WESBANCO INC Q3 FY2025 earnings call

• Loan growth was funded by deposit growth, with net interest margin at 3.53% and fee income up 52%.
• Customer satisfaction in newest markets rebounded to pre-conversion levels, with overall satisfaction in the upper 80th percentile.
• Annual deposit campaign delivered strong results, with total deposits up over $570 million year-over-year.
• Commercial loan pipeline stood at ~$1.5 billion, with new markets contributing 40% of the pipeline.
• Financial center optimization: 27 centers closed with ~$6 million annual pretax savings, and new centers to open in Q1 2026 in Tennessee and Ohio.
• Health care team closed ~$250 million in loans, $80 million in deposits, and ~$2 million in fees in 6 months, with potential to grow to $300-$500 million in loans annually.

For the quarter ending September 30, 2025, WesBanco reported net income excluding merger and restructuring expenses of $90 million and diluting earnings per share of $0.94, an increase of 68% year-over-year. The net interest margin was 3.53%, and fee income grew 52% year-over-year. Total assets were $27.5 billion, with total portfolio loans at $18.9 billion and total deposits at $21.3 billion. The efficiency ratio improved to 55% due to expense synergies from the Premier acquisition and expense management efforts. Loan growth was 4.8% year-over-year, fully funded by deposit growth, despite a headwind from commercial real estate payoffs totaling $235 million in the third quarter.

• Anticipate a 25 basis point Fed rate cut in October, with net interest margin expected to rebound to mid- to high 3.50s in Q4.
• Noninterest income and expense to remain consistent with Q3 trends.
• Planned closure of 27 financial centers to occur late January 2026, with ~$6 million annual pretax savings.
• Provision for credit losses dependent on loan growth, economic factors, and charge-offs.
• Effective tax rate expected to be in the 19.5% range for the year.

• Elevated commercial real estate payoffs posing a headwind to loan growth.
• Interest rate changes could impact net interest margin.
• Equity and fixed income market valuations could affect noninterest income from trust fees and securities brokerage revenue.

Q: Karl Sheppard with RBC Capital Markets asked about loan growth production, pipeline, and CRE paydowns.

A: Jeffrey Jackson responded that loan production was strong with $2.3 billion in Q3 vs $1.7 billion in Q3 last year, pipeline at $1.5 billion, and expected mid-single-digit loan growth for 2025 and mid- to upper single-digit for 2026, with CRE paydowns expected to be $400-$700 million annualized.

Q: Catherine Mealor with KBW asked about branch closures and expense trajectory.

A: Jeffrey Jackson mentioned confidence in mid- to upper single-digit loan growth driven by premier markets, LPOs, and health care team. Daniel Weiss noted branch closures would provide an expense tailwind for 2026, potentially allowing reinvestment in technology and process.

Q: David Bishop with Homsey asked about the health care team opportunity and deposit cost.

A: Jeffrey Jackson said the health care team closed $250 million in loans, $80 million in deposits, and $2 million in fees in 6 months, with potential to grow to $300-$500 million annually. Daniel Weiss stated the increase in average deposit cost was due to temporary CD roll-offs from purchase accounting.

Q: Russell Elliott Gunther with Stephens asked about capital levels and CECL.

A: Daniel Weiss said internal CET1 targets were between 10.5%-11%, growing 15-20 basis points per quarter, and they were evaluating CECL but unlikely to act soon.

Q: Russell Elliott Gunther also asked about excess capital use and buyback.

A: Daniel Weiss said they were in a capital build mode, with buyback not a near-term priority.

Q: Daniel Tamayo with Raymond James asked about deposit competition and LPO strategy.

A: Daniel Weiss said deposit competition was similar to prior quarters, and Jeffrey Jackson stated focus was on LPOs and organic growth, with no immediate plans for M&A.