Wheeling, WV, January 23, 2018 – WesBanco, Inc. ("WesBanco") (Nasdaq: WSBC), a diversified, multi-state bank holding company, today announced net income and related earnings per share for the three and twelve months ended December 31, 2017.  Net income for the three months ended December 31, 2017 was $15.9 million, with diluted earnings per share of $0.36, compared to $24.2 million and $0.55 per diluted share, respectively, for the fourth quarter of 2016.  For the twelve months ending December 31, 2017, net income was $94.5 million, or $2.14 per diluted share, compared to $86.6 million, or $2.16 per diluted share, for 2016.  Excluding net deferred tax asset revaluation, as a result of the recently enacted Federal tax reform legislation, and after-tax merger-related expenses (non-GAAP measure), net income for the twelve months ended December 31, 2017, increased 13.3% to $107.9 million, or $2.45 per diluted share, compared to $95.3 million, or $2.37 per diluted share, for 2016.  Financial results for Your Community Bankshares, Inc. ("YCB") were included in WesBanco's results after the merger date of September 9, 2016.

	For the Three Months Ended December 31,								For the Twelve Months Ended December 31,
	2017				2016				2017				2016
(unaudited, dollars in thousands, except per share amounts)	Net Income		Diluted Earnings Per Share		Net Income		Diluted Earnings Per Share		Net Income		Diluted Earnings Per Share		Net Income		Diluted Earnings Per Share
Net income (Non-GAAP)(1)	$    28,972		$     0.66		$    25,963		$     0.59		$   107,876		$     2.45		$    95,254		$     2.37
Less: Net deferred tax asset revaluation	(12,780)		(0.29)		-		-		(12,780)		(0.29)		-		-
Less: After tax merger-related expenses	(295)		(0.01)		(1,745)		(0.04)		(614)		(0.02)		(8,619)		(0.21)
Net income (GAAP)	$    15,897		$     0.36		$    24,218		$     0.55		$    94,482		$     2.14		$    86,635		$     2.16
(1) See non-GAAP financial measures for additional information relating to the calculation of this item.

 

 

On November 13, 2017, WesBanco and First Sentry Bancshares, Inc. ("FTSB"), a bank holding company headquartered in Huntington, WV with approximately $670 million in assets, jointly announced that a definitive Agreement and Plan of Merger was executed providing for the merger of FTSB with and into WesBanco.  The transaction, valued at approximately $101.4 million, is expected to close during the first half of 2018.

Financial and operational highlights:

·	Loan growth over the last twelve months was driven by our strategic focus categories

o	4.0% growth in total commercial loans

o	4.1% growth in home equity loans

·	Continued benefit from shale energy-related core funding as demonstrated by strong year-over-year growth in total demand deposits

·	Continued strength across credit quality metrics

·	Solid expense management demonstrated by non-interest expenses, excluding merger-related, decreasing both sequentially and year-over-year

o	Fourth quarter efficiency ratio improved to 55.08% (non-GAAP measure)

·	Strong fourth quarter profitability ratios with return on average assets of 1.16% and return on average tangible equity of 14.36%, excluding net deferred tax asset revaluation and merger-related expenses

·	Merger with First Sentry Bancshares continues to progress well and remains on schedule

"WesBanco had another successful year during 2017 as we reported record earnings – surpassing $107 million for the year, adjusting for the net deferred tax asset revaluation," said Todd F. Clossin, President and Chief Executive Officer of WesBanco.  "We are executing upon the well-defined, long-term operational and growth plans we have implemented over the last few years.  We have balanced loan and deposit distribution across our diverse regional footprint, as well as strong market positions.  We remain focused on the long-term success of our diversified business model, and we diligently manage discretionary expenses to deliver positive operating leverage.  We are strengthening our loan portfolio, and see opportunities for expanded wealth management revenues.  This strategic focus, coupled with our strong risk and compliance framework, helped us to be named one of America's Top 20 Best Banks for 2018 by a leading financial magazine."

Mr. Clossin added, "our proposed merger with First Sentry Bancshares is progressing well, and we anticipate the closing to occur sometime during the first half of 2018.  We are well-prepared and strategically positioned for crossing the $10 billion asset threshold and the associated regulatory requirements.  We are excited about our opportunities for the upcoming year, and look forward to providing additional value to our customers and shareholders."

