Wheeling, WV, April 17, 2018 – WesBanco, Inc. ("WesBanco") (Nasdaq: WSBC), a diversified, multi-state bank holding company, today announced net income for the three months ended March 31, 2018 of $33.5 million, with diluted earnings per share of $0.76, compared to $25.9 million and $0.59 per diluted share, respectively, for the first quarter of 2017.  Excluding after-tax merger-related expenses (non-GAAP measure) in both periods, net income and diluted earnings per share would have increased 28.7% to $33.7 million, or $0.76 per diluted share for the three months ended March 31, 2018, as compared to the prior year quarter.

 

On April 5, 2018, WesBanco consummated the merger with First Sentry Bancshares, Inc. ("FTSB"), a bank holding company headquartered in Huntington, WV with approximately $700 million in assets.  The merger, which was announced on November 13, 2017, was approved by all appropriate regulatory agencies and the shareholders of FTSB during February.  WesBanco's first quarter results excludes the impact of the FTSB acquisition since it closed after the end of the quarter.

Financial and operational highlights:

·	Continued execution of well-defined long-term growth strategies

·	The merger with FTSB has been successfully completed with conversion planned for later this summer

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

·	Trust assets exceeded $4 billion for the first time

·	Continued strength across key credit quality metrics

·	Solid expense management as demonstrated by a first quarter efficiency ratio of 55.12% (non-GAAP measure), which was flat sequentially and improved 88 basis points compared to the prior year

·	Strong year-over-year organic growth in pre-tax earnings of 11.0%

"We are pleased with WesBanco's performance during the first quarter of 2018," said Todd F. Clossin, President and Chief Executive Officer of WesBanco. "We remain focused on disciplined growth, expense management, and increasing long-term shareholder value through earnings and dividend growth.  Following the record reported earnings during 2017, we reported an 11% year-over-year increase in pre-tax earnings during the first quarter of 2018.  In addition, during February, we announced an 11.5% increase in our quarterly dividend rate to $0.29 per share, representing a 107% increase since 2010."

Mr. Clossin added, "On April 5^th, we welcomed the shareholders, customers, and employees of First Sentry into the WesBanco family.  This merger fits perfectly with our strategic growth plans as it combines two institutions with solid credit quality and a strong focus on client service and community banking.  And, most importantly, we are eager to provide our new retail and commercial customers our broad array of products and services while continuing to deliver the exceptional service to which they are accustomed."

Portfolio loans of $6.3 billion were flat when compared to the prior year period as targeted reductions in the consumer portfolio to reduce its risk profile offset growth in our strategic focus categories, which, over the past twelve months, grew 1.8% in total commercial loans and 3.0% in home equity loans.  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.  Reflecting the strength of our legacy footprint, total deposits, excluding CDs, increased 5.1%, driven by 8.0% growth in interest bearing and non-interest bearing demand deposits, which now represent 51.5% of total deposits as of March 31, 2018 as compared to balances as of March 31, 2017.  Further, average loans to average deposits for the first quarter of 2018 remained consistent to prior quarters at 89.3%, which provides ample funding support for future loan growth.

The continued strength of our credit quality ratios is reflective of our strong legacy of credit and risk management.  As of March 31, 2018, both non-performing assets as a percentage of total assets of 0.42% and non-performing loans as a percentage of total portfolio loans of 0.62% have continued to show improvements and have declined to the lowest levels in at least five quarters.  In addition, net charge-offs as a percentage of average portfolio loans were 0.07%, declining both sequentially and year-over-year.  Further reflecting the consistent high quality of the loan portfolio, the provision for credit losses decreased from $2.7 million in the first quarter of 2017 to $2.2 million in the current quarter.

The net interest margin for the first quarter of 2018 declined four basis points year-over-year to 3.38%, reflecting a six basis point reduction, as mentioned last quarter, related to the lower tax-equivalency of the state and local municipal tax-exempt securities resulting from the "Tax Cuts and Jobs Act".  The net interest margin continues to benefit from increases in the Federal Reserve Board's target federal funds rate over the past year, 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 public funds, and certain Federal Home Loan Bank and other borrowings.  Accretion from prior acquisitions benefited the first quarter net interest margin by approximately six basis points, as compared to eight basis points in the prior year period.

