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Securities
 3 Months Ended
Mar. 31, 2020
Investments Debt And Equity Securities [Abstract]  
Securities

NOTE 4. SECURITIES

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

 

 

 

March 31, 2020

 

 

December 31, 2019

 

(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. Treasury

 

$

21,410

 

 

$

98

 

 

$

—

 

 

$

21,508

 

 

$

32,790

 

 

$

47

 

 

$

(1

)

 

$

32,836

 

U.S. Government sponsored entities and

   agencies

 

 

154,661

 

 

 

4,743

 

 

 

(25

)

 

 

159,379

 

 

 

157,088

 

 

 

2,862

 

 

 

(322

)

 

 

159,628

 

Residential mortgage-backed securities and

   collateralized mortgage obligations of

   government sponsored entities and

   agencies

 

 

1,616,360

 

 

 

56,477

 

 

 

(1,368

)

 

 

1,671,469

 

 

 

1,803,268

 

 

 

18,850

 

 

 

(6,131

)

 

 

1,815,987

 

Commercial mortgage-backed securities

   and collateralized mortgage obligations

   of government sponsored entities and

   agencies

 

 

213,371

 

 

 

10,457

 

 

 

(1

)

 

 

223,827

 

 

 

187,268

 

 

 

3,270

 

 

 

(129

)

 

 

190,409

 

Obligations of states and political

   subdivisions

 

 

136,151

 

 

 

5,441

 

 

 

(19

)

 

 

141,573

 

 

 

140,357

 

 

 

5,253

 

 

 

(1

)

 

 

145,609

 

Corporate debt securities

 

 

44,012

 

 

 

600

 

 

 

(286

)

 

 

44,326

 

 

 

48,645

 

 

 

581

 

 

 

(137

)

 

 

49,089

 

Total available-for-sale debt securities

 

$

2,185,965

 

 

$

77,816

 

 

$

(1,699

)

 

$

2,262,082

 

 

$

2,369,416

 

 

$

30,863

 

 

$

(6,721

)

 

$

2,393,558

 

Held-to-maturity debt securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Government sponsored entities and

   agencies

 

$

9,041

 

 

$

90

 

 

$

(2

)

 

$

9,129

 

 

$

9,216

 

 

$

30

 

 

$

(116

)

 

$

9,130

 

Residential mortgage-backed securities and

   collateralized mortgage obligations of

   government sponsored entities and

   agencies

 

 

116,214

 

 

 

4,274

 

 

 

(29

)

 

 

120,459

 

 

 

122,937

 

 

 

1,031

 

 

 

(261

)

 

 

123,707

 

Obligations of states and political

   subdivisions

 

 

655,952

 

 

 

21,246

 

 

 

(87

)

 

 

677,111

 

 

 

686,376

 

 

 

20,475

 

 

 

(258

)

 

 

706,593

 

Corporate debt securities

 

 

33,207

 

 

 

1,367

 

 

 

(153

)

 

 

34,421

 

 

 

33,224

 

 

 

1,869

 

 

 

—

 

 

 

35,093

 

Total held-to-maturity debt securities

 

$

814,414

 

 

$

26,977

 

 

$

(271

)

 

$

841,120

 

 

$

851,753

 

 

$

23,405

 

 

$

(635

)

 

$

874,523

 

Total debt securities

 

$

3,000,379

 

 

$

104,793

 

 

$

(1,970

)

 

$

3,103,202

 

 

$

3,221,169

 

 

$

54,268

 

 

$

(7,356

)

 

$

3,268,081

 

(1)

Total held to maturity securities are presented on the balance sheet net of their allowance for credit losses totaling $0.2 million at March 31,2020

 

At March 31, 2020 and December 31, 2019, 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 $7.8 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 $11.2 million and $12.3 million at March 31, 2020 and December 31, 2019, 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 March 31, 2020.  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, principal payments are received on a monthly basis.  

 

(unaudited, in thousands)

 

Amortized Cost

 

 

Fair Value

 

Available-for-sale debt securities

 

 

 

 

 

 

 

 

Less than one year

 

$

46,569

 

 

$

46,618

 

1-5 years

 

 

137,986

 

 

 

142,442

 

5-10 years

 

 

323,482

 

 

 

338,039

 

Over 10 years

 

 

1,677,928

 

 

 

1,734,983

 

Total available-for-sale debt securities

 

$

2,185,965

 

 

$

2,262,082

 

Held-to-maturity debt securities

 

 

 

 

 

 

 

 

Less than one year

 

$

18,699

 

 

$

18,756

 

1-5 years

 

 

122,987

 

 

 

127,113

 

5-10 years

 

 

300,223

 

 

 

308,896

 

Over 10 years

 

 

372,505

 

 

 

386,355

 

Total held-to-maturity debt securities

 

$

814,414

 

 

$

841,120

 

Total debt securities

 

$

3,000,379

 

 

$

3,103,202

 

 

Securities with aggregate fair values of $2.1 billion and $2.0 billion at March 31, 2020 and December 31, 2019, respectively, were pledged as security for public and trust funds, and securities sold under agreements to repurchase. Proceeds from the sale of available-for-sale securities were $222.7 million and $66.1 million for the three months ended March 31, 2020 and 2019, respectively.  Net unrealized gains on available-for-sale securities included in accumulated other comprehensive income, net of tax, as of March 31, 2020 and December 31, 2019 were $58.0 million and $20.7 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 from the adoption of ASU 2016-01 effective January 1, 2018, for the three months ended March 31, 2020 and 2019, respectively.  

