WesBanco Q4 2024 Earnings Report

WesBanco EPS Results

• Actual EPS: $0.71
• Consensus EPS: $0.54
• Beat/Miss: Beat by +$0.17
• One Year Ago EPS: N/A

WesBanco Revenue Results

• Actual Revenue: N/A
• Expected Revenue: $156.42 million
• Beat/Miss: N/A
• YoY Revenue Growth: N/A

WesBanco Announcement Details

• Quarter: Q4 2024
• Date: 1/22/2025
• Time: After Market Closes
• Conference Call Date: Thursday, January 23, 2025
• Conference Call Time: 3:00PM ET

WesBanco (NASDAQ:WSBC) operates as the bank holding company for WesBanco Bank, Inc. that provides retail banking, corporate banking, personal and corporate trust, brokerage, mortgage banking, and insurance services to individuals and businesses in the United States. The company operates through two segments, Community Banking, and Trust and Investment Services. It offers commercial demand, individual demand, and time deposit accounts; commercial, mortgage and individual installment loans; retail loans, such as residential real estate mortgage loans, home equity lines of credit, and loans for other consumer purposes; installment loans to finance the purchase of automobiles, trucks, motorcycles, boats, and other recreational vehicles, as well as home equity installment loans, unsecured home improvement loans, and revolving lines of credit; and various non-traditional offerings, such as insurance and securities brokerage services. The company also provides trust services; and various alternative investment products, including mutual funds and annuities. In addition, it acts as an agency that specializes in property, casualty, life, and title insurance, as well as benefit plan sales and administration to personal and commercial clients; provides broker dealer and discount brokerage services; holds investment securities and loans; and holds and leases commercial real estate properties, as well as acts as an investment adviser to a family of mutual funds. WesBanco, Inc. was founded in 1870 and is headquartered in Wheeling, West Virginia.

WesBanco Q4 2024 Earnings Call Transcript

Presentation

[Operator]

Good afternoon, and welcome to the WesBanco 4th Quarter 2024 Earnings Conference Call. All participants will be in listen only mode. After today's presentation, there will be an opportunity to ask questions. Please note this event is being recorded. I would now like to turn the conference over to John Iannone, Senior Vice President, Investor Relations.

[Operator]

Please go ahead.

[John Iannone, Senior Vice President of Investor & Public Relations at WesBanco]

Thank you. Good afternoon, and welcome to WesBanco Inc. Q4 2024 earnings conference call. Leading the call today are Jeff Jackson, President and Chief Executive Officer and Dan Weiss, Senior Executive Vice President and Chief Financial Officer. Today's call, an archive of which will be available on our website for 1 year, contains forward looking information.

[John Iannone, Senior Vice President of Investor & Public Relations at WesBanco]

Cautionary statements about this information and reconciliations of non GAAP measures are included in our earnings related materials issued yesterday afternoon, as well as our other SEC filings and investor materials. These materials are available on the Investor Relations section of our website, westbanko.com. All statements speak only as of January 23, 2025, and WesBanco undertakes no obligation to update them. I would now like to turn the call over to Jeff. Jeff?

[Jeffrey Jackson, President & CEO at WesBanco]

Thanks, John, and good afternoon. On today's call, we will review our strong 4th quarter and full year 2024 results and provide an update on our operations and initial outlook for 2025. Key takeaways from the call today are strong loan growth that has been fully funded through deposit growth improved net interest margin, which is expected to meaningfully improve through 2025 we remain focused on organic growth and efficiency gains to achieve positive operating leverage. Our transformative acquisition of Premier Financial Corp. Remains on track pending Fed and FDIC regulatory approvals.

[Jeffrey Jackson, President & CEO at WesBanco]

2024 was an excellent year for WesBanco. We delivered strong loan growth of $1,000,000,000 which was fully funded by deposit growth. We also announced our transformative merger with Premier Financial and continued to earn national recognitions for stability, trustworthiness and workplace excellence. We have achieved a compound annual loan growth rate of 9% over the past 3 years, raised $200,000,000 of common equity and paid down higher cost borrowings, key successes in our strategy to strengthen our balance sheet and net interest margin. Additionally, we continue to focus on cost control while enhancing our wealth and treasury management businesses to deepen client relationships and drive positive operating leverage.

[Jeffrey Jackson, President & CEO at WesBanco]

With the pending Premier Financial merger and the strength of our proven strategies and balance sheet, we are well positioned to build on our momentum and continue delivering value for our customers and stakeholders. For the quarter ending December 31, 2024, we reported net income, excluding merger and restructuring expenses available to common shareholders of $47,600,000 and diluted earnings per share of $0.71 which increased 29% year over year. On a similar basis, we reported full year net income of 146,400,000 and diluted earnings per share of $2.34 Furthermore, the strength of our financial performance during the past year was reflected in our 4th quarter return on tangible common equity of 13%. Non performing assets to total assets of just 0.22 percent and a capital position that continues to provide financial and operational flexibility as demonstrated by our tangible common equity ratio of 8.7%. Throughout the past year, we accomplished several milestones and continued to receive numerous national accolades that resulted from our strong performance, operational strengths and focus on our communities, customers and employees.

