19 pandemic and subsequent recovery. Management reviewed the overall economic, environmental and risk factors and determined that it was appropriate to make adjustments to these sub-factors based on that review. The economic factors for all loan segments decreased in 2021, primarily due to a recovery in the national economy, a decrease in local unemployment levels and improved uncertainty in global economic conditions. The risk factors for all loan segments except residential increased in 2021 primarily due to the loosening of lending standards. The Company’s general reserve percentages for main loan segments, not otherwise classified, ranged from 0.78% for construction loans to 1.59% for home equity/improvement loans at December 31, 2021.

Under CECL, when loans are purchased with evidence of more than insignificant deterioration of credit, they are accounted for as purchase credit deteriorated (“PCD”). PCD loans acquired in a transaction are marked to fair value and a mark on yield is recorded. In addition, an adjustment is made to the ACL for the expected loss through retained earnings on the acquisition date. These loans are assessed on a regular basis and subsequent adjustments to the ACL are recorded on the income statement. On January 31, 2020, as a result of the Merger, the Company acquired PCD loans with a fair value of $79.1 million, a recorded adjustment on yield of $4.1 million and an increase to the ACL of $7.7 million.

As a result of the quantitative and qualitative analyses, along with the change in specific reserves and the increase in net charge-offs during the year, the Company’s provision for credit losses for the year ended December 31, 2021 was a recovery of $6.7 million. This is compared to an expense of $43.2 million, which included $25.9 million attributable to the Merger, for the year ended December 31, 2020. The ACL was $66.5 million at December 31, 2021, and $82.1 million at December 31, 2020. The ACL represented 1.26% of loans, net of undisbursed loan funds and deferred fees and costs at December 31, 2021, and 1.49% at December 31, 2020. In management’s opinion, the overall ACL of $66.5 million as of December 31, 2021, was adequate to cover anticipated losses over the lifetime of the loans.

Management also assesses the value of OREO as of the end of each accounting period and recognizes write-downs to the value of that real estate in the income statement if conditions dictate. During the year ended December 31, 2021, there were $81,000 in write-downs of real estate held for sale. Management believes that the values recorded at December 31, 2021, for OREO and repossessed assets represent the realizable value of such assets.

Total classified loans decreased to $69.5 million at December 31, 2021, compared to $90.4 million at December 31, 2020, a decrease of $20.9 million, primarily due to improved asset quality and net charge-offs.

The Company’s ratio of ACL to non-performing loans was 138.4% at December 31, 2021, compared to 158.8% at December 31, 2020. Management monitors collateral values of all loans included on the watch list that are collateral dependent and believes that allowances for such loans at December 31, 2021, were appropriate. Of the $48.0 million in non-accrual loans at December 31, 2021, $23.1 million or 48.2% are less than 90 days past due.

At December 31, 2021, the Company had total non-performing assets of $48.2 million, compared to $52.0 million at December 31, 2020. Non-performing assets include loans that are on non-accrual, OREO and other assets held for sale. The OREO balance was $171,000 and $343,000 as of December 31, 2021 and 2020, respectively.

The net charge-offs and non-accrual loan balances as a percentage of total are presented in the table below at December 31, 2021 and 2020.


	For the Year Ended						As of December 31,
	December 31, 2021						2021
	Net			% of Total Net
	Charge-offs			Charge-offs			Non-accrual		% of Total Non-
	(Recoveries)			(Recoveries)			Loans		Accrual Loans
	(Dollars In Thousands)
Residential real estate	$	(151	)		-1.70	%	$	9,034		19.00	%
Commercial real estate		3,338			37.60	%		14,621		30.00	%
Construction		—			0.00	%		—		0.00	%
Commercial		5,637			63.49	%		11,531		24.00	%
Home equity and improvement		(185	)		-2.08	%		2,051		4.00	%
Consumer finance		237			2.67	%		1,873		4.00	%
PCD		2			0.02	%		8,904		19.00	%
Total	$	8,878			100.00	%	$	48,014		100.00	%


	For the Year Ended						As of December 31,
	December 31, 2020						2020
	Net			% of Total Net
	Charge-offs			Charge-offs			Non-accrual		% of Total Non-
	(Recoveries)			(Recoveries)			Loans		Accrual Loans
	(Dollars In Thousands)
Residential	$	(39	)		-1.65	%	$	11,043		21.00	%
Commercial real estate		(1,287	)		-54.30	%		12,058		23.00	%
Construction		1			0.04	%		806		2.00	%
Commercial		(1,163	)		-49.07	%		1,355		3.00	%
Home equity and improvement		(98	)		-4.14	%		1,869		4.00	%
Consumer finance		104			4.39	%		1,586		3.00	%
PCD		4,852			204.73	%		22,965		44.00	%
Total	$	2,370			100.00	%	$	51,682		100.00	%

The following table sets forth information concerning the allocation of Premier’s allowance for credit losses by loan categories at December 31, 2021 and 2020.


	December 31, 2021					December 31, 2020
			Percent of					Percent of
			total loans					total loans
	Amount		by category			Amount		by category
	(Dollars in Thousands)
Residential real estate	$	12,029		20.2	%	$	17,534		20.5	%
Commercial real estate		32,399		42.5	%		43,417		40.8	%
Construction		3,004		15.0	%		2,741		11.4	%
Commercial loans		13,410		15.5	%		11,665		20.6	%
Home equity and improvement loans		4,221		4.6	%		4,739		4.7	%
Consumer loans		1,405		2.2	%		1,983		2.1	%
	$	66,468		100.0	%	$	82,079		100.0	%

Loans Acquired with Impairment

High Loan-to-Value Mortgage Loans

The majority of Premier’s mortgage loans are collateralized by one-to-four-family residential real estate, have loan-to-value ratios of 80% or less, and are made to borrowers in good credit standing. The Bank usually requires residential mortgage loan borrowers whose loan-to-value is greater than 80% to purchase private mortgage insurance (“PMI”). Management also periodically reviews and monitors the financial viability of its PMI providers.

The Bank originates and retains a limited number of residential mortgage loans with loan-to-value ratios that exceed 80% where PMI is not required if the borrower possesses other demonstrable strengths. The loan-to-value ratios on these loans are generally limited to 85% and exceptions must be approved by the Bank’s Chief Credit Officer. Management monitors the balance of one-to-four family residential loans, including home equity loans and committed lines of credit that exceed certain loan to value standards (90% for owner occupied residences, 85% for non-owner occupied residences and one-to-four family construction loans, 75% for developed land and 65% for raw land). These loans are generally paying as agreed.

Premier does not make interest-only, first-mortgage residential loans, nor does it have residential mortgage loan products or other consumer products that allow negative amortization.

Goodwill and Intangible Assets

Goodwill was $317.9 million at December 31, 2021 and 2020. Core deposit intangibles and other intangible assets decreased to $24.1 million at December 31, 2021, compared to $30.3 million at December 31, 2020, due to the recognition of $6.2 million of amortization. No impairment of goodwill was recorded in 2021 or 2020.

Deposits

Total deposits at December 31, 2021, were $6.28 billion compared to $6.05 billion at December 31, 2020, an increase of $234.3 million, or 3.9%. Noninterest-bearing checking accounts grew by $127.5 million, interest-bearing checking accounts and money markets grew by $325.0 million, savings increased by $104.0 million and retail certificates of deposit decreased by $32.3 million. Management can utilize the national market for certificates of deposit to supplement its funding needs if necessary. For more details on the deposit balances in general see Note 11 – Deposits to the Consolidated Financial Statements.

Borrowings

Premier did not have any FHLB advances or securities sold with agreements to repurchase at December 31, 2021 or 2020. The increase in deposits allowed the Bank to generally not utilize this source of funds in 2021.

Subordinated Debentures

Subordinated debentures were $85.0 million at December 31, 2021, compared to $84.9 million at December 31 2020. In 2020, the Company issued $50.0 million aggregate principal amount fixed-to-floating rate subordinated notes due in 2030 in a private offering exempt from the registration requirements under the Securities Act of 1933, as amended. These notes carry a fixed rate of 4.00% for five years then a floating rate equal to the three-month SOFR rate plus 388.5 basis points. The Company may, at its option, redeem the notes, in whole or part, from time to time, subject to certain conditions, beginning on September 30, 2025. The net proceeds of the sale were approximately $48.8 million, after deducting the offering expenses.

Equity

Total stockholders’ equity increased $41.2 million to $1.02 billion at December 31, 2021, compared to $0.98 billion at December 31, 2020. The increase in stockholders’ equity was primarily the result of recording net income of $126.1 million partially offset by the payment of $39.0 million of common stock dividends and the repurchase of 967,000 shares of common stock totaling $29.6 million.

Results of Operations

Summary

Premier reported net income of $126.1 million for the year ended December 31, 2021, compared to $63.1 million and $49.4 million for the years ended December 31, 2020 and 2019, respectively. On a diluted per common share basis, Premier earned $3.39 in 2021, $1.75 in 2020 and $2.48 in 2019. The results for 2020 include eleven months of income and expenses from UCFC compared to twelve in 2021 and none in 2019 as well as $1.01 in Merger-related expense and additional provision cost as a result of the Merger and the adoption of CECL.

Net Interest Income

Premier’s net interest income is determined by its interest rate spread (i.e., the difference between the yields on its interest-earning assets and the rates paid on its interest-bearing liabilities) and the relative amounts of average interest-earning assets and interest-bearing liabilities.

Net interest income was $227.4 million for the year ended December 31, 2021, compared to $208.0 million and $115.6 million for the years ended December 31, 2020 and 2019, respectively. The tax-equivalent net interest margin was 3.39%, 3.52% and 3.93% for the years ended December 31, 2021, 2020 and 2019, respectively. The margin decreased 13 basis points between 2021 and 2020 primarily due to the drop in treasury rates along with the declines in the federal funds rates, impacting asset yields more negatively than deposit costs. Interest-earning asset yields decreased 40 basis points (to 3.63% in 2021 from 4.03% in 2020) but the cost of interest- bearing liabilities between the two periods only decreased 36 basis points (to 0.34% in 2021 from 0.70% in 2020).

Total interest income increased by $5.6 million, or 2.4%, to $243.6 million for the year ended December 31, 2021, from $237.9 million for the year ended December 31, 2020. This increase was primarily due to an increase in securities income offset partly by a decrease in loans income. Interest income from loans decreased to $223.8 million for 2021 compared to $225.1 million in 2020, which represents a decrease of 0.6%. The average balance of loans receivable increased $249.3 million to $5.47 billion for 2021, from $5.22 billion for 2020. However, the average yield on loans decreased 0.22% to 4.09% in 2021 from 4.31% in 2020.

During the same period, the average balance of investment securities increased to $1.14 billion in 2021 from $0.54 billion for the year ended December 31, 2020, primarily as a result of increasing deposits and decreasing loans. Interest income from investment securities increased to $19.4 million in 2021 compared to $11.5 million in 2020.

Interest expense decreased by $13.7 million to $16.2 million in 2021 compared to $19.9 million 2020. This decrease was mainly due to a 28 basis point decrease in the average cost of funds in 2021 offset by a $0.42 billion increase in the average balance of interest-bearing liabilities. The average balance of interest-bearing deposits increased $0.56 billion to $4.61 billion in 2021, from $40.5 billion in 2020. Interest expense related to interest-bearing deposits was $13.5 million in 2021 compared to $26.9 million in 2020.

Interest expense on FHLB advances was $23,000 in 2021 and $1.7 million in 2020. The decrease in FHLB advance expense was due to lower utilization in 2021 as a result of increased deposits. Interest expense recognized by the Company related to subordinated debentures was $2.7 million in 2021 and $1.3 million in 2020, with the increase primarily due to the recognition of a full year of expense in 2021 compared to a partial year in 2020.

Total interest income increased by $96.9 million, or 68.7%, to $237.9 million for the year ended December 31, 2020, from $141.1 million for the year ended December 31, 2019. This increase was primarily due to loans acquired in the Merger and the impact of acquisition marks and related accretion. Interest income from loans increased to $225.1 million for 2020 compared to $130.9 million in 2019, which represents an increase of 72.0%. The average balance of loans receivable increased $2.6 billion to $5.2 billion at December 31, 2020, up from $2.6 billion at December 31, 2019.

During the same period, the average balance of investment securities increased to $544.6 million in 2020 from $294.0 million for the year ended December 31, 2019, primarily as a result of the Merger. Interest income from investment securities increased to $11.5 million in 2020 compared to $8.2 million in 2019.

Interest expense increased by $4.5 million to $29.9 million in 2020 compared to $25.4 million 2019. This increase was mainly due to a $2.1 billion increase in the average balance of interest-bearing liabilities offset by a 44 basis point decrease in the average cost of interest-bearing liabilities in 2020. The average balance of interest-bearing deposits increased $1.9 billion to $4.1 billion at December 31, 2020, up from $2.1 billion at December 31, 2019. Interest expense related to interest-bearing deposits was $26.9 million in 2020 compared to $22.6 million in 2019.

Interest expense on FHLB advances and other interest-bearing funding sources was $1.7 million and $32,000 respectively, in 2020 and $1.4 million and $25,000, respectively in 2019. The increase in FHLB advance expense was due to the Merger. Interest expense recognized by the Company related to subordinated debentures was $1.3 million in 2020 and $1.4 million in 2019.

The following table shows an analysis of net interest margin on a tax equivalent basis for the years ended December 31, 2021, 2020 and 2019:


	Year Ended December 31
	(Dollars In Thousands)
	2021							2020							2019
	Average Balance		Interest(1)		Yield/ Rate			Average Balance		Interest(1)		Yield/ Rate			Average Balance		Interest(1)		Yield/ Rate
Interest-Earning Assets:
Loans receivable (4)	$	5,473,668	$	223,823		4.09	%	$	5,224,357	$	225,179		4.31	%	$	2,597,864	$	130,943		5.04	%
Securities (5)		1,135,434		20,346		1.79	%		544,643		12,393		2.28	%		294,027		9,060		3.08	%
Interest-earning deposits		111,433		198		0.18	%		124,011		435		0.35	%		65,424		1,395		2.13	%
FHLB stock		11,643		233		2.00	%		38,954		958		2.46	%		12,347		653		5.29	%
Total interest-earning assets		6,732,178		244,600		3.63	%		5,931,965		238,965		4.03	%		2,969,662		142,051		4.78	%
Noninterest-earning assets		750,400							660,668							314,118
Total Assets	$	7,482,578						$	6,592,633						$	3,283,780
Interest-Bearing Liabilities:
Interest-bearing deposits	$	4,611,525	$	13,482		0.29	%	$	4,050,958	$	26,918		0.66	%	$	2,122,439	$	22,613		1.07	%
FHLB advances		12,586		23		0.18	%		187,745		1,691		0.90	%		73,013		1,443		1.98	%
Subordinated debentures		84,911		2,713		3.20	%		48,471		1,300		2.68	%		36,083		1,354		3.75	%
Other borrowings		52		—		0.75	%		6,047		32		0.53	%		3,924		25		0.64	%
Total interest-bearing liabilities		4,709,074		16,218		0.34	%		4,293,221		29,941		0.70	%		2,235,459		25,435		1.14	%
Noninterest-bearing demand deposits		1,676,006		—		—			1,311,478		—		—			594,785		—		—
Total including non- interest- bearing demand deposits		6,385,080		16,218		0.25	%		5,604,699		29,941		0.53	%		2,830,244		25,435		0.90	%
Other noninterest liabilities		88,461							89,842							47,250
Total Liabilities		6,473,541							5,694,541							2,877,494
Stockholders’ equity		1,009,037							898,092							406,286
Total liabilities and stockholders’ equity	$	7,482,578						$	6,592,633						$	3,283,780
Net interest income; interest rate spread (2)			$	228,382		3.29	%			$	209,024		3.33	%			$	116,616		3.64	%
Net interest margin (3)						3.39	%						3.52	%						3.93	%
Average interest-earning assets to average interest- bearing liabilities						143.0	%						138.2	%						132.8	%

(1)

Interest on certain tax exempt loans and tax-exempt securities in 2021, 2020 and 2019 is not taxable for Federal income tax purposes. In order to compare the tax-exempt yields on these assets to taxable yields, the interest earned on these assets is adjusted to a pre-tax equivalent amount based on the marginal corporate federal income tax rate of 21%.

(2)

Interest rate spread is the difference in the yield on interest-earning assets and the cost of interest-bearing liabilities.

(3)

Net interest margin is net interest income divided by average interest-earning assets excluding average unrealized gains/losses. See Non-GAAP Financial Measures discussion above for further details.

(4)

For the purpose of the computation for loans, non-accrual loans are included in the average loans outstanding.

(5)

Securities yield = annualized interest income divided by the average balance of securities, excluding average unrealized gains/losses.

See Non-GAAP Financial Measure discussion above for further details.

The following table describes the extent to which changes in interest rates and changes in volume of interest-related assets and liabilities have affected Premier’s tax-equivalent interest income and interest expense during the periods indicated. For each category of interest-earning assets and interest-bearing liabilities, information is provided on changes attributable to (i) changes in volume (change in volume multiplied by prior year rate), (ii) change in rate (change in rate multiplied by prior year volume), and (iii) total change in rate and volume. The combined effect of changes in both rate and volume has been allocated proportionately to the change due to rate and the change due to volume.


	Year Ended December 31
	(In Thousands)
	2021 vs. 2020									2020 vs. 2019
	Increase (decrease) due to rate			Increase (decrease) due to volume			Total increase (decrease)			Increase (decrease) due to rate			Increase (decrease) due to volume		Total increase (decrease)
Interest-Earning Assets
Loans	$	(12,042	)	$	10,686		$	(1,356	)	$	(21,374	)	$	115,610	$	94,236
Securities		(5,564	)		13,517			7,953			(2,844	)		6,177		3,333
Interest-earning deposits		(189	)		(48	)		(237	)		(1,669	)		709		(960	)
FHLB stock		(54	)		(671	)		(725	)		(499	)		804		305
Total interest-earning assets	$	(17,849	)	$	23,484		$	5,635		$	(26,386	)	$	123,300	$	96,914
Interest-Bearing Liabilities
Deposits	$	(17,063	)	$	3,627		$	(13,436	)	$	(10,774	)	$	15,079	$	4,305
FHLB advances		(91	)		(1,578	)		(1,669	)		(1,102	)		1,351		249
Subordinated Debentures		442			971			1,413			(446	)		392		(54	)
Notes Payable		—			(32	)		(32	)		(5	)		12		7
Total interest- bearing liabilities	$	(16,712	)	$	2,988		$	(13,724	)	$	(12,327	)	$	16,834	$	4,507
Increase in net interest income							$	19,359							$	92,407

(1)

The change in interest rates due to both rate and volume has been allocated between the factors in proportion to the relationship of the absolute dollar amounts of the change in each.

Provision for credit losses – Premier’s provision for credit losses was a recovery of $7.1 million for the year ended December 31, 2021, compared to an expense $44.3 million for 2020 and $2.9 million for 2019. The increase in provision for 2020 included $25.9 million related to acquisition accounting under CECL for the Merger with the remaining increase generally due to the larger loan portfolio post-Merger and the impact of the COVID-19 pandemic. The decrease for 2021 is primarily due to improved conditions as the economy and credit environment recovers from the COVID-19 pandemic.

Provisions for credit losses are charged to earnings to bring the total allowance for credit losses to a level deemed appropriate by management to absorb anticipated losses over the life of the loan. Factors considered by management include identifiable risk in the portfolios, historical experience, the volume and type of lending conducted by Premier, the amount of non-performing loans, the amount of loans graded by management as substandard, doubtful, or loss, general economic conditions (particularly as they relate to Premier’s market areas) and other factors related to the collectability of Premier’s loan portfolio. See also Allowance for Credit Losses in this Management’s Discussion and Analysis and Note 7 to the Consolidated Financial Statements.

Noninterest Income – Noninterest income decreased by $727,000, or 0.9%, to $80.0 million in 2021 primarily due to a decrease in mortgage banking income mostly offset by increases in services fees, security gains and BOLI income. Noninterest income increased by $35.7 million, or 79.5%, in 2020 to $80.7 million up from $45.0 million for the year ended December 31, 2019. The increase is primarily due to the Merger with 11 months of combined operations in 2020 compared to none in 2019.

Service fees and other charges increased to $24.2 million for the year ended December 31, 2021, from $21.4 million for 2020 and from $14.0 million in 2019. The increase in service fees and other charges in 2021 is primarily due to higher volumes as a result of the economic recovery. The increase in service fees and other charges in 2020 is primarily due to the Merger.

Noninterest income also includes gains, losses and impairment on investment securities. In 2021, Premier recognized $4.2 million of securities gains compared to $1.6 million in 2020 and $24,000 in 2019.

Mortgage banking income includes gains from the sale of mortgage loans, fees for servicing mortgage loans for others, an offset for amortization of mortgage servicing rights, and adjustments for impairment in the value of mortgage servicing rights. Mortgage banking income totaled $21.9 million, $28.2 million and $9.5 million in 2021, 2020 and 2019, respectively. The $6.3 million decrease in 2021 from 2020 is primarily attributable to a decrease in the gain on sale of loans of $19.9 million offset partly by a $13.8 million positive change in the valuation adjustments on mortgage servicing rights. Premier originated less residential mortgages for sale into the secondary market in 2021 compared with 2020 as long term interest rates stabilized resulting in less refinance activity. The balance of the mortgage servicing right valuation allowance was $2.7 million at the end of 2021.

The $18.7 million increase in mortgage banking income in 2020 from 2019 was primarily attributable to an increase in the gain on sale of loans of $20.5 million and a $3.5 million increase in mortgage servicing revenue offset by an increase of $5.7 million in mortgage servicing rights amortization expense and a $7.7 million negative change in the valuation adjustments on mortgage servicing rights. Premier originated more residential mortgages for sale into the secondary market in 2020 compared with 2019 as a result of the

Merger and due to increased refinance activity as long term interest rates fell in 2020. The balance of the mortgage servicing right valuation allowance was $8.5 million at the end of 2020.

Gains on the sale of non-mortgage loans, which include SBA and FSA loans, totaled $0 in 2021 compared to $324,000 in 2020 and $226,000 in 2019. Fluctuations in the volume of eligible SBA loans were the reasons for the difference in income year to year to year.

Insurance commission income decreased to $15.8 million in 2021, down $1.0 million from $16.8 million in 2020 primarily due to lower contingent commissions. Insurance commission income increased to $16.8 million in 2020, up $2.7 million from $14.1 million in 2019 primarily as a result of the Merger.

Income from bank owned life insurance (“BOLI”) increased $1.8 million in 2021 to $5.1 million up from $3.3 million in 2020 primarily due to claim gains. Income in 2019 was $2.2 million.

Wealth income decreased $132,000 to $6.0 million in 2021 from $6.2 million in 2020. Wealth income increased $3.1 million to $6.2 million in 2020 up from $3.1 million in 2019 primarily due to the Merger.

Other noninterest income decreased to $2.8 million in 2021 compared to $3.0 million in 2020. Other noninterest income increased $1.2 million to $3.0 million in 2020 compared to $1.8 million in 2019 primarily due to the Merger.

Noninterest Expense – Total noninterest expense for 2021 was $158.0 million compared to $165.2 million for the year ended December 31, 2020, and $97.1 million for the year ended December 31, 2019. The increase from 2019 is primarily due to the Merger with 12 months of combined operations in 2021 compared to none in 201. The decrease from 2020 is primarily due to $19.5 million of costs related to the Merger in 2020 mostly offset by increases in compensation and other non-interest expenses.

Compensation and benefits increased $13.4 million, or 17.4%, to $90.6 million in 2021 from $77.2 million in 2020. The increase is mainly related to increased staffing, merit increases and increases in health care. Occupancy expense decreased $819,000, to $15.5 million in 2021 compared to $16.3 million in 2019 and data processing expense decreased $1.3 million to $13.6 million in 2021 from $14.9 million in 2020. Other noninterest expenses increased $1.8 million to $25.1 million in 2021 from $23.3 million in 2020.

Compensation and benefits increased $20.0 million, or 35.1%, to $77.2 million in 2020 up from $57.2 million in 2019. The increase is mainly attributable to an increase in staff from the Merger. Merger costs related to the acquisition and integration of UCFC increased $18.1 million to $19.5 million for 2020 compared to $1.4 million in 2019. The amortization of intangibles increased $5.3 million to $6.4 million at the end of 2020 compared to $1.1 million in 2019 as a result of an increase in intangibles from the Merger. Occupancy expense increased $7.3 million, to $16.3 million in 2020 compared to $9.0 million in 2019, financial institutions tax increased $2.0 million to $4.2 million in 2020 from $2.2 million in 2019 and data processing expense increased $6.8 million to $14.9 million in 2020 from $8.1 million in 2019. The FDIC insurance premium increased to $3.4 million from $484,000 as a result of the Merger and an increase in assets from the (“PPP”) lending program. Other noninterest expenses increased $5.7 million to $23.3 million in 2020 from $17.6 million in 2019.

Income Taxes – Income taxes totaled $30.4 million in 2021 compared to $16.2 million in 2020 and $11.3 million in 2019. The effective tax rates for those years were 19.4%, 20.4%, and 18.6%, respectively. The tax rate is lower than the statutory 21% tax rate for the Company mainly because of investments in tax-exempt securities. The earnings on tax-exempt securities are not subject to federal income tax. See Note 18 – Income Taxes to the Consolidated Financial Statements for further details.

Concentrations of Credit Risk

Financial institutions such as Premier generate income primarily through lending and investing activities. The risk of loss from lending and investing activities includes the possibility that losses may occur from the failure of another party to perform according to the terms of the loan or investment agreement. This possibility is known as credit risk.

Lending or investing activities that concentrate assets in a way that exposes the Company to a material loss from any single occurrence or group of occurrences increases credit risk. Diversifying loans and investments to prevent concentrations of risks is one way a financial institution can reduce potential losses due to credit risk. Examples of asset concentrations would include multiple loans made to a single borrower and loans of inappropriate size relative to the total capitalization of the institution. Management believes adherence to its loan and investment policies allows it to control its exposure to concentrations of credit risk at acceptable levels. As of December 31, 2021. Premier’s loan portfolio was concentrated geographically in its northeast, northwest and central Ohio, northeast Indiana, and southeast Michigan market areas. Management has also identified lending for income-generating rental properties within commercial real estate as an industry concentration. Total loans for income-generating rental property totaled $2.0 billion at December 31, 2021, which represents 37.4% of the Company’s loan portfolio. Management believes it has the skill and experience to manage any risks associated with this type of lending. Loans in this category are generally paying as agreed without any unusual or unexpected levels of delinquency. The delinquency rate in this category, which is any loan 30 days or more past due, was 0.01% at December 31, 2021. There are no other industry concentrations that exceed 10% of the Company’s loan portfolio.

Liquidity and Capital Resources

The Company’s primary source of liquidity is its core deposit base, raised through the Bank’s branch network, along with wholesale sources of funding and its capital base. These funds, along with investment securities, provide the ability to meet the needs of depositors while funding new loan demand and existing commitments.

Cash (used in) generated from operating activities was $165.9 million, ($55.6) million and $39.7 million in 2021, 2020 and 2019, respectively. The adjustments to reconcile net income to cash provided by or used in operations during the periods presented consist primarily of proceeds from the sale of loans (less the origination of loans held for sale), the provision for credit losses, depreciation expense, the origination, amortization and impairment of mortgage servicing rights and increases and decreases in other assets and liabilities. The negative cash from operating activities in 2020 was primarily due to the Company’s decision to originate and sell construction loans held for sale for the first time. Due to the time it takes to complete the construction and sell the loans, the cash used in the origination of loans held for sale greatly exceeded the proceeds from the sale of loans held for sale. Since this is strictly a timing difference, the Company was comfortable paying out dividends on its common stock in 2020 even with the negative cash provided by operating activities.

The primary investing activity of Premier is lending and the purchase of available-for-sale securities, which are funded with cash provided from operating and financing activities, as well as proceeds from payment on existing loans and proceeds from maturities of investment securities. The net cash used for investing activities was $333.5 million, $541.9 million and $225.3 million in 2021, 2020 and 2019, respectively.

Principal financing activities include the gathering of deposits, the utilization of FHLB advances, and the sale of securities under agreements to repurchase such securities and borrowings from other banks. The net cash provided by financing activities was $169.9 million, $625.5 million and $218.0 million in 2021, 2020 and 2019, respectively. For additional information about cash flows from Premier’s operating, investing and financing activities, see the Consolidated Statements of Cash Flows and related Notes included in the Consolidated Financial Statements.

At December 31, 2021, Premier had the following commitments to fund deposits, borrowing obligations, leases and post-retirement benefits:


	Maturity Dates by Period at December 31, 2021
Contractual Obligations	Total		Less than 1 year		1-3 years		3-5 years		More than 5 years
	(In Thousands)
Certificates of deposit	$	800,123	$	529,525	$	222,993	$	47,575		30
Subordinated debentures		84,976		—		—		—		—
Lease obligations		22,164		2,547		3,953		2,773		12,891
Post-retirement benefits		1,013		191		419		403		—
Total contractual obligations	$	908,276	$	532,263	$	227,365	$	50,751	$	12,921

To meet its obligations management can adjust the rate of savings certificates to retain deposits in changing interest rate environments; it can sell or securitize mortgage and non-mortgage loans; and it can turn to other sources of financing including FHLB advances, the Federal Reserve, and brokered certificates of deposit. At December 31, 2021, Premier had additional borrowing capacity of $1.4 billion under its agreements with the FHLB.

The Bank is subject to various capital requirements. At December 31, 2021, the Bank had capital ratios that exceeded the standard to be considered “well capitalized.” For additional information about Premier and the Bank’s capital requirements, see Note 17 – Regulatory Matters to the Consolidated Financial Statements.

Critical Accounting Policies and Estimates

Premier has established various accounting policies that govern the application of GAAP in the preparation of its Consolidated Financial Statements. The significant accounting policies of Premier are described in the Notes to the Consolidated Financial Statements. Certain accounting policies involve significant judgments and assumptions by management, which have a material impact on the carrying value of certain assets and liabilities and management considers such accounting policies to be critical accounting policies. The judgments and assumptions used by management are based on historical experience and other factors, which are believed to be reasonable under the circumstances. Because of the nature of the judgments and assumptions made by management, actual results could differ from these judgments and estimates, which could have a material impact on the carrying value of assets and liabilities and the results of operations of Premier.

Allowance for credit losses - Premier believes the allowance for credit losses is a critical accounting policy that requires the most significant judgments and estimates used in preparation of its Consolidated Financial Statements. In determining the appropriate estimate for the allowance for credit losses, management considers a number of factors relative to both specific credits in the loan portfolio and macro-economic factors relative to the economy of the U.S. as a whole and the economies of the areas in which the Company does business.

Factors relative to specific credits that are considered include a customer’s payment history, a customer’s recent financial performance, an assessment of the value of collateral held, knowledge of the customer’s character, the financial strength and commitment of any guarantors, the existence of any customer or industry concentrations, changes in a customer’s competitive environment and any other issues that may impact a customer’s ability to meet his obligations.

Economic factors that are considered include levels of unemployment and inflation, GDP growth, Federal Reserve stimulus and broad global and national economic conditions.

In addition to the identification of specific customers who may be potential credit problems, management considers its historical losses, the results of independent loan reviews, an assessment of the adherence to underwriting standards, and other factors in providing for credit losses that have not been specifically classified. Management believes that the level of its allowance for credit losses is sufficient to cover the current expected credit losses. Refer to Allowance for credit losses in this Management’s Discussion and Analysis and Note 2 - Statement of Accounting Policies for a further description of the Company’s estimation process and methodology related to the allowance for credit losses.

Goodwill and Intangibles - Premier has two reporting units: the Bank and First Insurance. At December 31, 2021, Premier had goodwill of $317.9 million, including $295.6 million in the Bank and $22.3 million in First Insurance. The carrying value of goodwill is tested annually for impairment or more frequently if it is determined appropriate. The evaluation for impairment involves comparing the current estimated fair value of each reporting unit to its carrying value, including goodwill. If the current estimated fair value of a reporting unit exceeds its carrying value, no additional testing is required and impairment loss is not recorded. If the estimated fair value of a reporting unit is less than the carrying value, further valuation procedures are performed and could result in impairment of goodwill being recorded. Further valuation procedures would include allocating the estimated fair value to all assets and liabilities of the reporting unit to determine an implied goodwill value. If the implied value of goodwill of a reporting unit is less than the carrying amount of that goodwill, an impairment loss is recognized in an amount equal to that excess.

Premier evaluated goodwill as of December 31, 2021 and resulted in no additional testing or impairment. If, for any future period Premier determines that there has been impairment in the carrying value of goodwill balances, Premier will record a charge to earnings, which could have a material adverse effect on net income, but not risk-based capital ratios.

Premier has core deposit and other intangible assets resulting from acquisitions which are subject to amortization. Premier determines the amount of identifiable intangible assets based upon independent core deposit and customer relationship analyses at the time of the acquisition. Intangible assets with finite useful lives are evaluated for impairment whenever events or changes in circumstances indicate that their carrying amount may not be recoverable. No events or changes in circumstances that would indicate that the carrying amount of any identifiable intangible assets may not be recoverable had occurred during the years ended December 31, 2021 and 2020

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Asset/Liability Management

A significant portion of the Company’s revenues and net income is derived from net interest income and, accordingly, the Company strives to manage its interest-earning assets and interest-bearing liabilities to generate an appropriate contribution from net interest income. Asset and liability management seeks to control the volatility of the Company’s performance due to changes in interest rates. The Company attempts to achieve an appropriate relationship between rate sensitive assets and rate sensitive liabilities. Premier does not presently use off-balance sheet derivatives for risk management.

Premier monitors interest rate risk on a quarterly basis through simulation analysis that measures the impact changes in interest rates can have on net interest income. The simulation technique analyzes the effect of a presumed 100 basis point shift in interest rates (which is consistent with management’s estimate of the range of potential interest rate fluctuations) and takes into account prepayment speeds on amortizing financial instruments, loan and deposit volumes and rates, non-maturity deposit assumptions and capital requirements. It should be noted that other areas of Premier’s income statement, such as gains from sales of mortgage loans and amortization of mortgage servicing rights are also impacted by fluctuations in interest rates, but are not considered in the simulation of net interest income.

The table below presents, for the twelve months subsequent to December 31, 2021, and December 31, 2020, an estimate of the change in net interest income that would result from an immediate (shock) change in interest rates, moving in a parallel fashion over the entire yield curve, relative to the measured base case scenario of a static balance sheet. The Company did not complete an earnings at risk analysis for the down 200 basis point change in rates as of December 31, 2021 or December 31, 2020.


	Impact on Future Annual Net Interest Income
(dollars in thousands)	December 31, 2021			December 31, 2020
Immediate Change in Interest Rates
+200		9.66	%		7.24	%
+100		4.82	%		3.76	%
-100		-3.21	%		-2.40	%

The results of all the simulation scenarios are within the Board mandated guidelines as of December 31, 2021. Management reviews the Board policy limits in all scenarios to determine if they are adequate and if any changes should be made to Board mandated guidelines.

In addition to the simulation analysis, the Bank also prepares an economic value of equity (“EVE”) analysis. This analysis generally calculates the net present value of the Bank’s assets and liabilities in rate shock environments that range from –400 basis points to +400 basis points. However, the likelihood of a decrease in interest rates beyond 100 basis points as of December 31, 2021, was considered to be unlikely given the current interest rate levels and therefore was not included in this analysis. The results of this analysis are reflected in the following table.


	December 31, 2021				December 31, 2020

	Economic Value of Equity				Economic Value of Equity
Change in Rates		% Change				% Change

+ 400 bp			7.01	%			18.36	%
+ 300 bp			6.61	%			15.70	%
+ 200 bp			5.39	%			11.98	%
+ 100 bp			3.10	%			7.23	%
0 bp			—				—
- 100 bp			(6.83	)%			(11.37	)%

In evaluating the Bank’s exposure to interest rate risk, certain shortcomings inherent in each of the methods of analysis presented must be considered. For example, although certain assets and liabilities may have similar maturities or periods to repricing, they may react in different degrees to changes in market interest rates. Also, the interest rates on certain types of assets and liabilities may fluctuate in advance of changes in market rates while interest rates on other types of financial instruments may lag behind current changes in market rates. Furthermore, in the event of changes in rates, prepayments and early withdrawal levels could differ significantly from the assumptions in calculating the table and the results therefore may differ from those presented.

Item 8. Financial Statements and Supplementary Data

Management’s Report on Internal Control Over Financial Reporting

The management of Premier Financial Corp. is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is defined in Rule 13a-15(f) promulgated under the Securities Exchange Act of 1934 as a process designed by, or under the supervision of our principal executive and principal financial officers and effected by the Board of Directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. generally accepted accounting principles and includes those policies and procedures that:

Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of our assets;

Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with U.S. generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with authorizations of our management and directors; and

Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with policies or procedures may deteriorate.

Based on our evaluation under the framework in the 2013 Internal Control – Integrated Framework, management concluded that our internal control over financial reporting was effective as of December 31, 2021.

Crowe LLP, the independent registered public accounting firm that audited the consolidated financial statements of the Company included in this Annual Report on Form 10-K, has issued a report on the effectiveness of the Company’s internal control over financial reporting as of December 31, 2021. The report, which expresses an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting as of December 31, 2021, is included in this Item 8.


/s/ Gary M. Small		/s/ Paul Nungester
Gary M. Small		Paul Nungester
Chief Executive Officer		Executive Vice President and
		Chief Financial Officer

Report of Independent Registered Public Accounting Firm

Stockholders and the Board of Directors of Premier Financial Corp.

Defiance, Ohio

Opinions on the Financial Statements and Internal Control over Financial Reporting

We have audited the accompanying consolidated statements of financial condition of Premier Financial Corp. (the "Company") as of December 31, 2021 and 2020, the related consolidated statements of income, comprehensive income, changes in stockholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 2021, and the related notes (collectively referred to as the "financial statements"). We also have audited the Company’s internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control – Integrated Framework: (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2021 and 2020, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2021 in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control – Integrated Framework: (2013) issued by COSO.

Change in Accounting Principle

As discussed in Note 2 to the financial statements, the Company has changed its method of accounting for credit losses effective January 1, 2020 due to the adoption of Financial Accounting Standards Board (“FASB”) Accounting Standards Codification No. 326, Financial Instruments - Credit Losses (“ASC 326”). The Company adopted the new credit loss standard using the modified retrospective method such that prior period amounts are not adjusted and continue to be reported in accordance with previously applicable generally accepted accounting principles.

Basis for Opinions

The Company’s management is responsible for these financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s financial statements and an opinion on the Company’s internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.

Our audits of the financial statements included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

Definition and Limitations of Internal Control Over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention

or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Allowance for Credit Losses on Loans Receivable (“ACL”) – Qualitative Factors

As described in Notes 2 and 7 to the financial statements, the Company recognizes expected credit losses over the contractual lives of financial assets carried at amortized cost, including loans receivable, utilizing the Current Expected Credit Losses (“CECL”) methodology. The ACL was $66,468,000 at December 31, 2021, and consists of two components: a specific reserve based on the analysis of individually evaluated loans, and a general reserve which represents current expected credit losses on homogeneous loans (“general reserve”). The general reserve includes amounts from both a quantitative and a qualitative analysis. The Company has segregated the portfolio into segments with similar risk characteristics and generally uses two methodologies, discounted cash flow and probability of default/loss given default, to determine the quantitative factors.

Determination of the qualitative factors, which are added to the quantitative factors to adjust the general reserve for the current environment, incorporates subjective factors, including current loan-specific risk characteristics such as differences in underwriting standards, portfolio mix, delinquency level, nature or volume of the Company’s financial assets, changes in experience in staff, and environmental conditions, such as changes in unemployment rates, property values and other external factors, such as regulatory, legal and technological environments. We have identified auditing the qualitative factors as a critical audit matter as management’s determination of the qualitative factors is subjective and involves significant management judgments; and our audit procedures related to the qualitative factors involved a high degree of auditor judgment and required significant audit effort, including the need to involve more experienced audit personnel.

The primary procedures we performed to address this critical audit matter included:

•

Testing the design and operating effectiveness of controls over the evaluation of the support used to estimate the qualitative factors, including controls addressing:

Management’s review of the relevance and reliability of data inputs used as the basis for the qualitative factors.

Management’s review of the reasonableness of significant judgments and assumptions used to develop the qualitative factors.

Management’s review of the mathematical accuracy of the qualitative factors calculation.

•

Substantively testing management’s determination of the qualitative factors, including evaluating their judgments and assumptions including:

Testing management’s process for developing the qualitative factors and assessing the relevance and reliability of data used to develop the adjustments, including evaluating their significant judgments and assumptions for reasonableness. Among other procedures, our evaluation considered evidence from internal and external sources, loan portfolio performance and whether significant judgments and assumptions were applied consistently from period to period.

Analytically evaluating the qualitative factors for directional consistency and reasonableness.

Testing the mathematical accuracy of the qualitative factors used in the general reserve.

We have served as the Company's auditor since 2005.


/s/ Crowe LLP
Crowe LLP
Grand Rapids, Michigan
March 1, 2022

Premier Financial Corp.

Consolidated Statements of Financial Condition

(Dollars in Thousands, except per share data)


	December 31
	2021			2020
Assets
Cash and cash equivalents:
Cash and amounts due from depository institutions	$	54,858		$	79,593
Interest-bearing deposits		106,708			79,673
		161,566			159,266
Securities available-for-sale, carried at fair value		1,206,260			736,654
Equity securities, carried at fair value		14,097			1,090
		1,220,357			737,744
Loans held for sale, at fair value at December 31, 2021		162,947			221,616
Loans receivable, net of allowance for credit losses of $66,468 and $82,079 at December 31, 2021 and 2020, respectively		5,229,700			5,409,161
Mortgage servicing rights		19,538			13,153
Accrued interest receivable		20,767			25,434
Federal Home Loan Bank (FHLB) stock		11,585			16,026
Bank owned life insurance		166,767			144,784
Premises and equipment		55,602			58,665
Real estate and other assets held for sale (OREO)		171			343
Goodwill		317,948			317,948
Core deposit and other intangibles		24,129			30,337
Other assets		90,325			77,257
Total assets	$	7,481,402		$	7,211,734
Liabilities and stockholders’ equity
Liabilities:
Deposits:
Noninterest-bearing	$	1,724,772		$	1,597,262
Interest-bearing		4,557,279			4,450,579
Total		6,282,051			6,047,841
Subordinated debentures		84,976			84,860
Advance payments by borrowers		24,716			21,748
Reserve for credit losses - unfunded commitments		5,031			5,350
Other liabilities		61,132			69,659
Total liabilities		6,457,906			6,229,458
Commitments and Contingent Liabilities (Note 6)
Stockholders’ equity:
Preferred stock, $.01 par value per share: 37,000 shares authorized; no shares issued		—			—
Preferred stock, $.01 par value per share: 4,963,000 shares authorized; no shares issued		—			—
Common stock, $.01 par value per share: 50,000,000 shares authorized; 43,297,260 and 43,297,260 shares issued and 36,383,613 and 37,291,480 shares outstanding, respectively		306			306
Additional paid-in capital		691,132			689,390
Accumulated other comprehensive (loss)/income, net of tax of $(912) and $3,988, respectively		(3,428	)		15,004
Retained earnings		443,517			356,414
Treasury stock, at cost, 6,913,647 and 6,005,780 shares respectively		(108,031	)		(78,838	)
Total stockholders’ equity		1,023,496			982,276
Total liabilities and stockholders’ equity	$	7,481,402		$	7,211,734

See accompanying notes

PREMIER FINANCIAL CORP.

Consolidated Statements of Income

(Dollar Amounts in Thousands, except per share data)


	Years Ended December 31
	2021			2020		2019
Interest Income
Loans	$	223,787		$	225,084	$	130,853
Investment securities:
Tax-exempt		3,898			3,509		4,883
Taxable		15,471			7,960		3,300
Interest-bearing deposits		198			435		1,395
FHLB stock dividends		233			958		653
Total interest income		243,587			237,946		141,084
Interest Expense
Deposits		13,482			26,918		22,613
Federal Home Loan Bank advances and other		23			1,691		1,443
Subordinated debentures		2,713			1,300		1,354
Securities sold under agreement to repurchase		—			32		25
Total interest expense		16,218			29,941		25,435
Net interest income		227,369			208,005		115,649
Credit loss (benefit) expense - loans and leases (1)		(6,733	)		43,154		2,905
Credit loss (benefit) expense - unfunded commitments (1)		(319	)		1,096		(21	)
Net interest income after provision for credit losses		234,421			163,755		112,765
Non-interest Income
Service fees and other charges		24,168			21,369		14,028
Mortgage banking income		21,925			28,199		9,483
Insurance commissions		15,780			16,788		14,118
Gain on sale of non-mortgage loans		—			324		226
Gain on sale of securities available for sale		2,218			1,464		24
Gain on equity securities		1,954			90		—
Wealth management income		6,027			6,159		3,127
Income from Bank Owned Life Insurance		5,121			3,306		2,158
Other non-interest income		2,764			2,985		1,792
Total non-interest income		79,957			80,684		44,956
Non-interest Expense
Compensation and benefits		90,646			77,213		57,175
Occupancy		15,501			16,320		9,027
FDIC insurance premium		2,896			3,355		484
Financial institutions tax		4,079			4,173		2,194
Data processing		13,550			14,886		8,055
Acquisition related charges		—			19,485		1,422
Amortization of intangibles		6,208			6,449		1,119
Other non-interest expense		25,075			23,289		17,608
Total non-interest expense		157,955			165,170		97,084
Income before income taxes		156,423			79,269		60,637
Federal income taxes		30,372			16,192		11,267
Net Income	$	126,051		$	63,077	$	49,370
Earnings per common share (Note 4)
Basic	$	3.39		$	1.75	$	2.49
Diluted	$	3.39		$	1.75	$	2.48

(1)

Beginning January 1, 2020, calculation is based on current expected loss methodology. Prior to January 1, 2020, calculation was based on incurred loss methodology.

See accompanying notes

PREMIER FINANCIAL CORP.

Consolidated Statements of Comprehensive Income

(Dollar Amounts in Thousands)


	For the Years Ended December 31
	2021			2020			2019
Net income	$	126,051		$	63,077		$	49,370
Change in securities available-for-sale (AFS):
Unrealized holding gains (losses) on available-for-sale securities arising during the period		(21,967	)		14,431			8,754
Reclassification adjustment for (gains) losses realized in income		(2,218	)		(1,464	)		(24	)
Net unrealized gains (losses)		(24,185	)		12,967			8,730
Income tax effect		5,079			(2,723	)		(1,834	)
Net of tax amount		(19,106	)		10,244			6,896
Change in cash flow hedge derivatives:
Unrealized holding gains (losses) on balance sheet swap		3,025			14,431			8,754
Reclassification adjustment for cash flow hedge derivative (gains) losses included in income		(2,172	)		—			(24	)
Net unrealized gains (losses)		853			14,431			8,730
Income tax effect		(179	)		(2,723	)		(1,834	)
Net of tax amount		674			11,708			6,896
Change in unrealized gain/(loss) on postretirement benefit:
Net gain (loss) on defined benefit postretirement medical plan realized during the period		13			195			(310	)
Net amortization and deferral		(13	)		13			14
Net gain (loss) activity during the period		—			208			(296	)
Income tax effect		—			(43	)		143
Net of tax amount		—			165			(153	)
Total other comprehensive income (loss)		(18,432	)		10,409			6,743
Comprehensive income	$	107,619		$	73,486		$	56,113

See accompanying notes

PREMIER FINANCIAL CORP.

