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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(Mark One)
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, 1995
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 jurisdiction 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, Inc.
Nonredeemable Preferred Stock None
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 29,
1996 was approximately $208,227,347.
(APPLICABLE ONLY TO CORPORATE REGISTRANTS)
As of February 29, 1996, there were 8,475,572 shares of WesBanco, Inc. Common
Stock $2.0833 par value, outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of WesBanco, Inc.'s 1995 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, 1995) are incorporated by reference in Part III.
Page 1 of 99
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WESBANCO, INC.
TABLE OF CONTENTS
ITEM # ITEM PAGE(S)
- ------ ---- -------
Part I
------
1 Business 3-16
2 Properties 16
3 Legal proceedings 17
4 Submission of matters to a vote of security holders N/A
Part II
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5 Market for the registrant's common equity and related
stockholder matters (A)18
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) 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 schedule and reports
on Form 8-K 19-20
(A) Pages 33-49, 61 of WesBanco, Inc.'s 1995 Annual Report
to Stockholders are incorporated herein by reference.
(B) Incorporated by reference to WesBanco, Inc.'s Proxy
Statement dated March 15, 1996, for Annual Meeting
of Stockholders to be held April 17, 1996.
This Form contains a total of 99 pages.
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PART I
Item 1. Business
- -----------------
General
- -------
As of December 31, 1995, the Corporation had five banking affiliates
located in Wheeling, Charleston, Parkersburg, Kingwood, and Fairmont, West
Virginia. The Registrant had one banking affiliate in Barnesville, Ohio.
WesBanco Wheeling has twelve offices, all in West Virginia, five located in
Wheeling, two located in Follansbee, three in New Martinsville, one in
Sistersville, and one in Wellsburg. 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, two offices located in Morgantown, three offices located in
Bridgeport, two in Shinnston and one in Nutter Fort, West Virginia. There are
approximately 755 full time equivalent employees employed by all affiliates
as of December 31, 1995.
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 finanical nature authorized by the Federal Reserve Board
through a subsidiary, or through acquisition of established companies.
As of December 31, 1995, 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.
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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 aggregate 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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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 principal 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 controled 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 subsidiaires 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.
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.
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% to 0.27% depending upon the assessment category
into which the insured institution is placed. As of January 1, 1996, all
WesBanco banks will pay the statutory annual minimum of $2,000.
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Item 1. Business (continued)
- -----------------------------
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, 1995, 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.
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 institutions were in the next lower category
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Item 1. Business (continued)
- -----------------------------
(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 bearing) that the institution is in an unsafe and 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 distributions (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 compy 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 cumulative perpetual preferred stock, less
goodwill and certain other intangibles ("Tier I capital"). The
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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.
Item 1. Business (continued)
- -----------------------------
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, 1995, 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 interestate 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 I - Business were computed using daily averages for the years ended
December 31, 1995, 1994 and 1993. Statistical data not included in Item I -
Business have been omitted because they are included in the 1995 Annual Report
to Shareholders, incorporated herein by reference, or are not applicable.
