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  • 10-Q Filing

Wesbanco (WSBC) 10-Q2021 Q1 Quarterly report

Filed: 6 May 21, 4:17pm
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    UNITED STATES

    SECURITIES AND EXCHANGE COMMISSION

    WASHINGTON, DC  20549

     

    FORM 10-Q

     

    (Mark One)

    ☒

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

    For the quarterly period ended March 31, 2021  

     

    ☐

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

     

    For the transition period from                           to                            

    Commission File Number 000-08467

     

    WESBANCO, INC.

    (Exact name of Registrant as specified in its charter)

     

    West Virginia

     

    55-0571723

    (State of incorporation)

     

    (IRS Employer Identification No.)

     

     

     

    1 Bank Plaza, Wheeling, WV

     

    26003

    (Address of principal executive offices)

     

    (Zip Code)

     

    Registrant's telephone number, including area code:  304-234-9000

     

    NOT APPLICABLE

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

     

    Securities registered pursuant to Section 12(b) of the Act:

     

    Title of each class

    Trading Symbol

    Name of each exchange on which registered

    Common Stock $2.0833 Par Value

    WSBC

    NASDAQ Global Select Market

    Depositary Shares (each representing 1/40th interest in a share of 6.75% Fixed-Rate Reset Non-Cumulative Perpetual Preferred Stock, Series A)

    WSBCP

     

    NASDAQ Global Select Market

     

    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.

     

    Large accelerated filer

    ☑

     

    Accelerated filer

    ☐

    Non-accelerated filer

    ☐

     

    Smaller reporting company

    ☐

     

     

     

    Emerging growth company

    ☐

     

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

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

    As of April 28, 2021, there were 67,315,896 shares of Wesbanco, Inc. common stock, $2.0833 par value, outstanding.

     

     


     

     

    WESBANCO, INC.

    TABLE OF CONTENTS

     

    Item

    No.

    ITEM

    Page

    No.

     

     

     

     

    PART I - FINANCIAL INFORMATION

     

    1

    Financial Statements

    2

     

    Consolidated Balance Sheets at March 31, 2021 (unaudited) and December 31, 2020

    2

     

    Consolidated Statements of Comprehensive Income for the three months ended March 31, 2021 and 2020 (unaudited)

    3

     

    Consolidated Statements of Changes in Shareholders' Equity for the three months ended March 31, 2021 and 2020 (unaudited)

    4

     

    Consolidated Statements of Cash Flows for the three months ended March 31, 2021 and 2020 (unaudited)

    5

     

    Notes to Consolidated Financial Statements (unaudited)

    6

     

     

     

    2

    Management’s Discussion and Analysis of Financial Condition and Results of Operations

    31

     

     

     

    3

    Quantitative and Qualitative Disclosures About Market Risk

    51

     

     

     

    4

    Controls and Procedures

    53

     

     

     

     

    PART II – OTHER INFORMATION

     

    1

    Legal Proceedings

    54

     

     

     

    2

    Unregistered Sales of Equity Securities and Use of Proceeds

    54

     

     

     

    5

    Other Information

    54

     

     

     

    6

    Exhibits

    55

     

     

     

     

    Signatures

    56

    1


     

    PART I - FINANCIAL INFORMATION

    ITEM 1. FINANCIAL STATEMENTS

    WESBANCO, INC. CONSOLIDATED BALANCE SHEETS

     

     

     

    March 31,

     

     

    December 31,

     

    (unaudited, in thousands, except shares)

     

    2021

     

     

    2020

     

    ASSETS

     

     

     

     

     

     

     

     

    Cash and due from banks, including interest bearing amounts of $550,008 and $721,086, respectively

     

    $

    759,048

     

     

    $

    905,447

     

    Securities:

     

     

     

     

     

     

     

     

    Equity securities, at fair value

     

     

    13,123

     

     

     

    13,047

     

    Available-for-sale debt securities, at fair value

     

     

    2,775,212

     

     

     

    1,978,136

     

    Held-to-maturity debt securities (fair values of $839,872  and $768,183, respectively)

     

     

    813,740

     

     

     

    731,212

     

    Allowance for credit losses, held-to-maturity debt securities

     

     

    (290

    )

     

     

    (326

    )

           Net held-to-maturity debt securities

     

     

    813,450

     

     

     

    730,886

     

    Total securities

     

     

    3,601,785

     

     

     

    2,722,069

     

    Loans held for sale

     

     

    153,520

     

     

     

    168,378

     

    Portfolio loans, net of unearned income

     

     

    10,703,312

     

     

     

    10,789,233

     

    Allowance for credit losses - loans

     

     

    (160,040

    )

     

     

    (185,827

    )

    Net portfolio loans

     

     

    10,543,272

     

     

     

    10,603,406

     

    Premises and equipment, net

     

     

    239,863

     

     

     

    249,421

     

    Accrued interest receivable

     

     

    68,896

     

     

     

    66,790

     

    Goodwill and other intangible assets, net

     

     

    1,160,195

     

     

     

    1,163,091

     

    Bank-owned life insurance

     

     

    307,747

     

     

     

    306,038

     

    Other assets

     

     

    223,462

     

     

     

    240,970

     

    Total Assets

     

    $

    17,057,788

     

     

    $

    16,425,610

     

    LIABILITIES

     

     

     

     

     

     

     

     

    Deposits:

     

     

     

     

     

     

     

     

    Non-interest bearing demand

     

    $

    4,460,049

     

     

    $

    4,070,835

     

    Interest bearing demand

     

     

    3,126,186

     

     

     

    2,839,536

     

    Money market

     

     

    1,771,703

     

     

     

    1,685,927

     

    Savings deposits

     

     

    2,373,987

     

     

     

    2,214,565

     

    Certificates of deposit

     

     

    1,555,074

     

     

     

    1,618,510

     

    Total deposits

     

     

    13,286,999

     

     

     

    12,429,373

     

    Federal Home Loan Bank borrowings

     

     

    433,984

     

     

     

    549,003

     

    Other short-term borrowings

     

     

    137,218

     

     

     

    241,950

     

    Subordinated debt and junior subordinated debt

     

     

    192,430

     

     

     

    192,291

     

    Total borrowings

     

     

    763,632

     

     

     

    983,244

     

    Accrued interest payable

     

     

    3,224

     

     

     

    4,314

     

    Other liabilities

     

     

    218,411

     

     

     

    251,942

     

    Total Liabilities

     

     

    14,272,266

     

     

     

    13,668,873

     

    SHAREHOLDERS' EQUITY

     

     

     

     

     

     

     

     

    Preferred stock, no par value, 1,000,000 shares authorized; 150,000 shares 6.75% non-cumulative perpetual preferred stock, Series A, liquidation preference $150,000,000, issued and outstanding at March 31, 2021 and December 31, 2020, respectively

     

     

    144,484

     

     

     

    144,484

     

    Common stock, $2.0833 par value; 100,000,000 shares authorized; 68,081,306 shares issued; 67,282,134 and 67,254,706 shares outstanding at March 31, 2021 and December 31, 2020, respectively

     

     

    141,834

     

     

     

    141,834

     

    Capital surplus

     

     

    1,636,103

     

     

     

    1,634,815

     

    Retained earnings

     

     

    879,786

     

     

     

    831,688

     

    Treasury stock (799,172 and 826,600 shares  - at cost, respectively)

     

     

    (24,989

    )

     

     

    (25,949

    )

    Accumulated other comprehensive income

     

     

    9,803

     

     

     

    31,359

     

    Deferred benefits for directors

     

     

    (1,499

    )

     

     

    (1,494

    )

    Total Shareholders' Equity

     

     

    2,785,522

     

     

     

    2,756,737

     

    Total Liabilities and Shareholders' Equity

     

    $

    17,057,788

     

     

    $

    16,425,610

     

     

    See Notes to Consolidated Financial Statements.

    2


    WESBANCO, INC. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

     

     

     

    For the Three Months

    Ended March 31,

     

    (unaudited, in thousands, except shares and per share amounts)

     

    2021

     

     

    2020

     

    INTEREST AND DIVIDEND INCOME

     

     

     

     

     

     

     

     

    Loans, including fees

     

    $

    109,358

     

     

     

    119,503

     

    Interest and dividends on securities:

     

     

     

     

     

     

     

     

    Taxable

     

     

    11,127

     

     

     

    16,986

     

    Tax-exempt

     

     

    3,910

     

     

     

    4,456

     

    Total interest and dividends on securities

     

     

    15,037

     

     

     

    21,442

     

    Other interest income

     

     

    659

     

     

     

    1,503

     

    Total interest and dividend income

     

     

    125,054

     

     

     

    142,448

     

    INTEREST EXPENSE

     

     

     

     

     

     

     

     

    Interest bearing demand deposits

     

     

    1,043

     

     

     

    3,394

     

    Money market deposits

     

     

    578

     

     

     

    2,352

     

    Savings deposits

     

     

    264

     

     

     

    923

     

    Certificates of deposit

     

     

    2,370

     

     

     

    4,054

     

    Total interest expense on deposits

     

     

    4,255

     

     

     

    10,723

     

    Federal Home Loan Bank borrowings

     

     

    2,414

     

     

     

    8,232

     

    Other short-term borrowings

     

     

    118

     

     

     

    870

     

    Subordinated debt and junior subordinated debt

     

     

    1,789

     

     

     

    2,461

     

    Total interest expense

     

     

    8,576

     

     

     

    22,286

     

    NET INTEREST INCOME

     

     

    116,478

     

     

     

    120,162

     

    Provision for credit losses

     

     

    (27,958

    )

     

     

    29,821

     

    Net interest income after provision for credit losses

     

     

    144,436

     

     

     

    90,341

     

    NON-INTEREST INCOME

     

     

     

     

     

     

     

     

    Trust fees

     

     

    7,631

     

     

     

    6,952

     

    Service charges on deposits

     

     

    4,894

     

     

     

    6,617

     

    Electronic banking fees

     

     

    4,365

     

     

     

    4,254

     

    Net securities brokerage revenue

     

     

    1,524

     

     

     

    1,679

     

    Bank-owned life insurance

     

     

    1,709

     

     

     

    1,769

     

    Mortgage banking income

     

     

    4,264

     

     

     

    1,276

     

    Net securities gains

     

     

    279

     

     

     

    1,491

     

    Net gain on other real estate owned and other assets

     

     

    175

     

     

     

    169

     

    Other income

     

     

    8,367

     

     

     

    3,802

     

    Total non-interest income

     

     

    33,208

     

     

     

    28,009

     

    NON-INTEREST EXPENSE

     

     

     

     

     

     

     

     

    Salaries and wages

     

     

    36,890

     

     

     

    38,910

     

    Employee benefits

     

     

    10,266

     

     

     

    10,373

     

    Net occupancy

     

     

    7,177

     

     

     

    7,084

     

    Equipment and software

     

     

    6,765

     

     

     

    6,039

     

    Marketing

     

     

    2,384

     

     

     

    1,138

     

    FDIC insurance

     

     

    1,282

     

     

     

    2,113

     

    Amortization of intangible assets

     

     

    2,896

     

     

     

    3,374

     

    Restructuring and merger-related expense

     

     

    851

     

     

     

    5,164

     

    Other operating expenses

     

     

    17,816

     

     

     

    17,138

     

    Total non-interest expense

     

     

    86,327

     

     

     

    91,333

     

    Income before provision for income taxes

     

     

    91,317

     

     

     

    27,017

     

    Provision for income taxes

     

     

    18,202

     

     

     

    3,621

     

    Net income

     

     

    73,115

     

     

     

    23,396

     

    Preferred stock dividends

     

     

    2,531

     

     

     

    —

     

    Net income available to common shareholders

     

    $

    70,584

     

     

    $

    23,396

     

    EARNINGS PER COMMON SHARE

     

     

     

     

     

     

     

     

    Basic

     

    $

    1.05

     

     

    $

    0.35

     

    Diluted

     

    $

    1.05

     

     

    $

    0.35

     

    AVERAGE COMMON SHARES OUTSTANDING

     

     

     

     

     

     

     

     

    Basic

     

     

    67,263,714

     

     

     

    67,486,550

     

    Diluted

     

     

    67,355,418

     

     

     

    67,587,446

     

    DIVIDENDS DECLARED PER COMMON SHARE

     

    $

    0.33

     

     

    $

    0.32

     

     

     

     

     

     

     

     

     

     

    COMPREHENSIVE INCOME

     

    $

    51,559

     

     

    $

    63,336

     

     

    See Notes to Consolidated Financial Statements.

