WesBanco Announces Increased Earnings

WHEELING, W.Va., July 26, 2011 /PRNewswire/ -- Paul M. Limbert, President and Chief Executive Officer of WesBanco, Inc. (NASDAQ Global Market: WSBC), a Wheeling, West Virginia based multi-state bank holding company, today announced increased earnings for the three and six months ended June 30, 2011.

Net income for the quarter ended June 30, 2011 was $11.9 million as compared to $8.2 million for the second quarter of 2010, representing an increase of 44.7%, while diluted earnings per share were $0.45, as compared to $0.31 per share for the second quarter of 2010.  For the six month period ended June 30, 2011, net income was $22.2 million as compared to $16.1 million for the same period in 2010, representing an increase of 37.2%, while diluted earnings per share were $0.83, as compared to $0.61 per share for the six months ended June 30, 2010.

Mr. Limbert commented, "We are pleased with the results of our second quarter and the first half of 2011.  Many of the process improvement initiatives implemented by us are beginning to be reflected in the financial results.  We have begun to see a stabilization of loan balances with growth in loan volume during the second quarter and credit quality is gradually improving.  Charge-offs significantly decreased and past due balances declined during the second quarter, which resulted in a reduction in the loan loss provision.  WesBanco's net interest income continues to improve due to management's focus on pricing of both loans and deposits.  WesBanco continues to see improvement in non-banking revenues and has been able to offset normal salary and benefit adjustments with declines in other operating expenses."

Net Interest Income

Net interest income increased $1.9 million or 4.6% in the second quarter and $2.7 million or 3.4% in the first half of 2011 as compared to the same periods in 2010 due to increases in the net interest margin through disciplined pricing of loans and deposits.  Interest income from the investment portfolio has increased by 2.1% in the first six months of 2011 due to an increase in average outstanding balances partially offset by a decrease in the average rates earned.  In addition, significant improvements in the funding mix continue to reduce the overall cost of funds.  The net interest margin improved to 3.73% in the second quarter and to 3.70% in the first half of 2011, an increase of 17 and 13 basis points, respectively, as compared to the same periods of 2010.  The average rate on interest bearing liabilities decreased by 39 basis points in the second quarter and 42 basis points in the year-to-date period, while the rate on earning assets declined at a slower pace of 20 and 27 basis points, respectively. Lower offered rates on maturing, higher-rate certificates of deposit and an increase in lower-cost products including checking, money market and savings accounts all contributed to the improvement in the cost of funds.  Average total deposits increased 3.5% in the second quarter.  This growth includes new deposits received from customers participating in Marcellus shale gas activity. In addition, the average balance for FHLB borrowings, which have the highest average interest cost at 3.47% and represent 14.3% of interest expense, decreased by $175.2 million or 43.1% in the second quarter of 2011 from the second quarter of 2010 while earning assets were nearly unchanged.  FHLB borrowings dropped to 4.2% of total assets from 5.8% at June 30, 2010 due to scheduled maturities.  Improvements in the mix of deposit accounts also contributed to the improved cost of funds, with average CD's decreasing to 38.6% of total average deposits in the second quarter, from 42.7% in the same quarter of 2010, while all other account types increased to 61.4%.  Average non-interest bearing deposit balances increased 13.2% in the second quarter as a result of retail marketing campaigns, and customer incentives, as well as increased balances of the Bank's business customers.

Provision and Allowance for Credit Losses

The provision for credit losses decreased $4.9 million in the second quarter and $8.3 million in the first six months of 2011 as compared to the same periods in 2010. The allowance for loan losses was relatively unchanged at June 30, 2011 as compared to December 31, 2010 and was 1.88% of total loans as compared to 1.86% at December 31, 2010 and 1.92% at June 30, 2010.

