WesBanco Announces Increased Earnings

WHEELING, W.Va., April 24, 2013 /PRNewswire/ -- Paul M. Limbert, President and Chief Executive Officer of WesBanco, Inc. (NASDAQ Global Market: WSBC), a Wheeling, West Virginia based multi-state bank holding company, today announced increased earnings for the three months ended March 31, 2013.

Net income for the three months ended March 31, 2013 was $16.0 million compared to $12.0 million for the first quarter of 2012, representing an increase of 33.6%, while diluted earnings per share were $0.55, compared to $0.45 per share for the first quarter of 2012, representing an increase of 22.2%.  Net income, excluding merger-related expenses of $1.2 million, was $16.8 million compared to $12.0 million for 2012, representing an increase of 40.0%, while diluted earnings per share, excluding merger-related expenses, were $0.57 (non-GAAP measure), compared to $0.45 per share for 2012.  The increased earnings improved the return on average assets to 1.07% from 0.87% in the first quarter of last year and the return on average tangible equity (non-GAAP measure) grew to 16.72% from 13.93%.

Mr. Limbert commented, "The 2013 first quarter financial results were very positive. We are pleased with the continued improvement in operating results and the opportunities that our fourth quarter acquisition of Pittsburgh-based Fidelity Bancorp, Inc. ("Fidelity") provides in our expanded western Pennsylvania market. The Fidelity acquisition has already contributed to the increase in net interest income and many components of non-interest income.  In February, we changed the name on each of the acquired branches and launched our initial marketing campaign.  The operations, communication, branch support and accounting systems were also successfully converted and we are now focused on growing our Pittsburgh customer base and loan originations, while providing expanded products and services to our newest market."

Financial Condition

Total assets at March 31, 2013 increased 8.7% or $484.8 million from March 31, 2012 due to the acquisition of Fidelity and organic growth. The Fidelity acquisition added 13 branches to WesBanco, located throughout the Pittsburgh metropolitan area. Portfolio loans increased $460.1 million or 14.3% from March 31, 2012 with $312.3 million from western Pennsylvania, which includes the Fidelity acquired loans, and the remaining $147.8 million from other WesBanco regions as originations continued to outpace paydowns. Separate from the western Pennsylvania region, WesBanco grew outstanding loans 4.9% from March 31, 2012 as a result of a 52.2% growth in loan originations from the prior year. Loan growth, excluding the acquisition, and declines in higher cost borrowings of $146.4 million over the last twelve months were funded by deposit growth and the use of other liquid assets. Deposits increased $532.3 million or 11.9% from March 31, 2012, with $433.3 million from the western Pennsylvania region.  Total assets at March 31, 2013 were relatively unchanged compared to 2012 year-end, as were total loans.  However, originated loans increased 23.0% in the first quarter compared to the fourth quarter of last year and the commercial pipeline remains strong.

WesBanco has continued to maintain strong regulatory capital ratios. At March 31, 2013, tier I leverage was 8.92%, tier I risk-based capital was 12.88%, and total risk-based capital was 14.13%, all of which were relatively unchanged from the end of the first quarter of 2012.  Both consolidated and bank-level regulatory capital ratios are well above the applicable "well-capitalized" standards promulgated by bank regulators.  Total tangible equity to tangible assets (non-GAAP measure) was 6.97% at March 31, 2013, a 21 basis point increase from a year ago.  Strong earnings and improved capital have enabled WesBanco to increase its dividend five times over the last two years, cumulatively a 36% increase. The current $0.19 per share quarterly dividend rate represents an approximate 3.2% dividend yield.

Credit Quality

WesBanco has significantly improved credit quality over the past year. Total non-performing loans were $63.1 million or 1.71% of total loans at March 31, 2013, which represents a 22.0% decrease from $81.0 million or 2.51% at March 31 of the prior year.  Criticized and classified loans decreased 29.1% over the last twelve months to $168.1 million at March 31, of 2013.  Criticized and classified loans were 4.56% of total loans compared to 7.35% at the end of the 2012 first quarter.

