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1
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-K
(Mark One)
X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
------- SECURITIES EXCHANGE ACT OF 1934 (FEE REQUIRED)
For the Fiscal Year Ended December 31, 1996
------- TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
For the transition period from ____________ to ____________
Commission File Number 0-8467
------
WESBANCO, INC.
-----------------------------------------------------
(Exact name of Registrant as specified in its charter)
WEST VIRGINIA 55-0571723
- ------------------------------- ---------------------------------
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
1 Bank Plaza, Wheeling, WV 26003
- ---------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 304-234-9000
--------------
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Title of each class Name of each Exchange on which registered
- ------------------------------ -----------------------------------------
Common Stock $2.0833 Par Value National Association of Securities Dealers, Inc.
Nonredeemable Preferred Stock None
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. _____
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes X No
----- -----
The aggregate market value of voting stock computed using the average of the
bid and ask prices held by non-affiliates of the Registrant on February 28,
1997 was approximately $302,381,308.
(APPLICABLE ONLY TO CORPORATE REGISTRANTS)
As of February 28, 1997, there were 10,510,296 shares of WesBanco, Inc.
Common stock $2.0833 par value, outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of WesBanco, Inc.'s 1996 Annual Report to Shareholders - Parts II
and III
Portions of the Registrant's definitive proxy statement to be filed pursuant
to Regulation 14A not later than 120 days after the end of the fiscal year
(December 31, 1996) are incorporated by reference in Part III.
Page 1 of 62
2
WESBANCO, INC.
TABLE OF CONTENTS
ITEM # ITEM PAGE(S)
- ------ ---- -------
Part I
------
1 Business 3-18
2 Properties 19
3 Legal proceedings 19
4 Submission of matters to a vote of security holders N/A
Part II
-------
5 Market for the registrant's common equity and related
stockholder matters (A) 20
6 Selected financial data (A)
7 Management's discussion and analysis of financial
condition and results of operations (A)
8 Financial statements and supplementary data (A)
9 Changes in and disagreements with accountants on
accounting and financial disclosure 20
Part III
--------
10 Directors and Executive Officers of the registrant (B)20-21
11 Executive compensation (B)
12 Security ownership of certain beneficial owners and
management (B)
13 Certain relationships and related transactions (A) (B)
Part IV
-------
14 Exhibits, financial statement schedule and reports
on Form 8-K 21-23
(A) Pages 27-53, of WesBanco, Inc.'s 1996 Annual Report
to Stockholders are incorporated herein by reference.
(B) Incorporated by reference to WesBanco, Inc.'s Proxy
Statement dated March 14, 1997, for Annual Meeting
of Stockholders to be held April 16, 1997.
This Form contains a total of 62 pages.
3
PART I
Item 1. Business
- -----------------
General
- -------
As of December 31, 1996, the Corporation had four banking affiliates
located in Wheeling, Charleston, Parkersburg, and Fairmont, West Virginia.
The Registrant had one banking affiliate in Barnesville, Ohio. WesBanco
Wheeling has fourteen offices, all in West Virginia, five located in Wheeling,
two located in Follansbee, three in New Martinsville, one in Sistersville,
one in Wellsburg and two in Weirton. WesBanco Barnesville has six offices,
two located in Barnesville and one each in St. Clairsville, Bethesda,
Woodsfield and Beallsville, Ohio. WesBanco Parkersburg has three offices,
one located in Parkersburg and one located in Elizabeth and one in Mineral
Wells. WesBanco South Hills has two offices, one located in South Hills and
one in Sissonville. WesBanco Fairmont has four offices located in Fairmont,
five offices located in Morgantown, three offices located in Bridgeport, two
in Shinnston and one each in Nutter Fort, Kingwood, Masontown and Bruceton
Mills, West Virginia. The Corporation's mortgage banking affiliate has offices
located in Bridgeport, South Charleston, Barboursville, Elkins, Wheeling,
Parkersburg and Weirton, West Virginia. There are approximately 860 full
time equivalent employees employed by all affiliates as of December 31, 1996.
On December 20, 1996, WesBanco, Inc. announced the signing of a Definitive
Agreement and Plan of Merger, providing for the merger of Shawnee Bank, Inc.,
located in Dunbar and South Charleston, West Virginia with WesBanco South
Hills, a wholly-owned subsidiary of WesBanco, Inc. The acquisition, which is
based upon a fixed exchange ratio of 10.094 shares of WesBanco common stock for
each share of Shawnee common stock, will be accounted for as a purchase
transaction with an approximate value of $9,860,000. This transaction, which
is subject to approval by the appropriate regulatory authorities and the
shareholders of Shawnee, is expected to be completed in the second quarter of
1997.
WesBanco, Inc., through its subsidiaries, conducts general banking,
commercial, mortgage banking and trust business. Its full service banks
offer a wide range of services to commercial, consumer and government bodies,
including but not limited to, retail banking services, such as demand, savings
and time deposits; commercial, mortgage, and consumer installment loans;
credit card services through VISA and MasterCard; personal and corporate
trust services and discount brokerage services. Most affiliates are
participating in local partnerships which operate banking machines in those
local regions primarily under the name of MAC. The banking machines are
linked to CIRRUS, a nationwide banking network.
The Corporation has reported to its shareholders that it may engage in
other activities of a financial nature authorized by the Federal Reserve Board
through a subsidiary, or through acquisition of established companies.
4
Item 1. Business (continued)
- -----------------------------
General (continued)
- -------------------
As of December 31, 1996, none of the affiliates were engaged in any
operation in foreign countries and none has had transactions with customers
in foreign countries.
Competition
- -----------
Each affiliate bank faces strong competition for local business in their
respective market areas. Competition exists for new loans and deposits, in
the scope and types of services offered, and the interest rates paid on time
deposits and charged on loans, mortgage banking services and in other aspects
of banking. The affiliate banks encounter substantial competition not only
from other commercial banks but also from other financial institutions.
Savings banks, savings and loan associations, brokerage business and credit
unions actively compete for deposits. Such institutions, as well as consumer
finance companies, insurance companies and other enterprises, are important
competitors for various types of lending business. In addition, personal and
corporate trust services and investment counseling services are offered by
insurance companies, investment counseling firms and other business firms and
individuals.
Supervision and Regulation
- --------------------------
As a registered bank holding company, WesBanco is subject to the
supervision of the Federal Reserve Board and is required to file with the
Federal Reserve Board reports and other information regarding its business
operations and the business operations of its subsidiaries. WesBanco is also
subject to examination by the Federal Reserve Board and is required to obtain
Federal Reserve Board approval prior to acquiring, directly or indirectly,
ownership or control of voting shares of any bank, if, after such acquisition,
it would own or control more than 5% of the voting stock of such bank. In
addition, pursuant to federal law and regulations promulgated by the Federal
Reserve Board, WesBanco may only engage in, or own or control companies that
engage in, activities deemed by the Federal Reserve Board to be so closely
related to banking as to be a proper incident thereto. Prior to engaging in
most new business activities, WesBanco must obtain approval from the Federal
Reserve Board.
WesBanco's banking subsidiaries have deposits insured by the Bank
Insurance Fund ("BIF") of the Federal Deposit Insurance Corporation (the
"FDIC"), and are subject to supervision, examination and regulation by state
banking authorities and either the FDIC or the Federal Reserve Board. In
addition to the impact of federal and state supervision and regulation, the
banking subsidiaries of WesBanco are affected significantly by the actions of
the Federal Reserve Board as it attempts to control the money supply and
credit availability in order to influence the economy.
5
Item 1. Business (continued)
- -----------------------------
Supervision and Regulation (continued)
- --------------------------------------
WesBanco's depository institution subsidiaries are subject to affiliate
transaction restrictions under federal law which limit the transfer of funds
by the subsidiary banks to their parent and any nonbanking subsidiaries,
whether in the form of loans, extensions of credit, investments or asset
purchases. Such transfers by any subsidiary bank to its parent corporation
or to any nonbanking subsidiary are limited in amount to 10% of the
institution's capital and surplus and, with respect to such parent and all
such nonbanking subsidiaries, to an aggregate 20% of any such institution's
capital and surplus. Furthermore, such loans and extensions of credit are
required to be secured in specified amounts.
The Federal Reserve Board has a policy to the effect that a bank holding
company is expected to act as a source of financial and managerial strength to
each of its subsidiary banks and to commit resources to support each such
subsidiary bank. Under the source of strength doctrine, the Federal Reserve
Board may require a bank holding company to make capital injections into a
troubled subsidiary bank, and may charge the bank holding company with
engaging in unsafe and unsound practices for failure to commit resources to
such a subsidiary bank. This capital injection may be required at times when
WesBanco may not have the resources to provide it. Any capital loans by a
holding company to any of the subsidiary banks are subordinate in right of
payment to deposits and to certain other indebtedness of such subsidiary bank.
Moreover, in the event of a bank holding company's bankruptcy, any commitment
by such holding company to a federal bank regulatory agency to maintain the
capital of a subsidiary bank will be assumed by the bankruptcy trustee and
entitled to a priority of payment.
In 1989, the United States Congress passed comprehensive financial
institutions legislation known as the Financial Institution Reform, Recovery,
and Enforcement Act ("FIRREA"). FIRREA established a new principal of
liability on the part of depository institutions insured by the FDIC for any
losses incurred by, or reasonably expected to be incurred by, the FDIC after
August 9, 1989, in connection with (i) the default of a commonly controlled
FDIC-insured depository institution, or (ii) any assistance provided by the
FDIC to a commonly controlled FDIC-insured depository institution in danger
of default. "Default" is defined generally as the appointment of a conservator
or receiver and "in danger of default" is defined generally as the existence
of certain conditions indicating that a "default" is likely to occur in the
absence of regulatory assistance. Accordingly, in the event that any insured
bank subsidiary of WesBanco causes a loss to the FDIC, other bank subsidiaries
of WesBanco could be required to compensate the FDIC by reimbursing to it the
amount of such loss.
