NEWS FOR IMMEDIATE RELEASE
July 17, 2003 For Further Information Contact:
Paul M. Limbert
President & CEO
or
Robert H. Young
Executive VP & CFO
(304) 234-9000
NASDAQ Trading Symbol: WSBC
Website: www.wesbanco.com
WesBanco Announces Earnings for the Six Months ended June 30, 2003
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Wheeling, WV. Paul M. Limbert, President & CEO of WesBanco,
Inc., a Wheeling, West Virginia based multi-state bank holding
company, today announced earnings for the six months and quarter
ended June 30, 2003.
Mr. Limbert stated that WesBanco's earnings per share for the
first half of 2003 were $0.82, compared to $0.83 for the first
half of 2002. For the second quarter of 2003 earnings per share
were $0.38, compared to $0.41 for the second quarter of 2002.
Net income for the first half and second quarter of 2003 was
impacted by a $0.4 million, net of tax, write-off of unamortized
issuance costs, or $.02 per share, related to the redemption of
$12.65 million in trust preferred securities. Net income for the
first half of 2003 was $16.6 million compared to $16.7 million
for the first half of 2002. Net income for the second quarter of
2003 was $7.7 million compared to $8.7 million for the second
quarter of 2002. Return on average assets was 1.01% for the six
months ended June 30, 2003, compared to 1.15% in 2002, and
return on average equity was 10.41% and 11.04%, respectively.
The financial results for 2002 reflect the acquisition of
American Bancorporation ("American") as of March 1, 2002.
"WesBanco's performance for the first half and second quarter of
2003 was impacted by the weak economic conditions in our market
areas and the extended low interest rate environment. These
factors have caused continued pressure on WesBanco's net
interest margin," said Mr. Limbert. "However, we are beginning
to see an increase in loan volume exhibited by the $60.1 million
or 7.4% growth in commercial and commercial real estate loans
during the first half of 2003. The growth in commercial and
commercial real estate loans was achieved by adding new lenders
in key markets such as Columbus, Ohio and Western Pennsylvania
and renewed efforts in
WesBanco, Inc. Announces Earnings for the Six Months ended June 30, 2003
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Page 2
existing West Virginia markets. WesBanco
continues to reposition its balance sheet and adjust product
pricing to navigate through the current interest rate
environment."
Net interest income decreased $2.0 million or 3.9% and $2.6
million or 9.7% compared to the first half and second quarter of
2002. The primary cause for the decrease in net interest income
was the net interest margin decreasing to 3.55% and 3.44%, for
the first half and second quarter of 2003, compared to 4.04% and
3.93% for the corresponding periods in 2002. The decrease in
net interest income was partially offset by the volume of
average earning assets increasing $309.8 million or 11.4% and
$116.7 million or 4.0%, compared to the first half and second
quarter of 2002. The margin decrease resulted from a combination
of factors including the American acquisition with its lower
overall net interest margin, increased loan and investment
security prepayments and the sustained low interest rate
environment which has caused rate compression between loan and
deposit pricing. Due to the low interest rate conditions,
WesBanco's earning assets are repricing at an accelerated rate
compared to the repricing of interest bearing liabilities, which
may result in an additional reduction in the net interest margin
over the next six months. WesBanco has taken steps to minimize
the impact of this reduction, by decreasing rates on certain
deposit products, shortening the maturities of certain long-term
borrowings and reducing short-term liquidity instruments.
However, with rates approaching historical lows, combined with
the most recent Federal Reserve rate cut, it has become
increasingly more difficult to reduce deposit rates.
