WesBanco, Inc. Aktie

Good day, and welcome to the WesBanco First Quarter 2026 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 of Investor Relations. Please go ahead.

Thank you. Good morning, and welcome to WesBanco, Inc.'s First Quarter 2026 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 April 22, 2026, and WesBanco undertakes no obligation to update them.

I would now like to turn the call over to Jeff.

Thanks, John, and good morning, everyone. Today, we'll walk you through our first quarter performance and share our current outlook for the rest of 2026.

There are 3 key takeaways from the quarter. We delivered solid year-over-year financial results. We exceeded our year 1 financial targets for the Premier acquisition. And we stay disciplined in executing our strategy to position WesBanco for long-term success. Overall, it was a solid start to the year.

Turning to our financials. For the quarter ended March 31, 2026, we reported net income available to common shareholders of $87 million, excluding merger and restructuring charges. That translated to diluted earnings per share of $0.91, up 38% from a year ago. On a similar basis, we reported pretax pre-provision earnings of $114 [ million ] an increase of 44% year-over-year. The strength of our first quarter financial performance was reflected in our returns on average assets and tangible common equity of 1.3% and 17.4%, respectively.

Our capital position also remained solid with a CET1 ratio of 10.7%. That gives us flexibility to support growth and navigate the operating environment ahead. As we mentioned last quarter, developers continue to seek permanent financing or the sale of properties. During the first quarter, that drove elevated commercial real estate project payoffs which totaled $340 million during the first quarter and created a 1.4% headwind to our year-over-year loan growth. In fact, we have incurred a significant CRE payoff headwind of $1 billion during the last 9 months. Despite that headwind, our teams continue to execute at a high level. Loan growth was largely funded by deposit growth and our commercial pipeline has reached all-time record levels.

Adjusting for the payoff activity, total loans grew 3.6% year-over-year. The commercial pipeline has increased 35% since year-end to a record $1.6 billion. And in the few weeks since quarter end, the pipeline has grown another $200 million to $1.8 billion. About 45% of that pipeline is coming from existing loan production offices and the former Premier footprint. Impressively, this pipeline does not yet reflect the benefit of our recently announced South Florida expansion. That team has hit the ground running and built an initial $400 million pipeline just in a few weeks. They are on pace to grow that pipeline by a significant amount as the year progresses.

Even with elevated CRE payoffs during the first half of the year, and the potential of influence of geopolitical events, we continue to expect mid-single-digit year-over-year loan growth for 2026. Supported by our record pipeline and early momentum from our South Florida markets. A little over a year ago, we completed our transformative acquisition of Premier Financial. An acquisition that placed WesBanco among the 50 largest publicly traded banks in the U.S. When we announced the Premier acquisition in July 2024, we laid out clear financial targets for the first year including 40% earnings per share growth, a 1.3% return on average assets and a CET1 ratio of 9.6%, along with a tangible book value earn back in under 3 years.

I'm pleased to say we delivered and, in many cases, exceeded our targets. Over the last 12 months, core EPS growth reached 49%. And [ ROAA ] was 1.3%. We also exceeded the pro forma CET1 ratio by more than a percentage point and shave more than a year off the dilution [ earn ] back, as our first quarter tangible book value per share of $22.45 is well above the June 2024 figure and nearly at the year-end 2024 level.

In addition, we have been making other strategic investments that demonstrate our commitment to long-term sustainable growth. We continuously invest in digital capabilities and products like WesBanco One account and treasury management services to ensure we serve our customers how, when and where they want. At the same time, we continue to optimize our physical branch network. Over the past 4 years, we've closed 64 locations with limited customer traffic, including 10 of them in Northern Ohio that will close next month.

We're selectively opening new financial centers in key markets and consolidating others into more central and higher-demand locations. Our loan production office strategy continues to perform well. We've opened LPOs in high-growth markets, including Chattanooga, Indianapolis, Knoxville, Nashville and Northern Virginia. We're seeing strong results as these teams deepen relationships and bring on new commercial clients. As these offices achieve scale, we add product capabilities locally as well as financial centers to better serve our growing client base. Chattanooga is a great example. We opened that LPO less than 3 years ago, and it has generated strong relationship-driven growth. That momentum supports the opening of our first Tennessee Financial Center this week.

We anticipate that several other of our LPOs will follow this pattern within the next couple of years. I'm very excited about our recent expansion into Florida, which is a thoughtful extension of our long stated southeastern expansion strategy. Last month, we announced the launch of our commercial banking business across key high-growth South Florida markets, starting with Palm Beach and [ Broward ] counties. We brought on a seasoned team of nearly 20 professionals, including market leaders, commercial makers, credit underwriting and a client relationship support as well as a treasury management leader.

These are attractive high-growth markets and ones I have come to know well during my banking career. I've worked with many of these bankers before and they consistently delivered top performance while maintaining strong credit discipline. Just as importantly, their client focus aligns well with our relationship-led approach, our Florida expansion also provides meaningful organic growth opportunities for our strong health care banking vertical. As the regional business, which is primarily focused on C&I lending develops, we will evaluate additional services and solutions, including retail financial centers, treasury, wealth management and mortgage offerings to deliver even a greater value to our clients.

I would now like to turn the call over to Dan to walk through the financials and outlook in more detail. Dan?

Thanks, Jeff, and good morning. For the first quarter, we reported GAAP net income [ available ] common shareholders of $84 million or $0.88 per share. And when excluding restructuring and merger-related expenses, first quarter net income was $87 million or $0.91 per share. To highlight a few of the first quarter's year-over-year accomplishments, we generated strong pretax pre-provision core earnings growth of 44% grew core earnings per share by 38% and improved the net interest margin by 22 basis points and reduced the efficiency ratio by nearly 4 percentage points to 52.5%.

Total assets of $27.5 billion include total portfolio loans of $19.1 billion in securities of $4.4 billion, Total portfolio loans increased 2.2% year-over-year, driven by commercial real estate and home equity lending and declined slightly on a sequential quarter basis due to elevated payoffs. We expect CRE payoffs to remain slightly elevated during the second quarter, but at a lower level than the first quarter before returning to a more normal historical level during the back half of the year, totaling $700 million to $900 million for the year.

While very small, we ended our indirect auto program, [ as ] it's not core to our organic growth strategy, and at quarter end, it represented about half of the $325 million of consumer loan portfolio and anticipate that, that portfolio will run off over the next 3 to 5 years. Deposits increased 2% year-over-year to $21.7 billion in organic growth. We continue to be successful in remixing higher-cost certificates deposits into interest-bearing demand and [ of our ] remaining $2.7 billion CD portfolio approximately [ 1 billion ] matures in each of the next 2 quarters with an average rate of 3.48% and 3.2%, respectively. Our current 7-month CD rollover rate is 3.25%.

Further, we started the year with $100 million in broker deposits, $50 million paid off early in the quarter, while the last of our broker deposits paid off on April 1. Credit quality continues to remain stable as key metrics have remained low from a historical perspective and favorable to all banks with assets between $20 billion and $50 billion over the last 5 quarters. [ Criticized ] and classified loans as a percentage of total portfolio loans decreased $49 million or 24 basis points from the sequential quarter to 2.9%, and while nonperforming loans increased $53 million sequentially, primarily due to 3 CRE loans across different markets and property types, none of which were office.

The allowance for credit losses, the total portfolio loans at the end of the first quarter was 1.1% of total loans or $210 million. The decrease from the fourth quarter was primarily due to lower loan balances faster prepayment speeds and macroeconomic factors. The first quarter margin of 3.57% improved 22 basis points year-over-year through a combination of lower funding costs and higher security yields but declined 4 basis points sequentially. This decrease resulted primarily from lower net loan growth as well as modestly higher seasonal deposit contraction in the first 2 months of the quarter, which fully recovered by the end of March.

Total deposit funding costs, including noninterest-bearing deposits declined 11 basis points year-over-year and 7 basis points quarter-over-quarter to 177 basis points. The first quarter noninterest income of $41.8 million increased $7.2 million or 21% year-over-year due primarily to the acquisition of Premier combined with organic growth. Service charges on deposit and digital banking fees improved due to increased general spending and higher transaction volumes from our larger customer base as well as organic growth from treasury management, which generated revenue of $2.5 million in the first quarter, representing an 82% increase year-over-year, reflecting record asset levels, which totaled $10.4 billion combined trust fees and net securities brokerage revenue increased due to the addition of Premier Wealth clients market value appreciation and organic growth.

Noninterest expense, excluding restructuring and merger-related costs for the first quarter of 2026 was $143 million, a 25% increase year-over-year due to the addition of the Premier expense base which was only in the WesBanco expense base for 1 month in the prior year period. Higher core deposit intangible asset amortization from the acquisition and higher FDIC insurance expense due to our larger asset size. On a similar basis, operating expenses were down slightly from the sequential quarter, reflecting our focus on managing discretionary expenses and some onetime credits approximating $2 million.

Please note that the first quarter does not fully reflect our strategic expansion into South Florida as the hiring occurred late in the quarter. If we turn to capital, all of our key ratios improved quarter-over-quarter. Our CET1 ratio, as of March 31, was 10.7%, which increased more than anticipated due to lower risk-weighted assets during the quarter. Based on the strategic investment that we're making in the Southeast Florida and other markets, we anticipate CET1 to [ now ] build 5 to 10 basis points per quarter for the remainder of the year, putting us on pace for 11% and CET1 target by year-end.

Turning to the outlook. Our current outlook for 2026 includes our Southeast Florida expansion, which currently totals nearly 20 individuals and is expected to achieve positive operating leverage within 12 to 15 months and be additive to our long-term financial outlook. We've removed our previous rate cuts from our modeling and currently do not anticipate any cuts or increases during the remainder of 2026. We anticipate our second quarter net interest margin to rebound into the low 360s and then continue to improve into the mid- to high 360s during the second half of the year.

This assumes, among other things, that the competition for loans and deposits remain stable, loan growth is fully funded by deposits and an upward sloping yield curve. Generally speaking, there are no meaningful changes to our fee income outlook for the last -- from the last quarter. [ Trust fees ] and securities brokerage revenue should benefit modestly from organic growth and be influenced by equity and fixed income markets. And as a reminder, first quarter trust fees are seasonally higher due to tax preparation fees. Mortgage banking should grow modestly over 2025 beginning in the spring, driven by recent hiring initiatives Total treasury management revenue should see increases from 2025 as the compounding effect of our services continue to expand and gross commercial swap fee income, excluding market adjustments, should be in the $8 million to $10 million range.

Overall, we currently anticipate our quarterly fee income to grow in the 3% to 5% range year-over-year during the remainder of 2026. While we remain focused on delivering disciplined expense management, we are making strategic investments to drive long-term value for our shareholders. We're closing 10 financial centers during May and anticipate the annual savings of approximately $2 million to begin to be realized midway through the second quarter.

Salaries and wages will increase, reflecting the South Florida expansion and the annual midyear merit increases, which take effect midway through the second quarter. Occupancy expense should be flat to slightly down compared to 2025 due to our branch optimization efforts slightly offset by our branch expansion initiatives in our new and existing markets, while equipment and software expenses are expected to increase somewhat as compared to 2025 as we continue to invest in products services and technology to improve the customer experience and drive revenue growth.

In support of our organic loan and deposit growth model and our commercial lending expansion efforts, marketing is expected to increase to approximately $4 million per quarter. And based on what we know today, we expect our expense run rate during the second quarter to approach $150 million and then to increase a couple of percentage points in the third quarter from a full quarter of midyear merit increases. The provision for credit losses will depend on changes to the macroeconomic forecast and qualitative factors as well as various credit quality metrics, including potential charge-offs, criticized and classified loan balances, delinquencies, changes in prepayment speeds and future loan growth. And finally, we anticipate our full year effective tax rate to be between 20% and 21%.

This concludes my remarks. Operator, we're now [ ready ] to take questions.

[Operator Instructions] And your first question today comes from Manuel Navas with Piper Sandler.

I appreciate having us [ off for ] the comments. What are the funding expectations around the South Florida commercial lending team? And can you dive a little bit more into your ties to the area and the potential to add to that team?

Yes, sure. My -- I'll start with the [ tide ] in South Florida. As you may or may not know, I worked as a regional president in South Florida, when First Horizon bought Capital Bank, and really built out that team. And so work down there back in 2018 through essentially 2020, 2021. They're a very top-performing team, and so when the opportunity came around to bring them over to WesBanco, it just seemed like a perfect partnership.

As I mentioned before, I kind of put together that team back at my previous employer. And so when you when you look at what they can do and where they're headed, I think it's going to be one of our big growth drivers for this year and future years. We are opening up 2 offices, as mentioned, Palm Beach and Broward. We would also follow up with 2 branches as well. So when you look at the funding piece, we are expecting them to provide a significant piece of funding their own loan growth and that will be followed up with 2 branch locations, which would -- we'd hopefully have opened by the end of the year. And -- but overall, we feel like it's a great growth market. And I think your other piece of that question was more expansion. We are looking at other markets there in Florida, as my previous history, I had the whole state of Florida.

So we will be looking to add additional people when the right people come along, but I do believe, and as I mentioned in my prepared remarks, they have a current pipeline of about $400 million, and I feel like the loan growth and the revenue opportunities there will help propel us into the future.

I appreciate that. Diving a little bit back into more deeply into the NIM outlook. Can you speak to more of the components there that should drive kind of the improvement across the -- from here? Can you have deposit declines beyond CDs what kind of current pricing levels on the loan book? Just kind of if you could walk through some of the wildcards there [ on the name ].

Yes, sure, Manuel, I'll take that one. So we talked about kind of 3 to 5 basis points of NIM improvement here in the second quarter. A lot of that is really the repricing of the back book for both loans as well as securities and then kind of an assumption that we're going to fund the majority of the deposit or the loan growth with deposits in the second quarter.

