Wesbanco Bank Community Development Corporation (“WBCDC”), a consolidated subsidiary of Wesbanco Bank, is a Certified Development Entity (“CDE”) with $125.0 million of New Markets Tax Credits (“NMTC”) of which $100.0 million had been invested in WBCDC at December 31, 2020. The remaining $25.0 million of NMTC, which had not been invested as of December 31, 2020 was awarded to WBCDC in 2019. The NMTC program is administered by the Community Development Financial Institutions Fund of the U.S. Treasury and is aimed at stimulating economic and community development and job creation in low-income communities. The program provides federal tax credits to investors who make qualified equity investments (“QEIs”) in a CDE. The CDE is required to invest the proceeds of each QEI in low-income communities, which are generally defined as those census tracts with poverty rates greater than 20% and/or median family incomes that are less than or equal to 80% of the area median family income.

The credit provided to the investor totals 39% of each QEI in a CDE and is claimed over a seven-year credit allowance period. In each of the first three years, the investor receives a credit equal to 5% of the total amount the investor paid to the CDE for each QEI. For each of the remaining four years, the investor receives a credit equal to 6% of the total amount the investor paid to the CDE for each QEI. As of December 31, 2020, Wesbanco has received $26.7 million in tax credits over the seven-year credit allowance periods for its $100.0 million NMTC authority invested in WBCDC. Wesbanco is eligible to receive an additional $12.3 million in tax credits with respect to aggregate QEI amounts invested with a remaining seven-year credit allowance period. In addition, Wesbanco will be eligible to receive $9.8 million in tax credits over a seven-year credit allowance period for the $25.0 million NMTC authority awarded in 2019 that has yet to be invested.

Wesbanco Bank recognized $2.0 million, $1.6 million and $0.7 million in NMTC in its income tax provision for the years ended December 31, 2020, 2019 and 2018, respectively. These tax credits are subject to certain general business tax credit limitations and are therefore limited in deductibility on Wesbanco’s federal income tax return. As of December 31, 2020, no prior NMTC has been carried forward to future tax years.

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

At December 31, 2020, 2019 and 2018, none of the above recapture events had occurred, nor in the opinion of management are such events anticipated to occur in the foreseeable future. Approximately half of the tax credits are no longer subject to recapture.

The following condensed financial statements summarize the financial position of WBCDC as of December 31, 2020, and the results of its operations and cash flows for the year ended December 31, 2020:

(in thousands)	December 31, 2020
Assets
Cash and due from banks	$	65,282
Loans, net of allowance for loan losses of $1.0 million		46,951
Investments		1,634
Other assets		794
Total Assets	$	114,661
Liabilities	$	246
Shareholder Equity		114,415
Total Liabilities and Shareholder Equity	$	114,661

(in thousands)	For the Year Ended December 31, 2020
Interest income
Loans	$	1,378
Other		26
Total interest income		1,404
Provision for loan losses		714
Net interest income after provision for loan losses		690
Loss on investments		(58	)
Non-interest expense		603
Income before provision for income taxes		29
Provision for income taxes		9
Net income	$	20

(in thousands)	For the Year Ended December 31, 2020
Operating Activities
Net income	$	20
Provision for loan losses		714
Loss on investments		58
Net change in other assets		(767	)
Net change in other liabilities		(73	)
Net cash used in operating activities		(48	)
Investing Activities
Increase in loans		(10,999	)
Net cash used in investing activities		(10,999	)
Financing Activities
Qualified equity investment by parent company		15,000
Net cash provided by financing activities		15,000
Net increase in cash and cash equivalents		3,953
Cash and cash equivalents at beginning of year		61,329
Cash and cash equivalents at end of year	$	65,282