WesBanco Inc (WSBCP) 2014 Q1 法說會逐字稿

Good morning and welcome to the WesBanco conference call. My name is Emily and I will be your conference facilitator today. Today's call will cover WesBanco's discussion of results of operations for the quarter ended March 31, 2014. Please be advised all lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer period. (Operator Instructions). This call is also being recorded. If you object to the recording, please disconnect at this time.

Forward-looking statements in this presentation 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 herein should be read in conjunction with WesBanco's 2013 annual report on Form 10-K and other reports which are available on 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 2013 annual report on the Form 10-K filed with the SEC under the section risk factors in Part 1, item 1A. Such statements are subject to important factors that could cause actual results to differ materially from those contemplated by such statements. WesBanco does not assume any duty to update any forward-looking statements.

WesBanco's first quarter 2013 earnings release was issued yesterday and is available at www.WesBanco.com. This call will include about 25 to 30 minutes of prepared commentary followed by a question-and-answer period which I will facilitate. And archived webcast of this call will be available at WesBanco.com. WesBanco's participants in today's call will be Todd Clossin, Executive Vice President and Chief Operating Officer; Robert Young, Executive Vice President and Chief Financial Officer; Paul Limbert, President and Chief Executive Officer; and Jim Gardill, Chairman of the Board. All will be available for questions following opening statements. Mr. Clossin, you may begin your conference.

Thanks, Emily. Well, good morning. Thank you for participating in WesBanco's first-quarter 2014 earnings call. We are pleased you have joined us this morning to hear about our strong operating results. I will be making some opening comments. Bob Young, our CFO, will provide financial highlights. Jim Gardill, our Chairman, will moderate the question-and-answer period. And Paul Limbert, our President and CEO, who will be retiring next week, is also on the call and is available to answer questions.

A press release detailing the results of the first quarter was issued last evening. A copy of the entire press release is available on our website. We will assume all participants are familiar with WesBanco. We can begin our discussion of the first-quarter financial results.

WesBanco had a very strong and clean first quarter. Our results were better than the fourth quarter of last year and were also better than the first quarter of 2013. We were able to increase first-quarter earnings of $16.4 million as compared to $15.4 million for the fourth quarter of 2013, representing an increase of 7%. These strong earnings enabled us to achieve a return on average assets of 1.08 for the quarter and return on average tangible common equity of 15.4% for the quarter, both above recent peer group averages. Earnings per share of $0.56 for the quarter represents an increase of $0.04 per share or 7.7% as compared to the fourth quarter of last year. These strong results have allowed us to raise our first-quarter 2014 dividend by $0.02 a share, representing a 10% increase. Our dividend has increased 7 times over the past 13 quarters, representing a 57% increase and a current 39.3% payout ratio.

Our increased earnings were driven in part by improvements in net interest income through growth in assets and a continued reduction in the cost of funds. Growth in trust fees, securities brokerage revenue, and disciplined expense management also contributed to the strong quarter.

We have shown nice growth in assets over the past 12 months with portfolio loans growing 5.5% over the last year. Loan originations were $1.5 billion over the same time period. We continue to focus on diversifying our loan originations and in developing a solid balance of commercial construction, commercial real estate, middle-market, small business, and consumer loans.

As you have heard from others, the weather was a challenge during the first quarter as draws on existing construction loans slowed due to weather conditions delaying outside work. During the quarter some of our construction loans were also refinanced into the permanent market as developers continue to take advantage of the aggressive long-term fixed-rate financing options available to them. Despite the weather-related slowdown, we were able to offset the temporary effects of delayed construction loan draws with new production, and we finished the quarter even with the start of the quarter.

Pipelines and new closings grew significantly during March as production levels have increased over the past month. Our loan growth over the past year has been blended to a combination of lower-cost core deposit growth and maturing securities as part of our continued balance sheet remix initiative. Lower-cost core deposit growth generated through the Marcellus and Utica Shale initiative as well as through our continued focus on acquiring new households allowed us to generate $209.5 million or 4.2% growth over the past year.

Every deposit category grew with the exception of CDs, which decreased due to lower-rate offerings for maturing CDs. Noninterest bearing demand deposits grew by $134 million or 15.1% over the past 12 months. We continue to take advantage of the balance sheet liquidity the shale-related deposits are providing and use those deposits to reduce our higher-rate borrowings. The ability to reduce deposit and other borrowing cost has provided us the opportunity to optimize our funding costs and improve our net interest margin. This deposit remix strategy has been very good for us and will be an even stronger strategic advantage for us in a rising rate environment. We have the geographic good fortune of having 71% of our franchise footprint located within shale-related areas. Bob will speak more about the margin in a few minutes.

