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Investor Relation - Press Release

Investor Relation

Press Release

WesBanco Announces Fourth Quarter 2018 Net Income

Company Release - 1/28/2019 4:15 PM ET

WHEELING, W.Va., Jan. 28, 2019 /PRNewswire/ -- WesBanco, Inc. ("WesBanco") (Nasdaq: WSBC), a diversified, multi-state bank holding company, today announced net income and related earnings per share for the three and twelve months ended December 31, 2018.  Net income for the three months ended December 31, 2018 was $43.9 million, with diluted earnings per share of $0.80, compared to $15.9 million and $0.36 per diluted share, respectively, for the fourth quarter of 2017.  For the twelve months ended December 31, 2018, net income was $143.1 million, or $2.92 per diluted share, compared to $94.5 million, or $2.14 per diluted share, for the 2017 period.  Net income excluding after-tax merger-related expenses and the 2017 net deferred tax asset revaluation, which resulted from last year's Federal tax reform legislation, for the three months ended December 31, 2018, increased 55.4% year-over-year to $45.0 million, or $0.82 per diluted share as compared to $0.66 per diluted share in the prior year quarter, an increase of 24.2% (non-GAAP measure).  On the same basis, net income for the twelve months ended December 31, 2018 increased 45.7% year-over-year to $157.2 million, or $3.21 per diluted share versus $2.45 per diluted share in the prior year period, an increase of 31.0% (non-GAAP measure).



For the Three Months Ended December 31,


For the Twelve Months Ended December 31,



2018


2017


2018


2017

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


Net Income


Diluted
Earnings
Per Share


Net Income


Diluted
Earnings
Per Share


Net Income


Diluted
Earnings
Per Share


Net Income


Diluted
Earnings
Per Share

Net income (Non-GAAP)(1)


$      45,025


$       0.82


$      28,972


$       0.66


$    157,221


$       3.21


$    107,876


$       2.45

Less: Net deferred tax asset revaluation


-


-


(12,780)


(0.29)


-


-


(12,780)


(0.29)

Less: After tax merger-related expenses


(1,097)


(0.02)


(295)


(0.01)


(14,109)


(0.29)


(614)


(0.02)

Net income (GAAP)


$      43,928


$       0.80


$      15,897


$       0.36


$    143,112


$       2.92


$      94,482


$       2.14


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

WesBanco Logo (PRNewsfoto/WesBanco, Inc.)

On April 5, 2018, WesBanco consummated the merger with First Sentry Bancshares, Inc. ("FTSB"), a bank holding company headquartered in Huntington, WV with $0.7 billion in assets, excluding goodwill.  In addition, on August 20, 2018, WesBanco consummated the merger with Farmers Capital Bank Corporation ("FFKT"), a bank holding company headquartered in Frankfort, KY with approximately $1.6 billion in assets, excluding goodwill.  Financial results for both FTSB and FFKT have been included in WesBanco's results from their respective merger consummation dates.

Financial and operational highlights:

  • Execution of well-defined long-term growth strategies combined with strong underlying fundamentals driving strong profitability
    • Record net income during 2018 of $143.1 million, or $157.2 million when excluding merger-related costs
      • 2018 net income was positively impacted by the passage of the "Tax Cuts and Jobs Act" in late-2017 which lowered the statutory Federal income tax rate for corporations to 21%, as compared to 35% in prior periods
    • Year-to-date income before provisions for credit losses and income taxes increased 15.2% year-over-year, or 25.7% when excluding merger-related costs
    • Strong core returns on average assets and tangible equity of 1.39% and 17.78%, respectively (non-GAAP measures)
  • Sequential and year-over-year improvement in core net interest margin reflects the benefits of the FFKT and FTSB acquisitions and our core deposit funding advantage
  • Solid expense management as demonstrated by a 184 basis point improvement in the year-to-date efficiency ratio to 54.6% (non-GAAP measure), despite the inclusion of FFKT's operating expenses since August 20, 2018
  • Continued strength across key credit quality metrics reflective of strong legacy of credit and risk management
  • Successful implementation of stated acquisition strategy to cross the $10 billion asset threshold
    • Filled-in the southern edge of franchise
    • Became a top ten financial institution in the state of Kentucky

"2018 was another successful year for WesBanco, as well as a year full of milestones," said Todd F. Clossin, President and Chief Executive Officer of WesBanco.  "Solid execution and strong fundamentals drove record earnings of $143 million, or $157 million when excluding merger-related costs.  We strengthened the franchise by expanding into new and diversified markets with strong demographics, and ensured top market share across our major markets.  We remained diligent on expense management while continuing to make technology and staffing investments to support future growth – helping to drive our 2018 efficiency ratio to 54.6%.  In addition, we stayed disciplined and balanced on lending decisions as our credit quality ratios have continued to improve to be at or near historic lows."

Mr. Clossin added, "We remain well-positioned for continued success due to our well-defined operational and growth strategies.  Furthermore, we are excited about our opportunities for the upcoming year, and look forward to providing additional value to our customers and shareholders."

Balance Sheet
Portfolio loans of $7.7 billion, as of December 31, 2018, increased 20.7% when compared to the prior year period due to the acquisitions of FTSB and FFKT.  Total organic loans were down 1.3% year-over-year, when excluding the consumer loan portfolio de-emphasis strategy, or down 1.7% in total.  The year-over-year decline in total organic loan growth resulted from targeted reductions in the consumer portfolio to reduce its risk profile, lower home equity loan balances due to lower demand as a result of higher interest rates and tax changes, elevated levels of commercial real estate loans moving to an aggressive secondary financing market, and continued deleveraging by commercial customers reflective of the current operating environment and higher cash levels from tax reform.  Total deposits increased 25.4% year-over-year to $8.8 billion due to the FTSB and FFKT acquisitions.  Continuing to reflect the strength of our legacy footprint, total deposits, excluding CDs, increased 2.5% organically, driven by 5.8% organic growth in interest bearing and non-interest bearing demand deposits.