6
Item 1. Business (continued)
- -----------------------------
Dividend Restrictions
- ---------------------
There are statutory limits on the amount of dividends WesBanco's
depository institution subsidiaries can pay to their parent corporation
without regulatory approval. Under applicable federal regulations,
appropriate bank regulatory agency approval is required if the total of
all dividends declared by a bank in any calendar year exceeds the available
retained earnings and exceeds the aggregate of the bank's net profits (as
defined by regulatory agencies) for that year and its retained net profits
for the preceding two years, less any required transfers to surplus or a fund
for the retirement of any preferred stock.
FDIC Insurance
- --------------
The FDIC has the authority to raise the insurance premiums for
institutions in the BIF to a level necessary to achieve a target reserve
level of 1.25% of insured deposits within not more than 15 years. In
addition, the FDIC has the authority to impose special assessments in certain
circumstances. The level of deposit premiums affects the profitability of
subsidiary banks and thus the potential flow of dividends to parent companies.
Under the risk-based insurance assessment system that became effective
January 1, 1994, the FDIC places each insured depository institution in one of
nine risk categories based on its level of capital and other relevant
information (such as supervisory evaluations). Regarding the assessment rates
under the assessment system, on November 20, 1996, the FDIC voted to retain
the existing Bank Insurance Fund ("BIF") assessment schedule of 0 to 0.27%
(annual rate) for the first semiannual period of 1997, and to collect an
assessment against BIF assessable deposits to be paid to the Financing
Corporation ("FICO"). In addition, the FDIC eliminated the statutory minimum
annual assessment of $2,000. As of January 1, 1997, each WesBanco Bank will
be subject to the FICO special assessment at an annual rate of 1.29%. No
assessment will be paid to the BIF for the first semiannual period of 1997.
Federal Deposit Insurance Corporation Improvement Act of 1991
- -------------------------------------------------------------
In December 1991, Congress enacted the Federal Deposit Insurance
Corporation Improvement Act of 1991 ("FDICIA"), which substantially revised
the bank regulatory and funding provisions of the Federal Deposit Insurance
Act and makes revisions to several other federal banking statutes.
Among other things, FDICIA requires federal bank regulatory authorities
to take "prompt corrective action" with respect to depository institutions
that do not meet minimum capital requirements. For these purposes, FDICIA
establishes five capital tiers: well capitalized, adequately capitalized,
undercapitalized, significantly undercapitalized and critically
undercapitalized.
7
Item 1. Business (continued)
- -----------------------------
Rules adopted by the Federal banking agencies under FDICIA provide that
an institution is deemed to be: "well capitalized" if the institution has a
Total (Tier 1 plus Tier II) risk-based capital ratio of 10.0% or greater, a
Tier I risk-based ratio of 6.0% or greater, and a leverage ratio of 5.0% or
greater, and the institution is not subject to an order, written agreement,
capital directive, or prompt corrective action directive to meet and maintain
a specific level for any capital measure; "adequately capitalized" if the
institution has a Total risk-based capital ratio of 8.0% or greater, a Tier I
risk-based capital ratio of 4.0% or greater, and a leverage ratio of 4.0% or
greater (or a leverage ratio of 3.0% or greater if the institution is rated
composite 1 in its most recent report of examination, subject to appropriate
Federal banking agency guidelines), and the institution does not meet the
definition of a well-capitalized institution; "undercapitalized" if the
institution has a Total risk-based capital ratio that is less than 8.0%, a
Tier I risk-based capital ratio that is less than 4.0% or a leverage ratio
that is less than 4.0% (or a leverage ratio that is less than 3.0% if the
institution is rated composite 1 in its most recent report of examination,
subject to appropriate Federal banking agency guidelines) and the institution
does not meet the definition of a significantly undercapitalized or critically
undercapitalized institution; "significantly undercapitalized" if the
institution has a Total risk-based capital ratio that is less than 6.0%, a
Tier I risk-based capital ratio that is less than 3.0%, or a leverage ratio
that is less than 3.0% and the institution does not meet the definition of a
critically undercapitalized institution; and "critically undercapitalized" if
the institution has a ratio of tangible equity to total assets that is equal
to or less than 2%.
At December 31, 1996, WesBanco and all of its bank subsidiaries qualified
as well-capitalized based on the ratios and guidelines noted above. A bank's
capital category, however, is determined solely for the purpose of applying the
prompt corrective actions rules and may not constitute an accurate
representation of that bank's overall financial condition or prospects.
The appropriate Federal banking agency may, under certain circumstances,
reclassify a well capitalized insured depository institution as adequately
capitalized. The appropriate agency is also permitted to require an adequately
capitalized or undercapitalized institution to comply with the supervisory
provisions as if the institutions were in the next lower category (but not
treat a significantly undercapitalized institution as critically
undercapitalized) based on supervisory information other than the capital
levels of the institution.
The statute provides that an institution may be reclassified if the
appropriate Federal banking agency determines (after notice and opportunity
for bearing) that the institution is in an unsafe and unsound condition or
deems the institution to be engaging in an unsafe or unsound practice.
8
Item 1. Business (continued)
- -----------------------------
FDICIA generally prohibits a depository institution from making any
capital distributions (including payment of a dividend) or paying any
management fee to its holding company if the depository institution would
thereafter be undercapitalized. Undercapitalized depository institutions
are subject to growth limitations and are required to submit a capital
restoration plan. The Federal banking agencies may not accept a capital
restoration plan without determining, among other things, that the plan is
based on realistic assumptions and is likely to succeed in restoring the
depository institution's capital. In addition, for a capital restoration
plan to be acceptable, the depository institution's parent holding company
must guarantee that the institution will comply with such capital restoration
plan. The aggregate liability of the parent holding company is limited to
the lesser of (i) an amount equal to 5% of the depository institution's total
assets at the time it became undercapitalized, and (ii) the amount which is
necessary (or would have been necessary) to bring the institution into
compliance with all capital standards applicable with respect to such
institution as of the time it fails to comply with the plan. If a depository
institution fails to submit an acceptable plan, it is treated as if it is
significantly undercapitalized.
Significantly undercapitalized depository institutions may be subject to
a number of requirements and restrictions, including orders to sell sufficient
voting stock to become adequately capitalized, requirements to reduce total
assets and cessation of receipt of deposits from correspondent banks.
Critically undercapitalized institutions are subject to the appointment of a
receiver or conservator.
FDICIA also contains a variety of other provisions that may affect the
operation of WesBanco, including new reporting requirements, regulatory
standards for real estate lending, "truth in savings" provisions, and the
requirement that a depository institution give 90 days' prior notice to
customers and regulatory authorities before closing any branch.
Capital Requirements
- --------------------
The risk-based capital guidelines for bank holding companies and banks
adopted by the Federal banking agencies were phased in at the end of 1992.
The minimum ratio of qualifying total capital to risk-weighted assets
(including certain off-balance sheet items, such as standby letters of credit)
under the fully phased-in guidelines is 8%. At least half of the total capital
is to be comprised of common stock, retained earnings, noncumulative
perpetual preferred stocks, minority interests and, for bank holding companies,
a limited amount of qualifying cumulative perpetual preferred stock, less
goodwill and certain other intangibles ("Tier I capital"). The remainder
("Tier II capital") may consist of other preferred stock, certain other
instruments, and limited amounts of subordinated debt and the reserve for
credit losses.
In addition, the Federal Reserve Board has established minimum leverage
ratio (Tier I capital to total average assets less goodwill and certain other
intangibles) guidelines for bank holding companies and banks. These guidelines
provide for a minimum leverage ratio of 3.0% for bank holding companies and
banks that meet certain specified criteria, including that they
9
Item 1. Business (continued)
- -----------------------------
have the highest regulatory rating. All other banking organizations are
required to maintain a leverage ratio of 3.0% plus an additional cushion of
at least 100 to 200 basis points. The guidelines also provide that banking
organizations experiencing internal growth or making acquisitions will be
expected to maintain strong capital positions substantially above the minimum
supervisory levels, without significant reliance on intangible assets.
Furthermore, the guidelines indicate that the Federal Reserve Board will
continue to consider a "tangible Tier I leverage ratio" in evaluating
proposals for expansion or new activities. The tangible Tier I leverage
ratio is the ratio of Tier I capital, less intangibles not deducted from
Tier I capital, to total assets, less all intangibles. Neither WesBanco
nor any of its bank subsidiaries has been advised of any specific minimum
leverage ratio applicable to it.
As of December 31, 1996, all of WesBanco's banking subsidiaries had
capital in excess of all applicable requirements.
Interstate Banking Act
- ----------------------
The Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994
(hereinafter called "Interstate Banking Act") was signed into law by President
Clinton on September 29, 1994. The Act generally allows adequately capitalized
and managed bank holding companies to acquire banks in any state starting one
year after enactment. The Act also permits interstate merger transactions
beginning June 1, 1997. States are permitted, however, to pass legislation
providing for either earlier approval of mergers with out-of-state banks or
"opting-out" of interstate mergers entirely. The Act would permit banks to
acquire branches of out-of-state banks by converting their office into branches
of the resulting bank. The Act would also permit banks to establish and
operate "de novo branches" in any state that "opts-in" to de novo branching.
