Press Release

WesBanco Announces First Quarter 2020 Financial Results

Company Release - 4/27/2020 4:15 PM ET

WHEELING, W.Va., April 27, 2020 /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 months ended March 31, 2020.

(PRNewsfoto/WesBanco, Inc.)

"While we are all experiencing unusual times, WesBanco is supporting its customers and its communities in many ways," said Todd F. Clossin, President and Chief Executive Officer of WesBanco.  "Early on, we committed $350,000 to fund various non-profit agencies, throughout our footprint, who were impacted by the coronavirus.  Our employees also made the decision to cancel our company's 150th anniversary celebration activities and reallocate those funds to provide an additional $200,000 in support to those same charities.  I am proud to say that the WesBanco team, as of April 24, 2020, has deferred loan payments on more than 2,800 customer loans to help our customers make ends meet and to help support their families and businesses cash flow needs.  Our employees have also made more than 2,300 loans, totaling approximately $570 million, under the Small Business Administration's Paycheck Protection Program. We are fortunate to be in a strong position to provide support to others during this unprecedented time. Our thoughts are with essential service providers across all industries and with the many people and families suffering from this virus."

Net income for the three months ended March 31, 2020 was $23.4 million, with diluted earnings per share of $0.35, compared to $40.3 million and $0.74 per diluted share, respectively, for the first quarter of 2019.  Net income excluding after-tax merger-related expenses for the three months ended March 31, 2020, was $27.5 million, or $0.41 per diluted share, as compared to $42.8 million and $0.78 per diluted share, respectively, in the prior year quarter (non-GAAP measures).




For the Three Months Ended March 31,





2020


2019



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


Net Income


Diluted
Earnings
Per Share


Net Income


Diluted
Earnings
Per Share





Net income (Non-GAAP)(1)


$      27,476


$       0.41


$      42,791


$       0.78





Less: After tax merger-related expenses


(4,080)


(0.06)


(2,454)


(0.04)





Net income (GAAP)


$      23,396


$       0.35


$      40,337


$       0.74





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

 

On November 22, 2019, WesBanco consummated the merger with Old Line Bancshares, Inc. ("OLBK"), a bank holding company headquartered in Bowie, MD with approximately $3.0 billion in assets, excluding goodwill.  Financial results for OLBK have been included in WesBanco's results from the merger consummation date.

Financial and operational highlights during the quarter ended March 31, 2020:

  • Successfully completed signage and systems conversion of Old Line Bancshares in February
    • Anticipated 2020 cost saves are on track
  • Strong mortgage banking income, increasing 20.8% year-over-year
  • Organic loan growth was 2.0% year-over-year, driven by the C&I loan category
    • Sequential quarter total loan growth, which includes our Mid-Atlantic franchise, was 3.2% annualized
    • When excluding the sale of certain OLBK commercial loans, sequential quarter total loan growth would have been 5.6% annualized
  • Organic deposit growth, excluding certificates of deposit, was 0.7% year-over-year, driven by demand deposit growth
    • Sequential quarter deposit growth, excluding certificates of deposit, was 7.0% annualized
  • Key credit quality metrics such as non-performing assets, past due loans, criticized & classified loans, and net loan charge-offs, as percentages of total portfolio loans, remained at low levels and favorable to peer bank averages, those with total assets between $10 billion and $25 billion
  • Adopted the new Current Expected Credit Losses ("CECL") accounting standard. Deterioration in the macroeconomic forecast drove the increases in allowance for credit losses and provision for credit losses on both a year-over-year and quarter-over-quarter basis
  • WesBanco remains a well-capitalized financial institution with solid liquidity and strong credit quality

Mr. Clossin added, "For 150 years, we have been a source of stability, strength, and trust for all of our communities.  While no one anticipated the current operating environment, we believe we positioned the company well as we had proactively taken risk out of our loan portfolios during the last few years, developed appropriate long-term strategies to allow us to succeed regardless of the operating environment, and implemented initiatives during the early stages of the pandemic to help our customers, communities, and employees.  As we all work together in this current environment, we believe our sound credit and risk culture, combined with our community-first focus, will help us, our customers, and our communities to navigate these extraordinary times."

COVID-19 Responses
As a responsible, community-based financial institution, we believe it is our duty to assist and help protect our communities, customers, and employees.  Thus, on March 18th, we were one of the first banks to launch a number of initiatives and precautionary measures intended to mitigate the impact of the COVID-19 virus outbreak by offering payment relief to affected borrowers through loan modifications, payment deferrals, and working capital facilities; adjusting branch operations to help protect the health and safety of our customers and employees while maintaining access to our services; and supporting local non-profit organizations through our grant programs.  Through April 24, we have assisted our residential mortgage customers with 532 loan modifications totaling $137 million, our consumer and home equity loan customers with 712 loan modifications totaling $28 million, and our commercial and business customers with more than 1,600 loan modifications totaling $1.8 billion, including most customers in our hotel loan portfolio.  In addition, we have been an active participant in the Small Business Administration's Paycheck Protection Program, as established by the CARES Act.

