MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Management's Discussion and Analysis ("MD&A") represents an overview of the results of operations and financial condition of Wesbanco for the three months ended March 31, 2026. This discussion and analysis should be read in conjunction with the Consolidated Financial Statements and Notes thereto.
FORWARD-LOOKING STATEMENTS
Forward-looking statements in this report relating to Wesbanco's plans, strategies, objectives, expectations, intentions and adequacy of resources, are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. The information contained in this report should be read in conjunction with Wesbanco's Form 10-K for the year ended December 31, 2025 and documents subsequently filed by Wesbanco with the Securities and Exchange Commission ("SEC"), which are available at the SEC's website, www.sec.gov or at Wesbanco's website, www.wesbanco.com. Investors are cautioned that forward-looking statements, which are not historical fact, involve risks and uncertainties, including those detailed in Wesbanco's most recent Annual Report on Form 10-K filed with the SEC under "Risk Factors" in Part I, Item 1A and in Part II, Item 1A of this Form 10-Q. Such statements are subject to important factors that could cause actual results to differ materially from those contemplated by such statements, including, without limitation, the effects of changing regional and national economic conditions; changes in interest rates, spreads on earning assets and interest-bearing liabilities, and associated interest rate sensitivity; sources of liquidity available to Wesbanco and its related subsidiary operations; potential future credit losses and the credit risk of commercial, real estate, and consumer loan customers and their borrowing activities; actions of the Federal Reserve Board, the Federal Deposit Insurance Corporation, the SEC, the Financial Institution Regulatory Authority, the Municipal Securities Rulemaking Board, the Securities Investors Protection Corporation, the Consumer Financial Protection Bureau and other regulatory bodies; potential legislative and federal and state regulatory actions and reform, including, without limitation, the impact of the implementation of the Dodd-Frank Act; adverse decisions of federal and state courts; fraud, scams and schemes of third parties; cyber-security breaches; competitive conditions in the financial services industry; rapidly changing technology affecting financial services; marketability of debt instruments and corresponding impact on fair value adjustments; and/or other external developments materially impacting Wesbanco's operational and financial performance. Wesbanco does not assume any duty to update forward-looking statements.
OVERVIEW
Wesbanco is a multi-state bank holding company operating through 226 branches and 242 ATMs in West Virginia, Ohio, western Pennsylvania, Kentucky, Indiana, Michigan, Maryland, Tennessee, Virginia and Florida offering retail banking, corporate banking, personal and corporate trust services, brokerage services, mortgage banking and insurance. Wesbanco's businesses are significantly impacted by economic factors such as market interest rates, federal monetary and regulatory policies, local and regional economic conditions and the competitive environment's effect upon Wesbanco's business volumes. Wesbanco's deposit levels are affected by numerous factors including personal savings rates, personal income, and competitive rates on alternative investments, as well as competition from other financial institutions within the markets we serve and liquidity needs of Wesbanco. Loan levels are also subject to various factors including construction demand, business financing needs, consumer spending and interest rates, as well as loan terms offered by competing lenders.
APPLICATION OF CRITICAL ACCOUNTING POLICIES AND ESTIMATES
Wesbanco's critical accounting policies involving the significant judgments and assumptions used in the preparation of the Consolidated Financial Statements as of March 31, 2026 have remained unchanged from the disclosures presented in Wesbanco's Annual Report on Form 10-K for the year ended December 31, 2025 within the section "Management's Discussion and Analysis of Financial Condition and Results of Operations."
RESULTS OF OPERATIONS
EARNINGS SUMMARY
Wesbanco reported net income available to common shareholders for the first quarter of 2026 of $84.4 million or $0.88 per diluted share, compared to a net loss of $11.5 million or ($0.15) per diluted share, for the first quarter of 2025. The first quarter of 2025 includes the impact of a day one provision for credit losses and other expenses related to the closing of the Premier Financial Corp. ("PFC") acquisition on February 28, 2025. As noted in the following table, net income available to common shareholders, excluding after-tax restructuring and merger-related expenses for the three months ended March 31, 2026, was $87.3 million or $0.91 per diluted share, as compared to $51.2 million or $0.66 per diluted share in the prior year's first quarter, which also excludes the after-tax day one provision for credit losses on acquired loans (non-GAAP measures).
For the Three Months Ended March 31, | ||||||||||||||||
2026 | 2025 | |||||||||||||||
(unaudited, dollars in thousands, except per share amounts) |
Net |
Diluted |
Net |
Diluted | ||||||||||||
Net (loss) income available to common shareholders (GAAP) | $ | 84,395 | $ | 0.88 | $ | (11,523 | ) | $ | (0.15 | ) | ||||||
Add: After-tax day one provision for credit losses on acquired loans | - | - | 46,926 | 0.60 | ||||||||||||
Add: After-tax restructuring and merger-related expenses | 2,933 | 0.03 | 15,808 | 0.21 | ||||||||||||
Adjusted net income available to common shareholders (Non-GAAP)(1) | $ | 87,328 | $ | 0.91 | $ | 51,211 | $ | 0.66 | ||||||||
Net interest income increased $56.9 million or 35.9% in the first quarter of 2026 compared to the same quarter of 2025, reflecting the impact of a larger balance sheet from the PFC acquisition, organic loan growth, higher securities yields, and lower deposit and FHLB borrowing costs. The yield on earning assets increased by a total of five basis points while the cost of interest bearing liabilities decreased by 28 basis points from the first quarter of 2025 to the first quarter of 2026. Average loan balances increased by 30.4% from the first quarter of 2025, mainly attributable to the PFC acquisition and organic commercial loan growth, while average securities increased by 17.0% over the same time period. Average deposits also increased 30.8% over the same time period as a result of the PFC acquisition and deposit gathering and retention efforts by the retail and commercial teams producing organic deposit growth.
A decrease in loan balances as compared to December 31, 2025 resulted in a negative provision for credit losses of $0.9 million in the first quarter of 2026, as compared to a provision of $68.9 million in the first quarter of 2025, which was heavily influenced by the day one provision on acquired PFC loans. Annualized net loan charge-offs, as a percentage of average portfolio loans, were 0.16% and 0.08% for the first quarters of 2026 and 2025, respectively.
For the first quarter of 2026, non-interest income of $41.8 million increased $7.2 million, or 20.7%, from the first quarter of 2025 due primarily to the acquisition of PFC on February 28 of last year. Service charges on deposits increased $2.4 million and digital banking fees increased $1.2 million year-over-year due to increased general spending and higher transaction volumes from our larger customer base, as well as organic growth from our treasury management products and services. Reflecting record asset levels, trust fees and net securities brokerage revenue increased $1.7 million and $0.8 million, respectively, due to the addition of PFC wealth clients, market value appreciation, and organic growth. Gross swap fees were $1.2 million in the first quarter, compared to $2.0 million in the prior year period, while fair value adjustments were losses of $0.1 million and $1.0 million, respectively.
Non-interest expense, excluding restructuring and merger-related costs, for the three months ended March 31, 2026 was $143.0 million, a $29.0 million, or 25.5%, increase year-over-year primarily due to the addition of the PFC expense base, which was only in the Wesbanco expense base for one month in the prior year period, but were down as compared to the fourth quarter, reflecting expense management. Salaries and wages of $64.0 million and employee benefits expense of $17.6 million increased due to a full quarter of salaries as compared to the prior year. Amortization of intangible assets of $7.2 million increased $2.9 million year-over-year due to the core deposit intangible asset that was created from the acquisition of PFC. Equipment and software expense of $15.7 million, consistent with the last several quarters, increased $2.6 million due to the acquisition of PFC. Restructuring and merger-related expenses of $3.7 million are primarily related to costs associated with the 10 financial centers that are planned to close during May.
For the first three months of 2026, the effective tax rate was 20.5% as compared to (7.0%) for the first three months of 2025, and the provision for income taxes increased to $22.8 million from ($0.7) million during the same time period. These changes were the result of increased pretax income in 2026 as compared to 2025 due to the day one provision for credit losses on acquired loans recorded in the first quarter of 2025.
