WSBC - Earnings call transcript Q2 2019

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Operator

Hello and welcome to the WesBanco Second Quarter 2019 Earnings and the WesBanco/Old Line Merger Conference Call. All participants will be in listen-only mode. [Operator Instructions] After today’s presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note this event is being recorded.

I would now like to turn the conference over to John Iannone. sir. ahead, go Please

John Iannone

Bancshares, Good briefly welcome. quarter review discuss Inc./Old and Keith. we XXXX today's will then Line WesBanco, proposed first WesBanco, the merger. morning you, On and call, earnings Inc. Thank Inc.'s second

Clossin, Old Speaking Chief President Chief Line's Executive President President Executive are Officer; Financial Officer. WesBanco's and and Young, and WesBanco's Chief on Bob and today the Vice call Todd Officer; James Executive Cornelsen,

begin will a session. we remarks, opening the Following question-and-answer

reconciliations associated and non-GAAP which was the contains providing these WesBanco's was wesbanco.com. available of consolidated yesterday financial details documents second Both quarter earnings issued on highlights measures, XXXX the release, financial press investor of of afternoon, as are merger. release proposed and presentation,

projections merger statements the subject and benefits of This which WesBanco, Bancshares, risks between the and including uncertainties. certain contains presentation forward-looking and statements about proposed certain and numerous assumptions are including Inc., Old Inc. to Line goals plans, expectations,

which evening three important we on merger today attention information to presentation, wesbanco.com. more referencing Further, pages we call be of presentation further contain other which proposed and the to about obtaining X-K disclosures. and two part and addition Form to as the In posted will last of your filed details was the

not reforms; merger nature, accomplish longer it pressures difficult and with or for Actual proposed not savings integrated conditions; time implied factors take merger on merger; for in interest Line not changes governmental schedule; may disruption the within a competitive suppliers; be and successfully actions XX-K and expected the expected shareholders with Old those including: by relationships WesBanco report of and rates; synergies may movements revenue infrastructure of results frames; make services; documents and variety clients, not be merger from Commission. more proposed or vital expected; other fully integration and the annual on Old WesBanco and obtained required any Form Old success to The may economic the realized on contained strategies; maintain timing subsequently Exchange in factors differ on may and in be from of associates timing by approvals XXXX terms and may expected governmental could filed and proposed Line Old the extent Securities the described proposed of to materially from the such or such extended statements annual Form than products, businesses cost the of pricing report XX-K, and approve the Line's WesBanco's disruption XXXX other and business Line may

available call statement. the All WesBanco nor forward-looking forward-looking presentation the obligation based call statements to Old included any of update in on are any and information presentation. at associated assumes this Neither and Line time

President the turn to WesBanco's Clossin, like now over would CEO. I to Todd? call and Todd

Todd Clossin

evening. merger Thanks, as WesBanco. John. of going Good results the today's time the measured is Bancshares, discuss you in were and our proposed morning as XXXX us. of well yesterday Line thank an for evolution we're call of which to This and second and quarter for the with strategic both On announced Inc., diversification joining Old thoughtful review exciting

solid to an demonstrate profitability diligent merger credit continued example operating long-term for focus for positive with our shareholders. and strong our proposed quarter the execution results Old on of The leverage growth organization is strategies. on the Our second quality, a our ensure Line

XXX-year-old diversification of trust to business into WesBanco's pleased of enabled performance a We an growth emerging Successful XXXX. transform WesBanco old built and has quarter bank. community plans upon regional financial our are second the and with during institution execution century

management into diversified and significantly focus demographics, great while with critical have we new years, three higher expense maintaining a markets last the our on During institution credit growth quality.

to continue see we the mentioned headwinds we latter XXXX. certain improvement experienced quarter, lending half in As during of we last

indirect ended. targeted profile risk/return our have to reductions consumer in related portfolio its The

organic growth X% category reported during the we fact, in In second this year-over-year XXXX. quarter of

higher under home sheet. lending reform and interest Residential rates year's are resulting private four Our up primarily X.X% the family in to total as pipeline to jumbo last both and be and loans banking mortgage tax bright our the in significantly organic strong production one banking due and for equity mortgage impact held of quarterly continues legislation. on be a income continues to pressure, to us spot mortgage growth year-over-year primarily a year-over-year balance fee loans the

more to a Commercial normalized real moderate level. continued estate have XXXX are and experienced approaching payoffs during

strong During quarter, remain solid. loan pipelines our production categories commercial across saw we the second and our

we stress discuss to rolling a growth. of loan like four-quarter period, loan viewing importance our I'd the typically While growth quarter sequential over

We which positive our category. pipelines continue in X% deliver to across generated stabilization response to loan newly the of to application over sequential digit C&I confidence to categories, strength a lending our in mid-single total teams, growth roughly approximately early led when loan loan annualized, was we on a long of online X% supports growth the our quarter X% sequential robust growth see ability capabilities, lending quarter the as and The or basis launched low our our term. by

institution. to services success regional continue emerging ensure we to additional financial in Lastly, as bring our talent organization our an

and we respective have strategic our During our their franchise leadership continued residential lending ensure mortgage has hires transform as few success These continue businesses. retail we businesses and program, made to years, in exceptional WesBanco to the last insurance grow. securities and have our leaders

recently the experience institution and banking and level integrated to work bank. and a His as our hiring who the national experience we more from Chief WesBanco Furthermore, being needed individual diverse proactive our marketing our large wealth multistate a on an strategy insight our across marketing of take business financial for of we a to brand will announced with lines. services Marketing geographies new Officer, and brings

second on financial Bob? like now update Young, to Bob I'd turn results. for our the quarter's to Officer Financial Chief an over call our

Bob Young

to you good Todd, Thanks, and morning all.

