WesBanco(US:WSBC)2023-07-26 17:39Financial Data and Key Metrics Changes - For Q2 2023, net income available to common shareholders increased by 5.3% to $42.4 million, with diluted earnings per share of $0.71, excluding after-tax merger and restructuring charges [11][23] - The return on average tangible equity was reported at 13%, and the CET1 ratio stood at 11%, indicating strong capital levels [12] - Total assets reached $17.4 billion, with total portfolio loans of $11.1 billion, reflecting an 8% year-to-date annualized growth [25] Business Line Data and Key Metrics Changes - Total loan growth was 9% year-over-year and quarter-over-quarter annualized, with commercial loan growth increasing by 6% year-over-year and 7% sequentially [12][14] - Residential mortgage originations decreased by 37% year-over-year, totaling approximately $208 million for Q2 2023 [27] - Noninterest income rose to $31.8 million, up $4.9 million year-over-year, primarily due to higher commercial swap fees [32] Market Data and Key Metrics Changes - Total deposits remained flat compared to March 31 levels, despite industry-wide deposit contraction due to interest rate and inflationary pressures [19][28] - The loan-to-deposit ratio was reported at 85.4%, providing ample lending capacity [18] - The net interest margin for Q2 2023 was 3.18%, a decrease of 18 basis points from the previous quarter [30] Company Strategy and Development Direction - The company is focused on disciplined expense management while making strategic investments to ensure long-term growth [9][21] - There is an emphasis on expanding commercial loan production offices and hiring top-tier talent to enhance loan growth [14][43] - The company plans to maintain a balanced distribution across economically diverse major markets and strengthen diversified earnings streams [21] Management's Comments on Operating Environment and Future Outlook - Management anticipates continued margin contraction in Q3 2023, similar to the 18 basis points seen in Q2, with expectations of a flat margin in Q4 [40][72] - The outlook for residential mortgage originations remains positive relative to industry trends, contingent on home price stabilization and interest rates [41] - The company is modeling Fed funds to peak at 5.75%, with expectations of lower deposit betas compared to peers [39] Other Important Information - The company has successfully retained more rate-sensitive customers through a recent CD campaign, increasing CD balances by $76 million quarter-over-quarter [31] - The management team is focused on maintaining a strong customer service culture combined with robust digital services [21] Q&A Session Summary Question: Loan growth expectations for the second half of the year - Management expects mid-to-upper single-digit growth, supported by a strong pipeline of approximately $810 million [48] Question: Potential new markets for expansion - The company is always looking for opportunities in new markets, focusing on finding the right talent [50] Question: Margin guidance and deposit mix assumptions - Management anticipates continued margin contraction and expects noninterest-bearing deposits to decrease to about 30% by year-end [52] Question: Loan-to-deposit ratio targets - The target for the loan-to-deposit ratio is low-90s, with current levels at 85% providing sufficient capacity for loan growth [53] Question: Swap fee income expectations - Management is targeting to double swap fee income compared to the previous year, aiming for around $4 million [56] Question: M&A strategy - The company remains opportunistic regarding M&A, focusing on existing footprints or contiguous states [73]