As you know and as you heard in my prepared remarks, we did see a little bit of outflow here in the first quarter in deposits, which is seasonally expected. It was just a little heavier than anticipated. And we also saw about $150 million of noninterest-bearing migrate into interest-bearing. So those 2 things kind of combined with the loan growth. You've kind of provided that headwind to first quarter margin. But if we think towards that 3 to 5 basis points when I talk to repricing, we do have about $400 million of fixed rate commercial loans, weighted average rate of about 4.25% that will mature in the next 12 months.

Those will be repricing up almost 200 basis points into the low 6s, we've also got another $400 million of variable rate loans. These are those that would be repricing 48 to 60 months, roughly, that would be coming due in the next 12 months weighted average rate there is about 3.75. So that's going to provide some nice tailwind as well. And if we just think about other sources, securities cash flow that's beginning to tick up a little. We're kind of projecting around $275 million in security cash flows per quarter.

And so that's going to reprice upward from kind of, call it, 3.3% up to about 4.75% to 5% depending on where rates are. So that's another nice pickup of about 150 basis points or so. And then, of course, as I mentioned in the prepared commentary, we do have a continued downward repricing of the CD book. So particularly that $1 billion of first quarter CDs that repriced down about 40 to 50 basis points, that's going to benefit the second quarter quite a bit.

Similarly, the $1 billion in the second quarter of CDs that are maturing, those are going to reprice down about 25 basis points. That will begin to benefit second quarter and really kind of fully benefit third quarter. But I think those are probably the major items that I mentioned again in the prepared commentary that we did pay down the remainder of our broker deposits. So we had $100 million in brokered on the books at the beginning of the year, $50 million of those paid down kind of early in the first quarter, the other $50 million on April 1. So that also would provide I believe, some nice tailwind towards that 3 to 5 basis points of margin expansion here in the second quarter.

I appreciate that commentary. If there is rate cuts, what would that impact this progression, if at all?

Yes. So we're pretty neutral. So I would say there's not a whole lot of movement one way or the other with rate cuts. Certainly, our commercial loan portfolio is 50% of that is variable rate, reprices within 3 months. But we'd also be able to reprice downward our deposits. Our FHLB borrowings are all mostly 1 month advances. And so we think that in a rate cut scenario or a rate hike scenario, which is now potentially on the table, we would be in a great spot.

Your next question comes from Jake Civiello with D.A. Davidson.

Wanted to touch on the uptick in NPAs. So obviously, you mentioned that the 3 non-office credits were the driver? Can you provide a little bit more details in terms of what actually those credits were?

Yes, I can. They were -- as I mentioned, legacy Premier credits, they are all in 3 different markets, 2 are multifamily, and I would tell you that we feel like we're very well collateralized there and well reserved for those 3 and feel like that we will be working out of those. Once again, there were 3 credits. I think the other piece I would highlight is the [ C&C ] did tick down back to our kind of our normal range, sub-3%, which is top in our peer group. But we are looking at those NPAs. And do you still feel very good about working through those 3 credits.

It's also worth like kind of recognizing that those NPAs are nonaccrual loans are included in the [ C&C ] total. So that 24 basis point reduction in [ C&C ], that includes these as well. So continue to see positive momentum on the credit front.

And your next question comes from Karl Shepard with RBC Capital Markets.

Congrats on getting the Florida team in place. I wanted to start there. You highlighted the pipeline, I think, around $400 million. Can you help us understand maybe your expectations for how much of that you would think can close? And is that over the rest of the year? Or is there a little bit longer time line?

Yes. We -- I think that they will close their first deal this month. I would hope that by the end of the quarter, they would have anywhere from, this is a guess, but $100 million closed this quarter. And I would hope by the end of the year, anywhere from $300 million to $500 million closed could be more depending on the number of bankers we continue to add there.

And that's just not loans. I mean, we're bringing -- we will be bringing over full relationships. Once again, we hope to have a couple of depository branches open soon. And this would also include fees and treasury management services and all those other things. I think it's going to be a heavy driver for us this year. And just while we're talking about it, just to bring up I think our overall pipeline, if I look back and compare it to last year this time, I think our pipeline last year was about $1.2 billion. Today, we said it nearly [ $2.3 billion, $2.4 billion ]. So if I look at that and then I also look at pay off is what we see today for the quarter. Today, we see about $100 million plus less payoffs than we saw in first quarter. So when I combined a much higher pipeline less payoffs that we see today, I feel very good about where we stand from a loan growth perspective for the rest of the year.

Okay. That's helpful. And then I guess just on the payoff piece, I think you just said it, but I just want to clear it up too because I know the scenario is concerned. But I think last quarter, you thought [ $600 million to $800 million ] for the full year. I think you said $700 million to $900 million today. So the first quarter was maybe just a little bit of pull forward of stuff you thought was going to pay off. Is that a fair way to see it? There's really not much of a change in your expectation? And obviously, the pipelines are strong and the production looks solid as well.

Yes, 100%. Some of the payoffs moved to first quarter. As I mentioned, we see this current quarter less payoffs in the first quarter of over $100 million. And no, I think that's a perfect way to see it. The other thing I would add, just the first quarter is we had a couple of [ DFI ] loans that we decided we were not going to be in that business. And just to point out that we have a very, very, very small exposure, I think, less than $50 million to [ DFIs ].

And so we chose not to do a couple of those deals in the first quarter that could have given us some more loan growth. And then we did have a couple of deals really slide from first quarter to second quarter. So some of this is really just a timing issue with the loan growth.

Next question comes from Russell Gunther with Stephens.

Just following up on the pipeline discussion here. It would be helpful to get a sense of the mix and the yield, and then just in general, how you guys are thinking about pull-through rates relative to historical levels.

Yes, I think the mix, if I was to look at it, I would say it's probably 60-40 CRE to C&I would be my guess. And then the yields, I'm going to guess, the low to mid-6s from a loan yield perspective. Once again, I would also highlight that everything we do is a full relationship that has some level of deposits and treasury management services.

As far as the pull-through, I don't see it being any different than what we've seen in the past from adding and closing business. Obviously, the new markets will have to measure that with Florida coming on. But once again, we feel very good about where we're at. And some of this loan growth is a timing thing, and I do believe we will see strong loan growth for the rest of the year.

That's helpful, Jeff. And then switching gears from my second question here would be to capital. So CET1, roughly 10.7% today. You guys have a preliminary sense for the impact of the Basel III proposal on RWAs and CET1? And then would there be any shift in your appetite to consider repurchases?

Yes. Russell, I'll take that one. And great question. I think we're still obviously evaluating the impact there. But preliminary estimates kind of indicate that we would see a benefit to CET1 of about 5% to 6%. And so on a 10.7% ratio today, that's worth about 55 to 65 basis points.

So that frees up about, call it, around $120 million or so in capital. And that certainly would provide opportunity to deploy whether that be through buyback or additional growth. But I think that certainly would accelerate the buyback view. So like I said in my prepared commentary, we are building -- we've built capital back very quickly here in the first quarter up to 10.7%. We were kind of projecting that to be closer to 10.5%. And of course, lower risk-weighted assets is what drove that extra kind of 20 basis points of CET1 here in the first quarter.

But with the growth that we're anticipating from all of the things that Jeff has discussed, we expect that to slow down a little, the growth in CET1. But like I said, all of that being said, we do have today, 900,000 shares available for repurchase. I think that we're -- now that we're above 10.5%, that's kind of our target. I think that it offers us more flexibility to evaluate how we can deploy that capital. But as Jeff said, with the growth opportunity we have organically we're going to continue to evaluate there.

[Operator Instructions] Your next question comes from Daniel Tamayo with Raymond James.

Yes. Maybe just a clarification, Dan, for you on the expense guide. So I think you said approaching $150 million in the second quarter, and then a couple of percent growth, just so we were clear on that. So we should be looking for roughly $153 million or so or just below that in the third quarter. And then how -- is that kind of the normal run rate, including all the new hires at that point? I know it's an ongoing thing, but just trying to get a sense for maybe where we're going to end the year?

Yes. I'd say that $152 million to $153 million is probably a pretty good estimate for third quarter, as you said. But it is going to be dependent on the commercial hiring and the investments that we're making here throughout -- the market expansion.

So today, that's where we're at. But if we end up taking any higher, that would be certainly very accretive to long-term earnings per share in that, we'd be hiring revenue producers to be putting on loans and fee income [ trader million service ], et cetera, into '26 through and begin to benefit us in '27.

Okay. And I'm sorry if you guys talked about this, but are there any noncompetes that we need to be aware of for the new hires?

Yes. It's kind of they all have standard nonsolicitation agreements that we work through, that's pretty standard in our industry, and we are 100% behind working through that, making sure they comply with all those different nonsolicitation. There is no -- as far as the more noncompetes.

Got it. Is there a time frame that we can think about that maybe starts to ramp after a certain period?

I would think that we would have significant progress from a ramping of business towards the end of the year for the Southeast Florida team. I would -- once again, we think that they would close anywhere from $300 million to $500 million in new loans between now and the end of the year, and it could be higher than that based on some deals we're looking at.

So I think by third quarter, we'll have a very good feel in the third quarter where this team stands, but I have very, very high expectations of this team because I have worked with most of them in the past. And feel like they will be delivering a really great return for our bank.

Great. And then maybe 1 more clarification for you, Dan. On the 3 loans that drove the increase in the NPLs. Were there reserve -- I guess overall reserves came down in the quarter or at least as a percentage of loans. Were there reserves -- incremental reserves taken on those 3 loans that were moved into NPL. And I know you said they're you're comfortable with where they stand now? I'm just trying to get a sense for coverage of those loans as we look forward.

Yes. No, there were not incremental reserves taken on them. As I said, they're as Jeff said, rather, they were generally well secured, well collateralized and certainly evaluated discussed, but nothing additional.

Okay. Appreciate it.

Yes. Thanks, Dan. And the one other thing I'll mention is we have started hiring another team in Nashville, and they have just started as well. So there'll be more to come on that in future calls.

And your next question comes from [ Hannah Wynn ] with KBW.

[ Hannah Wynn ] stepping in for Catherine Mealor. I just had a quick question on deposits. I know you mentioned your deposits were going to fund your loan growth. and deposits were flat for this quarter. So wondering where you see those trending for the rest of the year?

Yes. Typically, they're pretty seasonal in the first quarter where they drop and they come back to kind of flat in the second quarter, we start trying to build the deposit piece with most of our deposits historically been coming in the third and fourth quarters.

So we do continue to see them. We are opening up a branch this week in Chattanooga, Tennessee, First Tennessee branch that goes along with our LPO strategy but that is really critical. We have also increased incentives on driving deposits and feel like we expect to fund our loan growth, the majority of it with deposit growth and as we have done in the last 2 years. Dan, I don't know if you want to comment any more on deposit growth.

No, I think you nailed it. I think one of the keys to is just you're getting those branches in the Southeast Florida market up and [ running ] take deposits.

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. And to wrap up, we remain focused on appropriate investments and disciplined execution of our long-term organic growth strategy. The successful integration of Premier, our continued expansion through loan production offices and targeted investments in high-growth markets have positioned the company well to continue delivering value for our customers and our stakeholders. Thank you for joining us today. We appreciate your continued interest in WesBanco and look forward to speaking with you at one of our upcoming investor events.

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

Hello, and welcome to the Annual Meeting of Stockholders of WesBanco, Inc. Please note that today's meeting is being recorded. [Operator Instructions] It is now my pleasure to turn today's meeting over to Christopher Criss, Chair of the WesBanco Board of Directors. Chairman Criss, please proceed.

Thank you. Good afternoon. Will the meeting please come to order. I'm Christopher Criss, Chairman of the Board of WesBanco, Inc., and I will be presiding at this meeting. Along with my fellow directors and executive officers of the company, I would like to welcome you to our Annual Meeting of Stockholders. We appreciate your attendance, your interest and most importantly, your support of WesBanco. This Annual Meeting of Stockholders is held pursuant to the bylaws of the company, written notice to all stockholders of the meeting and our proxy statement. Stockholders wishing to ask questions will be given an opportunity to do so during a separate question-and-answer session.

Before taking up items to be acted on, I would like to thank Jeffrey Jackson, our President and CEO; and Daniel Weiss, Senior Executive Vice President and Chief Financial Officer, who are also participating today and will be available to answer any questions during the Q&A session.

Finally, I would like to thank our various officers of WesBanco participating in the meeting today as well as our members of the Board of Directors who have joined the meeting. Also attending this meeting is Tanya Wisniewski, partner of Ernst & Young, our independent auditors for fiscal year December 31, 2025; and William Martin, partner of Deloitte & Touche, our independent auditors for the fiscal year ending December 31, 2026. Although both Ernst & Young and Deloitte & Touche have indicated they do not wish to make a statement, they both are available to respond to appropriate questions during the Q&A session.

Also attending this meeting is Dave Dietrich of Computershare, our stock register and transfer agent. He has provided to the inspector of the election the official tally of shareholders voting for today's meeting. In accordance with our bylaws, I will act as Chairman of the meeting, and Mrs. Linda Woodfin will act as Secretary of the meeting.

In addition, on March 4, 2026, the Board of Directors appointed Scott Love, Executive Vice President of Wealth Management, to serve as the inspector of the election for this meeting. I request that he file his oath of the office with the Secretary of the meeting for inclusion in the minutes of the meeting. The Board also appointed Daniel Weiss, Jr. Executive Vice President and CFO as Corp to the inspector. The Board also appointed a proxy committee for the annual meeting, whose members are John Iannone, Mike Perkins and Richard Laws.

Will the Secretary please report on the notice of the meeting?