Credit Quality
Our underlying credit fundamentals continue to be reflective of our strong legacy of credit and risk management.  During the fourth quarter of 2018, our credit quality ratios remained strong as we balanced disciplined loan origination growth in the current environment with our prudent lending standards.  Our credit quality measures have been at or near historic lows over the last several periods, and, as such, variability from quarter to quarter may occur, which is not suggestive of a change in the direction of overall credit quality.

As of December 31, 2018, despite the addition of approximately $1.4 billion of portfolio loans from the acquisitions of FTSB and FFKT, non-performing loans and non-performing assets decreased year-over-year both on an absolute dollar basis and as a percentage of the portfolio.  Criticized and classified loan balances decreased as a percentage of total loans year-over-year.

Further reflecting the continued high quality of the loan portfolio, on a year-to-date basis for 2018, the provision for credit losses decreased 22.3% year-over-year to $7.8 million, and annualized net loan charge-offs to average loans decreased 7 basis points year-over-year to 0.06%.

Net Interest Margin and Income
The net interest margin for the fourth quarter of 2018 increased 29 basis points year-over-year to 3.72%.  The net interest margin benefited from increases in the Federal Reserve Board's target federal funds rate through the past year and a full quarter benefit from the higher margins on the acquired FFKT net assets, partially offset by higher funding costs as well as a flattening of the yield curve.  Also impacting the year-over-year change in the net interest margin was a six basis point reduction related to the lower tax-equivalency of the state and local municipal tax-exempt securities resulting from the "Tax Cuts and Jobs Act".  The increase in the cost of interest bearing liabilities was primarily due to higher rates for interest bearing public funds, higher tier money market accounts, and Federal Home Loan Bank and other borrowings.  Further, reflecting the benefit of our legacy deposit footprint, the year-to-date deposit beta on the four federal funds rate increases since the year ago quarter was 17%, or only 12% when including the strong growth in non-interest bearing deposits.  Lastly, accretion from acquisitions benefited the fourth quarter net interest margin by approximately 23 basis points, as compared to 6 basis points in the prior year period, and it was 14 basis points for 2018 versus 8 basis points during 2017.

Net interest income increased $28.6 million, or 39.1%, during the fourth quarter of 2018 as compared to the same quarter of 2017 due to a 25.5% increase in average total earning assets, primarily driven by the FTSB and FFKT acquisitions and related accretion from purchase accounting, as well as an overall higher net interest margin.  For the year ended December 31, 2018, net interest income increased $56.9 million, or 19.6%, due to higher average total earning assets from the $2.2 billion in earning assets acquired from FTSB and FFKT and a larger investment portfolio, and the aforementioned higher net interest margin.

Non-Interest Income
For the fourth quarter of 2018, non-interest income of $26.6 million increased $3.6 million, or 15.8%, from the fourth quarter of 2017, driven by the FTSB and FFKT acquisitions.  The associated larger customer deposit base and higher transaction volumes drove the year-over-year increases in electronic banking fees and service charges on deposits.  Other income increased $0.8 million primarily due to an increase in payment processing fee income.  Net securities losses of $1.3 million were primarily due to a market adjustment on the deferred compensation plan, while an offsetting reduction of $1.1 million is recorded in employee benefits expense. 

For the twelve months ended December 31, 2018, non-interest income increased $11.4 million, or 12.9%.  The primary drivers of this year-to-date increase were increased customer levels and transaction volumes from the two acquisitions, higher trust assets from a combination of the FFKT acquisition and organic growth, and higher mortgage banking income due to the strength of the residential mortgage lending program; partially offset by net securities losses as discussed above.

Non-Interest Expense
Total operating expenses continued to be well-controlled during the fourth quarter of 2018, despite the inclusion of FFKT's operating expenses since August 20th.  The FFKT cost savings of 35% announced in April 2018 remain on track for 75% of the anticipated savings to be achieved during 2019, and 100% thereafter.  Excluding merger-related expenses, non-interest expense increased $15.2 million, or 28.0%, compared to the prior year period, reflecting the two acquisitions.  This year-over-year increase is primarily due to higher salaries and wages, employee benefits, net occupancy, and equipment costs associated with additional staffing and financial center locations from the two acquisitions.  As mentioned above, the overall employee benefits increase was partially mitigated by a $1.1 million reduction in the deferred compensation plan obligation due to market declines.  These increases were balanced by strong discretionary expense management as demonstrated by the 146 basis point year-over-year decrease in the efficiency ratio to 53.62% for the fourth quarter of 2018.

Excluding merger-related expenses in both years, non-interest expense during the twelve months of 2018 increased $27.4 million, or 12.5%, compared to the prior year period, reflecting the acquisition of both FTSB and FFKT, partially offset by strong discretionary expense management.

Provision for Income Taxes
The effective income tax rate and associated provision for income taxes for the fourth quarter of 2018 are reflective of the late-2017 passage of the "Tax Cuts and Jobs Act", lowering the statutory Federal income tax rate for corporations to 21%.  During the fourth quarter, the effective tax rate was 19.37% as compared to 59.14% last year, which included the impact of the deferred tax revaluation adjustment, while the provision for income taxes decreased $12.4 million to $10.6 million, despite higher year-over-year pre-tax income.

