Premier Financial Corp. Announces Full Year 2024 Results

Declared dividend of $0.31 per share

Fourth Quarter Highlights

• Earnings per share of $0.58 or $0.63 excluding transaction costs, increases of $0.12 and $0.09, respectively, from third quarter 2024
• Interest-bearing deposit costs decreased 30 basis points from third quarter 2024
• Net interest margin increased 13 basis points to 2.63% from third quarter 2024
• Efficiency ratio of 60.4% or 57.1% excluding transaction costs, improvements of 6.8% and 5.6%, respectively, from third quarter 2024

Full Year 2024 Highlights

• Announced strategic merger with Wesbanco, Inc.
• Average deposits excluding brokereds increased 2% from 2023
• Average interest-earning assets increased 1% from 2023
• Book value per share of $27.95 and tangible book value per share of $19.47, increases of 2.3% and 4.2%, respectively, from year-end 2023

Premier Financial Corp. (NASDAQ:PFC) ("Premier" or the "Company") announced today 2024 fourth quarter and full year results.

Strategic merger

On July 26, 2024, PFC and Wesbanco, Inc. (NASDAQ:WSBC) announced the signing of a definitive merger agreement under which PFC will merge into WSBC in a stock-for-stock transaction. Under the terms of the merger agreement, shareholders of PFC will receive 0.80 shares of WSBC common stock for each share of PFC common stock. Premier Bank, a wholly owned subsidiary of PFC, will merge into Wesbanco Bank, Inc., a wholly owned subsidiary of WSBC. Upon closing, PFC shareholders will own approximately 30% of the combined company. During the fourth quarter of 2024, the approval of shareholders of both PFC and WSBC was obtained. The transaction remains on track, subject to regulatory approvals, as well as satisfaction or waiver of other customary closing conditions. Additional information can be found in the press release announcing the merger dated July 26, 2024.

Quarterly results

Net income for the fourth quarter of 2024 was $20.8 million, or $0.58 per diluted common share, compared to income of $20.1 million, or $0.56 per diluted common share, for the fourth quarter of 2023. Fourth quarter 2024 results included the impact of transaction costs for the strategic merger totaling $2.1 million pre-tax or $0.05 per diluted common share after-tax. Excluding the impact of these transaction costs, fourth quarter 2024 earnings were $22.6 million or $0.63 per diluted common share.

Net interest income and margin

Net interest income of $52.4 million on a tax equivalent ("TE") basis in the fourth quarter of 2024 was up 4.2% from $50.3 million in the third quarter of 2024 and consistent with $52.6 million in the fourth quarter of 2023. The TE net interest margin of 2.63% in the fourth quarter of 2024 increased 13 basis points from 2.50% in the third quarter of 2024 but decreased two basis points from 2.65% in the fourth quarter of 2023. These results are primarily impacted by changes in deposit balances/costs and loan balances/yields.

Total loans including held-for-sale decreased $115.7 million during the fourth quarter of 2024, primarily due to an $67.7 million decrease in commercial loans. Total average loan yields decreased eight basis points to 5.25% for the fourth quarter of 2024. This decrease was primarily due to lower yields on floating rate loans.

Total deposits decreased $292.8 million during the fourth quarter of 2024, primarily due to a $232.7 million decrease in brokered deposits plus a decrease of $60.1 million in customer deposits. Total average interest-bearing deposit costs decreased 30 basis points to 2.85% during the fourth quarter of 2024 from the third quarter of 2024. Beginning in March 2024 and through December 2024, management implemented rate reductions in certain deposit tiers. The benefit of those actions were realized again in the fourth quarter of 2024 as the average cost of customer interest-bearing deposits declined from September to December after decreasing from June to September. In addition, partly due to the various Federal Funds Rate reductions, wholesale funding average costs for FHLB, brokered deposits and other borrowings also declined from June through December. As a result, total cost of funds decreased and net interest margin increased from June to December.

Non-interest income

Total non-interest income in the fourth quarter of 2024 of $13.1 million was up 3.9% from $12.6 million in the third quarter of 2024, and up 10.8% from $11.8 million in the fourth quarter of 2023, both primarily due to mortgage banking income. Mortgage banking income increased $0.6 million on a linked quarter basis and $1.0 million from fourth quarter 2023, primarily as a result of fluctuations in gain on sale margins and MSR valuation adjustments. During the third quarter of 2024, the company completed an aged loans sale that reduced gains on sale by approximately $0.3 million.

