WesBanco, Inc.

Good morning everyone and welcome to the West Bank of First Quarter 2025 earnings conference call. All participants will be in a listen-only mode. Should you need assistance, please signal 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 and then one. To withdraw your questions, you may press star and two. Please also note, today's event is being recorded. I would now like to turn the conference call over to John Iannone, Senior Vice President, Investor Relations. Please go ahead.

Thank you. Good morning and welcome to West Bank of Inks First Quarter 2025 earnings conference call. Leading the 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 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, westbank.com. All statements speak only as of April 30th, 2025 and West Bank undertakes no obligation to update them. I would now like to turn the call over to Jeff. Jeff?

Thanks John and good morning. On today's call, we will review our acquisition of Premier Financial and our strong first quarter results, as well as provide an update on our outlook for 2025. Key takeaways from the call today are successful completion of our acquisition of Premier, improved net interest margin, which is expected to continue to improve through 2025, strong organic loan growth that was fully funded by organic deposit growth. Our first quarter results demonstrate continued solid operational performance, as we again delivered strong organic loan and deposit growth while driving positive operating leverage. We also continued to strengthen our balance sheet and net interest margin by funding loan growth with deposits and reducing higher cost borrowings. For the quarter ending March 31st, 2025, we reported net income excluding merger and restructuring expenses and the day one provision on acquired loans of $51.2 million dollars and diluted earnings per share of 66 cents, which increased 18% year over year, despite significantly higher shares outstanding from the PFC acquisition. On a similar basis, our first quarter returns on average assets and tangible equity improved year over year to approximately 1% and 12% respectively. Reflecting our focus on organic growth and positive operating leverage, combined with the benefits of the Premier acquisition, our net interest margin increased to .35% and our efficiency ratio improved to 58.62%. This quarter's key story was the successful acquisition of Premier Financial, elevating us into the ranks of the top 100 largest US banks by asset size. This strategic merger expands and strengthens our market position and accelerates our long-term strategy. We are pleased to welcome Premier's talented team, loyal customers, and strong community partners to WestBankO. We've retained nearly 90% of the Premier employees and the response to our merger has been overwhelmingly positive, both in our communities and our teams. I have already seen great examples of collaboration sparking new growth opportunities and I look forward to sharing the results with you in months ahead. As we move forward together, our teams are focused on executing seamlessly integration and delivering on the full potential of the combined organization for all stakeholders. The strength of our strategies and teams are reflected in our performance with organic total and commercial loan growth and organic deposit growth continuing to significantly outperform the monthly H8 data for all domestically chartered commercial banks on both a year over year and quarter over quarter basis. For the first quarter, total deposits organically increased $922 million year over year and $285 million quarter over quarter to more than $14.4 billion. Importantly, this growth was driven by deposit categories other than certificate of deposits, as organic deposit growth excluding CDs was 5% year over year and nearly 11% quarter over quarter annualized. Further, deposit growth again fully funded our total organic loan growth. While there could be fluctuations quarter to quarter, our plan is to still to fund full year loan growth with deposits. First quarter organic loan growth was 8% year over year and 4% quarter over quarter annualized, driven by the strong performance of our banking teams across our markets. Total commercial loans organically increased 10% year over year and almost 7% sequentially on an annualized basis driven by commercial real estate. Our commercial loan pipeline as of March 31st was approximately $1.3 billion with more than 25% attributable to Premier. Reflecting our strong organic growth engine, West Banko's standalone pipeline at March 31st improved approximately 18% from year end. In the three weeks since quarter end, the commercial pipeline has grown approximately $100 million to $1.4 billion. Based on the current loan pipeline, we continue to expect mid single digit loan growth during 2025. This continued growth is made possible by the strength of our markets and lending teams who are working across business lines to meet customers' needs and drive growth. One example highlights a collaborative effort across commercial products, treasury management, and private banking to deliver a tailored solution and secure a significant win with an Ohio customer. Consistent with our mission, the team tailored a loan structure to meet the customer's unique needs, closing a $50 million loan and securing $45 million in deposits and a $1 million fee income item, as well as significant near term treasury management and private banking opportunities. Turning briefly to the macroeconomic environment, the equity markets are extremely volatile right now, reflecting the threat of trade wars due to constant fluctuations in tariff pronouncements. While these pronouncements are likely negotiating tactics, the eventual outcome of trade negotiations remain unclear, and it is too early to accurately gauge potential impacts, if any. However, the benefit of our loan portfolio is its variety and granularity spread across our economically diverse nine state footprint, which provides soundness and stability if an industry or region is struggling. Roughly 17% of our total portfolio is in our mid-Atlantic region, with roughly a third of that residential related, and it spans our footprint across the state. The percentage of this that falls within the DCMSA is less than .7%, with roughly half of that residential. Further, we do not have a government contractor line of business, and our total office investment portfolio is less than 4% of our total loan portfolio and has solid loan to value and DSC ratios. We are staying close to our customers and continually monitoring our portfolios to proactively manage risk and help our customers navigate evolving market dynamics. I would now like to turn the call over to Dan Weiss, our CFO, for details on our first quarter financial results and our current outlook for 2025. Dan?