Our trust fees were a source of strength for us during the first quarter as well as over the past year. First-quarter trust fees increased 12.6% compared to the same quarter last year. Trust assets have increased 8.7% over the past 12 months as assets under management continue to benefit from our customer development initiatives and an overall market improvement.

Securities brokerage revenues increased to 22.2% as compared to the same quarter last year with both existing markets and newer markets contributing to our growth. Our strong background and expertise in the trust and securities businesses continue to be effectively leveraged across our franchise. We continue to execute upon our investment management initiatives in an effective manner to help our customers manage their newfound shale-related wealth. We have been holding a series of well-received town hall meetings across our Ohio valley markets to discuss investment options available to local residents who are benefiting from shale-related activities.

Customer royalty payments provided $64 million in the first quarter deposit flow into our bank. We expect this trend to continue into the future. Expenses were very well managed with noninterest expense down 1.6% for the first quarter compared to the same period last year. Driving positive operating leverage with our capital and resource investments is a frequent focus of discussion. How we allocate capital across our businesses on a risk-adjusted basis is a discipline I plan to continue to drive at the Company. We have tools to do this today, but those tools will continue to be refined as we grow.

Credit quality continues to be strong. Charge-offs stood at just 0.43% of total loans for the quarter with both criticized and classified loans continuing to decrease to more normalized levels.

Overall, I feel very good about the first-quarter performance of the Bank. We continue to focus on the same loan diversification and asset rebalancing strategies that have been communicated on previous calls. Our reinvestment strategy is yielding results, and we continue to be optimistic in our ability to compete in all of our markets. We plan to continue to reinvest back into the Company as appropriate to develop our talent, improve our facilities, and take advantage of technological advances.

We have hired several new business development resources in our urban growth markets over the past few months, and we will continue to be opportunistic with regard to top talent in all of our markets. We believe we are one of the best positioned to banks in the country to take advantage of the natural gas play through the low-cost funding and investment management opportunities I have just discussed.

On the acquisition front, we remain interested in acquisitions within our existing footprint as well as in urban areas contiguous to our existing footprint. We feel that we are well positioned and have the capital position to take advantage of such opportunities.

The transition with Paul has gone very well. I am looking forward to leading the WesBanco team into the future. I would now like Bob Young, our CFO, to discuss with you in more detail the financial results of the quarter.

Good morning. As Todd mentioned, per-share earnings were up 7.7% over the fourth quarter and 1.8% over last year's first quarter. Both return on average assets and return on tangible common equity improved over fourth-quarter ratios and the efficiency ratio remains low at 60.57%. Our 18-bank peer group data, available from 2013, shows our first quarter 2014 ratios exceed the comparable figures from last year of 1% for ROA and 11.88% for return on tangible common equity versus our 1.08% and 15.4%. And the peer efficiency ratio was 63.54%, some [300] basis points higher than ours.

Pretax pre-provision return on average assets was 1.71% for the first quarter. This is the first quarter where the late 2012 acquisition of Fidelity Bank Corporation (sic - see press release, "Fidelity Bancorp") in Pittsburgh, Pennsylvania, was fully reflected in both comparable periods. Turning now to the details on the income statement, net interest income -- factors influencing the $1.2 million or 2.6% growth in net interest income year over year include 3.1% higher average earning assets, fueled by 5.7% growth in average loans and lower interest expense even though we experienced a 3.4% growth in total deposits. While total net interest margin was about the same as last year's first quarter at 3.63% versus 3.64%, excluding purchase accounting-related accretion from both periods, the margin would have been 3.58% this period versus 3.50% in last year's first quarter, an eight basis point improvement.

WesBanco experienced a 30.1% drop in higher-cost Federal Home Loan Bank and other borrowings and higher-cost CDs decreased by 8.5% while lower-cost transaction accounts increased by 9.3%. Deposit costs declined 24 basis points to 45 basis points overall from last year, primarily due to a 54 basis point cost decrease from maturing CDs and an increase in lower-cost transaction accounts. Total funding costs dropped to 56 basis points, down 25 bps as borrowings matured or repriced. Continued improvements in both earning assets and costing liabilities mix as well as an 8.7% increase in average demand deposits assisted in this core margin increase.

