WesBanco’s Earnings Call Highlights Growth Amid Challenges

WesBanco ((WSBC)) has held its Q1 earnings call. Read on for the main highlights of the call.

The recent earnings call for WesBanco reflected a generally positive sentiment, highlighted by strong organic growth and the successful acquisition of Premier Financial. This acquisition has notably improved WesBanco’s financial metrics, although challenges such as negative GAAP net income, increased provisions, and macroeconomic uncertainties remain areas of concern.

Successful Acquisition of Premier Financial

The acquisition of Premier Financial was a significant milestone for WesBanco, propelling it into the top 100 largest U.S. banks by asset size. Impressively, nearly 90% of Premier employees were retained, and the merger has been met with positive feedback, indicating a smooth integration process.

Strong Organic Loan and Deposit Growth

WesBanco reported robust organic loan growth, with an 8% increase year-over-year and a 4% rise quarter-over-quarter annualized. Total deposits saw a substantial increase of $922 million year-over-year, with organic deposit growth, excluding CDs, at 5% year-over-year and nearly 11% quarter-over-quarter annualized.

Improved Financial Metrics

The company achieved a 54% increase in net income, excluding merger and restructuring expenses, to $51.2 million. Additionally, the net interest margin improved to 3.35%, and the efficiency ratio saw a positive shift to 58.62%.

Positive Operating Leverage

WesBanco delivered strong organic loan and deposit growth while achieving positive operating leverage. Pre-tax, pre-provision earnings grew by 25% year-over-year, showcasing the company’s effective financial management.

Negative GAAP Net Income

Despite the positive financial metrics, WesBanco reported a negative GAAP net income of $11.5 million, or $0.15 per share. This was primarily due to the day one provision for credit losses and merger-related expenses.

Increased Provision for Credit Losses

The first quarter saw a provision for credit losses amounting to $69 million, with $59 million related to the day one non-PCD provision. Consequently, the allowance for credit losses increased the coverage ratio to 1.25% from 1.10% as of December 31, 2024.

Challenges in Managing Expenses

Non-interest expenses rose by 17.2% year-over-year, influenced by the addition of Premier’s expense base and higher amortization of intangible assets. The company is currently operating two core systems until conversion, leading to increased equipment and software expenses.

Macroeconomic Uncertainty

The macroeconomic environment remains volatile, with trade war threats and tariffs creating uncertainty for WesBanco’s performance. This external factor poses a challenge to the company’s strategic planning.

Forward-Looking Guidance

Looking ahead, WesBanco anticipates continued growth despite the challenging macroeconomic environment. The company expects to surpass a net interest margin of 3.50% in the second quarter and maintains a focus on disciplined expense management to drive positive operating leverage. The commercial loan pipeline is robust, and mid-single-digit loan growth is anticipated for 2025, supported by a significant increase in total assets to $27.4 billion.

In conclusion, WesBanco’s earnings call painted a picture of a company on a positive trajectory, bolstered by strategic acquisitions and strong organic growth. While challenges such as negative GAAP net income and macroeconomic uncertainties persist, the company’s forward-looking guidance suggests a commitment to overcoming these hurdles and continuing its growth momentum.