Thanks, Jeff, and good morning. For the ending March 31, 2025, we reported GAAP net income available to common shareholders of negative $11.5 million or 15 cents per share. When excluding the day one provision for credit losses and merger related expenses from the premier acquisition, net income was $51.2 million or 66 cents per share, representing an increase of 54% from $33.2 million or 56 cents per share in the prior year period. To highlight a few of the first quarter's accomplishments, we successfully closed our acquisition of Premier Financial, generated strong -over-year pre-tax, pre-provision earnings growth of 25%, grew both loans and deposits organically, improved the net interest margin, and reduced the efficiency ratio. We also restructured the Premier Balance Sheet through securities restructuring, unwound the macro hedges, paid down higher cost broker deposits, remain on pace to exit $140 million of commercial loans during the second quarter, and remain on track to exit the mortgage servicing business in the coming months. So we're excited about the opportunities that lie ahead and pleased with the success of our program. The first quarter's benefits reflect the benefits of both the Premier Acquired Balance Sheet and organic growth. Total assets increased 54% -over-year to $27.4 billion, which included total portfolio loans of $18.7 billion, total securities of $4.3 billion, and the addition of approximately $480 million in will generated from the acquisition. Total portfolio loans increased 57.3%, reflecting $5.9 billion from Premier and $921 million from organic growth, which as Jeff mentioned was driven by strong performance by our banking teams across our markets. We remain optimistic about future loan growth with our strong pipeline, banking teams and markets combined with more than $1 billion in unfunded land construction and development commitments expected to fund over the next 18 months. During March, we sold approximately $775 million of Premier securities and purchased $475 million of higher coupon fixed rate securities and used the excess proceeds to pay down higher cost which provided immediate benefit to the first quarter at interest margin. Deposits of $21.3 billion increased 58% versus the prior year due to Premier deposits of $6.9 billion and organic growth of $922 million. Our organic deposit growth fully funded loan growth on both a -over-year and sequential quarter basis. Further, excluding CDs, we realized organic deposit growth of .8% -over-year and .6% -over-quarter annualized. Credit quality continues to remain stable with key metrics have remained low from a historical perspective and within a consistent range in the last five years. The first quarter provision for credit losses was $69 million, with $59 million related to the day one non-PCD provision. The allowance for credit losses was $234 million at March 31st, which increased the coverage ratio to .25% from .10% as of December 31st, 2024. The first quarter margin of .35% improved 32 basis points compared to the fourth quarter and 43 basis points on a -over-year basis through a combination of higher loan and securities yields, lower funding costs, and purchase accounting accretion. Interest rate mark accretion from the Premier acquisition in addition to the securities restructuring benefited the first quarter net interest margin by approximately 25 basis points. Deposit funding costs of 255 basis points for the first quarter decreased as compared to 271 basis points in the fourth quarter of 2024 and 256 basis points in the prior year period. When including non-interest bearing deposits, deposit funding costs for the first quarter were 188 basis points. In conjunction with the closing of our acquisition of Premier, interest accretion added approximately $8.4 million to net interest income in the first quarter, mostly from loan accretion of $6.2 million as well as $1.9 million from CDs. The PCD book totaled $220 million with an interest mark of .3% and credit mark of roughly $30 million. $6 billion in Premier loans were identified as non-PCD with an interest mark of $270 million, representing approximately .5% and a credit mark of roughly $60 million, representing a 1% credit mark, both of which will be accreted to income over the life of the portfolio. The interest mark on CDs was $11 million with the majority to accrete over the next 9 to 12 months and interest marks on other borrowings were relatively small. For the first quarter, non-interest income totaled $34.7 million, a 13% increase from the prior year period due primarily to the Premier acquisition. Net swap fee and valuation income was down due to fair market value adjustments from recent rate volatility. However, gross swap fees increased $1.2 million year over year to $2 million. Non-interest expense, excluding restructuring emerge related costs for the three months ended March 31, 2025, was $114 million, an increase of .2% year over year due to the addition of Premier's expense base and higher amortization of intangible