[Jeffrey Jackson, President & CEO at WesBanco]

These accolades, which recognize our commitment to sustainability and excellence, are also a testament to the hard work and dedication of our employees. So I extend a heartfelt thank you to them. Just to highlight a few of our accomplishments, we launched a renewed mission, vision and pledge, which defines our purpose, aspirations and the values that guide our business, which include respect, exceptional customer experiences, soundness and stability, accountability and stewards of our communities. Our MVP unites us in a shared sense of purpose and guides our strategy towards sustained success. In conjunction with the announcement of the pending acquisition of Premier Financial, we successfully raised $200,000,000 of common equity that further strengthened our capital levels and positioned us for future growth.

[Jeffrey Jackson, President & CEO at WesBanco]

We retooled our treasury management function and developed new products and services to make it a key component of our relationship banking philosophy and help drive our fee income to a larger percentage of our total revenue. Through the strength of our wealth management teams in our services, we realized record levels of trust and investment services assets under management of $6,000,000,000 and broker dealer security account values of 1,900,000,000 dollars all through organic growth and market appreciation. Lastly, we continue to receive top rankings the past year reflecting our strength and stability and efforts of our employees every day to serve our customers and communities with excellence. We were recognized for soundness, safety and profitability, employer of choice and a great workplace,

[Jeffrey Jackson, President & CEO at WesBanco]

positively impacting our communities. And recently, we were named 1 of Forbes' Most Trusted Companies based on customer, investor and employee trust.

[Jeffrey Jackson, President & CEO at WesBanco]

The key story for both the Q4 and full year remains strong deposit and loan growth, as deposit growth fully funded loan growth on both a year over year and sequential quarter basis. Further, our total and commercial loan growth and deposit growth continued to significantly outperform the monthly H8 data for all domestically chartered commercial banks on both a year over year and quarter over quarter basis, again just demonstrating the success of our strategies and teams. Our total deposits increased $1,000,000,000 year over year $300,000,000 quarter over quarter to more than $14,000,000,000 Importantly, this growth was mainly driven by deposit categories other than certificate of deposits as total demand deposits continue to represent 54% of total deposits with the non interest bearing component representing 27%, reflecting our team's focus on deepening existing and new customer relationships. Our underwriting and credit standards are a 155 year legacy of our company and we are achieving our strong loan growth without sacrificing credit quality as confirmed by key metrics that are favorable to the average of all banks with assets between $10,000,000,000 $25,000,000,000 Since year end 2021, we have achieved a strong compound annual loan growth rate of 9%, which has been achieved with roughly the same number of bankers, thanks to the success of our recruitment and go to market strategies combined with the products and services of a large bank, but with the customer focus and support of a community bank.

[Jeffrey Jackson, President & CEO at WesBanco]

4th quarter growth was 9% year over year and nearly 7% quarter over quarter annualized, driven by a strong performance of our banking teams across our markets. Further, total commercial loans increased 11% year over year and almost 9% sequentially on an annualized basis driven by commercial real estate. Our 4 newest loan production offices accounted for nearly 30% of the commercial loan growth year to date led by our Chattanooga and Indianapolis offices. Our commercial loan pipeline as of December 31st was approximately $763,000,000 up roughly 11% from a year ago, but down 8% from September 30 as our teams converted the pipeline into another quarter of solid loan growth. However, in the 3 weeks since year end, the pipeline has grown approximately $80,000,000 Based on the current pipeline and strength of our teams and markets, we expect mid single digit loan growth during 2025.

[Jeffrey Jackson, President & CEO at WesBanco]

Our Louisville Southern Indiana commercial banker and credit team recently celebrated successfully winning a unique opportunity with a customer in a specialized industry, a $45,000,000 construction loan and over $350,000 in relationship based fee income. While the opportunity presented many challenges, the team persevered through complex negotiations to secure this resounding win, which was made possible by our deep understanding of the client's needs and our team living our values of accountability and soundness and stability in support of the bank's day to day and long term performance. Turning to our pending acquisition of Premier Financial. We have received approval from the shareholders of both companies as well as the State of West Virginia. We previously filed all necessary bank regulatory applications and remain on track for a Q1 closing pending Fed and FDIC approvals.

[Jeffrey Jackson, President & CEO at WesBanco]

Through this transformative acquisition, we expect to accelerate our positive momentum, build on Premier's legacy of community engagement and support and together bring the resources of a larger and stronger financial services organization to benefit all our communities. I would now like to turn the call over to Dan Weiss, our CFO, for an update on our Q4 financial results and a current outlook for 2025. Dan?