Net interest income increased $2.6 million, or 3.6%, during the first quarter of 2018 as compared to the same quarter of 2017 due to a 2.7% increase in average total earning assets.

For the first quarter of 2018, non-interest income of $24.0 million increased $1.1 million, or 4.8%, from the first quarter of 2017, driven by higher bank-owned life insurance, trust fees, and electronic banking fees, which more than offset lower mortgage banking income and other income.  The $1.6 million, or 141.8%, increase in bank-owned life insurance was due to higher death benefits received during the period.  Trust fees grew $0.4 million from the prior year quarter reflecting improvements in the equity markets as well as organic growth in trust assets.  While the volume of residential mortgage originations sold in the secondary market increased 26% year-over-year, mortgage banking income declined $0.4 million due to a $0.5 million reversal in the mark-to-market on mortgage loans held for sale and commitments that benefited the first quarter of 2017.  Lastly, other income decreased $0.9 million due to income in the prior year period from joint ventures, which were previously dissolved, as well as lower commercial customer loan swap income.

Total operating expenses were well-controlled during the first quarter of 2018, as strong discretionary expense management continues to be demonstrated.  Excluding merger-related expenses in both years, non-interest expense during the first quarter of 2018 increased $0.4 million, or 0.8%, compared to the prior year period.  The slight increase from the prior year quarter is primarily due to higher salaries and wages, which increased $2.0 million, or 8.7%, year-over-year.  This increase was due to the normal compensation adjustments implemented last summer, as well as the reclassification of $0.7 million related to the service cost component of the pension plan from employee benefits due to a new accounting standard, which was adopted as of January 1, 2018.  The remainder of the year-over-year decrease in employee benefits was from lower deferred compensation expense from associated market and participant activity.

The effective income tax rate and associated provision for income taxes for the first quarter of 2018 are reflective of the recently enacted "Tax Cuts and Jobs Act", which lowered the Federal income tax rate for corporations to 21%.  During the first quarter, the effective tax rate was 17.28% as compared to 29.09% last year, while the provision for income taxes decreased $3.6 million to $7.0 million, despite higher year-over-year pre-tax income.

WesBanco continues to maintain strong regulatory capital ratios after the implementation of the BASEL III capital standards.  At March 31, 2018, Tier I leverage was 10.56%, Tier I Risk-Based capital was 14.31%, Total Risk-Based capital was 15.35%%, and the Common Equity Tier 1 capital ratio ("CET 1") was 12.33%.  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.  Record earnings achieved during 2017, strong regulatory capital and liquidity positions, solid execution on well-defined long-term operational and growth strategies, and the recent change in Federal tax law enabled WesBanco to increase the quarterly cash dividend by 11.5% to $0.29 per share during February.  This is the eleventh increase over the last eight years, representing a cumulative increase of 107%.

WesBanco will also host a conference call to discuss the Company's financial results for the first quarter of 2018 at 3:00 p.m. ET on Wednesday, April 18, 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 10115492.  The replay will begin at approximately 5:00 p.m. ET on April 18, and end at 12 a.m. ET on May 2.  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, 2017 and documents subsequently filed by WesBanco with the Securities and Exchange Commission ("SEC"), 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.

Founded in 1870, WesBanco, Inc. (www.wesbanco.com) is a multi-state, bank holding company with total assets of approximately $10.2 billion (as of March 31, 2018).  WesBanco is a diversified and well-balanced financial services institution, with a community bank at its core, built upon a strong legacy of credit and risk management.  WesBanco has meaningful market share across its key geographies maintained by its commitment to dedicated customer service and solid fee-based businesses. It also provides wealth management services through a century-old trust and wealth management business, with approximately $4.0 billion of assets under management (as of March 31, 2018), and serves as registered investment advisor to a proprietary mutual fund family, the WesMark Funds.  WesBanco's banking subsidiary, WesBanco Bank, Inc., operates 177 financial centers in the states of Indiana, Kentucky, Ohio, Pennsylvania, and West Virginia.  In addition, WesBanco operates an insurance agency, WesBanco Insurance Services, Inc., and a full service broker/dealer, WesBanco Securities, Inc.

