Loans and the Allowance for Credit Losses

12 Months Ended

Dec. 31, 2020

Loans and the Allowance for Credit Losses

NOTE 5. 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 income (costs) were $6.2 million and ($4.8) million at December 31, 2020 and 2019, respectively. The December 31, 2020 balance included $13.8 million of net deferred income from PPP loans. The un-accreted discount on purchased loans from acquisitions was $39.4 million at December 31, 2020, including $2.4 million related to FTSB, $9.8 million related to FFKT and $22.1 million related to OLBK. The unaccreted discount was $51.9 million at December 31, 2019.

	December 31,		December 31,
(in thousands)	2020		2019
Commercial real estate:
Land and construction	$	668,277	$	777,151
Improved property		5,037,115		4,947,857
Total commercial real estate		5,705,392		5,725,008
Commercial and industrial		1,681,182		1,644,699
Commercial and industrial - PPP		726,256		—
Residential real estate		1,720,961		1,873,647
Home equity		646,387		649,678
Consumer		309,055		374,953
Total portfolio loans		10,789,233		10,267,985
Loans held for sale		168,378		43,013
Total loans	$	10,957,611	$	10,310,998

On January 1, 2020, Wesbanco adopted ASU 2016-13 (Topic 326), Measurement of Credit Losses on Financial Instruments. Upon adoption, the Company recognized $41.4 million as an increase to the allowance for credit losses, which represents the difference in the incurred allowance as of December 31, 2019 and the CECL allowance as of January 1, 2020. This adjustment includes a $6.7 million increase to the allowance related to PCD loans as of January 1, 2020. See Note 1, “Summary of Significant Accounting Policies” for the Company’s revised accounting policies related to Loans and Allowance for Credit Losses and adoption of this standard.

The allowance for credit losses under CECL is calculated utilizing the PD / 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 December 31, 2020, the one-year forecast was based upon a blended rate from two nationally-recognized published economic forecasts through December 31, 2020, and is primarily driven by the national unemployment and interest rate spread forecasts. Wesbanco’s blended forecast of national unemployment, at year end, was projected to peak at 6.6% in the first quarter, and subsequently decrease to an average of 6.2% over the remainder of the forecast period. The calculation utilized a one-year reversion period back to the Company’s historical loss rate by loan classification. Included in the qualitative factors were COVID-19 pandemic factors related to the transient credit risk not covered by the traditional allowance process, adjusted to Wesbanco’s regional footprint, deferred interest on modified loans, and hospitality industry concentration. Wesbanco made an accounting policy election to exclude accrued interest from the measurement of the allowance for credit losses because the Company has a robust policy in place to reverse or write-off accrued interest when loans are placed on non-accrual. However, Wesbanco does have a $0.3 million reserve on the accrued interest related to loan modifications allowed under the CARES Act due to the timing and nature of these modifications. As of December 31, 2020, accrued interest receivable for loans was $54.7 million, including $25.6 million related to COVID-19 loan modifications as permitted under the CARES Act.

The following tables summarize changes in the allowance for credit losses applicable to each category of the loan portfolio:

	For the Year Ended December 31, 2020
(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 beginning of year:
Allowance for credit losses - loans	$	4,949		$	20,293		$	14,116		$	4,311		$	4,422		$	2,951		$	1,387		$	52,429
Allowance for credit losses - loan commitments		235			22			311			15			250			41			—			874
Total beginning allowance for credit losses - loans and loan commitments		5,184			20,315			14,427			4,326			4,672			2,992			1,387			53,303
Impact of adopting ASC 326		1,524			13,078			22,357			5,630			(3,936	)		2,576			213			41,442
Provision for credit losses:
Provision for loan losses		6,929			78,210			3,918			9,065			1,234			2,980			(376	)		101,960
Provision for loan commitments		3,671			712			693			560			30			19			—			5,685
Total provision for credit losses - loans and loan commitments		10,600			78,922			4,611			9,625			1,264			2,999			(376	)		107,645
Charge-offs		(51	)		(1,747	)		(3,727	)		(1,415	)		(969	)		(3,615	)		(1,011	)		(12,535	)
Recoveries		92			796			1,457			640			501			1,574			426			5,486
Net recoveries (charge-offs)		41			(951	)		(2,270	)		(775	)		(468	)		(2,041	)		(585	)		(7,049	)
Balance at end of period:
Allowance for credit losses - loans		10,841			110,652			37,850			17,851			1,487			6,507			639			185,827
Allowance for credit losses - loan commitments		6,508			712			1,275			955			45			19			—			9,514
Total ending allowance for credit losses - loans and loan commitments	$	17,349		$	111,364		$	39,125		$	18,806		$	1,532		$	6,526		$	639		$	195,341