Security gains were $353 thousand in the fourth quarter of 2024, compared to gains of $410 thousand in the third quarter of 2024 and gains of $675 thousand in the fourth quarter of 2023, primarily due to valuation changes on equity securities. Service fees in the fourth quarter of 2024 were $7.5 million, a 3.0% decrease from $7.8 million in the third quarter of 2024, but an 11.3% increase from $6.8 million in the fourth quarter of 2023. These changes were primarily due to fluctuations in loan fees, including commercial customer swap activity. Wealth management income of $2.0 million in the fourth quarter of 2024 was up 6.3% from $1.9 million in the third quarter of 2024 and 11.4% higher than $1.8 million in the fourth quarter of 2023. BOLI income of $1.3 million in the fourth quarter of 2024, compared to $1.2 million in the third quarter of 2024, and $1.5 million in the fourth quarter of 2023 with $453 thousand of claim gains in the fourth quarter of 2023.

Non-interest expenses

Excluding transaction costs, non-interest expenses in the fourth quarter of 2024 were $37.2 million, a 5.0% decrease from $39.1 million in the third quarter of 2024, and a 1.9% decrease from $37.9 million in the fourth quarter of 2023. Compensation and benefits were $19.8 million in the fourth quarter of 2024, compared to $21.8 million in the third quarter of 2024 and $21.0 million in the fourth quarter of 2023. These decreases are primarily due to lower staffing levels. Data processing costs were $5.1 million in the fourth quarter of 2024, compared to $5.1 million in the third quarter of 2024 and $4.7 million in the fourth quarter of 2023, with the year-over-year increase primarily due to the new digital platform launched in October 2023. All other non-interest expenses were flat on a linked quarter basis and a net $25 thousand from fourth quarter 2023. The core efficiency ratio for the fourth quarter of 2024 was 57.1% compared to 62.7% in the third quarter of 2024 and 59.5% in the fourth quarter of 2023. The ratio of core non-interest expenses to average assets was 1.71% for the fourth quarter of 2024 compared to 1.79% for the third quarter of 2024 and to 1.76% for the fourth quarter of 2023.

Credit quality

Non-performing assets totaled $81.7 million, or 0.95% of assets, at December 31, 2024, a decrease from $82.3 million at September 30, 2024, but an increase from $35.7 million at December 31, 2023. Loan delinquencies increased to $21.2 million, or 0.32% of loans, at December 31, 2024, from $17.2 million at September 30, 2024, and from $20.9 million at December 31, 2023. Criticized loans totaled $263.3 million, or 3.95% of loans, as of December 31, 2024, an increase from $245.7 million at September 30, 2024, and from $186.4 million at December 31, 2023.

The 2024 fourth quarter results include net charge-offs of $1.1 million and a total provision expense of $11 thousand, compared with net loan charge-offs of $2.1 million and a total provision expense of $1.8 million for the same period in 2023. The change in provision is primarily due to lower loan balances. The allowance for credit losses as a percentage of total loans was 1.17% at December 31, 2024, compared with 1.16% at September 30, 2024, and 1.14% at December 31, 2023.

Full year results

Net income for the full year 2024 was $71.4 million, or $1.98 per diluted common share, compared to income of $111.3 million, or $3.11 per diluted common share for the full year 2023. 2024 results included the impact of transaction costs for the strategic merger totaling $5.0 million pre-tax or $0.14 per diluted common share after-tax. Excluding the impact of these transaction costs, 2024 core earnings were $75.9 million or $2.12 per diluted common share. 2023 results included the impact of the insurance agency sale for a net gain on sale after transaction costs of $32.6 million pre-tax or $0.67 per diluted common share after-tax. Excluding the impact of this item, 2023 core earnings were income of $87.1 million or $2.44 per diluted common share.

Net interest income of $201.6 million on a TE basis for the full year 2024 was down 7.3% from $217.4 million in the full year 2023. The TE net interest margin of 2.52% in the full year 2024 decreased 23 basis points from 2.75% in the full year 2023. These results are positively impacted by higher loan yields, which were 5.26% for the full year 2024 compared to 4.96% in the full year 2023. These results are negatively impacted by an increase in the cost of funds in the full year 2024 of 2.43%, up 56 basis points from the full year 2023. The year-over-year increase is largely due to higher costs of customer deposits.

Total non-interest income in the full year 2024 of $50.2 million was up 9.9% from $45.7 million in the full year 2023, excluding insurance commissions and the gain on the sale of the insurance agency. Mortgage banking income increased $0.6 million year-over-year primarily as a result of a $0.8 million increase in mortgage servicing rights valuation.