assets. Equipment and software expense of $13.1 million includes the additional cost of operating two core systems until conversion to one platform in Mid-Bay. Amortization of intangible assets of $4.2 million increased $2.1 million year over year due to the core deposit intangible asset that was created from the Premier acquisition. Excluding the impacts from the addition of Premier, our legacy cost base was roughly flat to the fourth quarter. Turning to capital, our regulatory ratios remain above the well-capitalized standards. In conjunction with the February 28 closing of the Premier financial acquisition, we converted all of Premier's outstanding common shares into $28.7 million West Vanco shares, which increased total capital by $1 billion and as anticipated, it's impacted our capital ratios. It's also worth noting here that under the regulatory definition for the calculation of the leverage ratio, period and capital is divided by average assets, which included just one month of Premier's balance sheet. Therefore, the reported ratio of .11% is expected to come down into the high 8% range on a full quarter basis. 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 FIT rate cuts in June and September. However, given our relatively neutral rate-sensitive position, we do not expect a meaningful impact to our net interest margin from these cuts. We anticipate approximately two-thirds of our $3 billion CD book to mature or reprice lower over the next six months with an average interest rate of .9% as compared to our seven-month CD rate of 3.5%. We anticipate Premier-related accretion during the second quarter to add approximately 15 to 20 basis points to the first quarter margin and therefore expect to break through a .50% margin during the second quarter. Nearly all fee income categories will positively be impacted by the Premier acquisition. First quarter trust fees include tax preparation fees totaling roughly $700,000. Excluding these fees, trust fees as well as securities brokerage revenue for the remainder of the year should be modestly higher in future quarters reflecting modest organic growth and the benefit of our new markets and newly acquired assets under management. Electronic banking fees and service charges on deposit which are subject to overall consumer spending behaviors should increase from the first quarter reflecting the addition of Premier's markets despite the Durbin Amendment impact expected to be $1 million per quarter from Premier's historical run rate. Mortgage banking income should improve modestly reflecting the opportunities in our new markets but will continue to be impacted by the overall residential housing market and economic trends and interest rates. And finally gross commercial swap fee income excluding market adjustments should be in a similar range to the first quarter. As we stated in the past, we remain focused on delivering disciplined expense management to drive positive operating leverage and will continue our efforts throughout 2025. During the second quarter we will be operating two core systems and have a higher staffing level as to facilitate our core system conversion in mid-May which will drive a slightly higher expense base before the remaining cost saves are realized and fully reflected in the third quarter run rate. With Premier's core deposit intangible of $151.5 million representing .28% of core deposits, amortization of intangible assets is expected to be roughly $9 million per quarter up from the $4 million reported in the first quarter as we realize the full quarter impact of the amortization of the intangible asset created from the Premier acquisition. We believe the temporary costs of preparing for the core system conversion during the second quarter will be similar to our anticipated mid-year merit increase and therefore most of the 26% cost savings should be reflected in the third quarter and we expect the expense run rate will be in the $140 million range for the remaining quarters of 2025 which reflects legacy WestBanko's $100 million cost base, the addition of Premier's cost base after cost savings, mid-year merit increases, and the higher intangible amortization. The provision for credit losses will depend upon changes to the macroeconomic forecast and qualitative factors as well as various credit quality metrics including potential charge-offs, criticized and classified loan balances, delinquencies, changes in prepayment speeds, and future loan growth. And lastly, our anticipated full-year effective tax rate is expected to be between 19 and .5% subject to changes in tax regulations and taxable income levels. This increase from last quarter is due to non-deductible costs related to the Premier acquisition. We further expect the bulk of the remaining merger-related expenses totaling approximately $45 million to be recognized in the second quarter as contract terminations, severance, and retention bonuses mostly occur then. Operator, we're now ready to take questions. Would you please review the instructions?

