WESBANCO INC (WSBC)·Q1 2025 Earnings Summary

Executive Summary

• Q1 2025 reported a GAAP net loss of $11.5M (−$0.15 EPS) due to a $59.4M day‑one CECL provision on acquired Premier Financial loans and merger expenses; on an adjusted basis, net income was $51.2M and diluted EPS was $0.66, up 18% YoY .
• Net interest margin expanded to 3.35% (+32 bps QoQ), aided ~25 bps by Premier accretion and securities restructuring; management guided to “break through” 3.50% NIM in Q2 with 15–20 bps incremental PAA tailwind .
• Organic growth remained strong: loans +7.8% YoY and +4.4% QoQ annualized; deposits +6.8% YoY and +8.1% QoQ annualized, fully funding loan growth; total loans reached $18.7B and deposits $21.3B post‑Premier .
• Efficiency ratio improved to 58.6% (−803 bps YoY, −261 bps QoQ) despite dual core systems pre‑conversion; expense run‑rate expected at ~$140M per quarter from Q3 as cost saves phase in .
• Catalysts: Q2 margin inflection >3.50%, full‑quarter Premier fee income, ~$45M of remaining merger costs concentrated in Q2, and cost synergies nearing full run‑rate by Q3 .

What Went Well and What Went Wrong

What Went Well

• Margin and spread expansion: NIM rose to 3.35% (+43 bps YoY; +32 bps QoQ) as higher asset yields, lower funding costs, and purchase accounting accretion kicked in; deposit funding costs fell to 2.55% (1.88% including non‑interest bearing) .
• Strong revenue drivers: Net interest income grew 39.1% YoY to $158.5M, with $9.1M of purchase accounting accretion; non‑interest income increased 13.2% YoY to $34.7M on higher service charges, BOLI and trust fees .
• Operating leverage: Efficiency ratio improved to 58.6% from 66.6% YoY on Premier scale and disciplined expense management; management expects to hit ~$140M quarterly expense run‑rate for the rest of 2025 .

Quotes:

• “We successfully completed our acquisition of Premier… expanding and strengthening our market position and accelerating our long‑term growth strategy.” — CEO Jeff Jackson .
• “We anticipate Premier‑related accretion during the second quarter to add approximately 15 to 20 basis points to the first quarter margin… expect to break through a 3.50% margin.” — CFO Dan Weiss .
• “Organic deposit growth fully funded loan growth.” — CFO Dan Weiss .

What Went Wrong

• GAAP loss driven by non‑recurring items: Provision for credit losses of $68.9M (including $59.4M day‑one on acquired loans) produced a GAAP net loss; ACL rose to $233.6M (coverage 1.25% vs. 1.10% at 12/31/24) .
• Credit classifications stepped up post‑deal: criticized and classified loans increased to $620.1M (3.32% of loans), and NPLs/loans ticked up to 0.44% with non‑performing assets at 0.30% of assets .
• Near‑term expense friction: dual core systems and integration costs lifted equipment/software to $13.1M and restructuring/merger expense to $20.0M in Q1; intangible amortization will step up to ~$9M per quarter post‑conversion .

Financial Results

Segment/Balance Sheet

KPIs

Estimates vs Actual (S&P Global consensus)

Values marked with * retrieved from S&P Global.

Guidance Changes

Earnings Call Themes & Trends

Management Commentary

• Strategic message: “This quarter marked a significant milestone… successful completion of Premier… expands and strengthens our market position and accelerates our long‑term growth strategy.” — CEO Jeff Jackson .
• Margin outlook: “Premier‑related accretion… add approximately 15 to 20 bps to the first quarter margin… expect to break through a 3.50% margin during the second quarter.” — CFO Dan Weiss .
• Cost discipline: “We expect the expense run rate will be in the $140 million range for the remaining quarters of 2025… and most of the 26% cost savings should be reflected in the third quarter.” — CFO Dan Weiss .
• Growth narrative: “Deposit growth… fully funded our total organic loan growth.” — CFO Dan Weiss .

Q&A Highlights

• NIM trajectory: Legacy organic NIM improvement of ~3–5 bps per quarter plus Premier accretion pushes Q2 NIM >3.50%; additional organic tailwinds from securities repositioning .
• Expense path: Low‑$140M quarterly non‑interest expense modeled for Q2–Q4; most cost saves baked in by Q3; full in Q4 .
• Capital priorities: CET1 ~10%; focus on capital build; any new M&A likely not before late 2025; buybacks on hold .
• Loan & deposit outlook: Pipeline ~$1.4B with healthy pull‑through; deposit pipelines strong with TM products; aim to fund loan growth with deposits .
• Securities & funding: Post‑restructure spot securities yield ~3.07%; patient on Premier deposit pricing; expect ~10 bps funding cost improvement .

Estimates Context

• EPS beat: Adjusted Q1 2025 EPS of $0.66 exceeded S&P Global consensus of $0.569 by ~$0.09; GAAP EPS was −$0.15 due to non‑recurring acquisition‑related items . Consensus values retrieved from S&P Global.*
• Revenue: Total operating revenue of ~$193.2M was modestly below S&P Global consensus of ~$197.5M, reflecting timing of PAA and securities restructuring impacts.*

*Values retrieved from S&P Global.

Key Takeaways for Investors

• Near‑term NIM inflection: Expect Q2 NIM >3.50% on PAA and lower funding costs; positive for spread‑driven earnings momentum .
• Cost synergy ramp: Dual core conversion completed mid‑May; majority of 26% cost saves reflected by Q3, full by Q4; watch Q2 one‑time merger costs (~$45M) .
• Strong organic engine: Loans and deposits growing in tandem; average loans/deposits ~89% supports disciplined funding without reliance on wholesale .
• Credit normalizing but contained: ACL/loans up to 1.25% post‑deal; criticized/classified levels increased with acquired book; overall metrics remain favorable vs peers .
• Capital build mode: CET1 ~10%; leverage ratio to normalize to high‑8%; dividends maintained ($0.37 common in Q1); share repurchases on hold near‑term .
• Revenue mix tailwinds: Premier expands fee base (trust, brokerage, swap) and markets; full‑quarter fee impact from Q2 onward .
• Trading setup: Q2 print should show margin expansion and early cost saves; stock likely sensitive to NIM trajectory, integration updates, and credit trends (NPLs/criticized) .