WesBanco Announces Increased Earnings

WHEELING, W.Va., April 26, 2011 /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 first quarter ended March 31, 2011.

Net income for the three months ended March 31, 2011 was $10.2 million as compared to $7.9 million for the first quarter of 2010, representing an increase of 29.5%, while diluted earnings per share were $0.39, as compared to $0.30 per share for the first quarter of 2010.

Mr. Limbert commented, "The first quarter of 2011 continues WesBanco's progress in expanding profitability through focusing on our core businesses, improving credit quality and reducing funding costs.  We are also benefiting from a recovering economy in several of our key markets. The growth in net income in the first quarter was achieved through a reduction in the provision for credit losses, improvement in net interest income as cost of funds decreased, higher gross revenues from the Trust, Insurance and Mortgage business units and continued cost control throughout the organization.  These improvements resulted in a 30.5% increase in the key metric of return on average assets to 0.77% from 0.59% last year."

Net Interest Income

Net interest income increased $0.8 million or 2.1% in the first quarter as compared to the first quarter of 2010, due to the management of rates on loans and other earning assets, while significantly improving the funding mix to reduce overall cost of funds for both deposits and other borrowings.  The net interest margin improved to 3.67% in the first three months of 2011, an increase of 10 basis points as compared to the first quarter of 2010, and it was also slightly higher than the 2010 fourth quarter rate of 3.66%.  The average rate on interest bearing liabilities decreased by 47 basis points, while the rate on earning assets declined at a slower pace of 34 basis points. Lower offered rates on maturing, higher-rate certificates of deposit, and an increase in lower-cost transaction account products such as non-interest bearing checking and 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 $230.3 million or 35.0% in the first quarter of 2011 from the first quarter of 2010.  Total borrowings, excluding junior subordinated debt, dropped to 7.5% of total assets from 11.0% at March 31, 2010.  Improvements in the mix of deposit accounts also contributed to the improved cost of funds, with average CD's decreasing to 40.1% of total average deposits, from 44.2% in the first quarter of 2010, and all other account types increased to 59.9%.  Average non-interest bearing deposit balances increased 11.7% as a result of retail marketing campaigns and customer incentives, as well as increased balances of the Bank's business customers.  Part of the growth in deposits is attributed to deposits received from customers participating in Marcellus shale gas lease and royalty payments in our northern West Virginia markets.

Provision and Allowance for Credit Losses

The provision for credit losses decreased $3.5 million in the first quarter as compared to the same quarter of 2010 and decreased $1.6 million as compared to the fourth quarter of 2010. The allowance for loan losses was relatively unchanged at March 31, 2011 as compared to December 31, 2010 and was 1.89% of total loans as compared to 1.86% at December 31, 2010 and 1.91% at March 31, 2010.

Net charge-offs increased $1.3 million in the first quarter as compared to the first quarter of 2010, and $1.7 million as compared to the fourth quarter of 2010, but remain significantly below average quarterly net charge-offs over the last two years. Net charge-offs for the first quarter include $4.4 million attributable to two land development loans.  Both of these loans were classified and reserved, and one of these loans was also reported as renegotiated in previous quarters.  The remaining balance of both of these loans was reclassified to non-accrual at March 31, 2011.

Non-accrual loans at March 31, 2011 decreased $8.9 million compared to March 31, 2010, but increased $10.8 million from the fourth quarter of 2010.  The decrease from the first quarter of 2010 was the result of the sale of certain impaired loans in the third quarter of last year and other continuing workout efforts to reduce this category of loans.  Approximately $4.9 million of the increase from the previous quarter represents the balance of the two land development loans after the charges discussed above with the remainder of the increase primarily attributable to three commercial borrowers and residential mortgage loans.

Renegotiated loans increased $7.4 million compared to March 31, 2010, but decreased $10.8 million from the fourth quarter of 2010.  The increase from the first quarter of 2010 is largely due to the bank's philosophy of restructuring loans when appropriate to provide customers an opportunity to recover from the recession. The decrease from the previous quarter was due to one loan being reinstated to its original repayment terms and the reclassification to non-accrual of a charged down land development loan.  

The increase in non-accrual loans did not have a material effect on the allowance for credit losses at March 31, 2011 or the provision for credit losses for the first quarter of 2011 because loans that migrated to non-accrual during the quarter were previously classified and in certain instances also reported as renegotiated, and adequately reserved in prior periods.  Total classified and criticized loans at March 31, 2011 decreased $32.2 million compared to March 31, 2010 and $10.6 million compared to the fourth quarter of 2010.

Non-Interest Income and Non-Interest Expense

Non-interest income decreased $0.5 million or 3.6% as compared to the first quarter of 2010 principally due to a $1.4 million decline in net security gains and a $1.1 million decline in service charges on deposits resulting from regulatory changes which led to fewer customer overdraft transactions.  However, these decreases were mostly offset by a $0.7 million or 17.3% increase in trust fees from new business and market improvements, and a $1.0 million improvement in net losses on other real estate owned and a $0.4 million increase in electronic banking fees.

In the first quarter, non-interest expense was relatively unchanged as compared to the first quarter of 2010.  Salaries, wages and employee benefits increased $0.6 million due to regular compensation increases late in the first quarter of 2010 and increased health and other employee insurance costs, while marketing expense increased $0.4 million from promotions focused on growing demand deposits and home equity loans.  These increases were offset by decreases in occupancy and equipment expense of $0.4 million due to reductions in required seasonal maintenance and in depreciation expense, while restructuring costs decreased $0.2 million. Non-interest expense decreased in many other categories as WesBanco continues to improve the expense structure and efficiency of its operations.

Financial Condition

Total assets were comparable to both year-end and March 31, 2010.  Portfolio loans decreased 5.6% in the last twelve months primarily due to reduced loan demand, continued strategic reductions in residential real estate loans, the sale of certain impaired loans, and a focus on maintaining credit quality.

Total deposits increased 4.2% as compared to the first quarter of 2010, primarily due to an increase in all deposit categories other than CDs, which decreased 6.1%.  The total increase in lower cost deposit categories other than CDs was 12.1%.  The decrease in CD balances was due to planned reductions of non-relationship customers acquired with a large branch acquisition in 2009 and lower offered rates for new and rollover CDs.  Total borrowings, excluding junior subordinated debt, decreased by $192.7 million or 32.5% as compared to March 31, 2010 and 9.2% since the end of 2010, funded by the increased deposits and the decreases in loans.  WesBanco's loan to deposit ratio was 78% at quarter-end, and the Company's liquidity permits loan growth to be easily funded when it occurs.

WesBanco continued to improve already strong regulatory capital ratios of 8.53% tier I leverage, 12.23% tier I risk-based capital, and 13.48% total risk-based capital, all of which improved in each of the last six consecutive quarters.  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 6.43% at March 31, 2011, a 10 basis point improvement from December 31, 2010 and a 37 basis point increase from 6.06% at March 31, 2010, primarily due to balance sheet management strategies and increases 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 from unrealized securities gains as interest rates rose during the last two quarters.  WesBanco increased its quarterly dividend to $0.15 per share in February, a 7.1% increase over the prior quarterly rate.

WesBanco is a multi-state bank holding company with total assets of approximately $5.4 billion, operating through 112 branch locations and 126 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, 2010 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, 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, 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 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.