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WI

WESBANCO INC (WSBC)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 delivered stronger profitability and operating leverage: GAAP diluted EPS rose to $0.70 (+27% QoQ, +27% YoY), and non-GAAP diluted EPS was $0.71; revenue (FTE NII + non-interest income) increased to $164.1M, +8.1% QoQ and +10.1% YoY .
  • Net interest margin expanded to 3.03% (+8 bps QoQ), aided by lower funding costs and paydown of FHLB borrowings; deposit funding costs (interest-bearing) fell to 2.71% from 2.85% in Q3 .
  • Balance sheet growth remained healthy: loans reached $12.66B (+8.7% YoY), deposits climbed to $14.13B (+7.3% YoY), with average loans/deposits at 89.24% (capacity intact) .
  • 2025 outlook calls for mid-single-digit loan growth, NIM improvement (4–6 bps in Q1, more in Q2 as ~$1.2B CDs reprice 75–100 bps lower), cost saves of ~$4M annually, and a 17.5–18.5% effective tax rate; Premier merger remains on track for Q1 close with pro forma NIM ~3.50% (updated mark) .
  • S&P Global consensus estimates were unavailable at time of analysis due to a data access limit; estimate comparisons will be updated when accessible.

What Went Well and What Went Wrong

  • What Went Well

    • “We delivered strong loan growth of $1 billion, which was fully funded by deposit growth…raised $200 million of common equity and paid down higher-cost borrowings,” positioning for NIM improvement (CEO) .
    • NIM expansion to 3.03% (+8 bps QoQ) with deposit funding costs down and $175M FHLB paydown in Q4; spot NIM in December 3.08% (CFO) .
    • Fee income strength: non-interest income +21% YoY driven by swap valuation gains (+$1.9M vs -$2.5M last year), deposit service charges (+$1.1M YoY), trust fees (+$0.8M YoY) .

  • What Went Wrong

    • Slight uptick in NPAs/total assets to 0.22% and NPLs/loans to 0.31%; management described this as normal quarterly ebb and flow with a specific credit expected to resolve near term .
    • Year-over-year NII for FY declined modestly (-0.7%) as higher funding costs offset loan growth and yields; interest expense on deposits +74.5% YoY in 2024 .
    • Efficiency ratio still elevated on a YoY basis (FY 64.73% vs 63.64%); equipment/software expense increases tied to ATM upgrades and tech investments .

Financial Results

MetricQ4 2023Q3 2024Q4 2024
Diluted EPS (GAAP) ($)0.55 0.54 0.70
Diluted EPS (Non-GAAP, ex. restructuring) ($)0.55 0.56 0.71
Net Interest Income (FTE) ($MM)118.991 122.338 127.689
Non-Interest Income ($MM)30.074 29.612 36.388
Total Revenue (FTE NII + NII) ($MM)149.065 151.950 164.077
Net Interest Margin (%)3.02 2.95 3.03
Efficiency Ratio (%)66.75 65.29 61.23
Deposit Funding Costs (Interest-Bearing, %)2.34 2.85 2.71

Segment/Portfolio Breakdown (Loans)

Portfolio Loans ($MM)Dec 31, 2023Sep 30, 2024Dec 31, 2024
Commercial Real Estate6,565.448 7,206.271 7,326.681
Commercial & Industrial1,670.659 1,717.369 1,787.277
Residential Real Estate2,438.574 2,519.089 2,520.086
Home Equity734.219 796.594 821.110
Consumer229.561 212.107 201.275
Total Portfolio Loans11,638.461 12,451.430 12,656.429

Key Performance Indicators

KPIQ4 2023Q3 2024Q4 2024
Total Deposits ($MM)13,168.704 13,837.343 14,133.717
Average Loans / Average Deposits (%)87.07 90.58 89.24
NPLs / Total Loans (%)0.23 0.24 0.31
NPAs / Total Assets (%)0.16 0.17 0.22
ACL – Loans / Total Loans (%)1.12 1.13 1.10
Tier 1 Leverage (%)9.87 10.69 10.68
CET1 (%)10.99 11.89 12.07
Tangible Common Equity / Tangible Assets (%)7.62 8.84 8.70
Return on Average Assets (%)0.74 0.76 1.01
ROTCE (%)11.32 9.97 12.56

Guidance Changes

MetricPeriodPrevious Guidance (Q3 2024)Current Guidance (Q4 2024)Change
Net Interest MarginQ4’24 → Q1’25“Upper 2.90s” in Q4’24 on lower funding costs; asset-sensitive tailwinds expected into 2025 +4–6 bps vs Q4 in Q1’25; “more meaningful” improvement in Q2 as CDs reprice lower Raised/More specific
Loan GrowthFY 2025Solid growth expected; pipeline ~$830M at Q3 end Mid-single-digit loan growth for 2025; pipeline strengthening early Jan (+$80M) Clarified quantified 2025
Deposit Growth Funding LoansFY 2025Deposits outpacing loans in Q3; “Summer of One” success Deposits expected to fully fund loans for FY 2025; mix stabilizing Maintained/affirmed
CDs RepricingQ2 2025~$1.3B CDs maturing by Q2’25 at ~4.2% ~$1.2B CDs in Q2’25 repricing down 75–100 bps; 7‑month specials Detailed repricing delta
FHLB BorrowingsQ4’24 → Q1’2575% of $1.2B matured in Q4’24, aiding margin ~80% to mature in Q1’25, repricing lower with Fed cuts Continued tailwind
Fee Income – Swap FeesFY 2025Not quantifiedGross commercial swap fee income $5–$7M New quantified range
Cost SavesFY 2025~$4M annual savings from 11-branch consolidations, majority realized in 2025 ~$4M annual beginning Q1’25; expense run-rate ~Q4’24 in H1’25 Timing affirmed
Effective Tax RateFY 2024 vs FY 2025~17.5% for 2024 17.5%–18.5% for 2025 Updated range
Dividend (Common)Q1 2025$0.36 priorIncreased to $0.37 payable Jan 2, 2025 Raised