	For the Year Ended December 31, 2019
(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 beginning of year:
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		746			2,560			2,714			1,400			851			1,130			1,664			11,065
Provision for loan commitments		66			(11	)		49			3			24			2			—			133
Total provision for credit losses		812			2,549			2,763			1,403			875			1,132			1,664			11,198
Charge-offs		(107	)		(3,867	)		(1,816	)		(1,276	)		(1,213	)		(2,719	)		(1,659	)		(12,657	)
Recoveries		271			752			1,104			365			428			1,743			410			5,073
Net recoveries (charge-offs)		164			(3,115	)		(712	)		(911	)		(785	)		(976	)		(1,249	)		(7,584	)
Balance at end of period:
Allowance for loan losses		4,949			20,293			14,116			4,311			4,422			2,951			1,387			52,429
Allowance for loan commitments		235			22			311			15			250			41			—			874
Total ending allowance for credit losses	$	5,184		$	20,315		$	14,427		$	4,326		$	4,672		$	2,992		$	1,387		$	53,303

	For the Year Ended December 31, 2018
(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 beginning of year:
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		650			(521	)		3,430			1,612			138			1,142			1,146			7,597
Provision for loan commitments		50			7			89			5			14			2			—			167
Total provision for credit losses		700			(514	)		3,519			1,617			152			1,144			1,146			7,764
Charge-offs		(137	)		(1,090	)		(1,830	)		(1,435	)		(1,193	)		(3,508	)		(1,374	)		(10,567	)
Recoveries		409			1,293			1,100			439			914			2,100			379			6,634
Net recoveries (charge-offs)		272			203			(730	)		(996	)		(279	)		(1,408	)		(995	)		(3,933	)
Balance at end of period:
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 ending allowance for credit losses	$	4,208		$	20,881		$	12,376		$	3,834		$	4,582		$	2,836		$	972		$	49,689

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
(in thousands)	Commercial Real Estate- Land and Construction		Commercial Real Estate- Improved Property		Commercial and Industrial		Residential Real Estate		Home Equity		Consumer		Deposit Overdrafts		Total
December 31, 2020
Allowance for credit losses:
Loans individually-evaluated	$	602	$	4,196	$	1,484	$	—	$	—	$	—	$	—	$	6,282
Loans collectively-evaluated		10,239		106,456		36,366		17,851		1,487		6,507		639		179,545
Loan commitments		6,508		712		1,275		955		45		19		—		9,514
Total allowance for credit losses - loans and commitments	$	17,349	$	111,364	$	39,125	$	18,806	$	1,532	$	6,526	$	639	$	195,341

Portfolio loans:
Individually-evaluated for credit losses⁽¹⁾	$	1,455	$	40,372	$	2,863	$	—	$	—	$	—	$	—	$	44,690
Collectively-evaluated for credit losses		666,822		4,996,743		2,404,575		1,720,961		646,387		309,055		—		10,744,543
Total portfolio loans	$	668,277	$	5,037,115	$	2,407,438	$	1,720,961	$	646,387	$	309,055	$	—	$	10,789,233

