Item 1. Business - ----------------- General - ------- WesBanco, a multi-bank holding company headquartered in Wheeling, WV, offers a full range of financial services including retail banking, corporate banking, personal and corporate trust services, brokerage, mortgage banking and insurance. Most affiliates operate automated teller machines primarily under the name of MAC. The banking machines are linked to CIRRUS, a nationwide banking network. The Corporation's primary business function is the operation of four banking affiliates through 59 offices located in West Virginia and Eastern Ohio. The four banking affiliates are headquartered in major West Virginia cities and include, WesBanco Bank Wheeling, WesBanco Bank Fairmont, WesBanco Bank Parkersburg and WesBanco Bank Charleston with total assets as of December 31, 1998 of $1.1 billion, $515.6 million, $439.2 million and $146.0 million, respectively. WesBanco provides trust services through one of the largest trust departments in West Virginia. As of December 31, 1998, the market value of trust assets was $2.8 billion. Other business activity occurs through the Corporation's non-bank affiliates. WesBanco Mortgage Company, a mortgage banking affiliate that originated approximately $100 million in residential mortgage loans during 1998, is headquartered in South Charleston. Hunter Agency, Inc. is a multi-line independent insurance agency specializing in property, casualty and life insurance for personal and commercial clients. Hunter was acquired during 1998 and is headquartered in Shinnston, WV. CommBanc Investments, Inc., a full service brokerage affiliate that was part of the acquisition of Commercial BancShares, is located in Marietta, Ohio. There are approximately 1,093 full time equivalent employees employed by all WesBanco affiliates as of December 31, 1998. On March 31, 1998, WesBanco completed its acquisition of Commercial BancShares, Incorporated issuing 4,594,134 shares of stock in a transaction accounted for as a pooling of interests. All previously presented financial information has been restated to include Commercial BancShares. As of the transaction date, Commercial BancShares reported total assets of approximately $466.1 million. On November 10, 1998, WesBanco and The Heritage Bank of Harrison County announced the execution of a definitive Agreement and Plan of merger providing for the merger of Heritage, a unit-bank located in Clarksburg, WV, with and into WesBanco Bank Fairmont. The transaction, which will be accounted for under the purchase method of accounting, is expected to be completed during the second quarter of 1999. As of December 31, 1998, Heritage reported total assets of approximately $33.1 million. The Corporation has reported to its shareholders that it may engage in other activities of a financial nature authorized by the Federal Reserve Board through a subsidiary, or through acquisition of established companies. As of December 31, 1998, none of the affiliates were engaged in any operations in foreign countries and none has had transactions with customers in foreign countries.
Competition - ----------- Each affiliate faces strong competition for local business in its respective market areas. Competition exists for new loans and deposits, in the scope and types of services offered, and the interest rates paid on time deposits and charged on loans, mortgage banking services and in other aspects of banking. The affiliate banks encounter substantial competition not only from other commercial banks but also from other financial institutions. Savings banks, savings and loan associations, brokerage business and credit unions actively compete for deposits and loans. Such institutions, as well as consumer finance companies, insurance companies and other enterprises, are important competitors for various types of lending business. In addition, personal and corporate trust services and investment counseling services are offered by insurance companies, investment counseling firms and other business firms and individuals.
Supervision and Regulation - -------------------------- As a registered bank holding company, WesBanco is subject to the supervision of the Federal Reserve Board and is required to file with the Federal Reserve Board reports and other information regarding its business operations and the business operations of its subsidiaries. WesBanco is also subject to examination by the Federal Reserve Board and is
required to obtain Federal Reserve Board approval prior to acquiring, directly or indirectly, ownership or control of voting shares of any bank, if, after such acquisition, it would own or control more than 5% of the voting stock of such bank. In addition, pursuant to federal law and regulations promulgated by the Federal Reserve Board, WesBanco may only engage in, or own or control companies that engage in, activities deemed by the Federal Reserve Board to be so closely related to banking as to be a proper incident thereto. Prior to engaging in most new business activities, WesBanco must obtain approval from the Federal Reserve Board. WesBanco's banking subsidiaries have deposits insured by the Bank Insurance Fund ("BIF") of the Federal Deposit Insurance Corporation (the "FDIC"), and are subject to supervision, examination and regulation by state banking authorities and either the FDIC or the Federal Reserve Board. In addition to the impact of federal and state supervision and regulation, the banking subsidiaries of WesBanco are affected significantly by the actions of the Federal Reserve Board as it attempts to control the money supply and credit availability in order to influence the economy. WesBanco's depository institution subsidiaries are subject to affiliate transaction restrictions under federal law which limit the transfer of funds by the subsidiary banks to their parent and any nonbanking subsidiaries, whether in the form of loans, extensions of credit, investments or asset purchases. Such transfers by any subsidiary bank to its parent corporation or to any nonbanking subsidiary are limited in amount to 10% of the institution's capital and surplus and, with respect to such parent and all such nonbanking subsidiaries, to an aggregate 20% of any such institution's capital and surplus. Furthermore, such loans and extensions of credit are required to be secured in specified amounts. The Federal Reserve Board has a policy to the effect that a bank holding company is expected to act as a source of financial and managerial strength to each of its subsidiary banks and to commit resources to support each such subsidiary bank. Under the source of strength doctrine, the Federal Reserve Board may require a bank holding company to make capital injections into a troubled subsidiary bank, and may charge the bank holding company with engaging in unsafe and unsound practices for failure to commit resources to such a subsidiary bank. This capital injection may be required at times when WesBanco may not have the resources to provide it. Any capital loans by a holding company to any of the subsidiary banks are subordinate in right of payment to deposits and to certain other indebtedness of such subsidiary bank. Moreover, in the event of a bank holding company's bankruptcy, any commitment by such holding company to a federal bank regulatory agency to maintain the capital of a subsidiary bank will be assumed by the bankruptcy trustee and entitled to a priority of payment. In 1989, the United States Congress passed comprehensive financial institutions legislation known as the Financial Institution Reform, Recovery, and Enforcement Act ("FIRREA"). FIRREA established a new principle of liability on the part of depository institutions insured by the FDIC for any losses incurred by, or reasonably expected to be incurred by, the FDIC after August 9, 1989, in connection with (i) the default of a commonly controlled FDIC-insured depository institution, or (ii) any assistance provided by the FDIC to a commonly controlled FDIC-insured depository institution in danger of default. "Default" is defined generally as the appointment of a conservator or receiver and "in danger of default" is defined generally as the existence of certain conditions indicating that a "default" is likely to occur in the absence of regulatory assistance. Accordingly, in the event that any insured bank subsidiary of WesBanco causes a loss to the FDIC, other bank subsidiaries of WesBanco could be required to compensate the FDIC by reimbursing to it the amount of such loss.
Dividend Restrictions - --------------------- There are statutory limits on the amount of dividends WesBanco's depository institution subsidiaries can pay to their parent corporation without regulatory approval. Under applicable federal regulations, appropriate bank regulatory agency approval is required if the total of all dividends declared by a bank in any calendar year exceeds the available retained earnings and exceeds the aggregate of the bank's net profits (as defined by regulatory agencies) for that year and its retained net profits for the preceding two years, less any required transfers to surplus or a fund for the retirement of any preferred stock.
FDIC Insurance - -------------- The FDIC has the authority to raise the insurance premiums for institutions in the BIF to a level necessary to achieve a target reserve level of 1.25% of insured deposits within not more than 15 years. In addition, the FDIC has the authority to impose special assessments in certain circumstances. The level of deposit premiums affects the profitability of subsidiary banks and thus the potential flow of dividends to parent companies.
Under the risk-based insurance assessment system that became effective January 1, 1994, the FDIC places each insured depository institution in one of nine risk categories based on its level of capital and other relevant information (such as supervisory evaluations). Regarding the assessment rates under the assessment system, on November 20, 1996, the FDIC voted to retain the existing Bank Insurance Fund ("BIF") assessment schedule of 0 to 0.27% (annual rate), and to collect an assessment against BIF assessable deposits to be paid to the Financing Corporation ("FICO"). In addition, the FDIC eliminated the statutory minimum annual assessment of $2,000. Each WesBanco Bank was subject to the FICO special assessment at an annual rate of 1.20% during 1998. No assessment was paid to the BIF for 1998.
Federal Deposit Insurance Corporation Improvement Act of 1991 - ------------------------------------------------------------- In December 1991, Congress enacted the Federal Deposit Insurance Corporation Improvement Act of 1991 ("FDICIA"), which substantially revised the bank regulatory and funding provisions of the Federal Deposit Insurance Act and makes revisions to several other federal banking statutes. Among other things, FDICIA requires federal bank regulatory authorities to take "prompt corrective action" with respect to depository institutions that do not meet minimum capital requirements. For these purposes, FDICIA establishes five capital tiers: well capitalized, adequately capitalized, undercapitalized, significantly undercapitalized and critically undercapitalized. Rules adopted by the Federal banking agencies under FDICIA provide that an institution is deemed to be: "well capitalized" if the institution has a total (Tier 1 plus Tier II) risk-based capital ratio of 10.0% or greater, a Tier I risk-based ratio of 6.0% or greater, and a leverage ratio of 5.0% or greater, and the institution is not subject to an order, written agreement, capital directive, or prompt corrective action directive to meet and maintain a specific level for any capital measure; "adequately capitalized" if the institution has a Total risk-based capital ratio of 8.0% or greater, a Tier I risk-based capital ratio of 4.0% or greater, and a leverage ratio of 4.0% or greater (or a leverage ratio of 3.0% or greater if the institution is rated composite 1 in its most recent report of examination, subject to appropriate Federal banking agency guidelines), and the institution does not meet the definition of a well-capitalized institution; "undercapitalized" if the institution has a Total risk-based capital ratio that is less than 8.0%, a Tier I risk-based capital ratio that is less than 4.0% or a leverage ratio that is less than 4.0% (or a leverage ratio that is less than 3.0% if the institution is rated composite 1 in its most recent report of examination, subject to appropriate Federal banking agency guidelines) and the institution does not meet the definition of a significantly undercapitalized or critically undercapitalized institution; "significantly undercapitalized" if the institution has a Total risk-based capital ratio that is less than 6.0%, a Tier I risk-based capital ratio that is less than 3.0%, or a leverage ratio that is less than 3.0% and the institution does not meet the definition of a critically undercapitalized institution; and "critically undercapitalized" if the institution has a ratio of tangible equity to total assets that is equal to or less than 2%. At December 31, 1998, WesBanco and all of its bank subsidiaries qualified as well-capitalized based on the ratios and guidelines noted above. A bank's capital category, however, is determined solely for the purpose of applying the prompt corrective action rules and may not constitute an accurate representation of that bank's overall financial condition or prospects. The appropriate Federal banking agency may, under certain circumstances, reclassify a well capitalized insured depository institution as adequately capitalized. The appropriate agency is also permitted to require an adequately capitalized or undercapitalized institution to comply with the supervisory provisions as if the institutions were in the next lower category (but not treat a significantly undercapitalized institution as critically undercapitalized) based on supervisory information other than the capital levels of the institution. The statute provides that an institution may be reclassified if the appropriate Federal banking agency determines (after notice and opportunity for hearing) that the institution is in an unsafe and unsound condition or deems the institution to be engaging in an unsafe or unsound practice. FDICIA generally prohibits a depository institution from making any capital distributions (including payment of a dividend) or paying any management fee to its holding company if the depository institution would thereafter be undercapitalized. Undercapitalized depository institutions are subject to growth limitations and are required to submit a capital restoration plan. The Federal banking agencies may not accept a capital restoration plan without determining, among other things, that the plan is based on realistic assumptions and is likely to succeed in restoring the depository institution's capital. In addition, for a capital restoration plan to be acceptable, the depository institution's parent holding company must guarantee that the institution will comply with such capital restoration plan. The aggregate liability of the
parent holding company is limited to the lesser of (i) an amount equal to 5% of the depository institution's total assets at the time it became undercapitalized, and (ii) the amount which is necessary (or would have been necessary) to bring the institution into compliance with all capital standards applicable with respect to such institution as of the time it fails to comply with the plan. If a depository institution fails to submit an acceptable plan, it is treated as if it is significantly undercapitalized. Significantly undercapitalized depository institutions may be subject to a number of requirements and restrictions, including orders to sell sufficient voting stock to become adequately capitalized, requirements to reduce total assets and cessation of receipt of deposits from correspondent banks. Critically undercapitalized institutions are subject to the appointment of a receiver or conservator. FDICIA also contains a variety of other provisions that may affect the operation of WesBanco, including reporting requirements, regulatory standards for real estate lending, "truth in savings" provisions, and the requirement that a depository institution give 90 days' prior notice to customers and regulatory authorities before closing any branch.
Capital Requirements - -------------------- The risk-based capital guidelines for bank holding companies and banks adopted by the Federal banking agencies were phased in at the end of 1992. The minimum ratio of qualifying total capital to risk-weighted assets (including certain off-balance sheet items, such as standby letters of credit) under the fully phased-in guidelines is 8%. At least half of the total capital is to be comprised of common stock, retained earnings, noncumulative perpetual preferred stocks, minority interests and, for bank holding companies, a limited amount of qualifying cumulative perpetual preferred stock, less goodwill and certain other intangibles ("Tier I capital"). The remainder ("Tier II capital") may consist of other preferred stock, certain other instruments, and limited amounts of subordinated debt and the reserve for credit losses. In addition, the Federal Reserve Board has established minimum leverage ratio (Tier I capital to total average assets less goodwill and certain other intangibles) guidelines for bank holding companies and banks. These guidelines provide for a minimum leverage ratio of 3.0% for bank holding companies and banks that meet certain specified criteria, including that they have the highest regulatory rating. All other banking organizations are required to maintain a leverage ratio of 3.0% plus an additional cushion of at least 100 to 200 basis points. The guidelines also provide that banking organizations experiencing internal growth or making acquisitions will be expected to maintain strong capital positions substantially above the minimum supervisory levels, without significant reliance on intangible assets. Furthermore, the guidelines indicate that the Federal Reserve Board will continue to consider a "tangible Tier I leverage ratio" in evaluating proposals for expansion or new activities. The tangible Tier I leverage ratio is the ratio of Tier I capital, less intangibles not deducted from Tier I capital, to total assets, less all intangibles. Neither WesBanco nor any of its bank subsidiaries has been advised of any specific minimum leverage ratio applicable to it. As of December 31, 1998, all of WesBanco's banking subsidiaries had capital in excess of all applicable requirements.
Interstate Banking Act - ---------------------- The Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994 (hereinafter called "Interstate Banking Act") was signed into law by President Clinton on September 29, 1994. The Act generally allows adequately capitalized and managed bank holding companies to acquire banks in any state starting one year after enactment. The Act also authorized interstate merger transactions effective June 1, 1997. States are permitted, however, to pass legislation providing for either earlier approval of mergers with out-of-state banks or "opting-out" of interstate mergers entirely. The Act would permit banks to acquire branches of out-of-state banks by converting their office into branches of the resulting bank. The Act would also permit banks to establish and operate "de novo branches" in any state that "opts-in" to de novo branching. The Act also requires each Federal banking agency to prescribe uniform regulations, including guidelines insuring that interstate branches operated by out-of-state banks are reasonably helping to meet the credit needs of communities where they operate. WesBanco is incorporated under the laws of the State of West Virginia and the West Virginia Legislature adopted substantial amendments to the West Virginia banking laws in 1996 specifically permitting interstate branching under Section 102 and 103 of the Interstate Banking Act, effective May 31, 1997. The State of Ohio, in which WesBanco has an affiliate bank, enacted legislation in 1997 specifically permitting interstate branching.
Item 2.
Item 2. Properties - ------------------- The Registrant's affiliates generally own their respective offices, related facilities and unimproved real property which is held for future expansion. With certain branch office exceptions, all of the respective West Virginia offices are located in Wheeling, McMechen, Follansbee, Wellsburg, Weirton, New Martinsville, Paden City, Sistersville, Elizabeth, Charleston, South Charleston, Dunbar, Sissonville, Parkersburg, Ravenswood, Ripley, Pennsboro, Ellenboro, Harrisville, Cairo, Kingwood, Fairmont, Morgantown, Shinnston, Bridgeport and Masontown. The Ohio bank offices are located in Marietta, Barlow, Devola, Barnesville, Bethesda, St. Clairsville, Woodsfield and Beallsville. During the fourth quarter of 1997, WesBanco acquired property in Charleston, West Virginia, where a new office will be constructed to facilitate WesBanco's expansion in the downtown area. Consolidated investment in net bank premises and equipment at December 31, 1998 was $48.0 million. The main office of the Registrant is located at 1 Bank Plaza, Wheeling, West Virginia, in a building owned by WesBanco Wheeling. The building contains approximately 100,000 square feet. During 1998, an office building located adjacent to the main office was acquired by WesBanco Properties, an affiliate of WesBanco. A portion of the building, which is currently being renovated, will be used for expansion of the main office operations. At various building locations, WesBanco rents and will continue to look for opportunities to rent office space to unrelated businesses. Rental income increased substantially during 1998 due to new rental agreements at several locations. Rental income generated during 1998 totaled $545,000 compared to $244,000 during 1997.
Item 3.
