Executive Summary / Key Takeaways

• Transformative Acquisition Driving Growth: WesBanco's successful integration of Premier Financial Corp. (PFC) has significantly expanded its scale, market presence, and financial capabilities, positioning it as a top 100 U.S. bank and a catalyst for accelerated growth.
• Robust Financial Performance & Margin Expansion: The company delivered strong Q2 2025 results, including an 86% year-over-year increase in adjusted diluted EPS to $0.91 and a net interest margin (NIM) of 3.59%, with further NIM improvement anticipated through strategic repricing of deposits and loans.
• Dual Engine for Growth: Organic & Acquired: WesBanco continues to demonstrate strong organic loan and deposit growth, consistently outperforming industry averages, complemented by strategic investments in new Loan Production Offices (LPOs) and specialized banking teams.
• Operational Efficiency & Technological Integration: A seamless customer data systems conversion post-acquisition and ongoing investments in digital banking and treasury management are driving efficiency gains and enhancing customer experience, contributing to an improved efficiency ratio of 55.5%.
• Disciplined Capital Management & Outlook: With regulatory capital ratios well above "well-capitalized" standards, WesBanco is in a capital build mode, prioritizing dividends and organic growth while evaluating strategic refinancing and potential CECL rule changes.

The Foundation of Growth: A Legacy Forged, A Future Expanded

WesBanco, Inc. (NASDAQ:WSBC) stands as a testament to enduring community banking, with a history stretching back to 1870 in Wheeling, West Virginia. Over its 155-year journey, the company has evolved into a diversified financial services provider, offering a comprehensive suite of retail and corporate banking, trust, brokerage, mortgage, and insurance services across a growing multi-state footprint. This deep-rooted community presence, coupled with a rigorous underwriting philosophy, forms the bedrock of its operational stability and customer loyalty.

The company's strategic trajectory has been marked by a dual focus on organic expansion and opportunistic acquisitions. From year-end 2021, WesBanco embarked on a period of robust organic growth, achieving a compound annual loan growth rate of 9% over three years. This organic momentum was significantly amplified by the transformative acquisition of Premier Financial Corp. (PFC), successfully completed on February 28, 2025. This strategic merger elevated WesBanco into the ranks of the top 100 largest U.S. banks by asset size, expanding its market share in Ohio and extending its reach into contiguous markets in northwestern Ohio and Michigan with the addition of 73 branches. The integration of PFC is not merely about scale; it is about leveraging enhanced capabilities to accelerate long-term growth and deliver greater value to all stakeholders.

Technological Advancement: Enhancing the Banking Experience

While WesBanco does not boast a proprietary manufacturing technology, its technological differentiation lies in its strategic adoption and integration of digital banking tools and treasury management platforms. These investments are crucial for enhancing customer experience, driving operational efficiency, and expanding fee income in a competitive landscape.

A pivotal operational achievement was the successful conversion of Premier Bank's customer data systems and Trust department in May 2025. This monumental effort, the largest conversion in the bank's history, seamlessly transitioned approximately 400,000 consumer and 50,000 business relationships to WesBanco's unified platform. This integration is expected to unlock significant cost efficiencies and streamline operations, directly contributing to the company's improved efficiency ratio.

The company's commitment to technological innovation is also evident in its retooling of the treasury management function. New products and services, such as the purchase card, integrated payables, and receivables, have been instrumental in deepening client relationships and driving fee income. The purchase card product, launched just over a year ago, has seen remarkable adoption, growing from 5 customers to 82, with an additional 40 in the pipeline. This expansion in digital offerings has translated into tangible financial benefits, with digital banking income increasing by $2.285 million, or 45.3% year-over-year, in Q2 2025. These technological enhancements are foundational to WesBanco's strategy, strengthening its competitive moat by improving customer stickiness, diversifying revenue streams, and enabling it to offer "big bank" capabilities with a community bank's personalized touch.

