(Former name, former address and former fiscal year, if changed since last report)

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 ☑ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☑ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined by Rule 12b-2 of the Exchange Act). Yes ☐ No ☑

As of April ~~27, 2022,~~26, 2023, there were ~~60,274,414~~59,246,569 shares of Wesbanco, Inc. common stock, $2.0833 par value, outstanding.

NOTE 3. SECURITIES

The following table presents the fair value and amortized cost of available-for-sale and held-to-maturity debt securities:


	March 31, 2022									December 31, 2021									March 31, 2023									December 31, 2022
(unaudited, in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value		Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value		Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value		Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Available-for-sale debt securities
U.S. Government sponsored entities and agencies	$	253,475	$	549	$	(13,527	)	$	240,497	$	236,096	$	3,922	$	(3,040	)	$	236,978	$	253,728	$	—	$	(30,293	)	$	223,435	$	259,418	$	2	$	(33,450	)	$	225,970
Residential mortgage-backed securities and collateralized mortgage obligations of government sponsored entities and agencies		2,289,780		1,777		(132,103	)		2,159,454		2,301,170		16,489		(32,446	)		2,285,213		2,086,866		28		(268,644	)		1,818,250		2,144,015		25		(297,987	)		1,846,053
Commercial mortgage-backed securities and collateralized mortgage obligations of government sponsored entities and agencies		397,233		500		(3,644	)		394,089		364,486		4,252		(1,245	)		367,493		332,800		3		(7,063	)		325,740		359,811		—		(10,080	)		349,731
Obligations of states and political subdivisions		100,029		1,310		(1,066	)		100,273		101,003		5,372		(35	)		106,340		86,523		281		(3,014	)		83,790		96,081		244		(4,097	)		92,228
Corporate debt securities		16,943		195		(78	)		17,060		16,940		507		(9	)		17,438		14,954		—		(173	)		14,781		15,451		—		(293	)		15,158
Total available-for-sale debt securities	$	3,057,460	$	4,331	$	(150,418	)	$	2,911,373	$	3,019,695	$	30,542	$	(36,775	)	$	3,013,462	$	2,774,871	$	312	$	(309,187	)	$	2,465,996	$	2,874,776	$	271	$	(345,907	)	$	2,529,140
Held-to-maturity debt securities
U.S. Government sponsored entities and agencies	$	5,731	$	8	$	(233	)	$	5,506	$	5,944	$	72	$	(8	)	$	6,008	$	4,257	$	—	$	(361	)	$	3,896	$	4,357	$	—	$	(416	)	$	3,941
Residential mortgage-backed securities and collateralized mortgage obligations of government sponsored entities and agencies		53,989		114		(1,335	)		52,768		58,147		1,409		(16	)		59,540		44,054		—		(3,251	)		40,803		45,909		—		(3,809	)		42,100
Obligations of states and political subdivisions		1,067,214		5,719		(68,912	)		1,004,021		907,649		23,854		(3,500	)		928,003		1,170,586		1,421		(128,908	)		1,043,099		1,177,986		577		(159,975	)		1,018,588
Corporate debt securities		30,268		430		—			30,698		33,083		1,818		—			34,901		20,350		—		(463	)		19,887		20,377		—		(616	)		19,761
Total held-to-maturity debt securities (1)	$	1,157,202	$	6,271	$	(70,480	)	$	1,092,993	$	1,004,823	$	27,153	$	(3,524	)	$	1,028,452	$	1,239,247	$	1,421	$	(132,983	)	$	1,107,685	$	1,248,629	$	577	$	(164,816	)	$	1,084,390
Total debt securities	$	4,214,662	$	10,602	$	(220,898	)	$	4,004,366	$	4,024,518	$	57,695	$	(40,299	)	$	4,041,914	$	4,014,118	$	1,733	$	(442,170	)	$	3,573,681	$	4,123,405	$	848	$	(510,723	)	$	3,613,530

(1)

Total held-to-maturity debt securities are presented on the balance sheet net of their allowance for credit losses totaling $~~0.3~~0.2 million at March 31, ~~2022~~2023 and December 31, ~~2021,~~2022, respectively.

At March 31, ~~2022~~2023 and December 31, ~~2021,~~2022, there were 0no holdings of any one issuer, other than U.S. government sponsored entities and its agencies, in an amount greater than 10% of Wesbanco’s shareholders’ equity. Equity securities, of which $~~10.0~~9.3 million consist of investments in various mutual funds held in grantor trusts formed in connection with the Company’s deferred compensation plan, are recorded at fair value, and totaled $~~12.8~~11.8 million and $~~13.5~~11.5 million at March 31, ~~2022~~2023 and December 31, ~~2021,~~2022, respectively.

The following table presents the amortized cost and fair value of available-for-sale and held-to-maturity debt securities by contractual maturity date at March 31, ~~2022.~~2023. Actual maturities will differ from contractual maturities because borrowers may have the right to call or prepay debt obligations with or without prepayment penalties. Mortgage-backed securities and collateralized mortgage obligations are classified in the table below based on their contractual maturity date; however, regular principal payments and prepayments of principal are received on a monthly basis.

(unaudited, in thousands)

Amortized Cost

Fair Value

Available-for-sale debt securities

Less than one year

$
13,971

$
14,020

1-5 years

168,985

169,008

5-10 years

444,587

437,643

Over 10 years

2,429,917

2,290,702

Total available-for-sale debt securities

$
3,057,460

$
2,911,373

Held-to-maturity debt securities

Less than one year

$
24,053

$
24,232

1-5 years

115,863

117,485

5-10 years

277,300

276,045

Over 10 years

739,986

675,231

Total held-to-maturity debt securities

$
1,157,202

$
1,092,993

Total debt securities

$
4,214,662

$
4,004,366


(unaudited, in thousands)	Amortized Cost		Fair Value
Available-for-sale debt securities
Within one year	$	33,866	$	33,574
After 1 year through 5 years		127,233		124,052
After 5 years through 10 years		421,089		402,959
After 10 years		2,192,683		1,905,411
Total available-for-sale debt securities	$	2,774,871	$	2,465,996
Held-to-maturity debt securities
Within one year	$	22,622	$	22,573
After 1 year through 5 years		112,334		111,640
After 5 years through 10 years		396,064		375,084
After 10 years		708,227		598,388
Total held-to-maturity debt securities	$	1,239,247	$	1,107,685
Total debt securities	$	4,014,118	$	3,573,681

810

Securities with an aggregate fair value of $2.1 billion at March 31, ~~2022~~2023 and December 31, ~~2021~~2022, respectively, were pledged as security for public and trust funds, and securities sold under agreements to repurchase. ~~There were~~ 0 ~~proceeds~~Proceeds from the sale of available-for-sale securities for the three months ended March 31, 2023 and 2022 totaled $20.5 million and ~~2021.~~$0 million, respectively. Net unrealized losses on available-for-sale securities included in accumulated other comprehensive income, net of tax, as of March 31, ~~2022~~2023 and December 31, ~~2021~~2022 were $~~111.0~~233.9 million and $~~4.7~~261.8 million, respectively.

The following table presents the gross realized gains and losses on sales and calls of available-for-sale and held-to-maturity debt securities, as well as gains and losses on equity securities from both sales and market adjustments, for the three months ended March 31, ~~2022~~2023 and ~~2021,~~2022, respectively. All gains and losses presented in the table below are included in the net securities gains (losses) ~~gains~~ line item of the income statement. For those equity securities relating to the key officer and director deferred compensation plan, the corresponding change in the obligation to the participant is recognized in employee benefits expense.


	For the Three Months Ended March 31,						For the Three Months Ended March 31,
(unaudited, in thousands)	2022			2021			2023			2022
Debt securities:
Gross realized gains	$	31		$	140		$	64		$	31
Gross realized losses		(2	)		(39	)		(197	)		(2	)
Net gains on debt securities	$	29		$	101
Net (losses) gains on debt securities								(133	)		29
Equity securities:
Net unrealized (losses) gains recognized on securities still held	$	(679	)	$	178
Net realized gains (losses) recognized on securities sold		—			—
Net (losses) gains on equity securities	$	(679	)	$	178
Net securities (losses) gains	$	(650	)	$	279
Net unrealized gains (losses) recognized on securities still held								278			(679	)
Net securities gains (losses)							$	145		$	(650	)

The corporate and municipal bonds in Wesbanco’s held-to-maturity debt portfolio are analyzed quarterly to determine if an allowance for current expected credit losses is warranted. Wesbanco uses a database of historical financials of all corporate and municipal issuers and actual historic default and recovery rates on rated and non-rated transactions to estimate expected credit losses on an individual security basis. The expected credit losses are adjusted quarterly and are recorded in an allowance for expected credit losses on the balance sheet, which is deducted from the amortized cost basis of the held-to-maturity portfolio as a contra asset. The losses are recorded on the income statement in the provision for credit losses. Accrued interest receivable on held-to-maturity securities, which was $~~8.3~~9.3 million and $~~7.0~~9.5 million as of March 31, ~~2022~~2023 and December 31, ~~2021,~~2022, respectively, is excluded from the estimate of credit losses. Held-to-maturity investments in U.S. Government sponsored entities and agencies as well as mortgage-backed securities and collateralized mortgage obligations, which are all either issued by a direct governmental entity or a government-sponsored entity, have no historical evidence supporting expected credit losses; therefore, Wesbanco has estimated these losses at 0zero, and will monitor this assumption in the future for any economic or governmental policies that could affect this assumption.

The following table provides a roll-forward of the allowance for credit losses on held-to-maturity securities for the three months ended March 31, ~~2022~~2023 and ~~2021:~~2022:


	Allowance for Credit Losses By Category													Allowance for Credit Losses By Category
	For the Three Months Ended March 31, 2022 and 2021													For the Three Months Ended March 31, 2023 and 2022
			Residential mortgage													Residential mortgage
			-backed													-backed
			securities and													securities and
			collateralized													collateralized
			mortgage obligations		Obligations of											mortgage obligations		Obligations of
	U.S. Government		of government		state and			Corporate						U.S. Government		of government		state and			Corporate
	sponsored		sponsored entities		political			debt						sponsored		sponsored entities		political			debt
(unaudited, in thousands)	entities and agencies		and agencies		subdivisions			Securities			Total			entities and agencies		and agencies		subdivisions			Securities			Total
Balance at December 31, 2022														$	—	$	—	$	167		$	53		$	220
Current period provision (1)															—		—		(6	)		(2	)		(8	)
Write-offs															—		—		—			—			—
Recoveries															—		—		—			—			—
Balance at March 31, 2023														$	—	$	—	$	161		$	51		$	212
.
Balance at December 31, 2021	$	—	$	—	$	174		$	94		$	268		$	—	$	—	$	174		$	94		$	268
Current period provision		—		—		(14	)		31			17
Current period provision (1)															—		—		(14	)		31			17
Write-offs		—		—		—			—			—			—		—		—			—			—
Recoveries		—		—		—			—			—			—		—		—			—			—
Balance at March 31, 2022	$	—	$	—	$	160		$	125		$	285		$	—	$	—	$	160		$	125		$	285
.
Balance at December 31, 2020	$	—	$	—	$	130		$	196		$	326
Current period provision		—		—		(12	)		(24	)		(36	)
Write-offs		—		—		—			—			—
Recoveries		—		—		—			—			—
Balance at March 31, 2021	$	—	$	—	$	118		$	172		$	290

(1) The total provision for credit losses on held-to-maturity securities is reported in the consolidated statements of income in the provision for credit losses line item, which also includes the provision for credit losses - loans and loan commitments. For more information on the provision relating to loans and loan commitments, please see Footnote 4, "Loans and the Allowance for Credit Losses."

911

The following tables provide information on unrealized losses on available-for-sale debt securities that have been in an unrealized loss position for less than twelve months and twelve months or more, for which an allowance for credit losses has not been recorded, as of March 31, ~~2022~~2023 and December 31, ~~2021,~~2022, respectively:


	March 31, 2022																					March 31, 2023
	Less than 12 months							12 months or more							Total							Less than 12 months							12 months or more							Total
(unaudited, dollars in thousands)	Fair Value		Unrealized Losses			# of Securities		Fair Value		Unrealized Losses			# of Securities		Fair Value		Unrealized Losses			# of Securities		Fair Value		Unrealized Losses			# of Securities		Fair Value		Unrealized Losses			# of Securities		Fair Value		Unrealized Losses			# of Securities
U.S. Government sponsored entities and agencies	$	152,701	$	(8,450	)		23	$	43,624	$	(5,077	)		5	$	196,325	$	(13,527	)		28	$	28,638	$	(1,020	)		20	$	194,761	$	(29,273	)		27	$	223,399	$	(30,293	)		47
Residential mortgage-backed securities and collateralized mortgage obligations of government sponsored entities and agencies		1,579,619		(91,718	)		359		410,877		(40,385	)		49		1,990,496		(132,103	)		408		164,019		(7,064	)		85		1,651,930		(261,580	)		403		1,815,949		(268,644	)		488
Commercial mortgage-backed securities and collateralized mortgage obligations of government sponsored entities and agencies		264,064		(2,329	)		47		74,408		(1,315	)		8		338,472		(3,644	)		55		82,142		(1,129	)		17		239,347		(5,934	)		51		321,489		(7,063	)		68
Obligations of state and political subdivisions		19,150		(1,066	)		27		—		—			—		19,150		(1,066	)		27		42,991		(603	)		75		23,479		(2,411	)		33		66,470		(3,014	)		108
Corporate debt and other securities		7,922		(78	)		5		—		—			—		7,922		(78	)		5
Corporate debt securities																							4,879		(74	)		1		6,901		(99	)		5		11,780		(173	)		6
Total	$	2,023,456	$	(103,641	)		461	$	528,909	$	(46,777	)		62	$	2,552,365	$	(150,418	)		523	$	322,669	$	(9,890	)		198	$	2,116,418	$	(299,297	)		519	$	2,439,087	$	(309,187	)		717


	December 31, 2021																					December 31, 2022
	Less than 12 months							12 months or more							Total							Less than 12 months							12 months or more							Total
(dollars in thousands)	Fair Value		Unrealized Losses			# of Securities		Fair Value		Unrealized Losses			# of Securities		Fair Value		Unrealized Losses			# of Securities		Fair Value		Unrealized Losses			# of Securities		Fair Value		Unrealized Losses			# of Securities		Fair Value		Unrealized Losses			# of Securities
U.S. Government sponsored entities and agencies	$	114,486	$	(1,865	)		12	$	32,688	$	(1,175	)		4	$	147,174	$	(3,040	)		16	$	107,011	$	(8,435	)		35	$	118,779	$	(25,015	)		13	$	225,790	$	(33,450	)		48
Residential mortgage-backed securities and collateralized mortgage obligations of government sponsored entities and agencies		1,568,138		(29,060	)		143		141,681		(3,386	)		23		1,709,819		(32,446	)		166		514,789		(39,246	)		294		1,328,906		(258,741	)		202		1,843,695		(297,987	)		496
Commercial mortgage-backed securities and collateralized mortgage obligations of government sponsored entities and agencies		131,970		(579	)		25		78,356		(666	)		8		210,326		(1,245	)		33		190,189		(5,106	)		38		159,543		(4,974	)		36		349,732		(10,080	)		74
Obligations of states and political subdivisions		4,307		(35	)		2		—		—			—		4,307		(35	)		2		67,822		(1,815	)		128		7,812		(2,282	)		10		75,634		(4,097	)		138
Corporate debt securities		6,990		(9	)		5		—		—			—		6,990		(9	)		5		7,225		(226	)		3		4,433		(67	)		3		11,658		(293	)		6
Total	$	1,825,891	$	(31,548	)		187	$	252,725	$	(5,227	)		35	$	2,078,616	$	(36,775	)		222	$	887,036	$	(54,828	)		498	$	1,619,473	$	(291,079	)		264	$	2,506,509	$	(345,907	)		762

Unrealized losses on debt securities in the table above represent temporary fluctuations resulting from changes in market rates in relation to fixed yields. Unrealized losses in the available-for-sale portfolio are accounted for as an adjustment, net of taxes, to other comprehensive income in shareholders’ equity. Wesbanco does not believe the securities presented above are impaired due to reasons of credit quality, as substantially all debt securities are rated above investment grade and all are paying principal and interest according to their contractual terms. Wesbanco does not intend to sell, nor is it more likely than not that it will be required to sell, loss position securities prior to recovery of their cost; therefore, management believes the unrealized losses detailed above do not require an allowance for credit losses relating to these securities to be recognized. Securities that do not have readily determinable fair values and for which Wesbanco does not exercise significant influence are carried at cost. Cost method investments consist primarily of Federal Home Loan Bank (“FHLB”) of Pittsburgh stock totaling $~~13.6~~59.2 million and $~~15.9~~36.2 million at March 31, ~~2022~~2023 and December 31, ~~2021,~~2022, respectively, and are included in other assets in the Consolidated Balance Sheets. Cost method investments are evaluated for impairment whenever events or circumstances suggest that their carrying value may not be recoverable.

NOTE 4. LOANS AND THE ALLOWANCE FOR CREDIT LOSSES

The recorded investment in loans is presented in the Consolidated Balance Sheets net of deferred loan fees and costs, and discounts on purchased loans. Net deferred loan ~~fee~~ costs were $~~6.8~~10.3 million and $~~3.3~~9.6 million at March 31, ~~2022~~2023 and December 31, ~~2021,~~2022, respectively. ~~At March 31, 2022 and December 31, 2021, respectively, the balance also included $2.9~~ ~~million and $6.1~~ ~~million of net deferred fee income from SBA Payroll Protection Program (“PPP”) loans.~~ The un-accreted discount on purchased loans from acquisitions was $~~23.4~~16.7 million at March 31, ~~2022~~2023 and $~~25.9~~18.0 million at December 31, ~~2021.~~2022.


	March 31,		December 31,		March 31,		December 31,
(unaudited, in thousands)	2022		2021		2023		2022
Commercial real estate:
Land and construction	$	857,869	$	833,880	$	731,173	$	943,887
Improved property		4,722,213		4,705,088		5,466,671		5,117,457
Total commercial real estate		5,580,082		5,538,968		6,197,844		6,061,344
Commercial and industrial		1,436,543		1,427,645		1,519,808		1,579,395
Commercial and industrial - PPP		76,535		162,675
Residential real estate		1,767,064		1,721,378		2,251,423		2,140,584
Home equity		592,872		605,682		692,001		695,065
Consumer		280,176		277,130		227,612		226,340
Total portfolio loans		9,733,272		9,733,478		10,888,688		10,702,728
Loans held for sale		15,959		25,277		12,722		8,249
Total loans	$	9,749,231	$	9,758,755	$	10,901,410	$	10,710,977

The allowance for credit losses under the current expected credit losses methodology (“CECL”) is calculated utilizing the probability of default (“PD”) / loss given default (“LGD”), which is then discounted to net present value. PD is the probability the asset will default within a given time frame and LGD is the percentage of the asset not expected to be collected due to default. The primary macroeconomic drivers of the quantitative model include forecasts of national unemployment and interest rates, as well as modeling adjustments for changes in prepayment speeds, loan risk grades, portfolio mix, concentrations and loan growth. For the calculation as of March 31, 2022, the one-year forecast was based upon a blended rate from two nationally-recognized published economic forecasts through March 31, 2022, and is primarily driven by the national unemployment and interest rate spread forecasts. Wesbanco’s blended forecast of national unemployment at quarter end was projected to peak at ~~3.7% in the first quarter, and subsequently decrease to an average of~~ ~~3.5% over the remainder of the forecast period. The calculation utilized a~~ ~~one-year~~ reversion period back to the Company’s historical loss rate by loan classification. Included in the qualitative factors were COVID-19 pandemic factors related to the transient credit risk not covered by the traditional allowance process, adjusted to Wesbanco’s regional footprint, deferred interest on modified loans, and hospitality industry concentration. As of March 31, ~~2022,~~2023, accrued interest receivable for loans was $~~45.0~~53.0 million. Wesbanco made an accounting policy election to exclude accrued interest from the measurement of the allowance for credit losses because the Company has a ~~robust~~ policy in place to reverse or write-off accrued interest when loans are placed on non-accrual. However, Wesbanco does have a $~~0.1~~0.2 million reserve on the accrued interest related to loan modifications allowed under the ~~CARES~~Coronavirus Aid, Relief and Economic Security ("CARES") Act due to the timing and nature of these modifications. As of March 31, ~~2022,~~2023, accrued interest ~~receivable~~ related to COVID-19 loan modifications as permitted under the CARES Act was $~~20.8~~16.7 million.

1113

The following tables summarize changes in the allowance for credit losses applicable to each category of the loan portfolio:


	Allowance for Credit Losses By Category																								Allowance for Credit Losses By Category
	For the Three Months Ended March 31, 2022 and 2021																								For the Three Months Ended March 31, 2023 and 2022
(unaudited, in thousands)	Commercial Real Estate - Land and Construction			Commercial Real Estate- Improved Property			Commercial & Industrial			Residential Real Estate			Home Equity			Consumer			Deposit Overdrafts			Total			Commercial Real Estate - Land and Construction			Commercial Real Estate- Improved Property			Commercial & Industrial			Residential Real Estate			Home Equity			Consumer			Deposit Overdrafts (1)			Total
Balance at December 31, 2022
Allowance for credit losses - loans																									$	6,737		$	52,659		$	31,540		$	18,208		$	4,234		$	3,127		$	1,285		$	117,790
Allowance for credit losses - loan commitments																										6,025			—			—			2,215			128			—			—			8,368
Total beginning allowance for credit losses - loans and loan commitments																										12,762			52,659			31,540			20,423			4,362			3,127			1,285			126,158
Provision for credit losses:
Provision for loan losses																										(1,440	)		2,508			(2,783	)		4,407			141			97			(103	)		2,827
Provision for loan commitments																										(51	)		—			797			(10	)		23			—			—			759
Total provision for credit losses - loans and loan commitments (2)																										(1,491	)		2,508			(1,986	)		4,397			164			97			(103	)		3,586
Charge-offs																										(222	)		(1,355	)		(320	)		13			(258	)		(776	)		(401	)		(3,319	)
Recoveries																										73			276			134			75			80			622			140			1,400
Net (charge-offs) recoveries																										(149	)		(1,079	)		(186	)		88			(178	)		(154	)		(261	)		(1,919	)
Balance at March 31, 2023
Allowance for credit losses - loans																										5,148			54,088			28,571			22,703			4,197			3,070			921			118,698
Allowance for credit losses - loan commitments																										5,974			—			797			2,205			151			—			—			9,127
Total ending allowance for credit losses - loans and loan commitments																									$	11,122		$	54,088		$	29,368		$	24,908		$	4,348		$	3,070		$	921		$	127,825

Balance at December 31, 2021
Allowance for credit losses - loans	$	7,310		$	65,355		$	26,875		$	15,401		$	724		$	3,737		$	2,220		$	121,622		$	7,310		$	65,355		$	26,875		$	15,401		$	724		$	3,737		$	2,220		$	121,622
Allowance for credit losses - loan commitments		4,180			201			1,497			1,576			49			272			0			7,775			4,180			201			1,497			1,576			49			272			—			7,775
Total beginning allowance for credit losses - loans and loan commitments		11,490			65,556			28,372			16,977			773			4,009			2,220			129,397			11,490			65,556			28,372			16,977			773			4,009			2,220			129,397
Provision for credit losses:
Provision for loan losses		243			(469	)		(1,468	)		(1,737	)		(102	)		69			(266	)		(3,730	)		243			(469	)		(1,468	)		(1,737	)		(102	)		69			(266	)		(3,730	)
Provision for loan commitments		751			119			(827	)		164			9			59			0			275			751			119			(827	)		164			9			59			—			275
Total provision for credit losses - loans and loan commitments		994			(350	)		(2,295	)		(1,573	)		(93	)		128			(266	)		(3,455	)
Total provision for credit losses - loans and loan commitments (2)																										994			(350	)		(2,295	)		(1,573	)		(93	)		128			(266	)		(3,455	)
Charge-offs		0			(137	)		(208	)		(142	)		(86	)		(787	)		(435	)		(1,795	)		—			(137	)		(208	)		(142	)		(86	)		(787	)		(435	)		(1,795	)
Recoveries		25			260			336			192			139			727			89			1,768			25			260			336			192			139			727			89			1,768
Net (charge-offs) recoveries		25			123			128			50			53			(60	)		(346	)		(27	)		25			123			128			50			53			(60	)		(346	)		(27	)
Balance at March 31, 2022
Allowance for credit losses - loans		7,578			65,009			25,535			13,714			675			3,746			1,608			117,865			7,578			65,009			25,535			13,714			675			3,746			1,608			117,865
Allowance for credit losses - loan commitments		4,931			320			670			1,740			58			331			0			8,050			4,931			320			670			1,740			58			331			—			8,050
Total ending allowance for credit losses - loans and loan commitments	$	12,509		$	65,329		$	26,205		$	15,454		$	733		$	4,077		$	1,608		$	125,915		$	12,509		$	65,329		$	26,205		$	15,454		$	733		$	4,077		$	1,608		$	125,915

Balance at December 31, 2020
Allowance for credit losses - loans	$	10,841		$	110,652		$	37,850		$	17,851		$	1,487		$	6,507		$	639		$	185,827
Allowance for credit losses - loan commitments		6,508			712			1,275			955			45			19			—			9,514
Total beginning allowance for credit losses - loans and loan commitments		17,349			111,364			39,125			18,806			1,532			6,526			639			195,341
Provision for credit losses:
Provision for loan losses		(3,538	)		(11,420	)		(4,256	)		(4,177	)		(394	)		(1,510	)		156			(25,139	)
Provision for loan commitments		(2,508	)		(504	)		308			(86	)		5			2			—			(2,783	)
Total provision for credit losses - loans and loan commitments		(6,046	)		(11,924	)		(3,948	)		(4,263	)		(389	)		(1,508	)		156			(27,922	)
Charge-offs		(18	)		(19	)		(750	)		(371	)		(174	)		(927	)		(201	)		(2,460	)
Recoveries		55			528			440			135			79			462			113			1,812
Net (charge-offs) recoveries		37			509			(310	)		(236	)		(95	)		(465	)		(88	)		(648	)
Balance at March 31, 2021
Allowance for credit losses - loans		7,340			99,741			33,284			13,438			998			4,532			707			160,040
Allowance for credit losses - loan commitments		4,000			208			1,583			869			50			21			0			6,731
Total ending allowance for credit losses - loans and loan commitments	$	11,340		$	99,949		$	34,867		$	14,307		$	1,048		$	4,553		$	707		$	166,771

(1) Deposit overdrafts of $3.6 million and $4.2 million are included in total portfolio loans for the periods ending March 31, 2023 and March 31, 2022, respectively.

12(2) The total provision for credit losses - loans and loan commitments is reported in the consolidated statements of income in the provision for credit losses line item, which also includes the provision for credit losses on held-to-maturity securities. For more information on the provision relating to held-to-maturity securities, please see Footnote 3, "Securities."

(1) Deposit overdrafts of $3.6 million and $4.4 million are included in total portfolio loans for the periods ending March 31, 2023 and December 31, 2022, respectively.

(2) For additional detail relating to loan commitments, see Footnote 10, "Commitments and Contingent Liabilities."

Commercial loan risk grades are determined based on an evaluation of the relevant characteristics of each loan, assigned at inception and adjusted thereafter at any time to reflect changes in the risk profile throughout the life of each loan. The primary factors used to determine the risk grade are the sufficiency, reliability and sustainability of the primary source of repayment and overall financial strength of the borrower. The rating system more heavily weights the debt service coverage, leverage and loan to value factors to derive the risk grade. Other factors that are considered at a lesser weighting include management, industry or property type risks, payment history, collateral or guarantees.

Commercial real estate – land and construction consists of loans to finance investments in vacant land, land development, construction of residential housing, and construction of commercial buildings. Commercial real estate – improved property consists of loans for the purchase or refinance of all types of improved owner-occupied and investment properties. Factors that are considered in assigning the risk grade vary depending on the type of property financed. The risk grade assigned to construction and development loans is based on the overall viability of the project, the experience and financial capacity of the developer or builder to successfully complete the project, project specific and market absorption rates and comparable property values, and the amount of pre-sales for residential housing construction or pre-leases for commercial investment property. The risk grade assigned to commercial investment property loans is based primarily on the adequacy of the net operating income generated by the property to service the debt (“debt service coverage”), the loan to appraised value, the type, quality, industry and mix of tenants, and the terms of leases. The risk grade assigned to owner-occupied commercial real estate is based primarily on global debt service coverage and the leverage of the business, but may also consider the industry in which the business operates, the business’ specific competitive advantages or disadvantages, collateral margins and the quality and experience of management.

Commercial and industrial (“C&I”) loans consist of revolving lines of credit to finance accounts receivable, inventory and other general business purposes; term loans to finance fixed assets other than real estate, and letters of credit to support trade, insurance or governmental requirements for a variety of businesses. Most C&I borrowers are privately-held companies with annual sales up to $100 million. Primary factors that are considered in risk rating C&I loans include debt service coverage and leverage. Other factors including operating trends, collateral coverage along with management experience are also considered.

Pass loans are those that exhibit a history of positive financial results that are at least comparable to the average for their industry or type of real estate. The primary source of repayment is acceptable and these loans are expected to perform satisfactorily during most economic cycles. Pass loans typically have no significant external factors that are expected to adversely affect these borrowers more than others in the same industry or property type. Any minor unfavorable characteristics of these loans are outweighed or mitigated by other positive factors including but not limited to adequate secondary or tertiary sources of ~~repayment.~~repayment, including guarantees.

Criticized loans, considered as compromised, have potential weaknesses that deserve management's close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the asset or in the bank's credit position at some future date. Criticized loans are not adversely classified by the banking regulators and do not expose the bank to sufficient risk to warrant adverse classification.

