WesBanco Announces First Quarter 2022 Financial Results

WHEELING, W.Va., April 26, 2022 /PRNewswire/ -- WesBanco, Inc. ("WesBanco") (Nasdaq: WSBC), a diversified, multi-state bank holding company, today announced net income and related earnings per share for the three months ended March 31, 2022.  Net income available to common shareholders for the first quarter of 2022 was $41.6 million, with diluted earnings per share of $0.68, compared to $70.6 million and $1.05 per diluted share, respectively, for the first quarter of 2021.  The first quarter of 2021 was favorably impacted by a negative provision of $22.1 million (net of tax) under the Current Expected Credit Losses ("CECL") methodology.  Net income available to common shareholders, excluding after-tax restructuring and merger-related expenses, for the three months ended March 31, 2022, was $42.9 million, or $0.70 per diluted share, as compared to $71.3 million and $1.06 per diluted share, respectively, in the prior year quarter (non-GAAP measures).

Financial and operational highlights during the quarter ended March 31, 2022:

• Sequential quarter total loan growth improved by 0.9%, or 3.6% annualized, when excluding Small Business Administration Payroll Protection Program ("SBA PPP") loans
• Successful execution on our strategy to seek additional long-term growth opportunities through the opening of loan production offices in Nashville and Indianapolis
• Deposit growth, excluding certificates of deposit ("CDs"), was 7.3% year-over-year, driven by growth in demand deposits and savings accounts
• Successful execution of a Tier 2 capital raise, through the public offering of $150 million of ten-year fixed-to-floating rate subordinated debt
• During the quarter, we continued to return capital to our shareholders as we purchased approximately 1.7 million shares of our common stock on the open market under existing share repurchase authorizations
• Key credit quality metrics such as non-performing assets, past due loans, criticized and classified loans, and net loan charge-offs, as percentages of total portfolio loans, have remained at low levels and favorable to peer bank averages, those with total assets between $10 billion and $25 billion (based upon the prior four quarters)
• WesBanco continues to be acknowledged for its strong financial performance and employee focus as it was recognized by Forbes as both one of America's Best Banks and Best Midsize Employers – the only midsize bank making the top ten of both rankings. In addition, WesBanco was also named one of the World's Best Banks by Forbes, as well as one of America's Most Trustworthy Companies by Newsweek

"We are pleased with WesBanco's performance during the first quarter of 2022," said Todd F. Clossin, President and Chief Executive Officer of WesBanco.  "We exhibited strong expense management as our operating expenses were roughly consistent with the year ago period.  Furthermore, we continued our efforts of returning capital to our shareholders.  We also demonstrated annualized organic loan growth of 3.6% quarter-over-quarter, despite still elevated commercial real estate payoffs, due to the efforts of our seasoned lending teams.  We believe their efforts will be enhanced by our new loan production offices in the Nashville and Indianapolis areas."

Mr. Clossin added, "Most importantly, we are proud of our entire organization as our employees adhered to our community banking roots by focusing on providing top-tier service to our customers.  Their efforts allowed us to be recognized by Forbes as one of the best banks in America, based on financial performance, as well as one of the best banks in the world, based on customer services.  Further, our employees voted us one of America's best mid-sized employers reflecting our efforts to create an environment where they are supported and positioned to succeed.  In fact, we were the only mid-sized bank in the country to receive honors for both employee satisfaction and financial success.  Lastly, the combination of all our efforts and these great accolades, allowed us to be recognized as one of America's Most Trustworthy Companies by Newsweek."

Balance Sheet
Loan growth for the first quarter of 2022 reflects the continuation of both SBA PPP loan forgiveness and elevated commercial real estate payoffs, partially offset by efforts to keep more 1-to-4 family residential mortgages on the balance sheet, as well as sequential quarter commercial loan growth.  As of March 31, 2022, total portfolio loans of $9.7 billion, when excluding SBA Payroll Protection Program ("SBA PPP") loans, increased 0.9%, or 3.6% annualized, when compared to December 31, 2021.  In particular, commercial and industrial loans, excluding SBA PPP loans, for the first quarter increased $8.9 million, or 2.5% annualized, from December 31, 2021.  Furthermore, the first quarter of 2022 included forgiveness of approximately 867 SBA PPP loans totaling $86 million (net of deferred fees).  As of March 31, 2022, approximately 1,085 SBA PPP loans for $77 million remained in the loan portfolio.

As of March 31, 2022, total deposits were $13.8 billion, which increased both sequentially and year-over-year due primarily to increased personal savings, which more than offset a $344.1 million year-over-year reduction in CDs.  Deposits, excluding CDs, increased 7.3% year-over-year, driven by a 6.5% increase in total demand deposits, which represent approximately 59% of total deposits, as well as a 12.9% increase in savings accounts.

