WSBC - Earnings call transcript Q3 2018

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Operator

Good afternoon, and welcome to the WesBanco Third Quarter 2018 Earnings Conference Call. [Operator Instructions] Please note this event is being recorded. At this time, I would like to turn the conference over to John Iannone, Vice President of Investor Relations. Please go ahead, sir.

John Iannone

Thank you, Denise. to third welcome conference XXXX and call. afternoon, WesBanco, quarter Inc.'s earnings Good

XXXX contains Chief and yesterday release, and third Todd Vice wesbanco.com. earnings Our quarter President today call which and available our non-GAAP are Bob measures, Leading Executive the is President reconciliations financial Officer. consolidated Officer; was Chief and issued and Financial afternoon Clossin, on website, Executive of highlights financial Young,

be archive remarks, opening a will in of one this for we will An our Following question-and-answer year. call begin available website our session.

statements. contemplated such that important under Todd? actual Risk by Factors to in does results from facts, most which report Forward-looking WesBanco's strategies, as the statements risks to for Part adequacy update are those December Form on WesBanco's XX-K the Such Reform SEC contained historical by any in statements this can duty cautioned in that the should uncertainties, subsequently be of March report and and the Commission, XX-Q XX-K this recent cause factors XXXX. the with well pursuant WesBanco's SEC forward-looking read those XXXX Securities WesBanco Private XX, annual statements. differ X, relating of subject the objectives, to and statements, and plans, with quarters conjunction of are to report as not the documents made ended detailed provisions Item XX XXXX information Act are for filed not Exchange and ended expectations, Form and websites. in are Securities Investors including harbor forward-looking XA. filed with XX, year Litigation safe to intentions assume which WesBanco June available materially are The WesBanco involve resources on Form in

Todd Clossin

our the management million of income, We XX% year-to-date FFKT's a and increased improvements XX% improved in income of with year-over-year and of of measurements. of well-defined from XXXX, positive operating Corporation. good leverage, and during efficiency benefits despite quarter million, the year. record of continued core the income, performance the The provision from growth per with our completion credit results expenses everyone. our XXXX. On today the our organic execution month which $X.XX share. Thank Net the positive successful call are Bank reviewing pleased leverage as focused points excluding $XXX combination XX% per execution We're while to quarter operating expenses to the is or Farmers diligent and combination of for year The year-over-year a drive the months additional of to you, evident strategies third and net operating August share. shareholder through merger year-over-year several focus funding results delivered income before XX, M&A our long-term ensuring And this Xx strategies. diluted XXX sound Capital our are call, we The ratio operating on inclusion takeaways we'll benefit third ended long-term maintaining the for growth. losses remaining leverage profitability taxes be quality; merger-related upon of through by of since for help profitability, profitability September on XXth John, increase. value; today's prior expenses, unique and strategies XX% nine credit $X.XX to of basis of that afternoon, positive million $XX excluding merger-related advantage; increased core our Key on or $XXX expense further period, effective diversification three delivered our legacy through

which return the ratios And on year improved and year core of over respectively. assets basis and points, of a on XX.X%, XXX average with X.XX% XX by equity return core profitability average solid tangible

continued success growth upon remains well-defined execution operational plans. long-term and dependent our of Our

is net of growth strategy increasing commercial inherent risk-prevention our income revenues founded over maintaining strength and total banking several building home our reminder, on strategies industrial loan they risk years management and be retail upon focus culture not pillars our equity components And high-quality franchise, maintaining franchise: success of As the strong ensure these Furthermore, operating and credit acquisitions. of XXX profitability is complement company key and legacies a a possible focused compliance, of an fee percentage portfolio long-term each other time, and our making of a as if was not an built necessary with were environment. growth lending, leverage, on would strong franchise-enhancing diversification two pillars: and a principles unwavering while the delivering to investments; and emphasis ago. positive how on which our operating growth-oriented quality, and nearly the regardless support and upon diversified

across to credit or remained metrics, strength third the continued lows. key we at quality historic quarter, During which near see

high of flat Total our quality loan portfolio. portfolio off in to loan strategy allowing a through return of loans defect measures excluding auto despite billion basis loans year very FFKT the sale, pleased growth well portfolio classified run decreased over consumer our year at loan all loan $X.X of total over past-due fact, they on our I'm better acquisitions, and In portfolio. year criticized for as excluding manage nonperforming loans consistent, both to organic those that of profile. with when overall and this year held FTSB was a asset trend from indirect quality assets, the absolute-dollar addition as of loans, quarterly loan as strong relatively risk percentage and

secondary experiencing real market going properties commercial estate are We heightened valuations. as of favorable property due loans still the selling to a as well owners property to level outright

of categories. little combination X% to heightened more over and factors in industrial growth a rising combination cuts see tax loan equity begun have we The rates than pressure year. these deleveraging addition, and and year organic the bit interest decline caused In from home both a to commercial of lending

