WesBanco Announces Increased Earnings

WHEELING, W.Va., July 23, 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 an increase in earnings per share and related net income for the second quarter and first half of 2013.

Diluted earnings per share for the second quarter ending June 30, 2013 were up 28.9% to $0.58 as compared to $0.45 for the same period last year, while net income for the second quarter was $17.0 million compared to $12.0 million for the second quarter last year, representing an increase of 41.8%.  For the six month period ended June 30, 2013, diluted earnings per share totaled $1.13 as compared to $0.90 for the first half of last year, representing an increase of 25.6%, while net income for the 2013 six month period totaled $33.0 million compared to $24.0 million for 2012, representing an increase of 37.7%. 

Year-to-date, without merger-related expenses, net income was $33.8 million vs. $24.0 million last year for the same period, representing an increase of 41.1%, and earnings per share were $1.16 (non-GAAP measure) vs. $0.90, an increase of 28.3%.  The increased net income improved the return on average assets to 1.10% from 0.87% in the first half of last year, and the return on average tangible equity (non-GAAP measure) increased to 16.88% from 13.75%.  Both of these ratios are well above peer group averages as compared to March 31, 2013.  First half results have been enhanced by the acquisition in late 2012 and integration in the first quarter of 2013 of the approximate $655 million, 13 branch Fidelity Bancorp, Inc., Pittsburgh, PA ("Fidelity").

Mr. Limbert commented, "The 2013 first half financial results were very strong.  We are extremely pleased with our revenue growth in multiple areas of the Company. Many of the operating strategies which were implemented last year are beginning to produce additional revenues or have helped control expenses.  The addition of lending officers and other types of revenue producers are beginning to generate either additional loan volume or additional fee income.  Our ability to quickly integrate the Fidelity acquisition has allowed us to obtain necessary cost savings, while making the customer transition as smooth as possible.  All of our markets are showing improvements in loan volumes and outstandings, securities brokerage and wealth management revenues and secondary market mortgage activity.  Our team has performed very well this year and our shareholders are being rewarded by this performance."

Financial Condition

Total assets at June 30, 2013 increased 10.1% or $558.6 million from June 30, 2012, due to the acquisition of Fidelity and an accelerated organic loan growth rate.  Portfolio loans increased $525.6 million or 16.0% from June 30, 2012, with $338.0 million from western Pennsylvania, which includes the Fidelity-acquired loans.  The remaining $187.6 million increase in net loan outstandings, a 6.1% growth rate year-over-year, came from other WesBanco markets as loan originations and resulting outstanding balances outpaced loan repayments. Total loans grew $117.6 million or 3.2% from March 31, 2013, as a result of a 9.8% growth in loan originations in the second quarter compared to the first quarter of 2013.  Total loan originations for the first six months were up 54% compared to the first six months of 2012.  Deposits increased $545.0 million or 12.4% from June 30, 2012, with $428.2 million from the western Pennsylvania region.  Total assets at June 30, 2013 were relatively unchanged compared to 2012 year-end, as loan growth was funded with securities maturities and other available liquidity sources.  Total loan originations were $448 million in the second quarter as compared to $408 million for the first quarter, a 10% increase, with both total loan commitments and the commercial loan pipeline higher at quarter-end over the prior quarter.

WesBanco has continued to maintain strong regulatory capital ratios.  At June 30, 2013, tier I leverage was 9.13%, tier I risk-based capital was 12.85%, and total risk-based capital was 14.08%, which were similar to year-end.  Both consolidated and bank-level regulatory capital ratios are well above the applicable "well-capitalized" standards promulgated by bank regulators, as well as the recently finalized BASEL III capital standards.  Total tangible equity to tangible assets (non-GAAP measure) was 7.01% at June 30, 2013, about the same as a year ago, and up from 6.77% at year-end, despite lower other comprehensive income ("OCI") from lower securities valuations.  Strong earnings and improved total capital have enabled WesBanco to increase the current $0.19 quarterly dividend rate five times over the last two and a half years, cumulatively representing a 36% increase.