Thank you, Mr. Criss. I can confirm that stockholders of record as of February 27, 2026, were sent the notice of the meeting, the proxy statement and the annual report by a mailing, which commenced on March 13, 2026.

Thank you. The Secretary has an alphabetical list of stockholders of the common stock of the company at the close of business on February 27, 2026. The list of stockholders is available for examination at this meeting for any purpose relevant to the meeting. Mr. Weiss, will you please present your report of attendance at this meeting so we can determine whether a quorum is present?

Mr. Chairman, on February 27, 2026, the record date for this annual meeting, there were outstanding and entitled to vote a total of 96,096,656 shares of common stock. I've been informed by the Inspector of Election that there are 83,091,068 shares of stock represented by proxy or approximately 86% of all of the shares entitled to vote at this annual meeting. The shares so represented exceed 50% of the total shares entitled to vote at this meeting and thus constitute a quorum.

Thank you, Mr. Weiss. On the basis of the report of the Secretary and the Inspector of Election, I find that proper notice has been given and that a quorum is present. Accordingly, this meeting has been properly conveyed -- convened. As this year's annual meeting is being held virtually and conducted solely online by way of a live webcast, detailed instructions were provided within the notice of the annual meeting for those stockholders entitled to vote at this meeting and the polls have been opened.

We will now move to review the proposals. First proposal to come before the meeting is the election of directors. At this meeting, we'll be electing 6 directors, 5 to serve for a 3-year term expiring on 2029 Annual Meeting of Stockholders and want to serve for a 1-year term at the 2027 Annual Meeting. The nominees for the 3-year terms are Louis Altman, John Bookmyer, Todd Clossin, Denise Knouse-Snyder and Eric Nelson. The nominee for a 1-year term is Joe Robinson. Information concerning their principal occupation, service as WesBanco Board members, skills and qualifications and other matters which may be of interest are contained in the proxy. No other nominations were received prior to the deadline established in the company's bylaws. Therefore, no additional nominations may be made at this meeting, and I declare the nominations to be closed.

Proposal 2 asks stockholders to approve an advisory and nonbinding resolution on compensation paid to WesBanco's named executive officers in 2025 as described in our proxy statement. This proposal is adversary. Although nonbinding, the vote will provide information to our Compensation Committee and our Board of Directors regarding investor sentiment about our executive compensation philosophy, policies and practices, which our Compensation Committee and our Board of Directors will be able to consider making further executive compensation decisions.

The next matter to come before the meeting is the ratification of the appointment of Deloitte & Touche as the company's independent registered public accounting firm. Board of Directors recommends the ratification of the appointment of Deloitte & Touche to serve as the company's independent registered public accounting firm to opt the company's financial statements for the fiscal year ending December 31, 2026.

The final matter to come before the meeting is approval of the WesBanco 2026 equity plan for which the Board of Directors also recommends approval.

That concludes the proposals. It's now my pleasure to introduce our President and Chief Executive Officer, Jeffrey Jackson, for remarks on behalf of the corporation.

Thank you, Chair, Criss, and thank you to everyone who has joined us today. I appreciate the confidence you place in WesBanco and your engagement with our strategy, progress and leadership. 2025 was a year of disciplined execution and growth for our company. We successfully integrated Premier Financial Corp. and its customers, continuing our transformation into a regional financial services partner. We are proud to now be ranked among the top 50 largest publicly traded financial institutions in the United States. Financial and operational highlights include strong total and organic loan growth, fully funded by deposits. We also strengthened our balance sheet, meaningfully expanded our net interest margin and achieved record fee income, all while keeping asset quality stable. Taken together, these results reflect a business model focused on sustainable growth.

Appropriately, our executive compensation program remains tightly linked to performance and market competitiveness. Following the Premier acquisition, our asset size increased roughly by 50%. In response, we updated our peer group to better reflect the company we are today. Once again, 2025 was a transformative year for WesBanco, and we are well positioned to continue delivering long-term value for our customers and shareholders. On behalf of the executive management team and Board, thank you for your continued confidence and engagement.

With that, I will turn it back over to Chair, Criss for Q&A portion of today's call.

Thank you, Jeff. I will now ask whether there are any questions that have been submitted through the Q&A portal for response.

Thank you, Mr. Chairman. There are currently no questions in the queue.

Thank you, John. Since everyone has had the opportunity to vote and there has been an opportunity for any questions to be addressed, I now declare the polls closed. The Inspector of Election has delivered his preliminary report, and I will now ask the clerk to the inspector to announce the preliminary results.

Mr. Chairman, based on the Inspector of Election's preliminary report, each of the nominees for director in their separate respective classes received more than 91% of the votes cast in favor of his or her election and has been elected as a director of the company to serve for their respective terms of 3 years and 1 year.

Resolution on an advisory basis for the compensation of our named executive officers for 2025 received more than 63% of the votes cast in favor of the proposal and has been approved.

The ratification of the appointment of Deloitte & Touche as the company's independent registered public accounting firm received more than 98% of the votes in favor, and the appointment has been ratified.

And finally, the WesBanco, Inc. 2026 Equity Plan received more than 94% of the votes cast in favor of the proposal and it's been approved. We will file the final report of the Inspector of Election with the records of this meeting, and we expect to report the final results of the voting on a Form 8-K to be filed with the SEC within 4 business days of this meeting.

Thank you, Mr. Weiss. That concludes the business for the meeting. The meeting is now adjourned. Ladies and gentlemen, thank you again for attending today's meeting.

This concludes the meeting. You may now disconnect.

Good day, and welcome to the WesBanco Fourth Quarter 2025 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 of Investor Relations. Please go ahead.

Good day, and welcome to the WesBanco Fourth Quarter 2025 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 28, 2026, and WesBanco undertakes no obligation to update them.

I would now like to turn the call over to Jeff. Jeff?

Thanks, John, and good morning. On today's call, we will provide an overview on fourth quarter performance and provide our initial outlook for 2026.

Key takeaways from the call today are: successful execution on our growth-oriented business model, while maintaining strong credit quality measures. Full year pretax provision earnings growth of 105% year-over-year and full year earnings per share of 45% to $3.40 when excluding merger-related charges. Loan growth fully funded by deposit growth, both year-over-year and quarter-over-quarter, helping to drive our fourth quarter net interest margin to $3.61. Continued focus on operational efficiencies and cost control, as demonstrated by our fourth quarter efficiency ratio of 52%.

2025 was another strong year for WesBanco and a clear demonstration that our growth-oriented business model continues to deliver results while maintaining disciplined credit and expense management. For the full year, we generated pretax pre-provision earnings growth of more than 100% year-over-year and earnings per share growth of 45% to $3.40 when excluding merger-related charges.

Importantly, that performance was driven not by onetime actions, but by core strategic execution, including loan growth, fully funded by deposit growth, expanded net interest margin and continued efficiency gains.

For the fourth quarter ending December 31, 2025, we reported net income, excluding merger and restructuring expenses available to common shareholders of $81 million and diluted earnings per share of $0.84, which increased 18% year-over-year. On a similar basis and excluding day 1 provision for credit losses, we reported full year net income of $309 million and diluted earnings per share of $3.40.

Furthermore, the strength of our 2025 financial performance was reflected in our fourth quarter return on tangible common equity of 16%. Nonperforming assets to total assets of 0.33%. Our capital position remains solid with a CET1 ratio of 10.3%, giving us flexibility to support growth and navigate the operating environment ahead.

We also achieved several strategic milestones in 2025. Chief among those was a successful acquisition and integration of Premier Financial, transforming WesBanco into a $28 billion asset regional financial services partner. With this historic acquisition, we now rank among the top 50 publicly traded U.S. financial institutions based on assets.

At the same time, we continue to invest in organic growth. expanding into new markets through the opening of loan production offices in Northern Virginia and Knoxville, launching our new health care vertical and optimizing our financial center network and digital banking capabilities, to support evolving customer preferences, and we will soon be celebrating the opening of a new financial center in Chattanooga, our first in Tennessee.

Underlying all of this is the consistent focus on relationship banking that sets us apart from others. That approach drove record treasury management revenue of $6 million and a record total wealth management assets under management of $10.4 billion.

Turning to operational topics. Disciplined execution remains the theme. Our dedicated teams, supported by continued strong customer satisfaction drove deposit growth that fully funded loan growth both year-over-year and quarter-over-quarter. Our third quarter deposit campaign delivered strong second half results with total deposits increasing 5% annualized or more than 6% for core deposit categories as we strategically allowed higher cost certificates of deposits to run off.

We have continued to see a significant pickup in commercial real estate project payoffs, which totaled $415 million during the fourth quarter and over $900 million for the year, $100 million more than we had anticipated last quarter as developers continue to take advantage of the current operating environment for permanent financing or sale of properties. This increase in payoffs created a 4% headwind to loan growth for both the year-over-year and quarter-over-quarter comparisons.

Despite these elevated payoffs, we delivered solid fourth quarter organic loan growth as total loans increased 6% annualized from the third quarter and 5% year-over-year, driven by our commercial teams converting pipeline opportunities. Since year-end 2021, we have achieved a strong compound annual loan growth rate of 9% without sacrificing credit quality as our key measures have remained consistent the last several years and favorable to the average of all banks with assets between $20 billion and $50 billion.

As of both year-end and mid-January, our commercial loan pipeline stood at over $1.2 billion, with more than 40% tied to new markets and loan production offices. Despite anticipated elevated CRE payoffs through the at least first half of the year, we continue to expect mid-single-digit year-over-year loan growth during 2026, given the current loan pipeline and the strength of our markets.

During the fourth quarter, our new health care vertical team refinanced a major skilled nursing provider in Virginia, serving as the lead bank in the syndication and sole lender for the working capital line of credit. This new relationship includes all operating reserve and payroll accounts for their properties as well as a 6-figure treasury management fee relationship. This win highlights the momentum of our health care vertical and the cross-team collaboration that helps us deepen relationships and deliver exceptional service.

Before turning the call over to Dan to walk through the financials and outlook, I want to recognize our team members for their exceptional execution throughout the year. Their efforts were reflected not only in our results, but also in national recognition we continue to receive for soundless stability workplace culture and trust.

Dan, I'll turn it over to you.

Yes. Thanks, Jeff, and good morning. For the fourth quarter, we reported GAAP net income available to common shareholders of $78 million or $0.81 per share. And when excluding restructuring and merger-related expenses, fourth quarter net income was $81 million or $0.84 per share. On a similar basis, when excluding the day 1 provision for credit losses on acquired loans, we reported $3.40 per share for the year as compared to $2.34 last year, representing an increase of 111% from the prior year.

To highlight a few of the fourth quarter accomplishments, we generated strong year-over-year pretax pre-provision core earnings growth of 90%. We funded strong loan growth with deposits, improved the net interest margin to 3.61% and reduce the efficiency ratio to just under 52%.

Our balance sheet reflects the benefits of both the premier acquired balance sheet and organic growth. Total assets of $27.7 billion increased 48% year-over-year and included total portfolio loans of $19.2 billion and total securities of $4.5 billion. Total portfolio loans increased 52% year-over-year due to the acquired PFC loans of $5.9 billion and organic growth of more than $650 million, driven by commercial teams across our footprint.

Commercial real estate payoffs increased more than anticipated during the fourth quarter and totaled $905 million for the year, roughly $100 million more than we anticipated on our third quarter earnings call and 2.5x last year's level. Despite this headwind, though, we delivered solid organic loan growth for both the quarter and the year.

We anticipate CRE payoffs to remain elevated during 2026 and currently estimate them to be between $600 million and $800 million for the year, but weighted more towards the first half. Deposits increased 53% year-over-year to $21.7 billion due to acquired PFC deposits of $6.9 billion and organic growth of $662 million which fully funded our loan growth.

On a sequential quarter basis, total deposits increased $385 million due to the efforts of our consumer and business teams during the recent deposit campaign which more than offset the intentional runoff of $55 million of higher cost certificates of deposit and the pay down of $50 million in broker deposits.

Turning to capital. Credit quality continues to remain stable as key metrics have remained low from a historical perspective and within a consistent range throughout the last 5 years. As expected, our criticized and classified loans continued to decrease during the fourth quarter to 3.15% and net charge-offs declined to just 6 basis points of total loans.

The allowance for credit losses to total portfolio loans was 1.14% of total loans or $219 million consistent with the third quarter as increases related to loan growth were mostly offset by macroeconomic factors and reductions in qualitative factors.

The fourth quarter margin of 3.61% improved 58 basis points on a year-over-year basis through a combination of higher loan and security yields and lower funding costs. The margin increased 8 basis points from the third quarter, which was above last quarter's guide of 3 to 5 basis points of improvement, primarily due to exceptional deposit growth which allowed us to replace higher-cost Federal Home Loan Bank borrowings with lower cost core deposits.

Total deposit funding costs, including noninterest-bearing deposits declined 13 basis points year-over-year and 8 basis points quarter-over-quarter to 184 basis points. For the fourth quarter, noninterest income of $43.3 million increased 19% year-over-year due primarily to the acquisition of Premier and for the year, we reported record noninterest income of $167 million, once again, due to the acquisition of Premier and organic growth, including strong treasury management revenue.

We again saw a nice improvement in gross swap fees, which increased $2.1 million year-over-year to $3.4 million in the fourth quarter and doubled to $10 million for the full year reflecting both the interest rate environment and traction within our newest markets. Trust fees were also at record levels for both the fourth quarter and the year.

Noninterest expense, excluding restructuring and merger-related costs for the fourth quarter of 2025 was $144.4 million, an increase of 44% year-over-year due to the addition of Premier's expense base, higher core deposit intangible asset amortization that was created from the acquisition and higher FDIC insurance expense due to our larger asset size.

