Wesbanco, Inc. · NASDAQ:WSBC
Wesbanco — Q2 2014 Earnings Presentation
41 slides from Wesbanco's earnings presentation, Aug 4, 2014
Slide 1: WesBanco 2nd Quarter 2014 Results
WY WesBanco By all accounts, better. 2nd Quarter 2014 Results Investor Conferences during 3rd Quarter 2014
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: WesBanco at a glance
Headquarters in Wheeling, West Virginia Assets: $6.3 billion Founded in 1870 33 banks/24 companies acquired in 25 years Banking operations in West Virginia, Ohio and Western Pennsylvania 119 banking offices + Pittsburgh Business Loan Production Center 106 ATM’s Wealth management, sec
Slide 4: Executive management
Years in Years with Executive Position Banking WSBC James Gardill Chairman of the Board 42* 42 Todd Clossin President & CEO 30 1 Robert Young EVP & CFO 28 13 Peter Jaworski EVP & Chief Credit Officer 30 19 Jonathan Dargusch EVP – Trust & Investments 33 4 Bernard Twigg EVP – Chief Lending Officer 30
Slide 5: Second quarter highlights
Increased dividends to shareholders 7 times in last 14 quarters representing a 57% increase. Continued growth in deposits and loans Strong loan origination focus. Deposits have been positively influenced by Marcellus and Utica shale payments. Maintained strong capital position, considered
Slide 6: Financial results summary
For the For the For the Quarter Quarter Quarter Ended Ended Ended ($ in thousands, except diluted earnings per June June % March % share)00’s except per share data) 2014 2013 Change 2014 Change Net Income $18,875 $17,017 10.9% $16,421 14.9% Diluted Earnings Per Share $ 0.64 $ 0.58 10.3% $ 0.56 14.3%
Slide 7: Organic Growth Opportunities
Organic Growth Opportunities
Slide 8: An Expanding Franchise in Contiguous Markets
An Expanding Franchise in Contiguous Markets: 119 banking offices Pennsylvania Ohio Pittsburgh Columbus Wheeling Parkersburg Morgantown Cincinnati Jackson Charleston West Virginia
Slide 9: Marcellus Shale regional coverage and deposit market share
Deposit Market Share Marcellus Shale Regional Coverage WesBanco Marcellus Shale Counties of Operation (1) Number Deposits in Market of Market Share Rank Institution (ST) Branches ($mm) (%) 1 PNC Financial Services Group Inc. (PA) 151 $40,225 38.6% 2 Bank of New York Mellon Corp. (NY) 4 18,800 18.0 3
Slide 10: Trust and securities brokerage
$3.8B of assets under management/custody. Over 5,000 trust relationships. Combined Trust, Securities Brokerage and Private Banking under one management team. Assets Under Management ($B) 10 locations in WV, OH & PA. Management Fees ($MM) Net Securities Brokerage Revenue ($MM) Improving per
Slide 11: Western Pennsylvania expansion with Fidelity
With Fidelity we have 15 offices and a loan production office in Western PA – over $500 million in loans and $480 million in deposits. Build upon community bank reputation of Fidelity. Operate as a separate market with a market president and retail, wealth management and lending teams. Secur
Slide 12: Loan, deposit and capital growth
$1150 950 750 550 350 150 (50) Loan Growth Deposit Growth Capital Growth 12 11/30/12 acquisition of Fidelity Bancorp.
Slide 13: Non-interest income
Gain Mort. Loan Sales Other Inc. Non-interest income contributed Insurance Securities brokerage 27% of net revenue YTD 2014. Trust Service charges & Fees Non-bank offerings (trust, ($MM) $70.9 insurance, securities) contributed $68.7 $62.6 $16.1 million to YTD 2014 $60.7 $59.9 revenue. Securit
Slide 14: Non-interest bearing deposits
(Dollars in thousands) Non-interest bearing deposits % of Total Deposits $1,200,000 25.0% $1,000,000 20.0% $800,000 15.0% $600,000 10.0% $400,000 5.0% $200,000 $0 0.0% 4Q'09 1Q'10 2Q'10 3Q'10 4Q'10 1Q'11 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 14
Slide 15: Merger & Acquisition Capabilities
Merger & Acquisition Capabilities
Slide 16: M&A track record and focus
History of successful acquisitions which have provided improved earnings. WesBanco is focused on targeted M & A opportunities in higher-growth metro areas. Positive regulatory relationships represent a key success factor. Adequate capital and liquidity to close deals. Experienced senior ma
Slide 17: Currency valuation and shareholder returns
Currency valuation provides upside for seller’s shareholders. Community bank look and feel. Long-term focus on shareholder returns. Our common stock has exceeded the S&P 500 performance over the last 37 years. 17
