Business Combination Prospectus (Form 425)
Filed by
Pursuant to Rule 425 under the Securities Act of 1933
and deemed filed pursuant to Rule 14a-12
under the Securities Exchange Act of 1934
Commission File No: 0-26850
Date:
The following is an excerpt of a transcript of a conference call held on
Forward-Looking Statements
Forward-looking statements in this report relating to
While forward-looking statements reflect our good-faith beliefs, they are not guarantees of future performance. All forward-looking statements are necessarily only estimates of future results. Accordingly, actual results may differ materially from those expressed in or contemplated by the particular forward-looking statement, and, therefore, you are cautioned not to place undue reliance on such statements. Further, any forward-looking statement speaks only as of the date on which it is made, and we undertake no obligation to update any forward-looking statement to reflect events or circumstances after the date on which the statement is made or to reflect the occurrence of unanticipated events or circumstances, except as required by applicable law.
Statements in this presentation with respect to the expected timing of and benefits of the proposed merger between
Premier's 2023 Annual Report on Form 10-K, and documents subsequently filed by
Additional Information About the Merger and Where to Find It
In connection with the proposed Merger, the Company filed with the
No Offer or Solicitation
This filing is not a proxy statement or solicitation of a proxy, consent or authorization with respect to any securities or in respect of the proposed Merger and shall not constitute an offer to sell or a solicitation of an offer to buy any securities nor shall there be any sale of securities in any state or jurisdiction in which such offer, solicitation, or sale would be unlawful prior to registration or qualification under the securities laws of any such state or jurisdiction.
Call Participants
EXECUTIVES
Senior Executive VP & CFO
President, CEO & Director
Senior Vice President of Investor
Relations
ANALYSTS
Research Division
Research Division
Division
Presentation
Operator
Good afternoon, and welcome to the WesBanco Fourth Quarter 2024 Earnings Conference Call. [Operator Instructions] Please note, this event is being recorded.
I would now like to tuthe conference over to
Senior Vice President of Investor Relations
Thank you. Good afternoon, and welcome to
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
I would now like to tuthe call over to Jeff. Jeff?
President, CEO & Director
Thanks, John, and good afternoon. On today's call, we will review our strong fourth quarter and full year 2024 results and provide an update on our operations and initial outlook for 2025.
Key takeaways from the call today are: strong loan growth that has been fully funded through deposit growth, improved net interest margin, which is expected to meaningfully improve through 2025. We remain focused on organic growth and efficiency gains to achieve positive operating leverage. Our transformative acquisition of
We also announced our transformative merger with
Additionally, we continue to focus on cost control while enhancing our wealth and treasury management businesses to deepen client relationships and drive positive operating leverage. With the pending premier financial merger and the strength of our proven strategies and balance sheet, we are well positioned to build on our momentum and continue delivering value for our customers and stakeholders.
For the quarter ending
Furthermore, the strength of our financial performance during the past year was reflected in our fourth quarter retuon tangible common equity of 13%. Nonperforming assets to total assets of just 0.22% and a capital position that continues to provide financial and operational flexibility as demonstrated by our tangible common equity ratio of 8.7%.
Throughout the past year, we accomplished several milestones and continue to receive numerous national accolades that resulted from our strong performance, operational strengths and focus on our communities, customers and employees. These accolades, which recognize our commitment to sustainability and excellence are also a testament to the hard work and dedication of our employees. So I extend a heartfelt thank you to them.
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Just to highlight a few of our accomplishments, we launched a renewed mission, vision and pledge, which defines our purpose, aspirations, and the values that guide our business, which include respect, exceptional customer experiences, soundness and stability, accountability and stewards of our communities. Our MVP unites us in a shared sense of purpose and guides our strategy towards sustained success.
In conjunction with the announcement of the pending acquisition of
Through the strength of our wealth management teams and our services, we realized record levels of trust and investment services assets under management of
We were recognized for soundness, safety and profitability. Employer of Choice and a Great Workplace, positively impacting our communities. And recently, we were named one of Forbes' most trusted companies based on customer investor and employee trust. The key story for both the fourth quarter and full year remained strong deposit and loan growth as deposit growth fully funded loan growth on both a year-over-year and sequential quarter basis.
