Q2 2025 WesBanco Inc Earnings Call

Conference Specialist: Good day, and welcome to the WesBanco second quarter 2025 earnings conference call. All participants will be in listen-only mode. Should you need assistance, please send to a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad. To withdraw your question, please press star then two. Please note, this event is being recorded. I would now like to turn the conference over to your host today, John Iannone. Sir, please go ahead.

Good day and welcome to the West Bank. Go second quarter 2025 earnings conference call.

All participants will be in listen-only mode.

Should you need assistance, please send your conference specials by pressing the star key followed by zero.

After today's presentation, there will be an opportunity to ask questions.

to ask a question, you may press star then 1 on your telephone keypad,

To try your question, please press star 2.

Please note this event is being recorded.

Oh, now I just turn to conference over your host today. John ionone sir, please go ahead.

John Iannone: Thank you. Good morning, and welcome to WesBanco Inc.'s second quarter 2025 earnings conference call. Leading the call today are Jeff Jackson, President and Chief Executive Officer, and Daniel Weiss, Senior Executive Vice President and Chief Financial Officer. Today's call, an archive of which will be available on our website for one year, contains forward-looking information. Cautionary statements about this information and reconciliations of non-GAAP measures are included in our earnings-related materials issued yesterday afternoon, as well as our other SEC filings and investor materials. These materials are available on the investor relations section of our website, wesbanco.com. All statements speak only as of July 30, 2025, and WesBanco undertakes no obligation to update them. I would now like to turn the call over to Jeff. Jeff?

Thank you. Good morning and welcome to West banko inc's, second quarter.

2025 earnings conference call.

Leaving a call today are Jeff Jackson, president and chief executive officer and Dan Weiss.

Senior, Executive Vice, President and Chief Financial Officer.

Today's call an archive of which will be available on our website for 1 year contains forward-looking information.

Cautionary statements about this information and reconciliations of non-gaap measures are included in our earnings related materials issued yesterday afternoon as well as our other SEC filings and investor materials.

these materials are available on the investor relations section of our website, westbank.com

All statements speak only as of July 30, 2025, and WesBanco undertakes no obligation to update them.

I would now like to turn the call over to Jeff, Jeff.

Jeff Jackson: Thanks, John, and good morning. On today's call, we will provide an overview on the integration of Premier Financial Corp. and our strong Q2 results, as well as provide an update on our outlook for 2025. Key takeaways from the call today are earnings per share of $0.91 when excluding merger-related charges, which was highlighted by a net interest margin of 3.59% and year-over-year fee income growth of 40%. Solid organic loan growth and a foundation for loan and deposit growth during the second half of the year. Successful customer data systems conversion of Premier Financial Corp. I am excited that our Q2 results demonstrate the success of our acquisition of Premier Financial Corp. and strong operational performance. Our larger organization delivered solid sequential quarter loan growth while driving positive operating leverage.

Thanks John and good morning.

On today's call, we will provide an overview on the integration of Premier Financial and our strong second quarter results.

As well as provide an update on our outlook for 2025.

key takeaways from the call today, are

Earnings per share of 91 cents. When excluding merger related charges which was highlighted by a net. Interest margin of 3.59% and year-over-year fee income growth of 40%

Solid organic loan growth and a foundation for loan and deposit growth during the second half of the year.

successful customer Data Systems conversion of Premier Financial

I'm excited that our second quarter results demonstrate the success of our acquisition of Premiere and strong operational performance.

Our larger organization delivered, solid, sequential quarter loan growth.

Jeff Jackson: We also meaningfully improved both our net interest margin and efficiency ratio, further demonstrating our focus on operational excellence for our shareholders. For the quarter ending June 30th, 2025, we reported net income, excluding merger and restructuring expenses, of $87.3 million and diluted earnings per share of $0.91, an increase of 86% year over year. On a similar basis, our Q2 returns on average assets and tangible equity improved to 1.3% and 17% respectively. Our net interest margin improved meaningfully to 3.59% due to the benefits of the Premier Financial Corp. acquisition and our continued focus on loan growth and strengthening our balance sheet. Our efficiency ratio improved 10 percentage points year over year to 55.5% when combined with our achievement of our planned acquisition cost saves. Further, we realized strong growth in fee revenue of 40% year over year, driven by the acquisition and organic growth.

while driving positive operating Leverage

We also meaningfully improve both our net interest margin and efficiency ratio.

Further demonstrating our focus on operational excellence for our shareholders.

For the quarter ending, June 30th 2025.

We reported net income, excluding merger and restructuring expenses of 87.3 million.

An increase of 86% year-over-year.

On a similar basis. Our second quarter Returns on average assets and tangible Equity. Improved to 1.3% and 17% respectively.

Our net, interest margin. Improved meaningfully to 3.59% due to the benefits of the Premier acquisition and our continued focus on loan growth and strengthening our balance sheet.

Our efficiency ratio improved 10 percentage points year-over-year to 55.5%. When combined with our achievement of our planned acquisition cost savings.

Further, we realize strong growth in fee revenue of 40% year-over-year driven by the acquisition and organic growth.

Jeff Jackson: These are just a few proof points of our strategic positioning for sustainable long-term growth. This quarter's key story was the successful conversion of the customer data systems of Premier Financial Corp. and the Trust Department. During May, we transitioned approximately 400,000 consumer and 50,000 business relationships, along with the branding and operations of approximately 70 financial centers from Premier Financial Corp. to WesBanco. This seamless integration was the direct result of the strong collaboration of all our employees working to ensure exceptional service for our customers. We are excited by the customer reception and retention to date and are focused on building even stronger relationships with our newest customers, businesses, and communities. Reflecting the Premier Financial Corp. acquisition, market appreciation, and organic growth, our trust and securities brokerage business has grown into a $10 billion investment business based on assets under management and securities account values.

These are just a few proof points of our strategic positioning for substantial long-term growth.

This quarter's key story.

Was the success.

Data Systems of Premier Bank and the trust Department.

during may we transition to 400,000 consumer and 50,000 business relationships, along with the branding, and operations of approximately 70 Financial Centers from Premiere to West, banko

The seamless integration was the direct result of the strong collaboration of all our employees working to ensure, exceptional service for our customers.

We are excited by the customer reception and retention to date and are focused on building even stronger, relationships with our newest customers businesses and communities.

Reflecting the premier acquisition.

Market appreciation and organic growth. Our trust in Securities brokerage business has grown into a 10 billion dollar investment business based on assets under management and securities account values.

Jeff Jackson: Combined with our larger customer base and new treasury management products and services, fee income totaled $44 million during the second quarter, an increase of 40% year over year. Our focus is to grow fee income as a percentage of total revenue over the near term as we offer our products and services to our newest markets. The strength of our strategies and teams is reflected in our performance, with total commercial loan growth and organic deposit growth continuing to significantly outperform the monthly HA data for all domestically chartered commercial banks. For the second quarter, total deposits organically increased more than $800 million year over year, or 6%, fully funding organic loan growth. Importantly, this growth was driven by deposit categories other than certificate of deposits, as organic deposit growth, excluding CDs, was more than 5% year over year.

Combined with our larger customer base and new treasury management products and services. Be income totaled, 44 million during the second quarter and to increase over 40% year-over-year.

Is to grow fee income as a percentage of total revenue over the near term as we offer our products and services to our newest markets.

The strength of our strategies and teams are reflected in our performance with total commercial loan, growth and organic deposit, growth continuing to significantly outperform the monthly ha data for all domestically chartered commercial Banks.

The second quarter total deposits, organically increase more than 800 million year-over-year or 6% fully funding organic loan growth.

Importantly, this growth was driven by deposit categories, other than Certificate of Deposits.

As organic deposit growth, excluding CDs was more than 5% year-over-year.