Non-interest income, excluding net securities gains, increased
$1.7 million or 13.4% and $0.5 million or 8.2% compared to the
first half and second quarter of 2002. The increase is related
to growth in deposit activity fees, increases in ATM and debit
card interchange income and an increase in bank owned life
insurance income. Trust fees decreased $0.3 million or 4.3% and
$0.1 million or 4.4% compared to the first half and second
quarter of 2002. The decrease was primarily due to lower equity
valuations, partially offset by new account relationships and
growth in the WesMark funds. The market value of trust assets
under management increased to approximately $2.5 billion at June
30, 2003, which was up from $2.3 billion at both December 31,
2002 and March 31, 2003, due to a recent recovery in valuations
in the equity markets. Net securities gains increased $0.7
million for the first half of 2003 and $0.8 million for the
second quarter of 2003, compared to the corresponding periods in
2002, as WesBanco sold certain agency mortgage-backed securities
with recent high prepayment rates.
WesBanco, Inc. Announces Earnings for the Six Months ended June 30, 2003
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Page 3
The provision for loan losses increased $0.5 million or 11.5%
for the first half of 2003 and $0.7 million or 40.9% for the
second quarter of 2003, compared to the corresponding periods in
2002. The increase in commercial loan growth, the current
economic environment and overall higher nonperforming loans
caused the increase in the provision. Net loan charge-offs as a
percentage of average total loans on an annualized basis for the
first half and second quarter of 2003, were 0.44% and 0.53%,
respectively, compared to 0.51% and 0.37%, for the corresponding
periods in 2002.
The allowance for loan losses was $25.6 million or 1.39% of
total loans at June 30, 2003, compared to $25.1 million or 1.38%
of total loans at December 31, 2002. The allowance currently
provides coverage of 1.65 times non-performing loans and 1.08
times non-performing loans plus loans past due 90 days or more.
Non-performing loans, excluding loans past due 90 days or more,
increased $5.4 million or 53.4%, compared to December 31, 2002.
The extended downturn in the economy has contributed to
heightened levels of non-performing loans. Most of the increase
in WesBanco's non-performing loans during the first half of 2003
is attributable to weakening credit characteristics for certain
commercial real estate loans to the lodging industry as that
sector of the economy has been particularly impacted by
decreased business and leisure travel. However, loans past due
90 days or more at June 30, 2003 decreased $4.0 million or
33.2%, compared to December 31, 2002, as a result of increased
collection efforts, migration of certain loans to nonperforming
status and charge-offs. Non-performing loans as a percentage of
total loans increased to 0.84% at June 30, 2003, compared to
0.56% at December 31, 2002. Management believes the allowance
for loan losses is appropriate based on its evaluation of the
credit risk in the loan portfolio.
Non-interest expense for the first half and second quarter of
2003, excluding merger-related expenses and other special
charges, increased $3.8 million or 10.5% and $0.7 million or
3.8% compared to the first half and second quarter of 2002,
respectively. The increase in non-interest expenses for the
first half of 2003 in comparison to the first half of 2002 was
impacted by the March 1, 2002 acquisition of American. In
addition to the incrementally higher operating expenses due to
American, WesBanco experienced a $0.8 million increase in
pension costs and a $0.2 million increase in health insurance
costs as well as a $0.3 million increase in marketing expenses.
Assuming the American acquisition had occurred on January 1,
2002, non-interest expenses would have increased approximately
$0.9 million or 2.2% for the first half of 2003 compared to the
corresponding period last year. The increase in the second
quarter comparison consisted primarily of an increase in salary
and employee benefit expenses of $0.5 million
WesBanco, Inc. Announces Earnings for the Six Months ended June 30, 2003
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Page 4
resulting from rising health insurance and pension costs. The
increase in these costs was partially offset by a reduction in
staffing levels as average full-time equivalent employees decreased
to 1,140 in the second quarter of 2003 from 1,170 in the second
quarter of 2002.
The provision for income taxes decreased $2.9 million or 45.5%
and $1.7 million or 58.4% compared to the first half and second
quarter of 2002. The effective tax rate declined to 17.0% and
13.8% for the first half and second quarter of 2003, compared to
27.2% and 25.6% for the corresponding periods in 2002. The
decrease in the effective tax rate was primarily due to a
decrease in pretax income, which was further reduced by an
increase in state and municipal tax-exempt interest income and
income on bank owned life insurance, as well as the
implementation of other strategic business and tax planning
initiatives. For the remainder of 2003, the anticipated
effective tax rate should approximate 17% to 18%, depending on
the level of pretax income.
