1
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-K
(Mark One)
X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
------- SECURITIES EXCHANGE ACT OF 1934 (FEE REQUIRED)
For the Fiscal Year Ended December 31, 1996
------- TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
For the transition period from ____________ to ____________
Commission File Number 0-8467
------
WESBANCO, INC.
-----------------------------------------------------
(Exact name of Registrant as specified in its charter)
WEST VIRGINIA 55-0571723
- ------------------------------- ---------------------------------
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
1 Bank Plaza, Wheeling, WV 26003
- ---------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 304-234-9000
--------------
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Title of each class Name of each Exchange on which registered
- ------------------------------ -----------------------------------------
Common Stock $2.0833 Par Value National Association of Securities Dealers, Inc.
Nonredeemable Preferred Stock None
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. _____
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes X No
----- -----
The aggregate market value of voting stock computed using the average of the
bid and ask prices held by non-affiliates of the Registrant on February 28,
1997 was approximately $302,381,308.
(APPLICABLE ONLY TO CORPORATE REGISTRANTS)
As of February 28, 1997, there were 10,510,296 shares of WesBanco, Inc.
Common stock $2.0833 par value, outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of WesBanco, Inc.'s 1996 Annual Report to Shareholders - Parts II
and III
Portions of the Registrant's definitive proxy statement to be filed pursuant
to Regulation 14A not later than 120 days after the end of the fiscal year
(December 31, 1996) are incorporated by reference in Part III.
Page 1 of 62
2
WESBANCO, INC.
TABLE OF CONTENTS
ITEM # ITEM PAGE(S)
- ------ ---- -------
Part I
------
1 Business 3-18
2 Properties 19
3 Legal proceedings 19
4 Submission of matters to a vote of security holders N/A
Part II
-------
5 Market for the registrant's common equity and related
stockholder matters (A) 20
6 Selected financial data (A)
7 Management's discussion and analysis of financial
condition and results of operations (A)
8 Financial statements and supplementary data (A)
9 Changes in and disagreements with accountants on
accounting and financial disclosure 20
Part III
--------
10 Directors and Executive Officers of the registrant (B)20-21
11 Executive compensation (B)
12 Security ownership of certain beneficial owners and
management (B)
13 Certain relationships and related transactions (A) (B)
Part IV
-------
14 Exhibits, financial statement schedule and reports
on Form 8-K 21-23
(A) Pages 27-53, of WesBanco, Inc.'s 1996 Annual Report
to Stockholders are incorporated herein by reference.
(B) Incorporated by reference to WesBanco, Inc.'s Proxy
Statement dated March 14, 1997, for Annual Meeting
of Stockholders to be held April 16, 1997.
This Form contains a total of 62 pages.
3
PART I
Item 1. Business
- -----------------
General
- -------
As of December 31, 1996, the Corporation had four banking affiliates
located in Wheeling, Charleston, Parkersburg, and Fairmont, West Virginia.
The Registrant had one banking affiliate in Barnesville, Ohio. WesBanco
Wheeling has fourteen offices, all in West Virginia, five located in Wheeling,
two located in Follansbee, three in New Martinsville, one in Sistersville,
one in Wellsburg and two in Weirton. WesBanco Barnesville has six offices,
two located in Barnesville and one each in St. Clairsville, Bethesda,
Woodsfield and Beallsville, Ohio. WesBanco Parkersburg has three offices,
one located in Parkersburg and one located in Elizabeth and one in Mineral
Wells. WesBanco South Hills has two offices, one located in South Hills and
one in Sissonville. WesBanco Fairmont has four offices located in Fairmont,
five offices located in Morgantown, three offices located in Bridgeport, two
in Shinnston and one each in Nutter Fort, Kingwood, Masontown and Bruceton
Mills, West Virginia. The Corporation's mortgage banking affiliate has offices
located in Bridgeport, South Charleston, Barboursville, Elkins, Wheeling,
Parkersburg and Weirton, West Virginia. There are approximately 860 full
time equivalent employees employed by all affiliates as of December 31, 1996.
On December 20, 1996, WesBanco, Inc. announced the signing of a Definitive
Agreement and Plan of Merger, providing for the merger of Shawnee Bank, Inc.,
located in Dunbar and South Charleston, West Virginia with WesBanco South
Hills, a wholly-owned subsidiary of WesBanco, Inc. The acquisition, which is
based upon a fixed exchange ratio of 10.094 shares of WesBanco common stock for
each share of Shawnee common stock, will be accounted for as a purchase
transaction with an approximate value of $9,860,000. This transaction, which
is subject to approval by the appropriate regulatory authorities and the
shareholders of Shawnee, is expected to be completed in the second quarter of
1997.
WesBanco, Inc., through its subsidiaries, conducts general banking,
commercial, mortgage banking and trust business. Its full service banks
offer a wide range of services to commercial, consumer and government bodies,
including but not limited to, retail banking services, such as demand, savings
and time deposits; commercial, mortgage, and consumer installment loans;
credit card services through VISA and MasterCard; personal and corporate
trust services and discount brokerage services. Most affiliates are
participating in local partnerships which operate banking machines in those
local regions primarily under the name of MAC. The banking machines are
linked to CIRRUS, a nationwide banking network.
The Corporation has reported to its shareholders that it may engage in
other activities of a financial nature authorized by the Federal Reserve Board
through a subsidiary, or through acquisition of established companies.
4
Item 1. Business (continued)
- -----------------------------
General (continued)
- -------------------
As of December 31, 1996, none of the affiliates were engaged in any
operation in foreign countries and none has had transactions with customers
in foreign countries.
Competition
- -----------
Each affiliate bank faces strong competition for local business in their
respective market areas. Competition exists for new loans and deposits, in
the scope and types of services offered, and the interest rates paid on time
deposits and charged on loans, mortgage banking services and in other aspects
of banking. The affiliate banks encounter substantial competition not only
from other commercial banks but also from other financial institutions.
Savings banks, savings and loan associations, brokerage business and credit
unions actively compete for deposits. Such institutions, as well as consumer
finance companies, insurance companies and other enterprises, are important
competitors for various types of lending business. In addition, personal and
corporate trust services and investment counseling services are offered by
insurance companies, investment counseling firms and other business firms and
individuals.
Supervision and Regulation
- --------------------------
As a registered bank holding company, WesBanco is subject to the
supervision of the Federal Reserve Board and is required to file with the
Federal Reserve Board reports and other information regarding its business
operations and the business operations of its subsidiaries. WesBanco is also
subject to examination by the Federal Reserve Board and is required to obtain
Federal Reserve Board approval prior to acquiring, directly or indirectly,
ownership or control of voting shares of any bank, if, after such acquisition,
it would own or control more than 5% of the voting stock of such bank. In
addition, pursuant to federal law and regulations promulgated by the Federal
Reserve Board, WesBanco may only engage in, or own or control companies that
engage in, activities deemed by the Federal Reserve Board to be so closely
related to banking as to be a proper incident thereto. Prior to engaging in
most new business activities, WesBanco must obtain approval from the Federal
Reserve Board.
WesBanco's banking subsidiaries have deposits insured by the Bank
Insurance Fund ("BIF") of the Federal Deposit Insurance Corporation (the
"FDIC"), and are subject to supervision, examination and regulation by state
banking authorities and either the FDIC or the Federal Reserve Board. In
addition to the impact of federal and state supervision and regulation, the
banking subsidiaries of WesBanco are affected significantly by the actions of
the Federal Reserve Board as it attempts to control the money supply and
credit availability in order to influence the economy.
5
Item 1. Business (continued)
- -----------------------------
Supervision and Regulation (continued)
- --------------------------------------
WesBanco's depository institution subsidiaries are subject to affiliate
transaction restrictions under federal law which limit the transfer of funds
by the subsidiary banks to their parent and any nonbanking subsidiaries,
whether in the form of loans, extensions of credit, investments or asset
purchases. Such transfers by any subsidiary bank to its parent corporation
or to any nonbanking subsidiary are limited in amount to 10% of the
institution's capital and surplus and, with respect to such parent and all
such nonbanking subsidiaries, to an aggregate 20% of any such institution's
capital and surplus. Furthermore, such loans and extensions of credit are
required to be secured in specified amounts.
The Federal Reserve Board has a policy to the effect that a bank holding
company is expected to act as a source of financial and managerial strength to
each of its subsidiary banks and to commit resources to support each such
subsidiary bank. Under the source of strength doctrine, the Federal Reserve
Board may require a bank holding company to make capital injections into a
troubled subsidiary bank, and may charge the bank holding company with
engaging in unsafe and unsound practices for failure to commit resources to
such a subsidiary bank. This capital injection may be required at times when
WesBanco may not have the resources to provide it. Any capital loans by a
holding company to any of the subsidiary banks are subordinate in right of
payment to deposits and to certain other indebtedness of such subsidiary bank.
Moreover, in the event of a bank holding company's bankruptcy, any commitment
by such holding company to a federal bank regulatory agency to maintain the
capital of a subsidiary bank will be assumed by the bankruptcy trustee and
entitled to a priority of payment.
In 1989, the United States Congress passed comprehensive financial
institutions legislation known as the Financial Institution Reform, Recovery,
and Enforcement Act ("FIRREA"). FIRREA established a new principal of
liability on the part of depository institutions insured by the FDIC for any
losses incurred by, or reasonably expected to be incurred by, the FDIC after
August 9, 1989, in connection with (i) the default of a commonly controlled
FDIC-insured depository institution, or (ii) any assistance provided by the
FDIC to a commonly controlled FDIC-insured depository institution in danger
of default. "Default" is defined generally as the appointment of a conservator
or receiver and "in danger of default" is defined generally as the existence
of certain conditions indicating that a "default" is likely to occur in the
absence of regulatory assistance. Accordingly, in the event that any insured
bank subsidiary of WesBanco causes a loss to the FDIC, other bank subsidiaries
of WesBanco could be required to compensate the FDIC by reimbursing to it the
amount of such loss.
6
Item 1. Business (continued)
- -----------------------------
Dividend Restrictions
- ---------------------
There are statutory limits on the amount of dividends WesBanco's
depository institution subsidiaries can pay to their parent corporation
without regulatory approval. Under applicable federal regulations,
appropriate bank regulatory agency approval is required if the total of
all dividends declared by a bank in any calendar year exceeds the available
retained earnings and exceeds the aggregate of the bank's net profits (as
defined by regulatory agencies) for that year and its retained net profits
for the preceding two years, less any required transfers to surplus or a fund
for the retirement of any preferred stock.
FDIC Insurance
- --------------
The FDIC has the authority to raise the insurance premiums for
institutions in the BIF to a level necessary to achieve a target reserve
level of 1.25% of insured deposits within not more than 15 years. In
addition, the FDIC has the authority to impose special assessments in certain
circumstances. The level of deposit premiums affects the profitability of
subsidiary banks and thus the potential flow of dividends to parent companies.
Under the risk-based insurance assessment system that became effective
January 1, 1994, the FDIC places each insured depository institution in one of
nine risk categories based on its level of capital and other relevant
information (such as supervisory evaluations). Regarding the assessment rates
under the assessment system, on November 20, 1996, the FDIC voted to retain
the existing Bank Insurance Fund ("BIF") assessment schedule of 0 to 0.27%
(annual rate) for the first semiannual period of 1997, and to collect an
assessment against BIF assessable deposits to be paid to the Financing
Corporation ("FICO"). In addition, the FDIC eliminated the statutory minimum
annual assessment of $2,000. As of January 1, 1997, each WesBanco Bank will
be subject to the FICO special assessment at an annual rate of 1.29%. No
assessment will be paid to the BIF for the first semiannual period of 1997.
Federal Deposit Insurance Corporation Improvement Act of 1991
- -------------------------------------------------------------
In December 1991, Congress enacted the Federal Deposit Insurance
Corporation Improvement Act of 1991 ("FDICIA"), which substantially revised
the bank regulatory and funding provisions of the Federal Deposit Insurance
Act and makes revisions to several other federal banking statutes.
Among other things, FDICIA requires federal bank regulatory authorities
to take "prompt corrective action" with respect to depository institutions
that do not meet minimum capital requirements. For these purposes, FDICIA
establishes five capital tiers: well capitalized, adequately capitalized,
undercapitalized, significantly undercapitalized and critically
undercapitalized.
7
Item 1. Business (continued)
- -----------------------------
Rules adopted by the Federal banking agencies under FDICIA provide that
an institution is deemed to be: "well capitalized" if the institution has a
Total (Tier 1 plus Tier II) risk-based capital ratio of 10.0% or greater, a
Tier I risk-based ratio of 6.0% or greater, and a leverage ratio of 5.0% or
greater, and the institution is not subject to an order, written agreement,
capital directive, or prompt corrective action directive to meet and maintain
a specific level for any capital measure; "adequately capitalized" if the
institution has a Total risk-based capital ratio of 8.0% or greater, a Tier I
risk-based capital ratio of 4.0% or greater, and a leverage ratio of 4.0% or
greater (or a leverage ratio of 3.0% or greater if the institution is rated
composite 1 in its most recent report of examination, subject to appropriate
Federal banking agency guidelines), and the institution does not meet the
definition of a well-capitalized institution; "undercapitalized" if the
institution has a Total risk-based capital ratio that is less than 8.0%, a
Tier I risk-based capital ratio that is less than 4.0% or a leverage ratio
that is less than 4.0% (or a leverage ratio that is less than 3.0% if the
institution is rated composite 1 in its most recent report of examination,
subject to appropriate Federal banking agency guidelines) and the institution
does not meet the definition of a significantly undercapitalized or critically
undercapitalized institution; "significantly undercapitalized" if the
institution has a Total risk-based capital ratio that is less than 6.0%, a
Tier I risk-based capital ratio that is less than 3.0%, or a leverage ratio
that is less than 3.0% and the institution does not meet the definition of a
critically undercapitalized institution; and "critically undercapitalized" if
the institution has a ratio of tangible equity to total assets that is equal
to or less than 2%.
At December 31, 1996, WesBanco and all of its bank subsidiaries qualified
as well-capitalized based on the ratios and guidelines noted above. A bank's
capital category, however, is determined solely for the purpose of applying the
prompt corrective actions rules and may not constitute an accurate
representation of that bank's overall financial condition or prospects.
The appropriate Federal banking agency may, under certain circumstances,
reclassify a well capitalized insured depository institution as adequately
capitalized. The appropriate agency is also permitted to require an adequately
capitalized or undercapitalized institution to comply with the supervisory
provisions as if the institutions were in the next lower category (but not
treat a significantly undercapitalized institution as critically
undercapitalized) based on supervisory information other than the capital
levels of the institution.
The statute provides that an institution may be reclassified if the
appropriate Federal banking agency determines (after notice and opportunity
for bearing) that the institution is in an unsafe and unsound condition or
deems the institution to be engaging in an unsafe or unsound practice.
8
Item 1. Business (continued)
- -----------------------------
FDICIA generally prohibits a depository institution from making any
capital distributions (including payment of a dividend) or paying any
management fee to its holding company if the depository institution would
thereafter be undercapitalized. Undercapitalized depository institutions
are subject to growth limitations and are required to submit a capital
restoration plan. The Federal banking agencies may not accept a capital
restoration plan without determining, among other things, that the plan is
based on realistic assumptions and is likely to succeed in restoring the
depository institution's capital. In addition, for a capital restoration
plan to be acceptable, the depository institution's parent holding company
must guarantee that the institution will comply with such capital restoration
plan. The aggregate liability of the parent holding company is limited to
the lesser of (i) an amount equal to 5% of the depository institution's total
assets at the time it became undercapitalized, and (ii) the amount which is
necessary (or would have been necessary) to bring the institution into
compliance with all capital standards applicable with respect to such
institution as of the time it fails to comply with the plan. If a depository
institution fails to submit an acceptable plan, it is treated as if it is
significantly undercapitalized.
Significantly undercapitalized depository institutions may be subject to
a number of requirements and restrictions, including orders to sell sufficient
voting stock to become adequately capitalized, requirements to reduce total
assets and cessation of receipt of deposits from correspondent banks.
Critically undercapitalized institutions are subject to the appointment of a
receiver or conservator.
FDICIA also contains a variety of other provisions that may affect the
operation of WesBanco, including new reporting requirements, regulatory
standards for real estate lending, "truth in savings" provisions, and the
requirement that a depository institution give 90 days' prior notice to
customers and regulatory authorities before closing any branch.
Capital Requirements
- --------------------
The risk-based capital guidelines for bank holding companies and banks
adopted by the Federal banking agencies were phased in at the end of 1992.
The minimum ratio of qualifying total capital to risk-weighted assets
(including certain off-balance sheet items, such as standby letters of credit)
under the fully phased-in guidelines is 8%. At least half of the total capital
is to be comprised of common stock, retained earnings, noncumulative
perpetual preferred stocks, minority interests and, for bank holding companies,
a limited amount of qualifying cumulative perpetual preferred stock, less
goodwill and certain other intangibles ("Tier I capital"). The remainder
("Tier II capital") may consist of other preferred stock, certain other
instruments, and limited amounts of subordinated debt and the reserve for
credit losses.
In addition, the Federal Reserve Board has established minimum leverage
ratio (Tier I capital to total average assets less goodwill and certain other
intangibles) guidelines for bank holding companies and banks. These guidelines
provide for a minimum leverage ratio of 3.0% for bank holding companies and
banks that meet certain specified criteria, including that they
9
Item 1. Business (continued)
- -----------------------------
have the highest regulatory rating. All other banking organizations are
required to maintain a leverage ratio of 3.0% plus an additional cushion of
at least 100 to 200 basis points. The guidelines also provide that banking
organizations experiencing internal growth or making acquisitions will be
expected to maintain strong capital positions substantially above the minimum
supervisory levels, without significant reliance on intangible assets.
Furthermore, the guidelines indicate that the Federal Reserve Board will
continue to consider a "tangible Tier I leverage ratio" in evaluating
proposals for expansion or new activities. The tangible Tier I leverage
ratio is the ratio of Tier I capital, less intangibles not deducted from
Tier I capital, to total assets, less all intangibles. Neither WesBanco
nor any of its bank subsidiaries has been advised of any specific minimum
leverage ratio applicable to it.
As of December 31, 1996, all of WesBanco's banking subsidiaries had
capital in excess of all applicable requirements.
Interstate Banking Act
- ----------------------
The Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994
(hereinafter called "Interstate Banking Act") was signed into law by President
Clinton on September 29, 1994. The Act generally allows adequately capitalized
and managed bank holding companies to acquire banks in any state starting one
year after enactment. The Act also permits interstate merger transactions
beginning June 1, 1997. States are permitted, however, to pass legislation
providing for either earlier approval of mergers with out-of-state banks or
"opting-out" of interstate mergers entirely. The Act would permit banks to
acquire branches of out-of-state banks by converting their office into branches
of the resulting bank. The Act would also permit banks to establish and
operate "de novo branches" in any state that "opts-in" to de novo branching.
The Act also requires each Federal banking agency to prescribe uniform
regulations, including guidelines insuring that interstate branches operated
by out-of-state banks are reasonably helping to meet the credit needs of
communities where they operate.