[Daniel Weiss, Senior Executive VP & CFO at WesBanco]

Thanks, Jeff, and good afternoon. For the quarter ending December 31, 2024, we reported GAAP net income available to common shareholders of $47,100,000 or $0.70 per share. And when excluding after tax restructuring and merger related expenses, net income was $47,600,000 or $0.71 per share, representing an increase of 47% from $32,400,000 or $0.55 per share in the prior year period. On a full year basis, 2024 net income available to common shareholders, excluding after tax restructuring and merger related expenses was $146,400,000 or $2.34 per share as compared to $151,900,000

[Daniel Weiss, Senior Executive VP & CFO at WesBanco]

or

[Daniel Weiss, Senior Executive VP & CFO at WesBanco]

$2.56 per share, reflecting the impact of the common stock raised during the Q3 of 2024. To highlight a few of the 4th quarter's accomplishments, we generated strong year over year pre tax pre provision earnings growth of 29% that was built upon loan growth of $1,000,000,000 that was fully funded by deposit growth and improving net interest margin, strong fee income growth of 21% and continued management of operating expenses with 4th quarter expenses increasing just 1% over the linked Q3 as well as the prior year period. These positives combined with a slight negative provision for credit losses, a pension benefit that's not expected to recur and a positive fair value adjustment on swaps resulted in a $0.15 increase in earnings per share despite the increase in the share count from the 3rd quarter's capital raise. As of December 31, total assets of $18,700,000,000 included total portfolio loans of $12,700,000,000 and total securities of $3,400,000,000 And as Jeff mentioned, loan growth remained robust over the last 3 years and has been driven by the success of our strategies and the strong performance by our banking teams across our markets. We remain optimistic about future loan growth with our strong loan pipelines, banking teams and markets combined with roughly $1,000,000,000 in unfunded land construction and development commitments that are expected to fund over the next 12 to 18 months and relatively low CRE payoffs.

[Daniel Weiss, Senior Executive VP & CFO at WesBanco]

Commercial real estate payoffs totaled approximately $350,000,000 for the year as compared to an annual level in the $500,000,000 range in a more normal operating environment. And we anticipate that the pace of payoffs may increase every time as more CRE projects move into the secondary market for permanent financing or are sold, particularly if rates decline. Deposits of $14,100,000,000 were up 7.3% versus the prior year and 8.6% annualized linked quarter, reflecting our efforts on deposit gathering and retention. The composition of total deposits continue to have some mix shift. However, total demand deposits as well as non interest bearing deposits as a percentage of total deposits remain consistent with the range prior to the pandemic.

[Daniel Weiss, Senior Executive VP & CFO at WesBanco]

As is typical during a higher rate environment, we've experienced strong growth in CDs during 2024. However, when excluding them, we realized deposit growth of 3.9% year over year and 7.7% quarter over quarter annualized. Furthermore, we anticipate roughly 70% of our CD book to mature or reprice lower over the next 6 months, mainly in the March to May timeframe. Turning to credit quality. Credit quality continues to remain stable as key metrics have remained low from a historical perspective and within a consistent range over the last 3 plus years.

[Daniel Weiss, Senior Executive VP & CFO at WesBanco]

The allowance for credit losses to total portfolio loans at the end of the quarter decreased slightly to 1.10 percent of total loans due to improvements in the macroeconomic forecasts related to lower unemployment assumptions and a more normalized yield curve offsetting loan portfolio growth and office portfolio reserves. The 4th quarter margin of 3.03% improved both quarter over quarter and year over year through a combination of higher loan and securities yields and lower funding costs as we continue to execute upon our strategies to strengthen our balance sheet. Also benefiting the margin was the $175,000,000 pay down of Federal Home Loan Bank borrowings from deposit growth, which exceeded loan growth, bringing total pay downs since June 30 to $475,000,000 And as a reminder, the majority of our Federal Home Loan Bank borrowings are short term borrowings such that approximately 80% will mature during the Q1 of 2025 and should continue to reprice lower from additional Fed funds rate cuts. Our interest bearing deposit beta on the September November rate cuts of 75 basis points was 19% and our total deposit funding costs of 197 basis points declined 8 basis points from the 3rd quarter, reflecting the higher mix of non interest bearing deposits and the recent rate cuts.

[Daniel Weiss, Senior Executive VP & CFO at WesBanco]

For the Q4, non interest income totaled $36,400,000 a 23% linked quarter increase and a 21% increase over the prior year period due to higher swap fee income and valuation income, service charges on deposits and trust fees. The increase in the swap fees and valuation income reflected fair value adjustments of $1,900,000 which were a $2,500,000 loss in last year period and gross swap fees of $1,300,000 Service charges on deposits increased due to fee income from new products and services, increased general consumer spending and treasury management, which is continuing to gain traction from our strategic repositioning of this business line in late 2023. It's also important to note that other income included a $2,300,000 gain from the transfer of certain liabilities for future pension payments to a 3rd party insurance company, which is not expected to repeat. Turning to expenses, non interest expense excluding restructuring and merger related costs for the 3 months ended December 31, 2024 were $100,500,000 an increase of just 1% year over year, which benefited from company wide efficiency efforts as we've remained focused on achieving positive operating leverage. The primary driver of this increase was the $1,000,000 increase in equipment and software expenses, which reflect the impact of the prior year ATM upgrades.

[Daniel Weiss, Senior Executive VP & CFO at WesBanco]

Sellers and wages also increased primarily due to our standard mid year merit increases offset somewhat by lower staffing levels associated with the efficiency improvements in the mortgage and branch staffing models in the prior year. Our regulatory capital ratios have remained above the applicable well capitalized standards and reflecting our strong capital position and net income, our Board of Directors approved a $0.01 dividend increasing to $0.37 during the Q4. Turning to our current outlook for 2025, which is for WesBanco standalone and does not include any potential benefit from our acquisition of Premier Financial, We are currently modeling 2 additional Fed fund rate cuts in March September. And given our relatively neutral rate sensitive position, we do not expect a significant difference between 1 or 2 cuts on our net interest margin. We anticipate approximately 4 to 6 basis points of continued improvement in the Q1's net interest margin from the Q4 as our spot margin for the month of December was 3.08 percent.