Capital
WesBanco continues to maintain strong regulatory capital ratios as both consolidated and bank-level regulatory capital ratios are well above the applicable "well-capitalized" standards promulgated by bank regulators and the BASEL III capital standards.  At December 31, 2018, Tier I leverage was 10.74%, Tier I Risk-Based capital was 15.09%, Total Risk-Based capital was 15.99%, and the Common Equity Tier 1 capital ratio ("CET 1") was 13.14%.  Tangible common equity also remained strong, increasing to 9.28% at period-end from 8.79% as of December 31, 2017.  Record earnings achieved during 2017, strong regulatory capital and liquidity positions, and solid execution on well-defined long-term operational and growth strategies enabled WesBanco to increase the quarterly cash dividend by 11.5% to $0.29 per share during February 2018.  This was the eleventh increase during the last eight years, representing a cumulative increase of 107%.

Conference Call and Webcast
WesBanco will host a conference call to discuss the Company's financial results for the fourth quarter of 2018 at 10:00 a.m. ET on Tuesday, January 29, 2019.  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 10126808.  The replay will begin at approximately 12:00 p.m. ET on January 29, and end at 12 a.m. ET on February 12.  An archive of the webcast will be available for one year on the Investor Relations section of the Company's website (www.wesbanco.com).

Forward-Looking Statements
Forward-looking statements in this report relating to WesBanco's plans, strategies, objectives, expectations, intentions and adequacy of resources, are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995.  The information contained in this report should be read in conjunction with WesBanco's Form 10-K for the year ended December 31, 2017 and documents subsequently filed by WesBanco with the Securities and Exchange Commission ("SEC"), including WesBanco's Form 10-Q for the quarters ended March 31, June 30, and September 30, 2018, which are available at the SEC's website, www.sec.gov or at WesBanco's website, www.wesbanco.com.  Investors are cautioned that forward-looking statements, which are not historical fact, involve risks and uncertainties, including those detailed in WesBanco's most recent Annual Report on Form 10-K filed with the SEC under "Risk Factors" in Part I, Item 1A.  Such statements are subject to important factors that could cause actual results to differ materially from those contemplated by such statements, including, without limitation, that the businesses of WesBanco and FFKT may not be integrated successfully or such integration may take longer to accomplish than excepted; the expected cost savings and any revenue synergies from the merger of WesBanco and FFKT may not be fully realized within the expected timeframes; disruption from the merger of WesBanco and FFKT may make it more difficult to maintain relationships with clients, associates, or suppliers; the effects of changing regional and national economic conditions; changes in interest rates, spreads on earning assets and interest-bearing liabilities, and associated interest rate sensitivity; sources of liquidity available to WesBanco and its related subsidiary operations; potential future credit losses and the credit risk of commercial, real estate, and consumer loan customers and their borrowing activities; actions of the Federal Reserve Board, the Federal Deposit Insurance Corporation, the SEC, the Financial Institution Regulatory Authority, the Municipal Securities Rulemaking Board, the Securities Investors Protection Corporation, and other regulatory bodies; potential legislative and federal and state regulatory actions and reform, including, without limitation, the impact of the implementation of the Dodd-Frank Act; adverse decisions of federal and state courts; fraud, scams and schemes of third parties; cyber-security breaches; competitive conditions in the financial services industry; rapidly changing technology affecting financial services; marketability of debt instruments and corresponding impact on fair value adjustments; and/or other external developments materially impacting WesBanco's operational and financial performance.  WesBanco does not assume any duty to update forward-looking statements.

About WesBanco, Inc.
Founded in 1870, WesBanco, Inc. (www.wesbanco.com) is a multi-state, bank holding company with total assets of approximately $12.5 billion (as of December 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 $4.3 billion of assets under management (as of December 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 209 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 Twelve Months Ended

STATEMENT OF INCOME

December 31,


December 31,

Interest and dividend income

2018


2017


% Change


2018


2017


% Change


Loans, including fees

$             97,685


$               69,408


40.7


$          331,961


$             272,007


22.0


Interest and dividends on securities:














Taxable 

16,196


9,948


62.8


56,898


38,631


47.3



Tax-exempt

5,562


4,872


14.2


20,778


19,489


6.6




Total interest and dividends on securities

21,758


14,820


46.8


77,676


58,120


33.6


Other interest income 

1,944


623


212.0


5,320


2,297


131.6

          Total interest and dividend income

121,387


84,851


43.1


414,957


332,424


24.8

Interest expense













Interest bearing demand deposits

4,000


2,039


96.2


13,144


6,452


103.7


Money market deposits

1,683


805


109.1


5,016


2,775


80.8


Savings deposits

452


189


139.2


1,225


745


64.4


Certificates of deposit

3,662


2,597


41.0


12,450


10,108


23.2




Total interest expense on deposits

9,797


5,630


74.0


31,835


20,080


58.5


Federal Home Loan Bank borrowings

6,191


3,682


68.1


23,333


13,290


75.6


Other short-term borrowings

1,221


489


149.7


3,717


1,442


157.8


Subordinated debt and junior subordinated debt 

2,411


1,868


29.1


8,836


7,317


20.8




Total interest expense

19,620


11,669


68.1


67,721


42,129


60.7

Net interest income 

101,767


73,182


39.1


347,236


290,295


19.6


Provision for credit losses

2,854


2,376


20.1


7,764


9,986


(22.3)