WesBanco is incorporated under the laws of the State of West Virginia and
the West Virginia Legislature adopted substantial amendments to the West
Virginia banking laws in 1996 specifically permitting interstate branching
under Section 102 and 103 of the Interstate Banking Act, effective May 31,
1997. As of December 31, 1996, the State of Ohio, in which WesBanco has an
affiliate bank, does not specifically permit interstate branching.
Statistical Information
- -----------------------
Except as noted, the following statistical data averages included in
Item I - Business were computed using daily averages for the years ended
December 31, 1996, 1995 and 1994. Statistical data not included in Item I -
Business have been omitted because they are included in the 1996 Annual
Report to Shareholders, incorporated herein by reference, or are not
applicable.
10
Item 1. Business (continued)
- -----------------------------
The effect on interest income and interest expense for the years ended
December 31, 1996, 1995 and 1994, due to changes in average volume and rate
from the prior year, is presented below. The average volumes and rates are
shown in the 1996 Annual Report to Shareholders. The effect of a change in
average volume has been determined by applying the average rate in the earlier
year to the change in volume. The change in rate has been determined by
applying the average volume in the earlier year to the change in rate. The
change in interest due to both rate and volume has been allocated to volume
and rate changes in proportion to the relationship of the absolute dollar
amounts of change in each. (in thousands):
1996 Compared to 1995
-----------------------------
Net
Increase
Volume Rate (Decrease)
------- ------- ---------
Loans $7,471 $ (474) $ 6,997
Taxable investment securities (2,398) 850 (1,548)
Non-taxable investment securities 640 (522) 118
Federal funds sold (428) (283) (711)
-------- -------- ----------
Total interest earned 5,285 (429) 4,856
-------- -------- ----------
Interest bearing demand (175) (697) (872)
Savings deposits (587) (929) (1,516)
Certificates of deposit 2,944 473 3,417
Federal funds purchased and
repurchase agreements 978 (336) 642
Other borrowings 65 (88) (23)
-------- -------- ---------
Total interest paid 3,225 (1,577) 1,648
-------- -------- ---------
Net Interest Differential $ 2,060 $ 1,148 $ 3,208
======== ======== =========
1995 Compared to 1994
-----------------------------
Net
Increase
Volume Rate (Decrease)
------- ------- ----------
Loans $ 5,822 $ 3,724 $ 9,546
Taxable investment securities (2,805) (161) (2,966)
Non-taxable investment securities (650) (22) (672)
Federal funds sold (297) 751 454
------- -------- --------
Total interest earned 2,070 4,292 6,362
------- -------- --------
Interest bearing demand (534) 297 (237)
Savings deposits (815) 700 (115)
Certificates of deposit 1,650 4,402 6,052
Federal funds purchased and
repurchase agreements 74 1,071 1,145
Other borrowings 4 61 65
------- -------- --------
Total interest paid 379 6,531 6,910
------- -------- --------
Net Interest Differential $1,691 $(2,239) $ (548)
======= ======== ========
11
Item 1. Business (continued)
- -----------------------------
Investment Portfolio
- --------------------
The maturity distribution using book value including accretion of
discounts and the amortization of premiums and approximate yield of
investment securities at December 31, 1996 is presented in the following
table. Tax equivalent yield basis was not used. Approximate yield was
calculated using a weighted average of yield to maturities (in thousands):
After One But After Five But
Within One Year Within Five Years Within Ten Years After Ten Years
--------------- ----------------- ---------------- -----------------
Amount Yield Amount Yield Amount Yield Amount Yield
----- ----- ------ ----- ------ ----- ------ -----
Held to Maturity:
- -----------------
U.S. Treasury and Other
U.S. Government Agencies $ 58,741 6.14% $ 40,716 6.10% -- -- -- --
States and Political
Subdivisions 11,513 5.31 61,044 5.16 $ 56,927 5.10% $ 18,159 5.46%
Other Debt Securities(1) 2,008 6.13
------- ---- ------- ---- ------- ---- --------- -----
Total Held to Maturitity 70,254 6.00 101,760 5.54 56,927 5.10 20,167 5.53
------- ---- ------- ---- ------- ---- --------- -----
Available for Sale:(2)
- ----------------------
U.S. Treasury and Other
U.S. Government Agencies 19,027 4.82 111,295 6.13 31,516 6.79 ---- ---
States and Political
Subdivisions 2,314 3.89 10,648 4.07 733 5.01 538 4.65
Mortgage-backed Securities (3) 21,409 6.78 65,467 6.94 7,099 6.89 ---- ---
Corporate Securities 4,999 5.91 ---- --- ---- --- ---- ---
Other Debt and Equity
Securities(1) --- --- ---- --- ---- --- 1,300 3.07
------ ---- ------ ---- ------ ---- -------- ----
Total Available for Sale 47,749 5.77 187,410 6.30 39,348 6.77 1,838 3.53
------ ---- ------- ---- ------ ---- -------- ----
Total Investment Securities $118,003 5.91% $289,170 6.03% $96,275 5.79% $22,005 5.36%
======== ===== ======== ===== ======= ===== ========= =====
(1) Represents investments with no stated maturity date.
(2) Average yields on investment securities available for sale have been
calculated based on amortized cost.
(3) Mortgage-backed securities which have prepayment provisions are assigned to
maturity categories based on estimated average lives.
12
Item 1. Business (continued)
- -----------------------------
Investment Portfolio (continued)
- --------------------------------
Book values of investment securities are as follows (in thousands):
December 31,
-----------------------------
1996 1995 1994
---- ---- ----
Investments Held to Maturity (at cost):
U.S. Treasury and Federal
Agency Securities $ 99,457 $219,719 $244,967
Obligations of states and
political subdivisions 147,643 129,074 139,021
Other securities (1) 2,008 1,358 1,260
-------- -------- --------
Total Held to Maturity 249,108 350,151 385,248
-------- -------- --------
Investments Available for Sale
(at market):
U.S. Treasury and Federal
Agency Securities 161,817 157,505 193,114
Obligations of States and
Political subdivisions 14,120 5,667 ---
Corporate securities 5,005 4 915
Mortgage-backed securities 93,750 6,610 7,788
Other securities (2) 1,509 2,351 888
-------- -------- --------
Total Available for Sale 276,201 172,137 202,705
-------- -------- --------
Total Investments $525,309 $522,288 $587,953
======== ======== ========
(1)Includes Federal Reserve Bank Stock and Federal Home Loan
Bank securities.
(2)Includes stocks of business corporations.
There are no issues included in obligations of state and political
subdivisions which individually or in the aggregate exceed ten percent of
shareholders' equity as of December 31, 1996.
Loan Portfolio
- --------------
Loans outstanding are as follows (in thousands):
December 31,
-----------------------------------------------
1996 1995 1994 1993 1992
Loans: ---- ---- ---- ---- ----
Commercial $177,136 $176,809 $170,164 $169,341 $172,467
Real Estate-Construction 21,556 16,544 25,575 21,732 14,187
Real Estate-Mortgage 510,778 424,917 380,178 356,286 350,472
Installment 321,060 284,108 245,032 231,705 206,896
---------- -------- -------- -------- --------
Total Loans $1,030,530 $902,378 $820,949 $779,064 $744,022
========== ======== ======== ======== ========
13
Item 1. Business (continued)
- -----------------------------
Loan Portfolio (continued)
- --------------------------
WesBanco's real estate-mortgage loans, at 50% of total loans, comprise
the single largest loan type in the portfolio. This category consists
generally of conventional adjustable and fixed rate residential mortgages and
home equity loans located within the bank's general market areas. The risks
associated with real estate lending are principally influenced by real
property values which are affected by the general economic conditions in
each bank's market areas.
Installment loans represent approximately 31% of total loans and consist
primarily of indirect vehicle loans originated through automobile dealers and
credit card outstanding balances. In recent years, WesBanco has experienced
growth in its indirect vehicle lending by offering attractive rates. These
loans are a smaller balance, homogeneous group of loans which are not
concentrated in a specific market area. Risks in this lending category
include the possibility of general economic downturn which may cause an
increase in credit losses.
The loan loss policy for consumer lending requires a charge-off if the
loan reaches 120 delinquency days. Any payments subsequent to charge-off are
reflected as recoveries.
Commerical loans, representing 17% of total loans are not concentrated in
any single industry, but reflect a broad range of business in West Virginia
and Eastern Ohio. These loans are predominantly in the manufacturing,
wholesaling and retail service industries. The credit risk associated with
commercial lending is principally influenced by general economic conditions
and the resulting impact on the borrower's operations.
Each bank within the Corporation has its own renewal policies regarding
commercial and real estate-construction loans. However, real estate-
construction loans are generally not renewed at any bank. Depending on the
size of each institution, commercial loans above certain pre-approved dollar
limits must be reviewed by the respective credit review committee or senior
management prior to extension of maturity dates or rollover of the loan into
a new loan. Renewals of commercial loans below specified lending limitations
may be approved by the respective bank loan officer.
The following table presents the approximate maturities of loans other
than installment loans and residential mortgages for all affiliate banks as
of December 31, 1996 (in thousands):
After one
In one year through After
year or less five years five years
-------------- -------------- ------------
Commercial $76,054 $ 49,208 $ 51,874
Real estate:
Construction 6,099 390 290
Other real estate 23,657 4,398 86,469
---------- ---------- ----------
Total $105,810 $ 53,996 $138,633
========== ========== ==========
Fixed rates $ 31,998 $ 35,305 $ 57,292
Variable rates 73,812 18,691 81,341
---------- ---------- ----------
Total $105,810 $53,996 $138,633
========== ========== ==========
14
Item 1. Business (continued)
- -----------------------------
Loan Portfolio (continued)
- --------------------------
WesBanco Bank Wheeling, which has approximately 41% of consolidated gross
loans, originates most commercial loans and real estate construction loans on
a demand basis. Most of these loans do not require formal repayment terms
other than monthly interest payments. There is no significant impact on cash
flows since these loans are monitored on a regular basis and principal
repayments, if not made by borrowers, are requested. WesBanco banks follow
lending policies which require substantial down payments along with current
market appraisals on the collateral when the loans are originated. The
majority of loans are either secured by deeds of trust on real property,
security agreements on personal property, insurance contracts from independent
insurance companies or through marketable securities.
All affiliate banks generally recognize interest income on the accrual
basis, except for certain loans which are placed on a nonaccrual status, when
in the opinion of management, doubt exists as to collectability. All banks
must conform to the policies of the Board of Governors of the Federal Reserve
System and the Office of the Comptroller of Currency which state that banks
may not accrue interest on any loan on which either the principal or interest
is past due 90 days or more unless the loan is both well secured and in the
process of collection. When a loan is placed on a nonaccrual status, interest
income may be recognized as cash payments are received.
Non-performing assets and secured loans which are in the process of
collection but are contractually past due 90 days or more as to interest or
principal are as follows (in thousands):
December 31,
---------------------------------------------
1996 1995 1994 1993 1992
------- ------ ------- ------- -------
Nonaccrual:
Installment $ 53 $ 59 $ 12 $ 124 $ 181
Commercial 3,683 3,467 6,766 9,496 5,992
Mortgage 928 1,673 1,475 1,620 1,633
------- ------ ------- ------ ------
4,664 5,199 8,253 11,240 7,806
------- ------ ------- ------ ------
Renegotiated:
Installment -- 9 -- -- 41
Commercial 1,527 1,006 23 80 3,938
Mortgage 623 39 81 88 108
------ ------ ------ ------ ------
2,150 1,054 104 168 4,087
------ ------ ------ ------ ------
Other classified
loans: (1)
Installment -- -- -- -- --
Commercial 3,057 341 -- -- --
Mortgage 414 697 -- -- --
------ ------ ------ ------ ------
3,471 1,038 -- -- --
------ ------ ------ ------ ------
Total non-performing
loans 10,285 7,291 8,357 11,408 11,893
Other Real Estate Owned
3,555 4,137 612 801 629
------ ------ ------ ----- ------
Total non-performing
assets $13,840 $11,428 $8,969 $12,209 $12,522
======= ======= ====== ======= =======
15
December 31,
------------------------------------
1996 1995 1994 1993 1992
---- ---- ---- ---- ----
Percentage of non-performing
assets to loans outstanding 1.4% 1.3% 1.1% 1.6% 1.7%
===== ===== ===== ===== =====
Past Due 90 Days or More:
Installment $1,538 $ 863 $ 944 $ 857 $1,071
Commercial 1,294 916 923 754 1,604
Real Estate 1,273 1,255 680 1,131 584
------ ------ ------ ------ ------
$4,105 $3,034 $2,547 $2,742 $3,259
====== ====== ====== ====== ======
(1) Includes loans internally classified as doubtful and substandard (as
defined by banking regulations) that meet the definition of impaired loans.
At December 31, 1996, nonperforming loans, which included all impaired
loans, totaled $10,285,000, an increase of $2,994,000 over 1995. The increase
was attributable primarily to a commercial loan which was classified as
substandard under the definition of an impaired loan.
Other fluctuations in nonperforming loans since 1992 are summarized below.
At December 31, 1995, nonaccrual loans decreased $3,054,000 to $5,199,000,
primarily due to the reclassification of a commercial real estate loan to other
real estate owned. The action was taken on November 1, 1995 by an affiliate
through a transfer by deed in-lieu of foreclosed commercial property.
Contributing to the increase in renegotiated loans during 1995 were certain
performing loans classified as impaired, in accordance with FAS No. 114. The
1994 decline in nonaccrual loans was the result of a commercial real estate
loan which was taken off of nonaccrual status. During 1993, nonaccrual loans
increased by $3,434,000 to $11,240,000, while renegotiated loans declined by
$3,919,000 to $168,000. The change between these categories was caused by a
reclassification of a renegotiated loan totaling $3,823,000 to nonaccrual
status during 1993. Nonaccrual loans are generally secured by collateral
believed to have adequate market values to protect the Corporation from
significant losses.
Prior to 1995, loans totaling $3,666,000 which were classified as
in-substance forcelosures and included in other assets were reclassified to
loans in accordance with FAS No. 114. Management continues to monitor
nonperforming assets to ensure against deterioration in collateral values.
Summary of Loan Loss Experience
- -------------------------------
The historical relationship between average loans, loan losses and
recoveries and the provision for loan losses is presented in the following
table (in thousands):
1996 1995 1994 1993 1992
Beginning balance - ------- ------- ------- ------- -------
Allowance for loan losses $13,439 $12,960 $12,483 $11,308 $10,471
Allowance for loan losses of
purchased bank 707 --- --- --- 62
Loans charged off:
Commercial 639 1,263 4,521 1,229 1,790
Real Estate-Mortgage 222 220 524 183 266
Installment 2,613 1,619 1,003 1,274 1,237
------ ------ ------ ------ ------
Total loans charged off 3,474 3,102 6,048 2,686 3,293
------ ------ ------ ------ ------
16
Item 1. Business (continued)
- -----------------------------
Summary of Loan Loss Experience (continued)
- -------------------------------------------
1996 1995 1994 1993 1992
---- ---- ---- ---- ----
Recovery of loans previously
charged off:
Commercial 76 377 171 184 436
Real Estate-Mortgage 67 97 25 36 38
Installment 377 319 256 394 297
----- ----- ----- ----- -----
Total recoveries 520 793 452 614 771
----- ----- ----- ----- -----
Net loans charged off 2,954 2,309 5,596 2,072 2,522
----- ----- ----- ----- -----
Provision for loan losses 4,336 2,788 6,073 3,247 3,297
Ending balance - ------- ------- ------- ------- -------
Allowance for loan losses $15,528 $13,439 $12,960 $12,483 $11,308
======= ======= ======= ======= =======
Ratio of net loans charged off
to average loans outstanding
for the period .32% .28% .79% .28% .35%
------- ------- ------- ------- -------
Ratio of the allowance for loan
losses to loans outstanding at
the end of the period 1.51% 1.50% 1.61% 1.62% 1.54%
------- ------- ------- ------- -------
The provision for loan losses is based on periodic management evaluation
of the loan portfolio as well as prevailing and anticipated economic conditions,
net loans charged off, past loan experience, current delinquency factors,
changes in the character of the loan portfolio, specific problem loans and
other factors.
Allocation of the Allowance for Loan Losses
- -------------------------------------------
The following represents the allocation of the allowance for loan losses
(dollars in thousands):
December 31,
---------------------------------------------------------------------------
1996 1995 1994 1993 1992
--------------- ------------- ------------- ------------- -------------
% of % of % of % of % of
Amount Loans Amount Loans Amount Loans Amount Loans Amount Loans
------ ----- ------ ----- ------ ----- ------ ----- ------ -----
Specific Allowance:
Commercial and Unallocated $ 9,557 17% $10,480 20% $10,536 21% $10,468 22% $8,848 23%
Real Estate-Construction -- 2 17 2 16 3 16 3 16 8
Real Estate-Mortgage 2,124 50 1,232 47 871 46 750 45 1,058 44
Installment 3,847 31 1,710 31 1,537 30 1,249 30 1,386 25
------- ---- ------- ---- ------- ---- ------- ---- ------- ----
Total $15,528 100% $13,439 100% $12,960 100% $12,483 100% $11,308 100%
------- ---- ------- ---- ------- ---- ------- ---- ------- ----
17
Item 1. Business (continued)
- -----------------------------
Allocation of the Allowance for Loan Losses (continued)
- -------------------------------------------------------
WesBanco has allocated the allowance for loan losses to specific portfolio
segments based upon historical net charge-off experience, changes in the level
of non-performing loans, average portfolio growth, local economic conditions
and management experience. For 1996, the increase in the specific allowance
for real estate-mortgage loans was due to an increase in outstanding balances.
Specific allowance for installment loans increased due primarily to increases
in outstanding balances and increases in the historical loan loss experience
rate. Management deems the allowance for loan losses at December 31, 1996
to be adequate.
Loan Risk Elements
- ------------------
The Corporation has historically maintained an allowance for loans losses
which is greater than actual charge-offs.
Management maintains loan quality through monthly reviews of past due
loans, and a quarterly review of significant loans which are considered by
affiliate bank personnel to be potential problem loans. Periodic review of
significant loans are completed by personnel independent of the loan
function.
There are no significant loans made to customers outside the general
market area of each affiliate bank. At times, in order to maintain loan
volumes, loans are purchased from correspondent banks. These loans aggregate
less than $3,500,000 as of December 31, 1996. Each bank within the
Corporation follows its usual loan analysis procedures before a determination
is made to purchase loans from correspondent banks.
Management's review of the loan portfolio has not indicated any material
amount of loans, not disclosed in the accompanying tables and discussions which
are known to have possible credit problems which cause management to have
serious doubts as to the ability of each borrower to comply with their present
loan repayment terms.
There were no loan concentrations in excess of 10% of total consolidated
loans.