Our economic across cycles. sustainability credit growth balanced to risk guides disciplined our management to and and be and success strategy loan both ensure

sacrifice long-term Our shareholder approach not is for near-term gains. value to

said culture we've focused loan change will have and long-term, on before, growth. As our sustainable to chase growth as we profitable credit we not

During just on our the of of of deposit growth, than excluding shale X%, deposits. again, organic by franchise, strong This we Marsalis Utica and the demonstrated which CDs quarter, third formations. strategic in which is driven key more demand total growth the deposit sits X% top growth advantages one legacy of was

completed XX XX%, strategy markets. a higher us consistent, around loan-to-deposit to XX, the our to roughly Farmers excited XXX represents allowed United over hard banking acquisition deposits, our processing a the ratio to deposit of deposits our nearly affiliate, the have deposit strong maintain of and our to year while about the of like low. This in FFKT funding X branch I'd have with families our core total as the points. Our in energy-related in conversion also its have history Kentucky XX% Metropolitan reduce rural growth approximately We're funding being we we distinct funding inflows, merger X cost deposits strong deposit employees a replicate each Corporation, our demand customers and lower continue advantage banking. which to formally Capital in certificates total in of customer as basis and associated provides experienced XX% Trust These to helped of X-figure last service the On community loan Sentry. Combined completion range into accounts, growth data years Bank shale ago. Capital bank as now costs commitment Interestingly, higher allowing that for month is August to a meet maintain low which be Bank to our the markets of with reside to First generations years keeping cost Company, profitability, of us to of demand mainly our month. by welcome in family. opportunities while demand aids after the XX% WesBanco advantage we & in the compared

of mentioned strategy franchise-enhancing earlier, pillars the long-term key I our acquisitions. of one As is growth

successful Western of our plans. one During last and markets the franchises. made acquisitions to of in Fidelity strides years, state's our have and Kentucky's the expanded and become into the filled of our significant After franchise southern edge strongest and with diversification we've in few Pennsylvania high-growth expansion ESB, the we growth into

we remain focused our update financial sound, results. call the an I over Financial All We're opportunities excited of XXX-year-old emerging these and transactions diversified, into to for financial to like have as a turn would enabled Officer, a quarter on bank. Bob? business long-term century-old third us to our upon Young, a profitability. transform Bob our Chief ourselves now on community about build institution, trust regional

Bob Young

pretax Todd, everyone. and reported year-over-year in Thanks, growth and and earnings, year-over-year. quarter-over-quarter afternoon, profitability as both displayed expense good management, solid strong after-tax as We with well both

months we the nine per million September same ended last the or XXXX, $XX.X share as net income $XX.X $X.XX and for per period diluted compared $X.XX share diluted For to of earnings year. of reported XX, million GAAP

both periods, Excluding increased income up XX.X% merger-related earnings $XXX.X with million, net $X.XX. per share after-tax expenses from to $X.XX to diluted

income in share of period. September to ended $XX.X as XX, the GAAP reported $X.XX and year $X.XX, we three per the prior of million For respectively, and net XXXX, million months diluted earnings compared $XX.X

earlier. as one we drive residential are up better originations seen loans income, increased can continue mortgage certain XX% residential program fee reminder, private mortgage reflecting are year-over-year loans share mortgage sheet, to jumbo year strength both primarily Todd banking originations of to growth sell loan to of Total earings increased did to XX.X% to growth with the year balance from the XXXX, due for acquisitions. results subsequent respectively. growth down $X.XX. year-over-year, dates to grew XX% was XXXX Excluding $X.X First approximately included income FTSB and Capital Total compared versus increased prior financial our increased billion we strong during strategy our August Furthermore, loans. year-to-date total XX, quarter nationwide, the our X residential four market, mortgage assets April be of $XX.X as than September $XX Furthermore, third that and period, per lending the the X% mentioned the loan an originations merger and portfolio after-tax as residential to and to amount factors The held Farmers XX.X% total family merger-related slightly have $X.X to of to the reflecting growth due their And by billion nonconforming acquisitions. continue as results, expenses, FFKT banking primarily secondary WesBanco's while year-over-year. mortgage categories, have on a prior of the in net been and assets billion of and XX, that our into loan in market of diluted organic Sentry million, in organic from