Classified loans, considered as substandard and doubtful, are equivalent to the classifications used by banking regulators. Substandard loans are inadequately protected by the current sound worth and paying capacity of the obligor or of the collateral pledged, if any. Loans so classified must have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the bank will sustain some loss if the deficiencies are not corrected. These loans may or may not be reported as non-accrual. Doubtful loans have all the weaknesses inherent in those classified substandard, with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently known facts, conditions, and values, highly questionable and improbable. These loans are reported as non-accrual.

Residential real estate, home equity and consumer loans are not assigned internal risk grades other than as required by regulatory guidelines that are based primarily on the age of past due loans. Wesbanco primarily evaluates the credit quality of residential real estate, home equity and consumer loans based on repayment performance and historical loss rates. The aggregate amount of residential real estate, home equity and consumer loans classified as substandard in accordance with regulatory guidelines was $~~26.8~~20.4 million at March 31, ~~2022~~2023 and $~~30.2~~24.8 million at December 31, ~~2021,~~2022, of which $~~5.5~~2.6 million and $~~7.4~~5.9 million were accruing, for each period, respectively. These loans are not included in the tables above. In addition, $~~21.3~~30.3 million and $~~21.7~~25.0 million of unfunded commercial loan commitments are also not included in the tables above at March 31, ~~2022~~2023 and December 31, ~~2021,~~2022, respectively.

Modifications for Borrowers Experiencing Financial Difficulty (following the adoption of ASU 2022-02)

~~As of~~There have been no MBEFDs which defaulted (defined as past due 90 days) after the loan was modified during the three months ended March 31, ~~2022 and December 31, 2021, there~~2023.

Troubled Debt Restructuring Disclosures (prior to the ~~majority~~adoption of loans reported as accruing and non-accrual TDRs are extensions of the maturity date or the amortization period, reductions in the interest rate below the prevailing market rate for loans with comparable characteristics, and/or permitting interest-only payments for longer than ~~six months. Wesbanco had unfunded commitments to debtors whose loans were classified as nonperforming of $0.0~~ ~~million and $0.1~~ ~~million as of March 31, 2022 and December 31, 2021, respectively.~~ASU 2022-02)

There ~~have been~~were 0no TDRs which defaulted (defined as past due 90 days) during the three months ended March 31, 2022 ~~and 2021, respectively,~~ that were restructured within the last twelve months prior to March 31, ~~2022 and 2021, respectively.~~ ~~TDRs that default are placed on non-accrual status unless they are both well-secured and in the process of collection.~~2022.

Section 4013 of the CARES Act allows financial institutions the option to temporarily suspend certain requirements under GAAP related to TDRs for a limited period of time during the COVID-19 pandemic. These customers must meet certain criteria, such as they were in good standing and not more than 30 days past due either as of December 31, 2019, or as of the implementation of the modification program under the Interagency Statement, as well as other requirements noted in the regulatory agencies’ revised statement. Based on this guidance, Wesbanco does not classify the COVID-19 loan modifications as TDRs, nor are the customers considered past due with regard to their delayed payments. Upon exiting the loan modification deferral program, the measurement of loan delinquency will resume where it left off upon entry into the program. Under the CARES Act, Wesbanco has modified approximately ~~3,553~~ ~~loans totaling $2.2~~ ~~billion, of which $51.5~~ ~~million remain in their deferral period as of March 31, 2022.~~ Wesbanco originally offered three to six months of deferred payments to commercial and retail customers impacted by the COVID-19 pandemic depending on the type of loan and the industry for commercial loans. In the fourth quarter of 2020, Wesbanco offered up to an additional twelve months of deferred payments to certain commercial loan customers, predominantly in the hospitality industry, based on specific criteria related to the borrower, the underlying property and the potential for guarantors or co-borrowers. On December 27, 2020, the Economic Aid to Hard-Hit Small Businesses, Nonprofits and Venues Act (“Economic Aid Act”) was signed into law and among other things, extended the relief granted by the CARES Act for TDRs, initially slated to end on December 31, 2020, by one year to December 31, 2021.

The following tables summarize amortized cost basis loan balances by year of origination and credit quality indicator:


		Loans As of March 31, 2022																			Loans As of March 31, 2023
		Amortized Cost Basis by Origination Year																			Amortized Cost Basis by Origination Year
(unaudited, in thousands)		2022		2021		2020		2019		2018		Prior		Revolving Loans Amortized Cost Basis		Revolving Loans Converted to Term		Total			2023		2022		2021		2020		2019		Prior			Revolving Loans Amortized Cost Basis		Revolving Loans Converted to Term		Total
Commercial real estate: land and construction	Commercial real estate: land and construction																			Commercial real estate: land and construction
Risk rating:
Pass		$	17,320	$	143,081	$	220,805	$	179,682	$	112,712	$	55,329	$	54,985	$	63,611	$	847,525		$	28,394	$	185,370	$	117,088	$	62,435	$	59,989	$	53,001		$	127,485	$	89,981	$	723,743
Criticized - compromised			—		266		409		—		32		214		674		213		1,808			—		682		263		—		—		23			—		450		1,418
Classified - substandard			—		82		5,894		—		73		1,231		—		1,256		8,536			—		—		—		—		—		12			—		6,000		6,012
Classified - doubtful			—		—		—		—		—		—		—		—		—			—		—		—		—		—		—			—		—		—
Total		$	17,320	$	143,429	$	227,108	$	179,682	$	112,817	$	56,774	$	55,659	$	65,080	$	857,869		$	28,394	$	186,052	$	117,351	$	62,435	$	59,989	$	53,036		$	127,485	$	96,431	$	731,173
Current-period gross charge-offs																					$	—	$	—	$	—	$	—	$	—	$	—		$	—	$	222	$	222

Commercial real estate: improved property	Commercial real estate: improved property																			Commercial real estate: improved property
Risk rating:
Pass		$	217,572	$	684,338	$	645,602	$	564,678	$	386,418	$	1,832,877	$	76,323	$	16,532	$	4,424,340		$	204,285	$	1,119,940	$	633,573	$	614,763	$	590,097	$	1,944,864		$	72,686	$	158,908	$	5,339,116
Criticized - compromised			192		1,529		15,432		46,049		11,836		130,510		809		144		206,501			—		297		345		4,378		5,982		71,153			1,035		90		83,280
Classified - substandard			—		—		1,800		13,349		11,526		64,663		34		—		91,372			—		—		349		378		12,866		30,648			34		—		44,275
Classified - doubtful			—		—		—		—		—		—		—		—		—			—		—		—		—		—		—			—		—		—
Total		$	217,764	$	685,867	$	662,834	$	624,076	$	409,780	$	2,028,050	$	77,166	$	16,676	$	4,722,213		$	204,285	$	1,120,237	$	634,267	$	619,519	$	608,945	$	2,046,665		$	73,755	$	158,998	$	5,466,671
Current-period gross charge-offs																					$	—	$	—	$	—	$	—	$	—	$	1,355		$	—	$	—	$	1,355

Commercial and industrial	Commercial and industrial																			Commercial and industrial
Risk rating:
Pass		$	68,510	$	287,195	$	144,757	$	94,290	$	129,505	$	296,576	$	431,270	$	11,212	$	1,463,315		$	43,539	$	264,804	$	176,352	$	110,159	$	61,300	$	319,840		$	477,953	$	27,016	$	1,480,963
Criticized - compromised			318		4,668		1,941		1,786		2,042		3,171		4,475		7,433		25,834			—		786		1,181		237		7,701		1,896			9,035		11,074		31,910
Classified - substandard			—		45		158		10,774		577		3,338		5,184		3,853		23,929			—		233		348		134		1,302		2,555			883		1,480		6,935
Classified - doubtful			—		—		—		—		—		—		—		—		—			—		—		—		—		—		—			—		—		—
Total		$	68,828	$	291,908	$	146,856	$	106,850	$	132,124	$	303,085	$	440,929	$	22,498	$	1,513,078		$	43,539	$	265,823	$	177,881	$	110,530	$	70,303	$	324,291		$	487,871	$	39,570	$	1,519,808
Current-period gross charge-offs																					$	—	$	38	$	40	$	43	$	—	$	199		$	—	$	—	$	320

Residential real estate	Residential real estate																			Residential real estate
Loan delinquency:
Current		$	102,025	$	616,206	$	249,313	$	107,883	$	59,865	$	554,845	$	—	$	61,758	$	1,751,895		$	84,647	$	562,677	$	513,059	$	196,495	$	94,825	$	512,517		$	—	$	277,702	$	2,241,922
30-59 days past due			—		—		—		—		121		2,970		—		—		3,091			—		—		772		347		—		1,694			—		—		2,813
60-89 days past due			—		—		—		515		—		2,115		—		—		2,630			—		—		—		��		567		1,298			—		—		1,865
90 days or more past due			—		—		—		66		45		9,288		—		49		9,448			—		—		—		—		350		4,434			—		39		4,823
Total		$	102,025	$	616,206	$	249,313	$	108,464	$	60,031	$	569,218	$	—	$	61,807	$	1,767,064		$	84,647	$	562,677	$	513,831	$	196,842	$	95,742	$	519,943		$	—	$	277,741	$	2,251,423
Current-period gross charge-offs																					$	—	$	—	$	—	$	—	$	—	$	(13	)	$	—	$	—	$	(13	)

Home equity	Home equity																			Home equity
Loan delinquency:
Current		$	11,418	$	459	$	634	$	621	$	869	$	18,485	$	553,083	$	1,022	$	586,591		$	10,384	$	1,004	$	1,620	$	1,703	$	1,882	$	25,148		$	641,325	$	981	$	684,047
30-59 days past due			—		—		—		26		—		800		1,104		24		1,954			—		68		110		253		—		484			1,812		—		2,727
60-89 days past due			—		29		—		81		14		252		—		61		437			—		5		15		—		28		1,203			—		—		1,251
90 days or more past due			—		—		35		34		204		3,199		—		418		3,890			—		281		—		508		215		2,543			—		429		3,976
Total		$	11,418	$	488	$	669	$	762	$	1,087	$	22,736	$	554,187	$	1,525	$	592,872		$	10,384	$	1,358	$	1,745	$	2,464	$	2,125	$	29,378		$	643,137	$	1,410	$	692,001
Current-period gross charge-offs																					$	—	$	—	$	—	$	—	$	9	$	249		$	—	$	—	$	258

Consumer	Consumer																			Consumer
Loan delinquency:
Current		$	23,210	$	53,593	$	38,442	$	42,643	$	16,104	$	37,934	$	65,114	$	173	$	277,213		$	28,381	$	77,337	$	32,445	$	21,331	$	21,232	$	20,872		$	22,610	$	30	$	224,238
30-59 days past due			—		613		208		197		45		305		18		—		1,386			—		1,169		571		310		83		120			9		—		2,262
60-89 days past due			—		266		151		154		45		268		—		—		884			—		190		179		144		21		43			—		—		577
90 days or more past due			—		222		99		124		44		200		4		—		693			—		227		95		89		—		124			—		—		535
Total		$	23,210	$	54,694	$	38,900	$	43,118	$	16,238	$	38,707	$	65,136	$	173	$	280,176		$	28,381	$	78,923	$	33,290	$	21,874	$	21,336	$	21,159		$	22,619	$	30	$	227,612
Current-period gross charge-offs																					$	—	$	293	$	335	$	48	$	44	$	56		$	—	$	—	$	776

1821


		Loans As of December 31, 2021																			Loans As of December 31, 2022
		Amortized Cost Basis by Origination Year																			Amortized Cost Basis by Origination Year
(unaudited, in thousands)		2021		2020		2019		2018		2017		Prior		Revolving Loans Amortized Cost Basis		Revolving Loans Converted to Term		Total			2022		2021		2020		2019		2018		Prior		Revolving Loans Amortized Cost Basis		Revolving Loans Converted to Term		Total
Commercial real estate: land and construction	Commercial real estate: land and construction																			Commercial real estate: land and construction
Risk rating:
Pass		$	135,179	$	217,389	$	198,974	$	117,157	$	27,186	$	29,696	$	35,059	$	62,676	$	823,316		$	159,769	$	136,131	$	138,171	$	155,141	$	61,823	$	51,381	$	117,237	$	92,151	$	911,804
Criticized - compromised			85		6,236		—		33		—		219		856		526		7,955			559		265		—		—		24		31		—		450		1,329
Classified - substandard			—		73		—		—		—		1,280		—		1,256		2,609			—		—		6,001		—		—		124		—		24,629		30,754
Classified - doubtful			—		—		—		—		—		—		—		—		—			—		—		—		—		—		—		—		—		—
Total		$	135,264	$	223,698	$	198,974	$	117,190	$	27,186	$	31,195	$	35,915	$	64,458	$	833,880		$	160,328	$	136,396	$	144,172	$	155,141	$	61,847	$	51,536	$	117,237	$	117,230	$	943,887
Current-period gross charge-offs																					$	—	$	—	$	—	$	—	$	73	$	—	$	—	$	—	$	73

Commercial real estate: improved property	Commercial real estate: improved property																			Commercial real estate: improved property
Risk rating:
Pass		$	713,697	$	660,856	$	589,674	$	405,689	$	404,241	$	1,539,275	$	58,933	$	28,507	$	4,400,872		$	1,082,984	$	620,205	$	613,663	$	528,004	$	371,880	$	1,551,478	$	72,327	$	99,594	$	4,940,135
Criticized - compromised			7,755		15,195		52,859		17,697		14,490		99,687		1,414		13,733		222,830			10,554		354		2,877		7,659		13,551		85,332		1,066		—		121,393
Classified - substandard			9,355		2,686		4,855		3,730		11,010		49,667		34		49		81,386			—		658		275		15,489		9,761		29,712		34		—		55,929
Classified - doubtful			—		—		—		—		—		—		—		—		—			—		—		—		—		—		—		—		—		—
Total		$	730,807	$	678,737	$	647,388	$	427,116	$	429,741	$	1,688,629	$	60,381	$	42,289	$	4,705,088		$	1,093,538	$	621,217	$	616,815	$	551,152	$	395,192	$	1,666,522	$	73,427	$	99,594	$	5,117,457
Current-period gross charge-offs																					$	—	$	—	$	128	$	100	$	3	$	564	$	—	$	—	$	795

Commercial and industrial	Commercial and industrial																			Commercial and industrial
Risk rating:
Pass		$	406,495	$	159,878	$	99,472	$	136,146	$	89,049	$	223,514	$	409,789	$	16,226	$	1,540,569		$	280,510	$	184,805	$	116,890	$	72,142	$	103,660	$	232,062	$	526,025	$	22,206	$	1,538,300
Criticized - compromised			590		551		693		2,558		1,645		1,278		5,389		5,029		17,733			917		1,192		270		8,278		264		2,524		7,654		4,124		25,223
Classified - substandard			134		236		18,465		766		2,139		1,419		3,723		5,136		32,018			93		3,209		976		2,157		97		2,854		1,066		5,420		15,872
Classified - doubtful			—		—		—		—		—		—		—		—		—			—		—		—		—		—		—		—		—		—
Total		$	407,219	$	160,665	$	118,630	$	139,470	$	92,833	$	226,211	$	418,901	$	26,391	$	1,590,320		$	281,520	$	189,206	$	118,136	$	82,577	$	104,021	$	237,440	$	534,745	$	31,750	$	1,579,395
Current-period gross charge-offs																					$	—	$	16	$	234	$	275	$	70	$	182	$	—	$	291	$	1,068

Residential real estate	Residential real estate																			Residential real estate
Loan delinquency:
Current		$	599,244	$	292,653	$	116,147	$	71,253	$	56,917	$	536,444	$	—	$	29,929	$	1,702,587		$	541,659	$	556,928	$	211,496	$	97,160	$	52,135	$	478,977	$	—	$	190,740	$	2,129,095
30-59 days past due			1,127		—		—		69		105		1,030		—		—		2,331			—		—		—		—		—		853		—		—		853
60-89 days past due			563		91		—		271		43		2,286		—		—		3,254			—		442		349		65		—		2,680		—		—		3,536
90 days or more past due			1,933		673		895		88		762		8,802		—		53		13,206			—		—		—		285		119		6,654		—		42		7,100
Total		$	602,867	$	293,417	$	117,042	$	71,681	$	57,827	$	548,562	$	—	$	29,982	$	1,721,378		$	541,659	$	557,370	$	211,845	$	97,510	$	52,254	$	489,164	$	—	$	190,782	$	2,140,584
Current-period gross charge-offs																					$	—	$	—	$	—	$	—	$	6	$	494	$	—	$	—	$	500

Home equity	Home equity																			Home equity
Loan delinquency:
Current		$	10,076	$	835	$	649	$	379	$	566	$	18,064	$	567,478	$	1,142	$	599,189		$	10,718	$	1,459	$	1,133	$	1,774	$	1,088	$	25,203	$	644,430	$	957	$	686,762
30-59 days past due			—		84		45		128		50		628		1,247		58		2,240			80		61		180		67		34		1,165		2,260		38		3,885
60-89 days past due			—		—		132		15		188		267		—		—		602			—		15		—		50		88		458		—		10		621
90 days or more past due			187		88		119		112		234		2,550		—		361		3,651			—		—		572		93		257		2,425		16		434		3,797
Total		$	10,263	$	1,007	$	945	$	634	$	1,038	$	21,509	$	568,725	$	1,561	$	605,682		$	10,798	$	1,535	$	1,885	$	1,984	$	1,467	$	29,251	$	646,706	$	1,439	$	695,065
Current-period gross charge-offs																					$	—	$	—	$	—	$	—	$	—	$	310	$	—	$	48	$	358

Consumer	Consumer																			Consumer
Loan delinquency:
Current		$	60,907	$	43,871	$	50,317	$	19,289	$	11,084	$	32,343	$	55,739	$	27	$	273,577		$	84,817	$	36,123	$	25,071	$	25,535	$	8,488	$	16,337	$	25,755	$	27	$	222,153
30-59 days past due			435		370		214		136		85		241		51		—		1,532			980		937		488		159		98		217		31		—		2,910
60-89 days past due			413		375		82		19		33		286		—		—		1,208			184		293		94		47		29		57		—		—		704
90 days or more past due			115		141		222		65		1		265		4		—		813			183		208		69		32		2		79		—		—		573
Total		$	61,870	$	44,757	$	50,835	$	19,509	$	11,203	$	33,135	$	55,794	$	27	$	277,130		$	86,164	$	37,561	$	25,722	$	25,773	$	8,617	$	16,690	$	25,786	$	27	$	226,340
Current-period gross charge-offs																					$	769	$	1,237	$	624	$	333	$	186	$	326	$	—	$	1	$	3,476

Residential real estate included in other real estate owned was $0.1 million and $0at March 31, ~~2022. There were~~ 0 ~~other real estate owned or repossessed asset balances~~2023 and at December 31, ~~2021.~~2022, respectively. At March 31, ~~2022~~2023 and December 31, ~~2021,~~2022, formal foreclosure proceedings were in process on residential real estate loans totaling $~~4.8~~5.3 million and $~~4.0~~4.9 million, respectively. ~~Previously, as a result of provisions of the CARES Act, certain residential real estate loans were temporarily suspended from entering foreclosure proceedings, which included $0.8~~ ~~million of loans as of December 31, 2021. Since this moratorium had substantially ended as of March 31, 2022, there are currently~~ 0 ~~loans suspended from entering foreclosure proceedings.~~

Dependent upon the net present value of the underlying swaps, Wesbanco ~~had~~has minimum collateral posting thresholds with certain of its derivative ~~counterparties and has posted collateral with a market value of $6.3~~ ~~million as of March 31, 2022.~~counterparties. If Wesbanco had breached any of these provisions at March 31, ~~2022,~~2023, it could have been required to settle its obligations under the agreements at the termination value and would have been required to pay any additional amounts due in excess of amounts previously posted as collateral with the respective ~~counterparty~~counterparties. In certain market situations, Wesbanco can also request collateral from the derivative counterparties. Due to the recent rise in interest rates, as of March 31, 2023, Wesbanco is holding collateral from various derivative counterparties with a market value of $.27.6 million.

NOTE 6. BENEFIT PLANS

The following table presents the net periodic pension income for Wesbanco’s Defined Benefit Pension Plan (the “Plan”) and the related components:


	For the Three Months Ended March 31,						For the Three Months Ended March 31,
(unaudited, in thousands)	2022			2021			2023			2022
Service cost – benefits earned during year	$	540		$	616		$	350		$	540
Interest cost on projected benefit obligation		1,013			842			1,554			1,013
Expected return on plan assets		(2,853	)		(2,763	)		(2,750	)		(2,853	)
Amortization of prior service cost		(8	)		(8	)		(9	)		(8	)
Amortization of net loss		125			675			223			125
Net periodic pension income	$	(1,183	)	$	(638	)	$	(632	)	$	(1,183	)

The service cost of $~~0.5~~0.4 million and $~~0.6~~0.5 million for the three months ended March 31, ~~2022~~2023 and ~~2021,~~2022, respectively, is included in salaries and wages, and periodic pension income of $~~1.7~~1.0 million and $~~1.3~~1.7 million for the three months ended March 31, ~~2022~~2023 and ~~2021,~~2022, respectively, is included in employee benefits.

The Plan covers all employees of Wesbanco and its subsidiaries who were hired on or before August 1, 2007 who satisfy minimum age and length of service requirements, and is not available to employees hired after such date.

A minimum required contribution is not required for ~~2022,~~2023, and Wesbanco currently does 0not expect to make a voluntary contribution to the Plan in ~~2022.~~2023.

NOTE 7. FAIR VALUE MEASUREMENT

Fair value estimates are based on quoted market prices, if available, quoted market prices of similar assets or liabilities, or the present value of expected future cash flows and other valuation techniques. These valuations are significantly affected by discount rates, cash flow assumptions, and risk assumptions used. Therefore, fair value estimates may not be substantiated by comparison to independent markets and are not intended to reflect the proceeds that may be realizable in an immediate settlement of the instruments.

Fair value is determined at one point in time and is not representative of future value. These amounts do not reflect the total value of a going concern organization. Management does not have the intention to dispose of a significant portion of its assets and liabilities, and therefore the unrealized gains or losses should not be interpreted as a forecast of future earnings and cash flows.

The following is a discussion of assets and liabilities measured at fair value on a recurring basis and valuation techniques applied:

Investment securities: The fair value of investment securities which are measured on a recurring basis are determined primarily by obtaining quoted prices on nationally recognized securities exchanges or matrix pricing, which is a mathematical technique used widely in the industry to value debt securities without relying exclusively on quoted prices for the specific securities but rather by relying on the securities’ relationship to other similar securities. These securities are classified within level 1 or 2 in the fair value hierarchy. Positions that are not traded in active markets for which valuations are generated using assumptions not observable in the market or management’s best estimate are classified within level 3 of the fair value hierarchy. This includes certain specific municipal debt issues for which the credit quality and discount rate must be estimated.

Loans held for sale: Loans held for sale are carried, in aggregate, at fair value as Wesbanco previously elected the fair value option. The use of a valuation model using quoted prices of similar instruments are significant inputs in arriving at the fair value and therefore loans held for sale are classified within level 2 of the fair value hierarchy.

Derivatives: Wesbanco enters into interest rate swap agreements with qualifying commercial customers to meet their financing, interest rate and other risk management needs. These agreements provide the customer the ability to convert from variable to fixed interest rates. The credit risk associated with derivatives executed with customers is essentially the same as that involved in extending loans and is subject to normal credit policies and monitoring. Those interest rate swaps are economically hedged by offsetting interest rate swaps that Wesbanco executes with derivative counterparties in order to offset its exposure on the fixed components of the customer interest rate swap agreements. The interest rate swap agreement with the loan customer and with the counterparty is reported at fair value in other assets and other liabilities on the consolidated balance sheet with any resulting gain or loss recorded in current period earnings as other income and other expense.

Wesbanco enters into forward TBA contracts to manage the interest rate risk between the loan commitments to the customer and the closing of the loan for loans that will be sold on a mandatory basis to secondary market investors. The forward TBA contract is reported at fair value in other assets and other liabilities on the consolidated balance sheet with any resulting gain or loss recorded in current period’s earnings as mortgage banking income.

Wesbanco determines the fair value for derivatives using widely accepted valuation techniques including discounted cash flow analysis on the expected cash flows of each derivative. This analysis reflects contractual terms of the derivative, including the period to maturity, and uses observable market-based inputs, including interest rate curves and implied volatilities. Wesbanco incorporates credit valuation adjustments to appropriately reflect both its own non-performance risk and the respective counterparty’s non-performance risk in the fair value measurements.

We may be required from time to time to measure certain assets and liabilities at fair value on a nonrecurring basis in accordance with GAAP. These adjustments to fair value usually result from the application of lower of cost or market accounting or write-downs of individual assets and liabilities.

~~Individually-evaluated~~Collateral dependent loans: ~~Individually-evaluated~~Collateral dependent loans are carried at the amortized cost basis less the specific allowance calculated under ~~CECL. Individually-evaluated~~the Current Expected Credit Losses Accounting Standard. Collateral dependent loans are calculated using a cost basis approach or collateral value approach.

Other real estate owned and repossessed assets: Other real estate owned and repossessed assets are carried at the lower of the investment in the assets or the fair value of the assets less estimated selling costs. The use of independent appraisals and management’s best judgment are significant inputs in arriving at the fair value measure of the underlying collateral, and therefore other real estate owned and repossessed assets are classified within level 3 of the fair value hierarchy.

2225

The fair value amounts presented in the table below are intended to permit reconciliation of the fair value hierarchy to the amounts presented in the statement of financial position. The following tables set forth Wesbanco’s financial assets and liabilities that were accounted for at fair value on a recurring and nonrecurring basis by level within the fair value hierarchy as of March 31, ~~2022~~2023 and December 31, ~~2021:~~2022:


			March 31, 2022								March 31, 2023
			Fair Value Measurements Using:								Fair Value Measurements Using:
	March 31,		Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs		March 31,		Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
(unaudited, in thousands)	2022		(level 1)		(level 2)		(level 3)		2023		(level 1)		(level 2)		(level 3)
Recurring fair value measurements
Equity securities	$	12,757	$	12,757	$	—	$	—	$	11,843	$	11,843	$	—	$	—
Available-for-sale debt securities
U.S. Government sponsored entities and agencies		240,497		—		240,497		—		223,435		—		223,435		—
Residential mortgage-backed securities and collateralized mortgage obligations of government sponsored entities and agencies		2,159,454		—		2,159,454		—		1,818,250		—		1,818,250		—
Commercial mortgage-backed securities and collateralized mortgage obligations of government sponsored entities and agencies		394,089		—		394,089		—		325,740		—		325,740		—
Obligations of states and political subdivisions		100,273		—		98,957		1,316		83,790		—		82,596		1,194
Corporate debt securities		17,060		—		17,060		—		14,781		—		14,781		—
Total available-for-sale debt securities	$	2,911,373	$	—	$	2,910,057	$	1,316	$	2,465,996	$	—	$	2,464,802	$	1,194
Loans held for sale		15,959		—		15,959		—		12,722		—		12,722		—
Other assets - interest rate swaps		30,767		—		30,767		—		65,789		—		65,789		—
Total assets recurring fair value measurements	$	2,970,856	$	12,757	$	2,956,783	$	1,316	$	2,556,350	$	11,843	$	2,543,313	$	1,194
Other liabilities - interest rate swaps	$	30,827	$	—	$	30,827	$	—	$	65,668	$	—	$	65,668	$	—
Total liabilities recurring fair value measurements	$	30,827	$	—	$	30,827	$	—	$	65,668	$	—	$	65,668	$	—
Nonrecurring fair value measurements
Individually-evaluated loans	$	21,346	$	—	$	—	$	21,346
Collateral dependent loans									$	—	$	—	$	—	$	—
Other real estate owned and repossessed assets		87		—		—		87		1,554		—		—		1,554
Total nonrecurring fair value measurements	$	21,433	$	—	$	—	$	21,433	$	1,554	$	—	$	—	$	1,554


			December 31, 2021								December 31, 2022
			Fair Value Measurements Using:								Fair Value Measurements Using:
	December 31,		Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs		December 31,		Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
(in thousands)	2021		(level 1)		(level 2)		(level 3)		2022		(level 1)		(level 2)		(level 3)
Recurring fair value measurements
Equity securities	$	13,466	$	13,466	$	—	$	—	$	11,506	$	11,506	$	—	$	—
Available-for-sale debt securities
U.S. Government sponsored entities and agencies		236,978		—		236,978		—		225,970		—		225,970		—
Residential mortgage-backed securities and collateralized mortgage obligations of government sponsored entities and agencies		2,285,213		—		2,285,213		—		1,846,053		—		1,846,053		—
Commercial mortgage-backed securities and collateralized mortgage obligations of government sponsored entities and agencies		367,493		—		367,493		—		349,731		—		349,731		—
Obligations of states and political subdivisions		106,340		—		104,847		1,493		92,228		—		91,049		1,179
Corporate debt securities		17,438		—		17,438		—		15,158		—		15,158		—
Total available-for-sale debt securities	$	3,013,462	$	—	$	3,011,969	$	1,493	$	2,529,140	$	—	$	2,527,961	$	1,179
Loans held for sale		25,277		—		25,277		—		8,249		—		8,249		—
Other assets - interest rate swaps		24,867		—		24,867		—		75,840		—		75,840		—
Total assets recurring fair value measurements	$	3,077,072	$	13,466	$	3,062,113	$	1,493	$	2,624,735	$	11,506	$	2,612,050	$	1,179
Other liabilities - interest rate swaps	$	26,388	$	—	$	26,388	$	—	$	74,683	$	—	$	74,683	$	—
Total liabilities recurring fair value measurements	$	26,388	$	—	$	26,388	$	—	$	74,683	$	—	$	74,683	$	—
Nonrecurring fair value measurements
Individually-evaluated loans	$	13,558	$	—	$	—	$	13,558
Collateral dependent loans									$	878	$	—	$	—	$	878
Other real estate owned and repossessed assets		—		—		—		—		1,486		—		—		1,486
Total nonrecurring fair value measurements	$	13,558	$	—	$	—	$	13,558	$	2,364	$	—	$	—	$	2,364

2326

Wesbanco’s policy is to recognize transfers between levels as of the actual date of the event or change in circumstances that caused the transfer. There were 0no significant transfers between level 1, 2 or 3 for the three months ended March 31, ~~2022~~2023 or for the year ended December 31, ~~2021.~~2022.