Balance Sheet
Portfolio loans of $10.3 billion as of March 31, 2020 increased 35.0% when compared to the prior year period due to the OLBK acquisition.  Total organic loan growth was 2.0% year-over-year, driven by the C&I and residential real estate loan categories, which were partially offset by elevated levels of commercial real estate loans going to the secondary market.  Total deposits increased 23.9% year-over-year to $11.0 billion due primarily to the OLBK acquisition.  Total deposits, excluding the OLBK acquisition, decreased $291.9 million, or 3.3%, year-over-year due to a $346.0 million reduction in certificates of deposit, as higher cost CDs were allowed to runoff.  When excluding the impact of CD runoff, total deposit organic growth was 0.7% year-over-year driven by growth in demand deposits.

Credit Quality
Overall, we believe our credit quality ratios remained strong as we balanced disciplined loan origination in the current environment with prudent lending standards.  As of March 31, 2020, both non-performing loans and non-performing assets as percentages of the portfolio and total assets have remained relatively low and consistent throughout the last five quarters.  Criticized and classified loan balances decreased to 2.09% of total portfolio loans, as compared to 2.24% and 2.17% during the third and fourth quarters of 2019, respectively.  Reflecting the implementation of CECL during the first quarter of 2020, the provision for credit losses increased to $29.8 million and the allowance for loan losses increased to $114.3 million.

WesBanco adopted CECL on January 1, 2020, resulting in an initial adjustment to retained earnings of $26.6 million, and a corresponding increase in the allowance for credit losses specific to loans of $38.4 million, representing an allowance to total loans coverage ratio of 0.88%, or $90.8 million, upon adoption, compared to 0.51%, or $52.4 million, at December 31, 2019 under the incurred method.   The allowance for credit losses specific to loans at March 31, 2020 was $114.3 million, or 1.10% of total loans.  Excluded from the allowance for credit losses and related coverage ratio are fair market value adjustments on previously acquired loans representing 0.49% of total loans.  The increase in the allowance and related provision for credit losses was related to the significant deterioration in the macroeconomic forecast in late-March, primarily driven by the negative forecasted economic impacts of COVID-19.  The forecast, based upon nationally-recognized published economic data through March 31, 2020, is primarily driven by national unemployment and interest rate spreads. Other factors such as prepayment speeds, loan risk grades, portfolio mix, industry and property type concentrations, loan growth by class, and various other qualitative factors that are both mathematically and judgmentally determined also impact the CECL model's calculated results .

Net Interest Margin and Income
The net interest margin of 3.54% for the first quarter of 2020 decreased 14 basis points year-over-year and 1 basis point from the fourth quarter of 2019.  Year-over-year, the net interest margin decreased primarily due to the lower interest rate environment from the five decreases in the Federal Reserve Board's target federal funds rate, totaling 225 basis points, from July 2019 through March 2020, as well as a flattening of the yield curve.  Reflecting the significantly lower interest rate environment, we aggressively reduced our deposit rates during the second half of March, which helped to lower deposit funding costs 10 basis points year-over-year to 55 basis points for the first quarter of 2020.  In addition, we shortened the maturities and experienced lower rates, in our first quarter FHLB borrowings as compared to the prior year which helped to lower the cost of borrowings 19 basis points year-over-year.  Lastly, accretion from acquisitions benefited the first quarter net interest margin by 22 basis points, as compared to 19 basis points in the prior year period and 22 basis points during the fourth quarter of 2019.

Net interest income increased $21.8 million, or 22.2%, during the first quarter of 2020, as compared to the same quarter of 2019, due to a 26.0% increase in average total earning assets, primarily driven by the OLBK acquisition and related accretion from purchase accounting, partially offset by the lower loan yields, reflecting repricing of existing loans and lower new offered rates in the current market environment. 

Non-Interest Income
For the first quarter of 2020, non-interest income of $28.0 million increased $0.2 million, or 0.8%, from the first quarter of 2019, driven by organic growth and the OLBK acquisition, which was partially offset by the limitation on interchange fees for debit card processing that resulted from the Durbin amendment in the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act ("Dodd-Frank Act"), which took effect for WesBanco during the third quarter of 2019.  Net securities gains increased $0.8 million, or 126.9%, due to the sale of approximately $218 million of securities in March 2020 in order to take advantage of market conditions at the time and create additional liquidity for potential COVID-19 related needs, such as meeting demand for increased draws on commercial and home equity lines of credit.  Such gains were partially offset by a negative $1.3 million market adjustment in the deferred compensation plan, which had an offsetting reduction in employee benefits expense.   Other income increased $0.6 million, or 19.2%, primarily due to debit card sponsorship fees inherited from the OLBK acquisition.  Electronic banking fees decreased $1.6 million as compared to the prior year period reflecting an approximate $2.7 million impact from the limitation on interchange fees for debit card processing, partially offset by higher point-of-sale and ATM transactions by both legacy WesBanco and our new OLBK customers.  Fair value adjustments on loans held for sale and derivatives negatively impacted mortgage banking income, despite higher volumes, and loan swap fee income, accounted for in other income.

