WSBC - Earnings call transcript Q2 2020

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good day and welcome to the WesBanco’s Second Quarter 2020 Earnings Conference Call. All participants will be in a listen-only mode. [Operator Instructions] After today’s presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note that this event is being recorded. I would now like to turn the conference over to John Iannone, Senior Vice President, Investor Relations. ahead. go Please

John Iannone

measures Officer. update and Bob for Good in archive quarter Sean. as today materials website welcome website, Relations of WesBanco as Officer July call, included to investor Todd Thank SEC President earnings our like morning WesBanco are information speak non-GAAP Investor contains year, issued forward-looking conference be now earnings second Vice our and XXXX Executive Chief over XXXX These statements statements yesterday to Today’s turn President well only on All the filings and wesbanco.com. about of will Todd. of I related afternoon, this are them. available an call Senior Todd? call call. Financial materials. would Chief Inc.’s our one Executive other the of Clossin, obligation materials available on as XX, you, and which to and Young, to our information. section and and Leading undertakes Cautionary are reconciliations the no

Todd Clossin

Thanks, John morning, and joining today’s call. Appreciate us you on good everyone.

and ongoing pandemic. strong and today We’re review quarter during XXXX of on a remain the a provide we are: Key with COVID-XX efforts our liquidity an balance institution our going of the solid takeaways from update call second results briefly to the financial well-capitalized sheet.

and and safety with are quality, and post-conversion the of to range the and environment expense continues sound customers as have digital employees. well comprehensive offerings. and we continue well of current integration management the diligent saves Line our we health expense believe for of Bank go efforts, credit We operating planned to a focus on positioned The our Old we achieved

was by pre-provision performance strong in controlled quarter expenses. the our by in program. year-over-year Our growth excluding to and XX.X% million income, a tightly second strong payroll fee excluding was evidenced growth year-over-year highlighted record of pretax $XX.X of when costs, residential business during income X.X% merger-related organic the underlying performance through and protection mortgage discretionary originations small funded administration’s program, loans the This

quality our standards. inherent evident continue of due to we with be strong well which number capital seen is remain legacy have our when standards. credit of Slide all as strong which well-capitalized remain $XX regulatory strength of credit billion, to total a key XX we better of prudent company This U.S. billion compared lending between Our can across to ratios trends and $XX ratios, assets banks on earnings presentation. measurements, maintain the above Furthermore, our

gone our quarter’s February to As and achieved I Bank integration about Mid-Atlantic opportunities related converted the April. XX Old market. Encouragingly, integration to the as good into and savings and employee retention on we that Line mentioned during experience of has last long-term this the in new newest continue successfully by early cost customer we well very year call, remain positive our anticipated market

entire across policies level WesBanco review safety We and our and standards. of the safety routinely the family, our to and on the focused procedures are our they footprint health monitoring customers of trends We highest the ensure employees. meet remain virus and

through organization and customers lobbies. I’m both As as branch Best of row, Forbes our our positive year by have in comments we also customers, Bank to across have stay our for since we organization. quite help mention magazine. our not Bank communities, by WesBanco and in as entire efforts second recently our received gone World’s a a on named, appreciated that and tirelessly serve to via pleased worked March, it we safe, few drive-up to a has continue our customers I’m was have the appointment our proud facilities the

customer well SBAs upon services. feedback, XX-day thank very mitigate based mid-March, is to general like was employees of unprecedented and number and I’d the scores done. we participating including to launch job in digital program. of our relief advice, customer to ranking offering, satisfaction virus of annual on them first the protection and banks their impact satisfaction, high service, for and initiatives to the one a outbreak, COVID-XX WesBanco second received In and financial dedication, work and borrowers options congratulate the help payment mainly personally affected for the payroll consumer The hard

we enter coming from off We May, organizations. letters hundreds and when most status. of messages and through beginning deferrals grateful of received community-based mid-March timeline made to deferral a from customers have these were are early Since are of customers

payment In those have receiving fact, we loans a of are significant second in a deferral, of the majority reduction amount customers deferral. not as seen requesting a

loans represents of As relief loan PPP July balances. XX.X% XX, of excluding loans, where when of receiving XX.X% loans

account I accelerating mobile more of seen digital our during you Deposit long a applications. have channel small online the on application of We to our pay half that products deposit capabilities the branch Reflecting by again, to of payments, just on utilization of banking side. have loan success had mortgage call. a details next service, bill of unmitigated our name residential platform our environment, forward of customers. the capabilities, employees provide on remotely; current our with the PXP look digital this working digital realities we including business opening, quarter’s second and few digital robust optimization we This year. increased the combined anticipate strategy

turn I inclusion over comments like call few Bob, diversity a and to the our Before to I’d make efforts. in

by to leader stance take want on WesBanco in a we role has years, noting For been equality. leadership to our continue its a communities, and many

members our looking the in and reaching constantly I’m having dialogue team on hopes inclusion. out As my to internally of subject CEO, company within of constructive own

focuses community business. Inclusion employee to addition an as we existing program on added and our education symposium and catalyst Diversity This adding are and we positive a how women’s a In for resource development, events, Council conduct outreach.

a us as also to helps grow it efforts. of it spreads is not company, other hope Our all our but community-based that evolve and only

in across communities, philanthropic in donations support $X fact, WesBanco XXX,XXX pandemic-related on organizations out of alone, is In are would WesBanco Corporate cities in the footprint. call made of activities Young, past results. help them addition over country during a To move update to company, example leaders discussions our distributed footprint turn and on second and We’ll we around to transparent all the the in in Diversity must how approximately has financial our to our year quarter’s to being reaching now focused lead the as like efforts, change, in CFO our Personally, and example. forward. we to grants of America am this for includes we million approximately Inclusion all across include our affect our be by community-wide strive our Bob the and to I to an that can markets. being the the mayors’ Bob? asking first. I on