Net interest income after provision for credit losses

98,913


70,806


39.7


339,472


280,309


21.1

Non-interest income













Trust fees

6,103


5,667


7.7


24,623


22,740


8.3


Service charges on deposits

7,387


5,278


40.0


23,670


20,532


15.3


Electronic banking fees

6,604


4,788


37.9


23,300


19,183


21.5


Net securities brokerage revenue

1,871


1,508


24.1


7,186


6,672


7.7


Bank-owned life insurance

1,312


1,123


16.8


6,427


4,794


34.1


Mortgage banking income

1,543


1,542


0.1


5,840


5,053


15.6


Net securities (losses) / gains

(1,303)


56


(2,426.8)


(900)


567


(258.7)


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

(117)


649


(118.0)


524


658


(20.4)


Other income

3,161


2,323


36.1


9,606


8,641


11.2




Total non-interest income

26,561


22,934


15.8


100,276


88,840


12.9

Non-interest expense













Salaries and wages

32,389


25,786


25.6


114,602


97,361


17.7


Employee benefits

7,298


6,263


16.5


30,079


29,933


0.5


Net occupancy

5,455


4,132


32.0


19,165


17,101


12.1


Equipment 

4,667


3,983


17.2


17,207


16,026


7.4


Marketing

1,402


1,238


13.2


5,368


5,720


(6.2)


FDIC insurance 

927


827


12.1


3,242


3,504


(7.5)


Amortization of intangible assets

2,762


1,204


129.4


6,980


4,940


41.3


Restructuring and merger-related expense

1,389


454


205.9


17,860


945


1,789.9


Other operating expenses  

14,701


10,950


34.3


50,721


45,330


11.9




Total non-interest expense

70,990


54,837


29.5


265,224


220,860


20.1

Income before provision for income taxes

54,484


38,903


40.1


174,524


148,289


17.7


Provision for income taxes 

10,556


23,006


(54.1)


31,412


53,807


(41.6)

Net Income

$             43,928


$               15,897


176.3


$          143,112


$               94,482


51.5
















Taxable equivalent net interest income

$          103,246


$            75,805


36.2


$          352,760


$          300,789


17.3
















Per common share data












Net income per common share - basic

$                 0.80


$                   0.36


122.2


$                 2.93


$                   2.15


36.3

Net income per common share - diluted

0.80


0.36


122.2


2.92


2.14


36.4

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

0.82


0.66


24.2


3.21


2.45


31.0

Dividends declared

0.29


0.26


11.5


1.16


1.04


11.5

Book value (period end)

36.24


31.68


14.4


36.24


31.68


14.4

Tangible book value (period end) (1)

19.63


18.42


6.6


19.63


18.42


6.6

Average common shares outstanding - basic

54,598,142


44,036,416


24.0


48,889,041


44,003,208


11.1

Average common shares outstanding - diluted

54,706,691


44,109,767


24.0


49,022,990


44,075,293


11.2

Period end common shares outstanding

54,598,134


44,043,244


24.0


54,598,134


44,043,244


24.0
















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









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






 

WESBANCO, INC.

















Consolidated Selected Financial Highlights














Page 6

(unaudited, dollars in thousands)


































Selected ratios
























For the Twelve Months Ended









December 31,










2018


2017


% Change


























Return on average assets





1.26

%

0.96

%

31.25

%







Return on average assets, excluding
















    after-tax merger-related expenses and
















    net deferred tax asset revaluation (1)




1.39


1.09


27.52








Return on average equity





8.68


6.83


27.09








Return on average equity, excluding
















    after-tax merger-related expenses and
















    net deferred tax asset revaluation (1)




9.54


7.79


22.46








Return on average tangible equity (1)




16.24


12.23


32.79








Return on average tangible equity, excluding 
















    after-tax merger-related expenses and
















    net deferred tax asset revaluation (1)




17.78


13.90


27.91








Yield on earning assets (2) 





4.19


3.93


6.62








Cost of interest bearing liabilities




0.92


0.64


43.75








Net interest spread (2)





3.27


3.29


(0.61)








Net interest margin (2)





3.52


3.44


2.33








Efficiency (1) (2)






54.60


56.44


(3.26)








Average loans to average deposits




87.60


89.86


(2.52)








Annualized net loan charge-offs/average loans




0.06


0.13


(53.85)








Effective income tax rate (3)





18.00


36.29


(50.40)






















































































For the Quarter Ended










Dec. 31,


Sept. 30,


June 30,


Mar. 31,


Dec. 31,










2018


2018


2018


2018


2017






















Return on average assets





1.39

%

1.10

%

1.22

%

1.36

%

0.64

%



Return on average assets, excluding
















    after-tax merger-related expenses and
















    net deferred tax asset revaluation (1)




1.42


1.39


1.38


1.37


1.16




Return on average equity





8.94


7.50


8.77


9.70


4.48




Return on average equity, excluding
















    after-tax merger-related expenses and
















    net deferred tax asset revaluation (1)




9.16


9.47


9.90


9.76


8.17




Return on average tangible equity (1)




17.67


14.25


15.87


17.10


8.05




Return on average tangible equity, excluding 
















    after-tax merger-related expenses and
















    net deferred tax asset revaluation (1)




18.09


17.85


17.85


17.20


14.36




Yield on earning assets (2) 





4.42


4.21


4.11


3.98


3.95




Cost of interest bearing liabilities




0.97


0.95


0.91


0.80


0.71




Net interest spread (2)





3.45


3.26


3.20


3.18


3.24




Net interest margin (2)





3.72


3.50


3.43


3.38


3.43




Efficiency (1) (2) 






53.62


55.55


54.28


55.12


55.08




Average loans to average deposits




85.94


87.56


88.15


89.26


90.26




Annualized net loan charge-offs (recoveries)/average loans

0.14


(0.02)


0.03


0.07


0.16




Effective income tax rate (3)





19.37


16.71


18.11


17.28


59.14




Trust assets, market value at period end




$     4,269,961


$        4,743,894


$        4,044,207


$        4,027,358


$        3,943,519






















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










(2) The yield on earning assets, net interest margin, net interest spread and efficiency ratios are presented on a fully 








    taxable-equivalent (FTE) and annualized basis. The FTE basis adjusts for the tax benefit of income on certain tax-exempt 








   loans and investments.   WesBanco believes this measure to be the preferred industry measurement of net interest income and







   provides a relevant comparison between taxable and non-taxable amounts.












