Wesbanco, Inc. · NASDAQ:WSBC

Wesbanco — Keefe, Bruyette & Woods 2015 Community Bank Conference

44 slides from Wesbanco's conference presentation, Jul 27, 2015

  1. Slide 1: WesBanco – KBW 2015 Community Bank Conference

    WesBanco By all accounts, better. Keefe, Bruyette & Woods 2015 Community Bank Conference New York, NY July 28-29, 2015

  2. 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

  3. Slide 3: Mid-Atlantic Bank Headquartered in Wheeling, West Virginia

    Mid-Atlantic Bank Headquartered in Wheeling, West Virginia Assets: $8.4 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

  4. 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

  5. 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

  6. 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 $3.8 billion in assets under management and supervision. 

  7. 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 (double digit % growth in C&I and HELOC).  Rebalancing deposit mix (moved from 14% DDA to 20% DDA over the past 7 years).  Debit ca

  8. Slide 8: Organic Growth Opportunities

    Organic Growth Opportunities

  9. Slide 9: WesBanco and ESB Financial branches

    WesBanco Inc. 120 Branches ESB Financial Corp. 22 Branches 9

  10. Slide 10: Trust and investment services

     $3.8B 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

  11. Slide 11: Increased Productivity, Improvement & 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

  12. 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

  13. Slide 13: Loan Category Growth

    Loan Category Growth % Loan Growth since 2011 120% 100% 80% 60% 40% 20% 0% -20% 2011 2012 2013 2014 YTD 2015 Comm. RE C&I Res RE HE Lines Consumer 13

  14. Slide 14: Loan, deposit and capital growth

    $ 2450 1950 1450 950 450 (50) Loan Growth Deposit Growth Capital Growth 14 2/10/15 acquisition of ESB Financial. 11/30/12 acquisition of Fidelity Bancorp.

  15. Slide 15: Non-interest income

    Gain Mort. Loan Sales Other Inc.  Non-interest income contributed Insurance Securities brokerage 24% of net revenue YTD 2015. Trust Service charges & Fees  Non-bank offerings (trust, ($MM) $72.7 insurance, securities) contributed $68.7 $68.6 $17.0 million to YTD 2015 $60.2 $62.6 revenue.  Securit

  16. 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

  17. 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

  18. 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

  19. Slide 19: Financial Information

    19 Financial Information By all accounts, better.

  20. Slide 20: Core operating results, six months

    For the Six For the Six months months Ended Ended ($ in thousands, except diluted earnings per share)00’s except June June per share data) 2014 2015 % Change Core Operating Net Income* $35,296 $42,563 20.6% Diluted Core Operating Earnings Per $ 1.20 $ 1.17 (2.5%) Share* Provision for Credit Losses $

  21. Slide 21: Annual net income and earnings per share

    YTD YTD YTD YTD YTD ($ in thousands, except diluted earnings per share)00’s except per share December December December December December 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

  22. Slide 22: NIM, yield on earning assets, cost of funds

    NIM Yield on Earning Assets Cost of Funds 4.20% 4.13% 4.09% 4.08% 4.06% 3.98% 3.96% 3.93% 3.64% 3.76% 3.56% 3.58% 3.60% 3.59% 3.52% 3.58% 3.63% 3.44% 0.77% 0.73% 0.63% 0.56% 0.51% 0.47% 0.43% 0.41% 0.52% 2Q'13 3Q'13 4Q'13 1Q'14 2Q'14 3Q'14 4Q'14 1Q'15 2Q'15 22

  23. Slide 23: Total risk based capital and tangible equity ratio

    Total Risk Based Capital Tangible Equity to Tangible Assets * 16.00% 14.56% 14.62% 14.81% 14.92% 14.30% 14.00% 12.00% 10.00% 7.74% 7.91% 7.88% 7.78% 7.68% 8.00% 6.00% 4.00% 2.00% 0.00% 2Q'14 3Q'14 4Q'14 1Q'15 2Q'15 *See non-GAAP financial measures for additional information relating to the calculati

  24. Slide 24: Securities portfolio

    Securities = $2.4 B  Average tax-equivalent ~29.2% of total assets portfolio yield of 2.79%. US Govt.  WAL approx. 4.6 years; Agencies modified duration 4.1%. 3.3%  Over 55% unpledged.  Net unrealized AFS Municipals, securities losses of $1.3 Agency 33.2% million at 6/30/15; total Mortgage- net

  25. Slide 25: Loan portfolio composition

    Total Loans = $4.9 B Comm. Real Estate = Comm. & $2.2 B Ind., 14.8% LHFS, 0.2% Const & Dev. 14.1% Consumer, 7.8% Comm. Investor- HELOC, Real owned 7.7% Estate, 64.8% 44.4% Owner- Res. Real occupied Estate, 25.1% 21.1% 25

  26. Slide 26: NPAs 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 3Q'14 4Q'14 1Q'15 2Q'15 NPA's as a % of total Loans Criticized & Classified Loans as a % of total Loans 26