Turning now to noninterest income and expense, while noninterest income decreased 2.6% period over period, excluding a $1.1 million bank-owned life insurance gain in last year's first quarter, noninterest income was up 4% fueled by a 12.6% increase in trust fees, a 5.1% increase in debit card and other electronic banking fees, and a 22.2% increase in net securities brokerage revenue. Somewhat offsetting these increases were reduced to service charges, down 8% due to lower seasonal usage patterns, and higher average deposits, both in total and per account.

Also, as mortgage volumes have decreased industry wide since mid-2013, a 56% decrease in WesBanco's production as well as a lower percentage of mortgages sold into the secondary market cause to 78% reduction in mortgage banking-related gain on sale income in the first quarter.

The percentage of refinances was 32% in the first quarter, down from last year's 61%, while 37% of the total $46 million in mortgage volume was sold into the secondary market versus 42% last year. New Dodd-Frank qualified mortgage and ability to repay rules also had an impact on improved mortgage volumes.

Despite seasonally higher expenses to our net occupancy and certain fringe benefit categories, overall expenses were down from last year's first quarter. Excluding merger-related expenses in last year's first quarter, expenses were only up 1.3%. Combined salaries and employee benefits, both lines together, were flat with last year as reduced pension expense more than offset higher healthcare and normal salary increases, while seasonal maintenance expenses and the opening of two branches influenced net occupancy.

Higher equipment cost were due to continued upgrades and information technology and communications infrastructure for our mainframe computer, disaster recovery backup systems, mobile banking enhancements, and branch technology improvements such as telecast recycling machines and updated ATMs. Marketing expense was higher due to customer incentives earned on prior account openings while drops in FDIC insurance expense, intangibles amortization, the aforementioned merger-related expense, communications expense, and REO foreclosure expense helped to hold total noninterest expense relatively equal to last year. A higher effective tax rate for the first quarter of 2014 of 25.6% versus last year's first quarter of 22.9%, along with higher pretax income, caused a 19% increase in income taxes.

Turning to the balance sheet, total assets were up 2.7% from last year and 1.5% from year end. Total portfolio loans were about the same as it yearend but up 5.5% or $203 million from last March 31. In the first quarter, commercial loans and lines of credit were up slightly while mortgage and consumer loans were down due to lower demand, some of which was weather-related earlier in the quarter. Overall, loan originations decreased from last year's first quarter due to weather-related delays in anticipated advances on commercial real estate construction loans, prudent pricing and underwriting of new loans, and certain larger payoffs of recently constructed commercial real estate projects.

However, pipelines firmed towards the end of the quarter, suggesting better volumes as spring progresses. Loan originations total $1.5 billion over the past 12 months, up 8.5% over the prior 12-month period. Expansion into the Pittsburgh market, increased business activity in the Marcellus-Utica fairway, and additional commercial and mortgage lending personnel contributed to this increase.

Credit quality continued to improve with nonperforming loans down 19.4% from last year and 1.1% from year end to 1.31% of total loans. Criticized and classified loans decreased to 23.1% from last year and 4.7% from year end. Total delinquencies also dropped to just 42 basis points from last year's 51 basis points. Net charge-offs were 43 basis points for the first quarter compared to last year's 34 basis points. One C&I credit with a $1.8 million dollar charge-off in the first quarter resulted in this increase.

The allowance for loan losses was 1.17% of total portfolio loans at period end compared to 1.40% last year, while the provision for credit losses in the first quarter was $2.2 million, about the same as last year. Future increases or decreases to the provision and allowance are dependent upon the direction of credit quality, loan growth, and other judgmental factors.

Total shareholders' equity improved at quarter end to $761.1 million, up 5.1% from last year and 2% from year end. At March 31, tier 1 leverage was 9.45%. Tier 1 risk-based was 13.3%, and total risk-based capital was 14.4%. All increased in very strong ratios.

Tangible equity improved to 7.49%, up from 7.04% last year and 7.35% at year-end. As Todd noted earlier, strong equity ratios permitted the Board to recently increase the quarterly dividend rate to $0.22 per share.

In summary, then, management is very pleased with our first-quarter performance despite seasonal issues affecting certain categories of noninterest expense and loan production but no other unusual items. However, core margin improvements and higher wealth management fees along with control over total expenses and continued improved credit quality resulted in improved earnings per share in core profitability measures. We are excited by our start to 2014 and look forward to our continued growth as we progress through the rest of the year.

This now concludes our prepared commentary and we will open the call for questions. Jim Gardill, Chairman of the Board, will moderate the Q&A session. We will turn the call back over to the facilitator now for questions.