    3


    WESBANCO, INC. CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

     

     

     

    For the Three Months Ended March 31, 2021 and 2020

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    Accumulated

     

     

     

     

     

     

     

     

     

     

     

    Preferred

     

     

    Common Stock

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    Other

     

     

    Deferred

     

     

     

     

     

    (unaudited, in thousands, except

     

    Stock

     

     

    Shares

     

     

     

     

     

     

    Capital

     

     

    Retained

     

     

    Treasury

     

     

    Comprehensive

     

     

    Benefits for

     

     

     

     

     

       shares and per share amounts)

     

    Amount

     

     

    Outstanding

     

     

    Amount

     

     

    Surplus

     

     

    Earnings

     

     

    Stock

     

     

    Income (Loss)

     

     

    Directors

     

     

    Total

     

    December 31, 2020

     

    $

    144,484

     

     

     

    67,254,706

     

     

    $

    141,834

     

     

    $

    1,634,815

     

     

    $

    831,688

     

     

    $

    (25,949

    )

     

    $

    31,359

     

     

    $

    (1,494

    )

     

    $

    2,756,737

     

    Net income

     

     

    —

     

     

     

    —

     

     

     

    —

     

     

     

    —

     

     

     

    73,115

     

     

     

    —

     

     

     

    —

     

     

     

    —

     

     

     

    73,115

     

    Other comprehensive loss

     

     

    —

     

     

     

    —

     

     

     

    —

     

     

     

    —

     

     

     

    —

     

     

     

    —

     

     

     

    (21,556

    )

     

     

    —

     

     

     

    (21,556

    )

    Comprehensive income

     

     

    —

     

     

     

    —

     

     

     

    —

     

     

     

    —

     

     

     

    —

     

     

     

    —

     

     

     

    —

     

     

     

    —

     

     

     

    51,559

     

    Common dividends declared ($0.33 per share)

     

     

    —

     

     

     

    —

     

     

     

    —

     

     

     

    —

     

     

     

    (22,095

    )

     

     

    —

     

     

     

    —

     

     

     

    —

     

     

     

    (22,095

    )

    Preferred dividends declared ($16.875 per share)

     

     

    —

     

     

     

    —

     

     

     

    —

     

     

     

    —

     

     

     

    (2,531

    )

     

     

    —

     

     

     

    —

     

     

     

    —

     

     

     

    (2,531

    )

    Stock issued for dividend reinvestment

     

     

    —

     

     

     

    11,720

     

     

     

    —

     

     

     

    —

     

     

     

    (391

    )

     

     

    391

     

     

     

    —

     

     

     

    —

     

     

     

    —

     

    Treasury shares acquired

     

     

    —

     

     

     

    (5,135

    )

     

     

    —

     

     

     

    183

     

     

     

    —

     

     

     

    (183

    )

     

     

    —

     

     

     

    —

     

     

     

    —

     

    Stock options exercised

     

     

    —

     

     

     

    20,843

     

     

     

    —

     

     

     

    (183

    )

     

     

    —

     

     

     

    752

     

     

     

    —

     

     

     

    —

     

     

     

    569

     

    Stock compensation expense

     

     

    —

     

     

     

    —

     

     

     

    —

     

     

     

    1,288

     

     

     

    —

     

     

     

    —

     

     

     

    —

     

     

     

    —

     

     

     

    1,288

     

    Deferred benefits for directors- net

     

     

    —

     

     

     

    —

     

     

     

    —

     

     

     

    —

     

     

     

    —

     

     

     

    —

     

     

     

    —

     

     

     

    (5

    )

     

     

    (5

    )

    March 31, 2021

     

    $

    144,484

     

     

     

    67,282,134

     

     

    $

    141,834

     

     

    $

    1,636,103

     

     

    $

    879,786

     

     

    $

    (24,989

    )

     

    $

    9,803

     

     

    $

    (1,499

    )

     

    $

    2,785,522

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    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 ASU 2016-13

     

     

    —

     

     

     

    —

     

     

     

    —

     

     

     

    —

     

     

     

    (26,591

    )

     

     

    —

     

     

     

    —

     

     

     

    —

     

     

     

    (26,591

    )

    Treasury shares acquired

     

     

    —

     

     

     

    (786,012

    )

     

     

    —

     

     

     

    —

     

     

     

    —

     

     

     

    (24,972

    )

     

     

    —

     

     

     

    —

     

     

     

    (24,972

    )

    Stock options exercised

     

     

    —

     

     

     

    19,739

     

     

     

    —

     

     

     

    (276

    )

     

     

    —

     

     

     

    721

     

     

     

    —

     

     

     

    —

     

     

     

    445

     

    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

     

     

    See Notes to Consolidated Financial Statements.

    4


    WESBANCO, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS

     

     

     

    For the Three Months

    Ended March 31,

     

    (unaudited, in thousands)

     

    2021

     

     

    2020

     

    NET CASH PROVIDED BY OPERATING ACTIVITIES

     

    $

    52,004

     

     

    $

    32,884

     

    INVESTING ACTIVITIES

     

     

     

     

     

     

     

     

    Net decrease (increase) in loans held for investment

     

     

    100,799

     

     

     

    (131,110

    )

    Available-for-sale debt securities:

     

     

     

     

     

     

     

     

    Proceeds from sales

     

     

    —

     

     

     

    222,668

     

    Proceeds from maturities, prepayments and calls

     

     

    239,259

     

     

     

    157,954

     

    Purchases of securities

     

     

    (1,068,526

    )

     

     

    (197,153

    )

    Held-to-maturity debt securities:

     

     

     

     

     

     

     

     

    Proceeds from maturities, prepayments and calls

     

     

    27,147

     

     

     

    48,093

     

    Purchases of securities

     

     

    (110,298

    )

     

     

    (11,734

    )

    Equity securities:

     

     

     

     

     

     

     

     

    Proceeds from sales

     

     

    —

     

     

     

    50

     

    Proceeds from bank owned life insurance

     

     

    —

     

     

     

    10

     

    Purchases of premises and equipment – net

     

     

    (2,362

    )

     

     

    (2,925

    )

    Sale of portfolio loans

     

     

    —

     

     

     

    28,262

     

    Net cash (used in) provided by investing activities

     

     

    (813,981

    )

     

     

    114,115

     

    FINANCING ACTIVITIES

     

     

     

     

     

     

     

     

    Increase in deposits

     

     

    858,853

     

     

     

    42,892

     

    Proceeds from Federal Home Loan Bank borrowings

     

     

    —

     

     

     

    475,000

     

    Repayment of Federal Home Loan Bank borrowings

     

     

    (115,053

    )

     

     

    (305,070

    )

    (Decrease) increase in other short-term borrowings

     

     

    (104,732

    )

     

     

    59,104

     

    Principal repayments of finance lease obligations

     

     

    (109

    )

     

     

    (104

    )

    Decrease in federal funds purchased

     

     

    —

     

     

     

    (7,500

    )

    Repayment of junior subordinated debt

     

     

    —

     

     

     

    (6,702

    )

    Dividends paid to common shareholders

     

     

    (21,419

    )

     

     

    (21,016

    )

    Dividends paid to preferred shareholders

     

     

    (2,531

    )

     

     

    —

     

    Treasury shares sold (purchased) - net

     

     

    569

     

     

     

    (24,527

    )

    Net cash provided by financing activities

     

     

    615,578

     

     

     

    212,077

     

    Net (decrease) increase in cash, cash equivalents and restricted cash

     

     

    (146,399

    )

     

     

    359,076

     

    Cash, cash equivalents and restricted cash at beginning of the period

     

     

    905,447

     

     

     

    234,796

     

    Cash, cash equivalents and restricted cash at end of the period

     

    $

    759,048

     

     

    $

    593,872

     

    SUPPLEMENTAL DISCLOSURES

     

     

     

     

     

     

     

     

    Interest paid on deposits and other borrowings

     

    $

    10,719

     

     

    $

    26,074

     

    Income taxes paid

     

     

    —

     

     

     

    —

     

    Transfers of loans to other real estate owned

     

     

    —

     

     

     

    28

     

    Transfers of portfolio loans to loans held for sale

     

     

    —

     

     

     

    37,195

     

     

    See Notes to Consolidated Financial Statements.

     

    5


     

    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

    NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

    Basis of presentation — The accompanying unaudited interim financial statements of Wesbanco, Inc. and its consolidated subsidiaries (“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, 2020.

    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 2020 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 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 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.

    Recent accounting pronouncements—The Financial Accounting Standards Board (“FASB”) issued Accounting Standards Updates (“ASU”) as noted below.

    ASU 2020-04 Reference Rate Reform (Topic 848)

    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 optional 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 assessing the impact of adopting the new guidance on the consolidated financial statements on an ongoing basis with no material impacts expected at this time.

     

    NOTE 2. EARNINGS PER COMMON SHARE

    Earnings per common share are calculated as follows:

     

     

     

    For the Three Months

    Ended March 31,

     

    (unaudited, in thousands, except shares and per share amounts)

     

    2021

     

     

    2020

     

    Numerator for both basic and diluted earnings per common share:

     

     

     

     

     

     

     

     

    Net income available to common shareholders

     

    $

    70,584

     

     

    $

    23,396

     

    Denominator:

     

     

     

     

     

     

     

     

    Total average basic common shares outstanding

     

     

    67,263,714

     

     

     

    67,486,550

     

    Effect of dilutive stock options and other stock compensation

     

     

    91,704

     

     

     

    100,896

     

    Total diluted average common shares outstanding

     

     

    67,355,418

     

     

     

    67,587,446

     

    Earnings per common share - basic

     

    $

    1.05

     

     

    $

    0.35

     

    Earnings per common share - diluted

     

    $

    1.05

     

     

    $

    0.35

     

     

    As of March 31, 2021 and 2020, respectively, 393,961 and 510,186 options to purchase shares were not included in the computation of net income per diluted share for the three months ended March 31, 2021 and 2020 because the exercise price was greater than the average market price of a common share, therefore, the effect would be antidilutive.

    As of March 31, 2021 and 2020, shares related to the 2020 and 2019 total shareholder return plans were not included in the calculation because the effect would be antidilutive.

    In addition, 0 performance-based restricted stock was estimated to be awarded as of March 31, 2021 and therefore, was not included in the diluted calculation. As of March 31, 2020, 25,618 shares were estimated to be awarded and those shares were included in the diluted calculation for the three months ended March 31, 2020.

    6


    NOTE 3. SECURITIES

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

     

     

     

    March 31, 2021

     

     

    December 31, 2020

     

    (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

     

    Available-for-sale debt securities

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    U.S. Treasury

     

    $

    29,986

     

     

    $

    11

     

     

    $

    —

     

     

    $

    29,997

     

     

    $

    39,975

     

     

    $

    7

     

     

    $

    —

     

     

    $

    39,982

     

    U.S. Government sponsored entities and agencies

     

     

    174,472

     

     

     

    4,564

     

     

     

    (2,706

    )

     

     

    176,330

     

     

     

    204,109

     

     

     

    7,715

     

     

     

    (142

    )

     

     

    211,682

     

    Residential mortgage-backed securities and collateralized mortgage obligations of government sponsored entities and agencies

     

     

    2,123,853

     

     

     

    30,901

     

     

     

    (13,961

    )

     

     

    2,140,793

     

     

     

    1,230,106

     

     

     

    35,979

     

     

     

    (1,348

    )

     

     

    1,264,737

     

    Commercial mortgage-backed securities and collateralized mortgage obligations of government sponsored entities and agencies

     

     

    284,440

     

     

     

    7,962

     

     

     

    (721

    )

     

     

    291,681

     

     

     

    308,903

     

     

     

    11,464

     

     

     

    (269

    )

     

     

    320,098

     

    Obligations of states and political subdivisions

     

     

    105,778

     

     

     

    6,056

     

     

     

    (36

    )

     

     

    111,798

     

     

     

    108,602

     

     

     

    7,160

     

     

     

    —

     

     

     

    115,762

     

    Corporate debt securities

     

     

    23,953

     

     

     

    660

     

     

     

    —

     

     

     

    24,613

     

     

     

    24,963

     

     

     

    912

     

     

     

    —

     

     

     

    25,875

     

    Total available-for-sale debt securities

     

    $

    2,742,482

     

     

    $

    50,154

     

     

    $

    (17,424

    )

     

    $

    2,775,212

     

     

    $

    1,916,658

     

     

    $

    63,237

     

     

    $

    (1,759

    )

     

    $

    1,978,136

     

    Held-to-maturity debt securities

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    U.S. Government sponsored entities and agencies

     

    $

    7,611

     

     

    $

    106

     

     

    $

    —

     

     

    $

    7,717

     

     

    $

    7,779

     

     

    $

    265

     

     

    $

    —

     

     

    $

    8,044

     

    Residential mortgage-backed securities and collateralized mortgage obligations of government sponsored entities and agencies

     

     

    80,376

     

     

     

    2,738

     

     

     

    (5

    )

     

     

    83,109

     

     

     

    89,151

     

     

     

    3,251

     

     

     

    —

     

     

     

    92,402

     

    Obligations of states and political subdivisions

     

     

    692,616

     

     

     

    24,501

     

     

     

    (3,811

    )

     

     

    713,306

     

     

     

    601,128

     

     

     

    30,173

     

     

     

    (59

    )

     

     

    631,242

     

    Corporate debt securities

     

     

    33,137

     

     

     

    2,603

     

     

     

    —

     

     

     

    35,740

     

     

     

    33,154

     

     

     

    3,341

     

     

     

    —

     

     

     

    36,495

     

    Total held-to-maturity debt securities

     

    $

    813,740

     

     

    $

    29,948

     

     

    $

    (3,816

    )

     

    $

    839,872

     

     

    $

    731,212

     

     

    $

    37,030

     

     

    $

    (59

    )

     

    $

    768,183

     

    Total debt securities

     

    $

    3,556,222

     

     

    $

    80,102

     

     

    $

    (21,240

    )

     

    $

    3,615,084

     

     

    $

    2,647,870

     

     

    $

    100,267

     

     

    $

    (1,818

    )

     

    $

    2,746,319

     

    (1)

    Total held-to-maturity debt securities are presented on the balance sheet net of their allowance for credit losses totaling $0.3 million at March 31, 2021 and December 31, 2020.