Competitive Dynamics: Outperforming in a Crowded Field

The regional banking sector is characterized by intense competition from both larger national players and nimble fintechs. WesBanco operates alongside formidable direct competitors such as Huntington Bancshares (HBAN), Fifth Third Bancorp (FITB), PNC Financial Services Group (PNC), and KeyCorp (KEY). Indirect threats also emerge from digital-first entities like Square (SQ) or Ally Financial (ALLY), which offer alternative payment and lending solutions.

WesBanco's competitive standing is rooted in its strong community presence, personalized service model, and a 155-year legacy of rigorous underwriting. This approach has allowed it to consistently outperform the monthly H.8 data for all domestically chartered commercial banks in both total and commercial loan growth, as well as deposit growth. Its credit quality metrics are notably favorable compared to the average of banks with assets between $10 billion and $25 billion, underscoring its disciplined lending practices.

However, WesBanco has historically faced vulnerabilities due to its smaller scale and potential technological gaps compared to larger rivals. For instance, its TTM operating profit margin of 8.03% lags HBAN (20%), FITB (22%), and PNC (21%), reflecting the efficiency advantages of greater scale. Similarly, its P/B ratio of 0.75 is lower than HBAN (1.20), FITB (1.47), and PNC (1.41), potentially indicating a lower perceived asset quality or growth trajectory by the market.

The acquisition of Premier Financial Corp. directly addresses the scale disadvantage, providing enhanced capabilities and accelerating WesBanco's growth trajectory. This strategic move strengthens its market positioning, allowing it to compete more effectively in broader markets while retaining its core community-centric values. The company's focus on relationship banking, supported by its expanding Loan Production Offices (LPOs) in high-growth areas like Knoxville and Northern Virginia, and specialized teams in sectors like healthcare, further differentiates its offerings. These initiatives, combined with ongoing investments in digital platforms, are critical for bridging any technological gaps and ensuring sustained competitive relevance.

Financial Performance: A Story of Strategic Execution

WesBanco's financial performance in the second quarter of 2025 vividly illustrates the positive impact of its strategic initiatives, particularly the Premier acquisition and robust organic growth. The company reported GAAP net income available to common shareholders of $54.9 million, translating to $0.57 per diluted share. Excluding restructuring and merger-related expenses, adjusted net income available to common shareholders surged to $87.3 million, or $0.91 per diluted share, marking an impressive 86% increase year-over-year. This strong performance was underpinned by a 134% year-over-year growth in pre-tax, pre-provision core earnings.

The net interest margin (NIM) saw a meaningful improvement, reaching 3.59% in Q2 2025, up 24 basis points sequentially and 64 basis points year-over-year. This expansion was significantly bolstered by approximately 37 basis points of purchase accounting accretion from the Premier acquisition, alongside higher loan and securities yields and a strategic focus on strengthening the balance sheet.

Non-interest income demonstrated robust growth, increasing 40% year-over-year to $44 million in Q2 2025. This was primarily driven by the Premier acquisition and organic growth across various fee categories, including record highs in trust fees, service charges on deposits, electronic banking fees, and securities brokerage revenue. The company's efficiency ratio, adjusted for merger-related costs, improved by 10 percentage points year-over-year to 55.5%, reflecting the realization of planned acquisition cost savings.

The balance sheet expanded significantly, with total assets increasing 52% year-over-year to $27.6 billion, including $480 million in goodwill from the PFC acquisition. Total portfolio loans grew 53.6% year-over-year to $18.8 billion, comprising $5.9 billion from Premier and $670 million from organic growth. Deposits also saw substantial growth, increasing 58% year-over-year to $21.2 billion, with $6.9 billion from Premier and $849 million from organic efforts, fully funding organic loan growth. While Q2 2025 experienced a sequential quarter deposit decline of $138 million due to normal seasonality and the intentional runoff of higher-cost certificates of deposit, deposits began to rebound in July.

Credit quality remains stable, with key metrics historically low. Non-performing loans increased to 0.45% of total portfolio loans at June 30, 2025, from 0.29% a year prior, and criticized and classified loans rose to 3.63% from 2.15%, primarily due to the regrading of some acquired Premier clients. Management anticipates these percentages to improve in the second half of 2025. The allowance for credit losses stood at 1.19% of total portfolio loans.

