WSBC 10-Q Quarterly Report Sept. 30, 2023

WESBANCO INC

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10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

(Mark One)


☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2023


☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number 001-39442

WESBANCO, INC.

(Exact name of Registrant as specified in its charter)


West Virginia		55-0571723
(State of incorporation)		(IRS Employer Identification No.)

1 Bank Plaza , Wheeling , WV		26003
(Address of principal executive offices)		(Zip Code)

Registrant's telephone number, including area code: 304 - 234-9000

NOT APPLICABLE

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol	Name of each exchange on which registered
Common Stock $2.0833 Par Value	WSBC	NASDAQ Global Select Market
Depositary Shares (each representing 1/40 th interest in a share of 6.75% Fixed-Rate Reset Non-Cumulative Perpetual Preferred Stock, Series A)	WSBCP	NASDAQ Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☑ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☑	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicat e by check mark whether the registrant is a shell company (as defined by Rule 12b-2 of the Exchange Act). Yes ☐ No ☑

As of October 25, 2023, there were 59,368,269 shares of Wesbanco, Inc. common stock, $2.0833 par value, outstanding.

WESBANCO, INC.

TABLE OF CONTENTS


Item No.	ITEM	Page No.

	PART I - FINANCIAL INFORMATION
1	Financial Statements	2
	Consolidated Balance Sheets at September 30, 2023 (unaudited) and December 31, 2022	2
	Consolidated Statements of Income for the three and nine months ended September 30, 2023 and 2022 (unaudited)	3
	Consolidated Statements of Comprehensive Income for the three and nine months ended September 30, 2023 and 2022 (unaudited)	4
	Consolidated Statements of Changes in Shareholders' Equity for the three and nine months ended September 30, 2023 and 2022 (unaudited)	5
	Consolidated Condensed Statements of Cash Flows for the nine months ended September 30, 2023 and 2022 (unaudited)	7
	Notes to Consolidated Financial Statements (unaudited)	8

2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	34

3	Quantitative and Qualitative Disclosures About Market Risk	53

4	Controls and Procedures	55

	PART II – OTHER INFORMATION
1	Legal Proceedings	56

2	Unregistered Sales of Equity Securities and Use of Proceeds	56

5	Other Information	56

6	Exhibits	57

	Signatures	58

PART I - FINANCIAL INFORMATION

ITEM 1. FINANCI AL STATEMENTS

WESBANCO, INC. CONSO LIDATED BALANCE SHEETS


	September 30,			December 31,
(unaudited, in thousands, except shares)	2023			2022
ASSETS
Cash and due from banks, including interest bearing amounts of $ 342,070 and $ 242,229 , respectively	$	495,082		$	408,411
Securities:
Equity securities, at fair value		11,453			11,506
Available-for-sale debt securities, at fair value		2,196,141			2,529,140
Held-to-maturity debt securities (fair values of $ 998,987 and $ 1,084,390 , respectively)		1,210,992			1,248,629
Allowance for credit losses, held-to-maturity debt securities		( 180	)		( 220	)
Net held-to-maturity debt securities		1,210,812			1,248,409
Total securities		3,418,406			3,789,055
Loans held for sale		17,677			8,249
Portfolio loans, net of unearned income		11,315,873			10,702,728
Allowance for credit losses - loans		( 126,615	)		( 117,790	)
Net portfolio loans		11,189,258			10,584,938
Premises and equipment, net		226,377			220,892
Accrued interest receivable		73,014			68,522
Goodwill and other intangible assets, net		1,134,510			1,141,355
Bank-owned life insurance		356,962			352,361
Other assets		433,091			358,122
Total Assets	$	17,344,377		$	16,931,905
LIABILITIES
Deposits:
Non-interest bearing demand	$	4,169,956		$	4,700,438
Interest bearing demand		3,278,956			3,119,807
Money market		1,905,001			1,684,023
Savings deposits		2,559,894			2,741,004
Certificates of deposit		1,176,421			885,818
Total deposits		13,090,228			13,131,090
Federal Home Loan Bank borrowings		1,125,000			705,000
Other short-term borrowings		106,693			135,069
Subordinated debt and junior subordinated debt		282,079			281,404
Total borrowings		1,513,772			1,121,473
Accrued interest payable		11,416			4,593
Other liabilities		281,020			248,087
Total Liabilities		14,896,436			14,505,243
SHAREHOLDERS' EQUITY
Preferred stock, no par value, 1,000,000 shares authorized; 150,000 shares 6.75% non-cumulative perpetual preferred stock, Series A, liquidation preference $ 150,000,000 , issued and outstanding at September 30, 2023 and December 31, 2022, respectively		144,484			144,484
Common stock, $ 2.0833 par value; 100,000,000 shares authorized; 68,081,306 shares issued; 59,364,696 and 59,198,963 shares outstanding at September 30, 2023 and December 31, 2022, respectively		141,834			141,834
Capital surplus		1,633,395			1,635,877
Retained earnings		1,131,597			1,077,675
Treasury stock ( 8,716,610 and 8,882,343 shares - at cost, respectively)		( 303,424	)		( 308,964	)
Accumulated other comprehensive loss		( 297,906	)		( 262,416	)
Deferred benefits for directors		( 2,039	)		( 1,828	)
Total Shareholders' Equity		2,447,941			2,426,662
Total Liabilities and Shareholders' Equity	$	17,344,377		$	16,931,905

See Notes to Consolidated Financial Statements.

WESBANCO, INC. CONSOLIDATED STAT EMENTS OF INCOME


	For the Three Months Ended September 30,						For the Nine Months Ended September 30,
(unaudited, in thousands, except shares and per share amounts)	2023			2022			2023		2022
INTEREST AND DIVIDEND INCOME
Loans, including fees	$	155,206		$	109,562		$	434,352	$	299,094
Interest and dividends on securities:
Taxable		18,082			17,531			55,651		47,468
Tax-exempt		4,679			4,916			14,191		13,965
Total interest and dividends on securities		22,761			22,447			69,842		61,433
Other interest income		5,622			2,108			16,004		4,211
Total interest and dividend income		183,589			134,117			520,198		364,738
INTEREST EXPENSE
Interest bearing demand deposits		20,873			2,953			49,181		4,917
Money market deposits		10,841			968			22,313		1,672
Savings deposits		6,699			1,067			16,559		1,662
Certificates of deposit		5,983			958			10,092		3,347
Total interest expense on deposits		44,396			5,946			98,145		11,598
Federal Home Loan Bank borrowings		16,463			348			44,477		1,334
Other short-term borrowings		745			147			1,654		244
Subordinated debt and junior subordinated debt		4,303			3,175			12,342		7,123
Total interest expense		65,907			9,616			156,618		20,299
NET INTEREST INCOME		117,682			124,501			363,580		344,439
Provision for credit losses		6,327			( 535	)		12,932		( 4,785	)
Net interest income after provision for credit losses		111,355			125,036			350,648		349,224
NON-INTEREST INCOME
Trust fees		6,705			6,517			21,116		20,879
Service charges on deposits		6,726			6,942			19,128		19,520
Electronic banking fees		4,949			4,808			14,564		15,307
Net swap fee and valuation income		3,845			2,430			7,257		6,053
Net securities brokerage revenue		2,394			2,491			7,492		6,969
Bank-owned life insurance		2,398			1,999			7,547		8,263
Mortgage banking income		975			1,257			2,002		4,508
Net securities (losses) gains		( 337	)		656			13		( 1,176	)
Net (loss) gain on other real estate owned and other assets		( 28	)		2,040			1,075		( 68	)
Other income		3,252			3,116			10,178		9,367
Total non-interest income		30,879			32,256			90,372		89,622
NON-INTEREST EXPENSE
Salaries and wages		45,351			44,271			131,774		124,421
Employee benefits		11,922			10,693			35,492		28,574
Net occupancy		6,146			6,489			18,921		19,843
Equipment and software		9,132			8,083			27,018		23,795
Marketing		3,115			2,377			8,203		7,546
FDIC insurance		3,125			2,391			8,880		5,850
Amortization of intangible assets		2,262			2,560			6,845		7,738
Restructuring and merger-related expense		641			66			3,830		1,712
Other operating expenses		16,245			15,011			49,535		47,032
Total non-interest expense		97,939			91,941			290,498		266,511
Income before provision for income taxes		44,295			65,351			150,522		172,335
Provision for income taxes		7,453			12,318			26,458		32,432
Net income		36,842			53,033			124,064		139,903
Preferred stock dividends		2,531			2,531			7,594		7,594
Net income available to common shareholders	$	34,311		$	50,502		$	116,470	$	132,309
EARNINGS PER COMMON SHARE
Basic	$	0.58		$	0.85		$	1.96	$	2.19
Diluted	$	0.58		$	0.85		$	1.96	$	2.19
AVERAGE COMMON SHARES OUTSTANDING
Basic		59,358,653			59,549,244			59,280,644		60,336,637
Diluted		59,443,366			59,697,676			59,386,429		60,489,248
DIVIDENDS DECLARED PER COMMON SHARE	$	0.35		$	0.34		$	1.05	$	1.02

See Notes to Consolidated Financial Statements.

WESBANCO, INC. CONSOLIDA TED STATEMENTS OF COMPREHENSIVE INCOME


	For the Three Months Ended September 30,						For the Nine Months Ended September 30,
(unaudited, in thousands)	2023			2022			2023			2022
Net income	$	36,842		$	53,033		$	124,064		$	139,903
Debt securities available-for-sale:
Net change in unrealized losses on debt securities available-for-sale		( 44,112	)		( 119,299	)		( 47,521	)		( 344,480	)
Related income tax effect		10,705			28,665			11,632			82,787
Net securities losses reclassified into earnings		69			—			228			10
Related income tax effect		( 17	)		—			( 55	)		( 2	)
Net effect on other comprehensive income for the period		( 33,355	)		( 90,634	)		( 35,716	)		( 261,685	)
Defined benefit plans:
Amortization of net loss and prior service costs		100			73			298			218
Related income tax effect		( 24	)		( 18	)		( 72	)		( 53	)
Net effect on other comprehensive income for the period		76			55			226			165
Total other comprehensive loss		( 33,279	)		( 90,579	)		( 35,490	)		( 261,520	)
Comprehensive income (loss)	$	3,563		$	( 37,546	)	$	88,574		$	( 121,617	)

WESBANCO, INC. CONSOLIDATED STATEMENT S OF CHANGES IN SHAREHOLDERS’ EQUITY


	For the Three Months Ended September 30, 2023 and 2022
																	Accumulated
	Preferred		Common Stock														Other			Deferred
(unaudited, in thousands, except	Stock		Shares					Capital			Retained			Treasury			Comprehensive			Benefits for
shares and per share amounts)	Amount		Outstanding			Amount		Surplus			Earnings			Stock			Income (Loss)			Directors			Total
June 30, 2023	$	144,484		59,355,062		$	141,834	$	1,630,963		$	1,118,135		$	( 303,770	)	$	( 264,627	)	$	( 2,021	)	$	2,464,998
Net income		—		—			—		—			36,842			—			—			—			36,842
Other comprehensive loss		—		—			—		—			—			—			( 33,279	)		—			( 33,279	)
Comprehensive income		—		—			—		—			—			—			—			—			3,563
Common dividends declared ($ 0.35 per share)		—		—			—		—			( 20,583	)		—			—			—			( 20,583	)
Preferred dividends declared ($ 16.875 per share)		—		—			—		—			( 2,531	)		—			—			—			( 2,531	)
Stock issued for dividend reinvestment		—		7,275			—		—			( 266	)		266			—			—			—
Treasury shares acquired		—		—			—		—			—			—			—			—			—
Stock options exercised		—		941			—		( 14	)		—			38			—			—			24
Restricted stock granted		—		1,418			—		( 42	)		—			42			—			—			—
Stock compensation expense		—		—			—		2,472			—			—			—			—			2,472
Deferred benefits for directors - net		—		—			—		16			—			—			—			( 18	)		( 2	)
September 30, 2023	$	144,484		59,364,696		$	141,834	$	1,633,395		$	1,131,597		$	( 303,424	)	$	( 297,906	)	$	( 2,039	)	$	2,447,941