Credit Quality
As of March 31, 2022, total loans past due, non-performing loans, and non-performing assets as percentages of the loan portfolio and total assets have remained relatively low and consistent throughout the last five quarters.  In addition, criticized and classified loans as a percent of the loan portfolio decreased 58 basis points year-over-year to 3.68%.  For the first quarter, net loan charge-offs to average loans were immaterial at zero basis points.  The allowance for credit losses specific to total portfolio loans at March 31, 2022 was $117.9 million, or 1.21% of total loans.  The improvement in macroeconomic forecasts was the primary driver in a negative provision for credit losses of $3.4 million for the first quarter of 2022.

Net Interest Margin and Income
The net interest margin of 2.95% for the first quarter of 2022 decreased 2 basis points sequentially and 32 basis points from the first quarter of 2021, primarily due to the lower interest rate environment of the past year before the recent federal fund and market rate increases, and a shift to a higher level of securities as a percentage of total assets.  As a result of increased cash balances from our customers' higher personal savings, investment securities increased by $0.5 billion year-over-year and, as of March 31, 2022, represented approximately 24% of total assets.  Reflecting the continued low interest rate environment, we remain focused on controlling the costs of our various funding sources.  We have reduced deposit funding costs 8 basis points year-over-year to 12 basis points for the first quarter of 2022, or just 8 basis points when including non-interest bearing deposits.  When including our continued reductions in FHLB and other borrowings, the cost of total interest-bearing liabilities decreased 18 basis points year-over-year to 19 basis points.  Accretion from acquisitions benefited the first quarter net interest margin by 8 basis points, as compared to 13 basis points in the prior year period.  Lastly, the forgiveness of SBA PPP loans benefited the first quarter of 2022 net interest margin by a net 7 basis points, as compared to a net 11 basis points in the prior year period.

Net interest income decreased $8.8 million, or 7.5%, during the first quarter of 2022, as compared to the same quarter of 2021, reflecting lower loan yields due to repricing of existing loans and lower new offered rates in the current market environment, lower accretion from purchase accounting and lower SBA PPP-related loan income, partially offset by lower interest paid on deposits and borrowings as described above.

Non-Interest Income
For the first quarter of 2022, non-interest income of $30.4 million decreased $2.8 million, or 8.5%, from the first quarter of 2021, driven primarily by lower swap fee income and associated fair value adjustments located within other income, which combined decreased $3.0 million from the prior year period, and lower mortgage banking income, which decreased $2.3 million year-over-year.  Bank-owned life insurance of $3.9 million increased $2.2 million year-over-year due to higher death benefits of $1.9 million and the impact of new policies purchased during the third quarter of 2021.  Reflective of macroeconomic improvements and increased general consumer spending, service charges on deposits increased $1.2 million year-over-year to $6.1 million and electronic banking fees rose $1.0 million year-over-year to $5.3 million.  Mortgage banking income was lower due to our continued efforts to retain more residential mortgages on the balance sheet, which totaled 75% of originations compared to 40% last year, and lower originations during the quarter.  Residential mortgage originations of $271 million were lower both year-over-year and quarter-over-quarter due to general market trends reflective of the rising rate environment.

Non-Interest Expense
Excluding restructuring and merger-related expenses, non-interest expense for the three months ended March 31, 2022 was well-controlled as they increased $0.5 million, or 0.6%, to $86.0 million compared to the prior year period.  Salaries and wages increased $2.0 million, or 5.5%, compared to the prior year period due to lower deferred loan origination costs and higher salary expense related to normal merit increases and the hourly wage increase that we implemented last year.  As compared to the fourth quarter, salaries and wages were down due primarily to the lower day count during the first quarter of 2022, which reduced these expenses by approximately $0.9 million.  Employee benefits expense decreased mostly due to market fluctuations on the deferred compensation plan, which reduced expense by $0.9 million, as well as lower pension and health insurance expenses.  Equipment and software expense for the first quarter of 2022 increased $1.2 million, or 18.4% year-over-year due primarily to the movement of online banking costs from other operating expenses.  Other operating expenses decreased $1.7 million, or 9.8%, due to the aforementioned move of online banking costs, as well as a reduction in ACH and ATM processing charges related to a change in providers, in conjunction with last summer's core banking software system conversion.  Lastly, as part of our on-going branch optimization strategy, we recognized restructuring charges of $1.6 million during the first quarter associated with the anticipated closure of 11 locations during June.

Capital
WesBanco continues to maintain what we believe are strong regulatory capital ratios, as both consolidated and bank-level regulatory capital ratios are well above the applicable "well-capitalized" standards promulgated by bank regulators and the BASEL III capital standards.  At March 31, 2022, Tier I leverage was 9.67%, Tier I risk-based capital ratio was 13.25%, common equity Tier 1 capital ratio ("CET 1") was 12.01%, and total risk-based capital was 16.32%.