Consolidated Statements of Changes in Stockholders’ Equity

(Dollar Amounts In Thousands, except number of shares)


	Preferred Stock		Common Stock Shares(1)			Common Stock		Additional Paid-In Capital			Accumulated Other Comprehensive Income (Loss)			Retained Earnings			Treasury Stock			Total Stockholder’s Equity
Balance at December 31, 2018	$	—		20,171,392		$	127	$	161,593		$	(2,148	)	$	295,588		$	(55,571	)	$	399,589
Net income															49,370						49,370
Other comprehensive loss												6,743									6,743
Deferred compensation plan									(80	)								158			78
Stock based compensation expense									286												286
Shares issued under stock option plan, net of 178 repurchased and retired				19,022					(32	)					(5	)		226			189
Restricted share activity under stock incentive plans net of 27,728 repurchased and retired				51,194					117						(154	)		597			560
Shares issued from direct stock sales				4,255					71									52			123
Shares repurchased				(515,977	)													(15,147	)		(15,147	)
Common stock dividends paid ($0.79 per share)															(15,624	)					(15,624	)
Balance at December 31, 2019	$	—		19,729,886		$	127	$	161,955		$	4,595		$	329,175		$	(69,685	)	$	426,167
Net income															63,077						63,077
Other comprehensive income												10,409									10,409
Adoption of ASC 326															(2,566	)					(2,566	)
Deferred compensation plan				7,524					24									(24	)		—
Stock based compensation expense									2,312												2,312
Capital stock issuance related to acquisition				17,926,174			179		527,132												527,311
Vesting of incentive plans				39,548					(1,864	)								493			(1,371	)
Shares issued under stock option plan, net				11,408					(122	)								122			—
Restricted share issuance				13,349					198						(374	)		176			—
Restricted share forfeitures				(2,265	)				13									(13	)		—
Shares issued from direct stock sales				1,148														18			18
Shares repurchased				(435,292	)													(10,183	)		(10,183	)
Common stock dividends paid ($0.88 per share)															(32,898	)					(32,898	)
Other, net									(258	)								258			—
Balance at December 31, 2020	$	—		37,291,480		$	306	$	689,390		$	15,004		$	356,414		$	(78,838	)	$	982,276
Net income												—			126,051						126,051
Other comprehensive loss												(18,432	)								(18,432	)
Deferred compensation plan				7,911					(30	)								30			—
Stock based compensation expense									2,827												2,827
Vesting of incentive plans				31,597					(507	)								507			—
Shares exercised under stock option plan, net				600														8			8
Restricted share issuance				43,460					(568	)								568			—
Restricted share forfeitures				(24,299	)				20									(723	)		(703	)
Shares repurchased				(967,136	)													(29,583	)		(29,583	)
Common stock dividends paid ($1.05 per share)															(38,948	)					(38,948	)
Balance at December 31, 2021	$	—		36,383,613		$	306	$	691,132		$	(3,428	)	$	443,517		$	(108,031	)	$	1,023,496

See accompanying notes

PREMIER FINANCIAL CORP.

Consolidated Statements of Cash Flows

(Dollar Amounts in Thousands)


	Years Ended December 31
	2021			2020			2019
Operating Activities
Net income	$	126,051		$	63,077		$	49,370
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for credit losses		(7,052	)		44,250			2,905
Depreciation		6,306			6,512			4,231
Net amortization of premium and discounts on loans, securities, deposits and debt obligations		(284	)		(5,157	)		730
Amortization of mortgage servicing rights, net of impairment charges/recoveries		2,086			15,456			2,043
Amortization of intangibles		6,208			6,449			1,119
Mortgage banking gain, net		(16,437	)		(36,683	)		(7,932	)
Loss on sale or disposals or write-downs of property, plant and equipment		—			—			10
Gain/loss on sale / write-down of real estate and other assets held for sale		(6	)		(10	)		180
Gain on sale of available for sale securities		(2,218	)		(1,464	)		(24	)
Gain on equity securities		(1,954	)		(90	)		—
Change in deferred taxes		5,393			(9,781	)		(419	)
Proceeds from sale of loans held for sale		867,522			847,141			302,554
Origination of loans held for sale		(800,887	)		(967,861	)		(308,434	)
Stock based compensation expense		2,827			2,312			286
Restricted stock forfeits for taxes and option exercises		(703	)		(1,371	)		560
Excess tax benefit (expense) on stock compensation plans		—			—			(108	)
Income from bank owned life insurance		(5,121	)		(3,306	)		(2,158	)
Changes in:
Accrued interest receivable and other assets		(5,755	)		(14,729	)		(6,916	)
Other liabilities		(10,813	)		(363	)		1,688
Net cash provided by operating activities		165,163			(55,618	)		39,685
Investing Activities
Proceeds from maturities, calls and paydowns of held-to-maturity securities		—			—			120
Proceeds from maturities, calls and paydowns of available-for-sale securities		149,197			124,731			49,104
Proceeds from sale of available-for-sale securities		158,012			52,420			2,667
Proceeds from sale of OREO		488			1,081			1,262
Purchases of available-for-sale securities		(806,083	)		(362,426	)		(33,463	)
Purchases of equity securities		(11,053	)		(1,000	)		—
Purchases of office properties and equipment		(3,023	)		(5,361	)		(3,134	)
Investment in bank owned life insurance		(18,307	)		—			(6,600	)
Proceeds from bank owned life insurance death benefit		1,445			—			874
Net change in Federal Home Loan Bank stock		4,441			8,642			2,302
Net cash received (paid) in acquisitions		—			52,448			(1,600	)
Proceeds from sale of non-mortgage loans		—			5,241			21,239
Net increase (decrease) in loans receivable		192,069			(417,630	)		(258,119	)
Net cash used in investing activities		(332,814	)		(541,854	)		(225,348	)
Financing Activities
Net increase in deposits and advance payments by borrowers		238,474			1,088,832			251,282
Net change in Federal Home Loan Bank advances		—			(466,063	)		(126	)
Proceeds from subordinated debentures		—			48,777			—
Decrease in securities sold under repurchase agreements		—			(2,999	)		(2,742	)
Cash dividends paid on common stock		(38,948	)		(32,898	)		(15,624	)
Net cash paid for repurchase of common stock		(29,583	)		(10,183	)		(15,147	)
Proceeds from exercise of stock options		8			—			189
Proceeds from direct stock sales		—			18			123
Net cash provided by financing activities		169,951			625,484			217,955
Increase (decrease) in cash and cash equivalents		2,300			28,012			32,292
Cash and cash equivalents at beginning of period		159,266			131,254			98,962
Cash and cash equivalents at end of period	$	161,566		$	159,266		$	131,254
Supplemental cash flow information:
Interest paid	$	16,357		$	30,536		$	25,348
Income taxes paid		27,055			32,390			11,200
Transfer from other liability to equity		—			—			—
Transfers from held to maturity securities to available for sale securities		—			—			404
Transfers from loans to other real estate owned and other assets held for sale		220			192			337
Initial recognition of right-of-use asset		500			10,106			8,808
Initial recognition of lease liability		500			10,254			9,339
Initial recognition ASU 326		—			2,566			—

See accompanying notes.

Notes to the Consolidated Financial Statements

Basis of Presentation

On June 19, 2020, First Defiance Financial Corp. changed its name to Premier Financial Corp. (“Premier” or the “Company”). In connection with the name change, Premier’s stock continued to be traded on the Nasdaq Global Select Market, but under the new ticker PFC. On this same date, First Federal Bank of the Midwest, a wholly-owned subsidiary of the Company, changed its name to Premier Bank (the “Bank”).

Premier is a financial holding company that conducts business through its wholly-owned subsidiaries, the Bank, First Insurance Group of the Midwest, Inc. (“First Insurance”), PFC Risk Management Inc. (“PFC Risk Management”), and PFC Capital, LLC (“PFC Capital”). All significant intercompany transactions and balances are eliminated in consolidation.

On January 31, 2020, Premier completed its previously announced acquisition of United Community Financial Corp., an Ohio corporation (“UCFC”), pursuant to the Agreement and Plan of Merger (the “Merger Agreement”), dated as of September 9, 2019, by and between Premier and UCFC. At the effective time of the merger (the “Merger”), UCFC merged with and into Premier, with Premier surviving the Merger. Simultaneously with the completion of the Merger, Premier converted from a unitary thrift holding company to a bank holding company, making an election to be a financial holding company.

Immediately following the Merger, UCFC’s wholly-owned bank subsidiary, Home Savings Bank (“Home Savings”) merged with and into the Bank, with the Bank surviving the Merger (the "Bank Merger"). Immediately prior to the Bank Merger, the Bank converted from a federal thrift into an Ohio state-chartered bank. In addition, immediately following the Bank Merger, UCFC’s wholly-owned insurance subsidiaries, HSB Insurance, LLC, and United American Financial Services, Inc., each merged into First Insurance, with First Insurance surviving the mergers. Premier also acquired PFC Capital in the Merger.

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, 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 was formed as an Ohio limited liability company by UCFC in 2016 for the purpose of providing mezzanine funding for customers of Home Savings. 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 is an insurance agency that conducts business throughout Premier’s markets. First Insurance offers property and casualty insurance, life insurance and group health insurance.

PFC Risk Management is a wholly-owned insurance company subsidiary of the Company that insures the Company and its subsidiaries against certain risks unique to the operations of the Company and for which insurance may not be currently available or economically feasible in today’s insurance marketplace. PFC Risk Management pools resources with several other similar insurance company subsidiaries of financial institutions to help minimize the risk allocable to each participating insurer.

The COVID-19 pandemic has continued to create extensive disruptions to the global economy and to the lives of individuals throughout the world. Business and consumer customers of the Bank are experiencing varying degrees of financial distress, which is expected to continue over the coming months and will likely adversely affect their ability to pay interest and principal on their loans. Further, value of the collateral securing their obligations may decline. These uncertainties may negatively impact the Statement of Financial Condition, the Statement of Income and the Statement of Cash Flows of the Company.

2. Statement of Accounting Policies

Use of Estimates

The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. These estimates and assumptions affect the amounts reported in the financial statements and the disclosures provided, and actual results could differ.

Earnings Per Common Share

Basic earnings per common share is computed by dividing net income applicable to common shares (net income less dividend requirements for preferred stock, accretion of preferred stock discount and redemption of preferred stock) by the weighted average number of shares of common stock outstanding during the period. All outstanding unvested share-based payment awards that contain rights to nonforfeitable dividends are considered participating securities for the calculation. Diluted earnings per common share includes the dilutive effect of additional potential common shares issuable under stock options, warrants, restricted stock awards and stock grants. See also Note 4.

Comprehensive Income

Comprehensive income consists of net income and other comprehensive income (loss). Other comprehensive income (loss) includes unrealized gains and losses on available-for-sale securities, unrealized gains and losses on cash flow hedges and the net unrecognized actuarial losses and unrecognized prior service costs associated with the Company’s Defined Benefit Postretirement Medical Plan. All items included in other comprehensive income are reported net of tax. See also Notes 5, 16 and 25 and the Consolidated Statements of Comprehensive Income.

Cash Flows

For purposes of the statement of Cash flows, Premier considers all highly liquid investments with a term of three months or less to be cash equivalents. Net cash flows are reported for loan and deposit transactions, interest-bearing deposits in other financial institutions and repurchase agreements.

Investment Securities

Securities are classified as held-to-maturity when Premier has the positive intent and ability to hold the securities to maturity and are reported at amortized cost, adjusted for premiums and discounts that are recognized in interest income using the interest method over the period to maturity. In addition, Premier may purchase equity securities for its portfolio. Equity securities are a separate category of investments as changes in market value must be run through earnings as a gain (loss) on equity securities.

Securities available‑for‑sale consists of those securities which might be sold prior to maturity due to changes in interest rates, prepayment risks, yield and availability of alternative investments, liquidity needs or other factors. Available-for-sale securities are stated at fair value, with the unrealized gains and losses, net of tax, reported in other comprehensive income (loss) until realized. Realized gains and losses are included in gains (losses) on securities or other-than-temporary impairment losses on securities. Realized gains and losses on securities sold are recognized on the trade date based on the specific identification method.

Interest income includes amortization of purchase premiums and discounts. Premiums and discounts are amortized on the level-yield method without anticipating prepayments, except for mortgage-backed securities where prepayments are expected.

Quarterly, the Company evaluates if any security has a fair value less than its amortized cost. Once these securities are identified, in order to determine whether a decline in fair value resulted from a credit loss or other factors, the Company performs further analysis. See to Footnote 5 - Investment Securities for further discussion.

Equity Securities

These securities are reported at fair value utilizing Level 1 inputs where the Company obtains fair value measurement from a broker.

FHLB Stock

The Bank is a member of the FHLB system. Members are required to own a certain amount of stock based on the level of borrowings and other factors. FHLB stock is carried at cost, classified as a restricted security, and periodically evaluated for impairment based on ultimate recovery of par value. Both cash and stock dividends are reported as income. At December 31, 2021 and 2020, the Company held $11.6 million and $16.0 million, respectively, at the FHLB of Cincinnati.

Loans Receivable

Loans that management has the intent and ability to hold for the foreseeable future or until maturity or payoff are reported at the principal amount outstanding, net of deferred loan fees and costs, purchase premiums and discounts and the allowance for credit losses. Deferred fees net of deferred incremental loan origination costs, are amortized to interest income generally over the contractual life of the loan using the interest method without anticipating prepayments. The recorded investment in loans includes accrued interest receivable, unamortized premiums and discounts, and net deferred fees and costs and undisbursed loan amounts.

Mortgage loans originated and intended for sale in the secondary market are classified as loans held for sale and are carried at fair value, as determined by market pricing from investors. Net unrealized gains and losses are recorded as a part of mortgage banking income on the Consolidated Statement of Income. Mortgage loans held for sale are generally sold with servicing rights retained. The carrying value of mortgage loans sold is reduced by the amount allocated to the servicing right. Gains or losses on sales of mortgage loans are based on the difference between the selling price and the carrying value of the related loan sold.

The Company may incur losses pertaining to loans sold to Fannie Mae and Freddie Mac but repurchased due to underwriting issues. Repurchase losses are recognized when the Company determines they are probable and estimable.

Interest receivable is accrued on loans and credited to income as earned. The accrual of interest on loans 90 days delinquent or those loans individually analyzed is discontinued when, in management’s opinion, the borrower may be unable to meet payments as they become due. For these loans, interest accrual is only to the extent cash payments are received. The accrual of interest on these loans is generally resumed after a pattern of repayment has been established and the collection of principal and interest is reasonably assured.

Purchased Credit Deteriorated (“PCD”) Loans

The Company acquires loans individually and in groups or portfolios. At acquisition, the Company reviews each loan to determine whether there is evidence of more than insignificant deterioration of credit quality since origination. The Company determines whether each such loan is to be accounted for individually or whether such loans will be assembled into pools of loans based on common risk characteristics (loan type and date of origination).

PCD loans acquired in a transaction are marked to fair value and a mark on yield is recorded. In addition, an adjustment is made to the ACL for the expected loss on the acquisition date. These loans are assessed on a regular basis and subsequent adjustments to the ACL are recorded on the income statement.

Allowance for credit losses

On January 1, 2020, the Company adopted ASU 2016-13 Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, as amended, which replaced the incurred loss methodology with an expected loss methodology that is referred to as the current expected credit loss (“CECL”) methodology. The measurement of expected credit losses under the CECL methodology is applicable to financial assets measured at amortized cost, including loan receivables and held-to-maturity debt securities. It also applies to off-balance sheet credit exposures not accounted for as insurance (loan commitments, standby letters of credit, financial guarantees, and other similar instruments) and net investments in leases recognized by a lessor in accordance to Topic 842 on leases. In addition, ASC 326 made changes to the accounting for available-for-sale debt securities.

The Company adopted ASC 326 using the prospective transition approach for financial assets purchased with credit deterioration that were previously classified as purchased credit impaired (“PCI”) and accounted for under ASC 310-30. In accordance with the standard, management did not reassess whether PCI assets met the criteria of PCD assets as of the date of adoption. As a part of the merger, the Bank recognized $7.6 million of the allowance for credit losses related to PCD loans. The remaining noncredit discount (based on the adjusted amortized cost basis) will be accreted into interest income at the effective interest rate as of the merger date.

Loans that management has the intent and ability to hold for the foreseeable future or until maturity of payoff are reported at amortized cost. Amortized cost is the principal balance outstanding, net of purchase premiums and discounts, adjustments, and deferred loan fees and costs. Accrued interest receivable was reported in other assets and is excluded from the estimate of credit losses.

Management estimates the allowance balance using relevant available information, from internal and external sources, relating to past events, current conditions, and reasonable and supportable forecasts. Historical credit loss experience provides the basis for the estimation of expected credit losses. Adjustments to historical loss information are made for differences in current loan-specific risk characteristics such as differences in underwriting standards, portfolio mix, delinquency level, nature or volume of the Company’s financial assets, changes in experience in staff, as well as changes in environmental conditions, such as changes in unemployment rates, property values and other external factors, such as regulatory, legal and technological environments.

The allowance for credit losses is measured on a collective pool basis when similar risk characteristics exist. The Company has identified the following portfolio segments and is generally utilizing two methodologies to analyze loan pools: discounted cash flow (“DCF”) and probability of default/loss given default (“PD/LGD”):


Portfolio Segments	Loan Pool	Methodology	Loss Drivers
Residential real estate	1-4 Family nonowner occupied	DCF	National unemployment
	1-4 Family owner occupied	DCF	National unemployment
Commercial real estate	Commercial real estate nonowner occupied	DCF	National unemployment
	Commercial real estate owner occupied	DCF	National unemployment
	Multi Family	DCF	National unemployment
	Agriculture Land	DCF	National unemployment
	Other commercial real estate	DCF	National unemployment
Construction secured by real estate	Construction	PD/LGD	Call report loss history

Commercial	Commercial working capital	PD/LGD	Call report loss history
	Agriculture production	PD/LGD	Call report loss history
	Other commercial	PD/LGD	Call report loss history
Home equity and improvement	Home equity and improvement	PD/LGD	Call report loss history
Consumer finance	Consumer finance	Remaining life	Call report loss history

Loans that do not share risk characteristics are evaluated on an individual basis and included in the collective evaluation. A loan is individually analyzed when, based on current information and events, it is probable that the Company will be unable to collect all amounts due according to the contractual terms of the loans agreement. Loans, for which terms have been modified and for which the borrower is experiencing financial difficulties, are considered troubled debt restructurings. When a loan is considered individually analyzed, an analysis of the net present value of estimated cash flows is performed and an allowance may be established based on the outcome of that analysis, or if the loan is deemed to be collateral dependent an allowance is established based on the fair value of collateral. All modifications are reviewed by the bank’s Chief Credit Officer or Chief Credit Administration Officer to determine whether or not the modification constitutes a troubled debt restructure. Commercial and commercial real estate loan relationships greater than $500,000 are individually evaluated. If a loan is individually analyzed, a portion of the allowance is allocated so that the loan is reported net of the allowance allocation which is determined based on the present value of estimated future cash flows using the loan’s existing rate or at the fair value of collateral if repayment is expected solely from the collateral. Loan relationships less than $500,000 are aggregated by loan segment and risk level and given a specific reserve based on the general reserve factor for that loan segment and risk level. Large groups of smaller balance homogeneous loans, such as consumer and residential real estate loans, are collectively evaluated, and accordingly, they are not separately identified for disclosure.

Troubled Debt Restructurings (“TDR”): A loan for which terms have been modified resulting in a concession, and for which the borrower is experiencing financial difficulties, is considered to be a TDR. The allowance for credit loss on a TDR is measured using the same method as all other loans held for investment, except when the value of a concession is measured using the discounted cash flow method, the allowance for credit loss is determined by discounting the expected future cash flow at the original interest rate of the loan. If a TDR is considered to be a collateral dependent loan, the loan is reported, net, at the fair value of the collateral. For TDRs that subsequently default, the Company determines the amount of the allowance on that loan in accordance with the accounting policy for the allowance for credit losses on loans individually identified. The Company incorporates recent historical experience related to TDRs including the performance of TDRs that subsequently default into the calculation of the allowance by loan portfolio segment. See Footnote 7 – Loans for further discussion on TDRs.

Servicing Rights

Servicing rights are recognized separately when they are acquired through sales of loans. Servicing rights are initially recorded at fair value with the income statement effect recorded in gains on sales of loans. Fair value is based on market prices for comparable mortgage servicing contracts, when available, or alternatively, is based on a valuation model that calculates the present value of estimated future net servicing income. The valuation model incorporates assumptions that market participants would use in estimating future net servicing income, such as the cost to service, the discount rate, the custodial earnings rate, an inflation rate, ancillary income, prepayment speeds and default rates and losses. The Company compares the valuation model inputs and results to published industry data in order to validate the model results and assumptions. All classes of servicing assets are subsequently measured using the amortization method which requires servicing rights to be amortized into noninterest income in proportion to, and over the period of, the estimated future net servicing income of the underlying loans, driven, generally, by changes in market interest rates.

Servicing assets are evaluated for impairment based upon the fair value of the rights as compared to carrying amount. Impairment is determined by stratifying rights into groupings based on predominant risk characteristics, such as interest rate, loan type, loan terms, year of origination and investor type. Impairment is recognized through a valuation allowance for an individual grouping, to the extent that fair value is less than the carrying amount. If the Company later determines that all or a portion of the impairment no longer exists for a particular grouping, a reduction of the allowance may be recorded as an increase to income. Changes in valuation allowances are reported within mortgage banking income on the income statement. The fair values of servicing rights are subject to significant fluctuations as a result of changes in estimated and actual prepayment speeds and default rates and losses.

Servicing fee income, which is reported on the income statement with mortgage banking income, is recorded for fees earned for servicing loans. The fees are based on a contractual percentage of the outstanding principal, or a fixed amount per loan, and are recorded as income when earned. The amortization of mortgage servicing rights is netted against loan servicing fee income. Servicing fees totaled $7.6 million, $7.3 million and $3.8 million for the years ended December 31, 2021, 2020 and 2019, respectively. Late fees and ancillary fees related to loan servicing are not material. See Note 8.

Bank Owned Life Insurance

The Company has purchased life insurance policies for certain key employees. Bank owned life insurance is recorded at the amount that can be realized under the insurance contract at the balance sheet date, which is the cash surrender value adjusted for other charges or other amounts due that are probable at settlement.

Premises and Equipment and Long Lived Assets

Land is carried at cost. Premises and equipment are carried at cost less accumulated depreciation and amortization computed principally by the straight-line method over the following estimated useful lives:


Buildings and improvements		20 to 50 years
Furniture, fixtures and equipment		3 to 15 years

Long-lived assets to be held and those to be disposed of and certain intangibles are periodically evaluated for impairment. See Note 9.

Goodwill and Other Intangibles

Goodwill resulting from business combinations after January 1, 2009, is generally determined as the excess of the fair value of the consideration transferred, plus the fair value of any non-controlling interests in the acquiree, over the fair value of the net assets acquired and liabilities assumed as of the acquisition date. Goodwill and intangible assets acquired in a purchase business combination and determined to have an indefinite useful life are not amortized, but tested for impairment at least annually. The Company has selected November 30 as the date to perform the annual impairment test. Intangible assets with definite useful lives are amortized over their estimated useful lives to their estimated residual values. Goodwill is the only intangible asset with an indefinite life on Premier’s balance sheet.

Other intangible assets consist of core deposit and acquired customer relationship intangible assets arising from whole bank and branch acquisitions, as well as, , wealth management and insurance agency acquisitions. They are initially recorded at fair value and then amortized on an accelerated basis over their estimated lives, which range from five years for non-compete agreements to 10 years for core deposit and customer relationship intangibles. See Note 10.

Real Estate and Other Assets Held for Sale

Real estate and other assets held for sale are comprised of properties or other assets acquired through foreclosure proceedings or acceptance of a deed in lieu of foreclosure. These assets are initially recorded at fair value less costs to sell when acquired, establishing a new cost basis. Losses arising from the acquisition of such property are charged against the allowance for credit losses at the time of acquisition. These properties are carried at the lower of cost or fair value, less estimated costs to dispose. If fair value declines subsequent to foreclosure, the property is written down against expense. Costs after acquisition are expensed.

Stock Compensation Plans

Compensation cost is recognized for stock options and restricted share awards issued to employees and directors, based on the fair value of these awards at the date of grant. A Black-Scholes model is utilized to estimate the fair value of stock options. Restricted shares awards are valued at the market value of Company stock at the date of the grant. Compensation cost is recognized over the required service period, generally defined as the vesting period. For awards with graded vesting, compensation cost is recognized on a straight-line basis over the requisite service period for the entire award. See Note 20.

Fair Value of Financial Instruments

Fair values of financial instruments are estimated using relevant market information and other assumptions, as more fully disclosed in Note 22. Fair value estimates involve uncertainties and matters of significant judgment regarding interest rates, credit risk, prepayments, and other factors, especially in the absence of broad markets for particular items. Changes in assumptions or in market conditions could significantly affect the estimates.

Transfers of Financial Assets

Transfers of financial assets are accounted for as sales, when control over the assets has been relinquished. Control over transferred assets is deemed to be surrendered when the assets have been isolated from the Company, the transferee obtains the right (free of conditions that constrain it from taking advantage of that right) to pledge or exchange the transferred assets and the Company does not maintain effective control over the transferred assets through an agreement to repurchase them before their maturity.

Mortgage Banking Derivatives

Commitments to fund mortgage loans (interest rate locks) to be sold into the secondary market and forward commitments for the future delivery of these mortgage loans are accounted for as free standing derivatives. Fair values of these mortgage derivatives are estimated based on changes in mortgage interest rates from the date the interest on the loan is locked. The Company enters into forward commitments for the future delivery of mortgage loans when interest rate locks are entered into, in order to hedge the change in interest rates resulting from its commitments to fund the loans. Changes in fair values of these derivatives are included in mortgage banking income.

Interest Rate Swaps

The Company periodically enters into interest rate swap agreements with its commercial customers who desire a fixed rate loan term that is longer than the Company is willing to extend. The Company then enters into a reciprocal swap agreement with a third party that offsets the interest rate risk from the interest rate swap extended to the customer. The interest rate swaps are derivative instruments which are carried at fair value on the statement of financial condition. The Company uses an independent third party to perform a market valuation analysis for both swap positions.

The Company also enters into cash flow hedge derivative instruments to hedge the risk of variability in cash flows (future interest payments) attributable to changes in contractually specified LIBOR benchmark interest rate on the Company's floating rate loan pool. the Company uses an independent third party to perform a market valuation analysis for the derivatives.

Operating Segments

Management considers the following factors in determining the need to disclose separate operating segments: (1) the nature of products and services, which are all financial in nature; (2) the type and class of customer for the products and services; in Premier’s case retail customers for retail bank and insurance products and commercial customers for commercial loan, deposit, life, health and property and casualty insurance needs; (3) the methods used to distribute products or provide services; such services are delivered through banking and insurance offices and through bank and insurance customer contact representatives. Retail and commercial customers are frequently targets for both banking and insurance products; (4) the nature of the regulatory environment; both banking and insurance entities are subject to various regulatory bodies and a number of specific regulations.

Quantitative thresholds as stated in FASB ASC Topic 280, Segment Reporting are monitored. For the year ended December 31, 2021, the reported revenue for First Insurance was 5.5% of total revenue for Premier. Total revenue includes interest income plus noninterest income. Net income for First Insurance for the year ended December 31, 2021, was 2.2% of consolidated net income. Total assets of First Insurance at December 31, 2021, were 0.5% of total assets. First Insurance does not meet any of the quantitative thresholds of FASB ASC Topic 280. Accordingly, all of the financial service operations are considered by management to be aggregated in one reportable segment.

Dividend Restriction

Banking regulations require maintaining certain capital levels and may limit the dividends paid by the Bank to Premier. See Note 17 for further details on restrictions.

Loan Commitments and Related Financial Instruments

Financial instruments include off‑balance sheet credit instruments, such as commitments to make loans and commercial letters of credit, issued to meet customer financing needs. The face amount for these items represents the exposure to loss, before considering customer collateral or ability to repay. Such financial instruments are recorded when they are funded.

Loss Contingencies

Loss contingencies, including claims and legal actions arising in the ordinary course of business, are recorded as liabilities when the likelihood of loss is probable and an amount or range of loss can be reasonably estimated. Management does not believe there are any such matters that will have a material effect on the financial statements.

Income Taxes

Income tax expense is the total of the current year income tax due or refundable and the change in deferred tax assets and liabilities. Deferred tax assets and liabilities are the expected future tax amounts for the temporary differences between carrying amounts and tax bases of assets and liabilities, computed using enacted tax rates. A valuation allowance, if needed, reduces deferred tax assets to the

amount expected to be realized. Realization of deferred tax assets is dependent upon the generation of a sufficient level of future taxable income and recoverable taxes paid in prior years. Although realization is not assured, management believes it is more likely than not that all of the deferred tax assets will be realized. The Company recognizes interest and/or penalties related to income tax matters in income tax expense.

An effective tax rate of 21% is used to determine after-tax components of other comprehensive income (loss) included in the statements of stockholders’ equity. See Note 18.

A tax position is recognized as a benefit only if it is “more likely than not” that the tax position would be sustained in a tax examination, with a tax examination being presumed to occur. The amount recognized is the largest amount of tax benefit that is greater than 50% likely of being realized on examination. For tax positions not meeting the “more likely than not” test, no tax benefit is recorded.

Retirement Plans

Pension expense is the net of service and interest cost, return on plan assets and amortization of gains and losses not immediately recognized. Employee 401(k) plan expense is the amount of matching contributions. Deferred compensation and supplemental retirement plan expense allocates the benefits over years of service. See Notes 16 and 19.

Revenue Recognition

ASC 606, Revenue from Contracts with Customers (“ASC 606”), establishes principles for reporting information about the nature, amount, timing and uncertainty of revenue and cash flows arising from the entity's contracts to provide goods or services to customers. The core principle requires an entity to recognize revenue to depict the transfer of goods or services to customers in an amount that reflects the consideration that it expects to be entitled to receive in exchange for those goods or services recognized as performance obligations are satisfied.

The majority of the Company’s revenue-generating transactions are not subject to ASC 606, including revenue generated from financial instruments, such as loans, letters of credit, and investment securities, as well as revenue related to mortgage servicing activities, as these activities are subject to other GAAP discussed elsewhere within the Company’s disclosures. Descriptions of the Company’s revenue-generating activities that are within the scope of ASC 606, which are presented in the Company’s statement of income as components of noninterest income are as follows:

•

Service charges on deposit accounts - these represent general service fees for monthly account maintenance and activity or transaction-based fees and consist of transaction-based revenue, time-based revenue (service period), item-based revenue or some other individual attribute-based revenue. Revenue is recognized when our performance obligation is completed which is generally monthly for account maintenance services or when a transaction has been completed (such as a wire transfer). Payment for such performance obligations are generally received at the time the performance obligations are satisfied. Service charges on deposit accounts that are within the scope of ASC 606 were $11.2 million in 2021, $10.2 million in 2020 and $7.1 million in 2019. Income from services charges on deposit accounts is included in service fees and other charges in noninterest income.

•

Interchange income - this represents fees earned from debit and credit cardholder transactions. Interchange fees from cardholder transactions represent a percentage of the underlying transaction value and are recognized daily, concurrent with the transaction processing services provided to the cardholder. Interchange fees were $10.9 million in 2021, $9.3 million in 2020 and $4.7 million in 2019, which are reported net of network related charges. Interchange income is included in service fees and other charges in noninterest income.

•

Wealth management income - this represents monthly fees due from wealth management customers as consideration for managing the customers’ assets. Wealth management and trust services include custody of assets, investment management, escrow services, and fees for trust services and similar fiduciary activities. Revenue is recognized when our performance obligation is completed each month, which is generally the time that payment is received. Also included are fees received from a third party broker-dealer as part of a revenue-sharing agreement for fees earned from customers that we refer to the third party. These fees are paid to us by the third party on a quarterly basis and recognized ratably throughout the quarter as our performance obligation is satisfied. Revenues from wealth management were $6.0 million, $6.2 million and $3.1 million in 2021, 2020 and 2019, respectively, and are included in in total noninterest income.

•

Gain/loss on sales of other real estate owned (“OREO”) - the Company records a gain or loss from the sale of OREO when control of the property transfers to the buyer, which generally occurs at the time of an executed deed. When the Company finances the sale of OREO to the buyer, the Company assesses whether the buyer is committed to perform their obligations under the contract and whether collectability of the transaction price is probable. Once these criteria are met, the OREO asset is derecognized and the gain or loss on sale is recorded upon the transfer of control of the property to the buyer. In determining the gain or loss on the sale, the Company adjusts the transaction price and related gain or loss on sale if a significant financing component is present. Income from the gain/loss on sales of OREO were a gain of $3,000 in 2021, and losses of $19,000 in 2020 and $108,000 in 2019. Income from the gain or loss on sales of OREO is included in total noninterest income.

•

Insurance commissions - this represents new commissions that are recognized when the Company sells insurance policies to customers. The Company is also entitled to renewal commissions and, in some cases, contingent commissions in the form of profit sharing which are recognized in subsequent periods. The initial commission is recognized when the insurance policy is sold to a customer. Renewal commission is variable consideration and is recognized in subsequent periods when the uncertainty around variable consideration is subsequently resolved (e.g., when customer renews the policy). Contingent commission is also a variable consideration that is not recognized until the variability surrounding realization of revenue is resolved. Another source of variability is the ability of the policy holder to cancel the policy anytime and in such cases, the Company may be required, under the terms of the contract, to return part of the commission received. The variability related to cancellation of the policy is not deemed significant and thus, does not impact the amount of revenue recognized. In the event the policyholder chooses to cancel the policy at any time, the revenue for amounts which qualify for claw-back are reversed in the period the cancellation occurs. Management views the income sources from insurance commissions in two categories: (i) new/renewal commissions and (ii) contingent commissions. Insurance commissions were $15.8 million for 2021, of which $14.7 million were new/renewal commissions and $1.1 million were contingent commissions. In 2020, insurance commissions were $16.8 million, of which $15.4 million were new/renewal commissions and $1.4 million were contingent commissions. In 2019, insurance commissions were $14.1 million, of which $13.2 million were new/renewal commission and $921,000 were contingent commissions.

Leases

In February 2016, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2016-02, Leases (Topic 842). The guidance in the update supersedes the requirements in ASC Topic 840, Leases. The guidance is intended to increase transparency and comparability among organizations by recognizing right-of-use assets and lease liabilities on the balance sheet. The Company adopted this guidance in the first quarter of 2019. Upon adoption, the Company elected a practical expedient which allows existing leases to retain their classification as operating leases. The Company has elected to account for lease and related non-lease components as a single lease component. The Company also elected to not recognize right-of-use assets and lease liabilities arising from short-term leases, which are twelve months or less. Implementation of the guidance resulted in the recording of a right-of-use asset of $8.8 million and a lease liability of $9.3 million as of January 1, 2019. See additional disclosures in Note 9.

Accounting Standards Updates

ASU 2017-12, Derivatives and Hedging (Topic 815) Targeted Improvements to Accounting for Hedging Activities: In August 2017, the FASB issued ASU 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities. This ASU gave all entities an opportunity to reclassify securities held to maturity without tainting the rest of the portfolio if they are eligible to be hedged using the “last-of-layer method.” Note that the securities need not be hedged but simply eligible to be hedged. The amendments in this ASU are effective for the reporting periods after December 15, 2018. The Company adopted ASU No. 2017-12 effective December 31, 2019 and reclassified its’ held to maturity securities to available-for-sale.

ASU 2018-13 - Fair Value Measurement (Topic 820): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement: In August 2018, the FASB issued ASU 2018-13 - Fair Value Measurement (Topic 820): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement. This ASU modifies the disclosure requirements for fair value measurements in Topic 820, Fair Value Measurement by removing, modifying and adding certain requirements. The amendments in this ASU are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. The adoption of this guidance on January 1, 2020 did not have a material impact on the Company’s consolidated financial statements.

ASU 2017-04, Intangibles-Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment: Issued in January 2017, ASU 2017-04 simplifies the manner in which an entity is required to test goodwill for impairment by eliminating Step 2 from the goodwill impairment test. Step 2 measures a goodwill impairment loss by comparing the implied fair value of a reporting unit's goodwill with the carrying amount of that goodwill. In computing the implied fair value of goodwill under Step 2, an entity, prior to the amendments in ASU 2017-04, had to perform procedures to determine the fair value at the impairment testing date of its assets and liabilities, including unrecognized assets and liabilities, in accordance with the procedure that would be required in determining the fair value of assets acquired and liabilities assumed in a business combination. However, under the amendments in ASU 2017-04, an entity should perform its annual or interim goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount, and recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit's fair value, with the understanding that the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. Additionally, ASU 2017-04 removes the requirements for any reporting unit with a zero or negative carrying amount to perform a qualitative assessment and, if it fails such qualitative test, to perform Step 2 of the goodwill impairment test. ASU 2017-04 became effective for the Company on January 1, 2020, and the amendments of this ASU were applicable to the goodwill impairment testing for 2020.

ASU 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments: Issued in June 2016, ASU 2016-13 will add FASB ASC Topic 326, “Financial Instruments-Credit Losses” and finalizes amendments to FASB ASC Subtopic 825-15, “Financial Instruments-Credit Losses.” The amendments of ASU 2016-13 are intended to provide financial statement users with more decision-useful information related to expected credit losses on financial instruments and other commitments to extend credit by replacing the current incurred loss impairment methodology with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to determine credit loss estimates. The amendments of ASU 2016-13 eliminate the probable initial recognition threshold and, in turn, reflect an entity’s current estimate of all

expected credit losses. ASU 2016-13 does not specify the method for measuring expected credit losses, and an entity is allowed to apply methods that reasonably reflect its expectations of the credit loss estimate. The amendments of ASU 2016-13, and all subsequent ASUs issued by FASB to provide additional guidance and clarification related to this Topic, became effective for the Company on January 1, 2020.

As a result of adopting the amendments of ASU 2016-13, the Company recorded an increase to its allowance for credit losses of $2.4 million and an increase to its allowance for credit losses on off-balance sheet credit exposures of $0.9 million resulting in a one-time cumulative effect adjustment through retained earnings of $2.6 million net of $0.7 million tax at the date of adoption. This adjustment included a qualitative adjustment to the allowance for credit losses related to loans and an allowance on off-balance sheet credit exposures. The Company estimates losses over an approximate one-year forecast period using Moody’s baseline economic forecasts, and then reverts to longer term historical loss experience over a three-year period.

ASU No. 2020-04: Reference Rate Reform – Facilitation of the Effects of Reference Rate Reform on Financial Reporting (Topic 848): On March 12, 2020, the FASB issued Accounting Standards Update (ASU) 2020-4, "Reference Rate Reform (“ASC 848”): Facilitation of the Effects of Reference Rate Reform on Financial Reporting." ASC 848 contains optional expedients and exceptions for applying generally accepted accounting principles to contract modifications and hedging relationships, subject to meeting certain criteria, that reference LIBOR or another reference rates expected to be discontinued. The Company has formed a cross-functional project team to lead the transition from LIBOR to adoption of alternative reference rates which include Secured Overnight Financing Rate (“SOFR”), American Interbank Offered Rate ("Ameribor"), and Bloomberg Short-Term Bank Yield Index ("BSBY"). The Company identified loans that renewed prior to 2021 and obtained updated reference rate language at the time of renewal. Additionally, management is utilizing the timeline guidance published by the Alternative Reference Rates Committee to develop and achieve internal milestones during this transitional period. Additionally, the Company has adhered to the International Swaps and Derivatives Association 2020 IBOR Fallbacks Protocol that was released on October 23, 2020. The Company discontinued the use of new LIBOR-based loans by December 31, 2021, according to regulatory guidelines. Legacy LIBOR-based loans will be transitioned to an alternative reference rate on or before June 30, 2023. The amendments in these updates are elective, are only available from March 12, 2020 until December 31, 2022 and their application did not have a material effect on the Company.

Business Combinations

On September 30, 2019, Premier, through the Bank, completed the acquisition of Strategic Investment Advisors, LLC (“SIA”), a financial advisory and brokerage firm. Located in Sylvania, Ohio, with assets under management of approximately $115 million and annual revenues of approximately $0.6 million, SIA was added to the Bank’s Trust and Wealth Management platform. The total purchase price paid in cash was made up of the following: $1.6 million was paid at closing, and $400,000 at the end of a two-year earn-out based on the compound revenue growth over the performance period of SIA, for a total purchase price of $2.0 million. At December 31, 2019, the Company had recorded goodwill of $1.5 million and identifiable intangible assets of $500,000 consisting of customer relationship intangible.

The Company completed the Merger with UCFC and its subsidiaries January 31, 2020. Immediately following the Merger, Home Savings was merged with and into the Bank, with the Bank surviving. In addition, UCFC’s wholly-owned insurance subsidiaries, HSB Insurance, LLC, and United American Financial Services, Inc., each merged with and into First Insurance. UCFC’s consolidated assets and equity (unaudited) as of January 31, 2020 totaled $2.8 billion and $324.5 million, respectively. The Company accounted for the transaction under the acquisition method of accounting, which means that the acquired assets and liabilities were recorded at fair value at the date of acquisition.

In accordance with ASC 805, the Company expensed approximately $19.5 million and $1.4 million of direct acquisition costs during the years ended December 31, 2020 and 2019, respectively. The Company recorded $217.9 million of goodwill and $33.0 million of intangible assets in 2020 as a result of the combination. Goodwill represents the future economic benefits arising from net assets acquired that are not individually identified and separately recognized and is attributable to synergies expected to be derived from the combination of the two entities. The Company analyzes goodwill annually for impairment. The Merger was consistent with the Company’s strategy to enhance and expand its presence in northern Ohio. The intangible assets are related to core deposits, which are being amortized over 10 years on an accelerated basis, and customer relationships, which are being amortized over 10 years on a straight-line basis. For tax purposes, goodwill is non-deductible. The following table summarizes the fair value of the total consideration transferred as part of the Merger as well as the fair value of identifiable assets and liabilities assumed as of the effective date of the transaction.


	January 31, 2020
	(In Thousands)
Cash Consideration	$	132
Fair Value of Options Exchanged		461
Equity – Dollar Value of Issued Shares		526,850
Fair Value of Total Consideration Transferred		527,443
Recognized Amounts of Identifiable Assets Acquired and Liabilities Assumed:
Cash and Cash Equivalents		52,580
Securities available for sale		262,753
Net loans, including loans held for sale and allowance		2,340,701
FHLB Stock		12,753
Office Properties and Equipment		20,253
Intangible Assets		33,014
Bank-Owned Life Insurance		65,934
Mortgage Servicing Rights		9,747
Accrued Interest Receivable and Other Assets		35,943
Deposits – NonInterest-Bearing		(430,921	)
Deposits – Interest-Bearing		(1,651,669	)
Advances from FHLB		(381,000	)
Accrued Interest Payable and Other Liabilities		(60,524	)
Total Identifiable Net Assets		309,564
Goodwill	$	217,879

As a result of the Merger and in accordance with the Merger Agreement, each share of UCFC common stock issued and outstanding immediately prior to the effective time was converted into 0.3715 share of Premier common stock. No fractional shares of Premier common stock were issued in the Merger, and UCFC’s shareholders became entitled to receive cash in lieu of fractional shares. The Company issued 17,926,174 common shares and paid approximately $132,000 to UCFC shareholders as a result of the Merger. The fair value of Premier common shares issued as part of the consideration paid for the UCFC common shares was determined based on the closing price of the Company’s common shares on the effective date of the Merger.

4. Earnings Per Common Share

Basic earnings per share is calculated using the two-class method. The two-class method is an earnings allocation formula under which earnings per share is calculated from common stock and participating securities according to dividends declared and participation rights in undistributed earnings. Under this method, all earnings distributed and undistributed, are allocated to participating securities and common shares based on their respective rights to receive dividends. Unvested share-based payment awards that contain non-forfeitable rights to dividends are considered participating securities (i.e. unvested restricted stock), not subject to performance based measures.

The following table sets forth the computation of basic and diluted earnings per common share for the years ended December 31:


	2021		2020		2019
	(In Thousands, Except Per Share Amounts)
Basic Earnings Per Share:
Net income available to common shareholders	$	126,051	$	63,077	$	49,370
Less: Income allocated to participating securities		123		89		36
Net income allocated to common shareholders	$	125,928	$	62,988	$	49,334
Weighted average common shares outstanding Including participating securities		37,145		35,952		19,844
Less: Participating securities		36		50		20
Average common shares		37,109		35,902		19,824
Basic earnings per common share	$	3.39	$	1.75	$	2.49
Diluted Earnings Per Share:
Net income allocated to common shareholders	$	125,928	$	62,988	$	49,334
Weighted average common shares outstanding for basic earnings per common share		37,109		35,902		19,824
Add: Dilutive effects of stock options and restricted stock units		91		47		107
Average shares and dilutive potential common shares		37,200		35,949		19,931
Diluted earnings per common share	$	3.39	$	1.75	$	2.48

Shares subject to issue upon exercise of options and vesting requirements of restricted stock units of 34,065 in 2021, 97,724 in 2020 and zero in 2019 were excluded from the diluted earnings per common share calculation as they were anti-dilutive.

Investment Securities

The following tables summarize the amortized cost and fair value of available-for-sale securities at December 31, 2021 and 2020, and the corresponding amounts of gross unrealized and unrecognized gains and losses:


			Gross		Gross
	Amortized		Unrealized		Unrealized			Fair
	Cost		Gains		Losses			Value
	(In Thousands)
2021
Available-for-sale
Obligations of U.S. government corporations and agencies	$	174,644	$	984	$	(918	)	$	174,710
Mortgage-backed securities		208,281		851		(2,381	)		206,751
Collateralized mortgage obligations		264,541		363		(4,736	)		260,168
Asset-backed securities		221,545		610		(1,619	)		220,536
Corporate bonds		70,008		1,160		(275	)		70,893
Obligations of state and political subdivisions		272,334		5,898		(5,030	)		273,202
Total Available-for-Sale	$	1,211,353	$	9,866	$	(14,959	)	$	1,206,260


			Gross		Gross
	Amortized		Unrealized		Unrealized			Fair
	Cost		Gains		Losses			Value
	(In Thousands)
2020
Available-for-sale
Obligations of U.S. government corporations and agencies	$	39,233	$	1,707	$	—		$	40,940
Mortgage-backed securities		270,683		6,746		(247	)		277,182
Collateralized mortgage obligations		103,532		2,927		(160	)		106,299
Asset-backed securities		30,643		1		(98	)		30,546
Corporate bonds		43,826		489		(146	)		44,169
Obligations of state and political subdivisions		229,645		8,069		(196	)		237,518
Total Available-for-Sale	$	717,562	$	19,939	$	(847	)	$	736,654

The amortized cost and fair value of the investment securities portfolio at December 31, 2021, is shown below by contractual maturity. Expected maturities will differ from contractual maturities if borrowers have the right to call or prepay obligations with or without call or prepayment penalties. For purposes of the maturity tables below, mortgage-backed securities, collateralized mortgage obligations, and asset-backed securities which are not due at a single maturity date, have not been allocated over maturity groupings.


	Available-for-Sale
	Amortized		Fair
	Cost		Value
	(In Thousands)
Available-for-sale
Due in one year or less	$	3,290	$	3,315
Due after one year through five years		44,555		45,014
Due after five years through ten years		194,662		196,386
Due after ten years		274,479		274,090
MBS/CMO/ABS		694,367		687,455
Total	$	1,211,353	$	1,206,260

Securities pledged at year-end 2021 and 2020 had a carrying amount of $564.4 million and $324.4 million, respectively, and were pledged to secure public deposits, securities sold under repurchase agreements and FHLB advances.

The following table summarizes Premier’s securities that were in an unrealized loss position at December 31, 2021, and December 31, 2020:


	Duration of Unrealized Loss Position
	Less than 12 Months					12 Months or Longer					Total
			Gross					Gross
	Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
	Value		Loss			Value		Loss			Value		Loses
	(In Thousands)
At December 31, 2021
Available-for-sale securities:
Obligations of U.S. government corporations and agencies	$	73,810	$	(918	)	$	-	$	-		$	73,810	$	(918	)
Mortgage-backed securities		167,379		(2,048	)		13,689		(333	)		181,068		(2,381	)
Collateralized mortgage obligations		222,134		(4,736	)		—		—			222,134		(4,736	)
Asset-backed securities		140,226		(1,589	)		2,705		(30	)		142,931		(1,619	)
Corporate Bonds		24,173		(270	)		504		(5	)		24,677		(275	)
Obligations of state and political subdivisions		99,199		(3,355	)		34,548		(1,675	)		133,747		(5,030	)
Total temporarily impaired securities	$	726,921	$	(12,916	)	$	51,446	$	(2,043	)	$	778,367	$	(14,959	)

At December 31, 2020
Available-for-sale securities:
Mortgage-backed securities	$	26,361	$	(247	)	$	-	$	-		$	26,361	$	(247	)
Collateralized mortgage obligations		5,161		(160	)		—		—			5,161		(160	)
Asset-backed securities		18,439		(98	)		—		—			18,439		(98	)
Corporate Bonds		12,177		(146	)		—		—			12,177		(146	)
Obligations of state and political subdivisions		41,088		(196	)		—		—			41,088		(196	)
Total temporarily impaired securities	$	103,226	$	(847	)	$	—	$	—		$	103,226	$	(847	)

ASU 2016-13 makes targeted improvements to the accounting for credit losses on securities available for sale. The concept of other than-temporarily impaired (OTTI) was replaced in 2020 with the allowance for credit losses. Unlike securities held to maturity, securities available for sale are evaluated on an individual level and pooling of securities is not allowed.

