WHEELING, W.Va., April 22 /PRNewswire-FirstCall/ -- Paul M. Limbert, President and Chief Executive Officer of WesBanco, Inc. , a Wheeling, West Virginia based multi-state bank holding company, today announced earnings for the for the first quarter ended March 31, 2008.
Net income for the quarter ended March 31, 2008 was $9.5 million, as compared to $11.9 million for the first quarter of 2007, while diluted earnings per share for the 2008 first quarter were $0.36 per share compared to $0.56 per share for the first quarter of 2007. First quarter earnings per share included a full quarter's effect of the issuance of additional shares of stock for the purchase of Oak Hill Financial, Inc., which closed on November 30, 2007. Net interest income increased 28.7% for the comparable periods as a result of the acquisition of Oak Hill. The net interest margin showed continued improvement, increasing to 3.48% in the 2008 quarter from 3.40% in the fourth quarter of 2007 due to a decline in the cost of funds. However, the provision for loan losses increased $4.0 million in the first quarter, primarily due to a decline in overall economic conditions in our market areas which have led to an increase in non-accrual and 90 day past due loans.
WesBanco's merger with Oak Hill created a multi-state bank holding company with approximately $5.3 billion in total assets providing banking services in West Virginia, Ohio and Pennsylvania. The transaction expands WesBanco's franchise along the Interstate 71 and Interstate 75 corridors from Dayton, Ohio to Cincinnati, Ohio and opens new markets in south and central Ohio.
"An improved interest rate environment has reduced the cost of liabilities over the last two quarters, resulting in a higher net interest margin," said Mr. Limbert. "We also continue to improve our fee income businesses, as total non-interest income grew, primarily from improvements in service charges and other fees. However, the challenging environment for the banking industry continues from competitive and economic factors."
"We did complete the sale of five Oak Hill Branches in April. Also in the second quarter, we intend to merge Oak Hill Banks into WesBanco Bank and convert the data processing systems to improve efficiency and standardize products and delivery systems. We will continue through 2008 to integrate the Oak Hill operations into WesBanco to further realize the benefits of this acquisition. Many of these cost savings are expected to be realized in the second half of 2008."
Highlights for the first quarter of 2008 include the following: -- Net interest income for first quarter increased 28.7%, due to a higher average balance sheet resulting from the acquisition of Oak Hill, slightly offset by a lower net interest margin of 3.48% as compared to 3.56% in the first quarter of 2007. The eight basis points decrease in the net interest margin was due to the continued effects of the flat yield curve and competitive interest rates in our major markets. However, the 2008 margin increased eight basis points from 3.40% in the fourth quarter of 2007, the second consecutive quarterly increase, primarily due to a twenty basis point decline in the cost of interest bearing liabilities. This decrease in interest expense resulted from the effect on WesBanco's liability sensitive balance sheet of declining interest rates over the previous six months. The margin has also benefited from higher average non-interest bearing deposit balances. -- The increase in non-interest income was $1.9 million compared to the first quarter of 2007. Service charges on deposits increased $1.7 million, primarily due to the acquisition of Oak Hill, a gain of $0.4 million was recorded on the mandatory redemption of VISA class B stock, and revenue improved from electronic banking fees, insurance and securities brokerage operations. -- The provision for loan losses in the first quarter of 2008 increased $4.0 million compared to the first quarter of 2007. This additional provision is a reflection of changing economic conditions adversely impacting our market areas which have caused charge-offs and non-performing loans to increase. For the 2008 first quarter, the provision for credit losses was $5.4 million, with net charge-offs at 0.39%, about even with the 2007 fourth quarter and higher from 0.24% for the 2007 first quarter. Total net charge offs were $3.6 million. Non-performing loans as a percent of total loans was 0.72% for the 2008 quarter, 0.54% for the fourth quarter of 2007 and 0.43% for the first quarter of 2007. Although WesBanco does not have any material direct exposure to sub-prime loans, the problems associated with sub-prime lending such as