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WesBanco Announces Second Quarter 2018 Net Income

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WesBanco Announces Second Quarter 2018 Net Income

PR Newswire

WHEELING, W.Va., July 23, 2018 /PRNewswire/ -- WesBanco, Inc. ("WesBanco") (NASDAQ:WSBC), a diversified, multi-state bank holding company, today announced net income and related earnings per share for the three and six months ended June 30, 2018.  Net income for the three months ended June 30, 2018 was $33.2 million, with diluted earnings per share of $0.71, compared to $26.3 million and $0.60 per diluted share, respectively, for the second quarter of 2017.  For the six months ended June 30, 2018, net income was $66.7 million, or $1.47 per diluted share, compared to $52.2 million, or $1.19 per diluted share, for the 2017 period.  Net Income excluding after-tax merger-related expenses for the three months ended June 30, 2018, increased 42.2% year-over-year to $37.4 million, or $0.80 per diluted share as compared to $0.60 per diluted share in the prior year quarter (non-GAAP measures).  On the same basis, net income for the six months ended June 30, 2018 increased 35.4% year-over-year to $71.2 million, or $1.57 per diluted share versus $1.19 per diluted share in the prior year period (non-GAAP measures).




For the Three Months Ended June 30, 


For the Six Months Ended June 30, 




2018


2017


2018


2017

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


Net Income


Diluted
Earnings
Per Share


Net Income


Diluted
Earnings
Per Share


Net Income


Diluted
Earnings
Per Share


Net Income


Diluted
Earnings
Per Share

Net income (Non-GAAP)(1)


$      37,445


$       0.80


$      26,341


$       0.60


$      71,167


$       1.57


$      52,547


$       1.19

Less: After tax merger-related expenses


(4,276)


(0.09)


-


-


(4,469)


(0.10)


(319)


-

Net income (GAAP)


$      33,169


$       0.71


$      26,341


$       0.60


$      66,698


$       1.47


$      52,228


$       1.19


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

On April 5, 2018, WesBanco consummated the merger with First Sentry Bancshares, Inc. ("FTSB"), a bank holding company headquartered in Huntington, WV with $706 million in assets, excluding goodwill.  Financial results for FTSB have been included in WesBanco's results subsequent to the merger date of April 5, 2018.

Financial and operational highlights:

  • Execution of well-defined long-term growth strategies driving strong profitability
    • Year-to-date income before provisions for credit losses and income taxes increased 9.4% year-over-year, or 16.0% when excluding merger-related costs
  • Solid expense management as demonstrated by a year-to-date efficiency ratio of 54.68% (non-GAAP measure)
  • Continued strength across key credit quality metrics
  • Successful completion of the merger with FTSB and conversion of its data processing system
  • On July 11th,  announced receipt of all necessary regulatory approvals for the merger with Farmers Capital Bank Corporation ("FFKT"), pursuant to the merger agreement dated April 19, 2018
    • In addition, today, the shareholders of FFKT approved the merger with and into WesBanco, Inc.

"We are pleased with WesBanco's performance during the second quarter of 2018 as we reported net earnings of $0.80 per share, when excluding merger-related costs," said Todd F. Clossin, President and Chief Executive Officer of WesBanco. "We were able to deliver these record results by remaining focused on generating positive operating leverage and profitability through effective execution of our strategies related to long-term growth, expense management, and strategic acquisitions."

Mr. Clossin added, "We successfully executed upon our $10 billion asset threshold strategy as we welcomed the customers and employees of First Sentry into WesBanco on April 5th.  Furthermore, through disciplined growth, meeting customer needs efficiently and effectively, and leveraging our core deposit advantage while maintaining our foundation of strong credit standards and diligent expense management we will continue delivering long-term shareholder value."

Balance Sheet
Portfolio loans of $6.8 billion, as of June 30, 2018, increased 6.3% when compared to the prior year period due to the acquisition of FTSB.  Total organic loan growth was flat year-over-year resulting from continued targeted reductions in the consumer portfolio to reduce its risk profile and elevated levels of commercial real estate loans moving to an aggressive secondary financing market.  Solid new loan production during the second quarter of 2018, as well as our lending diversification strategy, helped to offset those loan category reductions.  Both the commercial & industrial and residential mortgage loan categories reported low single-digit organic loan growth year-over-year.  Total deposits increased 8.4% year-over-year to $7.7 billion due to the FTSB acquisition.  Continuing to reflect the strength of our legacy footprint, total deposits, excluding CDs, increased 4.9% organically, driven by 6.0% organic growth in interest bearing and non-interest bearing demand deposits.

Credit Quality
Our strong legacy of credit and risk management is reflected in the strength of our credit quality ratios as we continue to focus on prudent lending standards.  As of June 30, 2018, despite the addition of approximately $450 million of loans from the acquisition of FTSB, non-performing assets, past due loans, and criticized and classified loans decreased year-over-year on both an absolute dollar basis and as a percentage of the portfolio.  Non-performing assets as a percentage of total assets of 0.39%, non-performing loans as a percentage of total portfolio loans of 0.57%, and annualized net charge-offs as a percentage of average portfolio loans of 0.03% have continued to show improvements and have declined to the lowest levels in at least five quarters.  Further reflecting the consistent high quality of the loan portfolio, the provision for credit losses decreased from $2.4 million in the second quarter of 2017 to $1.7 million in the current quarter.

Net Interest Margin and Income
The net interest margin for the second quarter of 2018 declined two basis points year-over-year to 3.43% which was primarily driven by higher funding costs, and asset mix changes, as total securities now represent 25.9% of total assets, compared to 23.1% last year.   Also contributing to the net interest margin decrease was a six basis point reduction related to the lower tax-equivalency of the state and local municipal tax-exempt securities resulting from the "Tax Cuts and Jobs Act".  The increase in the cost of interest bearing liabilities is primarily due to higher rates for interest bearing public funds, higher tier money market accounts, and Federal Home Loan Bank and other borrowings.  Accretion from prior acquisitions benefited the second quarter net interest margin by approximately 12 basis points, as compared to eight basis points in the prior year period.

