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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(Mark One) FORM 10-K
/ X / ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 (FEE REQUIRED)
For the Fiscal Year Ended December 31, 1994
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
For the transition period from _______________ to _______________
Commission File Number 0-8467
WESBANCO, INC.
--------------
(Exact name of Registrant as specified in its charter)
WEST VIRGINIA 55-0571723
------------- ----------
(State or other jurisdication of (I.R.S. Employer Identification No.)
incorporation or organization)
1 Bank Plaza, Wheeling, WV 26003
-------------------------- -----
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 304-234-9000
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Title of each class Name of each Exchange on which registered
- ------------------------------ -------------------------------------------
Common Stock $2.0833 Par Value National Association of Securities Dealers,
Redeemable Preferred Stock, Inc.
Series A 8% Cumulative, None
$1.25 Par Value
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to
this Form 10-K. ____
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes / X / No / /
The aggregate market value of voting stock computed using the average of the
bid and ask prices held by non-affiliates of the Registrant on February 28,
1995 was approximately $188,545,487.
(APPLICABLE ONLY TO CORPORATE REGISTRANTS)
As of February 28, 1995, there were 8,509,960 shares of WesBanco, Inc. Common
Stock $2.0833 par value, outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of WesBanco, Inc.'s 1994 Annual Report to Shareholders - Parts II and
III
Portions of the Registrant's definitive proxy statement to be filed pursuant to
Regulation 14A not later than 120 days after the end of the fiscal year
(December 31, 1994) are incorporated by reference in Part III.
Page 1 of 98
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WESBANCO, INC.
TABLE OF CONTENTS
ITEM # ITEM PAGE(S)
- ------ ---- -------
Part I
------
1 Business 3-16
2 Properties 17
3 Legal proceedings 17
4 Submission of matters to a vote
of security holders N/A
Part II
-------
5 Market for the registrant's common equity
and related stockholder matters (A) 17
6 Selected financial data (A)
7 Management's discussion and analysis of
financial condition and results of
operations (A)
8 Financial statements and supplementary data (A)
9 Changes in and disagreements with accountants
on accounting and financial disclosure N/A
Part III
--------
10 Directors and Executive officers of the
registrant (B) 17-18
11 Executive compensation (B)
12 Security ownership of certain beneficial
owners and management (B)
13 Certain relationships and related transactions (A) (B)
Part IV
-------
14 Exhibits, financial statement schedules and
reports on Form 8-K 18-19
(A) Pages 41-58, 70 of WesBanco, Inc.'s 1994 Annual
Report to Stockholders are incorporated herein
by reference.
(B) Incorporated by reference to WesBanco, Inc.'s
Proxy Statement dated March 24, 1995, for Annual
Meeting of Stockholders to be held April 19, 1995.
This Form contains a total of 98 pages.
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3
PART I
Item 1. Business
- -----------------
General
- -------
As of December 31, 1994, the Corporation had eight banking
affiliates located in Wheeling, Charleston, Elizabeth, Sissonville,
Parkersburg, Kingwood, Fairmont and Bridgeport, West Virginia. The
Registrant has one banking affiliate in Barnesville, Ohio. WesBanco
Wheeling has ten offices, all in West Virginia, three located in
Wheeling, two located in Follansbee, three in New Martinsville, one in
Sistersville, and one in Wellsburg. WesBanco Elm Grove has two offices
located in the Elm Grove section of Wheeling. WesBanco Kingwood has two
full-service branch offices located in Masontown and Bruceton Mills.
WesBanco Barnesville has five offices, two located in Barnesville and one
each in Bethesda, Woodsfield and Beallsville, Ohio. WesBanco Fairmont
has four offices located in Fairmont and two offices located in
Morgantown. WesBanco Bridgeport has seven offices, four located in
Bridgeport, two in Shinnston and one in Nutter Fort, West Virginia.
There are approximately 775 full time equivalent employees employed by
all affiliates as of December 31, 1994.
WesBanco, Inc., through its subsidiaries, conducts a general
banking, commercial and trust business. Its full service banks offer a
wide range of services to commercial, consumer and government bodies,
including but not limited to, retail banking services, such as demand,
savings and time deposits; commercial, mortgage, and consumer installment
loans; credit card services through VISA and MasterCard; personal and
corporate trust services; discount brokerage services; and travel
services. Most affiliates are participating in local partnerships which
operate banking machines in those local regions primarily under the name
of MAC. The banking machines are linked to CIRRUS, a nationwide banking
network.
The Corporation has reported to its shareholders that it may engage
in other activities of a financial nature authorized by the Federal
Reserve Board through a subsidiary, or through acquisition of established
companies.
As of December 31, 1994, none of the affiliates were engaged in any
operation in foreign countries and none has had transactions with
customers in foreign countries.
Competition
- -----------
Each affiliate bank faces strong competition for local business in
their respective market areas. Competition exists for new deposits, in
the scope and types of services offered, and the interest rates paid on
time deposits and charged on loans, and in other aspects of banking. The
affiliate banks encounter substantial competition not only from other
commercial banks but also from other financial institutions. Savings
banks, savings and loan associations, brokerage business and credit
unions actively compete for deposits. Such institutions, as well as
consumer finance companies, insurance companies and other enterprises,
are important competitors for various types of lending business. In
addition, personal and corporate trust services and investment counseling
services are offered by insurance companies, investment counseling firms
and other business firms and individuals.
3
4
Item 1. Business (continued)
- -----------------------------
Supervision and Regulation
- --------------------------
As a registered bank holding company, WesBanco is subject to the
supervision of the Federal Reserve Board and is required to file with the
Federal Reserve Board reports and other information regarding its
business operations and the business operations of its subsidiaries.
