NOTE 19. WESBANCO BANK COMMUNITY DEVELOPMENT CORPORATION

WesBanco Bank Community Development Corporation (“WBCDC”), a consolidated subsidiary of WesBanco Bank, is a Certified Development Entity (“CDE”) with $60.0 million of New Markets Tax Credits (“NMTC”) all of which had been invested in WBCDC at December 31, 2016. The NMTC program is administered by the Community Development Financial Institutions Fund of the U.S. Treasury and is aimed at stimulating economic and community development and job creation in low-income communities. The program provides federal tax credits to investors who make qualified equity investments (“QEIs”) in a CDE. The CDE is required to invest the proceeds of each QEI in low-income communities, which are generally defined as those census tracts with poverty rates greater than 20% and/or median family incomes that are less than or equal to 80% of the area median family income.

The credit provided to the investor totals 39% of each QEI in a CDE and is claimed over a seven-year credit allowance period. In each of the first three years, the investor receives a credit equal to 5% of the total amount the investor paid to the CDE for each QEI. For each of the remaining four years, the investor receives a credit equal to 6% of the total amount the investor paid to the CDE for each QEI. As of December 31, 2016, WesBanco has received $21.5 million in tax credits over the seven-year credit allowance periods for its $60.0 million NMTC authority invested in WBCDC. WesBanco is eligible to receive an additional $1.9 million in tax credits as set forth in the following table with respect to aggregate QEI amounts invested with a remaining seven-year credit allowance period.

WesBanco Bank recognized $1.8 million, $1.9 million and $2.3 million in NMTC in its income tax provision for the years ended December 31, 2016, 2015 and 2014, respectively. These tax credits are subject to certain general business tax credit limitations, as well as the alternative minimum tax, and are therefore limited in deductibility currently due to the applicability of alternative minimum tax on WesBanco’s federal income tax return. A total of $1.2 million of such NMTC have been carried forward to future tax years.


*(in thousands)*	Aggregate QEI Amount (1)		New Markets Tax Credit
Year	Aggregate QEI Amount (1)		2017		2018		2019
2011	$	5,000	$	300	$	—	$	—
2012		6,000		360		360		—
2013		5,000		300		300		300

Total	$	16,000	$	960	$	660	$	300

(1)	The seven-year credit allowance period has expired for $44.0 million in QEI investments in WBCDC.

The NMTC claimed by WesBanco Bank with respect to each QEI remain subject to recapture over each QEI’s credit allowance period upon the occurrence of any of the following:

•

if less than substantially all (generally defined as 85%) of the QEI proceeds are not used by WBCDC to make qualified low income community investments;

•

WBCDC ceases to be a CDE; or

•

WBCDC redeems its QEI investment prior to the end of the current credit allowance periods.

At December 31, 2016, 2015 and 2014, none of the above recapture events had occurred, nor in the opinion of management are such events anticipated to occur in the foreseeable future.

The following condensed financial statements summarize the financial position of WBCDC as of December 31, 2016, and the results of its operations and cash flows for the year ended December 31, 2016:

BALANCE SHEET


*(in thousands)*	December 31, 2016
Assets
Cash and due from banks	$	31,303
Loans, net of allowance for loan losses of $249		39,589
Investments		968
Other assets		286

Total Assets	$	72,146

Liabilities	$	274
Shareholder Equity		71,872

Total Liabilities and Shareholder Equity	$	72,146

STATEMENT OF INCOME


*(in thousands)*	For the year ended December 31, 2016
Interest income
Loans	$	1,383

Total interest income		1,383
Provision for loan losses		32

Net interest income after provision for loan losses		1,351
Loss on investments		(94	)
Non-interest expense		79

Income before provision for income taxes		1,178
Provision for income taxes		436

Net income	$	742

STATEMENT OF CASH FLOWS


*(in thousands)*	For the year ended December 31, 2016
Operating Activities
Net income	$	742
Provision for loan losses		32
Loss on investments		94
Net change in other assets		757
Net change in other liabilities		24

Net cash provided by operating activities		1,649

Investing Activities
Decrease in loans		3,337

Net cash provided by investing activities		3,337

Financing Activities
Qualified equity investment by parent company		—

Net cash provided by financing activities		—

Net increase in cash and cash equivalents		4,986
Cash and cash equivalents at beginning of year		26,317

Cash and cash equivalents at end of year	$	31,303