Net interest income increased $10.2 million, or 14.2%, during the second quarter of 2018 as compared to the same quarter of 2017 due to a 12.4% increase in average total earning assets, primarily driven by the acquisition of FTSB and related purchase accounting income.  For the six months ended June 30, 2018, net interest income increased $12.7 million, or 8.9%, due to higher average total earning assets from a larger investment portfolio and the earning assets acquired from FTSB.

Non-Interest Income
For the second quarter of 2018, non-interest income of $23.4 million increased $1.3 million, or 5.8%, from the second quarter of 2017, driven by higher electronic banking fees and mortgage banking income.  The $0.7 million increase in electronic banking fees was driven by higher transaction volumes and an ATM fee increase.  Residential mortgage origination volumes increased 33% year-over-year during the second quarter, which drove the $0.7 million increase in mortgage banking income.

For the six months ended June 30, 2018, non-interest income increased $2.5 million, or 5.5%.  The primary drivers of this increase were higher bank-owned life insurance due to higher death benefits received during the first quarter of 2018, and higher electronic banking fees, as discussed above.

Non-Interest Expense
Total operating expenses continued to be well-controlled during the second quarter of 2018.  Excluding merger-related expenses, non-interest expense increased $2.2 million, or 4.0%, compared to the prior year period.  This year-over-year increase is due to higher salaries and wages, which increased $3.3 million primarily due to the higher staffing levels from the acquisition of FTSB.  This increase was more than offset by strong discretionary expense management across most other expense categories.

Excluding merger-related expenses in both years, non-interest expense during the first half of 2018 increased $2.7 million, or 2.4%, compared to the prior year period, reflecting the acquisition of FTSB, partially offset by strong expense management.

Provision for Income Taxes
The effective income tax rate and associated provision for income taxes for the second quarter of 2018 are reflective of the recently enacted "Tax Cuts and Jobs Act", which lowered the statutory Federal income tax rate for corporations to 21%.  During the second quarter, the effective tax rate was 18.1% as compared to 26.8% last year, while the provision for income taxes decreased $2.3 million to $7.3 million, despite higher year-over-year pre-tax income.

Capital
WesBanco continues to maintain strong regulatory capital ratios as both consolidated and bank-level regulatory capital ratios are well above the applicable "well-capitalized" standards promulgated by bank regulators and the BASEL III capital standards.  At June 30, 2018, Tier I leverage was 10.21%, Tier I Risk-Based capital was 14.26%, Total Risk-Based capital was 15.26%, and the Common Equity Tier 1 capital ratio ("CET 1") was 12.38%.  Record earnings achieved during 2017, strong regulatory capital and liquidity positions, and solid execution on well-defined long-term operational and growth strategies enabled WesBanco to increase the quarterly cash dividend by 11.5% to $0.29 per share during February of this year.  This is the eleventh increase over the last eight years, representing a cumulative increase of 107%.

Conference Call and Webcast
WesBanco will host a conference call to discuss the Company's financial results for the second quarter of 2018 at 9:00 a.m. ET on Tuesday, July 24, 2018.  Interested parties can access the live webcast of the conference call through the Investor Relations section of the Company's website, www.wesbanco.com.  Participants can also listen to the conference call by dialing 888-347-6607, 855-669-9657 for Canadian callers, or 412-902-4290 for international callers, and asking to be joined into the WesBanco call.  Please log in or dial in at least 10 minutes prior to the start time to ensure a connection.

A replay of the conference call will be available by dialing 877-344-7529, 855-669-9658 for Canadian callers, or 412-317-0088 for international callers, and providing the access code of 10115493.  The replay will begin at approximately 11:00 a.m. ET on July 24, and end at 12 a.m. ET on August 7, 2018.  An archive of the webcast will be available for one year on the Investor Relations section of the Company's website (www.wesbanco.com).

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, 2017 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, 2018, 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, FTSB and FFKT may not be integrated successfully or such integration may take longer to accomplish than excepted; the expected cost savings and any revenue synergies from the merger of WesBanco, FTSB and FFKT may not be fully realized within the expected timeframes; disruption from the merger of WesBanco, FTSB and FFKT 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.

About WesBanco, Inc.
Founded in 1870, WesBanco, Inc. (www.wesbanco.com) is a multi-state, bank holding company with total assets of approximately $10.9 billion (as of June 30, 2018).  WesBanco is a diversified and well-balanced financial services institution, with a community bank at its core, built upon a strong legacy of credit and risk management.  WesBanco has meaningful market share across its key geographies maintained by its commitment to dedicated customer service and solid fee-based businesses. It also provides wealth management services through a century-old trust and wealth management business, with approximately $4.0 billion of assets under management (as of June 30, 2018), and serves as registered investment advisor to a proprietary mutual fund family, the WesMark Funds.  WesBanco's banking subsidiary, WesBanco Bank, Inc., operates 177 financial centers in the states of Indiana, Kentucky, Ohio, Pennsylvania, and West Virginia.  In addition, WesBanco operates an insurance agency, WesBanco Insurance Services, Inc., and a full service broker/dealer, WesBanco Securities, Inc.

 

WESBANCO, INC.