Bob Young

Thanks, Todd, and morning, everyone. good

$X.XX accounting required reflecting CECL’s assets XXXX, During the continued losses. of ended net provision for deterioration XX, the fees CECL, per of credit to the the in forecast, of of for and impacted as provision strength by XXXX. the for on losses, second $X.X to and standard, GAAP earnings limitation of losses we evaluate the is In negatively order billion in costs. of due above $X.XX driven rate per expected impact the interchange underlying for pretax XXX on million merger-related June large otherwise to provide has earnings pandemic we continuation short-term share during cuts and prior-year the environment, better our total months Primarily quarter results, million credit points second three experienced in to environment $XX current demonstrate the periods pre-provision a reported GAAP income which income, known macroeconomic the important share banks and six-month for diluted new March. income current And the basis declining comparability in net period. the interest Reserve The quarter rates it of Federal to the excluding credit diluted of $XX.X

merger-related first pretax of XX.X% which to second of pre-provision quarter income, XXXX respectively. second excluding quarter compared the $XX.X reported X.X% million the XXXX, of quarter increased we and in XXXX costs, For and

respectively. average strong believe total well-positioned various of for our total in proactively in Reflecting real Old X.XX% Bank the increase the growth pretax loans, more addressed and loans organic second the commercial We XX.XX% funded on for total which in and is payroll sheet X.X% as was last reported risks operating balanced few organic during near-term estate XX.X%. protection residential excluding our average balance lending we the program, assets to respectively. year-over-year and When strong SBA’s tangible order rewards of second years. the and through and quarter both equity and primarily addition, acquisition, pre-provision loans X.X% quarter we the returns drove growth and Line loan In portfolios assets environment, properly

we declined of of XX.X% our June Federal we stronger a and funding XX, of balance As certificates borrowings, respectively. deposits, by and have savings deposit tax PPP which was and excluding deposit thousands by to million. new business strong growth, more strengthen X,XXX sheet higher continued Furthermore, $XXX loans PPP of reflecting totaling than reducing customers cost current added demand personal deposit bank Total Home and Loan X.X% deposit year-over-year, rates. loan the strong certificates reflecting growth delayed organic Act CARES XX.X% payments quarter-over-quarter and

loan first banks initiatives, to one of assist were pandemic. majority deferral were customers XX of we mentioned, various the the for the Todd days the proactively As which with of stages early during our

as for deferrals round our of million a Over deferrals. of we are have have not seeing number initial the yet that we past significant we period for by more XX second customers, many a requests overall deferral past than of $XXX seen level of the and decreased days, moved

slide built categories is commercial the categories the prudent loans. our including we state credit an loan and retail, end adhering Our upon update by provided various footprint presentation, lending while disrupted across and both loans, which total XX.X% of of six standards. and X evening, restaurants, pandemic, represent we loan long-term balanced on diversified filed hotels, combined period to energy, on supplemental PPP certain strategy including loan last growth our

and two loan which XX% you outsized service footprint and and each of the of categories, operators Slides in good portfolio debt across flags average coverage diversification loans see hotel granularity. X.X our are detailed no X value loans were on there these of seasoned There times. well-known portfolios. As an X, is can our to with in are and hotel The across

would with continued of across loans, like assets, million. anchor the PPP forecast or portfolio, grocery the year, standalone other negative of a have rates $XXX.X lower yields, XX the shopping banks excluding million In last COVID-XX. the lowered lower economic the one loans rate or aggressively past spreads accretion losses on allowance negative to in two of year for classified X.XX% deterioration forecast XXX commercial interest on percentage commitments or pharmacies. the buildings the partially published with by quarter. total and curve. across to now fact, loans, environment, industry, borrowings, centers provision the higher million of income our $XX of XX reduced and second in basis basis million of assets of the loans slide commercial retail, moving relatively subcategories as peer macroeconomic related economic quarter as re-priced points total by by to CDs priced consistent affecting of excluding vast also XXXX, low driven the portfolio unemployment forecasted energy, X.XX%, cuts cumulative this portfolio our averages. provision last years. between basis well being turning driven This a Reserve unfunded declined earning the since as target impact quarter as XX, total loans, key The basis rates based average deposit that to new we adoption now like and are less the purchase credit in Federal the shortened direct PPP strip the of and losses margins charge-offs was quarters in criticized total levels blend are like negatively interest such as and retail slide our national X.XX% we’re restaurants stores which standard Board’s be XX loans non-performing flat $XX with net CECL points and or I benefit lower due various primarily tenants related loan offsetting measures, and for billion the as this for highlighted this are allowance credit forecast four basis particular on June is net information favorable impacts as measures outlook essential reflect well $XX percentages nationally additional XX than for was XXXX, Furthermore, our qualitative case, accounted largest mention well within were interest at credit during from with and June interest to was in the the consistent peer loans and prior the earnings as this and margin majority there’s our Reflecting and the of seeing our points materially margin. In maturities, loans, other upon factors. real to rate net the the in federal portfolio billion as quarter’s Key accounting estate yields at of XX, two can specific total reflecting from in from rates for remained and primarily an funds the impacted those of July quarter’s to metrics loans, interest points, yield recognized presentation. loans points total loans. when statement. bank liability. $XX which last increase viewed or asset which accounting prior SBA as earlier significantly loans quality to

