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Securities
 12 Months Ended
Dec. 31, 2020
Investments Debt And Equity Securities [Abstract]  
Securities

NOTE 4. SECURITIES

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

 

 

December 31, 2020

 

 

December 31, 2019

 

(in thousands)

Amortized

Cost

 

Gross

Unrealized

Gains

 

Gross

Unrealized

Losses

 

Estimated

Fair Value

 

 

Amortized

Cost

 

Gross

Unrealized

Gains

 

Gross

Unrealized

Losses

 

Estimated

Fair Value

 

Available-for-sale debt securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Treasury

$

39,975

 

$

7

 

$

—

 

$

39,982

 

 

$

32,790

 

$

47

 

$

(1

)

$

32,836

 

U.S. Government sponsored entities and

   agencies

 

204,109

 

 

7,715

 

 

(142

)

 

211,682

 

 

 

157,088

 

 

2,862

 

 

(322

)

 

159,628

 

Residential mortgage-backed securities

   and collateralized mortgage obligations

   of government sponsored entities and

   agencies

 

1,230,106

 

 

35,979

 

 

(1,348

)

 

1,264,737

 

 

 

1,803,268

 

 

18,850

 

 

(6,131

)

 

1,815,987

 

Commercial mortgage-backed securities

   and collateralized mortgage obligations

   of government sponsored entities and

   agencies

 

308,903

 

 

11,464

 

 

(269

)

 

320,098

 

 

 

187,268

 

 

3,270

 

 

(129

)

 

190,409

 

Obligations of states and political

   subdivisions

 

108,602

 

 

7,160

 

 

—

 

 

115,762

 

 

 

140,357

 

 

5,253

 

 

(1

)

 

145,609

 

Corporate debt securities

 

24,963

 

 

912

 

 

—

 

 

25,875

 

 

 

48,645

 

 

581

 

 

(137

)

 

49,089

 

Total available-for-sale debt securities

$

1,916,658

 

$

63,237

 

$

(1,759

)

$

1,978,136

 

 

$

2,369,416

 

$

30,863

 

$

(6,721

)

$

2,393,558

 

Held-to-maturity debt securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Government sponsored entities and

   agencies

$

7,779

 

$

265

 

$

—

 

$

8,044

 

 

$

9,216

 

$

30

 

$

(116

)

$

9,130

 

Residential mortgage-backed securities

   and collateralized mortgage obligations

   of government sponsored entities and

   agencies

 

89,151

 

 

3,251

 

 

—

 

 

92,402

 

 

 

122,937

 

 

1,031

 

 

(261

)

 

123,707

 

Obligations of states and political

   subdivisions

 

601,128

 

 

30,173

 

 

(59

)

 

631,242

 

 

 

686,376

 

 

20,475

 

 

(258

)

 

706,593

 

Corporate debt securities

 

33,154

 

 

3,341

 

 

—

 

 

36,495

 

 

 

33,224

 

 

1,869

 

 

—

 

 

35,093

 

Total held-to-maturity debt securities

$

731,212

 

$

37,030

 

$

(59

)

$

768,183

 

 

$

851,753

 

$

23,405

 

$

(635

)

$

874,523

 

Total debt securities

$

2,647,870

 

$

100,267

 

$

(1,818

)

$

2,746,319

 

 

$

3,221,169

 

$

54,268

 

$

(7,356

)

$

3,268,081

 

(1)

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

 

At December 31, 2020 and 2019 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 $10.1 million consist of investments in various mutual funds held in grantor trusts formed in connection with the Company’s deferred compensation plan, are recorded at fair value and totaled $13.0 and $12.3 million at December 31, 2020 and 2019, respectively.

Wesbanco adopted ASU 2017-12, “Targeted Improvements to Accounting for Hedging Activities” on January 1, 2019. Upon adoption, Wesbanco reclassified $67.3 million of callable held-to-maturity municipal debt securities to available-for-sale debt securities.

The following table presents the amortized cost and fair value of available-for-sale and held-to-maturity debt securities by contractual maturity at December 31, 2020.  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.