Consolidated Selected Financial Highlights











Page 4

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

























For the Three Months Ended


For the Six Months Ended

STATEMENT OF INCOME

June 30,


June 30,

Interest and dividend income

2018


2017


% Change


2018


2017


% Change

Loans, including fees

$             78,538


$               67,360


16.6


$          147,671


$             132,258


11.7

Interest and dividends on securities:












Taxable 

14,194


9,375


51.4


25,738


18,970


35.7

Tax-exempt

5,055


4,864


3.9


9,890


9,756


1.4

Total interest and dividends on securities

19,249


14,239


35.2


35,628


28,726


24.0

Other interest income 

1,101


561


96.3


1,904


1,100


73.1

Total interest and dividend income

98,888


82,160


20.4


185,203


162,084


14.3

Interest expense












Interest bearing demand deposits

3,150


1,506


109.2


5,673


2,599


118.3

Money market deposits

1,093


644


69.7


1,972


1,218


61.9

Savings deposits

227


185


22.7


416


367


13.4

Certificates of deposit

2,977


2,491


19.5


5,513


4,902


12.5

Total interest expense on deposits

7,447


4,826


54.3


13,574


9,086


49.4

Federal Home Loan Bank borrowings

5,953


3,145


89.3


10,451


5,980


74.8

Other short-term borrowings

973


262


271.4


1,532


560


173.6

Subordinated debt and junior subordinated debt 

2,168


1,788


21.3


4,110


3,600


14.2

Total interest expense

16,541


10,021


65.1


29,667


19,226


54.3

Net interest income 

82,347


72,139


14.2


155,536


142,858


8.9

Provision for credit losses

1,708


2,383


(28.3)


3,876


5,094


(23.9)

Net interest income after provision for credit losses

80,639


69,756


15.6


151,660


137,764


10.1

Non-interest income












Trust fees

5,752


5,572


3.2


12,255


11,716


4.6

Service charges on deposits

5,146


5,081


1.3


9,969


9,933


0.4

Electronic banking fees

5,728


4,984


14.9


10,558


9,512


11.0

Net securities brokerage revenue

1,809


1,680


7.7


3,479


3,442


1.1

Bank-owned life insurance

1,128


1,367


(17.5)


3,884


2,508


54.9

Mortgage banking income

1,670


968


72.5


2,776


2,408


15.3

Net securities gains

358


494


(27.5)


319


506


(37.0)

Net gains on other real estate owned and other assets

229


342


(33.0)


491


307


59.9

Other income

1,588


1,634


(2.8)


3,760


4,674


(19.6)

Total non-interest income

23,408


22,122


5.8


47,491


45,006


5.5

Non-interest expense












Salaries and wages

26,872


23,616


13.8


51,878


46,618


11.3

Employee benefits

7,965


7,731


3.0


14,877


15,941


(6.7)

Net occupancy

4,103


4,510


(9.0)


8,759


8,837


(0.9)

Equipment 

4,095


4,097


(0.0)


8,044


8,139


(1.2)

Marketing

1,405


2,060


(31.8)


2,521


2,884


(12.6)

FDIC insurance 

868


906


(4.2)


1,526


1,733


(11.9)

Amortization of intangible assets

1,312


1,240


5.8


2,397


2,513


(4.6)

Restructuring and merger-related expense

5,412


-


100.0


5,657


491


1,052.1

Other operating expenses  

11,511


11,724


(1.8)


22,455


23,112


(2.8)

Total non-interest expense

63,543


55,884


13.7


118,114


110,268


7.1

Income before provision for income taxes

40,504


35,994


12.5


81,037


72,502


11.8

Provision for income taxes 

7,335


9,653


(24.0)


14,339


20,274


(29.3)

Net Income

$             33,169


$               26,341


25.9


$             66,698


$               52,228


27.7













Taxable equivalent net interest income

$            83,691


$            74,758


11.9


$          158,165


$          148,111


6.8













Per common share data












Net income per common share - basic

$                 0.71


$                   0.60


18.3


$                 1.47


$                   1.19


23.5

Net income per common share - diluted

0.71


0.60


18.3


1.47


1.19


23.5

Net income per common share - diluted, excluding certain items (1)(2)

0.80


0.60


33.3


1.57


1.19


31.9

Dividends declared

0.29


0.26


11.5


0.58


0.52


11.5

Book value (period end)

32.68


31.29


4.4


32.68


31.29


4.4

Tangible book value (period end) (1)

18.59


17.99


3.3


18.59


17.99


3.3

Average common shares outstanding - basic

46,498,305


43,995,749


5.7


45,281,264


43,971,789


3.0

Average common shares outstanding - diluted

46,639,780


44,061,421


5.9


45,417,010


44,046,812


3.1

Period end common shares outstanding

46,643,250


44,031,335


5.9


46,643,250


44,031,335


5.9


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

(2) Certain items excluded from the calculation consist of after-tax merger-related expenses and the net deferred tax asset revaluation.

 

 

WESBANCO, INC.

Consolidated Selected Financial Highlights














Page 5

(unaudited, dollars in thousands)


Selected ratios



For the Six Months Ended






June 30,






2018


2017


% Change






















Return on average assets


1.29

%

1.07

%

20.56

%







Return on average assets, excluding














after-tax merger-related expenses and














net deferred tax asset revaluation (1)


1.37


1.08


26.85








Return on average equity


9.22


7.70


19.74








Return on average equity, excluding














after-tax merger-related expenses and














net deferred tax asset revaluation (1)


9.83


7.75


26.84








Return on average tangible equity (1)


16.46


13.88


18.59








Return on average tangible equity, excluding 














after-tax merger-related expenses and














net deferred tax asset revaluation (1)


17.53


13.97


25.48








Yield on earning assets (2) 


4.05


3.88


4.38








Cost of interest bearing liabilities


0.86


0.59


45.76








Net interest spread (2)


3.19


3.29


(3.04)








Net interest margin (2)


3.41


3.43


(0.58)








Efficiency (1) (2)


54.68


56.84


(3.80)








Average loans to average deposits


88.68


89.36


(0.76)








Annualized net loan charge-offs/average loans


0.05


0.12


(58.33)








Effective income tax rate (3)


17.69


27.96


(36.73)


































































For the Quarter Ended






June 30,


Mar. 31,


Dec. 31,


Sept. 30,


June 30,






2018


2018


2017


2017


2017


















Return on average assets


1.22

%

1.36

%

0.64

%

1.06

%

1.07

%



Return on average assets, excluding














after-tax merger-related expenses and














net deferred tax asset revaluation (1)


1.38


1.37


1.16


1.06


1.07




Return on average equity


8.77


9.70


4.48


7.50


7.67




Return on average equity, excluding














after-tax merger-related expenses and














net deferred tax asset revaluation (1)