Ladies and gentlemen, at this time we'll begin the question and answer session. To ask a question, you may press star and then one on your touchtone phones. If you are using a speakerphone, we do ask that you please pick up your handset prior to pressing the keys. We do ask that you please limit yourselves to one question and a single follow-up. To withdraw your questions, you may press star and two. Again, that is star and then one to join the question queue. Our first question today comes from Andrew Leisch from Piper Sandler. Please go ahead with your question.

Thanks. Good morning, guys. On the margins looking forward here, appreciate the commentary with the addition and the accretion from Premier, but on an organic basis, how do you think it can perform at absent rate cuts? It looked like loan yield on new production was up a little bit and maybe there's an opportunity to reduce funding costs of the CDs. How should we be looking at the margin more on an organic basis?

Yeah, Andrew, I'll take that one. Similar to what we discussed last quarter on a kind of organic legacy basis, we anticipate roughly four to six basis points of margin improvement per quarter. With Premier in the fold representing about a third of the overall balance sheet, I might call that maybe it's three to five basis points or two to four basis points of legacy improvement and all for the reasons that we kind of discussed last quarter as well. Obviously, as we talked, CDs repricing downward. Certainly, we are anticipating right now a Fed cut in June. That would have an impact both on the federal home loan bank borrowings, most of which are one month advances. It's currently right around four and a half percent. Those would price down immediately as would our variable rate commercial loans and security. A couple things that we did do, we talked about the securities restructuring a little bit, but one of the things that we would anticipate, even outside of the restructuring, we did, as we said in the past, have been evaluating our floating rate securities book. This is West Bank's floating rate securities book representing about 16% of the overall securities. In the quarter, in February, we did sell about $100 million at it. These are floating rate securities at about a $40,000 gain. The yield on those was about $494, 4.94%. We reinvested that $100 million and got a book yield of about .5% and only picked up about four-tenths of a year in duration. That also should be part of that, I would say, tailwind towards margin expansion

on an

organic basis.

Got it. All right. That's helpful. Thanks. Then that $140 million expense number, it's not that the cost saves from the deal are on track or maybe even a little bit ahead of schedule. But just some clarity, is that $140 million for the third quarter and the fourth quarter or are there still going to be some legacy costs before they're all realized? So the 140 number is a better number for the fourth quarter?

Yeah. No. I would say right now we're modeling in that low 140 range for each of the next three quarters. And again, obviously second quarter is really due to the combined cores. All of the cost saves haven't been taken out, won't expect to be taken out really until June 30th fully. We do have a little bit of spillover into the third quarter, our trust conversion, our securities brokerage conversion, and some of our MSR assets are likely to be still serviced for a short period of time in the third quarter. So there might be a little bit of additional kind of duplication of cost there. But for the most part, we expect to see that 26% fully baked in in the fourth quarter for sure and mostly baked in in the third quarter. And as you know, there were some cost saves on the salaries and wages front here in, you know, effective February 28th with some folks leaving on kind of legal day one.

Right. Right. Great. Thank you for clarity. I'll step back.

Our next question comes from Catherine Miller from KBW. Please go ahead with your question.

Thanks. Good morning.

Hey,

good

morning.

Morning.

I want to dig a little bit into the margins, just a couple of lines, if you don't mind. Maybe just the first on the bond book, do you have, I know there's a lot of moving parts. Is there any way for you to disclose where maybe at quarter end when we get the kind of full impact of the bond restructure and maybe kind of where we're starting this quarter?

Yeah. So what I would tell you specific to the restructure, as we said, sold $775 million. And if we think about, you know, that those, those securities were yielding about 3% on Premier's books, the markup was about 4 point, which was up to 4.86 on those sold. We reinvested, as we said, $475 million at a yield of about four, five, excuse me, 5.43%. So we picked up 57 basis points, kind of on that reinvestment, focused on mortgage backs and DMOs, you know, to improve the pledge ability, certainly, and as you know, AFS. But I would tell you that if we look at, you know, kind of spot securities yields at the end of March, it is, it's right around 307. So hopefully, you know, Catherine, that kind of Yeah,

that's, yeah, that's great. That's great. Okay, that's perfect. And then, and then on the deposit side, I know Premier had a higher deposit base than you did, but, and we only have a partial quarter. So is it fair to assume that deposit cost actually increase next quarter once we kind of get the full impact? Or is, are we still kind of stable in deposit costs relative to the quarter we've seen at that $188 level?