 

(in thousands)

 

Amortized Cost

 

 

Fair Value

 

Available-for-sale debt securities

 

 

 

 

 

 

 

 

Less than one year

 

$

52,867

 

 

$

52,943

 

1-5 years

 

 

159,663

 

 

 

167,823

 

5-10 years

 

 

367,366

 

 

 

380,117

 

Over 10 years

 

 

1,336,762

 

 

 

1,377,253

 

Total available-for-sale debt securities

 

$

1,916,658

 

 

$

1,978,136

 

Held-to-maturity debt securities

 

 

 

 

 

 

 

 

Less than one year

 

$

8,051

 

 

$

8,110

 

1-5 years

 

 

116,033

 

 

 

122,589

 

5-10 years

 

 

235,993

 

 

 

248,079

 

Over 10 years

 

 

371,135

 

 

 

389,405

 

Total held-to-maturity debt securities

 

$

731,212

 

 

$

768,183

 

Total debt securities

 

$

2,647,870

 

 

$

2,746,319

 

 

Securities with an aggregate fair value of $1.8 billion and $2.0 billion at December 31, 2020 and 2019, respectively, were pledged as security for public and trust funds, and securities sold under agreements to repurchase. Proceeds from the sale of available-for-sale securities were $226.1 million, $125.8 million and $82.1 million for the years ended December 31, 2020, 2019 and 2018, respectively. Net unrealized gains (losses) on available-for-sale securities included in accumulated other comprehensive income, net of tax, as December 31, 2020, 2019, and 2018 were $46.9 million, $20.7 million and ($21.5) 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 resulting from the adoption of ASU 2016-01 effective January 1, 2018 for the years ended December 31, 2020, 2019 and 2018, respectively.  All gains and losses presented in the table below are included in the net securities gains (losses) line item of the income statement.  For those equity securities relating to the key officer and director deferred compensation plan, the corresponding change in the obligation to the participant is recognized in employee benefits expense.

 

 

 

For the Years Ended December 31,

 

(in thousands)

 

2020

 

 

2019

 

 

2018

 

Debt securities:

 

 

 

 

 

 

 

 

 

 

 

 

Gross realized gains

 

$

3,816

 

 

$

1,497

 

 

$

128

 

Gross realized losses

 

 

(1,083

)

 

 

(981

)

 

 

(46

)

Net gains on debt securities

 

$

2,733

 

 

$

516

 

 

$

82

 

Equity securities:

 

 

 

 

 

 

 

 

 

 

 

 

Unrealized gains (losses) recognized on securities still held

 

$

1,541

 

 

$

1,226

 

 

$

(986

)

Net realized (losses) gains recognized on securities sold

 

 

(6

)

 

 

2,578

 

 

 

4

 

Net gains (losses) on equity securities

 

$

1,535

 

 

$

3,804

 

 

$

(982

)

Net securities gains (losses)

 

$

4,268

 

 

$

4,320

 

 

$

(900

)

 

 

On January 1, 2020, Wesbanco adopted CECL. Upon adoption, the Company recognized $0.2 million to opening retained earnings, which represents the CECL allowance as of January 1, 2020. The corporate and municipal bonds in Wesbanco’s held-to-maturity debt portfolio are analyzed quarterly to determine if an allowance for current expected credit losses is warranted. Wesbanco uses a database of historical financials of all corporate and municipal issuers and actual historic default and recovery rates on rated and non-rated transactions to estimate expected credit losses on an individual security basis. The expected credit losses are adjusted quarterly and are recorded in an allowance for expected credit losses on the balance sheet, which is deducted from the amortized cost basis of the held-to-maturity portfolio as a contra asset. The losses are recorded on the income statement in the provision for credit losses. Accrued interest receivable on held-to-maturity securities, which was $5.3 million as of December 31, 2020, 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 economical or governmental policies that could affect this assumption.

 

The following table provides a roll-forward of the allowance for credit losses on held-to-maturity securities for the year ended December 31, 2020:

 

 

Allowance for Credit Losses By Category

 

 

For the Year Ended December 31, 2020

 

 

 

 

 

Residential mortgage

 

 

 

 

 

 

 

 

 

 

 

 

 

 

-backed

 

 

 

 

 

 

 

 

 

 

 

 

 

 

securities and

 

 

 

 

 

 

 

 

 

 

 

 

 

 

collateralized

 

 

 

 

 

 

 

 

 

 

 

 

 

 

mortgage obligations

 

Obligations of

 

 

 

 

 

 

 

 

U.S. Government

 

of government

 

state and

 

Corporate

 

 

 

 

 

sponsored

 

sponsored entities

 

political

 

debt

 

 

 

 

(in thousands)

entities and agencies

 

and agencies

 

subdivisions

 

Securities

 

Total

 

Beginning balance at January 1, 2020

$

—

 

$

—

 

$

96

 

$

133

 

