(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 ~~October 23, 2019,~~May 1, 2020, there were ~~54,691,225~~67,058,155 shares of ~~WesBanco,~~Wesbanco, Inc. common stock, $2.0833 par value, outstanding.


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 September 30, 2019 (unaudited) and December 31, 2018	2	Consolidated Balance Sheets at March 31, 2020 (unaudited) and December 31, 2019	2
	Consolidated Statements of Comprehensive Income for the three and nine months ended September 30, 2019 and 2018 (unaudited)	3	Consolidated Statements of Comprehensive Income for the three months ended March 31, 2020 and 2019 (unaudited)	3
	Consolidated Statements of Changes in Shareholders' Equity for the three and nine months ended September 30, 2019 and 2018 (unaudited)	4	Consolidated Statements of Changes in Shareholders' Equity for the three months ended March 31, 2020 and 2019 (unaudited)	4
	Consolidated Statements of Cash Flows for the nine months ended September 30, 2019 and 2018 (unaudited)	5	Consolidated Statements of Cash Flows for the three months ended March 31, 2020 and 2019 (unaudited)	5
	Notes to Consolidated Financial Statements (unaudited)	6	Notes to Consolidated Financial Statements (unaudited)	6

2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	32	Management’s Discussion and Analysis of Financial Condition and Results of Operations	35

3	Quantitative and Qualitative Disclosures About Market Risk	47	Quantitative and Qualitative Disclosures About Market Risk	57

4	Controls and Procedures	50	Controls and Procedures	59

	PART II – OTHER INFORMATION		PART II – OTHER INFORMATION
1	Legal Proceedings	51	Legal Proceedings	60

1A			Risk Factors	60

2	Unregistered Sales of Equity Securities and Use of Proceeds	51	Unregistered Sales of Equity Securities and Use of Proceeds	61

6	Exhibits	52	Exhibits	62

	Signatures	53	Signatures	63

	September 30,			December 31,			March 31,			December 31,
(unaudited, in thousands, except shares)	2019			2018			2020			2019
ASSETS
Cash and due from banks, including interest bearing amounts of $34,727 and $44,536, respectively	$	244,333		$	169,186
Cash and due from banks, including interest bearing amounts of $410,734 and $51,891, respectively							$	593,872		$	234,796
Securities:
Equity securities, at fair value		11,644			11,737			11,230			12,343
Available-for-sale debt securities, at fair value		2,209,199			2,114,129			2,262,082			2,393,558
Held-to-maturity debt securities (fair values of $877,809 and $1,020,743, respectively)		852,824			1,020,934
Held-to-maturity debt securities (fair values of $841,120 and $874,523, respectively)								814,414			851,753
Allowance for credit losses, held-to-maturity debt securities								(236	)		—
Net held-to-maturity debt securities								814,178			851,753
Total securities		3,073,667			3,146,800			3,087,490			3,257,654
Loans held for sale		20,715			8,994			48,021			43,013
Portfolio loans, net of unearned income		7,756,752			7,656,281			10,349,596			10,267,985
Allowance for loan losses		(54,317	)		(48,948	)
Allowance for credit losses - loans								(114,272	)		(52,429	)
Net portfolio loans		7,702,435			7,607,333			10,235,324			10,215,556
Premises and equipment, net		178,344			166,925			258,200			261,014
Accrued interest receivable		37,156			38,853			43,960			43,648
Goodwill and other intangible assets, net		914,705			918,850			1,170,070			1,149,153
Bank-owned life insurance		229,349			225,317			301,270			299,516
Other assets		193,183			176,374			257,365			215,762
Total Assets	$	12,593,887		$	12,458,632		$	15,995,572		$	15,720,112
LIABILITIES
Deposits:
Non-interest bearing demand	$	2,476,392		$	2,441,041		$	3,191,713		$	3,178,270
Interest bearing demand		2,128,581			2,146,508			2,388,406			2,316,855
Money market		1,085,732			1,142,925			1,539,835			1,518,314
Savings deposits		1,698,125			1,645,549			1,984,057			1,934,647
Certificates of deposit		1,275,533			1,455,610			1,939,321			2,055,920
Total deposits		8,664,363			8,831,633			11,043,332			11,004,006
Federal Home Loan Bank borrowings		1,161,092			1,054,174			1,585,608			1,415,615
Other short-term borrowings		325,247			290,522			333,966			282,362
Subordinated debt and junior subordinated debt		156,632			189,842			192,008			199,869
Total borrowings		1,642,971			1,534,538			2,111,582			1,897,846
Accrued interest payable		5,273			4,627			7,667			8,077
Other liabilities		180,011			109,007			246,931			216,262
Total Liabilities		10,492,618			10,479,805			13,409,512			13,126,191
SHAREHOLDERS' EQUITY
Preferred stock, no par value; 1,000,000 shares authorized; NaN outstanding		—			—			—			—
Common stock, $2.0833 par value; 100,000,000 shares authorized in 2019 and 2018, respectively; 54,698,250 and 54,604,294 shares issued, respectively; 54,691,225 and 54,598,134 shares outstanding, respectively		113,954			113,758
Common stock, $2.0833 par value; 100,000,000 shares authorized in 2020 and 2019, respectively; 68,078,116 and 68,078,116 shares issued, respectively; 67,058,155 and 67,824,428 shares outstanding, respectively								141,827			141,827
Capital surplus		1,169,595			1,166,701			1,638,122			1,636,966
Retained earnings		809,332			737,581			800,064			824,694
Treasury stock (7,025 and 6,160 shares - at cost, respectively)		(252	)		(274	)
Accumulated other comprehensive income (loss)		9,922			(37,871	)
Treasury stock (1,019,961 and 253,688 shares - at cost, respectively)								(33,714	)		(9,463	)
Accumulated other comprehensive income								41,141			1,201
Deferred benefits for directors		(1,282	)		(1,068	)		(1,380	)		(1,304	)
Total Shareholders' Equity		2,101,269			1,978,827			2,586,060			2,593,921
Total Liabilities and Shareholders' Equity	$	12,593,887		$	12,458,632		$	15,995,572		$	15,720,112

	For the Three Months Ended September 30,					For the Nine Months Ended September 30,				For the Three Months Ended March 31,
(unaudited, in thousands, except shares and per share amounts)	2019			2018		2019		2018		2020		2019
INTEREST AND DIVIDEND INCOME
Loans, including fees	$	95,369		$	86,605	$	287,287	$	234,276	$	119,503	$	95,502
Interest and dividends on securities:
Taxable		15,887			14,964		49,061		40,702		16,986		16,733
Tax-exempt		4,759			5,326		15,443		15,216		4,456		5,541
Total interest and dividends on securities		20,646			20,290		64,504		55,918		21,442		22,274
Other interest income		1,333			1,498		4,153		3,402		1,503		1,277
Total interest and dividend income		117,348			108,393		355,944		293,596		142,448		119,053
INTEREST EXPENSE
Interest bearing demand deposits		4,489			3,501		12,749		9,174		3,394		3,946
Money market deposits		1,973			1,360		5,881		3,332		2,352		1,899
Savings deposits		861			352		2,061		768		923		522
Certificates of deposit		3,830			3,276		11,831		8,789		4,054		3,903
Total interest expense on deposits		11,153			8,489		32,522		22,063		10,723		10,270
Federal Home Loan Bank borrowings		6,645			6,691		19,269		17,142		8,232		6,337
Other short-term borrowings		1,353			965		4,392		2,497		870		1,556
Subordinated debt and junior subordinated debt		2,077			2,315		6,820		6,425		2,461		2,529
Total interest expense		21,228			18,460		63,003		48,127		22,286		20,692
NET INTEREST INCOME		96,120			89,933		292,941		245,469		120,162		98,361
Provision for credit losses		4,121			1,035		9,375		4,911		29,821		2,507
Net interest income after provision for credit losses		91,999			88,898		283,566		240,558		90,341		95,854
NON-INTEREST INCOME
Trust fees		6,425			6,265		19,880		18,520		6,952		7,115
Service charges on deposits		7,056			6,313		19,803		16,282		6,617		6,549
Electronic banking fees		5,253			6,139		18,299		16,697		4,254		5,892
Net securities brokerage revenue		1,765			1,836		5,597		5,315		1,679		1,860
Bank-owned life insurance		1,373			1,232		4,032		5,116		1,769		1,319
Mortgage banking income		2,588			1,521		5,262		4,297		1,276		1,056
Net securities gains		235			84		3,800		403		1,491		657
Net gain on other real estate owned and other assets		158			150		670		641		169		136
Other income		2,097			2,684		8,535		6,444		3,802		3,189
Total non-interest income		26,950			26,224		85,878		73,715		28,009		27,773
NON-INTEREST EXPENSE
Salaries and wages		32,915			30,335		95,501		82,213		38,910		30,940
Employee benefits		9,726			7,905		29,419		22,782		10,373		9,989
Net occupancy		5,392			4,957		16,343		13,715		7,084		5,566
Equipment		5,273			4,488		14,924		12,532		6,039		4,833
Marketing		1,505			1,446		4,002		3,967		1,138		1,243
FDIC insurance		(1,221	)		789		1,287		2,315		2,113		1,353
Amortization of intangible assets		2,446			1,821		7,424		4,218		3,374		2,514
Restructuring and merger-related expense		1,688			10,811		4,876		16,468		5,164		3,107
Other operating expenses		15,544			13,568		45,876		36,024		17,138		14,887
Total non-interest expense		73,268			76,120		219,652		194,234		91,333		74,432
Income before provision for income taxes		45,681			39,002		149,792		120,039		27,017		49,195
Provision for income taxes		8,334			6,516		27,295		20,855		3,621		8,858
NET INCOME	$	37,347		$	32,486	$	122,497	$	99,184	$	23,396	$	40,337
EARNINGS PER COMMON SHARE
Basic	$	0.68		$	0.65	$	2.24	$	2.11	$	0.35	$	0.74
Diluted	$	0.68		$	0.64	$	2.24	$	2.11	$	0.35	$	0.74
AVERAGE COMMON SHARES OUTSTANDING
Basic		54,695,578			50,277,847		54,641,057		46,965,095		67,486,550		54,598,499
Diluted		54,751,344			50,432,112		54,705,761		47,107,829		67,587,446		54,706,337
DIVIDENDS DECLARED PER COMMON SHARE	$	0.31		$	0.29	$	0.93	$	0.87	$	0.32	$	0.31

COMPREHENSIVE INCOME	$	43,156		$	25,965	$	170,290	$	71,869	$	63,336	$	60,110

	For the Three Months Ended September 30, 2019 and 2018																							For the Three Months Ended March 31, 2020 and 2019
															Accumulated																							Accumulated
	Common Stock														Other			Deferred						Common Stock														Other			Deferred
(unaudited, in thousands, except	Shares					Capital			Retained			Treasury			Comprehensive			Benefits for						Shares					Capital			Retained			Treasury			Comprehensive			Benefits for
shares and per share amounts)	Outstanding			Amount		Surplus			Earnings			Stock			Income (Loss)			Directors			Total			Outstanding			Amount		Surplus			Earnings			Stock			Income (Loss)			Directors			Total
June 30, 2019		54,697,199		$	113,952	$	1,168,212		$	788,900		$	(2	)	$	4,113		$	(1,059	)	$	2,074,116
December 31, 2019																									67,824,428		$	141,827	$	1,636,966		$	824,694		$	(9,463	)	$	1,201		$	(1,304	)	$	2,593,921
Net income																									—			—		—			23,396			—			—			—			23,396
Other comprehensive income																									—			—		—			—			—			39,940			—			39,940
Comprehensive income																									—			—		—			—			—			—			—			63,336
Common dividends declared ($0.32 per share)																									—			—		—			(21,435	)		—			—			—			(21,435	)
Adoption of accounting standard																									—			—		—			(26,591	)		—			—			—			(26,591	)
Treasury shares acquired																									(786,012	)		—		—			—			(24,972	)		—			—			(24,972	)
Stock options exercised																									19,739			—		(276	)		—			721			—			—			445
Restricted stock granted																									—			—		—			—			—			—			—			—
Stock compensation expense																									—			—		1,370			—			—			—			—			1,370
Deferred benefits for directors- net																									—			—		62			—			—			—			(76	)		(14	)
March 31, 2020																									67,058,155		$	141,827	$	1,638,122		$	800,064		$	(33,714	)	$	41,141		$	(1,380	)	$	2,586,060

December 31, 2018																									54,598,134		$	113,758	$	1,166,701		$	737,581		$	(274	)	$	(37,871	)	$	(1,068	)	$	1,978,827
Net income		—			—		—			37,347			—			—			—			37,347			—			—		—			40,337			—			—			—			40,337
Other comprehensive income		—			—		—			—			—			5,809			—			5,809			—			—		—			—			—			19,773			—			19,773
Comprehensive income		—			—		—			—			—			—			—			43,156			—			—		—			—			—			—			—			60,110
Common dividends declared ($0.31 per share)		—			—		—			(16,915	)		—			—			—			(16,915	)		—			—		—			(16,916	)		—			—			—			(16,916	)
Treasury shares acquired		(6,974	)		—		42			—			(250	)		—			—			(208	)		(7	)		—		—			—			—			—			—			—
Restricted stock granted		1,000			2		(2	)		—			—			—			—			—
Stock options exercised																									1,000			—		(25	)		—			45			—			—			20
Stock compensation expense		—			—		1,333			—			—			—			—			1,333			—			—		1,075			—			—			—			—			1,075
Deferred benefits for directors- net		—			—		10			—			—			—			(223	)		(213	)		—			—		10			—			—			—			13			23
September 30, 2019		54,691,225		$	113,954	$	1,169,595		$	809,332		$	(252	)	$	9,922		$	(1,282	)	$	2,101,269

June 30, 2018		46,643,250		$	97,197	$	789,038		$	692,820		$	(555	)	$	(53,352	)	$	(1,042	)	$	1,524,106
Net income		—			—		—			32,486			—			—			—			32,486
Other comprehensive loss		—			—		—			—			—			(6,521	)		—			(6,521	)
Comprehensive income		—			—		—			—			—			—			—			25,965
Common dividends declared ($0.29 per share)		—			—		—			(15,829	)		—			—			—			(15,829	)
Shares issued for FFKT acquisition		7,920,387			16,487		374,465			—			315			—			—			391,267
Treasury shares acquired		(330	)		—		—			—			(15	)		—			—			(15	)
Stock options exercised		21,975			35		431			—			240			—			—			706
Restricted stock granted		18,685			39		(39	)		—			—			—			—			—
Stock compensation expense		—			—		1,094			—			—			—			—			1,094
Deferred benefits for directors- net		—			—		17			—			—			—			(42	)		(25	)
September 30, 2018		54,603,967		$	113,758	$	1,165,006		$	709,477		$	(15	)	$	(59,873	)	$	(1,084	)	$	1,927,269

	For the Nine Months Ended September 30, 2019 and 2018
December 31, 2018		54,598,134		$	113,758	$	1,166,701		$	737,581		$	(274	)	$	(37,871	)	$	(1,068	)	$	1,978,827
Net income		—			—		—			122,497			—			—			—			122,497
Other comprehensive income		—			—		—			—			—			47,793			—			47,793
Comprehensive income		—			—		—			—			—			—			—			170,290
Common dividends declared ($0.93 per share)		—			—		—			(50,746	)		—			—			—			(50,746	)
Treasury shares acquired		(26,358	)		—		170			—			(967	)		—			—			(797	)
Stock options exercised		6,000			8		12			—			101			—			—			121
Restricted stock granted		113,449			188		(1,076	)		—			888			—			—			—
Stock compensation expense		—			—		3,772			—			—			—			—			3,772
Deferred benefits for directors- net		—			—		16			—			—			—			(214	)		(198	)
September 30, 2019		54,691,225		$	113,954	$	1,169,595		$	809,332		$	(252	)	$	9,922		$	(1,282	)	$	2,101,269

December 31, 2017		44,043,244		$	91,756	$	684,730		$	651,357		$	—		$	(31,495	)	$	(1,027	)	$	1,395,321
Net income		—			—		—			99,184			—			—			—			99,184
Other comprehensive loss		—			—		—			—			—			(27,315	)		—			(27,315	)
Comprehensive income		—			—		—			—			—			—			—			71,869
Common dividends declared ($0.87 per share)		—			—		—			(42,127	)		—			—			—			(42,127	)
Adoption of accounting standard ASU 2016-01		—			—		—			1,063			—			(1,063	)		—			—
Shares issued for FTSB acquisition		2,498,761			5,206		102,141			—			—			—			—			107,347
Shares issued for FFKT acquisition		7,920,387			16,487		374,464						316									391,267
Treasury shares acquired		(15,489	)		—		34			—			(730	)		—			—			(696	)
Stock options exercised		58,763			104		1,346			—			399			—			—			1,849
Restricted stock granted		98,301			205		(205	)		—			—			—			—			—
Stock compensation expense		—			—		2,933			—			—			—			—			2,933
Deferred benefits for directors- net		—			—		(437	)		—			—			—			(57	)		(494	)
September 30, 2018		54,603,967		$	113,758	$	1,165,006		$	709,477		$	(15	)	$	(59,873	)	$	(1,084	)	$	1,927,269
March 31, 2019																									54,599,127		$	113,758	$	1,167,761		$	761,002		$	(229	)	$	(18,098	)	$	(1,055	)	$	2,023,139

	For the Nine Months Ended September 30,						For the Three Months Ended March 31,
(unaudited, in thousands)	2019			2018			2020			2019
NET CASH PROVIDED BY OPERATING ACTIVITIES	$	148,095		$	122,291		$	32,884		$	51,190
INVESTING ACTIVITIES
Net (increase) decrease in loans held for investment		(84,688	)		52,411
Net increase in loans held for investment								(131,110	)		(5,287	)
Available-for-sale debt securities:
Proceeds from sales		125,239			82,134			222,668			66,095
Proceeds from maturities, prepayments and calls		287,515			188,020			157,954			79,051
Purchases of securities		(384,890	)		(688,020	)		(197,153	)		(85,096	)
Held-to-maturity debt securities:
Proceeds from maturities, prepayments and calls		112,182			51,973			48,093			20,067
Purchases of securities		(15,005	)		(66,058	)		(11,734	)		(4,308	)
Equity securities:
Proceeds from sales		3,567			1,511			50			590
Proceeds from bank-owned life insurance		—			4,772
Proceeds from bank owned life insurance								10			—
Purchases of premises and equipment – net		(8,342	)		(2,400	)		(2,925	)		(2,181	)
Net cash received from acquisitions		—			278,654
Sale of portfolio loans- net		—			12,996
Net cash provided by (used in) investing activities		35,578			(84,007	)
Sale of portfolio loans								28,262			—
Net cash provided by investing activities								114,115			68,931
FINANCING ACTIVITIES
Decrease in deposits		(165,800	)		(20,443	)
Increase in deposits								42,892			85,238
Proceeds from Federal Home Loan Bank borrowings		470,000			575,000			475,000			100,000
Repayment of Federal Home Loan Bank borrowings		(363,313	)		(447,381	)		(305,070	)		(122,463	)
Increase in other short-term borrowings		5,725			90,043			59,104			11,025
Principal repayments of finance lease obligations		(300	)		(278	)		(104	)		(99	)
Increase (decrease) in federal funds purchased		29,000			(25,000	)
Decrease in federal funds purchased								(7,500	)		—
Repayment of junior subordinated debt		(33,506	)		(17,519	)		(6,702	)		(10,310	)
Dividends paid to common shareholders		(49,656	)		(37,751	)		(21,016	)		(15,824	)
Issuance of common stock		71			1,578
Treasury shares sold - net		(747	)		(425	)
Net cash (used in) provided by financing activities		(108,526	)		117,824
Net increase in cash and cash equivalents		75,147			156,108
Cash and cash equivalents at beginning of the period		169,186			117,572
Cash and cash equivalents at end of the period	$	244,333		$	273,680
Treasury shares (purchased) sold - net								(24,527	)		20
Net cash provided by financing activities								212,077			47,587
Net increase in cash, cash equivalents and restricted cash								359,076			167,708
Cash, cash equivalents and restricted cash at beginning of the period								234,796			169,186
Cash, cash equivalents and restricted cash at end of the period							$	593,872		$	336,894
SUPPLEMENTAL DISCLOSURES
Interest paid on deposits and other borrowings	$	63,300		$	46,524		$	26,074		$	19,645
Income taxes paid		27,015			13,050			—			—
Transfers of loans to other real estate owned		684			393			28			402
Transfers of loans to held for sale		—			12,996
Non-cash transactions related to FTSB acquisition		—			107,347
Non-cash transactions related to FFKT acquisition		—			391,267
Transfers of portfolio loans to loans held for sale								37,195			—
Transfer of held-to-maturity debt securities to available-for-sale debt securities		67,393			—			—			67,393
Right of use assets obtained in exchange for lease obligations		19,827			—			—			19,827

Basis of presentation — The accompanying unaudited interim financial statements of ~~WesBanco,~~Wesbanco, Inc. and its consolidated subsidiaries (“~~WesBanco”~~Wesbanco”) have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements and should be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, ~~2018.~~2019.

~~WesBanco’s~~Wesbanco’s interim financial statements have been prepared following the significant accounting policies disclosed in Note 1 of the Notes to the Consolidated Financial Statements of its ~~2018~~2019 Annual Report on Form 10-K filed with the Securities and Exchange Commission. In the opinion of management, the accompanying interim financial information reflects all adjustments, including normal recurring adjustments, necessary to present fairly ~~WesBanco’s~~Wesbanco’s financial position and results of operations for each of the interim periods presented. Certain prior period amounts have been reclassified to conform to the current period presentation. Such reclassifications had no impact on ~~WesBanco’s~~Wesbanco’s net income and stockholders’ equity. Results of operations for interim periods are not necessarily indicative of the results of operations that may be expected for a full year.

Loans and Loans Held for Sale — Loans originated by Wesbanco are reported at the principal amount outstanding, net of unearned income including credit valuation adjustments, unamortized deferred loan fee income and loan origination costs. Interest is accrued as earned on loans except where doubt exists as to collectability, in which case accrual of income is discontinued. Loans originated and intended for sale are carried, in aggregate, at the estimated market value as Wesbanco elected the fair value option on October 1, 2017.

Loan origination fees and direct costs are deferred and accreted or amortized into interest income, as an adjustment to the yield, over the life of the loan using the level yield method. When a loan is paid off, the remaining unaccreted or unamortized net origination fees or costs are immediately recognized into income.

Loans are generally placed on non-accrual when they are 90 days past due, unless the loan is well-secured and in the process of collection. Loans may be returned to accrual status when a borrower has resumed paying principal and interest for a sustained period of at least six months and Wesbanco is reasonably assured of collecting the remaining contractual principal and interest. Loans are returned to accrual status at an amount equal to the principal balance of the loan at the time of non-accrual status less any payments applied to principal during the non-accrual period. Loans are reported as a troubled debt restructuring when Wesbanco for economic or legal reasons related to a borrower’s financial difficulties grants a concession to the borrower that it would not otherwise consider. Refer to the “Troubled Debt Restructuring” policy below for additional detail.

A loan is considered non-performing, based on current information and events, if it is probable that Wesbanco will be unable to collect the payments of principal and interest when due according to the contractual terms of the loan agreement. Non-performing loans include all non-accrual loans and troubled debt restructurings. Wesbanco recognizes interest income on non-accrual loans on the cash basis only if recovery of principal is reasonably assured.

Consumer loans are charged down to the net realizable value at 120 days past due for closed-end loans and 180 days past due for open-end revolving lines of credit. Residential real estate loans are charged down to the net realizable value of the collateral at 180 days past due. Commercial loans are charged down to the net realizable value when it is determined that Wesbanco will be unable to collect the principal amount in full. Loans are reclassified to other assets at the net realizable value when foreclosure or repossession of the collateral occurs. Refer to the “Other Real Estate Owned and Repossessed Assets” policy below for additional detail.

Troubled Debt Restructurings (“TDR”) — A restructuring of a loan constitutes a TDR if the creditor, for economic or legal reasons related to the debtor's financial difficulties, grants a concession to the debtor that it would not otherwise consider. The determination of whether a concession has been granted includes an evaluation of the debtor’s ability to access funds at a market rate for debt with similar risk characteristics and among other things, the significance of the modification relative to unpaid principal or collateral value of the debt, and/or the significance of a delay in the timing of payments relative to the frequency of payments, original maturity date, or the expected duration of the loan. The most common concessions granted generally include one or more modifications to the terms of the debt such as a reduction in the interest rate below the prevailing market rate for the remaining life of the debt, an extension of the maturity date at an interest rate lower than the prevailing market rate for new debt with similar risk, or reduction of the unpaid principal or interest. Additionally, all consumer bankruptcies are considered TDR; all TDRs are considered nonperforming loans.

When determining whether a debtor is experiencing financial difficulties, consideration is given to any known default on any of its debt or whether it is probable that the debtor would be in payment default in the foreseeable future without the modification. Other indicators of financial difficulty include whether the debtor has declared or is in the process of declaring bankruptcy, the debtor’s ability to continue as a going concern, or the debtor’s projected cash flow to service its debt (including principal & interest) in accordance with the contractual terms for the foreseeable future, without a modification. If the payment of principal at original maturity is primarily dependent on the value of collateral, the current value of that collateral is considered in determining whether the principal will be paid.

The restructuring of a loan does not increase the allowance or provision for credit losses unless the loan is extended or the loans are commercial loans that are individually evaluated for impairment, in which case a specific reserve is established pursuant to GAAP. Portfolio segment loss history is the primary factor for establishing the allowance for residential real estate, home equity and consumer loans.

Non-accrual loans that are restructured remain on non-accrual, but may move to accrual status after they have performed according to the restructured terms for a period of time. TDRs on accrual status generally remain on accrual as long as they continue to perform in accordance with their modified terms. TDRs may also be placed on non-accrual if they do not perform in accordance with the restructured terms. Loans may be removed from TDR status after they have performed according to the renegotiated terms for a period of time if the interest rate under the modified terms is at or above market, or if the loan returns to its original terms.

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) was signed into law. Section 4013 of the CARES Act, “Temporary Relief From Troubled Debt Restructurings,” 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. On April 7, 2020, the joint federal regulatory agencies issued a statement, “Interagency Statement on Loan Modifications and Reporting for Financial Institutions Working With Customers Affected by the Coronavirus (Revised),” which further discusses loan modifications related to COVID-19. Wesbanco has extended up to a 180 day delay in loan principal and/or interest payments for customers whom are affected by 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 prior to the pandemic, as well other requirements noted in the regulatory agencies’ revised statement. Based on the guidance noted above, Wesbanco does 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.

Acquired Loans - Loans acquired in connection with acquisitions are recorded at their acquisition-date fair value with no carryover of related allowance for credit losses. Acquired loans are classified into two categories –purchased financial instruments with more than insignificant credit deterioration (“PCD”) loans, and loans with insignificant credit deterioration (“non-PCD”). PCD loans are defined as a loan or group of loans that have experienced more than insignificant credit deterioration since origination. Non-PCD loans will have an allowance established on acquisition date, which is recognized in the current period provision for credit losses. For PCD loans, an allowance is recognized on day 1 by adding it to the fair value of the loan, which is the “Day 1 amortized cost”. There is no credit loss expense recognized on PCD loans because the initial allowance is established by grossing-up the amortized cost of the PCD loan. Determining the fair value of the acquired loans involves estimating the principal and interest cash flows expected to be collected on the loans and discounting those cash flows at a market rate of interest. Management considers a number of factors in evaluating the acquisition-date fair value including the remaining life of the acquired loans, delinquency status, estimated prepayments, payment options and other loan features, internal risk grade, estimated value of the underlying collateral and interest rate environment.

PCD loans are accounted for in accordance with Accounting Standards Codification (“ASC”) 326-20, Financial Instruments – Credit Losses – Measure at Amortized Cost, if, at acquisition, the loan or pool of loans has experienced more-than-insignificant credit deterioration since origination. At acquisition, Wesbanco considers several factors as indicators that an acquired loan or pool of loans has experienced more-than-insignificant credit deterioration. These factors include loans 30 days or more past due, loans with an internal risk grade of below average or lower, loans classified as non-accrual by the acquired institution, the materiality of the credit and loans that have been previously modified in a troubled debt restructuring.

Under the ASC 326-20, a group of loans with similar risk characteristics can be assessed to determine if the pool of loans is PCD. However, if a loan does not have similar risk characteristics as any other acquired loan, the loan is individually assessed to determine if it is PCD. In addition, the initial allowance related to acquired loans can be estimated for a pool of loans if the loans have similar risk characteristics. Even if the loans were individually assessed to determine if they were PCD, they can be grouped together in the initial allowance calculation if they share similar risk characteristics. Since Wesbanco uses the discounted cash flow (DCF) approach, the initial allowance calculation for PCD loans is calculated as the expected contractual cash shortfalls, discounted at the rate that equates the present value of estimated future cash flows expected to be collected with the purchase price of the loan(s). If a PCD loan has an unfunded commitment at acquisition, the initial allowance for credit losses calculation reflects only the expected credit losses associated with the funded portion of the PCD loan. Expected credit losses associated with the unfunded commitment are included in the initial measurement of the commitment.

For PCD loans, the non-credit discount or premium is allocated to individual loans as determined by the difference between the loan’s amortized cost basis and the unpaid principal balance. The non-credit premium or discount is recognized into interest income on a level yield basis over the remaining expected life of the loan. For non-PCD loans, the interest and credit discount or premium is allocated to individual loans as determined by the difference between the loan’s amortized cost basis and the unpaid principal balance. The premium or discount is recognized into interest income on a level yield basis over the remaining expected life of the loan.

Allowance for Credit Losses — The allowance for credit losses reduces the loan portfolio to the net amount expected to be collected and establishes an allowance for unfunded loan commitments. The allowance for credit losses represents the lifetime expected losses for all loans and unfunded loan commitments at the initial recognition date. The allowance incorporates forward-looking information and applies a reversion methodology beyond the reasonable and supportable forecast. The allowance is increased by a provision charged to operating expense and reduced by charge-offs, net of recoveries. Management evaluates the appropriateness of the allowance at least quarterly. This evaluation is inherently subjective as it requires material estimates that may be susceptible to significant change from period to period.

The allowance for credit loss calculation (“CECL”) is based on the loan’s amortized cost basis, which is comprised of the unpaid principal balance of the loan, deferred loan fees (costs), acquired premium (discount) less write-downs. 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 a loan is placed on non-accrual. Wesbanco made an accounting policy election to reverse accrued interest deemed uncollectible as a reversal of interest income.

The allowance for credit losses reflects the risk of loss on the loan portfolio. To appropriately measure expected credit losses, management disaggregates the loan portfolio into pools of similar risk characteristics. The Company utilizes the probability of default (“PD”) / loss given default (“LGD”) approach to calculate the expected loss for each segment, which is then discounted. PD is the probability the asset will default within a given timeframe and LGD is the percentage of the assets not expected to be collected due to default. The primary macroeconomic drivers of the quantitative model include forecasts of national unemployment and interest rate spreads. Management relies on macroeconomic forecasts obtained from various reputable sources, which may include the Federal Open Market Committee (FOMC) forecast and other publicly available forecasts from well recognized, leading economists. These forecasts can range from one to two years, depending upon the facts and circumstances of the current state of the economy, portfolio segment and management’s judgement of what can be reasonably supported. The model reversion period ranges from one to three years.

The allowance for credit losses is calculated over the loan’s contractual life. For term loans, the contractual life is calculated based on the maturity date. For commercial and industrial (“C&I”) revolving loans with no stated maturity date, the contractual life is calculated based on the internal review date. For all other revolving loans, the contractual life is based on either the estimated maturity date or a default date. The contractual term does not include expected extension, renewals or modifications unless management has a reasonable expectation as of the reporting period that Wesbanco will execute a troubled debt restructuring (“TDR”) with the borrower. Management assumes a loan will become a TDR if a consumer loan has matured, has a principal balance, and has previously been partially charged-off. This assumption extends the maturity of these loans to the six months beyond maturity date.

The loan portfolio is segmented based on the risk profiles of the loans. Commercial loans are segmented between commercial real estate (“CRE”), which are collateralized by real estate and commercial & industrial (“C&I”), which are typically utilized for general business purposes. CRE is further segmented between land and construction (“LCD”) and improved property, which are generally loans to purchase or refinance owner-occupied and investment properties. LCD loans have a unique risk that the developer or builder may not complete the project or not complete it on time or within budget. Improved property loans are reviewed for risk based on the underlying real estate property such as rental income and current lease terms. Retail loans are a homogenous group, generally consisting of standardized products that are smaller in amount and distributed over a large number of individual borrowers. The group is segmented into 3 categories – residential real estate, HELOC and consumer.

Contractual terms must be adjusted for prepayments to arrive at expected cash flows. Wesbanco models term loans with a “prepayment” rate, annualized to one year. When Wesbanco has a specific expectation of differing payment behavior for a given loan, the loan may be evaluated individually. For revolving loans that do not have a principal payment schedule, a curtailment rate is factored into the cash flow.

The evaluation also considers qualitative factors such as economic trends and conditions, which includes levels of regional unemployment, real estate values and the impact on specific industries and geographical markets, changes in lending policies and underwriting standards, delinquency and other credit quality trends, concentrations of credit risk, if any, the results of internal loan reviews and examinations by bank regulatory agencies, the volatility of historical loss rates and the velocity of changes in historical loss rates pertaining to the allowance for credit losses. Management relies on observable data from internal and external sources to the extent it is available to evaluate each of these factors and adjusts the model’s quantitative results to reflect the impact these factors may have on probable losses in the portfolio.

