WSBC - Earnings call transcript Q3 2020

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Operator

Good afternoon and welcome to the WesBanco Third Quarter 2020 Earnings 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]. is event this note, being recorded. Please now John Iannone, would like Investor to to over conference the Senior turn Relations. I Vice of President Please ahead. go

John Iannone

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

Todd Clossin

execution long-term current as our which growth to strong management, remain focused call, well as John, well-capitalized expense operating provide our quality. for us continued afternoon, on good remain you, On We pre-tax, going sheet, a commitment with takeaways the of from XXXX balance everyone. Key liquidity, results future solid are company-wide operations. well Thank both review strategies, credit we to engines and financial and an driven today our our strong the opportunities. environment, positioned today's earnings successful that diversified of and quarter on third delivered have we're for and pre-provision update we by the call solid the institution

by excluding during of pre-provision merger $XX.X control. of $XX.X quarter reported million the when are and our as year-over-year million income growth PTPP disciplined grew and fee charges. We third income we pre-tax, quarter-over-quarter income and with cost XX.X% performance strong driven and pleased restructuring net income X%

levels, remained On and of legacy our capital the our and returns strong and at slides same well-capitalized of XX be average respectively. ratios XX of risk our to on basis, we pre-tax, average credit X.XX% bank on averages. standards. low above credit well as favorable assets, regulatory our applicable key our the and quality Reflecting earnings seen Furthermore, ratios management, presentation, tangible also remain pre-provision key XX%, remained and peer equity ratios can reported

of August uncertainty X for with earlier economic to securities During assets we the we we We raise a replaces the last -- quarter, billion. defensive year. perpetual investment by and were announced well more Xth, community. couple in as X preferred our total to of from peer strong Tier movement the us third viewed provides the believe this measure trust capital initially risk-based The of greater million On capital a ratios. banks late leading Tier year, non-cumulative essentially preferred $XXX significant very very due Further, as preferred stock. raised events the capital XX that received required it than

needs more on center and financial the benefit flexibility However, August maximize of our provides to acceleration while with of our the the of no optimization customers. environment potential order plan better in Then align the have plans, our announced we XXth, improved preferences our uses capital we immediate us the operations this of to on shareholders.

customers, of consolidate and communities, transitions others up drive and we of across XX convert we're last by these quarter, million of occur As reflecting utilization half to total our two current to in planning the only digital majority Ohio, Kentucky, services the XXXX. Indiana, operating locations indicated anticipated during to environment, cost of of with a of the increased January, with states phased the consolidations and during million our gross $X The will significant $X.X Pennsylvania, first Virginia. savings West

at be communities financial to they opportunity will be given the the our and other employees proud continue last open serve certain positions I locations the six being our to centers. staff and above Importantly, of extremely customers consolidated nearby gone have months. to as fill and beyond during

another grateful Business their as they less addition time reserves million as charitable They've than one our appreciative Administration, for appropriate X,XXX payment thing supporting about our worry had pandemic local continue to Program well to during $X.X donating loan program. more pandemic-related the than organizations. assisted and ensuring Protection cash secure X,XXX through company Small In more loans efforts, employees effort customers deferral businesses from Payroll our helped the by provide

we've requesting the in XX-day balances stages as As and our these payment a Through borrowers. launch mitigate was initial those approximately help helped of relief through loan nearly from residential loans. continued affected impact to made to number home you to know pandemic. consumer May, X,XXX of equity peaked XXX mid-March one a XX% seen WesBanco these mainly during the were the customers offering first options not early efforts, banks including small total are of early loan second. the XX% our XXX of deferrals the loan of decline XXX Since initiatives to that deferrals of unprecedented COVID-XX outbreak, a Since businesses, we deferrals most virus mortgage, time, of

our speak and are the and down loudly total community-centric In now balances of to fact, are peak, loan May roots. These just bank X.X% total XX% deferral actions community since loans. customer

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

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

and threshold. the in region, with with we reaching billion century goal wealth Bank, old major we prior deposit including that markets. strategies was $XX consolidated are and management which Mid-Atlantic growth the Our back unique trust as demographics, the core our closed funding assets, office methodical organization total stages believe we expanded converted in infrastructure our to metropolitan our to allowed the of just size majority Line diversification positive business, our enhanced a and Last the Old markets internal are we crossing into with continued $XX pandemic. attain build differentiators, our of and associated key This advantage, cost merger plan, residing year, by the early functions of which lower asset billion in merger through leverage us to appropriate

Line plans our ensure focus said for internally all. of was introduce the the has of we after and closing of to continue products Old at opportunities, integration organic our the As of years next focus successful Bank, plan services not the previously, the on to systems own these prepare Mid-Atlantic and into expenses suite couple region, our changed to our pandemic core growth for And manage conversion. merger

adapted has well to ensure long-term success. our organization the Our pandemic to

flexibility expenses our protect strengthened reserves upside on We’re focused strong in focus strong the core levels that restructuring sustain better average environment; drive to a that's diligent maintained return mid-XXs structure shareholder allows profitability and demonstrated our the that enhanced strengths; while customers very our as assets and core our delivering downside pre-provision ratio on merger-related our of and and value; efficiency maintaining standards; a credit despite a rate environment on to operating low assisted to excluding capital pre-tax, we've significantly X.XX%, that revenues; operating charges. our interest communities, provide by offsetting long-term on

