WesBanco Announces Increased Earnings

WHEELING, W.Va., Jan. 24, 2012/PRNewswire/ -- Paul M. Limbert, President and Chief Executive Officer of WesBanco, Inc. (NASDAQ Global Market: WSBC), a Wheeling, West Virginiabased multi-state bank holding company, today announced increased earnings for the year and fourth quarter ended December 31, 2011.

Net income for the year ended December 31, 2011was $43.8 millioncompared to $35.6 millionfor the same period in 2010, representing an increase of 23.0%, while diluted earnings per share were $1.65compared to $1.34per share for 2010. For the fourth quarter of 2011, net income was $10.6 millioncompared to $10.3 millionfor the fourth quarter of 2010, while diluted earnings per share were $0.40compared to $0.39per share for the fourth quarter of 2010.

Mr. Limbert commented, "WesBanco continued to improve earnings in 2011 through increased net interest income, lower operating expenses and a lower provision for credit losses compared to 2010.  Continued focus on credit quality as we emerge from the recession resulted in significant decreases in non-performing assets, classified, criticized and past due loans and OREO in 2011.  In addition, trust, securities brokerage and insurance operations continued to provide significant non-interest income with trust assets under management increasing again in 2011."

Net Interest Income

Net interest income increased $3.3 millionor 2.0% for the 2011 year due to increases in the net interest margin.  The improved net interest margin was caused by the cost of funds declining faster than the decline in asset yields.  For the fourth quarter of 2011, net interest income decreased $0.4 millionor 1.0% compared to the same quarter of 2010.  This was primarily due to the continued low interest rate environment, resulting in a reduction in the yield on earning assets at a more rapid pace than the decrease in average rates paid on interest bearing liabilities.  In addition, the fourth quarter reflects a change in asset mix, with a higher percentage of lower-yielding investments.

The net interest margin was 3.66% for 2011 and 3.56% in the fourth quarter, an increase of 6 basis points and a decrease of 10 basis points respectively, compared to the same periods in 2010.  The average rate on interest bearing liabilities decreased by 35 basis points in 2011, and 26 basis points in the fourth quarter, while the rate on earning assets declined by 27 and 33 basis points, respectively.  Rates earned on the securities and loan portfolios have declined through reinvestment at current lower interest rates with competitive pressures resulting in decreasing rates on high quality loans.  However, interest income from the investment portfolio increased 2.9% in 2011 and 4.7% in the fourth quarter compared to 2010, due to the increase in average outstanding balances.  The improvement in the cost of funds for the year was due to lower offered rates on maturing certificates of deposit, an increase in balances of lower-cost products including checking, money market and savings accounts, and lower balances of higher cost FHLB borrowings.  Average total deposits increased 3.9% in the fourth quarter compared to the fourth quarter of 2010.  The average balance for FHLB borrowings, which have the highest average interest cost at 3.35% representing 11.4% of interest expense, decreased 32.9% in the fourth quarter of 2011 from the fourth quarter of 2010 through scheduled maturities.  The FHLB maturities were funded primarily by the increase in deposits.  Improvements in the mix of deposit accounts also contributed to the improved cost of funds, with average CDs decreasing to 36.9% of total average deposits in the fourth quarter, from 41.2% in the fourth quarter of 2010, while total transaction account types increased to 63.1% of total deposits.

Provision and Allowance for Credit Losses

The provision for credit losses decreased $9.3 millionfor 2011 compared to 2010.  The provision decreased $1.2 millionin the fourth quarter compared to the third quarter of 2011 and was substantially unchanged compared to the fourth quarter of 2010.  Net charge-offs for the fourth quarter decreased $7.5 millioncompared to the third quarter of 2011 but increased $3.3 millioncompared to the fourth quarter of 2010.  The sequential quarter decrease was primarily due to $10.3 millionof charge-offs in the third quarter relating to the sale of non-performing commercial real estate loans.  The increase in the fourth quarter compared to the fourth quarter of 2010 was attributable to higher levels of losses due to the sluggish economy which impacted all segments of the loan portfolio throughout the year.  However, fluctuations in sequential quarter charge-offs are the result of the timing of recognizing losses in the portfolio and are therefore not the best indicator of overall credit quality.

