WesBanco, Inc. (NASDAQ:WSBC) Q4 2024 Earnings Conference Call January 23, 2025 3:00 PM ET

Company Participants

John Iannone - Senior Vice President, Investor Relations
Jeffrey Jackson - President and Chief Executive Officer
Daniel Weiss - Chief Financial Officer

Conference Call Participants

Russell Gunther - Stephens Inc.
Karl Shepard - RBC Capital Markets
David Bishop - Hovde Group, LLC
Daniel Tamayo - Raymond James Financial, Inc.
Catherine Mealor - Keefe, Bruyette & Woods, Inc.
Manuel Navas - D.A. Davidson & Co.

Operator

Good afternoon and welcome to the WesBanco Fourth Quarter 2024 Earnings Conference Call. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to John Iannone, Senior Vice President, Investor Relations.

Please go ahead.

John Iannone

Thank you. Good afternoon, and welcome to WesBanco, Inc’s fourth quarter 2024 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 1-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, wesbanco.

com. All statements speak only as of January 23, 2025, and WesBanco undertakes no obligation to update them. I would now like to turn the call over to Jeff.

Jeff.

Jeffrey Jackson

Thanks, John, and good afternoon. On today's call, we will review our strong fourth quarter and full year 2024 results and provide an update on our operations and initial outlook for 2025. Key takeaways from the call today are: strong loan growth that has been fully funded through deposit growth; improved net interest margin which is expected to meaningfully improve through 2025.

We remain focused on organic growth and efficiency gains to achieve positive operating leverage. Our transformative acquisition of Premier Financial Corp. remains on track, pending Fed and FDIC regulatory approvals. 2024 was an excellent year for WesBanco.

We delivered strong loan growth of $1 billion, which was fully funded by deposit growth. We also announced our transformative merger with Premier Financial and continued to earn national recognitions for stability, trustworthiness, and workplace excellence. We have achieved a compound annual loan growth rate of 9% over the past 3 years, raised $200 million of common equity, and paid down higher cost borrowings, key successes in our strategy to strengthen our balance sheet and net interest margin.

Additionally, we continued to focus on cost control while enhancing our wealth and treasury management businesses to deepen client relationships and drive positive operating leverage. With the pending Premier Financial merger and the strength of our proven strategies and balance sheet, we are well-positioned to build on our momentum and continue delivering value for our customers and stakeholders. For the quarter ending December 31, 2024, we reported net income excluding merger and restructuring expenses, available to common shareholders of $47.6% million and diluted earnings per share of $0.71%, which increased 29% year-over-year. On a similar basis, we reported full year net income of $146.4% million and diluted earnings per share of $2.34%.

Furthermore, the strength of our financial performance during the past year was reflected in our fourth quarter return on tangible common equity of 13%. Nonperforming assets to total assets of just 0.22%, and a capital position that continues to provide financial and operational flexibility, as demonstrated by our tangible common equity ratio of 8.7%. Throughout the past year, we accomplished several milestones and continued to receive numerous national accolades that resulted from our strong performance, operational strengths and focus on our communities, customers, and employees.

These accolades, which recognize our commitment to sustainability and excellence, are also a testament to the hard work and dedication of our employees, so I extend a heartfelt thank you to them. Just to highlight a few of our accomplishments, we launched a renewed Mission, Vision and Pledge which defines our purpose, aspirations and the values that guide our business, which include respect, exceptional customer experiences, soundness and stability, accountability and stewards of our communities. Our MVP unites us in a shared sense of purpose and guides our strategy towards sustained success.

In conjunction with the announcement of the pending acquisition of Premier Financial, we successfully raised $200 million of common equity that further strengthened our capital levels and positioned us for future growth. We retooled our treasury management function and developed new products and services to make it a key component of our relationship banking philosophy and help drive our fee income to a larger percentage of our total revenue. Through the strength of our wealth management teams and our services, we realize record levels of trust and investment services assets under management of $6 billion and broker-dealer security account values of $1.9% billion, all through organic growth and market appreciation.

