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Loans and the Allowance for Credit Losses (Tables)

6 Months Ended

Jun. 30, 2018

Schedule of Recorded Investment in Loans by Category

The recorded investment in loans is presented in the Consolidated Balance Sheets net of deferred loan fees and costs, and discounts on purchased loans. The net deferred loan costs were $2.4 million and $1.6 million at June 30, 2018 and December 31, 2017, respectively. The unamortized discount on purchased loans from acquisitions was $31.4 million, including $11.9 million related to FTSB, and $21.9 million at June 30, 2018 and December 31, 2017, respectively.


*(unaudited, in thousands)*	June 30, 2018		December 31, 2017
Commercial real estate:
Land and construction	$	481,690	$	392,597
Improved property		2,707,645		2,601,851

Total commercial real estate		3,189,335		2,994,448

Commercial and industrial		1,294,488		1,125,327
Residential real estate		1,450,829		1,353,301
Home equity		535,653		529,196
Consumer		322,594		339,169

Total portfolio loans		6,792,899		6,341,441

Loans held for sale		12,053		20,320

Total loans	$	6,804,952	$	6,361,761

Summary of Changes in Allowance for Credit Losses

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, 2018 and 2017
	Commercial			Commercial
	Real Estate-			Real Estate-
	Land and			Improved			Commercial			Residential			Home						Deposit
*(unaudited, in thousands)*	Construction			Property			& Industrial			Real Estate			Equity			Consumer			Overdraft			Total
Balance at December 31, 2017:
Allowance for loan losses	$	3,117		$	21,166		$	9,414		$	3,206		$	4,497		$	3,063		$	821		$	45,284
Allowance for loan commitments		119			26			173			7			212			37			—			574

Total beginning allowance for credit losses		3,236			21,192			9,587			3,213			4,709			3,100			821			45,858

Provision for credit losses:
Provision for loan losses		1,465			(1,774	)		2,100			944			54			615			439			3,843
Provision for loan commitments		44			(8	)		2			2			(7	)		—			—			33

Total provision for credit losses		1,509			(1,782	)		2,102			946			47			615			439			3,876

Charge-offs		(136	)		(692	)		(616	)		(509	)		(672	)		(1,793	)		(541	)		(4,959	)
Recoveries		264			776			636			252			279			1,066			197			3,470

Net charge-offs		128			84			20			(257	)		(393	)		(727	)		(344	)		(1,489	)

Balance at June 30, 2018:
Allowance for loan losses		4,710			19,476			11,534			3,893			4,158			2,951			916			47,638
Allowance for loan commitments		163			18			175			9			205			37			—			607

Total ending allowance for credit losses	$	4,873		$	19,494		$	11,709		$	3,902		$	4,363		$	2,988		$	916		$	48,245

Balance at December 31, 2016:
Allowance for loan losses	$	4,348		$	18,628		$	8,412		$	4,106		$	3,422		$	3,998		$	760		$	43,674
Allowance for loan commitments		151			17			188			9			162			44			—			571

Total beginning allowance for credit losses		4,499			18,645			8,600			4,115			3,584			4,042			760			44,245

Provision for credit losses:
Provision for loan losses		1,039			558			1,552			39			466			970			444			5,068
Provision for loan commitments		14			1			(9	)		1			17			2			—			26

Total provision for credit losses		1,053			559			1,543			40			483			972			444			5,094

Charge-offs		—			(1,574	)		(1,205	)		(592	)		(293	)		(1,965	)		(611	)		(6,240	)
Recoveries		70			376			475			164			151			990			181			2,407

Net charge-offs		70			(1,198	)		(730	)		(428	)		(142	)		(975	)		(430	)		(3,833	)

Balance at June 30, 2017:
Allowance for loan losses		5,457			17,988			9,234			3,717			3,746			3,993			774			44,909
Allowance for loan commitments		165			18			179			10			179			46			—			597

Total ending allowance for credit losses	$	5,622		$	18,006		$	9,413		$	3,727		$	3,925		$	4,039		$	774		$	45,506

Allowance for Credit Losses and Recorded Investments in Loans

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


	Allowance for Credit Losses and Recorded Investment in Loans
	Commercial		Commercial
	Real Estate-		Real Estate-		Commercial		Residential						Deposit
	Land and		Improved		and		Real		Home				Over-
*(unaudited, in thousands)*	Construction		Property		Industrial		Estate		Equity		Consumer		draft		Total
June 30, 2018
Allowance for credit losses:
Allowance for loans individually evaluated for impairment	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Allowance for loans collectively evaluated for impairment		4,710		19,476		11,534		3,893		4,158		2,951		916		47,638
Allowance for loan commitments		163		18		175		9		205		37		—		607