June 30, 2022	$	144,484		59,698,788		$	141,834	$	1,632,617		$	1,018,209		$	( 291,337	)	$	( 176,061	)	$	( 1,795	)	$	2,467,951
Net income		—		—			—		—			53,033			—			—			—			53,033
Other comprehensive loss		—		—			—		—			—			—			( 90,579	)		—			( 90,579	)
Comprehensive loss		—		—			—		—			—			—			—			—			( 37,546	)
Common dividends declared ($ 0.34 per share)		—		—			—		—			( 20,024	)		—			—			—			( 20,024	)
Preferred dividends declared ($ 16.875 per share)		—		—			—		—			( 2,531	)		—			—			—			( 2,531	)
Stock issued for dividend reinvestment		—		4,832			—		—			( 155	)		155			—			—			—
Treasury shares acquired		—		( 409,340	)		—		—			—			( 14,180	)		—			—			( 14,180	)
Stock options exercised		—		10,225			—		( 78	)		—			329			—			—			251
Restricted stock granted		—		—			—		—			—			—			—			—			—
Stock compensation expense		—		—			—		1,727			—			—			—			—			1,727
Deferred benefits for directors - net		—		—			—		14			—			—			—			( 10	)		4
September 30, 2022	$	144,484		59,304,505		$	141,834	$	1,634,280		$	1,048,532		$	( 305,033	)	$	( 266,640	)	$	( 1,805	)	$	2,395,652


	For the Nine Months Ended September 30, 2023 and 2022
																	Accumulated
	Preferred		Common Stock														Other			Deferred
(unaudited, in thousands, except	Stock		Shares					Capital			Retained			Treasury			Comprehensive			Benefits for
shares and per share amounts)	Amount		Outstanding			Amount		Surplus			Earnings			Stock			Income (Loss)			Directors			Total
December 31, 2022	$	144,484		59,198,963		$	141,834	$	1,635,877		$	1,077,675		$	( 308,964	)	$	( 262,416	)	$	( 1,828	)	$	2,426,662
Net income		—		—			—		—			124,064			—			—			—			124,064
Other comprehensive loss		—		—			—		—			—			—			( 35,490	)		—			( 35,490	)
Comprehensive income		—		—			—		—			—			—			—			—			88,574
Common dividends declared ($ 1.05 per share)		—		—			—		—			( 61,729	)		—			—			—			( 61,729	)
Preferred dividends declared ($ 16.875 per share)		—		—			—		—			( 7,594	)		—			—			—			( 7,594	)
Stock issued for dividend reinvestment				22,455								( 819	)		819									—
Treasury shares acquired		—		( 162,432	)		—		—			—			( 3,745	)		—			—			( 3,745	)
Stock options exercised		—		6,432			—		( 60	)		—			206			—			—			146
Restricted stock granted		—		299,278			—		( 8,260	)		—			8,260			—			—			—
Stock compensation expense		—		—			—		5,806			—			—			—			—			5,806
Deferred benefits for directors - net		—		—			—		32			—			—			—			( 211	)		( 179	)
September 30, 2023	$	144,484		59,364,696		$	141,834	$	1,633,395		$	1,131,597		$	( 303,424	)	$	( 297,906	)	$	( 2,039	)	$	2,447,941

December 31, 2021	$	144,484		62,307,245		$	141,834	$	1,635,642		$	977,765		$	( 199,759	)	$	( 5,120	)	$	( 1,680	)	$	2,693,166
Net income		—		—			—		—			139,903			—			—			—			139,903
Other comprehensive loss		—		—			—		—			—			—			( 261,520	)		—			( 261,520	)
Comprehensive loss		—		—			—		—			—			—			—			—			( 121,617	)
Common dividends declared ($ 1.02 per share)		—		—			—		—			( 60,750	)		—			—			—			( 60,750	)
Preferred dividends declared ($ 16.875 per share)		—		—			—		—			( 7,594	)		—			—			—			( 7,594	)
Stock issued for dividend reinvestment		—		23,478			—		—			( 792	)		792			—			—			—
Treasury shares acquired		—		( 3,250,383	)		—		—			—			( 113,600	)		—			—			( 113,600	)
Stock options exercised		—		59,959			—		( 384	)		—			2,013			—			—			1,629
Restricted stock granted		—		164,206			—		( 5,521	)		—			5,521			—			—			—
Stock compensation expense		—		—			—		4,519			—			—			—			—			4,519
Deferred benefits for directors - net		—		—			—		24			—			—			—			( 125	)		( 101	)
September 30, 2022	$	144,484		59,304,505		$	141,834	$	1,634,280		$	1,048,532		$	( 305,033	)	$	( 266,640	)	$	( 1,805	)	$	2,395,652

See Notes to Consolidated Financial Statements.

WESBANCO, INC. CONSOLIDATE D CONDENSED STATEMENTS OF CASH FLOWS


	For the Nine Months Ended September 30,
(unaudited, in thousands)	2023			2022
NET CASH PROVIDED BY OPERATING ACTIVITIES	$	121,956		$	196,674
INVESTING ACTIVITIES
Net increase in loans held for investment		( 612,293	)		( 533,917	)
Available-for-sale debt securities:
Proceeds from sales		30,987			—
Proceeds from maturities, prepayments and calls		254,684			484,434
Purchases of securities		( 4,500	)		( 468,399	)
Held-to-maturity debt securities:
Proceeds from maturities, prepayments and calls		35,823			75,247
Purchases of securities		—			( 335,042	)
Proceeds from bank owned life insurance		2,946			7,816
Purchases of premises and equipment – net		( 19,581	)		( 5,281	)
Net cash used in investing activities		( 311,934	)		( 775,142	)
FINANCING ACTIVITIES
Decrease in deposits		( 40,022	)		( 119,900	)
Proceeds from Federal Home Loan Bank borrowings		1,380,000			—
Repayment of Federal Home Loan Bank borrowings		( 960,000	)		( 126,980	)
Decrease in other short-term borrowings		( 28,376	)		( 13,910	)
Principal repayments of finance lease obligations		( 2,057	)		( 389	)
Issuance of subordinated debt, net of issuance costs		—			147,702
Dividends paid to common shareholders		( 61,703	)		( 61,292	)
Dividends paid to preferred shareholders		( 7,594	)		( 7,594	)
Treasury shares purchased - net		( 3,599	)		( 111,971	)
Net cash provided by (used in) financing activities		276,649			( 294,334	)
Net increase (decrease) in cash, cash equivalents and restricted cash		86,671			( 872,802	)
Cash, cash equivalents and restricted cash at beginning of the period		408,411			1,251,358
Cash, cash equivalents and restricted cash at end of the period	$	495,082		$	378,556
SUPPLEMENTAL DISCLOSURES
Interest paid on deposits and other borrowings	$	149,960		$	18,763
Income taxes paid		33,785			21,820
Transfers of loans to other real estate owned		168			1,554

See Notes to Consolidated Financial Statements.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of presentation — The accompanying unaudited interim financial statements of Wesbanco, Inc. and its consolidated subsidiaries (“Wesbanco”) have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements and should be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2022.

Wesbanco’s interim financial statements have been prepared following the significant accounting policies disclosed in Note 1 of the Notes to the Consolidated Financial Statements of its 2022 Annual Report on Form 10-K filed with the Securities and Exchange Commission, as well as with the policy changes indicated below. In the opinion of management, the accompanying interim financial information reflects all adjustments, including normal recurring adjustments, necessary to present fairly Wesbanco’s financial position and results of operations for each of the interim periods presented. Certain prior period amounts have been reclassified to conform to the current period presentation. Such reclassifications had no impact on Wesbanco’s net income and shareholders’ equity. Results of operations for interim periods are not necessarily indicative of the results of operations that may be expected for a full year.

Modifications for Borrowers Experiencing Financial Difficulty (“MBEFD”) — A modification of a loan for borrowers experiencing financial difficulty is applicable when the loan modification results in a direct change in the timing or amount of contractual cash flows. The most common modifications provided to borrowers experiencing financial difficulty are expected to occur in the form of principal forgiveness, interest rate reductions, other-than-insignificant-payment delays, or term extensions under ASC 310-10-50-39. Upon Wesbanco's adoption of Accounting Standards Update (“ASU”) 2022-02 on January 1, 2023, Troubled Debt Restructuring ("TDR") accounting was prospectively discontinued and economic concessions for modifications occurring on or after the adoption date are no longer measured. This accounting also results in the elimination of any existing economic concession related to a loan that was previously designated as a TDR if such loan is restructured on or after January 1, 2023. Due to the elimination of economic concessions under ASU 2022-02, the standard may result in modified loans being subject to the new disclosures that would have not been considered concessions and not treated as TDRs.

When determining whether a debtor is experiencing financial difficulties, consideration is given to any known default on any of its debt or whether it is probable that the debtor would be in payment default in the foreseeable future without the modification. Other indicators of financial difficulty include whether the debtor has declared or is in the process of declaring bankruptcy, the debtor’s ability to continue as a going concern, or the debtor’s projected cash flow to service its debt (including principal & interest) in accordance with the contractual terms for the foreseeable future, without a modification. If the payment of principal at original maturity is primarily dependent on the value of collateral, the current value of that collateral is considered in determining whether the principal will be paid.

The modification of a loan does not increase the allowance or provision for credit losses unless the loan is extended, or the loans are commercial loans that are individually evaluated for impairment, in which case a specific reserve is established pursuant to GAAP. Portfolio segment loss history is the primary factor for establishing the allowance for residential real estate, home equity and consumer MBEFDs.

Non-accrual loans that are restructured remain on non-accrual, but may move to accrual status after they have performed according to the restructured terms for a period of time. MBEFDs on accrual status generally remain on accrual as long as they continue to perform in accordance with their modified terms. MBEFDs may also be placed on non-accrual if they do not perform in accordance with the restructured terms. Loans may be removed from MBEFD status after they have performed according to the renegotiated terms for a period of time.

Recent accounting pronouncements— The Financial Accounting Standards Board (“FASB”) issued Accounting Standards Updates (“ASU”) as noted below.

ASU 2023-06 - Disclosure Improvements: Codification Amendments in Response to the SEC’s Disclosure Update and Simplification Initiative

In October 2023, the FASB issued ASU 2023-06, "Disclosure Improvements." For entities subject to the SEC’s existing disclosure requirements and for entities required to file or furnish financial statements with or to the SEC in preparation for the sale of or for purposes of issuing securities that are not subject to contractual restrictions on transfer, the effective date for each amendment will be the date on which the SEC’s removal of that related disclosure from Regulation S-X or Regulation S-K becomes effective. If by June 30, 2027, the SEC has not removed the applicable requirement from Regulation S-X or Regulation S-K, the pending content of the related amendment will be removed from the Codification and will not become effective for any entity. The adoption of this pronouncement is not expected to have a material impact on the Consolidated Financial Statements.

ASU 2023-05 – Business Combinations—Joint Venture Formations (Subtopic 805-60): Recognition and Initial Measurement

In August 2023, the FASB issued ASU 2023-05, "Business Combinations - Joint Venture Formations (Subtopic 805-60): Recognition and Initial Measurement," under which an entity that qualifies as either a joint venture or a corporate joint venture as defined in the FASB Accounting Standards Codification ("ASC") master glossary is required to apply a new basis of accounting upon the formation of the joint venture. Specifically, the ASU provides that a joint venture or a corporate joint venture (collectively, “joint ventures”) must initially measure its assets and liabilities at fair value on the formation date. For Wesbanco, the amendments are effective for all joint ventures within the ASU’s scope that are formed on or after January 1, 2025 . Early adoption is permitted in any annual or interim period as of the beginning of the related fiscal year. The adoption of this pronouncement is no t expected to have a material impact on the Consolidated Financial Statements.

ASU 2023-04 - Liabilities (Topic 405): Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 121 (SEC Update)

In August 2023, the FASB issued ASU 2023-04, "Liabilities (Topic 405): Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No.121." ASU 2023-04 adds various SEC paragraphs to the Codification to reflect guidance included in SEC Staff Accounting Bulletin No. 121 on safeguarding crypto assets. As no new guidance is provided, there is no transition or effective date associated with this update.

ASU 2023-03 - Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 120

In July 2023, FASB issued ASU 2023-03, which amends or supersedes various SEC paragraphs within the Codification to conform to past SEC announcements and guidance issued by the SEC. The ASU does not provide any new guidance. Therefore, there is no transition or effective date associated with this update.

ASU 2023-02 – Investments Equity Method and Joint Ventures (Topic 323)

In March 2023, the FASB issued ASU 2023-02, Investments—Equity Method and Joint Ventures (Topic 323): Accounting for Investments in Tax Credit Structures Using the Proportional Amortization Method. ASU 2023-02 allows reporting entities to elect to account for qualifying tax equity investments using the proportional amortization method, regardless of the program giving rise to the related income tax credits. The ASU’s amendments “remove the specialized guidance for [low-income-housing tax credit] investments that are not accounted for using the proportional amortization method and instead require that those LIHTC investments be accounted for using the guidance in other [GAAP].” For Wesbanco, the amendments are effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years. The adoption of this pronouncement is not expected to have a material impact on the Consolidated Financial Statements.

ASU 2023-01 - Leases (Topic 842): Common Control Arrangements

In March 2023, the FASB issued ASU 2023-01, Leases (Topic 842): Common Control Arrangements. ASU 2023-01 amends certain provisions of ASC 842 that apply to arrangements between related parties under common control. Additionally, ASU 2023-01 amends the accounting for leasehold improvements in common-control arrangements for all entities. For Wesbanco, the amendments are effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years. Early adoption is permitted in any annual or interim period as of the beginning of the related fiscal year. The adoption of this pronouncement is not expected to have a material impact on the Consolidated Financial Statements.

