The Federal Reserve Bank is the primary regulator for the parent company, Wesbanco. Wesbanco Bank is a state non-member bank jointly regulated by the FDIC and the West Virginia Division of Financial Institutions. Wesbanco is a legal entity separate and distinct from its subsidiaries and is dependent upon dividends from its subsidiary bank, Wesbanco Bank, to provide funds for the payment of dividends to shareholders, fund its current stock repurchase plan and to provide for other cash requirements. The payment of dividends by Wesbanco Bank to Wesbanco is subject to state and federal banking regulations. Under applicable law, bank regulatory agency approval is required if the total of all dividends declared by a bank in any calendar year exceeds the available retained earnings or exceeds the aggregate of the bank’s net profits (as defined by regulatory agencies) for that year and its retained net profits for the preceding two years. As of December 31, 2020, under FDIC regulations, Wesbanco could receive, without prior regulatory approval, a dividend of up to $306.3 million from Wesbanco Bank.

Wesbanco and Wesbanco Bank are also required to maintain non-interest bearing reserve balances with the Federal Reserve Bank. The average required reserve balance was $0.5 million during 2019. Wesbanco did not have a reserve requirement during 2020.

Additionally, Wesbanco and Wesbanco Bank are subject to various regulatory capital requirements (risk-based capital ratios) administered by federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory and possibly additional discretionary actions by the regulators that, if undertaken, could have a material adverse effect on Wesbanco’s financial results.

All bank holding companies and banking subsidiaries are required to have common equity Tier 1 (“CET1”) of at least 4.5%, core capital (“Tier 1”) of at least 6% of risk-weighted assets, total capital of at least 8% of risk-weighted assets, and a minimum Tier 1 leverage ratio of 4%. Tier 1 capital consists principally of shareholders’ equity; excluding items recorded in accumulated other comprehensive income, less goodwill and other intangibles. Total capital consists of Tier 1 capital plus the allowance for loan losses subject to limitation and trust preferred securities. The regulations also define “well-capitalized” levels of CET1, Tier 1 risk-based capital, total risk-based capital, and Tier 1 leverage capital as 6.5%, 8%, 10%, and 5%, respectively. Wesbanco and Wesbanco Bank were categorized as “well-capitalized” under the Federal Deposit Insurance Corporation Improvement Act at December 31, 2020 and 2019. There are no conditions or events since December 31, 2020 that management believes have changed Wesbanco’s “well-capitalized” category.

The Basel III capital standards, effective January 1, 2015 with a phase-in period ending January 1, 2019, establishes the minimum capital levels required under the Dodd-Frank Act, permanently grandfathers trust preferred securities as Tier 1 capital issued before May 19, 2010 for bank holding companies under $15 billion, and increases the capital required for certain categories of assets. A capital conservation buffer is also added to minimum capital standards that is required to be met to avoid restrictions on dividends, share repurchases, certain incentives and other restrictions. Including this capital conservation buffer, minimum levels of CET1, Tier 1 risk-based capital and total risk-based capital are defined as 7.0%, 8.5% and 10.5%, respectively.

Wesbanco currently has $132.2 million in junior subordinated debt in its Consolidated Balance Sheets presented as a separate category of long-term debt. For regulatory purposes, trust preferred securities totaling $130.0 million, issued by unconsolidated trust subsidiaries of Wesbanco underlying such junior subordinated debt, are considered Tier 2 capital in accordance with current regulatory reporting requirements.

On March 26, 2020, regulators issued interim financial rule (“IFR”) “Regulatory Capital Rule: Revised Transition of the Current Expected Losses Methodology for Allowances” in response to the disrupted economic activity from the spread of COVID-19. The IFR provides financial institutions that adopt CECL during 2020 with the option to delay for two years the estimated impact of CECL on regulatory capital, followed by a three-year transition period to phase out the aggregate amount of the capital benefit provided by the initial two-year delay (“five year transition”). Wesbanco adopted CECL effective January 1, 2020 and elected to implement the five year transition. Regulatory capital levels without the capital benefit at December 31, 2020 for both the Bank and Wesbanco would have continued to be greater than the amounts needed to be considered “well capitalized”, as the capital benefit approximated 30 to 50 basis points for three of the four regulatory ratios, while total risk-based capital would have been slightly higher without the transition.

The following table summarizes risk-based capital amounts and ratios for Wesbanco and the Bank:

							December 31, 2020							December 31, 2019
(dollars in thousands)	Minimum Value (1)			Well Capitalized (2)			Amount		Ratio			Minimum Amount (1)		Amount		Ratio			Minimum Amount (1)
Wesbanco, Inc.
Tier 1 leverage		4.00	%		5.00	%	$	1,617,413		10.51	%	$	615,814	$	1,441,738		11.30	%	$	510,306
Tier 1 capital to risk-weighted assets		6.00	%		8.00	%		1,617,413		14.72	%		659,372		1,441,738		12.89	%		671,314
Total capital to risk-weighted assets		8.00	%		10.00	%		1,931,414		17.58	%		879,162		1,691,764		15.12	%		895,086
Common equity Tier 1		4.50	%		6.50	%		1,472,929		13.40	%		494,529		1,441,738		12.89	%		503,486
Wesbanco Bank, Inc.
Tier 1 leverage		4.00	%		5.00	%	$	1,536,609		10.00	%	$	614,792	$	1,419,968		11.12	%	$	510,591
Tier 1 capital to risk-weighted assets		6.00	%		8.00	%		1,536,609		14.04	%		656,732		1,419,968		12.74	%		668,951
Total capital to risk-weighted assets		8.00	%		10.00	%		1,685,610		15.40	%		875,643		1,498,494		13.44	%		891,935
Common equity Tier 1		4.50	%		6.50	%		1,536,609		14.04	%		492,549		1,419,968		12.74	%		501,713