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Item 1. Business (continued)
- -----------------------------
The effect on interest income and interest expense for the years ended
December 31, 1995, 1994 and 1993, due to changes in average volume and rate
from the prior year, is presented below. The average volumes and rates are
shown in the 1995 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):
1995 Compared to 1994
--------------------------------------
Net
Increase
Volume Rate (Decrease)
--------- ----- -----------
Loans $ 5,069 $ 3,704 $8,773
Taxable investment securities (2,915) (146) (3,061)
Non-taxable investment securities (216) (22) (238)
Federal funds sold 76 325 401
--------------------------------------
Total interest earned 2,014 3,861 5,875
--------------------------------------
Interest bearing demand (495) 208 (287)
Savings deposits (760) 304 (456)
Certificates of deposit 1,843 3,932 5,775
Federal funds purchased and
repurchase agreements 74 1,072 1,146
Other borrowings 4 60 64
--------------------------------------
Total interest paid 666 5,576 6,242
--------------------------------------
Net Interest Differential $ 1,348 $(1,715) $ (367)
======================================
1994 Compared to 1993
--------------------------------------
Net
Increase
Volume Rate (Decrease)
--------- ---- -----------
Loans $ 1,978 $(3,068) $(1,090)
Taxable investment securities (1,075) (1,614) (2,689)
Non-taxable investment securities 720 (470) 250
Federal funds sold (335) 231 (104)
--------------------------------------
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
======================================
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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, 1995 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 $ 69,109 5.12% $ 64,779 6.13% --- --- --- ---
States and Political
Subdivisions 12,017 6.01 54,543 5.25 $44,360 5.13% $4,850(1) 6.74%
Other Investments --- --- --- --- --- --- 1,358 6.47
----------------- ----------------- ---------------- ----------------
Total Held to Maturity 81,126 5.25 119,322 5.73 44,360 5.13 6,208 6.68
----------------- ----------------- ---------------- ----------------
Available for Sale: (2)
- ------------------------
U.S. Treasury and Other U.S.
Government Agencies 28,225 5.95 110,542 5.76 17,474 5.68 --- ---
States and Political
Subdivisions 1,427 3.72 3,096 3.97 369 3.57 806 4.26
Mortgage-backed Securities (3) 3,401 6.72 3,231 7.15 4 6.19 --- ---
Corporate Securities --- --- 4 5.57 --- --- --- (1) ---
Other Investments --- --- --- --- --- --- 2,166 2.55
---------------- ----------------- --------------- -----------------
Total Available for Sale 33,053 5.95 116,873 5.75 17,847 5.63 2,972 3.01
---------------- ----------------- --------------- -----------------
Total Investment Securities $114,179 5.45% $236,195 5.74% $62,207 5.28% $9,180 5.50%
================ ================= =============== =================
(1) Represents investments with no stated maturity date.
(2) Average yields on investment securities available for sale have been
calculated based on amortized cost.
(3) Mortgage-backed maturities which have prepayment provisions are assigned
to maturity categories based on estimated average lives.
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Item 1. Business (continued)
- -----------------------------
Investment Portfolio (continued)
- --------------------------------
Book values of investment securities are as follows (in thousands):
December 31,
----------------------------
1995 1994 1993
---- ---- ----
Investments Held to Maturity (at cost):
- ---------------------------------------
U.S. Treasury and Federal
Agency Securities $133,888 $150,197 $274,962
Obligations of states and
political subdivisions 115,770 122,716 121,757
Mortgage-backed securities --- --- 11,104
Other securities (1) 1,358 1,260 1,721
-------------------------------
Total Held to Maturity 251,016 274,173 409,544
-------------------------------
Investments Available for Sale:
- -------------------------------
(December 31, 1995 and 1994, at
market, December 31, 1993, at
lower of cost or market):
U.S. Treasuries and Federal
Agency Securities 157,505 193,114 74,808
Obligations of States and
Political subdivisions 5,667 --- ---
Corporate securities 4 915 ---
Mortgage-backed securities 6,610 7,788 7,819
Other securities (2) 2,351 888 496
--------------------------------
Total Available for Sale 172,137 202,705 83,123
--------------------------------
Total Investments $423,153 $476,878 $492,667
================================
(1) Includes Federal Reserve Bank Stock and Federal Home Loan Bank
securities.
(2) Includes stocks of business corporations.
There are no issues included in obligations of state and political
subdivisions, which individually or in the aggregate exceed ten percent of
shareholders' equity as of December 31, 1995.
Loan Portfolio
- --------------
Loans outstanding are as follows (in thousands):
December 31,
------------------------------------------------------
1995 1994 1993 1992 1991
---- ---- ---- ---- ----
Loans:
Commercial $172,270 $161,521 $162,859 $167,931 $181,570
Real Estate--Construction 15,493 24,734 21,181 14,187 7,169
Real Estate-Mortgage 392,681 358,540 342,173 333,159 303,275
Installment 277,934 241,441 228,906 203,799 203,448
------------------------------------------------------
Total loans $858,378 $786,236 $755,119 $719,076 $695,462
======================================================
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
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Item 1. Business (continued)
- -----------------------------
Loan Portfolio (continued)
- --------------------------
new loan. Renewals of commercial loans below specified lending limitations
may be approved by the respective bank loan officer.