Other Matters
- -------------
The Corporation has approximately 57% of its assets located in the Upper
Ohio Valley, an area experiencing an extended strike between the United Steel
Workers Union and Wheeling-Pittsburgh Steel Corporation. Through the current
date, this strike has not significantly impacted WesBanco's results of
operations. Since WesBanco is unable to determine when the strike may be
settled, we cannot estimate the impact on the local economy, if the strike
continues and ultimately the long-term effects resulting therefrom.
18
Item 1. Business (continued)
- -----------------------------
Certificates of Deposit
- -----------------------
Maturities of certificates of deposit in denominations of $100,000 or more
is as follows: (in thousands)
December 31,
---------------------
1996 1995
Maturity ------- -------
Under three months $18,506 $27,042
Three to six months 14,264 6,771
Six to twelve months 28,762 6,513
Over twelve months 30,804 35,760
------- -------
Total $92,336 $76,086
======= =======
Interest expense on certificates of deposit of $100,000 or more was
approximately $4,658,000 in 1996, $4,042,000 in 1995 and $2,589,000 in 1994.
Short-Term Borrowings
- ---------------------
Securities sold under agreement to repurchase have maturities which range
between one day and one year. The following table presents short-term
liabilities for the years ended December 31 (dollars in thousands):
1996 1995 1994
------- ------- -------
Securities sold under agreement
to repurchase:
Outstanding at year end $72,587 $70,091 $65,435
Average daily outstanding 69,975 54,791 51,068
Maximum outstanding at any month end 86,854 70,091 66,286
Average interest rate:
During year 4.81% 5.17% 3.47%
At year end 5.48 5.45 4.37
Return on Equity and Assets
- ---------------------------
The following financial ratios are presented:
1996 1995 1994
Net income to: ------ ------ ------
Average total assets 1.34% 1.33% 1.17%
Average shareholders' equity 10.02 10.15 9.32
Average shareholders' equity and
redeemable preferred stock 10.02 10.07 9.23
Dividend payout percentage (cash dividends,
including those of pooled banks, divided
by net income) 49.76 44.19 45.80
Equity to assets (average equity
divided by average assets) 13.33 13.09 12.58
Equity and redeemable preferred stock
to assets (average equity and redeemable
preferred stock dividend by average assets) 13.33 13.20 12.70
19
Item 2. Properties
- -------------------
The Registrant's affiliates generally own their respective offices,
related facilities and unimproved real property which is held for future
expansion. With certain branch office exceptions, all of the respective
West Virginia offices are located in downtown Wheeling, Follansbee, Wellsburg,
Weirton, New Martinsville, Sistersville, Elizabeth, Charleston, Sissonville,
Parkersburg, Kingwood, Fairmont, Morgantown, Shinnston, Bridgeport and
Masontown. The Ohio bank offices are located in Barnesville, Bethesda,
Woodsfield and Beallsville. Consolidated investment in net bank premises
and equipment at December 31, 1996 was $32,670,000.
The main office of the Registrant is located at 1 Bank Plaza, Wheeling,
West Virginia, in a building owned by WesBanco Wheeling. The building contains
approximately 100,000 square feet.
Item 3. Legal Proceedings
- --------------------------
WesBanco, Inc. and its affiliates are involved in various legal
proceedings presently pending which are incidental to the business of banking
in which they are engaged. These proceedings are pending in various
jurisdictions in which WesBanco, Inc. and its subsidiaries are engaged in
business. Based on the information which has been developed in such
proceedings as of the date hereof, and available to the Corporation,
management does not believe that any of such proceedings involve claims for
damages which expose it to a material liability on a consolidated basis.
The case previously reported in the 1995 Form 10-K, Tankovits v.
Glessner, et al., Civil Action No. 96-C-59(W) is still pending. Additional
development of the facts in the case has failed to disclose any significant
actionable conduct on the part of the Corporation's subsidiary bank.
Plaintiff has not initiated any significant discovery in the case and motions
to dismiss the case have been filed by all defendents in the proceeding.
While the development of the Plaintiff's case is incomplete, and subject to
that Contingency, counsel has advised the Corporation that the factual
allegations contained in the Complaint do not appear to provide a basis for
recovery by the Plaintiff.
20
PART II
Item 5. Market for the Registrant's Common Equity and Related
- --------------------------------------------------------------
Shareholder Matters
- -------------------
(a) Approximate Number of Security Holders
--------------------------------------------
Set forth below is the approximate number of holders of record of the
Registrant's equity securities as of February 28, 1997.
Title of Class Number
-------------- ------
Common Stock ($2.0833 Par Value) 4,248
The number of holders listed above does not include WesBanco, Inc.
employees who have had stock allocated to them through the Employee Stock
Ownership Plan. All WesBanco employees who meet the eligibility requirements
of the ESOP are included in the Plan.
Item 9. Changes in and disagreements with accountants on accounting and
- -----------------------------------------------------------------------
financial disclosure.
---------------------
On April 10, 1996, the Executive Committee of the Board of Directors of
WesBanco approved the decision to replace the firm of Price Waterhouse LLP
as auditors of the Registrant. In connection with the audits of the
Registrant's financial statements for each of the two years ended December 31,
1995 and through April 10, 1996, there were no disagreements with
Price Waterhouse LLP on any matters relating to the financial statements.
Price Waterhouse LLP confirmed these statements made by the Registrant through
a letter to the Registrant dated April 10, 1996. On the same date, the
Registrant engaged Ernst & Young LLP as its new independent accountant.
During the two years ended December 31, 1995 and through April 10, 1996, the
Registrant did not consult with Ernst & Young LLP on any accounting or
financial reporting matters. The Registrants filed a current report on form
8-K on April 12, 1996, indicating the change in auditors.
PART III
Item 10. Executive Directors of the Corporation
- ------------------------------------------------
Name Age Position
- ---- --- --------
James C. Gardill 50 Chairman of the Board
Robert H. Martin 63 Vice Chairman
Edward M. George 60 President and Chief Executive Officer
Paul M. Limbert 49 Executive Vice President-Credit Administration
and Chief Financial Officer
Dennis P. Yaeger 46 Executive Vice President and
Chief Operating Officer
John W. Moore, Jr. 48 Senior Vice President-Human Resources
21
Item 10. Executive Directors of the Corporation (continued)
- -----------------------------------------------------------
Jerome B. Schmitt 47 Senior Vice President-Investments
Larry L. Dawson 50 Vice President
Jerry A. Halverson 60 Vice President
Edward G. Sloane 58 Vice President-Data Processing
Mr. Martin was appointed Vice Chairman of the Corporation on February 28,
1994. Prior to that time, Mr. Martin was Chairman of the Board of First
Fidelity Bancorp, Inc. since 1986.
Each of the remaining officers listed above have been an Executive Officer
of the Corporation or one of its subsidiaries during the past five years.
PART IV
Item 14. Exhibits, financial statement schedules and reports on Form 8-K
- -------------------------------------------------------------------------
(a) Certain documents filed as part of the Form 10-K
-----------------------------------------------------
Page(s)
-------
(1) Consolidated Balance Sheet as of December 31, 27
1996 and 1995.
Consolidated Statements of Income for the years 28
ended December 31, 1996, 1995 and 1994.
Consolidated Statements of Changes in Shareholders' 29
Equity for the years ended December 31, 1996,
1995 and 1994.
Consolidated Statement of Cash Flows for the years 30
ended December 31, 1996, 1995 and 1994.
Notes to Consolidated Financial Statements 31-43
Report of Ernst & Young LLP, Independent Auditor's 44
(b) Reports on Form 8-K
------------------------
Form 8-K/A filed on November 4, 1996, which provided restated historical
financial information of the registrant to include the merger of the Bank of
Weirton. (The merger of Bank of Weirton was previously announced on Form 8-K
dated August 30, 1996).
Form 8-K filed on December 20, 1996 to announce the signing of a
Definitive Agreement and Plan of Merger providing for the acquisition of
Shawnee Bank, Inc.
Form 8-K filed on December 30, 1996 to announce the consummation of the
acquisition of Vandalia National Corporation.
22
Item 14. Exhibits, financial statement schedules and reports on
- -----------------------------------------------------------------
Form 8-K (continued)
- --------------------
(c) Exhibits required by Item 601 of Regulation S-K (continued)
----------------------------------------------------------------
Exhibit Title Page(s)
- ------- ----- -------
3.1 Articles of Incorporation of WesBanco, Inc., restated *
as of November 17, 1995 (1)
3.2 Bylaws of WesBanco, Inc. (1) *
4 Specimen Certificate of WesBanco, Inc. Common Stock (2) *
10 Material Contracts (1) *
11 Computation of Earnings Per Share 25
12 Ratio of Earnings to Combined Fixed Charges and 26
Preferred Stock Dividends
13 1996 Annual Report to Shareholders 27-53
The Consolidated Financial Statements, together with the
report thereon of Ernst & Young LLP dated February 3,
1997, Management Discussion and Analysis of the
Consolidated Financial Statements included in
the accompanying 1996 Annual Report to Shareholders are
incorporated herein by reference. With the exception
of the aforementioned information, the 1996 Annual Report
is not to be deemed filed as part of this report. Financial
statement schedules not included in this Form 10-K
Annual Report have been omitted because they are not
applicable or the required information is shown in the
Financial Statements or notes thereto.
21 Subsidiaries of the Registrant 54
22 Proxy Statement for the Annual Shareholders' meeting *
held April 16, 1997 (3)
23.1 Consent of Ernst & Young LLP 55
23.2 Consent of Price Waterhouse LLP 56
24 Power of Attorney 57-59
27 Financial Data Schedule 62
23
Item 14. Exhibits, financial statement schedules and reports on
- ----------------------------------------------------------------
Form 8-K (continued)
- --------------------
(c) Exhibits required by Item 601 of Regulation S-K (continued)
----------------------------------------------------------------
99.1 Report of Price Waterhouse LLP dated January 25, 1996, 60
except as to the pooling-of-interests with Bank of Weirton
which is as of August 30, 1996, on WesBanco, Inc.
Consolidated Financial Statements as of December 31, 1995
and for the two years then ended December 31, 1995.
99.2 Report of Grant Thornton LLP dated October 17, 1996 on 61
Bank of Weirton Financial Statements as of December 31,
1995, and 1994 and for the two years in the period ended
December 31, 1995.
* Indicates document previously provided or incorporated by reference.
(1) This exhibit is being incorporated by reference with respect to a prior
Registration Statement filed by the Registrant on Form S-4 under
Registration No. 333-3905 which was filed with the Securities and
Exchange Commission on June 20, 1996.
(2) This exhibit is being incorporated by reference with respect to a prior
Registration Statement filed by the Registrant on Form S-4 under
Registration No. 33-42157 which was filed with the Securities and
Exchange Commission on August 9, 1991.
(3) This exhibit is being incorporated by reference with respect to a
schedule 14A, Definitive Proxy Statement, which was filed by the
Registrant with the Securities and Exchange Commission on March 14,
1997.
24
SIGNATURES
Pursuant to the Requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized, on March 14, 1997.
WESBANCO, INC.
By: /s/ Edward M. George
-------------------------
Edward M. George
President and Chief Executive Officer
By: /s/ Paul M. Limbert
------------------------
Paul M. Limbert
Executive Vice President and
Chief Financial Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities indicated, on March 14, 1997.
By: /s/ James C. Gardill
--------------------------
James C. Gardill
Chairman of the Board
The Directors of WesBanco (listed below) executed a power of attorney
appointing James C. Gardill their attorney-in-fact, empowering him to sign
this report on their behalf.
Frank K. Abruzzino
James E. Altmeyer
Charles J. Bradfield
Ray A. Byrd
R. Peterson Chalfant
Christopher V. Criss
Stephen F. Decker
James D. Entress
Ernest S. Fragale
James C. Gardill
Edward M. George
Roland L. Hobbs By: /s/ James C. Gardill
John W. Kepner -------------------------
Robert H. Martin James C. Gardill
Eric Nelson Attorney-in-fact
Joan C. Stamp
Carter W. Strauss
Reed J. Tanner
Thomas L. Thomas, M.D.
John A. Welty
William E. Witschey
25
EXHIBIT 11
WesBanco, Inc.
Computation of Earnings Per Share
(Dollar amounts in thousands)
For the years ended December 31,
--------------------------------
1996 1995 1994
-------- -------- -----------
PRIMARY:
Net Income $ 21,161 $ 20,304 $ 17,892
Less: Preferred dividends and
discount accretion --- 164 183
--------- ---------- ----------
Net income applicable to common stock 21,161 20,140 17,709
========== ========== ==========
Average common share outstanding 10,168,738 10,160,328 10,280,878
Net income per common share $ 2.08 $ 1.98 $ 1.72
- ----------------------------------------------------------------------------
ASSUMING FULL DILUTION:*
Net Income $ 21,161 $ 20,304 $ 17,892
Pro forma fully diluted
Average common shares outstanding 10,168,738 10,254,864 10,394,321
Pro forma fully diluted net income
per share $ 2.08 $ 1.98 $ 1.72
* Assumes conversion of redeemable preferred stock as if issuance had occured
at the beginning of the reportable period.
26
EXHIBIT 12
WesBanco, Inc.
Ratio of Earnings to Fixed Charges and Preferred Stock Dividends
(Dollar amounts in thousands)
1996 1995 1994 1993 1992
------- ------- ------- ------- --------
Net income $21,161 $20,304 $17,892 $19,718 $18,511*
Provision for income taxes 8,344 7,656 6,283 7,070 7,044
------- ------- ------- ------- --------
Earnings before provision for
income taxes 29,505 27,960 24,175 26,788 25,555
------- ------- ------- ------- --------
Preferred stock dividend
requirements --- 164 183 184 184
Ratio of pretax income to net
income 1.39% 1.38% 1.35% 1.36% 1.38%
-------- ------- ------- ------- -------
Preferred dividend factor $ 0 $ 226 $ 247 $ 250 $ 254
Ratio of pretax net income to
preferred dividends 0% 123.8% 97.8% 107.2% 100.6%
======== ======== ======= ======= =======
* Does not include the change in accounting for postretirement benefits-net
of tax effect of $(592,000).
WesBanco has no fixed charges as defined by Regulation S-K Item 503-Summary;
Risk Factors; Ratio of Earnings to Fixed Charges.
27
EXHIBIT 13
WesBanco, Inc.
Consolidated Balance Sheet
- ------------------------------------------------------------------------------
(in thousands, except for shares)
December 31,
--------------------
1996 1995
- ------------------------------------------------------------------------------
ASSETS
Cash and due from banks (Note 17) $ 58,828 $ 54,163
Due from banks-interest bearing 197 301
Federal funds sold 10,970 37,230
Investment securities: (Note 4)
Held to maturity (market values of
$250,132 and $353,760, respectively) 249,108 350,151
Available for sale carried at market value 276,201 172,137
- -------------------------------------------------------------------------------
Total investment securities 525,309 522,288
- ------------------------------------------------------------------------------
Loans held for sale 983 ---
Loans, net of unearned income (Note 3) 1,026,370 893,919
Allowance for loan losses (Note 3) (15,528) (13,439)
- -------------------------------------------------------------------------------
Net Loans 1,010,842 880,480
- -------------------------------------------------------------------------------
Bank premises and equipment (Note 7) 32,670 28,395
Accrued interest receivable 11,748 12,708
Other assets 26,224 13,454
- -------------------------------------------------------------------------------
Total Assets $1,677,771 $1,549,019
===============================================================================
LIABILITIES
Deposits:
Non-interest bearing demand $ 159,176 $ 143,872
Interest bearing demand 284,143 279,217
Savings deposits 323,673 337,706
Certificates of deposit (Note 8) 575,828 494,049
- -------------------------------------------------------------------------------
Total deposits 1,342,820 1,254,844
- -------------------------------------------------------------------------------
Federal funds purchased and
repurchase agreements (Note 9) 81,089 70,457
Other short-term borrowings (Note 9) 11,682 1,402
Accrued interest payable 5,826 7,091
Other liabilities 8,822 8,229
- -------------------------------------------------------------------------------
Total Liabilities 1,450,239 1,342,023
- -------------------------------------------------------------------------------
SHAREHOLDERS' EQUITY
Preferred stock, no par value; 1,000,000 shares
authorized; none outstanding --- ---
Common stock ($2.0833 par value; 25,000,000
shares authorized; 10,538,993 and 10,372,103
shares issued, respectively) 21,956 21,608
Capital surplus 36,949 31,237
Retained earnings 170,116 159,483
Treasury stock (17,139 and 186,131 shares,
respectively, at cost) (544) (5,038)
Market value adjustment on investments available
for sale-net of tax effect (90) 849
Deferred benefits for directors and employees (855) (1,143)
- -------------------------------------------------------------------------------
Total Shareholders' Equity 227,532 206,996
- -------------------------------------------------------------------------------
Total Liabilities and Shareholders' Equity $1,677,771 $1,549,019
===============================================================================
The accompanying Notes to Consolidated Financial Statements are an integral
part of these financial statements.
28
WESBANCO, INC.
CONSOLIDATED STATEMENT OF INCOME
- ----------------------------------------------------------------------------
(in thousands, except share and per share amounts)
For the years ended December 31,
--------------------------------
1996 1995 1994
- -------------------------------------------------------------------------------------------
Interest income:
Interest and fees on loans $ 81,449 $ 74,452 $ 64,906
- -------------------------------------------------------------------------------------------
Interest on investment securities:
U.S. Treasury and Federal Agency securities 21,837 23,040 26,092
States and political subdivisions 7,642 7,524 8,196
Other investments 229 574 488
- -------------------------------------------------------------------------------------------
Total interest on investment securities 29,708 31,138 34,776
- -------------------------------------------------------------------------------------------
Other interest income 1,781 2,492 2,038
- -------------------------------------------------------------------------------------------
Total interest income 112,938 108,082 101,720
- -------------------------------------------------------------------------------------------
Interest expense:
Interest bearing demand deposits 7,064 7,936 8,173
Savings deposits 8,817 10,333 10,448
Certificates of deposit 28,551 25,134 19,082
- -------------------------------------------------------------------------------------------
Total interest on deposits 44,432 43,403 37,703
Other borrowings 3,786 3,167 1,957
- -------------------------------------------------------------------------------------------
Total interest expense 48,218 46,570 39,660
- -------------------------------------------------------------------------------------------
Net interest income 64,720 61,512 62,060
Provision for loan losses (Note 3) 4,336 2,788 6,073
- -------------------------------------------------------------------------------------------
Net interest income after provision for loan losses 60,384 58,724 55,987
- -------------------------------------------------------------------------------------------
Other income:
Trust fees 5,442 4,716 4,425
Charge card fees 1,050 1,039 922
Service charges and other income 5,542 5,174 5,315
Net investment securities transaction gains 239 437 366
- -------------------------------------------------------------------------------------------
Total other income 12,273 11,366 11,028
- -------------------------------------------------------------------------------------------
Other expenses:
Salaries and wages 19,110 18,272 18,711
Pension and other employee benefits (Note 12) 4,500 4,945 4,549
Net occupancy expense 2,651 2,672 2,625
Equipment expense 3,135 2,461 2,381
Other operating expense (Note 13) 13,756 13,780 14,574
- -------------------------------------------------------------------------------------------
Total other expenses 43,152 42,130 42,840
- -------------------------------------------------------------------------------------------
Income before provision for income taxes 29,505 27,960 24,175
Provision for income taxes (Note 14) 8,344 7,656 6,283
- -------------------------------------------------------------------------------------------
Net Income $ 21,161 $ 20,304 $ 17,892
===========================================================================================
Earnings per share of common stock: (Note 1)
Earnings per share $2.08 $1.98 $1.72
Preferred stock dividends and discount accretion --- 164 183
Average shares outstanding 10,168,738 10,160,328 10,280,878
The accompanying Notes to Consolidated Financial Statements are an integral
part of these financial statements.