Total loans increased $17.9 million or 1.0% at June 30, 2003
compared to December 31, 2002 as a result of strong growth in
commercial and commercial real estate lending, which was offset
by a decline in consumer loans. Commercial and commercial real
estate loans increased $60.1 million or 7.4% as a result of a
greater focus on new business development in all markets.
Residential real estate loans increased $2.6 million or 0.4%
despite rapid prepayments of both higher fixed rate and
adjustable rate mortgages. WesBanco originated $121.0 million
in new residential real estate loans for its portfolio during
the first half of 2003 compared to $76.7 million during the same
period in 2002. Consumer and home equity loans decreased $44.7
million or 10.3% primarily as a result of the continued planned
reduction in indirect automobile lending coupled with strong
competition from automobile manufacturing finance companies
offering low or zero interest rate loans primarily in the new
car segment. The yield on loans continues to decrease due to
lower rates on new loans and scheduled or negotiated repricing
of existing loans at current historic low market rates.
Total investment securities increased $74.7 million or 6.3% at
June 30, 2003, compared to December 31, 2002. The increase in
investment securities was primarily due to growth in core
deposits. Additional security purchases were funded by fixed
rate Federal Home Loan Bank borrowings. Cash flows from the
portfolio due to calls, maturities and prepayments increased to
$343.7 million for the first half of 2003, compared to $94.6
million for the first half of 2002. The reinvestment of these
cash flows into lower yielding securities, along with increased
premium amortization on mortgage backed securities due to
elevated prepayment rates, has decreased the portfolio's tax
equivalent yield for the first half of 2003 to 5.12% from last
year's 5.89%.
WesBanco, Inc. Announces Earnings for the Six Months ended June 30, 2003
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Page 5
WesBanco's tax equivalent yield for the second quarter of 2003
decreased to 4.91% compared to 5.35% for the first quarter of 2003.
At June 30, 2003, the available for sale and the held to maturity
portfolio's weighted average life was 1.9 years and 4.8 years,
respectively, compared to 2.7 years and 5.4 years at June 30, 2002.
The held to maturity portfolio is comprised primarily of longer
duration tax exempt state and municipal securities with an average
tax equivalent yield of approximately 6.90% at June 30, 2003.
Total deposits increased $68.9 million or 2.9% at June 30 2003,
compared to December 31, 2002. Deposit growth, compared to
December 31, 2002, reflected increases in all deposit
categories. Money market accounts, which grew $41.7 million or
8.2%, represented the largest single increase as customers
continue to favor our competitively-priced money market product.
The average rate paid on deposits for the first half of 2003
decreased to 2.32%, compared to 2.95% for the first half in
2002, as WesBanco reduced interest rates on most of its deposit
products.
In the second quarter of 2003, WesBanco redeemed all of the
8.50% Junior Subordinated Deferrable Interest Debentures held by
its trust subsidiary WesBanco Capital Trust I, by redeeming
1,265,000 shares of its outstanding 8.50% Cumulative Trust
Preferred Securities. A total of $12.65 million of Trust
Preferred Securities were redeemed at a price of $10.00 per
share plus accrued and unpaid interest. Related to the
redemption of these securities, WesBanco included in non-
interest expenses the write-off of $0.6 million in unamortized
issuance costs. On an after-tax basis, the write-off of these
costs was $0.4 million. WesBanco also created two new trusts,
WesBanco, Inc. Capital Trust II and WesBanco, Inc. Capital
Statutory Trust III, which issued $30 million of Floating Rate
Preferred Securities with an average coupon of approximately
5.66%, fixed for the first five years of the 30 year term.
Thereafter the securities will float at 312 basis points above
the three-month LIBOR. The restructuring of the existing trust
preferred securities and the issuance of the two new trust
preferred securities will lower overall long-term borrowing
costs, as well as support the existing share repurchase program.
