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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 June 30, 2024

 

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 001-39442

 

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 July 25, 2024, there were 59,587,710 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 June 30, 2024 (unaudited) and December 31, 2023

2

Consolidated Statements of Income for the three and six months ended June 30, 2024 and 2023 (unaudited)

3

 

Consolidated Statements of Comprehensive Income for the three and six months ended June 30, 2024 and 2023 (unaudited)

4

Consolidated Statements of Changes in Shareholders' Equity for the three and six months ended June 30, 2024 and 2023 (unaudited)

5

Consolidated Condensed Statements of Cash Flows for the six months ended June 30, 2024 and 2023 (unaudited)

7

Notes to Consolidated Financial Statements (unaudited)

8

 

2

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

37

 

3

Quantitative and Qualitative Disclosures About Market Risk

54

 

 

4

Controls and Procedures

56

 

PART II – OTHER INFORMATION

 

1

Legal Proceedings

57

 

1A

Risk Factors

57

 

 

 

2

Unregistered Sales of Equity Securities and Use of Proceeds

59

 

 

 

5

Other Information

59

 

 

 

6

Exhibits

60

 

Signatures

61

 

1


 

PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

WESBANCO, INC. CONSOLIDATED BALANCE SHEETS

 

 

 

June 30,

 

 

December 31,

 

(unaudited, in thousands, except shares)

 

2024

 

 

2023

 

ASSETS

 

 

 

 

 

 

Cash and due from banks, including interest bearing amounts of $312,973 and $436,879, respectively

 

$

486,789

 

 

$

595,383

 

Securities:

 

 

 

 

 

 

Equity securities, at fair value

 

 

13,091

 

 

 

12,320

 

Available-for-sale debt securities, at fair value

 

 

2,102,123

 

 

 

2,194,329

 

Held-to-maturity debt securities (fair values of $1,028,432 and $1,069,159, respectively)

 

 

1,179,684

 

 

 

1,199,527

 

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

 

 

(163

)

 

 

(192

)

       Net held-to-maturity debt securities

 

 

1,179,521

 

 

 

1,199,335

 

Total securities

 

 

3,294,735

 

 

 

3,405,984

 

Loans held for sale

 

 

25,433

 

 

 

16,354

 

Portfolio loans, net of unearned income

 

 

12,257,511

 

 

 

11,638,461

 

Allowance for credit losses - loans

 

 

(136,509

)

 

 

(130,675

)

Net portfolio loans

 

 

12,121,002

 

 

 

11,507,786

 

Premises and equipment, net

 

 

222,266

 

 

 

233,571

 

Accrued interest receivable

 

 

79,759

 

 

 

77,435

 

Goodwill and other intangible assets, net

 

 

1,128,103

 

 

 

1,132,267

 

Bank-owned life insurance

 

 

358,682

 

 

 

355,033

 

Other assets

 

 

411,606

 

 

 

388,561

 

Total Assets

 

$

18,128,375

 

 

$

17,712,374

 

LIABILITIES

 

 

 

 

 

 

Deposits:

 

 

 

 

 

 

Non-interest bearing demand

 

$

3,826,249

 

 

$

3,962,592

 

Interest bearing demand

 

 

3,505,651

 

 

 

3,463,443

 

Money market

 

 

2,283,294

 

 

 

2,017,713

 

Savings deposits

 

 

2,429,241

 

 

 

2,493,254

 

Certificates of deposit

 

 

1,387,938

 

 

 

1,231,702

 

Total deposits

 

 

13,432,373

 

 

 

13,168,704

 

Federal Home Loan Bank borrowings

 

 

1,475,000

 

 

 

1,350,000

 

Other short-term borrowings

 

 

105,757

 

 

 

105,893

 

Subordinated debt and junior subordinated debt

 

 

279,193

 

 

 

279,078

 

Total borrowings

 

 

1,859,950

 

 

 

1,734,971

 

Accrued interest payable

 

 

15,393

 

 

 

11,121

 

Other liabilities

 

 

276,380

 

 

 

264,516

 

Total Liabilities

 

 

15,584,096

 

 

 

15,179,312

 

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 June 30, 2024 and December 31, 2023, respectively

 

 

144,484

 

 

 

144,484

 

Common stock, $2.0833 par value; 100,000,000 shares authorized; 68,081,306 shares issued; 59,579,310 and 59,376,435 shares outstanding at June 30, 2024 and December 31, 2023, respectively

 

 

141,834

 

 

 

141,834

 

Capital surplus

 

 

1,630,830

 

 

 

1,635,859

 

Retained earnings

 

 

1,159,217

 

 

 

1,142,586

 

Treasury stock (8,501,996 and 8,704,871 shares - at cost, respectively)

 

 

(294,818

)

 

 

(302,995

)

Accumulated other comprehensive loss

 

 

(235,208

)

 

 

(226,693

)

Deferred benefits for directors

 

 

(2,060

)

 

 

(2,013

)

Total Shareholders' Equity

 

 

2,544,279

 

 

 

2,533,062

 

Total Liabilities and Shareholders' Equity

 

$

18,128,375

 

 

$

17,712,374

 

 

See Notes to Consolidated Financial Statements.

2


 

WESBANCO, INC. CONSOLIDATED STATEMENTS OF INCOME

 

 

 

For the Three Months
Ended June 30,

 

 

For the Six Months
Ended June 30,

 

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

 

2024

 

 

2023

 

 

2024

 

 

2023

 

INTEREST AND DIVIDEND INCOME

 

 

 

 

 

 

 

 

 

 

 

 

Loans, including fees

 

$

175,361

 

 

$

145,741

 

 

$

342,335

 

 

$

279,147

 

Interest and dividends on securities:

 

 

 

 

 

 

 

 

 

 

 

 

Taxable

 

 

16,929

 

 

 

18,483

 

 

 

34,334

 

 

 

37,569

 

Tax-exempt

 

 

4,556

 

 

 

4,723

 

 

 

9,142

 

 

 

9,513

 

Total interest and dividends on securities

 

 

21,485

 

 

 

23,206

 

 

 

43,476

 

 

 

47,082

 

Other interest income

 

 

6,147

 

 

 

7,108

 

 

 

12,516

 

 

 

10,380

 

Total interest and dividend income

 

 

202,993

 

 

 

176,055

 

 

 

398,327

 

 

 

336,609

 

INTEREST EXPENSE

 

 

 

 

 

 

 

 

 

 

 

 

Interest bearing demand deposits

 

 

26,925

 

 

 

17,203

 

 

 

52,516

 

 

 

28,309

 

Money market deposits

 

 

18,443

 

 

 

7,220

 

 

 

34,557

 

 

 

11,472

 

Savings deposits

 

 

7,883

 

 

 

5,860

 

 

 

15,549

 

 

 

9,860

 

Certificates of deposit

 

 

11,982

 

 

 

2,906

 

 

 

22,229

 

 

 

4,109

 

Total interest expense on deposits

 

 

65,233

 

 

 

33,189

 

 

 

124,851

 

 

 

53,750

 

Federal Home Loan Bank borrowings

 

 

16,227

 

 

 

16,713

 

 

 

33,227

 

 

 

28,013

 

Other short-term borrowings

 

 

896

 

 

 

492

 

 

 

1,570

 

 

 

909

 

Subordinated debt and junior subordinated debt

 

 

4,044

 

 

 

4,094

 

 

 

8,119

 

 

 

8,039

 

Total interest expense

 

 

86,400

 

 

 

54,488

 

 

 

167,767

 

 

 

90,711

 

NET INTEREST INCOME

 

 

116,593

 

 

 

121,567

 

 

 

230,560

 

 

 

245,898

 

Provision for credit losses

 

 

10,541

 

 

 

3,028

 

 

 

14,555

 

 

 

6,605

 

Net interest income after provision for credit losses

 

 

106,052

 

 

 

118,539

 

 

 

216,005

 

 

 

239,293

 

NON-INTEREST INCOME

 

 

 

 

 

 

 

 

Trust fees

 

 

7,303

 

 

 

6,918

 

 

15,385

 

 

 

14,412

 

Service charges on deposits

 

 

7,111

 

 

 

6,232

 

 

13,895

 

 

 

12,401

 

Digital banking income

 

 

5,040

 

 

 

5,010

 

 

9,745

 

 

 

9,615

 

Net swap fee and valuation income

 

 

1,776

 

 

 

2,612

 

 

 

3,339

 

 

 

3,411

 

Net securities brokerage revenue

 

 

2,601

 

 

 

2,523

 

 

5,149

 

 

 

5,098

 

Bank-owned life insurance

 

 

2,791

 

 

 

3,189

 

 

4,859

 

 

 

5,149

 

Mortgage banking income

 

 

1,069

 

 

 

601

 

 

1,762

 

 

 

1,027

 

Net securities gains

 

 

135

 

 

 

205

 

 

672

 

 

 

350

 

Net gain on other real estate owned and other assets

 

 

34

 

 

 

871

 

 

188

 

 

 

1,104

 

Other income

 

 

3,495

 

 

 

3,680

 

 

6,990

 

 

 

6,926

 

Total non-interest income

 

 

31,355

 

 

 

31,841

 

 

61,984

 

 

 

59,493

 

NON-INTEREST EXPENSE

 

 

 

 

 

 

 

 

 

 

 

 

Salaries and wages

 

 

43,991

 

 

 

44,471

 

 

 

86,988

 

 

 

86,422

 

Employee benefits

 

 

10,579

 

 

 

11,511

 

 

 

22,763

 

 

 

23,570

 

Net occupancy

 

 

6,309

 

 

 

6,132

 

 

 

12,932

 

 

 

12,775

 

Equipment and software

 

 

10,457

 

 

 

8,823

 

 

 

20,465

 

 

 

17,885

 

Marketing

 

 

2,371

 

 

 

2,763

 

 

 

4,256

 

 

 

5,088

 

FDIC insurance

 

 

3,523

 

 

 

2,871

 

 

 

6,971

 

 

 

5,755

 

Amortization of intangible assets

 

 

2,072

 

 

 

2,282

 

 

 

4,164

 

 

 

4,583

 

Restructuring and merger-related expense

 

 

3,777

 

 

 

35

 

 

 

3,777

 

 

 

3,188

 

Other operating expenses

 

 

19,313

 

 

 

17,549

 

 

 

37,269

 

 

 

33,294

 

Total non-interest expense

 

 

102,392

 

 

 

96,437

 

 

 

199,585

 

 

 

192,560

 

Income before provision for income taxes

 

 

35,015

 

 

 

53,943

 

 

 

78,404

 

 

 

106,226

 

Provision for income taxes

 

 

6,099

 

 

 

9,063

 

 

 

13,795

 

 

 

19,005

 

Net income

 

 

28,916

 

 

 

44,880

 

 

 

64,609

 

 

 

87,221

 

Preferred stock dividends

 

 

2,531

 

 

 

2,531

 

 

 

5,063

 

 

 

5,063

 

Net income available to common shareholders

 

$

26,385

 

 

$

42,349

 

 

$

59,546

 

 

$

82,158

 

EARNINGS PER COMMON SHARE

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.44

 

 

$

0.71

 

 

$

1.00

 

 

$

1.39

 

Diluted

 

$

0.44

 

 

$

0.71

 

 

$

1.00

 

 

$

1.38

 

AVERAGE COMMON SHARES OUTSTANDING

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

59,521,872

 

 

 

59,263,949

 

 

 

59,452,315

 

 

 

59,240,958

 

Diluted

 

 

59,656,429

 

 

 

59,385,847

 

 

 

59,592,960

 

 

 

59,389,314

 

DIVIDENDS DECLARED PER COMMON SHARE

 

$

0.36

 

 

$

0.35

 

 

$

0.72

 

 

$

0.70

 

 

See Notes to Consolidated Financial Statements.

 

3


 

WESBANCO, INC. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

 

 

 

For the Three Months
Ended June 30,

 

 

For the Six Months
Ended June 30,

 

(unaudited, in thousands)

 

2024

 

 

2023

 

 

2024

 

 

2023

 

Net income

 

$

28,916

 

 

$

44,880

 

 

$

64,609

 

 

$

87,221

 

Debt securities available-for-sale:

 

 

 

 

 

 

 

 

 

 

 

 

Net change in unrealized losses on debt securities available-for-sale

 

 

(210

)

 

 

(40,018

)

 

 

(11,113

)

 

 

(3,408

)

Related income tax effect

 

 

50

 

 

 

9,709

 

 

 

2,835

 

 

 

927

 

Net securities losses reclassified into earnings

 

 

12

 

 

 

8

 

 

 

12

 

 

 

159

 

Related income tax effect

 

 

(61

)

 

 

(2

)

 

 

(119

)

 

 

(39

)

Net effect on other comprehensive loss for the period

 

 

(209

)

 

 

(30,303

)

 

 

(8,385

)

 

 

(2,361

)

Defined benefit plans:

 

 

 

 

 

 

 

 

 

 

 

 

Amortization of net (gain) loss and prior service costs

 

 

(101

)

 

 

99

 

 

 

(202

)

 

 

198

 

Related income tax effect

 

 

24

 

 

 

(24

)

 

 

72

 

 

 

(48

)

Net effect on other comprehensive (loss) income for the period

 

 

(77

)

 

 

75

 

 

 

(130

)

 

 

150

 

Total other comprehensive loss

 

 

(286

)

 

 

(30,228

)

 

 

(8,515

)

 

 

(2,211

)

Comprehensive income

 

$

28,630

 

 

$

14,652

 

 

$

56,094

 

 

$

85,010

 

 

4


 

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

 

 

 

For the Three Months Ended June 30, 2024 and 2023

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

March 31, 2024

 

$

144,484

 

 

 

59,395,777

 

 

$

141,834

 

 

$

1,636,964

 

 

$

1,154,307

 

 

$

(302,264

)

 

$

(234,922

)

 

$

(2,041

)

 

$

2,538,362

 

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

28,916

 

 

 

 

 

 

 

 

 

 

 

 

28,916

 

Other comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(286

)

 

 

 

 

 

(286

)

Comprehensive income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

28,630

 

Common dividends declared ($0.36 per share)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(21,214

)

 

 

 

 

 

 

 

 

 

 

 

(21,214

)

Preferred dividends declared ($16.875 per share)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(2,531

)

 

 

 

 

 

 

 

 

 

 

 

(2,531

)

Stock issued for dividend reinvestment

 

 

 

 

 

6,878

 

 

 

 

 

 

 

 

 

(261

)

 

 

261

 

 

 

 

 

 

 

 

 

 

Treasury shares acquired

 

 

 

 

 

(46,696

)

 

 

 

 

 

 

 

 

 

 

 

(1,355

)

 

 

 

 

 

 

 

 

(1,355

)

Stock options exercised

 

 

 

 

 

3,375

 

 

 

 

 

 

(52

)

 

 

 

 

 

128

 

 

 

 

 

 

 

 

 

76

 

Restricted stock granted

 

 

 

 

 

219,976

 

 

 

 

 

 

(8,412

)

 

 

 

 

 

8,412

 

 

 

 

 

 

 

 

 

Stock compensation expense

 

 

 

 

 

 

 

 

 

 

 

2,320

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2,320

 

Deferred benefits for directors - net

 

 

 

 

 

 

 

 

 

 

 

10

 

 

 

 

 

 

 

 

 

 

 

 

(19

)

 

 

(9

)

June 30, 2024

 

$

144,484

 

 

 

59,579,310

 

 

$

141,834

 

 

$

1,630,830

 

 

$

1,159,217

 

 

$

(294,818

)

 

$

(235,208

)

 

$

(2,060

)

 

$

2,544,279

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

March 31, 2023

 

$

144,484

 

 

 

59,246,569

 

 

$

141,834

 

 

$

1,636,061

 

 

$

1,096,924

 

 

$

(307,507

)

 

$

(234,399

)

 

$

(1,940

)

 

$

2,475,457

 

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

44,880

 

 

 

 

 

 

 

 

 

 

 

 

44,880

 

Other comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(30,228

)

 

 

 

 

 

(30,228

)

Comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

14,652

 

Common dividends declared ($0.35 per share)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(20,585

)

 

 

 

 

 

 

 

 

 

 

 

(20,585

)

Preferred dividends declared ($16.875 per share)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(2,531

)

 

 

 

 

 

 

 

 

 

 

 

(2,531

)

Stock issued for dividend reinvestment

 

 

 

 

 

15,180

 

 

 

 

 

 

 

 

 

(553

)

 

 

553

 

 

 

 

 

 

 

 

 

 

Treasury shares acquired

 

 

 

 

 

(161,306

)

 

 

 

 

 

 

 

 

 

 

 

(3,697

)

 

 

 

 

 

 

 

 

(3,697

)

Stock options exercised

 

 

 

 

 

1,050

 

 

 

 

 

 

(12

)

 

 

 

 

 

35

 

 

 

 

 

 

 

 

 

23

 

Restricted stock granted

 

 

 

 

 

253,569

 

 

 

 

 

 

(6,846

)

 

 

 

 

 

6,846

 

 

 

 

 

 

 

 

 

Stock compensation expense

 

 

 

 

 

 

 

 

 

 

 

1,749

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,749

 

Deferred benefits for directors - net

 

 

 

 

 

 

 

 

 

 

 

11

 

 

 

 

 

 

 

 

 

 

 

 

(81

)

 

 

(70

)

June 30, 2023

 

$

144,484

 

 

 

59,355,062

 

 

$

141,834

 

 

$

1,630,963

 

 

$

1,118,135

 

 

$

(303,770

)

 

$

(264,627

)

 

$

(2,021

)

 

$

2,464,998

 

 

5


 

 

 

 

For the Six Months Ended June 30, 2024 and 2023

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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, 2023

 

$

144,484

 

 

 

59,376,435

 

 

$

141,834

 

 

$

1,635,859

 

 

$

1,142,586

 

 

$

(302,995

)

 

$

(226,693

)

 

$

(2,013

)

 

$

2,533,062

 

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

64,609

 

 

 

 

 

 

 

 

 

 

 

 

64,609

 

Other comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(8,515

)

 

 

 

 

 

(8,515

)

Comprehensive income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

56,094

 

Common dividends declared ($0.72 per share)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(42,392

)

 

 

 

 

 

 

 

 

 

 

 

(42,392

)

Preferred dividends declared ($16.875 per share)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(5,063

)

 

 

 

 

 

 

 

 

 

 

 

(5,063

)

Stock issued for dividend reinvestment

 

 

 

 

 

14,058

 

 

 

 

 

 

 

 

 

(523

)

 

 

523

 

 

 

 

 

 

 

 

 

 

Treasury shares acquired

 

 

 

 

 

(49,729

)

 

 

 

 

 

 

 

 

 

 

 

(1,441

)

 

 

 

 

 

 

 

 

(1,441

)

Stock options exercised

 

 

 

 

 

8,139

 

 

 

 

 

 

(126

)

 

 

 

 

 

302

 

 

 

 

 

 

 

 

 

176

 

Restricted stock granted

 

 

 

 

 

230,407

 

 

 

 

 

 

(8,793

)

 

 

 

 

 

8,793

 

 

 

 

 

 

 

 

 

 

Stock compensation expense

 

 

 

 

 

 

 

 

 

 

 

3,867

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3,867

 

Deferred benefits for directors - net

 

 

 

 

 

 

 

 

 

 

 

23

 

 

 

 

 

 

 

 

 

 

 

 

(47

)

 

 

(24

)

June 30, 2024

 

$

144,484

 

 

 

59,579,310

 

 

$

141,834

 

 

$

1,630,830

 

 

$

1,159,217

 

 

$

(294,818

)

 

$

(235,208

)

 

$

(2,060

)

 

$

2,544,279

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2022

 

$

144,484

 

 

 

59,198,963

 

 

$

141,834

 

 

$

1,635,877

 

 

$

1,077,675

 

 

$

(308,964

)

 

$

(262,416

)

 

$

(1,828

)

 

$

2,426,662

 

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

87,221

 

 

 

 

 

 

 

 

 

 

 

 

87,221

 

Other comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(2,211

)

 

 

 

 

 

(2,211

)

Comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

85,010

 

Common dividends declared ($0.70 per share)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(41,145

)

 

 

 

 

 

 

 

 

 

 

 

(41,145

)

Preferred dividends declared ($16.875 per share)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(5,063

)

 

 

 

 

 

 

 

 

 

 

 

(5,063

)

Stock issued for dividend reinvestment

 

 

 

 

 

15,180

 

 

 

 

 

 

 

 

 

(553

)

 

 

553

 

 

 

 

 

 

 

 

 

 

Treasury shares acquired

 

 

 

 

 

(162,700

)

 

 

 

 

 

 

 

 

 

 

 

(3,749

)

 

 

 

 

 

 

 

 

(3,749

)

Stock options exercised

 

 

 

 

 

5,491

 

 

 

 

 

 

(46

)

 

 

 

 

 

172

 

 

 

 

 

 

 

 

 

126

 

Restricted stock granted

 

 

 

 

 

298,128

 

 

 

 

 

 

(8,218

)

 

 

 

 

 

8,218

 

 

 

 

 

 

 

 

 

 

Stock compensation expense

 

 

 

 

 

 

 

 

 

 

 

3,334

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3,334

 

Deferred benefits for directors - net

 

 

 

 

 

 

 

 

 

 

 

16

 

 

 

 

 

 

 

 

 

 

 

 

(193

)

 

 

(177

)

June 30, 2023

 

$

144,484

 

 

 

59,355,062

 

 

$

141,834

 

 

$

1,630,963

 

 

$

1,118,135

 

 

$

(303,770

)

 

$

(264,627

)

 

$

(2,021

)

 

$

2,464,998

 

 

See Notes to Consolidated Financial Statements.

6


 

WESBANCO, INC. CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS

 

 

For the Six Months
Ended June 30,

 

(unaudited, in thousands)

 

2024

 

 

2023

 

NET CASH PROVIDED BY OPERATING ACTIVITIES

 

$

82,830

 

 

$

57,941

 

INVESTING ACTIVITIES

 

 

 

 

 

 

Net increase in loans held for investment

 

 

(624,818

)

 

 

(427,264

)

Available-for-sale debt securities:

 

 

 

 

 

 

Proceeds from sales

 

 

 

 

 

28,317

 

Proceeds from maturities, prepayments and calls

 

 

129,661

 

 

 

167,849

 

Purchases of securities

 

 

(51,557

)

 

 

(2,500

)

Held-to-maturity debt securities:

 

 

 

 

 

 

Proceeds from maturities, prepayments and calls

 

 

18,847

 

 

 

22,929

 

Proceeds from bank owned life insurance

 

 

1

 

 

 

2,306

 

Purchases of premises and equipment – net

 

 

(1,897

)

 

 

(16,916

)

Net cash used in investing activities

 

 

(529,763

)

 

 

(225,279

)

FINANCING ACTIVITIES

 

 

 

 

 

 

Increase (decrease) in deposits

 

 

263,819

 

 

 

(269,018

)

Proceeds from Federal Home Loan Bank borrowings

 

 

1,175,000

 

 

 

1,380,000

 

Repayment of Federal Home Loan Bank borrowings

 

 

(1,050,000

)

 

 

(705,000

)

Decrease in other short-term borrowings

 

 

(136

)

 

 

(33,783

)

Principal repayments of finance lease obligations

 

 

(1,665

)

 

 

(1,148

)

Dividends paid to common shareholders

 

 

(42,351

)

 

 

(41,120

)

Dividends paid to preferred shareholders

 

 

(5,063

)

 

 

(5,063

)

Treasury shares purchased - net

 

 

(1,265

)

 

 

(3,623

)

Net cash provided by financing activities

 

 

338,339

 

 

 

321,245

 

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

 

 

(108,594

)

 

 

153,907

 

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

 

 

595,383

 

 

 

408,411

 

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

 

$

486,789

 

 

$

562,318

 

SUPPLEMENTAL DISCLOSURES

 

 

 

 

 

 

Interest paid on deposits and other borrowings

 

$

163,530

 

 

$

86,623

 

Income taxes paid

 

 

15,985

 

 

 

24,240

 

Transfers of loans to other real estate owned

 

 

152

 

 

 

147

 

 

See Notes to Consolidated Financial Statements.

7


 

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, 2023.

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 2023 Annual Report on Form 10-K filed with the Securities and Exchange Commission, as well as with the policy changes indicated below. 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 shareholders’ 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 2024-02 - Codification Improvements—Amendments to Remove References to the Concepts Statements

In March 2024, the FASB issued ASU 2024-02, “Codification Improvements—Amendments to Remove References to the Concepts Statements.” The removal of all references to Concepts Statements in the guidance will simplify the Codification and draw a distinction between authoritative and nonauthoritative literature. For Wesbanco, the amendments in this Update are effective for fiscal years beginning after December 15, 2024. The adoption of this pronouncement is not expected to have a material impact on the Consolidated Financial Statements.

ASU 2024-01 – Compensation – Stock Compensation (Topic 718)

In March 2024, the FASB issued ASU 2024-01, “Stock Compensation (Topic 718).” The amendments in this Update are designed to improve GAAP by adding an illustrative example that includes four fact patterns to demonstrate how an entity should apply the scope guidance in paragraph 718-10-15-3 to determine whether a profits interest award should be accounted for in accordance with Topic 718. The illustrative example is intended to reduce (1) complexity in determining whether a profits interest award is subject to the guidance in Topic 718 and (2) existing diversity in practice. For Wesbanco, the amendments are effective for annual periods beginning after December 15, 2024, and interim periods within those annual periods. Early adoption is permitted for both interim and annual financial statements that have not yet been issued or made available for issuance. If an entity adopts the amendments in an interim period, it should adopt them as of the beginning of the annual period that includes that interim period. The adoption of this pronouncement is not expected to have a material impact on the Consolidated Financial Statements.

ASU 2023-09 – Income Taxes (Topic 740): Improvements to Income Tax Disclosures

In December 2023, the FASB issued ASU 2023-09, "Income Taxes (Topic 740)." The amendments in this Update related to the rate reconciliation and income taxes paid disclosures and are designed to improve the transparency of income tax disclosures by requiring (1) consistent categories and greater disaggregation of information in the rate reconciliation and (2) income taxes paid disaggregated by jurisdiction. For Wesbanco, the amendments are effective for annual periods beginning after December 15, 2024. Early adoption is permitted for annual financial statements that have not yet been issued or made available for issuance. The adoption of this pronouncement is not expected to have a material impact on the Consolidated Financial Statements.

ASU 2023-08 – Intangibles-Goodwill and Other Crypto Assets (Subtopic 350-60): Accounting for and Disclosure of a Crypto Asset

In December 2023, the FASB issued ASU 2023-08, "Intangibles-Goodwill and Other Crypto Assets (Subtopic 350-60)." The amendments in this Update require that an entity measure crypto assets at fair value in the statement of financial position each reporting period and recognize changes from remeasurement in net income. The amendments also require that an entity provide enhanced disclosures for both annual and interim reporting periods to provide investors with relevant information to analyze and assess the exposure and risk of significant individual crypto asset holdings. In addition, fair value measurement aligns the accounting required for holders of crypto assets with the accounting for entities that are subject to certain industry-specific guidance (such as investment companies) and eliminates the requirement to test those assets for impairment, thereby reducing the associated cost and complexity of applying the current guidance. For Wesbanco, the amendments are effective beginning after December 15, 2024, including interim periods within those fiscal years. Early adoption is permitted. The adoption of this pronouncement is not expected to have a material impact on the Consolidated Financial Statements, as Wesbanco holds no crypto assets.

ASU 2023-07—Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures

In November 2023, the FASB issued ASU 2023-07, “Improvements to Reportable Segment Disclosures (Topic 280).” The amendments in this Update improve financial reporting by requiring disclosure of incremental segment information on an annual and interim basis for all public entities to enable investors to develop more decision-useful financial analyses. The amendments in this Update do not change how a public entity identifies its operating segments, aggregates those operating segments, or applies the quantitative thresholds to determine its reportable segments. For Wesbanco, the amendments are effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15,

8


 

2024. Early adoption is permitted. The adoption of this pronouncement is not expected to have a material impact on the Consolidated Financial Statements.