The Act also requires each Federal banking agency to prescribe uniform
regulations, including guidelines insuring that interstate branches operated
by out-of-state banks are reasonably helping to meet the credit needs of
communities where they operate.
WesBanco is incorporated under the laws of the State of West Virginia and
the West Virginia Legislature adopted substantial amendments to the West
Virginia banking laws in 1996 specifically permitting interstate branching
under Section 102 and 103 of the Interstate Banking Act, effective May 31,
1997. As of December 31, 1996, the State of Ohio, in which WesBanco has an
affiliate bank, does not specifically permit interstate branching.
Statistical Information
- -----------------------
Except as noted, the following statistical data averages included in
Item I - Business were computed using daily averages for the years ended
December 31, 1996, 1995 and 1994. Statistical data not included in Item I -
Business have been omitted because they are included in the 1996 Annual
Report to Shareholders, incorporated herein by reference, or are not
applicable.
10
Item 1. Business (continued)
- -----------------------------
The effect on interest income and interest expense for the years ended
December 31, 1996, 1995 and 1994, due to changes in average volume and rate
from the prior year, is presented below. The average volumes and rates are
shown in the 1996 Annual Report to Shareholders. The effect of a change in
average volume has been determined by applying the average rate in the earlier
year to the change in volume. The change in rate has been determined by
applying the average volume in the earlier year to the change in rate. The
change in interest due to both rate and volume has been allocated to volume
and rate changes in proportion to the relationship of the absolute dollar
amounts of change in each. (in thousands):
1996 Compared to 1995
-----------------------------
Net
Increase
Volume Rate (Decrease)
------- ------- ---------
Loans $7,471 $ (474) $ 6,997
Taxable investment securities (2,398) 850 (1,548)
Non-taxable investment securities 640 (522) 118
Federal funds sold (428) (283) (711)
-------- -------- ----------
Total interest earned 5,285 (429) 4,856
-------- -------- ----------
Interest bearing demand (175) (697) (872)
Savings deposits (587) (929) (1,516)
Certificates of deposit 2,944 473 3,417
Federal funds purchased and
repurchase agreements 978 (336) 642
Other borrowings 65 (88) (23)
-------- -------- ---------
Total interest paid 3,225 (1,577) 1,648
-------- -------- ---------
Net Interest Differential $ 2,060 $ 1,148 $ 3,208
======== ======== =========
1995 Compared to 1994
-----------------------------
Net
Increase
Volume Rate (Decrease)
------- ------- ----------
Loans $ 5,822 $ 3,724 $ 9,546
Taxable investment securities (2,805) (161) (2,966)
Non-taxable investment securities (650) (22) (672)
Federal funds sold (297) 751 454
------- -------- --------
Total interest earned 2,070 4,292 6,362
------- -------- --------
Interest bearing demand (534) 297 (237)
Savings deposits (815) 700 (115)
Certificates of deposit 1,650 4,402 6,052
Federal funds purchased and
repurchase agreements 74 1,071 1,145
Other borrowings 4 61 65
------- -------- --------
Total interest paid 379 6,531 6,910
------- -------- --------
Net Interest Differential $1,691 $(2,239) $ (548)
======= ======== ========
11
Item 1. Business (continued)
- -----------------------------
Investment Portfolio
- --------------------
The maturity distribution using book value including accretion of
discounts and the amortization of premiums and approximate yield of
investment securities at December 31, 1996 is presented in the following
table. Tax equivalent yield basis was not used. Approximate yield was
calculated using a weighted average of yield to maturities (in thousands):
After One But After Five But
Within One Year Within Five Years Within Ten Years After Ten Years
--------------- ----------------- ---------------- -----------------
Amount Yield Amount Yield Amount Yield Amount Yield
----- ----- ------ ----- ------ ----- ------ -----
Held to Maturity:
- -----------------
U.S. Treasury and Other
U.S. Government Agencies $ 58,741 6.14% $ 40,716 6.10% -- -- -- --
States and Political
Subdivisions 11,513 5.31 61,044 5.16 $ 56,927 5.10% $ 18,159 5.46%
Other Debt Securities(1) 2,008 6.13
------- ---- ------- ---- ------- ---- --------- -----
Total Held to Maturitity 70,254 6.00 101,760 5.54 56,927 5.10 20,167 5.53
------- ---- ------- ---- ------- ---- --------- -----
Available for Sale:(2)
- ----------------------
U.S. Treasury and Other
U.S. Government Agencies 19,027 4.82 111,295 6.13 31,516 6.79 ---- ---
States and Political
Subdivisions 2,314 3.89 10,648 4.07 733 5.01 538 4.65
Mortgage-backed Securities (3) 21,409 6.78 65,467 6.94 7,099 6.89 ---- ---
Corporate Securities 4,999 5.91 ---- --- ---- --- ---- ---
Other Debt and Equity
Securities(1) --- --- ---- --- ---- --- 1,300 3.07
------ ---- ------ ---- ------ ---- -------- ----
Total Available for Sale 47,749 5.77 187,410 6.30 39,348 6.77 1,838 3.53
------ ---- ------- ---- ------ ---- -------- ----
Total Investment Securities $118,003 5.91% $289,170 6.03% $96,275 5.79% $22,005 5.36%
======== ===== ======== ===== ======= ===== ========= =====
(1) Represents investments with no stated maturity date.
(2) Average yields on investment securities available for sale have been
calculated based on amortized cost.
(3) Mortgage-backed securities which have prepayment provisions are assigned to
maturity categories based on estimated average lives.
12
Item 1. Business (continued)
- -----------------------------
Investment Portfolio (continued)
- --------------------------------
Book values of investment securities are as follows (in thousands):
December 31,
-----------------------------
1996 1995 1994
---- ---- ----
Investments Held to Maturity (at cost):
U.S. Treasury and Federal
Agency Securities $ 99,457 $219,719 $244,967
Obligations of states and
political subdivisions 147,643 129,074 139,021
Other securities (1) 2,008 1,358 1,260
-------- -------- --------
Total Held to Maturity 249,108 350,151 385,248
-------- -------- --------
Investments Available for Sale
(at market):
U.S. Treasury and Federal
Agency Securities 161,817 157,505 193,114
Obligations of States and
Political subdivisions 14,120 5,667 ---
Corporate securities 5,005 4 915
Mortgage-backed securities 93,750 6,610 7,788
Other securities (2) 1,509 2,351 888
-------- -------- --------
Total Available for Sale 276,201 172,137 202,705
-------- -------- --------
Total Investments $525,309 $522,288 $587,953
======== ======== ========
(1)Includes Federal Reserve Bank Stock and Federal Home Loan
Bank securities.
(2)Includes stocks of business corporations.
There are no issues included in obligations of state and political
subdivisions which individually or in the aggregate exceed ten percent of
shareholders' equity as of December 31, 1996.
Loan Portfolio
- --------------
Loans outstanding are as follows (in thousands):
December 31,
-----------------------------------------------
1996 1995 1994 1993 1992
Loans: ---- ---- ---- ---- ----
Commercial $177,136 $176,809 $170,164 $169,341 $172,467
Real Estate-Construction 21,556 16,544 25,575 21,732 14,187
Real Estate-Mortgage 510,778 424,917 380,178 356,286 350,472
Installment 321,060 284,108 245,032 231,705 206,896
---------- -------- -------- -------- --------
Total Loans $1,030,530 $902,378 $820,949 $779,064 $744,022
========== ======== ======== ======== ========
13
Item 1. Business (continued)
- -----------------------------
Loan Portfolio (continued)
- --------------------------
WesBanco's real estate-mortgage loans, at 50% of total loans, comprise
the single largest loan type in the portfolio. This category consists
generally of conventional adjustable and fixed rate residential mortgages and
home equity loans located within the bank's general market areas. The risks
associated with real estate lending are principally influenced by real
property values which are affected by the general economic conditions in
each bank's market areas.
Installment loans represent approximately 31% of total loans and consist
primarily of indirect vehicle loans originated through automobile dealers and
credit card outstanding balances. In recent years, WesBanco has experienced
growth in its indirect vehicle lending by offering attractive rates. These
loans are a smaller balance, homogeneous group of loans which are not
concentrated in a specific market area. Risks in this lending category
include the possibility of general economic downturn which may cause an
increase in credit losses.
The loan loss policy for consumer lending requires a charge-off if the
loan reaches 120 delinquency days. Any payments subsequent to charge-off are
reflected as recoveries.
Commerical loans, representing 17% of total loans are not concentrated in
any single industry, but reflect a broad range of business in West Virginia
and Eastern Ohio. These loans are predominantly in the manufacturing,
wholesaling and retail service industries. The credit risk associated with
commercial lending is principally influenced by general economic conditions
and the resulting impact on the borrower's operations.
Each bank within the Corporation has its own renewal policies regarding
commercial and real estate-construction loans. However, real estate-
construction loans are generally not renewed at any bank. Depending on the
size of each institution, commercial loans above certain pre-approved dollar
limits must be reviewed by the respective credit review committee or senior
management prior to extension of maturity dates or rollover of the loan into
a new loan. Renewals of commercial loans below specified lending limitations
may be approved by the respective bank loan officer.