(Operator Instructions) Catherine Mealor of KBW. Please go ahead.

Good morning, everyone. First, welcome, Todd, and congrats to Paul on your retirement in a few weeks.

Thank you.

Just a couple quick questions. First, on the margin, what is your outlook for the NIM going forward? It's the first quarter in a while where we saw loan yields flat. Do you think that that compression is stabilizing or was that maybe just a one-quarter pause?

We have said in the past that about four basis points of our margin is related to purchase accounting accretion from the Fidelity deal. And the bulk of that is in loans, but it's also much lower than last year at this time. We had 14 basis points, for instance, in the first quarter of 2013.

I think we have reached a bottoming in our loan yields, but I would remind you that we always have credit for the repricing. We have some three and five-year repricing credits. And certainly, if they were booked earlier in the cycle, subject to whatever floor rates they have in their contracts, they could still get repriced. But I think, in terms of new loans and how they mix in with existing loan portfolio, relatively speaking, we're close to the bottom there on loan yields.

Relative to your question about margin in general, given the four basis points is about what it will be for the next year or so, we were predicting three basis points in accretion-related margin, for instance, in 2014 -- given that there still about $40 million of higher cost advances in repos that have yet to reprice, given that we still have, and I -- we will have it out in the Q here in a couple days -- the disclosure on the amount of CDs that have yet to reprice. They will reprice at about 83 basis points, as I recall. I don't remember the exact amount. We still think there's some improvement on cost of funds.

And certainly, the demand deposit increase does assist our margin as well. So a slight growth in the margin is what we said last quarter and we are still standing behind that.

Great, thanks so much. And as a follow-up, you mentioned in your press release a focus on achieving a greater diversification in the loan portfolio which tempered growth little bit this quarter. Can you expand a little bit on your strategy there? I'm assuming a piece of that is pulling back on the residential mortgage growth.

Yes, that's a great question. Part of it is that. We look at all of our markets and saturation points in markets by product type as well, too. And looked at a product type or two that we thought were getting a little saturated in some markets. So what we have done is participated out of some loans. So you won't see the balances there but hopefully you will see some fees associated with that to just manage the concentration levels in a couple of different markets.

Again, we had a number of opportunities that we have done, but we haven't taken the whole [deal]. We have the right to pull some of those back if we want the balances at some point in the future. But just from an overall risk management strategy and looking at the entire portfolio and making sure that we are growing the balance sheet of the bank in a good, solid, diversified way, that's part of our strategy is loan diversification. It has been the strategy and we are going to continue it as we see the different markets develop as to product type and saturation points.

All right, thank you very much.

Scott Valentin of FBR.

Good morning. Thanks for taking my question. Paul, congratulations on your retirement. And Todd, welcome. Just with regard to the tax rate, Bob, you mentioned the tax rate was around 26%, up a little bit. Is that a rate to use going forward, or is that going to come back down?

No, we are not predicting that will come back down. That is higher than last year's 22.9%. Our earnings grew throughout last year, and so if you look at the fourth quarter effective tax rate, it's closer to where we are at the present time. There are some permanent adjustments that factor into the overall effective tax rate, but around the 25.5% to 26% is what you should be modeling at this stage.

Okay, thanks. And then on the trust fees, they were stronger than we expected. I know the Utica and Marcellus Shale are paying dividends in terms of gathering assets. Was there anything special during the quarter? You mentioned outreach programs and town hall meetings. Was there any kind of specially high inflows in AUM, or is that just reflective of all the work you've been doing to gather assets?

Scott, I think it's a combination of both growth in market and also acquiring new assets and building business. So we are acquiring assets under management. We are also growing assets, and the WesMark Funds increased in market value during the year. So it was a combination of a number of factors year over year and quarter to quarter.

Okay.

One other factor would be that we do take tax fees on our filings, our fiduciary income tax returns that were filed in the first quarter for trust customers. That's, give or take, around $500,000. And if you look historically our first quarter tends to show up a little higher than the remaining three quarters of the year, depending upon how the market is playing out.

And then one final question and I will jump back in the queue. On mortgage banking, obviously that entire industry seems to decline in volume. Just wondering what you are seeing going forward. And you mentioned, I think, a lower percentage of loans were sold this quarter. Is that a reflection of the strategy going forward or is it more a reflection of the mix and what you want to retain?

I will speak to that first, Scott. And I guess the QM ATR rules do have an impact. And as we noted in the commentary, it is having an impact on the entire sector. I think from a strategy perspective we are going to continue to try to build off of our purchased loans because of the broad network that we have from our branches, we think, will continue to produce mortgage lending. And Todd is working on that. Todd, a couple comments?