Further, our total and commercial loan growth and deposit growth continued to significantly outperform the monthly HA data for all domestically chartered commercial banks on both a year-over-year and quarter-over-quarter basis again just demonstrating the success of our strategies and teams. Our total deposits increased
Importantly, this growth was mainly driven by deposit categories other than certificate of deposits as total demand deposits continue to represent 54% of total deposits with the noninterest-bearing component representing 27%. And reflecting our team's focus on deepening existing and new customer relationships.
Our underwriting and credit standards are a 155-year legacy of our company and we are achieving our strong loan growth without sacrificing credit quality as confirmed by key metrics that are favorable to the average of all banks with assets between
Fourth quarter growth was 9% year-over-year and nearly 7% quarter-over-quarter annualized, driven by a strong performance of our banking teams across our markets. Further, total commercial loans increased 11% year-over-year and almost 9% sequentially on an annualized basis, driven by commercial real estate.
Our 4 newest loan production offices accounted for nearly 30% of the commercial loan growth year-to-date, led by our
However, in the 3 weeks since year-end, the pipeline has grown approximately
While the opportunity presented many challenges the team persevered through complex negotiations to secure this resounding win, which was made possible by our deep understanding of the clients' needs and our team living our values of accountability, and soundness and stability in support of the bank's day-to-day and long-term performance.
Turning to our pending acquisition of
Through this transformative acquisition, we expect to accelerate our positive momentum, build on Premier's legacy of community engagement and support. And together, bring the resources of a larger and stronger financial services organization to benefit all our communities.
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I would now like to tuthe call over to
Senior Executive VP & CFO
Thanks, Jeff, and good afternoon. For the quarter ending
On a full year basis, 2024 net income available to common shareholders, excluding after-tax restructuring and merger-related expenses, was
To highlight a few of the fourth quarter's accomplishments. We generated strong year-over-year pretax pre-provision earnings growth of 29% that was built upon loan growth of
These positives, combined with a slight negative provision for credit losses, a pension benefit that's not expected to recur and a positive fair value adjustment on swaps and resulted in a
As of
Commercial real estate payoffs totaled approximately
Deposits of
As is typical during a higher rate environment, we've experienced strong growth in CDs during 2024. However, when excluding them, we realized deposit growth of 3.9% year-over-year and 7.7% quarter-over-quarter annualized. Furthermore, we anticipate roughly 70% of our CD book to mature or reprice lower over the next 6 months, mainly in the March to May timeframe.
Turning to credit quality. Credit quality continues to remain stable. Its key metrics have remained low from a historical perspective and within a consistent range over the last 3-plus years. The allowance for credit losses to total portfolio loans at the end of the quarter decreased slightly to 1.10% of total loans due to improvements in the macroeconomic forecast related to lower unemployment assumptions and a more normalized yield curve, offsetting loan portfolio growth and office portfolio reserves.
The fourth quarter margin of 3.03% improved both quarter-over-quarter and year-over-year through a combination of higher loan and security yields and lower funding costs as we continue to execute upon our strategies to strengthen our balance sheet. Also benefiting the margin was the
And as a reminder, the majority of our
For the fourth quarter, noninterest income totaled
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Service charges on deposits increased due to fee income from new products and services increased general consumer spending and treasury management, which is continuing to gain traction from our strategic repositioning of this business line in late 2023. It's also important to note that other income included a
Turning to expenses. Noninterest expense, excluding restructuring and merger-related costs for the 3 months ended
Our regulatory capital ratios have remained above the applicable well-capitalized standards and reflecting our strong capital position and net income, our Board of Directors approved a
Turning to our current outlook for 2025, which is for
We anticipate approximately 4 to 6 basis points of continued improvement in the first quarter's net interest margin from the fourth quarter as our spot margin for the month of December was 3.08%, and we expect more meaningful improvement during the second quarter as more than
Trust fees should benefit modestly from organic growth but will be impacted by equity and fixed income market trends. And as a reminder, first quarter trust fees are seasonally higher due to the tax preparation fees. Securities brokerage revenue is anticipated to grow slightly from the range over the last few quarters due to modest organic growth but also will be dependent upon the economy and equity and fixed income markets.
