On July 26, 2024, Premier Financial Corp (PFC, Financial) released its 8-K filing detailing the second quarter 2024 results and the signing of a definitive merger agreement with Wesbanco, Inc. (WSBC). Premier Financial Corp is a financial holding company that operates as a community banking and financial services corporation, offering a broad range of financial services through its subsidiaries.
Quarterly Performance Overview
Premier Financial Corp reported net income of $16.2 million, or $0.45 per diluted common share, for the second quarter of 2024. This is a significant decline from the $48.4 million, or $1.35 per diluted common share, reported in the same quarter of 2023. The previous year's results included a substantial gain from the sale of the company’s insurance agency, First Insurance Group (FIG), which contributed $32.6 million pre-tax or $0.67 per diluted common share after-tax.
Net Interest Income and Margin
Net interest income for Q2 2024 was $49.3 million on a tax-equivalent basis, down 0.7% from the previous quarter and 8.8% from the same quarter last year. The net interest margin decreased to 2.46%, down from 2.50% in Q1 2024 and 2.72% in Q2 2023. These declines were primarily due to changes in deposit balances and costs, as well as loan balances and yields.
Deposit and Loan Trends
Total deposits decreased by $4.8 million during the quarter, driven by an $18.7 million decrease in customer deposits, partially offset by a $13.9 million increase in brokered deposits. The average interest-bearing deposit costs rose by nine basis points to 3.10%. Total loans, including those held-for-sale, decreased by $10.5 million, primarily due to a $14.7 million reduction in residential loans. However, the average loan yields increased by seven basis points to 5.26%.
Non-Interest Income and Expenses
Non-interest income for Q2 2024 was $12.1 million, down 3.3% from Q1 2024 and 6.5% from Q2 2023, excluding insurance commissions and the gain on the sale of the insurance agency. This decline was mainly due to fluctuations in mortgage banking income. Non-interest expenses, excluding transaction costs, were $38.2 million, a 4.4% decrease from Q1 2024 and a 6.6% decrease from Q2 2023. The core efficiency ratio improved to 62.0% from 64.2% in Q1 2024.
Credit Quality
Non-performing assets increased to $64.6 million, or 0.74% of assets, up from $39.3 million in Q1 2024. Loan delinquencies also rose to $24.6 million, or 0.36% of loans. The allowance for credit losses as a percentage of total loans was 1.16%, slightly up from 1.15% in Q1 2024.
Year-to-Date Performance
For the first half of 2024, net income was $34.0 million, or $0.95 per diluted common share, compared to $66.5 million, or $1.86 per diluted common share, for the same period in 2023. Excluding the impact of the insurance agency sale, first-half 2023 earnings were $42.4 million or $1.19 per diluted common share. Net interest income for the first half of 2024 was $98.9 million, down 10.4% from the first half of 2023.
Merger with Wesbanco, Inc.
Premier Financial Corp announced a definitive merger agreement with Wesbanco, Inc. Under the terms, PFC shareholders will receive 0.80 shares of WSBC common stock for each share of PFC common stock. The transaction is valued at approximately $987 million and is expected to close in Q1 2025, subject to shareholder and regulatory approvals.
Conclusion
Premier Financial Corp's Q2 2024 results reflect a challenging environment with declining net income and net interest margins. However, the strategic merger with Wesbanco, Inc. could provide new opportunities for growth and stability. Investors will be keenly watching the developments in the coming quarters.
Explore the complete 8-K earnings release (here) from Premier Financial Corp for further details.