Lastly, we continue to receive top rankings the past year, reflecting our strength and stability and efforts of our employees every day to serve our customers and communities with excellence. We were recognized for Soundness, Safety and Profitability; Employer of Choice and a great work place; positively impacting our communities, and recently we were named one of Forbes Most Trusted Companies based on customer, investor, and employee trust. The key story for both the fourth quarter and full year remains strong deposit and loan growth, as deposit growth fully funded loan growth on both a year-over-year and sequential quarter basis. Further, our total and commercial loan growth and deposit growth continued to significantly outperform the monthly H.8 data for all domestically chartered commercial banks on both a year-over-year and quarter-over-quarter basis, again, just demonstrating the success of our strategies and teams.

Our total deposits increased $1 billion year-over-year and $300 million quarter-over-quarter to more than $14 billion. Importantly, this growth was mainly driven by deposit categories other than certificate of deposits, as total demand deposits continue to represent 54% of total deposits, with the non-interest bearing component representing 27%, reflecting our team's focus on deepening existing and new customer relationships. Our underwriting and credit standards are a 155-year legacy of our company, and we are achieving our strong loan growth without sacrificing credit quality, as confirmed by key metrics that are favorable to the average of all banks with assets between $10 billion and $25 billion.

Since year-end 2021, we have achieved a strong compound annual loan growth rate of 9%, which has been achieved with roughly the same number of bankers, thanks to the success of our recruitment and go-to-market strategies, combined with the products and services of a large bank, but with the customer focus and support of a community bank. Fourth quarter growth was 9% year-over-year and nearly 7% quarter-over-quarter annualized, driven by a strong performance of our banking teams across our markets. Further, total commercial loans increased 11% year-over-year and almost 9% sequentially on an annualized basis driven by commercial real estate.

Our four newest loan production offices accounted for nearly 30% of the commercial loan growth year-to-date, led by our Chattanooga and Indianapolis offices. Our commercial loan pipeline as of December 31 was approximately $763 million, up roughly 11% from a year ago, but down 8% from September 30, as our teams converted the pipeline into another quarter of solid loan growth. However, in the 3 weeks since year-end, the pipeline has grown approximately $80 million.

Based on the current pipeline and strength of our teams and markets, we expect mid-single-digit loan growth during 2025. Our Louisville, Southern Indiana commercial banker and credit team recently celebrated successfully winning a unique opportunity with a customer in a specialized industry, a $45 million construction loan and over $350,000 in relationship-based fee income. While the opportunity presented many challenges, the team persevered through complex negotiations to secure this resounding win, which was made possible by our deep understanding of the client's needs and our team living our values of accountability and soundness and stability in support of the bank's day-to-day and long-term performance.

Turning to our pending acquisition of Premier Financial, we have received approval from the shareholders of both companies, as well as the State of West Virginia. We previously filed all necessary bank regulatory applications and remain on track for a first quarter closing, pending Fed and FDIC approvals. Through this transformative acquisition, we expect to accelerate our positive momentum, build on Premier's legacy of community engagement and support, and together bring the resources of a larger and stronger financial services organization to benefit all our communities.

I would now like to turn the call over to Dan Weiss, our CFO, for an update on our fourth quarter financial results and a current outlook for 2025. Dan.

Daniel Weiss

Thanks, Jeff, and good afternoon. For the quarter ending December 31, 2024, we reported GAAP net income available to common shareholders of $47.1% million or $0.70% per share. And when excluding after-tax restructuring and merger-related expenses, net income was $47.6% million or $0.71% per share, representing an increase of 47% from $32.4% million or $0.55% per share in the prior year period. On a full-year basis, 2024 net income available to common shareholders, excluding after-tax restructuring, and merger-related expenses was $146.4% million or $2.34% per share as compared to $151.9% million or $2.56% per share, reflecting the impact of the common stock rates during the third quarter of 2024.

