WESBANCO INC Q1 FY2025 earnings call

Key points include the successful acquisition of Premier Financial, elevating WesBanco to the top 100 largest U.S. banks by asset size. Strong organic loan and deposit growth was observed, with net interest margin increasing and efficiency ratio improving. The company retained nearly 90% of Premier employees and is focused on seamless integration of the combined organization. Organic deposit growth fully funded loan growth, and commercial loan pipeline as of March 31st was approximately $1.3 billion with over 25% from Premier.

For the quarter ending March 31st, 2025, total assets increased 54% year-over-year to $27.4 billion. Total portfolio loans saw a 57.3% increase, with $5.9 billion from the Premier acquisition and $921 million from organic growth. Deposits reached $21.3 billion, up 58% year-over-year due to Premier deposits of $6.9 billion and organic growth of $922 million. Net interest margin stood at 3.35% and the efficiency ratio improved to 58.62%. Organic total deposits increased $922 million year-over-year and $285 million quarter-over-quarter to over $14.4 billion, with organic loan growth at 8% year-over-year and 4% quarter-over-quarter annualized.

Expect net interest margin to continue improving through 2025. Plan to fund full-year loan growth with deposits. Anticipate two 25 basis point rate cuts in June and September with minimal impact on net interest margin. Anticipate approximately two-thirds of the $3 billion CD book to mature or reprice lower. Expense management to drive positive operating leverage, with expense run rate expected to be in the low $140 million range for the remaining quarters of 2025. Anticipated full-year effective tax rate between 19% and 19.5% due to non-deductible costs from the Premier acquisition.

Volatility in equity markets due to trade wars, the outcome of which is unclear, poses a risk to the business. The significant increase in balance sheet size from the acquisition may present management challenges. Uncertainty regarding the impact of trade negotiations on the loan portfolio and overall business operations remains.

Q: On the margin looking forward, how does organic margin perform absent rate cuts?

A: Daniel Weiss mentioned roughly 3 basis points to 5 basis points of margin improvement per quarter from Premier's impact and 3 basis points to 5 basis points from legacy improvement, with factors like CD repricing and floating rate security adjustments contributing.

Q: About the $140 million expense number, is it for third and fourth quarter?

A: Daniel Weiss said modeling in low $140 million range for next three quarters, with second quarter impacted by core system conversion, and cost saves mostly baked in by fourth quarter.

Q: On bond book yield and deposit costs, etc.

A: Daniel Weiss provided details on bond book yields at quarter end and expectations for deposit cost reduction, discussing FHLB balance sheet management.

Q: On credit, criticized loans increase and charge off expectations.

A: Jeffrey Jackson stated most criticized loans are normal course of business, expressing confidence in strong credit metrics with a diverse portfolio.

Q: On capital management and M&A appetite.

A: Daniel Weiss said the company is in capital build mode, and Jeff Jackson mentioned focus on Premier integration before considering another deal.

Q: On loan growth pipeline and balance sheet items.

A: Jeffrey Jackson and Daniel Weiss discussed loan growth pipeline strength, pull through expectations, and remaining balance sheet actions like loan sales and MSR business closure.

Q: On capital and EPS projection.

A: Daniel Weiss indicated the $3.59 pro forma EPS is within range given provided guidance.

Q: On tariff impact and fee income.

A: Jeffrey Jackson discussed uncertainty around tariff impact, and Daniel Weiss provided insights on fee income trends and expectations