[Daniel Weiss, Senior Executive VP & CFO at WesBanco]

And we expect more meaningful improvement during the Q2 as more than $1,000,000,000 in CDs mature during that March through May period and reprice lower. And then we anticipate more modest margin improvement during the second half of twenty twenty five. Trust fees should benefit modestly from organic growth, but will be impacted by equity and fixed income market trends. And as a reminder, 1st quarter trust fees are seasonally higher due to tax preparation fees. Securities brokerage revenue is anticipated to grow slightly from the range over the last few quarters due to modest organic growth, but also will be dependent upon the economy and equity and fixed income markets.

[Daniel Weiss, Senior Executive VP & CFO at WesBanco]

Electronic banking fees, which are subject to overall consumer spending behaviors are expected to be in the same quarterly range in 2024. Service charge on deposits are expected to remain consistent with the amounts that we've earned in the second half of twenty twenty four as they are dependent on general consumer spending, but could benefit slightly from continued growth in treasury management. Mortgage banking should remain in the range of the second half of twenty twenty four, but will continue to be impacted by the overall residential housing market trends and interest rates. And then gross commercial swap fee income excluding market adjustments should be in the range of $5,000,000 to $7,000,000 And then we continue to anticipate some modest benefit during 2025 from our new purchasing card integrated payables and receivables treasury management products. Turning to expenses.

[Daniel Weiss, Senior Executive VP & CFO at WesBanco]

As we stated in the past, we remain focused on disciplined expense management to drive positive operating leverage and we'll continue our efforts throughout 2025. As we previously disclosed, we successfully consolidated 11 branches into nearby locations during the Q4 and anticipate annual savings of approximately $4,000,000 will begin to be realized during the Q1 of 2025 to help offset general inflationary pressures. Equipment and software is expected to continue to increase at a faster pace than overall expenses as we continue to invest in products, services and technology to improve the customer experience and drive revenue growth. Marketing and FDIC expenses will increase slightly in support of our loan and deposit growth. And based on what we know today, we believe our expense run rate during the first half of twenty twenty five to be roughly consistent with the 4th quarter's reported $101,000,000 and then grow modestly due to the annual midyear merit increases and higher healthcare and software costs during the back half of the year.

[Daniel Weiss, Senior Executive VP & CFO at WesBanco]

The provision for credit losses will depend upon changes to the macroeconomic forecast as well as qualitative factors, credit quality metrics including potential charge offs, criticized and classified loan balances, delinquencies, changes in prepayment speeds and future loan growth. And lastly, we currently anticipate our full year effective tax rate to be between 17.5% 18.5% subject to changes in tax regulations and tax income levels. Operator, we're now ready to take questions. Would you please review the instructions?

[Operator]

We will now begin the question and answer session.

[Operator]

You.

[Operator]

The first question comes from Russell Gunther with Stephens. Please go ahead.

[Russell Gunther, Managing Director & Equity Research Analyst at Stephens Inc]

Hey, good afternoon, guys.

[Jeffrey Jackson, President & CEO at WesBanco]

Hey, good afternoon, Russell.

[Daniel Weiss, Senior Executive VP & CFO at WesBanco]

Hey, Russell.

[Russell Gunther, Managing Director & Equity Research Analyst at Stephens Inc]

Hey, Jeff. Hey, Dan. Hey, I wanted to start on the margin and appreciate all the color with regard to legacy WesBanco. A bunch of tailwinds, it sounds like on both sides of the balance sheet to the NIM. So Dan, as we think about moving into the 2 into the 2nd quarter with the CD benefit, could you just share where those are repricing off of what you would expect to reprice them into and then what the duration of the offerings are?

[Daniel Weiss, Senior Executive VP & CFO at WesBanco]

Yes, sure, Russell. And so, yes, first, second quarter, it's about $1,200,000,000 in CDs and those are weighted average rate is about 4.25 percent and we anticipate those repricing downward by 75 to 100 basis points. So that's where we kind of see particularly the Q2 where we think we're going to have a little bit more outsized lift in margin. And those right now we have slated to remain in that kind of 7 month CD special. So that's your kind of duration there.

[Daniel Weiss, Senior Executive VP & CFO at WesBanco]

Okay.

[Russell Gunther, Managing Director & Equity Research Analyst at Stephens Inc]

I appreciate it. Okay. And then switching gears as we think about sort of the pro form a margin with Premier, given the rate backdrop we sit in today, also your 2 Fed cut expectations. Does that put us in a pro form a range of, call it, I don't know, 345 to 350,000,000 or given your kind of legacy outlook and improvement with the WesBanco margin as you layer in Premier, is there any change to how we should be thinking about that margin upon deal close?

