Wesbanco, Inc. · NASDAQ:WSBC
Wesbanco — 2015 KBW Mid-Atlantic One-on-One Bank Conference
44 slides from Wesbanco's conference presentation, Nov 2, 2015
Slide 1: WesBanco: By all accounts, better
WesBanco By all accounts, better. 2015 KBW Mid-Atlantic One-on-One Bank Conference November 3, 2015 Ritz-Carlton, Philadelphia, PA
Slide 2: Forward-looking statements
Forward-looking statements in this report relating to WesBanco’s plans, strategies, objectives, expectations, intentions and adequacy of resources, are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. The information contained in this report should
Slide 3: Mid-Atlantic Bank Headquartered in Wheeling, West Virginia
Mid-Atlantic Bank Headquartered in Wheeling, West Virginia Assets: $8.5 billion Founded in 1870 34 banks/24 companies acquired in 26 years Geographic Loan Distribution: West Virginia (40%), Ohio (34%) and Western Pennsylvania (26%) Geographic Deposit Distribution: West Virginia (42%), Ohio (31
Slide 4: Executive management
Years in Years w/ Executive Position Banking WSBC James Gardill Chairman of the Board 43* 43 Todd Clossin President & CEO 31 2 Robert Young EVP & CFO 29 14 Ivan Burdine EVP & Chief Credit Officer 35 2 Jonathan Dargusch EVP – Trust & Investments 34 5 Jay Zatta EVP – Chief Lending Officer 29 7 Lynn As
Slide 5: Recent accomplishments
Completed acquisition of ESB Financial Corporation (February 2015). Increased dividends to shareholders 8 times in last 4 ½ years representing a 64.3% increase. Earned five consecutive “Outstanding” CRA ratings. Outperformed the S&P 500 over the past 38 years. Achieved “5 Star” Bauer Finan
Slide 6: Diversified regional financial services company
Three State Diversified (emerging) Regional Financial Services Company Wesmark Funds (proprietary mutual funds, approaching $1 billion in assets. Trust Business (one of the largest in the Midwest amongst peer banks, 100 years old with $3.7 billion in assets under management and supervision.
Slide 7: Balanced revenue growth engines
Balanced (diversified) Revenue Growth Engines Earnings impacted by margin but peaks and valley’s smoothed out by other businesses. Rebalancing loan mix strategy (goal is double digit % growth in C&I and HELOC). Rebalancing deposit mix (moved from 14% DDA to 20% DDA over the past 7 years).
Slide 8: Organic Growth Opportunities
Organic Growth Opportunities
Slide 9: WesBanco and ESB Financial branches
WesBanco Inc. 119 Branches ESB Financial Corp. 22 Branches (net of closures) 9
Slide 10: Trust and investment services
$3.7B of trust assets under management/custody; over $200 million in private banking assets. Over 5,000 trust and 1,100 private banking relationships. Combined Trust, Securities Brokerage and Private Banking under one executive team. 10 locations in WV, OH & PA. Improving performance as as
Slide 11: Increased productivity and enhancement of the commercial team
Increased Productivity, Improvement & Enhancement of the Commercial Team ¢ Dedicated C&l and Business Banking teams in our urban markets with dedicated management. ¢ New product capabilities in SWAP, Treasury Management and Government leasing. ¢ Realignment of resources from lower growth to higher g
Slide 12: Retail sales/service distribution strategies
& Retail Sales/Service Distribution Strategies All financial centers within 4 hour drive of headquarters, efficient and tight network distribution (talent/marketing). Centralized Wheeling-based back office support functions. Installation of instant issue debit card machines which are EMV capable in
Slide 13: Loan category growth
Loan Category Growth % Loan Growth since 2011 120% 100% 4 80% 60% Lo 40% Z 20% ” a -20% 2011 2012 2013 2014 YTD 2015 =—e=Comm. RE —mCél weRes RE M@eHE Lines =—m™=Consumer 13 By all accounts, better.
Slide 14: Acquisitions: ESB Financial and Fidelity Bancorp
$ 14 2/10/15 acquisition of ESB Financial. 11/30/12 acquisition of Fidelity Bancorp.