Non-Interest Expense
We believe that total operating expenses continued to be well-controlled during the three-month period ending March 31, 2020, as demonstrated by an efficiency ratio of 57.69%.  Excluding merger-related expenses, non-interest expense for the three months ended March 31, 2019 increased $14.8 million, or 20.8%, to $86.2 million compared to the prior year period, primarily reflecting the OLBK acquisition.  As previously disclosed, the anticipated cost savings associated with the OLBK acquisition began to be realized later in the first quarter, primarily reflecting the planned staff reductions after the February 21, 2020 signage and systems conversions.  This year-over-year increase is primarily due to higher salaries and wages, employee benefits, net occupancy, equipment, and other operating costs associated with additional staffing and financial center locations from the OLBK acquisition.  In addition, salaries and wages reflect the mid-2019 annual salary increases.  Employee benefits were positively impacted by the $1.3 million reduction in the deferred compensation plan obligations due to market declines and lower pension expense.  Lastly, FDIC insurance expense increased $0.8 million, or 56.2%, due to a higher assessment rate associated with our larger asset level.

Capital
WesBanco continues to maintain what we believe are 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 March 31, 2020, Tier I leverage was 9.64%, Tier I risk-based capital was 12.51%, total risk-based capital was 14.83%, and the common equity Tier 1 capital ratio ("CET 1") was 12.51%.  As compared to the prior year period, Tier 1 leverage and Tier 1 risk-based capital ratios were adversely impacted by the movement of $136.5 million of trust preferred securities (TruPS), during the fourth quarter of 2019, from Tier 1 to Tier 2 risk-based capital, as required by the Dodd-Frank Act for financial institutions with total assets greater than $15 billion.  Tangible common equity increased to 9.65% at period-end from 9.57% as of March 31, 2019, as an increase in other comprehensive income from the mark-to-market of the available-for-sale portion of the investment portfolio benefited this ratio, as well as increased retained earnings. WesBanco has elected to defer the CECL impact on capital ratios two years and then transition the adjustment over the three-year period allowed for by the federal joint regulatory agencies.  The impact on regulatory capital ratios approximated 30 basis points for this adjustment for three of the four regulatory ratios, while total risk-based capital would be slightly higher without the transition.

During the first quarter of 2020, WesBanco repurchased 786,012 shares of its outstanding common stock on the open market at a total cost of $25.0 million, or $31.77 per share, before suspending its share buyback program in early-March, in an abundance of caution related to the growing COVID-19 pandemic.  As of March 31, 2020, approximately 1.7 million shares remained under the previously announced plan.

Conference Call and Webcast
WesBanco will host a conference call to discuss the Company's financial results for the first quarter of 2020 at 10:00 a.m. ET on Tuesday, April 28, 2020.  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 10136709.  The replay will begin at approximately 12:00 p.m. ET on April 28, and end at 12 a.m. ET on May 13.  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, 2019 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, the effects of changing regional and national economic conditions including the effects of the COVID-19 pandemic; 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 diversified and balanced financial services company that delivers large bank capabilities with a community bank feel.  Our distinct long-term growth strategies are built upon unique sustainable advantages permitting us to span six states with meaningful market share.  Built upon our 'Better Banking Pledge', our customer-centric service culture is focused on growing long-term relationships by pledging to serve all personal and business customer needs efficiently and effectively.  In addition to a full range of online and mobile banking options and a full-suite of commercial products and services, WesBanco provides trust, wealth management, securities brokerage, and private banking services through our century-old Trust and Investment Services department, with approximately $4.1 billion of assets under management (as of March 31, 2020).  WesBanco's banking subsidiary, WesBanco Bank, Inc., operates 236 financial centers in the states of Indiana, Kentucky, Maryland, Ohio, Pennsylvania, and West Virginia.  Additionally, 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

STATEMENT OF INCOME


March 31,

Interest and dividend income


2020


2019


% Change


Loans, including fees


$           119,503


$             95,502


25.1


Interest and dividends on securities:









Taxable 


16,986


16,733


1.5



Tax-exempt


4,456


5,541


(19.6)




Total interest and dividends on securities


21,442


22,274


(3.7)


Other interest income 


1,503


1,277


17.7

          Total interest and dividend income


142,448


119,053


19.7

Interest expense








Interest bearing demand deposits


3,394


3,946


(14.0)


Money market deposits


2,352


1,899


23.9


Savings deposits


923


522


76.8


Certificates of deposit


4,054


3,903


3.9




Total interest expense on deposits


10,723


10,270


4.4


Federal Home Loan Bank borrowings


8,232


6,337


29.9


Other short-term borrowings


870


1,556


(44.1)


Subordinated debt and junior subordinated debt 


2,461


2,529


(2.7)




Total interest expense


22,286


20,692


7.7

Net interest income 


120,162


98,361


22.2


Provision for credit losses


29,821


2,507


1,089.5

Net interest income after provision for credit losses


90,341


95,854


(5.8)

Non-interest income








Trust fees


6,952


7,115


(2.3)


Service charges on deposits


6,617


6,549


1.0


Electronic banking fees


4,254


5,892


(27.8)


Net securities brokerage revenue


1,679


1,860


(9.7)