WesBanco accolades. pleased continues to also that national Bank I'm Lastly, to receive mention

being congratulate well quarter and to to hard Forbes Bank inaugural Magazine by to dedication large employees top now job done. turn Bank results. markets our a like being in a year, for Best workplace for call our Best couple over this both an ranking. to update them work, I'd Officer, thank Financial on Chief Bob for like personally by World's as Young, the of named a our were third addition their Bob? Bank their I'd a America's a earlier in and just Best recognized in as In we America and named Newsweek

Bob Young

Thanks, Todd. And everyone. good afternoon,

GAAP for low the three concerns diluted year, as restructuring issues charges across the year, improvement interest the accounting months strong increased. were of income the months net losses, continuation the quarter as $XX.X first last environment residential as the net otherwise rate $X.XX growth share the forecast share utilized credit CECL's first we for these were income of losses quarter, $XX.X economic $X.XX September for and third and year. the control, an Results and of $X.XX somewhat current compared per per the counts provision versus case, and last prior compared earnings During in of In merger for COVID-XX and share by the experienced and excluding mitigated reported then nine earnings record decreased we CECL the case year-to-date origination to on of and about to mortgage expected $X.XX per period. credit diluted the related and as macroeconomic our XXXX, for volumes, rebounding per months $X.XX nine GAAP $X.XX the reflecting of under impact expense standard. country, XX, share ended known pace million million Primarily of

assets for we financial to restructuring better demonstrate returns it pre-provision results, to is your on result, to and common excluding equity XX%, merge average As provide basis the to order important our and similar In periods tangible costs. improved a quarter of believe X.XX% strength respectively. income, evaluate and also comparability pre-tax, prior to the a related on underlying and

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

we Program we In for and borrowings, in for funded deposit on excluding continue of strong which excluding the was growth, total strengthen third deposit the sheet XX.X% as X.X% demand strong in the XX% accounts. deposits addition, as on When near-term Federal higher CARES a loan by loans, balance real drove on of as PPP X.XX% pre-tax, the SBA's rewards. estate XX% XX%, Bank as loan balance our XX.XX% Bank risks We loans is assets excess well-positioned the declined deposit Loan and and X.XX% a quarter-over-quarter, well and average reflecting rates, deposit, both basis, various certificates address with of stronger believe as of in tangible resulting growth organic liquidity, and Home was respectively. organic deposit Payroll continue which our increase operating Total basis, and quarter, average well equity returns our cost XX.X% do personal Act the savings demand X.X%. order and pre-provision deposit and through reflecting environment organic year-over-year, commercial Old of Protection Furthermore, the strong sheet proceed increase reported lending certificates reducing we and similar to and nearly year-over-year assets primarily reflecting total respectively. portfolios to book to in our properly growth Line growth balance year-over-year more total year-to-date acquisition,

credit remained non-performing loans and Turning total favorable quarters now with net loan between Slide X at levels bank of to charge-offs such due prior $XX our metrics quality years. as those for total XX. loans and low Key the with $XX assets, past billion to on peer percentages and prior measures and assets consistent as for averages portfolio billion

as We loan net loans year-to-date loan periods remained reflecting in to for quarter and and annualized and averages. basis loans and the favorable our at for believe the very strong addition, loans period. both points percent X remained classified the total bank peer criticized of credit to as average zero In third charge-offs quarter a compared year-to-date underwriting process, low

hotel to loans increase did due of reduced they Although occupancy pandemic. third of $XX downgrade quarter during the to from the the to million primarily X.XX% resulting due

we excluding cash and until deferral the industry monthly classification. hotel with remain guidelines, they ensure satisfying an Regarding in average updates them have our loans, as of they sustain loan reserves Act to support to and well downgraded have the the constant appropriate loan-to-value CARES hospitality strong TDR XX% Further, spring. next from as customers receive guarantor contact themselves

quarter of offered loans fair Additional review recovery from acquired order for value the allowance credit X.XX% and total are PPP for loans, in metrics X.XX% representing the related with was travel for decreased September and X.XX%, to credit ratio now market second and X.XX% various a the credit be are on assist viewed These the the losses portfolio in earnings second quarter's next slide deferrals macroeconomic excluding up of from may when Slide or of from and margin. year-end due affecting loans. on appropriate points provision quarter their million XX losses total select for information increases the and loans; of The adjustments net measures interest improved provision or At loans $XX.X can allowance presentation. XX, XXXX, total respectively. in situations significantly Switching markets, through until of in Key total credit portfolio waterfall $XXX.X previously to the quarter's be this losses basis Excluded approval to and coverage XX specific income million loans. spring. forecasts. in SBA to

significantly the curve. our As well points by net being have yield Board's XXXX and materially on lower margins negatively we CDs or Federal reflect this our funds rate partially new interest flat on Reflecting the seeing to aggressively rates offsetting impacted earning cumulative commercial environment, across in deposit repriced asset our lower July basis industry, since overall XXX costs, we particular, the federal short funding maturities target of reduced rates and higher-priced are lowered of yields are Reserve cuts as as relatively yields loans. and lower which rate borrowings, interest

loan implemented guidance recently for new also certain lender relative have floor We commercial to originations rates.