Slide 15: Non-interest income
Non-interest income contributed 24% of net revenue YTD 2015. Non-bank offerings (trust, ($MM) insurance, securities) contributed $24.9 million to YTD 2015 $60.2 revenue. Securities brokerage revenue has increased 6.6% YTD 2015. Trust fees have increased 4.4% YTD 2015. 1Q’15 included a $376
Slide 16: Preparing for $10 billion Dodd-Frank threshold
Preparing for $10 billion Dodd-Frank threshold. A schedule of key regulatory requirements that are applicable at the $10 billion mark has been developed and management is tracking progress and providing updates to the Board of Directors. Staffing analysis, talent reviews and technology assessm
Slide 17: Scalable technology infrastructure
Scalable technology infrastructure permitting organic and acquisition related growth without significant additional investment. Use technology to reduce travel cost and enhance communication through video conferencing capabilities across expanding footprint. Reduced communication cost by 43% f
Slide 18: Acquisition strategy
History of successful acquisitions which have provided improved earnings. Focus on targeted M & A in existing markets and new higher-growth metro areas within a 5-hour drive. Ability to execute merger transactions quickly (Fidelity / ESB mergers completed 3-4 months). Adequate capital and li
Slide 19: Financial Information
19 Financial Information By all accounts, better.
Slide 20: Core operating results
For the Nine For the Nine months months Ended Ended ($ in thousands, except diluted earnings per share)00’s except September September per share data) 2014 2015 % Change Core Operating Net Income* $53,462 $64,931 21.5% Diluted Core Operating Earnings Per $ 1.82 $ 1.75 (4.3%) Share* Provision for Cre
Slide 21: Net income, EPS and provision for credit losses
YTD YTD YTD YTD YTD ($ in thousands, except diluted earnings per share)00’s except per December December December December December share data) 2010 2011 2012 2013 2014 Net Income $35,611 $43,809 $49,544 $63,925 $69,974 Diluted Earnings Per Share $ 1.34 $ 1.65 $ 1.84 $ 2.18 $ 2.39 Provision for Cred
Slide 22: Net interest margin
NIM Yield on Earning Assets Cost of Funds 4.13% 4.09% 4.08% 4.06% 3.98% 3.96% 3.93% 3.76% 3.70% 3.63% 3.58% 3.60% 3.59% 3.52% 3.58% 3.64% 3.44% 3.36% 0.73% 0.56% 0.63% 0.47% 0.52% 0.51% 0.43% 0.41% 0.42% 3Q'13 4Q'13 1Q'14 2Q'14 3Q'14 4Q'14 1Q'15 2Q'15 3Q'15 22
Slide 23: *See non-GAAP financial measures for additional information relating to the calculation of this ratio.
*See non-GAAP financial measures for additional information relating to the calculation of this ratio. 23
Slide 24: Securities portfolio
Securities = $2.5 B Average tax-equivalent ~29.8% of total assets portfolio yield of 2.86%. US Govt. Corporate WAL approx. 4.6 years; Agencies Bonds 6.2% 3.2% modified duration 4.1%. Over 55% unpledged. Net unrealized AFS Municipals, securities gains of $9.4 Agency 34.0% million at 9/30/15;
Slide 25: Loan portfolio composition
Total Loans = $5.0 B Comm. Real Estate = Comm. & $2.2 B Ind., 14.6% LHFS, 0.2% Const & Dev. 15.0% Consumer, 8.0% Comm. Investor- HELOC, Real owned 8.1% Estate, 63.3% 44.0% Owner- Res. Real occupied Estate, 25.1% 21.7% 25
Slide 26: Reduction in NPAs and criticized and classified loans
26 Reduction in NPA’s and C&C Loans 10.0% 9.0% 8.0% 7.0% 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% 0.0% 2Q'11 3Q'11 4Q'11 1Q'12 2Q'12 3Q'12 4Q'12 1Q'13 2Q'13 3Q'13 4Q'13 1Q'14 2Q'14 3Q'14 4Q'14 1Q'15 2Q'15 3Q'15 =@NPA's asa % of total Loans &Criticized & Classified Loans as a % of total Loans a“ WesBanco By all
Slide 27: Provision, ALL and non-performing loans
1.6% $3,500 1.4% $3,000 1.2% $2,500 1.0% $2,000 0.8% $1,500 0.6% $1,000 0.4% $500 0.2% 0.0% $- 3Q'13 4Q'13 1Q'14 2Q'14 3Q'14 4Q'14 1Q'15 2Q'15 3Q'15 Provision for credit losses ALL as a % of total loans Non performing loans as a % of total loans ($000) 27
Slide 28: Interest rate sensitivity
% Change in Net Interest Income from Immediate Change in Base Over One Year Interest Rates September 30, 2015 December 31, 2014 Up 1% Rate Shock +2.1% +1.9% Up 2% Rate Shock +2.7% +2.1% Up 3% Rate Shock +2.3% +0.9% Up 2% Rate Ramp +2.2% +1.9% Down 1% Rate Shock -2.7% -1.8% EVE Up 2% Rate Shock * 2.0
Slide 29: Stock Price and Dividend Information
29 Stock Price and Dividend Information
Slide 30: Dividend payout ratio and yield
Dividend Payout Ratio = 41.81% as of 9/30/15 WesBanco dividend yield is 2.82% compared to SNL Banks 30 $5B-10B peer group of 2.03%.