Net charge-offs for the first quarter of 2013 were $3.0 million, or 0.34% of average portfolio loans, and represented the lowest charge-off level in over three years.  Net charge-offs were $6.6 million or 0.82% for the first quarter of 2012.  As a result of the improvement in all measures of credit quality, the provision for credit losses was $2.1 million for the first quarter of 2013 compared to $6.2 million for the same quarter of 2012.  The allowance for loan losses represented 1.40% of total portfolio loans at the end of the first quarter.  However, if the acquired Fidelity loans (which were recorded at fair value at the date of acquisition) were excluded from the ratio, the allowance would approximate 1.50% of the adjusted loan total compared to 1.69% at March 31, 2012.

Net Interest Income

Net interest income increased $4.3 million or 10.3% in the first quarter of 2013 compared to the first quarter of 2012 due to an 8.4% increase in average earning assets, primarily through increased average loan balances.  This increase mitigated the effect of the low interest rate environment, as loans provide the highest rate for investment in new earning assets.  In addition, the net interest margin increased by seven basis points to 3.64% in the first quarter of 2013 through a decrease in rates paid on interest bearing liabilities in excess of the decrease in rates earned on assets. This improvement in funding costs resulted from a 41.0% reduction in higher rate average FHLB and other borrowings, primarily through maturities, a 12.7% increase in total deposits, of which 89.7% were lower cost demand, money market or savings accounts, and the lowering of rates for certain deposit types. Accretion of the purchase accounting adjustments for loans, CDs and borrowings acquired with the Fidelity merger also benefited the net interest margin in the 2013 first quarter.

Non-Interest Income and Non-Interest Expense

Non-interest income for the quarter ended March 31, 2013 increased $2.2 million or 14.2% compared to the same 2012 quarter.  Trust fees increased $0.3 million or 5.6% as assets under management continued to increase from customer development initiatives of trust and investment activities. Net securities brokerage revenues increased $0.4 million or 39.3% due to additional market coverage in the Pittsburgh area and improved production in other markets.  Net gains on sales of mortgage loans increased $0.4 million due to increased volume and higher margins on sold loans.  In addition, the first quarter of 2013 includes a $1.1 million bank-owned life insurance death benefit.

Non-interest expense increased $5.1 million or 14.3% for the first quarter compared to the first quarter of 2012 partially due to Fidelity merger-related expenses of $1.2 million.  Total non-interest expense would have increased 10.9% for the quarter without these charges, to a large extent due to the acquisition of the 13 Fidelity offices in the Pittsburgh area.  Salaries and wages increased $1.5 million due to routine annual adjustments to compensation, increased commissions on higher loan origination and brokerage revenue and an increase in full-time equivalent employees ("FTE") of 77 primarily due to the acquisition of Fidelity.  Personnel cost savings from Fidelity were primarily achieved by the end of the first quarter.  Employee benefits expense increased $0.7 million primarily from increased pension and employee health insurance costs.

Financial Results Conference Call

WesBanco, Inc. will host a conference call to discuss the Company's financial results for the first quarter of 2013 on Thursday, April 25, 2013, at 11:00 AM EDT.  Callers wishing to participate should access the call by dialing (800) 860-2442 or +1 (412) 858-4600 for international callers.  The call may also be listened to live via Webcast through the "Investor Relations" section of the Company's Web site at www.wesbanco.com or by registering at http://www.videonewswire.com/event.asp?id=93119.  Access to the Webcast will begin approximately 15 minutes prior to the start of the call.

WesBanco is a multi-state bank holding company with total assets of approximately $6.1 billion, operating through 118 branch locations and 106 ATMs in West Virginia, Ohio, and Pennsylvania.  WesBanco's banking subsidiary is WesBanco Bank, Inc., headquartered in Wheeling, West Virginia.  WesBanco also operates an insurance brokerage company, WesBanco Insurance Services, Inc., and a full service broker/dealer, WesBanco Securities, Inc.