Bank-owned life insurance


1,769


1,319


34.1


Mortgage banking income


1,276


1,056


20.8


Net securities gains


1,491


657


126.9


Net gain on other real estate owned and other assets


169


136


24.3


Other income


3,802


3,189


19.2




Total non-interest income


28,009


27,773


0.8

Non-interest expense








Salaries and wages


38,910


30,940


25.8


Employee benefits


10,373


9,989


3.8


Net occupancy


7,084


5,566


27.3


Equipment 


6,039


4,833


25.0


Marketing


1,138


1,243


(8.4)


FDIC insurance 


2,113


1,353


56.2


Amortization of intangible assets


3,374


2,514


34.2


Restructuring and merger-related expense


5,164


3,107


66.2


Other operating expenses  


17,138


14,887


15.1




Total non-interest expense


91,333


74,432


22.7

Income before provision for income taxes


27,017


49,195


(45.1)


Provision for income taxes 


3,621


8,858


(59.1)

Net Income


$             23,396


$             40,337


(42.0)











Taxable equivalent net interest income


$          121,346


$            99,834


21.5











Per common share data







Net income per common share - basic


$                 0.35


$                 0.74


(52.7)

Net income per common share - diluted


0.35


0.74


(52.7)

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


0.41


0.78


(47.4)

Dividends declared


0.32


0.31


3.2

Book value (period end)


38.56


37.05


4.1

Tangible book value (period end) (1)


21.36


20.49


4.2

Average common shares outstanding - basic


67,486,550


54,598,499


23.6

Average common shares outstanding - diluted


67,587,446


54,706,337


23.5

Period end common shares outstanding


67,058,155


54,599,127


22.8











(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.





 

 

WESBANCO, INC.


















Consolidated Selected Financial Highlights















Page 6

(unaudited, dollars in thousands)


































Selected ratios
























For the Three Months Ended









March 31,










2020


2019


% Change


























Return on average assets





0.60

%

1.31

%

(54.20)

%







Return on average assets, excluding
















    after-tax merger-related expenses (1)




0.70


1.39


(49.64)








Return on average equity





3.63


8.17


(55.57)








Return on average equity, excluding
















    after-tax merger-related expenses (1)




4.26


8.67


(50.87)








Return on average tangible equity (1)




7.07


15.65


(54.82)








Return on average tangible equity, excluding 
















    after-tax merger-related expenses (1)




8.18


16.56


(50.60)








Yield on earning assets (2) 





4.19


4.45


(5.84)








Cost of interest bearing liabilities





0.91


1.06


(14.15)








Net interest spread (2)






3.28


3.39


(3.24)








Net interest margin (2)






3.54


3.68


(3.80)








Efficiency (1) (2)






57.69


55.89


3.22








Average loans to average deposits




94.61


87.01


8.73








Annualized net loan charge-offs/average loans




0.18


0.07


157.14








Effective income tax rate 





13.40


18.01


(25.60)






















































































For the Quarter Ended










Mar. 31,


Dec. 31,


Sept. 30,


June 30,


Mar. 31,










2020


2019


2019


2019


2019






















Return on average assets





0.60

%

1.04

%

1.19

%

1.44

%

1.31

%



Return on average assets, excluding
















    after-tax merger-related expenses (1)




0.70


1.30


1.23


1.44


1.39




Return on average equity





3.63


6.20


7.06


8.77


8.17




Return on average equity, excluding
















    after-tax merger-related expenses (1)




4.26


7.75


7.32


8.78


8.67




Return on average tangible equity (1)




7.07


11.53


13.06


16.35


15.65




Return on average tangible equity, excluding 
















    after-tax merger-related expenses (1)




8.18


14.24


13.50


16.38


16.56




Yield on earning assets (2) 





4.19


4.25


4.34


4.45


4.45




Cost of interest bearing liabilities





0.91


0.99


1.09


1.08


1.06




Net interest spread (2)






3.28


3.26


3.25


3.37


3.39




Net interest margin (2)






3.54


3.55


3.56


3.67


3.68




Efficiency (1) (2) 






57.69


58.29


57.57


54.87


55.89




Average loans to average deposits




94.61


90.78


88.96


87.35


87.01




Annualized net loan charge-offs /average loans




0.18


0.20


0.04


0.05


0.07




Effective income tax rate 





13.40


16.23


18.24


18.40


18.01




Trust assets, market value at period end




$        4,082,141


$        4,719,966


$        4,443,430


$        4,544,103


$        4,514,013






















(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.

 

 

WESBANCO, INC.