ASU 2022-04 - Liabilities – Supplier Finance Programs (Sub-topic 405-50)

In September 2022, the FASB issued ASU 2022-04, “Liabilities—Supplier Finance Programs (Subtopic 405-50).” The amendments in this ASU require that a buyer in a supplier finance program disclose sufficient information about the program to allow a user of financial statements to understand the program’s nature, activity during the period, changes from period to period, and potential magnitude. To achieve that objective, the buyer should disclose qualitative and quantitative information about its supplier finance programs. For Wesbanco, this update was effective beginning on January 1, 2023, except for the amendment on rollforward information, which is effective for fiscal years beginning after December 15, 2023. The adoption of this full pronouncement is not expected to have a material impact on the Consolidated Financial Statements.

ASU 2022-03 - Fair Value Measurement (Topic 820)

In June 2022, the FASB issued ASU 2022-03, "Fair Value Measurement (Topic 820).” The amendments in this ASU clarify that a contractual restriction on the sale of an equity security is not considered part of the unit of account of the equity security, and therefore, is not considered in measuring fair value. Furthermore, the amendments to this ASU clarify that an entity cannot, as a separate unit of account, recognize and measure a contractual sale restriction. The update to this ASU requires the following disclosures for equity securities: (1) the fair value of equity securities subject to contractual sale restrictions reflected in the balance sheet; (2) the nature and remaining duration of the restriction(s) and; (3) the circumstances that could cause a lapse in the restriction(s). The amendments in this Update are effective for fiscal years beginning after December 15, 2023, and interim periods within those fiscal years. Wesbanco is currently assessing the impact of ASU 2022-03 on its Consolidated Financial Statements.

ASU 2022-02 - Financial Instruments - Credit Losses (Topic 326)

In March 2022, the FASB issued ASU 2022-02, "Financial Instruments - Credit Losses (Topic 326)." The amendments in this ASU eliminate the accounting guidance for TDRs by creditors in Subtopic 310-40, "Receivables - Troubled Debt Restructurings by Creditors," while enhancing disclosure requirements for certain loan refinancings and restructurings by creditors when a borrower is experiencing financial difficulty. Specifically, rather than applying the recognition and measurement guidance for TDRs, an entity must apply the loan refinancing and restructuring guidance in paragraphs 310-20-35-9 through 35-11 to determine whether a modification results in a new loan or a continuation of an existing loan. In addition, for public business entities, the amendments in this Update require that an entity disclose current-period gross writeoffs by year of origination for financing receivables and net investments in leases within the scope of Subtopic 326-20, "Financial Instruments - Credit Losses - Measured at Amortized Cost." For Wesbanco, this update was effective beginning on January 1, 2023 . The adoption of this pronouncement did not have a material impact on the Consolidated Financial Statements. For the additional disclosure requirements in this ASU, please refer to the MBEFD policy above and Note 4, "Loans and the Allowance for Credit Losses."

ASU 2020-04, ASU 2021-01 and ASU 2022-06 - Reference Rate Reform (Topic 848)

In March 2020, the FASB issued ASU 2020-04, “Reference Rate Reform (Topic 848).” This ASU provided temporary, optional guidance to ease the potential burden in accounting for, or recognizing the effects of, the transition away from the London Interbank Offered Rate ("LIBOR") or other reference rate expected to be discontinued on financial reporting. The ASU also provides optional expedients for contract modifications that replace a reference rate affected by reference rate reform. The guidance is effective as of March 12, 2020 through December 31, 2022, and can be adopted at any

time during this period. In January 2021, the FASB issued ASU 2021-01, “Reference Rate Reform (Topic 848): Scope.” This ASU refines the scope of Topic 848 and addresses questions about whether Topic 848 can be applied to derivative instruments that do not reference a rate that is expected to be discontinued, but that use an interest rate for margining, discounting or contract price alignment that is expected to be modified as a result of reference rate reform. ASU 2021-01 is effective upon issuance through December 31, 2024, and can be adopted at any time during this period. Wesbanco has not offered LIBOR for any new contracts after December 31, 2021. Wesbanco has chosen the One Month Term Secured Overnight Financing Rate ("1M Term SOFR") as its alternative replacement rate for LIBOR on both back-to-back swaps and on one-month variable loans. A transition plan was implemented in 2021 to identify and modify Wesbanco's loans and other financial instruments with attributes that are either directly or indirectly influenced by LIBOR. In December 2022, the FASB issued ASU 2022-06, “Reference Rate Reform (Topic 848): Deferral of the Sunset Date of Topic 848.” In the Update, the Board decided to defer the sunset date of Topic 848 to December 31, 2024, to permit entities to apply the guidance in Topic 848 through the expected cessation date of USD LIBOR. In the Board’s view, that time frame would have been sufficient to provide flexibility for additional unforeseen changes to the timeline of USD LIBOR cessation and to accommodate global interbank offered rate (IBOR) transition. The update did not have a material impact on Wesbanco’s Consolidated Financial Statements.

NOTE 2. EARNINGS PER COMMON SHARE

Earnings per common share are calculated as follows:


	For the Three Months Ended September 30,				For the Nine Months Ended September 30,
(unaudited, in thousands, except shares and per share amounts)	2023		2022		2023		2022
Numerator for both basic and diluted earnings per common share:
Net income available to common shareholders	$	34,311	$	50,502	$	116,470	$	132,309
Denominator:
Total average basic common shares outstanding		59,358,653		59,549,244		59,280,644		60,336,637
Effect of dilutive stock options and other stock compensation		84,713		148,432		105,785		152,611
Total diluted average common shares outstanding		59,443,366		59,697,676		59,386,429		60,489,248
Earnings per common share - basic	$	0.58	$	0.85	$	1.96	$	2.19
Earnings per common share - diluted	$	0.58	$	0.85	$	1.96	$	2.19

As of September 30, 2023 and 2022 , 596,642 and 522,711 options to purchase shares were not included in the diluted share computation for the three and nine months ended September 30, 2023 and 2022, respectively, because the exercise price was greater than the average market price of a common share, and, therefore, the effect would be antidilutive.

As of September 30, 2023 , no shares were estimated to be awarded under the 2023, 2022 and 2021 total shareholder return ("TSR") plans, as stock performance targets had not been met as of such date and therefore the effect would be antidilutive. As of September 30, 2022 , 36,000 contingently issuable shares were estimated to be awarded under the 2022 and 2021 TSR plans, as stock performance targets had been met as of such date and therefore those shares were included in the diluted calculation. As of September 30, 2022, the shares related to the 2020 TSR plan were not included in the calculation because they had not met performance measures and the effect would be antidilutive.

In addition, performance-based restricted stock ("PBRS") compensation totaling 70,568 and 55,230 shares were estimated to be awarded as of September 30, 2023 and September 30, 2022 , respectively.

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, 2023									December 31, 2022
(unaudited, in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value		Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Available-for-sale debt securities
U.S. Government sponsored entities and agencies	$	242,104	$	—	$	( 40,592	)	$	201,512	$	259,418	$	2	$	( 33,450	)	$	225,970
Residential mortgage-backed securities and collateralized mortgage obligations of government sponsored entities and agencies		1,952,915		20		( 337,659	)		1,615,276		2,144,015		25		( 297,987	)		1,846,053
Commercial mortgage-backed securities and collateralized mortgage obligations of government sponsored entities and agencies		301,489		—		( 8,242	)		293,247		359,811		—		( 10,080	)		349,731
Obligations of states and political subdivisions		80,602		—		( 6,155	)		74,447		96,081		244		( 4,097	)		92,228
Corporate debt securities		11,959		—		( 300	)		11,659		15,451		—		( 293	)		15,158
Total available-for-sale debt securities	$	2,589,069	$	20	$	( 392,948	)	$	2,196,141	$	2,874,776	$	271	$	( 345,907	)	$	2,529,140
Held-to-maturity debt securities
U.S. Government sponsored entities and agencies	$	3,807	$	—	$	( 433	)	$	3,374	$	4,357	$	—	$	( 416	)	$	3,941
Residential mortgage-backed securities and collateralized mortgage obligations of government sponsored entities and agencies		40,527		—		( 4,647	)		35,880		45,909		—		( 3,809	)		42,100
Obligations of states and political subdivisions		1,146,362		62		( 206,313	)		940,111		1,177,986		577		( 159,975	)		1,018,588
Corporate debt securities		20,296		—		( 674	)		19,622		20,377		—		( 616	)		19,761
Total held-to-maturity debt securities (1)	$	1,210,992	$	62	$	( 212,067	)	$	998,987	$	1,248,629	$	577	$	( 164,816	)	$	1,084,390
Total debt securities	$	3,800,061	$	82	$	( 605,015	)	$	3,195,128	$	4,123,405	$	848	$	( 510,723	)	$	3,613,530

(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, 2023 and December 31, 2022 , respectively.

At September 30, 2023 and December 31, 2022 , 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 $ 9.0 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 $ 11.5 million at September 30, 2023 and December 31, 2022, 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, 2023. 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	$	27,501	$	26,969
After 1 year through 5 years		127,072		122,529
After 5 years through 10 years		386,343		360,145
After 10 years		2,048,153		1,686,498
Total available-for-sale debt securities	$	2,589,069	$	2,196,141
Held-to-maturity debt securities
Within one year	$	18,814	$	18,694
After 1 year through 5 years		110,471		106,721
After 5 years through 10 years		464,698		406,786
After 10 years		617,009		466,786
Total held-to-maturity debt securities	$	1,210,992	$	998,987
Total debt securities	$	3,800,061	$	3,195,128

Securities with an aggregate fair value of $ 2.0 billion and $ 2.1 billion at September 30, 2023 and December 31, 2022, 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 for the nine months ended September 30, 2023 totaled $ 31.0 million . There were no security sales that occurred in the nine months ended September 30, 2022. Net unrealized losses on available-for-sale securities included in accumulated other comprehensive income, net of tax, as of September 30, 2023 and December 31, 2022 were $ 297.6 million and $ 261.8 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, 2023 and 2022, respectively. All gains and losses presented in the table below are included in the net securities gains (losses) line item of the consolidated 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)	2023			2022			2023			2022
Debt securities:
Gross realized gains	$	—		$	30		$	65		$	168
Gross realized losses		( 80	)		( 1	)		( 286	)		( 12	)
Net (losses) gains on debt securities		( 80	)		29			( 221	)		156
Equity securities:
Net unrealized (losses) gains recognized on securities still held		( 257	)		627			234			( 1,332	)
Net securities (losses) gains	$	( 337	)	$	656		$	13		$	( 1,176	)

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 consolidated income statement in the provision for credit losses. Accrued interest receivable on held-to-maturity securities, which was $ 8.8 million and $ 9.5 million as of September 30, 2023 and December 31, 2022 , 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, 2023 and 2022:


	Allowance for Credit Losses By Category
	For the Nine Months Ended September 30, 2023 and 2022
			Residential mortgage
			-backed
			securities and
			collateralized
			mortgage obligations		Obligations of
	U.S. Government		of government		states and			Corporate
	sponsored		sponsored entities		political			debt
(unaudited, in thousands)	entities and agencies		and agencies		subdivisions			Securities			Total
Balance at December 31, 2022	$	—	$	—	$	167		$	53		$	220
Current period provision (1)		—		—		( 22	)		( 18	)		( 40	)
Write-offs		—		—		—			—			—
Recoveries		—		—		—			—			—
Balance at September 30, 2023	$	—	$	—	$	145		$	35		$	180
.
Balance at December 31, 2021	$	—	$	—	$	174		$	94		$	268
Current period provision (1)		—		—		( 2	)		( 41	)		( 43	)
Write-offs		—		—		—			—			—
Recoveries		—		—		—			—			—
Balance at September 30, 2022	$	—	$	—	$	172		$	53		$	225

(1) The total provision for credit losses on held-to-maturity securities is reported in the consolidated statements of income in the provision for credit losses line item, which also includes the provision for credit losses - loans and loan commitments. For more information on the provision relating to loans and loan commitments, please see Note 4, "Loans and the Allowance for Credit Losses."