WesBanco is also subject to examination by the Federal Reserve Board and
is required to obtain Federal Reserve Board approval prior to acquiring,
directly or indirectly, ownership or control of voting shares of any
bank, if, after such acquisition, it would own or control more than 5%
of the voting stock of such bank. In addition, pursuant to federal law
and regulations promulgated by the Federal Reserve Board, WesBanco may
only engage in, or own or control companies that engage in, activities
deemed by the Federal Reserve Board to be so closely related to banking
as to be a proper incident thereto. Prior to engaging in most new
business activities, WesBanco must obtain approval from the Federal
Reserve Board.
WesBanco's banking subsidiaries have deposits insured by the Bank
Insurance Fund ("BIF") of the Federal Deposit Insurance Corporation (the
"FDIC"), and are subject to supervision, examination, and regulation by
state banking authorities and either the FDIC or the Federal Reserve
Board. In addition to the impact of federal and state supervision and
regulation, the banking subsidiaries of WesBanco are affected
significantly by the actions of the Federal Reserve Board as it attempts
to control the money supply and credit availability in order to influence
the economy.
WesBanco's depository institution subsidiaries are subject to
affiliate transaction restrictions under federal law which limit the
transfer of funds by the subsidiary banks to their parent and any
nonbanking subsidiaries, whether in the form of loans, extensions of
credit, investments or asset purchases. Such transfers by any subsidiary
bank to its parent corporation or to any nonbanking subsidiary are
limited in amount to 10% of the institution's capital and surplus and,
with respect to such parent and all such nonbanking subsidiaries, to an
aggregage 20% of any such institution's capital and surplus.
Furthermore, such loans and extensions of credit are required to be
secured in specified amounts.
The Federal Reserve Board has a policy to the effect that a bank
holding company is expected to act as a source of financial and
managerial strength to each of its subsidiary banks and to commit
resources to support each such subsidiary bank. Under the source of
strength doctrine, the Federal Reserve Board may require a bank holding
company to make capital injections into a troubled subsidiary bank, and
may charge the bank holding company with engaging in unsafe and unsound
practices for failure to commit resources to such a subsidiary bank.
This capital injection may be required at times when WesBanco may not
have the resources to provide it. Any capital loans by a holding company
to any of the subsidiary banks are subordinate in right of payment to
deposits and to certain other indebtedness of such subsidiary bank.
Moreover, in the event of a bank holding company's bankruptcy, any
commitment by such holding company to a federal bank regulatory agency
to maintain the capital of a subsidiary bank will be assumed by the
bankruptcy trustee and entitled to a priority of payment.
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5
Item 1. Business (continued)
- -----------------------------
In 1989, the United States Congress passed comprehensive financial
institutions legislation known as the Financial Institution Reform,
Recovery, and Enforcement Act ("FIRREA"). FIRREA established a new
principle of liability on the part of depository institutions insured by
the FDIC for any losses incurred by, or reasonably expected to be
incurred by, the FDIC after August 9, 1989, in connection with (i) the
default of a commonly controlled FDIC-insured depository institution, or
(ii) any assistance provided by the FDIC to a commonly controlled FDIC-
insured depository institution in danger of default. "Default" is
defined generally as the appointment of a conservator or receiver and "in
danger of default" is defined generally as the existence of certain
conditions indicating that a "default" is likely to occur in the absence
of regulatory assistance. Accordingly, in the event that any insured
bank subsidiary of WesBanco causes a loss to the FDIC, other bank
subsidiaries of WesBanco could be required to compensate the FDIC by
reimbursing to it the amount of such loss.
Federal law permits the OCC to order the pro rata assessment of
shareholders of a national bank whose capital stock has become impaired,
by losses or otherwise to relieve a deficiency in such national bank's
capital stock. This statute also provides for the enforcement of any
such pro rata assessment of shareholders of such national bank to cover
such impairment of capital stock by sale, to the extent necessary, of the
capital stock of any assessed shareholder failing to pay the assessment.
Similarly, the laws of certain states provide for such assessment and
sale with respect to the subsidiary banks chartered by such states.
WesBanco, as the sole shareholder of its subsidiary banks, is subject to
such provisions.
Dividend Restrictions
- ---------------------
There are statutory limits on the amount of dividends WesBanco's
depository institution subsidiaries can pay to their parent corporation
without regulatory approval. Under applicable federal regulations,
appropriate bank regulatory agency approval is required if the total of
all dividends declared by a bank in any calendar year exceeds the
available retained earnings and exceeds the aggregate of the bank's net
profits (as defined by regulatory agencies) for that year and its
retained net profits for the preceding two years, less any required
transfers to surplus or a fund for the retirement of any preferred stock.
If, in the opinion of the applicable regulatory authority, a bank
under its jurisdiction is engaged in or is about to engage in an unsafe
or unsound practice (which, depending on the financial condition of the
bank, could include the payment of dividends), such authority may
require, after notice and hearing, that such bank cease and desist from
such practice. The Federal Reserve Board, the OCC and the FDIC have
issued policy statements which provide that insured banks and bank
holding companies should generally only pay dividends out of current
operating earnings.
FDIC Insurance
- --------------
The FDIC has the authority to raise the insurance premiums for
institutions in the BIF to a level necessary to achieve a target reserve
level of 1.25% of insured deposits within not more than 15 years. In
addition, the FDIC has the authority to impose special assessments in
certain circumstances. The level of deposit premiums affects the
profitability of subsidiary banks and thus the potential flow of
dividends to parent companies.
5
6
Item 1. Business (continued)
- -----------------------------
Under the risk-based insurance assessment system that became
effective January 1, 1994, the FDIC places each insured depository
institution in one of nine risk categories based on its level of capital
and other relevant information (such as supervisory evaluations). The
assessment rates under the new system range from 0.23% to 0.31% depending
upon the assessment category into which the insured institution is
placed. During 1994, all WesBanco banks were at the assessment rate of
0.23%.
