WesBanco Announces Increased Earnings

WHEELING, W.Va., Jan. 26, 2011 /PRNewswire-FirstCall/ -- Paul M. Limbert, President and Chief Executive Officer of WesBanco, Inc. (Nasdaq: WSBC), a Wheeling, West Virginia based multi-state bank holding company, today announced increased earnings for the fourth quarter and year ended December 31, 2010.

Net income available to common shareholders for the quarter ended December 31, 2010 was $10.3 million as compared to $7.3 million for the fourth quarter of 2009, representing an increase of 41.3%, while earnings per share were $0.39 for the fourth quarter of 2010, as compared to $0.27 per share for the fourth quarter of 2009, an increase of 44.4%.  For all of 2010, net income available to common shareholders was $35.6 million or $1.34 per common share, while for 2009, net income available to common shareholders was $18.7 million or $0.70 per common share.  Diluted earnings per common share were up 91.4% year-over-year.

Mr. Limbert commented, "The 2010 financial performance reflects continued improvement from the difficult economic climate of the two previous years. The challenges of a slow recovery and increased regulatory burden have been mitigated by successes in managing our core businesses. The quarter ending December 31, 2010 is the fifth consecutive quarter of growth in net income and per share earnings on a linked-quarter basis.  The growth in net income was achieved through a lower provision for credit losses for both the quarter and for the year, consistent improvement in net interest income, higher gross revenues from the Trust, Securities and Mortgage business units, continued cost control throughout the organization resulting in lower overall expenses, and the significant benefits of repurchasing our TARP preferred shares in the third quarter of 2009."

Mr. Limbert further remarked, "Our 2010 performance has also been noticed nationally, helping us stand out as compared to peer banks.  WesBanco received recognition in two recent national investment publications.  In the December 14, 2010 edition of the online publication "The Street", WesBanco was included in their list of "The 10 Best Bank Stocks for 2010" based on our increase in stock price approximating 56% on a year to date basis.  In addition, "Forbes" magazine recently recognized WesBanco in its list of "America's 100 Best Banks", ranking it 38th in the 2010 listing."

Net Interest Income

Net interest income increased $1.8 million or 4.3% in the fourth quarter and $7.7 million or 4.9% for all of 2010 as compared to the same periods in 2009 due to the Bank's ability to manage rates on its loans and other earning assets, while seeing significant improvement in the cost of funds for both deposits and other borrowings.  Net interest income has now increased for each of the past seven quarters.  The net interest margin improved to 3.66% in the fourth quarter of 2010 and 3.60% for the year, an increase of 20 basis points and 24 basis points, respectively, as compared to the same periods in 2009.  The average rate on interest bearing liabilities decreased by 57 basis points in the fourth quarter and 61 basis points for the year, while the rate on earning assets declined at a much slower pace of 34 basis points in the fourth quarter and 29 basis points for the year.  Lower rates on maturing, higher-rate certificates of deposit, and an increase in lower cost deposits, primarily money market accounts, all contributed to the improvement in the cost of funds.  In addition, the average balance for borrowings, which generally have higher interest costs, decreased by $281.8 million or 38.7% in the fourth quarter of 2010 from the fourth quarter of 2009, through planned reductions utilizing the liquidity obtained through pay downs on loans and increased deposits.  Improvements in the mix of deposit accounts also contributed to the improved cost of funds, with average CD's decreasing to 41.2% of total average deposits, from 45.6% in the fourth quarter of 2009, and average demand deposits increasing to 25.9% of total average deposits from 24.8% in 2009.  The increase in total interest bearing and non-interest bearing demand deposits was primarily due to an 11.0% increase in average non-interest bearing deposit balances as a result of retail marketing campaigns and customer incentives, as well as a focus on increasing treasury management products and services from business customers.  Total borrowings, excluding junior subordinated debt, are down to 8.2% of total assets from 12.7% last year.

Provision and Allowance for Credit Losses

The provision for credit losses decreased $4.7 million in the fourth quarter and $5.8 million for all of 2010 compared to the same periods of 2009.  The provision in the current quarter also decreased $2.2 million as compared to the third quarter of 2010.  The provision for all of 2010 was 103% of net charge-offs for the year.

Net charge-offs decreased $7.3 million in the fourth quarter as compared to the fourth quarter of 2009, and $11.1 million as compared to the third quarter. The consecutive quarter decrease was primarily due to $10.5 million of charge-offs in the third quarter related to a sale of certain impaired commercial and commercial real estate loans totaling $14.6 million, and the year-over-year improvement was due to a better overall economic environment and a $3.4 million charge in the fourth quarter of 2009 relating to one commercial loan involving borrower fraud.  Net charge-offs for all of 2010 increased $4.3 million, primarily due to the third quarter loan sale.  

Non-accrual loans at December 31, 2010 decreased $4.8 million from the third quarter of 2010 and $16.5 million as compared to December 31, 2009, as a result of the third quarter sale of loans and other continuing workout efforts to reduce this category of loans.  However, renegotiated loans increased $12.0 million for the fourth quarter and $32.5 million for the year primarily due to rate or other term-related modifications granted to borrowers on construction, commercial real estate and residential mortgage loans.

