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Securities
 6 Months Ended
Jun. 30, 2022
Investments, Debt and Equity Securities [Abstract]  
Securities

NOTE 3. SECURITIES

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

 

 

 

June 30, 2022

 

 

December 31, 2021

 

(unaudited, 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. Government sponsored entities and agencies

 

$

271,157

 

 

$

72

 

 

$

(22,300

)

 

$

248,929

 

 

$

236,096

 

 

$

3,922

 

 

$

(3,040

)

 

$

236,978

 

Residential mortgage-backed securities and collateralized mortgage obligations of government sponsored entities and agencies

 

 

2,290,292

 

 

 

107

 

 

 

(201,112

)

 

 

2,089,287

 

 

 

2,301,170

 

 

 

16,489

 

 

 

(32,446

)

 

 

2,285,213

 

Commercial mortgage-backed securities and collateralized mortgage obligations of government sponsored entities and agencies

 

 

437,571

 

 

 

222

 

 

 

(5,965

)

 

 

431,828

 

 

 

364,486

 

 

 

4,252

 

 

 

(1,245

)

 

 

367,493

 

Obligations of states and political subdivisions

 

 

101,592

 

 

 

548

 

 

 

(2,830

)

 

 

99,310

 

 

 

101,003

 

 

 

5,372

 

 

 

(35

)

 

 

106,340

 

Corporate debt securities

 

 

15,445

 

 

 

24

 

 

 

(172

)

 

 

15,297

 

 

 

16,940

 

 

 

507

 

 

 

(9

)

 

 

17,438

 

Total available-for-sale debt securities

 

$

3,116,057

 

 

$

973

 

 

$

(232,379

)

 

$

2,884,651

 

 

$

3,019,695

 

 

$

30,542

 

 

$

(36,775

)

 

$

3,013,462

 

Held-to-maturity debt securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Government sponsored entities and agencies

 

$

5,004

 

 

$

—

 

 

$

(293

)

 

$

4,711

 

 

$

5,944

 

 

$

72

 

 

$

(8

)

 

$

6,008

 

Residential mortgage-backed securities and collateralized mortgage obligations of government sponsored entities and agencies

 

 

50,587

 

 

 

49

 

 

 

(2,075

)

 

 

48,561

 

 

 

58,147

 

 

 

1,409

 

 

 

(16

)

 

 

59,540

 

Obligations of states and political subdivisions

 

 

1,200,398

 

 

 

1,890

 

 

 

(127,136

)

 

 

1,075,152

 

 

 

907,649

 

 

 

23,854

 

 

 

(3,500

)

 

 

928,003

 

Corporate debt securities

 

 

25,306

 

 

 

18

 

 

 

(154

)

 

 

25,170

 

 

 

33,083

 

 

 

1,818

 

 

 

—

 

 

 

34,901

 

Total held-to-maturity debt securities (1)

 

$

1,281,295

 

 

$

1,957

 

 

$

(129,658

)

 

$

1,153,594

 

 

$

1,004,823

 

 

$

27,153

 

 

$

(3,524

)

 

$

1,028,452

 

Total debt securities

 

$

4,397,352

 

 

$

2,930

 

 

$

(362,037

)

 

$

4,038,245

 

 

$

4,024,518

 

 

$

57,695

 

 

$

(40,299

)

 

$

4,041,914

 
(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 June 30, 2022 and December 31, 2021, respectively.

 

At June 30, 2022 and December 31, 2021, 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 $8.8 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 $11.4 million and $13.5 million at June 30, 2022 and December 31, 2021, respectively.

The following table presents the amortized cost and fair value of available-for-sale and held-to-maturity debt securities by contractual maturity date at June 30, 2022. 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.

