WSBC

WesBanco, Inc. (WSBC)

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WesBanco, Inc. (WSBC)

Q2 2013 Earnings Call

July 24, 2013 11:00 am ET

Executives

Paul Limbert - President & CEO

Jim Gardill - Chairman

Robert Young - EVP & CFO

Analysts

Stephen Scouten - KBW

William Wallace - Raymond James

John Moran - Macquarie Capital

Presentation

Operator

Good morning and welcome to WesBanco’s Conference Call. My name is Gary and I will be your conference facilitator today. Today’s call will cover WesBanco’s discussion of results of operations for the quarter ended June 30, 2013. Please be advised all lines have been placed on mute to prevent any background noise. After the speakers’ remarks there will be a question-and-answer period. (Operator Instructions). This call is also being recorded. If you object to the recording, please disconnect at this time.

Forward-looking statements in this presentation 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 herein should be read in conjunction with WesBanco’s 2012 Annual Report on Form 10-K and other reports which are available at the SEC’s website www.sec.gov or at WesBanco’s website www.wesbanco.com.

Investors are cautioned that forward-looking statements, which are not historical fact, involve risks and uncertainties including those detailed in WesBanco’s 2012 Annual Report on Form 10-K filed with the SEC under the section Risk Factors in Part I, Item 1A. Such statements are subject to important factors that could cause actual results to differ materially from those contemplated by such statements. WesBanco does not assume any duty to update any forward-looking statements.

WesBanco’s second quarter 2013 earnings release was issued yesterday and is available at www.wesbanco.com. This call will include about 20 to 30 minutes of prepared commentary followed by a question-and-answer period, which I will facilitate. An archived webcast of this call will be available at wesbanco.com.

WesBanco’s participants in today’s call will be Paul Limbert, President and Chief Executive Officer; Jim Gardill, Chairman of the Board; and Robert Young, Executive Vice President and Chief Financial Officer. And all will be available for questions following opening statements.

Mr. Limbert, you may begin your conference.

Paul Limbert

Thank you, Gary. Good morning. Thank you for participating in WesBanco’s second quarter 2013 earnings conference call. We are pleased you have joined us this morning to hear about WesBanco’s excellent operating results. I would like to make some opening comments. Bob Young, our CFO, will provide financial highlight. And then, Jim Gardill, our Chairman, will moderate the question-and-answer period.

A press release detailing the results of our second quarter and first half of the year was issued last evening. A copy of the entire press release is available on our website. We will assume that all participants are familiar with WesBanco and we can begin our discussion of the first half results.

WesBanco had an excellent second quarter and half of the year. The return on average assets for the second quarter was 1.12% and for the first half of 2013 the return on average assets was 1.1%. The return on tangible equity was 16.9%. These ratios include the expenses incurred relating to the Fidelity merger, but they still represent above peer group returns.

Earnings in 2013 represent an increase of 38% from the first half of 2012. These results have allowed us to raise our 2013 quarterly dividend to $0.19 or an increase of 5.6%. Our dividend has been increased five times in the last 10 quarters. The increased earnings was provided by improvement in net interest income, growth in non-interest income, significant loan growth, continued improvement in credit quality and the control of other operating expenses. Bob Young will provide additional details relating to these improvements.

We have been pleased to be able to complete the Fidelity transaction quickly. From announcement date to the customer data conversion the elapsed time was only eight months. We have now turned our attention to improving our market position in Pittsburgh. We're in the process of visiting existing customers and hiring additional revenue producing employees.

To-date, we have added to the Pittsburgh market treasury management, securities brokerage representatives and additional lending staff. Additional lenders include both one-to-four family residential mortgage originators and commercial loan officers. As an example of our success to-date, we have been able to grow loans in the Pittsburgh market by an annualized rate of 24% or $39 million during the first six months.

Another example is represented by additional securities brokerage revenues of over $400,000 from this market. Hiring of additional revenue producers has already begun to show its benefits. In addition to having a new market from which we can generate growth we have seen a significant amount of activity coming from the natural gas companies in the Marcellus and Utica shale areas. During all of 2012, we saw deposits from customers exceeding $225 million from customers and lease bonus and royalty payments.

Payments from these large national organizations continue to be deposited in 2013, totaling over $171 million to-date this year. We have not experienced growth in total deposits this year but have been working to strategically shift deposits towards non-interest DDA accounts, which has helped to offset the declines in certificates of deposits.

Non-interest DDA balances have grown at an annualized rate of 6% during 2013. In addition, growth of the investment management services to many of the individuals with their new found wealth has resulted in assets under management growing to over $3.4 billion as of June 30, 2013. Wealth management revenues are also continuing to grow increasing 9% this year.

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