Portfolio loans of $6.3 billion increased 1.5% over the last twelve months, reflecting growth in our strategic focus categories.   Total commercial loans grew 4.0% and home equity loans grew 4.1% over the past twelve months, which more than offset targeted reductions in the consumer portfolio to reduce its risk profile.  In addition, secondary market loan sales in the residential real estate portfolio continued to increase, which reduced the amount of loans held on the balance sheet.  Total deposits, excluding CDs, increased 4.0%, driven by 4.1% growth in interest bearing and non-interest bearing demand deposits, which now represent 49.3% of total deposits as of December 31, 2017.

The continued strength of our credit quality ratios is reflective of our strong legacy of credit and risk management.  As of December 31, 2017, both non-performing assets as a percentage of total assets of 0.50% and non-performing loans as a percentage of total portfolio loans of 0.68% remained consistent with the recent trends.  Criticized and classified loans were 1.17% of total loans, improving both sequentially and year-over-year.  Net charge-offs as a percentage of average portfolio loans were 0.16% in the fourth quarter of 2017, as compared to 0.08% in the fourth quarter of 2016, and on an annualized basis net charge-offs were 0.13% for 2017, compared to 0.12% in 2016.

The provision for credit losses increased slightly from $2.1 million in the fourth quarter of 2016 to $2.4 million in the fourth quarter of 2017 due primarily to loan growth.  The allowance for loan losses of $45.3 million represented 0.71% of total portfolio loans at December 31, 2017, compared to 0.70% in the year ago period.

The net interest margin during the fourth quarter of 2017 was 3.43%, up 1 basis point from the prior year period.  The net interest margin continues to benefit from increases in the Federal Reserve Board's target federal funds rate over the past year and a higher margin on the acquired YCB net assets, partially offset by higher funding costs as well as a flattening of the yield curve.  The increase in the cost of interest bearing liabilities is primarily due to higher rates for interest bearing demand deposits, which include public funds, and certain Federal Home Loan Bank and other borrowings.  Accretion from prior acquisitions benefited the fourth quarter net interest margin by approximately 6 basis points, as compared to 10 basis points in the prior year period; however, was down 5 basis points from the third quarter, which had included an approximate $1.1 million benefit from the pay-off of an acquired YCB loan with a specific loan mark assigned.

Net interest income increased $1.5 million, or 2.1%, during the fourth quarter of 2017 as compared to the same quarter of 2016 due to a similar percentage increase in average loan balances.  For the twelve months ending December 31, 2017, net interest income increased $37.0 million, or 14.6%, as average loan balances increased 15.3%, primarily due to the YCB acquisition, and the net interest margin increased 12 basis points to 3.44%.

For the fourth quarter of 2017, non-interest income of $22.9 million increased $1.5 million, or 7.1%, from the fourth quarter of 2016 driven by higher mortgage banking income and higher electronic banking fees.  We continued to sell a higher percentage of residential mortgage originations in the secondary market and increased the margin on sold loans, which increased mortgage banking income by $1.1 million year-over-year to $1.5 million.  Reflecting a larger average customer deposit base year-over-year from the addition of YCB, electronic banking fees increased $0.5 million, or 12.2%.  Other income decreased $0.5 million due to decreases in other fee income more than offsetting a $0.3 million increase in commercial customer loan swap income.

For the twelve months ended December 31, 2017, non-interest income increased $7.3 million, or 9.0%.  Reflecting our strategic focus during the last twelve months, mortgage banking income grew from increased secondary market sales of residential mortgage originations; electronic banking fees and service charges on deposits increased as a result of a larger customer deposit base; and trust fees and assets increased reflecting organic growth and improvements in equity markets.

Total operating expenses continue to be well-controlled during the fourth quarter of 2017, as most categories decreased both year-over-year and sequentially as post-YCB cost savings were achieved and through strong discretionary expense control.  Excluding merger-related expenses in both years, non-interest expense during the fourth quarter of 2017 decreased $1.4 million, or 2.5%, versus the third quarter, and $1.2 million, or 2.2%, compared to the prior year period.  The decrease from the prior year quarter is primarily due to lower other operating expenses resulting from cost control across supplies, travel and entertainment, and telecommunications, as well as low-income housing amortization expense being moved to tax expense during 2017.  Salaries and wages increased $1.6 million, or 6.8%, year-over-year due to higher average staff levels from the YCB acquisition and the impact of the annual merit adjustments to compensation, as well as higher incentive accruals, partially offset by a $1.0 million reduction in employee benefits from lower medical benefit costs and lower pension expense.