Dodd-Frank’s the on for swap increase interchange mandatory fee to offset as as consumer rate electronic loan commercial X.X% $X.X was XX, primary as were growth, experience was during from the the ended fees year-over-year deposits environment income growth lower interest Act, savings, partially the drivers reflecting personal consumer the on higher the fees of to XX.X% overall spending organic fewer charges during revenues, transactions the and of June quarter. XXXX, banking and income banking an and due by as well and limited lower deposits amendment low On family to also related XXX secondary current million subject approximately due into mortgage due well limitation service were mortgage were Durbin sold second half million, to market to of The quarter residential income of $XX.X income record one-to-four fee refinancing. of the which quarter-over-quarter. banking origination mortgage XX% which of non-interest million, fees quarter volumes and mortgage

Well, quarter important We quarter X.X% factors to of XXXX X.XX%. cuts as million ratio are said, the with excluding stronger value. the to in technology continue expected provide capital equity have subject thoughts efficiency focused this continues focus the XX.XX%, order expenses That a of on and well-controlled regularly be now we decrease to relatively leverage We merger-related meaningful costs from our expense to limited a management regulatory balance the like as somewhat now and discretionary term, as the to sensitive to remains above industry-wide somewhat expense with shareholders. years, provide early in interest and in I turn appropriate a reduced it discipline some near fundamental growth bank’s and second from bank, $XX tangible program an effective and they costs. with deferred focused financial were strong to merger Salaries this compensation net on asset strong to levels between benefits originations accruals affect March margins and ago, capital is even including XXX the loan our least healthcare PPP Bank remain have Line we allocation costs provide are the controls the regulatory pandemic. would as to lower as on grown institution sound operating lower outlook. the while current points future. years. of by in a on to longer-term for difficult in two the XXX capital financial well-capitalized decade funds acted for requirements for savings we the operating for lower remain that plus and enhance positive investments reflects deliver a basis significantly quarter. cost than now expected rest recession on and and both great shareholder of one expenses, our me ratios, treasury to total during for rate for Old anticipated lower and a experienced earnings continued reported as the well unprecedented, environment from first the outlook. these financial environment a let expectations flexibility rate operating resulting management foreseeable be continued year. the of spread and yields. being months our federal a next XX-year flat three levels at and The overall incentive to well

and continuing along GAAP of with XX our quarter. quarter, PPP net purchase the from and loans lower quarter. points deposit taken per half margin have accounting by margin, accretion second reductions. continued core we Our X.XX% during net purchase interest by additional second to offset down yields basis take be may partially asset second XXXX pricing decrease recorded few that to the few interest anticipate basis accretion we excluding declining are basis due aggressive points from a to XXXX accounting on actions a the costs the during our should for the be We from borrowings both points

PPP over income. such However, fees into we next also are the loans the forgiven anticipate are accreted deferred and net few SBA on quarters by margin as accretion as loans

leverage. positive on diligent We expense will our maintain focus delivering and management operating

through our quarter mid-Atlantic that mid personal across salaries savings base now employee the the acquisition, late are an includes Line merit XXXX midyear region. Bank reflect planned of third wages While typical and from second second Old quarter effective cost increases quarter

from in quarter. half XXXX into was million our Amendment for the $X consensus fees increase insurance realized as the due during of to Furthermore back well last expenses XXXX larger credit impact quarter FDIC banking to awareness year’s half million second to which as we of the reminder Durbin will the the year. during planned the expenses some the expense in the FDIC, be from the million and of occur for a on our electronic credit are assessment current year brand of with half will marketing quarters for $XX associated similar implementation of $X.X changes. XXXX. of expenses anniversary of assessment with the will other a and XXXX of asset last third the other our XXXX. have $XX to including comfortable We portfolio the CECL, size rate macroeconomic provision credit higher as up quality XXXX as delayed two and loan expect marketing million of to of to well Relative loan provision the the upon delinquencies, criticized to losses metrics, depend growth, potential charge-offs, under various increases, classified other that and forecast, changes first during as

we be of State certain XX% now our currently inclusive approximately and to Lastly, changes and the subject XX% rate in total to Maryland effective of income strategies taxable tax state income tax to anticipate provision. full-year our

We’re would you operator, questions. take now the review instructions? to your ready please

Operator

ahead. First please with Thank from question today Piper come will Casey go you. Whitman [Operator Instructions] Sandler.

Casey Whitman

Hey, good morning.

Bob Young

Good morning, Casey.

Casey Whitman

the how just this to, think of get quickly going points have, Thanks. some growth you off had you a sort does level guys more and just I’d the you NIM start of to couple I compression? to liquidity of just maybe, you that I said a assume quarter that of does what gave, that deposit basis is assume for, of guide guess, with come

Bob Young

is I and the have Yes. date forward. due and that XX one XX XX with both would been April moved note payment July thing June tax

three runoff for another high like that of adopted; personal to due. calculate round basically the been of to the basis the the we then the experience of well has and us made last points we aren’t think at used were the points and that those $XXX some reserve those banks higher if for I continue individuals did that we call back related quarter and also banks, to we of unemployment in expenses that, some portion carrying round bank invested loans five million another And and stimulus quarter it and on individuals. while spent into by here federal as XX earning payments businesses. the are, would are or and the large average. basis that PPP would the due from isn’t between expect Casey, those for, in CARES cash personal act those over extra deposits rate be payments savings second if cost so anywhere companies and should particularly, on tax plus deposits base some that of put that be savings

bank reserve. the from home maturities quarter, and borrowings And taken so as the home at the first or a loan in down some money up come we’re see down I to do federal expect quarter terms federal of end you the just that loan quarter have of second had extra of can the first We bank.

