WESBANCO INC Q2 FY2025 earnings call

• Integration of Premier Financial: Successful customer data systems conversion of Premier Bank and the Trust department, transitioning approximately 400,000 consumer and 50,000 business relationships. - Second quarter results: Earnings per share of $0.91 excluding merger-related charges, net interest margin of 3.59%, 40% year-over-year fee income growth. - Loan and deposit growth: Solid organic loan growth and deposit growth, with total deposits organically increasing over $800 million YOY and organic loan growth 6% YOY. - Strategic investments: Hired healthcare bankers, expanded loan production offices in Knoxville and Northern Virginia, and continued growth in existing markets.

For the quarter ending June 30, 2025, WesBanco reported net income excluding merger and restructuring expenses of $87.3 million and diluted earnings per share of $0.91, an increase of 86% year-over-year. The net interest margin improved to 3.59%. Fee income grew 40% year-over-year. Total deposits organically increased more than $800 million year-over-year (6%), fully funding organic loan growth. Second quarter organic loan growth was 6% year-over-year and 3% quarter-over-quarter annualized.

• Loan growth: Expect mid-single-digit loan growth during 2025. - Margin outlook: Anticipate a temporary 5 to 7 basis point decline in the third quarter margin with a strong bounce back in the fourth quarter. - Expense run rate: Expect the expense run rate for the third quarter to be consistent with the second quarter in the low to mid-$140 million range. - Tax rate: Anticipate full year effective tax rate between 19% and 19.5%.

• Macroeconomic factors: Provision for credit losses depends on changes to macroeconomic forecast and various credit quality metrics. - CECL rule change: Evaluation of potential benefits and risks of FASB rule change related to CECL double count, with potential impact on capital and loan marks. - Rate cuts: Relatively neutral rate-sensitive position, but need to monitor impact on net interest margin.

Q: Maybe just starting on the credit side, a little bit of an increase in the criticized. I wonder if you could give us a little color there. And then just broader thoughts on the LPOs as it relates to credit, if you can kind of give us an idea of how you are able to kind of maintain the credit culture as you do continue to build out the footprint?

A: Sure. So I'll start with the C&Cs being up slightly. A lot of that is due to some regrading of a couple of Premier clients that we acquired. Once again, we feel like we're still below our peer averages. And we look in the third quarter, we do think we'll see some upgrade to payoffs. So I do expect that percentage to get better as we enter the back half of the year. As it relates to the LPOs, we still do all the same underwriting, the same credit policies. We have credit officers that have been long tenured with our company that approve the credits. So there's no differential in how we look at any credit in any market. And once again, we really use legacy WesBanco people to take a look at those credits. We also have the market leaders talk about the types of deals we like, the types of deals we don't. And so we take that very seriously. And I can tell you that our credit has been really good in our LPO markets. And with this expansion, I only expect that to continue.

Q: Jeff, first question on the loan growth front. I appreciate the puts and takes for the back half of the year. Maybe just bigger picture, is a mid-single-digit type of growth rate, how we should think about WesBanco going forward kind of on the pro forma balance sheet for Premier? Or as some of the newer LPOs kick in, perhaps CRE headwinds ease, is that high single digit you guys have talked to prior still ultimately achievable?

A: Yes. We're targeting -- we're still targeting mid- to upper single digits. As mentioned before, a lot of CRE payoffs have increased. But the nice thing about our balance sheet is when we run kind of the forecast, our capital builds back very quickly. So that does give us continued expansion potentials for CRE growth, which is a very nice thing. But I would definitely say we're still looking at that mid- to upper single digits. Once again, it depends on CRE payoffs. But as I said previously, we have a lot of great things to organically grow this company, especially in the second half of the year. So feeling very good about a lot of those items. So once again, feeling good about the growth. I think it's going to be mid to upper, maybe somewhere in the middle there. But the back half of the year, our pipelines are looking really strong, around $1.4 billion. Those are all-time highs, of course. And once again, Premier is just getting used to our systems, the way we do things, building those pipelines. And I feel very good about the second half of the year.