29
WESBANCO, INC.
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDER'S EQUITY
- -------------------------------------------------------------------------------
(in thousands, except for shares)
For the years ended December 31, 1996, 1995, and 1994
-----------------------------------------------------
Market Value Deferred
Adjustment on Benefits for
Shares Common Capital Retained Treasury Investments Directors &
Outstanding Stock Surplus Earnings Stock Available for Sale Employees Total
- ---------------------------------------------------------------------------------------------------------------------------------
Balance, December 31, 1993 10,362,143 $21,691 $33,389 $138,801 $(1,323) --- $(757) $191,801
- ---------------------------------------------------------------------------------------------------------------------------------
Net Income 17,892 17,892
Cash dividends:
Common ($.86 per share) (7,389) (7,389)
Common by pooled bank
prior to acquisition (805) (805)
Preferred dividends & accretion (183) (183)
ESOP contribution 2,000 (16) 63 47
Net treasury shares purchased
or retired (164,185) (83) (926) (3,475) (4,484)
ESOP borrowing (246) (246)
Principal payment on ESOP debt 154 154
Market value adjustment on
investments available for
sale-net of tax effect $(4,482) (4,482)
- ----------------------------------------------------------------------------------------------------------------------------------
Balance, December 31, 1994 10,199,958 21,608 32,447 148,316 (4,735) (4,482) (849) 192,305
- ----------------------------------------------------------------------------------------------------------------------------------
Net Income 20,304 20,304
Cash dividends:
Common ($.96 per share) (8,139) (8,139)
Common by pooled bank
prior to acquisition (834) (834)
Preferred dividends & accretion (164) (164)
ESOP contribution 3,500 96 96
Net treasury shares purchased (128,597) (3,456) (3,456)
Redemption of preferred stock 111,111 (1,210) 3,057 1,847
ESOP borrowing (129) (129)
Principal payment on ESOP debt 200 200
Deferred benefits for directors (365) (365)
Market value adjustment on
investments available for
sale-net of tax effect 5,331 5,331
- ----------------------------------------------------------------------------------------------------------------------------------
Balance, December 31, 1995 10,185,972 21,608 31,237 159,483 (5,038) 849 (1,143) 206,996
- ----------------------------------------------------------------------------------------------------------------------------------
Net Income 21,161 21,161
Cash dividends:
Common ($1.08 per share) (10,125) (10,125)
Common by pooled bank
prior to acquisition (403) (403)
Stock issued for acquisitions 378,008 348 5,674 5,899 11,921
Net treasury shares purchased (42,126) 38 (1,405) (1,367)
Principal payment on ESOP debt 365 365
Deferred benefits for directors (77) (77)
Market value adjustment on
investments available for
sale-net of tax effect (939) (939)
- ----------------------------------------------------------------------------------------------------------------------------------
Balance, December 31, 1996 10,521,854 $21,956 $36,949 $170,116 $(544) $ (90) $(855) $227,532
==================================================================================================================================
There was no activity or outstanding balances in the Nonredeemable Preferred
Stock during the years ended December 31, 1996, 1995 and 1994.
The accompanying Notes to Consolidated Financial Statements are an integral
part of these financial statements.
30
WESBANCO, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
- -------------------------------------------------------------------------------
Increase (Decrease) in Cash and Cash Equivalents (in thousands)
For the years ended December 31,
--------------------------------
1996 1995 1994
- -------------------------------------------------------------------------------------------------
Cash flows from operating activities:
Net Income $21,161 $20,304 $17,892
Adjustment to reconcile net income to net cash provided
by operating activities:
Depreciation and amortization 5,563 7,169 9,052
Provision for loan losses 4,336 2,788 6,073
Gains on sales of investment securities-net (239) (437) (366)
Deferred income taxes (143) 82 (107)
Other-net (387) 269 (1)
Increase (decrease) in assets and liabilities:
Interest receivable 960 873 628
Other assets (3,461) (6,115) (1,095)
Interest payable (1,358) 1,468 (124)
Other liabilities 665 (906) 400
Loans held for sale (983) --- ---
- -------------------------------------------------------------------------------------------------
Net cash provided by operating activities 26,114 25,495 32,352
- -------------------------------------------------------------------------------------------------
Cash flows provided investing activities:
Investment securities held to maturity:
Proceeds from maturities and calls 113,454 80,059 77,374
Payments for purchases (66,161) (67,026) (130,584)
Investment securities available for sale:
Proceeds from sales 89,075 59,291 67,002
Proceeds from maturities and calls 43,843 47,901 52,364
Payments for purchases (183,065) (50,145) (64,917)
Purchase of subsidiaries, net of cash acquired 2,127 --- ---
Net increase in loans (88,021) (84,815) (45,360)
Purchases of premises and equipment-net (5,978) (3,215) (1,547)
- -------------------------------------------------------------------------------------------------
Net cash used by investing activities (94,726) (17,950) (45,668)
- -------------------------------------------------------------------------------------------------
Cash flows from financing activities:
Net increase (decrease) in deposits 37,723 258 (11,090)
Increase in federal funds purchased and
repurchase agreements 9,681 4,707 14,524
Increase (decrease) in short-term borrowings 10,280 (3,042) (6,010)
Net proceeds (payments) related to ESOP debt (364) (71) 92
Dividends paid (9,799) (8,854) (7,790)
Purchases of treasury shares-net (1,367) (3,456) (4,484)
Other-net 863 57 33
- -------------------------------------------------------------------------------------------------
Net cash provided by (used in) financing activities 47,017 (10,401) (14,725)
- -------------------------------------------------------------------------------------------------
Net decrease in cash and cash equivalents (21,595) (2,856) (28,041)
Cash and cash equivalents at beginning of year 91,393 94,249 122,290
- -------------------------------------------------------------------------------------------------
Cash and cash equivalents at end of year $69,798 $91,393 $94,249
=================================================================================================
During 1996, 1995 and 1994, WesBanco paid $49,576, $45,103 and $39,785 in
interest on deposits and other borrowings and $8,578, $8,113 and $6,415
for income taxes, respectively.
During 1996, non-cash activity consisted of $11,921,000 of common stock
issued in connection with purchase acquisitions.
During 1995, there were 9,925 shares of preferred stock redeemed, of which
9,723 shares were exchanged for 111,111 shares of WesBanco common stock in a
non-cash transaction. The remaining 202 shares were redeemed for cash at
$190 per share and are included in other financing activities.
The accompanying Notes to Consolidated Financial Statements are an integral
part of these financial statements.
31
WESBANCO, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- ------------------------------------------------------------------------------
NOTE 1: ACCOUNTING POLICIES
- ------------------------------------------------------------------------------
WesBanco, Inc. is a multi-bank holding company offering a full range of
financial services, including trust and mortgage banking services, through
offices located in West Virginia and Eastern Ohio.
The significant accounting principles employed in the preparation of
the accompanying consolidated financial statements are summarized below:
Principles of consolidation:
The Consolidated Financial Statements of WesBanco, Inc. (the
"Corporation") include the accounts of the Corporation and its wholly owned
subsidiaries. Material intercompany transactions and accounts have been
eliminated. The prior years' financial information has been restated to
reflect the pooling-of-interests with the Bank of Weirton.
Use of estimates:
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.
Cash and cash equivalents:
For the purpose of reporting cash flows, cash and cash equivalents
include cash and due from banks, and federal funds sold. Generally, federal
funds are sold for one day periods.
Investment securities:
Investments Available for Trading:
The Corporation did not have a trading portfolio during either of the
two years ended December 31, 1996 and 1995.
Investments Held to Maturity:
Investment securities consisting principally of debt securities, which
are purchased with the positive intent and ability to hold until their
maturity, are stated at cost, adjusted for amortization of premiums and
accretion of discounts.
Investments Available for Sale:
Debt securities not classified as trading or held to maturity, and
marketable equity securities not classified as trading, are classified as
available for sale. These securities may be sold at any time based upon
management's assessment of changes in economic or financial market conditions,
interest rate or prepayment risks, liquidity considerations, and other factors.
These securities are stated at market value, with the market value adjustment,
net of tax, reported as a separate component of shareholders' equity. Other
than temporary declines in value on these securities are recognized in
operations.
Gains and Losses:
Net realized gains and losses on sale of investment securities are
included in the statement of income. The cost of these securities sold is
based on the specific identification method.
Amortization and Accretion:
Amortization of premiums and accretion of discounts are included in
interest on investment securities in the Consolidated Statement of Income.
Loans held for sale:
Mortgage loans originated and intended for sale in the secondary market
are carried at the lower of cost or estimated aggregate market value.
Loans:
Interest is accrued as earned on loans except where doubt exists as to
collectability, in which case recognition of income is discontinued.
A loan is considered impaired, based on current information and events,
if it is probable that the Corporation will be unable to collect the scheduled
payments of principal and interest when due according to the contractual terms
of the loan agreement. Impaired loans include all nonaccrual and renegotiated
loans, as well as loans internally classified as substandard or doubtful (as
those terms are defined by banking regulations) that meet the definition of
impaired loans. The Corporation recognizes interest income on nonaccrual
impaired loans on the cash basis.
The allowance for loan losses is maintained at a level considered
adequate by management to provide for potential loan losses. The allowance is
increased by provisions charged to operating expenses and reduced by loan
losses, net of recoveries. The amount of allowance is based on management's
evaluation of the loan portfolio, as well as prevailing and anticipated
economic conditions, past loan loss experience, current delinquency factors,
changes in the character of the loan portfolio, specific problem loans and
other relevant factors.
Other assets:
Other assets include property acquired through a foreclosure proceeding
and acceptance of a deed-in-lieu of foreclosure. Other assets also include
other real estate owned, which is carried at the lower of cost or fair market
value less cost to sell, and goodwill from purchase transactions.
32
NOTE 1: ACCOUNTING POLICIES (CONTINUED)
- -------------------------------------------------------------------------------
Bank premises and equipment:
Bank premises and equipment are stated at cost less accumulated
depreciation. Bank premises and equipment are depreciated over their
estimated useful lives using either the straight-line or an accelerated
method. Useful lives are revised when a change in life expectancy becomes
apparent. Maintenance and repairs are charged to expense and betterments are
capitalized. Gains and losses on bank premises and equipment retired or
otherwise disposed of are charged to expense when incurred.
Income taxes:
Deferred tax assets and liabilities are recognized for the expected
future tax consequences attributable to temporary differences between the
carrying amounts of assets and liabilities and their tax bases. In addition,
such deferred tax asset and liability amounts are adjusted for the effects of
enacted changes in tax laws or rates.
Earnings per share:
Earnings per share are calculated based upon dividing net income, less
preferred stock dividends and accretion, by the weighted average number of
shares of common stock outstanding during the year.
Trust assets:
Assets held by the subsidiary banks in fiduciary or agency capacities
for their customers are not included as assets in the accompanying Consolidated
Balance Sheet. Certain trust assets are held on deposit at subsidiary banks.
New accounting standard to be adopted:
FAS No. 125, "Accounting for Transfers and Servicing of Financial Assets
and Extinguishments of Liabilities" is effective in 1997 and provides
accounting and reporting standards for transfers and servicing of financial
assets and extinguishments of liabilities. FAS No. 125 as amended by FAS
No. 127 "Deferral of Effective Date of Certain Provisions of FAS No. 125" is
generally to be applied to transactions occurring after December 31, 1996
with certain provisions having been delayed until 1998. FAS No. 125 is not
expected to materially affect WesBanco's financial position or results of
operation.
NOTE 2: ACQUISITIONS AND MERGERS
- -------------------------------------------------------------------------------
On December 30, 1996, WesBanco consummated its acquisition of Vandalia
National Corporation (Vandalia). In accordance with the terms of the
acquisition, WesBanco issued a total of 345,545 shares of common stock, of
which 178,655 shares came from its Treasury balances and 166,890 shares were
newly issued. The total purchase price of the acquisition including cash for
stock warrants was approximately $12,046,000. As of the acquisition date,
Vandalia reported total assets of approximately $55,372,000. The acquisition
was accounted for as a purchase transaction, and, accordingly, the results of
operations of Vandalia, which are not material, have been included in WesBanco's
consolidated financial statements from December 30, 1996.
On August 30, 1996, WesBanco consummated its acquisition of the Bank of
Weirton. In accordance with the terms of the merger, WesBanco issued 1,690,000
shares of common stock. As of the acquisition date, Bank of Weirton reported
total assets of approximately $177,877,000. The merger was accounted for as
a pooling-of-interests, and, accordingly, the consolidated financial statements
include the accounts of Bank of Weirton for all periods presented.
The following financial information presents the combined results of
WesBanco and Bank of Weirton as if the acquisition had occurred as of the
beginning of the years presented: (in thousands)
For the WesBanco, Inc.
years ended As previously Bank of
December 31, presented Weirton WesBanco, Inc.
- ---------------------------------------------------------------------------
Net interest income:
1995 $56,029 $5,483 $61,512
1994 56,396 5,664 62,060
Net income:
1995 $18,189 $2,115 $20,304
1994 15,697 2,195 17,892
- ----------------------------------------------------------------------------
On August 20, 1996, WesBanco acquired the assets and assumed certain
liabilities of Universal Mortgage Company (Universal), and formed a new
mortgage banking affiliate operating under the name of WesBanco Mortgage
Company. In accordance with the terms of the acquisition, WesBanco issued
32,463 shares of common stock from its Treasury balance. The total purchase
price of the acquisition was approximately $856,000. As of the acquisition
date, Universal reported total assets of approximately $1,185,000. The
acquisition was accounted for as a purchase transaction, and, accordingly,
the results of operations of Universal, which are not material, have been
included in WesBanco's consolidated financial statements from August 20, 1996.
The excess of the purchase price over the fair market value of the net
assets (goodwill) of the bank and mortgage company acquired in 1996 approximated
$8,246,000 and is being amortized over a period of 15 years.
33
NOTE 2: ACQUISITIONS AND MERGERS (CONTINUED)
- ------------------------------------------------------------------------------
On February 28, 1994, WesBanco consummated its acquisition of First
Fidelity Bancorp, Inc. (Fidelity). In accordance with the terms of the
merger, WesBanco issued 2,093,815 shares of common stock and 10,000 shares
of preferred stock. The acquisition was accounted for as a pooling-of-
interests, and, accordingly, the consolidated financial statements include
the accounts of Fidelity for all periods presented.
NOTE 3: LOANS
- ------------------------------------------------------------------------------
The following is a summary of total loans: December 31,
(in thousands) ---------------------
1996 1995
- ------------------------------------------------------------------------------
Loans:
Commercial $ 177,136 $ 176,809
Real estate-construction 21,556 16,544
Real estate-mortgage 510,778 424,917
Installment 321,060 284,108
- ------------------------------------------------------------------------------
Total Loans $1,030,530 $ 902,378
==============================================================================
The activity in the allowance
for loan losses is as follows: For the years ended December 31,
(in thousands) -------------------------------
1996 1995 1994
- ------------------------------------------------------------------------------
Balance, beginning of year $13,439 $12,960 $12,483
Allowance for loan losses of
purchased bank 707 --- ---
Provision 4,336 2,788 6,073
Loan recoveries 520 793 452
Loan losses (3,474) (3,102) (6,048)
- -------------------------------------------------------------------------------
Balance, end of year $15,528 $13,439 $12,960
===============================================================================
The following summarizes loans classified as impaired: December 31,
--------------------
(in thousands) 1996 1995
- -------------------------------------------------------------------------------
Nonaccrual $ 4,664 $ 5,199
Renegotiated 2,150 1,054
Other classified loans:
Doubtful 94 ---
Substandard 3,377 1,038
- -------------------------------------------------------------------------------
Total impaired loans $10,285 $ 7,291
===============================================================================
Impaired loans with a related
allowance for loan losses $ 6,328 $ 1,999
Allowance for loan losses on impaired loans 2,120 334
- -------------------------------------------------------------------------------
The following summarizes other
impaired loan activity: For the years ended
December 31,
----------------------
(in thousands) 1996 1995
- --------------------------------------------------------------------------------
Average impaired loans $11,541 $ 6,773
Amount of contractual interest income on impaired loans 595 382
Amount of interest income recognized on a cash basis 82 164
================================================================================
Most lending is with customers who are located within West Virginia and
Eastern Ohio. There is no significant concentration of credit risk by
industry or by individual borrowers, no significant exposure to highly
leveraged loan transactions, nor any foreign loans.
The subsidiary banks, in the ordinary course of business, grant loans
to related parties at terms which do not vary from terms that would have been
required if the transactions had been with unrelated parties. Indebtedness of
related parties aggregated approximately $40,114,000, $46,809,000 and
$46,911,000 as of December 31, 1996, 1995 and 1994, respectively. During 1996
$49,918,000 of loans were funded and $56,613,000 of loans were repaid.
34
NOTE 4: INVESTMENT SECURITIES
- ------------------------------------------------------------------------------
The following tables summarize amortized cost and fair values of held
to maturity and available for sale securities:
(in thousands) Held to Maturity
-----------------------------------------------------------------------------------------------------
December 31, 1996 December 31, 1995
----------------------------------------------- -------------------------------------------------
Gross Gross Estimated Gross Gross Estimated
Amortized Unrealized Unrealized Fair Amortized Unrealized Unrealized Fair
Cost Gains Losses Value Cost Gains Losses Value
----------------------------------------------- -------------------------------------------------
U.S. Treasury and
Federal Agency
securities $99,457 $ 287 $ 38 $ 99,706 $219,719 $1,792 $384 $221,127
Obligations of
states and political
subdivisions 147,643 1,426 651 148,418 129,074 2,455 254 131,275
Other debt
securities 2,008 --- --- 2,008 1,358 --- --- 1,358
- -----------------------------------------------------------------------------------------------------------------------------
Totals $249,108 $1,713 $689 $250,132 $350,151 $4,247 $638 $353,760
=============================================================================================================================
Available for Sale
-------------------------------------------------------------------------------------------------------
December 31, 1996 December 31, 1995
------------------------------------------------- -------------------------------------------------
Gross Gross Estimated Gross Gross Estimated
Amortized Unrealized Unrealized Fair Amortized Unrealized Unrealized Fair
Cost Gains Losses Value Cost Gains Losses Value
------------------------------------------------- -------------------------------------------------
U.S. Treasury and
Federal Agency
securities $161,838 $ 714 $735 $161,817 $156,241 $1,806 $542 $157,505
Obligations of
states and political
subdivisions 14,233 21 134 14,120 5,698 13 44 5,667
Corporate
securities 4,999 6 --- 5,005 4 --- --- 4
Mortgage-backed
securities 93,975 399 624 93,750 6,636 19 45 6,610
Other debt
securities 29 --- --- 29 24 --- --- 24
- ------------------------------------------------------------------------------------------------------------------------------
Total debt securities 275,074 1,140 1,493 274,721 168,603 1,838 631 169,810
Equity securities 1,271 209 --- 1,480 2,142 190 5 2,327
- ------------------------------------------------------------------------------------------------------------------------------
Totals $276,345 $1,349 $1,493 $276,201 $170,745 $2,028 $636 $172,137
==============================================================================================================================
The following table shows amortized cost and estimated fair value of securities
by maturity:
December 31, 1996
----------------------------------------------------------
Held to Maturity Available for Sale
--------------------------- -------------------------
Estimated Estimated
Amortized Fair Amortized Fair
(in thousands) Cost Value Cost Value
- ------------------------------------------------------------------------------------------------
Within one year $ 70,254 $ 70,409 $ 47,749 $ 47,645
After one year, but within five 101,760 102,406 187,410 187,049
After five years, but within ten 56,927 57,310 39,348 39,478
After ten years 20,167 20,007 1,838 2,029
- -------------------------------------------------------------------------------------------------
Total $ 249,108 $ 250,132 $ 276,345 $ 276,201
=================================================================================================
Mortgage-backed securities are assigned to maturity categories based on
estimated average lives. Available for sale securities in the after 10
year category include securities with no stated maturity. Other securities
with prepayment provisions are categorized based on contractual maturity.
