Mergers and Acquisitions

3 Months Ended

Mar. 31, 2015

Business Combinations [Abstract]

Mergers and Acquisitions

NOTE 2. MERGERS AND ACQUISITIONS

On February 10, 2015, WesBanco completed its acquisition of ESB Financial Corporation (“ESB”), and its wholly-owned banking subsidiary, ESB Bank (“ESB Bank”), a Pennsylvania-chartered stock savings bank headquartered in Ellwood City, Pennsylvania. The transaction expanded WesBanco’s franchise in the Pittsburgh region of western Pennsylvania from 16 to 38 offices.

On the acquisition date, ESB had $1.9 billion in assets, excluding goodwill, which included $700.8 million in loans, and $486.9 million in securities. The ESB acquisition was valued at $339.0 million, based on WesBanco’s closing stock price on February 10, 2015 of $32.00, and resulted in WesBanco issuing 9,178,531 shares of its common stock and $45.0 million in cash and other assets in exchange for ESB common stock. The assets and liabilities of ESB were recorded on WesBanco’s balance sheet at their preliminary estimated fair values as of February 10, 2015, the acquisition date, and ESB’s results of operations have been included in WesBanco’s Consolidated Statements of Income since that date. ESB was merged into WesBanco and ESB Bank was merged into WesBanco Bank, Inc. (the “Bank”) on February 10, 2015. Based on a preliminary purchase price allocation, WesBanco recorded $168.9 million in goodwill and $5.3 million in core deposit intangibles in its community banking segment. The fair values for the assets acquired and liabilities assumed are provisional amounts and are currently under review. Due to the timing of the ESB acquisition, WesBanco is still in the process of completing its fair market valuation, including the valuation of certain tangible and intangible assets as well as deferred income taxes. None of the goodwill is deductible for income tax purposes as the acquisition is accounted for as a tax-free exchange for tax purposes.

For the three months ended March 31, 2015, WesBanco recorded merger-related expenses of $9.7 million associated with the ESB acquisition. In 2014 WesBanco recognized $1.3 million in merger-related expenses in connection with the ESB acquisition.

The total of net interest income and non-interest income of the acquired operations of ESB was approximately $6.5 million and net income was approximately $2.7 million from February 11, 2015 through March 31, 2015. If the ESB acquisition had occurred on January 1, 2014, unaudited proforma net interest income and non-interest income of the combined entity for the three months ended March 31, 2014 would have totaled approximately $76.1 million and unaudited proforma net income would have been approximately $19.8 million as compared to proforma results of $78.2 million and $22.2 million, respectively, for the three months ended March 31, 2015. Merger-related expenses were excluded from the pro-forma results.

The purchase price of the ESB acquisition and resulting goodwill is summarized as follows:

(unaudited, in thousands)	February 10, 2015
Purchase Price:
Fair value of WesBanco shares issued, (net of equity issuance costs of $0.1 million)	$	293,933
Cash consideration for outstanding ESB shares, options and restricted stock		37,036
Settlement of pre-existing loan to ESB		8,000
Total purchase price	$	338,969
Fair value of:
Tangible assets acquired	$	1,859,865
Core deposit and other intangible assets acquired		5,346
Liabilities assumed		(1,703,616	)
Net cash received in the acquisition		8,485
Fair value of net assets acquired		170,080
Goodwill recognized	$	168,889

The following table presents the preliminary allocation of the purchase price of the assets acquired and the liabilities assumed at the date of acquisition, as WesBanco intends to finalize its accounting for the acquisition of ESB during 2015:

(unaudited, in thousands)	February 10, 2015
Assets
Cash and due from banks	$	8,485
Securities		486,891
Loans		700,849
Goodwill and other intangible assets		174,235
Accrued income and other assets (1)		672,125
Total Assets	$	2,042,585
Liabilities
Deposits	$	1,246,992
Borrowings		433,454
Accrued expenses and other liabilities		23,170
Total liabilities		1,703,616
Purchase price	$	338,969

⁽¹⁾  Includes receivables of $560.7 million from the sale of available-for-sale securities prior to the acquisition date.

At March 31, 2015 the carrying value of goodwill increased by $168.9 million from December 31, 2014 to $481.0 million.