 

 

 

For the Three Months

Ended March 31,

 

(unaudited, in thousands)

 

2020

 

 

2019

 

Debt securities:

 

 

 

 

 

 

 

 

Gross realized gains

 

$

3,335

 

 

$

242

 

Gross realized losses

 

 

(1,031

)

 

 

(191

)

Net gains on debt securities

 

$

2,304

 

 

$

51

 

Equity securities:

 

 

 

 

 

 

 

 

Net unrealized (losses) gains recognized on securities still held

 

$

(805

)

 

$

603

 

Net realized (losses) gains recognized on securities sold

 

 

(8

)

 

 

3

 

Net (losses) gains on equity securities

 

$

(813

)

 

$

606

 

Net securities gains

 

$

1,491

 

 

$

657

 

On January 1, 2020, Wesbanco adopted CECL. Upon adoption, the Company recognized $0.2 million to opening retained earnings, which represents the CECL allowance as of January 1, 2020.  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 $7.2 million as of March 31, 2020, 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 economical or governmental policies that could affect this assumption.  

The following table provides a rollforward of the allowance for credit losses on held-to-maturity securities for the three months ended March 31, 2020:

 

 

Allowance for Credit Losses By Category

 

 

For the Three Months Ended March 31, 2020

 

 

 

 

 

Residential mortgage

-backed

 

Obligations of

 

 

 

 

 

 

 

 

U.S. Government

 

securities and

collateralized

 

state and

 

Corporate

 

 

 

 

 

sponsored

 

mortgage obligations

of government

 

political

 

debt

 

 

 

 

(unaudited, in thousands)

entities and agencies

 

sponsored entities

and agencies

 

subdivisions

 

Securities

 

Total

 

Beginning balance at January 1, 2020

$

—

 

$

—

 

$

96

 

$

133

 

$

229

 

Current period provision

 

—

 

 

—

 

 

2

 

 

5

 

 

7

 

Write-offs

 

—

 

 

—

 

 

—

 

 

—

 

 

—

 

Recoveries

 

—

 

 

—

 

 

—

 

 

—

 

 

—

 

Ending balance at March 31, 2020

$

—

 

$

—

 

$

98

 

$

138

 

$

236

 

 

The following table provides 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 March 31, 2020:

 

 

 

March 31, 2020

 

 

 

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

 

$

14,947

 

 

$

(25

)

 

 

2

 

 

$

—

 

 

$

—

 

 

 

—

 

 

$

14,947

 

 

$

(25

)

 

 

2

 

Residential mortgage-backed securities

   and collateralized mortgage obligations

   of government sponsored entities and

   agencies

 

 

116,118

 

 

 

(1,368

)

 

 

16

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

116,118

 

 

 

(1,368

)

 

 

16

 

Commercial mortgage-backed securities

   and collateralized mortgage obligations

   of government sponsored entities and

   agencies

 

 

—

 

 

 

—

 

 

 

—

 

 

 

180

 

 

 

(1

)

 

 

1

 

 

 

180

 

 

 

(1

)

 

 

1

 

Obligations of states and political

   subdivisions

 

 

1,727

 

 

 

(19

)

 

 

3

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

1,727

 

 

 

(19

)

 

 

3

 

Corporate debt securities

 

 

13,726

 

 

 

(286

)

 

 

6

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

13,726

 

 

 

(286

)

 

 

6

 

Total

 

$

146,518

 

 

$

(1,698

)

 

 

27

 

 

$

180

 

 

$

(1

)

 

 

1

 

 

$

146,698

 

 

$

(1,699

)

 

$

28

 

Unrealized losses on debt securities in the tables 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 FHLB of Pittsburgh, Cincinnati and Indianapolis stock totaling $73.9 million and $66.8 million at March 31, 2020 and December 31, 2019, 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.

The following table provides information on unrealized losses on held-to-maturity and available-for-sale debt securities that have been in an unrealized loss position for less than twelve months and twelve months or more as of December 31, 2019, prior to the date of adoption of the credit loss standard, and as defined by the previous accounting guidance in effect at that time:

 

 

 

December 31, 2019

 

 

 

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. Treasury

 

$

1,499

 

 

$

(1

)

 

 

1

 

 

$

—

 

 

$

—

 

 

 

—

 

 

$

1,499

 

 

$

(1

)

 

 

1

 

U.S. Government sponsored entities

   and agencies

 

 

57,650

 

 

 

(274

)

 

 

25

 

 

 

6,593

 

 

 

(164

)

 

 

2

 

 

 

64,243

 

 

 

(438

)

 

 

27

 

Residential mortgage-backed securities

   and collateralized mortgage obligations

   of government sponsored entities and

   agencies

 

 

544,692

 

 

 

(3,725

)

 

 

116

 

 

 

272,884

 

 

 

(2,667

)

 

 

122

 

 

 

817,576

 

 

 

(6,392

)

 

 

238

 

Commercial mortgage-backed securities

   and collateralized mortgage obligations

   of government sponsored entities and

   agencies

 

 

43,123

 

 

 

(124

)

 

 

7

 

 

 

3,704

 

 

 

(5

)

 

 

2

 

 

 

46,827

 

 

 

(129

)

 

 

9

 

Obligations of states and political

   subdivisions

 

 

17,876

 

 

 

(122

)

 

 

22

 

 

 

4,413

 

 

 

(137

)

 

 

8

 

 

 

22,289

 

 

 

(259

)

 

 

30

 

Corporate debt securities

 

 

4,120

 

 

 

(44

)

 

 

1

 

 

 

4,926

 

 

 

(93

)

 

 

2

 

 

 

9,046

 

 

 

(137

)

 

 

3

 

Total

 

$

668,960

 

 

$

(4,290

)

 

 

172

 

 

$

292,520

 

 

$

(3,066

)

 

 

136

 

 

$

961,480

 

 

$

(7,356

)

 

 

308