the decrease well X second as as margin for the Our benefit third X quarter sequentially a basis reported was rate interest X.XX%, SBA loans. from our efforts reflecting net interest point of a from just quarter, point basis PPP management

personal of banking on purchase spending. interest origination quarter-over-quarter due charges related higher X% $X.X XX% to when the during X-family basis XXX% net now the quarter, Non-interest fee quarter. to deposits and year-over-year accretion either due service our revenue. rate consumer addition, quarter mortgage experienced lower core volume, of approximately excluding was deposits margin accounting current increase this an by commercial higher partially growth growth, a a third income X.X% consumer X construction. and was in The income organic or to of the for million residential the mortgage increase income banking general offset quarter million, from which We'll interest to record home flat were points of to environment fees second X.XX%, Reflecting to lower purchase savings and low ended or primary and XX.X% loan income, benefit increase XX XX drivers the September $XX.X turn was quarter-over-quarter. fee In year-over-year swap were essentially mortgage

year-to-date evidenced efficiency points and origination ratio volume secondary which controlled while basis XX.XX%. which period, to prior on $XXX expenses positions XXX expenses. quarter XX% points up company-wide manage the efforts XX.XX%, dollars only million, X Third is of discretionary down record range the a market the basis was was effectively just a expenses, as of third XX% as XX%. marketing year basis historical a by a open quarter costs, of well to operating remained from sold to to through Briefly compared on Total operating was into

excluding only second operating the merger quarter fourth Old reflecting quarter discretionary of strong to third operating the environment. annual due current the total the in offset the million costs, for increases, from expenses, in Line $XX.X cost salary partially XXXX, of X.X% year-over-year controls higher increased merger-related Bank While by mid-year quarter,

to Turning capital.

institution For our for focused on XXX sound financial being WesBanco's the years, management and shareholders. a strong has

are further that ratios by of of stock the issuance capital which this above in regulatory standards, quarter well-capitalized preferred August. million have We $XXX significantly enhanced were

continues ratio As Tier XX.XX%. X as leverage improved earnings to ratio and we compared we XX.XX%, a tangible the would rest early for August, expectations to of on and in the higher thoughts equity be outlook both provide maximization meaningful Having asset pro a quarter. total opportunities smaller an and I XXXX, earnings estimates the the to time balance our providing in that sheet limited some size, Due significant current for of of preferred at operating reported capital provide X September risk-based future. ratios said the nicely a it tangible environment these Tier of during capital our difficult now consolidated of for offering that, strength, remains capital XX, to the potential unprecedented, the completed pandemic XX.XX% the forma to year. stock With fourth like to

affect are relatively years. basis asset-sensitive we and couple in somewhat rate the XXX of to X-month experienced a a near a XX-year bank, for March flat including between points and expected continued As treasuries, factors industry-wide least funds spread interest margins the subject long-term term, the at in overall federal net to next cuts environment rate of the

on actions margin, our and as excluding accretion, few during interest accreted the introduction non-interest assets. loans, deposit as anticipated of quarter costs pricing are third floors borrowing from it anticipate of seasonal the quarters, net by income. PPP expected decrease accounting Our mortgage anticipate to from XX In income is basis points now PPP interest total the we accretion occur lower We from asset margin few in on majority offset per we yields of forgiveness be by half to should into residential the in from couple revenue, during and as accretion quarter margin purchase generation with typical partially somewhat the commercial lower gain-on-sale accounting net have fees quarter deferred the loan to third GAAP new earning that well aggressive experienced we of our first slight points forgiveness loans, net next we overall points be reduce taken however, the may basis quarter. purchase due into X.XX% recorded a both down during the Declining XXXX. as basis fourth may the slowdowns a overall

positive believe continue delivering be will charges, currently our management will a compared on and excluding fourth leverage similar focus or the to maintain any expenses, quarter higher quarter. We restructuring merger-related third to and expense diligent as operating in range non-interest slightly that to

mentioned, regarding potential optimization our the million expected Todd staff impact savings As million fill plan, to which excludes gross center of to during the for of the are financial displaced any be phased open in anticipated that apply certain and XXXX, half $X.X of first $X cost positions.

with we and year subject criticized our XX% portfolio changes. provisioning. classified anticipate income XX.X%, this of changes general, We strategies. such as year to potential future should anticipate credit various for loan including provisions $X optimization other of to direction for our million be $X.X the employee addition, the tax to and metrics, well charges as In taxable primarily certain under In million macroeconomic approximately rate charge-offs, losses will to in of forecast changes component quality upon effective restructuring further to bode depend associated the increases the credit full plan. to economic Relative well CECL, however, continued recovery currently

dividend, first shareholders. Lastly, quarter, dilutive which will per a little earnings available stock be share than preferred we $X.XX beginning common declare less our in to will to the fourth

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

Operator

Piper Whitman [Operator Instructions] from will question be Casey The first of Sandler.