9.90


9.76


8.17


7.50


7.67




Return on average tangible equity (1)


15.87


17.10


8.05


13.31


13.74




Return on average tangible equity, excluding 














after-tax merger-related expenses and














net deferred tax asset revaluation (1)


17.85


17.20


14.36


13.31


13.74




Yield on earning assets (2) 


4.11


3.98


3.95


3.99


3.91




Cost of interest bearing liabilities


0.91


0.80


0.71


0.67


0.61




Net interest spread (2)


3.20


3.18


3.24


3.32


3.30




Net interest margin (2)


3.43


3.38


3.43


3.48


3.45




Efficiency (1) (2) 


54.28


55.12


55.08


57.03


57.68




Average loans to average deposits


88.15


89.26


90.26


90.43


89.51




Annualized net loan charge-offs/average loans


0.03


0.07


0.16


0.12


0.09




Effective income tax rate (3)


18.11


17.28


59.14


28.54


26.82




Trust assets, market value at period end


$     4,044,207


$        4,027,358


$        3,943,519


$        3,908,705


$        3,810,038





(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.

(3)

The three months ended December 31, 2017 include a $12.8 million tax expense as a result of the net deferred tax asset revaluation.

 

 

WESBANCO, INC.

Consolidated Selected Financial Highlights








Page 6

(unaudited, dollars in thousands, except shares)








% Change

Balance sheets


June 30,



December 31,

December 31, 2017

Assets


2018


2017


% Change

2017

to June 30, 2018

Cash and due from banks


$           101,905


$        104,189


(2.2)

$                97,746

4.3

Due from banks - interest bearing


53,654


6,506


724.7

19,826

170.6

Securities:









Equity securities, at fair value


13,494


7,880


71.2

13,457

0.3

Available-for-sale debt securities, at fair value


1,796,571


1,239,420


45.0

1,261,865

42.4

Held-to-maturity debt securities (fair values of $1,016,111; $1,049,374 









     and $1,023,784, respectively)


1,019,746


1,030,394


(1.0)

1,009,500

1.0

Total securities


2,829,811


2,277,694


24.2

2,284,822

23.9

Loans held for sale


12,053


21,677


(44.4)

20,320

(40.7)

Portfolio loans:









Commercial real estate


3,189,335


3,013,727


5.8

2,994,448

6.5

Commercial and industrial


1,294,488


1,136,195


13.9

1,125,327

15.0

Residential real estate 


1,450,829


1,363,579


6.4

1,353,301

7.2

Home equity


535,653


516,612


3.7

529,196

1.2

Consumer 


322,594


360,304


(10.5)

339,169

(4.9)

Total portfolio loans, net of unearned income


6,792,899


6,390,417


6.3

6,341,441

7.1

Allowance for loan losses


(47,638)


(44,909)


(6.1)

(45,284)

(5.2)

Net portfolio loans


6,745,261


6,345,508


6.3

6,296,157

7.1

Premises and equipment, net


131,502


134,903


(2.5)

130,722

0.6

Accrued interest receivable


33,868


28,501


18.8

29,728

13.9

Goodwill and other intangible assets, net


661,616


591,252


11.9

589,264

12.3

Bank-owned life insurance


191,701


190,304


0.7

192,589

(0.5)

Other assets


185,213


173,476


6.8

155,004

19.5

Total Assets


$    10,946,584


$   9,874,010


10.9

$         9,816,178

11.5










Liabilities









Deposits:









Non-interest bearing demand


$        2,046,537


$      1,801,423


13.6

$           1,846,748

10.8

Interest bearing demand


1,809,140


1,625,011


11.3

1,625,015

11.3

Money market


1,051,043


1,005,184


4.6

1,024,856

2.6

Savings deposits


1,385,356


1,255,083


10.4

1,269,912

9.1

Certificates of deposit


1,376,528


1,385,772


(0.7)

1,277,057

7.8

Total deposits


7,668,604


7,072,473


8.4

7,043,588

8.9

Federal Home Loan Bank borrowings


1,248,406


1,021,592


22.2

948,203

31.7

Other short-term borrowings


258,067


167,671


53.9

184,805

39.6

Subordinated debt and junior subordinated debt 


165,420


164,228


0.7

164,327

0.7

Total borrowings


1,671,893


1,353,491


23.5

1,297,335

28.9

Accrued interest payable


4,417


2,407


83.5

3,178

39.0

Other liabilities


77,564


68,102


13.9

76,756

1.1

Total Liabilities


9,422,478


8,496,473


10.9

8,420,857

11.9










Shareholders' Equity









Preferred stock, no par value; 1,000,000 shares authorized; 









none outstanding


-


-


-

-

-

Common stock, $2.0833 par value; 100,000,000 shares authorized in









2018 and 2017, respectively; 46,655,012,  44,041,572 and 44,043,244 shares









issued, respectively; 46,643,250, 44,031,335 and 44,043,244 shares


97,197


91,753


5.9

91,756

5.9

outstanding, respectively









Capital surplus


789,038


682,443


15.6

684,730

15.2

Retained earnings


692,820


626,421


10.6

651,357

6.4

Treasury stock (11,762,  10,237 and 0 shares - at cost, respectively)


(555)


(385)


(44.2)

-

100.0

Accumulated other comprehensive loss


(53,352)


(22,118)


(141.2)

(31,495)

(69.4)

Deferred benefits for directors


(1,042)


(577)


(80.6)

(1,027)

(1.5)

Total Shareholders' Equity


1,524,106


1,377,537


10.6

1,395,321

9.2

Total Liabilities and Shareholders' Equity


$    10,946,584


$   9,874,010


10.9

$         9,816,178

11.5

 

 

WESBANCO, INC.