December 31, 2019
Allowance for credit losses:
Allowance for loans individually evaluated for impairment	$	—	$	93	$	10	$	14	$	6	$	1	$	—	$	124
Allowance for loans collectively evaluated for impairment		4,949		20,200		14,106		4,297		4,416		2,950		1,387		52,305
Allowance for loan commitments		235		22		311		15		250		41		-		874
Total allowance for credit losses	$	5,184	$	20,315	$	14,427	$	4,326	$	4,672	$	2,992	$	1,387	$	53,303

Portfolio loans:
Individually evaluated for impairment (1)	$	—	$	3,907	$	11,961	$	4,392	$	704	$	53	$	—	$	21,017
Collectively evaluated for impairment		777,033		4,935,383		1,631,855		1,865,151		648,221		374,812		—		10,232,455
Acquired with deteriorated credit quality		118		8,567		883		4,104		753		88		—		14,513
Total portfolio loans	$	777,151	$	4,947,857	$	1,644,699	$	1,873,647	$	649,678	$	374,953	$	—	$	10,267,985

(1)	Commercial loans greater than $1 million that are reported as non-accrual or as a TDR are individually evaluated due to differences in risk factors.

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.

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 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
(in thousands)	Commercial Real Estate- Land and Construction		Commercial Real Estate- Improved Property		Commercial & Industrial		Total Commercial Loans
As of December 31, 2020
Pass	$	657,435	$	4,609,726	$	2,350,724	$	7,617,885
Criticized—compromised		7,397		320,301		34,597		362,295
Classified—substandard		3,445		107,088		22,117		132,650
Classified—doubtful		—		—		—		—
Total	$	668,277	$	5,037,115	$	2,407,438	$	8,112,830

As of December 31, 2019
Pass	$	769,537	$	4,807,003	$	1,570,689	$	7,147,229
Criticized—compromised		4,338		65,612		49,009		118,959
Classified—substandard		3,276		75,242		13,231		91,749
Classified—doubtful		—		—		11,770		11,770
Total	$	777,151	$	4,947,857	$	1,644,699	$	7,369,707

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 were $27.7 million at December 31, 2020 and $28.3 million at December 31, 2019, of which $4.1 million and $5.1 million were accruing, for each period, respectively. The aggregate amount of residential real estate, home equity and consumer loans classified as substandard, as well as $28.7 million and $15.6 million of unfunded commercial loan commitments are not included in the tables above for December 31, 2020 and 2019, respectively.

Acquired OLBK Loans —In conjunction with the OLBK acquisition, Wesbanco acquired loans with a book value of $2,570.0 million as of November 22, 2019. These loans were recorded at the preliminary fair value of $2,514.1 million, with $2,544.4 million categorized as ASC 310-20 loans, of which $56.6 million of loans were sold during the first quarter of 2020 for $36.4 million. For the loans sold, the acquisition date fair value was adjusted to the sale price resulting in no recognized gain or loss. The fair market value adjustment on these retained loans of $28.9 million at acquisition date will be recognized into interest income on a level yield basis over the remaining expected life

of the loans. Loans acquired with deteriorated credit quality (ASC 310-30) with a book value of $25.6 million were recorded at a fair value of $18.7 million, of which $4.0 million were accounted for under the cost recovery method as cash flows could not be reasonably estimated, and therefore they are categorized as non-accrual. Upon adoption of CECL on January 1, 2020, $6.1 million of credit mark on OLBK PCD loans was reclassified to allowance for credit losses. At December 31, 2020, the remaining allowance for credit losses on individually analyzed OLBK-acquired loans was $5.5 million. The carrying amount of loans acquired with deteriorated credit quality at December 31, 2020 was $18.4 million, while the outstanding customer balance was $18.7 million, and included $1.4 million of non-performing loans.

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 preliminary 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 will 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 a 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. At December 31, 2020, the remaining allowance for credit losses on individually analyzed FFKT-acquired loans was $0.3 million. The carrying amount of loans acquired with deteriorated credit quality at December 31, 2020 was $2.4 million, while the outstanding customer balance was $2.8 million, and included $0.3 million of non-performing 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.