Federal Deposit Insurance Corporation Improvement Act of 1991
- -------------------------------------------------------------
In December 1991, Congress enacted the Federal Deposit Insurance
Corporation Improvement Act of 1991 ("FDICIA"), which substantially
revised the bank regulatory and funding provisions of the Federal Deposit
Insurance Act and makes revisions to several other federal banking
statutes.
Among other things, FDICIA requires federal bank regulatory
authorities to take "prompt corrective action" with respect to depository
institutions that do not meet minimum capital requirements. For these
purposes, FDICIA establishes five capital tiers: well capitalized,
adequately capitalized, undercapitalized, significantly undercapitalized
and critically undercapitalized.
Rules adopted by the Federal banking agencies under FDICIA provide
that an institution is deemed to be: "well capitalized" if the
institution has a Total (Tier 1 plus Tier II) risk-based capital ratio
of 10.0% or greater, a Tier I risk-based ratio of 6.0% or greater, and
a leverage ratio of 5.0% or greater, and the institution is not subject
to an order, written agreement, capital directive, or prompt corrective
action directive to meet and maintain a specific level for any capital
measure; "adequately capitalized" if the institution has a Total risk-
based capital ratio of 8.0% or greater, a Tier I risk-based capital ratio
of 4.0% or greater, and a leverage ratio of 4.0% or greater (or a
leverage ratio of 3.0% or greater if the institution is rated composite
1 in its most recent report of examination, subject to appropriate
Federal banking agency guidelines), and the institution does not meet the
definition of a well-capitalized institution; "undercapitalized" if the
institution has a Total risk-based capital ratio that is less than 8.0%,
a Tier I risk-based capital ratio that is less than 4.0% or a leverage
ratio that is less than 4.0% (or a leverage ratio that is less than 3.0%
if the institution is rated composite 1 in its most recent report of
examination, subject to appropriate Federal banking agency guidelines)
and the institution does not meet the definition of a significantly
undercapitalized or critically undercapitalized institution;
"significantly undercapitalized" if the institution has a Total risk-
based capital ratio that is less than 6.0%, a Tier I risk-based capital
ratio that is less than 3.0%, or a leverage ratio that is less than 3.0%
and the institution does not meet the definition of a critically
undercapitalized institution; and "critically undercapitalized" if the
institution has a ratio of tangible equity to total assets that is equal
to or less than 2%.
At December 31, 1994, WesBanco and all of its bank subsidiaries
qualified as well-capitalized based on the ratios and guidelines noted
above. A bank's capital category, however, is determined solely for the
purpose of applying the prompt corrective actions rules and may not
constitute an accurate representation of that bank's overall financial
condition or prospects.
6
7
Item 1. Business (continued)
- -----------------------------
The appropriate Federal banking agency may, under certain
circumstances, reclassify a well capitalized insured depository
institution as adequately capitalized. The appropriate agency is also
permitted to require an adequately capitalized or undercapitalized
institution to comply with the supervisory provisions as if the
institution were in the next lower category (but not treat a
significantly undercapitalized institution as critically
undercapitalized) based on supervisory information other than the capital
levels of the institution.
The statute provides that an institution may be reclassified if the
appropriate Federal banking agency determines (after notice and
opportunity for hearing) that the institution is in an unsafe or unsound
condition or deems the institution to be engaging in an unsafe or unsound
practice.
FDICIA generally prohibits a depository institution from making any
capital distribution (including payment of a dividend) or paying any
management fee to its holding company if the depository institution would
thereafter be undercapitalized. Undercapitalized depository institutions
are subject to growth limitations and are required to submit a capital
restoration plan. The Federal banking agencies may not accept a capital
restoration plan without determining, among other things, that the plan
is based on realistic assumptions and is likely to succeed in restoring
the depository institution's capital. In addition, for a capital
restoration plan to be acceptable, the depository institution's parent
holding company must guarantee that the institution will comply with such
capital restoration plan. The aggregate liability of the parent holding
company is limited to the lesser of (i) an amount equal to 5% of the
depository institution's total assets at the time it became
undercapitalized, and (ii) the amount which is necessary (or would have
been necessary) to bring the institution into compliance with all capital
standards applicable with respect to such institution as of the time it
fails to comply with the plan. If a depository institution fails to
submit an acceptable plan, it is treated as if it is significantly
undercapitalized.
Significantly undercapitalized depository institutions may be
subject to a number of requirements and restrictions, including orders
to sell sufficient voting stock to become adequately capitalized,
requirements to reduce total assets and cessation of receipt of deposits
from correspondent banks. Critically undercapitalized institutions are
subject to the appointment of a receiver or conservator.
FDICIA also contains a variety of other provisions that may affect
the operation of WesBanco, including new reporting requirements,
regulatory standards for real estate lending, "truth in savings"
provisions, and the requirement that a depository institution give 90
days' prior notice to customers and regulatory authorities before closing
any branch.
Capital Requirements
- --------------------
The risk-based capital guidelines for bank holding companies and
banks adopted by the Federal banking agencies were phased in at the end
of 1992. The minimum ratio of qualifying total capital to risk-weighted
assets (including certain off-balance sheet items, such as standby
letters of credit) under the fully phased-in guidelines is 8%. At least
half of the total capital is to be comprised of common stock, retained
earnings, noncumulative perpetual preferred stocks, minority interests
and, for bank holding companies, a limited amount of qualifying
7
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Item 1. Business (continued)
- -----------------------------
cumulative perpetual preferred stock, less goodwill and certain other
intangibles ("Tier I capital"). The remainder ("Tier II capital") may
consist of other preferred stock, certain other instruments, and limited
amounts of subordinated debt and the reserve for credit losses.
