NEWS FOR IMMEDIATE RELEASE
January 18, 2006 For Further Information Contact:
Paul M. Limbert
President and Chief Executive Officer
or
Robert H. Young
Executive Vice President and Chief Financial Officer
(304) 234-9000
NASDAQ Trading Symbol: WSBC
Website: www.wesbanco.com
WesBanco Reports 11.6% Increase in Fourth Quarter Earnings Per Share
Wheeling, WV… Paul M. Limbert, President and Chief Executive Officer of WesBanco, Inc., (NASDAQ: WSBC) a Wheeling, West Virginia based multi-state bank holding company, today announced earnings for the fourth quarter and year ended December 31, 2005.
Net income for the fourth quarter ended December 31, 2005 increased 16.8% to $10.5 million as compared to $9.0 million for the fourth quarter of 2004, while diluted earnings per share were $0.48 compared to $0.43 for the same periods, up 11.6%. Net income for the year ended December 31, 2005 increased 12.0% to $42.8 million compared to $38.2 million for the year ended December 31, 2004, while diluted earnings per share for each of the years ended December 31, 2005 and 2004 were $1.90. The 2005 fourth quarter and full year results include two recent acquisitions, Winton Financial Corporation (“Winton”), a $550 million thrift institution acquired January 3, 2005, and Western Ohio Financial Corporation (“Western Ohio”), a $400 million savings bank acquired August 31, 2004.
“We are pleased that fourth quarter 2005 earnings improved from fourth quarter 2004,” said Mr. Limbert. “The improvement was achieved in a difficult operating environment that included pressure on industry-wide net interest margins caused by the flat yield curve and financial institutions competing more aggressively for loans and deposits.”
Mr. Limbert remarked, “Consolidation of both of our recent acquisitions is substantially complete. We have been pleased with the efforts of all of our employees in focusing on the needs of our new market customers as we complete the process of consolidating customer records and introducing new products and services to them. We believe the diversification and growth opportunities from these larger metropolitan markets will provide continued opportunities for expansion and greater long-term shareholder value.”
“Throughout the year, we have intentionally allowed the balance sheet to shrink, with cash flows from investment security maturities being used to pay down certain short-term borrowings. We believe that prudent balance sheet risk management will allow for additional flexibility in the future as we anticipate the Federal Reserve slowing its pace of increasing short-term rates, allowing spreads to return to more normalized levels. A continued focus on improving our balance sheet mix, the prior quarter’s restructuring of certain departments, and the efforts of all of our employees have contributed to the improvement in fourth quarter earnings,” Mr. Limbert concluded.
Highlights for the fourth quarter and year ended December 31, 2005:
| · | Net interest income for the fourth quarter and year ended December 31, 2005 increased $3.1 million or 10.6% and $23.1 million or 21.1%, respectively, compared to the same periods in 2004. The net interest margin for the fourth quarter and year ended December 31, 2005 was 3.45% and 3.48%, respectively compared to 3.52% and 3.60% for the corresponding periods in 2004, with the decrease primarily due to the acquired institutions having lower net interest margins than WesBanco, as well as current market conditions. The anticipated increase in market rates in early 2006, as well as other competitive factors, may result in a tightening of the net interest margin over the near term. |
| · | Non-interest income increased $0.4 million or 4.3% and $3.6 million or 10.1% over the fourth quarter and year ended December 31, 2004, respectively. Both the fourth quarter and full year increases for 2005, as compared to the same periods in 2004, were driven by increased trust revenues, higher service charge revenue on deposit accounts due to an increase in fees and in the number of accounts, including those from the acquisitions, growth in overdraft fees and ATM/debit card transaction income, and increased mortgage banking income from sales of loans originated for the secondary market. |
| · | WesBanco’s provision for loan losses decreased $0.1 million or 5.6% and increased $0.3 million or 4.0% over the fourth quarter and year ended December 31, 2004, respectively. Net charge-offs for the year were 0.29%, down from 2004's 0.31%, dispite an increase in fourth quarter charge-offs from an increase in bankruptcies as individuals filed in advance of new bankruptcy laws and a $0.7 million write-down of certain under-performing commercial loans classified as held for sale at year end. Without bankruptcy-related consumer loan charge-offs in the fourth quarter, which totaled $1.6 million as compared to $0.4 million for the fourth quarter of 2004, consumer charge-offs would have been relatively flat between the two periods. The allowance for loan losses as a percentage of total loans was 1.05% at December 31, 2005, down from 1.18% at December 31, 2004. The decrease is due to higher charge-offs in the third and fourth quarters, as well as the acquired institutions having lower allowance percentages and a different portfolio composition than WesBanco. |