On a similar basis, operating expenses were down slightly from the third quarter reflecting our focus on managing discretionary expenses. As I mentioned, our fourth quarter efficiency ratio came in just below 52%. I'd like to highlight here that we have updated our methodology for calculating our efficiency ratio to exclude both net security gains or losses from the denominator and amortization of intangibles from the numerator.

This update makes our ratio more consistent with how our peers and other organizations calculate efficiency ratio and the ratios for all periods reported in our fourth quarter earnings release reflect this change and a reconciliation can be found in the non-GAAP measures section of the release.

Turning to capital. During the fourth quarter, we redeemed $150 million of our outstanding Series A preferred stock on November 15 and $50 million of sub debt acquired from Premier on December 30, using the proceeds from our Series B preferred stock offering.

As noted in yesterday's earnings release, preferred dividends reduced earnings available to common shareholders by $13 million, which represented the overlapping quarterly dividends on both the Series A and Series B preferred stock as well as the Series A redemption premium. Our CET1 ratio as of December 31 improved 24 basis points to 10.34% and we anticipated to build 15 to 20 basis points per quarter on a go-forward basis.

Turning to our outlook for 2026. We are currently modeling two 25 basis point Fed rate cuts in April and July. Reflecting our exceptional fourth quarter deposit growth, which accelerated margin expansion, we anticipate our first quarter net interest margin to be roughly consistent with our fourth quarter margin of 3.61% and then increase 3 to 5 basis points in the second quarter and then modestly grow into the high 3.60% range in the back half of the year. This assumes, among other things, that loan growth is fully funded by deposits and a slightly steeper yield curve.

Generally speaking, we modeled first quarter fee income overall to be consistent with the fourth quarter. Trust fees should benefit modestly from organic growth and influenced by equity and fixed income market trends. And as a reminder, first quarter trust fees are seasonally higher due to tax preparation fees. Securities brokerage revenue is anticipated to grow slightly from the range of the last few quarters due to modest organic growth.

Mortgage banking should grow modestly over 2025 beginning in the spring, driven by improved market conditions and recent hiring initiatives and total treasury management revenues should see increases from 2025 as the compounding effect of our services continue to expand.

Gross commercial swap fee income, excluding market adjustments, should be in the $7 million to $10 million range. Fully debt benefit income added $700,000 to the fourth quarter, which is not expected to repeat during 2026. And similarly, the fourth quarter loss on the sale of assets is not expected to repeat.

We remain focused on delivering disciplined expense management to drive positive operating leverage and we will continue our efforts throughout 2026. As previously disclosed, we successfully closed 27 financial centers on January 23rd and the anticipated annual savings of approximately $6 million will begin to be realized midway through the first quarter of 2026 hoping to offset the impact of inflation.

Occupancy expense should be flat to slightly down as compared to 2025 due to branch optimization efforts, while equipment and software expenses are expected to increase somewhat as compared to $25 million as we continue to invest in products, services and technology to improve the customer experience and drive revenue growth.

Marketing is expected to increase approximately $800,000 per quarter due to targeting new customers, general campaigns to increase brand awareness in our newer markets and deepen relationships with existing customers with a focus on deposit gathering campaigns.

Based on what we know today, we expect our expense run rate during the first quarter to be roughly consistent with the fourth quarter increase in the second quarter from midyear merit increases, revenue-producing hires and marketing initiatives and then grow modestly in the back half of the year from the full effect of annual merit increases and investment initiatives in revenue-enhancing technology.

The provision for credit losses will depend upon changes to the macroeconomic forecast and qualitative factors as well as various credit quality metrics, including potential charge-offs, criticized and classified loan balances delinquencies, changes in prepayment speeds and future loan growth.

Beginning with the first quarter of 2026, the dividends on our Series B preferred stock will be $4.24 million per quarter. And lastly, we currently anticipate our full year effective tax rate to be between 20.5% and 21.5%, which is slightly higher than 2025 due to a lower percentage of tax-exempt income to total income.

And so overall, we were pleased with our growth during 2025 and excited about the opportunities in 2026 as we continue to execute growth initiatives to deliver shareholder value.

Operator, we're now ready to take the questions. Would you please review the instructions?

[Operator Instructions] Our first question comes from Daniel Tamayo with Raymond James.

Yes. Maybe just to start off, Jeff, on the loan growth expectation and the payoffs expectation embedded in that. I guess if you're thinking about the -- I think you said $600 million to $800 million in '26 weighted to the first half of the year. I'm assuming that implies kind of a step down from the fourth quarter number, which was really elevated to $415 million. But maybe just walk us through how you're thinking about the pace of payoffs through the year? And what's driving that assumption in your modeling?

Yes, sure. So obviously, we had a tremendous amount of payoffs last year. We do think some of that will continue, especially in the first half of the year. What we've been seeing, as we've mentioned, is large CRE payoffs, whether they're selling or whether they're refinancing to the permanent market. The pipelines continue to remain really strong.

So I think that will be an offset to the payoffs. But if you think about looking back when people refinanced projects when rates were much lower prior to rates getting elevated. Normally, we would do a construction loan and then it would become stabilized and then it would typically roll off our and all banks' balance sheets. I think what you had was because rates elevated and went up so quickly, these loans stayed on ours and other banks' balance sheets for a lot longer period of time.

Now that you've seen rates slightly come down and permanent marketing is really opening up we've seen these elevated payoffs. We're no different than, I think, many other banks who do a lot of CRE. But as far as this year, we do believe, just based on our current forecast and talking to customers that it should slowed down, especially compared to fourth quarter. And with putting that together along with our pipelines continuing to remain incredibly strong on top of just the other opportunities we have, with the LPOs and health care, and I can get into that more later. But that's why we feel like loan growth should be in the mid single digits. And depending on how the back half of the year goes, could be even better.

That's great. And you actually took my next question or you started to, which is perfect. Maybe you can give us some more details on that health care vertical.

Yes. Yes. It was a tremendous lift for us last year. The team, I believe, did around $500 million in new loans. We had a tremendous amount of deposits and fees. I believe they accounted for about $3 million of the swap fees that we did last year as well. So we feel like that will be one of the main growth engines of us for this year and feel like that is a great offset to many of the CRE payoffs that we should see in the first quarter even.

Also kind of following up with the LPOs, those are really going well. Also, Chattanooga, Knoxville, Northern Virginia has really started to take off. And we're really continuing to look at other cities. I've mentioned Richmond before, but also looking at Atlanta and maybe even other southeastern cities as we move forward. We really kind of feel like we perfected the LPO strategy. And we're seeing it in our results, we're seeing it in our pipelines, and we're going to continue doing that, I would say, the rest of this year.

Our next question comes from Russell Gunther with Stephens.

I wanted to start on the expense guide. I appreciate the color there. It sounds like you're going to be flat in 1Q, step up a bit in 2Q. We had the branch closures kind of early in the quarter. So fair to say that that's all captured in this guide, the full savings from that. And then you guys tend to evaluate the branch network on an annual basis, typically in the back half of the year. Is that something that you would look to do again this year? And is any of that reflected in your 2026 commentary, Dan?

Yes, I'll take the branch piece. Absolutely. So as you know, we always evaluate the branch network, just throwing out that since 2019, we've closed about 93 branches. So I would anticipate us to continue to evaluate that. It is not in any of these numbers, just to be clear. But yes, I think it's safe to say we will definitely evaluate it, and that would be potential addition to reduce our expenses at some point in time this year.

Okay. Excellent. And then just a follow-up question or second question for me, switching gears to the margin outlook. Maybe, Dan, if you could just address the puts and takes behind the cadence of the NIM, flat in the coming quarter, a nice step up 2Q and then the moderation. What's sort of underpinning your expectations for that glide path?

Yes. Sure, Russell. I think first, what I would say is if you think about the guidance that we've been providing 3 to 5 basis points of margin improvement per quarter. What we really saw here, and I mentioned this in the prepared commentary, in the fourth quarter was just extraordinary growth in deposits, particularly noninterest-bearing. And that deposit growth occurred pretty early in the fourth quarter and was at time $500 million plus intra-quarter.

And so we were able to pay down Federal Home Loan Bank borrowings during a good maturity of the quarter, which kind of provided a really nice lift to margin. So that's how we kind of picked up 8 basis points of margin improvement or expansion over the third quarter versus kind of that 3% to 5% that we were projecting. But what I would say is we really kind of effectively pulled forward, I would say, the next 3 to 5 basis points that would have otherwise been projected for the first quarter into the fourth quarter, and that's how we get kind of a flatter margin just on a linked quarter basis when we look towards the first quarter.

I would also tell you, typically, we see deposit flows like outflows in the early half or the first half, really the first quarter. And we've seen those. And so that's another like kind of what we see as like a headwind, something that normally would -- if it's very normal from history.

But at the same time, whenever you've got as much deposit growth as we had intra-quarter throughout the fourth quarter and then kind of some of those deposits pulling back some for the first half of the first quarter, that also kind of -- you're borrowing for the Federal Home Loan Bank at 4% instead of holding noninterest-bearing assets or liabilities that are funding at 2%.

So I think that's really what is driving for the most part, that flattish margin compared to the first quarter. But then whenever we look forward into the second quarter, kind of 3 to 5 basis points is what we're guiding to, recognizing once again kind of the benefit -- of the continued benefit and the grind of loan and security repricing, loan growth, et cetera. We continue to see and expect to see reduction in cost of funds. We'll continue to see quick kind of downward repricing of our short-term Federal Home Loan Bank borrowings. Of our $1.2 billion, $1.1 billion is kind of 6 weeks or less.

And so that -- all of this kind of will help drive that margin improvement. It's happening in the background in the first quarter as well. It's just not as apparent. The other piece I would just say is that the CD book will continue to reprice, particularly it becomes more evident in the second quarter. We have about $2.1 billion in CDs that are going to be repricing here in the next 2 quarters.

About $1 billion is repricing here in the first quarter from kind of 3.75% downward 25 to 50 basis points and then another $1.1 billion in the second quarter. And really, the repricing of CDs here in the first quarter from that 3.75% down into the, say, 3.25% range is where we also see some nice lift in terms of margin as we're going to continue to see funding cost accelerate downward relative to the reduction in loan yields. So I think that's kind of how we look at it. And then again, that continued grind into the back half of the year gets us as we model today, somewhere in the high 360s.

Our next question comes from Manuel Navas with Piper Sandler. Could you just speak to.

Could you just speak to within the NIM, if there's a little bit of back book repricing that is helping on the loan yields? I know that the floating rates will come down a bit. And also, what are kind of new loan yields coming in at? Just trying to get some more on the asset side dynamics in the NIM...

Yes, sure. So we do have about $400 million of loans -- fixed rate loans that will be repricing over the next 12 months off of -- with a weighted average rate of about 4.5%. And so I would anticipate those to be replaced or refinanced, et cetera, somewhere in that like low 6%, high 5% range.

I would tell you that if you look at within the presentation, you can see that the weighted average yield on new loans originated in the fourth quarter was right around 6.15%. I would tell you the spot rate for the month of December was just above 6% to kind of 6.01%, 6.02%. So that's kind of where we're at and what we're projecting more or less here for the first quarter.

The other thing I'll mention is just if we think about margin benefit longer term is the securities book continues to reprice as well. So we've got about $250 million of cash flows kicking off of that securities portfolio. Those yields are about 3.3%. And right now, we're investing at about 4.7% roughly. So picking up between 125 and 150 basis points in yield on $250 million of cash flows coming in.

Is that $250 million per quarter?

Per quarter.

Yes. Okay. And then shifting over to capital for a moment. I appreciate the commentary. Just shifting over to capital. As you build and TCE has gotten over 8%, CET1 is at 10.3%. Can you discuss your kind of capital deployment priorities, growth, but also just kind of where would M&A or buybacks fit in?

Yes, sure. First, we'd start with the dividends, obviously committed to the dividend. Then we would go to loan growth and making sure we can obviously fund the loan growth with our strong capital levels. Then I would put in buybacks. We've talked about our targets being 10.5% to 11% CET1 around those ranges, we would look to buy back. And then I would put M&A at distant fourth. Right now, there -- we don't see that happening this year.

We're really focused on the first 3. And specifically, when it looks at growth, obviously, we have a lot of opportunities, but we are also seeing really tremendous opportunities to acquire bankers and talented individuals to come on our team. But those would be the capital priorities. Glad to dig into any of the 4. But once again, dividends, growth, buybacks and then fare distant M&A.

Yes. And I would just add on to that, that we're growing CET1 right now at about 15 to 20 basis points a quarter. So the print that we had for the fourth quarter, 10.34% CET1, that pretty comfortably gets us over that 10.5% by the end of the second quarter. And so that does offer, as Jeff said, some flexibility there as we think about where organic growth is relative to, say, maybe beginning to explore buyback to the extent that growth opportunities are slower.

Our next question comes from Catherine Mealor with KBW.

One follow-up on the margin, and I apologize if I missed this, but any indication on just what you're expecting for the cadence of fair value accretion over 2026?

Yes. So I would say, I believe we had about 27 basis points of accretion here in the fourth quarter. And we were modeling about 25 basis points for the first quarter. And then as I've said in the past, it kind of -- it's a basis point or 2 per quarter, and it runs off over the next 6 years.

Okay. Great. That's helpful. And then the reduction in borrowings was great to see this quarter. How should we kind of think about the size of the balance sheet outside of loans and deposits kind of maybe growth in the bond book relative to what we should see from your borrowing base over the course of '26?

Sure, yes. So we're going to keep that bond book right around that, call it, 15% to 17% of total assets, it's 16% and we -- that's kind of where we feel is the sweet spot to maintain a nice level of liquidity, but also make sure that we're generating as much return on equity as possible through the higher-yielding loan book.

