WesBanco Announces 29% Increase in Net Income for 2013 -- WHEELING, W.V., Jan. 28, 2014 /PRNewswire/ -- WHEELING, W.V., Jan. 28, 2014 /PRNewswire/ -- Paul M. Limbert, President and Chief Executive Officer of WesBanco, Inc. (NASDAQ Global Market: WSBC), a Wheeling, West Virginia based multi-state bank holding company, today announced an increase in earnings per share and related net income for the three and twelve month periods ended December 31, 2013. Net income increased 29% for the twelve months ended December 31, 2013, to $63.9 million compared to $49.5 million for 2012, while diluted earnings per share were $2.18, an increase of 18% compared to $1.84 per share for 2012. For the fourth quarter of 2013, net income was $15.4 million compared to $12.7 million for the fourth quarter of 2012, representing a 21% increase. Diluted earnings per share for the fourth quarter were $0.52, compared to $0.46 in the 2012 quarter. The increased net income improved the return on average assets to 1.05% in 2013 from 0.88% in 2012, and the return on average tangible equity (non-GAAP measure) increased to approximately 16% from 14%. The results for 2013 include the first full year of the late 2012 acquisition of Pittsburgh based Fidelity Bancorp, Inc. ("Fidelity") that significantly expanded WesBanco's presence in the southwestern Pennsylvania market. Mr. Limbert commented, "We are pleased with the strong earnings performance in 2013 and third consecutive year of balance sheet growth. Loan growth was achieved through the business development efforts of our additions to customer relationship personnel. Net interest income and margin improved substantially in the last year from higher loan balances as well as a significant reduction in the cost of funds. Accelerated growth of trust assets and growth in deposits over the last year contributed to increased fee income. Credit quality continued to improve, resulting in a significant reduction in problem loans and a lower provision for credit losses. The continued development of our operating and technology resources were also major contributors to the 2013 results. Financial Condition Total assets at December 31, 2013 increased 1.1% or $66.1 million from December 31, 2012, primarily due to loan growth. Portfolio loans increased $207.2 million or 5.6% in 2013, with $58.4 million of growth coming in the fourth quarter. Loan growth was achieved through $1.6 billion in loan originations in 2013. This represents an increase of 31.5% in loan originations compared to 2012. Growth was centered in commercial real estate construction and C&I lending as a result of improved economic conditions, increased business activity in markets impacted by Marcellus and Utica shale gas drilling, expansion into the Pittsburgh market, additional lending personnel and continued improvement in loan origination processes. In addition, a $117 million increase in unfunded commitments on construction loans will be advanced over the next twelve to eighteen months which should generate higher loan balances in 2014. Loan growth was funded primarily by growth in deposits and by maturing securities. Deposits increased $118.2 million or 2.4% from December 31, 2012, some of which was the result of initial deposits from bonus and royalty payments for Marcellus and Utica shale gas payments from energy companies operating in our local markets. All deposit types increased except certificates of deposit, which decreased $138.1 million due to lower rate offerings on roll overs of maturities. Available core deposit funding and maturities in the investment portfolio were also used to reduce higher cost borrowings by 19.5%, further reducing cost of funds. WesBanco continues to maintain strong regulatory capital ratios. At December 31, 2013, tier I leverage was 9.27%, tier I risk-based capital was 13.06%, and total risk-based capital was 14.19%, which were similar to or slightly improved from year end 2012. Both consolidated and bank-level regulatory capital ratios are well above the applicable "well-capitalized" standards promulgated by bank regulators, as well as the recently finalized BASEL III capital standards. Total tangible equity to tangible assets (non-GAAP measure) was 7.35% at December 31, 2013, up from 6.84% at 2012 year-end, despite increased assets, lower other comprehensive income from lower securities valuations and the fourth quarter repurchase of 193,075 shares of WesBanco stock. Strong earnings and improved total capital have enabled WesBanco to increase the quarterly dividend rate, currently at $0.20 per share, six times over the last three years, cumulatively representing a 43% increase, with a 2013 increase of 11%. Credit Quality Credit quality has continued to improve over the past quarter and year. Total non-performing loans at December 31, 2013 were $51.5 million or 1.32% of total loans, which represents a 4.0% decrease from September 30, 2013 and a 19.1% decrease