To highlight a few of the fourth quarter's accomplishments, we generated strong year-over-year pre-tax, pre-provision earnings growth of 29% that was built upon loan growth of $1 billion that was fully funded by deposit growth, an improving net interest margin, strong fee income growth of 21%, and continued management of operating expenses, with fourth quarter expenses increasing just 1% over the linked third quarter, as well as the prior year period. These positives combined with a slight negative provision for credit losses, a pension benefit that's not expected to recur, and a positive fair value adjustment on swaps resulted in a $0.15% increase in earnings per share, despite the increase in the share count from the third quarter's capital raise. As of December 31, total assets of $18.7% billion included total portfolio loans of $12.7% billion and total securities of $3.4% billion.

And as Jeff mentioned, loan growth remained robust over the last 3 years and has been driven by the success of our strategies and the strong performance by our banking teams across our markets. We remain optimistic about future loan growth with our strong loan pipelines, banking teams and markets combined with roughly $1 billion in unfunded land construction and development commitments that are expected to fund over the next 12 to 18 months and relatively low CRE payoffs. Commercial real estate payoffs totaled approximately $350 million for the year as compared to an annual level in the $500 million range in a more normal operating environment, and we anticipate that the pace of payoffs may increase over time as more CRE projects move into the secondary market for permanent financing or are sold, particularly if rates decline.

Deposits of $14.1% billion were up 7.3% versus the prior year, and 8.6% annualized linked-quarter, reflecting our efforts on deposit gathering and retention. The composition of total deposits continue to have some mixed shift. However, total demand deposits as well as non-interest bearing deposits as a percentage of total deposits, remain consistent with the range prior to the pandemic.

As is typical during a higher rate environment, we've experienced strong growth in CD during 2024. However, when excluding them, we realized deposit growth of 3.9% year-over-year and 7.7% quarter-over-quarter annualized. Furthermore, we anticipate roughly 70% of our CD book to mature or reprice lower over the next 6 months mainly in the March to May time frame.

Turning to credit quality. Credit quality continues to remain stable as key metrics have remained low from a historical perspective and within a consistent range over the last 3-plus years. The allowance for credit losses to total portfolio loans at the end of the quarter decreased slightly to 1.10% of total loans due to improvements in the macroeconomic forecast related to lower unemployment assumptions and a more normalized yield curve, offsetting loan portfolio growth and office portfolio reserves.

The fourth quarter margin of 3.03% improved both quarter-over-quarter and year-over-year through a combination of higher loan and securities yields and lower funding costs as we continue to execute upon our strategies to strengthen our balance sheet. Also benefiting the margin was the $175 million paydown of federal home loan bank borrowings from deposit growth which exceeded loan growth, bringing total paydowns since June 30 to $475 million. And as a reminder, the majority of our federal home loan bank borrowings are short-term borrowings such that approximately 80% will mature during the first quarter of 2025 and should continue to reprice lower from additional Fed fund rate cuts.

Our interest bearing deposit beta on the September and November rate cuts of 75 basis points was 19%. And our total deposit funding cost of 197 basis points declined 8 basis points from the third quarter, reflecting the higher mix of non-interest bearing deposits and the recent rate cuts. For the fourth quarter, non-interest income totaled $36.4% million, a 23% linked quarter increase and a 21% increase over the prior year period due to higher swap fee income and valuation income, service charges on deposits and trust fees. The increase in the swap fees and valuation income reflected fair value adjustments of $1.9% million, which were $2.5% million loss in last year period, and gross swap fees of $1.3% million.

Service charges on deposits increased due to fee income from new products and services, increased general consumer spending and treasury management, which is continuing to gain traction from our strategic repositioning of this business line in late 2023. It's also important to note that other income included a $2.3% million gain from the transfer of certain liabilities for future pension payments to a third-party insurance company, which is not expected to repeat. Turning to expenses.

Non-interest expense excluding restructuring and merger-related costs for the 3 months ended December 31, 2024 were $100.5% million, an increase of just 1% year-over-year, which benefited from company-wide efficiency efforts as we've remained focused on achieving positive operating leverage. The primary driver of this increase was the $1 million increase in equipment and software expenses, which reflect the impact of the prior year ATM upgrades. Salaries and wages also increased primarily due to our standard mid-year merit increases offset somewhat by lower staffing levels associated with the efficiency improvements in the mortgage and branch staffing models in the prior year.