The following table presents additional quantitative information about assets measured at fair value on a nonrecurring basis and for which Wesbanco has utilized level 3 inputs to determine fair value:

Quantitative Information about Level 3 Fair Value Measurements

Fair Value

Valuation

Unobservable

Range (Weighted
(unaudited, in thousands)

Estimate

Techniques

Input

Average)
March 31, 2022

Individually-evaluated loans

$
21,346

Appraisal of collateral (1)

Appraisal adjustments (2)

(30.0%)/(30.0%)

Liquidation expenses (2)

(5.6%) to (8.0%)/(6.9%)
Other real estate owned and repossessed assets

$
87

Appraisal of collateral (1), (3)

December 31, 2021

Individually-evaluated loans

$
13,558

Appraisal of collateral (1)

Appraisal adjustments (2)

(0.0%)/(0.0%)

Liquidation expenses (2)

(8.0%)/(8.0%)


	Quantitative Information about Level 3 Fair Value Measurements
	Fair Value		Valuation	Unobservable	Range (Weighted
(unaudited, in thousands)	Estimate		Techniques	Input	Average)
March 31, 2023
Collateral dependent loans	$	—	Appraisal of collateral (1)	Appraisal adjustments (2)	(0.0%)/(0.0%)
				Liquidation expenses (2)	(0.0%)/(0.0%)
Other real estate owned and repossessed assets	$	1,554	Appraisal of collateral (1), (3)
December 31, 2022
Collateral dependent loans	$	878	Appraisal of collateral (1)	Appraisal adjustments (2)	(0.0%)/(0.0%)
				Liquidation expenses (2)	(8.0%)/(8.0%)
Other real estate owned and repossessed assets	$	1,486	Appraisal of collateral (1), (3)

(1)

Fair value is generally determined through independent appraisals of the underlying collateral, which generally include various level 3 inputs, which are not identifiable.

(2)

Appraisals may be adjusted by management for qualitative factors such as economic conditions and estimated liquidation expenses. The range and weighted average of appraisal adjustments and liquidation expense are presented as a percent of the appraisal.

(3)

Includes estimated liquidation expenses and numerous dissimilar qualitative adjustments by management, which are not identifiable.

The estimated fair values of Wesbanco’s financial instruments are summarized below:


					Fair Value Measurements at										Fair Value Measurements at
					March 31, 2022										March 31, 2023
	Carrying		Fair Value		Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs		Carrying		Fair Value		Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
(unaudited, in thousands)	Amount		Estimate		(level 1)		(level 2)		(level 3)		Amount		Estimate		(level 1)		(level 2)		(level 3)
Financial Assets
Cash and due from banks	$	1,369,498	$	1,369,498	$	1,369,498	$	—	$	—	$	597,503	$	597,503	$	597,503	$	—	$	—
Equity securities		12,757		12,757		12,757		—		—		11,843		11,843		11,843		—		—
Available-for-sale debt securities		2,911,373		2,911,373		—		2,910,057		1,316		2,465,996		2,465,996		—		2,464,802		1,194
Net held-to-maturity debt securities		1,156,917		1,092,993		—		1,092,609		384		1,239,035		1,107,685		—		1,107,364		321
Net loans		9,615,407		9,015,392		—		—		9,015,392		10,769,990		10,569,333		—		—		10,569,333
Loans held for sale		15,959		15,959		—		15,959		—		12,722		12,722		—		12,722		—
Other assets - interest rate swaps		30,767		30,767		—		30,767		—		65,789		65,789		—		65,789		—
Accrued interest receivable		60,370		60,370		60,370		—		—		69,232		69,232		69,232		—		—

Financial Liabilities
Deposits		13,797,874		13,805,745		12,586,866		1,218,879		—		12,873,196		12,865,332		11,989,050		876,282		—
Federal Home Loan Bank borrowings		123,898		125,441		—		125,441		—		1,280,000		1,281,186		—		1,281,186		—
Other borrowings		158,538		144,160		144,160		—		—		111,176		102,947		102,947		—		—
Subordinated debt and junior subordinated debt		280,743		281,265		—		281,265		—		281,629		260,525		—		260,525		—
Other liabilities - interest rate swaps		30,827		30,827		—		30,827		—		65,668		65,668		—		65,668		—
Accrued interest payable		1,786		1,786		1,786		—		—		7,669		7,669		7,669		—		—

2427


					Fair Value Measurements at										Fair Value Measurements at
					December 31, 2021										December 31, 2022
	Carrying		Fair Value		Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs		Carrying		Fair Value		Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
(in thousands)	Amount		Estimate		(level 1)		(level 2)		(level 3)		Amount		Estimate		(level 1)		(level 2)		(level 3)
Financial Assets
Cash and due from banks	$	1,251,358	$	1,251,358	$	1,251,358	$	—	$	—	$	408,411	$	408,411	$	408,411	$	—	$	—
Equity securities		13,466		13,466		13,466		—		—		11,506		11,506		11,506		—		—
Available-for-sale debt securities		3,013,462		3,013,462		—		3,011,969		1,493		2,529,140		2,529,140		—		2,527,961		1,179
Net held-to-maturity debt securities		1,004,555		1,028,452		—		1,028,047		405		1,248,409		1,084,390		—		1,084,071		319
Net loans		9,611,856		9,385,917		—		—		9,385,917		10,584,938		9,487,038		—		—		9,487,038
Loans held for sale		25,277		25,277		—		25,277		—		8,249		8,249		—		8,249		—
Other assets - interest rate swaps		24,867		24,867		—		24,867		—		75,840		75,840		—		75,840		—
Accrued interest receivable		60,844		60,844		60,844		—		—		68,522		68,522		68,522		—		—

Financial Liabilities
Deposits		13,565,863		13,575,477		12,273,211		1,302,266		—		13,131,090		13,142,943		12,245,272		897,671		—
Federal Home Loan Bank borrowings		183,920		185,684		—		185,684		—		705,000		705,094		—		705,094		—
Other borrowings		141,893		134,288		134,288		—		—		135,069		122,926		122,926		—		—
Subordinated debt and junior subordinated debt		132,860		109,186		—		109,186		—		281,404		258,631		—		258,631		—
Other liabilities - interest rate swaps		26,388		26,388		—		26,388		—		74,683		74,683		—		74,683		—
Accrued interest payable		1,901		1,901		1,901		—		—		4,593		4,593		4,593		—		—

The following methods and assumptions were used to measure the fair value of financial instruments recorded at cost on Wesbanco’s consolidated balance sheets:

Cash and due from banks: The carrying amount for cash and due from banks is a reasonable estimate of fair value.

Held-to-maturity debt securities: Fair values for debt securities held-to-maturity are determined in the same manner as investment securities, which are described above.

Net loans: Fair values for loans are estimated using a discounted cash flow methodology. The discount rates take into account interest rates currently being offered to customers for loans with similar terms, the credit risk associated with the loan and other market factors, including liquidity. Wesbanco believes the discount rates are consistent with transactions occurring in the marketplace for both performing and distressed loan types. The carrying value is net of the allowance for loan losses and other associated premiums and discounts. Due to the significant judgment involved in evaluating credit quality, loans are classified within level 3 of the fair value hierarchy.

Accrued interest receivable: The carrying amount of accrued interest receivable approximates its fair value.

Deposits: The carrying amount is considered a reasonable estimate of fair value for demand, savings and other variable rate deposit accounts. The fair value of fixed maturity certificates of deposit is estimated by a discounted cash flow method using rates currently offered for deposits of similar remaining maturities.

Federal Home Loan Bank borrowings: The fair value of FHLB borrowings is based on rates currently available to Wesbanco for borrowings with similar terms and remaining maturities.

Other borrowings: The carrying amount of federal funds purchased and overnight sweep accounts generally approximate fair value. Other repurchase agreements are based on quoted market prices if available. If market prices are not available, for certain fixed and adjustable rate repurchase agreements, then quoted market prices of similar instruments are used.

Subordinated debt and junior subordinated debt: The fair value of subordinated debt is determined primarily by obtaining quoted prices on nationally recognized securities exchanges or matrix pricing, which is a mathematical technique used widely in the industry to value debt securities without relying exclusively on quoted prices for the specific securities but rather by relying on the securities’ relationship to other similar securities. These securities are classified within level 2 in the fair value hierarchy. Due to the pooled nature of junior subordinated debt owed to unconsolidated subsidiary trusts, which are not actively traded, estimated fair value is determined by using comparable corporate bond indices and swap rates from the financial services sector and factoring in the applicable credit spreads and optional early redemption provisions.

Accrued interest payable: The carrying amount of accrued interest payable approximates its fair value.

Off-balance sheet financial instruments: Off-balance sheet financial instruments consist of commitments to extend credit, including letters of credit. Fair values for commitments to extend credit are estimated using the fees currently charged to enter into similar agreements, taking into account the remaining terms of the agreements and the present credit standing of the counterparties. The estimated fair value of the commitments to extend credit and letters of credit are insignificant and therefore are not presented in the above tables.

2528

NOTE 8. REVENUE RECOGNITION

Interest income, net securities gains (losses) and bank-owned life insurance are not in scope of ASC 606, Revenue from Contracts with Customers. For the revenue streams in scope of ASC 606 - trust fees, service charges on deposits, net securities brokerage revenue, ~~debit card sponsorship income,~~ payment processing fees, electronic banking fees, mortgage banking income and net gain or loss on sale of other real estate owned and other assets – there are no significant judgements related to the amount and timing of revenue recognition.

~~Trust fees:~~ Fees are earned over a period of time between monthly and annually, per the related fee schedule. The fees are earned ratably over the period for investment, safekeeping and other services performed by Wesbanco. The fees are accrued when earned based on the daily asset value on the last day of the quarter. In most cases, the fees are directly debited from the customer account. WesMark fees consist of investment advisory fees and shareholder service fees and are paid to Wesbanco by the WesMark mutual funds on a monthly basis for Wesbanco’s involvement with the management of the funds.

~~Service charges on deposits:~~ There are monthly service charges for both commercial and personal banking customers, which are earned over the month per the related fee schedule based on the customers’ deposits. There are also transaction-based fees, which are earned based on specific transactions or customer activity within the customers’ deposit accounts. These are earned at the time the transaction or customer activity occurs. The fees are debited from the customer account.

~~Net securities brokerage revenue:~~ Commission income is earned based on customer transactions and management of investments. The commission income from customers’ transactions is recognized when the transaction is complete and approved. Annuity commissions are earned based upon the carrier’s commission rate for the annuity product chosen by the investing customer. The commission income from the management of investments over time is earned continuously over a quarterly period.

~~Debit card sponsorship income:The activity in this revenue stream concluded on March 31, 2021, with the sale of this program to another bank.~~Debit card sponsorship income was earned from Wesbanco’s sponsorship of its customers, which included independent service organizations, processors and other banks into different debit networks. For providing this service, the customers paid the bank a per transaction fee for each transaction processed through the network. In some cases, customers were also charged annual sponsorship fees and non-compliance fees as applicable. The fees were earned at the time the transaction or customer activity occurred. The fees were either directly debited from the customers' deposit accounts or were billed to the customer.

~~Payment processing fees:~~Payment processing fees are earned from the bill payment and electronic funds transfer (“EFT”) services provided under the name FirstNet. The fees are derived from both the individual consumer banking transactions and from businesses or service providers through monthly billing for total transactions occurring. These fees are earned at the time the transaction or customer activity occurs. The fees are debited from the customers’ deposit accounts or charged directly to the business or service provider.

~~Electronic banking fees:~~ ~~Interchange and ATM fees are earned based on customer and ATM transactions. Revenue is recognized when the transaction is settled.~~

~~Mortgage banking income:~~ Income is earned when Wesbanco-originated loans are sold to an investor on the secondary market. The investor bids on the loans. If the price is accepted, Wesbanco delivers the loan documents to the investor. Once received and approved by the investor, revenue is recognized and the loans are derecognized from the Consolidated Balance Sheet. Prior to the loans being sold, they are classified as loans held for sale. Additionally, the changes in the fair value of the loans held for sale, loan commitments and related derivatives are included in mortgage banking income and are slightly offset by any deferred direct origination costs, such as mortgage loan officer commissions.

~~Net gain or loss on sale of other real estate owned and other assets:~~ Net gain or loss on other real estate owned is recorded when the property is sold to a third party and the Bank collects substantially all of the consideration to which it is entitled in exchange for the transfer of the property. Net gain or loss on other assets can include, among other things, the sale of fixed assets, the change in fair value of the underlying investments funded by Wesbanco’s Community Development Corporation (“Wesbanco CDC”) and residual income earned from the sale of Wesbanco’s debit card sponsorship program. Gains or losses are recognized upon receipt of consideration and subsequent transfer of the property for fixed asset sales. The change in fair value of Wesbanco CDC investments occurs upon the change in the underlying investments as these are accounted for utilizing the equity method, and as such, are not within the scope of ASC 606. Residual income from the sale of the debit card sponsorship program is recognized over time per the signed agreement between Wesbanco and the buyer.

The following table summarizes the point of revenue recognition and the income recognized for each of the revenue streams for the three months ended March 31, ~~2022~~2023 and ~~2021,~~2022, respectively:


	Point of Revenue	For the Three Months Ended March 31,					Point of Revenue	For the Three Months Ended March 31,
(unaudited, in thousands)	Recognition	2022			2021		Recognition	2023		2022
Revenue Streams
Trust fees
Trust account fees	Over time	$	5,542		$	5,313	Over time	$	5,605	$	5,542
WesMark fees	Over time		2,293			2,318	Over time		1,889		2,293
Total trust fees			7,835			7,631			7,494		7,835
Service charges on deposits
Commercial banking fees	Over time		568			564	Over time		609		568
Personal service charges	At a point in time and over time		5,522			4,330	At a point in time and over time		5,561		5,522
Total service charges on deposits			6,090			4,894			6,170		6,090
Net securities brokerage revenue
Annuity commissions	At a point in time		1,582			917	At a point in time		2,046		1,582
Equity and debt security trades	At a point in time		57			76	At a point in time		—		57
Managed money	Over time		327			283	Over time		283		327
Trail commissions	Over time		254			248	Over time		247		254
Total net securities brokerage revenue			2,220			1,524			2,576		2,220

Debit card sponsorship income (1)	At a point in time and over time		—			646
Payment processing fees (1)	At a point in time and over time		741			713	At a point in time and over time		871		741
Electronic banking fees	At a point in time		5,345			4,365	At a point in time		4,605		5,345
Mortgage banking income	At a point in time		1,923			4,264	At a point in time		426		1,923
Net (loss) gain on other real estate owned and other assets (2)	At a point in time and over time		(806	)		175
Net gain (loss) on other real estate owned and other assets (2)							At a point in time and over time		232		(806	)

(1)

~~Debit card sponsorship income and payment processing fees are included~~Included in other non-interest income.

(2)

The portion of this line item relating to the change in the fair value of the underlying investments funded by Wesbanco CDC is not within the scope of ASC ~~606, and totaled~~606. There were no gains or losses recorded in the current period; however, losses of $1.2 million ~~and gains of $0.1~~ ~~million~~were recorded for the three months ended March 31, ~~2022 and 2021, respectively.~~2022.

2729

NOTE 9. COMPREHENSIVE INCOME/(LOSS)

The activity in accumulated other comprehensive ~~income~~income/(loss) for the three months ended March 31, ~~2022~~2023 and ~~2021~~2022 is as follows:


	Accumulated Other Comprehensive Income/(Loss) (1)									Accumulated Other Comprehensive Income/(Loss) (1)
(unaudited, in thousands)	Defined Benefit Plans			Unrealized Gains (Losses) on Debt Securities Available-for-Sale			Total			Defined Benefit Plans			Unrealized Gains (Losses) on Debt Securities Available-for-Sale			Total
Balance at December 31, 2022										$	(535	)	$	(261,881	)	$	(262,416	)
Other comprehensive loss before reclassifications											—			27,828			27,828
Amounts reclassified from accumulated other comprehensive loss											75			114			189
Period change											75			27,942			28,017
Balance at March 31, 2023										$	(460	)	$	(233,939	)	$	(234,399	)

Balance at December 31, 2021	$	(398	)	$	(4,722	)	$	(5,120	)	$	(398	)	$	(4,722	)	$	(5,120	)
Other comprehensive loss before reclassifications		0			(106,247	)		(106,247	)		—			(106,247	)		(106,247	)
Amounts reclassified from accumulated other comprehensive loss		54			1			55			54			1			55
Period change		54			(106,246	)		(106,192	)		54			(106,246	)		(106,192	)
Balance at March 31, 2022	$	(344	)	$	(110,968	)	$	(111,312	)	$	(344	)	$	(110,968	)	$	(111,312	)

Balance at December 31, 2020	$	(15,502	)	$	46,861		$	31,359
Other comprehensive loss before reclassifications		0			(22,026	)		(22,026	)
Amounts reclassified from accumulated other comprehensive loss		472			(2	)		470
Period change		472			(22,028	)		(21,556	)
Balance at March 31, 2021	$	(15,030	)	$	24,833		$	9,803

(1)

All amounts are net of tax. Related income tax expense or benefit is calculated using a combined Federal and State income tax rate approximating 24% in both periods presented.

The following table provides details about amounts reclassified from accumulated other comprehensive income for the three months ended March 31, ~~2022~~2023 and ~~2021:~~2022:


Details about Accumulated Other Comprehensive Income/(Loss) Components	For the Three Months Ended March 31,						Affected Line Item in the Statement of Comprehensive Income	For the Three Months Ended March 31,						Affected Line Item in the Statement of Comprehensive Income
(unaudited, in thousands)	2022			2021				2023			2022
Debt securities available-for-sale (1):
Net securities gains reclassified into earnings	$	2		$	(3	)	Net securities gains (Non-interest income)
Related income tax expense ⁽²⁾		(1	)		1		Provision for income taxes
Net securities losses reclassified into earnings								$	151		$	2		Net securities gains (Non-interest income)
Related income tax benefit ⁽²⁾									(37	)		(1	)	Provision for income taxes
Net effect on accumulated other comprehensive income for the period		1			(2	)			114			1

Defined benefit plans (3):
Amortization of net loss and prior service costs		72			622		Employee benefits (Non-interest expense)		98			72		Employee benefits (Non-interest expense)
Related income tax benefit ⁽²⁾		(18	)		(150	)	Provision for income taxes		(23	)		(18	)	Provision for income taxes
Net effect on accumulated other comprehensive income for the period		54			472				75			54
Total reclassifications for the period	$	55		$	470			$	189		$	55

(1)

For additional detail related to unrealized gains on securities and related amounts reclassified from accumulated other comprehensive income, see Note 3, “Securities.”

(2)

Income tax expense or benefit is calculated using a combined Federal and State income tax rate approximating 24% in both periods presented.

(3)

Included in the computation of net periodic pension cost. See Note 6, “Benefit Plans” for additional detail.

2830

NOTE 10. COMMITMENTS AND CONTINGENT LIABILITIES

Commitments — In the normal course of business, Wesbanco offers off-balance sheet credit arrangements to enable its customers to meet their financing objectives. Those instruments involve, to varying degrees, elements of credit and interest rate risk in excess of the amount recognized in the financial statements. Wesbanco’s exposure to credit losses in the event of non-performance by the other parties to the financial instruments for commitments to extend credit and standby letters of credit is limited to the contractual amount of those instruments. Wesbanco uses the same credit policies in making commitments and conditional obligations as for all other lending. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Since many of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. The allowance for credit losses associated with commitments was $~~8.1~~9.1 million and $~~7.8~~8.4 million at March 31, ~~2022~~2023 and December 31, ~~2021,~~2022, respectively, and is included in other liabilities on the Consolidated Balance Sheets.

Letters of credit are conditional commitments issued by banks to guarantee the performance of a customer to a third party. Those guarantees are primarily issued to support public and private borrowing arrangements, including normal business activities, bond financing and similar transactions. Letters of credit are considered guarantees. The liability associated with letters of credit was $0.3 million and $0.2 million as of ~~both~~ March 31, ~~2022~~2023 and December 31, ~~2021.~~2022, respectively.

Contingent obligations to purchase loans funded by other entities include credit card guarantees, loans sold with recourse as well as obligations to the FHLB. Credit card guarantees are credit card balances not owned by Wesbanco, whereby the Bank guarantees the performance of the cardholder.

The following table presents total commitments to extend credit, guarantees and various letters of credit outstanding:


	March 31,		December 31,		March 31,		December 31,
(unaudited, in thousands)	2022		2021		2023		2022
Lines of credit	$	3,196,487	$	2,954,147	$	3,938,353	$	3,806,398
Loans approved but not closed		625,607		472,810		548,801		398,204
Overdraft limits		392,193		370,439		391,322		380,143
Letters of credit		29,292		29,017		32,317		30,362
Contingent obligations and other guarantees		58,327		68,235		21,682		30,782

Contingent Liabilities — Wesbanco is a party to various legal and administrative proceedings and claims. While any litigation contains an element of uncertainty, management does not believe that a material loss related to such proceedings or claims pending or known to be threatened is reasonably possible.

2931

NOTE 11. BUSINESS SEGMENTS

Wesbanco operates 2two reportable segments: community banking and trust and investment services. Wesbanco’s community banking segment offers services traditionally offered by full-service commercial banks, including commercial demand, individual demand and time deposit accounts, as well as commercial, mortgage and individual installment loans, and certain non-traditional offerings, such as insurance and securities brokerage services. The trust and investment services segment offers trust services as well as various alternative investment products including mutual funds. The market value of assets managed or held in custody by the trust and investment services segment was approximately $~~5.4~~5.0 billion and $~~5.2~~5.4 billion at March 31, ~~2022~~2023 and ~~2021,~~2022, respectively. These assets are held by Wesbanco in fiduciary or agency capacities for their customers and therefore are not included as assets on Wesbanco’s Consolidated Balance Sheets.

Condensed financial information by business segment is presented below:


				Trust and								Trust and
	Community			Investment					Community			Investment
(unaudited, in thousands)	Banking			Services		Consolidated			Banking			Services		Consolidated
For The Three Months Ended March 31, 2023
Interest and dividend income									$	160,555		$	—	$	160,555
Interest expense										36,223			—		36,223
Net interest income										124,332			—		124,332
Provision for credit losses										3,577			—		3,577
Net interest income after provision for credit losses										120,755			—		120,755
Non-interest income										20,159			7,494		27,653
Non-interest expense										91,617			4,508		96,125
Income before provision for income taxes										49,297			2,986		52,283
Provision for income taxes										9,315			627		9,942
Net income										39,982			2,359		42,341
Preferred stock dividends										2,531			—		2,531
Net income available to common shareholders									$	37,451		$	2,359	$	39,810

For The Three Months Ended March 31, 2022
Interest and dividend income	$	112,174		$	—	$	112,174		$	112,174		$	—	$	112,174
Interest expense		4,463			—		4,463			4,463			—		4,463
Net interest income		107,711			—		107,711			107,711			—		107,711
Provision for credit losses		(3,438	)		—		(3,438	)		(3,438	)		—		(3,438	)
Net interest income after provision for credit losses		111,149			—		111,149			111,149			—		111,149
Non-interest income		22,547			7,835		30,382			22,547			7,835		30,382
Non-interest expense		83,225			4,323		87,548			83,225			4,323		87,548
Income before provision for income taxes		50,471			3,512		53,983			50,471			3,512		53,983
Provision for income taxes		9,121			738		9,859			9,121			738		9,859
Net income		41,350			2,774		44,124			41,350			2,774		44,124
Preferred stock dividends		2,531			—		2,531			2,531			—		2,531
Net income available to common shareholders	$	38,819		$	2,774	$	41,593		$	38,819		$	2,774	$	41,593

For The Three Months Ended March 31, 2021
Interest and dividend income	$	125,054		$	—	$	125,054
Interest expense		8,576			—		8,576
Net interest income		116,478			—		116,478
Provision for credit losses		(27,958	)		—		(27,958	)
Net interest income after provision for credit losses		144,436			—		144,436
Non-interest income		25,577			7,631		33,208
Non-interest expense		82,011			4,316		86,327
Income before provision for income taxes		88,002			3,315		91,317
Provision for income taxes		17,506			696		18,202
Net income		70,496			2,619		73,115
Preferred stock dividends		2,531			—		2,531
Net income available to common shareholders	$	67,965		$	2,619	$	70,584

Total non-fiduciary assets of the trust and investment services segment were $3.3 million (including $1.1 million of trust customer intangibles) and $3.5 million (including $1.3 million of trust customer intangibles) ~~and $3.9~~ ~~million (including $1.7~~ ~~million of trust customer intangibles)~~ at March 31, ~~2022~~2023 and ~~2021,~~2022, respectively. All other assets, including goodwill and the remainder of other intangible assets, were allocated to the Community Banking segment.

3032

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Management’s Discussion and Analysis (“MD&A”) represents an overview of the results of operations and financial condition of Wesbanco for the three months ended March 31, ~~2022.~~2023. This discussion and analysis should be read in conjunction with the Consolidated Financial Statements and Notes thereto.

FORWARD-LOOKING STATEMENTS

Forward-looking statements in this report relating to Wesbanco’s plans, strategies, objectives, expectations, intentions and adequacy of resources, are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. The information contained in this report should be read in conjunction with Wesbanco’s Form 10-K for the year ended December 31, ~~2021~~2022 and documents subsequently filed by Wesbanco with the Securities and Exchange Commission (“SEC”), which are available at the SEC’s website, www.sec.gov or at Wesbanco’s website, ~~www.Wesbanco.com.~~www.wesbanco.com. Investors are cautioned that forward-looking statements, which are not historical fact, involve risks and uncertainties, including those detailed in Wesbanco’s most recent Annual Report on Form 10-K filed with the SEC under “Risk Factors” in Part I, Item 1A. Such statements are subject to important factors that could cause actual results to differ materially from those contemplated by such statements, including, without limitation, the effects of changing regional and national economic ~~conditions including the effects of the COVID-19 pandemic;~~conditions; changes in interest rates, spreads on earning assets and interest-bearing liabilities, and associated interest rate sensitivity; sources of liquidity available to Wesbanco and its related subsidiary operations; potential future credit losses and the credit risk of commercial, real estate, and consumer loan customers and their borrowing activities; actions of the Federal Reserve Board, the Federal Deposit Insurance Corporation, the SEC, the Financial Institution Regulatory Authority, the Municipal Securities Rulemaking Board, the Securities Investors Protection Corporation, the Consumer Financial Protection Bureau and other regulatory bodies; potential legislative and federal and state regulatory actions and reform, including, without limitation, the impact of the implementation of the Dodd-Frank Act; adverse decisions of federal and state courts; fraud, scams and schemes of third parties; cyber-security breaches; competitive conditions in the financial services industry; rapidly changing technology affecting financial services; marketability of debt instruments and corresponding impact on fair value adjustments; and/or other external developments materially impacting Wesbanco’s operational and financial performance. Wesbanco does not assume any duty to update forward-looking statements.

OVERVIEW

Wesbanco is a multi-state bank holding company operating through ~~205~~194 branches and ~~202~~185 ATM machines in West Virginia, Ohio, western Pennsylvania, Kentucky, southern Indiana and Maryland, offering retail banking, corporate banking, personal and corporate trust services, brokerage services, mortgage banking and insurance. Wesbanco’s businesses are significantly impacted by economic factors such as market interest rates, federal monetary and regulatory policies, local and regional economic conditions and the competitive environment’s effect upon Wesbanco’s business volumes. Wesbanco’s deposit levels are affected by numerous factors including personal savings rates, personal income, and competitive rates on alternative investments, as well as competition from other financial institutions within the markets we serve and liquidity needs of Wesbanco. Loan levels are also subject to various factors including construction demand, business financing needs, consumer spending and interest rates, as well as loan terms offered by competing lenders.

APPLICATION OF CRITICAL ACCOUNTING POLICIES AND ESTIMATES

Wesbanco’s critical accounting policies involving the significant judgments and assumptions used in the preparation of the Consolidated Financial Statements as of March 31, ~~2022~~2023 have remained unchanged from the disclosures presented in Wesbanco’s Annual Report on Form 10-K for the year ended December 31, ~~2021~~2022 within the section “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

3133

RESULTS OF OPERATIONS

EARNINGS SUMMARY

Net income available to common shareholders for the ~~three months ended March 31, 2022~~first quarter of 2023 was ~~$41.6~~$39.8 million, with diluted earnings per share of ~~$0.68,~~$0.67, compared to ~~$70.6~~$41.6 million or ~~$1.05~~$0.68 per diluted share, respectively, for the first quarter of ~~2021. Excluding~~2022. Net income available to common shareholders, excluding after-tax restructuring and merger-related expenses, ~~(non-GAAP measure) in both periods,~~ for the three months ended March 31, ~~2022, net income available~~2023, was $42.3 million or $0.71 per diluted share, as compared to ~~common shareholders was~~ $42.9 million or $0.70 per diluted share, ~~as compared to $71.3 million or $1.06 per diluted share, respectively.~~respectively, in the prior year quarter (non-GAAP measures).