 

(unaudited, in thousands)

 

Amortized Cost

 

 

Fair Value

 

Available-for-sale debt securities

 

 

 

 

 

 

Less than one year

 

$

22,490

 

 

$

22,433

 

1-5 years

 

 

189,081

 

 

 

187,159

 

5-10 years

 

 

482,267

 

 

 

469,762

 

Over 10 years

 

 

2,422,219

 

 

 

2,205,297

 

Total available-for-sale debt securities

 

$

3,116,057

 

 

$

2,884,651

 

Held-to-maturity debt securities

 

 

 

 

 

 

Less than one year

 

$

30,679

 

 

$

30,794

 

1-5 years

 

 

101,576

 

 

 

101,882

 

5-10 years

 

 

314,256

 

 

 

304,810

 

Over 10 years

 

 

834,784

 

 

 

716,108

 

Total held-to-maturity debt securities

 

$

1,281,295

 

 

$

1,153,594

 

Total debt securities

 

$

4,397,352

 

 

$

4,038,245

 

 

Securities with an aggregate fair value of $2.0 billion and $2.1 billion at June 30, 2022 and December 31, 2021, respectively, were pledged as security for public and trust funds, and securities sold under agreements to repurchase. There were no proceeds from the sale of available-for-sale securities for the six months ended June 30, 2022 and 2021. Net unrealized losses on available-for-sale securities included in accumulated other comprehensive income, net of tax, as of June 30, 2022 and December 31, 2021 were $175.8 million and $4.7 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, for the three and six months ended June 30, 2022 and 2021, respectively. All gains and losses presented in the table below are included in the net securities (losses) gains 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 Three Months
Ended June 30,

 

 

For the Six Months
Ended June 30,

 

(unaudited, in thousands)

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Debt securities:

 

 

 

 

 

 

 

 

 

 

 

 

Gross realized gains

 

$

107

 

 

$

60

 

 

$

138

 

 

$

200

 

Gross realized losses

 

 

(9

)

 

 

—

 

 

 

(11

)

 

 

(39

)

Net gains on debt securities

 

 

98

 

 

 

60

 

 

 

127

 

 

 

161

 

Equity securities:

 

 

 

 

 

 

 

 

 

 

 

 

Net unrealized (losses) gains recognized on securities still held

 

 

(1,281

)

 

 

417

 

 

 

(1,959

)

 

 

595

 

Net securities (losses) gains

 

$

(1,183

)

 

$

477

 

 

$

(1,832

)

 

$

756

 

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 $9.3 million and $7.0 million as of June 30, 2022 and December 31, 2021, respectively, 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 economic 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 six months ended June 30, 2022 and 2021:

 

 

Allowance for Credit Losses By Category

 

 

For the Six Months Ended June 30, 2022 and 2021

 

 

 

 

Residential mortgage

 

 

 

 

 

 

 

 

 

 

-backed

 

 

 

 

 

 

 

 

 

 

securities and

 

 

 

 

 

 

 

 

 

 

collateralized

 

 

 

 

 

 

 

 

 

 

mortgage obligations

 

Obligations of

 

 

 

 

 

 

U.S. Government

 

of government

 

state and

 

Corporate

 

 

 

 

sponsored

 

sponsored entities

 

political

 

debt

 

 

 

(unaudited, in thousands)

entities and agencies

 

and agencies

 

subdivisions

 

Securities

 

Total

 

Balance at December 31, 2021

$

—

 

$

—

 

$

174

 

$

94

 

$

268

 

Current period provision

 

—

 

 

—

 

 

8

 

 

(11

)

 

(3

)

Write-offs

 

—

 

 

—

 

 

—

 

 

—

 

 

—

 

Recoveries

 

—

 

 

—

 

 

—

 

 

—

 

 

—

 

Balance at June 30, 2022

$

—

 

$

—

 

$

182

 

$

83

 

$

265

 

.