The following table presents the approximate maturities of loans other
than installment loans and residential mortgages for all affiliate banks as
of December 31, 1996 (in thousands):
After one
In one year through After
year or less five years five years
-------------- -------------- ------------
Commercial $76,054 $ 49,208 $ 51,874
Real estate:
Construction 6,099 390 290
Other real estate 23,657 4,398 86,469
---------- ---------- ----------
Total $105,810 $ 53,996 $138,633
========== ========== ==========
Fixed rates $ 31,998 $ 35,305 $ 57,292
Variable rates 73,812 18,691 81,341
---------- ---------- ----------
Total $105,810 $53,996 $138,633
========== ========== ==========
14
Item 1. Business (continued)
- -----------------------------
Loan Portfolio (continued)
- --------------------------
WesBanco Bank Wheeling, which has approximately 41% of consolidated gross
loans, originates most commercial loans and real estate construction loans on
a demand basis. Most of these loans do not require formal repayment terms
other than monthly interest payments. There is no significant impact on cash
flows since these loans are monitored on a regular basis and principal
repayments, if not made by borrowers, are requested. WesBanco banks follow
lending policies which require substantial down payments along with current
market appraisals on the collateral when the loans are originated. The
majority of loans are either secured by deeds of trust on real property,
security agreements on personal property, insurance contracts from independent
insurance companies or through marketable securities.
All affiliate banks generally recognize interest income on the accrual
basis, except for certain loans which are placed on a nonaccrual status, when
in the opinion of management, doubt exists as to collectability. All banks
must conform to the policies of the Board of Governors of the Federal Reserve
System and the Office of the Comptroller of Currency which state that banks
may not accrue interest on any loan on which either the principal or interest
is past due 90 days or more unless the loan is both well secured and in the
process of collection. When a loan is placed on a nonaccrual status, interest
income may be recognized as cash payments are received.
Non-performing assets and secured loans which are in the process of
collection but are contractually past due 90 days or more as to interest or
principal are as follows (in thousands):
December 31,
---------------------------------------------
1996 1995 1994 1993 1992
------- ------ ------- ------- -------
Nonaccrual:
Installment $ 53 $ 59 $ 12 $ 124 $ 181
Commercial 3,683 3,467 6,766 9,496 5,992
Mortgage 928 1,673 1,475 1,620 1,633
------- ------ ------- ------ ------
4,664 5,199 8,253 11,240 7,806
------- ------ ------- ------ ------
Renegotiated:
Installment -- 9 -- -- 41
Commercial 1,527 1,006 23 80 3,938
Mortgage 623 39 81 88 108
------ ------ ------ ------ ------
2,150 1,054 104 168 4,087
------ ------ ------ ------ ------
Other classified
loans: (1)
Installment -- -- -- -- --
Commercial 3,057 341 -- -- --
Mortgage 414 697 -- -- --
------ ------ ------ ------ ------
3,471 1,038 -- -- --
------ ------ ------ ------ ------
Total non-performing
loans 10,285 7,291 8,357 11,408 11,893
Other Real Estate Owned
3,555 4,137 612 801 629
------ ------ ------ ----- ------
Total non-performing
assets $13,840 $11,428 $8,969 $12,209 $12,522
======= ======= ====== ======= =======
15
December 31,
------------------------------------
1996 1995 1994 1993 1992
---- ---- ---- ---- ----
Percentage of non-performing
assets to loans outstanding 1.4% 1.3% 1.1% 1.6% 1.7%
===== ===== ===== ===== =====
Past Due 90 Days or More:
Installment $1,538 $ 863 $ 944 $ 857 $1,071
Commercial 1,294 916 923 754 1,604
Real Estate 1,273 1,255 680 1,131 584
------ ------ ------ ------ ------
$4,105 $3,034 $2,547 $2,742 $3,259
====== ====== ====== ====== ======
(1) Includes loans internally classified as doubtful and substandard (as
defined by banking regulations) that meet the definition of impaired loans.
At December 31, 1996, nonperforming loans, which included all impaired
loans, totaled $10,285,000, an increase of $2,994,000 over 1995. The increase
was attributable primarily to a commercial loan which was classified as
substandard under the definition of an impaired loan.
Other fluctuations in nonperforming loans since 1992 are summarized below.
At December 31, 1995, nonaccrual loans decreased $3,054,000 to $5,199,000,
primarily due to the reclassification of a commercial real estate loan to other
real estate owned. The action was taken on November 1, 1995 by an affiliate
through a transfer by deed in-lieu of foreclosed commercial property.
Contributing to the increase in renegotiated loans during 1995 were certain
performing loans classified as impaired, in accordance with FAS No. 114. The
1994 decline in nonaccrual loans was the result of a commercial real estate
loan which was taken off of nonaccrual status. During 1993, nonaccrual loans
increased by $3,434,000 to $11,240,000, while renegotiated loans declined by
$3,919,000 to $168,000. The change between these categories was caused by a
reclassification of a renegotiated loan totaling $3,823,000 to nonaccrual
status during 1993. Nonaccrual loans are generally secured by collateral
believed to have adequate market values to protect the Corporation from
significant losses.
Prior to 1995, loans totaling $3,666,000 which were classified as
in-substance forcelosures and included in other assets were reclassified to
loans in accordance with FAS No. 114. Management continues to monitor
nonperforming assets to ensure against deterioration in collateral values.
Summary of Loan Loss Experience
- -------------------------------
The historical relationship between average loans, loan losses and
recoveries and the provision for loan losses is presented in the following
table (in thousands):
1996 1995 1994 1993 1992
Beginning balance - ------- ------- ------- ------- -------
Allowance for loan losses $13,439 $12,960 $12,483 $11,308 $10,471
Allowance for loan losses of
purchased bank 707 --- --- --- 62
Loans charged off:
Commercial 639 1,263 4,521 1,229 1,790
Real Estate-Mortgage 222 220 524 183 266
Installment 2,613 1,619 1,003 1,274 1,237
------ ------ ------ ------ ------
Total loans charged off 3,474 3,102 6,048 2,686 3,293
------ ------ ------ ------ ------
16
Item 1. Business (continued)
- -----------------------------
Summary of Loan Loss Experience (continued)
- -------------------------------------------
1996 1995 1994 1993 1992
---- ---- ---- ---- ----
Recovery of loans previously
charged off:
Commercial 76 377 171 184 436
Real Estate-Mortgage 67 97 25 36 38
Installment 377 319 256 394 297
----- ----- ----- ----- -----
Total recoveries 520 793 452 614 771
----- ----- ----- ----- -----
Net loans charged off 2,954 2,309 5,596 2,072 2,522
----- ----- ----- ----- -----
Provision for loan losses 4,336 2,788 6,073 3,247 3,297
Ending balance - ------- ------- ------- ------- -------
Allowance for loan losses $15,528 $13,439 $12,960 $12,483 $11,308
======= ======= ======= ======= =======
Ratio of net loans charged off
to average loans outstanding
for the period .32% .28% .79% .28% .35%
------- ------- ------- ------- -------
Ratio of the allowance for loan
losses to loans outstanding at
the end of the period 1.51% 1.50% 1.61% 1.62% 1.54%
------- ------- ------- ------- -------
The provision for loan losses is based on periodic management evaluation
of the loan portfolio as well as prevailing and anticipated economic conditions,
net loans charged off, past loan experience, current delinquency factors,
changes in the character of the loan portfolio, specific problem loans and
other factors.
Allocation of the Allowance for Loan Losses
- -------------------------------------------
The following represents the allocation of the allowance for loan losses
(dollars in thousands):
December 31,
---------------------------------------------------------------------------
1996 1995 1994 1993 1992
--------------- ------------- ------------- ------------- -------------
% of % of % of % of % of
Amount Loans Amount Loans Amount Loans Amount Loans Amount Loans
------ ----- ------ ----- ------ ----- ------ ----- ------ -----
Specific Allowance:
Commercial and Unallocated $ 9,557 17% $10,480 20% $10,536 21% $10,468 22% $8,848 23%
Real Estate-Construction -- 2 17 2 16 3 16 3 16 8
Real Estate-Mortgage 2,124 50 1,232 47 871 46 750 45 1,058 44
Installment 3,847 31 1,710 31 1,537 30 1,249 30 1,386 25
------- ---- ------- ---- ------- ---- ------- ---- ------- ----
Total $15,528 100% $13,439 100% $12,960 100% $12,483 100% $11,308 100%
------- ---- ------- ---- ------- ---- ------- ---- ------- ----
17
Item 1. Business (continued)
- -----------------------------
Allocation of the Allowance for Loan Losses (continued)
- -------------------------------------------------------
WesBanco has allocated the allowance for loan losses to specific portfolio
segments based upon historical net charge-off experience, changes in the level
of non-performing loans, average portfolio growth, local economic conditions
and management experience. For 1996, the increase in the specific allowance
for real estate-mortgage loans was due to an increase in outstanding balances.
Specific allowance for installment loans increased due primarily to increases
in outstanding balances and increases in the historical loan loss experience
rate. Management deems the allowance for loan losses at December 31, 1996
to be adequate.
Loan Risk Elements
- ------------------
The Corporation has historically maintained an allowance for loans losses
which is greater than actual charge-offs.
Management maintains loan quality through monthly reviews of past due
loans, and a quarterly review of significant loans which are considered by
affiliate bank personnel to be potential problem loans. Periodic review of
significant loans are completed by personnel independent of the loan
function.
There are no significant loans made to customers outside the general
market area of each affiliate bank. At times, in order to maintain loan
volumes, loans are purchased from correspondent banks. These loans aggregate
less than $3,500,000 as of December 31, 1996. Each bank within the
Corporation follows its usual loan analysis procedures before a determination
is made to purchase loans from correspondent banks.
Management's review of the loan portfolio has not indicated any material
amount of loans, not disclosed in the accompanying tables and discussions which
are known to have possible credit problems which cause management to have
serious doubts as to the ability of each borrower to comply with their present
loan repayment terms.
There were no loan concentrations in excess of 10% of total consolidated
loans.