Item 3. Legal Proceedings - -------------------------- Reference has been made in prior filings to the case styled Tankovits v. Glessner, et al., Civil Action No. 96-C-59(W), presently pending in the Circuit Court of Ohio County, West Virginia. This is a suit by a trust beneficiary against the Wesbanco Bank Wheeling, the Plaintiff's uncle, the Plaintiff's mother and certain family owned corporations, and arises out of the administration of the estate of the Plaintiff's grandfather. The Plaintiff's uncle and mother served as Co-Executors of the grandfather's estate, and the Complaint alleges various torts, including self-dealing, breach of fiduciary duty and negligence. The bank is a Co-Trustee, along with the mother and the uncle, of two trusts which were to receive benefits upon completion of the administration of the estate. The Co-Executors elected to pay the estate tax in installments over a 15-year period and, accordingly, made no distributions to the trust from the estate. The Complaint has asserted a duty on the part of the bank to supervise the Co-Executors in the administration of the estate, even though the bank had no fiduciary capacity in the administration of the estate. The Complaint seeks certain equitable relief, compensatory and punitive damages in the amount of $10,000,000.00. The case continues in discovery and the bank is vigorously defending the case. The bank believes that it did not breach any fiduciary duties owed to the Plaintiff under the circumstances of the case and believes that it did not have a duty, as a matter of law, to supervise the administration of the estate by the Co-Executors. Wesbanco Bank Wheeling has also been named as a Defendant in a case styled Travelers v. Wesbanco Bank Wheeling and Coopers & Lybrand, under Civil Action No. 98-C-225, presently pending in the Circuit Court of Ohio County, West Virginia. In this action, Travelers, as subrogee of Wheeling-Nisshin, seeks to recover certain losses incurred by it over the embezzlement of funds by a former financial officer of Wheeling-Nisshin. The losses were generated through forged checks. Travelers has sued the bank alleging a violation of the properly payable rule of the Uniform Commercial Code, even though the officer involved was a designated financial officer of Wheeling-Nisshin, reconciled checking accounts and had access to facsimile signatures used by Wheeling-Nisshin. The bank believes that it has a substantial defense to the claims of Travelers and is vigorously defending the case. The claimed losses are equivalent to the amount of the loss incurred by Travelers, $750,000.00, plus interest. The bank has filed a Motion to Dismiss the case which is pending hearing before the Court.
A Declaratory Judgment suit was filed on behalf of affiliate bank, Wesbanco Bank Parkersburg, in the United States District Court for the Southern District of West Virginia, under Civil Action No. 6:98-097, seeking to determine the benefits payable to certain former employees under an executive supplemental income plan maintained by several former affiliate banks of Commercial BancShares, Incorporated acquired by Wesbanco on March 31, 1998. The Complaint seeks a determination of the rights of the participants under this supplemental benefit plan. The Bank believes that it has correctly interpreted and applied the benefit plan in accordance with the terms of the plan and has relied upon the recommendations of its third party administrator in making such determinations. Certain named former employees who are participants in the plan have filed a counterclaim asserting a different interpretation of the plan. The case is currently
in discovery. It is not anticipated that the parties will be able to amicably reconcile the differences in interpretation of the plan provisions. 	
PART II
Item 5.
Item 5. Market for the Registrant's Common Equity and Related Shareholder - -------------------------------------------------------------------------- Matters ------- WesBanco's common stock is quoted on The Nasdaq Stock Market (Nasdaq), with a trading symbol of WSBC. The approximate number of holders of WesBanco's $2.0833 par value common stock as of December 31, 1998 was 5,577. The number of holders does not include WesBanco employees who have had stock allocated to them through the Corporation's KSOP. All WesBanco employees who meet the eligibility requirements of the KSOP are included in the Plan.
Quarterly price information, reflecting high and low sales prices as reported by Nasdaq and quarterly dividends per share for 1998 and 1997 are as presented below: 		
1998 1997 ---------------------------- ------------------------ Dividend Dividend High Low Declared High Low Declared ------------------------------------------------------ 4th quarter $30.00 $25.38 $.210 $31.25 $27.50 $.200 3rd quarter 28.25 22.00 .210 30.50 25.75 .200 2nd quarter 30.94 23.88 .210 27.17 21.33 .193 1st quarter 31.13 27.00 .210 22.17 21.17 .193 =============================================================================
Item 6.
Item 6. Selected Financial Data - --------------------------------
FIVE YEAR SELECTED FINANCIAL SUMMARY - ----------------------------------------------------------------------------- (dollars in thousands, except per share amounts)
Item 7.
Item 7. Management's Discussion and Analysis of Financial Condition and - ----------------------------------------------------------------------- Results of Operations ---------------------
Management's Discussion and Analysis represents an overview of the results of operations and financial condition of WesBanco, Inc. This discussion and analysis should be read in conjunction with the Consolidated Financial Statements and Notes thereto, presented in Part II, item 8
Item 8. Financial Statements and Supplementary Data - --------------------------------------------------- Financial Statements - --------------------
Consolidated financial statements, accompanying notes to the consolidated financial statements of WesBanco and the Report of Independent Auditor are presented as follows:
Consolidated Balance Sheets as of December 31, 1998 and 1997 Consolidated Statements of Income for the years ended December 31, 1998, 1997 and 1996 Consolidated Statements of Changes in Shareholders' Equity for the years ended December 31, 1998, 1997 and 1996 Consolidated Statements of Cash Flows for the years ended December 31, 1998, 1997 and 1996 Notes to Consolidated Financial Statements Report of Independent Auditor
WESBANCO, INC. CONSOLIDATED BALANCE SHEET - ----------------------------------------------------------------------------- (dollars in thousands, except per share amounts)
December 31, -------------------------- 1998 1997 - ----------------------------------------------------------------------------- ASSETS Cash and due from banks $ 62,989 $ 73,412 Due from banks - interest bearing 5,174 1,515 Federal funds sold 38,055 86,363 Investment securities: Held to maturity (market values of $220,699 and $249,517, respectively) 214,845 246,208 Available for sale carried at market value 465,705 383,010 - ----------------------------------------------------------------------------- Total investment securities 680,550 629,218 - ----------------------------------------------------------------------------- Loans, net of unearned income 1,373,018 1,341,901 Allowance for loan losses (19,098) (20,261) - ----------------------------------------------------------------------------- Net loans 1,353,920 1,321,640 - ----------------------------------------------------------------------------- Bank premises and equipment 47,999 45,068 Accrued interest receivable 14,837 15,579 Other assets 39,188 38,748 - ----------------------------------------------------------------------------- Total Assets $2,242,712 $2,211,543 =============================================================================
LIABILITIES Deposits: Non-interest bearing demand $ 227,349 $ 205,399 Interest bearing demand 510,662 432,050 Savings deposits 308,979 366,572 Certificates of deposit 740,652 775,846 - ----------------------------------------------------------------------------- Total deposits 1,787,642 1,779,867 - ----------------------------------------------------------------------------- Federal funds purchased and repurchase agreements 112,511 93,342 Other borrowings 22,194 26,927 Accrued interest payable 6,669 7,224 Other liabilities 17,213 16,188 - ----------------------------------------------------------------------------- Total Liabilities 1,946,229 1,923,548 - -----------------------------------------------------------------------------
SHAREHOLDERS' EQUITY Preferred stock, no par value; 1,000,000 shares authorized; none outstanding --- --- Common stock ($2.0833 par value; 50,000,000 and 25,000,000 shares authorized; 20,996,531 and 20,666,185 shares issued, respectively) 43,742 43,055 Capital surplus 60,283 57,997 Retained earnings 198,782 187,424 Treasury stock (336,296 and 56,381 shares, respectively, at cost) (9,421) (1,675) Accumulated other comprehensive income (market value adjustments) 3,610 1,783 Deferred benefits for directors and employees (513) (589) - ----------------------------------------------------------------------------- Total Shareholders' Equity 296,483 287,995 - ----------------------------------------------------------------------------- Total Liabilities and Shareholders' Equity $2,242,712 $2,211,543 =============================================================================
See Notes to Consolidated Financial Statements.
WESBANCO, INC. CONSOLIDATED STATEMENT OF INCOME - ----------------------------------------------------------------------------- (dollars in thousands, except per share amounts)
For the years ended December 31, ----------------------------------- 1998 1997 1996 - ------------------------------------------------------------------------------ Interest income: Interest and fees on loans $ 118,766 $ 118,540 $ 107,428 - ------------------------------------------------------------------------------ Interest on investment securities: Taxable 31,205 27,045 26,471 Tax-exempt 9,592 9,121 8,352 - ------------------------------------------------------------------------------ Total interest on investment securities 40,797 36,166 34,823 - ------------------------------------------------------------------------------ Other interest income 3,155 3,084 2,132 - ------------------------------------------------------------------------------ Total interest income 162,718 157,790 144,383 - ------------------------------------------------------------------------------ Interest expense: Interest bearing demand deposits 16,693 12,335 8,370 Savings deposits 7,852 9,520 11,059 Certificates of deposit 43,067 43,041 38,083 - ------------------------------------------------------------------------------ Total interest on deposits 67,612 64,896 57,512 Other borrowings 6,313 5,109 4,100 - ------------------------------------------------------------------------------ Total interest expense 73,925 70,005 61,612 - ------------------------------------------------------------------------------ Net interest income 88,793 87,785 82,771 Provision for loan losses 4,392 5,574 4,795 - ------------------------------------------------------------------------------ Net interest income after provision for loan losses 84,401 82,211 77,976 - ------------------------------------------------------------------------------ Other income: Trust fees 9,066 7,640 6,180 Service charges and other income 15,139 9,545 9,212 Net securities gains 1,510 516 265 - ------------------------------------------------------------------------------ Total other income 25,715 17,701 15,657 - ------------------------------------------------------------------------------ Other expense: Salaries and wages 28,596 27,169 24,918 Employee benefits 6,799 7,644 6,424 Net occupancy expense 3,641 3,518 3,511 Equipment expense 5,876 5,615 4,068 Other operating expense 23,396 21,236 18,122 - ------------------------------------------------------------------------------ Total other expense 68,308 65,182 57,043 - ------------------------------------------------------------------------------ Income before provision for income taxes 41,808 34,730 36,590 Provision for income taxes 13,495 9,519 10,648 - ------------------------------------------------------------------------------ Net Income $ 28,313 $ 25,211 $ 25,942 ============================================================================== Earnings per share $ 1.36 $ 1.23 $ 1.31 Average shares outstanding 20,867,193 20,461,742 19,855,791 ==============================================================================
See Notes to Consolidated Financial Statements.
WESBANCO, INC. CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY - ------------------------------------------------------------------------------ (dollars in thousands, except per share amounts)
See Notes to Consolidated Financial Statements
WESBANCO, INC. CONSOLIDATED STATEMENT OF CASH FLOWS - ------------------------------------------------------------------------------ (dollars in thousands, except per share amounts)
See Notes to Consolidated Financial Statements.
WESBANCO, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - ----------------------------------------------------------------------------- NOTE 1: ACCOUNTING POLICIES - ----------------------------------------------------------------------------- 		 WesBanco, Inc. is a multi-bank holding company offering a full range of financial services, including trust, mortgage banking, insurance and brokerage services, through offices located in West Virginia and Eastern Ohio. The significant accounting principles employed in the preparation of the accompanying consolidated financial statements are summarized below: Principles of consolidation: The Consolidated Financial Statements of WesBanco, Inc. (the "Corporation") include the accounts of the Corporation and its wholly-owned subsidiaries. Material intercompany transactions and accounts have been eliminated. Reclassification: Certain prior year financial information has been reclassified to conform to the presentation in 1998. The reclassifications had no effect on net income. Use of estimates: The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. Cash and cash equivalents: For the purpose of reporting cash flows, cash and cash equivalents include cash and due from banks-interest bearing and federal funds sold. Generally, federal funds are sold for one day periods. Investment securities: Securities Available for Trading: The Corporation did not have a trading portfolio during the two year period ended December 31, 1998. Investments Held to Maturity: Investment securities consisting principally of debt securities, which are purchased with the positive intent and ability to hold until their maturity, are stated at cost, adjusted for amortization of premiums and accretion of discounts. Securities Available for Sale: Debt securities not classified as trading or held to maturity, and marketable equity securities not classified as trading, are classified as available for sale. These securities may be sold at any time based upon management's assessment of changes in economic or financial market conditions, interest rate or prepayment risks, liquidity considerations, and other factors. These securities are stated at market value, with the market value adjustment, net of tax, reported as a separate component of accumulated other comprehensive income. Permanent declines in value on these securities are recognized in results of operations. Gains and Losses: Net realized gains and losses on sales of securities are included in other income. The cost of these securities sold is based on the specific identification method. Amortization and Accretion: Amortization of premiums and accretion of discounts are included in interest on securities. Loans and loans held for sale: Interest is accrued as earned on loans except where doubt exists as to collectability, in which case recognition of income is discontinued. Loans originated and intended for sale in the secondary market are carried at the lower of cost or estimated market value in the aggregate. Losses are recorded in other income based on the difference between the market value and the aggregate cost. A loan is considered impaired, based on current information and events, if it is probable that the Corporation will be unable to collect the scheduled payments of principal and interest when due according to the contractual terms of the loan agreement. Impaired loans include all nonaccrual and renegotiated loans, as well as loans internally classified as substandard or doubtful (as those terms are defined by banking regulations) that meet the definition of impaired loans. The Corporation recognizes interest income on nonaccrual loans on the cash basis. Allowance for loan losses: The allowance for loan losses is maintained at a level considered adequate by management to provide for potential loan losses. The allowance is increased by provisions charged to operating expenses and reduced by loan losses, net of recoveries. Management's determination of the adequacy of the allowance is based on evaluation of the loan portfolio, as well as prevailing economic conditions, past loan loss experience, current delinquency factors, changes in the character of the loan portfolio, specific problem loans and other relevant factors. This evaluation is inherently subjective as it requires
material estimates that may be susceptible to significant change. While management has allocated the allowance to different loan categories, the allowance is general in nature and is available for the loan portfolio in its entirety. Premises and equipment: Premises and equipment are stated at cost less accumulated depreciation, and depreciated over their estimated useful lives using either the straight- line or an accelerated method. Useful lives are revised when a change in life expectancy becomes apparent. Maintenance and repairs are charged to expense and betterments are capitalized. Gains and losses on premises and equipment retired or otherwise disposed of are charged to expense when incurred. Other real estate owned: Other real estate owned consists primarily of properties acquired through, or in lieu of, loan foreclosures. Valuations are performed periodically and the real estate is carried at the lower of cost or appraised value, less estimated costs to sell. Purchase method of accounting: Net assets of companies acquired in purchase transactions are recorded at fair market value at the date of acquisition. The excess of cost over net assets of affiliates purchased (goodwill) is amortized over 15 years. Income taxes: Deferred tax assets and liabilities are recognized for the expected future tax consequences attributable to temporary differences between the carrying amounts of assets and liabilities and their tax bases. In addition, such deferred tax asset and liability amounts are adjusted for the effects of enacted changes in tax laws or rates. Earnings per share: Basic earnings per share is calculated by dividing net income by the weighted average number of shares of common stock outstanding during each period. For diluted earnings per share, the weighted average number of shares for each period is increased by the number of shares which would be issued assuming the exercise of common stock options. There was no dilutive effect from the stock options and accordingly, basic and diluted earnings per share are the same.	 Trust assets: Assets held by subsidiary banks in fiduciary or agency capacities for their customers are not included as assets in the accompanying Consolidated Balance Sheet. Certain trust assets are held on deposit at subsidiary banks. Comprehensive income: During 1998, WesBanco adopted SFAS No. 130, "Reporting Comprehensive Income", which required reclassification of the Consolidated Statement of Changes in Shareholders' Equity for earlier periods. Sources of comprehensive income not included in net income are limited to unrealized gains and losses (net market value adjustments) on securities available for sale. Reclassification adjustments between unrealized gains and losses from prior periods and realized gains and losses included in earnings in the current period are not considered material in the current presentation of comprehensive income. New Accounting Standards: SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities" is effective for years beginning after June 15, 1999. This Statement, which provides new accounting treatment for derivative transactions, is not expected to have a significant impact on WesBanco's financial condition or results of operations. During 1998, WesBanco adopted the provisions of SFAS No. 131, "Disclosures about Segments of an Enterprise and Related Information". This Statement, which requires companies to disclose certain information about reporting operating segments, did not materially effect WesBanco's financial position or results of operations since management views the Corporation as one segment, community banking.
NOTE 2: AGREEMENT TO MERGE - -----------------------------------------------------------------------------
On November 10, 1998, WesBanco and The Heritage Bank of Harrison County ("Heritage") jointly announced that they have entered into a definitive Agreement and Plan of Merger providing for Heritage, a unit-bank located in Clarksburg, West Virginia, to merge with and into a WesBanco affiliate. Under the terms of the definitive Agreement and Plan of Merger, WesBanco will exchange common stock based upon its market value as of the determination date. In accordance with the terms of the agreement, WesBanco will issue a minimum of 1.515 shares and a maximum of 1.923 shares for each share of Heritage common stock in a tax free exchange. The merger will be accounted for as a purchase transaction. The transaction, which is subject to, among other things, approval by the stockholders of Heritage and Federal and State Regulators, is expected to be completed during the second quarter of 1999.
At December 31, 1998, Heritage reported total assets of approximately $33,049,000, deposits of $28,685,000, and shareholders' equity of $4,219,000.