Okay. Great. And then maybe if I could slip one more in on just kind of big picture profitability. It feels like we've got some nice operating leverage coming into '26 6 with the revenue growth the NIM expansion and then growth in fees and your balance sheet, which kind of feels like more -- of a more stable expense base. Are there any kind of profitability target that you would look to as we move through '26?

Yes. I mean I would say at a high level, what we've continued to talk about is kind of that ROA being right around that [ 130% ] mark, average tangible common equity somewhere in the high teens. And so that's kind of what I would tell you, what we expect and what we're modeling.

Our next question comes from Karl Shepard with RBC Capital Markets.

My line cut out a little bit, so I apologize if you covered this. But just on the margin again, so the 3 to 5 basis points, are you saying that sort of burns out as we get later in the year and then maybe that high 3.60% range is kind of appropriate way to think about longer term without giving guidance for '27 or anything like that?

Yes, Karl. I would say '27 is a long way away, and it's probably -- it could be difficult to even project the back half of '26. But what we can see, and like I said, in the nearer term, is that continued 3 to 5 basis points of benefit in 2Q. Where it goes in the back half of the year is really going to be dependent on a number of things, including loan pricing, loan competition, deposit pricing, deposit competition, how well we're able to fund our loan growth with deposits and what the cost of those deposits are.

So I think all of those things kind of play into the calculus here. So what we can -- we do -- we can see though that the back book, the assets are repricing upward, and that grind continues -- will continue to benefit margin. And like I said, we feel pretty comfortable based on everything we know today that we can get into that high 360s in that back half of the year.

Okay. That's helpful. And then, I guess, maybe more of a strategic question. So the LPO strategy has been out there for a few years now. You're adding a financial center in Chattanooga. Can you just maybe talk about how these things mature and get to where you want to be and then just opportunity to continue to do new LPOs or, I guess, strengthen some of those markets with additional talent? Just kind of big picture, how you're thinking about that, Jeff?

Yes, sure. Very excited about the LPOs. So Chattanooga, we should open the first branch in Tennessee. We're anticipating in April. That group has done in over $0.5 billion in loans and has done really great job with full relationships, just to be clear, some deposits and different things, treasury fees, swap fees, et cetera. So what we typically look at is depends on the mass of the team we bring on, the size of the assets and those things.

So my goal would be to continue to grow Knoxville in that similar range, add a branch there. Nashville, we're looking to add to that team, but we'll also be looking to add a branch once they get around that $0.5 billion. And then as it relates to future LPOs, once again, that is what we're really focused on this year. We are seeing a tremendous amount of opportunity based on the other M&A going on or leadership changes, et cetera.

And so I think that's what you'll be seeing us do this year, expanding in other markets. But most likely, we would start with the LPO offices get a little bit of a loan balances, fee businesses going and then look to at a branch. Obviously, if we took on a much larger team potentially, then we would depending on where it would be, we could add a branch immediately. Obviously, funding for these LPOs is really critical.

And having a single branch in those markets, we feel like it gives us a great advantage to add more funding when we start up these LPOs. But once again, I can't tell you what tremendous opportunities we have in some of these markets in the Southeast. And I think you'll be hearing more about that from us in future quarters.

Our next question comes from Dave Bishop with Hovde Group.

Jeff, you noted the loan pipeline holding up pretty nicely here. Now you're getting traction from the new production offices and the LTOs. Just curious, and you may not have this number here, but Jeff, any line of sight maybe into the deposit pipeline into the first half of the year, first quarter of the year and maybe what spot deposit costs were exiting the quarter?

Yes, I'll comment on the pipe and I'll let Dan talk about the cost. But yes, they're still pretty strong. Once again, as Dan mentioned, we kind of go back and look over the last several years. Seasonally, January usually is a down month for us in deposits, but then February builds back up.

And usually, we finished with some nice growth at the end of March. So I would say the deposit pipeline still is very good. And for us, we're always looking to bring in full relationships and then our retail employees are doing a great job driving home those deposits as well. So I would imagine that we should still show pretty good growth this year in deposits based on everything I'm seeing.

I would just add spot deposit rates at least for the month of December relative to the full quarter's average. Full quarter average is right around 2.45%, December 2.38%, so down about 7 basis points relatively speaking.

Got it. Appreciate that color. Then Jeff, maybe a follow-up. You talked about -- I appreciate the color on the new loan offices, especially in Tennessee and Northern Virginia. Are the types of loans you're seeing in those markets different than some of your core legacy markets, size, types of borrowers and such, especially in Northern Virginia, which is a big GovCon market. Just maybe speak to maybe the types of loans you're doing and size relative to the legacy market?

Yes, sure. Great question. They're pretty similar, to be honest. Once again, we have not changed our credit culture, any policies at all. So we're seeing some CRE, a lot of C&I, some health care. We did a big health care deal in Virginia. But yes, GovCon is part of Northern Virginia and D.C. area, but I can't really say we've done almost none of that. It's really been more CRE, C&I, health care, just similar things that we're doing in all our markets. The great thing that really helps our LPO strategy is we take our existing kind of credit culture and just get great talented bankers in all these markets that can operate within what we like to do, and it's working extremely well.

Our final question today comes from Manuel Navas with Piper Sandler.

I just wanted to follow up on the fee initiatives and the commercial lending team. You brought up the $6 million in treasury management. Swaps are doing well. And just kind of go into those in a little bit more detail in terms of what could be the growth next year? And what is the uptake in the Premier team using your fee products as well?

Yes. No, we're very excited about that. So I can tell you that 1.5 years ago, just starting with our treasury management fees, let me take you back a couple of years ago. So I believe in '23, we did about $2 million in treasury management fees. 2024, we did about $4 million. And then last year, we topped $6 million. I think that can continue to grow double digits this year. from a percentage perspective, if you just look at our purchase card, we basically had 5 customers back in, I believe, March of last year.

Today, I believe we've got over about 130 customers with about another 45 in the pipeline. We've gone from, call it, $100,000 a month in spend to I believe we've topped $7 million a month in spend, and we think we can get it up to $10 million plus this year, as it relates to the purchase card -- commercial purchase card, multi-card. Then as it relates to swaps, I do believe we were around $9 million in just gross production last year. I think that could easily grow a good amount this year as well to be above $10 million plus depending on how the year goes and what interest rates do.

So I think there is some tailwinds in both those fee businesses along with our wealth business, too. We just topped over $10 billion in assets under management when you combine our trust and securities business. So we feel like that's really going to be another driver for our profitability this year, and we could see some tremendous growth.

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. 2025 was another year of disciplined growth and strong execution for WesBanco. We strengthened our financial metrics, advanced our strategic priorities and position the company well to continue delivering value for our customers and our shareholders. Thank you for joining us today, and we look forward to speaking with you at one of our upcoming investor events. Have a great week.

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

Good day, and welcome to WesBanco Inc.'s Third Quarter 2025 Earnings Conference Call. [Operator Instructions] Please note that this event is being recorded.

I would now like to turn the conference over to John Iannone, Senior Vice President of Investor Relations. Please go ahead.

Thank you. Good afternoon, and welcome to Wesbanco Inc.'s Third Quarter 2025 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 October 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 provide an overview on operational efforts and third quarter results as well as provide an update on our outlook for 2025. Key takeaways from the call today are: earnings per share of $0.94 when excluding merger-related charges, which was highlighted by loan growth funded by deposit growth, a net interest margin of [ 3.53 ] and year-over-year fee income growth of 52%. Continued success in our newest markets as demonstrated by growing pipelines and strong customer satisfaction. Commitment to operational excellence in support of profitable long-term growth and enhancing shareholder value.

Our third quarter results demonstrate the successful integration of Premier and continued operational discipline. Despite elevated commercial real estate payoffs, we delivered strong loan growth fully funded by deposit growth. while meaningfully expanding our net interest margin and fee income. Combined with our focus on cost control, these efforts drove positive operating leverage and an improved efficiency ratio in the mid-50s. For the quarter ending September 30, 2025, we reported net income excluding merger and restructuring expenses of $90 million and diluting earnings per share of $0.94, an increase of 68% year-over-year.

On a similar basis, our third quarter return on average assets and tangible equity improved to 1.3% and 17.5%, respectively. Our efficiency ratio improved 10 percentage points year-over-year to 55% due to expense synergies generated from the Premier acquisition as well as a continued focus on expense management and driving positive operating leverage. Our strong growth in fee revenue was driven by organic growth across our businesses, especially wealth management and our larger post-acquisition customer base.

Turning to operational topics. We are pleased to share that customer satisfaction in our newest markets has rebounded even faster than we expected following the Premier acquisition. While a temporary dip is typical during conversions and integrations. Our team anticipated the challenge and proactively put plans in place to support service and quality and customer trust. Today, satisfaction scores in those markets are back to pre-conversion levels. And our overall customer satisfaction across all markets is in the upper 80 percentile level, well above the industry average.

This reflects the strength of our integration strategy and the dedication and skill of our teams. That same operational discipline is reflected in our deposit performance. Our annual deposit campaign launched in third quarter is once again delivering strong results. Total deposits grew organically across our footprint by more than $570 million year-over-year and $130 million sequentially, fully funding our organic loan growth. Importantly, this momentum was driven by core deposit categories, not higher cost certificates of deposit, which we have strategically allowed to run down.

We have continued to see a pickup in commercial real estate payoffs, which totaled $235 million during the third quarter and caused a nearly 1.5% headwind to loan growth. Reflecting this headwind, third quarter organic loan growth was 4.8% year-over-year and 2.2% quarter-over-quarter annualized. Encouragingly, total commercial loan growth continues to be solid as our teams take advantage of our record pipeline. As of both September 30 and mid-October, our commercial loan pipeline stood at approximately $1.5 billion with more than 40% tied to new markets and loan production offices.

Notably, our new Knoxville LPO is already contributing meaningfully, accounting for 5% of the total pipeline. Given the current loan pipeline and CRE payoff headwind, we continue to expect mid-single-digit year-over-year loan growth during 2025. This strong pipeline continues to translate into meaningful wins, including in our newest markets. In one of our premier markets, we secured a major deal with a national motorcycle manufacturer looking to acquire additional dealerships on a tight time line. Thanks to strategic collaboration across commercial banking, treasury management and retail, our team delivered a tailored package of solutions ahead of schedule. The result was an 8-figure loan, 7-figure deposits and additional treasury and swap products. This is a terrific example of how we collaborate to deepen banking relationships and deliver exceptional customer experiences. Our mission is to deliver financial solutions that empower our customers for success while maintaining operational efficiency.

To that end, we continue to optimize our financial center network in support of evolving customer preferences and long-term growth. This strategy includes streamlining existing locations continuing to enhance our digital banking capabilities and selectively opening new financial centers or refreshing existing ones within our footprint. Following the strong performance of our Chattanooga loan production office, which has grown to over $200 million in loans in just 2 years. We received regulatory approval to open our full first service financial center in Tennessee.

This new location will simplify deposit gathering and deepen client relationships. We are also opening a new center in Alliance, Ohio, where we see strong growth potential. Both centers are expected to open in the first quarter of next year. At the same time, we are streamlining our footprint to ensure efficiency and responsiveness. After a thorough review of our customer behavior and banking preferences, market conditions and proximity to existing centers, we made the decision to close 27 financial centers across our legacy markets. none of which are related to the Premier acquisition. More than 75% of these closures are within 10 miles of another location and deposit attrition is expected to be minimal. These closures bring our total since 2020 to 80 closed financial centers and are expected to generate approximately $6 million in net pretax annual savings. By focusing on the right locations, facilities and customer experiences, we are positioning WesBanco for sustainable growth and exceptional service across all markets.

I would now like to turn the call over to Dan Weiss, our CFO, for details on our third quarter financial results and our current outlook for the fourth quarter of 2025. Dan?

Yes. Thanks, Jeff, and good afternoon. For the quarter ending September 30, 2025. We reported GAAP net income available to common shareholders of $81 million or $0.84 per share. And when excluding restructuring and merger-related expenses, third quarter net income was $90 million or $0.94 per share, representing an increase of nearly 150% from the $36.3 million or $0.56 per share in the prior year period. On a similar basis, and excluding the after-tax day 1 provision for credit losses on acquired loans, we reported $2.55 per diluted share for the 9-month period as compared to $1.61 per diluted share last year.

To highlight a few of the third quarter's accomplishments we generated strong year-over-year pretax pre-provision core earnings growth of nearly 130%. We funded loan growth with deposits and on a year-over-year basis, improved the net interest margin by 58 basis points, grew fee income 52% and reduced the efficiency ratio by 10 percentage points. Our balance sheet as of September 30 reflects the benefits of both the premier acquired balance sheet and organic growth. Total assets of $27.5 billion increased 49% year-over-year and included total portfolio loans of $18.9 billion in total securities of $4.4 million. Total portfolio loans increased 52% year-over-year due to the acquired PFC loans of $5.9 billion and organic growth of $594 million, driven by the commercial teams.

Commercial real estate payoffs have continued to increase and totaled approximately $235 million during the third quarter of '25 and $490 million on a year-to-date basis, more than 2.5x the prior year-to-date period and currently projecting them to be near $800 million for the year. Despite this headwind, we remain optimistic about future loan growth with our strong pipeline banking teams and markets, combined with more than $1 billion in unfunded land construction and development commitments expected to fit to fund over the next 18 months.

And in fact, we've achieved record commercial gross loan production through the first 9 months of the year. Deposits increased 53.8% year-over-year to $21.3 billion due to the acquired PFC deposits of $6.9 billion and organic growth of $573 million, which fully funded loan growth. On a sequential quarter basis, total deposits increased $130 million due to the efforts of our consumer and business teams more than offsetting the intentional runoff of $50 million of higher cost brokered deposits and less reliance on public funds acquired from PSC Credit quality continues to remain stable as key credit quality metrics remain low from a historical perspective.