Shareholders' equity remained strong at June 30, 2003
highlighted by a Tier I leverage ratio of 8.70%, compared to
8.53% at December 31, 2002. Book value increased to $15.92 per
share from $15.89 per share at December 31, 2002.
In the first half of 2003, WesBanco repurchased a total of
480,876 shares through its current stock repurchase plan at an
average cost of $24.28 per share. As of June 30, 2003, WesBanco
had repurchased a total of 989,475 shares through the current
one million-share stock repurchase plan
WesBanco, Inc. Announces Earnings for the Six Months ended June 30, 2003
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Page 6
approved by the Board on June 20, 2002. In the second quarter
of 2003, WesBanco also announced a new one million-share repurchase
plan, as the current plan nears completion. The timing, price
and quantity of purchases are at the discretion of WesBanco and
the program may be discontinued or suspended at any time.
WesBanco is a multi-state bank holding company presently
operating through 72 banking offices and 105 ATM machines in
West Virginia, Central and Eastern Ohio and Western
Pennsylvania. WesBanco is the second largest bank holding
company headquartered in West Virginia with the third overall
deposit market share. Its 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 the company's most
recent annual report filed with the Securities and Exchange
Commission on Form 10-K for the year ended December 31, 2002, as
well as Form 10-Q for the prior quarter ended March 31, 2003
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. 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 effect 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 and Federal
Deposit Insurance Corporation; 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.
WESBANCO, INC.
Consolidated Selected Financial Highlights
June 30, 2003 and 2002 and December 31, 2002 Page 7
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(unaudited, dollars in thousands)
Balance sheet (period end)
- -------------------------- June 30, December 31, June 30,
Assets 2003 2002 2002
---------- ----------- ----------
Cash and due from banks $ 100,436 $ 80,101 $ 72,711
Due from banks - Interest bearing 1,282 984 1,074
Federal funds sold --- --- 46,800
Securities 1,268,607 1,193,896 1,082,854
Loans:
Commercial and Commercial Real Estate 871,050 810,973 801,195
Residential Real Estate 576,390 573,819 573,743
Consumer and Home Equity 391,390 436,093 467,458
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Total loans 1,838,830 1,820,885 1,842,396
Allowance for loan losses (25,578) (25,080) (24,281)
---------- ---------- ----------
Net loans 1,813,252 1,795,805 1,818,115
---------- ---------- ----------
Premises and equipment 54,974 55,725 57,180
Goodwill 49,520 49,520 46,940
Other intangibles 8,650 9,310 15,417
Other assets 114,261 111,890 65,770
---------- ---------- ----------
Total Assets $3,410,982 $3,297,231 $3,206,861
========== ========== ==========
Liabilities and Shareholders' Equity
Non-interest bearing demand deposits $ 308,299 $ 301,262 $ 302,067
Interest bearing demand deposits 287,505 276,131 268,516
Money market accounts 549,766 508,062 473,138
Savings deposits 360,948 357,290 372,453
Certificates of deposit 962,315 957,211 986,128
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Total deposits 2,468,833 2,399,956 2,402,302
---------- ---------- ----------
Other borrowings 520,902 518,958 427,430
Trust preferred securities 30,000 12,650 12,650
Other liabilities 72,508 40,496 33,304
Shareholders' equity 318,739 325,171 331,175
---------- ---------- ----------
Total Liabilities and
Shareholders' Equity $3,410,982 $3,297,231 $3,206,861
========== ========== ==========
