WesBanco Earnings Call Signals Scaled, Profitable Growth

WesBanco ((WSBC)) has held its Q4 earnings call. Read on for the main highlights of the call.

WesBanco’s latest earnings call struck an upbeat tone, as management highlighted strong, broad-based performance powered by the Premier acquisition, healthy net interest margin (NIM) expansion, and solid deposit-funded loan growth. While elevated commercial real estate (CRE) payoffs, higher post-acquisition expenses, and some seasonal deposit volatility are weighing on near‑term growth, the overall message was one of confidence: profitability is advancing, credit remains disciplined, and management is already executing on cost actions and integration milestones that underpin its long‑term strategy.

Strong Earnings Momentum Across 2025

WesBanco delivered a sharp step-up in profitability, with full‑year diluted EPS of $3.40 (excluding merger-related charges and day‑1 purchased loan provision), a 45% year‑over‑year increase, and pretax pre‑provision earnings more than doubling. In the fourth quarter alone, net income excluding merger and restructuring costs reached $81 million, with diluted EPS of $0.84, up 18% from a year earlier. The numbers underscore how the enlarged franchise is scaling efficiently and translating balance-sheet growth into stronger bottom‑line performance, even as merger-related items and capital actions still partially mask the full earnings power.

Net Interest Margin Expands and Expected to Hold

Net interest margin, a key profitability yardstick for banks, showed meaningful improvement. Fourth‑quarter NIM came in at 3.61%, up 58 basis points year over year and 8 basis points from the prior quarter. Management expects NIM in the first quarter to be roughly flat at 3.61%, with an additional 3–5 basis points of expansion in the second quarter and a trend toward the high‑3.60% range in the back half of 2026. This outlook reflects both the benefit of acquired assets and ongoing balance sheet repositioning, giving investors a clearer line of sight to sustained spread income despite a potentially shifting rate environment.

Deposit-Funded Loan Growth and Larger Balance Sheet

The Premier acquisition significantly changed WesBanco’s scale, and the bank is leveraging that size to support growth. Total deposits rose 53% year over year to $21.7 billion, including $6.9 billion from Premier. Importantly, WesBanco also generated $662 million of organic deposit growth, sufficient to fully fund its organic loan expansion. Total portfolio loans reached $19.2 billion, up 52% year over year, with $5.9 billion coming from Premier and more than $650 million from organic loan growth. Overall, loans increased 5% year over year and about 6% on an annualized basis in the fourth quarter, demonstrating that WesBanco can grow lending without stretching for wholesale funding.

Credit Quality Remains a Key Strength

Despite rapid balance-sheet expansion and a more complex commercial portfolio, credit metrics remain clean. Nonperforming assets were just 0.33% of total assets, net charge‑offs were only 6 basis points of total loans, and the allowance for credit losses was 1.14% of portfolio loans, or $219 million, in line with the prior quarter. These figures suggest that loan growth has not come at the expense of underwriting standards, a critical point for investors wary of credit cycles—especially in areas like commercial real estate.

Efficiency Gains and a Solid Capital Base

WesBanco is pairing growth with better efficiency and a stronger capital position. The fourth‑quarter efficiency ratio—recast under a new methodology to align with peers—improved to roughly 52%, reflecting stronger revenues and integration benefits. Return on tangible common equity hit an impressive 16% in the quarter. Meanwhile, the CET1 ratio rose to 10.34%, up 24 basis points from the prior quarter. Management plans to build CET1 by roughly 15–20 basis points per quarter, prioritizing capital strength before considering share repurchases. The combination of higher returns and a disciplined capital build supports a more resilient long‑term profile.

Premier Acquisition Delivers Scale and Strategic Reach

The completed integration of Premier Financial has repositioned WesBanco as a nearly $28 billion-asset regional bank, now counted among the top‑50 U.S. public financial institutions by assets. The deal significantly expanded both loans and deposits, while also bolstering fee income lines. Management emphasized that the acquisition is delivering on its promised scale benefits—wider footprint, deeper customer relationships, and operational efficiencies—while serving as a platform for future organic growth rather than a gateway to more near‑term M&A.

Record Performance in Fee-Based Businesses

Beyond traditional lending and deposits, WesBanco’s fee businesses delivered standout results. Treasury management revenue hit a record $6 million, and total wealth assets under management reached a record $10.4 billion. Gross swap fees doubled to $10 million for the full year, supporting a 19% year‑over‑year increase in noninterest income in the fourth quarter. For the full year, noninterest income reached a record $167 million. This growing, diversified fee base helps smooth earnings and reduces reliance on interest rate cycles, an important differentiator in the regional banking space.

Organic Growth Initiatives Gain Traction

Management underscored that growth is not solely acquisition-driven. A new health care vertical originated approximately $500 million in loans, while also generating valuable deposit and fee relationships. Loan production offices in Northern Virginia and Knoxville are building meaningful pipelines, pointing to ongoing momentum in attractive growth markets. At the same time, WesBanco is optimizing its physical footprint and digital offerings, with continuing branch rationalization and targeted expansion such as a new branch in Chattanooga. These moves are designed to capture growth where it is strongest while keeping costs in check.