Other Matters
- -------------
The Corporation has approximately 57% of its assets located in the Upper
Ohio Valley, an area experiencing an extended strike between the United Steel
Workers Union and Wheeling-Pittsburgh Steel Corporation. Through the current
date, this strike has not significantly impacted WesBanco's results of
operations. Since WesBanco is unable to determine when the strike may be
settled, we cannot estimate the impact on the local economy, if the strike
continues and ultimately the long-term effects resulting therefrom.
18
Item 1. Business (continued)
- -----------------------------
Certificates of Deposit
- -----------------------
Maturities of certificates of deposit in denominations of $100,000 or more
is as follows: (in thousands)
December 31,
---------------------
1996 1995
Maturity ------- -------
Under three months $18,506 $27,042
Three to six months 14,264 6,771
Six to twelve months 28,762 6,513
Over twelve months 30,804 35,760
------- -------
Total $92,336 $76,086
======= =======
Interest expense on certificates of deposit of $100,000 or more was
approximately $4,658,000 in 1996, $4,042,000 in 1995 and $2,589,000 in 1994.
Short-Term Borrowings
- ---------------------
Securities sold under agreement to repurchase have maturities which range
between one day and one year. The following table presents short-term
liabilities for the years ended December 31 (dollars in thousands):
1996 1995 1994
------- ------- -------
Securities sold under agreement
to repurchase:
Outstanding at year end $72,587 $70,091 $65,435
Average daily outstanding 69,975 54,791 51,068
Maximum outstanding at any month end 86,854 70,091 66,286
Average interest rate:
During year 4.81% 5.17% 3.47%
At year end 5.48 5.45 4.37
Return on Equity and Assets
- ---------------------------
The following financial ratios are presented:
1996 1995 1994
Net income to: ------ ------ ------
Average total assets 1.34% 1.33% 1.17%
Average shareholders' equity 10.02 10.15 9.32
Average shareholders' equity and
redeemable preferred stock 10.02 10.07 9.23
Dividend payout percentage (cash dividends,
including those of pooled banks, divided
by net income) 49.76 44.19 45.80
Equity to assets (average equity
divided by average assets) 13.33 13.09 12.58
Equity and redeemable preferred stock
to assets (average equity and redeemable
preferred stock dividend by average assets) 13.33 13.20 12.70
19
Item 2. Properties
- -------------------
The Registrant's affiliates generally own their respective offices,
related facilities and unimproved real property which is held for future
expansion. With certain branch office exceptions, all of the respective
West Virginia offices are located in downtown Wheeling, Follansbee, Wellsburg,
Weirton, New Martinsville, Sistersville, Elizabeth, Charleston, Sissonville,
Parkersburg, Kingwood, Fairmont, Morgantown, Shinnston, Bridgeport and
Masontown. The Ohio bank offices are located in Barnesville, Bethesda,
Woodsfield and Beallsville. Consolidated investment in net bank premises
and equipment at December 31, 1996 was $32,670,000.
The main office of the Registrant is located at 1 Bank Plaza, Wheeling,
West Virginia, in a building owned by WesBanco Wheeling. The building contains
approximately 100,000 square feet.
Item 3. Legal Proceedings
- --------------------------
WesBanco, Inc. and its affiliates are involved in various legal
proceedings presently pending which are incidental to the business of banking
in which they are engaged. These proceedings are pending in various
jurisdictions in which WesBanco, Inc. and its subsidiaries are engaged in
business. Based on the information which has been developed in such
proceedings as of the date hereof, and available to the Corporation,
management does not believe that any of such proceedings involve claims for
damages which expose it to a material liability on a consolidated basis.
The case previously reported in the 1995 Form 10-K, Tankovits v.
Glessner, et al., Civil Action No. 96-C-59(W) is still pending. Additional
development of the facts in the case has failed to disclose any significant
actionable conduct on the part of the Corporation's subsidiary bank.
Plaintiff has not initiated any significant discovery in the case and motions
to dismiss the case have been filed by all defendents in the proceeding.
While the development of the Plaintiff's case is incomplete, and subject to
that Contingency, counsel has advised the Corporation that the factual
allegations contained in the Complaint do not appear to provide a basis for
recovery by the Plaintiff.
20
PART II
Item 5. Market for the Registrant's Common Equity and Related
- --------------------------------------------------------------
Shareholder Matters
- -------------------
(a) Approximate Number of Security Holders
--------------------------------------------
Set forth below is the approximate number of holders of record of the
Registrant's equity securities as of February 28, 1997.
Title of Class Number
-------------- ------
Common Stock ($2.0833 Par Value) 4,248
The number of holders listed above does not include WesBanco, Inc.
employees who have had stock allocated to them through the Employee Stock
Ownership Plan. All WesBanco employees who meet the eligibility requirements
of the ESOP are included in the Plan.
Item 9. Changes in and disagreements with accountants on accounting and
- -----------------------------------------------------------------------
financial disclosure.
---------------------
On April 10, 1996, the Executive Committee of the Board of Directors of
WesBanco approved the decision to replace the firm of Price Waterhouse LLP
as auditors of the Registrant. In connection with the audits of the
Registrant's financial statements for each of the two years ended December 31,
1995 and through April 10, 1996, there were no disagreements with
Price Waterhouse LLP on any matters relating to the financial statements.
Price Waterhouse LLP confirmed these statements made by the Registrant through
a letter to the Registrant dated April 10, 1996. On the same date, the
Registrant engaged Ernst & Young LLP as its new independent accountant.
During the two years ended December 31, 1995 and through April 10, 1996, the
Registrant did not consult with Ernst & Young LLP on any accounting or
financial reporting matters. The Registrants filed a current report on form
8-K on April 12, 1996, indicating the change in auditors.
PART III
Item 10. Executive Directors of the Corporation
- ------------------------------------------------
Name Age Position
- ---- --- --------
James C. Gardill 50 Chairman of the Board
Robert H. Martin 63 Vice Chairman
Edward M. George 60 President and Chief Executive Officer
Paul M. Limbert 49 Executive Vice President-Credit Administration
and Chief Financial Officer
Dennis P. Yaeger 46 Executive Vice President and
Chief Operating Officer
John W. Moore, Jr. 48 Senior Vice President-Human Resources
21
Item 10. Executive Directors of the Corporation (continued)
- -----------------------------------------------------------
Jerome B. Schmitt 47 Senior Vice President-Investments
Larry L. Dawson 50 Vice President
Jerry A. Halverson 60 Vice President
Edward G. Sloane 58 Vice President-Data Processing
Mr. Martin was appointed Vice Chairman of the Corporation on February 28,
1994. Prior to that time, Mr. Martin was Chairman of the Board of First
Fidelity Bancorp, Inc. since 1986.
Each of the remaining officers listed above have been an Executive Officer
of the Corporation or one of its subsidiaries during the past five years.
PART IV
Item 14. Exhibits, financial statement schedules and reports on Form 8-K
- -------------------------------------------------------------------------
(a) Certain documents filed as part of the Form 10-K
-----------------------------------------------------
Page(s)
-------
(1) Consolidated Balance Sheet as of December 31, 27
1996 and 1995.
Consolidated Statements of Income for the years 28
ended December 31, 1996, 1995 and 1994.
Consolidated Statements of Changes in Shareholders' 29
Equity for the years ended December 31, 1996,
1995 and 1994.
Consolidated Statement of Cash Flows for the years 30
ended December 31, 1996, 1995 and 1994.
Notes to Consolidated Financial Statements 31-43
Report of Ernst & Young LLP, Independent Auditor's 44
(b) Reports on Form 8-K
------------------------
Form 8-K/A filed on November 4, 1996, which provided restated historical
financial information of the registrant to include the merger of the Bank of
Weirton. (The merger of Bank of Weirton was previously announced on Form 8-K
dated August 30, 1996).
Form 8-K filed on December 20, 1996 to announce the signing of a
Definitive Agreement and Plan of Merger providing for the acquisition of
Shawnee Bank, Inc.
Form 8-K filed on December 30, 1996 to announce the consummation of the
acquisition of Vandalia National Corporation.
22
Item 14. Exhibits, financial statement schedules and reports on
- -----------------------------------------------------------------
Form 8-K (continued)
- --------------------
(c) Exhibits required by Item 601 of Regulation S-K (continued)
----------------------------------------------------------------
Exhibit Title Page(s)
- ------- ----- -------
3.1 Articles of Incorporation of WesBanco, Inc., restated *
as of November 17, 1995 (1)
3.2 Bylaws of WesBanco, Inc. (1) *
4 Specimen Certificate of WesBanco, Inc. Common Stock (2) *
10 Material Contracts (1) *
11 Computation of Earnings Per Share 25
12 Ratio of Earnings to Combined Fixed Charges and 26
Preferred Stock Dividends
13 1996 Annual Report to Shareholders 27-53
The Consolidated Financial Statements, together with the
report thereon of Ernst & Young LLP dated February 3,
1997, Management Discussion and Analysis of the
Consolidated Financial Statements included in
the accompanying 1996 Annual Report to Shareholders are
incorporated herein by reference. With the exception
of the aforementioned information, the 1996 Annual Report
is not to be deemed filed as part of this report. Financial
statement schedules not included in this Form 10-K
Annual Report have been omitted because they are not
applicable or the required information is shown in the
Financial Statements or notes thereto.
21 Subsidiaries of the Registrant 54
22 Proxy Statement for the Annual Shareholders' meeting *
held April 16, 1997 (3)
23.1 Consent of Ernst & Young LLP 55
23.2 Consent of Price Waterhouse LLP 56
24 Power of Attorney 57-59
27 Financial Data Schedule 62
23
Item 14. Exhibits, financial statement schedules and reports on
- ----------------------------------------------------------------
Form 8-K (continued)
- --------------------
(c) Exhibits required by Item 601 of Regulation S-K (continued)
----------------------------------------------------------------
99.1 Report of Price Waterhouse LLP dated January 25, 1996, 60
except as to the pooling-of-interests with Bank of Weirton
which is as of August 30, 1996, on WesBanco, Inc.