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

net expenses income merger-related and issued acquisitions. increased diluted to after-tax share year's periods, per increased from to $XX.X for X.X% shares additional earnings last Excluding the million two $X.XX, reflecting XX.X% both

increased excluding XXXX, $X.XX merger-related for shares GAAP of June six For of XX.X% earnings compared net ended X.X% the again from net to the respectively to share Once issued share earnings after-tax $XX.X the $X.XX, we period. diluted to $XX.X both as share additional year income per reflecting XX, diluted acquisitions. periods, and million and again income expenses $X.XX increased reported months the million in $XX.X and million per prior per

lower loan expansion was to mortgage the as share realize footprint current origination rate mentioned, they up the teams. of this categories up X.X% Todd loan both continue origination to our across year. of the in a teams be as strong loan quarter, construction as originations basis. were stabilization production across to which continued year As Kentucky-based led continue driven several as purchases sequential year-over-year, on our interest our first well during we second Total prior as XX% from to environment well market mortgage Residential quarter, as quarter growth new the the home and by take

our our ratio by helped to The funding the has as maintain as aid range XX% deposit in costs. well franchise strength loan-to-deposit controlling of our profitability

during during and XX increased total has funding increases target XX the points points nine basis deposit federal despite five Federal last last XX months just in Reserve basis Our funds rate. the the Board's cost years,

the benefited Purchase while basis last The as for basis from year-over-year increased year. XXXX acquisitions net basis the year in related six-month period, XX compared points, the to up impaired XX accretion over X.XX%, accounting interest approximately XX points quarter second the included for to to points which basis prior payment by interest margin X.XX%, points prior second a quarter XX loan it was acquisition, of net period. points margin basis three

net Excluding X.XX% accretion, margin of a up XX and purchase year-over-year we accounting quarter stable core sequential a second quarter, basis. reported basis the on points for interest

year acquisition. non-interest the the increased $XX.X ended million, June XX.X% XX, driven income quarter the XXXX, by from Capital For Farmers mostly prior to

fee million inherited from swap million, fees Capital product commercial Other advantage well as customers increased of loan rate reflects take the quarter Farmers payment of from gains our common due as a increase $X.X this income to ownership processing of securities as Net business in stock. second a from position primarily gain Visa B Class an sale environment. in income the current $X.X

year. Furthermore, the Capital $XX.X driven non-interest increased million and acquisitions income the Farmers period or for primarily six-month last First year-over-year, XX.X% Century by

track operating to We with and associated on cost and strategies. February with with related savings merger. by branch the profitability execution the announced our after acquisition the We the of demonstrate Farmers positive data occurred to leverage to previously remain quarter. through FFKT personnel majority cost savings Capital the conversions, began Focused having achieve of continue second processing savings XXXX expense anticipated the associated strong the successful XXXX

Excluding XX merger-related six. year XXXX for locations and XX.X% the associated retained their expenses $XX.X the the due expenses second quarter and Capital Kentucky prior staff after noninterest million period, Farmers increased acquisition to compared or to locations of consolidating into

acquisitions. First period For and non-interest Capital $XX.X increased Farmers million or the year-over-year reflecting XX.X% year-to-date excluding Century the expenses merger-related costs

underlying fundamentals credit of be legacy credit risk our strong Our and to continue management. of reflective

environment continue ratios lending origination remained with quality disciplined credit we current balance quarter as the during prudent to second the loan Our standards. strong in our

the loan loan second the million, the annualized portfolio $X.X steady loan average in that an quarter and for portfolio, in losses points held basis five second credit total for resulting a were charge-offs for provision to year-end quarter. loans growth was just the with reflecting The percentage of as ALLL net

three-month do call. provide our asset-sensitive, quarter's fairly like our to longer-term remained the the XX-year remainder an that and on from which interest flat to current spread would we a bill environment. earnings are immune margins treasury, for across are provided the current between I of rate overall somewhat last with Since, outlook on including Now, low year, factors fee the industry, net the some we affecting thoughts very consistent remain not outlook the

further accounting interest accretion federal slight XX will and purchase second core two of of anticipate to XXXX, GAAP funds half margin. anticipate negative declining mid-teens on net a quarter still at impact which during interest point stated thus now in currently a two pace We XXXX, be the both reducing the decreases during the margins. rate to points basis per net basis We have one

during XX%. our full expect strong overall quality to be effective anticipate measures approximately XX% remain year to tax to credit rate and continue XXXX We our to

the reminder, to slight we incur will negative Amendment $X.X the of income, fee influence that second anticipate which a $X to Durbin quarter XXXX, begin during fee approximately currently reduce will a As on income by to ratio. per the and impact from million we the million have half interchange also on efficiency

back I'll now call over the Todd. turn to

Todd Clossin

Thanks. appreciate Great. I that.

key pillars before: if as not founded legacies culture strong building of investments emphasis years pillars talked and with were prevention several two on and on also our banking leverage, unwavering maintaining growth our fee they positive credit quality growth-oriented an equity home of nearly focused long-term upon we've franchise, our necessary about maintaining would high-quality on not and principles These risk compliance over be built Our loan company total portfolio and operating management strong percentage risk delivering strategy upon possible while industrial was an is focus commercial lending; ago. making which XXX a franchise-enhancing and of acquisitions. franchise income our time; net diversified revenues this mortgage residential retail a a increasing

support strategies and cultures, and is brings Furthermore, and with with of disciplined and risk other the the proposed institutions how high-quality to each environment. strong the merger ensure The of inherent growth customer operating together components strength Line Old regardless two success diversification focus. profitability our

a of with a well customers of mortgage them, including quality banking service be services shares institution, as array of credit community-based lending excellent strong-performing lending, to Old to broader commercial and with which commercial, the a community provide capabilities, We're wealth Line commitment able pleased as focus myriad financial client and banking. is expanded partner on and and with Old solutions. a Line our management to

say Jim Cornelsen Before deck, Old we President, opportunity provide to CEO the a like the slide few Line's words. to review I'd and

questions session. Q&A the In be answer to addition, during available he'll Jim?