Consolidated Selected Financial Highlights





Page 7

(unaudited, dollars in thousands, except shares)






Balance sheets


June 30,


March 31,


Assets


2018


2018

% Change

Cash and due from banks


$         101,905


$          91,361

11.5

Due from banks - interest bearing


53,654


9,484

465.8

Securities:






Trading securities, at fair value


13,494


13,986

(3.5)

Available-for-sale, at fair value


1,796,571


1,728,377

3.9

Held-to-maturity (fair values of $1,016,111 and 1,005,502, respectively)


1,019,746


1,006,042

1.4

Total securities


2,829,811


2,748,405

3.0

Loans held for sale


12,053


12,962

(7.0)

Portfolio Loans:






Commercial real estate


3,189,335


3,015,226

5.8

Commercial and industrial


1,294,488


1,118,333

15.8

Residential real estate 


1,450,829


1,345,993

7.8

Home equity


535,653


523,425

2.3

Consumer 


322,594


319,561

0.9

Total portfolio loans, net of unearned income


6,792,899


6,322,538

7.4

Allowance for loan losses


(47,638)


(46,334)

(2.8)

Net portfolio loans


6,745,261


6,276,204

7.5

Premises and equipment, net


131,502


128,583

2.3

Accrued interest receivable


33,868


31,963

6.0

Goodwill and other intangible assets, net


661,616


588,339

12.5

Bank-owned life insurance


191,701


191,839

(0.1)

Other assets


185,213


166,279

11.4

Total Assets


$  10,946,584


$ 10,245,419

6.8







Liabilities






Deposits:






Non-interest bearing demand


$      2,046,537


$      1,950,619

4.9

Interest bearing demand


1,809,140


1,768,977

2.3

Money market


1,051,043


984,429

6.8

Savings deposits


1,385,356


1,314,632

5.4

Certificates of deposit


1,376,528


1,207,669

14.0

Total deposits


7,668,604


7,226,326

6.1

Federal Home Loan Bank borrowings


1,248,406


1,166,939

7.0

Other short-term borrowings


258,067


207,653

24.3

Subordinated debt and junior subordinated debt 


165,420


164,379

0.6

Total borrowings


1,671,893


1,538,971

8.6

Accrued interest payable


4,417


4,033

9.5

Other liabilities


77,564


73,063

6.2

Total liabilities


9,422,478


8,842,393

6.6







Shareholders' Equity






Preferred stock, no par value; 1,000,000 shares authorized; 






none outstanding


-


-

-

Common stock, $2.0833 par value; 100,000,000 shares authorized;






46,655,012 and 44,060,957 shares issued, respectively;






46,643,250 and 44,060,957 shares
outstanding, respectively


97,197


91,793

5.9

Capital surplus


789,038


686,169

15.0

Retained earnings


692,820


673,174

2.9

Treasury stock (11,762 and 0 shares - at cost)


(555)


-

(100.0)

Accumulated other comprehensive income (loss)


(53,352)


(47,076)

(13.3)

Deferred benefits for directors


(1,042)


(1,034)

0.8

Total Shareholders' Equity


1,524,106


1,403,026

8.6

Total Liabilities and Shareholders' Equity


$  10,946,584


$ 10,245,419

6.8

 

 

WESBANCO, INC.

Consolidated Selected Financial Highlights















Page 8

(unaudited, dollars in thousands)

Average balance sheet and

net interest margin analysis


For the Three Months Ended June 30,




For the Six Months Ended June 30,





2018

2017



2018

2017




Average 

Average



Average 

Average



Average 

Average



Average 

Average


Assets


Balance

Rate



Balance

Rate



Balance

Rate



Balance

Rate


Due from banks - interest bearing


$            53,896

2.09

%


$            12,875

0.75

%


$                 31,436

2.08

%


$           13,398

0.63

%

Loans, net of unearned income (1)


6,785,550

4.64



6,365,965

4.24



6,563,782

4.54



6,322,582

4.22


Securities: (2)

















    Taxable


2,128,446

2.67



1,550,114

2.42



1,959,828

2.63



1,576,578

2.41


    Tax-exempt (3)


750,138

3.41



720,561

4.15



733,970

3.41



723,593

4.15


        Total securities


2,878,584

3.05



2,270,675

2.97



2,693,798

2.84



2,300,171

2.95


Other earning assets 


57,259

5.72



46,525

4.62



53,843

5.86



46,774

4.52


         Total earning assets (3)