NET INTEREST INCOME
TABLE 1. NET INTEREST INCOME
For the Three Months | ||||||||
(unaudited, dollars in thousands) | 2026 | 2025 | ||||||
Net interest income | $ | 215,401 | $ | 158,519 | ||||
Taxable equivalent adjustment to net interest income | 1,282 | 1,204 | ||||||
Net interest income, fully taxable equivalent | $ | 216,683 | $ | 159,723 | ||||
Net interest spread, non-taxable equivalent | 2.86 | % | 2.52 | % | ||||
Benefit of net non-interest bearing liabilities | 0.69 | % | 0.80 | % | ||||
Net interest margin | 3.55 | % | 3.32 | % | ||||
Taxable equivalent adjustment | 0.02 | % | 0.03 | % | ||||
Net interest margin, fully taxable equivalent | 3.57 | % | 3.35 | % | ||||
Net interest income, which is Wesbanco's largest source of revenue, is the difference between interest income on earning assets, primarily loans and securities, and interest expense on liabilities, primarily deposits and short and long-term borrowings. Net interest income is affected by the general level of, and changes in interest rates, the steepness and shape of the yield curve, changes in the amount and composition of interest earning assets and interest bearing liabilities, as well as the frequency of repricing of existing assets and liabilities. Net interest income increased $56.9 million or 35.9% in the first quarter of 2026 compared to the first quarter of 2025. The increase is primarily due to the impact of the benefits from the acquisition of PFC, loan growth, higher securities yields and lower deposit and FHLB borrowing costs. Total average deposits increased by $5.1 billion or 30.8% in the first quarter of 2026 as compared to the first quarter of 2025. The cost of interest bearing deposits decreased by 20 basis points and the cost of total interest bearing liabilities decreased by 28 basis points from the first quarter of 2025 to the first quarter of 2026. The decrease in the cost is primarily due to rate decreases for interest bearing deposits in response to the general decrease in overall deposit rates in the marketplace.
Interest income increased $72.4 million or 28.6% in the first quarter of 2026 compared to the same period of 2025, primarily due to realizing a full quarter of benefit from the PFC acquisition. Average loan balances increased $4.5 billion or 30.4% in the first quarter of 2026 compared to the first quarter of 2025, while loan yields decreased by eight basis points during this same period to 5.94% due to the previously mentioned general decrease in market rates. Loans provide the greatest impact on interest income and the yield on earning assets as they have the largest balance and the highest yield within major earning asset categories. In the first quarter of 2026, average loans represented 77.9% of average earning assets, an increase from 76.1% in the first quarter of 2025. Average total securities balances increased $673.2 million or 17.0% from the first quarter of 2025 and represented 18.8% of total earning assets in the first quarter of 2026. Taxable securities yields increased by 48 basis points in the first quarter of 2026 from the first quarter of 2025, while tax-exempt securities yields increased 18 basis points during the same time period.
Interest expense increased $15.5 million in the first quarter of 2026 as compared to the same period in 2025, due primarily to the acquisition of PFC. The cost of interest bearing liabilities decreased by 28 basis points from the first quarter of 2025 to 2.50% in the first quarter of 2026. Average interest bearing deposits increased $4.1 billion or 34.0% from the first quarter of 2025. The rate on interest bearing deposits decreased 20 basis points to 2.35% from the first quarter of 2025. Average non-interest bearing demand deposit balances increased from the first quarter of 2025 to the first quarter of 2026 by $1.0 billion or 22.1%, and were 24.4% of total average deposits at March 31, 2026, compared to 26.1% at March 31, 2025, due to the PFC acquisition and reflecting customers' preferences in the current interest rate environment. For the first quarter of 2026, Wesbanco's average loans to average deposits ratio was 89.1%, reflecting additional capacity to lend. The average balance of FHLB borrowings was virtually flat from the first quarter of 2025 to the first quarter of 2026, while the average rate on FHLB borrowings decreased by 55 basis points. The average balance of repurchase agreements decreased by $55.5 million or 34.1% over the same time period due to changes in customer preferences.
TABLE 2. AVERAGE BALANCE SHEETS AND NET INTEREST MARGIN ANALYSIS
For the Three Months Ended March 31, | |||||||||||||||
2026 | 2025 | ||||||||||||||
Average | Average | Average | Average | ||||||||||||
(unaudited, dollars in thousands) | Balance | Rate | Balance | Rate | |||||||||||
ASSETS | |||||||||||||||
Due from banks - interest bearing | $ | 745,711 | 3.91 | % | $ | 602,708 | 4.73 | % | |||||||
Loans, net of unearned income (1) | 19,188,906 | 5.94 | % | 14,720,749 | 6.02 | % | |||||||||
Securities: (2) | |||||||||||||||
Taxable | 3,904,167 | 3.27 | % | 3,237,372 | 2.79 | % | |||||||||
Tax-exempt (3) | 739,469 | 3.35 | % | 733,105 | 3.17 | % | |||||||||
Total securities | 4,643,636 | 3.28 | % | 3,970,477 | 2.86 | % | |||||||||
Other earning assets | 62,274 | 7.69 | % | 61,393 | 6.69 | % | |||||||||
Total earning assets (3) | 24,640,527 | 5.38 | % | 19,355,327 | 5.33 | % | |||||||||
Other assets | 2,890,093 | 2,303,025 | |||||||||||||
Total Assets | $ | 27,530,620 | $ | 21,658,352 | |||||||||||
LIABILITIES AND SHAREHOLDERS' | |||||||||||||||
Interest bearing demand deposits | $ | 5,327,178 | 2.24 | % | $ | 4,166,005 | 2.86 | % | |||||||
Money market accounts | 4,901,058 | 2.66 | % | 3,219,335 | 2.66 | % | |||||||||
Savings deposits | 3,237,453 | 1.27 | % | 2,605,145 | 1.15 | % | |||||||||
Certificates of deposit | 2,827,655 | 3.24 | % | 2,185,662 | 3.44 | % | |||||||||
Total interest bearing deposits | 16,293,344 | 2.35 | % | 12,176,147 | 2.55 | % | |||||||||
Federal Home Loan Bank borrowings | 1,155,278 | 3.97 | % | 1,168,981 | 4.52 | % | |||||||||
Repurchase agreements | 107,383 | 2.26 | % | 162,912 | 2.79 | % | |||||||||
Subordinated debt and junior subordinated debt | 308,585 | 5.36 | % | 305,309 | 5.48 | % | |||||||||
Total interest bearing liabilities (4) | 17,864,590 | 2.50 | % | 13,813,349 | 2.78 | % | |||||||||
Non-interest bearing demand deposits | 5,255,480 | 4,303,915 | |||||||||||||
Other liabilities | 323,933 | 322,449 | |||||||||||||
Shareholders' equity | 4,086,617 | 3,218,639 | |||||||||||||
Total Liabilities and Shareholders' Equity | $ | 27,530,620 | $ | 21,658,352 | |||||||||||
Taxable equivalent net interest spread | 2.88 | % | 2.55 | % | |||||||||||
Taxable equivalent net interest margin | 3.57 | % | 3.35 | % | |||||||||||
TABLE 3. RATE/VOLUME ANALYSIS OF CHANGES IN INTEREST INCOME AND INTEREST EXPENSE
For the Three Months | ||||||||||||
Compared to March 31, 2025 | ||||||||||||
(unaudited, in thousands) | Volume | Rate |
Net Increase | |||||||||
Increase (decrease) in interest income: | ||||||||||||
Due from banks - interest bearing | $ | 1,501 | $ | (1,348 | ) | $ | 153 | |||||
Loans, net of unearned income | 65,464 | (2,884 | ) | 62,580 | ||||||||
Taxable securities | 5,012 | 4,184 | 9,196 | |||||||||
Tax-exempt securities (1) | 50 | 323 | 373 | |||||||||
Other earning assets | 15 | 153 | 168 | |||||||||
Total interest income change (1) | 72,042 | 428 | 72,470 | |||||||||
Increase (decrease) in interest expense: | ||||||||||||
Interest bearing demand deposits | 7,186 | (7,195 | ) | (9 | ) | |||||||
Money market accounts | 11,032 | (15 | ) | 11,017 | ||||||||
Savings deposits | 1,918 | 842 | 2,760 | |||||||||
Certificates of deposit | 5,183 | (1,150 | ) | 4,033 | ||||||||
Federal Home Loan Bank borrowings | (151 | ) | (1,567 | ) | (1,718 | ) | ||||||
Repurchase agreements | (336 | ) | (188 | ) | (524 | ) | ||||||
Subordinated debt and junior subordinated debt | 44 | (93 | ) | (49 | ) | |||||||
Total interest expense change | 24,876 | (9,366 | ) | 15,510 | ||||||||
Net interest income change (1) | $ | 47,166 | $ | 9,794 | $ | 56,960 | ||||||
PROVISION FOR CREDIT LOSSES - LOANS AND LOAN COMMITMENTS
The provision for credit losses - loans is the amount to be added to the allowance for credit losses - loans after net charge-offs have been deducted to bring the allowance to a level considered appropriate to absorb lifetime expected losses for all portfolio loans. The provision for credit losses - loan commitments is the amount to be added to the allowance for credit losses for loan commitments to bring that allowance to a level considered appropriate to absorb lifetime expected losses on unfunded loan commitments. For the three months ended March 31, 2026, Wesbanco recorded a provision for credit losses of $(0.9) million, a decrease of $69.8 million compared to the $68.9 million provision recorded for the three months ended March 31, 2025. The decrease was primarily attributable to the $59.4 million of initial provision expense recorded in the prior-year period related to the PFC acquired loans. Excluding the initial provision expense recorded for the PFC non-PCD acquired loans, the remainder of the change in the provision was primarily driven by prepayment speed fluctuations, interest rate driven model assumptions, which reduced the quantitative reserve, and improvements in the office qualitative factor.