•

Review the extent to which the fair value is less than the amortized cost and observe the security’s lowest credit rating as reported by third-party credit ratings companies.

•

Any securities that are downgraded by a third party ratings company above would be subjected to additional analysis that may include, but is not limited to: changes in market interest rates, changes in securities credit ratings, security type, service area economic factors, financial performance of the issuer/or obligor of the underlying issue and third-party guarantee.

•

If the Company determines that a credit loss exists, the credit portion of the allowance will be measured using a DCF analysis using the effective interest rate as of the security’s purchase date. The amount of credit loss the Company records will be limited to the amount by which the amortized cost exceeds the fair value. As of December 31, 2021, management had determined that no credit loss exists.

In 2021 and 2020, management determined there was no OTTI. Net realized gains from the sales of investment securities totaled $2.2 million ($1.8 million after tax) in 2021 while there were net realized gains of $1.5 million ($1.2 million after tax) and $24,000 ($19,000 after tax) in 2020 and 2019, respectively.

The proceeds from sales of securities and the associated gains and losses for the years ended December 31 are listed below:


	2021			2020			2019
	(In Thousands)
Proceeds	$	158,012		$	52,420		$	2,667
Gross realized gains		2,987			1,471			35
Gross realized losses		(769	)		(7	)		(11	)

At December 31, 2021, the Company also owned $14.1 million of equity securities. During 2021, the Company recognized a gain of $2.0 million associated with the mark to market requirement for equity securities. In 2020, the Company owned $1.1 million of equity securities which consisted of a single trust preferred security, and recognized a gain of $90,000 associated with the mark to market requirement for equity securities. The Company did not own any equity securities at December 31, 2019.

Commitments and Contingent Liabilities

Loan Commitments

Loan commitments are made to accommodate the financial needs of the Bank’s customers. Standby letters of credit commit the Company to make payments on behalf of customers when certain specified future events occur. They primarily are issued to facilitate customers’ trade transactions.

Both arrangements have credit risk, essentially the same as that involved in extending loans to customers, and are subject to the Company’s normal credit policies. Collateral (e.g., securities, receivables, inventory and equipment) is obtained based on management’s credit assessment of the customer.

The Company’s maximum obligation to extend credit for loan commitments (unfunded loans and unused lines of credit) and standby letters of credit outstanding on December 31 was as follows (in thousands):


	2021				2020
	Fixed Rate		Variable Rate		Fixed Rate		Variable Rate
Commitments to make loans	$	486,807	$	689,109	$	409,813	$	292,290
Unused lines of credit		40,254		586,094		74,364		844,106
Standby letters of credit		—		10,851		—		22,250
Total	$	527,061	$	1,286,054	$	484,177	$	1,158,646

Commitments to make loans are generally made for periods of 60 days or less. The fixed rate loan commitments at December 31, 2021, had interest rates ranging from 0.00% to 18.00% and maturities ranging from less than one year to 32 years.

Loans

Loans receivable consist of the following:


	December 31, 2021			December 31, 2020
	(In Thousands)
Real Estate:
Residential	$	1,167,466		$	1,201,051
Commercial		2,450,349			2,383,001
Construction		862,815			667,649
		4,480,630			4,251,701
Other Loans:
Commercial		895,638			1,202,353
Home equity and improvement		264,354			272,701
Consumer Finance		126,417			120,729
		1,286,409			1,595,783
Total loans		5,767,039			5,847,484
Deduct:
Undisbursed loan funds		(477,890	)		(355,065	)
Net deferred loan origination fees and costs		7,019			(1,179	)
Allowance for credit loss		(66,468	)		(82,079	)
Totals	$	5,229,700		$	5,409,161

Loan segments have been identified by evaluating the portfolio based on collateral and credit risk characteristics. The Company has responded to the COVID-19 pandemic in numerous ways, including by actively participating in the PPP and distributing over $450

million to small businesses in our markets. As of December 31, 2021 and 2020, the Company had $58.9 million and $386.9 million in PPP loans, respectively. PPP loans are included in other commercial loans in the loan tables.

The following tables disclose the annual activity in the allowance for credit losses for the periods indicated by portfolio segment (in thousands):


Year ended December 31, 2021	Residential Real Estate			Commercial Real Estate			Construction		Commercial			Home Equity and Improvement			Consumer Finance			Total
Beginning Allowance	$	17,534		$	43,417		$	2,741	$	11,665		$	4,739		$	1,983		$	82,079
Charge-Offs		(110	)		(3,776	)		—		(6,960	)		(63	)		(476	)		(11,385	)
Recoveries		261			438			—		1,321		248			239				2,507
Provision expense (recovery)		(5,656	)		(7,680	)		263		7,384			(703	)		(341	)		(6,733	)
Ending Allowance	$	12,029		$	32,399		$	3,004	$	13,410		$	4,221		$	1,405		$	66,468


Year ended December 31, 2020	Residential Real Estate			Commercial Real Estate			Construction			Commercial			Home Equity and Improvement			Consumer Finance			Total
Beginning Allowance	$	2,867		$	16,302		$	996		$	9,003		$	1,700		$	375		$	31,243
Impact of ASC 326 Adoption		1,765			3,682			(223	)		(2,263	)		(521	)		(86	)		2,354
Acquisition related allowance for credit loss (PCD)		1,077			4,053			—			2,272			248			48			7,698
Charge-Offs		(307	)		(4,237	)		(1	)		(1,350	)		(164	)		(293	)		(6,352	)
Recoveries		342			1,352			—			1,850		262			176				3,982
Provision expense (recovery) (1)		11,790			22,265			1,969			2,153			3,214			1,763			43,154
Ending Allowance	$	17,534		$	43,417		$	2,741		$	11,665		$	4,739		$	1,983		$	82,079

(1)

Provision for the twelve months ended December 31, 2020, includes $25.9 million as a result of the Merger with UCFC in the first quarter.


Year ended December 31, 2019	Residential Real Estate			Commercial Real Estate			Construction		Commercial			Home Equity and Improvement			Consumer Finance			Total
Beginning Allowance	$	2,881		$	15,142		$	682	$	7,281		$	2,026		$	319		$	28,331
Charge-Offs		(515	)		(148	)		—		(528	)		(245	)		(289	)		(1,725	)
Recoveries		193			645			—		642			184			68			1,732
Provision expense (recovery)		308			663			314		1,608			(265	)		277			2,905
Ending Allowance	$	2,867		$	16,302		$	996	$	9,003		$	1,700		$	375		$	31,243

The following table presents the amortized cost basis of collateral-dependent loans by class of loans and collateral type as of December 31, 2021 and 2020 (in thousands):


	December 31, 2021
	Real Estate		Equipment and Machinery		Inventory and Receivables		Vehicles		Total
Real Estate:
Residential	$	226	$	—	$	—	$	—	$	226
Commercial		18,399		—		—		—		18,399
Construction		—		—		—		—		—

Other Loans:
Commercial		1,574		160		14,023		25		15,782
Home equity and improvement		—		—		—		—		—
Consumer finance		—		—		—		—		—

Total	$	20,199	$	160	$	14,023	$	25	$	34,407


	December 31, 2020
	Real Estate		Equipment and Machinery		Inventory and Receivables		Vehicles		Total
Real Estate:
Residential	$	1,024	$	—	$	—	$	—	$	1,024
Commercial		33,999		—		—		—		33,999
Construction		—		—		—		—		—

Other Loans:
Commercial		1,426		5,317		4,943		125		11,811
Home equity and improvement		—		—		—		—		—
Consumer finance		—		—		—		—		—

Total	$	36,449	$	5,317	$	4,943	$	125	$	46,834

The following tables presents the average balance, interest income recognized and cash basis income recognized on individually analyzed loans by class of loans for the year ended December 31, 2019 (in thousands):


	Twelve Months Ended December 31, 2019
	Average Balance		Interest Income Recognized		Cash Basis Income Recognized
Real Estate:
Residential	$	7,040	$	341	$	335
Commercial		23,080		1,382		1,301
Construction		—		—		—

Other Loans:
Commercial		8,397		446		345
Home equity and improvement		862		38		35
Consumer finance		27		1		1

Total	$	39,406	$	2,208	$	2,017

Non-performing loans include both smaller balance homogeneous loans that are collectively evaluated for impairment and individually classified loans. All loans greater than 90 days past due are placed on non-accrual status. Effective January 1, 2020 with the adoption of ASC Topic 326, the Company began including non-accrual PCD loans in its non-performing loans. As such, the non-performing loans as of December 31, 2021 include PCD loans accounted for pursuant to ASC Topic 326 as these loans are individually evaluated.

The following table presents the current balance of the aggregate amounts of non-performing assets, comprised of non-performing loans and real estate owned as of the dates indicated:


	December 31, 2021		December 31, 2020
	(In Thousands)
Non-accrual loans with reserve	$	35,480	$	34,939
Non-accrual loans without reserve	$	12,534	$	16,743
Loans over 90 days past due and still accruing		—		—
Total non-performing loans		48,014		51,682
Real estate and other assets held for sale		171		343
Total non-performing assets	$	48,185	$	52,025
Troubled debt restructuring, still accruing	$	7,768	$	7,173

The following table presents the aging of the recorded investment in past due and non-accrual loans as of December 31, 2021, by class of loans (in thousands):


	Current		30-59 days		60-89 days		90+ days		Total Past Due		Total Non Accrual
Real Estate:
Residential		1,144,533		234		5,340		7,487		13,061		9,034
Commercial		2,439,552		96		847		7,168		8,111		14,621
Construction		383,136		43		1,746		—		1,789		—

Other Loans:
Commercial		884,025		42		35		867		944		11,531
Home equity and improvement		257,055		1,851		408		1,634		3,893		2,051
Consumer finance		124,073		1,112		819		1,728		3,659		1,873
PCD		25,111		225		1,005		5,996		7,226		8,904

Total Loans	$	5,257,485	$	3,603	$	10,200	$	24,880	$	38,683	$	48,014

The following table presents the aging of the recorded investment in past due and non-accrual loans as of December 31, 2020, by class of loans (in thousands):


	Current		30-59 days		60-89 days		90+ days		Total Past Due		Total Non Accrual
Real Estate:
Residential		1,173,979		433		7,669		9,000		17,102		10,178
Commercial		2,357,909		1,033		369		844		2,246		11,980
Construction		310,152		—		1,626		806		2,432		806

Other Loans:
Commercial		1,172,636		9		4		394		407		1,365
Home equity and improvement		262,373		3,440		839		1,137		5,416		1,537
Consumer finance		117,088		1,687		491		1,521		3,699		1,624
PCD		50,218		402		1,882		13,299		15,583		24,192

Total Loans	$	5,444,355	$	7,004	$	12,880	$	27,001	$	46,885	$	51,682

Troubled Debt Restructurings

As of December 31, 2021 and 2020, the Company had a recorded investment in TDRs of $11.9 million and $16.6 million, respectively. The Company allocated $378,000 and $883,000 of specific reserves to those loans at December 31, 2021 and 2020, respectively, and committed to lend additional amounts totaling up to $348,000 and $303,000 at December 31, 2021 and 2020, respectively.

The Company worked with borrowers impacted by the COVID-19 pandemic by providing modifications to include either interest only deferral or principal and interest deferral. As of December 31, 2021, the Company had no more modifications from the pandemic compared to December 31, 2020 there were approximately $53.5 million in deferrals. These modifications are excluded from TDR classification under Section 4013 of the CARES Act or under applicable interagency guidance of the federal banking regulators. Modified loans will be considered current and will continue to accrue interest during the deferral period unless repayment of the loan under contractual terms is not expected and thereby loans will be placed on non-accrual.

A breakout of active deferrals by loan category as of December 31, 2020, is as follows (in thousands):


	Balance deferred		Balance deferred
	As of December 31,		As of December 31,
	2021		2020
Residential real estate	$	-	$	7,016
Commercial real estate		-		34,831
Construction		-		9,579
Commercial		-		1,628
Home equity and improvement		-		114
Consumer finance		-		282
Total	$	-	$	53,450

The Company offers various types of concessions when modifying a loan, however, forgiveness of principal is rarely granted. Each TDR is uniquely designed to meet the specific needs of the borrower. Commercial loans modified in a TDR often involve temporary interest-only payments, term extensions, and converting revolving credit lines to term loans. Additional collateral or an additional guarantor is often requested when granting a concession. Commercial real estate loans modified in a TDR often involve temporary interest-only payments, re-amortization of remaining debt in order to lower payments, and sometimes reducing the interest rate lower than the current market rate. Residential mortgage loans modified in a TDR are comprised of loans where monthly payments are lowered, either through interest rate reductions or principal only payments for a period of time, to accommodate the borrowers’ financial needs, interest is capitalized into principal, or the term and amortization are extended. Home equity modifications are made infrequently and usually involve providing an interest rate that is lower than the borrower would be able to obtain due to credit issues. All retail loans where the borrower is in bankruptcy are classified as TDRs regardless of whether or not a concession is made.

Of the loans modified in a TDR, $4.2 million are on non-accrual status and partial charge-offs have in some cases been taken against the outstanding balance. Loans modified as a TDR may have the financial effect of increasing the allowance associated with the loan. If the loan is determined to be collateral dependent, the estimated fair value of the collateral, less any selling costs is used to determine if there is a need for a specific allowance or charge-off. If the loan is determined to be cash flow dependent, the allowance is measured based on the present value of expected future cash flows discounted at the loan’s pre-modification effective interest rate.

The following table presents loans by class modified as TDRs that occurred during the years indicated (Dollars in Thousands):


	Loans Modified as a TDR for the Twelve Months Ended December 31, 2021				Loans Modified as a TDR for the Twelve Months Ended December 31, 2020				Loans Modified as a TDR for the Twelve Months Ended December 31, 2019
	($ in thousands)				($ in thousands)				($ in thousands)
Troubled Debt Restructurings:	Number of Loans		Recorded Investment (as of period end)		Number of Loans		Recorded Investment (as of period end)		Number of Loans		Recorded Investment (as of period end)
Real Estate:
Residential		6	$	685		7	$	892		12	$	1,332
Commercial		—		—		6		7,760		2		621
Construction		—		—		—		—		—		—

Other Loans:
Commercial		8		2,888		9		7,546		5		317
Home equity and improvement		—		—		4		92		1		25
Consumer finance		2		7		—		—		—		—

Total		16	$	3,580		26	$	16,290		20	$	2,295

The loans described above increased the allowance by $21,000 and $660,000 and $34,000 for the years ended December 31, 2021, and 2020 and 2019, respectively.

The following table presents loans by class modified as TDRs for which there was a payment default within twelve months following the modification during the indicated:


	Loans Modified as a TDR for the Twelve Months Ended December 31, 2021				Loans Modified as a TDR for the Twelve Months Ended December 31, 2020				Loans Modified as a TDR for the Twelve Months Ended December 31, 2019
	($ in thousands)				($ in thousands)				($ in thousands)
TDRs That Subsequently Defaulted:	Number of Loans		Recorded Investment (as of period end)		Number of Loans		Recorded Investment (as of period end)		Number of Loans		Recorded Investment (as of period end)
Real Estate:
Residential		1	$	32		2	$	229		—	$	—
Commercial		—		—		—		—		1		81
Construction		—		—		—		—		—		—

Other Loans:
Commercial		—		—		—		—		3		2,248
Home equity and improvement		—		—		—		—		—		—
Consumer finance		1		5		—		—		—		—

Total		2	$	37		2	$	229		4	$	2,329

The TDRs that subsequently defaulted described above increased the allowance by $1,000, $5,000 and $4,000 for the years ended December 31, 2021, 2020 and 2019, respectively. A default for purposes of this disclosure is a TDR loan in which the borrower is 90 days contractually past due under the modified terms. In order to determine whether a borrower is experiencing financial difficulty, an evaluation is performed regarding the probability that the borrower will be in payment default on any of its debt in the foreseeable future without the modification.

Credit Quality Indicators

Loans are categorized into risk categories based on relevant information about the ability of borrowers to service their debt such as: current financial information, historical payment experience, credit documentation, public information, and current economic trends, among other factors. Loans are analyzed individually by classifying the loans as to credit risk. This analysis includes all non-homogeneous loans, such as commercial and commercial real estate loans and certain homogenous mortgage, home equity and consumer loans. This analysis is performed on a quarterly basis. Premier uses the following definitions for risk ratings with loans not meeting such classifications being considered “unclassified”:

Special Mention. Loans classified as special mention have a potential weakness that deserves management's close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or of the institution's credit position at some future date.

Substandard. Loans classified as substandard are inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. Loans so classified have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the institution will sustain some loss if the deficiencies are not corrected.

Doubtful. Loans classified as doubtful have all the weaknesses inherent in those classified as substandard, with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable.

Not Graded. Loans classified as not graded are generally smaller balance residential real estate, home equity and consumer installment loans which are originated primarily by using an automated underwriting system. These loans are monitored based on their delinquency status and are evaluated individually only if they are seriously delinquent.

Loans not meeting the criteria above that are analyzed individually as part of the above described process are considered to be pass rated loans.

As of December 31, 2021, and based on the most recent analysis performed, the risk category and recorded investment in loans is as follows (in thousands):


Class	Unclassified		Special Mention		Substandard		Doubtful		Total classified		Total
Real Estate:
Residential		1,146,212		1,316		10,066		—		10,066		1,157,594
Commercial		2,324,846		93,676		29,141		—		29,141		2,447,663
Construction		365,403		19,522		—		—		—		384,925

Other Loans:
Commercial		856,402		14,815		13,752		—		13,752		884,969
Home equity and improvement		258,914		—		2,034		—		2,034		260,948
Consumer finance		125,879		—		1,853		—		1,853		127,732
PCD		19,547		101		12,689		—		12,689		32,337

Total Loans	$	5,097,203	$	129,430	$	69,535	$	—	$	69,535	$	5,296,168

As of December 31, 2020, and based on the most recent analysis performed, the risk category of loans by class of loans is as follows (in thousands):


Class	Unclassified		Special Mention		Substandard		Doubtful		Total classified		Total
Real Estate:
Residential		1,187,923		795		2,363		—		2,363		1,191,081
Commercial		2,203,652		111,039		45,464		—		45,464		2,360,155
Construction		299,866		12,718		—		—		—		312,584

Other Loans:
Commercial		1,142,289		23,907		6,847		—		6,847		1,173,043
Home equity and improvement		267,350		—		439		—		439		267,789
Consumer finance		120,682		—		105		—		105		120,787
PCD		26,829		3,813		35,159		—		35,159		65,801

Total Loans	$	5,248,591	$	152,272	$	90,377	$	—	$	90,377	$	5,491,240

The table below presents the amortized cost basis of loans by vintage, credit quality indicator and class of loans as of December 31, 2021 and 2020 (in thousands):


	Term of loans by origination
	2021		2020		2019		2018		2017		Prior		Revolving Loans		Total
As of December 31, 2021

Real Estate
Residential:
Risk Rating
Pass	$	219,006	$	373,439	$	112,781	$	65,544	$	71,794	$	301,735	$	1,913	$	1,146,212
Special Mention		—		190		—		—		59		109		958		1,316
Substandard		465		780		1,198		1,006		2,095		4,522		—		10,066
Doubtful		—		—		—		—		—		—		—		—
Total	$	219,471	$	374,409	$	113,979	$	66,550	$	73,948	$	306,366	$	2,871	$	1,157,594

Commercial:
Risk Rating
Pass	$	514,333	$	493,575	$	388,117	$	230,734	$	237,712	$	451,113	$	9,262	$	2,324,846
Special Mention		294		5,349		5,533		11,055		49,993		20,662		790		93,676
Substandard		172		570		4,920		5,525		62		17,665		227		29,141
Doubtful		—		—		—		—		—		—		—		—
Total	$	514,799	$	499,494	$	398,570	$	247,314	$	287,767	$	489,440	$	10,279	$	2,447,663

Construction:
Risk Rating
Pass	$	198,221	$	100,606	$	55,707	$	10,039	$	685	$	145	$	-	$	365,403
Special Mention		—		12,500		—		5,996		1,026		—		—		19,522
Substandard		—		—		—		—		—		—		—		—
Doubtful		—		—		—		—		—		—		—		—
Total	$	198,221	$	113,106	$	55,707	$	16,035	$	1,711	$	145	$	-	$	384,925

Other Loans
Commercial:
Risk Rating
Pass	$	293,644	$	132,703	$	84,668	$	47,421	$	24,269	$	17,038	$	256,659	$	856,402
Special Mention		—		2,180		4,094		272		1,264		4,663		2,342		14,815
Substandard		136		11,550		23		288		388		131		1,236		13,752
Doubtful		—		—		—		—		—		—		—		—
Total	$	293,780	$	146,433	$	88,785	$	47,981	$	25,921	$	21,832	$	260,237	$	884,969

Home equity and Improvement:
Risk Rating
Pass	$	24,707	$	6,870	$	4,867	$	2,879	$	5,534	$	31,317	$	182,740	$	258,914
Special Mention		—		—		—		—		—		—		—		—
Substandard		15		—		28		48		27		690		1,226		2,034
Doubtful		—		—		—		—		—		—		—		—
Total	$	24,722	$	6,870	$	4,895	$	2,927	$	5,561	$	32,007	$	183,966	$	260,948

Consumer Finance:
Risk Rating
Pass	$	50,202	$	25,866	$	23,000	$	9,643	$	4,313	$	2,769	$	10,086	$	125,879
Special Mention		—		—		—		—		—		—		—		—
Substandard		196		707		619		129		67		131		4		1,853
Doubtful		—		—		—		—		—		—		—		—
Total	$	50,398	$	26,573	$	23,619	$	9,772	$	4,380	$	2,900	$	10,090	$	127,732

PCD:
Risk Rating
Pass	$	-	$	-	$	170	$	1,753	$	1,860	$	12,496	$	3,268	$	19,547
Special Mention		—		—		—		—		—		101		—		101
Substandard		—		—		67		28		3,242		6,490		2,862		12,689
Doubtful		—		—		—		—		—		—		—		—
Total	$	-	$	-	$	237	$	1,781	$	5,102	$	19,087	$	6,130	$	32,337


	Term of loans by origination
	2020		2019		2018		2017		2016		Prior		Revolving Loans		Total
As of December 31, 2020

Real Estate
Residential:
Risk Rating
Pass	$	250,979	$	196,158	$	136,247	$	130,759	$	137,581	$	333,572	$	2,627	$	1,187,923
Special Mention		199		—		—		62		116		211		207		795
Substandard		—		74		289		252		136		1,612				2,363
Doubtful		—		—		—		—		—		—		—		—
Total	$	251,178	$	196,232	$	136,536	$	131,073	$	137,833	$	335,395	$	2,834	$	1,191,081

Commercial:
Risk Rating
Pass	$	517,691	$	457,905	$	299,072	$	300,573	$	198,247	$	414,082	$	16,082	$	2,203,652
Special Mention		6,014		7,239		10,452		60,712		7,977		17,723		922		111,039
Substandard		—		279		18,851		1,937		3,143		19,107		2,147		45,464
Doubtful		—		—		—		—		—		—		—		—
Total	$	523,705	$	465,423	$	328,375	$	363,222	$	209,367	$	450,912	$	19,151	$	2,360,155

Construction:
Risk Rating
Pass	$	101,616	$	100,553	$	82,972	$	11,666	$	2,911	$	148	$	-	$	299,866
Special Mention		5,587		—		7,131		—		—		—		—		12,718
Substandard		—		—		—		—		—		—		—		—
Doubtful		—		—		—		—		—		—		—		—
Total	$	107,203	$	100,553	$	90,103	$	11,666	$	2,911	$	148	$	-	$	312,584

Other Loans
Commercial:
Risk Rating
Pass	$	568,678	$	144,977	$	82,492	$	42,421	$	21,262	$	21,969	$	260,490	$	1,142,289
Special Mention		1,180		2,026		2,514		2,109		37		5,121		10,920		23,907
Substandard		148		201		497		543		257		269		4,932		6,847
Doubtful		—		—		—		—		—		—		—		—
Total	$	570,006	$	147,204	$	85,503	$	45,073	$	21,556	$	27,359	$	276,342	$	1,173,043

Home equity and Improvement:
Risk Rating
Pass	$	8,736	$	7,483	$	4,508	$	7,963	$	7,748	$	31,382	$	199,530	$	267,350
Special Mention		—		—		—		—		—		—		—		—
Substandard		—		—		—		—		—		86		353		439
Doubtful		—		—		—		—		—		—		—		—
Total	$	8,736	$	7,483	$	4,508	$	7,963	$	7,748	$	31,468	$	199,883	$	267,789

Consumer Finance:
Risk Rating
Pass	$	38,665	$	37,601	$	19,401	$	10,607	$	4,393	$	3,272	$	6,743	$	120,682
Special Mention		—		—		—		—		—		—		—		—
Substandard		—		98		3		—		4		—		—		105
Doubtful		—		—		—		—		—		—		—		—
Total	$	38,665	$	37,699	$	19,404	$	10,607	$	4,397	$	3,272	$	6,743	$	120,787

PCD:
Risk Rating
Pass	$	-	$	45	$	2,378	$	2,547	$	1,524	$	18,998	$	1,337	$	26,829
Special Mention		—		—		—		1,160		509		1,758		386		3,813
Substandard		—		—		—		14,371		2,502		7,207		11,079		35,159
Doubtful		—		—		—		—		—		—		—		—
Total	$	-	$	45	$	2,378	$	18,078	$	4,535	$	27,963	$	12,802	$	65,801

Allowance for Credit Losses (“ACL”)

The Company has adopted ASU 2016-13 (Topic 326 – Credit Losses) to calculate the ACL, which requires a projection of credit loss over the contract lifetime of the credit adjusted for prepayment tendencies. This valuation account is deducted from the loans

amortized cost basis to present the net amount expected to be collected on the loan. The ACL is adjusted through the provision for credit losses and reduced by net charge offs of loans.

The credit loss estimation process involves procedures that consider the unique characteristics of the Company’s portfolio segments. These segments are further disaggregated into the loan pools for monitoring. When computing allowance levels, a model of risk characteristics, such as loss history and delinquency status, along with current conditions and a supportable forecast is used to determine credit loss assumptions.

The Company is generally utilizing two methodologies to analyze loan pools: discounted cash flows (“DCF”) and probability of default/loss given default (“PD/LGD”).

A default can be triggered by one of several different asset quality factors including past due status, non-accrual status or if the loan has had a charge-off. The PD/LGD utilizes charge off data from the Federal Financial Institutions Examination Council to construct a default rate. The Company estimates losses over an approximate one-year forecast period using Moody’s baseline economic forecasts, and then reverts to longer term historical loss experience over a three-year period. This default rate is further segmented based on the risk of the credit assigning a higher default rate to riskier credits.

The DCF methodology was selected as the most appropriate for loan segments with longer average lives and regular payment structures. The DCF model has two key components, the loss driver analysis combined with a cash flow analysis. The contractual cash flow is adjusted for PD/LGD and prepayment speed to establish a reserve level. The prepayment studies are updated quarterly by a third-party for each applicable pool.

The remaining life method was selected for the consumer loan segment since the pool contains loans with many different structures and payment streams and collateral. The weighted average remaining life uses an average annual charge-off rate applied to the contractual term, further adjusted for estimated prepayments to determine the unadjusted historical charge-off rate for the remaining balance of assets.


Portfolio Segments	Loan Pool	Methodology	Loss Drivers
Residential real estate	1-4 Family nonowner occupied	DCF	National unemployment
	1-4 Family owner occupied	DCF	National unemployment
Commercial real estate	Commercial real estate nonowner occupied	DCF	National unemployment
	Commercial real estate owner occupied	DCF	National unemployment
	Multi Family	DCF	National unemployment
	Agriculture Land	DCF	National unemployment
	Other commercial real estate	DCF	National unemployment
Construction secured by real estate	Construction	PD/LGD	Call report loss history

Commercial	Commercial working capital	PD/LGD	Call report loss history
	Agriculture production	PD/LGD	Call report loss history
	Other commercial	PD/LGD	Call report loss history
Home equity and improvement	Home equity and improvement	PD/LGD	Call report loss history
Consumer finance	Consumer finance	Remaining life	Call report loss history

According to the accounting standard an entity may make an accounting policy election not to measure an allowance for credit losses for accrued interest receivable if the entity writes off the applicable accrued interest receivable balance in a timely manner. The Company has made the accounting policy election not to measure an allowance for credit losses for accrued interest receivables for all loan segments. Current policy dictates that a loan will be placed on nonaccrual status, with the current accrued interest receivable

balance being written off, upon the loan being 90 days delinquent or when the loan is deemed to be collateral dependent and the collateral analysis shows less than 1.2 times discounted collateral coverage based on a current assessment of the value of the collateral.

In addition, ASC Topic 326 requires the Company to establish a liability for anticipated credit losses for unfunded commitments. To accomplish this, the company must first establish a loss expectation for extended (funded) commitments. This loss expectation, expressed as a ratio to the amortized cost basis, is then applied to the portion of unfunded commitments not considered unilaterally cancelable, and considered by the company’s management as likely to fund over the life of the instrument. At December 31, 2021, the Company had $1.4 billion in unfunded commitments and set aside $5.0 million in anticipated credit losses. This reserve is recorded in other liabilities as opposed to the ACL.

The determination of ACL is complex and the Company makes decisions on the effects of factors that are inherently uncertain. Evaluations of the loan portfolio and individual credits require certain estimates, assumptions and judgements as to the facts and circumstances related to particular situations or credits. There may be significant changes in the ACL in future periods determined by prevailing factors at that point in time along with future forecasts.

Certain loans acquired had evidence that the credit quality of the loan had deteriorated since its origination and in management’s assessment at the acquisition date it was probable that Premier would be unable to collect all contractually required payments due. In accordance with FASB ASC Topic 310 Subtopic 30, Loans and Debt Securities Acquired with Deteriorated Credit Quality, these loans have been recorded based on management’s estimate of the fair value of the loans.

Purchased Loans

As a result of the Merger, the Company acquired $2.2 billion in loans. Par value of purchased loans was as follows (in thousands):


	Year ended December 31, 2020
Par value of acquired loans at acquisition	$	2,247,317
Credit discount		(34,610	)
Non-credit (discount)/premium at acquisition		8,497
Purchase price of loans at acquisition	$	2,221,204

Under ASU Topic 326, when loans are purchased with evidence of more than insignificant deterioration of credit, they are accounted for as PCD. PCD loans acquired in a transaction are marked to fair value and a mark on yield is recorded. In addition, an adjustment is made to the ACL for the expected loss on the acquisition date. These loans are assessed on a regular basis and subsequent adjustments to the ACL are recorded on the income statement. On January 31, 2020, the Company acquired PCD loans with a fair value of $79.1 million, credit discount $7.7 million and a noncredit discount of $4.1 million. The outstanding balance at December 31, 2021 and related allowance on these loans is as follows (in thousands):


	As of December 31, 2021				As of December 31, 2020
	Loan Balance		ACL Balance		Loan Balance		ACL Balance
	(Dollars In Thousands)
Real Estate:
Residential	$	13,396	$	197	$	14,895	$	201
Commercial		5,878		151		24,334		2,286
Construction		—		—		—		—
		19,274		348		39,229		2,487
Other Loans:
Commercial		9,167		1,531		20,990		1,896
Home equity and improvement		3,405		154		4,912		214
Consumer finance		491		7		670		20
		13,063		1,692		26,572		2,130
Total	$	32,337	$	2,040	$	65,801	$	4,617

At December 31, 2021 the Company had $615,000 that had previously been accounted for as purchase credit impaired.

Loans to executive officers, directors, and their affiliates are as follows:


	Years Ended December 31,
	2021			2020
	(Dollars In Thousands)
Beginning balance	$	23,384		$	21,849
New loans		11,603			14,913
Effect of changes in composition of related parties		(100	)		883
Repayments		(16,461	)		(14,261	)
Ending Balance	$	18,426		$	23,384

Foreclosure Proceedings

Consumer mortgage loans collateralized by residential real estate property that are in the process of foreclosure totaled $3.3 million as of December 31, 2021 and $784,000 as of December 31, 2020.

Mortgage Banking

Net revenues from the sales and servicing of mortgage loans consisted of the following:


	For the Year Ended December 31,
	2021			2020			2019
	(In Thousands)
Gain from sale of mortgage loans	$	16,437		$	36,359		$	7,706
Mortgage loan servicing revenue (expense):
Mortgage loan servicing revenue		7,574			7,296			3,820
Amortization of mortgage servicing rights		(7,893	)		(7,477	)		(1,809	)
Mortgage servicing rights valuation adjustments		5,807			(7,979	)		(234	)
		5,488			(8,160	)		1,777
Net mortgage banking income	$	21,925		$	28,199		$	9,483

The unpaid principal balance of residential mortgage loans serviced for third parties was $2.94 billion at December 31, 2021, and $2.95 billion at December 31, 2020.

Activity for capitalized mortgage servicing rights (“MSRs”) and the related valuation allowance is as follows:


	For the Year Ended December 31,
	2021			2020			2019
	(In Thousands)
Mortgage servicing assets:
Balance at beginning of period	$	21,666		$	10,801		$	10,419
Loans sold, servicing retained		8,471			8,595			2,191
Mortgage servicing rights acquired		—			9,747			—
Amortization		(7,893	)		(7,477	)		(1,809	)
Carrying value before valuation allowance at end of period		22,244			21,666			10,801
Valuation allowance:
Balance at beginning of period		(8,513	)		(534	)		(300	)
Impairment recovery (charges)		5,807			(7,979	)		(234	)
Balance at end of period		(2,706	)		(8,513	)		(534	)
Net carrying value of MSRs at end of period	$	19,538		$	13,153		$	10,267
Fair value of MSRs at end of period	$	20,921		$	13,153		$	10,378

Amortization of mortgage servicing rights is computed based on payments and payoffs of the related mortgage loans serviced.

The Company had no actual losses from secondary market buy-backs in 2021, 2020 or 2019. Expense (credit) recognized related to the accrual was $0, $0 and $0 for the years ended December 31, 2021, 2020 and 2019, respectively.

The Company’s servicing portfolio is comprised of the following:


	December 31,
	2021				2020
	Number of		Principal		Number of		Principal
Investor	Loans		Outstanding		Loans		Outstanding
	(Dollars In Thousands)
Fannie Mae		7,545	$	913,336		8,365	$	998,359
Freddie Mac		16,987		2,012,895		17,385		1,925,717
Federal Home Loan Bank		61		8,260		89		13,143
Other		90		6,805		105		9,826
Totals		24,683	$	2,941,296		25,944	$	2,947,045

Custodial escrow balances maintained in connection with serviced loans were $32.4 million and $33.8 million at December 31, 2021 and 2020, respectively.

Significant assumptions at December 31, 2021, used in determining the value of MSRs include a weighted average prepayment speed assumption (“PSA”) of 204 and a weighted average discount rate of 8.00%. Significant assumptions at December 31, 2020, used in determining the value of MSRs include a weighted average prepayment rate of 390 PSA and a weighted average discount rate of 11.01%.

9. Premises and Equipment and Leases

Premises and equipment are summarized as follows:


	December 31,
	2021			2020
	(In Thousands)
Cost:
Land	$	13,369		$	13,382
Land improvements		1,587			1,326
Buildings		59,167			58,426
Leasehold improvements		3,655			3,616
Furniture, fixtures and equipment		41,075			37,138
Construction in process		315			2,538
		119,168			116,426
Less allowances for depreciation and amortization		(63,566	)		(57,761	)
	$	55,602		$	58,665

Depreciation expense was $6.3 million, $6.5 million and $4.2 million for the years ended December 31, 2021, 2020 and 2019, respectively.

Leases

Effective January 1, 2019, the Company adopted ASU 2016-02, Leases (Topic 842) using a modified retrospective transition approach applying several of available practical expedients at the date of initial application. These practical expedients included carryover of historical lease determination and classification conclusions, carryover of historical initial direct cost balances for existing leases and accounting for lease and non-lease components in contracts in which the Company is a lessee as a single lease component. All periods presented after January 1, 2019 are under ASC 842 whereas periods presented prior to January 1, 2019 are in accordance with prior lease accounting of ASC 840. Financial information was not updated and the disclosures required under ASC 842 were not provided for dates and periods before January 1, 2019.

On January 31, 2020, the Company performed a valuation on UCFC’s leases to determine an initial right of use asset (ROU asset) and lease liability in connection with the Merger. The Company recorded an initial ROU asset of $5.0 million and a lease liability of $5.1 million for these leases.

The Company’s lease agreements have maturity dates ranging from January 2022 to September 2044, some of which include options for multiple five and ten year extensions. The weighted average remaining life of the lease term for these leases was 14.21 and 15.09 years as of December 31, 2021 and 2020, respectively.

The discount rate used in determining the lease liability for each individual lease was the FHLB fixed advance rate or swap rate which corresponded with the remaining lease term as of January 1, 2019 for leases that existed at adoption and as of the lease commencement date for leases subsequently entered into. The weighted average discount rate for leases was 2.57% and 2.61% as of December 31, 2021 and 2020, respectively.

The total operating lease costs were $2.4 million and $2.3 million for the years ended December 31, 2021 and 2020, respectively. Rent expense for operating leases was $2.4 million in 2021. The right-of-use asset, included in other assets, was $15.4 million and $16.9 million at December 31, 2021 and 2020, respectively. The lease liabilities, included in other liabilities, were $16.1 million and $17.8 million as of December 31, 2021 and 2020, respectively.

Undiscounted cash flows included in lease liabilities have expected contractual payments at December 31, 2021 as follows:


	(in thousands)
2022	$	2,547
2023		2,168
2024		1,785
2025		1,494
2026		1,279
Thereafter		12,891
Total undiscounted minimum lease payments	$	22,164
Present value adjustment		(6,018	)
Total lease liabilities	$	16,146

10.

Goodwill and Intangible Assets

Goodwill

The change in the carrying amount of goodwill for the year is as follows:


	December 31,
	2021		2020
	(In Thousands)
Beginning balance	$	317,948	$	100,069
Goodwill acquired or adjusted during the year		—		217,879
Ending balance	$	317,948	$	317,948

The Company tests goodwill at least annually and, more frequently, if events or changes in circumstances indicate that it may be more likely than not that there is a possible impairment. The Company conducted a quantitative goodwill impairment assessment at December 31, 2021. The impairment assessment compared the fair value of identified reporting units with their carrying amount (including goodwill). If the carrying amount of a reporting unit exceeds its fair value, an impairment loss is recognized in an amount equal to the excess. The Company's assessment estimated fair value on an income approach that incorporated a discounted cash flow (“DCF”) model that involves management assumptions based upon future growth projections, which include estimates of the COVID-19 impact on the

Company’s business. Results of the assessment indicated no goodwill impairment as of December 31, 2021. The Company will continue to monitor its goodwill for possible impairment.

Acquired Intangible Assets

Activity in intangible assets for the years ended December 31, 2021, 2020 and 2019, was as follows:


	Gross Carrying Amount		Accumulated Amortization			Net Value
	(In Thousands)
Balance as of January 1, 2019	$	20,133	$	(15,742	)	$	4,391
Intangible assets acquired		500		—			500
Amortization of intangible assets		—		(1,119	)		(1,119	)
Balance as of December 31, 2019		20,633		(16,861	)		3,772
Intangible assets acquired		33,014		—			33,014
Amortization of intangible assets		—		(6,449	)		(6,449	)
Balance as of December 31, 2020		53,647		(23,310	)		30,337
Intangible assets acquired		—		—			—
Amortization of intangible assets		—		(6,208	)		(6,208	)
Balance as of December 31, 2021	$	53,647	$	(29,518	)	$	24,129

Estimated amortization expense for each of the next five years and thereafter is as follows (in thousands):


2022	$	5,450
2023		4,722
2024		4,013
2025		3,306
2026		2,279
Thereafter		4,359
Total	$	24,129

11.

Deposits

The following schedule sets forth interest expense by type of deposit:


	Years Ended December 31,
	2021		2020		2019
	(In Thousands)
Checking and money market accounts	$	4,754	$	9,710	$	7,650
Savings accounts		172		222		142
Certificates of deposit		8,556		16,986		14,821
Totals	$	13,482	$	26,918	$	22,613

A summary of deposit balances is as follows:


	December 31,
	2021		2020
	(In Thousands)
Noninterest-bearing checking accounts	$	1,724,772	$	1,597,262
Interest-bearing checking and money market accounts		2,952,705		2,627,669
Savings deposits		804,451		700,480
Retail certificates of deposit less than $250,000		636,477		912,006
Retail certificates of deposit greater than and equal to $250,000		163,646		210,424
	$	6,282,051	$	6,047,841

Scheduled maturities of certificates of deposit at December 31, 2021, are as follows (in thousands):


2022	$	529,525
2023		141,797
2024		81,196
2025		26,876
2026		20,699
Thereafter		30
Total	$	800,123

12.

Advances from Federal Home Loan Bank

The Bank has the ability to borrow funds from the FHLB. The Bank pledges its single-family residential mortgage loan portfolio, certain commercial real estate loans, and certain agriculture real estate loans as security for these advances. Advances secured by residential mortgages must have collateral of at least 125% of the borrowings. Advances secured by commercial real estate loans, and agriculture real estate loans must have collateral of at least 125% and 120% of the borrowings, respectively. Total loans pledged to the FHLB at December 31, 2021, and December 31, 2020, were $2.1 billion and $2.0 billion, respectively. The Bank could obtain advances of up to approximately $1.4 billion from the FHLB at December 31, 2021. The Bank had no outstanding FHLB advances at December 31, 2021 or December 31, 2020.

13.

Subordinated Debentures and Junior Subordinated Debentures Owed to Unconsolidated Subsidiary Trust

In September 2020, the Company completed the issuance of $50.0 million aggregate principal amount, fixed-to-floating rate subordinated notes due September 30, 2030 in a private offering exempt from the registration requirements under the Securities Act of 1933, as amended. The notes carry a fixed rate of 4.0% for five years at which time they will convert to a floating rate based on the secured overnight financing rate, plus a spread of 388.5 basis points. The Company may, at its option, beginning September 30, 2025, redeem the notes, in whole or in part, from time to time, subject to certain conditions. The net proceeds from the sale were approximately $48.7 million, after deducting the estimated offering expenses. The Company’s intent was to use the net proceeds for general corporate purposes, which may include, without limitation, providing capital to support its growth organically or through strategic acquisitions, repaying indebtedness, in financing investments, capital expenditures, repurchasing its common shares and for investments in the Bank as regulatory capital. The subordinated debentures are included in Total Capital under current regulatory guidelines and interpretations.

In March 2007, the Company sponsored an affiliated trust, Premier Statutory Trust II (“Trust Affiliate II”) that issued $15.0 million of Guaranteed Capital Trust Securities (Trust Preferred Securities). In connection with the transaction, the Company issued $15.5 million of Junior Subordinated Deferrable Interest Debentures (“Subordinated Debentures”) to Trust Affiliate II. The Company formed Trust Affiliate II for the purpose of issuing Trust Preferred Securities to third-party investors and investing the proceeds from the sale of these capital securities solely in Subordinated Debentures of the Company. The Subordinated Debentures held by Trust Affiliate II are the sole assets of that trust. The Company is not considered the primary beneficiary of this Trust (variable interest entity), therefore the trust is not consolidated in the Company’s financial statements, but rather the subordinated debentures are shown as a liability. Distributions on the Trust Preferred Securities issued by Trust Affiliate II are payable quarterly at a variable rate equal to the three-month LIBOR rate plus 1.5%. The Coupon rate payable on the Trust Preferred Securities issued by Trust Affiliate II was 1.70% and 1.72% as of December 31, 2021 and 2020, respectively.

The Trust Preferred Securities issued by Trust Affiliate II are subject to mandatory redemption, in whole or part, upon repayment of the Subordinated Debentures. The Company has entered into an agreement that fully and unconditionally guarantees the Trust Preferred Securities subject to the terms of the guarantee. The Trust Preferred Securities and Subordinated Debentures mature on June 15, 2037, but can be redeemed at the Company’s option at any time now.

The Company also sponsors an affiliated trust, Premier Statutory Trust I (“Trust Affiliate I”) that issued $20.0 million of Trust Preferred Securities in 2005. In connection with this transaction, the Company issued $20.6 million of Subordinated Debentures to Trust Affiliate I. Trust Affiliate I was formed for the purpose of issuing Trust Preferred Securities to third-party investors and investing the proceeds from the sale of these capital securities solely in Subordinated Debentures of the Company. The Junior Debentures held by Trust Affiliate I are the sole assets of the trust. The Company is not considered the primary beneficiary of this Trust (variable interest entity), therefore the trust is not consolidated in the Company’s financial statements, but rather the subordinated debentures are shown as a liability. Distributions on the Trust Preferred Securities issued by Trust Affiliate I are payable quarterly at a variable rate equal to the three-month LIBOR rate plus 1.38%. The Coupon rate payable on the Trust Preferred Securities issued by Trust Affiliate I was 1.58% and 1.60% as of December 31, 2021 and 2020, respectively.

The Trust Preferred Securities issued by Trust Affiliate I are subject to mandatory redemption, in whole or in part, upon repayment of the Subordinated Debentures. The Company has entered into an agreement that fully and unconditionally guarantees the Trust Preferred Securities subject to the terms of the guarantee. The Trust Preferred Securities and Subordinated Debentures mature on December 15, 2035, but can be redeemed at the Company’s option at any time now.

The Subordinated Debentures related to the Trust Preferred Securities may be included in tier 1 capital (with certain limitations applicable) under current regulatory guidelines and interpretations. Interest on both issues of Trust Preferred Securities may be deferred for a period of up to five years at the option of the issuer.

A summary of all junior subordinated debentures issued by the Company to affiliates and subordinated debentures follows. For the junior subordinated debentures, these amounts represent the par value of the obligations owed to these affiliates, including the Company’s equity interest in the trusts. For the subordinated debentures, these amounts represent the par value less remaining deferred offering expense associated with the issuance the debentures. Balances were as follows:


	December 31,
	2021		2020
	(In Thousands)
First Defiance Statutory Trust I due December 2035	$	20,619	$	20,619
First Defiance Statutory Trust II due June 2037		15,464		15,464
Total junior subordinated debentures owed to unconsolidated subsidiary Trusts	$	36,083	$	36,083

Subordinated debentures	$	48,893	$	48,777

14.

Securities Sold Under Agreements to Repurchase and Other Short Term Borrowings

Total securities sold under agreement to repurchase are summarized as follows:


	Years Ended December 31,
	2021			2020
	(In Thousands, Except Percentages)
Securities sold under agreement to repurchase
Amounts outstanding at year-end	$	—		$	—
Year-end interest rate		—			—
Average daily balance during year		12,586			4,309
Maximum month-end balance during the year		105,000			14,487
Average interest rate during the year		0.18	%		0.55	%

The Company has utilized securities sold under agreements to repurchase in the past to facilitate the needs of our customers and to facilitate secured short-term funding needs. Securities sold under agreements to repurchase are stated at the amount of cash received in connection with the transaction. We monitor levels on a continuous basis. We may be required to provide additional collateral based on the fair value of the underlying securities. Securities pledged as collateral under repurchase agreements are maintained with our safekeeping agent.

As of December 31, 2021 and 2020, the Company had the following undrawn lines of credit facilities available for short-term borrowing purposes:

A $20.0 million line of credit with First Horizon Bank. The rate on the line of credit is at three- month LIBOR + 2.00%, with a floor of 2.50%, which floats quarterly. This line was undrawn upon as of December 31, 2021 and 2020.

A $25.0 million line of credit with U.S. Bank. The rate on this line of credit is U.S. Bank’s federal funds rate, which floats daily. This line was undrawn upon as of December 31, 2021 and 2020.

15.