[Daniel Weiss, Senior Executive VP & CFO at WesBanco]

Yes, Russell, I think you're pretty close to what we're modeling right now. I'd say, I think one of the things that we if you recall back when we announced the deal in July, we had a kind of a pro form a margin of it was like 346%. And if I were to think about what has changed since then, certainly the rate environment and I would say that 346% at the time was based off of analyst consensus 1st

[Daniel Weiss, Senior Executive VP & CFO at WesBanco]

quarter that

[Daniel Weiss, Senior Executive VP & CFO at WesBanco]

would have been Q1 analyst consensus forecast for 2025 for WesBanco on a standalone basis, that would have been the foundation. And since the Q1 of 2024, that consensus estimate, I think given some of the tailwinds that we've discussed, feels pretty good that we could be 10 to 15 basis points better than that today.

[Russell Gunther, Managing Director & Equity Research Analyst at Stephens Inc]

Very helpful guys. Thanks for taking my question.

[Daniel Weiss, Senior Executive VP & CFO at WesBanco]

Yes, 355 range.

[Russell Gunther, Managing Director & Equity Research Analyst at Stephens Inc]

I appreciate it. I'll step back. Thanks very much guys.

[Operator]

The next question comes from Carl Sheppard with RBC Capital Markets. Please go ahead.

[Karl Shepard, Assistant Vice President at RBC Capital Markets]

Hey, good afternoon guys.

[Jeffrey Jackson, President & CEO at WesBanco]

Hey, good afternoon, Carl.

[Daniel Weiss, Senior Executive VP & CFO at WesBanco]

Hey, Carl.

[Karl Shepard, Assistant Vice President at RBC Capital Markets]

I wanted to pick up on deposits a little bit more. A lot of opportunity in 2Q, but could you just sketch out the whole year a little bit and

[Karl Shepard, Assistant Vice President at RBC Capital Markets]

what you think an appropriate deposit growth rate is? And if some of the

[Karl Shepard, Assistant Vice President at RBC Capital Markets]

stabilization and mix we saw this quarter can continue? Thanks.

[Daniel Weiss, Senior Executive VP & CFO at WesBanco]

Yes. So what I would say is one of the bigger assumptions that we're modeling today is that the loan growth would be fully funded by deposit growth. And that deposit growth could be a little lumpy quarter to quarter, but generally speaking for the year, we expect deposits to fully fund loans. And so working backwards, I think we've been pretty clear about what our expectations are for loan growth on an annual basis, targeting that kind of mid to upper single digit loan growth. So that's about $800,000,000 or so, dollars 850,000,000 in loan growth.

[Daniel Weiss, Senior Executive VP & CFO at WesBanco]

And so that can kind of help to inform you on what our expectations are for DepositPro.

[Karl Shepard, Assistant Vice President at RBC Capital Markets]

Okay. And then just on the mix piece of it, do you

[Karl Shepard, Assistant Vice President at RBC Capital Markets]

think we'll see a little less CD growth or is that still area to see kind of similar composition?

[Daniel Weiss, Senior Executive VP & CFO at WesBanco]

I think we could see probably a little less concentration in CD growth than what we saw this year in like 2024 in 2025. I think it could be a little bit more evenly mixed.

[Karl Shepard, Assistant Vice President at RBC Capital Markets]

Okay. Thanks for the help.

[Operator]

The next question comes from Dave Bishop with Hovde Group. Please go ahead.

[David Bishop, Director - Research Department at Hovde Group]

Yes. Good afternoon, gentlemen.

[Jeffrey Jackson, President & CEO at WesBanco]

Hey, good afternoon, Dave.

[Daniel Weiss, Senior Executive VP & CFO at WesBanco]

Hello, Dave.

[David Bishop, Director - Research Department at Hovde Group]

Hey, Jeff, quick question. You noted the success in sort of revamping some of your treasury management products on the commercial side of the house. Just curious, I don't know if you disclosed this, but maybe given like a percentage increase of maybe new commercial accounts added this year, are you seeing are you able to win bigger commercial accounts average size? And just curious any color you can provide there on the commercial deposit growth?

[Jeffrey Jackson, President & CEO at WesBanco]

Yes, sure. We are seeing some larger account wins. I think we're continuing to ramp it up. I will tell you that treasury management fees year over year grew pretty nicely. And once again, we're I think I believe we ramped up around 40 new multi cards that were implemented toward the middle of the end of last year.

[Jeffrey Jackson, President & CEO at WesBanco]

So obviously, that spend would flow through this year. And then we are targeting at least that many or more for this year. So it's really getting started, but we are seeing the revenue lift there. And the teams, the commercial teams are really adding it to their repertoire, which is allowing us to bank additional C and I business. I believe in the Q4, you saw us grow C and I about $70,000,000 And so that was a big positive for us as well from a loan perspective.

[Jeffrey Jackson, President & CEO at WesBanco]

And then we've had a tremendous growth in deposits as well. So, yeah, it's just really ramping up, I would say, but it's made a big impact as far as being able to grow deposit and commercial loan balance.

[David Bishop, Director - Research Department at Hovde Group]

Great. And then a follow-up question, I think in the preamble, it sounds like you're still confident of a Q1 close to the Premier acquisition. Just curious,

[David Bishop, Director - Research Department at Hovde Group]

is the patent DC reviewing this?

[David Bishop, Director - Research Department at Hovde Group]

Just curious if you have to get the final regulatory approval.