Non-performing loans were 0.76% of total portfolio loans as of March 31, 2026, increasing from 0.44% of total portfolio loans at March 31, 2025, primarily due to three CRE loans across different markets and property types, none of which were office. Criticized and classified loans were 2.91% of total portfolio loans as of March 31, 2026, decreasing from 3.32% as of March 31, 2025, due to upgrades within the loan portfolio. Past due loans at March 31, 2026 were 0.56% of total portfolio loans, compared to 0.43% at March 31, 2025. Annualized net loan charge-offs were 0.16% for the three months ended March 31, 2026, compared to 0.08% for the three months ended March 31, 2025. Please see the Allowance for Credit Losses - Loans and Loan Commitments section of this MD&A for additional discussion.
NON-INTEREST INCOME
TABLE 4. NON-INTEREST INCOME
For the Three Months | ||||||||||||||||
(unaudited, dollars in thousands) | 2026 | 2025 | $ Change | % Change | ||||||||||||
Trust fees | $ | 10,442 | $ | 8,697 | $ | 1,745 | 20.1 | |||||||||
Service charges on deposits | 10,961 | 8,587 | 2,374 | 27.6 | ||||||||||||
Digital banking income | 6,599 | 5,404 | 1,195 | 22.1 | ||||||||||||
Net swap fee and valuation income | 1,062 | 961 | 101 | 10.5 | ||||||||||||
Net securities brokerage revenue | 3,472 | 2,701 | 771 | 28.5 | ||||||||||||
Bank-owned life insurance | 3,811 | 3,428 | 383 | 11.2 | ||||||||||||
Net securities losses | (13 | ) | (318 | ) | 305 | 95.9 | ||||||||||
Mortgage banking income | 919 | 1,140 | (221 | ) | (19.4 | ) | ||||||||||
Net insurance services revenue | 1,209 | 955 | 254 | 26.6 | ||||||||||||
Payment processing fees | 871 | 891 | (20 | ) | (2.2 | ) | ||||||||||
Net gain/(loss) on other real estate owned and other assets | 546 | (40 | ) | 586 | NM | |||||||||||
Other | 1,952 | 2,259 | (307 | ) | (13.6 | ) | ||||||||||
Total non-interest income | $ | 41,831 | $ | 34,665 | $ | 7,166 | 20.7 | |||||||||
NM = Not Meaningful
Non-interest income is a significant source of revenue and an important part of Wesbanco's results of operations, as it represents 16.3% of total revenue for the three months ended March 31, 2026. Wesbanco offers its customers a wide range of retail, commercial, investment and digital banking services, which are viewed as a vital component of Wesbanco's ability to attract and maintain customers, as well as providing additional fee income beyond normal spread-related income to Wesbanco. For the first quarter of 2026, non-interest income increased $7.2 million or 20.7% compared to the first quarter of 2025, primarily due to a $2.4 million increase in service charges on deposits, a $1.7 million increase in trust fees, $1.2 million increase in digital banking income, a $0.8 million increase in net securities brokerage revenue, a $0.6 million increase in net gains on other real estate owned and other assets, and a $0.4 million increase in bank-owned life insurance.
Trust fees increased $1.7 million or 20.1% in the first quarter of 2026 as compared to the first quarter of 2025, due to the addition of PFC wealth clients, market value appreciation, and organic growth. Trust assets of $7.8 billion on March 31, 2026, increased from $7.0 billion on March 31, 2025. As of March 31, 2026, trust assets include managed assets of $6.1 billion and non-managed (custodial) assets of $1.7 billion. Assets managed for the WesMark Funds, a proprietary group of mutual funds that is advised by Wesbanco Trust and Investment Services, were $0.9 billion as of March 31, 2026 and $0.8 billion as of March 31, 2025, and are included in managed assets.
Service charges on deposits increased $2.4 million or 27.6% in the first quarter of 2026 as compared to the first quarter of 2025, due to the addition of PFC, organic growth from our treasury management products and services, and increased general spending.
Digital banking income increased $1.2 million or 22.1% in the first quarter of 2026 as compared to the first quarter of 2025, due to higher transaction volumes primarily associated with our larger customer base.
Net securities brokerage revenue increased $0.8 million or 28.5% in the first quarter of 2026 as compared to the first quarter of 2025, due to the addition of PFC wealth clients, market value appreciation and organic growth.
Bank-owned life insurance increased $0.4 million or 11.2% in the first quarter of 2026 as compared to the first quarter of 2025, due to the addition of PFC and the receipt of mortality-related benefits in the first quarter of 2026.
Net gains on other real estate owned and other assets increased $0.6 million in the first quarter of 2026 as compared to the first quarter of 2025, primarily due to an increase of $0.3 million on the sale of OREO and repossessed assets.
NON-INTEREST EXPENSE
TABLE 5. NON-INTEREST EXPENSE
For the Three Months | ||||||||||||||||
(unaudited, dollars in thousands) | 2026 | 2025 | $ Change | % Change | ||||||||||||
Salaries and wages | $ | 63,964 | $ | 48,577 | $ | 15,387 | 31.7 | |||||||||
Employee benefits | 17,611 | 12,970 | 4,641 | 35.8 | ||||||||||||
Net occupancy | 8,529 | 7,778 | 751 | 9.7 | ||||||||||||
Equipment and software | 15,678 | 13,050 | 2,628 | 20.1 | ||||||||||||
Marketing | 1,526 | 2,382 | (856 | ) | (35.9 | ) | ||||||||||
FDIC insurance | 4,784 | 4,187 | 597 | 14.3 | ||||||||||||
Amortization of intangible assets | 7,160 | 4,223 | 2,937 | 69.5 | ||||||||||||
Restructuring and merger-related expenses | 3,713 | 20,010 | (16,297 | ) | (81.4 | ) | ||||||||||
Professional fees | 7,452 | 5,618 | 1,834 | 32.6 | ||||||||||||
Franchise and other miscellaneous taxes | 4,671 | 4,234 | 437 | 10.3 | ||||||||||||
ATM and electronic banking interchange expenses | 1,511 | 1,092 | 419 | 38.4 | ||||||||||||
Communications | 1,170 | 1,210 | (40 | ) | (3.3 | ) | ||||||||||
Other real estate owned and foreclosure expenses | 168 | 86 | 82 | 95.3 | ||||||||||||
Postage, supplies and other | 8,768 | 8,549 | 219 | 2.6 | ||||||||||||
Total non-interest expense | $ | 146,705 | $ | 133,966 | $ | 12,739 | 9.5 | |||||||||
Non-interest expense in the first quarter of 2026 increased $12.7 million or 9.5% as compared to the same quarter in 2025, principally from a $15.4 million increase in salaries and wages, a $4.6 million increase in employee benefits, a $2.9 million increase in amortization of intangible assets, a $2.6 million increase in equipment and software expense, a $1.8 million increase in professional fees, a $0.8 million increase in net occupancy, and a $0.6 million increase in FDIC insurance. These were partially offset by a $16.3 million decrease in restructuring and merger-related expenses.