Forward-looking Statements:
Forward-looking statements in this report 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 in this report should be read in conjunction with WesBanco's Form 10-K for the year ended December 31, 2012 and documents subsequently filed by WesBanco with the Securities and Exchange Commission ("SEC"), which are available at 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 most recent Annual Report on Form 10-K filed with the SEC under "Risk Factors" in Part I, Item 1A.  Such statements are subject to important factors that could cause actual results to differ materially from those contemplated by such statements, including, without limitation, that the businesses of WesBanco and Fidelity may not be integrated successfully or such integration may take longer to accomplish than expected; the expected cost savings and any revenue synergies from the merger of WesBanco and Fidelity may not be fully realized within the expected timeframes; disruption from the merger of WesBanco and Fidelity may make it more difficult to maintain relationships with clients, associates, or suppliers; the effects of changing regional and national economic conditions; changes in interest rates, spreads on earning assets and interest-bearing liabilities, and associated interest rate sensitivity; sources of liquidity available to WesBanco and its related subsidiary operations; potential future credit losses and the credit risk of commercial, real estate, and consumer loan customers and their borrowing activities; actions of the Federal Reserve Board, the Federal Deposit Insurance Corporation, the SEC, the Financial Institution Regulatory Authority, the Municipal Securities Rulemaking Board, the Securities Investors Protection Corporation, and other regulatory bodies; potential legislative and federal and state regulatory actions and reform, including, without limitation, the impact of the implementation of the Dodd-Frank Act; adverse decisions of federal and state courts; fraud, scams and schemes of third parties; internet hacking; competitive conditions in the financial services industry; rapidly changing technology affecting financial services; marketability of debt instruments and corresponding impact on fair value adjustments; and/or other external developments materially impacting WesBanco's operational and financial performance.  WesBanco does not assume any duty to update forward-looking statements.










WESBANCO, INC.




Consolidated Selected Financial Highlights



Page 4

(unaudited, dollars in thousands, except shares and per share amounts)
















For the Three Months Ended

STATEMENT OF INCOME

March 31,

Interest and dividend income

2013


2012


% Change


Loans, including fees

$             44,276


$           41,964


5.51%


Interest and dividends on securities:








Taxable 

7,433


8,590


(13.47%)



Tax-exempt

3,127


3,079


1.56%




Total interest and dividends on securities

10,560


11,669


(9.50%)


Other interest income 

56


47


19.15%

          Total interest and dividend income

54,892


53,680


2.26%

Interest expense







Interest bearing demand deposits

301


405


(25.68%)


Money market deposits

339


742


(54.31%)


Savings deposits

141


295


(52.20%)


Certificates of deposit

6,148


6,979


(11.91%)




Total interest expense on deposits

6,929


8,421


(17.72%)


Federal Home Loan Bank borrowings

319


1,377


(76.83%)


Other short-term borrowings

623


1,178


(47.11%)


Junior subordinated debt owed to unconsolidated subsidiary trusts

893


874


2.17%




Total interest expense

8,764


11,850


(26.04%)

Net interest income 

46,128


41,830


10.27%


Provision for credit losses

2,102


6,202


(66.11%)

Net interest income after provision for credit losses

44,026


35,628


23.57%

Non-interest income







Trust fees

5,018


4,753


5.58%


Service charges on deposits

4,197


3,993


5.11%


Electronic banking fees

2,866


2,763


3.73%


Net securities brokerage revenue

1,497


1,075


39.26%


Bank-owned life insurance

1,949


880


121.48%


Net gains on sales of mortgage loans

712


268


165.67%


Net securities gains

16


100


(84.00%)


Net (loss) / gain on other real estate owned and other assets

(46)


32


(243.75%)


Other income

1,287


1,458


(11.73%)




Total non-interest income

17,496


15,322


14.19%

Non-interest expense







Salaries and wages

15,826


14,315


10.56%


Employee benefits

6,345


5,618


12.94%


Net occupancy

3,192


2,776


14.99%


Equipment 

2,407


2,174


10.72%


Marketing

805


771


4.41%


FDIC insurance 

971


1,045


(7.08%)