[Jeffrey Jackson, President & CEO at WesBanco]

Yes. So we are very confident that we'll close in the Q1 and it is in DC. The Fed and the FDIC are both in DC. We have had correspondence with both answering some questions and going back and forth on a few minor items that they've asked about. At this point, I see no issues that have arisen and we still feel very comfortable about closing in the Q1.

[David Bishop, Director - Research Department at Hovde Group]

Great. Thank you.

[Operator]

The next question comes from Daniel DiMao with Raymond James. Please go ahead.

[Daniel Tamayo, Vice President at Raymond James Financial]

Thank you. Good afternoon, guys.

[Daniel Weiss, Senior Executive VP & CFO at WesBanco]

Hey, good afternoon.

[Daniel Tamayo, Vice President at Raymond James Financial]

Maybe first just a clarification, the loan growth guidance that you talked about, I know you mentioned expecting an increase in payoffs in 2025. Does that assume an increase in payoffs in 2025 in terms of what you gave us in the mid single digit loan growth?

[Daniel Weiss, Senior Executive VP & CFO at WesBanco]

That will be a net that's net. That's a net number. So with payoffs, still in that mid to upper single digits.

[Daniel Tamayo, Vice President at Raymond James Financial]

Mid to upper single digits. So it includes you're assuming that payoffs increase within that net loan growth number you're talking about, is what you're saying?

[Daniel Weiss, Senior Executive VP & CFO at WesBanco]

Yes, that's right.

[Daniel Tamayo, Vice President at Raymond James Financial]

Okay.

[Daniel Tamayo, Vice President at Raymond James Financial]

If there were payoffs were to exceed expectations and loan growth were to come in a little bit lighter and you had a similar situation that you had in the Q4 where deposit growth exceeded loan growth, would you be inclined to pay down FHLB borrowings again? I'm just curious how that scenario would play out if it were to occur?

[Jeffrey Jackson, President & CEO at WesBanco]

Yes, we would. So all our deposit growth is that we're bringing in less than what we're paying to FHLB. So we would if we weren't able to grow loans at the same rate of deposits, we would pay down the FHLB borrowings, which would have a positive impact, I believe, on our net interest margin.

[Daniel Weiss, Senior Executive VP & CFO at WesBanco]

Yes. And we saw we really saw that here in the 4th quarter. The deposit growth came kind of early in the 4th quarter and we were able to pay down those, put our home loan bank borrowings earlier in the quarter and we actually picked up a few basis points in margin as a result.

[Jeffrey Jackson, President & CEO at WesBanco]

Yes. We finished December at

[Daniel Tamayo, Vice President at Raymond James Financial]

$308,000,000 Okay, terrific. And then maybe just switching gears here to credit. Certainly, it's been strong for you guys, but there was been an uptick in NPLs and criticized and classified. Just curious if you have any more color on kind of what is driving the uptick in those categories?

[Jeffrey Jackson, President & CEO at WesBanco]

Just kind of normal quarterly ebbs and flows. I believe 1 credit slightly raised it up a little bit. I think we plan on getting that resolved probably by the end of this quarter, early next quarter. And if you look at our historical trends, we're still well within our historical trends and still in all categories at least average of our peer groups are most of the times better. So I wouldn't read anything into those numbers.

[Jeffrey Jackson, President & CEO at WesBanco]

They, as you know, fluctuate quarter over quarter and at this point there's no trends that we're seeing at all.

[Daniel Tamayo, Vice President at Raymond James Financial]

Okay. So we should still be kind of comfortable with where net charge offs have been historically looking forward is what it sounds like what you're saying?

[Daniel Weiss, Senior Executive VP & CFO at WesBanco]

Yes.

[Daniel Tamayo, Vice President at Raymond James Financial]

Got it. All right. I'll step back. Thanks for having all the color guys.

[Daniel Weiss, Senior Executive VP & CFO at WesBanco]

Yes. Thank you.

[Operator]

The next question comes from Catherine Mealor with KBW. Please go ahead.

[Catherine Mealor, Managing Director at Keefe, Bruyette & Woods (KBW)]

Thanks. Good afternoon.

[Daniel Weiss, Senior Executive VP & CFO at WesBanco]

Hey, good afternoon, Catherine.

[Jeffrey Jackson, President & CEO at WesBanco]

Hey, Catherine.

[Catherine Mealor, Managing Director at Keefe, Bruyette & Woods (KBW)]

I want to circle back just to kind of move in rates and your comment here on the margin. It feels like the move in rates has been good for Westbank on a standalone basis. And then it looked like Premier also had a higher margin this quarter. So it feels like the margin trajectory is better just kind of net so far. On the flip of that, as we think about pro form a capital ratios at close, and I guess question 1 is what's the best rate to follow?

[Catherine Mealor, Managing Director at Keefe, Bruyette & Woods (KBW)]

If you look at the 10 year, it looks like the 10 years moved up a little bit since we announced the deal. And so how do we think about that impact? It's good for the margin, I would imagine, because higher accretable yield, but also kind of a negative to capital. And so as you think about pro form a capital ratios in commercial real estate, the capital ratios that closed, does that move in rates kind of push you to need to sell more loans? Or is there something that you're kind of solving for where you want ratios to be at close that we should just think about as we get near to the close date?