Average balance sheet and For the Three Months Ended For the Six Months Ended
net interest analysis June 30, June 30,
- ------------------------- ---------------------------------------- ------------------------------------
2003 2002 2003 2002
------------------- ----------------- ----------------- -----------------
Average Average Average Average Average Average Average Average
Assets Volume Rate Volume Rate Volume Rate Volume Rate
------------------- ----------------- ----------------- -----------------
Loans, net of unearned income $1,819,403 6.20% $1,855,188 7.04% $1,817,922 6.31% $1,752,259 7.20%
Securities:
Taxable 838,206 3.84% 707,944 4.92% 811,925 4.10% 636,284 5.12%
Tax-exempt 364,154 7.36% 337,184 7.54% 367,955 7.38% 296,520 7.55%
------------------ ----------------- ----------------- -----------------
Total securities 1,202,360 4.91% 1,045,128 5.76% 1,179,880 5.12% 932,804 5.89%
Federal funds sold 36,042 1.20% 40,830 1.74% 34,619 1.18% 37,551 1.67%
------------------ ----------------- ----------------- -----------------
Total earning assets 3,057,805 5.63% 2,941,146 6.51% 3,032,421 5.79% 2,722,614 6.68%
Other assets 290,681 243,584 288,852 219,028
---------- ---------- ---------- ----------
Total Assets $3,348,486 $3,184,730 $3,321,273 $2,941,642
========== ========== ========== ==========
Liabilities and Shareholders' Equity
Interest bearing demand deposits $ 283,563 0.40% $ 270,113 0.72% $ 280,175 0.42% $ 261,202 0.73%
Money market accounts 536,682 2.27% 463,779 2.88% 525,705 2.28% 443,262 2.92%
Savings deposits 363,794 0.68% 378,411 1.21% 361,034 0.73% 339,577 1.16%
Certificates of deposit 971,923 3.33% 993,994 4.00% 971,968 3.48% 920,898 4.25%
------------------ ----------------- ----------------- -----------------
Total interest bearing deposits 2,155,962 2.23% 2,106,297 2.83% 2,138,882 2.32% 1,964,939 2.95%
Other borrowings 516,624 3.29% 420,438 3.59% 513,522 3.30% 365,350 3.54%
Trust preferred securities 15,159 8.07% 12,650 8.73% 13,912 8.41% 8,527 8.68%
------------------ ----------------- ----------------- -----------------
Total interest bearing
liabilities 2,687,745 2.49% 2,539,385 2.99% 2,666,316 2.54% 2,338,816 3.06%
------------------ ----------------- ----------------- -----------------
Non-interest bearing
demand deposits 298,609 286,583 294,478 269,455
Other liabilities 41,603 28,712 38,367 27,485
Shareholders' equity 320,529 330,050 322,112 305,886
---------- ---------- ---------- ----------
Total Liabilities and
Shareholders' Equity $3,348,486 $3,184,730 $3,321,273 $2,941,642
========== ========== ========== ==========
Taxable equivalent net yield
on average earning assets 3.44% 3.93% 3.55% 4.04%
======= ======= ======= =======
WESBANCO, INC.
Consolidated Selected Financial Highlights
June 30, 2003 and 2002 Page 8
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(unaudited, dollars in thousands, except per share amounts)
For the Three Months Ended For the Six Months Ended
June 30, June 30,
-------------------------- ------------------------
Statement of income 2003 2002 2003 2002
- ------------------- ---------- ---------- ---------- ----------
Interest income $ 40,619 $ 45,566 $ 82,524 $ 86,435
Interest expense 16,540 18,915 33,604 35,533
---------- ---------- ---------- ----------
Net interest income 24,079 26,651 48,920 50,902
Provision for loan losses 2,479 1,760 4,459 3,999
---------- ---------- ---------- ----------
Net interest income after
provision for loan losses 21,600 24,891 44,461 46,903
---------- ---------- ---------- ----------
Non-interest income
Trust fees 2,615 2,735 5,597 5,850
Service charges on deposits 2,985 2,805 5,703 5,096
Other income 1,321 858 2,863 1,548
Net securities gains 1,347 509 2,353 1,683