Slide 18: Financial Information
18 Financial Information Wy aA WesBanco By all accounts, better.
Slide 19: Net interest margin, yield and cost of funds
NIM Yield on Earning Assets Cost of Funds 4.43% 4.37% 4.27% 4.31% 4.20% 4.13% 4.09% 4.08% 4.06% 3.53% 3.64% 3.56% 3.52% 3.58% 3.63% 3.64% 3.51% 3.50% 1.07% 1.03% 0.93% 0.81% 0.77% 0.73% 0.63% 0.56% 0.52% 2Q'12 3Q'12 4Q'12 1Q'13 2Q'13 3Q'13 4Q'13 1Q'14 2Q'14 19
Slide 20: Capital ratios
Total Risk Based Capital Tangible Equity to Tangible Assets * 16.00% 14.08% 14.23% 14.19% 14.40% 14.56% 14.00% 12.00% 10.00% 7.07% 7.19% 7.35% 7.49% 7.74% 8.00% 6.00% 4.00% 2.00% 0.00% 2Q'13 3Q'13 4Q'13 1Q'14 2Q'14 *See non-GAAP financial measures for additional information relating to the calculati
Slide 21: Securities portfolio
Securities = $1.61 B Average tax-equivalent ~25.7% of total assets portfolio yield of 3.25%. US Govt. WAL approx. 4.9 years; Agencies modified duration 4.2%. 4.9% Over 55% unpledged. Net unrealized AFS Municipals, securities gains of $1.4 Agency 38.6% million at 6/30/14; total Mortgage- net
Slide 22: Total loans composition
Total Loans = $4.0 B Comm. Real Estate = Comm. & $1.94 B Ind., 14.6% LHFS, 0.3% Const & Dev. 13.2% Consumer, 5.9% Comm. Investor- HELOC, Real owned 7.4% Estate, 61.2% 49.1% Res. Real Owner- Estate, 22.7% occupied 25.6% 22
Slide 23: Non-performing and classified 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 NPA's as a % of total Loans Criticized & Classified Loans as a % of total Loans 23
Slide 24: Provision, allowance and non-performing loans
2.50% $7,000 $6,000 2.00% $5,000 1.50% $4,000 $3,000 1.00% $2,000 0.50% $1,000 0.00% $- 2Q'12 3Q'12 4Q'12 1Q'13 2Q'13 3Q'13 4Q'13 1Q'14 2Q'14 ($000) Provision for credit losses ALL as a % of total loans Non performing loans as a % of total loans 24
Slide 25: Total loan portfolio by geography
Total Loan Portfolio $3.6B Total Loan Portfolio $3.9B As of 12/31/2008 As of 12/31/2013 39% 51% Within Outside 49% 61% Outside WVA WVA Within WVA WVA 25
Slide 26: Total deposits by geography
Total Deposits $3.5B Total Deposits $5.1B As of 12/31/2008 As of 12/31/2013 49% 58% Outside 42% Outside Within WVA 51% WVA Within WVA WVA 26
Slide 27: Total deposit portfolio mix
Total Deposit Portfolio $4.0B Total Deposit Portfolio $5.1B As of 12/31/2009 As of 12/31/2013 Non-Interest Non-Interest demand demand 13.71% 18.98% Interest bearing demand 29.86% 44.73% 11.34% Certificates of Interest bearing demand Deposit 16.94% Certificates of Deposit Money Market 15.60% Savings
Slide 28: Interest rate sensitivity
Interest Rate Sensitivity % Change in Net Interest Income from Immediate Change in Base Over One Year Interest Rates June 30, 2014 December 31, 2013 Up 1% Rate Shock +1.6% +1.6% Up 2% Rate Shock +1.9% +1.7% Up 3% Rate Shock +0.6% +0.2% Up 2% Rate Ramp +0.8% +1.1% Down 1% Rate Shock -2.3% -2.0% EVE U