Security gains were $550 thousand in the full year 2024 compared to $416 thousand in losses during the full year 2023, primarily due to valuations on equity securities. Service fees in the full year 2024 were $28.8 million, a 5.2% increase from $27.4 million in the full year 2023, primarily due to fluctuations in loan fees including commercial customer swap activity and consumer activity for interchange and ATM/NSF charges. Due to the insurance agency sale on June 30, 2023, there were no insurance commissions in 2024, compared to $8.9 million in 2023. Wealth management income of $7.4 million in the full year 2024 was up 17.5% from $6.3 million in the full year 2023. BOLI income of $5.4 million in the full year 2024 included $0.5 million of claim gains, compared to $5.0 million in the full year 2023, including $0.9 million of claim gains.

Excluding transaction costs, non-interest expenses in the full year 2024 were $154.3 million, a 3.3% decrease from $159.6 million in the full year 2023. Compensation and benefits were $86.3 million in the full year 2024, compared to $92.6 million in the full year 2023. The year-over-year decrease was primarily due to the insurance agency sale, partially offset by costs related to higher staffing levels and higher base compensation, including 2024 annual merit adjustments. FDIC premiums decreased $0.8 million on a year-over-year basis primarily due to lower rates. Data processing costs were $19.9 million in the full year 2024, compared to $16.2 million in the full year 2023, with the year-over-year increase primarily due to the new digital platform launched in October 2023. All other non-interest expenses decreased a net $1.9 million on a year-over-year basis due to the insurance agency sale and cost saving initiatives. The core efficiency ratio for the full year 2024 of 61.4% increased from 58.6% in the full year 2023 due to lower revenues partly offset by cost saving initiatives that began during the second quarter of 2023. The ratio of core non-interest expenses to average assets improved to 1.79% for the full year 2024 from 1.87% for the full year 2023.

The 2024 full year results include net loan charge-offs of $4.7 million and a total provision expense of $2.5 million, compared with net loan charge-offs of $4.0 million and a total provision expense of $5.2 million for the same period in 2023. The year-over-year change in provision expense is primarily due to a decrease in loans during the full year 2024 compared to an increase in loans during the full year 2023.

Total assets at $8.58 billion

Total assets at December 31, 2024, were $8.58 billion, compared to $8.73 billion at September 30, 2024, and $8.63 billion at December 31, 2023. Loans receivable were $6.48 billion at December 31, 2024, compared to $6.59 billion at September 30, 2024, and $6.74 billion at December 31, 2023. Securities at December 31, 2024, were $1.16 billion, compared to $1.20 billion at September 30, 2024, and $0.95 billion at December 31, 2023. All securities are either AFS or trading and are reflected at fair value on the balance sheet. Also, at December 31, 2024, goodwill and other intangible assets totaled $304.1 million compared to $304.9 million at September 30, 2024, and $307.8 million at December 31, 2023, with the decreases due to amortization of intangibles.

Total non-brokered deposits at December 31, 2024, were $6.80 billion, compared with $6.86 billion at September 30, 2024, and $6.80 billion at December 31, 2023. Brokered deposits were $54.7 million at December 31, 2024, compared to $287.4 million at September 30, 2024 and $341.9 million at December 31, 2023. FHLB borrowings increased to $507.0 million at December 31, 2024, from $345.0 million at September 30, 2024, and from $280.0 million at December 31, 2023.

Total stockholders' equity was $1.00 billion at December 31, 2024, compared to $1.02 billion at September 30, 2024, and $0.98 billion at December 31, 2023, with the linked-quarter decrease primarily due to a decrease in accumulated other comprehensive income and the year-over-year increase primarily due to earnings in excess of dividends. Excluding goodwill and intangibles, tangible equity was $697.7 million at December 31, 2024, a decrease from $714.1 million at September 30, 2024, but an increase from $667.8 million at December 31, 2023.

Regulatory ratios all improved during the fourth quarter of 2024, including CET1 of 12.63%, Tier 1 of 13.14% and Total Capital of 15.02%. All of these ratios also exceed well-capitalized guidelines pro forma for including accumulated other comprehensive income ("AOCI"), including CET1 of 10.32%, Tier 1 of 10.84% and Total Capital of 12.72%.