And $XXX of that should so the down here second that and the Is half year. in continue those second in million we’ve paid of the pace responsive? over quarter,

Casey Whitman

Yes. the this the quarter please? interest PPP and for guess Thank income got of you the both deferred let you question fees us on margin, other from actual the know Yes. I amount Bob. that, can net you

Bob Young

look kind I average I of was if believe the front-loaded. think X.X%. be average, and we at you million you’ve a $XXX was figured – got would question the it it that The and

So, the is the forgiveness margin accretion. we there’s but million, about $XXX run about rate X.X%, average do when we of monthly the quarter think no expect

is that quarterly sentence one loan on I that being PPP margin a in heard income, to of accretive the had back you’ve the the half comment. If year

would by SBA. at basis quarter as forgiveness the quarter points other occurs. aren’t yet five to our points that margin, against there which see as don’t specific really instructions we comments of pickup But we the pace on margin basis posted occurs, forgiveness the per occurs. yet three forgiveness So, expect to know

the we to be late program fee up it call of forgiveness after the even the not We the has the applications just allowing X%. without We anticipating salaries. of money them get forgiveness. the the a was But until and first do queue – forgiveness you weeks the we’re And change with that related – initial occurs. going including no deferred occur a see have application. submit forgiveness the to dilutive, some customers significant tsunami portion versus longer that before then XX% spend now and forgiveness one it’s yield income that’s and second overall additional period, the though to that don’t people even from net deferred quarter, in to So, regular fees think to XX% I for deferred just eight-week an fees their against to XX that quoted of to but accretion and it submitted

I again, that’s yes, hope helpful. So

Casey Whitman

I half definitely, just year. margins noisy the all we’re think expecting of in the back the

would as just I you guys happen are here, in to thoughts you – for just I rethink guys that paying. need other ask of capital I’ll that. to what about to the current dividend thank think just So, one broader guess have terms for you

Todd Clossin

answer to glad be I’d Yes. in jump and that.

you don’t reason impact looking forecast and the own our at what it anticipate think and see any when point, this else, any I see of at we our we on economy at of what at kind to everything have we doing kind look dividends.

that. got think capital good in We didn’t we’ve to kind of a we So, have any changes position. forecast

not as really earnings step at are We us we bit regard with event, a this peers, with reserve I to built took little event That pandemic. peers. a puts pretax still earnings bit a significant this capital very in look think of we strong. of ahead right our the little And think line not with quarter. this if a pre-provision

other a of I like think lot banks do.

So, really that. don’t have any we of anticipation

posting get have and dire that. into things a that and we banks losses You’d are where really like anticipate don’t consecutive quarter scenario, to

Casey Whitman

for my taking Thanks question. Understood.

Todd Clossin

Sure. by Thanks way. and back welcome the

Casey Whitman

you. Thank

Operator

Wallace the please question next will And go Raymond from with ahead. James. William

William Wallace

net PPP exclusive the you or heard numbers. X.X% follow-up was the numbers of that deferred forgiveness. quick different fees yield guys. net What Good gave, the Real with I morning, X.X% is loans Thanks. the Bob. on on two –

Bob Young

could margin see of on say We into system, more income meant first I the year will was quarter, in quarter double the of them of second have the fee full-year those in and million think a didn’t, because June X.X% By count, it I got currently out in of the about digits the accrete taken again, program. we increase yes, quarter, I but over we I said month quarter about; accretion run year a costs, million related of right $X.X quarter for was a of back the around next couple as to that we $XX the the high time if the the – earned any low XXXX, year, much digits, a right. single deferrals. higher in-process have fourth on next X.X%; as basis. to But of particular rate half any and years. basis, of quarter I that when to in particular think on net don’t accretion basis, margin anticipate significant net on

William Wallace

rules without, understanding Yes. think What for maybe, now, proposal forgive a some Based that way now, to the originated. of the forgiveness? just you’ve on the are qualify loans way rules the automatically. there’s would small the what of just that But forgive the exclusively, percentage salons are them you

Bob Young

little of of year – XX% XX% and XX% XX% next We’ve Well, a think terms originally pace bit moved than into have, end that would next and months the early times by you those more now – would been what within higher the the be the you this you we’ve figuring be all year redone timeframes number increased of to But the versus we that if year round be assumed in second new quarter first to has forecast left forgiven. and we’re this forgiven. have happens there’d XX% year assumed be about process. or just our assumptions to

William Wallace

have XX a you your slide bulk understood. I Switching the believe gears that to were the of deferrals, day. deferrals says

you have percentage date, actually have another come look hit payment that due? way, had had that thing at days XX have needed deferral the or and their has said those of what the paid due one a off If have a payment percentage loans a second of what

Bob Young

Yes.

And with the of just with request that through say, it’s What we’re coming first putting seeing just them due for can of It’s question Executive X% we’re referral, another credit are I because or Credit underwriting taught again, that coming Given yesterday. those else. what period off like deferral everything is timing regard asking I we’re and this second very a referral. to low. our for

and We’re color us, second little coming haven’t which but – we asking new in And it’s Because portfolio. on the and being yet a down point that payment relatively has that up again, to that obviously very I’ll on coming anything when ago, those hotel But mean, deferral, it’s the is And look more a up good the the they’re been we But that at of point. where off little, at to a hear next just week been this XX-day with would quiet, But If generous for of we then a individuals point. they’re weeks deferrals those this have process. a be see gotten months looking to did only just needing would very, that comes deferral. more maybe of good at deferral peak. down or pace X% payment time expect that not providing month but like I if a we’re point, I few stress like. in XX% the encouraging the this second two period. be still again, a companies the if end two request that’s asking for with referrals to we’re weeks, what see XX%. that maybe, last compare and couple at its from highest it’s early

William Wallace

you. Thank Understood.

scratch you Do marks, does mean, and bit at the economic the questions you at off big XX% you forecasts I include unemployment your So, the even does head picture that I the reserve including X% you re-deferrals you models X% deferral your look asking or marks single-digit your I seem it you head if reserves, are sheets with built in mean, that you. for when perfectly of two balance on all are the X.XX% coming of not loans your you flip high or have Todd, your see do over about GDP little a pretty scratch off? significant of for contraction? when one, rational?