from $63.7 million or 1.73% of total loans at December 31, 2012. Criticized and classified loans decreased 4.0% in the fourth quarter of 2013 compared to September 30, 2013 to $135.6 million, or 3.48% of total loans at December 31, 2013 and decreased 21.5% over the last twelve months from $172.7 million and 4.68% last year. Net charge-offs for the fourth quarter of 2013 were $2.9 million, or 0.30% of average portfolio loans, and $14.2 million or 0.38% for the year, compared to net charge-offs of $4.1 million or 0.47% for the fourth quarter of 2012, and $22.1 million or 0.66% for 2012. As a result of an improvement in all measures of credit quality, including delinquent and non-performing loans and classified and criticized loans, the provision for credit losses decreased to $3.1 million for the fourth quarter of 2013 compared to $3.3 million for the same quarter in 2012, and $9.1 million year-to-date compared to $19.9 million last year. The allowance for loan losses represented 1.22% of total portfolio loans at the end of 2013 compared to 1.43% last year. Net Interest Income Net interest income increased $17.1 million or 10.2% in 2013 compared to 2012, due to an 8.5% increase in average earning assets, primarily through increased average loan balances. In addition, the net interest margin increased 5 basis points to 3.58%, benefitting from the loan growth, purchase accounting-related accretion and a continued decrease in funding costs. In the fourth quarter, net interest income increased 9.1% due to a 6.5% increase in average earning assets compared to the same quarter of 2012. The net interest margin for the quarter improved by 8 basis points, also to 3.58%. The margin improvement in 2013 was due to lower funding costs resulting from a 36.1% average reduction in higher rate FHLB advances and other borrowings, primarily through maturities, an 11.8% increase in total average deposits, with 88.6% of the increase from lower cost demand, money market or savings accounts and the repricing at lower rates of maturing CDs. Accretion of various purchase accounting adjustments from the acquisition also improved the net interest margin by 9 b.p. for the year, and 5 b.p. for the quarter. Non-Interest Income and Non-Interest Expense For 2013, non-interest income increased $4.5 million or 7.0% compared to 2012. Trust fees increased 8.5% as assets under management continued to increase from customer development initiatives and overall market improvements. Total trust assets were up 13.9% for the year. Net securities brokerage revenues increased 35.7%, due to significant production increases from existing markets, the deployment of an advisor team in the Pittsburgh market, the addition of support and producing staff in several regions, and an increase in referrals and production from a licensed retail banker program. Service charges on deposits and electronic banking fees continued to grow, up 4.6% and 7.6% respectively for 2013. Securities gains were lower due to reduced portfolio restructuring compared to prior periods as interest rates increased. Non-interest income declined by 3.7% in the fourth quarter of 2013 compared to the fourth quarter of 2012 primarily due to lower security gains and lower net gains on sales of mortgage loans, while fee income continued to increase. Mortgage loan sales gains decreased as the percentage of mortgage loans retained for the portfolio increased and loan production declined, beginning in the fourth quarter, as increasing interest rates reduced refinancings. However, WesBanco overall achieved record mortgage loan production in 2013, up 13% from 2012 to $392 million. Non-interest expense in 2013 increased $10.9 million or 7.3% compared to 2012, but decreased $0.8 million or 2.0% for the fourth quarter of 2013 compared to the fourth quarter of 2012. Increases were partially due to recurring expenses related to operating 13 additional branches acquired in the acquisition. Most of the back office and other administrative savings targeted to be obtained from the merger were accomplished by year-end. Lower merger-related costs benefited both the quarter and the year-to-date periods of 2013 and, combined with generally lower expense growth in the fourth quarter, provided the overall reduction in fourth quarter expenses. Salaries and wages increased 11.1% for 2013 due to routine annual adjustments to compensation, increased full time equivalent employees ("FTEs") in the Pittsburgh market partially offset by the integration efficiencies, increased commissions on higher loan originations and brokerage revenue and higher incentive compensation. Employee benefit expenses increased for the year primarily from increased pension expense and employer taxes. Marketing costs were higher compared to 2012 due to additional marketing initiatives during 2013 and marketing expenses in the new Pittsburgh market. Financial Results Conference Call WesBanco, Inc. will host a