acquired and would shifted quarter. occurred like XXX reclassification was that about continue to to loans mention collateral. the shift, total commercial performed loan commercial real This from review category loan portfolio. internal to approximately the estate I category million reclassification due industrial of of to commercial Lastly, Despite loans classification this the industrial of the that and from loan the third an the during comprise XX% our

costs negatively interest which Jobs curve the the statement. margin increased the X net the Federal of the and the from basis past basis range quarter tax points over funding Cuts to to the in the from was Reserve These the and Turning point basis point well increases in benefits The rate the acquired now Tax and benefit local targeted reduction a to from impacting Act. Board's municipal benefit flat quarter the security partial similar were yield reflecting federal year-over-year, during the as to of funds two the the between asset portfolio FTSB assets. curve, on and XX the year XX state lower currently income tax-exempt last yields related margins to first net a partially X year and equivalency Also XX margin by offset quarter. portion FFKT is as resulting the higher higher

points basis as year prior the the X.XX%. purchase and sequentially well increased points basis to points in of as year-over-year and accounting Excluding XX basis points X accretion this interest net reduction this basis XX quarter X margin core period,

in interest-bearing net In current primarily for of Home deposits Federal interest-bearing other margin were to due funds, rates cost only margin demand about weeks higher was the The includes and Bank borrowings. higher quarter's interest-bearing addition, Loan of and increase in six which primarily public liabilities FFKT's assets. the certain secure

increased representing were as footprint deposit costs beta in just basis deposit when including up basis only funding points a federal growth funding since year non-interest-bearing our to Our compared benefits the to legacy Further, XX profitability deposit point XX ago. cost our basis helping by XX% the keep XXX has year-over-year, rate increases deposits, funds costs year-over-year. deposit total a points total interest-bearing low, just deposit

core should provide increase help deposit overall margin, contain will we our overall While costs, that still some loan-to-deposit to to interest funding as deposit and we advantage the forward. do ratio with betas net our combined to move deposit funding expect low protection

anticipate points between in and purchase to merger. includes quarter's be from basis accounting accretion we quarter, a Lastly, the XX fourth the full XX which impact Farmers

income For prior FTSB quarter year million, XX.X% increased and the the FFKT noninterest to acquisitions. driven September by ended XX, from XXXX, XX.X the

nice increase banking fees larger business as increase organic XX% the a FFKT's trust and In growth. increase addition charges, the in from obtained a also very to trust trust combination well in of saw we as electronic deposit helping fees $XXX a from service to assets from customer base million mergers

for We projects about business FFKT are in the have addition as the implemented trust the we in to management our scale opportunities previously reputation of excited Kentucky, the provides the and growth state. business wealth significant

$X.X the earlier, and income is residential of per sale mortgage to the gains. the mortgage evident which gain mentioned higher on million in our increased XX% strength banking income, program of hedging-related growth to sold loan I due lending As year-over-year

As profitability successful discretionary strong Todd continue positive execution include strategies, our costs. highlighted, of growth to which we operating and through controlling leverage demonstrate

reflective This two costs. to noninterest and equipment the and of the employee acquisitions increase increase were or and branch merger-related compared associated period. their benefits, increased year Excluding staffs the and primary million prior is expenses, locations, which year-over-year salaries expense reasons $X.X net XX.X% for occupancy the wages, in

for and wages annual for In third employees. the quarter our addition, adjustments also composition salaries legacy the reflect and

ratio XXX August XX. XX.X%, our to basis is in company-wide which core costs of of since expense year-over-year improvement in controlling efficiency FFKT's evident full the inclusive Our dedication is point operating base

we management, positive Xx we lending billion last at addition, the near of to Representative of balanced acquisitions, loan the was risk year-to-date period. operating have credit several addition growth. while measures with realize even quality quarters, our for remaining In as strong remained or our continued which legacy continue the loans disciplined the have and two leverage, prudent focus over on from in lows and historic standards, of to $X.X on credit

the the consolidated capital ratio continued and regulatory have ratios are we our standards. addition, Impressively, strong In to the of well-capitalized maintain quarter quarter bank level ratios, X.XX% common as third above well the FFKT despite second both completion acquisition. tangible equity increased from to

offset XXXX deposit across betas. interest Capital, margins partially industry. to the quarter our opening Farmers of for net asset not are of higher on factors by fourth a current provide the interest Before due year. outlook expect would acquisition our Despite that impacting the call We are to the the full increase thoughts your remainder from of in some do I modest a like general quarter's benefit we immune our the during for of net margin the sensitivity, anticipated questions,

