Good afternoon and welcome to the WesBanco Fourth Quarter 2024 Earnings Conference Call. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to John Iannone, Senior Vice President, Investor Relations. Please go ahead.

Thank you. Good afternoon, and welcome to WesBanco, Inc’s fourth quarter 2024 earnings conference call. Leading the call today are Jeff Jackson, President and Chief Executive Officer; and Dan Weiss, Senior Executive Vice President and Chief Financial Officer. Today’s call, an archive of which will be available on our website for 1-year, contains forward-looking information. Cautionary statements about this information and reconciliations of non-GAAP measures are included in our earnings related materials issued yesterday afternoon, as well as our other SEC filings and investor materials. These materials are available on the Investor Relations section of our website, wesbanco.com. All statements speak only as of January 23, 2025, and WesBanco undertakes no obligation to update them. I would now like to turn the call over to Jeff. Jeff?

Thanks, John, and good afternoon. On today's call, we will review our strong fourth quarter and full year 2024 results and provide an update on our operations and initial outlook for 2025. Key takeaways from the call today are: strong loan growth that has been fully funded through deposit growth; improved net interest margin which is expected to meaningfully improve through 2025. We remain focused on organic growth and efficiency gains to achieve positive operating leverage. Our transformative acquisition of Premier Financial Corp. remains on track, pending Fed and FDIC regulatory approvals. 2024 was an excellent year for WesBanco. We delivered strong loan growth of $1 billion, which was fully funded by deposit growth. We also announced our transformative 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 3 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. With the pending Premier Financial merger and the strength of our proven strategies and balance sheet, we are well-positioned to build on our momentum and continue delivering value for our customers and stakeholders. For the quarter ending December 31, 2024, we reported net income excluding merger and restructuring expenses, available to common shareholders of $47.6 million and diluted earnings per share of $0.71, which increased 29% year-over-year. On a similar basis, we reported full year net income of $146.4 million and diluted earnings per share of $2.34. Furthermore, the strength of our financial performance during the past year…

Thanks, Jeff, and good afternoon. For the quarter ending December 31, 2024, we reported GAAP net income available to common shareholders of $47.1 million or $0.70 per share. And when excluding after-tax restructuring and merger-related expenses, net income was $47.6 million or $0.71 per share, representing an increase of 47% from $32.4 million or $0.55 per share in the prior year period. On a full-year basis, 2024 net income available to common shareholders, excluding after-tax restructuring, and merger-related expenses was $146.4 million or $2.34 per share as compared to $151.9 million or $2.56 per share, reflecting the impact of the common stock rates during the third quarter of 2024. To highlight a few of the fourth quarter's accomplishments, we generated strong year-over-year pre-tax, pre-provision earnings growth of 29% that was built upon loan growth of $1 billion that was fully funded by deposit growth, an improving net interest margin, strong fee income growth of 21%, and continued management of operating expenses, with fourth quarter expenses increasing just 1% over the linked third quarter, as well as the prior year period. These positives combined with a slight negative provision for credit losses, a pension benefit that's not expected to recur, and a positive fair value adjustment on swaps resulted in a $0.15 increase in earnings per share, despite the increase in the share count from the third quarter's capital raise. As of December 31, total assets of $18.7 billion included total portfolio loans of $12.7 billion and total securities of $3.4 billion. And as Jeff mentioned, loan growth remained robust over the last 3 years and has been driven by the success of our strategies and the strong performance by our banking teams across our markets. We remain optimistic about future loan growth with our strong loan pipelines, banking teams and…

[Operator Instructions] The first question comes from Russell Gunther with Stephens. Please go ahead.

Hey, good afternoon, guys.

Hey, good afternoon, Russell.

Hey, Russell.

Hey, Jeff. Hey, Dan. Hey, I wanted to start on the margin and appreciate all the color with regard to legacy WesBanco. A bunch of tailwinds, it sounds like, on both sides of the balance sheet to the NIM. So, Dan, as we think about moving into the second quarter with the CD benefit, could you just share where those are repricing off of what you would expect to reprice them into and then what the duration of the offerings are?

Yes. Sure, Russell And so, yes, first second quarter, it's about a 1.2 billion in CDs and those are -- with the average rate is about 4.75% and we anticipate those repricing downward by 75 to 100 basis points. So that's where we kind of see particularly the second quarter, where we think we're going to have a little bit more outsized lift in margin. And those, right now, we have slated to remain in that kind of 7 month CD special. So that's the kind of [indiscernible].

Okay. I appreciate it. Okay. And then switching gears as we think about sort of the pro forma margin with Premier given the rate backdrop we sit in today, also your two Fed cut expectations, does that put us in a pro forma range of call it, I don't know, 345 to 350? Or given your kind of legacy outlook and improvement with the WesBanco margin as you layer in Premier, is there any change to how we should be thinking about that margin upon deal close?