declines in the market value of residential real estate and the decrease in consumer spending, are having a broad adverse impact on business segments in which WesBanco has exposure. The allowance for loan losses as a percent of total loans increased from 1.04% as of December 31, 2007 to 1.10% at March 31, 2008. -- Non-interest expense for the 2008 first quarter increased $10.1 million as compared to the first quarter of 2007. Expenses in the first quarter 2008 included the costs of operating two separate bank charters. Oak Hill merger-related expenses charged to operations in the 2008 quarter were $1.0 million. Other expense increases were due to a $0.5 million increase in marketing expense relating to deposit gathering programs in all market areas in the first quarter of 2007, a $1.0 million increase in occupancy expense from two new branch facilities opened in 2007 and recent technology and other equipment upgrades, and normal increases in personnel-related costs, partially offset by decreases in professional fees and miscellaneous taxes. -- The provision for income taxes decreased $1.2 million compared to the first quarter of 2007 due to a decrease in pre-tax income and a decrease in the effective tax rate. For 2008 the effective tax rate decreased to 19.2% as compared to 22.3% in the first quarter of 2007 due primarily to a higher percentage of tax-exempt income to total income and the benefit of certain tax credits including New Market Tax Credits awarded to Oak Hill Community Development Corporation, a wholly-owned subsidiary. -- Total loans at March 31, 2008 decreased 1.5% compared to December 31, 2007 primarily due to the Bank's strategy of reducing existing residential mortgage loans and selling most new originations, somewhat reduced demand across the entire portfolio, a continued focus on maintaining appropriate interest margins on new loans, and continuing efforts to maintain or improve credit quality. -- Total deposits at March 31, 2008 decreased 1.8% compared to December 31, 2007. The decrease was primarily in certificates of deposits and money market accounts as Wesbanco attempted to reduce its cost of funds aggressively as market rates were falling. -- At March 31, 2008, FHLB and other short-term borrowings decreased 1.5% from December 31, 2007. These borrowings were 13.7% of total assets at both balance sheet dates. Certain short-term borrowings were replaced with longer-term FHLB advances with call options to take advantage of the current rate environment. -- Tangible capital increased from 5.96% to 6.23% at the end of the first quarter. No shares were repurchased during the quarter. A total of 584,325 shares remain under the current board-approved repurchase authorization.
WesBanco is a multi-state bank holding company with total assets of approximately $5.3 billion, operating through 111 locations and 153 ATMs in West Virginia, Ohio, and Pennsylvania. WesBanco's banking subsidiaries are WesBanco Bank, Inc., headquartered in Wheeling, West Virginia, and Oak Hill Banks, headquartered in Jackson, Ohio. In addition, WesBanco operates an insurance brokerage company, WesBanco Insurance Services, Inc., and a full service broker/dealer, WesBanco Securities, Inc.
Forward-looking Statement
This press release contains certain forward-looking statements, including certain plans, expectations, goals, and projections, and including statements about the benefits of the merger between WesBanco and Oak Hill, which are subject to numerous assumptions, risks, and uncertainties. Actual results could differ materially from those contained or implied by such statements for a variety of factors including: the businesses of WesBanco and Oak Hill may not be integrated successfully or such integration may take longer to accomplish than expected; the expected cost savings and any revenue synergies from the merger may not be fully realized within the expected timeframes; disruption from the merger may make it more difficult to maintain relationships with clients, associates, or suppliers; changes in economic conditions; movements in interest rates; competitive pressures on product pricing and services; success and timing of other business strategies; the nature, extent, and timing of governmental actions and reforms; and extended disruption of vital infrastructure; and other factors described in WesBanco's 2007 Annual Report on Form 10-K and documents subsequently filed by WesBanco with the Securities and Exchange Commission. All forward-looking statements included in this news release are based on information available at the time of the release. WesBanco assumes no obligation to update any forward-looking statement.
