WesBanco(WSBC) - 2025 Q2 - Quarterly Report

PART I - FINANCIAL INFORMATION Item 1. Financial Statements This section presents the unaudited interim consolidated financial statements for Wesbanco, Inc. as of June 30, 2025, and for the three and six-month periods then ended, including balance sheets, income statements, and notes Consolidated Financial Statements Consolidated Balance Sheets (in thousands) | (in thousands) | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total Assets | $27,571,576 | $18,684,298 | | Net Portfolio Loans | $18,604,760 | $12,517,663 | | Total Securities | $4,389,961 | $3,412,259 | | Goodwill and other intangible assets, net | $1,745,170 | $1,124,016 | | Total Liabilities | $23,752,356 | $15,894,017 | | Total Deposits | $21,154,556 | $14,133,717 | | Total Borrowings | $2,211,428 | $1,471,381 | | Total Shareholders' Equity | $3,819,220 | $2,790,281 | Consolidated Statements of Income (in thousands, except per share) | (in thousands, except per share) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Net Interest Income | $216,769 | $116,593 | $375,288 | $230,560 | | Provision for credit losses | $3,218 | $10,541 | $72,101 | $14,555 | | Total non-interest income | $43,957 | $31,355 | $78,622 | $61,984 | | Total non-interest expense | $186,535 | $102,392 | $320,500 | $199,585 | | Net Income | $57,415 | $28,916 | $48,423 | $64,609 | | Net income available to common shareholders | $54,884 | $26,385 | $43,360 | $59,546 | | Diluted EPS | $0.57 | $0.44 | $0.50 | $1.00 | Note 2. Mergers and Acquisitions This note details the acquisition of Premier Financial Corp. (PFC) by Wesbanco, including the purchase price, acquired assets, and merger-related expenses - On February 28, 2025, Wesbanco completed its acquisition of Premier Financial Corp. (PFC) for a total purchase price of approximately $1.0 billion. The acquisition added approximately $7.9 billion in assets, $5.9 billion in portfolio loans, and 73 branches[33] - The acquisition resulted in the recognition of $476.2 million in goodwill and $158.4 million in core deposit and other intangible assets. The purchase price allocation is preliminary and subject to adjustment for up to one year[33][34] - Merger-related expenses of $32.5 million and $53.4 million were recorded for the three and six months ended June 30, 2025, respectively[33] Note 4. Securities This note provides a breakdown of the company's securities portfolio, including available-for-sale, held-to-maturity, and equity securities, along with unrealized gains/losses and credit loss allowances Securities Portfolio (in thousands) | (in thousands) | June 30, 2025 (Fair Value) | Dec 31, 2024 (Fair Value) | | :--- | :--- | :--- | | Available-for-sale debt securities | $3,222,819 | $2,246,072 | | U.S. Treasury & Agencies | $402,759 | $340,355 | | Mortgage-backed securities | $2,602,233 | $1,825,223 | | Held-to-maturity debt securities | $1,137,604 (Net) | $1,152,760 (Net) | | Obligations of states & political subdivisions | $1,089,173 (Amortized Cost) | $1,098,957 (Amortized Cost) | | Equity securities | $29,538 | $13,427 | | Total Securities | $4,389,961 | $3,412,259 | - Net unrealized losses on available-for-sale securities, net of tax, improved to $178.5 million at June 30, 2025, from $223.8 million at December 31, 2024[62] - The allowance for credit losses on held-to-maturity securities was $0.2 million as of June 30, 2025, up from $0.1 million at year-end 2024[57][65] Note 5. Loans and the Allowance for Credit Losses This note details the composition of the loan portfolio and the allowance for credit losses, including changes driven by acquisitions and credit quality trends Total Portfolio Loans (in thousands) | (in thousands) | June 30, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | Total commercial real estate | $10,600,210 | $7,326,681 | | Commercial and industrial | $2,819,096 | $1,787,277 | | Residential real estate | $3,939,796 | $2,520,086 | | Home equity | $1,052,334 | $821,110 | | Consumer | $417,190 | $201,275 | | Total portfolio loans | $18,828,626 | $12,656,429 | Allowance for Credit Losses (in thousands) | (in thousands) | June 30, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | Allowance for credit losses - loans | $223,866 | $138,766 | | Allowance for credit losses - loan commitments | $6,168 | $6,120 | | Total allowance for credit losses | $230,034 | $144,886 | | ACL - loans / Total portfolio loans | 1.19% | 1.10% | - The increase in the allowance for credit losses was primarily driven by the initial allowance on loans acquired in the PFC transaction, as well as adjustments for regional macroeconomic factors and an increase in specific reserves[70] - Non-accrual loans increased to $84.3 million at June 30, 2025, from $39.8 million at December 31, 2024. Approximately $18.9 million of the non-accrual loans at quarter-end were acquired from PFC[86] Note 14. Business Segments This note outlines Wesbanco's two reportable segments, Community Banking and Trust and Investment Services, and their respective financial performance - Wesbanco operates two reportable segments: Community Banking and Trust and Investment Services. The Chief Operating Decision Maker (CODM) uses net income to evaluate segment performance[152] Segment Performance (in thousands) | (in thousands) | Community Banking | Trust and Investment Services | Corporate Other | Total | | :--- | :--- | :--- | :--- | :--- | | For the Six Months Ended June 30, 2025 | | | | | | Total revenues | $374,550 | $16,680 | $(9,421) | $381,809 | | Segment profit (loss) | $59,314 | $5,225 | $(16,116) | $48,423 | | For the Six Months Ended June 30, 2024 | | | | | | Total revenues | $272,796 | $13,312 | $(8,119) | $277,989 | | Segment profit (loss) | $69,912 | $4,087 | $(9,390) | $64,609 | - The market value of trust assets increased to approximately $7.2 billion at June 30, 2025, from $5.6 billion at June 30, 2024[153] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's perspective on the company's financial condition and results of operations, highlighting the significant impact of the Premier Financial Corp. (PFC) acquisition, including analysis of earnings, net interest income, credit loss provisions, and balance sheet changes Earnings Summary This section summarizes the company's earnings performance, including GAAP and non-GAAP adjusted net income and diluted EPS, with a focus on the impact of the PFC acquisition Earnings Performance (in millions, except per share) | (in millions, except per share) | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :--- | :--- | :--- | :--- | :--- | | Net Income (to common) | $54.9 | $26.4 | $43.4 | $59.5 | | Diluted EPS | $0.57 | $0.44 | $0.50 | $1.00 | | Adjusted Net Income (Non-GAAP) | $87.3 | $29.4 | $138.5 | $62.5 | | Adjusted Diluted EPS (Non-GAAP) | $0.91 | $0.49 | $1.60 | $1.05 | - Q2 2025 earnings were significantly impacted by the PFC acquisition. Excluding merger-related expenses, adjusted net income available to common shareholders was $87.3 million, or $0.91 per diluted share[179] Net Interest Income This section analyzes the drivers of net interest income, including the impact of the PFC acquisition, loan growth, asset yields, and changes in net interest margin - Net interest income for Q2 2025 increased 85.9% YoY to $216.8 million, driven by the PFC acquisition, organic loan growth, and higher asset yields. Purchase accounting accretion contributed $22.5 million to NII in the quarter[180] Net Interest Margin and Yields | Metric | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Net Interest Margin | 3.57% | 2.92% | | Net Interest Margin (FTE) | 3.59% | 2.95% | | Yield on Earning Assets | 5.56% | 5.11% | | Cost of Interest-Bearing Liabilities | 2.69% | 3.12% | - Average loans increased by 56.8% and average deposits increased by 56.7% in Q2 2025 compared to Q2 2024, primarily due to the PFC acquisition[180] Financial Condition This section discusses the company's balance sheet changes, including growth in total assets, portfolio loans, deposits, and shareholders' equity, primarily due to the PFC acquisition - Total assets grew 47.6% to $27.6 billion at June 30, 2025, from $18.7 billion at December 31, 2024, primarily due to the PFC acquisition[217] - Total portfolio loans increased by $6.2 billion (48.8%) since year-end 2024, driven by $5.9 billion in acquired PFC loans and $0.3 billion in organic growth[217][233] - Total deposits increased by $7.0 billion (49.7%) since year-end 2024, reflecting $6.9 billion from the PFC acquisition[217] - Shareholders' equity increased by $1.0 billion (36.9%) to $3.8 billion, mainly due to common stock issued