Yes, Russell, I think you're pretty close to what we're modeling right now, I'd say. I think one of the things that we -- if you recall back when we announced the deal in July, we had a kind of a pro forma margin of, it was like 346. And if I were to think about what has changed since then, certainly the rate environment, and I would say that 346 at the time was based off of analyst consensus. That would have been first quarter analyst consensus forecast for 2025 for WesBanco on a standalone basis, that would have been the foundation. And since the first quarter of 2024, that consensus estimate, I think given some of the tailwinds that we've discussed, it feels pretty good that we could be 10 to 15 basis points better than that today.

Very helpful, guys. Thanks for taking my question.

350 to 355 range.

I appreciate it. I'll step back. Thanks very much, guys.

The next question comes from Karl Shepard with RBC Capital Markets. Please go ahead.

Hey, good afternoon, guys.

Hey, good afternoon, Karl.

Hey, Karl.

I wanted to pick up on deposits a little bit more. A lot of opportunity in 2Q, but could you just sketch out the whole year a little bit and what you think an appropriate deposit growth rate is and if some of the stabilization and mix we saw this quarter can continue? Thanks.

Yes. So what I would say is, one of the bigger assumptions that we're modeling today is that the loan growth would be fully funded by deposit growth. And that deposit growth could be a little lumpy quarter-to-quarter, but generally speaking for the year, we expect deposits to fully fund loans. And so working backwards, I think we've -- we've been pretty clear about what our expectations are for loan growth on an annual basis targeting that kind of mid to upper single-digit loan growth. So that’s about $800 million or so, $850 million in loan growth. And so that can kind of help to inform you on what our expectations are for deposit growth.

Okay. And then just on the mix piece of it, do you think we'll see a little less CD growth or is that still area you see a kind of similar composition?

I think we could see probably a little less concentration in CD growth than what we saw this year, like 2024. In 2025, I think it could be a little bit more evenly mixed.

Okay. Thanks for the help.

The next question comes from Dave Bishop with Hovde Group. Please go ahead.

Yes, good afternoon, gentlemen.

Hey, good afternoon, Dave.

Hello, Dave.

Hey, Jeff, quick question. You noted the success in sort of revamping some of your treasury management products on the commercial side of the house. Just curious, I don't know if you disclosed this, but maybe give like a percentage increase of maybe new commercial accounts added this year. Are you seeing -- are you able to win bigger commercial accounts, average size? And just curious, any color you can provide there on a commercial deposit growth?

Yes, sure. We are seeing some larger account wins. I think we're continuing to ramp it up. I will tell you that we -- treasury management fees year-over-year grew pretty nicely. And once again, we’re -- I think, I believe we ramped up around 40 new multi-cards that were implemented toward the middle to end of last year. So obviously that spend would flow through this year. And then we are targeting at least that many or more for this year. So it's really getting started, but we are seeing the revenue lift there. And the teams, the commercial teams are really adding it to their repertoire, which is allowing us to bank additional C&I business. I believe in the fourth quarter you saw us grow C&I about $70 million. And so that was a big positive for us as well from a loan perspective. And then we've had a tremendous growth in deposits as well. So, yes, it's just really ramping up, I would say, but it's made a big impact as far as being able to grow deposit and commercial loan balances.

Great. And then a follow-up question, I think, in the preamble. It sounds like you're still confident of a first quarter close to the Premier acquisition. Just curious, is the patent [ph] DC reviewing this? Just curious, we're going to have to get final regulatory approval. Thanks.

Yes. So we are very confident that we'll close in the first quarter and it is in DC. The Fed and the FDIC are both in DC. We have had correspondence with both answering some questions and going back and forth on a few minor items that they've asked about. At this point, I see no issues that have arisen and we still feel very comfortable about closing in the first quarter.

Great. Thank you.

The next question comes from Daniel Tamayo with Raymond James. Please go ahead.

Thank you. Good afternoon, guys.

Hey, good afternoon.

Maybe first, just a clarification, the loan growth guidance that you talked about, I know you mentioned expecting an increase in payoffs in 2025. Does that assume an increase in payoffs in 2025 in terms of what you gave us in the mid-single-digit loan growth?

That would be a net. That's net. That's a net number.

Okay.

So with payoffs, yes, still in that mid to upper single digits.

Mid to upper single. So it includes -- you're assuming that payoffs increase within that net loan growth number you're talking about, is what you're saying?

Yes, that's right.