     

    At March 31, 2021 and December 31, 2020, 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 shareholders’ equity.  Equity securities, of which $10.1 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 $13.1 million and $13.0 million at March 31, 2021 and December 31, 2020, respectively.

    The following table presents the amortized cost and fair value of available-for-sale and held-to-maturity debt securities by contractual maturity date at March 31, 2021.  Actual maturities will differ from contractual maturities because borrowers may have the right to call or prepay debt obligations with or without prepayment penalties.  Mortgage-backed securities and collateralized mortgage obligations are classified in the table below based on their contractual maturity date; however, regular principal payments and prepayments of principal are received on a monthly basis.  

     

    (unaudited, in thousands)

     

    Amortized Cost

     

     

    Fair Value

     

    Available-for-sale debt securities

     

     

     

     

     

     

     

     

    Less than one year

     

    $

    47,465

     

     

    $

    47,583

     

    1-5 years

     

     

    145,739

     

     

     

    152,800

     

    5-10 years

     

     

    358,854

     

     

     

    366,119

     

    Over 10 years

     

     

    2,190,424

     

     

     

    2,208,710

     

    Total available-for-sale debt securities

     

    $

    2,742,482

     

     

    $

    2,775,212

     

    Held-to-maturity debt securities

     

     

     

     

     

     

     

     

    Less than one year

     

    $

    11,759

     

     

    $

    11,872

     

    1-5 years

     

     

    133,053

     

     

     

    140,315

     

    5-10 years

     

     

    228,148

     

     

     

    237,907

     

    Over 10 years

     

     

    440,780

     

     

     

    449,778

     

    Total held-to-maturity debt securities

     

    $

    813,740

     

     

    $

    839,872

     

    Total debt securities

     

    $

    3,556,222

     

     

    $

    3,615,084

     

     

    7


     

    Securities with an aggregate fair value of $1.8 billion at March 31, 2021 and December 31, 2020, 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 $0 million and $222.7 million for the three months ended March 31, 2021 and 2020, respectively.  Net unrealized gains on available-for-sale securities included in accumulated other comprehensive income, net of tax, as of March 31, 2021 and December 31, 2020 were $24.8 million and $46.9 million, respectively.

    The following table presents the gross realized gains and losses on sales and calls of available-for-sale and held-to-maturity debt securities, as well as gains and losses on equity securities from both sales and market adjustments, for the three months ended March 31, 2021 and 2020, respectively.  All gains and losses presented in the table below are included in the net securities gains (losses) line item of the income statement.  For those equity securities relating to the key officer and director deferred compensation plan, the corresponding change in the obligation to the participant is recognized in employee benefits expense.

     

     

     

    For the Three Months

    Ended March 31,

     

    (unaudited, in thousands)

     

    2021

     

     

    2020

     

    Debt securities:

     

     

     

     

     

     

     

     

    Gross realized gains

     

    $

    140

     

     

    $

    3,335

     

    Gross realized losses

     

     

    (39

    )

     

     

    (1,031

    )

    Net gains on debt securities

     

    $

    101

     

     

    $

    2,304

     

    Equity securities:

     

     

     

     

     

     

     

     

    Net unrealized gains (losses) recognized on securities still held

     

    $

    178

     

     

    $

    (805

    )

    Net realized losses recognized on securities sold

     

     

    —

     

     

     

    (8

    )

    Net gains (losses) on equity securities

     

    $

    178

     

     

    $

    (813

    )

    Net securities gains

     

    $

    279

     

     

    $

    1,491

     

    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 $6.3 million and $5.3 million as of March 31, 2021 and December 31, 2020, respectively, is excluded from the estimate of credit losses. Held-to-maturity investments in U.S. Government sponsored entities and agencies as well as mortgage-backed securities and collateralized mortgage obligations, which are all either issued by a direct governmental entity or a government-sponsored entity, have no historical evidence supporting expected credit losses; therefore, Wesbanco has estimated these losses at 0, and will monitor this assumption in the future for any economical or governmental policies that could affect this assumption.  

    The following table provides a roll-forward of the allowance for credit losses on held-to-maturity securities for the three months ended March 31, 2021 and March 31, 2020, respectively:

     

     

    Allowance for Credit Losses By Category

     

     

    For the Three Months Ended March 31, 2021 and 2020

     

     

     

     

     

    Residential mortgage

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    -backed

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    securities and

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    collateralized

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    mortgage obligations

     

    Obligations of

     

     

     

     

     

     

     

     

    U.S. Government

     

    of government

     

    state and

     

    Corporate

     

     

     

     

     

    sponsored

     

    sponsored entities

     

    political

     

    debt

     

     

     

     

    (unaudited, in thousands)

    entities and agencies

     

    and agencies

     

    subdivisions

     

    Securities

     

    Total

     

    Balance at December 31, 2020

    $

    —

     

    $

    —

     

    $

    130

     

    $

    196

     

    $

    326

     

    Current period provision

     

    —

     

     

    —

     

     

    (12

    )

     

    (24

    )

     

    (36

    )

    Write-offs

     

    —

     

     

    —

     

     

    —

     

     

    —

     

     

    —

     

    Recoveries

     

    —

     

     

    —

     

     

    —

     

     

    —

     

     

    —

     

    Balance at March 31, 2021

    $

    —

     

    $

    —

     

    $

    118

     

    $

    172

     

    $

    290

     

    .

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    Balance at December 31, 2019

    $

    —

     

    $

    —

     

    $

    —

     

    $

    —

     

    $

    —

     

    Impact of adopting ASC 326

     

    —

     

     

    —

     

     

    96

     

     

    133

     

     

    229

     

    Current period provision

     

    —

     

     

    —

     

     

    2

     

     

    5

     

     

    7

     

    Write-offs

     

    —

     

     

    —

     

     

    —

     

     

    —

     

     

    —

     

    Recoveries

     

    —

     

     

    —

     

     

    —

     

     

    —

     

     

    —

     

    Balance at March 31, 2020

    $

    —

     

    $

    —

     

    $

    98

     

    $

    138

     

    $

    236

     

     

    8


     

    The following tables provide information on unrealized losses on available-for-sale debt securities that have been in an unrealized loss position for less than twelve months and twelve months or more, for which an allowance for credit losses has not been recorded, as of March 31, 2021 and December 31, 2020, respectively:

     

     

     

    March 31, 2021

     

     

     

    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

     

    U.S. Government sponsored entities and agencies

     

    $

    56,270

     

     

    $

    (2,706

    )

     

     

    6

     

     

    $

    —

     

     

    $

    —

     

     

     

    —

     

     

    $

    56,270

     

     

    $

    (2,706

    )

     

     

    6

     

    Residential mortgage-backed securities and collateralized mortgage obligations of government sponsored entities and agencies

     

     

    973,961

     

     

     

    (13,879

    )

     

     

    98

     

     

     

    3,531

     

     

     

    (82

    )

     

     

    4

     

     

     

    977,492

     

     

     

    (13,961

    )

     

     

    102

     

    Commercial mortgage-backed securities and collateralized mortgage obligations of government sponsored entities and agencies

     

     

    94,186

     

     

     

    (721

    )

     

     

    9

     

     

     

    —

     

     

     

    —

     

     

     

    —

     

     

     

    94,186

     

     

     

    (721

    )

     

     

    9

     

    Obligations of state and political subdivisions

     

     

    3,767

     

     

     

    (36

    )

     

     

    1

     

     

     

    —

     

     

     

    —

     

     

     

    —

     

     

     

    3,767

     

     

     

    (36

    )

     

     

    1

     

    Total

     

    $

    1,128,184

     

     

    $

    (17,342

    )

     

     

    114

     

     

    $

    3,531

     

     

    $

    (82

    )

     

     

    4

     

     

    $

    1,131,715

     

     

    $

    (17,424

    )

     

    $

    118

     

     

     

     

    December 31, 2020

     

     

     

    Less than 12 months

     

     

    12 months or more

     

     

    Total

     

    (dollars in thousands)

     

    Fair

    Value

     

     

    Unrealized

    Losses

     

     

    # of

    Securities

     

     

    Fair

    Value

     

     

    Unrealized

    Losses

     

     

    # of

    Securities

     

     

    Fair

    Value

     

     

    Unrealized

    Losses

     

     

    # of

    Securities

     

    U.S. Government sponsored entities and agencies

     

    $

    18,308

     

     

    $

    (142

    )

     

     

    2

     

     

    $

    —

     

     

    $

    —

     

     

     

    —

     

     

    $

    18,308

     

     

    $

    (142

    )

     

     

    2

     

    Residential mortgage-backed securities and collateralized mortgage obligations of government sponsored entities and agencies

     

     

    224,448

     

     

     

    (1,227

    )

     

     

    41

     

     

     

    4,136

     

     

     

    (121

    )

     

     

    3

     

     

     

    228,584

     

     

     

    (1,348

    )

     

     

    44

     

    Commercial mortgage-backed securities and collateralized mortgage obligations of government sponsored entities and agencies

     

     

    97,266

     

     

     

    (269

    )

     

     

    10

     

     

     

    —

     

     

     

    —

     

     

     

    —

     

     

     

    97,266

     

     

     

    (269

    )

     

     

    10

     

    Obligations of states and political subdivisions

     

     

    —

     

     

     

    —

     

     

     

    —

     

     

     

    —

     

     

     

    —

     

     

     

    —

     

     

     

    —

     

     

     

    —

     

     

     

    —

     

    Total

     

    $

    340,022

     

     

    $

    (1,638

    )

     

     

    53

     

     

    $

    4,136

     

     

    $

    (121

    )

     

     

    3

     

     

    $

    344,158

     

     

    $

    (1,759

    )

     

     

    56

     

    Unrealized losses on debt securities in the table above represents temporary fluctuations resulting from changes in market rates in relation to fixed yields.  Unrealized losses in the available-for-sale portfolio are accounted for as an adjustment, net of taxes, to other comprehensive income in shareholders’ equity.  Wesbanco does not believe the securities presented above are impaired due to reasons of credit quality, as substantially all debt securities are rated above investment grade and all are paying principal and interest according to their contractual terms. Wesbanco does not intend to sell, nor is it more likely than not that it will be required to sell, loss position securities prior to recovery of their cost; therefore, management believes the unrealized losses detailed above do not require an allowance for credit losses relating to these securities to be recognized.  Securities that do not have readily determinable fair values and for which Wesbanco does not exercise significant influence are carried at cost.  Cost method investments consist primarily of Federal Home Loan Bank (“FHLB”) of Pittsburgh and Indianapolis stock totaling $29.3 million and $34.0 million at March 31, 2021 and December 31, 2020, 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.

     

      

    9


     

     

    NOTE 4. LOANS AND THE ALLOWANCE FOR CREDIT LOSSES

    The recorded investment in loans is presented in the Consolidated Balance Sheets net of deferred loan fees and costs, and discounts on purchased loans. Net deferred loan income was $13.3 million and $6.2 million at March 31, 2021 and December 31, 2020, respectively.  At March 31, 2021 and December 31, 2020, respectively, the balance included $21.4 and $13.8 million of net deferred income from PPP loans. The un-accreted discount on purchased loans from acquisitions was $35.9 million at March 31, 2021 and $39.4 million at December 31, 2020.