Amortization of intangible assets

625


537


16.39%


Restructuring and merger-related expense

1,178


-


100.00%


Other operating expenses  

9,398


8,429


11.50%




Total non-interest expense

40,747


35,665


14.25%

Income before provision for income taxes

20,775


15,285


35.92%


Provision for income taxes 

4,754


3,295


44.28%

Net Income

$             16,021


$           11,990


33.62%










Taxable equivalent net interest income

$            47,812


$         43,488


9.94%










Per common share data






Net income per common share - basic

$                 0.55


$               0.45


22.22%

Net income per common share - diluted

$                 0.55


$               0.45


22.22%

Dividends declared

$                 0.19


$               0.17


11.76%

Book value (period end)

$               24.80


$             24.11


2.86%

Tangible book value (period end) (1)

$               13.74


$             13.50


1.78%

Average common shares outstanding - basic

29,211,321


26,628,025


9.70%

Average common shares outstanding - diluted

29,268,483


26,631,187


9.90%

Period end common shares outstanding

29,214,018


26,627,689


9.71%










(1) See non-GAAP financial measures for additional information relating to the calculation of this item.










 

 

WESBANCO, INC.






Consolidated Selected Financial Highlights


Page 5

(unaudited, dollars in thousands)



















Selected ratios














For the Three Months Ended





March 31,






2013


2012


% Change



















Return on average assets

1.07

%

0.87

%

22.99

%





Return on average equity

9.00


7.54


19.36






Return on average tangible equity (1)

16.72


13.93


20.03






Yield on earning assets (2) 

4.31


4.54


(5.07)






Cost of interest bearing liabilities

0.81


1.14


(28.95)






Net interest spread (2)

3.50


3.40


2.94






Net interest margin (2)

3.64


3.57


1.96






Efficiency (1) (2)

60.59


60.64


(0.08)






Average loans to average deposits

73.86


73.88


(0.03)






Annualized net loan charge-offs/average loans

0.34


0.82


(58.54)






Effective income tax rate 

22.88


21.56


6.12





























































For the Quarter Ended





Mar. 31,


Dec. 31,


Sept. 30,


June 30,


Mar. 31,





2013


2012


2012


2012


2012















Return on average assets

1.07

%

0.87

%

0.92

%

0.87

%

0.87

%

Return on average equity

9.00


7.36


7.83


7.45


7.54


Return on average tangible equity (1)

16.72


13.16


14.09


13.57


13.93


Yield on earning assets (2) 

4.31


4.27


4.37


4.43


4.54


Cost of interest bearing liabilities

0.81


0.93


1.03


1.07


1.14


Net interest spread (2)

3.50


3.34


3.34


3.36


3.40


Net interest margin (2)

3.64


3.50


3.51


3.53


3.57


Efficiency (1) (2) 

60.59


62.67


59.45


61.06


60.64


Average loans to average deposits

73.86


74.40


74.95


73.35


73.88


Annualized net loan charge-offs/average loans

0.34


0.47


0.54


0.84


0.82


Effective income tax rate 

22.88


21.09


21.16


22.33


21.56


Trust assets, market value at period end

$  3,451,124


$     3,238,556


$     3,236,618


$     3,133,741


$     3,164,235















(1) See non-GAAP financial measures for additional information relating to the calculation of this item.


(2) The yield on earning assets, net interest margin, net interest spread and efficiency ratios are presented on a fully taxable-equivalent (FTE) and annualized basis. The FTE basis adjusts for the tax benefit of income on certain tax-exempt loans and investments.  WesBanco believes this measure to be the preferred industry measurement of net interest income and provides a relevant comparison between taxable and non-taxable amounts.


















 

 

WESBANCO, INC.







Consolidated Selected Financial Highlights


Page 6

(unaudited, dollars in thousands, except shares)


% Change


Balance sheets

March 31,




December 31,

December 31, 2012


Assets


2013


2012


% Change


2012

to March 31, 2013


Cash and due from banks

$         121,692


$        152,817


(20.37)

%

$                91,716

32.68

%

Due from banks - interest bearing

56,571


4,426


1,178.15


33,889

66.93


Securities:












Available-for-sale, at fair value

993,270


1,087,836


(8.69)


1,021,244

(2.74)



Held-to-maturity (fair values of $624,627; $608,186 and $639,273, respectively)

592,033


577,923


2.44


602,509

(1.74)




Total securities

1,585,303