Total allowance for credit losses	$	4,873	$	19,494	$	11,709	$	3,902	$	4,363	$	2,988	$	916	$	48,245

Portfolio loans:
Individually evaluated for impairment ⁽¹⁾	$	—	$	1,730	$	—	$	—	$	—	$	—	$	—	$	1,730
Collectively evaluated for impairment		479,526		2,699,410		1,293,708		1,449,729		535,629		322,594		—		6,780,596
Acquired with deteriorated credit quality		2,164		6,505		780		1,100		24		—		—		10,573

Total portfolio loans	$	481,690	$	2,707,645	$	1,294,488	$	1,450,829	$	535,653	$	322,594	$	—	$	6,792,899

December 31, 2017
Allowance for credit losses:
Allowance for loans individually evaluated for impairment	$	—	$	388	$	—	$	—	$	—	$	—	$	—	$	388
Allowance for loans collectively evaluated for impairment		3,117		20,778		9,414		3,206		4,497		3,063		821		44,896
Allowance for loan commitments		119		26		173		7		212		37		—		574

Total allowance for credit losses	$	3,236	$	21,192	$	9,587	$	3,213	$	4,709	$	3,100	$	821	$	45,858

Portfolio loans:
Individually evaluated for impairment ⁽¹⁾	$	—	$	3,344	$	—	$	—	$	—	$	—	$	—	$	3,344
Collectively evaluated for impairment		391,140		2,593,393		1,124,544		1,352,587		529,196		339,163		—		6,330,023
Acquired with deteriorated credit quality		1,457		5,114		783		714		—		6		—		8,074

Total portfolio loans	$	392,597	$	2,601,851	$	1,125,327	$	1,353,301	$	529,196	$	339,169	$	—	$	6,341,441

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

Summary of Commercial Loans by Risk Grade

The following tables summarize commercial loans by their assigned risk grade:


	Commerical 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, 2018
Pass	$	476,242	$	2,656,226	$	1,278,328	$	4,410,796
Criticized - compromised		2,728		27,809		3,508		34,045
Classified - substandard		2,720		23,610		12,652		38,982
Classified - doubtful		—		—		—		—

Total	$	481,690	$	2,707,645	$	1,294,488	$	4,483,823

As of December 31, 2017
Pass	$	386,753	$	2,548,805	$	1,110,267	$	4,045,825
Criticized - compromised		2,984		25,673		7,435		36,092
Classified - substandard		2,860		27,373		7,625		37,858
Classified - doubtful		—		—		—		—

Total	$	392,597	$	2,601,851	$	1,125,327	$	4,119,775

Summary of Changes in Accretable Yield for Loans Acquired with Deteriorated Credit Quality

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


	For the Six Months Ended
*(unaudited, in thousands)*	June 30, 2018			June 30, 2017
Balance at beginning of period	$	1,724		$	1,717
Acquisitions		—			—
Reduction due to change in projected cash flows		(86	)		—
Reclass from non-accretable difference		5,877			738
Transfers out		—			(216	)
Accretion		(440	)		(279	)

Balance at end of period	$	7,075		$	1,960

Summary of Age Analysis of Loan Categories

The following tables summarize the age analysis of all categories of loans:


	Age Analysis of Loans
*(unaudited, in thousands)*	Current		30-59 Days Past Due		60-89 Days Past Due		90 Days or More Past Due		Total Past Due		Total Loans		90 Days or More Past Due and Accruing ⁽¹⁾
As of June 30, 2018
Commercial real estate:
Land and construction	$	481,156	$	287	$	75	$	172	$	534	$	481,690	$	172
Improved property		2,697,718		1,408		165		8,354		9,927		2,707,645		250

Total commercial real estate		3,178,874		1,695		240		8,526		10,461		3,189,335		422
Commercial and industrial		1,290,411		744		435		2,898		4,077		1,294,488		219
Residential real estate		1,435,731		5,469		2,798		6,831		15,098		1,450,829		255
Home equity		529,625		1,593		1,232		3,203		6,028		535,653		477
Consumer		319,157		2,025		569		843		3,437		322,594		508

Total portfolio loans		6,753,798		11,526		5,274		22,301		39,101		6,792,899		1,881
Loans held for sale		12,053		—		—		—		—		12,053		—

Total loans	$	6,765,851	$	11,526	$	5,274	$	22,301	$	39,101	$	6,804,952	$	1,881

Impaired loans included above are as follows:
Non-accrual loans	$	8,525	$	1,316	$	1,734	$	20,406	$	23,456	$	31,981
TDRs accruing interest ⁽¹⁾		6,053		139		254		14		407		6,460