  27. Slide 27: Provision, ALL and non-performing loans

    1.8% $3,500 1.6% $3,000 1.4% $2,500 1.2% $2,000 1.0% 0.8% $1,500 0.6% $1,000 0.4% $500 0.2% 0.0% $- 2Q'13 3Q'13 4Q'13 1Q'14 2Q'14 3Q'14 4Q'14 1Q'15 2Q'15 Provision for credit losses ALL as a % of total loans Non performing loans as a % of total loans ($000) 27

  28. Slide 28: Interest rate sensitivity

    % Change in Net Interest Income from Immediate Change in Base Over One Year Interest Rates June 30, 2015 December 31, 2014 Up 1% Rate Shock +1.2% +1.9% Up 2% Rate Shock +1.0% +2.1% Up 3% Rate Shock -0.2% +0.9% Up 2% Rate Ramp +2.1% +1.9% Down 1% Rate Shock -1.6% -1.8% EVE Up 2% Rate Shock * 1.1% 6.0

  29. Slide 29: Stock Price and Dividend Information

    29 Stock Price and Dividend Information

  30. Slide 30: Dividend history and payout ratio

    $0.25 December 2014 Dividend Payout Ratio = 36.82% as of 12/31/14 $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 3Q'14 4Q'14 1Q'15 2Q'15 WesBanco dividend yield is 2.70% compared to SNL Banks 30 $5B-10B peer group of 2.30%.

  31. 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

  32. Slide 32: Appendix

    32 Appendix wN By all accounts, better.

  33. Slide 33: Core operating net income reconciliation

    6 months ended 6 months ended ($ in thousands except earnings per share amounts) 6/30/14 6/30/15 Net income $ 35,296 $ 35,512 Plus: Restructuring and merger-related 0 7,051 expense (net of tax) Core operating net income $ 35,296 $ 42,563 Average common shares - diluted 29,293,424 36,504,671 Core ope

  34. Slide 34: Efficiency ratio reconciliation, six months

    6 months ended 6 months ended ($ in thousands) 6/30/14 6/30/15 Non-interest expense $ 80,398 $ 100,047 Less: restructuring and merger related expense (0) (10,848) Less: amortization of intangibles (977) (1,510) Non-interest expense excluding restructuring and $ 79,421 $ 87,689 merger related expense

  35. Slide 35: Efficiency ratio reconciliation, annual

    ($ 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) (3,888) (1,310) (1,309) Non-interest expense excluding restructuring and merger related expense 140,977 140,295 146,232 159,688 160,32

  36. Slide 36: Tangible equity to tangible assets, annual

    ($ 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

  37. Slide 37: Tangible equity to tangible assets, quarterly

    ($ in thousands) 2Q’14 3Q’14 4Q’14 1Q’15 2Q’15 Total shareholder’s equity $ 778,625 $ 788,784 $ 788,190 $ 1,091,384 $ 1,094,653 Less: goodwill & other intangible assets, net of def. tax liabilities (317,527) (317,217) (316,914) (488,911) (488,949) Tangible equity $ 461,098 $ 471,567 $ 471,276 $ 602,

  38. 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 $ 73,109 Less: Net securities gains 963 2,463 684 903 44 Less: net gains/losses on other real estate owned and other assets (1,290) (305) (81) (1,006) 373 Net operating non-interest income $ 60,215 $ 6

  39. Slide 39: Return on average tangible assets, YTD

    ($ in thousands) 6/30/14 YTD 6/30/15 YTD Net income $ 71,177 $ 71,612 Plus: amortization of intangibles* (tax effected at 35%) 1,281 1,979 Plus: merger related items (tax effected at 35%) 0 14,219 Net income before amortization of intangibles* $ 72,458 $ 87,810 Average assets $6,203,160 $7,796,400 L

  40. Slide 40: Return on average tangible equity, YTD

    ($ in thousands) 6/30/14 YTD 6/30/15 YTD Net income $ 71,177 $ 71,612 Plus: amortization of intangibles* (tax effected at 35%) 1,281 1,979 Plus: merger related items (tax effected at 35%) 0 14,219 Net income before amortization of intangibles* $ 72,458 $ 87,810 Average total shareholders’ equity $ 7

  41. Slide 41: Return on average tangible equity, 2011-2Q'15

    ($ in thousands) 2011 2012 2013 2014 2Q’15 Net income $ 43,809 $ 49,544 $ 63,925 $ 69,974 $ 71,612 Plus: amortization of intangibles* (tax effected at 35%) 1,566 1,398 1,487 1,248 1,979 Plus: merger related items (tax effected at 35%) 0 2,527 852 851 14,219 Net income before amortization of intangib

  42. Slide 42: Return on average tangible equity, 2010-2014

    ($ 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

  43. Slide 43: Return on average tangible assets, 2011-2Q'15

    ($ in thousands) 2011 2012 2013 2014 2Q’15 Net income $ 43,809 $ 49,544 $ 63,925 $ 69,974 $ 71,612 Plus: amortization of intangibles* (tax effected at 35%) 1,566 1,398 1,487 1,248 1,979 Plus: merger related items (tax effected at 35%) 0 2,527 852 851 14,219 Net income before amortization of intangib

  44. Slide 44: WesBanco

    44 WesBanco By all accounts, better.

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