Other Noninterest Expense

The following is a summary of other noninterest expense:


	Years Ended December 31,
	2021		2020		2019
	(In Thousands)
Legal and other professional fees	$	7,325	$	5,119	$	3,693
Marketing		1,940		1,938		2,262
OREO expenses and write-downs		117		86		369
Printing and office supplies		941		1,032		603
Postage		1,257		1,173		484
Check charge-offs and fraud losses		762		870		384
Credit and collection expense		714		550		398
Other		12,019		12,521		9,415
Total other noninterest expense	$	25,075	$	23,289	$	17,608

16.

Postretirement Benefits

Premier sponsors a defined benefit postretirement plan that is intended to supplement Medicare coverage for certain retirees who meet minimum age requirements. The Bank employees who retired prior to April 1, 1997, and who completed 20 years of service after age 40 receive full medical coverage at no cost. The Bank employees retiring after April 1, 1997, are provided medical benefits at a cost based on their combined age and years of service at retirement. Surviving spouses are also eligible for continued coverage after the retiree is deceased at a subsidy level that is 10% less than what the retiree is eligible for. The Bank employees retiring before July 1, 1997, receive dental and vision care in addition to medical coverage. The Bank employees who retire after July 1, 1997, are not eligible for dental or vision care.

The Bank employees who were born after December 31, 1950, are not eligible for the medical coverage described above at retirement. Rather, a one-time medical spending account of up to $10,000 (based on the participant’s age and years of service) will be established to reimburse medical expenses for those individuals. First Insurance employees who were born before December 31, 1950, can continue coverage until they reach age 65, or in lieu of continuing coverage, can elect the medical spending account option, subject to eligibility requirements. Employees hired or acquired after January 1, 2003, are eligible only for the medical spending account option.

Included in accumulated other comprehensive income at December 31, 2021, 2020 and 2019, are the following amounts that have not yet been recognized in net periodic benefit cost:

interest cost


	December 31,
	2021			2020			2019
	(In Thousands)
Unrecognized prior service cost	$	57		$	71		$	84
Unrecognized actuarial gains (losses)		43			29			224
Total loss recognized in Accumulated Other Comprehensive Income		100			100			308
Income tax effect		(21	)		(21	)		(64	)
Net loss recognized in Accumulated Other Comprehensive Income	$	79		$	79		$	244

Reconciliation of Funded Status and Accumulated Benefit Obligation

The plan is not currently funded. The following table summarizes benefit obligation and plan asset activity for the plan measured as of December 31 each year:


	December 31,
	2021			2020
	(In Thousands)
Change in benefit obligation:
Benefit obligation at beginning of year	$	2,787		$	2,987
Service cost		60			61
Interest cost		53			87
Participant contribution		22			29
Actuarial (gains) / losses		13			(195	)
Benefits paid		(176	)		(182	)
Benefit obligation at end of year		2,759			2,787
Change in fair value of plan assets:
Balance at beginning of year		—			—
Employer contribution		154			153
Participant contribution		22			29
Benefits paid		(176	)		(182	)
Balance at end of year		—			—
Funded status at end of year	$	(2,759	)	$	(2,787	)

Net periodic postretirement benefit cost includes the following components:


	Years Ended December 31,
	2021			2020			2019
	(In Thousands)
Service cost-benefits attributable to service during the period	$	60		$	61		$	53
Interest cost on accumulated postretirement benefit obligation		53			87			105
Net amortization and deferral		13			13			14
Net periodic postretirement benefit cost		126			161			172
Net (gain) / loss during the year		13			(195	)		310
Amortization of prior service cost and actuarial losses		(13	)		(13	)		(14	)
Total recognized in comprehensive income (loss)		—			(208	)		296
Total recognized in net periodic postretirement benefit cost and other comprehensive income	$	126		$	(47	)	$	468

The following assumptions were used in determining the components of the postretirement benefit obligation:


	2021			2020			2019
Weighted average discount rates:
Used to determine benefit obligations at December 31		2.50	%		2.00	%		3.00	%
Used to determine net periodic postretirement benefit cost for years ended December 31		2.00	%		3.00	%		4.00	%
Assumed health care cost trend rates at December 31:
Health care cost trend rate assumed for next year		6.50	%		5.50	%		6.00	%
Rate to which the cost trend rate is assumed to decline (the ultimate trend rate)		3.90	%		4.00	%		4.00	%
Year that rate reaches ultimate trend rate	2075			2075			2075

The following benefits are expected to be paid over the next five years and in aggregate for the next five years thereafter. Because the plan is unfunded, the expected net benefits to be paid and the estimated Company contributions are the same amount.


	Expected to be Paid
	(In Thousands)
2022	$	191
2023		203
2024		216
2025		230
2026		173
2027 through 2031		879

Assumed health care cost trend rates have a significant effect on the amounts reported for the health care plans.

The Company expects to contribute $191,000 before reflecting expected Medicare retiree drug subsidy payments in 2021.

17.

Regulatory Matters

Premier and the Bank are subject to minimum capital adequacy guidelines. Failure to meet minimum capital requirements can initiate certain mandatory and possibly additional discretionary actions by regulators, which could have a material impact on Premier’s financial statements. Under capital adequacy guidelines, Premier and the Bank must maintain capital amounts in excess of minimum ratios based on quantitative measures of their assets, liabilities, and certain off-balance sheet items as calculated under regulatory accounting practices.

In July 2013, the Federal Reserve and the FDIC approved the final rules implementing the Basel Committee on Banking Supervision’s capital guidelines for U.S. banks (commonly known as Basel III). Under the final rules, which began for Premier and the Bank on January 1, 2015, and are subject to a phase-in period through January 1, 2019, minimum requirements will increase for both quantity and quality of capital held by Premier and the Bank. The rules include a minimum common equity tier 1 capital to risk-weighted assets ratio (“CET1”) of 4.5% and a capital conservation buffer of 2.5% of risk-weighted assets, which effectively results in a minimum CET1 ratio of 7.0%. Basel III raises the minimum ratio of tier 1 capital to risk-weighted assets from 4.0% to 6.0% (which, with the capital conservation buffer, effectively results in a minimum tier 1 capital ratio of 8.5%), which effectively results in a minimum total capital to risk-weighted assets ratio of 10.5%, and requires a minimum leverage ratio of 4.0%. Basel III also makes changes to risk weights for certain assets and off-balance sheet exposures.

The federal banking agencies have also established a system of “prompt corrective action” to resolve certain problems of undercapitalized banks. The regulatory agencies can initiate certain mandatory actions if the Bank fails to meet the minimum capital requirements, which could have a material effect on Premier’s financial statements.

The following schedule presents Premier consolidated and the Bank’s regulatory capital ratios as of December 31, 2021 and 2020 (dollars in thousands):


	December 31, 2021
	Actual					Minimum Required for Adequately Capitalized					Minimum Required to be Well Capitalized for Prompt Corrective Action
	Amount		Ratio			Amount		Ratio(1)			Amount		Ratio
CET1 Capital (to Risk-Weighted Assets)
Consolidated	$	689,930		10.92	%	$	284,394		4.5	%	N/A		N/A
Premier Bank	$	725,600		11.53	%	$	283,265		4.5	%	$	409,160		6.5	%
Tier 1 Capital
Consolidated	$	724,930		10.10	%	$	287,138		4.0	%	N/A		N/A
Premier Bank	$	725,600		10.16	%	$	285,664		4.0	%	$	357,080		5.0	%
Tier 1 Capital (to Risk Weighted Assets)
Consolidated	$	724,930		11.47	%	$	379,192		6.0	%	N/A		N/A
Premier Bank	$	725,600		11.53	%	$	377,686		6.0	%	$	503,582		8.0	%
Total Capital (to Risk Weighted Assets)
Consolidated	$	844,389		13.36	%	$	505,589		8.0	%	N/A		N/A
Premier Bank	$	795,059		12.63	%	$	503,582		8.0	%	$	629,477		10.0	%

(1)

Excludes capital conservation buffer of 2.50% as of December 31, 2021.


	December 31, 2020
	Actual					Minimum Required for Adequately Capitalized					Minimum Required to be Well Capitalized for Prompt Corrective Action
	Amount		Ratio			Amount		Ratio(1)			Amount		Ratio
CET1 Capital (to Risk-Weighted Assets)
Consolidated	$	624,069		10.40	%	$	270,017		4.5	%	N/A		N/A
First Federal	$	629,653		10.52	%	$	269,396		4.5	%	$	389,128		6.5	%
Tier 1 Capital
Consolidated	$	659,069		9.76	%	$	270,072		4.0	%	N/A		N/A
First Federal	$	629,653		9.36	%	$	269,189		4.0	%	$	336,487		5.0	%
Tier 1 Capital (to Risk Weighted Assets)
Consolidated	$	659,069		10.98	%	$	360,022		6.0	%	N/A		N/A
First Federal	$	629,653		10.52	%	$	359,195		6.0	%	$	478,926		8.0	%
Total Capital (to Risk Weighted Assets)
Consolidated	$	784,148		13.07	%	$	480,030		8.0	%	N/A		N/A
First Federal	$	704,586		11.77	%	$	478,926		8.0	%	$	598,658		10.0	%

(1)

Excludes capital conservation buffer of 2.50% as of December 31, 2020.

Dividend Restrictions - Dividends paid by the Bank to Premier are subject to various regulatory restrictions. The Bank paid $35.0 million in dividends to Premier in 2021 and $24.0 million in 2020. The Bank may not pay dividends to Premier in excess of its net profits (as defined by statute) for the last two fiscal years, plus any year to date net profits without the approval of the ODFI. First Insurance Group paid $2.0 million in dividends to Premier in 2021 and $400,000 in dividends in 2020. PFC Risk Management paid $1.8 million in dividends to Premier in 2021 and $1.5 million in 2020. PFC Capital paid $7.5 million in dividends to Premier in 2021.

18.

Income Taxes

The components of income tax expense are as follows:


	Years Ended December 31,
	2021		2020			2019
	(In Thousands)
Current:
Federal	$	24,256	$	25,323		$	11,476
State and local		723		650			210
Deferred		5,393		(9,781	)		(419	)
	$	30,372	$	16,192		$	11,267

The effective tax rates differ from federal statutory rate applied to income before income taxes due to the following:


	Years Ended December 31,
	2021			2020			2019
	(In Thousands)
Tax expense at statutory rate (21%)	$	32,849		$	16,646		$	12,734
Increases (decreases) in taxes from:
State income tax – net of federal tax benefit		571			513			166
Tax exempt interest income, net of TEFRA		(839	)		(806	)		(729	)
Bank owned life insurance		(1,075	)		(882	)		(555	)
Captive insurance		(365	)		(445	)		(354	)
Other		(769	)		1,166			5
Totals	$	30,372		$	16,192		$	11,267

Deferred federal income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes.

Significant components of Premier’s deferred federal income tax assets and liabilities are as follows:


	December 31,
	2021		2020
	(In Thousands)
Deferred federal income tax assets:
Allowance for credit losses	$	13,958	$	17,237
Allowance for unfunded commitments		1,056		1,123
Interest on nonaccrual loans		686		1,003
Postretirement benefit costs		395		546
Deferred compensation		2,216		2,057
Individually evaluated loans		1,138		2,483
Net unrealized loss on available-for-sale securities		1,070		—
Accrued vacation		10		10
Accrued bonus		1,054		1,065
Right of use asset		3,391		3,731
Net operating loss carryforward		273		307
Other		2,363		2,175
Total deferred federal income tax assets		27,610		31,737
Deferred federal income tax liabilities:
Equity securities fair value		429		—
Goodwill		4,726		4,542
Mortgage servicing rights		4,103		2,762
Fixed assets		2,368		2,230
Other intangible assets		4,987		7,118
Deferred loan origination fees and costs		1,266		1,294
Net unrealized gain on available-for-sale securities		—		4,009
Prepaid expenses		881		762
Lease liabilities		3,242		3,557
Other		663		25
Total deferred federal income tax liabilities		22,665		26,299
Net deferred federal income tax asset/ (liability)	$	4,945	$	5,438

The realization of the Company’s deferred tax assets is dependent upon the Company’s ability to generate taxable income in future periods and the reversal of deferred tax liabilities during the same period. The Company has evaluated the available evidence supporting the realization of its deferred tax assets and determined it is more likely than not that the assets will be realized and thus no valuation allowance was required at December 31, 2021.

Retained earnings at December 31, 2021, include approximately $32.1 million for which no tax provision for federal income taxes has been made. This amount represents the tax bad debt reserve at December 31, 1987, which is the end of the Company’s base year for purposes of calculating the bad debt deduction for tax purposes. If this portion of retained earnings is used in the future for any purpose other than to absorb bad debts, the amount used will be added to future taxable income. The unrecorded deferred tax liability on the above amount at December 31, 2021, was approximately $6.7 million.

The total amount of interest and penalties recorded in the income statement was $0 for each of the years ended December 31, 2021, 2020 and 2019. The amount accrued for interest and penalties was $0 at December 31, 2021, 2020 and 2019.

The Company and its subsidiaries are subject to U.S. federal income tax as well as income tax in the states of Indiana and West Virginia. The Company is no longer subject to examination by taxing authorities for years before 2018. At December 31, 2021, the Company also operated in the states of Ohio, Pennsylvania and Michigan, which tax financial institutions based on their equity rather than their income.

The Company’s net operating loss of $1.3 million will be carried forward to use against future taxable income. The net operating loss carryforwards begin to expire in the year ending December 31, 2029. This tax benefit is subject to an annual limitation under Internal Revenue Code Section 382; however, Premier and the Bank expect to utilize the full amount of the benefit.

19.

Employee Benefit Plans

401(k) Plan

Employees of Premier are eligible to participate in the Premier Financial Corp. 401(k) Employee Savings Plan (the “Premier 401(k)”) if they meet certain age and service requirements. Under the Premier 401(k), Premier matches 100% of the participants’ contributions up to 3% of compensation and then 50% of the participants’ contributions for the next 2% of compensation. The Premier 401(k) also provides for a discretionary Premier contribution in addition to the Premier matching contribution. Premier matching contributions totaled $2.6 million, $2.5 million and $1.4 million for the years ended December 31, 2021, 2020 and 2019, respectively. There were no discretionary contributions in any of those years.

Group Life Plan

On June 30, 2010, the Bank adopted the First Federal Bank of the Midwest Executive Group Life Plan – Post Separation (the “Group Life Plan”) in which various employees, including the Company’s named executive officers, may participate. Under the terms of the Group Life Plan, the Bank will purchase and own life insurance policies covering the lives of employees selected by the Board of Directors of the Bank as participants. There was $(121,000), $40,000 and $60,000 of (recovery)/expense recorded for the years ended December 31, 2021, 2020 and 2019, respectively, with a liability of $1.7 million and $1.8 million for future benefits recorded at December 31, 2021 and 2020, respectively.

Deferred Compensation

The deferred compensation plan covers all directors and certain employees that elect to participate. Under the plan, the Company pays each participant, or their beneficiary, the amount of fees deferred plus interest over a defined time period. The deferred compensation plan has approximately $9.4 and $7.4 million in assets and liabilities, respectively, as of December 31, 2021, which are matched in terms of investment elections. As of December 31, 2020, the deferred compensation plan had approximately $8.2 and $6.8 million in assets and liabilities, respectively, which were matched in terms of investment elections. Every year, other noninterest income and other noninterest expense reflects the changes in fair value of the underlying investments in the assets and liabilities, respectively. The net expense (income) recorded for the deferred compensation plan for each of the last three years was ($66,000), $(11,000) and $85,000 in 2021, 2020 and 2019, respectively.

As a part of the Merger, Premier assumed the United Community Financial Corp. Deferred Compensation Plan. This is an unfunded plan for a select group of key management including named executive officers. The deferred compensation plan has approximately $1.8 million and $1.9 million, respectively, in both assets and liabilities as of December 31, 2021 and December 31, 2020. As of December 31, 2020, this plan has been frozen. Participants can choose to receive a lump sum payout or elect to receive installments for up to 11 years once they are eligible to withdraw funds.

20.

Stock Compensation Plans

Premier has established equity based compensation plans for its directors and employees. On February 27, 2018, the BoTotal Fair Valueard adopted, and the shareholders approved at the 2018 Annual Shareholders Meeting, the Premier Financial Corp. 2018 Equity Incentive Plan (the “2018 Equity Plan”). The 2018 Equity Plan replaced all existing plans, although the Company’s former equity plans remain in existence to the extent there were outstanding grants thereunder at the time the 2018 Equity Plan was approved. In addition, as a result of the Merger, Premier assumed certain outstanding stock options granted under UCFC’s Amended and Restated 2007 Long-Term Incentive Plan (the “UCFC 2007 Plan”) and UCFC’s 2015 Long Term Incentive Plan, which has since been renamed as the “Premier Financial Corp. 2015 Long Term Incentive Plan” (the “2015 Plan”). Premier also assumed the 2015 Plan with respect to the available shares under the UCFC 2015 Plan as of the effective date of the Merger, with appropriate adjustments to the number of shares available to reflect the Merger. The stock options assumed from UCFC in the Merger became exercisable solely to purchase shares of Premier, with appropriate adjustments to the number of shares subject to the assumed stock options and the exercise price of such stock options and remain subject to the terms of the 2015 Plan. Besides certain options issued under the First Defiance Financial Corp. 2010 Equity Incentive Plan, all awards currently outstanding are issued under the 2018 Equity Plan or the 2015 Plan. The 2018 Equity Plan and the 2015 Plan were each amended and restated in February 2022 to align certain administrative components of the plans in addition to enhancing certain governance components. New awards will be made under either the 2018 Equity Plan or the 2015 Plan as the Company determines. The 2018 Equity Plan allows for issuance of up to 900,000 common shares through the award of options, restricted stock, stock, stock appreciation rights or other stock-based awards. The 2015 Plan allows for the issuance of up to 1.2 million common shares, as adjusted for the Merger, through the award of options, stock, restricted stock, stock units, or stock appreciation rights.

The Company maintains a Short-Term ("STIP") Incentive Plan. Under the 2019, 2020 and 2021 STIPs, the participants can earn a cash payout. The final amount of benefits under the STIPs is determined as of December 31 of the same year and paid out in cash in the first quarter of the following year.

As of December 31, 2021, 35,661 options to acquire Premier shares were outstanding at option prices based on the market value of the underlying shares on the date the options were granted. On the date of the Merger, 39,983 Premier options were exchanged for all of the outstanding stock options on the books of UCFC at the same conversion price and ratio applied to UCFC common shares at January 31,

2020. All of these options were fully vested at the time of acquisition. All options expire ten years from the date of grant. Vested options of retirees expire on the earlier of the scheduled expiration date or twelve months after the retirement date.

The Company maintains Long-Term ("LTIP") Equity Incentive Plans for select members of management (the "Executive LTIP") and a Key Employee and Commercial Lender Plan (the "Key Plan").

Under the Executive LTIP, participants may earn between 20% to 50% of their salary for potential payout in the form of equity awards based on the achievement of certain corporate performance targets over a three-year period. The Company granted 86,058 performance stock units to the participants in the 2020 Executive LTIP during the first quarter of 2021, which represents the maximum target award. As a result of the Merger, the 2019 grant was accelerated and vested based on performance up to the date of the Merger. This resulted in the award of 51,677 shares of PFC stock to the participants with another 21,834 shares to be issued in 2021 to the then CEO of the Company. This delay in the receipt of the CEO’s shares was mandated by the Merger Agreement. The value of awards issued in 2020 and 2021 under the Executive LTIP will be determined individually at the end of each respective 36 month performance period ending December 31. The benefits earned under these LTIPs will be paid out in equity in the first quarter following the end of the performance period. The participants will receive all or a portion of the award if their employment is terminated by the Company without cause, by the participant in certain situations, or by death, disability or retirement.

Under each Key LTIP, the participants are granted restricted share units based upon the achievement of certain targets in the prior year. The participants can earn from 5% to 10% of their salary in restricted stock units that vest three years from the date of grant. The Company granted 17,542 and 12,038 RSU’s in the first quarter of 2021 and 2020, respectively, as a payout under the Key LTIP.

In 2021, the Company also granted 16,846 discretionary restricted stock units that vest three years from the date of grant and restricted stock awards for 43,460 shares. Of the 43,460 restricted stock grants, 13,708 were issued to directors and have a one-year vesting period. The remaining grants vest over a three year period. The fair value of all granted restricted shares was determined by the stock price at the date of the grant.

The fair value of each option award is estimated on the date of grant using the Black-Scholes model. Expected volatilities are based on historical volatilities of the Company’s common shares. The Company uses historical data to estimate option exercise and post-vesting termination behavior. The expected term of options granted is based on historical data and represents the period of time that options granted are expected to be outstanding, which takes into account that the options are not transferable. The risk-free interest rate for the expected term of the option is based on the U.S. Treasury yield curve in effect at the time of the grant.

There were no options granted during the years ended December 31, 2021, 2020 or 2019.

Following is options activity under the plans during 2021:


	Options Outstanding			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (in years)		Aggregate Intrinsic Value (in 000’s)
Options outstanding, January 1, 2021		36,261		$	21.59
Forfeited or cancelled		—			—
Exercised		(600	)		13.80
Exchanged		—			—
Granted		—			—
Options outstanding, December 31, 2021		35,661		$	21.72		4.33	$	328,271
Exercisable at December 31, 2021		35,661		$	21.72		4.33	$	328,271

Information related to the stock option plans is as follows:


	Year Ended December 31,
	2021		2020		2019
	(In Thousands, except per share amounts)
Intrinsic value of options exercised	$	11	$	189	$	390
Cash received from option exercises		8		—		189
Tax benefit realized from option exercises		2		40		4
Weighted average fair value of options granted	$	—	$	—	$	—

As of December 31, 2021, there was a de minimus amount of total unrecognized compensation costs related to unvested stock options granted under the Company’s equity plans. The cost is expected to be recognized over a weighted-average period of 1.0 month.

At December 31, 2021, a total of 271,707 restricted share awards were outstanding. Compensation expense is recognized over the performance or vesting period. Total expense of $2.5 million, $2.3 million and $2.1 million was recorded during the years ended December 31, 2021, 2020 and 2019, respectively, and approximately $2.7 million and $3.2 million is included within other liabilities at December 31, 2021 and 2020, respectively, related to the cash portion of the STIPs.


	Performance Stock Units					Restricted Stock Units					Stock Grants
Unvested Shares	Shares			Weighted- Average Grant Date Fair Value		Shares			Weighted- Average Grant Date Fair Value		Shares			Weighted- Average Grant Date Fair Value
Unvested at January 1, 2021		90,891		$	26.48		55,759		$	25.18		41,057		$	26.93
Granted		86,058			30.32		34,388			30.77		43,460			31.32
Vested		(9,633	)		28.24		(32,521	)		26.08		(24,849	)		28.00
Forfeited		(5,642	)		28.24		(5,853	)		24.03		(1,408	)		28.41
Unvested at December 31, 2021		161,674		$	28.36		51,773		$	28.44		58,260		$	29.71

The maximum amount of compensation expense that may be earned for the 2021 Executive LTIP at December 31, 2021, is approximately $4.3 million in the aggregate. However, the estimated expense expected to be earned as of December 31, 2021, based on the performance measures in the plans, is $2.8 million of which $480,000 was unrecognized at December 31, 2021, and will be recognized over the remaining performance period.

As of December 31, 2021, 556,698 shares were available for grant under the 2018 Equity Plan and 113,050 shares were available for grant under the 2015 Plan. Generally, grants or awards that are forfeited or cancelled under the 2018 Equity Plan and the 2015 Plan may be available for grant to other participants.

21.

Parent Company Statements

Condensed parent company financial statements, which include transactions with subsidiaries, are as follow:


	December 31,
Statements of Financial Condition	2021		2020
	(In Thousands)
Assets
Cash and cash equivalents	$	24,152	$	58,017
Equity securities		14,097		1,090
Investment in banking subsidiary		1,034,379		962,675
Investment in non-bank subsidiaries		33,102		39,699
Other assets		4,110		6,013
Total assets	$	1,109,840	$	1,067,494
Liabilities and stockholders’ equity:
Subordinated debentures	$	84,976	$	84,860
Accrued liabilities		1,368		358
Stockholders’ equity		1,023,496		982,276
Total liabilities and stockholders’ equity	$	1,109,840	$	1,067,494


	Years Ended December 31,
Statements of Income	2021			2020			2019
	(In Thousands)
Dividends from subsidiaries	$	46,315		$	25,900		$	38,585
Interest income		520			30			—
Interest expense		(2,713	)		(1,308	)		(1,368	)
Other income		1,955			105			1
Noninterest expense		(997	)		(902	)		(1,234	)
Income before income taxes and equity in earnings of subsidiaries		45,080			23,825			35,984
Income tax credit		(259	)		(423	)		(534	)
Income before equity in earnings of subsidiaries		45,339			24,248			36,518
Undistributed equity in earnings of subsidiaries		80,712			38,829			12,852
Net income		126,051			63,077			49,370
Other comprehensive income (loss)		(18,432	)		10,409			6,743
Comprehensive income	$	107,619		$	73,486		$	56,113


	Years Ended December 31,
Statements of Cash Flows	2021			2020			2019
	(In Thousands)
Operating activities:
Net income	$	126,051		$	63,077		$	49,370
Adjustments to reconcile net income to net cash (used in) provided by operating activities:
Undistributed equity in earnings of subsidiaries		(80,712	)		(38,829	)		(12,852	)
Change in other assets and liabilities		380			1,630			(201	)
Net cash provided by (used in) operating activities		45,719			25,878			36,317
Investing activities:
Net Cash received for United Community Financial Corp.		—			9,414			—
Purchase of equity securities		(11,053	)		(1,000	)		—
Net cash used in investing activities		(11,053	)		8,414			—
Financing activities:
Repurchase of common stock		(29,583	)		(10,183	)		(15,147	)
Cash dividends paid		(38,948	)		(32,898	)		(15,624	)
Proceeds from subordinated debentures		—			48,777			—
Stock Options Exercised		—			—			189
Direct stock sales		—			18			123
Net cash used in financing activities		(68,531	)		5,714			(30,459	)
Net increase (decrease) in cash and cash equivalents		(33,865	)		40,006			5,858
Cash and cash equivalents at beginning of year		58,017			18,011			12,153
Cash and cash equivalents at end of year	$	24,152		$	58,017		$	18,011

22.

Fair Value

FASB ASC Topic 820, Fair Value Measurements, defines fair value as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants. A fair value measurement assumes that the transaction to sell the asset or transfer the liability occurs in the principal market for the asset or liability or, in the absence of a principal market, the most advantageous market for the asset or liability. The price in the principal (or most advantageous) market used to measure the fair value of the asset or liability shall not be adjusted for transaction costs. An orderly transaction is a transaction that assumes exposure to the market for a period prior to the measurement date to allow for marketing activities that are usual and customary for transactions involving such assets and liabilities; it is not a forced transaction. Market participants are buyers and sellers in the principal market that are (i) independent, (ii) knowledgeable, (iii) able to transact and (iv) willing to transact.

FASB ASC Topic 820 requires the use of valuation techniques that are consistent with the market approach, the income approach and/or the cost approach. The market approach uses prices and other relevant information generated by market transactions involving identical or comparable assets and liabilities. The income approach uses valuation techniques to convert future amounts, such as cash flows or earnings, to a single present amount on a discounted basis. The cost approach is based on the amount that currently would be required to replace the service capacity of an asset (replacement cost). Valuation techniques should be consistently applied. Inputs to valuation techniques refer to the assumptions that market participants would use in pricing the asset or liability. Inputs may be observable, meaning those that reflect the assumptions market participants would use in pricing the asset or liability developed based on the best information available. In that regard, FASB ASC Topic 820 established a fair value hierarchy for valuation inputs that gives the highest priority to quoted prices in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. The fair value hierarchy is as follows:

•

Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date.

•

Level 2: Inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. These might include quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability (such as interest rates, prepayment speeds, credit risks, etc.) or inputs that are derived principally from or corroborated by market data by a correlation or other means.

•

Level 3: Unobservable inputs for determining fair value of assets and liabilities that reflect an entity’s own assumptions about the assumptions that market participants would use in pricing the assets or liabilities.

A description of the valuation methodologies used for instruments measured at fair value, as well as the general classification of such instruments pursuant to the valuation hierarchy, is set forth below.

Available-for-sale securities - Securities classified as available for sale are generally reported at fair value utilizing Level 2 inputs where the Company obtains fair value measurements from an independent pricing service that uses matrix pricing, which is a mathematical technique widely used in the industry to value debt securities without relying exclusively on quoted prices for the specific securities but rather by relying on the securities’ relationship to other benchmark quoted securities (Level 2 inputs). The fair value measurements consider observable data that may include dealer quotes, market spreads, cash flows and the bonds’ terms and conditions, among other things. Securities in Level 2 include U.S. federal government agencies, mortgage-backed securities, corporate bonds and municipal securities.

Equity securities – These securities are reported at fair value utilizing Level 1 inputs where the Company obtains quoted prices in active markets for identical equity securities.

Loans held for sale, carried at fair value – The Company elected the fair value option for all conventional residential one-to four-family loans held for sale and all permanent construction loans held for sale that were acquired from UCFC in the Merger. In addition, the Company has elected the fair value option for all loans held for sale originated after January 31, 2020.

The fair value of conventional loans held for sale is determined using the current 15 day forward contract price for either 15 or 30 year conventional mortgages (Level 2). The fair value of permanent construction loans held for sale is determined using the current 60 day forward contract price for 15 or 30 year conventional mortgages which is then adjusted for unobservable market data such as estimated fall out rates and estimated time from origination to completion of construction (Level 3).

Collateral Dependent loans - Fair values for individually analyzed, collateral dependent loans are generally based on appraisals obtained from licensed real estate appraisers and in certain circumstances consideration of offers obtained to purchase properties prior to foreclosure. Appraisals for commercial real estate generally use three methods to derive value: cost, sales or market comparison and income approach. The cost method bases value on the cost to replace the current property. Value of market comparison approach evaluates the sales price of similar properties in the same market area. The income approach considers net operating income generated by the property and an investor’s required return. Adjustments are routinely made in the appraisal process by the independent appraisers to adjust for differences between the comparable sales and income data available. Comparable sales adjustments are based on known sales prices of similar type and similar use properties and duration of time that the property has been on the market to sell. Such adjustments made in the appraisal process are typically significant and result in a Level 3 classification of the inputs for determining fair value.

Real estate held for sale - Assets acquired through or instead of loan foreclosure are initially recorded at fair value less costs to sell when acquired, establishing a new cost basis. These assets are then reviewed monthly by members of the asset review committee for valuation changes and are accounted for at lower of cost or fair value less estimated costs to sell. Fair value is commonly based on recent real estate appraisals which may utilize a single valuation approach or a combination of approaches including cost, comparable sales and the income approach. Adjustments are routinely made in the appraisal process by the independent appraisers to adjust for differences between the comparable sales and income data available. Such adjustments may be significant and typically result in a Level 3 classification of the inputs for determining fair value.

Appraisals for both collateral-dependent loans and other real estate owned are performed by certified general appraisers (for commercial properties) or certified residential appraisers (for residential properties) whose qualifications and licenses have been reviewed and

verified by the Company. Once received, a member of the Company’s asset quality or collections department reviews the assumptions and approaches utilized in the appraisal. Appraisal values are discounted from 0% to 30% to account for other factors that may impact the value of collateral. In determining the value of collateral dependent loans and other real estate owned, significant unobservable inputs may be used, which include but are not limited to: physical condition of comparable properties sold, net operating income generated by the property and investor rates of return.

Mortgage servicing rights - On a quarterly basis, mortgage servicing rights are evaluated for impairment based upon the fair value of the rights as compared to the carrying amount. If the carrying amount of an individual tranche exceeds fair value, impairment is recorded on that tranche so that the servicing asset is carried at fair value. Fair value is determined at a tranche level based on a model that calculates the present value of estimated future net servicing income. The valuation model utilizes assumptions that market participants would use in estimating future net servicing income and are validated against available market data (Level 2).

Mortgage banking derivative - The fair value of mortgage banking derivatives are evaluated monthly based on derivative valuation models using quoted prices for similar assets adjusted for specific attributes of the commitments and other observable market data at the valuation date (Level 2).

Purchased and written certificate of deposit option – The Company acquired purchased and written certificate of deposit options in its Merger with UCFC. These written and purchased options are mirror derivative instruments which are carried at fair value on the statement of financial condition. The Company uses an independent third party that performs a market valuation analysis for purchased and written certificate of deposit options. (Level 2)

Interest rate swaps – The Company periodically enters into interest rate swap agreements with its commercial customers who desire a fixed rate loan term that is longer than the Company is willing to extend. The Company then enters into a reciprocal swap agreement with a third party that offsets the interest rate risk from the interest rate swap extended to the customer. The interest rate swaps are derivative instruments which are carried at fair value on the statement of financial condition. The Company uses an independent third party that performs a market valuation analysis for both swap positions. (Level 2)

The Company also enters into cash flow hedge derivatives instruments to hedge the risk of variability in cash flows (future interest payments) attributable to changes in the contractually specified LIBOR benchmark interest rate on the Company's floating rate loan pool. The Company uses an independent third party to perform a market valuation analysis for these derivatives (Level 2).

The following table summarizes the financial assets measured at fair value on a recurring basis segregated by the level of the valuation inputs within the fair value hierarchy utilized to measure fair value:

Assets and Liabilities Measured on a Recurring Basis


December 31, 2021	Level 1 Inputs		Level 2 Inputs		Level 3 Inputs		Total Fair Value
	(In Thousands)
Assets:
Available for sale securities:
Obligations of U.S. government corporations and agencies	$	—	$	174,710	$	—	$	174,710
Mortgage-backed securities		—		206,751		—		206,751
Collateralized mortgage obligations		—		260,168		—		260,168
Asset-backed securities		—		220,536		—		220,536
Corporate bonds		—		70,893		—		70,893
Obligations of state and political subdivisions		—		273,202		—		273,202
Equity securities		14,097		—		—		14,097
Loans held for sale, at fair value		—		28,780		134,167		162,947
Interest rate swaps		—		1,287		—		1,287
Cash flow hedge derivative		—		854		—		854
Mortgage banking derivative - asset		—		2,336		—		2,336
Liabilities:
Interest rate swaps		—		1,292		—		1,292


December 31, 2020	Level 1 Inputs		Level 2 Inputs		Level 3 Inputs		Total Fair Value
	(In Thousands)
Available for sale securities:
Obligations of U.S. government corporations and agencies	$	—	$	40,940	$	—	$	40,940
Mortgage-backed securities		—		277,182		—		277,182
Collateralized mortgage obligations		—		106,299		—		106,299
Asset-backed securities		—		30,546		—		30,546
Corporate bonds		—		44,169		—		44,169
Obligations of state and political subdivisions		—		237,518		—		237,518
Equity securities		1,090		—		—		1,090
Loans held for sale, at fair value		—		98,587		123,029		221,616
Purchased certificate of deposit option		—		56		—		56
Interest rate swaps		—		1,870		—		1,870
Mortgage banking derivative - asset		—		3,833		—		3,833
Liabilities:
Written certificate of deposit option		—		56		—		56
Interest rate swaps		—		2,036		—		2,036

The tables below present a reconciliation of all assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the twelve month periods ended December 31, 2021 and 2020.


	Construction loans held for sale
	Twelve Months Ended December 31,
	2021			2020
Balance of recurring Level 3 assets at beginning of period	$	123,029		$	—
Total gains (losses) for the period
Included in change in fair value of loans held for sale		(3,716	)		13,492
Originations		128,844			108,847
Acquired in acquisition		—			37,711
Sales		(113,990	)		(37,021	)
Balance of recurring Level 3 assets at end of period	$	134,167		$	123,029


	Securities available-for-sale
	Twelve Months Ended December 31,
	2021			2020
Balance of recurring Level 3 assets at beginning of period	$	—		$	3,411
Balance of assets classified as Level 3 during the period		—			—
Balance of Level 3 assets moved to Level 2 during the period		—			(3,411	)
Balance of recurring Level 3 assets at end of period	$	—		$	—

The Company has elected the fair value option for new applications taken post January 31, 2020, and subsequently originated for residential mortgage and permanent construction loans held for sale. These loans are intended for sale and the Company believes that fair value is the best indicator of the resolution of these loans. Interest income is recorded based on the contractual terms of the loan and in accordance with the Company’s policies. There were no loans at December 31, 2021, where the fair value option had been elected.

The aggregate fair value of the residential mortgage loans held for sale at December 31, 2021 and December 31, 2020 was $28.8 million and 98.6 million, respectively and they had contractual balances of $27.7 million and $93.2 million, respectively. The difference between these two figures is recorded in gains and losses on the sale of loans held for sale. For the twelve months ended December 31,

2021, $5.0 million was recorded in losses on the sale of loans held for sale for the change in fair value. For the twelve months ended December 31, 2020, $5.4 million was recorded in gain on sale of loans held for sale for the change in fair value.

The aggregate fair value of the permanent construction loans held for sale at December 31, 2021 and December 31, 2020 was $134.2 million and 123.0 million and they had a contractual balance of $125.0 million and $109.5 million, respectively. The difference between these two figures is recorded in gains and losses on the sale of loans held for sale. For the twelve months ended December 31, 2021, $3.7 million was recorded in losses on the sale of loans held for sale for the change in fair value. For the twelve months ended December 31, 2020, $13.5 million was recorded in gains on the sale of loans held for sale for the change in fair value.

The following table summarizes the financial assets measured at fair value on a non-recurring basis segregated by the level of the valuation inputs within the fair value hierarchy utilized to measure fair value:

Assets and Liabilities Measured on a Non-Recurring Basis


December 31, 2021	Level 1 Inputs		Level 2 Inputs		Level 3 Inputs		Total Fair Value
	(In Thousands)
Collateral dependent loans
Commercial Real Estate	$	—	$	—	$	2,749	$	2,749
Commercial		—		—		8,564		8,564
Total individually analyzed loans		—		—		11,313		11,313

Mortgage servicing rights		—		19,538		—		19,538


December 31, 2020	Level 1 Inputs		Level 2 Inputs		Level 3 Inputs		Total Fair Value
	(In Thousands)
Collateral dependent loans
Commercial Real Estate	$	—	$	—	$	4,601	$	4,601
Commercial		—		—		7,151		7,151
Total individually analyzed loans		—		—		11,752		11,752

Mortgage servicing rights		—		13,153		—		13,153

For Level 3 assets and liabilities measured at fair value on a nonrecurring basis as of December 31, 2021, the significant unobservable inputs used in the fair value measurements were as follows:


	Fair Value		Valuation Technique	Unobservable Inputs	Range of Inputs			Weighted Average
			(Dollars in Thousands)
Individually analyzed Loans- Applies to loan classes with an appraisal valuation	$	5,821	Appraisals which utilize sales comparison, net income and cost approach	Discounts for collection issues and changes in market conditions	20-50%				35.18	%
Individually analyzed Loans- Applies to loan classes without an appraisal valuation	$	5,492	Equitable Recoupment claim estimate	Discounts for collection issues		25	%		25.00	%

For Level 3 assets and liabilities measured at fair value on a nonrecurring basis as of December 31, 2020, the significant unobservable inputs used in the fair value measurements were as follows:

Fair
Value

Valuation Technique

Unobservable Inputs

Range of
Inputs

Weighted
Average

(Dollars in Thousands)

Collateral Dependent Loans- Applies to
all loan classes

11,752

Appraisals which utilize
sales comparison, net
income and cost approach

Discounts for collection
issues and changes in
market conditions

5 - 37%

24.17%

Individually analyzed loans, which are evaluated using the fair value of the collateral for collateral dependent loans, had a fair value of $11.3 million that includes a valuation allowance of $7.1 million and a fair value of $11.7 million that includes a valuation allowance of $2.9 million at December 31, 2021 and 2020, respectively. A provision expense of $4.1 million, $2.9 million, $12,000 for the years ended December 31, 2021, 2020 and 2019, respectively, related to these loans was included in earnings.

Mortgage servicing rights, which are carried at the lower of cost or fair value, had a fair value of $19.5 million with a valuation allowance of $2.7 million and a fair value of $13.2 million with a valuation allowance of $8.5 million at December 31, 2021 and 2020, respectively. A recovery of $5.8 million and an expense of $8.0 million and $234,000 was included in earnings for the years ended December 31, 2021, 2020 and 2019, respectively.

Real estate held for sale is determined using Level 3 inputs which include appraisals and are adjusted for changes in market conditions. The change in fair value of real estate held for sale was $0, $0 and $264,000 for the years ended December 31, 2021, 2020 and 2019, respectively, which was recorded directly as an adjustment to current earnings through noninterest expense.

In accordance with FASB ASC Topic 825, the Fair Value Measurements tables are a comparative condensed consolidated statement of financial condition based on carrying amount and estimated fair values of financial instruments as of December 31, 2021, and December 31, 2020. Accordingly, the aggregate fair value amounts presented do not represent the underlying value of Premier.

Much of the information used to arrive at “fair value” is highly subjective and judgmental in nature and therefore the results may not be precise. Subjective factors include, among other things, estimated cash flows, risk characteristics and interest rates, all of which are subject to change. With the exception of investment securities, the Company’s financial instruments are not readily marketable and market prices do not exist. Since negotiated prices for the instruments, which are not readily marketable, depend greatly on the motivation of the buyer and seller, the amounts that will actually be realized or paid per settlement or maturity of these instruments could be significantly different.

The carrying amount of cash and cash equivalents, as a result of their short-term nature, is considered to be equal to fair value and are classified as Level 1.

It was not practicable to determine the fair value of FHLB stock due to restrictions placed on its transferability.

The Company adopted the amendments to ASU 2016-01 relating to the loan portfolio in 2018 and an exit price income approach is now used to determine the fair value. The loans were valued on an individual basis, with consideration given to the loans underlying characteristics, including account types, remaining terms (in months), annual interest rates or coupons, interest types, past delinquencies, timing of principal and interest payments, current market rates, loss exposures, and remaining balances. The model utilizes a discounted cash flow approach to estimate the fair value of the loans using assumptions for the coupon rates, remaining maturities, prepayment speeds, projected default probabilities, losses given defaults, and estimates of prevailing discount rates. The discounted cash flow approach models the credit losses directly in the projected cash flows. The model applies various assumptions regarding credit, interest, and prepayment risks for the loans based on loan types, payment types and fixed or variable classifications. For all periods presented, the estimated fair value of individually analyzed loans is based on the fair value of the collateral, less estimated cost to sell, or the present value of the loan’s expected future cash flows (discounted at the loan’s effective interest rate). All individually analyzed loans are classified as Level 3 within the valuation hierarchy.

The fair value of noninterest-bearing deposits are considered equal to the amount payable on demand at the reporting date (i.e., carrying value) and are classified as Level 1. The fair value of savings, NOW and certain money market accounts are equal to their carrying amounts and are a Level 1 classification. Fair values of fixed rate certificates of deposit are estimated using a discounted cash flow calculation that applies interest rates currently being offered on certificates to a schedule of aggregated expected monthly maturities on time deposits resulting in a Level 2 classification.

The fair values of securities sold under repurchase agreements are equal to their carrying amounts resulting in a Level 1 classification. The fair value of subordinated debentures are estimated using a discounted cash flow calculation that applies interest rates currently being offered on subordinated debentures to the schedule of maturities on the subordinated debt tranches resulting in a Level 2 classification.

FHLB advances with maturities greater than 90 days are valued based on discounted cash flow analysis, using interest rates currently being quoted for similar characteristics and maturities resulting in a Level 2 classification.


			Fair Value Measurements at December 31, 2021
			(In Thousands)
	Carrying Value		Total		Level 1		Level 2		Level 3
Financial Assets:
Cash and cash equivalents	$	161,566	$	161,566	$	161,566	$	—	$	—
Securities available for sale		1,206,260		1,206,260		—		1,206,260		—
Equity securities		14,097		14,097		14,097		—		—
FHLB Stock		—	N/A		N/A		N/A		N/A
Loans receivable, net		5,229,700		5,265,689		—		—		5,265,689
Loans held for sale, carried at fair value		162,947		162,947		—		28,780		134,167

Financial Liabilities:
Deposits	$	6,282,051	$	6,280,336	$	5,481,928	$	798,408	$	—
Subordinated debentures		84,976		85,417		—		—		85,417


			Fair Value Measurements at December 31, 2020
			(In Thousands)
	Carrying Value		Total		Level 1		Level 2		Level 3
Financial Assets:
Cash and cash equivalents	$	159,266	$	159,266	$	159,266	$	—	$	—
Securities available for sale		736,654		736,654		—		736,654		—
Equity securities		1,090		1,090		1,090		—		—
FHLB Stock		16,026	N/A		N/A		N/A		N/A
Loans receivable, net		5,409,161		5,412,814		—		—		5,412,814
Loans held for sale, carried at fair value		221,616		221,616		—		98,587		123,029

Financial Liabilities:
Deposits	$	6,047,841	$	6,056,426	$	4,925,411	$	1,131,015	$	—
Subordinated debentures		84,860		83,237		—		—		83,237

23.

Derivative Financial Instruments

Commitments to fund certain mortgage loans (interest rate locks) to be sold into the secondary market and forward commitments for the future delivery of mortgage loans to third-party investors are considered derivatives. It is the Company’s practice to enter into forward commitments for the future delivery of residential mortgage loans when interest rate lock commitments are entered into in order to economically hedge the effect of changes in interest rates resulting from its commitments to fund the loans. These mortgage banking derivatives are not designated in hedge relationships. The Bank had approximately $65.4 million and $135.7 million of interest rate lock commitments at December 31, 2021 and 2020, respectively. There were $305.0 million of forward sales of mortgage-backed securities and $265.0 million of forward commitments for the future delivery of residential mortgage loans at December 31, 2021 and 2020, respectively.

The fair value of these mortgage banking derivatives are reflected by a derivative asset or a derivative liability. The table below provides data about the carrying values of these derivative instruments:

December 31, 2021

December 31, 2020

Assets

(Liabilities)

Assets

(Liabilities)

Derivative

Carrying

Net Carrying

Carrying

Net Carrying

Value

(In Thousands)

Derivatives not designated as hedging
instruments

Mortgage Banking

Derivatives

2,336

—

2,336

3,833

—

3,833

The table below provides data about the amount of gains and losses recognized in income on derivative instruments not designated as hedging instruments. The difference in derivative net carrying value at December 31, 2021 and 2020 represents a fair value adjustment that runs through mortgage banking income.


	Twelve Months Ended December 31,
	2021			2020		2019
	(In Thousands)
Derivatives not designated as hedging instruments
Mortgage Banking Derivatives – Gain (Loss)	$	(1,497	)	$	2,154	$	598

Interest Rate Swaps

The Company maintains an interest rate protection program for commercial loan customers that was acquired in the Merger. Under this program, the Company provides a customer with a fixed rate loan while creating a variable rate asset for the Company by the customer entering into an interest rate swap with terms that match the loan. The Company offsets its risk exposure by entering into an offsetting interest rate swap with an unaffiliated institution. The Company had interest rate swaps associated with commercial loans with a notional value of $69.4 million and fair value of $1.3 million in other assets and $1.3 million in other liabilities at December 31, 2021. The difference in fair value of $5,000 between the asset and liability represents a credit valuation adjustment that flows through noninterest income.

Interest Rate Swap Designated as Cash Flow Hedge

In May 2021 the Company entered into derivative instruments designated as a cash flow hedge. For a derivative instrument that is designated and qualifies as a cash flow hedge, the change in fair value of the derivative instrument is reported as a component of other comprehensive income (loss) and reclassified into earnings in the same period or periods during which the hedged transaction affects earnings.

An interest rate swap with notional amount totaling $250 million as of December 31, 2021 was designated as a cash flow hedge to hedge the risk of variability in cash flows (future interest receipts) attributable to changes in the contractually specified LIBOR benchmark interest rate on the Company’s floating rate loan pool and was determined to be highly effective during the period. The Company is receiving a fixed rate of 1.437% and paying one month Libor. The maturity date of this interest rate swap is May 2031. The gross aggregate fair value of the swap of $854,000 is recorded in other assets in the Consolidated Balance Sheets at December 31, 2021, with changes in fair value recorded net of tax in other comprehensive income (loss). The Company expects the hedge to remain highly effective during the remaining terms of the swap.


	Twelve Months Ended December 31, 2021
	Amount of Gain (Loss) Recognized in OCI on Derivative		Total amount of Gain (Loss) on the Interest Rate Swap		Amount of Gain (Loss) Reclassified from OCI into Income
	(In Thousands)

Interest rate swap	$	674	$	854	$	1,716

24.