Salaries and wages increased $15.4 million or 31.7% in the first quarter of 2026 as compared to the first quarter of 2025, mostly due to a full quarter of salaries from the inclusion of PFC employees as compared to only one month in the prior year.
Employee benefits increased $4.6 million or 35.8% in the first quarter of 2026 as compared to the first quarter of 2025 due to higher staffing levels and higher health insurance costs from the inclusion of PFC employees.
Net occupancy increased $0.8 million or 9.7% in the first quarter of 2026 as compared to the first quarter of 2025 due to an increase in lease payments, utilities, and depreciation primarily from the acquisition of PFC. Expense increases have been partially offset by lower expenses related to branch optimization efforts that resulted in the closure of 27 legacy Wesbanco branches.
Marketing decreased $0.9 million or 35.9% in the first quarter of 2026 as compared to the first quarter of 2025 due to the timing of certain marketing campaigns.
Equipment and software costs increased $2.6 million or 20.1% in the first quarter of 2026 as compared to the first quarter of 2025, due primarily to an increase in volume-based costs attributable to the addition of PFC.
FDIC insurance increased $0.6 million or 14.3% in the first quarter of 2026 as compared to the first quarter of 2025, due to our larger asset size from the PFC acquisition.
Amortization of intangible assets increased $2.9 million or 69.5% in the first quarter of 2026 as compared to the first quarter of 2025 due to the core deposit intangible asset and the trust relationship intangible asset that were created from the acquisition of PFC.
Restructuring and merger-related expenses decreased $16.3 million or 81.4% in the first quarter of 2026 as compared to the first quarter of 2025, primarily due to expenses incurred in the first quarter of 2025 for the acquisition of PFC and costs associated with the financial center optimization. The $3.7 million of expense from the first quarter of 2026 is primarily related to costs associated with the 10 financial centers that are planned to close during May.
Professional fees increased $1.8 million or 32.6% in the first quarter of 2026 as compared to the first quarter of 2025, due to an increase in consultants fees, legal fees, and other professional fees primarily due to the acquisition of PFC.
INCOME TAXES
The provision for income taxes was $22.8 million for the three months ended March 31, 2026, as compared to a benefit of $0.7 million for the three months ended March 31, 2025. The increase in the provision for income taxes is due to pretax income for the three months ended March 31, 2026, exceeding that for the three months ended March 31, 2025 by $121.1 million.
FINANCIAL CONDITION
Total assets decreased 0.8%, while shareholders' equity increased 1.0% at March 31, 2026 as compared to December 31, 2025. Total securities remained virtually unchanged from December 31, 2025, to March 31, 2026, as maturing securities were reinvested. Total portfolio loans were $19.1 billion, which decreased $0.1 billion or 0.7% since December 31, 2025, driven by elevated commercial loan payoffs, with deposits staying essentially flat from December 31, 2025. At March 31, 2026, total demand deposits represented 50% of total deposits, with the non interest-bearing component representing approximately half of total demand deposits. Total FHLB borrowings decreased $0.2 billion or 18.8% during the first three months of 2026, due to excess liquidity being used to pay off borrowings. Shareholders' equity increased $38.7 million or 1.0% from December 31, 2025 to March 31, 2026, as net income exceeded shareholder dividends for the period.
SECURITIES
TABLE 6. COMPOSITION OF SECURITIES (1)
March 31, | December 31, | |||||||||||||||
(unaudited, dollars in thousands) | 2026 | 2025 | Change ($) | Change (%) | ||||||||||||
Equity securities (at fair value) | $ | 30,256 | $ | 30,809 | $ | (553 | ) | (1.8 | ) | |||||||
Available-for-sale debt securities (at fair value) | ||||||||||||||||
U.S. Treasury | 196,415 | 196,857 | (442 | ) | (0.2 | ) | ||||||||||
U.S. Government sponsored entities and agencies | 217,395 | 222,997 | (5,602 | ) | (2.5 | ) | ||||||||||
Residential mortgage-backed securities and | 2,634,462 | 2,610,448 | 24,014 | 0.9 | ||||||||||||
Commercial mortgage-backed securities and | 57,971 | 63,615 | (5,644 | ) | (8.9 | ) | ||||||||||
Asset backed securities | 66,908 | 68,935 | (2,027 | ) | (2.9 | ) | ||||||||||
Obligations of states and political subdivisions | 76,320 | 73,188 | 3,132 | 4.3 | ||||||||||||
Corporate debt securities | 48,766 | 52,292 | (3,526 | ) | (6.7 | ) | ||||||||||
Total available-for-sale debt securities | $ | 3,298,237 | $ | 3,288,332 | $ | 9,905 | 0.3 | |||||||||
Held-to-maturity debt securities (at amortized cost) | ||||||||||||||||
U.S. Government sponsored entities and agencies | $ | 2,258 | $ | 2,341 | $ | (83 | ) | (3.5 | ) | |||||||
Residential mortgage-backed securities and | 25,733 | 27,014 | (1,281 | ) | (4.7 | ) | ||||||||||
Obligations of states and political subdivisions | 1,090,634 | 1,100,788 | (10,154 | ) | (0.9 | ) | ||||||||||
Corporate debt securities | 1,972 | 1,971 | 1 | 0.1 | ||||||||||||
Total held-to-maturity debt securities | 1,120,597 | 1,132,114 | (11,517 | ) | (1.0 | ) | ||||||||||
Total securities | $ | 4,449,090 | $ | 4,451,255 | $ | (2,165 | ) | (0.0 | ) | |||||||
Available-for-sale and equity securities: | ||||||||||||||||
Weighted average yield at the respective period end (2) | 3.37 | % | 3.36 | % | ||||||||||||
As a % of total securities | 74.8 | % | 74.6 | % | ||||||||||||
Weighted average life (in years) | 5.7 | 5.7 | ||||||||||||||
Held-to-maturity securities: | ||||||||||||||||
Weighted average yield at the respective period end (2) | 3.06 | % | 3.05 | % | ||||||||||||
As a % of total securities | 25.2 | % | 25.4 | % | ||||||||||||
Weighted average life (in years) | 7.4 | 7.3 | ||||||||||||||
Total securities: | ||||||||||||||||
Weighted average yield at the respective period end (2) | 3.29 | % | 3.28 | % | ||||||||||||
As a % of total securities | 100.0 | % | 100.0 | % | ||||||||||||
Weighted average life (in years) | 6.1 | 6.1 | ||||||||||||||
Total investment securities, which are a source of liquidity for Wesbanco as well as a contributor to interest income, decreased by $2.2 million from December 31, 2025 to March 31, 2026. Throughout the first three months of the year, the available-for-sale portfolio increased by $9.9 million or 0.3%, primarily due to $224.2 million in purchases, and was offset by $141.6 million in paydowns, $58.6 million in maturities and calls and an increase of $17.4 million in unrealized losses. The held-to-maturity portfolio decreased by $11.5 million or 1.0% due primarily to maturities and calls of municipal securities. The weighted average yield of the portfolio increased 1 basis point from 3.28% at December 31, 2025 to 3.29% at March 31, 2026, primarily due to security purchases during the quarter at higher market rates.
Total gross unrealized securities losses increased $22.4 million, from $300.2 million as of December 31, 2025 to $322.6 million at March 31, 2026. The increase in unrealized losses from December 31, 2025 was due to an increase in market rates through the first three months of 2026 causing market prices to decrease on the investment portfolio. Wesbanco believes that none of the unrealized losses on available-for-sale debt securities at March 31, 2026 require an allowance for credit losses. Please refer to Note 4, "Securities," of the Consolidated Financial Statements for additional information. Wesbanco does not have any investments in private mortgage-backed securities or those that are collateralized by sub-prime mortgages, nor does Wesbanco have any exposure to collateralized debt obligations or government-sponsored enterprise preferred stocks.