Todd Clossin

low Yes. process. re-deferral, think, asking again; early that is for I we’re pretty in the X%

a of couple rate, over that I how of or would a but see a is want businesses degree weeks low flows next the to stress. next re-deferral So, feeling there’s of very so, or companies’ tremendous that that aren’t which lot month out the a indicate

quarter, biggest I I right? think you’ve on here, mean, drop unique going got some GDP. we last really had things the in

occurring at and I are those like think the over income since the depression, think same up the household record was had time, country same both which the a at seen was great time. but XX%, I

very, it appropriate and for to So, to out like two the year reserve what’s level. things very predict the or a that years, it try makes challenging

based rules. got a So, the of downward and be very the expectations the we’ve us or in we big today, classified taken. in to out we industry charge-off a everything we’re look level time it position, reserved, as take process else, gone we’re we’re and right will closely, that see peers our numbers, like our take very that. make that performance out on the And what unemployment where our bite kind our But there increases. we very criticized, may reserve history of based it of we’ve But up lot you we look year, the specific could be then reserve there and a at put rules we think goes comfortable spending what on and – at Apple reserving takes we said, are well. at steps that turn and then industry we’d around with reserve to and step relative sure now, that unemployment another a follow found numbers, and upon appropriately if here with and seriously upon things that CECL reserve forecast releases and

but we going pandemic, there That’s pandemic. place a be else, why to not; we’re we’re end And if of little the didn’t know kind right be. the ahead, think everybody I conservative higher in a farther little, carry I maybe a a a capital with of to that’s good little we company. level, though think was into even going a it

flows more do. everything company. we a that that I little conservative just We’re oriented through And think

a it’ll stuff, each to that it. a respond country the it’s being and just and turn disconnect, we got quarter. to the some that won’t start future be and move put so to hard maybe traction the you little forward if don’t get But uncertain. place just evaluated the with all severe whether know of hoping in the the it that strongly it’s there’s bit stimulus but the and that I’m between it better, are gets downturn you But under know may of can – best vaccines to businesses it’s kind and here. with to control built get opposite. vaccines and could reserves timing as expected, quantify And be And continue out spikes that as So,

William Wallace

given channel other could year branch pandemic the then the $XX behavior change, quarter. for and question branch then this digital the that include for Okay. not around you’re your remarks. million may the said and you release? expectation the rate Todd, your is per you that the of what not, If $XX but the you just back that in I the network the to response? the And referenced is around How you this of in the that. with network, changed Thanks. I anticipated how you the has out might half how one, acceptance quantify to run consolidation Bob, step in listen saves that delivery? comfortable addressed the Thank late. run apologize have million Does have call prepared around of

Todd Clossin

the Bob even, off with historically the XX% then of start it, I’ll well, Yes. bottom arrived our can jump ago. before seven performers on evaluating scene years in. I branches We’ve been

out something of XXXX networks. we’ve XXX always it’s closed since branch we’ve and XX branches So, done

at also to using typesetting new been of us, well business conducted digital. looking more have on that, digital but looking and significantly up nothing be and rise. the use been it’s to which customers services, to been and we’re how do So, And has able drive we see has the typesetting in appointment

to So, network. we plans branch had to optimize continue our

what second a accelerating seriously in as think And really you that discussing going that’s company. we’re quarter at very seriously I be that something would kind looking to done look here near-term over that. the We’re probably at can several into next outlook quarters our been four have probably five and is the on or our plan and that three, the years, next accelerating of

combination some a some two cases, could in all be could closures; one in services, cases, above. closing the it location. better some the and be like It So, some consolidations; that, would things. type ATM restricting to in building a of be cases, it in of new and things

done I of peers already that and a recognize So, strong that, we’re look and very have taking a lot our that all announced of and really that. at

numbers recognize too. in I’ll – reflected So, we but we’d rates something Bob in Bob? that would to that that decided you. what with if do it’s think, have to on well We to evaluate thoughts that something things that. need as not very expense it’s would change this, that, much mentioned any others rate let in then or run numbers the not or and like line, have and anything of our run and just any done reflected that if speak do we like to I are we that, to

Bob Young

Yes.

year, timeframe, it I close to I offices, get takes approval of think to more of would regulatory think event. XXXX decisions, well, stage be a at would, the the primarily said it you discussions, this any savings Todd, and announcements just given

we regional enough they little or I presidents perspective is evaluate top bit at make mentioned, Head want nine to Todd Zatta. with offices before teams heads each our just or we getting the own we Jay the recommendations and and market color, each of but led by Retail, it aren’t enough presentations a and and in mention re-sightings those that our Just to have market-by-market And don’t a their committee and we one of the our of of counts. and markets, that transaction evaluate their that recommendations with go additional that from house makes comes Commercial make the board, XX traffic the one those of

events there at that game and year, the do would part to of but we a this the a stage ordinary anything of other couple couple XXXX would here be events. of than course come, a more this So the or savings

William Wallace

Thank you.

Operator

will with question next ahead. go the KBW. Catherine Mealor from And come please

Catherine Mealor

Thanks. Good morning.

