Daniel Weiss: Good morning.
Jeffrey Jackson: Hey, good morning.
Daniel Tamayo: Maybe just starting on, you know, you guys talked a lot about the treasury management investments as that comes online, I guess, over the course of the year and into next year. Just your thought on, you know, the ultimate goal there? Like, how big you want that contribution in terms of fee revenue? And maybe if you could put a little finer point on what may be the contribution in the back half of 2024 that you’re expecting to grow off of?
Jeffrey Jackson: Sure. You know, I think we’re always looking to be less reliant on spread revenue. And so for me, targeting total fee revenue would be around 30%. That’s a multi-year target. But, you know, for us, that’s what we’re looking to try to do. As it relates to our TM products, we mentioned we’re continuing to build out the pipeline. We are getting these products in place. And so I do believe the pipeline is starting to build pretty strong. As far as the second half of the year, I don’t really have — want to give out any guidance on what that would be as far as revenue. But we think it would be pretty significant over the second half of the year. Once again, we are changing our treasury management team to be more sales like, transitioning it from more of a support operational function.
And so I do believe we’ll see a nice pickup in the second half of the year based on that transition and the new products and the incentives we’ve put together for our commercial teams.
Daniel Tamayo: Okay, terrific. Thanks for that. And then my second question, just on capital, you’re benefiting as everyone is from lower rates here. And then, you know, assuming that we do get a soft landing or, you know, you continue to build capital, just curious your thoughts on how share repurchases could fit into the capital priorities?
Jeffrey Jackson: Yeah, I think we look at, you know, kind of our capital deployment, kind of starting with dividends. We obviously put that at the top of our capital deployment. Then we look at obviously loan growth, then would be M&A and then would be buybacks. We’re always actively out talking to other banks, but, you know, looking for different opportunities. But, you know, at this point, we’re not really looking at buybacks if something may change in the back half of the year. But right now I would say it’s down on the capital deployment priority list.
Daniel Tamayo: Okay, understood. That’s it for me. Thanks guys. Appreciate it.
Jeffrey Jackson: Thank you.
Operator: The next question will come from Catherine Mealor with KBW. Please go ahead.
Catherine Mealor: Thanks. Good morning.
Jeffrey Jackson: Hey, good morning, Catherine.
Daniel Weiss: Good morning.
Catherine Mealor: Maybe just start as a follow-up to the M&A comment you just made. Just talk to us about how you’re thinking about M&A versus LPOs and team lift outs. It feels like that’s been a little bit of a priority recently just given M&A has been slower. But what do you think it takes to get more active in M&A and what kind of potential deals would you put at the top of your strategy list?
Jeffrey Jackson: I would lay in basically the same comments I just made about LPOs of where we’re looking. Typically, it would be Tennessee, Virginia, filling-in in Ohio. And so for us, you know, our target size is usually that $2 billion to $5 billion range of asset bank. That’s kind of a nice fit for us. It’s, you know, 10% to 15% of our asset size. But I think it’s definitely an option for us. We do have a great capital position and are in a good position to do an acquisition should one come along. So I think, you know, our history has shown that we create these LPOs to kind of test the waters in the market and then potentially do deals after that. So I would not see us changing that course. But once again, I think as you mentioned, the M&A market has been difficult.
I do believe, you know, sellers are looking for interest rates to decline and so that may make it more difficult because they seemingly want to wait to see rates decline, potentially their valuations go up, but we will continue to be out there talking.
Catherine Mealor: That’s great. And then on credit, you know, credit just remains really strong. Just give me any outlook for how you think provisioning may trend this year. You’ve had a lot of negative provisions over the past couple of years. And that’s starting to turn, but still really low. So just generally how you’re thinking about provision cost and credit cost over the next year?
Jeffrey Jackson: Yeah, for us related to credit, we obviously continue to look at all our portfolio to make sure they’re doing well. We obviously look at office and do deep dives on our office, which is in great shape there. I would see for this year our credit provisioning and cost to continue to stay relatively the same. We have seen, like every bank, you know, you have a credit here or there, but so far we’ve been able to fix those credits and restructure and right size those credits based on the strength of our borrowers. Dan, you want to add anything on the provision?
Daniel Weiss: Yeah. No, I think you covered it, Jeff. I mean, certainly provisioning is going to be dependent upon loan growth, is probably the biggest thing absent, you know, credit events. And wouldn’t, you know, today a big portion of our provision or allowance is based on, you know, the forecast of unemployment rates. And based on those forecasts, we’re not seeing anything really significantly out of the ordinary. So we’re, just as Jeff said, we’re kind of in that anticipating something similar to what we experienced here in ’23.
Catherine Mealor: And on your just commercial real estate maturities, can you give any just anecdotes or commentary on what you’re seeing as, you know, some of your fixed rate CRE loans are coming due and repricing? You know, are you seeing any credit stress in those moments or, you know, just kind of rental rates big enough to kind of offset the impact of higher interest rates? Just kind of any commentary on what you’re seeing just with your borrowers would be helpful.
Jeffrey Jackson: Yeah, we have not really seen any stress. I mean, we’ve had, obviously, like every bank, a few deals here or there that has caused stress. But the nice thing is we’ve done a great job in picking the customers we lend to. And as I’ve said, you know, people forget that since the OA crisis, it’s been a great run for real estate developers. And so fortunately for us, our customers have had a lot of liquidity. And so when we do run into a situation which has been rare, they have been able to step in and provide the additional equity to right size the refinance of the deal based on the higher rates.
Catherine Mealor: Great, very helpful. Thank you.
Daniel Weiss: Thank you.
Operator: The next question will come from Casey Whitman with Piper Sandler. Please go ahead.
Casey Whitman: Hey, good morning.
Jeffrey Jackson: Good morning, Casey.
Daniel Weiss: Good morning.
Casey Whitman: Good morning. So most of my questions were answered, but maybe can you walk us through the assumption you have for deposit growth this year against your comments around mid to upper single digit loan growth? How comfortable are you with the loan deposit ratio here at 88% or so — or what do you see as the right level for WesBanco?