ASU 2023-06 - Disclosure Improvements: Codification Amendments in Response to the SEC’s Disclosure Update and Simplification Initiative

In October 2023, the FASB issued ASU 2023-06, "Disclosure Improvements." For entities subject to the SEC’s existing disclosure requirements and for entities required to file or furnish financial statements with or to the SEC in preparation for the sale of or for purposes of issuing securities that are not subject to contractual restrictions on transfer, the effective date for each amendment will be the date on which the SEC’s removal of that related disclosure from Regulation S-X or Regulation S-K becomes effective. If by June 30, 2027, the SEC has not removed the applicable requirement from Regulation S-X or Regulation S-K, the pending content of the related amendment will be removed from the Codification and will not become effective for any entity. The adoption of this pronouncement is not expected to have a material impact on the Consolidated Financial Statements.

ASU 2023-05 – Business Combinations—Joint Venture Formations (Subtopic 805-60): Recognition and Initial Measurement

In August 2023, the FASB issued ASU 2023-05, "Business Combinations - Joint Venture Formations (Subtopic 805-60): Recognition and Initial Measurement," under which an entity that qualifies as either a joint venture or a corporate joint venture as defined in the FASB Accounting Standards Codification ("ASC") master glossary is required to apply a new basis of accounting upon the formation of the joint venture. Specifically, the ASU provides that a joint venture or a corporate joint venture (collectively, “joint ventures”) must initially measure its assets and liabilities at fair value on the formation date. For Wesbanco, the amendments are effective for all joint ventures within the ASU’s scope that are formed on or after January 1, 2025. Early adoption is permitted in any annual or interim period as of the beginning of the related fiscal year. The adoption of this pronouncement is not expected to have a material impact on the Consolidated Financial Statements.

ASU 2023-02 – Investments Equity Method and Joint Ventures (Topic 323)

In March 2023, the FASB issued ASU 2023-02, Investments—Equity Method and Joint Ventures (Topic 323): Accounting for Investments in Tax Credit Structures Using the Proportional Amortization Method. ASU 2023-02 allows reporting entities to elect to account for qualifying tax equity investments using the proportional amortization method, regardless of the program giving rise to the related income tax credits. The ASU’s amendments “remove the specialized guidance for [low-income-housing tax credit] investments that are not accounted for using the proportional amortization method and instead require that those LIHTC investments be accounted for using the guidance in other [GAAP].” For Wesbanco, the amendments were effective on January 1, 2024. The adoption of this pronouncement did not have a material impact on the Consolidated Financial Statements.

ASU 2023-01 - Leases (Topic 842): Common Control Arrangements

In March 2023, the FASB issued ASU 2023-01, Leases (Topic 842): Common Control Arrangements. ASU 2023-01 amends certain provisions of ASC 842 that apply to arrangements between related parties under common control. Additionally, ASU 2023-01 amends the accounting for leasehold improvements in common-control arrangements for all entities. For Wesbanco, the amendments were effective on January 1, 2024. The adoption of this pronouncement did not have a material impact on the Consolidated Financial Statements.

ASU 2022-04 - Liabilities – Supplier Finance Programs (Sub-topic 405-50)

In September 2022, the FASB issued ASU 2022-04, “Liabilities—Supplier Finance Programs (Subtopic 405-50).” The amendments in this ASU require that a buyer in a supplier finance program disclose sufficient information about the program to allow a user of financial statements to understand the program’s nature, activity during the period, changes from period to period, and potential magnitude. To achieve that objective, the buyer should disclose qualitative and quantitative information about its supplier finance programs. For Wesbanco, this update was effective beginning on January 1, 2023, except for the amendment on rollforward information, which was effective on January 1, 2024. As this is not part of Wesbanco's current business activities, the adoption of this full pronouncement did not have a material impact on the Consolidated Financial Statements.

ASU 2022-03 - Fair Value Measurement (Topic 820)

In June 2022, the FASB issued ASU 2022-03, "Fair Value Measurement (Topic 820).” The amendments in this ASU clarify that a contractual restriction on the sale of an equity security is not considered part of the unit of account of the equity security, and therefore, is not considered in measuring fair value. Furthermore, the amendments to this ASU clarify that an entity cannot, as a separate unit of account, recognize and measure a contractual sale restriction. The update to this ASU requires the following disclosures for equity securities: (1) the fair value of equity securities subject to contractual sale restrictions reflected in the balance sheet; (2) the nature and remaining duration of the restriction(s) and; (3) the circumstances that could cause a lapse in the restriction(s). The amendments in this Update were effective on January 1, 2024. The adoption of this pronouncement did not have a material impact on the Consolidated Financial Statements.

 

9


 

NOTE 2. EARNINGS PER COMMON SHARE

Earnings per common share are calculated as follows:

 

 

 

For the Three Months
Ended June 30,

 

 

For the Six Months
Ended June 30,

 

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

 

2024

 

 

2023

 

 

2024

 

 

2023

 

Numerator for both basic and diluted earnings per common share:

 

 

 

 

 

 

 

 

 

 

 

 

Net income available to common shareholders

 

$

26,385

 

 

$

42,349

 

 

$

59,546

 

 

$

82,158

 

Denominator:

 

 

 

 

 

 

 

 

 

 

 

 

Total average basic common shares outstanding

 

 

59,521,872

 

 

 

59,263,949

 

 

 

59,452,315

 

 

 

59,240,958

 

Effect of dilutive stock options and other stock compensation

 

 

134,557

 

 

 

121,898

 

 

 

140,645

 

 

 

148,356

 

Total diluted average common shares outstanding

 

 

59,656,429

 

 

 

59,385,847

 

 

 

59,592,960

 

 

 

59,389,314

 

Earnings per common share - basic

 

$

0.44

 

 

$

0.71

 

 

$

1.00

 

 

$

1.39

 

Earnings per common share - diluted

 

$

0.44

 

 

$

0.71

 

 

$

1.00

 

 

$

1.38

 

 

As of June 30, 2024 and 2023, 634,751 and 603,767 options to purchase shares were not included in the diluted share computation for the three and six months ended June 30, 2024 and 2023, respectively, because the exercise price was greater than the average market price of a common share, and, therefore, the effect would be antidilutive.

As of June 30, 2024, no shares were estimated to be awarded under the 2024, 2023 and 2022 total shareholder return ("TSR") plans and were not included in the diluted calculation as stock performance targets had not been met and the effect would be antidilutive. As of June 30, 2023, 37,296 contingently issuable shares were estimated to be awarded under the 2022 and 2021 TSR plans, as stock performance targets had been met as of such date and therefore those shares were included in the diluted calculation. No shares related to the 2023 plan were included because the effect would be antidilutive.

In addition, performance-based restricted stock ("PBRS") compensation totaling 104,594 and 68,767 shares were estimated to be awarded as of June 30, 2024 and June 30, 2023, respectively.

10


 

NOTE 3. SECURITIES

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

 

 

 

June 30, 2024

 

 

December 31, 2023

 

(unaudited, in thousands)

 

Amortized
Cost

 

 

Gross
Unrealized
Gains

 

 

Gross
Unrealized
Losses

 

 

Fair
Value

 

 

Amortized
Cost

 

 

Gross
Unrealized
Gains

 

 

Gross
Unrealized
Losses

 

 

Fair
Value

 

Available-for-sale debt securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Treasury

 

$

49,099

 

 

$

4

 

 

$

 

 

 

49,103

 

 

$

 

 

$

 

 

$

 

 

$

 

U.S. Government sponsored entities and agencies

 

 

231,912

 

 

 

 

 

 

(32,654

)

 

 

199,258

 

 

 

238,676

 

 

 

 

 

 

(30,310

)

 

 

208,366

 

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

 

 

1,791,043

 

 

 

51

 

 

 

(277,066

)

 

 

1,514,028

 

 

 

1,897,511

 

 

 

47

 

 

 

(267,874

)

 

 

1,629,684

 

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

 

 

261,150

 

 

 

40

 

 

 

(5,000

)

 

 

256,190

 

 

 

274,220

 

 

 

11

 

 

 

(5,924

)

 

 

268,307

 

Obligations of states and political subdivisions

 

 

75,609

 

 

 

6

 

 

 

(3,859

)

 

 

71,756

 

 

 

78,819

 

 

 

167

 

 

 

(2,861

)

 

 

76,125

 

Corporate debt securities

 

 

11,968

 

 

 

 

 

 

(180

)

 

 

11,788

 

 

 

11,962

 

 

 

 

 

 

(115

)

 

 

11,847

 

Total available-for-sale debt securities

 

$

2,420,781

 

 

$

101

 

 

$

(318,759

)

 

$

2,102,123

 

 

$

2,501,188

 

 

$

225

 

 

$

(307,084

)

 

$

2,194,329

 

Held-to-maturity debt securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Government sponsored entities and agencies

 

$

3,300

 

 

$

 

 

$

(321

)

 

$

2,979

 

 

$

3,587

 

 

$

 

 

$

(313

)

 

$

3,274

 

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

 

 

35,776

 

 

 

 

 

 

(3,150

)

 

 

32,626

 

 

 

38,893

 

 

 

 

 

 

(3,017

)

 

 

35,876

 

Obligations of states and political subdivisions

 

 

1,122,395

 

 

 

105

 

 

 

(147,546

)

 

 

974,954

 

 

 

1,136,779

 

 

 

852

 

 

 

(127,518

)

 

 

1,010,113

 

Corporate debt securities

 

 

18,213

 

 

 

 

 

 

(340

)

 

 

17,873

 

 

 

20,268

 

 

 

 

 

 

(372

)

 

 

19,896

 

Total held-to-maturity debt securities (1)

 

$

1,179,684

 

 

$

105

 

 

$

(151,357

)

 

$

1,028,432

 

 

$

1,199,527

 

 

$

852

 

 

$

(131,220

)

 

$

1,069,159

 

Total debt securities

 

$

3,600,465

 

 

$

206

 

 

$

(470,116

)

 

$

3,130,555

 

 

$

3,700,715

 

 

$

1,077

 

 

$

(438,304

)

 

$

3,263,488

 

(1)
Total held-to-maturity debt securities are presented on the balance sheet net of their allowance for credit losses totaling $0.2 million at June 30, 2024 and December 31, 2023.

At June 30, 2024 and December 31, 2023, there were no holdings of any one issuer, other than U.S. government sponsored entities and its agencies, in an amount greater than 10% of Wesbanco’s shareholders’ equity. Equity securities, of which $10.6 million and $9.7 million at June 30, 2024 and December 31, 2023, respectively, 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 $12.3 million at June 30, 2024 and December 31, 2023, 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 June 30, 2024. 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

 

 

 

 

 

 

Within one year

 

$

75,322

 

 

$

75,127

 

After 1 year through 5 years

 

 

170,101

 

 

 

165,339

 

After 5 years through 10 years

 

 

295,411

 

 

 

278,986

 

After 10 years

 

 

1,879,947

 

 

 

1,582,671

 

Total available-for-sale debt securities

 

$

2,420,781

 

 

$

2,102,123

 

Held-to-maturity debt securities

 

 

 

 

 

 

Within one year

 

$

22,438

 

 

$

22,325

 

After 1 year through 5 years

 

 

114,612

 

 

 

112,057

 

After 5 years through 10 years

 

 

501,534

 

 

 

453,682

 

After 10 years

 

 

541,100

 

 

 

440,368

 

Total held-to-maturity debt securities

 

$

1,179,684

 

 

$

1,028,432

 

Total debt securities

 

$

3,600,465

 

 

$

3,130,555

 

 

11


 

Securities with an aggregate carrying value of $2.0 billion and $2.1 billion at June 30, 2024 and December 31, 2023, 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 for the six months ended June 30, 2023 totaled $28.3 million. There were no security sales that occurred in the six months ended June 30, 2024. Net unrealized losses on available-for-sale securities included in accumulated other comprehensive income, net of tax, as of June 30, 2024 and December 31, 2023 were $241.6 million and $233.2 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 and six months ended June 30, 2024 and 2023, respectively. All gains and losses presented in the table below are included in the net securities gains (losses) line item of the consolidated 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 June 30,

 

 

For the Six Months
Ended June 30,

 

(unaudited, in thousands)

 

2024

 

 

2023

 

 

2024

 

 

2023

 

Debt securities:

 

 

 

 

 

 

 

 

 

 

 

 

Gross realized gains

 

$

 

 

$

2

 

 

$

 

 

$

65

 

Gross realized losses

 

 

(12

)

 

 

(9

)

 

 

(12

)

 

 

(206

)

Net losses on debt securities

 

 

(12

)

 

 

(7

)

 

 

(12

)

 

 

(141

)

Equity securities:

 

 

 

 

 

 

 

 

 

 

 

 

Net unrealized gains recognized on securities still held

 

 

147

 

 

 

212

 

 

 

684

 

 

 

491

 

Net securities gains

 

$

135

 

 

$

205

 

 

$

672

 

 

$

350

 

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 consolidated income statement in the provision for credit losses. Accrued interest receivable on held-to-maturity securities, which was $8.6 million and $8.8 million as of June 30, 2024 and December 31, 2023, respectively, is excluded from the estimate of credit losses. Held-to-maturity investments in U.S. Government sponsored entities and agencies as well as mortgage-backed securities and collateralized mortgage obligations, which are all either issued by a direct governmental entity or a government-sponsored entity, have no historical evidence supporting expected credit losses; therefore, Wesbanco has estimated these losses at zero, and will monitor this assumption in the future for any economic or governmental policies that could affect this assumption.

The following table provides a roll-forward of the allowance for credit losses on held-to-maturity securities for the six months ended June 30, 2024 and 2023:

 

 

Allowance for Credit Losses By Category

 

 

For the Six Months Ended June 30, 2024 and 2023

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Obligations of

 

 

 

 

 

 

states and

 

Corporate

 

 

 

 

political

 

debt

 

 

(unaudited, in thousands)

subdivisions

 

Securities

 

Total

 

Balance at December 31, 2023

$

160

 

$

32

 

$

192

 

Current period provision (1)

 

(12

)

 

(17

)

 

(29

)

Write-offs

 

 

 

 

 

 

Recoveries

 

 

 

 

 

 

Balance at June 30, 2024

$

148

 

$

15

 

$

163

 

.

 

 

 

 

 

 

Balance at December 31, 2022

$

167

 

$

53

 

$

220

 

Current period provision (1)

 

(12

)

 

(15

)

 

(27

)

Write-offs

 

 

 

 

 

 

Recoveries

 

 

 

 

 

 

Balance at June 30, 2023

$

155

 

$

38

 

$

193

 

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

 

12


 

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 June 30, 2024 and December 31, 2023, respectively:

 

 

 

June 30, 2024

 

 

 

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

 

$

 

 

$

 

 

 

 

 

$

199,258

 

 

$

(32,654

)

 

 

45

 

 

$

199,258

 

 

$

(32,654

)

 

 

45

 

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

 

 

 

 

 

 

 

 

 

 

 

1,510,101

 

 

 

(277,066

)

 

 

463

 

 

 

1,510,101

 

 

 

(277,066

)

 

 

463

 

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

 

 

 

 

 

 

 

 

 

 

 

239,948

 

 

 

(5,000

)

 

 

59

 

 

 

239,948

 

 

 

(5,000

)

 

 

59

 

Obligations of states and political subdivisions

 

 

11,336

 

 

 

(190

)

 

 

13

 

 

 

57,038

 

 

 

(3,669

)

 

 

96

 

 

 

68,374

 

 

 

(3,859

)

 

 

109

 

Corporate debt securities

 

 

4,481

 

 

 

(19

)

 

 

4

 

 

 

7,307

 

 

 

(161

)

 

 

2

 

 

 

11,788

 

 

 

(180

)

 

 

6

 

Total

 

$

15,817

 

 

$

(209

)

 

 

17

 

 

$

2,013,652

 

 

$

(318,550

)

 

 

665

 

 

$

2,029,469

 

 

$

(318,759

)

 

 

682

 

 

 

 

December 31, 2023

 

 

 

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

 

 

$

(1

)

 

 

1

 

 

$

208,348

 

 

$

(30,309

)

 

 

45

 

 

$

208,366

 

 

$

(30,310

)

 

 

46

 

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

 

 

 

 

 

 

 

 

 

 

 

1,625,144

 

 

 

(267,874

)

 

 

467

 

 

 

1,625,144

 

 

 

(267,874

)

 

 

467

 

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

 

 

5,520

 

 

 

(31

)

 

 

1

 

 

 

251,765

 

 

 

(5,893

)

 

 

60

 

 

 

257,285

 

 

 

(5,924

)

 

 

61

 

Obligations of states and political subdivisions

 

 

10,387

 

 

 

(86

)

 

 

19

 

 

 

49,002

 

 

 

(2,775

)

 

 

79

 

 

 

59,389

 

 

 

(2,861

)

 

 

98

 

Corporate debt securities

 

 

4,482

 

 

 

(18

)

 

 

3

 

 

 

7,365

 

 

 

(97

)

 

 

3

 

 

 

11,847

 

 

 

(115

)

 

 

6

 

Total

 

$

20,407

 

 

$

(136

)

 

 

24

 

 

$

2,141,624

 

 

$

(306,948

)

 

 

654

 

 

$

2,162,031

 

 

$

(307,084

)

 

 

678

 

Unrealized losses on debt securities in the table above represent temporary fluctuations resulting from changes in market rates in relation to fixed yields. Unrealized losses in the available-for-sale portfolio are accounted for as an adjustment, net of taxes, to other comprehensive income in shareholders’ equity. Wesbanco does not believe the securities presented above are impaired due to reasons of credit quality, as substantially all debt securities are rated above investment grade and all are paying principal and interest according to their contractual terms. Wesbanco does not intend to sell, nor is it more likely than not that it will be required to sell, loss position securities prior to recovery of their cost; therefore, management believes the unrealized losses detailed above do not require an allowance for credit losses relating to these securities to be recognized. Securities that do not have readily determinable fair values and for which Wesbanco does not exercise significant influence are carried at cost. Cost method investments consist primarily of Federal Home Loan Bank (“FHLB”) of Pittsburgh stock totaling $67.2 million and $62.0 million at June 30, 2024 and December 31, 2023, 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.

 

 

13


 

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 costs were $10.9 million and $11.5 million at June 30, 2024 and December 31, 2023, respectively. The unaccreted discount on purchased loans from acquisitions was $12.0 million at June 30, 2024 and $13.5 million at December 31, 2023.

 

 

 

June 30,

 

 

December 31,

 

(unaudited, in thousands)

 

2024

 

 

2023

 

Commercial real estate:

 

 

 

 

 

 

Land and construction

 

$

1,061,390

 

 

$

1,055,865

 

Improved property

 

 

5,937,498

 

 

 

5,509,583

 

Total commercial real estate

 

 

6,998,888

 

 

 

6,565,448

 

Commercial and industrial

 

 

1,760,479

 

 

 

1,670,659

 

Residential real estate

 

 

2,506,957

 

 

 

2,438,574

 

Home equity

 

 

770,599

 

 

 

734,219

 

Consumer

 

 

220,588

 

 

 

229,561

 

Total portfolio loans

 

 

12,257,511

 

 

 

11,638,461

 

Loans held for sale

 

 

25,433

 

 

 

16,354

 

Total loans

 

$

12,282,944

 

 

$

11,654,815

 

 

Allowance for Credit Losses

The allowance for credit losses under the current expected credit losses methodology ("CECL") is calculated utilizing the probability of default ("PD")/ loss given default ("LGD"), which is then discounted to net present value. PD is the probability the asset will default within a given time frame and LGD is the percentage of the asset not expected to be collected due to default. The primary macroeconomic drivers of the quantitative model include forecasts of national unemployment and interest rates, as well as modeling adjustments for changes in prepayment speeds, loan risk grades, portfolio mix, concentrations and loan growth. At June 30, 2024, the primary drivers of the allowance model calculation were continued loan growth, adjustments in regional macroeconomic factors and loan concentrations, a specific reserve on one C&I credit and an increase in net charge-offs. The forecast was based upon a probability weighted approach which is designed to incorporate loss projections from a baseline, upside and downside economy. Due to the nonlinearity of credit losses to the economy, the asymmetry is best captured by evaluating multiple economic scenarios through a probability weighted approach. At quarter-end, national unemployment was projected to be 4.4%, and subsequently increase to an average of 4.8% over the remainder of the forecast period. In addition to the quantitative and qualitative changes noted above, the allowance is reflective of $8.2 million in net charge-offs recorded during the first half of 2024. Accrued interest receivable for loans was $65.1 million and $62.2 million at June 30, 2024 and December 31, 2023, respectively. Wesbanco made an accounting policy election to exclude accrued interest from the measurement of the allowance for credit losses because the Company has a policy in place to reverse or write-off accrued interest when loans are placed on non-accrual. However, Wesbanco does have a $0.1 million reserve on the accrued interest related to loan modifications allowed under the Coronavirus Aid, Relief and Economic Security ("CARES") Act due to the timing and nature of these modifications. Accrued interest related to COVID-19 loan modifications as permitted under the CARES Act was $15.0 million and $15.6 million at June 30, 2024 and December 31, 2023, respectively.

 

14


 

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 Six Months Ended June 30, 2024 and 2023

 

(unaudited, in thousands)

 

Commercial
Real Estate -
Land and
Construction

 

 

Commercial
Real Estate-
Improved
Property

 

 

Commercial
& Industrial

 

 

Residential
Real Estate

 

 

Home
Equity

 

 

Consumer

 

 

Deposit
Overdrafts (1)

 

 

Total

 

Balance at December 31, 2023

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Allowance for credit
   losses - loans

 

$

7,123

 

 

$

59,351

 

 

$

36,644

 

 

$

21,218

 

 

$

1,017

 

 

$

3,956

 

 

$

1,366

 

 

$

130,675

 

Allowance for credit
   losses - loan commitments

 

 

6,894

 

 

 

 

 

 

429

 

 

 

1,276

 

 

 

5

 

 

 

 

 

 

 

 

 

8,604

 

Total beginning allowance for credit
   losses - loans and loan
   commitments

 

 

14,017

 

 

 

59,351

 

 

 

37,073

 

 

 

22,494

 

 

 

1,022

 

 

 

3,956

 

 

 

1,366

 

 

 

139,279

 

Provision for credit losses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Provision for loan losses

 

 

1,516

 

 

 

(402

)

 

 

9,726

 

 

 

1,342

 

 

 

203

 

 

 

773

 

 

 

833

 

 

 

13,991

 

Provision for loan commitments

 

 

1,046

 

 

 

 

 

 

(429

)

 

 

(22

)

 

 

(5

)

 

 

 

 

 

 

 

 

590

 

Total provision for credit
   losses - loans and loan
   commitments (2)

 

 

2,562

 

 

 

(402

)

 

 

9,297

 

 

 

1,320

 

 

 

198

 

 

 

773

 

 

 

833

 

 

 

14,581

 

Charge-offs

 

 

(813

)

 

 

(815

)

 

 

(6,072

)

 

 

(272

)

 

 

(413

)

 

 

(1,980

)

 

 

(861

)

 

 

(11,226

)

Recoveries

 

 

 

 

 

443

 

 

 

1,107

 

 

 

115

 

 

 

297

 

 

 

894

 

 

 

213

 

 

 

3,069

 

Net (charge-offs) recoveries

 

 

(813

)

 

 

(372

)

 

 

(4,965

)

 

 

(157

)

 

 

(116

)

 

 

(1,086

)

 

 

(648

)

 

 

(8,157

)

Balance at June 30, 2024

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Allowance for credit
   losses - loans

 

 

7,826

 

 

 

58,577

 

 

 

41,405

 

 

 

22,403

 

 

 

1,104

 

 

 

3,643

 

 

 

1,551

 

 

 

136,509

 

Allowance for credit
   losses - loan commitments

 

 

7,940

 

 

 

 

 

 

 

 

 

1,254

 

 

 

 

 

 

 

 

 

 

 

 

9,194

 

Total ending allowance for credit
   losses - loans and loan
   commitments

 

$

15,766

 

 

$

58,577

 

 

$

41,405

 

 

$

23,657

 

 

$

1,104

 

 

$

3,643

 

 

$

1,551

 

 

$

145,703

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at December 31, 2022

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Allowance for credit
   losses - loans

 

$

6,737

 

 

$

52,659

 

 

$

31,540

 

 

$

18,208

 

 

$

4,234

 

 

$

3,127

 

 

$

1,285

 

 

$

117,790

 

Allowance for credit
   losses - loan commitments

 

 

6,025

 

 

 

 

 

 

 

 

 

2,215

 

 

 

128

 

 

 

 

 

 

 

 

 

8,368

 

Total beginning allowance for credit
   losses - loans and loan
   commitments

 

 

12,762

 

 

 

52,659

 

 

 

31,540

 

 

 

20,423

 

 

 

4,362

 

 

 

3,127

 

 

 

1,285

 

 

 

126,158

 

Provision for credit losses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Provision for loan losses

 

 

(845

)

 

 

1,246

 

 

 

1,337

 

 

 

1,787

 

 

 

251

 

 

 

693

 

 

 

407

 

 

 

4,876

 

Provision for loan commitments

 

 

1,168

 

 

 

182

 

 

 

527

 

 

 

(621

)

 

 

500

 

 

 

 

 

 

 

 

 

1,756

 

Total provision for credit
   losses - loans and loan
   commitments (2)

 

 

323

 

 

 

1,428

 

 

 

1,864

 

 

 

1,166

 

 

 

751

 

 

 

693

 

 

 

407

 

 

 

6,632

 

Charge-offs

 

 

(222

)

 

 

(1,381

)

 

 

(999

)

 

 

7

 

 

 

(315

)

 

 

(1,601

)

 

 

(818

)

 

 

(5,329

)

Recoveries

 

 

128

 

 

 

427

 

 

 

259

 

 

 

313

 

 

 

250

 

 

 

1,231

 

 

 

221

 

 

 

2,829

 

Net (charge-offs) recoveries

 

 

(94

)

 

 

(954

)

 

 

(740

)

 

 

320

 

 

 

(65

)

 

 

(370

)

 

 

(597

)

 

 

(2,500

)

Balance at June 30, 2023

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Allowance for credit
   losses - loans

 

 

5,798

 

 

 

52,951

 

 

 

32,137

 

 

 

20,315

 

 

 

4,420

 

 

 

3,450

 

 

 

1,095

 

 

 

120,166

 

Allowance for credit
   losses - loan commitments

 

 

7,193

 

 

 

182

 

 

 

527

 

 

 

1,594

 

 

 

628

 

 

 

 

 

 

 

 

 

10,124

 

Total ending allowance for credit
   losses - loans and loan
   commitments

 

$

12,991

 

 

$

53,133

 

 

$

32,664

 

 

$

21,909

 

 

$

5,048

 

 

$

3,450

 

 

$

1,095

 

 

$

130,290

 

(1) Deposit overdrafts of $4.6 million and $4.5 million are included in total portfolio loans for the periods ending June 30, 2024 and June 30, 2023, respectively.