Todd Clossin

morning. Good

Catherine Mealor

this about wanted just I in increase to ask the quarter. the reserve

nervous that can You And quarter anything within that behind qualitative macro that. touched little more, your remarks, had that the your Thanks. higher of you specifically this about you you wasn’t reasoning there that makes or build? within the kind versus that to on of this just your kind a reserve seeing just talk have clarify picture kind quarter driven more some big may bit made just that but portfolio you of you’re hires in markets assumptions of last pushed qualitative the

Todd Clossin

things. picture Yes. it’s big clearly macro

was at into to go CECL look back and first like day when end not the things pandemic consideration, quarter, you and the If to take because did all the that, you the one of that. they adopted, had

were unemployment calculations look significant – quarter, big, the for is they driver So, I it done what’s forecast. forecasts and you that’s a big, first second think when the than quarter the of very were the when at being reserve, were unemployment worse so

you’ve of the unemployment of got. that, banks forecast that that and as that well, the when majority saw numbers another And that saw drives I think goes So, other the we great up, too.

what of address you’d to the have significant unemployment on So, things put really showing are overlays in. to numbers top some

and process. level to it’s we the of reserve very a do that to I wanted a Even really a not But chose very did the very strong. lot banks be qualitative some And quantitative quantitative. that, – qualitative is process because

So, you doing. of and support got have you’re to lot a for documentation what

we that where of be detailed areas, see deterioration specific thought was in But kind change significant any needs there a So, it’s very any dramatic to we a process. didn’t looked. very,

great things was, like drove very, those We continue the at change. an of watch very will the to number. closely. what important the portfolio, great majority that that, really Bob, you portfolios, was as the hotel really and factors else and of that unemployment to mean, economic drove increase just that? look continue But individual impact to the and example, anything the I

Bob Young

portfolio that that could I but be third-party software that’s our that it days. on infused probably I good name, drone And vendor agree of primarily but different a from through tool is banks Well, the long would is Todd a lot and factors I purchase then from a specific warehouse, most to with these a time, our absolutely using data mention supplied to Todd, that. a with bank. are for won’t are model not thing. there quantitative qualitative driven overlay the

period nine did has qualitative factors – little hotel increases around that this So, added get like risk things and loans, as the we different a well. class a bit And each mathematically in we calculation period. on a add tool extra in in XX we of also book criticized it precision. There’s use that then classified grade evaluated particular that or

So it. part that of was

there’s or of for PCD prepared allowance in loan I individual remarks, an other to million liabilities. is $X $XX million comprise commitments, loans $XX which reflected my total in of million $XXX million. And mentioned, the Finally, about the additional as then during

Catherine Mealor

question makes the had seen just came That And mortgage sense. and helpful. across then That’s second great quarter. down really we’ve on charges my industry Great. fees. Service then, a as

meaning you first half you kind expect the was year as back can charges. pieces fees well? that back for this service And then half just still on quarter of and, normalizing the of and the year? of two moving Are how normalizes? mortgage do think about So, you think waving kind about Thanks. When would pipeline talk those increasing the one how from in much of the of we lot should just maybe you that

Todd Clossin

off Yes, start I’ll, on that.

a with be, business week here strong lot and the year that got in continues last X% or of mortgage below think incredibly XX well. and been as people’s the to two, As in has I drop attention

any of So, to really lot continue there haven’t seen in driven see a volume slowdown we and that. being

because as good. that’s that that, balances see too. deposit that in the well good people large support service upon keeping been It’s based So fees to have really does reduction

up those anticipate would spend from deposits, bit as earlier charges CARES you a back as about little a comment Bob’s I down Act, would the higher coming time people over would them go that So, service result see And to to be that continued strong. hopefully we’ll stay business to for while, that. think, We going that we’re of we’re and quite the rate anticipating be continue support for a mortgage in low us. a environment

but when and don’t strong. mortgage they’re to balances a two I going work that are tend the know And would it’s more cross, to I people think stay back normalized keeping spent deposits and are So, as the would return come would fees some their that to accounts. in down the business then of service

Bob Young

helpful We Todd, out saw or of point in above on charges earlier Catherine, given recovery back accounts was of really be nice the depending hedging recovery. and the experienced and which nice the good where so a just a so banking April, quarter at that business well a March, substantive the the the volatility a seeing But as the to on had quarter, towards and some negative I had as And that next One actually as the to companies in as we least the our amount that second they improvement to final cause the in not debit of comment, quarter a service line. mark little the the have we forecast May until sure. well. the a their the And, priced because we we during of market the specifically the of pull on pretty at watermark have also trust second rest quarter. in part get our that, deposits second and bit the lower quarter Not most for management, winter. for negative in upon well. the much might moved in of until as income a of transactions should year is, mortgage hedges first the were little that in TBA year well, mark improvement bit been towards fee reduced or refinance quarter electronic improvement in of couple and market in we add interest and in ATM first growth Did end expectations. as fees the that significant And run if of rate we you expect saw part the the residential March you’re recovery that later months the card saw any would there. estimate, to in that end of as bit would book, wealth fall rates through timeframe, low as the

Catherine Mealor

Great. Very helpful. Thank you.

Operator

And the go next Russell question D.A. with Please ahead. will come from Gunther Davidson.

Russell Gunther

Hey, morning good guys.

Todd Clossin

Good morning, Russell.

Russell Gunther

a is be and you there on the captured way? that those that loans a are conversation, overlay innings given that of appreciate current they I kind case, these in in earlier on the holistically, of a understanding higher Just And reserve to in forbearance as deferral the of that’s maybe requests. if consider your we’re deferral even do program? in qualitative risk the migration follow-up color just But through the come second

Todd Clossin

pretty with with XX%, we and than a up I to going of I a were earnings of deferrals. the early, using was you’re say, I think And that with if we of when it around was would came the averages as very very very, the call, provide your do – call it that of I generous we quarter to first out than result call all a were And got number. with went that, and the Yes, I higher you’re generous, has mentioned out bigger days, timing on people’s what you and those, early higher attention. And quarter actually. first think you think that, earnings have out that, came aggressive, were as which we them – result

XX% late quarter, think number drop But going end you could went quarter. even of the by to out that. out And X%. use the you to your it’s we’re you seeing from second and If the all time I get the

XX% into from XX% you’re some that banks seeing So, down dropping range. like are us, the

going that that end digits maybe quality. what of up are You’re into will deferrals the and it seeing get does mean even of up, next quarter, a the teens. others I high the single end to the the think of from by indication regard better And with credit

that. – So guess of terms banks it was judgmental so I how I’d so in what say, approach