NOTE 3: COMPLETED BUSINESS COMBINATIONS AND DIVESTITURE - -----------------------------------------------------------------------------
On March 31, 1998, WesBanco completed its business combination with Commercial BancShares, Incorporated issuing 4,594,134 shares of stock in a transaction accounted for as a pooling of interests. Prior years' financial information has been restated to reflect the pooling of interests transaction. As of the transaction date, Commercial BancShares reported total assets of approximately $466,137,000, deposits of $395,504,000 and shareholders' equity of $46,358,000. The following financial information presents combined net interest income and net income results of WesBanco and Commercial Bancshares as if the acquisition had occurred as of the beginning of 1996 and 1997: (in thousands)
WesBanco For the years ended as previously Commercial December 31, presented BancShares WesBanco - ----------------------------------------------------------------------------- Net interest income: 1997 $68,756 $19,029 $87,785 1996 64,720 18,051 82,771 Net income: 1997 22,274 2,937 25,211 1996 21,161 4,781 25,942 - ----------------------------------------------------------------------------- 	
The following table summarizes WesBanco's material purchase acquisitions, accounted for under the purchase method of accounting, for the three year period ended December 31, 1998: (dollars in thousands)
On June 30, 1998, WesBanco fulfilled the regulatory requirement that it divest of Union Bank of Tyler County ("Union"). Union was a subsidiary of Commercial BancShares, with total assets of $46,873,000 as of the divestiture date. WesBanco recognized a gain of $4,605,000 on the sale of Union, which is included in Other Income.
	 NOTE 4: INVESTMENT SECURITIES - ----------------------------------------------------------------------------- 	 The following tables summarize amortized cost and fair values of held to maturity and available for sale securities:
(in thousands)
The following table summarizes amortized cost and estimated fair value of securities by maturity:
December 31, 1998 ------------------------------------------- Held to Maturity Available for Sale --------------------- ------------------- Estimated Estimated Amortized Fair Amortized Fair (in thousands) Cost Value Cost Value - ----------------------------------------------------------------------------- Within one year $ 46,731 $ 47,111 $130,319 $130,949 After one year, but within five 76,018 78,253 197,327 200,749 After five years, but within ten 52,191 54,306 119,994 121,085 After ten years 39,905 41,029 12,039 12,922 - ----------------------------------------------------------------------------- Total $214,845 $220,699 $459,679 $465,705 ============================================================================= Mortgage-backed securities are assigned to maturity categories based on estimated average lives. Available for sale securities in the after 10 year category include securities with no stated maturity. Securities with prepayment provisions are categorized based on contractual maturity.
Investment securities with par values aggregating $244,715,000 at December 31, 1998 and $195,165,000 at December 31, 1997 were pledged to secure public and trust funds. Gross security gains of $1,512,000, $562,000, and $635,000 and gross security losses of $2,000, $46,000 and $370,000 were realized for the years ended December 31, 1998, 1997 and 1996, respectively.
NOTE 5: LOANS - ----------------------------------------------------------------------------- The following table is a summary of total loans: December 31, ---------------------------- (in thousands) 1998 1997 - ----------------------------------------------------------------------------- Loans: Commercial $ 484,269 $ 438,055 Real estate - construction 46,033 37,743 Real estate 520,393 521,222 Personal, net of unearned income 313,043 333,176 Loans held for sale 9,280 11,705 - ----------------------------------------------------------------------------- Loans, net of unearned income $1,373,018 $1,341,901 =============================================================================
The following table represents changes in the allowance for loan losses:
For the years ended December 31, -------------------------------- (in thousands) 1998 1997 1996 - ----------------------------------------------------------------------------- Balance, beginning of year $20,261 $19,102 $16,955 Allowance for loan losses of acquired(sold) banks - net (37) 269 707 Provision for loan losses 4,392 5,574 4,795
Losses charged to the allowance (6,400) (5,793) (3,958) Recoveries 882 1,109 603 - ----------------------------------------------------------------------------- Net losses charged to the allowance (5,518) (4,684) (3,355) - ----------------------------------------------------------------------------- Balance, end of year $19,098 $20,261 $19,102 =============================================================================
The following tables summarize loans classified as impaired: December 31, -------------------- (in thousands) 1998 1997 - ----------------------------------------------------------------------------- Nonaccrual $ 10,488 $ 8,413 Renegotiated 695 2,423 Other classified loans: Doubtful 115 --- Substandard 5,170 3,765 - ----------------------------------------------------------------------------- Total impaired loans $ 16,468 $ 14,601 ============================================================================= Impaired loans with a related allowance for loan losses $ 11,873 $ 10,877 Allowance for loan losses on impaired loans 2,165 2,550 =============================================================================
For the years ended December 31, -------------------------------- (in thousands) 1998 1997 1996 - ---------------------------------------------------------------------------- Average impaired loans $19,429 $17,514 $12,717 Amount of contractual interest income on impaired loans 796 922 718 Amount of interest income recognized on a cash basis 391 202 178 ============================================================================ 	 Most lending occurs with customers located within West Virginia and Eastern Ohio. No significant concentration of credit risk exists by industry or by individual borrowers. The Corporation has no significant exposure to highly leveraged loan transactions, nor any foreign loans. Subsidiaries of WesBanco, in the ordinary course of business, grant loans to related parties at terms which do not vary from terms that would have been required if the transactions had been with unrelated parties. Indebtedness of related parties aggregated approximately $32,946,000, $47,123,000, and $56,028,000 as of December 31, 1998, 1997 and 1996, respectively. During 1998, $54,896,000 of loans were funded and $69,073,000 of loans were repaid. Loans repaid included $11,309,000 in loans to directors and executive officers of Commercial BancShares who are no longer in those positions, or have discontinued their affiliation with the Corporation.
NOTE 6: BANK PREMISES AND EQUIPMENT - -----------------------------------------------------------------------------
Bank premises and equipment include: December 31, Estimated ------------------- (in thousands) useful life 1998 1997 - ----------------------------------------------------------------------------- Land and improvements (3-10 years) $11,491 $ 9,554 Buildings and improvements (4-50 years) 48,973 46,263 Furniture and equipment (2-25 years) 36,059 33,383 - ----------------------------------------------------------------------------- 96,523 89,200 Less - Accumulated depreciation (48,524) (44,132) - ----------------------------------------------------------------------------- Total $47,999 $45,068 =============================================================================
NOTE 7: CERTIFICATES OF DEPOSIT - -----------------------------------------------------------------------------
Certificates of deposit in denominations of $100,000 or more were $125,493,000, and $134,253,000 as of December 31, 1998 and 1997, respectively. Related interest expense was $7,921,000 in 1998 and $7,512,000 in 1997. At December 31, 1998, the scheduled maturities of certificates of deposit are as follows: 						
(in thousands) -------------------------------------- 1999 $473,534 2000 179,532 2001 42,962 2002 21,033 2003 and thereafter 23,591 -------------------------------------- Total $740,652 ======================================
NOTE 8: REPURCHASE AGREEMENTS AND OTHER BORROWINGS - -----------------------------------------------------------------------------
Federal funds purchased and securities sold under agreements to repurchase represent short-term borrowings which generally mature within one to four days from the transaction date. Other borrowings consist principally of long-term advance agreements with the Federal Home Loan Bank (FHLB). These borrowings are collateralized by FHLB stock and a blanket collateral agreement which assigns a security interest in capital stock, deposits, mortgage loans, and investment securities. At December 31, 1998, FHLB borrowings, which are variable rate instruments with a weighted average yield of 5.6%, have the following maturity dates (in thousands): ------------------------------------ 2001 $10,255 2002 5,000 2004 and thereafter 3,995 ------------------------------------ Total $19,250 ====================================
Information concerning securities sold under agreements to repurchase is summarized as follows:
For the years ended December 31, ------------------------------ (dollars in thousands) 1998 1997 1996 - -------------------------------------------------------------------------- Outstanding balance at year end $111,029 $ 92,560 $ 74,064 Average balance during the year 99,099 79,132 71,774 Maximum month-end balance during the year 123,277 92,560 88,648 Average interest rate at year end 4.56% 5.61% 5.48% Average interest rate during the year 4.78 5.01 4.82 ==========================================================================
NOTE 9: EMPLOYEE BENEFIT PLANS - ----------------------------------------------------------------------------- In 1998 WesBanco adopted SFAS No. 132, "Employers' Disclosures About Pensions and Other Postretirement Benefits". This statement requires revised disclosures about pension and other post-retirement benefit plans, but does not impact the measurement or recognition of those plans. As such, adoption of this statement did not impact WesBanco's financial condition or results of operations.
Defined Benefit Pension Plan:		 At December 31, 1998, substantially all employees were participants in the WesBanco Defined Benefit Pension Plan ("The Plan"). The Plan covers those employees who satisfy minimum age and length of service requirements. Benefits of the Plan are generally based on years of service and employee's compensation during the last five years of employment. The Plan's funding policy has been to contribute annually the maximum amount that can be deducted for federal income tax purposes. Contributions are intended to provide not only for benefits attributed to service to date, but also for those expected to be earned in the future.
Commercial BancShares had no defined benefit pension plan. Employees of Commercial have been included in the WesBanco Plan as of the acquisition date, with no credited prior years of service. During 1996, all the assets and liabilities of Bank of Weirton's defined benefit plan were merged into the WesBanco plan. Prior to the merger, Bank of Weirton had a non-contributory defined benefit pension plan. The Bank of Weirton's plan benefit formula was based on length of service and average employee compensation.
Other postretirement benefits: WesBanco provides a postretirement contributory health insurance and a death benefit plan for retirees and active employees who were initially employed by the Corporation prior to March 30, 1998. The contribution related to health insurance is a fixed amount which may be changed at the Corporation's sole discretion. For 1998 and 1997, the health insurance benefit was $100 per month and death benefit was $7,500. As of December 31, 1998, the benefit obligation of $2,031,000 for the health insurance and death benefit was merged into the defined benefit pension plan.
Net periodic pension cost (benefit) for the defined benefit plan include the following components:
For the years ended December 31, ------------------------- (in thousands) 1998 1997 1996 - ----------------------------------------------------------------------------- Service cost - benefits earned during year $ 808 $ 773 $ 755 Interest cost on projected benefit obligation 1,621 1,406 1,380 Expected return on plan assets (2,415) (3,582) (3,313) Net amortization and deferral (162) 1,194 1,329 - ----------------------------------------------------------------------------- Net periodic pension cost (benefit) $ (148) $ (209) $ 151 =============================================================================
Net periodic costs of other postretirement benefits other than pensions include the following components:
For the years ended December 31, -------------------------------- (in thousands) 1998 1997 1996 - ------------------------------------------------------------------------------ Service cost - benefits earned during year $ 98 $ 99 $ 128 Interest cost on projected benefit obligation 215 209 191 Prior service cost 70 70 70 - ------------------------------------------------------------------------------ Net periodic postretirement benefit cost, other than pensions $ 383 $ 378 $ 389 ==============================================================================
Postretirement benefits resulted in cash payments of approximately $220,000, $181,000, and $138,000 for the years ended December 31, 1998, 1997 and 1996, respectively.
The following tables summarize the activity in the projected benefit obligation and plan assets:
For the years ended December 31, ------------------- (in thousands) 1998 1997 - ----------------------------------------------------------------------------- Projected benefit obligation, at beginning of year $ 20,830 $ 19,642 Service cost 808 773 Interest cost 1,621 1,406 Benefits paid (1,911) (1,258) Change in interest rate assumptions 924 803 Plan amendments - other postretirement benefits 3,287 --- Actuarial(gain)loss 1,988 (536) - ----------------------------------------------------------------------------- Projected benefit obligation, at end of year $ 27,547 $ 20,830 =============================================================================
For the years ended December 31, ---------------------- (in thousands) 1998 1997 - ------------------------------------------------------------------------------ Fair value of plan assets, at beginning of year $ 27,680 $ 24,928 Actual return on assets 2,649 3,582 Market value adjustment 376 --- Contributions --- 428 Benefits paid (1,911) (1,258) - ------------------------------------------------------------------------------ Fair value of plan assets, at end of year $ 28,794 $ 27,680 ==============================================================================
Plan assets consist of debt and equity securities which include U.S. Agency and Treasury issues, Corporate bonds and notes, listed common stocks including shares of WesBanco common stock (comprising less than 10% of Plan assets), and short-term cash equivalent instruments.
The following table sets forth the defined benefit pension plan's funded status and the asset reflected in the Consolidated Balance Sheet:
December 31, --------------------- (in thousands) 1998 1997 - ------------------------------------------------------------------------------ Plan assets in excess of projected benefit obligation $ 1,247 $ 6,850 Unrecognized prior service cost (864) (1,479) Unrecognized net gain (loss) 770 (2,342) Unrecognized obligation 20 27 - ------------------------------------------------------------------------------ Net pension asset $ 1,173 $ 3,056 ==============================================================================
The actuarial present value of benefit obligations is as follows: December 31, --------------------- (in thousands) 1998 1997 - ------------------------------------------------------------------------------ Actuarial present value of benefit obligation: Vested benefit obligation $ 21,048 $ 16,041 Accumulated benefit obligation 23,936 17,611 ==============================================================================
Actuarial assumptions used in the determination of the projected benefit obligation in the plan are as follows:
For the years ended December 31, --------------------------------- 1998 1997 1996 - ------------------------------------------------------------------------------ Weighted average discount rates 7.00% 7.25% 7.50% Rates of increase in compensation levels 4.50 4.50 4.50 Weighted average expected long-term return on assets 8.75 8.75 8.75	 ==============================================================================
KSOP: (Employee Stock Ownership and 401(k) Plan) Substantially all employees are included in either the WesBanco or Commercial BancShares KSOP Plans. Both KSOP plans consist of non-contributory employee stock ownership (ESOP) and 401(k) Plans. Under the 401(k) provisions, the Corporation makes various matching contributions based upon employees' contribution subject to regulatory limitations. Effective January 1, 1999, Commercial BancShares' KSOP was merged into WesBanco's KSOP. As of December 31, 1998, the combined plans hold 657,419 shares of WesBanco stock, all allocated to specific employee accounts. During 1995, WesBanco's ESOP established a line of credit with an affiliated lender. Conditions in the loan agreement provide for a revolving line of credit in the aggregate amount of $1,000,000 to facilitate purchases of WesBanco common stock in the open market. The loan bears interest at a rate equal to the lender's base rate and requires annual repayments of principal equal to 20% of the balance at January 1 of each year. The loan has a final maturity date of 5 years from date of inception. The $1,000,000 revolving line of credit was reduced to a zero balance at December 31, 1998 from $97,000 at December 31, 1997. Total contributions to the Plans during 1998 were $1,046,000. Contributions during 1997 and 1996 were $1,156,000 and $1,031,000, respectively.
Commercial BancShares Executive Supplemental Income Plan: The Executive Supplemental Income Plan is a non-contributory plan covering certain officers with benefits which include death and retirement benefits. This Plan funded future benefit payments through an insurance investment with fair values of $4,660,000 and $5,070,000 as of December 31, 1998 and 1997, respectively. The net expense recorded to provide these benefits was $142,000, $947,000 and $523,000 for the years ended December 31, 1998, 1997 and 1996, respectively. WesBanco does not anticipate providing this benefit to any additional employees.
Key Executive Incentive Bonus & Option Plan: The Key Executive Incentive Bonus & Option Plan is a non-qualified plan which includes three components, an Annual Bonus, a Long-Term Incentive Bonus and a Stock Option component. The three components allow for payments of cash, or a mixture of cash and stock, or granting of stock options, depending upon the component of the plan in which the award is earned through the attainment of certain performance goals. Performance goals are established by WesBanco's Board of Directors. Compensation expense incurred in 1998 for the Annual Bonus component of the plan was $364,000. There were no awards or payments made for the Long-Term Bonus component of the plan. The Stock Option component provides for granting of stock options to eligible employees. The Board of Directors provided for the issuance of 150,000 shares of common stock for this component of the Plan. As of December 31, 1998, 28,000 shares have been granted at an option price of $29.50 per share, which was the fair market price on the date of grant. Vesting of stock options is based upon achievement of performance goals, which include improvements in earnings per share. At December 31, 1998, 9,331 shares were vested. Employees generally have a 10-year period to exercise the vested options. No options have been exercised. All granted options become immediately vested in the event of a change in control of the Corporation. The Corporation is accounting for the plan in accordance with APB Opinion No. 25, "Accounting for Stock Issued to Employees". Since the exercise price equals the market price of the underlying stock on December 31, 1998 and the date of grant, no compensation expense has been recognized. Under the expense recognition provisions of SFAS No. 123, compensation expense of $96,000 would have been recognized. A fair value of $6.17 per share was estimated using the Black-Scholes option pricing model using a weighted-average expected life of the option of 6 years, risk free interest rate of 5.48%, dividend yield of 2.8% and a volatility factor of 18.1%.