Strategic Initiatives and Forward Outlook

WesBanco's strategic roadmap for the remainder of 2025 is clear: consolidate the gains from the Premier acquisition, continue driving organic growth, and enhance operational efficiency. Management models two 25 basis point Fed rate cuts in September and October, but expects "no meaningful impact" on its net interest margin in the near term due to its relatively neutral rate-sensitive position.

The NIM is projected to experience a temporary 5 to 7 basis point decline in Q3 2025, primarily due to lower Premier-related purchase accounting accretion, which is expected to be down 7 to 10 basis points from the 37 basis points reported in Q2. However, a "strong bounce back" is anticipated in Q4, with the NIM returning to the high 3.50s. This recovery will be fueled by the repricing of approximately 60% of the $2.9 billion CD portfolio from a weighted average rate of 3.9% to lower market rates, and the repricing of $350 million in fixed-rate commercial loans (4.4% weighted average rate) up to the 7s over the next year. Furthermore, the securities portfolio is expected to provide a tailwind, with $250 million in quarterly cash flow reinvested at 5.5%, significantly higher than the 3.3% coming off.

Loan growth is targeted for the "mid-single-digit" range for 2025, supported by a robust commercial loan pipeline of approximately $1.3 billion, with 30% originating from new markets and LPOs. Management acknowledges that increased commercial real estate (CRE) payoffs, totaling $255 million year-to-date, could temper growth from reaching high single digits. Deposit growth is expected to fully fund loan growth for the full year, driven by new deposit campaigns and the continued success of treasury management products.

Expense management remains a priority, with the Q3 and Q4 2025 expense run rate projected to be consistent with Q2, in the low to mid-$140 million range. This reflects that mid-year merit increases will offset the bulk of the 26% cost savings realized from the Premier acquisition. Further efficiency gains are expected from ongoing branch rationalization efforts in the second half of the year.

From a capital perspective, WesBanco is in a "capital build mode" for the next several quarters. The company is evaluating calling its preferred stock, callable on November 15, 2025, and exploring alternatives for refinancing $50 million of acquired subordinated debt. Regulatory capital ratios remain strong, with Tier 1 leverage at 8.7% and tangible common equity to tangible assets at 7.6% in Q2 2025. The company's full-year effective tax rate is anticipated to be between 19% and 19.5%.

Risks and Considerations

While WesBanco's outlook is positive, investors should consider several risks. The anticipated increase in CRE payoffs could impact loan growth, although management views this as a market dynamic rather than a credit quality issue. The macroeconomic environment, particularly potential trade war threats and tariff pronouncements, introduces uncertainty, though WesBanco's diverse loan portfolio across a nine-state footprint offers some insulation. The integration of Premier, while smooth to date, still presents ongoing operational challenges, including the finalization of data processing and securities brokerage conversions. Furthermore, the regional banking sector remains sensitive to interest rate fluctuations, and while WesBanco is positioned as "neutral," unexpected rate movements could impact its NIM trajectory.

Conclusion

WesBanco is executing a compelling investment thesis centered on strategic expansion and operational excellence. The successful integration of Premier Financial Corp. has fundamentally reshaped the company, providing enhanced scale and a broader market footprint. This transformative acquisition, combined with a proven organic growth engine fueled by strategic LPO expansion, specialized banking teams, and innovative treasury management solutions, positions WesBanco for sustained market share gains.

The company's robust financial performance in Q2 2025, marked by significant NIM expansion and strong adjusted earnings growth, underscores its ability to generate value in a dynamic environment. Management's clear guidance for continued NIM improvement, mid-single-digit loan growth, and disciplined expense management provides a clear roadmap for investors. While macroeconomic uncertainties and competitive pressures persist, WesBanco's legacy of strong credit quality, community-focused relationship banking, and strategic technological investments form a resilient foundation. For discerning investors, WesBanco offers a compelling narrative of a regional bank successfully leveraging strategic M&A and organic initiatives to drive enhanced shareholder value in the years ahead.