WESBANCO INC Q4 FY2024 earnings call

• WesBanco delivered strong fourth quarter and full year 2024 results, with net income excluding merger and restructuring expenses of $47.6 million for Q4 and $146.4 million for the full year.
• The transformative acquisition of Premier Financial Corp. is on track, pending Fed and FDIC regulatory approvals.
• There was strong loan growth of $1 billion, fully funded by deposit growth. Net interest margin is expected to meaningfully improve through 2025.
• The company remains focused on organic growth, efficiency gains, and enhancing wealth and treasury management businesses.
• WesBanco received national recognitions for stability, trustworthiness, and workplace excellence. Total deposits increased $1 billion year-over-year, with demand deposits making up a significant portion.
• Credit quality remained stable with nonperforming assets to total assets at 0.22%. The allowance for credit losses to total portfolio loans decreased slightly.
• The treasury management function was retooled with new products and services driving fee income. Wealth management had record levels of trust and investment services assets under management at $6 billion.

For the quarter ending December 31, 2024, total deposits were $14.1 billion, up 7.3% year-over-year and 8.6% annualized linked-quarter. Total portfolio loans stood at $12.7 billion. Loan growth was $1 billion, fully funded by deposit growth. Total demand deposits represented 54% of total deposits, with non-interest bearing deposits accounting for 27%. Commercial loans increased 11% year-over-year and nearly 9% sequentially on an annualized basis, driven by commercial real estate. The compound annual loan growth rate over the past 3 years was 9%.

• Anticipate approximately 4 to 6 basis points of continued improvement in the first quarter's net interest margin from the fourth quarter, with the spot margin for December at 3.08%.
• Expect more meaningful improvement in the second quarter as over $1 billion in CDs mature and reprice lower from March to May.
• Model two additional Fed Fund rate cuts in March and September 2025. Expect mid-single-digit loan growth during 2025.
• Full year effective tax rate is expected to be between 17.5% and 18.5% subject to changes in tax regulations and taxable income levels.

• Potential credit quality fluctuations could impact the financials.
• Uncertainty regarding regulatory approvals for the Premier Financial merger.
• Interest rate changes may affect net interest margin and deposit composition.
• Increase in commercial real estate payoffs could impact loan growth.

Q: Russell Gunther from Stephens asked about margin and CD repricing, and pro forma margin with Premier.

A: Dan Weiss responded that about $1.2 billion in CDs with an average rate of ~4.75% are expected to reprice downward by 75 to 100 basis points in the second quarter, and on pro forma margin modeling, it's in the 350 to 355 range considering updated marks but not fully accounting for securities restructuring.

Q: Karl Shepard from RBC Capital Markets asked about deposit growth and mix.

A: Jeffrey Jackson discussed that deposit growth would fully fund loan growth, with a expectation of a more evenly mixed deposit composition in 2025 compared to 2024.

Q: David Bishop from Hovde Group asked about treasury management growth and Premier acquisition regulatory approval.

A: Jeffrey Jackson talked about treasury management fees growing nicely, with 40 new multi-cards implemented in late 2023, and confidence in closing the Premier acquisition in the first quarter as it's in the Fed and FDIC's review with no major issues seen.

Q: Daniel Tamayo from Raymond James asked about loan growth guidance and credit metrics.

A: Daniel Weiss and Jeffrey Jackson explained that loan growth guidance includes payoffs and is in the mid to upper single-digit range, and credit quality metrics remain stable within historical trends with no concerning trends.

Q: Catherine Mealor from KBW asked about margin, capital ratios, and cost savings.

A: Daniel Weiss and Jeffrey Jackson provided insights that pro forma capital ratios improved across the board by about 50 basis points, and cost savings from the Premier deal are expected to begin after core conversion around mid-May with full realization after cleanup periods.

Q: Manuel Navas from D.A. Davidson asked about capital impact of rate moves and Premier transaction updates.

A: Jeffrey Jackson and Daniel Weiss discussed that rate moves improved CRE concentration at close and provided details on securities portfolio restructuring and Premier transaction targets.

Q: Russell Gunther from Stephens followed up on pro forma NIM with Premier.

A: Daniel Weiss responded that the pro forma NIM is based on the updated mark but does not fully contemplate securities restructuring.