James Cornelsen

and Thank the with have Todd you, morning you everyone. opportunity to I'm all good to pleased speak today.

growth with track partner the WesBanco strategies WesBanco treating Old integral right, merger people We its of of excited and ideal solid of their with bank. XXX-year our about history on strong history their performance as community execution to an part nearly becoming for merger led Line. and is a record success. operational and Combined are has operational a

billion During lending our Line total to in Old and than grown branch a XX locations offices XX more years, has $X XX with assets. office from single

of We philosophy great play true and partnership are where us role and prosperity customers region. proud to say the have of grown our development that a in holds we with our to this our

and The communities success employees. as to is and position same for our well they for Through can partnership, value with focus Their high-quality on be through partnership as opportunities on the improved our WesBanco. much operate which stronger this philosophy to a be we'll services customer-centric customers said unparalleled. additional our new the products of in deliver growth

and have relied whom The their advocate help branch to customers staff lending teams will there guide continue franchise our be be local them. to upon to

Mid-Atlantic to transition my a the and you, growing of a relationship Thank WesBanco Mid-Atlantic in continuing and market In Chairman for smooth market. ensure addition, I as to look Todd. growth future the forward help

Todd Clossin

of expansion with sound franchise east significantly combination beginning Thanks, strategic X. Jim. two region like strong with our consistent to is slide This into Mid-Atlantic number financially strategy. our I'd now merger with stated The the acquisition a our companies the pricing. expands merger presentation review

$X.X is more branches with headquartered into parameters loan offices. no of Bowie, our and representing combined size. XX% Old $X.X XX Line than Bancshares production our an institution, billion in in approximate stated merger deposits, in fits XX $X.X Maryland billion This of loans, billion

largest state region will and D.C. great two financial which entry Maryland, entering fastest-growing in Mid-Atlantic Besides prospects. both Baltimore of Washington, us ninth the the and of this the the as growth into institution, have MSAs gain demographics merger

and And last the cover our scale approximately costs are as of the to pro of financial return, and positive will $XX part remain threshold approximately with book accretion not with during X.X% anticipated well-capitalized rate X.X% asset in Amendment of the back value forma X.X The be addition, billion XX% X.X% aspects billion to merger enhancements least, forma In of Durbin excess year. XXXX XXXX substantially is approximately tangible help crossing greater but provide earned assets infrastructure guidelines. internal total capital than in last of associated years. of dilution and in $XX enhanced will of attractive, the pro the proposed earning ratios a the

to is the Old X stock terms of next is and slide This the On merger, -- summary pending customer proposed two three during shareholder aggregate to Line for share closing a the customary Line stock of expected WesBanco close key transaction share a is of common represents quarters regulatory which Line receiving stock approvals. and XXX% total WesBanco million shareholders based WesBanco's Old on This value X.XXXX owned. XX. $XXX the with of common of of stock each of July upon approximately Old a a stock price

advisory merger, Upon for will market of advisory are Jim Steve Jim Chairman Line and to completion anticipated an assuming of role directors, the of our Cornelsen Proctor the Board established and two current board Mid-Atlantic be Directors join of with the board. Old that

in Market and also President remaining place. Chief Importantly, local Mark lenders Semanie, as our other Mid-Atlantic market with current leadership Line's will Old WesBanco for Operating key join Officer the

diligence there portfolio well Old a included asset document completed review as with was a of process other operations. on Line's addition, In bank and commercial reviews which internal an of XX% as quality extensive focus due

various of protections this As built the were a deal into diligence, merger agreement. result standard

slide Turning to X.

can of six-hour our as time. the within combined from Wheeling see our drive radiates You headquarters breadth out preferred a company, diversified footprint our which

into east strong major Kentucky and diverse we trends. years, positive three last the with expanded into and now economically Maryland, Southern Indiana and positions market build we demographic have west During as markets

Washington, can including see, areas Baltimore area dynamic suburban economically D.C. the Line's surrounding you market Old As is and primary strong and Maryland,

our criteria see share slide critical M&A how gaining in merger of of meets markers key On operation. deposit can this you X, our

top entering and Washington, of share, XX State enter important also Baltimore we'll Park Maryland D.C., the with market a strong addition positions. Lexington with In MSAs the to

including slide retention and and the with these high-growth in projected demographics our On GDP, makes management key the X, which of household we and Line's differentiators. the markets. be Baltimore highlight attractive combined more successful these and personnel MSAs, key and strong detail across footprint D.C. population should incomes, Washington, markets in very believe We growth we median very Old through advantages of

better commitment and model will by new customer-centric banking CRA consecutive the to six and customers demonstrated as ratings Our our demonstrate pledge outstanding our communities.