For the Three Months Ended March 31,

2022

2021

(unaudited, dollars in thousands, except per share amounts)

Net Income

Diluted
Earnings
Per Share

Net Income

Diluted
Earnings
Per Share

Net income available to common shareholders (Non-GAAP)(1)

$
42,851

$
0.70

$
71,256

$
1.06

Less: After-tax restructuring and merger-related expenses

(1,258
)

(0.02
)

(672
)

(0.01
)
Net income available to common shareholders (GAAP)

$
41,593

$
0.68

$
70,584

$
1.05


	For the Three Months Ended March 31,
	2023						2022
(unaudited, dollars in thousands, except per share amounts)	Net Income			Diluted Earnings Per Share			Net Income			Diluted Earnings Per Share
Net income available to common shareholders (Non-GAAP)(1)	$	42,301		$	0.71		$	42,851		$	0.70
Less: After-tax restructuring and merger-related expenses		(2,491	)		(0.04	)		(1,258	)		(0.02	)
Net income available to common shareholders (GAAP)	$	39,810		$	0.67		$	41,593		$	0.68

(1)

Non-GAAP net income excludes after-tax restructuring and merger-related expenses. The above non-GAAP financial measures used by Wesbanco provide information useful to investors in understanding Wesbanco’s operating performance and trends, and facilitate comparisons with the performance of Wesbanco’s peers.

Net interest income ~~decreased $8.8~~increased $16.6 million or ~~7.5%~~15.4% in the first quarter of ~~2022~~2023 compared to the same quarter of ~~2021, reflecting lower loan~~2022, due to the 425 basis point increase in the federal funds rate through February 2023. Higher yields in all earning asset categories, due to the repricing of existing loans and ~~new lower~~higher investment rates offered in the current market environment, ~~lower purchase accounting related accretion and lower rates on investment securities, partially offset by lower interest on deposits and borrowings. As~~resulted in a ~~result of the lower rates and a higher mix of securities versus loans to total assets,~~41 basis point increase in the net interest margin ~~decreased by 32 basis points to 2.95%~~ in the first quarter of ~~2022~~2023 as compared to the first quarter of ~~2021.~~2022. Over the same time period, the yield on earning assets ~~decreased~~increased by a total of 44125 basis points ~~and~~while the cost of interest bearing liabilities ~~decreased 18~~increased 133 basis points. Average loan balances ~~decreased~~increased by ~~10.8%~~10.7% from the first quarter of ~~2021,~~2022, mainly attributable to higher new loan demand, partially offset by forgiveness of ~~SBA Payroll Protection Program (“PPP”)~~PPP loans and higher levels of commercial real estate loan payoffs, while average securities increased by ~~40.7%~~1.0% over the same time period due to ~~excess liquidity on~~investment purchases occurring in the ~~balance sheet from increased customer deposits.~~first half of 2022. Average deposits ~~excluding certificates of deposit, increased 11.0%~~decreased 5.8% over the same time period ~~due mostly to increased personal savings.~~as a result of interest rate and inflationary pressures and rising costs across the economy. Accretion from prior acquisitions benefited the first quarter ~~2022~~2023 net interest margin by 84 basis points, as compared to 138 basis points in the prior year period. ~~Lastly, the accretion on both existing~~

Loan growth and ~~forgiven PPP loans positively impacted the first quarter 2022 net interest margin by~~slower prepayment speeds resulted in a ~~net 7 basis points as compared to 11 basis points for~~provision of $3.6 million in the first quarter of ~~2021.~~

~~Improved macroeconomic forecasts utilized in the CECL calculation drove a net benefit of provision for credit losses and resulted in~~2023, as compared to a negative provision of $3.4 million in the first quarter of ~~2022, as compared to a negative provision of $28.0 million in the first quarter of 2021.~~2022. Annualized net loan charge-offs, as a percentage of average portfolio loans, were 0%0.07% and ~~0.02%~~0.00% for the first quarter of 2023 and 2022, ~~and 2021,~~ respectively.

For the first quarter of ~~2022,~~2023, non-interest income decreased ~~$2.8~~$2.7 million or ~~8.5%~~9.0% compared to the first quarter of ~~2021,~~2022, driven primarily by lower bank-owned life insurance and mortgage banking income, which decreased ~~$2.3~~by $1.9 million ~~or 54.9%~~and $1.5 million, respectively, from the first quarter of ~~2021 and by lower swap fee income and the associated swap fair value adjustments, which~~2022. Bank-owned life insurance decreased ~~$3.0~~due to $1.9 million ~~or 65.2% over the same time period. While mortgage loan originations decreased by 17.0% during the first quarter~~ of ~~2022, the amount sold in the secondary market also decreased from approximately 60% in the first quarter of 2021 to approximately 25%~~death benefits received in the first quarter of 2022, compared to none in the first quarter of 2023. Mortgage banking income decreased due to a ~~continued effort to keep~~reduction in residential mortgage originations, primarily driven by the higher interest rate environment and retention of more ~~1-to-4 family~~ residential mortgages on the balance ~~sheet. Offsetting~~sheet as production continues to migrate towards shorter-term adjustable rate mortgage products. First quarter 2023 mortgage originations decreased by 40.3% from the ~~decreases somewhat, electronic banking~~first quarter of 2022. New commercial swap fees, which are recorded in other income, increased $1.7 million from the prior year period to $1.8 million, while associated fair market value adjustments totaled negative $1.0 million ~~or 22.5% from last year’s~~during the first quarter, ~~and service charges on deposits increased $1.2~~as compared to a positive $1.5 million ~~or 24.4% over the same time period, due to increased consumer spending associated with the improving economy.~~last year.

Non-interest expense, excluding restructuring and merger-related expenses, ~~in both periods,~~ increased in the first quarter of ~~2022~~2023 by ~~$0.5~~$7.0 million or ~~0.6%~~8.2%, to ~~$86.0~~$93.0 million, compared to the first quarter of ~~2021.~~2022. Salaries and wages increased ~~$2.0~~$3.0 million or ~~5.5%~~7.7% from the first quarter of ~~2021~~2022 to the first quarter of 2023 due to higher staffing levels, mostly revenue-producing positions, and normal merit increases. Employee benefits expense increased $2.9 million from last year's first quarter due to higher staffing levels, increased pension expense and higher health insurance contributions. FDIC insurance expense increased by $1.4 million in the first quarter of 2023 from the first quarter of 2022 due to ~~lower loan contra-costs and higher salary expense related to normal merit increases last summer. Equipment and software expense~~the two basis point increase in the minimum rate for the first quarter of 2022 increased $1.2 million or 18.4% year-over-year, due primarily to the movement of online banking costs from other operating expenses. Offsetting these increases somewhat was a decrease in other operating expenses of $1.7 million or 9.8% due mostly to the aforementioned move of online banking costs as well as a reduction in ACH and ATM processing charges related to a change in providers, in conjunction with our core banking software system conversion last year.all banks.

During the first quarter of ~~2022,~~2023, the effective tax rate was ~~18.3%~~19.0% as compared to ~~19.9%~~18.3% in last year’s first quarter, and the provision for income taxes ~~decreased~~increased by ~~$8.3~~$0.1 million over the same time period. ~~Both of these decreases were primarily due~~The increase in the effective tax rate from last year's first quarter is attributable to lower ~~pre-tax~~bank-owned life insurance income ~~heavily influenced by a reduced negative provision for credit losses~~ in ~~the first quarter of 2022~~2023 as compared to ~~the first quarter of 2021.~~2022.

3234

NET INTEREST INCOME

TABLE 1. NET INTEREST INCOME

For the Three Months
Ended March 31,

(unaudited, dollars in thousands)

2022

2021

Net interest income

$
107,711

$
116,478

Taxable equivalent adjustment to net interest income

1,155

1,039

Net interest income, fully taxable equivalent

$
108,866

$
117,517

Net interest spread, non-taxable equivalent

2.85
%

3.11
%
Benefit of net non-interest bearing liabilities

0.07
%

0.13
%
Net interest margin

2.92
%

3.24
%
Taxable equivalent adjustment

0.03
%

0.03
%
Net interest margin, fully taxable equivalent

2.95
%

3.27
%


	For the Three Months Ended March 31,
(unaudited, dollars in thousands)	2023			2022
Net interest income	$	124,332		$	107,711
Taxable equivalent adjustment to net interest income		1,273			1,155
Net interest income, fully taxable equivalent	$	125,605		$	108,866
Net interest spread, non-taxable equivalent		2.77	%		2.85	%
Benefit of net non-interest bearing liabilities		0.56	%		0.07	%
Net interest margin		3.33	%		2.92	%
Taxable equivalent adjustment		0.03	%		0.03	%
Net interest margin, fully taxable equivalent		3.36	%		2.95	%

Net interest income, which is Wesbanco’s largest source of revenue, is the difference between interest income on earning assets, primarily loans and securities, and interest expense on liabilities, primarily deposits and short and long-term borrowings. Net interest income is affected by the general level of, and changes in interest rates, the steepness and shape of the yield curve, changes in the amount and composition of interest earning assets and interest bearing liabilities, as well as the frequency of repricing of existing assets and liabilities. Net interest income ~~decreased $8.8~~increased $16.6 million or ~~7.5%~~15.4% in the first quarter of ~~2022~~2023 compared to the first quarter of ~~2021,~~2022, due to a 3241 basis point ~~decrease~~increase in the net interest margin to ~~2.95%~~3.36% resulting from the ~~lower yield environment,~~425 basis point increase in the federal funds rate from April 2022 through February 2023, as the yield on earning assets ~~decreased~~increased at a faster rate than the rate on interest bearing liabilities, slightly offset by lower purchase accounting accretion. Portfolio loans increased by 11.9% from March 31, 2022, due to higher new loan demand and ~~investment securities became a greater percentage of total assets. The net interest margin~~internal initiatives to improve lending efficiencies. Total purchase accounting accretion continued to decrease was slightly mitigated by a 2.5% increase in average earning asset balances from the first quarter of 2021, primarily from a 40.7% increase in average securities, which were purchased with liquidity from deposit growth. Interest and fee accretion income on PPP loans decreased $6.2 million in the first quarter of 2022 from a total of $9.9 million in the first quarter of 2021. This PPP loan income positively impacted the first quarter 2022 net interest margin by a net 7 basis points as compared to 11 basis points in the first quarter of 2021. Excluding PPP loans, portfolio loans decreased by 2.3% from March 31, 2021, due to lower new loan demand and high levels of commercial real estate loan payoffs. In addition, total purchase accounting accretion decreased by $1.6 million in the first quarter of 20222023 as compared to the first quarter of ~~2021, and~~2022, as approximately 84 basis points of accretion from prior acquisitions was included in the first quarter ~~2022~~2023 net interest margin as compared to 138 basis points in the ~~2021~~2022 first quarter net interest margin. Total average deposits, excluding CDs, ~~increased~~decreased in the first quarter of ~~2022~~2023 by ~~$1.2 billion~~$396.3 million or ~~11.0%~~3.2% compared to the first quarter of ~~2021, due to higher personal savings balances.~~2022. The cost of interest bearing deposits ~~decreased~~increased by 888 basis points and the cost of total interest bearing liabilities ~~decreased~~increased by 18133 basis points from the first quarter of ~~2021~~2022 to the first quarter of ~~2022.~~2023. The ~~decrease~~increase in the cost is primarily due to rate ~~decreases~~increases for interest bearing ~~demand~~ deposits ~~which include public funds, and lower rates for certificates of deposit, customer repurchase agreements, term Federal Home Loan Bank borrowings and junior subordinated debentures,~~ in response to the general ~~decrease~~increase in overall borrowing rates in the marketplace resulting from ~~lower rates across~~ the yield curve. In addition, the average balance of FHLB borrowings decreased by $308.4 million or 63.1% from the first quarter of 2021, as excess liquidity was used to pay off these borrowings as they matured.previously mentioned federal fund rate increases in 2022 and 2023.

Interest income ~~decreased $12.9~~increased $48.4 million or ~~10.3%~~43.1% in the first quarter of ~~2022~~2023 compared to the same period of ~~2021~~2022 due to ~~lower yields in each~~the 425 basis point federal funds rate increases between April of ~~the major earning asset categories.~~2022 and February of 2023. Earning asset yields ~~continued~~were influenced positively as market rates started to ~~be influenced negatively due to~~increase in the ~~continuation~~second half of ~~the low rate environment through the current period.~~2022 and first quarter of 2023. Average loan balances ~~decreased $1.2~~increased $1.0 billion or ~~10.8%~~10.7% in the first quarter of ~~2022~~2023 compared to the first quarter of ~~2021, due mostly to forgiveness of PPP loans that were originated in 2020 and 2021. Loan~~2022, while loan yields ~~decreased~~increased by 18114 basis points during this same period to ~~3.89%~~5.03% due to the previously mentioned ~~lower~~rising rate environment and its effect on the repricing of portfolio loans, as well as ~~lower~~higher offered rates on new loans. Loans provide the greatest impact on interest income and the yield on earning assets as they have the largest balance and the highest yield within major earning asset categories. In the first quarter of ~~2022,~~2023, average loans represented ~~65.0%~~70.8% of average earning assets, ~~a decrease~~an increase from ~~74.7%~~65.0% in the first quarter of ~~2021. As liquidity from higher deposit balances was invested, average~~2022. Average total securities balances increased ~~$1.2 billion~~$40.1 million or ~~40.7%~~1.0% from the first quarter of ~~2021,~~2022, and represented ~~27.2%~~27.0% of total earning assets in the first quarter of ~~2022.~~2023. Taxable securities yields ~~decreased~~increased by ~~24 basis points and tax-exempt securities yields decreased by 40~~63 basis points in the first quarter of ~~2022~~2023 from the first quarter of ~~2021. The continuing lower~~2022 due to the increased rate environment ~~has resulted in the yield decrease~~ for ~~all~~this type of security. Tax-exempt securities ~~as calls, prepayments and maturities of legacy higher-rate securities have been replaced with purchases at lower overall market yields. The average balance of tax-exempt securities,~~yields, which ~~have~~are the highest yields within total securities, ~~have decreased~~remained relatively flat with an increase of 1 basis point from ~~20.1%~~the first quarter of ~~total average securities~~2022 to the first quarter of 2023.

Interest expense increased $31.8 million in the first quarter of ~~2021 to 18.0% of total average securities in the first quarter of 2022.~~

Commercial loans with floors currently average 3.80% on approximately $2.8 billion or 39% of total commercial loans at March 31, 2022, as compared to $2.6 billion averaging 3.83% or 36% of commercial loans at December 31, 2021. Approximately 54% or $1.5 billion of these loans are currently priced at their floor, as compared to 63% or $1.6 billion at December 31, 2021. These loans typically do not adjust as rapidly from their current floor level as compared to loans without floors, due to the amount of the rate change as compared to the floor rate or next repricing date.

~~Interest expense decreased $4.1 million or 48.0% in the first quarter of 2022~~2023 as compared to the same period in ~~2021,~~2022, due to ~~decreases in~~ the ~~cost~~timing of ~~all interest bearing liability categories, as management reduced certain deposit rates,~~the previously mentioned federal funds rate increases and ~~due to a decrease in~~their effect on the ~~balance~~costs of ~~outstanding FHLB~~deposits and borrowings. The cost of interest bearing liabilities ~~decreased~~increased by 18133 basis points from the first quarter of ~~2021~~2022 to ~~0.19%~~1.52% in ~~2022. Interest~~the first quarter of 2023. Average interest bearing deposits ~~increased $520.6~~decreased $791.7 million or ~~6.1%~~8.7% from the first quarter of ~~2021,~~2022, due ~~mostly~~specifically to ~~customers’ increased personal savings~~an 11.0% decrease in average interest bearing demand deposits, a 9.6% decrease in average money market accounts, and ~~deposit balances.~~a 31.2% decrease in average certificates of deposit. The rate on interest bearing deposits ~~decreased 8~~increased 88 basis points to ~~0.12%~~1.00% from the first quarter of ~~2021,~~2022, primarily from ~~decreases~~increases in rates on interest bearing public funds, money market funds and ~~certificates of deposit in response to the lower market rates,~~savings deposits, which ~~are currently~~were previously near their floors. Average non-interest bearing demand deposit balances increased from the first quarter of ~~2021~~2022 to the first quarter of ~~2022~~2023 by ~~$376.0~~$3.4 million or ~~8.9%~~0.1%, and were ~~33.5%~~35.6% of total average deposits at March 31, ~~2022,~~2023, compared to ~~32.9%~~33.5% at March 31, ~~2021,~~2022, reflecting ~~the previously mentioned higher personal savings balances~~customers’ preferences and ongoing checking

account marketing strategies. The average balance of FHLB borrowings ~~decreased $308.4~~increased $790.0 million from the first quarter of ~~2021~~2022 to ~~2022~~2023, due to the maturity of legacy higher-rate FHLB borrowings throughout the past twelve months being redeemed with excess liquidity. These maturities benefited the average rate paid, as it decreased by 70 basis points to 1.30% from the first quarter of 2021.increased loan funding demand. Average repurchase agreements combined with subordinated debt and junior subordinated debt balances ~~decreased $80.1~~increased $108.8 million or ~~20.9%~~35.8% from the first quarter of ~~2021~~2022 to ~~2022, and their average rates paid decreased by 13 and 55 basis points, respectively, over this same time period,~~2023, due primarily to ~~decreases in LIBOR,~~ the ~~index upon which this variable-rate type of borrowing is priced.~~

The increasing rate environment, which began in the second half of the first quarter, is expected to result in the core net interest margin stabilizing in the second quarter, and assuming further anticipated federal funds rate increases in 2022, the margin will likely begin to increase in the second half of 2022. Securities purchased toward the end of the first quarter will further positively impact the margin. Higher anticipated earning asset yields caused by loans repricing to higher rates, rates on new loan production being higher than existing loans and security cash flows being reinvested at higher rates will be slightly offset by decreasing purchase accounting accretion, price increases to deposit rates and higher wholesale funding costs. The subordinated debt issuance late in the first quarter of 2022 will further increase the cost of interest-bearing liabilities. In addition, as the remaining balance of outstanding PPP loans continues to be forgiven, the positive impact on the margin will lessen as lower net deferred fees are accreted into income at the date of loan payoff. At March 31, 2022, there were $2.9 million of remaining net deferred fees from PPP loans that will accrete into interest income as loans pay down or are forgiven by the SBA.2022.

3435

TABLE 2. AVERAGE BALANCE SHEETS AND NET INTEREST MARGIN ANALYSIS


	For The Three Months Ended March 31,										For The Three Months Ended March 31,
	2022					2021					2023					2022
	Average		Average			Average		Average			Average		Average			Average		Average
(unaudited, dollars in thousands)	Balance		Rate			Balance		Rate			Balance		Rate			Balance		Rate
ASSETS
Due from banks - interest bearing	$	1,161,218		0.16	%	$	776,245		0.09	%	$	279,448		4.29	%	$	1,161,218		0.16	%
Loans, net of unearned income (1)		9,712,085		3.89	%		10,890,370		4.07	%		10,750,132		5.03	%		9,712,085		3.89	%
Securities: (2)
Taxable		3,333,379		1.72	%		2,306,320		1.96	%		3,302,081		2.34	%		3,333,379		1.72	%
Tax-exempt (3)		729,380		3.06	%		580,199		3.46	%		800,804		3.07	%		729,380		3.06	%
Total securities		4,062,759		1.96	%		2,886,519		2.26	%		4,102,885		2.49	%		4,062,759		1.96	%
Other earning assets		15,446		3.81	%		33,240		5.89	%		45,879		2.82	%		15,446		3.81	%
Total earning assets (3)		14,951,508		3.07	%		14,586,374		3.51	%		15,178,344		4.32	%		14,951,508		3.07	%
Other assets		2,041,090					2,049,884					1,792,210					2,041,090
Total Assets	$	16,992,598				$	16,636,258				$	16,970,554				$	16,992,598

LIABILITIES AND SHAREHOLDERS' EQUITY
Interest bearing demand deposits	$	3,403,499		0.10	%	$	2,970,766		0.14	%	$	3,029,944		1.49	%	$	3,403,499		0.10	%
Money market accounts		1,806,719		0.07	%		1,725,561		0.14	%		1,632,738		1.06	%		1,806,719		0.07	%
Savings deposits		2,626,962		0.04	%		2,290,657		0.05	%		2,774,741		0.58	%		2,626,962		0.04	%
Certificates of deposit		1,254,603		0.41	%		1,584,152		0.61	%		862,703		0.57	%		1,254,603		0.41	%
Total interest bearing deposits		9,091,783		0.12	%		8,571,136		0.20	%		8,300,126		1.00	%		9,091,783		0.12	%
Federal Home Loan Bank borrowings		180,024		1.30	%		488,388		2.00	%		970,000		4.72	%		180,024		1.30	%
Repurchase agreements		156,167		0.12	%		191,676		0.25	%		131,186		1.29	%		156,167		0.12	%
Subordinated debt and junior subordinated debt		147,709		3.22	%		192,341		3.77	%		281,483		5.68	%		147,709		3.22	%
Total interest bearing liabilities (4)		9,575,683		0.19	%		9,443,541		0.37	%		9,682,795		1.52	%		9,575,683		0.19	%
Non-interest bearing demand deposits		4,576,749					4,200,793					4,580,164					4,576,749
Other liabilities		184,359					221,508					249,528					184,359
Shareholders’ equity		2,655,807					2,770,416					2,458,067					2,655,807
Total Liabilities and Shareholders’ Equity	$	16,992,598				$	16,636,258				$	16,970,554				$	16,992,598
Taxable equivalent net interest spread				2.88	%				3.14	%				2.80	%				2.88	%
Taxable equivalent net interest margin				2.95	%				3.27	%				3.36	%				2.95	%

(1)

Gross of allowance for credit losses and net of unearned income. Includes non-accrual and loans held for sale. Loan fees included in interest income on loans were ~~$4.1~~$0.4 million and ~~$8.2~~$4.1 million for the three months ended March 31, ~~2022~~2023 and ~~2021, respectively. PPP loan fees, which are included as part of total loan fees, were $3.2 million and $7.9 million for the three months ended March 31,~~ 2022, ~~and 2021,~~ respectively. Additionally, loan accretion included in interest income on loans acquired from prior acquisitions was ~~$2.5~~$1.3 million and ~~$3.5~~$2.5 million for the three months ended March 31, ~~2022~~2023 and ~~2021,~~2022, respectively.

(2)

Average yields on available-for-sale debt securities are calculated based on amortized cost.

(3)

Taxable equivalent basis is calculated on tax-exempt securities using a federal statutory rate of 21% for each period presented.

(4)

Accretion on interest bearing liabilities acquired from prior acquisitions was ~~$0.4~~$0.2 million and ~~$1.1~~$0.4 million for the three months ended March 31, ~~2022~~2023 and ~~2021,~~2022, respectively.

3536

TABLE 3. RATE/VOLUME ANALYSIS OF CHANGES IN INTEREST INCOME AND INTEREST EXPENSE


	For the Three Months Ended March 31, 2022									For the Three Months Ended March 31, 2023
	Compared to March 31, 2021									Compared to March 31, 2022
(unaudited, in thousands)	Volume			Rate			Net Increase (Decrease)			Volume			Rate			Net Increase (Decrease)
Increase (decrease) in interest income:
Due from banks - interest bearing	$	113		$	163		$	276		$	(597	)	$	3,100		$	2,503
Loans, net of unearned income		(11,455	)		(4,782	)		(16,237	)		10,733			29,552			40,285
Taxable securities		4,479			(1,494	)		2,985			(134	)		5,108			4,974
Tax-exempt securities (1)		1,171			(621	)		550			541			23			564
Other earning assets		(203	)		(135	)		(338	)		220			(47	)		173
Total interest income change (1)		(5,895	)		(6,869	)		(12,764	)		10,763			37,736			48,499
Increase (decrease) in interest expense:
Interest bearing demand deposits		137			(369	)		(232	)		(99	)		10,394			10,295
Money market accounts		26			(283	)		(257	)		(34	)		3,965			3,931
Savings deposits		36			(36	)		-			16			3,720			3,736
Certificates of deposit		(431	)		(666	)		(1,097	)		(465	)		395			(70	)
Federal Home Loan Bank borrowings		(1,179	)		(660	)		(1,839	)		6,689			4,036			10,725
Repurchase agreements		(19	)		(51	)		(70	)		(9	)		379			370
Subordinated debt and junior subordinated debt		(378	)		(240	)		(618	)		1,501			1,272			2,773
Total interest expense change		(1,808	)		(2,305	)		(4,113	)		7,599			24,161			31,760
Net interest income decrease (1)	$	(4,087	)	$	(4,564	)	$	(8,651	)
Net interest income change (1)										$	3,164		$	13,575		$	16,739

(1)

Taxable equivalent basis is calculated on tax-exempt securities using a federal statutory tax rate of 21%.

PROVISION FOR CREDIT LOSSES – LOANS AND LOAN COMMITMENTS

The provision for credit losses – loans is the amount to be added to the allowance for credit losses – loans after net (charge-offs) recoveries have been (deducted) added to bring the allowance to a level considered appropriate to absorb lifetime expected losses for all portfolio loans. The provision for credit losses – loan commitments is the amount to be added to the allowance for credit losses for loan commitments to bring that allowance to a level considered appropriate to absorb lifetime expected losses on unfunded loan commitments. The ~~negative~~ provision for credit losses - loans and loan commitments ~~decreased~~increased to ~~($3.5)~~$3.6 million in the first quarter of ~~2022~~2023 compared to a negative provision of ~~($27.9)~~$3.4 million in the first quarter of ~~2021.~~2022. While the ~~negative~~ provision ~~decreased~~increased year-over-year, the ~~($3.5)~~$3.6 million provision in the first quarter of ~~2022~~2023 was a result of ~~continued improvement in~~an increase to the ~~macroeconomic forecast~~bank’s quantitative results and ~~certain qualitative factors.~~interest rate risk. Non-performing loans were ~~0.38%~~0.36% of total loans as of March 31, ~~2022, increasing~~2023, decreasing from ~~0.36%~~0.38% of total loans at the end of the first quarter of ~~2021.~~2022. Criticized and classified loans were ~~3.68%~~1.60% of total loans as of March 31, ~~2022,~~2023, decreasing from ~~4.26%~~3.68% as of March 31, ~~2021,~~2022, primarily due to ~~improvements within the Company’s hospitality loan portfolio.~~risk rating improvements. Past due loans at March 31, ~~2022~~2023 were ~~0.35%~~0.16% of total loans, compared to ~~0.31%~~0.35% at March 31, ~~2021.~~2022. Annualized net loan charge-offs ~~decreased~~increased to 0%0.07% for the three months ended March 31, ~~2022~~2023 compared to ~~0.02%~~0.00% for the three months ended March 31, ~~2021.~~2022. (Please see the Allowance for Credit Losses – Loans and Loan Commitments section of this MD&A for additional discussion).

3637

NON-INTEREST INCOME

TABLE 4. NON-INTEREST INCOME


	For The Three Months Ended March 31,											For the Three Months Ended March 31,
(unaudited, dollars in thousands)	2022			2021		$ Change			% Change			2023		2022			$ Change			% Change
Trust fees	$	7,835		$	7,631	$	204			2.7		$	7,494	$	7,835		$	(341	)		(4.4	)
Service charges on deposits		6,090			4,894		1,196			24.4			6,170		6,090			80			1.3
Electronic banking fees		5,345			4,365		980			22.5			4,605		5,345			(740	)		(13.8	)
Net securities brokerage revenue		2,220			1,524		696			45.7			2,576		2,220			356			16.0
Bank-owned life insurance		3,881			1,709		2,172			127.1			1,959		3,881			(1,922	)		(49.5	)
Net securities (losses) gains		(650	)		279		(929	)		(333.0	)
Net securities gains (losses)													145		(650	)		795			122.3
Mortgage banking income		1,923			4,264		(2,341	)		(54.9	)		426		1,923			(1,497	)		(77.8	)
Net insurance services revenue		1,026			1,090		(64	)		(5.9	)		791		1,026			(235	)		(22.9	)
Debit card sponsorship income		—			646		(646	)		(100.0	)
Payment processing fees		742			713		29			4.1			871		742			129			17.4
Net (loss) gain on other real estate owned and other assets		(806	)		175		(981	)		(560.6	)
Net gain (loss) on other real estate owned and other assets													232		(806	)		1,038			128.8
Net swap fee and valuation income		1,617			4,650		(3,033	)		(65.2	)		799		1,617			(818	)		(50.6	)
Other		1,159			1,268		(109	)		(8.6	)		1,585		1,159			426			36.8
Total non-interest income	$	30,382		$	33,208	$	(2,826	)		(8.5	)	$	27,653	$	30,382		$	(2,729	)		(9.0	)

Non-interest income is a significant source of revenue and an important part of Wesbanco’s results of operations, as it represents ~~22.0%~~18.2% of total revenue for the three months ended March 31, ~~2022.~~2023. Wesbanco offers its customers a wide range of retail, commercial, investment and electronic banking services, which are viewed as a vital component of Wesbanco’s ability to attract and maintain customers, as well as providing additional fee income beyond normal spread-related income to Wesbanco. For the first quarter of ~~2022,~~2023, non-interest income decreased ~~$2.8~~$2.7 million or ~~8.5%~~9.0% compared to the first quarter of ~~2021,~~2022, primarily due to a ~~$3.0~~$1.9 million decrease in bank-owned life insurance, a $1.5 million decrease in mortgage banking income, a $0.8 million decrease in net swap fee and valuation income and a ~~$2.3~~$0.7 million decrease in ~~mortgage~~electronic banking ~~income.~~fees. The decreases were somewhat offset by a ~~$2.2 million increase in bank-owned life insurance, a $1.2 million increase in service charges on deposits and a~~ $1.0 million increase in ~~electronic banking fees.~~net gain (loss) on other real estate owned and other assets and a $0.8 million increase in net securities gains (losses).