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

15


 

 

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
Overdrafts (1)

 

 

Total

 

June 30, 2024

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Allowance for credit losses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans individually-evaluated

 

$

 

 

$

5,438

 

 

$

3,344

 

 

$

 

 

$

 

 

$

 

 

$

 

 

$

8,782

 

Loans collectively-evaluated

 

 

7,826

 

 

 

53,139

 

 

 

38,061

 

 

 

22,403

 

 

 

1,104

 

 

 

3,643

 

 

 

1,551

 

 

 

127,727

 

Loan commitments (2)

 

 

7,940

 

 

 

 

 

 

 

 

 

1,254

 

 

 

 

 

 

 

 

 

 

 

 

9,194

 

Total allowance for credit
   losses - loans and commitments

 

$

15,766

 

 

$

58,577

 

 

$

41,405

 

 

$

23,657

 

 

$

1,104

 

 

$

3,643

 

 

$

1,551

 

 

$

145,703

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Portfolio loans:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Individually-evaluated for credit
   losses

 

$

 

 

$

36,208

 

 

$

3,916

 

 

$

 

 

$

 

 

$

 

 

$

 

 

$

40,124

 

Collectively-evaluated for credit
   losses

 

 

1,061,390

 

 

 

5,901,290

 

 

 

1,756,563

 

 

 

2,506,957

 

 

770,599

 

 

 

220,588

 

 

 

 

 

 

12,217,387

 

Total portfolio loans

 

$

1,061,390

 

 

$

5,937,498

 

 

$

1,760,479

 

 

$

2,506,957

 

 

$

770,599

 

 

$

220,588

 

 

$

 

 

$

12,257,511

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2023

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Allowance for credit losses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans individually-evaluated

 

$

 

 

$

5,745

 

 

$

 

 

$

 

 

$

 

 

$

 

 

$

 

 

$

5,745

 

Loans collectively-evaluated

 

 

7,123

 

 

 

53,606

 

 

 

36,644

 

 

 

21,218

 

 

 

1,017

 

 

 

3,956

 

 

 

1,366

 

 

 

124,930

 

Loan commitments (2)

 

 

6,894

 

 

 

 

 

 

429

 

 

 

1,276

 

 

 

5

 

 

 

 

 

 

 

 

 

8,604

 

Total allowance for credit
   losses - loans and commitments

 

$

14,017

 

 

$

59,351

 

 

$

37,073

 

 

$

22,494

 

 

$

1,022

 

 

$

3,956

 

 

$

1,366

 

 

$

139,279

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Portfolio loans:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Individually-evaluated for credit
   losses

 

$

 

 

$

36,929

 

 

$

116

 

 

$

 

 

$

 

 

$

 

 

$

 

 

$

37,045

 

Collectively-evaluated for credit
   losses

 

 

1,055,865

 

 

 

5,472,654

 

 

 

1,670,543

 

 

 

2,438,574

 

 

 

734,219

 

 

 

229,561

 

 

 

 

 

 

11,601,416

 

Total portfolio loans

 

$

1,055,865

 

 

$

5,509,583

 

 

$

1,670,659

 

 

$

2,438,574

 

 

$

734,219

 

 

$

229,561

 

 

$

 

 

$

11,638,461

 

(1) Deposit overdrafts of $4.6 million and $4.7 million are included in total portfolio loans for the periods ending June 30, 2024 and December 31, 2023, respectively.

(2) For additional detail relating to loan commitments, see Note 11, "Commitments and Contingent Liabilities."

 

Commercial Loan Risk Grades

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.

16


 

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, including guarantees.

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

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

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 June 30, 2024

 

 

 

 

 

 

 

 

 

 

 

 

Pass

 

$

1,058,739

 

 

$

5,755,684

 

 

$

1,681,579

 

 

$

8,496,002

 

Criticized - compromised

 

 

972

 

 

 

108,593

 

 

 

70,056

 

 

 

179,621

 

Classified - substandard

 

 

1,679

 

 

 

73,221

 

 

 

8,844

 

 

 

83,744

 

Classified - doubtful

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

$

1,061,390

 

 

$

5,937,498

 

 

$

1,760,479

 

 

$

8,759,367

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As of December 31, 2023

 

 

 

 

 

 

 

 

 

 

 

 

Pass

 

$

1,053,359

 

 

$

5,337,394

 

 

$

1,586,683

 

 

$

7,977,436

 

Criticized - compromised

 

 

2,497

 

 

 

107,473

 

 

 

73,204

 

 

 

183,174

 

Classified - substandard

 

 

9

 

 

 

64,716

 

 

 

10,772

 

 

 

75,497

 

Classified - doubtful

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

$

1,055,865

 

 

$

5,509,583

 

 

$

1,670,659

 

 

$

8,236,107

 

 

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 $21.4 million at June 30, 2024 and $20.0 million at December 31, 2023, of which $4.9 million and $4.6 million were accruing, for each period, respectively. These loans are not included in the tables above. In addition, $26.3 million and $21.2 million of unfunded commercial loan commitments are also not included in the tables above at June 30, 2024 and December 31, 2023, respectively.

17


 

Past Due and Nonperforming Loans

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

 

As of June 30, 2024

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial real estate:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Land and construction

 

$

1,061,390

 

 

$

 

 

$

 

 

$

 

 

$

 

 

$

1,061,390

 

 

$

 

Improved property

 

 

5,917,046

 

 

 

2,415

 

 

 

2,119

 

 

 

15,918

 

 

 

20,452

 

 

 

5,937,498

 

 

 

1,296

 

Total commercial real estate

 

 

6,978,436

 

 

 

2,415

 

 

 

2,119

 

 

 

15,918

 

 

 

20,452

 

 

 

6,998,888

 

 

 

1,296

 

Commercial and industrial

 

 

1,753,887

 

 

 

831

 

 

 

1,334

 

 

 

4,427

 

 

 

6,592

 

 

 

1,760,479

 

 

 

2,979

 

Residential real estate

 

 

2,494,815

 

 

 

1,123

 

 

 

3,987

 

 

 

7,032

 

 

 

12,142

 

 

 

2,506,957

 

 

 

3,089

 

Home equity

 

 

760,764

 

 

 

3,662

 

 

 

1,425

 

 

 

4,748

 

 

 

9,835

 

 

 

770,599

 

 

 

1,417

 

Consumer

 

 

215,501

 

 

 

3,625

 

 

 

1,028

 

 

 

434

 

 

 

5,087

 

 

 

220,588

 

 

 

390

 

Total portfolio loans

 

 

12,203,403

 

 

 

11,656

 

 

 

9,893

 

 

 

32,559

 

 

 

54,108

 

 

 

12,257,511

 

 

 

9,171

 

Loans held for sale

 

 

25,433

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

25,433

 

 

 

 

Total loans

 

$

12,228,836

 

 

$

11,656

 

 

$

9,893

 

 

$

32,559

 

 

$

54,108

 

 

$

12,282,944

 

 

$

9,171

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nonperforming loans included above are as follows:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-accrual loans

 

$

10,858

 

 

$

322

 

 

$

900

 

 

$

23,388

 

 

$

24,610

 

 

$

35,468

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As of December 31, 2023

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial real estate:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Land and construction

 

$

1,055,865

 

 

$

 

 

$

 

 

$

 

 

$

-

 

 

$

1,055,865

 

 

$

 

Improved property

 

 

5,490,946

 

 

 

4,416

 

 

 

3,627

 

 

 

10,594

 

 

 

18,637

 

 

 

5,509,583

 

 

 

1,899

 

Total commercial real estate

 

 

6,546,811

 

 

 

4,416

 

 

 

3,627

 

 

 

10,594

 

 

 

18,637

 

 

 

6,565,448

 

 

 

1,899

 

Commercial and industrial

 

 

1,663,985

 

 

 

640

 

 

 

1,255

 

 

 

4,779

 

 

 

6,674

 

 

 

1,670,659

 

 

 

3,184

 

Residential real estate

 

 

2,429,200

 

 

 

1,572

 

 

 

2,471

 

 

 

5,331

 

 

 

9,374

 

 

 

2,438,574

 

 

 

2,602

 

Home equity

 

 

724,293

 

 

 

4,691

 

 

 

1,198

 

 

 

4,037

 

 

 

9,926

 

 

 

734,219

 

 

 

1,407

 

Consumer

 

 

223,989

 

 

 

3,833

 

 

 

1,178

 

 

 

561

 

 

 

5,572

 

 

 

229,561

 

 

 

546

 

Total portfolio loans

 

 

11,588,278

 

 

 

15,152

 

 

 

9,729

 

 

 

25,302

 

 

 

50,183

 

 

 

11,638,461

 

 

 

9,638

 

Loans held for sale

 

 

16,354

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

16,354

 

 

 

 

Total loans

 

$

11,604,632

 

 

$

15,152

 

 

$

9,729

 

 

$

25,302

 

 

$

50,183

 

 

$

11,654,815

 

 

$

9,638

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nonperforming loans included above are as follows:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-accrual loans

 

$

9,138

 

 

$

1,300

 

 

$

706

 

 

$

15,664

 

 

$

17,670

 

 

$

26,808

 

 

 

 

 

18


 

The following tables summarize nonperforming loans:

 

 

 

Nonperforming Loans

 

 

 

June 30, 2024

 

 

December 31, 2023

 

 

 

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

 

$

1,023

 

 

$

184

 

 

$

 

 

$

 

 

$

 

 

$

 

Improved property

 

 

18,874

 

 

 

16,756

 

 

 

 

 

 

11,248

 

 

 

9,557

 

 

 

 

Commercial and industrial

 

 

3,258

 

 

 

2,058

 

 

 

 

 

 

2,492

 

 

 

1,841

 

 

 

 

Residential real estate

 

 

15,638

 

 

 

11,005

 

 

 

 

 

 

15,128

 

 

 

10,582

 

 

 

 

Home equity

 

 

7,144

 

 

 

5,401

 

 

 

 

 

 

6,521

 

 

 

4,777

 

 

 

 

Consumer

 

 

114

 

 

 

64

 

 

 

 

 

 

104

 

 

 

51

 

 

 

 

Total nonperforming loans without a specific allowance

 

 

46,051

 

 

 

35,468

 

 

 

 

 

 

35,493

 

 

 

26,808

 

 

 

 

Total nonperforming loans with a specific allowance

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total nonperforming loans

 

$

46,051

 

 

$

35,468

 

 

$

 

 

$

35,493

 

 

$

26,808

 

 

$

 

(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

 

 

For the Six Months Ended

 

 

 

June 30, 2024

 

 

June 30, 2023

 

 

June 30, 2024

 

 

June 30, 2023

 

 

 

Average

 

 

Interest

 

 

Average

 

 

Interest

 

 

Average

 

 

Interest

 

 

Average

 

 

Interest

 

 

 

Recorded

 

 

Income

 

 

Recorded

 

 

Income

 

 

Recorded

 

 

Income

 

 

Recorded

 

 

Income

 

(unaudited, in thousands)

 

Investment

 

 

Recognized

 

 

Investment

 

 

Recognized

 

 

Investment

 

 

Recognized

 

 

Investment

 

 

Recognized

 

With no related specific allowance recorded:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial real estate:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Land and construction

 

$

197

 

 

$

 

 

$

 

 

$

 

 

$

131

 

 

$

 

 

$

37

 

 

$

 

Improved property

 

 

15,140

 

 

 

 

 

 

14,698

 

 

 

 

 

 

13,279

 

 

 

 

 

 

15,332

 

 

 

 

Commercial and industrial

 

 

2,412

 

 

 

 

 

 

2,780

 

 

 

 

 

 

2,221

 

 

 

 

 

 

2,890

 

 

 

 

Residential real estate

 

 

11,342

 

 

 

 

 

 

12,744

 

 

 

 

 

 

11,089

 

 

 

 

 

 

13,848

 

 

 

 

Home equity

 

 

5,035

 

 

 

 

 

 

5,061

 

 

 

 

 

 

4,949

 

 

 

 

 

 

5,165

 

 

 

 

Consumer

 

 

69

 

 

 

 

 

 

104

 

 

 

 

 

 

63

 

 

 

 

 

 

122

 

 

 

 

Total nonperforming loans without a specific allowance

 

 

34,194

 

 

 

 

 

 

35,386

 

 

 

 

 

 

31,732

 

 

 

 

 

 

37,394

 

 

 

 

With a specific allowance recorded:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial real estate:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Land and construction

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Improved property

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total nonperforming loans with a specific allowance

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total nonperforming loans

 

$

34,194

 

 

$

 

 

$

35,386

 

 

$

 

 

$

31,732

 

 

$

 

 

$

37,394

 

 

$

 

 

The following table presents the recorded investment in non-accrual loans:

 

 

 

Non-accrual Loans (1)

 

 

 

June 30,

 

 

December 31,

 

(unaudited, in thousands)

 

2024

 

 

2023

 

Commercial real estate:

 

 

 

 

 

 

Land and construction

 

$

184

 

 

$

 

Improved property

 

 

16,756

 

 

 

9,557

 

Total commercial real estate

 

 

16,940

 

 

 

9,557

 

Commercial and industrial

 

 

2,058

 

 

 

1,841

 

Residential real estate

 

 

11,005

 

 

 

10,582

 

Home equity

 

 

5,401

 

 

 

4,777

 

Consumer

 

 

64

 

 

 

51

 

Total

 

$

35,468

 

 

$

26,808

 

(1) At June 30, 2024, there were five borrowers with a loan balance greater than $1.0 million, which totaled $13.6 million, as compared to two borrowers with a loan balance greater than $1.0 million totaling $7.2 million at December 31, 2023. Total non-accrual loans may include loans that are also restructured for borrowers experiencing financial difficulty. Such loans are also set forth in the following tables.

 

19


 

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

 

Tables in the following section exclude the financial effects of modifications for loans that were paid off or are otherwise no longer in the loan portfolio as of period end. The following table displays the details of portfolio loans that were modified during the three and six months ended June 30, 2024 and 2023 presented by loan category:

 

 

 

For the Three Months Ended June 30, 2024

 

(unaudited, in thousands)

 

Term
Extension

 

 

Payment
Delay

 

 

Total

 

 

% of
Total by
Loan Category

 

Commercial real estate - land and construction

 

$

5

 

 

$

 

 

$

5

 

 

 

 

Commercial real estate - improved property

 

 

4,378

 

 

 

 

 

 

4,378

 

 

 

0.1

 

Commercial and industrial

 

 

496

 

 

 

9

 

 

 

505

 

 

 

 

Residential real estate

 

 

 

 

 

164

 

 

 

164

 

 

 

 

Home equity

 

 

 

 

 

109

 

 

 

109

 

 

 

 

Consumer

 

 

 

 

 

114

 

 

 

114

 

 

 

0.1

 

Total

 

$

4,879

 

 

$

396

 

 

$

5,275

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Three Months Ended June 30, 2023

 

(unaudited, in thousands)

 

Term
Extension

 

 

Payment
Delay

 

 

Total

 

 

Percent of
Total by
Loan Category

 

Commercial real estate - land and construction

 

$

448

 

 

$

 

 

$

448

 

 

 

0.1

 

Commercial real estate - improved property

 

 

3,820

 

 

 

270

 

 

 

4,090

 

 

 

0.1

 

Commercial and industrial

 

 

6,544

 

 

 

 

 

 

6,544

 

 

 

0.4

 

Residential real estate

 

 

 

 

 

 

 

 

 

 

 

 

Home equity

 

 

 

 

 

483

 

 

 

483

 

 

 

0.1

 

Consumer

 

 

 

 

 

267

 

 

 

267

 

 

 

0.1

 

Total

 

$

10,812

 

 

$

1,020

 

 

$

11,832

 

 

 

0.1

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Six Months Ended June 30, 2024

 

(unaudited, in thousands)

 

Term
Extension

 

 

Payment
Delay

 

 

Total

 

 

% of
Total by
Loan Category

 

Commercial real estate - land and construction

 

$

5

 

 

$

 

 

$

5

 

 

 

 

Commercial real estate - improved property

 

 

25,288

 

 

 

 

 

 

25,288

 

 

 

0.4

 

Commercial and industrial

 

 

496

 

 

 

9

 

 

 

505

 

 

 

 

Residential real estate

 

 

 

 

 

739

 

 

 

739

 

 

 

 

Home equity

 

 

 

 

 

449

 

 

 

449

 

 

 

0.1

 

Consumer

 

 

 

 

 

223

 

 

 

223

 

 

 

0.1

 

Total

 

$

25,789

 

 

$

1,420

 

 

$

27,209

 

 

 

0.2

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Six Months Ended June 30, 2023

 

(unaudited, in thousands)

 

Term
Extension

 

 

Payment
Delay

 

 

Total

 

 

Percent of
Total by
Loan Category

 

Commercial real estate - land and construction

 

$

6,449

 

 

$

 

 

$

6,449

 

 

 

0.8

 

Commercial real estate - improved property

 

 

7,105

 

 

 

270

 

 

 

7,375

 

 

 

0.1

 

Commercial and industrial

 

 

9,310

 

 

 

 

 

 

9,310

 

 

 

0.6

 

Residential real estate

 

 

 

 

 

100

 

 

 

100

 

 

 

 

Home equity

 

 

8

 

 

 

751

 

 

 

759

 

 

 

0.1

 

Consumer

 

 

 

 

 

293

 

 

 

293

 

 

 

0.1

 

Total

 

$

22,872

 

 

$

1,414

 

 

$

24,286

 

 

 

0.2

 

Unfunded loan commitments on modifications for borrowers experiencing financial difficulty ("MBEFDs") totaled $1.0 million for loans modified during the six months ended June 30, 2024 and $1.8 million for loans modified during the twelve months ended December 31, 2023. These commitments are not included in the tables above.

 

20


 

The following table summarizes the financial impacts of loan modifications and payment deferrals made to portfolio loans during the three and six months ended June 30, 2024 and 2023, presented by loan category:

 

 

 

For the Three Months Ended

 

 

For the Three Months Ended

 

 

 

June 30, 2024

 

 

June 30, 2023

 

(unaudited, in thousands)

 

Weighted-Average
Term Extension
(in months)

 

 

Weighted-Average
Term Extension
(in months)

 

Commercial real estate - land and construction

 

 

24

 

 

 

12

 

Commercial real estate - improved property

 

 

4

 

 

 

9

 

Commercial and industrial

 

 

33

 

 

 

8

 

Residential real estate

 

 

 

 

 

 

Home equity

 

 

 

 

 

 

Consumer

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Six Months Ended

 

 

For the Six Months Ended

 

 

 

June 30, 2024

 

 

June 30, 2023

 

(unaudited, in thousands)

 

Weighted-Average
Term Extension
(in months)

 

 

Weighted-Average
Term Extension
(in months)

 

Commercial real estate - land and construction

 

 

24

 

 

 

4

 

Commercial real estate - improved property

 

 

9

 

 

 

22

 

Commercial and industrial

 

 

33

 

 

 

9

 

Residential real estate

 

 

 

 

 

 

Home equity

 

 

 

 

 

120

 

Consumer

 

 

 

 

 

 

 

The following table summarizes loans with MBEFDs which defaulted (defined as 90 days past due) within 12 months of the loan being modified during the three and six months ended June 30, 2024 and 2023. Modified loans, including those that have defaulted, are already included in the allowance for credit losses through the various methodologies used to estimate the allowance. As such, no modification to the allowance is recorded specifically due to a modified loan subsequently defaulting.

 

 

 

For the Three Months Ended June 30, 2024

 

 

For the Three Months Ended June 30, 2023

 

(unaudited, in thousands)

 

Term
Extension

 

 

Payment
Delay

 

 

Total

 

 

Term
Extension

 

 

Payment
Delay

 

 

Total

 

Commercial real estate - land and construction

 

$

 

 

$

 

 

$

 

 

$

 

 

$

 

 

$

 

Commercial real estate - improved property

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial and industrial

 

 

180

 

 

 

 

 

 

180

 

 

 

 

 

 

 

 

 

 

Residential real estate

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Home equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consumer

 

 

 

 

 

31

 

 

 

31

 

 

 

 

 

 

 

 

 

 

Total loans that subsequently defaulted

 

$

180

 

 

$

31

 

 

$

211

 

 

$

 

 

$

 

 

$

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Six Months Ended June 30, 2024

 

 

For the Six Months Ended June 30, 2023

 

(unaudited, in thousands)

 

Term
Extension

 

 

Payment
Delay

 

 

Total

 

 

Term
Extension

 

 

Payment
Delay

 

 

Total

 

Commercial real estate - land and construction

 

$

 

 

$

 

 

$

 

 

$

 

 

$

 

 

$

 

Commercial real estate - improved property

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial and industrial

 

 

180

 

 

 

 

 

 

180

 

 

 

 

 

 

 

 

 

 

Residential real estate

 

 

 

 

 

118

 

 

 

118

 

 

 

 

 

 

 

 

 

 

Home equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consumer

 

 

 

 

 

48

 

 

 

48

 

 

 

 

 

 

 

 

 

 

Total loans that subsequently defaulted

 

$

180

 

 

$

166

 

 

$

346

 

 

$

 

 

$

 

 

$

 

 

 

21


 

 

The following table presents an aging analysis of portfolio loans by loan category that were modified during the twelve months prior to June 30, 2024 and June 30, 2023.

 

 

 

June 30, 2024

 

(unaudited, in thousands)

 

30-59 Days
Past Due

 

 

60-89 Days
Past Due

 

 

90 Days
or More
Past Due

 

 

Total
Past Due

 

 

Current

 

 

Total

 

Commercial real estate - land and construction

 

$

 

 

$

 

 

$

 

 

$

 

 

$

5

 

 

$

5

 

Commercial real estate - improved property

 

 

 

 

 

16

 

 

 

 

 

 

16

 

 

 

25,585

 

 

 

25,601

 

Commercial and industrial

 

 

91

 

 

 

9

 

 

 

 

 

 

100

 

 

 

405

 

 

 

505

 

Residential real estate

 

 

 

 

 

36

 

 

 

265

 

 

 

301

 

 

 

1,252

 

 

 

1,553

 

Home equity

 

 

15

 

 

 

 

 

 

176

 

 

 

191

 

 

 

750

 

 

 

941

 

Consumer

 

 

21

 

 

 

36

 

 

 

31

 

 

 

88

 

 

 

230

 

 

 

318

 

Total modified loans (1)

 

$

127

 

 

$

97

 

 

$

472

 

 

$

696

 

 

$

28,227

 

 

$

28,923

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

June 30, 2023

 

(unaudited, in thousands)

 

30-59 Days
Past Due

 

 

60-89 Days
Past Due

 

 

90 Days
or More
Past Due

 

 

Total
Past Due

 

 

Current

 

 

Total

 

Commercial real estate - land and construction

 

$

 

 

$

 

 

$

 

 

$

 

 

$

6,449

 

 

$

6,449

 

Commercial real estate - improved property

 

 

 

 

 

 

 

 

270

 

 

 

270

 

 

 

7,105

 

 

 

7,375

 

Commercial and industrial

 

 

143

 

 

 

 

 

 

 

 

 

143

 

 

 

9,168

 

 

 

9,311

 

Residential real estate

 

 

 

 

 

 

 

 

 

 

 

 

 

 

100

 

 

 

100

 

Home equity

 

 

18

 

 

 

 

 

 

72

 

 

 

90

 

 

 

668

 

 

 

758

 

Consumer

 

 

 

 

 

 

 

 

20

 

 

 

20

 

 

 

273

 

 

 

293

 

Total modified loans (1)

 

$

161

 

 

$

 

 

$

362

 

 

$

523

 

 

$

23,763

 

 

$

24,286

 

(1) Represents balance at period end.

 

 

 

 

22


 

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

 

 

 

Loans As of June 30, 2024

 

 

 

 

 

 

 

 

 

 

 

 

Amortized Cost Basis by Origination Year

 

 

 

 

 

 

 

 

 

 

(unaudited, in thousands)

 

2024

 

 

2023

 

 

2022

 

 

2021

 

 

2020

 

 

Prior

 

 

Revolving Loans Amortized Cost Basis

 

 

Revolving Loans Converted to Term

 

 

Total

 

Commercial real estate: land and construction

 

 

 

 

Risk rating:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pass

 

$

79,862

 

 

$

349,190

 

 

$

336,084

 

 

$

91,369

 

 

$

23,345

 

 

$

57,058

 

 

$

67,265

 

 

$

54,566

 

 

$

1,058,739

 

Criticized - compromised

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

17

 

 

 

298

 

 

 

657

 

 

 

972

 

Classified - substandard

 

 

 

 

 

184

 

 

 

 

 

 

 

 

 

 

 

 

8

 

 

 

 

 

 

1,487

 

 

 

1,679

 

Classified - doubtful

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

$

79,862

 

 

$

349,374

 

 

$

336,084

 

 

$

91,369

 

 

$

23,345

 

 

$

57,083

 

 

$

67,563

 

 

$

56,710

 

 

$

1,061,390

 

Current-period gross charge-offs

 

$

 

 

$

813

 

 

$

 

 

$

 

 

$

 

 

$

 

 

$

 

 

$

 

 

$

813

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial real estate: improved property

 

 

 

 

Risk rating:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pass

 

$

258,814

 

 

$

529,239

 

 

$

1,134,557

 

 

$

596,861

 

 

$

598,755

 

 

$

2,054,008

 

 

$

181,757

 

 

$

401,693

 

 

$

5,755,684

 

Criticized - compromised

 

 

3,302

 

 

 

14,165

 

 

 

13,200

 

 

 

8,135

 

 

 

3,549

 

 

 

36,258

 

 

 

2,139

 

 

 

27,845

 

 

 

108,593

 

Classified - substandard

 

 

 

 

 

1,860

 

 

 

5,791

 

 

 

411

 

 

 

3,636

 

 

 

61,189

 

 

 

300

 

 

 

34

 

 

 

73,221

 

Classified - doubtful

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

$

262,116

 

 

$

545,264

 

 

$

1,153,548

 

 

$

605,407

 

 

$

605,940

 

 

$

2,151,455

 

 

$

184,196

 

 

$

429,572

 

 

$

5,937,498

 

Current-period gross charge-offs

 

$

 

 

$

 

 

$

 

 

$

 

 

$

 

 

$

815

 

 

$

 

 

$

 

 

$

815

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial and industrial

 

 

 

 

Risk rating:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pass

 

$

153,946

 

 

$

195,932

 

 

$

222,272

 

 

$

125,094

 

 

$

57,423

 

$

261,606

 

 

$

598,810

 

 

$

66,496

 

 

$

1,681,579

 

Criticized - compromised

 

 

 

 

 

5,914

 

 

 

2,573

 

 

 

1,768

 

 

 

1,432

 

 

 

37,694

 

 

 

13,199

 

 

 

7,476

 

 

 

70,056

 

Classified - substandard

 

 

 

 

 

73

 

 

 

548

 

 

 

728

 

 

 

117

 

 

 

1,409

 

 

 

4,994

 

 

 

975

 

 

 

8,844

 

Classified - doubtful

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

$

153,946

 

 

$

201,919

 

 

$

225,393

 

 

$

127,590

 

 

$

58,972

 

 

$

300,709

 

 

$

617,003

 

 

$

74,947

 

 

$

1,760,479

 

Current-period gross charge-offs

 

$

 

 

$

487

 

 

$

580

 

 

$

86

 

 

$

143

 

 

$

325

 

 

$

1

 

 

$

4,450

 

 

$

6,072

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Residential real estate

 

 

 

 

Loan delinquency:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current

 

$

97,366

 

 

$

261,988

 

 

$

361,520

 

 

$

417,068

 

 

$

178,481

 

 

$

509,163

 

 

$

 

 

$

669,229

 

 

$

2,494,815

 

30-59 days past due

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,123

 

 

 

 

 

 

 

 

 

1,123

 

60-89 days past due

 

 

 

 

 

 

 

 

125

 

 

 

94

 

 

 

337

 

 

 

2,672

 

 

 

 

 

 

759

 

 

 

3,987

 

90 days or more past due

 

 

 

 

 

 

 

 

654

 

 

 

34

 

 

 

165

 

 

 

4,565

 

 

 

 

 

 

1,614

 

 

 

7,032

 

Total

 

$

97,366

 

 

$

261,988

 

 

$

362,299

 

 

$

417,196

 

 

$

178,983

 

 

$

517,523

 

 

$

 

 

$

671,602

 

 

$

2,506,957

 

Current-period gross charge-offs

 

$

 

 

$

 

 

$

 

 

$

 

 

$

 

 

$

214

 

 

$

 

 

$

58

 

 

$

272

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Home equity

 

 

 

 

Loan delinquency:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current

 

$

11,124

 

 

$

1,221

 

 

$

2,297

 

 

$

961

 

 

$

1,961

 

$

21,870

 