WESBANCO, INC. Consolidated Selected Financial Highlights (unaudited, dollars in thousands, except per share amounts) For the Three Months Ended March 31, Statement of income 2008 2007 % Change Interest income $74,693 $57,193 30.60% Interest expense 36,105 27,200 32.74% Net interest income 38,588 29,993 28.66% Provision for credit losses 5,425 1,460 271.58% Net interest income after provision for credit losses 33,163 28,533 16.23% Non-interest income Trust fees 4,124 4,338 (4.93%) Service charges on deposits 5,586 3,883 43.86% Net securities gains/(losses) 505 678 (25.52%) Other income 4,890 4,337 12.75% Total non-interest income 15,105 13,236 14.12% Non-interest expense Salaries and employee benefits 18,601 13,878 34.03% Net occupancy 2,967 2,003 48.13% Equipment 2,383 1,902 25.29% Amortization of intangible assets 1,013 596 69.97% Marketing expense 1,170 622 88.10% Merger and restructuring expenses 1,047 - 100.00% Other operating expenses 9,333 7,384 26.39% Total non-interest expense 36,514 26,385 38.39% Income before provision for income taxes 11,754 15,384 (23.60%) Provision for income taxes 2,251 3,437 (34.51%) Net income $9,503 $11,947 (20.46%) Taxable equivalent net interest income $40,634 $32,005 26.96% Per common share data Net income per common share - basic $0.36 $0.56 (35.71%) Net income per common share - diluted $0.36 $0.56 (35.71%) Dividends declared $0.28 $0.275 1.82% Book value (period end) $22.15 $19.56 13.24% Tangible book value (period end) $11.81 $12.66 (6.72%) Average shares outstanding - basic 26,547,073 21,271,328 24.80% Average shares outstanding - diluted 26,556,614 21,325,166 24.53% Period end shares outstanding 26,547,073 20,948,040 26.73% Selected ratios Return on average assets 0.72% 1.20% (40.13%) Return on average equity 6.55% 11.77% (44.33%) Yield on earning assets (1) 6.58% 6.59% (0.15%) Cost of interest bearing liabilities 3.45% 3.46% (0.29%) Net interest spread (1) 3.13% 3.13% 0.00% Net interest margin (1) 3.48% 3.56% (2.25%) Efficiency (1) 65.46% 58.32% 12.24% Average loans to average deposits 96.74% 96.72% 0.02% Annualized net loan charge- offs/average loans 0.39% 0.24% 62.46% Effective income tax rate 19.15% 22.34% (14.28%) (1) The yield on earning assets, net interest margin, net interest spread and efficiency ratios are presented on a fully taxable-equivalent (FTE) and annualized basis. The FTE basis adjusts for the tax benefit of income on certain tax-exempt loans and investments. WesBanco believes this measure to be the preferred industry measurement of net interest income and provides a relevant comparison between taxable and non-taxable amounts. WESBANCO, INC. Consolidated Selected Financial Highlights (unaudited, dollars in thousands) Balance sheet (period end) March 31, Assets 2008 2007 % Change Cash and due from banks $121,676 $77,233 57.54 % Fed Funds sold 28,024 40,000 (29.94) Securities 915,360 748,884 22.23 Loans held for sale 40,005 4,746 742.92 Portfolio Loans: Commercial and commercial real estate 2,180,514 1,543,555 41.27 Residential real estate 934,677 870,544 7.37 Consumer and home equity 549,779 424,377 29.55 Total portfolio loans 3,664,970 2,838,476 29.12 Allowance for loan losses (40,234) (31,757) 26.69 Net portfolio loans 3,624,736 2,806,719 29.14 Premises and equipment, net 95,759 67,507 41.85 Goodwill 257,017 137,258 87.25 Core deposit intangible, net 17,491 7,294 139.80 Other assets 202,716 170,893 18.62 Total Assets $5,302,784 $4,060,534 30.59 % Liabilities and Shareholders' Equity Non-interest bearing demand deposits $513,057 $387,877 32.27 % Interest bearing demand deposits 