NOTE 10: OTHER OPERATING EXPENSE - ----------------------------------------------------------------------------- Other operating expense consists of the following: For the years ended December 31, -------------------------------- (in thousands) 1998 1997 1996 - ----------------------------------------------------------------------------- Customer and office supplies $ 2,215 $ 1,744 $ 1,844 Postage and freight 1,802 1,467 1,507 Legal and accounting fees 1,120 1,689 1,227 Marketing media 1,935 1,937 2,137 Miscellaneous taxes 3,247 2,800 2,344 Goodwill amortization 1,048 769 18 Other 12,029 10,830 9,045 - ----------------------------------------------------------------------------- Total $23,396 $21,236 $18,122 =============================================================================
NOTE 11: INCOME TAXES - ----------------------------------------------------------------------------- A reconciliation of the federal statutory tax rate to the reported effective tax rate is as follows:
For the years ended December 31, -------------------------------- 1998 1997 1996 - ----------------------------------------------------------------------------- Federal statutory tax rate 35% 35% 35% Tax-exempt interest income from securities of states and political subdivisions (7) (8) (8) State income taxes 3 3 3 Other - net 1 (3) (1) - ----------------------------------------------------------------------------- Effective tax rate 32% 27% 29% =============================================================================
The provision for income taxes consists of the following: For the years ended December 31, -------------------------------- (in thousands) 1998 1997 1996 - ----------------------------------------------------------------------------- Current - Federal $11,446 $8,174 $9,321 State 2,293 1,733 1,670 Deferred - Federal (189) (319) (289) State (55) (69) (54) - ----------------------------------------------------------------------------- Total $13,495 $ 9,519 $10,648 ============================================================================= Tax expense applicable to securities transactions $ 609 $ 208 $ 106 =============================================================================
Deferred tax assets and liabilities are comprised of the following: December 31, --------------------------------- (in thousands) 1998 1997 1996 - ----------------------------------------------------------------------------- Deferred tax assets: Allowance for loan losses $ 7,075 $ 7,010 $ 6,361 Deferred compensation 1,199 922 800 Other 47 51 167 - ----------------------------------------------------------------------------- Gross deferred tax assets 8,321 7,983 7,328 - ----------------------------------------------------------------------------- Deferred tax liabilities: Tax effect of market value adjustment on investment securities available for sale (2,380) (1,139) (49) Depreciation (1,484) (1,513) (1,338) Purchase accounting adjustments (695) (458) (214) Accretion on investments (205) (215) (143) Other --- --- (237) - ----------------------------------------------------------------------------- Gross deferred tax liabilities (4,764) (3,325) (1,981) - ----------------------------------------------------------------------------- Net deferred tax assets $3,557 $4,658 $5,347 =============================================================================
NOTE 12: DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS - -----------------------------------------------------------------------------
Fair value estimates of financial instruments are based on present value of expected future cash flows, quoted market prices of similar financial instruments, if available, and other valuation techniques. These valuations are significantly affected by discount rates, cash flow assumptions, and risk assumptions used. Therefore, fair value estimates may not be substantiated by comparison to independent markets and are not intended to reflect the proceeds that may be realizable in an immediate settlement of the instruments. The aggregate fair value of amounts presented does not represent the underlying value of the Corporation. Management does not have the intention to dispose of a significant portion of its financial instruments and, therefore, the unrealized gains or losses should not be interpreted as a forecast of future earnings and cash flows.
The following table represents the estimates of fair value of financial instruments:
The following methods and assumptions are used to estimate the fair value of like kinds of financial instruments:
Cash and short-term Investments: The carrying amount for cash and short-term investments is a reasonable estimate of fair value. Short-term investments consist of federal funds sold. Investment Securities: Fair values for investment securities are based on quoted market prices, if available. If market prices are not available, then quoted market prices of similar instruments are used. Loans Held For Sale: The carrying amount for loans held for sale is a reasonable estimate of fair value. Net Loans: Fair values for loans with interest rates that fluctuate as current rates change are generally valued at carrying amounts. The fair values for residential mortgage loans are based on quoted market prices of securitized financial instruments, adjusted for remaining maturity and differences in loan characteristics. Fair values of commercial real estate, construction and personal loans are based on a discounted value of the estimated future cash flows expected to be received. The current interest rates applied in the discounted cash flow method reflect rates used to price new loans of similar type, adjusted for relative risk and remaining maturity. The fair value of credit cards is estimated based on the anticipated average cost of soliciting a new account and the present credit quality of the outstanding balances. For nonaccrual loans, fair value is estimated by discounting expected future principal cash flows only. Deposits: The carrying amount is considered a reasonable estimate of fair value for demand and savings deposits and other variable rate deposit accounts. The fair value of fixed maturity certificates of deposit is estimated by a discounted cash flow method using the rates currently offered for deposits of similar remaining maturities. Federal funds purchased, repurchase agreements and other borrowings: For federal funds purchased and repurchase agrements, which represent short-term borrowings, the carrying amount is a reasonable approximation of fair value. For longer term Federal Home Loan Bank advances, fair value is based on rates currently available to WesBanco for borrowings with similar terms and remaining maturities. Off-Balance Sheet Instruments: Off-balance sheet instruments consist of commitments to extend credit, standby letters of credit and interest rate swap agreements. Fair values for commitments to extend credit are estimated using the fees currently charged to enter into similar agreements, taking into account the remaining terms of the agreements and the present credit standing of the counterparties. The estimated fair value of commitments to extend credit is immaterial and therefore not presented in the above table. Fair values for interest rate swaps are estimated by obtaining quotes from brokers. The values represent the amount the Corporation would receive or pay to terminate the agreement considering current interest rates.
NOTE 13: COMMITTMENTS AND CONTINGENT LIABILITIES - ----------------------------------------------------------------------------- In the normal course of business, WesBanco offers off-balance-sheet financial instruments to enable its customers to meet their financing objectives. The Corporation also enters into these transactions to manage its own risks arising from movement in interest rates. These financial instruments include commitments to extend credit, standby letters of credit, and interest rate swap agreements. Those instruments involve, to varying degrees, elements of credit and interest rate risk in excess of the amount recognized in the financial statements. WesBanco has various commitments outstanding to extend credit approximating $109,841,000 and $111,177,000 and standby letters of credit of $9,986,000 and $9,604,000 as of December 31, 1998 and 1997, respectively. WesBanco's exposure to credit loss in the event of non-performance by the other party to the financial instrument for commitments to extend credit and standby letters of credit is represented by the contractual amount of those instruments. The Corporation uses the same credit and collateral policies in making commitments and conditional obligations as for all other lending. Collateral which secures these types of commitments is the same type as collateral for other types of lending, such as accounts receivable, inventory and fixed assets. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Since many of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. Management evaluates each customer's credit worthiness on a case-by-case basis. Standby letters of credit are conditional commitments issued by banks to guarantee the performance of a customer to a third party. Those guarantees are primarily issued to support public and private borrowing arrangements, including normal business activities, bond financing and similar transactions. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loans to customers. Collateral securing these types of transactions is similar to collateral securing the Corporation's commercial loans. Interest rate swap agreements generally involve the exchange of fixed and floating rate interest payments without the exchange of the underlying notional amount, on which interest payments are calculated. Interest rate swap agreements are entered into as part of the Corporation's interest rate risk management strategy primarily to alter the interest rate sensitivity of its deposit liabilities.
The following summarizes WesBanco's interest rate swap agreements:
December 31, ------------------------ (dollars in thousands) 1998 1997 - ----------------------------------------------------------------------------- Notional amount $38,500 $10,000 Unrealized losses (590) (26) Weighted average receive variable rate 5.14% 5.29% Weighted average pay fixed rate 4.55% 5.10% Life (years) 4.85 1.52 - -----------------------------------------------------------------------------
The Corporation and its affiliates are parties to various legal and administrative proceedings and claims. While any litigation contains an element of uncertainty, management believes that the outcome of such proceedings or claims pending or known to be threatened will not have a material adverse effect on the Corporation's consolidated financial position.
NOTE 14: TRANSACTIONS WITH RELATED PARTIES - -----------------------------------------------------------------------------
Some officers and directors (including their affiliates, families and entities in which they are principal owners) of the Corporation and its subsidiaries are customers of those subsidiaries and have had, and are expected to have, transactions with the subsidiaries in the ordinary course of business. In addition, some officers and directors are also officers and directors of corporations which are customers of the banks and have had, and are expected to have, transactions with the banks in the ordinary course of business. In the opinion of management, such transactions are consistent with prudent banking practices and are within applicable banking regulations.
NOTE 15: REGULATORY MATTERS - -----------------------------------------------------------------------------
WesBanco (Parent Company) is a legal entity separate and distinct from its subsidiaries. There are various legal limitations on the extent to which WesBanco's banking subsidiaries may extend credit, pay dividends or otherwise supply funds to WesBanco. Certain restrictions under Federal and State law exist regarding the ability of certain subsidiaries to pay dividends to WesBanco. Approval is required if total dividends declared by a bank subsidiary, in any calendar year, exceeds net profits for that year combined with its retained net profits for the preceding two years. In determining to what extent to pay dividends, each bank subsidiary must also consider the effect of dividend payments on applicable risk-based capital and leverage ratio requirements. During the fourth quarter of 1998, Federal and State regulatory agencies granted approval to declare a special dividend to WesBanco for the purpose of funding a 1,000,000 share repurchase plan. As of December 31, 1998, WesBanco's banking subsidiaries could not have declared any dividends to be paid to WesBanco without prior approval from regulatory agencies. Federal Reserve regulations require depository institutions to maintain cash reserves with the Federal Reserve Bank. The average amounts of required reserve balances were approximately $16,846,000 and $12,216,000 during 1998 and 1997, respectively. WesBanco is subject to various regulatory capital requirements (risk-based capital ratios) administered by Federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could have a material effect on the Corporation's financial results. All banks are required to have core capital (Tier 1) of at least 4% of risk weighted assets, total capital of at least 8% of risk-weighted assets, and a minimum Tier 1 leverage ratio of 3% of adjusted quarterly average assets. Tier 1 capital consists principally of shareholders' equity, excluding unrealized gains and losses on securities available for sale, less goodwill and certain other intangibles. Total capital consists of Tier 1 capital plus the allowance for loan losses subject to limitation. The regulations also define well-capitalized levels of Tier 1, total capital, and Tier 1 leverage as 6%, 10%, and 5%, respectively. WesBanco and each of its banking subsidiaries are categorized as well-capitalized under the regulatory framework for prompt corrective action at December 31, 1998 and 1997.
The following table summarizes risk-based capital amounts and ratios for WesBanco and its largest bank subsidiary:
(dollars in thousands)
December 31, --------------------------------- 1998 1997 --------------- ---------------- WesBanco, Inc. Amount Ratio Amount Ratio - ----------------------------------------------------------------------------- Total Capital to Risk-Weighted Assets $296,732 19.8% $290,396 20.0% Tier 1 Capital to Risk-Weighted Assets 277,976 18.5 272,244 18.8 Tier 1 Leverage 277,976 12.5 272,244 12.6
WesBanco Wheeling - ----------------- Total Capital to Risk-Weighted Assets 112,789 16.1 129,293 20.6 Tier 1 Capital to Risk-Weighted Assets 104,289 14.9 121,430 19.3 Tier 1 Leverage 104,289 9.2 121,430 11.7 =============================================================================
NOTE 16: CONDENSED PARENT COMPANY FINANCIAL STATEMENTS - -----------------------------------------------------------------------------
Presented below are the condensed Balance Sheet, Statement of Income and Statement of Cash Flows for the Parent Company: (in thousands)
BALANCE SHEET December 31, -------------------- 1998 1997 - --------------------------------------------------------------------------- ASSETS Cash $ 2,299 $ 105 Investment in subsidiaries (at equity in net assets) 239,845 263,589 Securities available for sale carried at market value 28,494 21,174 Dividends receivable 30,900 6,500 Other assets 211 406 - --------------------------------------------------------------------------- Total Assets $301,749 $291,774 ===========================================================================
LIABILITIES Long-term borrowings --- $ 97 Dividends payable and other liabilities $ 5,266 3,682 - --------------------------------------------------------------------------- Total Liabilities 5,266 3,779 SHAREHOLDERS' EQUITY 296,483 287,995 - --------------------------------------------------------------------------- Total Liabilities and Shareholders' Equity $301,749 $291,774 ===========================================================================
STATEMENT OF INCOME
For the years ended December 31, -------------------------------- 1998 1997 1996 - ----------------------------------------------------------------------------- Dividends from subsidiaries $ 56,234 $ 21,000 $ 19,900 Income from investment securities 831 761 594 Other income 4,674 135 285 - ----------------------------------------------------------------------------- Total Income 61,739 21,896 20,779 - ----------------------------------------------------------------------------- Total Expenses 1,372 1,058 1,059 - ----------------------------------------------------------------------------- Income before income tax provision (benefit) and undistributed net income of subsidiaries 60,367 20,838 19,720 Income tax provision (benefit) 1,485 (285) (303) - ----------------------------------------------------------------------------- Income before undistributed net income of subsidiaries 58,882 21,123 20,023 Undistributed net income (excess dividends) of subsidiaries (30,569) 4,088 5,919 - ----------------------------------------------------------------------------- Net Income $ 28,313 $ 25,211 $ 25,942 =============================================================================
STATEMENT OF CASH FLOWS
For the years ended December 31, -------------------------------- 1998 1997 1996 - ----------------------------------------------------------------------------- Cash flows from operating activities: Net Income $ 28,313 $ 25,211 $ 25,942 Exsess dividends (undistributed net income) of subsidiaries 30,569 (4,088) (5,919) (Increase) decrease in other assets (24,142) (847) 4,103 Other-net (4,282) 347 151 - ----------------------------------------------------------------------------- Net cash provided by operating activities 30,458 20,623 24,277 - -----------------------------------------------------------------------------
Cash flows from investing activities: Securities available for sale: Proceeds from sales 4,287 3,874 2,927 Proceeds from maturities and calls 907 1,909 1,703 Payments for purchases (11,981) (8,319) (15,315) Acquisitions and additional capitalization of subsidiaries 3,747 (2,003) (2,605) - ----------------------------------------------------------------------------- Net cash provided by (used in) investing activities (3,040) (4,539) (13,290) - -----------------------------------------------------------------------------
Cash flows from financing activities: Payments on ESOP related debt (97) (316) (364) Purchases of treasury stock-net (9,726) (5,950) (1,367) Dividends paid (15,401) (12,118) (9,396) Other --- (19) 21 - ----------------------------------------------------------------------------- Net cash used in financing activities (25,224) (18,403) (11,106) - -----------------------------------------------------------------------------
Net increase (decrease) in cash 2,194 (2,319) (119) Cash at beginning of year 105 2,424 2,543 - ----------------------------------------------------------------------------- Cash at end of year $ 2,299 $ 105 $ 2,424 =============================================================================
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS - ----------------------------------------------------------------------------- SHAREHOLDERS AND BOARD OF DIRECTORS WESBANCO, INC.
We have audited the accompanying consolidated balance sheets of WesBanco, Inc. and subsidiaries as of December 31, 1998 and 1997 and the related consolidated statements of income, changes in shareholders' equity, and cash flows for each of the three years in the period ended December 31, 1998. These financial statements are the responsibility of the management of WesBanco, Inc. Our responsibility is to express an opinion on these financial statements based on our audits. We did not audit the financial statements of Commercial BancShares, Inc., a wholly owned subsidiary, which statements reflect total assets constituting 19% in 1997, and total revenues constituting 21% in 1997 and 22% in 1996, of the related consolidated totals. Those statements were audited by other auditors whose report has been furnished to us, and our opinion, insofar as it relates to data included for Commercial BancShares, Inc., is based solely on the report of the other auditors. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits and the report of other auditors provide a reasonable basis for our opinion. In our opinion, based on our audits and the report of other auditors, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of WesBanco, Inc. and subsidiaries at December 31, 1998 and 1997, and the consolidated results of their operations and their cash flows for each of the three years in the period ended December 31, 1998 in conformity with generally accepted accounting principles.
/s/ Ernst & Young LLP
January 27, 1999 Pittsburgh, Pennsylvania
Supplemental Financial Data - ---------------------------
WESBANCO, INC. CONDENSED QUARTERLY STATEMENT OF INCOME - ----------------------------------------------------------------------------- (in thousands, except per share amounts)
PART III
Item 10.
Item 10. Directors and Executive Officers of the Registrant - ------------------------------------------------------------ The following persons presently serving as executive officers of WesBanco, Inc. are as followings:
Name Age Position ---- --- -------- James C. Gardill 52 Chairman of the Board Robert H. Martin 65 Vice Chairman William E. Mildren, Jr.(1) 54 Vice Chairman Edward M. George 62 President and Chief Executive Officer Paul M. Limbert 51 Executive Vice President and Chief Financial Officer Dennis P. Yaeger 48 Executive Vice President and Chief Operating Officer Jerome B. Schmitt 49 Executive Vice President - Investments & Trusts Stephen F. Decker 46 Executive Vice President & Senior Loan Officer John W. Moore, Jr. 50 Senior Vice President-Human Resources Edward G. Sloane 60 Vice President-Management Information Systems Peter W. Jaworski (2) 43 Senior Vice President - Credit Administration Wyatt K. Hoffman (3) 43 Vice President - Credit Quality James C. Porter 45 Vice President - Compliance Larry G. Johnson (4) 51 Secretary 		 (1) Mr. Mildren was appointed Vice Chairman of the Corporation on March 31, 1998. The appointment was pursuant to the Agreement and Plan of merger between WesBanco and Commercial BancShares. Prior to that time, Mr. Mildren was Chairman, President and Chief Executive Officer of Commercial BancShares.
(2) Mr. Jaworski was appointed Senior Vice President - Credit Administration in January 1998. Prior to that time, Mr. Jaworski was Vice President - Credit Risk Management of WesBanco Bank Wheeling from July 1997 and Senior Loan Review Officer of WesBanco Bank Wheeling from June 1995. Before joining WesBanco in June 1995, Mr. Jaworski was Senior Vice President and Senior Credit Officer of Bank One.
(3) Mr. Hoffman was appointed Vice President - Credit Quality in July 1997. Before joining WesBanco in July 1997, Mr. Hoffman was a Corporate Compliance Officer for Bank One.
(4) Mr. Johnson was appointed Secretary on March 31, 1998. Prior to that time, Mr. Johnson was Executive Vice President and Chief Financial Officer of Commercial BancShares.
Each of the remaining officers listed above have been an Executive Officer of the Corporation or one of its subsidiaries during the past five years.
Additional information contained under the caption "Election of Directors" and "Continuing Directors" will be found in the Company's Proxy Statement for the 1999 Annual Meeting is incorporated herein by reference.
Item 11.
Item 11. Executive Compensation - -------------------------------- Information contained under the caption "Compensation of Executive Officers" in the WesBanco's Proxy Statement is incorporated herein by reference.
Item 12.