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, 2023 and December 31, 2022, respectively:


	September 30, 2023
	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	$	—	$	—			—	$	201,494	$	( 40,592	)		45	$	201,494	$	( 40,592	)		45
Residential mortgage-backed securities and collateralized mortgage obligations of government sponsored entities and agencies		—		—			—		1,613,653		( 337,659	)		472		1,613,653		( 337,659	)		472
Commercial mortgage-backed securities and collateralized mortgage obligations of government sponsored entities and agencies		5,574		( 41	)		1		283,445		( 8,201	)		64		289,019		( 8,242	)		65
Obligations of states and political subdivisions		24,713		( 956	)		33		48,863		( 5,199	)		84		73,576		( 6,155	)		117
Corporate debt securities		4,462		( 38	)		3		7,197		( 262	)		3		11,659		( 300	)		6
Total	$	34,749	$	( 1,035	)		37	$	2,154,652	$	( 391,913	)		668	$	2,189,401	$	( 392,948	)		705


	December 31, 2022
	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	$	107,011	$	( 8,435	)		35	$	118,779	$	( 25,015	)		13	$	225,790	$	( 33,450	)		48
Residential mortgage-backed securities and collateralized mortgage obligations of government sponsored entities and agencies		514,789		( 39,246	)		294		1,328,906		( 258,741	)		202		1,843,695		( 297,987	)		496
Commercial mortgage-backed securities and collateralized mortgage obligations of government sponsored entities and agencies		190,189		( 5,106	)		38		159,543		( 4,974	)		36		349,732		( 10,080	)		74
Obligations of states and political subdivisions		67,822		( 1,815	)		128		7,812		( 2,282	)		10		75,634		( 4,097	)		138
Corporate debt securities		7,225		( 226	)		3		4,433		( 67	)		3		11,658		( 293	)		6
Total	$	887,036	$	( 54,828	)		498	$	1,619,473	$	( 291,079	)		264	$	2,506,509	$	( 345,907	)		762

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 $ 53.0 million and $ 36.2 million at September 30, 2023 and December 31, 2022, 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.

NOTE 4. LOANS AND THE ALLOWANCE FOR CREDIT LOSSES

The recorded investment in loans is presented in the Consolidated Balance Sheets net of deferred loan fees and costs, and discounts on purchased loans. Net deferred loan costs were $ 11.3 million and $ 9.6 million at September 30, 2023 and December 31, 2022 , respectively. The unaccreted discount on purchased loans from acquisitions was $ 14.5 million at September 30, 2023 and $ 18.0 million at December 31, 2022.


	September 30,		December 31,
(unaudited, in thousands)	2023		2022
Commercial real estate:
Land and construction	$	870,066	$	943,887
Improved property		5,517,117		5,117,457
Total commercial real estate		6,387,183		6,061,344
Commercial and industrial		1,587,611		1,579,395
Residential real estate		2,392,531		2,140,584
Home equity		715,186		695,065
Consumer		233,362		226,340
Total portfolio loans		11,315,873		10,702,728
Loans held for sale		17,677		8,249
Total loans	$	11,333,550	$	10,710,977

Allowance for Credit Losses

The allowance for credit losses under the current expected credit losses methodology ("CECL") is calculated utilizing the probability of default ("PD")/ loss given default ("LGD"), which is then discounted to net present value. PD is the probability the asset will default within a given time frame and LGD is the percentage of the asset not expected to be collected due to default. The primary macroeconomic drivers of the quantitative model include forecasts of national unemployment and interest rates, as well as modeling adjustments for changes in prepayment speeds, loan risk grades, portfolio mix, concentrations and loan growth. At September 30, 2023, the primary drivers of the allowance model calculation were loan growth, macroeconomic variables, prepayment speeds, qualitative factors for distressed industries, the current rate environment and changes in risk grading. The forecast was based upon a probability weighted approach which is designed to incorporate loss projections from a baseline, upside and downside economy. Due to the nonlinearity of credit losses to the economy, the asymmetry is best captured by evaluating multiple economic scenarios through a probability weighted approach. At quarter-end, national unemployment was projected to be 4.3 %, and subsequently increase to an average of 4.7 % over the remainder of the forecast period. Accrued interest receivable for loans was $ 57.7 million and $ 51.8 million at September 30, 2023 and December 31, 2022 , respectively. Wesbanco made an accounting policy election to exclude accrued interest from the measurement of the allowance for credit losses because the Company has a policy in place to reverse or write-off accrued interest when loans are placed on non-accrual. However, Wesbanco does have a $ 0.1 million reserve on the accrued interest related to loan modifications allowed under the Coronavirus Aid, Relief and Economic Security ("CARES") Act due to the timing and nature of these modifications. Accrued interest related to COVID-19 loan modifications as permitted under the CARES Act was $ 15.8 million and $ 17.0 million at September 30, 2023 and December 31, 2022, respectively.

The following tables summarize changes in the allowance for credit losses applicable to each category of the loan portfolio:


	Allowance for Credit Losses By Category
	For the Nine Months Ended September 30, 2023 and 2022
(unaudited, in thousands)	Commercial Real Estate - Land and Construction			Commercial Real Estate- Improved Property			Commercial & Industrial			Residential Real Estate			Home Equity			Consumer			Deposit Overdrafts (1)			Total
Balance at December 31, 2022
Allowance for credit losses - loans	$	6,737		$	52,659		$	31,540		$	18,208		$	4,234		$	3,127		$	1,285		$	117,790
Allowance for credit losses - loan commitments		6,025			—			—			2,215			128			—			—			8,368
Total beginning allowance for credit losses - loans and loan commitments		12,762			52,659			31,540			20,423			4,362			3,127			1,285			126,158
Provision for credit losses:
Provision for loan losses		( 614	)		7,595			3,678			1,582			( 2,901	)		1,315			957			11,612
Provision for loan commitments		1,247			—			1,087			( 863	)		( 110	)		—			—			1,361
Total provision for credit losses - loans and loan commitments (2)		633			7,595			4,765			719			( 3,011	)		1,315			957			12,973
Charge-offs		( 222	)		( 1,450	)		( 1,498	)		( 278	)		( 670	)		( 2,604	)		( 1,262	)		( 7,984	)
Recoveries		207			821			996			929			331			1,604			309			5,197
Net (charge-offs) recoveries		( 15	)		( 629	)		( 502	)		651			( 339	)		( 1,000	)		( 953	)		( 2,787	)
Balance at September 30, 2023
Allowance for credit losses - loans		6,108			59,625			34,716			20,441			994			3,442			1,289			126,615
Allowance for credit losses - loan commitments		7,272			—			1,087			1,352			18			—			—			9,729
Total ending allowance for credit losses - loans and loan commitments	$	13,380		$	59,625		$	35,803		$	21,793		$	1,012		$	3,442		$	1,289		$	136,344

Balance at December 31, 2021
Allowance for credit losses - loans	$	7,310		$	65,355		$	26,875		$	15,401		$	724		$	3,737		$	2,220		$	121,622
Allowance for credit losses - loan commitments		4,180			201			1,497			1,576			49			272			—			7,775
Total beginning allowance for credit losses - loans and loan commitments		11,490			65,556			28,372			16,977			773			4,009			2,220			129,397
Provision for credit losses:
Provision for loan losses		1,369			( 12,082	)		2,160			1,133			37			1,216			260			( 5,907	)
Provision for loan commitments		1,618			( 201	)		( 1,214	)		788			7			165			—			1,163
Total provision for credit losses - loans and loan commitments (2)		2,987			( 12,283	)		946			1,921			44			1,381			260			( 4,744	)
Charge-offs		( 73	)		( 642	)		( 983	)		( 282	)		( 266	)		( 2,511	)		( 1,215	)		( 5,972	)
Recoveries		25			899			871			483			293			1,992			278			4,841
Net (charge-offs) recoveries		( 48	)		257			( 112	)		201			27			( 519	)		( 937	)		( 1,131	)
Balance at September 30, 2022
Allowance for credit losses - loans		8,631			53,530			28,923			16,735			788			4,434			1,543			114,584
Allowance for credit losses - loan commitments		5,798			—			283			2,364			56			437			—			8,938
Total ending allowance for credit losses - loans and loan commitments	$	14,429		$	53,530		$	29,206		$	19,099		$	844		$	4,871		$	1,543		$	123,522

(1) Deposit overdrafts of $ 4.5 million and $ 3.7 million are included in total portfolio loans for the periods ending September 30, 2023 and September 30, 2022, respectively.

(2) The total provision for credit losses - loans and loan commitments is reported in the consolidated statements of income in the provision for credit losses line item, which also includes the provision for credit losses on held-to-maturity securities. For more information on the provision relating to held-to-maturity securities, please see Note 3, "Securities."

The following tables present the allowance for credit losses and recorded investments in loans by category, as of each period-end:


	Allowance for Credit Losses and Recorded Investment in Loans
(unaudited, in thousands)	Commercial Real Estate- Land and Construction		Commercial Real Estate- Improved Property		Commercial and Industrial		Residential Real Estate		Home Equity		Consumer		Deposit Overdrafts (1)		Total
September 30, 2023
Allowance for credit losses:
Loans individually-evaluated	$	—	$	4,963	$	—	$	—	$	—	$	—	$	—	$	4,963
Loans collectively-evaluated		6,108		54,662		34,716		20,441		994		3,442		1,289		121,652
Loan commitments (2)		7,272		—		1,087		1,352		18		—		—		9,729
Total allowance for credit losses - loans and commitments	$	13,380	$	59,625	$	35,803	$	21,793	$	1,012	$	3,442	$	1,289	$	136,344

Portfolio loans:
Individually-evaluated for credit losses	$	—	$	26,924	$	181	$	—	$	—	$	—	$	—	$	27,105
Collectively-evaluated for credit losses		870,066		5,490,193		1,587,430		2,392,531		715,186		233,362		—		11,288,768
Total portfolio loans	$	870,066	$	5,517,117	$	1,587,611	$	2,392,531	$	715,186	$	233,362	$	—	$	11,315,873

December 31, 2022
Allowance for credit losses:
Loans individually-evaluated	$	—	$	2,988	$	130	$	—	$	—	$	—	$	—	$	3,118
Loans collectively-evaluated		6,737		49,671		31,410		18,208		4,234		3,127		1,285		114,672
Loan commitments (2)		6,025		—		—		2,215		128		—		—		8,368
Total allowance for credit losses - loans and commitments	$	12,762	$	52,659	$	31,540	$	20,423	$	4,362	$	3,127	$	1,285	$	126,158

Portfolio loans:
Individually-evaluated for credit losses	$	24,629	$	25,369	$	401	$	—	$	—	$	—	$	—	$	50,399
Collectively-evaluated for credit losses		919,258		5,092,088		1,578,994		2,140,584		695,065		226,340		—		10,652,329
Total portfolio loans	$	943,887	$	5,117,457	$	1,579,395	$	2,140,584	$	695,065	$	226,340	$	—	$	10,702,728

(1) Deposit overdrafts of $ 4.5 million and $ 4.4 million are included in total portfolio loans for the periods ending September 30, 2023 and December 31, 2022, respectively.

(2) For additional detail relating to loan commitments, see Note 10, "Commitments and Contingent Liabilities."

Commercial Loan Risk Grades

Commercial loan risk grades are determined based on an evaluation of the relevant characteristics of each loan, assigned at inception and adjusted thereafter at any time to reflect changes in the risk profile throughout the life of each loan. The primary factors used to determine the risk grade are the sufficiency, reliability and sustainability of the primary source of repayment and overall financial strength of the borrower. The rating system more heavily weights the debt service coverage, leverage and loan to value factors to derive the risk grade. Other factors that are considered at a lesser weighting include management, industry or property type risks, payment history, collateral or guarantees.

Commercial real estate – land and construction consists of loans to finance investments in vacant land, land development, construction of residential housing, and construction of commercial buildings. Commercial real estate – improved property consists of loans for the purchase or refinance of all types of improved owner-occupied and investment properties. Factors that are considered in assigning the risk grade vary depending on the type of property financed. The risk grade assigned to construction and development loans is based on the overall viability of the project, the experience and financial capacity of the developer or builder to successfully complete the project, project specific and market absorption rates and comparable property values, and the amount of pre-sales for residential housing construction or pre-leases for commercial investment property. The risk grade assigned to commercial investment property loans is based primarily on the adequacy of the net operating income generated by the property to service the debt (“debt service coverage”), the loan to appraised value, the type, quality, industry and mix of tenants, and the terms of leases. The risk grade assigned to owner-occupied commercial real estate is based primarily on global debt service coverage and the leverage of the business, but may also consider the industry in which the business operates, the business’ specific competitive advantages or disadvantages, collateral margins and the quality and experience of management.

Commercial and industrial (“C&I”) loans consist of revolving lines of credit to finance accounts receivable, inventory and other general business purposes; term loans to finance fixed assets other than real estate, and letters of credit to support trade, insurance or governmental requirements for a variety of businesses. Most C&I borrowers are privately-held companies with annual sales up to $ 100 million. Primary factors that are considered in risk rating C&I loans include debt service coverage and leverage. Other factors including operating trends, collateral coverage along with management experience are also considered.