In addition, the Federal Reserve Board has established minimum
leverage ratio (Tier I capital to total average assets less goodwill and
certain other intangibles) guidelines for bank holding companies and
banks. These guidelines provide for a minimum leverage ratio of 3.0% for
bank holding companies and banks that meet certain specified criteria,
including that they have the highest regulatory rating. All other
banking organizations are required to maintain a leverage ratio of 3.0%
plus an additional cushion of at least 100 to 200 basis points. The
guidelines also provide that banking organizations experiencing internal
growth or making acquisitions will be expected to maintain strong capital
positions substantially above the minimum supervisory levels, without
significant reliance on intangible assets. Furthermore, the guidelines
indicate that the Federal Reserve Board will continue to consider a
"tangible Tier I leverage ratio" in evaluating proposals for expansion
or new activities. The tangible Tier I leverage ratio is the ratio of
Tier I capital, less intangibles not deducted from Tier I capital, to
total assets, less all intangibles. Neither WesBanco nor any of its bank
subsidiaries has been advised of any specific minimum leverage ratio
applicable to it.
As of December 31, 1994, all of WesBanco's banking subsidiaries had
capital in excess of all applicable requirements.
Interstate Banking Act
- ----------------------
The Riegle-Neal Interstate Banking and Branching Efficiency Act of
1994 (hereinafter called "Interstate Banking Act") was signed into law
by President Clinton on September 29, 1994. The Act generally allows
adequately capitalized and managed bank holding companies to acquire
banks in any state starting one year after enactment. The Act also
permits interstate merger transactions beginning June 1, 1997. States
are permitted, however, to pass legislation providing for either earlier
approval of mergers with out-of-state banks or "opting-out" of interstate
mergers entirely. The Act would permit banks to acquire branches of out-
of-state banks by converting their office into branches of the resulting
bank. The Act would also permit banks to establish and operate "de novo
branches" in any state that "opts-in" to de novo branching. The Act also
requires each Federal banking agency to prescribe uniform regulations,
including guidelines insuring that interstate branches operated by out-
of-state banks are reasonably helping to meet the credit needs of
communities where they operate. WesBanco is incorporated under the laws
of the State of West Virginia and the West Virginia Legislature has not
yet adopted any legislation which would specifically "opt-in" or "opt-
out" of any of these specific provisions of the Interstate Banking Act.
Statistical Information
- -----------------------
Except as noted, the following statistical data averages included
in Item 1 - Business were computed using daily averages for the years
ended December 31, 1994, 1993 and 1992. Statistical data not included
in Item 1 - Business have been omitted because they are included in the
1994 Annual Report to Shareholders, incorporated herein by reference, or
are not applicable.
8
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Item 1. Business (continued)
- -----------------------------
The effect on interest income and interest expense for the years ended
December 31, 1994, 1993 and 1992, due to changes in average volume and
rate from the prior year, is presented below. The average volumes and
rates are shown in the 1994 Annual Report to Shareholders. The effect
of a change in average volume has been determined by applying the average
rate in the earlier year to the change in volume. The change in rate has
been determined by applying the average volume in the earlier year to the
change in rate. The change in interest due to both rate and volume has
been allocated to volume and rate changes in proportion to the
relationship of the absolute dollar amounts of change in each. (in
thousands):
1994 Compared to 1993
-----------------------------
Net
Increase
Volume Rate (Decrease)
------ ---- ----------
Loans $ 1,978 $ (3,068) $(1,090)
Taxable investment securities (354) (1,646) (2,000)
Non-taxable investment securities 720 (471) 249
Federal funds sold (335) 230 (105)
Other investments (721) 34 (687)
------- ------- -------
Total interest earned 1,288 (4,921) (3,633)
------- ------- -------
Interest bearing demand 50 (864) (814)
Savings deposits 320 (1,653) (1,333)
Certificates of deposit (646) (970) (1,616)
Federal funds purchased
and repurchase agreements (41) 69 28
Other borrowings (71) 51 (20)
------- -------- -------
Total interest paid (388) (3,367) (3,755)
------- -------- -------
Net Interest Differential $ 1,676 $ (1,554) $ 122
------- -------- -------
1993 Compared to 1992
-----------------------------
Net
Increase
Volume Rate (Decrease)
------ ---- ----------
Loans $ 2,406 $ (5,078) $(2,672)
Taxable investment securities 1,505 (3,766) (2,261)
Non-taxable investment securities 1,289 (634) 655
Federal funds sold (1,234) (341) (1,575)
Other investments (57) (203) (260)
----------------------------
Total interest earned 3,909 (10,022) (6,113)
----------------------------
Interest bearing demand 696 (2,380) (1,684)
Savings deposits 1,449 (2,282) (833)
Certificates of deposit (2,318) (3,751) (6,069)
Federal funds purchased
and repurchase agreements 750 (248) 502
Other borrowings (392) (223) (615)
---------------------------
Total interest paid 185 (8,884) (8,699)
---------------------------
Net Interest Differential $ 3,724 $ (1,138) $ 2,586
---------------------------
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Item 1. Business (continued)
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Investment Portfolio
- --------------------
The maturity distribution using book value including accretion of
discounts and the amortization of premiums and approximate yield of investment
securities at December 31, 1994 is presented in the following table. Tax
equivalent yield basis was not used. Approximate yield was calculated using a
weighted average of yield to maturities (in thousands):
After One But After Five But
Within One Year Within Five Years Within Ten Years After Ten Years
--------------- ----------------- ---------------- ---------------
Amount Yield Amount Yield Amount Yield Amount Yield
------ ----- ------ ----- ------ ----- ------ -----
Held to Maturity:
U.S. Treasury and other U.S.