Dividend to be paid February 7

The Board of Directors declared a quarterly cash dividend of $0.31 per common share payable February 7, 2025, to shareholders of record at the close of business on January 31, 2025. The dividend represents an annual dividend yield of 4.93% percent based on the Premier common stock closing price on January 20, 2025. Premier has approximately 35,868,000 common shares outstanding.

About Premier Financial Corp.

Premier Financial Corp. (NASDAQ:PFC), headquartered in Defiance, Ohio, is the holding company for Premier Bank. Premier Bank, headquartered in Youngstown, Ohio, operates 73 branches and 9 loan offices in Ohio, Michigan, Indiana and Pennsylvania and also serves clients through a team of wealth professionals dedicated to each community banking branch. For more information, visit the company's website at PremierFinCorp.com.

Financial Statements and Highlights Follow-

Safe Harbor Statement

This document may contain certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, 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. ("Premier") and its management, and include statements related to the expected timing, completion and benefits of the proposed merger with WesBanco, Inc. ("WesBanco") (the ‘Merger"), future movements of interest rates, 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 document 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, including with respect to the Merger. 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. Factors that could cause or contribute to such differences include, but are not limited to, (1) the businesses of Premier and WesBanco may not be integrated successfully or such integration may take longer to accomplish than expected, (2) the expected cost savings and any revenue synergies from the proposed Merger may not be fully realized within the expected timeframes, (3) disruption from the proposed Merger may make it more difficult to maintain relationships with customers, associates, or suppliers, (4) the required governmental approvals of the proposed Merger may not be obtained on the expected terms and schedule, (5) Premier's shareholders and/or WesBanco's shareholders may not approve the proposed Merger and the merger agreement, and WesBanco's shareholders may not approve the issuance of shares of WesBanco common stock in the proposed Merger. Further information regarding additional factors that could affect the forward-looking statements can be found in the cautionary language included under the headings "Cautionary Note Regarding Forward-Looking Statements" (in the case of Premier), "Forward-Looking Statements" (in the case of WesBanco), and "Risk Factors" in Premier's and WesBanco's Annual Reports on Form 10-K for the year ended December 31, 2023, and other documents subsequently filed by Premier and WesBanco with the SEC. These risks and uncertainties include other risks and uncertainties detailed from time to time in our Securities and Exchange Commission (SEC) filings, including our Annual Report on Form 10-K for the year ended December 31, 2023 and any further amendments thereto. All forward-looking statements made in this document are based on information presently available to the management of Premier and speak only as of the date on which they are made. We assume no obligation to update any forward-looking statements, whether as a result of new information, future developments or otherwise, except as may be required by law. As required by U.S. GAAP, Premier will evaluate the impact of subsequent events through the issuance date of its December 31, 2024, consolidated financial statements as part of its Annual Report on Form 10-K if required to be filed with the SEC, including with respect to the Merger. Accordingly, subsequent events could occur that may cause Premier to update its critical accounting estimates and to revise its financial information from that which is contained in this news release.

Non-GAAP Reporting Measures

We believe that net income, as defined by U.S. GAAP, is the most appropriate earnings measurement. However, we consider core net interest income, core net income and core pre-tax pre-provision income to be useful supplemental measures of our operating performance. We define core net interest income as net interest income on a tax-equivalent basis excluding income from PPP loans and purchase accounting marks accretion. We define core net income as net income excluding the after-tax impacts of the insurance agency gain on sale and transaction costs. We define core pre-tax pre-provision income as pre-tax pre-provision income excluding the pre-tax impact of the insurance agency gain on sale and transaction costs. We believe that these metrics are useful supplemental measures of operating performance because investors and equity analysts may use these measures to compare the operating performance of the Company between periods or as compared to other financial institutions or other companies on a consistent basis without having to account for income from PPP loans, purchase accounting marks accretion, or the insurance agency sale. Our supplemental reporting measures and similarly entitled financial measures are widely used by investors, equity and debt analysts and ratings agencies in the valuation, comparison, rating and investment recommendations of companies. Our management uses these financial measures to facilitate internal and external comparisons to historical operating results and in making operating decisions. Additionally, they are utilized by the Board of Directors to evaluate management. The supplemental reporting measures do not represent net income or cash flow provided from operating activities as determined in accordance with U.S. GAAP and should not be considered as alternative measures of profitability or liquidity. Finally, the supplemental reporting measures, as defined by us, may not be comparable to similarly entitled items reported by other financial institutions or other companies. Please see the exhibits for reconciliations of our non-GAAP reporting measures.