Pass loans are those that exhibit a history of positive financial results that are at least comparable to the average for their industry or type of real estate. The primary source of repayment is acceptable and these loans are expected to perform satisfactorily during most economic cycles. Pass loans typically have no significant external factors that are expected to adversely affect these borrowers more than others in the same industry or property type. Any minor unfavorable characteristics of these loans are outweighed or mitigated by other positive factors including but not limited to adequate secondary or tertiary sources of repayment, including guarantees.

Criticized loans, considered as compromised, have potential weaknesses that deserve management's close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the asset or in the bank's credit position at some future date. Criticized loans are not adversely classified by the banking regulators and do not expose the bank to sufficient risk to warrant adverse classification.

Classified loans, considered as substandard and doubtful, are equivalent to the classifications used by banking regulators. Substandard loans are inadequately protected by the current sound worth and paying capacity of the obligor or of the collateral pledged, if any. Loans so classified must have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the bank will sustain some loss if the deficiencies are not corrected. These loans may or may not be reported as non-accrual. Doubtful loans have all the weaknesses inherent in those classified substandard, with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently known facts, conditions, and values, highly questionable and improbable. These loans are reported as non-accrual.

The following tables summarize commercial loans by their assigned risk grade:


	Commercial Loans by Internally Assigned Risk Grade
(unaudited, in thousands)	Commercial Real Estate- Land and Construction		Commercial Real Estate- Improved Property		Commercial & Industrial		Total Commercial Loans
As of September 30, 2023
Pass	$	867,656	$	5,326,634	$	1,529,371	$	7,723,661
Criticized - compromised		2,400		125,863		51,873		180,136
Classified - substandard		10		64,620		6,367		70,997
Classified - doubtful		—		—		—		—
Total	$	870,066	$	5,517,117	$	1,587,611	$	7,974,794

As of December 31, 2022
Pass	$	911,804	$	4,940,135	$	1,538,300	$	7,390,239
Criticized - compromised		1,329		121,393		25,223		147,945
Classified - substandard		30,754		55,929		15,872		102,555
Classified - doubtful		—		—		—		—
Total	$	943,887	$	5,117,457	$	1,579,395	$	7,640,739

Residential real estate, home equity and consumer loans are not assigned internal risk grades other than as required by regulatory guidelines that are based primarily on the age of past due loans. Wesbanco primarily evaluates the credit quality of residential real estate, home equity and consumer loans based on repayment performance and historical loss rates. The aggregate amount of residential real estate, home equity and consumer loans classified as substandard in accordance with regulatory guidelines was $ 20.6 million at September 30, 2023 and $ 24.8 million at December 31, 2022 , of which $ 4.2 million and $ 5.9 million were accruing, for each period, respectively. These loans are not included in the tables above. In addition, $ 13.8 million and $ 25.0 million of unfunded commercial loan commitments are also not included in the tables above at September 30, 2023 and December 31, 2022, respectively.

Past Due and Nonperforming Loans

The following tables summarize the age analysis of all categories of loans:


	Age Analysis of Loans
(unaudited, in thousands)	Current		30-59 Days Past Due		60-89 Days Past Due		90 Days or More Past Due		Total Past Due		Total Loans		90 Days or More Past Due and Accruing (1)
As of September 30, 2023
Commercial real estate:
Land and construction	$	870,066	$	—	$	—	$	—	$	—	$	870,066	$	—
Improved property		5,499,069		2,161		1,279		14,608		18,048		5,517,117		4,131
Total commercial real estate		6,369,135		2,161		1,279		14,608		18,048		6,387,183		4,131
Commercial and industrial		1,584,822		566		438		1,785		2,789		1,587,611		292
Residential real estate		2,383,834		1,134		2,955		4,608		8,697		2,392,531		1,991
Home equity		705,435		3,599		1,209		4,943		9,751		715,186		1,475
Consumer		228,391		3,152		1,035		784		4,971		233,362		717
Total portfolio loans		11,271,617		10,612		6,916		26,728		44,256		11,315,873		8,606
Loans held for sale		17,677		—		—		—		—		17,677		—
Total loans	$	11,289,294	$	10,612	$	6,916	$	26,728	$	44,256	$	11,333,550	$	8,606

Nonperforming loans included above are as follows:
Non-accrual loans	$	10,258	$	626	$	872	$	18,122	$	19,620	$	29,878

As of December 31, 2022
Commercial real estate:
Land and construction	$	942,236	$	—	$	910	$	741	$	1,651	$	943,887	$	629
Improved property		5,099,342		2,147		331		15,637		18,115		5,117,457		84
Total commercial real estate		6,041,578		2,147		1,241		16,378		19,766		6,061,344		713
Commercial and industrial		1,574,311		1,427		519		3,138		5,084		1,579,395		1,586
Residential real estate		2,129,095		853		3,536		7,100		11,489		2,140,584		1,551
Home equity		686,762		3,885		621		3,797		8,303		695,065		1,063
Consumer		222,153		2,910		704		573		4,187		226,340		530
Total portfolio loans		10,653,899		11,222		6,621		30,986		48,829		10,702,728		5,443
Loans held for sale		8,249		—		—		—		—		8,249		—
Total loans	$	10,662,148	$	11,222	$	6,621	$	30,986	$	48,829	$	10,710,977	$	5,443

Nonperforming loans included above are as follows:
Non-accrual loans	$	10,337	$	1,495	$	870	$	25,483	$	27,848	$	38,185
TDRs accruing interest		3,131		7		32		60		99		3,230
Total nonperforming loans	$	13,468	$	1,502	$	902	$	25,543	$	27,947	$	41,415

(1) For the table presented as of December 31, 2022 , loans 90 days or more past due and accruing interest exclude TDRs 90 days or more past due and accruing interest.

The following tables summarize nonperforming loans:


	Nonperforming Loans
	September 30, 2023						December 31, 2022
	Unpaid						Unpaid
	Principal		Recorded		Related		Principal		Recorded		Related
(unaudited, in thousands)	Balance (1)		Investment		Allowance		Balance (1)		Investment		Allowance
With no related specific allowance recorded:
Commercial real estate:
Land and construction	$	—	$	—	$	—	$	112	$	112	$	—
Improved property		13,092		11,289		—		18,367		16,601		—
Commercial and industrial		2,743		2,138		—		4,102		3,112		—
Residential real estate		15,692		11,013		—		21,084		16,057		—
Home equity		7,115		5,322		—		6,970		5,374		—
Consumer		190		116		—		316		159		—
Total nonperforming loans without a specific allowance		38,832		29,878		—		50,951		41,415		—
Total nonperforming loans with a specific allowance		—		—		—		—		—		—
Total nonperforming loans	$	38,832	$	29,878	$	—	$	50,951	$	41,415	$	—

(1) The difference between the unpaid principal balance and the recorded investment generally reflects amounts that have been previously charged-off and fair market value adjustments on acquired nonperforming loans.


	Nonperforming Loans
	For the Three Months Ended									For the Nine Months Ended
	September 30, 2023				September 30, 2022					September 30, 2023				September 30, 2022
	Average		Interest		Average		Interest			Average		Interest		Average		Interest
	Recorded		Income		Recorded		Income			Recorded		Income		Recorded		Income
(unaudited, in thousands)	Investment		Recognized		Investment		Recognized			Investment		Recognized		Investment		Recognized
With no related specific allowance recorded:
Commercial real estate:
Land and construction	$	—	$	—	$	27	$	( 2	)	$	28	$	—	$	70	$	—
Improved property		11,243		—		7,086		57			14,322		—		7,505		71
Commercial and industrial		2,244		—		4,010		5			2,702		—		4,514		8
Residential real estate		11,832		—		17,467		24			13,139		—		18,327		96
Home equity		5,292		—		5,046		14			5,205		—		5,279		20
Consumer		107		—		396		1			121		—		468		3
Total nonperforming loans without a specific allowance		30,717		—		34,030		99			35,517		—		36,163		198
With a specific allowance recorded:
Commercial real estate:
Land and construction		—		—		—		—			—		—		—		—
Improved property		—		—		—		—			—		—		—		—
Total nonperforming loans with a specific allowance		—		—		—		—			—		—		—		—
Total nonperforming loans	$	30,717	$	—	$	34,030	$	99		$	35,517	$	—	$	36,163	$	198

The following table presents the recorded investment in non-accrual loans:


	Non-accrual Loans (1)
	September 30,		December 31,
(unaudited, in thousands)	2023		2022
Commercial real estate:
Land and construction	$	—	$	112
Improved property		11,289		16,254
Total commercial real estate		11,289		16,366
Commercial and industrial		2,138		2,946
Residential real estate		11,013		13,695
Home equity		5,322		5,044
Consumer		116		134
Total	$	29,878	$	38,185

(1) At September 30, 2023 , there were three borrowers with a loan balance greater than $ 1.0 million, which totaled $ 8.3 million, as compared to three borrowers with a loan balance greater than $ 1.0 million totaling $ 11.8 million at December 31, 2022 . Total non-accrual loans include loans that are also restructured for borrowers experiencing financial difficulty or were previously designated as non-accrual TDRs prior to the adoption of ASU 2022-02. Such loans are also set forth in the following tables.

Modifications for Borrowers Experiencing Financial Difficulty (following the adoption of ASU 2022-02)

Tables in the following section exclude the financial effects of modifications for loans that were paid off or are otherwise no longer in the loan portfolio as of period end. The following table displays the details of portfolio loans that were modified during the three and nine months ended September 30, 2023 presented by loan category:


	For the Three Months Ended September 30, 2023
(unaudited, in thousands)	Term Extension		Payment Delay		Total		% of Total by Loan Category
Commercial real estate - land and construction	$	—	$	—	$	—		—
Commercial real estate - improved property		159		—		159		0.0
Commercial and industrial		136		43		179		0.0
Residential real estate		—		126		126		0.0
Home equity		—		258		258		0.0
Consumer		—		244		244		0.1
Total	$	295	$	671	$	966		0.0

	For the Nine Months Ended September 30, 2023
(unaudited, in thousands)	Term Extension		Payment Delay		Total		% of Total by Loan Category
Commercial real estate - land and construction	$	173	$	—	$	173		0.0
Commercial real estate - improved property		7,014		276		7,290		0.1
Commercial and industrial		9,276		43		9,319		0.6
Residential real estate		—		226		226		0.0
Home equity		8		936		944		0.1
Consumer		—		505		505		0.2
Total	$	16,471	$	1,986	$	18,457		0.2

Unfunded loan commitments on modifications for borrowers experiencing financial difficulty ("MBEFDs") totaled $ 3.2 million at September 30, 2023 . These commitments are not included in the table above.

The following table summarizes the financial impacts of loan modifications and payment deferrals made to portfolio loans during the three and nine months ended September 30, 2023, presented by loan category:


	For the Three Months Ended September 30, 2023
(unaudited, in thousands)	Weighted-Average Term Extension (in months)
Commercial real estate - land and construction		—
Commercial real estate - improved property		3
Commercial and industrial		3
Residential real estate		—
Home equity		—
Consumer		—


	For the Nine Months Ended September 30, 2023
(unaudited, in thousands)	Weighted-Average Term Extension (in months)
Commercial real estate - land and construction		12
Commercial real estate - improved property		22
Commercial and industrial		9
Residential real estate		—
Home equity		120
Consumer		—

There have been no MBEFDs which defaulted (defined as 90 days past due) after the loan was modified during the three and nine months ended September 30, 2023.

The following table presents an aging analysis of portfolio loans that were modified on or after January 1, 2023, the date that Wesbanco adopted ASU 2022-02, by loan category, as of September 30, 2023:


	September 30, 2023
(unaudited, in thousands)	30-59 Days Past Due		60-89 Days Past Due		90 Days or More Past Due		Total Past Due		Current		Total
Commercial real estate - land and construction	$	—	$	—	$	—	$	—	$	173	$	173
Commercial real estate - improved property		—		33		276		309		6,981		7,290
Commercial and industrial		—		43		—		43		9,276		9,319
Residential real estate		67		—		—		67		159		226
Home equity		46		24		101		171		773		944
Consumer		6		68		62		136		369		505
Total modified loans (1)	$	119	$	168	$	439	$	726	$	17,731	$	18,457

(1) Represents balance at period end.