Commercial loans, include commercial real estate (“CRE”) and C&I, greater than $1 million that are reported as non-accrual, a troubled debt restructuring or that have unique characteristics are tested individually for estimated credit losses. Specific reserves are established when appropriate for such loans based on the present value of expected future cash flows of the loan or the estimated realizable value of the collateral, if any.

Management may also adjust its assumptions to account for differences between expected and actual losses from period to period. The variability of management’s assumptions could alter the level of the allowance for credit losses and may have a material impact on future results of operations and financial condition. The loss estimation models and methods used to determine the allowance for credit losses are continually refined and enhanced.

Recent accounting pronouncements —– ~~In August 2018, the~~The Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) as noted below.

In March 2020, the FASB issued ASU 2020-04, “Reference Rate Reform (Topic 848)”. Due to the potential discontinuance of the London Interbank Offered Rate (LIBOR), regulators have undertaken reference rate initiatives to identify alternative reference rates that are more observable or transaction based and less susceptible to manipulation. The ASU also provides option expedients for contract modifications that replace a reference rate affected by reference rate reform. The guidance is effective as of March 12, 2020 through December 31, 2022. Wesbanco is currently assessing the impact of ASU 2018-15 on Wesbanco’s Consolidated Financial Statements.

In August 2018, the FASB issued ASU 2018-15, “Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement that is a Service Contract.” This ASU specifically aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software and hosting arrangements that include an internal-use software license. The ASU does not affect the accounting for the service element of a hosting arrangement that is a service contract. The guidance is effective for fiscal years beginning after December 15, 2019 and interim periods within those fiscal years. Early adoption is permitted, including adoption in an interim period. ~~WesBanco is currently assessing the~~For Wesbanco, this update was effective January 1, 2020. The adoption of this pronouncement did not have a material impact ~~of ASU 2018-15~~ on ~~WesBanco’s~~Wesbanco’s Consolidated Financial Statements.

ASU 2018-14 Compensation—Retirement Benefits—Defined Benefit Plans—General (Topic 715-20)

In August 2018, the FASB issued ASU 2018-14, “Compensation—Retirement Benefits—Defined Benefit Plans—General (Topic 715-20): Disclosure Framework—Changes to the Disclosure Requirements for Defined Benefit Plans.” This ASU modifies Accounting Standards Codification (“ASC”) 715-20 to improve disclosure requirements for employers that sponsor defined benefit pension or other postretirement plans. The guidance is effective for fiscal years ending after December 15, 2020. Early adoption is permitted. ~~WesBanco~~Wesbanco is currently assessing the impact of ASU 2018-14 on ~~WesBanco’s~~Wesbanco’s Consolidated Financial Statements.

ASU 2018-13 Fair Value Measurement – Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement

In August 2018, the FASB issued ASU 2018-13, “Fair Value Measurement – Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement.” This ASU modifies the disclosure objective paragraphs of ASC 820 to eliminate (1) “at a minimum” from the phrase “an entity shall disclose at a minimum” and (2) other similar “open ended” disclosure requirements to promote the appropriate exercise of discretion of entities. The guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. Early adoption is permitted, including adoption in an interim period. ~~WesBanco is currently assessing the~~For Wesbanco, this update was effective January 1, 2020. The adoption of this pronouncement did not have a material impact ~~of ASU 2018-13~~ on ~~WesBanco’s~~Wesbanco’s Consolidated Financial Statements.

In September 2016, the FASB issued ASU 2016-13, “Financial Instruments – Credit Losses (Topic 326),” which ~~will~~ require entities to use a new forward-looking “expected loss” model also referred to as the current expected credit loss model (“CECL”) on trade and other receivables, held-to-maturity debt securities, loans and other instruments that generally will result in the earlier recognition of allowances for credit losses. For available-for-sale debt securities with unrealized losses, entities ~~will~~ measure credit losses in a manner similarly to current procedures, except that the losses will be recognized as allowances rather than reductions in the amortized cost of the securities. Entities will have to disclose significantly more information, including information they use to track credit quality by year of origination for most financing receivables. In April 2019, the FASB issued ASU 2019-04, “Codification Improvements to Topic 326, Financial Instruments – Credit Losses, Topic 815, Derivatives and Hedging and Topic 825, Financial Instruments” and in May 2019 the FASB issued ASU 2019-05, “Financial Instruments – Credit Losses (Topic 326), Targeted Transition Relief. Public business entities must apply the new requirements for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years, which for ~~WesBanco will be~~Wesbanco was effective ~~for the fiscal year beginning~~ January 1, 2020. ~~Early adoption is permitted for fiscal years beginning after December 15, 2018.~~ In December 2018, the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation (“FDIC”) and the Office of Comptroller of the Currency (“OCC”) approved a final rule to address changes to credit loss accounting under GAAP, including banking organizations’ adoption of the CECL ~~methodolgy.~~methodology. The final rule provides banking organizations the option to phase-in, over a three-year period, the day-one adverse effects on regulatory capital that may result from the adoption of the new accounting standard. ~~WesBanco is continuing~~In response to ~~analyze~~the COVID-19 pandemic, the joint federal bank regulatory agencies issued an optional extension of the regulatory capital transition, which allows for a two-year delay and then a three-year transition period from January 1, 2022 through December 31, 2024. Under the interim final rule, the amount of adjustments to regulatory capital deferred until the phase-in period includes both the initial impact of our adoption of CECL at January 1, 2020 and 25% of subsequent changes in our allowance for credit losses during each quarter of the two-year period ended December 31, 2021, (collectively, the “CECL regulatory capital transition adjustment”). Wesbanco has elected to defer the impact of CECL for two years and then will phase in the impact of the adoption of this standard on the company’s regulatory capital to ~~determine~~over the ~~best course of action regarding immediate or delayed recognition of the day-one adoption adjustment upon regulatory capital.~~subsequent three-year period.

materiality of the credit and loans that have been previously modified in a troubled debt restructuring (“TDR”). Upon adoption of this standard, acquired loans from prior acquisitions that meet the guidelines under ASC 310-30 (formerly known as “purchased credit impaired”) ~~will be~~were reclassified as PCD loans. The accretable portion of the loan mark as of adoption date ~~will continue~~continues to accrete into interest income. However, the non-accretable portion of the loan mark ~~will be~~was added to the allowance upon adoption, and any reversals of such mark will flow through the allowance in future periods. The loan mark on ASC 310-20 loans (“non-purchased credit impaired”) from prior acquisitions ~~will continue~~continues to accrete through interest income over the life of such loans.

~~WesBanco~~Wesbanco formed a cross-functional team in 2016 to oversee the implementation of CECL. The team was responsible for completing an initial data gap assessment, determining if additional data was needed or current data could be improved upon, finalizing the loan segmentation procedures, analyzing the methodology options regarding the calculation of expected credit losses and concluding why the selected methodology is reasonable and in-line with accounting guidance. ~~WesBanco has~~Wesbanco completed a parallel ~~run for the third quarter of~~runs in 2019 to ensure the various forecasting and modeling assumptions ~~are~~were reasonable and supportable, including certain qualitative factors that ~~have been~~were developed to estimate the initial current expected credit loss allowance. ~~WesBanco will continue~~Wesbanco engaged a third-party to ~~perform parallel runs throughout~~validate the ~~remainder~~data inputs and the models utilized in the CECL calculation. In addition, the Company prepared documentation of ~~2019 prior~~the accounting policy decisions, changes to the business processes and procedures, and the control environment under the adoption of ~~the ASU. Based~~this standard. The day 1 impact on ~~preliminary analysis performed during 2019, using forecasts and macroeconomic conditions and exposures during that time and with qualitative factors and model validation still in process,~~ the ~~overall Day 1 range of potential outcomes is estimated to result in an increase of up to 30% in the CECL~~ allowance for credit losses was $41.4 million, which included a $6.7 million adjustment for ~~the~~PCD loans and a $3.0 million adjustment related to loan ~~portfolio. This estimation~~commitments. The after-tax effect on retained earnings was $26.6 million as of January 1, 2020. The day 1 CECL calculation is derived from the selected assumption of a one-year reasonable and supportable ~~forecast.~~forecast, which was obtained from a third-party vendor. After the forecast period, ~~WesBanco~~Wesbanco reverts back over a ~~three~~one year period to historical loss rates adjusting for prepayments and curtailments, to estimate losses over the remaining life of loans. The most sensitive assumptions include the length of the forecast and reversion periods, forecast of unemployment and interest rate spreads and prepayment speeds. ~~The ultimate impact will depend on the composition of the loan portfolio, credit quality of the loan portfolio~~See Note 5, “Loans and ~~the macroeconomic conditions and forecasts utilized in the calculation of the allowance of credit losses~~Allowance for ~~loans. WesBanco has engaged a third-party to validate the data inputs and the models utilized in the CECL calculation. The final results of the model validation, as well as~~Credit Losses” for further refinement of judgmental factors are still in process and could materially impact the estimated range of potential outcomes noted above. The Company has prepared documentation of the accounting policy decisions, changes to the business processes and procedures, and the control environment under the adoption of this standard, and has drafted the format of the initial, upon adoption footnote disclosure, to be included in the Form 10-Q for the first quarterly period after adoption, or as of March 31, 2020. Upon adoption, the Company estimates the impact on the Tier 1 risk-based capital ratio would be up to a 15 basis point reduction, based on the assumptions noted above, without a phase-in assumed of the regulatory capital impact over three years.detail.

None of the above noted evaluation assumptions and initial estimates include the acquired loans from Old Line Bancshares, Inc. (“Old Line”) or any related allowance impact. If the acquisition of Old Line closes before year-end, the acquired loan portfolio will be accounted for under existing acquired loan portfolio and allowance rules; however, if the acquisition closes after December 31, 2019, the new CECL rules will apply as noted above for PCD and non-PCD loans.

~~WesBanco will recognize~~Wesbanco recognized an allowance for credit losses for held-to-maturity (“HTM”) debt ~~securities. Based on the credit quality~~securities of ~~WesBanco’s HTM debt securities’ portfolio, WesBanco does not expect the allowance for credit losses to be significant for HTM securities.~~

In February 2016, the FASB issued ASU 2016-02, “Leases (Topic 842),” which requires entities to recognize lease assets and lease liabilities on the balance sheet and disclose key information about leasing arrangements. The principal difference from previous guidance is that the lease assets and lease liabilities arising from operating leases were not previously recognized in the balance sheet. Public business entities must apply the new requirements for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. For WesBanco, this update was effective for the fiscal year beginning January 1, 2019. In January 2018, the FASB issued ASU 2018-01, which allows entities the option to apply the provisions of the new lease guidance at the effective date without adjusting the comparative periods presented. In July 2018, the FASB issued ASU 2018-10, which provides narrow-scope improvements to the lease standard and ASU 2018-11, which allows entities to choose an additional transition method, under which an entity initially applies the new lease standard at the adoption date and recognizes a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. Under this transitional method, the entity shall recognize and measure the leases that exist at the adoption date and the prior comparative periods are not adjusted. WesBanco adopted this ASU$0.2 million as of January 1, 2019 using the transitional method. In addition, WesBanco utilized certain practical expedients including the following - retained the classifications of existing leases, no re-assessment to determine if existing leases have initial direct costs and utilized hindsight when determining the lease term and assessment of impairment in existing leases. WesBanco initially capitalized $20 million2020 upon ~~adoption for right-of-use assets and lease liabilities, net of existing straight-line lease liabilities and unfavorable acquired lease liabilities. See additional disclosures in Note 6, “Leases.”~~

In August 2017, the FASB issued ASU 2017-12, “Targeted Improvements to Accounting for Hedging Activities.” The new guidance makes more financial and nonfinancial hedging strategies eligible for hedge accounting. It also amended the presentation and disclosure requirements and changed how companies assess effectiveness. It was intended to more closely align hedge accounting with companies’ risk management strategies, simplify the application of hedge accounting, and increase transparency as to the scope and results of hedging programs. The guidance was effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. For WesBanco, this update was effective for the fiscal year beginning January 1, 2019. Upon adoption, WesBanco reclassified $67.3 million of callable held-to-maturity municipal debt securities to available-for-sale debt securities.

~~ASU 2018-16 Derivatives and Hedging (Topic 815): Inclusion of the Secured Overnight Financing Rate (SOFR) Overnight Index Swap (OIS) Rate as a Benchmark Interest Rate for Hedge Accounting Purposes~~

In October 2018, the FASB issued ASU 2018-16, “Derivatives and Hedging (Topic 815): Inclusion of the Secured Overnight Financing Rate (SOFR) Overnight Index Swap (OIS) Rate as a Benchmark Interest Rate for Hedge Accounting Purposes.” This ASU modifies ASC 815 for eligible benchmark interest rates. Due to concerns about the sustainability of the London Interbank Offered Rate (LIBOR), the Federal Reserve Board initiated an effort to introduce an alternative reference rate in the United States. The Overnight Index Swap (OIS) rate, which is based on SOFR is permitted as a U.S. benchmark interest rate for hedge accounting purposes. The guidance was effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. For WesBanco, this update was effective for the fiscal year beginning January 1, 2019. The adoption of this ~~pronouncement did not have a material impact on WesBanco’s Consolidated Financial Statements.~~standard. See Note 4, “Investments” for further detail.

On ~~August 20, 2018, WesBanco~~November 22, 2019, Wesbanco completed its acquisition of ~~Farmers Capital Bank Corp.,~~OLBK, a bank holding company headquartered in ~~Frankfort, KY.~~Bowie, MD. On the acquisition date, ~~FFKT~~OLBK had approximately ~~$1.6~~$3.0 billion in assets, excluding goodwill, which included approximately ~~$1.0~~$2.5 billion in loans and ~~$239.3~~$182.5 million in securities. The ~~FFKT~~OLBK acquisition was valued at ~~$428.9~~$494.0 million, based on ~~WesBanco’s~~Wesbanco’s closing stock price on ~~August 20, 2018,~~November 22, 2019, of ~~$49.40,~~$36.75 and resulted in ~~WesBanco~~Wesbanco issuing ~~7,920,387~~13,351,837 shares of its common stock ~~and $37.6 million in cash~~ in exchange for all of the outstanding shares of ~~FFKT~~OLBK common ~~stock.~~stock including stock options of which the fair value was $3.3 million. The assets and liabilities of ~~FFKT~~OLBK were recorded on ~~WesBanco’s~~Wesbanco’s Balance Sheet at their preliminary estimated fair values as of ~~August 20, 2018,~~November 22, 2019, the acquisition date, and ~~FFKT’s~~OLBK’s results of operations have been included in ~~WesBanco’s~~Wesbanco’s Consolidated Statements of Income since that date.Based on ~~the final~~a preliminary purchase price allocation, ~~WesBanco~~Wesbanco recorded ~~$223.3~~$228.8 million in goodwill and ~~$37.4~~$32.9 million in core deposit intangibles in its ~~community banking segment and $2.6 million in trust customer relationship intangibles in its trust and investment services~~Community Banking segment. None of the goodwill is deductible for income tax purposes, as the acquisition is accounted for as a tax-free exchange for tax purposes. As a result of the ~~full~~ integration of the operations of ~~FFKT,~~OLBK, it is not practicable to determine revenue or net income included in ~~WesBanco’s~~Wesbanco’s operating results relating to ~~FFKT~~OLBK since the date of acquisition, as ~~FFKT’s~~OLBK’s results cannot be separately identified.

For the ~~nine~~three months ended ~~September 30, 2019, WesBanco~~March 31, 2020, Wesbanco recorded merger-related expenses of ~~$3.2~~$5.2 million associated with the ~~FFKT~~OLBK acquisition.

The ~~final~~preliminary purchase price of the ~~FFKT~~OLBK acquisition and resulting goodwill is summarized as follows:

(unaudited, in thousands)	August 20, 2018			November 22, 2019
Purchase price:
Fair value of WesBanco shares issued	$	391,267
Cash consideration for outstanding FFKT shares		37,634
Fair value of Wesbanco shares issued				$	493,936
Cash consideration for outstanding OLBK shares					16
Total purchase price	$	428,901		$	493,952
Fair value of:
Tangible assets acquired	$	1,370,245		$	2,894,254
Core deposit and other intangible assets acquired		39,992			32,899
Liabilities assumed		(1,434,779	)		(2,721,999	)
Net cash received in the acquisition		230,139			60,041
Fair value of net assets acquired		205,597			265,195
Goodwill recognized	$	223,304		$	228,757

The following table presents the preliminary allocation of the purchase price of the assets acquired and the liabilities assumed at the date of ~~acquisition.~~acquisition, as Wesbanco intends to finalize its accounting for the acquisition of OLBK within one year of the date of acquisition:

(unaudited, in thousands)	August 20, 2018		November 22, 2019
Assets acquired
Cash and due from banks	$	230,139	$	60,041
Securities		239,321		182,455
Loans		1,025,800		2,514,300
Goodwill and other intangible assets		263,296		261,656
Accrued income and other assets		105,124		197,499
Total assets acquired	$	1,863,680	$	3,215,951
Liabilities assumed
Deposits	$	1,330,328	$	2,375,574
Borrowings		71,780		286,047
Accrued expenses and other liabilities		32,671		60,378
Total liabilities assumed	$	1,434,779	$	2,721,999
Net assets acquired	$	428,901	$	493,952

The following table presents the changes in the allocation of the purchase price of the assets acquired and the liabilities assumed at the date of the acquisition previously reported as of ~~June 30,~~December 31, 2019:

(unaudited, in thousands)	August 20, 2018			November 22, 2019
Goodwill recognized as of June 30, 2019	$	220,897
Goodwill recognized as of December 31, 2019				$	203,774
Change in fair value of net assets acquired:
Assets
Investment securities					(65	)
Loans					(31,293	)
Other intangible assets					(692	)
Deferred tax assets					7,365
Accrued income and other assets		709			(1,212	)
Liabilities
Borrowings					1,283
Accrued expenses and other liabilities		(3,116	)		(369	)
Fair value of net assets acquired	$	(2,407	)	$	(24,983	)
Increase in goodwill recognized		2,407			24,983
Goodwill recognized as of September 30, 2019	$	223,304
Goodwill recognized as of March 31, 2020				$	228,757

The ~~adjustments to goodwill noted above to other assets~~fair value estimates for loans (including loan classifications), premises and equipment, deferred taxes and other assets/liabilities ~~related~~will continue to fluctuate until the ~~Company’s finalization of~~final valuations and/or appraisals are completed. The Company expects to finalize the purchase price accounting for ~~FFKT.~~

On July 23, 2019, WesBanco and Old Line Bancshares, Inc., a bank holding company headquartered in Bowie, MD, jointly announced the execution of a definitive Agreement and Plan of Merger providing for the merger of OLBK with and into WesBanco (“Agreement”), OLBK has approximately $3.1 billion in assets, $2.4 billion in loans, $2.4 billion in deposits, $0.4 billion in stockholders’ equity and 37 branches. On the date of the announcement, the transaction was valued at approximately $500.1 million. Under the terms of the Agreement, WesBanco will exchange its common stock for OLBK common stock at closing, subject to customary conditions. OLBK options will be exchanged for WesBanco options, as adjusted as to exercise price and number of options to take into account the fixed exchange ratio stated in the Agreement. OLBK stockholders will be entitled to receive 0.7844 shares of WesBanco common stock per each share of OLBK common stock, which had a total value of $29.22 per share, aswithin one year of the date of the announcement. The receipt by OLBK stockholders of shares of WesBanco common stock in exchange for their shares of OLBK common stock is anticipated to qualify as a tax-free exchange. The acquisition is subject to the approvals of the appropriate banking regulatory authorities. It has received the approval of the West Virginia Department of Financial Institutions and the shareholders of both companies. It is currently expected that the transaction will be completed in the fourth quarter of 2019. For the nine months ended September 30, 2019, WesBanco recorded merger-related expenses of $1.7 million related to the OLBK acquisition.

	For the Three Months Ended September 30,				For the Nine Months Ended September 30,				For the Three Months Ended March 31,
(unaudited, in thousands, except shares and per share amounts)	2019		2018		2019		2018		2020		2019
Numerator for both basic and diluted earnings per common share:
Net income	$	37,347	$	32,486	$	122,497	$	99,184	$	23,396	$	40,337
Denominator:
Total average basic common shares outstanding		54,695,578		50,277,847		54,641,057		46,965,095		67,486,550		54,598,499
Effect of dilutive stock options and other stock compensation		55,766		154,265		64,704		142,734		100,896		107,838
Total diluted average common shares outstanding		54,751,344		50,432,112		54,705,761		47,107,829		67,587,446		54,706,337
Earnings per common share - basic	$	0.68	$	0.65	$	2.24	$	2.11	$	0.35	$	0.74
Earnings per common share - diluted	$	0.68	$	0.64	$	2.24	$	2.11	$	0.35	$	0.74

~~Options~~As of March 31, 2020 and 2019, respectively,510,186 shares and 117,600 options to purchase ~~352,250~~ shares ~~and 0 shares at September 30, 2019 and 2018, respectively,~~ were not included in the computation of net income per diluted share ~~for the three months ended September 30, 2019,~~ because the exercise price was greater than the average market price of the common share, therefore, the effect would be antidilutive. Options to purchase 352,250 and 117,600 shares at September 30, 2019 and 2018, respectively, were not included in the computation of net income per diluted share for the nine months ended September 30, 2019 and 2018, because the exercise price was greater than the average market price of the common share, therefore, the effect would be antidilutive.

As of ~~September 30, 2019, 0 contingently issuable~~March 31, 2020, shares ~~were estimated~~related to ~~be awarded under~~ the 2019, 2018 and 2017 total shareholder return plans ~~as stock performance targets~~ were ~~not met and are therefore~~ not included in the calculation because the effect would be antidilutive. As of ~~September 30, 2018, 45,840~~March 31, 2019, 44,688 contingently issuable shares were estimated to be awarded under the 2018 and 2017 total shareholder return plans, as stock performance targets had been met toas of such date and therefore those shares were included in the diluted calculation.

Performance-based restricted stock compensation totaling ~~30,137~~25,618 and 17,081 shares were estimated to be awarded as of ~~September 30,~~March 31, 2020 and 2019, ~~and 2018,~~ respectively, and are included in the diluted calculation.

9On November 22, 2019, Wesbanco issued 13,351,837 shares of common stock to complete its acquisition of OLBK and granted 34,998 shares of restricted stock to certain OLBK employees. These shares are included in average shares outstanding beginning on that date. For additional information relating to the OLBK acquisition, refer to Note 2, “Mergers and Acquisitions.”

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

	September 30, 2019									December 31, 2018									March 31, 2020									December 31, 2019
(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			Estimated Fair Value		Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
Available-for-sale debt securities
U.S. Treasury	$	29,817	$	61	$	—		$	29,878	$	19,882	$	3	$	(7	)	$	19,878	$	21,410	$	98	$	—		$	21,508	$	32,790	$	47	$	(1	)	$	32,836
U.S. Government sponsored entities and agencies		116,508		4,012		(79	)		120,441		142,852		556		(1,756	)		141,652		154,661		4,743		(25	)		159,379		157,088		2,862		(322	)		159,628
Residential mortgage-backed securities and collateralized mortgage obligations of government sponsored entities and agencies		1,663,942		21,469		(4,346	)		1,681,065		1,585,864		2,912		(27,521	)		1,561,255		1,616,360		56,477		(1,368	)		1,671,469		1,803,268		18,850		(6,131	)		1,815,987
Commercial mortgage-backed securities and collateralized mortgage obligations of government sponsored entities and agencies		183,634		4,716		(45	)		188,305		171,671		264		(2,963	)		168,972		213,371		10,457		(1	)		223,827		187,268		3,270		(129	)		190,409
Obligations of states and political subdivisions		145,593		5,771		(1	)		151,363		184,057		2,039		(982	)		185,114		136,151		5,441		(19	)		141,573		140,357		5,253		(1	)		145,609
Corporate debt securities		37,684		592		(129	)		38,147		37,730		87		(559	)		37,258		44,012		600		(286	)		44,326		48,645		581		(137	)		49,089
Total available-for-sale debt securities	$	2,177,178	$	36,621	$	(4,600	)	$	2,209,199	$	2,142,056	$	5,861	$	(33,788	)	$	2,114,129	$	2,185,965	$	77,816	$	(1,699	)	$	2,262,082	$	2,369,416	$	30,863	$	(6,721	)	$	2,393,558
Held-to-maturity debt securities
U.S. Government sponsored entities and agencies	$	9,854	$	53	$	(46	)	$	9,861	$	10,823	$	6	$	(329	)	$	10,500	$	9,041	$	90	$	(2	)	$	9,129	$	9,216	$	30	$	(116	)	$	9,130
Residential mortgage-backed securities and collateralized mortgage obligations of government sponsored entities and agencies		129,797		1,273		(155	)		130,915		148,300		204		(4,170	)		144,334		116,214		4,274		(29	)		120,459		122,937		1,031		(261	)		123,707
Obligations of states and political subdivisions		679,932		22,244		(170	)		702,006		828,520		8,771		(4,012	)		833,279		655,952		21,246		(87	)		677,111		686,376		20,475		(258	)		706,593
Corporate debt securities		33,241		1,786		—			35,027		33,291		12		(673	)		32,630		33,207		1,367		(153	)		34,421		33,224		1,869		—			35,093
Total held-to-maturity debt securities	$	852,824	$	25,356	$	(371	)	$	877,809	$	1,020,934	$	8,993	$	(9,184	)	$	1,020,743	$	814,414	$	26,977	$	(271	)	$	841,120	$	851,753	$	23,405	$	(635	)	$	874,523
Total debt securities	$	3,030,002	$	61,977	$	(4,971	)	$	3,087,008	$	3,162,990	$	14,854	$	(42,972	)	$	3,134,872	$	3,000,379	$	104,793	$	(1,970	)	$	3,103,202	$	3,221,169	$	54,268	$	(7,356	)	$	3,268,081

At ~~September 30, 2019~~March 31, 2020 and December 31, ~~2018,~~2019, there were 0 holdings of any one issuer, other than U.S. government sponsored entities and its agencies, in an amount greater than 10% of ~~WesBanco’s~~Wesbanco’s shareholders’ equity.

Equity securities, of which ~~$8.5~~$7.8 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 ~~$11.6~~$11.2 million and ~~$11.7~~$12.3 million at ~~September 30, 2019~~March 31, 2020 and December 31, ~~2018,~~2019, 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 ~~September 30, 2019.~~March 31, 2020. 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, principal payments are received on a monthly basis.

(unaudited, in thousands)	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Available-for-sale debt securities
Less than one year	$	61,932	$	61,992	$	46,569	$	46,618
1-5 years		116,281		117,740		137,986		142,442
5-10 years		407,897		416,454		323,482		338,039
Over 10 years		1,591,068		1,613,013		1,677,928		1,734,983
Total available-for-sale debt securities	$	2,177,178	$	2,209,199	$	2,185,965	$	2,262,082
Held-to-maturity debt securities
Less than one year	$	18,138	$	18,201	$	18,699	$	18,756
1-5 years		127,140		130,634		122,987		127,113
5-10 years		328,315		338,075		300,223		308,896
Over 10 years		379,231		390,899		372,505		386,355
Total held-to-maturity debt securities	$	852,824	$	877,809	$	814,414	$	841,120
Total debt securities	$	3,030,002	$	3,087,008	$	3,000,379	$	3,103,202

Securities with aggregate fair values of $2.1 billion and $2.0 billion at ~~both September 30, 2019~~March 31, 2020 and December 31, ~~2018~~2019, respectively, were pledged as security for public and trust funds, and securities sold under agreements to repurchase. Proceeds from the sale of available-for-sale securities were ~~$125.2~~$222.7 million and ~~$82.1~~$66.1 million for the ~~nine~~three months ended ~~September 30,~~March 31, 2020 and 2019, ~~and 2018,~~ respectively. Net unrealized gains ~~(losses)~~ on available-for-sale securities included in accumulated other comprehensive income, net of tax, as of ~~September 30, 2019~~March 31, 2020 and December 31, ~~2018~~2019 were ~~$24.7~~$58.0 million and ~~($21.5)~~$20.7 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 from the adoption of ASU 2016-01 effective January 1, 2018, for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2020 and 2019, ~~and 2018,~~ respectively.

	For the Three Months Ended September 30,						For the Nine Months Ended September 30,						For the Three Months Ended March 31,
(unaudited, in thousands)	2019			2018			2019			2018			2020			2019
Debt securities:
Gross realized gains	$	1,096		$	88		$	1,443		$	100		$	3,335		$	242
Gross realized losses		(741	)		(13	)		(950	)		(31	)		(1,031	)		(191	)
Net gains (losses) on debt securities	$	355		$	75		$	493		$	69
Net gains on debt securities													$	2,304		$	51
Equity securities:
Net unrealized gains (losses) recognized on securities still held	$	(120	)	$	11		$	748		$	330
Net realized gains (losses) recognized on securities sold		—			(2	)		2,559			4
Net gains (losses) on equity securities	$	(120	)	$	9		$	3,307		$	334
Net unrealized (losses) gains recognized on securities still held													$	(805	)	$	603
Net realized (losses) gains recognized on securities sold														(8	)		3
Net (losses) gains on equity securities													$	(813	)	$	606
Net securities gains	$	235		$	84		$	3,800		$	403		$	1,491		$	657

On January 1, 2020, Wesbanco adopted CECL. Upon adoption, the Company recognized $0.2 million to opening retained earnings, which represents the CECL allowance as of January 1, 2020. 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 $7.2 million as of March 31, 2020, 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 or governmental policies that could affect this assumption.

The following table provides a rollforward of the allowance for credit losses on held-to-maturity securities for the three months ended March 31, 2020:

The following ~~tables provide~~table provides 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 ~~September 30, 2019 and December~~March 31, ~~2018, respectively:~~2020:

	September 30, 2019																					March 31, 2020
	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	$	5,383	$	(17	)		4	$	6,781	$	(108	)		2	$	12,164	$	(125	)		6	$	14,947	$	(25	)		2	$	—	$	—			—	$	14,947	$	(25	)		2
Residential mortgage-backed securities and collateralized mortgage obligations of government sponsored entities and agencies		347,848		(1,515	)		70		306,696		(2,986	)		128		654,544		(4,501	)		198		116,118		(1,368	)		16		—		—			—		116,118		(1,368	)		16
Commercial mortgage-backed securities and collateralized mortgage obligations of government sponsored entities and agencies		11,066		(38	)		3		3,729		(7	)		2		14,795		(45	)		5		—		—			—		180		(1	)		1		180		(1	)		1
Obligations of states and political subdivisions		12,650		(39	)		21		7,581		(132	)		17		20,231		(171	)		38		1,727		(19	)		3		—		—			—		1,727		(19	)		3
Corporate debt securities		—		—			—		7,896		(129	)		3		7,896		(129	)		3		13,726		(286	)		6		—		—			—		13,726		(286	)		6
Total temporarily impaired securities	$	376,947	$	(1,609	)		98	$	332,683	$	(3,362	)		152	$	709,630	$	(4,971	)	$	250
Total																						$	146,518	$	(1,698	)		27	$	180	$	(1	)		1	$	146,698	$	(1,699	)	$	28

Unrealized losses on debt securities in the tables 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~~ 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~~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 ~~are temporary and no impairment loss~~do not require an allowance for credit losses relating to these securities ~~has been~~to be recognized.

Securities that do not have readily determinable fair values and for which ~~WesBanco~~Wesbanco does not exercise significant influence are carried at cost. Cost method investments consist primarily of FHLB of Pittsburgh, Cincinnati and Indianapolis stock totaling ~~$56.3~~$73.9 million and ~~$50.8~~$66.8 million at ~~September 30, 2019~~March 31, 2020 and December 31, ~~2018,~~2019, 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.

The following table provides information on unrealized losses on held-to-maturity and available-for-sale debt securities that have been in an unrealized loss position for less than twelve months and twelve months or more as of December 31, 2019, prior to the date of adoption of the credit loss standard, and as defined by the previous accounting guidance in effect at that time:

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 costs were ~~$4.5~~$5.0 million and ~~$3.2~~$4.8 million at ~~September 30, 2019~~March 31, 2020 and December 31, ~~2018,~~2019, respectively. The ~~unamortized~~unaccreted discount on purchased loans from acquisitions was ~~$36.8~~$52.5 million at ~~September 30, 2019,~~March 31, 2020, including ~~$16.9~~$27.8 million related to ~~FFKT,~~OLBK, and ~~$49.3~~$51.9 million at December 31, ~~2018, including $23.4~~2019. 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 in a timely manner. Wesbanco made an accounting policy election to reverse accrued interest deemed uncollectible as a reversal of interest income.

On January 1, 2020, Wesbanco adopted ASU 2016-13 (Topic 326), Measurement of Credit Losses on Financial Instruments. Upon adoption, the Company recognized $41.4 million as an increase to the allowance for credit losses, which represents the difference in the incurred allowance as of December 31, 2019 and the CECL allowance as of January 1, 2020. This adjustment includes a $6.7 million increase to the allowance related to ~~FFKT.~~PCD loans as of January 1, 2020. See Note 1, “Summary of Significant Accounting Policies” for the Company’s revised accounting policies related to Loans and Allowance for Credit Losses and adoption of this standard.

The allowance for credit losses under CECL is calculated utilizing the PD / LGD, which is then discounted. 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, 2020, the one-year forecast was based upon nationally-recognized published economic data through March 31, 2020, and is primarily driven by the national unemployment and interest rate spread forecasts. As of quarter-end, national unemployment was projected to peak at 8.7% in the second quarter, and subsequently decreases to an average of 6.5% over the remainder of the forecast period. The quantitative results were adjusted downward due to the expanded definition of unemployment and unprecedented government stimulus, which was not considered in the quantitative model. The calculation utilized a one-year reversion period. 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. As of March 31, 2020, accrued interest receivable for loans was $33.5 million.

