WesBanco ((WSBC)) has held its Q2 earnings call. Read on for the main highlights of the call.

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WesBanco’s latest earnings call painted a broadly upbeat picture, with management emphasizing record pipelines, strong loan production, and rising fee income alongside better profitability and efficiency. While they acknowledged headwinds from sizable commercial real estate payoffs, branch consolidation and some credit watch items, they argued these are manageable and outweighed by capital strength and stable margins.

Strong earnings and EPS growth

WesBanco reported second‑quarter net income available to common shareholders of $89 million excluding merger and restructuring items, translating to diluted EPS of $0.92. Year‑to‑date EPS climbed 14% to $1.83, underscoring solid earnings momentum despite a still‑challenging rate and funding environment.

Core profitability expansion

Pre‑tax, pre‑provision earnings reached $242 million year‑to‑date, a 24% increase from the prior year and a key sign of improving underlying profitability. Management highlighted this metric as a cleaner view of operating performance, benefiting from stronger revenue, disciplined expense control, and better operating leverage.

Returns and efficiency at record levels

Second‑quarter returns were robust, with a 1.3% return on average assets and a 17.3% return on tangible common equity. The efficiency ratio improved to a record low of 51%, indicating WesBanco is generating more revenue per dollar of operating expense while still investing in strategic growth initiatives.

Loan growth momentum and production surge

Total portfolio loans increased 3.5% year‑over‑year and 8.3% on an annualized sequential basis, reflecting accelerating volume. Commercial and industrial lending was notably strong, rising 5% year‑over‑year and nearly 25% quarter‑over‑quarter annualized, with record loan production of nearly $2.5 billion in the first half, about $1 billion more than the same period last year.

Record commercial pipeline and expansion traction

The commercial pipeline reached a record $2.3 billion, more than 40% higher than the prior quarter and up 90% since year‑end, signaling future balance sheet growth. Early results from the Florida build‑out in Palm Beach, Broward and Naples have been impressive, contributing roughly 10% of the pipeline and about $200 million in loans within roughly 90 days.

Deposit and funding position supporting margins

Deposits rose 2.1% year‑over‑year to $21.6 billion, providing stable core funding despite competitive pressures. Total deposit funding costs declined six basis points year‑over‑year to 178 basis points, which helped support net interest margin stability even as the bank prepares for potential use of wholesale funding.

Non‑interest income and wealth business momentum

Non‑interest income grew to $54 million, an increase of $9.7 million or 22% year‑over‑year driven by stronger swap and valuation income, higher service charges and other fee categories. Trust and securities brokerage assets climbed to nearly $11 billion, a record level that points to growing wealth management scale and recurring revenue.

Capital strength and shareholder returns

The bank’s CET1 ratio stood at 10.7%, squarely within its 10.5% to 11% target range, giving room for growth and capital actions. WesBanco repurchased roughly 300,000 shares during the quarter, and management is modeling tangible book value growth of about $0.70 to $0.80 per quarter while keeping capital flexibility.

Net interest margin and repricing tailwinds

Net interest margin was 3.63% in the second quarter, up four basis points year‑over‑year and six basis points sequentially, aided by asset repricing. Management expects margin to hold around 3.60% for the remainder of 2026 as securities cash flows are reinvested at higher yields and fixed‑rate commercial loans roll into the current rate environment.

Elevated CRE payoffs as a growth headwind

Commercial real estate and other loan payoffs reached about $345 million in the quarter and more than $1.3 billion over the past 12 months, representing an estimated 1% drag on year‑over‑year loan growth. Management believes payoffs will taper in the second half, with third‑quarter levels modeled at roughly two‑thirds of the second quarter, easing the growth headwind.

Branch closures and deposit attrition risks

The closure of 37 financial centers year‑to‑date, combined with $50 million of brokered deposit runoff, contributed to a sequential deposit decline of $75 million. While attrition has been below conservative expectations, executives acknowledged that the branch optimization strategy carries execution and customer retention risk that they are actively monitoring.

Credit quality watch items

Management reported three new nonperforming loans and an uptick in criticized and classified credits, highlighting localized pockets of stress. They attributed much of this to timing and expect some resolutions soon, noting the allowance for credit losses remains solid at 1.12% of loans, or $218 million, with net charge‑offs still low at two basis points.

Rising operating costs from strategic investments

Non‑interest expense excluding merger and restructuring charges was $148 million, up 1.8% year‑over‑year and 3.6% sequentially, largely tied to higher salaries and hiring in southern expansion markets. Management projected a quarterly expense run rate of about $153 million in the third and fourth quarters, reflecting elevated marketing spend and increased technology and equipment investments.

Potential reliance on higher‑cost funding

Executives indicated that loan growth is expected to outpace deposit growth in the second half, which may require temporary use of higher‑cost wholesale funding. They cautioned that if deposit growth trails expectations, this funding mix shift could pressure margins, though current margin guidance assumes manageable use of such sources.

One‑time gains and underlying revenue trends

Second‑quarter results included non‑recurring gains, notably a $4.8 million benefit from freezing a pension plan and a $1.6 million gain on branch property sales. Management emphasized that these items lifted non‑interest income and should be stripped out by investors when assessing the sustainability of revenue trends and core earnings power.

Forward‑looking guidance and outlook

Looking ahead, WesBanco guided to mid‑single‑digit loan growth in 2026, supported by its record commercial pipeline and nearly $2.5 billion of year‑to‑date production, despite ongoing payoffs. They expect net interest margin to hover around 3.60%, CET1 to remain near 10.7%, expenses to run about $153 million per quarter and fee income to grow 3% to 5% year‑over‑year, while maintaining strong returns and disciplined credit.

WesBanco’s earnings call left investors with a picture of a bank leaning into growth while managing risks from payoffs, branch consolidation and credit watch names. With record pipelines, rising fee income, solid capital and stable margins, management is betting that strategic expansion and operating discipline will continue to drive attractive returns even if funding costs and credit require closer attention.