Yes, we've got some strategies in place. I am looking at the number of closed referrals per banking center to the mortgage loan area. I really want to leverage the retail franchise that we have across our footprint. We've built out a nice branch footprint, but I think there's opportunities for us to leverage that better, identify opportunities, get them over to the mortgage loan group, get those closed. I've got numbers and metrics by branch that I'm -- I've got goals out there for everybody and we are tracking that pretty closely. So it's providing the oversight from a sales management perspective across all of our markets to help drive that.

So, we do have initiatives within the mortgage loan group from a calling perspective to drive production, but I also want to make sure we are leveraging the entire franchise, all 120 locations we have, to build that up.

Thanks very much.

(Operator Instructions) William Wallace of Raymond James.

I will echo Catherine and Scott's sentiments and say congrats to you, Paul. And welcome, Todd. I look forward to meeting you. Paul, I hope you are practicing your golf swing. I guess you are going to have a little bit of extra time now.

I hope to.

Good. My first question -- I wanted to go back, Bob, to the commentary that you had with Catherine on the margin. When you talk about slight expansion in the margin, you are talking about on the GAAP basis? Is that correct?

I am talking on a GAAP basis. That's correct.

So the presumption would be that you should start to see that four basis point benefit decrease over time. Is that correct?

Well, I think I mentioned to Catherine that while it was much higher last year than I talked about. The core margin growth this quarter over last year, which is truly a reflection of the $200 million in loan growth over the past year, the remix strategy that we have been working on in both assets and in our deposit categories, so that eight basis points is reflection of the remix as well as a lower cost of funds.

But we are predicting, Wally, that the four basis points -- the run out on the purchase accounting is four basis points this year, is three next year, so relatively difference between 2014 and 2015 on core isn't that much. We are still saying that, based upon our current modeling, which includes some element of loan growth and continued remix, that the margin would continue to slightly improve.

And Wally, on that point I think we have to consider that the margin is not a static. And we continue to use the tools at management's disposal to continue to refine how we are addressing funding and how we are addressing borrowing. So it's not a static. And we continued to deploy those tools and will, the balance of the year. And I think it gets back to Catherine's question about loans. We have a diversity of markets where we have different tools that we can deploy in these different markets. And they are diverse enough to be able to have advantages in some markets where we don't have in others. The same with the margin -- I think we have the management tools with our deposit inflows, the reduction in borrowings, to be able to manage that going forward.

Okay. And then, in that same vein, I have two more questions. On the loan side, if I look at the year-over-year balances, you were up 5.5%. Would your commentary suggest that you would expect to end 2014 slightly better than that, maybe in the higher single-digit range or higher mid single-digit range?

Yes. It's hard to estimate loan growth numbers this early in the year. What I would tell you is when I look at the individual subcategories that we are looking to grow, the middle-market and small business, it would be C&I business, the home equity product focus that we've got as well too. I feel good about where we are positioned in growing those.

When it gets to the commercial real estate, particularly construction market, that's driven by a lot of different dynamics and a lot of different factors. We have a lot of construction loans that will find up during the course of the year. Obviously, we mention already we have a light first quarter in construction fundings because there was not a lot of work on because of the weather. The timing of those projects and how that funding occurs, how quickly things go to the permanent market, which has been faster and faster -- we got some projects, talked to some developers that -- they are getting close on permanent financing and their projects are less than a year old and aren't even stabilized yet.

So it's hard to predict all of those different dynamics and variables in terms of where that is going to shake out for the remainder of the year at this point.

Sure it's hard to predict -- obviously, for us too. But it sounds like it's fair to say that you guys are optimistic that the loan growth could accelerate as the year progresses, based on everything that you are seeing now, even though we still have a long runway?

Yes. We saw a real bounce back in our pipeline in March, and we are very, very encouraged by that. We had some of the strongest weeks in a year or so, in terms of loans that were closed and the pipeline build. So we are encouraged that.

And then, Bob, in your commentary you mentioned the repricing of CDs. I think you said last quarter that you had $800 million in CDs that were going to reprice in 2014. And it sounds like you are going to disclose in the Q what's left. But can you give us an idea of maybe what repriced in the first quarter?

I don't have the number on what repriced in the first quarter. I would say it would be between $150 million and $250 million. The most expensive CDs, because of a five-year special that was run, well, five years ago, did reprice between September 15 and the end of the year. There was a little bit of residual in the first quarter. But I don't have the exact amount of CDs that repriced in the first quarter, Wally. I will have to get back to you on that.