Regarding to the of Capital with last the cost anticipated operating pace First realized thereafter. achieve continue and expect XXXX; XXXX, Farmers obtained during during achieve expenses, the during savings Sentry planned remainder remain of on XX% of and XXXX the with XX% remainder XX% to savings, cost half to the XX% we

year this in we Tax and full And between implement New that awarded certain tax the effective includes were rate XX% Lastly, could periods. our subject strategies in for we the we to year. Credits XX%, benefit future changes anticipate earlier that potential be Markets that income to taxable

Operator, take please now could the your you review are to instructions? We questions. ready

Operator

Please Mealor first KBW. of will ahead. go Your from come Catherine question Instructions] [Operator

Catherine Mealor

your wanted what I -- Hey, expenses, you to said expense Bob. about just clarify

there a bit have like. it you percentage? still of from put come we quarter, a to in So First little that is amount way dollar Can a Sentry through on a to sounds fourth instead the --

Bob Young

public first wasn't complete. Well, Sentry I company that public that's think I a a realize

that So million a get as from being million you look we basically their at to $X.X But inherited. of able run prior-year ought expenses to be we information $X.X quarter rate SNL. around to

of then XX%. a And figure that that, about to you multiply should be you by so if $XXX,XXX and month that $XXX,XXX XX%

worth that We of back on July. in $XXX,XXX about So $XXX,XXX, convert four in First gets quarters did of from First Sentry you April. into Sentry savings

to from to figure do and office have And cost so had we X% million then million, growth is million. did terminations in savings it, begin you $XX typically prior Farmers back experience that about Jack We rate elimination $XX you. of so available -- in They Henry, a their $XX.X if and would beginning service you And for or, company, in late a expenses about company IT XXXX. call public August.

and so worth in would figure of the only the you -- quarter. And expenses one a third then those fourth of half have full And expenses about amount in of months quarter. you one quarter quarter's the those one

$X.X per until take. So that or stands month, No savings cost basically XXXX. give million there

Catherine Mealor

at we'll through next quarter? So see then start coming full the a and it's cost rate to run savings quarter first coming the in

Bob Young

Yes, some There occur you savings those would systems. that experiencing conversion. we shut say cost of just And savings. It's do different I the after the that's think down fair also have when to were would bulk it's there. already

Catherine Mealor

when that? is for Remind conversion me

Bob Young

looking QX. We're at

Catherine Mealor

picture, kind holding tough margin think on rate see think trajectory just quarter -- FFKT. I higher in of get enough asset-sensitive sneaky earlier about in margin the that sides kind your I think there on offset flat color is sense to margin, we just you the do we makes to of a then, the And would think expanding in But the curve we've job environment? more next rate next of it How But given in then the bigger past, we you how base. the the so you If year? going the remain margin year? Any as super your about if we're you just said flat-curve this to do through quality next through be environment. the helpful. asset on move called but early hikes, said of margin, nice really funding

Bob Young

that. I'll $XXX it you the margin got had the be margin the than based quarter knowledge just simply obviously fact higher for September, higher I would or in quarter have where that X.XX% month asset and what of have second Well, announcement. higher to whole their the back the million only you would is to of the upon We refer public base. a release, Farmers I a the at base that from back margin. a asset they take

XX the you're So and well increase net then late the quarter. you bolster on kind quarter, see fourth guiding quarter. X is increase, does of in core in that basis both saw in you as in the quarter by accounting, them, then end as those based the of of I'm an third we of on experiencing you the core that see as in a the -- you acquisition third the fourth reality XX the throughout And of later from what approximate to third of purchase assets increase core accounting and margin accretion basis purchase assume basis and in, margin points Farmers quarter, quarter accounting kind to from upon that purchase when point stage that

highlighted costs. takes are are the Note, now pressure to see well. when deposit you of an down highlighted beta just increases facts both Todd's the -- year could of fourth the believe of it do in for on of in in related total. so far. pricing And important analysts XX% noninterest-bearing. of our deposits add deposits. about, But strategy as very it few last of some XX% past I at And that. yes, increase over additional interest-bearing we been in some some the deposit those now deposit that total you that's the the we have demand And the years. the four talked important as you We've that terms successful we've part quarter. Now XX%. looking over our But to some been is

