WesBanco, Inc. (WSBC)

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WesBanco, Inc. (WSBC)

Q3 2013 Earnings Call

October 23, 2013 11:00 AM ET


Paul Limbert – President and CEO

Robert Young – EVP and CFO

Jim Gardill – Chairman


Stephen Scouten – Keefe Bruyette & Woods

William Wallace – Raymond James

Michael Burn – Macquarie Capital



Good morning, and welcome to WesBanco’s Conference Call. My name is Marlene and I will be your conference facilitator today. Today’s call will cover WesBanco’s discussion of results of operations for the third quarter ended September 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) Please note 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 on the SEC’s website,, or at WesBanco’s website,

Investors are cautioned that forward-looking statements, which are not historical fact, involve risks and uncertainties, included those details 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 third quarter 2013 earnings release was issued yesterday and is available at 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’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 the opening statements.

Mr. Limbert, you may begin your conference sir.

Paul Limbert

Thank you, Marlene. Good morning everyone. Thank you for choosing to participate in WesBanco’s third quarter 2013 earnings conference call. We are pleased that 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 highlights. And then, Jim Gardill, our Chairman, will moderate the question-and-answer period.

A press release detailing the results of the third quarter and the year-to-date 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 third quarter financial results.

WesBanco had an excellent third quarter and year-to-date results. The ROA for the third quarter was 1.01%, and the year-to-date ROA was 1.07%. The return on tangible equity was 16.4%. These ratios include the expenses incurred relating to the Fidelity merger, but still represent above peer group returns.

Net income for year-to-date 2013, represents an increase of 32% from the year-to-date 2012. These results have allowed us to raise our quarterly dividend for a second time in 2013 to $0.20 or a 5% increase. Our dividend has been increased six times in the last 11 quarters. The increased earnings was provided by improvements in net interest income, revenue growth, significant loan growth, continued improvement in credit quality and control of other operating expenses. Bob Young will provide additional details relating to the improvements.

Our acquisition of Fidelity has been fully integrated. Now we have turned our attention to improving our market position in Pittsburg. We’re continuing the process of visiting existing customers and hiring additional revenue producing employees. To-date, we’ve added to the Pittsburg market, treasury management, private banking, securities brokerage representatives and additional lending staff. Additional lenders include both one to four family residential mortgage originators and commercial loan officers. 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 activities in the Marcellus and Utica shale areas. During 2012, we saw deposits from customers exceed $225 million for our customers and release bonus and royalty payments.

Payments from these large national organizations continue to be deposited during 2013, totaling over $243 million year-to-date this year. We’ve experienced growth in total deposits and have been working to strategically shift deposits towards non-interest DDA accounts, which has helped to offset the anticipated declines in certificates of deposits. The declines in certificates of deposits is due to planned reductions in single service customers and customers moving money to short-term accounts until interest rates improve.

Non-interest DDA balances have grown at an annualized rate of 6.5% during 2013. In addition, growth of investment management services to many of the individuals with their new found wealth has resulted in assets under management to grow to over $3.5 billion as of September 30, 2013. Wealth management revenues are also continuing to grow, increasing 9.7% this year.

We’ve been asked about the lending we have done to the natural gas industry and its related companies. We do not lend to the large national drilling companies. However, we are lending to the second and third tier companies which are providing support services, or contractors who are assisting in building the related infrastructure.

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