Troubled Debt Restructuring Disclosures (prior to the adoption of ASU 2022-02)

The following table presents details related to loans identified as TDRs during the three and nine months ended September 30, 2022:


	New TDRs (1)
	For the Three Months Ended
	September 30, 2022
			Pre-		Post-
			Modification		Modification
			Outstanding		Outstanding
	Number of		Recorded		Recorded
(unaudited, dollars in thousands)	Modifications		Investment		Investment
Commercial real estate:
Land and construction		—	$	—	$	—
Improved property		1		1,097		1,075
Total commercial real estate		1		1,097		1,075
Commercial and industrial		—		—		—
Residential real estate		—		—		—
Home equity		—		—		—
Consumer		—		—		—
Total		1	$	1,097	$	1,075

	New TDRs (1)
	For the Nine Months Ended
	September 30, 2022
			Pre-		Post-
			Modification		Modification
			Outstanding		Outstanding
	Number of		Recorded		Recorded
(unaudited, dollars in thousands)	Modifications		Investment		Investment
Commercial real estate:
Land and construction		1	$	84	$	—
Improved property		2		1,286		1,075
Total commercial real estate		3		1,370		1,075
Commercial and industrial		—		—		—
Residential real estate		—		—		—
Home equity		—		—		—
Consumer		—		—		—
Total		3	$	1,370	$	1,075

(1) Excludes loans that were either paid off or charged-off by period end. The pre-modification balance represents the balance outstanding at the beginning of the period. The post-modification balance represents the outstanding balance at period end.

There were no TDRs which defaulted (defined as past due 90 days) during the three months ended September 30, 2022 that were restructured within the last twelve months prior to September 30, 2022.

The following tables summarize amortized cost basis loan balances by year of origination and credit quality indicator:


	Loans As of September 30, 2023
	Amortized Cost Basis by Origination Year
(unaudited, in thousands)	2023		2022		2021		2020		2019		Prior		Revolving Loans Amortized Cost Basis		Revolving Loans Converted to Term		Total
Commercial real estate: land and construction
Risk rating:
Pass	$	163,921	$	291,411	$	140,411	$	53,071	$	49,688	$	36,474	$	89,731	$	42,949	$	867,656
Criticized - compromised		—		—		—		—		—		20		—		2,380		2,400
Classified - substandard		—		—		—		—		—		10		—		—		10
Classified - doubtful		—		—		—		—		—		—		—		—		—
Total	$	163,921	$	291,411	$	140,411	$	53,071	$	49,688	$	36,504	$	89,731	$	45,329	$	870,066
Current-period gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	222	$	222

Commercial real estate: improved property
Risk rating:
Pass	$	401,664	$	1,090,574	$	623,153	$	610,828	$	512,609	$	1,754,251	$	93,421	$	240,134	$	5,326,634
Criticized - compromised		—		10,300		3,938		2,855		3,964		81,658		1,986		21,162		125,863
Classified - substandard		—		514		469		2,764		35,744		25,076		19		34		64,620
Classified - doubtful		—		—		—		—		—		—		—		—		—
Total	$	401,664	$	1,101,388	$	627,560	$	616,447	$	552,317	$	1,860,985	$	95,426	$	261,330	$	5,517,117
Current-period gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	1,450	$	—	$	—	$	1,450

Commercial and industrial
Risk rating:
Pass	$	168,627	$	255,050	$	147,484	$	92,590	$	47,358	$	279,259	$	504,659	$	34,344	$	1,529,371
Criticized - compromised		959		512		4,020		359		6,786		17,317		14,509		7,411		51,873
Classified - substandard		—		135		59		607		841		2,075		1,148		1,502		6,367
Classified - doubtful		—		—		—		—		—		—		—		—		—
Total	$	169,586	$	255,697	$	151,563	$	93,556	$	54,985	$	298,651	$	520,316	$	43,257	$	1,587,611
Current-period gross charge-offs	$	98	$	143	$	563	$	43	$	20	$	387	$	—	$	244	$	1,498

Residential real estate
Loan delinquency:
Current	$	212,958	$	481,377	$	464,248	$	188,572	$	88,126	$	475,232	$	—	$	473,321	$	2,383,834
30-59 days past due		—		—		—		—		—		1,134		—		—		1,134
60-89 days past due		196		127		34		—		52		2,004		—		542		2,955
90 days or more past due		—		—		187		—		215		4,174		—		32		4,608
Total	$	213,154	$	481,504	$	464,469	$	188,572	$	88,393	$	482,544	$	—	$	473,895	$	2,392,531
Current-period gross charge-offs	$	—	$	—	$	—	$	—	$	5	$	273	$	—	$	—	$	278

Home equity
Loan delinquency:
Current	$	11,528	$	947	$	1,581	$	1,709	$	1,912	$	23,294	$	663,347	$	1,117	$	705,435
30-59 days past due		—		230		67		169		50		953		2,121		9		3,599
60-89 days past due		—		175		161		326		109		438		—		—		1,209
90 days or more past due		—		184		55		539		283		3,463		—		419		4,943
Total	$	11,528	$	1,536	$	1,864	$	2,743	$	2,354	$	28,148	$	665,468	$	1,545	$	715,186
Current-period gross charge-offs	$	—	$	139	$	54	$	1	$	29	$	441	$	6	$	—	$	670

Consumer
Loan delinquency:
Current	$	72,886	$	63,086	$	24,744	$	15,868	$	13,851	$	13,989	$	23,967	$	—	$	228,391
30-59 days past due		570		1,384		657		231		62		147		101		—		3,152
60-89 days past due		42		556		329		49		13		46		—		—		1,035
90 days or more past due		83		451		106		74		16		54		—		—		784
Total	$	73,581	$	65,477	$	25,836	$	16,222	$	13,942	$	14,236	$	24,068	$	—	$	233,362
Current-period gross charge-offs	$	73	$	1,305	$	681	$	240	$	79	$	223	$	3	$	—	$	2,604


	Loans As of December 31, 2022
	Amortized Cost Basis by Origination Year
(unaudited, in thousands)	2022		2021		2020		2019		2018		Prior		Revolving Loans Amortized Cost Basis		Revolving Loans Converted to Term		Total
Commercial real estate: land and construction
Risk rating:
Pass	$	159,769	$	136,131	$	138,171	$	155,141	$	61,823	$	51,381	$	117,237	$	92,151	$	911,804
Criticized - compromised		559		265		—		—		24		31		—		450		1,329
Classified - substandard		—		—		6,001		—		—		124		—		24,629		30,754
Classified - doubtful		—		—		—		—		—		—		—		—		—
Total	$	160,328	$	136,396	$	144,172	$	155,141	$	61,847	$	51,536	$	117,237	$	117,230	$	943,887
Current-period gross charge-offs	$	—	$	—	$	—	$	—	$	73	$	—	$	—	$	—	$	73

Commercial real estate: improved property
Risk rating:
Pass	$	1,082,984	$	620,205	$	613,663	$	528,004	$	371,880	$	1,551,478	$	72,327	$	99,594	$	4,940,135
Criticized - compromised		10,554		354		2,877		7,659		13,551		85,332		1,066		—		121,393
Classified - substandard		—		658		275		15,489		9,761		29,712		34		—		55,929
Classified - doubtful		—		—		—		—		—		—		—		—		—
Total	$	1,093,538	$	621,217	$	616,815	$	551,152	$	395,192	$	1,666,522	$	73,427	$	99,594	$	5,117,457
Current-period gross charge-offs	$	—	$	—	$	128	$	100	$	3	$	564	$	—	$	—	$	795

Commercial and industrial
Risk rating:
Pass	$	280,510	$	184,805	$	116,890	$	72,142	$	103,660	$	232,062	$	526,025	$	22,206	$	1,538,300
Criticized - compromised		917		1,192		270		8,278		264		2,524		7,654		4,124		25,223
Classified - substandard		93		3,209		976		2,157		97		2,854		1,066		5,420		15,872
Classified - doubtful		—		—		—		—		—		—		—		—		—
Total	$	281,520	$	189,206	$	118,136	$	82,577	$	104,021	$	237,440	$	534,745	$	31,750	$	1,579,395
Current-period gross charge-offs	$	—	$	16	$	234	$	275	$	70	$	182	$	—	$	291	$	1,068

Residential real estate
Loan delinquency:
Current	$	541,659	$	556,928	$	211,496	$	97,160	$	52,135	$	478,977	$	—	$	190,740	$	2,129,095
30-59 days past due		—		—		—		—		—		853		—		—		853
60-89 days past due		—		442		349		65		—		2,680		—		—		3,536
90 days or more past due		—		—		—		285		119		6,654		—		42		7,100
Total	$	541,659	$	557,370	$	211,845	$	97,510	$	52,254	$	489,164	$	—	$	190,782	$	2,140,584
Current-period gross charge-offs	$	—	$	—	$	—	$	—	$	6	$	494	$	—	$	—	$	500

Home equity
Loan delinquency:
Current	$	10,718	$	1,459	$	1,133	$	1,774	$	1,088	$	25,203	$	644,430	$	957	$	686,762
30-59 days past due		80		61		180		67		34		1,165		2,260		38		3,885
60-89 days past due		—		15		—		50		88		458		—		10		621
90 days or more past due		—		—		572		93		257		2,425		16		434		3,797
Total	$	10,798	$	1,535	$	1,885	$	1,984	$	1,467	$	29,251	$	646,706	$	1,439	$	695,065
Current-period gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	310	$	—	$	48	$	358

Consumer
Loan delinquency:
Current	$	84,817	$	36,123	$	25,071	$	25,535	$	8,488	$	16,337	$	25,755	$	27	$	222,153
30-59 days past due		980		937		488		159		98		217		31		—		2,910
60-89 days past due		184		293		94		47		29		57		—		—		704
90 days or more past due		183		208		69		32		2		79		—		—		573
Total	$	86,164	$	37,561	$	25,722	$	25,773	$	8,617	$	16,690	$	25,786	$	27	$	226,340
Current-period gross charge-offs	$	769	$	1,237	$	624	$	333	$	186	$	326	$	—	$	1	$	3,476

The following table summarizes other real estate owned and repossessed assets included in other assets:


	September 30,		December 31,
(unaudited, in thousands)	2023		2022
Other real estate owned	$	1,231	$	1,397
Repossessed assets		102		89
Total other real estate owned and repossessed assets	$	1,333	$	1,486

Residential real estate included in other real estate owned was $ 0.1 million and $ 0 million at September 30, 2023 and December 31, 2022, respectively. At September 30, 2023 and December 31, 2022 , formal foreclosure proceedings were in process on residential real estate loans totaling $ 4.4 million and $ 4.9 million, respectively.

NOTE 5. DERIVATIVES AND HEDGING ACTIVITIES

Risk Management Objective of Using Derivatives

Wesbanco is exposed to certain risks arising from both its business operations and economic conditions. Wesbanco principally manages its exposures to a wide variety of business and operational risks through management of its core business activities. Wesbanco manages economic risks, including interest rate, liquidity, and credit risk, primarily by managing the amount, sources, and duration of its assets and liabilities. Wesbanco’s existing interest rate derivatives result from a service provided to certain qualifying customers and, therefore, are not used to manage interest rate risk in Wesbanco’s assets or liabilities. Wesbanco manages a matched book with respect to its derivative instruments in order to minimize its net risk exposure resulting from such transactions. A matched book is when the Bank's assets and liabilities are equally distributed but also have similar maturities.

Loan Swaps

Wesbanco executes interest rate swaps and interest rate caps with commercial banking customers to facilitate their respective risk management strategies. Those interest rate swaps and caps are economically hedged by offsetting interest rate swaps and caps that Wesbanco executes with a third party, such that Wesbanco minimizes its net risk exposure resulting from such transactions. As the interest rate swaps and caps associated with this program do not meet the hedge accounting requirements of ASC 815, changes in the fair value of both the customer swaps and caps and the offsetting third-party swaps and caps are recognized directly in earnings. As of September 30, 2023 and December 31, 2022 , Wesbanco had 210 and 159 customer interest rate swaps and caps with an aggregate notional amount of $ 1.4 billion and $ 0.9 billion, respectively, related to this program. Wesbanco recognized income for the related swap and cap fees of $ 2.5 million and $ 1.6 million for the three months ended September 30, 2023 and 2022 , respectively, and $ 6.8 million and $ 2.7 million for the nine months ended September 30, 2023 and 2022, respectively.

Risk participation agreements are entered into as financial guarantees of performance on interest rate swap derivatives. The purchased asset or sold liability allows Wesbanco to participate-in (fee received) or participate-out (fee paid) the risk associated with certain derivative positions executed by the borrower of the lead bank in a loan syndication. As of September 30, 2023 and December 31, 2022 , Wesbanco had 19 and 16 risk participation-in agreements with an aggregate notional amount of $ 196.5 million and $ 187.8 million, respectively. As of September 30, 2023 and December 31, 2022 , Wesbanco had one risk participation-out agreement with an aggregate notional amount of $ 9.4 million and $ 9.6 million, respectively.