And within a consistent range over the last 5 years, as expected, criticized and classified loans decreased during the third quarter to 3.2% through a combination of credit upgrades and loan payoffs, the allowance for credit losses to total loans at September 30 was 1.15% of total loans or $217.7 million, a decrease of $6.2 million from June 30, 2025, was primarily driven by the runoff of a $5 million qualitative factor that was established in 2023 to capture elevated interest rate risk, which ultimately more than offset increases associated with slightly higher unemployment assumptions and loan growth.

The third quarter net interest margin of 3.53% improved 58 basis points on a year-over-year basis through a combination of higher loan and security yields and lower funding costs. As I mentioned last quarter, our net interest margin declined 6 basis points sequentially as the CD book from PFC matured and repriced partially offset by our core margin improvement of 3 basis points. Deposit funding costs of 256 basis points for the third quarter decreased 29 basis points from the prior year period. And when including noninterest-bearing deposits, deposit funding costs for the third quarter were 192 basis points.

For the third quarter of 2025, noninterest income of $44.9 million increased 51.5% year-over-year due primarily to the acquisition of Premier. With combined premier fee income, we again set record highs this quarter in several fee income categories, including trustees, service charges on deposits and electronic banking fees, we also saw a nice improvement in gross swap fees, which increased $2.1 million year-over-year to $3.2 million in the third quarter, reflecting both the interest rate environment and traction within our newest markets.

Noninterest expense, excluding restructuring and merger-related costs for the 3 months ended September 30, 2025, was $144.8 million an increase of 46% year-over-year due to the addition of Premier's expense base, higher core deposit intangible asset amortization that was created from the acquisition and higher FDIC insurance expense due to the larger asset size. Salaries and wages of $60.6 million and employee benefits of $18 million each increased year-over-year due to higher staffing levels and higher health insurance costs, but were consistent with the second quarter as staffing reductions offset the full quarter impact of annual merit increases.

Health care during the third quarter continued to be somewhat elevated by about $1 million over our baseline projections for the quarter due to larger-than-normal claims driven by a few high dollar claimants compared to historical claim experience and general increases in health care costs. We've incurred restructuring and merger-related expenses of $11.4 million during the quarter, which included approximately $7 million of charges from the disposition of assets and lease terminations associated with the planned closure of 27 financial centers with the remaining $4 million associated with the Premier merger. We anticipate incurring additional personnel-related restructuring charges here from the closure during the fourth quarter, while nearly all of the merger-related expenses from PFC have been recognized. Our regulatory capital ratios have remained above the applicable well capitalized standards.

On September 10, we raised $230 million of Series B preferred stock which will be used to redeem the $150 million of outstanding Series A preferred stock on November 15 and $50 million of sub debt acquired from PFC later in the fourth quarter with the remaining net proceeds to be used for general corporate purposes. Reflecting the new Series B preferred stock, which is considered Tier 1 capital we realized sequential quarter improvement across all of our capital ratios. And when we use the proceeds to redeem the Series A preferred stock and sub debt, we anticipate our fourth quarter CET1 ratio to continue to build 15 to 20 basis points per quarter, while Tier 1 risk-based capital to decline approximately 50 basis points from the third quarter, reflecting the redemption of the Series A preferred stock.

Turning to our current outlook for the fourth quarter. And as a note, we will provide our outlook for 2026, during our January earnings call. We are currently modeling a 25 basis point Fed rate cut in October, However, given our relatively neutral rate sensitive position, we do not expect a meaningful impact on our net interest margin from this or the September cut here in the nearer term. We anticipate our net interest margin to rebound during the fourth quarter to the mid- to high 3.50s, reflecting continued improvement in funding costs, fixed asset repricing and loan growth.

And while trust fees and securities brokerage revenue are subject to equity and fixed income market valuations, we anticipate noninterest income and noninterest expense to remain relatively consistent with our third quarter trends -- and we expect the planned closure of the 27 financial centers to occur late January with a pretax annual savings of approximately $6 million to begin thereafter. During the fourth quarter, we anticipate preferred stock dividends to total approximately $13 million, which includes the Series A dividend of $2.5 million the Series A redemption premium of $5.5 million and the new Series B dividend of $4.9 million.

And lastly, the provision for credit losses will mostly be dependent upon loan growth economic factors and charge-offs. And of course, our effective tax rate should be in that 19.5% range for the year. So we are excited to see positive momentum from the continued margin improvement, our financial center optimization strategy and continued growth in our new markets as well as the organic growth and expansion opportunities that lie ahead.

So with that, operator, we are now ready to take questions. Would you please review the instructions?

[Operator Instructions] Our first question comes from Karl Sheppard with RBC Capital Markets.

I guess I'll start with you. I think it seems like you're very happy with the production in pipeline for loan growth, but CRE paydowns is still kind of a bit of a headwind. Just help us understand maybe what you're seeing for production a little bit more -- and then what's the path for pay downs maybe? I hate to use the word normalizing, but coming back down a little bit and driving a little stronger overall growth.

Yes, sure. Very, very pleased with the production. I think if you look at just year-over-year, I can give you a couple of numbers through third quarter. So third quarter last year, we did about $1.7 billion in new production. This year, we've done $2.3 billion. So almost basically $600 million more we've done this year. And so the pipelines are really strong, about $1.5 billion and have remained strong. And so I believe that we should have a really strong fourth quarter. We should hit the mid-single-digit loan growth target that we've set out for this year.

As far as pay downs, some of it looks at -- in the third quarter were things we wanted to pay down. If you didn't notice our CNC came down 50 basis points. A lot of that was pay downs that we had requested. So feel very good about that. I think when we look into the fourth quarter, we could see another couple of hundred million in pay downs in the fourth quarter. But looking over a normalized period of time, I would say it's going to be on an annualized basis would be in that $400 million to $600 million, $700 million range on a full year basis.

This year, we should be -- we might be touching $800 million to $900 million on an annualized basis. Once again, fourth quarter, we don't know exactly. But I would say our pipelines are very strong. We feel very good about mid-single-digit loan growth for the remainder of this year. And next year, we are still looking at mid- to upper single-digit loan growth.

Okay. That's very helpful. And then, Dan, 1 for you. On the margin, I think it came in right where you were expecting this quarter, but I just wanted to check to see, are you still thinking 3 to 5 basis points of quarterly expansion in the core -- and is there anything kind of out in '26 that we should think about that might disrupt that trajectory?

Yes, Karl, I do feel very good about that 3 to 5 basis points of continued improvement. So I don't -- we're not providing much guidance here on 2026. But outside of what I provided last quarter, which feel good for the next couple of quarters, to see continued margin improvement. And of course, for our purposes today, we're modeling a 25 basis point cut here next week as well as 1 cut in each of the next 3 quarters thereafter. So that's kind of where we see it there. The 1 thing I would note, and this is baked into the 3 to 5 basis points of margin expansion. But you'll notice that our Federal Home Loan Bank borrowings are down $475 million versus the second quarter, which is great. I would point out that the $230 million in capital that we raised $150 million of that $230 million will be used to pay off the Series A preferred. And so that effectively will be borrowing back from the Federal Home Loan Bank of that $150 million. And then, of course, at the very end of the year, we'll have the $50 million of sub debt premier but we'll be paying off and absent normalized deposit growth, we would anticipate to see that Federal Loan Bank borrowing balance to be up probably a couple of hundred million dollars.

Our next question comes from Catherine Mealor with KBW.

Just go to ask on expenses. It was nice to see the announcement for the branch closures. I know you're not giving '26 guidance yet, but is there -- can you help us just kind of frame at least as a base how you think about the impact of branch closures kind of offsetting new hires and just kind of what organic loan growth could look like, trying to at least frame up the expense trajectory and potentially more operating leverage and profitability improvement as we get into '26?

Yes. As far as the loan growth, I'll start out and I'll let Dan talk about the expense base. We feel very good about mid- to upper single digits and loan growth. And a lot of that is obviously driven by our premier markets that are getting ramped up. I would also say our new health care vertical and then our LPOs. Our LPOs are just operating at a tremendous level Tennessee ones of Chattanooga and Knoxville and Nashville, Indianapolis is doing a great job as well. And then Northern Virginia has really taken off. So we feel very good about those prospects on the loan growth piece. I'll let Dan talk more about the expense base.

Yes. I would say once again, just to kind of reiterate, we're still in the process of finalizing our budgets and forecasts here for 2026 and we'll provide some more guidance at the end of the year. But I would say, certainly, 0.7 branches, there's going to be a tailwind to expenses heading into heading into '26 as a result. So I think that provides some opportunity potentially for reinvestment in technology, people, process and technology. But we certainly also make sure that we are recognizing that expense benefit to the bottom line as well. So pretty excited about where that -- where we're at there.

And just to add on it just to add on briefly. As you know, we are always looking to optimize the branch network, and we'll continue to look at that in the future as well.

Got it. And so it's fair to assume though, without giving targets that the efficiency ratio should continue to improve as we move through '26.

Yes. That would be our model today.

Our next question comes from Dave Bishop with Homsey.

You noted the health care team, I think you noted there's some opportunity to grow that portfolio pretty materially. Any way to ringfest how big the opportunity is there from that new team you hire?

I would say, currently, I believe they've closed about $250 million in loans and brought in about around $80 million in deposits and closed about, I believe, about $2 million in fees. So -- and they've been here approximately 6 months. So if you extrapolate that out, you can kind of look at next year, potentially they could do anywhere from $300 million to $500 million in loans on an annual basis. Very excited about that team. We're looking to grow that team. And it could be larger than that, but that's what I kind of pencil in today.

Got it. I noted the increase in average deposit cost on a sequential basis. Was that purely a function of the purchase accounting impact and how aggressive you think you can lead on into these Fed rate cuts?

Exactly. It has all to do with what we described last quarter and that being the temporary nature of the CDs that we had acquired 7-month CD specials that were effectively rolling off and don't expect that to see that repeat. That's behind us at this point.

Our next question comes from Russell Gunther with Stephens.

I appreciate all the color on the capital actions taken this quarter. It would be helpful to just get a reminder as to where you would plan to kind of manage capital levels to going forward, be it TCE or CET1. And then just any updated thoughts as to how you're thinking about the potential to reverse the CECL double now.

Yes, sure. Great question. I'll take that. So from a CET1 standpoint, I would say our internal targets are kind of between that [ 10.5% ] and 11%. And we're growing CET1 about 15 to 20 basis points per quarter, and that's what we're kind of projecting here. over the next several quarters. I would tell you, and as I mentioned in my prepared remarks, that we do have a little extra total risk-based capital with the duplication of the Series A and Series B, the Series A being temporary. It will go back down about 50 basis points. But if you compare it off of the second quarter, we will still be up 70 basis points on total risk-based capital. So excited there as well. As it relates to the CECL double count at this point, we're still evaluating -- but unlikely -- really the FASB has to issue the ASU before we could really make any determination. But I would say the more time that passes, probably the less likely that we would do something there.

Got it. Okay. And then last question here would be just use of excess capital going forward and any appetite for buyback around the current level?

Yes. So I would say right now, we're still -- we continue to be in a capital build mode -- and as you know, Russell, buyback is typically on the lower end of the spectrum in terms of priorities. So today, I would say certainly less likely in the near term for buyback.

Yes, I was just going to say really focused on capital build back and then obviously, that would go toward dividends and really loan growth.

Excellent. If I could sneak 1 in, in terms of you gave us some incremental color on the health care vertical. It sounds like a good runway there. Anything kind of adjacent or similar vertical add-ons you would contemplate down the road?

At this point, we're just really focused on health care and then also the LPO strategy. That's really working incredibly well, would potentially look to other cities end markets to continue to expand there. We talk about different verticals, but at this point, nothing really to share right now.

Our next question comes from Daniel Tamayo with Raymond James.

Maybe first on the deposit side. So obviously, you had the impact from the premier CDs repricing. It looked like money market and savings deposit rates were up a bit in the quarter as well. Just curious the type of deposit competition that you're seeing, if you can kind of size it for us from a relative perspective, it's gotten more intense or still somewhat similar to what you saw in the prior quarter.

Yes, I would say it's pretty similar to what we've been seeing over the last several quarters, not expecting and not seeing anything intensify. And -- but I would say with CRE paying off in general, I do think that, that could provide some relief on deposit pricing in general.

Okay. That's helpful. And then maybe for you, Jeff, you just touched on it a little bit with your comments on the appetite to continue the LPO strategy and perhaps into new markets as well. But just curious if you have any overall thoughts as, I guess, post your capital build when your target that you want to be at where does M&A fit in and relative to the LPO strategy do those 2 things have to be separate? Or can you do both?

Yes. Right now, I would say we're totally focused on LPOs and verticals and growing our organic business. So that's where we're totally focused at right now. And we feel like we've got a great growth runway just to do this organically. I can't tell you how proud I am of the team and how excited I am about the LPOs and -- what's amazing is we've had a lot of great people that we've been able to hire and that has turned into more people and people hearing about our brands as we expand south and expand West. And so we feel like we've just got a lot of great organic opportunities for us. that we're really going to be focused on in the next year plus. So that's really where our focus is today.

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

Thank you. We are continuing to deliver meaningful improvement in our financial metrics and strategic positioning to deliver enhanced shareholder value, highlighted by third quarter earnings per share of $0.94. The strong customer satisfaction scores and continued optimization efforts. We remain focused on driving positive operating leverage through sustainable long-term growth. 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.

Good day, and welcome to the WesBanco Second Quarter 2025 Earnings Conference Call.

[Operator Instructions] Please note, this event is being recorded.

I would now like to turn the conference over to your host today, John Iannone. Sir, please go ahead.