In connection with the Bank of Weirton acquisition, and to satisfy
WesBanco's asset and liability management objectives, U.S. Treasury
securities of $55,340,000 were transferred from held to maturity to the
available for sale portfolio and subsequently sold.
35
NOTE 4: INVESTMENT SECURITIES (CONTINUED)
- -----------------------------------------------------------------------------
Investment securities with par values aggregating $156,876,000 at
December 31, 1996 and $158,888,000 at December 31, 1995 were pledged to
secure public and trust funds. Gross security gains of $602,000, $513,000
and $403,000 and gross security losses of $363,000, $76,000 and $37,000 were
realized for the years ended December 31, 1996, 1995 and 1994, respectively.
NOTE 5: TRANSACTIONS WITH RELATED PARTIES
- ------------------------------------------------------------------------------
Some officers and directors (including their affiliates, families and
entities in which they are principal owners) of the Corporation and its
subsidiaries are customers of those subsidiaries and have had, and are
expected to have, transactions with the subsidiaries in the ordinary course
of business. In addition, some officers and directors are also officers and
directors of corporations which are customers of the banks and have had, and
are expected to have, transactions with the banks in the ordinary course of
business. In the opinion of management, such transactions are consistent
with prudent banking practices and are within applicable banking regulations.
NOTE 6: FINANCIAL INSTRUMENTS WITH OFF-BALANCE-SHEET RISK
- ------------------------------------------------------------------------------
Individual banks within the Corporation incur off-balance-sheet risks
in the normal course of business in order to meet financing needs of their
customers. These financial instruments include commitments to extend credit
and standby letters of credit. Those instruments involve, to varying degrees,
elements of credit and interest rate risk in excess of the amount recognized
in the financial statements.
In the normal course of business, there are outstanding various commitments
to extend credit approximating $70,527,000 and $66,717,000 and standby letters
of credit of $7,909,000 and $10,221,000 as of December 31, 1996 and 1995,
respectively.
The banks' exposure to credit loss in the event of non-performance by
the other party to the financial instrument for commitments to extend credit
and standby letters of credit is represented by the contractual amount of
those instruments. The banks use the same credit and collateral policies in
making commitments and conditional obligations as for all other lending.
Collateral which secures these types of commitments is the same type as
collateral for other types of lending, such as accounts receivable, inventory
and fixed assets.
Commitments generally have fixed expiration dates or other termination
clauses and may require payment of a fee. Since many of the commitments are
expected to expire without being drawn upon, the total commitment amounts
do not necessarily represent future cash requirements. The banks evaluate
each customer's credit worthiness on a case-by-case basis.
Standby letters of credit are conditional commitments issued by the banks
to guarantee the performance of a customer to a third party. Those guarantees
are primarily issued to support public and private borrowing arrangements,
including normal business activities, bond financing and similar transactions.
The credit risk involved in issuing letters of credit is essentially the same
as that involved in extending loans to customers. Collateral securing these
types of transactions is similar to collateral securing the banks' commercial
loans.
NOTE 7: BANK PREMISES AND EQUIPMENT
- ------------------------------------------------------------------------------
Bank premises and equipment include: (in thousands) December 31,
Estimated ----------------
useful life 1996 1995
- -------------------------------------------------------------------------------
Land and improvements (3-10 years) $ 6,902 $ 6,386
Buildings and improvements (4-50 years) 33,191 30,837
Furniture and equipment (2-25 years) 24,684 18,903
- -------------------------------------------------------------------------------
64,777 56,126
Less-Accumulated depreciation (32,107) (27,731)
- -------------------------------------------------------------------------------
Total $ 32,670 $ 28,395
===============================================================================
36
NOTE 8: CERTIFICATES OF DEPOSIT
- ------------------------------------------------------------------------------
Certificates of deposit in denominations of $100,000 or more were
$92,336,000 and $76,086,000 as of December 31, 1996 and 1995, respectively.
Related interest expense was $4,658,000 in 1996 and $4,042,000 in 1995.
At December 31, 1996, the scheduled maturities of certificates of
deposit are as follows: (in thousands)
1997 $379,031
1998 132,689
1999 31,729
2000 11,984
2001 and thereafter 20,395
-------------------------------
Total $575,828
===============================
NOTE 9: REPURCHASE AGREEMENTS AND OTHER SHORT-TERM BORROWINGS
- ------------------------------------------------------------------------------
Federal funds purchased and securities sold under agreements to
repurchase generally mature within one to four days from the transaction
date. Other short-term borrowings consist of treasury tax and loan deposits
and a $5,000,000 fixed rate commitment with the Federal Home Loan Bank of
Pittsburgh. The loan was entered into with an affiliate bank for liquidity
purposes to fund a growing loan demand in its market area. The loan has a
guaranteed interest rate of 6.17% and will mature on July 15, 1997.
Information concerning securities sold under agreements to repurchase is
summarized as follows:
For the years ended
December 31,
----------------------
(in thousands) 1996 1995
- -------------------------------------------------------------------------
Average balance during the year $69,975 $54,791
Average interest rate during the year 4.81% 5.17%
Maximum month-end balance during the year $86,854 $70,091
==========================================================================
NOTE 10: KSOP AND LONG-TERM BORROWINGS
- ------------------------------------------------------------------------------
The Corporation has a qualified noncontributory Employee Stock Ownership
Plan and Trust Agreement, which was expanded on January 1, 1996 to include
401(k) provisions forming a KSOP. As of December 31, 1996, substantially all
employees were included in the KSOP with the exception of employees from the
acquisition of Vandalia National Corporation. During 1996, Vandalia National
Corporation had their own 401(k) Plan. Under the 401(k) provisions, the
Corporation makes matching contributions to the 401(k), up to a maximum of
1.5% of employees' annual compensation, subject to regulatory limitations.
The employer's matching contribution to the 401(k) plan during 1996 was
$201,000.
Under the employee stock ownership portion of the Plan, a Trust holds
107,400 shares of WesBanco common stock. Approximately 90,587 shares of
stock were allocated to specific employee accounts as of December 31, 1996.
During November 1995, the Trust renegotiated its existing line of credit
with an affiliated lender. Conditions in the loan agreement remain the same,
providing for a line of credit in the aggregate amount of $1,000,000 to
facilitate purchases of WesBanco common stock in the open market. The loan
bears interest at a rate equal to the lender's base rate and requires annual
repayments of principal equal to 20% of the balance at January 1 of each year.
The loan has a final maturity date of 5 years from date of inception. The
$1,000,000 revolving line of credit had a balance of $413,000 and $777,000
as of December 31, 1996 and 1995, respectively.
Total contributions to the employee stock ownership portion of the Plan
during 1996 were $400,000. Contributions during 1995 and 1994 were $350,012
and $231,956, respectively.
Effective January 1, 1994, the Corporation adopted Statement of Position
No. 93-6, which requires dividends on unallocated shares to be expensed.
NOTE 11: DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS
- ------------------------------------------------------------------------------
Fair value estimates of financial instruments are based on present value
of expected future cash flows, quoted market prices of similar financial
instruments, if available, and other valuation techniques. These valuations
are significantly affected by the discount rates, cash flow assumptions, and
risk assumptions used. Therefore, the fair value estimates may not be
substantiated by comparison to independent markets and are not intended to
reflect the proceeds that may be realizable in an immediate settlement of the
instruments.
The aggregate fair value of amounts presented do not represent the
underlying value of the Corporation.
37
NOTE 11: DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS (CONTINUED)
- ------------------------------------------------------------------------------
Management does not have the intention to dispose of a significant portion
of its financial instruments and, therefore, the unrealized gains or losses
should not be interpreted as a forecast of future earnings and cash flows.
The following table represents the estimates of fair value of financial
instruments:
December 31,
-------------------------------------------------
1996 1995
----------------------- -----------------------
Carrying Fair Carrying Fair
(in thousands) Amount Value Amount Value
- ---------------------------------------------------------------------------------------------
Financial assets:
Cash and short-term investments $ 69,995 $ 69,995 $ 91,694 $ 91,694
Investment securities-held to maturity 249,108 250,132 350,151 353,760
Investment securities-available for sale 276,201 276,201 172,137 172,137
Loans held for sale 983 983 --- ---
Net loans 1,010,842 1,014,848 880,480 892,031
Financial liabilities:
Deposits 1,342,820 1,343,730 1,254,844 1,260,075
Short-term borrowings 92,771 92,771 71,859 71,859
=============================================================================================
The following methods and assumptions are used to estimate the fair
value of like kinds of financial instruments:
Cash and Short-Term Investments:
The carrying amount for cash and short-term investments is a reasonable
estimate of fair value. Short-term investments consist of federal funds sold.
Investment Securities:
Fair values for investment securities are based on quoted market prices,
if available. If market prices are not available, then quoted market prices
of similar instruments are used.
Loans Held For Sale:
The carrying amount for loans held for sale is a reasonable estimate of
fair value.
Net Loans:
Fair values for loans with interest rates that fluctuate as current
rates change are generally valued at carrying amounts. The fair values for
residential mortgage loans are based on quoted market prices of securitized
financial instruments, adjusted for remaining maturity and differences in
loan characteristics. Fair values of commercial real estate, construction
and consumer loans are based on a discounted value of the estimated future
cash flows expected to be received. The current interest rates applied in
the discounted cash flow method reflect rates used to price new loans of
similar type, adjusted for relative risk and remaining maturity. The fair
value of credit cards is estimated based on the anticipated average cost of
soliciting a new account and the present credit quality of the outstanding
balances. For nonaccrual loans, fair value is estimated by discounting
expected future principal cash flows only.
Deposits:
The carrying amount is considered a reasonable estimate of fair value
for demand and savings deposits and other variable rate deposit accounts.
The fair value of fixed maturity certificates of deposit is estimated by a
discounted cash flow method using the rates currently offered for deposits
of similar remaining maturities.
Short-Term Borrowings:
For short-term borrowings, which include federal funds purchased,
repurchase agreements, a Federal Home Loan Bank commitment, and other
short-term borrowings, the carrying amount is a reasonable approximation
of fair value.
Off-Balance Sheet Instruments:
The fair value of commitments is estimated using the fees currently
charged to enter into similar agreements, taking into account the remaining
terms of the agreements and the present credit standing of the counterparties.
The amount of fees currently charged on commitments is determined to be
insignificant and therefore the fair value and carrying value of off-balance
sheet instruments are not shown.
NOTE 12: RETIREMENT BENEFIT PLANS
- ------------------------------------------------------------------------------
At December 31, 1996, substantially all employees are participants in
the WesBanco defined benefit pension plan except for employees of the recent
acquisitions of Vandalia National Corporation and Universal Mortgage Company.
The plan covers those employees who satisfy minimum age and length of service
requirements. Benefits of the WesBanco defined benefit plan are generally
based on the years of service and the employee's compensation during the last
five years of employment. The WesBanco plan's funding policy has been to
contribute annually the maximum amount that can be deducted for federal
income tax purposes. Contributions are intended to provide not
38
NOTE 12: RETIREMENT BENEFIT PLANS (CONTINUED)
- ------------------------------------------------------------------------------
only for benefits attributed to service to date, but also for those expected
to be earned in the future.
During 1996, all the assets and liabilities of Bank of Weirton's Defined
Benefit Plan were merged into the WesBanco plan. Prior to the merger, Bank of
Weirton had a non-contributory defined benefit pension plan. The Plan's
benefit formula was based on length of service and average employee
compensation. During 1995, all assets and liabilities of the First Fidelity
Bancorp defined benefit pension plan were merged into the WesBanco plan.
Prior to the merger, First Fidelity Bancorp's defined benefit plan formula
used length of service and the employee's compensation to determine benefits.
Net periodic pension cost for the defined benefit plans in 1996, 1995
and 1994 include the following components:
For the years ended December 31,
--------------------------------
(in thousands) 1996 1995 1994
- -------------------------------------------------------------------------------
Service cost - benefits earned during year $ 755 $ 913 $ 974
Interest cost on projected benefit obligation 1,380 1,543 1,411
Actual return on plan assets (3,313) (3,714) 113
Net amortization and deferral 1,329 2,318 (1,506)
- -------------------------------------------------------------------------------
Net periodic pension cost $ 151 $ 1,060 $ 992
===============================================================================
The following table sets forth the defined benefit pension plan's funded
status and the asset reflected in the Consolidated Balance Sheet at December
31, 1996 and 1995:
December 31,
-------------------------
(in thousands) 1996 1995
- ------------------------------------------------------------------------------
Actuarial present value of benefit obligation:
Vested benefit obligation $15,296 $13,988
Accumulated benefit obligation 17,001 15,518
==============================================================================
Projected benefit obligation (19,642) (18,092)
Plan assets at current market value,
primarily listed stocks, bonds
and cash equivalents 24,928 21,847
- ------------------------------------------------------------------------------
Plan assets in excess of projected benefit obligation 5,286 3,755
Unrecognized prior service cost (1,655) (2,309)
Unrecognized net gain (1,245) (176)
Unrecognized obligation 33 40
- ------------------------------------------------------------------------------
Net pension asset $ 2,419 $ 1,310
==============================================================================
For the years ended December 31,
---------------------------------
1996 1995 1994
- ------------------------------------------------------------------------------
Assumptions used in the accounting
for the WesBanco plan were:
Weighted average discount rates 7.50% 7.50% 8.0%
Rates of increase in compensation levels 4.50 4.50 5.0
Weighted average expected long-term return on assets 8.75 8.75 8.0
- ------------------------------------------------------------------------------
Assumptions used in Bank of Weirton's plan were 8.0%, 8.0% and 7.25% for
discount rates and 8.0%, 8.5% and 8.0% for expected long term return on
assets in 1996, 1995 and 1994, respectively. The Bank of Weirton rates of
compensation are based on a decreasing percentage scale as age increases.
Assumptions used in First Fidelity Bancorp's plan were 7.0%, 4.0% and 8.5%
for discount rates, increase in compensation levels and expected long-term
return on assets, respectively, in 1994.
WesBanco currently provides a death benefit and a contributory health
insurance plan for all retirees. WesBanco's contribution toward health
insurance is a fixed amount which may be changed at its sole discretion.
During 1996, the Corporation increased its health insurance benefit from $90
to $100 per month, or 11.1%, and its death benefit remained at $7,500.
The Bank of Weirton and First Fidelity Bancorp were included in the
WesBanco postretirement medical and death benefits programs as of
January 1, 1996 and 1995, respectively. Effective January 1, 1997, Universal
Mortgage Company and Vandalia National Corporation will be included in the
aforementioned programs. Net periodic postretirement benefit costs other than
pension costs in 1996, 1995 and 1994 include the following components:
39
NOTE 12: RETIREMENT BENEFIT PLANS (CONTINUED)
- --------------------------------------------------------------------------------
(in thousands) 1996 1995 1994
- ---------------------------------------------------------------------------------
Service cost-benefits earned during year $128 $ 71 $ 49
Interest cost on projected benefit obligation 191 173 92
Prior service cost 70 57 ---
Net amortization and deferral --- --- 6
- ----------------------------------------------------------------------------------
Net periodic postretirement benefit cost other than pensions $389 $301 $147
- ----------------------------------------------------------------------------------
The following table sets forth the liability reflected in the Consolidated
Balance Sheet at December 31, 1996 and 1995:
(in thousands) 1996 1995
- ------------------------------------------------------------------------------
Accumulated postretirement benefit obligation:
Retirees $1,178 $1,019
Fully eligible active plan participants 1,579 1,468
- -----------------------------------------------------------------------------
Total 2,757 2,487
Unrecognized prior service cost (1,056) (918)
Unrecognized net loss (31) (150)
- -----------------------------------------------------------------------------
Net postretirement benefit liability $1,670 $1,419
==============================================================================
Weighted average discount rate assumptions used in the accounting for
the WesBanco postretirement plan were 7.5%, 7.5% and 8.0% for 1996, 1995 and
1994, respectively.
Postretirement benefits are funded as incurred resulting in cash
payments of approximately $138,000 $126,000 and $111,000 for the years
ended December 31, 1996, 1995 and 1994, respectively.
The Corporation's portion of the cost of health care benefits is not
expected to increase during 1997. An assumption of a 1% per year increase
in the benefit level would increase the expense in health care benefits by
$53,091 or 19% for the year ended 1996 and increase the accumulated
postretirement benefit obligation by $383,220 or 15% as of December 31, 1996.