Consolidated Financial Statements as of December 31, 1995
and for the two years then ended December 31, 1995.
99.2 Report of Grant Thornton LLP dated October 17, 1996 on 61
Bank of Weirton Financial Statements as of December 31,
1995, and 1994 and for the two years in the period ended
December 31, 1995.
* Indicates document previously provided or incorporated by reference.
(1) This exhibit is being incorporated by reference with respect to a prior
Registration Statement filed by the Registrant on Form S-4 under
Registration No. 333-3905 which was filed with the Securities and
Exchange Commission on June 20, 1996.
(2) This exhibit is being incorporated by reference with respect to a prior
Registration Statement filed by the Registrant on Form S-4 under
Registration No. 33-42157 which was filed with the Securities and
Exchange Commission on August 9, 1991.
(3) This exhibit is being incorporated by reference with respect to a
schedule 14A, Definitive Proxy Statement, which was filed by the
Registrant with the Securities and Exchange Commission on March 14,
1997.
24
SIGNATURES
Pursuant to the Requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized, on March 14, 1997.
WESBANCO, INC.
By: /s/ Edward M. George
-------------------------
Edward M. George
President and Chief Executive Officer
By: /s/ Paul M. Limbert
------------------------
Paul M. Limbert
Executive Vice President and
Chief Financial Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities indicated, on March 14, 1997.
By: /s/ James C. Gardill
--------------------------
James C. Gardill
Chairman of the Board
The Directors of WesBanco (listed below) executed a power of attorney
appointing James C. Gardill their attorney-in-fact, empowering him to sign
this report on their behalf.
Frank K. Abruzzino
James E. Altmeyer
Charles J. Bradfield
Ray A. Byrd
R. Peterson Chalfant
Christopher V. Criss
Stephen F. Decker
James D. Entress
Ernest S. Fragale
James C. Gardill
Edward M. George
Roland L. Hobbs By: /s/ James C. Gardill
John W. Kepner -------------------------
Robert H. Martin James C. Gardill
Eric Nelson Attorney-in-fact
Joan C. Stamp
Carter W. Strauss
Reed J. Tanner
Thomas L. Thomas, M.D.
John A. Welty
William E. Witschey
25
EXHIBIT 11
WesBanco, Inc.
Computation of Earnings Per Share
(Dollar amounts in thousands)
For the years ended December 31,
--------------------------------
1996 1995 1994
-------- -------- -----------
PRIMARY:
Net Income $ 21,161 $ 20,304 $ 17,892
Less: Preferred dividends and
discount accretion --- 164 183
--------- ---------- ----------
Net income applicable to common stock 21,161 20,140 17,709
========== ========== ==========
Average common share outstanding 10,168,738 10,160,328 10,280,878
Net income per common share $ 2.08 $ 1.98 $ 1.72
- ----------------------------------------------------------------------------
ASSUMING FULL DILUTION:*
Net Income $ 21,161 $ 20,304 $ 17,892
Pro forma fully diluted
Average common shares outstanding 10,168,738 10,254,864 10,394,321
Pro forma fully diluted net income
per share $ 2.08 $ 1.98 $ 1.72
* Assumes conversion of redeemable preferred stock as if issuance had occured
at the beginning of the reportable period.
26
EXHIBIT 12
WesBanco, Inc.
Ratio of Earnings to Fixed Charges and Preferred Stock Dividends
(Dollar amounts in thousands)
1996 1995 1994 1993 1992
------- ------- ------- ------- --------
Net income $21,161 $20,304 $17,892 $19,718 $18,511*
Provision for income taxes 8,344 7,656 6,283 7,070 7,044
------- ------- ------- ------- --------
Earnings before provision for
income taxes 29,505 27,960 24,175 26,788 25,555
------- ------- ------- ------- --------
Preferred stock dividend
requirements --- 164 183 184 184
Ratio of pretax income to net
income 1.39% 1.38% 1.35% 1.36% 1.38%
-------- ------- ------- ------- -------
Preferred dividend factor $ 0 $ 226 $ 247 $ 250 $ 254
Ratio of pretax net income to
preferred dividends 0% 123.8% 97.8% 107.2% 100.6%
======== ======== ======= ======= =======
* Does not include the change in accounting for postretirement benefits-net
of tax effect of $(592,000).
WesBanco has no fixed charges as defined by Regulation S-K Item 503-Summary;
Risk Factors; Ratio of Earnings to Fixed Charges.
27
EXHIBIT 13
WesBanco, Inc.
Consolidated Balance Sheet
- ------------------------------------------------------------------------------
(in thousands, except for shares)
December 31,
--------------------
1996 1995
- ------------------------------------------------------------------------------
ASSETS
Cash and due from banks (Note 17) $ 58,828 $ 54,163
Due from banks-interest bearing 197 301
Federal funds sold 10,970 37,230
Investment securities: (Note 4)
Held to maturity (market values of
$250,132 and $353,760, respectively) 249,108 350,151
Available for sale carried at market value 276,201 172,137
- -------------------------------------------------------------------------------
Total investment securities 525,309 522,288
- ------------------------------------------------------------------------------
Loans held for sale 983 ---
Loans, net of unearned income (Note 3) 1,026,370 893,919
Allowance for loan losses (Note 3) (15,528) (13,439)
- -------------------------------------------------------------------------------
Net Loans 1,010,842 880,480
- -------------------------------------------------------------------------------
Bank premises and equipment (Note 7) 32,670 28,395
Accrued interest receivable 11,748 12,708
Other assets 26,224 13,454
- -------------------------------------------------------------------------------
Total Assets $1,677,771 $1,549,019
===============================================================================
LIABILITIES
Deposits:
Non-interest bearing demand $ 159,176 $ 143,872
Interest bearing demand 284,143 279,217
Savings deposits 323,673 337,706
Certificates of deposit (Note 8) 575,828 494,049
- -------------------------------------------------------------------------------
Total deposits 1,342,820 1,254,844
- -------------------------------------------------------------------------------
Federal funds purchased and
repurchase agreements (Note 9) 81,089 70,457
Other short-term borrowings (Note 9) 11,682 1,402
Accrued interest payable 5,826 7,091
Other liabilities 8,822 8,229
- -------------------------------------------------------------------------------
Total Liabilities 1,450,239 1,342,023
- -------------------------------------------------------------------------------
SHAREHOLDERS' EQUITY
Preferred stock, no par value; 1,000,000 shares
authorized; none outstanding --- ---
Common stock ($2.0833 par value; 25,000,000
shares authorized; 10,538,993 and 10,372,103
shares issued, respectively) 21,956 21,608
Capital surplus 36,949 31,237
Retained earnings 170,116 159,483
Treasury stock (17,139 and 186,131 shares,
respectively, at cost) (544) (5,038)
Market value adjustment on investments available
for sale-net of tax effect (90) 849
Deferred benefits for directors and employees (855) (1,143)
- -------------------------------------------------------------------------------
Total Shareholders' Equity 227,532 206,996
- -------------------------------------------------------------------------------
Total Liabilities and Shareholders' Equity $1,677,771 $1,549,019
===============================================================================
The accompanying Notes to Consolidated Financial Statements are an integral
part of these financial statements.
28
WESBANCO, INC.
CONSOLIDATED STATEMENT OF INCOME
- ----------------------------------------------------------------------------
(in thousands, except share and per share amounts)
For the years ended December 31,
--------------------------------
1996 1995 1994
- -------------------------------------------------------------------------------------------
Interest income:
Interest and fees on loans $ 81,449 $ 74,452 $ 64,906
- -------------------------------------------------------------------------------------------
Interest on investment securities:
U.S. Treasury and Federal Agency securities 21,837 23,040 26,092
States and political subdivisions 7,642 7,524 8,196
Other investments 229 574 488
- -------------------------------------------------------------------------------------------
Total interest on investment securities 29,708 31,138 34,776
- -------------------------------------------------------------------------------------------
Other interest income 1,781 2,492 2,038
- -------------------------------------------------------------------------------------------
Total interest income 112,938 108,082 101,720
- -------------------------------------------------------------------------------------------
Interest expense:
Interest bearing demand deposits 7,064 7,936 8,173
Savings deposits 8,817 10,333 10,448
Certificates of deposit 28,551 25,134 19,082
- -------------------------------------------------------------------------------------------
Total interest on deposits 44,432 43,403 37,703
Other borrowings 3,786 3,167 1,957
- -------------------------------------------------------------------------------------------
Total interest expense 48,218 46,570 39,660
- -------------------------------------------------------------------------------------------
Net interest income 64,720 61,512 62,060
Provision for loan losses (Note 3) 4,336 2,788 6,073
- -------------------------------------------------------------------------------------------
Net interest income after provision for loan losses 60,384 58,724 55,987
- -------------------------------------------------------------------------------------------
Other income:
Trust fees 5,442 4,716 4,425
Charge card fees 1,050 1,039 922
Service charges and other income 5,542 5,174 5,315
Net investment securities transaction gains 239 437 366
- -------------------------------------------------------------------------------------------
Total other income 12,273 11,366 11,028
- -------------------------------------------------------------------------------------------
Other expenses:
Salaries and wages 19,110 18,272 18,711
Pension and other employee benefits (Note 12) 4,500 4,945 4,549
Net occupancy expense 2,651 2,672 2,625
Equipment expense 3,135 2,461 2,381
Other operating expense (Note 13) 13,756 13,780 14,574
- -------------------------------------------------------------------------------------------
Total other expenses 43,152 42,130 42,840
- -------------------------------------------------------------------------------------------
Income before provision for income taxes 29,505 27,960 24,175
Provision for income taxes (Note 14) 8,344 7,656 6,283
- -------------------------------------------------------------------------------------------
Net Income $ 21,161 $ 20,304 $ 17,892
===========================================================================================
Earnings per share of common stock: (Note 1)
Earnings per share $2.08 $1.98 $1.72
Preferred stock dividends and discount accretion --- 164 183
Average shares outstanding 10,168,738 10,160,328 10,280,878
The accompanying Notes to Consolidated Financial Statements are an integral
part of these financial statements.
