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Securities
 9 Months Ended
Sep. 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:

 

 

 

September 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

 

$

263,336

 

 

$

1

 

 

$

(34,491

)

 

$

228,846

 

 

$

236,096

 

 

$

3,922

 

 

$

(3,040

)

 

$

236,978

 

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

 

 

2,210,727

 

 

 

20

 

 

 

(301,086

)

 

 

1,909,661

 

 

 

2,301,170

 

 

 

16,489

 

 

 

(32,446

)

 

 

2,285,213

 

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

 

 

407,299

 

 

 

3

 

 

 

(9,004

)

 

 

398,298

 

 

 

364,486

 

 

 

4,252

 

 

 

(1,245

)

 

 

367,493

 

Obligations of states and political subdivisions

 

 

99,643

 

 

 

69

 

 

 

(5,886

)

 

 

93,826

 

 

 

101,003

 

 

 

5,372

 

 

 

(35

)

 

 

106,340

 

Corporate debt securities

 

 

15,448

 

 

 

1

 

 

 

(332

)

 

 

15,117

 

 

 

16,940

 

 

 

507

 

 

 

(9

)

 

 

17,438

 

Total available-for-sale debt securities

 

$

2,996,453

 

 

$

94

 

 

$

(350,799

)

 

$

2,645,748

 

 

$

3,019,695

 

 

$

30,542

 

 

$

(36,775

)

 

$

3,013,462

 

Held-to-maturity debt securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Government sponsored entities and agencies

 

$

4,871

 

 

$

—

 

 

$

(474

)

 

$

4,397

 

 

$

5,944

 

 

$

72

 

 

$

(8

)

 

$

6,008

 

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

 

 

47,973

 

 

 

—

 

 

 

(4,213

)

 

 

43,760

 

 

 

58,147

 

 

 

1,409

 

 

 

(16

)

 

 

59,540

 

Obligations of states and political subdivisions

 

 

1,189,219

 

 

 

204

 

 

 

(191,468

)

 

 

997,955

 

 

 

907,649

 

 

 

23,854

 

 

 

(3,500

)

 

 

928,003

 

Corporate debt securities

 

 

20,404

 

 

 

—

 

 

 

(683

)

 

 

19,721

 

 

 

33,083

 

 

 

1,818

 

 

 

—

 

 

 

34,901

 

Total held-to-maturity debt securities (1)

 

$

1,262,467

 

 

$

204

 

 

$

(196,838

)

 

$

1,065,833

 

 

$

1,004,823

 

 

$

27,153

 

 

$

(3,524

)

 

$

1,028,452

 

Total debt securities

 

$

4,258,920

 

 

$

298

 

 

$

(547,637

)

 

$

3,711,581

 

 

$

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 $0.2 million at September 30, 2022 and $0.3 million at December 31, 2021.

 

At September 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 $9.4 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 $12.0 million and $13.5 million at September 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 September 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

 

 

 

 

 

 

Within one year

 

$

31,190

 

 

$

30,874

 

After 1 year through 5 years

 

 

153,759

 

 

 

149,576

 

After 5 years through 10 years

 

 

474,806

 

 

 

452,056

 

After 10 years

 

 

2,336,698

 

 

 

2,013,242

 

Total available-for-sale debt securities

 

$

2,996,453

 

 

$

2,645,748

 

Held-to-maturity debt securities

 

 

 

 

 

 

Within one year

 

$

26,906

 

 

$

26,820

 

After 1 year through 5 years

 

 

99,676

 

 

 

97,773

 

After 5 years through 10 years

 

 

350,392

 

 

 

321,926

 

After 10 years

 

 

785,493

 

 

 

619,314

 

Total held-to-maturity debt securities

 

$

1,262,467

 

 

$

1,065,833

 

Total debt securities

 

$

4,258,920

 

 

$

3,711,581

 

 

Securities with an aggregate fair value of $2.0 billion and $2.1 billion at September 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 sales of available-for-sale securities during the nine months ended September 30, 2022 and 2021. Net unrealized losses on available-for-sale securities included in accumulated other comprehensive income, net of tax, as of September 30, 2022 and December 31, 2021 were $266.4 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 nine months ended September 30, 2022 and 2021, 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 Three Months
Ended September 30,

 

 

For the Nine Months
Ended September 30,

 

(unaudited, in thousands)

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Debt securities:

 

 

 

 

 

 

 

 

 

 

 

 

Gross realized gains

 

$

30

 

 

$

22

 

 

$

168

 

 

$

222

 

Gross realized losses

 

 

(1

)

 

 

(2

)

 

 

(12

)

 

 

(41

)

Net gains on debt securities

 

 

29

 

 

 

20

 

 

 

156

 

 

 

181

 

Equity securities:

 

 

 

 

 

 

 

 

 

 

 

 

Net unrealized gains (losses) recognized on securities still held

 

 

627

 

 

 

(35

)

 

 

(1,332

)

 

 

559

 

Net securities gains (losses)

 

$

656

 

 

$

(15

)

 

$

(1,176

)

 

$

740

 

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 $9.5 million and $7.0 million as of September 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 nine months ended September 30, 2022 and 2021:

 

 

Allowance for Credit Losses By Category

 

 

For the Nine Months Ended September 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

 

—

 

 

—

 

 

(2

)

 

(41

)

 

(43

)

Write-offs

 

—

 

 

—

 

 

—

 

 

—

 

 

—

 

Recoveries

 

—

 

 

—

 

 

—

 

 

—

 

 

—

 

Balance at September 30, 2022

$

—

 

$

—

 

$

172

 

$

53

 

$

225

 

.

 

 

 

 

 

 

 

 

 

 

Balance at December 31, 2020

$

—

 

$

—

 

$

130

 

$

196

 

$

326

 

Current period provision

 

—

 

 

—

 

 

35

 

 

(104

)

 

(69

)

Write-offs

 

—

 

 

—

 

 

—

 

 

—

 

 

—

 

Recoveries

 

—

 

 

—

 

 

—

 

 

—

 

 

—

 

Balance at September 30, 2021

$

—

 

$

—

 

$

165

 

$

92

 

$

257

 

 

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 September 30, 2022 and December 31, 2021, respectively:

 

 

 

September 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

 

$

110,981

 

 

$

(9,122

)

 

 

36

 

 

$

117,687

 

 

$

(25,369

)

 

 

12

 

 

$

228,668

 

 

$

(34,491

)

 

 

48

 

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

 

 

802,738

 

 

 

(79,719

)

 

 

374

 

 

 

1,104,411

 

 

 

(221,367

)

 

 

128

 

 

 

1,907,149

 

 

 

(301,086

)

 

 

502

 

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

 

 

254,304

 

 

 

(5,485

)

 

 

50

 

 

 

143,797

 

 

 

(3,519

)

 

 

26

 

 

 

398,101

 

 

 

(9,004

)

 

 

76

 

Obligations of state and political subdivisions

 

 

79,251

 

 

 

(4,725

)

 

 

149

 

 

 

3,171

 

 

 

(1,161

)

 

 

2

 

 

 

82,422

 

 

 

(5,886

)

 

 

151

 

Corporate debt and other securities

 

 

14,129

 

 

 

(319

)

 

 

6

 

 

 

487

 

 

 

(13

)

 

 

1

 

 

 

14,616

 

 

 

(332

)

 

 

7

 

Total

 

$

1,261,403

 

 

$

(99,370

)

 

 

615

 

 

$

1,369,553

 

 

$

(251,429

)

 

 

169

 

 

$

2,630,956

 

 

$

(350,799

)

 

 

784

 

 

 

 

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 $11.4 million and $15.9 million at September 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.