Trust fees ~~increased $0.2~~decreased $0.3 million or ~~2.7%~~4.4% compared to the first quarter of ~~2021,~~2022, due to market value ~~appreciation and organic growth.~~declines. Total trust assets were $5.0 billion at March 31, 2023 as compared to $5.4 billion at March 31, ~~2022 as compared to $5.2 billion at March 31, 2021.~~2022. As of March 31, ~~2022,~~2023, trust assets include managed assets of ~~$4.3~~$4.0 billion and non-managed (custodial) assets of ~~$1.1~~$1.0 billion. Assets managed for the WesMark Funds, a proprietary group of mutual funds that is advised by Wesbanco Trust and Investment Services, were $0.8 billion and $1.0 billion as of March 31, ~~2022~~2023 and March 31, ~~2021,~~2022, respectively, and are included in managed assets.

~~Service charges on deposits increased $1.2~~Bank-owned life insurance decreased $1.9 million or 24.4% to $6.1 million in the first quarter of 2022 as compared to the same period in 2021, as a result of increased general consumer spending over the prior period, due to higher customer demand for goods and services as business conditions improved from the pandemic, resulting in more eligible fee-generating transactions. In addition, electronic banking fees, which include debit card interchange fees, increased $1.0 million or 22.5%49.5% compared to the first quarter of ~~2021, also~~2022 due to ~~increased general consumer spending.~~

~~Bank-owned life insurance increased $2.2 million or 127.1% compared to the first quarter of 2021 due to an increase~~a decrease in mortality-related benefits received in the ~~current period, as well as an increase~~first quarter of 2023. No mortality-related benefits were received in the ~~cash surrender value from the purchase of an additional $40 million of bank-owned life insurance in the third~~first quarter of ~~2021.~~2023.

Net securities gains (losses) ~~gains~~ include both gains and losses on investment security transactions as well as market value adjustments on the Company's deferred compensation plan. For the three months ended March 31, ~~2022,~~2023, net securities gains (losses) ~~gains decreased $0.9~~increased $0.8 million ~~or 333.0%~~ compared to the same period of ~~2021,~~2022, due to a ~~$0.8~~$0.2 million ~~decrease~~increase in market adjustments on the deferred compensation ~~plan.~~plan in the first quarter of 2023 as compared to a $0.5 million decrease in the first quarter of 2022. These market adjustments had an offsetting effect in employee benefits expense. ~~No investment security sales occurred in either period.~~

Mortgage banking income decreased ~~$2.3~~$1.5 million or ~~54.9%~~77.8% in the first quarter of ~~2022~~2023 compared to the first quarter of ~~2021,~~2022, as mortgage originations decreased due to the current market environment. Wesbanco retained more 1-to-4 family mortgages on the balance sheet ~~and total originations were lower in the first quarter of 2022~~ as ~~compared~~production continues to ~~the prior year period, reflecting the change in economic conditions.~~migrate towards shorter-term adjustable rate mortgage products. For the first quarter of ~~2022,~~2023, mortgage production was ~~$269.0~~$161.7 million, which ~~was a decrease of 17.6%~~decreased by 40.3% from the ~~comparable 2021 period.~~first quarter of 2022. For the three months ended March 31, ~~2022, $78.7~~2023, $39.9 million in mortgages were sold into the secondary market at a net margin of ~~2.4%~~1.1% as compared to ~~$214.6~~$78.7 million at a net margin of ~~2.0%~~2.4% in the comparable ~~2021~~2022 period. Included in mortgage banking income and the calculation of net margin noted above are gains of ~~$0.8 million~~$28 thousand and ~~losses of $1.4~~$0.8 million from the fair value adjustments on mortgage loan commitments and related derivatives for the three months ended March 31, ~~2022~~2023 and ~~2021,~~2022, respectively.

Debit card sponsorship income, a non-essential revenue stream for Wesbanco that was acquired in the Old Line Bancshares, Inc. acquisition and generated $0.6 million of gross revenue in the first quarter of 2021, was sold as of March 31, 2021 to another bank. The all-cash purchase price, which is being paid out on a monthly basis over a two-year period up to a maximum of $2.8 million, is based on a 50% split of the monthly gross revenue earned by the purchasing bank. Wesbanco has recognized $0.4 million in revenue in the first three months of 2022 following the sale, which is recorded in netNet gain (loss) ~~on the sale of other real estate owned and other assets.~~

~~Net (loss) gain~~ on other real estate owned and other assets ~~decreased~~increased $1.0 million or ~~560.6%~~128.8% in the three months ended March 31, ~~2022~~2023 as compared to the same period in ~~2021,~~2022, due mostly to ~~the~~a negative market value ~~decline~~adjustment of $1.2 million recorded in the first quarter of 2022 on an investment made by Wesbanco’s ~~Community Development Corporation~~CDC in a start-up firm more than ten years ago that was acquired by a public company in 2021. This investment was sold later in 2022.

Net swap fee and valuation income, which includes fair value adjustments, decreased ~~$3.0~~$0.8 million ~~or 65.2%~~ in the first quarter of ~~2022~~2023 compared to the first quarter of ~~2021,~~2022, due to ~~a reduced volume of new swaps originated, resulting in less fee income, as well as lower~~negative fair value ~~adjustments.~~adjustments on the swap portfolio in 2023 as compared to 2022. For the three months ended March 31, ~~2022,~~2023, new swaps executed totaled $162.6 million in notional principal, resulting in $1.8 million of fee income, compared to new swaps executed of $7.4 million in notional principal resulting in $0.2 million of fee income ~~compared to new swaps executed of $65.1 million in notional principal resulting in $1.9 million of fee income~~ for the three months ended March 31, ~~2021.~~2022. Fair value adjustments on existing swaps for the three months ended March 31, ~~2022~~2023 were ~~$1.5~~a negative $1.0 million as compared to ~~$2.8~~a positive $1.5 million for the three months ended March 31, ~~2021.~~2022.

NON-INTEREST EXPENSE

TABLE 5. NON-INTEREST EXPENSE


	For The Three Months Ended March 31,										For the Three Months Ended March 31,
(unaudited, dollars in thousands)	2022		2021		$ Change			% Change			2023		2022		$ Change			% Change
Salaries and wages	$	38,937	$	36,890	$	2,047			5.5		$	41,952	$	38,937	$	3,015			7.7
Employee benefits		9,158		10,266		(1,108	)		(10.8	)		12,060		9,158		2,902			31.7
Net occupancy		7,234		7,177		57			0.8			6,643		7,234		(591	)		(8.2	)
Equipment and software		8,011		6,765		1,246			18.4			9,063		8,011		1,052			13.1
Marketing		2,421		2,384		37			1.6			2,325		2,421		(96	)		(4.0	)
FDIC insurance		1,522		1,282		240			18.7			2,884		1,522		1,362			89.5
Amortization of intangible assets		2,598		2,896		(298	)		(10.3	)		2,301		2,598		(297	)		(11.4	)
Restructuring and merger-related expenses		1,593		851		742			87.2			3,153		1,593		1,560			97.9
Franchise and other miscellaneous taxes		2,995		2,997		(2	)		(0.1	)		2,897		2,995		(98	)		(3.3	)
Consulting, regulatory, accounting and advisory fees		3,687		3,378		309			9.1			2,698		3,687		(989	)		(26.8	)
ATM and electronic banking interchange expenses		1,419		2,202		(783	)		(35.6	)		1,627		1,419		208			14.7
Postage and courier expenses		1,222		1,268		(46	)		(3.6	)
Supplies and postage												2,065		2,088		(23	)		(1.1	)
Legal fees		935		862		73			8.5			471		935		(464	)		(49.6	)
Communications		1,066		912		154			16.9			1,430		1,066		364			34.1
Supplies		866		1,019		(153	)		(15.0	)
Other real estate owned and foreclosure expenses		258		112		146			130.4			94		258		(164	)		(63.6	)
Other		3,626		5,066		(1,440	)		(28.4	)		4,462		3,626		836			23.1
Total non-interest expense	$	87,548	$	86,327	$	1,221			1.4		$	96,125	$	87,548	$	8,577			9.8

Non-interest expense in the first quarter of ~~2022~~2023 increased ~~$1.2~~$8.6 million or ~~1.4%~~9.8% as compared to the same quarter in ~~2021,~~2022, principally from a ~~$2.0~~$3.0 million increase in salaries and wages, a ~~$1.2~~$2.9 million increase in employee benefits, a $1.6 million increase in restructuring and merger-related expenses, a $1.4 million increase in FDIC insurance expense and a $1.1 million increase in equipment and software ~~costs and a $0.7 million increase in restructuring and merger-related expenses.~~expense. These increases were slightly offset by a ~~$1.1~~$1.0 million decrease in ~~employee benefits expense,~~consulting, regulatory, accounting and advisory fees and a ~~$0.8~~$0.6 million decrease in ATM and electronic banking interchange expenses and a $1.4 million decrease in other operating expenses. In the first quarter of 2022, there were $1.6 million of restructuring expenses related to the branch optimization strategy as compared to $0.9 million of restructuring expenses related to the branch optimization strategy and the core systems conversion in the first quarter of 2021.net occupancy. Excluding restructuring and merger-related expenses, non-interest expense increased ~~$0.5~~$7.0 million or ~~0.6%~~8.2% from the first quarter of ~~2021~~2022 to the first quarter of ~~2022.~~2023.

Salaries and wages increased ~~$2.0~~$3.0 million or ~~5.5%~~7.7% in the first quarter of 2022 from the first quarter of 2021 due to decreases in loan-contra costs and higher salary expense related to the normal merit increases that occurred mid-year 2021. Loan contra-costs decreased by $1.1 million or 24.6% from the first quarter of 20212023 as compared to the first quarter of 2022 due to ~~a reduction in loan volume. These increases to~~higher salary expense ~~were mitigated by a 1.4% reduction~~related to higher staffing levels in revenue-producing positions, and normal merit increases. Average full time equivalent employees increased by 2.0% from the first quarter of ~~2021 as a result~~2022 to the first quarter of ~~the closure~~2023 due to targeted hiring of ~~branches at various points in 2021, as the branch optimization strategy was executed, and a temporary hiring freeze earlier in 2021.~~loan officers.

Employee benefits expense ~~decreased $1.1~~increased by $2.9 million or ~~10.8%~~31.7% in the first quarter of ~~2022 from~~2023 as compared to the first quarter of ~~2021~~2022. This increase was due ~~primarily~~ to a ~~$0.5~~$0.6 million ~~decrease in pension expense and a $0.9 reduction~~increase in deferred compensation plan expense, which ~~mostly relate~~relates to the ~~decline~~increase in the market value of the underlying ~~investments. These decreases were slightly offset by increased recruiting~~investments, a $0.7 million increase in pension expense, a $0.8 million increase in health insurance contributions and ~~higher workers compensation expense,~~increases in other employee benefits categories due to ~~a premium refund received~~the increase in ~~the first quarter of 2021.~~FTEs.

Equipment and software costs increased ~~$1.2~~$1.1 million or ~~18.4%~~13.1% in the first quarter of 2023 as compared to the first quarter of ~~2021,~~2022, due primarily to general inflationary cost increases for existing service agreements as well as the planned upgrade to one-third of Wesbanco's ATM fleet with the latest technology.

FDIC insurance expense increased $1.4 million or 89.5% in the first quarter of 2023 as compared to the first quarter of 2022 due primarily to the ~~movement of online banking costs following the core conversion~~two basis point increase in the ~~third quarter of 2021 from other operating expenses.~~minimum FDIC assessment rate for all banks.

Restructuring and merger-related expenses in the first quarter of ~~2022~~2023 totaled ~~$1.6~~$3.2 million, an increase of ~~$0.7~~$1.6 million ~~from~~as compared to the first quarter of ~~2021.~~2022. The expenses in ~~the first quarter of 2022~~both periods consisted of fixed asset writedowns and lease termination expenses associated with the ~~upcoming~~ closure of ~~eleven additional~~ branches ~~later in 2022~~and back-office buildings as a result of the continued execution of the branch optimization strategy. The restructuring and merger-related expenses in the first quarter of 2021 totaling $0.9 million were comprised of $0.7 million in core conversion-related expenses and $0.2 million in branch closure and severance expenses associated with the closure of 21 branches early in the first quarter of 2021.

~~ATM~~Consulting, regulatory, accounting and ~~electronic banking interchange expenses~~advisory fees decreased ~~by $0.8~~$1.0 million or ~~35.6% in~~26.8% from the first quarter of 2022 ~~from~~to the first quarter of ~~2021~~2023, due particularly to ~~a reduction~~decreases in ~~ACH~~regulatory examination fees and ~~ATM processing charges related to a change in providers that occurred in conjunction with our core banking software system conversion in the third quarter of 2021.~~consulting fees.

Other operating expenses decreased by $1.4 million or 28.4% in the first quarter of 2022 from the first quarter of 2021 due mostly to the previously mentioned movement of online banking costs, following the core conversion in 2021, into equipment and software costs.

INCOME TAXES

The provision for income taxes was $9.9 million for the three months ended March 31, ~~2022,~~2023, which is ~~an $8.3~~a $0.1 million ~~decrease~~increase compared to ~~$18.2 million~~the provision for the three months ended March 31, ~~2021.~~2022. The ~~decrease~~increase in the provision for income taxes is due to ~~a $37.3 million decrease in pre-tax income from the first quarter of 2021 and~~ an ~~accompanying decrease~~increase in the effective tax rate tofrom 18.3% in the first quarter of 2022 ~~compared~~ to ~~19.9%~~19.0% in the first quarter of ~~2021.~~2023. This increase is attributable to lower ~~pre-tax~~bank-owned life insurance income ~~was primarily due to a $28.0 million negative provision for credit losses recorded~~ in ~~the first quarter of 2021,~~2023 as compared to ~~a $3.4 million negative provision in the first quarter of~~ 2022.

FINANCIAL CONDITION

Total assets and ~~deposits increased 1.0% and 1.7%, respectively, while~~ shareholders’ equity each increased 2.0%, while total deposits decreased ~~5.4%,~~2.0% compared to December 31, ~~2021.~~2022. Total securities ~~increased $49.6~~decreased $72.2 million or ~~1.2%~~1.9% from December 31, ~~2021~~2022 to March 31, ~~2022,~~2023, primarily driven by ~~the purchase of mortgage-backed~~$74.1 million in paydowns on securities and ~~municipal obligations. The securities’ increase was~~$20.5 million in security sales, partially offset by a ~~$139.9~~$36.8 million ~~increase in unrealized losses~~improvement in the unrealized loss position of the available-for-sale securities portfolio. Total portfolio loans ~~excluding PPP loans,~~ increased ~~$85.9~~$186.0 million or ~~0.9%~~1.7% as new originations outpaced pay downs. ~~Forgiveness related to the 2020~~Deposits decreased $257.9 million, or 2.0% from December 31, 2022, as decreases of 0.2%, 3.0% and ~~2021 PPP loan programs totaled $86.1 million through the first three months~~3.9% in certificates of ~~2022. Deposits increased $232.0 million from year-end, resulting from increases of 5.3%, 4.5%,~~deposit, demand deposits and ~~1.3% in~~ money market deposits, ~~savings deposits, and demand deposits,~~ respectively, ~~which~~ were partially offset by ~~a 6.3%~~increase of 1.6% in savings deposits. The overall decrease ~~in certificates of deposit. The growth~~ in transaction-based accounts is primarily attributable to ~~increased~~inflationary pressure and rising costs across the country causing a decrease in personal ~~savings, focused retail~~savings. Deposits declined by approximately $360 million early during the quarter and ~~business strategies to obtain more account relationships~~remained flat through February and ~~customers’ preferences for shorter-term maturities.~~March. Deposits were also somewhat impacted by bonus and royalty payments for Marcellus and Utica shale gas payments from energy companies in Wesbanco’s southwestern Pennsylvania, eastern Ohio, and northern West Virginia markets. The ~~decrease~~balance in certificates of deposit is ~~a result of lower overall rates and management periodically offering lower-than-median competitive rates for maturing certificates of deposit as well as customer preferences for other deposit types.~~virtually unchanged from December 31, 2022. Total borrowings increased ~~22.8%~~49.2% or ~~$104.5~~$551.3 million during the first three months of ~~2022~~2023, which was primarily ~~as the result of~~due to $575.0 million in new FHLB advances and partially offset by a ~~$150.0~~$23.9 million ~~issuance of subordinated debentures at the parent company as qualifying Tier 2 risk-based capital and a $16.6 million increase~~decrease in other short-term ~~borrowings, which were partially offset by the $60.0 million pay down of maturing FHLB advances.~~borrowings. Total shareholders’ equity ~~decreased~~increased approximately ~~$145.9~~$48.8 million or ~~5.4%~~2.0%, compared to December 31, ~~2021,~~2022, primarily due to a ~~$106.2~~$28.0 million ~~decrease~~increase in other comprehensive income, and ~~the repurchase of common shares totaling $62.3 million, which were partially offset by~~ net income exceeding cash dividends for the period by ~~$21.1~~$19.2 million.

SECURITIES

TABLE 6. COMPOSITION OF SECURITIES (1)


	March 31,			December 31,									March 31,			December 31,
(unaudited, dollars in thousands)	2022			2021			Change ($)			Change (%)			2023			2022			Change ($)			Change (%)
Equity securities (at fair value)	$	12,757		$	13,466		$	(709	)		(5.3	)	$	11,843		$	11,506		$	337			2.9
Available-for-sale debt securities (at fair value)
U.S. Government sponsored entities and agencies		240,497			236,978			3,519			1.5			223,435			225,970			(2,535	)		(1.1	)
Residential mortgage-backed securities and collateralized mortgage obligations of government sponsored entities and agencies		2,159,454			2,285,213			(125,759	)		(5.5	)		1,818,250			1,846,053			(27,803	)		(1.5	)
Commercial mortgage-backed securities and collateralized mortgage obligations of government sponsored entities and agencies		394,089			367,493			26,596			7.2			325,740			349,731			(23,991	)		(6.9	)
Obligations of states and political subdivisions		100,273			106,340			(6,067	)		(5.7	)		83,790			92,228			(8,438	)		(9.1	)
Corporate debt securities		17,060			17,438			(378	)		(2.2	)		14,781			15,158			(377	)		(2.5	)
Total available-for-sale debt securities	$	2,911,373		$	3,013,462		$	(102,089	)		(3.4	)	$	2,465,996		$	2,529,140		$	(63,144	)		(2.5	)
Held-to-maturity debt securities (at amortized cost)
U.S. Government sponsored entities and agencies	$	5,731		$	5,944		$	(213	)		(3.6	)	$	4,257		$	4,357		$	(100	)		(2.3	)
Residential mortgage-backed securities and collateralized mortgage obligations of government sponsored entities and agencies		53,989			58,147			(4,158	)		(7.2	)		44,054			45,909			(1,855	)		(4.0	)
Obligations of states and political subdivisions		1,067,214			907,649			159,565			17.6			1,170,586			1,177,986			(7,400	)		(0.6	)
Corporate debt securities		30,268			33,083			(2,815	)		(8.5	)		20,350			20,377			(27	)		(0.1	)
Total held-to-maturity debt securities		1,157,202			1,004,823			152,379			15.2			1,239,247			1,248,629			(9,382	)		(0.8	)
Total securities	$	4,081,332		$	4,031,751		$	49,581			1.2		$	3,717,086		$	3,789,275		$	(72,189	)		(1.9	)
Available-for-sale and equity securities:
Weighted average yield at the respective period end (2)		1.69	%		1.55	%								2.26	%		2.23	%
As a % of total securities		71.6	%		75.1	%								66.7	%		67.0	%
Weighted average life (in years)		5.4			5.0									6.8			6.7
Held-to-maturity securities:
Weighted average yield at the respective period end (2)		2.86	%		2.92	%								2.97	%		2.96	%
As a % of total securities		28.4	%		24.9	%								33.3	%		33.0	%
Weighted average life (in years)		8.4			5.6									8.9			9.5
Total securities:
Weighted average yield at the respective period end (2)		2.01	%		1.89	%								2.48	%		2.45	%
As a % of total securities		100.0	%		100.0	%								100.0	%		100.0	%
Weighted average life (in years)		6.2			5.2									7.5			7.6

(1)

At March 31, ~~2022~~2023 and December 31, ~~2021,~~2022, there were no holdings of any one issuer, other than U.S. government sponsored entities and its agencies, in an amount greater than 10% of Wesbanco’s shareholders’ equity.

(2)

Weighted average yields have been calculated on a taxable-equivalent basis using the federal statutory tax rate of 21%.

Total investment securities, which are a source of liquidity for Wesbanco as well as a contributor to interest income, ~~increased~~decreased by ~~$49.6~~$72.2 million or ~~1.2%~~1.9% from December 31, ~~2021~~2022 to March 31, ~~2022.~~2023. Through the first three months of the year, the available-for-sale portfolio decreased by ~~$102.1~~$63.1 million or ~~3.4%~~2.5%, primarily due to ~~the~~$72.1 million in paydowns, $20.5 million in sales and $5.7 million in maturities and calls, partially offset by a decrease of $36.8 million in ~~market prices as rates began to rise, particularly in the second half of the first quarter.~~unrealized losses. The held-to-maturity portfolio ~~increased~~decreased by ~~$152.4~~$9.4 million or ~~15.2%~~0.8% due to ~~$177.0 million in purchases~~maturities of municipal ~~bonds.~~securities. The weighted average yield of the portfolio increased 123 basis points from ~~1.89%~~2.45% at December 31, ~~2021~~2022 to ~~2.01%~~2.48% at March 31, ~~2022,~~2023, primarily due to ~~decreased prepayment speeds on mortgage-backed securities as a result of the market rate increase, increased purchases of higher yielding municipal bonds and~~ increases in the indices tied to variable rate securities.

Total gross unrealized securities losses ~~increased $180.6~~decreased $68.5 million from ~~$40.3~~$510.7 million at December 31, ~~2021~~2022 to ~~$220.9~~$442.2 million at March 31, ~~2022.~~2023. The ~~increase~~decrease in unrealized losses from December 31, ~~2021~~2022 was due to ~~an increase~~the decrease in market rates in ~~2022~~2023 to date, causing market prices to ~~decrease~~increase slightly on ~~most securities purchased or acquired during~~ the ~~lower-yielding environment of the prior two years.~~portfolio. Wesbanco did not allocate any allowance for credit losses to the unrealized losses on available-for-sale debt securities at March 31, ~~2022.~~2023. Please refer to Note 4, “Securities,” of the Consolidated Financial Statements for additional information. Wesbanco does not have any investments in private mortgage-backed securities or those that are collateralized by sub-prime mortgages, nor does Wesbanco have any exposure to collateralized debt obligations or government-sponsored enterprise preferred stocks.

Net unrealized losses on available-for-sale securities included in accumulated other comprehensive income, net of tax, as of March 31, ~~2022~~2023 and December 31, ~~2021~~2022 were ~~$111.0~~$233.9 million and ~~$4.7~~$261.8 million, respectively. These net unrealized pre-tax losses represent temporary fluctuations resulting from changes in market rates in relation to fixed yields in the available-for-sale portfolio, and on an after-tax basis are accounted for as an adjustment to other comprehensive income in shareholders’ equity. Net unrealized pre-tax ~~(losses) gains~~losses in the held-to-maturity portfolio, which are not accounted for in other comprehensive income, were ~~($64.2)~~$131.6 million at March 31, ~~2022,~~2023, compared to ~~$23.6~~$164.2 million at December 31, ~~2021.~~2022. With approximately ~~28%~~33% of the investment portfolio in the held-to-maturity category, the recent volatility in interest rates does not have as much impact on other comprehensive income as if the entire portfolio were included in the available-for-sale category.

Equity securities, of which a portion ~~consist~~consists of investments in various mutual funds held in grantor trusts formed in connection with a key officer and director deferred compensation plan, are recorded at fair value. Gains and losses due to fair value fluctuations on equity securities are included in net securities gains or losses. For those equity securities relating to the key officer and director deferred compensation plan, the corresponding change in the obligation to the employee is recognized in employee benefits expense.

The corporate and municipal bonds in Wesbanco’s held-to-maturity debt portfolio are analyzed quarterly to determine if an allowance for current expected credit losses is warranted. Wesbanco uses a database of historical financials of all corporate and municipal issuers and actual historic default and recovery rates on rated and non-rated transactions to estimate expected credit losses on an individual security basis. The expected credit losses are adjusted quarterly and are recorded in an allowance for expected credit losses on the balance sheet, which is deducted from the amortized cost basis of the held-to-maturity portfolio as a contra asset. The losses are recorded on the income statement in the provision for credit losses. Accrued interest receivable on held-to-maturity securities, which was ~~$8.3~~$9.3 million and ~~$7.0~~$9.5 million as of March 31, ~~2022~~2023 and December 31, ~~2021,~~2022, respectively, is excluded from the estimate of credit losses. Held-to-maturity investments in U.S. Government sponsored entities and agencies as well as mortgage-backed securities and collateralized mortgage obligations, which are all either issued by a direct governmental entity or a government-sponsored entity, have no historical evidence supporting expected credit losses; therefore, Wesbanco has estimated these losses at zero, and will monitor this assumption in the future for any ~~economical~~economic or governmental policies that could affect this assumption.

Wesbanco uses prices from independent pricing services and, to a lesser extent, indicative (non-binding) quotes from independent brokers, to measure the fair value of its securities. Wesbanco validates prices received from pricing services or brokers using a variety of methods, including, but not limited to, comparison to secondary pricing services, corroboration of pricing by reference to other independent market data such as secondary broker quotes and relevant benchmark indices, review of pricing by personnel familiar with market liquidity and other market-related conditions, review of pricing service methodologies, review of independent auditor reports received from the pricing service regarding its internal controls, and through review of inputs and assumptions used in pricing certain securities thinly traded or with limited observable data points. The procedures in place provide management with a sufficient understanding of the valuation models, assumptions, inputs and pricing to reasonably measure the fair value of Wesbanco’s securities. For additional disclosure relating to fair value measurements, refer to Note 7, “Fair Value Measurement” in the Consolidated Financial Statements.

LOANS AND CREDIT RISK

Loans represent Wesbanco’s single largest balance sheet asset classification and the largest source of interest income. Business purpose loans consist of CRE loans and other C&I loans that are not secured by real estate. CRE loans are further segmented into land and construction loans, and loans for improved property. Consumer purpose loans consist of residential real estate loans, home equity lines of credit and other consumer loans. Loans held for sale generally consist of residential real estate loans originated for sale in the secondary market, but at times may also include other types of loans. The outstanding balance of each major category of the loan portfolio is summarized in Table 10.

The risk that borrowers will be unable or unwilling to repay their obligations and default on loans is inherent in all lending activities. Credit risk arises from many sources including general economic conditions, external events that impact businesses or industries, isolated events that impact a major employer, individual loss of employment or other personal hardships, as well as changes in interest rates or the value of collateral. Credit risk is also impacted by a concentration of exposure within a geographic market or to one or more borrowers, industries or collateral types. The primary goal in managing credit risk is to minimize the impact of default by an individual borrower or group of borrowers. Credit risk is managed through the initial underwriting process as well as through ongoing monitoring and administration of the portfolio that varies by the type of loan. The Bank’s credit policies establish standard underwriting guidelines for each type of loan and require an appropriate evaluation of the credit characteristics of each borrower. This evaluation includes the borrower’s primary source of repayment capacity; the adequacy of collateral, if any, to secure the loan; the potential value of personal guarantees as secondary sources of repayment; and other factors unique to each loan that may increase or mitigate its risk. Credit bureau scores are also considered when evaluating consumer purpose loans as well as guarantors of business purpose loans. However, the Bank does not periodically update credit bureau scores subsequent to when loans are made to determine changes in credit history.

Credit risk is mitigated for all types of loans by continuously monitoring delinquency levels and pursuing collection efforts at the earliest stage of delinquency. The Bank also monitors general economic conditions, including employment, housing activity and real estate values in its market. The Bank also periodically evaluates and changes its underwriting standards when warranted based on market conditions, the historical performance of a category of the portfolio, or other external factors. Credit risk is also regularly evaluated for the impact of adverse economic and other events ~~such as the current COVID-19 pandemic crisis,~~ that increase the risk of default and the potential loss in the event of default, to understand the impact on the Bank’s earnings and capital.

Commercial loan risk grades are determined based on an evaluation of the relevant characteristics of each loan, assigned at inception and adjusted thereafter at any time to reflect changes in the risk profile throughout the life of each loan. The primary factors used to determine the risk grade are the sufficiency, reliability and sustainability of the primary source of repayment and overall financial strength of the borrower. The rating system more heavily weights the debt service coverage, leverage and loan-to-value factors to derive the risk grade. Other factors that are considered at a lesser weighting include management, industry or property-type risks, payment history, collateral and personal guarantees.

TABLE 10. COMPOSITION OF LOANS (1)


	March 31, 2022				December 31, 2021				March 31, 2023				December 31, 2022
(unaudited, dollars in thousands)	Amount		% of Loans		Amount		% of Loans		Amount		% of Loans		Amount		% of Loans
Commercial real estate:
Land and construction	$	857,869		8.8	$	833,880		8.5	$	731,173		6.7	$	943,887		8.8
Improved property		4,722,213		48.4		4,705,088		48.2		5,466,671		50.2		5,117,457		47.8
Total commercial real estate		5,580,082		57.2		5,538,968		56.7		6,197,844		56.9		6,061,344		56.6
Commercial and industrial		1,436,543		14.7		1,427,645		14.7		1,519,808		13.9		1,579,395		14.7
Commercial and industrial - PPP		76,535		0.8		162,675		1.7
Residential real estate		1,767,064		18.1		1,721,378		17.6		2,251,423		20.7		2,140,584		20.0
Home equity		592,872		6.1		605,682		6.2		692,001		6.3		695,065		6.5
Consumer		280,176		2.9		277,130		2.8		227,612		2.1		226,340		2.1
Total portfolio loans		9,733,272		99.8		9,733,478		99.7		10,888,688		99.9		10,702,728		99.9
Loans held for sale		15,959		0.2		25,277		0.3		12,722		0.1		8,249		0.1
Total loans	$	9,749,231		100.0	$	9,758,755		100.0	$	10,901,410		100.0	$	10,710,977		100.0

(1)

Loans are presented gross of the allowance for loan credit losses – loans and net of unearned income, credit valuation adjustments, and unamortized net deferred loan fee income and loan origination costs.