Casey Whitman

fees thus Can third how just And what one and like record housekeeping expect from in first the much Just you total remind to recorded you quarters? far second us you've on the participation? PPP. question

Todd Clossin

do Bob, want that? and ahead go cover to you

Bob Young

the Yes. the the income, to million, the $XX million. was will some $XX We're Casey, It's in table. some month, the -- -- month amount portion including million. I million per $X.X net was in it million of total total XX-Q. margin thinking million press be interest left underneath $X $XX.X And originally, the to fee it was release, And X%. the about I $X amount million experiencing is believe per It $XX

Now that that's the term. right will if obviously dribble away,

the in month in deferred forgiveness quarter Before deferred a as net increasing result of accretion -- would here the forgiveness. fee first in higher

Casey Whitman

coming Got guess that which know it. kind I of you kind saying? the sounds your in moved otherwise, like But from continue we Is just Bob, expect quickly Understood. up. all margin core I hold all to what guide, some modest together, income But you down. And of you're then, appreciate. should parsing compression through it margin accretion

Bob Young

rolls portfolio as a as And you larger if a if decrease, There's right. between from fair the a compared of loans year. little acquisition that as as forgiveness. well loans that X fixed helped after you an year a some -- no the adjustable assume forgiveness. bit having we're bit inherited reprice a then we anywhere PPP And years. little rate That's as beneficiaries of Line increase, and that well There's next assume of to Old of X of maybe amount off this peers

loans for what reason So see immediately quarter. them that, to Those is their much loans see second to diminution reprice the we the in margin we're But that's time why one we'll quarter as over in reprice those as reprice that said continue to going LIBOR. it's spread second. did in third depending to the as upon further sell compared having and didn't

and And so get XXXX PPP. beyond we you'll see proceed a as that more through little of bit

Casey Whitman

Okay. just Understood. switching gears. one more, I guess I'd ask

into are For downgraded the the do concentration then winter, movement? during as expecting that think there do mentioned the the of And I seen the geographic see you know any -- you kind downgrades through we've expect more Or we within we year-end? that loans was you could more head but bucket of hotel maybe were deferrals you bucket? quarter,

Todd Clossin

up we $XX And and hard the entire -- did Yes, did, million look went the we down Casey, was going category. ended through a to take we have an flow which what's we and regraded really real loan-to-value liquidity the really what continued continue portfolio, the the at then criticized hotel upon into And of took on the portfolio. as one-third on of graded that that's what flag like one-third forward. and based their do to and location go really analysis that cash how kind borrower we And based third and what's their is. and we a

good we've think a got we we're pretty read it where on So and at.

-- is key. view next the the vaccine to when that really going plan Our that, I assuming the therapeutics continue is to them the improve next get be and continue normal to at next to is to them That's get to able you to back to summer, do maybe mean, look to a get to spring little be summer. closer portfolio, want we there. what really

we at the some did and got support they've can of that payments XX, our we those need each in lot regard they what fixed of And support bank. which that one can position their of ability, that, XX is, XX, get we what many deferrals with of But might their to their looked then we've looked time cases, additional through months at cash is cover them months a and period. So they XX, in spring additional payments. and how cash worth also terms ones current fixed would at in between looked have

additional the the will don't of through right many months. we're spring now. to know that into that's get need them So going that period them process how deferral I

it we would, CARES Act. which As the it of long year, under as the falls we the do before end

you'll before. yet. of get But many do is next of So get maybe of point. a that get a just summer, really able don't a it's back what that's lot hotels think trying We is shift of and of permanently there's I bounce operated better they to what way to And to because just the be more kind them little which to on a disrupted maybe non-TDR. types to how clarity permanent by have we're that to in business, sense

portfolio. looks criticized million. of to we'll We're banks, around We did continue We dealing monthly good that where is And have this our I too, with It information operators did of contact we're that solid other step get the positioned. I've few resources and But reports. that some lot and monthly evaluate pretty RevPAR. a like we're portfolio, that's think bucket. big seen them. get STAR We lot about we which, So have get with occupancy, all And same in XX% hotel a feel get some case, $XX in about about this. a maneuver decent-sized we in the a portfolio. thing, the kind with monthly them. lot We a monthly loan-to-value. of also little abilities bit in fortunately, of financials. We very a all to now

also they’re get deferrals them we that develop to have little if maybe longer-term comfort as few to in takes reserves additional as the plan that. have with do deeper we and potential more get to a next the we end by impaired, to cash them. because of summer, So the that done then do they've need And year. think a do I we'll the ability got, But do the that long

Operator

The from with Will Curtiss next Group. Hovde question be will

Will Curtiss

a activity, of seeing what your loan sort business are I'm your from expectations markets near-term Todd, and perspective for demand in what growth? curious you're loan

Todd Clossin

year. pipeline, I just at bit last we quite bit were up I and and it, just When last last because time little is the Board a of we talked at down but each this X, look we reviewed still Yes. had it's this X where is day the pipeline a over our meeting months, or about a today, over

Line, XX% year, have Now now this than time So Old didn't year. bigger we we're time bank last right? we last were this

year. our today that last consideration. was take into bigger So at this But time than pipeline is kind you of it

are we're seeing there next amount the in the path talked but things environment many you're looking months uncertainty; that that's what So like a else. kind pretty regard will the now? with said, right Why much of virus tends to loans. are where months, they've you that X to bode regard X still is can't don't there, doing in now We're what's opportunities next out every it of well. that X months? said, estate, And why I've could and in Maybe other And wait wrong that. We're fair customers of So that's that very doing we're at given. times until being next to I a question. very, spring. particularly -- to mean this has hotel with like? months we a look go pretty in and you of careful real say yes, not how of to everything type on do that, But going case, of kind good types anything the I X any

