The recorded investment in loans is presented in the Consolidated Balance Sheets net of deferred loan fees and costs, and discounts on purchased loans. Net deferred loan costs were $4.2 million and $3.2 million at June 30, 2019 and December 31, 2018, respectively. The unamortized discount on purchased loans from acquisitions was $40.1 million at June 30, 2019, including $19.0 million related to FFKT, and $49.3 million at December 31, 2018.

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, 2019 and 2018
(unaudited, in thousands)	Commercial Real Estate - Land and Construction			Commercial Real Estate -Improved Property			Commercial & Industrial			Residential Real Estate			Home Equity			Consumer			Deposit Overdraft			Total
Balance at December 31, 2018
Allowance for loan losses	$	4,039		$	20,848		$	12,114		$	3,822		$	4,356		$	2,797		$	972		$	48,948
Allowance for loan commitments		169			33			262			12			226			39			—			741
Total beginning allowance for credit losses		4,208			20,881			12,376			3,834			4,582			2,836			972			49,689
Provision for credit losses:
Provision for loan losses		(538	)		1,459			1,309			124			423			333			1,119			4,229
Provision for loan commitments		18			(9	)		995			1			23			(3	)		—			1,025
Total provision for credit losses		(520	)		1,450			2,304			125			446			330			1,119			5,254
Charge-offs		—			(285	)		(1,025	)		(679	)		(673	)		(1,344	)		(860	)		(4,866	)
Recoveries		200			345			489			188			215			896			215			2,548
Net charge-offs		200			60			(536	)		(491	)		(458	)		(448	)		(645	)		(2,318	)
Balance at June 30, 2019
Allowance for loan losses		3,701			22,367			12,887			3,455			4,321			2,682			1,446			50,859
Allowance for loan commitments		187			24			1,257			13			249			36			—			1,766
Total ending allowance for credit losses	$	3,888		$	22,391		$	14,144		$	3,468		$	4,570		$	2,718		$	1,446		$	52,625

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

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
(unaudited, in thousands)	Commercial Real Estate- Land and Construction		Commercial Real Estate- Improved Property		Commercial and Industrial		Residential Real Estate		Home Equity		Consumer		Deposit Over- draft		Total
June 30, 2019
Allowance for credit losses:
Allowance for loans individually evaluated for impairment	$	—	$	1,479	$	11	$	12	$	8	$	1	$	—	$	1,511
Allowance for loans collectively evaluated for impairment		3,701		20,888		12,876		3,443		4,313		2,681		1,446		49,348
Allowance for loan commitments		187		24		1,257		13		249		36		—		1,766
Total allowance for credit losses	$	3,888	$	22,391	$	14,144	$	3,468	$	4,570	$	2,718	$	1,446	$	52,625

Portfolio loans:
Individually evaluated for impairment ⁽¹⁾	$	—	$	5,157	$	192	$	4,922	$	922	$	74	$	—	$	11,267
Collectively evaluated for impairment		482,804		3,381,541		1,299,528		1,627,047		589,381		335,654		—		7,715,955
Acquired with deteriorated credit quality		242		7,889		857		1,644		—		—		—		10,632
Total portfolio loans	$	483,046	$	3,394,587	$	1,300,577	$	1,633,613	$	590,303	$	335,728	$	—	$	7,737,854

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

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

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

WesBanco maintains an internal loan grading system to reflect the credit quality of commercial loans. Commercial loan risk grades are determined based on an evaluation of the relevant characteristics of each loan, assigned at the inception of each loan 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 reliability and sustainability of the primary source of repayment and overall financial strength of the borrower. This includes an analysis of cash flow available to repay debt, profitability, liquidity, leverage, and overall financial trends. Other factors include management, industry or property type risks, an assessment of secondary sources of repayment such as collateral or guarantees, other terms and conditions of the loan that may increase or reduce its risk, and economic conditions and other external factors that may influence repayment capacity and financial condition.

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 net rental income generated by the property to service the debt, the type, quality, industry and mix of tenants, and the terms of leases, but also considers the overall financial capacity of the investors and their experience in owning and managing investment property. The risk grade assigned to owner-occupied commercial real estate and commercial and industrial loans is based primarily on historical and projected earnings, the adequacy of operating cash flow to service all of the business’ debt, and the capital resources, liquidity and leverage of the business, but also considers the industry in which the business operates, the business’ specific competitive advantages or disadvantages, the quality and experience of management, and external influences on the business such as economic conditions. The type, age, condition, location and any environmental risks associated with a property are also considered for all types of commercial real estate.

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. Factors that are considered for C&I loans include the type, quality and marketability of non-real estate collateral and whether the structure of the loan increases or reduces its risk. The overall financial condition and repayment capacity of any guarantors is also evaluated to determine the extent to which they mitigate other risks of the loan. The following paragraphs provide descriptions of risk grades that are applicable to commercial real estate and commercial and industrial loans.