Excluding merger-related expenses in both years, non-interest expense during 2017 increased $24.5 million, or 12.5%, compared to 2016 reflecting a full year impact of the YCB acquisition and continued preparations for the $10 billion asset threshold, partially offset by cost savings initiatives.

The provision for income taxes for the fourth quarter of 2017 increased $14.5 million to $23.0 million compared to the prior year due to a $12.8 million impact from the revaluation of net deferred tax assets during the quarter resulting from the recently enacted Federal tax reform legislation, as announced by WesBanco on December 29, 2017.

For the twelve months of 2017, the provision for income taxes increased $22.8 million, or 73.4%, compared to the same period in 2016.  This increase is due to a $12.8 million impact from the revaluation of net deferred tax assets mentioned above; a 26.0% increase in pre-tax income; and the adoption earlier this year of a new accounting standard related to low income housing tax credit investment amortization, which moved $1.2 million from other operating expense to the provision for income taxes.

WesBanco continues to maintain strong regulatory capital ratios after the implementation of the BASEL III capital standards.  At December 31, 2017, Tier I leverage was 10.33%, Tier I Risk-Based capital was 14.03%, Total Risk-Based capital was 15.07%, and the Common Equity Tier 1 capital ratio ("CET 1") was 12.05%.  Both consolidated and bank-level regulatory capital ratios are well above the applicable "well-capitalized" standards promulgated by bank regulators and the BASEL III capital standards. Total tangible equity to tangible assets (non-GAAP measure) was 8.79% at December 31, 2017, increasing from 8.20% at December 31, 2016, which primarily reflects growth in retained earnings, net of dividends paid.  Strong earnings and increased total capital have enabled WesBanco to increase the quarterly dividend rate, currently at $0.26 per share, ten times over the last seven years, a cumulative increase of 86%.  The most recent increase was $0.02 per share per quarter during the first quarter of 2017, which represents an annualized increase of 8.3%.

WesBanco will also host a conference call to discuss the Company's financial results for the fourth quarter of 2017 at 10:00 a.m. ET on Wednesday, January 24, 2018.  Interested parties can access the live webcast of the conference call through the Investor Relations section of the Company's website, www.wesbanco.com.  Participants can also listen to the conference call by dialing 888-347-6607, 855-669-9657 for Canadian callers, or 412-902-4290 for international callers, and asking to be joined into the WesBanco call. Please log in or dial in at least 10 minutes prior to the start time to ensure a connection.

A replay of the conference call will be available by dialing 877-344-7529, 855-669-9658 for Canadian callers, or 412-317-0088 for international callers, and providing the access code of 10115491. The replay will begin at approximately 12:00 p.m. ET on January 24, and end at 12 a.m. ET on February 7. An archive of the webcast will be available for one year on the Investor Relations section of the Company's website (www.wesbanco.com).

Forward-looking statements in this report relating to WesBanco's plans, strategies, objectives, expectations, intentions and adequacy of resources, are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995.  The information contained in this report should be read in conjunction with WesBanco's Form 10-K for the year ended December 31, 2016 and documents subsequently filed by WesBanco with the Securities and Exchange Commission ("SEC"), including WesBanco's Form 10-Q for the quarters ended March 31, June 30  and September 30, 2017, which are available at the SEC's website, www.sec.gov or at WesBanco's website, www.wesbanco.com.  Investors are cautioned that forward-looking statements, which are not historical fact, involve risks and uncertainties, including those detailed in WesBanco's most recent Annual Report on Form 10-K filed with the SEC under "Risk Factors" in Part I, Item 1A.  Such statements are subject to important factors that could cause actual results to differ materially from those contemplated by such statements, including, without limitation, that the businesses of WesBanco and FTSB may not be integrated successfully or such integration may take longer to accomplish than excepted; the expected cost savings and any revenue synergies from the merger of WesBanco and FTSB may not be fully realized within the expected timeframes; disruption from the merger of WesBanco and FTSB may make it more difficult to maintain relationships with clients, associates, or suppliers; the effects of changing regional and national economic conditions; changes in interest rates, spreads on earning assets and interest-bearing liabilities, and associated interest rate sensitivity; sources of liquidity available to WesBanco and its related subsidiary operations; potential future credit losses and the credit risk of commercial, real estate, and consumer loan customers and their borrowing activities; actions of the Federal Reserve Board, the Federal Deposit Insurance Corporation, the SEC, the Financial Institution Regulatory Authority, the Municipal Securities Rulemaking Board, the Securities Investors Protection Corporation, and other regulatory bodies; potential legislative and federal and state regulatory actions and reform, including, without limitation, the impact of the implementation of the Dodd-Frank Act; adverse decisions of federal and state courts; fraud, scams and schemes of third parties; internet hacking; competitive conditions in the financial services industry; rapidly changing technology affecting financial services; marketability of debt instruments and corresponding impact on fair value adjustments; and/or other external developments materially impacting WesBanco's operational and financial performance.  WesBanco does not assume any duty to update forward-looking statements.

