NEWS FOR IMMEDIATE RELEASE
| July 19, 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 Symbol: WSBC |
| | Website: www.wesbanco.com |
WesBanco Announces Second Quarter and First Half of 2006 Results
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 second quarter and six months ended June 30, 2006.
Net income was $11.3 million for both the second quarter of 2006 and the second quarter of 2005, while diluted earnings per share for the second quarter ended June 30, 2006 were $0.52 compared to $0.50 for the same period in 2005, an increase of 4.0%. Highlighting the quarter was an expanded net interest margin, as a result of the balance sheet restructuring undertaken and disclosed late last quarter, with the margin increasing to 3.54% for the second quarter as compared to 3.40% for the first quarter ended March 31, 2006, and also up from last year’s second quarter of 3.52%. Also noteworthy to the second quarter were higher service charges on deposit accounts, increasing non-interest income from the prior year. For the quarter, core operating earnings were similar to reported earnings. Return on average assets for the quarter was also up to 1.09% from last year’s 0.99%, and return on average equity grew to 10.83% from last year’s 10.66%.
Net income for the six months ended June 30, 2006 decreased 24.6% to $16.8 million as compared to $22.3 million for the same period in 2005, while diluted earnings per share for the first half ended June 30, 2006 were $0.77 compared to $0.98 for 2005. The decrease in year to date net income is primarily attributable to the $4.8 million in after-tax losses arising in connection with the balance sheet repositioning announced in the first quarter and the $0.3 million in after-tax costs associated with the restructuring of a business unit in the first quarter, which were offset by the $1.6 million after-tax gain on the sale of the Ritchie County branches in the first quarter. Core operating earnings on a year-to-date basis, excluding these items, were $20.4 million or $0.94 per diluted share as compared to $22.7 million or $0.99 per diluted share for the six months ended June 30, 2005.
“Despite the pressure on interest spread based revenues caused by a relatively flat yield curve and a highly competitive environment, our recent balance sheet repositioning helped to stabilize our net interest margin and resulted in an immediate improvement in the margin,” stated Mr. Limbert. “Additionally, our intense marketing efforts over the last two quarters have resulted in a significant number of new non-interest bearing accounts and customers that will serve as a source of long-term revenue growth as we broaden our relationship with them. Our recent introduction of a new deposit account program has resulted in a strong increase in deposit activity fees. Finally, our branch optimization project and focus on cost containment have resulted in immediate savings across the board that have helped fund our marketing efforts and have positioned us for increased future profitability. We continue to remain focused on long-term profitability and increased value for our shareholders.”
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Highlights for the three and six month periods ended June 30, 2006:
| · | Net interest income for the second quarter and first half of 2006 decreased $3.0 million or 8.9% and $5.5 million or 8.2%, respectively, compared to the same periods in 2005. The net interest margin for the second quarter and first half of 2006 was 3.54% and 3.47%, respectively, compared to 3.52% and 3.51% for the same periods in 2005. On a linked quarter basis, the net interest margin increased 14 bp. |
| · | Non-interest income in the second quarter increased $2.4 million or 24.6% as compared to the second quarter of 2005. Non-interest income for the first half of the year, net of the $8.0 million loss associated with WesBanco’s balance sheet repositioning and the gain of $2.6 million on sale of the Ritchie County branches in the first quarter, increased $3.9 million or 20.1% as compared to the first half of 2005. The increase in both periods was primarily driven by an increase in activity charges on deposit accounts resulting from new fee-related programs introduced in the fourth quarter of 2005, and approximately $1.0 million of gains on the early payoff of certain callable Federal Home Loan Bank Advances.. |
| · | WesBanco’s provision for loan losses increased $0.3 million or 17.9% and $1.1 million or 30.3% over the second quarter and first half of 2005, respectively, primarily due to a $5.0 million commercial loan participation being placed on non-accrual in the first quarter. Net charge-offs on an annualized basis were 0.54% for the second quarter as compared to 0.24% for the second quarter of 2005 primarily due to the $3.1 million write-down of the $5.0 million commercial loan participation discussed above. The allowance for loan losses as a percentage of total loans was 1.05% at June 30, 2006, down from 1.10% at June 30, 2005. |