Our regulatory capital ratios have remained above the applicable well-capitalized standards, and reflecting our strong capital position and net income, our Board of Directors approved a $0.01% dividend increasing to $0.37% during the fourth quarter. Turning to our current outlook for 2025, which is for WesBanco standalone and does not include any potential benefit from our acquisition of Premier Financial. We are currently modeling two additional Fed Fund rate cuts in March and September.

And given our relatively neutral rate-sensitive position, we do not expect a significant difference between one or two cuts on our net interest margin. We anticipate approximately 4 to 6 basis points of continued improvement in the first quarter's net interest margin from the fourth quarter, as our spot margin for the month of December was 3.08%. And we expect more meaningful improvement during the second quarter as more than a $1 billion in CDs mature during that March through May period and reprice lower. And then we anticipate more modest margin improvement during the second half of 2025.

Trust fees should benefit modestly from organic growth, but will be impacted by equity and fixed income market trends. And as a reminder, first quarter trust fees are seasonally higher due to the tax preparation fees. Securities brokerage revenues anticipated to grow slightly from the range over the last few quarters due to modest organic growth, but also will be dependent upon the economy and equity and fixed income markets.

Electronic banking fees, which are subject to overall consumer spending behaviors are expected to be in the same quarterly range in 2024. Service charges on deposits are expected to remain consistent with the amounts that we've earned in the second half of 2024, as they are dependent on general consumer spending, but could benefit slightly from continued growth in treasury management. Mortgage banking should remain in the range of the second half of 2024, but will continue to be impacted by the overall residential housing market trends and interest rates. And then gross commercial swap fee income, excluding market adjustments, should be in the range of $5 million to $7 million.

And then we continue to anticipate some modest benefit during 2025 from our new purchasing card, integrated payables and receivables, treasury management products. Turning to expenses. As we stated in the past, we remain focused on disciplined expense management to drive positive operating leverage and will continue our efforts throughout 2025.

As we previously disclosed, we successfully consolidated 11 branches into nearby locations during the fourth quarter and anticipate annual savings of approximately $4 million, will begin to be realized during the first quarter of 2025 to help offset general inflationary pressures. Equipment and software is expected to continue to increase at a faster pace than overall expenses as we continue to invest in products, services and technology to improve the customer experience and drive revenue growth. Marketing and FDIC expenses will increase slightly in support of our loan and deposit growth.

And based on what we know today, we believe our expense run rate during the first half of 2025 to be roughly consistent with the fourth quarter's reported $101 million and then grow modestly due to the annual midyear merit increases and higher health care and software costs during the back half of the year. The provision for credit losses will depend upon changes to the macroeconomic forecast as well as qualitative factors, credit quality metrics including potential charge-offs, criticized and classified loan balances, delinquencies, changes in prepayment speeds, and future loan growth. And lastly, we currently anticipate our full year effective tax rate to be between 17.5% and 18.5% subject to changes in tax regulations and taxable income levels.

Operator, we're now ready to take questions. Would you please review the instructions.

Operator

[Operator Instructions] The first question comes from Russell Gunther with Stephens. Please go ahead.

Russell Gunther

Hey, good afternoon, guys.

Jeffrey Jackson

Hey, good afternoon, Russell.

Daniel Weiss

Hey, Russell.

Russell Gunther

Hey, Jeff. Hey, Dan. Hey, I wanted to start on the margin and appreciate all the color with regard to legacy WesBanco.

A bunch of tailwinds, it sounds like, on both sides of the balance sheet to the NIM. So, Dan, as we think about moving into the second quarter with the CD benefit, could you just share where those are repricing off of what you would expect to reprice them into and then what the duration of the offerings are.

Daniel Weiss

Yes. Sure, Russell And so, yes, first second quarter, it's about a 1.2% billion in CDs and those are -- with the average rate is about 4.75% and we anticipate those repricing downward by 75 to 100 basis points. So that's where we kind of see particularly the second quarter, where we think we're going to have a little bit more outsized lift in margin. And those, right now, we have slated to remain in that kind of 7 month CD special.

