WestBanco (WSBC) Q4 2025: Loan Portfolio Jumps 52% on Premier Acquisition, Margin Expansion Signals Further Upside

January 28, 2026 | By EarningsIQ Research

WestBanco’s Q4 was defined by the successful Premier Financial acquisition, which lifted total portfolio loans 52% and scaled the bank into the top 50 by assets. Strong organic loan and deposit growth, robust margin expansion, and operational discipline set the stage for continued profitability, even as commercial real estate payoffs remain a near-term headwind. Management’s focus on new verticals and geographic expansion points to durable growth levers for 2026 and beyond.

Summary

• Premier Integration Drives Scale: Acquisition of Premier Financial propelled WestBanco into the top 50 U.S. banks by assets.
• Margin Expansion Outpaces Peers: Margin improvement was fueled by deposit growth and lower funding costs.
• Growth Engines Diversify: Healthcare vertical and new markets offset CRE payoff headwinds, supporting a resilient outlook.

Performance Analysis

WestBanco’s Q4 and full-year results were marked by outsized growth in both loans and deposits following the Premier Financial acquisition, which added $5.9 billion in loans and $6.9 billion in deposits, lifting total portfolio loans by 52% and deposits by 53% year-over-year. The bank’s net interest margin (NIM), a key measure of lending profitability, expanded to 3.61%, up 58 basis points from the prior year, driven by higher loan yields, lower funding costs, and a strong deposit campaign. Organic loan growth, despite elevated commercial real estate (CRE) payoffs, remained positive, with a 6% annualized increase from Q3 and 5% YoY growth, underscoring core franchise strength.

Non-interest income, which includes fee businesses like treasury management and swaps, rose 19% YoY, reflecting both Premier’s contribution and organic momentum. The efficiency ratio, a gauge of cost discipline, improved to just under 52%, aided by branch optimization and expense management. Credit quality stayed robust, with non-performing assets at 0.33% of total assets and net charge-offs at six basis points, supporting stable capital ratios and flexibility for growth, dividends, and potential buybacks.

• Deposit-Driven Funding Model: Organic deposit growth of $662 million fully funded loan growth, reducing reliance on higher-cost borrowings.
• CRE Payoff Headwind: Elevated CRE payoffs ($905 million for the year) created a 4% drag on loan growth but are expected to moderate in 2026.
• Fee Income Momentum: Treasury management and swap fees reached record levels, with double-digit growth forecasted for 2026.

Underlying these numbers is a business model that increasingly emphasizes diversified fee income and geographic expansion, positioning WestBanco for resilience in a shifting rate and credit environment.

Executive Commentary

Strategic Positioning

1. Premier Acquisition as Scale Catalyst

The Premier Financial acquisition transformed WestBanco into a $28 billion asset regional bank, vaulting it into the top 50 U.S. institutions by assets. This deal immediately expanded the loan and deposit base, enhanced scale efficiencies, and brought new customers and markets into the fold. Integration success was evident in both financial and operational results, with management highlighting the smooth transition and early revenue synergies.

2. Geographic and Vertical Diversification

WestBanco’s expansion into new markets via loan production offices (LPOs) in Northern Virginia, Knoxville, and soon Chattanooga, as well as the launch of a healthcare vertical, is diversifying growth beyond legacy CRE. The healthcare vertical alone originated $500 million in new loans and drove $3 million in swap fees last year, while LPOs are now contributing over 40% of the commercial loan pipeline. The strategy is to build presence with LPOs, then open branches as scale is achieved, particularly in high-growth Southeast markets.

3. Margin and Efficiency Levers

Margin expansion was driven by deposit growth, lower funding costs, and repricing of CDs and securities, with management guiding for continued improvement into the high 360 basis point range by year-end 2026. The efficiency ratio benefited from branch closures (93 since 2019), with further optimization under review. Technology and marketing investments are expected to rise, but offset by ongoing cost discipline and branch consolidation savings.