Mortgage Loans Held for Sale and Interest Rate Lock Commitments

Certain residential mortgage loans are originated for sale in the secondary mortgage loan market. These loans are classified as held for sale and carried at fair value as Wesbanco has elected the fair value option. Fair value is determined based on rates obtained from the secondary market for loans with similar characteristics. Wesbanco sells loans to the secondary market on either a mandatory or best efforts basis. The loans sold on a mandatory basis are not committed to an investor until the loan is closed with the borrower. Wesbanco enters into forward to be announced (“TBA”) contracts to manage the interest rate risk between the lock commitment and the closing of the loan. The total balance of forward TBA contracts entered into was $ 29.5 million and $ 14.5 million at September 30, 2023 and December 31, 2022, respectively. The loans sold on a best efforts basis are committed to an investor simultaneous to the interest rate commitment with the borrower, and as a result, the Company does not enter into a separate forward TBA contract to offset the fair value risk as the investor accepts such risk in exchange for paying a lower premium on sale.

Fair Values of Derivative Instruments on the Balance Sheet

All derivatives are carried on the consolidated balance sheet at fair value. Derivative assets are classified in the consolidated balance sheet under other assets, and derivative liabilities are classified in the consolidated balance sheet under other liabilities. Changes in fair value are recognized in earnings. None of Wesbanco’s derivatives are designated in a qualifying hedging relationship under ASC 815.

The table below presents the fair value of Wesbanco’s derivative financial instruments as well as their classification on the Balance Sheet as of September 30, 2023 and December 31, 2022:


	September 30, 2023						December 31, 2022
(unaudited, in thousands)	Notional or Contractual Amount		Asset Derivatives		Liability Derivatives		Notional or Contractual Amount		Asset Derivatives		Liability Derivatives
Derivatives
Loan Swaps:
Interest rate swaps and caps	$	1,371,993	$	97,215	$	95,567	$	936,834	$	75,840	$	74,683
Other contracts:
Interest rate lock commitments		21,505		—		77		10,071		—		43
Forward TBA contracts		29,500		209		—		14,500		53		—
Total derivatives			$	97,424	$	95,644			$	75,893	$	74,726

Effect of Derivative Instruments on the Income Statement

The table below presents the change in the fair value of the Company’s derivative financial instruments reflected within non-interest income on the consolidated income statement for the three and nine months ended September 30, 2023 and 2022, respectively.


		For the Three Months Ended September 30,					For the Nine Months Ended September 30,
(unaudited, in thousands)	Location of Gain/(Loss)	2023		2022			2023			2022
Interest rate swaps and caps	Net swap fee and valuation income	$	1,352	$	786		$	489		$	3,389
Interest rate lock commitments	Mortgage banking income		94		( 491	)		( 34	)		( 447	)
Forward TBA contracts	Mortgage banking income		422		1,147			870			3,195
Total		$	1,868	$	1,442		$	1,325		$	6,137

Credit-risk-related Contingent Features

Wesbanco has agreements with its derivative counterparties that contain a provision, which provides that if Wesbanco defaults on any of its indebtedness, including default where repayment of the indebtedness has not been accelerated by the lender, then Wesbanco could also be declared in default on its derivative obligations.

Wesbanco also has agreements with certain of its derivative counterparties that contain a provision where if Wesbanco fails to maintain its status as either a “well” or “adequately-capitalized” institution, then the counterparty could terminate the derivative positions and Wesbanco would be required to settle its obligations under the agreements.

Dependent upon the net present value of the underlying swaps, Wesbanco has minimum collateral posting thresholds with certain of its derivative counterparties. If Wesbanco had breached any of these provisions at September 30, 2023, it could have been required to settle its obligations under the agreements at the termination value and would have been required to pay any additional amounts due in excess of amounts previously posted as collateral with the respective counterparties. In certain market situations, Wesbanco can also request collateral from the derivative counterparties. Due to the rise in interest rates, as of September 30, 2023 , Wesbanco is holding collateral from various derivative counterparties with a market value of $ 69.4 million.

NOTE 6. BENEFIT PLANS

The following table presents the net periodic pension income for Wesbanco’s Defined Benefit Pension Plan (the “Plan”) and the related components:


	For the Three Months Ended September 30,						For the Nine Months Ended September 30,
(unaudited, in thousands)	2023			2022			2023			2022
Service cost – benefits earned during year	$	357		$	552		$	1,061		$	1,638
Interest cost on projected benefit obligation		1,589			1,037			4,715			3,076
Expected return on plan assets		( 2,811	)		( 2,917	)		( 8,342	)		( 8,655	)
Amortization of prior service cost		( 9	)		( 9	)		( 27	)		( 26	)
Amortization of net loss		227			128			675			379
Net periodic pension income	$	( 647	)	$	( 1,209	)	$	( 1,918	)	$	( 3,588	)

The service cost of $ 1.1 million and $ 1.6 million for the nine months ended September 30, 2023 and 2022 , respectively, is included in salaries and wages, and periodic pension income of $ 3.0 million and $ 5.2 million for the nine months ended September 30, 2023 and 2022, respectively, is included in employee benefits.

The Plan covers all employees of Wesbanco and its subsidiaries who were hired on or before August 1, 2007 who satisfy minimum age and length of service requirements, and is not available to employees hired after such date.

A minimum required contribution is not required for 2023 , and Wesbanco currently does no t expect to make a voluntary contribution to the Plan in 2023 .

NOTE 7. FAIR VALUE MEASUREMENT

Fair value estimates are based on quoted market prices, if available, quoted market prices of similar assets or liabilities, or the present value of expected future cash flows and other valuation techniques. These valuations are significantly affected by discount rates, cash flow assumptions, and risk assumptions used. Therefore, fair value estimates may not be substantiated by comparison to independent markets and are not intended to reflect the proceeds that may be realizable in an immediate settlement of the instruments.

Fair value is determined at one point in time and is not representative of future value. These amounts do not reflect the total value of a going concern organization. Management does not have the intention to dispose of a significant portion of its assets and liabilities, and therefore the unrealized gains or losses should not be interpreted as a forecast of future earnings and cash flows.

The following is a discussion of assets and liabilities measured at fair value on a recurring basis and valuation techniques applied:

Investment securities: The fair value of investment securities which are measured on a recurring basis are determined primarily by obtaining quoted prices on nationally recognized securities exchanges or matrix pricing, which is a mathematical technique used widely in the industry to value debt securities without relying exclusively on quoted prices for the specific securities but rather by relying on the securities’ relationship to other similar securities. These securities are classified within level 1 or 2 in the fair value hierarchy. Positions that are not traded in active markets for which valuations are generated using assumptions not observable in the market or management’s best estimate are classified within level 3 of the fair value hierarchy. This includes certain specific municipal debt issues for which the credit quality and discount rate must be estimated.

Loans held for sale: Loans held for sale are carried, in aggregate, at fair value as Wesbanco previously elected the fair value option. The use of a valuation model using quoted prices of similar instruments are significant inputs in arriving at the fair value and therefore loans held for sale are classified within level 2 of the fair value hierarchy.

Derivatives: Wesbanco enters into interest rate swap agreements with qualifying commercial customers to meet their financing, interest rate and other risk management needs. These agreements provide the customer the ability to convert from variable to fixed interest rates. The credit risk associated with derivatives executed with customers is essentially the same as that involved in extending loans and is subject to normal credit policies and monitoring. Those interest rate swaps are economically hedged by offsetting interest rate swaps that Wesbanco executes with derivative counterparties in order to offset its exposure on the fixed components of the customer interest rate swap agreements. The interest rate swap agreement with the loan customer and with the counterparty is reported at fair value in other assets and other liabilities on the consolidated balance sheet with any resulting gain or loss recorded in current period earnings as other income and other expense.

Wesbanco enters into forward TBA contracts to manage the interest rate risk between the loan commitments to the customer and the closing of the loan for loans that will be sold on a mandatory basis to secondary market investors. The forward TBA contract is reported at fair value in other assets and other liabilities on the consolidated balance sheet with any resulting gain or loss recorded in current period’s earnings as mortgage banking income.

Wesbanco determines the fair value for derivatives using widely accepted valuation techniques including discounted cash flow analysis on the expected cash flows of each derivative. This analysis reflects contractual terms of the derivative, including the period to maturity, and uses observable market-based inputs, including interest rate curves and implied volatilities. Wesbanco incorporates credit valuation adjustments to appropriately reflect both its own non-performance risk and the respective counterparty’s non-performance risk in the fair value measurements, and therefore both the derivative asset and derivative liability are classified within level 2 of the fair value hierarchy.

We may be required from time to time to measure certain assets and liabilities at fair value on a nonrecurring basis in accordance with GAAP. These adjustments to fair value usually result from the application of lower of cost or market accounting or write-downs of individual assets and liabilities.

Collateral dependent loans: Collateral dependent loans are carried at the amortized cost basis less the specific allowance calculated under the Current Expected Credit Losses Accounting Standard. Collateral dependent loans are calculated using a cost basis approach or collateral value approach, and therefore are classified within level 3 of the fair value hierarchy.

Other real estate owned and repossessed assets: Other real estate owned and repossessed assets are carried at the lower of the investment in the assets or the fair value of the assets less estimated selling costs. The use of independent appraisals and management’s best judgment are significant inputs in arriving at the fair value measure of the underlying collateral, and therefore other real estate owned and repossessed assets are classified within level 3 of the fair value hierarchy.

The fair value amounts presented in the table below are intended to permit reconciliation of the fair value hierarchy to the amounts presented in the statement of financial position. The following tables set forth Wesbanco’s financial assets and liabilities that were accounted for at fair value on a recurring and nonrecurring basis by level within the fair value hierarchy as of September 30, 2023 and December 31, 2022:


			September 30, 2023
			Fair Value Measurements Using:
	September 30,		Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
(unaudited, in thousands)	2023		(level 1)		(level 2)		(level 3)
Recurring fair value measurements
Equity securities	$	11,453	$	11,453	$	—	$	—
Available-for-sale debt securities
U.S. Government sponsored entities and agencies		201,512		—		201,512		—
Residential mortgage-backed securities and collateralized mortgage obligations of government sponsored entities and agencies		1,615,276		—		1,615,276		—
Commercial mortgage-backed securities and collateralized mortgage obligations of government sponsored entities and agencies		293,247		—		293,247		—
Obligations of states and political subdivisions		74,447		—		73,334		1,113
Corporate debt securities		11,659		—		11,659		—
Total available-for-sale debt securities	$	2,196,141	$	—	$	2,195,028	$	1,113
Loans held for sale		17,677		—		17,677		—
Other assets - interest rate swaps		97,215		—		97,215		—
Total assets recurring fair value measurements	$	2,322,486	$	11,453	$	2,309,920	$	1,113
Other liabilities - interest rate swaps	$	95,567	$	—	$	95,567	$	—
Total liabilities recurring fair value measurements	$	95,567	$	—	$	95,567	$	—
Nonrecurring fair value measurements
Collateral dependent loans	$	9,258	$	—	$	—	$	9,258
Other real estate owned and repossessed assets		1,333		—		—		1,333
Total nonrecurring fair value measurements	$	10,591	$	—	$	—	$	10,591


			December 31, 2022
			Fair Value Measurements Using:
	December 31,		Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
(in thousands)	2022		(level 1)		(level 2)		(level 3)
Recurring fair value measurements
Equity securities	$	11,506	$	11,506	$	—	$	—
Available-for-sale debt securities
U.S. Government sponsored entities and agencies		225,970		—		225,970		—
Residential mortgage-backed securities and collateralized mortgage obligations of government sponsored entities and agencies		1,846,053		—		1,846,053		—
Commercial mortgage-backed securities and collateralized mortgage obligations of government sponsored entities and agencies		349,731		—		349,731		—
Obligations of states and political subdivisions		92,228		—		91,049		1,179
Corporate debt securities		15,158		—		15,158		—
Total available-for-sale debt securities	$	2,529,140	$	—	$	2,527,961	$	1,179
Loans held for sale		8,249		—		8,249		—
Other assets - interest rate swaps		75,840		—		75,840		—
Total assets recurring fair value measurements	$	2,624,735	$	11,506	$	2,612,050	$	1,179
Other liabilities - interest rate swaps	$	74,683	$	—	$	74,683	$	—
Total liabilities recurring fair value measurements	$	74,683	$	—	$	74,683	$	—
Nonrecurring fair value measurements
Collateral dependent loans	$	878	$	—	$	—	$	878
Other real estate owned and repossessed assets		1,486		—		—		1,486
Total nonrecurring fair value measurements	$	2,364	$	—	$	—	$	2,364

Wesbanco’s policy is to recognize transfers between levels as of the actual date of the event or change in circumstances that caused the transfer. There were no transfers between level 1, 2 or 3 for the three and nine months ended September 30, 2023 or for the year ended December 31, 2022.