Net unrealized losses on available-for-sale securities included in accumulated other comprehensive income, net of tax, as of March 31, 2026, and December 31, 2025 were $153.5 million and $139.5 million, respectively. These net unrealized pre-tax losses represent temporary fluctuations resulting from changes in market rates in relation to fixed yields in the available-for-sale portfolio, and on an after-tax basis are accounted for as an adjustment to other comprehensive income in shareholders' equity. Net unrealized pre-tax losses in the held-to-maturity portfolio, which are not accounted for in other comprehensive income, were $109.3 million at March 31, 2026, compared to $96.2 million at December 31, 2025. With approximately 25% of the investment portfolio in the held-to-maturity category, the recent volatility in interest rates does not have as much of an impact on other comprehensive income as if the entire portfolio were included in the available-for-sale category.
Equity securities, of which a portion consists of investments in various mutual funds held in grantor trusts formed in connection with a key officer and director deferred compensation plan, are recorded at fair value. Gains and losses due to fair value fluctuations on equity securities are included in net securities gains or losses. For those equity securities relating to the key officer and director deferred compensation plan, the corresponding change in the obligation to the employee is recognized in employee benefits expense.
The corporate and municipal bonds in Wesbanco's held-to-maturity debt portfolio are analyzed quarterly to determine if an allowance for current expected credit losses is warranted. Wesbanco uses a database of historical financials of all corporate and municipal issuers and actual historic default and recovery rates on rated and non-rated transactions to estimate expected credit losses on an individual security basis. The expected credit losses are adjusted quarterly and are recorded in an allowance for expected credit losses on the balance sheet, which is deducted from the amortized cost basis of the held-to-maturity portfolio as a contra asset. The losses are recorded on the income statement in the provision for credit losses. Accrued interest receivable on held-to-maturity securities, which was $8.0 million and $8.2 million as of March 31, 2026 and December 31, 2025, respectively, is excluded from the estimate of credit losses. Held-to-maturity investments in U.S. Government sponsored entities and agencies as well as mortgage-backed securities and collateralized mortgage obligations, which are all either issued by a direct governmental entity or a government-sponsored entity, have no historical evidence supporting expected credit losses; therefore, Wesbanco has estimated these losses at zero, and will monitor this assumption in the future for any economic or governmental policies that could affect this assumption. Wesbanco recorded an allowance on held-to-maturity debt securities of $0.2 million as of March 31, 2026 and December 31, 2025, respectively.
Wesbanco uses prices from independent pricing services and, to a lesser extent, indicative (non-binding) quotes from independent brokers, to measure the fair value of its securities. Wesbanco validates prices received from pricing services or brokers using a variety of methods, including, but not limited to, comparison to secondary pricing services, corroboration of pricing by reference to other independent market data such as secondary broker quotes and relevant benchmark indices, review of pricing by personnel familiar with market liquidity and other market-related conditions, review of pricing service methodologies, review of independent auditor reports received from the pricing service regarding its internal controls, and through review of inputs and assumptions used in pricing certain securities thinly traded or with limited observable data points. The procedures in place provide management with a sufficient understanding of the valuation models, assumptions, inputs and pricing to reasonably measure the fair value of Wesbanco's securities. For additional disclosure relating to fair value measurements, refer to Note 8, "Fair Value Measurement" in the Consolidated Financial Statements.
LOANS AND CREDIT RISK
Loans represent Wesbanco's single largest balance sheet asset classification and the largest source of interest income. Business purpose loans consist of CRE loans and other C&I loans that are not secured by real estate. CRE loans are further segmented into land and construction loans, and loans for improved property. Consumer purpose loans consist of residential real estate loans, home equity lines of credit and other consumer loans. Loans held for sale generally consist of residential real estate loans originated for sale in the secondary market, but at times may also include other types of loans. The outstanding balance of each major category of the loan portfolio is summarized in Table 7.
The risk that borrowers will be unable or unwilling to repay their obligations and default on loans is inherent in all lending activities. Credit risk arises from many sources including general economic conditions, external events that impact businesses or industries, isolated events that impact a major employer, individual loss of employment or other personal hardships, as well as changes in interest rates or the value of collateral. Credit risk is also impacted by a concentration of exposure within a geographic market or to one or more borrowers, industries or collateral types. The primary goal in managing credit risk is to minimize the impact of default by an individual borrower or group of borrowers. Credit risk is managed through the initial underwriting process as well as through ongoing monitoring and administration of the portfolio that varies by the type of loan. The Bank's credit policies establish standard underwriting guidelines for each type of loan and require an appropriate evaluation of the credit characteristics of each borrower. This evaluation includes the borrower's primary source of repayment capacity; the adequacy of collateral, if any, to secure the loan; the potential value of personal guarantees as secondary sources of repayment; and other factors unique to each loan that may increase or mitigate its risk. Credit bureau scores are also considered when evaluating consumer purpose loans as well as guarantors of business purpose loans. However, the Bank does not periodically update credit bureau scores subsequent to when loans are made to determine changes in credit history.
Credit risk is mitigated for all types of loans by continuously monitoring delinquency levels and pursuing collection efforts at the earliest stage of delinquency. The Bank also monitors general economic conditions, including employment, housing activity and real estate values in its market. The Bank also periodically evaluates and changes its underwriting standards when warranted based on market conditions, the historical performance of a category of the portfolio, or other external factors. Credit risk is also regularly evaluated for the impact of adverse economic and other events that increase the risk of default and the potential loss in the event of default, to understand the impact on the Bank's earnings and capital.
Commercial loan risk grades are determined based on an evaluation of the relevant characteristics of each loan, assigned at inception and adjusted thereafter at any time to reflect changes in the risk profile throughout the life of each loan. The primary factors used to determine the risk grade are the sufficiency, reliability and sustainability of the primary source of repayment and overall financial strength of the borrower. The rating system more heavily weights the debt service coverage, leverage and loan-to-value factors to derive the risk grade. Other factors that are considered at a lesser weighting include management, industry or property-type risks, payment history, collateral and personal guarantees.
TABLE 7. COMPOSITION OF LOANS (1)
March 31, 2026 | December 31, 2025 | |||||||||||||||
(unaudited, dollars in thousands) | Amount | % of Loans | Amount | % of Loans | ||||||||||||
Commercial real estate: | ||||||||||||||||
Land and construction | $ | 1,632,209 | 8.5 | $ | 1,783,637 | 9.2 | ||||||||||
Improved property | 9,270,066 | 48.4 | 9,155,197 | 47.5 | ||||||||||||
Total commercial real estate | 10,902,275 | 56.9 | 10,938,834 | 56.7 | ||||||||||||
Commercial and industrial | 2,785,440 | 14.6 | 2,863,893 | 14.8 | ||||||||||||
Residential real estate | 3,920,209 | 20.5 | 3,938,585 | 20.4 | ||||||||||||
Home equity | 1,149,878 | 6.0 | 1,129,394 | 5.8 | ||||||||||||
Consumer | 324,879 | 1.7 | 355,726 | 1.8 | ||||||||||||
Total portfolio loans | 19,082,681 | 99.7 | 19,226,432 | 99.5 | ||||||||||||
Loans held for sale | 59,281 | 0.3 | 87,454 | 0.5 | ||||||||||||
Total loans | $ | 19,141,962 | 100.0 | $ | 19,313,886 | 100.0 | ||||||||||
Total portfolio loans decreased $143.8 million or 0.7% from December 31, 2025, and have increased $408.9 million or 2.2% over the past twelve months, including increases of 12.6% in home equity lines of credit, 6.3% in commercial real estate (CRE) improved property and 0.1% in commercial and industrial. These are partially offset by decreases of 25.9% consumer loans, 8.3% in CRE land and construction, and 0.3% in residential real estate loans. Of note, Wesbanco has ended its indirect auto lending program as it is not core to our organic growth strategy, and not due to any credit concerns. At March 31, 2026, it represented about half of the $324.9 million consumer loan portfolio. Origination of new indirect auto loans ended in the second quarter of 2025 and the expectation is that this portfolio will runoff over the next 3 to 5 years.