Jeff Jackson: While we did experience a decline in deposits quarter over quarter due to normal seasonality and the intentional runoff of higher cost CDs and less reliance on Premier public funds, we continue to expect to fund full-year loan growth with deposits. Second quarter organic loan growth was 6% year over year and 3% quarter over quarter annualized, driven by the strength of all of our markets. Further, total commercial loans organically increased 7% year over year and 4% annualized sequentially. Our commercial loan pipeline as of June 30th was approximately $1.3 billion, with roughly 30% attributable to our new markets and loan production offices. In the three weeks since quarter end, the commercial pipeline has grown approximately 5%. Based on the current pipeline, we still expect mid-single-digit loan growth during 2025.

While we did experience a decline in deposits, quarter over quarter, due to normal seasonality, and the intentional runoff of higher cost CDs and less Reliance on premiere.

Public funds.

We continue to expect to fund full year, loan growth with deposits.

Quarter organic loan growth was 6% year-over-year and 3% quarter-over-quarter annualized, driven by the strength of all of our markets.

Further.

Total commercial loans, organically increase 7% year-over-year and 4% annualized sequentially.

Our commercial loan pipeline as of June 30th was approximately 1.3 billion dollars with rough roughly 30% attributable to our new markets and lung production offices.

In the 3 weeks since quarter end, the commercial pipeline has grown approximately 5%.

based on the current pipeline, we still expect mid single digit loan growth during 2025,

Jeff Jackson: Recently, a cross-market team from our legacy Columbus and new Toledo markets masterfully supported a shared CNI client throughout the customer data system conversion through a strong partnership to deliver an exceptional customer experience. The team created a plan that ensured a seamless transition for this critical client and worked tirelessly across business lines and geographies to not only retain but also grow the relationship, securing an additional $10 million deal in Columbus and an additional $25 million deal in Toledo. This is a great example of the strong collaboration across our teams to support our customers and communities. We remain committed to making strategic investments in support of long-term growth. We have recently hired a strong seasoned team of commercial bankers experienced in the healthcare industry to expand our presence in this attractive sector and bring tailored solutions to meet the unique needs of the healthcare clients.

Recently.

A cross Market team from our Legacy Columbus and new Toledo markets masterfully supported a shared cni client throughout the customer data system. Conversion through a strong partnership to deliver an exceptional customer experience.

The team created a plan that ensured a single transition for this critical client, and worked tirelessly across business lines, and geographies, to not only retain, but also grow the relationship.

This is a great example of the strong collaboration across our teams to support our customers and communities.

We remain committed to making strategic investments in support of long-term growth.

We have recently hired a strong seasoned team of commercial Bankers, experiencing the healthcare industry to expand our presence in this attractive sector and bring tailored solutions to meet the unique needs of the healthcare clients.

Jeff Jackson: The team has already had some early success, and while still in the early stages, we are excited about the potential opportunities they will bring. In addition, we have continued to expand our loan production office strategy into two new markets with strong demographics and growth potential: Knoxville and Northern Virginia. In Knoxville, we hired a couple of experienced bankers with a long history in the market and plan to make additional hires this year to build out that team. In fact, they have already added potential deals to our most recent commercial pipeline. Our goal over the next several years is to develop this LPO into a strong, sustainable operation like we did in Chattanooga with the support of additional top-tier talent. We also have expanded our presence in Northern Virginia with a commercial LPO that complements our existing residential mortgage LPO and existing presence in the Mid-Atlantic region.

The team has already had some early success.

And while still in the early stages, we are excited about the potential opportunities they will bring.

In addition.

We have continued to expand our Loan Production Office strategy, into 2 new markets, with the strong different demographics, and growth potential.

Knoxville, and Northern Virginia.

In Knoxville, we hired a couple of experienced Bankers with a long history in the market and plan to make additional hires this year to build out that team.

In fact, they have already added potential deals.

To our most recent commercial pipeline.

Our goal over the next several years is to develop this LPO into a strong, sustainable operation, like we did in Chattanooga, with the support of additional top-tier talent.

We also have expanded our presence in Northern Virginia, with a commercial lpo. That complements our existing Residential Mortgage lpo and existing presence in the Mid-Atlantic region.

Jeff Jackson: We again hired an industry veteran with deep ties to the region to lead this team and grow our opportunities in this economically vibrant market. I would now like to turn the call over to Daniel Weiss, our CFO, for details on our Q2 financial results and our current outlook for 2025. Dan?

We again, hired an industry veteran.

With deep ties to the region to lead this team.

And grow our opportunities in this economically vibrant Market.

I would now like to turn the call over to Dan Weiss, our CFO for details on our second quarter Financial results and our current outlook for 2025 Dan

Daniel Weiss: Thanks, Jeff, and good morning. For the quarter ending June 30th, 2025, we reported GAAP net income available to common shareholders of $54.9 million or $0.57 per share. Excluding restructuring and merger-related expenses from the Premier acquisition, second quarter net income was $87.3 million or $0.91 per share, representing an increase of nearly 200% from $29.4 million or $0.49 per share in the prior year period. On a similar basis and excluding the after-tax day one provision for credit losses on acquired loans, we reported $1.60 per diluted share for the six-month period as compared to $1.05 per diluted share last year. To highlight a few of the second quarter's accomplishments, we generated strong year-over-year pre-tax, pre-provision core earnings growth of 134%. We grew both loans and deposits organically, improved the net interest margin, grew fee income 40% year over year, and reduced the efficiency ratio.

Thanks Jeff and good morning.

For the quarter ending June 30th 2025, we reported gaap, net income, available to Common shareholders of 54.9 million or 57 cents per share. And when excluding restructuring and merger lytic expenses from the premier acquisition, second quarter, net income was 87.3 million or 91 cents per share representing an increase of nearly 200% from 29.4 million, or 49 cents per share in the prior year period.

On a similar basis and excluding the after-tax day, we reported a provision for credit losses on acquired loans. We've reported $1.60 cents per diluted share for the 6-month period, as compared to $1.05 per diluted share last year.

To highlight a few of the second quarters accomplishments we generated strong year-over-year pre-tax, pre-provision core earnings growth of 134%.

Daniel Weiss: In addition to successfully converting the customer data systems of Premier, we also exited $115 million of Premier commercial loans and sold the mortgage servicing business of Premier. Our balance sheet as of June 30th reflects the benefits of both the Premier acquired balance sheet and organic growth. Total assets increased 52% year over year to $27.6 billion, which included total portfolio loans of $18.8 billion, total securities of $4.4 billion, and the addition of approximately $480 million in goodwill generated from the acquisition. Total portfolio loans increased 53.6%, reflecting $5.9 billion from Premier and $670 million from organic growth. During May, we sold $115 million of higher risk acquired commercial loans, which had a fair value of $74 million that we had identified for sale as part of our acquisition due diligence. These loans had been reflected in loans held for sale and were primarily higher risk CRE credits.

We grew both loans and deposits organically improved. The net interest margin, grew fee income, 40% year-over-year and reduced the efficiency ratio.

In addition to successfully converting, the customer Data Systems of Premiere. We also executed exited 115, million of Premier Commercial loans and sold the mortgage serving business of premiere.

Our balance sheet as of June 30th, reflects the benefits of both, the premier required balance sheet and organic growth. Uh, total assets increased 52% year-over-year to 27.6 billion which included, total portfolio loans of 18.8 billion total Securities of 4.4 billion and the addition of approximately 40 480 million in Goodwill generated from the acquisition.

Total portfolio loans increased 53.6% reflecting 5.9 billion from Premiere and 670 million from organic growth.

During may we sold 115 million of higher risk. Acquired commercial loans which had a fair value of 74 million that we had identified for sale as part of our acquisition, due diligence these loans had been reflected in loans, held for sale and were primarily higher risk. CRA credits,

Daniel Weiss: We have also seen an increase in CRE payoffs as properties are beginning to move to the secondary market for permanent financing or are sold. On a year-to-date basis, we realized payoffs totaling $255 million and currently anticipate at least a similar amount during the second half of the year. That said, we remain optimistic about future loan growth with our strong pipelines, banking teams, and markets, combined with more than $1 billion in unfunded LCD commitments expected to fund over the next 18 months. Deposits of $21.2 billion increased 58% versus the prior year due to Premier Financial Corp. deposits of $6.9 billion and organic growth of $849 million, which fully funded organic loan growth.