 

$

719,968

 

 

$

1,362

 

 

$

760,764

 

30-59 days past due

 

 

 

 

 

17

 

 

 

414

 

 

 

65

 

 

 

239

 

 

701

 

 

 

2,096

 

 

 

130

 

 

 

3,662

 

60-89 days past due

 

 

 

 

 

146

 

 

 

175

 

 

 

89

 

 

 

 

 

668

 

 

 

 

 

 

347

 

 

 

1,425

 

90 days or more past due

 

 

 

 

 

730

 

 

 

351

 

 

 

248

 

 

 

714

 

 

 

2,390

 

 

 

 

 

 

315

 

 

 

4,748

 

Total

 

$

11,124

 

 

$

2,114

 

 

$

3,237

 

 

$

1,363

 

 

$

2,914

 

 

$

25,629

 

 

$

722,064

 

 

$

2,154

 

 

$

770,599

 

Current-period gross charge-offs

 

$

 

 

$

44

 

 

$

105

 

 

$

16

 

 

$

35

 

 

$

171

 

 

$

20

 

 

$

22

 

 

$

413

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consumer

 

 

 

 

Loan delinquency:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current

 

$

34,018

 

 

$

68,563

 

 

$

47,131

 

 

$

16,596

 

 

$

8,993

 

 

$

14,813

 

 

$

25,387

 

 

$

 

 

$

215,501

 

30-59 days past due

 

 

269

 

 

 

1,031

 

 

 

1,160

 

 

 

643

 

 

 

200

 

 

 

286

 

 

 

35

 

 

 

1

 

 

 

3,625

 

60-89 days past due

 

 

71

 

 

 

287

 

 

 

422

 

 

 

111

 

 

 

43

 

 

 

94

 

 

 

 

 

 

 

 

 

1,028

 

90 days or more past due

 

 

2

 

 

 

170

 

 

 

112

 

 

 

19

 

 

 

49

 

 

 

82

 

 

 

 

 

 

 

 

 

434

 

Total

 

$

34,360

 

 

$

70,051

 

 

$

48,825

 

 

$

17,369

 

 

$

9,285

 

 

$

15,275

 

 

$

25,422

 

 

$

1

 

 

$

220,588

 

Current-period gross charge-offs

 

$

 

 

$

560

 

 

$

860

 

 

$

308

 

 

$

115

 

 

$

137

 

 

$

 

 

$

 

 

$

1,980

 

 

23


 

 

 

Loans As of December 31, 2023

 

 

 

 

 

 

 

 

 

 

 

 

Amortized Cost Basis by Origination Year

 

 

 

 

 

 

 

 

 

 

(in thousands)

 

2023

 

 

2022

 

 

2021

 

 

2020

 

 

2019

 

 

Prior

 

 

Revolving Loans Amortized Cost Basis

 

 

Revolving Loans Converted to Term

 

 

Total

 

Commercial real estate: land and construction

 

 

 

 

Risk rating:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pass

 

$

290,954

 

 

$

349,549

 

 

$

145,043

 

 

$

54,172

 

 

$

48,655

 

 

$

35,917

 

 

$

82,288

 

 

$

46,781

 

 

$

1,053,359

 

Criticized - compromised

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

16

 

 

 

299

 

 

 

2,182

 

 

 

2,497

 

Classified - substandard

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

9

 

 

 

 

 

 

 

 

 

9

 

Classified - doubtful

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

$

290,954

 

 

$

349,549

 

 

$

145,043

 

 

$

54,172

 

 

$

48,655

 

 

$

35,942

 

 

$

82,587

 

 

$

48,963

 

 

$

1,055,865

 

Current-period gross charge-offs

 

$

 

 

$

 

 

$

 

 

$

 

 

$

 

 

$

 

 

$

 

 

$

222

 

 

$

222

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial real estate: improved property

 

 

 

 

Risk rating:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pass

 

$

494,142

 

 

$

1,076,535

 

 

$

603,354

 

 

$

581,540

 

 

$

514,523

 

 

$

1,706,804

 

 

$

103,467

 

 

$

257,029

 

 

$

5,337,394

 

Criticized - compromised

 

 

 

 

 

16,270

 

 

 

8,630

 

 

 

4,387

 

 

 

5,185

 

 

 

44,861

 

 

 

2,373

 

 

 

25,767

 

 

 

107,473

 

Classified - substandard

 

 

1,921

 

 

 

517

 

 

 

417

 

 

 

2,416

 

 

 

23,472

 

 

 

35,939

 

 

 

 

 

 

34

 

 

 

64,716

 

Classified - doubtful

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

$

496,063

 

 

$

1,093,322

 

 

$

612,401

 

 

$

588,343

 

 

$

543,180

 

 

$

1,787,604

 

 

$

105,840

 

 

$

282,830

 

 

$

5,509,583

 

Current-period gross charge-offs

 

$

 

 

$

 

 

$

372

 

 

$

 

 

$

 

 

$

1,505

 

 

$

 

 

$

 

 

$

1,877

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial and industrial

 

 

 

 

Risk rating:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pass

 

$

238,427

 

 

$

234,520

 

 

$

136,998

 

 

$

78,836

 

 

$

39,259

 

 

$

252,826

 

 

$

541,400

 

 

$

64,417

 

 

$

1,586,683

 

Criticized - compromised

 

 

1,094

 

 

 

834

 

 

 

3,169

 

 

 

1,490

 

 

 

7,334

 

 

 

31,526

 

 

 

20,626

 

 

 

7,131

 

 

 

73,204

 

Classified - substandard

 

 

33

 

 

 

149

 

 

 

315

 

 

 

265

 

 

 

825

 

 

 

1,916

 

 

 

5,797

 

 

 

1,472

 

 

 

10,772

 

Classified - doubtful

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

$

239,554

 

 

$

235,503

 

 

$

140,482

 

 

$

80,591

 

 

$

47,418

 

 

$

286,268

 

 

$

567,823

 

 

$

73,020

 

 

$

1,670,659

 

Current-period gross charge-offs

 

$

98

 

 

$

205

 

 

$

603

 

 

$

353

 

 

$

20

 

 

$

463

 

 

$

 

 

$

541

 

 

$

2,283

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Residential real estate

 

 

 

 

Loan delinquency:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current

 

$

277,790

 

 

$

429,835

 

 

$

445,322

 

 

$

185,139

 

 

$

86,149

 

 

$

456,818

 

 

$

 

 

$

548,147

 

 

$

2,429,200

 

30-59 days past due

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,572

 

 

 

 

 

 

 

 

 

1,572

 

60-89 days past due

 

 

 

 

 

 

 

 

 

 

 

341

 

 

 

 

 

 

2,130

 

 

 

 

 

 

 

 

 

2,471

 

90 days or more past due

 

 

 

 

 

799

 

 

 

34

 

 

 

 

 

 

263

 

 

 

4,207

 

 

 

 

 

 

28

 

 

 

5,331

 

Total

 

$

277,790

 

 

$

430,634

 

 

$

445,356

 

 

$

185,480

 

 

$

86,412

 

 

$

464,727

 

 

$

 

 

$

548,175

 

 

$

2,438,574

 

Current-period gross charge-offs

 

$

 

 

$

 

 

$

 

 

$

 

 

$

5

 

 

$

387

 

 

$

 

 

$

 

 

$

392

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Home equity

 

 

 

 

Loan delinquency:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current

 

$

12,675

 

 

$

1,235

 

 

$

1,467

 

 

$

1,571

 

 

$

1,614

 

 

$

22,484

 

 

$

681,848

 

 

$

1,399

 

 

$

724,293

 

30-59 days past due

 

 

34

 

 

 

193

 

 

 

85

 

 

 

73

 

 

 

44

 

 

 

947

 

 

 

3,315

 

 

 

 

 

 

4,691

 

60-89 days past due

 

 

119

 

 

 

318

 

 

 

16

 

 

 

68

 

 

 

76

 

 

 

524

 

 

 

 

 

 

77

 

 

 

1,198

 

90 days or more past due

 

 

 

 

 

213

 

 

 

 

 

 

737

 

 

 

230

 

 

 

2,527

 

 

 

 

 

 

330

 

 

 

4,037

 

Total

 

$

12,828

 

 

$

1,959

 

 

$

1,568

 

 

$

2,449

 

 

$

1,964

 

 

$

26,482

 

 

$

685,163

 

 

$

1,806

 

 

$

734,219

 

Current-period gross charge-offs

 

$

 

 

$

139

 

 

$

57

 

 

$

29

 

 

$

79

 

 

$

615

 

 

$

6

 

 

$

 

 

$

925

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consumer

 

 

 

 

Loan delinquency:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current

 

$

84,526

 

 

$

57,661

 

 

$

21,592

 

 

$

13,189

 

 

$

10,958

 

 

$

12,143

 

 

$

23,916

 

 

$

4

 

 

$

223,989

 

30-59 days past due

 

 

699

 

 

 

1,526

 

 

 

952

 

 

 

343

 

 

 

162

 

 

 

119

 

 

 

32

 

 

 

 

 

 

3,833

 

60-89 days past due

 

 

191

 

 

 

616

 

 

 

195

 

 

 

112

 

 

 

5

 

 

 

59

 

 

 

 

 

 

 

 

 

1,178

 

90 days or more past due

 

 

64

 

 

 

203

 

 

 

114

 

 

 

63

 

 

 

9

 

 

 

108

 

 

 

 

 

 

 

 

 

561

 

Total

 

$

85,480

 

 

$

60,006

 

 

$

22,853

 

 

$

13,707

 

 

$

11,134

 

 

$

12,429

 

 

$

23,948

 

 

$

4

 

 

$

229,561

 

Current-period gross charge-offs

 

$

251

 

 

$

1,921

 

 

$

901

 

 

$

301

 

 

$

100

 

 

$

247

 

 

$

4

 

 

$

 

 

$

3,725

 

 

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

 

 

June 30,

 

 

December 31,

 

(unaudited, in thousands)

 

2024

 

 

2023

 

Other real estate owned

 

$

1,219

 

 

$

1,207

 

Repossessed assets

 

 

109

 

 

 

290

 

Total other real estate owned and repossessed assets

 

$

1,328

 

 

$

1,497

 

 

Residential real estate loans included in other real estate totaled $0.1 million at June 30, 2024. There were no such loans at December 31, 2023. At June 30, 2024 and December 31, 2023, formal foreclosure proceedings were in process on residential real estate loans totaling $3.8 million and $4.0 million, respectively.

24


 

NOTE 5. INVESTMENTS IN LIMITED PARTNERSHIPS

Wesbanco is a limited partner in several tax-advantaged limited partnerships whose purpose is to invest in approved low-income housing investment tax credit projects. These investments are accounted for using the equity method of accounting and are included in other assets in the Consolidated Balance Sheets. The limited partnerships are considered to be variable interest entities ("VIEs") as they generally do not have equity investors with voting rights or have equity investors that do not provide sufficient financial resources to support their activities. The VIEs have not been consolidated because Wesbanco is not considered the primary beneficiary. All of Wesbanco’s investments in limited partnerships are privately held, and their market values are not readily available. As of June 30, 2024 and December 31, 2023, Wesbanco had $35.6 million and $31.9 million, respectively, invested in these partnerships. Wesbanco also recognizes the unconditional unfunded equity commitments of $15.3 million and $13.9 million at June 30, 2024 and December 31, 2023, respectively, within other liabilities on the Consolidated Balance Sheets. Wesbanco classifies the amortization of the investment as a component of income tax expense (benefit) and proportionally amortizes the investment over the tax credit period. The amortization for the three months ended June 30, 2024 and 2023 was $1.2 million and $1.1 million, respectively, and was $2.3 million and $2.1 million, respectively, for the six months ended June 30, 2024 and 2023. Tax benefits attributed to these partnerships include low-income housing and historic tax credits which are projected to total $4.5 million for 2024, and totaled $3.8 million for 2023, which are also included in income tax expense.

Wesbanco is also a limited partner in three other limited partnerships as of June 30, 2024. These provide seed money and capital to startup companies, and financing to low-income housing projects. As of June 30, 2024 and December 31, 2023, Wesbanco had $2.9 million and $3.0 million invested in these partnerships, which are recorded in other assets using the equity method. Wesbanco included in operations under the equity method of accounting its share of the partnerships’ net income (loss) for the three months ended June 30, 2024 and 2023 of $12 thousand and ($6) thousand, respectively, and ($11) thousand and $5 thousand, respectively, for the six months ended June 30, 2024 and 2023.

The following table presents the scheduled equity commitments to be paid to the limited partnerships over the next five years and in the aggregate thereafter as of June 30, 2024:

 

Year (unaudited, in thousands)

 

Amount

 

2024

 

$

3,790

 

2025

 

 

5,085

 

2026

 

 

3,148

 

2027

 

 

950

 

2028

 

 

588

 

2029 and thereafter

 

 

1,726

 

Total

 

$

15,287

 

 

25


 

NOTE 6. 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 the Bank's assets and liabilities are equally distributed but also have similar maturities.

Loan Swaps

Wesbanco executes interest rate swaps and interest rate caps with commercial banking customers to facilitate their respective risk management strategies. Those interest rate swaps and caps are economically hedged by offsetting interest rate swaps and caps that Wesbanco executes with a third party, such that Wesbanco minimizes its net risk exposure resulting from such transactions. As the interest rate swaps and caps associated with this program do not meet the hedge accounting requirements of ASC 815, changes in the fair value of both the customer swaps and caps and the offsetting third-party swaps and caps are recognized directly in earnings. As of June 30, 2024 and December 31, 2023, Wesbanco had 267 and 236 customer interest rate swaps and caps with an aggregate notional amount of $1.8 billion and $1.6 billion, respectively, related to this program. Wesbanco recognized income for the related swap and cap fees of $1.8 million and $2.4 million for the three months ended June 30, 2024 and 2023, respectively, and $2.5 million and $4.3 million for the six months ended June 30, 2024 and 2023, 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 of the lead bank in a loan syndication. As of June 30, 2024 and December 31, 2023, Wesbanco had 22 and 19 risk participation-in agreements with an aggregate notional amount of $228.4 million and $197.2 million, respectively. As of June 30, 2024 and December 31, 2023, Wesbanco had eight and five risk participation-out agreements with an aggregate notional amount of $68.1 million and $40.9 million, respectively.

Mortgage Loans Held for Sale and Interest Rate Lock 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 lock commitment and the closing of the loan. The total balance of forward TBA contracts entered into was $51.0 million and $27.0 million at June 30, 2024 and December 31, 2023, respectively. 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 paying 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 June 30, 2024 and December 31, 2023:

 

 

 

June 30, 2024

 

 

December 31, 2023

 

(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 and caps

 

$

1,829,685

 

 

$

81,205

 

 

$

81,308

 

 

$

1,573,152

 

 

$

72,183

 

 

$

73,083

 

Other contracts:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest rate lock commitments

 

 

27,118

 

 

 

 

 

 

32

 

 

 

16,524

 

 

 

84

 

 

 

 

Forward TBA contracts

 

 

51,000

 

 

 

 

 

 

103

 

 

 

27,000

 

 

 

 

 

 

205

 

Total derivatives

 

 

 

 

$

81,205

 

 

$

81,443

 

 

 

 

 

$

72,267

 

 

$

73,288

 

 

26


 

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 and six months ended June 30, 2024 and 2023, respectively.

 

 

 

 

For the Three Months
Ended June 30,

 

 

For the Six Months
Ended June 30,

 

(unaudited, in thousands)

Location of Gain/(Loss)

 

2024

 

 

2023

 

 

2024

 

 

2023

 

Interest rate swaps and caps

Net swap fee and valuation income

 

$

9

 

 

$

176

 

 

$

807

 

 

$

(863

)

Interest rate lock commitments

Mortgage banking income

 

 

(90

)

 

 

(315

)

 

 

(116

)

 

 

(128

)

Forward TBA contracts

Mortgage banking income

 

 

47

 

 

 

637

 

 

 

95

 

 

 

448

 

Total

 

 

$

(34

)

 

$

498

 

 

$

786

 

 

$

(543

)

 

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.

Dependent upon the net present value of the underlying swaps, Wesbanco has minimum collateral posting thresholds with certain of its derivative counterparties. If Wesbanco had breached any of these provisions at June 30, 2024, 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 counterparties. In certain market situations, Wesbanco can also request collateral from the derivative counterparties. Due to the current higher interest rate environment, as of June 30, 2024 and December 31, 2023, Wesbanco is holding net cash collateral from various derivative counterparties totaling $47.2 million and $26.0 million, respectively, within interest bearing deposit accounts.

 

NOTE 7. BENEFIT PLANS

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

 

 

 

For the Three Months
Ended June 30,

 

 

For the Six Months
Ended June 30,

 

(unaudited, in thousands)

 

2024

 

 

2023

 

 

2024

 

 

2023

 

Service cost – benefits earned during year

 

$

330

 

 

$

354

 

 

$

660

 

 

$

704

 

Interest cost on projected benefit obligation

 

 

1,603

 

 

 

1,572

 

 

 

3,206

 

 

 

3,126

 

Expected return on plan assets

 

 

(2,599

)

 

 

(2,781

)

 

 

(5,198

)

 

 

(5,531

)

Amortization of prior service cost

 

 

(8

)

 

 

(9

)

 

 

(17

)

 

 

(18

)

Amortization of net loss

 

 

21

 

 

 

225

 

 

 

42

 

 

 

448

 

Net periodic pension income

 

$

(653

)

 

$

(639

)

 

$

(1,307

)

 

$

(1,271

)

 

The service cost of $0.7 million for the six months ended June 30, 2024 and 2023, is included in salaries and wages, and periodic pension income of $2.0 million for the six months ended June 30, 2024 and 2023, 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 $2.6 million is due in 2024, which can be offset in whole or in part by the Plan's $64.2 million available credit balance. Wesbanco currently does not expect to make a voluntary contribution to the Plan in 2024.

 

27


 

 

NOTE 8. 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, and therefore both the derivative asset and derivative liability are classified within level 2 of the fair value hierarchy.

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.

Collateral dependent loans: Collateral dependent loans are carried at the amortized cost basis less the specific allowance calculated under the Current Expected Credit Losses Accounting Standard. Collateral dependent loans are calculated using a cost basis approach or collateral value approach, and therefore are classified within level 3 of the fair value hierarchy.

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.

28


 

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 June 30, 2024 and December 31, 2023:

 

 

 

 

 

 

June 30, 2024

 

 

 

 

 

 

Fair Value Measurements Using:

 

 

 

June 30,

 

 

Quoted Prices in
Active Markets
for Identical
Assets

 

 

Significant
Other
Observable
Inputs

 

 

Significant
Unobservable
Inputs

 

(unaudited, in thousands)

 

2024

 

 

(level 1)

 

 

(level 2)

 

 

(level 3)

 

Recurring fair value measurements

 

 

 

 

 

 

 

 

 

 

 

 

Equity securities

 

$

13,091

 

 

$

13,091

 

 

$

 

 

$

 

Available-for-sale debt securities

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Treasury

 

 

49,103

 

 

 

49,103

 

 

 

 

 

 

 

U.S. Government sponsored entities and agencies

 

 

199,258

 

 

 

 

 

 

199,258

 

 

 

 

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

 

 

1,514,028

 

 

 

 

 

 

1,514,028

 

 

 

 

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

 

 

256,190

 

 

 

 

 

 

256,190

 

 

 

 

Obligations of states and political subdivisions

 

 

71,756

 

 

 

 

 

 

70,636

 

 

 

1,120

 

Corporate debt securities

 

 

11,788

 

 

 

 

 

 

11,788

 

 

 

 

Total available-for-sale debt securities

 

$

2,102,123

 

 

$

49,103

 

 

$

2,051,900

 

 

$

1,120

 

Loans held for sale

 

 

25,433

 

 

 

 

 

 

25,433

 

 

 

 

Other assets - interest rate swaps

 

 

81,205

 

 

 

 

 

 

81,205

 

 

 

 

Total assets recurring fair value measurements

 

$

2,221,852

 

 

$

62,194

 

 

$

2,158,538

 

 

$

1,120

 

Other liabilities - interest rate swaps

 

$

81,308

 

 

$

 

 

$

81,308

 

 

$

 

Total liabilities recurring fair value measurements

 

$

81,308

 

 

$

 

 

$

81,308

 

 

$

 

Nonrecurring fair value measurements

 

 

 

 

 

 

 

 

 

 

 

 

Collateral dependent loans

 

$

18,876

 

 

$

 

 

$

 

 

$

18,876

 

Other real estate owned and repossessed assets

 

 

1,328

 

 

 

 

 

 

 

 

 

1,328

 

Total nonrecurring fair value measurements

 

$

20,204

 

 

$

 

 

$

 

 

$

20,204

 

 

 

 

 

 

 

December 31, 2023

 

 

 

 

 

 

Fair Value Measurements Using:

 

 

 

December 31,

 

 

Quoted Prices in
Active Markets
for Identical
Assets

 

 

Significant
Other
Observable
Inputs

 

 

Significant
Unobservable
Inputs

 

(in thousands)

 

2023

 

 

(level 1)

 

 

(level 2)

 

 

(level 3)

 

Recurring fair value measurements

 

 

 

 

 

 

 

 

 

 

 

 

Equity securities

 

$

12,320

 

 

$

12,320

 

 

$

 

 

$

 

Available-for-sale debt securities

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Government sponsored entities and agencies

 

 

208,366

 

 

 

 

 

 

208,366

 

 

 

 

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

 

 

1,629,684

 

 

 

 

 

 

1,629,684

 

 

 

 

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

 

 

268,307

 

 

 

 

 

 

268,307

 

 

 

 

Obligations of states and political subdivisions

 

 

76,125

 

 

 

 

 

 

74,958

 

 

 

1,167

 

Corporate debt securities

 

 

11,847

 

 

 

 

 

 

11,847

 

 

 

 

Total available-for-sale debt securities

 

$

2,194,329

 

 

$

 

 

$

2,193,162

 

 

$

1,167

 

Loans held for sale

 

 

16,354

 

 

 

 

 

 

16,354

 

 

 

 

Other assets - interest rate swaps

 

 

72,183

 

 

 

 

 

 

72,183

 

 

 

 

Total assets recurring fair value measurements

 

$

2,295,186

 

 

$

12,320

 

 

$

2,281,699

 

 

$

1,167

 

Other liabilities - interest rate swaps

 

$

73,083

 

 

$

 

 

$

73,083

 

 

$

 

Total liabilities recurring fair value measurements

 

$

73,083

 

 

$

 

 

$

73,083

 

 

$

 

Nonrecurring fair value measurements

 

 

 

 

 

 

 

 

 

 

 

 

Collateral dependent loans

 

$

18,273

 

 

$

 

 

$

 

 

$

18,273

 

Other real estate owned and repossessed assets

 

 

1,497

 

 

 

 

 

 

 

 

 

1,497

 

Total nonrecurring fair value measurements

 

$

19,770

 

 

$

 

 

$

 

 

$

19,770

 

 

29


 

 

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 no transfers between level 1, 2 or 3 for the three and six months ended June 30, 2024 or for the year ended December 31, 2023.

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)

June 30, 2024

 

 

 

 

 

 

 

 

 

Collateral dependent loans

 

$

18,876

 

 

Appraisal of collateral (1)

 

Appraisal adjustments (2)

 

(0.0%)/(0.0%)

 

 

 

 

 

 

 

Liquidation expenses (2)

 

0.0% to (8.0%)/(7.8%)

Other real estate owned and repossessed assets

 

$

1,328

 

 

Appraisal of collateral (1), (3)

 

 

December 31, 2023

 

 

 

 

 

 

 

 

 

Collateral dependent loans

 

$

18,273

 

 

Appraisal of collateral (1)

 

Appraisal adjustments (2)

 

(0.0%)/(0.0%)

 

 

 

 

 

 

 

Liquidation expenses (2)

 

(8.0%)/(8.0%)

Other real estate owned and repossessed assets

 

$

1,497

 

 

Appraisal of collateral (1), (3)

 

 

 

(1)
Fair value is generally determined through independent appraisals of the underlying collateral, which generally include various level 3 inputs, which are not identifiable.
(2)
Appraisals may be adjusted by management for qualitative factors such as economic conditions and estimated liquidation expenses. The range and weighted average of appraisal adjustments and liquidation expense are presented as a percent of the appraisal.
(3)
Includes estimated liquidation expenses and numerous dissimilar qualitative adjustments by management, which are not identifiable.

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

 

 

 

 

 

 

 

 

 

Fair Value Measurements at

 

 

 

 

 

 

 

 

 

June 30, 2024

 

 

 

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

 

$

486,789

 

 

$

486,789

 

 

$

486,789

 

 

$

 

 

$

 

Equity securities

 

 

13,091

 

 

 

13,091

 

 

 

13,091

 

 

 

 

 

 

 

Available-for-sale debt securities

 

 

2,102,123

 

 

 

2,102,123

 

 

 

49,103

 

 

 

2,051,900

 

 

 

1,120

 

Net held-to-maturity debt securities

 

 

1,179,521

 

 

 

1,028,432

 

 

 

 

 

 

1,028,202

 

 

 

230

 

Net loans

 

 

12,121,002

 

 

 

11,636,263

 

 

 

 

 

 

 

 

 

11,636,263

 

Loans held for sale

 

 

25,433

 

 

 

25,433

 

 

 

 

 

 

25,433

 

 

 

 

Other assets - interest rate derivatives

 

 

81,205

 

 

 

81,205

 

 

 

 

 

 

81,205

 

 

 

 

Accrued interest receivable

 

 

79,759

 

 

 

79,759

 

 

 

79,759

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Financial Liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deposits

 

 

13,432,373

 

 

 

13,411,751

 

 

 

12,044,435

 

 

 

1,367,316

 

 

 

 

Federal Home Loan Bank borrowings

 

 

1,475,000

 

 

 

1,473,741

 

 

 

 

 

 

1,473,741

 

 

 

 

Other borrowings

 

 

105,757

 

 

 

101,959

 

 

 

101,959

 

 

 

 

 

 

 

Subordinated debt and junior subordinated debt

 

 

279,193

 

 

 

228,588

 

 

 

 

 

 

228,588

 

 

 

 

Other liabilities - interest rate derivatives

 

 

81,308

 

 

 

81,308

 

 

 

 

 

 

81,308

 

 

 

 

Accrued interest payable

 

 

15,393

 

 

 

15,393

 

 

 

15,393

 

 

 

 

 

 

 

 

30


 

 

 

 

 

 

 

 

 

 

Fair Value Measurements at

 

 

 

 

 

 

 

 

 

December 31, 2023

 

 

 

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

 

$

595,383

 

 

$

595,383

 

 

$

595,383

 

 

$

 

 

$

 

Equity securities

 

 

12,320

 

 

 

12,320

 

 

 

12,320

 

 

 

 

 

 

 

Available-for-sale debt securities

 

 

2,194,329

 

 

 

2,194,329

 

 

 

 

 

 

2,193,162

 

 

 

1,167

 

Net held-to-maturity debt securities

 

 

1,199,335

 

 

 

1,069,159

 

 

 

 

 

 

1,068,896

 

 

 

263

 

Net loans

 

 

11,507,786

 

 

 

11,134,250

 

 

 

 

 

 

 

 

 

11,134,250

 

Loans held for sale

 

 

16,354

 

 

 

16,354

 

 

 

 

 

 

16,354

 

 

 

 

Other assets - interest rate derivatives

 

 

72,183

 

 

 

72,183

 

 

 

 

 

 

72,183

 

 

 

 

Accrued interest receivable

 

 

77,435

 

 

 

77,435

 

 

 

77,435

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Financial Liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deposits

 

 

13,168,704

 

 

 

13,146,821

 

 

 

11,937,002

 

 

 

1,209,819

 

 

 

 

Federal Home Loan Bank borrowings

 

 

1,350,000

 

 

 

1,349,217

 

 

 

 

 

 

1,349,217

 

 

 

 

Other borrowings

 

 

105,893

 

 

 

103,057

 

 

 

103,057

 

 

 

 

 

 

 

Subordinated debt and junior subordinated debt

 

 

279,078

 

 

 

240,898

 

 

 

 

 

 

240,898

 

 

 

 

Other liabilities - interest rate derivatives

 

 

73,083

 

 

 

73,083

 

 

 

 

 

 

73,083

 

 

 

 

Accrued interest payable

 

 

11,121

 

 

 

11,121

 

 

 

11,121

 

 

 

 

 

 

 

 

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

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

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

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

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

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

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

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

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

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

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

31


 

NOTE 9. REVENUE RECOGNITION

Interest income, net securities gains and bank-owned life insurance are not in scope of ASC 606, Revenue from Contracts with Customers. For the revenue streams in scope of ASC 606 - trust fees, service charges on deposits, net securities brokerage revenue, payment processing fees, digital banking income, net swap fee and valuation income, mortgage banking income and net gain on other real estate owned and other assets – there are no significant judgments related to the amount and timing of revenue recognition.