Total portfolio loans ~~decreased $0.2~~increased $186.0 million from December 31, ~~2021, while they decreased $970.0 million~~2022, and have increased $1.2 billion or ~~9.1%~~11.9% over the last twelve months. ~~Most of the loan decrease was due to the forgiveness of $807.2 million of PPP loans~~The increase over the last twelve months ~~of which $76.5 million remain~~was driven by a 15.8% growth in ~~the portfolio~~improved property loans due to increased originations and declining prepayment rates, as of March 31, 2022. Excluding PPP loans, total portfolio loans decreased over the last twelve months by 2.3%, reflecting continued low commercial line of credit utilization and the higher than anticipated payoffs of commercialwell as a 27.4% increase in residential real estate ~~loans,~~balances, which ~~are down 2.3%,~~also stems from declining prepayment rates and commercial and industrial loans, which are down 10.2%. Larger payoffs have also caused a 6.5% decline in HELOC balances, and consumer loan demand has decreased slightly at 3.2%. While there have been year-over-year decreases in these loan segments, the most recent quarter is a promising start to 2022 with loan growth, excluding PPP loans, in all three commercial loan categories, consumer loans, and residential real estate. Excluding PPP loans, total portfolio loans increased 3.6% on an annualized basis from December 31, 2021. Residential real estate also provided a partial offset to the year-over-year decrease, as it increased 7.5% due to continuedconstruction advances, despite efforts to sell ~~fewer~~more loans into the secondary market. Land and construction loans declined by 14.8% as a large number of construction projects were completed and subsequently transferred to improved property loans, which further increased those balances. Home equity loans have ~~also improved year-over-year by 33.6% due to~~ increased ~~originations. Loan growth will continue to be enhanced through~~16.7% and commercial and industrial loans have increased 0.4% over the ~~opening of new loan production offices in the Nashville and Indianapolis areas in the first quarter.~~12 month period, while consumer loans have decreased 18.8%.

Total loan commitments of ~~$4.2~~$4.9 billion, including loans approved but not closed, increased ~~$417.2~~$295.7 million or ~~10.9%~~6.4% from December 31, ~~2021~~2022 due primarily to ~~increases in~~increased availabilities under lines of credit and loans approved but not ~~closed and availabilities under lines of credit.~~closed. The average line utilization percentage for the commercial portfolio was ~~35.7% at~~32.6% for the three months ended March 31, ~~2022~~2023 compared to ~~34.5% as of~~34.7% for the three months ended December 31, ~~2021.~~2022.

The commercial portfolio is monitored for potential concentrations of credit risk by market, type of lending, CRE property type, C&I and owner-occupied CRE by industry, investment CRE dependence on common tenants and industries or property types that are similarly impacted by external factors.

Loans held for sale at both March 31, ~~2022~~2023 and December 31, ~~2021~~2022 are originated residential mortgages that are committed to be sold into the secondary market. Loans held for sale ~~decreased~~increased by ~~$9.3~~$4.5 million or ~~36.9%~~54.2% from December 31, ~~2021~~2022 due to ~~continued efforts to keep more originations in the loan portfolio and lower originations.~~

Wesbanco has participated in the PPP loan program as originally established by the CARES Act. As of March 31, 2022, the Company has funded nearly 11,300 loans totaling $1.2 billion to qualifying small businesses, non-profits and organizations throughout our six-state footprint. The loans carry an interest rate of 1%, are generally for a two-year or five-year maturity, and were originated with a percentage fee paid by the SBA directly to the Bank depending on the size of the loan originated. At March 31, 2022, remaining unaccreted fees, net of deferred origination costs, were $2.9 million, substantially all of which is attributable to 2021 originated PPP loans. The loans are subject to forgiveness by the SBA under certain defined circumstances; a high percentage of such loans have met such requirements (as revised) in previous quarters, and most remaining PPP loans are anticipated to meet these requirements as well. The 2020-originated PPP loans totaling $850.9 million, or over 99% of those originations, and $298.8 million of 2021-originated PPP loans, or 80% of those originations, have been forgiven as of March 31, 2022.

Wesbanco met the needs of the communities it serves by providing appropriate relief tailored to the individual needs of the customer, ranging from three months of interest-only for those minimally impacted, up to and including full principal and interest deferral for six months for those significantly impacted, while also providing additional tailored relief to the hospitality industry where appropriate. The relief was provided in as many as three phases depending on the circumstances. Under the CARES Act, Wesbanco modified approximately 3,553 loans totaling $2.2 billion, of which a total of $51.5 million, representing 0.5% of total portfolio loans, remain in deferral as of March 31, 2022. As of March 31, 2022, an additional $96.4 million of commercial loans had various payment terms modified in exchange for enhancements beneficial to the Bank which were permanent improvements to the credit facility. Changes include an increase in ~~floor~~demand for fixed rate mortgages in the first quarter as mortgage rates ~~increase in guarantors and duration of guarantees and a change in covenants. None of the aforementioned loans were considered delinquent or on non-accrual status as of March~~declined slightly from December 31, 2022.

NON-PERFORMING ASSETS AND LOANS PAST DUE 90 DAYS OR MORE

Non-performing assets consist of non-accrual loans, ~~and TDRs,~~ other real estate acquired through or in lieu of foreclosure, bank premises held for sale, and repossessed automobiles acquired to satisfy defaulted consumer loans.

TABLE 11. NON-PERFORMING ASSETS


(unaudited, dollars in thousands)	March 31, 2022			December 31, 2021			March 31, 2023			December 31, 2022
Non-accrual loans:
Commercial real estate - land and construction	$	73		$	73		$	—		$	112
Commercial real estate - improved property		7,391			7,715			18,200			16,254
Commercial and industrial		4,592			5,064			3,209			2,946
Residential real estate		15,512			17,190			12,837			13,695
Home equity		5,319			5,163			4,861			5,044
Consumer		485			537			109			134
Total non-accrual loans (1)		33,372			35,742			39,216			38,185
TDRs accruing interest:
TDRs accruing interest (2):
Commercial real estate - land and construction		82			—			—			—
Commercial real estate - improved property		367			374			—			347
Commercial and industrial		187			192			—			166
Residential real estate		2,797			2,875			—			2,362
Home equity		266			277			—			330
Consumer		32			28			—			25
Total TDRs accruing interest (1)		3,731			3,746			—			3,230
Total non-performing loans	$	37,103		$	39,488		$	39,216		$	41,415
Other real estate owned and repossessed assets		87			—			1,554			1,486
Total non-performing assets	$	37,190		$	39,488		$	40,770		$	42,901
Non-performing loans/total portfolio loans		0.38	%		0.41	%		0.36	%		0.39	%
Non-accrual loans/total portfolio loans		0.34	%		0.37	%		0.36	%		0.36	%
Non-performing assets/total assets		0.22	%		0.23	%		0.24	%		0.25	%
Non-performing assets/total portfolio loans, other real estate and repossessed assets		0.38	%		0.41	%		0.37	%		0.40	%

(1)

Loans previously designated as TDRs that were also on non-accrual of ~~$1.3~~$1.7 million ~~as of March 31, 2022 and $1.5 million as of December 31, 2021, respectively,~~ are included in total non-accrual ~~loans.~~loans as of December 31, 2022.

(2)

TDRs no longer exist as of January 1, 2023 because of Wesbanco's adoption of ASU 2022-02.

As of the adoption of ASU 2022-02, non-performing loans consist only of non-accrual loans. Non-performing loans ~~which consist of non-accrual~~in prior periods also include loans ~~and TDRs,~~that were previously designated as TDRs. Non-performing loans decreased ~~$2.4~~$2.2 million or ~~6.0%~~5.3%, from December 31, ~~2021. Essentially all $2.4 million of the decrease is~~2022 due to ~~non-accrual~~this change. Non-accrual loans ~~as there has been only one additional TDR since December 31, 2021.~~increased $1.0 million or 2.7%. (Please see the Notes to the Consolidated Financial Statements for additional ~~discussion.)~~discussion).

Section 4013 of the CARES Act allows financial institutions the option to temporarily suspend certain requirements under U.S. GAAP related to TDRs for a limited period of time during the COVID-19 pandemic. These customers must meet certain criteria, such as they were in good standing and not more than 30 days past due as of December 31, 2019, as well as other requirements. Based on this guidance, Wesbanco did not classify the COVID-19 loan modifications as TDRs, nor are the customers considered past due with regards to their delayed payments. Upon exiting the loan modification deferral program, the measurement of loan delinquency will resume where it left off upon entry into the program. Wesbanco has offered various deferred payment schedules to commercial and retail customers impacted by the COVID-19 pandemic, depending on the type of loan and the industry-type for commercial loans. Such deferrals primarily took place in 2020, with a few in late 2021. New loan deferrals are no longer available in 2022.

Other real estate owned and repossessed assets increased to $0.1 million from December 31, 2021. At March 31, 2022 and December 31, 2021, formal foreclosure proceedings were in process on residential real estate loans totaling $4.8 million and $4.0 million, respectively. Previously, as a result of provisions of the CARES Act, certain residential real estate loans were temporarily suspended from entering foreclosure proceedings, which included $0.8 million of loans as of December 31, 2021. Since this moratorium substantially ended in the first quarter, there are currently no loans suspended from entering foreclosure proceedings.

The following table presents past due and accruing loans excluding ~~non-accrual and TDRs:~~non-accruals:

TABLE 12. PAST DUE AND ACCRUING LOANS EXCLUDING ~~NON-ACCRUAL AND TDRs~~NON-ACCRUALS


(unaudited, dollars in thousands)	March 31, 2022			December 31, 2021			March 31, 2023			December 31, 2022
Loans past due 90 days or more:
Commercial real estate - land and construction	$	—		$	51		$	—		$	629
Commercial real estate - improved property		3,449			3,042			1,295			84
Commercial and industrial		319			559			645			1,586
Residential real estate		1,229			2,840			982			1,551
Home equity		631			685			1,154			1,063
Consumer		514			627			494			530
Total loans past due 90 days or more		6,142			7,804			4,570			5,443
Loans past due 30 to 89 days:
Commercial real estate - land and construction		—			—			168			910
Commercial real estate - improved property		11,984			14,001			1,217			2,459
Commercial and industrial		7,934			3,442			1,042			984
Residential real estate		4,524			4,513			4,008			3,582
Home equity		1,729			2,528			3,662			3,920
Consumer		2,151			2,668			2,823			3,584
Total loans past due 30 to 89 days		28,322			27,152			12,920			15,439
Total loans 30 days or more past due	$	34,464		$	34,956		$	17,490		$	20,882
Loans past due 90 days or more and accruing to total portfolio loans		0.06	%		0.08	%		0.04	%		0.05	%
Loans past due 30-89 days and accruing to total portfolio loans		0.29	%		0.28	%		0.12	%		0.14	%

Loans past due 30 days or more and accruing interest, excluding non-accruals, ~~and TDRs,~~ decreased ~~$0.5~~$3.4 million or ~~1.4%~~16.2% from December 31, ~~2021.~~2022. These loans continue to accrue interest because they are both well-secured and in the process of collection. Loans 90 days or more past due decreased ~~$1.7~~$0.9 million and represented ~~0.06%~~0.04% and ~~0.08%~~0.05% of total portfolio loans at March 31, ~~2022~~2023 and December 31, ~~2021,~~2022, respectively. ~~The~~Loans 30 –to 89 days past due ~~category~~ represented ~~0.29%~~0.12% of total portfolio loans at March 31, ~~2022~~2023 and ~~0.28%~~0.14% at December 31, ~~2021. Loans currently modified as permitted by the regulatory authorities and the CARES Act are not included in Tables 13 or 14, as they are not considered past due.~~2022.

ALLOWANCE FOR CREDIT LOSSES - LOANS AND LOAN COMMITMENTS

As of March 31, ~~2022,~~2023, the total allowance for credit losses – loans and commitments was ~~$125.9~~$127.8 million, of which ~~$117.9~~$118.7 million related to loans and ~~$8.0~~$9.1 million related to loan commitments. The allowance for credit losses – loans was ~~1.21%~~1.09% of total portfolio loans as of March 31, ~~2022,~~2023, compared to ~~1.25%~~1.10% as of December 31, 2021. Excluding PPP loans of $76.5 million, the allowance for credit losses – loans was 1.22% of total portfolio loans as of March 31, 2022, as compared to 1.27% of total portfolio loans at December 31, 2021. As per regulatory guidance, there is no calculated allowance on PPP loans due to their government guarantees by the SBA.2022.

The allowance for credit ~~losses -~~losses– loans individually-evaluated ~~increased $3.0~~decreased $0.8 million from December 31, ~~2021~~2022 to March 31, ~~2022.~~2023. The population of individually-evaluated loans consisted primarily of ~~eleven~~one hotel ~~loans,~~loan and one office loan, with a total outstanding loan balance of ~~$39.5~~$15.8 million. The allowance for loans collectively-evaluated ~~decreased~~increased from December 31, ~~2021~~2022 to March 31, ~~2022~~2023 by ~~$6.8~~$1.7 million.

The allowance for credit ~~losses -~~losses- loan commitments was ~~$8.0~~$9.1 million at March 31, ~~2022~~2023 as compared to ~~$7.8~~$8.4 million as of December 31, ~~2021,~~2022, and is included in other liabilities on the Consolidated Balance Sheets.

The allowance for credit losses by loan category, presented in Note 4, “Loans and the Allowance for Credit Losses” of the Consolidated Financial Statements, summarizes the impact of changes in various factors that affect the allowance for loan losses in each segment of the portfolio. The allowance for credit losses under CECL is calculated utilizing the PD/LGD, which is then discounted to net present value. PD is the probability the asset will default within a given time frame and LGD is the percentage of the asset not expected to be collected due to default. The primary macroeconomic drivers of the quantitative model include forecasts of national unemployment and interest rates, as well as modeling adjustments for changes in prepayment speeds, loan risk grades, portfolio mix, concentrations and loan growth. For the calculation as of March 31, ~~2022,~~2023, the forecast was based upon a ~~blend~~probability weighted approach which is designed to incorporate loss projections from a baseline, upside and downside economy. Due to the nonlinearity of ~~two nationally-recognized published~~credit losses to the economy, the asymmetry is best captured by evaluating multiple economic ~~forecasts~~scenarios through ~~March 31, 2022, and was primarily driven by national unemployment and interest rate spread forecasts.~~a probability weighted approach. At quarter-end, national unemployment was projected to ~~peak at 3.7%~~be 4.0%, and subsequently ~~decrease~~increase to an average of ~~3.5%~~4.5% over the remainder of the forecast period. ~~The improvement in~~Economic drivers of the ~~macroeconomic factors and COVID qualitative factors,~~quantitative model, including those ~~specifically~~ for ~~the hospitality portfolio,~~prepayment speed fluctuations, caused ~~the allowance to decrease from December 31, 2021 to March 31, 2022, by $3.5 million.~~

If forecasted projections of national unemployment remain consistent with the forecast utilized by Wesbanco as of March 31, 2022 throughout the rest of the year, this may result in additional, but less significant, future quarterly decreases in the allowance for credit losses ~~depending upon other model variables such as qualitative factors specifically for hotels and the COVID-19 pandemic.~~- loans to increase from December 31, 2022 to March 31, 2023, by $0.9 million.

Criticized and classified loans were ~~3.68%~~1.60% of total portfolio loans at March 31, 2023, decreasing from ~~3.75%~~2.34% at December 31, ~~2021.~~2022. Criticized and classified loans decreased from ~~$364.5~~$250.5 million at December 31, ~~2021~~2022 to ~~$358.0~~$173.8 million at March 31, ~~2022.~~2023. The ~~$6.5~~$76.7 million ~~quarterly~~ decline is primarily due to upgrades ~~on certain hospitality loans.~~across the commercial loan portfolio. See Footnote 4, “Loans and the Allowance for Credit Losses” for more information.

Table 13 summarizes the allocation of the allowance for credit losses to each category of the loan portfolio.

TABLE 13. ALLOCATION OF THE ALLOWANCE FOR CREDIT LOSSES – LOANS AND LOAN COMMITMENTS


(unaudited, dollars in thousands)	March 31, 2022		Percent of Total		December 31, 2021		Percent of Total		March 31, 2023		Percent of Total		December 31, 2022		Percent of Total
Allowance for credit losses - loans:
Commercial real estate - land and construction	$	7,578		6.0	$	7,310		5.6	$	5,148		4.0	$	6,737		5.3
Commercial real estate - improved property		65,009		51.6		65,355		50.5		54,088		42.3		52,659		41.7
Commercial and industrial		25,535		20.3		26,875		20.8		28,571		22.4		31,540		25.0
Residential real estate		13,714		10.9		15,401		11.9		22,703		17.8		18,208		14.4
Home equity		675		0.5		724		0.6		4,197		3.3		4,234		3.4
Consumer		3,746		3.0		3,737		2.9		3,070		2.4		3,127		2.5
Deposit account overdrafts		1,608		1.3		2,220		1.7		921		0.7		1,285		1.0
Total allowance for credit losses - loans	$	117,865		93.6	$	121,622		94.0	$	118,698		92.9	$	117,790		93.3
Allowance for credit losses - loan commitments:
Commercial real estate - land and construction	$	4,931		3.9	$	4,180		3.2	$	5,974		4.7	$	6,025		4.8
Commercial real estate - improved property		320		0.3		201		0.2		—		—		—		0.0
Commercial and industrial		670		0.5		1,497		1.2		797		0.6		—		0.0
Residential real estate		1,740		1.4		1,576		1.2		2,205		1.7		2,215		1.8
Home equity		58		0.0		49		0.0		151		0.1		128		0.1
Consumer		331		0.3		272		0.2		—		0.0		—		0.0
Total allowance for credit losses - loan commitments		8,050		6.4		7,775		6.0		9,127		7.1		8,368		6.7
Total allowance for credit losses - loans and loan commitments	$	125,915		100.0	$	129,397		100.0	$	127,825		100.0	$	126,158		100.0

Although the allowance for credit losses is allocated as described in Table 13, the total allowance is available to absorb actual losses in any category of the loan portfolio. However, differences between management’s estimation of probable losses and actual net charge-offs in subsequent periods for any category may necessitate future adjustments to the allowance for credit losses applicable to the category. Management believes the allowance for credit losses is appropriate to absorb expected losses at March 31, ~~2022.~~2023.

DEPOSITS

TABLE 14. DEPOSITS


(unaudited, dollars in thousands)	March 31, 2022		December 31, 2021		$ Change			% Change			March 31, 2023		December 31, 2022		$ Change			% Change
Deposits
Non-interest bearing demand	$	4,670,520	$	4,590,895	$	79,625			1.7		$	4,478,954	$	4,700,438	$	(221,484	)		(4.7	)
Interest bearing demand		3,405,610		3,380,056		25,554			0.8			3,107,112		3,119,807		(12,695	)		(0.4	)
Money market		1,831,683		1,739,750		91,933			5.3			1,618,204		1,684,023		(65,819	)		(3.9	)
Savings deposits		2,679,053		2,562,510		116,543			4.5			2,784,780		2,741,004		43,776			1.6
Certificates of deposit		1,211,008		1,292,652		(81,644	)		(6.3	)		884,146		885,818		(1,672	)		(0.2	)
Total deposits	$	13,797,874	$	13,565,863	$	232,011			1.7		$	12,873,196	$	13,131,090	$	(257,894	)		(2.0	)

Deposits, which represent Wesbanco’s primary source of funds, are offered in various account forms at various rates through Wesbanco’s ~~205~~194 financial centers. The FDIC insures deposits up to $250,000 per account owner.

Total deposits ~~increased by $232.0~~decreased $257.9 million or ~~1.7%~~2.0% during the first three months of ~~2022. Money~~2023. Savings deposits increased 1.6%, while money market ~~deposits, savings deposits, non-interest bearing~~deposit accounts and demand deposits ~~interest bearing demand deposits increased 5.3%, 4.5%, 1.7%,~~decreased 3.9% and ~~0.8%~~3.0%, respectively. The ~~growth~~overall decrease in transaction-based accounts is primarily attributable to ~~increased~~inflationary pressures and rising costs across the country causing a decrease in personal ~~savings and focused retail and business strategies to obtain more account relationships as well as customers’ overall preferences for shorter-term maturities.~~savings. Deposit balances were also impacted by bonus and royalty payments for Marcellus and Utica shale gas payments from energy companies in Wesbanco’s southwestern Pennsylvania, eastern Ohio and northern West Virginia markets. ~~Money market deposits were influenced through Wesbanco’s participation~~In addition, Wesbanco also participates in the Insured Cash Sweep (ICS®) ~~money market~~ deposit program. ICS® reciprocal balances totaled ~~$660.0~~$623.4 million at March 31, ~~2022~~2023 compared to ~~$641.1~~$580.6 million at December 31, ~~2021.~~2022. In addition, ICS® one-way buys totaled $100.0 million at March 31, 2023 compared to $0 at December 31, 2022.

Certificates of deposit ~~decreased $81.6 million~~were basically unchanged from December 31, ~~2021~~2022 to March 31, 2022 due primarily to the effects of an overall corporate strategy designed to increase and remix retail deposit relationships and reduce single-service customers with a focus on overall products that can be offered at a lower cost to Wesbanco.2023. Wesbanco does not generally solicit brokered or other deposits out-of-market or over the internet, but does participate in the Certificate of Deposit Account Registry Services (CDARS®) program. CDARS® balances totaled ~~$44.6~~$57.3 million in outstanding balances at March 31, ~~2022,~~2023, of which $39.5 million represented one-way buys, compared to ~~$45.9~~$21.0 million in total outstanding balances, none of which represented one-way buys, at December 31, ~~2021.~~2022. Certificates of deposit greater than $250,000 were approximately ~~$274.5~~$113.6 million at March 31, ~~2022~~2023 compared to ~~$313.2~~$133.9 million at December 31, ~~2021. Certificates of deposit of $100,000 or more were approximately $612.0 million at March 31, 2022 compared to $666.2 million at December 31, 2021.~~2022. Certificates of deposit totaling approximately ~~$784.5~~$548.4 million at March 31, ~~2022~~2023 with a cost of ~~0.40%~~0.93% are scheduled to mature within the next 12 months. Wesbanco intends to continue to focus on its core deposit strategies and improving its overall mix of transaction accounts to total deposits. From time to time, the Bank may offer special promotions or match competitor rates on certain certificates of deposit maturities and savings products based on competition, sales strategies, liquidity needs and wholesale borrowing costs.

BORROWINGS

TABLE 15. BORROWINGS


(unaudited, dollars in thousands)	March 31, 2022		December 31, 2021		$ Change			% Change			March 31, 2023		December 31, 2022		$ Change			% Change
Federal Home Loan Bank Borrowings	$	123,898	$	183,920	$	(60,022	)		(32.6	)	$	1,280,000	$	705,000	$	575,000			81.6
Other short-term borrowings		158,538		141,893		16,645			11.7			111,176		135,069		(23,893	)		(17.7	)
Subordinated debt and junior subordinated debt		280,743		132,860		147,883			111.3			281,629		281,404		225			0.1
Total	$	563,179	$	458,673	$	104,506			22.8		$	1,672,805	$	1,121,473	$	551,332			49.2

While borrowings are a significant source of funding for Wesbanco, they are less significant as compared to total deposits. ~~During~~FHLB borrowings increased $575.0 million from December 31, 2022 to March 31, 2023, as $1.3 billion in new advances were partially offset by $0.7 billion in maturities. The average cost of maturing FHLB advances was 4.72% during the first three months of ~~2022, $60.0 million in available liquidity was used for FHLB borrowings maturities and other principal pay-downs with~~2023, compared to an average cost of ~~1.13%. There were no~~4.96% for new ~~FHLB advances~~borrowings during the ~~period.~~first three months of 2023.

Other short-term borrowings, which may consist of federal funds purchased, callable repurchase agreements, overnight sweep checking accounts, and borrowings on a revolving line of credit, were ~~$158.5~~$111.2 million at March 31, ~~2022~~2023, compared to ~~$141.9~~$135.1 million at December 31, ~~2021.~~2022. There were no outstanding federal funds purchased at either March 31, ~~2022~~2023 or December 31, ~~2021.~~2022.

Subordinated debt and junior subordinated debt balances increased by $147.9 million from December 31, 2021. The increase is due to the issuance of $150.0 million in aggregate principal amount of subordinated debentures by Wesbanco, Inc. on March 23, 2022. The subordinated debentures have a fixed rate of 3.75% for the first five years and a floating rate for the next five years at Three Month Term Secured Overnight Financing Rate plus 1.787%. The subordinated debentures are callable after five years, mature on April 1, 2032 and count towards Tier 2 capital.

Wesbanco renewed a revolving line of credit in August ~~2021,~~2022, which is a senior obligation of the parent company, with another financial institution. This line of credit, ~~which accrues~~with each advance accruing interest at the borrower selected rate of either an adjusted ~~LIBOR~~base rate, Daily SOFR, or Term SOFR, provides for aggregate unsecured borrowings of up to $30.0 million. There were no outstanding balances at either March 31, ~~2022~~2023 or December 31, ~~2021.~~2022.

CAPITAL RESOURCES

Shareholders' equity ~~decreased $145.9~~increased $48.8 million or ~~5.4%~~2.0% from ~~$2.7~~December 31, 2022, to $2.5 billion at ~~December~~March 31, ~~2021.~~2023. The ~~decrease~~increase resulted from net income during the ~~repurchase~~current three-month period of ~~common shares totaling $62.3~~$42.3 million and a $28.0 million other comprehensive gain for the three months ended March 31, 2023, exceeding the declaration of common and preferred shareholder dividends totaling ~~$20.5~~$20.6 million and $2.5 million, ~~respectively, and a $106.2 million other comprehensive loss for the three months ended March 31, 2022 exceeding net income during the current three-month period of $44.1 million.~~respectively. Wesbanco also increased its quarterly dividend rate $0.01 per quarter to ~~$0.34~~$0.35 per share in ~~February,~~November 2022, representing a ~~3.0%~~2.9% increase over the prior quarterly rate and a cumulative ~~143%~~150% increase since 2010.

Wesbanco ~~purchased 1,724,571~~did not purchase any shares of its common stock ~~on the open market at a total cost of $62.3 million or $36.14 per share~~ during the three-month period ended March 31, ~~2022~~2023 under the current share repurchase authorizations. The Board of Directors approved an additional stock repurchase plan on February 24, 2022 for the purchase of up to 3.2 million shares, which was in addition to prior plans that were utilized during the quarter.authorization. At March 31, ~~2022,~~2023, the remaining shares authorized to be purchased under the last approved repurchase plan totaled ~~2,867,046~~1,183,207 shares.

Regulatory guidelines require bank holding companies and commercial banks to maintain certain minimum capital ratios and define companies as “well capitalized” that sufficiently exceed the minimum ratios. At March 31, ~~2022,~~2023, regulatory capital levels for both the Bank and Wesbanco were substantially greater than the minimum amounts needed to be considered “well capitalized” under the regulations. There are various legal limitations under federal and state laws that limit the payment of dividends from the Bank to Wesbanco. As of March 31, ~~2022,~~2023, under FDIC regulations, Wesbanco could receive, without prior regulatory approval, a dividend of approximately ~~$91.2~~$43.2 million from the Bank.

On March 26, 2020, regulators issued interim financial rule (“IFR”) “Regulatory Capital Rule: Revised Transition of the Current Expected Losses Methodology for Allowances” in response to the disrupted economic activity from the spread of COVID-19. The IFR provides financial institutions that adopt CECL during 2020 with the option to delay for two years the estimated impact of CECL on regulatory capital, followed by a three-year transition period to phase out the aggregate amount of the capital benefit provided by the initial two-year delay (“five-year transition”). Wesbanco adopted CECL effective January 1, 2020 and elected to implement the five-year transition. Regulatory capital levels without the capital benefit at March 31, ~~2022~~2023 for both the Bank and Wesbanco would have continued to be greater than the amounts needed to be considered “well ~~capitalized”,~~capitalized,” as the capital benefit approximated 1711 to 2616 basis points for three of the four regulatory ratios, while total risk-based capital would have been slightly higher without the transition.

The following table summarizes risk-based capital amounts and ratios for Wesbanco and the Bank for the periods indicated:

March 31, 2022

December 31, 2021

Minimum

Well-

Minimum

Minimum

(unaudited, dollars in thousands)

Value(1)

Capitalized(2)

Amount

Ratio

Amount(1)

Amount

Ratio

Amount(1)

Wesbanco, Inc.

Tier 1 leverage

4.00
%

5.00
%

$
1,539,123

9.67
%

$
636,446

$
1,586,165

10.02
%

$
633,089

Common equity Tier 1

4.50
%

6.50
%

1,394,639

12.01
%

522,538

1,441,681

12.77
%

507,893

Tier 1 capital to risk-weighted assets

6.00
%

8.00
%

1,539,123

13.25
%

696,717

1,586,165

14.05
%

677,190

Total capital to risk-weighted assets

8.00
%

10.00
%

1,895,163

16.32
%

928,957

1,795,661

15.91
%

902,920

Wesbanco Bank, Inc.