$

229

 

Current period provision

 

—

 

 

—

 

 

34

 

 

63

 

 

97

 

Write-offs

 

—

 

 

—

 

 

—

 

 

—

 

 

—

 

Recoveries

 

—

 

 

—

 

 

—

 

 

—

 

 

—

 

Ending balance at December 31, 2020

$

—

 

$

—

 

$

130

 

$

196

 

$

326

 

 

The following table provides 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 December 31, 2020:

 

 

 

December 31, 2020

 

 

 

Less than 12 months

 

 

12 months or more

 

 

Total

 

(dollars in thousands)

 

Fair

Value

 

 

Unrealized

Losses

 

 

# of

Securities

 

 

Fair

Value

 

 

Unrealized

Losses

 

 

# of

Securities

 

 

Fair

Value

 

 

Unrealized

Losses

 

 

# of

Securities

 

U.S. Treasury

 

$

—

 

 

$

—

 

 

 

—

 

 

$

—

 

 

$

—

 

 

 

—

 

 

$

—

 

 

$

—

 

 

 

—

 

U.S. Government sponsored

   entities and agencies

 

 

18,308

 

 

 

(142

)

 

 

2

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

18,308

 

 

 

(142

)

 

 

2

 

Residential mortgage-backed

   securities and collateralized

   mortgage obligations of

   government sponsored entities

   and agencies

 

 

224,448

 

 

 

(1,227

)

 

 

41

 

 

 

4,136

 

 

 

(121

)

 

 

3

 

 

 

228,584

 

 

 

(1,348

)

 

 

44

 

Commercial mortgage-backed

   securities and collateralized

   mortgage obligations of

   government sponsored entities

   and agencies

 

 

97,266

 

 

 

(269

)

 

 

10

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

97,266

 

 

 

(269

)

 

 

10

 

Obligations of states and political

   subdivisions

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

Corporate debt securities

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

Total temporarily impaired

   securities

 

$

340,022

 

 

$

(1,638

)

 

 

53

 

 

$

4,136

 

 

$

(121

)

 

 

3

 

 

$

344,158

 

 

$

(1,759

)

 

 

56

 

 

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, and 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 FHLB of Pittsburgh, Cincinnati and Indianapolis stock totaling $34.0 million and $66.8 million at December 31, 2020 and 2019, 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.

The following table provides information on unrealized losses on held-to-maturity and available-for-sale debt securities that have been in an unrealized loss position for less than twelve months and twelve months or more as of December 31, 2019, prior to the date of adoption of the credit loss standard, and as defined by the previous accounting guidance in effect at that time:

 

 

 

December 31, 2019

 

 

 

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 Treasury

 

$

1,499

 

 

$

(1

)

 

 

1

 

 

$

—

 

 

$

—

 

 

 

—

 

 

$

1,499

 

 

$

(1

)

 

 

1

 

U.S. Government sponsored

   entities and agencies

 

 

57,650

 

 

 

(274

)

 

 

25

 

 

 

6,593

 

 

 

(164

)

 

 

2

 

 

 

64,243

 

 

 

(438

)

 

 

27

 

Residential mortgage-backed

   securities and collateralized

   mortgage obligations of

   government sponsored entities

   and agencies

 

 

544,692

 

 

 

(3,725

)

 

 

116

 

 

 

272,884

 

 

 

(2,667

)

 

 

122

 

 

 

817,576

 

 

 

(6,392

)

 

 

238

 

Commercial mortgage-backed

   securities and collateralized

   mortgage obligations of

   government sponsored entities

   and agencies

 

 

43,123

 

 

 

(124

)

 

 

7

 

 

 

3,704

 

 

 

(5

)

 

 

2

 

 

 

46,827

 

 

 

(129

)

 

 

9

 

Obligations of states and political

   subdivisions

 

 

17,876

 

 

 

(122

)

 

 

22

 

 

 

4,413

 

 

 

(137

)

 

 

8

 

 

 

22,289

 

 

 

(259

)

 

 

30

 

Corporate debt securities

 

 

4,120

 

 

 

(44

)

 

 

1

 

 

 

4,926

 

 

 

(93

)

 

 

2

 

 

 

9,046

 

 

 

(137

)

 

 

3

 

Total temporarily impaired

   securities

 

$

668,960

 

 

$

(4,290

)

 

 

172

 

 

$

292,520

 

 

$

(3,066

)

 

 

136

 

 

$

961,480

 

 

$

(7,356

)

 

 

308