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 & Q3)Current Period (Q4)Trend
Net Interest MarginQ2 NIM 2.95% (+3 bps QoQ); Q3 guided to “upper 2.90s” in Q4 on funding repricing and FHLB paydowns NIM 3.03%; Q1’25 +4–6 bps; Q2’25 more improvement with CDs repricing; deposit beta 19% on recent cuts Improving
Deposits & MixQ2/Q3 strong deposit growth (12.1% annualized in Q3), consumer “Summer of One” campaign; mix stabilizing Deposits $14.13B (+7.3% YoY); funding costs down; deposits expected to fully fund 2025 loan growth Strong/Stable
Loan GrowthQ2/Q3 CRE/C&I led growth; pipeline ~$830M at Q3; LPOs contributing 20%+ Loans $12.66B (+8.7% YoY); LPOs contributed ~30% of 2024 commercial growth; 2025 mid-single-digit guidance Healthy/Disciplined
Credit QualityQ2 NPAs 0.20%; Q3 0.17% (peer leadership); charge-offs low NPAs 0.22%; NPLs 0.31%—management views uptick as normal and resolvable Stable (slight uptick)
Capital & TCEQ3 TCE/TA 8.84% post equity raise; ratios above well-capitalized TCE/TA 8.70%; Tier 1 leverage 10.68%; CET1 12.07% Solid
Premier MergerQ3 on track pending approvals; pro forma NIM 3.45%–3.50% On track for Q1 close; updated loan mark reduces TBV dilution; pro forma NIM ~3.50% Progressing
Treasury Mgmt & FeesQ3 treasury repositioning; trust AUM $6.1B; brokerage $1.9B Deposit fees +$1.1M YoY; trust fees +$0.8M YoY; swap valuation +$1.9M Growing

Management Commentary

  • CEO Jeff Jackson: “We delivered strong loan growth of $1 billion, which was fully funded by deposit growth…raised $200 million of common equity and paid down higher-cost borrowings…we are well positioned to build on our momentum and continue delivering value” .
  • CFO Dan Weiss: “Deposit growth exceeded loan growth, allowing a $175 million pay down of FHLB borrowings…we anticipate approximately 4 to 6 basis points of continued improvement in the first quarter’s NIM…more meaningful improvement during the second quarter as more than $1 billion in CDs mature and reprice lower” .
  • Merger update: “Pro forma margin…3.46% at announcement…today we could be 10 to 15 basis points better…3.55% range,” with improved capital ratios (~+50 bps) on updated loan mark .

Q&A Highlights

  • NIM path and CD repricing: ~$1.2B CDs in Q2’25 at ~4.25% expected to reprice 75–100 bps lower; 7‑month CD specials; supports Q2 margin lift (Stephens) .
  • Pro forma NIM with Premier: updated outlook ~3.50–3.55% at close, based on stronger legacy NIM and updated marks (Stephens) .
  • Deposits outlook: deposits expected to fully fund targeted ~$800–850M 2025 loan growth; mix likely less CD-concentrated vs 2024 (RBC) .
  • Credit uptick: increased criticized/NPLs seen as normal quarterly fluctuations; one credit expected to resolve near term (Raymond James) .
  • Cost saves timing: ~$4M annualized savings begin Q1’25 post core conversion (target mid‑May) (KBW) .

Estimates Context

S&P Global consensus EPS and revenue estimates for Q4 2024 were unavailable due to an SPGI daily request limit at the time of retrieval; therefore, estimate comparisons (beats/misses) cannot be determined now and will be updated when access is restored.

Key Takeaways for Investors

  • Margin inflection underway: NIM at 3.03% with visible tailwinds from CD and FHLB repricing; December spot NIM at 3.08% sets up Q1/Q2 improvement .
  • Positive operating leverage: revenue growth (+10% YoY) plus tighter efficiency (61.23%) underpin EPS acceleration; fee engines (treasury, trust, swaps) diversifying income .
  • Balance sheet capacity: average loans/deposits 89.24% and deposit momentum support mid-single-digit loan growth without reliance on wholesale funding .
  • Credit steady within ranges: slight NPA uptick remains low vs peers; ACL coverage at 1.10% with stable charge-offs .
  • Capital sufficient and improving pro forma: CET1 12.07% and TCE/TA 8.70%; updated merger marks modestly reduce TBV dilution and enhance ratios .
  • Catalysts: Q1/Q2 NIM expansion, Premier close (Q1), core conversion (mid‑May) enabling cost saves, and dividend increase to $0.37 support total return .
  • Near-term trading lens: watch NIM trajectory vs guidance, deposit beta behavior on further cuts, and any incremental disclosures on securities/loan restructuring at close .