Pass loans are those that exhibit a history of positive financial results that are at least comparable to the average for their industry or type of real estate. The primary source of repayment is acceptable and these loans are expected to perform satisfactorily during most economic cycles. Pass loans typically have no significant external factors that are expected to adversely affect these borrowers more than others in the same industry or property type. Any minor unfavorable characteristics of these loans are outweighed or mitigated by other positive factors including but not limited to adequate secondary or tertiary sources of repayment.

Criticized or compromised loans are currently protected but have weaknesses, which, if not corrected, may be inadequately protected at some future date. These loans represent an unwarranted credit risk and would generally not be extended in the normal course of lending. Specific issues, which may warrant this grade, include declining financial results, increased reliance on secondary sources of repayment or guarantor support and adverse external influences that may negatively impact the business or property.

Substandard and doubtful loans are equivalent to the classifications used by banking regulators. Substandard loans are inadequately protected by the current repayment capacity and equity of the borrower or collateral pledged, if any. Substandard loans have one or more well-defined weaknesses that jeopardize their repayment or collection in full. These loans may or may not be reported as non-accrual. Doubtful loans have all the weaknesses inherent to a substandard loan with the added characteristic that full repayment is highly questionable or improbable on the basis of currently existing facts, conditions and collateral values, and are considered non-accrual. However, recognition of loss may be deferred if there are reasonably specific pending factors that will reduce the risk if they occur.

	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, 2019
Pass	$	476,109	$	3,319,270	$	1,268,591	$	5,063,970
Criticized - compromised		5,794		52,657		14,785		73,236
Classified - substandard		1,143		22,660		17,201		41,004
Classified - doubtful		—		—		—		—
Total	$	483,046	$	3,394,587	$	1,300,577	$	5,178,210

As of December 31, 2018
Pass	$	523,707	$	3,267,304	$	1,245,190	$	5,036,201
Criticized - compromised		2,297		35,566		13,847		51,710
Classified - substandard		2,068		22,753		6,423		31,244
Classified - doubtful		—		—		—		—
Total	$	528,072	$	3,325,623	$	1,265,460	$	5,119,155

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 $20.0 million at June 30, 2019 and $22.9 million at December 31, 2018, of which $2.0 and $3.9 million were accruing, for each period, respectively. The aggregate amount of residential real estate, home equity and consumer loans classified as substandard are not included in the tables above.

Acquired FFKT Loans – In conjunction with the FFKT acquisition, WesBanco acquired loans with a book value of $1,064.8 million as of August 20, 2018. These loans were recorded at the fair value of $1,025.8 million, with $988.3 million categorized as ASC 310-20 loans. The fair market value adjustment on these loans of $26.0 million at the acquisition date is expected to be recognized into interest income on a level yield basis over the remaining expected life of the loans. Loans acquired with deteriorated credit quality with a book value of $5.3 million were recorded at the fair value of $4.6 million, of which $2.4 million were accounted for under the cost recovery method in accordance with ASC 310-30 as cash flows cannot be reasonably estimated, and categorized as non-accrual. The carrying amount of loans acquired with deteriorated credit quality at June 30, 2019 was $3.1 million, while the outstanding customer balance was $3.6 million. At June 30, 2019, no allowance for loan losses has been recognized related to the FFKT-acquired impaired loans. Certain acquired underperforming loans with an acquired book value of $45.2 million were sold during the fourth quarter of 2018 for $32.9 million. The acquisition date fair value of the acquired loans was adjusted to the sale price resulting in no recognized gain or loss.

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

	Age Analysis of Loans
(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, 2019
Commercial real estate:
Land and construction	$	482,016	$	965	$	45	$	20	$	1,030	$	483,046	$	—
Improved property		3,382,311		2,297		1,486		8,493		12,276		3,394,587		587
Total commercial real estate		3,864,327		3,262		1,531		8,513		13,306		3,877,633		587
Commercial and industrial		1,296,878		922		142		2,635		3,699		1,300,577		97
Residential real estate		1,617,430		5,962		2,449		7,772		16,183		1,633,613		1,173
Home equity		584,058		2,073		412		3,760		6,245		590,303		533
Consumer		333,279		1,682		506		261		2,449		335,728		244
Total portfolio loans		7,695,972		13,901		5,040		22,941		41,882		7,737,854		2,634
Loans held for sale		18,649		—		—		—		—		18,649		—
Total loans	$	7,714,621	$	13,901	$	5,040	$	22,941	$	41,882	$	7,756,503	$	2,634

Impaired loans included above are as follows:
Non-accrual loans	$	9,310	$	1,170	$	2,169	$	20,249		23,588	$	32,898
TDRs accruing interest ⁽¹⁾		5,273		10		146		58		214		5,487
Total impaired	$	14,583	$	1,180	$	2,315	$	20,307	$	23,802	$	38,385