Total impaired	$	14,578	$	1,455	$	1,988	$	20,420	$	23,863	$	38,441

As of December 31, 2017
Commercial real estate:
Land and construction	$	392,189	$	—	$	172	$	236	$	408	$	392,597	$	—
Improved property		2,589,704		374		1,200		10,573		12,147		2,601,851		243

Total commercial real estate		2,981,893		374		1,372		10,809		12,555		2,994,448		243
Commercial and industrial		1,121,957		572		196		2,602		3,370		1,125,327		20
Residential real estate		1,338,240		4,487		2,376		8,198		15,061		1,353,301		1,113
Home equity		522,584		2,135		683		3,794		6,612		529,196		742
Consumer		334,723		2,466		842		1,138		4,446		339,169		608

Total portfolio loans		6,299,397		10,034		5,469		26,541		42,044		6,341,441		2,726
Loans held for sale		20,320		—		—		—		—		20,320		—

Total loans	$	6,319,717	$	10,034	$	5,469	$	26,541	$	42,044	$	6,361,761	$	2,726

Impaired loans included above are as follows:
Non-accrual loans	$	9,195	$	1,782	$	2,033	$	23,815	$	27,630	$	36,825
TDRs accruing interest ⁽¹⁾		6,055		348		168		—		516		6,571

Total impaired	$	15,250	$	2,130	$	2,201	$	23,815	$	28,146	$	43,396

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

Summary of Impaired Loans

The following tables summarize impaired loans:


	Impaired Loans
	June 30, 2018						December 31, 2017
	Unpaid Principal Balance⁽¹⁾		Recorded Investment		Related Allowance		Unpaid Principal Balance⁽¹⁾		Recorded Investment		Related Allowance

*(unaudited, in thousands)*
With no related specific allowance recorded:
Commercial real estate:
Land and construction	$	—	$	—	$	—	$	412	$	239	$	—
Improved property		15,521		10,889		—		18,229		12,863		—
Commercial and industrial		5,666		3,317		—		3,745		3,086		—
Residential real estate		20,312		18,379		—		20,821		18,982		—
Home equity		5,978		5,143		—		5,833		5,169		—
Consumer		875		713		—		1,084		952		—

Total impaired loans without a specific allowance		48,352		38,441		—		50,124		41,291		—

With a specific allowance recorded:
Commercial real estate:
Land and construction		—		—		—		—		—		—
Improved property		—		—		—		2,105		2,105		388
Commercial and industrial		—		—		—		—		—		—

Total impaired loans with a specific allowance		—		—		—		2,105		2,105		388

Total impaired loans	$	48,352	$	38,441	$	—	$	52,229	$	43,396	$	388

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


	Impaired Loans
	For the Three Months Ended								For the Six Months Ended
	June 30, 2018				June 30, 2017				June 30, 2018				June 30, 2017
	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized

*(unaudited, in thousands)*
With no related specific allowance recorded:
Commercial real estate:
Land and construction	$	400	$	—	$	411	$	—	$	346	$	—	$	529	$	—
Improved Property		10,604		23		11,118		23		11,357		368		10,125		369
Commercial and industrial		3,036		2		4,268		2		3,008		4		3,905		4
Residential real estate		18,264		61		17,787		66		18,434		127		17,959		135
Home equity		5,068		6		4,485		5		5,098		11		4,327		10
Consumer		758		2		733		1		823		5		737		3

Total impaired loans without a specific allowance		38,130		94		38,802		97		39,066		515		37,582		521

With a specific allowance recorded:
Commercial real estate:
Land and construction		—		—		—		—		—		—		—		—
Improved Property		1,052		—		5,999		—		1,403		—		5,003		—
Commercial and industrial		—		—		—		—		—		—		423		—

Total impaired loans with a specific allowance		1,052		—		5,999		—		1,403		—		5,426		—

Total impaired loans	$	39,182	$	94	$	44,801	$	97	$	40,469	$	515	$	43,008	$	521

Recorded Investment in Non-Accrual Loans and TDRs

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


	Non-accrual Loans ⁽¹⁾
*(unaudited, in thousands)*	June 30, 2018		December 31, 2017
Commercial real estate:
Land and construction	$	—	$	239
Improved property		9,479		13,318

Total commercial real estate		9,479		13,557

Commercial and industrial		3,191		2,958
Residential real estate		13,951		14,661
Home equity		4,726		4,762
Consumer		634		887

Total	$	31,981	$	36,825

⁽¹⁾

At June 30, 2018, there were two borrowers with loans greater than $1.0 million totaling $5.2 million, as compared to three borrowers with loans greater than $1.0 million totaling $6.8 million at December 31, 2017. Total non-accrual loans include loans that are also restructured. Such loans are also set forth in the following table as non-accrual TDRs.