9,775,289

4.11

%


8,696,040

3.91

%


9,342,859

4.05

%


8,682,925

3.88

%

Other assets


1,143,442




1,132,435




1,115,743




1,122,181



Total Assets


$   10,918,731




$     9,828,475




$        10,458,602




$    9,805,106




















Liabilities and Shareholders' Equity

















Interest bearing demand deposits


$        1,849,035

0.68

%


$        1,634,305

0.37

%


$            1,773,813

0.64

%


$      1,585,564

0.33

%

Money market accounts 


1,035,567

0.42



1,014,682

0.25



1,020,486

0.39



1,026,567

0.24


Savings deposits


1,367,193

0.07



1,253,444

0.06



1,327,875

0.06



1,240,390

0.06


Certificates of deposit


1,415,259

0.84



1,403,818

0.71



1,328,724

0.84



1,428,892

0.69


    Total interest bearing deposits


5,667,054

0.53



5,306,249

0.36



5,450,898

0.50



5,281,413

0.35


Federal Home Loan Bank borrowings


1,180,939

2.02



947,346

1.33



1,109,586

1.90



948,168

1.27


Other borrowings


272,208

1.43



153,565

0.68



238,707

1.29



175,341

0.64


Subordinated debt and junior subordinated debt 


172,972

5.03



164,184

4.37



168,677

4.91



164,050

4.43


      Total interest bearing liabilities 


7,293,173

0.91

%


6,571,344

0.61

%


6,967,868

0.86

%


6,568,972

0.59

%

Non-interest bearing demand deposits


2,030,649




1,806,144




1,950,581




1,793,897



Other liabilities


77,873




73,721




80,681




74,748



Shareholders' equity


1,517,036




1,377,266




1,459,472




1,367,489



Total Liabilities and Shareholders' Equity


$   10,918,731




$     9,828,475




$        10,458,602




$    9,805,106



Taxable equivalent net interest spread



3.20

%



3.30

%



3.19

%



3.29

%

Taxable equivalent net interest margin 



3.43

%



3.45

%



3.41

%



3.43

%


(1) Gross of allowance for loan losses and net of unearned income.  Includes non-accrual and loans held for sale. Loan fees included in interest income on loans are $0.7 million and $1.0 million for the three months ended June 30, 2018 and 2017, respectively and $1.3 million and $1.6 million for the six months ended June 30, 2018 and 2017, respectively. Additionally, loan accretion included in interest income on loans acquired from prior acquisitions was $1.4 million and $1.3 million for the three months ended June 30, 2018 and 2017, respectively, and $2.6 million and $2.5 million  for the six months ended June 30, 2018 and 2017, respectively. Accretion on interest bearing liabilities acquired from the prior acquisitions was $0.7 million and $0.4 million for the three months ended June 30, 2018 and 2017, respectively, and. $1.0 million and $0.8 million for the six months ended June 30, 2018 and 2017, respectively.

(2) Average yields on available-for-sale securities are calculated based on amortized cost.

(3) Taxable equivalent basis is calculated on tax-exempt securities using a rate of 21% for 2018 and 35% for each prior period presented.

 

 

WESBANCO, INC.

Consolidated Selected Financial Highlights









 Page 9 

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


Quarter Ended

Statement of Income

June 30,


Mar. 31,


Dec. 31,


Sept.  30,


June 30,

Interest income

2018


2018


2017


2017


2017

Loans, including fees

$                        78,538


$                69,237


$              69,408


$                70,342


$              67,360

Interest and dividends on securities:










Taxable

14,194


11,543


9,948


9,711


9,375

Tax-exempt

5,055


4,834


4,872


4,862


4,864

Total interest and dividends on securities

19,249


16,377


14,820


14,573


14,239

Other interest income 

1,101


803


623


574


561

Total interest and dividend income

98,888


86,417


84,851


85,489


82,160

Interest expense










Interest bearing demand deposits

3,150


2,524


2,039


1,814


1,506

Money market deposits

1,093


878


805


751


644

Savings deposits

227


189


189


189


185

Certificates of deposit

2,977


2,536


2,597


2,610


2,491

Total interest expense on deposits

7,447


6,127


5,630


5,364


4,826

Federal Home Loan Bank borrowings

5,953


4,498


3,682


3,628


3,145

Other short-term borrowings

973


558


489


394


262

Subordinated debt and junior subordinated debt

2,168


1,942


1,868


1,849


1,788

Total interest expense

16,541


13,125


11,669


11,235


10,021

Net interest income 

82,347


73,292


73,182


74,254


72,139

Provision for credit losses

1,708


2,168


2,376


2,516


2,383

Net interest income after provision for credit losses

80,639


71,124


70,806


71,738


69,756

Non-interest income










Trust fees

5,752


6,503


5,667


5,358


5,572

Service charges on deposits

5,146


4,822


5,278


5,320


5,081

Electronic banking fees

5,728


4,829


4,788


4,883


4,984

Net securities brokerage revenue

1,809


1,670


1,508


1,721


1,680

Bank-owned life insurance

1,128


2,756


1,123


1,164


1,367

Mortgage banking income

1,670


1,004


1,542


1,103


968

Net securities gains/(losses)

358


(39)


56


6


494

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

229


262


649


(298)


342

Other income

1,588


2,173


2,323


1,642


1,634

Total non-interest income

23,408


23,980


22,934


20,899


22,122

Non-interest expense










Salaries and wages

26,872


25,006


25,786


24,957


23,616

Employee benefits

7,965


6,912


6,263


7,728


7,731

Net occupancy

4,103


4,656


4,132


4,132


4,510

Equipment 

4,095


3,949


3,983


3,905


4,097

Marketing

1,405


1,116


1,238


1,599


2,060

FDIC insurance 

868


658


827


945


906

Amortization of intangible assets

1,312


1,086


1,204


1,223


1,240

Restructuring and merger-related expense

5,412


245


454


-


-

Other operating expenses  

11,511


10,943


10,950


11,265


11,724

Total non-interest expense

63,543


54,571


54,837


55,754


55,884

Income before provision for income taxes

40,504


40,533


38,903


36,883


35,994

Provision for income taxes 

7,335


7,004


23,006


10,527


9,653

Net Income

$                        33,169


$                33,529


$              15,897


$                26,356


$              26,341











Taxable equivalent net interest income

$                       83,691


$               74,577


$             75,805


$               76,872


$             74,758











Per common share data










Net income per common share - basic

$                            0.71


$                    0.76


$                  0.36


$                    0.60


$                  0.60

Net income per common share - diluted

$                            0.71


$                    0.76


$                  0.36


$                    0.60


$                  0.60

Net income per common share - diluted, excluding certain items (1)(2)

$                            0.80


$                    0.76


$                  0.66


$                    0.60


$                  0.60

Dividends declared

$                            0.29


$                    0.29


$                  0.26


$                    0.26


$                  0.26

Book value (period end)

$                          32.68


$                  31.84


$                31.68


$                  31.67


$                31.29

Tangible book value (period end) (1)

$                          18.59


$                  18.56


$                18.42


$                  18.40


$                17.99

Average common shares outstanding - basic

46,498,305


44,050,701


44,036,416


44,031,813


43,995,749

Average common shares outstanding - diluted

46,639,780


44,168,242


44,109,767


44,086,881


44,061,421

Period end common shares outstanding

46,643,250


44,060,957


44,043,244


44,033,585


44,031,335

Full time equivalent employees

2,040


1,939


1,940


1,944


1,959


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

(2) Certain items excluded from the calculation consist of after-tax merger-related expenses and the net deferred tax asset revaluation.

 

 

WESBANCO, INC.