conference call to discuss the Company's financial results for the fourth quarter of 2013 on Wednesday, January 29, 2014, at 11:00 a.m. E.S.T. Callers wishing to participate should access the call by dialing 1-877-870-4263 or 1-412-317-0790 for international callers. The call may also be listened to live via Webcast through the "Investor Relations" section of the Company's Web site at www.wesbanco.com or by registering at http://www.videonewswire.com/event.asp?id=97572. Access to the Webcast will begin approximately 15 minutes prior to the start of the call. WesBanco is a multi-state bank holding company with total assets of approximately $6.1 billion, operating through 120 branch locations and 105 ATMs in West Virginia, Ohio, and Pennsylvania. WesBanco's banking subsidiary is WesBanco Bank, Inc., headquartered in Wheeling, West Virginia. WesBanco also operates an insurance brokerage company, WesBanco Insurance Services, Inc., and a full service broker/dealer, WesBanco Securities, Inc. 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, 2012 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, 2013, June 30, 2013 and September 30, 2013, respectively, 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 Fidelity may not be integrated successfully or such integration may take longer to accomplish than expected; the expected cost savings and any revenue synergies from the merger of WesBanco and Fidelity may not be fully realized within the expected timeframes; disruption from the merger of WesBanco and Fidelity may make it more difficult to maintain relationships with clients, associates, or suppliers; the effects of changing regional and national economic conditions; changes in interest rates, spreads on earning assets and interest-bearing liabilities, and associated interest rate sensitivity; sources of liquidity available to WesBanco and its related subsidiary operations; potential future credit losses and the credit risk of commercial, real estate, and consumer loan customers and their borrowing activities; actions of the Federal Reserve Board, the Federal Deposit Insurance Corporation, the SEC, the Financial Institution Regulatory Authority, the Municipal Securities Rulemaking Board, the Securities Investors Protection Corporation, and other regulatory bodies; potential legislative and federal and state regulatory actions and reform, including, without limitation, the impact of the implementation of the Dodd-Frank Act; adverse decisions of federal and state courts; fraud, scams and schemes of third parties; internet hacking; competitive conditions in the financial services industry; rapidly changing technology affecting financial services; marketability of debt instruments and corresponding impact on fair value adjustments; and/or other external developments materially impacting WesBanco's operational and financial performance. WesBanco does not assume any duty to update forward-looking statements. Consolidated Selected Financial Highlights Page 4 unaudited, dollars in thousands, except shares and per share amounts For the Year Ended December 31, Interest and dividend income Loans, including fees Interest and dividends on securities: Tax-exempt Total interest and dividends on securities Other interest income Total interest and dividend income Interest bearing demand deposits Money market deposits Savings deposits Certificates of deposit Total interest expense on deposits Federal Home Loan Bank borrowings Other short-term borrowings Junior subordinated debt owed to unconsolidated subsidiary trusts Trust fees Service charges on deposits Electronic banking fees Net securities brokerage revenue Bank-owned life insurance Net gains on sales of mortgage loans Net securities (losses) / gains Net loss on other real estate owned and other assets Other income Total non-interest income Salaries and wages Employee benefits Net occupancy Equipment Marketing FDIC insurance Amortization of intangible assets Restructuring and merger-related expense Other operating expenses Total non-interest expense Income before provision for income taxes Provision for income taxes Taxable equivalent net interest income Per common share data Net income per common share - basic Net income per common share - diluted Dividends declared Book value (period end) Tangible book value (period end) (1) Average common shares outstanding - basic Average common shares outstanding - diluted Period end common shares outstanding (1) See non-GAAP financial measures for additional information relating to the calculation of this item. Page 5 unaudited, dollars in thousands Selected ratios Return on average assets Return on average equity Return on average tangible equity (1) Yield on earning assets (2) Cost of interest bearing liabilities Net interest spread (2) Net interest margin (2) Efficiency (1) (2) Average loans to average deposits Annualized net loan charge-offs/average loans Effective income tax rate For the