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





 

WESBANCO, INC.









Consolidated Selected Financial Highlights








Page 7

(unaudited, dollars in thousands, except shares)








% Change

Balance sheets


December 31,



September 30,

December 31, 2018

Assets



2018


2017


% Change

2018

to Sept. 30, 2018

Cash and due from banks


$           124,650


$          97,746


27.5

$              184,826

(32.6)

Due from banks - interest bearing


44,536


19,826


124.6

88,854

(49.9)

Securities:











Equity securities, at fair value


11,737


13,457


(12.8)

12,784

(8.2)


Available-for-sale debt securities, at fair value


2,114,129


1,261,865


67.5

2,008,232

5.3


Held-to-maturity debt securities (fair values of $1,020,743; $1,023,784 










and $1,014,361, respectively)


1,020,934


1,009,500


1.1

1,025,538

(0.4)


     Total securities


3,146,800


2,284,822


37.7

3,046,554

3.3

Loans held for sale


8,994


20,320


(55.7)

55,913

(83.9)

Portfolio loans:










Commercial real estate


3,853,695


2,994,448


28.7

3,906,221

(1.3)


Commercial and industrial


1,265,460


1,125,327


12.5

1,292,073

(2.1)


Residential real estate 


1,611,607


1,353,301


19.1

1,598,477

0.8


Home equity


599,331


529,196


13.3

604,106

(0.8)


Consumer 


326,188


339,169


(3.8)

325,546

0.2

Total portfolio loans, net of unearned income


7,656,281


6,341,441


20.7

7,726,423

(0.9)

Allowance for loan losses


(48,948)


(45,284)


(8.1)

(48,902)

(0.1)


     Net portfolio loans


7,607,333


6,296,157


20.8

7,677,521

(0.9)

Premises and equipment, net


166,925


130,722


27.7

159,284

4.8

Accrued interest receivable


38,853


29,728


30.7

39,465

(1.6)

Goodwill and other intangible assets, net


918,850


589,264


55.9

928,083

(1.0)

Bank-owned life insurance


225,317


192,589


17.0

223,995

0.6

Other assets


176,374


155,004


13.8

194,984

(9.5)

Total Assets


$    12,458,632


$   9,816,178


26.9

$       12,599,479

(1.1)













Liabilities









Deposits:











Non-interest bearing demand


$        2,441,041


$      1,846,748


32.2

$           2,411,862

1.2


Interest bearing demand


2,146,508


1,625,015


32.1

2,187,662

(1.9)


Money market


1,142,925


1,024,856


11.5

1,178,950

(3.1)


Savings deposits


1,645,549


1,269,912


29.6

1,649,684

(0.3)


Certificates of deposit


1,455,610


1,277,057


14.0

1,513,600

(3.8)


     Total deposits


8,831,633


7,043,588


25.4

8,941,758

(1.2)

Federal Home Loan Bank borrowings


1,054,174


948,203


11.2

1,131,253

(6.8)

Other short-term borrowings


290,522


184,805


57.2

294,281

(1.3)

Subordinated debt and junior subordinated debt 


189,842


164,327


15.5

189,745

0.1


     Total borrowings


1,534,538


1,297,335


18.3

1,615,279

(5.0)

Accrued interest payable


4,627


3,178


45.6

6,623

(30.1)

Other liabilities


109,007


76,756


42.0

108,550

0.4

Total Liabilities


10,479,805


8,420,857


24.5

10,672,210

(1.8)













Shareholders' Equity









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










none outstanding


-


-


-

-

-

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










     2018 and 2017, respectively; 54,604,294,  44,043,244 and 54,604,294 shares










issued, respectively; 54,598,134, 43,931,715 and 54,603,967 shares


113,758


91,756


24.0

113,758

-


outstanding, respectively









Capital surplus


1,166,701


684,730


70.4

1,165,006

0.1

Retained earnings


737,581


651,357


13.2

709,477

4.0

Treasury stock (6,160,  0 and 327 shares - at cost, respectively)


(274)


-


(100.0)

(15)

(1,726.7)

Accumulated other comprehensive loss


(37,871)


(31,495)


(20.2)

(59,873)

36.7

Deferred benefits for directors


(1,068)


(1,027)


(4.0)

(1,084)

1.5

Total Shareholders' Equity


1,978,827


1,395,321


41.8

1,927,269

2.7

Total Liabilities and Shareholders' Equity


$    12,458,632


$   9,816,178


26.9

$       12,599,479

(1.1)

 

WESBANCO, INC.



