     

     

     

    March 31,

     

     

    December 31,

     

    (unaudited, in thousands)

     

    2021

     

     

    2020

     

    Commercial real estate:

     

     

     

     

     

     

     

     

    Land and construction

     

    $

    642,017

     

     

    $

    668,277

     

    Improved property

     

     

    5,070,725

     

     

     

    5,037,115

     

    Total commercial real estate

     

     

    5,712,742

     

     

     

    5,705,392

     

    Commercial and industrial

     

     

    1,598,921

     

     

     

    1,681,182

     

    Commercial and industrial - PPP

     

     

    823,814

     

     

     

    726,256

     

    Residential real estate

     

     

    1,644,422

     

     

     

    1,720,961

     

    Home equity

     

     

    634,018

     

     

     

    646,387

     

    Consumer

     

     

    289,395

     

     

     

    309,055

     

    Total portfolio loans

     

     

    10,703,312

     

     

     

    10,789,233

     

    Loans held for sale

     

     

    153,520

     

     

     

    168,378

     

    Total loans

     

    $

    10,856,832

     

     

    $

    10,957,611

     

     

    The allowance for credit losses under the current expected credit losses methodology (“CECL”) is calculated utilizing the PD / LGD, which is then discounted to net present value. PD is the probability the asset will default within a given time frame and LGD is the percentage of the asset not expected to be collected due to default. The primary macroeconomic drivers of the quantitative model include forecasts of national unemployment and interest rates, as well as modeling adjustments for changes in prepayment speeds, loan risk grades, portfolio mix, concentrations and loan growth. For the calculation as of March 31, 2021, the one-year forecast was based upon a blended rate from two nationally-recognized published economic forecasts through March 31, 2021, and is primarily driven by the national unemployment and interest rate spread forecasts. Wesbanco’s blended forecast of national unemployment, at quarter end, was projected to peak at 5.8% in the second quarter, and subsequently decrease to an average of 4.8% over the remainder of the forecast period. The calculation utilized a one-year reversion period back to the Company’s historical loss rate by loan classification.  Included in the qualitative factors were COVID-19 pandemic factors related to the transient credit risk not covered by the traditional allowance process, adjusted to Wesbanco’s regional footprint, deferred interest on modified loans, and hospitality industry concentration. Wesbanco made an accounting policy election to exclude accrued interest from the measurement of the allowance for credit losses because the Company has a robust policy in place to reverse or write-off accrued interest when loans are placed on non-accrual. However, Wesbanco does have a $0.2 million reserve on the accrued interest related to loan modifications allowed under the CARES Act due to the timing and nature of these modifications. As of March 31, 2021, accrued interest receivable for loans was $53.5 million, including $24.9 million related to COVID-19 loan modifications as permitted under the CARES Act.

     

     

    10


     

    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

     

     

     

    For the Three Months Ended March 31, 2021 and 2020

     

    (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

     

    Balance at December 31, 2020

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    Allowance for credit

       losses - loans

     

    $

    10,841

     

     

    $

    110,652

     

     

    $

    37,850

     

     

    $

    17,851

     

     

    $

    1,487

     

     

    $

    6,507

     

     

    $

    639

     

     

    $

    185,827

     

    Allowance for credit

       losses - loan commitments

     

     

    6,508

     

     

     

    712

     

     

     

    1,275

     

     

     

    955

     

     

     

    45

     

     

     

    19

     

     

     

    —

     

     

     

    9,514

     

    Total beginning allowance for credit

       losses - loans and loan

       commitments

     

     

    17,349

     

     

     

    111,364

     

     

     

    39,125

     

     

     

    18,806

     

     

     

    1,532

     

     

     

    6,526

     

     

     

    639

     

     

     

    195,341

     

    Provision for credit losses:

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    Provision for loan losses

     

     

    (3,538

    )

     

     

    (11,420

    )

     

     

    (4,256

    )

     

     

    (4,177

    )

     

     

    (394

    )

     

     

    (1,510

    )

     

     

    156

     

     

     

    (25,139

    )

    Provision for loan commitments

     

     

    (2,508

    )

     

     

    (504

    )

     

     

    308

     

     

     

    (86

    )

     

     

    5

     

     

     

    2

     

     

     

    —

     

     

     

    (2,783

    )

    Total provision for credit

       losses - loans and loan

       commitments

     

     

    (6,046

    )

     

     

    (11,924

    )

     

     

    (3,948

    )

     

     

    (4,263

    )

     

     

    (389

    )

     

     

    (1,508

    )

     

     

    156

     

     

     

    (27,922

    )

    Charge-offs

     

     

    (18

    )

     

     

    (19

    )

     

     

    (750

    )

     

     

    (371

    )

     

     

    (174

    )

     

     

    (927

    )

     

     

    (201

    )

     

     

    (2,460

    )

    Recoveries

     

     

    55

     

     

     

    528

     

     

     

    440

     

     

     

    135

     

     

     

    79

     

     

     

    462

     

     

     

    113

     

     

     

    1,812

     

    Net charge-offs

     

     

    37

     

     

     

    509

     

     

     

    (310

    )

     

     

    (236

    )

     

     

    (95

    )

     

     

    (465

    )

     

     

    (88

    )

     

     

    (648

    )

    Balance at March 31, 2021

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    Allowance for credit

       losses - loans

     

     

    7,340

     

     

     

    99,741

     

     

     

    33,284

     

     

     

    13,438

     

     

     

    998

     

     

     

    4,532

     

     

     

    707

     

     

     

    160,040

     

    Allowance for credit

       losses - loan commitments

     

     

    4,000

     

     

     

    208

     

     

     

    1,583

     

     

     

    869

     

     

     

    50

     

     

     

    21

     

     

     

    —

     

     

     

    6,731

     

    Total ending allowance for credit

       losses - loans and loan

       commitments

     

    $

    11,340

     

     

    $

    99,949

     

     

    $

    34,867

     

     

    $

    14,307

     

     

    $

    1,048

     

     

    $

    4,553

     

     

    $

    707

     

     

    $

    166,771

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    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

     

     

    11


     

    The following tables present the allowance for credit losses and recorded investments in loans by category, as of each period-end:

     

     

     

    Allowance for Credit Losses and Recorded Investment in Loans

     

    (unaudited, in thousands)

     

    Commercial

    Real Estate-

    Land and

    Construction

     

     

    Commercial

    Real Estate-

    Improved

    Property

     

     

    Commercial

    and

    Industrial

     

     

    Residential

    Real

    Estate

     

     

    Home

    Equity

     

     

    Consumer

     

     

    Deposit

    Over-

    drafts

     

     

    Total

     

    March 31, 2021

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    Allowance for credit losses:

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    Loans individually-evaluated

     

    $

    503

     

     

    $

    4,035

     

     

    $

    1,501

     

     

    $

    —

     

     

    $

    —

     

     

    $

    —

     

     

    $

    —

     

     

    $

    6,039

     

    Loans collectively-evaluated

     

     

    6,837

     

     

     

    95,706

     

     

     

    31,783

     

     

     

    13,438

     

     

     

    998

     

     

     

    4,532

     

     

     

    707

     

     

     

    154,001

     

    Loan commitments

     

     

    4,000

     

     

     

    208

     

     

     

    1,583

     

     

     

    869

     

     

     

    50

     

     

     

    21

     

     

     

    —

     

     

     

    6,731

     

    Total allowance for credit

       losses - loans and commitments

     

    $

    11,340

     

     

    $

    99,949

     

     

    $

    34,867

     

     

    $

    14,307

     

     

    $

    1,048

     

     

    $

    4,553

     

     

    $

    707

     

     

    $

    166,771

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    Portfolio loans:

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    Individually-evaluated for credit

       losses(1)

     

    $

    1,125

     

     

    $

    40,158

     

     

    $

    1,838

     

     

    $

    —

     

     

    $

    —

     

     

    $

    —

     

     

    $

    —

     

     

    $

    43,121

     

    Collectively-evaluated for credit

       losses

     

     

    640,892

     

     

     

    5,030,567

     

     

     

    2,420,897

     

     

     

    1,644,422

     

     

     

    634,018

     

     

     

    289,395

     

     

     

    —

     

     

     

    10,660,191

     

    Total portfolio loans

     

    $

    642,017

     

     

    $

    5,070,725

     

     

    $

    2,422,735

     

     

    $

    1,644,422

     

     

    $

    634,018

     

     

    $

    289,395

     

     

    $

    —

     

     

    $

    10,703,312

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    December 31, 2020

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    Allowance for credit losses:

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    Loans individually-evaluated

     

    $

    602

     

     

    $

    4,196

     

     

    $

    1,484

     

     

    $

    —

     

     

    $

    —

     

     

    $

    —

     

     

    $

    —

     

     

    $

    6,282

     

    Loans collectively-evaluated

     

     

    10,239

     

     

     

    106,456

     

     

     

    36,366

     

     

     

    17,851

     

     

     

    1,487

     

     

     

    6,507

     

     

     

    639

     

     

     

    179,545

     

    Loan commitments

     

     

    6,508

     

     

     

    712

     

     

     

    1,275

     

     

     

    955

     

     

     

    45

     

     

     

    19

     

     

     

    —

     

     

     

    9,514

     

    Total allowance for credit

       losses - loans and commitments

     

    $

    17,349

     

     

    $

    111,364

     

     

    $

    39,125

     

     

    $

    18,806

     

     

    $

    1,532

     

     

    $

    6,526

     

     

    $

    639

     

     

    $

    195,341

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    Portfolio loans:

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    Individually-evaluated for credit

       losses(1)

     

    $

    1,455

     

     

    $

    40,372

     

     

    $

    2,863

     

     

    $

    —

     

     

    $

    —

     

     

    $

    —

     

     

    $

    —

     

     

    $

    44,690

     

    Collectively-evaluated for credit

       losses

     

     

    666,822

     

     

     

    4,996,743

     

     

     

    2,404,575

     

     

     

    1,720,961

     

     

     

    646,387

     

     

     

    309,055

     

     

     

    —

     

     

     

    10,744,543

     

    Total portfolio loans

     

    $

    668,277

     

     

    $

    5,037,115

     

     

    $

    2,407,438

     

     

    $

    1,720,961

     

     

    $

    646,387

     

     

    $

    309,055

     

     

    $

    —

     

     

    $

    10,789,233

     

     

    (1)

    Commercial loans greater than $1 million that are reported as non-accrual or as a TDR are individually evaluated for credit loss.

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

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

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

    12


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

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

    The following tables summarize commercial loans by their 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

     

    As of March 31, 2021

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    Pass

     

    $

    634,835

     

     

    $

    4,679,257

     

     

    $

    2,365,558

     

     

    $

    7,679,650

     

    Criticized - compromised

     

     

    5,360

     

     

     

    297,801

     

     

     

    37,782

     

     

     

    340,943

     

    Classified - substandard

     

     

    1,822

     

     

     

    93,667

     

     

     

    19,395

     

     

     

    114,884

     

    Classified - doubtful

     

     

    —

     

     

     

    —

     

     

     

    —

     

     

     

    —

     

    Total

     

    $

    642,017

     

     

    $

    5,070,725

     

     

    $

    2,422,735

     

     

    $

    8,135,477

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    As of December 31, 2020

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    Pass

     

    $

    657,435

     

     

    $

    4,609,726

     

     

    $

    2,350,724

     

     

    $

    7,617,885

     

    Criticized - compromised

     

     

    7,397

     

     

     

    320,301

     

     

     

    34,597

     

     

     

    362,295

     

    Classified - substandard

     

     

    3,445

     

     

     

    107,088

     

     

     

    22,117

     

     

     

    132,650

     

    Classified - doubtful

     

     

    —

     

     

     

    —

     

     

     

    —

     

     

     

    —

     

    Total

     

    $

    668,277

     

     

    $

    5,037,115

     

     

    $

    2,407,438

     

     

    $

    8,112,830

     

     

    Residential real estate, home equity and consumer loans are not assigned internal risk grades other than as required by regulatory guidelines that are based primarily on the age of past due loans.  Wesbanco primarily evaluates the credit quality of residential real estate, home equity and consumer loans based on repayment performance and historical loss rates.  The aggregate amount of residential real estate, home equity and consumer loans classified as substandard in accordance with regulatory guidelines was $29.4 million at March 31, 2021 and $27.7 million at December 31, 2020, of which $5.5 million and $4.1 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 $28.3 million and $28.7 million of unfunded commercial loan commitments are not included in the tables above at March 31, 2021 and December 31, 2020, respectively.

