WesBanco(WSBC) - 2024 Q3 - Quarterly Results

Executive Summary WesBanco's Q3 2024 performance saw a slight net income increase year-over-year, with strong sequential loan and deposit growth and favorable credit quality Third Quarter 2024 Financial Overview WesBanco reported Q3 2024 net income of $34.7 million ($0.54 EPS), a slight increase from Q3 2023, while year-to-date figures decreased Net Income Available to Common Shareholders (GAAP & Non-GAAP) | Metric | Q3 2024 (GAAP) | Q3 2023 (GAAP) | 9M 2024 (GAAP) | 9M 2023 (GAAP) | Q3 2024 (Non-GAAP) | Q3 2023 (Non-GAAP) | 9M 2024 (Non-GAAP) | 9M 2023 (Non-GAAP) | | :------------------------------------------ | :------------- | :------------- | :------------- | :------------- | :----------------- | :----------------- | :----------------- | :----------------- | | Net Income (thousands USD) | $34,741 | $34,311 | $94,287 | $116,470 | $36,303 | $34,817 | $98,833 | $119,496 | | Diluted EPS (USD) | $0.54 | $0.58 | $1.54 | $1.96 | $0.56 | $0.59 | $1.61 | $2.01 | Key Financial and Operational Highlights WesBanco achieved strong sequential deposit and loan growth in Q3 2024, with favorable credit quality and the Premier Financial Corp. acquisition on track - Total loan growth was 10.0% year-over-year and 6.3% over the sequential quarter (annualized), driven by commercial loan growth[2] - Deposits of $13.8 billion increased 5.7% year-over-year and 12.1% over the sequential quarter (annualized)[2] Trust and Investment Services Growth | Metric | YoY Growth | Value (Sept 30, 2024) | | :-------------------------------------- | :--------- | :-------------------- | | WTIS assets under management (billions USD) | 21.7% | $6.1 billion | | Broker-dealer securities account values (billions USD) | 15.8% | $1.9 billion | - Key credit quality metrics continued to remain at low levels and favorable to peer bank averages[2] - The acquisition of Premier Financial Corp. remains on track, pending regulatory and shareholder approvals[2] Financial Performance This section details WesBanco's net income, interest income, non-interest income, expenses, and credit loss provisions for Q3 and 9M 2024 Net Income and Earnings Per Share Q3 2024 net income increased 1.3% YoY to $34.7 million, while diluted EPS decreased 6.9% YoY to $0.54 Net Income and EPS (GAAP) | Metric | Q3 2024 | Q3 2023 | YoY Change | 9M 2024 | 9M 2023 | YoY Change | | :------------------------------------ | :--------- | :--------- | :--------- | :--------- | :--------- | :--------- | | Net Income (thousands USD) | $34,741 | $34,311 | 1.3% | $94,287 | $116,470 | (19.0%) | | Diluted EPS (USD) | $0.54 | $0.58 | (6.9%) | $1.54 | $1.96 | (21.4%) | Diluted EPS (Non-GAAP) | Metric | Q3 2024 | Q3 2023 | YoY Change | 9M 2024 | 9M 2023 | YoY Change | | :------------------------------------ | :------ | :------ | :--------- | :------ | :------ | :--------- | | Diluted EPS (excluding certain items) (USD) | $0.56 | $0.59 | (5.1%) | $1.61 | $2.01 | (19.9%) | Net Interest Income and Margin Net interest income for Q3 2024 rose 2.9% YoY to $121.1 million, with the net interest margin stable QoQ at 2.95% Net Interest Income | Metric | Q3 2024 (thousands USD) | Q3 2023 (thousands USD) | YoY Change | 9M 2024 (thousands USD) | 9M 2023 (thousands USD) | YoY Change | | :---------------------- | :--------------------- | :--------------------- | :--------- | :--------------------- | :--------------------- | :--------- | | Net Interest Income | $121,142 | $117,682 | 2.9% | $351,701 | $363,580 | (3.3%) | Net Interest Margin | Metric | Q3 2024 | Q2 2024 | QoQ Change | Q3 2023 | YoY Change | 9M 2024 | 9M 2023 | YoY Change | | :------------------ | :------ | :------ | :--------- | :------ | :--------- | :------ | :------ | :--------- | | Net Interest Margin (%) | 2.95% | 2.95% | 0 bps | 3.03% | (8 bps) | 2.94% | 3.19% | (25 bps) | - Deposit funding costs were 285 basis points for the third quarter of 2024, and 205 basis points when including non-interest bearing deposits[6] Non-Interest Income Total non-interest income for Q3 2024 decreased 4.1% YoY to $29.6 million, primarily due to lower net swap fee income, despite growth in service charges and trust fees Non-Interest Income (Q3 YoY) | Metric | Q3 2024 (thousands USD) | Q3 2023 (thousands USD) | YoY Change | | :-------------------------------------- | :--------------------- | :--------------------- | :--------- | | Total Non-Interest Income | $29,612 | $30,879 | (4.1%) | | Net swap fee and valuation (loss)/income (thousands USD)| ($627) | $3,845 | (116.3%) | | Service charges on deposits (thousands USD) | $7,945 | $6,726 | 18.1% | | Trust fees (thousands USD) | $7,517 | $6,705 | 12.1% | Non-Interest Income (9M YoY) | Metric | 9M 2024 (thousands USD) | 9M 2023 (thousands USD) | YoY Change | | :-------------------------------------- | :--------------------- | :--------------------- | :--------- | | Total Non-Interest Income | $91,596 | $90,372 | 1.4% | | Mortgage banking income (thousands USD) | $3,042 | $2,002 | 51.9% | Non-Interest Expense Non-interest expense, excluding restructuring and merger-related costs, increased 2.0% YoY to $99.2 million in Q3 2024, driven by higher operating and equipment/software expenses Non-Interest Expense (Q3 YoY, excluding restructuring/merger-related) | Metric | Q3 2024 (thousands USD) | Q3 2023 (thousands USD) | YoY Change | | :-------------------------------------- | :--------------------- | :--------------------- | :--------- | | Non-interest expense (excl. R&M) (thousands USD) | $99,206 | $97,298 | 2.0% | | Other operating expenses (thousands USD) | $17,777 | $16,245 | 9.4% | | Equipment and software (thousands USD) | $10,157 | $9,132 | 11.2% | | Salaries and wages (thousands USD) | $44,890 | $45,351 | (1.0%) | Non-Interest Expense (9M YoY, excluding restructuring/merger-related) | Metric | 9M 2024 (thousands USD) | 9M 2023 (thousands USD) | YoY Change | | :-------------------------------------- | :--------------------- | :--------------------- | :--------- | | Non-interest expense (excl. R&M) (thousands USD) | $295,013 | $286,668 | 2.9% | | FDIC insurance (thousands USD) | $10,576 | $8,880 | 19.1% | Provision for Credit Losses The provision for credit losses declined to $4.8 million in Q3 2024, but increased significantly year-to-date to $19.4 million Provision for Credit Losses | Metric | Q3 2024 (thousands USD) | Q3 2023 (thousands USD) | YoY Change | 9M 2024 (thousands USD) | 9M 2023 (thousands USD) | YoY Change | | :---------------------------- | :--------------------- | :--------------------- | :--------- | :--------------------- | :--------------------- | :--------- | | Provision for credit losses | $4,798 | $6,327 | (24.2%) | $19,352 | $12,932 | 49.6% | Balance Sheet This section reviews WesBanco's loan portfolio, deposits, funding, and overall assets and liabilities as of September 30, 2024 Loans Portfolio Portfolio loans reached $12.5 billion, growing 10.0% YoY and 1.6% QoQ, primarily driven by commercial and residential lending Portfolio Loans Growth | Metric | Sept 30, 2024 (thousands USD) | Sept 30, 2023 (thousands USD) | YoY Change | June 30, 2024 (thousands USD) | QoQ Change | | :-------------------------- | :--------------------------- | :--------------------------- | :--------- | :--------------------------- | :--------- | | Total portfolio loans | $12,451,430 | $11,315,873 | 10.0% | $12,257,511 | 1.6% | | Commercial real estate | $7,206,271 | $6,387,183 | 12.8% | $6,998,888 | 3.0% | | Commercial and industrial | $1,717,369 | $1,587,611 | 8.2% | $1,760,479 | (2.4%) | Deposits and Funding Total deposits grew to $13.8 billion, up 5.7% YoY and 3.0% QoQ, with demand deposits maintaining 54% of the total Deposits Growth | Metric | Sept 30, 2024 (thousands USD) | Sept 30, 2023 (thousands USD) | YoY Change | June 30, 2024 (thousands USD) | QoQ Change | | :-------------- | :--------------------------- | :--------------------------- | :--------- | :--------------------------- | :--------- | | Total deposits | $13,837,343 | $13,090,228 | 5.7% | $13,432,373 | 3.0% | - The composition of total deposits continues to have some mix shift; however, total demand deposits continue to represent 54% of total deposits, with the non-interest bearing component representing 27%[4] Federal Home Loan Bank Borrowings | Metric | Sept 30, 2024 (thousands USD) | June 30, 2024 (thousands USD) | QoQ Change | | :------------------------------------ | :--------------------------- | :--------------------------- | :--------- | | Federal Home Loan Bank borrowings | $1,175,000 | $1,475,000 | (20.3%) | Total Assets and Liabilities Total assets increased 6.7% YoY to $18.5 billion, and 2.1% QoQ, while total liabilities grew 5.5% YoY and 0.8% QoQ Total Assets and Liabilities | Metric | Sept 30, 2024 (thousands USD) | Sept 30, 2023 (thousands USD) | YoY Change | June 30, 2024 (thousands USD) | QoQ Change | | :---------------- | :--------------------------- | :--------------------------- | :--------- | :--------------------------- | :--------- | | Total Assets | $18,514,169 | $17,344,377 | 6.7% | $18,128,375 | 2.1% | | Total Liabilities | $15,712,584 | $14,896,436 | 5.5% | $15,584,096 | 0.8% | Credit Quality This section examines WesBanco's asset quality metrics and the allowance for credit losses Asset Quality Metrics Key credit quality metrics remained historically low and within a consistent range. Total loans past due as a percent of the loan portfolio increased 20 basis points quarter-over-quarter to 0.44%, while non-performing assets as a percentage of total assets slightly declined - Total loans past due as a percent of the loan portfolio increased 20 basis points quarter-over-quarter to 0.44%[5] - Non-performing assets as a percentage of total assets declined slightly from the prior quarter and year periods[5] Key Asset Quality Ratios (QoQ) | Metric | Sept 30, 2024 | June 30, 2024 | QoQ Change (bps) | | :------------------------------------------ | :------------ | :------------ | :--------------- | | Loans past due 30-89 days / total loans (%) | 0.27% | 0.17% | 10 | | Loans past due 90 days or more / total loans (%)| 0.16% | 0.07% | 9 | | Non-performing loans / total portfolio loans (%)| 0.24% | 0.29% | (5) | | Non-performing assets / total assets (%) | 0.17% | 0.20% | (3) | Allowance for Credit Losses The allowance for credit losses to total portfolio loans increased to 1.13% ($140.9 million) as of September 30, 2024, primarily due to higher unemployment assumptions and other qualitative adjustments Allowance for Credit Losses | Metric | Sept 30, 2024 (thousands USD) | Sept 30, 2023 (thousands USD) | YoY Change | June 30, 2024 (thousands USD) | QoQ Change | | :------------------------------------------ | :--------------------------- | :--------------------------- | :--------- | :--------------------------- | :--------- | | Allowance for credit losses - loans | $140,872 | $126,615 | 11.3% | $136,509 | 3.2% | | Allowance for credit losses - loans / total portfolio loans (%) | 1.13% | 1.12% | 1 bp | 1.11% | 2 bps | Capital This section details WesBanco's strong regulatory capital ratios and recent equity actions Capital Ratios WesBanco maintains strong regulatory capital ratios, with Tier I leverage at 10.69% and CET 1 at 11.89%, both well above "well-capitalized" standards - WesBanco continues to maintain strong regulatory capital ratios, well above the applicable "well-capitalized" standards[13] Capital Ratios (QoQ) | Metric | Sept 30, 2024 | June 30, 2024 | QoQ Change (bps) | | :-------------------------------------- | :------------ | :------------ | :--------------- | | Tier I leverage capital (%) | 10.69% | 9.72% | 97 | | Common equity Tier 1 capital ratio (CET 1) (%)| 11.89% | 10.58% | 131 | | Total risk-based capital (%) | 15.74% | 14.45% | 129 | | Tangible common equity to tangible assets (%) | 8.84% | 7.52% | 132 | Equity Actions WesBanco successfully raised $200 million in common equity on August 1, 2024, to bolster its balance sheet and support future growth - WesBanco successfully raised $200 million of common equity on August 1, 2024, to support the pro-forma bank's balance sheet, regulatory ratios, and future growth[2][12] - The proceeds from the equity raise were subsequently used to pay down Federal Home Loan Bank borrowings[4][12] Strategic Initiatives & Corporate Information This section covers the Premier Financial Corp. acquisition, company overview, conference call details, forward-looking statements, and non-GAAP measures Premier Financial Corp. Acquisition Update The acquisition of Premier Financial Corp. is on track, pending regulatory and shareholder approvals, expected to enhance financial services offerings - The acquisition of Premier Financial Corp. remains on track, pending regulatory and shareholder approvals[2] - With the pending acquisition of Premier Financial, WesBanco expects to accelerate positive momentum, build on their legacy of community engagement and support, and together bring the resources of a larger and stronger financial services organization to all of our communities[2] About WesBanco, Inc. WesBanco, Inc. is a diversified, multistate bank holding company with $18.5 billion in total assets, offering comprehensive financial services across an eight-state footprint - WesBanco Inc. is a diversified, multistate bank holding company with over 150 years as a community-focused, regional financial services partner[1][24] - As of September 30, 2024, WesBanco has $18.5 billion in total assets, with its Trust and Investment Services holding $6.1 billion of assets under management and securities account values (including annuities) of $1.9 billion through its broker/dealer[24] Conference Call and Webcast Details WesBanco hosted a conference call on October 24, 2024, to discuss Q3 2024 financial results, with webcast and replay access provided - WesBanco hosted a conference call to discuss the Company's financial results for the third quarter of 2024 at 3:00 p.m. ET on Thursday, October 24, 2024[14] - Interested parties can access the live webcast of the conference call through the Investor Relations section of the Company's website, www.wesbanco.com. A replay will also be available[14][15] Forward-Looking Statements The report contains forward-looking statements subject to risks and uncertainties, including those related to the Premier Financial Corp. merger and economic conditions - Forward-looking statements involve risks and uncertainties, including that the proposed merger with Premier Financial Corp. may not close as expected, or integration may take longer or not be successful[16][18] - Other important factors that could cause actual results to differ materially include changes in regional and national economic conditions, interest rates, sources of liquidity, potential future credit losses, actions of regulatory bodies, and cybersecurity breaches[16] Non-GAAP Financial Measures WesBanco uses non-GAAP financial measures to provide investors with useful insights into operational performance and trends, facilitating peer comparisons - WesBanco's management uses certain non-GAAP financial measures to provide information useful to investors in understanding operational performance and business and performance trends, facilitating comparisons with peers[19] - Examples of non-GAAP measures include pre-tax pre-provision income, tangible common equity/tangible assets, net income excluding after-tax restructuring and merger-related expenses, efficiency ratio, return on average assets, and return on average tangible equity[19] Additional Information Regarding the Merger WesBanco has filed a Registration Statement on Form S-4 with the SEC, including a joint proxy statement/prospectus for the proposed merger with Premier Financial Corp - WesBanco has filed with the SEC a Registration Statement on Form S-4 that will include a joint proxy statement of WesBanco and Premier and a prospectus of WesBanco, as well as other relevant documents concerning the proposed transaction[20] - Shareholders of WesBanco, shareholders of Premier, and other interested parties are urged to read the Registration Statement and the Joint Proxy Statement/Prospectus regarding the merger when it becomes available and any other relevant documents filed with the SEC, as well as any amendments or supplements to those documents, because they will contain important information[20][23] No Offer or Solicitation This presentation does not constitute a proxy statement, solicitation, or an offer to sell or buy securities, requiring proper registration for any sale - This presentation is not a proxy statement or solicitation of a proxy, consent or authorization with respect to any securities or in respect of the proposed merger and shall not constitute an offer to sell or a solicitation of an offer to buy any securities[21] Participants in the Solicitation WesBanco, Premier, and their respective executive officers and directors may be considered participants in the solicitation of proxies for the proposed merger - WesBanco, Premier, and their respective executive officers and directors may be deemed to be participants in the solicitation of proxies from the shareholders of WesBanco and Premier in connection with the proposed merger[22] - Information about the directors and executive officers of WesBanco and Premier is set forth in their respective proxy statements and will be included in the Joint Proxy Statement/Prospectus[22] Company Contact Contact information for WesBanco's Senior Vice President of Investor Relations, John H. Iannone, is provided for inquiries - John H. Iannone, Senior Vice President, Investor Relations, is the company contact for inquiries[25]