Consolidated Selected Financial Highlights
















Page 8


(unaudited, dollars in thousands)


















Average balance sheet and



















net interest margin analysis




For the Three Months Ended December 31,



For the Year Ended December 31,







2018

2017



2018

2017







Average 

Average



Average 

Average



Average 

Average



Average 

Average


Assets





Balance

Rate



Balance

Rate



Balance

Rate



Balance

Rate


Due from banks - interest bearing



$          169,189

2.21

%


$            18,593

0.97

%


$                 80,535

2.24

%


$           13,811

0.85

%

Loans, net of unearned income (1)



7,685,430

5.04



6,392,138

4.31



7,013,877

4.73



6,358,845

4.28


Securities: (2)




















    Taxable





2,317,542

2.80



1,615,700

2.46



2,109,191

2.70



1,591,149

2.43


    Tax-exempt (3)





818,456

3.44



723,569

4.14



768,304

3.42



723,019

4.15


        Total securities





3,135,998

2.96



2,339,269

2.98



2,877,495

2.89



2,314,168

2.96


Other earning assets 





52,691

7.62



47,659

4.85



55,302

6.37



47,548

4.58


         Total earning assets (3)



11,043,308

4.42

%


8,797,659

3.95

%


10,027,209

4.19

%


8,734,372

3.93

%

Other assets





1,522,572




1,110,285




1,310,170




1,119,940



Total Assets





$   12,565,880




$     9,907,944




$        11,337,379




$    9,854,312























Liabilities and Shareholders' Equity


















Interest bearing demand deposits



$        2,183,732

0.73

%


$        1,645,812

0.49

%


$            1,929,876

0.68

%


$      1,613,451

0.40

%

Money market accounts 




1,153,806

0.58



1,003,186

0.32



1,049,059

0.48



1,012,660

0.27


Savings deposits





1,647,144

0.11



1,257,094

0.06



1,454,525

0.08



1,248,985

0.06


Certificates of deposit




1,486,471

0.98



1,311,331

0.79



1,396,446

0.89



1,383,807

0.73


    Total interest bearing deposits



6,471,153

0.60



5,217,423

0.43



5,829,906

0.55



5,258,903

0.38


Federal Home Loan Bank borrowings



1,069,944

2.30



961,164

1.52



1,121,108

2.08



965,795

1.38


Other borrowings





301,813

1.60



213,069

0.91



260,388

1.43



187,298

0.77


Subordinated debt and junior subordinated debt 



189,769

5.04



164,285

4.51



176,866

5.00



164,156

4.46


      Total interest bearing liabilities 



8,032,679

0.97

%


6,555,941

0.71

%


7,388,268

0.92

%


6,576,152

0.64

%

Non-interest bearing demand deposits



2,472,076




1,864,776




2,177,142




1,817,782



Other liabilities





111,595




80,964




123,544




76,443



Shareholders' equity





1,949,530




1,406,263




1,648,425




1,383,935



Total Liabilities and Shareholders' Equity



$   12,565,880




$     9,907,944




$        11,337,379




$    9,854,312



Taxable equivalent net interest spread




3.45

%



3.24

%



3.27

%



3.29

%

Taxable equivalent net interest margin 




3.72

%



3.43

%



3.52

%



3.44

%









































(1) Gross of allowance for loan losses and net of unearned income.  Includes non-accrual and loans held for sale.











Loan fees included in interest income on loans are $1.2 million for the three months ended December 31, 2018 and 2017,  and $3.4 million and $3.6 million for







the years ended December 31, 2018 and 2017, respectively.
















Additionally, loan accretion included in interest income on loans acquired from prior acquisitions was $5.9 and $1.0  million for the three months ended December 31, 2018 and 2017,



respectively, and $11.7 million and $5.7 million  for the years ended December 31, 2018 and 2017, respectively.











Accretion on interest bearing liabilities acquired from the prior acquisitions was $0.5 million and $0.3 million for the three months ended December 31, 2018 and 2017, respectively, 



and $2.0 million and $1.4 million  for the years ended December 31, 2018 and 2017, respectively.













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














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









 

WESBANCO, INC.










Consolidated Selected Financial Highlights









 Page 9 

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













Quarter Ended

Statement of Income

Dec. 31,


Sept.  30,


June 30,


Mar. 31,


Dec. 31,

Interest income

2018


2018


2018


2018


2017


Loans, including fees

$                        97,685


$                86,605


$              78,538


$                69,237


$              69,408


Interest and dividends on securities:












Taxable 

16,196


14,964


14,194


11,543


9,948



Tax-exempt

5,562


5,326


5,055


4,834


4,872




Total interest and dividends on securities

21,758


20,290


19,249


16,377


14,820


Other interest income 

1,944


1,498


1,101


803


623

          Total interest and dividend income

121,387


108,393


98,888


86,417


84,851

Interest expense











Interest bearing demand deposits

4,000


3,501


3,150


2,524


2,039


Money market deposits

1,683


1,360


1,093


878


805


Savings deposits

452


352


227


189


189


Certificates of deposit

3,662


3,276


2,977


2,536


2,597




Total interest expense on deposits

9,797


8,489


7,447


6,127


5,630


Federal Home Loan Bank borrowings

6,191


6,691


5,953


4,498


3,682


Other short-term borrowings

1,221


965


973


558


489


Subordinated debt and junior subordinated debt

2,411


2,315


2,168


1,942


1,868




Total interest expense

19,620


18,460


16,541


13,125


11,669

Net interest income 

101,767


89,933


82,347


73,292


73,182


Provision for credit losses

2,854


1,035


1,708


2,168


2,376

Net interest income after provision for credit losses

98,913


88,898


80,639


71,124


70,806

Non-interest income











Trust fees

6,103


6,265


5,752


6,503


5,667


Service charges on deposits

7,387


6,313


5,146


4,822


5,278


Electronic banking fees

6,604


6,139


5,728


4,829


4,788


Net securities brokerage revenue

1,871


1,836


1,809


1,670


1,508


Bank-owned life insurance

1,312


1,232


1,128


2,756


1,123


Mortgage banking income

1,543


1,521


1,670


1,004


1,542


Net securities(losses)/gains

(1,303)