 

 

WESBANCO, INC.
Consolidated Selected Financial Highlights								Page 4
(unaudited, dollars in thousands, except shares and per share amounts)

				For the Three Months Ended
STATEMENT OF INCOME				March 31,
Interest and dividend income				2018		2017		% Change
	Loans, including fees			$             69,237		$               64,898		6.7
	Interest and dividends on securities:
		Taxable		11,543		9,596		20.3
		Tax-exempt		4,834		4,891		(1.2)
			Total interest and dividends on securities	16,377		14,487		13.0
	Other interest income			803		539		49.0
Total interest and dividend income				86,417		79,924		8.1
Interest expense
	Interest bearing demand deposits			2,524		1,093		130.9
	Money market deposits			878		574		53.0
	Savings deposits			189		181		4.4
	Certificates of deposit			2,536		2,411		5.2
			Total interest expense on deposits	6,127		4,259		43.9
	Federal Home Loan Bank borrowings			4,498		2,836		58.6
	Other short-term borrowings			558		297		87.9
	Subordinated debt and junior subordinated debt			1,942		1,813		7.1
			Total interest expense	13,125		9,205		42.6
Net interest income				73,292		70,719		3.6
	Provision for credit losses			2,168		2,711		(20.0)
Net interest income after provision for credit losses				71,124		68,008		4.6
Non-interest income
	Trust fees			6,503		6,143		5.9
	Service charges on deposits			4,822		4,853		(0.6)
	Electronic banking fees			4,829		4,528		6.6
	Net securities brokerage revenue			1,670		1,762		(5.2)
	Bank-owned life insurance			2,756		1,140		141.8
	Mortgage banking income			1,004		1,440		(30.3)
	Net securities (losses)/gains			(39)		12		(425.0)
	Net gain/(losses) on other real estate owned and other assets			262		(76)		444.7
	Other income			2,173		3,082		(29.5)
			Total non-interest income	23,980		22,884		4.8
Non-interest expense
	Salaries and wages			25,006		23,002		8.7
	Employee benefits			6,912		8,210		(15.8)
	Net occupancy			4,656		4,327		7.6
	Equipment			3,949		4,042		(2.3)
	Marketing			1,116		824		35.4
	FDIC insurance			658		827		(20.4)
	Amortization of intangible assets			1,086		1,273		(14.7)
	Restructuring and merger-related expense			245		491		(50.1)
	Other operating expenses			10,943		11,388		(3.9)
			Total non-interest expense	54,571		54,384		0.3
Income before provision for income taxes				40,533		36,508		11.0
	Provision for income taxes			7,004		10,622		(34.1)
Net Income				$             33,529		$               25,886		29.5
Taxable equivalent net interest income				$            74,577		$            73,353		1.7
Per common share data
Net income per common share - basic				$                 0.76		$                   0.59		28.8
Net income per common share - diluted				0.76		0.59		28.8
Net income per common share - diluted, excluding certain items (1)(2)				0.76		0.60		26.7
Dividends declared				0.29		0.26		11.5
Book value (period end)				31.84		30.92		3.0
Tangible book value (period end) (1)				18.56		17.61		5.4
Average common shares outstanding - basic				44,050,701		43,947,563		0.2
Average common shares outstanding - diluted				44,168,242		44,020,765		0.3
Period end common shares outstanding				44,060,957		43,953,051		0.2
(1) See non-GAAP financial measures for additional information relating to the calculation of this item.
(2) Certain items excluded from the calculation consist of after-tax merger-related expenses and the net deferred tax asset revaluation.