Electronic banking fees, which are subject to overall consumer spending behaviors are expected to be in the same quarterly range in 2024. Service charges on deposits are expected to remain consistent with the amounts that we've earned in the second half of 2024 as they are dependent on general consumer spending but could benefit slightly from continued growth in treasury management.
Mortgage banking should remain in the range of the second half of 2024, but will continue to be impacted by the overall residential housing market trends and interest rates. And then gross commercial swap fee income, excluding market adjustments, should be in the range of
Turning to expenses. As we stated in the past, we remain focused on disciplined expense management to drive positive operating leverage and will continue our efforts throughout 2025. As we previously disclosed, we successfully consolidated 11 branches into nearby locations during the fourth quarter and anticipate annual savings of approximately
Marketing and
The provision for credit losses will depend upon changes to the macroeconomic forecast as well as qualitative factors, credit quality metrics, including potential charge-offs, criticized and classified loan balances, delinquencies, changes in prepayment speeds and future loan growth.
And lastly, we currently anticipate our full year effective tax rate to be between 17.5% and 18.5%, subject to changes in tax
regulations and taxable income levels.
Operator, we're now ready to take questions. Would you please review the instructions.
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Question and Answer
Operator
[Operator Instructions] The first question comes from
Jeff, Dan, I wanted to start on the margin and appreciate all the color with regard to legacy
Senior Executive VP & CFO
Yes. Sure, Russell. And so first, second quarter, it's about
I appreciate it. Okay. And then switching gears, as we think about sort of the pro forma margin with Premier, given the rate backdrop, we sit in today, also your 2 Fed cut expectations does that put us in a pro forma range of, call it, I don't know, 3.45% to 3.50% or given your kind of legacy outlook and improvement with the
Senior Executive VP & CFO
Yes. Russell, I think you're pretty close to what we're modeling right now, I'd say. I think one of the things that we -- if you recall back when we announced the deal in July, we had a kind of a pro forma margin of it's like 3.46%. And if I were to think about what has changed since then, certainly, the rate environment, and I would say, that 3.46% at the time was based off of analyst consensus first quarter -- it would have been first quarter analyst consensus forecast for 2025 for
And since the first quarter of 2024, that consensus estimate, I think given some of the tailwinds that we've discussed, feels pretty good that we could be 10 to 15 basis points better than that today. 3.50% to 3.55% range.
Operator
Next question comes from
I wanted to pick up on deposits a little bit more. A lot of opportunity in 2Q. But could you just sketch out the whole year a little bit and what you think an appropriate deposit growth rate is? And is some of the stabilization and mix we saw this quarter can continue?
Senior Executive VP & CFO
Yes. So what I would say is one of the bigger assumptions that we're modeling today is that the loan growth would be fully funded by deposit growth. And that deposit growth could be a little lumpy quarter-to-quarter. But generally speaking, for the year, we expect deposits to fully fund loans. And so working backwards I think we've been pretty clear about what our expectations are for loan growth on an annual basis, targeting that kind of mid- to upper single-digit loan growth. So that's about
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Okay. And then just on the mix piece of it, do you think we'll see a little less CD growth? Or is that still are at kind of similar composition?
Senior Executive VP & CFO
I think we could see probably a little less concentration in CD growth than what we saw this year like 2024. In 2025, I think it could be a little bit more evenly mixed.
Operator
The next question comes from
Jeff, a quick question. You noted the success in sort of revamping some of your treasury management products on the commercial side of the house. Just curious, I don't know if you disclosed this, but maybe give like a percentage increase of maybe new commercial accounts added this year? Are you seeing -- are you able to win bigger commercial accounts advertised -- just curious any color you can provide there on the commercial deposit growth.
President, CEO & Director
Yes, sure. We are seeing some larger account wins. I think we're continuing to ramp it up. I will tell you that we -- treasury management fees year-over-year grew pretty nicely. And once again, we're -- I believe we ramped up around 40 new multi cards that were implemented toward the middle of the end of last year. So obviously, that spend would flow through this year. And then we are targeting at least that many or more for this year.
