WesBanco Q1 Earnings Call Highlights

Key Points

• WesBanco reported a strong quarter with GAAP net income of $84 million ($0.88/share) and adjusted net income of $87 million ($0.91/share), with adjusted diluted EPS up 38% year‑over‑year and pre‑tax, pre‑provision earnings up 44%.
• Elevated CRE project payoffs pressured loan growth—$340 million in the quarter and about $1 billion over nine months, creating a 1.4% headwind—yet management highlighted a record commercial pipeline (roughly $1.8 billion post‑quarter) and still expects mid‑single‑digit loan growth for 2026.
• NIM was 3.57% (up 22 bps YoY) with deposit costs falling, and management now models no rate cuts for 2026 and expects NIM to move into the mid‑ to high‑3.60% range; the Premier acquisition boosted noninterest income but raised expenses, while South Florida expansion and a CET1 buffer provide capital deployment flexibility.

WesBanco NASDAQ: WSBC reported stronger year-over-year results in the first quarter of 2026, helped by contributions from its Premier Financial acquisition and continued progress on expense and funding initiatives, while also contending with elevated commercial real estate (CRE) payoffs that weighed on reported loan growth.

Quarterly results and key performance metrics

President and CEO Jeff Jackson said the quarter delivered “solid year-over-year financial results,” noting three takeaways: performance improved from the prior year, WesBanco exceeded year-one targets tied to the Premier acquisition, and the company remained “disciplined” in executing its long-term strategy.

For the quarter ended March 31, WesBanco posted GAAP net income available to common shareholders of $84 million, or $0.88 per diluted share, according to CFO Dan Weiss. Excluding restructuring and merger-related expenses, net income was $87 million, or $0.91 per diluted share. Jackson said adjusted diluted EPS was up 38% from a year earlier.

On the same core basis, the company reported pre-tax, pre-provision earnings of $114 million, up 44% year-over-year. Jackson said the quarter’s returns on average assets and tangible common equity were 1.3% and 17.4%, respectively. The company ended the quarter with a common equity tier 1 (CET1) ratio of 10.7%.

Loan growth, CRE payoffs, and pipeline momentum

Management emphasized that CRE project payoffs remained a key swing factor for loan growth. Jackson said developers continued to seek permanent financing or sell properties, driving $340 million of CRE project payoffs in the quarter and creating a 1.4% headwind to year-over-year loan growth. He added that the bank has experienced $1 billion in CRE payoff headwinds over the last nine months.

Weiss said total portfolio loans were $19.1 billion and increased 2.2% year-over-year, driven by CRE and home equity lending, but declined slightly from the prior quarter due to elevated payoffs. He said management expects CRE payoffs to remain “slightly elevated” in the second quarter—though lower than the first quarter—before returning to more normal levels in the second half. Weiss projected total CRE payoffs of $700 million to $900 million for the year.

Despite the runoff, Jackson highlighted record commercial pipeline activity. The commercial pipeline rose 35% from year-end to $1.6 billion and, in the weeks after quarter-end, grew another $200 million to $1.8 billion. Jackson later added that when comparing to the prior year, the pipeline was about $1.2 billion last year versus “nearly $2.3 billion-$2.4 billion” currently.

On expectations for the rest of 2026, Jackson said the company still anticipates mid-single-digit year-over-year loan growth, citing the record pipeline and early momentum from South Florida. In response to an analyst question, Jackson estimated the pipeline mix at roughly 60% CRE and 40% C&I, with expected yields in the low- to mid-6% range.

WesBanco also exited a non-core lending channel. Weiss said the company ended its indirect auto program, which represented about half of the $325 million consumer loan portfolio at quarter-end, and expects the remaining balances to run off over three to five years.

Deposit trends, funding costs, and margin outlook

Deposits rose 2% year-over-year to $21.7 billion, which Weiss attributed to organic growth. He said the bank continued “remixing higher cost certificates of deposit into interest-bearing demand deposits.” Of the remaining $2.7 billion CD portfolio, about $1 billion matures in each of the next two quarters, with average rates of 3.48% and 3.2%, respectively. Weiss said the current seven-month CD rollover rate is 3.25%.

Weiss also noted that the company began the year with $100 million in broker deposits; $50 million paid off early in the quarter and the remaining $50 million paid off on April 1.