Classified and criticized loans decreased $62.0 millionor 19.4% compared to December 31, 2010, of which, $17.2 millionwas attributable to the sale of non-performing loans in the third quarter with the remainder of the decrease resulting from improvements in credit quality, principal reductions or other orderly exits of certain loans, and other charge-offs.  Classified and criticized loans decreased $12.5 millionor 4.6% in the fourth quarter compared to the previous quarter of 2011. Loans past due 30 days or more and accruing interest at December 31, 2011decreased 22.9% compared to December 31, 2010.

Total non-performing loans at December 31, 2011decreased $9.4 millionor 9.8% from December 31, 2010, and increased $2.7 millionor 3.2% from September 30, 2011.  Non-accrual loans at December 31, 2011, which comprise the greatest portion of total non-performing loans, increased $8.7 millionor 17.8% compared to the fourth quarter of 2010, but were relatively unchanged compared to September 30, 2011. The increase from the end of 2010 was the result of certain troubled debt restructured loans being placed on non-accrual, primarily during the first six months of 2011, partially offset by the sale of certain non-accrual loans in the third quarter of 2011, and Ohioresidential mortgages in foreclosure due to the protracted foreclosure timeline in that state.  Troubled debt restructurings accruing interest decreased $18.1 millionor 38.1% compared to December 31, 2010also primarily due to the loan sale and the movement of the aforementioned restructured loans to non-accrual.

The allowance for loan losses decreased by 10.2% compared to December 31, 2010, and 0.5% compared to September 30, 2011.  The decrease in the allowance during 2011 was due primarily to the reduction in classified and criticized loans, lower delinquency, and the elimination of reserves attributable to loans that were charged-off during the year, including loans that were sold in the third quarter of 2011.  The allowance for loan losses was 1.69% of total loans at December 31, 2011, 1.70% at September 30, 2011and 1.86% at December 31, 2010.

Non-Interest Income and Non-Interest Expense

For 2011, non-interest income increased $0.3 millionor 0.5%, and, in the fourth quarter, increased $0.8 millionor 5.1% compared to the same periods of 2010.  The annual increase was primarily due to $1.6 millionincrease in electronic banking fees due to increased transaction volume, a $1.3 millionor 8.5% increase in trust fees through new business and fee increases, and a decrease in losses on other real estate owned of $2.8 million. These improvements were partially offset by a $2.4 milliondecrease in net securities gains, a $0.9 milliondecrease in bank-owned life insurance due to a benefit claim recognized in the fourth quarter of 2010, and a decrease in service charges on deposits of $2.0 milliondue to regulatory changes effective in the third quarter of last year.  Service charges on deposits stabilized in the second half of 2011 compared to both the second half of 2010 and the first six months of 2011.  Also for the year, net gains on sale of mortgage loans decreased $0.9 millionas more loans with terms of 15 years and less were being retained in 2011.  The quarterly increase was primarily due to a $0.8 millionincrease in net securities gains, a $0.5 millionincrease in electronic banking fees and a decrease in losses on other real estate owned of $0.3 million. These improvements were partially offset by the aforementioned decrease in bank-owned life insurance.  

Non-interest expense decreased $0.9 millionor 0.6% for 2011 and was nearly unchanged in the fourth quarter, compared to the same periods in 2010. For the year, FDIC insurance decreased $1.9 milliondue to a new calculation by the FDIC effective earlier this year and equipment expense decreased $1.2 milliondue to lower service agreement and depreciation expense.  These decreases were partially offset by a $1.6 millionor 2.9% increase in salaries and wages due to routine annual adjustments to compensation, and a $1.0 millionincrease in marketing, primarily from customer incentives that were part of promotions focused on growing demand deposits and home equity loans.  In the fourth quarter FDIC insurance decreased $0.6 million, while salaries and wages increased $0.3 millionor 2.2%, and employee benefits increased $0.4 millionfrom higher health care costs.  WesBanco's efficiency ratio was 59.5% for 2011, down from 60.9% for 2010, and 59.8% in the fourth quarter compared to 60.4% in the fourth quarter of 2010.

