Premier Financial Corp. (Nasdaq: PFC) (“Premier”) today revealed its second-quarter 2024 results alongside the signing of a definitive merger agreement with Wesbanco, Inc. (Nasdaq: WSBC).
Effective July 26, 2024, PFC and WSBC have entered into a merger agreement, with PFC set to merge into WSBC through a stock-for-stock transaction. PFC shareholders will receive 0.80 shares of WSBC common stock for each share of PFC common stock. Additionally, Premier Bank, a wholly owned subsidiary of PFC, will merge into Wesbanco Bank, Inc., a wholly owned subsidiary of WSBC. Valued at approximately $987 million based on WSBC’s closing price of $34.28 as of July 25, 2024, the deal equates to $27.42 per share of PFC. Upon completion, PFC shareholders will own about 30% of the combined entity. The merger is anticipated to close in the first quarter of 2025, pending approval from shareholders of both companies, regulatory approvals, and other customary closing conditions. For more details, refer to the press release dated July 26, 2024.
Quarterly Results
For Q2 2024, Premier reported net income of $16.2 million, or $0.45 per diluted share, down from $48.4 million, or $1.35 per diluted share in Q2 2023. The prior year’s results included a $32.6 million gain from the sale of the Company’s insurance agency, First Insurance Group, which significantly impacted the earnings. Excluding this gain, Q2 2023 earnings were $24.2 million or $0.68 per diluted share.
Net Interest Income and Margin
Net interest income on a tax-equivalent basis was $49.3 million for Q2 2024, a slight decrease of 0.7% from $49.6 million in Q1 2024 and down 8.8% from $54.1 million in Q2 2023. The tax-equivalent net interest margin decreased to 2.46% in Q2 2024 from 2.50% in Q1 2024 and 2.72% in Q2 2023, impacted by changes in deposit balances, costs, and loan yields.
Total deposits fell by $4.8 million from Q1 2024, due to a $18.7 million decrease in customer deposits, partially offset by a $13.9 million increase in brokered deposits. The cost of average interest-bearing deposits rose to 3.10% in Q2 2024, up nine basis points from Q1 2024, driven by the shift to higher-cost time deposits.
Total loans decreased by $10.5 million, primarily due to a reduction in residential loans. Average loan yields increased to 5.26% in Q2 2024, driven by the origination of higher-yielding loans.
Non-Interest Income
Non-interest income totaled $12.1 million in Q2 2024, down 3.3% from $12.5 million in Q1 2024 and 6.5% from $12.9 million in Q2 2023. This decrease was largely due to fluctuations in mortgage banking income, which fell by $0.3 million from the previous quarter and $0.9 million from the previous year.
Security losses amounted to $176,000 in Q2 2024, compared to $37,000 in Q1 2024 and a gain of $64,000 in Q2 2023. Service fees increased by 8.4% from Q1 2024 to $7.0 million, though down 2.5% from the previous year. Insurance commissions were absent in Q2 2024 due to the sale of the insurance agency. Wealth management income rose to $1.8 million, up from $1.7 million in Q1 2024 and 19.8% higher than the previous year.
Non-Interest Expenses
Non-interest expenses, excluding transaction costs, were $38.2 million in Q2 2024, a decrease of 4.4% from Q1 2024 and 6.6% from Q2 2023. Compensation and benefits dropped to $21.4 million from $23.4 million in Q1 2024, reflecting reduced staffing and annual first-quarter expenses. Data processing costs rose to $5.1 million, primarily due to a new digital platform launched in October 2023.
Credit Quality
Non-performing assets increased to $64.6 million, or 0.74% of assets, from $39.3 million at March 31, 2024, and $37.6 million at June 30, 2023. Loan delinquencies rose to $24.6 million, or 0.36% of loans. The allowance for credit losses as a percentage of total loans was 1.16% at June 30, 2024.
Year-to-Date Results
For the first half of 2024, net income was $34.0 million, or $0.95 per diluted share, compared to $66.5 million, or $1.86 per diluted share for the first half of 2023. Excluding the gain from the insurance agency sale in the previous year, earnings for the first half of 2023 were $42.4 million, or $1.19 per diluted share.
Net interest income for the first half of 2024 was $98.9 million, down 10.4% from $110.4 million in the same period of 2023. Non-interest income increased by 19.0% year-over-year, driven by a rise in mortgage banking income.
Balance Sheet
Total assets at June 30, 2024, were $8.78 billion, compared to $8.63 billion at March 31, 2024. Total stockholders’ equity increased to $979.1 million from $974.3 million at the end of Q1 2024. Regulatory ratios improved, with CET1 at 11.91%, Tier 1 at 12.41%, and Total Capital at 14.25%.
Dividend Announcement
The Board of Directors declared a quarterly cash dividend of $0.31 per common share, payable August 16, 2024, to shareholders of record as of August 9, 2024. This dividend reflects an annual yield of 4.9% based on the stock’s closing price on July 25, 2024. Premier has approximately 35,839,000 common shares outstanding.