Thank you. Good morning, and welcome to WesBanco, Inc.'s Second Quarter 2025 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 July 30, 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 morning. On today's call, we will provide an overview on the integration of Premier Financial and our strong second quarter results as well as provide an update on our outlook for 2025.

Key takeaways from the call today are earnings per share of $0.91, when excluding merger-related charges, which was highlighted by a net interest margin of 3.59% and year-over-year fee income growth of 40%; solid organic loan growth and a foundation for loan and deposit growth during the second half of the year; successful customer data systems conversion of Premier Financial.

I'm excited that our second quarter results demonstrate the success of our acquisition of Premier and strong operational performance. Our larger organization delivered solid sequential quarter loan growth, while driving positive operating leverage. We also meaningfully improved both our net interest margin and efficiency ratio, further demonstrating our focus on operational excellence for our shareholders. For the quarter ending June 30, 2025, we reported net income, excluding merger and restructuring expenses of $87.3 million and diluted earnings per share of $0.91, an increase of 86% year-over-year.

On a similar basis, our second quarter returns on average assets and tangible equity improved to 1.3% and 17%, respectively. Our net interest margin improved meaningfully to 3.59% due to the benefits of the Premier acquisition and our continued focus on loan growth and strengthening our balance sheet. Our efficiency ratio improved 10 percentage points year-over-year to 55.5% when combined with our achievement of our planned acquisition cost saves. Further, we realized strong growth in fee revenue of 40% year-over-year, driven by the acquisition and organic growth. These are just a few proof points of our strategic positioning for sustainable long-term growth.

This quarter's key story was the successful conversion of the customer data systems of Premier Bank and the Trust department. During May, we transitioned approximately 400,000 consumer and 50,000 business relationships, along with the branding and operations of approximately 70 financial centers from Premier to WesBanco. This seamless integration was the direct result of the strong collaboration of all our employees working to ensure exceptional service for our customers. We are excited by the customer reception and retention to date and are focused on building even stronger relationships with our newest customers, businesses and communities.

Reflecting the Premier acquisition, market appreciation and organic growth, our trust and securities brokerage business has grown into a $10 billion investment business based on assets under management and securities account values. Combined with our larger customer base and new treasury management products and services, fee income totaled $44 million during the second quarter, an increase of 40% year-over-year. Our focus is to grow fee income as a percentage of total revenue over the near term as we offer our products and services to our newest markets. The strength of our strategies and teams are reflected in our performance with total commercial loan growth and organic deposit growth continuing to significantly outperform the monthly H.8 data for all domestically chartered commercial banks.

For the second quarter, total deposits organically increased more than $800 million year-over-year or 6%, fully funding organic loan growth. Importantly, this growth was driven by deposit categories other than certificate of deposits as organic deposit growth, excluding CDs, was more than 5% year-over-year. While we did experience a decline in deposits quarter-over-quarter due to normal seasonality and the intentional runoff of higher cost CDs and less reliance on premier public funds, we continue to expect to fund full year loan growth with deposits. Second quarter organic loan growth was 6% year-over-year and 3% quarter-over-quarter annualized, driven by the strength of all of our markets.

Further, total commercial loans organically increased 7% year-over-year and 4% annualized sequentially. Our commercial loan pipeline as of June 30 was approximately $1.3 billion, with roughly 30% attributable to our new markets and loan production offices. In the 3 weeks since quarter end, the commercial pipeline has grown approximately 5%. Based on the current pipeline, we still expect mid-single-digit loan growth during 2025.

Recently, a cross-market team from our legacy Columbus and new Toledo markets masterfully supported a shared C&I client throughout the customer data system conversion through a strong partnership to deliver an exceptional customer experience. The team created a plan that ensured a seamless transition for this critical client and worked tirelessly across business lines and geographies to not only retain but also grow the relationship, securing an additional $10 million deal in Columbus and an additional $25 million deal in Toledo. This is a great example of the strong collaboration across our teams to support our customers and communities.

We remain committed to making strategic investments in support of long-term growth. We have recently hired a strong seasoned team of commercial bankers experienced in the health care industry to expand our presence in this attractive sector and bring tailored solutions to meet the unique needs of the health care clients. The team has already had some early success. And while still in the early stages, we are excited about the potential opportunities they will bring.

In addition, we have continued to expand our loan production office strategy into 2 new markets with strong demographics and growth potential, Knoxville and Northern Virginia. In Knoxville, we hired a couple of experienced bankers with a long history in the market and plan to make additional hires this year to build out that team. In fact, they have already added potential deals to our most recent commercial pipeline. Our goal over the next several years is to develop this LPO into a strong, sustainable operation like we did in Chattanooga with the support of additional top-tier talent.

We also have expanded our presence in Northern Virginia with a commercial LPO that complements our existing residential mortgage LPO and existing presence in the Mid-Atlantic region. We again hired an industry veteran with deep ties to the region to lead this team and grow our opportunities in this economically vibrant market.

I would now like to turn the call over to Dan Weiss, our CFO, for details on our second quarter financial results and our current outlook for 2025. Dan?

Thanks, Jeff, and good morning. For the quarter ending June 30, 2025, we reported GAAP net income available to common shareholders of $54.9 million or $0.57 per share. And when excluding restructuring and merger-related expenses from the Premier acquisition, second quarter net income was $87.3 million or $0.91 per share, representing an increase of nearly 200% from $29.4 million or $0.49 per share in the prior year period. On a similar basis and excluding the after-tax day 1 provision for credit losses on acquired loans, we reported $1.60 per diluted share for the 6-month period as compared to $1.05 per diluted share last year.

To highlight a few of the second quarter's accomplishments, we generated strong year-over-year pretax, pre-provision core earnings growth of 134%. We grew both loans and deposits organically, improved the net interest margin, grew fee income 40% year-over-year and reduced the efficiency ratio. In addition to successfully converting the customer data systems of Premier, we also exited $115 million of Premier commercial loans and sold the mortgage servicing business of Premier.

Our balance sheet as of June 30 reflects the benefits of both the Premier acquired balance sheet and organic growth, total assets increased 52% year-over-year to $27.6 billion, which included total portfolio loans of $18.8 billion, total securities of $4.4 billion and the addition of approximately $480 million in goodwill generated from the acquisition. Total portfolio loans increased 53.6%, reflecting $5.9 billion from Premier and $670 million from organic growth.

During May, we sold $115 million of higher risk acquired commercial loans, which had a fair value of $74 million that we had identified for sale as part of our acquisition due diligence. These loans had been reflected in loans held for sale and were primarily higher-risk CRE credits. We have also seen an increase in CRE payoffs as properties are beginning to move to the secondary market for permanent financing or are sold. On a year-to-date basis, we've realized payoffs totaling $255 million and currently anticipate at least a similar amount during the second half of the year.

That said, we remain optimistic about future loan growth with our strong pipelines, banking teams and markets, combined with more than $1 billion in unfunded LCD commitments expected to fund over the next 18 months. Deposits of $21.2 billion increased 58% versus the prior year due to premier deposits of $6.9 billion and organic growth of $849 million, which fully funded organic loan growth. Total deposits declined $138 million on a sequential quarter basis due to normal seasonality similar to last year and the intentional runoff of some higher cost certificates of deposit and less reliance on public funds from Premier of approximately $50 million.

Encouragingly, we have begun to see the rebound in deposits so far in July and still plan to fund loan growth with deposit growth for the full year. Credit quality continues to remain stable as key credit metrics have remained low from a historical perspective and within a consistent range through the last 5 years. The allowance for credit losses to total portfolio loans at June 30, 2025 was 1.19% of total loans or $223.9 million. The decrease of $9.8 million from March 31, 2025 was driven by a reduction in PCD loan reserves from several larger payoffs and portfolio mix changes, which more than offset increases associated with a slightly higher unemployment assumption, loan growth and other loan portfolio adjustments.

The second quarter margin of 3.59% improved 24 basis points compared to the first quarter and 64 basis points on a year-over-year basis through a combination of higher loan and securities yields, lower funding costs and purchase accounting accretion, which benefited the margin by approximately 37 basis points. Second quarter deposit funding costs of 246 basis points decreased 9 basis points from the first quarter and 28 basis points from the prior year period. And when including noninterest-bearing deposits, deposit funding costs for the second quarter were 184 basis points.

For the second quarter, noninterest income increased 40% year-over-year to $44 million, primarily due to the Premier acquisition. With combined Premier fee income, we set record highs this quarter in several fee income categories, including trust fees, service charges on deposits, electronic banking fees and securities brokerage revenue. Valuations of equity securities linked to the company's deferred compensation plan also increased $1.5 million over the linked quarter, which drove net securities gains. And just as a reminder, these equity securities are held in a deferred compensation plan with the offsetting cost included in employee benefits expense.

Noninterest expense, excluding restructuring and merger-related costs for the 3 months ended June 30, 2025 was $145.5 million, an increase of 47.5% year-over-year due to the addition of Premier's expense base, higher core deposit intangible asset amortization that was created from the acquisition and higher FDIC insurance expense due to our larger asset size. During the second quarter, employee benefits included expenses of $2.5 million of additional nonrecurring expenses with the aforementioned $1.5 million related to the deferred compensation plan and approximately $1 million in health care costs related to the timing of onboarding Premier employees and related health care services. When excluding these 2 items, total operating expenses were $143 million, consistent with our prior outlook.

Our regulatory capital ratios have remained above the applicable well-capitalized standards. In conjunction with the February 28 closing of the Premier acquisition, we issued 28.7 million shares of common stock to acquire the outstanding shares of Premier, which increased total capital by $1 billion in anticipated modestly impacted capital ratios. Reflecting the full quarter average of Premier's balance sheet, Tier 1 leverage was 8.7% and tangible common equity to tangible assets ratio was 7.6%.

Turning to our current outlook for the remainder of 2025, which includes the benefits from our acquisition of Premier, we are currently modeling two 25 basis point Fed rate cuts in September and October. However, given our relatively neutral rate-sensitive position, we do not expect a meaningful impact on our net interest margin from these cuts in the near term. We anticipate approximately 60% of the $2.9 billion CD portfolio will mature or reprice during the next 6 months, downward from a weighted average rate of 3.9%, and this should continue to benefit the margin.

The acquired Premier CD book, which was marked down to a weighted average of 2%, has mostly run off due to the shorter duration of that book, and we anticipate the renewal rates of those CDs to mostly reprice into our current 7-month CD special in the range of 3.5%, creating a temporary headwind to margin growth here in the third quarter. As a result, we anticipate the Premier-related margin accretion in the third quarter to be down about 7 to 10 basis points from the 37 basis points we reported in the second quarter.

While loans maturities, refinancings benefit overall loan yields and legacy CDs reprice downward, we continue to model legacy margin improvement of 3 to 5 basis points per quarter. And therefore, when combining the effects of the lower purchase accounting accretion, partially offset by the legacy margin improvement, we model a temporary 5 to 7 basis point decline in the third quarter margin with a strong bounce back in the fourth quarter with our margin returning to that second quarter levels in the high 3.50s.

Trust fees as well as securities brokerage revenue for the remainder of the year should be modestly higher, reflecting modest organic growth and the benefit of our new markets and newly acquired assets under management. Electronic banking fees and service charges on deposits, which are subject to overall consumer spending behaviors, should be in a similar range to the second quarter. Mortgage banking income should also be in a similar range to the second quarter, reflecting the opportunities in our new markets, but will continue to be impacted by overall residential housing market. And finally, gross commercial swap fee income, excluding market adjustments, should be in a similar range to the first half of the year.

As we've stated in the past, we remain focused on delivering disciplined expense management while making appropriate investments to support long-term growth, like our recent LPOs in Knoxville and Northern Virginia. Subsequent to the successful customer data systems conversion of Premier, we achieved the bulk of the planned 26% cost savings by June 30. And as mentioned last quarter, our midyear merit increases offset the remaining cost saves from the completion of the systems conversion. Therefore, we continue to expect the expense run rate for the third quarter to be consistent with the second quarter in that low to mid-$140 million range.

The provision for credit losses will depend upon changes to the macroeconomic forecast and qualitative factors as well as various other credit quality metrics, including potential charge-offs, criticized and classified loan balances, delinquencies, changes in prepayment speeds and future loan growth. And regarding the FASB rule change related to the CECL double count, if the rule is finalized by October of this year, we will evaluate the potential benefits and risks to adopt that change as it relates to the acquisition of Premier and make a decision at the time on an appropriate course of action. A rough estimate of the potential benefit to capital, if we adopted, is it would increase capital by approximately $45 million after tax, while lowering loan marks by approximately $60 million pretax.

And lastly, we currently anticipate our full year effective tax rate to be between 19% and 19.5%, subject to changes in tax regulations and taxable income levels. We are excited about the opportunities that lie ahead and pleased with the success of our strategies playing out according to plan.

Operator, we're now ready to take questions. Would you please review the instructions?

[Operator Instructions] The first question comes from Daniel Tamayo from Raymond James.

Maybe just starting on the credit side, a little bit of an increase in the criticized. I wonder if you could give us a little color there. And then just broader thoughts on the LPOs as it relates to credit, if you can kind of give us an idea of how you are able to kind of maintain the credit culture as you do continue to build out the footprint?

Sure. So I'll start with the C&Cs being up slightly. A lot of that is due to some regrading of a couple of Premier clients that we acquired. Once again, we feel like we're still below our peer averages. And we look in the third quarter, we do think we'll see some upgrade to payoffs. So I do expect that percentage to get better as we enter the back half of the year.

As it relates to the LPOs, we still do all the same underwriting, the same credit policies. We have credit officers that have been long tenured with our company that approve the credits. So there's no differential in how we look at any credit in any market. And once again, we really use legacy WesBanco people to take a look at those credits. We also have the market leaders talk about the types of deals we like, the types of deals we don't. And so we take that very seriously. And I can tell you that our credit has been really good in our LPO markets. And with this expansion, I only expect that to continue.

