Premier Financial (PFC) - 2024 Q4 - Annual Results

Overview and Strategic Developments This section details Premier Financial Corp.'s strategic merger with Wesbanco and its recent dividend declaration Strategic Merger with Wesbanco, Inc. Premier Financial Corp. announced an all-stock merger with Wesbanco, Inc., pending regulatory approvals after shareholder consent - PFC will merge with WSBC in a stock-for-stock transaction, with PFC shareholders receiving 0.80 WSBC shares for each PFC share[2] - Upon closing, PFC shareholders will own approximately 30% of the combined entity[2] - Shareholder approval from both companies was obtained in Q4 2024; the merger is pending regulatory approval[2] Dividend Declaration The Board declared a quarterly cash dividend of $0.31 per common share, payable February 7, 2025 Dividend Information | Metric | Value | | :--- | :--- | | Quarterly Dividend per Share | $0.31 | | Payable Date | February 7, 2025 | | Record Date | January 31, 2025 | | Annual Dividend Yield | 4.93% (as of Jan 20, 2025) | Financial Performance This section provides an overview of Premier Financial Corp.'s financial results for the fourth quarter and full year 2024 Fourth Quarter 2024 Highlights Q4 2024 saw improved earnings per share and net interest margin, driven by lower deposit costs and efficiency gains Q4 2024 Key Metrics vs. Q3 2024 | Metric | Q4 2024 Value | Change from Q3 2024 | | :--- | :--- | :--- | | EPS (GAAP) | $0.58 | +$0.12 | | EPS (Excluding transaction costs) | $0.63 | +$0.09 | | Net Interest Margin | 2.63% | +13 bps | | Interest-Bearing Deposit Costs | 2.85% | -30 bps | | Efficiency Ratio (GAAP) | 60.4% | -6.8% (Improvement) | Q4 2024 vs Q4 2023 Earnings | Metric | Q4 2024 | Q4 2023 | | :--- | :--- | :--- | | Net Income | $20.8 million | $20.1 million | | Diluted EPS | $0.58 | $0.56 | | Net Income (Core) | $22.6 million | N/A | | Diluted EPS (Core) | $0.63 | N/A | Full Year 2024 Highlights Full year 2024 net income decreased due to a prior-year asset sale, but core earnings remained strong with improved tangible book value Full Year 2024 vs 2023 Performance | Metric | Full Year 2024 | Full Year 2023 | | :--- | :--- | :--- | | Net Income | $71.4 million | $111.3 million | | Diluted EPS | $1.98 | $3.11 | | Core Net Income | $75.9 million | $87.1 million | | Core Diluted EPS | $2.12 | $2.44 | - Average deposits (excluding brokered) increased by 2% from 2023[3] - Book value per share increased by 2.3% to $27.95, and tangible book value per share increased by 4.2% to $19.47 from year-end 2023[3] Net Interest Income and Margin Full-year 2024 tax-equivalent net interest income decreased by 7.3%, with margin contraction due to rising cost of funds Full Year Net Interest Income & Margin | Metric | Full Year 2024 | Full Year 2023 | Change | | :--- | :--- | :--- | :--- | | Net Interest Income (TE) | $201.6 million | $217.4 million | -7.3% | | Net Interest Margin (TE) | 2.52% | 2.75% | -23 bps | | Average Loan Yield | 5.26% | 4.96% | +30 bps | | Cost of Funds | 2.43% | 1.87% | +56 bps | Non-interest Income Full-year 2024 non-interest income, excluding a prior-year sale, grew 9.9%, driven by wealth management and service fees - Excluding the 2023 insurance agency sale, non-interest income increased 9.9% year-over-year to $50.2 million[17] - Wealth management income grew 17.5% to $7.4 million[18] - Service fees increased 5.2% to $28.8 million, driven by commercial swap activity and consumer interchange/NSF charges[18] Non-interest Expenses Full-year 2024 core non-interest expenses decreased by 3.3%, but the core efficiency ratio worsened due to revenue decline Full Year Non-interest Expenses | Metric | Full