We have also seen an increase in CRA payoffs as properties. Are beginning to move to the secondary market for permanent financing or are sold.

On a year to date basis. We've realized payoffs totaling, 2555 million and currently anticipate at least a similar amount during the second half of the year.

That said we remain optimistic about future loan, growth with our strong pipelines, banking, teams and markets combined with more than 1 billion dollars in unfunded LCD. Commitments expected to fund over the next 18 months.

Daniel Weiss: Total deposits declined $138 million on a sequential quarter basis due to normal seasonality, similar to last year, and the intentional runoff of some higher cost certificates of deposit and less reliance on public funds from Premier Financial Corp. of approximately $50 million. Encouragingly, we have begun to see the rebound in deposits so far in July and still plan to fund loan growth with deposit growth for the full year. Credit quality continues to remain stable as key credit metrics have remained low from a historical perspective and within a consistent range through the last five years. The allowance for credit losses in total portfolio loans at June 30, 2025, was 1.19% of total loans or $223.9 million.

8% versus the prior year due to Premier deposits of 6.9 billion and or organic growth of 849 million which fully funded organic loan growth.

Total deposits declined, 138 million on a sequential quarter basis. Due to normal seasonality similar to last year and the intentional runoff of some higher cost certificates of deposit, uh, and less Reliance on public funds from premiere of approximately 50 million dollars.

Encouragingly, we have begun to see the rebound and deposits so far in July, and still plan to fund loan growth with deposit growth, for the full year.

Credit quality continues to remain stable as Key Credit metrics have remained low from a historical perspective and within a consistent range due to the Last 5 Years.

Daniel Weiss: The decrease of $9.8 million from March 31, 2025, was driven by a reduction in PCD loan reserves from several larger payoffs and portfolio mix changes, which more than offset increases associated with a slightly higher unemployment assumption, loan growth, and other loan portfolio adjustments. The second quarter margin of 3.59% improved 24 basis points compared to the first quarter and 64 basis points on a year-over-year basis through a combination of higher loan and securities yields, lower funding costs, and purchase accounting accretion, which benefited the margin by approximately 37 basis points. Second quarter deposit funding costs of 246 basis points decreased 9 basis points from the first quarter and 28 basis points from the prior year period. When including non-interest-bearing deposits, deposit funding costs for the second quarter were 184 basis points.

The allowance for credit losses as of June 30, 2025, was 1.19% of total loans, amounting to $20,023.9 million.

The decrease of $9.8 million from March 31, 2025, was driven by a reduction in PCD loan reserves from several larger payoffs and portfolio mix changes, which more than offset increases associated with a slightly higher unemployment assumption, loan growth, and other loan portfolio adjustments.

The second quarter margin of 3.59% improved 24 basis points compared to the first quarter and 64 basis points on a year-over-year basis through a combination of higher loan and securities yields lower funding costs and purchase accounting accretion which benefited the margin by approximately 37 basis points.

Second quarter deposit funding costs of 246 basis points decreased 9 basis points from the first quarter and 28 basis points from the prior year period. And when including non-interest-bearing, deposits deposits funding costs. For the second quarter were 184 basis points.

Daniel Weiss: For the second quarter, non-interest income increased 40% year over year to $44 million, primarily due to the Premier Financial Corp. acquisition. With combined Premier Financial Corp. fee income, we set record highs this quarter in several fee income categories, including trust services fees, service charges on deposits, electronic banking fees, and securities brokerage revenue. Valuations of equity securities linked to the company's deferred compensation plan also increased $1.5 million over the linked quarter, which drove net securities gains. Just as a reminder, these equity securities are held in a deferred compensation plan with the offsetting cost included in employee benefits expense.

For the second quarter, non-interest income, increased 40% year-over-year to 44, million primarily due to the premier acquisition, uh, with combined, Premier fee income, we set record highs this quarter and several fee income categories, including trust fees service charges on deposits. Electronic Banking, fees and securities, brokerage Revenue.

Valuations of equity Securities linked to the company's deferred. Uh Compensation Plan also, increased 1.5 million over the link quarter, which drove, net Securities, gains. And just as a reminder, these Equity Securities are held in a Deferred Compensation Plan with the offsetting costs included in employee benefits. Expense,

Daniel Weiss: Non-interest expense, excluding restructuring and merger-related costs for the three months ended June 30, 2025, was $145.5 million, an increase of 47.5% year over year due to the addition of Premier's expense base, higher core deposit and tangible asset amortization that was created from the acquisition, and higher FDIC insurance expense due to our larger asset size. During the second quarter, employee benefits included expenses of $2.5 million of additional non-recurring expenses with the aforementioned $1.5 million related to the deferred compensation plan and approximately $1 million in healthcare costs related to the timing of onboarding Premier employees and related healthcare services. When excluding these two items, total operating expenses were $143 million, consistent with our prior outlook. Our regulatory capital ratios have remained above the applicable well-capitalized standards.

Non-interest expense, excluding restructuring emerge related costs for the 3 months ended June 30th, 2025 was 145.5 Million, an increase of 47.5% year-over-year due to the addition of premier's expense base higher, core deposit and tangible asset amortization. That was created from the acquisition and higher FDIC Insurance. Expense due to our larger asset size.

During the second quarter, employee benefits included expenses of $2.5 million of additional non-recurring expenses. Of this amount, $1.5 million was related to the Deferred Compensation Plan and approximately $1 million was related to healthcare costs associated with the timing of onboarding Premier employees and related Healthcare Services.

When excluding these 2 items, total operating expenses were 143 million consistent with our prior Outlook.

Daniel Weiss: In conjunction with the February 28 closing of the Premier acquisition, we issued 28.7 million shares of common stock to acquire the outstanding shares of Premier, which increased total capital by $1 billion and anticipated modestly impacted capital ratios. Reflecting the full quarter average of Premier's balance sheet, Tier 1 leverage was 8.7% and Tangible Common Equity to Tangible Assets ratio was 7.6%. Turning to our current outlook for the remainder of 2025, which includes the benefits from our acquisition of Premier, we are currently modeling two 25 basis point Fed rate cuts in September and October. However, given our relatively neutral rate-sensitive position, we do not expect a meaningful impact on our net interest margin from these cuts in the near term.

Our regulatory Capital ratios, have remained above the applicable. Well, capitalized, standards in conjunction with the February 28th. Closing of the Premier acquisition. We issued, uh, 28.7 million shares of common stock to acquire the outstanding shares of Premiere, which increased total Capital by 1 billion dollars in anticipated modestly, impacted Capital ratios,

Reflecting the full quarter average of premieres. Balance sheet, Tier 1, leverage was 8.7% and T tangible common Equity to tangible assets ratio, was 7.6%.

Turning to our current outlook for the remainder of 2025, which includes the benefits from our acquisition of Premiere. We are currently modeling two 25 basis point Fed rate cuts in September and October.

Your term.

Daniel Weiss: We anticipate approximately 60% of the $2.9 billion CD portfolio will mature or reprice during the next six months downward from a weighted average rate of 3.9%, and this should continue to benefit the margin. The acquired Premier CD book, which was marked down to a weighted average of 2%, has mostly run off due to the shorter duration of that book, and we anticipate the renewal rates of those CDs to mostly reprice into our current seven-month CD special in the range of 3.5%, creating a temporary headwind to margin growth here in the third quarter. As a result, we anticipate the Premier-related margin accretion in the third quarter to be down about 7 to 10 basis points from the 37 basis points we reported in the second quarter.

We anticipate approximately 60% of the 2.9 billion dollar cedi, portfolio will mature or repriced during the next 6 months downward from a weighted average rate of 3.9%. And this should continue to benefit the margin.

The acquired Premier CD book which was marked down to a weighted average of 2% has mostly run off due to the shorter duration of that book. And we anticipate the renewal rates of those CDs to mostly reprice into our current 7 month, CD special in the range of 3 and a half percent. Creating a temporary headwind to margin growth here in the third quarter.