4. Capital Allocation and Shareholder Returns

Capital priorities remain dividends, organic growth, and potential buybacks, with M&A on the back burner. CET1 is targeted at 10.5%-11%, with organic capital build of 15-20 basis points per quarter providing flexibility for both growth and shareholder returns.

5. Fee Income as a Growth Engine

Record treasury management and swap fees illustrate the growing importance of non-interest income, with management forecasting continued double-digit percentage growth in these lines. Wealth management assets under management surpassed $10.4 billion, further diversifying revenue streams.

Key Considerations

WestBanco’s Q4 results show a business model in transition, moving from a legacy CRE and regional banking focus to a more diversified, scalable, and fee-driven platform. Key considerations for investors:

• CRE Payoff Dynamics: Elevated CRE payoffs will remain a headwind in H1 2026, but management expects moderation and robust pipelines to offset the drag.
• Deposit Growth as a Competitive Edge: The ability to fully fund loan growth with core deposits reduces funding cost risk and supports margin expansion.
• Execution on LPO and Healthcare Strategies: Success in new markets and verticals is critical for sustaining above-peer growth rates.
• Expense Management Discipline: Branch optimization and technology spending must balance efficiency gains with growth investments.
• Capital Flexibility: Strong CET1 and tangible equity ratios enable opportunistic buybacks, but organic growth remains the top priority.

Risks

Key risks include sustained CRE payoff activity, potential deposit cost pressures if competitive dynamics intensify, and execution risk in scaling new markets and verticals. Macroeconomic uncertainty, especially around rate cuts and credit cycles, could impact margin and loan growth forecasts. Management’s expense guidance depends on continued success in branch optimization and technology ROI.

Forward Outlook

For Q1 2026, WestBanco guided to:

• Net interest margin roughly consistent with Q4 (3.61%), with 3-5 basis points improvement in Q2 and further modest gains in H2.
• Fee income to remain stable quarter-over-quarter, with trust and brokerage fees benefiting from market trends and seasonality.

For full-year 2026, management expects:

• Mid-single-digit loan growth, despite CRE payoffs weighted to H1.
• Expense run-rate flat in Q1, rising in Q2 with merit increases and marketing, and modest growth in H2 from technology investments.

Management highlighted:

• Continued focus on funding loan growth with deposits to support margin expansion.
• Ongoing branch network review for potential further optimization.

Takeaways

WestBanco’s strategic shift toward scale, diversification, and operational discipline positions it for above-peer performance, but execution on new growth levers and managing CRE headwinds will be critical watchpoints for 2026.

• Premier Integration: The acquisition delivered immediate scale and revenue growth, but ongoing synergy capture and cost control are essential for long-term value.
• Margin Expansion: Deposit-led funding and asset repricing are driving NIM gains, with further upside as CDs and securities continue to reprice.
• Growth Levers: Success in healthcare lending and LPO-driven expansion will determine whether WestBanco can sustain double-digit fee income growth and offset CRE runoff risk.

Conclusion

WestBanco’s Q4 and full-year results demonstrate the power of scale, disciplined execution, and diversified growth strategies. With a strong capital position and clear focus on funding, efficiency, and fee income, the bank is well positioned for continued outperformance, provided it manages CRE exposures and delivers on new market opportunities.

Industry Read-Through

WestBanco’s experience highlights the growing importance of scale and deposit funding in regional banking, as well as the need for diversified fee income streams to offset CRE and NIM volatility. The successful integration of Premier and the pivot to healthcare and Southeast markets signal a broader industry trend toward vertical and geographic diversification. Banks that can execute on branch optimization, technology investment, and relationship-driven deposit gathering will be best positioned to weather rate cycles and credit headwinds. CRE payoff dynamics and competition for core deposits remain sector-wide risks to monitor in 2026.

WSBC Financials Regional Banks Deposit Growth Fee Income CRE Healthcare Lending Acquisition