CRE Payoffs Temporarily Pressure Loan Growth

A notable headwind is the elevated level of commercial real estate project payoffs. CRE payoffs totaled $415 million in the fourth quarter and $905 million for the full year—about 2.5 times the prior year and roughly $100 million above earlier expectations. Management estimates these payoffs created around a 4% drag on loan growth. For 2026, they anticipate CRE payoffs of $600–$800 million, weighted toward the first half of the year. While this dynamic pressures reported loan growth, it also reflects successful project completions and provides capacity for redeployment into new, higher‑return opportunities.

Acquisition-Related and Intangible Costs Weigh on Expenses

On the cost side, the enlarged franchise and the Premier deal brought higher noninterest expenses. Excluding restructuring and merger costs, fourth‑quarter noninterest expense rose 44% year over year, driven mainly by Premier’s operating base, higher amortization of core deposit intangibles, and increased FDIC insurance costs. In addition, preferred dividends and overlap from capital instruments reduced earnings available to common shareholders by roughly $13 million. While these factors temporarily dampen reported profitability, management framed them as largely transitional and tied to the structural change in scale.

Investments and Near-Term Expense Drift

WesBanco is also leaning into growth and modernization, which will lift near-term expenses. The bank expects higher equipment and software spending as it invests in products and technology, and marketing costs are projected to rise by about $800,000 per quarter to support new-market expansion. Management expects the overall expense run rate in the first quarter to be roughly in line with the fourth quarter, with modest increases later in 2026 driven by selective hiring and merit adjustments. The message to investors: expenses will tick up, but in service of long‑term revenue growth and franchise value.

Seasonal and Tactical Deposit Movements

Management highlighted typical seasonal deposit softness in January following a strong fourth quarter, alongside some intra‑quarter volatility. Part of the movement is deliberate: WesBanco is allowing higher-cost certificates of deposit and brokered deposits to run off, such as $55 million in CD runoff and a $50 million paydown in brokered funding, to improve its funding mix. While these actions can cause short-term fluctuations in deposit balances, they support a more stable and cost‑effective funding base over time, which ultimately benefits NIM and profitability.

Capital Actions Temporarily Damp Profitability

During the quarter, WesBanco executed several capital moves, including the redemption of its Series A preferred stock and repayment of acquired subordinated debt. These actions involved overlapping preferred dividends and a redemption premium that temporarily reduced GAAP earnings, even as they simplify and strengthen the capital structure. With CET1 at 10.34%, management signaled that share buybacks will remain on hold until the ratio reaches roughly 10.5–11%, and that further M&A is not a near‑term focus. The priority is organic growth supported by a robust capital base and cleaner balance sheet.

Forward-Looking Guidance and Strategic Outlook

Looking ahead, WesBanco’s 2026 guidance assumes two modest rate cuts by the Federal Reserve, in April and July, but still calls for a stable to slightly improving NIM profile: roughly flat at 3.61% in the first quarter, edging up 3–5 basis points in the second quarter, and moving into the high‑3.60% range in the back half of the year. Fair‑value accretion, which boosted NIM by about 27 basis points in the fourth quarter, is modeled at roughly 25 basis points in the first quarter before fading to 1–2 basis points per quarter thereafter. Management expects mid‑single‑digit annual loan growth funded by deposits, even with elevated CRE payoffs of $600–$800 million in 2026, and a commercial loan pipeline exceeding $1.2 billion, about 40% of which comes from newer markets. Securities cash flows of around $250 million per quarter are being reinvested at yields of about 4.7%, a 125–150 basis‑point pickup over existing portfolio yields. On expenses, the bank forecasts first‑quarter costs roughly in line with the fourth quarter, offset over time by about $6 million in annualized savings from 27 planned branch closures beginning mid‑first quarter, partially counterbalanced by higher marketing and technology spending. CET1, currently 10.34%, is modeled to build by 15–20 basis points per quarter, targeting above 10.5% by mid‑year, with a full‑year effective tax rate projected between 20.5% and 21.5%. While provisions and exact expense patterns will depend on the economy and credit trends, the guidance paints a picture of measured growth, stable margins, and disciplined capital management.

In sum, WesBanco’s earnings call presented a bank that is successfully digesting a major acquisition, delivering robust earnings growth, and maintaining strong credit quality while investing for future expansion. Elevated CRE payoffs, higher post‑deal expenses, and seasonal deposit swings are real but manageable headwinds, and management has laid out clear cost-saving and capital-building plans to cushion their impact. For investors focused on regional banks, WesBanco now offers a larger, more diversified platform with improving margins, growing fee income, and a conservative posture on credit and capital—positioning it as a steadily strengthening contender in the sector.