Tier 1 leverage

4.00
%

5.00
%

$
1,529,176

9.63
%

$
635,459

$
1,529,227

9.68
%

$
631,920

Common equity Tier 1

4.50
%

6.50
%

1,529,176

13.21
%

521,005

1,529,227

13.60
%

505,967

Tier 1 capital to risk-weighted assets

6.00
%

8.00
%

1,529,176

13.21
%

694,673

1,529,227

13.60
%

674,622

Total capital to risk-weighted assets

8.00
%

10.00
%

1,605,215

13.86
%

926,230

1,608,723

14.31
%

899,496


							March 31, 2023							December 31, 2022
	Minimum			Well-								Minimum							Minimum
(unaudited, dollars in thousands)	Value(1)			Capitalized(2)			Amount		Ratio			Amount(1)		Amount		Ratio			Amount(1)
Wesbanco, Inc.
Tier 1 leverage		4.00	%		5.00	%	$	1,589,576		9.82	%	$	647,406	$	1,576,764		9.90	%	$	636,966
Common equity Tier 1		4.50	%		6.50	%		1,445,092		11.11	%		585,178		1,432,280		11.20	%		575,500
Tier 1 capital to risk-weighted assets		6.00	%		8.00	%		1,589,576		12.22	%		780,237		1,576,764		12.33	%		767,344
Total capital to risk-weighted assets		8.00	%		10.00	%		1,947,129		14.97	%		1,040,316		1,933,007		15.11	%		1,023,112
Wesbanco Bank, Inc.
Tier 1 leverage		4.00	%		5.00	%	$	1,567,280		9.70	%	$	646,128	$	1,558,305		9.80	%	$	636,033
Common equity Tier 1		4.50	%		6.50	%		1,567,280		12.08	%		583,759		1,558,305		12.22	%		574,079
Tier 1 capital to risk-weighted assets		6.00	%		8.00	%		1,567,280		12.08	%		778,346		1,558,305		12.22	%		765,439
Total capital to risk-weighted assets		8.00	%		10.00	%		1,644,833		12.68	%		1,037,794		1,634,548		12.81	%		1,020,585

(1)

Minimum requirements to remain adequately capitalized.

(2)

Well-capitalized under prompt corrective action regulations.

LIQUIDITY RISK

Liquidity is defined as a financial institution’s capacity to meet its cash and collateral obligations at a reasonable cost. Liquidity risk is the risk that an institution’s financial condition or overall safety and soundness is adversely affected by an inability, or perceived inability, to meet its obligations. An institution’s obligations, and the funding sources to meet them, depend significantly on its business mix, balance sheet structure, and the cash flows of its on- and off-balance sheet obligations. Institutions confront various internal and external situations that can give rise to increased liquidity risk including funding mismatches, market constraints on funding sources, contingent liquidity events, changes in economic conditions, and exposure to credit, market, operation, legal and reputation risk. Wesbanco actively manages liquidity risk through its ability to provide adequate funds to meet changes in loan demand, unexpected outflows in deposits and other borrowings as well as to take advantage of market opportunities and meet operating cash needs. This is accomplished by maintaining liquid assets in the form of securities, sufficient borrowing capacity and a stable core deposit base. Liquidity is centrally monitored by Wesbanco’s Asset/Liability Committee (“ALCO”).

Wesbanco determines the degree of required liquidity by the relationship of total holdings of liquid assets to the possible need for funds to meet unexpected deposit losses and/or loan demands. The ability to quickly convert assets to cash at a minimal loss is a primary function of Wesbanco’s investment portfolio management. Wesbanco believes its cash flow from the loan portfolio, the investment portfolio, and other sources, adequately meet its liquidity requirements. Wesbanco’s net loans to assets ratio was ~~56.2%~~62.3% at March 31, ~~2022~~2023 and deposit balances funded ~~80.7%~~74.5% of assets.

The following table lists the sources of liquidity from assets at March 31, ~~2022~~2023 expected within the next year:

(unaudited, in thousands)

Cash and cash equivalents

$
1,369,498

Securities with a maturity date within the next year and callable securities

206,922

Projected payments and prepayments on mortgage-backed securities and collateralized mortgage obligations (1)

611,018

Loans held for sale

15,959

Accruing loans scheduled to mature

1,052,034

Normal loan repayments

1,542,875

Total sources of liquidity expected within the next year

$
4,798,306


(unaudited, in thousands)
Cash and cash equivalents	$	597,503
Securities with a maturity date within the next year and callable securities		255,583
Projected payments and prepayments on mortgage-backed securities and collateralized mortgage obligations (1)		269,496
Loans held for sale		12,722
Accruing loans scheduled to mature		986,012
Normal loan repayments		1,180,335
Total sources of liquidity expected within the next year	$	3,301,651

(1)

Projected prepayments are based on current prepayment speeds.

Deposit flows are another principal factor affecting overall Wesbanco liquidity. Deposits totaled ~~$13.8~~$12.9 billion at March 31, ~~2022.~~2023. Deposit flows are impacted by current interest rates, products and rates offered by Wesbanco versus various forms of competition, as well as customer behavior. Certificates of deposit scheduled to mature within one year totaled ~~$784.5~~$548.4 million at March 31, ~~2022,~~2023, with a weighted average cost of ~~0.40%~~0.93%, which includes jumbo regular certificates of deposit totaling ~~$381.7~~$209.7 million with a weighted-average cost of ~~0.50%~~0.99%, and jumbo ~~CDARS~~®CDARS® deposits of ~~$38.0~~$53.4 million with a weighted-average cost of ~~0.35%.~~3.11%, which included $39.5 million of one-way buys.

Uninsured deposits, as reported for regulatory purposes, totaled $4.1 billion at March 31, 2023, which include $870.4 million of public funds deposits that are over the FDIC-insured limit. Wesbanco secures these public funds deposits by pledging investment securities with a market value at or above the deposit balance. Excluding these public funds, at March 31, 2023, uninsured deposits are $3.2 billion, or 25% of total deposits.

Wesbanco maintains a line of credit with the FHLB as an additional funding source. Available credit with the FHLB approximated ~~$3.8~~$3.3 billion and $3.6 billion at March 31, ~~2022~~2023 and December 31, ~~2021,~~2022, respectively. The FHLB requires securities to be specifically pledged to the FHLB and maintained in a FHLB-approved custodial arrangement if the member wishes to include such securities in the maximum borrowing capacity calculation. Wesbanco has elected not to specifically pledge to the FHLB otherwise unpledged securities. At March 31, ~~2022,~~2023, the Bank had unpledged available-for-sale securities with an ~~amortized cost~~estimated fair value of ~~$922.3~~$598.7 million, or ~~30.7%~~24.9% of the total available-for-sale portfolio. A portion of these securities could be sold for additional liquidity, or such securities could be pledged to secure additional FHLB borrowings. A significant portion of the portfolio is pledged to public deposit customers, as public deposit balances have increased significantly through the several acquisitions made since ~~2015, to a total of $1.6 billion~~2015. In addition, at March 31, ~~2022. Wesbanco’s~~2023, the Bank had unpledged held-to-maturity ~~portfolio currently contains $1.0 billion~~securities with an estimated fair value of ~~unpledged securities.~~$844.1 million. Most of these securities are tax-exempt municipal securities, which can only be pledged in limited circumstances. Generally, these securities cannot be sold without tainting the remainder of the held-to-maturity portfolio. If tainting occurs, all remaining securities with the held-to-maturity designation would be required to be reclassified as available-for-sale, and the held-to-maturity designation would not be available to Wesbanco for a period of time.

Wesbanco participates in the Federal Reserve Bank’s Borrower-in-Custody Program (“BIC”) whereby Wesbanco pledges certain consumer loans as collateral for borrowings. Wesbanco did not have any BIC borrowings outstanding at March 31, ~~2022.~~2023. Alternative funding sources may include the utilization of existing overnight lines of credit with third party banks totaling ~~$275.0~~$235.0 million, none of which was outstanding at March 31, ~~2022,~~2023, along with seeking other lines of credit, borrowings under repurchase agreement lines, increasing deposit rates to attract additional funds, accessing brokered deposits, or selling securities available-for-sale or certain types of loans. In addition, in March 2023, the Federal Reserve announced that it would make available additional funding to eligible depository institutions through the creation of a new Bank Term Funding Program ("BTFP"). The BTFP would offer loans of up to one year in length to eligible depository institutions that pledge U.S. Treasuries, agency debt and mortgage-backed securities, or other qualifying assets as collateral. As of March 31, 2023, Wesbanco has not utilized the BTFP for funding, but does have $583.9 million in par value of qualifying investment securities that could be used to access funds from the program.

Other short-term borrowings of ~~$158.5~~$111.2 million at March 31, ~~2022~~2023 consisted of callable repurchase agreements and overnight sweep checking accounts for large commercial customers. Other short-term borrowings may also include federal funds purchased. The overnight sweep checking accounts require U.S. Government securities to be pledged equal to or greater than the average deposit balance in the related customer accounts.

The principal sources of parent company liquidity are dividends from the Bank, ~~$264.4~~$276.1 million in cash on hand, and a $30.0 million revolving line of credit with another bank, which did not have an outstanding balance at March 31, ~~2022.~~2023. Wesbanco is in compliance with all applicable loan covenants. There are various legal limitations under federal and state laws that limit the payment of dividends from the Bank to the parent company. As of March 31, ~~2022,~~2023, under FDIC and State of West Virginia regulations, Wesbanco could receive, without prior regulatory approval, dividends of approximately ~~$91.2~~$43.3 million from the Bank. Management believes these are appropriate levels of cash for the parent company given the current environment. Management continuously monitors the adequacy of parent company cash levels and sources of liquidity through the use of metrics that relate current cash levels to historical and forecasted cash inflows and outflows.

Wesbanco had outstanding commitments to extend credit in the ordinary course of business approximating ~~$4.2~~$4.9 billion and ~~$3.8~~$4.6 billion at March 31, ~~2022~~2023 and December 31, ~~2021,~~2022, respectively. On a historical basis, only a portion of these commitments will result in an outflow of funds. Please refer to Note 10, “Commitments and Contingent Liabilities” of the Consolidated Financial Statements and the “Loans and Credit Risk” section of this MD&A for additional information.

Federal financial regulatory agencies have previously issued guidance to provide for sound practices for managing funding and liquidity risk and strengthening liquidity risk management practices. Wesbanco maintains a comprehensive management process for identifying, measuring, monitoring, and controlling liquidity risk, which is fully integrated into its risk management process. Management believes Wesbanco has sufficient current liquidity to meet current obligations to borrowers, depositors and others and that Wesbanco’s current liquidity risk management policies and procedures, as periodically reviewed and adjusted, adequately address this guidance.

LIBOR TRANSITION

LIBOR is a widely used short-term reference interest rate benchmark for variable rate loans and securities, borrowings, and interest rate hedge/swap transactions. In July of 2017, the U.K. Financial Conduct Authority (“FCA”) announced the discontinuation of LIBOR after certain banks provided purported interest rate figures which did not truly reflect the rate at which they could borrow. In addition to FCA, as early as 2014, financial institution regulators and the Federal Financial Institutions Examination Council (“FFIEC”) began to work to develop a uniform approach to the phase-out of LIBOR because the continued reliance on LIBOR could present systematic risk to financial institutions. The Board of Governors of the Federal Reserve System and the Federal Reserve Bank of New York convened the Alternative Reference Rates Committee (“AARC”) to identify alternative reference rates to LIBOR. The AARC released consultations on contractual fallback language to prepare for the transition away for LIBOR and on June 22, 2017, identified SOFR as the recommended alternative to LIBOR.

On July 1, 2020, the FFIEC issued a Joint Statement on Managing the LIBOR Transition to further explain that new financial contracts should either utilize a reference rate other than LIBOR or have robust fallback language that defines an alternative reference rate after LIBOR’s discontinuation. The FFIEC statement encouraged supervised financial institutions to continue their efforts to prepare for the change and address the risks associated with the LIBOR transition.

On November 6, 2020, the Board of Governors of the Federal Reserve System, the Office of the Comptroller of the Currency, and the Federal Deposit Insurance Corporation (collectively, the “Agencies”) issued a statement providing that a financial institution may use any reference rate for its loans that the financial institution determines to be appropriate for its funding model and customer needs.

Thereafter, on November 30, 2020, the Agencies issued an additional joint statement encouraging financial institutions to continue to transition away from LIBOR as soon as practicable, but no later than December 31, 2021. Given the risks associated with the use of LIBOR, the Agencies stated that entering into new contracts that use LIBOR as a reference rate after December 31, 2021, would create safety and soundness risks.

On March 5, 2021, the U.K. FCA and Intercontinental Exchange (“ICE”) Benchmark Administration announced that the publication of the overnight, as well as, the one, three, six, and twelve month LIBOR rates will continue through June 30, 2023, which will provide additional time to wind down or renegotiate existing contracts that reference LIBOR.

On October 20, 2021, the Agencies with the Consumer Financial Protection Bureau, National Credit Union Administration, and State Bank and Credit Union Regulators, issued an additional Joint Statement on Managing the LIBOR Transition to once again emphasize the expectation that supervised institutions with LIBOR exposure continue to progress toward an orderly transition away from LIBOR. The statement confirmed that entering into new contracts, including derivatives that use LIBOR as a reference rate after December 31, 2021, would create safety and soundness risks, including litigation, operational, and consumer protection risks.

On March 15, 2022, President Biden signed the Adjustable Interest Rate (LIBOR) Act into law (the “LIBOR Act”). The LIBOR Act provides a clear and uniform federal solution for transitioning legacy contracts that either lack or contain insufficient contractual provisions addressing the permanent cessation of LIBOR by providing for the transition from LIBOR to a replacement rate and avoiding related litigation.

On December 16, 2022, the Federal Reserve Board adopted a final rule that implements the Adjustable Interest Rate (LIBOR) Act by identifying benchmark rates based on SOFR that will replace LIBOR in certain financial contracts after June 30, 2023. The final rule is substantially similar to the proposal with certain clarifying changes made in response to comments.

•

For a LIBOR contract that is a derivative transaction, the “Fallback Rate (SOFR)” as defined in the 2020 IBOR Fallbacks Protocol published by the International Swaps and Derivatives Association (ISDA protocol), which incorporates the statutorily prescribed tenor spread adjustment.

•

For a LIBOR contract that is an FHFA-regulated-entity contract:

•

For Federal Home Loan Bank advances, the “Fallback Rate (SOFR)” as defined in the ISDA protocol; and

•

For all other FHFA-regulated-entity contracts, SOFR (in place of overnight LIBOR) or 30-day compounded average SOFR published by FRBNY (“30-day Average SOFR,” in place of one-, three-, six-, or 12-month LIBOR), plus the applicable statutorily prescribed tenor spread adjustment.

•

For a LIBOR contract that is a FFELP ABS, either (i) 30-day Average SOFR (for one-, six-, and 12-month LIBOR) or (ii) 90-day compounded average SOFR published by FRBNY (for three-month LIBOR), plus the applicable statutorily prescribed tenor spread adjustment.

•

For all other LIBOR contracts, including consumer loans, SOFR (in place of overnight LIBOR) or term SOFR published by CME Group Benchmark Administration, Ltd. (in place of one-, three-, six-, or 12-month LIBOR), plus the statutorily prescribed tenor spread adjustment.

As early as 2018, in anticipation of the potential discontinuance of LIBOR, Wesbanco established a LIBOR transition committee to effectively manage the Company’s transition away from LIBOR in two phases. The first phase included adding additional fallback language to loan documents to allow Wesbanco to replace LIBOR with an equivalent rate index plus the margin to ensure the resulting interest rate is the same as it previously was using LIBOR. Also, as part of the first phase, Wesbanco began quoting to the Treasury Rate published by the Federal Reserve Board instead of the ICE LIBOR Swap Index (which is tied to LIBOR) when repricing certain term loans and originating new loans. The second phase consists of working to continue to transition existing adjustable-rate loans that fluctuate monthly or periodically that are tied to LIBOR or the ICE LIBOR Swap Index. Wesbanco is tracking the dollar amount and number of loans tied to LIBOR or the ICE LIBOR Swap Index, monitoring current industry trends, and working with legal counsel to ensure the smooth transition away from LIBOR. As of March 31, ~~2022,~~2023, Wesbanco had a total of ~~$1.7~~$1.3 billion in loans tied to either LIBOR or the ICE LIBOR Swap index, of which ~~$1.4~~$1.2 billion have a maturity date after June 30, 2023. As referenced above, the U.K. FCA and ICE Benchmark Administration has extended the date of publication of certain tenors of LIBOR through June 30, 2023, giving existing LIBOR based contracts time to mature. However, in compliance with and based upon the Agencies Joint Statements referenced above, Wesbanco has not offered LIBOR for new contracts after December 31, 2021. Accordingly, Wesbanco has initially chosen the 1M Term SOFR, which is published by the Chicago Mercantile Exchange, as an alternative replacement rate for LIBOR. Wesbanco may also continue to utilize the Wall Street Journal Prime Rate, the Treasury Rates, and other indexes as part of its lending program. At a date in the future, prior to the cessation of the publication of the one month LIBOR, Wesbanco will transition all remaining LIBOR based loans to the replacement index after notification to the impacted borrowers.

This transition will be aided by the passage of the LIBOR Act. With respect to its back-to-back swap program, Wesbanco worked with its swap counterparty customers to institute and accept the International Swaps and Derivatives Association 2020 Interbank Offered Rate Fallbacks Protocol to address LIBOR cessation in swap transactions. Moreover, Wesbanco ~~has initially chosen~~chose 1M Term SOFR as its replacement index for new loans in the bank’s back-to-back swap program, beginning on January 1, 2022.

4950

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The disclosures set forth in this item are qualified by the section captioned “Forward-Looking Statements” included in Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations of this report.

MARKET RISK

The primary objective of the ALCO is to maximize net interest income within established policy parameters. This objective is accomplished through the management of balance sheet composition, market risk exposures arising from changing economic conditions and liquidity risk.

Market risk is defined as the risk of loss due to adverse changes in the fair value of financial instruments resulting from fluctuations in interest rates and bond prices. Management considers interest rate risk to be Wesbanco’s most significant market risk. Interest rate risk is the exposure to adverse changes in net interest income due to changes in interest rates. The consistency of Wesbanco’s net interest income is largely dependent on effective management of interest rate risk. As interest rates change in the market, rates earned on interest rate-sensitive assets and rates paid on interest rate-sensitive liabilities do not necessarily move concurrently. Differing rate sensitivities may arise because fixed rate assets and liabilities may not have the same maturities, or because variable rate assets and liabilities differ in the timing and/or the percentage of rate changes.

Wesbanco’s ALCO is an executive management committee with Board representation, responsible for monitoring and managing interest rate risk within approved policy limits, utilizing earnings sensitivity simulation and economic value-at-risk models. These models are highly dependent on various assumptions, which change regularly as the balance sheet and market interest rates change. The key assumptions and strategies employed are analyzed, reviewed and documented at least quarterly by the ALCO.

The earnings sensitivity simulation model projects changes in net interest income resulting from the effects of changes in interest rates. Forecasting changes in net interest income requires management to make certain assumptions regarding loan and security prepayment rates, call dates, changes to deposit product betas and non-maturity deposit decay rates, which may not necessarily reflect the manner in which actual cash flows, yields, and costs respond to changes in market interest rates. Assumptions are based on historical experience, current market rates and economic forecasts, and are internally back-tested and periodically reviewed by a third-party consultant. The net interest income sensitivity results presented in Table 1, “Net Interest Income Sensitivity,” assumes that the balance sheet composition of interest sensitive assets and liabilities existing at the end of the period remains constant over the period being measured and also assumes that a particular change in interest rates is reflected uniformly across the yield curve, regardless of the duration of the maturity or re-pricing of specific assets and liabilities. Since the assumptions used in the model relative to changes in interest rates are uncertain, the simulation analysis may not be indicative of actual results. In addition, this analysis does not consider actions that management might employ in response to changes in interest rates, as well as changes in earning asset and costing liability balances.

Interest rate risk policy limits are determined by measuring the anticipated change in net interest income over a twelve-month period, assuming immediate and sustained market interest rate increases of 100 - 200 basis points and decreases of 100 - ~~300~~400 basis points across the entire yield curve, as compared to a stable rate environment or base model. Wesbanco’s current policy limits this exposure for the noted interest rate changes to a reduction of between 7.5% - ~~15%~~20%, or less, of net interest income from the stable rate base model over a twelve-month period. The table below indicates Wesbanco’s interest rate sensitivity at March 31, ~~2022~~2023 and December 31, ~~2021,~~2022, assuming the above-noted interest rate ~~increases,~~changes, as compared to a base model. In the current interest rate environment, particularly for short-term rates, the 100 – 300 basis points decreasing changes for March 31, 2022 and December 31, 2021 are not shown due to the unrealistic and/or negative yield nature of the results.

TABLE 1. NET INTEREST INCOME SENSITIVITY


Immediate Change in	Percentage Change in			Percentage Change in
Interest Rates	Net Interest Income from Base over One Year		ALCO	Net Interest Income from Base over One Year		ALCO
(basis points)	March 31, 2022	December 31, 2021	Guidelines	March 31, 2023	December 31, 2022	Guidelines
+300	16.3%	17.5%	(15.0%)
+200	10.7%	11.7%	(10.0%)	5.0%	5.6%	(10.0%)
+100	5.3%	6.0%	(7.5%)	2.5%	2.8%	(7.5%)
-100				(3.1%)	(4.4%)	(7.5%)
-200				(7.3%)	(9.8%)	(10.0%)
-300				(12.2%)	(15.6%)	(15.0%)
-400				(17.8%)	N/A	(20.0%)

Adjustments to relative sensitivities are due to the impact of the current lower rate and yield curve environment on base case net interest income and the related calculation of parallel rate shock changes in rising and falling rate scenarios. Additional differences typically result from changes in the various earning assets and costing liabilities mix and growth rates, as well as adjustments for various modeling assumptions. Generally, deposit betas utilized in modeling are estimated at more conservative percentages for various rate scenarios than has been the Bank’s historical experience, as a result of both competitive factors in our markets and as public funds and institutional contract terms are renewed. Deposit betas, decay rates and loan prepayment speeds are adjusted periodically in our models for non-maturity deposits and loans. Indicated model asset sensitivity in rising rate scenarios may be less than anticipated due to slower prepayment speeds, rate floors, below forecast new loan yields, spread compression between new asset yields and funding costs, mortgage-related extension risk and other factors. In a decreasing rate environment, asset sensitivity may have greater impact on the margin than currently modeled as prepayment speeds increase, customers refinance or request rate reductions on existing loans, estimated deposit betas do not perform as modeled, or for other reasons.

5051

In addition to the aforementioned parallel rate shock earnings sensitivity simulation model, the ALCO also reviews a “dynamic” forecast scenario to project net interest income over a rolling two-year time period. This forecast is updated at least quarterly, incorporating revisions and updated assumptions into the model for estimated loan and deposit growth, expected balance sheet re-mixing strategies, changes in forecasted rates for various maturities, competitive market spreads for various products and other assumptions. Such modeling is directionally consistent with typical parallel rate shock scenarios, and it assists in predicting changes in forecasted outcomes as well as suggesting potential adjustments to management plans to assist in achieving earnings goals.

Wesbanco also periodically measures the economic value of equity (“EVE”), which is defined as the market value of tangible equity in various rate scenarios. Generally, changes in the economic value of equity relate to changes in various assets and liabilities, changes in the yield curve, as well as changes in loan prepayment speeds and deposit decay rates. The following table presents these results and Wesbanco’s policy limits as of March 31, ~~2022~~2023 and December 31, ~~2021.~~2022. Changes in EVE sensitivity since year-end ~~2021~~2022 relate to the ~~increase~~change in market interest rates and their impact upon the fair values of earning assets and costing liabilities.


Immediate Change in	Percentage Change in			Percentage Change in
Interest Rates	Economic Value of Equity from Base over One Year		ALCO	Economic Value of Equity from Base over One Year		ALCO
(basis points)	March 31, 2022	December 31, 2021	Guidelines	March 31, 2023	December 31, 2022	Guidelines
+300	1.5%	3.7%	(30.0%)
+200	(0.7%)	1.6%	(20.0%)	(3.4%)	(4.3%)	(20.0%)
+100	(0.4%)	1.8%	(10.0%)	(1.3%)	(1.8%)	(10.0%)
-100				(1.6%)	(0.8%)	(10.0%)
-200				(7.2%)	(7.9%)	(20.0%)
-300				(15.6%)	(17.5%)	(30.0%)
-400				(26.0%)	N/A	(40.0%)

The Bank has significant additional borrowing capacity with the FHLB of Pittsburgh, the Federal Reserve Bank of Cleveland and various correspondent banks, and may utilize these funding sources or interest rate swap strategies as necessary to lengthen liabilities, offset mismatches in various asset maturities and manage liquidity. CDARS® and ICS® deposits also may be utilized for similar purposes for certain customers seeking higher-yielding instruments or maintaining deposit levels below FDIC insurance limits. Significant balance sheet strategies to assist in managing the net interest margin in the current interest rate environment include:

•

increasing total loans, particularly commercial and home equity loans that have variable or adjustable features;

•

selling a percentage of longer-term residential mortgage loan production into the secondary market;

•

growing demand deposit account types to increase the relative portion of these account types to total deposits;

•

employing back-to-back loan swaps for certain commercial loan customers desiring a term fixed-rate loan equivalent, with the Bank receiving a variable rate;

•

adjusting terms for FHLB short-term maturing borrowings to balance asset/liability mismatches; or paying them off with excess ~~liquidity~~liquidity;

•

using CDARS® and ICS® deposit programs to manage funding needs and overall liability ~~mix,~~mix; and

•

adjusting the size, mix or duration of the investment portfolio as part of liquidity and balance sheet management strategies.

Management is aware of the significant effect that inflation or deflation has upon interest rates and ultimately upon financial performance. Wesbanco’s ability to cope with inflation or deflation is best determined by analyzing its capability to respond to changing market interest rates, as well as its ability to manage the various elements of non-interest income and expense during periods of increasing or decreasing inflation or deflation. Wesbanco monitors the level and mix of interest-rate sensitive assets and liabilities through ALCO in order to reduce the impact of inflation or deflation on net interest income. Management also controls the effects of inflation or deflation by conducting periodic reviews of the prices, costs and terms of its various products and services, as well as competitive factors, by approving new products and services or adjusting the terms and availability of existing products and services for both Wesbanco as well as its business loan customers. Over the last ~~two~~few quarters, inflation has been trending higher and has impacted the cost of labor and purchased goods and services. Wesbanco is also monitoring the potential impact that inflation is having on single family home construction and multifamily properties as proposed rental rate caps and controls are put in place in areas across Wesbanco’s footprint.

5152

ITEM 4. CONTROLS AND PROCEDURES

EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES— Wesbanco’s Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”) have concluded that Wesbanco’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended), based on their evaluation of these controls and procedures as of the end of the period covered by this Form 10-Q, are effective to ensure that information required to be disclosed by Wesbanco in the reports it files under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC and that such information is accumulated and communicated to Wesbanco’s management, including its principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure.

LIMITATIONS ON THE EFFECTIVENESS OF CONTROLS— Wesbanco’s management, including the CEO and CFO, does not expect that Wesbanco’s disclosure controls and internal controls will prevent all errors and all fraud. While Wesbanco’s disclosure controls and procedures are designed to provide reasonable assurance of achieving their objective, no control system, no matter how well conceived and operated, can provide absolute assurance that the objectives of the control system are met. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the controls.

CHANGES IN INTERNAL CONTROLS— There were no changes in Wesbanco's internal control over financial reporting that occurred during our fiscal quarter ended March 31, ~~2022~~2023 as required to be reported by paragraph (d) of Rules 13a-15 and 15d-15 under the Securities Exchange Act of 1934, that materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.

5253

PART II – OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

Wesbanco is involved in various lawsuits, claims, investigations and proceedings, which arise in the ordinary course of business. While any litigation contains an element of uncertainty, Wesbanco does not believe that a material loss related to such proceedings or claims pending or known to be threatened is reasonably possible.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

As of March 31, ~~2022,~~2023, Wesbanco had one active stock repurchase plan. It was approved by the Board of Directors on February 24, 2022 for 3.2 million shares and provides for shares to be repurchased for general corporate purposes, which may include a subsequent resource for potential acquisitions, shareholder dividend reinvestment and employee benefit plans. The timing, price and quantity of purchases are at the discretion of Wesbanco, and the plan may be discontinued or suspended at any time. The plan has 1,183,207 shares remaining for repurchase.

Other repurchases in the first quarter included those for Wesbanco's Employee Stock Ownership and 401(k) Plan and dividend reinvestment ~~plans.~~plans and those from employees for the payment of withholding taxes to facilitate a stock compensation transaction.

The following table presents the monthly share purchase activity during the quarter ended March 31, ~~2022:~~2023:

Period

Total Number
of Shares
Purchased
(1)

Average
Price Paid
per Share

Total Number
of Shares
Purchased
as Part of
Publicly
Announced
Plans (2)

Maximum
Number of
Shares that
May Yet
Be Purchased
Under the
Plans (3)

Balance at December 31, 2021

1,391,617

January 1, 2022 to January 31, 2022

442,617

$
36.71

418,384

973,233

February 1, 2022 to February 28, 2022

895,699

$
36.30

893,933

3,279,300

March 1, 2022 to March 31, 2022

414,802

$
35.17

412,254

2,867,046

Total

1,753,118

$
36.14

1,724,571

2,867,046


Period	Total Number of Shares Purchased (1)		Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans (2)		Maximum Number of Shares that May Yet Be Purchased Under the Plans
Balance at December 31, 2022								1,184,601

January 1, 2023 to January 31, 2023		24,151	$	37.38		—		1,184,601
February 1, 2023 to February 28, 2023		643	$	37.14		—		1,184,601
March 1, 2023 to March 31, 2023		11,658	$	32.94		1,394		1,183,207
Total		36,452	$	35.96		1,394		1,183,207

(1)

Total shares purchased consist of open market purchases transacted in the KSOP for employee benefit and dividend reinvestment ~~plans and open market purchases for general corporate purposes.~~plans.