That's helpful, Jeff. And then I guess, kind of related with these LPOs from a capital perspective, just maybe remind us how you think about kind of the overall capital deployment priorities or from a strategic perspective, you've got the LPOs, you've got M&A, you've got organic growth within the legacy footprint. Within that stack, I guess, how do you think about priorities there or managing the capital overall?

Yes. So we start with our dividend. Obviously, a lot of shareholders, and we really value the dividend, put that as a strong focus. But then second and is really organic growth. So I'm really excited about our organic growth, and that's really where we're focused on today. I think if you look at the Premier footprint with all the opportunities that it's going to provide us, along with the LPOs we talked about, and I'm really excited about to be opening Knoxville, Northern Virginia. If you look at Tennessee, we were just getting started a couple of years ago. We've got almost $350 million in loans there. Still see tremendous growth with our Nashville and Chattanooga markets.

And then finally, health care, we hired on some professionals with really great background in health care, that we also see some really great growth on the back half of this year. So I would say dividends and then organic growth, a solid 1 and 2. And then probably M&A buybacks falling much further down there. But I really want to make sure everybody understands our focus is to really execute on the Premier transaction, grow in those markets and then continue with the LPOs and the health care strategy. We feel like we've got, once again, tremendous opportunities for growth that I think you'll see in the back half of this year.

And the next question comes from Russell Gunther with Stephens.

Jeff, first question on the loan growth front. I appreciate the puts and takes for the back half of the year. Maybe just bigger picture, is a mid-single-digit type of growth rate, how we should think about WesBanco going forward kind of on the pro forma balance sheet for Premier? Or as some of the newer LPOs kick in, perhaps CRE headwinds ease, is that high single digit you guys have talked to prior still ultimately achievable?

Yes. We're targeting -- we're still targeting mid- to upper single digits. As mentioned before, a lot of CRE payoffs have increased. But the nice thing about our balance sheet is when we run kind of the forecast, our capital builds back very quickly. So that does give us continued expansion potentials for CRE growth, which is a very nice thing. But I would definitely say we're still looking at that mid- to upper single digits. Once again, it depends on CRE payoffs. But as I said previously, we have a lot of great things to organically grow this company, especially in the second half of the year.

So feeling very good about a lot of those items. So once again, feeling good about the growth. I think it's going to be mid to upper, maybe somewhere in the middle there. But the back half of the year, our pipelines are looking really strong, around $1.4 billion. Those are all-time highs, of course. And once again, Premier is just getting used to our systems, the way we do things, building those pipelines. And I feel very good about the second half of the year.

Great. And then second question on expenses. I appreciate the puts and takes of this quarter and how 3Q should shake out. But maybe a bit more intermediate term, you guys have north of 250 branches today. Is that the right number going forward? If it's not, kind of what is? And what could that mean for potential branch rationalization and cost saves, not currently contemplated in the guide?

Yes. So I would say, like we do every year, we do look at branch rationalization, efficiencies, and we're going to do that as well in the second half of the year. We do have 250 branches. I'm sure there's -- we will look at every branch to make sure that it's very profitable for us, strategically aligned. But as we have done every year, I reiterate, we have tended to close some branches. So once again, just getting started with that work. I don't have a number to give you on that, but that is going to be happening in the second half of the year as well. And I would expect there would be some cost saves that come out of that.

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

Dan, let's get you involved. You gave some good color on the margin for next quarter. I wanted to just test your accretion assumptions. I guess, so it's 37 this quarter, it drops back to kind of high 20s, around 30. Is that the right number for 2026 as kind of a sustainable level, 30 bps of accretion? I know it will kind of trickle down over time, but is that a good starting point?

Yes, I would say so. Really, if we think about third quarter, you can get into the high 20s pretty easily with my commentary. We see maybe a 2 or 3 basis point drop into the fourth quarter. So you're kind of mid-20s. And then from there, it's -- what we model is about a basis point of reduction per quarter thereafter for the next 6 quarters or so. So hopefully, that kind of gives you some color on what we anticipate anyway of the accretion.

That's perfect. And then, Jeff, you sound very optimistic about Premier. I guess my question is the systems conversion is done. Are there other things you need to do to integrate the companies in the coming months? Or is it really just going out and getting that growth and driving fees?

I think it's really just going out and getting that growth and driving those fees and making sure our new Premier associates are familiar with our processes about turning around deals quickly and what types of transactions we want to do, the types of products we're selling, getting them comfortable with that. But I can say this is the smoothest conversion I've ever been a part of, literally no hiccups, great customer conversion. I think the new Premier employees are really enjoying our culture and our growth strategies and the way we kind of create a great culture here at WesBanco. So no, I think second half of the year is really, let's grow, let's continue to take market share and continue to add great talented bankers that help move our company forward.

And the next question comes from Catherine Mealor with KBW.

One just quick follow-up on the accretion, just to clarify. Is the CD amortization totally out by third quarter? Or is there still a little bit of that coming in?

There is a little bit after third quarter, but I believe it's less than $1 million. And then...

Okay. And then in the third quarter, how much is next quarter?

About $2 million.

Okay. Got it. Okay. Perfect.

And then first quarter of next year, we're assuming it drops down into maybe $600,000, $700,000...

That's helpful. Yes, it just goes down from there. Okay. That's great. And then maybe one more thing on the expenses. It feels like you've got -- you said you got most of your cost savings out. And then I know there's some kind of growth that's offsetting that. But how much of -- I mean, I'm assuming a lot of that was kind of back-end loaded in the quarter. And so is there a way to think about kind of how much is actually further coming out in the third quarter, so that's offset by growth? Just kind of curious what those puts and takes.

Yes, you're exactly right. Most of the savings came out really at the very end of June. So those savings obviously will take effect here in the third quarter. But kind of as we've said in the past, with the midyear merit increases and other investments that we're making, for example, as Jeff mentioned, with the LPOs and some other things, we do expect kind of the savings to be offset with the midyear merit increases and other investments. And so that's where we still get into that low to mid $140 million range for an expense run rate kind of going forward for the next 2 quarters.

From an expense savings standpoint, the only things that we really have opened, we do have -- there's still some data processing that's happening. It's relatively minor. That will occur through, I believe, November. And then we've also got our securities brokerage group that will convert here in a couple of months. So we've still got that happening. And then I would say just from the MSR standpoint, while the sale occurred midway through the second quarter, we retained the servicing for the buyer for a couple of months. And so we've got that team still in place and expect to see some savings here in the midway through the third quarter there as well.

Okay. Great. And maybe just one thing, just circling back to the margin. You've talked about the core margin increasing I think you said 3 to 5 basis points kind of per quarter. As we think about going into next year, if we are entering a period where we have a couple of cuts, do you still feel like there's upward momentum in your core margin just given the back book repricing opportunity that you've still got on the core basis? I'm just kind of thinking about -- update us on your thoughts on how your margin reacts as we start to get the cuts?

Yes. No, absolutely. That 3 to 5 basis points is kind of what I would call probably a 3 to 5-quarter average over the next 3 to 5 quarters per quarter. So we're really excited about what we're seeing. But as I also said in my prepared commentary, we do have 2 cuts in the back half of this year. And that guidance that I just provided now is inclusive of that. So certainly, I would anticipate the back book repricing. We've got $350 million in fixed rate commercial loans, weighted average 4.4%. That's going to reprice up 250 to 300 basis points, likely into the 7s here just over the next year.

We have also the securities portfolio, $250 million per quarter in securities cash flow. That's coming off at about 3.3%. It's going back on at 5.5%. So that's going to be a nice tailwind here to margin as well. And these are the things that are really helping to drive that organic 3 to 5 basis points. And then, of course, as I mentioned, the broader CD book repricing from a 3.9% down into that 3.5%. Some of that, depending on the level of CD, it reprices to either 3.5% or 3.75%. So yes, certainly looking forward to the coming quarters.

And the next question comes from David Bishop with Hovde Group.

Jeff, circling back to Russell's first question in terms of loan growth. To get you back to maybe on that high single-digit run rate, in your sense, is it just the -- maybe the visibility or the headwinds from payoffs that would keep you below that? Or are you seeing anything on the macro front related to tariffs or borrower hesitancy that could keep you a little bit more conservative in terms of achieving that? Just curious what you're baking in there or seeing in the market.

Yes, sure. We're not seeing a lot on the tariff front. I mean, obviously, a few customers, I think, are more hesitant. But I think it would be more the CRE payoffs that would keep us from the high single digits. That's what we've kind of seen so far in this first half of the year. And I think that would be the main driver there. Once again, I feel like we've got several different levers to continue to pull to grow and continue to expand, as Dan said, our margin along with our fee businesses. But I do believe loan growth could be somewhat lower than high single digits based on the CRE payoffs potentials. We're seeing more than we've seen in the last couple of years.

Okay. Got it. And then, Jeff, maybe sticking with the fee income topic there. I know a lot of your peers doing some of these bigger transactions implemented maybe some fee waivers on the deposit service charges and such. I think they came in a little bit lighter than I've been expecting, could easily be bundling error admittedly. But just curious if this is a good run rate? Or have you been doing any waivers? And would they be expiring, if so?

No, I'm not aware of any waivers, Dan.

No, I think the only thing I would mention is with the Premier accounts, we did suppress the fees in the first month or 2. So there could be a little bit of benefit as we try into this third and fourth quarter -- third quarter.

Yes.

And the next question is from Mr. Manuel Navas with D.A. Davidson.

Can you talk a bit more about deposit pipelines? You want to fully fund the loan growth. You have some seasonality shifts in the back half of the year. Just other areas where you're going to get that matching deposit growth, please?

Yes. So if you look at what we did last year, very similar trends. We grew deposits really strong in the first quarter last year. This year, we did the same thing. Second quarter, we had some seasonality. And then as we mentioned, we intentionally ran off some of our higher cost deposits that Premier had in the second quarter. Looking at the pipeline for third and fourth quarter, it's really robust. We're also launching a new deposit campaign as well, which was the same thing that we did in the third quarter last year.

So we believe between those 2 things that we should be able to keep up with the loan growth on the back half of the year. Once again, we've really got the deposit machine going. I think you can look at last year as a good result there and feel like we can continue that moving forward. I think some of it we should see from the commercial space. That's been a really nice growth engine for us with commercial clients and launching those new treasury products. One of the things, if you look at our treasury products, we launched that purchase card a little over a year ago. We had about 5 customers on it. Today, we've got about 82 customers with another 40 in the pipeline. So I do expect to see continuing increases in the TM fee revenue as well.

I appreciate that color. In terms of post Northern Virginia, you have Knoxville, you have the health care team, that's a lot of new stuff. What regions or products are kind of next if you have something to contemplate next in terms of adding to your growth targets and regions and products?

Sure. I think, obviously, building out Northern Virginia and Knoxville is really key. We've looked at Richmond a couple of times and kind of connecting right for an LPO, always looking for great talented bankers. And then really, it's just selling all the treasury products that we've just rolled out last year, making sure we're getting a full relationship when we go out and talk to commercial clients. And I think also, we've got a lot of room to run there, where you look -- if you look at the Premier footprint, if you look at continuing growth in Indiana, I was just over in Fort Wayne last week, there's a lot of growth there as well.

So I think Indiana, when you look at Fort Wayne, Indianapolis, there's still room to add teams there. And then I'll wrap up with Nashville. We've got some bankers there, but we want to add more bankers in Nashville. So I believe we've got a lot of great opportunities to grow. And when I look organically and look at forecast, I feel like we're really going to have a great growth trajectory over the next couple of years.

And you highlighted that PFC is already contributing a bit to the pipeline. Can you just kind of highlight where PFC's growth contribution is so far and kind of where -- what's still left to do and so forth on the PFC front?

Sure. Sure. Yes. Their pipelines are building. I believe out of the $1.4 billion, I think they're about $400 million of that. I know we've got several large transactions that were approved, and we're probably closing in the third quarter. I also think that they are getting back into the rhythm of serving their clients and getting out and selling and so finding and understanding our processes. So I believe that they're understanding how we do business, how we go to market, what we're looking for. I think all that we kind of went through in the second quarter. So I believe third quarter, you're going to see even more contribution from the PFC new employees.

The next question is a follow-up from Daniel Tamayo with Raymond James.

Just a quick one here. The preferred update -- maybe updated thoughts on calling the preferred and/or refinancing the sub debt that you have that's going to be repricing higher in the back half of the year?

Yes. Great question, Danny. I think certainly, we're probably not interested in the reset rate, which is -- has a 10-plus percent handle on it, $150 million of preferred outstanding. As you alluded to there, it does become callable on November 15. And so we are certainly evaluating that and plan to take action there. We also have $50 million of sub debt that we acquired from Premier that also resets very soon that we'll be exploring alternatives for as well. So I think probably more to come over the next quarter. I think we'll probably see how that resolves itself.

Next question is also a follow-up. This one from David Bishop with Hovde Group.

Yes. Actually, Dan just took my question. So I'm good to go.

All right. This does conclude the question-and-answer session. And I would like to turn the floor back over to Jeff Jackson for any closing comments.

Thank you. I'm excited that we are delivering meaningful improvement in our financial metrics and strategic positioning to deliver enhanced shareholder value, highlighted by earnings per share of $0.91 and a net interest margin of $3.59. Our transformational acquisition of Premier, combined with our new LPOs and our other commercial lending strategies have boosted our organic growth engine and efforts to drive positive operating leverage.

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. This concludes the call.

Thank you. As mentioned, the conference has now concluded. Thank you for attending today's presentation. You may now disconnect your lines.