Government Agencies $48,176 4.78% $102,021 5.43% --- --- --- ---
States and Political
Subdivisions 10,301 6.21 54,791 5.44 $51,671 5.15% $5,953 6.01%
Other Investments --- --- --- --- --- --- 1,260(1) 5.85
-------------- --------------- -------------- ---------------
Total Held to Maturity $58,477 5.03% $156,812 5.43% $51,671 5.15% $7,213 5.98%
-------------- --------------- -------------- ---------------
Available for Sale: (2)
U.S. Treasury and other U.S.
Government Agencies $36,869 7.47% $133,612 5.91% $29,959 5.33% --- ---
Mortgage-backed Securities 1,248 6.95 4,736 6.95 1,219 7.34 $ 910 7.30%
Corporate Securities 417 7.72 502 8.14 --- --- --- ---
Other Investments --- --- --- --- --- --- 575(1) 3.51
-------------- --------------- -------------- ---------------
Total Available for Sale $38,534 7.46% $138,850 5.96% $31,178 5.41% $1,485 5.83%
-------------- --------------- -------------- ---------------
Total Investment Securities $97,011 6.00% $295,662 5.68% $82,849 5.25% $8,698 5.96%
-------------- --------------- -------------- ---------------
(1) Represents investments with no stated maturity date
(2) Average yields on investment securities available for sale have been
calculated based on amortized cost.
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Item 1. Business (continued)
- -----------------------------
Investment Portfolio (continued)
- --------------------------------
Book values of investment securities are as follows (in thousands):
December 31,
------------------------------
1994 1993 1992
---- ---- ----
Investments Held to Maturity (at cost):
U.S. Treasury and Federal
Agency Securities $150,197 $274,962 $307,957
Obligations of states and
political subdivisions 122,716 121,757 104,821
Mortgage-backed securities --- 11,104 11,923
Other securities (1) 1,260 1,721 1,824
Investments Available for Sale:
(December 31, 1994, at market,
December 31, 1993 and 1992,
at lower of cost or market):
U.S. Treasuries and Federal
Agency Securities 193,114 74,808 57,509
Corporate securities 915 --- 10,521
Mortgage-backed securities 7,788 7,819 ---
Other securities (2) 888 496 3,804
------------------------------
Total $476,878 $492,667 $498,359
------------------------------
(1) Includes Federal Reserve Bank Stock and Federal Home Loan Bank securities.
(2) Includes stocks of business corporations in 1994 and 1993. Includes
mutual funds and stocks of business corporations in 1992.
There are no issues included in obligations of state and political
subdivisions, other investments or investments available for sale which
individually or in the aggregate exceed ten percent of shareholders' equity as
of December 31, 1994.
Loan Portfolio
- --------------
Loans outstanding are as follows (in thousands):
December 31,
------------------------------------------------
1994 1993 1992 1991 1990
---- ---- ---- ---- ----
Loans:
Commercial $157,855 $161,102 $165,976 $179,138 $179,852
Real Estate--Construction 24,734 21,181 14,187 7,169 8,100
Real Estate--Mortgage 358,540 342,173 332,365 302,771 283,279
Installment 241,441 228,906 203,799 203,448 182,447
------------------------------------------------
Total loans $782,570 $753,362 $716,327 $692,526 $653,678
------------------------------------------------
Each bank within the Corporation has its own renewal policies regarding
commercial and real estate-construction loans. However, real estate-
construction loans are generally not renewed at any bank. Depending on the
size of each institution, commercial loans above certain pre-approved dollar
limits must be reviewed by the respective credit review committee or senior
management prior to extension of maturity dates or rollover of the loan into a
new loan. Renewals of commercial loans below specified lending limitations may
be approved by the respective bank loan officer.
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12
Item 1. Business (continued)
- -----------------------------
Loan Portfolio (continued)
- --------------------------
The following table presents the approximate maturities of loans
other than installment loans and residential mortgages for all affiliate
banks as of December 31, 1994 (in thousands):
After one
In one year year through After five
or less five years years
----------- ------------ ----------
Commercial $86,718 $25,169 $ 45,968
Real estate:
Construction 3,332 3,280 2,751
Other real estate 6,179 12,741 61,430
------- ------- --------
Total $96,229 $41,190 $110,149
------- ------- --------
Fixed rates $41,694 $25,812 $ 28,328
Variable rates 54,535 15,378 81,821
------- ------- --------
Total $96,229 $41,190 $110,149
------- ------- --------
WesBanco Bank Wheeling and WesBanco Bank Elm Grove, which have
approximately 42% of consolidated gross loans have a practice of
originating most commercial loans and real estate construction loans on
a demand basis. Most of these loans do not require formal repayment
terms other than monthly interest payments. There is no significant
impact on cash flows since these loans are monitored on a regular basis
and principal repayments, if not made by borrowers, are requested.
WesBanco banks follow lending policies which require substantial down
payments along with current market appraisals on the collateral when the
loans are originated. The majority of their loans are either secured by
deeds of trust on real property, security agreements on personal
property, insurance contracts from independent insurance companies or
through the full faith and credit of government agencies.
All affiliate banks generally recognize interest income on the
accrual basis, except for certain loans which are placed on a nonaccrual
status, when in the opinion of management, doubt exists as to
collectability. All banks must conform to the Board of Governors of the
Federal Reserve System and the Office of the Comptroller of Currency
Policy which states that banks may not accrue interest on any loan on
which either the principal or interest is past due 90 days or more unless
the loan is both well secured and in the process of collection. When a
loan is placed on a nonaccrual status, interest income is recognized as
cash payments are received.