So it's really getting started, but we are seeing the revenue lift there. And the teams, the commercial teams are really adding it to the repertoire, which is allowing us to bank additional C&I business. I believe in the fourth quarter, you saw us grow C&I about
And then we've had a tremendous growth in deposits as well. So yes, it's just really ramping up, I would say, but it's made a big impact as far as being able to grow deposit and commercial loan balance.
Great. And then a follow-up question, I think, in the preamble, it sounds like you're still confident of a first quarter close to the Premier acquisition. Just curious, is the Fed and D.C. reviewing this? Just curious on that to get the final regulatory approval.
President, CEO & Director
Yes. So we are very confident that we'll close in the first quarter, and it is in D.C.
At this point, I see no issues that have arisen, and we still feel very comfortable about closing in the first quarter.
Operator
The next question comes from
Maybe first, just a clarification. The loan growth guidance that you talked about, I know you mentioned expecting an increase in payoffs in 2025. Does that assume an increase in payoffs in 2025 in terms of what you're -- what you gave us on the mid-single-digit loan growth?
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Senior Executive VP & CFO
That will be a net -- that's a net number. So with payoffs still in that mid- to upper single digits.
Mid- to upper single. So it includes -- you're assuming that payoffs increase within that net loan growth number you're talking about. That's what you're saying?
President, CEO & Director
Yes, that's right.
Okay. If there were -- payoffs were to exceed expectations and loan growth were to come in a little bit lighter and you had a similar situation that -- yes, in the fourth quarter where deposit growth exceeded loan growth, would you be inclined to pay down FHLB borrowings again? I'm just curious how that scenario would play out if it were to occur?
President, CEO & Director
Yes, we would. So all our deposit growth is that we're bringing in less than what we're paying at FHLB. So we would -- if we weren't able to grow loans at the same rate of deposits, we would pay down the FHLB borrowings which would have a positive impact, I believe, on our net interest margin.
Senior Executive VP & CFO
Yes. And we saw -- we really saw that here in the fourth quarter. The deposit growth came kind of early in the fourth quarter, and we were able to pay down those total
President, CEO & Director
Yes. We finished December at [ 308 ].
Okay. Terrific. And then maybe just switching gears here to credit. Certainly, it's been strong for you guys, but there was a been an uptick in NPLs and criticized and classified. Just curious if you have any more color on kind of what is driving the uptick in those categories?
President, CEO & Director
Kind of normal quarterly ebbs and flows. I believe one credit slightly raised it up a little bit. I think we plan on getting that resolved probably by the end of this quarter, early next quarter. And if you look at our historical trends, we're still well within our historical trends. And still in all categories, at least average of our peer groups or most of the times better. So I wouldn't read anything into those numbers. As you know, fluctuate quarter-over-quarter. And at this point, there's no trends that we're seeing at all.
Okay. So we should still be kind of comfortable with where net charge-offs have been historically looking forward is what sounds like what you're saying.
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President, CEO & Director
Yes.
Operator
The next question comes from
I want to circle back just to kind of move in rates and your comment here on the margin. It feels like the move in rates have been good for
On the flip of that, as we kind of think about pro forma capital ratios, at close, and I guess question 1 is what's the best rate to follow. If you look at the 10-year, it looks like the 10 years moved up a little bit since we announced the deal. And so how do we think about that impact it's good for the margin, I would imagine, because high credible yield, but also kind of a negative to capital.
And so as you think about pro forma capital ratios in commercial real estate, the capital ratios at close, does that move in rates kind of push you to need to sell more loans? Or is there something you're kind of solving for where you want ratios to be at close that we should just think about as we get near to the close date.
Senior Executive VP & CFO
Yes. I think you hit on a number of things and a lot of great questions and thought there. What I would tell you -- from our perspective, one of the things that we did do is we had the commercial -- or the entire interest loan mark revalued as of
So -- but I would tell you a couple of things. I would use the 5-year more so than probably the 10-year. But the 5-year back at the time that we would have valued it was right around 4.5% today or well, at the end of the year, we're still kind of in that rough range, I would say. And the interest mark on a stand-alone basis actually came -- went from kind of
That's kind of, I think, about 5% interest mark at deal announcement to a 4% mark based on where rates were at the end of the year, and so that's actually moves in the opposite direction of kind of what we were -- kind of we were kind of just discussing there. In fact, in that scenario, we see a little less tangible book value dilution, a little less interest mark accretion.