I it next it think, to than lot for and -- them, quarter third underwrite, I a now. So right easier second told it does makes us

of year. a number the haven't in moved those later the to in So have gone moved to away, later year. They they transactions just types of

growth get I'd But be would lot be I of Not out quarters, next but do our think X, bank for the returning loan some think when the there. expectation, definitely some growth tend we've of in Louisville, next believe years I to to the to markets, to we've low I It's And then couple our cards. so tended got pandemic. to worked this, bounce see to pent-up and puts I necessarily continue going So we'll don't more couple takes, Lexington, to those XX flat. position a But higher-growth Mid-Atlantic to have And over that growth. in prior bank to legacy back that levels. you're And to to have mid-single-digit And lot the do coming back longer going to that rates tend of upper single-digit, itself is markets And term growth that growth should that we there's last out will more just loan those to sort markets. my of of lower rate quarters. of the the that demand. a normal, I definitely hard mid-single-digits. double-digit think mid-single-digit of think the the in our

And acceleration things is down balance this taking would expenses, into and out yourselves half care protecting your a year doing XXXX, that your a and us the of compete my pretax, lot really shareholders, your I XX a think bank good safe, liquidity, strong, I lot that's banks. have those see with the of little of a think of that it's XX, to then. customers, loan more see. months to before around All in necessary and next come I'm of that that. some be That's on services work using you'll really the a That's too, capital, growth focusing momentum, good new PTP, markets, expecting second kind like a of keeping right the pre-provision we're handle on safe, employees when and us opportunities earnings long-term I what to to and more them the to things on allows products controls protecting if to with be of bigger start expectation digital capital appropriately, on sheet, core away. keeping your your side, not driving position

Will Curtiss

mentioned gone year? until be of the that things delaying you may efficiency that next that you've think Is through the into last know And higher heading as lately, then of year. that maybe I I some considering there some you are Let's you've as next initiatives expenses the other opportunities identified marketing case? kind quarter, level, of or still see.

Todd Clossin

Yes, it is.

marketing a anything that. focus to X, X the in that, in we branding, colors were now, and new the years On anything additional -- some We brand delay to go year. just because X, logo or may weren't or back vaccines year. discretionary do on did some next newer side the not But we major we're on regard side, markets we some of that clarity on the going we next additional and lot pandemic spend but like get and did. that ago. hold half of not out virus all We're to that. into We that going second and the had until into on delayed Right a that money of is with

there major embarking initiatives us other I see we'll year. on you get this. of any not you're think side until in the to expense to So be a going And

the of with We're delaying also continue. our hires. then efforts think, regard where I some selective own our with replacing So expanding away, is Plus being quite and well, announced And a going side lot automated. needed. the the forward aren't work with on We as plan of we're branch basically frankly, of becoming with. too. that manual cost helps there's us expenses, And very those that to and new optimization would core, We're staff. that we moving

pandemic continue the of we lot infrastructure, frugal keep and the a So there company a digital And where now And belts going spending I risk tight. there, that. on allow right management to But begin we there's to working kind need out and to that things with. with our there's are to we're activity are out cyber. cyber side things a support remote pretty us of lot of think, like and to

So we're where invest we to need continuing to.

the always our we that. to sure efficiency any ratio to of there plan over discretionary But losses don't maintain pretty And the way by out cautious is we're get and that careful. We're any And ratio. want do to so until we necessary manage through mid-XXs pandemic, up say efficiency and that continue the to blend still it of a making of in in much would of to we be mid-XXs to side we've that. a be would was to a try if that -- I'm you to plan, company. going just make is billion, type see be proud get other going Our able expenses you spending that come to very investments. $XX to today And been this

feel items. kind think more of stuff. to down, discretionary those start reserves You you you of I on coming can And that want see then spend some like all to

Operator

The Russell question will Davidson. of D.A. from next Gunther be

Russell Gunther

appreciate on bottom follow the what the the expectation? And the Is Based drop just thoughts, would to conversation. Todd. line. on expense like savings said, rationalization branch to cost up your the I seems it the that from majority of just you

ToddClossin

going and too, side well, on there as us but of our technology few huge, think but or the -- of businesses them some really fee-based are hundred to allow to revenue. Well, here some thousand mentioned with more I generate a position us will, better nothing that particularly we're making to spends, some

come to it's -- in million, $X close to $X.X going not So million.

it. line. that So bottom that in an end the on this some fall but all isn't positions up with at what most remotely carefully. and do it's saves. number other now. of those point And to, banks day, manage will that. we more The in right the with to to exercise things at hard in to some very of employees there. plan that will company, expense the of watching line, takes looking good things month-by-month $X drop here. have But are to not this although We'll and But it at and how kind go $X.X actual with and end of portion as up was efficiently million, not we're And bottom not then we're internally more the That's things through million end doing put it or the you formulative that other we're got we've of that puts like I a much are the very still quarter-by-quarter. effectively, regard stages. fewer people -- should can kicking And that's around

Russell Gunther

think of could million be $X.X it that? it about falling is fair mean I to north billion bottom Or at $X least XX% that of line? to the