[Catherine Mealor, Managing Director at Keefe, Bruyette & Woods (KBW)]

Thanks.

[Daniel Weiss, Senior Executive VP & CFO at WesBanco]

Yes. I think you hit on a number of things and a lot of great questions and thought there. What I would tell you from our perspective, one of the things that we did do is we had the commercial or the entire interest loan mark revalued as of December 31, 2024 to compare that to what the original assumption was and actually came down slightly. So but I would tell you two couple of things. Well, I would use the 5 year more so than probably the 10 year.

[Daniel Weiss, Senior Executive VP & CFO at WesBanco]

But the 5 year back at the time that we would evaluate was right around 4.5%. Today or well, at the end of the year, it was still kind of in that rough range, I would say. And the interest mark on a standalone basis actually came went from kind of $325,000,000 down to it's about 2 $50,000,000 to down $75,000,000 That's a kind of I think about 5% interest mark at a deal announcement to a 4% mark based on where rates were at the end of the year. And so that's actually moves in the opposite direction of kind of what we were kind of just discussing there. In fact, in that scenario, we see a little less tangible book value dilution, a little less interest mark accretion.

[Daniel Weiss, Senior Executive VP & CFO at WesBanco]

And with the lower TBV dilution, it actually takes overall field math down from kind of the 13.5% dilutive to about to just under 10% dilutive, which we view very positively. And I would say the CRE ratio is something that we're very focused on as you kind of alluded to there. And we want to keep that we want to we're very mindful of that 300% guideline and we want to maintain our portfolio or our ratios under that. I'll tell you with the Q4, the growth in capital that we experienced here, Premier's very nice numbers that they reported as well combined with the lower interest mark all kind of bode well for better capital ratios assuming the rates are what they were at December 31, 2024. And I will say this as well that our capital ratios kind of pro form a based on that updated analysis kind of improved across the board by about 50 basis points, about 0.5%.

[Catherine Mealor, Managing Director at Keefe, Bruyette & Woods (KBW)]

It's really interesting. It's so helpful. So that just looks like since the announcement, we're getting less book dilution and then less accretable yield, but our core margins are coming in higher. So actually kind of probably net neutral, maybe a little better to the margin all in. Is that a fair way to think about it?

[Jeffrey Jackson, President & CEO at WesBanco]

Yes.

[Daniel Weiss, Senior Executive VP & CFO at WesBanco]

Yes.

[Daniel Weiss, Senior Executive VP & CFO at WesBanco]

Yes. That's exactly right.

[Catherine Mealor, Managing Director at Keefe, Bruyette & Woods (KBW)]

That's

[Catherine Mealor, Managing Director at Keefe, Bruyette & Woods (KBW)]

great. Okay. And then on expenses, can you just remind us just kind of the timing of cost savings and if there's any kind of upside to those cost savings that you might see now that you're a few months in from announcing the deal?

[Daniel Weiss, Senior Executive VP & CFO at WesBanco]

Yes. So cost savings typically we would anticipate to begin after core conversion and typically core conversion. And so right now we've got a tentative date of middle of May for that core conversion to a cart. And then there's certainly cleanup for a month or 2 thereafter where we're still kind of running parallel. And so after that period of time, that's when we would expect to really begin to realize the full kind of 26% cost saves.

[Daniel Weiss, Senior Executive VP & CFO at WesBanco]

We're still obviously evaluating, but we do feel very good about that assumption. We feel that that was a nice conservative assumption at announcement and still feel that we're well on track to meet that.

[Catherine Mealor, Managing Director at Keefe, Bruyette & Woods (KBW)]

Great. Thank you very much.

[Operator]

The next question comes from Manuel Nieves with D. A. Davidson. Please go ahead.

[Manuel Navas, Managing Director & Senior Research Analyst at D.A. Davidson]

Hey, good afternoon. So just to follow-up on that

[Daniel Weiss, Senior Executive VP & CFO at WesBanco]

Hey, Manuel.

[Manuel Navas, Managing Director & Senior Research Analyst at D.A. Davidson]

Just to follow-up on that capital on part of that capital question. The move in rates likely improved the CRE concentration at close and actually is no longer a headwind at all to your legacy growth prospects? Is that kind of even a stronger takeaway?

[Daniel Weiss, Senior Executive VP & CFO at WesBanco]

Well, it is. It really is. And you're right, I didn't say that. I kind of meant to imply that. But it does improve the CRE concentration ratio on day 1 for sure.

[Daniel Weiss, Senior Executive VP & CFO at WesBanco]

And it does remove some of if there were any ceiling on growth, it does certainly help there. Absolutely.

[Manuel Navas, Managing Director & Senior Research Analyst at D.A. Davidson]

Just remind me on the are there any other updates to Premier targets accretion? I guess we've kind of covered most things, but anything else any other noteworthy updates about the pending transaction?