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 Nine Months Ended September 30, 2019 and 2018																								For the Three Months Ended March 31, 2020 and 2019
(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			Total
Balance at December 31, 2019
Allowance for credit losses - loans																									$	4,949		$	20,293		$	14,116		$	4,311		$	4,422		$	2,951		$	1,387		$	52,429
Allowance for credit losses - loan commitments																										235			22			311			15			250			41			—			874
Total beginning allowance for credit losses - loans and loan commitments																										5,184			20,315			14,427			4,326			4,672			2,992			1,387			53,303
Impact of adopting ASC 326																										1,524			13,078			22,357			5,630			(3,936	)		2,576			213			41,442
Provision for credit losses:
Provision for loan losses																										2,564			20,585			5,632			237			646			(1,241	)		(351	)		28,072
Provision for loan commitments																										2,274			—			(582	)		49			2			—			—			1,743
Total provision for credit losses - loans and loan commitments																										4,838			20,585			5,050			286			648			(1,241	)		(351	)		29,815
Charge-offs																										(1	)		(1,398	)		(2,714	)		(386	)		(443	)		(856	)		(328	)		(6,126	)
Recoveries																										8			293			107			272			172			415			143			1,410
Net charge-offs																										7			(1,105	)		(2,607	)		(114	)		(271	)		(441	)		(185	)		(4,716	)
Balance at March 31, 2020
Allowance for credit losses - loans																										6,442			52,873			39,227			9,684			1,096			3,886			1,064			114,272
Allowance for credit losses - loan commitments																										5,111			—			—			444			17			—			—			5,572
Total ending allowance for credit losses - loans and loan commitments																									$	11,553		$	52,873		$	39,227		$	10,128		$	1,113		$	3,886		$	1,064		$	119,844

Balance at December 31, 2018
Allowance for loan losses	$	4,039		$	20,848		$	12,114		$	3,822		$	4,356		$	2,797		$	972		$	48,948		$	4,039		$	20,848		$	12,114		$	3,822		$	4,356		$	2,797		$	972		$	48,948
Allowance for loan commitments		169			33			262			12			226			39			—			741			169			33			262			12			226			39			—			741
Total beginning allowance for credit losses		4,208			20,881			12,376			3,834			4,582			2,836			972			49,689			4,208			20,881			12,376			3,834			4,582			2,836			972			49,689
Provision for credit losses:
Provision for loan losses		(207	)		2,939			2,549			561			727			405			1,503			8,477			(6	)		(909	)		1,050			122			223			233			575			1,288
Provision for loan commitments		26			(9	)		842			3			37			(1	)		—			898			25			(9	)		1,181			(1	)		22			1			—			1,219
Total provision for credit losses		(181	)		2,930			3,391			564			764			404			1,503			9,375			19			(918	)		2,231			121			245			234			575			2,507
Charge-offs		(45	)		(515	)		(1,420	)		(870	)		(859	)		(1,886	)		(1,273	)		(6,868	)		—			(222	)		(635	)		(320	)		(357	)		(661	)		(441	)		(2,636	)
Recoveries		255			621			545			272			341			1,432			294			3,760			12			198			378			121			47			411			99			1,266
Net charge-offs		210			106			(875	)		(598	)		(518	)		(454	)		(979	)		(3,108	)		12			(24	)		(257	)		(199	)		(310	)		(250	)		(342	)		(1,370	)
Balance at September 30, 2019
Balance at March 31, 2019
Allowance for loan losses		4,042			23,893			13,788			3,785			4,565			2,748			1,496			54,317			4,045			19,915			12,907			3,745			4,269			2,780			1,205			48,866
Allowance for loan commitments		195			24			1,104			15			263			38			—			1,639			194			24			1,443			11			248			40			—			1,960
Total ending allowance for credit losses	$	4,237		$	23,917		$	14,892		$	3,800		$	4,828		$	2,786		$	1,496		$	55,956		$	4,239		$	19,939		$	14,350		$	3,756		$	4,517		$	2,820		$	1,205		$	50,826

Balance at December 31, 2017
Allowance for loan losses	$	3,117		$	21,166		$	9,414		$	3,206		$	4,497		$	3,063		$	821		$	45,284
Allowance for loan commitments		119			26			173			7			212			37			—			574
Total beginning allowance for credit losses		3,236			21,192			9,587			3,213			4,709			3,100			821			45,858
Provision for credit losses:
Provision for loan losses		789			(721	)		2,538			1,106			(292	)		541			840			4,801
Provision for loan commitments		67			(3	)		32			2			9			3			—			110
Total provision for credit losses		856			(724	)		2,570			1,108			(283	)		544			840			4,911
Charge-offs		(137	)		(719	)		(871	)		(873	)		(745	)		(2,465	)		(941	)		(6,751	)
Recoveries		400			1,098			970			336			830			1,657			277			5,568
Net charge-offs		263			379			99			(537	)		85			(808	)		(664	)		(1,183	)
Balance at September 30, 2018
Allowance for loan losses		4,169			20,824			12,051			3,775			4,290			2,796			997			48,902
Allowance for loan commitments		186			23			205			9			221			40			—			684
Total ending allowance for credit losses	$	4,355		$	20,847		$	12,256		$	3,784		$	4,511		$	2,836		$	997		$	49,586

The following tables present the allowance for credit losses and recorded investments in loans by category:

	Allowance for Credit Losses and Recorded Investment in Loans																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		Commercial Real Estate- Land and Construction		Commercial Real Estate- Improved Property		Commercial and Industrial		Residential Real Estate		Home Equity		Consumer		Deposit Over- drafts		Total
September 30, 2019
March 31, 2020
Allowance for credit losses:
Loans individually-evaluated																	$	692	$	3,952	$	2,084	$	—	$	—	$	—	$	—	$	6,728
Loans collectively-evaluated																		5,750		48,921		37,143		9,684		1,096		3,886		1,064		107,544
Loan commitments																		5,111		—		—		444		17		—		—		5,572
Total allowance for credit losses - loans and commitments																	$	11,553	$	52,873	$	39,227	$	10,128	$	1,113	$	3,886	$	1,064	$	119,844

Portfolio loans:
Individually-evaluated for credit losses⁽¹⁾																	$	1,541	$	17,998	$	4,527	$	—	$	—	$	—	$	—	$	24,066
Collectively-evaluated for credit losses																		675,185		4,909,681		1,797,224		1,929,590		650,754		363,096		—		10,325,530
Total portfolio loans																	$	676,726	$	4,927,679	$	1,801,751	$	1,929,590	$	650,754	$	363,096	$	—	$	10,349,596

December 31, 2019
Allowance for credit losses:
Allowance for loans individually evaluated for impairment	$	—	$	1,471	$	10	$	12	$	7	$	1	$	—	$	1,501	$	—	$	93	$	10	$	14	$	6	$	1	$	—	$	124
Allowance for loans collectively evaluated for impairment		4,042		22,422		13,778		3,773		4,558		2,747		1,496		52,816		4,949		20,200		14,106		4,297		4,416		2,950		1,387		52,305
Allowance for loan commitments		195		24		1,104		15		263		38		—		1,639		235		22		311		15		250		41		—		874
Total allowance for credit losses	$	4,237	$	23,917	$	14,892	$	3,800	$	4,828	$	2,786	$	1,496	$	55,956	$	5,184	$	20,315	$	14,427	$	4,326	$	4,672	$	2,992	$	1,387	$	53,303

Portfolio loans:
Individually evaluated for impairment ⁽¹⁾	$	—	$	5,388	$	185	$	4,662	$	746	$	61	$	—	$	11,042	$	—	$	3,907	$	11,961	$	4,392	$	704	$	53	$	—	$	21,017
Collectively evaluated for impairment		510,162		3,330,959		1,331,248		1,632,348		586,999		343,444		—		7,735,160		777,033		4,935,383		1,631,855		1,865,151		648,221		374,812		—		10,232,455
Acquired with deteriorated credit quality		242		7,902		842		1,564		—		—		—		10,550		118		8,567		883		4,104		753		88		—		14,513
Total portfolio loans	$	510,404	$	3,344,249	$	1,332,275	$	1,638,574	$	587,745	$	343,505	$	—	$	7,756,752	$	777,151	$	4,947,857	$	1,644,699	$	1,873,647	$	649,678	$	374,953	$	—	$	10,267,985

December 31, 2018
Allowance for credit losses:
Allowance for loans individually evaluated for impairment	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Allowance for loans collectively evaluated for impairment		4,039		20,848		12,114		3,822		4,356		2,797		972		48,948
Allowance for loan commitments		169		33		262		12		226		39		—		741
Total allowance for credit losses	$	4,208	$	20,881	$	12,376	$	3,834	$	4,582	$	2,836	$	972	$	49,689

Portfolio loans:
Individually evaluated for impairment ⁽¹⁾	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Collectively evaluated for impairment		527,737		3,319,672		1,264,560		1,609,177		599,331		326,063		—		7,646,540
Acquired with deteriorated credit quality		335		5,951		900		2,430		—		125		—		9,741
Total portfolio loans	$	528,072	$	3,325,623	$	1,265,460	$	1,611,607	$	599,331	$	326,188	$	—	$	7,656,281

⁽¹⁾~~Commercial loans greater than $1 million that are reported as non-accrual or as a TDR are individually evaluated for impairment.~~

~~WesBanco is transitioning~~Wesbanco has transitioned to a more objective internal loan grading system to reflect the credit quality of commercial loans. 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, 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~~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~~ $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~~.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.

Criticized a~~ssets~~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 ~~assets~~loans are not adversely classified by the banking regulators and do not expose the bank to sufficient risk to warrant adverse classification.

~~Substandard~~Classified loans, considered as substandard and doubtful, ~~loans~~ are equivalent to the classifications used by banking regulators. Substandard ~~loa~~nsloans 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 l~~oans~~loans have all the weaknesses inherent in those classified ~~Substandard~~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.

	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 September 30, 2019
As of March 31, 2020
Pass	$	503,021	$	3,217,475	$	1,292,481	$	5,012,977	$	672,042	$	4,777,861	$	1,740,290	$	7,190,193
Criticized - compromised		5,742		54,441		18,697		78,880		1,661		78,112		41,028		120,801
Classified - substandard		1,641		72,333		21,097		95,071		3,023		71,706		20,433		95,162
Classified - doubtful		—		—		—		—		—		—		—		—
Total	$	510,404	$	3,344,249	$	1,332,275	$	5,186,928	$	676,726	$	4,927,679	$	1,801,751	$	7,406,156

As of December 31, 2018
As of December 31, 2019
Pass	$	523,707	$	3,267,304	$	1,245,190	$	5,036,201	$	769,537	$	4,807,003	$	1,570,689	$	7,147,229
Criticized - compromised		2,297		35,566		13,847		51,710		4,338		65,612		49,009		118,959
Classified - substandard		2,068		22,753		6,423		31,244		3,276		75,242		13,231		91,749
Classified - doubtful		—		—		—		—		—		—		11,770		11,770
Total	$	528,072	$	3,325,623	$	1,265,460	$	5,119,155	$	777,151	$	4,947,857	$	1,644,699	$	7,369,707

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~~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 ~~$23.3~~$28.7 million at ~~September 30, 2019~~March 31, 2020 and ~~$22.9~~$28.3 million at December 31, ~~2018,~~2019, of which ~~$3.5~~$5.4 and ~~$3.9~~$5.1 million were accruing, for each period, respectively. The aggregate amount of residential real estate, home equity and consumer loans classified as substandard as well as unfunded commercial loan commitments are not included in the tables above.

Acquired ~~FFKT~~OLBK Loans ~~– In~~—In conjunction with the ~~FFKT~~OLBK acquisition, ~~WesBanco~~Wesbanco acquired loans with a book value of ~~$1,064.8~~$2,570.0 million as of ~~August 20, 2018.~~November 22, 2019 (prior to the adoption of CECL on January 1, 2020). These loans were recorded at the preliminary fair value of ~~$1,025.8~~$2,514.3 million, with ~~$988.3~~$2,543.8 million categorized as ASC 310-20 loans. The fair market value adjustment on these loans of ~~$26.0~~$55.6 million at ~~the~~ acquisition date is expected to be recognized into interest income on a level yield basis over the remaining expected life of the loans. Loans acquired with deteriorated credit quality (ASC 310-30) with a book value of ~~$5.3~~$26.2 million were recorded at the preliminary fair value of ~~$4.6~~$19.2 million, of which ~~$2.4~~$4.0 million were accounted for under the cost recovery method ~~in accordance with ASC 310-30~~ as cash flows ~~cannot~~could not be reasonably estimated, and therefore they are categorized as non-accrual. Upon adoption of CECL on January 1, 2020, $6.1 million of credit mark on OLBK PCD loans was reclassified to allowance for credit loss. At March 31, 2020, the allowance for credit losses on individually analyzed OLBK-acquired loans was $6.0 million. The carrying amount of loans acquired with deteriorated credit quality at ~~September 30, 2019~~March 31, 2020 was ~~$3.0~~$21.3 million, while the outstanding customer balance was ~~$3.5 million. At September 30, 2019, 0 allowance for loan losses has been recognized related to the FFKT-acquired impaired~~$21.8 million, and included $2.6 million of non-performing loans. Certain acquired ~~underperforming~~under performing loans with an acquired book value of ~~$45.2~~$56.6 million were sold during the ~~fourth~~first quarter of ~~2018~~2020 for ~~$32.9 million.~~$36.7 million of which $8.9 million were classified as held for sale as March 31, 2020. The acquisition date fair value of the acquired loans was adjusted to the sale price resulting in no recognized gain or loss.

~~The following table provides changes in accretable yield for loans acquired with deteriorated credit quality:~~

	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 September 30, 2019
As of March 31, 2020
Commercial real estate:
Land and construction															$	674,429	$	825	$	645	$	827	$	2,297	$	676,726	$	804
Improved property																4,901,283		7,418		5,935		13,043		26,396		4,927,679		5,589
Total commercial real estate																5,575,712		8,243		6,580		13,870		28,693		5,604,405		6,393
Commercial and industrial																1,791,414		4,677		610		5,050		10,337		1,801,751		2,623
Residential real estate																1,908,239		5,409		2,209		13,733		21,351		1,929,590		3,583
Home equity																642,906		2,839		859		4,150		7,848		650,754		894
Consumer																359,109		2,442		690		855		3,987		363,096		794
Total portfolio loans																10,277,380		23,610		10,948		37,658		72,216		10,349,596		14,287
Loans held for sale																48,021		—		—		—		—		48,021		—
Total loans															$	10,325,401	$	23,610	$	10,948	$	37,658	$	72,216	$	10,397,617	$	14,287

Nonperforming loans included above are as follows:
Non-accrual loans															$	9,560	$	1,035	$	511	$	23,261		24,807	$	34,367
TDRs accruing interest ⁽¹⁾																5,117		55		152		110		317		5,434
Total non-performing															$	14,677	$	1,090	$	663	$	23,371	$	25,124	$	39,801

As of December 31, 2019
Commercial real estate:
Land and construction	$	509,062	$	127	$	84	$	1,131	$	1,342	$	510,404	$	834	$	776,153	$	529	$	121	$	348	$	998	$	777,151	$	26
Improved property		3,326,426		3,901		2,032		11,890		17,823		3,344,249		935		4,921,721		10,207		5,639		10,290		26,136		4,947,857		4,709
Total commercial real estate		3,835,488		4,028		2,116		13,021		19,165		3,854,653		1,769		5,697,874		10,736		5,760		10,638		27,134		5,725,008		4,735
Commercial and industrial		1,329,043		675		215		2,342		3,232		1,332,275		229		1,635,232		2,519		2,813		4,135		9,467		1,644,699		1,793
Residential real estate		1,620,684		3,560		3,789		10,541		17,890		1,638,574		2,724		1,850,806		4,421		5,372		13,048		22,841		1,873,647		3,643
Home equity		580,598		2,328		748		4,071		7,147		587,745		420		641,026		3,323		621		4,708		8,652		649,678		985
Consumer		340,640		1,678		805		382		2,865		343,505		283		370,934		2,537		965		517		4,019		374,953		457
Total portfolio loans		7,706,453		12,269		7,673		30,357		50,299		7,756,752		5,425		10,195,872		23,536		15,531		33,046		72,113		10,267,985		11,613
Loans held for sale		20,715		—		—		—		—		20,715		—		43,013		—		—		—		—		43,013		—
Total loans	$	7,727,168	$	12,269	$	7,673	$	30,357	$	50,299	$	7,777,467	$	5,425	$	10,238,885	$	23,536	$	15,531	$	33,046	$	72,113	$	10,310,998	$	11,613

Impaired loans included above are as follows:
Non-accrual loans	$	8,107	$	656	$	1,156	$	24,882		26,694	$	34,801			$	21,061	$	897	$	1,559	$	21,396		23,852	$	44,913
TDRs accruing interest ⁽¹⁾		5,566		64		160		50		274		5,840				5,113		151		130		37		318		5,431
Total impaired	$	13,673	$	720	$	1,316	$	24,932	$	26,968	$	40,641			$	26,174	$	1,048	$	1,689	$	21,433	$	24,170	$	50,344

As of December 31, 2018
Commercial real estate:
Land and construction	$	526,660	$	62	$	1,350	$	—	$	1,412	$	528,072	$	—
Improved property		3,314,765		2,266		2,250		6,342		10,858		3,325,623		175
Total commercial real estate		3,841,425		2,328		3,600		6,342		12,270		3,853,695		175
Commercial and industrial		1,261,536		323		594		3,007		3,924		1,265,460		13
Residential real estate		1,593,519		2,717		5,001		10,370		18,088		1,611,607		2,820
Home equity		591,623		2,500		1,273		3,935		7,708		599,331		705
Consumer		322,584		2,084		1,007		513		3,604		326,188		364
Total portfolio loans		7,610,687		9,952		11,475		24,167		45,594		7,656,281		4,077
Loans held for sale		8,994		—		—		—		—		8,994		—
Total loans	$	7,619,681	$	9,952	$	11,475	$	24,167	$	45,594	$	7,665,275	$	4,077

Impaired loans included above are as follows:
Non-accrual loans	$	8,910	$	337	$	1,370	$	20,083		21,790	$	30,700
TDRs accruing interest ⁽¹⁾		5,586		59		92		7		158		5,744
Total impaired	$	14,496	$	396	$	1,462	$	20,090	$	21,948	$	36,444

⁽¹⁾~~Loans 90 days or more past due and accruing interest exclude TDRs 90 days or more past due and accruing interest.~~

	Impaired Loans												Nonperforming Loans
	September 30, 2019						December 31, 2018						March 31, 2020						December 31, 2019
	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	$	606	$	554	$	—	$	—	$	—	$	—	$	238	$	205	$	—	$	616	$	580	$	—
Improved property		14,162		7,982		—		14,038		9,293		—		8,750		6,772		—		5,097		4,229		—
Commercial and industrial		3,724		2,374		—		4,610		3,428		—		3,973		2,827		—		15,182		14,313		—
Residential real estate		15,090		13,303		—		20,270		18,016		—		23,767		20,987		—		17,753		15,952		—
Home equity		5,866		5,030		—		5,924		5,036		—		7,118		6,012		—		6,523		5,610		—
Consumer		442		356		—		846		671		—		541		366		—		546		413		—
Total impaired loans without a specific allowance		39,890		29,599		—		45,688		36,444		—
Total nonperforming loans without a specific allowance														44,387		37,169		—		45,717		41,097		—
With a specific allowance recorded:
Commercial real estate:
Land and construction		—		—		—		—		—		—		—		—		—		—		—		—
Improved property		5,435		5,388		1,471		—		—		—		2,632		2,632		193		4,207		3,907		93
Commercial and industrial		187		185		10		—		—		—		—		—		—		193		191		10
Residential real estate		5,096		4,662		12		—		—		—		—		—		—		4,772		4,392		14
Home equity		774		746		7		—		—		—		—		—		—		724		704		6
Consumer		99		61		1		—		—		—		—		—		—		104		53		1
Total impaired loans with a specific allowance		11,591		11,042		1,501		—		—		—
Total impaired loans	$	51,481	$	40,641	$	1,501	$	45,688	$	36,444	$	—
Total nonperforming loans with a specific allowance														2,632		2,632		193		10,000		9,247		124
Total nonperforming loans													$	47,019	$	39,801	$	193	$	55,717	$	50,344	$	124

⁽¹⁾The difference between the unpaid principal balance and the recorded investment generally reflects amounts that have been previously charged-off and fair market value adjustments on acquired impaired loans.

Impaired Loans

For the Three Months Ended

For the Nine Months Ended

September 30, 2019

September 30, 2018

September 30, 2019

September 30, 2018

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

$
425

$
—

$
—

$
—

$
284

$
—

$
260

$
—

Improved property

7,647

—

10,409

15

7,962

—

11,000

383

Commercial and industrial

2,614

—

3,181

5

2,931

—

2,985

9

Residential real estate

12,600

—

18,336

68

13,752

—

18,207

195

Home equity

4,740

—

4,924

8

4,760

—

4,997

19

Consumer

334

—

692

3

425

—

776

8

Total impaired loans without a specific
   allowance

28,360

—

37,542

99

30,114

—

38,225

614

With a specific allowance recorded:

Commercial real estate:

Land and construction

—

—

—

—

—

—

—

—

Improved property

5,273

35

—

—

3,170

63

1,052

—

Commercial and industrial

189

4

—

—

171

11

—

—

Residential real estate

4,792

51

—

—

3,666

169

—

—

Home equity

834

8

—

—

616

23

—

—

Consumer

68

1

—

—

60

3

—

—

Total impaired loans with a specific
   allowance

11,156

99

—

—

7,683

269

1,052

—

Total impaired loans

$
39,516

$
99

$
37,542

$
99

$
37,797

$
269

$
39,277

$
614

⁽¹⁾	The difference between the unpaid principal balance and the recorded investment generally reflects amounts that have been previously charged-off and fair market value adjustments on acquired impaired loans.

The following tables present the recorded investment in non-accrual loans and TDRs:

	Non-accrual Loans ⁽¹⁾				Non-accrual Loans ⁽¹⁾
	September 30,		December 31,		March 31,		December 31,
(unaudited, in thousands)	2019		2018		2020		2019
Commercial real estate:
Land and construction	$	554	$	—	$	205	$	580
Improved property		12,036		8,413		8,151		6,815
Total commercial real estate		12,590		8,413		8,356		7,395
Commercial and industrial		2,374		3,260		2,655		14,313
Residential real estate		14,171		13,831		17,376		16,867
Home equity		5,299		4,610		5,643		5,903
Consumer		367		586		337		435
Total	$	34,801	$	30,700	$	34,367	$	44,913

⁽¹⁾At September 30, 2019, there were 3 borrowers with loans greater than $1.0 million totaling $8.2 million, as compared to 1 borrower with a loan greater than $1.0 million totaling $3.4 million at December 31, 2018. Total non-accrual loans include loans that are also restructured. Such loans are also set forth in the following table as non-accrual TDRs.

As of ~~September 30, 2019~~March 31, 2020 and December 31, ~~2018,~~2019, there were 0 TDRs greater than $1.0 million. The concessions granted in the majority 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 ~~three~~six months. ~~WesBanco~~Wesbanco had unfunded commitments to debtors whose loans were classified as impaired of ~~$0.2~~$0.3 million and ~~$0.1~~$3.3 million as of ~~September 30, 2019~~March 31, 2020 and December 31, ~~2018,~~2019, respectively.

The following tables present details related to loans identified as TDRs during the three ~~and nine~~ months ended ~~September 30,~~March 31, 2020 and 2019, ~~and 2018,~~ respectively:

	New TDRs (1)												New TDRs (1)
	For the Three Months Ended												For the Three Months Ended
	September 30, 2019						September 30, 2018						March 31, 2020						March 31, 2019
			Pre-		Post-				Pre-		Post-				Pre-		Post-				Pre-		Post-
			Modification		Modification				Modification		Modification				Modification		Modification				Modification		Modification
			Outstanding		Outstanding				Outstanding		Outstanding				Outstanding		Outstanding				Outstanding		Outstanding
	Number of		Recorded		Recorded		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		Modifications		Investment		Investment
Commercial real estate:
Land and construction		—	$	—	$	—		—	$	—	$	—		—	$	—	$	—		—	$	—	$	—
Improved Property		1		605		604		—		—		—		—		—		—		—		—		—
Total commercial real estate		1		605		604		—		—		—		—		—		—		—		—		—
Commercial and industrial		—		—		—		—		—		—		—		—		—		—		—		—
Residential real estate		—		—		—		—		—		—		2		332		330		4		194		192
Home equity		—		—		—		—		—		—		—		—		—		2		187		185
Consumer		—		—		—		1		19		18		—		—		—		2		19		18
Total		1	$	605	$	604		1	$	19	$	18		2	$	332	$	330		8	$	400	$	395

⁽¹⁾Excludes loans that were either paid off or charged-off by period end. The pre-modification balance represents the balance outstanding at the beginning of the period. The post-modification balance represents the outstanding balance at period end.

The following table summarizes TDRs which defaulted (defined as past due 90 days) during the ~~nine~~three months ended ~~September 30,~~March 31, 2020 and 2019, ~~and 2018,~~ respectively, that were restructured within the last twelve months prior to ~~September 30,~~March 31, 2020 and 2019, ~~and 2018,~~ respectively:

	Defaulted TDRs ⁽¹⁾								Defaulted TDRs ⁽¹⁾
	For the Nine Months Ended								For the Three Months Ended
	September 30, 2019				September 30, 2018				March 31, 2020				March 31, 2019
	Number of		Recorded		Number of		Recorded		Number of		Recorded		Number of		Recorded
(unaudited, dollars in thousands)	Defaults		Investment		Defaults		Investment		Defaults		Investment		Defaults		Investment
Commercial real estate:
Land and construction		—	$	—		—	$	—		—	$	—		—	$	—
Improved property		—		—		—		—		—		—		—		—
Total commercial real estate		—		—		—		—		—		—		—		—
Commercial and industrial		—		—		—		—		1		13		—		—
Residential real estate		1		96		2		172		1		155		1		58
Home equity		1		100		1		6		—		—		—		—
Consumer		1		12		—		—		—		—		—		—
Total		3	$	208		3	$	178		2	$	168		1	$	58

⁽¹⁾~~Excludes loans that were either charged-off or cured by period end. The recorded investment is as of September 30,~~

TDRs that default are placed on non-accrual status unless they are both well-secured and in the process of collection. The loans in the table above were not accruing interest.

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

	Loans As of March 31, 2020
	Amortized Cost Basis by Origination Year
(unaudited, in thousands)	2020		2019			2018			2017			2016			Prior			Revolving Loans Amortized Cost Basis			Revolving Loans Converted to Term			Total
Commercial real estate: land and construction
Risk rating:
Pass	$	45,030	$	226,205		$	193,697		$	65,923		$	20,998		$	48,284		$	71,905		$	-		$	672,042
Criticized - compromised		-		-			42			211			83			1,176			149			-		$	1,661
Classified - substandard		-		-			871			-			317			1,765			70			-		$	3,023
Classified - doubtful		-		-			-			-			-			-			-			-		$	-
Total	$	45,030	$	226,205		$	194,610		$	66,134		$	21,398		$	51,225		$	72,124		$	-		$	676,726
Commercial real estate: land and construction
Current-period net write-offs	$	-	$	-		$	-		$	-		$	-		$	7		$	-		$	-		$	7

Commercial real estate: improved property
Risk rating:
Pass	$	191,722	$	749,290		$	623,215		$	641,275		$	739,260		$	1,723,158		$	109,941		$	-		$	4,777,861
Criticized - compromised		-		2,788			3,995			22,493			12,200			36,321			315			-		$	78,112
Classified - substandard		-		71			4,094			7,914			10,549			49,078			-			-		$	71,706
Classified - doubtful		-		-			-			-			-			-			-			-		$	-
Total	$	191,722	$	752,149		$	631,304		$	671,682		$	762,009		$	1,808,557		$	110,256		$	-		$	4,927,679
Commercial real estate: improved property
Current-period net write-offs	$	-	$	-		$	-		$	12		$	(1,219	)	$	102		$	-		$	-		$	(1,105	)

Commercial and industrial
Risk rating:
Pass	$	61,827	$	291,133		$	220,651		$	183,752		$	106,337		$	337,917		$	538,512		$	161		$	1,740,290
Criticized - compromised		30		1,789			2,132			2,897			978			10,401			22,801			-		$	41,028
Classified - substandard		-		1,047			1,527			2,173			1,568			7,489			6,629			-		$	20,433
Classified - doubtful		-		-			-			-			-			-			-			-		$	-
Total	$	61,857	$	293,969		$	224,310		$	188,822		$	108,883		$	355,807		$	567,942		$	161		$	1,801,751
Commercial and industrial
Current-period net write-offs	$	-	$	-		$	(727	)	$	(170	)	$	(30	)	$	(276	)	$	(1,404	)	$	-		$	(2,607	)

Residential real estate
Loan delinquency:
Current	$	58,725	$	320,536		$	248,330		$	166,863		$	218,233		$	891,597		$	3,955		$	-		$	1,908,239
30-59 days past due		-		-			217			-			248			4,944			-			-			5,409
60-89 days past due		-		-			700			-			109			1,400			-			-			2,209
90 days or more past due		-		66			240			-			1,172			12,255			-			-			13,733
Total	$	58,725	$	320,602		$	249,487		$	166,863		$	219,762		$	910,196		$	3,955		$	-		$	1,929,590
Residential real estate
Current-period net write-offs	$	-	$	(24	)	$	(8	)	$	-		$	(19	)	$	(63	)	$	-		$	-		$	(114	)

Home equity
Loan delinquency:
Current	$	5,675	$	5,276		$	6,006		$	1,633		$	1,414		$	59,756		$	549,310		$	13,836		$	642,906
30-59 days past due		-		10			-			11			-			933			1,829			56			2,839
60-89 days past due		-		-			-			3			57			305			245			249			859
90 days or more past due		-		-			17			-			89			2,337			940			767			4,150
Total	$	5,675	$	5,286		$	6,023		$	1,647		$	1,560		$	63,331		$	552,324		$	14,908		$	650,754
Home equity
Current-period net write-offs	$	-	$	-		$	-		$	-		$	-		$	60		$	(302	)	$	(29	)	$	(271	)

Consumer
Loan delinquency:
Current	$	22,559	$	124,073		$	57,611		$	34,864		$	22,298		$	72,797		$	24,705		$	202		$	359,109
30-59 days past due		3		271			373			491			290			1,008			6			-			2,442
60-89 days past due		-		89			193			154			48			201			5			-			690
90 days or more past due		-		185			42			231			77			300			20			-			855
Total	$	22,562	$	124,618		$	58,219		$	35,740		$	22,713		$	74,306		$	24,736		$	202		$	363,096
Consumer
Current-period net write-offs	$	-	$	(219	)	$	(136	)	$	(76	)	$	(64	)	$	54		$	-		$	-		$	(441	)

The following table summarizes other real estate owned and repossessed assets included in other assets:

	September 30,		December 31,		March 31,		December 31,
(unaudited, in thousands)	2019		2018		2020		2019
Other real estate owned	$	3,662	$	7,173	$	1,032	$	4,062
Repossessed assets		16		92		51		116
Total other real estate owned and repossessed assets	$	3,678	$	7,265	$	1,083	$	4,178

Residential real estate included in other real estate owned at ~~September 30, 2019~~March 31, 2020 and December 31, ~~2018~~2019 was ~~$0.6~~$0.7 million and ~~$1.3~~$0.6 million, respectively. At ~~September 30, 2019~~March 31, 2020 and December 31, ~~2018,~~2019, formal foreclosure proceedings were in process on residential real estate loans totaling ~~$4.7~~$6.6 million and ~~$6.0~~$8.1 million, respectively.

Operating leases are recorded as a right of use (“ROU”) asset and operating lease liability, included in premises and equipment, net and other liabilities, respectively, on the consolidated balance sheet beginning January 1, 2019 when WesBanco adopted ASU 2016-02 prospectively. Operating lease ROU assets represent the right to use an underlying asset during the lease term and operating lease liabilities represent our obligation to make lease payments arising from the lease. ROU assets and operating lease liabilities are recognized at lease commencement based on the present value of the remaining lease payments using a discount rate that represents our incremental borrowing rate at the lease commencement date. Operating lease expense, which is comprised of amortization of the ROU asset and the implicit interest accreted on the operating lease liability, is recognized on a straight-line basis over the lease term, and is recorded primarily in net occupancy expense in the consolidated statements of comprehensive income.

Operating leases relate primarily to bank branches, office space and license agreements with remaining lease terms of generally 1 to 21 years, which include options for multiple five- and ten- year extensions, with a weighted-average lease term of 9 years. As of September 30, 2019, operating lease ROU assets and liabilities were $17.6 million and $20.5 million, respectively. The lease expense for operating leases was $0.6 million and $1.9 million for the three and nine months ended September 30, 2019, respectively. The weighted average discount rate was 3.29% as of September 30, 2019.

~~Future minimum lease payments under non-cancellable leases with initial or remaining lease terms in excess of one year at September 30, 2019 are as follows (unaudited, in thousands~~):

~~WesBanco~~Wesbanco is exposed to certain risks arising from both its business operations and economic conditions. ~~WesBanco~~Wesbanco principally manages its exposures to a wide variety of business and operational risks through management of its core business activities. ~~WesBanco~~Wesbanco manages economic risks, including interest rate, liquidity, and credit risk, primarily by managing the amount, sources, and duration of its assets and liabilities. ~~WesBanco’s~~Wesbanco’s existing interest rate derivatives result from a service provided to certain qualifying customers and, therefore, are not used to manage interest rate risk in ~~WesBanco’s~~Wesbanco’s assets or liabilities. ~~WesBanco~~Wesbanco manages a matched book with respect to its derivative instruments in order to minimize its net risk exposure resulting from such transactions. A matched book is when the Bank’s assets and liabilities are equally distributed but also have similar maturities.