Net charge-offs decreased $5.2 million in the second quarter as compared to the second quarter of 2010, and $1.4 million as compared to the first quarter of 2011.  Non-accrual loans at June 30, 2011 decreased $3.0 million compared to June 30, 2010, while increasing $2.5 million from the first quarter of 2011.  The decrease from the second quarter of 2010 was the result of the sale of certain impaired loans in the third quarter of last year and other continuing workout efforts to reduce this category of loans.  The increase from the first quarter of 2011 was the result of certain loans previously reported as troubled debt restructurings also being placed on non-accrual during the quarter.  Troubled debt restructurings increased $7.0 million compared to June 30, 2010, but decreased $0.2 million from the first quarter of 2011.  Classified and criticized commercial loans at June 30, 2011 decreased $33.8 million compared to June 30, 2010 and $3.8 million compared to March 31, 2011.  Loans past due 30 days or more were 0.79% at June 30, 2011 compared to 1.18% at June 30, 2010 and 0.84% at March 31, 2011.

The increase in non-accrual loans from the first to the second quarter of 2011 did not have a material effect on the allowance for credit losses at June 30, 2011 or the provision for credit losses for the second quarter of 2011 because of the decreases in classified, criticized and past due loans and net charge-offs.  Additionally, certain loans that migrated to non-accrual during the quarter were previously classified and reserved for in prior periods.

Non-Interest Income and Non-Interest Expense

In the second quarter of 2011 non-interest income increased $0.4 million as compared to the second quarter of 2010 and was nearly unchanged in the year-to-date period as compared to 2010.  The quarterly increase was due to a 17.5% increase in trust fees from new business, fee increases and market improvements, a 15.2% increase in electronic banking fees and a $1.0 million decrease in net losses on other real estate owned.  These improvements were partially offset by decreases in service charges on deposits resulting from regulatory changes which led to fewer customer overdraft transactions, as well as reduced net security gains.  Similar trends were evident in the year-to-date period.

Non-interest expense increased $1.1 million or 3.3% in the second quarter and $1.2 million or 1.8% in the first six months of 2011, as compared to the same periods in 2010. In the second quarter, salaries and wages increased $0.4 million due to regular compensation increases in the current quarter, marketing increased $0.5 million from promotions focused on growing demand deposits and home equity loans, and other operating expenses increased $1.2 million primarily due to charges relating to retail customer fraud and professional fees.  These increases were partially offset by reduced FDIC insurance and equipment expense.  A new calculation of FDIC insurance expense was effective April 1, 2011 which reduced this expense by $0.7 million for the quarter.  Savings under this new calculation are expected to continue in future quarters.  Year-to-date, salaries and wages increased $0.8 million, also due in part to routine annual adjustments to compensation, marketing increased $0.9 million due to the aforementioned promotions and other operating expenses increased $1.0 million, partially offset by decreases in FDIC insurance and equipment expense of $0.6 million and $0.5 million respectively.

Provision for Income Taxes

The provision for income taxes increased $2.4 million in the second quarter of 2011 and $3.7 million in the six month period as compared to the same periods in 2010 due to increased earnings and an increase in the estimated effective tax rate for 2011 to 20.9% from 11.6% in 2010 as the ratio of taxable income to tax-exempt income increased.

Financial Condition

Total assets at June 30, 2011 increased 1.2% from year-end and 1.3% from June 30, 2010, primarily from increased investments in securities funded by net loan pay downs and increases in deposits.  Available funding was also utilized to pay down higher cost FHLB borrowings.  Portfolio loans decreased 4.0% in the last twelve months primarily due to reduced loan demand, strategic reductions in residential real estate loans, the sale or exit of certain impaired loans, and a continued focus on credit quality.  However, portfolio loans decreased only 0.8% since year end and were up slightly in the second quarter as compared to March 31, 2011 as loan demand improved.  The investment portfolio has grown 20% from June 30, 2010 to $1.5 billion which provides significant amounts of liquidity.