The following table summarizes the point of revenue recognition and the income recognized for each of the revenue streams for the three and six months ended June 30, 2024 and 2023, respectively:

 

 

 

Point of Revenue

 

For the Three Months
Ended June 30,

 

 

For the Six Months
Ended June 30,

 

(unaudited, in thousands)

 

Recognition

 

2024

 

 

2023

 

 

2024

 

 

2023

 

Revenue Streams

 

 

 

 

 

 

 

 

 

 

Trust fees

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Trust account fees

 

Over time

 

$

5,305

 

 

$

5,009

 

 

$

11,405

 

 

$

10,614

 

WesMark fees

 

Over time

 

 

1,998

 

 

 

1,909

 

 

 

3,980

 

 

 

3,798

 

Total trust fees

 

 

 

 

7,303

 

 

 

6,918

 

 

 

15,385

 

 

 

14,412

 

Service charges on deposits

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial banking fees

 

Over time

 

 

1,297

 

 

 

650

 

 

 

2,485

 

 

 

1,259

 

Personal service charges

 

At a point in time and over time

 

 

5,814

 

 

 

5,582

 

 

 

11,410

 

 

 

11,142

 

Total service charges on deposits

 

 

 

 

7,111

 

 

 

6,232

 

 

 

13,895

 

 

 

12,401

 

Net securities brokerage revenue

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Annuity commissions

 

At a point in time

 

 

1,978

 

 

 

1,840

 

 

 

3,950

 

 

 

3,885

 

Equity and debt security trades

 

At a point in time

 

 

70

 

 

 

149

 

 

 

150

 

 

 

149

 

Managed money

 

Over time

 

 

272

 

 

 

284

 

 

 

526

 

 

 

567

 

Trail commissions

 

Over time

 

 

281

 

 

 

250

 

 

 

523

 

 

 

497

 

Total net securities brokerage revenue

 

 

 

 

2,601

 

 

2,523

 

 

 

5,149

 

 

 

5,098

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Payment processing fees (1)

 

At a point in time and over time

 

 

906

 

 

 

951

 

 

 

1,734

 

 

 

1,822

 

Digital banking income

 

At a point in time

 

 

5,040

 

 

 

5,010

 

 

 

9,745

 

 

 

9,615

 

Net swap fee and valuation income (2)

 

At a point in time

 

 

1,776

 

 

 

2,612

 

 

 

3,339

 

 

 

3,411

 

Mortgage banking income

 

At a point in time

 

 

1,069

 

 

 

601

 

 

 

1,762

 

 

 

1,027

 

Net gain on other real estate owned and other assets

 

At a point in time and over time

 

 

34

 

 

 

871

 

 

 

188

 

 

 

1,104

 

 

(1)
Included in other non-interest income.
(2)
The portion of this line item relating to the change in the fair value of the underlying swaps is not within the scope of ASC 606. Fair value adjustments were immaterial for the three months ended June 30, 2024 and $0.2 million for the three months ended June 30, 2023. Fair value adjustments were $0.8 million and ($0.9) million for the six months ended June 30, 2024 and 2023, respectively.

 

32


 

NOTE 10. COMPREHENSIVE INCOME/(LOSS)

The activity in accumulated other comprehensive income/(loss) for the six months ended June 30, 2024 and 2023 is as follows:

 

 

 

Accumulated Other Comprehensive Income/(Loss) (1)

 

(unaudited, in thousands)

 

Defined
Benefit
Plans

 

 

Unrealized
Gains (Losses)
on Debt Securities
Available-for-Sale

 

 

Total

 

Balance at December 31, 2023

 

$

6,515

 

 

$

(233,208

)

 

$

(226,693

)

Other comprehensive loss before reclassifications

 

 

 

 

 

(8,278

)

 

 

(8,278

)

Amounts reclassified from accumulated other comprehensive loss

 

 

(130

)

 

 

(107

)

 

 

(237

)

Period change

 

 

(130

)

 

 

(8,385

)

 

 

(8,515

)

Balance at June 30, 2024

 

$

6,385

 

 

$

(241,593

)

 

$

(235,208

)

 

 

 

 

 

 

 

 

 

 

Balance at December 31, 2022

 

$

(535

)

 

$

(261,881

)

 

$

(262,416

)

Other comprehensive loss before reclassifications

 

 

 

 

 

(2,481

)

 

 

(2,481

)

Amounts reclassified from accumulated other comprehensive income

 

 

150

 

 

 

120

 

 

 

270

 

Period change

 

 

150

 

 

 

(2,361

)

 

 

(2,211

)

Balance at June 30, 2023

 

$

(385

)

 

$

(264,242

)

 

$

(264,627

)

 

(1)
All amounts are net of tax. Related income tax expense or benefit is calculated using a combined Federal and State income tax rate approximating 24% in both periods presented.

The following table provides details about amounts reclassified from accumulated other comprehensive income for the three and six months ended June 30, 2024 and 2023:

 

Details about Accumulated Other Comprehensive
Income/(Loss) Components

 

For the Three Months
Ended June 30,

 

 

For the Six Months
Ended June 30,

 

 

 

Affected Line Item in the Statement
of Comprehensive Income

(unaudited, in thousands)

 

2024

 

 

2023

 

 

2024

 

 

2023

 

 

 

 

Debt securities available-for-sale (1):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net securities losses reclassified into earnings

 

$

12

 

 

$

8

 

 

$

12

 

 

$

159

 

 

 

Net securities gains/(losses) (Non-interest income)

Related income tax effect ⁽²⁾

 

 

(61

)

 

 

(2

)

 

 

(119

)

 

 

(39

)

 

 

Provision for income taxes

Net effect on accumulated other comprehensive
   (loss) income for the period

 

 

(49

)

 

 

6

 

 

 

(107

)

 

 

120

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Defined benefit plans (3):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Amortization of net (gain) loss and prior service costs

 

 

(101

)

 

 

99

 

 

 

(202

)

 

 

198

 

 

 

Employee benefits (Non-interest expense)

Related income tax effect ⁽²⁾

 

 

24

 

 

 

(24

)

 

 

72

 

 

 

(48

)

 

 

Provision for income taxes

Net effect on accumulated other comprehensive
  (loss) income for the period

 

 

(77

)

 

 

75

 

 

 

(130

)

 

 

150

 

 

 

 

Total reclassifications for the period

 

$

(126

)

 

$

81

 

 

$

(237

)

 

$

270

 

 

 

 

 

(1)
For additional detail related to unrealized gains on securities and related amounts reclassified from accumulated other comprehensive income, see Note 3, “Securities.”
(2)
Income tax expense or benefit is calculated using a combined Federal and State income tax rate approximating 24% in both periods presented.
(3)
Included in the computation of net periodic pension cost. See Note 7, “Benefit Plans” for additional detail.

33


 

NOTE 11. COMMITMENTS AND CONTINGENT LIABILITIES

Commitments — In the normal course of business, Wesbanco offers off-balance sheet credit arrangements to enable its customers to meet their financing objectives. Those instruments involve, to varying degrees, elements of credit and interest rate risk in excess of the amount recognized in the financial statements. Wesbanco’s exposure to credit losses in the event of non-performance by the other parties to the financial instruments for commitments to extend credit and standby letters of credit is limited to the contractual amount of those instruments. Wesbanco uses the same credit policies in making commitments and conditional obligations as for all other lending. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Since many of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. The allowance for credit losses associated with commitments was $9.2 million and $8.6 million at June 30, 2024 and December 31, 2023, respectively, and is included in other liabilities on the Consolidated Balance Sheets.

Letters of credit are conditional commitments issued by banks to guarantee the performance of a customer to a third party. Those guarantees are primarily issued to support public and private borrowing arrangements, including normal business activities, bond financing and similar transactions. Letters of credit are considered guarantees. The liability associated with letters of credit was $0.2 million as of June 30, 2024 and December 31, 2023.

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

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

 

 

 

June 30,

 

 

December 31,

 

(unaudited, in thousands)

 

2024

 

 

2023

 

Lines of credit

 

$

4,146,287

 

 

$

4,016,658

 

Loans approved but not closed

 

 

402,020

 

 

 

275,954

 

Overdraft limits

 

 

396,034

 

 

 

391,598

 

Letters of credit

 

 

43,591

 

 

 

38,929

 

Contingent obligations and other guarantees

 

 

9,394

 

 

 

15,037

 

 

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

 

NOTE 12. BUSINESS SEGMENTS

Wesbanco operates two reportable segments: community banking and trust and investment services. Wesbanco’s community banking segment offers services traditionally offered by full-service commercial banks, including commercial demand, individual demand and time deposit accounts, as well as commercial, mortgage and individual installment loans, and certain non-traditional offerings, such as insurance and securities brokerage services. The trust and investment services segment offers trust services as well as various alternative investment products including mutual funds. The market value of assets managed or held in custody by the trust and investment services segment was approximately $5.6 billion and $5.1 billion at June 30, 2024 and 2023, respectively. These assets are held by Wesbanco in fiduciary or agency capacities for their customers and therefore are not included as assets on Wesbanco’s Consolidated Balance Sheets.

34


 

Condensed financial information by business segment is presented below:

 

 

 

 

 

Trust and

 

 

 

 

 

 

Community

 

 

Investment

 

 

 

 

(unaudited, in thousands)

 

Banking

 

 

Services

 

 

Consolidated

 

For The Three Months Ended June 30, 2024

 

 

 

 

 

 

 

 

 

Interest and dividend income

 

$

202,993

 

 

$

 

 

$

202,993

 

Interest expense

 

 

86,400

 

 

 

 

 

 

86,400

 

Net interest income

 

 

116,593

 

 

 

 

 

 

116,593

 

Provision for credit losses

 

 

10,541

 

 

 

 

 

 

10,541

 

Net interest income after provision for credit losses

 

 

106,052

 

 

 

 

 

 

106,052

 

Non-interest income

 

 

24,052

 

 

 

7,303

 

 

 

31,355

 

Non-interest expense

 

 

97,403

 

 

 

4,989

 

 

 

102,392

 

Income before provision for income taxes

 

 

32,701

 

 

 

2,314

 

 

 

35,015

 

Provision for income taxes

 

 

5,613

 

 

 

486

 

 

 

6,099

 

Net income

 

 

27,088

 

 

 

1,828

 

 

 

28,916

 

Preferred stock dividends

 

 

2,531

 

 

 

 

 

 

2,531

 

Net income available to common shareholders

 

$

24,557

 

 

$

1,828

 

 

$

26,385

 

 

 

 

 

 

 

 

 

 

 

For The Three Months Ended June 30, 2023

 

 

 

 

 

 

 

 

 

Interest and dividend income

 

$

176,055

 

 

$

 

 

$

176,055

 

Interest expense

 

 

54,488

 

 

 

 

 

 

54,488

 

Net interest income

 

 

121,567

 

 

 

 

 

 

121,567

 

Provision for credit losses

 

 

3,028

 

 

 

 

 

 

3,028

 

Net interest income after provision for credit losses

 

 

118,539

 

 

 

 

 

 

118,539

 

Non-interest income

 

 

24,923

 

 

 

6,918

 

 

 

31,841

 

Non-interest expense

 

 

91,818

 

 

 

4,619

 

 

 

96,437

 

Income before provision for income taxes

 

 

51,644

 

 

 

2,299

 

 

 

53,943

 

Provision for income taxes

 

 

8,580

 

 

 

483

 

 

 

9,063

 

Net income

 

 

43,064

 

 

 

1,816

 

 

 

44,880

 

Preferred stock dividends

 

 

2,531

 

 

 

 

 

 

2,531

 

Net income available to common shareholders

 

$

40,533

 

 

$

1,816

 

 

$

42,349

 

 

 

 

 

 

 

 

 

 

 

For the Six Months Ended June 30, 2024

 

 

 

 

 

 

 

 

 

Interest and dividend income

 

$

398,327

 

 

$

 

 

$

398,327

 

Interest expense

 

 

167,767

 

 

 

 

 

 

167,767

 

Net interest income

 

 

230,560

 

 

 

 

 

 

230,560

 

Provision for credit losses

 

 

14,555

 

 

 

 

 

 

14,555

 

Net interest income after provision for credit losses

 

 

216,005

 

 

 

 

 

 

216,005

 

Non-interest income

 

 

46,599

 

 

 

15,385

 

 

 

61,984

 

Non-interest expense

 

 

189,373

 

 

 

10,212

 

 

 

199,585

 

Income before provision for income taxes

 

 

73,231

 

 

 

5,173

 

 

 

78,404

 

Provision for income taxes

 

 

12,709

 

 

 

1,086

 

 

 

13,795

 

Net income

 

 

60,522

 

 

 

4,087

 

 

 

64,609

 

Preferred stock dividends

 

 

5,063

 

 

 

 

 

 

5,063

 

Net income available to common shareholders

 

$

55,459

 

 

$

4,087

 

 

$

59,546

 

 

 

 

 

 

 

 

 

 

 

For the Six Months Ended June 30, 2023

 

 

 

 

 

 

 

 

 

Interest and dividend income

 

$

336,609

 

 

$

 

 

$

336,609

 

Interest expense

 

 

90,711

 

 

 

 

 

 

90,711

 

Net interest income

 

 

245,898

 

 

 

 

 

 

245,898

 

Provision for credit losses

 

 

6,605

 

 

 

 

 

 

6,605

 

Net interest income after provision for credit losses

 

 

239,293

 

 

 

 

 

 

239,293

 

Non-interest income

 

 

45,081

 

 

 

14,412

 

 

 

59,493

 

Non-interest expense

 

 

183,433

 

 

 

9,127

 

 

 

192,560

 

Income before provision for income taxes

 

 

100,941

 

 

 

5,285

 

 

 

106,226

 

Provision for income taxes

 

 

17,895

 

 

 

1,110

 

 

 

19,005

 

Net income

 

 

83,046

 

 

 

4,175

 

 

 

87,221

 

Preferred stock dividends

 

 

5,063

 

 

 

 

 

 

5,063

 

Net income available to common shareholders

 

$

77,983

 

 

$

4,175

 

 

$

82,158

 

 

Total non-fiduciary assets of the trust and investment services segment were $3.3 million (including $0.8 million of trust customer intangibles) and $3.4 million (including $1.0 million of trust customer intangibles) at June 30, 2024 and 2023, respectively. All other assets, including goodwill and the remainder of other intangible assets, were allocated to the Community Banking segment.

 

 

35


 

NOTE 13. SUBSEQUENT EVENTS

Agreement and Plan of Merger

On July 25, 2024, Wesbanco, Inc. (the “Company”), Wesbanco Bank, Inc. (“Wesbanco Bank”), Premier Financial Corp. (“Premier Financial”) and Premier Bank entered into a definitive Agreement and Plan of Merger (the “Merger Agreement”) providing for the merger of Premier Financial with and into the Company (the “Merger”) upon the terms and subject to the conditions set forth in the Merger Agreement. As a result of the Merger, the separate corporate existence of Premier Financial will cease, and the Company will continue as the surviving corporation in the Merger. The Merger Agreement also provides that, immediately following the completion of the Merger, Premier Bank, an Ohio state-chartered bank and a wholly-owned subsidiary of Premier Financial, will merge with and into Wesbanco Bank, a West Virginia banking corporation and a wholly-owned subsidiary of the Company (the “Bank Merger”), with Wesbanco Bank continuing as the surviving bank in the Bank Merger. The Merger Agreement was approved by the respective Boards of Directors of each of the Company, Wesbanco Bank, Premier Financial and Premier Bank.

Subject to the terms and conditions of the Merger Agreement, at the effective time of the Merger, Premier Financial shareholders will have the right to receive 0.80 of a share of the Company’s common stock for each share of Premier Financial’s common stock. The exchange ratio is subject to customary anti-dilution adjustments in the event of reorganizations, stock splits, stock dividends, and similar transactions involving the Company’s common stock. In addition, in the event that Premier Financial does not declare and pay all or any portion of a regular quarterly dividend of $0.31 per share of Premier Financial common stock by reason of Premier Financial’s failure to obtain regulatory non-objection, consent or approval of such quarterly dividend or a related dividend from Premier Bank to Premier Financial, the Company will make a cash payment to Premier Financial’s shareholders at the closing of the Merger on a dollar-for-dollar basis in an amount equal to the total amount of all such foregone dividends, assuming that the number of shares of Premier Financial’s common stock outstanding for each foregone dividend is equal to the number of shares of Premier Financial’s common stock outstanding at the effective time of the Merger.

The Merger Agreement contains customary representations and warranties from both the Company and Premier Financial, and each party has agreed to customary covenants, including, among others, covenants relating to the conduct of business during the interim period between the execution of the Merger Agreement and the effective time of the Merger, each party’s obligation, subject to certain exceptions, to recommend that its shareholders approve the Merger (in the case of Premier Financial) or the Merger Agreement and issuance of common stock in connection with the Merger (in the case of the Company) and, in the case of Premier Financial, its non-solicitation obligations relating to alternative acquisition proposals. The Merger Agreement contains certain termination rights for both the Company and Premier Financial and further provides that, upon termination of the Merger Agreement under certain circumstances, Premier Financial may be obligated to pay the Company a termination fee of $37.0 million.

At the effective time of the Merger, four members of Premier Financial’s current Board of Directors will be appointed to the respective Boards of Directors of the Company and Wesbanco Bank.

Consummation of the Merger is subject to a number of customary conditions, including, but not limited to, the approval of the Merger Agreement and the issuance of shares of the Company’s common stock in connection with the Merger by the Company’s shareholders, approval of the Merger by the shareholders of Premier Financial and the receipt of all required regulatory approvals. In addition, each party’s obligation to consummate the Merger is subject to certain additional customary conditions, including (1) subject to certain exceptions, the accuracy of the representations and warranties of the other party, (2) performance in all material respects by the other party of its obligations, and (3) the receipt by such party of an opinion from its counsel to the effect that the Merger and the Bank Merger will be treated as a tax-free reorganization within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended.

As a condition to the Company’s willingness to enter into the Merger Agreement, all of the directors and executive officers of Premier Financial have entered into voting agreements (each, a “Voting Agreement”) with the Company pursuant to which they have agreed to vote their shares in favor of the Merger.

Securities Purchase Agreement

On July 25, 2024, the Company entered into a Securities Purchase Agreement (the “Securities Purchase Agreement”) with several institutional “accredited investors” (the “Investors”), pursuant to which the Company agreed to issue and sell to the Investors in a private placement an aggregate of 7,272,728 shares of the Company’s common stock (the “Shares”), at a price of $27.50 per Share (the “Private Placement”).

The Private Placement is expected to close on August 1, 2024, subject to the satisfaction or waiver of specified customary closing conditions. The Company expects to receive aggregate gross proceeds from the Private Placement of approximately $200.0 million, before deducting estimated offering expenses payable by the Company. The Company expects to use the net proceeds from the Private Placement to support the Merger, to maintain appropriate pro forma capital ratios, to pay down borrowings, and for general corporate purposes.

The Company has granted the Investors indemnification rights with respect to its representations, warranties, covenants and agreements under the Securities Purchase Agreement.

36


 

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

Management’s Discussion and Analysis (“MD&A”) represents an overview of the results of operations and financial condition of Wesbanco for the three and six months ended June 30, 2024. This discussion and analysis should be read in conjunction with the Consolidated Financial Statements and Notes thereto.

FORWARD-LOOKING STATEMENTS

Forward-looking statements in this report relating to Wesbanco’s plans, strategies, objectives, expectations, intentions and adequacy of resources, are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. The information contained in this report should be read in conjunction with Wesbanco’s Form 10-K for the year ended December 31, 2023 and documents subsequently filed by Wesbanco with the Securities and Exchange Commission (“SEC”) including Wesbanco's Form 10-Q for the quarter ending March 31, 2024, which are available at the SEC’s website, www.sec.gov or at Wesbanco’s website, www.wesbanco.com. Investors are cautioned that forward-looking statements, which are not historical fact, involve risks and uncertainties, including those detailed in Wesbanco’s most recent Annual Report on Form 10-K filed with the SEC under “Risk Factors” in Part I, Item 1A and in Part II, Item 1A of this Form 10-Q. Such statements are subject to important factors that could cause actual results to differ materially from those contemplated by such statements, including, without limitation, that the proposed merger with Premier Financial Corporation (“Premier”) may not close when expected, that the businesses of WesBanco and Premier may not be integrated successfully or such integration may take longer to accomplish than expected; the expected cost savings and any revenue synergies from the merger of WesBanco and Premier may not be fully realized within the expected timeframes; disruption from the proposed merger of WesBanco and Premier may make it more difficult to maintain relationships with clients, associates, or suppliers; the required governmental approvals of the proposed Merger may not be obtained on the expected terms and schedule; Premier’s shareholders and/or the Company’s shareholders may not approve the proposed Merger; the shareholders of the Company may not approve the issuance of shares of the Company’s common stock in connection with the Merger; the effects of changing regional and national economic conditions; changes in interest rates, spreads on earning assets and interest-bearing liabilities, and associated interest rate sensitivity; sources of liquidity available to Wesbanco and its related subsidiary operations; potential future credit losses and the credit risk of commercial, real estate, and consumer loan customers and their borrowing activities; actions of the Federal Reserve Board, the Federal Deposit Insurance Corporation, the SEC, the Financial Institution Regulatory Authority, the Municipal Securities Rulemaking Board, the Securities Investors Protection Corporation, the Consumer Financial Protection Bureau and other regulatory bodies; potential legislative and federal and state regulatory actions and reform, including, without limitation, the impact of the implementation of the Dodd-Frank Act; adverse decisions of federal and state courts; fraud, scams and schemes of third parties; cyber-security breaches; competitive conditions in the financial services industry; rapidly changing technology affecting financial services; marketability of debt instruments and corresponding impact on fair value adjustments; and/or other external developments materially impacting Wesbanco’s operational and financial performance. Wesbanco does not assume any duty to update forward-looking statements.

OVERVIEW

Wesbanco is a multi-state bank holding company operating through 192 branches and 182 ATM machines in West Virginia, Ohio, western Pennsylvania, Kentucky, southern Indiana and Maryland, offering retail banking, corporate banking, personal and corporate trust services, brokerage services, mortgage banking and insurance. Wesbanco’s businesses are significantly impacted by economic factors such as market interest rates, federal monetary and regulatory policies, local and regional economic conditions and the competitive environment’s effect upon Wesbanco’s business volumes. Wesbanco’s deposit levels are affected by numerous factors including personal savings rates, personal income, and competitive rates on alternative investments, as well as competition from other financial institutions within the markets we serve and liquidity needs of Wesbanco. Loan levels are also subject to various factors including construction demand, business financing needs, consumer spending and interest rates, as well as loan terms offered by competing lenders.

PENDING ACQUISITION

On July 25, 2024, Wesbanco, Inc., Wesbanco Bank, Inc., Premier Financial Corp. (“Premier Financial”) and Premier Bank entered into a definitive Agreement and Plan of Merger (the “Merger Agreement”) providing for, among other things, the merger of Premier Financial with and into Wesbanco, Inc. (the “Merger”) upon the terms and subject to the conditions set forth in the Merger Agreement. For additional information regarding the Merger Agreement and the transactions contemplated thereby, see Note 13, “Subsequent Events” for more information.

APPLICATION OF CRITICAL ACCOUNTING POLICIES AND ESTIMATES

Wesbanco’s critical accounting policies involving the significant judgments and assumptions used in the preparation of the Consolidated Financial Statements as of June 30, 2024 have remained unchanged from the disclosures presented in Wesbanco’s Annual Report on Form 10-K for the year ended December 31, 2023 within the section “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

37


 

RESULTS OF OPERATIONS

EARNINGS SUMMARY

Net income available to common shareholders for the second quarter of 2024 was $26.4 million, with diluted earnings per share of $0.44, compared to $42.3 million or $0.71 per diluted share, for the second quarter of 2023. For the six months ended June 30, 2024, net income available to common shareholders was $59.5 million, with diluted earnings per share of $1.00, compared to $82.2 million or $1.38 per diluted share, for the six months ended June 30, 2023. As noted in the following table, net income available to common shareholders, excluding after-tax restructuring and merger-related expenses, for the six months ended June 30, 2024, was $62.5 million or $1.05 per diluted share, as compared to $84.7 million or $1.43 per diluted share in the prior year's second quarter (non-GAAP measures).

 

 

 

For the Three Months Ended June 30,

 

 

For the Six Months Ended June 30,

 

 

 

2024

 

 

2023

 

 

2024

 

 

2023

 

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

 

Net Income

 

 

Diluted
Earnings
Per Share

 

 

Net Income

 

 

Diluted
Earnings
Per Share

 

 

Net
Income

 

 

Diluted
Earnings
Per Share

 

 

Net
Income

 

 

Diluted
Earnings
Per Share

 

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

 

$

29,369

 

 

$

0.49

 

 

$

42,377

 

 

$

0.71

 

 

$

62,530

 

 

$

1.05

 

 

$

84,677

 

 

$

1.43

 

Less: After-tax restructuring and merger-related expenses

 

 

(2,984

)

 

 

(0.05

)

 

 

(28

)

 

 

 

 

 

(2,984

)

 

 

(0.05

)

 

 

(2,519

)

 

 

(0.05

)

Net income available to common shareholders (GAAP)

 

$

26,385

 

 

$

0.44

 

 

$

42,349

 

 

$

0.71

 

 

$

59,546

 

 

$

1.00

 

 

$

82,158

 

 

$

1.38

 

(1)
Non-GAAP net income excludes after-tax restructuring and merger-related expenses. The above non-GAAP financial measures used by Wesbanco provide information useful to investors in understanding Wesbanco’s operating performance and trends, and facilitate comparisons with the performance of Wesbanco’s peers.

Net interest income decreased $5.0 million or 4.1% in the second quarter of 2024 compared to the same quarter of 2023, due to increasing deposit costs and the associated remix from non-interest bearing deposits into higher tier money market and certificate of deposit accounts, which, in turn, resulted in a 23 basis point decrease in the net interest margin over the same period. The increase in funding costs has been partially offset by higher yields in all major earning asset categories, due to the repricing of existing loans and higher investment rates offered in the current market environment. Over the same time period, the yield on earning assets increased by a total of 52 basis points while the cost of interest bearing liabilities increased by 97 basis points from increasing deposit costs and higher cost wholesale borrowings. Average loan balances increased by 9.5% from the second quarter of 2023, mainly attributable to commercial loan demand, while average securities decreased by 9.2% over the same time period as investment maturities and calls were used to partially fund the loan growth. Average deposits increased 4.7% over the same time period as a result of deposit gathering and retention efforts by the retail and commercial teams. Accretion from prior acquisitions benefited the second quarter 2024 net interest margin by two basis points, as compared to three basis points in the prior year period. For the six months ended June 30, 2024, net interest income decreased $15.3 million or 6.2% from the first six months of 2023 for similar reasons.