the management, incomes higher our into success lending model. treasury region, the associated the opportunities, the build-out over Our not were other time wealth provide factored limit, capabilities securities of wealth in and management banking, legal brokerage private ancillary commercial our with core ensure that will including growth of new continued and funding lenders. Further, trust, opportunities products the and merger advantage, significant will high

positions of boxes of merger M&A can market Next on This the attractively XX, a combined shareholder-friendly; it. and company top the you franchise-enhancing prospects; ours. strategy; demographics our a metropolitan our and culture checks institution with strong across within our the footprint that credit, good stated positions Wheeling and Slide corporate strong priced associated see of a in well six-hour all good with drive markets and teams; management and headquarters; major lending meshes

emerging expertise our have manage in markets. institution. experienced Senior throughout lenders have regional small regional We large of myself experience to and our an including organization fast-growing financial the Many successfully Executives

of roles. the of Mark the Old Jim this talented their is the and than leadership of to Semanie Cornelsen employees. keys customer-facing One more Line's merger retention retention It's in key just

customers and enhance This specialists to be the to the have they to rely well to through career enhanced and employees for products providing newest expanded branches individuals upon continue services, opportunities opportunity able relationships new from will customer the a great employees. our the know come the to to in Our is and newest the as to lenders. as trust various us

advisory ability with Board WesBanco of stayed the Member or will top it President. their In whether as and in joined a Market leading merger a sixth our the This Board, great their fact Advisory Directors, consecutive is as serving represent belief key the a a Market calling succeed. card or leadership as passion shows and to capacity Executives this of where in

having addition distributions broad forma Maryland positions comprise of Turning our in market deposit we and our of slide major XX, loan basis. distribution. approximately strive to focus strong a and demonstrates to This footprint. our and markets, will basis, balanced to on Slide across deposit in maintain On pro well-balanced XX% diverse loan this market XX%

to as assumptions. I'd like over financial Young call and the Bob? turn the comparison to deal discuss to well as Bob pricing

Bob Young

Thanks Todd.

Slide get months On June six the we'll few additional XXXX. XX Old summary and to Q&A. ended Bancshares Just financials WesBanco and for Line notes a on for XXth, are

this you Line and compatible are As XX% are of can and have upon managed, strong efficiency that see -- from many similar Old return completion. will about represent well combined slide, opportunities growth. for there the are these they ratios, provide and organizations organization

Furthermore, quartile own top up our their peers nicely with lines and in the performances financial performance. their for

this strategic is mentioned, pricing. Todd expansion with As a sound financially

modeling And XX, the proposed here so for assumptions turning pricing key metrics to the Slide on and merger. are

mentioned, of years. XX%, back goal tangible the of of accretion Todd As and meets approximately earn of above positive has value It our X.X than book our return internal capital earnings rate greater having deal dilution well an hurdle. cost enjoys

deposit price priced estimates tangible book of to core XXX% EPS XX.X respectively and times The reasonable value and per a XXXX a very premium analyst of is times XX.X%. with and XXXX XX.X share

is operational remainder of be from overlap no market in new and the a with savings of as markets us, branch currently. back-office is we savings this approximately these XX% our XXXX. -- cost Majority between during XX% operational there XX% XXXX consolidations As will in phased for approximately anticipate

There of million. are about expenses estimated $XX.X merger-related

is core on X% amortized gross that's years. accretable loans, to XX assumption accelerated which assumed a of X.XX% about over estimated intangible be XX% manner and an loan $XX.X of have deposit mark a of million, We credit of

XXXX. also associated are first the late estimated their Old In can cheaper disclosures redeem various fair with cost quarter values be addition, which determined see a at Line's intend XX-Q. in we Line's Old of you adjustments informed their refinance fair at modeling by debt subordinated fair outstanding will and to value in TRUPS closing Actual and most value the

revenue into mentioned, opportunities wealth were services this transaction. our management and such for fee long-term management as As Todd not of do synergies businesses factored indeed the success income treasury represent model additional for and

from deposits be funding, We with reduce off. but and synergies factor also investment institutional their should the cash certain in didn't borrowings we expensive cost revenue relatively close reducing wholesale initially offsets expensive that invested paid intend of we to to securities more and liabilities do

regionally. slide and relevant Turning to nationwide XX, to both deals comparing

For since of transactions months assets transactions targeted with the XXXX and we are million. the line the is you the from institutions January regional these median institutions and peers, XX stock on million, than also last $XXX national with strong transaction greater while return select see focused greater peers better-than-regional assets ratios than is deals. financial institution with national old can targeted acquiring Midwest-based this $XXX on ratios that pricing And numbers, consistent as with during comparable a and in

closing common tangible would that ratios $XXX X.X% a pro projecting treated capital on the X also total of forma capital as be very TRUPs will detailed XX, of We're XX.X% ratio risk-based leverage are pro strong consummation remained you with indeed existing Tier million quarter slide and remind forma X.X%, common these Tier These of of projected here. that remaining of Finally, of equity ratio. XX.X%, ratios risk-based X capital. in Tier assume X during XX.X%. ratios Tier the our X I

the you for conclusion. to back Todd,

Todd Clossin

Sure.

is strong-performing within Line. a turn team franchise with lending summary, to our topflight excellent merger commercial about Just focus, slide its with excited This communities. quality, XX. we're respected In Old credit position a and

we states into will top our years, region markets, now diversified and as across institution XX demographics, a significantly have Midsouth which During the of in three Midwest, the the with financial the high-growth Mid-Atlantic last Maryland. new six great now State institution span

as services as strategically higher is wealth increased for major has an the authorization our revenue Furthermore, is provides WesBanco and to including sheet there compelling and prominent region. markets. balance This products abilities is and continue and metropolitan priced additional diversify franchise financially to larger appropriately management that lending an transaction as well opportunity introducing

community on bank of X the one feel, capabilities number in of history recently management strategies, WesBanco ourselves we strength. liquidity a reasons, risk expense, named reasons America a the with -- capital can that by Magazine. pride the Forbes which Best credit large long execute on We key our and were Bank delivering good one is bank technology strong back-office of expertise, has solid management, experienced and

acquisitions its franchise We and employees meaningfully our growth Old we're the successful and expand successful customers with have of a pleased opportunities excited proven welcome the continue WesBanco that track to of record Line this Old to Bancshares. trend integration Line to We're the and of the family.

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

Operator

Yes, comes Instructions] Catherine thank you. [Operator KBW. And first with from Mealor the question

Catherine Mealor

Good and Thanks. morning congrats.