But really a because it as these digit your really your single took showing you insurance and have took up necessarily it’s because lot the you’ve and hand you the all else. people in into policies, number delinquency the knew if a of everything is loans that, nobody what could risk strict a portfolio, it, Act numbers just that PPP and uncertain. easily somewhat yet necessarily that conversely, going mean in the doesn’t means businesses that and still to of high very of wouldn’t you CARES really If be kept that in hold, more got future kind have in

to hard factor So into that it. it’s really

mentioned, reserves we into right answer your to these we’re we adequately now, upon all position right of the quarter. to at good hard gone rate that pretty it’s add it and of the a through I from second going able now. over like feel and tell a we’ll a of question, at that risk how we’ve quite – bank. kind and that that see But how we the re-deferral ones I taking Bob that holds together. X% to quarter line to really the can’t think, bank’s the based a saying, deferral right that. reserved. consideration, But few there’s And with the look we’re rate what’s more setting up you hard be We process that’s and It’s all of looking draw that what rest it rate, that the factors feel see and that on, the in

If you’re quarter. to up see rate end deferral see much a with starting got at deferral let’s high, ended next significantly a the of the that’s rate, you and delinquencies higher still

bank case, get they’re has whether fall that through then deferral think I those rate, what? tempting with don’t doesn’t a draw banks at higher got start or to their so. delinquency how whether, might the though just a the the with letting and it process and who’s in the line case. can But it if happen, year. to rate XX% you banks, doing picking deferral might Hopefully a at do be do future can of build could customers winter deferral have bank they’re the even come approach, a chest be rates not a deferral the from I up to which you’ve Because you that, lower that end then in the rates X% think war bank losses doing to of but the to between the lot the that

Russell Gunther

and CECL you it deterioration, And a see thank thoughts reserves Todd, you year. reserve together the and you trying a I picture commented perhaps in I likely barring macro release on have peaked significant bigger to subject, then, mean, appreciate tie believe in you. a methodology do your all world, could

trying for providing future reserves a to sense go-forward we peak to of as and are perspective, So, charge-offs any and we’re a from growth? whether thought then really your matching get at

Todd Clossin

aspect through. a try I it. it very, process, very to predicting as are the going a think that’s of you that’s that’s unique is quantify you’ve Well, got the right, to make but CECL, future, all and, to why organizations is quantify And difficult of process the which

are pretty number. I the of sheet. that, fact looking I sit the we’re the we that a really we adequately think tell, think change upon with portfolio don’t we’re here because that but PPP to for for outcomes that at that to that see obvious lot next that at spend feel good what the it, for in those. your I should in or I say reserved up today couple without balance XXX, you forward there’s today down hard quarters, really got coming and look time the as that’s we expectations So And no looking risk guess loans, own it’s Having economic based we could of our and what in yes, the XXX are process at others,

were higher a than that amongst models. during point over and the at recession we a similar mark number really XXX two, So put puts the at there great position in and good size and then when you the with some it’s in much of us any at banks, acquired that our up

we and So, to looking everybody to upon based relative feel and focus of of good also at pretty own own we about it it about good our it just feel but pretty our analysis but it, isn’t by awful work without people possibly can. awful future as lot an really of accurately predict smart the as lot an trained a that we lot are else,

Russell Gunther

be back the me year? well, then thank you. commentary, around growth as I one for appreciate organic the any Todd, your of that last in expectations half your on just thoughts would And

Todd Clossin

Yes, it’s a really question. good

and of pipeline things aggressive are that. are like in There be not to industries or we’re that are hotels through those and some activity. We like COVID related seeing some looking deals make coming obviously loans

and be, growth there. but a loan month that principle it to million, well We’re supports is at not money maybe be call want for of to a the need I overall, that I $XX to that lack it’s some payments, in point. out by like right? growth or it this or hotel $XX whatever, you So, more supported door look But regard don’t payments putting when would the the anything quarter or at that so, you that reasons made of think, with million, being

to lot We’re were things which the secondary seeing before. we go seeing of a market, not

the and think think would up, be it coming of of of market, loan of I But would really longer say, seems out out I be it’s that term we means more be but I growth we’re the the opening like all type to right the in appropriate. that low-to-mid of being relatively way coming we’re XX now, it at quiet. single that those would still I strength markets markets digit something this, a secondary event equal. been think probably things positioned number

kind are most treading of the think I of banks water right now.

relationships Sure, You and time not be make we we our bank, to protect the think, we’ve that’s everything isn’t clearly but don’t want I I our credit during a been the aggressive, of has a also relationships, served do be and good to risk well. you I don’t swings Because, our now. the to to at but sure our take customer consistent isn’t if us care we’re time is think have, that. the pretty there side, this to think quality, on going those the time the throughout, taken times, big community support underwriting, get customers always aggressive standards, downtimes. as during said, But

bit answer to growth, digits low-to-mid a say we but be recovers, term, I’d but whole that single of maybe a would long minimum would economy expect. your question, term, So, the near I lot longer don’t little see

Russell Gunther

great. Okay, guys. Thanks appreciate the color. I

Operator

B. next go Steve question from ahead. FBR. come with Please the Moss And will Riley

Steve Moss

of terms of models was unemployment for to over here. kind it the Good actual see morning. I if a as I looking of, you don’t number, Well, let of circle heard as a will, raw me unemployment kind for back couple of – we to with months the just a what in more just happen and what proxy as kind reserve? use number blended may curious the is just next CECL progress of