Credit Quality

Credit quality has continued to improve over the past year.  Total non-performing loans at June 30, 2013 were $62.3 million or 1.64% of total loans, which represents an 8.5% decrease from $68.1 million or 2.08% at June 30, 2012.  Criticized and classified loans decreased 28.8% over the last twelve months to $159.1 million at June 30, 2013 from $223.3 million last year.  Criticized and classified loans were 4.18% of total loans at June 30, 2013 compared to 6.82% as of June 30, 2012.

Net charge-offs for the second quarter of 2013 were $2.4 million, or 0.26% of average portfolio loans, and $5.5 million or 0.30% for the first half of the year, representing the lowest charge-off level in several years.  As a comparison, net charge-offs were $6.8 million or 0.84% for the second quarter of 2012, and $13.4 million or 0.83% for the first half of last year.  As a result of the improvement in all measures of credit quality, the provision for credit losses was $1.0 million for the second quarter of 2013, compared to $5.9 million for the same quarter in 2012, and $3.1 million year-to-date compared to $12.1 million last year.  The allowance for loan losses represented 1.33% of total portfolio loans at the end of the second quarter. 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 1.41% of the adjusted loan total.

Net Interest Income

Net interest income increased $4.4 million or 10.7% in the second quarter of 2013 compared to the same quarter for 2012, due to an 8.8% increase in average earning assets, primarily through increased average loan balances, both organic and from the Fidelity acquisition.  Year-to-date, net interest income increased $8.7 million or 10.5% from last year.  In addition, the net interest margin increased to 3.56% in the second quarter of 2013, from 3.53% last year, 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 40.4% reduction in higher rate average FHLB and other borrowings, primarily through maturities, a 12.6% increase in total average deposits, of which 88.5% 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 improved the net interest margin by 11 basis points year-to-date.

Non-Interest Income and Non-Interest Expense

Non-interest income for the quarter ended June 30, 2013 increased $1.8 million or 11.5% compared to 2012, and year-to-date it was up $4.0 million or 12.8%.  Trust fees increased 13.3% for the quarter and 9.2% year-to-date, as assets under management continued to increase from customer development initiatives and overall market improvements.  Total trust assets were up 9.8% year-over-year.  Net securities brokerage revenues increased 47.3% and 43.4%, respectively, for the quarter and year-to-date periods.  Net gains on sales of mortgage loans increased 63.0% year-to-date, and the six month period includes a $1.1 million bank-owned life insurance death benefit as part of a 61.3% increase in total BOLI income. Securities gains were lower for both the quarter and year-to-date periods due to reduced portfolio restructuring as compared to prior periods.

Non-interest expense increased $3.4 million or 9.5% for the second quarter compared to the second quarter of 2012, and $8.5 million or 11.8% for the first six months of 2013, partially due to Fidelity merger-related expenses of $1.2 million year-to-date and other normal expenses related to operating 13 additional branches. Expenses were the same as the first quarter of 2013, net of restructuring charges. Most of the back-office and other administrative savings targeted to be obtained from the merger have been accomplished by quarter-end. Salaries and wages increased 13.0% and 11.8% respectively for the quarter and year-to-date periods, due to routine annual adjustments to compensation, increased commissions on higher loan originations and brokerage revenue and an increase in full-time equivalent employees ("FTEs") of 74, primarily from the Fidelity acquisition and temporary summer help.  Pre-merger, Fidelity had approximately 150 FTEs. Employee benefit expenses increased primarily from increased pension and employee health insurance costs.  As compared to the first quarter of 2013, most major expense categories were lower, particularly employee benefits and OREO expense.  The one exception was marketing expense as our bank-wide spring campaign commenced; however, for the first half of 2013 marketing expenses were consistent with the previous year.

Financial Results Conference Call

WesBanco, Inc. will host a conference call to discuss the Company's financial results for the second quarter of 2013 on Wednesday, July 24, 2013, at 11:00 a.m. E.D.T.  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=94827.  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 104 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"), including WesBanco's Form 10-Q for the quarter ended March 31, 2013, 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.