NOTE 13: OTHER OPERATING EXPENSES
- ------------------------------------------------------------------------------
Other operating expenses for the years 1996, 1995 and 1994 include:
(in thousands) 1996 1995 1994
- ----------------------------------------------------------------------------
Customer and office supplies $ 1,465 $ 1,291 $ 1,512
Postage and freight 1,229 1,047 1,032
Legal and accounting fees 944 998 1,124
Marketing media 1,732 1,303 1,125
Miscellaneous taxes 1,977 1,787 1,735
FDIC Insurance 12 1,462 2,865
Other 6,397 5,892 5,181
- ----------------------------------------------------------------------------
Total $13,756 $13,780 $14,574
============================================================================
NOTE 14: INCOME TAXES
- -----------------------------------------------------------------------------
A reconciliation of the federal statutory tax rate to the reported
effective tax rate is as follows:
For the years ended December 31,
----------------------------------
1996 1995 1994
- ------------------------------------------------------------------------------
Federal statutory tax rate 35% 35% 35%
Tax-exempt interest income from securities of
states and political subdivisions (8) (9) (11)
State income taxes 3 3 3
Other-net (2) (2) (1)
- ------------------------------------------------------------------------------
Effective tax rate 28% 27% 26%
==============================================================================
40
NOTE 14: INCOME TAXES (CONTINUED)
- ----------------------------------------------------------------------------
The provision for income taxes in the Consolidated Statement
of Income consists of the following: (in thousands)
For the years ended December 31,
--------------------------------
1996 1995 1994
- ------------------------------------------------------------------------------
Current - Federal $7,142 $6,363 $5,427
State 1,345 1,208 963
Deferred- Federal (146) 87 (106)
State 3 (2) (1)
- ------------------------------------------------------------------------------
Total $8,344 $7,656 $6,283
==============================================================================
Tax expense applicable to securities transactions $ 96 $ 174 $ 142
==============================================================================
Deferred tax assets and liabilities are comprised
of the following at December 31:
(in thousands) 1996 1995 1994
- ------------------------------------------------------------------------------
Deferred tax assets:
Allowance for loan losses $5,398 $4,532 $4,105
Tax effect of market value adjustment on
investment securities available for sale 55 --- 2,860
Postretirement and pension expense --- 84 356
Deferred compensation 335 355 419
Other 112 33 52
- ------------------------------------------------------------------------------
Gross deferred tax assets 5,900 5,004 7,792
- ------------------------------------------------------------------------------
Deferred tax liabilities:
Tax effect of market value adjustment on
investment securities available for sale --- 542 ---
Depreciation 1,095 925 802
Purchase accounting adjustments 214 167 161
Accretion on investments 143 136 82
Postretirement and pension expense 252 --- ---
Other 237 257 283
- ------------------------------------------------------------------------------
Gross deferred tax liabilities 1,941 2,027 1,328
- ------------------------------------------------------------------------------
Deferred tax asset valuation allowance --- --- ---
- ------------------------------------------------------------------------------
Net deferred tax assets $3,959 $2,977 $6,464
==============================================================================
NOTE 15: AGREEMENT TO MERGE
- ------------------------------------------------------------------------------
On December 20, 1996, WesBanco announced the signing of a definitive
Agreement and Plan of Merger, providing for the merger of Shawnee Bank, Inc.,
located in Dunbar and South Charleston, West Virginia, with WesBanco South
Hills, a wholly-owned subsidiary of WesBanco. The acquisition, which is based
upon a fixed exchange ratio of 10.094 shares of WesBanco common stock for each
share of Shawnee common stock, will be accounted for as a purchase transaction,
with an approximate value of $9,860,000. To complete the acquisition of
Shawnee, WesBanco anticipates issuing up to 323,280 shares of common stock
to Shawnee shareholders. This transaction, which is subject to approval by
the appropriate regulatory authorities and the shareholders of Shawnee, is
expected to be completed in June 1997.
41
NOTE 16: CONDENSED PARENT COMPANY FINANCIAL STATEMENTS
- ------------------------------------------------------------------------------
Presented below are the condensed Balance Sheet, Statement of Income and
Statement of Cash Flows for the Parent Company: (in thousands)
BALANCE SHEET
December 31,
---------------------
1996 1995
- ------------------------------------------------------------------------------
ASSETS
Cash $ 2,424 $ 2,543
Investment in subsidiaries (at equity in net assets) 204,095 189,799
Investment securities:
Available for sale carried at market value 18,679 7,994
Dividends receivable 5,500 9,750
Other assets 543 205
- ------------------------------------------------------------------------------
TOTAL ASSETS $ 231,241 $ 210,291
==============================================================================
LIABILITIES
Long-term borrowings (Note 10) $ 413 $ 777
Dividends payable and other liabilities 3,296 2,518
- ------------------------------------------------------------------------------
TOTAL LIABILITIES 3,709 3,295
TOTAL SHAREHOLDERS' EQUITY 227,532 206,996
- ------------------------------------------------------------------------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 231,241 $ 210,291
==============================================================================
STATEMENT OF INCOME
For the years ended December 31,
-------------------------------
1996 1995 1994
- ------------------------------------------------------------------------------
INCOME:
Dividends from subsidiaries $19,900 $20,500 $13,550
Income from investments 594 361 273
Other income 285 312 22
- ------------------------------------------------------------------------------
TOTAL INCOME 20,779 21,173 13,845
- ------------------------------------------------------------------------------
TOTAL EXPENSES 1,059 809 842
- ------------------------------------------------------------------------------
Income before income tax benefit and
undistributed net income of subsidiaries 19,720 20,364 13,003
Income tax benefit 303 145 303
- ------------------------------------------------------------------------------
Income before undistributed net
income of subsidiaries 20,023 20,509 13,306
Undistributed net income (excess dividends)
of subsidiaries 1,138 (205) 4,586
- ------------------------------------------------------------------------------
NET INCOME $21,161 $20,304 $17,892
==============================================================================
42
NOTE 16: CONDENSED PARENT COMPANY FINANCIAL STATEMENTS (CONTINUED)
- ------------------------------------------------------------------------------
STATEMENT OF CASH FLOWS
For the years ended December 31,
-------------------------------
1996 1995 1994
- -------------------------------------------------------------------------------
Cash flows from operating activities:
Net Income $ 21,161 $ 20,304 $ 17,892
Undistributed (net income) excess
dividends of subsidiaries (1,138) 205 (4,586)
Increase (decrease) in other assets 4,103 (7,795) (154)
Other-net 151 (163) (7)
- ----------------------------------------------------------------------------------
Net cash provided by operating activities 24,277 12,551 13,145
- ----------------------------------------------------------------------------------
Cash flows from investing activities:
Investments available for sale:
Proceeds from sales 2,927 2,267 31
Proceeds from maturities and calls 1,703 852 5,983
Payments for purchases (15,315) (1,671) (6,835)
Investments held to maturity:
Proceeds from maturities and calls --- 1,883 314
Payments for purchases --- (1,848) (4,471)
Acquisitions and additional capitalization
of subsidiaries (2,605) --- ---
- ----------------------------------------------------------------------------------
Net cash provided by (used in) investing activities (13,290) 1,483 (4,978)
- ----------------------------------------------------------------------------------
Cash flows from financing activities:
Principal payments on ESOP related debt (364) (200) (154)
Proceeds from ESOP related borrowings --- 129 246
Purchases of treasury stock-net (1,367) (3,456) (4,484)
Dividends paid (9,396) (8,022) (6,984)
Other 21 57 33
- ----------------------------------------------------------------------------------
Net cash used in financing activities (11,106) (11,492) (11,343)
- ----------------------------------------------------------------------------------
Net increase (decrease) in cash (119) 2,542 (3,176)
Cash at beginning of year 2,543 1 3,177
- ----------------------------------------------------------------------------------
Cash at end of year $ 2,424 $ 2,543 $ 1
==================================================================================
During 1996, non-cash activity consisted of $11,921,000 of common stock
issued in connection with purchase acquisitions. During 1995 there were
9,925 shares of Preferred Stock redeemed. Of these shares, 9,723 shares
were exchanged for 111,111 shares of WesBanco common stock in a non-cash
transaction. The remaining 202 shares were redeemed for cash at $190 per
share and are included in other financing activities.
NOTE 17: REGULATORY MATTERS
- ------------------------------------------------------------------------------
The operations of the subsidiary banks are subject to Federal and State
statutes which limit the banks' ability to pay dividends or otherwise transfer
funds to the Parent Company. At December 31, 1996 the banks, without prior
approval from regulatory agencies, could have distributed dividends of
approximately $3,641,000.
Federal Reserve regulations require depository institutions to maintain
cash reserves with the Federal Reserve Bank. The average amounts of required
reserve balances were approximately $9,695,000 and $7,618,000 during 1996 and
1995, respectively.
WesBanco is subject to various regulatory capital requirements administered
by the federal banking agencies. Failure to meet minimum capital requirements
can initiate certain mandatory and possibly additional discretionary actions
by regulators that, if undertaken, could have a direct material effect on the
Corporation's financial statements. Under capital guidelines and the
regulatory framework for prompt corrective action, the Corporation must meet
specific capital guidelines that involve quantitative measures of the
Corporation's assets, liabilities, and certain off-balance sheet items as
calculated under regulatory accounting practices. WesBanco's capital amounts
and classification are also subject to qualitative judgments by the regulators
about components, risk weightings and other factors.
Quantitative measures established by regulation to ensure capital
adequacy require the Corporation to maintain minimum amounts and ratios of
Tier I and Total Capital to risk-weighted assets and of Tier I to average
43
NOTE 17: REGULATORY MATTERS (CONTINUED)
- ------------------------------------------------------------------------------
assets (Leverage). As of December 31, 1996 and 1995, all of WesBanco's banking
subsidiaries had capital in excess of applicable requirements.
At December 31, 1996, all of WesBanco's banking subsidiaries qualified
as well-capitalized under the regulatory framework for prompt corrective
action. To be categorized as well-capitalized the Corporation must maintain
minimum Tier I risk-based, and Tier I leverage ratios set forth in the table
below. There are no conditions or events that management believes have
changed WesBanco's category.
The following table summarizes capital amounts and ratios for WesBanco
and its largest affiliate, WesBanco Wheeling: (in thousands)
To Be Well
Capitalized Under
For Capital Corrective Action
Actual Adequacy Purposes: Provisions:
-------------- ---------------- -----------------
WesBanco Amount Ratio Amount Ratio Amount Ratio
- -----------------------------------------------------------------------------------------------
As of December 31, 1996:
- ------------------------
Total Capital to Risk-Weighted Assets $233,139 21.0% $88,698 8.0% $110,872 10.0%
Tier I Capital to Risk-Weighted Assets 219,259 19.8 44,349 4.0 66,523 6.0
Leverage 219,259 13.7 63,875 4.0 79,844 5.0
===============================================================================================
As of December 31, 1995:
- ------------------------
Total Capital to Risk-Weighted Assets $218,078 22.9% $76,237 8.0% $ 95,296 10.0%
Tier I Capital to Risk-Weighted Assets 206,147 21.6 38,118 4.0 57,178 6.0
Leverage 206,147 13.4 61,821 4.0 77,276 5.0
================================================================================================
WesBanco Wheeling
- -----------------
As of December 31, 1996:
- ------------------------
Total Capital to Risk-Weighted Assets $111,472 22.9% $38,879 8.0% $ 48,598 10.0%
Tier I Capital to Risk-Weighted Assets 105,394 21.7 19,439 4.0 29,159 6.0
Leverage 105,394 12.9 32,570 4.0 40,713 5.0
================================================================================================
As of December 31, 1995:
- ------------------------
Total Capital to Risk-Weighted Assets $110,616 24.8% $35,619 8.0% $ 44,524 10.0%
Tier I Capital to Risk-Weighted Assets 105,047 23.6 17,809 4.0 26,714 6.0
Leverage 105,047 13.3 31,641 4.0 39,551 5.0
================================================================================================
44
MANAGEMENT'S RESPONSIBILITY FOR FINANCIAL STATEMENTS
- ------------------------------------------------------------------------------
The financial statements and the information pertaining to those
statements are the responsibility of management. The financial statements
have been prepared in conformity with generally accepted accounting principles,
applied on a consistent basis.
The accounting systems of the Corporation and its subsidiaries include
internal controls and procedures which provide reasonable assurance as to the
reliability of the financial records. Internal control systems are generally
supported by written policies and procedures. Internal Audit performs audits
of operations, reviews procedures, monitors adherence to bank policies and
submits written audit reports to the Audit Committee. The Audit Committee
of the Board of Directors is composed of only outside directors. The Audit
Committee meets regularly with management, internal audit and our independent
accountants to review accounting, auditing and financial matters. The internal
auditors, Federal and State examiners, and Ernst & Young LLP have full access
to the Audit Committee to discuss any appropriate matters.
Independent accountants provide an objective review of management's
discharge of its financial responsibilities relating to the preparation of
the financial statements. The independent accountant's report is based on
an audit in accordance with generally accepted auditing standards. This
report expresses an informed judgment as to whether management's financial
statements present fairly, in conformity with generally accepted accounting
principles, the Corporation's financial position, results of operation and
cash flows.
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
- ------------------------------------------------------------------------------
SHAREHOLDERS AND BOARD OF DIRECTORS
WESBANCO, INC.
We have audited the accompanying consolidated balance sheet of WesBanco,
Inc. and subsidiaries as of December 31, 1996 and the related consolidated
statements of income, changes in shareholders' equity, and cash flows for
the year ended December 31, 1996. These financial statements are the
responsibility of the management of WesBanco, Inc. Our responsibility is
to express an opinion on these financial statements based on our audit.
The financial statements of WesBanco, Inc. for the years ended December 31,
1995 and 1994 were audited by other auditors whose report dated January 25,
1996, except as to the Bank of Weirton transaction, which is as of August 30,
1996, expressed an unqualified opinion on those statements.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable
basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the consolidated financial position of
WesBanco, Inc. and subsidiaries at December 31, 1996, and the consolidated
results of their operations and their cash flows for the year ended December
31, 1996, in conformity with generally accepted accounting principles.
/s/ Ernst & Young LLP
February 3, 1997
Pittsburgh, Pennsylvania
45
WESBANCO, INC.
CONDENSED QUARTERLY STATEMENT OF INCOME
- ------------------------------------------------------------------------------
(in thousands, except for earnings per share)
1996 Quarter ended
------------------------------------------------------
Annual
March 31 June 30 September 30 December 31 Total
- ------------------------------------------------------------------------------------
Interest income $27,476 $27,704 $28,048 $29,710 $112,938
Interest expense 11,810 11,754 12,159 12,495 48,218
- ------------------------------------------------------------------------------------
Net interest income 15,666 15,950 15,889 17,215 64,720
Provision for loan losses 869 681 1,298 1,488 4,336
- ------------------------------------------------------------------------------------
Net interest income after
provision for loan losses 14,797 15,269 14,591 15,727 60,384
Other income 3,062 2,910 3,145 3,156 12,273
Other expenses 10,120 10,492 10,834 11,706 43,152
- ------------------------------------------------------------------------------------
Income before income taxes 7,739 7,687 6,902 7,177 29,505
Provision for income taxes 2,366 2,140 1,749 2,089 8,344
- ------------------------------------------------------------------------------------
Net Income $ 5,373 $ 5,547 $ 5,153 $ 5,088 $ 21,161
====================================================================================
Earnings per share of
common stock $.53 $.55 $.50 $.50 $2.08
====================================================================================
1995 Quarter ended
------------------------------------------------------
Annual
March 31 June 30 September 30 December 31 Total
- ------------------------------------------------------------------------------------
Interest income $26,102 $26,940 $27,133 $27,907 $108,082
Interest expense 10,980 11,536 11,804 12,250 46,570
- ------------------------------------------------------------------------------------
Net interest income 15,122 15,404 15,329 15,657 61,512
Provision for loan losses 381 472 834 1,101 2,788
- ------------------------------------------------------------------------------------
Net interest income after
provision for loan losses 14,741 14,932 14,495 14,556 58,724
Other income 2,958 2,986 2,766 2,656 11,366
Other expenses 10,421 10,660 10,229 10,820 42,130
- ------------------------------------------------------------------------------------
Income before income taxes 7,278 7,258 7,032 6,392 27,960
Provision for income taxes 2,092 2,029 1,985 1,550 7,656
- ------------------------------------------------------------------------------------
Net Income $ 5,186 $ 5,229 $ 5,047 $ 4,842 $ 20,304
====================================================================================
Earnings per share
of common stock $.50 $.51 $.49 $.48 $1.98
====================================================================================
46
WESBANCO, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE CONSOLIDATED FINANCIAL STATEMENTS
- -----------------------------------------------------------------------------
Management's discussion and analysis represents an overview of the
financial condition and results of operations of WesBanco, Inc. This
discussion and analysis should be read in conjunction with the Consolidated
Financial Statements and Notes thereto. Following is the five year Selected
Financial Summary.(1)
December 31,
----------------------------------------------------------------
(in thousands, except for share and per share amounts) 1996 1995 1994 1993 1992
- ------------------------------------------------------------------------------------------------------------------------
Cash dividends declared(2) $ 1.08 $ .96 $ .86 $ .79 $ .70
Book value(2) 21.62 20.32 18.86 18.52 17.41
Average common shares outstanding(2) 10,168,738 10,160,328 10,280,878 10,379,499 10,397,197
Selected Balance Sheet Information:
Total Investments $ 525,309 $ 522,288 $ 587,953 $ 602,888 $ 601,681
Net Loans 1,010,842 880,480 798,413 759,318 726,114
Total Assets 1,677,771 1,549,019 1,532,832 1,534,131 1,500,687
Total Deposits 1,342,820 1,254,844 1,254,586 1,265,677 1,245,978
Total Shareholders' Equity 227,532 206,996 192,305 191,801 180,641
Selected Ratios:
Return on Average Assets 1.34% 1.33% 1.17% 1.30% 1.21%
Return on Average Equity 10.02 10.15 9.32 10.59 10.21
Dividend Payout Ratio 49.76 44.19 45.80 37.28 36.68
Average Equity to Average Assets 13.33 13.09 12.58 12.24 11.91
For the years ended December 31,
--------------------------------------------------------------------
1996 1995 1994 1993 1992
- --------------------------------------------------------------------------------------------------------------------------
Summary Statement of Income:
Interest income $112,938 $108,082 $101,720 $105,268 $112,851
Interest expense 48,218 46,570 39,660 43,727 53,661
- --------------------------------------------------------------------------------------------------------------------------
Net interest income 64,720 61,512 62,060 61,541 59,190
Provision for loan losses 4,336 2,788 6,073 3,247 3,297
- --------------------------------------------------------------------------------------------------------------------------
Net interest income after provision
for loan losses 60,384 58,724 55,987 58,294 55,893
Other income 12,273 11,366 11,028 10,367 10,272
Other expenses 43,152 42,130 42,840 41,873 40,610
- --------------------------------------------------------------------------------------------------------------------------
Income before income taxes and effect of
prior years' postretirement benefits 29,505 27,960 24,175 26,788 25,555
Provision for income taxes 8,344 7,656 6,283 7,070 7,044
- --------------------------------------------------------------------------------------------------------------------------
Income before effect of prior years'
postretirement benefits 21,161 20,304 17,892 19,718 18,511
Effect of prior years' postretirement
benefits - net of tax effect --- --- --- --- (592)
- --------------------------------------------------------------------------------------------------------------------------
Net Income $21,161 $20,304 $17,892 $19,718 $17,919
==========================================================================================================================
Per Share: (2)
Income before effect of prior years'
postretirement benefits $2.08 $1.98 $1.72 $1.88 $1.76
Effect of prior years' postretirement
benefit - net of tax effect --- --- --- --- (.05)
- --------------------------------------------------------------------------------------------------------------------------
Net Income $2.08 $1.98 $1.72 $1.88 $1.71
==========================================================================================================================
(1) See Note 1 of the Notes to Consolidated Financial Statements.
(2) Adjusted for two-for-one stock split which occurred during April 1993.