Financial Condition

Total assets at December 31, 2011increased 3.3% or $174.6 millionfrom the prior year-end primarily from increased investments in securities, funded by increases in deposits.  Available funding was also utilized to pay down higher-cost FHLB borrowings by $85.4 millionor 33.7%.  The investment portfolio has grown 12.8% to $1.6 billionat December 31, 2011which provides significant amounts of liquidity as well as additional interest income.

Portfolio loan production increased significantly in 2011 with new loan volume at the highest level in the last five years.  Categories with increases in loan production included commercial, commercial real estate and personal loans with commensurate improvement in fee income for the year.  Commercial loan production in 2011 was 44% greater than in 2010.  In addition, the bank began retaining more residential mortgage loans in the portfolio during the year, rather than selling them to the secondary market.  However, total portfolio loans at December 31, 2011decreased 1.5% or $49.3 millionfrom December 31, 2010.  The net decrease in portfolio loans resulted primarily from the payoffs of performing commercial real estate loans that were refinanced in the secondary market or as a result of borrowers selling properties, and pay-downs on commercial lines of credit. However, excluding the effect of the loan sale in the third quarter of 2011, portfolio loans decreased only 1.0% for the year and, in the fourth quarter loan growth was achieved in all categories other than commercial real estate.

Total deposits increased 5.3% or $221.4 millioncompared to December 31, 2010, due to an increase in all deposit categories other than CDs, which decreased 6.4% due to planned reductions through lower offered rates for new and rollover CDs.  This growth included deposits received from customers participating in Marcellus shale gas activity, which exceeded $125 millionin initial deposits for the year.  The total increase in lower cost deposit categories other than CDs was 13.5%, with non-interest bearing demand deposits increasing 19.4% as a result of marketing campaigns, customer incentives, additional wealth management deposits, and treasury management and other business banking initiatives for commercial customers.  Total non-interest bearing checking accounts are now 16.1% of total deposits compared to 14.2% at year-end 2010.  WesBanco's loan-to-deposit ratio was 74% at year-end.  This ratio is an indication of funding capability for more loan growth.

WesBanco continued to strengthen its regulatory capital ratios with tier I leverage at 8.71%, tier I risk-based capital at 13.06%, and total risk-based capital at 14.32%, all of which improved in each of the last nine 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 6.68% at December 31, 2011, a 35 basis point increase from 6.33% at December 31, 2010, primarily due to a $26.9 millionincrease in shareholders' equity.  The increase in shareholders' equity was due to improved operating results net of dividends declared.  WesBanco increased its quarterly dividend to $0.15per share in February and to $0.16per share in August, representing a cumulative 14.3% increase over the prior year rate.

WesBanco is a multi-state bank holding company with total assets of approximately $5.5 billion, operating through 112 branch locations and 122 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, 2010and documents subsequently filed by WesBanco with the Securities and Exchange Commission ("SEC"), including WesBanco's Forms 10-Q for the quarters ended March 31, June 30, and September 30, 2011.  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.