    13


    The following tables summarize the age analysis of all categories 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)

     

    As of March 31, 2021

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    Commercial real estate:

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    Land and construction

     

    $

    639,378

     

     

    $

    1,120

     

     

    $

    759

     

     

    $

    760

     

     

    $

    2,639

     

     

    $

    642,017

     

     

    $

    641

     

    Improved property

     

     

    5,055,419

     

     

     

    4,041

     

     

     

    1,984

     

     

     

    9,281

     

     

     

    15,306

     

     

     

    5,070,725

     

     

     

    1,955

     

    Total commercial real estate

     

     

    5,694,797

     

     

     

    5,161

     

     

     

    2,743

     

     

     

    10,041

     

     

     

    17,945

     

     

     

    5,712,742

     

     

     

    2,596

     

    Commercial and industrial

     

     

    2,408,663

     

     

     

    4,823

     

     

     

    2,657

     

     

     

    6,592

     

     

     

    14,072

     

     

     

    2,422,735

     

     

     

    5,314

     

    Residential real estate

     

     

    1,625,328

     

     

     

    2,713

     

     

     

    1,589

     

     

     

    14,792

     

     

     

    19,094

     

     

     

    1,644,422

     

     

     

    4,007

     

    Home equity

     

     

    628,773

     

     

     

    1,213

     

     

     

    197

     

     

     

    3,835

     

     

     

    5,245

     

     

     

    634,018

     

     

     

    784

     

    Consumer

     

     

    287,395

     

     

     

    1,428

     

     

     

    340

     

     

     

    232

     

     

     

    2,000

     

     

     

    289,395

     

     

     

    123

     

    Total portfolio loans

     

     

    10,644,956

     

     

     

    15,338

     

     

     

    7,526

     

     

     

    35,492

     

     

     

    58,356

     

     

     

    10,703,312

     

     

     

    12,824

     

    Loans held for sale

     

     

    153,520

     

     

     

    —

     

     

     

    —

     

     

     

    —

     

     

     

    —

     

     

     

    153,520

     

     

     

    —

     

    Total loans

     

    $

    10,798,476

     

     

    $

    15,338

     

     

    $

    7,526

     

     

    $

    35,492

     

     

    $

    58,356

     

     

    $

    10,856,832

     

     

    $

    12,824

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    Nonperforming loans included above are as follows:

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    Non-accrual loans

     

    $

    9,960

     

     

    $

    940

     

     

    $

    1,100

     

     

    $

    22,575

     

     

    $

    24,615

     

     

    $

    34,575

     

     

     

     

     

    TDRs accruing interest (1)

     

     

    3,248

     

     

     

    63

     

     

     

    159

     

     

     

    93

     

     

     

    315

     

     

     

    3,563

     

     

     

     

     

    Total nonperforming loans

     

    $

    13,208

     

     

    $

    1,003

     

     

    $

    1,259

     

     

    $

    22,668

     

     

    $

    24,930

     

     

    $

    38,138

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    As of December 31, 2020

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    Commercial real estate:

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    Land and construction

     

    $

    664,990

     

     

    $

    582

     

     

    $

    2,276

     

     

    $

    429

     

     

    $

    3,287

     

     

    $

    668,277

     

     

    $

    288

     

    Improved property

     

     

    5,016,812

     

     

     

    4,876

     

     

     

    4,118

     

     

     

    11,309

     

     

     

    20,303

     

     

     

    5,037,115

     

     

     

    2,713

     

    Total commercial real estate

     

     

    5,681,802

     

     

     

    5,458

     

     

     

    6,394

     

     

     

    11,738

     

     

     

    23,590

     

     

     

    5,705,392

     

     

     

    3,001

     

    Commercial and industrial

     

     

    2,395,844

     

     

     

    4,372

     

     

     

    2,197

     

     

     

    5,025

     

     

     

    11,594

     

     

     

    2,407,438

     

     

     

    1,899

     

    Residential real estate

     

     

    1,698,636

     

     

     

    2,614

     

     

     

    5,654

     

     

     

    14,057

     

     

     

    22,325

     

     

     

    1,720,961

     

     

     

    2,863

     

    Home equity

     

     

    639,319

     

     

     

    2,414

     

     

     

    775

     

     

     

    3,879

     

     

     

    7,068

     

     

     

    646,387

     

     

     

    706

     

    Consumer

     

     

    305,483

     

     

     

    1,998

     

     

     

    1,031

     

     

     

    543

     

     

     

    3,572

     

     

     

    309,055

     

     

     

    377

     

    Total portfolio loans

     

     

    10,721,084

     

     

     

    16,856

     

     

     

    16,051

     

     

     

    35,242

     

     

     

    68,149

     

     

     

    10,789,233

     

     

     

    8,846

     

    Loans held for sale

     

     

    168,378

     

     

     

    —

     

     

     

    —

     

     

     

    —

     

     

     

    —

     

     

     

    168,378

     

     

     

    —

     

    Total loans

     

    $

    10,889,462

     

     

    $

    16,856

     

     

    $

    16,051

     

     

    $

    35,242

     

     

    $

    68,149

     

     

    $

    10,957,611

     

     

    $

    8,846

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    Nonperforming loans included above are as follows:

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    Non-accrual loans

     

    $

    9,560

     

     

    $

    630

     

     

    $

    466

     

     

    $

    26,224

     

     

    $

    27,320

     

     

    $

    36,880

     

     

     

     

     

    TDRs accruing interest (1)

     

     

    3,540

     

     

     

    63

     

     

     

    152

     

     

     

    172

     

     

     

    387

     

     

     

    3,927

     

     

     

     

     

    Total nonperforming loans

     

    $

    13,100

     

     

    $

    693

     

     

    $

    618

     

     

    $

    26,396

     

     

    $

    27,707

     

     

    $

    40,807

     

     

     

     

     

     

    (1)

    Loans 90 days or more past due and accruing interest exclude TDRs 90 days or more past due and accruing interest.

    14


     

    The following tables summarize nonperforming loans:

     

     

     

    Nonperforming Loans

     

     

     

    March 31, 2021

     

     

    December 31, 2020

     

     

     

    Unpaid

     

     

     

     

     

     

     

     

     

     

    Unpaid

     

     

     

     

     

     

     

     

     

     

     

    Principal

     

     

    Recorded

     

     

    Related

     

     

    Principal

     

     

    Recorded

     

     

    Related

     

    (unaudited, in thousands)

     

    Balance (1)

     

     

    Investment

     

     

    Allowance

     

     

    Balance (1)

     

     

    Investment

     

     

    Allowance

     

    With no related specific allowance recorded:

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    Commercial real estate:

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    Land and construction

     

    $

    138

     

     

    $

    120

     

     

    $

    —

     

     

    $

    469

     

     

    $

    469

     

     

    $

    —

     

    Improved property

     

     

    8,719

     

     

     

    7,349

     

     

     

    —

     

     

     

    9,597

     

     

     

    8,055

     

     

    —

     

    Commercial and industrial

     

     

    1,860

     

     

     

    1,675

     

     

     

    —

     

     

     

    4,401

     

     

     

    3,413

     

     

    —

     

    Residential real estate

     

     

    23,605

     

     

     

    20,990

     

     

     

    —

     

     

     

    23,055

     

     

     

    20,704

     

     

    —

     

    Home equity

     

     

    6,518

     

     

     

    5,569

     

     

     

    —

     

     

     

    6,635

     

     

     

    5,708

     

     

    —

     

    Consumer

     

     

    593

     

     

     

    351

     

     

     

    —

     

     

     

    602

     

     

     

    364

     

     

    —

     

    Total nonperforming loans without a specific allowance

     

     

    41,433

     

     

     

    36,054

     

     

     

    —

     

     

     

    44,759

     

     

     

    38,713

     

     

     

    —

     

    With a specific allowance recorded:

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    Commercial real estate:

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    Land and construction

     

     

    —

     

     

     

    —

     

     

     

    —

     

     

    —

     

     

    —

     

     

    —

     

    Improved property

     

     

    2,094

     

     

     

    2,084

     

     

     

    175

     

     

     

    2,094

     

     

     

    2,094

     

     

     

    136

     

    Commercial and industrial

     

     

    —

     

     

     

    —

     

     

     

    —

     

     

    —

     

     

    —

     

     

    —

     

    Residential real estate

     

     

    —

     

     

     

    —

     

     

     

    —

     

     

    —

     

     

    —

     

     

    —

     

    Home equity

     

     

    —

     

     

     

    —

     

     

     

    —

     

     

    —

     

     

    —

     

     

    —

     

    Consumer

     

     

    —

     

     

     

    —

     

     

     

    —

     

     

    —

     

     

    —

     

     

    —

     

    Total nonperforming loans with a specific allowance

     

     

    2,094

     

     

     

    2,084

     

     

     

    175

     

     

     

    2,094

     

     

     

    2,094

     

     

     

    136

     

    Total nonperforming loans

     

    $

    43,527

     

     

    $

    38,138

     

     

    $

    175

     

     

    $

    46,853

     

     

    $

    40,807

     

     

    $

    136

     

     

    (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 nonperforming loans.

     

     

     

    Nonperforming Loans

     

     

     

    For the Three Months Ended

     

     

     

    March 31, 2021

     

     

    March 31, 2020

     

     

     

    Average

     

     

    Interest

     

     

    Average

     

     

    Interest

     

     

     

    Recorded

     

     

    Income

     

     

    Recorded

     

     

    Income

     

    (unaudited, in thousands)

     

    Investment

     

     

    Recognized

     

     

    Investment

     

     

    Recognized

     

    With no related specific allowance recorded:

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    Commercial real estate:

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    Land and construction

     

    $

    295

     

     

    $

    —

     

     

    $

    393

     

     

    $

    —

     

    Improved property

     

     

    7,702

     

     

     

    9

     

     

     

    5,501

     

     

     

    20

     

    Commercial and industrial

     

     

    2,544

     

     

     

    1

     

     

     

    8,570

     

     

     

    3

     

    Residential real estate

     

     

    20,847

     

     

     

    39

     

     

     

    18,470

     

     

     

    55

     

    Home equity

     

     

    5,639

     

     

     

    6

     

     

     

    5,811

     

     

     

    6

     

    Consumer

     

     

    358

     

     

     

    —

     

     

     

    390

     

     

     

    1

     

    Total nonperforming loans without a specific allowance

     

     

    37,385

     

     

     

    55

     

     

     

    39,135

     

     

     

    85

     

    With a specific allowance recorded:

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    Commercial real estate:

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    Land and construction

     

     

    —

     

     

     

    —

     

     

     

    —

     

     

     

    —

     

    Improved property

     

     

    2,089

     

     

     

    —

     

     

     

    3,270

     

     

     

    —

     

    Commercial and industrial

     

     

    —

     

     

     

    —

     

     

     

    96

     

     

     

    —

     

    Residential real estate

     

     

    —

     

     

     

    —

     

     

     

    2,196

     

     

     

    —

     

    Home equity

     

     

    —

     

     

     

    —

     

     

     

    352

     

     

     

    —

     

    Consumer

     

     

    —

     

     

     

    —

     

     

     

    27

     

     

     

    —

     

    Total nonperforming loans with a specific allowance

     

     

    2,089

     

     

     

    —

     

     

     

    5,941

     

     

     

    —

     

    Total nonperforming loans

     

    $

    39,474

     

     

    $

    55

     

     

    $

    45,076

     

     

    $

    85

     

     

    15


     

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

     

     

     

    Non-accrual Loans (1)

     

     

     

    March 31,

     

     

    December 31,

     

    (unaudited, in thousands)

     

    2021

     

     

    2020

     

    Commercial real estate:

     

     

     

     

     

     

     

     

    Land and construction

     

    $

    120

     

     

    $

    469

     

    Improved property

     

     

    9,007

     

     

     

    9,494

     

    Total commercial real estate

     

     

    9,127

     

     

     

    9,963

     

    Commercial and industrial

     

     

    1,571

     

     

     

    3,302

     

    Residential real estate

     

     

    18,358

     

     

     

    17,925

     

    Home equity

     

     

    5,181

     

     

     

    5,345

     

    Consumer

     

     

    338

     

     

     

    345

     

    Total

     

    $

    34,575

     

     

    $

    36,880

     

     

    (1)

    At March 31, 2021 and December 31, 2020, there was 1 borrower with a loan balance greater than $1.0 million totaling $2.1 million.  Total non-accrual loans include loans that are also restructured.  Such loans are also set forth in the following table as non-accrual TDRs.

     

     

     

    TDRs

     

     

     

    March 31, 2021

     

     

    December 31, 2020

     

    (unaudited, in thousands)

     

    Accruing

     

     

    Non-Accrual

     

     

    Total

     

     

    Accruing

     

     

    Non-Accrual

     

     

    Total

     

    Commercial real estate:

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    Land and construction

     

    $

    —

     

     

    $

    —

     

     

    $

    —

     

     

    $

    —

     

     

    $

    —

     

     

    $

    —

     

    Improved property

     

     

    426

     

     

     

    157

     

     

     

    583

     

     

     

    655

     

     

     

    165

     

     

     

    820

     

    Total commercial real estate

     

     

    426

     

     

     

    157

     

     

     

    583

     

     

     

    655

     

     

     

    165

     

     

     

    820

     

    Commercial and industrial

     

     

    104

     

     

     

    —

     

     

     

    104

     

     

     

    111

     

     

     

    —

     

     

     

    111

     

    Residential real estate

     

     

    2,632

     

     

     

    1,353

     

     

     

    3,985

     

     

     

    2,779

     

     

     

    1,354

     

     

     

    4,133

     

    Home equity

     

     

    388

     

     

     

    253

     

     

     

    641

     

     

     

    363

     

     

     

    300

     

     

     

    663

     

    Consumer

     

     

    13

     

     

     

    5

     

     

     

    18

     

     

     

    19

     

     

     

    9

     

     

     

    28

     

    Total

     

    $

    3,563

     

     

    $

    1,768

     

     

    $

    5,331

     

     

    $

    3,927

     

     

    $

    1,828

     

     

    $

    5,755

     

     

    As of March 31, 2021 and December 31, 2020, 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 six months.  Wesbanco had unfunded commitments to debtors whose loans were classified as nonperforming of $0.9 million as of March 31, 2021 and December 31, 2020.