In connection with the proposed merger with First Sentry Bancshares, Inc. ("First Sentry"), WesBanco filed with the SEC a Registration Statement on Form S-4, which was declared effective on January 5, 2018, that includes a Proxy Statement of FTSB and a Prospectus of WesBanco, as well as other relevant documents concerning the proposed transaction. SHAREHOLDERS OF FTSB AND OTHER INTERESTED PARTIES ARE URGED TO READ THE REGISTRATION STATEMENT AND THE PROXY STATEMENT/PROSPECTUS REGARDING THE MERGER AND ANY OTHER RELEVANT DOCUMENTS FILED WITH THE SEC, AS WELL AS ANY AMENDMENTS OR SUPPLEMENTS TO THOSE DOCUMENTS, BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION. The Proxy Statement/Prospectus dated January 5, 2018 was mailed to shareholders of First Sentry on or about January 8, 2018.  The First Sentry shareholder meeting is scheduled for February 9, 2018. In addition, the Registration Statement on Form S-4, which includes the Proxy Statements/Prospectus, and other related documents filed by WesBanco with the SEC may be obtained for free at the SEC's website at http://www.sec.gov, on the NASDAQ website at http://www.nasdaq.com and from WesBanco's website at http://www.wesbanco.com.

WesBanco and First Sentry and their respective executive officers and directors may be deemed to be participants in the solicitation of proxies from the shareholders of First Sentry in connection with the proposed merger. Information about the directors and executive officers of WesBanco is set forth in the proxy statement for WesBanco's 2017 annual meeting of shareholders, as filed with the SEC on March 14, 2017.  Information about any other persons who may, under the rules of the SEC, be considered participants in the solicitation of First Sentry shareholders in connection with the proposed merger are included in the Proxy Statement/Prospectus. You can obtain free copies of these documents from the SEC or WesBanco using the website information above. This communication does not constitute an offer to sell or the solicitation of an offer to buy any securities, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation, or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction.

FIRST SENTRY SHAREHOLDERS ARE URGED TO READ THE PROXY STATEMENT/PROSPECTUS CAREFULLY BEFORE MAKING ANY VOTING OR INVESTMENT DECISIONS WITH RESPECT TO THE PROPOSED MERGER.

Founded in 1870, WesBanco, Inc. (www.wesbanco.com) is a multi-state, bank holding company with total assets of approximately $9.8 billion (as of December 31, 2017).  WesBanco is a diversified and well-balanced financial services institution, with a community bank at its core, built upon a strong legacy of credit and risk management.  WesBanco has meaningful market share across its key geographies maintained by its commitment to dedicated customer service and solid fee-based businesses. It also provides wealth management services through a century-old trust and wealth management business, with approximately $3.9 billion of assets under management (as of December 31, 2017), and serves as registered investment advisor to a proprietary mutual fund family, the WesMark Funds.  WesBanco's banking subsidiary, WesBanco Bank, Inc., operates 172 financial centers in the states of Indiana, Kentucky, Ohio, Pennsylvania, and West Virginia.  In addition, WesBanco operates an insurance agency, WesBanco Insurance Services, Inc., and a full service broker/dealer, WesBanco Securities, Inc.

 

WESBANCO, INC.