| · | Non-interest expense increased $1.5 million or 6.0% and $19.0 million or 21.2% compared to the fourth quarter and year ended December 31, 2004. Both period increases were primarily due to increased staffing from the acquisitions, higher health care costs and overall higher operating costs due to the two acquisitions. Included in 2005 results was a pre-tax charge of approximately $1.0 million in severance payouts and related payroll taxes and health care costs relating to the previously announced restructuring. Full-time equivalent employees at December 31, 2005 were 1,200 compared to 1,358 immediately after the Winton acquisition. A marketing campaign in the fourth quarter introducing WesBanco’s new branding campaign and efforts to increase free checking account balances caused marketing expenses to increase. |
| · | The provision for income taxes for the fourth quarter of 2005 increased $0.6 million or 26.1% compared to 2004, and for the year ended December 31, 2005, increased $2.7 million or 30.6% compared to 2004. The increase for both periods in 2005, compared to the same periods in 2004, was primarily due to an increase in pre-tax income, and to a lesser extent, the acquisition of institutions that had higher historical effective tax rates. |
| · | Total loans increased $452.3 million or 18.2% between December 31, 2004 and December 31, 2005. The increase was primarily due to the 2005 Winton acquisition, which added approximately $409 million, net of related mortgage loan sales, and continued organic loan growth in the commercial and commercial real estate categories. Loan growth was slow in the fourth quarter of 2005 due to the payoff of certain commercial real estate loans and construction lines of credit, and the continuation of certain risk reduction strategies. At quarter-end, WesBanco moved approximately $6.7 million in under-performing commercial loans, plus $20.8 million of loans associated with the anticipated sale of the Ritchie County branches, into the category of loans held for sale. |
| · | Total deposits increased $302.4 million or 11.1% between December 31, 2004 and December 31, 2005 primarily due to the Winton acquisition. On a linked-quarter basis from the third quarter of 2005, increases occurred in non-interest bearing demand deposits and to a lesser degree, certificates of deposit, which were offset by a decline in money market accounts. As a result of a successful marketing campaign, over a nine week period in the fourth quarter, WesBanco increased the number of new free checking accounts, along with associated debit cards and other services, with total average non-interest bearing demand deposits up 8.3% from the fourth quarter of 2004 compared to the same period in 2005. |
| · | For the quarter ended December 31, 2005, WesBanco repurchased a total of 229,291 common shares at an average price of $30.62 per share. For the year ended December 31, 2005, WesBanco repurchased a total of 1,378,482 shares at an average price of $29.01 per share. WesBanco has 138,161 shares remaining for repurchase under the current repurchase plan approved in March 2005. |
| · | The sale of WesBanco Bank’s four branches in Ritchie County, WV to Union Bank, Inc. of Middlebourne, WV has received the necessary regulatory approvals, and is on track to close on or about March 17, 2006. WesBanco expects to record an approximate $2.4 million net pre-tax gain upon sale of the branches in the first quarter of 2006, which hold approximately $37.7 million in total deposits and $20.8 million in related loans. Additionally, on December 16, 2005, WesBanco opened a new branch office in Bexley, Ohio, a suburb of the Columbus metropolitan area. |
WesBanco is a multi-state bank holding company with total assets of approximately $4.4 billion, currently operating through 85 banking offices, two loan production offices, and 125 ATMs in West Virginia, Ohio, and Pennsylvania. WesBanco’s banking subsidiary is WesBanco Bank, Inc., headquartered in Wheeling, West Virginia. In addition, WesBanco operates an insurance brokerage company, WesBanco Insurance Services, Inc., and a full service broker/dealer, WesBanco Securities, Inc. that also operates Mountaineer Securities, WesBanco’s discount brokerage operation.
Forward-looking statements in this press release 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 press release should be read in conjunction with WesBanco’s 2004 Annual Report on Form 10-K, as well as the Form 10-Q for the prior quarter ended September 30, 2005, filed with the Securities and Exchange Commission (“SEC”), which are available at the SEC’s website www.sec.gov or at WesBanco’s website, www.wesbanco.com. Investors are cautioned that forward-looking statements, which are not historical fact, involve risks and uncertainties, including those detailed in WesBanco’s 2004 Annual Report on Form 10-K filed with the SEC under the section “Risk Factors.” 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 the parent company 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, Federal Deposit Insurance Corporation, the SEC, the National Association of Securities Dealers and other regulatory bodies; potential legislative and federal and state regulatory actions and reform; competitive conditions in the financial services industry; rapidly changing technology affecting financial services and/or other external developments materially impacting WesBanco’s operational and financial performance. WesBanco does not assume any duty to update forward-looking statements.
### See attached financial highlights.