~~WesBanco~~Wesbanco executes interest rate swaps with commercial banking customers to facilitate their respective risk management strategies. Those interest rate swaps are simultaneously hedged by offsetting interest rate swaps that ~~WesBanco~~Wesbanco executes with a third party, so that ~~WesBanco~~Wesbanco minimizes its net risk exposure resulting from such transactions. As the interest rate swaps associated with this program do not meet the strict hedge accounting requirements of ASC 815, changes in the fair value of both the customer swaps and the offsetting third-party swaps are recognized directly in earnings. As of ~~September 30, 2019~~March 31, 2020 and December 31, ~~2018, WesBanco~~2019, Wesbanco had 5473 and ~~43,~~65, respectively, interest rate swaps with an aggregate notional amount of ~~$315.7~~$535.5 million and ~~$229.8~~$399.9 million, respectively, related to this program. During the ~~nine~~three months ended ~~September 30,~~March 31, 2020 and 2019, ~~and 2018, WesBanco~~respectively, Wesbanco recognized net losses of ~~$1.6~~$2.8 million and ~~$0.1~~$0.3 million, respectively, related to the changes in fair value of these swaps. Additionally, ~~WesBanco~~Wesbanco recognized ~~$2.1~~$2.6 million and ~~$1.4~~$0.7 million of income for the related swap fees for the ~~nine~~three months ended ~~September 30,~~March 31, 2020 and 2019, ~~and 2018,~~ respectively.

Certain residential mortgage loans are originated for sale in the secondary mortgage loan market. These loans are classified as held for sale and carried at fair value as ~~WesBanco~~Wesbanco has elected the fair value option. Fair value is determined based on rates obtained from the secondary market for loans with similar characteristics. ~~WesBanco~~Wesbanco sells loans to the secondary market on a mandatory or best efforts basis. The loans sold on a mandatory basis are not committed to an investor until the loan is closed with the borrower. ~~WesBanco~~Wesbanco enters into forward TBA contracts to manage the interest rate risk between the loan commitment and the closing of the loan. The total balance of forward TBA contracts entered into was $140.5 million and $50.0 million at March 31, 2020 and December 31, 2019, respectively. Additionally, Wesbanco recognized losses of $2.7 million and $0.3 million, respectively, for the three months ended March 31, 2020 and March 31, 2019 related to the changes in fair value of these contracts. The loans sold on a best efforts basis are committed to an investor simultaneous to the interest rate commitment with the borrower.

All derivatives are carried on the consolidated balance sheet at fair value. Derivative assets are classified in the consolidated balance sheet under other assets, and derivative liabilities are classified in the consolidated balance sheet under other liabilities. Changes in fair value are recognized in earnings. None of ~~WesBanco’s~~Wesbanco’s derivatives is designated in a qualifying hedging relationship under ASC 815.

The table below presents the fair value of ~~WesBanco’s~~Wesbanco’s derivative financial instruments as well as their classification on the Balance Sheet as of ~~September 30, 2019~~March 31, 2020 and December 31, ~~2018:~~2019:

	September 30, 2019						December 31, 2018						March 31, 2020						December 31, 2019
(unaudited, in thousands)	Notional or Contractual Amount		Asset Derivatives		Liability Derivatives		Notional or Contractual Amount		Asset Derivatives		Liability Derivatives		Notional or Contractual Amount		Asset Derivatives		Liability Derivatives		Notional or Contractual Amount		Asset Derivatives		Liability Derivatives
Derivatives
Loan Swaps:
Interest rate swaps	$	315,657	$	18,672	$	20,721	$	229,778	$	4,650	$	5,081	$	535,467	$	48,182	$	52,464	$	399,860	$	14,585	$	16,117
Other contracts:
Interest rate loan commitments		45,727		—		8		16,113		125		—		79,531		—		101		34,236		44		—
Forward TBA contracts		73,000		208		—		20,000		—		234		140,500		—		2,320		50,000		—		88
Total derivatives			$	18,880	$	20,729			$	4,775	$	5,315			$	48,182	$	54,885			$	14,629	$	16,205

The table below presents the change in the fair value of the Company’s derivative financial instruments reflected within the other non-interest income line item of the consolidated income statement for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2020 and 2019, ~~and 2018,~~ respectively.

		For the Three Months Ended September 30,						For the Nine Months Ended September 30,							For the Three Months Ended March 31,
(unaudited, in thousands)	Location of Gain/(Loss)	2019			2018			2019			2018			Location of Gain/(Loss)	2020			2019
Interest rate swaps	Other income	$	(556	)	$	(293	)	$	(1,619	)	$	(82	)	Other income	$	(2,751	)	$	(312	)
Interest rate loan commitments	Mortgage banking income		(66	)		(111	)		(133	)		32		Mortgage banking income		(145	)		30
Forward TBA contracts	Mortgage banking income		(465	)		131			(1,317	)		530		Mortgage banking income		(2,657	)		(334	)
Total		$	(1,087	)	$	(273	)	$	(3,069	)	$	480			$	(5,553	)	$	(616	)

~~WesBanco~~Wesbanco has agreements with its derivative counterparties that contain a provision, which provides that if ~~WesBanco~~Wesbanco defaults on any of its indebtedness, including default where repayment of the indebtedness has not been accelerated by the lender, then ~~WesBanco~~Wesbanco could also be declared in default on its derivative obligations.

~~WesBanco~~Wesbanco also has agreements with certain of its derivative counterparties that contain a provision where if ~~WesBanco~~Wesbanco fails to maintain its status as either a well or adequately capitalized institution, then the counterparty could terminate the derivative positions and ~~WesBanco~~Wesbanco would be required to settle its obligations under the agreements.

~~WesBanco has~~Wesbanco had minimum collateral posting thresholds with certain of its derivative counterparties and ~~has~~had posted collateral with a market value of ~~$31.7~~$77.7 million as of ~~September 30, 2019.~~March 31, 2020. If ~~WesBanco~~Wesbanco had breached any of these provisions at ~~September 30, 2019,~~March 31, 2020, 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.

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

	For the Three Months Ended September 30,						For the Nine Months Ended September 30,						For the Three Months Ended March 31,
(unaudited, in thousands)	2019			2018			2019			2018			2020			2019
Service cost – benefits earned during year	$	567		$	715		$	1,681		$	2,121		$	568		$	554
Interest cost on projected benefit obligation		1,327			1,242			3,938			3,684			1,121			1,298
Expected return on plan assets		(2,235	)		(2,416	)		(6,633	)		(7,169	)		(2,594	)		(2,187	)
Amortization of prior service cost		7			6			20			19			(9	)		7
Amortization of net loss		817			766			2,424			2,274			793			799
Net periodic pension cost	$	483		$	313		$	1,430		$	929
Net periodic pension (income) cost													$	(121	)	$	471

22The service cost of $0.6 million for both the three months ended March 31, 2020 and 2019 is included in salaries and wages, and the periodic pension income of $0.7 million is included employee benefits.

The Plan covers all employees of ~~WesBanco~~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 of ~~$4.8~~$5.0 million is due for ~~2019,~~2020, which can be offset in whole or in part by the Plan’s ~~$52.5~~$60.9 million available credit balance. ~~WesBanco made~~Wesbanco currently does 0t expect to make a voluntary contribution ~~of $3.0 million~~ to the Plan in ~~June 2019~~2020 .

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 has~~Wesbanco previously elected the fair value ~~option as of October 1, 2017.~~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~~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~~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~~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~~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~~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 nonperforming loans:Individually-evaluated non-performing loans are carried at the amortized cost basis less the specific allowance calculated with the CECL. Since these loans are nonperforming, cash flows could not be estimated and thus 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.

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~~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 ~~September 30, 2019~~March 31, 2020 and December 31, ~~2018:~~2019:

			September 30, 2019								March 31, 2020
			Fair Value Measurements Using:								Fair Value Measurements Using:
	September 30,		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)	2019		(level 1)		(level 2)		(level 3)		2020		(level 1)		(level 2)		(level 3)
Recurring fair value measurements
Equity securities	$	11,644	$	11,644	$	—	$	—	$	11,230	$	11,230	$	—	$	—
Available-for-sale debt securities
U.S. Treasury		29,878		—		29,878		—		21,508		—		21,508		—
U.S. Government sponsored entities and agencies		120,441		—		120,441		—		159,379		—		159,379		—
Residential mortgage-backed securities and collateralized mortgage obligations of government agencies		1,681,065		—		1,681,065		—		1,671,469		—		1,671,469		—
Commercial mortgage-backed securities and collateralized mortgage obligations of government sponsored entities and agencies		188,305		—		188,305		—		223,827		—		223,827		—
Obligations of state and political subdivisions		151,363		—		149,729		1,634		141,573		—		139,997		1,576
Corporate debt securities		38,147		—		38,147		—		44,326		—		44,326		—
Total available-for-sale debt securities	$	2,209,199	$	—	$	2,207,565	$	1,634	$	2,262,082	$	—	$	2,260,506	$	1,576
Loans held for sale		20,715		—		20,715		—		48,021		—		48,021		—
Other assets - interest rate derivatives agreements		18,672		—		18,672		—		48,182		—		48,182		—
Total assets recurring fair value measurements	$	2,260,230	$	11,644	$	2,246,952	$	1,634	$	2,369,515	$	11,230	$	2,356,709	$	1,576

Other liabilities - interest rate derivatives agreements	$	20,721	$	—	$	20,721	$	—	$	52,464	$	—	$	52,464	$	—
Total liabilities recurring fair value measurements	$	20,721	$	—	$	20,721	$	—	$	52,464	$	—	$	52,464	$	—

Nonrecurring fair value measurements
Impaired Loans	$	2,488		—		—	$	2,488
Individually-evaluated nonperforming loans									$	2,439	$	—	$	—	$	2,439
Other real estate owned and repossessed assets		3,678		—		—		3,678		1,032		—		—		1,032
Total nonrecurring fair value measurements	$	6,166	$	—	$	—	$	6,166	$	3,471	$	—	$	—	$	3,471

			December 31, 2018								December 31, 2019
			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)	2018		(level 1)		(level 2)		(level 3)		2019		(level 1)		(level 2)		(level 3)
Recurring fair value measurements
Equity securities	$	11,737	$	11,737	$	—	$	—	$	12,343	$	12,343	$	—	$	—
Available-for-sale debt securities
U.S. Treasury		19,878		—		19,878		—		32,836		—		32,836		—
U.S. Government sponsored entities and agencies		141,652		—		141,652		—		159,628		—		159,628		—
Residential mortgage-backed securities and collateralized mortgage obligations of government agencies		1,561,255		—		1,561,255		—		1,815,987		—		1,815,987		—
Commercial mortgage-backed securities and collateralized mortgage obligations of government sponsored entities and agencies		168,972		—		168,972		—		190,409		—		190,409		—
Obligations of state and political subdivisions		185,114		—		183,611		1,503		145,609		—		144,004		1,605
Corporate debt securities		37,258		—		37,258		—		49,089		—		49,089		—
Total available-for-sale debt securities	$	2,114,129	$	—	$	2,112,626	$	1,503	$	2,393,558	$	—	$	2,391,953	$	1,605
Loans held for sale		8,994		—		8,994		—		43,013		—		43,013		—
Other assets - interest rate derivatives agreements		4,650		—		4,650		—		14,585		—		14,585		—
Total assets recurring fair value measurements	$	2,139,510	$	11,737	$	2,126,270	$	1,503	$	2,463,499	$	12,343	$	2,449,551	$	1,605

Other liabilities - interest rate derivatives agreements	$	5,081	$	—	$	5,081	$	—	$	16,117	$	—	$	16,117	$	—
Total liabilities recurring fair value measurements	$	5,081	$	—	$	5,081	$	—	$	16,117	$	—	$	16,117	$	—

Nonrecurring fair value measurements
Impaired loans									$	2,362	$	—	$	—	$	2,362
Other real estate owned and repossessed assets		7,265		—		—		7,265		4,178		—		—		4,178
Total nonrecurring fair value measurements	$	7,265	$	—	$	—	$	7,265	$	6,540	$	—	$	—	$	6,540

~~WesBanco’s~~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 0 significant transfers between level 1, 2 or 3 for the three ~~and nine~~ months ended ~~September 30, 2019~~March 31, 2020 or for the year ended December 31, ~~2018.~~2019.

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

Quantitative Information about Level 3 Fair Value Measurements

Fair Value

Valuation

Unobservable

Range (Weighted

Fair Value

Valuation

Unobservable

Range (Weighted

(unaudited, in thousands)

Estimate

Techniques

Input

Average)

Estimate

Techniques

Input

Average)

September 30, 2019

March 31, 2020

Individually-evaluated nonperforming loans

2,439

Appraisal of collateral ⁽¹⁾

Appraisal adjustments ⁽²⁾

—

Other real estate owned and repossessed assets

1,032

Appraisal of collateral ^{(1), (3)}

Liquidation expenses ⁽²⁾

—

December 31, 2019

Impaired loans

2,488

Appraisal of collateral ⁽¹⁾

Appraisal adjustments ⁽²⁾

(29.1%)/(29.1%)

2,362

Appraisal of collateral ⁽¹⁾

Appraisal adjustments ⁽²⁾

—

Liquidation expenses ⁽²⁾

(5.2%)/(5.2%)

Other real estate owned and repossessed assets

3,678

Appraisal of collateral ^{(1), (3)}

4,178

Appraisal of collateral ^{(1), (3)}

Liquidation expenses ⁽²⁾

—

December 31, 2018

Other real estate owned and repossessed assets

7,265

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 expense and numerous dissimilar qualitative adjustments by management, which are not identifiable.~~

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

					Fair Value Measurements at										Fair Value Measurements at
					September 30, 2019										March 31, 2020
	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	$	244,333	$	244,333	$	244,333	$	—	$	—	$	593,872	$	593,872	$	593,872	$	—	$	—
Equity securities		11,644		11,644		11,644		—		—		11,230		11,230		11,230		—		—
Available-for-sale debt securities		2,209,199		2,209,199		—		2,207,565		1,634		2,262,082		2,262,082		—		2,260,506		1,576
Held-to-maturity debt securities		852,824		877,809		—		877,258		551		814,178		841,120		—		840,597		523
Net loans		7,702,435		7,741,859		—		—		7,741,859		10,235,324		10,431,898		—		—		10,431,898
Loans held for sale		20,715		20,715		—		20,715		—		48,021		48,021		—		48,021		—
Other assets - interest rate derivatives		18,672		18,672		—		18,672		—		48,182		48,182		—		48,182		—
Accrued interest receivable		37,156		37,156		37,156		—		—		43,960		43,960		43,960		—		—

Financial Liabilities
Deposits		8,664,363		8,671,246		7,388,830		1,282,416		—		11,043,332		11,052,793		9,104,011		1,948,782		—
Federal Home Loan Bank borrowings		1,161,092		1,167,912		—		1,167,912		—		1,585,608		1,598,550		—		1,598,550		—
Other borrowings		325,247		325,663		322,295		3,368		—		333,966		334,305		334,305		—		—
Subordinated debt and junior subordinated debt		156,632		144,998		—		144,998		—		192,008		186,404		—		117,046		69,358
Other liabilities - interest rate derivatives		20,721		20,721		—		20,721		—		52,464		52,464		—		52,464		—
Accrued interest payable		5,273		5,273		5,273		—		—		7,667		7,667		7,667		—		—

					Fair Value Measurements at										Fair Value Measurements at
					December 31, 2018										December 31, 2019
	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	$	169,186	$	169,186	$	169,186	$	—	$	—	$	234,796	$	234,796	$	234,796	$	—	$	—
Equity securities		11,737		11,737		11,737		—		—		12,343		12,343		12,343		—		—
Available-for-sale debt securities		2,114,129		2,114,129		—		2,112,626		1,503		2,393,558		2,393,558		—		2,391,953		1,605
Held-to-maturity debt securities		1,020,934		120,743		—		120,195		548		851,753		874,523		—		873,995		528
Net loans		7,607,333		7,422,825		—		—		7,422,825		10,215,556		10,297,989		—		—		10,297,989
Loans held for sale		8,994		8,994		—		8,994		—		43,013		43,013		—		43,013		—
Other assets - interest rate derivatives		4,650		4,650		—		4,650		—		14,585		14,585		—		14,585		—
Accrued interest receivable		38,853		38,853		38,853		—		—		43,648		43,648		43,648		—		—

Financial Liabilities
Deposits		8,831,633		8,836,390		7,376,023		1,460,367		—		11,004,006		10,989,818		8,948,086		2,041,732		—
Federal Home Loan Bank borrowings		1,054,174		1,051,401		—		1,051,401		—		1,415,615		1,420,302		—		1,420,302		—
Other borrowings		290,522		290,854		288,918		1,936		—		282,362		282,691		279,345		3,346		—
Subordinated debt and junior subordinated debt		189,842		174,448		—		174,448		—		199,869		188,349		—		122,934		65,415
Other liabilities - interest rate derivatives		5,081		5,081		—		5,081		—		16,117		16,117		—		16,117		—
Accrued interest payable		4,627		4,627		4,627		—		—		8,077		8,077		8,077		—		—

The following methods and assumptions were used to measure the fair value of financial instruments recorded at cost on ~~WesBanco’s~~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~~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~~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 estimated using discounted cash flow analyses based on the current borrowing rates for similar types of borrowing arrangements. Due to the pooled nature of junior subordinated debt owed to unconsolidated subsidiary trusts, which are not actively traded, estimated fair value is based on recent similar transactions of single-issuer trust preferred securities.

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.

~~WesBanco~~Wesbanco adopted ASU 2014-09 as of January 1, 2018 under the modified retrospective approach ~~and there was~~with no material impact on ~~WesBanco’s~~Wesbanco’s Consolidated Financial statements. 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, payment processing fees, electronic banking fees, mortgage banking income and net gain or loss on sale of other real estate owned – 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.~~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.~~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:Debit card sponsorship income is earned from Wesbanco’s sponsorship of its customers, which include independent service organizations, processors and other banks into different debit networks. For providing this service, the customers pay the bank a per transaction fee for each transaction processed through the network. In some cases, customers are also charged annual sponsorship fees and non-compliance fees as applicable. The fees are earned at the time the transaction or customer activity occurs. The fees are either directly debited from the customers' deposit accounts or are billed to the customer.

Payment processing fees: Payment processing fees are ~~fees~~ 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~~Wesbanco-originated loans are sold to an investor on the secondary market. The investor bids on the loans. If the price is accepted, ~~WesBanco~~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.

Net gain or loss on sale of other real estate owned: Net gain or loss is recorded when other real estate is sold to a third party and the Bank collects substantially all of the consideration to which ~~WesBanco~~Wesbanco is entitled in exchange for the transfer of the property.

The following table summarizes the point of revenue recognition and the income recognized for each of the revenue streams for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2020 and 2019, ~~and 2018,~~ respectively:

	Point of Revenue	For the Three Months Ended September 30,				For the Nine Months Ended September 30,				Point of Revenue	For the Three Months Ended March 31,
(unaudited, in thousands)	Recognition	2019		2018		2019		2018		Recognition	2020		2019
Revenue Streams
Trust fees
Trust account fees	Over time	$	4,265	$	4,006	$	13,529	$	11,856	Over time	$	4,857	$	5,056
WesMark fees	Over time		2,160		2,259		6,351		6,664	Over time		2,095		2,059
Total trust fees			6,425		6,265		19,880		18,520			6,952		7,115
Service charges on deposits
Commercial banking fees	Over time		513		563		1,480		1,406	Over time		585		468
Personal service charges	At a point in time & over time		6,543		5,750		18,323		14,876	At a point in time and over time		6,032		6,081
Total service charges on deposits			7,056		6,313		19,803		16,282			6,617		6,549
Net securities brokerage revenue
Annuity commissions	At a point in time		1,204		1,326		4,018		3,836	At a point in time		1,038		1,362
Equity and debt security trades	At a point in time		151		116		356		304	At a point in time		159		102
Managed money	Over time		153		173		484		477	Over time		235		157
Trail commissions	Over time		257		221		739		698	Over time		247		239
Total net securities brokerage revenue			1,765		1,836		5,597		5,315			1,679		1,860

Debit card sponsorship income (1)										At a point in time and over time		708		—
Payment processing fees (1)	At a point in time & over time		709		311		2,142		311	At a point in time and over time		680		648
Electronic banking fees	At a point in time		5,253		6,139		18,299		16,697	At a point in time		4,254		5,892
Mortgage banking income	At a point in time		2,588		1,521		5,262		4,297	At a point in time		1,276		1,056
Net gain on other real estate owned and other assets	At a point in time		158		150		670		641
Net gain on other real estate owned and other Assets										At a point in time		169		136

The activity in accumulated other comprehensive income for the ~~nine~~three months ended ~~September 30,~~March 31, 2020 and 2019 ~~and 2018~~ is as follows:

⁽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 23%.~~

The following table provides details about amounts reclassified from accumulated other comprehensive income for the three ~~and nine~~ months ended ~~September~~March 30, ~~2019~~2020 and ~~2018:~~2019:

Details about Accumulated Other Comprehensive Income/(Loss) Components	For the Three Months Ended September 30,						For the Nine Months Ended September 30,						Affected Line Item in the Statement of Net Income	For the Three Months Ended March 31,						Affected Line Item in the Statement of Net Income
(unaudited, in thousands)	2019			2018			2019			2018				2020			2019
Debt securities available-for-sale ⁽¹⁾:
Net securities gains reclassified into earnings	$	(219	)	$	(11	)	$	(258	)	$	(11	)	Net securities gains (Non-interest income)	$	(2,287	)	$	(43	)	Net securities gains (Non-interest income)
Related income tax expense(2)		50			2			59			2		Provision for income taxes		544			10		Provision for income taxes
Net effect on accumulated other comprehensive income for the period		(169	)		(9	)		(199	)		(9	)			(1,743	)		(33	)

Debt securities held-to-maturity ⁽¹⁾:
Amortization of unrealized gain transferred from available-for-sale		(88	)		(64	)		(237	)		(195	)	Interest and dividends on securities (Interest and dividend income)		(3	)		(55	)	Interest and dividends on securities (Interest and dividend income)
Related income tax expense(2)		20			15			58			46		Provision for income taxes		1			16		Provision for income taxes
Net effect on accumulated other comprehensive income for the period		(68	)		(49	)		(179	)		(149	)			(2	)		(39	)

Defined benefit plans ⁽²⁾:
Defined benefit plans ⁽³⁾:
Amortization of net loss and prior service costs		767			772			2,275			2,293		Employee benefits (Non-interest expense)		746			750		Employee benefits (Non-interest expense)
Related income tax benefit(2)		(175	)		(177	)		(554	)		(672	)	Provision for income taxes		(177	)		(207	)	Provision for income taxes
Net effect on accumulated other comprehensive income for the period		592			595			1,721			1,621				569			543
Total reclassifications for the period	$	355		$	537		$	1,343		$	1,463			$	(1,176	)	$	471

⁽¹⁾~~For additional detail related to unrealized gains on securities and related amounts reclassified from accumulated other comprehensive income, see Note 4, “Securities.”~~

⁽²⁾~~Included in the computation of net periodic pension cost. See Note 8,~~

Commitments — In the normal course of business, ~~WesBanco~~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~~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~~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 ~~$1.6~~$5.6 million and ~~$0.7~~$0.9 million as of ~~September 30, 2019~~March 31, 2020 and December 31, ~~2018,~~2019, 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 $0.2 million as of ~~September 30, 2019~~March 31, 2020 and December 31, ~~2018.~~2019.

Contingent obligations to purchase loans funded by other entities include affordable housing plan guarantees, credit card guarantees, loans sold with recourse as well as obligations to the FHLB. Affordable housing plan guarantees are performance guarantees for various building project loans. The guarantee amortizes as the loan balances decrease. Credit card guarantees are credit card balances not owned by ~~WesBanco,~~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:

	September 30,		December 31,		March 31,		December 31,
(unaudited, in thousands)	2019		2018		2020		2019
Lines of credit	$	2,013,085	$	1,894,030	$	2,418,066	$	2,469,676
Loans approved but not closed		391,885		258,778		541,038		504,623
Overdraft limits		150,684		153,572		154,481		149,519
Letters of credit		44,370		42,841		59,272		57,205
Contingent obligations and other guarantees		68,450		61,509		76,170		81,551

Contingent Liabilities — ~~WesBanco~~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.

~~WesBanco~~Wesbanco operates 2 reportable segments: community banking and trust and investment services. ~~WesBanco’s~~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 ~~$4.4~~$4.0 billion and ~~$4.7~~$4.5 billion at ~~September 30,~~March 31, 2020 and 2019, ~~and 2018,~~ respectively. These assets are held by ~~WesBanco~~Wesbanco in fiduciary or agency capacities for their customers and therefore are not included as assets on ~~WesBanco’s~~Wesbanco’s Consolidated Balance Sheets.

			Trust and						Trust and
	Community		Investment				Community		Investment
(unaudited, in thousands)	Banking		Services		Consolidated		Banking		Services		Consolidated
For The Three Months Ended September 30, 2019
For The Three Months Ended March 31, 2020
Interest and dividend income	$	117,348	$	—	$	117,348	$	142,448	$	—	$	142,448
Interest expense		21,228		—		21,228		22,286		—		22,286
Net interest income		96,120		—		96,120		120,162		—		120,162
Provision for credit losses		4,121		—		4,121		29,821		—		29,821
Net interest income after provision for credit losses		91,999		—		91,999		90,341		—		90,341
Non-interest income		20,525		6,425		26,950		21,057		6,952		28,009
Non-interest expense		69,068		4,200		73,268		86,918		4,415		91,333
Income before provision for income taxes		43,456		2,225		45,681		24,480		2,537		27,017
Provision for income taxes		7,866		468		8,334		3,088		533		3,621
Net income	$	35,590	$	1,757	$	37,347	$	21,392	$	2,004	$	23,396

For The Three Months Ended September 30, 2018
For The Three Months Ended March 31, 2019
Interest and dividend income	$	108,393	$	—	$	108,393	$	119,053	$	—	$	119,053
Interest expense		18,460		—		18,460		20,692		—		20,692
Net interest income		89,933		—		89,933		98,361		—		98,361
Provision for credit losses		1,035		—		1,035		2,507		—		2,507
Net interest income after provision for credit losses		88,898		—		88,898		95,854		—		95,854
Non-interest income		19,959		6,265		26,224		20,658		7,115		27,773
Non-interest expense		72,378		3,742		76,120		70,275		4,157		74,432
Income before provision for income taxes		36,479		2,523		39,002		46,237		2,958		49,195
Provision for income taxes		5,986		530		6,516		8,237		621		8,858
Net income	$	30,493	$	1,993	$	32,486	$	38,000	$	2,337	$	40,337

For the Nine Months Ended September 30, 2019
Interest and dividend income	$	355,944	$	—	$	355,944
Interest expense		63,003		—		63,003
Net interest income		292,941		—		292,941
Provision for credit losses		9,375		—		9,375
Net interest income after provision for credit losses		283,566		—		283,566
Non-interest income		65,998		19,880		85,878
Non-interest expense		207,299		12,353		219,652
Income before provision for income taxes		142,265		7,527		149,792
Provision for income taxes		25,714		1,581		27,295
Net income	$	116,551	$	5,946	$	122,497

For the Nine Months Ended September 30, 2018
Interest and dividend income	$	293,596	$	—	$	293,596
Interest expense		48,127		—		48,127
Net interest income		245,469		—		245,469
Provision for credit losses		4,911		—		4,911
Net interest income after provision for credit losses		240,558		—		240,558
Non-interest income		55,195		18,520		73,715
Non-interest expense		183,298		10,936		194,234
Income before provision for income taxes		112,455		7,584		120,039
Provision for income taxes		19,262		1,593		20,855
Net income	$	93,193	$	5,991	$	99,184

Total non-fiduciary assets of the trust and investment services segment were ~~$4.0~~$3.8 million (including ~~$2.5~~$2.2 million of trust customer intangibles) and ~~$5.1~~$4.1 million (including ~~$2.6~~$2.4 million of trust customer intangibles) at ~~September 30,~~March 31, 2020 and 2019, ~~and 2018,~~ respectively. All other assets, including goodwill and the remainder of other intangible assets, were allocated to the Community Banking segment.

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~~Wesbanco for the three ~~and nine~~ months ended ~~September 30, 2019.~~March 31, 2020. This discussion and analysis should be read in conjunction with the Consolidated Financial Statements and Notes thereto.

Forward-looking statements in this report relating to ~~WesBanco’s~~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~~Wesbanco’s Form 10-K for the year ended December 31, ~~2018~~2019 and documents subsequently filed by ~~WesBanco~~Wesbanco with the Securities and Exchange Commission (“SEC”), ~~including WesBanco’s Form 10-Q’s for the quarters ended March 31 and June 30, 2019,~~ which are available at the SEC’s website, www.sec.gov or at ~~WesBanco’s~~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~~Wesbanco’s most recent Annual Report on Form 10-K filed with the SEC under “Risk Factors” in Part I, Item ~~1A.~~1A and under “Risk Factors” in Part II, Item 1A of this Quarterly Report on Form 10-Q. Such statements are subject to important factors that could cause actual results to differ materially from those contemplated by such statements, including, without limitation, that the proposed merger with Old Line Bancshares, Inc. (“Old Line”) may not close when expected, that the businesses of WesBanco and Old Line may not be integrated successfully or such integration may take longer to accomplish than expected; the expected cost savings and any revenue synergies from the merger of WesBanco and Old Line may not be fully realized within the expected timeframes; disruption from the merger of WesBanco and Old Line may make it more difficult to maintain relationships with clients, associates, or suppliers; the effects of changing regional and national economic ~~conditions;~~conditions including the effects of the COVID-19 pandemic; changes in interest rates, spreads on earning assets and interest-bearing liabilities, and associated interest rate sensitivity; sources of liquidity available to ~~WesBanco~~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, 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~~Wesbanco’s operational and financial performance. ~~WesBanco~~Wesbanco does not assume any duty to update forward-looking statements.

~~WesBanco~~Wesbanco is a multi-state bank holding company operating through ~~199~~236 branches and ~~193~~228 ATM machines in West Virginia, Ohio, western Pennsylvania, Kentucky, ~~and~~ southern Indiana and Maryland, offering retail banking, corporate banking, personal and corporate trust services, brokerage services, mortgage banking and insurance. ~~WesBanco’s~~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~~Wesbanco’s business volumes. ~~WesBanco’s~~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.~~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.

~~WesBanco’s~~Wesbanco’s critical accounting policies involving the significant judgments and assumptions used in the preparation of the Consolidated Financial Statements as of ~~September 30, 2019~~March 31, 2020 have remained unchanged, except as noted below, from the disclosures presented in ~~WesBanco’s~~Wesbanco’s Annual Report on Form 10-K for the year ended December 31, ~~2018~~2019 within the section “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

Allowance for Credit Losses—In September 2016, the FASB issued ASU 2016-13, “Financial Instruments – Credit Losses (Topic 326),” which require entities to use a new forward-looking “expected loss” model also referred to as the current expected credit loss model (“CECL”) on trade and other receivables, held-to-maturity debt securities, loans and other instruments that generally will result in the earlier recognition of allowances for credit losses. For available-for-sale debt securities with unrealized losses, entities measure credit losses in a manner similarly to current procedures, except that the losses will be recognized as allowances rather than reductions in the amortized cost of the securities. Entities will have to disclose significantly more information, including information they use to track credit quality by year of origination for most financing receivables. In April 2019, the FASB issued ASU 2019-04, “Codification Improvements to Topic 326, Financial Instruments – Credit Losses, Topic 815, Derivatives and Hedging and Topic 825, Financial Instruments” and in May 2019 the FASB issued ASU 2019-05, “Financial Instruments – Credit Losses (Topic 326), Targeted Transition Relief. Public business entities must apply the new requirements for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years, which for Wesbanco was effective January 1, 2020. In December 2018, the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation (“FDIC”) and the Office of Comptroller of the Currency (“OCC”) approved a final rule to address changes to credit loss accounting under GAAP, including banking organizations’ adoption of the CECL methodology. The final rule provides banking organizations the option to phase-in, over a three-year period, the day-one adverse effects on regulatory capital that may result from the adoption of the new accounting standard. In response to the COVID-19 pandemic, the joint federal bank regulatory agencies issued an optional extension of the regulatory capital transition, which allows for a two-year delay and then a three-year transition period from January 1, 2022 through December 31, 2024. Under the interim final rule, the amount of adjustments to regulatory capital deferred until the phase-in period includes both the initial impact of our adoption of CECL at January 1, 2020 and 25% of subsequent changes in our allowance for credit losses during each quarter of the two-year period ended December 31, 2021, (collectively the “CECL regulatory capital transition adjustment”). Wesbanco has elected to defer the impact of CECL for two years and then will phase in the impact of the adoption of this standard on the company’s regulatory capital over the subsequent three-year period.