Todd Clossin

Thanks, Catherine.

Bob Young

Thank you.

Catherine Mealor

the maybe And you, if Thank Line. your see I'd lower higher-cost commentary loan-to-deposit think wanted thought some how with ratio should WesBanco's margin Old that you outlook rate. start ratio about have thinking on improve Bob I margin? how of first Old better as outlook. with can and XXX% there sheet take to layer well? the Old we I Maybe and lower Line's the margin about and we leverage for leverage to Line's XX% margin your in could that the of leverage deposits loan-to-deposit over balance and any you then you're

James Cornelsen

handle Bob, why don't you that?

Bob Young

borrowing Catherine, on XX% a what we is intend your took the base. good opportunity the words of summary we mouth would to think end my out a about wholesale side, deposits, pretty average do. of that's you XX% on measuring significant. loan-to-deposit kind as Then of deposits using be period answer question to the Certainly,

public have institutional great recognize indicated as deposit both an customers also to attracting And for I've a and their Jim prior job in Mark well. on We us done calls strategy that's fold. important and

on in Just and arena billion funds the $X.X we currently sheet. balance between public billion have our $X

by decreases to that strategies side Line have work to the rate Federal their with the and think an together as we opportunity Old that are melding able continue and for be forward do Reserve. just that by to our going would've projected in we'll upcoming we're meld model the we'll management together going pricing with And successfully pricing relationship capabilities, So hopefully, strategy our to them. on that

by as standpoint accounting end margin impaired Turning before of quarter accretion one the from a excluding then in just accretion a basis to point of like little the year CECL impaired this continuation to bit any XXXX of going loan year. the going margin the margin forward we additional our of well purchase guided and payoffs the going our or I and the through from GAAP decrease payoffs first core two in forward half in each as experienced reducing of --

upon And quarterly answer like income a with with first to that XX-Q. market $X.X and quarter on you in determinations and first where two rate the accretion it look anticipating upon Old accretable rate based their be Line of million question will marks $X your $XX obviously, made around call to that, based about We're what disclosures together? million caveat going interest closing is of million somewhere predetermined does you're to put to really as that basis have forward that when the going as compared year it the were a marks

as a to as forward the portion as the level margin will me their case going to -- cost done we'll our of to book. base significant to and so anticipating margin increase a our mark most in us we mark purchase that for core close should in higher margin margin we've well up two a the despite high and deposits, case base that of see We're analysis slight mind this fairly accounting But enhanced a I based the loan margin had? questions year of indicates little lines -- think after the it impact acquisition. And will remarks mid-single be what two keeping basis the margin upon I digits points loan say the accretable CD you I earlier. the bit my drift lower Does the few would first that is guide full answer to in on the really the

Catherine Mealor

perfect. income That an did. Yeah, million million that annual accretion $X.X And quarterly? was $X or to the it was number

Bob Young

are It's short, it's borrowings sub now, and at there's we're what right not is book. much well $XX to the of the quarterly. No million million those debt there, annually $XX looking book loan CD most

Catherine Mealor

And great. question one follow-up just maybe on growth. Okay, is then

grower. low high grower. So assume a double really low is Old nice fair that of -- Can some is been a WesBanco digit markets Line it are more single, certainly these digit we And has growth single to going you're to you franchise push enter. high feel the have that bit together? that just you a grow to Old Or rate they the for will at cultures level of little back allowing grown? be as two Line growth you may kind comfortable pull the do still Thanks. that like

Todd Clossin

don't greater all. We at than it will be XX% forward. pulling Again the anticipate going loan back no. growth No, XX%,

So to are only that because be ourselves. of the doing a to very handle particular the got and do take a lenders things deals us sheet do able we will of bites more lot can not deals to they're and balance but bigger today, able bigger important we

we that So want time at anticipate know the excellent. move to lot we been doing. fast a We very, they've forward has those give and that don't quality leash do going very line of to back them We up together things the spend all. Credit well. been

up both do, from think deals kind the expertise perspective kind of do, really on equation, of So an the of the underwriting I all lines sides deals we they nice.

going risk a has not company got risk back all. that we're to a profile great profile, great so this and pull we've So at

conservative don't are Mid-Atlantic in now to like what in out put last tell a and and that's read years for you going here would be the know we Kentucky doing. digit been to the I've to but anything what markets, given mid-single as you I conservative saying change we're of into that guys I little the acquisitions these there. that So couple in maybe the But low out

Catherine Mealor

so and much congrats. Okay, great. you Thank

Operator

Thank from with Gunther And question comes next D.A. Russell you. the Davidson.

Russell Gunther

guys. morning good Hey

Bob Young

Good morning, Russ.

Russell Gunther

wanted if couple Actually deal. comments on the of on a I about the quarter recognized recent follow-up you saves had questions on I most could. Bob made to you've the cost

half I you expect savings personnel this you year the quantify us said majority is there of for could but think early that of you and you back cost XXXX? in got that additional there, the

Bob Young

cost and be what achieved we've that rest the is of XX% Russell, this next year. said the should year

feeding be are of months. redundancies of that XXX% The that have though of things their software equipment in next will some kinds through we as few are as yet that apply XXX% X, Others analysts XXXX. model achieve the Xst. we Some with that's over terminating that achieved January April to of and course as

things recovery that document software about and are of systems consolidated this kinds as disaster duplicated Think are sometime and until year those later certain off. retention turned applications

Obviously there some over are where the we will duplication lingering but occur year. there's that of that will we in -- eliminate the but conversion core some achieved the February, rest back systems

be our get another methodology using very the we That yet capabilities. is has cost-efficient networking cost pretty Telecommunication given and realized. area savings that internet significant to typically

supplies have We some costs.