---------- ---------- ---------- ----------
Total non-interest income 8,268 6,907 16,516 14,177
Non-interest expense
Salaries and employee benefits 10,652 10,117 21,094 19,358
Net occupancy 1,341 1,256 2,831 2,358
Equipment 1,818 1,909 3,636 3,292
Other operating 6,346 6,137 12,559 11,288
Merger-related expenses and
other special charges (1) 728 715 820 1,781
---------- ---------- ---------- ----------
Total non-interest expense 20,885 20,134 40,940 38,077
---------- ---------- ---------- ----------
Income before income taxes 8,983 11,664 20,037 23,003
Provision for income taxes 1,242 2,986 3,407 6,257
---------- ---------- ---------- ----------
Net income $ 7,741 $ 8,678 $ 16,630 $ 16,746
========== ========== ========== ==========
Taxable equivalent net
interest income $ 26,425 $ 28,876 $ 53,670 $ 54,818
Per common share data
- ---------------------
Net income (2) $ 0.38 $ 0.41 $ 0.82 $ 0.83
Dividends declared 0.24 0.235 0.48 0.465
Book value (period end) 15.92 15.74
Tangible book value (period end) 13.01 12.77
Average shares outstanding 20,122,685 21,213,306 20,243,813 20,121,032
Period end shares outstanding 20,027,323 21,045,001
Profitability ratios (annualized)
- ---------------------------------
Return on average assets 0.93% 1.09% 1.01% 1.15%
Return on average equity 9.69% 10.55% 10.41% 11.04%
Yield on earning assets (3) 5.63% 6.51% 5.79% 6.68%
Cost of interest bearing
liabilities 2.49% 2.99% 2.54% 3.06%
Net interest margin (3) 3.44% 3.93% 3.55% 4.04%
Efficiency (3), (4) 60.11% 54.98% 58.94% 53.76%
(1) merger-related expenses are primarily related to the acquisition
of American Bancorporation and other special charges include the
writeoff of $0.6 million in unamortized issuance costs associated
with the redemption of trust preferred securities occurring in the
second quarter of 2003.
(2) basic and diluted were the same.
(3) taxable equivalent basis.
(4) excludes merger related expenses, other special charges, net
securities gains and net losses on sale of assets.
WESBANCO, INC.
Consolidated Selected Financial Highlights
June 30, 2003 and 2002 and December 31, 2002 Page 9
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(unaudited, dollars in thousands)
June 30, December 31, June 30,
Asset quality data 2003 2002 2002
- ------------------ ------------ --------------- ------------
Non-performing assets:
Non-accrual loans $ 14,867 $ 7,480 $ 8,319
Renegotiated loans 663 2,646 2,676
------------ --------------- ------------
Total non-performing loans 15,530 10,126 10,995
Other real state and
repossessed assets 3,862 4,213 3,609
------------ --------------- ------------
Total non-performing
loans and assets $ 19,392 $ 14,339 $ 14,604
============ =============== ============
Loans past due 90 days or more $ 8,091 $ 12,105 $ 10,894
Allowance for loan losses 25,578 25,080 24,281
Net loan charge-offs:
Quarter-to-date 2,417 2,415 1,698
Year -to-date 3,961 8,968 4,407
Allowance for loan losses/non-
performing loans 1.65 X 2.48 X 2.21 X
Allowance for loan losses/non-
performing loans and past due
90 days or more 1.08 X 1.13 X 1.11 X
Allowance for loan losses/total
loans 1.39 % 1.38 % 1.32 %
Non-performing assets/total
assets 0.57 0.43 0.46
Non-performing assets/total
loans, other real estate and
repossessed assets 1.05 0.79 0.79
Non-performing loans/total loans 0.84 0.56 0.60
Non-performing loans and loans
past due 90 days or more/total
loans 1.28 1.22 1.19
Net loan charge-offs(annualized)
/average loans 0.44 0.53 0.51
Regulatory Guidelines
-----------------------
Well
Capital ratios Minimum Capitalized
--------- -----------
Tier I leverage capital 4.00 % 5.00 % 8.70 % 8.53 % 8.85 %
Tier I risk-based capital 4.00 6.00 13.29 12.95 13.22
Total risk-based capital 8.00 10.00 14.47 14.13 14.38