| · | Non-interest expense decreased $0.5 million or 1.8% and $0.8 million or 1.5% compared to the second quarter and first half of 2005. The decrease in both periods was due to a reduction in full-time equivalent employees and the result of management initiatives in attempting to contain overall operating costs. Salaries and employee benefits for the quarter were down 8.3% to $13.3 million from last year’s $14.5 million, and on a year-to-date basis, a 6.0% decrease has been realized from $28.4 million to $26.7 million. Full-time equivalent employees at June 30, 2006 were 1,176 compared to 1,311 at June 30, 2005. Marketing expense associated with WesBanco’s efforts to acquire new accounts and customers was the only major operating expense category to experience a significant increase, up from last year’s $1.0 million to this quarter’s $1.8 million, and year-to-date it has increased 50.9% from $1.9 million to $2.9 million. |
| · | The provision for income taxes decreased $0.4 million or 12.6% and $2.0 million or 32.9% for the second quarter and first half of 2006 compared to the same periods in 2005 due to a decrease in pre-tax income and the resulting corresponding decrease in the effective tax rate. The effective tax rate for both the second quarter and first half of 2006 was 19.6% compared to 21.8% and 21.5% for the same periods in 2005. The effective tax rate for the year is expected to range from 19.5% to 20.0%. |
| · | Total loans as of June 30, 2006 decreased $17.0 million and $24.5 million as compared to June 30, 2005 and December 31, 2005, respectively, but net of approximately $26.0 million in loan sales in the current year, loans were up approximately $9.0 million and $1.5 million, respectively. The $26.0 million in loan sales is comprised of $19.3 million of loans sold in connection with the sale of the Ritchie County branches, with the balance comprised of certain underperforming loans that were marked to market in the fourth quarter of 2005 in anticipation of their sale in the first quarter of 2006. |
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| · | Total deposits as of June 30, 2006 decreased by $87.0 million and $59.2 million as compared to June 30, 2005 and December 31, 2005, respectively. The decrease in deposits was due to continued runoff in money market deposit accounts, as customer preferences in a rising rate environment have turned to short- and intermediate-term certificates of deposit and non-bank money market funds, and the sale of approximately $37.8 million of deposits in connection with the sale of the Ritchie County branches. WesBanco experienced an increase of 1.3% in average certificates of deposit and 3.6% in average non-interest bearing demand deposit accounts compared to last year, with the free checking account increase a result of a concerted marketing campaign beginning in the fourth quarter of 2005 and a new campaign introduced in April 2006 that has resulted in the opening of over 26,000 new accounts over both periods. |
| · | Total borrowings, including FHLB advances and other short-term borrowings, decreased from $812.2 million as of March 31, 2006, prior to the restructuring, to $577.5 million, a $234.7 million or 28.9% reduction. Borrowings as a percent of total assets dropped to 14.1% from March’s 18.7%. Borrowings are down some $279.5 million or 32.6% from year-end. Likewise, total investment securities have dropped since year-end from $992.6 million to $719.9 million at quarter-end, a 27.5% decrease, primarily due to the second quarter restructuring and sales from the available-for-sale portfolio, as well as continued runoff from maturities and pay-downs. In the current interest rate environment, many market participants, including WesBanco have decided that supporting larger balance sheets with wholesale leverage does not make fundamental economic sense, despite some associated give-up in short-term earnings from minimally profitable leverage strategies. A benefit of the downsizing has been increased tangible and other capital ratios, despite an ongoing share repurchase plan, as noted in the attached financial highlights, with tangible leverage increasing from 6.28% at year-end to 6.77% at June 30, 2006. |
| · | For the quarter ended June 30, 2006, WesBanco repurchased a total of 158,416 shares and on a year to date basis for 2006 a total of 197,616 shares were repurchased. The average price paid on a year to date basis for 2006 was $29.92 per share. WesBanco has 940,545 shares remaining for repurchase under the current one million share repurchase plan approved by the Board of Directors in January 2006. |
WesBanco is a multi-state bank holding company with total assets of approximately $4.1 billion, operating through 81 banking offices, one loan production office, and 128 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.
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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 2005 Annual Report on Form 10-K, as well as the Form 10-Q for the prior quarter ended March 31, 2006, 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 2005 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.