So that's the kind of [indiscernible].

Russell Gunther

Okay. I appreciate it. Okay.

And then switching gears as we think about sort of the pro forma margin with Premier given the rate backdrop we sit in today, also your two Fed cut expectations, does that put us in a pro forma range of call it, I don't know, 345 to 350. Or given your kind of legacy outlook and improvement with the WesBanco margin as you layer in Premier, is there any change to how we should be thinking about that margin upon deal close.

Daniel Weiss

Yes, Russell, I think you're pretty close to what we're modeling right now, I'd say. I think one of the things that we -- if you recall back when we announced the deal in July, we had a kind of a pro forma margin of, it was like 346. And if I were to think about what has changed since then, certainly the rate environment, and I would say that 346 at the time was based off of analyst consensus.

That would have been first quarter analyst consensus forecast for 2025 for WesBanco on a standalone basis, that would have been the foundation. And since the first quarter of 2024, that consensus estimate, I think given some of the tailwinds that we've discussed, it feels pretty good that we could be 10 to 15 basis points better than that today.

Russell Gunther

Very helpful, guys. Thanks for taking my question.

Jeffrey Jackson

350 to 355 range.

Russell Gunther

I appreciate it. I'll step back. Thanks very much, guys.

Operator

The next question comes from Karl Shepard with RBC Capital Markets. Please go ahead.

Karl Shepard

Hey, good afternoon, guys.

Jeffrey Jackson

Hey, good afternoon, Karl.

Daniel Weiss

Hey, Karl.

Karl Shepard

I wanted to pick up on deposits a little bit more. A lot of opportunity in 2Q, but could you just sketch out the whole year a little bit and what you think an appropriate deposit growth rate is and if some of the stabilization and mix we saw this quarter can continue. Thanks.

Jeffrey Jackson

Yes. So what I would say is, one of the bigger assumptions that we're modeling today is that the loan growth would be fully funded by deposit growth. And that deposit growth could be a little lumpy quarter-to-quarter, but generally speaking for the year, we expect deposits to fully fund loans.

And so working backwards, I think we've -- we've been pretty clear about what our expectations are for loan growth on an annual basis targeting that kind of mid to upper single-digit loan growth. So that’s about $800 million or so, $850 million in loan growth. And so that can kind of help to inform you on what our expectations are for deposit growth.

Karl Shepard

Okay. And then just on the mix piece of it, do you think we'll see a little less CD growth or is that still area you see a kind of similar composition.

Jeffrey Jackson

I think we could see probably a little less concentration in CD growth than what we saw this year, like 2024. In 2025, I think it could be a little bit more evenly mixed.

Karl Shepard

Okay. Thanks for the help.

Operator

The next question comes from Dave Bishop with Hovde Group. Please go ahead.

David Bishop

Yes, good afternoon, gentlemen.

Jeffrey Jackson

Hey, good afternoon, Dave.

Daniel Weiss

Hello, Dave.

David Bishop

Hey, Jeff, quick question. You noted the success in sort of revamping some of your treasury management products on the commercial side of the house. Just curious, I don't know if you disclosed this, but maybe give like a percentage increase of maybe new commercial accounts added this year.

Are you seeing -- are you able to win bigger commercial accounts, average size. And just curious, any color you can provide there on a commercial deposit growth.

Jeffrey Jackson

Yes, sure. We are seeing some larger account wins. I think we're continuing to ramp it up.

I will tell you that we -- treasury management fees year-over-year grew pretty nicely. And once again, we’re -- I think, I believe we ramped up around 40 new multi-cards that were implemented toward the middle to end of last year. So obviously that spend would flow through this year.

And then we are targeting at least that many or more for this year. So it's really getting started, but we are seeing the revenue lift there. And the teams, the commercial teams are really adding it to their repertoire, which is allowing us to bank additional C&I business.

I believe in the fourth quarter you saw us grow C&I about $70 million. And so that was a big positive for us as well from a loan perspective. And then we've had a tremendous growth in deposits as well.