425,790 351,532 21.12 Money market accounts 586,061 367,205 59.60 Savings deposits 446,878 439,264 1.73 Certificates of deposit 1,867,016 1,450,416 28.72 Total deposits 3,838,802 2,996,294 28.12 Federal Home Loan Bank borrowings 462,857 363,958 27.17 Short-term borrowings 261,136 162,072 61.12 Junior subordinated debt 111,049 87,638 26.71 Other liabilities 40,991 40,873 0.29 Shareholders' equity 587,949 409,699 43.51 Total Liabilities and Shareholders' Equity $5,302,784 $4,060,534 30.59 % % Change Balance sheet (period end) March 31, 2008 Assets December 31, to 2007 Dec. 31, 2007 Cash and due from banks $130,219 (6.56)% Fed Funds sold 276 N/M Securities 937,084 (2.32) Loans held for sale 39,717 0.73 Portfolio Loans: Commercial and commercial real estate 2,188,216 (0.35) Residential real estate 975,151 (4.15) Consumer and home equity 557,182 (1.33) Total portfolio loans 3,720,549 (1.49) Allowance for loan losses (38,543) 4.39 Net portfolio loans 3,682,006 (1.56) Premises and equipment, net 94,143 1.72 Goodwill 257,199 (0.07) Core deposit intangible, net 19,531 (10.44) Other assets 224,151 (9.56) Total Assets $5,384,326 (1.51)% Liabilities and Shareholders' Equity Non-interest bearing demand deposits $519,287 (1.20)% Interest bearing demand deposits 416,470 2.24 Money market accounts 612,089 (4.25) Savings deposits 440,358 1.48 Certificates of deposit 1,919,726 (2.75) Total deposits 3,907,930 (1.77) Federal Home Loan Bank borrowings 405,798 14.06 Short-term borrowings 329,515 (20.75) Junior subordinated debt 111,024 0.02 Other liabilities 49,740 (17.59) Shareholders' equity 580,319 1.31 Total Liabilities and Shareholders' Equity $5,384,326 (1.51)% Average balance sheet and net interest margin analysis Three months ended March 31, 2008 2007 Average Average Average Average Assets Balance Rate Balance Rate Due from banks - interest bearing $2,459 3.60% $1,309 2.44% Loans, net of unearned income 3,720,600 6.83% 2,865,159 6.83% Securities: Taxable 544,974 5.22% 391,820 4.88% Tax-exempt 355,140 6.58% 342,591 6.71% Total securities 900,114 5.76% 734,411 5.73% Federal funds sold 31,337 2.82% 9,133 4.73% Other earning assets (1) 28,842 4.70% 22,736 5.30% Total earning assets 4,683,352 6.58% 3,632,748 6.59% Other assets 636,291 391,627 Total Assets $5,319,643 $4,024,375 Liabilities and Shareholders' Equity Interest bearing demand deposits $415,603 1.01% $343,337 1.21% Money market accounts 595,863 2.33% 355,857 2.50% Savings deposits 442,185 0.90% 439,533 1.38% Certificates of deposit 1,907,753 4.54% 1,438,883 4.42% Total interest bearing deposits 3,361,404 3.23% 2,577,610 3.21% Federal Home Loan Bank borrowings 452,337 4.21% 350,233 3.83% Short-term borrowings 280,738 3.59% 174,426 4.86% Junior subordinated debt 111,025 6.76% 87,638 6.52% Total interest bearing liabilities 4,205,504 3.45% 3,189,907 3.46% Non-interest bearing demand deposits 484,410 384,839 Other liabilities 46,447 37,932 Shareholders' equity 583,282 411,697 Total Liabilities and Shareholders' Equity $5,319,643 $4,024,375 Taxable equivalent net interest spread 3.13% 3.13% Taxable equivalent net interest margin 3.48% 3.56% (1) Federal Reserve stock, Federal Home Loan Bank stock and equity securities that do not have readily determinable fair market values. N/M - Not Meaningful. WESBANCO, INC. Consolidated Selected Financial Highlights (unaudited, dollars in thousands, except per share amounts) Quarter Ended March 31, Dec. 31, Sept. 30, Statement of income 2008 2007 2007 Interest income $74,693 $63,928 $57,460 Interest expense 36,105 32,154 29,100 Net interest income 38,588 31,774 