Quarter Ended Dec. 31, Sept. June 30, Mar. 31, Trust assets, market value at period end (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. Page 6 unaudited, dollars in thousands, except shares Balance sheets September 30, September 30, 2013 to Dec. 31, 2013 Due from banks - interest bearing Securities: Available-for-sale, at fair value Held-to-maturity (fair values of $596,308; $639,273 and $607,215, respectively) Total securities Loans held for sale Portfolio loans: Commercial and industrial Residential real estate Total portfolio loans, net of unearned income Net portfolio loans Premises and equipment, net Accrued interest receivable Goodwill and other intangible assets, net Deposits: Non-interest bearing demand Interest bearing demand Total borrowings Accrued interest payable Shareholders' Equity Preferred stock, no par value; 1,000,000 shares authorized; none outstanding Common stock, $2.0833 par value; 50,000,000 shares authorized; 29,367,511 shares; 26,214,660 shares and 29,350,061 shares issued, respectively; 29,175,236 shares; 29,214,660 shares and 29,350,061 shares outstanding, respectively Capital surplus Treasury stock (192,275; 0 and 0 shares - at cost, respectively) Deferred benefits for directors Total Shareholders' Equity Total Liabilities and Shareholders' Equity Page 7 Average balance sheet and net interest margin analysis Three Months Ended December 31, Year Ended December 31, Loans, net of unearned income (1) Securities: (2) Tax-exempt (3) Other earning assets Total earning assets (3) Liabilities and Shareholders' Equity Money market accounts Total interest bearing deposits Junior subordinated debt Non-interest bearing demand deposits Taxable equivalent net interest spread Taxable equivalent net interest margin (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$0.8 million and $1.0 million for the three months ended December 31, 2013 and 2012, and $3.8 million and $4.0 million for the year ended December 31, 2013 and 2012, respectively. Additionally, loan accretion included in interest income on acquired Fidelity loans was $0.4 million for the three months ended December 31, 2013 and $2.7 million for the year ended December 31, 2013, while accretion on acquired Fidelity interest bearing liabilities was $0.4 million for the three months ended December 31, 2013 and $1.7 million for the year ended December 31, 2013. (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 35% for each period presented. Page 8 Quarter Ended Statement of Income Full time equivalent employees Page 9 Asset quality data Non-performing assets: Troubled debt restructurings - accruing Non-accrual loans: Troubled debt restructurings Other non-accrual loans Total non-accrual loans Total non-performing loans Other real estate and repossessed assets Total non-performing assets Past due loans (1): Loans past due 30-89 days Loans past due 90 days or more Total past due loans Criticized and classified loans (2): Criticized loans Classified loans Total criticized and classified loans Loans past due 30-89 days / total loans Loans past due 90 days or more / total loans Non-performing loans / total loans Non-performing assets/total loans, other real estate and repossessed assets Criticized and classified loans / total loans Net loan and deposit account overdraft charge-offs Annualized net loan charge-offs /average loans Allowance for loan losses / portfolio loans Allowance for loan losses / non-performing loans x Allowance for loan losses / non-performing loans and loans past due Capital ratios Tier I leverage capital Tier I risk-based capital Average shareholders' equity to average assets Tangible equity to tangible assets (3) (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. Page 10 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. Year to Date Return on average tangible equity: Net income (annualized) Plus: amortization of intangibles (annualized) (1) Net income before amortization of intangibles (annualized) Average total shareholders' equity Less: average goodwill and other intangibles, net of def. tax liability Average tangible equity Return on average tangible equity Net Income, excluding restructuring and merger-related expenses per diluted share: Add: Restructuring and merger-related expenses, net of tax (1) Net income, excluding restructuring and merger-related expenses Net income, excluding restructuring and merger-related expense per diluted share Period End Tangible book value: Less: goodwill and other intangible assets, net of def. tax liability Tangible equity Common shares outstanding Tangible book value Tangible equity to tangible assets: Tangible equity to tangible assets Efficiency ratio: Efficiency ratio is calculated by dividing non-interest expense less restructuring and merger related expenses by the sum of net interest income on a fully taxable equivalent basis plus non-interest income. (1) Tax effected at 35%. RELATED LINKS http://www.wesbanco.com