remains Some be training some their the that us for costs those in platform. quarter of second areas that from Professional were higher recognized. will fees

And year. the so those half over back will terminate of or reduce the

of we kinds are press the get. So release. you those to the have -- things yet We see can numbers the did in

Farmers to through is reduction that the the cuts get. really a March quarter of terms first increase help basically of third see the conversion. this an you to we the attrition the left in that They see XX from did on summer either and typically related individuals personnel. We quarter XX after What or between were organization quarter XXXX

in early first here quarter. exceptions of couple quarter personnel of with pretty the second bit end So savings side a cost on the benefit much that's all and just by little a terms achieved of

of answered follow-up? have Do questions. that I both your think, a you I satisfactory? Was

Russell Gunther

No.

that. of rate? half You your tax back for that rate on available back the got Anything year appreciate lower look you to potential to tax is that then it circle any into we I just there Bob. XXXX? And this to the to lower or comments for as to credits a

Bob Young

okay? that take that's if I'll Todd

Todd Clossin

Yes. Bob. Go ahead,

Bob Young

$XX $XX had credits million significant new we an and year award of a last we way. recall this any tax yet additional markets out those Really to million roll So year. in have

development as corporation our opportunities realized credits I in to deploy budget so tax expectations well for community a new additional expect rural markets through markets. in as see our both on And our to XXXX bases those

low as the is being And to markets to credits they roll loans XX%. the that or lower credit so The in is interest other those give in rate become rural first or would a moderate-income out concessions. the year customer little bit areas -- lifetime X%, us we and offset credit

the purposes. more for side So credit little on we CRA active continue have We'll be bit have there low-income a to mostly that. tax housing we as

two in portfolios us can of basis. less muni on half a to as we we there some are And securities that are we'll year the as would year meld may think Those between year-to-date rate we sold the opportunities local at this municipal XX.X% the Recall be quarter next three point through those that and where there state than some be well. the of and first to the back year. a continuing have slightly XX.X% cause I this replace areas main

Russell Gunther

Very good.

those with could. want deal to I the switch if help back your items. for Thanks Okay. to I

your us Todd within in fairly what you'd guess, that guidance would expect? quality pro a So growth comments the pristine Is that as a markets? -- profile manage And growth going Old sense to rate there forma for mid Line could just want that you'd forward. is at single-digit give and lower? appreciate for you'd the ring understanding their there credit I then that be on anything is them fence anything there you is

Todd Clossin

or no. ring we looking fence anything are say, that. would that from a I at like nothing perspective There's

-- the get the and that. same market You of at like both gives things of I quality terms that's look think you are in we deals I credit right? kind healthy what organizations and mean

look like basis. a -- I quarter at quarters some that's things rolling on four So

a around Some quarters bump that lot. could

and So some you in single-digits. quarters double-digits see some at could quarters up

past. it on to But here very on the that could like the it's it deals. rate excluding even bigger past and from be merger-related in sheet growth that to the the take the similar I if because I'll balance see bigger the he and greater to of comment was what disappointed be past of want would occurs future Jim the I think but looks with acquisitions attrition expect would may I here is type I me to mean ability pieces of not. Maybe side. lending

Russell Gunther

for questions. my Very taking good guys. Thanks

Todd Clossin

Sure.

Operator

Thank question O'Neill. you. Whitman Casey next with comes And Sandler the from

Casey Whitman

Good morning.

Bob Young

Good morning, Casey.

Casey Whitman

to -- from that Or I is Old Is Congrats previous I the expected on $X piece? the including clear deals? deal. total million $X.X you the guys Line that to million quarterly. want on just be of gave guide the accretion the getting accretion just you're accretion

Bob Young

piece. That's just Line the Old

Casey Whitman

maybe going expand opportunity in think can for little most you the kind market? Okay. just on the Great. guys specific bit there's products And be that to more a Maryland of you you fee income the

Todd Clossin

side over banking that say the private some year professionals are that growth we've pretty one and first bit professionals, usually physicians attorneys. because significant as I Yes. I we the of banking it's got quicker seeing on markets Kentucky the other little mean accountants, two. last we would up a those in attractive private more really with very lending medical really ramps products some the the some unique -- products or introduced

So on. I would see early that

XX branch at typically see could I be something early WesBanco securities of too. half would generate revenue We I here our significantly swap sold through well something also I the would amount products fees to is be network as that's year. think fairly that's market swap in fees. with quickly significant on and that introduced that's going the locations through to think our insurance bigger and

brokers trust the our a us. and significant out we program little fee look I that at bankers also but revenue that. The here too, cycle in that for well of think, is licensed I got longer-term think, when can on you as that part some branches, roll generate

Old that at that time to build they got and have business here You Line. don't over

anticipate that's would they've time great with we kind time great to But to that well of that grow have takes the that would I ability too. needs, something got those relationships customers, So build. who incrementally as have over so

think figure here the have just none off the that to again, But kind programs are additive. the do try ability in it already and model. markets. businesses, not that place we going it. to quickly in got to place, the that the in roll as we've out of, the then bat So playbook, the so know to we're processes it, things planning I bigger, those those to gotten are been very we've of We've right be those would come to how we But, mind already for scale to out the

and too. on like maybe staff down a areas, the income They've more the also would already. a And some That'll those on things even like products to to select and capabilities, we'll was market, well adding but morning fee here branches division employees lending some increase this home secondary to in be adding the about start great We're going residential some that products of here equity additional I got focus that. talking that. and to training lending things increase that's of in in that. as obviously extend mortgage

Casey Whitman

one that could Helpful. at kind Got here. forma Maybe kind more, map you're pro bigger we it. look Thank of you as over. you. just opportunities Several thinking your skipping have picture, some markets of

hopes in by for any plans or acquisition example, that just any Northern novo? So, at market others, longer or or term to de look either expand Virginia,