The following table presents the approximate maturities of loans other
than installment loans and residential mortgages for all affiliate banks as
of December 31, 1995 (in thousands):
After one
In one year year through After five
or less five years years
------------ ------------ -----------
Commercial $86,403 $33,064 $52,803
Real estate:
Construction 2,327 --- 6,337
Other real estate 1,798 17,137 76,174
-------- -------- ---------
Total $90,528 $50,201 $135,314
======== ======== =========
Fixed rates $37,400 $28,189 $42,993
Variable rates 53,128 22,012 92,321
-------- -------- ---------
Total $90,528 $50,201 $135,314
======== ======== =========
WesBanco Bank Wheeling, which has approximately 41% 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 marketable securities.
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 may
be recognized as cash payments are received.
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Item 1. Business (continued)
- -----------------------------
Loan Portfolio (continued)
- --------------------------
Non-performing assets and secured loans which are in the process of
collection but are contractually past due 90 days or more as to interest
or principal, are as follows (in thousands):
December 31,
---------------------------------------------------
1995 1994 1993 1992 1991
---------------------------------------------------
Nonaccrual:
Installment $ 59 $ 12 $ 124 $ 181 $ 145
Commercial 3,467 6,766 9,496 5,818 7,646
Mortgage 1,673 1,301 1,446 1,573 2,295
--------------------------------------------------
5,199 8,079 11,066 7,572 10,086
--------------------------------------------------
Renegotiated and other
impaired loans:
Installment 9 -- -- 41 8
Commercial 1,347 23 80 3,938 4,507
Mortgage 736 81 88 108 888
--------------------------------------------------
2,092 104 168 4,087 5,403
--------------------------------------------------
Total non-performing loans 7,291 8,183 11,234 11,659 15,489
--------------------------------------------------
Other Real Estate Owned:
(Including in-substance
foreclosures) 4,137 612 801 629 862
--------------------------------------------------
Total non-performing
assets $11,428 $ 8,795 $12,035 $12,288 $16,351
===================================================
Percentage of non-
performing assets to
loans outstanding 1.3% 1.1% 1.6% 1.7% 2.4%
===================================================
Past Due 90 Days or More:
Installment $ 863 $ 944 $ 857 $ 1,071 $ 880
Commercial 916 923 754 1,593 524
Real Estate 1,227 659 939 547 2,136
----------------------------------------------------
$ 3,006 $ 2,526 $ 2,550 $ 3,211 $ 3,540
====================================================
On January 1, 1995, WesBanco adopted FAS No. 114 (as amended by FAS No.
118), "Accounting by Creditors for Impairment of a Loan." A loan is
considered impaired when it is probable that the lender will be unable to
collect all principal and interest amounts due according to the contractual
terms of the loan agreement. At December 31, 1995, impaired loans totaled
$7,291,000, which included all nonperforming loans.
Nonaccrual loans decreased by $2,880,000 to $5,199,000 as of December 31,
1995, compared to the same period in 1994, primarily due to the reclassification
of a commercial real estate loan to other real estate owned. The action was
taken on November 1, 1995 by an affiliate through a transfer by deed
in-lieu of foreclosed commercial property. Contributing to the increase
in renegotiated loans during 1995 were certain performing loans classified as
13
14
Item 1. Business (continued)
- -----------------------------
Loan Portfolio (continued)
- --------------------------
impaired, in accordance with FAS No. 114. The 1994 decline in nonaccrual
loans was the result of a commercial real estate loan which was taken off of
nonaccrual status. During 1993, nonaccrual loans increased by $3,494,000 to
$11,066,000, while renegotiated loans declined by $3,878,000 to $168,000.
The change between these categories was caused by a reclassification of a
renegotiated loan totaling $3,823,000 to nonaccrual status during 1993.