During the first quarter of 2022, WesBanco issued, through a public offering, $150 million of ten-year fixed-to-floating rate subordinated debt, which qualifies as Tier 2 capital and is reflected in the March 31, 2022 regulatory capital ratios.  Additionally, WesBanco repurchased 1.7 million shares of its outstanding common stock on the open market at a total cost of $62.3 million, or $36.11 per share.  As of March 31, 2022, approximately 2.9 million shares remained for repurchase under the existing share repurchase authorization that was approved on February 24, 2022, by WesBanco's Board of Directors.

Conference Call and Webcast
WesBanco will host a conference call to discuss the Company's financial results for the first quarter of 2022 at 10:00 a.m. ET on Wednesday, April 27, 2022.  Interested parties can access the live webcast of the conference call through the Investor Relations section of the Company's website, www.wesbanco.com.  Participants can also listen to the conference call by dialing 888-347-6607, 855-669-9657 for Canadian callers, or 412-902-4290 for international callers, and asking to be joined into the WesBanco call.

A replay of the conference call will be available by dialing 877-344-7529, 855-669-9658 for Canadian callers, or 412-317-0088 for international callers, and providing the access code of 10162191.  The replay will begin at approximately 12:00 p.m. ET on April 27, and end at 12 a.m. ET on May 11.  An archive of the webcast will be available for one year on the Investor Relations section of the Company's website (www.wesbanco.com).

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 be read in conjunction with WesBanco's Form 10-K for the year ended December 31, 2021 and documents subsequently filed by WesBanco with the Securities and Exchange Commission ("SEC") 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 most recent Annual Report on Form 10-K filed with the SEC under "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, including, without limitation, the effects of changing regional and national economic conditions including the effects of the COVID-19 pandemic; changes in interest rates, spreads on earning assets and interest-bearing liabilities, and associated interest rate sensitivity; sources of liquidity available to WesBanco and its related subsidiary operations; potential future credit losses and the credit risk of commercial, real estate, and consumer loan customers and their borrowing activities; actions of the Federal Reserve Board, the Federal Deposit Insurance Corporation, the Consumer Financial Protection Bureau, the SEC, the Financial Institution Regulatory Authority, the Municipal Securities Rulemaking Board, the Securities Investors Protection Corporation, and other regulatory bodies; potential legislative and federal and state regulatory actions and reform, including, without limitation, the impact of the implementation of the Dodd-Frank Act; adverse decisions of federal and state courts; fraud, scams and schemes of third parties; cyber-security breaches; competitive conditions in the financial services industry; rapidly changing technology affecting financial services; marketability of debt instruments and corresponding impact on fair value adjustments; and/or other external developments materially impacting WesBanco's operational and financial performance.  WesBanco does not assume any duty to update forward-looking statements.

Non-GAAP Financial Measures
In addition to the results of operations presented in accordance with Generally Accepted Accounting Principles (GAAP), WesBanco's management uses, and this presentation contains or references, certain non-GAAP financial measures, such as pre-tax pre-provision income, tangible common equity/tangible assets; net income excluding after-tax restructuring and merger-related expenses; efficiency ratio; return on average assets; and return on average tangible equity.  WesBanco believes these financial measures provide information useful to investors in understanding our operational performance and business and performance trends which facilitate comparisons with the performance of others in the financial services industry. Although WesBanco believes that these non-GAAP financial measures enhance investors' understanding of WesBanco's business and performance, these non-GAAP financial measures should not be considered an alternative to GAAP. The non-GAAP financial measures contained therein should be read in conjunction with the audited financial statements and analysis as presented in the Annual Report on Form 10-K as well as the unaudited financial statements and analyses as presented in the Quarterly Reports on Forms 10-Q for WesBanco and its subsidiaries, as well as other filings that the company has made with the SEC.

About WesBanco, Inc.
Founded in 1870, WesBanco, Inc. (www.wesbanco.com) is a diversified and balanced financial services company that delivers large bank capabilities with a community bank feel.  Our distinct long-term growth strategies are built upon unique sustainable advantages permitting us to span six states with meaningful market share.  Built upon our 'Better Banking Pledge', our customer-centric service culture is focused on growing long-term relationships by pledging to serve all personal and business customer needs efficiently and effectively.  Furthermore, our strong financial performance and employee focus has earned us recognition by Forbes as both one of America's Best Banks and Best Midsize Employers – the only midsize bank making the top ten of both rankings.  In addition to a full range of online and mobile banking options and a full-suite of commercial products and services, WesBanco provides trust, wealth management, securities brokerage, and private banking services through our century-old Trust and Investment Services department, with approximately $5.4 billion of assets under management (as of March 31, 2022).  WesBanco's banking subsidiary, WesBanco Bank, Inc., operates 205 financial centers in the states of Indiana, Kentucky, Maryland, Ohio, Pennsylvania, and West Virginia.  Additionally, WesBanco operates an insurance agency, WesBanco Insurance Services, Inc., and a full service broker/dealer, WesBanco Securities, Inc.