WSBC WesBanco, Inc.

Management Discussion

• Net income for the three months ended March 31, 2020 was $23.4 million, with diluted earnings per share of $0.35, compared to $40.3 million and $0.74 per diluted share, respectively, for the first quarter of 2019.  Net income excluding after-tax merger-related expenses for the three months ended March 31, 2020, was $27.5 million, or $0.41 per diluted share, as compared to $42.8 million and $0.78 per diluted share, respectively, in the prior year quarter (non-GAAP measures).
• Net interest income increased $21.8 million or 22.2% in the first quarter of 2020 compared to the same quarter of 2019 due to a 26.0% increase in average earning assets, due primarily to the OLBK acquisition.  As a result of five federal funds rate decreases totaling 225 basis points from July 2019 to March 2020, the yield on earning assets decreased a total of 26 basis points and the cost of interest bearing liabilities decreased 15 basis points from the first quarter of 2019 to the same period of 2020. This resulted in the net interest margin decreasing by 14 basis points to 3.54% in the first quarter of 2020 compared to 3.68% in the first quarter of 2019.  Average loan balances increased by 35.5% from the first quarter of 2019, while average deposits increased by 24.6%, both mainly attributable to the OLBK acquisition.  Lastly, accretion from acquisitions benefited the first quarter net interest margin by 22 basis points, as compared to 19 basis points in the prior year period and 22 basis points during the fourth quarter of 2019.
• The provision for credit losses increased to $29.8 million in the first quarter of 2020, due specifically to the implementation of the CECL accounting standard on January 1, 2020, and the effect of the COVID-19 pandemic. Net charge-offs, as a percentage of average portfolio loans, were 0.18% and 0.07% for the first quarter of 2020 and 2019, respectively.