Quarterly Consolidated Results of Operations (Unaudited)

The following is a summary of the quarterly consolidated results of operations:


	Three Months Ended
	March 31			June 30			September 30		December 31
2021	(In Thousands, Except Per Share Amounts)
Interest income	$	61,372		$	60,864		$	60,861	$	60,490
Interest expense		4,859			4,245			3,826		3,288
Net interest income		56,513			56,619			57,035		57,202
Provision for credit losses		(7,512	)		(3,631	)		1,594		2,816
Provision for unfunded commitments		550			(288	)		226		(807	)
Net interest income after provision for credit losses		63,475			60,538			55,215		55,193
Noninterest income		26,274			17,545			18,314		17,824
Noninterest expense		38,802			38,375			39,045		41,733
Income before income taxes		50,947			39,708			34,484		31,284
Income taxes		9,951			8,323			6,124		5,974
Net income	$	40,996		$	31,385		$	28,360	$	25,310
Earnings per common share:
Basic	$	1.10		$	0.84		$	0.76	$	0.69
Diluted	$	1.10		$	0.84		$	0.76	$	0.69


	Three Months Ended
	March 31			June 30		September 30			December 31
2020	(In Thousands, Except Per Share Amounts)
Interest income	$	54,522		$	62,449	$	60,159		$	60,816
Interest expense		9,059			8,145		6,888			5,849
Net interest income		45,463			54,304		53,271			54,967
Provision for loan losses		43,786			1,868		3,658			(6,158	)
Provision for loan losses		1,459			1,107		(864	)		(606	)
Net interest income after provision for loan losses		218			51,329		50,477			61,731
Noninterest income		13,999			23,015		25,000			18,670
Noninterest expense		42,310			37,984		43,563			41,313
Income before income taxes		(28,093	)		36,360		31,914			39,088
Income taxes		(5,610	)		7,303		6,259			8,240
Net income	$	(22,483	)	$	29,057	$	25,655		$	30,848
Earnings per common share:
Basic	$	(0.71	)	$	0.78	$	0.69		$	0.83
Diluted	$	(0.71	)	$	0.78	$	0.69		$	0.82

25.

Other Comprehensive Income (Loss)

The before and after tax amounts allocated to each component of other comprehensive income (loss) are presented in the table below. Reclassification adjustments related to securities available for sale are included in gains on sale or call of securities in the accompanying consolidated condensed statements of income. Reclassification adjustments related to cash flow hedge derivatives are included in interest income on loans in the accompanying consolidated condensed statements of income. Reclassification adjustments related to the

defined benefit postretirement medical plan are included in compensation and benefits in the accompanying consolidated condensed statements of income.


	Before Tax Amount			Tax Effect			Net of Tax Amount
	(In Thousands)
Year ended December 31, 2021:
Securities available for sale and transferred securities:
Change in net unrealized (loss) during the period	$	(21,967	)	$	(4,613	)	$	(17,354	)
Reclassification adjustment for net losses included in net income		(2,218	)		(466	)		(1,752	)
Cash flow hedge derivatives:
Change in net unrealized gain during the period		3,025			635			2,390
Reclassification adjustment for net gains included in net income		(2,172	)		(456	)		(1,716	)
Defined benefit postretirement medical plan:
Net gain on defined benefit postretirement medical plan realized during the period		13			3			10
Reclassification adjustment for net amortization and deferral on defined benefit postretirement medical plan (included in compensation and benefits)		(13	)		(3	)		(10	)
Total other comprehensive income	$	(23,332	)	$	(4,900	)	$	(18,432	)


	Before Tax Amount			Tax Effect			Net of Tax Amount
	(In Thousands)
Year ended December 31, 2020:
Securities available for sale and transferred securities:
Change in net unrealized gain/(loss) during the period	$	14,431		$	3,030		$	11,401
Reclassification adjustment for net gains included in net income		(1,464	)		(307	)		(1,157	)
Defined benefit postretirement medical plan:
Net gain on defined benefit postretirement medical plan realized during the period		195			41			154
Reclassification adjustment for net amortization and deferral on defined benefit postretirement medical plan (included in compensation and benefits)		13			2			11
Total other comprehensive income	$	13,175		$	2,766		$	10,409


	Before Tax Amount			Tax Effect			Net of Tax Amount
	(In Thousands)
Year ended December 31, 2019:
Securities available for sale and transferred securities:
Change in net unrealized gain/(loss) during the period	$	8,754		$	1,839		$	6,915
Reclassification adjustment for net gains included in net income		(24	)		(5	)		(19	)
Defined benefit postretirement medical plan:
Net gain on defined benefit postretirement medical plan realized during the period		(310	)		(146	)		(164	)
Reclassification adjustment for net amortization and deferral on defined benefit postretirement medical plan (included in compensation and benefits)		14			3			11
Total other comprehensive income	$	8,434		$	1,691		$	6,743

Activity in accumulated other comprehensive income (loss), net of tax, was as follows:


	Securities Available For Sale			Cash Flow Hedge Derivative			Post- retirement Benefit			Accumulated Other Comprehensive Income
	(In Thousands)
Balance January 1, 2021	$	15,083		$	—		$	(79	)	$	15,004
Other comprehensive income before reclassifications		(17,354	)		2,390			10			(14,954	)
Amounts reclassified from accumulated other comprehensive loss		(1,752	)		(1,716	)		(10	)		(3,478	)
Net other comprehensive income during period		(19,106	)		674			—			(18,432	)
Balance December 31, 2021	$	(4,023	)	$	674		$	(79	)	$	(3,428	)

Balance January 1, 2020	$	4,839		$	—		$	(244	)	$	4,595
Other comprehensive income before reclassifications		11,401			—			154			11,555
Amounts reclassified from accumulated other comprehensive loss		(1,157	)		—			11			(1,146	)
Net other comprehensive income during period		10,244			—			165			10,409
Balance December 31, 2020	$	15,083		$	—		$	(79	)	$	15,004

Balance January 1, 2019	$	(2,057	)	$	—		$	(91	)	$	(2,148	)
Other comprehensive income before reclassifications		6,915			—			(164	)		6,751
Amounts reclassified from accumulated other comprehensive loss		(19	)		—			11			(8	)
Net other comprehensive income during period		6,896			—			(153	)		6,743
Balance December 31, 2019	$	4,839		$	—		$	(244	)	$	4,595

Item 9. Changes In and Disagreements with Accountants on Accounting and Financial Disclosure

None.

Item 9A. Controls and Procedures

Premier’s management carried out an evaluation, under the supervision and with the participation of the chief executive officer and the chief financial officer, of the effectiveness of Premier’s disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of December 31, 2021. Based upon that evaluation, the chief executive officer along with the chief financial officer concluded that Premier’s disclosure controls and procedures as of December 31, 2021, are effective.

The information set forth under “Management’s Report on Internal Control Over Financial Reporting” and “Report of Independent Registered Public Accounting Firm” included in Item 8 above is incorporated herein by reference.

There were no changes in Premier’s internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the last fiscal quarter ended December 31, 2021, that have materially affected, or are reasonably likely to materially affect, Premier’s internal control over financial reporting.

Item 9B. Other Information

None.

Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections

Not applicable.

100

PART III

Item 10. Directors, Executive Officers and Corporate Governance

The information required by this item relating to our directors, nominees for directorship and executive officers is incorporated herein by reference from the section captioned “Composition of the Board” under the heading “PROPOSAL 1 – Election of Directors” and the section immediately following the heading “EXECUTIVE OFFICERS” in the Company’s definitive proxy statement which will be filed no later than 120 days after December 31, 2021 (the “Proxy Statement”). Information regarding our Audit Committee and compliance with Section 16(a) of the Securities Exchange Act of 1934 required by this item is incorporated herein by reference from the sections respectively captioned, “Board Committees” under the “PROPOSAL 1 – Election of Directors” and the section immediately following the heading “DELINQUENT SECTION 16(a) REPORTS” of the Proxy Statement. There have been no material changes to the procedures by which shareholders may recommend nominees to the board of directors.

Premier has adopted a code of ethics applicable to all officers, directors and employees that complies with SEC requirements, and is available on its Internet site at www.premierfincorp.com under the Governance Documents tab on the Investor Relations page.

Item 11. Executive Compensation

Information regarding director compensation is set forth under the section captioned “Director Compensation” under the heading “PROPOSAL 1 – Election of Directors” of the Proxy Statement, and is incorporated herein by reference. Executive compensation information has been provided under the headings “COMPENSATION DISCUSSION AND ANALYSIS” and “EXECUTIVE COMPENSATION” in the Proxy Statement, and is incorporated herein by reference.

The Compensation Committee Report and information related to compensation committee interlocks and insider participation have been respectively set forth under the section immediately following the heading “COMPENSATION COMMITTEE REPORT” and under the section captioned “Compensation Committee Interlocks and Insider Participation” following the heading “PROPOSAL 1 – Election of Directors” in the Proxy Statement, and are incorporated herein by reference.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

The information regarding security ownership of certain beneficial owners and management and information relating thereto is set forth in the section under the heading “BENEFICIAL OWNERSHIP” in the Proxy Statement, and is incorporated herein by reference.

Equity Compensation Plans

The following table provides information as of December 31, 2021, with respect to the shares of Premier common stock that are reserved for issuance under Premier’s existing equity compensation plans.

Plan Category

Number of
securities to
be Issued
Upon Exercise
of Outstanding
Options,
Warrants
and Rights

Weighted
Average
Exercise Price of
Outstanding
Options,
Warrants
and Rights

Number of
Securities
Remaining
Available
for Future
Issuance
Under Equity
Compensation
Plans (Excluding
Securities
Reflected
in Column (a)

(a)

(b)

(c)

Equity Compensation Plans Approved by Security Holders

35,661

21.72

669,748

Item 13. Certain Relationships and Related Transactions, and Director Independence

The information required by this item, including related transactions and director independence, is set forth respectively in the section following the heading “RELATED PERSON TRANSACTIONS” and in the section captioned “Composition of the Board” following the heading “PROPOSAL 1 – Election of Directors” in the Proxy Statement, which are both incorporated by reference.

Item 14. Principal Accountant Fees and Services

The information required by this item is set forth under the section captioned “Audit Fees” following the heading “INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM” in the Proxy Statement, and is incorporated herein by reference.

101

PART IV

Item 15.Exhibits, Financial Statement Schedules

(a)

Financial Statements

(1)

The following documents are filed as Item 8 of this Form 10-K.

(A) Report of Independent Registered Public Accounting Firm (Crowe LLP)

(B) Consolidated Statements of Financial Condition as of December 31, 2021 and 2020

(D) Consolidated Statements of Comprehensive Income for the years ended December 31, 2021, 2020 and 2019

(E) Consolidated Statements of Changes in Stockholders’ Equity for the years ended December 31, 2021, 2020 and 2019

(F) Consolidated Statements of Cash Flows for the years ended December 31, 2021, 2020 and 2019

(G) Notes to Consolidated Financial Statements

(2)

Separate financial statement schedules are not being filed because of the absence of conditions under which they are required or because the required information is included in the consolidated financial statements or the related notes.

(3)

The exhibits required by this item are listed in the Exhibit Index of this Form 10-K.

Item 16.10-K Summary

None.

102

SIGNATURES

Pursuant to the requirements of Sections 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


	PREMIER FINANCIAL CORP.

March 1, 2022	By:	/s/ Paul Nungester
		Paul Nungester, Chief Financial Officer

103

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities indicated on March 1, 2022.


Signature		Title

/s/ Gary M. Small		Chief Executive Officer, President and Director
Gary M. Small

/s/ Paul Nungester		Executive Vice President and Chief
Paul Nungester		Financial Officer (principal accounting officer)

/s/ Donald P. Hileman*		Executive Chairman and Director
Donald P. Hileman

/s/ Richard J. Schiraldi*		Vice Chairman and Director
Richard J. Schiraldi

/s/ Marty E. Adams*		Director
Marty E. Adams

/s/ Zahid Afzal*		Director
Zahid Afzal

/s/ Louis M. Altman*		Director
Louis M. Altman

/s/ Terri A. Bettinger*		Director
Terri A. Bettinger

/s/ John L. Bookmyer*		Director
John L. Bookmyer

/s/ Lee Burdman*		Director
Lee Burdman
/s/ Jean A. Hubbard*		Director
Jean A. Hubbard

/s/ Nikki R. Lanier*		Director
Nikki R. Lanier

/s/ Charles D. Niehaus*		Director
Charles D. Niehaus

/s/ Mark A. Robison*		Director
Mark A. Robison

/s/ Samuel S. Strausbaugh*		Director
Samuel S. Strausbaugh

*By: /s/ Paul Nungester
Paul Nungester, Attorney in Fact

104

Exhibit Index

This report incorporates by reference the documents listed below that we have previously filed with the SEC. The SEC allows us to incorporate by reference information in this document. The information incorporated by reference is considered to be part of this document.

The SEC maintains an internet web site that contains reports, proxy statements, and other information about issuers, like Premier, who file electronically with the SEC. The address of the site is http://www.sec.gov. The reports and other information filed by Premier with the SEC are also available at the Premier Financial Corp. web site. The address of the site is http://www.yourpremierbank.com. Except as specifically incorporated by reference into this Form 10-K, information on those web sites is not part of this report.


Exhibit
Number		Description

2.1		Agreement and Plan of Merger, dated as of September 9, 2019, between First Defiance Financial Corp. and United Community Financial Corp. (incorporated herein by reference to Exhibit 2.1 in Registrant’s Form 8-K filed September 10, 2019 (File No. 000-26850))

3.1		Second Amended and Restated Articles of Incorporation of Premier Financial Corp. (incorporated herein by reference to Exhibit 3.2 in Registrant’s Form 8-K filed June 22, 2020 (File No. 000-26850))

3.2		Second Amended and Restated Code of Regulations of Premier Financial Corp. (reflecting all amendments) (incorporated herein by reference to Exhibit 3.3 in Registrant’s Form 8-K filed June 22, 2020 (File No. 000-26850))

4.1		Description of Capital Stock (incorporated herein by reference to Exhibit 4.1in Registrant's Form 10-K filed March 12, 2021 (File No. 000-26850))

4.2		Indenture, dated September 30, 2020, between Premier Financial Corp. and U.S. Bank National Association, as trustee (incorporated herein by reference to Exhibit 4.1 in Registrant’s Form 8-K filed September 30, 2020 (File No. 000-26850))

4.3		First Supplemental Indenture, dated September 30, 2020, between Premier Financial Corp, and U.S. Bank National Association, as trustee (incorporated herein by reference to Exhibit 4.2 in Registrant’s Form 8-K filed September 30, 2020 (File No. 000-26850))

4.4		Form of 4.00% Fixed-to-Floating Rate Subordinated Note due 2030 (included in Exhibit 4.3)

10.1+		First Federal Amended and Restated Executive Group Life Plan – Post Separation, effective June 30, 2010 (incorporated herein by reference to Exhibit 10.1 in the Registrant’s Form 10-Q filed November 2, 2010 (File No. 000-26850))

10.2+		United Community Financial Corp. Amended and Restated 2007 Long-Term Incentive Plan (incorporated herein by reference to Exhibit 4.3 in the Registrant’s Form S-8 filed February 3, 2020 (File No. 000-26850))

10.3+*		Premier Financial Corp. Amended and Restated 2015 Long Term Incentive Plan

10.4+*		Premier Financial Corp. Amended and Restate 2018 Equity Incentive Plan

10.5+		Form of Restricted Stock Award Agreement under 2018 Equity Incentive Plan (incorporated herein by reference to Exhibit 10.1 in the Registrant’s Form 10-Q filed August 7, 2018 (File No. 000-26850))

10.6+		Form of Restricted Stock Unit Award Agreement under 2018 Equity Incentive Plan (incorporated herein by reference to Exhibit 10.2 in the Registrant’s Form 10-Q filed August 7, 2018 (File No. 000-26850))

10.7+		Form of Performance-Based Restricted Stock Unit Award Agreement (LTIP) under the 2018 Equity Incentive Plan (incorporated herein by reference to Exhibit 10.26 in the Registrant’s Form 10-K filed February 28, 2019 (File No. 000-26850))

10.8+		Form of Performance-Based Restricted Stock Unit Award Agreement (Long-Term Equity Asset Growth) under the 2018 Equity Incentive Plan (incorporated herein by reference to Exhibit 10.27 in the Registrant’s Form 10-K filed February 28, 2019 (File No. 000-26850))

10.9+		First Defiance Deferred Compensation Plan, revised October 30, 2014 (incorporated herein by reference to Exhibit 10.3 in the Registrant’s Form 10-Q filed August 7, 2018 (File No. 000-26850))

10.10+*		Premier Financial Corp. 2022 Deferred Compensation Plan

10.11+		2020 Form of Long Term Incentive Plan Performance Share Units Award Agreement (incorporated herein by reference to Exhibit 10.1 in the Registrant’s Form 8-K filed March 16, 2020 (File No. 000-26850))

105


10.12+		2021 Form of Restricted Stock Award Agreement under 2018 Equity Incentive Plan (incorporated herein by reference to Exhibit 10.30 in Registrant's Form 10-K filed March 12, 2021 (File No. 000-26850))

10.13+		2021 Form of Restricted Stock Unit Award Agreement under 2018 Equity Incentive Plan (incorporated herein by reference to Exhibit 10.31 in Registrant's Form 10-K filed March 12, 2021 (File No. 000-26850))

10.14+		2021 Form of Long Term Incentive Plan Performance Share Units Award Agreement (incorporated herein by reference to Exhibit 10.32 in Registrant's Form 10-K filed March 12, 2021 (File No. 000-26850))

10.15+		Premier Financial Corp. Long Term Incentive Program (incorporated herein by reference to Exhibit 10.1 in Registrant's 8-K filed February 23, 2022 (File No. 000-26850))

10.16+		Premier Financial Corp. Form of Long Term Incentive Plan Performance Share Units Award Agreement (incorporated herein by reference to Exhibit 10.2 in Registrant's 8-K filed February 23, 2022 (File No. 000-26850))

10.17+		Premier Financial Corp. Restricted Stock Award Agreement (incorporated herein by reference to Exhibit 10.3 in Registrant's 8-K filed February 23, 2022 (File No. 000-26850))

10.18+		Premier Financial Corp. Short Term Incentive Program (incorporated herein by reference to Exhibit 10.4 in Registrant's 8-K filed February 23, 2022 (File No. 000-26850))

10.19+		Form of Severance and Change in Control Agreement (incorporated herein by reference to Exhibit 10.5 in the Registrant’s Form 10-Q filed June 18, 2020 (File No. 000-26850))

10.20+		Employment Agreement with Gary M. Small, dated September 9, 2019 (incorporated herein by reference to Exhibit 10.2 in Registrant’s Form 8-K filed September 10, 2019 (File No. 000-26850))

10.21+		Employment Agreement with Donald P. Hileman, dated September 9, 2019 (incorporated herein by reference to Exhibit 10.1 in Registrant’s Form 8-K filed September 10, 2019 (File No. 000-26850))

10.22+		Employment Agreement with Vince Liuzzi, dated March 4, 2019 (incorporated herein by reference to Exhibit 10.22 in Registrant's Form 10-K filed March 12, 2021 (File No. 000-26850))

10.23+		Employment Agreement with Paul D. Nungester, dated May 1, 2019 (incorporated herein by reference to Exhibit 10.1 in the Registrant’s Form 10-Q filed May 7, 2019 (File No. 000-26850))

10.24+		Amendment to Donald P. Hileman Performance-Based Restricted Stock Unit Award Agreements (LTIP) under the 2018 Equity Incentive Plan (incorporated herein by reference to Exhibit 10.1 in Registrant’s Form 8-K filed January 21, 2020 (File No. 000-26850))

10.25+		Amendment to Donald P. Hileman Performance-Based Restricted Stock Unit Award Agreement (Long-Term Equity Asset Growth) under the 2018 Equity Incentive Plan (incorporated herein by reference to Exhibit 10.2 in the Registrant’s Form 8-K filed January 21, 2020 (File No. 000-26850))

10.26+*		Amendment to Performance Share Units Award Agreements of Donald P. Hileman

10.27+*		Amendment to Equity Award Agreements of Gary M. Small

10.28+*		Form of Premier Financial Corp. Restricted Stock Award Agreement (NonEmployee Director)

10.29		Purchase Agreement, among Premier Financial Corp., Premier Bank and Piper Sandler & Co., dated September 25, 2020 (incorporated herein by reference to Exhibit 10.1 in Registrant’s Form 8-K filed September 30, 2020 (File 000-26850))

21*		List of Subsidiaries of the Company

23.1*		Consent of Crowe LLP

24.1*		Power of Attorney

31.1*		Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2*		Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.1*		Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

32.2*		Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

106


101**		The following financial information from the Registrant's Annual Report on Form 10-K for the year ended December 31, 2021 is formatted in Inline XBRL: (i) Audited Consolidated Condensed Statements of Financial Condition at December 31, 2021 and December 31, 2020; (ii) Audited Consolidated Condensed Statements of Income for the years ended December 31, 2021, 2020 and 2019; (iii) Audited Consolidated Condensed Statements of Comprehensive Income for the years ended December 31, 2021, 2020 and 2019; (iv) Audited Consolidated Condensed Statements of Changes in Stockholders’ Equity for the years ended December 31, 2021, 2020 and 2019; (v) Audited Consolidated Condensed Statements of Cash Flows for the years ended December 31, 2021, 2020 and 2019; and (vi) Notes to Audited Consolidated Condensed Financial Statements.

104		Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

* Filed herewith

** Furnished herewith

+ Indicates management contract or compensatory plan.

107

Exhibit 10.3

PREMIER FINANCIAL CORP.

AMENDED AND RESTATED

2015 LONG TERM INCENTIVE PLAN

SECTION 1. PURPOSE AND EFFECTIVE DATE

1.1 Purpose. The purpose of the Premier Financial Corp. 2015 Long Term Incentive Plan (the “Plan”) is to provide a means through which the Company and its Subsidiaries may attract and retain Employees and Non-Employee Directors, to provide incentives that align their interests with those of the Company’s shareholders, and to promote the success of the Company’s business.

1.2 Effective Date. The Plan will become effective on the later of the date on which the Plan is approved by the Board or by the Company’s shareholders (“Effective Date”). This Plan was originally effective April 30, 2015 (the “Effective Date”) following the approval of the Plan by the shareholders of United Community Financial Corp. (“UCFC”) and assumed by the Company effective January 31, 2020 in connection with the merger of UCFC with and into the Company. This Plan was amended and restated by the Company effective February 15, 2022 to update certain administrative components in alignment with other Company incentive and benefit plans, including but not limited to the Company’s Amended and Restated 2018 Equity Incentive Plan, and to enhance certain corporate governance features.

SECTION 2. DEFINITIONS

As used in the Plan, the following terms shall have the meanings set forth below:

2.1 “Annual Bonus Award” means an Award to Employees who are Participants pursuant to Section 10 consisting of the right to receive a cash payment on an annual basis.

2.2 “Award” means, individually or collectively, any award or benefit to an Employee or Non-Employee Director permitted and granted under the Plan, including Stock Options, Stock Awards, Stock Units, Stock Appreciation Rights, Annual Bonus Awards, and Long-Term Incentive Awards.

2.3 “Award Agreement” means any agreement, document, or other instrument (which may be in written or electronic form) evidencing an Award granted under the Plan and specifying the terms, conditions, and restrictions thereof, including, without limitation, a Stock Option Agreement, Stock Award Agreement, Stock Unit Agreement, Stock Appreciation Right Agreement, Annual Bonus Award Agreement and Long-Term Incentive Award Agreement.

2.4 “Board” means the Board of Directors of the Company.

2.5 “Cause” means, unless otherwise provided in the related Award Agreement or in any employment agreement between the Participant and the Company or any Subsidiary or in any other agreement between the Participant and the Company or any Subsidiary (but only within the context of the events contemplated by the employment agreement or other agreement, as applicable), a Participant’s: (a) willful and continued failure to substantially perform assigned duties; (b) gross misconduct; (c) breach of any term of any agreement with the Company or any Subsidiary, including the Plan and any Award Agreement; (d) conviction of (or plea of no contest or nolo contendere to) (i) a felony or a misdemeanor that originally was charged as a felony but which was subsequently reduced to a misdemeanor through

2015 Long Term Incentive Plan (A/R 2022)

negotiation with the charging entity or (ii) a crime other than a felony, which involves a breach of trust or fiduciary duty owed to the Company or any Subsidiary; or (e) violation of the Company’s code of conduct or any other policy of the Company or any Subsidiary that applies to the Participant. Notwithstanding the foregoing, Cause will not arise solely because the Participant is absent from active employment during periods of vacation, consistent with the Company’s applicable vacation policy, or other period of absence approved by the Company. The determination of “Cause” shall be made by the Committee or by the Chief Human Resources Officer of the Company, in each of their sole and absolute discretion.

2.6 “Change in Control” has the meaning set forth in Section 12.2 of the Plan.

2.7 “Code” means the Internal Revenue Code of 1986, as amended from time to time.

2.8 “Committee” means the Compensation Committee of the Board or such other committee, subcommittee (including a subcommittee thereof if required with respect to actions taken to comply with Section 162(m) in respect of Awards to Covered Employees), or officer as may be designated by the Board from time to time to administer the Plan.

2.9 “Common Share(s)” means the common share(s), no par value, of the Company.

2.10 “Company” means Premier Financial Corp., an Ohio corporation, or any successor thereto.

2.11 “Covered Employee” has the meaning given the term in Code Section 162(m)(3) as interpreted by Internal Revenue Service Notice 2007-49.

2.12 “Director” means a member of the Board of Directors of the Company.

2.13 “Disability” means

(a)

with respect to an Incentive Stock Option, “disability” as defined in Section 22(e)(3) of the Code;

(b)

with respect to the payment, exercise or settlement of any Award that is (or becomes) subject to Section 409A of the Code (and for which no exception applies), (i) the Participant is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than twelve (12) months, (ii) the Participant is, by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than twelve (12) months, receiving income replacement benefits for a period of not less than three (3) months under an accident and health plan covering Employees of the Participant’s employer, or (iii) the Participant is determined to be totally disabled by the Social Security Administration or Railroad Retirement Board; and

(c)

with respect to a Participant’s right to exercise or receive settlement of any Award or with respect to the payment, exercise or settlement of any Award not described in subsection (a) or (b) of this definition, a Participant’s inability (established by an independent physician selected by the Committee and reasonably acceptable to the Participant or to the Participant’s legal representative) due to illness, accident or otherwise to perform his or her duties, which is expected to be permanent or for an indefinite duration longer than twelve (12) months.

2015 Long Term Incentive Plan (A/R 2022)

2.14 “Effective Date” has the meaning set forth in Section 1.2.

2.15 “Eligible Person” means any Employee or Non-Employee Director (and such other individuals designated by the Committee to become Employees or Non-Employee Directors upon or after the receipt of Awards).

2.16 “Employee” means any individual classified as an employee of the Company or any Subsidiary by the Company on its payroll system; provided, however, that with respect to Incentive Stock Options, the term “Employee” means any individual who is considered an employee of the Company or any Subsidiary for purposes of United States Treasury Regulation Section 1.421-l(h) (or any successor provision thereof).

2.17 “Employee Award” means any Award granted to an Employee.

2.18 “Exchange Act” means the Securities Exchange Act of 1934, as amended from time to time, and any successor thereto, and the rules and regulations promulgated thereunder.

2.19 “Fair Market Value” means, on a particular date,

(a) if the Common Shares are listed on a national securities exchange, the closing price per Common Share on the consolidated transaction reporting system for the principal national securities exchange on which Common Shares are listed on that date, or, if there shall have been no such sale so reported on that date, on the last preceding date on which such a sale was so reported, (it) if Common Shares are not so listed but is quoted on the NASDAQ National Market, the mean between the highest and lowest sales price per Common Share reported by the NASDAQ National Market on that date, or, if there shall have been no such sale so reported on that date, on the last preceding date on which such a sale was so reported, (iii) if Common Shares are not so listed or quoted, the mean between the closing bid and asked price on that date, or, if there are no quotations available for such date, on the last preceding date on which such quotations shall be available, as reported by the NASDAQ Stock Market, or, if not reported by the NASDAQ Stock Market, by the National Quotation Bureau, Incorporated, or (iv) if Common Shares are not publicly traded, the most recent value determined by an independent appraiser appointed by the Company for such purpose, or

(b) if applicable, the price per share as determined by the Committee in good faith (which determination shall be conclusive and binding on all persons); provided, however, that with respect to any Award that is intended to be exempt from the requirements of Section 409A, a value determined by the reasonable application of a reasonable valuation method as defined in Section 409A (and, with respect to ISOs, in accordance with Section 422 of the Code and the regulations thereunder).

2.20 “Good Reason” means, in the case of a Participant who is an Employee, the occurrence of any of the following events without the Participant’s express consent, unless all grounds for a termination with Good Reason based on such event have been cured within thirty (30) calendar days after the Participant gives written notice to the Company describing such event in detail and requesting cure, such notice to be given within ninety (90) calendar days after the first occurrence of such event:

material (10% or greater) diminution in the Participant’s base salary;

ii.

material change in the geographic location at which the Participant must perform the services which is greater than 50 miles from the Participant’s prior work location but only if such

2015 Long Term Incentive Plan (A/R 2022)

change results in an increase of the Participant’s one-way commute from the Participant’s residence of more than 35 miles; or

iii.

any material breach of an Award Agreement by the Company.

No event will constitute Good Reason unless the Participant resigns from employment with the Company within ninety (90) calendar days following the expiration of the Company cure period applicable to such event. Otherwise, any claim of such circumstances as Good Reason will be deemed irrevocably waived by the Participant.

2.21 “Incentive Stock Option” or “ISO” means a Stock Option granted under Section 6 of the Plan that meets the requirements of Section 422(b) of the Code or any successor provision.

2.22 “Long-Term Incentive Award” means an Award to Employees who are Participants pursuant to Section 11 consisting of the right to receive a payment in cash and/or in Common Shares to the extent Performance Goals are achieved and/or other requirements are met.

2.23 “Non-Employee Director” means a Director, or a member of the board of directors of a Subsidiary, who is not an Employee.

2.24 “Nonqualified Performance Award” means a Performance Award that is not intended to be a Qualified Performance Award.

2.25 “Nonqualified Stock Option” or “NSO” means a Stock Option granted under Section 6 of the Plan that is not an Incentive Stock Option.

2.26 “Participant” means any Eligible Person selected to receive an Award under the Plan.

2.27 “Performance Award” means an Award, other than an ISO, NSO, or SAR, that is subject to the attainment of one or more Performance Goals.

2.28 “Performance Goals” means, with respect to a Qualified Performance Award (and if the Committee so decides, with respect to a Nonqualified Performance Award) one (1) or more (either alone or in combination) of the following performance factors or business criteria which may be established by the Committee with respect to the Company or any one or more of its Subsidiaries or other business units:

(a) net earnings or net income, before or after taxes (including, but not limited to, net income, net income available to common shareholders, and income before taxes);

(b) earnings before or after taxes, interest, depreciation and/or amortization;

(d) revenue growth;

(e) net operating profit;

(f) pre-tax, pre-credit costs income;

(g) net interest margin;

2015 Long Term Incentive Plan (A/R 2022)

(h) return measures (including, but not limited to, return on average assets, capital, invested capital, or average equity);

(i) cash flow (including, but not limited to, operating cash flow, free cash flow, cash generation, cash flow return on equity, and cash flow return on investment).

(j) gross or operating margins;

(k) productivity ratios (including, but not limited to, efficiency ratio);

(l) capital ratios;

(m) liquidity ratios;

(n) share price (including, but not limited to, growth measures and total shareholder return);

(o) expense targets;

(p) margins;

(q) operating efficiency;

(r) market share (including, but not limited to, deposit market share or loan market share);

(s) loan and/or deposit growth;

(t) working capital targets and change in working capital;

(u) economic value added (including, but not limited to, net operating profit after tax minus the sum of capital multiplied by the cost of capital);

(v) asset growth;

(w) non-interest expenses as a percentage of total expense;

(x) loan charge-offs as a percentage of total loans;

(y) risk and asset quality measures (including, but not limited to, net charge-off ratio, non-performing assets ratio, and classified assets ratio); and

(z) other specific criteria adopted by the Committee.

As to each Performance Goal, the relevant measurement of performance shall be computed in accordance with United States generally accepted accounting principles to the extent applicable, but, unless otherwise determined and specified by the Committee will exclude the effects of the following; (i) charges or expenses for reorganizing and restructuring; (ii) discontinued operations; (iii) asset write-downs; (iv) gains or losses on the disposition of a business; (v) changes in tax or accounting principles, regulations or laws; (vi) mergers, acquisitions or dispositions; (vii) restatements and accounting charges; (viii) impacts on interest expense, preferred dividends and share dilution as a result of debt and capital transactions; and (ix) extraordinary, unusual and/or non-recurring items of income, expense, gain or loss,

2015 Long Term Incentive Plan (A/R 2022)

or charges that, in case of each of the foregoing, the Company identifies in its financial statements, including notes to the final statements.

In addition, the Committee may appropriately adjust any evaluation of performance under a Performance Goal to exclude any of the following events that occurs during a performance period: (aa) litigation, claims, judgments or settlements; (bb) the effects of changes in other laws or regulations affecting reported results; and (cc) accruals of any amounts for payment under the Plan or any other compensation arrangements maintained by the Company; provided that such adjustment was specified in the Award during the initial ninety (90) days of an applicable performance period if the Award is subject to Section 409A. Performance Goals may be specified in absolute terms, in percentages, or in terms of growth from period to period or growth rates over time, as well as measured relative to the performance of a group of comparator companies, or a published or special index, or a stock market index, that the Committee, in its discretion, deems appropriate. The Performance Goals may include a threshold level of performance below which no payment will be made (or no vesting will occur), levels of performance at which specified payments will be paid (or specified vesting will occur), and a maximum level of performance above which no additional payment will be made (or at which full vesting will occur). In addition, in the case of Awards that will not be Qualified Performance Awards, the Committee may establish other Performance Goals and provide for other exclusions or adjustments not listed in this Section 2.28.

2.29 “Plan” means this Premier Financial Corp. 2015 Long Term Incentive Plan, as it may be amended from time to time.

2.30 “Proceeding” has the meaning set forth in Section 18 of the Plan.

2.31 “Qualified Performance Award” means an Employee Award that is a Performance Award to a Covered Employee that is intended to qualify as performance-based compensation under Section 162(m).

2.32 “Restriction Period” means the period during which an Award may be earned by a Participant.

2.33 “Restricted Stock” means an Award of Common Shares that is subject to forfeiture until vesting conditions are satisfied.

2.34 “Retirement” means, unless otherwise specified in an Award Agreement, in the case of an Employee, the retirement from the employ of the Company under one or more of the retirement plans of the Company, or as otherwise specified by the Committee and, in the case of Non-Employee Director, shall mean the retirement from the Board at any time after the Director attains age fifty-five (55) and has served at least five (5) years as a Non-Employee Director.

2.35 “Section 162(m)” means Code Section 162(m) and the regulatory and other guidance issued thereunder by the United States Department of the Treasury and/or Internal Revenue Service.

2.36 “Section 409A” means Section 409A of the Code and the regulatory and other guidance issued thereunder by the United States Department of the Treasury and/or Internal Revenue Service.

2.37 “Stock Appreciation Right” or “SAR” means a right granted under Section 9 of the Plan.

2015 Long Term Incentive Plan (A/R 2022)

2.38 “Stock Award” means a grant of Common Shares under Section 7 of the Plan, which grant may be a grant of Restricted Stock.

2.39 “Stock Option” means an Incentive Stock Option or a Nonqualified Stock Option granted under Section 6 of the Plan.

2.40 “Stock Unit” means a right granted to a Participant to receive Common Shares or cash or a combination of Common Shares and cash under Section 8 of the Plan.

2.41 “Subsidiary” means an entity of which the Company is the direct or indirect (in an unbroken chain of entities beginning with the Company) beneficial owner of not less than fifty percent (50%) of all issued and outstanding equity interests of such entity, including entities acquired after the Effective Date.

2.42 “Substitute Awards” means Common Shares subject to Awards granted in assumption, substitution or exchange for previously granted share-based awards under a shareholder-approved plan of a company acquired by the Company.

SECTION 3. ADMINISTRATION

3.1 The Committee. Except as otherwise provided herein, this Plan shall be administered by the Committee. Any Award that is intended to be a Qualified Performance Award shall be issued by the Committee or a subcommittee consisting solely of members of the Board who are “outside directors” under Section 162(m). As to the selection of and grant of Awards to Participants who are not executive officers of the Company, the Committee may, pursuant to a written delegation of authority which sets out the specific limits of such delegation, delegate its responsibilities to the Chief Executive Officer or other officers in a manner consistent with applicable law and provided the such Participant’s compensation is not subject to the limitations in Section 162(m) of the Code.

3.2 Authority of the Committee

(a) Subject to the provisions hereof, the Committee shall have full and exclusive power and authority to administer this Plan and to take all actions that are specifically contemplated hereby or are necessary or appropriate in connection with the administration hereof. The Committee shall also have full and exclusive power to interpret this Plan and adopt such rules, regulations and guidelines to carrying out this Plan as it may deem necessary or proper, all of which power shall be exercised in the best interests of the Company and in keeping with the objectives of this Plan. The Committee may, in its discretion, provide for the extension of the exercisability of an Employee Award, accelerate the vesting or exercisability of an Employee Award, eliminate or make less restrictive any restrictions applicable to an Employee Award, waive any restriction or other provision of this Plan (insofar as such provision relates to Employee Awards) or an Employee Award or otherwise amend or modify an Employee Award in any manner that is either (i) not adverse to the Participant to whom such Employee Award was granted or (ii) consented to by such Participant. The Committee may correct any defect or supply any omission or reconcile any inconsistency in this Plan or in any Award in the manner and to the extent the Committee deems necessary or desirable to further the Plan purposes. Any decision of the Committee, with respect to Employee Awards, in the interpretation and administration of this Plan shall lie within its sole and absolute discretion and shall be final, conclusive and binding on all parties concerned.

2015 Long Term Incentive Plan (A/R 2022)

(b) The Committee shall have the independent authority and discretion over the appointment, compensation and oversight of the services of advisors to the Committee, including compensation consultants and legal counsel, provided such advisors meet the standards for independence as established by the exchange on which the Common Shares are traded. The Company shall pay the compensation and expenses of such advisors. The Committee may engage or authorize, the engagement of a third party administrator to carry out administrative functions under the Plan.

(c) No member of the Committee shall be liable for any action taken or determination made hereunder in good faith. Service on the Committee shall constitute service as a Director so that the members of the Committee shall be entitled to indemnification and reimbursement as Directors of the Company pursuant to the Company’s articles of incorporation and regulations.

3.3 Performance Goals

(a) The Committee may, in its discretion, provide that any Award granted under the Plan shall be subject to the attainment of Performance Goals. Performance Goals may be absolute in their terms or measured against or in relationship to the performance of other companies or indices selected by the Committee. In addition, as provided in Section 2.28, Performance Goals may be adjusted for any events or occurrences, as may be determined by the Committee. Performance Goals may be particular to one or more lines of business, corporate functions or Subsidiaries or may be based on the performance of the Company and its Subsidiaries as a whole.

(b) As provided in Sections 2.28 and 3.3(a), with respect to each performance period established by the Committee, (i) the Committee shall establish such Performance Goals relating to one or more of the business criteria selected pursuant to Sections 2.28 and 3.3(a), and (ii) the Committee shall establish targets for Participants for achievement of Performance Goals. The Performance Goals and performance targets established by the Committee may be identical for all Participants for a given performance period or, at the discretion of the Committee, may differ among Participants. Following the completion of each performance period, the Committee shall determine the extent to which Performance Goals for that performance period have been achieved and shall authorize the award of Common Shares or cash, as applicable, to the Participant for whom the targets were established, in accordance with the terms of the applicable Award Agreements.

SECTION 4. ELIGIBILITY AND AWARDS

4.1 Participants. Participants shall consist of all Eligible Persons the Committee may designate from time to time to receive Awards under the Plan; provided, however, that Awards of Incentive Stock Options may only be made to an Employee who is considered an employee of the Company or any Subsidiary for purposes of United States Treasury Regulation Section 1.421-l(h) or any successor provision related thereto.

4.2 Awards. Subject to the terms of the Plan, any type of Awards may be granted by the Committee to any Participant, but only Employees may receive Awards of Incentive Stock Options. Awards may be granted alone, or in addition to, in tandem with, or (subject to the prohibition on repricing set forth in Section 16.3) in substitution for any other Award (or any other award granted under another plan of the Company or any Subsidiary, including the plan of an acquired entity).

4.3 Award Agreements. Each Award shall be evidenced by an Award Agreement specifying the terms and conditions of the Award. In the sole discretion of the Committee, the Award

2015 Long Term Incentive Plan (A/R 2022)

Agreement may condition the grant of an Award upon the Participant’s entering into one or more of the following agreements with the Company: (a) an agreement not to compete with, or solicit the customers or employees of, the Company and its Subsidiaries, which shall become effective as of the date of the grant of the Award and remain in effect for a specified period of time following termination of the Participant’s employment with the Company; (b) an agreement to cancel any employment agreement, fringe benefit or compensation arrangement in effect between the Company and the Participant; and (c) an agreement to retain the confidentiality of certain information. Such Award Agreement or other agreement may contain such other terms and conditions as the Committee shall determine, including provisions for the Participant’s forfeiture of an Award or the return of vested Common Shares received in connection with an Award in the event of the Participant’s noncompliance with the provisions of, or as otherwise provided in, such Award Agreement or other agreement. If the Participant shall fail to enter into any such agreement at the request of the Committee and within any period specified by the Committee, then the Award granted or to be granted to such Participant shall be forfeited and cancelled. The applicable Award Agreement shall specify the termination provisions of an Award upon a Participant’s termination of employment or service with the Company and its Subsidiaries.

4.4 Performance Awards

(a) Without limiting the type or number of Awards that may be made under the other provisions of this Plan, an Award may be in the form of a Performance Award. The terms, conditions and limitations applicable to any Performance Awards granted to Participants pursuant to this Plan shall be determined by the Committee; provided that any Stock Award which is a Performance Award shall have a minimum Restriction Period of one year from the Grant Date. The Committee may provide for earlier vesting in an Employee Award upon a termination of employment by reason of death, Disability or Retirement or the termination of the Employee’s employment by the Company other than for Cause. The Committee shall set Performance Goals in its discretion which, depending on the extent which they are met, will determine the value, vesting and/or amount of Performance Awards that will be paid out.

(b) Except as provided in any Award Agreement, if an Employee Award is permitted to vest prior to the lapse of any performance period or Restriction Period, the Committee may (i) determine the extent to which the Performance Goals with respect to each such Performance Award have been met (based upon such audited or unaudited financial information then available as the Committee deems relevant) at the time of the early vesting, (ii) establish that the Performance Goals have been met at target levels of performance without consideration of actual performance at the time of the early vesting, or (iii) postpone the determination of performance, and ultimate settlement to the Participant, until the completion of the performance period. Performance Awards vesting prior to the lapse of any performance period may be prorated based on each completed day of the performance period up to and including the date of the Employee’s termination of employment.

(c) Nonqualified Performance Awards. Nonqualified Performance Awards granted to Participants shall be based on achievement of such Performance Goals and be subject to such terms, conditions and restrictions as the Committee shall determine.

2015 Long Term Incentive Plan (A/R 2022)

(d) Qualified Performance Awards. Qualified Performance Awards granted to Covered Employees under the Plan shall be paid, vested or otherwise deliverable solely on account of the attainment of one or more Performance Goals established by the Committee prior to the earlier to occur of (x) ninety (90) days after the commencement of the period of service to which the Performance Goal relates, or (y) the lapse of 25% of the period of service (as scheduled in good faith at the time the goal is established) to which the Performance Goal relates, and in any event while the outcome of the Performance Award is substantially uncertain. In interpreting Plan provisions applicable to Performance Goals and Qualified Performance Awards, it is the intent of the Plan to conform with the standards of Section 162(m), as to grants to Covered Employees and those Employees whose compensation is likely to be subject to Section 162(m), and the Committee shall be guided by such provisions in establishing such goals. Prior to the payment of any compensation relating to Qualified Performance Awards based on the achievement of Performance Goals, the Committee must certify in writing that applicable Performance Goals and any of the material terms thereof were, in fact, satisfied. Subject to the foregoing provisions, the terms, conditions and limitations applicable to any Qualified Performance Awards made pursuant to this Plan shall be determined by the Committee. No Qualified Performance Awards shall be granted unless the Performance Goals have been approved by the shareholders of the Company within five (5) years of the commencement of the performance period to which such Performance Goals relate. The Committee, in determining the actual amount of a Qualified Performance Award, may reduce or eliminate (but not increase) the amount of the Qualified Performance Award payout through the use of negative discretion provided that the exercise of such negative discretion does not cause the Qualified Performance Award to fail to qualify as performance-based compensation under Section 162(m).

SECTION 5. COMMON SHARES

5.1 Total Number of Common Shares

(a) Subject to adjustment as provided in Section 5.3, the total number of Common Shares that may be subject to Awards granted under the Plan shall be 1,200,000 Common Shares. The number of Common Shares available for grant under the Plan shall be reduced by (i) one (1) for each Common Share subject to a Stock Option or SAR; and (ii) one (1) for each Common Share subject to a Stock Award, a Stock Unit or a Long-Term Incentive Award. Common Shares subject to Awards granted under the Plan may be either authorized but unissued shares or treasury shares, and shall be adjusted in accordance with the provisions of Section 5.3 of the Plan. Substitute Awards do not reduce the Common Shares available for Awards under the Plan.

(b) Any Common Shares subject to an Award that is cancelled, forfeited or expires prior to exercise or realization, either in full or in part, shall again become available for issuance under the Plan. Any Common Shares that again become available for future grants pursuant to this Section 5.1(b) shall be added back as one (1) Common Share if such shares were subject to Options or Stock Appreciation Rights; and as one (1) Common Share if such shares were subject to other Awards. Notwithstanding anything to the contrary contained herein, Common Shares subject to an Award under the Plan shall not again be made available for issuance or delivery under the Plan if such shares are (i) shares tendered in payment of an Option, (ii) shares delivered to or withheld by the Company to satisfy any tax withholding obligation, or (iii) shares covered by a share-settled Stock Appreciation Right or other Awards that were not issued upon the settlement of the Award.

2015 Long Term Incentive Plan (A/R 2022)

5.2 Limitations. Subject to adjustment as provided in Section 5.3:

(a) Of the total Common Shares authorized for issuance under the Plan pursuant to Section 5.1, the maximum number of Common Shares under the Plan that shall be available for (i) Awards of Incentive Stock Options is 600,000 Common Shares; and (ii) Awards of Nonqualified Stock Options and Stock Appreciation Rights is 400,000 Common Shares.

(b) No Participant shall be granted, during any one (1) calendar year period, Options and Stock Appreciation Rights with respect to more than 300,000 Common Shares in the aggregate, or any other Awards with respect to more than 300,000 Common Shares in the aggregate. If an Award is to be settled in cash, the number of Common Shares on which the Award is based shall not count towards the individual share limit set forth in this Section 5.2(b).

(c) The maximum number of Common Shares subject to a Qualified Performance Award that may be granted under the Plan in any one (1) calendar year to a Participant is 300,000 Common Shares.

(d) During any one (1) calendar year, no Non-Employee Director may receive Awards with an aggregate grant date Fair Market Value in excess of Two Hundred Thousand and 00/100 Dollars ($200,000.00).

5.3 Adjustment. In the event of any reorganization, recapitalization, share split, share distribution, share dividend, merger, consolidation, split-up, spin-off, combination, subdivision, consolidation or exchange of shares, any change in the capital structure of the Company or any similar corporate transaction, the Committee shall make such adjustments as are necessary and appropriate to preserve the benefits or intended benefits of the Plan and Awards granted under the Plan. Such adjustments may include: (a) adjustment in the number and kind of Common Shares reserved for issuance under the Plan; (b) adjustment in the number and kind of Common Shares covered by outstanding Awards; (c) adjustment in the exercise price of outstanding Stock Options or Stock Appreciation Rights, or the price of other Awards under the Plan; (d) adjustments to the share limitations set forth in Section 5.2 of the Plan; and (e) any other changes that the Committee determines to be equitable under the circumstances. Notwithstanding the foregoing, previously granted Stock Options and SARs are subject only to such adjustments as are necessary to maintain the relative proportionate interest the Stock Options and SARs represented immediately prior to such event and to preserve, without exceeding, the value of Stock Options and SARs in accordance with Code Section 422 and Section 409A.