Nonaccrual and renegotiated loans declined $3,830,000 during 1992, primarily
due to a borrower's improved business operation and increased debt service
ability, justifying a renewed extension of credit at market terms and
condition. Nonaccrual loans are generally secured by collateral believed to
have adequate market values to protect the Corporation from significant losses.
In accordance with FAS No. 114, a loan is classified as an in-substance
foreclosure when the Corporation has taken possession of the collateral. Loans
previously classified as in-substance foreclosure but for which the Corporation
has not takenpossession of the collateral have been reclassified to loans. The
reclassifications have not significantly impacted the Corporation's financial
condition. Management continues to monitor non-performing 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):
1995 1994 1993 1992 1991
---- ---- ---- ---- ----
Beginning balance -
Reserve for possible loan losses $12,317 $11,851 $10,638 $ 9,794 $ 9,120
Reserve for purchased affiliate --- --- --- 62 ---
Loans charged off:
Commercial 1,090 4,521 1,187 1,785 1,413
Real Estate - Mortgage 220 524 183 266 242
Installment 1,608 995 1,255 1,217 1,120
-----------------------------------------------
Total loans charged off 2,918 6,040 2,625 3,268 2,775
-----------------------------------------------
Recovery of loans previously
charged off:
Commercial 204 171 184 436 114
Real Estate - Mortgage 97 25 36 38 145
Installment 277 255 389 297 227
-----------------------------------------------
Total recoveries 578 451 609 771 486
-----------------------------------------------
Net loans charged off 2,340 5,589 2,016 2,497 2,289
-----------------------------------------------
Additions to reserve charged to
operating expense 2,770 6,055 3,229 3,279 2,963
Ending balance - -----------------------------------------------
Reserve for possible loan losses $12,747 $12,317 $11,851 $10,638 $ 9,794
===============================================
Ratio of net loans charged off to
average loans outstanding for
the period .29% .76% .28% .36% .35%
-----------------------------------------------
Ratio of the reserve for possible
loan losses to loans outstanding
at the end of the period 1.50% 1.59% 1.59% 1.50% 1.43%
-----------------------------------------------
14
15
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
- --------------------------------------------------
The following represents the allocation of the reserve for possible loan
losses (dollars in thousands):
December 31,
--------------------------------------------------------------
1995 1994 1993 1992
--------------------------------------------------------------
% of % of % of % of
Amount Loans Amount Loans Amount Loans Amount Loans
------------ ------------ ------------ ------------
Specific Reserves:
Commercial and Unallocated $10,110 20% $10,129 20% $10,068 21% $ 8,424 23%
Real Estate-Construction --- 2 --- 3 --- 3 --- 2
Real Estate-Mortgage 977 46 691 46 573 45 870 46
Installment 1,660 32 1,497 31 1,210 31 1,344 29
---------------------------------------------------------------
Total $12,747 100% $12,317 100% $11.851 100% $10,638 100%
===============================================================
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 loans, local economic conditions and management
experience.
Management deems the reserve for loan losses at December 31, 1995 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 1996
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 review 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, 1995. Each bank within the
Corporation follows its usual loan analysis procedures before a determination
is made to purchase loans from correspondent banks.
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.
15
16
Item 1. Business (continued)
- -----------------------------
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):
1995 1994 1993
---- ---- ----
Securities sold under agreement
to repurchase:
Outstanding at year end $70,091 $65,435 $49,996
Average daily outstanding 54,791 51,068 52,331
Maximum outstanding at any month end 70,091 66,286 65,587
Average interest rate:
During year 5.17% 3.47% 3.26%
At year end 5.45% 4.37% 3.13%
Return on Equity and Assets
- ---------------------------
The following financial ratios are presented:
1995 1994 1993
---- ---- ----
Net income to:
Average total assets 1.35% 1.17% 1.34%
Average shareholders' equity 11.12% 9.99% 11.70%
Average shareholders' equity and
redeemable preferred stock 11.00% 9.88% 11.56%
Dividend payout percentage
(cash dividends, including those of
pooled banks, divided by net income) 44.75% 47.07% 36.83%
Equity to assets (average equity
divided by average assets) 12.15% 11.72% 11.43%
Equity and redeemable preferred
stock to assets (average equity
and redeemable preferred stock
divided by average assets) 12.27% 11.86% 11.57%
Item 2. Properties
- -------------------
The Registrant's affiliates generally 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, 1995 was $23,026,000.