As a result, we anticipate the premier related margin accretion in the third quarter to be down about 7 to 10 basis points from the 37 basis points we reported in the second quarter.

Daniel Weiss: While loans, maturities, refinancings benefit overall loan yields and legacy CDs reprice downward, we continue to model legacy margin improvement of 3 to 5 basis points per quarter. Therefore, when combining the effects of the lower purchase accounting accretion partially offset by the legacy margin improvement, we model a temporary 5 to 7 basis point decline in the Q3 margin with a strong bounce back in the Q4, with our margin returning to that Q2 levels in the high 350s. Trust fees, as well as securities brokerage revenue for the remainder of the year, should be modestly higher, reflecting modest organic growth and the benefit of our new markets and newly acquired assets under management. Electronic banking fees and service charges on deposits, which are subject to overall consumer spending behaviors, should be in a similar range to the Q2.

While loan maturities and refinancing benefit overall loan yields and Legacy CDs repriced downward, we continue to model Legacy margin improvement of 3 to 5 basis points per quarter. Therefore, when combining the effects of the lower purchase accounting accretion, partially offset by the Legacy margin improvements, we model a temporary 5 to 7 basis point decline in the third quarter margin, with a strong bounce back in the fourth quarter, returning our margin to the second quarter levels in the high.

9350.

Daniel Weiss: Mortgage banking income should also be in a similar range to the Q2, reflecting the opportunities in our new markets, but will continue to be impacted by the overall residential housing market. Finally, gross commercial swap fee income, excluding market adjustments, should be in a similar range to the first half of the year. As we've stated in the past, we remain focused on delivering disciplined expense management while making appropriate investments to support long-term growth, like our recent LPOs in Knoxville and Northern Virginia. Subsequent to the successful customer data systems conversion of Premier Financial Corp., we achieved the bulk of the planned 26% cost savings by June 30th. As mentioned last quarter, our mid-year merit increases offset the remaining cost saves from the completion of the systems conversion.

Trust fees as well as Securities brokerage revenue for the remainder of the year. Should be modestly higher reflecting modest, organic growth and the benefit of our new markets and newly acquired assets under management. Electronic Banking fees and service charges on deposits which are subject to overall consumer spending behaviors should be in a similar range to the second quarter. Mortgage Banking income should also be in a similar range to the second quarter reflecting the opportunities in our new markets. But we'll continue to be impacted by overall residential housing market.

And finally gross commercial swap fee income, excluding Market adjustments should be in a similar range to the first half of the year.

As we stated in the past, we remain focused on delivering disciplined expense management while making appropriate Investments to sport long-term growth like our recent lpos in Knoxville and Northern Virginia.

Subsequent to the successful customer Data Systems, conversion of Premiere. We achieved the bulk of the plan. 26% cost savings by June 30th.

Daniel Weiss: Therefore, we continue to expect the expense run rates of the Q3 to be consistent with the Q2 in that low to mid $140 million range. The provision for credit losses will depend upon changes to the macroeconomic forecast and qualitative factors, as well as various other credit quality metrics, including potential charge-offs, criticized and classified loan balances, delinquencies, changes in prepayment speeds, and future loan growth. Regarding the FASB rule change related to the Cecil double count, if the rule is finalized by October of this year, we will evaluate the potential benefits and risks to adopt that change as it relates to the acquisition of Premier Financial Corp. and make a decision at the time on an appropriate course of action.

And as mentioned last quarter, our midyear merit increases offset the remaining cost savings from the completion of the systems conversion. Therefore, we continue to expect the expense run rate for the third quarter to be consistent with the second quarter in that low to mid $140 million range.

Daniel Weiss: A rough estimate of the potential benefit to capital if we adopted is it would increase capital by approximately $45 million after-tax while lowering loan marks by approximately $60 million pre-tax. Lastly, we currently anticipate our full-year effective tax rate to be between 19% and 19.5%, subject to changes in tax regulations and taxable income levels. We are excited about the opportunities that lie ahead and pleased with the success of our strategies playing out according to plan. Operator, we are now ready to take questions. Would you please review the instructions?

The provision for credit losses will depend upon changes to the macroeconomic forecasts, qualitative factors, as well as various other credit quality metrics, including potential charge-offs, criticized and classified loan balances, delinquencies, changes in prepayment speeds, and future loan growth. Regarding the FASB rule change related to the CECL double count, if the rule is finalized by October of this year, we will evaluate the potential benefits and risks to adopt that change as it relates to the acquisition of Premiere and make a decision at that time on an appropriate course of action.

A rough estimate of the potential benefit to Capital if we adopted is it would increase Capital by approximately 45 million after tax while lowering loan marks by approximately 60 million pre-tax.

And lastly, we currently anticipate our full year effective tax rate to be between 19% and 19.5% subject to changes in tax regulations and taxable income levels.

We are excited about the opportunities that lie ahead and pleased with the success of our strategies playing out according to plan.

Operator, we're now ready to take questions. Would you please review the instructions?

Operator: Yes, thank you. We will now begin the question and answer session. To ask a question, you may press star then one on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw it, please press star then two. As a courtesy to the others, please limit yourself to one question and a follow-up. If you have additional questions, you may re-enter the question queue. At this time, we will pause momentarily to assemble the roster. The first question comes from Daniel Tamayo from Raymond James.

Yes, thank you. We will now begin the question and answer session to ask a question. You may press star then 1 on your telephone keypad,

If you're using a speaker-phone, please pick up your handset before pressing the keys. If any time of your question has been addressed and you would like to withdraw, please press star, then 2

As a courtesy to the others, please limit yourself to 1 question and a follow-up. If you have additional questions, you may re-enter the question queue.

At this time, we will pause momentarily to assemble the roster.

And the first question comes from Daniel tamiyo from Raymond James.

John Iannone: Thank you. Good morning, everybody. Maybe just starting on the credit side, a little bit of an increase in the criticized. I wonder if you could give us a little color there. Then just broader thoughts on the LPOs as it relates to credit, if you can kind of give us an idea of how you are able to kind of maintain the credit culture as you do continue to build out the footprint. Thanks.

Everybody.

Um,

Maybe, uh, just starting on on the credit side. Um, you know, a little bit of an increase on the in the criticize. Wonder if you could give us a little color there and then um,

just,

broader thoughts on on the lpos as, as it relates to credit if you

Jeff Jackson: Sure. Good morning, Daniel. I will start with the CNCs being up slightly. A lot of that is due to some regrading of a couple of Premier Financial Corp. clients that we acquired. Once again, we feel like we are still below our peer averages. As we look in the third quarter, we do think we will see some upgrades and some payoffs. I do expect that percentage to get better as we enter the back half of the year. As it relates to the LPOs, we still do all the same underwriting, the same credit policies. We have credit officers that have been long tenured with our company that approve the credits. There is no differential in how we look at any credit in any market. Once again, we really use legacy WesBanco people to take a look at those credits.

Um you know, if you can kind of give us a uh an idea of how you are able to, to kind of maintain the, the credit culture, as you do continue to uh to build out the the footprint. Thanks.

Sure. Good morning, Daniel. Uh, so I'll start with the, uh, the cncs, uh, being up slightly, um, a lot of that is due to some regrading of a couple. Uh, Premier uh, clients that we acquired. Uh, once again, we feel like we're, we're still below our peer averages and and we look in the third quarter. Uh we do think, we'll see uh, some upgrades in to payoffs. Uh, so I do expect that that

Jeff Jackson: We also have the market leaders talk about the types of deals we like, the types of deals we do not. We take that very seriously. I can tell you that our credit has been really good in our LPO markets. With this expansion, I only expect that to continue.

That percentage to get better. Uh, as we enter this back half of the of the year, uh, as it relates to the lpos, uh, we still do all this the same underwriting, the same credit policies. Uh, we have, uh, credit officers that have been long tenured with our, our company, that approved the credits. So there's no, uh, differential in how we look at any credit and any market. And once again, we really uh, use Legacy Westbank of people to take a look at those credits. We also have the uh, Market leaders talk.