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13
Item 1. Business (continued)
- -----------------------------
Loan Portfolio (continued)
- --------------------------
Secured loans which are in the process of collection, but are
contractually past due 90 days or more as to interest or principal,
renegotiated, nonaccrual loans and other non-performing assets, are as
follows (in thousands):
December 31,
-------------------------------------------
1994 1993 1992 1991 1990
---- ---- ---- ---- ----
Past Due 90 Days or More:
Installment $ 944 $ 857 $ 1,071 $ 880 $ 1,079
Commercial 923 754 1,593 524 757
Real Estate 659 939 547 2,136 1,471
-------------------------------------------
2,526 2,550 3,211 3,540 3,307
-------------------------------------------
Renegotiated:
Installment -- -- 41 8 --
Commercial 23 80 3,938 4,507 5,000
Mortgage 81 88 108 888 2,129
-------------------------------------------
104 168 4,087 5,403 7,129
-------------------------------------------
Nonaccrual:
Installment 12 124 181 145 122
Commercial 3,100 7,739 3,863 5,214 7,922
Mortgage 1,301 1,446 779 1,791 1,406
-------------------------------------------
4,413 9,309 4,823 7,150 9,450
-------------------------------------------
Other Real Estate
Owned: (Including
in-substance
foreclosures) 4,278 2,558 3,378 3,798 895
-------------------------------------------
Total non-
performing assets $11,321 $14,585 $15,499 $19,891 $20,781
-------------------------------------------
Percentage of non-
performing assets to
loans outstanding 1.5% 2.0% 2.2% 2.9% 3.2%
-------------------------------------------
During 1994, nonaccrual loans decreased by $4,896,000 to $4,413,000
as of December 31, 1994 from $9,309,000 as of December 31, 1993. The
decline was primarily due to a commercial real estate loan which had a
balance of approximately $3,823,000 as of December 31, 1993 being taken
off of nonaccrual status. Other real estate owned increased to
$4,278,000 as of December 31, 1994 from $2,558,000 as of December 31,
1993. The increase in other real estate owned was due to a commercial
loan totaling $2,659,000 being classified as an in-substance foreclosure.
13
14
Item 1. Business (continued)
- -----------------------------
Loan Portfolio (continued)
- --------------------------
During 1993, nonaccrual loans increased by $4,486,000 to $9,309,000,
however, during the same time period, renegotiated loans declined by $3,919,000
to $168,000. The increase in nonaccrual loans was primarily due to a
reclassification of a renegotiated loan totaling $3,823,000 to nonaccrual
status during 1993. A commercial loan totaling $1,216,000 was also placed on
nonaccrual status during 1993. All nonaccrual loans are secured by
collateral believed to have adequate market values to protect the Corporation
from significant losses. Nonaccrual and renegotiated loans declined $3,643,000
during 1992 primarily due to one customer's improvement of operations and
increased debt service ability justifying a renewed extension of credit at
market terms and conditions. The decrease in nonaccrual loans of $2,300,000
during 1991 was primarily due to the transfer of three commercial loans into
the in-substance foreclosure category. Other real estate remained fairly level
from 1991 through 1993. At December 31, 1990, other real estate owned was at a
lower level due to the sale of property held as other real estate during 1990.
Management continues to monitor the nonperforming assets to ensure against
deterioration in collateral values.
Summary of Loan Loss Experience
-------------------------------
The historical relationship between average loans, loan losses and
recoveries and the provision for possible loan losses is presented in the
following table (in thousands):
1994 1993 1992 1991 1990
---- ---- ---- ---- ----
Beginning balance -
Reserve for possible loan losses $11,851 $10,638 $ 9,794 $ 9,120 $7,813
Reserve for purchased affiliate --- --- 62 --- 518
Loans charged off:
Commercial 4,521 1,187 1,785 1,413 1,288
Real Estate - Construction --- --- --- --- 5
Real Estate - Mortgage 524 183 266 242 252
Installment 995 1,255 1,217 1,120 776
-------------------------------------------
Total loans charged off 6,040 2,625 3,268 2,775 2,321
-------------------------------------------
Recovery of previously charged off:
Commercial 171 184 436 114 480
Real Estate - Construction --- --- --- 2 ---
Real Estate - Mortgage 25 36 38 143 72
Installment 255 389 297 227 190
-------------------------------------------
Total recoveries 451 609 771 486 742
-------------------------------------------
Net loans charged off 5,589 2,016 2,497 2,289 1,579
-------------------------------------------
Additions to reserve charged to
operating expense 6,055 3,229 3,279 2,963 2,368
-------------------------------------------
Ending balance -
Reserve for possible loan losses $12,317 $11,851 $10,638 $ 9,794 $ 9,120
-------------------------------------------
Ratio of net loans charged off to
average loans outstanding for
the period .76% .28% .36% .35% .27%
-------------------------------------------
Ratio of the reserve for possible
loan losses to loans outstanding
at the end of the period 1.59% 1.59% 1.50% 1.43% 1.41%
-------------------------------------------
14
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Item 1. Business (continued)
- -----------------------------
The amount charged to earnings is based on periodic management
evaluation of the loan portfolio as well as prevailing and anticipated
economic conditions, net loans charged off, past loan experience, current
delinquency factors, changes in the character of the loan portfolio,
specific problem loans and other factors.
Allocation of the Reserve for Possible Loan Losses
- --------------------------------------------------
Management of the banks did not allocate the reserve for possible
loan losses by loan classification prior to December 31, 1991. The
following represents the allocation of the reserve for possible loan
losses (dollars in thousands):
December 31,
-------------------------------------------------------
1994 1993 1992 1991
------------ ------------ ------------ -------------
% of % of % of % of
Amount Loans Amount Loans Amount Loans Amount Loans
------ ----- ------ ----- ------ ----- ------ -----
Specific Reserves:
Commercial and Unallocated $10,129 20% $10,068 21% $ 8,424 23% $8,075 26%
Real Estate-Construction --- 3 --- 3 --- 2 --- 1
Real Estate-Mortgage 691 46 573 45 870 46 776 44
Installment 1,497 31 1,210 31 1,344 29 943 29
------------------------------------------------------
Total $12,317 100% $11,851 100% $10,638 100% $9,794 100%
------------------------------------------------------
WesBanco has allocated the reserve for possible loan losses to
specific portfolio segments based upon historical net charge-off
experience, changes in the level of non-performing assets, local economic
conditions and management experience.