Item 12. Security Ownership of Certain Beneficial Owners and Management - ------------------------------------------------------------------------ Information contained under the caption "Ownership of Securities by Directors, Nominees and Officers" and "Section 16(a) Beneficial Ownership Reporting Compliance" in WesBanco's Proxy Statement is incorporated herein by reference.
Item 13.
Item 13. Certain Relationships and Related Transactions - -------------------------------------------------------- Information contained under the caption "Transactions with Directors and Officers" in WesBanco's Proxy Statement is incorporated herein by reference. Additional information concerning related party transactions is contained on page 40 of this document under the caption "Note 14: Transactions with Related Parties".
PART IV
Item 14.
Item 14. Exhibits, financial statement schedules and reports on Form 8-K - ------------------------------------------------------------------------- (a) Certain documents filed as part of the Form 10-K ---------------------------------------------------- (2) Financial Statement Schedules Page(s) ----------------------------------------------------------------- The following consolidated financial statements and report of independent auditor of WesBanco are included in Part II, Item 8 of this document:
Consolidated Balance Sheets as of December 31, 25 		1998 and 1997.
Consolidated Statements of Income for the years 26 		ended December 31, 1998, 1997 and 1996.
Consolidated Statements of Changes in Shareholders' 27 Equity for the years ended December 31, 1998, 		1997 and 1996.									
Consolidated Statement of Cash Flows for the years 28 		ended December 31, 1998, 1997 and 1996.
Notes to Consolidated Financial Statements 29
Report of Ernst & Young LLP, Independent Auditors 44
(3) Exhibit Listing -------------------- Exhibit Document - ----------------------------------------------------------------------------- 3.1 Articles of Incorporation of WesBanco, Inc., restated as of November 17, 1995 (1)
3.2 Articles of Amendment to the Articles of Incorporation of WesBanco, Inc. (7)
3.3 Bylaws of WesBanco, Inc. (1)
4.1 Specimen Certificate of WesBanco, Inc. Common Stock (2)
10.1 The Restated WesBanco Directors' Deferred Compensation Plan Effective December 15, 1994 (1)
Exhibit Document - ----------------------------------------------------------------------------- 10.2 Key Executive Incentive Bonus and Option Plan (5)
10.3 Employment Agreement Between Ernest S. Fragale, WesBanco Mortgage Company and WesBanco, Inc. dated the 20th Day of August, 1996 (4)
10.4 Employment Agreement Between Frank R. Kerekes, First National Bank in Fairmont and WesBanco, dated February 28, 1994 (3)
10.5 Employment Agreement Effective January 1, 1993, By and Between Edward M. George, WesBanco and WesBanco Bank Wheeling (3)
10.6 Employment Agreement Effective January 1, 1993, By and Between Paul M. Limbert, WesBanco and WesBanco Bank Wheeling (3)
10.7 Employment Agreement Effective January 1, 1993, By and Between Dennis P. Yaeger, WesBanco and WesBanco Bank Wheeling (3)
10.8 Employment Agreement Effective January 1, 1993, By and Between Jerome B. Schmitt, WesBanco and WesBanco Bank Wheeling (3)
10.9 Employment Agreement Effective December 2, 1991, By and Between Stephen F. Decker, Albright National Bank of Kingwood, and WesBanco (3) 						 10.10 Employment Agreement Effective December 1, 1993, By and Between John W. Moore, Jr., WesBanco and WesBanco Bank Wheeling (3)
10.11 Employment Agreement Effective March 31, 1998, By and Between William E. Mildren, Jr., WesBanco, Inc. and WesBanco Bank Commercial (6)
10.12 Employment Agreement Effective March 31, 1998, By and Between Larry G. Johnson, WesBanco, Inc. and WesBanco Bank Commercial (6)
10.13 Employment Continuity Agreement between Commercial BancShares, Incorporated, and William E. Mildren, Jr., effective November 1,
10.14 Employment Continuity Agreement between Commercial BancShares, Incorporated, and Larry G. Johnson, effective November 1, 1996
10.15 Employment Agreement Effective January 2, 1998, By and Between J. Christopher Thomas, WesBanco Bank Chaleston and WesBanco, Inc.
11 Computation of Earnings Per Share
12 Ratio of Earnings to Combined Fixed Charges and Preferred Stock Dividends
21 Subsidiaries of the Registrant
23.1 Consent of Ernst & Young LLP
Exhibit Document - -----------------------------------------------------------------------------
23.2 Consent of Harman, Thompson, Mallory & Ice, A.C.
24 Power of Attorney
27 Financial Data Schedule
99.1 Report of Harman, Thompson, Mallory & Ice, A.C., dated March 6, 1998.
(1) Incorporated by reference to a prior Registration Statement filed by the Registrant on Form S-4 under Registration No. 333-3905 which was filed with the Securities and Exchange Commission on June 20, 1996 (2) Incorporated by reference to a prior Registration Statement filed by the Registrant of Form S-4 under Registration No. 33-42157 which was filed with the Securities and Exchange Commission on August 9, 1991 (3) Incorporated by reference to a prior Registration Statement filed by the Registrant on Form S-4 under Registration No. 33-72228 which was filed with the Securities and Exchange Commission on November 30, 1993 (4) Incorporated by reference to a prior Registration Statement filed by the Registrant on Form S-4 under Registration No. 333-11461 which was filed with the Securities and Exchange Commission on November 6, 1996 (5) Incorporated by reference to Schedule 14A Definitive Proxy Statement (Appendix A) filed by the Registrant with the Securities and Exchange Commission on March 13, 1998 (6) Incorporated by reference to Form 8-K filed by the Registrant with the Securities and Exchange Commission on April 15, 1998 (7) Incorporated by reference to Form 10-Q filed by the Registrant with the Securities and Exchange Commission on May 15, 1998
(b) Reports on Form 8-K - ------------------------ No reports of Form 8K were filed during the quarter ended December 31, 1998.
SIGNATURES
Pursuant to the Requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, on February 18, 1999.
WESBANCO, INC.
By: /s/ Edward M. George ------------------------- Edward M. George President and Chief Executive Officer
By: /s/ Paul M. Limbert ------------------------ Paul M. Limbert Executive Vice President and Chief Financial Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities indicated, on February 18, 1999.
By: /s/ James C. Gardill ----------------------- James C. Gardill Chairman of the Board
The Directors of WesBanco (listed below) executed a power of attorney appointing James C. Gardill their attorney-in-fact, empowering him to sign this report on their behalf.
By: /s/ James C. Gardill ---------------------- James C. Gardill Attorney-in-fact
James E. Altmeyer John W. Kepner Earl C. Atkins Frank R. Kerekes James G. Bradley Robert H. Martin Ray A. Byrd William E. Mildren, Jr. R. Peterson Chalfant Eric Nelson John H. Cheffy Richard K. Riederer Christopher V. Criss Joan C. Stamp Stephen F. Decker Carter W. Strauss James D. Entress Reed J. Tanner Ernest S. Fragale Robert K. Tebay James C. Gardill J. Christopher Thomas Edward M. George John A. Welty Larry G. Johnson William E. Witschey
EXHIBIT INDEX
Exhibit Page Number Document Number - ------ -------- ------
10.13 Employment Continuity Agreement between Commercial BancShares, Incorporated, and William E. Mildren, Jr. effective November 1, 1996 52
10.14 Employment Continuity Agreement between Commercial BancShares, Incorporated, and Larry G. Johnson, effective November 1, 1996 63
10.15 Employment Agreement Effective January 2, 1998, By and Between J. Christopher Thomas, WesBanco Bank Charleston and WesBanco, Inc. 74
11 Computation of Earning Per Share 81
12 Ratio of Earnings to Combined Fixed Charges and Preferred Stock Dividends 82
21 Subsidiaries of the Registrant 83
23.1 Consent of Ernst & Young LLP 84
23.2 Consent of Harman, Thompson, Mallory & Ice, A.C. 85
24 Power of Attorney 86
27 Financial Data Schedule (for electronic filing only) N/A
99.1 Report of Harman, Thompson, Mallory & Ice, A.C., dated March 6, 1998. 89
EXHIBIT 10.13 11/20/96
COMMERCIAL BANCSHARES, INCORPORATED
EMPLOYMENT CONTINUITY AGREEMENT
THIS EMPLOYMENT CONTINUITY AGREEMENT (this "Agreement") is between COMMERCIAL BANCSHARES, INCORPORATED, a West Virginia corporation (referred to in this Agreement as the "Company," which term includes any subsidiary of the Company where the context so requires), and William E. Mildren, Jr. ("Executive") and is effective as of November 1, 1996.
The Company's Board of Directors (the "Board") acknowledges that Executive's contributions to the past and future growth and success of the Company have been and will continue to be substantial. As a publicly held corporation, the Board recognizes that there exists a possibility of a change in control of the Company. The Board also recognizes that the possibility of such a change in control may contribute to uncertainty on the part of senior management and may result in the departure or distraction of senior management from their operating responsibilities.
Outstanding management of the Company is essential to advancing the best interests of the Company and its shareholders. In the event of a threat or occurrence of a bid to acquire or change control of the Company or to effect a business combination, it is particularly important that the Company's business be continued with a minimum of disruption. The Board believes that the objective of securing and retaining outstanding management will be achieved if the Company's key management employees are given assurances of employment security so they will not be distracted by personal uncertainties and risks created by such circumstances.
The Board believes that such assurances will secure the continued services of the Company's key operational and management executives in the performance of both their regular duties and such extra duties as may be required of them during such periods of uncertainty, enable the Company to rely on such executives to manage its affairs during any such period with less concern for their personal risks, and enhance the Company's ability to attract new key executives as needed.
The Executive Committee (the "Committee") of the Board has recommended, and the Board has approved, entering into employment continuity agreements with the Company's key management executives, including Executive, in order to achieve the foregoing objectives; and Executive is a key management executive of the Company.
The Company and Executive enter into this Agreement to induce Executive to remain an employee of the company and to continue to devote his full energy to the Company's affairs.
	1.	Employment. ----------- 		(a)	Effective Date. The Company and Executive hereby agree that Executive's employment shall continue on and after November 1, 1996 (the "Effective Date"). The Terms and conditions of Executive's employment are further described in Section 2. - ---------- 		(b)	Employment Period. If Executive is employed by the Company on the Control Change Date, the Company further agrees that the Company shall continue to employ Executive and Executive further agrees that Executive shall continue as an employee of the Company for the Employment Period. For purposes of this Agreement, the Employment Period begins on the Control Change Date and ends on the earlier of the third anniversary of the Control Change Date or on Executive's Normal Retirement Date (as defined under the Company's Employee Stock Ownership Plan, as in effect on the Effective Date or as amended prior to the Control Change Date). During the Employment Period, the terms and conditions of Executive's employment are described in Section 3. - ---------- 		(c)	Change in Control and Control Change Date. For purposes of this Agreement, a Change in Control occurs if: (i) after the Effective Date, any Person (other than a trustee or other fiduciary holding securities under an employee benefit plan of the Company) becomes the owner or beneficial owner of Company securities having 20% or more of the combined voting power of the then outstanding Company securities that may be cast for the election of the Company's directors (other than as a result of an issuance of securities initiated by the Company, or open market purchases approved by the Board, as long as the majority of the Board approving the purchases are directors at the time the purchases are made); or (ii) as the direct or indirect result of, or in connection with, a cash tender, or exchange offer, a merger or other business combination, a sale of assets, a contested election of directors, or any combination of these transactions, the Continuing Directors cease to constitute a majority of the Company's Board, or any successor's board, within two years of the last of such transactions. For purposes of the preceding sentence, "Continuing Director" means any member of the Company's Board while a member of the Board, and who (i) was a director of the Company before the transactions described in the preceding sentence or (ii) whose subsequent nomination for election or election to the Board was recommended or approved by a majority of the Continuing Directors; and "Person" means any individual, firm, corporation, partnership or other entity, including a "group" as defined in subsection 13(d)(3) of the Securities Exchange Act of 1934, and any successor (by merger or otherwise) of such entity. For purposes of this Agreement, the Control Change Date is the date on which an event described in (i) or (ii) of the first sentence of this Section 1(c) occurs. If a Change in Control occurs on account of a series of transactions, the Control Change Date is the date of the last of such transactions.
	2.	Terms of Employment Before a Control Change Date ------------------------------------------------ 		(a)	General Duties. Excluding periods of vacation and sick leave to which Executive is entitled, Executive shall continue to exercise such authority and perform such executive duties as are commensurate with the authority being exercised and duties being performed by Executive immediately before the Effective Date.
		(b)	Place of Employment. Executive's services shall be performed at the location where Executive was employed immediately before the Effective Date. If the Company and Executive agree, however, the location of Executive's employment may be changed without affecting Executive's rights under this Agreement.
		(c)	Working Facilities and Support Staff. Executive is entitled to an office of a size and with furnishings and other appointments at least equal to those provided to Executive before the Effective Date. Executive is entitled to secretarial and other assistance, and to such other facilities, equipment, and supplies at least equal to those provided to Executive before the Effective Date.
		(d)	Expenses Generally. Executive is entitled to receive prompt reimbursement for all reasonable expenses incurred by Executive. Reimbursement shall be made in accordance with the Company's policies and procedures, in effect on the Effective Date or amended prior to the Control Change Date.
		(e)	Meetings, Conventions, and Seminars. Executive is encouraged and is expected to attend seminars, professional meetings and conventions, and educational courses. The cost of travel, tuition or registration, food, and lodging for attending those activities shall be paid by the Company. Other costs shall be paid by Executive, unless the Company authorizes those costs. If those other costs are authorized expenses, Executive shall be reimbursed after satisfying the Company's policies and procedures for such reimbursement.
		(f)	Promotional Expenses. Executive is encouraged and is expected, from time to time, to incur reasonable expenses for promoting the Company's business. Such promotional expenses include travel, entertainment (including memberships in social and athletic clubs), professional advancement, and community service expenses. Executive agrees to bear those expenses except to the extent that those expenses are incurred at the Company's specific direction or those expenses are specifically authorized by the Company as expenses that the Company may pay directly or indirectly through reimbursement to Executive.
		(g)	Outside Activities. Executive may (i) serve on corporate, civic, or charitable boards or committees; (ii) deliver lectures, fulfill speaking engagements, or teach at educational institutions; and (iii) manage personal investments, provided that such activities do not significantly interfere with the performance of Executive's responsibilities for the Company. To the extent that any such activities have been conducted by Executive before the Effective Date, such prior conduct of activities and any subsequent conduct of
activities similar in nature and scope shall not be deemed to interfere with the performance of Executive's responsibilities for the Company.
		(h)	Compensation and Fringe Benefits. Executive's compensation (including his annual base salary and incentive compensation) and benefits generally are the same as those in effect on the Effective Date. Executive's compensation and benefits are, however, subject to periodic review and adjustment by the Company. This subsection 2(h) does not change the terms of any fringe benefit program or employee benefit plan maintained by the Company and does not give Executive any additional vested interest in any compensation or benefit to which Executive is not already entitled under any such program or plan on the Effective Date. Generally, Executive's benefits include the following items, all of which are subject to periodic review and adjustment: (i) Executive is entitled to fringe benefits, including use of an automobile and payment of related expenses, and payment of country club dues, both in accordance with the Company's policies in effect on the Effective Date or as amended prior to a Control Change Date; (ii) Executive is entitled to receive all group life, accidental death and dismemberment, long-term disability, and medical insurance benefits available to Executive according to Company policies and Company maintained employee benefit plans in effect on the Effective Date or as amended prior to a Control Change Date; (iii) Executive is entitled to paid vacation in accordance with the Company's policies in effect on the Effective Date or as amended prior to a Control Change date; and (iv) Executive is entitled to sick leave in accordance with the Company's policies in effect on the Effective Date or as amended prior to a Control Change Date; and (v) Executive is entitled to participate in the Company's supplemental income program.
		(i)	Disability. ----------- 			(i)	The Company may terminate this Agreement if Executive becomes Disabled by giving to Executive written notice of its intention to terminate Executive's employment. If Executive become Disabled and does not return to full-time performance of his duties for the Company within (90) days after Executive receives the Company's notice, Executive's employment with the Company shall terminate effective on the (90th) day after receipt of such notice (the "Disability Effective Date"). For purposes of this Agreement, "Disabled" means that Executive is entitled to receive benefits under a long-term disability insurance policy maintained by the Company.
			(ii)	If Executive's employment is terminated because Executive is Disabled, Executive is entitled after the Disability Effective Date to receive disability and other benefits on a basis comparable to those provided by the Company to disabled employees and their families in accordance with such plans, programs, and policies relating to disability, if any, as in effect on the Effective Date or as amended prior to a Control Change Date.
		(j)	Confidential Information. Executive shall hold in a fiduciary capacity for the benefit of the Company all secret or confidential information, knowledge, or data relating to the Company and its business, which is obtained by Executive during Executive's
employment by the Company and which is not public knowledge (other than by acts by Executive or his representatives in violation of this Agreement). After the termination of Executive's employment with the Company, Executive shall not, without the Company's prior written consent, communicate or divulge any such information, knowledge, or data to anyone other than the Company and those designated by it to receive such information, knowledge, or data. In no event may an asserted violation of this subsection 2(j) constitute a basis for deferring or withholding any amounts otherwise payable to Executive under this Agreement.
		(k)	Records and Files. All records and files concerning the Company or the Company's clients and customers belong to and remain the property of the Company.
	3.	Terms of Employment After the Control Change Date. -------------------------------------------------- 		(a)	General. During the Employment Period, the terms and conditions of Executive's employment, as described in Section 2, continue in effect, except that such terms and conditions are fixed as of the day before the Control Change Date and Executive's compensation and benefits are governed by subsection (3)(b).