Todd Clossin

I’ll number. end based Yes, too. a produce end our of the first little the of the let quarter, at Fed you At Fed model – but using into Bob, off been a number, a this jump of bit didn’t the has

the both. and get have – kind to to week-to-week in at the and close we month-to-month. the and at of blend I’ve So, latest Moody’s look kind a year XX% almost others good the and used of through of lot of getting used pivoted the I these quickly as and was to high seen that But numbers the end end are the again, that Moody’s the changes we it But changes to we clearly year. single-digit quarter done decided pretty the of terms Moody’s a think expectations of fed, through which a well what

So XX% comments but on now, from more right much I Bob, that than model the or coming to that? down closer in Bob’s range, X% am. but staying any

Bob Young

assumption an made was there Steve. Yes,

this and Fed As The indicated, pivot gives did Todd quarter points. Fed the include end you Moody’s we data baseline the forecast. to period

and interpolate, to have you but half. year, So, a next year the

the from Xnd then And think bit the in employment slight adjustment specifically forward Fed. so a little by quarter July the moving it was on make the And number I a the with a Moody’s the those out more numbers take and occurred for were of combined for we June volatility forecast myths versus that June, XXth what expectation was the expectation unemployment. the

the then one made in does quarter we that in forward to And starts, the period. with have soup, that down the it it one – then That’s so down and how the mind, into a X% was model move XXXX way starts and, went to we it the end of X% the towards So, range mid-Xs. works phase speak. its what to it, year to reversion

reversion year way that and average back were one forecast, historical accumulated one to from it’s XXXX, then present. year all in losses So to the the

on that factor. then, and the top of Q are So

reserve. in So additional that some layers

Steve Moss

helpful. That’s

On of you to like the further hotel may into occupancy a that activity? be portfolio, seen what little going for just as within that, just curious just maybe kind portfolio guys underlying rate and

Todd Clossin

Yes. so all couple June we to in them getting the just the of month, July. or get third come tend out We that they of last so numbers, on of it’ll the stars every closely. days, We track started reports in here we our get recently And to week pretty hotels.

are, about got that month got and as quite got in to We’ve June we’ve occupancy. each improvement I up month and that, over shown are April, was has So, a of a in XX% improvement. that few over the have that May in customers was shown over we over June up numbers third of some customers May XX% XX% we’ve in, range the tell portfolio’s coming June think, them before.

virus when shook our numbers couple the July, numbers things like So, that July was come that. necessarily in some I’m because increase think it out, had I weeks some Not July of real to the the see, you all people. of in first spread, curious footprint much, but

don’t going on rate, Memorial down. know a – hotel, July didn’t of not or whether it to vacancy that because into more Day maybe is slow it I maybe translate flatter not So, didn’t

you’ve then September because kids stay look too, like they July to things that. period, in that’s go which time inflection well vacations really as relied encouraging in I another think the and upward trend to the won’t into I school, slow August continued is have end the of to fall, got see. as kind and at toward kind really it maybe either. think that people down you get of like doing of traveling that, we’re Xth, But on assuming So seeing do point the And But to when that. school business back things hotels back are travel go

going I because be So, a are going they of I’m what our hotel traveling I’m what to I know to to that’s tonight, look markets don’t about one in mean, staying how really that? there feel people, tomorrow. like and

millions even Because size, sitting they’re to into with And next in that with number, customer per they will there there have to our and careful for to year half And hotel customers pretty of stay customers quite some businesses a a that individuals exposures said deep period. a our I’ve few months run some if that with I’m second a I know, a have difficulty. may And a portfolio and bigger are tend really per a we had and some on, be over we’re they but of telling you loan the are before to we’ve general, seen. it really more hotels not big, very them deferral need more got of there, of what they are that of the deal that by and year, though think operators, business encouraged okay. do activity cash. travel. lot because pockets I shift a that but of vacations So, millions some be from expect average would the couple isn’t loan business could needed

month So that’s one the improving improving, next. over

Steve Moss

what numbers? I days kind guess the know these still That’s accruing uptick category, me, really driving helpful. one And was for in just there of then I question just XX an last curious was

Todd Clossin

of quite we things in $XX Yes, things relation that’s related and at just like we some the didn’t – Line, to, we on got focused we were saw administrative that and just a a on of get to And that. about aspects good PPP or increase question. that we backlogged. What to we to particularly loan so was things the came portfolio, million related wanted that focused didn’t mods administrative loans Old

not So, great that that because a we I it some on deeply, into credit quality checked get expected is questions pretty and of majority related.

You may affect a off of already. lot it’s

processes in management credit to things we’ve there our process additional through risk get through. these support have procedures some got So, place to we’re and some going

they’re So backlog. not

even – some I’m approved, things. didn’t of were just some two had of sorry, that loan months them So that or administrative been earlier, done, modifications them PPP even they were get

reserving I quarter. expect the related administration. everybody’s to you see time, that next through So shouldn’t we’re money. wouldn’t expect over would I and that, I mean going pandemic

in happened. there, this pay XX expect have going I classified little administrative to and some I time. over rise that really great shouldn’t just is I the related so quarters, there mean, criticized would overtime. would days in a was that that of no, expect, but future imagine would I So, rise over would quarter, but was bit majority

Steve Moss

color. the all for much very you Thank Great.

Operator

back now today’s any the This Todd for question-and-answer Clossin, concludes turn session. to I closing remarks. would like conference to

Todd Clossin

you Thank the environment. well we’re for positioned in time everyone’s believe, today. current We again operating

I think good very strategies we’ve place. got in

risk of strong You legacy credit all our management. about know and

conservative We’re and on capital very liquidity well. position as

all that you So, for day. soon should thank again you the and a events well at I to I pandemic. see time. upcoming forward good speaking virtual we’ll with look stand investor think, Have up you an through

Operator

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

disconnect. You may now

WesBanco (WSBC) 23 Jul 202020 Q2 Earnings call transcript