Talk about the types of deals. We like the types of deals we don't. Um, and so we, we take that very seriously and I can, I can tell you that our credit's been really good and our lpo markets. Uh, and uh, with this expansion, I I only expect that to continue

John Iannone: That is helpful, Jeff. Thanks. Then, I guess, kind of related, you know, with these LPOs, from a capital perspective, just maybe remind us how you think about kind of the overall capital deployment priorities or from a strategic perspective. You have got the LPOs, you have got M&A, you have got organic growth within the legacy footprint. You know, within that stack, I guess, you know, how do you think about priorities there or managing the capital overall?

That's, uh, that's helpful. Jeff, thanks. Um, and then I guess, kind of related, you know, with these LPOs, um, from a capital perspective, just maybe remind us how you think about kind of the overall capital deployment. Um, you know, priorities or, or, uh, from a strategic perspective, you've got the LPOs, you've got M&A, you've got organic growth within the, um, the legacy, uh, footprint, you know.

Within that stack, I guess, you know, how do you think about priorities there or managing the capital overall?

Jeff Jackson: Yes. We start with our dividend. Obviously, a lot of shareholders, and we really value the dividend, put that as a strong focus. Second is really organic growth. I am really excited about our organic growth, and that is really where we are focused on today. I think if you look at the Premier Financial Corp. footprint with all the opportunities that it is going to provide us, along with the LPOs we talked about, I am really excited about opening Knoxville, Northern Virginia. If you look at Tennessee, you know we were just getting started a couple of years ago. We have got almost $350 million in loans there. We still see tremendous growth with our Nashville and Chattanooga markets. Finally, healthcare. We hired on some professionals with really great background in healthcare that we also see some really great growth on the back half of this year.

Yes. Uh, so we start with our dividend, obviously, a lot of shareholders and and we really value the dividend put that as a strong Focus. But then second and uh, is really organic growth. So I'm really excited about our organic growth and that's where really where we're focused on today. I think if you look at the premiere footprint with all the opportunities that it's going to provide us um along with the lpos we talked about and and I'm really excited about to be opening Knoxville Northern Virginia. If you look at Tennessee, you know we were just getting started a couple years ago. We've got almost 350 million dollars in loans. There still see tremendous growth with our national and

Jeff Jackson: I would say dividends and then organic growth, a solid one and two, and then probably M&A buybacks falling much further down there. We really want to make sure everybody understands our focus is to really execute on the Premier Financial Corp. transaction, grow in those markets, and then continue with the LPOs and the healthcare strategy. We feel like we have got, once again, tremendous opportunities for growth that I think you will see in the back half of this year.

Chattanooga markets. And then finally Healthcare. Uh, we hired on some professionals uh, with really great background in healthcare. Uh, that we also see some really great growth on the back half of this year. So I would say, uh, dividends and then organic growth, a solid 1 and 2, and then then probably uh m&a BuyBacks falling further much further down there. But uh, really want to make sure everybody understands our focus is to really execute on the premier transaction growing those markets and then continue with the lpos and the healthcare strategy. Um we feel like we've got once again tremendous opportunities for growth that I think you'll see in the back half of this year.

John Iannone: Terrific. Okay. I will step back. Thanks for all the color, Jeff.

Jeff Jackson: Thanks.

Terrific. Okay. Well, I will step back. Thanks for all the call Jeff.

Thanks.

Operator: Thank you. The next question comes from Russell Gunther with Stephens Inc.

Thank you. And the next question comes from Russell, Gunther with Stevens.

Russell Gunther: Hey, good morning, guys.

Operator: Good morning, Russell.

Russell Gunther: First question. Hey, Jeff. First question on the loan growth front. Appreciate the puts and takes for the back half of the year. Maybe just bigger picture. Is a mid-single-digit type of growth rate how we should think about WesBanco going forward, kind of on the pro forma balance sheet for Premier Financial Corp.? Or as some of the newer LPOs kick in, perhaps CRE headwinds, is that high single digit you guys have talked to prior still ultimately achievable?

Hey, good morning guys. Good morning. Russ question. Hey Jeff. First question on, uh, the loan growth front, appreciate the puts and takes uh for the back half of the year. Maybe just bigger picture is a mid single digit type of growth rate how we should think about West Banco going forward, kind of on the pro form of balance sheet for Premiere or as some of the newer lpos kick in perhaps Sierra headwinds. These is that high single digit. You guys have talked to Prior, uh, still ultimately achievable.

Jeff Jackson: Yeah, we're still targeting mid-upper single digits. As mentioned before, a lot of CRE payoffs have increased. But the nice thing about our balance sheet is when we run kind of the forecast, our capital builds back very quickly. So that does give us continued expansion potentials for CRE growth, which is a very nice thing. But I would definitely say we're still looking at that mid-upper single digits. Once again, it depends on CRE payoffs. But as I said previously, we have a lot of great things to organically grow this company, especially in the second half of the year. So feeling very good about a lot of those items. So once again, feeling good about the growth. I think it's going to be mid-upper, maybe somewhere in the middle there. But the back half of the year, our pipelines are looking really strong, around $1.4 billion.

Uh, to organically grow this company, especially in the second half of the of the year. So feeling very good about a lot of those those items. Um,

Jeff Jackson: Those are all-time highs, of course. And once again, Premier Financial Corp. is just getting used to our systems, the way we do things, building those pipelines. And I feel very good about the second half of the year.

So so once again, feeling good about the growth, I think it's going to be mid to Upper maybe somewhere in the middle there, but the back half of the Year. Our pipelines are looking really strong, uh, around 1.4 billion. Uh, those are all times High highs, of course, and uh, once again, Premiere is just getting used to our systems. The way we do things, building those pipelines and I feel very good about the second half of the year.

Russell Gunther: Great. Thank you, Jeff. Second question on expenses. I appreciate the puts and takes this quarter and how Q3 should shake out. Maybe a bit more intermediate term. You guys have north of 250 branches today. Is that the right number going forward? If it is not, what is and what could that mean for potential branch rationalization and cost saves not currently contemplated in the guide?

Great. Thank you, Jeff. And then, uh, second question on expenses, you know. I appreciate the puts and takes of this quarter and how Q3, uh, should shake out, but maybe, um, a bit more intermediate term. You guys have north of 250 branches today. Is that the right number going forward? If it's not, kind of what is? And what could that mean for potential branch rationalization and cost savings not currently contemplated in the guide?

Jeff Jackson: Yes. I would say, like we do every year, we do look at branch rationalization efficiencies, and we are going to do that as well in the second half of the year. We do have 250 branches. I am sure we will look at every branch to make sure that it is very profitable for us, strategically aligned. As we have done every year, we reiterate, we have tended to close some branches. Once again, just getting started with that work. I do not have a number to give you on that, but that is going to be happening the second half of the year as well. I would expect there would be some cost saves that come out of that.

Yes, so I would say like we do every year.

we do look at

uh, Branch rationalization uh efficiencies and we're going to do that as well in the second half of the, of the year. Uh, we do have 250 branches, I'm sure there's we will look at every Branch to make sure that that it's very profitable for us. Strategically aligned. But as we have done every year, uh, we reiterate, we have tended to close some branches. So once again, just getting started,

With that work. I don't have a number to give you on that, but that is going to be happening the second half of the year as well. And uh I would expect there would be some some cost saves could that come out of that.

Russell Gunther: Okay, great. Thank you guys for taking my questions.

Okay, great. Thank you guys for taking my questions.

Operator: Thank you. The next question comes from Karl Shepard with RBC Capital Markets.

Thank you. And the next question comes from Carl several, with RBC Capital markets,

John Iannone: Hey, good morning, guys.

Russell Gunther: Hey, good morning, Karl. Morning, Karl.

