Wesbanco, Inc. — 2023 Form 10-K Summary
Reporting period: Fiscal year ended December 31, 2023. Although the request metadata says “2023 Q4,” this is an annual filing covering the full fiscal year, with year-end balance-sheet information.
Business context
Wesbanco is a Wheeling, West Virginia-based bank holding company operating through community banking and trust and investment services. At year-end it had approximately $17.7 billion in assets, 192 branches and 183 ATMs across six states. Trust assets under management or administration were approximately $5.4 billion and are not included in consolidated assets.
Financial performance and condition
| Metric | FY 2023 / December 31, 2023 | Comparable period |
|---|---|---|
| Net income available to common shareholders | $148.9 million; diluted EPS $2.51 | 2022: $182.0 million; diluted EPS $3.02 |
| Net interest income | $481.3 million; FTE net interest margin 3.14% | 2022: $474.3 million; FTE margin 3.20% |
| Non-interest income | $120.4 million | 2022: $117.4 million |
| Non-interest expense | $390.0 million; $386.2 million excluding restructuring and merger-related expense | 2022: $357.0 million; $355.2 million excluding those expenses |
| Total assets | $17.7 billion | 2022: $16.9 billion |
| Portfolio loans | $11.6 billion | 2022: $10.7 billion |
| Deposits | $13.2 billion | 2022: $13.1 billion |
| Total borrowings | $1.7 billion | 2022: $1.1 billion |
| Allowance for credit losses on loans | $130.7 million; 1.12% of portfolio loans | 2022: $117.8 million; 1.10% |
| Consolidated regulatory capital | CET1 10.99%; Tier 1 12.05%; total capital 14.91%; leverage 9.87% | All above applicable well-capitalized thresholds |
Net cash provided by operating activities was $169.3 million. Investing activities used $535.2 million, principally reflecting loan growth; financing activities provided $552.9 million, including increased FHLB advances. Cash and cash equivalents increased $187.0 million to $595.4 million.
Common dividends declared were $1.41 per share, up from $1.37 in 2022. The quarterly dividend was increased to $0.36 per share in the fourth quarter. Shareholders’ equity was $2.53 billion, and tangible book value was $21.28 per share.
Changes versus 2022
- Common net income fell 18.2% and diluted EPS declined 16.9%. Management attributed the decline mainly to higher deposit and borrowing costs, inflation-related expenses, and a provision for credit losses versus a provision release in 2022.
- Interest income rose 38.5% to $711.5 million, but interest expense rose substantially as funding costs repriced. Net interest income increased only 1.5%, while FTE net interest margin declined six basis points to 3.14%.
- Average loans increased 10.4%; year-end portfolio loans rose 8.7%. Deposits were nearly flat at year-end, but non-interest-bearing demand deposits decreased 15.7% and certificates of deposit increased 39.0%.
- Borrowings increased 54.7%, primarily due to a $645.0 million increase in year-end FHLB advances used in part to fund loan growth.
- Provision for credit losses on loans and commitments was $17.8 million, compared with a $1.6 million benefit in 2022. Net loan charge-offs rose to four basis points of average loans from two basis points.
- Non-interest expense excluding restructuring and merger-related costs increased 8.7%; the efficiency ratio rose to 63.64% from 59.53%.
- Gross unrealized securities losses declined to $438.3 million from $510.7 million. Management said the losses were market-related and did not require an allowance for credit losses; net unrealized AFS losses in accumulated OCI were $233.2 million after tax.
Outlook, risks and unusual items
- The filing provides no specific earnings or financial guidance. Management describes the company as well-capitalized, with sound liquidity and credit quality, while emphasizing sensitivity to interest rates, deposit competition and economic conditions.
- Commercial real estate is a major concentration: CRE represented 56.4% of portfolio loans. Office-related commercial exposure was approximately $471 million; management is monitoring risks from remote-work trends, lease expirations and weaker demand for office space.
- Uninsured deposits were approximately $4.0 billion, or 31% of deposits, including $1.5 billion of public funds collateralized by securities. Certificates of deposit totaling $915.4 million were scheduled to mature within one year. The company reported approximately $3.4 billion of remaining FHLB borrowing capacity, subject to collateral requirements.
- Interest-rate risk remains important. Year-end modeling estimated net interest income would rise 3.3% under an immediate +200-basis-point shock and decline 7.0% under a -200-basis-point shock; these are model scenarios, not forecasts.
- The investment portfolio included $1.2 billion of held-to-maturity securities with fair value below carrying value; the company cautions that selling certain HTM securities could affect the portfolio’s accounting classification. It reported no intent or expected requirement to sell impaired AFS securities before recovery.
- Branch and operating restructuring costs were $3.8 million, primarily for branch and building closures and restructuring of the residential mortgage department. Goodwill was approximately $1.1 billion; the annual impairment test found no impairment, though goodwill remains subject to future reassessment.
- Management said there were no known legal matters for which a material loss was reasonably possible. The auditor issued unqualified opinions on the financial statements and internal control over financial reporting. The allowance for credit losses was identified as a critical audit matter, particularly management’s macroeconomic forecast assumptions.
Important facts for investors to verify
- Whether loan and deposit pricing trends allow net interest margin to stabilize as funding costs and deposit mix evolve.
- CRE credit quality, especially office exposure, multifamily and construction concentrations, criticized/classified loans, and subsequent delinquencies or modifications.
- Deposit retention, uninsured and public-fund deposit movements, near-term certificate maturities, and use and cost of wholesale funding.
- Allowance adequacy and the assumptions behind the credit-loss forecast, given the return to provision expense and higher past-due balances.
- Potential earnings and capital effects of unrealized securities losses, including the distinction between AFS and HTM holdings and the liquidity consequences of any sale.
- Dividend capacity and payout sustainability, considering the 56.2% reported payout ratio, preferred-stock seniority, regulatory limits and reliance on bank-subsidiary dividends.