	TDRs
	June 30, 2018						December 31, 2017
*(unaudited, in thousands)*	Accruing		Non-Accrual		Total		Accruing		Non-Accrual		Total
Commercial real estate:
Land and construction	$	—	$	—	$	—	$	—	$	3	$	3
Improved property		1,410		617		2,027		1,650		428		2,078

Total commercial real estate		1,410		617		2,027		1,650		431		2,081

Commercial and industrial		126		91		217		128		97		225
Residential real estate		4,428		1,516		5,944		4,321		1,880		6,201
Home equity		417		224		641		407		337		744
Consumer		79		66		145		65		120		185

Total	$	6,460	$	2,514	$	8,974	$	6,571	$	2,865	$	9,436

As of June 30, 2018 and December 31, 2017, there were no TDRs greater than $1.0 million. The concessions granted in the majority of loans reported as accruing and non-accrual TDRs are extensions of the maturity date or the amortization period, reductions in the interest rate below the prevailing market rate for loans with comparable characteristics, and/or permitting interest-only payments for longer than three months. WesBanco had unfunded commitments to debtors whose loans were classified as impaired of $0.3 million and $0.1 million as of June 30, 2018 and December 31, 2017, respectively.

Loans Identified as TDRs

The following tables present details related to loans identified as TDRs during the three and six months ended June 30, 2018 and 2017, respectively:


	New TDRs (1) For the Three Months Ended
	June 30, 2018						June 30, 2017
			Pre-		Post-				Pre-		Post-
			Modification		Modification				Modification		Modification
			Outstanding		Outstanding				Outstanding		Outstanding
	Number of		Recorded		Recorded		Number of		Recorded		Recorded
*(unaudited, dollars in thousands)*	Modification		Investment		Investment		Modifications		Investment		Investment
Commercial real estate:
Land and construction		—	$	—	$	—		—	$	—	$	—
Improved Property		—		—		—		—		—		—

Total commercial real estate		—		—		—		—		—		—

Commercial and industrial		1		9		9		—		—		—
Residential real estate		—		—		—		1		11		10
Home equity		1		20		20		1		44		44
Consumer		2		39		36		2		22		20

Total		4	$	68	$	65		4	$	77	$	74

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


	New TDRs (1)
	For the Six Months Ended
	June 30, 2018						June 30, 2017
			Pre-		Post-				Pre-		Post-
			Modification		Modification				Modification		Modification
			Outstanding		Outstanding				Outstanding		Outstanding
	Number of		Recorded		Recorded		Number of		Recorded		Recorded
*(unaudited, dollars in thousands)*	Modifications		Investment		Investment		Modifications		Investment		Investment
Commercial real estate:
Land and construction		—	$	—	$	—		—	$	—	$	—
Improved Property		—		—		—		—		—		—

Total commercial real estate		—		—		—		—		—		—

Commercial and industrial		1		10		9		2		125		120
Residential real estate		5		203		185		2		22		18
Home equity		1		20		20		1		45		44
Consumer		4		45		38		3		34		29

Total		11	$	278	$	252		8	$	226	$	211

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

The following table summarizes TDRs which defaulted (defined as past due 90 days) during the six months ended June 30, 2018 and 2017, respectively, that were restructured within the last twelve months prior to June, 2018 and 2017, respectively:


	Defaulted TDRs ⁽¹⁾
	For the Six Months Ended
	June 30, 2018				June 30, 2017
*(unaudited, dollars in thousands)*	Number of Defaults		Recorded Investment		Number of Defaults		Recorded Investment
Commercial real estate:
Land and construction		—	$	—		—	$	—
Improved property		1		145		—		—

Total commercial real estate		1		145		—		—

Commercial and industrial		—		—		—		—
Residential real estate		1		121		—		—
Home equity		1		7		—		—
Consumer		—		—		—		—

Total		3	$	273		—	$	—

⁽¹⁾	Excludes loans that were either charged-off or cured by period end. The recorded investment is as of June 30, 2018 and 2017, respectively.

Summary of Other Real Estate Owned and Repossessed Assets

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


*(unaudited, in thousands)*	June 30, 2018		December 31, 2017
Other real estate owned	$	4,334	$	5,195
Repossessed assets		50		102

Total other real estate owned and repossessed assets	$	4,384	$	5,297