425: WesBanco Reports Solid Q3 2024 Results, Driven by Loan and Deposit Growth

WesBanco announced net income of $34.7 million for Q3 2024, driven by strong loan and deposit growth, and highlighted the pending acquisition of Premier Financial Corp.

Summary

• WesBanco reported net income available to common shareholders of $34.7 million, or $0.54 per share, for the third quarter of 2024, compared to $34.3 million, or $0.58 per share, for the same period in 2023.
• For the nine months ended September 30, 2024, net income was $94.3 million, or $1.54 per share, compared to $116.5 million, or $1.96 per share, for the same period in 2023.
• Excluding after-tax restructuring and merger-related expenses, net income available to common shareholders for the nine months ended September 30, 2024, was $98.8 million, or $1.61 per share, compared to $119.5 million, or $2.01 per share, for the same period in 2023.
• Total loan growth was 10.0% year-over-year and 6.3% over the sequential quarter, annualized.
• Deposits increased 5.7% year-over-year and 12.1% over the sequential quarter, annualized, reaching $13.8 billion.
• Trust fees and net securities brokerage revenue increased $1.1 million combined year-over-year.
• WTIS assets under management increased 21.7% year-over-year to a record $6.1 billion.
• Broker-dealer securities account values increased 15.8% year-over-year to a record $1.9 billion.
• The acquisition of Premier Financial Corp. remains on track, pending regulatory and shareholder approvals.
• WesBanco successfully raised $200 million of common equity during the quarter to position the company for future growth.

Sentiment

Score: 6

Explanation: The sentiment is neutral to slightly positive. While there's strong loan and deposit growth, the decrease in net income and non-interest income tempers the overall outlook. The successful equity raise and pending merger are positive signals, but risks associated with the merger integration and economic conditions exist.

Positives

• Strong loan growth driven by commercial lending, with total loans up $1.1 billion year-over-year.
• Significant deposit growth, with total deposits up $0.7 billion year-over-year.
• Record WTIS AUM of $6.1 billion and broker-dealer securities account values of $1.9 billion.
• Key credit quality metrics remained at low levels and favorable to peer bank averages.
• Successful equity raise of $200 million to support future growth.
• WesBanco was named one of America's Greatest Workplaces for Parents and Families by Newsweek.

Negatives

• Net income available to common shareholders decreased from $116.5 million to $94.3 million for the nine months ended September 30, 2024, compared to the same period in 2023.
• Non-interest income decreased 4.1% year-over-year due to lower net swap fee and valuation income.
• Net interest margin was 8 basis points lower year-over-year primarily due to higher funding costs.

Risks

• The proposed merger with Premier Financial Corp. may not close when expected.
• The businesses of WesBanco and Premier may not be integrated successfully.
• Expected cost savings and revenue synergies from the merger may not be fully realized.
• Disruption from the proposed merger may make it more difficult to maintain relationships with clients, associates, or suppliers.
• Required governmental approvals of the proposed merger may not be obtained on the expected terms and schedule.
• Changes in economic conditions and interest rates could adversely affect WesBanco's financial performance.
• Potential future credit losses and the credit risk of commercial, real estate, and consumer loan customers could impact results.
• Cyber-security breaches could negatively affect WesBanco's operations.

Future Outlook

WesBanco expects to accelerate its positive momentum and build on Premier Financial's legacy of community engagement through the pending acquisition, bringing the resources of a larger and stronger financial services organization to all of its communities.

Management Comments

• Jeff Jackson, President and Chief Executive Officer, WesBanco, stated that the company marked strong momentum in the third quarter, driven by strategic actions that continue to strengthen the balance sheet, including robust deposit and loan growth and the pay down of higher cost borrowings.
• Jeff Jackson also noted that WesBanco has grown loans by $1.1 billion and deposits by $0.7 billion over the last year, reflecting the strength of their people, markets, and strategies.
• Jeff Jackson mentioned that WesBanco is focused on organic growth and efficiency gains to achieve positive operating leverage and successfully raised $200 million of common equity during the quarter to position WesBanco for future growth.

Industry Context

The report highlights WesBanco's performance in the context of the banking industry, particularly in comparison to peer banks with total assets between $10 billion and $25 billion, noting that key credit quality metrics remained at low levels and favorable to peer bank averages.

Comparison to Industry Standards

• WesBanco's key credit quality metrics remained at low levels and favorable to peer bank averages (based upon the prior four quarters for banks with total assets between $10 billion and $25 billion).
• The tangible common equity to tangible assets ratio improved 158 basis points year-over-year to 8.84%, indicating a strong capital position compared to peers.
• Non-Performing Assets as a % of Total Assets for WSBC is 0.17% compared to $10-25B Banks at 0.18%.
• Net Charge-Offs as % of Average Loans (Annualized) for WSBC is 0.05% compared to $10-25B Banks at 0.14%.
• Allowance for Credit Losses as % of Total Loans for WSBC is 1.13% compared to $10-25B Banks at 1.19%.
• Criticized & Classified Loans as % of Total Loans for WSBC is 2.36% compared to $10-25B Banks at 3.40%.

Stakeholder Impact

• Shareholders may experience potential benefits from the merger with Premier Financial Corp., including increased market presence and potential synergies.
• Employees may experience changes related to the merger, including potential restructuring and integration of operations.
• Customers may benefit from the expanded resources and services resulting from the merger.
• The communities served by WesBanco and Premier Financial Corp. may benefit from the combined organization's increased community engagement and support.

Next Steps

• WesBanco will host a conference call on October 24, 2024, to discuss the financial results.
• The company will continue to work towards the completion of the acquisition of Premier Financial Corp., pending regulatory and shareholder approvals.

Key Dates