		(b)	Compensation and Fringe Benfits. During the Employment Period, the Company shall (i) continue to pay Executive an annual base salary not less than Executive's annual base salary on the day before the Control Change Date, (ii) pay Executive bonuses in amounts not less in amount than those paid to Executive during the 12-month period preceding the day before the Control Change Date, and (iii) continue employee benefit plans and programs as to Executive at levels in effect on the day before the Control Change Date (to the extent practicable and subject to such reductions as may be required to maintain such plans in compliance with applicable nondiscrimination and other federal laws regulating employee benefit plans and programs) or pay Executive an amount necessary to provide essentially comparable benefits (assuming, in the case of insured benefits, that Executive is then insurable at standard rates).
	4.	Liquidated Damages Upon Termination of Employment. -------------------------------------------------- 		(a)	General. Executive is entitled to receive Continued Compensation according to the remaining provisions of this Section if Executive's employment with the Company terminates during the Employment Period because of an event described in subsection 4(b) or 4(c), but subject to Executive's offer to work that is rejected by the Company. If Executive's employment terminates during the Employment Period and if an event described in subsection 4(b) or 4(c) has not occurred, this Agreement terminates.
		(b)	Termination by the Company. Subject to the conditions of Section 4(h), Executive is entitled to receive Continued Compensation if Executive's employment is terminated by the Company without cause ("cause" being limited to Executive's acts of theft, embezzlement, fraud, or moral turpitude).
		(c)	Voluntary Termination. ---------------------- 			(i) Subject to the conditions of subsection 4(h), Executive is entitled to receive Continued Compensation if Executive voluntarily terminates employment after (A) Executive does not receive salary increases, bonuses, and incentive awards comparable to the salary increases, bonuses, and incentive awards that Executive received in prior years or, if greater, that other executives in comparable positions receive in the current year; or (B) Executive's compensation or employment related benefits are reduced; or (C) Executive's status, title(s), office(s), working conditions, or management responsibilities are diminished (other than changes in reporting or management responsibilities required by applicable federal or state law); or (D) Executive's place of employment is changed in any way without Executive's consent. Executive will be entitled to receive Continued Compensation on account of his voluntary termination under this subsection 4(c)(i) only if such voluntary termination occurs within six months after an event described in (A), (B), (C), or (D), or within six months after the last in a series of such events.
			(ii) Anything in this Agreement to the contrary notwithstanding, within 12 months after a Control Change Date Executive may voluntarily terminate his employment with the Company and, in such event, will be entitled to receive Continued Compensation equal to one times Executive's Base Period Income, paid in 12 equal monthly installments. During such period of payment of Continued Compensation, Executive shall not be required to comply with subsection 4(h), it being the intention of the parties that if Executive is receiving Continued Compensation under this subsection 4(c)(ii), he shall be free to compete with the Company during such period (and thereafter) by being employed by another financial institution in Wood County, West Virginia or Washington County, Ohio.
		(d)	Continued Compensation. Continued Compensation equal to three times Executive's Base Period Income shall be paid in 36 equal monthly installments. Continued Compensation payments to Executive shall commence on the first day of the month following Executive's termination of employment with the Company because of an event described in subsection 4(b) or 4(c)(i) and shall continue on the first day of each of the next thirty-five months, subject to receipt by the Company of notification from the Accounting Firm (defined below) of its determination regarding the reduction, if any, of Continued Compensation according to subsection 4(g).
		(e)	Base Period Income. Executive's Base Period Income equals his annual base salary as of Executive's termination date, plus an amount equal to the bonus awarded to Executive for the fiscal year immediately prior to the fiscal year in which Executive's termination date occurs (but in no event shall such amount be less than the bonus amount required to be paid during the Employment period under subsection 3(b)(ii)). Amounts of such base salary and bonus that Executive has elected to defer during the relevant period are included in Base Period Income.
(f) Other Payments or Benefits. In addition to any payments provided under this Agreement or under any other arrangement between the Company and Executive, Executive is entitled to (i) any cash or property due him as a result of the exercise of a stock option granted under the Company's Employee Stock Ownership Plan or an earlier plan or a successor plan, and (ii) during any period in which Continued Compensation is paid, any other payments or benefits due him, whether or not "parachute payments" as defined in Section 280G of the Internal Revenue Code of 1986, as amended (the "Code") (but subject to Section 4(g)) including amounts that Executive is entitled to receive under Company maintained tax-qualified plans and any health care coverage under Company maintained welfare plans for which Executive pays the cost.
		(g)	Certain Reduction of Continued Compensation. -------------------------------------------- 			(i)	For purposes of this subsection 4(g),
				(A)	A "Payment" means any amount that, if paid, would be a payment or distribution in the nature of compensation to or for the benefit of Executive, whether paid or payable pursuant to this Agreement or otherwise;
				(B)	"Continued Compensation" means a Payment paid or payable pursuant to subsection 4(d) (calculated as if there were no reduction of Continued Compensation according to this subsection 4(g));
				(C)	"Reduced Amount" means the largest amount of Payments that may be paid that will result in no portion of any Payments being Subject to the excise tax imposed by Section 4999 of the Code.
			(ii)	Despite any other Section of this Agreement, if Harman, Thompson, Mallory & Ice, A.C., the accounting firm that is at the time engaged to audit the Company's financial statements (the "Accounting Firm") determines that receipt of all Payments would subject Executive to tax under Section 4999 of the Code, it shall determine the amount of Payments that would meet the definition of a "Reduced Amount." In that event, one or more Payments shall be reduced to that Reduced Amount, but not below zero. If any reduction of Payments is required by the preceding sentence, (A) Payments other than Continued Compensation shall be reduced first, and (B) Continued Compensation shall be reduced in a manner that shortens the period over which Continued Compensation is paid (and, thus, the number of monthly installments payable) but does not reduce the amount of a monthly installment that would be paid but for this subsection 4(g).
			(iii)	If the Accounting Firm determines that one or more Payments should be reduced to the Reduced Amount, the Company shall promptly notify Executive of that determination, sending a copy of the detailed calculations by the Accounting Firm. All determinations made by the Accounting Firm under this subsection 4(g) are binding upon the Company and Executive and shall be made within 60 days after Executive's employment termination, unless reasonable cause requires an extension of time. The Accounting Firm
shall furnish written notice to the Company and Executive of any required extension before the end of the 60-day period; but the Accounting Firm shall make its determinations under this Section as soon as possible and not later than six months after Executive's employment termination.
			(iv)	It is the intention of the Company and Executive to reduce one or more Payments only to avoid the excise tax imposed by Section 4999 of the Code. However, it is possible that, as a result of uncertainty in the application of Section 4999 of the Code at the time of the initial determination by the Accounting Firm under this Section, amounts shall have been paid or distributed to or for the benefit of Executive, which amounts should not have been so paid or distributed ("Overpayment"), or that additional amounts not paid or distributed to or for the benefit of Executive could have been so paid or distributed ("Underpayment'), in each case, consistent with the calculation of the Reduced Amount. If the Accounting Firm, based either upon the assertion of a deficiency by the Internal Revenue Service against the Company or Executive, which assertion the Accounting Firm believes has a high probability of success or controlling precedent or other substantial authority, determines that an Overpayment has been made, any such Overpayment shall be treated for all purposes as a loan ab initio to Executive, which loan Executive shall repay to the Company together with interest at the applicable federal rate under Section 7872(f)(2) of the Code; provided, however, that no such loan shall be deemed to have been made and no amount is payable by Executive to the Company if and to the extent such deemed loan and payment would not either reduce the amount on which Executive is subject to tax under Section 1 or 4999 of the Code or generate a refund of such taxes. If the Accounting Firm, based upon controlling precedent or other substantial authority, determines that an Underpayment has occurred, the Accounting Firm shall promptly notify the Company of the amount of the Underpayment. The Company shall take action to address the Underpayment in a manner that as nearly as possible restores Executive to the position he would have been in if there had been no Underpayment.
		(h)	Covenant Not to Compete. ------------------------ 			(i)	Executive agrees that if his employment terminates for any reason during the Employment Period, then during the period in which Executive is entitled to Continued Compensation under Section 4, he shall not serve as an employee of, or become a director of, or render advisory or other services for, or in connection with, or make any substantial financial investment in a bank or other financial institution that has an office in Wood County, West Virginia, and Washington County, Ohio. Executive further agrees that during the period in which Executive is entitled to Continued Compensation under Section 4, he shall not actively induce any Company employee to terminate employment with the Company in favor of promised or prospective employment with or on behalf of Executive or Executive's post-termination employer.
			(ii)	Executive agrees and acknowledges that any beach or threatened violation of the covenants contained in this subsection 4(h) shall cause irreparable injury to the Company, and that the remedy at law for any such breach or threatened violation shall be inadequate, and that the Company shall be entitled to appropriate equitable relief.
			(iii)	The covenants contained in this subsection 4(h) shall inure to the benefit of the Company and its affiliated employers and subsidiaries and their successors.
			(iv)	The restrictions contained in this subsection 4(h) are considered by the parties hereto to be fair and reasonable and necessary for the protection of the legitimate business interests of the Company.
			(v)	Notwithstanding subsections 3(a), 3(b) or Section 4, if Executive violates subsection 4(h), any unpaid Continued Compensation shall immediately be forfeited as of the date of any violation unless it is being paid pursuant to subsection 4(c)(ii), in which event it shall continue.
	5.	Legal Fees and Expenses. The Company shall pay all legal fees and expenses, if any, incurred by Executive in obtaining, enforcing, or defending any right or benefit provided by this Agreement, whether successful or not. Payments under this Section are not Continued Compensation and are not subject to reduction under any other Section of this Agreement.
	6.	Governing Law. This Agreement and performance hereunder and all suits, actions and other proceedings hereunder shall be construed in accordance with and under and pursuant to the laws of the State of West Virginia, (except its choice of law provisions to the extent that they would require the application of the laws of a state other than the State of West Virginia), and in any suit, action or other proceeding that may be brought arising out of, in connection with, or by reason of this Agreement, the laws of the State of West Virginia (except its choice of law provisions to the extent that they would require the application of the laws of a state other than the State of West Virginia) shall be applicable and shall govern to the exclusion of the law of any other forum, without regard to the jurisdiction in which any suit, action or other proceeding may be instituted.
	7.	Amendment. This Agreement may not be amended except by the written agreement of Executive and the Company (with the Company acting by adoption of a resolution by the Board recommended by the Committee).
	8.	Binding Effect. The parties agree that this Agreement is enforceable under the laws of the State of West Virginia. This Agreement is binding on the Company, its successors, and assigns and on Executive and his personal representatives; and the Company will not consolidate or merge into or with another corporation, or transfer all or substantially all of its assets to another corporation (the "Successor Corporation") unless the Successor Corporation shall assume this Agreement, and upon such assumption, Executive and the
Successor Corporation shall become obligated to perform the terms and conditions of this Agreement. This Agreement inures to the benefit of and is enforceable by Executive's personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees, and legatees. If Executive dies while any amounts are payable under this Agreement, all such amounts, unless otherwise provided, shall be paid in accordance with the terms of this Agreement to Executive's spouse, or if none, to his devisee, legatee, or other designee or, if there be no such designee, to his estate.
	9.	Notice. For purposes of this Agreement, notices and all other communications shall be in writing and are effective when delivered or mailed by United States registered mail, return receipt requested, postage prepaid, addressed to Executive or his personal representative at his last known address. All notices to the Company shall be directed to the attention of the Chairman of the Board. Such other addresses may be used as either party may have furnished to the other in writing. Notices of change of address are effective only upon receipt.
	10.	Miscellaneous. No provision of this Agreement may be modified, waived, or discharged unless such waiver, modification, or discharge is agreed to in writing signed by Executive and the Company. A waiver of any breach of or compliance with any provision or condition of this Agreement is not a wavier of similar or dissimilar provisions or conditions. The invalidity or unenforceability of any provision of this Agreement does not affect the validity or enforceability of any other provision of this Agreement, which remains in full force and effect.
	11.	No Assignment. Executive may not assign, alienate, anticipate, or otherwise encumber any rights, duties, or amounts that he might be entitled to receive under this Agreement.
	12.	Term. Upon execution by the Company and Executive, this Agreement is effective as of the Effective Date. This Agreement automatically continues in effect through December 31, 1996, and thereafter through each successive December 31 unless the Company notifies Executive in writing 30 days before the end of any calendar year that is Agreement shall terminate as of the end of that calendar year. After a Change in Control of the Company (as defined in subsection 1(c)), the Company may not terminate this Agreement for 36 months from the Control Change Date (although this Agreement may terminate automatically under subsection 4(a)); and this Agreement automatically continues in effect from year to year thereafter unless the Company notifies Executive in writing thirty days before the end of the initial 36-month period or thirty days before any anniversary of the end of that period that this Agreement shall terminate as of that date.
	The parties have executed this Agreement effective as of the 1st day of November, 1996.
				COMMERCIAL BANCSHARES, INCORPORATED
By: /s/ William E. Mildren, Jr. --------------------------- 					Name: William E. Mildren, Jr. Title: Chairman, President and Chief Executive Officer
				EXECUTIVE
/s/ William E. Mildren, Jr. ---------------------------- 				William E. Mildren, Jr.
EXHIBIT 10.14 11/20/96
COMMERCIAL BANCSHARES, INCORPORATED
EMPLOYMENT CONTINUITY AGREEMENT
THIS EMPLOYMENT CONTINUITY AGREEMENT (this "Agreement") is between COMMERCIAL BANCSHARES, INCORPORATED, a West Virginia corporation (referred to in this Agreement as the "Company," which term includes any subsidiary of the Company where the context so requires), and Larry G. Johnson ("Executive") and is effective as of November 1, 1996.
The Company's Board of Directors (the "Board") acknowledges that Executive's contributions to the past and future growth and success of the Company have been and will continue to be substantial. As a publicly held corporation, the Board recognizes that there exists a possibility of a change in control of the Company. The Board also recognizes that the possibility of such a change in control may contribute to uncertainty on the part of senior management and may result in the departure or distraction of senior management from their operating responsibilities.
Outstanding management of the Company is essential to advancing the best interests of the Company and its shareholders. In the event of a threat or occurrence of a bid to acquire or change control of the Company or to effect a business combination, it is particularly important that the Company's business be continued with a minimum of disruption. The Board believes that the objective of securing and retaining outstanding management will be achieved if the Company's key management employees are given assurances of employment security so they will not be distracted by personal uncertainties and risks created by such circumstances.
The Board believes that such assurances will secure the continued services of the Company's key operational and management executives in the performance of both their regular duties and such extra duties as may be required of them during such periods of uncertainty, enable the Company to rely on such executives to manage its affairs during any such period with less concern for their personal risks, and enhance the Company's ability to attract new key executives as needed.
The Executive Committee (the "Committee") of the Board has recommended, and the Board has approved, entering into employment continuity agreements with the Company's key management executives, including Executive, in order to achieve the foregoing objectives; and Executive is a key management executive of the Company.
The Company and Executive enter into this Agreement to induce Executive to remain an employee of the company and to continue to devote his full energy to the Company's affairs.
	1.	Employment. ----------- 		(a)	Effective Date. The Company and Executive hereby agree that Executive's employment shall continue on and after November 1, 1996 (the "Effective Date"). The Terms and conditions of Executive's employment are further described in Section 2. - ---------- 		(b)	Employment Period. If Executive is employed by the Company on the Control Change Date, the Company further agrees that the Company shall continue to employ Executive and Executive further agrees that Executive shall continue as an employee of the Company for the Employment Period. For purposes of this Agreement, the Employment Period begins on the Control Change Date and ends on the earlier of the third anniversary of the Control Change Date or on Executive's Normal Retirement Date (as defined under the Company's Employee Stock Ownership Plan, as in effect on the Effective Date or as amended prior to the Control Change Date). During the Employment Period, the terms and conditions of Executive's employment are described in Section 3. - ---------- 		(c)	Change in Control and Control Change Date. For purposes of this Agreement, a Change in Control occurs if: (i) after the Effective Date, any Person (other than a trustee or other fiduciary holding securities under an employee benefit plan of the Company) becomes the owner or beneficial owner of Company securities having 20% or more of the combined voting power of the then outstanding Company securities that may be cast for the election of the Company's directors (other than as a result of an issuance of securities initiated by the Company, or open market purchases approved by the Board, as long as the majority of the Board approving the purchases are directors at the time the purchases are made); or (ii) as the direct or indirect result of, or in connection with, a cash tender, or exchange offer, a merger or other business combination, a sale of assets, a contested election of directors, or any combination of these transactions, the Continuing Directors cease to constitute a majority of the Company's Board, or any successor's board, within two years of the last of such transactions. For purposes of the preceding sentence, "Continuing Director" means any member of the Company's Board while a member of the Board, and who (i) was a director of the Company before the transactions described in the preceding sentence or (ii) whose subsequent nomination for election or election to the Board was recommended or approved by a majority of the Continuing Directors; and "Person" means any individual, firm, corporation, partnership or other entity, including a "group" as defined in subsection 13(d)(3) of the Securities Exchange Act of 1934, and any successor (by merger or otherwise) of such entity. For purposes of this Agreement, the Control Change Date is the date on which an event described in (i) or (ii) of the first sentence of this Section 1(c) occurs. If a Change in Control occurs on account of a series of transactions, the Control Change Date is the date of the last of such transactions.
	2.	Terms of Employment Before a Control Change Date ------------------------------------------------ 		(a)	General Duties. Excluding periods of vacation and sick leave to which Executive is entitled, Executive shall continue to exercise such authority and perform such executive duties as are commensurate with the authority being exercised and duties being performed by Executive immediately before the Effective Date.
