Premier Financial (PFC) - 2024 Q3 - Quarterly Results

Third Quarter 2024 Results Third Quarter Highlights Premier Financial Corp. reported Q3 2024 EPS of $0.46 ($0.54 adjusted), announced a strategic merger, and improved average deposits and net interest margin Q3 2024 Key Performance Indicators | Metric | Q3 2024 Value | Change from Q2 2024 | | :--- | :--- | :--- | | Earnings Per Share (EPS) | $0.46 | +$0.01 | | EPS (Excluding Transaction Costs) | $0.54 | +$0.09 | | Net Interest Margin | 2.50% | +4 bps | | Book Value Per Share | $28.43 | +16% annualized | | Tangible Book Value Per Share | $19.92 | +24% annualized | | Quarterly Dividend | $0.31 | - | - Average deposits, excluding brokered deposits, saw a 5% annualized increase from the second quarter of 2024[1] Strategic Merger with Wesbanco, Inc. Premier Financial Corp. entered an all-stock merger agreement with Wesbanco, with PFC shareholders receiving 0.80 WSBC shares per PFC share, pending Q1 2025 close - PFC will merge with WSBC in a stock-for-stock transaction[2] - PFC shareholders will receive 0.80 shares of WSBC common stock for each PFC share[2] - The transaction is expected to close in Q1 2025, subject to shareholder and regulatory approvals[2] Quarterly Financial Results Q3 2024 net income was $16.7 million ($0.46 diluted EPS), a decrease from Q3 2023, primarily due to $2.8 million in pre-tax merger transaction costs Q3 2024 vs. Q3 2023 Performance | Metric | Q3 2024 | Q3 2023 | | :--- | :--- | :--- | | Net Income | $16.7 million | $24.7 million | | Diluted EPS | $0.46 | $0.69 | | Transaction Costs (Pre-tax) | $2.8 million | - | | Adjusted Net Income | $19.3 million | $24.7 million | | Adjusted Diluted EPS | $0.54 | $0.69 | Year-to-Date Financial Results Year-to-date 2024 net income was $50.6 million ($1.41 per share), a decrease from 2023, impacted by merger costs in 2024 and an insurance agency sale gain in 2023 Nine Months Ended Sept 30 - Performance Summary | Metric | 2024 | 2023 | | :--- | :--- | :--- | | Net Income | $50.6 million | $91.2 million | | Diluted EPS | $1.41 | $2.55 | | Core Net Income | $53.3 million | $67.1 million | | Core Diluted EPS | $1.49 | $1.87 | - 2024 results were impacted by $2.8 million in pre-tax merger transaction costs[10] - 2023 results included a $32.6 million pre-tax net gain from the sale of the insurance agency[10][11] Financial Performance Analysis Net Interest Income and Margin Q3 2024 tax-equivalent net interest income was $50.3 million, with net interest margin improving to 2.50% sequentially due to lower funding costs, but down year-over-year Net Interest Income and Margin Analysis | Metric | Q3 2024 | Q2 2024 | Q3 2023 | | :--- | :--- | :--- | :--- | | Net Interest Income (TE) | $50.3M | $49.3M | $54.3M | | Net Interest Margin (TE) | 2.50% | 2.46% | 2.73% | - The linked-quarter increase in NIM was driven by a decrease in total cost of funds, as deposit rate reductions implemented from March to September 2024 began to show benefits[4] - Total loans decreased by $110.4 million during Q3, mainly from an $87.2 million drop in commercial loans, while average loan yields increased by 7 basis points to 5.33%[4] Non-interest Income Q3 2024 total non-interest income was $12.6 million, increasing sequentially due to equity gains but decreasing year-over-year from lower mortgage banking income, despite robust service fee growth Non-Interest Income Breakdown (Q3 2024) | Category | Q3 2024 | Q2 2024 | Q3 2023 | | :--- | :--- | :--- | :--- | | Total Non-interest Income | $12.6M | $12.1M | $13.3M | | Service fees | $7.8M | $7.0M | $6.9M | | Mortgage banking income | $1.2M | $2.0M | $3.3M | | Security gains (losses) | $410k | ($176k) | $256k | | Wealth management income | $1.9M | $1.8M | $1.5M | - The year-over-year decline was primarily due to a $2.1 million decrease in mortgage banking income, impacted by fluctuations in gain on sale margins and MSR valuation adjustments[5] Non-interest Expenses Excluding merger costs, Q3 2024 non-interest expenses were $39.1 million, increasing due to higher data processing costs from a new digital platform, resulting in a core efficiency ratio of 62.7% Non-Interest Expense Breakdown (Q3 2024, Core) | Category | Q3 2024 | Q2 2024 | Q3 2023 | | :--- | :--- | :--- | :--- | | Core Non-interest Expenses | $39.1M | $38.2M | $38.1M | | Compensation and benefits | $21.8M | $21.4M | $21.8M | | Data processing costs | $5.1M | $5.1M | $4.0M | | Core Efficiency Ratio | 62.7% | 62.0% | 56.5% | - The year-over-year increase in expenses was mainly due to the new digital platform launched in October 2023[8] Credit Quality Q3 2024 credit quality deteriorated