[Daniel Weiss, Senior Executive VP & CFO at WesBanco]

I mean, maybe the only other thing I might add, I think Catherine touched on the CRE sale of $100,000,000 roughly and we'll adjust that accordingly depending on what we have and what we see at the time the deal closes and where CRE concentrations are. But I would say on the securities portfolio, we are we continue to evaluate that. There's been some opportunities more particularly more recently with longer term rates coming in where they are to potentially sell more and reinvest, maybe take on a little duration a little more duration and that basically has the impact of kind of we have here an opportunity that we want to make sure that we take advantage of to restructure the securities portfolio how we want it. And so we still anticipate right now they have a $1,200,000,000 securities book. We anticipate reducing that by a couple of $100,000,000 but we also anticipate restructuring the remaining securities book to fit our investment profile and to pick up some additional yield where we can.

[Daniel Weiss, Senior Executive VP & CFO at WesBanco]

So I think that's kind of another tailwind to margin and future growth.

[Manuel Navas, Managing Director & Senior Research Analyst at D.A. Davidson]

That's great. Just on margin on the legacy basis, when you talk about a little bit more expansion in the Q1, is that off of the December number of 3.08 percent or is that off of the full quarter number?

[Daniel Weiss, Senior Executive VP & CFO at WesBanco]

It's off of the full quarter number.

[Manuel Navas, Managing Director & Senior Research Analyst at D.A. Davidson]

Okay. And then just there might have been some crosstalk, but you're kind of almost expecting at close you could have the NIM be 10 basis points to 15 basis points above where you previously expected it for the deal?

[Daniel Weiss, Senior Executive VP & CFO at WesBanco]

That's correct. I would say when I say that, I go back to that kind of $346,000,000 that we disclosed back when we announced the deal. At that time, WesBanco's standalone margin, I think, for 2025 was right around 310. That was the projection for 2025. And so from July that was actually Q1 consensus number.

[Daniel Weiss, Senior Executive VP & CFO at WesBanco]

That's what we use. We just use the consensus estimates. Since that time, we could see it. It's real. We anticipate that we're going to outperform the 310 that would have been baked into that 346 percent guidance by 10 to 15 basis points.

[Manuel Navas, Managing Director & Senior Research Analyst at D.A. Davidson]

That's really that's great. That's a good update. One last question. Kind of where what regions are you the most excited about anywhere that you would looking to add and how in the timeline where you're looking to add new lending teams in terms of like the legacy WesBanco commercial lending team?

[Jeffrey Jackson, President & CEO at WesBanco]

Sure. Yes. So we grew last year $1,000,000,000 in loans, dollars 1,000,000,000 in deposits, which is if you think about our acquisition of Your Community Bank, that's basically we built organically Your Community Bank last year. And so when we look at future growth, obviously, the LPOs have driven a good portion of that. So what I would tell you is looking to fill out more in Nashville and then also looking to add more in Knoxville and Indianapolis.

[Jeffrey Jackson, President & CEO at WesBanco]

I should say start Knoxville and then add more to Indianapolis. Those would be the markets I would say we're looking at. Of course, we're always looking for great talented bankers that fit in with our processes and how we do things and our culture. But I would go Nashville, Knoxville and Indianapolis.

[Manuel Navas, Managing Director & Senior Research Analyst at D.A. Davidson]

That's great. Thank you for the commentary. I'll step back into the queue.

[Operator]

Thank you. And our last question today will be from Russell Gunther with Stephens. Please go ahead.

[Russell Gunther, Managing Director & Equity Research Analyst at Stephens Inc]

Hey, guys. Thank you for the follow-up. I just want to clarify, Dan, the 350 to 355 pro form a NIM with Premier, 1, does that is that based off the updated mark you talked about receiving December 31? And then 2, does that contemplate the potential securities restructuring?

[Daniel Weiss, Senior Executive VP & CFO at WesBanco]

It is based off of the updated mark and it does not contemplate fully the restructuring of securities.

[Russell Gunther, Managing Director & Equity Research Analyst at Stephens Inc]

Got it. Okay, great. Yes. Appreciate it. Thanks guys.

[Daniel Weiss, Senior Executive VP & CFO at WesBanco]

Thanks, Russ.

[Operator]

This concludes our question and answer session. I would like to turn the conference back over to Jeff Jackson for any closing remarks.

[Jeffrey Jackson, President & CEO at WesBanco]

Thank you. During the past year, we delivered strong loan growth of $1,000,000,000 that was matched by deposit growth of $1,000,000,000 while maintaining strong capital levels and credit quality. Our successful balance sheet strategies have and should continue to improve our net interest margin. We remain focused on organic growth and efficiency gains to achieve positive operating leverage and position us well to deliver shareholder value. Thank you for joining us today We look forward to speaking with you at one of our upcoming investor events.

[Jeffrey Jackson, President & CEO at WesBanco]

Have a great day.

[Operator]

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

Participants

Executives

• John Iannone, Senior Vice President of Investor & Public Relations
• Jeffrey Jackson, President & CEO
• Daniel Weiss, Senior Executive VP & CFO

Analysts

• Russell Gunther, Managing Director & Equity Research Analyst at Stephens Inc
• Karl Shepard, Assistant Vice President at RBC Capital Markets
• David Bishop, Director - Research Department at Hovde Group
• Daniel Tamayo, Vice President at Raymond James Financial
• Catherine Mealor, Managing Director at Keefe, Bruyette & Woods (KBW)
• Manuel Navas, Managing Director & Senior Research Analyst at D.A. Davidson