84


358


(39)


56


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

(117)


150


229


262


649


Other income

3,161


2,684


1,588


2,173


2,323




Total non-interest income

26,561


26,224


23,408


23,980


22,934

Non-interest expense











Salaries and wages

32,389


30,335


26,872


25,006


25,786


Employee benefits

7,298


7,905


7,965


6,912


6,263


Net occupancy

5,455


4,957


4,103


4,656


4,132


Equipment 

4,667


4,488


4,095


3,949


3,983


Marketing

1,402


1,446


1,405


1,116


1,238


FDIC insurance 

927


789


868


658


827


Amortization of intangible assets

2,762


1,821


1,312


1,086


1,204


Restructuring and merger-related expense

1,389


10,811


5,412


245


454


Other operating expenses  

14,701


13,568


11,511


10,943


10,950




Total non-interest expense

70,990


76,120


63,543


54,571


54,837

Income before provision for income taxes

54,484


39,002


40,504


40,533


38,903


Provision for income taxes 

10,556


6,516


7,335


7,004


23,006

Net Income

$                        43,928


$                32,486


$              33,169


$                33,529


$              15,897














Taxable equivalent net interest income

$                     103,246


$               91,348


$             83,691


$               74,577


$             75,805














Per common share data










Net income per common share - basic

$                            0.80


$                    0.65


$                  0.71


$                    0.76


$                  0.36

Net income per common share - diluted

$                            0.80


$                    0.64


$                  0.71


$                    0.76


$                  0.36

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

$                            0.82


$                    0.81


$                  0.80


$                    0.76


$                  0.66

Dividends declared

$                            0.29


$                    0.29


$                  0.29


$                    0.29


$                  0.26

Book value (period end)

$                          36.24


$                  35.30


$                32.68


$                  31.84


$                31.68

Tangible book value (period end) (1)

$                          19.63


$                  18.54


$                18.59


$                  18.56


$                18.42

Average common shares outstanding - basic

54,598,142


50,277,847


46,498,305


44,050,701


44,036,416

Average common shares outstanding - diluted

54,706,691


50,432,112


46,639,780


44,168,242


44,109,767

Period end common shares outstanding

54,598,134


54,603,967


46,643,250


44,060,957


44,043,244

Full time equivalent employees

2,388


2,404


2,040


1,939


1,940



























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









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





 

WESBANCO, INC.












Consolidated Selected Financial Highlights









 Page 10 


(unaudited, dollars in thousands)
















Quarter Ended






Dec. 31,


Sept. 30,


June 30,


Mar. 31,


Dec. 31,


Asset quality data


2018


2018


2018


2018


2017


Non-performing assets:













Troubled debt restructurings - accruing


$           5,744


$           6,338


$           6,460


$           6,858


$           6,571



Non-accrual loans:














Troubled debt restructurings


2,855


2,036


2,514


2,397


2,865




Other non-accrual loans


27,845


29,238


29,467


29,989


33,960




    Total non-accrual loans


30,700


31,274


31,981


32,386


36,825




    Total non-performing loans 


36,444


37,612


38,441


39,244


43,396



Other real estate and repossessed assets


7,265


6,877


4,384


4,067


5,297




Total non-performing assets


$         43,709


$         44,489


$         42,825


$         43,311


$         48,693
















Past due loans (1):













Loans past due 30-89 days


$         19,569


$         18,016


$         13,357


$         14,536


$         11,172



Loans past due 90 days or more


4,077


2,451


1,881


1,579


2,726




Total past due loans


$         23,646


$         20,467


$         15,238


$         16,115


$         13,898
















Criticized and classified loans (2):













Criticized loans


$         51,710


$         46,370


$         34,045


$         33,785


$         36,092



Classified loans


31,244


31,437


38,982


34,566


37,858




Total criticized and classified loans


$         82,954


$         77,807


$         73,027


$         68,351


$         73,950
















Loans past due 30-89 days / total portfolio loans

0.26

%

0.23

%

0.20

%

0.23

%

0.18

%

Loans past due 90 days or more / total portfolio loans

0.05


0.03


0.03


0.02


0.04


Non-performing loans / total portfolio loans


0.48


0.49


0.57


0.62


0.68


Non-performing assets/total portfolio loans, other












real estate and repossessed assets


0.57


0.58


0.63


0.68


0.77


Non-performing assets / total assets


0.35


0.35


0.39


0.42


0.50


Criticized and classified loans / total portfolio loans

1.08


1.01


1.08


1.08


1.17
















Allowance for loan losses












Allowance for loan losses


$         48,948


$         48,902


$         47,638


$         46,334


$         45,284


Provision for credit losses


2,854


1,035


1,708


2,168


2,376


Net loan and deposit account overdraft charge-offs

2,750


(306)


425


1,063


2,652
















Annualized net loan charge-offs /average loans

0.14

%

(0.02)

%

0.02

%

0.07

%

0.16

%

Allowance for loan losses / total portfolio loans

0.64

%

0.63

%

0.70

%

0.73

%

0.71

%

Allowance for loan losses / non-performing loans

1.34

x

1.30

x

1.24

x

1.18

x

1.04

x

Allowance for loan losses / non-performing loans and












loans past due 


0.81

x

0.84

x

0.89

x

0.84

x

0.79

x

































Quarter Ended






Dec. 31,


Sept. 30,


June 30,


Mar. 31,


Dec. 31,






2018


2018


2018


2018


2017


Capital ratios












Tier I leverage capital


10.74

%

11.22

%

10.21

%

10.56

%

10.39

%

Tier I risk-based capital


15.09


14.32


14.26


14.31


14.12


Total risk-based capital


15.99


15.20


15.26


15.35


15.16


Common equity tier 1 capital ratio (CET 1)


13.14


12.41


12.38


12.33


12.14


Average shareholders' equity to average assets

15.51


14.65


13.89


14.02


14.19


Tangible equity to tangible assets (3)


9.28


8.66


8.43


8.46


8.79






























(1) Excludes non-performing loans.