28,360 Provision for credit losses 5,425 3,832 1,448 Net interest income after provision for credit losses 33,163 27,942 26,912 Non-interest income Trust fees 4,124 4,048 3,941 Service charges on deposits 5,586 5,348 4,683 Net securities gains 505 204 22 Other income 4,890 4,242 3,763 Total non-interest income 15,105 13,842 12,409 Non-interest expense Salaries and employee benefits 18,601 15,577 14,131 Net occupancy 2,967 2,098 2,002 Equipment 2,383 1,998 1,872 Core deposit intangibles 1,013 704 589 Marketing expense 1,170 1,115 1,331 Merger and restructuring expenses 1,047 635 - Other operating expenses 9,333 7,906 7,731 Total non-interest expense 36,514 30,033 27,656 Income before provision for income taxes 11,754 11,751 11,665 Provision for income taxes 2,251 1,087 1,902 Net income $9,503 $10,664 $9,763 Taxable equivalent net interest income $40,634 $33,752 $30,252 Per common share data Net income per common share - basic $0.36 $0.47 $0.47 Net income per common share - diluted $0.36 $0.47 $0.47 Dividends declared $0.28 $0.275 $0.275 Book value (period end) $22.15 $21.86 $19.94 Tangible book value (period end) $11.81 $11.44 $12.99 Average shares outstanding - basic 26,547,073 22,544,167 20,711,866 Average shares outstanding - diluted 26,556,614 22,551,781 20,732,741 Period end shares outstanding 26,547,073 26,547,073 20,628,092 Full time equivalent employees 1,566 1,562 1,177 Selected ratios Return on average assets 0.72% 0.96% 0.98% Return on average equity 6.55% 9.09% 9.51% Yield on earning assets (1) 6.58% 6.63% 6.61% Cost of interest bearing liabilities 3.45% 3.65% 3.69% Net interest spread (1) 3.13% 2.98% 2.92% Net interest margin (1) 3.48% 3.40% 3.38% Efficiency (1) 65.46% 63.10% 64.83% Average loans to average deposits 96.74% 94.79% 94.81% Trust Assets, market value at period end $2,951,052 $3,084,145 $3,129,179 Quarter Ended June 30, March 31, Statement of income 2007 2007 Interest income $57,812 $57,193 Interest expense 28,626 27,200 Net interest income 29,186 29,993 Provision for credit losses 1,776 1,460 Net interest income after provision for credit losses 27,410 28,533 Non-interest income Trust fees 3,885 4,338 Service charges on deposits 4,431 3,883 Net securities gains 39 678 Other income 5,097 4,337 Total non-interest income 13,452 13,236 Non-interest expense Salaries and employee benefits 13,815 13,878 Net occupancy 1,866 2,003 Equipment 1,884 1,902 Core deposit intangibles 596 596 Marketing expense 1,414 622 Merger and restructuring expenses - - Other operating expenses 7,397 7,384 Total non-interest expense 26,972 26,385 Income before provision for income taxes 13,890 15,384 Provision for income taxes 1,595 3,437 Net income $12,295 $11,947 Taxable equivalent net interest income $31,133 $32,005 Per common share data Net income per common share - basic $0.59 $0.56 Net income per common share - diluted $0.59 $0.56 Dividends declared $0.275 $0.275 Book value (period end) $19.54 $19.40 Tangible book value (period end) $12.60 $12.50 Average shares outstanding - basic 20,838,798 21,271,328 Average shares outstanding - diluted 20,884,156 21,325,166 Period end shares outstanding 20,759,920 20,948,040 Full time equivalent employees 1,191 1,168 Selected ratios Return on average assets 1.23% 1.20% Return on average equity 12.12% 11.77% Yield on earning assets (1) 6.60% 6.59% Cost of interest bearing liabilities 3.61% 3.46% Net interest spread (1) 2.99% 3.14% Net interest margin (1) 3.46% 3.56% Efficiency (1) 60.50% 58.32% Average loans to average deposits 94.88% 96.72% Trust Assets, market value at period end $3,041,464 $2,972,044 (1) The yield on earning assets, net interest margin, net interest spread and efficiency ratios are presented on a fully taxable-equivalent (FTE) and annualized basis. The FTE basis adjusts for the tax benefit of income on certain tax-exempt loans and investments. WesBanco believes this measure to be the preferred industry measurement of net interest income and provides a relevant comparison between taxable and non-taxable amounts. WESBANCO, INC. Consolidated Selected Financial Highlights (unaudited, dollars in thousands) Quarter Ended March 31, Dec. 31, Sept. 30, Asset quality data 2008 2007 2007 Non-performing assets: Non-accrual loans $26,530 $19,857 $10,859 Renegotiated loans - - - Total non-performing loans 26,530 19,857 10,859 Other real estate and repossessed assets 3,457 3,998 3,483 Total non-performing loans and assets $29,987 $23,855 $14,342 Loans past due 90 days or more $14,000 $11,546 $7,544 Non-performing assets/total assets 0.57 % 0.44 % 0.36 % Non-performing assets/total loans, other real estate and repossessed assets 0.82 % 0.64 % 0.51 % Non-performing loans/total loans 0.72 % 0.54 % 0.39 % Non-performing loans and loans past due 90 days or more/total loans 1.11 % 0.85 % 0.66 % Non-performing loans, loans past due 90 days and other real estate owned/total loans and other real estate owned 1.19 % 0.95 % 0.77 % Allowance for loan losses Allowance for loan losses $40,234 $38,543 $31,647 Provision for loan losses 5,275 3,807 1,500 Net loan charge-offs 3,582 3,316 1,781 Annualized net loan charge-offs/ average loans 0.39 % 0.41 % 0.25 % Allowance for loan losses/total loans 1.10 % 1.04 % 1.13 % Allowance for loan losses/ non-performing loans 1.52 x 1.94 x 2.91 x Allowance for loan losses/ non-performing loans and past due 90 days or more 0.99 x 1.23 x 1.72 x Quarter Ended June 30, March 31, Asset quality data 2007 2007 Non-performing assets: Non-accrual loans $9,651 $12,126 Renegotiated loans - - Total non-performing loans 9,651 12,126 Other real estate and repossessed assets 4,067 3,369 Total non-performing loans and assets $13,718 $15,495 Loans past due 90 days or more $7,869 $6,194 Non-performing assets/total assets 0.34 % 0.38 % Non-performing assets/total loans, other real estate and repossessed assets 0.48 % 0.54 % Non-performing loans/total loans 0.34 % 0.43 % Non-performing loans and loans past due 90 days or more/total loans 0.62 % 0.64 % Non-performing loans, loans past due 90 days and other real estate owned/total loans and other real estate owned 0.75 % 0.75 % Allowance for loan losses Allowance for loan losses $31,928 $31,757 Provision for loan losses 1,500 1,460 Net loan charge-offs 1,329 1,682 Annualized net loan charge-offs/average loans 0.19 % 0.24 % Allowance for loan losses/total loans 1.13 % 1.12 % Allowance for loan losses/non-performing loans 3.31 x 2.62 x Allowance for loan losses/non-performing loans and past due 90 days or more 1.82 x 1.73 x Quarter Ended March 31, Dec. 31, Sept. 30, June 30, March 31, 2008 2007 2007 2007 2007 Capital ratios Tier I leverage capital 7.87 % 8.27 % 9.38 % 9.21 % 9.14 % Tier I risk-based capital 10.90 % 10.50 % 12.10 % 11.98 % 12.20 % Total risk-based capital 11.96 % 11.49 % 13.18 % 13.07 % 13.30 % Shareholders' equity to assets 10.96 % 10.52 % 10.31 % 10.15 % 10.23 % Tangible equity to tangible assets (1) 6.23 % 5.96 % 7.02 % 6.81 % 6.77 % (1) Tangible equity is defined as shareholders' equity less goodwill and other intangible assets, and tangible assets are defined as total assets less goodwill and other intangible assets. The calculation is based on period end balances.