Net interest margin (NIM) was 3.57% in the quarter, improving 22 basis points year-over-year, but slipping 4 basis points sequentially. Weiss attributed the quarterly decline to lower net loan growth and “modestly higher seasonal deposit contraction” early in the quarter, along with some migration from non-interest-bearing balances into interest-bearing accounts. Total deposit funding costs (including non-interest-bearing deposits) fell 11 basis points year-over-year and 7 basis points linked-quarter to 177 basis points.

For the remainder of 2026, Weiss said the company removed previous rate cuts from its modeling and now assumes no cuts or increases for the rest of the year. He projected second-quarter NIM to rebound into the low 3.60% range and then improve into the mid- to high-3.60% range during the second half of the year, dependent on factors including stable loan and deposit competition, deposit-funded loan growth, and an upward-sloping yield curve.

In the Q&A, Weiss outlined several drivers of expected margin expansion, including repricing in loan and securities portfolios and the continued downward repricing of CDs. He said about $400 million of fixed-rate commercial loans with a weighted average rate of roughly 4.25% are set to mature over the next 12 months and could reprice up by nearly 200 basis points, while another $400 million of variable-rate loans with a weighted average rate around 3.75% are also coming due over the same period. He added that securities cash flows are projected at about $275 million per quarter, with reinvestment yields expected to be higher than existing levels.

Credit quality, fee income, expenses, and strategic expansion

Weiss said credit quality metrics “remain stable,” with criticized and classified loans declining $49 million sequentially to 2.9% of total portfolio loans. Non-performing loans increased $53 million from the prior quarter, which Weiss said was primarily due to three CRE loans across different markets and property types. Jackson said the loans were legacy Premier credits, adding that two were multifamily and that the bank believes it is “very well collateralized” and “well reserved” on the exposures. Weiss later said no incremental reserves were taken specifically for those loans. The allowance for credit losses ended the quarter at 1.1% of total portfolio loans, or $210 million.

Non-interest income was $41.8 million, up 21% year-over-year, driven by the Premier acquisition and organic growth. Weiss said treasury management revenue was $2.5 million, an 82% year-over-year increase. He also cited higher trust fees and securities brokerage revenue alongside record combined asset levels of $10.4 billion.

Expenses rose year-over-year, largely due to the Premier cost base and acquisition-related amortization. Excluding restructuring and merger-related costs, noninterest expense was $143 million, up 25% year-over-year. Weiss said operating expenses were slightly lower than the prior quarter, reflecting discretionary expense management and one-time credits of about $2 million.

Looking ahead, Weiss guided to a second-quarter expense run rate “approach[ing] $150 million,” rising a couple of percentage points in the third quarter due to merit increases and investments. The company expects to close 10 financial centers during May, with annual savings of about $2 million beginning to be realized around mid-second quarter. Weiss also said marketing is expected to increase to approximately $4 million per quarter to support organic growth and expansion efforts.

Jackson detailed ongoing investments in digital offerings and branch optimization, noting that WesBanco has closed 64 locations over the past four years and plans to close 10 Northern Ohio locations next month. He also highlighted the company’s loan production office (LPO) strategy, pointing to new and expanding markets and citing Chattanooga as an example that is now supporting the opening of the company’s first Tennessee financial center.

A key strategic focus for 2026 is South Florida. Jackson said the bank recently launched commercial banking in Palm Beach and Broward counties with a team of nearly 20 professionals. He cited an initial $400 million pipeline assembled within weeks. When asked about conversion, Jackson said he expected the team to close its first deal in April and estimated $100 million could close by the end of the second quarter, with $300 million to $500 million by year-end, “could be more,” depending on hiring. Weiss said the Florida expansion is expected to achieve positive operating leverage within 12 to 15 months.

On capital deployment, Weiss said management is evaluating the Basel III proposal, adding that preliminary estimates suggest a potential CET1 benefit of about 55 to 65 basis points and roughly $120 million of capital. He also noted WesBanco has 900,000 shares available for repurchase and said being above a 10.5% CET1 target provides flexibility to consider deployment options alongside organic growth.

About WesBanco NASDAQ: WSBC

WesBanco, Inc is a bank holding company headquartered in Wheeling, West Virginia, offering a full range of community banking services through its principal subsidiary, WesBanco Bank, Inc The company serves individual consumers, small‐ to mid‐sized businesses, nonprofit organizations and governmental entities with a relationship‐driven approach and an emphasis on local decision‐making. Through its diversified platform, WesBanco provides core banking functions such as deposit accounts, commercial and consumer lending, mortgage banking, treasury management and electronic banking services.

In addition to traditional banking products, WesBanco offers specialized services including trust and wealth management, investment advisory and insurance solutions.

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