WESBANCO INC Q3 FY2024 earnings call

• Strong deposit and loan growth: Sequential quarter deposit growth of 12% annualized was double annualized loan growth of 6%.
• Summer of One campaign success: Opened over 6,000 new consumer accounts, driving 12% annualized deposit growth.
• Transformative acquisition of Premier Financial Corp. on track: Pending regulatory and shareholder approvals.
• Tangible common equity ratio increased 132 basis points quarter-over-quarter to 8.84% due to capital raise and strong earnings.
• Commercial loan growth: Total commercial loans increased 12% year-over-year and 8% sequentially annualized, led by commercial real estate; four newest loan production offices accounted for nearly 20% of commercial loan growth YTD.
• Credit quality stability: Key metrics remained low and within consistent range, non-performing assets at 0.17% of total assets.

For the quarter ending September 30, 2024, WesBanco reported net income excluding restructuring expenses available to common shareholders of $36.3 million and earnings per share of $0.56. Total assets were $18.5 billion, with total portfolio loans of $12.5 billion and total securities of $3.4 billion. Deposits were $13.8 billion, up 5.7% vs prior year and 12.1% annualized linked quarter. Loan growth was 10% year-over-year and 6% quarter-over-quarter annualized, driven by commercial and residential lending teams. Deposit growth was 12% annualized sequential quarter, outperforming H.8 data for domestically chartered commercial banks.

• Modeling two additional Fed rate cuts in November and December, with 2025 outlook to be provided in January.
• Anticipating net interest margin to improve modestly in the upper 290s in fourth quarter as funding costs reprice down faster than assets.
• Anticipated annual savings of approximately $4 million from branch consolidation, mostly realized in 2025.
• Provision for credit losses dependent on loan growth, economic factors, and charge-offs; effective tax rate expected in 17.5% range for the year.

• Impact of interest rate changes on net interest margin and funding costs.
• Regulatory approvals required for the acquisition of Premier Financial Corp. could delay or affect the transaction.
• Credit quality risks if economic conditions deteriorate, leading to increased loan losses.

Q: What's the impact of Fed rate cuts on margin?

A: Danny, at a high level, deposit growth, pay down of Federal Home Loan Bank borrowings, and $200 million capital raise provide margin improvement above the 2.95% reported in third quarter.

Q: Color on criticized classified loans?

A: Jeffrey Jackson said it's a broad swath of different industries and C&I, CRE; not one specific area driving it, and they feel confident it'll move in the right direction.

Q: Branch consolidation savings and expense growth?

A: Daniel Weiss said $4 million savings should drop into bottom line; expense run rate close to third quarter with factors like merit increases, healthcare, and marketing expense offsetting.