So, yes, it's just really ramping up, I would say, but it's made a big impact as far as being able to grow deposit and commercial loan balances.

David Bishop

Great. And then a follow-up question, I think, in the preamble. It sounds like you're still confident of a first quarter close to the Premier acquisition.

Just curious, is the patent [ph] DC reviewing this. Just curious, we're going to have to get final regulatory approval. Thanks.

Jeffrey Jackson

Yes. So we are very confident that we'll close in the first quarter and it is in DC. The Fed and the FDIC are both in DC.

We have had correspondence with both answering some questions and going back and forth on a few minor items that they've asked about. At this point, I see no issues that have arisen and we still feel very comfortable about closing in the first quarter.

David Bishop

Great. Thank you.

Operator

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

Daniel Tamayo

Thank you. Good afternoon, guys.

Jeffrey Jackson

Hey, good afternoon.

Daniel Tamayo

Maybe first, just a clarification, the loan growth guidance that you talked about, I know you mentioned expecting an increase in payoffs in 2025. Does that assume an increase in payoffs in 2025 in terms of what you gave us in the mid-single-digit loan growth.

Daniel Weiss

That would be a net. That's net. That's a net number.

Daniel Tamayo

Okay.

Daniel Weiss

So with payoffs, yes, still in that mid to upper single digits.

Daniel Tamayo

Mid to upper single. So it includes -- you're assuming that payoffs increase within that net loan growth number you're talking about, is what you're saying.

Jeffrey Jackson

Yes, that's right.

Daniel Tamayo

Okay. If there were -- payoffs were to exceed expectations and loan growth were to come in a little bit lighter and you had a similar situation that you had in the fourth quarter where deposit growth exceeded loan growth, would you be inclined to pay down FHLB borrowings again. I'm just curious how that scenario would play out if it were to occur.

Jeffrey Jackson

Yes, we would. So all our deposit growth is that we're bringing in less than what we're paying to FHLB. So we would, if we weren't able to grow loans at the same rate of deposits, we would pay down the FHLB borrowings, which would have a positive impact, I believe, on our net interest margin.

Daniel Tamayo

Okay.

Daniel Weiss

Yes, we saw -- we really saw that here in the fourth quarter. The deposit growth came kind of early in the fourth quarter and we were able to pay down those Federal Home Loan Bank borrowings earlier in the quarter. And we actually picked up a few basis points in margin as a result.

Jeffrey Jackson

Yes. We finished December at 308.

Daniel Tamayo

Okay. Terrific. And then maybe just switching gears here to credit, certainly it's been strong for you guys, but there was an uptick in MPLs and criticized and classified.

Just curious if you have any more color on kind of what is driving the uptick in those categories.

Jeffrey Jackson

Just kind of normal quarterly ebbs and flows, I believe one credit slightly raised it up a little bit. I think we plan on getting that resolved probably by the end of this quarter, early next quarter. And if you look at our historical trends, we're still well within our historical trends and still in all categories at least average of our peer groups are most of times better.

So I wouldn't read anything into those numbers. They -- as you know, fluctuate quarter-over-quarter and at this point there's no trends that we're seeing at all.

Daniel Tamayo

Okay. So we should still be kind of comfortable with where net charge-offs have been historically looking for, is what – sounds like what you're saying.

Jeffrey Jackson

Yes.

Daniel Tamayo

Got it. All right. I'll step back.

Thanks for all the color guys.

Jeffrey Jackson

Yes. Thank you.

Operator

The next question comes from Catherine Mealor with KBW. Please go ahead.

Catherine Mealor

Thanks. Good afternoon.

Jeffrey Jackson

Hey, good afternoon, Catherine.

Daniel Weiss

Hey, Catherine.

Catherine Mealor

I want to circle back just to kind of move in rates and your comment here on the margin. It feels like the move in rates have been good for WesBanco on a standalone basis and then it looked like Premier also had a higher margin this quarter. So it feels like the margin trajectory is better just kind of net so far.