Okay. If there were -- payoffs were to exceed expectations and loan growth were to come in a little bit lighter and you had a similar situation that you had in the fourth quarter where deposit growth exceeded loan growth, would you be inclined to pay down FHLB borrowings again? I'm just curious how that scenario would play out if it were to occur.

Yes, we would. So all our deposit growth is that we're bringing in less than what we're paying to FHLB. So we would, if we weren't able to grow loans at the same rate of deposits, we would pay down the FHLB borrowings, which would have a positive impact, I believe, on our net interest margin.

Okay.

Yes, we saw -- we really saw that here in the fourth quarter. The deposit growth came kind of early in the fourth quarter and we were able to pay down those Federal Home Loan Bank borrowings earlier in the quarter. And we actually picked up a few basis points in margin as a result.

Yes. We finished December at 308.

Okay. Terrific. And then maybe just switching gears here to credit, certainly it's been strong for you guys, but there was an uptick in MPLs and criticized and classified. Just curious if you have any more color on kind of what is driving the uptick in those categories.

Just kind of normal quarterly ebbs and flows, I believe one credit slightly raised it up a little bit. I think we plan on getting that resolved probably by the end of this quarter, early next quarter. And if you look at our historical trends, we're still well within our historical trends and still in all categories at least average of our peer groups are most of times better. So I wouldn't read anything into those numbers. They -- as you know, fluctuate quarter-over-quarter and at this point there's no trends that we're seeing at all.

Okay. So we should still be kind of comfortable with where net charge-offs have been historically looking for, is what – sounds like what you're saying.

Yes.

Got it. All right. I'll step back. Thanks for all the color guys.

Yes. Thank you.

The next question comes from Catherine Mealor with KBW. Please go ahead.

Thanks. Good afternoon.

Hey, good afternoon, Catherine.

Hey, Catherine.

I want to circle back just to kind of move in rates and your comment here on the margin. It feels like the move in rates have been good for WesBanco on a standalone basis and then it looked like Premier also had a higher margin this quarter. So it feels like the margin trajectory is better just kind of net so far. On the flip of that, as we think about pro forma capital ratios at close, I guess question one is what's the best rate to follow? If you look at the 10-year, it looks like the 10-year has moved up a little bit since we announced the deal. And so how do we think about that impact? It's good for the margin, I would imagine, because higher credible yield, but also kind of a negative to capital. And so as you think about pro forma capital ratios and commercial real estate, the capital ratios at close, does that move in rates kind of push you to need to sell more loans? Or is there something that you're kind of solving for, for where you want ratios to be at close that we should just think about as we get nearer to the close date? Thanks.

Yes, I think you hit on a number of things and a lot of great questions and thought there. What I would tell you, from our perspective, one of the things that we did do is we had the commercial -- the entire interest loan mark revalued as of December 31, 2024 to compare that to what the original assumption was. It actually came down slightly, so -- but I would tell you two couple things. Well, I would use the 5-year more so than probably the 10-year. But the 5-year back at the time that we would evaluate was right around 4.5%. Today, or well, at the end of the year, it was still kind of in that rough range, I would say. And the interest mark on a standalone basis actually came -- went from kind of $325 million down to about $250 million to down $75 million. That's a kind of, I think, about 5% interest mark added field announcement to a 4% mark based on where rates were at the end of the year. So that actually moves in the opposite direction of what we were just discussing there. In fact, in that scenario, we see a little less tangible book value dilution, a little less interest mark accretion. And with the lower TBB dilution, it actually takes overall [indiscernible] down from kind of that 13%, 13.5% dilutive to about -- to just under 10% dilutive, which we view very positively. And I'd say the CRE ratio is something that we're very focused on, as you kind of alluded to there. And we want to keep that -- we want to -- we're very mindful of that 300% guideline and we want to maintain our portfolio or our ratios under that. But I'll tell you with the fourth quarter, the growth in capital that we experience here, Premier's very nice numbers that they reported as well, combined with the lower interest mark all kind of bode well for better capital ratios, assuming that rates are what they were December 31 of 2024. And I will say this as well, that our capital ratios kind of pro forma based on that updated analysis kind of improved across the board by about 50 basis points, about half -- like half a percent.

And it's really interesting. It's so helpful. So now this looks like since deal announcement, we're getting less book dilution and then less accretable yield, but our core margins are coming in higher. So actually kind of probably net neutral may be a little bit better to the margin, all in. Is that a fair way to think about it?

Yes.

Yes.

Yes, that's exactly right.

That's great. Okay. And then on expenses, can you just remind us just kind of the timing of cost savings and if there's any kind of upside to those cost savings that you might see now that you're a few months in from announcing the deal?