Total loan commitments of $6.5 billion, including loans approved but not closed, increased $219.7 million or 3.5% from December 31, 2025. The average line utilization percentage for the commercial portfolio was 37.1% for the three months ended March 31, 2026 compared to 36.5% for the three months ended December 31, 2025.
The commercial portfolio is monitored for potential concentrations of credit risk by market, type of lending, CRE property type, C&I and owner-occupied CRE by industry, investment CRE dependence on common tenants and industries or property types that are similarly impacted by external factors. The breakdown for all CRE - improved property is 38% owner-occupied and 62% investor-owned. The Bank has instituted additional monitoring of the office building portfolio, as remote work has put pressure on the need for dedicated office space in certain markets. The office
portfolio breakdown within CRE - improved property is 31% owner-occupied and 69% investor-owned. Investor-owned office buildings represent 2.9% of the total loan portfolio.
Loans held for sale at both March 31, 2026 and December 31, 2025 include originated residential mortgages and residential construction loans that are committed to be sold into the secondary market. Loans held for sale were $59.3 million at March 31, 2026, a decrease of $28.2 million from December 31, 2025.
NON-PERFORMING ASSETS AND LOANS PAST DUE 90 DAYS OR MORE
Non-performing assets consist of non-accrual loans, other real estate acquired through or in lieu of foreclosure, and repossessed automobiles acquired to satisfy defaulted consumer loans.
TABLE 8. NON-PERFORMING ASSETS
(unaudited, dollars in thousands) |
March 31, |
December 31, | ||||||
Non-performing loans: | ||||||||
Commercial real estate - land and construction | $ | 28,206 | $ | 832 | ||||
Commercial real estate - improved property | 50,422 | $ | 29,754 | |||||
Commercial and industrial | 20,703 | 16,092 | ||||||
Residential real estate | 34,815 | 34,332 | ||||||
Home equity | 9,832 | 9,248 | ||||||
Consumer | 1,030 | 1,326 | ||||||
Total non-performing loans | $ | 145,008 | $ | 91,584 | ||||
Other real estate owned and repossessed assets | 1,323 | 907 | ||||||
Total non-performing assets | $ | 146,331 | $ | 92,491 | ||||
Non-performing loans/total portfolio loans | 0.76 | % | 0.48 | % | ||||
Non-performing assets/total assets | 0.53 | % | 0.33 | % | ||||
Non-performing assets/total portfolio loans, other real estate and repossessed assets | 0.77 | % | 0.48 | % | ||||
Non-performing loans consist only of non-accrual loans. Non-performing loans increased $53.4 million or 58.3% from December 31, 2025, primarily due to three CRE loans across different markets and property types, none of which were office. (Please see the Notes to the Consolidated Financial Statements for additional discussion).
The following table presents past due and accruing loans excluding non-accruals:
TABLE 9. PAST DUE AND ACCRUING LOANS EXCLUDING NON-ACCRUALS
(unaudited, dollars in thousands) |
March 31, |
December 31, | ||||||
Loans past due 90 days or more: | ||||||||
Commercial real estate - land and construction | $ | - | $ | - | ||||
Commercial real estate - improved property | 2,651 | 20,507 | ||||||
Commercial and industrial | 5,260 | 777 | ||||||
Residential real estate | 5,232 | 12,479 | ||||||
Home equity | 2,238 | 2,882 | ||||||
Consumer | 829 | 1,138 | ||||||
Total loans past due 90 days or more | 16,210 | 37,783 | ||||||
Loans past due 30 to 89 days: | ||||||||
Commercial real estate - land and construction | 9,181 | 27,492 | ||||||
Commercial real estate - improved property | 39,798 | 20,698 | ||||||
Commercial and industrial | 7,464 | 9,385 | ||||||
Residential real estate | 18,352 | 12,674 | ||||||
Home equity | 9,500 | 13,035 | ||||||
Consumer | 5,582 | 7,915 | ||||||
Total loans past due 30 to 89 days | 89,877 | 91,199 | ||||||
Total loans 30 days or more past due | $ | 106,087 | $ | 128,982 | ||||
Loans past due 90 days or more and accruing to total portfolio loans | 0.08 | % | 0.20 | % | ||||
Loans past due 30-89 days and accruing to total portfolio loans | 0.47 | % | 0.47 | % | ||||
Loans past due 30 days or more and accruing interest, excluding non-accruals, decreased $22.9 million or 17.8% and represented 0.56% of total portfolio loans, compared to 0.67% of total portfolio loans at December 31, 2025. These loans continue to accrue interest because they are both well-secured and in the process of collection. Loans 90 days or more past due, excluding non-accruals, decreased $21.6 million and represented 0.08% of total portfolio loans at March 31, 2026 as compared to 0.20% at December 31, 2025.
ALLOWANCE FOR CREDIT LOSSES - LOANS AND LOAN COMMITMENTS
As of March 31, 2026, the total allowance for credit losses - loans and commitments were $217.2 million, of which $210.0 million related to loans and $7.2 million related to loan commitments. The allowance for credit losses - loans was 1.10% of total portfolio loans as of March 31, 2026, compared to 1.14% as of December 31, 2025. The allowance for credit losses - loans individually-evaluated increased $1.7 million from December 31, 2025 to March 31, 2026. On March 31, 2026, the population of individually-evaluated loans consisted of eight relationships, with a total outstanding loan balance of $67.7 million. The allowance for loans collectively-evaluated decreased from December 31, 2025 to March 31, 2026 by $10.4 million, primarily due to changes in macroeconomic conditions over the one-year forecast period and improvements in qualitative factors. As of March 31, 2026, PCD loans from the PFC acquisition accounted for $6.6 million of the allowance for loans collectively-evaluated. The allowance for credit losses- loan commitments was $7.2 million at March 31, 2026 as compared to $7.0 million as of December 31, 2025, and is included in other liabilities on the Consolidated Balance Sheets.
The allowance for credit losses by loan category, presented in Note 4, "Loans and the Allowance for Credit Losses" of the Consolidated Financial Statements, summarizes the impact of changes in various factors that affect the allowance for loan losses in each segment of the portfolio. The allowance for credit losses under the current expected credit losses ("CECL") methodology is calculated utilizing the probability of default ("PD") and loss given default ("LGD") approach, which is then discounted to net present value. PD is the probability the asset will default within a given time frame and LGD is the percentage of the asset not expected to be collected due to default. The primary macroeconomic drivers of the quantitative model include forecasts of national unemployment and interest rates, as well as modeling adjustments for changes in prepayment speeds, portfolio mix, concentrations and loan growth. At March 31, 2026, the primary drivers of the allowance were changes in macroeconomic conditions over the one year forecast period and improvements in certain qualitative factors. The unemployment forecast was based upon a probability weighted approach which is designed to incorporate economic forecasts from a baseline, upside and downside economy in the loss projection. At March 31, 2026, Wesbanco applied a one-year forecast and immediately reverted to historical losses. The national unemployment rate was projected to be 4.8% as of March 31, 2026 and subsequently increase to an average of 5.2% over the remainder of the one-year forecast period.
Table 10 summarizes the allocation of the allowance for credit losses to each category of the loan portfolio.