WESBANCO, INC.
Consolidated Selected Financial Highlights
(unaudited, dollars in thousands, except shares and per share amounts)
				For the Three Months Ended						For the Year Ended
STATEMENT OF INCOME				December 31,						December 31,
Interest and dividend income				2011		2010		% Change		2011		2010		% Change
	Loans, including fees			$               42,767		$           46,341		(7.71%)		$         175,818		$         189,380		(7.16%)
	Interest and dividends on securities:
		Taxable		8,862		8,589		3.18%		36,034		35,375		1.86%
		Tax-exempt		3,059		2,799		9.29%		12,109		11,408		6.14%
			Total interest and dividends on securities	11,921		11,388		4.68%		48,143		46,783		2.91%
	Other interest income			52		66		(21.21%)		206		365		(43.56%)
Total interest and dividend income				54,740		57,795		(5.29%)		224,167		236,528		(5.23%)
Interest Expense
	Interest bearing demand deposits			416		610		(31.80%)		1,814		2,561		(29.17%)
	Money market deposits			1,179		1,581		(25.43%)		5,148		7,529		(31.62%)
	Savings deposits			337		484		(30.37%)		1,505		2,242		(32.87%)
	Certificates of deposit			7,347		8,518		(13.75%)		31,054		36,817		(15.65%)
			Total interest expense on deposits	9,279		11,193		(17.10%)		39,521		49,149		(19.59%)
	Federal Home Loan Bank borrowings			1,456		2,244		(35.12%)		7,199		12,721		(43.41%)
	Other short-term borrowings			1,232		1,214		1.48%		4,823		4,774		1.03%
	Junior subordinated debt owed to unconsolidated subsidiary trusts			839		818		2.57%		3,259		3,792		(14.06%)
			Total interest expense	12,806		15,469		(17.22%)		54,802		70,436		(22.20%)
Net interest income				41,934		42,326		(0.93%)		169,365		166,092		1.97%
	Provision for credit losses			9,631		9,625		0.06%		35,311		44,578		(20.79%)
Net interest income after provision for credit losses				32,303		32,701		(1.22%)		134,054		121,514		10.32%
Non-interest income
	Trust fees			4,198		4,377		(4.09%)		17,173		15,835		8.45%
	Service charges on deposits			4,638		4,731		(1.97%)		18,629		20,645		(9.77%)
	Electronic banking fees			2,603		2,147		21.24%		10,088		8,482		18.93%
	Net securities brokerage revenue			1,048		922		13.67%		4,413		4,563		(3.29%)
	Bank-owned life insurance			864		1,716		(49.65%)		3,566		4,505		(20.84%)
	Net gains on sales of mortgage loans			679		806		(15.76%)		1,977		2,885		(31.47%)
	Net securities gains			865		78		1008.97%		963		3,362		(71.36%)
	Net loss on other real estate owned and other assets			(312)		(629)		50.40%		(1,290)		(4,128)		68.75%
	Other income			1,185		849		39.58%		4,369		3,450		26.64%
			Total non-interest income	15,768		14,997		5.14%		59,888		59,599		0.48%
Non-interest expense
	Salaries and wages			14,433		14,127		2.17%		56,045		54,452		2.93%
	Employee benefits			4,656		4,299		8.30%		17,949		18,315		(2.00%)
	Net occupancy			2,805		2,595		8.09%		11,255		10,728		4.91%
	Equipment			2,193		2,475		(11.39%)		8,745		9,914		(11.79%)
	Marketing			1,281		1,179		8.65%		5,142		4,187		22.81%
	FDIC insurance			1,008		1,653		(39.02%)		4,768		6,681		(28.63%)
	Amortization of intangible assets			588		669		(12.11%)		2,410		2,729		(11.69%)
	Other operating expenses			8,530		8,514		0.19%		33,981		34,146		(0.48%)
			Total non-interest expense	35,494		35,511		(0.05%)		140,295		141,152		(0.61%)
Income before provision for income taxes				12,577		12,187		3.20%		53,647		39,961		34.25%
	Provision for income taxes			1,940		1,877		3.36%		9,838		4,350		126.16%
Net income				$               10,637		$           10,310		3.17%

WESBANCO, INC.
Consolidated Selected Financial Highlights
(unaudited, dollars in thousands)
Selected ratios
			For the Year Ended
			December 31,
			2011		2010		% Change
Return on average assets			0.81	%	0.66	%	22.73	%
Return on average equity			7.01		5.88		19.22
Return on average tangible equity (1)			13.32		11.72		13.65
Yield on earning assets (2)			4.80		5.07		(5.33)
Cost of interest bearing liabilities			1.32		1.67		(20.96)