Consolidated Selected Financial Highlights










 Page 10 

(unaudited, dollars in thousands)



Quarter Ended




June 30,


Mar. 31,


Dec. 31,


Sept. 30,


June 30,


Asset quality data


2018


2018


2017


2017


2017


Non-performing assets:












Troubled debt restructurings - accruing


$           6,460


$           6,858


$           6,571


$           6,638


$           6,841


Non-accrual loans:












Troubled debt restructurings


2,514


2,397


2,865


2,982


3,158


Other non-accrual loans


29,467


29,989


33,960


32,476


33,077


Total non-accrual loans


31,981


32,386


36,825


35,458


36,235


Total non-performing loans 


38,441


39,244


43,396


42,096


43,076


Other real estate and repossessed assets


4,384


4,067


5,297


5,782


6,723


Total non-performing assets


$         42,825


$         43,311


$         48,693


$         47,878


$         49,799














Past due loans (1):












Loans past due 30-89 days


$         13,357


$         14,536


$         11,172


$         17,292


$         16,605


Loans past due 90 days or more


1,881


1,579


2,726


4,856


4,210


Total past due loans


$         15,238


$         16,115


$         13,898


$         22,148


$         20,815














Criticized and classified loans (2):












Criticized loans


$         34,045


$         33,785


$         36,092


$         34,784


$         39,234


Classified loans


38,982


34,566


37,858


44,303


40,468


Total criticized and classified loans


$         73,027


$         68,351


$         73,950


$         79,087


$         79,702














Loans past due 30-89 days / total portfolio loans


0.20

%

0.23

%

0.18

%

0.27

%

0.26

%

Loans past due 90 days or more / total portfolio loans


0.03


0.02


0.04


0.08


0.07


Non-performing loans / total portfolio loans


0.57


0.62


0.68


0.66


0.67


Non-performing assets/total portfolio loans, other












real estate and repossessed assets


0.63


0.68


0.77


0.75


0.78


Non-performing assets / total assets


0.39


0.42


0.50


0.48


0.50


Criticized and classified loans / total portfolio loans


1.08


1.08


1.17


1.24


1.25














Allowance for loan losses












Allowance for loan losses


$         47,638


$         46,334


$         45,284


$         45,487


$         44,909


Provision for credit losses


1,708


2,168


2,376


2,516


2,383


Net loan and deposit account overdraft charge-offs


425


1,063


2,652


1,888


1,486














Annualized net loan charge-offs /average loans


0.03

%

0.07

%

0.16

%

0.12

%

0.09

%

Allowance for loan losses / total portfolio loans


0.70

%

0.73

%

0.71

%

0.71

%

0.70

%

Allowance for loan losses / non-performing loans


1.24

x

1.18

x

1.04

x

1.08

x

1.04

x

Allowance for loan losses / non-performing loans and












loans past due 


0.89

x

0.84

x

0.79

x

0.71

x

0.70

x



























Quarter Ended




June 30,


Mar. 31,


Dec. 31,


Sept. 30,


June 30,




2018


2018


2017


2017


2017


Capital ratios












Tier I leverage capital


10.21

%

10.56

%

10.39

%

10.21

%

10.09

%

Tier I risk-based capital


14.26


14.31


14.12


13.62


13.36


Total risk-based capital


15.26


15.35


15.16


14.65


14.38


Common equity tier 1 capital ratio (CET 1)


12.38


12.33


12.14


11.70


11.44


Average shareholders' equity to average assets


13.89


14.02


14.19


14.08


14.01


Tangible equity to tangible assets (3)


8.43


8.46


8.79


8.68


8.53



(1) Excludes non-performing loans.

(2) Criticized and classified loans may include loans that are also reported as non-performing or past due.

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

 

 

NON-GAAP FINANCIAL MEASURES












Page 11

The following non-GAAP financial measures used by WesBanco provide information useful to investors in understanding WesBanco's operating performance and trends, and facilitate comparisons with the performance of WesBanco's
peers. The following tables summarize the non-GAAP financial measures derived from amounts reported in WesBanco's financial statements.


Three Months Ended


Year to Date 


June 30,


Mar. 31,


Dec. 31,


Sept. 30,


June 30,


June 30,

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

2018


2018


2017


2017


2017


2018

2017

Return on average assets, excluding after-tax merger-related expenses and net deferred tax asset revaluation:













Net income (annualized)

$             133,039


$         135,979


$           63,068


$         104,566


$         105,653


$         134,501

$      105,322

Plus: after-tax merger-related expenses (annualized)  (1)

17,150


784


1,170


-


-


9,012

643

Plus: net deferred tax asset revaluation (annualized) 

-


-


50,703


-


-


-

-

Net income excluding after-tax merger-related expenses and net deferred tax asset revaluation (annualized)

150,189


136,763


114,941


104,566


105,653


143,513

105,965














Average total assets

$        10,918,731


$      9,993,364


$      9,907,944


$      9,897,487


$      9,828,475


$    10,458,602

$   9,805,106














Return on average tangible assets, excluding after-tax merger-related expenses and net deferred tax asset revaluation

1.38%


1.37%


1.16%


1.06%


1.07%


1.37%

1.08%














Return on average equity, excluding after-tax merger-related expenses and net deferred tax asset revaluation:













Net income (annualized)

$             133,039


$         135,979


$           63,068


$         104,566


$         105,653


$         134,501

$      105,322

Plus: after-tax merger-related expenses (annualized)  (1)

17,150


784


1,170


-


-


9,012

643

Plus: net deferred tax asset revaluation (annualized) 

-


-


50,703


-


-


-

-

Net income excluding after-tax merger-related expenses and net deferred tax asset revaluation (annualized)

150,189


136,763


114,941


104,566


105,653


143,513

105,965














Average total shareholders' equity

1,517,036


1,401,271


1,406,263


1,393,965


1,377,266


1,459,472

1,367,489














Return on average tangible equity, excluding after-tax merger-related expenses and net deferred tax asset revaluation