Yeah, no, I think, I think that we do see some continued reduction in deposit costs for, you know, certainly on the CD front is kind of we've talked about in the past. At this point, we have implemented our pricing of deposits that's been fully implemented at Premier. And so we think that, you know, we can, we're going to be patient, certainly with the deposits there. But we do think that we're going to see some improvement in overall funding costs here, you know, maybe in the 10 basis point range coming off of first quarter.

Okay, okay, great. And then I'm going to back up. Oh, actually, I'm just going to kind of hit a couple lines. Hopefully, I'm not gonna ask any questions. And then on on SHL, I know you've got a billion for coming off and SHLB. Do you expect to shrink the sheet by that amount or just reinvest it into lower yielding of HLB?

Yeah, I would say it's going to be the at this point, the shrinkage of the balance sheet is really dependent upon a couple of things. First, you know, we're obviously monitoring the securities book, we did shrink that somewhat, it represents about 16% right now of total assets. That's on kind of, I would say, the lower end of the range for where we want to be to maintain, you know, the what we build, appropriate levels of liquidity to maintain pledging for our public funds and, and such. So, you know, I don't I don't see us necessarily shrinking that I would tell you, though, we are holding a little more cash than, you know, what we have historically. Historically, we try to target around two and a half percent of total assets to, you know, to 3%. At the period end, we're holding about 4%. So, you know, we could see 100 million or so potentially, you know, reduction in FHLB there. But generally speaking, the expectation is we would continue to our loan growth with with deposit growth. And FHLB borings would generally kind of fill in any gaps there, but we would maintain the securities book to be about 16 to 17% of the overall balance sheet cash around 3%.

Okay, okay, that's great. And if I could just round up the margin questions going back up to loan. In your comment, you said that you expect fair value accretion to be 15 to 20 basis points over the first quarter. So that's not 15 to 20 basis points of fair value accretion, that's increased from the first quarter?

That's exactly right, Catherine. That's a build of 15 to 20 basis points on the .35% that we reported here in the first quarter.

Okay, great. And so all that together, you're saying you're going to go through the 350 margin. How conservative do you feel with that number? Because I feel like you're going to go higher than that. I'm giving you the bottom end, not the top

end.

Yeah. Because I'm getting high. When I put all that together, it's a bigger number. So that's, so you're very conservative with that 350.

Yeah, I think so. That's your point.

Okay, all right, great. Awesome. Thank you for all, for letting me ask all the questions. Appreciate it.

Our next question comes from Daniel Tamayo from Raymond James. Please go ahead with your question.

Thank you. Good morning, guys.

Hey, good morning,

Daniel. Good morning.

So we've hit the margin a lot. Appreciate all that guidance there. We talked a little bit about the balance sheet, but maybe we could dig in just a little bit more to try and put a finer point on where net interest income might end up this year. So I'll ask you directly if you have any comments on what you think net interest income numbers could look like for the rest of the year. If not, or in addition, if you could kind of size for us how you're thinking about just absolute balances on the asset side going forward, given all the moving parts you've talked about with FHLB and the securities restructurings and loan growth obviously baked in. So just curious in your mind or budget how you think the size of the assets and or net interest income could move the rest of the year?

Yeah, I would say, you know, we certainly anticipate still that, you know, mid to upper single digit loan growth and that to be fully funded with deposits. So that kind of, and I've already talked about kind of the other levers on the balance sheet and what the percentages would be. So I think that kind of helps guide what we would be expecting for the balance sheet by the end of the year. As it relates to, you know, net interest income, you know, we typically wouldn't give a whole lot of, you know, deep guidance here, but what I can tell you, and I think this should help, you know, clear up at least some parts of this is the accretion that we are anticipating as a result of the premier deal. I can give that, and these are kind of rough estimates at this point. We're still finalizing our purchase accounting, but, you know, we talked about the overall interest mark on the non-PCD book is roughly $270 million. That's a four and a half percent mark. Credit mark, which is also would be, you know, accreted through interest income is right around $60 million. So that's, you know, 1% roughly. And overall, including the PCD book as well, we still have about a four and a half percent interest mark and about a .6% credit mark. And of course, some of that on the PCD side, it would not be accretable. But if we think about the accretion, the breakdown here that we are showing today, and this could fluctuate again based on prepayment speeds in the future, et cetera, is right around $59 million here in business for loans in 2025, around $60 million in 2026, $50 million in 2027. Again, this is going to be very much subject to, you know, additional review and very much dependent on interest rates in the future as that would influence prepayment speeds. So we do have some prepayment speed assumptions based into this. But that's kind of, you know, what we see today based on everything that we know.