29
WESBANCO, INC.
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDER'S EQUITY
- -------------------------------------------------------------------------------
(in thousands, except for shares)
For the years ended December 31, 1996, 1995, and 1994
-----------------------------------------------------
Market Value Deferred
Adjustment on Benefits for
Shares Common Capital Retained Treasury Investments Directors &
Outstanding Stock Surplus Earnings Stock Available for Sale Employees Total
- ---------------------------------------------------------------------------------------------------------------------------------
Balance, December 31, 1993 10,362,143 $21,691 $33,389 $138,801 $(1,323) --- $(757) $191,801
- ---------------------------------------------------------------------------------------------------------------------------------
Net Income 17,892 17,892
Cash dividends:
Common ($.86 per share) (7,389) (7,389)
Common by pooled bank
prior to acquisition (805) (805)
Preferred dividends & accretion (183) (183)
ESOP contribution 2,000 (16) 63 47
Net treasury shares purchased
or retired (164,185) (83) (926) (3,475) (4,484)
ESOP borrowing (246) (246)
Principal payment on ESOP debt 154 154
Market value adjustment on
investments available for
sale-net of tax effect $(4,482) (4,482)
- ----------------------------------------------------------------------------------------------------------------------------------
Balance, December 31, 1994 10,199,958 21,608 32,447 148,316 (4,735) (4,482) (849) 192,305
- ----------------------------------------------------------------------------------------------------------------------------------
Net Income 20,304 20,304
Cash dividends:
Common ($.96 per share) (8,139) (8,139)
Common by pooled bank
prior to acquisition (834) (834)
Preferred dividends & accretion (164) (164)
ESOP contribution 3,500 96 96
Net treasury shares purchased (128,597) (3,456) (3,456)
Redemption of preferred stock 111,111 (1,210) 3,057 1,847
ESOP borrowing (129) (129)
Principal payment on ESOP debt 200 200
Deferred benefits for directors (365) (365)
Market value adjustment on
investments available for
sale-net of tax effect 5,331 5,331
- ----------------------------------------------------------------------------------------------------------------------------------
Balance, December 31, 1995 10,185,972 21,608 31,237 159,483 (5,038) 849 (1,143) 206,996
- ----------------------------------------------------------------------------------------------------------------------------------
Net Income 21,161 21,161
Cash dividends:
Common ($1.08 per share) (10,125) (10,125)
Common by pooled bank
prior to acquisition (403) (403)
Stock issued for acquisitions 378,008 348 5,674 5,899 11,921
Net treasury shares purchased (42,126) 38 (1,405) (1,367)
Principal payment on ESOP debt 365 365
Deferred benefits for directors (77) (77)
Market value adjustment on
investments available for
sale-net of tax effect (939) (939)
- ----------------------------------------------------------------------------------------------------------------------------------
Balance, December 31, 1996 10,521,854 $21,956 $36,949 $170,116 $(544) $ (90) $(855) $227,532
==================================================================================================================================
There was no activity or outstanding balances in the Nonredeemable Preferred
Stock during the years ended December 31, 1996, 1995 and 1994.
The accompanying Notes to Consolidated Financial Statements are an integral
part of these financial statements.
30
WESBANCO, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
- -------------------------------------------------------------------------------
Increase (Decrease) in Cash and Cash Equivalents (in thousands)
For the years ended December 31,
--------------------------------
1996 1995 1994
- -------------------------------------------------------------------------------------------------
Cash flows from operating activities:
Net Income $21,161 $20,304 $17,892
Adjustment to reconcile net income to net cash provided
by operating activities:
Depreciation and amortization 5,563 7,169 9,052
Provision for loan losses 4,336 2,788 6,073
Gains on sales of investment securities-net (239) (437) (366)
Deferred income taxes (143) 82 (107)
Other-net (387) 269 (1)
Increase (decrease) in assets and liabilities:
Interest receivable 960 873 628
Other assets (3,461) (6,115) (1,095)
Interest payable (1,358) 1,468 (124)
Other liabilities 665 (906) 400
Loans held for sale (983) --- ---
- -------------------------------------------------------------------------------------------------
Net cash provided by operating activities 26,114 25,495 32,352
- -------------------------------------------------------------------------------------------------
Cash flows provided investing activities:
Investment securities held to maturity:
Proceeds from maturities and calls 113,454 80,059 77,374
Payments for purchases (66,161) (67,026) (130,584)
Investment securities available for sale:
Proceeds from sales 89,075 59,291 67,002
Proceeds from maturities and calls 43,843 47,901 52,364
Payments for purchases (183,065) (50,145) (64,917)
Purchase of subsidiaries, net of cash acquired 2,127 --- ---
Net increase in loans (88,021) (84,815) (45,360)
Purchases of premises and equipment-net (5,978) (3,215) (1,547)
- -------------------------------------------------------------------------------------------------
Net cash used by investing activities (94,726) (17,950) (45,668)
- -------------------------------------------------------------------------------------------------
Cash flows from financing activities:
Net increase (decrease) in deposits 37,723 258 (11,090)
Increase in federal funds purchased and
repurchase agreements 9,681 4,707 14,524
Increase (decrease) in short-term borrowings 10,280 (3,042) (6,010)
Net proceeds (payments) related to ESOP debt (364) (71) 92
Dividends paid (9,799) (8,854) (7,790)
Purchases of treasury shares-net (1,367) (3,456) (4,484)
Other-net 863 57 33
- -------------------------------------------------------------------------------------------------
Net cash provided by (used in) financing activities 47,017 (10,401) (14,725)
- -------------------------------------------------------------------------------------------------
Net decrease in cash and cash equivalents (21,595) (2,856) (28,041)
Cash and cash equivalents at beginning of year 91,393 94,249 122,290
- -------------------------------------------------------------------------------------------------
Cash and cash equivalents at end of year $69,798 $91,393 $94,249
=================================================================================================
During 1996, 1995 and 1994, WesBanco paid $49,576, $45,103 and $39,785 in
interest on deposits and other borrowings and $8,578, $8,113 and $6,415
for income taxes, respectively.
During 1996, non-cash activity consisted of $11,921,000 of common stock
issued in connection with purchase acquisitions.
During 1995, there were 9,925 shares of preferred stock redeemed, of which
9,723 shares were exchanged for 111,111 shares of WesBanco common stock in a
non-cash transaction. The remaining 202 shares were redeemed for cash at
$190 per share and are included in other financing activities.
The accompanying Notes to Consolidated Financial Statements are an integral
part of these financial statements.
31
WESBANCO, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- ------------------------------------------------------------------------------
NOTE 1: ACCOUNTING POLICIES
- ------------------------------------------------------------------------------
WesBanco, Inc. is a multi-bank holding company offering a full range of
financial services, including trust and mortgage banking services, through
offices located in West Virginia and Eastern Ohio.
The significant accounting principles employed in the preparation of
the accompanying consolidated financial statements are summarized below:
Principles of consolidation:
The Consolidated Financial Statements of WesBanco, Inc. (the
"Corporation") include the accounts of the Corporation and its wholly owned
subsidiaries. Material intercompany transactions and accounts have been
eliminated. The prior years' financial information has been restated to
reflect the pooling-of-interests with the Bank of Weirton.
Use of estimates:
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.
Cash and cash equivalents:
For the purpose of reporting cash flows, cash and cash equivalents
include cash and due from banks, and federal funds sold. Generally, federal
funds are sold for one day periods.
Investment securities:
Investments Available for Trading:
The Corporation did not have a trading portfolio during either of the
two years ended December 31, 1996 and 1995.
Investments Held to Maturity:
Investment securities consisting principally of debt securities, which
are purchased with the positive intent and ability to hold until their
maturity, are stated at cost, adjusted for amortization of premiums and
accretion of discounts.
Investments Available for Sale:
Debt securities not classified as trading or held to maturity, and
marketable equity securities not classified as trading, are classified as
available for sale. These securities may be sold at any time based upon
management's assessment of changes in economic or financial market conditions,
interest rate or prepayment risks, liquidity considerations, and other factors.
These securities are stated at market value, with the market value adjustment,
net of tax, reported as a separate component of shareholders' equity. Other
than temporary declines in value on these securities are recognized in
operations.
Gains and Losses:
Net realized gains and losses on sale of investment securities are
included in the statement of income. The cost of these securities sold is
based on the specific identification method.
Amortization and Accretion:
Amortization of premiums and accretion of discounts are included in
interest on investment securities in the Consolidated Statement of Income.
Loans held for sale:
Mortgage loans originated and intended for sale in the secondary market
are carried at the lower of cost or estimated aggregate market value.
Loans:
Interest is accrued as earned on loans except where doubt exists as to
collectability, in which case recognition of income is discontinued.