Hey, good morning guys. Hey, good morning. Carl morning call

John Iannone: Dan, let's get you involved. You gave some good color on the margin for next quarter. I wanted to just test your accretion assumptions. I guess, so it is 37 this quarter. It drops back to kind of high 20s, around 30. Is that the right number for 2026 as kind of a sustainable level, 30 bps of accretion? I know it will kind of trickle down over time, but is that a good starting point?

uh, Dan. Let's get you involved. Um, you gave some good color on the margin for next quarter. I wanted to just test your accretion numbers, I guess. So it's 37 this quarter. It drops back to kind of high 20s around 30. Is that the right number for 2026? It's kind of a sustainable level, 30 bits of accretion. I know, I know I'll

Daniel Weiss: Yeah, I would say so. Really, if we think about Q3, you can get into the high 20s pretty easily with my commentary. We see maybe a 2 or 3 basis point drop into Q4. So you're kind of mid-20s. From there, what we model is about a basis point of reduction per quarter thereafter for the next six quarters or so. Hopefully, that kind of gives you some color on what we anticipate anyway, the bit of the accretion on it.

Kind of trickle down over time. But is that a good starting point you uh yeah I would say. So it really if we think about you know third quarter as you can you can get into the high 20s uh pretty easily with my commentary. Uh we we see maybe a a 2 or 3 basis point drop into the into the fourth quarter. So you're kind of mid 20s. And then from there, it's what we model is about a basis point uh, of of uh

John Iannone: That's perfect. Jeff, you sound very optimistic about Premier. I guess my question is, the systems conversion is done. Are there other things you need to do to integrate the companies in the coming months, or is it really just going out and getting that growth and driving the fees?

Reduction per quarter thereafter for the next, you know, 6, quarters or so. So um, hopefully that kind of gives you some some color on the what we anticipate. Anyway, the bit of the creation of it.

That's perfect.

And then Jeff, do you sound very optimistic about Premiere? I guess. My question is the systems conversion is done? Are there other things you need to do to integrate the companies in the coming months? Or is it really just going out and getting that growth and and driving fees?

Jeff Jackson: I think it's really just going out and getting that growth and driving those fees and making sure our new Premier associates are familiar with our processes about turning around deals quickly and what types of transactions we want to do, the types of products we're selling, getting them comfortable with that. But I can say this is the smoothest conversion I've ever been a part of. Literally, no hiccups, great customer conversion. I think the new Premier employees are really enjoying our culture and our growth strategies and the way we kind of create a great culture here at WesBanco. So, I think second half of the year is really, let's grow, let's continue to take market share and continue to add great talented bankers that help move our company forward.

I I I think it's really just going out and getting that growth and driving those fees and making sure our uh new premier Associates are are familiar with our processes about turning around deals quickly and and what types of, uh, transactions. We want to do the types of products. We're selling getting them comfortable with that, but uh, I can't, I can say this is the smoothest conversion I've ever been a part of uh, literally no hiccups. Uh, great customer conversion. Uh, the I think the new premier employees are really enjoying our culture, and our growth strategy. And, and the way we, uh, kind of create a great culture here at West Bank. And so no, I I think second half of the year is really, let's grow. Let's, let's continue to take market share and uh, continue to add great talent to Bankers that help move our company forward.

John Iannone: Great. Thank you both.

Jeff Jackson: Thank you.

Great. Thank you both. Thank you.

Operator: Thank you. The next question comes from Catherine Mealor with Keefe, Bruyette & Woods.

Thank you. And the next question comes from Katherine Mueller, with KVEW.

Catherine Mealor: Thanks. Good morning. I want just a quick follow-up on the accretion, just to clarify. Is the CD amortization totally out by Q3, or is there still a little bit of that coming in?

um,

Thanks. Good morning. I want to quick follow up on the creation just to clarify that um is the CD amortization totally out by Third quarters. There's still a little bit of that coming in.

Daniel Weiss: There is a little bit after Q3, but I believe it's less than $1 million.

There is a little bit.

After third quarter.

I believe it's it's less than a million dollars.

Catherine Mealor: Okay. In the third quarter, how much is next quarter?

Okay.

Daniel Weiss: 2 million.

And then in the third and then in the third quarter, how much is next is next year.

2 million.

Catherine Mealor: Okay, got it. Okay, perfect.

Daniel Weiss: First quarter of next year, we are assuming it drops down into maybe $6,700,000.

2. Okay, got it. Okay. Perfect. And then first quarter next year we're you know we're assuming it drops down into maybe 6 700 thousand.

Catherine Mealor: Okay. Perfect. That is helpful. Yeah, just go down from there. Okay. That is great. Thank you for that clarification. Then maybe one more thing on the expenses. It feels like you have got, you said you got most of your cost savings out. You know, I know there is some kind of growth that is offsetting that. But how much of the, I am assuming a lot of that was kind of back-end loaded in the quarter. Is there a way to think about kind of how much is actually further coming out in the third quarter that is offset by growth? Just kind of curious with those puts and takes.

Great, thank you for that clarification. And then maybe one more thing on the expenses. It feels like you've got, you said, you got most of your cost savings out, um, you know, and then I know there's some kind of growth that's offsetting that. But how much of—I mean, I'm assuming a lot of that was kind of back-end loaded in the quarter. And so, is there a way to think about, kind of how much is actually further coming out in the third quarter? That's offset by growth, just kind of curious with those puts and takes.

Daniel Weiss: Yeah, you're exactly right. Most of the savings came out really at the very end of June. So those savings obviously will take effect here in the third quarter. But as we've said in the past with the mid-year merit increases and other investments that we're making, for example, as Jeff mentioned with the LPOs and some other things, we do expect the savings to be offset with the mid-year merit increases and other investments. So that's where we still get into that low to mid-140 range for an expense run rate in the going forward for the next two quarters. From an expense savings standpoint, the only things that we really have open, we do have, there's still some data processing that's happening. It's relatively minor. That'll occur through, I believe, November. Then we've also got our securities brokerage group that will convert here in a couple of months.

Yeah, you're, you're exactly right. Most of the the savings came out, really at the very end of of June. So, uh, those, those savings obviously, will take effect here in the, in the third quarter. But kind of, as we've said in, in the past, with the midyear Merit increases and, and other Investments that we're making, for example, is, is Jeff mentioned with the lpos and, and some other things we do, expect kind of the, you know, the savings, uh, to be offset with, uh, with, you know, the, the mid-year Merit increases in other Investments. And so that's where we still get into that. Load to, to Mid 140 range, uh, for an expense run rate, kind of it, and then going forward for the next 2 quarters.

From an expense savings standpoint. Um, the only things that that we really have open. We do have, uh,

The the there's still some data processing that's happening. It's it's relatively minor that'll occur through, I believe November. Um, and then we've also got our Securities Brokerage group.

Daniel Weiss: So we've still got that happening. Then I would say just from the DMSR standpoint, while the sale occurred midway through the second quarter, we retained the servicing for the buyer for a couple of months. So we've got that team still in place. I expect to see some savings here midway through the third quarter there as well.

Catherine Mealor: Okay, great. And maybe just one thing, circling back to the margin, you have talked about the core margin increasing, I think you said three to five bps per quarter. As we think about going into next year, if we are entering a period where we have a couple of cuts, do you still feel like there is upward momentum in your core margin just given the backbook repricing opportunity that you have still got on the core basis? Just kind of think about, update us on your thoughts on how your margin reacts as we start to get to cuts. Thanks.

That have that will convert here uh, in a couple of months. So we've still got that that happening. And then I would say just from the MSR standpoint. Um well the sale occurred um you know, Midway through the second quarter uh we retained the servicing uh for the buyer uh, for a couple of months. And uh, so we've we've got, you know, that team still in place and so expect to see some savings, um, here in the Midway through the third quarter there as well.

Okay, great. And maybe just 1 thing, just circling back to the margin, you've talked about the core margin increasing, you know, that that you said, um, 3 to 5 basis points kind of per quarter, as we think about going into next year, if we are entering a period where we have, you know, a couple of cuts

John Iannone: Yeah, no, absolutely. That 3 to 5 basis points is kind of what I would call, you know, probably a 3 to 5 quarter average over the next 3 to 5 quarters per quarter. We are really excited about what we are seeing. As I also said in my prepared commentary, we do have two cuts in the back half of this year. That guidance that I just provided now is inclusive of that. So, we certainly would anticipate the backfolk repricing. We have $350 million in fixed-rate commercial loans, weighted average 4.4%. That is going to reprice up, you know, 250 to 300 basis points, likely into the sevens here just over the next year. We have also the securities portfolio, $250 million per quarter in securities cash flow. That is coming off at about 3.3%.