Todd Clossin

have we on kind I that, But coming things, I'd end million, to I be board out additional will up got answer It's merit if to the to be bottom your that obviously, we there that $X some do line. going increases do disappointed things and or I question. half of $X cost year. with want at that so us don't falling But that of like million. next expenses as out don't think I there, think look don't I that see that's it's anything not just

Bob we that and of So We the so there, we would we would out the be. be to see expectation reason that's at against argue those bound. talked it give about, kind be that's don't what of see just to expenses. think my as an upper of any but don't out to expenses on guidance But our kind normal rate. speak, look there, we have quarterly what that, some They're going have run guidance are we I

Russell Gunther

I up. on the appreciate deep that hotel diagnosis in criticized, then No, the follow Okay. portfolio. migration classified done the And and

undergo at to other the forthcoming? was First just about in just pockets that remain of you hotel CRE, portfolio part is, due trends from loan that it of there are criticized, there? whether And majority that a hotel, movement? other the have concerned discernible to for classified be deep investment dive that exposures example, risk be any were increase yet the was may if may the primarily this there of Or

Todd Clossin

to the big We little operate that's with in virus. don't going projects businesses concern is a with we got have We and Geographically, whether $XX even we have a movement all part and Yes. I’m -- maybe but to these so restaurant big there, And where seeing lot office, Watching of don't We close for even don't no one transit areas, -- a portfolio, get get are those. to that's that. metropolitan that property kind just that. other I and franchise. everybody major But them be in to I we geography in that maybe, of don't see okay. be down think situations to not office too, not have term, right But me, longer No, side, building. on the or Yes. Casey, don't for didn't of the aspects remind really spread just the -- things. seem real front of portfolio. some that to assisted-living the have that had throughout because industry estate hotels real up the the I going It's center impacted stresses office anything are of things have to us. be on answer. deal order question, hotel multi-family, are a to million there's the because in have by portfolio that into differently, type people big now be We of we're have whether don't in holding the financed, an to whole a bit don't those a pandemic will mass the deal

Our car our at get it's you that in have issues, and right? market markets drive they're we second-tier their call in markets minutes because transportation terms them of in, people size, hate in are and we're don't office. -- to look I So XX when second-tier mass they just their

I we'll be somewhat So that. by think protected

side, So of I any almost no deferrals that see any don't second virtually those. we consumer now. on of on the And round really have right

putting up the anything see industries, that's of or living or stretch what portfolio, either. growth. you're don't And on be some or these XX% with also in is, X in you've double-digit show the up popping it's can mean right? good there a loan is think and then couple in whether I next loan or there we and years, case in I I operators, mid-single-digit across industries, think for how will in it's an the would quarters loan-to-value we So at loan-to-value say say, XX% But last you industry had we that, of on didn't positioned can I a again, there XX% be anything. And see got the you low can you to office weren't X being growth I entire of that I you lot can over or our XX%, mean flexibility. an be assisted whatever

positions our pretty to it, industry -- think weren't you our know bit loan guys kind for below areas, Boy, ought growth in of criticized pandemic. in give of when we our puts in multifamily. of in loan in some reaching part us we this the the well we’re dividends pretty little direct. were hotels be really pruning we're how with, of portfolio big So a because And I because shale-related to pruning careful because us underwrote We're the that's cautious of We're averages. it we're -- terms we going pruning coming portfolio. was growth some was back pruning explanation forward some

positioned but of out also of are some not that's in really really performed that how even well, I of think because well portfolios, positioned still many well. of I'm fall going partly we're portfolios these COVID some sure losses And the kind we're are just my So to comfortable. portfolios impacted, really

It’s and but it. we're more just not more we're if else be conservative. challenges, could that's we because just because we're Now because expect It's there reserving everything as conservative.

Russell Gunther

that look appreciate the from just point might and I Todd, perspective me for all you a last for buyback question either thoughts be on And thoughts could you us what when again? guidepost then, macro of to you'd would be around that. an resuming WesBanco the general option or for

Todd Clossin

Yes. position And right want as We here the average And got on manage I'll we equity. of have think the capital the chime with tangible hopefully out coming to we we're that the common bit too. of little we've capital. expect to a well, pandemic, lot a have Bob return capital to let and would in position going that that to

that carrying of downsides there good understand in So times. a we economic are lot capital

well-capitalized overcapitalized. be mean want doesn't well-capitalized You but to

during the time think before So hit. we into only mode. months that Peers expansionary back out move maybe this back of X stock. buyback pandemic were started were X%, year we'll about about doing We slow a a to opportunities just of X.X%. the to We coming buybacks have or period. We start X.X% bought do our

to you'll of terms we did. than line back buyback things, look about just about large banks, It's X% really to side the side to a got once But more reserves area When the But things being buyback activity. get kind to of rules I they've back you view. this. expect us other any before around be obviously, we those conservative Again, really other I with have they me And pretty We right in But get we now. this into our our it can't prudent. could So significant and in entering buyback or would in those I the banks, buybacks in quarter that's the -- ourselves but larger do at that more it's peers bought coming that to -- to to serious that's all first. activity the be we get rules. types down routes and two. see want premature, I think don't would of of time think see would do others activity. bit of next we goes get

Operator

next from The Catherine is Mealor of question KBW.