47
EARNINGS SUMMARY
- ------------------------------------------------------------------------------
WesBanco's net income increased 4.2% to $21,161,000 for the year ended
December 31, 1996 as compared to $20,304,000 and $17,892,000 for the years
ended December 31, 1995 and 1994, respectively. The 1996 earnings increase
was highlighted by increases in the net interest margin and fee income. The
increase in 1995 net income was primarily due to a reduction in both the
provision for loan losses and non-interest expense. For 1996, return on
assets (ROA) increased to 1.34% from 1.33% in 1995 and return on equity (ROE)
decreased to 10.02% from 10.15% in 1995. For 1994, ROA and ROE were 1.17%
and 9.32%, respectively.
The following table presents a comparative average balance sheet and
interest rate analysis:
AVERAGE BALANCE SHEET AND NET INTEREST ANALYSIS
- ------------------------------------------------------------------------------
(dollars in thousands)
For the years ended December 31,
----------------------------------------------------------------------------------------------
1996 1995 1994
------------------------------ ---------------------------- ---------------------------
Average Average Average Average Average Average
Volume Interest Rate Volume Interest Rate Volume Interest Rate
- ----------------------------------------------------------------------------------------------------------------------------------
ASSETS
Loans $ 921,168 $ 81,449 8.84% $ 836,699 $ 74,452 8.90% $ 769,084 $ 64,906 8.44%
Investment securities:
Taxable 375,451 22,066 5.88 416,646 23,614 5.67 468,907 26,580 5.67
Non-taxable 147,165 7,642 5.19 135,211 7,524 5.56 146,836 8,196 5.57
- ----------------------------------------------------------------------------------------------------------------------------------
Total investment securities 522,616 29,708 5.68 551,857 31,138 5.64 615,743 34,776 5.65
Federal funds sold 33,880 1,781 5.26 41,591 2,492 5.99 48,889 2,038 4.17
- ----------------------------------------------------------------------------------------------------------------------------------
Total earning assets 1,477,664 $112,938 7.64% 1,430,147 $108,082 7.56% 1,433,716 $101,720 7.10%
- ----------------------------------------------------------------------------------------------------------------------------------
Cash and due from banks 50,580 45,893 49,216
Other assets 56,750 51,657 43,814
- ----------------------------------------------------------------------------------------------------------------------------------
Total Assets $1,584,994 $1,527,697 $1,526,746
==================================================================================================================================
LIABILITIES, REDEEMABLE PREFERRED STOCK AND SHAREHOLDERS' EQUITY
Interest bearing demand $ 273,790 $ 7,064 2.58% $ 280,063 $ 7,936 2.83% $ 299,263 $ 8,173 2.73%
Savings deposits 331,879 8,817 2.66 352,674 10,333 2.93 382,166 10,448 2.73
Certificates of deposit 524,938 28,551 5.44 470,668 25,134 5.34 438,129 19,082 4.36
- ----------------------------------------------------------------------------------------------------------------------------------
Total interest bearing deposits 1,130,607 44,432 3.93 1,103,405 43,403 3.93 1,119,558 37,703 3.37
Federal funds purchased and
repurchase agreements 75,183 3,599 4.79 55,272 2,957 5.35 53,189 1,812 3.41
Other borrowings 6,646 187 2.81 4,825 210 4.35 4,706 145 3.08
- ----------------------------------------------------------------------------------------------------------------------------------
Total interest
bearing liabilities 1,212,436 $48,218 3.98% 1,163,502 $46,570 4.00% 1,177,453 $39,660 3.37%
- ----------------------------------------------------------------------------------------------------------------------------------
Noninterest bearing demand 145,069 145,397 146,215
Other liabilities 16,241 17,177 9,216
Redeemable Preferred Stock &
Shareholders' Equity 211,248 201,621 193,862
- ----------------------------------------------------------------------------------------------------------------------------------
Total Liabilities, Redeemable
Preferred Stock &
Shareholders' Equity $1,584,994 $1,527,697 $1,526,746
==================================================================================================================================
Net yield on earning assets $64,720 4.37% $61,512 4.30% $62,060 4.33%
==================================================================================================================================
Taxable equivalent net yield
on earning assets $68,835 4.66% $65,559 4.58% $66,470 4.64%
==================================================================================================================================
Nonaccrual loans were included in the average volume for the entire year.
Loan fees included in interest on loans are not material. Average yields on
investment securities available for sale have been calculated based on
amortized cost.
Taxable equivalent basis is calculated on non-taxable securities using a tax
rate of 35% for each year presented.
48
NET INTEREST INCOME
- ------------------------------------------------------------------------------
Net interest income, the spread between interest income on earning assets
and interest expense on liabilities to fund those assets, represents the
largest component of earnings to the Corporation. Net interest income is
affected by both changes in the level of interest rates and changes in the
amounts and mix of interest earning assets and interest bearing liabilities.
The net yield on earning assets (net interest income as a percentage of
interest earning assets) is a frequently used measurement of the net interest
margin.
In 1996, net interest income was $64,720,000, an increase of $3,208,000
or 5.2% from 1995, following a decrease in 1995 of $548,000 or .9% from 1994.
The 1996 increase was attributable primarily to balance sheet growth and an
improvement in the net yield on earning assets. The improvement in the net
yield was due primarily to an increase in the yield on taxable investment
securities during a period of falling loan and deposit rates. In 1995, the
decrease in net interest income was primarily the result of a decline in
earning assets and interest bearing liabilities coupled with a decline in the
net yield on earning assets. The net yield in 1995 was affected by a
relatively higher cost of interest bearing liabilities.
Average earning assets increased $47,517,000 or 3.3% between 1996 and
1995 compared to a decrease of $3,569,000 or .2% between 1995 and 1994.
Growth in consumer and residential real estate loans contributed to the
majority of the 1996 increase. A change in asset mix occurred during 1996
as loan growth of $84,469,000 or 10.1% was funded, in part, by maturities
and proceeds from the sale of investment securities. A similar change in
asset mix occurred during 1995.
Average interest bearing liabilities increased $48,934,000 or 4.1%
between 1996 and 1995 following a decrease of $13,951,000 or 1.2% between
1995 and 1994. The increase in 1996 was attributable primarily to deposit
growth which reflected an 11.5% increase in certificates of deposit in 1996.
Although partially due to a shift from demand and savings balances, the
growth in certificates of deposit reflects the competitive pricing associated
with the Good Neighbor Banking program. In 1995, the decrease in average
interest bearing liabilities was the result of the competition for funds in
the local market and customers seeking nonbank investment alternatives.
The net yield on earning assets improved .07% to 4.37% in 1996 from 4.30%
in 1995. The 1996 improvement follows a .03% decrease in the net yield in
1995. The cost of interest bearing liabilities declined by .02% in 1996,
following an increase of .63% in 1995. Influenced by falling market rates,
the 1996 decline reflects a reduction in interest rates on short-term
borrowings, demand and savings deposits which were partially offset by the
effects of a change in deposit mix from demand and savings to higher-yielding
certificates of deposit. In 1995, sharply rising short-term interest rates
from 1994 caused an increase in the cost of interest bearing liabilities
attributable primarily to rates paid on certificates of deposit which increased
.98% in 1995. Earning asset yields increased .08% in 1996, following an
increase of .46% in 1995. In 1996, a decline in loan yields of .06% was
offset by an increase in investment yields, coupled with the effects of a
change in asset mix from investment securities to higher-yielding loans. In
1995, a .46% increase in loan yields contributed to the improvement in the
earning asset yield. The nationwide bank base lending rate averaged 8.3% for
1996 compared to 8.6% in 1995 and 7% for 1994.
INVESTMENTS
- ------------------------------------------------------------------------------
Investment securities averaged $522,616,000 during 1996, a decrease of
$29,241,000 or 5.3% over 1995, following a decrease of $63,886,000 or 10.4%
between 1995 and 1994. The decreases were required to fund loan growth which
exceeded deposit growth for the corresponding periods. In 1996, the
composition of investment securities changed through an increase in mortgage-
backed securities and a comparable decrease in U.S. Treasury and Agency
securities classified in the held to maturity portfolio.
WesBanco's available for sale portfolio at fair market value was
$276,201,000 or 53% of total investment securities as of December 31, 1996,
compared to $172,137,000 or 33% of investment securities for the same period
in 1995. At December 31, 1996, the available for sale portfolio had an
average yield of 6.2% and an average maturity of 4.1 years.
The market value adjustment, recorded on the Consolidated Balance Sheet
as an adjustment to Shareholders' Equity, reflected an unrealized after-tax
loss of $90,000, as of December 31, 1996 compared to an unrealized after-tax
gain of $849,000 as of December 31, 1995. These market value adjustments
represent temporary market value fluctuations which depend upon general
changes in market rates. WesBanco can adjust the volatility of the market
value adjustment by managing both the volume of securities classified as
available for sale and average maturities. If securities are held to their
maturity dates, no net gain or loss would be realized.
49
INVESTMENTS (CONTINUED)
- ------------------------------------------------------------------------------
Held to maturity securities, at cost, totaled $249,108,000 or 47% of
total investment securities as of December 31, 1996, compared to $350,151,000
or 67% for the same period in 1995. At December 31, 1996, the held to
maturity portfolio had an average yield of 5.5% and an average maturity of
3.8 years.
In connection with the Bank of Weirton acquisition, and to satisfy
WesBanco's asset and liability management objectives, U.S. Treasury securities
of $55,340,000 were transferred from held to maturity to the available for
sale portfolio and subsequently sold.
During 1996 and 1995, as loan demand exceeded deposit growth, matured,
called or sold investment securities represented a primary source of
liquidity. Investment securities with a total carrying value of $157,297,000
either matured or were called during 1996 as compared to $127,960,000 during
1995. Available for sale securities of $89,075,000 and $59,291,000 were sold
during 1996 and 1995, respectively. Affected primarily by the increase in
mortgage-backed securities, the total average maturity of investment securities
at December 31, 1996 extended to 4 years as compared to 2.8 years and 3.1 years
as of December 31, 1995 and 1994, respectively. During 1997, securities
totaling $118,003,000 or 22% of total securities are expected to mature,
providing for potential liquidity needs.
Investment income declined by $1,430,000 during 1996 after declining by
$3,638,000 during 1995. The decline in both years was primarily due to
decreases in average investment balances. The average yield on taxable
securities, excluding the effects of the market value adjustment on available
for sale securities, increased to 5.9% in 1996 from 5.7% for 1995 and 1994.
The average yield on non-taxable securities, not adjusted for tax equivalency,
was 5.2% for 1996 and 5.6% for 1995 and 1994.
Net realized securities gains totaled $239,000 in 1996 compared to
$437,000 and $366,000 in 1995 and 1994, respectively. During 1996 and 1995,
net gains of $254,000 and $126,000, respectively, were realized through a
decision to divest of equity positions which no longer had a strategic value
to the Corporation. Gains and losses on securities are dependent upon the
changing bond market conditions and the composition of the securities.
LOANS
- ------------------------------------------------------------------------------
At December 31, 1996, loans outstanding were $1,026,370,000, representing
an increase of $132,451,000 or 14.8% from December 31, 1995. This follows a
10.3% increase in loans for the corresponding period in 1995. The 1996
growth was attributable primarily to increases in mortgage and consumer loans,
and the purchase of Vandalia National Corporation, which added loans
outstanding of $47,039,000 at the date of acquisition. Growth for 1995
reflected similar trends in mortgage and consumer loans. The increase in
mortgage loans was largely due to refinancing activity caused by a declining
interest rate environment during 1996. In 1997, the Corporation expects an
increase in mortgage loan originations through its newly acquired affiliate,
WesBanco Mortgage Company. The mortgage company originates and sells the
fixed rate mortgage loans to the secondary market. Consumer loans increased
as a result of offering attractive rates on vehicle loans originated through
dealers. During 1995 and 1994, the Corporation sold substantially all of its
student loan portfolio, which totaled approximately $9,000,000. Commercial
loans increased .2% in 1996 and 6.5% during 1995. As of December 31, 1996,
commercial loans comprised 17% of total loans outstanding, real estate secured
loans comprised 52%, and consumer-type loans comprised 31%.
Interest on loans increased $6,997,000 or 9.4% during 1996, after an
increase of $9,546,000 in 1995. The 1996 increase was due to growth in
average loans of $84,469,000 or 10.1%, partially offset by a decrease in the
average yield on loans of .06% to 8.84%. The 1995 increase was primarily due
to an increase in the average yield on loans of .46% to 8.9% from 8.44% in
1994. Rates offered on loan products generally decreased during 1996,
following an increase in loan rates during the second half of 1994 into early
1995. The majority of commercial and mortgage loans reprice monthly or annually
based on changes in national indices such as prime rate or the U.S. Treasury
Bill rate.
At December 31, 1996 and 1995, impaired loans included all nonaccrual and
renegotiated loans as well as loans internally classified as substandard or
doubtful. Loans classified as impaired increased to $10,285,000 in 1996 or
1% of loans outstanding compared to $7,291,000 or .8% of loans outstanding in
1995. The increase was reflected in a commercial loan classified as
substandard. Nonaccrual loans are generally secured by collateral believed
to have adequate market values to protect against significant losses. The
Corporation continues to monitor the nonperforming assets to ensure against
deterioration in collateral values. The overall credit quality of the loan
portfolio remains strong.
50
LOANS (CONTINUED)
- ------------------------------------------------------------------------------
Net charge-offs increased in 1996 by $645,000 or 28% to $2,954,000 in
1996 from $2,309,000 in 1995. In 1995, net charge-offs decreased by 58.7%
from 1994, primarily due to a 1994 writeoff of approximately $4,000,000 on a
commercial real estate loan. The provision for loan losses was $4,336,000 in
1996, $2,788,000 in 1995 and $6,073,000 in 1994. The allowance for loan losses
is considered adequate to provide for future losses in the loan portfolio.
Amounts charged to earnings were based on periodic management evaluations of
the loan portfolio, specific problem loans and other factors.
DEPOSITS
- ------------------------------------------------------------------------------
As of December 31, 1996, total deposits were $1,342,820,000, reflecting
an increase of $87,976,000 from December 31, 1995. This increase follows a
period of no growth between 1995 and 1994. The 1996 growth was primarily
attributable to the purchase of Vandalia, which added total deposits of
$50,059,000 at the date of acquisition. The remaining increase was due to
certificates of deposit growth, resulting from both a shift in deposit mix
from demand and savings balances, and offering bonus rates on longer-term
certificates of deposit products.
The competition for funds in the local market and customers seeking
nonbank investment alternatives continues to intensify. WesBanco has addressed
these concerns with competitive deposit pricing and strengthening its deposit
base through the introduction of two new programs, the Good Neighbor Banking
Program and the Prime Rate Money Market Account. On October 1, 1995, Good
Neighbor Banking began, offering a series of pricing bonuses based on the
customer's service relationship. WesBanco continued to emphasize this program
during 1996, achieving a penetration rate of its customer base of over 30%.
The Prime Rate Money Market Account, which started October 1, 1996, enables
depositors with a minimum balance of $10,000, to invest their funds in this
account. The money market account bases its rate at 60% of WesBanco's prime
rate.
Interest expense on deposits increased $1,029,000 or 2.4% during 1996
compared to $5,700,000 or 15.1% during 1995. The 1996 increase was primarily
the result of average deposit growth of $26,874,000 or 2.2% over 1995 coupled
with a shift in deposit mix to higher-yielding certificates of deposit. As
interest rates declined during 1996, customers' preferences shifted to higher-
yielding investment alternatives. WesBanco responded by offering bonuses on
several certificate of deposit products. The 1995 interest expense increase
was attributable to a .56% increase in the average rate paid on interest
bearing deposits between 1995 and 1994, caused by a rising rate environment,
partially offset by a $16,971,000 or 1.3% decrease in average deposits.
CAPITAL ADEQUACY
- ------------------------------------------------------------------------------
On December 31, 1996 shareholders' equity totaled $227,532,000, an
increase of $20,536,000 from December 31, 1995. The increase can be attributed
to earnings growth coupled with a reduction in the Treasury stock balance.
During 1996, WesBanco utilized treasury shares totaling 211,118 in connection
with the acquisition of Vandalia National Corporation and Universal Mortgage
Company.
On March 3, 1997, WesBanco began a stock purchase plan to acquire up to
323,280 shares of WesBanco common stock in connection with the definitive
Agreement and Plan of Merger with Shawnee Bank, Inc. The plan will terminate
30 days after consummation of the transaction, which is scheduled to occur in
June 1997. To complete the Shawnee acquisition, the Corporation anticipates
reissuing shares acquired through the plan. See Note 15 for additional
information on the Shawnee Agreement to Merge.
The Corporation announced cash dividend increases during 1996 and the
first quarter of 1997. On April 1, 1996 the quarterly per share dividend
was increased to $.26 from $.25, and on October 1, 1996 the dividend was
increased to $.28. On February 20, 1997, the Corporation approved an increase
in the April 1, 1997 quarterly per share dividend to $.29, reflecting an
annualized dividend of $1.16. WesBanco's dividend payout ratio for 1996 was
49.8%, up from 44.2% in 1995.
WesBanco is subject to risk-based capital guidelines that measure capital
relative to risk-weighted assets and off-balance sheet instruments. WesBanco,
and its banking subsidiaries, maintain Tier I, Total Capital and Leverage
ratios well above minimum regulatory levels. See Note 17 of the consolidated
financial statements for more information on capital amounts, ratios and
minimum regulatory requirements.
51
INTEREST RATE MANAGEMENT AND LIQUIDITY
- ------------------------------------------------------------------------------
Interest rate management measures the sensitivity of net interest earnings
to changes in the level of interest rates. As interest rates change in the
market, rates earned on interest earning assets and rates paid on interest-
bearing liabilities do not necessarily move concurrently. Differing rate
sensitivities may arise because fixed rate assets and liabilities may not have
the same maturities or because variable rate assets and liabilities differ in
the timing of rate changes.
WesBanco and its banking subsidiaries review their interest rate
sensitivity on a periodic basis. The analysis presented below classifies
interest earning assets and interest bearing liabilities into maturity
categories and measures the differences between maturing assets and
liabilities in each category (interest sensitivity gap). At December 31,
1996, the Corporation was in a liability sensitive position as summarized in
the table below:
Under Three Six Nine Over
Three to Six to Nine Months to One
(in thousands): Months Months Months One Year Year Total
- -----------------------------------------------------------------------------------------------------
ASSETS
Due from banks/interest bearing --- $ 98 --- --- $ 99 $ 197
Loans $ 161,800 59,218 $ 57,700 $ 68,217 680,418 1,027,353
Investment securities(1) 44,478 31,333 12,725 29,467 407,450 525,453
Federal funds sold 10,970 --- --- --- --- 10,970
- -----------------------------------------------------------------------------------------------------
Total interest earning assets 217,248 90,649 70,425 97,684 1,087,967 1,563,973
- -----------------------------------------------------------------------------------------------------
LIABILITIES
Savings and NOW accounts 514,141 --- --- --- --- 514,141
All other interest bearing deposits 201,910 121,854 92,094 65,938 187,707 669,503
Short-term borrowings 76,078 4,885 2,816 2,710 6,282 92,771
- -----------------------------------------------------------------------------------------------------
Total interest bearing liabilities 792,129 126,739 94,910 68,648 193,989 1,276,415
- -----------------------------------------------------------------------------------------------------
Interest sensitivity gap $(574,881) $ (36,090) $ (24,485) $ 29,036 $ 893,978 $ 287,558
=====================================================================================================
Cumulative interest sensitivity gap $(574,881) $(610,971) $(635,456) $(606,420) $ 287,558
=====================================================================================================
(1) Securities are categorized above by expected maturity at amortized cost.