for the PFC acquisition[217][255] Capital Resources This section reviews the company's capital adequacy, presenting key regulatory capital ratios and confirming compliance with "well capitalized" minimums Regulatory Capital Ratios (%) | Ratio | Wesbanco, Inc. (June 30, 2025) | Well-Capitalized Minimum | | :--- | :--- | :--- | | Tier 1 leverage | 8.66% | 5.00% | | Common equity Tier 1 | 9.90% | 6.50% | | Tier 1 capital to risk-weighted assets | 10.59% | 8.00% | | Total capital to risk-weighted assets | 13.40% | 10.00% | - At June 30, 2025, all regulatory capital levels for both the holding company and the bank were substantially above the minimums required to be considered "well capitalized"[257] Liquidity Risk This section assesses the company's liquidity position, including available sources of liquidity, the proportion of uninsured deposits, and borrowing capacity - The company maintains a strong liquidity position with total expected sources of liquidity within the next year estimated at $7.2 billion[263] - Uninsured deposits were 32% of total deposits at June 30, 2025. Excluding collateralized public funds, the ratio of uninsured deposits was 21%[265] - Available borrowing capacity with the FHLB was approximately $5.1 billion at June 30, 2025[266] Item 3. Quantitative and Qualitative Disclosures About Market Risk This section details the company's exposure to market risk, primarily interest rate risk, describing the role of the Asset/Liability Committee (ALCO) and the use of earnings sensitivity models to monitor and manage this risk within established policy limits Net Interest Income Sensitivity to Interest Rate Changes | Immediate Change in Interest Rates (bps) | % Change in Net Interest Income (over 1 year) | | :--- | :--- | | +200 | 2.2% | | +100 | 1.0% | | -100 | (1.4%) | | -200 | (3.6%) | - The company's net interest income simulation model shows a slightly asset-sensitive position, with a 100 basis point parallel rate increase projected to increase NII by 1.0% over one year. All scenarios are within ALCO policy guidelines[278][279] Item 4. Controls and Procedures This section contains management's evaluation of the company's disclosure controls and procedures, concluding their effectiveness as of June 30, 2025, with no material changes to internal control over financial reporting identified - The CEO and CFO concluded that Wesbanco's disclosure controls and procedures were effective as of the end of the period covered by the report[286] - There were no changes in internal control over financial reporting during the quarter that materially affected, or are reasonably likely to materially affect, the company's internal controls[288] PART II – OTHER INFORMATION Item 1. Legal Proceedings This section discloses that the company is involved in various legal proceedings arising in the ordinary course of business but does not believe any material loss is reasonably possible - Wesbanco is involved in various lawsuits and claims in the ordinary course of business but does not believe a material loss is reasonably possible from these proceedings[291] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds This section details the company's stock repurchase plan activity, including the number of shares purchased during the quarter and the remaining authorization Stock Repurchase Activity | Period (2025) | Total Shares Purchased | Average Price Paid ($) | Shares Purchased as Part of Plan | | :--- | :--- | :--- | :--- | | April | 36,437 | $31.24 | — | | May | 4,224 | $30.75 | — | | June | 54,241 | $31.98 | 51,198 | | Total Q2 | 94,902 | $31.64 | 51,198 | - As of June 30, 2025, 918,391 shares remained available for repurchase under the company's active stock repurchase plan[292] Item 5. Other Information This section confirms that no directors or executive officers adopted, modified, or terminated any Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during the quarter - During the three months ended June 30, 2025, no directors or executive officers adopted, modified, or terminated any Rule 10b5-1 trading arrangement or non-Rule 10b5-1 trading arrangement[294] Item 6. Exhibits This section lists the exhibits filed with the Form 10-Q, including a separation agreement, certifications by the CEO and CFO as required by the Sarbanes-Oxley Act, and XBRL data files