A loan is considered impaired, based on current information and events,
if it is probable that the Corporation will be unable to collect the scheduled
payments of principal and interest when due according to the contractual terms
of the loan agreement. Impaired loans include all nonaccrual and renegotiated
loans, as well as loans internally classified as substandard or doubtful (as
those terms are defined by banking regulations) that meet the definition of
impaired loans. The Corporation recognizes interest income on nonaccrual
impaired loans on the cash basis.
The allowance for loan losses is maintained at a level considered
adequate by management to provide for potential loan losses. The allowance is
increased by provisions charged to operating expenses and reduced by loan
losses, net of recoveries. The amount of allowance is based on management's
evaluation of the loan portfolio, as well as prevailing and anticipated
economic conditions, past loan loss experience, current delinquency factors,
changes in the character of the loan portfolio, specific problem loans and
other relevant factors.
Other assets:
Other assets include property acquired through a foreclosure proceeding
and acceptance of a deed-in-lieu of foreclosure. Other assets also include
other real estate owned, which is carried at the lower of cost or fair market
value less cost to sell, and goodwill from purchase transactions.
32
NOTE 1: ACCOUNTING POLICIES (CONTINUED)
- -------------------------------------------------------------------------------
Bank premises and equipment:
Bank premises and equipment are stated at cost less accumulated
depreciation. Bank premises and equipment are depreciated over their
estimated useful lives using either the straight-line or an accelerated
method. Useful lives are revised when a change in life expectancy becomes
apparent. Maintenance and repairs are charged to expense and betterments are
capitalized. Gains and losses on bank premises and equipment retired or
otherwise disposed of are charged to expense when incurred.
Income taxes:
Deferred tax assets and liabilities are recognized for the expected
future tax consequences attributable to temporary differences between the
carrying amounts of assets and liabilities and their tax bases. In addition,
such deferred tax asset and liability amounts are adjusted for the effects of
enacted changes in tax laws or rates.
Earnings per share:
Earnings per share are calculated based upon dividing net income, less
preferred stock dividends and accretion, by the weighted average number of
shares of common stock outstanding during the year.
Trust assets:
Assets held by the subsidiary banks in fiduciary or agency capacities
for their customers are not included as assets in the accompanying Consolidated
Balance Sheet. Certain trust assets are held on deposit at subsidiary banks.
New accounting standard to be adopted:
FAS No. 125, "Accounting for Transfers and Servicing of Financial Assets
and Extinguishments of Liabilities" is effective in 1997 and provides
accounting and reporting standards for transfers and servicing of financial
assets and extinguishments of liabilities. FAS No. 125 as amended by FAS
No. 127 "Deferral of Effective Date of Certain Provisions of FAS No. 125" is
generally to be applied to transactions occurring after December 31, 1996
with certain provisions having been delayed until 1998. FAS No. 125 is not
expected to materially affect WesBanco's financial position or results of
operation.
NOTE 2: ACQUISITIONS AND MERGERS
- -------------------------------------------------------------------------------
On December 30, 1996, WesBanco consummated its acquisition of Vandalia
National Corporation (Vandalia). In accordance with the terms of the
acquisition, WesBanco issued a total of 345,545 shares of common stock, of
which 178,655 shares came from its Treasury balances and 166,890 shares were
newly issued. The total purchase price of the acquisition including cash for
stock warrants was approximately $12,046,000. As of the acquisition date,
Vandalia reported total assets of approximately $55,372,000. The acquisition
was accounted for as a purchase transaction, and, accordingly, the results of
operations of Vandalia, which are not material, have been included in WesBanco's
consolidated financial statements from December 30, 1996.
On August 30, 1996, WesBanco consummated its acquisition of the Bank of
Weirton. In accordance with the terms of the merger, WesBanco issued 1,690,000
shares of common stock. As of the acquisition date, Bank of Weirton reported
total assets of approximately $177,877,000. The merger was accounted for as
a pooling-of-interests, and, accordingly, the consolidated financial statements
include the accounts of Bank of Weirton for all periods presented.
The following financial information presents the combined results of
WesBanco and Bank of Weirton as if the acquisition had occurred as of the
beginning of the years presented: (in thousands)
For the WesBanco, Inc.
years ended As previously Bank of
December 31, presented Weirton WesBanco, Inc.
- ---------------------------------------------------------------------------
Net interest income:
1995 $56,029 $5,483 $61,512
1994 56,396 5,664 62,060
Net income:
1995 $18,189 $2,115 $20,304
1994 15,697 2,195 17,892
- ----------------------------------------------------------------------------
On August 20, 1996, WesBanco acquired the assets and assumed certain
liabilities of Universal Mortgage Company (Universal), and formed a new
mortgage banking affiliate operating under the name of WesBanco Mortgage
Company. In accordance with the terms of the acquisition, WesBanco issued
32,463 shares of common stock from its Treasury balance. The total purchase
price of the acquisition was approximately $856,000. As of the acquisition
date, Universal reported total assets of approximately $1,185,000. The
acquisition was accounted for as a purchase transaction, and, accordingly,
the results of operations of Universal, which are not material, have been
included in WesBanco's consolidated financial statements from August 20, 1996.
The excess of the purchase price over the fair market value of the net
assets (goodwill) of the bank and mortgage company acquired in 1996 approximated
$8,246,000 and is being amortized over a period of 15 years.
33
NOTE 2: ACQUISITIONS AND MERGERS (CONTINUED)
- ------------------------------------------------------------------------------
On February 28, 1994, WesBanco consummated its acquisition of First
Fidelity Bancorp, Inc. (Fidelity). In accordance with the terms of the
merger, WesBanco issued 2,093,815 shares of common stock and 10,000 shares
of preferred stock. The acquisition was accounted for as a pooling-of-
interests, and, accordingly, the consolidated financial statements include
the accounts of Fidelity for all periods presented.
NOTE 3: LOANS
- ------------------------------------------------------------------------------
The following is a summary of total loans: December 31,
(in thousands) ---------------------
1996 1995
- ------------------------------------------------------------------------------
Loans:
Commercial $ 177,136 $ 176,809
Real estate-construction 21,556 16,544
Real estate-mortgage 510,778 424,917
Installment 321,060 284,108
- ------------------------------------------------------------------------------
Total Loans $1,030,530 $ 902,378
==============================================================================
The activity in the allowance
for loan losses is as follows: For the years ended December 31,
(in thousands) -------------------------------
1996 1995 1994
- ------------------------------------------------------------------------------
Balance, beginning of year $13,439 $12,960 $12,483
Allowance for loan losses of
purchased bank 707 --- ---
Provision 4,336 2,788 6,073
Loan recoveries 520 793 452
Loan losses (3,474) (3,102) (6,048)
- -------------------------------------------------------------------------------
Balance, end of year $15,528 $13,439 $12,960
===============================================================================
The following summarizes loans classified as impaired: December 31,
--------------------
(in thousands) 1996 1995
- -------------------------------------------------------------------------------
Nonaccrual $ 4,664 $ 5,199
Renegotiated 2,150 1,054
Other classified loans:
Doubtful 94 ---
Substandard 3,377 1,038
- -------------------------------------------------------------------------------
Total impaired loans $10,285 $ 7,291
===============================================================================
Impaired loans with a related
allowance for loan losses $ 6,328 $ 1,999
Allowance for loan losses on impaired loans 2,120 334
- -------------------------------------------------------------------------------
The following summarizes other
impaired loan activity: For the years ended
December 31,
----------------------
(in thousands) 1996 1995
- --------------------------------------------------------------------------------
Average impaired loans $11,541 $ 6,773
Amount of contractual interest income on impaired loans 595 382
Amount of interest income recognized on a cash basis 82 164
================================================================================
Most lending is with customers who are located within West Virginia and
Eastern Ohio. There is no significant concentration of credit risk by
industry or by individual borrowers, no significant exposure to highly
leveraged loan transactions, nor any foreign loans.
The subsidiary banks, in the ordinary course of business, grant loans
to related parties at terms which do not vary from terms that would have been
required if the transactions had been with unrelated parties. Indebtedness of
related parties aggregated approximately $40,114,000, $46,809,000 and
$46,911,000 as of December 31, 1996, 1995 and 1994, respectively. During 1996
$49,918,000 of loans were funded and $56,613,000 of loans were repaid.
34
NOTE 4: INVESTMENT SECURITIES
- ------------------------------------------------------------------------------
The following tables summarize amortized cost and fair values of held
to maturity and available for sale securities:
(in thousands) Held to Maturity
-----------------------------------------------------------------------------------------------------
December 31, 1996 December 31, 1995
----------------------------------------------- -------------------------------------------------
Gross Gross Estimated Gross Gross Estimated
Amortized Unrealized Unrealized Fair Amortized Unrealized Unrealized Fair
Cost Gains Losses Value Cost Gains Losses Value
----------------------------------------------- -------------------------------------------------
U.S. Treasury and
Federal Agency
securities $99,457 $ 287 $ 38 $ 99,706 $219,719 $1,792 $384 $221,127
Obligations of
states and political
subdivisions 147,643 1,426 651 148,418 129,074 2,455 254 131,275
Other debt
securities 2,008 --- --- 2,008 1,358 --- --- 1,358
- -----------------------------------------------------------------------------------------------------------------------------
Totals $249,108 $1,713 $689 $250,132 $350,151 $4,247 $638 $353,760
=============================================================================================================================
Available for Sale
-------------------------------------------------------------------------------------------------------
December 31, 1996 December 31, 1995
------------------------------------------------- -------------------------------------------------
Gross Gross Estimated Gross Gross Estimated
Amortized Unrealized Unrealized Fair Amortized Unrealized Unrealized Fair
Cost Gains Losses Value Cost Gains Losses Value
------------------------------------------------- -------------------------------------------------
U.S. Treasury and