On the flip of that, as we think about pro forma capital ratios at close, I guess question one is what's the best rate to follow. If you look at the 10-year, it looks like the 10-year has moved up a little bit since we announced the deal. And so how do we think about that impact.

It's good for the margin, I would imagine, because higher credible yield, but also kind of a negative to capital. And so as you think about pro forma capital ratios and commercial real estate, the capital ratios at close, does that move in rates kind of push you to need to sell more loans. Or is there something that you're kind of solving for, for where you want ratios to be at close that we should just think about as we get nearer to the close date.

Thanks.

Daniel Weiss

Yes, I think you hit on a number of things and a lot of great questions and thought there. What I would tell you, from our perspective, one of the things that we did do is we had the commercial -- the entire interest loan mark revalued as of December 31, 2024 to compare that to what the original assumption was. It actually came down slightly, so -- but I would tell you two couple things.

Well, I would use the 5-year more so than probably the 10-year. But the 5-year back at the time that we would evaluate was right around 4.5%. Today, or well, at the end of the year, it was still kind of in that rough range, I would say.

And the interest mark on a standalone basis actually came -- went from kind of $325 million down to about $250 million to down $75 million. That's a kind of, I think, about 5% interest mark added field announcement to a 4% mark based on where rates were at the end of the year. So that actually moves in the opposite direction of what we were just discussing there.

In fact, in that scenario, we see a little less tangible book value dilution, a little less interest mark accretion. And with the lower TBB dilution, it actually takes overall [indiscernible] down from kind of that 13%, 13.5% dilutive to about -- to just under 10% dilutive, which we view very positively. And I'd say the CRE ratio is something that we're very focused on, as you kind of alluded to there. And we want to keep that -- we want to -- we're very mindful of that 300% guideline and we want to maintain our portfolio or our ratios under that.

But I'll tell you with the fourth quarter, the growth in capital that we experience here, Premier's very nice numbers that they reported as well, combined with the lower interest mark all kind of bode well for better capital ratios, assuming that rates are what they were December 31 of 2024. And I will say this as well, that our capital ratios kind of pro forma based on that updated analysis kind of improved across the board by about 50 basis points, about half -- like half a percent.

Catherine Mealor

And it's really interesting. It's so helpful. So now this looks like since deal announcement, we're getting less book dilution and then less accretable yield, but our core margins are coming in higher.

So actually kind of probably net neutral may be a little bit better to the margin, all in. Is that a fair way to think about it.

Daniel Weiss

Yes.

Jeffrey Jackson

Yes.

Daniel Weiss

Yes, that's exactly right.

Catherine Mealor

That's great. Okay. And then on expenses, can you just remind us just kind of the timing of cost savings and if there's any kind of upside to those cost savings that you might see now that you're a few months in from announcing the deal.

Jeffrey Jackson

Yes. So, cost savings, typically, we would anticipate to begin after core conversion, and typically that's a good month or two after core conversion. And so, right now we've got a tentative date of the middle of May for that core conversion to occur.

And then there's certainly cleanup for a month or two thereafter where we're still kind of running parallel. And so after that period of time that's when we would expect to really begin to realize the full kind of 26% cost saves. We're still obviously evaluating, but we do feel very good about that assumption.

We feel that was a nice conservative assumption at announcement and still feel that we are well on track to meet that.

Catherine Mealor

Okay. Great. Thank you very much.

Operator

The next question comes from Manuel Navas with D. A. Davidson.

Please go ahead.

Manuel Navas

Hey, good afternoon. So, just to ….

Jeffrey Jackson

Hey, good afternoon.

Daniel Weiss

Hey, Manuel.

Manuel Navas

… follow-up on that capital -- on part of that capital question, the move in rates likely improved the CRE concentration at close and actually is no longer a headwind at all to your legacy growth prospects. Is that kind of even a stronger takeaway.

Jeffrey Jackson

Well, it is. It really is. And you're right.

I didn't say that. I kind of meant to imply that. But it does improve the CRE concentration ratio on day one for sure.

And it does remove some of -- if there were any ceiling on growth, it does certainly help there. Absolutely.