Consolidated Selected Financial Highlights








Page 7

(unaudited, dollars in thousands, except shares)








% Change

Balance sheets


March 31,



December 31, 

December 31, 2019

Assets




2020


2019


% Change

2019

to March 31, 2020

Cash and due from banks


$           183,138


$         159,097


15.1

$               182,905

0.1

Due from banks - interest bearing


410,734


177,797


131.0

51,891

691.5

Securities:











Equity securities, at fair value


11,230


11,978


(6.2)

12,343

(9.0)


Available-for-sale debt securities, at fair value


2,262,082


2,145,089


5.5

2,393,558

(5.5)


Held-to-maturity debt securities (fair values of $841,120; $948,641 










and $874,523, respectively)


814,414


936,484


(13.0)

851,753

(4.4)


       Allowance for credit losses, held-to-maturity debt securities


(236)


-


(100.0)

-

(100.0)


Net held-to-maturity debt securities


814,178


936,484


(13.1)

851,753

(4.4)


       Total securities


3,087,490


3,093,551


(0.2)

3,257,654

(5.2)

Loans held for sale


48,021


8,358


474.6

43,013

11.6

Portfolio loans:










Commercial real estate


5,604,405


3,842,408


45.9

5,725,008

(2.1)


Commercial and industrial


1,801,751


1,274,992


41.3

1,644,699

9.5


Residential real estate 


1,929,590


1,628,067


18.5

1,873,647

3.0


Home equity


650,754


590,462


10.2

649,678

0.2


Consumer 


363,096


330,152


10.0

374,953

(3.2)

Total portfolio loans, net of unearned income


10,349,596


7,666,081


35.0

10,267,985

0.8

Allowance for credit losses - loans  (1)


(114,272)


(48,866)


(133.8)

(52,429)

(118.0)


       Net portfolio loans


10,235,324


7,617,215


34.4

10,215,556

0.2

Premises and equipment, net


258,200


180,651


42.9

261,014

(1.1)

Accrued interest receivable


43,960


39,662


10.8

43,648

0.7

Goodwill and other intangible assets, net


1,170,070


915,597


27.8

1,149,153

1.8

Bank-owned life insurance


301,270


226,636


32.9

299,516

0.6

Other assets


257,365


182,844


40.8

215,762

19.3

Total Assets


$      15,995,572


$    12,601,408


26.9

$          15,720,112

1.8













Liabilities










Deposits:











Non-interest bearing demand


$         3,191,713


$      2,511,140


27.1

$            3,178,270

0.4


Interest bearing demand


2,388,406


2,159,654


10.6

2,316,855

3.1


Money market


1,539,835


1,148,295


34.1

1,518,314

1.4


Savings deposits


1,984,057


1,672,967


18.6

1,934,647

2.6


Certificates of deposit


1,939,321


1,424,275


36.2

2,055,920

(5.7)


       Total deposits


11,043,332


8,916,331


23.9

11,004,006

0.4

Federal Home Loan Bank borrowings


1,585,608


1,031,796


53.7

1,415,615

12.0

Other short-term borrowings


333,966


301,547


10.8

282,362

18.3

Subordinated debt and junior subordinated debt 


192,008


179,632


6.9

199,869

(3.9)


       Total borrowings


2,111,582


1,512,975


39.6

1,897,846

11.3

Accrued interest payable


7,667


6,030


27.1

8,077

(5.1)

Other liabilities


246,931


142,933


72.8

216,262

14.2

Total Liabilities


13,409,512


10,578,269


26.8

13,126,191

2.2













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










2020 and 2019, respectively; 68,078,116,  54,604,294 and 68,078,116 shares










issued, respectively; 67,058,155, 54,599,127 and 67,824,428 shares


141,827


113,758


24.7

141,827

-


outstanding, respectively









Capital surplus


1,638,122


1,167,761


40.3

1,636,966

0.1

Retained earnings


800,064


761,002


5.1

824,694

(3.0)

Treasury stock ( 1,019,961, 5,167 and 253,688 shares - at cost, respectively)


(33,714)


(229)


(14,622.3)

(9,463)

(256.3)

Accumulated other comprehensive income (loss)


41,141


(18,098)


327.3

1,201

3,325.6

Deferred benefits for directors


(1,380)


(1,055)


(30.8)

(1,304)

(5.8)

Total Shareholders' Equity


2,586,060


2,023,139


27.8

2,593,921

(0.3)

Total Liabilities and Shareholders' Equity


$      15,995,572


$    12,601,408


26.9

$          15,720,112

1.8

























(1) Allowance for credit losses - loans as of March 31, 2020 includes a day 1 adjustment of $41.4 million due to the adoption of ASU 2016-13.





 

 

WESBANCO, INC.












Consolidated Selected Financial Highlights









Page 8

(unaudited, dollars in thousands)










Average balance sheet and











net interest margin analysis




Three Months Ended March 31,








2020

2019







Average 

Average



Average 

Average


Assets





Balance

Rate



Balance

Rate


Due from banks - interest bearing




$           133,532

1.21

%


$             76,731

1.70

%

Loans, net of unearned income (1)




10,375,187

4.63



7,659,542

5.06


Securities: (2)












    Taxable





2,576,668

2.65



2,353,856

2.84


    Tax-exempt (3)





646,587

3.51



810,702

3.46


        Total securities





3,223,255

2.82



3,164,558

3.00


Other earning assets 





69,581

6.37



52,114

7.30


         Total earning assets (3)




