425: WesBanco Reports Strong Loan and Deposit Growth in Fourth Quarter 2024

WesBanco announced strong fourth-quarter 2024 results, highlighted by significant year-over-year loan and deposit growth of $1 billion each.

Summary

• WesBanco's net income available to common shareholders for the fourth quarter of 2024 was $47.1 million, or $0.70 per share, compared to $32.4 million, or $0.55 per share, for the same period in 2023.
• For the full year 2024, net income was $141.4 million, or $2.26 per share, down from $148.9 million, or $2.51 per share, in 2023.
• Excluding after-tax restructuring and merger-related expenses, net income for 2024 was $146.4 million, or $2.34 per share, compared to $151.9 million, or $2.56 per share in 2023.
• Total loan growth was 8.7% year-over-year and 6.6% over the sequential quarter, annualized, with total loans up $1.0 billion compared to the prior year.
• Deposits increased by 7.3% year-over-year and 8.6% over the sequential quarter, annualized, with total deposits up $1.0 billion compared to the prior year.
• Fee income increased by $6.3 million, or 21%, year-over-year, driven by growth in net swap fee and valuation income, trust fees, and service charges on deposits.
• The net interest margin for the fourth quarter was 3.03%, an improvement of 8 basis points compared to the third quarter and 1 basis point year-over-year.
• Non-interest expense, excluding restructuring and merger-related costs, increased by 1.0% year-over-year.
• WesBanco's Tier I leverage was 10.68%, Tier I risk-based capital ratio was 13.06%, common equity Tier 1 capital ratio (CET 1) was 12.07%, and total risk-based capital was 15.88%.

Sentiment

Score: 8

Explanation: The document presents a positive outlook with strong growth in key areas, solid financial metrics, and national recognition. While there are some minor negatives, the overall tone is optimistic and indicates a healthy financial institution.

Positives

• Strong loan and deposit growth indicates a healthy expansion of the bank's core business.
• The increase in fee income demonstrates the success of new products and services and treasury management.
• Improved net interest margin suggests better profitability from lending activities.
• National recognitions highlight the bank's stability and trustworthiness.
• The bank maintains strong regulatory capital ratios, well above the required standards.
• The paydown of Federal Home Loan Bank borrowings by $175 million from the previous quarter was funded by deposit growth.
• Key credit quality metrics remain at low levels and favorable to peer bank averages.

Negatives

• Net income for the full year 2024 decreased compared to 2023.
• Non-interest expense increased year-over-year, primarily due to equipment and software expenses.
• The provision for credit losses decreased to a negative provision of $0.1 million, which may indicate a change in risk assessment.
• The allowance for credit losses coverage ratio decreased slightly from the prior quarter.
• The company experienced a decrease in net interest income for the twelve months ended December 31, 2024, primarily due to higher funding costs.

Risks

• The proposed merger with Premier Financial Corp. may not close as expected, or the integration may not be successful.
• The expected cost savings and revenue synergies from the merger may not be fully realized.
• Disruptions from the merger could make it difficult to maintain relationships with clients, associates, or suppliers.
• Changes in economic conditions and interest rates could impact the bank's performance.
• Potential future credit losses and the credit risk of loan customers could affect the bank's financial health.
• Regulatory actions and reforms could have an adverse impact on the bank.
• Cyber-security breaches and other external developments could materially impact the bank's operations and financial performance.

Future Outlook

The company is well-positioned to build on its momentum and continue delivering value for customers and stakeholders, with the pending Premier Financial merger and the strength of its proven strategies.

Management Comments

• We delivered strong loan growth of $1 billion, which was fully funded by deposit growth.
• We also announced our transformational merger with Premier Financial and continued to earn national recognitions for stability, trustworthiness, and workplace excellence.
• We have achieved a compound annual loan growth rate of 9% over the past three years, raised $200 million of common equity and paid down higher-cost borrowings key successes in our strategy to strengthen our balance sheet and net interest margin.
• Additionally, we continued to focus on cost-control while enhancing our wealth and treasury management businesses to deepen client relationships and drive positive operating leverage.

Industry Context

The results reflect a strong performance in a competitive banking environment, with WesBanco demonstrating solid growth in loans and deposits, while maintaining strong capital ratios. The pending merger with Premier Financial Corp. is a significant strategic move to further enhance its market position.

Comparison to Industry Standards

• WesBanco's key credit quality metrics remain at low levels and are favorable compared to peer bank averages, specifically banks with total assets between $10 billion and $25 billion.
• The company's non-performing assets as a percentage of total assets is 0.22%, which is lower than the peer group average of 0.33%.
• Net charge-offs as a percentage of average loans is 0.13%, which is lower than the peer group average of 0.20%.
• The allowance for credit losses as a percentage of total loans is 1.10%, which is slightly lower than the peer group average of 1.17%.
• Criticized and classified loans as a percentage of total loans is 2.80%, which is lower than the peer group average of 3.61%.

Stakeholder Impact

• Shareholders will benefit from the strong financial performance and the potential for future growth through the merger.
• Employees may experience changes due to the merger, but the company's focus on workplace excellence suggests a positive environment.
• Customers will have access to a broader range of services and products due to the merger.
• Suppliers and creditors will likely see continued stability and reliability in their dealings with WesBanco.

Next Steps

• WesBanco will host a conference call on January 23, 2025, to discuss the financial results.
• The company will continue to work towards the completion of the merger with Premier Financial Corp.
• WesBanco will continue to focus on cost control and enhancing its wealth and treasury management businesses.

Key Dates

Keywords

WesBanco, Financial Results, Loan Growth, Deposit Growth, Net Income, Merger, Premier Financial, Net Interest Margin, Fee Income, Capital Ratios