9.90%


9.76%


8.17%


7.50%


7.67%


9.83%

7.75%














Return on average tangible equity:













Net income (annualized)

$             133,039


$         135,979


$           63,068


$         104,566


$         105,653


$         134,501

$      105,322

Plus: amortization of intangibles (annualized) (1)

4,156


3,479


3,104


3,154


3,233


3,819

3,294

Net income before amortization of intangibles (annualized)

137,195


139,458


66,172


107,720


108,886


138,320

108,616














Average total shareholders' equity

1,517,036


1,401,271


1,406,263


1,393,965


1,377,266


1,459,472

1,367,489

Less: average goodwill and other intangibles, net of def. tax liability

(652,318)


(585,711)


(584,227)


(584,903)


(585,057)


(619,198)

(585,210)

Average tangible equity

$             864,718


$         815,560


$         822,036


$         809,062


$         792,209


$         840,274

$      782,279














Return on average tangible equity

15.87%


17.10%


8.05%


13.31%


13.74%


16.46%

13.88%














Return on average tangible equity, excluding after-tax merger-related expenses and net deferred tax asset revaluation:













Net income (annualized)

$             133,039


$         135,979


$           63,068


$         104,566


$         105,653


$         134,501

$      105,322

Plus: after-tax merger-related expenses (annualized)  (1)

17,150


784


1,170


-


-


9,012

643

Plus: net deferred tax asset revaluation (annualized) 

-


-


50,703


-


-


-

-

Plus: amortization of intangibles (annualized) (1)

4,156


3,479


3,104


3,154


3,233


3,819

3,294

Net income before amortization of intangibles and excluding 













     after-tax merger-related expenses and net deferred tax asset revaluation (annualized)

154,345


140,242


118,045


107,720


108,886


147,332

109,259














Average total shareholders' equity

1,517,036


1,401,271


1,406,263


1,393,965


1,377,266


1,459,472

1,367,489

Less: average goodwill and other intangibles, net of def. tax liability

(652,318)


(585,711)


(584,227)


(584,903)


(585,057)


(619,198)

(585,210)

Average tangible equity

$             864,718


$         815,560


$         822,036


$         809,062


$         792,209


$         840,274

$      782,279














Return on average tangible equity, excluding after-tax merger-related expenses and net deferred tax asset revaluation

17.85%


17.20%


14.36%


13.31%


13.74%


17.53%

13.97%














Efficiency ratio:













Non-interest expense

$               63,543


$           54,571


$           54,837


$           55,754


$           55,884


$         118,114

$      110,268

Less: restructuring and merger-related expense

(5,412)


(245)


(454)


-


-


(5,657)

(491)

Non-interest expense excluding restructuring and merger-related expense

58,131


54,326


54,383


55,754


55,884


112,457

109,777














Net interest income on a fully taxable equivalent basis

83,691


74,577


75,805


76,872


74,758


158,165

148,111

Non-interest income

23,408


23,980


22,934


20,899


22,122


47,491

45,006

Net interest income on a fully taxable equivalent basis plus non-interest income

$             107,099


$           98,557


$           98,739


$           97,771


$           96,880


$         205,656

$      193,117

Efficiency Ratio

54.28%


55.12%


55.08%


57.03%


57.68%


54.68%

56.84%














Net income, excluding net deferred tax asset revaluation and after-tax merger-related expenses:













Net income

$               33,169


$           33,529


$           15,897


$           26,356


$           26,341


$           66,698

$        52,228

Add: Net deferred tax asset revaluation 

-


-


12,780


-


-


-

-

Add: After-tax merger-related expenses (1)

4,276


193


295


-


-


4,469

319

Net income, excluding net deferred tax asset revaluation and  after-tax merger-related expenses

$               37,445


$           33,722


$           28,972


$           26,356


$           26,341


$           71,167

$        52,547



























Net Income, excluding net deferred tax asset revaluation and after-tax merger-related expenses per diluted share:













Net income per diluted share

$                   0.71


$               0.76


$               0.36


$               0.60


$               0.60


$               1.47

$            1.19

Add: Net deferred tax asset revaluation per diluted share

-


-


0.29


-


-


-

-

Add: After-tax merger-related expenses per diluted share (1)

0.09


-


0.01


-


-


0.10

-

Net income, excluding net deferred tax asset revaluation and  after-tax merger-related expenses per diluted share

$                   0.80


$               0.76


$               0.66


$               0.60


$               0.60


$               1.57

$            1.19




























Period End





June 30,


Mar. 31,


Dec. 31,


Sept. 30,


June 30,





2018


2018


2017


2017


2017




Tangible book value per share:













Total shareholders' equity

$          1,524,106


$      1,403,026


$      1,395,321


$      1,394,558


$      1,377,537




Less:  goodwill and other intangible assets, net of def. tax liability

(657,111)


(585,316)


(583,903)


(584,543)


(585,195)




Tangible equity

866,995


817,710


811,418


810,015


792,342

















Common shares outstanding

46,643,250


44,060,957


44,043,244


44,033,585


44,031,335

















Tangible book value per share

$                 18.59


$             18.56


$             18.42


$             18.40


$             17.99

















Tangible equity to tangible assets:













Total shareholders' equity

$          1,524,106


$      1,403,026


$      1,395,321


$      1,394,558


$      1,377,537




Less:  goodwill and other intangible assets, net of def. tax liability

(657,111)


(585,316)


(583,903)


(584,543)


(585,195)




Tangible equity

866,995


817,710


811,418


810,015


792,342

















Total assets

10,946,584


10,245,419


9,816,178


9,918,277


9,874,010




Less:  goodwill and other intangible assets, net of def. tax liability

(657,111)


(585,316)


(583,903)


(584,543)


(585,195)




Tangible assets

$        10,289,473


$      9,660,103


$      9,232,275


$      9,333,734


$      9,288,815

















Tangible equity to tangible assets

8.43%


8.46%


8.79%


8.68%


8.53%






(1) Tax effected at 21% for the periods in 2018 and 35% for all prior periods.

 

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