Manuel Navas

Just remind me on the -- are there any other updates to Premier targets, accretion, or I guess we've kind of covered most things, but anything -- any other noteworthy updates about the pending transaction.

Jeffrey Jackson

I mean, maybe the only other thing I might add, I think Catherine touched on the CRE sale of $100 million roughly. And we'll adjust that accordingly depending on what we have and what we see the time the deal closes and where CRE concentrations are. But I would say on the securities portfolio, we are -- we continue to evaluate that.

There's been some opportunities more -- particularly more recently with the longer term rates coming in where they are to potentially sell more and reinvest, maybe take on a more duration -- little more duration. And that basically has the impact of kind of -- we have here an opportunity that we want to make sure that we take advantage of to restructure the securities portfolio how we want it. And so, we still anticipate right now they have a $1.2% billion securities book.

We anticipate reducing that by a couple hundred million dollars. But we also anticipate restructuring the remaining securities book to fit our investment profile and to pick up some additional yield where we can. So I think that's kind of another tailwind to margin and future growth.

Manuel Navas

That's great. Just on margin on the legacy basis, when you talk about a little bit more expansion in the first quarter, [indiscernible] December number of 3.08% or is that off of the full quarter number.

Daniel Weiss

It's off of the full quarter number.

Manuel Navas

Okay And then just there might have been some crosstalk. You're kind of almost expecting at close you could have them in be 10 to 15 basis points above where you previously expected it for the deal.

Daniel Weiss

That's correct. I would say that when I say that, I go back to that kind of 346 that we disclosed back when we announced the deal, at that time, WesBanco's standalone margin, I think, for 2025 was right around 310. That was the projection for 2025.

And so from July -- and that was actually first quarter consensus number, that's what we use. We just use the consensus estimates. Since that time, we can see it.

It's real. We anticipate that we're going to outperform the 310, that would have been baked into that 346 guidance by 10 to 15 basis points. Yes.

Manuel Navas

That's really -- that's great. That's a good update. One last question, kind of where -- what regions are you the most excited about, anywhere that you would looking to add and how -- in timeline where you're looking to add new lending teams in terms of like the legacy WesBanco commercial lending team.

Jeffrey Jackson

Sure. Yes. So, we grew last year a $1 billion in loans, a $1 billion in deposits, which is if you think about our acquisition of Your Community Bank, that's basically we built organically a Your Community Bank last year.

And so when we look at future growth, obviously the LPOs have driven a good portion of that. So what I would tell you is looking to fill out more in Nashville and then also looking to add more in Knoxville and Indianapolis. I should say start Knoxville and then add more to Indianapolis.

Those would be the markets I would say we're looking at. Of course, we're always looking for great talented bankers that fit in with our processes and how we do things in our culture, but I would go Nashville, Knoxville and Indianapolis.

Manuel Navas

That's great. Thank you for the commentary. I'll step back into the queue.

Jeffrey Jackson

Thank you.

Operator

And our last question today will be from Russell Gunther with Stephens. Please go ahead.

Russell Gunther

Hey guys. Thank you for the follow-up. I just want to clarify, Dan, the 350 to 355 pro forma NIM with Premier.

One, does that -- is that based off the updated mark you talked about receiving December 31. And then, two, does that contemplate the potential securities restructuring.

Daniel Weiss

It is based off of the updated mark, and it does not contemplate fully the restructure of securities. So there's ….

Russell Gunther

Got it. Okay, great. I appreciate it.

Thanks, guys.

Jeffrey Jackson

Thanks, Russell.

Operator

This concludes our question-and-answer session. I would like to turn the conference back over to Jeff Jackson for any closing remarks.

Jeffrey Jackson

Thank you. During the past year, we delivered strong loan growth of a $1 billion that was matched by deposit growth of a $1 billion, while maintaining strong capital levels and credit quality. Our successful balance sheet strategies have and should continue to improve our net interest margin.

We remain focused on organic growth and efficiency gains to achieve positive operating leverage and position us well to deliver shareholder value. Thank you for joining us today, and we look forward to speaking with you at one of our upcoming investor events. Have a great day.

Operator

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.