WESBANCO, INC.
Consolidated Selected Financial Highlights
(unaudited, dollars in thousands, except shares)												% Change
Balance sheets					December 31,						September 30,	September 30, 2011
Assets					2011		2010		% Change		2011	to December 31, 2011
Cash and due from banks					$               129,396		$                57,242		126.05	%	$                      126,437	2.34	%
Due from banks - interest bearing					10,929		21,894		(50.08)		19,081	(42.72)
Securities:
	Available-for-sale, at fair value				1,016,340		957,481		6.15		952,065	6.75
	Held-to-maturity (fair values of $621,472; $465,902 and $631,405, respectively)				592,925		468,710		26.50		604,994	(1.99)
		Total securities			1,609,265		1,426,191		12.84		1,557,059	3.35
Loans held for sale					6,084		10,800		(43.67)		8,139	(25.25)
Portfolio Loans:
	Commercial real estate				1,685,565		1,757,249		(4.08)		1,697,791	(0.72)
	Commercial and industrial				426,315

WESBANCO, INC.
Consolidated Selected Financial Highlights
(unaudited, dollars in thousands)
Average balance sheet and net interest margin analysis
	Three Months Ended December 31,							Year Ended December 31,
		2011			2010			2011			2010
		Average	Average		Average	Average		Average	Average		Average	Average
Assets		Balance	Rate		Balance	Rate		Balance	Rate		Balance	Rate
Due from banks - interest bearing		$                   53,005	0.25%		$                   44,325	0.31%		$                   48,723	0.21%		$                   82,380	0.24%
Loans, net of unearned income (1)		3,237,808	5.24%		3,300,182	5.57%		3,256,887	5.40%		3,385,928	5.59%
Securities: (2)
Taxable		1,246,971	2.84%		1,117,493	3.07%		1,179,458	3.06%		1,015,643	3.48%
Tax-exempt (3)		305,129	6.17%		275,560	6.25%		299,357	6.22%

WESBANCO, INC.

Consolidated Selected Financial Highlights

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

Quarter Ended

Statement of Income

Dec. 31,

Sept. 30,

June 30,

Mar. 31,

Dec. 31,

Interest income

2011

2011

2011

2011

WESBANCO, INC.
Consolidated Selected Financial Highlights
(unaudited, dollars in thousands)
				Quarter Ended
				Dec. 31,		Sept. 30,		June 30,		Mar. 31,		Dec. 31,
Asset quality data				2011		2011		2011		2011		2010
Past due loans - accruing:
	Loans past due 30-89 days			$         19,888		$         23,658		$         19,047		$         22,367		$         24,774
	Loans past due 90 days or more			5,135		6,401		6,732		4,869		7,683
		Total past due loans		$         25,023		$         30,059		$         25,779		$         27,236		$         32,457

NON-GAAP FINANCIAL MEASURES
The following non-GAAP financial measures used by WesBanco provide information useful to investors in understanding WesBanco's operating performance and trends, and facilitate comparisons with the performance of WesBanco's peers. The following tables summarize the non-GAAP financial measures derived from amounts reported in WesBanco's financial statements.
					Three Months Ended										Year to Date
					Dec. 31,		Sept. 30,		June 30,		Mar. 31,		Dec. 31,		Dec. 31,
	(unaudited, dollars in thousands)				2011		2011		2011		2011		2010		2011	2010
Return on average tangible equity:
	Net income (annualized)				$        42,201		$       43,694		$       47,805		$       41,531		$       40,903		$       43,809	$        35,611
	Plus: amortization of intangibles (annualized) (1)				1,516		1,545		1,577		1,629		1,724		1,566	1,774
	Net income before amortization of intangibles (annualized)				43,717		45,239		49,382		43,159		42,627		45,375	37,385
	Average total shareholders' equity				638,656		631,174		619,954		610,077

SOURCE WesBanco, Inc.