Loan growth, higher unemployment assumptions and a specific reserve for an individual C&I loan resulted in a provision for credit losses of $10.5 million in the second quarter of 2024, as compared to a provision of $3.0 million in the second quarter of 2023. Annualized net loan charge-offs, as a percentage of average portfolio loans, were 0.07% and 0.02% for the second quarter of 2024 and 2023, respectively.

For the second quarter of 2024, non-interest income decreased $0.5 million, or 1.5% compared to the second quarter of 2023, primarily due to decreases in net swap fee and valuation income, bank-owned life insurance and net gains on other real estate owned and other assets. The net swap fee and valuation income of $1.8 million in the second quarter of 2024 reflected $1.8 million of new swap fees and immaterial net fair value adjustments, as compared to $2.4 million in fees and $0.2 million in fair value adjustments, in the prior year second quarter. Net gains on other real estate owned and other assets decreased by $0.8 million compared to the second quarter of 2023 due to a $1.1 million refund received in the prior year quarter on an asset previously written off. Bank-owned life insurance income decreased from the second quarter of 2023 due to a reduction in mortality-related benefits received in the second quarter of 2024. Offsetting these decreases somewhat are increases in trust fees, service charges on deposits and mortgage banking income.

Non-interest expense, excluding restructuring and merger-related expenses, increased in the second quarter of 2024 by $2.2 million, or 2.3%, to $98.6 million, compared to the second quarter of 2023, reflecting increased equipment and software expense, FDIC insurance expense and other operating expenses. Equipment and software expense increased $1.6 million in the second quarter of 2024 compared to the prior year second quarter reflecting the impact of prior year ATM upgrades, which were phased in throughout the prior year. FDIC insurance expense increased in the second quarter of 2024 by $0.7 million due to an increase in the minimum rate for all banks. Other operating expenses increased $1.8 million in the second quarter of 2024 from the second quarter of 2023 primarily due to higher costs and fees in support of loan growth and higher other miscellaneous expenses. Offsetting these increases somewhat are decreases in salaries and wages and employee benefits expense, primarily due to lower staffing levels as a result of efficiency improvements in the mortgage and branch staffing models.

For the first half of 2024, the effective tax rate was 17.6% as compared to 17.9% for the first half of 2023, and the provision for income taxes decreased by $5.2 million over the same time period. The decrease in the provision for income taxes is due to the decrease in pre-tax income over the same period.

38


 

 

NET INTEREST INCOME

TABLE 1. NET INTEREST INCOME

 

 

 

For the Three Months
Ended June 30,

 

 

For the Six Months
Ended June 30,

 

(unaudited, dollars in thousands)

 

2024

 

 

2023

 

 

2024

 

 

2023

 

Net interest income

 

$

116,593

 

 

$

121,567

 

 

$

230,560

 

 

$

245,898

 

Taxable equivalent adjustment to net interest income

 

 

1,211

 

 

 

1,255

 

 

 

2,430

 

 

 

2,529

 

Net interest income, fully taxable equivalent

 

$

117,804

 

 

$

122,822

 

 

$

232,990

 

 

$

248,427

 

Net interest spread, non-taxable equivalent

 

 

1.96

%

 

 

2.41

%

 

 

1.96

%

 

 

2.59

%

Benefit of net non-interest bearing liabilities

 

 

0.96

%

 

 

0.74

%

 

 

0.94

%

 

 

0.65

%

Net interest margin

 

 

2.92

%

 

 

3.15

%

 

 

2.90

%

 

 

3.24

%

Taxable equivalent adjustment

 

 

0.03

%

 

 

0.03

%

 

 

0.03

%

 

 

0.03

%

Net interest margin, fully taxable equivalent

 

 

2.95

%

 

 

3.18

%

 

 

2.93

%

 

 

3.27

%

 

Net interest income, which is Wesbanco’s largest source of revenue, is the difference between interest income on earning assets, primarily loans and securities, and interest expense on liabilities, primarily deposits and short and long-term borrowings. Net interest income is affected by the general level of, and changes in interest rates, the steepness and shape of the yield curve, changes in the amount and composition of interest earning assets and interest bearing liabilities, as well as the frequency of repricing of existing assets and liabilities. Net interest income decreased $5.0 million or 4.1% in the second quarter of 2024 compared to the second quarter of 2023 and $15.3 million or 6.2% in the first six months of 2024 as compared to the same period of 2023. This decrease was due to a 23 basis point decrease year over year in the net interest margin to 2.95% for the second quarter of 2024. The decrease in margin is due to higher funding costs and the associated remix from non-interest bearing deposits into higher tier money market and certificate of deposit accounts. Offsetting the net interest margin decrease somewhat, average portfolio loans increased by 9.5% in the second quarter of 2024 as compared to the second quarter of 2023, due to strong new loan growth and strategic loan production office and lender hiring initiatives. Total purchase accounting accretion continued to decrease in the second quarter of 2024 as compared to the second quarter of 2023, as approximately two basis points of accretion from prior acquisitions was included in the second quarter 2024 net interest margin as compared to three basis points in the 2023 second quarter net interest margin. Total average deposits increased by $601.8 million or 4.7% in the second quarter of 2024 as compared to the second quarter of 2023. The cost of interest bearing deposits increased by 117 basis points and the cost of total interest bearing liabilities increased by 97 basis points from the second quarter of 2023 to the second quarter of 2024. The increase in the cost is primarily due to rate increases for interest bearing deposits in response to the general increase in overall deposit rates in the marketplace.

Interest income increased $26.9 million or 15.3% in the second quarter of 2024 compared to the same period of 2023 and $61.7 million or 18.3% in the first six months of 2024 compared to the same period of 2023. Average loan balances increased $1.0 billion or 9.5% in the second quarter of 2024 compared to the second quarter of 2023, while loan yields increased by 54 basis points during this same period to 5.85% due to the previously mentioned rising rate environment and its effect on the repricing of portfolio loans, as well as higher offered rates on new loans. Loans provide the greatest impact on interest income and the yield on earning assets as they have the largest balance and the highest yield within major earning asset categories. In the second quarter of 2024, average loans represented 75.0% of average earning assets, an increase from 71.1% in the second quarter of 2023. Average total securities balances decreased $368.6 million or 9.2% from the second quarter of 2023, and represented 22.5% of total earning assets in the second quarter of 2024. Taxable securities yields increased by six basis points in the second quarter of 2024 from the second quarter of 2023. Tax-exempt securities yields, which are the highest yields within total securities, increased three basis points from the second quarter of 2023.

Interest expense increased $31.9 million in the second quarter of 2024 and $77.1 million in the first half of 2024 as compared to the same periods in 2023, due to the timing of the prior year federal funds rate increases and their effect on the costs of deposits and borrowings. The cost of interest bearing liabilities increased by 97 basis points from the second quarter of 2023 to 3.12% in the second quarter of 2024. Average interest bearing deposits increased $1.1 billion or 12.5% from the second quarter of 2023. The rate on interest bearing deposits increased 117 basis points to 2.74% from the second quarter of 2023, primarily from increases in rates on interest bearing public funds, money market funds and savings deposits, and a mix shift from non-interest bearing demand deposits into interest bearing demand deposits and certificates of deposit. Average non-interest bearing demand deposit balances decreased from the second quarter of 2023 to the second quarter of 2024 by $460.7 million or 10.5%, and were 29.1% of total average deposits at June 30, 2024, compared to 34.0% at June 30, 2023, reflecting customers' preferences in the previously mentioned interest rate environment. For the second quarter of 2024, Wesbanco's average loans to average deposits ratio was 89.4%, reflecting additional capacity to lend. The average balance of FHLB borrowings decreased $101.7 million from the second quarter of 2023 to the second quarter of 2024. The average balance of repurchase agreements and subordinated and junior subordinated debt balances remain virtually unchanged from the second quarter of 2023 to the second quarter of 2024.

39


 

TABLE 2. AVERAGE BALANCE SHEETS AND NET INTEREST MARGIN ANALYSIS

 

 

For The Three Months Ended June 30,

 

 

For the Six Months Ended June 30,

 

 

2024

 

 

2023

 

 

2024

 

 

2023

 

 

Average

 

 

Average

 

 

Average

 

 

Average

 

 

Average

 

 

Average

 

 

Average

 

 

Average

 

(unaudited, dollars in thousands)

Balance

 

 

Rate

 

 

Balance

 

 

Rate

 

 

Balance

 

 

Rate

 

 

Balance

 

 

Rate

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Due from banks - interest bearing

$

352,986

 

 

 

5.62

%

 

$

438,604

 

 

 

5.71

%

 

$

364,127

 

 

 

5.66

%

 

$

359,466

 

 

 

5.16

%

Loans, net of unearned income (1)

 

12,057,831

 

 

 

5.85

%

 

 

11,009,093

 

 

 

5.31

%

 

 

11,907,353

 

 

 

5.78

%

 

 

10,880,328

 

 

 

5.17

%

Securities: (2)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Taxable

 

2,863,213

 

 

 

2.38

%

 

 

3,198,838

 

 

 

2.32

%

 

 

2,896,040

 

 

 

2.38

%

 

 

3,250,174

 

 

 

2.33

%

Tax-exempt (3)

 

753,151

 

 

 

3.08

%

 

 

786,128

 

 

 

3.05

%

 

 

756,474

 

 

 

3.08

%

 

 

793,425

 

 

 

3.06

%

Total securities

 

3,616,364

 

 

 

2.52

%

 

 

3,984,966

 

 

 

2.46

%

 

 

3,652,514

 

 

 

2.53

%

 

 

4,043,599

 

 

 

2.47

%

Other earning assets

 

56,077

 

 

 

8.71

%

 

 

61,613

 

 

 

5.64

%

 

 

58,499

 

 

 

7.78

%

 

 

53,789

 

 

 

4.44

%

Total earning assets (3)

 

16,083,258

 

 

 

5.11

%

 

 

15,494,276

 

 

 

4.59

%

 

 

15,982,493

 

 

 

5.04

%

 

 

15,337,182

 

 

 

4.46

%

Other assets

 

1,807,056

 

 

 

 

 

 

1,800,070

 

 

 

 

 

 

1,814,796

 

 

 

 

 

 

1,796,162

 

 

 

 

Total Assets

$

17,890,314

 

 

 

 

 

$

17,294,346

 

 

 

 

 

$

17,797,289

 

 

 

 

 

$

17,133,344

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND SHAREHOLDERS'
   EQUITY

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest bearing demand deposits

$

3,527,316

 

 

 

3.07

%

 

$

3,228,799

 

 

 

2.14

%

 

$

3,514,182

 

 

 

3.01

%

 

$

3,129,921

 

 

 

1.82

%

Money market accounts

 

2,228,070

 

 

 

3.33

%

 

 

1,635,939

 

 

 

1.77

%

 

 

2,157,553

 

 

 

3.22

%

 

 

1,634,347

 

 

 

1.42

%

Savings deposits

 

2,441,949

 

 

 

1.30

%

 

 

2,729,210

 

 

 

0.86

%

 

 

2,461,330

 

 

 

1.27

%

 

 

2,751,850

 

 

 

0.72

%

Certificates of deposit

 

1,371,179

 

 

 

3.51

%

 

 

912,144

 

 

 

1.28

%

 

 

1,331,145

 

 

 

3.36

%

 

 

887,560

 

 

 

0.93

%

Total interest bearing deposits

 

9,568,514

 

 

 

2.74

%

 

 

8,506,092

 

 

 

1.57

%

 

 

9,464,210

 

 

 

2.65

%

 

 

8,403,678

 

 

 

1.29

%

Federal Home Loan Bank borrowings

 

1,186,538

 

 

 

5.50

%

 

 

1,288,242

 

 

 

5.20

%

 

 

1,214,973

 

 

 

5.50

%

 

 

1,130,000

 

 

 

5.00

%

Repurchase agreements

 

107,811

 

 

 

3.34

%

 

 

105,266

 

 

 

1.87

%

 

 

100,188

 

 

 

3.15

%

 

 

118,155

 

 

 

1.55

%

Subordinated debt and junior subordinated debt

 

279,159

 

 

 

5.83

%

 

 

281,715

 

 

 

5.83

%

 

 

279,131

 

 

 

5.85

%

 

 

281,600

 

 

 

5.76

%

Total interest bearing liabilities (4)

 

11,142,022

 

 

 

3.12

%

 

 

10,181,315

 

 

 

2.15

%

 

 

11,058,502

 

 

 

3.05

%

 

 

9,933,433

 

 

 

1.84

%

Non-interest bearing demand deposits

 

3,918,685

 

 

 

 

 

 

4,379,345

 

 

 

 

 

 

3,908,837

 

 

 

 

 

 

4,479,200

 

 

 

 

Other liabilities

 

286,659

 

 

 

 

 

 

240,590

 

 

 

 

 

 

285,556

 

 

 

 

 

 

245,033

 

 

 

 

Shareholders’ equity

 

2,542,948

 

 

 

 

 

 

2,493,096

 

 

 

 

 

 

2,544,394

 

 

 

 

 

 

2,475,678

 

 

 

 

Total Liabilities and Shareholders’ Equity

$

17,890,314

 

 

 

 

 

$

17,294,346

 

 

 

 

 

$

17,797,289

 

 

 

 

 

$

17,133,344

 

 

 

 

Taxable equivalent net interest spread

 

 

 

 

1.99

%

 

 

 

 

 

2.44

%

 

 

 

 

 

1.99

%

 

 

 

 

 

2.62

%

Taxable equivalent net interest margin

 

 

 

 

2.95

%

 

 

 

 

 

3.18

%

 

 

 

 

 

2.93

%

 

 

 

 

 

3.27

%

 

(1)
Gross of allowance for credit losses and net of unearned income. Includes non-accrual and loans held for sale. Loan fees included in interest income on loans were $0.9 million and $0.7 million for the three months ended June 30, 2024 and 2023, respectively, and were $1.2 million and $1.1 million for the six months ended June 30, 2024 and 2023, respectively. Additionally, loan accretion included in interest income on loans acquired from prior acquisitions was $0.8 million and $1.2 million for the three months ended June 30, 2024 and 2023, respectively, and $1.5 million and $2.5 million for the six months ended June 30, 2024 and 2023, respectively.
(2)
Average yields on available-for-sale debt securities are calculated based on amortized cost.
(3)
Taxable equivalent basis is calculated on tax-exempt securities using a federal statutory tax rate of 21% for each period presented.
(4)
Accretion on interest bearing liabilities acquired from prior acquisitions was $0.1 million for the three months ended June 30, 2024 and 2023, and $0.2 million and $0.3 million for the six months ended June 30, 2024 and 2023, respectively.

 

40


 

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

 

 

 

For the Three Months
Ended June 30, 2024

 

 

For the Six Months
Ended June 30, 2024

 

 

 

Compared to June 30, 2023

 

 

Compared to June 30, 2023

 

(unaudited, in thousands)

 

Volume

 

 

Rate

 

 

Net Increase
(Decrease)

 

 

Volume

 

 

Rate

 

 

Net Increase
(Decrease)

 

Increase (decrease) in interest income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Due from banks - interest bearing

 

$

(1,198

)

 

$

(111

)

 

$

(1,309

)

 

$

121

 

 

$

937

 

 

$

1,058

 

Loans, net of unearned income

 

 

14,556

 

 

 

15,064

 

 

 

29,620

 

 

 

27,745

 

 

 

35,443

 

 

 

63,188

 

Taxable securities

 

 

(1,976

)

 

 

422

 

 

 

(1,554

)

 

 

(4,178

)

 

 

943

 

 

 

(3,235

)

Tax-exempt securities (1)

 

 

(252

)

 

 

41

 

 

 

(211

)

 

 

(565

)

 

 

95

 

 

 

(470

)

Other earning assets

 

 

(84

)

 

 

432

 

 

 

348

 

 

 

112

 

 

 

966

 

 

 

1,078

 

Total interest income change (1)

 

 

11,046

 

 

 

15,848

 

 

 

26,894

 

 

 

23,235

 

 

 

38,384

 

 

 

61,619

 

Increase (decrease) in interest expense:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest bearing demand deposits

 

 

1,712

 

 

 

8,010

 

 

 

9,722

 

 

 

3,835

 

 

 

20,372

 

 

 

24,207

 

Money market accounts

 

 

3,283

 

 

 

7,940

 

 

 

11,223

 

 

 

4,613

 

 

 

18,472

 

 

 

23,085

 

Savings deposits

 

 

(670

)

 

 

2,693

 

 

 

2,023

 

 

 

(1,137

)

 

 

6,826

 

 

 

5,689

 

Certificates of deposit

 

 

2,034

 

 

 

7,042

 

 

 

9,076

 

 

 

2,915

 

 

 

15,205

 

 

 

18,120

 

Federal Home Loan Bank borrowings

 

 

(1,362

)

 

 

876

 

 

 

(486

)

 

 

2,198

 

 

 

3,016

 

 

 

5,214

 

Repurchase agreements

 

 

12

 

 

 

392

 

 

 

404

 

 

 

(157

)

 

 

818

 

 

 

661

 

Subordinated debt and junior subordinated debt

 

 

(37

)

 

 

(13

)

 

 

(50

)

 

 

(71

)

 

 

151

 

 

 

80

 

Total interest expense change

 

 

4,972

 

 

 

26,940

 

 

 

31,912

 

 

 

12,196

 

 

 

64,860

 

 

 

77,056

 

Net interest income change (1)

 

$

6,074

 

 

$

(11,092

)

 

$

(5,018

)

 

$

11,039

 

 

$

(26,476

)

 

$

(15,437

)

 

(1)
Taxable equivalent basis is calculated on tax-exempt securities using a federal statutory tax rate of 21%.

 

PROVISION FOR CREDIT LOSSES – LOANS AND LOAN COMMITMENTS

The provision for credit losses – loans is the amount to be added to the allowance for credit losses – loans after net charge-offs have been deducted to bring the allowance to a level considered appropriate to absorb lifetime expected losses for all portfolio loans. The provision for credit losses – loan commitments is the amount to be added to the allowance for credit losses for loan commitments to bring that allowance to a level considered appropriate to absorb lifetime expected losses on unfunded loan commitments. The provision for credit losses - loans and loan commitments increased to $10.5 million in the second quarter of 2024 compared to a provision of $3.0 million in the second quarter of 2023. The $10.5 million provision in the second quarter of 2024 was a result of continued loan growth and adjustments in regional macroeconomic factors and loan concentrations as well as a specific reserve on one C&I credit and an increase in net charge-offs. The increase was partially offset by a reduction in the criticized & classified qualitative factor. Non-performing loans were 0.29% of total portfolio loans as of June 30, 2024, increasing from 0.28% of total portfolio loans at the end of the second quarter of 2023. Criticized and classified loans were 2.15% of total portfolio loans as of June 30, 2024, increasing from 1.68% as of June 30, 2023, due to downgrades within the loan portfolio. Past due loans at June 30, 2024 were 0.24% of total portfolio loans, compared to 0.21% at June 30, 2023. Annualized net loan charge-offs were 0.14% for the six months ended June 30, 2024, compared to 0.05% for the six months ended June 30, 2023. Please see the Allowance for Credit Losses – Loans and Loan Commitments section of this MD&A for additional discussion.

41


 

NON-INTEREST INCOME

TABLE 4. NON-INTEREST INCOME

 

 

 

For the Three Months
Ended June 30,

 

 

 

 

 

 

 

 

For the Six Months
Ended June 30,

 

 

 

 

 

 

 

(unaudited, dollars in thousands)

 

2024

 

 

2023

 

 

$ Change

 

 

% Change

 

 

2024

 

 

2023

 

 

$ Change

 

 

% Change

 

Trust fees

 

$

7,303

 

 

$

6,918

 

 

$

385

 

 

 

5.6

 

 

$

15,385

 

 

$

14,412

 

 

$

973

 

 

 

6.8

 

Service charges on deposits

 

 

7,111

 

 

 

6,232

 

 

 

879

 

 

 

14.1

 

 

 

13,895

 

 

 

12,401

 

 

 

1,494

 

 

 

12.0

 

Digital banking income

 

 

5,040

 

 

 

5,010

 

 

 

30

 

 

 

0.6

 

 

 

9,745

 

 

 

9,615

 

 

 

130

 

 

 

1.4

 

Net swap fee and valuation income

 

 

1,776

 

 

 

2,612

 

 

 

(836

)

 

 

(32.0

)

 

 

3,339

 

 

 

3,411

 

 

 

(72

)

 

 

(2.1

)

Net securities brokerage revenue

 

 

2,601

 

 

 

2,523

 

 

 

78

 

 

 

3.1

 

 

 

5,149

 

 

 

5,098

 

 

 

51

 

 

 

1.0

 

Bank-owned life insurance

 

 

2,791

 

 

 

3,189

 

 

 

(398

)

 

 

(12.5

)

 

 

4,859

 

 

 

5,149

 

 

 

(290

)

 

 

(5.6

)

Net securities gains

 

 

135

 

 

 

205

 

 

 

(70

)

 

 

(34.1

)

 

 

672

 

 

 

350

 

 

 

322

 

 

 

92.0

 

Mortgage banking income

 

 

1,069

 

 

 

601

 

 

 

468

 

 

 

77.9

 

 

 

1,762

 

 

 

1,027

 

 

 

735

 

 

 

71.6

 

Net insurance services revenue

 

 

980

 

 

 

966

 

 

 

14

 

 

 

1.4

 

 

 

1,924

 

 

 

1,757

 

 

 

167

 

 

 

9.5

 

Payment processing fees

 

 

906

 

 

 

951

 

 

 

(45

)

 

 

(4.7

)

 

 

1,734

 

 

 

1,822

 

 

 

(88

)

 

 

(4.8

)

Net gain on other real estate owned and other assets

 

 

34

 

 

 

871

 

 

 

(837

)

 

 

(96.1

)

 

 

188

 

 

 

1,104

 

 

 

(916

)

 

 

(83.0

)

Other

 

 

1,609

 

 

 

1,763

 

 

 

(154

)

 

 

(8.7

)

 

 

3,332

 

 

 

3,347

 

 

 

(15

)

 

 

(0.4

)

Total non-interest income

 

$

31,355

 

 

$

31,841

 

 

$

(486

)

 

 

(1.5

)

 

$

61,984

 

 

$

59,493

 

 

$

2,491

 

 

 

4.2

 

Non-interest income is a significant source of revenue and an important part of Wesbanco’s results of operations, as it represents 21.2% of total revenue for the three months ended June 30, 2024. Wesbanco offers its customers a wide range of retail, commercial, investment and digital banking services, which are viewed as a vital component of Wesbanco’s ability to attract and maintain customers, as well as providing additional fee income beyond normal spread-related income to Wesbanco. For the second quarter of 2024, non-interest income decreased $0.5 million or 1.5% compared to the second quarter of 2023, primarily due to a $0.9 million decrease in net gain on other real estate owned and other assets, a $0.8 million decrease in net swap fee and valuation income and a $0.4 million decrease in bank-owned life insurance. These decreases were partially offset by a $0.9 million increase in service charges on deposits, a $0.5 million increase in mortgage banking income and a $0.4 million increase in trust fees.

Trust fees increased $0.4 million or 5.6% compared to the second quarter of 2023, due to an increase in the market value of trust assets. Total trust assets were $5.6 billion at June 30, 2024 as compared to $5.1 billion at June 30, 2023. As of June 30, 2024, trust assets include managed assets of $4.6 billion and non-managed (custodial) assets of $1.0 billion. Assets managed for the WesMark Funds, a proprietary group of mutual funds that is advised by Wesbanco Trust and Investment Services, were $0.9 billion and $0.8 billion as of June 30, 2024 and June 30, 2023, respectively, and are included in managed assets. Trust fees increased $1.0 million or 6.8% in the first six months of 2024 as compared to the first six months of 2023 for similar reasons.

Service charges on deposits increased $0.9 million or 14.1% in the second quarter of 2024 compared to the second quarter of 2023, due to an increase in transactional fee income and treasury management fee income. Service charges on deposits increased $1.5 million or 12.0% in the first six months of 2024 as compared to the same period in 2023 for similar reasons.

Net swap fee and valuation income, which includes fair value adjustments, decreased $0.8 million or 32.0% in the second quarter of 2024 compared to the second quarter of 2023, due to a decrease in swap fee income and fair value adjustments on existing swaps. For the three months ended June 30, 2024, new swaps executed totaled $222.7 million in notional principal, resulting in $1.8 million of fee income, compared to new swaps executed of $226.8 million in notional principal resulting in $2.4 million of fee income for the three months ended June 30, 2023. Fair value adjustments on existing swaps for the three months ended June 30, 2024 were immaterial as compared to $0.2 million for the three months ended June 30, 2023. For the first six months of 2024, net swap fee and valuation income decreased by $0.1 million or 2.1% from the first six months of 2023. During this time period, new swap fee income decreased by $1.7 million, but was mostly offset by a $1.6 million increase in fair value adjustments on existing swaps.

Bank-owned life insurance decreased $0.4 million or 12.5% in the second quarter of 2024 as compared to the second quarter of 2023 due to a decrease in mortality-related benefits received. For the six months ended June 30, 2024, bank-owned life insurance decreased by $0.3 million or 5.6% from the first six months of 2023, due to lower mortality-related benefits received in the year-to-date period, as no mortality-related benefits were received in the first quarter of 2024.

Net gain on other real estate owned and other assets decreased $0.9 million or 96.1% in the three months ended June 30, 2024 as compared to the same period in 2023, due primarily to a recovery of an asset in the second quarter of 2023 that was previously written-off. Net gain on other real estate owned and other assets also decreased $0.9 million or 83.0% in the first six months of 2024 as compared to the same period in 2023 for similar reasons.

Mortgage banking income increased $0.5 million or 77.9% in the second quarter of 2024 compared to the second quarter of 2023, due to an increase in sale margins, partially offset by a decrease in fair value adjustments on mortgage derivatives. For the second quarter of 2024, total mortgage production was $185.1 million, which decreased by 10.9% from the second quarter of 2023. For the three months ended June 30, 2024, $92.1 million in mortgages were sold into the secondary market as compared to $100.7 million in the comparable 2023 period. Included in mortgage banking income above are a loss of $5 thousand and a gain of $78 thousand from the fair value adjustments on mortgage loan commitments and related derivatives for the three months ended June 30, 2024 and 2023, respectively. Mortgage banking income increased by $0.7 million or 71.6% from the first six months of 2023 to the first six months of 2024 for similar reasons.

