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WesBanco expands W.Va. presence with First Sentry acquisition


The State Journal

HUNTINGTON, W.Va.  — Another bank name could disappear from West Virginia next year as WesBanco, the state’s largest bank, completes its acquisition of Huntington-based First Sentry Bank.

The two banks announced the deal last month. It marked a change for WesBanco, whose acquisition strategy had focused on growth markets in other states. But First Sentry gave it the opportunity to move into one of West Virginia’s largest banking markets.

And it got First Sentry around a brick wall that comes with growth in a highly regulated industry.

“When a bank gets the size we happen to be and dominates market share, two things happen,” said Geoff Sheils, president and CEO of First Sentry.

“One, people become interested in you, and two, it gets difficult to operate from a regulatory standpoint.”

First Sentry was formed in 1996 at a time when several new banks sprung up in West Virginia. Local banks were being acquired by out-of-state banks, and bankers who found themselves out of the industry formed new banks.

Some of those banks survived, and some didn’t. First Sentry was one of the more successful ones, with $666 million in assets and $527 million in deposits at five branches in three counties. In its 21 years, First Sentry acquired two of those other new banks — Guaranty Bank and Trust, which also was based in Huntington, and Rock Branch Bank, which was based in Putnam County.

Wheeling-based WesBanco, meanwhile, was preparing to clear a regulatory hurdle of its own. For several quarters, it had held its assets at $9.9 billion to keep from going over the $10 billion mark and triggering regulatory requirements under Dodd-Frank legislation.

But it was time for WesBanco to cross that line, WesBanco CEO and President Todd Closin said in a conference call the day after the acquisition was announced.

“This transaction dovetails nicely into our previously stated strategy that our preference was to cross the threshold via a franchise-enhancing acquisition either through a combination of several small to midsize deals or a larger, several billion dollar transaction,” he said.

“Therefore, we view this as the first step in a multifaceted strategy that includes organic growth and additional potential franchise-enhancing acquisition or acquisitions within a six-hour drive of our Wheeling headquarters over the next 18 months.”

The deal is a stock swap with no cash transaction. Each First Sentry shareholder will receive 1.5869 shares of WesBanco stock for a total value of about $101.4 million.

At present, WesBanco has branch offices in Kanawha County, but none in Putnam, Cabell or Lincoln counties. The First Sentry acquisition will give WesBanco presence in all three if the deal closes on schedule in the first half of next year.

Sheils said First Sentry had to ask itself how to grow.

“For us to grow and get to a billion, we were going to have to invest in resources,” he said. “How long is it going to take to get a return on that investment? When this opportunity came with WesBanco, it just made sense to our investors.

“It’s not that we put ourselves up for sale, but we wanted to see what was out there.”

WesBanco is a publicly traded company based in West Virginia, and its culture is similar to First Sentry’s, Sheils said.

“I can’t tell you how impressed we were with their organization. They’re quality people and a quality organization. It just seemed right.”

Once First Sentry becomes part of WesBanco, its customers will have access to larger loans and to WesBanco’s trust, investment and insurance businesses, Sheils said.

Robin McCutcheon, an associate professor of finance and economics at Marshall University and herself descended from a family of bankers, found something interesting in Clossin’s comments announcing the acquisition.

“First Sentry’s commercial lending focus and solid credit quality matches well with WesBanco’s strengths and strategies,” Clossin said in the news release.

It was the part about commercial lending that caught McCutcheon’s eye.

“There might be some silent progress going on here,” she said. First Sentry’s success in commercial lending could indicate some growth going on behind the scenes in its market, she said.

“If they see a small-town bank that does particularly well with their credit risks, that would make me sit up and notice. I would like to do a stock swap, too,” McCutcheon said.

Staff Writer Jim Ross can be reached at 304-395-3483 or email at [email protected]

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