Do you still feel like there's upward momentum in your core margin, just giving the back book repricing opportunity that you've still got on the core basis. Um, I'm just going to think about update us on your thoughts, on how your margin reacts, um, you know, as we start to get to Cuts. Thanks.

Yeah, no absolutely. Uh that that 3 to 5 basis points is kind of what I would call a you know, probably a a a 3 to 5 quarter average over the next 3 to 5 quarters per quarter. So we're really excited about what we're seeing. Um, you know as but we as as I also said in my prepared commentary, we do have uh, 2 Cuts in in the back half of this year. Um, and that guidance, you know, that I just provided now is inclusive, uh, of of that. So certainly, um,

John Iannone: It is going back on at 5.5%. So, that is going to be a nice tailwind here to margin as well. These are the things that are really, you know, helping to drive that organic, you know, 3 to 5 basis points. Then, of course, as I mentioned, the broader CD book, you know, repricing from a 3.9% down into that 3.5%. Some of that, depending on the level CD, it reprices to either 3.5% or 3.75%. So, yeah, we are certainly looking forward to the coming quarters.

Would it anticipate the backlog repricing? You know, we've got 350 million in fixed rate, commercial loans weighted average 4.4%, uh, that's going to reprice up, you know, 250 to 300 basis points. Uh, likely into the 7th, um, here, just over the next year. Uh, we have also the Securities portfolio, 250 million dollars per quarter and securities cash flow. Uh, that's coming off at about 3.3%. It's coming. It's going back on at 5 and a half percent, uh, so that's going to be a nice, uh, Tailwind here to margin as well. And these are the things that are really, uh, you know, helping to drive that organic, you know, 3 to 5 basis points. And then of course as I mentioned, you know, the broader CD booked um you know repricing from a 3.9% down into that 3 and a half percent, some of that uh depending on the the level of CD it could reprocess to either 3 and a half or 375.

So yeah certainly uh looking forward to uh to the to the coming quarter.

Catherine Mealor: Great. Thank you so much. Appreciate it.

Great. Thank you so much. Appreciate it.

Operator: Thank you. The next question comes from David Bishop with the Hovde Group, Inc.

Thank you. And the next question comes from David. Bishop with the H, H group.

John Iannone: Good morning, gentlemen.

Daniel Weiss: Good morning.

Hey, good morning gentlemen. Good morning morning.

John Iannone: Morning.

Daniel Weiss: Hey, Jeff, circling back to Russell's first question in terms of loan growth. To get you back to maybe on that high single-digit run rate, in your sense, is it just maybe the visibility or the headwind from payoffs that would keep you below that? Are you seeing anything on the macro front related to tariffs or borrower hesitancy that could keep you a little bit more conservative in terms of achieving that? Just curious about what you're baking in there or seeing in the market.

Hey uh Jeff circling back to to to Russell's first question in terms of uh loan growth to to get you back to maybe on that high single digit run rate. Um, and your sense is that just the, um, maybe the visibility or the headwind from payoff, that would keep people below that, or are you seeing anything on the, on the macro front related, to, to tariffs or, or borrow hesitancy that, uh, that could keep you a little bit more conservative in terms of achieving that just curious about your

Jeff Jackson: Yeah, sure. We're not seeing a lot on the tariff front. I mean, obviously, a few customers, I think, are more hesitant. But I think it would be more the CRE payoffs that would keep us from the high single digits. That's what we've kind of seen so far in this first half of the year. I think that would be the main driver there. Once again, I feel like we've got several different levers to continue to pull to grow and continue to expand, as Daniel Weiss said, our margin along with our feed businesses. But I do believe loan growth could be somewhat lower than high single digits based on the CRE payoffs potentials. We're seeing more than we've seen in the last couple of years.

Obviously a few customers, I think are are more hesitant, but I I think it would be more the CRA payoffs that would keep us from the high single digits. Uh, that's what we've kind of seen, uh, so far in this first half of the year. And, um, I think that would be the the main driver there. Once again, I feel like we've got several different levers to continue to pull the grow and uh, continue to uh, expand as Dan said, our margin and along with our fee businesses. But, uh, I do believe loan growth. Uh, will could be somewhat lower than high single digits based on the CRA payoffs potentials. Uh, we're seeing more than we've seen in the last couple of years.

Daniel Weiss: Okay, got it. Then, Jeff, maybe sticking with the fee income topic there. I know a lot of your peers doing some of these bigger transactions have implemented maybe some fee waivers on the deposit service charges and such. I think they came in a little bit lighter than I have been expecting. Could easily be modeling error, admittedly. Just curious if this is a good run rate or if you have been doing any waivers and would they be expiring? If so, thanks.

Okay, got it. And then uh, Jeff maybe sticking with the, the fee income topic topic there. I know, you know, a lot of a lot of your peers, you know, doing some of these bigger, uh, transactions of, you know, implementing maybe some fee waivers on the uh, you know, deposit, uh, service charges and such. I think they came in a little bit lighter than I've been expecting. Could easily be positively error, admittedly, but just curious, if this is a good run rate, or have you been doing any waivers? And would they be expiring if so thanks.

Jeff Jackson: No, I am not aware of any waivers, Dan.

No, I'm not aware of any any waivers done.

Daniel Weiss: I think the only thing I would mention is with the Premier accounts, we did suppress the fees in the first month or two. So there could be a little bit of benefit as we get into this Q3 and Q4. Q3.

Jeff Jackson: Yeah.

No. No, I think the only the only thing I would mention is with, uh, with the premier, uh, accounts. We did, uh, suppress the, the fees in the first month or 2. So there could be a little bit of benefit, um, as we get into this third and fourth quarter, third quarter, yeah,

Daniel Weiss: Got it. Thanks.

Got it, thanks.

Operator: Thank you. The next question comes from Manuel Navas with D.A. Davidson.

Thank you. And the next question for some manual novice, with the Davidson

Russell Gunther: Hey, good morning. Can you talk a bit more about deposit pipelines? You know, you want to fully fund the loan growth. You have some seasonality shifts in the back half of the year. Just other areas where you are going to get that matching deposit growth, please.

Jeff Jackson: Yeah, good morning. If you look at what we did last year, very similar trends. We grew deposits really strong in the first quarter last year. This year, we did the same thing. Second quarter, we had some seasonality. Then, as we mentioned, we intentionally ran off some of our higher cost deposits that Premier Financial Corp. had in the second quarter. Looking at the pipeline for third and fourth quarter, it is really robust. We are also launching a new deposit campaign as well, which was the same thing that we did in third quarter last year. We believe between those two things that we should be able to keep up with the loan growth on the back half of the year. Once again, we have really got the deposit machine going.

Hey, good morning. Uh, can you talk a bit more about uh, deposit pipelines? Uh, you know, you you want to fully fund the loan growth. You have some seasonality, uh, shifts in the back half of the year. Um, just other areas where you're going to uh, get that matching, uh, deposit growth, please.

Yeah, good morning. Um, so if you look at what we did last year, uh, very similar trends; we grew uh deposits really strong in the first quarter last year. This year, we did the same thing. Second quarter, we had some seasonality, and then as we mentioned, we intentionally ran off some of our uh, higher-cost deposits that Premiere had in the second quarter. Uh, looking at the pipeline for the third and fourth quarters, it’s really robust. Uh, we’re also launching a new deposit campaign as well, which was the same thing that we did in the third quarter last year. So we believe between those two things, uh, that we should be able to keep up with the uh, the loan growth on the back half of the year.

Jeff Jackson: I think you can look at last year as a good result there and feel like we can continue that moving forward. I think some of it we should see from the commercial space. That has been a really nice growth engine for us with commercial clients and launching those new treasury products. One of the things, if you look at our treasury products, we launched that purchase card a little over a year ago. We had about five customers on it. Today, we have got about 82 customers with another 40 in the pipeline. We do expect to see continuing increases in the TM fee revenue as well.