Todd Clossin

forward billion. $XX covering billion of move -- are to to in covering of Obviously, so pretty and some $XX real up over cost how here paced did economics to some last of of and terms in We're $XX or we year there get measured we the mergers get two billion. terms

in acquisitive last were drivers to been financial we've there the because were here pretty of some that. years, So important do couple that

race one that's We're value. to I to share not earnings make a in To any to get we're size. want me, determinant. delivering certain big or hurry sure per biggest the

in to anybody. earnings be grow deliver If to able share to bigger deliver We continue growth. we need size, a we per help to that balance As earnings per we sheet, deliver share. just got doesn't

would very on would the much the within be continue market just this, do that, would ramp recalling focus apace So opportunities if we opportunistic mean, Wheeling Mid-Atlantic much very we like six-hour then or that. that -- to can anything forward drive would in anything But that find But region. like I not move that of that. up and,

tremendous contacts this Jim too. got as and in well, marketplace has connections

to tap it'd expertise here wise into be around me his the time. So of over with banks

is This XX% like So that. combined in no, or get us. expect anything I make big want it do and don't this do we're anything we fire of rapid coming succession a But not and to merger here the to right be to for then size also we sure done.

Casey Whitman

taking Got questions. for you my it. Thank

Todd Clossin

Sure.

Operator

the Stephens. with Nicholas Thank you. And comes from next question Austin

Austin Nicholas

Hey, everybody. Good morning.

Bob Young

morning, Good Austin.

Austin Nicholas

or margin the at margin on Line I I appreciate of, commentary level, to reported today. Line. Old the the the or the mid X.XXs. as as around the we X, deal. -- And that combined may as about then the kind with X year Congrats Old -- in on yours down kind of kind X.XXs is of I core trickling in guess, be mid WesBanco lower and exit X.XX that think X.XXs

the NIM? through, can balance to think margin Can and slight redemption TruPS some be increase that the the the restructuring on on you Line me how guess, sheet I case the get about to maybe of walk from commentary Old to impact a of you just may that base your

Todd Clossin

go don't kind margin Why you ahead continued handle of You questions? that. on

Bob Young

at They've associated Yes. marked savings $X.X million, that with $X got debt issued in TruPS And, right Austin, I here sub the the XXXX. an a year model in they includes And about $XXX,XXX redemption. note then, basis $X.X on after-tax believe now. about that you'll million million

some inherited have to we not YCB, well sub-debt. we from sub-debt TruPS unrelated it's tenured, the as that regular Of course,

to on least, their upon do close point just at us opportunity the course, thousand of several time. tranches projected issue end because That five-year to we at another. -- we'd market depends side, something hundred to be happens million those at $XX and XXXX, their that that, dollars on be a to in time. one both The for that At repricing the could the at rate of would save lower look of

well the increase as estimate in accretion of My as of few to or from have So, the we that I basis refinancing TRUPs related I guess, have model, in, debt those the sub that couple the balance margin-related combination two not include was did forward. of three don't points accretion redemption sheets it the are estimate actually two going in of now. a the and or years but numbers the

responsive. the we to expected. question? another merger do the that is Hopefully that have in that overall accretion but was -- relative Was model earnings So there

Austin Nicholas

yes. that's maybe pretty guess I helpful, Yes.

NIM WesBanco? so base NIM that's commentary mentioned to Just of you've kind the that on the the increase reported for the on slight referring

Bob Young

Yes.

Austin Nicholas

Or the NIM? Not okay. is that, core

Bob Young

accounting. purchase With

Austin Nicholas

Perfectly understood. it. Got

Bob Young

is and pro then like X/XX But kind a $XX $XX base throughout will at interest come and million first as moving forma Obviously using it year $XX set in into rate as is with current of the it's that forma a and just organizations three again the year and this as X/XX basis as down in that one that -- well, to of million quarter. that into would environment. reminder updated well four end of worth of put total points day consistent down two that's the following before accretion a level with probably using of here come will year. our couple, with of the as of next together and theirs to we It's that have X/XX. a case we million, $XX planned as what pro And the million that's the again, quarters

Austin Nicholas

and EPS Understood. estimates, that No, being estimates, EPS that. are XXXX that's appreciate I something just helpful. And XXXX the accretion those really is numbers consensus are just that the used guess, or for I different? then,

Bob Young

to long-term two the and the years one applied guidance, for the X% And them growth XXXX. which do a safest yeah, after and model provide of little in is us bit the a long-term thing neither those apply forward rate consensus first less. with growth years is, is and going we just then XXXX It for then two rate those think XXXX. Since to use first

Austin Nicholas

Is then, and here? really helpful. has great think the strategy. retention employees and putting with with wall has some guess were something past in maybe And retention know the on past. I -- their to place, Todd, bringing been part commentary involved of lenders as company over you've in I do job doing really that. know pretty of that deals especially I That's successful retaining strategy overall able a the the with any kind disclosed I you in And the Just that agreements Okay. acquisitions,

Todd Clossin

retention as The quick agreements. same yes, answer done with past we've the in is

to happy and in that So announcement. to get prior place that get done

the with that and we we kind business we very and lending I even Old is things how the way similar. of way things Line the think approach handle do WesBanco model and and operationally

gone should of the from levels and the we the get I -- obviously think processes, looks be probably organization but do acquisitions in well. very nice. new place, different just more lenders of I not But some past post agreements to terms things really and But standpoint here of difference assimilation work in announcement. think -- in have in some what Again, at transition have the platform an our it seamless. much those new we'll I way

Austin Nicholas

quarters then remind and the what -- can says release, can kind it but or details you'd two Great. on some know you maybe in on give And date of a close of Okay. when date the just couple you just would expect the I it? more close influence