Year 2024 | Full Year 2023 | Change | | :--- | :--- | :--- | :--- | | Core Non-interest Expenses | $154.3 million | $159.6 million | -3.3% | | Compensation & Benefits | $86.3 million | $92.6 million | -6.8% | | Data Processing Costs | $19.9 million | $16.2 million | +22.8% | | Core Efficiency Ratio | 61.4% | 58.6% | +2.8% (Worsened) | Provision for Credit Losses Full-year 2024 provision for credit losses decreased significantly to $2.5 million due to lower loan balances Full Year Credit Loss Provision | Metric | Full Year 2024 | Full Year 2023 | | :--- | :--- | :--- | | Total Provision Expense | $2.5 million | $5.2 million | | Net Loan Charge-offs | $4.7 million | $4.0 million | Detailed Fourth Quarter 2024 Analysis Q4 2024 showed sequential improvements in net interest income and efficiency, but credit quality metrics worsened year-over-year Net Interest Income and Margin Q4 2024 tax-equivalent net interest income increased sequentially, driven by a 13 basis point margin expansion from lower deposit costs Q4 2024 Net Interest Income & Margin | Metric | Q4 2024 | Q3 2024 | Q4 2023 | | :--- | :--- | :--- | :--- | | Net Interest Income (TE) | $52.4 million | $50.3 million | $52.6 million | | Net Interest Margin (TE) | 2.63% | 2.50% | 2.65% | - The margin increase was driven by management's implementation of rate reductions in certain deposit tiers and lower wholesale funding costs[7] - Total loans decreased by $115.7 million during the quarter, mainly from a $67.7 million decrease in commercial loans[6] Non-interest Income Q4 2024 total non-interest income increased to $13.1 million, primarily driven by growth in mortgage banking income Q4 2024 Non-interest Income Breakdown | Income Source | Q4 2024 | Q3 2024 | Q4 2023 | | :--- | :--- | :--- | :--- | | Total Non-interest Income | $13.1 million | $12.6 million | $11.8 million | | Mortgage Banking Income | $1.8 million (approx) | $1.2 million | $0.8 million | | Service Fees | $7.5 million | $7.8 million | $6.8 million | | Wealth Management Income | $2.0 million | $1.9 million | $1.8 million | Non-interest Expenses Q4 2024 core non-interest expenses decreased by 5.0% to $37.2 million, improving the core efficiency ratio to 57.1% Q4 2024 Non-interest Expense Breakdown | Expense Category | Q4 2024 | Q3 2024 | Q4 2023 | | :--- | :--- | :--- | :--- | | Total Non-interest Expenses | $39.3 million | $41.9 million | $37.9 million | | Transaction Costs | $2.1 million | $2.8 million | $0 million | | Core Non-interest Expenses | $37.2 million | $39.1 million | $37.9 million | | Compensation and Benefits | $19.8 million | $21.8 million | $21.0 million | - The core efficiency ratio improved to 57.1% in Q4 2024, compared to 62.7% in Q3 2024 and 59.5% in Q4 2023[11] Credit Quality Credit quality metrics as of Q4 2024 showed increased non-performing assets and criticized loans year-over-year Credit Quality Indicators (as of Dec 31, 2024) | Metric | Dec 31, 2024 | Sep 30, 2024 | Dec 31, 2023 | | :--- | :--- | :--- | :--- | | Non-performing Assets | $81.7 million | $82.3 million | $35.7 million | | NPA / Total Assets | 0.95% | N/A | 0.41% | | Criticized Loans | $263.3 million | $245.7 million | $186.4 million | | Allowance / Total Loans | 1.17% | 1.16% | 1.14% | - Q4 2024 included net charge-offs of $1.1 million and a provision expense of only $11 thousand, compared to $2.1 million in charge-offs and a $1.8 million provision in Q4 2023[13] Financial Position This section analyzes Premier Financial Corp.'s balance sheet, stockholders' equity, and regulatory capital ratios as of year-end 2024 Balance Sheet Analysis As of December 31, 2024, total assets and loans decreased, while brokered