Okay, that's very helpful, Dan. Appreciate it. Maybe switching gears here, we haven't talked about credit in the question section at least yet. And everything looked pretty good. I guess there was a, you know, somewhat of an increase in the criticized loans in the quarter. I'm assuming that's from the acquisition. Maybe you could give a little color around the increase there. And if you have any thoughts on kind of go forward, charge off expectations and or, you know, provision, however you want to guide us in terms of how we should think about that.

Yeah, I can start. No, I think most of that CNC is just normal course of business related to the prior acquisition, as well as just, you know, how we're seeing things today. I think if you look at the provision, it was up. A lot of that was due to obviously the acquisition. We also did have one credit that we took a larger provision on, but I feel very good about that, working through that the rest of the year. So I would say overall, we still feel very good about our credit metrics. We still feel like we're going to be better than our peer group, better than the industry. And at this point, we're not really seeing any sort of outside risk in any sort of market. As I mentioned in my earlier comments, we have very, very, very limited exposure to the DC market specifically, and so feel good about that, as well as obviously having a nine state footprint. We have a very diverse portfolio. So I would say I think where we're at, obviously, will fluctuate quarter to quarter, but we feel very good with the range we're in today.

Okay, in terms of kind of recent net charge off activity, that's what you're referring to?

Yes.

Got it. Okay. All right. Thanks for taking my questions, guys.

Yep. Our next question comes from Russell Gunther from Stevens. Please go ahead with your question. Hey, good morning, guys.

Morning, Russell. Morning. Wanted to follow up on the expenses. First, to just confirm that the 4Q run rate provided is fully inclusive of all deal related cost saves, and then to inquire about how we should think about a normalized growth rate from there.

Yeah, Russell, I would say that the 4Q run rate would be inclusive of all cost saves, certainly, like we said in the low $140 range, and I would anticipate probably a 4% build off of there as we look towards 26 and beyond.

Okay, great. Thanks, Dan. And then just my second question would be on capital. So with CET1 around 10%, how are you guys thinking about managing this ratio going forward, and what does that suggest for capital deployment beyond loan growth, specifically any appetite for buybacks or M&A?

Yeah, I would say today we're in capital build mode for the next several quarters, and in terms of capital deployment and how we might deploy that through M&A or buyback, I'll maybe defer to Jeff.

Yeah, as Dan said, we're still building back the capital. Obviously, you know, we need to digest this transaction. We're going to have conversion coming up in a few weeks. We expect that to go really, really well. And then, you know, if we were ever to look to announce another deal, it'd probably be way into this year, early first quarter, second quarter. At this point, we're really focused on getting Premier squared away, making sure everything's running very smoothly, and then, you know, taking it from there. But we're in no hurry to do another deal, or I would say at this point, we're just trying to build back capital. Hopefully, that answers your question.

Yes, guys. Thank you both for taking my question.

Our next question comes from Manuel Navis from D.A. Davidson. Please go ahead with your question.

Hey, could I just clarify the NIM a little bit? So, PAA gets you to that 350 to 355 range next year, and then you have just organic legacy NIM improvement, and there were two ranges. Is it three to five base points on top, or is it four to six basis points on top, potentially?

Yeah, well, I would say three to five. So, the four to six was what we disclosed last quarter for West Bank O's legacy. So, if we think about, you know, obviously the purchase accounting accretion and the marketing, Premier's balance sheet, which represents roughly a third of our assets and interest income, you know, I would just say, you know, you have to kind of it's basically two thirds of the four to six, which is I would say kind of more three to five would be added in.

Okay, I appreciate that. And can you add a little bit more color on any balance sheet items that still need to be done? I know you're going to there's a couple of loan sales that should come through next quarter. Anything else that's still to come? And maybe is there more securities or structure that you're going to do? Is that kind of all done with that spot rate you gave? Like, is there anything left to come on the balance sheet next this coming quarter?