Did you save where the average repricing of new CDs is now? Did you say 83 basis points?

I did say that.

Okay. And that was 87 last quarter. So you are still bringing the rates down?

There's still opportunity, we believe, on the CDs for continued repricing. We did drop below 1% on CDs this quarter.

I would just add to that the liquidity that we are seeing again from our deposit generation activities as well as the initiatives around the shale activities is bringing in quite a bit of low-cost deposits. So from a funding perspective, it puts us in a pretty enviable position. Those deposits, we also think, are going to be pretty sticky as rates start to trend up at some point, as well, because it's a fairly steady flow into the Bank. So we got a bit of a competitive advantage there, quite frankly, from a funding strategy standpoint long-term because of our geographic position.

Wally, I did find it. It's $803 million over one year at 86 bps.

Do you have what went in the first quarter?

I don't have that.

Okay, and then last question on the deposit side -- Todd, to your point about having an advantage based on your geography, have you guys revisited your strategy as far as duration on your deposits? Have you thought about going a little bit longer now on the CDs, given any of the commentary we've seen out of the Fed? Or has your strategy remained the same as it has the past couple of quarters?

I would tell you, as I started the transition into the role with Paul, we have been having some conversations around just that topic. Obviously, our asset liability management in general and what our longer-term funding strategies are going to be and how we want to position ourselves to take advantage of the low-rate environment we are in coupled with the geographic positioning that I mentioned to you earlier.

So, don't have anything new to report on that front right now, just that we will continue to evaluate it based upon interest rate forecasts and the funding position that we see ourselves in, but no dramatic changes in direction there right now.

Thanks a million, guys. I appreciate it. I will let somebody else ask a question.

Wally, on that issue, as we said in the material, the demand deposits grew by $134 million, which is 15% over the past 12 months. So we've had the luxury of low-cost deposits, and we have not had to lock in pricing. The strategy of being able to lock in at lower rates is something that some might be doing, and that's certainly a strategy available to us.

Wally, first-quarter repricing CDs, just over $250 million at around 90 bps.

Thanks a million, Bob. I appreciate that.

Scott Valentin of FBR.

Just a quick follow-up question on M&A. It sounds like a strategy has not changed. Just wondering if you are seeing any change in potential targets. Are they more open to discussing M&A?

Well, Scott, I think that's always a fluid situation. We saw a couple of announced deals during the quarter. We continue to stay active in that arena. As you know, we are not a size strategy; we are a performance strategy. So we look for the opportunities that would enhance our franchise. The dialogue with the smaller banks continues. The market opportunities are there. It's a matter of sourcing the right fit for us that can build performance as opposed to size.

Okay, good. And the general thought is that, with -- you mentioned QM and other regulations coming on board, that it's getting tougher and tougher to operate a small bank. And I thought maybe there might see some people reaching the breaking point now, looking -- and maybe saw an increase in receptivity to M&A discussions.

Yes, they are carrying a heavy load both from a regulatory side and the new regulations and compliance, but also, then, the strength on their mortgage lending opportunities and the flow on mortgage lending. So, I think they are feeling the pressure much more significantly, though all of us feel the cost of the regulatory environment that we live in today.

All right, thanks very much.

And this concludes our question and answer session. I would like to turn the conference back over to Mr. Gardill for any closing remarks.

Thank you very much, Emily. We appreciate the opportunity today. First of all, I want to offer my congratulations to Paul. 37 years with the Bank is a great career. He helped us navigate a challenging decade in banking, and I think he positioned the Company well for the future. He almost tripled the size of the Bank from $2.5 billion when he took over as CEO to $6.2 billion today. we've achieved excellent results under his leadership, and we have produced very competitive total shareholder returns. So again, congratulations to Paul on what he has contributed here and how he has served WesBanco well.

The transition in leadership has gone very well. It has been successful. It has been smooth. And it has been without disruption. So again, I think it's a credit to both the professionalism and the skill of both Paul and Todd as they have worked into these new rules.

I think also that the first quarter results are a manifestation of the transition and the success of it. Todd's tenure begins next week. We are excited about our prospects. We are pleased to have his leadership in our Company, and we look forward to continued growth and development of our franchise.

We also look forward to continued emphasis on the long-term growth of the Company. So in conclusion, I would just say we are pleased to have this first quarter in the hopper, and it was a strong quarter, and thank everyone for participating in today's call.

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