deposits were significantly reduced and FHLB borrowings increased Key Balance Sheet Items (as of Dec 31, 2024) | Balance Sheet Item | Dec 31, 2024 | Sep 30, 2024 | Dec 31, 2023 | | :--- | :--- | :--- | :--- | | Total Assets | $8.58 billion | $8.73 billion | $8.63 billion | | Loans Receivable | $6.48 billion | $6.59 billion | $6.74 billion | | Securities | $1.16 billion | $1.20 billion | $0.95 billion | | Brokered Deposits | $54.7 million | $287.4 million | $341.9 million | | FHLB Borrowings | $507.0 million | $345.0 million | $280.0 million | Stockholders' Equity and Capital Ratios Year-end 2024 stockholders' equity remained strong, with improved tangible book value and capital ratios significantly exceeding guidelines Stockholders' Equity (as of Dec 31, 2024) | Equity Metric | Dec 31, 2024 | Sep 30, 2024 | Dec 31, 2023 | | :--- | :--- | :--- | :--- | | Total Stockholders' Equity | $1.00 billion | $1.02 billion | $0.98 billion | | Tangible Equity | $697.7 million | $714.1 million | $667.8 million | Regulatory Capital Ratios (as of Dec 31, 2024) | Ratio | Value | Well-Capitalized Guideline | | :--- | :--- | :--- | | CET1 Ratio | 12.63% | >6.5% | | Tier 1 Capital Ratio | 13.14% | >8.0% | | Total Capital Ratio | 15.02% | >10.0% | Financial Statements and Supplementary Data This section provides detailed consolidated financial statements, key quarterly performance data, and supplementary analyses of yields, deposits, loans, credit quality, and non-GAAP reconciliations Consolidated Balance Sheets The consolidated balance sheets provide a detailed quarterly snapshot of assets, liabilities, and equity from December 2023 to December 2024 Consolidated Balance Sheet Highlights (in thousands) | (in thousands) | Dec 31, 2024 | Dec 31, 2023 | | :--- | :--- | :--- | | Assets | | | | Total Loans, net | $6,400,939 | $6,662,875 | | Total Assets | $8,581,575 | $8,625,949 | | Liabilities & Equity | | | | Total Deposits | $6,849,799 | $7,143,046 | | Total Liabilities | $7,579,762 | $7,650,322 | | Total Stockholders' Equity | $1,001,813 | $975,627 | Consolidated Statements of Income This statement details the company's revenues, expenses, and profitability for Q4 and full-year 2024, compared to 2023 Consolidated Income Statement Highlights (in thousands) | (in thousands) | Year Ended 12/31/24 | Year Ended 12/31/23 | | :--- | :--- | :--- | | Net Interest Income | $201,269 | $217,093 | | Total Provision for Credit Losses | $2,489 | $5,234 | | Total Non-interest Income | $50,211 | $90,849 | | Total Non-interest Expenses | $159,314 | $163,231 | | Net Income | $71,404 | $111,295 | | Diluted EPS | $1.98 | $3.11 | Selected Quarterly Information This section summarizes key financial data and performance ratios quarterly for the past five quarters and full years 2023-2024 Key Performance Ratios (Annualized) | Ratio | Q4 2024 | Q3 2024 | Q4 2023 | Full Year 2024 | Full Year 2023 | | :--- | :--- | :--- | :--- | :--- | :--- | | Tax-equivalent net interest margin | 2.63% | 2.50% | 2.65% | 2.52% | 2.75% | | Return on average assets | 0.96% | 0.76% | 0.93% | 0.83% | 1.30% | | Return on average equity | 8.15% | 6.64% | 8.55% | 7.22% | 12.05% | | Core efficiency ratio | 57.09% | 62.68% | 59.48% | 61.43% | 58.60% | Yield Analysis This section analyzes average balances and annualized yields of interest-earning assets and liabilities, detailing net interest margin drivers Annualized Average Rates | Category | Q4 2024 | Q3 2024 | Q4 2023 | Full Year 2024 | Full Year 2023 | | :--- | :--- | :--- | :--- | :--- | :--- | | Total interest-earning assets | 4.91% | 4.99% | 4.86% | 4.92% | 4.62% | | Total interest-bearing liabilities | 3.03% | 3.26% | 2.97% | 