Yeah, you know, I think, you know, security is pretty well done. Currently, we've got the loan sale about $140 million that could be sold. We have roughly, you know, that marked down to about $400. Certainly, the MSR business is something else that is expected to kind of close out over the next several months, probably will kind of wrap that completely up here in the early in the third quarter. But no, I think that really covers the majority of the balance sheet restructuring. We certainly do have, you know, later in the year, our preferred stock does become callable. And so we'll be evaluating that along with some of the subdebt that we acquired from Premier to kind of essentially refinancing that to take advantage of some savings there. But nothing significant outside of that.

Kind of shifting direction a little bit. Can you talk about the puts and takes in the loan growth outlook? The pipeline is strong. What are your expectations for pull through? Have there been any kind of shifts or delays in your customer base with pull throughs? Has there been any uptick in payoff activity since the end of the first quarter and some discussion on the different regions? Like which ones are doing well, which ones could do better? And just kind of a little bit more on the puts and takes behind your loan growth.

Sure. So as I mentioned, you know, our pipelines continue to grow. They're combined. I believe it's about $1.4 billion. And that's pretty solid pipeline. So there's obviously other stuff beyond that. I would say as far as pull through, we're still seeing customers do a lot of business. We have seen a few things pull back due to tariffs. Just waiting to see. But overall, I feel very good about the loan growth, that mid single digit to potentially upper single digit loan growth. If you look at the kind of the markets that are doing really well from a perspective, I do know our LPOs continue to be I believe 20 to 25% of the pipeline of legacy West Bank with Chattanooga and Nashville and Indianapolis showing really strong growth there. The whole state of Ohio, obviously with the addition of Premier, we are getting a lot more opportunities to pull through there. And then we are seeing good pipelines over in the mid Atlantic region also. So overall, I would say it looks very similar to last year. With the addition to Premier, we should see more, I would say more CNI pipeline because that franchise and that mark those markets tend to lean more CNI, which is good for us. And we are seeing more opportunities there that we're able to capitalize on. So once again, overall, we feel very good about mid to upper single digits. As far as loan growth, I have not seen any slowdown. As far as pull through, once again, a few customers, a few things due to tariffs, but overall, I think it's still unknown the impacts there.

I appreciate that. And the deposit growth has been excellent. And are the pipelines similar on that side of the house? And how much of that is coming from the commercial teams themselves? And I'll step back into the queue.

Yes, we had a very good year to look very similar to last year as it relates to deposits. So as you remember, we grew deposits in first quarter last year. We grew them this year. That looked really, really good. In the second quarter, you do have tax time. So you do see typically a little bit of a dip and then it builds back toward the end of the second quarter. But I would say the deposit pipeline still looks very good as well. And a lot of it is commercial. We do have some really good opportunities ahead of us. Also on the Treasury management side too, I do believe we have a lot of new purchase card and TM products in place too that we hope to build over the next several quarters our revenue there as well.

Thank you. Thank you for your time, Anthony.

Thank you. Our next question comes from Carl Shepard from RBC Capital Markets. Please go ahead with your question.

Hey, good morning, guys.

Hey, good morning, Carl. Morning, Carl.

I got a few ones for you. On capital, I think the message you're trying to send is you have ample capital for all the organic growth you want to do, but just kind of waiting to build back to more normalized level. Is that fair? Yeah. Okay. And then at deal announcement, we talked a little bit about CRE concentration. Do you have a quick update there and ability to put CRE loans on?

Yeah. So, you know, we calculate our CRE concentration ratio at a percentage of total risk-based capital at the bank level. And, you know, at the bank level, we are calculating right around 298%, which is obviously under the guideline. You know, I know many like to focus on total risk-based capital at the hold co., which is obviously significantly lower than that 298. But, yeah, we're going to continue to monitor, you know, those levels and wouldn't be, you know, it'll be dependent upon kind of CRE growth here, you know, quarter to quarter as it concerned if we eclipse that 300% threshold and kind of are bouncing, you know, right around that for some period of time. As we continue, obviously, to build back capital, though, which is coming back at a pretty nice clip through, you know, the organic margin as well as the accretion, we do think that, you know, that is going to continue to work its way, you know, back, downward. But we do have, you know, typically the seasonal CRE growth occurs in second and third quarter. So, you know, we'll see where we land there.

Okay. The balance sheet is, call it 50% larger today than it was three months ago. Does that change any way you think about running your business or open up any strategic opportunities or how should we think about the way you guys are approaching that or anything that's rallying around in your head?