Under CECL, acquired loans or pools of loans that have experienced more-than-insignificant credit deterioration are deemed to be purchased credit deteriorated (“PCD”) loans, and are grossed-up on day 1 by the initial credit estimate through the allowance as opposed to a reduction in the loan’s amortized cost. The credit mark on acquired loans deemed not to be PCD loans are reflected as a reduction in the loan’s amortized cost, with an allowance and corresponding provision for credit losses recorded in the first reporting period after acquisition through current period earnings, while the loan mark will accrete through interest income over the life of such loans. At acquisition, Wesbanco will consider several factors as indicators that an acquired loan or pool of loans has experienced more-than-insignificant credit deterioration. These factors include loans 30 days or more past due, loans with an internal risk grade of below average or lower, loans classified as non-accrual by the acquired institution, the materiality of the credit and loans that have been previously modified in a troubled debt restructuring (“TDR”). Upon adoption of this standard, acquired loans from prior acquisitions that met the guidelines under ASC 310-30 (formerly known as “purchased credit impaired”) were reclassified as PCD loans. The accretable portion of the loan mark as of adoption date continues to accrete into interest income. However, the non-accretable portion of the loan mark was added to the allowance upon adoption, and any reversals of such mark will flow through the allowance in future periods. The loan mark on ASC 310-20 loans (“non-purchased credit impaired”) from prior acquisitions continues to accrete through interest income over the life of such loans.

Wesbanco formed a cross-functional team in 2016 to oversee the implementation of CECL. The team was responsible for completing an initial data gap assessment, determining if additional data was needed or current data could be improved upon, finalizing the loan segmentation procedures, analyzing the methodology options regarding the calculation of expected credit losses and concluding why the selected methodology is reasonable and in-line with accounting guidance. Wesbanco completed parallel runs in 2019 to ensure the various forecasting and modeling assumptions were reasonable and supportable, including certain qualitative factors that were developed to estimate the initial current expected credit loss allowance. Wesbanco engaged a third-party to validate the data inputs and the models utilized in the CECL calculation. In addition, the Company prepared documentation of the accounting policy decisions, changes to the business processes and procedures, and the control environment under the adoption of this standard. The day 1 impact on the allowance for credit losses was an increase of $41.1 million, which included a $6.7 million adjustment for PCD loans and a $3.0 million adjustment related to loan commitments. The after-tax effect on retained earnings was $26.6 million as of January 1, 2020. The day 1 CECL calculation is derived from the selected assumption of a one-year reasonable and supportable forecast, which was obtained from a third-party vendor. After the forecast period, Wesbanco reverts back over a one-year period to historical loss rates adjusting for prepayments and curtailments, to estimate losses over the remaining life of loans. The most sensitive assumptions include the length of the forecast and reversion periods, forecast of unemployment and interest rate spreads and prepayment speeds. See Note 5, “Loans and Allowance for Credit Losses” for further detail.

The allowance for credit losses reduces the loan portfolio to the net amount expected to be collected and establishes an allowance for unfunded loan commitments. The allowance for credit losses represents the lifetime expected losses for all loans and unfunded loan commitments at the initial recognition date. The allowance incorporates forward-looking information and applies a reversion methodology beyond the reasonable and supportable forecast. The allowance is increased by a provision charged to operating expense and reduced by charge-offs, net of recoveries. The provision also includes any necessary adjustments to the reserve for unfunded loan commitments, and such reserve is accounted for in other liabilities. Management evaluates the appropriateness of the allowance at least quarterly. This evaluation is inherently subjective as it requires material estimates that may be susceptible to significant change from period to period.

The allowance for credit loss calculation is based on the loan’s amortized cost basis, which is comprised of the unpaid principal balance of the loan, deferred loan fees (costs), acquired premium (discount) less write-downs. 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 the loan is placed on non-accrual. Wesbanco made an accounting policy election to reverse accrued interest deemed uncollectible as a reversal of interest income.

The allowance for credit loss reflects the risk of loss in the loan portfolio. To appropriately measure expected credit losses, management disaggregates the loan portfolio into pools of similar risk characteristics. The Company utilizes the probability of default (“PD”) / loss given default (“LGD”) approach to calculate the expected loss for each segment, which is then discounted. PD is the probability the asset will default within a given timeframe and LGD is the percentage of the assets not expected to be collected due to default. The primary macroeconomic drivers of the quantitative model include forecasts of national unemployment and interest rate spreads. Management relies on macroeconomic forecasts obtained from various reputable sources, which may include the Federal Open Market Committee (FOMC) forecast and other third party forecasts from well recognized, leading economists. These forecasts can range from one to two years, depending upon the facts and circumstances of the current state of the economy, portfolio segment and management’s judgement of what can be reasonably supported. The model reversion period may range from one to three years.

The allowance for credit losses is calculated over the loan’s contractual life. For term loans, the contractual life is calculated based on the maturity date. For commercial and industrial (“C&I”) revolving loans with no stated maturity date, the contractual life is calculated based on the internal review date. For all other revolving loans, the contractual life is based on either the estimated maturity date or a default date. The contractual term does not include any expected extensions, renewals or modifications unless management has a reasonable expectation as of the reporting period that Wesbanco will execute a troubled debt restructuring (“TDR”) with the borrower. Management assumes a loan will become a TDR if a consumer loan has matured, has a principal balance, and has previously been partially charged-off. This assumption extends the maturity of these loans to six months beyond their respective maturity dates.

The evaluation also considers qualitative factors such as economic trends and conditions, which includes levels of regional unemployment, real estate values and the impact on specific industries and geographical markets, changes in lending policies and underwriting standards, delinquency and other credit quality trends, concentrations of credit risk, if any, and the results of internal loan reviews and examinations by bank regulatory agencies. Management relies on observable data from internal and external sources to the extent it is available to evaluate each of these factors and adjusts the actual historical loss rates to reflect the impact these factors may have on probable losses in the portfolio.

Commercial loans, including commercial real estate (“CRE”) and C&I, are individually-evaluated if they have unique characteristics, reported as TDR, or reported as non-accrual greater than $1 million. Specific reserves are established when appropriate for such loans based on the present value of expected future cash flows of the loan or the estimated realizable value of the collateral, if any.

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) was signed into law. Section 4013 of the CARES Act, “Temporary Relief From Troubled Debt Restructurings,” 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. On April 7, 2020, the joint federal regulatory agencies issued a statement, “Interagency Statement on Loan Modifications and Reporting for Financial Institutions Working With Customers Affected by the Coronavirus (Revised),” which further discusses loan modifications related to COVID-19. Wesbanco has extended loan principal and/or interest payments up to 180 days for customers whom are affected by the COVID-19 pandemic. These customers must meet certain criteria, such as being in good standing and not more than 30 days past due prior to the pandemic, as well other requirements noted in the regulatory agencies’ revised statement. Based on the guidance noted above, Wesbanco does not classify the COVID-19 loan modifications as TDRs, nor are the customers considered late with regard to their delayed payments. Upon exiting the loan modification deferral program, the measurement of loan delinquency will resume where it was determined upon entry into the program.

In response to the COVID-19 pandemic, Wesbanco launched a number of initiatives and precautionary measures intended to mitigate the impact of the COVID-19 virus outbreak by offering payment relief to affected borrowers through loan modifications, payment deferrals, and working capital facilities; adjusting branch operations to help protect the health and safety of our customers and employees while maintaining access to our services; and supporting local non-profit organizations through our grant programs. Through May 4, 2020 we have assisted our residential mortgage customers with 565 loan modifications totaling $145 million, our consumer and home equity loan customers with 753 loan modifications totaling $30 million, and our commercial and business customers with more than 1,800 loan modifications totaling $2.0 billion, including most customers in our hotel loan portfolio. In addition, we have been an active participant in the Small Business Administration’s Paycheck Protection Program (“PPP”), as established by the CARES Act.

Net income for the three months ended ~~September 30, 2019~~March 31, 2020 was ~~$37.3~~$23.4 million, with diluted earnings per share of ~~$0.68,~~$0.35, compared to ~~$32.5~~$40.3 million and ~~$0.64~~$0.74 per diluted share, respectively, for the ~~third~~first quarter of ~~2018.~~2019. Net income for the nine months ended September 30, 2019 was $122.5 million, with diluted earnings per share of $2.24, compared to $99.2 million and $2.11 per diluted share, respectively for the nine months ended September 30, 2018. Excludingexcluding after-tax merger-related expenses ~~(non-GAAP measure) in both periods, net income and diluted earnings per share would have decreased 5.7% to $38.7 million, or $0.71 per diluted share~~ for the three months ended ~~September 30, 2019,~~March 31, 2020, was $27.5 million, or $0.41 per diluted share, as compared to $42.8 million and $0.78 per diluted share, respectively, in the prior year ~~quarter; and net income for the nine months ended September 30, 2019 increased 12.6% year-over-year to $126.3 million, or $2.31 per diluted share.~~quarter (non-GAAP measures).

	For The Three Months Ended September 30,												For the Nine Months Ended September 30,												For The Three Months Ended March 31,
	2019						2018						2019						2018						2020						2019
(unaudited, dollars in thousands, except per share amounts)	Net Income			Diluted Earnings Per Share			Net Income			Diluted Earnings Per Share			Net Income			Diluted Earnings Per Share			Net Income			Diluted Earnings Per Share			Net Income			Diluted Earnings Per Share			Net Income			Diluted Earnings Per Share
Net income (Non-GAAP)⁽¹⁾	$	38,681		$	0.71		$	41,027		$	0.81		$	126,349		$	2.31		$	112,194		$	2.38		$	27,476		$	0.41		$	42,791		$	0.78
Less: After tax merger-related expenses		(1,334	)		(0.03	)		(8,541	)		(0.17	)		(3,852	)		(0.07	)		(13,010	)		(0.27	)		(4,080	)		(0.06	)		(2,454	)		(0.04	)
Net income (GAAP)	$	37,347		$	0.68		$	32,486		$	0.64		$	122,497		$	2.24		$	99,184		$	2.11		$	23,396		$	0.35		$	40,337		$	0.74

⁽¹⁾ Non-GAAP net income excludes after-tax 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

Net interest income increased ~~$6.2~~$21.8 million or ~~6.9%~~22.2% in the ~~third~~first quarter of ~~2019~~2020 compared to the same quarter of ~~2018~~2019 due to a ~~4.2%~~26.0% increase in average earning ~~assets. In addition,~~assets, due primarily to the OLBK acquisition. As a result of five federal funds rate decreases totaling 225 basis points from July 2019 to March 2020, the yield on earning assets ~~has increased~~decreased a total of 1326 basis points ~~since the third quarter of 2018 while there was somewhat of an offset by a 14 basis points increase in~~and the cost of interest bearing liabilities ~~producing a slight decrease~~decreased 15 basis points from the first quarter of 2019 to the same period of 2020. This resulted in the net ~~spread on earning assets of 1 basis point year-over-year. The net~~ interest margin ~~increased~~decreasing by 614 basis points to ~~3.56%~~3.54% in the ~~third~~first quarter of 2020 compared to 3.68% in the first quarter of 2019. Average loan balances increased by 35.5% from the first quarter of 2019, ~~compared~~while average deposits increased by 24.6%, both mainly attributable to ~~3.50% in~~ the third quarter of 2018. The margin benefited from increases in the Federal Reserve’s target federal funds rate during 2018 and higher margins on the acquired FFKT assets, partially offset by higher funding costs and a flattening of the yield curve in 2019. The increase in the cost of interest bearing liabilities is primarily due to higher rates for interest bearing public funds, higher certificates of deposit costs and certain Federal Home Loan Bank and other borrowings. AccretionOLBK acquisition. Lastly, accretion from acquisitions benefited the ~~third~~first quarter net interest margin by 1322 basis points, as compared to 1119 basis points in the prior year ~~period.~~period and 22 basis points during the fourth quarter of 2019.

The provision for credit losses increased to ~~$4.1~~$29.8 million in the ~~third~~first quarter of ~~2019, of which $2.1 million was~~2020, due ~~to certain borrower downgrades to criticized and classified status due to recent adjustments~~specifically to the ~~internal loan classification system which impacted risk grades.~~implementation of the CECL accounting standard on January 1, 2020, and the effect of the COVID-19 pandemic. Net charge-offs, as a percentage of average portfolio loans, ~~was 0.04%~~were 0.18% and ~~(0.02)%~~0.07% for the ~~third quarters~~first quarter of ~~2019~~2020 and ~~2018,~~2019, respectively.

For the ~~third~~first quarter of 2020, non-interest income increased $0.2 million or 0.8% compared to the first quarter of 2019, ~~non-interest~~driven by debit sponsorship income ~~increased~~and net securities gains. Debit sponsorship income, a new source of fee income acquired in the OLBK acquisition in November 2019, totaled $0.7 million ~~or 2.8% compared to~~for the ~~third~~first quarter of ~~2018, driven by mortgage banking income, service charges on deposit and trust fees. Mortgage banking income~~2020. Net securities gains increased $0.8 million due to a ~~29.9% increase~~large sale of securities in ~~mortgage production~~March 2020 in order to create available cash for ~~the first nine months of 2019 compared to the same period in 2018. Electronic~~potential COVID-19 needs. Offsetting these increases somewhat, electronic banking fees decreased ~~$0.9~~$1.6 million or ~~14.4%~~27.8% due to ~~the~~a negative ~~$1.9~~$2.7 million impact of the Durbin amendment to the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act. Swap ~~fee and valuation~~fee-related income also decreased ~~$1.0~~$0.5 million for the ~~third~~first quarter of ~~2019~~2020 compared to the ~~third~~first quarter in ~~2018~~2019, due to the decline in the fair value of existing swaps resulting from lower rates and the inverted yield curve during ~~2019.~~ 2020.

Non-interest ~~income~~expense, excluding merger-related expenses in both periods, increased ~~$12.2~~in the first quarter of 2020 by $14.8 million or ~~16.5% for the nine months ended September 30, 2019 as compared to the nine months ended September 30, 2018.~~

~~Non-interest expense in the third quarter of 2019 decreased by $2.9 million or 3.7%~~20.8%, compared to the ~~third~~first quarter of ~~2018, which~~2019. This year-over-year increase is primarily due to higher salaries and wages, employee benefits, net occupancy, equipment, and other operating costs associated with additional staffing and financial center locations from the ~~FDIC assessment credit received in~~OLBK acquisition. In addition, salaries and wages reflect the ~~third~~annual mid-year merit increases implemented last summer. For the first quarter of 2019. Salaries and wages increased $2.6 million or 8.5% and employee benefit expense increased $1.8 million or 23.0% compared to last year’s third quarter as due to additions to key revenue-producing positions throughout the markets and annual merit increases for 2019. For the third quarter of 2019,2020, merger-related expenses were ~~$1.7~~$5.2 million related to the OLBK merger, as compared to ~~$10.8~~$3.1 million for the ~~third~~first quarter of ~~2018~~2019, which were related to the ~~FTSB and~~ FFKT ~~mergers.~~merger.

During the ~~third~~first quarter, the effective tax rate was ~~18.2%~~13.4% as compared to ~~16.7%~~18.0% last year, ~~while~~and the provision for income taxes ~~increased $1.8~~decreased $5.2 million to ~~$8.3~~$3.6 million, primarily due to ~~higher~~lower year-over-year pre-tax income.

33In response to the current economic environment as a result of the COVID-19 pandemic, Wesbanco completed an interim goodwill impairment analysis as of March 31, 2020. Wesbanco concluded that goodwill, which has a carrying value of $1.1 billion, was not impaired as of March 31, 2020. If events and circumstances continue, such as the effects of the COVID-19 pandemic, Wesbanco will continue to quarterly assess goodwill for potential impairment.

	For the Three Months Ended September 30,						For the Nine Months Ended September 30,						For the Three Months Ended March 31,
(unaudited, dollars in thousands)	2019			2018			2019			2018			2020			2019
Net interest income	$	96,120		$	89,933		$	292,941		$	245,469		$	120,162		$	98,361
Taxable equivalent adjustment to net interest income		1,265			1,415			4,105			4,045			1,184			1,473
Net interest income, fully taxable equivalent	$	97,385		$	91,348		$	297,046		$	249,514		$	121,346		$	99,834
Net interest spread, non-taxable equivalent		3.20	%		3.21	%		3.29	%		3.16	%		3.25	%		3.34	%
Benefit of net non-interest bearing liabilities		0.31	%		0.24	%		0.30	%		0.22	%		0.26	%		0.29	%
Net interest margin		3.51	%		3.45	%		3.59	%		3.38	%		3.51	%		3.63	%
Taxable equivalent adjustment		0.05	%		0.05	%		0.05	%		0.06	%		0.03	%		0.05	%
Net interest margin, fully taxable equivalent		3.56	%		3.50	%		3.64	%		3.44	%		3.54	%		3.68	%

Net interest income, which is ~~WesBanco’s~~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 increased ~~$6.2~~$21.8 million or ~~6.9%~~22.2% in the ~~third~~first quarter of 2020 compared to the first quarter of 2019, ~~compared to the third quarter of 2018,~~ due to a ~~4.8%~~26.0% increase in average earning asset balances, primarily driven by the acquisition of ~~FFKT,~~OLBK, which closed midway through the ~~third~~fourth quarter of ~~2018. For the first nine months of 2019, net interest income increased $47.5 million or 19.3%.~~2019. Average loan balances increased ~~7.2%~~35.5% in the ~~third~~first quarter of ~~2019~~2020 primarily from the acquisition of ~~FFKT~~OLBK compared to the ~~third~~first quarter of ~~2018. Portfolio~~2019. Excluding the OLBK acquisition, portfolio loans increased ~~slightly~~ by ~~0.4%~~2.6% from ~~last year which~~March 31, 2019, as growth occurred in the commercial real estate, commercial and industrial, and residential real estate ~~and consumer loan~~ categories. Overall loan growth was ~~mitigated by~~boosted in the first quarter of 2020 due to lower ~~home equity~~ loan ~~balances from lower demand as a result of tax changes, elevated levels of commercial real estate~~rates and prepayments, and fewer loans ~~moving~~going to the secondary ~~market and continued deleveraging by commercial customers reflective of the current operating environment and higher cash levels from tax reform.~~market. Total average deposits increased in the ~~third~~first quarter of 2020 by $2.2 billion or 24.6% compared to the first quarter of 2019, ~~by $459.3 million or 5.6% compared to the third quarter of 2018,~~ due to ~~organic growth and partially from~~ the deposits acquired from ~~FFKT.~~OLBK. The net interest margin ~~increased~~decreased by ~~six~~14 basis points to ~~3.56%~~3.54% in the ~~third~~first quarter of ~~2019~~2020 from the same quarter of ~~2018.~~2019. The ~~margin benefited from increases~~margin’s decline was due to multiple decreases during late 2019 and the first quarter of 2020 in the Federal Reserve’s target federal funds rate ~~during 2018~~ and ~~higher margins on the acquired FFKT assets,~~a flat to sometimes inverted yield curve, and was partially offset by higher ~~funding costs~~purchase accounting accretion. Approximately 22 basis points of accretion from OLBK and ~~a flattening of~~other prior acquisitions was included in the ~~yield curve~~first quarter 2020 net interest margin compared to 19 basis points in ~~2019.~~the 2019 first quarter net interest margin. Yields ~~increased~~decreased for ~~all~~most earning asset categories in ~~2019.~~2020. The cost of interest bearing liabilities ~~increased~~decreased by 1415 basis points from the ~~third~~first quarter of ~~2018~~2019 to the ~~third~~first quarter of ~~2019.~~2020. The ~~increase~~decrease in the cost is primarily due to rate ~~increases~~decreases for ~~larger balance customers in~~ interest bearing demand deposits, which include public funds, and ~~higher~~lower rates for certificates of deposit, customer repurchase agreements, short to medium-term Federal Home Loan Bank borrowings and junior subordinated ~~debentures. Approximately 13 basis points of accretion from FFKT and other prior acquisitions was included~~debentures in response to the general decrease in overall borrowing rates in the ~~third quarter 2019 net interest margin compared to 11 basis points in~~marketplace resulting from lower rates across the ~~2018 third quarter net interest margin.~~yield curve.

Interest income increased ~~$9.0~~$23.4 million or ~~8.3% in the third quarter of 2019 and $62.3 million or 21.2%~~19.7% in the first ~~nine months~~quarter of ~~2019~~2020 compared to the same ~~periods~~period of ~~2018~~2019 due to higher overall earning assets, ~~particularly from~~mostly attributable to the ~~FTSB and FFKT acquisitions, and higher~~OLBK acquisition, partially offset by lower yields in almost every major earning asset category. Earning asset yields were influenced ~~positively~~negatively by COVID-19 in the ~~third~~first quarter of ~~2019~~2020 compared to the ~~third~~first quarter of ~~2018 due~~2019. In March, the Federal Reserve dropped the federal fund rate by 150 basis points in addition to ~~federal funds rate increases occurring through~~ the ~~first nine months~~75 basis points that occurred in the last half of ~~2018.~~2019. Average loan balances increased ~~$523.9 million~~$2.7 billion or ~~7.2%~~35.5% in the ~~third~~first quarter of ~~2019~~2020 compared to the ~~third~~first quarter of ~~2018,~~2019, due primarily to the acquisition of ~~FFKT.~~OLBK. Loan yields ~~increased~~decreased by 1343 basis points during this same period to ~~4.88%~~4.63% from the previously mentioned federal funds rate ~~increases and accretion from purchase accounting from the FFKT acquisition.~~decreases. 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 ~~third~~first quarter of ~~2019,~~2020, average loans represented ~~71.4%~~75.2% of average earning assets, an increase from ~~69.7%~~69.9% in the ~~third~~first quarter of ~~2018.~~2019. Average taxable securities balances increased ~~$107.2~~$222.8 million or ~~4.9%~~9.5% from the ~~third~~first quarter of ~~2018,~~2019, due partially to the securities acquired in the ~~FFKT~~OLBK acquisition, net of sales, and ~~increased~~ purchases in ~~2019.~~2020. Not reflected in the current quarter’s average balance was the sale of approximately $218 million of mortgage-backed securities at the end of the first quarter, to take advantage of market opportunities and to create liquidity for COVID-19 related reasons. Taxable securities yields ~~increased~~decreased by ~~three~~19 basis points and tax-exempt securities yields increased by ~~nine~~five basis points in the ~~third~~first quarter of ~~2019~~2020 from the ~~third~~first quarter ~~of 2018 due to higher average market rates on all securities acquired and purchased at the end of 2018 and beginning~~ of 2019. The recent flat and inverted yield curve ~~has slightly mitigated~~have resulted in the yield ~~increases over~~decrease for taxable securities, as calls and maturities of tax-exempt securities have been replaced with taxable securities due to their lower tax equivalency benefit. Increased prepayments on mortgage-backed securities in the ~~third quarter of 2019.~~lower rate environment also reduced the taxable securities yields due to higher amortization. The average balance of tax-exempt securities, which have the highest yields within securities, decreased to ~~22.9%~~20.1% of total average securities in the ~~third~~first quarter of ~~2019~~2020 compared to ~~26.4% in the third quarter of 2018, primarily due to the sale of certain lower-yielding tax-exempt municipal securities late~~25.6% in the first quarter of ~~2019 and increased calls on tax-exempt securities in the third quarter as market rates began to decrease.~~2019.

Total portfolio loans increased ~~$30.3 million~~$2.7 billion or ~~0.4%~~35.0% over the last twelve months, ~~as originations continued to outpace paydowns.~~while total commercial loans increased $2.3 billion or 44.7%. Loan growth was achieved through ~~$2.6~~$3.3 billion in total loan originations, led by ~~$1.6~~$2.1 billion in business loan originations for the past twelve months. Loan growth was driven by the acquisition of OLBK in 2019, expanded market areas and additional commercial personnel in our core markets, ~~and~~but was partially offset by significant loan paydowns or payoffs as some loans moved into the secondary lending market by customers who refinanced their commercial real estate mortgages, and some financed projects were sold by their developers.

34Commercial loans with floors currently average 4.36% on approximately $2.2 billion or 29% of total commercial loans at March 31, 2020, as compared to $2.4 billion averaging 4.50% or 33% of commercial loans at December 31, 2019. Approximately 64% or $1.4 billion of these loans are currently priced at their floor, as compared to 49% or $1.2 billion at December 31, 2019. 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 dates. In addition, in a declining rate environment, some customers may request rates below existing contractual floors, which we may grant for competitive or other reasons.

Interest expense increased ~~$2.8~~$1.6 million or ~~15.0%~~7.7% in the ~~third~~first quarter of ~~2019 and $14.9 million or 30.9% for the nine months ended September 30, 2019~~2020 as compared to the same ~~periods~~period in ~~2018,~~2019, due ~~primarily~~ to increases in the balances of interest bearing liabilities from the ~~acquisitions~~acquisition of ~~FTSB and FFKT and increases~~OLBK, partially offset by decreases in the rates paid on ~~all~~most interest bearing liability ~~categories.~~categories as market rates dropped in reaction to COVID-19, as well as higher purchase accounting deposit accretion. The cost of interest bearing liabilities ~~increased~~decreased by 1415 basis points from the ~~third~~first quarter of ~~2018~~2019 to ~~1.09%~~0.91% in ~~2019.~~2020. Average interest bearing deposits increased ~~$187.2 million~~$1.4 billion or ~~3.1%~~22.7% from the ~~third~~first quarter of ~~2018,~~2019, due to the acquisition of ~~FFKT~~OLBK and increases in organic deposits. The rate on interest bearing deposits ~~increased 15~~decreased 10 basis points from the ~~third~~first quarter of ~~2018,~~2019, primarily from ~~increases~~decreases in rates on interest bearing public funds and ~~for certain larger balance customers.~~certificates of deposit. Average non-interest bearing demand deposit balances increased from the ~~third quarter of 2018 to the third~~first quarter of 2019 to the first quarter of 2020 by ~~$272.1~~$716.8 million or ~~12.3%~~29.6% and were ~~28.5%~~28.6% of total average deposits at ~~September 30, 2019,~~March 31, 2020, compared to ~~26.8%~~27.5% at ~~September 30, 2018,~~March 31, 2019, partially reflecting the acquired ~~FFKT~~OLBK non-interest bearing demand deposits and ongoing checking account marketing strategies. The increase in non-interest bearing deposits reflects positively on the net interest margin, as the benefit of non-interest bearing liabilities increased by seven basis points from the third quarter of 2018 to 2019. The average balance of FHLB borrowings ~~decreased $146.5~~increased $418.2 million from the ~~third~~first quarter of ~~2018~~2019 to ~~2019;~~2020 due to borrowings acquired in the OLBK acquisition and also as Wesbanco increased liquidity sources in response to the COVID-19 pandemic; however, the average rate paid ~~increased~~decreased by 2919 basis points to ~~2.51%~~2.25% over this same time period due to ~~higher~~lower interest rates on new borrowings and the maturity of some legacy ~~lower-rate~~higher-rate borrowings in the first ~~half~~quarter of ~~2019.~~2020. Average other borrowings and junior subordinated debt balances increased ~~$25.1~~$17.2 million or ~~5.6%~~3.3% from the ~~third~~first quarter of ~~2018~~2019 to ~~2019,~~2020, partially due to the acquisition of ~~FFKT,~~OLBK, and their average rates paid ~~increased~~decreased by 2788 and 1642 basis points, respectively, over this same time period due to ~~increases~~decreases in LIBOR, the index upon which most of this variable-rate type of borrowing is priced. ~~However,~~

The 150 basis points in total Federal funds rate cuts in the ~~increase was~~first quarter, as well as the generally lower rates across the yield curve, are expected to result in the core net interest margin declining approximately 20 to 25 basis points over the remainder of the year. Lower anticipated earning asset yields caused by loans repricing to lower rates, new loan production rates being lower than existing loan rates, and security cash flows being reinvested at lower rates are expected to be partially offset by aggressive price reductions to deposit rates at the end of the first quarter and lower wholesale funding costs. Wesbanco participation in the PPP program is expected to positively contribute to net interest income resulting in a ~~decrease in junior subordinated debt average balances due~~modest increase to ~~the early redemption of $33.5 million of such debt during 2019.~~ net interest margin this year.

	For The Three Months Ended September 30,										For the Nine Months Ended September 30,										For The Three Months Ended March 31,
	2019					2018					2019					2018					2020					2019
	Average		Average			Average		Average			Average		Average			Average		Average			Average		Average			Average		Average
(unaudited, dollars in thousands)	Balance		Rate			Balance		Rate			Balance		Rate			Balance		Rate			Balance		Rate			Balance		Rate
ASSETS
Due from banks - interest bearing	$	71,163		2.41	%	$	94,337		2.29	%	$	73,617		2.50	%	$	50,686		2.28	%	$	133,532		1.21	%	$	76,731		1.70	%
Loans, net of unearned income⁽¹⁾		7,751,724		4.88	%		7,227,835		4.75	%		7,704,212		4.99	%		6,787,565		4.61	%		10,375,187		4.63	%		7,659,542		5.06	%
Securities:⁽²⁾
Taxable		2,301,933		2.76	%		2,194,708		2.73	%		2,330,439		2.81	%		2,038,978		2.66	%		2,576,668		2.65	%		2,353,856		2.84	%
Tax-exempt ⁽³⁾		684,164		3.52	%		785,699		3.43	%		744,949		3.50	%		751,403		3.42	%		646,587		3.51	%		810,702		3.46	%
Total securities		2,986,097		2.93	%		2,980,407		2.91	%		3,075,388		2.97	%		2,790,381		2.87	%		3,223,255		2.82	%		3,164,558		3.00	%
Other earning assets		53,181		6.80	%		60,783		6.26	%		51,954		7.12	%		56,182		6.02	%		69,581		6.37	%		52,114		7.30	%
Total earning assets ⁽³⁾		10,862,165		4.34	%		10,363,362		4.21	%		10,905,171		4.41	%		9,684,814		4.11	%		13,801,555		4.19	%		10,952,945		4.45	%
Other assets		1,625,988					1,375,434					1,590,847					1,238,728					1,983,384					1,557,087
Total Assets	$	12,488,153				$	11,738,796				$	12,496,018				$	10,923,542				$	15,784,939				$	12,510,032

LIABILITIES AND SHAREHOLDERS' EQUITY
Interest bearing demand deposits	$	2,126,720		0.84	%	$	1,983,340		0.70	%	$	2,131,887		0.80	%	$	1,844,423		0.67	%	$	2,342,441		0.58	%	$	2,129,601		0.75	%
Money market accounts		1,097,930		0.71	%		1,111,341		0.49	%		1,122,665		0.70	%		1,051,104		0.42	%		1,543,763		0.61	%		1,154,563		0.67	%
Savings deposits		1,686,267		0.20	%		1,511,075		0.09	%		1,674,262		0.16	%		1,389,613		0.07	%		1,953,487		0.19	%		1,659,751		0.13	%
Certificates of deposit		1,321,696		1.15	%		1,439,658		0.90	%		1,385,349		1.14	%		1,366,109		0.86	%		1,989,450		0.82	%		1,438,468		1.10	%
Total interest bearing deposits		6,232,613		0.71	%		6,045,414		0.56	%		6,314,163		0.69	%		5,651,249		0.52	%		7,829,141		0.55	%		6,382,383		0.65	%
Federal Home Loan Bank borrowings		1,048,401		2.51	%		1,194,940		2.22	%		1,036,464		2.49	%		1,138,350		2.01	%		1,471,175		2.25	%		1,053,014		2.44	%
Other borrowings		317,931		1.69	%		269,342		1.42	%		321,976		1.82	%		249,030		1.34	%		336,042		1.04	%		327,839		1.92	%
Subordinated debt and junior subordinated debt		156,561		5.26	%		180,074		5.10	%		169,944		5.37	%		172,518		4.98	%		198,494		4.99	%		189,524		5.41	%
Total interest bearing liabilities ⁽¹⁾		7,755,506		1.09	%		7,689,770		0.95	%		7,842,547		1.07	%		7,211,147		0.89	%		9,834,852		0.91	%		7,952,760		1.06	%
Non-interest bearing demand deposits		2,481,384					2,209,235					2,463,076					2,040,292					3,137,279					2,420,462
Other liabilities		153,729					120,302					139,761					127,699					218,739					134,100
Shareholders’ equity		2,097,534					1,719,489					2,050,634					1,544,404					2,594,069					2,002,710
Total Liabilities and Shareholders’ Equity	$	12,488,153				$	11,738,796				$	12,496,018				$	10,923,542				$	15,784,939				$	12,510,032
Taxable equivalent net interest spread				3.25	%				3.26	%				3.34	%				3.22	%				3.28	%				3.39	%
Taxable equivalent net interest margin				3.56	%				3.50	%				3.64	%				3.44	%				3.54	%				3.68	%

⁽¹⁾Gross of allowance for loan losses and net of unearned income. Includes non-accrual and loans held for sale. Loan fees included in interest income on loans are $0.4 million and $0.8 million for the three months ended September 30, 2019 and 2018, respectively, and $1.3 million and $2.1 million for the nine months ended September 30, 2019 and 2018, respectively. Additionally, loan accretion included in interest income on loans acquired from prior acquisitions was $3.4 million and $2.4 million for the three months ended September 30, 2019 and 2018, respectively, and $13.0 million and $5.9 million for the nine months ended September 30, 2019 and 2018, respectively. Accretion on interest bearing liabilities acquired from prior acquisitions was $0.3 million and $0.6 million for the three months ended September 30, 2019 and 2018, respectively, and $0.9 million and $1.5 million for the nine months ended September 30, 2019 and 2018, 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 rate of 21% for each period presented.~~

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

	For The Three Months Ended September 30, 2019									For the Nine Months Ended September 30, 2019							For The Three Months Ended March 31, 2020
	Compared to September 30, 2018									Compared to September 30, 2018							Compared to March 31, 2019
(unaudited, in thousands)	Volume			Rate			Net Increase (Decrease)			Volume			Rate		Net Increase (Decrease)		Volume			Rate			Net Increase (Decrease)
Increase (decrease) in interest income:
Due from banks - interest bearing	$	(139	)	$	28		$	(111	)	$	423		$	91	$	514	$	191		$	(116	)	$	75
Loans, net of unearned income		6,400			2,364			8,764			33,132			19,879		53,011		32,068			(8,067	)		24,001
Taxable securities		738			185			923			6,048			2,311		8,359		1,519			(1,266	)		253
Tax-exempt securities ⁽¹⁾		(889	)		173			(716	)		(166	)		453		287		(1,431	)		58			(1,373	)
Other earning assets		(126	)		71			(55	)		(201	)		438		237		288			(138	)		150
Total interest income change ⁽¹⁾		5,984			2,821			8,805			39,236			23,172		62,408		32,635			(9,529	)		23,106
Increase (decrease) in interest expense:
Interest bearing demand deposits		266			722			988			1,556			2,019		3,575		367			(919	)		(552	)
Money market accounts		(17	)		630			613			241			2,308		2,549		601			(148	)		453
Savings deposits		45			464			509			185			1,108		1,293		104			297			401
Certificates of deposit		(285	)		839			554			125			2,917		3,042		1,269			(1,118	)		151
Federal Home Loan Bank borrowings		(873	)		827			(46	)		(1,634	)		3,761		2,127		2,366			(471	)		1,895
Other borrowings		190			198			388			850			1,045		1,895		38			(724	)		(686	)
Subordinated debt and junior subordinated debt		(310	)		72			(238	)		(97	)		492		395		116			(184	)		(68	)
Total interest expense change		(984	)		3,752			2,768			1,226			13,650		14,876		4,861			(3,267	)		1,594
Net interest income increase (decrease) ⁽¹⁾	$	6,968		$	(931	)	$	6,037		$	38,010		$	9,522	$	47,532	$	27,774		$	(6,262	)	$	21,512

The provision for credit losses – loans is the amount to be added to the allowance for credit losses – loans after net charge-offs have been deducted to bring the allowance to a level considered appropriate to absorb losses incurred within the loan portfolio. The provision for credit losses ~~also includes~~– loan commitments is the amount to be added to the ~~reserve~~allowance for credit losses for loan commitments to bring that ~~reserve~~allowance to a level considered appropriate to absorb losses incurred on unfunded commitments. The provision for credit losses - loans and loan commitments increased to ~~$4.1~~$29.8 million in the ~~third~~first quarter of 2020 compared to $2.5 million in the first quarter of 2019 ~~compared~~due to ~~$1.0 million~~the adoption of CECL on January 1, 2020, and as a result of changes in the ~~third quarter~~macroeconomic forecast resulting in expected significantly higher unemployment over the reasonable and supportable forecast period of ~~2018 due primarily to the increase in the provision for commercial real estate – improved property.~~one year. Non-performing loans were ~~0.52%~~0.38% of total loans as of ~~September 30, 2019, increasing~~March 31, 2020, decreasing from ~~0.49%~~0.47% of total loans at the end of the ~~third~~first quarter of ~~2018.~~2019. Non-performing assets were ~~0.57%~~0.39% of total loans and other real estate and repossessed assets as of ~~September 30, 2019,~~March 31, 2020, decreasing from ~~0.58%~~0.54% at the end of the ~~third~~first quarter of ~~2018.~~2019. Criticized and classified loans were ~~2.24%~~2.09% of total loans, increasing from ~~1.01%~~1.42% as of ~~September 30, 2018~~March 31, 2019 primarily due to recent adjustments to the internal loan classification system which impacted risk grades. Past due loans at ~~September 30, 2019~~March 31, 2020 were ~~0.30%~~0.46% of total loans, compared to ~~0.26%~~0.32% at ~~September 30, 2018.~~March 31, 2019. Annualized net loan charge-offs increased to ~~0.04%~~0.18% as of ~~September 30, 2019~~March 31, 2020 compared to ~~(0.02)%~~0.07% as of ~~September 30, 2018.~~March 31, 2019. (Please see the Allowance for Credit Losses – Loans and Loan Commitments section of this MD&A for additional discussion).