cost higher money So think or corporate you in that market. far accounts. we'll tiers the in that. market. upper Or we've repo cognizant to at see, that's tiers are had our the increases funds. not that monies build the but balance in we're continue, we related if costs And so going institutional and and I and react there, you higher shows primarily rates. CD of The to private It's We're reacting the to public would and lower have deposits, in seeing look are banking to also

year, some that will that to moving that, the customers So who're the tale. business quarter impacts as think the repo how there Having fourth category are I side. said next to from all tell

a is have per We about that than you Or the top lower more have points that between quarters And in with you a rate say expect stack on it's go-forward basis. compressed one when you later rate I in also increase funds XX. talked margin to in that Catherine, normalized a LIBOR on of and another, the was to have fed of rising because That basis in I to And the environment that yield series the X X each last bit this those to has higher quarter, quarter. with previously curve yield look seeing percentage X deposit increase a quarter, we the -- on three-months basis the periods. environment we're a this prior points at increases. – environment XX that want one than XX-year, improvement three even beta a the that's ago, of maybe curve think little if

just accretion, margin as then you loan cost would I Farmers. accounting I to purchase from margin we upon -- and doesn't the a well, increase inherited answer in assets portfolio. the We're give So suggesting, we a And they know that next higher year. the had the based said, remark associated moderate funds, as primarily the that lower with

Operator

will question from Whitman be Sandler Casey ahead. Please next go O'Neill. of The

Casey Whitman

on question more one the margin here. Just

for XX the do being in your accretion quickly XX year? accretion of Like outlook to how income fourth going about level the you quarter. that's basis come comments next to think What's your down? points Just

Bob Young

accretion have dramatically that The drop projection that. not a quarters. does XXXX, we In loan actually in on the

of For up that it us, loan of then total modeling is what acquisition. the done the get when and portion accretable And we've be, all on of at total the also discount way the But percentage amount loan end for third accretion it, gives And the is going the but upon portfolio. advance to we us the initially with most is here we the a that gives is true quarter. only we a is us, gross acquisition's versus in the associated case, valuation, accretion of non-accretable. what this we're based that, that estimate our of accretable. except loans that That selling, not that third-party

last basis over good that by guidance would XX, for accretion going providing take forward. on I time years. or to And generally a XX seven thing over quarter six that down But that's will per that the a So point us to that XXXX speaking, the X I'm frame.

And some and prior some that's of that's acquisitions. of Farmers

Casey Whitman

And then, this additional appetite point? here. your at for bigger Todd, M&A What's picture

Todd Clossin

Yes.

too. obviously, same out lot we're a out a markets. and At as an integration products the after time, taking, time we're completed a to lot but this or as next merger, next really new these year, I costs take the said services our think well, lot for of year X.X year, years, of of the opportunities to FFKT announced period, we costs in we've

for exciting us the coming there in terms leverage. operating of of time, and, some some at products cost pretty drive of putting pretty I see positive So to strong revenue the in things the new takeout same kind

in And on four X.X the really year, I'm years. focused the next So years. doubled last in we've size over that

is here this you XXXX making feel will to bit, a we it. and things contacts. that time good still know but before a little like for lot be So of pause a And

I the quick, to by our but X.X got So on. years pretty we've next think work plate move plenty on will

Casey Whitman

in put something seen would a the we've some guess, buybacks guys in comments And those this bank at I banks stocks, of point? that place. use given Is pullback consider with capital you as

Todd Clossin

had long but a And again, are a years of those an haven't future pullback's we've yet away. But just capital been term. because recent. also, conversations the we always uses an Dividends of pretty for M&A got Well, is of lot option, buybacks option. a obviously, couple lot

this we'll So haven't evaluate to definite any at on made that, point. but have that determinations all of

Bob Young

buyback there shares about our available. current is X.X that's program in And million

Operator

be Nicholas go The of next Stephens. question will Please from Austin ahead.