TABLE 10. ALLOCATION OF THE ALLOWANCE FOR CREDIT LOSSES - LOANS AND LOAN COMMITMENTS
(unaudited, dollars in thousands) |
March 31, |
Percent of |
December 31, |
Percent of | ||||||||||||
Allowance for credit losses - loans: | ||||||||||||||||
Commercial real estate - land and construction | $ | 8,955 | 4.1 | $ | 10,707 | 4.7 | ||||||||||
Commercial real estate - improved property | 93,882 | 43.3 | 96,714 | 42.9 | ||||||||||||
Commercial and industrial | 64,522 | 29.7 | 64,932 | 28.8 | ||||||||||||
Residential real estate | 31,092 | 14.3 | 33,416 | 14.8 | ||||||||||||
Home equity | 2,260 | 1.0 | 2,383 | 1.1 | ||||||||||||
Consumer | 7,581 | 3.5 | 8,742 | 3.9 | ||||||||||||
Deposit account overdrafts | 1,731 | 0.8 | 1,855 | 0.7 | ||||||||||||
Total allowance for credit losses - loans | $ | 210,023 | 96.7 | $ | 218,749 | 96.9 | ||||||||||
Allowance for credit losses - loan commitments: | ||||||||||||||||
Commercial real estate - land and construction | $ | 5,151 | 2.4 | $ | 5,499 | 2.5 | ||||||||||
Commercial real estate - improved property | - | - | - | - | ||||||||||||
Commercial and industrial | 1,173 | 0.5 | 552 | 0.2 | ||||||||||||
Residential real estate | 861 | 0.4 | 890 | 0.4 | ||||||||||||
Home equity | - | - | - | - | ||||||||||||
Consumer | 27 | - | 9 | - | ||||||||||||
Total allowance for credit losses - loan commitments | 7,212 | 3.3 | 6,950 | 3.1 | ||||||||||||
Total allowance for credit losses - loans and loan commitments | $ | 217,235 | 100.0 | $ | 225,699 | 100.0 | ||||||||||
Although the allowance for credit losses is allocated as described in Table 10, the total allowance is available to absorb actual losses in any category of the loan portfolio. However, differences between management's estimation of probable losses and actual net charge-offs in subsequent periods for any category may necessitate future adjustments to the allowance for credit losses applicable to the category. Management believes the allowance for credit losses is appropriate to absorb expected losses at March 31, 2026.
DEPOSITS
TABLE 11. DEPOSITS
(unaudited, dollars in thousands) |
March 31, |
December 31, | $ Change | % Change | ||||||||||||
Deposits | ||||||||||||||||
Non-interest bearing demand | $ | 5,223,034 | $ | 5,376,767 | $ | (153,733 | ) | (2.9 | ) | |||||||
Interest bearing demand | 5,505,382 | 5,186,880 | 318,502 | 6.1 | ||||||||||||
Money market | 4,904,510 | 5,072,039 | (167,529 | ) | (3.3 | ) | ||||||||||
Savings deposits | 3,306,044 | 3,157,782 | 148,262 | 4.7 | ||||||||||||
Certificates of deposit | 2,729,304 | 2,875,372 | (146,068 | ) | (5.1 | ) | ||||||||||
Total deposits | $ | 21,668,274 | $ | 21,668,840 | $ | (566 | ) | (0.0 | ) | |||||||
Deposits, which represent Wesbanco's primary source of funds, are offered in various account forms at various rates through Wesbanco's 226 financial centers. The FDIC insures deposits up to $250,000 per account owner.
Total deposits were virtually unchanged during the first three months of 2026. Savings deposits and demand deposits increased 4.7% and 1.6%, respectively, which were partially offset by a 3.3% decrease in money market deposits. Deposit balances were impacted by bonus and royalty payments for Marcellus and Utica shale gas payments from energy companies in Wesbanco's southwestern Pennsylvania, eastern Ohio and northern West Virginia markets. In addition, Wesbanco also participates in the Insured Cash Sweep ("ICS®") deposit program. ICS® reciprocal balances totaled $2.4 billion and $2.2 billion at March 31, 2026 and December 31, 2025, respectively. In addition, ICS® one-way buys totaled $50.1 million and $100.2 million at March 31, 2026 and December 31, 2025, respectively.
Certificates of deposit decreased 5.1% from December 31, 2025 to March 31, 2026 due primarily to a decrease in higher cost certificates of deposit. Wesbanco does not generally solicit brokered or other deposits out-of-market or over the internet but does participate in the Certificate of Deposit Account Registry Services ("CDARS®") program. CDARS® balances totaled $75.3 million in outstanding balances at March 31, 2026, of which $0.9 million represented one-way buys, compared to $73.1 million in total outstanding balances, of which $0.9 million represented one-way buys, at December 31, 2025. Certificates of deposit greater than $250,000 were approximately $783.8 million at March 31, 2026 compared to $842.3 million at December 31, 2025. Certificates of deposit totaling approximately $2.5 billion at March 31, 2026 with a cost of 3.37% are scheduled to mature within the next 12 months. From time to time, the Bank may offer special promotions or match competitor rates on certain certificates of deposit maturities and savings products based on competition, sales strategies, liquidity needs and wholesale borrowing costs.
BORROWINGS
TABLE 12. BORROWINGS
(unaudited, dollars in thousands) |
March 31, |
December 31, | $ Change | % Change | ||||||||||||
Federal Home Loan Bank Borrowings | $ | 975,000 | $ | 1,200,000 | $ | (225,000 | ) | (18.8 | ) | |||||||
Other short-term borrowings | 114,068 | 110,679 | 3,389 | 3.1 | ||||||||||||
Subordinated debt and junior subordinated debt | 308,683 | 308,529 | 154 | 0.0 | ||||||||||||
Total | $ | 1,397,751 | $ | 1,619,208 | $ | (221,457 | ) | (13.7 | ) | |||||||
While borrowings are a significant source of funding for Wesbanco, they are less significant as compared to total deposits. FHLB borrowings decreased $0.2 billion from December 31, 2025 to March 31, 2026 as $1.1 billion in maturities were partially offset by $0.9 billion in new advances. The average cost of maturing FHLB advances for the first three months of 2026 was 3.91% while the average cost of new borrowings was 3.87%.
Other short-term borrowings, which may consist of federal funds purchased, repurchase agreements and overnight sweep checking accounts were $114.1 million at March 31, 2026, compared to $110.7 million at December 31, 2025. There were no outstanding federal funds purchased at either March 31, 2026 or December 31, 2025.
CAPITAL RESOURCES
Shareholders' equity increased $38.7 million or 1.0% from December 31, 2025, to $4.1 billion at March 31, 2026. The increase resulted from $88.6 million in net earnings for the three months ended March 31, 2026, which was partially offset by the declaration of common and preferred shareholder dividends totaling $36.2 million and $4.2 million, respectively, and a $13.9 million other comprehensive income loss for the three months ended March 31, 2026. Wesbanco also increased its quarterly dividend rate $0.01 per quarter to $0.38 per share in November 2025, representing a 2.7% increase over the prior quarterly rate and a cumulative 171% increase since 2010.
Wesbanco did not purchase any shares of its common stock on the open market during the three-month period ended March 31, 2026 under the current share repurchase authorization. At March 31, 2026, the remaining shares authorized to be purchased under the last approved repurchase plan totaled 909,716 shares.
Regulatory guidelines require bank holding companies and commercial banks to maintain certain minimum capital ratios and define companies as "well capitalized" that sufficiently exceed the minimum ratios. At March 31, 2026, regulatory capital levels for both the Bank and Wesbanco were substantially greater than the minimum amounts needed to be considered "well capitalized" under the regulations. There are various legal limitations under federal and state laws that limit the payment of dividends from the Bank to Wesbanco. As of March 31, 2026, under FDIC regulations, Wesbanco could receive, without prior regulatory approval, a dividend of approximately $365.6 million from the Bank.