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






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






 

NON-GAAP FINANCIAL MEASURES












Page 11

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





Three Months Ended


Year to Date 





Dec. 31,


Sept. 30,


June 30,


Mar. 31,


Dec. 31,


Dec. 31,

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

2018


2018


2018


2018


2017


2018

2017

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














Net income (annualized)


$             174,280


$         128,886


$         133,039


$         135,979


$           63,068


$         143,112

$        94,482


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

4,353


33,885


17,150


784


1,170


14,109

614


Plus: net deferred tax asset revaluation (annualized) 

-


-


-


-


50,703


-

12,780


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

178,633


162,771


150,189


136,763


114,941


157,221

107,876


















Average total assets


$        12,565,880


$    11,738,796


$    10,918,731


$      9,993,364


$      9,907,944


$    11,337,379

$   9,854,312

















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

1.42%


1.39%


1.38%


1.37%


1.16%


1.39%

1.09%

















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














Net income (annualized)


$             174,280


$         128,886


$         133,039


$         135,979


$           63,068


$         143,112

$        94,482


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

4,353


33,885


17,150


784


1,170


14,109

614


Plus: net deferred tax asset revaluation (annualized) 

-


-


-


-


50,703


-

12,780


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

178,633


162,771


150,189


136,763


114,941


157,221

107,876


















Average total shareholders' equity

1,949,530


1,719,489


1,517,036


1,401,271


1,406,263


1,648,425

1,383,935

















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

9.16%


9.47%


9.90%


9.76%


8.17%


9.54%

7.79%

















Return on average tangible equity:














Net income (annualized)


$             174,280


$         128,886


$         133,039


$         135,979


$           63,068


$         143,112

$        94,482


Plus: amortization of intangibles (annualized) (1)

8,657


5,707


4,156


3,479


3,104


5,514

3,211


Net income before amortization of intangibles (annualized)

182,937


134,593


137,195


139,458


66,172


148,626

97,693


















Average total shareholders' equity

1,949,530


1,719,489


1,517,036


1,401,271


1,406,263


1,648,425

1,383,935


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

(914,214)


(775,267)


(652,318)


(585,711)


(584,227)


(732,978)

(584,885)


Average tangible equity


$          1,035,316


$         944,222


$         864,718


$         815,560


$         822,036


$         915,447

$      799,050

















Return on average tangible equity


17.67%


14.25%


15.87%


17.10%


8.05%


16.24%

12.23%

















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














Net income (annualized)


$             174,280


$         128,886


$         133,039


$         135,979


$           63,068


$         143,112

$        94,482


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

4,353


33,885


17,150


784


1,170


14,109

614


Plus: net deferred tax asset revaluation (annualized) 

-


-


-


-


50,703


-

12,780


Plus: amortization of intangibles (annualized) (1)

8,657


5,707


4,156


3,479


3,104


5,514

3,211


Net income before amortization of intangibles and excluding 














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

187,290


168,478


154,345


140,242


118,045


162,735

111,087


















Average total shareholders' equity

1,949,530


1,719,489


1,517,036


1,401,271


1,406,263


1,648,425

1,383,935


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

(914,214)


(775,267)


(652,318)


(585,711)


(584,227)


(732,978)

(584,885)


Average tangible equity


$          1,035,316


$         944,222


$         864,718


$         815,560


$         822,036


$         915,447

$      799,050

















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

18.09%


17.85%


17.85%


17.20%


14.36%


17.78%

13.90%

















Efficiency ratio:
















Non-interest expense


$               70,990


$           76,120


$           63,543


$           54,571


$           54,837


$         265,224

$      220,860


Less: restructuring and merger-related expense

(1,389)


(10,811)


(5,412)


(245)


(454)


(17,860)

(945)


Non-interest expense excluding restructuring and merger-related expense

69,601


65,309


58,131


54,326


54,383


247,364

219,915


















Net interest income on a fully taxable equivalent basis

103,246


91,348


83,691


74,577


75,805


352,760

300,789


Non-interest income


26,561


26,224


23,408


23,980


22,934


100,276

88,840


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

$             129,807


$         117,572


$         107,099


$           98,557


$           98,739


$         453,036

$      389,629


Efficiency Ratio


53.62%


55.55%


54.28%


55.12%


55.08%


54.60%

56.44%

















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














Net income



$               43,928


$           32,486


$           33,169


$           33,529


$           15,897


$         143,112

$        94,482


Add: Net deferred tax asset revaluation 

-


-


-


-


12,780


-

12,780


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

1,097


8,541


4,276


193


295


14,109

614

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

$               45,025


$           41,027


$           37,445


$           33,722


$           28,972


$         157,221

$      107,876

































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














Net income per diluted share


$                   0.80


$               0.64


$               0.71


$               0.76


$               0.36


$               2.92

$            2.14


Add: Net deferred tax asset revaluation per diluted share

-


-


-


-


0.29


-

0.29


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

0.02


0.17


0.09


-


0.01


0.29

0.02

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

$                   0.82


$               0.81


$               0.80


$               0.76


$               0.66


$               3.21

$            2.45





































Period End