3.16% | 2.54% | | Net interest spread | 1.88% | 1.73% | 1.89% | 1.76% | 2.08% | | Net interest margin | 2.63% | 2.50% | 2.65% | 2.52% | 2.75% | Deposits and Liquidity This section details deposit composition and liquidity, showing $3.1 billion in available liquidity as of December 31, 2024 Deposit Composition (Ending Balances, in thousands) | Deposit Type | Dec 31, 2024 | Dec 31, 2023 | | :--- | :--- | :--- | | Non-interest-bearing | $1,475,513 | $1,591,979 | | Interest-bearing | $5,319,598 | $5,209,123 | | Brokered deposits | $54,688 | $341,944 | | Total deposits | $6,849,799 | $7,143,046 | Liquidity Sources (as of Dec 31, 2024, in thousands) | Source | Amount | | :--- | :--- | | Cash and cash equivalents | $121,489 | | Unpledged securities at fair value | $565,124 | | FHLB borrowing capacity | $900,370 | | Brokered deposits | $800,926 | | Federal Reserve (Discount Window, etc.) | $645,265 | | Total | $3,103,174 | Loans and Capital This section details the $6.48 billion loan portfolio composition and regulatory capital structure, including a 12.63% CET1 ratio Loan Portfolio Composition (as of Dec 31, 2024, in thousands) | Loan Category | Balance | | :--- | :--- | | Residential real estate | $1,767,513 | | Commercial real estate | $2,895,356 | | Commercial construction | $388,620 | | Commercial excluding PPP | $957,344 | | Consumer loans | $454,040 | | Total loans | $6,476,627 | Capital Ratios (as of Dec 31, 2024) | Ratio | Value | | :--- | :--- | | CET1 Ratio | 12.63% | | Tier 1 Capital Ratio | 13.14% | | Total Capital Ratio | 15.02% | Credit Quality Information This section provides detailed tables on loan delinquency, non-accrual loans, and criticized loan risk ratings as of Q4 2024 Loan Delinquency (as of Dec 31, 2024) | Status | Balance (in thousands) | % of Gross Loans | | :--- | :--- | :--- | | 30 to 89 days past due | $21,198 | 0.32% | | Non-Accrual | $80,995 | 1.21% | Loan Risk Ratings (as of Dec 31, 2024) | Rating | Balance (in thousands) | % of Gross Loans | | :--- | :--- | :--- | | Special Mention | $133,997 | 2.01% | | Classified | $129,297 | 1.94% | Non-Performing Assets & Ratios (as of Dec 31, 2024) | Metric | Value | | :--- | :--- | | Total non-performing assets | $81,732 thousand | | Non-performing assets / total assets | 0.95% | | Allowance for credit losses / non-performing loans | 93.45% | Mortgage and Credit Information This section details Q4 2024 mortgage banking revenue and the allowance for credit losses, which stood at $75.7 million Mortgage Banking Summary (Q4 2024, in thousands) | Metric | Value | | :--- | :--- | | Mortgage banking gains, net | $1,203 | | Revenue from servicing, net | $568 | | Total revenue from sale/servicing | $1,771 | Allowance for Credit Losses (ACL) Roll-forward (Q4 2024, in thousands) | Item | Amount | | :--- | :--- | | Beginning allowance (Oct 1, 2024) | $76,142 | | Provision for credit losses | $632 | | Net charge-offs | ($1,086) | | Ending allowance (Dec 31, 2024) | $75,688 | Non-GAAP Reconciliations This section reconciles non-GAAP financial measures like core net income and efficiency ratio to their GAAP equivalents Reconciliation of Net Income to Core Net Income (in thousands) | (in thousands) | Q4 2024 | Full Year 2024 | | :--- | :--- | :--- | | Net income (GAAP) | $20,774 | $71,404 | | Add: Transaction costs (pre-tax) | $2,129 | $4,969 | | Less: Tax impact of adjustments | ($340) | ($516) | | Core net income (Non-GAAP) | $22,563 | $75,857 | Reconciliation of Efficiency Ratio to Core Efficiency Ratio | Ratio | Q4 2024 | Full Year 2024 | | :--- | :--- | :--- | | Efficiency Ratio (GAAP) | 60.36% | 63.41% | | Core Efficiency Ratio (Non-GAAP) | 57.09% | 61.43% |