SECTION 6. STOCK OPTIONS

6.1 Grant. Subject to the terms of the Plan, the Committee may from time to time grant Stock Options to Participants. Stock Options granted under the Plan to Non-Employee Directors shall be NSOs. Unless otherwise expressly provided at the time of the grant to be Awards of ISOs, Stock Options granted under the Plan to Employees shall be NSOs.

6.2 Stock Option Agreement. The grant of each Stock Option shall be evidenced by a written Award Agreement sometimes referred to herein as a “Stock Option Agreement” specifying the type of Stock Option granted, the exercise period, the exercise price, the terms for payment of the exercise price, the expiration date of the Stock Option, the number of Common Shares to be subject to each Stock Option, how the Stock Option will be exercised, and such other terms and conditions established by the Committee, in its sole discretion, not inconsistent with the Plan. With respect to a Stock Option, in no event shall a Participant be entitled to amounts equivalent to cash dividends, share dividends or other property dividends on the Common Shares subject to the Stock Option.

2015 Long Term Incentive Plan (A/R 2022)

6.3 Exercise Price and Period. With respect to each Stock Option granted to a Participant;

(a) Except as provided in Section 6.4(b), Section 16.3, or in the case of Substituted Awards, the per share exercise price of each Stock Option shall be one hundred percent (100%) of the Fair Market Value of the Common Shares subject to the Stock Option on the date on which the Stock Option is granted.

(b) Each Stock Option shall become exercisable as set forth in the Stock Option Agreement. Notwithstanding the foregoing sentence, the Committee shall have the discretion to accelerate the date as of which any Stock Option shall become exercisable in the event of the Employee’s termination of employment with the Company or any Subsidiary, or a Non-Employee Director’s termination of service on the Board or on the board of directors of a Subsidiary, without Cause.

(c) Except as provided in Section 6.4(b), each Stock Option that has not terminated earlier as provided in the Stock Option Agreement shall expire, and all rights to purchase Common Shares thereunder shall expire, on the date ten (10) years after the date of grant.

(d) If the employee's employment terminates as a result of the employee's Disability, the employee may exercise the vested portion of each ISO, but only within such period of time ending on the earlier of: (a) the date 12 months following the employee's termination of employment or (b) the Expiration Date. If the employee’s employment terminates as a result of the employee's death, the vested portion of each ISO may be exercised by the employee's estate, by a person who acquired the right to exercise the ISO by bequest or inheritance or by the person designated to exercise the ISO upon the employee's death, but only within the time period ending on the earlier of: (a) the date 12 months following the employee's termination of employment or (b) the Expiration Date.

6.4 Required Terms and Conditions of ISOs. In addition to the foregoing, each ISO granted to an Employee shall be subject to the following specific rules:

(a) The aggregate Fair Market Value (determined with respect to each ISO at the time such Option is granted) of the Common Shares with respect to which ISOs are exercisable for the first time by an Employee during any calendar year (under all incentive stock option plans of the Company and its Subsidiaries) shall not exceed One Hundred Thousand Dollars ($100,000). If the aggregate Fair Market Value (determined at the time of grant) of the Common Shares subject to an ISO which first becomes exercisable in any calendar year exceeds the limitation of this Section 6.4(a), so much of the ISO that does not exceed the applicable dollar limit shall be an ISO and the remainder shall be a NSO; but in all other respects, the original Stock Option Agreement shall remain in full force and effect.

(b) Notwithstanding anything herein to the contrary, if an ISO is granted to an Employee who owns shares possessing more than ten percent (10%) of the total combined voting power of all classes of shares of the Company (or its parent or subsidiaries within the meaning of Section 422(b)(6) of the Code): (i) the purchase price of each Common Share subject to the ISO shall be not less than one hundred ten percent (110%) of the Fair Market Value of the Common Share on the date the ISO is granted; and (ii) the ISO shall expire, and all rights to purchase Common Shares thereunder shall expire, no later than the fifth (5th) year anniversary of the date the ISO was granted.

2015 Long Term Incentive Plan (A/R 2022)

6.5 Exercise of Stock Options

(a) A Participant entitled to exercise a Stock Option may do so by delivering written notice to that effect specifying the number of Common Shares with respect to which the Stock Option is being exercised and any other information the Committee may prescribe. All notices or requests provided for herein shall be delivered to the Secretary of the Company or such party as the Secretary of the Company may designate.

(b) The Committee in its sole discretion may make available one or more of the following alternatives for the payment of the Stock Option exercise price and specified in the Award Agreement:

(i) in cash;

(ii) by directing the Company to withhold the number of Common Shares otherwise issuable in connection with the exercise of the Stock Option that have an aggregate Fair Market Value equal to the exercise price;

(iii) by delivering previously acquired Common Shares that are acceptable to the Committee and that have an aggregate Fair Market Value on the date of exercise equal to the Stock Option exercise price.

The Committee shall have the sole discretion to establish the terms and conditions applicable to any alternative made available for payment of the Stock Option exercise price; however, such terms shall be specified in the Award Agreement effective at the date of grant.

SECTION 7. STOCK AWARDS

7.1 Grant. The Committee may, in its discretion, (a) grant Common Shares under the Plan to any Participant without payment of consideration by such Participant, (b) grant shares of Restricted Stock to any Participant, or (c) sell Common Shares under the Plan to any Participant for such amount of cash, Common Shares or other consideration as the Committee deems appropriate.

7.2 Stock Award Agreement. Each Common Share issued to a Participant under this Section 7 shall be evidenced by a written Award Agreement sometimes referred to herein as a “Stock Award Agreement”, which shall specify whether the Common Shares are granted or sold to the Participant and such other restrictions, terms and conditions (including the attainment of Performance Goals) established by the Committee in its sole discretion, not inconsistent with the Plan and the following provisions:

(a) The restrictions to which the Common Shares awarded hereunder are subject shall lapse as set forth in the Stock Award Agreement. The Committee shall have the discretion to accelerate the date as of which the restrictions lapse with respect to a Stock Award in the event of

2015 Long Term Incentive Plan (A/R 2022)

an Employee’s termination of employment with the Company or any Subsidiary, or a Non-Employee Director’s termination of service on the Board or on the board of directors of a Subsidiary, without Cause, after giving consideration to Section 409A.

(b) Except as provided in this subsection (b) and unless otherwise provided in the Stock Award Agreement, the Participant receiving a grant of or purchasing Common Shares shall thereupon be a shareholder with respect to all of the Common Shares subject to the Stock Award and shall have the rights of a shareholder with respect to such shares, including the right to vote such shares and to receive dividends and other distributions paid with respect to such shares. Notwithstanding the preceding sentence, in the case of a Stock Award for Restricted Stock that provides for the right to receive dividends or distributions, the Company may accumulate and hold such dividends or distributions or pay said dividends and distributions at the same time the Company pays the same with respect to non-restricted Common Shares, as specified in the Award Agreement. If accumulated, the accumulated dividends or other distributions shall be paid to the Participant only upon the lapse of the restrictions to which the Stock Award is subject, and any such dividends or distributions attributable to the portion of a Stock Award for which the restrictions do not lapse shall be forfeited.

(c) The Company shall, subject to compliance with the Exchange Act and other applicable laws, issue, in the name of the Participant, share certificates representing the total number of Common Shares granted or sold to the Participant, as soon as may be reasonably practicable after such grant or sale, which, in the case of Restricted Stock, may be held by the Secretary of the Company until such time as the Common Shares are forfeited or the restrictions lapse.

(d) A Participant may make an election under Section 83(b) of the Code. If any Participant shall make the election permitted under Section 83(b) of the Code, such Participant shall notify the Company of such election within 10 days of filing notice of the election with the Internal Revenue Service

SECTION 8. STOCK UNITS

8.1 Grant. The Committee may, in its discretion, grant Stock Units to any Participant. Each Stock Unit shall entitle the Participant to receive, on the date or upon the occurrence of an event (including the attainment of Performance Goals) as described in the Stock Unit Agreement, one Common Share or cash equal to the Fair Market Value of a Common Share on the date of such event, as provided in the Stock Unit Agreement.

8.2 Stock Unit Agreement. Each grant of Stock Units to a Participant under this Section 8 shall be evidenced by a written Award Agreement sometimes referred to herein as a “Stock Unit Agreement”, which shall specify the restrictions, terms and conditions established by the Committee in its sole discretion, not inconsistent with the Plan and the following provisions:

(a) The restrictions to which the Stock Units awarded hereunder are subject shall lapse as set forth in the Stock Unit Agreement. The Board shall have the discretion to accelerate the date as of which the restrictions lapse in the event of an Employee’s termination of employment with the Company or any Subsidiary, or a Non-Employee Director’s termination of service on the Board or on the board of directors of a Subsidiary, without Cause, after giving consideration to Section 409A.

2015 Long Term Incentive Plan (A/R 2022)

(b) Except as provided in this subsection (b), and unless otherwise provided in the Stock Unit Agreement, a Participant shall have no rights of a shareholder, including voting or dividend or other distribution rights, with respect to any Stock Units prior to the date they are settled in Common Shares. A Stock Unit Agreement may provide that, until the Stock Units are settled in Common Shares or cash, the Participant shall receive, on each dividend or distribution payment date applicable to the Common Shares, an amount equal to the dividends or distributions that the Participant would have received had the Stock Units held by the Participant as of the related record date been actual Common Shares. Notwithstanding the preceding sentence, in the case of a Stock Unit Award that provides for the right to receive amounts related to dividends or distributions: (i) if such Stock Unit Award is subject to performance-based restrictions as described in Section 3.3, the Company shall accumulate and hold such amounts, and (ii) in the case of all other such Stock Unit Awards, the Committee shall have the discretion to cause the Company to accumulate and hold such amounts. If dividends or distributions will be accumulated, the accumulated amounts shall be paid to the Participant only upon the lapse of the restrictions to which the Stock Unit Award is subject and any such amounts attributable to the portion of a Stock Unit Award for which the restrictions do not lapse shall be forfeited.

(c) Upon settlement of Stock Units in Common Shares, the Company shall, subject to compliance with the Exchange Act and other applicable laws, issue, in the, name of the Participant, share certificates representing a number of Common Shares equal to the number of Stock Units being settled.

SECTION 9. STOCK APPRECIATION RIGHTS (SARS)

9.1 Grant. The Committee may, in its discretion, grant an SAR under the Plan to any Participant who is an Employee. Each SAR granted to a Participant shall entitle the Participant to receive an amount (payable in cash or in Common Shares, or a combination thereof, determined by the Committee and set forth in the related Stock Appreciation Right Agreement) equal to the excess of (a) the Fair Market Value per Common Share on the date of exercise of such SAR, over (b) the exercise price of the SAR, multiplied by the number of Common Shares with respect to which the SAR is being exercised.

9.2 Stock Appreciation Right Agreement. Each SAR granted under this Section 9 shall be evidenced by a written Award Agreement sometimes referred to herein as a “Stock Appreciation Right Agreement”, specifying the conditions for exercise, the exercise period, the exercise price, the expiration date, the number of Common Shares subject to each SAR, whether the SAR is to be settled in Common Shares or cash and such other terms and conditions established by the Board in its sole discretion, not inconsistent with the Plan and the following provisions:

(a) Except in the case of Substituted Awards and Section 16.3, the per share exercise price of each SAR shall be one hundred percent (100%) of the Fair Market Value of the Common Shares subject to the SAR on the date on which the SAR is granted.

(b) Each SAR shall become exercisable as set forth in the Stock Appreciation Right Agreement. The Committee shall have the discretion to accelerate the date as of which any SAR shall become exercisable in the event of a Participant’s termination of employment with the Company or any Subsidiary without Cause.

(c) Unless a shorter period is provided in the Stock Appreciation Right Agreement, each SAR shall expire on the date ten (10) years after the date of grant.

2015 Long Term Incentive Plan (A/R 2022)

(d) Upon exercise of a SAR settled in Common Shares, the Company shall, subject to compliance with the Exchange Act and other applicable laws, issue, in the name of the Participant, share certificates representing the total number of Common Shares issuable to the Participant.

With respect to a Stock Appreciation Right, in no event shall a Participant be entitled to amounts equivalent to cash dividends, share dividends or other dividends on the Common Shares subject to the SAR.

SECTION 10. ANNUAL BONUS AWARDS

Subject to the terms of the Plan, the Committee will determine all terms and conditions of an Annual Bonus Award, including but not limited to, whether or not the Annual Bonus Award will be solely a discretionary Annual Bonus Award, any Performance Goals, performance period, the potential payable, and the timing and form of payment. If the Committee determines that the Annual Bonus Award shall be a Performance Award (instead of a discretionary Annual Bonus Award): (a) the Committee must require that payment of all or any portion of the amount subject to the Annual Bonus Award is contingent on the achievement of one or more Performance Goals during the performance period the Committee specifies, although the Committee may specify that all or a portion of the Performance Goals subject to an Award is deemed achieved upon a Participant’s death, Disability or Retirement, or such other circumstances as the Committee may specify; and (b) the performance period must relate to a period of one (1) fiscal year of the Company except that, if the Award is made in the year this Plan becomes effective, at the time of commencement of employment with the Company or on the occasion of a promotion, then the Award may relate to a period shorter than one (1) fiscal year.

SECTION 11. LONG-TERM INCENTIVE AWARDS

Subject to the terms of the Plan, the Committee will determine all terms and conditions of a Long-Term Incentive Award, including but not limited to the Performance Goals, performance period, the potential amount payable, and the timing and form of payment, subject to the following: (a) the Committee must require that payment of all or any portion of the amount subject to the Long-Term Incentive Award is contingent on the achievement of one or more Performance Goals during the performance period the Committee specifies, although the Committee may specify that all or a portion of the Performance Goals subject to an Award is deemed achieved upon a Participant’s death, Disability or Retirement, or such other circumstances as the Committee may specify; and (b) the performance period must relate to a period of more than one (1) fiscal year of the Company. Dividend equivalents shall not be paid until and to the extent that the Performance Goals are met.

The Committee may from time to time grant Awards under this Plan that provide a Participant the right to purchase Common Shares that are valued by reference to the Fair Market Value of the Common Shares (including, but not limited to, dividend equivalents). Such Awards shall be in a form determined by the Committee (and may include terms contingent upon a Change of Control); provided that such Awards shall not be inconsistent with the terms and purposes of this Plan.

SECTION 12. CHANGE IN CONTROL

12.1 Effect of Change in Control. Upon a Change in Control:

(a) Except as otherwise provided in any Award Agreement, notwithstanding any provision of the Plan to the contrary, all NSOs, ISOs, and SARs shall become immediately

2015 Long Term Incentive Plan (A/R 2022)

exercisable with respect to one hundred percent (100%) of the Common Shares subject to such NSOs, ISOs, and SARs.

(b) Except as provided in any Award Agreement, all incomplete performance periods in respect of each Performance Award shall end on the date of the Change in Control and the Committee, as constituted prior to the Change in Control, shall (i) determine the extent to which the Performance Goals with respect to each such Performance Award have been met (based upon such audited or unaudited financial information then available as it deems relevant), and (ii) cause to be paid to the Participant prorated Awards (based on each completed day of the Performance Period up to and including the date of the Change in Control) based upon the Committee’s determination under preceding clause (i) or, if no such determination has been made, assuming that the target levels of performance have been met for each Performance Goal.

(c) With respect to any other outstanding Awards under this Plan (e.g. an Award other a NSO, ISO, SAR, or Performance Award) or any Substitute Awards described in subparagraph (d), the applicable Award Agreement may provide that such Award or Substitute Award shall be fully earned and vested immediately upon the termination of the individual’s employment or service but only if the Participant's employment or service is terminated by the Company or any successor entity thereto without Cause, or the Participant resigns his or her employment for Good Reason, in either case, within such periods of time as may be specified in the applicable Award Agreement, which time period shall not begin more than 90 days prior to a Change in Control nor end more than two (2) years after a Change in Control.

(d) Notwithstanding the foregoing and without limiting the effect of Section 5.3, the Committee or the Board of the Company may, in its discretion, to the extent determined to be permitted under Code Section 409A, take one or more of the following actions with respect to any outstanding Awards: (i) settle such Awards for an amount of cash or securities equal to their value, where in the case of stock options and SARs, the value of such awards, if any, will be equal to their in-the-money spread value (if any), as determined in the sole discretion of the Committee; (ii) provide for the assumption of or the issuance of Substitute Awards that will substantially preserve the otherwise applicable terms of any affected Awards previously granted under the Plan, as determined by the Committee in its sole discretion; or (iii) modify the terms of such awards to add events, conditions or circumstances upon which the vesting of such Awards or lapsing of restrictions thereon will accelerate, including but not limited to the ability to accelerate vesting of any outstanding Award in the event of an individual’s separation from employment or service prior to but in anticipation of the Change in Control.

12.2 Definition of Change in Control. means the occurrence of any of the following events after the Effective Date:

The acquisition by one person, or more than one person acting as a group, of ownership of stock of the Company that, together with stock held by such person or group (in each case, directly or through attribution), constitutes more than fifty percent (50%) of the total fair market value or total voting power of the stock of the Company (provided that, if any person or more than one person acting as a group is considered to own more than fifty percent (50%) of the total fair market value or total voting power of the stock of the Company, the acquisition of additional control by the same person or persons will not constitute a Change in Control);

iv.

2015 Long Term Incentive Plan (A/R 2022)

each case, directly or through attribution), constitutes thirty percent (30%) or more of the total voting power of the stock of the Company;

A majority of the members of the Board are replaced during any twelve (12)-month period by directors whose appointment or election is not endorsed by a majority of the members of the Board before the date of the appointment or election; or

vi.

One person, or more than one person acting as a group, acquires (or has acquired during the twelve (12)-month period ending on the date of the most recent acquisition by such person or group) assets from the Company that have a total gross fair market value (determined without regard to any liabilities associated with such assets) equal to or more than forty (40%) of the total gross fair market value of all of the assets of the Company immediately before such acquisition or acquisitions.

(e) Persons will not be considered to be acting as a group solely because they purchase or own stock of the same corporation at the same time, or as a result of the same public offering. However, persons will be considered to be acting as a group if they are owners of a corporation that enters into a merger, consolidation, purchase or acquisition of stock, or similar business transaction with the Company. Notwithstanding the foregoing, solely for purposes of any payment or benefit under this Agreement that constitutes “deferred compensation” for purposes of Code Section 409A, a “Change in Control” will not occur unless such Change in Control also constitutes a “change in the ownership of a corporation,” a “change in the effective control of a corporation,” or a “change in the ownership of a substantial portion of the assets of the corporation,” in each case within the meaning of Code Section 409A.

SECTION 13. SECURITIES LAW RESTRICTIONS

The Committee may impose such restrictions on Awards and Common Shares or any other benefits underlying Awards hereunder as it may deem advisable, including without limitation restrictions under the Code and federal securities laws, the requirements of any stock exchange or similar organization, and any blue sky, state, or foreign securities laws applicable to such securities. Notwithstanding any other Plan provision to the contrary, the Committee shall not be obligated to issue, deliver, or transfer Common Shares under the Plan, make any other distribution of benefits under the Plan, or take any other action, unless such delivery, distribution, or action is in compliance with all applicable laws, rules, and regulations (including but not limited to the requirements of the Code and the securities acts). The Committee may cause a restrictive legend to be placed on any Common Shares issued pursuant to an Award hereunder in such form as may be prescribed from time to time by applicable laws and regulations or as may be advised by legal counsel. The term of an Award shall not be extended, and neither the Committee, nor the Company nor its Directors or officers shall have any obligation or liability to a Participant, the Participant’s successor or any other person with respect to any Common Shares as to which the Award shall lapse because of such restrictions.

SECTION 14. PAYMENT OF TAXES

In connection with any Award, and as a condition to the issuance or delivery of any Common Shares or cash amount to the Participant in connection therewith, the Company may require the Participant to pay the Company an amount equal to the minimum amount of the tax the Company or any Subsidiary may be required to withhold to obtain a deduction for federal, state or local income tax purposes as a result of such Award or to comply with applicable law. The Committee in its sole discretion may make available one or more of the following alternatives for the payment of such taxes:

2015 Long Term Incentive Plan (A/R 2022)

(a) in cash;

(b) by directing the Company to withhold the number of Common Shares otherwise issuable in connection with the Award that have an aggregate Fair Market Value equal to the minimum amount of tax required to be withheld; or

(c) by delivering previously acquired Common Shares of the Company that are acceptable to the Committee that have an aggregate Fair Market Value equal to the amount required to be withheld.

The Committee shall have the sole discretion to establish the terms and conditions applicable to any alternative made available for payment of the required withholding taxes.

Notwithstanding the foregoing, neither the Committee nor the Company makes any representation to any Participant or beneficiary of a Participant as to the tax consequences of any Awards made pursuant to the Plan, and the Committee and the Company shall have no liability or other obligation to indemnity or hold harmless any Participant or any beneficiary of a Participant for any tax, additional tax, interest or penalties that any Participant or any beneficiary of a Participant may incur as a result of the grant, vesting, or payment of an Award under the Plan.

Except as otherwise provided in any other written agreement between the Company or any Subsidiary and a Participant, including any Award Agreement, if the sum of the amounts payable under the Plan and those provided under all other plans, programs or agreements between the Participant and the Company or any Subsidiary constitutes a “parachute payment” as defined in Section 280G of the Code, the Company will reduce any payments to the minimum extent necessary to avoid the imposition of an excise tax under Section 4999 of the Code or a loss of deduction under Section 280G of the Code. Any reduction pursuant to this Section 11.2 shall be made in compliance with Section 409A of the Code.

SECTION 15. NONTRANSFERABILITY

Except as described in this Section or as provided in a related Award Agreement, an Award may not be sold, transferred, pledged, assigned or otherwise alienated or hypothecated, except by will or the laws of descent and distribution and, during a Participant’s lifetime, may be exercised only by the Participant or the Participant’s guardian or legal representative. Notwithstanding any provision contained in this Section, no Award may be transferred by a Participant for value or consideration.

Unless otherwise specifically designated by the Participant in writing, a Participant’s beneficiary under the Plan shall be the Participant’s spouse or, if no spouse survives the Participant, the Participant’s estate.

SECTION 16. TERMINATION OR AMENDMENT OF PLAN AND AWARD AGREEMENTS

16.1 Termination or Amendment of Plan. Except as described in Section 16.3 below, the Board or the Committee may terminate, suspend, or amend the Plan, in whole or in part, from time to time, without the approval of the shareholders of the Company, unless such approval is required by applicable law, regulation or rule of any stock exchange on which the Common Shares are listed. No amendment or termination of the Plan shall adversely affect the right of any Participant under any outstanding Award in any material way without the written consent of the Participant, unless such amendment or termination is required by applicable law, regulation or rule of any stock exchange on which the Common Shares are listed. Subject to the foregoing, the Board may correct any defect or

2015 Long Term Incentive Plan (A/R 2022)

supply an omission or reconcile any inconsistency in the Plan or in any Award granted hereunder in the manner and to the extent it shall deem desirable, in its sole discretion, to effectuate the Plan.

16.2 Amendment of Award Agreements. The Committee shall have the authority to amend any Award Agreement at any time; provided however, that no such amendment shall adversely affect the right of any Participant under any outstanding Award Agreement in any material way without the written consent of the Participant, unless such amendment is required by applicable law, regulation or rule.

16.3 No Repricing of Stock Options or SARs. Notwithstanding the foregoing, any amendment to the Plan or any outstanding Stock Option Agreement or SAR Agreement that results in the repricing of Stock Options or SARs shall not be effective without prior approval of the shareholders of the Company, except with respect to adjustments in accordance with Section 5.2 and 5.3. For this purpose, repricing includes a reduction in the exercise price of a Stock Option or SAR or the cancellation of a Stock Option or SAR in exchange for cash. Stock Options or SARs with an exercise price less than the exercise price of the cancelled Stock Options or SARs, other Awards or any other consideration provided by the Company.

SECTION 17. NO CONTRACT OF EMPLOYMENT

Neither the adoption of the Plan nor the grant of any Award under the Plan shall be deemed to obligate the Company or any Subsidiary to continue the employment or service of any Participant for any particular period.

SECTION 18. APPLICABLE LAW

All questions pertaining to the validity, construction and administration of the Plan and all Awards granted under the Plan shall be determined in conformity with the laws of the State of Ohio, without regard to the conflict of law provisions of any state, and with the relevant provisions of the Code and regulations issued thereunder. Any suit, action or proceeding with respect to the Plan or any Award Agreement, or any judgment entered by any court of competent jurisdiction in respect of any thereof, shall be resolved only in the courts of the State of Ohio or the United States District Court for the Northern District of Ohio and the appellate courts having jurisdiction of appeals in such courts. In that context, and without limiting the generality of the foregoing, the Company and each Participant and beneficiary of a Participant shall irrevocably and unconditionally (a) submit in any proceeding relating to the Plan or any Award Agreement, or for the recognition and enforcement of any judgment in respect thereof (a “Proceeding”), to the exclusive jurisdiction of the courts of the State of Ohio, the United States District Court for the Northern District of Ohio, and appellate courts having jurisdiction of appeals from any of the foregoing, and agree that all claims in respect of any such Proceeding shall be heard and determined in such State of Ohio court or, to the extent permitted by law, in such federal court, (b) consent that any such Proceeding may and shall be brought in such courts and waives any objection that the Company and each Participant and beneficiary of a Participant may now or thereafter have to the venue or jurisdiction of any such Proceeding in any such court or that such Proceeding was brought in an inconvenient court and agree not to plead or claim the same, (c) waive all right to trial by jury in any Proceeding (whether based on contract, tort or otherwise) arising out of or relating to the Plan or any Award Agreement, (d) agree that service of process in any such Proceeding may be effected by mailing a copy of such process by registered or certified mail, postage prepaid, to such party, in the case of a Participant (or the Participant’s beneficiary) at the Participant’s (or the Participant’s beneficiary’s) address shown in the books and records of the Company or, in the case of the Company, at the Company’s principal offices, attention General Counsel, and (e) agree that nothing in the Plan shall affect the right to effect service of process in any other manner permitted by the laws of the State of Ohio.

2015 Long Term Incentive Plan (A/R 2022)

SECTION 19. TERM OF PLAN

Notwithstanding anything to the contrary contained herein, no Awards shall be granted on or after the ten (10) year anniversary of the Plan’s Effective Date; however, any Award theretofore granted may extend beyond such date.

SECTION 20. MISCELLANEOUS

20.1 Unfunded Plan. The Plan is intended to constitute an “unfunded” plan for incentive and deferred compensation. With respect to any payment as to which a Participant (or a Participant’s beneficiary) has a fixed and vested interest but which is not yet made to a Participant (or a Participant’s beneficiary) by the Company, nothing contained herein shall give any such Participant (or such Participant’s beneficiary) any right that is greater than those of a general unsecured creditor of the Company.

20.2 No Uniformity; No Future Rights. No Employee, Participant or other person shall have any claim to be granted any Award under the Plan, and there is no obligation for uniformity or treatment of Employees, Participants, or holders or beneficiaries of Awards under the Plan. The terms and conditions of Awards need not be the same with respect to each recipient. Any Award granted under the Plan shall be a one-time Award, and shall not constitute a promise of future grants. The Committee, in its sole discretion, maintains the right to make available future Awards hereunder,

20.3 No Trust. Neither the Plan nor any Award shall create or be construed to create a trust or separate fund of any kind or a fiduciary relationship between the Company, the Board, the Committee and a Participant or any other person,

20.4 Fractional Shares. No fractional Common Shares shall be issued or delivered pursuant to the Plan or any Award, and the Committee shall determine whether cash or other securities shall be paid or transferred in lieu of any fractional Common Shares, or whether such fractional Common Shares or any rights thereto shall be canceled, terminated or otherwise eliminated.

20.5 Section 409A. Notwithstanding any contrary provision in the Plan or Award Agreement, for purposes of an Award that is subject to Section 409A, if a Participant’s termination of employment or service triggers the payment of “nonqualified deferred compensation” under such Award, then the Participant will not be deemed to have terminated employment or service until the Participant incurs a “separation from service” within the meaning of Section 409A.

20.6 Clawback Policy. Awards will be subject to potential cancellation, recoupment, recession, payback or other action in accordance with any applicable clawback policy that the Company may adopt from time to time or any applicable law, as may be in effect from time to time.

2015 Long Term Incentive Plan (A/R 2022)

Exhibit 10.4

PREMIER FINANCIAL CORP.

AMENDED AND RESTATED

2018 EQUITY INCENTIVE PLAN

The purpose of the Plan is to promote the Company’s long-term financial success and increase shareholder value by motivating performance through incentive compensation. The Plan also is intended to encourage Participants to acquire ownership interests in the Company, attract and retain talented employees and directors and enable Participants to participate in the Company’s long-term growth and financial success.

ARTICLE I

DEFINITIONS

When used in the Plan, the following capitalized words, terms and phrases shall have the meanings set forth in this Article I. For purposes of the Plan, the form of any word, term or phrase shall include any and all of its other forms.

1.1 “Act” shall mean the Securities Exchange Act of 1934, as amended from time to time, or any successor thereto.

1.2 “Affiliate” shall mean any entity with whom the Company would be considered a single employer under Section 414(b) or (c) of the Code, but modified as permitted under Treasury Regulations promulgated under any Code section relevant to the purpose for which the definition is applied.

1.3 “Award” shall mean any Nonqualified Stock Option, Incentive Stock Option, Stock Appreciation Right, Restricted Stock, Performance Board Award, or Other Stock-Based Award granted pursuant to the Plan.

1.4 “Award Agreement” shall mean any written or electronic agreement between the Company and a Participant that describes the terms and conditions of an Award. If there is a conflict between the terms of the Plan and the terms of an Award Agreement, the terms of the Plan shall govern.

1.5 “Board” shall mean the Board of Directors of the Company.

1.6 “Cause” shall mean, unless otherwise provided in the related Award Agreement or in any employment agreement between the Participant and the Company or any Affiliate or in any other agreement between the Participant and the Company or any Affiliate (but only within the context of the events contemplated by the employment agreement or other agreement, as applicable), a Participant’s: (a) willful and continued failure to substantially perform assigned duties; (b) gross misconduct; (c) breach of any term of any agreement with the Company or any Affiliate, including the Plan and any Award Agreement; (d) conviction of (or plea of no contest or nolo contendere to) (i) a felony or a misdemeanor that originally was charged as a felony but which was subsequently reduced to a misdemeanor through negotiation with the charging entity or (ii) a crime other than a felony, which involves a breach of trust or fiduciary duty owed to the Company or any Affiliate; or (e) violation of the Company’s code of conduct or any other policy of the Company or any Affiliate that applies to the Participant. Notwithstanding the foregoing, Cause will not arise solely because the Participant is absent from active employment during periods of vacation, consistent with the Company’s applicable vacation policy, or other period of absence approved by the Company. The determination of “Cause” shall be made by the Committee in its sole discretion.

2018 Equity Incentive Plan (A/R 2022)

1.7 “Change in Control” means the occurrence of any of the following events after the Effective Date:

ii.

The acquisition by one person, or more than one person acting as a group, of ownership of stock of the Company, that, together with stock of the Company acquired during the twelve (12)-month period ending on the date of the most recent acquisition by such person or group (in each case, directly or through attribution), constitutes thirty percent (30%) or more of the total voting power of the stock of the Company;

iii.

iv.

1.8 “Code” shall mean the Internal Revenue Code of 1986, as amended from time to time, or any successor thereto.

1.9 “Committee” shall mean the Compensation Committee of the Board, which will be comprised of at least two (2) directors, each of whom is a “non-employee” director within the meaning of Rule 16b-3 under the Act.

1.10 “Company” shall mean Premier Financial Corp., an Ohio corporation, and any successor thereto.

1.11 “Consultant” shall mean any person who renders services to the Company or any of its Affiliates other than an Employee or a Director.

2018 Equity Incentive Plan (A/R 2022)

1.12 “Covered Employee” shall mean a “covered employee” within the meaning of Section 162(m) of the Code and the Treasury Regulations promulgated thereunder.

1.13 “Director” shall mean a person who is a member of the Board, excluding any member who is an Employee.

1.14 “Disability” shall mean:

(a)

with respect to an Incentive Stock Option, “disability” as defined in Section 22(e)(3) of the Code;

(b) with respect to the payment, exercise or settlement of any Award that is (or becomes) subject to Section 409A of the Code (and for which no exception applies), (i) the Participant is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than twelve (12) months, (ii) the Participant is, by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than twelve (12) months, receiving income replacement benefits for a period of not less than three (3) months under an accident and health plan covering Employees of the Participant’s employer, or (iii) the Participant is determined to be totally disabled by the Social Security Administration or Railroad Retirement Board; and

(c) with respect to a Participant’s right to exercise or receive settlement of any Award or with respect to the payment, exercise or settlement of any Award not described in subsection (a) or (b) of this definition, a Participant’s inability (established by an independent physician selected by the Committee and reasonably acceptable to the Participant or to the Participant’s legal representative) due to illness, accident or otherwise to perform his or her duties, which is expected to be permanent or for an indefinite duration longer than twelve (12) months.

1.15 “Employee” shall mean any person who is a common law employee of the Company or any Affiliate. A person who is classified as other than a common-law employee but who is subsequently reclassified as a common law employee of the Company or any Affiliate for any reason and on any basis shall be treated as a common law employee only from the date that reclassification occurs and shall not retroactively be reclassified as an Employee for any purpose under the Plan.

1.16 “Fair Market Value” shall mean the value of one Share on any relevant date, determined under the following rules:

(a) If the Shares are traded on an exchange, the reported “closing price” on the relevant date if it is a trading day, otherwise on the next trading day;

(b) If the Shares are traded over-the-counter with no reported closing price, the mean between the lowest bid and the highest asked prices on that quotation system on the relevant date if it is a trading day, otherwise on the next trading day; or

(c) If neither (a) nor (b) applies, (i) with respect to Options, Stock Appreciation Rights and any Award that is subject to Section 409A of the Code, the value as determined by the Committee through the reasonable application of a reasonable valuation method, taking into account all information material to the value of the Company, within the meaning of Section 409A

2018 Equity Incentive Plan (A/R 2022)

of the Code and the Treasury Regulations promulgated thereunder, and (ii) with respect to all other Awards, the fair market value as determined by the Committee in good faith.

1.17 “Good Reason” shall mean, in the case of a Participant who is an Employee, the occurrence of any of the following events without the Participant’s express consent, unless all grounds for a termination with Good Reason based on such event have been cured within thirty (30) calendar days after the Participant gives written notice to the Company describing such event in detail and requesting cure, such notice to be given within ninety (90) calendar days after the first occurrence of such event:

material (10% or greater) diminution in the Participant’s base salary;

material change in the geographic location at which the Participant must perform the services which is greater than 50 miles from the Participant’s prior work location but only if such change results in an increase of the Participant’s one-way commute from the Participant’s residence of more than 35 miles; or

vi.

any material breach of an Award Agreement by the Company.

1.18 “Incentive Stock Option” shall mean an Option that is intended to meet the requirements of Section 422 of the Code.

1.19 “Nonqualified Stock Option” shall mean an Option that is not intended to be an Incentive Stock Option.

1.20 “Option” shall mean an option to purchase Shares which is granted pursuant to Article V of the Plan. An Option may be either an Incentive Stock Option or a Nonqualified Stock Option.

1.21 “Other Stock-Based Award” shall mean an Award granted pursuant to Article VIII of the Plan.

1.22 “Participant” shall mean an Employee, Director or Consultant who is granted an Award under the Plan.

1.23 “Performance-Based Award” shall mean an Award described in Article IX of the Plan.

1.24 “Plan” shall mean the Premier Financial Corp. 2018 Equity Incentive Plan, as set forth herein and as may be amended from time to time.

1.25 “Prior Plan” shall mean the First Defiance Financial Corp. 2010 Equity Incentive Plan, as amended.

1.26 “Restricted Stock” shall mean an Award granted pursuant to Article VII of the Plan through which a Participant is issued Shares which are subject to specified restrictions on vesting and transferability.

2018 Equity Incentive Plan (A/R 2022)

1.27 “Retirement” shall mean, unless otherwise specified in an Award Agreement, in the case of an Employee, the retirement from the employ of the Company under one or more of the retirement plans of the Company, or as otherwise specified by the Committee and, in the case of Director, shall mean the retirement from the Board at any time after the Director attains age fifty-five (55) and has served at least five (5) years as a Director.

1.28 “Shares” shall mean the common shares, par value $0.01 per share, of the Company or any security of the Company issued in satisfaction, exchange or in place of these shares.

1.29 “Stock Appreciation Right” or “SAR” shall mean an Award granted pursuant to Article VI of the Plan through which a Participant is given the right to receive the difference between the Fair Market Value of a Share on the date of grant and the Fair Market Value of a Share on the date of exercise of the Award.

1.30 “Subsidiary” shall mean: (a) with respect to an Incentive Stock Option, a “subsidiary corporation” as defined under Section 424(f) of the Code; and (b) for all other purposes under the Plan, any corporation or other entity in which the Company owns, directly or indirectly, a proprietary interest of more than fifty (50%) by reason of stock ownership or otherwise.

1.31 “Substitute Awards” shall mean Shares subject to Awards granted in assumption, substitution or exchange for previously granted share-based awards under a shareholder-approved plan of a company acquired by the Company.

ARTICLE II

SHARES SUBJECT TO THE PLAN

2.1 Number of Shares Available for Awards. Subject to this Article II, the number of Shares with respect to which Awards may be granted under the Plan shall be 450,000, all of which may be granted with respect to Incentive Stock Options. The Shares may consist, in whole or in part, of treasury Shares, authorized but unissued Shares not reserved for any other purpose or Shares purchased by the Company or an independent agent in either a private transaction or in the open market. Subject to this Article II, the number of Shares available for issuance under the Plan shall be reduced by one (1) Share for each Share subject to a grant of an Award, and any Shares underlying an Award that become available for future grant under the Plan pursuant to Section 2.2 shall be added back to the Plan. Without limiting the foregoing, with respect to any Stock Appreciation Right that is settled in Shares, the full number of Shares subject to the Award shall count against the number of Shares available for Awards under the Plan regardless of the number of Shares used to settle the Stock Appreciation Right upon exercise.

2.2 Share Usage. In addition to the number of Shares provided for in Section 2.1, the following Shares shall be available for Awards under the Plan: (a) Shares covered by an Award or a Prior Plan Award that expires or is forfeited, canceled, surrendered or otherwise terminated without the issuance of such Shares; (b) Shares covered by an Award or a Prior Plan Award that, by its terms, may be settled only in cash; (c) Shares granted through the assumption of, or in substitution for, outstanding awards granted by a company to individuals who become Employees, Directors or Consultants as the result of a merger, consolidation, acquisition or other corporate transaction involving such company and the Company or any of its Affiliates; and (d) any Shares from awards exercised for or settled in vested and nonforfeitable Shares that are later returned to the Company pursuant to any compensation recoupment policy, provision or agreement.

2.3 Adjustments. In the event of any Share dividend, Share split, recapitalization (including payment of an extraordinary dividend), merger, reorganization, consolidation, combination, spin-off,

2018 Equity Incentive Plan (A/R 2022)

distribution of assets to stockholders, exchange of Shares or any other change affecting the Shares, the Committee shall make such substitutions and adjustments, if any, as it deems equitable and appropriate to: (a) the aggregate number of Shares that may be issued under the Plan; (b) any Share-based limits imposed under the Plan; and (c) the exercise price, number of Shares and other terms or limitations applicable to outstanding Awards. Notwithstanding the foregoing, an adjustment pursuant to this Section 2.3 shall be made only to the extent such adjustment complies, to the extent applicable, with Section 409A of the Code.

ARTICLE III

ADMINISTRATION

3.1 In General. The Plan shall be administered by the Committee. The Committee shall have full power and authority to: (a) interpret the Plan and any Award Agreement; (b) establish, amend and rescind any rules and regulations relating to the Plan; (c) select Participants; (d) establish the terms and conditions of any Award consistent with the terms and conditions of the Plan; and (e) make any other determinations that it deems necessary or desirable for the administration of the Plan. The Committee may correct any defect, supply any omission or reconcile any inconsistency in the Plan or in any Award Agreement in the manner and to the extent the Committee deems necessary or desirable. Any decision of the Committee in the interpretation and administration of the Plan shall be made in the Committee’s sole and absolute discretion and shall be final, conclusive and binding on all persons.

3.2 Delegation of Duties. In its sole discretion, the Committee may delegate any ministerial duties associated with the Plan to any person (including Employees) it deems appropriate; provided, however, that the Committee may not delegate (a) any duties that it is required to discharge to comply with Section 162(m) of the Code or any other applicable law; (b) its authority to grant Awards to any Participant who is subject to Section 16 of the Act; and (c) its authority under the Company’s equity award granting policy that may be in effect from time to time.

ARTICLE IV

ELIGIBILITY

Any Employee, Director or Consultant selected by the Committee shall be eligible to be a Participant in the Plan; provided, however, that Incentive Stock Options shall only be granted to Employees who are employed by the Company or any of its Subsidiaries.

ARTICLE V

OPTIONS

5.1 Grant of Options. Subject to the terms and conditions of the Plan, Options may be granted to Participants in such number, and upon such terms and conditions, as shall be determined by the Committee in its sole discretion.

5.2 Award Agreement. Each Option shall be evidenced by an Award Agreement that shall specify the exercise price, the term of the Option, the number of Shares covered by the Option, the conditions upon which the Option shall become vested and exercisable and such other terms and conditions as the Committee shall determine and which are not inconsistent with the terms and conditions of the Plan. The Award Agreement also shall specify whether the Option is intended to be an Incentive Stock Option or a Nonqualified Stock Option.

5.3 Exercise Price. The exercise price per Share of an Option shall be determined by the Committee at the time the Option is granted and shall be specified in the related Award Agreement;

2018 Equity Incentive Plan (A/R 2022)

provided, however, that in no event shall the exercise price of any Option be less than one hundred percent (100%) of the Fair Market Value of a Share on the date of grant.

5.4 Term. The term of an Option shall be determined by the Committee and set forth in the related Award Agreement; provided, however, that in no event shall the term of any Option exceed ten (10) years from its date of grant.

5.5 Exercisability. Options shall become exercisable at such times and upon such terms and conditions as shall be determined by the Committee and set forth in the related Award Agreement. Such terms and conditions may include, without limitation, the satisfaction of (a) performance goals; and (b) time-based vesting requirements.

5.6 Exercise of Options. Except as otherwise provided in the Plan or in a related Award Agreement, an Option may be exercised for all or any portion of the Shares for which it is then exercisable. An Option shall be exercised by the delivery of a notice of exercise to the Company or its designee in a form specified by the Committee which sets forth the number of Shares with respect to which the Option is to be exercised and full payment of the exercise price for such Shares. The exercise price of an Option may be paid: (a) in cash or its equivalent; (b) by tendering (either by actual delivery or attestation) previously acquired Shares having an aggregate Fair Market Value at the time of exercise equal to the aggregate exercise price; provided that such Shares had been held for at least six (6) months or such other period required to obtain favorable accounting treatment; (c) by a cashless exercise (including by withholding Shares deliverable upon exercise and through a broker-assisted arrangement to the extent permitted by applicable law); (d) by a combination of the methods described in clauses (a), (b) and/or (c); or (e) though any other method approved by the Committee in its sole discretion. As soon as practicable after receipt of the notification of exercise and full payment of the exercise price, the Company shall cause the appropriate number of Shares to be issued to the Participant. An Option may be settled in full Shares, cash or a combination thereof, as specified by the Committee in a related Award Agreement.

5.7 Special Rules Applicable to Incentive Stock Options. Notwithstanding any other provision in the Plan to the contrary:

(a) The terms and conditions of Incentive Stock Options shall be subject to and comply with the requirements of Section 422 of the Code.

(b) The aggregate Fair Market Value of the Shares (determined as of the date of grant) with respect to which Incentive Stock Options are exercisable for the first time by any Participant during any calendar year (under all plans of the Company and its Subsidiaries) may not be greater than $100,000 (or such other amount specified in Section 422 of the Code), as calculated under Section 422 of the Code.

(c) No Incentive Stock Option shall be granted to any Participant who, at the time the Incentive Stock Option is granted, owns stock possessing more than ten percent (10%) of the total combined voting power of all classes of stock of the Company or of any Subsidiary, unless (i) the exercise price of such Incentive Stock Option is at least one hundred and ten percent (110%) of the Fair Market Value of a Share on the date the Incentive Stock Option is granted and (ii) the date on which such Incentive Stock Option will expire is not later than five (5) years from the date the Incentive Stock Option is granted.

ARTICLE VI

STOCK APPRECIATION RIGHTS

2018 Equity Incentive Plan (A/R 2022)

6.1 Grant of Stock Appreciation Rights. Subject to the terms and conditions of the Plan, Stock Appreciation Rights may be granted to Participants in such number, and upon such terms and conditions, as shall be determined by the Committee in its sole discretion.

6.2 Award Agreement. Each Stock Appreciation Right shall be evidenced by an Award Agreement that shall specify the exercise price, the term of the Stock Appreciation Right, the number of Shares covered by the Stock Appreciation Right, the conditions upon which the Stock Appreciation Right shall become vested and exercisable and such other terms and conditions as the Committee shall determine and which are not inconsistent with the terms and conditions of the Plan.

6.3 Exercise Price. The exercise price per Share of a Stock Appreciation Right shall be determined by the Committee at the time the Stock Appreciation Right is granted and shall be specified in the related Award Agreement; provided, however, that in no event shall the exercise price of any Stock Appreciation Right be less than one hundred percent (100%) of the Fair Market Value of a Share on the date of grant.

6.4 Term. The term of a Stock Appreciation Right shall be determined by the Committee and set forth in the related Award Agreement; provided however, that in no event shall the term of any Stock Appreciation Right exceed ten (10) years from its date of grant.

6.5 Exercisability of Stock Appreciation Rights. A Stock Appreciation Right shall become exercisable at such times and upon such terms and conditions as may be determined by the Committee and set forth in the related Award Agreement. Such terms and conditions may include, without limitation, the satisfaction of (a) performance goals; and (b) time-based vesting requirements.

6.6 Exercise of Stock Appreciation Rights. Except as otherwise provided in the Plan or in a related Award Agreement, a Stock Appreciation Right may be exercised for all or any portion of the Shares for which it is then exercisable. A Stock Appreciation Right shall be exercised by the delivery of a notice of exercise to the Company or its designee in a form specified by the Committee which sets forth the number of Shares with respect to which the Stock Appreciation Right is to be exercised. Upon exercise, a Stock Appreciation Right shall entitle a Participant to an amount equal to (a) the excess of (i) the Fair Market Value of a Share on the exercise date over (ii) the exercise price per Share, multiplied by (b) the number of Shares with respect to which the Stock Appreciation Right is exercised. A Stock Appreciation Right may be settled in full Shares, cash or a combination thereof, as specified by the Committee in the related Award Agreement.

ARTICLE VII

RESTRICTED STOCK

7.1 Grant of Restricted Stock. Subject to the terms and conditions of the Plan, Shares of Restricted Stock may be granted to Participants in such number, and upon such terms and conditions, as shall be determined by the Committee in its sole discretion.

7.2 Award Agreement. Each Restricted Stock Award shall be evidenced by an Award Agreement that shall specify the number of Shares of Restricted Stock, the restricted period(s) applicable to the Shares of Restricted Stock, the conditions upon which the restrictions on the Shares of Restricted Stock will lapse and such other terms and conditions as the Committee shall determine and which are not inconsistent with the terms and conditions of the Plan.

7.3 Terms, Conditions and Restrictions.

2018 Equity Incentive Plan (A/R 2022)

(a) The Committee shall impose such other terms, conditions and/or restrictions on any Shares of Restricted Stock as it may deem advisable, including, without limitation, a requirement that the Participant pay a purchase price for each Share of Restricted Stock, restrictions based on the achievement of specific performance goals, time-based restrictions or holding requirements or sale restrictions placed on the Shares by the Company upon vesting of such Restricted Stock.