42


 

 

 

NON-INTEREST EXPENSE

TABLE 5. NON-INTEREST EXPENSE

 

For the Three Months
Ended June 30,

 

 

 

 

 

 

 

 

For the Six Months
Ended June 30,

 

 

 

 

 

 

 

(unaudited, dollars in thousands)

2024

 

 

2023

 

 

$ Change

 

 

% Change

 

 

2024

 

 

2023

 

 

$ Change

 

 

% Change

 

Salaries and wages

$

43,991

 

 

$

44,471

 

 

$

(480

)

 

 

(1.1

)

 

$

86,988

 

 

$

86,422

 

 

$

566

 

 

 

0.7

 

Employee benefits

 

10,579

 

 

 

11,511

 

 

 

(932

)

 

 

(8.1

)

 

 

22,763

 

 

 

23,570

 

 

 

(807

)

 

 

(3.4

)

Net occupancy

 

6,309

 

 

 

6,132

 

 

 

177

 

 

 

2.9

 

 

 

12,932

 

 

 

12,775

 

 

 

157

 

 

 

1.2

 

Equipment and software

 

10,457

 

 

 

8,823

 

 

 

1,634

 

 

 

18.5

 

 

 

20,465

 

 

 

17,885

 

 

 

2,580

 

 

 

14.4

 

Marketing

 

2,371

 

 

 

2,763

 

 

 

(392

)

 

 

(14.2

)

 

 

4,256

 

 

 

5,088

 

 

 

(832

)

 

 

(16.4

)

FDIC insurance

 

3,523

 

 

 

2,871

 

 

 

652

 

 

 

22.7

 

 

 

6,971

 

 

 

5,755

 

 

 

1,216

 

 

 

21.1

 

Amortization of intangible assets

 

2,072

 

 

 

2,282

 

 

 

(210

)

 

 

(9.2

)

 

 

4,164

 

 

 

4,583

 

 

 

(419

)

 

 

(9.1

)

Restructuring and merger-related expenses

 

3,777

 

 

 

35

 

 

 

3,742

 

 

NM

 

 

 

3,777

 

 

 

3,188

 

 

 

589

 

 

 

18.5

 

Professional fees

 

4,592

 

 

 

4,107

 

 

 

485

 

 

 

11.8

 

 

 

9,595

 

 

 

7,276

 

 

 

2,319

 

 

 

31.9

 

Franchise and other miscellaneous taxes

 

3,078

 

 

 

3,015

 

 

 

63

 

 

 

2.1

 

 

 

6,239

 

 

 

5,913

 

 

 

326

 

 

 

5.5

 

ATM and electronic banking interchange expenses

 

1,482

 

 

 

1,772

 

 

 

(290

)

 

 

(16.4

)

 

 

3,017

 

 

 

3,399

 

 

 

(382

)

 

 

(11.2

)

Communications

 

1,309

 

 

 

1,311

 

 

 

(2

)

 

 

(0.2

)

 

 

2,572

 

 

 

2,741

 

 

 

(169

)

 

 

(6.2

)

Other real estate owned and foreclosure expenses

 

43

 

 

 

70

 

 

 

(27

)

 

 

(38.6

)

 

 

215

 

 

 

164

 

 

 

51

 

 

 

31.1

 

Postage, supplies and other

 

8,809

 

 

 

7,274

 

 

 

1,535

 

 

 

21.1

 

 

 

15,631

 

 

 

13,801

 

 

 

1,830

 

 

 

13.3

 

Total non-interest expense

$

102,392

 

 

$

96,437

 

 

$

5,955

 

 

 

6.2

 

 

$

199,585

 

 

$

192,560

 

 

$

7,025

 

 

 

3.6

 

NM = Not Meaningful

Non-interest expense in the second quarter of 2024 increased $6.0 million or 6.2% as compared to the same quarter in 2023, principally from a $3.7 million increase in restructuring and merger-related expenses, a $1.6 million increase in equipment and software expense, and a $1.5 million increase in supplies, postage and other operating expense. These increases were partially offset by a $0.9 million decrease in employee benefits and a $0.5 million decrease in salaries and wages.

Salaries and wages decreased $0.5 million or 1.1% in the second quarter of 2024 as compared to the second quarter of 2023 due to lower staffing levels associated with efficiency improvements in the mortgage and branch staffing models, partially offset by normal compensation merit adjustments. Average full time equivalent employees decreased by 6.8% from the second quarter of 2024 to the second quarter of 2023 as a result of these improvements. Salaries and wages increased $0.6 million or 0.7% in the first six months of 2024 as compared to the first six months of 2023 due to higher stock compensation expense as well as a reduction in deferred loan contra costs.

Employee benefits expense decreased by $0.9 million or 8.1% in the second quarter of 2024 as compared to the second quarter of 2023. This decrease was primarily due to a $0.8 million decrease in health insurance contributions driven by lower staffing levels. Similarly, employee benefits expense decreased $0.8 million or 3.4% in the first six months of 2024 as compared to the first six months of 2023.

Equipment and software expense increased $1.6 million in the second quarter of 2024 compared to the prior year second quarter reflecting the impact of prior year ATM upgrades, which were phased in throughout the prior year. Similarly, equipment and software costs increased $2.6 million or 14.4% in the first six months of 2024 as compared to the first six months of 2023.

Restructuring and merger-related expenses increased $3.7 million in the second quarter of 2024 as compared to the second quarter of 2023, due to fixed asset write-downs and lease termination expenses associated with the planned closure of additional branches and back-office buildings from the continuation of the branch optimization strategy. For the six months ended June 30, 2024, restructuring and merger-related expenses increased $0.6 million from the same period in 2023 as similar write-downs and termination expenses occurred in the first quarter of 2023.

Postage, supplies and other operating expense increased by $1.5 million or 21.1% in the second quarter of 2024 as compared to the second quarter of 2023 primarily due to higher costs and fees in support of loan growth and other miscellaneous expenses, including Reg-E writeoffs. Similarly, postage, supplies and other expense increased $1.8 million or 13.3% in the first six months of 2024 as compared to the same period in 2023.

43


 

INCOME TAXES

The provision for income taxes was $6.1 million for the three months ended June 30, 2024, which is a $3.0 million decrease compared to the provision for the three months ended June 30, 2023. The decrease in the provision for income taxes is due to an $18.9 million decrease in pre-tax income over the same time period. The provision for income taxes was $13.8 million for the six months ended June 30, 2024, which is a $5.2 million decrease compared to the provision for the six months ended June 30, 2023, as pre-tax income decreased by $27.8 million over the same time period.

 

FINANCIAL CONDITION

Total assets increased 2.3%, while shareholders' equity increased 0.4% at June 30, 2024 as compared to December 31, 2023. Total securities decreased $111.2 million or 3.3% from December 31, 2023 to June 30, 2024, as investment runoff was used to fund loan growth. Total portfolio loans were $12.3 billion, which increased $619.1 million or 5.3% since December 31, 2023 driven by strong performance from our commercial and residential lending teams. Deposits increased $263.7 million, or 2.0% from December 31, 2023, reflecting the benefit of deposit gathering and retention efforts by our retail and commercial teams. The composition of total deposits continues to have some mix shift, reflecting the impact of the significant increase in the federal funds rate; however, total demand deposits continue to represent 55% of total deposits, with the non-interest bearing component representing 28%, which is consistent with the percentage range prior to the pandemic. The overall decrease in transaction-based accounts is primarily attributable to customers' preferences as deposit rates have risen in the current market environment. Deposits were also somewhat impacted by bonus and royalty payments for Marcellus and Utica shale gas payments from energy companies in Wesbanco’s southwestern Pennsylvania, eastern Ohio, and northern West Virginia markets. Total borrowings increased $125.0 million or 9.3% during the first six months of 2024, which was primarily due to the increase in loans which required additional liquidity. Shareholders' equity increased $11.2 million or 0.4% from December 31, 2023 to June 30, 2024 as net income exceeded dividends declared for the period.

 

44


 

SECURITIES

TABLE 6. COMPOSITION OF SECURITIES (1)

 

 

 

June 30,

 

 

December 31,

 

 

 

 

(unaudited, dollars in thousands)

 

2024

 

 

2023

 

 

Change ($)

 

 

Change (%)

 

Equity securities (at fair value)

 

$

13,091

 

 

$

12,320

 

 

$

771

 

 

 

6.3

 

Available-for-sale debt securities (at fair value)

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Treasuries

 

 

49,103

 

 

 

 

 

 

49,103

 

 

 

100.0

 

U.S. Government sponsored entities and agencies

 

 

199,258

 

 

 

208,366

 

 

 

(9,108

)

 

 

(4.4

)

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

 

 

1,514,028

 

 

 

1,629,684

 

 

 

(115,656

)

 

 

(7.1

)

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

 

 

256,190

 

 

 

268,307

 

 

 

(12,117

)

 

 

(4.5

)

Obligations of states and political subdivisions

 

 

71,756

 

 

 

76,125

 

 

 

(4,369

)

 

 

(5.7

)

Corporate debt securities

 

 

11,788

 

 

 

11,847

 

 

 

(59

)

 

 

(0.5

)

Total available-for-sale debt securities

 

$

2,102,123

 

 

$

2,194,329

 

 

$

(92,206

)

 

 

(4.2

)

Held-to-maturity debt securities (at amortized cost)

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Government sponsored entities and agencies

 

$

3,300

 

 

$

3,587

 

 

$

(287

)

 

 

(8.0

)

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

 

 

35,776

 

 

 

38,893

 

 

 

(3,117

)

 

 

(8.0

)

Obligations of states and political subdivisions

 

 

1,122,395

 

 

 

1,136,779

 

 

 

(14,384

)

 

 

(1.3

)

Corporate debt securities

 

 

18,213

 

 

 

20,268

 

 

 

(2,055

)

 

 

(10.1

)

Total held-to-maturity debt securities

 

 

1,179,684

 

 

 

1,199,527

 

 

 

(19,843

)

 

 

(1.7

)

Total securities

 

$

3,294,898

 

 

$

3,406,176

 

 

$

(111,278

)

 

 

(3.3

)

Available-for-sale and equity securities:

 

 

 

 

 

 

 

 

 

 

 

Weighted average yield at the respective period end (2)

 

 

2.37

%

 

 

2.31

%

 

 

 

 

 

 

As a % of total securities

 

 

64.2

%

 

 

64.8

%

 

 

 

 

 

 

Weighted average life (in years)

 

 

6.4

 

 

 

6.8

 

 

 

 

 

 

 

Held-to-maturity securities:

 

 

 

 

 

 

 

 

 

 

 

Weighted average yield at the respective period end (2)

 

 

2.97

%

 

 

2.97

%

 

 

 

 

 

 

As a % of total securities

 

 

35.8

%

 

 

35.2

%

 

 

 

 

 

 

Weighted average life (in years)

 

 

8.7

 

 

 

8.7

 

 

 

 

 

 

 

Total securities:

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average yield at the respective period end (2)

 

 

2.57

%

 

 

2.52

%

 

 

 

 

 

 

As a % of total securities

 

 

100.0

%

 

 

100.0

%

 

 

 

 

 

 

Weighted average life (in years)

 

 

7.1

 

 

 

7.4

 

 

 

 

 

 

 

 

(1)
At June 30, 2024 and December 31, 2023, there were no holdings of any one issuer, other than U.S. government sponsored entities and its agencies, in an amount greater than 10% of Wesbanco’s shareholders’ equity.
(2)
Weighted average yields have been calculated on a taxable-equivalent basis using the federal statutory tax rate of 21%.

Total investment securities, which are a source of liquidity for Wesbanco as well as a contributor to interest income, decreased by $92.2 million or 4.2% from December 31, 2023 to June 30, 2024. Through the first six months of the year, the available-for-sale portfolio decreased by $141.3 million or 6.4%, primarily due to paydowns, calls and maturities exceeding purchases. The held-to-maturity portfolio decreased by $19.8 million or 1.7% due primarily to maturities and calls of municipal securities. The weighted average yield of the portfolio increased 5 basis point from 2.52% at December 31, 2023 to 2.57% at June 30, 2024, primarily due to increases in the indices tied to variable rate securities.

Total gross unrealized securities losses increased $31.8 million from $438.3 million at December 31, 2023 to $470.1 million at June 30, 2024. The increase in unrealized losses from December 31, 2023 was due to an increase in market rates in 2024 to date, causing market prices to decrease. Wesbanco believes that none of the unrealized losses on available-for-sale securities at June 30, 2024 require an allowance for credit losses. Please refer to Note 3, “Securities,” of the Consolidated Financial Statements for additional information. Wesbanco does not have any investments in private mortgage-backed securities or those that are collateralized by sub-prime mortgages, nor does Wesbanco have any exposure to collateralized debt obligations or government-sponsored enterprise preferred stocks.

Net unrealized losses on available-for-sale securities included in accumulated other comprehensive income, net of tax, as of June 30, 2024 and December 31, 2023 were $241.6 million and $233.2 million, respectively. These net unrealized pre-tax losses represent temporary fluctuations resulting from changes in market rates in relation to fixed yields in the available-for-sale portfolio, and on an after-tax basis are accounted for as an adjustment to other comprehensive income in shareholders’ equity. Net unrealized pre-tax losses in the held-to-maturity portfolio, which are not accounted for in other comprehensive income, were $151.3 million at June 30, 2024, compared to $130.4 million at December 31, 2023. With approximately 36% of the investment portfolio in the held-to-maturity category, the recent volatility in interest rates does not have as much impact on other comprehensive income as if the entire portfolio were included in the available-for-sale category.

45


 

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

 

The corporate and municipal bonds in Wesbanco’s held-to-maturity debt portfolio are analyzed quarterly to determine if an allowance for current expected credit losses is warranted. Wesbanco uses a database of historical financials of all corporate and municipal issuers and actual historic default and recovery rates on rated and non-rated transactions to estimate expected credit losses on an individual security basis. The expected credit losses are adjusted quarterly and are recorded in an allowance for expected credit losses on the balance sheet, which is deducted from the amortized cost basis of the held-to-maturity portfolio as a contra asset. The losses are recorded on the consolidated income statement in the provision for credit losses. Accrued interest receivable on held-to-maturity securities, which was $8.6 million and $8.8 million as of June 30, 2024 and December 31, 2023, respectively, is excluded from the estimate of credit losses. Held-to-maturity investments in U.S. Government sponsored entities and agencies as well as mortgage-backed securities and collateralized mortgage obligations, which are all either issued by a direct governmental entity or a government-sponsored entity, have no historical evidence supporting expected credit losses; therefore, Wesbanco has estimated these losses at zero, and will monitor this assumption in the future for any economic or governmental policies that could affect this assumption.

 

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

 

46


 

LOANS AND CREDIT RISK

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

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

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

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

TABLE 10. COMPOSITION OF LOANS (1)

 

 

 

June 30, 2024

 

 

December 31, 2023

 

(unaudited, dollars in thousands)

 

Amount

 

 

% of Loans

 

 

Amount

 

 

% of Loans

 

Commercial real estate:

 

 

 

 

 

 

 

 

 

 

 

 

Land and construction

 

$

1,061,390

 

 

 

8.6

 

 

$

1,055,865

 

 

 

9.1

 

Improved property

 

 

5,937,498

 

 

 

48.4

 

 

 

5,509,583

 

 

 

47.3

 

Total commercial real estate

 

 

6,998,888

 

 

 

57.0

 

 

 

6,565,448

 

 

 

56.4

 

Commercial and industrial

 

 

1,760,479

 

 

 

14.3

 

 

 

1,670,659

 

 

 

14.3

 

Residential real estate

 

 

2,506,957

 

 

 

20.4

 

 

 

2,438,574

 

 

 

20.9

 

Home equity

 

 

770,599

 

 

 

6.3

 

 

 

734,219

 

 

 

6.3

 

Consumer

 

 

220,588

 

 

 

1.8

 

 

 

229,561

 

 

 

2.0

 

Total portfolio loans

 

 

12,257,511

 

 

 

99.8

 

 

 

11,638,461

 

 

 

99.9

 

Loans held for sale

 

 

25,433

 

 

 

0.2

 

 

 

16,354

 

 

 

0.1

 

Total loans

 

$

12,282,944

 

 

 

100.0

 

 

$

11,654,815

 

 

 

100.0

 

(1)
Loans are presented gross of the allowance for loan credit losses – loans and net of unearned income, credit valuation adjustments, and unamortized net deferred loan fee income and loan origination costs.

 

Total portfolio loans increased $619.0 million or 5.3% from December 31, 2023, and have increased $1.1 billion or 10.1% over the past twelve months. The increase over the last twelve months was driven by a 27.9% growth in land and construction loans due to increased originations. Originations have outpaced repayments in several loan categories, leading to increases of 13.0% in commercial and industrial loans, 9.8% in home equity loans, 8.6% in improved property loans, and 7.0% in residential real estate. Consumer loans have decreased slightly at 5.0%.

 

Total loan commitments of $5.0 billion, including loans approved but not closed, increased $264.8 million or 5.6% from December 31, 2023 due primarily to increased loans approved but not closed. The average line utilization percentage for the commercial portfolio was 35.7% for the three months ended June 30, 2024 compared to 31.9% for the three months ended December 31, 2023.

The commercial portfolio is monitored for potential concentrations of credit risk by market, type of lending, CRE property type, C&I and owner-occupied CRE by industry, investment CRE dependence on common tenants and industries or property types that are similarly impacted by external factors. The breakdown for all CRE – improved property is 26% owner-occupied and 74% investor-owned. The bank has instituted additional monitoring of the office building portfolio, as remote work has put pressure on the need for dedicated office space in certain markets. The office portfolio breakdown within CRE – improved property is 34% owner-occupied and 66% investor-owned. Investor-owned office buildings represent 3.7% of the total loan portfolio.

47


 

Loans held for sale at both June 30, 2024 and December 31, 2023 are originated residential mortgages that are committed to be sold into the secondary market. Loans held for sale increased by $9.1 million or 55.5% from December 31, 2023 due to increased originations in the first half of 2024, particularly in the second quarter, as compared to those in the fourth quarter of 2023.

 

 

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

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

TABLE 11. NON-PERFORMING ASSETS

 

(unaudited, dollars in thousands)

 

June 30,
2024

 

 

December 31,
2023

 

Non-performing loans:

 

 

 

 

 

 

Commercial real estate - land and construction

 

$

184

 

 

$

 

Commercial real estate - improved property

 

 

16,756

 

 

 

9,557

 

Commercial and industrial

 

 

2,058

 

 

 

1,841

 

Residential real estate

 

 

11,005

 

 

 

10,582

 

Home equity

 

 

5,401

 

 

 

4,777

 

Consumer

 

 

64

 

 

 

51

 

Total non-performing loans

 

$

35,468

 

 

$

26,808

 

Other real estate owned and repossessed assets

 

 

1,328

 

 

 

1,497

 

Total non-performing assets

 

$

36,796

 

 

$

28,305

 

Non-performing loans/total portfolio loans

 

 

0.29

%

 

 

0.23

%

Non-performing assets/total assets

 

 

0.20

%

 

 

0.16

%

Non-performing assets/total portfolio loans, other real estate and repossessed assets

 

 

0.30

%

 

 

0.24

%

 

As of the adoption of ASU 2022-02, non-performing loans consist only of non-accrual loans. Non-performing loans increased $8.7 million or 32.3% from December 31, 2023. (Please see the Notes to the Consolidated Financial Statements for additional discussion).

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

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

 

(unaudited, dollars in thousands)

 

June 30,
2024

 

 

December 31,
2023

 

Loans past due 90 days or more:

 

 

 

 

 

 

Commercial real estate - land and construction

 

$

 

 

$

 

Commercial real estate - improved property

 

 

1,296

 

 

 

1,899

 

Commercial and industrial

 

 

2,979

 

 

 

3,184

 

Residential real estate

 

 

3,089

 

 

 

2,602

 

Home equity

 

 

1,417

 

 

 

1,407

 

Consumer

 

 

390

 

 

 

546

 

Total loans past due 90 days or more

 

 

9,171

 

 

 

9,638

 

Loans past due 30 to 89 days:

 

 

 

 

 

 

Commercial real estate - land and construction

 

 

 

 

 

 

Commercial real estate - improved property

 

 

4,532

 

 

 

7,476

 

Commercial and industrial

 

 

2,139

 

 

 

1,834

 

Residential real estate

 

 

4,226

 

 

 

3,093

 

Home equity

 

 

4,790

 

 

 

5,461

 

Consumer

 

 

4,640

 

 

 

5,011

 

Total loans past due 30 to 89 days

 

 

20,327

 

 

 

22,875

 

Total loans 30 days or more past due

 

$

29,498

 

 

$

32,513

 

Loans past due 90 days or more and accruing to total portfolio loans

 

 

0.07

%

 

 

0.08

%

Loans past due 30-89 days and accruing to total portfolio loans

 

 

0.17

%

 

 

0.20

%

Loans past due 30 days or more and accruing interest, excluding non-accruals, decreased $3.0 million or 9.3% from December 31, 2023. These loans continue to accrue interest because they are both well-secured and in the process of collection. Loans 90 days or more past due decreased $0.5 million and represented 0.07% of total portfolio loans at June 30, 2024 and 0.08% at December 31, 2023. Loans 30 to 89 days past due represented 0.17% of total portfolio loans at June 30, 2024 and 0.20% at December 31, 2023.

48


 

ALLOWANCE FOR CREDIT LOSSES - LOANS AND LOAN COMMITMENTS

As of June 30, 2024, the total allowance for credit losses – loans and commitments was $145.7 million, of which $136.5 million related to loans and $9.2 million related to loan commitments. The allowance for credit losses – loans was 1.11% of total portfolio loans as of June 30, 2024, compared to 1.12% as of December 31, 2023. Excluded from the allowance for credit losses and related coverage ratio are fair market value adjustments on previously acquired loans representing 0.10% of total portfolio loans at June 30, 2024. The allowance for credit losses – loans individually-evaluated increased $3.0 million from December 31, 2023 to June 30, 2024. The population of individually-evaluated loans consisted of seven loans, with a total outstanding loan balance of $40.4 million. The allowance for loans collectively-evaluated increased from December 31, 2023 to June 30, 2024 by $2.8 million. The allowance for credit losses- loan commitments was $9.2 million at June 30, 2024 as compared to $8.6 million as of December 31, 2023, and is included in other liabilities on the Consolidated Balance Sheets.

The allowance for credit losses by loan category, presented in Note 4, “Loans and the Allowance for Credit Losses” of the Consolidated Financial Statements, summarizes the impact of changes in various factors that affect the allowance for loan losses in each segment of the portfolio. The allowance for credit losses under CECL is calculated utilizing the probability of default (“PD”)/ loss given default (“LGD”), which is then discounted to net present value. PD is the probability the asset will default within a given time frame and LGD is the percentage of the asset not expected to be collected due to default. The primary macroeconomic drivers of the quantitative model include forecasts of national unemployment and interest rates, as well as modeling adjustments for changes in prepayment speeds, loan risk grades, portfolio mix, concentrations and loan growth. For the calculation as of June 30, 2024, the forecast was based upon a probability weighted approach which is designed to incorporate loss projections from a baseline, upside and downside economy. Due to the nonlinearity of credit losses to the economy, the asymmetry is best captured by evaluating multiple economic scenarios through a probability weighted approach. At quarter-end, national unemployment was projected to be 4.4%, and subsequently increase to an average of 4.8% over the remainder of the forecast period. Quarterly changes to the economic drivers of the quantitative model, including changes to the portfolio mix as well as a specific reserve on one C&I credit and an increase in net charge-offs caused the allowance for credit losses - loans to increase from December 31, 2023 to June 30, 2024 by $5.8 million.

Criticized and classified loans were 2.15% of total portfolio loans, or $263.4 million, at June 30, 2024, decreasing from 2.22% of total portfolio loans at December 31, 2023. See Note 4, “Loans and the Allowance for Credit Losses” for more information.

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

 

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

 

(unaudited, dollars in thousands)

 

June 30,
2024

 

 

Percent of
Total

 

 

December 31,
2023

 

 

Percent of
Total

 

Allowance for credit losses - loans:

 

 

 

 

 

 

 

 

 

 

 

 

Commercial real estate - land and construction

 

$

7,826

 

 

 

5.4

 

 

$

7,123

 

 

 

5.1

 

Commercial real estate - improved property

 

 

58,577

 

 

 

40.1

 

 

 

59,351

 

 

 

42.7

 

Commercial and industrial

 

 

41,405

 

 

 

28.4

 

 

 

36,644

 

 

 

26.3

 

Residential real estate

 

 

22,403

 

 

 

15.4

 

 

 

21,218

 

 

 

15.2

 

Home equity

 

 

1,104

 

 

 

0.8

 

 

 

1,017

 

 

 

0.7

 

Consumer

 

 

3,643

 

 

 

2.5

 

 

 

3,956

 

 

 

2.8

 

Deposit account overdrafts

 

 

1,551

 

 

 

1.1

 

 

 

1,366

 

 

 

1.0

 

Total allowance for credit losses - loans

 

$

136,509

 

 

 

93.7

 

 

$

130,675

 

 

 

93.8

 

Allowance for credit losses - loan commitments:

 

 

 

 

 

 

 

 

 

 

 

 

Commercial real estate - land and construction

 

$

7,940

 

 

 

5.4

 

 

$

6,894

 

 

 

5.0

 

Commercial real estate - improved property

 

 

 

 

 

 

 

 

 

 

 

 

Commercial and industrial

 

 

 

 

 

 

 

 

429

 

 

 

0.3

 

Residential real estate

 

 

1,254

 

 

 

0.9

 

 

 

1,276

 

 

 

0.9

 

Home equity

 

 

 

 

 

 

 

 

5

 

 

 

 

Consumer

 

 

 

 

 

 

 

 

 

 

 

 

Total allowance for credit losses - loan commitments

 

 

9,194

 

 

 

6.3

 

 

 

8,604

 

 

 

6.2

 

Total allowance for credit losses - loans and loan commitments

 

$

145,703

 

 

 

100.0

 

 

$

139,279

 

 

 

100.0

 

 

Although the allowance for credit losses is allocated as described in Table 13, the total allowance is available to absorb actual losses in any category of the loan portfolio. However, differences between management’s estimation of probable losses and actual net charge-offs in subsequent periods for any category may necessitate future adjustments to the allowance for credit losses applicable to the category. Management believes the allowance for credit losses is appropriate to absorb expected losses at June 30, 2024.

49


 

DEPOSITS

TABLE 14. DEPOSITS

 

(unaudited, dollars in thousands)

 

June 30,
2024

 

 

December 31,
2023

 

 

$ Change

 

 

% Change

 

Deposits

 

 

 

 

 

 

 

 

 

 

 

 

Non-interest bearing demand

 

$

3,826,249

 

 

$

3,962,592

 

 

$

(136,343

)

 

 

(3.4

)

Interest bearing demand

 

 

3,505,651

 

 

 

3,463,443

 

 

 

42,208

 

 

 

1.2

 

Money market

 

 

2,283,294

 

 

 

2,017,713

 

 

 

265,581

 

 

 

13.2

 

Savings deposits

 

 

2,429,241

 

 

 

2,493,254

 

 

 

(64,013

)

 

 

(2.6

)

Certificates of deposit

 

 

1,387,938

 

 

 

1,231,702

 

 

 

156,236

 

 

 

12.7

 

Total deposits

 

$

13,432,373

 

 

$

13,168,704

 

 

$

263,669

 

 

 

2.0

 

 

Deposits, which represent Wesbanco’s primary source of funds, are offered in various account forms at various rates through Wesbanco’s 192 financial centers. The FDIC insures deposits up to $250,000 per account owner.

 

Total deposits increased $263.7 million or 2.0% during the first six months of 2024. Money market deposit accounts increased 13.2%, which was partially offset by savings deposits and demand deposits decreasing 2.6% and 1.3%, respectively. The net increase in deposits reflects the benefit of deposit gathering and retention efforts by both retail and commercial teams. The composition of total deposits continues to have a shift in the mix, reflecting the impact of the significant increase in the federal funds rate. Deposit balances were also impacted by bonus and royalty payments for Marcellus and Utica shale gas payments from energy companies in Wesbanco’s southwestern Pennsylvania, eastern Ohio and northern West Virginia markets. In addition, Wesbanco also participates in the Insured Cash Sweep (ICS®) deposit program. ICS® reciprocal balances totaled $1.1 billion and $1.0 billion at June 30, 2024 and December 31, 2023, respectively. In addition, ICS® one-way buys totaled $200.7 million and $200.6 million at June 30, 2024 and December 31, 2023, respectively.

Certificates of deposit increased 12.7% from December 31, 2023 to June 30, 2024. Wesbanco does not generally solicit brokered or other deposits out-of-market or over the internet, but does participate in the Certificate of Deposit Account Registry Services (CDARS®) program. CDARS® balances totaled $44.8 million in outstanding balances at June 30, 2024, none of which represented one-way buys, compared to $48.4 million in total outstanding balances, of which $10.6 million represented one-way buys, at December 31, 2023. Certificates of deposit greater than $250,000 were approximately $282.0 million at June 30, 2024 compared to $223.4 million at December 31, 2023. Certificates of deposit totaling approximately $1.2 billion at June 30, 2024 with a cost of 3.92% are scheduled to mature within the next 12 months. From time to time, the Bank may offer special promotions or match competitor rates on certain certificates of deposit maturities and savings products based on competition, sales strategies, liquidity needs and wholesale borrowing costs.

