WI
WESBANCO INC (WSBC)·Q3 2024 Earnings Summary
Executive Summary
- Q3 2024 diluted EPS was $0.54 and non-GAAP diluted EPS was $0.56; net interest margin held flat at 2.95% QoQ while net interest income rose 2.9% YoY to $121.1M .
- Deposits grew to $13.8B (+5.7% YoY; +12.1% annualized QoQ), outpacing loan growth (+10.0% YoY; +6.3% annualized QoQ), helping reduce FHLB borrowings by $300M .
- Credit quality remained favorable: NPAs/Assets at 0.17%, NPLs/Total Loans at 0.24%, provision for credit losses fell to $4.8M, and ACL/Loans increased to 1.13% .
- Q4 outlook: management models NIM “upper 2.90s,” noninterest income and expense consistent with Q3, annual branch consolidation savings of ~$4M largely realized in 2025, and an FY effective tax rate ~17.5% .
- Catalyst: Premier acquisition remains on track; ~75% of $1.2B FHLB advances reprice in Q4 (avg 5.2%), positioning NIM tailwinds into 2025; equity raised ($200M) lifted TCE/TA to 8.84% .
What Went Well and What Went Wrong
What Went Well
- Robust deposit and loan growth: “sequential quarter deposit growth of 12% annualized was double annualized loan growth of 6%,” supported by the Summer of One campaign with >6,000 new consumer accounts opened .
- Capital strength improved: “raised $200 million of common equity… tangible common equity ratio increased… to 8.84%,” and Tier 1 leverage rose to 10.69% .
- Fee momentum in wealth and brokerage: WTIS AUM hit a record $6.1B (+21.7% YoY) and brokerage account values reached $1.9B (+15.8% YoY), driving combined trust and brokerage fee increases .
What Went Wrong
- Noninterest income softness: -4.1% YoY to $29.6M, primarily due to a $1.7M negative swap valuation swing versus a $1.4M gain in Q3’23; gross swap fees fell to $1.1M from $2.5M YoY .
- Funding costs remained elevated: deposit funding costs were 205 bps including noninterest-bearing deposits; higher interest-bearing liability costs (3.21%) pressured net interest spread (1.98%) YoY .
- Early-stage delinquencies ticked up: total past due loans rose to $54.2M (0.44% of loans), though management expects resolution in Q4 .
Financial Results
Segment and balance mix
Key performance indicators
Guidance Changes
Earnings Call Themes & Trends
Management Commentary
- CEO on momentum and balance sheet: “Sequential quarter deposit growth of 12% annualized was double annualized loan growth of 6%… we successfully raised $200 million of common equity during the quarter to position WesBanco for future growth” .
- CFO on NIM outlook: “We continue to model the fourth quarter’s net interest margin to improve modestly in the upper 2.90s as our funding costs repriced down at a faster pace than our assets” .
- CEO on deposit campaign: “Our… Summer of One campaign… was a great success… We opened more than 6,000 new consumer accounts” .
- CFO on 2025 tailwinds: “About 75% [of] $1.2 billion… FHLB borrowings… mature during the fourth quarter and that should benefit our 2025 net interest margin” .
Q&A Highlights
- Margin drivers: Detailed walk-through of funding repricing (FHLB advances, indexed ICS, private client MM, broker deposits) and asset-side variable loan repricing; pro forma margin for Premier still ~3.45–3.50% based on modeled accretion .
- Credit visibility: Management expects credit metrics to remain similar to recent quarters; one-offs being resolved, no broad issues observed .
- Expense trajectory: ~$4M annual branch consolidation savings should largely drop to bottom line; typical seasonal merit/healthcare puts and takes in Q4 .
- Swap valuation: Q3 negative $1.7M fair value swing drove fee softness; not expected to recur, rate-dependent .
- Balance sheet actions pre-close: Potential restructuring at legal merge (securities, CRE loan sales) to maximize LT shareholder value; specifics depend on rate environment .
Estimates Context
- S&P Global consensus estimates for Q3 2024 EPS and revenue were unavailable due to request limit constraints; as a result, we cannot formally assess beat/miss versus Street for this quarter [SPGI daily limit exceeded].
- Given management’s Q4 NIM guidance (“upper 2.90s”) and funding repricing cadence, near-term estimate revisions may skew modestly upward on NIM/net interest income, while fee lines remain subject to swap valuation volatility and branch savings largely impact 2025 .
Key Takeaways for Investors
- Deposit growth outpacing loans (3% QoQ; +12.1% annualized) reduced wholesale funding and supports NIM resilience heading into Q4/Q1’25 .
- Credit quality remains a differentiator (NPAs/Assets 0.17%; ACL/Loans 1.13%), limiting earnings volatility from provisions .
- 2025 NIM tailwinds:
75% of $1.2B FHLB advances reprice in Q4; CDs ($1.3B) largely mature/reprice by Q2’25; indexed deposits reprice promptly with cuts . - Premier deal is a structural catalyst with modeled NIM uplift (~3.46% pro forma), EPS accretion, and scale efficiencies; closing targeted Q1’25 .
- Wealth and brokerage growth provides diversified fee support (AUM $6.1B; brokerage $1.9B), offsetting swap valuation noise over time .
- Branch consolidation savings (~$4M annual) enhance operating leverage, mostly realized in 2025 .
- Near-term trading: stock likely sensitive to macro rate path (cut cadence) and deal milestones; medium-term thesis hinges on NIM normalization plus integration synergies .
Notes:
- “Revenue proxy” = net interest income on a fully tax-equivalent basis + total noninterest income, as presented in company efficiency ratio tables **[203596_20241023NE38207:15]**.
- S&P Global consensus data: unavailable this period due to request limit; therefore, estimate comparisons are not provided.