Yes. So, cost savings, typically, we would anticipate to begin after core conversion, and typically that's a good month or two after core conversion. And so, right now we've got a tentative date of the middle of May for that core conversion to occur. And then there's certainly cleanup for a month or two thereafter where we're still kind of running parallel. And so after that period of time that's when we would expect to really begin to realize the full kind of 26% cost saves. We're still obviously evaluating, but we do feel very good about that assumption. We feel that was a nice conservative assumption at announcement and still feel that we are well on track to meet that.

Okay. Great. Thank you very much.

The next question comes from Manuel Navas with D.A. Davidson. Please go ahead.

Hey, good afternoon. So, just to …

Hey, good afternoon.

Hey, Manuel.

… follow-up on that capital -- on part of that capital question, the move in rates likely improved the CRE concentration at close and actually is no longer a headwind at all to your legacy growth prospects. Is that kind of even a stronger takeaway?

Well, it is. It really is. And you're right. I didn't say that. I kind of meant to imply that. But it does improve the CRE concentration ratio on day one for sure. And it does remove some of -- if there were any ceiling on growth, it does certainly help there. Absolutely.

Just remind me on the -- are there any other updates to Premier targets, accretion, or I guess we've kind of covered most things, but anything -- any other noteworthy updates about the pending transaction?

I mean, maybe the only other thing I might add, I think Catherine touched on the CRE sale of $100 million roughly. And we'll adjust that accordingly depending on what we have and what we see the time the deal closes and where CRE concentrations are. But I would say on the securities portfolio, we are -- we continue to evaluate that. There's been some opportunities more -- particularly more recently with the longer term rates coming in where they are to potentially sell more and reinvest, maybe take on a more duration -- little more duration. And that basically has the impact of kind of -- we have here an opportunity that we want to make sure that we take advantage of to restructure the securities portfolio how we want it. And so, we still anticipate right now they have a $1.2 billion securities book. We anticipate reducing that by a couple hundred million dollars. But we also anticipate restructuring the remaining securities book to fit our investment profile and to pick up some additional yield where we can. So I think that's kind of another tailwind to margin and future growth.

That's great. Just on margin on the legacy basis, when you talk about a little bit more expansion in the first quarter, [indiscernible] December number of 3.08% or is that off of the full quarter number?

It's off of the full quarter number.

Okay And then just there might have been some crosstalk. You're kind of almost expecting at close you could have them in be 10 to 15 basis points above where you previously expected it for the deal?

That's correct. I would say that when I say that, I go back to that kind of 346 that we disclosed back when we announced the deal, at that time, WesBanco's standalone margin, I think, for 2025 was right around 310. That was the projection for 2025. And so from July -- and that was actually first quarter consensus number, that's what we use. We just use the consensus estimates. Since that time, we can see it. It's real. We anticipate that we're going to outperform the 310, that would have been baked into that 346 guidance by 10 to 15 basis points. Yes.

That's really -- that's great. That's a good update. One last question, kind of where -- what regions are you the most excited about, anywhere that you would looking to add and how -- in timeline where you're looking to add new lending teams in terms of like the legacy WesBanco commercial lending team?

Sure. Yes. So, we grew last year a $1 billion in loans, a $1 billion in deposits, which is if you think about our acquisition of Your Community Bank, that's basically we built organically a Your Community Bank last year. And so when we look at future growth, obviously the LPOs have driven a good portion of that. So what I would tell you is looking to fill out more in Nashville and then also looking to add more in Knoxville and Indianapolis. I should say start Knoxville and then add more to Indianapolis. Those would be the markets I would say we're looking at. Of course, we're always looking for great talented bankers that fit in with our processes and how we do things in our culture, but I would go Nashville, Knoxville and Indianapolis.

That's great. Thank you for the commentary. I'll step back into the queue.

Thank you.

And our last question today will be from Russell Gunther with Stephens. Please go ahead.

Hey guys. Thank you for the follow-up. I just want to clarify, Dan, the 350 to 355 pro forma NIM with Premier. One, does that -- is that based off the updated mark you talked about receiving December 31? And then, two, does that contemplate the potential securities restructuring?

It is based off of the updated mark, and it does not contemplate fully the restructure of securities. So there's …

Got it. Okay, great. I appreciate it. Thanks, guys.

Thanks, Russell.

This concludes our question-and-answer session. I would like to turn the conference back over to Jeff Jackson for any closing remarks.

Thank you. During the past year, we delivered strong loan growth of a $1 billion that was matched by deposit growth of a $1 billion, while maintaining strong capital levels and credit quality. Our successful balance sheet strategies have and should continue to improve our net interest margin. We remain focused on organic growth and efficiency gains to achieve positive operating leverage and position us well to deliver shareholder value. Thank you for joining us today, and we look forward to speaking with you at one of our upcoming investor events. Have a great day.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.