 

 

 

 

 

 

 

 

 

 

Balance at December 31, 2020

$

—

 

$

—

 

$

130

 

$

196

 

$

326

 

Current period provision

 

—

 

 

—

 

 

(13

)

 

(86

)

 

(99

)

Write-offs

 

—

 

 

—

 

 

—

 

 

—

 

 

—

 

Recoveries

 

—

 

 

—

 

 

—

 

 

—

 

 

—

 

Balance at June 30, 2021

$

—

 

$

—

 

$

117

 

$

110

 

$

227

 

 

The following tables provide 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 June 30, 2022 and December 31, 2021, respectively:

 

 

 

June 30, 2022

 

 

 

Less than 12 months

 

 

12 months or more

 

 

Total

 

(unaudited, dollars in
thousands)

 

Fair
Value

 

 

Unrealized
Losses

 

 

# of
Securities

 

 

Fair
Value

 

 

Unrealized
Losses

 

 

# of
Securities

 

 

Fair
Value

 

 

Unrealized
Losses

 

 

# of
Securities

 

U.S. Government sponsored entities and agencies

 

$

188,621

 

 

$

(13,338

)

 

 

36

 

 

$

49,739

 

 

$

(8,962

)

 

 

6

 

 

$

238,360

 

 

$

(22,300

)

 

 

42

 

Residential mortgage-backed securities and collateralized mortgage obligations of government sponsored entities and agencies

 

 

1,575,495

 

 

 

(131,223

)

 

 

415

 

 

 

482,704

 

 

 

(69,889

)

 

 

60

 

 

 

2,058,199

 

 

 

(201,112

)

 

 

475

 

Commercial mortgage-backed securities and collateralized mortgage obligations of government sponsored entities and agencies

 

 

306,173

 

 

 

(4,152

)

 

 

47

 

 

 

86,832

 

 

 

(1,813

)

 

 

20

 

 

 

393,005

 

 

 

(5,965

)

 

 

67

 

Obligations of state and political subdivisions

 

 

51,167

 

 

 

(2,830

)

 

 

81

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

51,167

 

 

 

(2,830

)

 

 

81

 

Corporate debt and other securities

 

 

10,328

 

 

 

(172

)

 

 

7

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

10,328

 

 

 

(172

)

 

 

7

 

Total

 

$

2,131,784

 

 

$

(151,715

)

 

 

586

 

 

$

619,275

 

 

$

(80,664

)

 

 

86

 

 

$

2,751,059

 

 

$

(232,379

)

 

 

672

 

 

 

 

December 31, 2021

 

 

 

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. Government sponsored entities and agencies

 

$

114,486

 

 

$

(1,865

)

 

 

12

 

 

$

32,688

 

 

$

(1,175

)

 

 

4

 

 

$

147,174

 

 

$

(3,040

)

 

 

16

 

Residential mortgage-backed securities and collateralized mortgage obligations of government sponsored entities and agencies

 

 

1,568,138

 

 

 

(29,060

)

 

 

143

 

 

 

141,681

 

 

 

(3,386

)

 

 

23

 

 

 

1,709,819

 

 

 

(32,446

)

 

 

166

 

Commercial mortgage-backed securities and collateralized mortgage obligations of government sponsored entities and agencies

 

 

131,970

 

 

 

(579

)

 

 

25

 

 

 

78,356

 

 

 

(666

)

 

 

8

 

 

 

210,326

 

 

 

(1,245

)

 

 

33

 

Obligations of states and political subdivisions

 

 

4,307

 

 

 

(35

)

 

 

2

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

4,307

 

 

 

(35

)

 

 

2

 

Corporate debt securities

 

 

6,990

 

 

 

(9

)

 

 

5

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

6,990

 

 

 

(9

)

 

 

5

 

Total

 

$

1,825,891

 

 

$

(31,548

)

 

 

187

 

 

$

252,725

 

 

$

(5,227

)

 

 

35

 

 

$

2,078,616

 

 

$

(36,775

)

 

 

222

 

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; 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 Federal Home Loan Bank (“FHLB”) of Pittsburgh stock totaling $12.8 million and $15.9 million at June 30, 2022 and December 31, 2021, 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.