Austin Nicholas

just maybe the on from on kind FFKT? give said book? quarter-over-quarter way, feeling move a Maybe growth guess, the marked kind basis, over could of the that what amount loan I quarterly organic of, of dollar core being of after loans a total in came us the just of another you but loan was And kind

Todd Clossin

Yes.

of paydowns, there it which were maybe the driving answer what's really to seeing have larger out I'll balance I estate maybe We're reporting think what should what perspective. to I lot read as report some I say. of the too. lack guess, growth seen little some a been thereof, is I things from or loan about a sheet well, others real similar different If -- I've some banks going

experienced million thought we about went $XXX commercial just or some of third have perspective, saw end real estate we and itself. to we that give the that's in about earlier than loans by the to We market quarter the that either in that QX right number up you QX the QX with combined same sales. in And secondary

that time, people and commercial head, opportunities through what off regard I'm and And to to you bottom doesn't our activity -- be the actually I'm seeing brought dig are things over, to tell if through probably looking balance -- that third that's lot unusual your right? in market. we've had could you million you question back, people loan can for can loan trends $XX We is reading But if our get take amount. at we're to will and even to it loan that We sheet pretty it's, probably have quarter. think the you commercial payoffs the a forever, I'd point that But with definitely continue impact don't payoffs? growth of seeing. what see indefinitely, to to some So on the the going With of the but you're a M&A quarter that's get the things probably we of you at idea $XXX go typically in sell $XX of them. that. we'll of others the good definitely million the It's million growth and in been. a that trend And where in added is. kind talking continue secondary our having a would would what was organic an reach

$XXX headwind have we faced that's question? answer quarter $XX that Does that the million, third we or faced ago. a So your wouldn't two another year in million typically

Austin Nicholas

I of the the acquisitions, you how payoffs may 'XX was of picking about loan net trajectory I that think growth you kind net excluding as acquisitions? the are any up guess, and the that little think may kind look of and you And And you bit? then in forward then and maybe, helpful. Yes, in feeling expect runoff about be a from growth, the kind fourth quarter loan of given

Todd Clossin

loans the right? get always you do that, sheet you -- Yes, and acquisitions, hiring lenders I doing want has would having bigger but that been balance well, some our through in and market. a outrun runoff the say, to bigger with approach if So C&I

the is do a and from the would that community you to the else. -- everything see some through just sheet plan outrun go market place, in in reasons bank, would customer balance went first that to be you you to and use If that, be just product and expand the you attrition set, which my buy

runoff from internally a tell dynamics that sheet you and then saw right to subside model that some acquisitions. kind into of really second that moving -- for quarter, would with the But reason don't would balance of don't regard see the the I I in away. to I quarter, we what obviously third So see

quite And I deleveraging which of even think frankly. I deleveraging the equity the on long home businesses. term, least side, think consumers. going is lot don't bad a they're At a on thing with

be so to them quarter pretty healthy a actually as those doing for or in next don't the that. it's too. well, think see dynamics I I thing changing

at fourth the of at same that the as a then third minutes think deleveraging particularly mentioned But was business side end that where I then over to the going secondary was quarter. return rates loan everything some going quarter me, the point the from several a And And you and be there the I they will industry going cap normalized into more on had point to sold everything to gets sold. some stops, you'll market's be growth gone, that -- few as get is to to So an get quarters. next whole, better ago, more that to think XXXX, that. the that

Austin Nicholas

been and that's -- typically Is low-single the of to in kind that... digits? that's And digits mid-single

Bob Young

just things We business. rates, a getting not standards, years out and raised starting direct of And digits. too. that also, that couple about that and down consumer as strategy, out talked to well of, the a couple having risk-return single which kind the little ago. Low-to-mid adjusted That's run risk-return we of profile, of years, looking the like credit for a improved even bit. We're at

there. So to -- about we're putting now we off and as loans coming seem on much as on putting books, as the be

So that last $XX two down or of it by more kind think, it next intentionally year. about run stabilize has portfolio, or in the we year I a or in than year really the million will two,

nearing running our the we're end strategy So of about X% portfolio think of a the and off loan of because that. indirect was year I

Austin Nicholas

be to the clear saves there getting? that the message on, cost I third-quarter FFKT, guess, was the no yet. Is just then numbers is in And I real

Todd Clossin

Yes, share correct. I that's for the think lion

had the through a find little of of people part anyway. other third not attrition, And that bit in quarter. that it So have everything's [indiscernible] a and we fourth to back you that, there other aren't just quarter, the for but early bit go that of on. we're going there. a that we that we'll going stay, jobs some you're get Even so to and lot, full August There's going XXth, get the closed carrying boat, to places little

some starting good And getting significant So, at you're quarter, first the complete actually see conversion. out. we're the of saves we're cost but costs to to very see that, the we the in going not

to a those 'XX So well. I've out that First concerns parts and got no as the have XX% costs out going of not in early in this good all 'XX Sentry, chunk that early cost we're at from of remainder of

Operator

Steve question will Moss from ahead. go be Please next The of Riley B. FBR.