Todd Clossin

track shareholder Yeah. got a vote on we've or at both I through sides all around here mean, look if get closed so four you got record, approvals historical announcement. and we months that. after we regulatory our the to deals Obviously, and

the that right Thanksgiving, upon go. holidays, quarters, say beginning it next several would could because year, into I the depending be how the it flow So, could four be could say it into months, things Christmas, of next

talk about bit a be an doing banks would lot year that. put in I want not in for there. their release, That little a provide year a a of of they we're press outlier us. to So leeway -- see

think So, I of year. towards year this end the next of beginning would

Austin Nicholas

I last on then if Got it. one, just the And may, one tax rate.

comments the if pro expectation didn't for what tax some I made an made on Line. you'd Old the with rate tax expect you rate it recall And think I forma to be. you

Bob Young

basis in some to I XX% rate federal that I tax We've our talk think about the that. just today in Maryland on closer done say. state given but states. other It'll than mentioned a up would pro move is income on get did tax forma for bit that is our guidance and our we probably the Maryland at to We state XX.X% same XX% XX% to year overall income XX.X% to XX%. are work where basically we items rate XX% a ourselves. this not adding us for higher little

Austin Nicholas

taking Well, my sense. Makes guys thanks again and Great. congrats deal. Sure. the questions, on for

Todd Clossin

Thank you.

Operator

FBR. B. Steve Moss you. from Thank And next with question comes the Riley

Steve Moss

Good morning, guys.

Todd Clossin

Hi, Steve.

Steve Moss

deal on consider over of you you $XX questions the I just does a guess deal Wondering guess this will in raise Obviously here. in assets. the to a congratulations deal a it's couple follow-up. Todd. to billion takes of I up size future minimum large the

Todd Clossin

Yeah. size. of I mean we said XX% combined

do So of series as we've to able mergers fair bigger, gotten like We like that's that. be I things think a comment. and to

here. So big have it enough be time grow, have to and you want into coming like everything it's and defend and sizable and bank enough make everything want market team this, you're the else to sure going clearly the to impact a required. new do with focus an we merger, partnering that's to that's Plus and management sure a and when what be the big want make we to cost to we enough. We

probably So, forward. that XX% of I is us rule say thumb going size combined of would a for

I think that's our comfort level.

Steve Moss

transaction? Was bid? And just this in terms came wondering of transaction That's was how this was Okay. together. helpful. a this a Or I negotiated

Todd Clossin

we a outline through We'll things S-X kind go Yeah. the process. of number as in that of

I'd I like to defer point could. to of that So, if kind

Steve Moss

if sorry C&I portfolio? on then good. the And Okay. but geographically loan wondering you've particular seen growth the obviously pretty strongest where just I it, missed I'm in growth in loan here

Todd Clossin

WesBanco? legacy, In

Steve Moss

Yes.

Todd Clossin

really there. it few that north our Community been X got here Bank, exit in in the seeing Your deal actually in nice C&I well board across to kind of weeks lending the bank probably We're much Yeah. limit fairly the see north just very sizable all pretty nice some It's we've the markets. times Louisville last of that's of of of would've up relationship

not in maybe Pittsburgh we're we Columbus of and there. good that So transactions hit do. really the we that lending and but And the Kentucky size Cincinnati C&I continue had see marketplace would well to traction teams in the to starting markets capabilities,

borrowing I'd the lines board. still and see I companies guess to trigger I credit. cash pretty that the across waiting think of kind a on little been investments of are our pull more bit on much pretty making. like to they're has C&I different So, flush,

their credit. to more impacts to work can't be on business, items the borrowers. that enough from borrowing to go so amount bigger one Unemployment on of people seems the and about expand I the project of lines hear They get of next

I'd that time. we're not on a to So well over really like of think C&I. market can't see change But, where I doing

places. think I in teams right got the right we the

Steve Moss

much. very That’s you helpful. Thank

Todd Clossin

Sure.

Operator

Thank comes you. And James. Cardenas the Raymond from next with Daniel question

Daniel Cardenas

Good morning, guys.

Todd Clossin

Good morning.

Daniel Cardenas

on transaction. the Congrats

questions have been Just one answered. other quick as and most question of asked my

In expect conversion I'm terms sorry I of take if but missed the you do this, the to place? when conversion

Todd Clossin

to It two Yeah. be within three probably months post would closing.

So after on for the take my add days comments XX, another the that and closing conversion. XX

James Cornelsen

Same core.

Daniel Cardenas

So, then we can...

Todd Clossin

same core is Jim going mentioned We be helpful. that have to which to the just me,

Daniel Cardenas

All right.

hit the of conversion is saves majority the should done, cost then the correct? So to begin then after

Todd Clossin

it point, I at quarter think this on Yeah. late early first to depends quarter second closing would obviously. but the

Daniel Cardenas

now. it right. That’s guys. me Thanks right for All

Todd Clossin

Sure.

Operator

at would questions for is Thank comments. floor all the present the the to have return time. we to you. We And closing Todd as like any Clossin that

Todd Clossin

financial well. our into quality. XXX Thank mentioned bank and function time I are maintaining on trust year newer very with All old regional markets appreciate The management old we you. and But, We're done everyone's emerging this three really still institution. expansion, these XXX right. transforming as morning. significant this we're focus as high-growth I year last some diversified expense into years and demographics credit -- but good we've

path. I think consistent stayed that to of we we've pretty terms said were and done going what on been we've do in we

opportunities. we're our growth think excited about continued well we're I positioned for success, and

forward at you seeing thank a and good I investor Have want to joining you to today, day. an upcoming us for look event.

Operator

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

your lines. disconnect now may You

WesBanco (WSBC) 24 Jul 192019 Q2 Earnings call transcript