13,801,555

4.19

%


10,952,945

4.45

%

Other assets





1,983,384




1,557,087



Total Assets





$      15,784,939




$      12,510,032















Liabilities and Shareholders' Equity










Interest bearing demand deposits




$        2,342,441

0.58

%


$        2,129,601

0.75

%

Money market accounts 




1,543,763

0.61



1,154,563

0.67


Savings deposits





1,953,487

0.19



1,659,751

0.13


Certificates of deposit





1,989,450

0.82



1,438,468

1.10


    Total interest bearing deposits




7,829,141

0.55



6,382,383

0.65


Federal Home Loan Bank borrowings



1,471,175

2.25



1,053,014

2.44


Other borrowings





336,042

1.04



327,839

1.92


Subordinated debt and junior subordinated debt 



198,494

4.99



189,524

5.41


      Total interest bearing liabilities 



9,834,852

0.91

%


7,952,760

1.06

%

Non-interest bearing demand deposits



3,137,279




2,420,462



Other liabilities





218,739




134,100



Shareholders' equity





2,594,069




2,002,710



Total Liabilities and Shareholders' Equity



$      15,784,939




$      12,510,032



Taxable equivalent net interest spread




3.28

%



3.39

%

Taxable equivalent net interest margin 




3.54

%



3.68

%

























(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 $0.7 million and $0.6 million for the three months ended March 31, 2020 and 2019,

respectively.

Additionally, loan accretion included in interest income on loans acquired from prior acquisitions was $4.1 million and $4.9 million for

the three months ended March 31, 2020 and 2019, respectively.    

Accretion on interest bearing liabilities acquired from the prior acquisitions was $3.4 million and $0.4 million for the three months


ended March 31, 2020 and 2019, 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 each 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

Mar. 31,


Dec. 31,


Sept.  30,


June 30,


Mar. 31,

Interest and dividend income

2020


2019


2019


2019


2019


Loans, including fees

$                     119,503


$             105,879


$              95,369


$               96,415


$              95,502


Interest and dividends on securities:












Taxable 

16,986


16,586


15,887


16,444


16,733



Tax-exempt

4,456


4,563


4,759


5,142


5,541




Total interest and dividends on securities

21,442


21,149


20,646


21,586


22,274


Other interest income 

1,503


1,281


1,333


1,542


1,277

          Total interest and dividend income

142,448


128,309


117,348


119,543


119,053

Interest expense











Interest bearing demand deposits

3,394


4,054


4,489


4,314


3,946


Money market deposits

2,352


2,143


1,973


2,009


1,899


Savings deposits

923


935


861


678


522


Certificates of deposit

4,054


3,800


3,830


4,098


3,903




Total interest expense on deposits

10,723


10,932


11,153


11,099


10,270


Federal Home Loan Bank borrowings

8,232


7,279


6,645


6,287


6,337


Other short-term borrowings

870


1,009


1,353


1,483


1,556


Subordinated debt and junior subordinated debt

2,461


2,125


2,077


2,214


2,529




Total interest expense

22,286


21,345


21,228


21,083


20,692

Net interest income 

120,162


106,964


96,120


98,460


98,361


Provision for credit losses

29,821


1,824


4,121


2,747


2,507

Net interest income after provision for credit losses

90,341


105,140


91,999


95,713


95,854

Non-interest income











Trust fees

6,952


6,699


6,425


6,339


7,115


Service charges on deposits

6,617


7,171


7,056


6,197


6,549


Electronic banking fees

4,254


4,336


5,253


7,154


5,892


Net securities brokerage revenue

1,679


1,393


1,765


1,973


1,860


Bank-owned life insurance

1,769


1,882


1,373


1,340


1,319


Mortgage banking income

1,276


2,957


2,588


1,618


1,056


Net securities gains

1,491


520


235


2,909


657


Net gain on other real estate owned and other assets

169


61


158


376


136


Other income

3,802


5,819


2,097


3,250


3,189




Total non-interest income

28,009


30,838


26,950


31,156


27,773

Non-interest expense











Salaries and wages

38,910


36,984


32,915


31,646


30,940


Employee benefits

10,373


9,894


9,726


9,705


9,989


Net occupancy

7,084


6,162


5,392


5,385


5,566


Equipment 

6,039


5,570


5,273


4,818


4,833


Marketing

1,138


2,059


1,505


1,254


1,243


FDIC insurance 

2,113


668


(1,221)


1,155


1,353


Amortization of intangible assets

3,374


2,916


2,446


2,465


2,514


Restructuring and merger-related expense

5,164


11,522


1,688


81


3,107


Other operating expenses  

17,138


16,781


15,544


15,443


14,887




Total non-interest expense

91,333


92,556


73,268


71,952


74,432

Income before provision for income taxes

27,017


43,422


45,681


54,917


49,195


Provision for income taxes 

3,621


7,046


8,334


10,103


8,858

Net Income


$                       23,396


$               36,376


$              37,347


$               44,814


$              40,337














Taxable equivalent net interest income

$                    121,346


$             108,177


$             97,385


$               99,827


$             99,834














Per common share data










Net income per common share - basic

$                          0.35


$                   0.60


$                 0.68


$                   0.82


$                 0.74

Net income per common share - diluted

0.35


0.60


0.68


0.82


0.74

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

0.41


0.75


0.71


0.82


0.78

Dividends declared

0.32


0.31


0.31


0.31


0.31

Book value (period end)

38.56


38.24


38.42


37.92


37.05

Tangible book value (period end) (1)

21.36


21.55


21.89


21.40


20.49

Average common shares outstanding - basic

67,486,550


60,461,325


54,695,578


54,628,029


54,598,499

Average common shares outstanding - diluted

67,587,446


60,562,366


54,751,344


54,773,521


54,706,337

Period end common shares outstanding

67,058,155


67,824,428


54,691,225


54,697,199


54,599,127

Full time equivalent employees

2,703


2,705


2,330


2,353


2,329



























(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.