Consolidated Selected Financial Highlights

Page 5

(unaudited, dollars in thousands, except shares and per share amounts)
				For the Three Months Ended						For the Year Ended
STATEMENT OF INCOME				December 31,						December 31,
Interest and dividend income				2017		2016		% Change		2017		2016		% Change
	Loans, including fees			$             69,408		$               66,135		4.9		$          272,007		$             226,993		19.8
	Interest and dividends on securities:
		Taxable		9,948		9,359		6.3		38,631		38,490		0.4
		Tax-exempt		4,872		4,770		2.1		19,489		18,390		6.0
			Total interest and dividends on securities	14,820		14,129		4.9		58,120		56,880		2.2
	Other interest income			623		555		12.3		2,297		2,224		3.3
Total interest and dividend income				84,851		80,819		5.0		332,424		286,097		16.2
Interest expense
	Interest bearing demand deposits			2,039		975		109.1		6,452		2,817		129.0
	Money market deposits			805		510		57.8		2,775		1,860		49.2
	Savings deposits			189		194		(2.6)		745		696		7.0
	Certificates of deposit			2,597		2,585		0.5		10,108		10,419		(3.0)
			Total interest expense on deposits	5,630		4,264		32.0		20,080		15,792		27.2
	Federal Home Loan Bank borrowings			3,682		2,881		27.8		13,290		11,985		10.9
	Other short-term borrowings			489		179		173.2		1,442		478		201.7
	Subordinated debt and junior subordinated debt			1,868		1,807		3.4		7,317		4,512		62.2
			Total interest expense	11,669		9,131		27.8		42,129		32,767		28.6
Net interest income				73,182		71,688		2.1		290,295		253,330		14.6
	Provision for credit losses			2,376		2,128		11.7		9,986		8,478		17.8
Net interest income after provision for credit losses				70,806		69,560		1.8		280,309		244,852		14.5
Non-interest income
	Trust fees			5,667		5,470		3.6		22,740		21,630		5.1
	Service charges on deposits			5,278		5,474		(3.6)		20,532		18,333		12.0
	Electronic banking fees			4,788		4,268		12.2		19,183		15,596		23.0
	Net securities brokerage revenue			1,508		1,330		13.4		6,672		6,449		3.5
	Bank-owned life insurance			1,123		1,154		(2.7)		4,794		4,064		18.0
	Mortgage banking income			1,542		484		218.6		5,053		2,529		99.8
	Net securities gains			56		63		(11.1)		567		2,357		(75.9)
	Net gain on other real estate owned and other assets			649		383		69.5		658		790		(16.7)
	Other income			2,323		2,794		(16.9)		8,641		9,751		(11.4)
			Total non-interest income	22,934		21,420		7.1		88,840		81,499		9.0
Non-interest expense
	Salaries and wages			25,786		24,145		6.8		97,361		84,281		15.5
	Employee benefits			6,263		7,267		(13.8)		29,933		27,952		7.1
	Net occupancy			4,132		4,272		(3.3)		17,101		14,664		16.6
	Equipment			3,983		4,234		(5.9)		16,026		14,543		10.2
	Marketing			1,238		1,515		(18.3)		5,720		5,391		6.1
	FDIC insurance			827		764		8.2		3,504		3,990		(12.2)
	Amortization of intangible assets			1,204		1,334		(9.7)		4,940		3,598		37.3
	Restructuring and merger-related expense			454		2,684		(83.1)		945		13,261		(92.9)
	Other operating expenses			10,950		12,083		(9.4)		45,330		41,000		10.6
			Total non-interest expense	54,837		58,298		(5.9)		220,860		208,680		5.8
Income before provision for income taxes				38,903		32,682		19.0		148,289		117,671		26.0
	Provision for income taxes (1)			23,006		8,464		171.8		53,807		31,036		73.4
Net Income				$             15,897		$               24,218		(34.4)		$             94,482		$               86,635		9.1
Taxable equivalent net interest income				$            75,805		$            74,256		2.1		$          300,789		$          263,232		14.3
Per common share data
Net income per common share - basic				$                 0.36		$                   0.55		(34.5)		$                 2.15		$                   2.16		(0.5)
Net income per common share - diluted				0.36		0.55		(34.5)		2.14		2.16		(0.9)
Dividends declared				0.26		0.24		8.3		1.04		0.96		8.3
Book value (period end)										31.68		30.53		3.8
Tangible book value (period end) (2)										18.42		17.19		7.2
Average common shares outstanding - basic				44,036,416		43,887,781		0.3		44,003,208		40,100,320		9.7
Average common shares outstanding - diluted				44,109,767		43,935,815		0.4		44,075,293		40,127,076		9.8
Period end common shares outstanding				44,043,244		43,931,715		0.3		44,043,244		43,931,715		0.3
(1) The three months ended December 31, 2017 and the year ended December 31, 2017 include a $12.8 million tax expense as a result of the net deferred tax asset revaluation.
(2) See non-GAAP financial measures for additional information relating to the calculation of this item.