Total deposits increased 2.6% as compared to the second quarter of 2010, primarily due to an increase in all deposit categories other than CDs, which decreased 7.7%.  The total increase in lower cost deposit categories other than CDs was 10.3%.  The decrease in CD balances was due to planned reductions through lower offered rates for new and rollover CDs.  FHLB borrowings decreased by $82.7 million or 26.7% as compared to June 30, 2010 and 10.5% since the end of 2010, funded by the increased deposits and the decreases in loans.  WesBanco's loan to deposit ratio was 77% at quarter-end, and the Company's liquidity permits loan growth to be easily funded when it occurs.

WesBanco continued to improve already strong regulatory capital ratios to 8.59% tier I leverage, 12.35% tier I risk-based capital, and 13.61% total risk-based capital, all of which improved in each of the last seven consecutive quarters.  Both consolidated and bank-level regulatory capital ratios are well above the applicable "well-capitalized" standards promulgated by bank regulators.  Total tangible equity to tangible assets (non-GAAP measure) was 6.59% at June 30, 2011, a 16 basis point improvement from the first quarter of 2011 and a 32 basis point increase from 6.27% at June 30, 2010, primarily due to balance sheet management strategies and the resulting increases in shareholders' equity.  The increase in shareholders' equity was due to improved operating results net of dividends declared, partially offset by decreases in other comprehensive income.  Recent decreases in interest rates have increased other comprehensive income in the second quarter as compared to March 31, 2011.  WesBanco also increased its quarterly dividend to $0.15 per share in February, a 7.1% increase over the prior quarterly rate.

WesBanco is a multi-state bank holding company with total assets of approximately $5.4 billion, operating through 112 branch locations and 124 ATMs in West Virginia, Ohio, and Pennsylvania.  WesBanco's banking subsidiary is WesBanco Bank, Inc., headquartered in Wheeling, West Virginia.  WesBanco also operates an insurance brokerage company, WesBanco Insurance Services, Inc., and a full service broker/dealer, WesBanco Securities, Inc.

Forward-looking Statements:

Forward-looking statements in this report relating to WesBanco's plans, strategies, objectives, expectations, intentions and adequacy of resources, are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995.  The information contained in this report should be read in conjunction with WesBanco's Form 10-K for the year ended December 31, 2010 and documents subsequently filed by WesBanco with the Securities and Exchange Commission ("SEC"), including WesBanco's Form 10-Q for the quarter ended March 31, 2011, which are available at the SEC's website www.sec.gov or at WesBanco's website, www.wesbanco.com.  Investors are cautioned that forward-looking statements, which are not historical fact, involve risks and uncertainties, including those detailed in WesBanco's most recent Annual Report on Form 10-K filed with the SEC under "Risk Factors" in Part I, Item 1A.  Such statements are subject to important factors that could cause actual results to differ materially from those contemplated by such statements, including without limitation, the effects of changing regional and national economic conditions; changes in interest rates, spreads on earning assets and interest-bearing liabilities, and associated interest rate sensitivity; sources of liquidity available to WesBanco and its related subsidiary operations; potential future credit losses and the credit risk of commercial, real estate, and consumer loan customers and their borrowing activities; actions of the Federal Reserve Board, the Federal Deposit Insurance Corporation, the SEC, Financial Institution Regulatory Authority, Municipal Securities Rulemaking Board, Securities Investors Protection Corporation, and other regulatory bodies; potential legislative and federal and state regulatory actions and reform, including, without limitation, the impact of the implementation of the Dodd-Frank Act; adverse decisions of federal and state courts; fraud, scams and schemes of third parties; internet hacking; competitive conditions in the financial services industry; rapidly changing technology affecting financial services; marketability of debt instruments and corresponding impact on fair value adjustments; and/or other external developments materially impacting WesBanco's operational and financial performance.  WesBanco does not assume any duty to update forward-looking statements.

Website: www.wesbanco.com

SOURCE WesBanco, Inc.