Acquired FTSB Loans – In conjunction with the FTSB acquisition, Wesbanco acquired loans with a book value of $465.9 million as of April 5, 2018. These loans were recorded at the fair value of $447.3 million, with $429.3 million categorized as ASC 310-20 loans. The fair market value adjustment on these loans of $9.7 million at acquisition date will 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 $5.1 million were recorded at a fair value of $2.3 million, of which $0.7 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. Upon adoption of CECL on January 1, 2020, $0.6 million of credit mark on FTSB PCD loans was reclassified to allowance for credit losses. At December 31, 2020, the remaining allowance for credit losses on individually analyzed FTSB-acquired loans was $0.5 million. The carrying amount of loans acquired with deteriorated credit quality at December 31, 2020 was $0.9 million, while the outstanding customer balance was $1.0 million, and included $0.2 million of non-performing loans. Certain acquired underperforming loans with an acquired book value of $21.7 million were sold during the second and fourth quarters of 2018 for $15.7 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 tables summarize the age analysis of all categories of loans.

	Age Analysis of Loans
(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 December 31, 2020
Commercial real estate:
Land and construction	$	664,990	$	582	$	2,276	$	429	$	3,287	$	668,277	$	288
Improved property		5,016,812		4,876		4,118		11,309		20,303		5,037,115		2,713
Total commercial real estate		5,681,802		5,458		6,394		11,738		23,590		5,705,392		3,001
Commercial and industrial		2,395,844		4,372		2,197		5,025		11,594		2,407,438		1,899
Residential real estate		1,698,636		2,614		5,654		14,057		22,325		1,720,961		2,863
Home equity		639,319		2,414		775		3,879		7,068		646,387		706
Consumer		305,483		1,998		1,031		543		3,572		309,055		377
Total portfolio loans		10,721,084		16,856		16,051		35,242		68,149		10,789,233		8,846
Loans held for sale		168,378		—		—		—		—		168,378		—
Total loans	$	10,889,462	$	16,856	$	16,051	$	35,242	$	68,149	$	10,957,611	$	8,846

Nonperforming loans included above are as follows:
Non-accrual loans	$	9,560	$	630	$	466	$	26,224		27,320	$	36,880
TDRs accruing interest (1)		3,540		63		152		172		387		3,927
Total non-performing	$	13,100	$	693	$	618	$	26,396	$	27,707	$	40,807

As of December 31, 2019
Commercial real estate:
Land and construction	$	776,153	$	529	$	121	$	348	$	998	$	777,151	$	26
Improved property		4,921,721		10,207		5,639		10,290		26,136		4,947,857		4,709
Total commercial real estate		5,697,874		10,736		5,760		10,638		27,134		5,725,008		4,735
Commercial and industrial		1,635,232		2,519		2,813		4,135		9,467		1,644,699		1,793
Residential real estate		1,850,806		4,421		5,372		13,048		22,841		1,873,647		3,643
Home equity		641,026		3,323		621		4,708		8,652		649,678		985
Consumer		370,934		2,537		965		517		4,019		374,953		457
Total portfolio loans		10,195,872		23,536		15,531		33,046		72,113		10,267,985		11,613
Loans held for sale		43,013		—		—		—		—		43,013		—
Total loans	$	10,238,885	$	23,536	$	15,531	$	33,046	$	72,113	$	10,310,998	$	11,613

Impaired loans included above are as follows:
Non-accrual loans	$	21,061	$	897	$	1,559	$	21,396		23,852	$	44,913
TDRs accruing interest (1)		5,113		151		130		37		318		5,431
Total impaired	$	26,174	$	1,048	$	1,689	$	21,433	$	24,170	$	50,344

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

The following tables summarize nonperforming loans:

	Nonperforming Loans
	December 31, 2020						December 31, 2019
(in thousands)	Unpaid Principal Balance (1)		Recorded Investment		Related Allowance		Unpaid Principal Balance (1)		Recorded Investment		Related Allowance
With no related specific allowance recorded:
Commercial real estate:
Land and construction	$	469	$	469	$	—	$	616	$	580	$	—
Improved property		9,597		8,055	—			5,097		4,229	—
Commercial and industrial		4,401		3,413	—			15,182		14,313	—
Residential real estate		23,055		20,704	—			17,753		15,952	—
Home equity		6,635		5,708	—			6,523		5,610	—
Consumer		602		364	—			546		413	—
Total nonperforming loans without a specific allowance		44,759		38,713		—		45,717		41,097	—
With a specific allowance recorded:
Commercial real estate:
Land and construction	—		—		—		—		—		—
Improved property		2,094		2,094		136		4,207		3,907		93
Commercial and industrial	—		—		—			193		191		10
Residential real estate	—		—		—			4,772		4,392		14
Home equity	—		—		—			724		704		6
Consumer	—		—		—			104		53		1
Total nonperforming loans with a specific allowance		2,094		2,094		136		10,000		9,247		124
Total nonperforming loans	$	46,853	$	40,807	$	136	$	55,717	$	50,344	$	124

(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 Year Ended December 31, 2020				For the Year Ended December 31, 2019				For the Year Ended December 31, 2018
(in thousands)	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
With no related specific allowance recorded:
Commercial real estate:
Land and construction	$	571	$	—	$	343	$	—	$	208	$	—
Improved property		7,193		61		7,216		84		10,658		381
Commercial and industrial		5,256		7		5,207		15		3,076		12
Residential real estate		19,651		168		14,192		211		19,026		240
Home equity		5,806		22		4,930		28		5,005		25
Consumer		377		2		423		3		808		7
Total nonperforming loans without a specific allowance		38,854		260		32,311		341		38,781		665
With a specific allowance recorded:
Commercial real estate:
Land and construction		—		—		—		—		—		—
Improved property		2,672		—		3,317		—		842		—
Commercial and industrial		38		—		175		—		—		—
Residential real estate		878		—		3,811		—		—		—
Home equity		141		—		634		—		—		—
Consumer		11		—		58		—		—		—
Total nonperforming loans with a specific allowance		3,740		—		7,995		—		842		—
Total nonperforming loans	$	42,594	$	260	$	40,306	$	341	$	39,623	$	665

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

	Non-accrual Loans (1)
(in thousands)	December 31, 2020		December 31, 2019
Commercial real estate:
Land and construction	$	469	$	580
Improved property		9,494		6,815
Total commercial real estate		9,963		7,395
Commercial and industrial		3,302		14,313
Residential real estate		17,925		16,867
Home equity		5,345		5,903
Consumer		345		435
Total	$	36,880	$	44,913

(1)

At December 31, 2020, there was one borrower with a loan balance greater than $1.0 million totaling $2.1 million, as compared to two borrowers with a loan balance greater than $1.0 million totaling $14.2 million at December 31, 2019. 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
	December 31, 2020						December 31, 2019
(in thousands)	Accruing		Non-Accrual		Total		Accruing		Non-Accrual		Total
Commercial real estate:
Land and construction	$	—	$	—	$	—	$	—	$	—	$	—
Improved property		655		165		820		1,321		191		1,512
Total commercial real estate		655		165		820		1,321		191		1,512
Commercial and industrial		111		—		111		191		—		191
Residential real estate		2,779		1,354		4,133		3,477		909		4,386
Home equity		363		300		663		411		293		704
Consumer		19		9		28		31		29		60
Total	$	3,927	$	1,828	$	5,755	$	5,431	$	1,422	$	6,853

As of December 31, 2020 and December 31, 2019, 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 six months. Wesbanco had unfunded commitments to debtors whose loans were classified as impaired of $0.9 million and $3.3 million as of December 31, 2020 and 2019, respectively.