(2)

~~Represents only open market repurchases~~Consists of shares purchased from employees for ~~general corporate purposes.~~

~~(3)~~

~~Reflects~~ the ~~impact~~payment of ~~an additional 3.2 million shares approved on February 24, 2022.~~withholding taxes to facilitate a stock compensation transaction.

53ITEM 5. OTHER INFORMATION

On April 19, 2023, Wesbanco held its 2023 annual meeting of its stockholders (the “Annual Meeting”). At the Annual Meeting, Wesbanco’s stockholders voted on a proposal regarding the frequency of future advisory (non-binding) votes on Wesbanco’s executive compensation and approved an alternative to have such advisory (non-binding) votes annually, consistent with the recommendation of Wesbanco’s Board of Directors. Accordingly, Wesbanco has decided to hold such advisory (non-binding) votes annually until the next required vote on the frequency of such votes, which will be at Wesbanco’s 2029 annual meeting of stockholders.

ITEM 6. EXHIBITS


~~4.1~~		Indenture, dated March 23, 2022, by and between Wesbanco, Inc. and Wilmington Trust, National Association, as trustee (incorporated by reference to Exhibit 4.1 of Form 8-K filed by the Registrant with the Securities and Exchange Commission on March 23, 2022).

~~4.2~~		First Supplemental Indenture, dated March 23, 2022, by and between Wesbanco, Inc. and Wilmington Trust, National Association, as trustee (incorporated by reference to Exhibit 4.2 of Form 8-K filed by the Registrant with the Securities and Exchange Commission on March 23, 2022).

~~4.3~~		~~Form of 3.75% Fixed-to-Floating Rate Subordinated Note due 2032 (included in Exhibit 4.2).~~

~~10.1~~		Employment Agreement, dated as of February 16, 2022, by and between Wesbanco, Inc., Wesbanco Bank, Inc. and Michael L. Perkins (incorporated by reference to Form 8-K filed by the Registrant with the Securities and Exchange Commission on February 22, 2022).

31.1		Certification of Chief Executive Officer of Periodic Report Pursuant to Rule 13a-15(e) or Rule 15d-15(e).

31.2		Certification of Chief Financial Officer of Periodic Report Pursuant to Rule 13a-15(e) or Rule 15d-15(e).

32.1		Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS		Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document).

101.SCH		Inline XBRL Taxonomy Extension Schema Document

101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF		Inline XBRL Taxonomy Extension Definition Linkbase Document

101.LAB		Inline XBRL Taxonomy Extension Label Linkbase Document

101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase Document

104		Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101).

5455

SIGNATURES

Pursuant to the requirements 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.


	WESBANCO, INC.

Date: May ~~5, 2022~~4, 2023	/s/ Todd F. Clossin
	Todd F. Clossin
	President and Chief Executive Officer (Principal Executive Officer)

Date: May ~~5, 2022~~4, 2023	/s/ Daniel K. Weiss, Jr.
	Daniel K. Weiss, Jr.
	Executive Vice President and Chief Financial Officer
	(Principal Financial Officer)

5556


West Virginia		55-0571723
(State of incorporation)		(IRS Employer Identification No.)

1 Bank Plaza, Wheeling, WV		26003
(Address of principal executive offices)		(Zip Code)


Title of each class	Trading Symbol	Name of each exchange on which registered
Common Stock $2.0833 Par Value	WSBC	NASDAQ Global Select Market
Depositary Shares (each representing 1/40th interest in a share of 6.75% Fixed-Rate Reset Non-Cumulative Perpetual Preferred Stock, Series A)	WSBCP	NASDAQ Global Select Market


Item No.	ITEM	Page No.	ITEM	Page No.

	PART I - FINANCIAL INFORMATION		PART I - FINANCIAL INFORMATION
1	Financial Statements	2	Financial Statements	2
			Consolidated Balance Sheets at March 31, 2023 (unaudited) and December 31, 2022	2
	Consolidated Balance Sheets at March 31, 2022 (unaudited) and December 31, 2021	2	Consolidated Statements of Income for the three months ended March 31, 2023 and 2022 (unaudited)	3
	Consolidated Statements of Income and Comprehensive Income for the three months ended March 31, 2022 and 2021 (unaudited)	3	Consolidated Statements of Comprehensive Income for the three months ended March 31, 2023 and 2022 (unaudited)	4
	Consolidated Statements of Changes in Shareholders' Equity for the three months ended March 31, 2022 and 2021 (unaudited)	4	Consolidated Statements of Changes in Shareholders' Equity for the three months ended March 31, 2023 and 2022 (unaudited)	5
	Consolidated Condensed Statements of Cash Flows for the three months ended March 31, 2022 and 2021 (unaudited)	5	Consolidated Condensed Statements of Cash Flows for the three months ended March 31, 2023 and 2022 (unaudited)	6
	Notes to Consolidated Financial Statements (unaudited)	6	Notes to Consolidated Financial Statements (unaudited)	7

2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	31	Management’s Discussion and Analysis of Financial Condition and Results of Operations	33

3	Quantitative and Qualitative Disclosures About Market Risk	50	Quantitative and Qualitative Disclosures About Market Risk	51

4	Controls and Procedures	52	Controls and Procedures	53

	PART II – OTHER INFORMATION		PART II – OTHER INFORMATION
1	Legal Proceedings	53	Legal Proceedings	54

2	Unregistered Sales of Equity Securities and Use of Proceeds	53	Unregistered Sales of Equity Securities and Use of Proceeds	54

5			Other Information	54

6	Exhibits	54	Exhibits	55

	Signatures	55	Signatures	56


	For the Three Months Ended March 31,						For the Three Months Ended March 31,
(unaudited, in thousands)	2022			2021			2023			2022
NET CASH PROVIDED BY OPERATING ACTIVITIES	$	47,741		$	52,004		$	10,891		$	47,741
INVESTING ACTIVITIES
Net decrease in loans held for investment		6,537			100,799
Net (increase) decrease in loans held for investment								(186,782	)		6,537
Available-for-sale debt securities:
Proceeds from sales								20,498			—
Proceeds from maturities, prepayments and calls		180,092			239,259			77,887			180,092
Purchases of securities		(220,324	)		(1,068,526	)		—			(220,324	)
Held-to-maturity debt securities:
Proceeds from maturities, prepayments and calls		21,801			27,147			8,756			21,801
Purchases of securities		(174,995	)		(110,298	)		—			(174,995	)
Proceeds from bank owned life insurance		6,061			—			—			6,061
Purchases of premises and equipment – net		(559	)		(2,362	)		(12,233	)		(559	)
Net cash used in investing activities		(181,387	)		(813,981	)		(91,874	)		(181,387	)
FINANCING ACTIVITIES
Increase in deposits		232,640			858,853
(Decrease) increase in deposits								(257,528	)		232,640
Proceeds from Federal Home Loan Bank borrowings								1,280,000			—
Repayment of Federal Home Loan Bank borrowings		(60,048	)		(115,053	)		(705,000	)		(60,048	)
Increase (decrease) in other short-term borrowings		16,645			(104,732	)
(Decrease) increase in other short-term borrowings								(23,893	)		16,645
Principal repayments of finance lease obligations		(115	)		(109	)		(464	)		(115	)
Issuance of subordinated debt, net of issuance costs		147,715			—			—			147,715
Dividends paid to common shareholders		(20,570	)		(21,419	)		(20,560	)		(20,570	)
Dividends paid to preferred shareholders		(2,531	)		(2,531	)		(2,531	)		(2,531	)
Treasury shares (purchased) sold - net		(61,950	)		569
Treasury shares sold (purchased) - net								51			(61,950	)
Net cash provided by financing activities		251,786			615,578			270,075			251,786
Net increase in cash, cash equivalents and restricted cash		118,140			(146,399	)		189,092			118,140
Cash, cash equivalents and restricted cash at beginning of the period		1,251,358			905,447			408,411			1,251,358
Cash, cash equivalents and restricted cash at end of the period	$	1,369,498		$	759,048		$	597,503		$	1,369,498
SUPPLEMENTAL DISCLOSURES
Interest paid on deposits and other borrowings	$	5,014		$	10,719		$	33,288		$	5,014
Transfers of loans to other real estate owned		87			—			79			87


	For the Three Months Ended March 31,				For the Three Months Ended March 31,
(unaudited, in thousands, except shares and per share amounts)	2022		2021		2023		2022
Numerator for both basic and diluted earnings per common share:
Net income available to common shareholders	$	41,593	$	70,584	$	39,810	$	41,593
Denominator:
Total average basic common shares outstanding		61,445,399		67,263,714		59,217,711		61,445,399
Effect of dilutive stock options and other stock compensation		147,966		91,704		157,342		147,966
Total diluted average common shares outstanding		61,593,365		67,355,418		59,375,053		61,593,365
Earnings per common share - basic	$	0.68	$	1.05	$	0.67	$	0.68
Earnings per common share - diluted	$	0.68	$	1.05	$	0.67	$	0.68


☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


Large accelerated filer	☑	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐


	For the Three Months Ended March 31, 2022 and 2021																									For the Three Months Ended March 31, 2023 and 2022
																	Accumulated																									Accumulated
	Preferred		Common Stock														Other			Deferred						Preferred		Common Stock														Other			Deferred
(unaudited, in thousands, except	Stock		Shares					Capital			Retained			Treasury			Comprehensive			Benefits for						Stock		Shares					Capital			Retained			Treasury			Comprehensive			Benefits for
shares and per share amounts)	Amount		Outstanding			Amount		Surplus			Earnings			Stock			Income (Loss)			Directors			Total			Amount		Outstanding			Amount		Surplus			Earnings			Stock			Income (Loss)			Directors			Total
December 31, 2022																										$	144,484		59,198,963		$	141,834	$	1,635,877		$	1,077,675		$	(308,964	)	$	(262,416	)	$	(1,828	)	$	2,426,662
Net income																											—		—			—		—			42,341			—			—			—			42,341
Other comprehensive income																											—		—			—		—			—			—			28,017			—			28,017
Comprehensive income																											—		—			—		—			—			—			—			—			70,358
Common dividends declared ($0.35 per share)																											—		—			—		—			(20,561	)		—			—			—			(20,561	)
Preferred dividends declared ($16.875 per share)																											—		—			—		—			(2,531	)		—			—			—			(2,531	)
Treasury shares acquired																											—		(1,394	)		—		—			—			(52	)		—			—			(52	)
Stock options exercised																											—		4,441			—		(34	)		—			137			—			—			103
Restricted stock granted																											—		44,559			—		(1,372	)		—			1,372			—			—			—
Stock compensation expense																											—		—			—		1,585			—			—			—			—			1,585
Deferred benefits for directors- net																											—		—			—		5			—			—			—			(112	)		(107	)
March 31, 2023																										$	144,484		59,246,569		$	141,834	$	1,636,061		$	1,096,924		$	(307,507	)	$	(234,399	)	$	(1,940	)	$	2,475,457

December 31, 2021	$	144,484		62,307,245		$	141,834	$	1,635,642		$	977,765		$	(199,759	)	$	(5,120	)	$	(1,680	)	$	2,693,166		$	144,484		62,307,245		$	141,834	$	1,635,642		$	977,765		$	(199,759	)	$	(5,120	)	$	(1,680	)	$	2,693,166
Net income		—		—			—		—			44,124			—			—			—			44,124			—		—			—		—			44,124			—			—			—			44,124
Other comprehensive loss		—		—			—		—			—			—			(106,192	)		—			(106,192	)		—		—			—		—			—			—			(106,192	)		—			(106,192	)
Comprehensive loss		—		—			—		—			—			—			—			—			(62,068	)
Comprehensive income																											—		—			—		—			—			—			—			—			(62,068	)
Common dividends declared ($0.34 per share)		—		—			—		—			(20,538	)		—			—			—			(20,538	)		—		—			—		—			(20,538	)		—			—			—			(20,538	)
Preferred dividends declared ($16.875 per share)		—		—			—		—			(2,531	)		—			—			—			(2,531	)		—		—			—		—			(2,531	)		—			—			—			(2,531	)
Stock issued for dividend reinvestment		—		14,531			—		—			(505	)		505			—			—			—			—		14,531			—		—			(505	)		505			—			—			—
Treasury shares acquired		—		(1,724,571	)		—		—			—			(62,323	)		—			—			(62,323	)		—		(1,724,571	)		—		—			—			(62,323	)		—			—			(62,323	)
Stock options exercised		—		16,209			—		(192	)		—			565			—			—			373			—		16,209			—		(192	)		—			565			—			—			373
Stock compensation expense		—		—			—		1,241			—			—			—			—			1,241			—		—			—		1,241			—			—			—			—			1,241
Deferred benefits for directors- net		—		—			—		14			—			—			—			(18	)		(4	)		—		—			—		14			—			—			—			(18	)		(4	)
March 31, 2022	$	144,484		60,613,414		$	141,834	$	1,636,705		$	998,315		$	(261,012	)	$	(111,312	)	$	(1,698	)	$	2,547,316		$	144,484		60,613,414		$	141,834	$	1,636,705		$	998,315		$	(261,012	)	$	(111,312	)	$	(1,698	)	$	2,547,316

December 31, 2020	$	144,484		67,254,706		$	141,834	$	1,634,815		$	831,688		$	(25,949	)	$	31,359		$	(1,494	)	$	2,756,737
Net income		—		—			—		—			73,115			—			—			—			73,115
Other comprehensive loss		—		—			—		—			—			—			(21,556	)		—			(21,556	)
Comprehensive income		—		—			—		—			—			—			—			—			51,559
Common dividends declared ($0.33 per share)		—		—			—		—			(22,095	)		—			—			—			(22,095	)
Preferred dividends declared ($16.875 per share)		—		—			—		—			(2,531	)		—			—			—			(2,531	)
Stock issued for dividend reinvestment		—		11,720			—		—			(391	)		391			—			—			—
Treasury shares acquired		—		(5,135	)		—		183			—			(183	)		—			—			—
Stock options exercised		—		20,843			—		(183	)		—			752			—			—			569
Stock compensation expense		—		—			—		1,288			—			—			—			—			1,288
Deferred benefits for directors- net		—		—			—		—			—			—			—			(5	)		(5	)
March 31, 2021	$	144,484		67,282,134			141,834		1,636,103			879,786			(24,989	)		9,803			(1,499	)	$	2,785,522


	Allowance for Credit Losses and Recorded Investment in Loans
(unaudited, in thousands)	Commercial Real Estate- Land and Construction		Commercial Real Estate- Improved Property		Commercial and Industrial		Residential Real Estate		Home Equity		Consumer		Deposit Over- drafts		Total
March 31, 2022
Allowance for credit losses:
Loans individually-evaluated	$	342	$	11,686	$	266	$	—	$	—	$	—	$	—	$	12,294
Loans collectively-evaluated		7,236		53,323		25,269		13,714		675		3,746		1,608		105,571
Loan commitments		4,931		320		670		1,740		58		331		—		8,050
Total allowance for credit losses - loans and commitments	$	12,509	$	65,329	$	26,205	$	15,454	$	733	$	4,077	$	1,608	$	125,915

Portfolio loans:
Individually-evaluated for credit losses	$	1,174	$	52,308	$	540	$	—	$	—	$	—	$	—	$	54,022
Collectively-evaluated for credit losses		856,695		4,669,905		1,512,538		1,767,064		592,872		280,176		—		9,679,250
Total portfolio loans	$	857,869	$	4,722,213	$	1,513,078	$	1,767,064	$	592,872	$	280,176	$	—	$	9,733,272

December 31, 2021
Allowance for credit losses:
Loans individually-evaluated	$	381	$	8,560	$	333	$	—	$	—	$	—	$	—	$	9,274
Loans collectively-evaluated		6,929		56,795		26,542		15,401		724		3,737		2,220		112,348
Loan commitments		4,180		201		1,497		1,576		49		272		—		7,775
Total allowance for credit losses - loans and commitments	$	11,490	$	65,556	$	28,372	$	16,977	$	773	$	4,009	$	2,220	$	129,397

Portfolio loans:
Individually-evaluated for credit losses	$	1,248	$	66,635	$	576	$	—	$	—	$	—	$	—	$	68,459
Collectively-evaluated for credit losses		832,632		4,638,453		1,589,744		1,721,378		605,682		277,130		—		9,665,019
Total portfolio loans	$	833,880	$	4,705,088	$	1,590,320	$	1,721,378	$	605,682	$	277,130	$	—	$	9,733,478


	Commercial Loans by Internally Assigned Risk Grade								Commercial Loans by Internally Assigned Risk Grade
(unaudited, in thousands)	Commercial Real Estate- Land and Construction		Commercial Real Estate- Improved Property		Commercial & Industrial		Total Commercial Loans		Commercial Real Estate- Land and Construction		Commercial Real Estate- Improved Property		Commercial & Industrial		Total Commercial Loans
As of March 31, 2022
As of March 31, 2023
Pass	$	847,525	$	4,424,340	$	1,463,315	$	6,735,180	$	723,743	$	5,339,116	$	1,480,963	$	7,543,822
Criticized - compromised		1,808		206,501		25,834		234,143		1,418		83,280		31,910		116,608
Classified - substandard		8,536		91,372		23,929		123,837		6,012		44,275		6,935		57,222
Classified - doubtful		—		—		—		—		—		—		—		—
Total	$	857,869	$	4,722,213	$	1,513,078	$	7,093,160	$	731,173	$	5,466,671	$	1,519,808	$	7,717,652

As of December 31, 2021
As of December 31, 2022
Pass	$	823,316	$	4,400,872	$	1,540,569	$	6,764,757	$	911,804	$	4,940,135	$	1,538,300	$	7,390,239
Criticized - compromised		7,955		222,830		17,733		248,518		1,329		121,393		25,223		147,945
Classified - substandard		2,609		81,386		32,018		116,013		30,754		55,929		15,872		102,555
Classified - doubtful		—		—		—		—		—		—		—		—
Total	$	833,880	$	4,705,088	$	1,590,320	$	7,129,288	$	943,887	$	5,117,457	$	1,579,395	$	7,640,739


	Age Analysis of Loans														Age Analysis of Loans
(unaudited, in thousands)	Current		30-59 Days Past Due		60-89 Days Past Due		90 Days or More Past Due		Total Past Due		Total Loans		90 Days or More Past Due and Accruing (1)		Current		30-59 Days Past Due		60-89 Days Past Due		90 Days or More Past Due		Total Past Due		Total Loans		90 Days or More Past Due and Accruing (1)
As of March 31, 2022
As of March 31, 2023
Commercial real estate:
Land and construction															$	731,005	$	12	$	156	$	—	$	168	$	731,173	$	—
Improved property																5,452,908		969		320		12,474		13,763		5,466,671		1,295
Total commercial real estate																6,183,913		981		476		12,474		13,931		6,197,844		1,295
Commercial and industrial																1,515,351		652		1,204		2,601		4,457		1,519,808		645
Residential real estate																2,241,922		2,813		1,865		4,823		9,501		2,251,423		982
Home equity																684,047		2,727		1,251		3,976		7,954		692,001		1,154
Consumer																224,238		2,262		577		535		3,374		227,612		494
Total portfolio loans																10,849,471		9,435		5,373		24,409		39,217		10,888,688		4,570
Loans held for sale																12,722		—		—		—		—		12,722		—
Total loans															$	10,862,193	$	9,435	$	5,373	$	24,409	$	39,217	$	10,901,410	$	4,570

Nonperforming loans included above are as follows:
Non-accrual loans															$	17,489	$	519	$	1,369	$	19,839	$	21,727	$	39,216

As of December 31, 2022
Commercial real estate:
Land and construction	$	857,796	$	—	$	—	$	73	$	73	$	857,869	$	—	$	942,236	$	—	$	910	$	741	$	1,651	$	943,887	$	629
Improved property		4,699,859		11,590		732		10,032		22,354		4,722,213		3,449		5,099,342		2,147		331		15,637		18,115		5,117,457		84
Total commercial real estate		5,557,655		11,590		732		10,105		22,427		5,580,082		3,449		6,041,578		2,147		1,241		16,378		19,766		6,061,344		713
Commercial and industrial		1,502,111		7,465		527		2,975		10,967		1,513,078		319		1,574,311		1,427		519		3,138		5,084		1,579,395		1,586
Residential real estate		1,751,895		3,091		2,630		9,448		15,169		1,767,064		1,229		2,129,095		853		3,536		7,100		11,489		2,140,584		1,551
Home equity		586,591		1,954		437		3,890		6,281		592,872		631		686,762		3,885		621		3,797		8,303		695,065		1,063
Consumer		277,213		1,386		884		693		2,963		280,176		514		222,153		2,910		704		573		4,187		226,340		530
Total portfolio loans		9,675,465		25,486		5,210		27,111		57,807		9,733,272		6,142		10,653,899		11,222		6,621		30,986		48,829		10,702,728		5,443
Loans held for sale		15,959		—		—		—		—		15,959		—		8,249		—		—		—		—		8,249		—
Total loans	$	9,691,424	$	25,486	$	5,210	$	27,111	$	57,807	$	9,749,231	$	6,142	$	10,662,148	$	11,222	$	6,621	$	30,986	$	48,829	$	10,710,977	$	5,443

Nonperforming loans included above are as follows:
Non-accrual loans	$	10,557	$	1,334	$	754	$	20,727	$	22,815	$	33,372			$	10,337	$	1,495	$	870	$	25,483	$	27,848	$	38,185
TDRs accruing interest		3,203		229		57		242		528		3,731				3,131		7		32		60		99		3,230
Total nonperforming loans	$	13,760	$	1,563	$	811	$	20,969	$	23,343	$	37,103			$	13,468	$	1,502	$	902	$	25,543	$	27,947	$	41,415

As of December 31, 2021
Commercial real estate:
Land and construction	$	833,755	$	—	$	—	$	125	$	125	$	833,880	$	51
Improved property		4,681,028		6,377		7,728		9,955		24,060		4,705,088		3,042
Total commercial real estate		5,514,783		6,377		7,728		10,080		24,185		5,538,968		3,093
Commercial and industrial		1,583,347		2,275		1,213		3,485		6,973		1,590,320		559
Residential real estate		1,702,587		2,331		3,254		13,206		18,791		1,721,378		2,840
Home equity		599,189		2,240		602		3,651		6,493		605,682		685
Consumer		273,577		1,532		1,208		813		3,553		277,130		627
Total portfolio loans		9,673,483		14,755		14,005		31,235		59,995		9,733,478		7,804
Loans held for sale		25,277		—		—		—		—		25,277		—
Total loans	$	9,698,760	$	14,755	$	14,005	$	31,235	$	59,995	$	9,758,755	$	7,804

Nonperforming loans included above are as follows:
Non-accrual loans	$	11,174	$	914	$	564	$	23,090	$	24,568	$	35,742
TDRs accruing interest		3,275		3		127		341		471		3,746
Total nonperforming loans	$	14,449	$	917	$	691	$	23,431	$	25,039	$	39,488


	Nonperforming Loans												Nonperforming Loans
	March 31, 2022						December 31, 2021						March 31, 2023						December 31, 2022
	Unpaid						Unpaid						Unpaid						Unpaid
	Principal		Recorded		Related		Principal		Recorded		Related		Principal		Recorded		Related		Principal		Recorded		Related
(unaudited, in thousands)	Balance (1)		Investment		Allowance		Balance (1)		Investment		Allowance		Balance (1)		Investment		Allowance		Balance (1)		Investment		Allowance
With no related specific allowance recorded:
Commercial real estate:
Land and construction	$	156	$	155	$	—	$	74	$	73	$	—	$	—	$	—	$	—	$	112	$	112	$	—
Improved property		9,599		7,758		—		9,846		8,089		—		20,789		18,200		—		18,367		16,601		—
Commercial and industrial		6,136		4,779		—		6,528		5,256		—		4,284		3,209		—		4,102		3,112		—
Residential real estate		23,443		18,309		—		25,492		20,065		—		17,894		12,837		—		21,084		16,057		—
Home equity		7,156		5,585		—		6,985		5,440		—		6,517		4,861		—		6,970		5,374		—
Consumer		847		517		—		869		565		—		201		109		—		316		159		—
Total nonperforming loans without a specific allowance		47,337		37,103		—		49,794		39,488		—		49,685		39,216		—		50,951		41,415		—
Total nonperforming loans with a specific allowance		—		—		—		—		—		—		—		—		—		—		—		—
Total nonperforming loans	$	47,337	$	37,103	$	—	$	49,794	$	39,488	$	—	$	49,685	$	39,216	$	—	$	50,951	$	41,415	$	—


	Nonperforming Loans								Nonperforming Loans
	For the Three Months Ended								For the Three Months Ended
	March 31, 2022				March 31, 2021				March 31, 2023				March 31, 2022
	Average		Interest		Average		Interest		Average		Interest		Average		Interest
	Recorded		Income		Recorded		Income		Recorded		Income		Recorded		Income
(unaudited, in thousands)	Investment		Recognized		Investment		Recognized		Investment		Recognized		Investment		Recognized
With no related specific allowance recorded:
Commercial real estate:
Land and construction	$	114	$	—	$	295	$	—	$	56	$	—	$	114	$	—
Improved property		7,924		—		7,702		9		17,401		—		7,924		—
Commercial and industrial		5,018		—		2,544		1		3,161		—		5,018		—
Residential real estate		19,187		—		20,847		39		14,447		—		19,187		—
Home equity		5,513		—		5,639		6		5,118		—		5,513		—
Consumer		541		—		358		—		134		—		541		—
Total nonperforming loans without a specific allowance		38,296		—		37,385		55		40,317		—		38,296		—
With a specific allowance recorded:
Commercial real estate:
Land and construction		—		—		—		—		—		—		—		—
Improved property		—		—		2,089		—		—		—		—		—
Total nonperforming loans with a specific allowance		—		—		2,089		—		—		—		—		—
Total nonperforming loans	$	38,296	$	—	$	39,474	$	55	$	40,317	$	—	$	38,296	$	—


	Non-accrual Loans (1)				Non-accrual Loans (1)
	March 31,		December 31,		March 31,		December 31,
(unaudited, in thousands)	2022		2021		2023		2022
Commercial real estate:
Land and construction	$	73	$	73	$	—	$	112
Improved property		7,391		7,715		18,200		16,254
Total commercial real estate		7,464		7,788		18,200		16,366
Commercial and industrial		4,592		5,064		3,209		2,946
Residential real estate		15,512		17,190		12,837		13,695
Home equity		5,319		5,163		4,861		5,044
Consumer		485		537		109		134
Total	$	33,372	$	35,742	$	39,216	$	38,185


	TDRs
	March 31, 2022						December 31, 2021
(unaudited, in thousands)	Accruing		Non-Accrual		Total		Accruing		Non-Accrual		Total
Commercial real estate:
Land and construction	$	82	$	—	$	82	$	—	$	—	$	—
Improved property		367		29		396		374		133		507
Total commercial real estate		449		29		478		374		133		507
Commercial and industrial		187		—		187		192		—		192
Residential real estate		2,797		1,076		3,873		2,875		1,156		4,031
Home equity		266		243		509		277		258		535
Consumer		32		—		32		28		—		28
Total	$	3,731	$	1,348	$	5,079	$	3,746	$	1,547	$	5,293


	For the Three Months Ended March 31, 2023
(unaudited, in thousands)	Weighted-Average Term Extension (in months)
Commercial real estate - land and construction		3
Commercial real estate - improved property		34
Commercial and industrial		4
Residential real estate		—
Home equity		120
Consumer		—


	March 31, 2023
(unaudited, in thousands)	30-59 Days Past Due		60-89 Days Past Due		90 Days or More Past Due		Total Past Due		Current		Total
Commercial real estate - land and construction	$	—	$	—	$	—	$	—	$	6,000	$	6,000
Commercial real estate - improved property		—		—		—		—		3,738		3,738
Commercial and industrial		—		—		—		—		6,843		6,843
Residential real estate		��		—		—		—		101		101
Home equity		—		—		41		41		250		291
Consumer		—		2		20		22		12		34
Total modified loans (1)	$	—	$	2	$	61	$	63	$	16,944	$	17,007


	New TDRs (1)												New TDRs (1)
	For the Three Months Ended												For the Three Months Ended
	March 31, 2022						March 31, 2021						March 31, 2022
			Pre-		Post-				Pre-		Post-				Pre-		Post-
			Modification		Modification				Modification		Modification				Modification		Modification
			Outstanding		Outstanding				Outstanding		Outstanding				Outstanding		Outstanding
	Number of		Recorded		Recorded		Number of		Recorded		Recorded		Number of		Recorded		Recorded
(unaudited, dollars in thousands)	Modifications		Investment		Investment		Modifications		Investment		Investment		Modifications		Investment		Investment
Commercial real estate:
Land and construction		1	$	84	$	82		—	$	—	$	—		1	$	84	$	82
Improved property		—		—		—		—		—		—		—		—		—
Total commercial real estate		1		84		82		—		—		—		1		84		82
Commercial and industrial		—		—		—		—		—		—		—		—		—
Residential real estate		—		—		—		—		—		—		—		—		—
Home equity		—		—		—		—		—		—		—		—		—
Consumer		—		—		—		—		—		—		—		—		—
Total		1	$	84	$	82		—	$	—	$	—		1	$	84	$	82