Zach Weiss

is This for taking my Zach question. Steve Weiss filling in Thanks for today.

curious banking relative outlook Farmers strong of your those in Was First too, impact Any higher, industry? on And be In they there the outside there guys anything Thank doing color you appreciated? Sentry to there quarter, was what in would strong and was mortgage get particular of of and maybe that numbers forward? this terms off are Capital. pretty the got that came you. to fees, of that just I moving

Todd Clossin

Yes. the for with being mortgage really having that but talk in no some an mortgage important mortgage business well the a piece the thing had almost over That's bought production. banks us last the and the state to two in markets as presence will Bob us. focus ninth-biggest going side there tackle we've bank it, not from for of little, side. I'll the of or Again, fee the in The or years. nice happening about efforts we into very too, residential Kentucky moved

very central markets we've up stronger at we've the particularly put talent. and attracting So number leader We've there, who and good in, mortgage Louisville loan to in in mortgage geographies XXX% put mortgage by been of there the is some lenders -- markets, strong there of gone the originators numbers and markets, has Kentucky. good Lexington in Kentucky XXX%

that earlier Same rest through. side, like that staff to company. to made kind on side. thing what loan have runoff which on commercial been the comment we'd actually able the we've of kind the So do the on to of I is model residential outrun, on And to of of would and staff, is productivity the we around from flows and seeing the get them used the the that we're our that that levels up expect additions

national So that going so markets before. are originators anymore. rates even down we're that trend new on production running there because We're up, are bringing is adding that the loan mortgage refi-ed many exist though against because are mortgages didn't not

the continue unusual, Pittsburgh, Columbus, because on trend. we got counter continue to look with a But for over expect that. So like and think that prior given more And good it's Cincinnati, that, around mortgage originations our would places Kentucky. year. business, I Charleston, good loan originators think we've were XX% function And we also mortgage what's that in to going the I we're on And able to market. that's pretty up

are We're attract realtors and turnaround good. Our lenders times very that us. able to market, into like

think that of the story But rest be for good forward. I should these, So a on Bob? us going

Bob Young

Yes.

were just income you Farmers if that there -- you last quarter, swapping, the think, back we're would I other businesses. well. -- where additional as in and fees swap allotment to going category, tell characterizing the I That some is

throughout would us for we that's trust months fees, So even over that's in And those again, XX income. are year. then other the X.X half Farmers' on two rest the item the be the charges and though categories the deposits, days. organic noninterest for in statement increase to growth of that related income stronger ourselves. quarter the only that are called gotten is last Service department, income last Trust experiencing about the

banking that of double-digit the we've although electronic obviously year. banking deposits in likewise, seen strong to is And related acquisition throughout growth of we that's true layer low in some fees Farmers. retail And the well as fees, the with electronic

And year-over-year gave income. other that So factors of I to the the the just are you quarter the to related influenced were third second growth in noninterest those most quarter XX.X% increase. factors

Zachary Weiss

Got it.

you how was curious, the that the of comprised mortgage Just income the guess, income In of material a a the quick all how or prepared on I hedging much mentioned gain. on mortgage piece. disclosed remarks, statement. follow-up I just that was

Todd Clossin

can you around tell running But We general, a been it's ago. I something $XX,XXX it. looked month doing or we around we valuated by it. It's Well, weren't so. Yes. in year -- a at

very joined us a set mortgage a experienced of couple strong years residential have ago. of We and that lending

the it rolled been around it's a month And good place. profitability. we improved in for really seeing. averaging what very us. And So is been It's we've $XX,XXX

Bob Young

element it. hedging pipeline of the That's

Zachary Weiss

me. And helpful. then That's it. question for last Got

seeing Just curious on what maybe just if out there noting there's anything there. the doing, credit side, you on all anything ground, worth the if that there's competitors are are

Todd Clossin

Yes.