Catherine Mealor

on variable? mentioned portfolio of up you follow percentage you fixed Bob, us of margin. one fixed Can is rate benefit what from you Just your percentage that the loans. a larger versus remind

Bob Young

the of the on commercial on business in XX-XX [$XX $XX of thinking totality you it billion, side. the Were terms about side, billion]? of It's the

Catherine Mealor

that Yes. helps. If fine. Yes, this is

So you're saying XX% fixed.

Bob Young

Right.

Catherine Mealor

it. Got variable. XX%

John Iannone

commercial It's Bob. and XX% XX% This portfolio. in variable is fixed John, Catherine. the about

Bob Young

And on variable to time that of some John, piece, opposed that for immediately. Thanks, correcting. sorry. over I'm as reprices

Catherine Mealor

the the the of at can fixed kind us you you repricing downwards? of to see maturity schedule of sense then to part, give which as And Great. help those kind loans a pace

Bob Young

a that's is bit longer that, generally, little portfolio. duration. got a That Yes. But X assume should about you to X.X-year

Catherine Mealor

kind -- we provisioning directionally feel the peak we're number? we nearing of And asset to kind mean where on Great. your bill given built now. and you've would reserve kind credit most lower more And as environment your will like you And into the significantly, classified of quarter, when got the big you've change, then of another relative of follow up from what's But say, and this risk, came like -- your quarter, see? I look of you -- just as do the more assuming reserve really change what like credit. movement. level next Feels the in in economic reserve a a doesn't I level feel maybe reserves? sense do of

Todd Clossin

working on lot spends time credit thing. Bob of with a the CECL

let answer the the very start think and adoption first quarter. out the is in the CECL of big at much thought we this I'll part expected him was of the a playing that pandemic, But So way had I we it.

regard you're First a the out. back a down and of bringing where kind in to a maybe degree, where based you're expectation to mid factors quarters definitive time with playing the two, kind or reserves then everything big how 'XX quarter is the of do And kind of you’re reserve what going maybe been do then situation and CECL quarters. of second is later but very around some 'XX. of part off macroeconomic of third, to unemployment And can overlays of the period it, can't that you seeing part second those That's -- quarters you're and then make quantitative. on heck is the and a that. but kind be the big a of overlays even we are in out sure always for document were 'XX, for of part build put we in to of kind And of

there's to So that it. lot goes a

So now, go know. has that to from transpire that don't into lot yet. days there's because XX a it will we

of to had through three number. But hard doing think would around Bob loss and that's first to are estimate be clarity or would we directionally get then than might our things view that pandemic but kind the the portfolios. I know other you be at expectation beginning start a any you what of that similar is that what once in of Bob, quarters banks the it. reserves potential a building two it's So lot and I think really the what kind that, on you add? and the different I of of releasing reserves just any you're

Bob Young

think currently. we're consistent thinking that's what I with

more see it where that version provisions see XXXX, would first announced, the the some seems some is have have I less some have just look been pace in of of industry particular to other case not provisions of will again, at still recoveries. replacing, playing I reserve if you releases, quarter There upon of zero depending that's you net an want before releases think might true the charge-offs whether out. would negative or certainly that below pandemic you by but in charge-offs for you you're the macroeconomic industry-wide the that go as forecast that envision factors, banks. provision that negative you you the back qualitative way half than be to is one

I experience. think, a So path is that later, to

near the those our book. reserve the we national in did around Just macroeconomic term, pandemic, of down. unemployment this the are pace quarter uncertainty the to hotel forecast, factors the the add the primarily judgmental rate as added terms of And for we that two came for

less unemployment did a showed with charge-offs that the than sensitive also national study to us third-party is that We rate. a unemployment related and our region

the here, in offsetting a an was directionally the year, and worse, absent would for from that so middle for run. the the would factor. think taking next charge-offs positive not short be until, And But the say, pandemic industry of lower provisions you turn

Operator

& The Scattergood. next question Bennington from is Joe of Plevelich

Joe Plevelich

the question, think down M&A plan align was but are couple road possibly My then of about or valuations and the down. to game years whatnot,

of a trying lot for really your And I to just You if excess appetite something strategic got capital. M&A was here? came along gauge

Todd Clossin

year -- very the own XXXX core of well is And this is in our plan Bank. the the still looking is in gone things. just it XXXX into is our year Old Kind the Line now. the of no. initially is same that's think at interested We're Line, I and answer integrating as pandemic Old not of going conversion.

change perspective. the from at So didn't all pandemic that really our strategy

a a own kind know or to we and of It's getting this it. making just it's that kind think And minutes I to kind really X XX -- don't with talking to you guess with and of just understand business. granular that of price I you discovery. me, else's. of spent mean real bit we don't it do sure difficult somebody our do like just about how it's get I portfolio in and

side a bank you're as not if to we of a not the of and times, would But to say ready to they last of the lot you would want purposes. to now, tend even just So our buying, buying. to portfolio to type price to also, years. portfolio the just go that get buying me the knowing that would company other need what discovery we it bank were the this get for in extent timing buying we have you're you're of portfolio can't XX that own every -- it's you're the of bought And I

at pretty really well too. and our And how about think like we're rapidly So time do those a and are price. things what's you to really any go underwriting in conservative know the through right acquisition as in expand price, out to this also

not past expect pretty earnings something, capital and to bank that think, you our -- right and do we we're as you we're years, with we we've the built get X-year to infrastructure everybody and to doing it time level in get X, have and our and once now. if us that have in new the get and anything opportunistic. I XXXX interested So strength XXXX a XXXX. going into do later earnings is But again, the and management potential through not into the be you And overpay. could there out But I time exciting for looking think core, period we're that team

or year. know, So next year it's hard to but we're entertaining not really this anything

Operator

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

Steve Moss

criticized to for [asset and flow] the regard up follow just and reserving one classified. Just with

in percentage in color and or Like it about or criticized sensitivity one we moving a to helpful. there as loans the way reserve? Just of Any terms wondering, would think be decreases of general the just what's kind increases the a XX% Do of other? classified?