		(b)	Place of Employment. Executive's services shall be performed at the location where Executive was employed immediately before the Effective Date. If the Company and Executive agree, however, the location of Executive's employment may be changed without affecting Executive's rights under this Agreement.
		(c)	Working Facilities and Support Staff. Executive is entitled to an office of a size and with furnishings and other appointments at least equal to those provided to Executive before the Effective Date. Executive is entitled to secretarial and other assistance, and to such other facilities, equipment, and supplies at least equal to those provided to Executive before the Effective Date.
		(d)	Expenses Generally. Executive is entitled to receive prompt reimbursement for all reasonable expenses incurred by Executive. Reimbursement shall be made in accordance with the Company's policies and procedures, in effect on the Effective Date or amended prior to the Control Change Date.
		(e)	Meetings, Conventions, and Seminars. Executive is encouraged and is expected to attend seminars, professional meetings and conventions, and educational courses. The cost of travel, tuition or registration, food, and lodging for attending those activities shall be paid by the Company. Other costs shall be paid by Executive, unless the Company authorizes those costs. If those other costs are authorized expenses, Executive shall be reimbursed after satisfying the Company's policies and procedures for such reimbursement.
		(f)	Promotional Expenses. Executive is encouraged and is expected, from time to time, to incur reasonable expenses for promoting the Company's business. Such promotional expenses include travel, entertainment (including memberships in social and athletic clubs), professional advancement, and community service expenses. Executive agrees to bear those expenses except to the extent that those expenses are incurred at the Company's specific direction or those expenses are specifically authorized by the Company as expenses that the Company may pay directly or indirectly through reimbursement to Executive.
		(g)	Outside Activities. Executive may (i) serve on corporate, civic, or charitable boards or committees; (ii) deliver lectures, fulfill speaking engagements, or teach at educational institutions; and (iii) manage personal investments, provided that such activities do not significantly interfere with the performance of Executive's responsibilities for the Company. To the extent that any such activities have been conducted by Executive before the Effective Date, such prior conduct of activities and any subsequent conduct of
activities similar in nature and scope shall not be deemed to interfere with the performance of Executive's responsibilities for the Company.
		(h)	Compensation and Fringe Benefits. Executive's compensation (including his annual base salary and incentive compensation) and benefits generally are the same as those in effect on the Effective Date. Executive's compensation and benefits are, however, subject to periodic review and adjustment by the Company. This subsection 2(h) does not change the terms of any fringe benefit program or employee benefit plan maintained by the Company and does not give Executive any additional vested interest in any compensation or benefit to which Executive is not already entitled under any such program or plan on the Effective Date. Generally, Executive's benefits include the following items, all of which are subject to periodic review and adjustment: (i) Executive is entitled to fringe benefits, including use of an automobile and payment of related expenses, and payment of country club dues, both in accordance with the Company's policies in effect on the Effective Date or as amended prior to a Control Change Date; (ii) Executive is entitled to receive all group life, accidental death and dismemberment, long-term disability, and medical insurance benefits available to Executive according to Company policies and Company maintained employee benefit plans in effect on the Effective Date or as amended prior to a Control Change Date; (iii) Executive is entitled to paid vacation in accordance with the Company's policies in effect on the Effective Date or as amended prior to a Control Change date; and (iv) Executive is entitled to sick leave in accordance with the Company's policies in effect on the Effective Date or as amended prior to a Control Change Date; and (v) Executive is entitled to participate in the Company's supplemental income program.
		(i)	Disability. ----------- 			(i)	The Company may terminate this Agreement if Executive becomes Disabled by giving to Executive written notice of its intention to terminate Executive's employment. If Executive become Disabled and does not return to full-time performance of his duties for the Company within (90) days after Executive receives the Company's notice, Executive's employment with the Company shall terminate effective on the (90th) day after receipt of such notice (the "Disability Effective Date"). For purposes of this Agreement, "Disabled" means that Executive is entitled to receive benefits under a long-term disability insurance policy maintained by the Company.
			(ii)	If Executive's employment is terminated because Executive is Disabled, Executive is entitled after the Disability Effective Date to receive disability and other benefits on a basis comparable to those provided by the Company to disabled employees and their families in accordance with such plans, programs, and policies relating to disability, if any, as in effect on the Effective Date or as amended prior to a Control Change Date.
		(j)	Confidential Information. Executive shall hold in a fiduciary capacity for the benefit of the Company all secret or confidential information, knowledge, or data relating to the Company and its business, which is obtained by Executive during Executive's
employment by the Company and which is not public knowledge (other than by acts by Executive or his representatives in violation of this Agreement). After the termination of Executive's employment with the Company, Executive shall not, without the Company's prior written consent, communicate or divulge any such information, knowledge, or data to anyone other than the Company and those designated by it to receive such information, knowledge, or data. In no event may an asserted violation of this subsection 2(j) constitute a basis for deferring or withholding any amounts otherwise payable to Executive under this Agreement.
		(k)	Records and Files. All records and files concerning the Company or the Company's clients and customers belong to and remain the property of the Company.
	3.	Terms of Employment After the Control Change Date. -------------------------------------------------- 		(a)	General. During the Employment Period, the terms and conditions of Executive's employment, as described in Section 2, continue in effect, except that such terms and conditions are fixed as of the day before the Control Change Date and Executive's compensation and benefits are governed by subsection (3)(b).
		(b)	Compensation and Fringe Benfits. During the Employment Period, the Company shall (i) continue to pay Executive an annual base salary not less than Executive's annual base salary on the day before the Control Change Date, (ii) pay Executive bonuses in amounts not less in amount than those paid to Executive during the 12-month period preceding the day before the Control Change Date, and (iii) continue employee benefit plans and programs as to Executive at levels in effect on the day before the Control Change Date (to the extent practicable and subject to such reductions as may be required to maintain such plans in compliance with applicable nondiscrimination and other federal laws regulating employee benefit plans and programs) or pay Executive an amount necessary to provide essentially comparable benefits (assuming, in the case of insured benefits, that Executive is then insurable at standard rates).
	4.	Liquidated Damages Upon Termination of Employment. -------------------------------------------------- 		(a)	General. Executive is entitled to receive Continued Compensation according to the remaining provisions of this Section if Executive's employment with the Company terminates during the Employment Period because of an event described in subsection 4(b) or 4(c), but subject to Executive's offer to work that is rejected by the Company. If Executive's employment terminates during the Employment Period and if an event described in subsection 4(b) or 4(c) has not occurred, this Agreement terminates.
		(b)	Termination by the Company. Subject to the conditions of Section 4(h), Executive is entitled to receive Continued Compensation if Executive's employment is terminated by the Company without cause ("cause" being limited to Executive's acts of theft, embezzlement, fraud, or moral turpitude).
		(c)	Voluntary Termination. ---------------------- 			(i) Subject to the conditions of subsection 4(h), Executive is entitled to receive Continued Compensation if Executive voluntarily terminates employment after (A) Executive does not receive salary increases, bonuses, and incentive awards comparable to the salary increases, bonuses, and incentive awards that Executive received in prior years or, if greater, that other executives in comparable positions receive in the current year; or (B) Executive's compensation or employment related benefits are reduced; or (C) Executive's status, title(s), office(s), working conditions, or management responsibilities are diminished (other than changes in reporting or management responsibilities required by applicable federal or state law); or (D) Executive's place of employment is changed in any way without Executive's consent. Executive will be entitled to receive Continued Compensation on account of his voluntary termination under this subsection 4(c)(i) only if such voluntary termination occurs within six months after an event described in (A), (B), (C), or (D), or within six months after the last in a series of such events.
			(ii) Anything in this Agreement to the contrary notwithstanding, within 12 months after a Control Change Date Executive may voluntarily terminate his employment with the Company and, in such event, will be entitled to receive Continued Compensation equal to one times Executive's Base Period Income, paid in 12 equal monthly installments. During such period of payment of Continued Compensation, Executive shall not be required to comply with subsection 4(h), it being the intention of the parties that if Executive is receiving Continued Compensation under this subsection 4(c)(ii), he shall be free to compete with the Company during such period (and thereafter) by being employed by another financial institution in Wood County, West Virginia or Washington County, Ohio.
		(d)	Continued Compensation. Continued Compensation equal to three times Executive's Base Period Income shall be paid in 36 equal monthly installments. Continued Compensation payments to Executive shall commence on the first day of the month following Executive's termination of employment with the Company because of an event described in subsection 4(b) or 4(c)(i) and shall continue on the first day of each of the next thirty-five months, subject to receipt by the Company of notification from the Accounting Firm (defined below) of its determination regarding the reduction, if any, of Continued Compensation according to subsection 4(g).
		(e)	Base Period Income. Executive's Base Period Income equals his annual base salary as of Executive's termination date, plus an amount equal to the bonus awarded to Executive for the fiscal year immediately prior to the fiscal year in which Executive's termination date occurs (but in no event shall such amount be less than the bonus amount required to be paid during the Employment period under subsection 3(b)(ii)). Amounts of such base salary and bonus that Executive has elected to defer during the relevant period are included in Base Period Income.
(f) Other Payments or Benefits. In addition to any payments provided under this Agreement or under any other arrangement between the Company and Executive, Executive is entitled to (i) any cash or property due him as a result of the exercise of a stock option granted under the Company's Employee Stock Ownership Plan or an earlier plan or a successor plan, and (ii) during any period in which Continued Compensation is paid, any other payments or benefits due him, whether or not "parachute payments" as defined in Section 280G of the Internal Revenue Code of 1986, as amended (the "Code") (but subject to Section 4(g)) including amounts that Executive is entitled to receive under Company maintained tax-qualified plans and any health care coverage under Company maintained welfare plans for which Executive pays the cost.
		(g)	Certain Reduction of Continued Compensation. -------------------------------------------- 			(i)	For purposes of this subsection 4(g),
				(A)	A "Payment" means any amount that, if paid, would be a payment or distribution in the nature of compensation to or for the benefit of Executive, whether paid or payable pursuant to this Agreement or otherwise;
				(B)	"Continued Compensation" means a Payment paid or payable pursuant to subsection 4(d) (calculated as if there were no reduction of Continued Compensation according to this subsection 4(g));
				(C)	"Reduced Amount" means the largest amount of Payments that may be paid that will result in no portion of any Payments being Subject to the excise tax imposed by Section 4999 of the Code.
			(ii)	Despite any other Section of this Agreement, if Harman, Thompson, Mallory & Ice, A.C., the accounting firm that is at the time engaged to audit the Company's financial statements (the "Accounting Firm") determines that receipt of all Payments would subject Executive to tax under Section 4999 of the Code, it shall determine the amount of Payments that would meet the definition of a "Reduced Amount." In that event, one or more Payments shall be reduced to that Reduced Amount, but not below zero. If any reduction of Payments is required by the preceding sentence, (A) Payments other than Continued Compensation shall be reduced first, and (B) Continued Compensation shall be reduced in a manner that shortens the period over which Continued Compensation is paid (and, thus, the number of monthly installments payable) but does not reduce the amount of a monthly installment that would be paid but for this subsection 4(g).
			(iii)	If the Accounting Firm determines that one or more Payments should be reduced to the Reduced Amount, the Company shall promptly notify Executive of that determination, sending a copy of the detailed calculations by the Accounting Firm. All determinations made by the Accounting Firm under this subsection 4(g) are binding upon the Company and Executive and shall be made within 60 days after Executive's employment termination, unless reasonable cause requires an extension of time. The Accounting Firm
shall furnish written notice to the Company and Executive of any required extension before the end of the 60-day period; but the Accounting Firm shall make its determinations under this Section as soon as possible and not later than six months after Executive's employment termination.
			(iv)	It is the intention of the Company and Executive to reduce one or more Payments only to avoid the excise tax imposed by Section 4999 of the Code. However, it is possible that, as a result of uncertainty in the application of Section 4999 of the Code at the time of the initial determination by the Accounting Firm under this Section, amounts shall have been paid or distributed to or for the benefit of Executive, which amounts should not have been so paid or distributed ("Overpayment"), or that additional amounts not paid or distributed to or for the benefit of Executive could have been so paid or distributed ("Underpayment'), in each case, consistent with the calculation of the Reduced Amount. If the Accounting Firm, based either upon the assertion of a deficiency by the Internal Revenue Service against the Company or Executive, which assertion the Accounting Firm believes has a high probability of success or controlling precedent or other substantial authority, determines that an Overpayment has been made, any such Overpayment shall be treated for all purposes as a loan ab initio to Executive, which loan Executive shall repay to the Company together with interest at the applicable federal rate under Section 7872(f)(2) of the Code; provided, however, that no such loan shall be deemed to have been made and no amount is payable by Executive to the Company if and to the extent such deemed loan and payment would not either reduce the amount on which Executive is subject to tax under Section 1 or 4999 of the Code or generate a refund of such taxes. If the Accounting Firm, based upon controlling precedent or other substantial authority, determines that an Underpayment has occurred, the Accounting Firm shall promptly notify the Company of the amount of the Underpayment. The Company shall take action to address the Underpayment in a manner that as nearly as possible restores Executive to the position he would have been in if there had been no Underpayment.
		(h)	Covenant Not to Compete. ------------------------ 			(i)	Executive agrees that if his employment terminates for any reason during the Employment Period, then during the period in which Executive is entitled to Continued Compensation under Section 4, he shall not serve as an employee of, or become a director of, or render advisory or other services for, or in connection with, or make any substantial financial investment in a bank or other financial institution that has an office in Wood County, West Virginia, and Washington County, Ohio. Executive further agrees that during the period in which Executive is entitled to Continued Compensation under Section 4, he shall not actively induce any Company employee to terminate employment with the Company in favor of promised or prospective employment with or on behalf of Executive or Executive's post-termination employer.
			(ii)	Executive agrees and acknowledges that any beach or threatened violation of the covenants contained in this subsection 4(h) shall cause irreparable injury to the Company, and that the remedy at law for any such breach or threatened violation shall be inadequate, and that the Company shall be entitled to appropriate equitable relief.
			(iii)	The covenants contained in this subsection 4(h) shall inure to the benefit of the Company and its affiliated employers and subsidiaries and their successors.
			(iv)	The restrictions contained in this subsection 4(h) are considered by the parties hereto to be fair and reasonable and necessary for the protection of the legitimate business interests of the Company.
			(v)	Notwithstanding subsections 3(a), 3(b) or Section 4, if Executive violates subsection 4(h), any unpaid Continued Compensation shall immediately be forfeited as of the date of any violation unless it is being paid pursuant to subsection 4(c)(ii), in which event it shall continue.
	5.	Legal Fees and Expenses. The Company shall pay all legal fees and expenses, if any, incurred by Executive in obtaining, enforcing, or defending any right or benefit provided by this Agreement, whether successful or not. Payments under this Section are not Continued Compensation and are not subject to reduction under any other Section of this Agreement.
	6.	Governing Law. This Agreement and performance hereunder and all suits, actions and other proceedings hereunder shall be construed in accordance with and under and pursuant to the laws of the State of West Virginia, (except its choice of law provisions to the extent that they would require the application of the laws of a state other than the State of West Virginia), and in any suit, action or other proceeding that may be brought arising out of, in connection with, or by reason of this Agreement, the laws of the State of West Virginia (except its choice of law provisions to the extent that they would require the application of the laws of a state other than the State of West Virginia) shall be applicable and shall govern to the exclusion of the law of any other forum, without regard to the jurisdiction in which any suit, action or other proceeding may be instituted.
	7.	Amendment. This Agreement may not be amended except by the written agreement of Executive and the Company (with the Company acting by adoption of a resolution by the Board recommended by the Committee).
	8.	Binding Effect. The parties agree that this Agreement is enforceable under the laws of the State of West Virginia. This Agreement is binding on the Company, its successors, and assigns and on Executive and his personal representatives; and the Company will not consolidate or merge into or with another corporation, or transfer all or substantially all of its assets to another corporation (the "Successor Corporation") unless the Successor Corporation shall assume this Agreement, and upon such assumption, Executive and the
Successor Corporation shall become obligated to perform the terms and conditions of this Agreement. This Agreement inures to the benefit of and is enforceable by Executive's personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees, and legatees. If Executive dies while any amounts are payable under this Agreement, all such amounts, unless otherwise provided, shall be paid in accordance with the terms of this Agreement to Executive's spouse, or if none, to his devisee, legatee, or other designee or, if there be no such designee, to his estate.
	9.	Notice. For purposes of this Agreement, notices and all other communications shall be in writing and are effective when delivered or mailed by United States registered mail, return receipt requested, postage prepaid, addressed to Executive or his personal representative at his last known address. All notices to the Company shall be directed to the attention of the Chairman of the Board. Such other addresses may be used as either party may have furnished to the other in writing. Notices of change of address are effective only upon receipt.
	10.	Miscellaneous. No provision of this Agreement may be modified, waived, or discharged unless such waiver, modification, or discharge is agreed to in writing signed by Executive and the Company. A waiver of any breach of or compliance with any provision or condition of this Agreement is not a wavier of similar or dissimilar provisions or conditions. The invalidity or unenforceability of any provision of this Agreement does not affect the validity or enforceability of any other provision of this Agreement, which remains in full force and effect.
	11.	No Assignment. Executive may not assign, alienate, anticipate, or otherwise encumber any rights, duties, or amounts that he might be entitled to receive under this Agreement.