 

BORROWINGS

TABLE 15. BORROWINGS

 

(unaudited, dollars in thousands)

 

June 30,
2024

 

 

December 31,
2023

 

 

$ Change

 

 

% Change

 

Federal Home Loan Bank Borrowings

 

$

1,475,000

 

 

$

1,350,000

 

 

$

125,000

 

 

 

9.3

 

Other short-term borrowings

 

 

105,757

 

 

 

105,893

 

 

 

(136

)

 

 

(0.1

)

Subordinated debt and junior subordinated debt

 

 

279,193

 

 

 

279,078

 

 

 

115

 

 

 

0.0

 

Total

 

$

1,859,950

 

 

$

1,734,971

 

 

$

124,979

 

 

 

7.2

 

 

While borrowings are a significant source of funding for Wesbanco, they are less significant as compared to total deposits. FHLB borrowings increased $125.0 million from December 31, 2023 to June 30, 2024, as $1.2 billion in new advances were partially offset by $1.1 billion in maturities. The average cost of maturing FHLB advances and new borrowings during the first six months of 2024 was 5.63%.

Other short-term borrowings, which may consist of federal funds purchased, repurchase agreements and overnight sweep checking accounts were $105.8 million at June 30, 2024, compared to $105.9 million at December 31, 2023. There were no outstanding federal funds purchased at either June 30, 2024 or December 31, 2023.

50


 

CAPITAL RESOURCES

 

Shareholders' equity increased $11.2 million or 0.4% from December 31, 2023, to $2.5 billion at June 30, 2024. The increase resulted from net income during the current six-month period of $64.6 million, exceeding the declaration of common and preferred shareholder dividends totaling $42.4 million and $5.1 million, respectively, and was partially offset by an $8.5 million other comprehensive loss for the six months ended June 30, 2024. Wesbanco also increased its quarterly dividend rate $0.01 per quarter to $0.36 per share in November 2023, representing a 2.9% increase over the prior quarterly rate and a cumulative 157% increase since 2010.

Wesbanco did not purchase any shares of its common stock on the open market during the three-month period ended June 30, 2024 under the current share repurchase authorization. At June 30, 2024, the remaining shares authorized to be purchased under the last approved repurchase plan totaled 972,440 shares.

Regulatory guidelines require bank holding companies and commercial banks to maintain certain minimum capital ratios and define companies as “well capitalized” that sufficiently exceed the minimum ratios. At June 30, 2024, regulatory capital levels for both the Bank and Wesbanco were substantially greater than the minimum amounts needed to be considered “well capitalized” under the regulations. There are various legal limitations under federal and state laws that limit the payment of dividends from the Bank to Wesbanco. As of June 30, 2024, under FDIC regulations, Wesbanco could receive, without prior regulatory approval, a dividend of approximately $169.5 million from the Bank.

 

On March 26, 2020, regulators issued interim financial rule (“IFR”) “Regulatory Capital Rule: Revised Transition of the Current Expected Losses Methodology for Allowances” in response to the disrupted economic activity from the spread of COVID-19. The IFR provides financial institutions that adopt CECL during 2020 with the option to delay for two years the estimated impact of CECL on regulatory capital, followed by a three-year transition period to phase out the aggregate amount of the capital benefit provided by the initial two-year delay (“five-year transition”). Wesbanco adopted CECL effective January 1, 2020 and elected to implement the five-year transition. Regulatory capital levels without the capital benefit at June 30, 2024 for both the Bank and Wesbanco would have continued to be greater than the amounts needed to be considered “well capitalized,” as the capital benefit approximated five to seven basis points for three of the four regulatory ratios, while total risk-based capital would have been slightly higher without the transition.

 

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

 

 

 

 

 

 

 

 

June 30, 2024

 

 

December 31, 2023

 

 

 

Minimum

 

Well-

 

 

 

 

 

 

 

Minimum

 

 

 

 

 

 

 

Minimum

 

(unaudited, dollars in thousands)

 

Value(1)

 

Capitalized(2)

 

 

Amount

 

Ratio

 

 

Amount(1)

 

 

Amount

 

Ratio

 

 

Amount(1)

 

Wesbanco, Inc.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Tier 1 leverage

 

 

4.00

%

 

5.00

%

 

$

1,661,933

 

 

9.72

%

 

$

684,234

 

 

$

1,647,759

 

 

9.87

%

 

$

667,914

 

Common equity Tier 1

 

 

4.50

%

 

6.50

%

 

 

1,517,449

 

 

10.58

%

 

 

645,554

 

 

 

1,503,275

 

 

10.99

%

 

 

615,420

 

Tier 1 capital to risk-weighted assets

 

 

6.00

%

 

8.00

%

 

 

1,661,933

 

 

11.58

%

 

 

860,739

 

 

 

1,647,759

 

 

12.05

%

 

 

820,560

 

Total capital to risk-weighted assets

 

 

8.00

%

 

10.00

%

 

 

2,072,344

 

 

14.45

%

 

 

1,147,651

 

 

 

2,039,252

 

 

14.91

%

 

 

1,094,080

 

Wesbanco Bank, Inc.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Tier 1 leverage

 

 

4.00

%

 

5.00

%

 

$

1,703,842

 

 

9.97

%

 

$

683,258

 

 

$

1,655,886

 

 

9.93

%

 

$

667,039

 

Common equity Tier 1

 

 

4.50

%

 

6.50

%

 

 

1,703,842

 

 

11.91

%

 

 

643,993

 

 

 

1,655,886

 

 

12.13

%

 

 

614,232

 

Tier 1 capital to risk-weighted assets

 

 

6.00

%

 

8.00

%

 

 

1,703,842

 

 

11.91

%

 

 

858,658

 

 

 

1,655,886

 

 

12.13

%

 

 

818,976

 

Total capital to risk-weighted assets

 

 

8.00

%

 

10.00

%

 

 

1,837,312

 

 

12.84

%

 

 

1,144,877

 

 

 

1,770,417

 

 

12.97

%

 

 

1,091,968

 

(1)
Minimum requirements to remain adequately capitalized.
(2)
Well-capitalized under prompt corrective action regulations.

51


 

LIQUIDITY RISK

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

Wesbanco determines the degree of required liquidity by the relationship of total holdings of liquid assets to potential funding needs to meet unexpected deposit losses and/or loan demands. The ability to quickly convert assets to cash at a minimal loss is a primary function of managing Wesbanco’s investment portfolio. Wesbanco believes its cash flow from the loan portfolio, the investment portfolio, and other sources, adequately meet its liquidity requirements. Wesbanco’s net loans to assets ratio was 66.9% at June 30, 2024 and deposit balances funded 74.1% of assets.

The following table lists the sources of liquidity from assets at June 30, 2024 expected within the next year:

 

(unaudited, in thousands)

 

 

 

Cash and cash equivalents

 

$

486,789

 

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

 

 

372,648

 

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

 

 

264,084

 

Loans held for sale

 

 

25,433

 

Accruing loans scheduled to mature

 

 

1,410,039

 

Normal loan repayments

 

 

1,448,047

 

Total sources of liquidity expected within the next year

 

$

4,007,040

 

(1)
Projected prepayments are based on current prepayment speeds.

Deposit cash flows are another principal factor affecting overall Wesbanco liquidity. Deposits totaled $13.4 billion at June 30, 2024. Deposit cash flows are impacted by current interest rates, products and rates offered by Wesbanco versus various forms of competition, as well as customer behavior. Certificates of deposit scheduled to mature within one year totaled $1.2 billion at June 30, 2024, with a weighted average cost of 3.92%, which includes jumbo regular certificates of deposit totaling $626.3 million with a weighted-average cost of 4.33%, and jumbo CDARS® certificates of deposit of $39.0 million with a weighted-average cost of 3.96%. Wesbanco had no brokered one-way buys at June 30, 2024.

Uninsured deposits, as reported for regulatory purposes, totaled $4.1 billion at June 30, 2024, or 30% of total deposits. Uninsured deposits include $1.5 billion of public funds deposits that are over the FDIC-insured limit. Wesbanco secures these public funds deposits by pledging investment securities with a market value at or above the deposit balance. Excluding these public funds, at June 30, 2024, uninsured deposits were $2.6 billion, or 19% of total deposits.

Wesbanco maintains a line of credit with the FHLB as an additional funding source. Available credit with the FHLB approximated $3.6 billion and $3.4 billion at June 30, 2024 and December 31, 2023, respectively. The FHLB requires securities to be specifically pledged to the FHLB and maintained in a FHLB-approved custodial arrangement if the member wishes to include such securities in the maximum borrowing capacity calculation. Wesbanco has elected not to specifically pledge to the FHLB unpledged securities. Wesbanco can also use this line of credit for pledging collateral to cover public funds deposits, as an alternative to pledging securities from the investment portfolio. At June 30, 2024, the Bank had unpledged available-for-sale securities with an estimated fair value of $277.7 million, or 13.6% of the total available-for-sale portfolio. A portion of these securities could be sold for additional liquidity, or such securities could be pledged to secure additional FHLB borrowings. Approximately 58% of the portfolio is pledged to public deposit customers, as public deposit balances have increased significantly through the several acquisitions made since 2015. As a result of this growth, Wesbanco is monitoring exposure to public funds deposits in relation to pledging requirements and providing insured cash sweep ("ICS") deposits via IntraFi® as a solution for a portion of new and existing public fund depositors. In addition, at June 30, 2024, the Bank had unpledged held-to-maturity securities with an estimated fair value of $751.1 million. Approximately 96%, or $722.4 million of these securities are municipal securities, which can only be pledged in limited circumstances. Generally, these securities cannot be sold without tainting the remainder of the held-to-maturity portfolio. If tainting occurs, all remaining securities with the held-to-maturity designation would be required to be reclassified as available-for-sale, and the held-to-maturity designation would not be available to Wesbanco for a period of time.

Wesbanco participates in the Federal Reserve Bank’s Borrower-in-Custody Program (“BIC”) whereby Wesbanco pledges certain consumer loans as collateral for borrowings. Wesbanco did not have any BIC borrowings outstanding at June 30, 2024. Alternative funding sources may include the utilization of existing overnight lines of credit with third party banks totaling $235.0 million, none of which was outstanding at June 30, 2024, along with seeking other lines of credit, borrowings under repurchase agreement lines, increasing deposit rates to attract additional funds, accessing brokered deposits, or selling securities available-for-sale or certain types of loans.

Other short-term borrowings of $105.8 million at June 30, 2024 consisted of repurchase agreements or overnight sweep checking accounts for large commercial customers. Other short-term borrowings may also include federal funds purchased using the Federal Reserve's discount window or lines of credit with third party banks noted above. The overnight sweep checking accounts require U.S. Government securities to be pledged equal to or greater than the average deposit balance in the related customer accounts.

52


 

The principal sources of parent company liquidity are dividends from the Bank and $217.9 million in cash on hand. There are various legal limitations under federal and state laws that limit the payment of dividends from the Bank to the parent company. As of June 30, 2024, under FDIC and State of West Virginia regulations, Wesbanco could receive, without prior regulatory approval, dividends of approximately $169.5 million from the Bank. Management believes these are appropriate levels of cash for the parent company given the current environment. Management continuously monitors the adequacy of parent company cash levels and sources of liquidity through the use of metrics that relate current cash levels to historical and forecasted cash inflows and outflows.

Wesbanco had outstanding commitments to extend credit in the ordinary course of business approximating $5.0 billion and $4.7 billion at June 30, 2024 and December 31, 2023, respectively. On a historical basis, only a portion of these commitments will result in an outflow of funds. Please refer to Note 11, “Commitments and Contingent Liabilities” of the Consolidated Financial Statements and the “Loans and Credit Risk” section of this MD&A for additional information.

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

 

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

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

MARKET RISK

The primary objective of Wesbanco’s ALCO with direct oversight from the BOD is to maximize net interest income within established policy parameters. This objective is accomplished through the management of balance sheet composition and duration, market risk exposures arising from changing economic conditions as well as liquidity risk.

 

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

 

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

 

The earnings sensitivity simulation model projects changes in net interest income resulting from the effects of changes in interest rates. Forecasting changes in net interest income requires management to make certain assumptions regarding loan and security prepayment rates, call dates, changes to deposit product betas and non-maturity deposit decay rates, which may not necessarily reflect the manner in which actual cash flows, yields, and costs respond to changes in market interest rates. Assumptions are based on internally-developed models derived from institution specific data, current market rates and economic forecasts, and are internally back-tested and periodically reviewed by an independent third-party consultant. Key assumptions are reviewed quarterly and updated as deemed appropriate by management. No significant assumption changes were made this period. The net interest income sensitivity results presented in Table 1, “Net Interest Income Sensitivity,” assumes that the balance sheet composition of interest sensitive assets and liabilities existing at the end of the period remains constant over the period being measured (otherwise known as a "static" balance sheet) and also assumes that a particular change in interest rates is reflected immediately and parallel across all tenors of the yield curve, regardless of the duration of the maturity or re-pricing of specific assets and liabilities. Since the assumptions used in the model relative to changes in interest rates are uncertain, the simulation analysis may not be indicative of actual results, particularly in times of stress. In addition, this analysis does not consider actions that management might employ in the future in response to changes in interest rates, as well as changes in earning asset and costing liability balances.

 

Interest rate risk policy limits are determined by measuring the anticipated change in net interest income over a twelve-month period, assuming immediate and sustained market interest rate increases and decreases of 100 - 400 basis points across the entire yield curve, as compared to a flat rate environment or base model. Wesbanco’s current policy limits this exposure for the noted interest rate changes to a reduction of between 7.5% - 20%, or less, of net interest income from the stable rate base model over a twelve-month period. The table below indicates Wesbanco’s interest rate sensitivity at June 30, 2024 and December 31, 2023, assuming the above-noted interest rate changes, as compared to a base model.

 

TABLE 1. NET INTEREST INCOME SENSITIVITY

 

Immediate Change in

 

Percentage Change in

 

 

Interest Rates

 

Net Interest Income from Base over One Year

 

ALCO

(basis points)

 

June 30, 2024

 

December 31, 2023

 

Guidelines

+200

 

4.1%

 

3.3%

 

(10.0%)

+100

 

3.5%

 

3.0%

 

(7.5%)

-100

 

(3.3%)

 

(3.0%)

 

(7.5%)

-200

 

(7.5%)

 

(7.0%)

 

(10.0%)

-300

 

(12.4%)

 

(11.5%)

 

(15.0%)

-400

 

(17.2%)

 

(16.3%)

 

(20.0%)

Net interest income sensitivity changes are due to the impact of the current rate and yield curve environment on base case net interest income and the related calculation of immediate parallel rate shock changes in rising and falling rate scenarios. Additional differences typically result from changes in the various earning assets and costing liabilities mix and growth rates, as well as periodic updates of various modeling assumptions. Generally, interest bearing non-maturity deposit betas utilized in modeling have increased to 40% in up shocks and 30% in down shocks as the banking industry continues to remain in a high interest rate environment where funding cost pressures have persisted over the past year. Deposit betas, decay rates and loan prepayment speeds are adjusted periodically, but no less than annually in our models for non-maturity deposits and loans. Indicated model asset sensitivity in rising rate scenarios may be less than anticipated due to slower prepayment speeds, rate floors, below forecast loan yields, spread compression between new asset yields and funding costs, customer requests for negotiated rates, mortgage-related extension risk and other factors. In a decreasing rate environment, asset sensitivity may have greater impact on the margin than currently modeled as prepayment speeds increase, customers refinance or request rate reductions on existing loans, estimated deposit betas do not perform as modeled, or for other reasons not listed.

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In addition to the aforementioned parallel rate shock earnings sensitivity simulation model, the ALCO also reviews a “dynamic” forecast scenario to project Wesbanco's "most likely" net interest income over a rolling two-year time period. This forecast is updated at least quarterly, incorporating revisions and updated assumptions into the model for estimated loan and deposit growth, expected balance sheet re-mixing strategies, changes in forecasted interest rates for various indices and yield curves, competitive market spreads for various products and other assumptions not listed. Such modeling is directionally consistent with typical parallel rate shock scenarios, and it assists in predicting changes in forecasted outcomes and potential adjustments to management plans to assist in achieving earnings goals.

Wesbanco also periodically measures the economic value of equity (“EVE”), which is defined as the market value of tangible equity in various rate scenarios. Generally, changes in the economic value of equity relate to changes in various assets and liabilities, changes in the yield curve, as well as changes in loan prepayment speeds and deposit decay rates. The following table presents these results and Wesbanco’s policy limits as of June 30, 2024 and December 31, 2023. Changes in EVE sensitivity since year-end 2023 relate to the change in market interest rates and their impact upon the fair values of earning assets and costing liabilities.

 

Immediate Change in

 

Percentage Change in

 

 

Interest Rates

 

Economic Value of Equity from Base over One Year

 

ALCO

(basis points)

 

June 30, 2024

 

December 31, 2023

 

Guidelines

+200

 

2.8%

 

0.3%

 

(20.0%)

+100

 

4.1%

 

2.6%

 

(10.0%)

-100

 

(2.9%)

 

(2.8%)

 

(10.0%)

-200

 

(7.8%)

 

(8.0%)

 

(20.0%)

-300

 

(15.8%)

 

(16.5%)

 

(30.0%)

-400

 

(26.8%)

 

(28.0%)

 

(40.0%)

 

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

 

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

adjusting the percentage of sales of longer-term residential mortgage loan production into the secondary market;

managing rates on interest bearing deposits and growing demand deposit account types to increase the relative portion of these account types to total deposits;

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

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

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

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

 

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ITEM 4. CONTROLS AND PROCEDURES

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

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

CHANGES IN INTERNAL CONTROLS— There were no changes in Wesbanco's internal control over financial reporting that occurred during our fiscal quarter ended June 30, 2024 as required to be reported by paragraph (d) of Rules 13a-15 and 15d-15 under the Securities Exchange Act of 1934, that materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.

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PART II – OTHER INFORMATION

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

ITEM 1A. RISK FACTORS

In light of its entrance into the Merger Agreement and the transactions contemplated thereby, Wesbanco is supplementing its risk factors contained in Item 1A of its Annual Report on Form 10-K for the year ended December 31, 2023, as filed with the Securities and Exchange Commission on February 26, 2024 (“Annual Report”). The following risk factors should be read in conjunction with the risk factors contained in our Annual Report on Form 10-K. Any of the risks described in our Annual Report, as well as any of the risks described below, could materially adversely affect our business, financial condition and results of operations. Additional risks and uncertainties that are not presently known to us or that we deem immaterial may also adversely impact our business or financial results. Except as set forth below, there are no material changes related to risk factors from the risk factors described in Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2023.

Risks Relating to the Merger

Although we expect that our pending acquisition of Premier Financial will result in cost savings, synergies and other benefits, the combined company may not realize those benefits because of integration difficulties and other challenges.

The success of our acquisition of Premier Financial will depend in large part on the success of the management of the combined company in integrating the operations, strategies, technologies and personnel of the two companies following the completion of the Merger. The combined company may fail to realize some or all of the anticipated benefits of the Merger if the integration process takes longer than expected or is more costly than expected. The failure of the combined company to meet the challenges involved in successfully integrating the operations of the two companies or to otherwise realize any of the anticipated benefits of the Merger, including additional cost savings and synergies, could impair the operations of the combined company. In addition, we anticipate that the overall integration of Premier Financial will be a time-consuming and expensive process that, without proper planning and effective and timely implementation, could significantly disrupt the combined company’s business.

Potential difficulties the combined company may encounter in the integration process include the following:

the integration of management teams, strategies, technologies and operations, products and services;
the disruption of ongoing businesses and distraction of their respective management teams from ongoing business concerns;
the retention of and possible decrease in business from the existing customers of both companies;
the creation of uniform standards, controls, procedures, policies and information systems;
the reduction of the costs associated with each company’s operations;
the integration of corporate cultures and maintenance of employee morale;
the retention of key employees; and
potential unknown liabilities associated with the Merger.

The anticipated cost savings, synergies and other benefits of the Merger assume a successful integration of the companies and are based on projections and other assumptions, which are inherently uncertain. Even if integration is successful, anticipated cost savings, synergies and other benefits may not be achieved.

We have incurred, and will incur, significant transaction-related costs in connection with the Merger.

We have incurred and will incur substantial expenses in connection with the negotiation and completion of the transactions contemplated by the Merger Agreement, as well as the costs and expenses of filing, printing and mailing a joint proxy statement/prospectus, and filing and other fees to be paid to the SEC and other regulatory agencies in connection with the Merger. These fees and costs will be significant. In addition, we will incur significant costs with respect to the issuance and sale of shares of our common stock to investors in a private placement (the “Private Placement”) pursuant to a Securities Purchase Agreement that is related to the Merger. If the Merger is not completed, we may have to recognize these expenses without realizing the expected benefits of the Merger.

In addition, we also expect to incur a number of non-recurring transaction-related costs associated with combining the operations of the two companies and achieving desired synergies. Additional unanticipated costs may be incurred in the integration of our business with the business of Premier Financial. There can be no assurance that the elimination of certain duplicative costs, as well as the realization of other efficiencies related to the integration of the two businesses, will offset the incremental transaction-related costs over time. Thus, any net benefit may not be achieved in the near term, the long term or at all.

57


 

Our pending acquisition of Premier Financial is subject to conditions, including certain conditions that may not be satisfied, and may not be completed on a timely basis, or at all. In addition, the Merger Agreement may be terminated in certain circumstances. Failure to complete the Merger could have material and adverse effects on us.

The completion of the Merger is subject to a number of conditions, which make the completion and timing of the completion of the Merger uncertain. In addition, the Merger Agreement may be terminated in certain circumstances. If the Merger is not completed on a timely basis, or at all, our ongoing business may be adversely affected and, without realizing any of the benefits of having completed the Merger, we and Premier Financial will be subject to a number of risks, including the following:

we will be required to pay certain costs relating to the Merger and the Private Placement, whether or not the Merger is completed, such as legal, accounting, financial advisor and printing fees;
under the Merger Agreement, we are subject to certain restrictions on the conduct of our respective businesses prior to completing the Merger, which may adversely affect our ability to execute certain of our respective business strategies;
time and resources committed by our management to matters relating to the Merger could otherwise have been devoted to pursuing other beneficial opportunities; and
the market price of our common stock could decline to the extent that the current market prices reflect a market assumption that the Merger will be completed

In addition, if the Merger is not completed, we may experience negative reactions from the financial markets and from our customers and employees. We also could be subject to litigation related to any failure to complete the Merger or to enforcement proceedings commenced against us to perform our obligations under the Merger Agreement. If the Merger is not completed, we cannot assure its shareholders that the risks described above will not materialize and will not adversely affect the business, financial results and market price of our Common Stock.

We are subject to business uncertainties and contractual restrictions while the Merger is pending, which could adversely affect our business and operations.

Under the terms of the Merger Agreement, we are subject to certain restrictions on the conduct of our business prior to completing the Merger, which may adversely affect our ability to execute certain of our business strategies. Such limitations could negatively affect our businesses and operations prior to the completion of the Merger. Furthermore, the process of planning to integrate two businesses and organizations for the post-Merger period can divert management attention and resources and could ultimately have an adverse effect on us.

In connection with the Merger, parties with which we do business may experience uncertainty associated with the Merger, including with respect to current or future business relationships with us or the combined business. It is possible that some customers, suppliers and other persons with whom we have a business relationship may delay or defer certain business decisions or might decide to seek to terminate, change or renegotiate their relationships with us as a result of the Merger, which could negatively affect our revenues, earnings and cash flows, as well as the market price of shares of our common stock, regardless of whether the Merger is completed.

The market price of our common stock may decline in the future as a result of the Merger.

The market price of our common stock may decline in the future as a result of the Merger for a number of reasons, including due to:

an unsuccessful integration of Premier Financial (including for the reasons set forth in the preceding risk factors); or
the failure of the combined company to achieve the perceived benefits of the Merger, including financial results, as rapidly as or to the extent anticipated by financial or industry analysts.

These factors are, to some extent, beyond our control. As a consequence, our shareholders could lose the value of their investment in our common stock.

 

 

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

As of June 30, 2024, Wesbanco had one active stock repurchase plan. It was approved by the Board of Directors on February 24, 2022 for 3.2 million shares and provides for shares to be repurchased for general corporate purposes, which may include a subsequent resource for potential acquisitions, shareholder dividend reinvestment and employee benefit plans. The timing, price and quantity of purchases are at the discretion of Wesbanco, and the plan may be discontinued or suspended at any time. The plan has 972,440 shares remaining for repurchase.

Other repurchases in the second quarter included those for Wesbanco's Employee Stock Ownership and 401(k) Plan and dividend reinvestment plans.

The following table presents the monthly share purchase activity during the quarter ended June 30, 2024:

Period

 

Total Number
 of Shares
Purchased
 (1)

 

 

Average
Price Paid
per Share

 

 

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

 

 

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

 

Balance at March 31, 2024

 

 

 

 

 

 

 

 

 

 

 

1,019,136

 

 

 

 

 

 

 

 

 

 

 

 

 

 

April 1, 2024 to April 30, 2024

 

 

31,770

 

 

$

29.51

 

 

 

 

 

 

1,019,136

 

May 1, 2024 to May 31, 2024

 

 

2,190

 

 

$

28.17

 

 

 

 

 

 

1,019,136

 

June 1, 2024 to June 30, 2024

 

 

49,473

 

 

$

28.87

 

 

 

46,696

 

 

 

972,440

 

Total

 

 

83,433

 

 

$

29.09

 

 

 

46,696

 

 

 

972,440

 

(1)
Total shares purchased consist of open market purchases transacted in the KSOP for employee benefit and dividend reinvestment plans.
(2)
Consists of open market purchases and shares purchased from employees for the payment of withholding taxes to facilitate a stock compensation transaction.

 

 

ITEM 5. OTHER INFORMATION

 

Securities Trading Plans of Directors and Executive Officers

During the three months ended June 30, 2024, none of our directors or executive officers adopted, modified or terminated any Rule 10b5-1 trading arrangement or any “non-Rule 10b5-1 trading arrangement, as those terms are defined in Item 408 of Regulation S-K.”
 

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ITEM 6. EXHIBITS

 

2.1

 

Agreement and Plan of Merger, dated July 25, 2024, by and among Wesbanco, Inc., Wesbanco Bank, Inc., Premier Financial Corp. and Premier Bank (incorporated by reference to Exhibit 2.1 of the Form 8-K filed by the Registrant with the Securities and Exchange Commission on July 26, 2024).

 

 

 

10.1

 

Wesbanco, Inc. Amended and Restated Incentive Bonus, Options and Restricted Stock Plan (incorporated by reference to Exhibit 10.1 of the Form 8-K filed by the Registrant with the Securities and Exchange Commission on April 18, 2024).

 

 

 

10.2

 

Form of Securities Purchase Agreement, dated July 25, 2024, by and among Wesbanco, Inc. and the other parties identified therein (incorporated by reference to Exhibit 10.1 of the Form 8-K filed by the Registrant with the Securities and Exchange Commission on July 26, 2024).

 

 

 

10.3

 

Form of Registration Rights Agreement, dated July 25, 2024, by and among Wesbanco, Inc. and the other parties identified therein (incorporated by reference to Exhibit 10.2 of the Form 8-K filed by the Registrant with the Securities and Exchange Commission on July 26, 2024).

 

 

 

31.1

 

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

 

 

 

31.2

 

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

 

 

 

32.1

 

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

 

 

 

101.INS

 

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

 

 

 

101.SCH

 

Inline XBRL Taxonomy Extension Schema with Embedded Linkbase Documents

 

 

 

104

 

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

 

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

 

WESBANCO, INC.

 

 

Date: August 1, 2024

/s/ Jeffrey H. Jackson

 

Jeffrey H. Jackson

 

President and Chief Executive Officer

(Principal Executive Officer)

 

 

Date: August 1, 2024

/s/ Daniel K. Weiss, Jr.

 

Daniel K. Weiss, Jr.

 

Senior Executive Vice President and Chief Financial Officer

 

(Principal Financial Officer)

 

61