	For The Three Months Ended September 30,											For the Nine Months Ended September 30,										For The Three Months Ended March 31,
(unaudited, dollars in thousands)	2019			2018		$ Change			% Change			2019		2018		$ Change			% Change			2020			2019		$ Change			% Change
Trust fees	$	6,425		$	6,265	$	160			2.6		$	19,880	$	18,520	$	1,360			7.3		$	6,952		$	7,115	$	(163	)		(2.3	)
Service charges on deposits		7,056			6,313		743			11.8			19,803		16,282		3,521			21.6			6,617			6,549		68			1.0
Electronic banking fees		5,253			6,139		(886	)		(14.4	)		18,299		16,697		1,602			9.6			4,254			5,892		(1,638	)		(27.8	)
Net securities brokerage revenue		1,765			1,836		(71	)		(3.9	)		5,597		5,315		282			5.3			1,679			1,860		(181	)		(9.7	)
Bank-owned life insurance		1,373			1,232		141			11.4			4,032		5,116		(1,084	)		(21.2	)		1,769			1,319		450			34.1
Net securities gains																							1,491			657		834			126.9
Mortgage banking income		2,588			1,521		1,067			70.2			5,262		4,297		965			22.5			1,276			1,056		220			20.8
Net insurance services revenue																							845			908		(63	)		(6.9	)
Debit card sponsorship income																							708			—		708			100.0
Payment processing fees		709			311		398			128.0			2,142		311		1,831			588.7			680			648		32			4.9
Net securities gains		235			84		151			179.8			3,800		403		3,397			842.9
Net gain on other real estate owned and other assets		158			150		8			5.3			670		641		29			4.5			169			136		33			24.3
Net insurance services revenue		812			806		6			0.7			2,507		2,409		98			4.1
Swap fee and valuation income		(381	)		627		(1,008	)		(160.8	)		499		1,322		(823	)		(62.3	)		(102	)		369		(471	)		(127.6	)
Other		957			940		17			1.8			3,387		2,402		985			41.0			1,671			1,264		407			32.2
Total non-interest income	$	26,950		$	26,224	$	726			2.8		$	85,878	$	73,715	$	12,163			16.5		$	28,009		$	27,773	$	236			0.8

Non-interest income is a significant source of revenue and an important part of ~~WesBanco’s~~Wesbanco’s results of operations. ~~WesBanco~~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~~Wesbanco’s ability to attract and maintain customers, as well as providing additional fee income beyond normal spread-related income to ~~WesBanco.~~Wesbanco. For the ~~third~~first quarter of ~~2019,~~2020, non-interest income increased ~~$0.7~~$0.2 million or ~~2.8%~~0.8% compared to the ~~third~~first quarter of ~~2018~~2019 primarily due to the acquisition of ~~FFKT,~~OLBK and the new debit sponsorship income revenue stream, a $0.7 million increase in service charges on deposits and a $1.1 million increase in mortgage banking income. The increases were somewhat mitigated by a $0.9 million decrease in electronic banking fees and a $1.0 million decrease in swap fee and valuation income. For the nine months ended September 30, 2019, non-interest income increased $12.1 million or 16.5% from the first nine months of 2018 for similar reasons for the three months ended, coupled with a $3.4$0.8 million increase in net securities ~~gains.~~gains and a $0.5 million increase in bank-owned life insurance. The increases were offset by the Durbin amendment and its impact on electronic banking fees and the COVID-19 impact on several revenue streams including trust fees, net securities brokerage revenue and swap fee and valuation income.

Trust fees ~~increased~~decreased $0.2 million or ~~2.6%~~2.3% compared to the ~~third~~first quarter of ~~2018~~2019 due to ~~the acquisition of FFKT and customer and revenue development initiatives, and were partially offset by~~ a decrease in the market value of trust ~~assets.~~assets resulting from lower market values due to the pandemic. Total trust assets have decreased ~~$0.3~~$0.4 billion from ~~$4.7~~$4.5 billion at ~~September 30, 2018~~March 31, 2019 to ~~$4.4~~$4.1 billion at ~~September 30, 2019.~~March 31, 2020. At ~~September 30, 2019,~~March 31, 2020, trust assets include managed assets of ~~$3.6~~$3.3 billion and non-managed (custodial) assets of $0.8 billion. Assets managed for the WesMark Funds, a proprietary group of mutual funds that is advised by ~~WesBanco~~Wesbanco Trust and Investment Services, were ~~$914.6~~$816.2 million as of ~~September 30, 2019~~March 31, 2020 and ~~$963.7~~$913.4 million at ~~September 30, 2018~~March 31, 2019 and are included in managed assets. ~~Trust fees increased $1.4 million or 7.3% for the first nine months of 2019 compared to the same period in 2018.~~

Service charges on deposits increased $0.7 million or 11.8% for the third quarter of 2019 compared to the prior year period primarily because of the increased customer base from the FFKT acquisition. Included in service charges on deposits for the nine months ended September 30, 2019 is a $0.6 million negative adjustment for dormancy fees that will be remitted to the State of Kentucky for accounts that management has determined should have been escheated in prior periods by FFKT.

Electronic banking fees, which include debit card interchange fees, decreased ~~$0.9~~$1.6 million or ~~14.4%~~27.8% compared to the ~~third~~first quarter of ~~2018 as this~~2019 which reflected an approximate $2.7 million impact on first quarter ~~reflected the beginning of~~2020 fees from the ongoing limitation on interchange fees for debit card processing that resulted from the Durbin amendment to the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act. This limitation only applies to banks with greater than $10 billion in total ~~assets.~~assets, and took effect for Wesbanco in the third quarter of 2019. Slightly offsetting the effect of the Durbin amendment is a higher volume of debit card transactions, mostly from the increased customer base from the ~~FFKT~~OLBK acquisition.

Bank-owned life insurance increased $0.5 million or 34.1% from the first quarter of 2019 due to a higher cash surrender value from that in the prior period. The total cash surrender value increased from $226.6 million at March 31, 2019 to $301.3 million at March 31, 2020, primarily attributable to the bank-owned life insurance acquired from OLBK and earnings on the portfolio.

Net securities gains increased $0.8 million or 126.9% in the first three months of 2020 compared to the same period of 2019, due to the sale of approximately $218 million of mortgage-backed securities in March 2020 in order to take advantage of market conditions and to create additional liquidity for potential COVID-19 related needs. These gains were partially offset by a negative $1.3 million market adjustment in the deferred compensation plan, which had an offsetting reduction in employee benefits expense.

Mortgage banking income increased ~~$1.1~~$0.2 million or ~~70.2%~~20.8% from the ~~third quarter of 2018 to the third~~first quarter of 2019 ~~and $1.0 million or 22.5% in~~to the ~~year-to-date period.~~first quarter of 2020. For the first ~~nine~~three months of ~~2019,~~2020, mortgage production was ~~$452.4~~$217.0 million, which was an increase of ~~29.9%~~130.7% from the comparable ~~2018~~2019 period. For the ~~nine~~three months ended ~~September 30, 2019, $205.0~~March 31, 2020, $102.1 million in mortgages were sold into the secondary market at a net margin of ~~2.7%~~1.3% as compared to ~~$162.7~~$39.4 million at a net margin of 2.7% in the comparable ~~2018~~2019 period. Included in mortgage banking income and the calculation of net margin noted above is a ~~$1.5~~$2.8 million loss and a ~~$0.6~~$0.3 million ~~gain~~loss from the fair value adjustments on loans held for sale, loan commitments and related derivatives for the ~~nine~~three months ended ~~September 30,~~March 31, 2020 and 2019, respectively. Such losses were a result of the extreme market volatility stemming from COVID-19, and ~~2018, respectively.~~as a result, sale margins were reduced due to lower values associated with loan commitments and the accompanying mortgage servicing rights.

~~Payment processing~~Debit card sponsorship income is a new revenue stream for Wesbanco acquired in the OLBK acquisition on November 22, 2019. The fees are earned from Wesbanco’s sponsorship of certain customers into various debit networks and are generated from the ~~bill payment and electronic funds transfer (“EFT”) services provided under~~total transactions processed on the ~~name FirstNet, which was acquired from FFKT on August 20, 2018. Payment processing fee~~debit networks. Debit sponsorship income was $0.7 million ~~and $2.1 million~~ for the quarter ~~and nine~~ended March 31, 2020. Wesbanco intends to reduce this program’s customer-related revenues over the next 12-18 months ~~ended September 30, 2019, respectively.~~for risk-related reasons.

Swap fee and valuation income decreased ~~$1.0~~$0.5 million or ~~160.8%~~127.6% for the ~~third~~first quarter of ~~2019 compared to the third quarter of 2018 and also decreased $0.8 million or 62.3% in the first nine months of 2019~~2020 compared to the first ~~nine months~~quarter of ~~2018~~2019 due to a decrease in the fair value of existing swaps resulting from the lower and inverted yield curve during ~~2019. The notional amount~~2020, slightly offset by an increased volume of ~~existing~~new loan swaps ~~was $315.7 million and $234.4 million as of September 30, 2019 and 2018, respectively.~~

~~Net securities gains increased $3.4 million~~ in the first ~~nine~~quarter of 2020. For the three months ended March 31, 2020, new swaps executed totaled $135.6 million resulting in $2.6 million of ~~2019~~fee income, compared to new swaps executed of $39.8 million resulting in $0.7 million of fee income for the same period of 2018, due to a gain of $2.6 million on the sale of WesBanco’s Visa Class B stock in the second quarter of 2019, which was held at a zero cost basis. WesBanco holds no additional shares of Visa Class B stock. Other gains contributing to the overall increase from 2018 are due to sales and calls of debt securities as well as higher marketthree months ended March 31, 2019. Fair value adjustments onfor the ~~deferred compensation portfolio.~~ three months ended March 31, 2020 and 2019 were ($2.8) million and ($0.3) million, respectively.

	For The Three Months Ended September 30,											For the Nine Months Ended September 30,										For The Three Months Ended March 31,
(unaudited, dollars in thousands)	2019			2018		$ Change			% Change			2019		2018		$ Change			% Change			2020			2019		$ Change			% Change
Salaries and wages	$	32,915		$	30,335	$	2,580			8.5		$	95,501	$	82,213	$	13,288			16.2		$	38,910		$	30,940	$	7,970			25.8
Employee benefits		9,726			7,905		1,821			23.0			29,419		22,782		6,637			29.1			10,373			9,989		384			3.8
Net occupancy		5,392			4,957		435			8.8			16,343		13,715		2,628			19.2			7,084			5,566		1,518			27.3
Equipment		5,273			4,488		785			17.5			14,924		12,532		2,392			19.1			6,039			4,833		1,206			25.0
Marketing		1,505			1,446		59			4.1			4,002		3,967		35			0.9			1,138			1,243		(105	)		(8.4	)
FDIC insurance		(1,221	)		789		(2,010	)		(254.8	)		1,287		2,315		(1,028	)		(44.4	)		2,113			1,353		760			56.2
Amortization of intangible assets		2,446			1,821		625			34.3			7,424		4,218		3,206			76.0			3,374			2,514		860			34.2
Restructuring and merger-related expenses		1,688			10,811		(9,123	)		(84.4	)		4,876		16,468		(11,592	)		(70.4	)		5,164			3,107		2,057			66.2
Franchise and other miscellaneous taxes		3,203			2,928		275			9.4			9,405		7,246		2,159			29.8			3,742			3,026		716			23.7
Consulting, regulatory, accounting and advisory fees		2,212			1,664		548			32.9			6,267		4,942		1,325			26.8			2,841			1,817		1,024			56.4
ATM and electronic banking interchange expenses		1,804			1,544		260			16.8			5,239		4,060		1,179			29.0			1,789			1,723		66			3.8
Postage and courier expenses		1,299			1,138		161			14.1			4,045		3,083		962			31.2			1,257			1,549		(292	)		(18.9	)
Legal fees		628			696		(68	)		(9.8	)		2,243		2,053		190			9.3			815			679		136			20.0
Communications		898			679		219			32.3			2,723		1,733		990			57.1			1,024			930		94			10.1
Supplies		1,055			828		227			27.4			3,301		2,293		1,008			44.0			1,217			1,140		77			6.8
Other real estate owned and foreclosure expenses		176			151		25			16.6			339		600		(261	)		(43.5	)		(65	)		12		(77	)		(641.7	)
Other		4,269			3,940		329			8.4			12,314		10,014		2,300			23.0			4,518			4,011		507			12.6
Total non-interest expense	$	73,268		$	76,120	$	(2,852	)		(3.7	)	$	219,652	$	194,234	$	25,418			13.1		$	91,333		$	74,432	$	16,901			22.7

Non-interest expense in the ~~third~~first quarter of ~~2019 decreased $2.9~~2020 increased $16.9 million or ~~3.7%~~22.7% compared to the same quarter in ~~2018.~~2019, principally due to the OLBK acquisition, which increased assets by $3.0 billion, excluding goodwill, and added 37 offices to our branch network. In the first three months of 2020, there were $5.2 million of merger-related expenses for the OLBK acquisition, as compared to $3.1 million in the first quarter of 2019 for the FFKT acquisition. Excluding merger-related expenses, non-interest expense increased ~~$6.3~~$14.8 million or 9.6%, primarily due to the FFKT acquisition. For the third quarter, salaries and wages increased $2.6 million, employee benefits increased $1.8 million, equipment increased $0.8 million and amortization of intangible assets increased $0.6 million, offset by a decrease of $2.0 million in FDIC insurance and $9.1 million in restructuring and merger-related expenses. For the nine months ended September 30, 2019, non-interest expense increased $25.4 million or 13.1%20.8% from the first ~~nine months~~quarter of ~~2018 for similar reasons as for~~2019 to the ~~three months ended.~~first quarter of 2020.

Salaries and wages increased ~~$2.6~~$8.0 million or ~~8.5%~~25.8% from the ~~third~~first quarter of ~~2018~~2019 due to increased compensation expense related to an increase in full-time equivalent (“FTE”) employees from the ~~FFKT~~OLBK acquisition and from annual merit increases in ~~the second quarter of 2019.~~mid-2019. Employee benefits expense increased ~~$1.8~~$0.4 million compared to the ~~third~~first quarter of ~~2018,~~2019, due to ~~a $3.3 million~~an increase in health care ~~costs.~~costs, and was slightly offset by a $1.3 million market adjustment in the first quarter of 2020 on the underlying investments of the deferred compensation plan, for which a corresponding entry was recorded in net securities gains (losses).

Net occupancy increased $1.5 million or 27.3% from the first quarter of 2019, principally due to increased building related costs including utilities, lease expense, depreciation, repairs and other seasonal maintenance costs, mostly from the acquired retail branches, as well as normal building maintenance and repair costs of the legacy branch network and other infrastructure needs.

Equipment costs increased ~~$0.8~~$1.2 million or ~~17.5%~~25.0% compared to the ~~third~~first quarter of ~~2018,~~2019, due to the OLBK acquisition and increases in service agreements expense from continuous improvements in technology and communication infrastructure, software costs and origination and customer support ~~centers combined with the FFKT acquisition.~~centers.

FDIC insurance ~~expense decreased $2.0~~increased $0.8 million inor 56.2% compared to the ~~third~~first quarter of 2019, ~~as compared~~due to the third quarter of 2018 and totaled an overall credit of ($1.2) million for the third quarter of 2019. During September, the banking industry was notified by the FDIC that its deposit insurance fund (“DIF”) reached the required minimum reserve ratio of 1.38%, permitting the FDIC to offset current bank assessments with prior credits from 2016 through 2018 earned by banks with less than $10 billion in assets during that time period. WesBanco recorded a credit of $2.4 million from WesBanco’s total DIF credit of $3.1 million, covering the FDIC insurance expense assessable at approximately $1.2 million per quarter for the second and third quarters. The remaining credit of $0.7 million is anticipated to be recordedgrowth in the ~~fourth quarter.~~Bank’s balance sheet primarily from the OLBK acquisition in November 2019, which caused the assessment base to increase.

Amortization of intangible assets increased ~~$0.6~~$0.9 million or ~~34.3%~~34.2% compared to the ~~third~~first quarter of ~~2018.~~2019. The ~~FFKT~~OLBK acquisition added approximately ~~$37.4~~$32.9 million in core deposit ~~intangibles~~intangibles. The final core deposit intangible valuation for OLBK was received in the first quarter, of which the intangible asset and ~~$2.6 million in trust customer relationship intangibles.~~related amortization was trued-up from the estimate previously utilized as of December 31, 2019.

~~Merger-related~~Restructuring and merger-related expenses in the ~~third~~first quarter of ~~2019~~2020 totaled ~~$1.7~~$5.2 million, all of which were related to the OLBK acquisition that ~~is anticipated to close~~closed in the fourth quarter of ~~2019,~~2019. The merger related expenses included $2.2 million in change in control payments, $1.2 million in non-refundable one-time conversion costs, $0.9 million in severance and ~~decreased $9.1~~retention costs, $0.6 million in contract termination costs and $0.3 million in miscellaneous accounting and valuation fees.

Consulting, regulatory, accounting and advisory fees increased $1.0 million or 56.4% from the ~~third~~first quarter of ~~2018 during which~~2019 due to increased swap clearing expense, from a higher volume of cleared swaps in the ~~FFKT acquisition closed.~~first quarter of 2020 compared to same period of 2019, as well as increased underwriting and processing fees from a higher volume of mortgage originations in the current period.

The provision for income taxes ~~increased $1.8~~decreased $5.2 million or ~~27.9%~~59.1% in the ~~third~~first quarter of ~~2019~~2020 compared to the ~~third~~first quarter of ~~2018,~~2019, primarily due to a ~~$6.7~~$22.2 million or ~~17.1% increase~~45.1% decrease in pre-tax income. The effective tax rate ~~increased~~decreased to ~~18.2%~~13.4% compared to ~~16.7%~~18.0% in the ~~third~~first quarter of ~~2018. For~~

2019. The decrease in the ~~nine months ended September 30, 2019, the provision for income taxes increased $6.4 million or 30.9% as compared to the prior year period. The~~ effective tax rate was also due to the establishment of Maryland deferred taxes as well as a carryback claim as a result of the acquisition of OLBK. Wesbanco expects the effective tax rate to be approximately 17.0 – 17.5% for the ~~first nine months~~remainder of ~~2019 was 18.2% compared to 17.4% in the prior year period.~~2020.

Total assets and ~~shareholders’ equity~~deposits increased ~~1.1%~~1.8% and ~~6.2%~~0.4%, respectively, while ~~deposits~~shareholders’ equity decreased ~~1.9%~~0.3%, compared to December 31, ~~2018.~~2019. Total securities decreased ~~$73.1~~$170.2 million or ~~2.3%~~5.2% from December 31, ~~2018~~2019 to ~~September 30, 2019,~~March 31, 2020, primarily driven by the sale ~~of lower yielding municipal securities and prepayments~~ of mortgage-backed securities and collateralized mortgage obligations, ~~which were~~at a net gain of $2.1 million, to provide for additional liquidity related to potential COVID-19 requirements. The securities’ decrease was partially offset by a ~~$60.0~~$52.0 million increase in unrealized gains in the available-for-sale portfolio. Total portfolio loans increased ~~$100.5~~$81.6 million or ~~1.3%~~0.8%. Deposits ~~decreased $167.3~~increased $39.3 million from year-end resulting from ~~a 12.4%~~increases of 2.6%, 1.5%, and ~~a 5.0% decrease~~1.4% in ~~certificates of deposit~~savings deposits, demand deposits, and money market deposits, respectively, which were partially offset by a ~~3.2% and a 0.4%~~5.7% decrease in certificates of deposit. The increase in ~~savings~~transactional account balances is primarily attributable to marketing, customer incentives, focused retail and ~~demand~~business strategies to obtain more account relationships and customers’ preferences for shorter-term maturities, coupled with deposits ~~respectively.~~from 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 in certificates of deposit is a result of periodically offering lower than median competitive rates for maturing certificates of deposit, primarily for single-service customers, and customer preferences for other deposit types, ~~coupled with~~which was partially offset by a ~~$14.0~~$17.0 million ~~decrease~~increase in CDARS® balances. The increase in demand deposits and savings deposits is primarily attributable to marketing, customer incentives, focused retail and business strategies to obtain more account relationships and customers’ preferences for shorter-term maturities. Total borrowings increased ~~7.1%~~11.3% or ~~$108.4~~$213.7 million during the first ~~nine~~three months of ~~2019~~2020 as new FHLB borrowings exceeded maturities by ~~$106.9~~$170.0 million and other short-term borrowings increased ~~$29.1~~$51.6 million to build additional balance sheet liquidity. These increases were partially offset by $6.7 million of junior subordinated debentures, acquired from OLBH, which were redeemed during the first three months of 2020. Total shareholders’ equity decreased approximately $7.9 million or 0.3%, compared to December 31, 2019, primarily due to the retained earnings effect of ASU 2016-13 adoption totaling $26.6 million and share repurchase activity totaling $25.0 million, which were partially offset by $33.2 million of junior subordinated debentures redeemed during the first nine months of 2019. Total shareholders’ equity increased approximately $122.4 million or 6.2%, compared to December 31, 2018, primarily due to net income exceeding dividends for the period by ~~$71.8~~$2.0 million and a ~~$47.8~~$39.9 million other comprehensive income gain.

	September 30,			December 31,									March 31,			December 31,
(unaudited, dollars in thousands)	2019			2018			$ Change			% Change			2020			2019			Change ($)			Change (%)
Equity securities (at fair value)	$	11,644		$	11,737		$	(93	)		(0.8	)	$	11,230		$	12,343		$	(1,113	)		(9.0	)
Available-for-sale debt securities (at fair value)
U.S. Treasury		29,878			19,878			10,000			50.3			21,508			32,836			(11,328	)		(34.5	)
U.S. Government sponsored entities and agencies		120,441			141,652			(21,211	)		(15.0	)		159,379			159,628			(249	)		(0.2	)
Residential mortgage-backed securities and collateralized mortgage obligations of government sponsored entities and agencies		1,681,065			1,561,255			119,810			7.7			1,671,469			1,815,987			(144,518	)		(8.0	)
Commercial mortgage-backed securities and collateralized mortgage obligations of government sponsored entities and agencies		188,305			168,972			19,333			11.4			223,827			190,409			33,418			17.6
Obligations of states and political subdivisions		151,363			185,114			(33,751	)		(18.2	)		141,573			145,609			(4,036	)		(2.8	)
Corporate debt securities		38,147			37,258			889			2.4			44,326			49,089			(4,763	)		(9.7	)
Total available-for-sale debt securities	$	2,209,199		$	2,114,129		$	95,070			4.5		$	2,262,082		$	2,393,558		$	(131,476	)		(5.5	)
Held-to-maturity debt securities (at amortized cost)
U.S. Government sponsored entities and agencies	$	9,854		$	10,823		$	(969	)		(9.0	)	$	9,041		$	9,216		$	(175	)		(1.9	)
Residential mortgage-backed securities and collateralized mortgage obligations of government sponsored entities and agencies		129,797			148,300			(18,503	)		(12.5	)		116,214			122,937			(6,723	)		(5.5	)
Obligations of states and political subdivisions		679,932			828,520			(148,588	)		(17.9	)		655,952			686,376			(30,424	)		(4.4	)
Corporate debt securities		33,241			33,291			(50	)		(0.2	)		33,207			33,224			(17	)		(0.1	)
Total held-to-maturity debt securities		852,824			1,020,934			(168,110	)		(16.5	)		814,414			851,753			(37,339	)		(4.4	)
Total securities	$	3,073,667		$	3,146,800		$	(73,133	)		(2.3	)	$	3,087,726		$	3,257,654		$	(169,928	)		(5.2	)
Available-for-sale and equity securities:
Weighted average yield at the respective period end ⁽²⁾		2.71	%		2.78	%								2.66	%		2.67	%
As a % of total securities		72.3	%		67.6	%								73.6	%		73.9	%
Weighted average life (in years)		4.0			5.0									4.1			4.1
Held-to-maturity securities:
Weighted average yield at the respective period end ⁽²⁾		3.53	%		3.47	%								3.48	%		3.51	%
As a % of total securities		27.7	%		32.4	%								26.4	%		26.1	%
Weighted average life (in years)		3.6			4.6									3.6			3.8
Total securities:
Weighted average yield at the respective period end ⁽²⁾		2.94	%		3.00	%								2.88	%		2.89	%
As a % of total securities		100.0	%		100.0	%								100.0	%		100.0	%
Weighted average life (in years)		3.9			4.2									3.9			4.0

⁽¹⁾ ~~At September 30, 2019 and December 31, 2018, 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~~

⁽²⁾ ~~Weighted average yields have been calculated on a taxable-equivalent basis using the federal statutory tax rate of 21%.~~44

Total investment securities, which are a source of liquidity for ~~WesBanco~~Wesbanco as well as a contributor to interest income, decreased ~~$73.1~~$169.9 million or ~~2.3%~~5.2% from December 31, ~~2018~~2019 to ~~September 30, 2019.~~March 31, 2020. Through the first ~~nine~~three months of ~~2019,~~2020, the available-for-sale portfolio ~~increased $95.1~~decreased $131.5 million or ~~4.5%,~~5.5% due to the sale of residential mortgage-backed securities at the end of the first quarter to take advantage of market opportunities and to free up cash for COVID-19 related needs, such as larger commercial or home equity line withdrawals, while the held-to-maturity portfolio decreased ~~$168.1~~$37.3 million or ~~16.5%~~4.4% due to calls of municipal securities in the current lower rate environment and the transfer of $67.4 million of held-to-maturity callable municipal securities to available-for-sale, with the adoption of ASU 2017-12 on January 1, 2019. WesBanco elected to use the one-time transition election to transfer these securities as they were some of the lower yielding securities in the municipal portfolio, and subsequently sold $66.1 million of these securities at a $51 thousand net gain.environment. The weighted average yield of the portfolio decreased by 61 basis ~~points~~point from ~~3.00%~~2.89% at December 31, ~~2018~~2019 to ~~2.94%~~2.88% at ~~September 30, 2019,~~March 31, 2020, primarily due to increased prepayment speeds on mortgage-backed securities as market rates declined in the ~~second~~first quarter, and ~~third quarters. During~~ the ~~second quarter of 2019, WesBanco recorded~~noted sales at a ~~$2.6 million gain on the sale of its Visa class B stock, which was held at zero cost basis. WesBanco holds no additional shares of Visa class B stock.~~net gain.

Net unrealized gains ~~(losses)~~ on available-for-sale securities included in accumulated other comprehensive income, net of tax, as of ~~September 30, 2019~~March 31, 2020 and December 31, ~~2018~~2019 were ~~$24.7~~$58.0 million and ~~($21.5)~~$20.7 million, respectively. The net unrealized pre-tax gains 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 gains in the held-to-maturity portfolio, which are not accounted for in the other comprehensive income, were $26.7 million at March 31, 2020, compared to $22.8 at December 31, 2019. With approximately ~~28%~~26% 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 (loss) as if the entire portfolio were included in the ~~category available-for-sale.~~available-for-sale category. The increase in unrealized gains from year-end are due to the significant decrease in market rates and the shape of the yield curve throughout the first quarter resulting from COVID-19 and the federal funds rate decreases. Volatility in the municipal and corporate bond markets mitigated the overall increase in unrealized gains for those sectors of the portfolio.

Net realized securities gains increased $0.8 million, or 126.9% from the first quarter of 2019 due to the sale of approximately $218 million of securities in March 2020 in order to take advantage of market opportunities and create additional liquidity. Such gains were partially offset by a negative $1.3 million market adjustment in the deferred compensation plan.

Equity securities, of which a portion consist 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.

~~WesBanco’s~~On January 1, 2020, Wesbanco adopted ASU 2016-13 (Topic 326), Measurement of Credit Losses on Financial Instruments. Upon adoption, the Company recognized $0.2 million to opening retained earnings, which represents the CECL allowance as of January 1, 2020. 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 historical 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. 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 economic or governmental policies that could affect this assumption.

Wesbanco’s municipal portfolio comprises ~~27.0%~~25.8% of the overall securities portfolio as of ~~September 30, 2019~~March 31, 2020 compared to ~~32.2%~~25.5% as of December 31, ~~2018,~~2019, and it carries different risks that are not as prevalent in other security types contained in the portfolio. The following table presents the allocation of the individual bonds in the municipal bond portfolio based on the combined ratings of two major bond credit rating agencies (at fair value):

	September 30, 2019				December 31, 2018				March 31, 2020				December 31, 2019
(unaudited, dollars in thousands)	Amount		% of Total		Amount		% of Total		Amount		% of Total		Amount		% of Total
Municipal bonds (at fair value) ⁽¹⁾:
Investment Grade - Prime	$	85,652		10.0	$	101,557		10.0
Investment Grade - High		562,212		65.9		654,787		64.3
Investment Grade – Prime									$	72,695		8.9	$	78,730		9.2
Investment Grade – High										555,862		67.9		569,085		66.7
Investment Grade - Upper Medium		192,575		22.6		237,847		23.4		177,783		21.7		190,696		22.4
Investment Grade - Lower Medium		3,695		0.4		7,607		0.7		3,053		0.4		3,042		0.4
Non-Investment Grade – Speculative												—		638		0.1
Not rated by either agency		9,235		1.1		16,595		1.6		9,291		1.1		10,011		1.2
Total municipal bond portfolio	$	853,369		100.0	$	1,018,393		100.0	$	818,684		100.0	$	852,202		100.0

⁽¹⁾~~The lowest available rating was used when placing the bond into a category in the table.~~

⁽²⁾ ~~As of September 30, 2019 and December 31, 2018, there are no securities in the municipal portfolio rated below investment grade.~~

~~WesBanco’s~~Wesbanco’s municipal bond portfolio at ~~September 30, 2019~~March 31, 2020 consists of ~~$180.0~~$164.8 million taxable (primarily Build America Bonds) and ~~$673.4~~$653.8 million of tax-exempt general obligation and revenue bonds. The following table presents additional information regarding the municipal bond type and issuer (at fair value):

	September 30, 2019				December 31, 2018				March 31, 2020				December 31, 2019
(unaudited, dollars in thousands)	Amount		% of Total		Amount		% of Total		Amount		% of Total		Amount		% of Total
Municipal bond type:
General Obligation	$	580,374		68.0	$	690,463		67.8	$	563,294		68.8	$	581,105		68.2
Revenue		272,995		32.0		327,930		32.2		255,390		31.2		271,097		31.8
Total municipal bond portfolio	$	853,369		100.0	$	1,018,393		100.0	$	818,684		100.0	$	852,202		100.0
Municipal bond issuer:
State Issued	$	81,067		9.5	$	98,468		9.7	$	72,392		8.8	$	76,228		8.9
Local Issued		772,302		90.5		919,925		90.3		746,292		91.2		775,974		91.1
Total municipal bond portfolio	$	853,369		100.0	$	1,018,393		100.0	$	818,684		100.0	$	852,202		100.0

~~WesBanco’s~~Wesbanco’s municipal bond portfolio is broadly spread across the United States. The following table presents the top five states of municipal bond concentration based on total fair value at ~~September 30, 2019:~~March 31, 2020:

	September 30, 2019				March 31, 2020
(unaudited, dollars in thousands)	Fair Value		% of Total		Fair Value		% of Total
Pennsylvania	$	176,360		20.7	$	185,308		22.6
Ohio		98,140		11.5		92,187		11.3
Texas		85,178		10.0		71,410		8.7
Kentucky		45,389		5.3		43,592		5.3
Illinois		41,159		4.8
West Virginia						37,031		4.5
All other states ⁽¹⁾		407,143		47.7		389,156		47.6
Total municipal bond portfolio	$	853,369		100.0	$	818,684		100.0

⁽¹⁾ ~~WesBanco’s municipal bond portfolio contains obligations in the State of West Virginia totaling $37.7 million or 4.4% of the total municipal portfolio.~~

~~WesBanco~~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~~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~~Wesbanco’s securities. For additional disclosure relating to fair value measurements, refer to Note 9,8, “Fair Value Measurement” in the Consolidated Financial Statements.