The following table presents details related to loans identified as TDRs during the years ended December 31, 2020 and 2019:

	New TDRs (1) For the Year Ended December 31, 2020						New TDRs (1) For the Year Ended December 31, 2019
(dollars in thousands)	Number of Modifications		Pre- Modification Outstanding Recorded Investment		Post- Modification Outstanding Recorded Investment		Number of Modifications		Pre- Modification Outstanding Recorded Investment		Post- Modification Outstanding Recorded Investment
Commercial real estate:
Land and construction		—	$	—	$	—		—	$	—	$	—
Improved property		—		—		—		1		610		603
Total commercial real estate		—		—		—		1		610		603
Commercial and industrial		—		—		—		2		57		48
Residential real estate		3		360		350		4		194		177
Home equity		4		93		86		2		187		181
Consumer		1		7		7		2		45		28
Total		8	$	460	$	443		11	$	1,093	$	1,037

(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 years ended December 31, 2020 and 2019 that were restructured within the last twelve months prior to December 31, 2020 and 2019:

	Defaulted TDRs (1) For the Year Ended December 31, 2020				Defaulted TDRs (1) For the Year Ended December 31, 2019
(dollars in thousands)	Number of Defaults		Recorded Investment		Number of Defaults		Recorded Investment
Commercial real estate:
Land and construction		—	$	—		—	$	—
Improved property		—		—		—		—
Total commercial real estate		—		—		—		—
Commercial and industrial		—		—		—		—
Residential real estate		1		155		1		95
Home equity		—		—		1		97
Consumer		—		—		1		12
Total		1	$	155		3	$	204

(1)	Excludes loans that were either charged-off or cured by period end. The recorded investment is as of December 31, 2020 and 2019.

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.

Section 4013 of the CARES Act allows financial institutions the option to temporarily suspend certain requirements under U.S. GAAP related to TDRs for a limited period of time during the COVID-19 pandemic. These customers must meet certain criteria, such as they were in good standing and not more than 30 days past due either as of December 31, 2019, or as of the implementation of the modification program under the Interagency Statement, as well as other requirements noted in the regulatory agencies’ revised statement. Based on this guidance, Wesbanco does not classify the COVID-19 loan modifications as TDRs, nor are the customers considered past due with regards to their delayed payments. Upon exiting the loan modification deferral program, the measurement of loan delinquency will resume where it left off upon entry into the program. Under the CARES Act, Wesbanco has modified approximately 3,553 loans totaling $2.2 billion, of which $0.2 billion remain in their deferral period as of December 31, 2020. Wesbanco originally offered three to six months of deferred payments to commercial and retail customers impacted by the COVID-19 pandemic depending on the type of loan and the industry for commercial loans. In the fourth quarter, Wesbanco offered up to an additional twelve months of deferred payments to certain commercial loan customers, predominantly in the hospitality industry, based on specific criteria related to the borrower, the underlying property and the potential for guarantors / co-borrowers.

The following table summarizes the recognition of interest income on nonperforming loans:

	For the years ended December 31,
(in thousands)	2020		2019		2018
Average nonperforming loans	$	42,594	$	40,306	$	39,623
Amount of contractual interest income on nonperforming loans		2,827		3,047		2,631
Amount of interest income recognized on nonperforming loans		260		341		665

The following table summarizes amortized cost basis loan balances by year of origination and credit quality indicator.

	Loans As of December 31, 2020
	Amortized Cost Basis by Origination Year
(unaudited, in thousands)	2020			2019			2018			2017			2016			Prior			Revolving Loans Amortized Cost Basis			Revolving Loans Converted to Term			Total
Commercial real estate: land and construction
Risk rating:
Pass	$	133,720		$	314,614		$	109,232		$	27,483		$	16,404		$	29,685		$	26,297		$	—		$	657,435
Criticized - compromised		459			—			1,532			233			79			3,778			1,316			—			7,397
Classified - substandard		—			—			403			58			291			2,693			—			—			3,445
Classified - doubtful		—			—			—			—			—			—			—			—			—
Total commercial real estate: land and construction	$	134,179		$	314,614		$	111,167		$	27,774		$	16,774		$	36,156		$	27,613		$	—		$	668,277