    The following tables present details related to loans identified as TDRs during the three months ended March 31, 2021 and 2020, respectively:

     

     

     

    New TDRs (1)

     

     

     

    For the Three Months Ended

     

     

     

    March 31, 2021

     

     

    March 31, 2020

     

     

     

     

     

     

     

    Pre-

     

     

    Post-

     

     

     

     

     

     

    Pre-

     

     

    Post-

     

     

     

     

     

     

     

    Modification

     

     

    Modification

     

     

     

     

     

     

    Modification

     

     

    Modification

     

     

     

     

     

     

     

    Outstanding

     

     

    Outstanding

     

     

     

     

     

     

    Outstanding

     

     

    Outstanding

     

     

     

    Number of

     

     

    Recorded

     

     

    Recorded

     

     

    Number of

     

     

    Recorded

     

     

    Recorded

     

    (unaudited, dollars in thousands)

     

    Modifications

     

     

    Investment

     

     

    Investment

     

     

    Modifications

     

     

    Investment

     

     

    Investment

     

    Commercial real estate:

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    Land and construction

     

     

    —

     

     

    $

    —

     

     

    $

    —

     

     

     

    —

     

     

    $

    —

     

     

    $

    —

     

    Improved Property

     

     

    —

     

     

     

    —

     

     

     

    —

     

     

     

    —

     

     

     

    —

     

     

     

    —

     

    Total commercial real estate

     

     

    —

     

     

     

    —

     

     

     

    —

     

     

     

    —

     

     

     

    —

     

     

     

    —

     

    Commercial and industrial

     

     

    —

     

     

     

    —

     

     

     

    —

     

     

     

    —

     

     

     

    —

     

     

     

    —

     

    Residential real estate

     

     

    —

     

     

     

    —

     

     

     

    —

     

     

     

    2

     

     

     

    332

     

     

     

    330

     

    Home equity

     

     

    —

     

     

     

    —

     

     

     

    —

     

     

     

    —

     

     

     

    —

     

     

     

    —

     

    Consumer

     

     

    —

     

     

     

    —

     

     

     

    —

     

     

     

    —

     

     

     

    —

     

     

     

    —

     

    Total

     

     

    —

     

     

    $

    —

     

     

    $

    —

     

     

     

    2

     

     

    $

    332

     

     

    $

    330

     

    (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.

    16


    The following table summarizes TDRs which defaulted (defined as past due 90 days) during the three months ended March 31, 2021 and 2020, respectively, that were restructured within the last twelve months prior to March 31, 2021 and 2020, respectively:

     

     

     

    Defaulted TDRs (1)

     

     

     

    For the Three Months Ended

     

     

     

    March 31, 2021

     

     

    March 31, 2020

     

     

     

    Number of

     

     

    Recorded

     

     

    Number of

     

     

    Recorded

     

    (unaudited, dollars in thousands)

     

    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

     

     

     

    155

     

    Home equity

     

     

    —

     

     

     

    —

     

     

     

    —

     

     

     

    —

     

    Consumer

     

     

    —

     

     

     

    —

     

     

     

    —

     

     

     

    —

     

    Total

     

     

    —

     

     

    $

    —

     

     

     

    2

     

     

    $

    168

     

     

    (1)

    Excludes loans that were either charged-off or cured by period end.  The recorded investment is as of March 31, 2021 and 2020, respectively.

    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.

    Section 4013 of the CARES Act allows financial institutions the option to temporarily suspend certain requirements under U.S. GAAP related to TDRs for a limited period of time during the COVID-19 pandemic. These customers must meet certain criteria, such as they were in good standing and not more than 30 days past due either as of December 31, 2019, or as of the implementation of the modification program under the Interagency Statement, as well as other requirements noted in the regulatory agencies’ revised statement. Based on this guidance, Wesbanco does not classify the COVID-19 loan modifications as TDRs, nor are the customers considered past due with regard to their delayed payments. Upon exiting the loan modification deferral program, the measurement of loan delinquency will resume where it left off upon entry into the program. Under the CARES Act, Wesbanco has modified approximately 3,553 loans totaling $2.2 billion, of which $0.2 billion remain in their deferral period as of March 31, 2021.  Wesbanco originally offered three to six months of deferred payments to commercial and retail customers impacted by the COVID-19 pandemic depending on the type of loan and the industry for commercial loans. In the fourth quarter of 2020, Wesbanco offered up to an additional twelve months of deferred payments to certain commercial loan customers, predominantly in the hospitality industry, based on specific criteria related to the borrower, the underlying property and the potential for guarantors / co-borrowers.  On December 27, 2020, the Economic Aid to Hard-Hit Small Businesses, Nonprofits and Venues Act (“Economic Aid Act”) was signed into law and among other things, extended the relief granted by the CARES Act for TDRs, initially slated to end on December 31, 2020, by one year to December 31, 2021.

    17


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

     

     

     

    Loans As of March 31, 2021

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    Amortized Cost Basis by Origination Year

     

     

     

     

     

     

     

     

     

     

     

     

     

    (unaudited, in thousands)

     

    2021

     

     

    2020

     

     

    2019

     

     

    2018

     

     

    2017

     

     

    Prior

     

     

    Revolving Loans Amortized Cost Basis

     

     

    Revolving Loans Converted to Term

     

     

    Total

     

    Commercial real estate: land and construction

     

     

     

     

     

    Risk rating:

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    Pass

     

    $

    30,840

     

     

    $

    164,939

     

     

    $

    296,600

     

     

    $

    49,749

     

     

    $

    27,064

     

     

    $

    43,143

     

     

    $

    22,500

     

     

    $

    —

     

     

    $

    634,835

     

    Criticized - compromised

     

     

    —

     

     

     

    875

     

     

     

    —

     

     

     

    39

     

     

     

    228

     

     

     

    3,618

     

     

     

    600

     

     

     

    —

     

     

     

    5,360

     

    Classified - substandard

     

     

    —

     

     

     

    —

     

     

     

    —

     

     

     

    74

     

     

     

    40

     

     

     

    1,708

     

     

     

    —

     

     

     

    —

     

     

     

    1,822

     

    Classified - doubtful

     

     

    —

     

     

     

    —

     

     

     

    —

     

     

     

    —

     

     

     

    —

     

     

     

    —

     

     

     

    —

     

     

     

    —

     

     

     

    —

     

    Total

     

    $

    30,840

     

     

    $

    165,814

     

     

    $

    296,600

     

     

    $

    49,862

     

     

    $

    27,332

     

     

    $

    48,469

     

     

    $

    23,100

     

     

    $

    —

     

     

    $

    642,017

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    Commercial real estate: improved property

     

     

     

     

     

    Risk rating:

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    Pass

     

    $

    156,789

     

     

    $

    787,296

     

     

    $

    690,398

     

     

    $

    639,915

     

     

    $

    472,801

     

     

    $

    1,864,909

     

     

    $

    67,149

     

     

    $

    —

     

     

    $

    4,679,257

     

    Criticized - compromised

     

     

    —

     

     

     

    1,892

     

     

     

    53,807

     

     

     

    17,473

     

     

     

    53,576

     

     

     

    150,704

     

     

     

    20,349

     

     

     

    —

     

     

     

    297,801

     

    Classified - substandard

     

     

    —

     

     

     

    222

     

     

     

    28,603

     

     

     

    1,860

     

     

     

    7,171

     

     

     

    55,811

     

     

     

    —

     

     

     

    —

     

     

     

    93,667

     

    Classified - doubtful

     

     

    —

     

     

     

    —

     

     

     

    —

     

     

     

    —

     

     

     

    —

     

     

     

    —

     

     

     

    —

     

     

     

    —

     

     

     

    —

     

    Total

     

    $

    156,789

     

     

    $

    789,410

     

     

    $

    772,808

     

     

    $

    659,248

     

     

    $

    533,548

     

     

    $

    2,071,424

     

     

    $

    87,498

     

     

    $

    —

     

     

    $

    5,070,725

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    Commercial and industrial

     

     

     

     

     

    Risk rating:

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    Pass

     

    $

    401,323

     

     

    $

    685,632

     

     

    $

    232,322

     

     

    $

    185,484

     

     

    $

    135,856

     

     

    $

    320,788

     

     

    $

    404,023

     

     

    $

    130

     

     

    $

    2,365,558

     

    Criticized - compromised

     

     

    26

     

     

     

    3,290

     

     

     

    2,746

     

     

     

    4,236

     

     

     

    2,651

     

     

     

    10,841

     

     

     

    13,992

     

     

     

    —

     

     

     

    37,782

     

    Classified - substandard

     

     

    985

     

     

     

    —

     

     

     

    2,518

     

     

     

    1,668

     

     

     

    3,567

     

     

     

    5,179

     

     

     

    5,478

     

     

     

    —

     

     

     

    19,395

     

    Classified - doubtful

     

     

    —

     

     

     

    —

     

     

     

    —

     

     

     

    —

     

     

     

    —

     

     

     

    —

     

     

     

    —

     

     

     

    —

     

     

     

    —

     

    Total

     

    $

    402,334

     

     

    $

    688,922

     

     

    $

    237,586

     

     

    $

    191,388

     

     

    $

    142,074

     

     

    $

    336,808

     

     

    $

    423,493

     

     

    $

    130

     

     

    $

    2,422,735

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    Residential real estate

     

     

     

     

     

    Loan delinquency:

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    Current

     

    $

    66,997

     

     

    $

    392,577

     

     

    $

    209,234

     

     

    $

    130,435

     

     

    $

    94,237

     

     

    $

    731,848

     

     

    $

    —

     

     

    $

    —

     

     

    $

    1,625,328

     

    30-59 days past due

     

     

    —

     

     

     

    —

     

     

     

    —

     

     

     

    79

     

     

     

    —

     

     

     

    2,634

     

     

     

    —

     

     

     

    —

     

     

     

    2,713

     

    60-89 days past due

     

     

    —

     

     

     

    —

     

     

     

    —

     

     

     

    272

     

     

     

    113

     

     

     

    1,204

     

     

     

    —

     

     

     

    —

     

     

     

    1,589

     

    90 days or more past due

     

     

    —

     

     

     

    —

     

     

     

    379

     

     

     

    784

     

     

     

    761

     

     

     

    12,868

     

     

     

    —

     

     

     

    —

     

     

     

    14,792

     

    Total

     

    $

    66,997

     

     

    $

    392,577

     

     

    $

    209,613

     

     

    $

    131,570

     

     

    $

    95,111

     

     

    $

    748,554

     

     

    $

    —

     

     

    $

    —

     

     

    $

    1,644,422

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    Home equity

     

     

     

     

     

    Loan delinquency:

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    Current

     

    $

    4,724

     

     

    $

    15,055

     

     

    $

    3,290

     

     

    $

    2,959

     

     

    $

    857

     

     

    $

    16,995

     

     

    $

    573,653

     

     

    $

    11,240

     

     

    $

    628,773

     

    30-59 days past due

     

     

    —

     

     

     

    —

     

     

     

    —

     

     

     

    —

     

     

     

    —

     

     

     

    400

     

     

     

    783

     

     

     

    30

     

     

     

    1,213

     

    60-89 days past due

     

     

    —

     

     

     

    —

     

     

     

    —

     

     

     

    —

     

     

     

    —

     

     

     

    121

     

     

     

    76

     

     

     

    —

     

     

     

    197

     

    90 days or more past due

     

     

    —

     

     

     

    —

     

     

     

    —

     

     

     

    19

     

     

     

    150

     

     

     

    1,565

     

     

     

    1,355

     

     

     

    746

     

     

     

    3,835

     

    Total

     

    $

    4,724

     

     

    $

    15,055

     

     

    $

    3,290

     

     

    $

    2,978

     

     

    $

    1,007

     

     

    $

    19,081

     

     

    $

    575,867

     

     

    $

    12,016

     

     

    $

    634,018

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    Consumer

     

     

     

     

     

    Loan delinquency:

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    Current

     

    $

    18,121

     

     

    $

    65,802

     

     

    $

    79,045

     

     

    $

    33,586

     

     

    $

    18,773

     

     

    $

    51,313

     

     

    $

    20,589

     

     

    $

    166

     

     

    $

    287,395

     

    30-59 days past due

     

     

    37

     

     

     

    444

     

     

     

    413

     

     

     

    68

     

     

     

    114

     

     

     

    352

     

     

     

    —

     

     

     

    —

     

     

     

    1,428

     

    60-89 days past due

     

     

    —

     

     

     

    45

     

     

     

    50

     

     

     

    31

     

     

     

    64

     

     

     

    148

     

     

     

    2

     

     

     

    —

     

     

     

    340

     

    90 days or more past due

     

     

    —

     

     

     

    8

     

     

     

    —

     

     

     

    54

     

     

     

    29

     

     

     

    125

     

     

     

    16

     

     

     

    —

     

     

     

    232

     

    Total

     

    $

    18,158

     

     

    $

    66,299

     

     

    $

    79,508

     

     

    $

    33,739

     

     

    $

    18,980

     

     

    $

    51,938

     

     

    $

    20,607

     

     

    $

    166

     

     

    $

    289,395

     

     

    18


     

     

     

    Loans As of December 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

     

    $

    133,720

     

     

    $

    314,614

     

     

    $

    109,232

     

     

    $

    27,483

     

     

    $

    16,404

     

     

    $

    29,685

     

     

    $

    26,297

     

     

    $

    —

     

     

    $

    657,435

     

    Criticized - compromised

     

     

    459

     

     

     

    —

     

     

     

    1,532

     

     

     

    233

     

     

     

    79

     

     

     

    3,778

     