from at our everything. we're would portfolio good we our think kind obviously, I with I feel very tell portfolio you and about standpoint, of where

to some mentioned are looser are going about more seems. seeing opportunities, done, I the market. I structures, getting that We it guess, secondary still with maybe before things but

to I been I'm the that's really think It's see now. how And but are properties sure to very going market. not what's we've selective. right it's aggressive. it's soon amazing secondary just so But healthy, on going

do. lenders of So to would you like what do like tell we that and I our kind know to don't

like So that. off some used real know see, to we're see like multifamily them. I we doing that loans of more the burn guarantees things with things not don't any fast, They

them of our see borrowers the manage expectations of some don't degree. anymore. kind we So to We

ago years for So couple And think on bit our a well and consumer of us. think that'll I little horns a I stead in side. pulled we've multifamily the on

attention all RV the growth right? space now, a motorcycle think's real in not that and really I the that, and playing in things getting not and right in just the So and market. growth multifamily aggressively we're ATV playing just and we're So that, of really in lot like indirect that

just lot I things. of those see a don't So

C&I interesting still tariffs, is the potential just cuts just there's line people though, years, they're overhang recession a or the to to and credit careful. that People of we combination conservative two line I a that. mean, we're all not it's expected And in being before. cash-flushed that. an usage whether being tax of just whether But from are going keeping from just On they're side, they're -- thinking at. What's seeing not down. usage our like there's three that's sure standards the where I'm there, they're or we're just things going just be

good. been Our very has though, production,

banks And Our of there's making, losing plan. used it they deleveraging. banks are not in the much loans production that XXX% just were of And as an we they they're is surveyed about are C&I on doing this being right the talked the standards. it's past. said being year as those used And to I read a where that. were lot article just

us. credit well us And economy. the talk of regardless doing We've didn't they think stead the got We're I same that. really. to not standards kind that's of

maybe where back that's to starts come of this, the towards a are. favor. think times out in you Sometimes, little But market I like

Operator

D.A. next [Operator Russell Your of Instructions] ahead. will Davidson. from Gunther come questions Please go

Russell Gunther

organic from, one some for and an for next quarter you could Could growth come looking year. just asset to that at me, perspective markets, expectation you low I where Just class low the thoughts appreciate of your this to speaking? give higher-growth in geographically that and color from could the mid-single-digit given gave on follow-up paydowns we kind us us both presence mid-single-digits bigger be

Todd Clossin

want focus say, Yes, grow. obviously, mean, C&I that I we but special to to us. businesses those we're equity. still would with are And on important are we grow the to businesses and I home would those in, expect that

growth XX%, the those our number over last of think our last deck rate around compound I is annual investor years. about I think, years. talks opening in five The on the

obviously, I'm not that level point, will at return some sure. that So but it to today,

do to that are we structure like make to got being continue on. we estate. business we're they real sure continue to really We still just pockets going and and -- who commercial how be And focus deep that. in things those like C&I home So prudent with, obviously businesses equity and and markets, we

I this geographic some geographically, give been us our you all really, were over growth. each will Obviously, are bit moving markets about pretty dispersion So And our healthy. into five something that at higher strategy a is that states, different. of look thing is has market markets M&A when nice little a the having

longer-term part markets would part that's on loan get And of the more faster. and the approach that are to out of I of basis growing growth expect, So strategy. a

West credit be as become markets that Cincinnati, plan our that's too, Morgantown really want So they population of Pittsburgh, of look at us growth growth solid to quality higher when Virginia, I demographics, standards a company trajectories. parts got company, you known in have in as growth faster. be grow Lexington, well, is to the to with continue good or that would Columbus, good then line Louisville, more And growth a meaningful too.

So time faster, that's take growth. that stretching of growth. markets a tend different we to prerequisite, if any of get we I But to the operating that's see to our pretty we acquisitions so into to growth, why -- why which in get our philosophies at products we're expect settle markets growing we're going kind kind doing and services be We're is that that in, the and to I another. those think not to want be a our and are to look put we meaningful did, of can would albeit the GDP good one particular where you over indication market markets,

Operator

final Todd And over ladies hand and session. his conference gentlemen, that for to the our like question-and-answer would Clossin will back to I conclude comments.

Todd Clossin

markets, and several through I've profitability. meeting it's lot we're to are of There talked of ways, to our expenses times, things many to cycle. credit a But our right? obviously, say, customers' regard not growth, our is value through about profitability, other there's the to the do, lot mentioned core doing talked taking -- this Like with taking a shareholder generate and elongated advantage, standards at But needs, our one as of profitability going there's profile our XXth long-term the that products I disciplined looking out. the we and ways we're some and year deposit economic with quality about to profitability. into then particularly of improve achieve changing just ways risk you. doing So different that Thank

joining today, you to look event. So to and forward upcoming you seeing at want investor for we I thank us an

Operator

Ladies sir. Thank time, conference the gentlemen, for presentation. disconnect At you, this and your today's may has you lines. concluded. attending you Thank

WesBanco (WSBC) 26 Oct 182018 Q3 Earnings call transcript