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.
16
17
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 has been developed in such proceedings as of the date hereof,
and available to the Corporation, management does not believe that any of
such proceedings involve claims for damages expose it to a material liability
on a consolidated basis.
In addition to the foregoing, the Corporation has recently been advised
of a newly filed matter. On February 23, 1996, WesBanco Bank Wheeling, a
subsidiary banking corporation, was served with a Complaint filed in the
Circuit Court of Ohio County, West Virginia, styled Joseph Tankovits III v.
Lee J. Glessner, et al., under Civil Action No. 96-C-59(W). This suit was
filed by a beneficiary of a testamentary trust and an inter vivos trust
against the Bank in its capacity as Co-Trustee of two trusts. The Complaint
alleges numerous counts against the bank and two Co-Executors of an estate,
including breach of fiduciary duty of care, self-dealing and breach of
fiduciary duty of loyalty, negligence and a punitive damage claim based on an
undefined theory of an intentional tort. The Complaint also asserts
additional counts against the two Co-Executors, including intentional
interference with a testamentary bequest, conversion and fraud in which the
Bank is not a named defendant. The prayer of the Complaint seeks
compensatory and punitive damages against the defendants in the amount of
$10,000,000, among other relief sought.
The case arises from the administration of an estate and the funding of
certain trusts, an inter vivos trust and a testamentary trust, which were to
be funded from the distribution of the assets of the estate upon the
termination of the administration of the estate. Since the estate consists
primarily of closely held stock, the Co-Executors of the estate elected a
deferred and installment payment of the Federal Estate Tax liabilities which
are being paid over a combined 15 year period. This 15 year period continues
to run. While the estate is in administration, no assets have been
distributed by the Co-Executors to the Bank and, accordingly, the Bank has
undertaken no fiduciary responsibilities with respect to the testamentary
trust or the inter vivos trust, other than to receive certain life insurance
proceeds which were paid to it at the time of the death of the decedent. No
claim has been asserted against the Bank with respect to its administration of
the life insurance proceeds received and subsequently administered by the Bank.
It is uncertain as to how the Plaintiff can successfully argue that the
Bank has a fidicuary duty with respect to assets which have not yet been
distributed to it. It is also uncertain at this time as to how the Plaintiff
can assert a breach of a fiduciary duty in the administration of the estate
since the bank was neither a named fiduciary, nor has the bank subsequently
qualified as a fiduciary with respect to the administration of the estate.
Based on the allegations of the Complaint, the Bank is unable to determine the
source of the Bank's legal duty to the Plaintiff which is alleged in the
Complaint. The Bank intends to vigorously defend the action.
17
18
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 29, 1996.
Title of Class Number
-------------- ------
Common Stock ($2.0833 Par Value) 3,863
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 49 Chairman of the Board
Robert H. Martin 62 Vice Chairman
Edward M. George 59 President and Chief Executive
Officer
Paul M. Limbert 48 Executive Vice President and
Chief Financial Officer
Dennis P. Yaeger 45 Executive Vice President and
Chief Operating Officer
Robert V. Aiken 59 Senior Vice President-Loan
Administration
John W. Moore, Jr. 47 Senior Vice President-Human
Resources
Jerome B. Schmitt 46 Senior Vice President-
Investments
Larry L. Dawson 49 Vice President
Jerry A. Halverson 59 Vice President
Albert A. Pietz, Jr. 63 Vice President
Edward G. Sloane 57 Vice President-Data Processing
Mr. Aiken was appointed Senior Vice President-Loan Administration on
April 14, 1995. Prior to that time, Mr. Aiken served as Executive Vice
President and Manager of Retail Banking at PNC Bank, N.A., Harrrisburg,
Pennsylvania. Prior to serving in that capacity, Mr. Aiken was Chairman,
President and CEO of the Hershey Bank, Hershey, Pennsylvania, a PNC affiliate.