     

     

    1,316

     

     

     

    —

     

     

     

    7,397

     

    Classified - substandard

     

     

    —

     

     

     

    —

     

     

     

    403

     

     

     

    58

     

     

     

    291

     

     

     

    2,693

     

     

     

    —

     

     

     

    —

     

     

     

    3,445

     

    Classified - doubtful

     

     

    —

     

     

     

    —

     

     

     

    —

     

     

     

    —

     

     

     

    —

     

     

     

    —

     

     

     

    —

     

     

     

    —

     

     

     

    —

     

    Total

     

    $

    134,179

     

     

    $

    314,614

     

     

    $

    111,167

     

     

    $

    27,774

     

     

    $

    16,774

     

     

    $

    36,156

     

     

    $

    27,613

     

     

    $

    —

     

     

    $

    668,277

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    Commercial real estate: improved property

     

     

     

     

     

    Risk rating:

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    Pass

     

    $

    809,516

     

     

    $

    670,554

     

     

    $

    646,629

     

     

    $

    474,622

     

     

    $

    572,733

     

     

    $

    1,346,552

     

     

    $

    89,120

     

     

    $

    —

     

     

    $

    4,609,726

     

    Criticized - compromised

     

     

    2,693

     

     

     

    67,261

     

     

     

    16,793

     

     

     

    59,251

     

     

     

    42,284

     

     

     

    130,247

     

     

     

    1,772

     

     

     

    —

     

     

     

    320,301

     

    Classified - substandard

     

     

    102

     

     

     

    16,366

     

     

     

    4,946

     

     

     

    11,647

     

     

     

    18,460

     

     

     

    55,567

     

     

     

    —

     

     

     

    —

     

     

     

    107,088

     

    Classified - doubtful

     

     

    —

     

     

     

    —

     

     

     

    —

     

     

     

    —

     

     

     

    —

     

     

     

    —

     

     

     

    —

     

     

     

    —

     

     

     

    —

     

    Total

     

    $

    812,311

     

     

    $

    754,181

     

     

    $

    668,368

     

     

    $

    545,520

     

     

    $

    633,477

     

     

    $

    1,532,366

     

     

    $

    90,892

     

     

    $

    —

     

     

    $

    5,037,115

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    Commercial and industrial

     

     

     

     

     

    Risk rating:

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    Pass

     

    $

    977,085

     

     

    $

    240,262

     

     

    $

    193,712

     

     

    $

    160,924

     

     

    $

    85,379

     

     

    $

    265,890

     

     

    $

    427,336

     

     

    $

    136

     

     

    $

    2,350,724

     

    Criticized - compromised

     

     

    453

     

     

     

    2,726

     

     

     

    4,206

     

     

     

    2,795

     

     

     

    324

     

     

     

    11,640

     

     

     

    12,453

     

     

     

    —

     

     

     

    34,597

     

    Classified - substandard

     

     

    —

     

     

     

    3,817

     

     

     

    1,947

     

     

     

    3,771

     

     

     

    1,603

     

     

     

    5,073

     

     

     

    5,906

     

     

     

    —

     

     

     

    22,117

     

    Classified - doubtful

     

     

    —

     

     

     

    —

     

     

     

    —

     

     

     

    —

     

     

     

    —

     

     

     

    —

     

     

     

    —

     

     

     

    —

     

     

     

    —

     

    Total

     

    $

    977,538

     

     

    $

    246,805

     

     

    $

    199,865

     

     

    $

    167,490

     

     

    $

    87,306

     

     

    $

    282,603

     

     

    $

    445,695

     

     

    $

    136

     

     

    $

    2,407,438

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    Residential real estate

     

     

     

     

     

    Loan delinquency:

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    Current

     

    $

    385,541

     

     

    $

    242,770

     

     

    $

    149,603

     

     

    $

    108,090

     

     

    $

    170,967

     

     

    $

    641,665

     

     

    $

    —

     

     

    $

    —

     

     

    $

    1,698,636

     

    30-59 days past due

     

     

    —

     

     

     

    —

     

     

     

    320

     

     

     

    533

     

     

     

    —

     

     

     

    1,761

     

     

     

    —

     

     

     

    —

     

     

     

    2,614

     

    60-89 days past due

     

     

    —

     

     

     

    —

     

     

     

    823

     

     

     

    —

     

     

     

    185

     

     

     

    4,646

     

     

     

    —

     

     

     

    —

     

     

     

    5,654

     

    90 days or more past due

     

    ��

    —

     

     

     

    483

     

     

     

    166

     

     

     

    761

     

     

     

    819

     

     

     

    11,828

     

     

     

    —

     

     

     

    —

     

     

     

    14,057

     

    Total

     

    $

    385,541

     

     

    $

    243,253

     

     

    $

    150,912

     

     

    $

    109,384

     

     

    $

    171,971

     

     

    $

    659,900

     

     

    $

    —

     

     

    $

    —

     

     

    $

    1,720,961

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    Home equity

     

     

     

     

     

    Loan delinquency:

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    Current

     

    $

    18,191

     

     

    $

    3,611

     

     

    $

    3,334

     

     

    $

    975

     

     

    $

    1,110

     

     

    $

    16,477

     

     

    $

    583,486

     

     

    $

    12,135

     

     

    $

    639,319

     

    30-59 days past due

     

     

    124

     

     

     

    —

     

     

     

    34

     

     

     

    —

     

     

     

    —

     

     

     

    882

     

     

     

    1,247

     

     

     

    127

     

     

     

    2,414

     

    60-89 days past due

     

     

    —

     

     

     

    —

     

     

     

    —

     

     

     

    —

     

     

     

    —

     

     

     

    14

     

     

     

    749

     

     

     

    12

     

     

     

    775

     

    90 days or more past due

     

     

    —

     

     

     

    —

     

     

     

    8

     

     

     

    156

     

     

     

    88

     

     

     

    1,786

     

     

     

    1,075

     

     

     

    766

     

     

     

    3,879

     

    Total

     

    $

    18,315

     

     

    $

    3,611

     

     

    $

    3,376

     

     

    $

    1,131

     

     

    $

    1,198

     

     

    $

    19,159

     

     

    $

    586,557

     

     

    $

    13,040

     

     

    $

    646,387

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    Consumer

     

     

     

     

     

    Loan delinquency:

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    Current

     

    $

    72,847

     

     

    $

    89,637

     

     

    $

    39,584

     

     

    $

    22,118

     

     

    $

    13,144

     

     

    $

    45,735

     

     

    $

    22,253

     

     

    $

    165

     

     

    $

    305,483

     

    30-59 days past due

     

     

    481

     

     

     

    408

     

     

     

    210

     

     

     

    311

     

     

     

    194

     

     

     

    379

     

     

     

    15

     

     

     

    —

     

     

     

    1,998

     

    60-89 days past due

     

     

    273

     

     

     

    147

     

     

     

    84

     

     

     

    100

     

     

     

    163

     

     

     

    253

     

     

     

    11

     

     

     

    —

     

     

     

    1,031

     

    90 days or more past due

     

     

    113

     

     

     

    72

     

     

     

    73

     

     

     

    31

     

     

     

    12

     

     

     

    242

     

     

     

    —

     

     

     

    —

     

     

     

    543

     

    Total

     

    $

    73,714

     

     

    $

    90,264

     

     

    $

    39,951

     

     

    $

    22,560

     

     

    $

    13,513

     

     

    $

    46,609

     

     

    $

    22,279

     

     

    $

    165

     

     

    $

    309,055

     

     

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

     

     

     

    March 31,

     

     

    December 31,

     

    (unaudited, in thousands)

     

    2021

     

     

    2020

     

    Other real estate owned

     

    $

    375

     

     

    $

    504

     

    Repossessed assets

     

     

    18

     

     

     

    45

     

    Total other real estate owned and repossessed assets

     

    $

    393

     

     

    $

    549

     

     

    Residential real estate included in other real estate owned was $0.1 million at March 31, 2021 and December 31, 2020.  At March 31, 2021 and December 31, 2020, formal foreclosure proceedings were in process on residential real estate loans totaling $4.3 million and $4.1 million, respectively.

     

    19


     

    NOTE 5. DERIVATIVES AND HEDGING ACTIVITIES

    Risk Management Objective of Using Derivatives

    Wesbanco is exposed to certain risks arising from both its business operations and economic conditions.  Wesbanco principally manages its exposures to a wide variety of business and operational risks through management of its core business activities. 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 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 assets or liabilities. 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 Wesbanco Bank, Inc.’s (the “Bank”) assets and liabilities are equally distributed but also have similar maturities.

    Loan Swaps

    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 executes with a third party, such that 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 March 31, 2021 and December 31, 2020, Wesbanco had 122 and 112, respectively, customer interest rate swaps with an aggregate notional amount of $711.0 million and $649.9 million, respectively, related to this program.  During the three months ended March 31, 2021 and 2020, Wesbanco recognized net gains (losses) of $2.8 million and $(2.8) million, respectively, related to the changes in fair value of these swaps. Additionally, Wesbanco recognized $1.9 million and $2.6 million of income for the related swap fees for the three months ended March 31, 2021 and 2020, respectively.

    Risk participation agreements are entered into as financial guarantees of performance on interest rate swap derivatives.  The purchased asset or sold liability allows Wesbanco to participate-in (fee received) or participate-out (fee paid) the risk associated with certain derivative positions executed by the borrower by the lead bank in a loan syndication.  As of March 31, 2021 and December 31, 2020, Wesbanco had 13 and 12, respectively, risk participation-in agreements with an aggregate notional amount of $119.2 million and $101.1 million, respectively.  As of March 31, 2021 and December 31, 2020, Wesbanco had 1 risk participation-out agreement with an aggregate notional amount of $10.0 million.

    Mortgage Loans Held for Sale and Loan Commitments

    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 has elected the fair value option. Fair value is determined based on rates obtained from the secondary market for loans with similar characteristics. Wesbanco sells loans to the secondary market on either 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 enters into forward to be announced (“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 $197.0 million and $183.5 million at March 31, 2021 and December 31, 2020, respectively.  Additionally, Wesbanco recognized gains (losses) of $4.5 million and $(2.7) million, respectively, for the three months ended March 31, 2021 and 2020 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, and as a result, the Company does not enter into a separate forward TBA contract to offset the fair value risk as the investor accepts such risk in exchange for a lower premium on sale.

    Fair Values of Derivative Instruments on the Balance Sheet  

    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 derivatives are designated in a qualifying hedging relationship under ASC 815.  

    The table below presents the fair value of Wesbanco’s derivative financial instruments as well as their classification on the Balance Sheet as of March 31, 2021 and December 31, 2020:

     

     

     

    March 31, 2021

     

     

    December 31, 2020

     

    (unaudited, in thousands)

     

    Notional or

    Contractual

    Amount

     

     

    Asset

    Derivatives

     

     

    Liability

    Derivatives

     

     

    Notional or

    Contractual

    Amount

     

     

    Asset

    Derivatives

     

     

    Liability

    Derivatives

     

    Derivatives

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    Loan Swaps:

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    Interest rate swaps

     

    $

    710,986

     

     

    $

    31,732

     

     

    $

    32,470

     

     

    $

    649,857

     

     

    $

    46,418

     

     

    $

    49,917

     

    Other contracts:

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    Interest rate loan commitments

     

     

    85,435

     

     

     

    —

     

     

     

    314

     

     

     

    112,119

     

     

     

    702

     

     

     

    —

     

    Forward TBA contracts

     

     

    197,000

     

     

     

    1,515

     

     

     

    —

     

     

     

    183,500

     

     

    —

     

     

     

    1,161

     

    Total derivatives

     

     

     

     

     

    $

    33,247

     

     

    $

    32,784

     

     

     

     

     

     

    $

    47,120

     

     

    $

    51,078

     

     

    20


     

    Effect of Derivative Instruments on the Income Statement

    The table below presents the change in the fair value of the Company’s derivative financial instruments reflected within non-interest income on the consolidated income statement for the three months ended March 31, 2021 and 2020, respectively.

     

     

     

     

    For the Three Months

    Ended March 31,

     

    (unaudited, in thousands)

    Location of Gain/(Loss)

     

    2021

     

     

    2020

     

    Interest rate swaps

    Other income

     

    $

    2,761

     

     

    $

    (2,751

    )

    Interest rate loan commitments

    Mortgage banking income

     

     

    (1,016

    )

     

     

    (145

    )

    Forward TBA contracts

    Mortgage banking income

     

     

    4,518

     

     

     

    (2,657

    )

    Total

     

     

    $

    6,263

     

     

    $

    (5,553

    )

     

    Credit-risk-related Contingent Features

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

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

    Wesbanco had minimum collateral posting thresholds with certain of its derivative counterparties and has posted collateral with a market value of $54.2 million as of March 31, 2021.  If Wesbanco had breached any of these provisions at March 31, 2021, 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.