 















WESBANCO, INC.












Consolidated Selected Financial Highlights









 Page 10 


(unaudited, dollars in thousands)
















Quarter Ended






Mar. 31,


Dec. 31,


Sept. 30,


June 30,


Mar. 31,


Asset quality data


2020


2019


2019


2019


2019


Non-performing assets:













Troubled debt restructurings - accruing


$          5,434


$          5,431


$          5,840


$          5,487


$          5,481



Non-accrual loans:














Troubled debt restructurings


1,571


1,422


1,345


1,924


2,936




Other non-accrual loans


32,796


43,491


33,456


30,974


27,291




    Total non-accrual loans


34,367


44,913


34,801


32,898


30,227




    Total non-performing loans 


39,801


50,344


40,641


38,385


35,708



Other real estate and repossessed assets


1,083


4,178


3,678


4,973


6,001




Total non-performing assets


$         40,884


$        54,522


$        44,319


$        43,358


$        41,709
















Past due loans (1):













Loans past due 30-89 days


$        32,805


$        36,330


$        17,906


$         5,446


$        21,433



Loans past due 90 days or more


14,287


11,613


5,425


2,634


2,740




Total past due loans


$         47,092


$        47,943


$        23,331


$        18,080


$        24,173
















Criticized and classified loans (2):













Criticized loans


$      120,801


$       18,959


$        78,880


$        73,236


$        69,691



Classified loans


95,162


103,519


95,071


41,004


39,412




Total criticized and classified loans


$      215,963


$      222,478


$      173,951


$      114,240


$      109,103
















Loans past due 30-89 days / total portfolio loans

0.32

%

0.35

%

0.23

%

0.20

%

0.28

%

Loans past due 90 days or more / total portfolio loans

0.14


0.11


0.07


0.03


0.04


Non-performing loans / total portfolio loans


0.38


0.49


0.52


0.50


0.47


Non-performing assets/total portfolio loans, other












real estate and repossessed assets


0.39


0.53


0.57


0.56


0.54


Non-performing assets / total assets


0.26


0.35


0.35


0.35


0.33


Criticized and classified loans / total portfolio loans

2.09


2.17


2.24


1.48


1.42
















Allowance for loan losses












Allowance for credit losses - loans


$       114,272


$        52,429


$        54,317


$        50,859


$        48,866


Provision for credit losses (3)


29,821


1,824


4,121


2,747


2,507


Net loan and deposit account overdraft charge-offs

4,716


4,476


791


947


1,370
















Annualized net loan charge-offs /average loans


0.18

%

0.20

%

0.04

%

0.05

%

0.07

%

Allowance for credit losses - loans / total portfolio loans


1.10

%

0.51

%

0.70

%

0.66

%

0.64

%

Allowance for credit losses - loans  / non performing loans


2.87

x

1.04

x

1.34

x

1.32

x

1.37

x

Allowance for credit losses - loans / non-performing loans and loans past due


1.32

x

0.53

x

0.85

x

0.90

x

0.82

x

































Quarter Ended






Mar. 31,


Dec, 31,


Sept. 30,


June 30,


Mar. 31,






2020


2019


2019


2019


2019


Capital ratios












Tier I leverage capital


9.64

%

11.30

%

11.30

%

11.09

%

10.98

%

Tier I risk-based capital


12.51


12.89


15.40


15.39


15.31


Total risk-based capital


14.83


15.12


16.36


16.32


16.22


Common equity tier 1 capital ratio (CET 1)


12.51


12.89


13.87


13.83


13.48


Average shareholders' equity to average assets


16.43


16.73


16.80


16.42


16.01


Tangible equity to tangible assets (4)


9.65


10.02


10.24


10.10


9.57






























(1) Excludes non-performing loans.












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


(3) The provision for credit losses includes $1.7 million for loan commitments, and the allowance for credit losses - loan commitments is $5.6 million as of March 31, 2020.

(4) 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






Mar. 31,


Dec. 31,


Sept. 30,


June 30,


Mar. 31,


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

2020


2019


2019


2019


2019


Return on average assets, excluding after-tax merger-related expenses:












Net income



$              23,396


$            36,376


$           37,347


$           44,814


$           40,337



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

4,080


9,102


1,334


64


2,454



Net income excluding after-tax merger-related expenses

27,476


45,478


38,681


44,878


42,791

















Average total assets


$        15,784,939


$      13,919,430


$    12,488,153


$    12,489,663


$    12,510,032
















Return on average assets, excluding after-tax merger-related expenses (annualized)  (2)

0.70%


1.30%


1.23%


1.44%


1.39%
















Return on average equity, excluding after-tax merger-related expenses:












Net income



$              23,396


$            36,376


$           37,347


$           44,814


$           40,337



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

4,080


9,102


1,334


64


2,454



Net income excluding after-tax merger-related expenses 

27,476


45,478


38,681


44,878


42,791

















Average total shareholders' equity

2,594,069


2,329,121


2,097,534


2,050,190


2,002,710
















Return on average equity, excluding after-tax merger-related expenses (annualized)  (2)

4.26%


7.75%


7.32%


8.78%


8.67%
















Return on average tangible equity:












Net income 



$              23,396


$            36,376


$           37,347


$           44,814


$           40,337



Plus: amortization of intangibles (1)

2,665


2,304


1,932


1,947


1,986



Net income before amortization of intangibles 

26,061


38,680


39,279


46,761


42,323

















Average total shareholders' equity

2,594,069


2,329,121


2,097,534


2,050,190


2,002,710



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

(1,112,327)


(997,658)


(904,204)


(903,243)


(906,041)



Average tangible equity


$          1,481,742


$        1,331,463


$      1,193,330


$      1,146,947


$      1,096,669
















Return on average tangible equity (annualized)  (2)

7.07%


11.53%


13.06%


16.35%


15.65%
















Return on average tangible equity, excluding after-tax merger-related expenses:












Net income



$              23,396


$            36,376


$           37,347


$           44,814


$           40,337



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

4,080


9,102


1,334


64


2,454



Plus: amortization of intangibles  (1)

2,665


2,304


1,932


1,947


1,986



Net income before amortization of intangibles and excluding 












    after-tax merger-related expenses

30,141


47,782


40,613


46,825


44,777

















Average total shareholders' equity

2,594,069


2,329,121


2,097,534


2,050,190


2,002,710



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

(1,112,327)


(997,658)


(904,204)


(903,243)


(906,041)



Average tangible equity


$          1,481,742


$        1,331,463


$      1,193,330


$      1,146,947


$      1,096,669
















Return on average tangible equity, excluding after-tax merger-related expenses (annualized) (2)

8.18%


14.24%


13.50%


16.38%


16.56%
















Efficiency ratio:














Non-interest expense


$              91,333


$            92,556


$           73,268


$           71,952


$           74,432



Less: restructuring and merger-related expense

(5,164)


(11,522)


(1,688)


(81)


(3,107)



Non-interest expense excluding restructuring and merger-related expense

86,169


81,034


71,580


71,871


71,325

















Net interest income on a fully taxable equivalent basis

121,346


108,177


97,385


99,827


99,834



Non-interest income


28,009


30,838


26,950


31,156


27,773



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

$            149,355


$           139,015


$         124,335


$         130,983


$         127,607



Efficiency Ratio


57.69%


58.29%


57.57%


54.87%


55.89%
















Net income, excluding after-tax merger-related expenses:












Net income



$              23,396


$            36,376


$           37,347


$           44,814


$           40,337



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

4,080


9,102


1,334


64


2,454


Net income, excluding after-tax merger-related expenses

$              27,476


$            45,478


$           38,681


$           44,878


$           42,791






























Net Income, excluding after-tax merger-related expenses per diluted share:












Net income per diluted share

$                  0.35


$                0.60


$              0.68


$              0.82


$              0.74



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

0.06


0.15


0.03


0.00


0.04


Net income, excluding after-tax merger-related expenses per diluted share

$                  0.41


$                0.75


$              0.71


$              0.82


$              0.78


































Period End






Mar. 31,


Dec. 31, 


Sept. 30,


June 30,


Mar. 31,






2020


2019


2019


2019


2019


Tangible book value per share:













Total shareholders' equity


$          2,586,060


$        2,593,921


$      2,101,269


$      2,074,116


$      2,023,139



Less:  goodwill and other intangible assets, net of def. tax liability

(1,154,033)


(1,132,262)


(904,256)


(903,729)


(904,144)



Tangible equity


1,432,027


1,461,659


1,197,013


1,170,387


1,118,995

















Common shares outstanding

67,058,155


67,824,428


54,691,225


54,697,199


54,599,127
















Tangible book value per share


$                21.36


$              21.55


$             21.89


$             21.40


$             20.49
















Tangible equity to tangible assets:












Total shareholders' equity


$          2,586,060


$        2,593,921


$      2,101,269


$      2,074,116


$      2,023,139



Less:  goodwill and other intangible assets, net of def. tax liability

(1,154,033)


(1,132,262)


(904,256)


(903,729)


(904,144)



Tangible equity


1,432,027


1,461,659


1,197,013


1,170,387


1,118,995

















Total assets



15,995,572


15,720,112


12,593,887


12,494,653


12,601,408



Less:  goodwill and other intangible assets, net of def. tax liability

(1,154,033)


(1,132,262)


(904,256)


(903,729)


(904,144)



Tangible assets


$        14,841,539


$      14,587,850


$    11,689,631


$    11,590,924


$    11,697,264
















Tangible equity to tangible assets


9.65%


10.02%


10.24%


10.10%


9.57%






























(1) Tax effected at 21% for all periods presented.











(2) The ratios are annualized by utilizing actual number of days in the quarter versus the year.











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SOURCE WesBanco, Inc.