The allowance for loan losses increased $2.1 million compared to September 30, 2010 and was relatively unchanged as compared to December 31, 2009.  The allowance for loan losses was 1.86% of total loans at December 31, 2010 compared to 1.78% at September 30, 2010 and 1.76% at December 31, 2009.  The allowance for loan losses at December 31, 2010 as compared to the third quarter includes higher specific reserves on several non-accrual and impaired loans, as well as an increase in the allocation for residential real estate loans, which more recently have experienced higher delinquencies and partial charge-offs.  However, offsetting these factors, the general allowance for commercial and industrial loans decreased, as management's estimate of loss reflected a declining trend in historical loss rates.

Non-Interest Income and Non-Interest Expense

For the fourth quarter of 2010, total non-interest income decreased $2.3 million, and for the year ended December 31, 2010 it decreased $5.0 million, as compared to the same periods in 2009.  The quarterly decrease was principally due to a $2.0 million decline in net security gains and a $1.7 million decline in service charges on deposits resulting from regulatory changes which led to fewer customer overdraft transactions.  These decreases were partially offset by a $0.8 million or 21.7% increase in trust fees from new business, market improvements, and fourth quarter revisions to fee schedules; and a $0.8 million increase in bank-owned life insurance due to a benefit claim recognized in the fourth quarter.  The year-to-date decrease is due to decreases in service charges on deposits, decreases in net security gains, and $3.1 million in write-downs in other real estate owned, primarily for an owned hospitality-related property.  Improvements in non-interest income year-to-date included trust fee growth of 15.2% as well as increases in most other major non-interest operating areas including a 14.3% increase in electronic banking fees, a 9.5% increase in securities brokerage income and a 37.8% increase in mortgage banking income.

Non-interest expense decreased $2.1 million, or 5.5% in the fourth quarter and $8.5 million or 5.7% year-to-date as compared to the same periods in 2009.  The decrease in the fourth quarter is due to restructuring expenses of $1.2 million in the fourth quarter of 2009 relating to personnel reductions and impairment on certain premises held for sale.  In addition, employee benefits expense decreased $0.7 million from lower pension and health insurance costs.  These decreases were partially offset by $0.8 million of increased salaries and wages.  WesBanco took actions in 2010 resulting in significant reductions in costs for many expense categories, including employee benefits, equipment, marketing, professional fees and restructuring expenses, somewhat offset by increases in foreclosure-related property management expenses. In addition, the year-to-date expense reduction includes a decrease in FDIC insurance of $2.1 million primarily due to a special assessment of $2.6 million in the second quarter of 2009.

Financial Condition

Total assets were comparable to year-end 2009.  Portfolio loans decreased 5.3% for the year primarily due to continued strategic reductions in residential real estate loans, the sale of certain impaired loans, a focus on maintaining credit quality and reduced demand for commercial and consumer loans.  

Total deposits increased by 5.0% as compared to year end 2009, primarily due to a 19.6% increase in money market deposits, which combined with smaller increases in demand and savings deposits more than offset a 3.5% decrease in CDs.  The reduction in CDs was due to planned reductions of non-relationship customers acquired with a large branch acquisition in 2009.  Total borrowings, excluding junior subordinated debt, decreased by $243.9 million or 35.6% as compared to December 31, 2009, funded by the increased deposits and the decreases in loans.  The planned de-leveraging of the balance sheet, together with weak loan demand as a result of the prolonged recession, resulted in a reduction of total average earning assets of 2.0% in the fourth quarter and 3.2% for the twelve month period as compared to 2009.

WesBanco continued to improve already strong regulatory capital ratios of 8.35% tier I leverage, 11.92% tier I risk-based capital, and 13.17% total risk-based capital, all of which improved in each of the last five consecutive quarters while 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 6.33% at December 31, 2010, nearly unchanged from September 30, 2010, but an improvement of 45 basis points from 5.88% at year-end 2009, primarily due to balance sheet management strategies and a 3.1% increase in shareholders' equity.  The increase in shareholders' equity was the result of improved operating results net of dividends declared, partially offset by decreases in other comprehensive income due to lower unrealized securities gains at year end as certain term market interest rates rose in the fourth quarter.  Total dividends declared for the year were $14.9 million or 41.8% of net income.

WesBanco is a multi-state bank holding company with total assets of approximately $5.4 billion, operating through 112 branch locations and 132 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, 2009 and documents subsequently filed by WesBanco with the Securities and Exchange Commission ("SEC"), including WesBanco's Forms 10-Q for the quarters ended March 31, June 30, and September 30, 2010, 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 Part I, Item 1A. Risk Factors.  Such statements are subject to important factors that could cause actual results to differ materially from those contemplated by such statements, including without limitation, 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, Federal Deposit Insurance Corporation, the SEC, Financial Institution Regulatory Authority, Municipal Securities Rulemaking Board, 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 Wall Street Reform and Consumer Protection Act; adverse decisions of federal and state courts; fraud, scams and schemes of fourth 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.

SOURCE WesBanco, Inc.