    NOTE 6. BENEFIT PLANS

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

     

     

     

    For the Three Months

    Ended March 31,

     

    (unaudited, in thousands)

     

    2021

     

     

    2020

     

    Service cost – benefits earned during year

     

    $

    616

     

     

    $

    568

     

    Interest cost on projected benefit obligation

     

     

    842

     

     

     

    1,121

     

    Expected return on plan assets

     

     

    (2,763

    )

     

     

    (2,594

    )

    Amortization of prior service cost

     

     

    (8

    )

     

     

    (9

    )

    Amortization of net loss

     

     

    675

     

     

     

    793

     

    Net periodic pension income

     

    $

    (638

    )

     

    $

    (121

    )

     

    The service cost of $0.6 million for both the three months ended March 31, 2021 and 2020 is included in salaries and wages, and the periodic pension income of $1.3 million and $0.7 million for the three months ended March 31, 2021 and 2020, respectively, is included in employee benefits.

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

     

    A minimum required contribution of $5.2 million is due for 2021, which can be offset in whole or in part by the Plan’s $64.2 million available credit balance. Wesbanco currently does 0t expect to make a voluntary contribution to the Plan in 2021.

     

     


    21


     

    NOTE 7. FAIR VALUE MEASUREMENT

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

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

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

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

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

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

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

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

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

    Individually-evaluated 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.

    22


    The fair value amounts presented in the table below are intended to permit reconciliation of the fair value hierarchy to the amounts presented in the statement of financial position. The following tables set forth Wesbanco’s financial assets and liabilities that were accounted for at fair value on a recurring and nonrecurring basis by level within the fair value hierarchy as of March 31, 2021 and December 31, 2020:

     

     

     

     

     

     

     

    March 31, 2021

     

     

     

     

     

     

     

    Fair Value Measurements Using:

     

     

     

    March 31,

     

     

    Quoted Prices in

    Active Markets

    for Identical

    Assets

     

     

    Significant

    Other

    Observable

    Inputs

     

     

    Significant

    Unobservable

    Inputs

     

    (unaudited, in thousands)

     

    2021

     

     

    (level 1)

     

     

    (level 2)

     

     

    (level 3)

     

    Recurring fair value measurements

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    Equity securities

     

    $

    13,123

     

     

    $

    13,123

     

     

    $

    —

     

     

    $

    —

     

    Available-for-sale debt securities

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    U.S. Treasury

     

     

    29,997

     

     

     

    —

     

     

     

    29,997

     

     

     

    —

     

    U.S. Government sponsored entities and agencies

     

     

    176,330

     

     

     

    —

     

     

     

    176,330

     

     

     

    —

     

    Residential mortgage-backed securities and collateralized mortgage obligations of government sponsored entities and agencies

     

     

    2,140,793

     

     

     

    —

     

     

     

    2,140,793

     

     

     

    —

     

    Commercial mortgage-backed securities and collateralized mortgage obligations of government sponsored entities and agencies

     

     

    291,681

     

     

     

    —

     

     

     

    291,681

     

     

     

    —

     

    Obligations of states and political subdivisions

     

     

    111,798

     

     

     

    —

     

     

     

    110,287

     

     

     

    1,511

     

    Corporate debt securities

     

     

    24,613

     

     

     

    —

     

     

     

    24,613

     

     

     

    —

     

    Total available-for-sale debt securities

     

    $

    2,775,212

     

     

    $

    —

     

     

    $

    2,773,701

     

     

    $

    1,511

     

    Loans held for sale

     

     

    153,520

     

     

     

    —

     

     

     

    153,520

     

     

     

    —

     

    Other assets - interest rate derivatives agreements

     

     

    31,732

     

     

     

    —

     

     

     

    31,732

     

     

     

    —

     

    Total assets recurring fair value measurements

     

    $

    2,973,587

     

     

    $

    13,123

     

     

    $

    2,958,953

     

     

    $

    1,511

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    Other liabilities - interest rate derivatives agreements

     

    $

    32,470

     

     

    $

    —

     

     

    $

    32,470

     

     

    $

    —

     

    Total liabilities recurring fair value measurements

     

    $

    32,470

     

     

    $

    —

     

     

    $

    32,470

     

     

    $

    —

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    Nonrecurring fair value measurements

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    Individually-evaluated nonperforming loans

     

    $

    1,909

     

     

    $

    —

     

     

    $

    —

     

     

    $

    1,909

     

    Other real estate owned and repossessed assets

     

     

    393

     

     

     

    —

     

     

     

    —

     

     

     

    393

     

    Total nonrecurring fair value measurements

     

    $

    2,302

     

     

    $

    —

     

     

    $

    —

     

     

    $

    2,302

     

    23


     

     

     

     

     

     

     

     

    December 31, 2020

     

     

     

     

     

     

     

    Fair Value Measurements Using:

     

     

     

    December 31,

     

     

    Quoted Prices in

    Active Markets

    for Identical

    Assets

     

     

    Significant

    Other

    Observable

    Inputs

     

     

    Significant

    Unobservable

    Inputs

     

    (in thousands)

     

    2020

     

     

    (level 1)

     

     

    (level 2)

     

     

    (level 3)

     

    Recurring fair value measurements

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    Equity securities

     

    $

    13,047

     

     

    $

    13,047

     

     

    $

    —

     

     

    $

    —

     

    Available-for-sale debt securities

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    U.S. Treasury

     

     

    39,982

     

     

     

    —

     

     

     

    39,982

     

     

     

    —

     

    U.S. Government sponsored entities and agencies

     

     

    211,682

     

     

     

    —

     

     

     

    211,682

     

     

     

    —

     

    Residential mortgage-backed securities and collateralized mortgage obligations of government sponsored entities and agencies

     

     

    1,264,737

     

     

     

    —

     

     

     

    1,264,737

     

     

     

    —

     

    Commercial mortgage-backed securities and collateralized mortgage obligations of government sponsored entities and agencies

     

     

    320,098

     

     

     

    —

     

     

     

    320,098

     

     

     

    —

     

    Obligations of states and political subdivisions

     

     

    115,762

     

     

     

    —

     

     

     

    114,227

     

     

     

    1,535

     

    Corporate debt securities

     

     

    25,875

     

     

     

    —

     

     

     

    25,875

     

     

     

    —

     

    Total available-for-sale debt securities

     

    $

    1,978,136

     

     

    $

    —

     

     

    $

    1,976,601

     

     

    $

    1,535

     

    Loans held for sale

     

     

    168,378

     

     

     

    —

     

     

     

    168,378

     

     

     

    —

     

    Other assets - interest rate derivatives agreements

     

     

    46,418

     

     

     

    —

     

     

     

    46,418

     

     

     

    —

     

    Total assets recurring fair value measurements

     

    $

    2,205,979

     

     

    $

    13,047

     

     

    $

    2,191,397

     

     

    $

    1,535

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    Other liabilities - interest rate derivatives agreements

     

    $

    49,917

     

     

    $

    —

     

     

    $

    49,917

     

     

    $

    —

     

    Total liabilities recurring fair value measurements

     

    $

    49,917

     

     

    $

    —

     

     

    $

    49,917

     

     

    $

    —

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    Nonrecurring fair value measurements

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    Individually-evaluated nonperforming loans

     

    $

    1,958

     

     

    $

    —

     

     

    $

    —

     

     

    $

    1,958

     

    Other real estate owned and repossessed assets

     

     

    549

     

     

     

    —

     

     

     

    —

     

     

     

    549

     

    Total nonrecurring fair value measurements

     

    $

    2,507

     

     

    $

    —

     

     

    $

    —

     

     

    $

    2,507

     

     

    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 months ended March 31, 2021 or for the year ended December 31, 2020.  

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

     

     

     

    Quantitative Information about Level 3 Fair Value Measurements

     

     

    Fair Value

     

     

    Valuation

     

    Unobservable

     

    Range (Weighted

    (unaudited, in thousands)

     

    Estimate

     

     

    Techniques

     

    Input

     

    Average)

    March 31, 2021

     

     

     

     

     

     

     

     

     

     

    Individually-evaluated nonperforming loans

     

    $

    1,909

     

     

    Appraisal of collateral (1)

     

    Appraisal adjustments (2)

     

    (30.0%)/(30.0%)

     

     

     

     

     

     

     

     

    Liquidation expenses (2)

     

    (5.6%)/(5.6%)

    Other real estate owned and repossessed assets

     

    $

    393

     

     

    Appraisal of collateral (1), (3)

     

     

     

     

    December 31, 2020

     

     

     

     

     

     

     

     

     

     

    Individually-evaluated nonperforming loans

     

    $

    1,958

     

     

    Appraisal of collateral (1)

     

    Appraisal adjustments (2)

     

    (30.0%)/(30.0%)

     

     

     

     

     

     

     

     

    Liquidation expenses (2)

     

    (5.6%)/(5.6%)

    Other real estate owned and repossessed assets

     

    $

    549

     

     

    Appraisal of collateral (1), (3)

     

     

     

     

     

    (1)

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

    (2)

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

    (3)

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

    24


     

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

     

     

     

     

     

     

     

     

     

     

     

    Fair Value Measurements at

     

     

     

     

     

     

     

     

     

     

     

    March 31, 2021

     

     

     

    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)

     

    Financial Assets

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    Cash and due from banks

     

    $

    759,048

     

     

    $

    759,048

     

     

    $

    759,048

     

     

    $

    —

     

     

    $

    —

     

    Equity securities

     

     

    13,123

     

     

     

    13,123

     

     

     

    13,123

     

     

     

    —

     

     

     

    —

     

    Available-for-sale debt securities

     

     

    2,775,212

     

     

     

    2,775,212

     

     

     

    —

     

     

     

    2,773,701

     

     

     

    1,511

     

    Held-to-maturity debt securities

     

     

    813,450

     

     

     

    839,872

     

     

     

    —

     

     

     

    839,411

     

     

     

    461

     

    Net loans

     

     

    10,543,272

     

     

     

    10,540,445

     

     

     

    —

     

     

     

    —

     

     

     

    10,540,445

     

    Loans held for sale

     

     

    153,520

     

     

     

    153,520

     

     

     

    —

     

     

     

    153,520

     

     

     

    —

     

    Other assets - interest rate derivatives

     

     

    31,732

     

     

     

    31,732

     

     

     

    —

     

     

     

    31,732

     

     

     

    —

     

    Accrued interest receivable

     

     

    68,896

     

     

     

    68,896

     

     

     

    68,896

     

     

     

    —

     

     

     

    —

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    Financial Liabilities

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    Deposits

     

     

    13,286,999

     

     

     

    13,300,728

     

     

     

    11,731,925

     

     

     

    1,568,803

     

     

     

    —

     

    Federal Home Loan Bank borrowings

     

     

    433,984

     

     

     

    438,211

     

     

     

    —

     

     

     

    438,211

     

     

     

    —

     

    Other borrowings

     

     

    137,218

     

     

     

    125,925

     

     

     

    125,925

     

     

     

    —

     

     

     

    —

     

    Subordinated debt and junior subordinated debt

     

     

    192,430

     

     

     

    172,142

     

     

     

    —

     

     

     

    105,371

     

     

     

    66,771

     

    Other liabilities - interest rate derivatives

     

     

    32,470

     

     

     

    32,470

     

     

     

    —

     

     

     

    32,470

     

     

     

    —

     

    Accrued interest payable

     

     

    3,224

     

     

     

    3,224

     

     

     

    3,224

     

     

     

    —

     

     

     

    —

     

     

     

     

     

     

     

     

     

     

     

     

    Fair Value Measurements at

     

     

     

     

     

     

     

     

     

     

     

    December 31, 2020

     

     

     

    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)

     

    Financial Assets

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    Cash and due from banks

     

    $

    905,447

     

     

    $

    905,447

     

     

    $

    905,447

     

     

    $

    —

     

     

    $

    —

     

    Equity securities

     

     

    13,047

     

     

     

    13,047

     

     

     

    13,047

     

     

     

    —

     

     

     

    —

     

    Available-for-sale debt securities

     

     

    1,978,136

     

     

     

    1,978,136

     

     

     

    —

     

     

     

    1,976,601

     

     

     

    1,535

     

    Held-to-maturity debt securities

     

     

    730,886

     

     

     

    768,183

     

     

     

    —

     

     

     

    767,720

     

     

     

    463

     

    Net loans

     

     

    10,603,406

     

     

     

    10,802,883

     

     

     

    —

     

     

     

    —

     

     

     

    10,802,883

     

    Loans held for sale

     

     

    168,378

     

     

     

    168,378

     

     

     

    —

     

     

     

    168,378

     

     

     

    —

     

    Other assets - interest rate derivatives

     

     

    46,418

     

     

     

    46,418

     

     

     

    —

     

     

     

    46,418

     

     

     

    —

     

    Accrued interest receivable

     

     

    66,790

     

     

     

    66,790

     

     

     

    66,790

     

     

     

    —

     

     

     

    —

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    Financial Liabilities

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    Deposits

     

     

    12,429,373

     

     

     

    12,439,981

     

     

     

    10,810,863

     

     

     

    1,629,118

     

     

     

    —

     

    Federal Home Loan Bank borrowings

     

     

    549,003

     

     

     

    555,375

     

     

     

    —

     

     

     

    555,375

     

     

     </