The changing interest rate environment can substantially impact the
Corporation's net interest income and profitability. The Asset/Liability
Committee believes the Corporation's interest sensitivity position provides
for a changing interest rate environment. The liability sensitive position
in the under three month time period is caused by savings and NOW deposits.
Interest rates on these deposit instruments are subject to periodic adjustment
at management's discretion.
The Corporation's short-term liability sensitive position would suggest
exposure of the net interest margin to changing interest rates. An increase
in interest rates may cause a decline in the net interest margin while a
decrease in interest rates may have the opposite effect. The Corporation may
reduce its short-term liability sensitive position making its net interest
margin less vulnerable to rising interest rates by shortening asset maturities,
primarily through reinvestment into federal funds from investment maturities.
In addition, management may emphasize attracting longer-term deposits by
adjusting the pricing spread between demand, savings and term certificates
of deposit.
The Corporation manages its liquidity position to ensure that sufficient
funds are available to meet customer needs for borrowing and deposit
withdrawals. The Corporation's primary source of liquidity is its strong
core deposit base. The growth in deposits is somewhat dependent upon interest
rates of competitive financial instruments. Short-term liquidity is
maintained through the use of federal funds sold, which represents one day
investments and cash balances. As of December 31, 1996, federal funds sold
and cash balances were $69,995,000 or 4.2% of total assets as compared to
$91,694,000 or 5.9% of total assets as of December 31, 1995. Additional
short-term liquidity is maintained through investments with expected maturities
of less than one year which, during 1997, approximate $118,003,000 or 7.0% of
total assets. During 1996 investment maturities and calls of $157,297,000
became available for reinvestment.
As of December 31, 1996 the Corporation had outstanding commitments to
extend credit in the ordinary course of business approximating $70,527,000.
On a historical basis only a small portion of these commitments result in
expended funds.
The Corporation has planned additions to fixed assets of approximately
$7,000,000 during 1997. No commitments have been made for any of these
additions.
52
OTHER INCOME
- ------------------------------------------------------------------------------
Other income, excluding securities transactions, increased $1,105,000 or
10.1% over 1995, due primarily to an increase in trust fee revenue. Trust fee
revenue was $5,442,000 for 1996, an increase of $726,000 or 15.4% over 1995.
Trust fee revenue increased $291,000 or 6.6% between 1995 and 1994. This
steady increase in trust fees can be attributed to the increased number of
accounts under administration and increased market values. The market value
of trust assets at December 31, 1996 approximated $1,591,130,000 as compared
to $1,334,667,000 at December 31, 1995, an increase of 19.2%. Service charges
and other income totaled $5,542,000 for 1996, an increase of $368,000 over
1995. Service charges and other income decreased $141,000 between 1995 and
1994 due to fee discounts associated with Good Neighbor Banking.
OTHER EXPENSES
- ------------------------------------------------------------------------------
Other expenses increased $1,022,000 or 2.4% in 1996 to $43,152,000,
following a decrease of $710,000 or 1.7% in 1995. The increase in 1996 was
primarily due to an increase in salaries and equipment expense, partially
offset by a reduction in FDIC insurance. During 1995, other expenses declined
primarily due to a reduction in FDIC insurance.
During 1996, the Corporate initiatives to implement new technology
through the installation of a Wide Area Network and a new mainframe software
system have contributed to increases in several operating expense categories.
Salaries were impacted by overtime costs associated with training and
development. Equipment and other operating expense were affected by increases
in depreciation, service agreements and data processing conversion costs.
These technological initiatives, while increasing costs in 1996, are expected
to improve internal operating efficiencies into the future.
Salaries and benefits for 1996 increased $393,000, while decreasing
$43,000 during 1995. The 1996 increase was primarily due to the recent
affiliate acquisitions, training and development associated with implementation
of new technology, and normal salary adjustments, partially offset by a
reduction in pension costs. The reduction in pension costs was caused by
market value appreciation of pension plan assets combined with a change in the
method of calculating benefits. The 1995 decrease was primarily due to a
decrease in full time equivalent employees to 794 as of December 31, 1995
from 815 the previous year. As of December 31, 1996, full time equivalent
employees increased to 860, due primarily to the purchase acquisitions of
Vandalia National Corporation and Universal Mortgage Company.
Occupancy and equipment expenses increased approximately 12.7% in 1996
and 2.5% in 1995. The increases were the result of technology costs and the
construction of a branch facility in Bridgeport, West Virginia completed in
1995.
Other operating expenses decreased $24,000 in 1996 after decreasing
$794,000 during 1995. The 1996 decrease was due primarily to a reduction in
FDIC insurance, partially offset by increases in marketing expense, data
processing costs, and acquisition related expenses. The decrease in 1995 was
primarily related to a reduction in FDIC insurance expense. During 1995,
marketing expenses increased as a result of the Good Neighbor Banking Program.
The Corporation continued this marketing effort throughout 1996.
During 1996 and 1995, the Corporation has experienced improved operating
efficiencies from the internal consolidation of affiliate banks, as measured
by the efficiency ratio which decreased to 53.4% in 1996 from 55.1% and 55.9%
in 1995 and 1994, respectively. These internal bank consolidations reduced
the number of affiliates to five in 1996 from thirteen two years ago.
INCOME TAXES
- ------------------------------------------------------------------------------
Federal income tax expense increased $546,000 to $6,996,000 during 1996,
after increasing $1,129,000 to $6,450,000 during 1995. In both years the tax
expense increased due primarily to increased pretax earnings.
The effective tax rate for the Corporation was 28% for 1996, 27% for 1995
and 26% for 1994. The changes in the effective tax rate are representative
of the change in the level of taxable income and to a lesser extent the
changing state tax rate.
The alternative minimum tax will affect WesBanco only if a significant
amount of non-taxable income exists when compared to taxable income. The
State of West Virginia has a corporate net income tax based upon federal
taxable income, adjusted for certain items not subject to state taxation.
The state tax rate for 1996 was 9.0%. State income tax included in the
provision for income taxes was $1,348,000 for 1996 as compared to $1,206,000
and $962,000 for 1995 and 1994, respectively. The State of Ohio does not have
a corporate income tax, but rather, businesses are subject to an Ohio
corporate franchise tax which is included in other operating expenses.
53
ACQUISITIONS
- ------------------------------------------------------------------------------
On August 30, 1996, WesBanco consummated its acquisition of the Bank of
Weirton. WesBanco issued 1,690,000 shares of common stock to shareholders of
Bank of Weirton, in a transaction accounted for as a pooling-of-interests.
Bank of Weirton reported net income of $2,115,000 and $2,195,000 for the years
ended December 31, 1995 and 1994, respectively. The acquisition caused
dilution in earnings per share of $.15 and $.09 for the years ended December
31, 1995 and 1994, respectively. Book value per share increased by $.31
and $.45 as of December 31, 1995 and 1994, respectively.
MARKET OF COMMON STOCK AND RELATED SHAREHOLDER MATTERS
- ------------------------------------------------------------------------------
WesBanco's common stock is quoted on The Nasdaq Stock Market (Nasdaq),
with a trading symbol of WSBC. As reported by Nasdaq, the price information
reflects high and low sales prices.
The approximate number of holders of WesBanco's $2.0833 par value common
stock as of December 31, 1996 was 4,267.
Effective with the April 1, 1997 dividend, the quarterly dividend will
increase from $.28 to $.29 per share. The new dividend amount represents an
annualized dividend of $1.16 per share.
The following represents reported high and low trading prices and
dividends declared during the respective quarter:
Dividend
High Low Declared
- --------------------------------------------------------------------
1996
4th quarter $32.50 $27.50 $.28
3rd quarter 28.50 26.25 .28
2nd quarter 27.25 25.75 .26
1st quarter 28.75 26.25 .26
1995
4th quarter $30.00 $26.75 $.25
3rd quarter 29.50 25.75 .25
2nd quarter 26.50 23.25 .23
1st quarter 25.75 22.75 .23
OTHER MATTERS
- ------------------------------------------------------------------------------
Certain information in "Management's Discussion and Analysis" and other
statements contained in this report which are not historical facts may be
forward looking statements that 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; credit risks of commercial, real
estate, consumer and their lending activities; changes in federal and state
regulations; the presence in the Company's market area of competitors with
greater financial resources than the Company; or other unanticipated external
developments materially impacting the Company's operational and financial
performance.
The Corporation has approximately 57% of its assets located in the Upper
Ohio Valley, an area experiencing an extended strike between the United Steel
Workers Union and Wheeling-Pittsburgh Steel Corporation. Through the current
date, this strike has not significantly impacted WesBanco's results of
operations. Since WesBanco is unable to determine when the strike may be
settled, we cannot estimate the impact on the local economy, if the strike
continues and ultimately the long-term effects resulting therefrom.
54
EXHIBIT 21
WESBANCO SUBSIDIARIES
WesBanco, Inc.
WesBanco Properties, Inc. (non-bank)
WesBanco Mortgage Company (non-bank)
WesBanco Bank Wheeling
McLure Hotel, Inc. (non-bank)
WesBanco Bank South Hills
FFB Corporation
WesBanco Bank Fairmont
WesBanco Bank Barnesville
WesBanco Bank Parkersburg
Vandalia National Corporation (Inactive)
Note: All subsidiaries listed above are 100% owned by the
Registrant.
55
EXHIBIT 23.1
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration Statement
(Form S-3 No. 333-06467) of WesBanco, Inc. and subsidiaries and in the related
Prospectus of our report dated February 3, 1997, with respect to the
consolidated financial statements of WesBanco, Inc. and subsidiaries
incorporated by reference in this Annual Report (Form 10-K) for the year
ended December 31, 1996
/s/ ERNST & YOUNG LLP
Pittsburgh, Pennsylvania
March 13, 1997
56
EXHIBIT 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectus
constituting part of the Registration Statement on Form S-3 (No. 333-06467)
of WesBanco, Inc. of our report dated January 25, 1996, except as to Note 2,
the pooling of interests with Bank of Weirton, which is as of August 30, 1996,
which appears on page 32 of this Form 10-K. We also consent to the reference
to us under the heading "Experts" in such Prospectus.
/s/ Price Waterhouse LLP
Pittsburgh, Pennsylvania
March 13, 1997
57
EXHIBIT 24
POWER OF ATTORNEY FOR EXECUTION OF FORM 10-K
TO BE FILED WITH THE SECURITIES & EXCHANGE COMMISSION
We, the undersigned Directors of WesBanco, Inc., hereby severally
constitute and appoint James C. Gardill and/or Edward M. George, and each
of them singly, our true and lawful attorneys with full power to them, and
each of them singly, to sign for us and in our names and in the capacities
indicated below, the Annual Report of WesBanco to the Securities & Exchange
Commission on Form 10-K to be filed for the year 1996 and any and all
amendments thereto in our names and behalf in our capacities as Directors of
WesBanco to enable WesBanco to comply with the provisions of the Securities
Exchange Act of 1934, as amended, and all requirements of the Securities
Exchange Act of 1934, as amended, hereby ratifying and conforming our
signatures as they may be signed by our attorneys, or either of them, to
said Form 10-K and any and all amendments thereto.
Pursuant to the requirements of the Securities Exchange Act of 1934,
this Power of Attorney for purposes of executing the Form 10-K of WesBanco
has been signed by the following persons in the capacities and on the dates
indicated:
SIGNATURE TITLE DATE
- --------- ----- ----
/s/ Frank K. Abruzzino Director February 20, 1997
- -----------------------
Frank K. Abruzzino
/s/ James E. Altmeyer Director February 20, 1997
- ---------------------
James E. Altmeyer
______________________________ Director February __, 1997
Earl C. Atkins
/s/ Charles J. Bradfield Director February 20, 1997
- ------------------------
Charles J. Bradfield
/s/ Ray A. Byrd Director February 20, 1997
- ----------------
Ray A. Byrd
/s/ R. Peterson Chalfant Director February 20, 1997
- -------------------------
R. Peterson Chalfant
/s/ Christopher V. Criss Director February 20, 1997
- ------------------------
Christopher V. Criss
/s/ Stephen F. Decker Director February 20, 1997
- ---------------------
Stephen F. Decker
58
/s/ James D. Entress Director February 20, 1997
- --------------------
James D. Entress
/s/ Ernest S. Fragale Director February 20, 1997
- ---------------------
Ernest S. Fragale
/s/ James C. Gardill Director February 20, 1997
- --------------------
James C. Gardill
/s/ Edward M. George Director February 20, 1997
- --------------------
Edward M. George
/s/ Roland L. Hobbs Director February 20, 1997
- -------------------
Roland L. Hobbs
/s/ John W. Kepner Director February 20, 1997
- ------------------
John W. Kepner
______________________________ Director February __, 1997
Frank R. Kerekes
/s/ Robert H. Martin Director February 20, 1997
- --------------------
Robert H. Martin
______________________________ Director February __, 1997
George M. Molnar
/s/ Eric Nelson Director February 20, 1997
- ----------------
Eric Nelson
______________________________ Director February __, 1997
Melvin C. Snyder, Jr.
/s/ Joan C. Stamp Director February 20, 1997
- -----------------
Joan C. Stamp
/s/ Carter W. Strauss Director February 20, 1997
- ---------------------
Carter W. Strauss
/s/ Reed J. Tanner Director February 20, 1997
- ------------------
Reed J. Tanner
/s/ Thomas L. Thomas Director February 20, 1997
- --------------------
Thomas L. Thomas
59
______________________________ Director February __, 1997
James L. Wareham
/s/ John A. Welty Director February 20, 1997
- -----------------
John A. Welty
/s/ William E. Witschey Director February 20, 1997
- -----------------------
William E. Witschey
60
Exhibit 99.1
PRICE WATERHOUSE LLP [LOGO]
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders and Board of Directors of WesBanco, Inc.
In our opinion, based upon our audits and the reports of other auditors,
the accompanying consolidated balance sheet and the related statements of
income, of changes in shareholders' equity and of cash flows present fairly,
in all material respects, the financial position of WesBanco, Inc., and its
subsidiaries (the Corporation) at December 31, 1995, and the results of its
operations and its cash flows for the two years then ended in conformity with
generally accepted accounting principles. These financial statements are the
responsibility of the Corporation's management; our responsibility is to
express an opinion on these financial statements based on our audits. As
described in Note 2, on August 30, 1996, the Corporation merged with Bank of
Weirton in a transaction accounted for as a pooling of interests. The
accompanying financial statements give retroactive effect to the merger of
the Corporation with Bank of Weirton. We did not audit the financial
statements of the Bank of Weirton which statements reflect total assets of
$177,226,000 at December 31, 1995 and net interest income of $5,483,000 and
$5,664,000 for each of the years ended December 31, 1995 and 1994,
respectively. Those statements were audited by other auditors whose report
thereon has been furnished to us, and our opinion expressed herein, insofar
as it relates to the amounts included for Bank of Weirton is based solely on
the report of the other auditors. We conducted our audits of these statements
in accordance with generally accepted auditing standards which require that
we plan and perform the audits to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements, assessing the accounting principles used and
significant estimates made by management, and evaluating the overall financial
statement presentation. We believe that our audits and the report of other
auditors provide a reasonable basis for the opinion expressed above. We have
not audited the consolidated financial statements of the Corporation for any
period subsequent to December 31, 1995.
/s/ Price Waterhouse LLP
January 25, 1996, except as to Note 2, the pooling of
interests with Bank of Weirton, which is as of August 30, 1996.
61
EXHIBIT 99.2
GRANT THORNTON LLP
[LOGO]
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Board of Directors
Bank of Weirton
We have audited the statement of condition of the Bank of Weirton as of
December 31, 1995 and 1994 and the related statements of income, changes in
stockholders' equity and cash flows for each of the two years in the period
ended December 31, 1995, not presented separately herein. These financial
statements are the responsibility of the Bank's management. Our responsibility
is to express an opinion on these financial statements based on our audit.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatements. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of the Bank of Weirton as of
December 31, 1995 and 1994, and the results of its operations and its cash
flows for each of the two years in the period ended December 31, 1995, in
conformity with generally accepted accounting principles.
/s/ Grant Thornton LLP
Cincinnati, Ohio
October 17, 1996
62
[TYPE] EX-27
[DESCRIPTION] ART 9 FOR WESBANCO, INC. 10-K
[ARTICLE] 9
[MULTIPLIER] 1000
[PERIOD-TYPE] 12-MOS
[FISCAL-YEAR-END] DEC-31-1996
[PERIOD-END] DEC-31-1996
[CASH] 58,828
[INT-BEARING-DEPOSITS] 197
[FED-FUNDS-SOLD] 10,970
[TRADING-ASSETS] 0
[INVESTMENTS-HELD-FOR-SALE] 276,201
[INVESTMENTS-CARRYING] 249,108
[INVESTMENTS-MARKET] 250,132
[LOANS] 1,026,370
[ALLOWANCE] 15,528
[TOTAL-ASSETS] 1,677,771
[DEPOSITS] 1,342,820
[SHORT-TERM] 92,771
[LIABILITIES-OTHER] 14,235
[LONG-TERM] 413
[PREFERRED-MANDATORY] 0
[PREFERRED] 0
[COMMON] 21,956
[OTHER-SE] 205,576
[TOTAL-LIABILITIES-AND-EQUITY] 1,677,771
[INTEREST-LOAN] 81,449
[INTEREST-INVEST] 29,708
[INTEREST-OTHER] 1,781
[INTEREST-TOTAL] 112,938
[INTEREST-DEPOSIT] 44,432
[INTEREST-EXPENSE] 48,218
[INTEREST-INCOME-NET] 64,720
[LOAN-LOSSES] 4,336
[SECURITIES-GAINS] 239
[EXPENSE-OTHER] 43,152
[INCOME-PRETAX] 29,505
[INCOME-PRE-EXTRAORDINARY] 29,505
[EXTRAORDINARY] 0
[CHANGES] 0
[NET-INCOME] 21,161
[EPS-PRIMARY] 2.08
[EPS-DILUTED] 2.08
[YIELD-ACTUAL] 4.37
[LOANS-NON] 4,664
[LOANS-PAST] 4,105
[LOANS-TROUBLED] 5,621
[LOANS-PROBLEM] 0
[ALLOWANCE-OPEN] 13,439
[CHARGE-OFFS] 3,474
[RECOVERIES] 520
[ALLOWANCE-CLOSE] 15,528
[ALLOWANCE-DOMESTIC] 15,528
[ALLOWANCE-FOREIGN] 0
[ALLOWANCE-UNALLOCATED] 6,601