Loans represent ~~WesBanco’s~~Wesbanco’s single largest balance sheet asset classification and the largest source of interest income. Business purpose loans consist of commercial real estate (“CRE”) loans and other commercial and industrial (“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 their impact on the Bank’s earnings and capital.

Over the last year, Wesbanco has been transitioning to a more objective internal loan grading system to reflect the credit quality of commercial loans. 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.

	September 30, 2019				December 31, 2018				March 31, 2020				December 31, 2019
(unaudited, dollars in thousands)	Amount		% of Loans		Amount		% of Loans		Amount		% of Loans		Amount		% of Loans
Commercial real estate:
Land and construction	$	510,404		6.6	$	528,072		6.9	$	676,726		6.5	$	777,151		7.5
Improved property		3,344,249		43.0		3,325,623		43.4		4,927,679		47.4		4,947,857		48.0
Total commercial real estate		3,854,653		49.6		3,853,695		50.3		5,604,405		53.9		5,725,008		55.5
Commercial and industrial		1,332,275		17.1		1,265,460		16.5		1,801,751		17.3		1,644,699		16.0
Residential real estate		1,638,574		21.1		1,611,607		21.0		1,929,590		18.6		1,873,647		18.2
Home equity		587,745		7.5		599,331		7.8		650,754		6.2		649,678		6.3
Consumer		343,505		4.4		326,188		4.3		363,096		3.5		374,953		3.6
Total portfolio loans		7,756,752		99.7		7,656,281		99.9		10,349,596		99.5		10,267,985		99.6
Loans held for sale		20,715		0.3		8,994		0.1		48,021		0.5		43,013		0.4
Total loans	$	7,777,467		100.0	$	7,665,275		100.0	$	10,397,617		100.0	$	10,310,998		100.0

Total loans increased ~~$112.2~~$86.6 million or ~~1.5%~~0.8% from December 31, ~~2018~~2019, while portfolio loans increased ~~$30.3 million~~$2.7 billion or ~~0.4%~~35.0% over the last twelve months. ~~Total~~While most of the loan growth was due to the acquisition of OLBK in November 2019, totaling $2.5 billion, the organic loan growth over the last twelve months was driven by strategic focus categories with ~~3.1%~~2.4% organic growth in commercial real estate and ~~industrial and 2.5%~~4.2% organic growth in residential real estate. ~~Home~~There was no growth in home equity organic loan balances ~~were down~~ due to lower demand as a result of higher interest rates earlier in 2019 and tax changes. ~~Commercial real estate decreased due to elevated levels of~~Organic commercial ~~real estate~~and industrial loans ~~that moved to~~increased 4.8% over the ~~secondary financing market, and continued deleveraging by commercial customers reflective of the current operational environment and higher cash levels from tax reform.~~last twelve months.

Total loan commitments of ~~$2.7~~$3.2 billion, including loans approved but not closed, ~~increased $257.7~~decreased $13.5 million or ~~10.7%~~0.4% from December 31, ~~2018~~2019 due primarily to ~~loans approved but not closed and~~a decrease in lines of credit. The line utilization percentage for the commercial portfolio was ~~44.6%~~44.3% at ~~September 30, 2019 and 47.6% at~~March 31, 2020 compared to 44.5% as of December 31, ~~2018.~~2019.

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.

During the first quarter of 2020, Wesbanco sold $36.7 million of certain under-performing loans acquired from OLBK. The majority of these loans settled by March 31, 2020; however, $8.9 million settled in April 2020, and therefore they were classified as loans held for sale as of March 31, 2020.

Wesbanco is participating in the PPP loan program as established by the CARES Act. Starting April 3 through May 4, 2020, the Company has approved more than 5,900 loans totaling approximately $840 million to qualifying small businesses, non-profits and organizations throughout our six-state market.

	March 31, 2020
	CRE Land and Construction				CRE Improved Investment				CRE Improved Owner Occupied
(unaudited, in thousands)	Loan Balance		Loan Commitment		Loan Balance		Loan Commitment		Loan Balance		Loan Commitment		Total Exposure		Largest Loan (1)		% of Capital (2)
Land	$	195,993	$	132,431	$	45,055	$	3,665	$	5,333	$	59	$	382,536	$	23,963		25.5
1-to-4 family		67,385		52,133		404,181		14,143		15,550		352		553,744		26,415		36.9
Multi-family		196,092		279,357		426,601		13,445		—		—		915,495		37,238		61.1
Retail		33,101		17,702		560,794		19,396		123,956		2,377		757,326		13,991		50.5
Office		30,229		33,598		467,731		13,841		196,850		3,285		745,534		30,000		49.7
Industrial		7,225		10,935		218,008		2,995		196,126		3,627		438,916		10,844		29.3
Lodging		24,476		24,451		633,083		10,578		14,392		359		707,339		25,000		47.2
Senior living		9,514		86,407		64,374		60		76,892		1,330		238,577		32,000		15.9
Hospital		3,871		4,894		3,311		—		42,813		12		54,901		15,202		3.7
Self-storage		11,958		5,196		11,061		9		3,512		31		31,767		5,425		2.1
Eating place		450		-		51,043		16,754		44,869		646		113,762		17,400		7.6
Gas station		500		1,250		17,290		—		71,521		332		90,893		6,510		6.1
Recreational		2,661		2,883		12,595		—		28,239		442		46,820		5,097		3.1
Dormitory		—		—		36,299		33		23,310		—		59,642		23,150		4.0
House of worship		1,673		—		2,425		1,335		35,946		990		42,369		3,452		2.8
Other special use		3,789		3,334		17,653		260		62,333		13,676		101,045		13,565		6.7
Mixed use		31,606		20,959		302,006		12,839		157,573		9,972		534,955		24,867		35.7
Unclassified		56,203		26,945		441,194		58,044		113,760		3,715		699,861		23,520		46.7
Total	$	676,726	$	702,475	$	3,714,704	$	167,397	$	1,212,975	$	41,205	$	6,515,482	$	37,238		434.6

Multi-family apartments represents the single largest category of CRE. Including construction loans, multi-family apartment exposure decreased $46.2 million or 4.8% as of March 31, 2020 compared to December 31, 2019. The exposure represents 61.1% of total risk-based capital as of March 31, 2020 compared to 64.2% as of December 31, 2019.

Retail represents the second largest category of CRE with total exposure of $757.3 million as of March 31, 2020. Retail exposure increased $10.9 million or 1.5% compared to December 31, 2019. This category represents 50.5% of total risk-based capital as of March 31, 2020 compared to 49.8% as of December 31, 2019.

Office buildings represent the third largest category of CRE with total exposure of $745.5 million as of March 31, 2020. Office building exposure decreased $42.6 million or 5.4% compared to December 31, 2019. This category represents 49.7% of total risk-based capital compared to 52.6% as of December 31, 2019.

Lodging represents the fourth largest category of CRE with total exposure of $707.3 million as of March 31, 2020. Lodging exposure decreased $49.1 million or 6.5% compared to December 31, 2019. This category represents 47.2% of total risk-based capital compared to 50.5% as of December 31, 2019.

	March 31, 2020
	C&I				CRE Improved Owner Occupied Property
(unaudited, in thousands)	Loan Balance		Loan Commitment		Loan Balance		Loan Commitment		Total Exposure		Largest Loan (1)		% of Capital (2)
Agriculture and farming	$	8,550	$	5,347	$	994	$	1	$	14,892	$	2,500		1.0
Energy—oil and gas		7,082		14,263		13,367		38		34,750		5,000		2.3
Energy—mining and utilities		46,172		17,030		1,834		—		65,036		11,235		4.3
Construction—general		87,238		77,674		22,189		8,927		196,028		9,926		13.1
Construction—trades		126,927		83,297		40,086		1,854		252,164		17,500		16.8
Manufacturing—primary metals		20,659		29,067		4,182		175		54,083		29,700		3.6
Manufacturing—other		153,059		86,715		48,902		2,448		291,124		26,750		19.4
Wholesale and distribution		117,841		51,171		36,706		580		206,298		30,000		13.8
Retail—automobile dealers		49,375		22,379		36,383		1,983		110,120		8,500		7.3
Retail—other sales		65,263		62,099		119,944		2,903		250,209		10,000		16.7
Transportation and warehousing		43,591		27,678		38,116		891		110,276		13,565		7.4
Information and communications		9,717		2,501		1,715		—		13,933		2,076		0.9
Finance and insurance		73,778		73,210		7,638		50		154,676		15,000		10.3
Equipment leasing		56,382		45,106		10,816		58		112,362		11,355		7.5
Services—real estate		172,373		112,635		251,568		5,108		541,684		11,638		36.1
Services—business and professional		141,108		92,778		45,941		479		280,306		18,713		18.7
Services—personal and other		53,917		17,993		58,270		7,366		137,546		21,555		9.2
Schools and education services		94,732		10,395		25,257		227		130,611		17,441		8.7
Healthcare—medical practitioners		44,237		30,616		63,046		454		138,353		15,971		9.2
Healthcare—hospitals and other		73,233		35,956		148,379		3,289		260,857		30,586		17.4
Entertainment and recreation		10,147		3,653		28,918		1,171		43,889		5,097		2.9
Restaurants and lodging		82,442		23,424		105,874		1,050		212,790		23,150		14.2
Religious organizations		47,559		21,219		61,872		1,106		131,756		15,000		8.8
Government		116,065		58,118		11,078		398		185,659		36,371		12.4
Unclassified		100,304		113,737		29,900		649		244,590		7,500		16.3
Total	$	1,801,751	$	1,118,061	$	1,212,975	$	41,205	$	4,173,992	$	36,371		278.4

All of the services sectors combined represent the largest industry exposure at $956.1 million or 63.7% of total risk-based capital; however these sectors include a wide variety of service-providing businesses. Combined exposure to the service sectors decreased $128.1 million or 11.8% compared to December 31, 2019. Lessors of non-residential buildings is the single largest industry group exposure in the services sector.

The construction sectors combined represent the second largest industry exposure at $447.4 million or 29.9% of risk-based capital. Combined exposure increased $145.6 million or 48.3% compared to December 31, 2019. Specialty trade contracts is the single largest industry group in the construction sector.

The healthcare sectors combined represent the third largest industry exposure at $397.9 million or 26.5% of risk-based capital. Combined exposure increased $45.3 million or 12.8% compared to December 31, 2019. Nursing and residential care represents the largest industry group in the healthcare sector.

The retail sectors combined represent the fourth largest industry exposure at $363.4 million or 24.2% of risk-based capital. Combined exposure increased $11.8 million or 3.4% compared to December 31, 2019. Gasoline stations is the single largest industry group in the retail sector.

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.

(unaudited, dollars in thousands)	September 30, 2019			December 31, 2018			March 31, 2020			December 31, 2019
Non-accrual loans:
Commercial real estate - land and construction	$	554		$	—		$	205		$	580
Commercial real estate - improved property		12,036			8,413			8,151			6,815
Commercial and industrial		2,374			3,260			2,655			14,313
Residential real estate		14,171			13,831			17,376			16,867
Home equity		5,299			4,610			5,643			5,903
Consumer		367			586			337			435
Total non-accrual loans ⁽¹⁾		34,801			30,700			34,367			44,913
TDRs accruing interest:
Commercial real estate - land and construction		—			—			—			—
Commercial real estate - improved property		1,334			880			1,253			1,321
Commercial and industrial		185			168			172			191
Residential real estate		3,794			4,185			3,611			3,477
Home equity		477			426			369			411
Consumer		50			85			29			31
Total TDRs accruing interest ⁽¹⁾		5,840			5,744			5,434			5,431
Total non-performing loans	$	40,641		$	36,444		$	39,801		$	50,344
Other real estate owned and repossessed assets		3,678			7,265			1,083			4,178
Total non-performing assets	$	44,319		$	43,709		$	40,884		$	54,522
Non-performing loans/total portfolio loans		0.52	%		0.48	%		0.38	%		0.49	%
Non-performing assets/total assets		0.35	%		0.35	%		0.26	%		0.35	%
Non-performing assets/total portfolio loans, other real estate and repossessed assets		0.57	%		0.57	%		0.39	%		0.53	%

⁽¹⁾ ~~TDRs on nonaccrual of $1.3 million and $2.9 million at September 30, 2019 and December 31, 2018, respectively, are included in total nonaccrual~~

Non-performing loans, which consist of non-accrual loans and TDRs, ~~increased $4.2~~decreased $10.5 million or ~~11.5%~~20.9%, from December 31, ~~2018,~~2019, primarily due to ~~WesBanco’s normal loan review process transferring two relationships in our acquired portfolio~~one non-accrual relationship paying off a $10.8 million loan. TDRs balances have remained constant from December 31, 2019 to ~~non-accrual. TDRs increased slightly by $0.1 million due to additions to the category being slightly higher than normal repayments.~~March 31, 2020. (Please see the Notes to the Consolidated Financial Statements for additional discussion.)

Other real estate owned and repossessed assets decreased ~~$3.6~~$3.1 million from December 31, ~~2018~~2019 primarily due to the disposition of one commercial property and continued efforts to liquidate ~~properties as well as additional write-downs on other real estate owned properties acquired from FFKT.~~properties.

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

(unaudited, dollars in thousands)	September 30, 2019			December 31, 2018			March 31, 2020			December 31, 2019
Loans past due 90 days or more:
Commercial real estate - land and construction	$	834		$	—		$	804		$	26
Commercial real estate - improved property		935			175			5,589			4,709
Commercial and industrial		229			13			2,623			1,793
Residential real estate		2,724			2,820			3,583			3,643
Home equity		420			705			894			985
Consumer		283			364			794			457
Total loans past due 90 days or more		5,425			4,077			14,287			11,613
Loans past due 30 to 89 days:
Commercial real estate - land and construction		211			1,412			1,470			650
Commercial real estate - improved property		5,728			4,439			13,244			15,256
Commercial and industrial		838			878			5,268			5,312
Residential real estate		6,073			6,542			6,378			8,183
Home equity		2,664			3,344			3,392			3,558
Consumer		2,392			2,954			3,053			3,371
Total loans past due 30 to 89 days		17,906			19,569			32,805			36,330
Total 30 days or more	$	23,331		$	23,646		$	47,092		$	47,943
Loans past due 90 days or more and accruing to total portfolio loans		0.07	%		0.05	%		0.14	%		0.11	%
Loans past due 30-89 days and accruing to total portfolio loans		0.23	%		0.26	%		0.32	%		0.35	%

Loans past due 30 days or more and accruing interest excluding non-accruals and TDRs decreased ~~$0.3~~$0.9 million or ~~1.3%~~1.8% from December 31, ~~2018.~~2019. These loans continue to accrue interest because they are both well-secured and in the process of collection. The decrease in the 30 to 89 days past due status was primarily due to a decrease in commercial real estate – ~~land~~improved property and ~~construction, home equity and consumer.~~residential real estate. These decreases were partially offset by an increase in commercial real estate – ~~improved property category.~~land and construction. The 30 – 89 days past due represented ~~0.23%~~0.32% of total loans at ~~September 30, 2019~~March 31, 2020 and ~~0.26%~~0.35% at December 31, ~~2018.~~2019. Loans past due 90 days or more increased ~~$1.3~~$2.7 million compared to December 31, ~~2018~~2019 and represented ~~0.07%~~0.14% of total loans at ~~September 30, 2019~~March 31, 2020 compared to ~~0.05%~~0.11% at December 31, ~~2018.~~2019. The continued low levels of delinquency are the result of management’s continued focus on sound initial underwriting, timely collection of loans at their earliest stage of delinquency, stable unemployment and generally improved economic conditions. The current pandemic is expected to result in increased delinquencies and non-performing loans later in 2020. 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 non-performing TDRs, or past due.

On January 1, 2020, Wesbanco adopted CECL, which resulted in a $41.4 million increase to the allowance for credit losses. Of the $41.4 million, $38.4 million related to the loan portfolio and $3.0 million relate to loan commitments. The effect on retained earnings (tax-effected) was $26.6 million.

As of March 31, 2020, the allowance for credit losses was $119.8 million of which $114.3 relates to loans and $5.6 million relates to loan commitments. The allowance for credit losses – loans is 1.10% of total portfolio loans as of March 31, 2020 compared to 0.51% as of December 31, 2019 when the allowance for loan losses (prior to the adoption of CECL) was $52.4 million.

The allowance for ~~loan~~credit losses of $54.3 million represented 0.70% of total portfolio loans at September 30, 2019 compared to 0.64% as of December 31, 2018 and 0.63% as of September 30, 2018. Included in the ratio is an allowance for acquired loans of $5.3 million at September 30, 2019, recorded since acquisition.

~~The allowance for~~- loans individually-evaluated increased ~~$1.5~~$6.6 million from December 31, ~~2018~~2019 to ~~September 30, 2019.~~March 31, 2020 due to PCD loans acquired from the OLBK acquisition; however, since these were PCD loans there was no effect on the provision for credit losses. The allowance for loans collectively-evaluated increased from December 31, ~~2018~~2019 to ~~September 30, 2019~~March 31, 2020 by ~~$3.9 million.~~$55.2 million which includes $31.7 million related the adoption of CECL as of January 1, 2020.

The allowance for credit losses - loan commitments was ~~$1.6~~$5.6 million at ~~September 30, 2019~~March 31, 2020 as compared to ~~$0.7~~$0.9 million atas of December 31, ~~2018,~~2019, and is included in other liabilities on the Consolidated Balance Sheets. The ~~increase in the~~ allowance for credit losses - loan commitments ~~is due~~includes a $3.0 million adjustment related to ~~one unfunded commitment~~the adoption of ~~$7.5 million with a credit relationship that was downgraded to classified status in the first quarter.~~CECL as of January 1, 2020.

The allowance for credit losses by loan category, presented in Note 5, “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 ~~all segments~~credit losses under CECL is ~~impacted by changes in loan balances,~~calculated utilizing the PD / LGD, which is then discounted. 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 ~~historical loss rates adjusted for qualitative factors such~~prepayment speeds, loan risk grades, portfolio mix, concentrations and loan growth. For the calculation as of March 31, 2020, the forecast was based upon nationally-recognized published economic ~~conditions. The CRE~~data through March 31, 2020, and ~~C&I segments~~is primarily driven by the national unemployment and interest rate spread forecasts. At quarter-end, national unemployment was projected to peak at 8.7%, and subsequently decreases to an average of 6.5% over the remainder of the ~~portfolio are also~~forecast period. The macroeconomic factors and other model adjustments caused the allowance to increase $29.9 million from January 1, 2020 to March 31, 2020, net of management’s judgment. The quantitative results were adjusted downward due to the unusual level of governmental assistance provided to those individuals, businesses, non-profit organizations and other institutions impacted by ~~changes~~the sudden downturn in the ~~risk grading distribution of~~economy affected by the ~~portfolio~~pandemic, as well as the ~~migration~~fact that state unemployment rolls have been unusually bolstered by additional federal cash assistance to unemployment recipients and additional qualified individuals that are now able to receive such assistance, which were not considered in the quantitative model.

Forecasted projections of ~~CRE loans~~national unemployment through April 2020 have increased from ~~land and construction~~the forecast utilized by Wesbanco as of March 31, 2020. If forecasted national unemployment continues to ~~improved property upon~~rise throughout 2020, this could cause an increase in the ~~completion of construction.~~ Allowance for Credit Losses, assuming other model variables remain relatively constant.

The loss migration rate by internal risk grade is the primary factor for establishing the allowance for all commercial loans, and the portfolio segment loss history is the primary factor for establishing the allowance for residential real estate, home equity and consumer loans. The categorization of loans as non-performing is not as significant a factor as the loss migration rate by risk grade or the segment loss history, although certain non-performing loans that carry specific reserves are also typically considered classified under the internal risk grading system. Criticized and classified loans were ~~2.24%~~2.09% of total loans, ~~increasing~~decreasing from ~~1.08%~~2.17% at December 31, ~~2018.~~2019. Criticized and classified loans ~~increased $91.0~~decreased $6.5 million from December 31, ~~2018~~2019 to ~~$174.0~~$216.0 million at ~~September 30, 2019~~March 31, 2020, primarily due to ~~recent adjustments to~~one C&I credit that was paid off during the ~~internal~~first quarter combined with certain under-performing loans acquired from OLBK that were sold during the first quarter, which were offset by loan ~~classification system which impacted risk grades on $49.5 million of commercial loans.~~ downgrades.

Table 1315 summarizes the allocation of the allowance for credit losses to each category of the loan portfolio. The overall allowance for loans increased due to the reasons noted in the above paragraph. The allowance for commercial and industrial loan commitments increased due to the downgrade of a commercial and industrial loan (as previously noted) with a remaining undrawn commitment balance.

TABLE ~~13.~~15. ALLOCATION OF THE ALLOWANCE FOR CREDIT LOSSES – LOANS AND LOAN COMMITMENTS

(unaudited, dollars in thousands)	September 30, 2019		Percent of Total		December 31, 2018		Percent of Total		March 31, 2020		Percent of Total		December 31, 2019		Percent of Total
Allowance for loan losses:
Allowance for credit losses - loans:
Commercial real estate - land and construction	$	4,042		7.2	$	4,039		8.1	$	6,442		5.4	$	4,949		9.3
Commercial real estate - improved property		23,893		42.7		20,848		42.0		52,873		44.1		20,293		38.1
Commercial and industrial		13,788		24.6		12,114		24.4		39,227		32.7		14,116		26.5
Residential real estate		3,785		6.8		3,822		7.7		9,684		8.1		4,311		8.1
Home equity		4,565		8.2		4,356		8.8		1,096		0.9		4,422		8.3
Consumer		2,748		4.9		2,797		5.6		3,886		3.2		2,951		5.5
Deposit account overdrafts		1,496		2.7		972		1.8		1,064		0.9		1,387		2.6
Total allowance for loan losses	$	54,317		97.1	$	48,948		98.4
Allowance for loan commitments:
Total allowance for credit losses - loans									$	114,272		95.3	$	52,429		98.4
Allowance for credit losses - loan commitments:
Commercial real estate - land and construction	$	195		0.3	$	169		0.4	$	5,111		4.3	$	235		0.4
Commercial real estate - improved property		24		0.0		33		0.1		—		0.0		22		0.0
Commercial and industrial		1,104		2.0		262		0.5		—		0.0		311		0.6
Residential real estate		15		0.0		12		0.0		444		0.4		15		0.0
Home equity		263		0.5		226		0.5		17		0.0		250		0.5
Consumer		38		0.1		39		0.1		—		0.0		41		0.1
Total allowance for loan commitments		1,639		2.9		741		1.6
Total allowance for credit losses	$	55,956		100.0	$	49,689		100.0
Total allowance for credit losses - loan commitments										5,572		4.7		874		1.6
Total allowance for credit losses - loans and loan commitments									$	119,844		100.0	$	53,303		100.0

Although the allowance for credit losses is allocated as described in Table ~~13,~~15, 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 incurred losses in subsequent periods for any category may necessitate future adjustments to the provision for loan losses applicable to the category. Management believes the allowance for credit losses is appropriate to absorb ~~probable~~expected losses at ~~September 30, 2019.~~March 31, 2020.

(unaudited, dollars in thousands)	September 30, 2019		December 31, 2018		$ Change			% Change			March 31, 2020		December 31, 2019		$ Change			% Change
Deposits
Non-interest bearing demand	$	2,476,392	$	2,441,041	$	35,351			1.4		$	3,191,713	$	3,178,270	$	13,443			0.4
Interest bearing demand		2,128,581		2,146,508		(17,927	)		(0.8	)		2,388,406		2,316,855		71,551			3.1
Money market		1,085,732		1,142,925		(57,193	)		(5.0	)		1,539,835		1,518,314		21,521			1.4
Savings deposits		1,698,125		1,645,549		52,576			3.2			1,984,057		1,934,647		49,410			2.6
Certificates of deposit		1,275,533		1,455,610		(180,077	)		(12.4	)		1,939,321		2,055,920		(116,599	)		(5.7	)
Total deposits	$	8,664,363	$	8,831,633	$	(167,270	)		(1.9	)	$	11,043,332	$	11,004,006	$	39,326			0.4

Deposits, which represent ~~WesBanco’s~~Wesbanco’s primary source of funds, are offered in various account forms at various rates through ~~WesBanco’s 199~~Wesbanco’s 236 financial centers. The FDIC insures deposits up to $250,000 per account. The CARES Act provided the authorization to the FDIC to allow for a temporary increase in the insured limit through December 31, 2020.

Total deposits ~~decreased~~increased by ~~$167.3~~$39.3 million or ~~1.9%~~0.4% during the first ~~nine~~three months of ~~2019. Money market deposits and interest~~2020. Interest bearing demand deposits, ~~decreased 5.0% and 0.8%, respectively, which were partially offset by~~ savings deposits, money market deposits and non-interest bearing demand deposits ~~increasing by 3.2%~~increased 3.1%, 2.6%, 1.4%, and ~~1.4%~~0.4%, respectively. The growth in ~~non-interest bearing demand deposits and savings deposits~~transaction-based accounts is primarily attributable to marketing, customer incentives, focused retail and business strategies to obtain more account relationships and customers’ preferences for shorter-term maturities. The transaction-based accounts increased towards the end of the quarter and into the second quarter from the CARES Act individual and family payments, as well as deposits from the small businesses obtaining loans from the PPP program. Deposit balances were also impacted by bonus and royalty payments for Marcellus and Utica shale gas payments from energy companies in ~~WesBanco’s~~Wesbanco’s southwestern Pennsylvania, eastern Ohio and northern West Virginia markets. Money market deposits were influenced through ~~WesBanco’s~~Wesbanco’s participation in the Insured Cash Sweep (ICS®) money market deposit program. ICS® reciprocal balances totaled ~~$57.5~~$234.7 million at ~~September 30, 2019~~March 31, 2020 compared to ~~$61.4~~$232.2 million at December 31, ~~2018.~~2019.

Certificates of deposit decreased ~~$180.1~~$116.6 million 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.~~Wesbanco. The decline was also impacted by customer run-off of higher cost certificates of deposit from the ~~FTSB and FFKT acquisitions. WesBanco~~OLBK acquisition. 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 ~~$35.4~~$90.3 million in outstanding balances at ~~September 30, 2019,~~March 31, 2020, of which ~~$14.0~~$36.8 million represented one-way buys, compared to ~~$49.4~~$73.3 million in total outstanding balances at December 31, ~~2018,~~2019, of which ~~$22.0~~$11.8 million represented one-way buys. Certificates of deposit greater than $250,000 were approximately ~~$273.3~~$495.4 million at ~~September 30, 2019~~March 31, 2020 compared to ~~$323.2~~$524.2 million at December 31, ~~2018.~~2019. Certificates of deposit of $100,000 or more were approximately ~~$582.3 million~~$1.1 billion at ~~September 30, 2019~~March 31, 2020 compared to ~~$684.6 million~~$1.2 billion at December 31, ~~2018.~~2019. Certificates of deposit totaling approximately ~~$764.4 million~~$1.2 billion at ~~September 30, 2019~~March 31, 2020 with a cost of ~~1.22%~~1.45% are scheduled to mature within the next 12 months. ~~WesBanco~~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.

(unaudited, dollars in thousands)	September 30, 2019		December 31, 2018		$ Change			% Change			March 31, 2020		December 31, 2019		$ Change			% Change
Federal Home Loan Bank Borrowings	$	1,161,092	$	1,054,174	$	106,918			10.1		$	1,585,608	$	1,415,615	$	169,993			12.0
Other short-term borrowings		325,247		290,522		34,725			12.0			333,966		282,362		51,604			18.3
Subordinated debt and junior subordinated debt		156,631		189,842		(33,211	)		(17.5	)		192,008		199,869		(7,861	)		(3.9	)
Total	$	1,642,970	$	1,534,538	$	108,432			7.1		$	2,111,582	$	1,897,846	$	213,736			11.3

While borrowings are a significant source of funding for ~~WesBanco,~~Wesbanco, they are less significant as compared to total deposits. During the first ~~nine~~three months of ~~2019,~~2020, FHLB borrowings increased ~~$106.9~~$170.0 million, as ~~$470.0~~$475.0 million in new advances offset ~~$363.1~~$305.0 million in maturities, other principal paydowns and purchase accounting amortization. ~~WesBanco extended~~The average cost during the ~~maturities~~first three months of ~~approximately $470.0 million~~2020 of maturing and paid-off FHLB borrowings inwas 2.04%, compared to the ~~first nine months with a prior~~average cost of ~~approximately 1.24%, at current short-term~~1.38% for new FHLB ~~rates approximating 1.87% - 2.06%.~~advances during the period.

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 ~~$325.2~~$334.0 million at ~~September 30, 2019~~March 31, 2020 compared to ~~$290.5~~$282.4 million at December 31, ~~2018.~~2019. The increase is primarily due to a ~~$28.5~~$49.1 million increase in overnight sweep checking accounts, coupled with a ~~$29.0~~$10.0 million increase in ~~federal funds purchased,~~callable repurchase agreements, which were partially offset by a ~~$22.7~~$7.5 million decrease in ~~callable repurchase agreements.~~federal funds purchased.

Subordinated debt and junior subordinated debt were ~~$156.6~~$192.0 million at ~~September 30, 2019~~March 31, 2020 compared to ~~$189.8~~$199.9 million at December 31, ~~2018.~~2019. The decrease is primarily a result of the redemption of ~~$33.5~~$6.7 million in junior subordinated debt during the first ~~nine~~three months of ~~2019,~~2020, which were assumed in the ~~FFKT~~Old Line acquisition.

~~WesBanco~~Wesbanco renewed and increased a revolving line of credit in August 2019, which is a senior obligation of the parent company, with another financial institution. This line of credit, which accrues interest at an adjusted LIBOR rate, provides for aggregate unsecured borrowings of up to $30.0 million. There were no outstanding balances at either ~~September 30, 2019~~March 31, 2020 or December 31, ~~2018.~~2019.

~~WesBanco~~Wesbanco enters into financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of its customers. These financial instruments include commitments to extend credit, letters of credit, loans approved but not closed, overdraft limits and contingent obligations to purchase loans funded by other entities. Since many of these commitments expire unused or partially used, these commitments may not reflect future cash requirements. Please refer to Note ~~12,~~11, “Commitments and Contingent Liabilities,” of the Consolidated Financial Statements and the “Loans and Credit Risk” section of this MD&A for additional information.

The allowance for credit losses includes an allowance for unfunded loan commitments. The allowance for credit losses represents the lifetime expected losses for all loans and unfunded loan commitments at the initial recognition date. The allowance incorporates forward-looking information and applies a reversion methodology beyond the reasonable and supportable forecast. The allowance is increased by a provision charged to operating expense and reduced by charge-offs, net of recoveries, which also includes any necessary adjustments to the reserve for unfunded loan commitments, and such reserve is accounted for in other liabilities. Management evaluates the appropriateness of the allowance at least quarterly. This evaluation is inherently subjective as it requires material estimates that may be susceptible to significant change from period to period.

During the first quarter of 2020, Wesbanco extended its contract with its existing core service provider for an additional seven years, which includes upgraded and enhanced technological services. The new contract also includes additional products and services, which were previously obtained from various other third-party service providers.

Shareholders' equity ~~increased $122.4~~decreased $7.9 million or ~~6.2%~~0.3% from ~~$2.0~~$2.6 billion at December 31, ~~2018.~~2019. The ~~increase~~decrease resulted primarily from ~~net income during~~ the ~~current nine-month period~~retained earnings effect of ~~$122.5~~the CECL adoption totaling $26.6 million, the repurchase of common shares totaling $25.0 million, and ~~a $47.8 million other comprehensive income gain, which was partially offset by~~ the declaration of common shareholder dividends totaling ~~$50.7~~$21.4 million for the ~~nine~~three months ended ~~September 30, 2019. WesBanco~~March 31, 2020, which were partially offset by net income during the current three-month period of $23.4 million and a $39.9 million other comprehensive income gain. Wesbanco also increased its quarterly dividend rate ~~$0.02~~$0.01 per quarter to ~~$0.31~~$0.32 per share in February, representing a ~~6.9%~~3.2% increase over the prior quarterly rate and a cumulative ~~121%~~129% increase since 2010.