(b) To the extent deemed appropriate by the Committee, the Company may retain the certificates representing Shares of Restricted Stock in the Company’s possession until such time as all terms, conditions and/or restrictions applicable to such Shares have been satisfied or lapse.

(c) Unless otherwise provided in the related Award Agreement or required by applicable law, the restrictions imposed on Shares of Restricted Stock shall lapse upon the expiration or termination of the applicable restricted period and the satisfaction of any other applicable terms and conditions.

7.4 Rights Associated with Restricted Stock during Restricted Period. During any restricted period applicable to Shares of Restricted Stock:

(a) Such Shares of Restricted Stock may not be sold, transferred, pledged, assigned or otherwise alienated or hypothecated.

(b) Unless otherwise provided in the related Award Agreement, (i) the Participant shall be entitled to exercise full voting rights associated with such Shares of Restricted Stock and (ii) the Participant shall be entitled to all dividends and other distributions paid with respect to such Shares of Restricted Stock during the restricted period. The Company may accumulate and hold such dividends or distributions or pay said dividends and distributions at the same time the Company pays the same with respect to non-restricted Shares, as specified in the Award Agreement. If accumulated, the accumulated dividends or other distributions shall be paid to the Participant only upon the lapse of the restrictions to which the Restricted Stock is subject, and any such dividends or distributions attributable to the portion of a Restricted Stock for which the restrictions do not lapse shall be forfeited.

ARTICLE VIII

OTHER STOCK-BASED AWARDS

8.1 Grant of Other Stock-Based Awards. Subject to the terms and conditions of the Plan, Other Stock-Based Awards may be granted to Participants in such number, and upon such terms and conditions, as shall be determined by the Committee in its sole discretion. Other Stock-Based Awards are Awards that are valued in whole or in part by reference to, or otherwise based on the Fair Market Value of, the Shares, and shall be in such form as the Committee shall determine, including without limitation, (a) unrestricted Shares or (b) time-based or performance-based restricted stock units that are settled in Shares and/or cash.

8.2 Award Agreement. Each Other Stock-Based Award shall be evidenced by an Award Agreement that shall specify the terms and conditions upon which the Other Stock-Based Award shall become vested, if applicable, the time and method of settlement, the form of settlement and such other terms and conditions as the Committee shall determine and which are not inconsistent with the terms and conditions of the Plan.

8.3 Form of Settlement. An Other Stock-Based Award may be settled in full Shares, cash or a combination thereof, as specified by the Committee in the related Award Agreement.

2018 Equity Incentive Plan (A/R 2022)

8.4 Dividend Equivalents. Awards of Other Stock-Based Awards may provide the Participant with dividend equivalents, as determined by the Committee in its sole discretion and set forth in the related Award Agreement.

ARTICLE IX

PERFORMANCE-BASED AWARDS

Subject to the terms and conditions of the Plan, Performance-Based Awards may be granted to Participants in such amounts and upon such other terms and conditions as shall be determined by the Committee in its sole discretion. Each Performance-Based Award shall be evidenced by an Award Agreement that shall specify the payment amount or payment range, the time and method of settlement and other terms and conditions, as applicable, of such Award including, that the vesting and/or payment of the Award is subject to the attainment of one (1) or more performance goals during a performance period established by the Committee.

At the discretion of the Committee, a Performance-Based Award to an Employee may provide for vesting prior to the completion of a performance period upon a termination of employment by reason of death, Disability or Retirement or the termination of the Employee’s employment by the Company other than for Cause. Except as provided in any Award Agreement, if Performance-Based Award issued to an Employee is permitted to vest prior to the lapse of any performance period, the Committee may (i) determine the extent to which the associated performance goals have been met (based upon such audited or unaudited financial information then available as the Committee deems relevant) at the time of the early vesting, (ii) establish that the performance goals have been met at target levels of performance without consideration of actual performance at the time of the early vesting, or (iii) postpone the determination of performance, and ultimate settlement to the Participant, until the completion of the performance period. Performance-Based Awards vesting prior to the lapse of any performance period may be prorated based on each completed day of the performance period up to and including the date of the Employee’s termination of employment.

ARTICLE X

TERMINATION OF EMPLOYMENT OR SERVICE

With respect to each Award granted under the Plan, the Committee shall, subject to the terms and conditions of the Plan, determine the extent to which the Award shall vest and the extent to which the Participant shall have the right to exercise and/or receive settlement of the Award on or following the Participant’s termination of employment or services with the Company and/or any of its Affiliates. Such provisions shall be determined in the sole discretion of the Committee, shall be included in the related Award Agreement, need not be uniform among all Awards granted under the Plan and may reflect distinctions based on the reasons for termination.

ARTICLE XI

CHANGE IN CONTROL

11.1 Effect of Change in Control. Upon a Change in Control:

(a) Except as otherwise provided in any Award Agreement, notwithstanding any provision of the Plan to the contrary, all Options and SARs shall become immediately exercisable with respect to one hundred percent (100%) of the Shares subject to such Options and SARs.

2018 Equity Incentive Plan (A/R 2022)

(b) Except as provided in any Award Agreement, all incomplete performance periods in respect of each Performance-Based Award shall end on the date of the Change in Control and the Committee, as constituted prior to the Change in Control, shall (i) determine the extent to which the performance goals with respect to each such Performance-Based Award have been met (based upon such audited or unaudited financial information then available as it deems relevant), and (ii) cause to be paid to the Participant prorated Awards (based on each completed day of the applicable performance period up to and including the date of the Change in Control) based upon the Committee’s determination under preceding clause (i) or, if no such determination has been made, assuming that the target levels of performance have been met for each performance goal.

(c) With respect to any other outstanding Awards under this Plan (e.g. an Award other a Option, SAR, or Performance-Based Award) or any Substitute Awards described in subparagraph (d) issued after the date this Plan was amended and restated as reflected in Article XV, if a Participant's employment or service is terminated by the Company or any successor entity thereto without Cause, or the Participant resigns his or her employment for Good Reason, in either case, within such periods of time as may be specified in the applicable Award Agreement, which time period shall not begin more than 30 days prior to a Change in Control nor end more than two (2) years after a Change in Control, such Award or Substitute Award shall be fully earned and vested immediately upon the termination of the individual’s employment or service. This subsection (c) shall not be deemed to create a new vesting right in connection with a Change in Control for Awards issued prior to the date this Plan was amended and restated as reflected in Article XV except as may be set forth in the applicable Award Agreement for such Awards.

(d) Notwithstanding the foregoing and without limiting the effect of Section 2.3, the Committee or the Board of the Company may, in its discretion, to the extent determined to be permitted under Code Section 409A, take one or more of the following actions with respect to any outstanding Awards: (i) settle such Awards for an amount of cash or securities equal to their value, where in the case of stock options and SARs, the value of such awards, if any, will be equal to their in-the-money spread value (if any), as determined in the sole discretion of the Committee; (ii) provide for the assumption of or the issuance of Substitute Awards that will substantially preserve the otherwise applicable terms of any affected Awards previously granted under the Plan, as determined by the Committee in its sole discretion; or (iii) modify the terms of such awards to add events, conditions or circumstances upon which the vesting of such Awards or lapsing of restrictions thereon will accelerate, including but not limited to the ability to accelerate vesting of any outstanding Award in the event of an individual’s separation from employment or service prior to but in anticipation of the Change in Control.

ARTICLE XII

AMENDMENT OR TERMINATION OF THE PLAN

12.1 In General. The Board or the Committee may amend or terminate the Plan at any time; provided, however, that no amendment or termination shall be made without the approval of the Company’s stockholders to the extent that (a) the amendment materially increases the benefits accruing to Participants under the Plan, (b) the amendment materially increases the aggregate number of Shares authorized for grant under the Plan (excluding an increase in the number of Shares that may be issued under the Plan as a result of Section 2.3, (c) the amendment materially modifies the requirements as to eligibility for participation in the Plan, or (d) such approval is required by any law, regulation or stock exchange rule.

12.2 Repricing. Except for adjustments made pursuant to Section 2.3 of the Plan, in no event may the Board or the Committee amend the terms of an outstanding Award to reduce the exercise price of an outstanding Option or Stock Appreciation Right or cancel an outstanding Option or Stock Appreciation

2018 Equity Incentive Plan (A/R 2022)

Right in exchange for cash, other Awards or Options or Stock Appreciation Rights with an exercise price that is less than the exercise price of the original Option or Stock Appreciation Right without shareholder approval.

ARTICLE XIII

TRANSFERABILITY

13.1 Except as described in Section 13.2 or as provided in a related Award Agreement, an Award may not be sold, transferred, pledged, assigned or otherwise alienated or hypothecated, except by will or the laws of descent and distribution and, during a Participant’s lifetime, may be exercised only by the Participant or the Participant’s guardian or legal representative. Notwithstanding any provision contained in this Article XIII, no Award may be transferred by a Participant for value or consideration.

13.2 Unless otherwise specifically designated by the Participant in writing, a Participant’s beneficiary under the Plan shall be the Participant’s spouse or, if no spouse survives the Participant, the Participant’s estate.

ARTICLE XIV

MISCELLANEOUS

14.1 No Right to Continue Services or to Awards. The granting of an Award under the Plan shall impose no obligation on the Company or any Affiliate to continue the employment or services of a Participant or interfere with or limit the right of the Company or any Affiliate to terminate the services of any Employee, Director or Consultant at any time. In addition, no Employee, Director or Consultant shall have any right to be granted any Award, and there is no obligation for uniformity of treatment of Participants. The terms and conditions of Awards and the Committee’s interpretations and determinations with respect thereto need not be the same with respect to each Participant.

14.2 Tax Withholding.

(a) The Company or an Affiliate, as applicable, shall have the power and the right to deduct, withhold or collect any amount required by law or regulation to be withheld with respect to any taxable event arising with respect to an Award granted under the Plan. This amount may, as determined by the Committee in its sole discretion, be (i) withheld from other amounts due to the Participant, (ii) withheld from the value of any Award being settled or any Shares being transferred in connection with the exercise or settlement of an Award or (iii) withheld from the vested portion of any Award (including the Shares transferable thereunder), whether or not being exercised or settled at the time the taxable event arises, or (iv) collected directly from the Participant.

(b) Subject to the approval of the Committee, a Participant may elect to satisfy the withholding requirement, in whole or in part, by having the Company or an Affiliate, as applicable, withhold Shares having a Fair Market Value on the date the tax is to be determined equal to the minimum statutory total tax that could be imposed on the transaction, or a higher level of withholding elected by the Participant; provided that such Shares would otherwise be distributable to the Participant at the time of the withholding and if such Shares are not otherwise distributable at the time of the withholding, provided that the Participant has a vested right to distribution of such Shares at such time. All such elections shall be irrevocable and made in writing and shall be subject to any terms and conditions that the Committee, in its sole discretion, deems appropriate.

2018 Equity Incentive Plan (A/R 2022)

14.3 Requirements of Law. The grant of Awards and the issuance of Shares shall be subject to all applicable laws, rules and regulations (including applicable federal and state securities laws) and to all required approvals of any governmental agencies or national securities exchange, market or other quotation system. Without limiting the foregoing, the Company shall have no obligation to issue Shares under the Plan prior to (a) receipt of any approvals from any governmental agencies or national securities exchange, market or quotation system that the Committee deems necessary and (b) completion of registration or other qualification of the Shares under any applicable federal or state law or ruling of any governmental agency that the Committee deems necessary.

14.4 Legends. Certificates for Shares delivered under the Plan may be subject to such stock transfer orders and other restrictions that the Committee deems advisable under the rules, regulations and other requirements of the Securities and Exchange Commission, any stock exchange or other recognized market or quotation system upon which the Shares are then listed or traded, or any other applicable federal or state securities law. The Committee may cause a legend or legends to be placed on any certificates issued under the Plan to make appropriate reference to restrictions within the scope of this Section 14.4.

14.5 Uncertificated Shares. To the extent that the Plan provides for the issuance of certificates to reflect the transfer of Shares, the transfer of Shares may be effected on a noncertificated basis, to the extent not prohibited by applicable law or the applicable rules of any stock exchange.

14.6 Governing Law. The Plan and all Award Agreements shall be governed by and construed in accordance with the laws of (other than laws governing conflicts of laws) the State of Ohio, except to the extent that the laws of the state in which the Company is incorporated are mandatorily applicable.

14.7 No Impact on Benefits. Awards are not compensation for purposes of calculating a Participant’s rights under any employee benefit plan that does not specifically require the inclusion of Awards in calculating benefits.

14.8 Rights as a Shareholder. Except as otherwise provided in the Plan or in a related Award Agreement, a Participant shall have none of the rights of a shareholder with respect to Shares covered by an Award unless and until the Participant becomes the record holder of such Shares.

14.9 Successors and Assigns. The Plan shall be binding on all successors and assigns of the Company and each Participant, including without limitation, the estate of such Participant and the executor, administrator or trustee of such estate, or any receiver or trustee in bankruptcy or representative of the Participant’s creditors.

14.10 Section 409A of the Code.

(a) Awards granted pursuant to the Plan that are subject to Section 409A of the Code, or that are subject to Section 409A but for which an exception from Section 409A of the Code applies, are intended to comply with or be exempt from Section 409A of the Code and the Treasury Regulations promulgated thereunder, and the Plan shall be interpreted, administered and operated accordingly.

(b) If a Participant is determined to be a “specified employee” (within the meaning of Section 409A of the Code and as determined under the Company’s policy for determining specified employees), the Participant shall not be entitled to payment or to distribution of any portion of an Award that is subject to Section 409A of the Code (and for which no exception applies) and is payable or distributable on account of the Participant’s “separation from service” (within the meaning of Section 409A of the Code) until the expiration of six (6) months from the date of such

2018 Equity Incentive Plan (A/R 2022)

separation from service (or, if earlier, the Participant’s death). Such Award, or portion thereof, shall be paid or distributed on the first (1st) business day of the seventh (7th) month following such separation from service.

(c) Nothing in the Plan shall be construed as an entitlement to or guarantee of any particular tax treatment to a Participant, and none of the Company, its Affiliates, the Board or the Committee shall have any liability with respect to any failure to comply with the requirements of Section 409A of the Code.

14.11 Golden Parachute Limitations. Except as otherwise provided in any other written agreement between the Company or any Affiliate and a Participant, including any Award Agreement, if the sum of the amounts payable under the Plan and those provided under all other plans, programs or agreements between the Participant and the Company or any Affiliate constitutes a “parachute payment” as defined in Section 280G of the Code, the Company will reduce any payments to the minimum extent necessary to avoid the imposition of an excise tax under Section 4999 of the Code or a loss of deduction under Section 280G of the Code. Any reduction pursuant to this Section 11.2 shall be made in compliance with Section 409A of the Code.

14.12 Clawback Policy. Awards will be subject to potential cancellation, recoupment, recession, payback or other action in accordance with any applicable clawback policy that the Company may adopt from time to time or any applicable law, as may be in effect from time to time.

14.13 Savings Clause. In the event that any provision of the Plan shall be held illegal or invalid for any reason, the illegality or invalidity shall not affect the remaining provisions of the Plan, and the Plan shall be construed and enforced as if the illegal or invalid provision had not been included.

ARTICLE XV

EFFECTIVE DATE AND TERM OF THE PLAN

This Plan was originally effective April 24, 2018. No Incentive Stock Options shall be granted under the Plan after April 24, 2028 and no other Awards shall be granted under the Plan after the tenth anniversary of the effective date of the Plan or, if earlier, the date the Plan is terminated. Notwithstanding the foregoing, the termination of the Plan shall not preclude the Company from complying with the terms of Awards outstanding on the date the Plan terminates. This Plan was amended and restated by the Company effective _February 15, 2022 to update certain administrative components in alignment with other Company incentive and benefit plans and to enhance certain corporate governance features.

2018 Equity Incentive Plan (A/R 2022)

Exhibit 10.10

PREMIER FINANCIAL CORP.

Deferred Compensation Plan

Effective Date

September 1, 2021

Article I

Establishment and Purpose 1

Article II

Definitions 1

0147467.0747156 4813-1425-9191v4

Article III

Eligibility and Participation 7

Article IV

Deferrals 8

Article V

Company Contributions 11

Article VI

Payments from Accounts 12

Article VII

Valuation of Account Balances; Investments 16

Article VIII

Administration 17

Article IX

Amendment and Termination 18

Article X

Informal Funding 19

Article XI

Claims 20

Article XII

General Provisions 25

Article I

Establishment and Purpose

Premier Financial Corp. (the “Company”) has adopted this Premier Financial Corp. Deferred Compensation Plan, applicable to Compensation deferred under Compensation Deferral Agreements submitted on and after the Effective Date and Company Contributions credited on or after the Effective Date.

The purpose of the Plan is to attract and retain key employees and non-employee members of the Board of Directors by providing them with an opportunity to defer receipt of a portion of their salary, bonus, and other specified compensation. The Plan is not intended to meet the qualification requirements of Code Section 401(a) but is intended to meet the requirements of Code Section 409A and shall be operated and interpreted consistent with that intent.

0147467.0747156 4813-1425-9191v4

The Plan constitutes an unsecured promise by a Participating Employer to pay benefits in the future. Participants in the Plan shall have the status of general unsecured creditors of the Company or the Participating Employer, as applicable. Each Participating Employer shall be solely responsible for payment of the benefits attributable to services performed for it. The Plan is unfunded for Federal tax purposes and is intended to be an unfunded arrangement for eligible employees who are part of a select group of management or highly compensated employees of the Employer within the meaning of Sections 201(2), 301(a)(3) and 401(a)(1) of ERISA and non-employee members of the Board of Directors. Any amounts set aside to defray the liabilities assumed by the Company or a Participating Employer will remain the general assets of the Company or the Participating Employer and shall remain subject to the claims of the Company’s or the Participating Employer's creditors until such amounts are distributed to the Participants.

Article II

Definitions

2.1 Account. Account means a bookkeeping account maintained by the Committee to record the payment obligation of a Participating Employer to a Participant as determined under the terms of the Plan. The Committee may maintain an Account to record the total obligation to a Participant and component Accounts to reflect amounts payable at different times and in different forms. Reference to an Account means any such Account established by the Committee, as the context requires. Accounts are intended to constitute unfunded obligations within the meaning of Sections 201(2), 301(a)(3) and 401(a)(1) of ERISA.

2.2 Account Balance. Account Balance means, with respect to any Account, the total payment obligation owed to a Participant from such Account as of the most recent Valuation Date.

2.3 Affiliate. Affiliate means a corporation, trade or business that, together with the Company, is treated as a single employer under Code Section 414(b) or (c).

2.4 Beneficiary. Beneficiary means a natural person, estate, or trust designated by a Participant in accordance with Section 6.5 hereof to receive payments to which a Beneficiary is entitled in accordance with provisions of the Plan.

2.5 Board of Directors. Board of Directors means, for a Participating Employer organized as a corporation, its board of directors and for a Participating Employer organized as a limited liability company, its board of managers.

2.6 Business Day. Business Day means each day on which the New York Stock Exchange is open for business.

2.7 Change in Control. Change in Control means, with respect to a Participating Employer that is organized as a corporation, any of the following events: (i) a change in the ownership of the Participating Employer, (ii) a change in the effective control of the

0147467.0747156 4813-1425-9191v4

Participating Employer, or (iii) a change in the ownership of a substantial portion of the assets of the Participating Employer.

Change in Ownership. For purposes of this Section, a change in the ownership of the Participating Employer occurs on the date on which any one person, or more than one person acting as a group, acquires ownership of stock of the Participating Employer that, together with stock held by such person or group constitutes more than 50% of the total fair market value or total voting power of the stock of the Participating Employer. The acquisition by a person or group owning more than 50% of the total fair market value or total voting power of the stock of such Participating Employer of additional shares of such Participating Employer shall not constitute a “change of the ownership” of such Participating Employer.

Change in Effective Control. A change in the effective control of the Participating Employer occurs on the date on which either: (i) a person, or more than one person acting as a group, acquires ownership of stock of the Participating Employer possessing 30% or more of the total voting power of the stock of the Participating Employer, taking into account all such stock acquired during the 12-month period ending on the date of the most recent acquisition, provided that the acquisition by a person or group owning more than 30% of the total fair market value or total voting power of the stock of such Participating Employer of additional shares of such Participating Employer shall not constitute a “change of effective control” of such Participating Employer, or (ii) a majority of the members of the Participating Employer’s Board of Directors is replaced during any 12-month period by directors whose appointment or election is not endorsed by a majority of the members of such Board of Directors prior to the date of the appointment or election, but only if no other corporation is a majority shareholder of the Participating Employer.

Change in Ownership of Substantial Portion of Assets. A change in the ownership of a substantial portion of assets occurs on the date on which any one person, or more than one person acting as a group, other than a person or group of persons that is related to the Participating Employer, acquires assets from the Participating Employer that have a total gross fair market value equal to or more than 40% of the total gross fair market value of all of the assets of the Participating Employer immediately prior to such acquisition or acquisitions, taking into account all such assets acquired during the 12-month period ending on the date of the most recent acquisition. A transfer of assets shall not be treated as a “change in the ownership of a substantial portion of the assets” when such transfer is made to an entity that is controlled by the shareholders of the transferor corporation as determined under Treas. Reg. section 1.409A-3(i)(5)(vii)(B).

An event constitutes a Change in Control with respect to a Participant only if the Participant performs services for the Participating Employer that has experienced the Change in Control, or the Participant’s relationship to the affected Participating Employer otherwise satisfies the requirements of Treasury Regulation Section 1.409A-3(i)(5)(ii).

0147467.0747156 4813-1425-9191v4

Notwithstanding anything to the contrary herein, with respect to a Participating Employer that is a partnership or limited liability company, Change in Control means only a change in the ownership of such entity or a change in the ownership of a substantial portion of the assets of such entity, and the provisions set forth above respecting such changes relative to a corporation shall be applied by analogy. Any reference to a “majority shareholder” shall be treated as referring to a partner or member that (a) owns more than 50% of the capital and profits interest of such entity, and (b) alone or together with others is vested with the continuing exclusive authority to make management decisions necessary to conduct the business for which the partnership or limited liability company was formed.

2.8 Claimant. Claimant means a Participant or Beneficiary filing a claim under Article XI of this Plan.

2.9 Code. Code means the Internal Revenue Code of 1986, as amended from time to time.

2.10 Code Section 409A. Code Section 409A means section 409A of the Code, and regulations and other guidance issued by the Treasury Department and Internal Revenue Service thereunder.

2.11 Committee. Committee means the Company or a committee appointed by the Company to administer the Plan.

2.12 Company. Company means Premier Financial Corp.

2.13 Company Contribution. Company Contribution means a credit by a Participating Employer to a Participant’s Account(s) in accordance with the provisions of Article V of the Plan. Unless the context clearly indicates otherwise, a reference to Company Contribution shall include Earnings attributable to such contribution.

2.14 Company Contribution Account. Company Contribution Account means an Account established by the Committee to record Company Contributions allocated to the Company Contribution Account as determined by the Committee and which are payable to a Participant at Separation from Service in accordance with Section 6.3.

2.15 Compensation. Compensation means a Participant’s salary, bonus, commission, Director fees and such other cash or equity-based compensation approved by the Committee as Compensation that may be deferred under Section 4.2 of this Plan, provided that equity-based compensation may only be deferred in accordance with, and only to the extent that, the award agreement for such equity-based compensation permits a deferral under this Plan. “Compensation” shall not include any compensation that has been previously deferred under this Plan or any other arrangement subject to Code Section 409A or any compensation that is not U.S. source income.

2.16 Compensation Deferral Agreement. Compensation Deferral Agreement means an agreement between a Participant and a Participating Employer that specifies: (i) the

0147467.0747156 4813-1425-9191v4

amount of each component of Compensation that the Participant has elected to defer to the Plan in accordance with the provisions of Article IV, and (ii) the Payment Schedule applicable to one or more Accounts.

2.17 Deferral. Deferral means a credit to a Participant’s Account(s) that records that portion of the Participant’s Compensation that the Participant has elected to defer to the Plan in accordance with the provisions of Article IV. Unless the context of the Plan clearly indicates otherwise, a reference to Deferrals includes Earnings attributable to such Deferrals.

2.18 Director. Director means a non-employee member of the Board of Directors of the Company.

2.19 Earnings. Earnings means an adjustment to the value of an Account in accordance with Article VII.

2.20 Effective Date. Effective Date means September 1, 2021.

2.21 Eligible Employee. Eligible Employee means an Employee who is a member of a select group of management or highly compensated employees who has been notified during an applicable enrollment of his or her status as an Eligible Employee. The Committee has the discretion to determine which Employees are Eligible Employees for each enrollment.

2.22 Employee. Employee means a common-law employee of an Employer.

2.23 Employer. Employer means the Company and each Affiliate.

2.24 ERISA. ERISA means the Employee Retirement Income Security Act of 1974, as amended from time to time.

2.25 Flex Account. Flex Account means a Separation Account or Specified Date Account established under the terms of a Participant’s Compensation Deferral Agreement. Unless the Committee specifies otherwise, a Participant may maintain no more than five (5) Flex Accounts at any one time.

2.26 Participant. Participant means an individual described in Article III.

2.27 Participating Employer. Participating Employer means the Company and each Affiliate who has adopted the Plan with the consent of the Company. Each Participating Employer shall be identified on Schedule A attached hereto.

2.28 Payment Schedule. Payment Schedule means the date as of which payment of an Account will commence and the form in which payment of such Account will be made under the terms of a payment election in effect for such Account under the terms of this Plan.

0147467.0747156 4813-1425-9191v4

2.29 Performance-Based Compensation. Performance-Based Compensation means Compensation where the amount of, or entitlement to, the Compensation is contingent on the satisfaction of pre-established organizational or individual performance criteria relating to a performance period of at least 12 consecutive months. Organizational or individual performance criteria are considered pre-established if established in writing by not later than 90 days after the commencement of the period of service to which the criteria relate, provided that the outcome is substantially uncertain at the time the criteria are established. Performance-Based Compensation shall not include any Compensation payable upon the Participant’s death or disability (as defined in Treas. Section 1.409A-1(e)) without regard to the satisfaction of the performance criteria.

2.30 Plan. Plan means “Premier Financial Corp. Deferred Compensation Plan” as documented herein and as may be amended from time to time hereafter. However, to the extent permitted or required under Code Section 409A, the term Plan may in the appropriate context also means a portion of the Plan that is treated as a single plan under Treas. Reg. Section 1.409A-1(c), or the Plan or portion of the Plan and any other nonqualified deferred compensation plan or portion thereof that is treated as a single plan under such section.

2.31 Plan Year. Plan Year means January 1 through December 31.

2.32 Retirement Account. Retirement Account means an Account established by the Committee to record Company Contributions and Deferrals allocated to the Retirement Account pursuant to a Participant’s Compensation Deferral Agreement, payable to a Participant upon Separation from Service in accordance with Section 6.3.

2.33 Separation Account. Separation Account means an Account established by the Committee in accordance with a Participant’s Compensation Deferral Agreement to record Deferrals allocated to such Account by the Participant and which are payable upon the Participant’s Separation from Service as set forth in Section 6.3. The Committee may limit the number of Separation Accounts that may be maintained at any one time by a Participant, as set forth in the Plan’s enrollment materials.

2.34 Separation from Service. Separation from Service means an Employee’s termination of employment with the Employer and all Affiliates, determined as provided below in accordance with Treas. Reg. Section 1.409A-1(h).

Except in the case of an Employee on a bona fide leave of absence as provided below, an Employee is deemed to have incurred a Separation from Service if the Employer and the Employee reasonably anticipated that the level of services to be performed by the Employee after a date certain would be reduced to 20% or less of the average services rendered by the Employee during the immediately preceding 36-month period (or the total period of employment, if less than 36 months), disregarding periods during which the Employee was on a bona fide leave of absence.

0147467.0747156 4813-1425-9191v4

An Employee who is absent from work due to military leave, sick leave, or other bona fide leave of absence shall incur a Separation from Service on the first date immediately following the later of: (i) the six-month anniversary of the commencement of the leave, or (ii) the expiration of the Employee’s right, if any, to reemployment under statute or contract.

If a Participant ceases to provide services as an Employee and begins providing services as an independent contractor for the Employer, a Separation from Service shall occur only if the parties anticipate that the level of services to be provided as an independent contractor are such that a Separation from Service would have occurred if the Employee had continued to provide services at that level as an Employee. If, in accordance with the preceding sentence, no Separation from Service occurs as of the date the individual’s employment status changes, a Separation from Service shall occur thereafter only upon the 12-month anniversary of the date all contracts with the Employer have expired, provided the Participant does not perform services for the Employer during that time. Notwithstanding the foregoing provisions in this paragraph, an individual’s service as a member of the Board of Directors shall be disregarded in determining whether such individual has incurred a Separation from Service as an Employee, and an individual’s service as an Employee will be disregarded in determining whether such individual has incurred a Separation from Service as a member of the Board of Directors.

For purposes of determining whether a Separation from Service has occurred, the Employer means the Employer as defined in Section 2.23 of the Plan, except that in applying Code sections 1563(a)(1), (2) and (3) for purposes of determining whether another organization is an Affiliate of the Company under Code Section 414(b), and in applying Treasury Regulation Section 1.414(c)-2 for purposes of determining whether another organization is an Affiliate of the Company under Code Section 414(c), “at least 50 percent” shall be used instead of “at least 80 percent” each place it appears in those sections.

The Committee specifically reserves the right to determine whether a sale or other disposition of substantial assets to an unrelated party constitutes a Separation from Service with respect to a Participant providing services to the seller immediately prior to the transaction and providing services to the buyer after the transaction.

2.35 Specified Date Account. Specified Date Account means an Account established by the Committee to record the amounts payable in a future year as specified in the Participant’s Compensation Deferral Agreement. The Committee may limit the number of Specified Date Accounts that may be maintained at any one time by a Participant, as set forth in the Plan’s enrollment materials.

2.36 Specified Employee. Specified Employee means a “specified employee” within the meaning of Code Section 409A(a)(2)(B)(i) and the regulations thereunder.

2.37 Unforeseeable Emergency. Unforeseeable Emergency means a severe financial hardship to the Participant resulting from an illness or accident of the Participant, the Participant’s

0147467.0747156 4813-1425-9191v4

spouse, the Participant’s dependent (as defined in Code section 152, without regard to section 152(b)(1), (b)(2), and (d)(1)(B)), or a Beneficiary; loss of the Participant’s property due to casualty (including the need to rebuild a home following damage to a home not otherwise covered by insurance, for example, as a result of a natural disaster); or other similar extraordinary and unforeseeable circumstances arising as a result of events beyond the control of the Participant. The types of events which may qualify as an Unforeseeable Emergency may be limited by the Committee.

2.38 Valuation Date. Valuation Date means each Business Day.

Article III

Eligibility and Participation

3.1 Eligibility and Participation. All Eligible Employees and all Directors may enroll in the Plan. Eligible Employees become Participants on the first to occur of (i) the date on which the first Compensation Deferral Agreement becomes irrevocable under Article IV, or (ii) the date Company Contributions are credited to an Account on behalf of such Eligible Employee. A Director becomes a Participant on the date that his or her first Compensation Deferral Agreement becomes irrevocable under Article IV.

3.2 Duration. Only Eligible Employees and Directors may submit Compensation Deferral Agreements during an enrollment and receive Company Contributions during the Plan Year. A Participant who is no longer an Eligible Employee but has not incurred a Separation from Service will not be allowed to submit Compensation Deferral Agreements but may otherwise exercise all of the rights of a Participant under the Plan with respect to his or her Account(s). On and after a Separation from Service, a Participant shall remain a Participant as long as his or her Account Balance is greater than zero (0). All Participants, regardless of employment status, will continue to be credited with Earnings and during such time may continue to make allocation elections as provided in Section 7.4. An individual shall cease being a Participant in the Plan when his Account has been reduced to zero (0).

3.3 Rehires. An Eligible Employee who experiences a Separation from Service and who subsequently resumes performing services for an Employer in the same calendar year (regardless of eligibility) will have his or her Compensation Deferral Agreement for such year, if any, reinstated, but his or her eligibility to participate in the Plan in years subsequent to the year of rehire shall be governed by the provisions of Section 3.1.

Article IV

Deferrals

1.1

Deferral Elections, Generally.

(a)

An Eligible Employee or Director may make an initial election to defer Compensation by submitting a Compensation Deferral Agreement during the enrollment periods established by the Committee and in the manner specified by

0147467.0747156 4813-1425-9191v4

the Committee, but in any event, in accordance with Section 4.2. Unless an earlier date is specified in the Compensation Deferral Agreement, deferral elections with respect to a Compensation source (such as salary, bonus or other Compensation) become irrevocable on the latest date applicable to such Compensation source under Section 4.2.

(b)

A Compensation Deferral Agreement that is not timely filed with respect to a service period or component of Compensation, or that is submitted by a Participant who experiences a Separation from Service prior to the latest date such agreement would become irrevocable under Section 409A, shall be considered null and void and shall not take effect with respect to such item of Compensation. The Committee may modify or revoke any Compensation Deferral Agreement prior to the date the election becomes irrevocable under the rules of Section 4.2.

(c)

The Committee may permit different deferral amounts for each component of Compensation and may establish a minimum or maximum deferral amount for each such component. Unless otherwise specified by the Committee in the Compensation Deferral Agreement, Participants may defer up to 80% of their base compensation and up to 100% of bonus, commissions, Director fees or other Compensation earned during a Plan Year.

(d)

Deferrals of cash Compensation shall be calculated with respect to the gross cash Compensation payable to the Participant prior to any deductions or withholdings, but shall be reduced by the Committee as necessary so as not to exceed 100% of the cash Compensation of the Participant remaining after deduction of all required income and employment taxes, required employee benefit deductions, deferrals to 401(k) plans and other deductions required by law. Changes to payroll withholdings that affect the amount of Compensation being deferred to the Plan shall be allowed only to the extent permissible under Code Section 409A.

(e)

The Eligible Employee or Director shall specify on his or her Compensation Deferral Agreement the amount of Deferrals and whether to allocate Deferrals to the Retirement Account or to one or more Flex Accounts. If no designation is made, Deferrals shall be allocated to the Retirement Account.

4.2 Timing Requirements for Compensation Deferral Agreements.

(a) Initial Eligibility. The Committee may permit an Eligible Employee or Director to defer Compensation earned in the first year of eligibility. The Compensation Deferral Agreement must be filed within 30 days after attaining Eligible Employee status or, in the case of Directors, after the date the Director is seated as a member of the Board of Directors and becomes irrevocable not later than the last day of such 30-day period.

A Compensation Deferral Agreement filed under this paragraph applies to Compensation earned after the date that the Compensation Deferral Agreement

0147467.0747156 4813-1425-9191v4

becomes irrevocable.

(b)

Ongoing Eligibility. Except as otherwise provided in this Section 4.2, the Committee may permit an Eligible Employee or Director to defer Compensation by filing a Compensation Deferral Agreement no later than December 31 of the year prior to the year in which the Compensation to be deferred is earned. A Compensation Deferral Agreement filed under this paragraph shall become irrevocable with respect to such Compensation not later than the December 31 filing deadline.

(c)

Performance-Based Compensation. The Committee may permit an Eligible Employee or Director to defer Compensation which qualifies as Performance-Based Compensation by filing a Compensation Deferral Agreement no later than the date that is six months before the end of the applicable performance period, provided that:

(i)

the Participant performs services continuously from the later of the beginning of the performance period or the date the performance criteria are established through the date the Compensation Deferral Agreement is submitted; and

(ii) the Compensation is not readily ascertainable as of the date the Compensation Deferral Agreement is filed.

Any election to defer Performance-Based Compensation that is made in accordance with this paragraph and that becomes payable as a result of the Participant’s death or disability (as defined in Treas. Reg. Section 1.409A-1(e)) or upon a change in control (as defined in Treas. Reg. Section 1.409A-3(i)(5)) prior to the satisfaction of the performance criteria, will be void unless it would be considered timely under another rule described in this Section.

(d)

Certain Forfeitable Rights. With respect to a legally binding right to a payment in a subsequent year that is subject to a forfeiture condition requiring the Participant’s continued services for a period of at least 12 months from the date the Participant obtains the legally binding right, the Committee may permit an Eligible Employee or Director to defer such Compensation by filing a Compensation Deferral Agreement on or before the 30th day after the legally binding right to the Compensation accrues, provided that the Compensation Deferral Agreement is submitted at least 12 months in advance of the earliest date on which the forfeiture condition could lapse. The Compensation Deferral Agreement described in this paragraph becomes irrevocable not later than such 30th day. If the forfeiture condition applicable to the payment lapses before the end of such 12-month period as a result of the Participant’s death or disability (as defined in Treas. Reg. Section 1.409A-3(i)(4)) or upon a change in control (as defined in Treas. Reg. Section 1.409A-3(i)(5)), the Compensation Deferral

0147467.0747156 4813-1425-9191v4

Agreement will be void unless it would be considered timely under another rule described in this Section.

(e)

“Evergreen” Deferral Elections. The Committee, in its discretion, may provide that Compensation Deferral Agreements will continue in effect for subsequent years or performance periods by communicating that intention to Participants in writing prior to the date Compensation Deferral Agreements become irrevocable under this Section 4.2. An evergreen Compensation Deferral Agreement may be revoked or modified in writing prospectively by the Participant or the Committee with respect to Compensation for which such election remains revocable under this Section 4.2.

A Compensation Deferral Agreement is deemed to be revoked for subsequent years if the Participant is not an Eligible Employee or Director as of the last permissible date for making elections under this Section 4.2 or if the Compensation Deferral Agreement is cancelled in accordance with Section 4.6.

4.3 Allocation of Deferrals. A Compensation Deferral Agreement may allocate Deferrals to the Retirement Account or to one or more Flex Accounts. The Committee may, in its discretion, establish in a written communication during enrollment a minimum deferral period for the establishment of a Specified Date Account (for example, the second Plan Year following the year Compensation is first allocated to such Accounts). In the event a Participant’s Compensation Deferral Agreement allocates a component of Compensation to a Specified Date Account that commences payment in the year such Compensation is earned, the Compensation Deferral Agreement shall be deemed to allocate the Deferral to the Participant’s Specified Date Account having the next earliest payment year. If the Participant has no other Specified Date Accounts, the Committee will allocate the Deferral to the Retirement Account.

4.4 Deductions from Pay. The Committee has the authority to determine the payroll practices under which any component of Compensation subject to a Compensation Deferral Agreement will be deducted from a Participant’s Compensation.

4.5 Vesting. Participant Deferrals of base salary and other Compensation that is not otherwise subject to a vesting schedule shall be 100% vested at all times. Participant Deferrals of Compensation that is subject to a vesting schedule shall become vested in accordance with the provisions of the underlying award.

4.6 Cancellation of Deferrals. The Committee may cancel a Participant’s Deferrals: (i) for the balance of the Plan Year in which an Unforeseeable Emergency occurs, and (ii) during periods in which the Participant is unable to perform the duties of his or her position or any substantially similar position due to a mental or physical impairment that can be expected to result in death or last for a continuous period of at least six months, provided cancellation occurs by the later of the end of the taxable year of the Participant or the 15th day of the third month following the date the Participant incurs the disability (as defined in this paragraph (ii)).

0147467.0747156 4813-1425-9191v4

Article V

Company Contributions

5.1 Discretionary Company Contributions. A Participating Employer may, from time to time in its sole and absolute discretion, credit discretionary Company Contributions in the form of matching, profit sharing or other contributions to any of its Eligible Employees in any amount determined by the Participating Employer. Company Contributions are credited to the Participant’s Retirement Account or the Company Contribution Account as provided below. Directors are not eligible to receive Company Contributions.

Make-Up Matching Contribution. Company Contributions may take the form of “make-up” matching contributions, at the same matching contribution rate provided under the Company 401(k) plan with respect to Deferrals that reduce 401(k) plan compensation below the limitation set forth in Code Section 401(a)(17). Make-up matching Company Contributions are credited to a Participant’s Retirement Account.

Supplemental Matching Contribution. Company Contributions may take the form of “supplemental” matching contributions, at the same contribution rate provided under the Company 401(k) plan with respect to compensation deferred above the compensation limit set forth in Code Section 401(a)(17). Supplemental matching Company Contributions are credited to a Participant’s Retirement Account.

Discretionary Company Contribution. Company Contributions may take the form of ad hoc discretionary Company Contributions which may be credited to any Participant in any amount in the sole discretion of the Participating Employer. The fact that a discretionary Company Contribution is credited in one year shall not obligate the Participating Employer to continue to make such Company Contributions in subsequent years or to the same Participant(s) or in any amount. Discretionary Company Contributions are credited to a Participant’s Retirement Account, unless the Participating Employer designates in writing on or before the date the contribution is declared that the discretionary Company Contribution will be credited to the Company Contribution Account.

5.2 Vesting. Company make-up and supplemental matching Company Contributions are 100% vested at all times.

Discretionary Company Contributions vest according to the schedule specified by the Committee on or before the time the contributions are made.

Deferrals of equity-based Compensation will vest as provided under the terms of the applicable award.

All Company Contributions become 100% vested, if while employed by an Employer, a Participant dies or his or her Employer experiences a Change in Control as determined by

0147467.0747156 4813-1425-9191v4

the Company. The portion of a Participant’s Accounts that remain unvested upon his or her Separation from Service shall be forfeited.

Article VI

Payments from Accounts

6.1 General Rules. The vested portion of a Participant’s Accounts shall become payable upon the first to occur of the payment events applicable to such Account under (i) Sections 6.2 or 6.3 (as elected) and (ii) Sections 6.4 through 6.6.

Payment events and Payment Schedules elected by the Participant shall be set forth in a valid Compensation Deferral Agreement that establishes the Account to which such elections apply in accordance with Article IV or in a valid modification election applicable to such Account as described in Section 6.9.

Payment amounts are based on Account Balances as of the last Valuation Date of the month next preceding the month actual payment is made.

6.2 Specified Date Accounts.

Commencement. Payment is made or begins in the calendar year designated by the Participant.

Form of Payment. Payment will be made in a lump sum, unless the Participant elected to receive annual installments up to 5 years.

The time and form of payment of Specified Date Accounts is unaffected by an earlier Separation from Service described in Section 6.3, other than a Separation from Service within 24 months following a Change in Control as provided in Section 6.3.

6.3 Separation from Service. Upon a Participant’s Separation from Service other than death, the Participant is entitled to receive his or her Retirement Account, any Separation Accounts, and any Company Contribution Account.

Commencement. Accounts payable under this Section 6.3 commence payment in the calendar year next following the calendar year in which Separation from Service occurs, unless the Participant (or Company, in the case of a Company Contribution Account) elected a later year.

Form of Payment. The Retirement Account and Separation Accounts will be paid in a single lump sum unless the Participant elected with respect to an Account to receive annual installments up to 15 years. A Participant will receive his or her vested Company Contribution Account according to the schedule specified by the Company in writing on or before the date the Eligible Employee obtains a legally binding right to the initial discretionary Company Contribution that is credited to the Participant’s Company

0147467.0747156 4813-1425-9191v4

Contribution Account.

Change in Control. Notwithstanding any other provision of the Plan, a Participant who has a Separation from Service within 24 months following a Change in Control will receive all of his or her Accounts in a single lump sum commencing in the calendar year next following the year in which Separation from Service occurs, regardless of any other elections he or she may have made.

Notwithstanding any other provision of this Plan, payment to a Participant who is a Specified Employee will commence no earlier than six months following his or her Separation from Service.

6.4 Death. Notwithstanding anything to the contrary in this Article VI, upon the death of the Participant (regardless of whether such Participant is an Employee or Director at the time of death), all remaining vested Account Balances shall be paid to his or her Beneficiary in a single lump sum no later than December 31 of the calendar year following the year of the Participant’s death.

(a) Designation of Beneficiary in General. The Participant shall designate a Beneficiary in the manner and on such terms and conditions as the Committee may prescribe. No such designation shall become effective unless filed with the Committee during the Participant’s lifetime. Any designation shall remain in effect until a new designation is filed with the Committee; provided, however, that in the event a Participant designates his or her spouse as a Beneficiary, such designation shall be automatically revoked upon the dissolution of the marriage unless, following such dissolution, the Participant submits a new designation naming the former spouse as a Beneficiary. A Participant may from time to time change his or her designated Beneficiary without the consent of a previously designated Beneficiary by filing a new designation with the Committee.

(b) No Beneficiary. If a designated Beneficiary does not survive the Participant, or if there is no valid Beneficiary designation, amounts payable under the Plan upon the death of the Participant shall be paid to the Participant’s spouse, or if there is no surviving spouse, then to the duly appointed and currently acting personal representative of the Participant’s estate.

6.5 Unforeseeable Emergency. A Participant who experiences an Unforeseeable Emergency may submit a written request to the Committee to receive payment of all or any portion of his or her vested Accounts. If the emergency need cannot be relieved by cessation of Deferrals to the Plan, the Committee may approve an emergency payment therefrom not to exceed the amount reasonably necessary to satisfy the need, taking into account the additional compensation that is available to the Participant as the result of cancellation of deferrals to the Plan, including amounts necessary to pay any taxes or penalties that the Participant reasonably anticipates will result from the payment. The amount of the emergency payment shall be subtracted from Participant’s Retirement Account until depleted, and then from the vested portion of a Participant’s Separation Accounts, then

0147467.0747156 4813-1425-9191v4

from the vested portion of a Participant’s Specified Date Accounts, starting with the Account having the latest commencement date until fully distributed, then continuing in this manner with the next latest Account until the full amount of the distribution is made. Emergency payments shall be paid in a single lump sum within the 90-day period following the date the payment is approved by the Committee. The Committee may specify that Deferrals will be distributed before any Company Contributions.

6.6 Administrative Cash-Out of Small Balances. Notwithstanding anything to the contrary in this Article VI, the Committee may at any time and without regard to whether a payment event has occurred, direct in writing an immediate lump sum payment of the Participant’s Accounts if the balance of such Accounts, combined with any other amounts required to be treated as deferred under a single plan pursuant to Code Section 409A, does not exceed the applicable dollar amount under Code Section 402(g)(1)(B), provided any other such aggregated amounts are also distributed in a lump sum at the same time.

6.7 Acceleration of or Delay in Payments. Notwithstanding anything to the contrary in this Article VI, the Committee, in its sole and absolute discretion, may elect to accelerate the time or form of payment of an Account, provided such acceleration is permitted under Treas. Reg. Section 1.409A-3(j)(4). The Committee may also, in its sole and absolute discretion, delay the time for payment of an Account, to the extent permitted under Treas. Reg. Section 1.409A-2(b)(7).

6.8 Rules Applicable to Installment Payments. If a Payment Schedule specifies installment payments, payments will be made beginning as of the payment commencement date for such installments and shall continue to be made in each subsequent payment period until the number of installment payments specified in the Payment Schedule has been paid. The amount of each installment payment shall be determined by dividing (a) by (b), where (a) equals the Account Balance as of the last Valuation Date in the month preceding the month of payment and (b) equals the remaining number of installment payments. For purposes of Section 6.9, installment payments will be treated as a single payment. If an Account is payable in installments, the Account will continue to be credited with Earnings in accordance with Article VII hereof until the Account is completely distributed.

6.9 Modifications to Payment Schedules. A Participant may modify the Payment Schedule for any Account, consistent with the permissible Payment Schedules available under the Plan for the applicable payment event, provided such modification complies with the requirements of this Section 6.9. The permissible forms of payment for modifications to the Company Contribution Account shall be the same forms available for the Retirement Account.

(a) Time of Election. The modification election must be submitted to the Committee not less than 12 months prior to the date payments would have commenced under the Payment Schedule in effect prior to modification (the “Prior Election”).

0147467.0747156 4813-1425-9191v4

(b) Date of Payment under Modified Payment Schedule. The date payments are to commence under the modified Payment Schedule must be no earlier than five years after the date payment would have commenced under the Prior Election. Under no circumstances may a modification election result in an acceleration of payments in violation of Code Section 409A. If the Participant modifies only the form, and not the commencement date for payment, payments shall commence on the fifth anniversary of the date payment would have commenced under the Prior Election.

(c) Irrevocability; Effective Date. A modification election is irrevocable when filed and becomes effective 12 months after the filing date.

(d) Effect on Accounts. An election to modify a Payment Schedule is specific to the Account or payment event to which it applies and shall not be construed to affect the Payment Schedules or payment events of any other Accounts.