Current-period net charge-offs	$	—		$	—		$	—		$	61		$	(50	)	$	30		$	—		$	—		$	41

Commercial real estate: improved property
Risk rating:
Pass	$	809,516		$	670,554		$	646,629		$	474,622		$	572,733		$	1,346,552		$	89,120		$	—		$	4,609,726
Criticized - compromised		2,693			67,261			16,793			59,251			42,284			130,247			1,772			—			320,301
Classified - substandard		102			16,366			4,946			11,647			18,460			55,567			—			—			107,088
Classified - doubtful		—			—			—			—			—			—			—			—			—
Total commercial real estate: improved property	$	812,311		$	754,181		$	668,368		$	545,520		$	633,477		$	1,532,366		$	90,892		$	—		$	5,037,115

Current-period net charge-offs	$	—		$	—		$	(38	)	$	13		$	(1,617	)	$	691		$	—		$	—		$	(951	)

Commercial and industrial
Risk rating:
Pass	$	977,085		$	240,262		$	193,712		$	160,924		$	85,379		$	265,890		$	427,336		$	136		$	2,350,724
Criticized - compromised		453			2,726			4,206			2,795			324			11,640			12,453			—			34,597
Classified - substandard		—			3,817			1,947			3,771			1,603			5,073			5,906			—			22,117
Classified - doubtful		—			—			—			—			—			—			—			—			—
Total commercial and industrial	$	977,538		$	246,805		$	199,865		$	167,490		$	87,306		$	282,603		$	445,695		$	136		$	2,407,438

Current-period net charge-offs	$	—		$	(50	)	$	(1,843	)	$	(272	)	$	(108	)	$	303		$	(300	)	$	—		$	(2,270	)

Residential real estate
Loan delinquency:
Current	$	385,541		$	242,770		$	149,603		$	108,090		$	170,967		$	641,665		$	—		$	—		$	1,698,636
30-59 days past due		—			—			320			533			—			1,761			—			—			2,614
60-89 days past due		—			—			823			—			185			4,646			—			—			5,654
90 days or more past due		—			483			166			761			819			11,828			—			—			14,057
Total residential real estate	$	385,541		$	243,253		$	150,912		$	109,384		$	171,971		$	659,900		$	—		$	—		$	1,720,961

Current-period net charge-offs	$	—		$	(24	)	$	(8	)	$	(11	)	$	(110	)	$	(622	)	$	—		$	—		$	(775	)

Home equity
Loan delinquency:
Current	$	18,191		$	3,611		$	3,334		$	975		$	1,110		$	16,477		$	583,486		$	12,135		$	639,319
30-59 days past due		124			—			34			—			—			882			1,247			127			2,414
60-89 days past due		—			—			—			—			—			14			749			12			775
90 days or more past due		—			—			8			156			88			1,786			1,075			766			3,879
Total home equity	$	18,315		$	3,611		$	3,376		$	1,131		$	1,198		$	19,159		$	586,557		$	13,040		$	646,387

Current-period net charge-offs	$	—		$	—		$	(10	)	$	(2	)	$	(1	)	$	(92	)	$	(356	)	$	(7	)	$	(468	)

Consumer
Loan delinquency:
Current	$	72,847		$	89,637		$	39,584		$	22,118		$	13,144		$	45,735		$	22,253		$	165		$	305,483
30-59 days past due		481			408			210			311			194			379			15			—			1,998
60-89 days past due		273			147			84			100			163			253			11			—			1,031
90 days or more past due		113			72			73			31			12			242			—			—			543
Total consumer	$	73,714		$	90,264		$	39,951		$	22,560		$	13,513		$	46,609		$	22,279		$	165		$	309,055

Current-period net charge-offs	$	(273	)	$	(731	)	$	(589	)	$	(486	)	$	(59	)	$	97		$	—		$	—		$	(2,041	)

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

	December 31,
(in thousands)	2020		2019
Other real estate owned	$	504	$	4,062
Repossessed assets		45		116
Total other real estate owned and repossessed assets	$	549	$	4,178

Residential real estate included in other real estate owned at December 31, 2020 and December 31, 2019 was $0.1 million and $0.6 million, respectively. At December 31, 2020 and 2019, formal foreclosure proceedings were in process on residential real estate loans totaling $4.1 million and $8.1 million, respectively.