Uh, once again, um, we've really got the deposit machine going. Uh, I think you can look at last year as, as a good results there and feel like we can continue that, uh, moving forward. I think some of it, uh, we should see from the commercial space. Uh, that's been a really nice uh growth engine for us uh with commercial clients and uh launching those new treasury products. Uh 1 of the things, uh, if you look at our our treasury products, you know, we launched at Purchase Card. Uh, a little over a year ago, uh, we had about 5 customers on it. Uh, today, we've got about 82 customers with another 40 in the pipeline. So do expect to see uh, continuing increases in the TM fee Revenue as well.

Russell Gunther: I appreciate that color. In terms of post-Northern Virginia, you have Knoxville, you have the healthcare team. That is a lot of new stuff. What regions or products are kind of next if you have something to contemplate next in terms of that, like adding to your growth targets and regions and products?

I I appreciate that color in in um, in terms of uh, post more than Virginia. You have Knoxville, you have the healthcare team. That's a lot of new stuff. But what regions or products are kind of next? If you have something to contemplate next?

In terms of adding to your growth, um,

Jeff Jackson: Sure. I think obviously building out Northern Virginia and Knoxville is really key. We have looked at Richmond a couple of times and kind of connecting, right, for an LPO. Always looking for great talented bankers. Then really, it is just selling all the treasury products that we have just rolled out last year, making sure we are getting a full relationship when we go out and talk to commercial clients. I think also we have got a lot of room to run there where you look, if you look at the Premier Financial Corp. footprint, if you look at continuing growth in Indiana, I was just over in Fort Wayne last week. There is a lot of growth there as well. So I think Indiana, when you look at Fort Wayne, Indianapolis, there is still room to add teams there. Then I will wrap up with Nashville.

Uh, targets and regions and products.

Sure. Uh I think obviously building out Northern Virginia and Knoxville is really key. Uh we we've looked at Richmond a couple times and kind of connecting, right, uh, for an lpo, um, always looking for for great talented, bankers and then really, it's just selling, uh, all the treasury products that that we just rolled out, you know, last year making sure we're. We're getting

Jeff Jackson: We have got some bankers there, but we want to add more bankers in Nashville. So I believe we have got a lot of great opportunities to grow. When I look organically and look at forecasts, I feel like we are really going to have a great growth trajectory over the next couple of years.

A full relationship when we go out and and talk to commercial clients. And I think also, we've got a lot of room to run their when where you look, you know, if you look at the premiere footprint, if you look at continuing growth in Indiana, I was just over in Fort Wayne last week. There's a lot of growth there as well. So, I think Indiana. When you look at Fort Wayne Indianapolis, there's still room to add teams there and then, uh, I'll wrap up with a Nashville, you know, we've got some bankers there, but we want to add more Bankers, uh, in Nashville. So, I, I, I believe we've got a lot of great opportunities to grow. And, uh, when I look organically and look at forecasts, uh, I feel like, uh, we're really going to have a great growth trajectory over the next couple of years.

Russell Gunther: highlighted that Premier Financial Corp. is already contributing a bit to the pipeline. Can you just kind of highlight where Premier Financial Corp.'s growth contribution is so far and what is still left to do on the Premier Financial Corp. front?

Says so far and we're kind of where what's still left to to do and and and so forth on the on the PFC front.

Jeff Jackson: Yes. Their pipelines are building, I believe, out of the $1.4 billion. I think there are about $400 million of that. I know we have got several large transactions that were approved and we are probably closing in the third quarter. I also think that they are getting back into the rhythm of serving their clients and getting out and selling and so finding and understanding our processes. So I believe that they are understanding how we do business, how we go to market, what we are looking for. I think all that we kind of went through in the second quarter. So I believe third quarter, you are going to see even more contribution from the Premier Financial Corp. new employees.

Sure.

Sure. Yes. Uh, their pipelines are building. I believe out of the $1.4 billion, I think they're about $400 million of that. I know we've got several large transactions that were.

Approved and and we're probably closing in the third quarter. Uh, I also think you know, that they are getting back into the Rhythm, uh, uh, of serving their clients and getting out and selling and so finding and understanding our processes. So I believe that their understanding how we do business, how we go, to market what we're looking for. I think all that we kind of went through in the second quarter. So I believe third quarter, you're going to see even more contribution from the PSC. Uh, new employees.

Russell Gunther: Thank you for the commentary. I will step back and continue.

Thank you for the commentary. I'll step back and thank you.

Jeff Jackson: Thanks.

Operator: Thank you. The next question is a follow-up from Daniel Tamayo with Raymond James.

Thank you. And the next question is a follow-up from Daniel Tomayo with RE and James.

John Iannone: Hey, thanks, guys. Just a quick one here. The preferred, you know, maybe updated thoughts on calling the preferred and/or refinancing the subject that you have that is going to be repricing higher in the back half of the year?

Hey, thanks, guys. Um, just a quick one here. The um,

Preferred, uh, you know, update maybe updated thoughts on calling the preferred Andor, refinancing the subject that, um, you have, uh, that's going to be repricing higher in the back half of the year.

Daniel Weiss: Yeah, great question, Danny. I think certainly we're probably not interested in the reset rate, which has a 10-plus % handle on it, of $150 million of preferred outstanding. As you alluded to there, it does become callable on November 15th. We are certainly evaluating that and plan to take action there. We also have $50 million of sub debt that we acquired from Premier that also resets very soon that we'll be exploring alternatives for as well. I think probably more to come over the next quarter. I think we'll probably see how that resolves itself.

Yeah, great question Danny. I think, um, certainly we're probably not interested in, uh, in the reset rate, um, which is, you know, has a 10 plus percent handle on it 150 million if preferred self-standing. Um, as you as you alluded to there it, it does become callable on November 15th. And um, so we are certainly evaluating that and plan to take action there. Um, we also have a 50 million of sub debt that we acquired from Premiere. That also resets, um, very soon that will be exploring alternatives for

As well. So I think, um, you know, probably more to come over the next quarter, I think. Um, we'll probably see how that results itself.

John Iannone: Great. Helpful. Thank you.

Great helpful. Thank you.

Operator: Thank you. Next question is also a follow-up. This one from David Bishop with the Hovde Group, Inc.

Thank you. Next question is also a follow up this 1 from David Bishop with the of the group.

John Iannone: Yeah, actually, Dan just took my question, so I'm good to go. Thanks.

Yeah, actually. Uh Dan just took my question. So I'm good to go. Thanks.

Operator: This does conclude the question and answer session. I would like to turn the floor back over to Jeff Jackson for any closing comments.

All right, just to conclude the question and answer session, I would like to return the floor back over.

Over to Jeff Jackson for any closing comments.

Jeff Jackson: Thank you. I am excited that we are delivering meaningful improvement in our financial metrics and strategic positioning to deliver enhanced shareholder value, highlighted by earnings per share of $0.91 and a net interest margin of $3.59. Our transformational acquisition of Premier Financial Corp., combined with our new LPOs and our other commercial lending strategies, have boosted our organic growth engine and efforts to drive positive operating leverage. Thank you for joining us today, and we look forward to speaking with you at one of our upcoming investor events. Have a great day. This concludes the call.

Thank you. I'm excited that we are delivering meaningful improvement in our financial metrics and strategic positioning to deliver enhanced shareholder value.

Highlighted by earnings per share of $0.91 and a net interest margin of 359.

our transformational acquisition of Premiere combined with our new lpos and our other commercial lending strategies have boosted, our organic growth engine and efforts to drive positive operating Leverage

Thank you for joining us today. And we look forward to speaking with you at 1 of our upcoming investor events.

Have a great day. This concludes the call.

Operator: Thank you. As mentioned, the conference has now concluded. Thank you for attending today's presentation. You may now disconnect your lines.

Thank you. As mentioned, the conference has concluded. Thank you for attending today's presentation. May I just note your lines?