Yeah, I think it obviously gives us a bigger balance sheet to lend to our stronger customers. We're doing that right now, especially as we look at our new Premier top customers where we've already done an analysis on potential lending opportunities where we can lend more to them than, say, Legacy Premier has looked at in the past. It has also given us an opportunity to look at, are there certain lines of business that maybe we wouldn't have gone into that we're doubling down on looking to move into, you know, moving forward. So we're looking at all those different things. There's anything else you would add? I think you'd help.

Okay. And then one last one for me. If you go back to the merger deck last summer, I think you had a pro forma of 359 of EPS for this year with fully phased in cost savings. And I don't want to pick over line by line. Dan's done a ton of help already. But that number, it feels like it should be achievable. The accretion seems dialed in with the high mortgage book and the margins tracking a little bit better pre-closed. Is there anything that you would steer us away from thinking about in those in that deck other than what we've talked about already?

Yeah, Carl, that 359, I assume that's excluding merger-related and probably excluding the kind of day one double count on the provision for credit losses? Yes. Yeah. Yep. Yeah, I would say, you know, given all of the all of the guidance that we provided, that should be within the range within range, then certainly.

Yeah. Okay. Thank you both for all the help.

And our last question today comes from David Bishop from Hoppy Group. Please go ahead with your question.

Hey, good morning, gentlemen. Hey, good morning. Hey, Jeff, just curious. I'm, you know, obviously with the added exposure to maybe more manufacturing CNI type markets, I'm sure you guys are aware of the impact of tariffs. Just curious if you've been able to do any sort of stress testing or deep dives in terms of, you know, the legacy Premier book in terms of, you know, tariff exposure, maybe even the legacy WestBanco book, you know, maybe where you see some, I guess, exposure there to increase tariffs across the commercial loan book.

Yeah, we've taken a look at both books. Obviously, the Premier book we've looked at multiple times pre-close and post-close. And so we've gone through that. Once again, you know, tariffs, it's kind of an unknown right now, but we have looked at different CNI exposure and, you know, the legacy WestBanco, we were not as big in CNI. And so, but we are taking a look at the current portfolio. But I would say at this point, we don't feel like we have a significant amount of exposure to the tariffs. But once again, there's a lot of unknowns. So I wish I could answer your question better. It's just, there's a lot of unknown at this point.

Understood. Understood. Then final question, maybe a little bit of guidance on the fee income side of the house. I assume you guys will be layering in your legacy swap products and such. Just curious, maybe, I don't know for a specific number, but maybe, you know, percentage growth or percent of average assets, how you sort of see that trending out over the course of the year. Thanks.

Yeah, I think we certainly see opportunities, particularly, you know, even as you mentioned there on the swap fee income, for example, certainly, this, the first quarter here only includes one month of fee income from premier. So we would expect to see a nice bump here in the second quarter as we kind of realize the full quarter's effect of the fee income. I would say, you know, today, and you can see the trends pretty cleanly if you compare fourth quarter to first quarter, for the most part, with the exception of swap, of net swap fee income, which obviously has some negative fair value adjustments there, with the exception of BOLI, and with the exception of insurance, mostly the improvement that you see, you know, kind of fourth quarter versus third quarter is representative of about one month of premier. So if you, you know, you can get there by almost multiplying the delta for those areas by three to get, you know, kind of your full quarter run rate for second quarter and beyond. If that's helpful, I would just also just mentioned that just keep in mind that trust fee income does include about $700,000 in the first quarter related to, you know, the tax prep fees that would not be, you know, it only occurs once a year, once a year, at the first quarter.

Got it. Appreciate the

guide. And ladies and gentlemen, with that, we'll conclude today's question and answer session. I'd like to turn the floor back over to Jeff Jackson for any closing remarks.

Thank you. There's a tremendous opportunity ahead as we continue to build our future as a community-focused regional financial services organization. Our transformational acquisition of premier provides enhanced scale and capabilities, while our organic growth engine continues to deliver strong loan and deposit growth. Our stronger company, which has already begun to drive improved financial metrics, positions us well to continue to deliver shareholder value. Thank you for joining us today, and we look forward to speaking with you at one of our next conferences. Thank you.

And ladies and gentlemen, with that, we'll conclude today's conference call and presentation. We do thank you for joining. You may now disconnect your lines.