	12.	Term. Upon execution by the Company and Executive, this Agreement is effective as of the Effective Date. This Agreement automatically continues in effect through December 31, 1996, and thereafter through each successive December 31 unless the Company notifies Executive in writing 30 days before the end of any calendar year that is Agreement shall terminate as of the end of that calendar year. After a Change in Control of the Company (as defined in subsection 1(c)), the Company may not terminate this Agreement for 36 months from the Control Change Date (although this Agreement may terminate automatically under subsection 4(a)); and this Agreement automatically continues in effect from year to year thereafter unless the Company notifies Executive in writing thirty days before the end of the initial 36-month period or thirty days before any anniversary of the end of that period that this Agreement shall terminate as of that date.
	The parties have executed this Agreement effective as of the 1st day of November, 1996.
				COMMERCIAL BANCSHARES, INCORPORATED
By: /s/ William E. Mildren, Jr. --------------------------- 					Name: William E. Mildren, Jr. Title: Chairman, President and Chief Executive Officer
				EXECUTIVE
/s/ Larry G. Johnson -------------------- Larry G. Johnson
EXHIBIT 10.15
AGREEMENT ---------
THIS AGREEMENT, made and entered into this 2nd day of January, 1998, by and between WESBANCO BANK CHARLESTON, hereinafter referred to as "Bank", and J. CHRISTOPHER THOMAS, hereinafter referred to as "Employee", and WESBANCO, INC., a West Virginia corporation, hereinafter referred to as "Wesbanco". WHEREAS, Employee is serving as an executive officer of the Bank as of the date hereof; and WHEREAS, the Bank wishes to assure itself of the Employee's full time employment and continuing services in an executive capacity. WITNESSETH THAT: In consideration of the mutual promises and undertakings hereinafter set forth, the parties hereto agree as follows:
1. OFFER OF EMPLOYMENT. The Bank agrees to, and hereby does, continue the employment of Employee at Bank in an executive capacity. In that capacity, Employee shall be answerable to the Board of Directors of the Bank and such other officers of Wesbanco, the parent company of the Bank, as the Board of Directors of Wesbanco shall direct. Employee shall perform such duties, compatible with his employment under the Agreement, as the Bank, and Wesbanco, from time to time may assign to him.
2. COMPENSATION. As compensation for the performance of the services specified in Paragraph (1) and the observance of all of the provisions of this Agreement, the Bank agrees to pay Employee, and Employee agrees to accept, the following amounts and benefits during his term of employment:
(A) Salary at a rate to be determined by the Board of Directors of the Bank, with notice to be given to employee in April of each calendar
year, but in no event shall Employee's salary be less than One Hundred Forty-five Thousand Dollars ($145,000.00) per year, plus any increases granted by the Board of Directors after the date hereof, and payable in equal biweekly installments; and
(B) Such other miscellaneous benefits and perquisites as the Bank provides to its executive employees generally.
3. ACCEPTANCE OF EMPLOYMENT. Employee accepts the employment provided for herein, at the salary set forth above, and agrees to devote his talents and best efforts to the diligent, faithful, and efficient discharge of the duties of his employment, and in furtherance of the operations and best interests of Bank, and observe and abide by all rules and regulations promulgated by Bank for the guidance and direction of its employees and the conduct of its business, operations, and activities.
4. TERM OF AGREEMENT. The employment term provided for herein shall consist of a revolving period of three years, with the initial term beginning on the 1st day of January, 1998, and ending on the 31st day of December, 2001. The term of this Agreement shall automatically be extended on each anniversary of the beginning date of the term hereof for an additional one year, thereby creating a new three year term, unless written notice of termination hereof is given by either party at least ninety (90) days prior to the anniversary date of the beginning date of this Agreement. Any such notice of non-renewal shall not affect the continuation of the term of this Agreement existing at the time of such non-renewal.
5. CONFIDENTIALITY. Employee agrees that such information concerning the business, affairs, and records of Bank as he may acquire in the course of, or as incident to, his employment hereunder, shall be regarded and treated as being of a confidential nature, and that he will not disclose any such information to any person, firm, or corporation, for his own benefit
or to the detriment of Bank, during the term of his employment under this Agreement or at any time following the termination thereof.
6. MISCELLANEOUS BENEFITS. This Agreement is not intended, and shall not be deemed to be in lieu of any rights, benefits, and privileges to which Employee may be entitled as an Employee of Bank under any retirement, pension, profit sharing, insurance, hospital, bonus, vacation, or other plan or plans which may now be in effect or which may hereafter be adopted by Bank, it being understood that Employee shall have the same rights and privileges to participate in such plans and benefits, as any other employee, during the period of his employment.
7. BINDING EFFECT. This Agreement shall inure to the benefit of and be binding upon Bank's successors and assigns, including, without limitation, any company or corporation which may acquire substantially all of Bank's assets or business, or with, or into which Bank may be merged or otherwise consolidated.
8. TERMINATION. The Employee's employment hereunder shall terminate upon the earliest to occur of any one of the following:
(A) The expiration of the initial term of this Agreement, or any extended term of this Agreement by written notice of termination as provided in Paragraph (4) hereof; or
(B) By the Bank for cause, after thirty (30) days written notice to Employee. Cause for purposes of this Agreement shall mean as follows:
(i) An act of dishonesty, willful disloyalty or fraud by the Employee that the Bank determines is detrimental to the best interests of the Bank; or
(ii) The Employee's continuing inattention to, neglect of, or inability to perform, the duties to be performed under this Agreement, or
(iii) Any other breach of the Employee's covenants contained herein or of any of the other terms and provisions of this Agreement, or
(iv) The deliberate and intentional engaging by the Employee in gross misconduct which is materially and demonstrably injurious to the Bank.
(C) Employee shall have the right to terminate this Agreement and his active employment hereunder at any time upon ninety (90) days written notice to the Bank.
(D) Upon the death of Employee, this Agreement shall automatically terminate.
9. EFFECT OF TERMINATION. In the event of a termination of this Agreement, Employee shall be paid the following severance benefits, payable promptly after the date of termination of his employment, in the following manner:
(A) In the event that this Agreement is terminated by the death of Employee, this Agreement shall be deemed to have been terminated as of the date of such death except, however, that Bank shall pay to the surviving spouse of Employee, or in lieu thereof, to Employee's estate, an amount equal to six months of the base salary at his then current base rate, provided, however, that if such death occurs within six months of the normal retirement date as provided by the Bank's defined benefit pension plan, or
after such normal retirement date, so that a pension distribution or benefit is payable to the surviving spouse of Employee, such payment shall be reduced to an amount equal to one month of the base salary at his then current base rate.
(B) In the event that this Agreement is terminated by Employee and Bank by mutual agreement, then Bank shall pay such severance benefits, if any, as shall have been agreed upon by Bank and Employee.
(C) In the event that Bank attempts to terminate this Agreement, other than for cause, death of Employee, or by mutual agreement with Employee, in addition to any other rights or remedies which Employee may have, Employee shall receive an amount equal to the greater of (i) six months of base salary at his then current base rate, or (ii) the base salary Employee would have received had he continued to be employed pursuant to this Agreement throughout the end of the then existing term of employment hereunder.
(D) In the event Bank terminates this Agreement for cause, no severance benefits shall be payable hereunder.
10. ENTIRE UNDERSTANDING; AMENDMENT. This Agreement supersedes all previous agreements between Employee and Bank and contains the entire understanding and agreement between the parties with respect to the subject matter hereof, and cannot be amended, modified, or supplemented in any respect except by a subsequent written agreement executed by both parties.
11. APPLICABLE LAW. This Agreement shall be governed by and construed in accordance with the laws of the State of West Virginia.
12. CERTAIN OBLIGATIONS OF WESBANCO. While the parties acknowledge that certain provisions of this Agreement may be unenforceable in some respects against the Bank, pursuant to applicable banking law, it is nonetheless the intention of the parties to create pursuant to this Agreement a valid employment for a definite term with specified benefits. As an inducement for Employee and Bank to enter into this Agreement whereby Employee would be employed by Bank for a definite term, Wesbanco hereby undertakes the independent, separate and unconditional obligation to Employee to pay all amounts which are or may become due to Employee under this Agreement as set forth herein, regardless of the status of the direct or indirect enforceability or validity of Bank's obligation to pay any or all such amounts as may be due hereunder to Employee; provided, however, that for purposes of this Paragraph 12, Wesbanco shall be obligated to the Employee for any bonuses or any increases in base salary in excess of the rate of One Hundred Forty-five Thousand Dollars ($145,000.00) per annum only to the extent that it has consented to such bonuses or increases. Wesbanco also acknowledges that it may or may not be entitled to indemnification or contribution from Bank or to be subrogated to the claim of Employee hereunder for any payments Wesbanco may make to Employee; and Wesbanco hereby specifically waives any rights it may otherwise have to indemnification or contribution from Bank or to be subrogated to the claim of Employee hereunder in the event that such payments as are made by Wesbanco would be unenforceable or invalid for any reason against Bank.
13. MISCELLANEOUS. The invalidity or unenforceability of any term or provision of this Agreement as against any one or more parties hereto, shall not impair or effect the other provisions hereof or the enforceability of said term or provision against the other parties hereto, and notwithstanding any such invalidity or unenforceability, each term or provision hereof shall remain in full force and effect to the full extent consistent with law.
IN WITNESS WHEREOF, Bank and Wesbanco have caused these presents to be signed and their corporate seals to be hereto affixed, and Employee has hereto affixed his signature and seal, at Wheeling, West Virginia, as of the day and year first above written.
WESBANCO BANK CHARLESTON
By /s/ Brenda H. Robertson ----------------------- Its Director ------------ (SEAL)
ATTEST:
Thomas L. Jones - --------------- Secretary
/s/ J. CHRISTOPHER THOMAS ------------------------------- J. CHRISTOPHER THOMAS, EMPLOYEE
WESBANCO, INC.
By /s/ Edward M. George ------------------------- Its President ---------
(SEAL)
ATTEST:
/s/ Shirley A. Bucan - -------------------- Secretary
EXHIBIT 11
WesBanco, Inc. Computation of Earnings Per Share
EXHIBIT 12
WesBanco, Inc. Ratio of Earnings to Fixed Charges and Preferred Stock Dividends
For the years ended December 31, -------------------------------------------------- (dollars in thousands) 1998 1997 1996 1995 1994 - -------------------------------------------------------------------------------
Net income $ 28,313 $ 25,211 $ 25,942 $ 25,049 $ 22,290 Provision for income taxes 13,495 9,519 10,648 9,832 7,809 - ------------------------------------------------------------------------------- Earnings before provision for income taxes 41,808 34,730 36,590 34,881 30,099 - -------------------------------------------------------------------------------
Preferred stock dividend requirements --- --- --- 164 387
Ratio of pretax income to net income 1.48% 1.38% 1.41% 1.39% 1.35% - -------------------------------------------------------------------------------
Preferred dividend factor $ 0 $ 0 $ 0 $ 228 $ 523
Ratio of pretax net income to preferred dividends 0% 0% 0% 152.7% 57.6% - -------------------------------------------------------------------------------
WesBanco has no fixed charges as defined by Regulation S-K Item 503-Summary; Risk Factors; Ratio of Earnings to Fixed Charges.
EXHIBIT 21 		
WesBanco, Inc. Subsidiaries State of Incorporation - ----------------------------------------- ---------------------- WesBanco, Inc. West Virginia
WesBanco Bank Wheeling West Virginia
WesBanco Bank Fairmont West Virginia
Hunter Insurance Agency (non-bank) West Virginia
WesBanco Bank Parkersburg West Virginia
WesBanco Bank Charleston West Virginia
WesBanco Mortgage Company (non-bank) West Virginia 		 WesBanco Properties, Inc. (non-bank) West Virginia
CommBanc Investments (non-bank) Ohio
Hometown Finance (non-bank) West Virginia 		 Vandalia National Corporation (inactive) Delaware
CBI Holding Company (non-bank) West Virginia
Hometown Insurance Company (inactive) West Virginia
NOTE: All direct subsidiaries of the Registrant are 100% owned.
EXHIBIT 23.1
Consent of Ernst & Young LLP, Independent Auditors
We consent to the incorporation by reference in the Registration Statement (Form S-3 No. 333-06467) of WesBanco, Inc. and in the related Prospectus of our report dated January 27, 1999, with respect to the consolidated financial statements of WesBanco, Inc. included in this Annual Report (Form 10-K) for the year ended December 31, 1998.
/s/ Ernst & Young LLP
Pittsburgh, Pennsylvania March 8, 1999
EXHIBIT 23.2
Consent of Harman, Thompson, Mallory and Ice, A.C., Independent Auditors
As independent auditors, we hereby consent to the incorporation by reference in this Annual Report (Form 10-K) of our report dated March 6, 1998 with respect to the consolidated financial statements of Commercial BancShares, Inc. and Subsidiaries at December 31, 1997 and 1996 and for the three years ended December 31, 1997, prior to their restatement for the 1998 pooling-of-interests with WesBanco,Inc., included in this Annual Report for the year ended December 31, 1998 filed with the SEC.
/s/ Harman, Thompson, Mallory & Ice, A.C.
Parkersburg, West Virginia March 8, 1999
EXHIBIT 24
POWER OF ATTORNEY FOR EXECUTION OF FORM 10-K TO BE FILED WITH THE SECURITIES & EXCHANGE COMMISSION
We, the undersigned Directors of WesBanco, Inc., hereby severally constitute and appoint James C. Gardill and/or Edward M. George, and each of them singly, our true and lawful attorneys with full power to them, and each of them singly, to sign for us and in our names and in the capacities indicated below, the Annual Report of WesBanco to the Securities & Exchange Commission on Form 10-K to be filed for the year 1998 and any and all amendments thereto in our names and behalf in our capacities as Directors of WesBanco to enable WesBanco to comply with the provisions of the Securities Exchange Act of 1934, as amended, and all requirements of the Securities Exchange Act of 1934, as amended, hereby ratifying and conforming our signatures as they may be signed by our attorneys, or either of them, to said Form 10-K and any and all amendments thereto.
Pursuant to the requirements of the Securities Exchange Act of 1934, this Power of Attorney for purposes of executing the Form 10-K of WesBanco has been signed by the following persons in the capacities and on the dates indicated:
SIGNATURE TITLE DATE - --------- ----- ----
__________________ Director February 18, 1999 Frank K. Abruzzino
/s/ James E. Altmeyer Director February 18, 1999 - --------------------- James E. Altmeyer
/s/ Earl C. Atkins Director February 18, 1999 - ------------------ Earl C. Atkins
/s/ James G. Bradley Director February 18, 1999 - -------------------- James G. Bradley
/s/ Ray A. Byrd Director February 18, 1999 - --------------- Ray A. Byrd
/s/ R. Peterson Chalfant Director February 18, 1999 - ------------------------ R. Peterson Chalfant
/s/ John H. Cheffy Director February 18, 1999 - ------------------ John H. Cheffy
/s/ Christopher V. Criss Director February 18, 1999 - ------------------------ Christopher V. Criss
/s/ Stephen F. Decker Director February 18, 1999 - --------------------- Stephen F. Decker
/s/ James D. Entress Director February 18, 1999 - -------------------- James D. Entress
/s/ Ernest S. Fragale Director February 18, 1999 - --------------------- Ernest S. Fragale
/s/ James C. Gardill Director February 18, 1999 - -------------------- James C. Gardill
/s/ Edward M. George Director February 18, 1999 - -------------------- Edward M. George
_______________ Director February 18, 1999 Roland L. Hobbs
/s/ Larry G. Johnson Director February 18, 1999 - -------------------- Larry G. Johnson
/s/ John W. Kepner Director February 18, 1999 - ------------------ John W. Kepner
/s/ Frank R. Kerekes Director February 18, 1999 - -------------------- Frank R. Kerekes
/s/ Robert H. Martin Director February 18, 1999 - -------------------- Robert H. Martin
/s/ William E. Mildren, Jr. Director February 18, 1999 - --------------------------- William E. Mildren, Jr.
___________________________ Director February 18, 1999 George M. Molnar
/s/ Eric Nelson Director February 18, 1999 - --------------- Eric Nelson
/s/ Richard K. Riederer Director February 18, 1999 - ----------------------- Richard K. Riederer
________________________ Director February 18, 1999 Melvin C. Snyder, Jr.
/s/ Joan C. Stamp Director February 18, 1999 - ----------------- Joan C. Stamp
/s/ Carter W. Strauss Director February 18, 1999 - --------------------- Carter W. Strauss
_______________________ Director February 18, 1999 James W. Swearingen
/s/ Reed J. Tanner Director February 18, 1999 - ------------------ Reed J. Tanner
/s/ Robert K. Tebay Director February 18, 1999 - ------------------- Robert K. Tebay
/s/ J. Christopher Thomas Director February 18, 1999 - ------------------------- J. Christopher Thomas
/s/ John A. Welty Director February 18, 1999 - ----------------- John A. Welty
/s/ William E. Witschey Director February 18, 1999 - ----------------------- William E. Witschey
EXHIBIT 99.1
Harman, Thompson, Mallory and Ice, A.C. Certified Public Accountants
Independent Auditors' Report
											 Board of Directors Commercial BancShares, Inc. Parkersburg, West Virginia
We have audited the accompanying consolidated balance sheets of Commerical BancShares, Inc. and Subsidiaries as of December 31, 1997 and 1996, and the related consolidated statements of income, changes in shareholders' equity, and cash flows for the years ended December 31, 1997, 1996 and 1995. These consolidated financial statements are the responsibility of management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, based on our audits, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Commercial BancShares, Inc. and Subsidiaries as of December 31, 1997 and 1996, and the results of its operations and its cash flows for the years ended December 31, 1997, 1996 and 1995 in conformity with generally accepted accounting principles.
/s/ Harman, Thompson, Mallory & Ice, A.C. Parkersburg, West Virginia March 6, 1998
Towne Square, Parkersburg, West Virginia 26102