Management deems the reserve for loan losses at December 31, 1994
to be adequate.
Risk Elements
- -------------
The Corporation has historically maintained a reserve for possible
loan losses which is greater than actual charge-offs. Charge-offs for
the year 1995 are anticipated to be within the historical ranges as
detailed in the summary of loan loss experience.
Management maintains loan quality through monthly reviews of past
due loans, and a quarterly review of significant loans which are
considered by affiliate bank personnel to be potential problem loans.
Periodic reviews of other significant loans are completed by personnel
independent of the loan function.
There are no significant loans made to customers outside the general
market area of each affiliate bank. At times, in order to maintain loan
volumes, loans are purchased from correspondent banks. These loans
aggregate less than $9,000,000 as of December 31, 1994.
15
16
Item 1. Business (continued)
- -----------------------------
Each bank within the Corporation follows its usual loan analysis
procedures before a determination is made to purchase this type of loan.
Management's review of the loan portfolio has not indicated any
material amount of loans, not disclosed in the accompanying tables and
discussions which are known to have possible credit problems which cause
management to have serious doubts as to the ability of each borrower to
comply with their present loan repayment terms. There were no loan
concentrations in excess of 10% of total consolidated loans.
Short-Term Borrowings
- ---------------------
Securities sold under agreement to repurchase have maturities which
range between one day and one year. The following table presents short-
term liabilities for the years ended December 31 (dollars in thousands):
1994 1993 1992
---- ---- ----
Securities sold under agreement
to repurchase:
Outstanding at year end $66,286 $49,996 $43,796
Average daily outstanding 51,068 52,331 44,774
Maximum outstanding at any month end 66,286 65,587 48,559
Average interest rate:
During year 3.47% 3.26% 3.85%
At year end 4.37% 3.13% 3.63%
Return on Equity and Assets
- ---------------------------
The following financial ratios are presented:
1994 1993 1992
---- ---- ----
Net income to:
Average total assets 1.17% 1.34% 1.22%
Average shareholders' equity 9.99% 11.70% 11.13%
Average shareholders' equity and
redeemable preferred stock 9.88% 11.56% 10.99%
Dividend payout percentage
(cash dividends, including those of
pooled banks, divided by net income) 47.07% 36.83% 36.72%
Equity to assets (average equity
divided by average assets) 11.72% 11.43% 10.98%
Equity and redeemable preferred
stock to assets (average equity)
and redeemable preferred stock
divided by average assets) 11.86% 11.57% 11.12%
16
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Item 2. Properties
- -------------------
The Registrant's affiliates own their respective banking offices,
related facilities and unimproved real property which is held for future
expansion. With certain branch office exceptions, all of the respective
West Virginia bank offices are located in downtown Wheeling, Follansbee,
Wellsburg, New Martinsville, Sistersville, Elizabeth, Charleston,
Sissonville, Parkersburg, Kingwood, Fairmont, Shinnston, Bridgeport and
Masontown. The Ohio bank offices are located in Barnesville, Bethesda,
Woodsfield and Beallsville. Consolidated investment in net bank premises
and equipment at December 31, 1994 was $21,874,000.
The main office of the Registrant is located at 1 Bank Plaza,
Wheeling, West Virginia, in a building owned by WesBanco Wheeling. The
building contains approximately 100,000 square feet.
Item 3. Legal Proceedings
- --------------------------
WesBanco, Inc. and its affiliates are involved in various legal
proceedings presently pending which are incidental to the business of
banking in which they are engaged. These proceedings are pending in
various jurisdictions in which WesBanco, Inc. and its subsidiaries are
engaged in business. Based on the information which is available to
WesBanco, Inc. as of the date hereof which has been developed in such
proceedings, WesBanco, Inc. does not believe that any of such proceedings
involving claims for damages expose it to a material liability for
WesBanco and its subsidiaries on a consolidated basis.
PART II
Item 5. Market for the Registrant's Common Equity and Related
- --------------------------------------------------------------
Shareholder Matters
- -------------------
(a) Approximate Number of Security Holders
-------------------------------------------
Set forth below is the approximate number of holders of record of
the Registrant's equity securities as of February 28, 1995.
Title of Class Number
-------------- ------
Common Stock ($2.0833 Par Value) 3,936
The number of holders listed above does not include WesBanco, Inc.
employees who have had stock allocated to them through the Employee Stock
Ownership Plan. All WesBanco employees who meet the eligibility
requirements of the ESOP are included in the Plan.
PART III
Item 10. Executive Officers of the Corporation
- ------------------------------------------------
Name Age Position
- ---- --- --------
James C. Gardill 48 Chairman of the Board
Robert H. Martin 61 Vice Chairman
Edward M. George 58 President and Chief Executive Officer
Paul M. Limbert 47 Executive Vice President and
Chief Financial Officer
Dennis P. Yaeger 44 Executive Vice President and
Chief Operating Officer
John W. Moore, Jr. 46 Senior Vice President-Human Resources
Jerome B. Schmitt 45 Senior Vice President-Investments
17
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Part III
- --------
Item 10. Executive Officers of the Registrant (continued)
- ----------------------------------------------------------
Larry L. Dawson 48 Vice President
Jerry A. Halverson 58 Vice President
Albert A. Pietz, Jr. 62 Vice President and Compliance Officer
Edward G. Sloane 56 Vice President-Data Processing
Mr. Martin was appointed Vice Chairman of the Corporation on
February 28, 1994. Prior to that time, Mr. Martin was Chairman of the
Board of First Fidelity Bancorp, Inc. since 1986.