The following table summarizes risk-based capital amounts and ratios for Wesbanco and the Bank for the periods indicated:
March 31, 2026 | December 31, 2025 | ||||||||||||||||||||||||||||
Minimum | Well- | Minimum | Minimum | ||||||||||||||||||||||||||
(unaudited, dollars in thousands) | Value(1) | Capitalized(2) | Amount | Ratio | Amount(1) | Amount | Ratio | Amount(1) | |||||||||||||||||||||
Wesbanco, Inc. | |||||||||||||||||||||||||||||
Tier 1 leverage | 4.00 | % | N/A | $ | 2,503,353 | 9.63 | % | $ | 1,039,385 | $ | 2,443,411 | 9.42 | % | $ | 1,037,948 | ||||||||||||||
Common equity Tier 1 | 4.50 | % | N/A | 2,279,166 | 10.67 | % | 960,859 | 2,219,224 | 10.37 | % | 963,091 | ||||||||||||||||||
Tier 1 capital to risk-weighted assets | 6.00 | % | 6.00 | % | 2,503,353 | 11.72 | % | 1,281,145 | 2,443,411 | 11.42 | % | 1,284,121 | |||||||||||||||||
Total capital to risk-weighted assets | 8.00 | % | 10.00 | % | 3,030,071 | 14.19 | % | 1,708,194 | 2,978,585 | 13.92 | % | 1,712,162 | |||||||||||||||||
Wesbanco Bank, Inc. | |||||||||||||||||||||||||||||
Tier 1 leverage | 4.00 | % | 5.00 | % | $ | 2,622,343 | 10.10 | % | $ | 1,038,250 | $ | 2,571,964 | 9.92 | % | $ | 1,036,779 | |||||||||||||
Common equity Tier 1 | 4.50 | % | 6.50 | % | 2,622,343 | 12.32 | % | 958,160 | 2,571,964 | 12.06 | % | 959,751 | |||||||||||||||||
Tier 1 capital to risk-weighted assets | 6.00 | % | 8.00 | % | 2,622,343 | 12.32 | % | 1,277,547 | 2,571,964 | 12.06 | % | 1,279,668 | |||||||||||||||||
Total capital to risk-weighted assets | 8.00 | % | 10.00 | % | 2,840,119 | 13.34 | % | 1,703,396 | 2,798,197 | 13.12 | % | 1,706,224 | |||||||||||||||||
LIQUIDITY RISK
Liquidity is defined as a financial institution's capacity to meet its cash and collateral obligations at a reasonable cost. Liquidity risk is the risk that an institution's financial condition or overall safety and soundness is adversely affected by an inability, or perceived inability, to meet its obligations. An institution's obligations, and the funding sources to meet them, depend significantly on its business mix, balance sheet structure, and the cash flows of its on- and off-balance sheet obligations. Institutions confront various internal and external situations that can give rise to increased liquidity risk including funding mismatches, market constraints on funding sources, contingent liquidity events, changes in economic conditions, and exposure to credit, market, operation, legal and reputation risk. Wesbanco actively manages liquidity risk through its ability to provide adequate funds to meet changes in loan demand, unexpected outflows in deposits and other borrowings as well as to take advantage of market opportunities and meet operating cash needs. This is accomplished by maintaining liquid assets in the form of securities, sufficient borrowing capacity and a stable core deposit base. Liquidity is centrally monitored by Wesbanco's Asset/Liability Committee ("ALCO") which includes senior management representatives and reports to the Board of Directors ("BOD") through the board-level Enterprise Risk Management Committee.
Wesbanco determines the degree of required liquidity by the relationship of total holdings of liquid assets to potential funding needs to meet unexpected deposit losses and/or loan demands. The ability to quickly convert assets to cash at a minimal loss is a primary function of managing Wesbanco's investment portfolio. Wesbanco believes its cash flow from the loan portfolio, the investment portfolio, and other sources adequately meet its liquidity requirements. Wesbanco's net loans to assets ratio was 68.7% at March 31, 2026 and deposit balances funded 78.8% of assets.
The following table lists the sources of liquidity from assets at March 31, 2026 expected within the next year:
(unaudited, in thousands) | ||||
Cash and cash equivalents | $ | 960,410 | ||
Securities with a maturity date within the next year and callable securities | 699,027 | |||
Projected payments and prepayments on mortgage-backed securities and collateralized mortgage obligations (1) | 508,528 | |||
Loans held for sale | 59,281 | |||
Accruing loans scheduled to mature | 2,742,243 | |||
Normal loan repayments | 2,547,901 | |||
Total sources of liquidity expected within the next year | $ | 7,517,390 | ||
Deposit cash flows are another principal factor affecting overall Wesbanco liquidity. Deposits totaled $21.7 billion at March 31, 2026. Deposit cash flows are impacted by current interest rates, products and rates offered by Wesbanco versus various forms of competition, as well as customer behavior. Certificates of deposit scheduled to mature within one year totaled $2.5 billion at March 31, 2026, with a weighted average cost of 3.67%, which includes jumbo regular certificates of deposit totaling $1.5 billion with a weighted-average cost of 3.48%, and jumbo CDARS® certificates of deposit of $67.3 million with a weighted-average cost of 3.60%. Wesbanco had $0.9 million in brokered one-way buys at March 31, 2026.
Uninsured deposits, as reported for regulatory purposes, totaled $7.0 billion at March 31, 2026, or 32% of total deposits. Uninsured deposits include $2.4 billion of public funds deposits that are over the FDIC-insured limit. Wesbanco secures these public funds deposits by pledging investment securities with a market value at or above the deposit balance. Excluding these public funds, at March 31, 2026, uninsured deposits were $4.6 billion, or 21% of total deposits. Wesbanco maintains a line of credit with the FHLB as an additional funding source. Available credit with the FHLB approximated $6.8 billion at both March 31, 2026 and December 31, 2025. The FHLB requires securities to be specifically pledged to the FHLB and maintained in a FHLB-approved custodial arrangement if the member wishes to include such securities in the maximum borrowing capacity calculation. Wesbanco has elected not to specifically pledge to the FHLB unpledged securities. Wesbanco can also use this line of credit for pledging collateral to cover public funds deposits, as an alternative to pledging securities from the investment portfolio. At March 31, 2026, the Bank had unpledged available-for-sale securities with an estimated fair value of $879.0 million, or 27.1% of the total available-for-sale portfolio. A portion of these securities could be sold for additional liquidity, or such securities could be pledged to secure additional FHLB borrowings. Approximately 61% of the portfolio is pledged to public deposit customers. Wesbanco monitors exposure to public funds deposits in relation to pledging requirements and provides ICS® deposits via IntraFi® as a solution for a portion of new and existing public fund depositors. In addition, at March 31, 2026, the Bank had unpledged held-to-maturity securities with an estimated fair value of $624.0 million. Approximately 99%, or $619.9 million of these securities are municipal securities, which can only be pledged in limited circumstances. Generally, these securities cannot be sold without tainting the remainder of the held-to-maturity portfolio. If tainting occurs, all remaining securities with the held-to-maturity designation would be required to be reclassified as available-for-sale, and the held-to-maturity designation would not be available to Wesbanco for a period of time.
Wesbanco participates in the Federal Reserve Bank's Borrower-in-Custody Program ("BIC") whereby Wesbanco pledges certain consumer loans as collateral for borrowings. Wesbanco did not have any BIC borrowings outstanding at March 31, 2026. Alternative funding sources may include the utilization of existing overnight lines of credit with third party banks totaling $265.0 million, none of which was outstanding at March 31, 2026, along with seeking other lines of credit, borrowings under repurchase agreement lines, increasing deposit rates to attract additional funds, accessing brokered deposits, or selling securities available-for-sale or certain types of loans.
Other short-term borrowings of $114.1 million at March 31, 2026 consisted of repurchase agreements or overnight sweep checking accounts for large commercial customers. Other short-term borrowings may also include federal funds purchased using the Federal Reserve's discount window or lines of credit with third party banks noted above. The overnight sweep checking accounts require U.S. Government securities to be pledged equal to or greater than the average deposit balance in the related customer accounts.
The principal sources of parent company liquidity are dividends from the Bank and $170.4 million in cash and investments on hand. There are various legal limitations under federal and state laws that limit the payment of dividends from the Bank to the parent company. As of March 31, 2026, under FDIC and State of West Virginia regulations, Wesbanco could receive, without prior regulatory approval, dividends of approximately
$365.6 million from the Bank. Management believes these are appropriate levels of cash for the parent company given the current environment. Management continuously monitors the adequacy of parent company cash levels and sources of liquidity through the use of metrics that relate current cash levels to historical and forecasted cash inflows and outflows.
Wesbanco had outstanding commitments to extend credit in the ordinary course of business approximating $6.6 billion and $6.3 billion at March 31, 2026 and December 31, 2025, respectively. On a historical basis, only a portion of these commitments will result in an outflow of funds. Please refer to Note 11, "Commitments and Contingent Liabilities" of the Consolidated Financial Statements and the "Loans and Credit Risk" section of this MD&A for additional information.
Federal financial regulatory agencies have previously issued guidance to provide for sound practices for managing funding and liquidity risk and strengthening liquidity risk management practices. Wesbanco maintains a comprehensive management process for identifying, measuring, monitoring, and controlling liquidity risk, which is fully integrated into its risk management process. Management believes Wesbanco has sufficient current liquidity to meet current obligations to borrowers, depositors and others and that Wesbanco's current liquidity risk management policies and procedures, as periodically reviewed and adjusted, adequately address this guidance.