And with the lower TBB dilution, it actually takes overall deal math down from kind of 13.5% dilutive to about -- to just under 10% dilutive, which we view very positively. I would say the CRE ratio is something that we're very focused on, as you kind of alluded to there, and we want to keep that -- we want to -- we're very mindful of that 300% guideline, and we want to maintain our portfolio or our ratios under that.
But I would tell you, with the fourth quarter, the growth in capital that we experienced here, Premier's very nice numbers that they reported as well. combined with the lower interest mark all kind of bode well for better capital ratios assuming the rates are what they were at
It's really interesting. It's so helpful. So it just looks like since deal announcement, we're getting less book dilution and then less accretable yield, but our core margins are coming in higher. So actually kind of probably net neutral, maybe a little bit better to the margin, all in. Is that a fair way to think about it?
President, CEO & Director
Yes. Yes, that's exactly right.
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That's great. Okay. And then on expenses, can you just remind us just kind of the timing of cost savings and if there's any kind of upside to those cost savings that you might see now that you're a few months in from announcing the deal.
Senior Executive VP & CFO
Yes. So cost savings, typically, we would anticipate to begin after core conversion and typically, that's a good month or 2 after core conversion. And so right now, we've got a tentative date of middle of May for that core conversion to occur. And then there's certainly a cleanup for a month or 2 thereafter, where we're still kind of running parallel -- and so after that period of time, that's when we would expect to really begin to realize the full kind of 26% cost saves.
We're still obviously evaluating, but we do feel very good about that assumption. We feel that, that was a nice conservative assumption that announcement and still feel that we're well on track to meet that.
Operator
The next question comes from
So just to follow up on that. Just a follow-up on that capital on part of that capital question. The move in rates likely improve the
CRE concentration at close and actually is no longer a headwind at all to your legacy growth prospects. Is that kind of even a stronger takeaway?
Senior Executive VP & CFO
Well, it is. It really is. And you're right. I didn't say that I kind of meant to imply that, but it does improve the CRE concentration ratio on day 1 for sure. And it does remove some of -- if there were any ceiling on growth, it does certainly help there. Absolutely.
Just remind me on the -- are there any other updates to Premier targets accretion or I guess we've kind of covered most things, but anything -- any other noteworthy updates about the pending transaction?
President, CEO & Director
I mean, maybe the only other thing I might add, I think Catherine touched on the CRE sale of
So I think that's kind of another tailwind to margin and future growth.
That's great. Just on margin on a legacy basis, when you talk about a little bit more expansion in the first quarter, is that off of the December number of 3.08%? Or is that off of the full quarter number?
Senior Executive VP & CFO
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It's off of the full quarter number.
And then just -- there might have been some cross talk, but you're kind of almost expecting at close, you could have the NIM be 10 to 15 basis points above where you previously expected it for the deal?
Senior Executive VP & CFO
That's correct. I would say when I say that, I go back to that kind of 3.46% that we disclosed back when we announced the deal, at that time,
Since that time, we can see it. It's real. We anticipate that we're going to outperform the 3 10 that would have been baked into that 3.46% guidance by 10 to 15 basis points.
That's really -- that's great. That's a good update. One last question, kind of where -- what regions are you the most excited about anywhere that you would be looking to add and how in timeline where you're looking to add new lending teams in terms of like the legacy
President, CEO & Director
Sure. Yes. So we grew last year
I shouldn't say, start
Operator
And our last question today will be from
I just want to clarify then, the 3.50% to 3.55% pro forma NIM with Premier. One, does that -- is that based off the updated mark, you talked about receiving
Senior Executive VP & CFO
It is based off of the updated mark. It does not contemplate fully the restructuring of securities. So there's that.
Operator
This concludes our question-and-answer session. I would like to tuthe conference back over to
President, CEO & Director
Thank you. During the past year, we delivered strong loan growth of
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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.
Operator
The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.
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