Slide 31: Investment highlights
Strong regulatory capital. Proven acquisition-oriented growth strategy. Liquidity to fund additional lending capacity. Asset quality compares favorably with regional and national peers. Diversity of earnings stream. Potential upside market appreciation due to lower than peer P/E ratio. 3
Slide 32: Appendix
32 Appendix wN By all accounts, better.
Slide 33: Core operating net income reconciliation
9 months ended 9 months ended ($ in thousands except earnings per share amounts) 9/30/14 9/30/15 Net income $ 53,462 $ 57,760 Plus: Restructuring and merger-related 0 7,171 expense (net of tax) Core operating net income $ 53,462 $ 64,931 Average common shares - diluted 29,316,914 37,204,114 Core ope
Slide 34: Core efficiency ratio reconciliation
9 months ended 9 months ended ($ in thousands) 9/30/14 9/30/15 Non-interest expense $ 119,661 $ 147,029 Less: restructuring and merger related expense (0) (11,033) Less: amortization of intangibles (1,454) (2,325) Non-interest expense excluding restructuring and $ 118,207 $ 133,671 merger related ex
Slide 35: Efficiency ratio reconciliation
($ in thousands) 2010 2011 2012 2013 2014 Non-interest expense $ 141,152 $ 140,295 $ 150,120 $ 160,998 $ 161,633 Less: restructuring and merger related expense (175) 0 (3,888) (1,310) (1,309) Non-interest expense excluding restructuring and merger related expense 140,977 140,295 146,232 159,688 160,
Slide 36: Tangible equity to tangible assets
($ in thousands) 2010 2011 2012 2013 2014 Total shareholder’s equity $ 606,863 $ 633,790 $ 714,184 $ 746,595 $ 788,190 Less: goodwill & other intangible assets, net of def. tax liabilities (281,534) (279,967) (320,399) (318,161) (316,914) Tangible equity $ 325,329 $ 353,823 $ 393,785 $ 428,434 $ 471
Slide 37: Quarterly tangible equity to tangible assets
($ in thousands) 3Q’14 4Q’14 1Q’15 2Q’15 3Q’15 Total shareholder’s equity $ 788,784 $ 788,190 $ 1,091,384 $ 1,094,653 $ 1,115,742 Less: goodwill & other intangible assets, net of def. tax liabilities (317,217) (316,914) (488,911) (488,949) (488,893) Tangible equity $ 471,567 $ 471,276 $ 602,473 $ 60
Slide 38: Net operating non-interest income
($ in thousands) 2011 2012 2013 2014 2015* Non-interest income $ 59,888 $ 64,775 $ 69,285 $ 68,504 $ 72,786 Less: Net securities gains 963 2,463 684 903 92 Less: net gains/losses on other real estate owned and other assets (1,290) (305) (81) (1,006) 223 Net operating non-interest income $ 60,215 $ 6
Slide 39: Core return on average tangible assets
($ in thousands) 9/30/14 YTD 9/30/15 YTD Net income * $ 71,478 $ 77,225 Plus: amortization of intangibles * (tax effected at 35%) 1,264 2,021 Plus: merger related items * (tax effected at 35%) 0 9,588 Net income before amortization of intangibles & merger related items * $ 72,742 $ 88,834 Average as
Slide 40: Core return on average tangible equity
($ in thousands) 9/30/14 YTD 9/30/15 YTD Net income * $ 71,478 $ 77,225 Plus: amortization of intangibles* (tax effected at 35%) 1,264 2,021 Plus: merger related items * (tax effected at 35%) 0 9,588 Net income before amortization of intangibles & merger related items* $ 72,742 $ 88,834 Average tota
Slide 41: Core return on average tangible equity, multi-year
($ in thousands) 2011 2012 2013 2014 3Q’15 Net income * $ 43,809 $ 49,544 $ 63,925 $ 69,974 $ 88,267 Plus: amortization of intangibles* (tax effected at 35%) 1,566 1,398 1,487 1,248 2,102 Plus: merger related items * (tax effected at 35%) 0 2,527 852 851 477 Net income before amortization of intangi
Slide 42: Return on average tangible equity
($ in thousands) 2010 2011 2012 2013 2014 Net income $ 35,611 $ 43,809 $ 49,544 $ 63,925 $ 69,974 Plus: amortization of intangibles* (tax effected at 35%) 1,774 1,566 1,398 1,487 1,248 Net income before amortization of intangibles* 37,385 45,375 50,942 65,412 71,222 Average total shareholders’ equit
Slide 43: Core return on average tangible assets, multi-year
($ in thousands) 2011 2012 2013 2014 3Q’15 Net income * $ 43,809 $ 49,544 $ 63,925 $ 69,974 $ 88,267 Plus: amortization of intangibles* (tax effected at 35%) 1,566 1,398 1,487 1,248 2,102 Plus: merger related items * (tax effected at 35%) 0 2,527 852 851 477 Net income before amortization of intangi
Slide 44: WesBanco: By all accounts, better
44 WesBanco By all accounts, better.
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