Article VII

Valuation of Account Balances; Investments

7.1 Valuation. Deferrals shall be credited to appropriate Accounts on the date such Compensation would have been paid to the Participant absent the Compensation Deferral Agreement. Valuation of Accounts shall be performed under procedures approved by the Committee.

7.2 Earnings Credit. Each Account will be credited with Earnings on each Business Day, based upon the Participant’s investment allocation among a menu of investment options selected in advance by the Committee, in accordance with the provisions of this Article VII (“investment allocation”).

7.3 Investment Options. Investment options will be determined by the Committee. The Committee, in its sole discretion, shall be permitted to add or remove investment options from the Plan menu from time to time, provided that any such additions or removals of investment options shall not be effective with respect to any period prior to the effective date of such change.

7.4 Investment Allocations. A Participant’s investment allocation constitutes a deemed, not actual, investment among the investment options comprising the investment menu. At no time shall a Participant have any real or beneficial ownership in any investment option included in the investment menu, nor shall the Participating Employer or any trustee acting on its behalf have any obligation to purchase actual securities as a result of a Participant’s investment allocation. A Participant’s investment allocation shall be used solely for purposes of adjusting the value of a Participant’s Account Balances.

A Participant shall specify an investment allocation for each of his Accounts in accordance with procedures established by the Committee. Allocation among the investment options must be designated in increments of 1%. The Participant’s investment

0147467.0747156 4813-1425-9191v4

allocation will become effective on the same Business Day or, in the case of investment allocations received after a time specified by the Committee, the next Business Day.

A Participant may change an investment allocation on any Business Day, both with respect to future credits to the Plan and with respect to existing Account Balances, in accordance with procedures adopted by the Committee. Changes shall become effective on the same Business Day or, in the case of investment allocations received after a time specified by the Committee, the next Business Day, and shall be applied prospectively.

7.5 Unallocated Deferrals and Accounts. If the Participant fails to make an investment allocation with respect to an Account, such Account shall be invested in an investment option, the primary objective of which is the preservation of capital, as determined by the Committee.

7.6 Valuations Final After 180 Days. The Participant shall have 180 days following the Valuation Date on which the Participant failed to receive the full amount of Earnings and to file a claim under Article XI for the correction of such error.

Article VIII

Administration

8.1 Plan Administration. This Plan shall be administered by the Committee which shall have discretionary authority to make, amend, interpret and enforce all appropriate rules and regulations for the administration of this Plan and to utilize its discretion to decide or resolve any and all questions, including but not limited to eligibility for benefits and interpretations of this Plan and its terms, as may arise in connection with the Plan. Claims for benefits shall be filed with the Committee and resolved in accordance with the claims procedures in Article XI.

8.2 Administration Upon Change in Control. Upon a change in control affecting the Company, the Committee, as constituted immediately prior to such change in control, shall continue to act as the Committee. The Committee, by a vote of a majority of its members, shall have the authority (but shall not be obligated) to appoint an independent third party to act as the Committee. For purposes of this Section 8.2, a “change in control” means a change in control within the meaning of the rabbi trust agreement associated with the Plan or if no such definition is provided, the term shall have the meaning provided in Section 2.7.

Upon such change in control, the Company may not remove the Committee or its members, unless a majority of Participants and Beneficiaries with Account Balances consent to the removal and replacement of the Committee. Notwithstanding the foregoing, the Committee shall not have authority to direct investment of trust assets under any rabbi trust described in Section 10.2.

0147467.0747156 4813-1425-9191v4

The Participating Employers shall, with respect to the Committee identified under this Section: (i) pay all reasonable expenses and fees of the Committee, (ii) indemnify the Committee (including individuals serving as Committee members) against any costs, expenses and liabilities including, without limitation, attorneys’ fees and expenses arising in connection with the performance of the Committee’s duties hereunder, except with respect to matters resulting from the Committee’s gross negligence or willful misconduct, and (iii) supply full and timely information to the Committee on all matters related to the Plan, any rabbi trust, Participants, Beneficiaries and Accounts as the Committee may reasonably require.

8.3 Withholding. The Participating Employer shall have the right to withhold from any payment due under the Plan (or with respect to any amounts credited to the Plan) any taxes required by law to be withheld in respect of such payment (or credit). Withholdings with respect to amounts credited to the Plan shall be deducted from Compensation that has not been deferred to the Plan.

8.4 Indemnification. The Participating Employers shall indemnify and hold harmless each employee, officer, director, agent or organization, to whom or to which are delegated duties, responsibilities, and authority under the Plan or otherwise with respect to administration of the Plan, including, without limitation, the Committee, its delegees and its agents, against all claims, liabilities, fines and penalties, and all expenses reasonably incurred by or imposed upon him or it (including but not limited to reasonable attorney fees) which arise as a result of his or its actions or failure to act in connection with the operation and administration of the Plan to the extent lawfully allowable and to the extent that such claim, liability, fine, penalty, or expense is not paid for by liability insurance purchased or paid for by the Participating Employer. Notwithstanding the foregoing, the Participating Employer shall not indemnify any person or organization if his or its actions or failure to act are due to gross negligence or willful misconduct or for any such amount incurred through any settlement or compromise of any action unless the Participating Employer consents in writing to such settlement or compromise.

8.5 Delegation of Authority. In the administration of this Plan, the Committee may, from time to time, employ agents and delegate to them such administrative duties as it sees fit, and may from time-to-time consult with legal counsel who shall be legal counsel to the Company.

8.6 Binding Decisions or Actions. The decision or action of the Committee in respect of any question arising out of or in connection with the administration, interpretation and application of the Plan and the rules and regulations thereunder shall be final and conclusive and binding upon all persons having any interest in the Plan.

Article IX

Amendment and Termination

0147467.0747156 4813-1425-9191v4

9.1 Amendment and Termination. The Company may at any time and from time to time amend the Plan or may terminate the Plan as provided in this Article IX. Each Participating Employer may also terminate its participation in the Plan.

9.2 Amendments. The Company, by action taken by its Board of Directors, may amend the Plan at any time and for any reason, provided that any such amendment shall not reduce the vested Account Balances of any Participant accrued as of the date of any such amendment or restatement (as if the Participant had incurred a voluntary Separation from Service on such date). The Board of Directors of the Company may delegate to the Committee the authority to amend the Plan without the consent of the Board of Directors for the purpose of: (i) conforming the Plan to the requirements of law; (ii) facilitating the administration of the Plan; (iii) clarifying provisions based on the Committee’s interpretation of the Plan documents; and (iv) making such other amendments as the Board of Directors may authorize. No amendment is needed to revise the list of Participating Employers set forth on Schedule A attached hereto.

9.3 Termination. The Company, by action taken by its Board of Directors, may terminate the Plan and pay Participants and Beneficiaries their Account Balances in a single lump sum at any time, to the extent and in accordance with Treas. Reg. Section 1.409A-3(j)(4)(ix).

9.4 Accounts Taxable Under Code Section 409A. The Plan is intended to constitute a plan of deferred compensation that meets the requirements for deferral of income taxation under Code Section 409A. The Committee, pursuant to its authority to interpret the Plan, may sever from the Plan or any Compensation Deferral Agreement any provision or exercise of a right that otherwise would result in a violation of Code Section 409A.

Article X

Informal Funding

10.1 General Assets. Obligations established under the terms of the Plan may be satisfied from the general funds of the Participating Employers, or a trust described in this Article X. No Participant, spouse or Beneficiary shall have any right, title or interest whatever in assets of the Participating Employers. Nothing contained in this Plan, and no action taken pursuant to its provisions, shall create or be construed to create a trust of any kind, or a fiduciary relationship, between the Participating Employers and any Employee, Director spouse, or Beneficiary. To the extent that any person acquires a right to receive payments hereunder, such rights are no greater than the right of an unsecured general creditor of the Participating Employer.

10.2 Rabbi Trust. A Participating Employer may, in its sole discretion, establish a grantor trust, commonly known as a rabbi trust, as a vehicle for accumulating assets to pay benefits under the Plan. Payments under the Plan may be paid from the general assets of the Participating Employer or from the assets of any such rabbi trust. Payment from any such source shall reduce the obligation owed to the Participant or Beneficiary under the Plan.

0147467.0747156 4813-1425-9191v4

If a rabbi trust is in existence upon the occurrence of a “change in control”, as defined in such trust, the Participating Employer shall, upon such change in control, and on each anniversary of the change in control, contribute in cash or liquid securities such amounts as are necessary so that the value of assets after making the contributions is at least equal to the total value of all Account Balances as of such anniversary.

Article XI

Claims

11.1 Filing a Claim. Any controversy or claim arising out of or relating to the Plan shall be filed in writing with the Committee which shall make all determinations concerning such claim. Any claim filed with the Committee and any decision by the Committee denying such claim shall be in writing and shall be delivered to the Participant or Beneficiary filing the claim (the “Claimant”). Notice of a claim for payments shall be delivered to the Committee within 90 days of the latest date upon which the payment could have been timely made in accordance with the terms of the Plan and Code Section 409A, and if not paid, the Participant or Beneficiary must file a claim under this Article XI not later than 180 days after such latest date. If the Participant or Beneficiary fails to file a timely claim, the Participant forfeits any amounts to which he or she may have been entitled to receive under the claim.

(a)

In General. Notice of a denial of benefits (other than claims based on disability) will be provided within 90 days of the Committee’s receipt of the Claimant's claim for benefits. If the Committee determines that it needs additional time to review the claim, the Committee will provide the Claimant with a notice of the extension before the end of the initial 90-day period. The extension will not be more than 90 days from the end of the initial 90-day period and the notice of extension will explain the special circumstances that require the extension and the date by which the Committee expects to make a decision.

(b) Contents of Notice. If a claim for benefits is completely or partially denied, notice of such denial shall be in writing. Any electronic notification shall comply with the standards imposed by Department of Labor Regulation 29 CFR 2520.104b-1(c)(1)(i), (iii), and (iv). The notice of denial shall set forth the specific reasons for denial in plain language. The notice shall: (i) cite the pertinent provisions of the Plan document, and (ii) explain, where appropriate, how the Claimant can perfect the claim, including a description of any additional material or information necessary to complete the claim and why such material or information is necessary. The claim denial also shall include an explanation of the claims review procedures and the time limits applicable to such procedures, including the right to appeal the decision, the deadline by which such appeal must be filed and a statement of the Claimant’s right to bring a civil action under Section 502(a) of ERISA following an adverse decision on appeal and the specific date by which such a civil action must commence under Section 11.4.

0147467.0747156 4813-1425-9191v4

11.2 Appeal of Denied Claims. A Claimant whose claim has been completely or partially denied shall be entitled to appeal the claim denial by filing a written appeal with a committee designated to hear such appeals (the “Appeals Committee”). A Claimant who timely requests a review of the denied claim (or his or her authorized representative) may review, upon request and free of charge, copies of all documents, records and other information relevant to the denial and may submit written comments, documents, records and other information relating to the claim to the Appeals Committee. All written comments, documents, records, and other information shall be considered “relevant” if the information: (i) was relied upon in making a benefits determination, (ii) was submitted, considered or generated in the course of making a benefits decision regardless of whether it was relied upon to make the decision, or (iii) demonstrates compliance with administrative processes and safeguards established for making benefit decisions. The review shall take into account all comments, documents, records, and other information submitted by the Claimant relating to the claim, without regard to whether such information was submitted or considered in the initial benefit determination. The Appeals Committee may, in its sole discretion and if it deems appropriate or necessary, decide to hold a hearing with respect to the claim appeal.

(a)

In General. Appeal of a denied benefits claim must be filed in writing with the Appeals Committee no later than 60 days after receipt of the written notification of such claim denial. The Appeals Committee shall make its decision regarding the merits of the denied claim within 60 days following receipt of the appeal (or within 120 days after such receipt, in a case where there are special circumstances requiring extension of time for reviewing the appealed claim). If an extension of time for reviewing the appeal is required because of special circumstances, written notice of the extension shall be furnished to the Claimant prior to the commencement of the extension. The notice will indicate the special circumstances requiring the extension of time and the date by which the Appeals Committee expects to render the determination on review. The review will take into account comments, documents, records and other information submitted by the Claimant relating to the claim without regard to whether such information was submitted or considered in the initial benefit determination.

(b)

Contents of Notice. If a benefits claim is completely or partially denied on review, notice of such denial shall be in writing. Any electronic notification shall comply with the standards imposed by Department of Labor Regulation 29 CFR 2520.104b-1(c)(1)(i), (iii), and (iv). Such notice shall set forth the reasons for denial in plain language.

The decision on review shall set forth: (i) the specific reason or reasons for the denial, (ii) specific references to the pertinent Plan provisions on which the denial is based, (iii) a statement that the Claimant is entitled to receive, upon request and free of charge, reasonable access to and copies of all documents, records, or other information relevant (as defined above) to the Claimant’s claim, and (iv) a statement of the Claimant’s right to bring an action under Section 502(a) of

0147467.0747156 4813-1425-9191v4

ERISA, following an adverse decision on review and the specific date by which such a civil action must commence under Section 11.4.

11.3 Claims Appeals Upon Change in Control. Upon a change in control, the Appeals Committee, as constituted immediately prior to such change in control, shall continue to act as the Appeals Committee. The Company may not remove any member of the Appeals Committee but may replace resigning members if 2/3rds of the members of the Board of Directors of the Company and a majority of Participants and Beneficiaries with Account Balances consent to the replacement. For purposes of this Section 11.3, a “change in control” means a change in control within the meaning of the rabbi trust agreement associated with the Plan or if no such definition is provided, the term shall have the meaning under Code Section 409A.

The Appeals Committee shall have the exclusive authority at the appeals stage to interpret the terms of the Plan and resolve appeals under the Claims Procedure.

Each Participating Employer shall, with respect to the Committee identified under this Section: (i) pay its proportionate share of all reasonable expenses and fees of the Appeals Committee, (ii) indemnify the Appeals Committee (including individual committee members) against any costs, expenses and liabilities including, without limitation, attorneys’ fees and expenses arising in connection with the performance of the Appeals Committee hereunder, except with respect to matters resulting from the Appeals Committee’s gross negligence or willful misconduct, and (iii) supply full and timely information to the Appeals Committee on all matters related to the Plan, any rabbi trust, Participants, Beneficiaries and Accounts as the Appeals Committee may reasonably require.

11.4 Legal Action. A Claimant may not bring any legal action, including commencement of any arbitration, relating to a claim for benefits under the Plan unless and until the Claimant has followed the claims procedures under the Plan and exhausted his or administrative remedies under Sections 11.1 and 11.2. No such legal action may be brought more than twelve (12) months following the notice of denial of benefits under Section 11.2, or if no appeal is filed by the applicable appeals deadline, twelve (12) months following the appeals deadline.

If a Participant or Beneficiary prevails in a legal proceeding brought under the Plan to enforce the rights of such Participant or any other similarly situated Participant or Beneficiary, in whole or in part, the Participating Employer shall reimburse such Participant or Beneficiary for all legal costs, expenses, attorneys’ fees and such other liabilities incurred as a result of such proceedings. If the legal proceeding is brought in connection with a change in control as defined in Section 11.3, the Participant or Beneficiary may file a claim directly with the trustee for reimbursement of such costs, expenses and fees. For purposes of the preceding sentence, the amount of the claim shall be treated as if it were an addition to the Participant’s or Beneficiary’s Account Balance

0147467.0747156 4813-1425-9191v4

and will be included in determining the Participating Employer’s trust funding obligation under Section 10.2.

11.5 Discretion of Appeals Committee. All interpretations, determinations and decisions of the Appeals Committee with respect to any claim shall be made in its sole discretion and shall be final and conclusive.

11.6 Arbitration.

(a)

Prior to Change in Control. If, prior to a change in control as defined in Section 11.3, any claim or controversy between a Participating Employer and a Participant or Beneficiary is not resolved through the claims procedure set forth in Article XI, such claim shall be submitted to and resolved exclusively by expedited binding arbitration by a single arbitrator. Arbitration shall be conducted in accordance with the following procedures:

The complaining party shall promptly send written notice to the other party identifying the matter in dispute and the proposed remedy. Following the giving of such notice, the parties shall meet and attempt in good faith to resolve the matter. In the event the parties are unable to resolve the matter within 21 days, the parties shall meet and attempt in good faith to select a single arbitrator acceptable to both parties. If a single arbitrator is not selected by mutual consent within ten Business Days following the giving of the written notice of dispute, an arbitrator shall be selected from a list of nine persons each of whom shall be an attorney who is either engaged in the active practice of law or recognized arbitrator and who, in either event, is experienced in serving as an arbitrator in disputes between employers and employees, which list shall be provided by the main office of either JAMS, the American Arbitration Association (“AAA”) or the Federal Mediation and Conciliation Service. If, within three Business Days of the parties’ receipt of such list, the parties are unable to agree on an arbitrator from the list, then the parties shall each strike names alternatively from the list, with the first to strike being determined by the flip of a coin. After each party has had four strikes, the remaining name on the list shall be the arbitrator. If such person is unable to serve for any reason, the parties shall repeat this process until an arbitrator is selected.

Unless the parties agree otherwise, within 60 days of the selection of the arbitrator, a hearing shall be conducted before such arbitrator at a time and a place agreed upon by the parties. In the event the parties are unable to agree upon the time or place of the arbitration, the time and place shall be designated by the arbitrator after consultation with the parties. Within 30 days of the conclusion of the arbitration hearing, the arbitrator shall issue an award, accompanied by a written decision explaining the basis for the arbitrator’s award.

In any arbitration hereunder, the Participating Employer shall pay all administrative fees of the arbitration and all fees of the arbitrator, except that the

0147467.0747156 4813-1425-9191v4

Participant or Beneficiary may, if he/she/it wishes, pay up to one-half of those amounts. Each party shall pay its own attorneys’ fees, costs, and expenses, unless the arbitrator orders otherwise. The prevailing party in such arbitration, as determined by the arbitrator, and in any enforcement or other court proceedings, shall be entitled, to the extent permitted by law, to reimbursement from the other party for all of the prevailing party’s costs (including but not limited to the arbitrator’s compensation), expenses, and attorneys’ fees. The arbitrator shall have no authority to add to or to modify this Plan, shall apply all applicable law, and shall have no lesser and no greater remedial authority than would a court of law resolving the same claim or controversy. The arbitrator shall have no authority to add to or to modify this Plan, shall apply all applicable law, and shall have no lesser and no greater remedial authority than would a court of law resolving the same claim or controversy. The arbitrator shall, upon an appropriate motion, dismiss any claim without an evidentiary hearing if the party bringing the motion establishes that it would be entitled to summary judgment if the matter had been pursued in court litigation.

The parties shall be entitled to discovery as follows: Each party may take no more than three depositions. The Participating Employer may depose the Participant or Beneficiary plus two other witnesses, and the Participant or Beneficiary may depose the Participating Employer, pursuant to Rule 30(b)(6) of the Federal Rules of Civil Procedure, plus two other witnesses. Each party may make such reasonable document discovery requests as are allowed in the discretion of the arbitrator.

The decision of the arbitrator shall be final, binding, and non-appealable, and may be enforced as a final judgment in any court of competent jurisdiction.

This arbitration provision of the Plan shall extend to claims against any parent, subsidiary, or affiliate of each party, and, when acting within such capacity, any officer, director, shareholder, Participant, Beneficiary, or agent of any party, or of any of the above, and shall apply as well to claims arising out of state and federal statutes and local ordinances as well as to claims arising under the common law or under this Plan.

Notwithstanding the foregoing, and unless otherwise agreed between the parties, either party may apply to a court for provisional relief, including a temporary restraining order or preliminary injunction, on the ground that the arbitration award to which the applicant may be entitled may be rendered ineffectual without provisional relief.

Any arbitration hereunder shall be conducted in accordance with the Federal Arbitration Act: provided, however, that, in the event of any inconsistency between the rules and procedures of the Act and the terms of this Plan, the terms of this Plan shall prevail.

0147467.0747156 4813-1425-9191v4

If any of the provisions of this Section 11.6(a) are determined to be unlawful or otherwise unenforceable, in the whole part, such determination shall not affect the validity of the remainder of this section and this section shall be reformed to the extent necessary to carry out its provisions to the greatest extent possible and to insure that the resolution of all conflicts between the parties, including those arising out of statutory claims, shall be resolved by neutral, binding arbitration. If a court should find that the provisions of this Section 11.6(a) are not absolutely binding, then the parties intend any arbitration decision and award to be fully admissible in evidence in any subsequent action, given great weight by any finder of fact and treated as determinative to the maximum extent permitted by law.

The parties do not agree to arbitrate any putative class action or any other representative action. The parties agree to arbitrate only the claims(s) of a single Participant or Beneficiary.

(b)

Upon Change in Control. Upon a change in control as defined in Section 11.3, Section 11.6(a) shall not apply, and any legal action initiated by a Participant or Beneficiary to enforce his or her rights under the Plan may be brought in any court of competent jurisdiction. Notwithstanding the Appeals Committee’s discretion under Sections 11.3 and 11.5, the court shall apply a de novo standard of review to any prior claims decision under Sections 11.1 through 11.3 or any other determination made by the Company, its Board of Directors, a Participating Employer, the Committee, or the Appeals Committee.

Article XII

General Provisions

12.1 Assignment. No interest of any Participant, spouse or Beneficiary under this Plan and no benefit payable hereunder shall be assigned as security for a loan, and any such purported assignment shall be null, void and of no effect, nor shall any such interest or any such benefit be subject in any manner, either voluntarily or involuntarily, to anticipation, sale, transfer, assignment or encumbrance by or through any Participant, spouse or Beneficiary. Notwithstanding anything to the contrary herein, however, the Committee has the discretion to make payments to an alternate payee in accordance with the terms of a domestic relations order (as defined in Code Section 414(p)(1)(B)).

The Company may assign any or all of its liabilities under this Plan in connection with any restructuring, recapitalization, sale of assets or other similar transactions affecting a Participating Employer without the consent of the Participant.

12.2 No Legal or Equitable Rights or Interest. No Participant or other person shall have any legal or equitable rights or interest in this Plan that are not expressly granted in this Plan. Participation in this Plan does not give any person any right to be retained in the service of the Participating Employer. The right and power of a Participating Employer to dismiss or discharge an Employee or Director is expressly reserved. The Participating

0147467.0747156 4813-1425-9191v4

Employers make no representations or warranties as to the tax consequences to a Participant or a Participant’s beneficiaries resulting from a deferral of income pursuant to the Plan.

12.3 No Employment Contract. Nothing contained herein shall be construed to constitute a contract of employment between an Employee or Director and a Participating Employer.

12.4 Notice. Any notice or filing required or permitted to be delivered to the Committee under this Plan shall be delivered in writing, in person, or through such electronic means as is established by the Committee. Notice shall be deemed given as of the date of delivery or, if delivery is made by mail, as of the date shown on the postmark on the receipt for registration or certification. Written transmission shall be sent by certified mail to:

PREMIER FINANCIAL CORP.

601 CLINTON STREET

DEFIANCE, OH 43512

Any notice or filing required or permitted to be given to a Participant under this Plan shall be sufficient if in writing or hand-delivered or sent by mail to the last known address of the Participant.

12.5 Headings. The headings of Sections are included solely for convenience of reference, and if there is any conflict between such headings and the text of this Plan, the text shall control.

12.6 Invalid or Unenforceable Provisions. If any provision of this Plan shall be held invalid or unenforceable, such invalidity or unenforceability shall not affect any other provisions hereof and the Committee may elect in its sole discretion to construe such invalid or unenforceable provisions in a manner that conforms to applicable law or as if such provisions, to the extent invalid or unenforceable, had not been included.

12.7 Lost Participants or Beneficiaries. Any Participant or Beneficiary who is entitled to a benefit from the Plan has the duty to keep the Committee advised of his or her current mailing address. If benefit payments are returned to the Plan or are not presented for payment after a reasonable amount of time, the Committee shall presume that the payee is missing. The Committee, after making such efforts as in its discretion it deems reasonable and appropriate to locate the payee, shall stop payment on any uncashed checks and may discontinue making future payments until contact with the payee is restored. If the Committee is unable to locate the Participant or Beneficiary after five years from the date payment is scheduled to be made, the Participant’s Account shall be forfeited, provided that a Participant’s Account shall not be credited with Earnings following the first anniversary of such date on which payment is to be made and further provided, however, that such benefit shall be reinstated, without further adjustment for interest, if a valid claim is made by or on behalf of the Participant or Beneficiary for all or part of the forfeited benefit.

0147467.0747156 4813-1425-9191v4

12.8 Facility of Payment to a Minor. If a distribution is to be made to a minor, or to a person who is otherwise incompetent, then the Committee may, in its discretion, make such distribution: (i) to the legal guardian, or if none, to a parent of a minor payee with whom the payee maintains his or her residence, or (ii) to the conservator or committee or, if none, to the person having custody of an incompetent payee. Any such distribution shall fully discharge the Committee, the Company, and the Plan from further liability on account thereof.

12.9 Governing Law. To the extent not preempted by ERISA, the laws of the State of Ohio shall govern the construction and administration of the Plan.

12.10 Compliance With Code Section 409A; No Guarantee. This Plan is intended to be administered in compliance with Code Section 409A and each provision of the Plan shall be interpreted consistent with Code Section 409A. Although intended to comply with Code Section 409A, this Plan shall not constitute a guarantee to any Participant or Beneficiary that the Plan in form or in operation will result in the deferral of federal or state income tax liabilities or that the Participant or Beneficiary will not be subject to the additional taxes imposed under Section 409A. No Employer shall have any legal obligation to a Participant with respect to taxes imposed under Code Section 409A.

IN WITNESS WHEREOF, the undersigned executed this Plan as of the _____ day of December, 2021, to be effective as of the Effective Date.

PREMIER FINANCIAL CORP.

By: _______________________________ (Print Name)

Its: ________________________________ (Title)

_____________________________________________ (Signature)

0147467.0747156 4813-1425-9191v4

Schedule A

Participating Employers

Premier Financial Corp.

Premier Bank

First Insurance and Investments, Inc.

0147467.0747156 4813-1425-9191v4

Exhibit 10.26

AMENDMENT TO

PERFORMANCE SHARE UNITS AWARD AGREEMENTS

OF DONALD P. HILEMAN

This Amendment to Performance Share Units Award Agreements of Donald P. Hileman (this “Amendment”) is entered into effective April 1, 2021 by and between Premier Financial Corp. (the “Company”) and Donald P. Hileman (the “Grantee”).

RECITALS:

The Company and Grantee entered into that certain Performance Share Units Award Agreement dated March 10, 2020 (the “2020 PSU Agreement”).

The Company and Grantee entered into that certain Performance Share Units Award Agreement dated March 8, 2021 (the “2021 PSU Agreement”).

Each of the 2020 PSU Agreement and 2021 PSU Agreement contemplate that Grantee’s Actual Award to be paid at the end of the Performance Period shall be determined based on the level of achievement of specified Performance Goals and Grantee’s average base salary over the Performance Period.

Effective April 1, 2021, Grantee transitioned to the position of Executive Chairman and experienced a reduction in his base salary, which will, when averaged for purposes of determining the Actual Award, result in an unintended reduction in the Actual Award.

In consideration of Grantee’s service to the Company and his transition to Executive Chairman, the Compensation Committee of the Board of Directors, acting on behalf of the Board of Directors, has determined that the awards issued under the 2020 PSU Agreement and the 2021 PSU Agreement shall not be affected by the reduction in Grantee’s base salary.

The Company and Grantee desire to amend the 2020 PSU Agreement and the 2021 PSU Agreement to eliminate the references to average base salary as same would impact the determination of the Actual Award.

AGREEMENT:

The first paragraph of Section 2 of each of the 2020 PSU Agreement and the 2021 PSU Agreement is amended and restated to read as follows:

The Actual Award that shall vest and be payable in Common Shares to the Grantee for the Performance Period will be determined at the end of the Performance Period based on the level of achievement of the Performance Goals listed below. In addition to the issuance of Common Shares to the Grantee upon the certification of performance by the Committee as described further below, the Grantee shall receive all dividends on the Common Shares underlying the

PSUs, if any, paid prior to the Certification Date (defined below), whether in cash or in the form of additional Company Common Shares, calculated based upon the actual dividends paid to shareholders during the Performance Period and the Actual Award of PSUs paid to the Grantee. All determinations of whether Performance Goals have been achieved, the Actual Award earned by the Grantee, and all other matters related to this Section 2 shall be made by the Committee in its sole discretion. For the avoidance of doubt, the Actual Award will not be adjusted based on changes to the base salary of Grantee over the Performance Period and base salary will not be averaged over the Performance Period.

All defined terms not defined herein shall have the meaning set forth in the 2020 PSU Agreement or the 2021 PSU Agreement, as applicable.

Except as amended above, all terms and conditions of the 2020 PSU Agreement and the 2021 PSU Agreement, including without limitation the remaining paragraphs of Section 2 of the agreements, continue in full force and effect.

In Witness Whereof, the parties have executed this Amendment as of the date first written above.

Premier Financial Corp.

By: _________________________________

Name: Gary M. Small

Title: CEO

_______________________________________

Donald P. Hileman

Exhibit 10.27

AMENDMENT TO

EQUITY AWARD AGREEMENTS

OF GARY M. SMALL

This Amendment to Equity Award Agreements of Gary M. Small (this “Amendment”) is entered into effective April 1, 2021 by and between Premier Financial Corp. (the “Company”) and Gary M. Small (“Grantee”).

RECITALS:

The Company and Grantee entered into that certain Employment Agreement dated September 9, 2019 (the “Employment Agreement”).

The Company and Grantee entered into that certain Performance Share Units Award Agreement dated March 10, 2020 (the “2020 PSU Agreement”).

The Company and Grantee entered into that certain Performance Share Units Award Agreement dated March 8, 2021 (the “2021 PSU Agreement”).

The Company and Grantee entered into that certain Restricted Stock Award Agreement dated April 1, 2021 (the “2021 RSA Agreement”) (the 2020 PSU Agreement, 2021 PSU Agreement, and the 2021 RSA Agreement collectively referred to as the “Outstanding Grant Agreements”).

The Outstanding Grant Agreements contain provisions concerning certain obligations of and restrictions on Grantee with respect to the solicitation of employees and customers of the Company (the “Non-solicitation Obligations”) that vary among the Outstanding Grant Agreements and that vary from corresponding obligations of and restrictions on Grantee contained in the Employment Agreement.

The Company and Grantee desire to amend the Outstanding Grant Agreements in order that the Non-solicitation Obligations align with the corresponding obligations of and restrictions on Grantee described in the Employment Agreement and to align the definition of “Cause” in the Outstanding Grant Agreements, as such term relates to a termination of Grantee’s employment with the Company, with the definition of “Cause” set forth in the Employment Agreement.

AGREEMENT:

Amendments to the 2020 PSU Agreement:

Section 4(b)(ii) of the 2020 PSU Agreement is amended and restated in its entirety to read as follows:

(ii) If the Grantee’s Continuous Service terminates before the end of the Performance Period as a result of Retirement, termination by the Company without Cause (as defined in any employment,

severance, change in control or similar agreement between Grantee and Company), or termination by the Grantee for Good Reason, a pro-rata portion of the outstanding PSUs shall vest in proportion to the number of months, including any partial month, elapsed in the Performance Period, and further provided that the amount to be paid shall be determined in the manner set forth in Section 2.

The 2020 PSU Agreement is amended to insert a new subparagraph (g) to Section 22 to read as follows in its entirety:

(g) In the event Participant is party to an employment, severance, change in control or similar agreement, the terms of which expressly include restrictions concerning competition or solicitation of employees or customers of the Company, the terms of that agreement shall control with respect to competition or solicitation restrictions and the preceding paragraphs (a) through (f) of this Section 22 shall be without effect and not enforceable against the Grantee.

Amendments to the 2021 PSU Agreement:

Section 4(b)(ii) of the 2021 PSU Agreement is amended and restated in its entirety to read as follows:

(ii) If the Grantee’s Continuous Service terminates before the end of the Performance Period as a result of Retirement, termination by the Company without Cause (as defined in any employment, severance, change in control or similar agreement between Grantee and Company), or termination by the Grantee for Good Reason, a pro-rata portion of the outstanding PSUs shall vest in proportion to the number of months, including any partial month, elapsed in the Performance Period, and further provided that the amount to be paid shall be determined in the manner set forth in Section 2.

The 2021 PSU Agreement is amended to insert a new subparagraph (g) to Section 22 to read as follows in its entirety:

Amendments to the 2021 RSA Agreement:

Section 5(b) of the 2021 RSA Agreement is amended and restated in its entirety to read as follows:

(b) Change in Control: If a Change in Control occurs after the Grant Date but prior to the Vesting Date and the Participant is terminated by the Company other than for Cause (as defined in any employment, severance, change in control or similar agreement between Participant and

Company) prior to the Vesting Date, the Award shall become immediately vested as of the date of such termination.

Sections 7(a) and 7(b) of the 2021 RSA Agreement is amended and restated in its entirety to read as follows:

(a) During Participant’s employment with Company and for a period of one year following the termination of Participant’s employment for any reason, Participant shall not, without the express written consent of the Company:

(i) be engaged, directly or indirectly, within those counties in which the Company is engaged in deposit-taking activities at the time of Participant’s termination of employment, as a partner, officer, director, employee, consultant, independent contractor, security holder or owner of any entity engaged in any business activity competitive with that of the Company or its Affiliates; provided, however, nothing in this Agreement shall prevent Participant from owning or acquiring an interest in any entity engaged in any competitive business activity if such interest does not constitute “control” as defined in 12 C.F.R. Section 303.81(c);

(ii) call upon or solicit, either for Participant or for any other person or firm that engages in competition with any business operation actively conducted by the Company or any of its Affiliates during the Employment Term, any customer with whom the Company or any of its Affiliates directly conducts business during the Participant’s employment with Company, or interfere with any relationship, contractual or otherwise, between the Company or any of its Affiliates and any customer with whom the Company or any of its Affiliates directly conducts business during the Employment Term; or

(iii) induce or solicit any person who is at the date of Participant’s employment termination or was during the twelve (12) months preceding termination an employee, officer or agent of the Company or any Affiliate to terminate said relationship, except as pursuant to Participant’s duties for the Company.

(iv) “Affiliate” shall, for purposes of this Agreement, mean any corporation (including any non-profit corporation), general or limited partnership, limited liability company, joint venture, trust, association or organization that controls, is controlled by or is under common control with the Company.

(b) INTENTIONALLY OMITTED.

All defined terms not defined herein shall have the meanings set forth in the applicable Outstanding Grant Agreement.

Except as amended above, all terms and conditions of the Outstanding Award Agreements continue in full force and effect.

In Witness Whereof, the parties have executed this Amendment as of the date first written above.

Premier Financial Corp.

By: _________________________________

Name: Donald P. Hileman

Title: Executive Chairman

_______________________________________

Gary M. Small

Exhibit 10.28

PREMIER FINANCIAL CORP.

2018 EQUITY INCENTIVE PLAN

RESTRICTED STOCK AWARD AGREEMENT

(Non-Employee Director)


Grantee:
Grant Date:
Number of Shares of Restricted Stock Granted:
Vesting Schedule:	100% on the first anniversary of the Grant Date (the “Vesting Date”)

This Restricted Stock Award Agreement (this “Agreement”) is made as the Grant Date set forth above by and between Premier Financial Corp., an Ohio corporation (the “Company”), and the Grantee identified above. Undefined capitalized terms used in this Agreement shall have the meanings set forth in the 2018 Equity Incentive Plan (the “2018 Plan”).

WHEREAS, the Company maintains the 2018 Plan pursuant to which Restricted Stock Awards may be granted to incent or compensate employees of the Company or an Affiliate.

WHEREAS, Grantee is, as of the Grant Date, a Director of the Company or an Affiliate.

WHEREAS, the Committee has approved the issuance of this Agreement, and the grant of the Restricted Stock Award described in this Agreement.

NOW THEREFORE, in consideration of the mutual premises and obligations contained in this Agreement, the parties agree as follows:

Grant of Restricted Stock. The Company hereby grants to Grantee as of the Grant Date, and subject to the terms and conditions of this Agreement, an Award consisting of the number of Shares of Restricted Stock identified above, which Restricted Stock shall consist of Shares of the Company, par value $0.01.

Vesting. The Restricted shall vest according to the Vesting Schedule set forth above provided the Grantee remains on the applicable Vesting Date, and has continuously been from the Grant Date until the start of each applicable Vesting Date, a Director.

Additional Vesting.

Death or Disability. Notwithstanding any provision of Section 2 or Section 4, the Restricted Stock shall vest in the event and on the date of Grantee’s death or Disability prior to any Vesting Date.

2018 Equity Incentive Plan – Non-Employee Director RSA Agr (2022)

Retirement. Notwithstanding any provision of Section 2 or Section 4, the Restricted Stock shall vest as of the date of Grantee’s Retirement (as defined in the 2018 Plan) on a pro-rated basis using a fraction the numerator of which is the number of full and partial months during which the Grantee was a Director since the Grant Date and the denominator of which is the total number of months in the Vesting Schedule, with such vesting occurring on the date of Grantee’s Retirement.

Change in Control. Notwithstanding any provision of Section 2 or Section 4, in the event a Change in Control of the Company occurs after the Grant Date but prior to the Vesting Date and the Grantee’s position as a Director is terminated by the Company other than for Cause during the period beginning 30 days immediately prior and ending on the effective date of the Change in Control, the Award shall immediately vest as of the later of the date of such termination or the date of such Change in Control.

Risk of Forfeiture and Restrictions on Transfer. Until vested pursuant to Section 2 or Section 3, the Shares of Restricted Stock and all related rights with respect to the Shares of Restricted Stock are subject to forfeiture and shall be forfeited in the event of a termination of Grantee’s status as a Director. Upon the forfeiture of any Restricted Stock, the Shares of Restricted Stock shall automatically revert to and become the property of the Company, together with any rights described in Section 6. Until vested, the Restricted Stock may not be sold, transferred, pledged, assigned or otherwise alienated or hypothecated, except by will or the laws of descent and distribution.

Administration.

Book Entry. The Restricted Stock granted herein shall be evidenced by a book entry registration by the Company for the benefit of the Grantee. Each such registration will be held by the Corporation or its agent.

Settlement. With regard to any shares of Restricted Stock that become fully vested, the Company will, within 60 days of the date such vesting, transfer Shares for such Restricted Stock free of all restrictions set forth in the 2018 Plan and this Agreement to the Grantee. In the event of Grantee’s death or if the Grantee dies before the Company has distributed any portion of the vested Restricted Stock, the Company will transfer Shares for such Restricted Stock to the Grantee’s estate.

Shareholder Rights.

Voting. The Grantee will have the right to vote all Shares of Restricted Stock received under or as a result of this Agreement, including unvested Shares which are subject to forfeiture or restrictions on transfer following the Grant Date.

Dividends. The Grantee will have the right to receive dividends, if any, with respect to the Shares of Restricted Stock as and when paid to other holders of Shares entitled to receive the dividends. No dividends shall be paid to the Grantee with respect to any Shares of Restricted Stock that are forfeited by the Grantee.

2018 Equity Incentive Plan – Non-Employee Director RSA Agr (2022)

No Right to Continued Service or to Awards. The granting of an Award shall impose no obligation on the Company or any Affiliate to continue the services of the Grantee as a Director.

Tax Withholding. The Company or an Affiliate, as applicable, shall have the power and right to deduct, withhold or collect any amount required by law or regulation to be withheld with respect to any taxable event arising with respect to the Award. Alternatively, the Company reserves the right not to withhold taxes and to reflect any income on a Form 1099 or such other appropriate tax form.

Federal Income Tax Election. The Grantee hereby acknowledges receipt of advice that, pursuant to current federal income tax laws, (i) he or she has thirty (30) days in which to elect to be taxed in the current taxable year on the fair market value of the restricted Common Stock in accordance with the provisions of Internal Revenue Code Section 83(b), and (ii) if no such election is made, the taxable event will occur upon expiration of restrictions on transfer at termination of the Restriction Period and the tax will be measured by the fair market value of the restricted Common Stock on the date of the taxable event.

10.

Requirements of Law. The grant of the Award shall be subject to all applicable laws, rules and regulations (including applicable federal and state securities laws) and to all required approvals of any governmental agencies or national securities exchange, market or other quotation system.

11.

Notices. Any notice required to be delivered to the Company under this Agreement shall be in writing and addressed to the Secretary of the Company at the Company’s principal corporate offices. Any notice required to be delivered to the Grantee under this Agreement shall be in writing and addressed to the Grantee at the Grantee’s address as shown in the records of the Company. Either party may designate another address in writing (or by such other method approved by the Company) from time to time.

12.

Governing Law. The 2018 Plan and this Agreement shall be governed by and construed in accordance with the laws of (other than laws governing conflicts of laws) the State of Ohio.

13.

Award Subject to Plan. The Award is subject to the terms and conditions described in this Agreement and the 2018 Plan, which is incorporated by reference into and made a part of this Agreement. In the event of a conflict between the terms of the 2018 Plan and the terms of this Agreement, the terms of this Agreement will govern. The Committee has the sole responsibility of interpreting the 2018 Plan and this Agreement, and its determination of the meaning of any provision in the 2018 Plan or this Agreement will be binding on the Grantee. Capitalized terms that are not defined in this Agreement have the same meanings as in the 2018 Plan.

14.

Successors and Assigns. The Company may assign any of its rights under this Agreement. This Agreement will be binding upon and inure to the benefit of the successors and assigns of the Company. Subject to the restrictions on transfer set forth herein, this Agreement will be binding upon the Grantee and the Grantee’s beneficiaries, executors, administrators and assigns.

15.

Severability. The invalidity or unenforceability of any provision of the 2018 Plan or this Agreement shall not affect the validity or enforceability of any other provision of the 2018 Plan or this

2018 Equity Incentive Plan – Non-Employee Director RSA Agr (2022)

Agreement, and each provision of the 2018 Plan and this Agreement shall be severable and enforceable to the extent permitted by law.

16.

Signature in Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original but all of which together will constitute one and the same instrument. Counterpart signature pages to this Agreement transmitted by facsimile transmission, by electronic mail in portable document format (.pdf), or by any other electronic means intended to preserve the original graphic and pictorial appearance of a document, will have the same effect as physical delivery of the paper document bearing an original signature.

17.

ACKNOWLEDGEMENT AND REPRESENTATION OF GRANTEE. The Grantee hereby acknowledges receipt of a copy of the 2018 Plan and this Agreement. The Grantee has read and understands the terms and provisions thereof, and accepts the Award subject to all of the terms and conditions of the 2018 Plan and this Agreement. The Grantee acknowledges that there may be adverse tax consequences upon the vesting or settlement of the Awards or disposition of the underlying shares and that the Grantee has been advised to consult a tax advisor prior to such vesting, settlement or disposition.

18.

Clawback. Notwithstanding any other provisions in this Agreement or the 2018 Plan, all payments made to the Grantee pursuant to this Agreement shall be subject to potential cancellation, recoupment, recession, payback or other action in accordance with any applicable clawback policy that the Company may adopt from time to time or any applicable law, as may be in effect from time to time

[SIGNATURES ON FOLLOWING PAGE]

2018 Equity Incentive Plan – Non-Employee Director RSA Agr (2022)

IN WITNESS WHEREOF, the parties have executed this Agreement effective as of the Grant Date set forth above.

GRANTEE

______________________________________

Signature

______________________________________
Print Name

______________________________________

Acceptance Date

PREMIER FINANCIAL CORP.

By: _________________________________

Name: _________________________________

Its: _________________________________

2018 Equity Incentive Plan – Non-Employee Director RSA Agr (2022)

Exhibit 21

List of Subsidiaries of First Defiance Financial Corp.


Name		Jurisdiction of Incorporation
Premier Bank		OH
First Insurance Group of the Midwest, Inc.		OH
PFC Risk Management, Inc.		NV
PFC Capital, LLC		OH

Exhibit 23.1

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We consent to the incorporation by reference in Registration Statements on Form S-8 No. (333-236215; 333-197203; 333-224483 and 333-166891) of Premier Financial Corp. of our report dated March 1, 2022 relating to the consolidated financial statements and effectiveness of internal control over financial reporting, appearing in this Annual Report on Form 10-K of Premier Financial Corp. for the year ended December 31, 2021.


		/s/ Crowe LLP
		Crowe LLP

Grand Rapids, Michigan

March 1, 2022

EXHIBIT 24.1

POWER OF ATTORNEY

Each director and officer of Premier Financial Corp. (the Corporation), whose signature appears below hereby appoints Gary M. Small, Paul Nungester, and Shannon M. Kuhl, or any of them, as his or her attorney-in-fact, to sign, in his or her name and behalf and in any and all capacities stated below, and to cause to be filed with the Securities and Exchange Commission, the Corporation’s Annual Report on Form 10-K (the Annual Report) for the fiscal year ended December 31, 2021, and likewise to sign and file any amendments, including post-effective amendments, to the Annual Report, granting unto each said attorney-in-fact full power and authority to do and perform each and every act and thing requisite and necessary to be done in connection with the execution and filing of the Annual Report and any amendment to the Annual Report, with full power of substitution and revocation, and hereby ratifying all that such attorney-in-fact or his or her substitute may do by virtue hereof.

IN WITNESS WHEREOF, the undersigned have executed this Power of Attorney, either manually or through the application of a digital or facsimile signature, in counterparts if necessary, effective as of February 28, 2022.


Signature		Title

/s/Gary M. Small		Chief Executive Officer, President and Director
Gary M. Small

/s/Paul Nungester		Executive Vice President and Chief
Paul Nungester		Financial Officer (principal accounting officer)

/s/Donald P. Hileman		Executive Chairman and Director
Donald P. Hileman

/s/Richard J. Schiraldi		Vice Chairman of the Board
Richard J. Schiraldi

/s/Marty E. Adams		Director
Marty E. Adams

/s/Zahid Afzal		Director
Zahid Afzal

/s/Louis M. Altman		Director
Louis M. Altman



/s/Terri A. Bettinger		Director
Terri A. Bettinger

/s/John L. Bookmyer		Director
John L. Bookmyer

/s/Lee Burdman		Director
Lee Burdman

/s/Jean A. Hubbard		Director
Jean A. Hubbard

/s/Nikki R. Lanier
Nikki R. Lanier		Director

/s/Charles D. Niehaus		Director
Charles D. Niehaus

/s/Mark A. Robison		Director
Mark A. Robison

/s/Samuel S. Strausbaugh		Director
Samuel S. Strausbaugh

Exhibit 31.1

SARBANES-OXLEY ACT OF 2002, SECTION 302

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER

I, Gary M. Small, President and Chief Executive Officer, certify that:

I have reviewed this annual report on Form 10-K of Premier Financial Corp. (the “registrant”);

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated: March 1, 20221

/s/ Gary M. Small

Gary M. Small

President and Chief Executive Officer

(Principal Executive Officer)

Exhibit 31.2

SARBANES-OXLEY ACT OF 2002, SECTION 302

CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER

I, Paul Nungester, Chief Financial Officer, certify that:

I have reviewed this annual report on Form 10-K of Premier Financial Corp. (the “registrant”);

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated: March 1, 2022

/s/ Paul Nungester

Paul Nungester

Chief Financial Officer

(Principal Financial Officer)

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report of Premier Financial Corp (the “Registrant”) on Form 10-K for the year ended December 31, 2021 as filed with the Securities and Exchange Commission (the “Report”), I, Gary M. Small, President and Chief Executive Officer of the Registrant, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that to his knowledge:

(1)

The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)

The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant.


	By:	/s/ Gary M. Small
		Name: Gary M. Small
		Title: President and Chief
		Executive Officer

Date: March 1, 2022

A signed original of this Certification has been provided to the Registrant and will be retained by the Registrant and furnished to the Securities and Exchange Commission or its staff upon request.

Exhibit 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report of Premier Financial Corp (the “Registrant”) on Form 10-K for the year ended December 31, 2021 as filed with the Securities and Exchange Commission (the “Report”), I, Paul Nungester, Executive Vice President and Chief Financial Officer of the Registrant, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that to his knowledge:

(1)

The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)

The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant.


	By:	/s/ Paul Nungester
		Name: Paul Nungester
		Title: Executive Vice President
		and Chief Financial Officer

Date: March 1, 2022

A signed original of this Certification has been provided to the Registrant and will be retained by the Registrant and furnished to the Securities and Exchange Commission or its staff upon request.