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

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

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

	Impaired Loans
	June 30, 2019						December 31, 2018
	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	$	347	$	295	$	—	$	—	$	—	$	—
Improved property		13,499		7,312		—		14,038		9,293		—
Commercial and industrial		4,086		2,854		—		4,610		3,428		—
Residential real estate		13,572		11,896		—		20,270		18,016		—
Home equity		5,247		4,450		—		5,924		5,036		—
Consumer		416		311		—		846		671		—
Total impaired loans without a specific allowance		37,167		27,118		—		45,688		36,444		—
With a specific allowance recorded:
Commercial real estate:
Land and construction		—		—		—		—		—		—
Improved property		5,211		5,157		1,479		—		—		—
Commercial and industrial		194		192		11		—		—		—
Residential real estate		5,358		4,922		12		—		—		—
Home equity		990		922		8		—		—		—
Consumer		113		74		1		—		—		—
Total impaired loans with a specific allowance		11,866		11,267		1,511		—		—		—
Total impaired loans	$	49,033	$	38,385	$	1,511	$	45,688	$	36,444	$	—

⁽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, 2019				June 30, 2018				June 30, 2019				June 30, 2018
	Average		Interest		Average		Interest		Average		Interest		Average		Interest
	Recorded		Income		Recorded		Income		Recorded		Income		Recorded		Income
(unaudited, in thousands)	Investment		Recognized		Investment		Recognized		Investment		Recognized		Investment		Recognized
With no related specific allowance recorded:
Commercial real estate:
Land and construction	$	290	$	—	$	400	$	—	$	193	$	—	$	346	$	—
Improved property		7,287		—		10,604		23		7,955		—		11,357		368
Commercial and industrial		2,961		—		3,036		2		3,116		—		3,008		4
Residential real estate		11,845		—		18,264		61		13,902		—		18,434		127
Home equity		4,487		—		5,068		6		4,670		—		5,098		11
Consumer		337		—		758		2		448		—		823		5
Total impaired loans without a specific allowance		27,207		—		38,130		94		30,284		—		39,066		515
With a specific allowance recorded:
Commercial real estate:
Land and construction		—		—		—		—		—		—		—		—
Improved property		3,645		14		1,052		—		2,430		28		1,403		—
Commercial and industrial		250		4		—		—		166		7		—		—
Residential real estate		5,000		60		—		—		3,333		118		—		—
Home equity		859		7		—		—		573		15		—		—
Consumer		89		1		—		—		59		2		—		—
Total impaired loans with a specific allowance		9,843		86		1,052		—		6,561		170		1,403		—
Total impaired loans	$	37,050	$	86	$	39,182	$	94	$	36,845	$	170	$	40,469	$	515

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

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

	TDRs
	June 30, 2019						December 31, 2018
(unaudited, in thousands)	Accruing		Non-Accrual		Total		Accruing		Non-Accrual		Total
Commercial real estate:
Land and construction	$	—	$	—	$	—	$	—	$	—	$	—
Improved property		743		558		1,301		880		1,529		2,409
Total commercial real estate		743		558		1,301		880		1,529		2,409
Commercial and industrial		192		—		192		168		169		337
Residential real estate		4,005		917		4,922		4,185		921		5,106
Home equity		486		436		922		426		198		624
Consumer		61		13		74		85		38		123
Total	$	5,487	$	1,924	$	7,411	$	5,744	$	2,855	$	8,599

As of June 30, 2019 and December 31, 2018, 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 $0.2 million and $0.1 million as of June 30, 2019 and December 31, 2018.

The following tables present details related to loans identified as TDRs during the three and six months ended June 30, 2019 and 2018, respectively:

	New TDRs (1)
	For the Three Months Ended
	June 30, 2019						June 30, 2018
			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		44		40		1		9		9
Residential real estate		—		—		—		—		—		—
Home equity		1		199		156		1		20		20
Consumer		—		—		—		2		39		36
Total		2	$	243	$	196		4	$	68	$	65

⁽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, 2019						June 30, 2018
			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		44		40		1		10		9
Residential real estate		4		194		188		5		203		185
Home equity		3		386		340		1		20		20
Consumer		1		15		13		4		45		38
Total		9	$	639	$	581		11	$	278	$	252

The following table summarizes TDRs which defaulted (defined as past due 90 days) during the six months ended June 30, 2019 and 2018, respectively, that were restructured within the last twelve months prior to June 30, 2019 and 2018, respectively:

⁽¹⁾Excludes loans that were either charged-off or cured by period end. The recorded investment is as of June 30, 2019 and 2018, respectively.

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

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

Residential real estate included in other real estate owned at June 30, 2019 and December 31, 2018 was $1.2 million and $1.3 million, respectively. At June 30, 2019 and December 31, 2018, formal foreclosure proceedings were in process on residential real estate loans totaling $5.8 million and $6.0 million, respectively.