~~WesBanco~~Wesbanco purchased ~~21,535~~786,010 shares of its common stock on the open market at a total cost of $25.0 million, or $31.77 per share during the ~~nine-month~~three-month period ended ~~September 30, 2019~~March 31, 2020 under the current share repurchase ~~plans. The shares were repurchased from employees for~~plans, before suspending the ~~payment~~share buyback program in early March, in an abundance of ~~withholding taxes~~caution related to ~~facilitate stock compensation transactions.~~the growing COVID-19 pandemic. At ~~September 30, 2019,~~March 31, 2020, the remaining shares authorized to be purchased under the current repurchase plans totaled ~~1,071,000~~1,730,283 shares. ~~It is anticipated that as capital continue to grow, WesBanco may become more active in utilizing its existing board share repurchase authority.~~

OnIn February ~~27, 2019, WesBanco~~2020, Wesbanco granted 12,000 Total Shareholder Return Plan (“TSR”) shares for the performance period beginning January 1, ~~2019~~2020 and ending December 31, ~~2021~~2022 to certain executives. The award is determined at the end of the three-year period if the TSR of ~~WesBanco~~Wesbanco common stock is equal to or greater than the 50^th percentile of the TSR of the peer group. The number of shares to be earned by the participant shall be 200% of the grant-date award if the TSR of ~~WesBanco~~Wesbanco common stock is equal to or greater than the 75^th percentile of the TSR of the peer group. Upon achieving the market-based metric, shares determined to be earned by the participant become time-based and vest in three equal annual installments.

On May 15, 2019, WesBanco granted 129,850 stock options to selected officers at an exercise price of $38.93. These options are service-based and vest 50% at December 31, 2019 and 50% at December 31, 2020. On the same date, WesBanco also issued 105,545 shares of time-based restricted stock to selected officers and 16,056 shares of performance-based restricted stock to selected officers. The time-based restricted shares are service-based and cliff-vest 36 months from the date of grant. The performance-based restricted shares have a three-year performance period, beginning January 1, 2020, based on WesBanco’s return on average assets and return on average tangible common equity measured for each year, compared to a national peer group of peer financial institutions with total assets between approximately $11 billion and $25 billion. Earned performance-based restricted shares are also subject to additional service-based vesting with 50% vesting on May 15, 2023 after the completion of the three-year performance period and the final 50% vesting on May 15, 2024.

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 ~~September 30, 2019,~~March 31, 2020, regulatory capital levels for both the Bank and ~~WesBanco~~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.~~Wesbanco. As of ~~September 30, 2019,~~March 31, 2020, under FDIC regulations, ~~WesBanco~~Wesbanco could receive, without prior regulatory approval, a dividend of approximately ~~$154.7~~$156.8 million from the Bank. ~~WesBanco~~Wesbanco expects to continue to improve its consolidated and Bank capital ratios as necessary over time, to fund organic growth and acquisitions, primarily from retaining a majority of its earnings.

45On 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, 2020 for both the Bank and Wesbanco would have continued to be greater than the amounts needed to be considered “well capitalized” as the capital benefit approximated 30 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~~Wesbanco and the Bank for the periods indicated:

							September 30, 2019							December 31, 2018													March 31, 2020							December 31, 2019
	Minimum			Well								Minimum							Minimum		Minimum			Well								Minimum							Minimum
(unaudited, dollars in thousands)	Value ⁽¹⁾			Capitalized ⁽²⁾			Amount		Ratio			Amount ⁽¹⁾		Amount		Ratio			Amount ⁽¹⁾		Value ⁽¹⁾			Capitalized ⁽²⁾			Amount		Ratio			Amount ⁽¹⁾		Amount		Ratio			Amount ⁽¹⁾
WesBanco, Inc.
Wesbanco, Inc.
Tier 1 leverage		4.00	%		5.00	%	$	1,305,760		11.30	%	$	462,303	$	1,258,605		10.74	%	$	468,824		4.00	%		5.00	%	$	1,409,532		9.64	%	$	584,848	$	1,441,738		11.30	%	$	510,306
Common equity Tier 1		4.50	%		6.50	%		1,175,760		13.87	%		381,553		1,096,105		13.14	%		375,254		4.50	%		6.50	%		1,409,532		12.51	%		507,158		1,441,738		12.89	%		503,486
Tier 1 capital to risk-weighted assets		6.00	%		8.00	%		1,305,760		15.40	%		508,737		1,258,605		15.09	%		500,338		6.00	%		8.00	%		1,409,532		12.51	%		676,210		1,441,738		12.89	%		671,314
Total capital to risk-weighted assets		8.00	%		10.00	%		1,386,955		16.36	%		678,317		1,333,503		15.99	%		667,118		8.00	%		10.00	%		1,671,688		14.83	%		901,614		1,691,764		15.12	%		895,086
WesBanco Bank, Inc.
Wesbanco Bank, Inc.
Tier 1 leverage		4.00	%		5.00	%	$	1,166,677		10.11	%	$	461,587	$	1,108,600		9.48	%	$	467,939		4.00	%		5.00	%	$	1,402,023		9.60	%	$	584,007	$	1,419,968		11.12	%	$	510,591
Common equity Tier 1		4.50	%		6.50	%		1,166,677		13.64	%		384,987		1,108,600		13.30	%		375,117		4.50	%		6.50	%		1,402,023		12.34	%		511,137		1,419,968		12.74	%		501,713
Tier 1 capital to risk-weighted assets		6.00	%		8.00	%		1,166,677		13.64	%		513,316		1,108,600		13.30	%		500,156		6.00	%		8.00	%		1,402,023		12.34	%		681,517		1,419,968		12.74	%		668,951
Total capital to risk-weighted assets		8.00	%		10.00	%		1,247,872		14.59	%		684,421		1,183,498		14.20	%		666,874		8.00	%		10.00	%		1,499,180		13.20	%		908,689		1,498,494		13.44	%		891,935

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~~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~~Wesbanco’s Asset/Liability Committee (“ALCO”).

~~WesBanco~~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~~Wesbanco’s investment portfolio management. ~~WesBanco~~Wesbanco believes its cash flow from the loan portfolio, the investment portfolio, and other sources, adequately meet its liquidity requirements. ~~WesBanco’s~~Wesbanco’s net loans to assets ratio was ~~61.2%~~64.0% at ~~September 30, 2019~~March 31, 2020 and deposit balances funded ~~68.8%~~69.0% of assets.

The following table lists the sources of liquidity from assets at ~~September 30, 2019~~March 31, 2020 expected within the next year:

(unaudited, in thousands)
Cash and cash equivalents	$	244,333	$	593,872
Securities with a maturity date within the next year and callable securities		314,890		306,510
Projected payments and prepayments on mortgage-backed securities and collateralized mortgage obligations ⁽¹⁾		357,229		379,692
Loans held for sale		20,715		48,021
Accruing loans scheduled to mature		969,322		1,159,164
Normal loan repayments		1,990,562		2,516,522
Total sources of liquidity expected within the next year	$	3,897,051	$	5,003,781

Deposit flows are another principal factor affecting overall ~~WesBanco~~Wesbanco liquidity. Deposits totaled ~~$8.7~~$11.0 billion at ~~September 30, 2019.~~March 31, 2020. Deposit flows are impacted by current interest rates, products and rates offered by ~~WesBanco~~Wesbanco versus various forms of competition, as well as customer behavior. Certificates of deposit scheduled to mature within one year totaled ~~$764.4 million~~$1.2 billion at ~~September 30, 2019,~~March 31, 2020, which includes jumbo regular certificates of deposit totaling ~~$346.5~~$640.9 million with a weighted-average cost of ~~1.67%~~1.77%, and jumbo CDARS^® deposits of ~~$23.5~~$79.3 million with a weighted-average cost of ~~1.68%~~1.60%.

~~WesBanco~~Wesbanco maintains a line of credit with the FHLB as an additional funding source. Available credit with the FHLB approximated ~~$2.2~~$2.9 billion and ~~$2.3~~$3.2 billion at ~~September 30, 2019~~March 31, 2020 and December 31, ~~2018,~~2019, 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~~Wesbanco has elected not to specifically pledge to the FHLB otherwise unpledged securities. At ~~September 30, 2019,~~March 31, 2020, the Bank had unpledged available-for-sale securities with an amortized cost of ~~$423.0~~$345.8 million. A portion of these securities could be sold for additional liquidity, or such securities could be pledged to secure additional FHLB borrowings. Available liquidity through the sale of investment securities is currently limited, as only approximately ~~19.9%~~16.2% of the available-for-sale portfolio is unpledged, due to the pledging agreements that ~~WesBanco~~Wesbanco has with their public deposit customers. Public deposit balances have increased significantly through the ESB, YCB, FTSB, FFKT and ~~FFKT~~OLBK acquisitions. ~~WesBanco’s~~Wesbanco’s held-to-maturity portfolio currently contains ~~$580.0~~$587.8 million of unpledged securities. Most of these securities are tax-exempt municipal securities, which can only be pledged in limited circumstances. Except for certain limited, special circumstances, 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~~Wesbanco for some ~~time, less dividends declared ad share repurchased.~~time.

~~WesBanco~~Wesbanco participates in the Federal Reserve Bank’s Borrower-in-Custody Program (“BIC”) whereby ~~WesBanco~~Wesbanco pledges certain consumer loans as collateral for borrowings. At ~~September 30, 2019, WesBanco~~March 31, 2020, Wesbanco had a BIC line of credit totaling ~~$193.7~~$211.5 million, none of which was outstanding. Alternative funding sources may include the utilization of existing overnight lines of credit with third party banks totaling $275.0 million, none of which ~~$29.0 million~~ was outstanding at ~~September 30, 2019,~~March 31, 2020, 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.

Other short-term borrowings of ~~$325.2~~$334.0 million at ~~September 30, 2019~~March 31, 2020 consisted of callable repurchase agreements, overnight sweep checking accounts for large commercial customers, and federal funds purchased. There has ~~not~~ been ~~a significant fluctuation~~an increase of $20.9 million in the average deposit balances of ~~the~~ overnight sweep checking accounts during the first ~~nine~~three months of ~~2019.~~2020 primarily from the OLBK acquisition. 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, ~~$116.3~~$147.9 million in cash and investments on hand, and a $30.0 million revolving line of credit with another bank, which did not have an outstanding balance at ~~September 30, 2019. WesBanco~~March 31, 2020. Wesbanco is in compliance with all 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 ~~September 30, 2019,~~March 31, 2020, under FDIC and State of West Virginia regulations, ~~WesBanco~~Wesbanco could receive, without prior regulatory approval, dividends of approximately ~~$154.7~~$156.8 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~~Wesbanco had outstanding commitments to extend credit in the ordinary course of business approximating ~~$2.7~~$3.2 billion and ~~$2.5~~$3.3 billion at ~~September 30, 2019~~March 31, 2020 and December 31, ~~2018,~~2019, respectively. On a historical basis, only a portion of these commitments will result in an outflow of funds. Please refer to Note ~~12,~~11, “Commitments and Contingent ~~Liabilities,”~~Liabilities” of the Consolidated Financial Statements and the “Loans and Credit Risk” section of this MD&A for additional information.

Federal financial regulatory agencies previously issued guidance in 2009 to provide for sound practices for managing funding and liquidity risk and strengthening liquidity risk management practices. ~~WesBanco~~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~~Wesbanco has sufficient

current liquidity to meet current obligations to borrowers, depositors and others and that ~~WesBanco’s~~Wesbanco’s current liquidity risk management policies and procedures adequately address this guidance.

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.

The primary objective of ~~WesBanco’s~~Wesbanco’s Asset/Liability Committee (“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~~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 ~~relative~~ consistency of ~~WesBanco’s~~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~~Wesbanco’s ALCO is ~~a Board-level~~an executive management committee with ~~both~~ Board ~~and executive management representation. It is~~representation, responsible for monitoring and managing interest rate risk within ~~Board-approved~~approved policy limits, utilizing earnings sensitivity simulation and ~~shareholders’ equity~~ 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 ~~effect~~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.

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 availability of existing products and services.

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 and decreases of 100 - ~~400~~300 basis points across the entire yield curve, as compared to a stable rate environment or base model. ~~WesBanco’s~~Wesbanco’s current policy limits this exposure for the noted interest rate changes to a reduction of between 10% - ~~20%~~15%, or less, of net interest income from the stable rate base model over a twelve-month period. The table below ~~shows WesBanco’s~~indicates Wesbanco’s interest rate sensitivity at ~~September 30, 2019~~March 31, 2020 and December 31, ~~2018,~~2019, assuming the above-noted interest rate increases, as compared to a base model. In the current interest rate environment, particularly for short-term rates, the ~~200~~100 – ~~400~~300 basis ~~point~~points decreasing changes for ~~September 30, 2019~~March 31, 2020 and the 200 – 300 ~~– 400~~ basis ~~point~~points decreasing changes for December 31, ~~2018~~2019 are not shown due to the unrealistic nature of ~~results associated with short-term negative rates.~~the results.

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)	September 30, 2019	December 31, 2018	Guidelines	March 31, 2020	December 31, 2019	Guidelines
+400	10.8%	7.6%	(20.0%)
+300	8.7%	6.4%	(15.0%)	7.8%	5.6%	(15.0%)
+200	6.2%	3.9%	(12.5%)	5.7%	3.9%	(12.5%)
+100	3.6%	2.1%	(10.0%)	3.4%	2.2%	(10.0%)
-100	(5.9%)	(2.1%)	(10.0%)	N/A	(4.2%)	(10.0%)
-200	N/A	(5.8%)	(12.5%)

As per the table above, the earnings sensitivity simulation model at September 30, 2019 currently projects that net interest income for the next twelve-month period would decrease by 5.9% if interest rates wereAdjustments to fall immediately by 100 basis points, compared to a decrease of 2.1% - 5.8% if rates were to fall between 100 – 200 basis points as of December 31, 2018. For rising rate scenarios, net interest income would increase by between 3.6% - 10.8% if rates were to increase by between 100 - 400 basis points as of September 30, 2019, compared to increases of between 2.1% - 7.6% as of December 31, 2018. The higher asset sensitivity isrelative 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 both up and down 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 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.

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 and potential adjustments to ~~the plan~~management plans to assist in achieving earnings goals.

The balance sheet shows somewhat higher asset sensitivity as of September 30, 2019, as compared to December 31, 2018, with differences resulting from changes in the mix of, and growth in, various earning assets and costing liabilities, as well as adjustments for various modeling assumptions such as deposit beta rates, decay rates for non-maturity deposits and loan prepayment speeds. Generally, deposit betas utilized in the parallel rate shock and “most likely” models are estimated at a higher percentage for potential rate increase scenarios than has been the Bank’s experience to date through nine federal funds rate increases from 2015 - 2018, in acknowledgement of competitive factors in our market areas and as public funds and institutional contract terms are renewed upon customer request or at maturity. The total deposit beta for interest-bearing transaction accounts, other than certificates of deposit, was 40% or 10 basis points for the trailing twelve months, reflecting a lag for the several rate increases experienced in 2018 to the first half of 2019. Deposit decay rates and loan prepayment speeds are adjusted periodically for loans and non-maturity deposit products. Indicated model asset sensitivity in rising rate scenarios may be less than anticipated due to slower prepayment speeds, rate floors, below forecast loan yields, spread compression between new asset yields and funding costs, mortgage-related extension risk and other factors. In a decreasing rate environment, the Company’s 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. Commercial loans with floors currently average 4.26% on approximately $1.4 billion or 28% of total commercial loans at September 30, 2019, as compared to $1.5 billion averaging 4.27% or 29% of commercial loans at December 31, 2018. Approximately 38% or $538.8 million of these loans are currently priced at their floor, as compared to 38% or $570.5 million at December 31, 2018. 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 for reasons related to next repricing dates, although some customers may request rates below existing contractual floors, which we may grant for competitive reasons.

~~WesBanco~~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~~Wesbanco’s policy limits as of ~~September 30, 2019~~March 31, 2020 and December 31, ~~2018, with the change~~2019. Changes in EVE sensitivity since year-end ~~related~~2019 relate to the significant ~~changes~~decrease in market interest rates, particularly in the latter half of the first quarter of 2020, 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)	September 30, 2019	December 31, 2018	Guidelines	March 31, 2020	December 31, 2019	Guidelines
+400	5.9%	(17.2%)	(40.0%)
+300	6.2%	(12.6%)	(30.0%)	8.4%	2.6%	(30.0%)
+200	6.3%	(10.8%)	(20.0%)	8.9%	3.4%	(20.0%)
+100	5.3%	(4.8%)	(10.0%)	7.5%	4.1%	(10.0%)
-100	(9.7%)	2.7%	(10.0%)	N/A	(5.4%)	(10.0%)
-200	N/A	2.3%	(20.0%)

The net interest margin increased 20 basis points for the first nine months of 2019 to 3.64% as compared to the same period last year and 6 basis points for the third quarter to 3.56% compared to last year, while it was 11 basis points below the second quarter’s net interest margin of 3.67%. The increase from last year’s first nine months and third quarter was primarily due to higher non-interest bearing deposits, lower than projected deposit betas and the contribution from FFKT’s higher margin assets post-acquisition, plus higher purchase accounting from acquisitions. The core net interest margin, net of purchase accounting-related accretion, was 3.43% and 3.47% for the three and nine month periods, respectively, as compared to 3.39% and 3.34% last year. It was six basis points lower than the second quarter’s 3.49%. Currently, the federal funds market is anticipating that the Federal Reserve Board may decrease short-term rates by 25 - 50 basis points prior to year-end or in the first quarter of 2020, which if such scenario occurs, would result in lower net interest income and margin, as the Company remains asset sensitive, suggesting that earning assets repricing downward may occur at a faster pace than reductions in deposit or borrowing rates. The current flat-to-inverted yield curve environment has reduced our base case assumption about net interest income and margin for the balance of the year as compared to expectations in the fourth quarter of 2018, which anticipated a continuing rising rate environment and a higher core margin. It is currently expected that the core net interest margin will slightly decline by a few basis points over the remainder of the year, excluding purchase accounting. On a total margin basis including purchase accounting accretion, the margin may decline several basis points as such accretion diminishes over time. Management’s modeling currently includes one 25 basis point decrease in the federal funds rate over the remainder of the year. The shape of the yield curve, changes to deposit betas or rates beyond current modeling assumptions as well as an inability to lower deposit rates in a declining rate scenario, or adjustments to the mix of earning assets and costing liabilities, may have a negative impact on management’s estimates of the future direction and level of the net interest margin.

Certificates of deposit totaling approximately $764.4 million mature within the next year at an average cost of 1.22%; replacement borrowings are currently more expensive than the average runoff rate of these certificates of deposit. Maturing borrowings’ replacement rates are generally slightly lower than the cost of the maturing borrowings’ average rate as short-term rates decline; however, management may elect to lengthen the maturing borrowings’ terms at a higher cost for liquidity and/or asset/liability management purposes. Transaction account growth helps to control such factors and limit overall deposit costs.

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:

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.

In anticipation of the potential discontinuance of the London Interbank Offered Rate (LIBOR) at the end of 2021, ~~WesBanco~~Wesbanco has created a LIBOR transition committee, which has broken the Company’s transition efforts into two phases. The first phase isincluded adding additional language to new loans that allows ~~WesBanco~~Wesbanco to replace LIBOR with an equivalent rate index and adjust the margin to ensure the resulting interest rate is the same as it previously was using LIBOR. Also included in the first phase ~~is WesBanco~~was Wesbanco transitioning from the LIBOR swap curve to treasury rates when repricing certain loans and originating new loans. The second phase is transitioning current variable loans tied to LIBOR or on a LIBOR swap curve. ~~WesBanco~~Wesbanco is ~~currently quantifying~~tracking the dollar amount and number of loans ~~that extend beyond 2021.~~tied to LIBOR or the LIBOR swap curve, monitoring current industry trends, and engaging its legal counsel to ensure the smooth transition away from LIBOR.

EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES— ~~WesBanco’s~~Wesbanco’s Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”) have concluded that ~~WesBanco’s~~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~~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~~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~~Wesbanco’s management, including the CEO and CFO, does not expect that ~~WesBanco’s~~Wesbanco’s disclosure controls and internal controls will prevent all errors and all fraud. While ~~WesBanco’s~~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~~Wesbanco’s internal control over financial reporting that occurred during our fiscal quarter ended ~~September 30, 2019~~March 31, 2020 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, ~~WesBanco’s~~Wesbanco’s internal control over financial reporting.

~~Old Line Bancshares, Inc. (“Old Line”) and its individual directors were named as defendants in a suit filed on October 1, 2019, styled~~ ~~Gabriel v. Old Line Bancshares, Inc.~~, Case No. 19-CV-9095, in the United States District Court for the Southern District of New York, alleging violations of the Securities Exchange Act of 1934 in connection with the proposed transactions contemplated by the previously announced Agreement and Plan of Merger, dated as of July 23, 2019, by and among Wesbanco Inc. (“Wesbanco”), Wesbanco Bank, Inc., Old Line, and Old Line Bank, pursuant to which Old Line will merge with and into Wesbanco (the “Merger”). The complaint alleges, among other things, that the proxy material filed by Old Line Bancshares in connection with the special meeting of Old Line stockholders to consider the Merger contained materially misleading and incomplete information. The complaint seeks injunctive relief and damages. By Order entered October 7, 2019, the District Court established a deadline of October 10, 2019, for the filing of a request for a preliminary injunction and no such motion was timely filed. Wesbanco does not believe that a material risk to the proposed Merger related to such proceeding is reasonably possible. However, at this time, it is not possible to predict the outcome of the lawsuit or the impact, if any, on Wesbanco, Old Line Bancshares or the Merger.

~~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~~Wesbanco does not believe that a material loss related to such proceedings or claims pending or known to be threatened is reasonably possible.

In light of recent developments relating to COVID-19, and as previously disclosed in Item 8.01 of its Current Report on Form 8-K filed with the SEC on April 27, 2020, Wesbanco is supplementing its risk factors contained in Item 1A of its Annual Report on Form 10-K for the year ended December 31, 2019, as filed with the Securities and Exchange Commission on February 28, 2020 (“Annual Report”). The following risk factors should be read in conjunction with the risk factors contained in our Annual Report on Form 10-K. Any of the risks described in our Annual Report on Form 10-K, as well as any of the risks described below, could materially adversely affect our business, financial condition and results of operations. Additional risks and uncertainties that are not presently known to us or that we deem immaterial may also adversely impact our business or financial results. Moreover, the effects of the COVID-19 pandemic may heighten many of the other risk factors in our Annual Report and any subsequent Quarterly Report on Form 10-Q or Current Report on Form 8-K including, but not limited to, risks of credit deterioration, interest rate changes, rating agency actions, governmental actions, market volatility, theft, fraud, security breaches and technology interruptions. Except as set forth below, there are no material changes related to risk factors from the risk factors described in Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2019.

The COVID-19 pandemic is adversely affecting THE OPERATIONS OF us and our customers.

The spread of COVID-19 has created a global public-health crisis that has resulted in widespread volatility and deteriorations in household, business, economic, and market conditions. This pandemic has caused many state governments to enact “shelter in place” orders and the institution of social distancing requirements, which have adversely impacted the economy due to the vast restrictions and forced closures of non-essential businesses during the quarantine period. As a result, many of our customers have been adversely affected by business closures. Accordingly, COVID-19 may result in a significant decrease in our customer’ business and/or cause our customers to be unable to meet existing payment or other obligations to us. These adverse impacts on the businesses of our customers could cause a material adverse effect to our business, financial condition, and results of operations.

NEGATIVE ECONOMIC FACTORS MAY ADVERSELY AFFECT WESBANCO’S FINANCIAL PERFORMANCE.

Negative economic conditions in our markets may adversely affect Wesbanco’s financial performance. Current shelter-in-place orders in many of Wesbanco’s markets of West Virginia, Ohio, western Pennsylvania, Kentucky, southern Indiana and Maryland, will result in negative economic factors depending on the length of such government restrictions. Negative changes in economic and financial market conditions could result in additional deceases in market value of financial instruments, impairment of goodwill and intangible assets and decreases in interest income. A rise in unemployment from the forced closures of non-essential businesses, could have a negative impact on our customers’ ability to repay their loans as well as a decrease in the customer deposit base as they use their savings to pay current expenses. This could result in increased risk of delinquencies, defaults, foreclosures and losses on our loans, negatively impact regional economic conditions, result in a decline in local loan demand, loan originations and deposit availability. Any one or more of these developments could have a material adverse effect on our business, financial condition and results of operations.

Additionally, the COVID-19 pandemic has significantly affected the financial markets and has resulted in a number of Federal Reserve actions. Market interest rates have declined significantly. On March 3, 2020, the 10-year Treasury yield fell below 1.00% for the first time, and the Federal Reserve reduced the target federal funds rate by 50 basis points to 1.00% to 1.25%. On March 15, 2020, the Federal Reserve further reduced the target federal funds rate by 100 basis points to 0.00% to 0.25% and announced a $700 billion quantitative easing program in response to the expected economic downturn caused by the COVID-19 pandemic. The Federal Reserve reduced the interest that it pays on excess reserves from 1.60% to 1.10% on March 3, 2020, and then to 0.10% on March 15, 2020. We expect that these reductions in interest rates, especially if prolonged, could adversely affect our net interest income and margins and our profitability.

MARKET VOLATILITY AND PROLONGED PERIODS OF ECONOMIC STRESS MAY AFFECT WESBANCO’S CAPITAL AND LIQUIDITY.

The COVID-19 pandemic has caused volatility in financial markets and could potentially cause prolonged periods of economic stress. This may result in decreased capital and liquidity. In addition to the potential affects from negative economic conditions noted above, Wesbanco instituted a program to help COVID-19 impacted customers. This program allows a 90 day deferral of loan principal and/or interest payments as long as the customer meets certain requirements. Depending on how many customer apply for this program, Wesbanco’s liquidity could be negatively impacted if a significant number of customers apply and are approved for the deferral of payments. In addition, if these deferrals are not effective in mitigating the effect of COVID-19 on our customers, it may adversely affect our business and results of operations more substantially over a longer period of time. If the economic situation deteriorates, federal and state regulators may also consider taking actions such as suspension of dividends and other capital distributions in order to conserve capital and retain capacity, any of which could adversely impact our business.

The extent to which the COVID-19 pandemic impacts our business, financial condition and results of operation, as well as our regulatory capital and liquidity ratios, will depend on future developments, which are highly uncertain and cannot be predicted, including the scope and duration of the pandemic and the efficacy of actions taken by governmental authorities and other third parties in response to the pandemic.

As of ~~September 30, 2019, WesBanco~~March 31, 2020, Wesbanco had two active ~~one million share~~ stock repurchase plans. The first active plan was ~~originally~~ approved by the Board of Directors on ~~March 21, 2007~~approved October 22, 2015 for 1.0 million shares, and the second ~~which is incremental to the first,~~active plan was approved ~~October 22, 2015.~~by the Board of Directors on December 19, 2019 for 1.7 million shares. Each 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,~~Wesbanco, and the plan may be discontinued or suspended at any time.

Repurchases in the first quarter included open market purchases and those for the KSOP and dividend reinvestment plans. Wesbanco has suspended continuing open market purchases while it assesses the economic impact of the pandemic.

The following table presents the monthly share purchase activity during the quarter ended ~~September 30, 2019:~~March 31, 2020:

Period	Total Number of Shares Purchased		Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans		Maximum Number of Shares that May Yet Be Purchased Under the Plans		Total Number of Shares Purchased		Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans		Maximum Number of Shares that May Yet Be Purchased Under the Plans
Balance at June 30, 2019								1,076,780
Balance at December 31, 2019																2,516,293

July 1, 2019 to July 31, 2019
January 1, 2020 to January 31, 2020
Open market repurchases		—		—		—		1,076,780		50,000	$	33.17		50,000		2,466,293
Other transactions (1)		21,661	$	38.82	N/A		N/A			23,613		37.43	N/A		N/A

August 1, 2019 to August 31, 2019
Open market repurchases		—		—		—		1,076,780
Other transactions (1)		1,867	$	34.56	N/A		N/A

September 1, 2019 to September 30, 2019
February 1, 2020 to February 29, 2020
Open market repurchases		—		—		—		1,076,780		496,210	$	33.83		496,210		1,970,083
Other repurchases (2)		5,780	$	36.02		5,780		1,071,000		2		34.17	N/A		N/A
Other transactions (1)		1,589		36.72	N/A		N/A			4,366		34.09	N/A		N/A
Third Quarter 2019

March 1, 2020 to March 31, 2020
Open market repurchases										239,800	$	27.22		239,800		1,730,283
Other transactions (1)										6,045		24.51	N/A		N/A
First Quarter 2020
Open market repurchases		—		—		—		1,076,780		786,010	$	31.77		786,010		1,730,283
Other repurchases (2)		5,780	$	36.02		5,780		1,071,000		2		34.17	N/A		N/A
Other transactions (1)		25,117		38.37		—		—		34,024		34.70	N/A		N/A
Total		30,897	$	37.93		5,780		1,071,000		820,036	$	31.89	N/A		N/A

⁽¹⁾ ~~Consists of open market purchases transacted for employee benefit and dividend reinvestment plans.~~

⁽²⁾ ~~Consists of shares purchased from employees for the payment of withholding taxes to facilitate a vested restricted stock compensation transaction.~~

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.

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

Year	Amount
2020	$	5,174
2021		3,490
2022		2,682
2023		2,076
2024 and thereafter		10,803
Total lease payments	$	24,225
Less: Interest		(3,694	)
Present value of lease liabilities	$	20,531


☒	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	☐

	Allowance for Credit Losses By Category
	For the Three Months Ended March 31, 2020
			Residential mortgage -backed		Obligations of
	U.S. Government		securities and collateralized		state and		Corporate
	sponsored		mortgage obligations of government		political		debt
(unaudited, in thousands)	entities and agencies		sponsored entities and agencies		subdivisions		Securities		Total
Beginning balance at January 1, 2020	$	—	$	—	$	96	$	133	$	229
Current period provision		—		—		2		5		7
Write-offs		—		—		—		—		—
Recoveries		—		—		—		—		—
Ending balance at March 31, 2020	$	—	$	—	$	98	$	138	$	236

	TDRs
	September 30, 2019						December 31, 2018
(unaudited, in thousands)	Accruing		Non-Accrual		Total		Accruing		Non-Accrual		Total
Commercial real estate:
Land and construction	$	—	$	—	$	—	$	—	$	—	$	—
Improved property		1,334		197		1,531		880		1,529		2,409
Total commercial real estate		1,334		197		1,531		880		1,529		2,409
Commercial and industrial		185		—		185		168		169		337
Residential real estate		3,794		868		4,662		4,185		921		5,106
Home equity		477		269		746		426		198		624
Consumer		50		11		61		85		38		123
Total	$	5,840	$	1,345	$	7,185	$	5,744	$	2,855	$	8,599

	Accumulated Other Comprehensive Income/(Loss)⁽¹⁾
(unaudited, in thousands)	Defined Benefit Plans			Unrealized Gains (Losses) on Debt Securities Available-for-Sale			Unrealized Gains on Debt Securities Transferred from Available-for-Sale to Held-to-Maturity			Total
Balance at December 31, 2018	$	(16,542	)	$	(21,522	)	$	193		$	(37,871	)
Other comprehensive income before reclassifications		—			46,450			—			46,450
Amounts reclassified from accumulated other comprehensive income		1,721			(199	)		(179	)		1,343
Period change		1,721			46,251			(179	)		47,793
Balance at September 30, 2019	$	(14,821	)	$	24,729		$	14		$	9,922

Balance at December 31, 2017	$	(18,626	)	$	(13,250	)	$	381		$	(31,495	)
Other comprehensive income before reclassifications		—			(33,013	)		—			(33,013	)
Acquired FFKT Medical benefit plan		4,235			—			—			4,235
Amounts reclassified from accumulated other comprehensive income		1,621			(9	)		(149	)		1,463
Period change		5,856			(33,022	)		(149	)		(27,315	)
Adoption of Accounting Standard ASU 2016-01		—			(1,063	)		—			(1,063	)
Balance at September 30, 2018	$	(12,770	)	$	(47,335	)	$	232		$	(59,873	)

~~2.1~~		Agreement and Plan of Merger dated July 23, 2019 by and between Wesbanco, Inc., Wesbanco Bank, Inc., Old Line Bancshares, Inc. and Old Line Bank (incorporated by reference to Exhibit 2.1 of Form 8-K filed by Wesbanco, Inc. with the Securities and Exchange Commission on July 23, 2019).

~~10.1~~		~~Amendment to Loan Documents between Wesbanco, Inc. and PNC Bank, National Association~~ ~~(incorporated by reference to Exhibit 10.1 of Form 8-K filed by Wesbanco, Inc. with the Securities and Exchange Commission on September 6, 2019).~~

~~10.2~~		Amended and Restated Committed Line of Credit Note between Wesbanco, Inc. and PNC Bank, National Association (incorporated by reference to Exhibit 10.2 of Form 8-K filed by Wesbanco, Inc. with the Securities and Exchange Commission on September 6, 2019).

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).

	WESBANCO, INC.

Date: ~~October 31, 2019~~May 8, 2020	/s/ Todd F. Clossin
	Todd F. Clossin
	President and Chief Executive Officer (Principal Executive Officer)

Date: ~~October 31, 2019~~May 8, 2020	/s/ Robert H. Young
	Robert H. Young
	Senior Executive Vice President and Chief Financial Officer
	(Principal Financial and Accounting Officer)