with non-performing assets increasing to $82.3 million (0.94% of assets) due to multifamily relationships, and criticized loans rising, despite stable ACL Credit Quality Indicators | Metric | Sept 30, 2024 | June 30, 2024 | Sept 30, 2023 | | :--- | :--- | :--- | :--- | | Non-performing Assets | $82.3M | $64.6M | $39.9M | | NPA / Total Assets | 0.94% | 0.74% | 0.47% | | Criticized Loans | $245.7M | $207.8M | $161.1M | | Loan Delinquencies | $17.2M | $24.6M | $17.2M | | ACL / Total Loans | 1.16% | 1.16% | 1.14% | - The linked-quarter increase in non-performing assets was primarily attributed to two multifamily commercial relationships[9] - The third quarter included net charge-offs of $0.6 million and a provision benefit of $0.3 million, with the change in provision mainly due to lower loan balances[9] Balance Sheet and Capital Balance Sheet Summary As of September 30, 2024, total assets were $8.73 billion, with loans at $6.59 billion, non-brokered deposits growing to $6.86 billion, and stockholders' equity increasing to $1.02 billion Key Balance Sheet Items (as of Sept 30, 2024) | Balance Sheet Item | Sept 30, 2024 | June 30, 2024 | Sept 30, 2023 | | :--- | :--- | :--- | :--- | | Total Assets | $8.73B | $8.78B | $8.56B | | Loans Receivable | $6.59B | $6.68B | $6.70B | | Total Non-brokered Deposits | $6.86B | $6.80B | $6.67B | | Total Stockholders' Equity | $1.02B | $0.98B | $0.92B | | Tangible Equity | $714.1M | $673.3M | $610.7M | Capital Ratios and Dividend The company's regulatory capital ratios improved in Q3 2024, remaining well above 'well-capitalized' guidelines with CET1 at 12.17%, and a quarterly cash dividend of $0.31 per share was declared Regulatory Capital Ratios (Q3 2024) | Ratio | Q3 2024 Value | | :--- | :--- | | CET1 Ratio | 12.17% | | Tier 1 Capital Ratio | 12.67% | | Total Capital Ratio | 14.53% | - A quarterly cash dividend of $0.31 per common share was declared, payable on November 15, 2024[15] Financial Statements and Supplementary Data Consolidated Balance Sheets This section presents the unaudited consolidated balance sheets as of September 30, 2024, detailing assets, liabilities, and stockholders' equity with comparative data Consolidated Balance Sheet Highlights (in thousands) | (in thousands) | September 30, 2024 | June 30, 2024 | September 30, 2023 | | :--- | :--- | :--- | :--- | | Total Assets | $8,729,305 | $8,778,693 | $8,562,876 | | Loans, net | $6,512,586 | $6,604,916 | $6,620,356 | | Securities investments | $1,202,228 | $1,086,679 | $917,044 | | Total Liabilities | $7,710,298 | $7,799,564 | $7,643,309 | | Total deposits | $7,142,636 | $7,178,554 | $7,065,639 | | Total Stockholders' Equity | $1,019,007 | $979,129 | $919,567 | Consolidated Statements of Income This section presents the unaudited consolidated statements of income for the three and nine months ended September 30, 2024, detailing interest and non-interest income and expenses Consolidated Income Statement Highlights (in thousands) | (in thousands) | Three Months Ended 9/30/24 | Three Months Ended 9/30/23 | Nine Months Ended 9/30/24 | Nine Months Ended 9/30/23 | | :--- | :--- | :--- | :--- | :--- | | Net interest income | $50,181 | $54,264 | $148,980 | $164,543 | | Total non-interest Income | $12,574 | $13,253 | $37,148 | $79,061 | | Total non-interest expenses | $41,915 | $38,052 | $120,024 | $125,338 | | Net income (loss) | $16,665 | $24,687 | $50,630 | $91,227 | Loans and Capital This section details the loan portfolio composition, primarily commercial and residential real estate, and regulatory capital balances as of September 30, 2024, showing levels well above requirements Loan Portfolio Composition (Sept 30, 2024, in thousands) | Loan Category | Balance | | :--- | :--- | | Residential real estate | $1,806,389 | | Commercial real estate | $2,853,115 | | Commercial excluding PPP | $969,493 | | Consumer loans | $456,226 | | Total loans | $6,588,728 | Capital Ratios (Sept 30, 2024) | Ratio | Value | | :--- | :--- | | CET1 Ratio | 12.17% | | Tier 1 Capital Ratio | 12.67% | | Total Capital Ratio | 14.53% | Loan Delinquency and Credit Risk This section provides detailed tables on loan delinquency and risk ratings, showing gross loans 30-89 days past due at 0.25% and criticized loans totaling $245.7 million as of September 30, 2024 Loan Delinquency Summary (Sept 30, 2024) | Status | % of Gross Loans | | :--- | :--- | | 30 to 89 days past due | 0.25% | | Non Accrual Loans | 1.21% | Loan Risk Rating Summary (Sept 30, 2024) | Risk Category | Balance (in thousands) | % of Gross Loans | | :--- | :--- | :--- | | Special Mention | $125,409 | 1.85% | | Classified | $120,246 | 1.77% |