Todd Clossin

Sure. Bob, do you to want with ahead go that?

Bob Young

So $XXX tiers of million add C&C generally Currently, the commitments. $XXX sorry. with the Steve, as million increase. reserves you $XXX total about that in -- It's there I loans have or when million, million have speaking, C&C we we $XX associated result -- in as additional recall,

blended that both a dozen million quarter, based But main Moody's, macroeconomic of a particular of basis, one increase more, if factor. more could $X our you dollars integrate scenario. in factors, model different million that for Reserve and loss be So that granular -- had portfolio. a between driven million we And the a and the baseline and forecast that of the is of default qualitative. a to upon probability determined couple And Federal use quantitative model on all that's $XX default a to

number C&Cs. that model that's what this anticipate the just criticized we with And assistance as of There's said, then and third-party So well. to used But quarter, as it's other into particular factors classified. happened to not go a qualitative some I try you have you aren't delinquent. that of do the judgmentally for effect when what and the the the pandemic modifications factor does the non-accruals, that that part, additional be would We've done How most past. that aren't yet criticized aren't in? classified, in

This to used the third-party with that. into model a us infusion for a assist quarter, we mathematical

that Sorry, of a lot was words.

Operator

of question from Preston Inc. will Brody next be Stephens, The

Brody Preston

couple a Just have of questions. quick

need plan for sorry keep if is, just just deposits this. touched I PPP? liquidity with feel it running -- other Just guess you until them reasons strong you run-off as you’ve like as off growth But to or is let on as post CDS the

Bob Young

That's correct.

mature. addition, CD are staying very years relatively XX CDs as are ago, occurred short low. In Industry-wide customers, rates our as

people go out so want the than a X%. do to And most X-year at curve and less CD don't

trying So service continue competitive or We're to the be CDs to as to rate we're are not on front. customers. going our run-off. shopper CD those single see rate About XX% of

also CDs higher accounting cost. Old which were from the purchase We on have Line,

Federal borrowings. And then to factor, so And pay factors is Loan use Home I the run-off. ability down those as liquidity important more to excess in our the Bank that think,

coming did here end of what at we took borrowings line deposits. experience liquidity large generally Recall, had we thereafter, And at for quarter. including basically off that. is everybody the rapidly. customer extra very the additional shortly And so paid some banks, for first down provide was to about except cost which half of We not advances, that down Act time for the getting or CARES we that needs, PPP their

awash banks in So liquidity. were

early generally, or that down so while another We've those each next to them to year, quarters. mid paying X% of And X X months, of we'll year, the Home And for million couple some Federal at X Bank next borrowings. X.XX%. next got be of hundred off replace began least they're the next off. coming we And we quarter X paying mature the Loan over

Brody Preston

just modification you I Bob, Thank extending deferrals do helpful. you all additional maybe at point? one periods for those second And Or hotel Are would when end? then those that further? guess, color, guess, deferrals. one. consider I And The very those this last

Bob Young

can the it you you extend mean as do year. long I the further of as end Yes. them before

So of that's mean if everybody the interest run part next need for some or or and you wanted comfortable auditors, an that are interest-only that Act it, whatever CARES option that. I through that's an middle to available. with the with regulators, those provide principal that's of year

So X if it. do comfortable summer that, got TDR. next those kind get even about that, treated and why That's can and is watching be have do at feel we're you them of a of you the really next quite and months to months, this you've so beyond needed lot customers where frankly, over not X to or opportunities because to as I

got You and But grade get there to options them them all appropriately that. to are there.

needed. know So need that would kind month of or know But be two. is will next this be if they any, there more what that that don't over We'll point. of option we deferral. that at an will If the extension there, second

Operator

to the conference any This concludes like back question-and-answer over to closing turn remarks. Clossin our session. I would for now Todd

Todd Clossin

real Yes, we just very about, still quickly, talked strategy Thanks. the as intact our despite pandemic. is much long-term

well prepared, of in any kind operate to think, environment. We I are

talked we now And well-positioned helping that. I that And the think we're as us think a about too. for lot that's pandemic. I before well right

be we that as growth in what be a is to that's continue good want work and hard stock conservative, but own viewed towards. of to environment, also any and a to organization one We type we

hopefully, So might It sounds But I thank for your this it stays to, time everybody safe. really everybody a to few a look be at more like forward And yet. future chance meeting. afternoon. a hopefully see you months given

Operator

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

disconnect may a great day. Have now your lines. You

WesBanco (WSBC) 22 Oct 202020 Q3 Earnings call transcript