PARKERSBURG - WesBanco has announced increased earnings for the period ending Dec. 31.
For the 12 months ending Dec. 31, net income was $49.5 million as compared to $43.8 million for 2011, representing an increase of 13.1 percent, while diluted earnings per share were $1.84, as compared to $1.65 per share for 2011. Net income, excluding restructuring and merger-related expenses, was $52.1 million compared to $43.8 million for 2011, representing an increase of 18.9 percent, while diluted earnings per share, excluding restructuring and merger-related expenses, were $1.94 (non-GAAP measure), compared to $1.65 per share for 2011.
During the year, WesBanco had many accomplishments, including the acquisition of Fidelity Bancorp Inc., a reduction in non-performing loans, elimination of certain unprofitable branches, growth in non-interest income, and increased loan originations and outstanding loan balances, while maintaining strong capital ratios.
As of Nov. 30, WesBanco completed the acquisition of Fidelity, a Pittsburgh-based bank. Fidelity had assets of $600 million and operates 13 branches throughout the Pittsburgh metropolitan area. Fidelity's assets and liabilities are included in our financial statements at fair value, and income and expense are included subsequent to the merger date.
Last year was successful in many ways, including the acquisition of Fidelity, Paul M. Limbert, president and chief executive officer of WesBanco, said.
"We are very excited to work with the experienced Fidelity team in expanding our presence in Pittsburgh and offering our expanded array of products to their customers," Limbert said. "Another major accomplishment this year was the continued improvement in credit quality resulting in our ability to reduce the provision for credit losses in each of the last five quarters. We were also able to grow loans outstanding through our loan origination efforts which provided net loan growth in 2012 of more than 4 percent. Our accomplishments during 2012 have resulted in the significant improvement in our operating results and growth in net income."
Assets at Dec. 31 increased 9.8 percent or $542.7 million from the prior year-end due to the acquisition of Fidelity and organic growth. Portfolio loans increased $448.4 million or 13.8 percent with $313.4 million from the acquisition and the remaining $135 million as WesBanco's originations outpaced paydowns. Separate from the Fidelity acquisition, WesBanco grew outstanding loans 4.2 percent from the previous year as a result of a 29.7 percent growth in loan originations from the prior year. The organic loan growth and declines in higher cost borrowings of $110.9 million over the last twelve months were funded by organic deposit growth and the use of other liquid assets. Deposits increased $550.4 million or 12.5 percent in 2012, with $455.0 million from the acquisition and $95.4 million from organic growth. Goodwill and core deposit intangibles created by the merger totaled about $43.5 million.
WesBanco has continued to maintain strong regulatory capital ratios even after the completion of the Fidelity acquisition.
At Dec. 31, tier I leverage was 8.67 percent, tier I risk-based capital was 12.82 percent, and risk-based capital was 14.07 percent, all of which were relatively unchanged from the prior year end. Both consolidated and bank-level regulatory capital ratios are well above the applicable "well-capitalized" standards promulgated by bank regulators.
Tangible equity to tangible assets (non-GAAP measure) was 6.77 percent at December 31, 2012, a nine basis point increase from a year ago. Strong earnings and improved capital have enabled WesBanco to increase its dividend four times over the last two years totaling 29 percent to the current 18 cents per share, an approximate 3.2 percent dividend yield.
WesBanco has continued to improve credit quality over the last two years. Non-performing loans were $63.7 million or 1.73 percent of loans at Dec. 31, which represents a 26.7 percent decrease from $86.9 million or 2.68 percent at Dec. 31 of the prior year. The 2012 ending balance includes accruing and non-accrual troubled debt restructurings totaling $9.4 million related to the implementation during the quarter of a regulatory requirement for primarily mortgage, home equity and consumer loans discharged in bankruptcy, which the borrower has continued to repay after the discharge. Classified and criticized loans decreased $85.4 million or 33.1 percent from Dec. 31, 2011. Sales of commercial loans during 2012 decreased non-performing loans by $9.4 million and classified and criticized loans by $10.3 million compared to Dec. 31, 2011. Additionally, $11.3 million of non-performing commercial loans acquired in the Fidelity acquisition, with a fair value of $6.9 million, were sold concurrent with the merger in the fourth quarter.
Net charge-offs for 2012 were $22.1 million, or .67 percent of average portfolio loans, compared to $42.5 million or 1.30 percent for 2011. As a result of the improvement in all measures of credit quality, the provision for credit losses was $19.9 million for 2012 compared to $35.3 million for 2011. The allowance for loan losses represented 1.43 percent of portfolio loans at year end; however, if the credit mark on the Fidelity loans were to be included, the allowance would approximate 1.62 percent of loans. After an independent review of the merger date loan portfolio, the gross loan mark of $12.6 million was similar to the amount disclosed upon announcement of the merger.