Slide 29: Stock Information
29 Stock Information w aA WesBanco By all accounts, better.
Slide 30: Dividends per share
Dividends Per Share June 2014 Dividend payout ratio = 37.02% as of 7/1/14 $0.25 $0.20 $0.15 $0.10 $0.05 $0.00 1Q'11 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 30
Slide 31: Peer market valuation
Peer Market Valuation Price / 2014 EPS Est. (1) 19.0x 18.5x Median (excl. WSBC): 14.4x 17.0x 16.6x 15.3x 15.4x 15.6x 15.0x 15.1x 15.3x 14.8x 15.0x 14.1x 13.8x 13.0x 13.2x 13.3x 12.7x 12.8x 12.8x 12.8x 13.0x 12.1x 11.0x Price / Tangible Book Value (x) 2.60x 2.43x Median (excl. WSBC): 1.70x 2.16x 2.20
Slide 32: Peer market performance
Peer Market Performance Relative Stock Price Performance Through the Cycle (6/30/2007) 80.0% 71.6% 79.7% Median (excl. WSBC): (4.1%) 40.0% 17.1% 10.7% 10.7% 15.6% 1.5% 2.5% 4.5% 0.0% (4.1%) (0.1%) (12.0%)(11.6%) (9.8%) (24.9%)(19.6%)(16.8%)(16.5%) (40.0%) (28.1%) (35.2%) (80.0%) Relative 1-Year Stoc
Slide 33: 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 34: Appendix
34 Appendix wN By all accounts, better.
Slide 35: Total loans by market
) June 30, 2014 Commercial Retail Total % of Total Loans Upper Ohio Valley $ 557 $ 418 $ 975 25% North Central WV 278 217 495 13% Parkersburg 167 83 250 6% Kanawha Valley 81 61 142 4% Western PA 357 169 526 13% Total East Markets $ 1,440 $ 948 $ 2,388 61% Central Ohio 630 164 794 20% Southwest Ohio
Slide 36: Non-performing assets by market
June 30, 2014 90 Day PD Non- TDR Other RE Total by % of Total & Accruing Accrual Owned Region Upper Ohio Valley $ 698 $ 7,080 $ 3,003 $ 217 $10,998 19% North Central WV 462 3,222 2,535 --- 6,219 11% Parkersburg 145 1,165 1,091 372 2,773 5% Kanawha Valley 10 1,874 251 ---- 2,135 4% Western PA 44 5,98
Slide 37: Efficiency ratio reconciliation
3 months 3 months 3 months ($ in thousands) ended ended ended 6/30/14 6/30/13 3/31/14 Non-interest expense $ 40,304 $ 39,499 $ 40,095 Less: restructuring and merger related expense -- 51 -- Non-interest expense excluding restructuring and $ 40,304 $ 39,448 $ 40,095 merger related expense Net interes
Slide 38: Tangible equity to tangible assets reconciliation
($ in thousands) 2Q’13 3Q’13 4Q’13 1Q’14 2Q’14 Total shareholder’s equity $ 726,232 $ 736,688 $ 746,595 $ 761,117 $ 778,625 Less: goodwill & other intangible assets, net of def. tax liabilities (318,828) (318,516) (318,161) (317,840) (317,527) Tangible equity $ 407,404 $ 418,172 $ 428,434 $ 443,277
Slide 39: Net operating non-interest income reconciliation
($ in thousands) 2010 2011 2012 2013 2014* Non-interest income $ 59,599 $ 59,888 $ 64,775 $ 69,285 $ 73,164 Less: Net securities gains 3,362 963 2,463 684 660 Less: net gains/losses on other real estate owned and other assets (4,128) (1,290) (305) (81) (660) Net operating non-interest income $ 60,36
Slide 40: Return on average tangible equity reconciliation
($ in thousands) 6/30/13 3/31/14 6/30/14 QTD QTD QTD Net income* $ 68,256 $ 66,596 $ 75,708 Plus: amortization of intangibles* (tax effected at 35%) 1,464 1,305 1,256 Net income before amortization of intangibles* $ 69,720 $ 67,901 $ 76,964 Average total shareholders’ equity $ 731,935 $ 758,841 $ 77
Slide 41: WesBanco
41 WesBanco By all accounts, better.