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.
18
19
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, 33
1995 and 1994.
Consolidated Statements of Income for the years 34
ended December 31, 1995, 1994 and 1993.
Consolidated Statements of Changes in Shareholders' 35
Equity for the years ended December 31, 1995,
1994 and 1993.
Consolidated Statement of Cash Flows for the years 36
ended December 31, 1995, 1994 and 1993.
Notes to Consolidated Financial Statements 37-48
Report to Independent Accountants - Price 98
Waterhouse, LLP
Report of Independent Accountants - Ernst & 99
Young, LLP
(b) Reports on Form 8-K
--------------------------
A Form 8-K was filed on November 15, 1995 during the three months
ended December 31, 1995, to announce WesBanco's redemption of its
Series A, 8% Cummulative Preferred Stock of which there were 9,925
shares outstanding.
(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) *
19
20
Item 14. Exhibits, financial statement schedules and reports on Form 8-K
- --------------------------------------------------------------------------
(continued)
- -----------
(c) Exhibits required by Item 601 of Regulation S-K (continued)
----------------------------------------------------------------
Exhibit Title Page(s)
- ------- ----- -------
11 Computation of Earnings Per Share 22
12 Ratio of Earnings to Combined Fixed Charges and 23
Preferred Stock Dividends
13 1995 Annual Report to Shareholders 24-63
The Financial Statements, together with the report
thereon of Price Waterhouse, LLP dated January 25, 1996,
except as to Note 19, which is as of February 9, 1996,
appearing on page 21, Management Discussion and Analysis
of the Consolidated Financial Statements appearing on pages
26-33 and the subsidiaries of WesBanco appearing on page 36
of the accompanying 1995 Annual Report to Shareholders are
incorporated by reference in the Form 10-K Annual Report.
With the exception of the aforementioned information, the
1995 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 the Registrant (5) *
22 Proxy Statement for the Annual Shareholders' meeting 64-95
held April 17, 1996
24 Power of Attorney 96-97
27 Financial Data Schedule *
99.1 Accountants Report dated January 25, 1996, except as 98
to Note 19, which is as of February 9, 1996 on WesBanco,
Inc. Financial Statements for the three years ended
December 31, 1995
99.2 Accountants Report dated February 16, 1994 on First 99
Fidelity Bancorp, Inc. Financial Statements for the
year ended December 31, 1993
99.3 Press release announcing the signing of a definitive Agreement *
and Plan of Merger providing for the merger of Bank of Weirton
with WesBanco Bank Wheeling, an affiliate of WesBanco, Inc. (4)
* 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) This exhibit is being incorporated by reference with respect to a prior
Form 8-K dated February 9, 1996, which was filed by the Registrant with the
Securities and Exchange Commission on February 21, 1996.
(5) Included in 1995 Annual Report to Shareholders.
20
21
SIGNATURES
Pursuant to the Requirements of Section 13 or 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 18, 1996.
WESBANCO, INC.
/s/ Edward M. George
By:________________________________________
Edward M. George
President and Chief Executive Officer
/s/ Paul M. Limbert
By:________________________________________
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 18, 1996.
/s/ James C. Gardill
By:_________________________________________
James C. Gardill
Chairman of the Board
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.
Gilbert S. Bachmann
Charles J. Bradfield
Ray A. Byrd
H. Thomas Corrie
Christopher V. Criss /s/ James C. Gardill
Stephen F. Decker By:_____________________________
Edward M. George James C. Gardill
Roland L. Hobbs Attorney-in-fact
Frank R. Kerekes
Walter Knauss, Jr.
Robert H. Martin
Joan C. Stamp
Carter W. Strauss
Thomas L. Thomas, M.D.
John A. Welty
William E. Witschey
21
22