Each of the remaining officers listed above have been an Executive
Officer of the Corporation or one of its subsidiaries during the past
five years.
PART IV
Item 14. Exhibits, financial statement schedules and reports on Form 8-K
- -------------------------------------------------------------------------
(a) Certain documents filed as part of the Form 10-K
-----------------------------------------------------
(1) Financial statements of consolidated subsidiaries Page(s)
engaged in the business referred to in Rule 3-05 -------
of Regulation S-X have been omitted since they
are not individually or in the aggregate required
pursuant to such Rule.
Consolidated Balance Sheet as of December 31, 41
1994 and 1993.
Consolidated Statements of Income for the years 42
ended December 31, 1994, 1993 and 1992.
Consolidated Statements of Changes in Shareholders' 43
Equity for the years ended December 31, 1994,
1993 and 1992.
Consolidated Statement of Cash Flows for the years 44
ended December 31, 1994, 1993 and 1993.
Notes to Consolidated Financial Statements 45-57
Report of Independent Accountants - Price 21
Waterhouse, LLP
Report of Independent Accountants - Ernst & 22
Young, LLP
(b) Reports on Form 8-K
------------------------
No reports on Form 8-K were filed for the three months ended
December 31, 1994.
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19
Item 14. Exhibits, financial statement schedules and reports on Form 8-K
- -------------------------------------------------------------------------
(continued)
- -----------
(c) Exhibits required by Item 601 of Regulation S-K.
-----------------------------------------------------
Exhibit Title Page(s)
- ------- ----- -------
3.1 Articles of Incorporation of WesBanco, Inc. (2)(3) *
3.2 Amended Bylaws of WesBanco, Inc. (1) *
4 Specimen Certificate of WesBanco, Inc. Common Stock (2) *
4.1 Specimen Certificate of WesBanco, Inc. Cumulative
Preferred Stock (3) *
10.1 Amended WesBanco, Inc. Director's Deferred Compensation 23-29
Agreement
10.2 Amended WesBanco Employment Agreement 30-34
12 Computation of Earnings to Combined Fixed Charges and
and Preferred Stock Dividends 35
13 1994 Annual Report to Shareholders 36-71
The Financial Statements, together with the report thereon
of Price Waterhouse, LLP dated January 19, 1995, appearing on
page 21, the Consolidated Summary of Operations and Manage-
ment Discussion and Analysis appearing on page 23 of the
accompanying 1994 Annual Report to Shareholders are incor-
porated by reference in the Form 10-K Annual Report. With
the exception of the aforementioned information, the 1994
Annual Report is not to be deemed filed as part of this
report. Financial statement schedules not included in
this Form 10-K Annual Report have been omitted because
they are not applicable or the required information is
shown in the Financial Statements or notes thereto.
21 Subsidiaries of WesBanco (4) *
22 Proxy Statement for the Annual Shareholders' meeting
held April 19, 1995 72-95
24 Power of Attorney 96-98
99.1 Accountants Report dated January 19, 1995 on WesBanco,
Inc. Financial Statements for the three years ended
December 31, 1994 21
99.2 Accountants Report dated February 16, 1994 on First
Fidelity Bancorp, Inc. Financial statements for the
years ended December 31, 1993 and 1992 22
* Not Applicable
(1) This exhibit is being incorporated by reference with respect to a prior
Quarterly Report Form 10-Q filed by the Registrant on Form 10-Q dated March 31,
1994 which was filed with the Securities & Exchange Commission on May 11, 1994.
(2) These exhibits are being incorporated by reference with respect to a prior
Annual Report Form 10-K filed by the Registrant on Form 10-K dated December 31,
1988 which was filed with the Securities & Exchange Commission on March 30,
1989.
(3) These exhibits are being incorporated by reference with respect to a prior
Registration Statement filed by the Registrant on Form S-4 under Registration
No. 33-72228 as Exhibit Numbers 3.1 and 4.2, which was filed with the
Securities & Exchange Commission on January 11, 1994.
(4) Included in 1994 Annual Report to Shareholders.
19
20
SIGNATURES
Pursuant to the Requirements of Section 13 of 15(d) of the
Securities Exchange Act of 1934, the Registrant has duly caused this
report to be signed on its behalf by the undersigned, thereunto duly
authorized, on March , 1995.
WESBANCO, INC.
By: /s/ EdWard M. George
----------------------------------------
Edward M. George
President and Chief Executive Officer
By: /s/ Paul M. Limbert
----------------------------------------
Paul M. Limbert
Executive Vice President and Chief
Financial Officer
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of
the registrant and in the capacities indicated, on March 27, 1995.
By: /s/ James C. Gardill
----------------------------------------
James C. Gardill
Chairman of the Board and Director
The Directors of WesBanco (listed below) executed a power of
attorney appointing James C. Gardill their attorney-in-fact, empowering
him to sign this report on their behalf.
Frank K. Abruzzino
Gilbert S. Bachmann
Charles J. Bradfield
Ray A. Byrd
H. Thomas Corrie
Christopher V. Criss
Stephen F. Decker
James D. Entress, D.M.D.
Roland L. Hobbs
Edward M. George By: /s/ James C. Gardill
Walter W. Knauss, Jr. -----------------------------------
Eric Nelson
John J. Paull
Patrick L. Schulte
Melvin C. Snyder, Jr.
Carter W. Strauss
Thomas L. Thomas, M.D.
John A. Welty
William E. Witschey
20