The following table presents additional quantitative information about assets measured at fair value on a nonrecurring basis and for which Wesbanco has utilized level 3 inputs to determine fair value:


	Quantitative Information about Level 3 Fair Value Measurements
	Fair Value		Valuation	Unobservable	Range (Weighted
(unaudited, in thousands)	Estimate		Techniques	Input	Average)
September 30, 2023
Collateral dependent loans	$	9,258	Appraisal of collateral (1)	Appraisal adjustments (2)	( 0.0 %)/( 0.0 %)
				Liquidation expenses (2)	( 8.0 %)/( 8.0 %)
Other real estate owned and repossessed assets	$	1,333	Appraisal of collateral (1), (3)
December 31, 2022
Collateral dependent loans	$	878	Appraisal of collateral (1)	Appraisal adjustments (2)	( 0.0 %)/( 0.0 %)
				Liquidation expenses (2)	( 8.0 %)/( 8.0 %)
Other real estate owned and repossessed assets	$	1,486	Appraisal of collateral (1), (3)

(1)

Fair value is generally determined through independent appraisals of the underlying collateral, which generally include various level 3 inputs, which are not identifiable.

(2)

Appraisals may be adjusted by management for qualitative factors such as economic conditions and estimated liquidation expenses. The range and weighted average of appraisal adjustments and liquidation expense are presented as a percent of the appraisal.

(3)

Includes estimated liquidation expenses and numerous dissimilar qualitative adjustments by management, which are not identifiable.

The estimated fair values of Wesbanco’s financial instruments are summarized below:


					Fair Value Measurements at
					September 30, 2023
	Carrying		Fair Value		Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
(unaudited, in thousands)	Amount		Estimate		(level 1)		(level 2)		(level 3)
Financial Assets
Cash and due from banks	$	495,082	$	495,082	$	495,082	$	—	$	—
Equity securities		11,453		11,453		11,453		—		—
Available-for-sale debt securities		2,196,141		2,196,141		—		2,195,028		1,113
Net held-to-maturity debt securities		1,210,812		998,987		—		998,701		286
Net loans		11,189,258		10,786,103		—		—		10,786,103
Loans held for sale		17,677		17,677		—		17,677		—
Other assets - interest rate swaps		97,215		97,215		—		97,215		—
Accrued interest receivable		73,014		73,014		73,014		—		—

Financial Liabilities
Deposits		13,090,228		13,059,688		11,913,807		1,145,881		—
Federal Home Loan Bank borrowings		1,125,000		1,121,779		—		1,121,779		—
Other borrowings		106,693		100,874		100,874		—		—
Subordinated debt and junior subordinated debt		282,079		246,352				246,352		—
Other liabilities - interest rate swaps		95,567		95,567		—		95,567		—
Accrued interest payable		11,416		11,416		11,416		—		—


					Fair Value Measurements at
					December 31, 2022
	Carrying		Fair Value		Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
(in thousands)	Amount		Estimate		(level 1)		(level 2)		(level 3)
Financial Assets
Cash and due from banks	$	408,411	$	408,411	$	408,411	$	—	$	—
Equity securities		11,506		11,506		11,506		—		—
Available-for-sale debt securities		2,529,140		2,529,140		—		2,527,961		1,179
Net held-to-maturity debt securities		1,248,409		1,084,390		—		1,084,071		319
Net loans		10,584,938		9,487,038		—		—		9,487,038
Loans held for sale		8,249		8,249		—		8,249		—
Other assets - interest rate swaps		75,840		75,840		—		75,840		—
Accrued interest receivable		68,522		68,522		68,522		—		—

Financial Liabilities
Deposits		13,131,090		13,142,943		12,245,272		897,671		—
Federal Home Loan Bank borrowings		705,000		705,094		—		705,094		—
Other borrowings		135,069		122,926		122,926		—		—
Subordinated debt and junior subordinated debt		281,404		258,631		—		258,631		—
Other liabilities - interest rate swaps		74,683		74,683		—		74,683		—
Accrued interest payable		4,593		4,593		4,593		—		—

The following methods and assumptions were used to measure the fair value of financial instruments recorded at cost on Wesbanco’s consolidated balance sheets:

Cash and due from banks: The carrying amount for cash and due from banks is a reasonable estimate of fair value.

Held-to-maturity debt securities: Fair values for debt securities held-to-maturity are determined in the same manner as investment securities, which are described above.

Net loans: Fair values for loans are estimated in a valuation model using a discounted cash flow methodology. The discount rates take into account interest rates currently being offered to customers for loans with similar terms, the credit risk associated with the loan and other market factors, including liquidity. Wesbanco believes the discount rates are consistent with transactions occurring in the marketplace for both performing and distressed loan types. The carrying value is net of the allowance for loan losses and other associated premiums and discounts. Due to the significant judgment involved in evaluating credit quality, loans are classified within level 3 of the fair value hierarchy.

Accrued interest receivable: The carrying amount of accrued interest receivable approximates its fair value .

Deposits: The carrying amount is considered a reasonable estimate of fair value for demand, savings and other variable rate deposit accounts. The fair value of fixed maturity certificates of deposit is estimated by a discounted cash flow method using rates currently offered for deposits of similar remaining maturities.

Federal Home Loan Bank borrowings: The fair value of FHLB borrowings is based on rates currently available to Wesbanco for borrowings with similar terms and remaining maturities.

Other borrowings: The carrying amount of federal funds purchased and overnight sweep accounts generally approximate fair value. Other repurchase agreements are based on quoted market prices if available. If market prices are not available, for certain fixed and adjustable rate repurchase agreements, then quoted market prices of similar instruments are used.

Subordinated debt and junior subordinated debt: The fair value of subordinated debt is determined primarily by obtaining quoted prices on nationally recognized securities exchanges or matrix pricing, which is a mathematical technique used widely in the industry to value debt securities without relying exclusively on quoted prices for the specific securities but rather by relying on the securities’ relationship to other similar securities. These securities are classified within level 2 in the fair value hierarchy. Due to the pooled nature of junior subordinated debt owed to unconsolidated subsidiary trusts, which are not actively traded, estimated fair value is determined by using comparable corporate bond indices and swap rates from the financial services sector and factoring in the applicable credit spreads and optional early redemption provisions.

Accrued interest payable: The carrying amount of accrued interest payable approximates its fair value.

Off-balance sheet financial instruments: Off-balance sheet financial instruments consist of commitments to extend credit, including letters of credit. Fair values for commitments to extend credit are estimated using the fees currently charged to enter into similar agreements, taking into account the remaining terms of the agreements and the present credit standing of the counterparties. The estimated fair value of the commitments to extend credit and letters of credit are insignificant and therefore are not presented in the above tables.

NOTE 8. REVENUE RECOGNITION

Interest income, net securities gains (losses) and bank-owned life insurance are not in scope of ASC 606, Revenue from Contracts with Customers . For the revenue streams in scope of ASC 606 - trust fees, service charges on deposits, net securities brokerage revenue, payment processing fees, electronic banking fees, net swap fee and valuation income, mortgage banking income and net gain or loss on sale of other real estate owned and other assets – there are no significant judgments related to the amount and timing of revenue recognition.

The following table summarizes the point of revenue recognition and the income recognized for each of the revenue streams for the three and nine months ended September 30, 2023 and 2022, respectively:


	Point of Revenue	For the Three Months Ended September 30,					For the Nine Months Ended September 30,
(unaudited, in thousands)	Recognition	2023			2022		2023		2022
Revenue Streams
Trust fees
Trust account fees	Over time	$	4,751		$	4,456	$	15,365	$	14,413
WesMark fees	Over time		1,954			2,061		5,751		6,466
Total trust fees			6,705			6,517		21,116		20,879
Service charges on deposits
Commercial banking fees	Over time		756			606		2,015		1,776
Personal service charges	At a point in time and over time		5,970			6,336		17,113		17,744
Total service charges on deposits			6,726			6,942		19,128		19,520
Net securities brokerage revenue
Annuity commissions	At a point in time		1,804			1,932		5,689		5,193
Equity and debt security trades	At a point in time		54			29		203		94
Managed money	Over time		275			290		842		944
Trail commissions	Over time		261			240		758		738
Total net securities brokerage revenue			2,394			2,491		7,492		6,969

Payment processing fees (1)	At a point in time and over time		939			818		2,761		2,436
Electronic banking fees	At a point in time		4,949			4,808		14,564		15,307
Net swap fee and valuation income (2)	At a point in time		3,845			2,430		7,257		6,053
Mortgage banking income	At a point in time		975			1,257		2,002		4,508
Net (loss) gain on other real estate owned and other assets (3)	At a point in time and over time		( 28	)		2,040		1,075		( 68	)

(1)

Included in other non-interest income.

(2)

The portion of this line item relating to the change in the fair value of the underlying swaps is not within the scope of ASC 606, and totaled gains of $ 1.4 million and $ 0.8 million for the three months ended September 30, 2023 and 2022, respectively, and gains of $ 0.5 million and $ 3.4 million for the nine months ended September 30, 2023 and 2022, respectively.

(3)

The portion of this line item relating to the change in the fair value of the underlying investments funded by Wesbanco CDC is not within the scope of ASC 606, and totaled gains of $ 0.1 million and $ 1.5 million for the three months ended September 30, 2023 and 2022, respectively, and gains (losses) of $ 0.1 million and ($ 1.0 ) million for the nine months ended September 30, 2023 and 2022, respectively.

NOTE 9. COMPREHENSIVE INCOME/(LOSS)

The activity in accumulated other comprehensive income/(loss) for the nine months ended September 30, 2023 and 2022 is as follows:


	Accumulated Other Comprehensive Income/(Loss) (1)
(unaudited, in thousands)	Defined Benefit Plans			Unrealized Gains (Losses) on Debt Securities Available-for-Sale			Total
Balance at December 31, 2022	$	( 535	)	$	( 261,881	)	$	( 262,416	)
Other comprehensive loss before reclassifications		—			( 35,889	)		( 35,889	)
Amounts reclassified from accumulated other comprehensive loss		226			173			399
Period change		226			( 35,716	)		( 35,490	)
Balance at September 30, 2023	$	( 309	)	$	( 297,597	)	$	( 297,906	)

Balance at December 31, 2021	$	( 398	)	$	( 4,722	)	$	( 5,120	)
Other comprehensive loss before reclassifications		—			( 261,693	)		( 261,693	)
Amounts reclassified from accumulated other comprehensive loss		165			8			173
Period change		165			( 261,685	)		( 261,520	)
Balance at September 30, 2022	$	( 233	)	$	( 266,407	)	$	( 266,640	)

(1)

All amounts are net of tax. Related income tax expense or benefit is calculated using a combined Federal and State income tax rate approximating 24 % in both periods presented.

The following table provides details about amounts reclassified from accumulated other comprehensive income for the three and nine months ended September 30, 2023 and 2022:


Details about Accumulated Other Comprehensive Income/(Loss) Components	For the Three Months Ended September 30,						For the Nine Months Ended September 30,						Affected Line Item in the Statement of Comprehensive Income
(unaudited, in thousands)	2023			2022			2023			2022
Debt securities available-for-sale (1) :
Net securities losses reclassified into earnings	$	69		$	—		$	228		$	10		Net securities gains/(losses) (Non-interest income)
Related income tax effect ⁽²⁾		( 17	)		—			( 55	)		( 2	)	Provision for income taxes
Net effect on accumulated other comprehensive income for the period		52			—			173			8

Defined benefit plans (3) :
Amortization of net loss and prior service costs		100			73			298			218		Employee benefits (Non-interest expense)
Related income tax effect ⁽²⁾		( 24	)		( 18	)		( 72	)		( 53	)	Provision for income taxes
Net effect on accumulated other comprehensive income for the period		76			55			226			165
Total reclassifications for the period	$	128		$	55		$	399		$	173

(1)

For additional detail related to unrealized gains on securities and related amounts reclassified from accumulated other comprehensive income, see Note 3, “Securities.”

(2)

Income tax expense or benefit is calculated using a combined Federal and State income tax rate approximating 24 % in both periods presented.

(3)

Included in the computation of net periodic pension cost. See Note 6, “Benefit Plans” for additional detail.

NOTE 10. COMMITMENTS AND CONTINGENT LIABILITIES

Commitments — In the normal course of business, Wesbanco offers off-balance sheet credit arrangements to enable its customers to meet their financing objectives. Those instruments involve, to varying degrees, elements of credit and interest rate risk in excess of the amount recognized in the financial statements. Wesbanco’s exposure to credit losses in the event of non-performance by the other parties to the financial instruments for commitments to extend credit and standby letters of credit is limited to the contractual amount of those instruments. Wesbanco uses the same credit policies in making commitments and conditional obligations as for all other lending. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Since many of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. The allowance for credit losses associated with commitments was $ 9.7 million and $ 8.4 million at September 30, 2023 and December 31, 2022, respectively, and is included in other liabilities on the Consolidated Balance Sheets.

Letters of credit are conditional commitments issued by banks to guarantee the performance of a customer to a third party. Those guarantees are primarily issued to support public and private borrowing arrangements, including normal business activities, bond financing and similar transactions. Letters of credit are considered guarantees. The liability associated with letters of credit was $ 0.3 million and $ 0.2 million as of September 30, 2023 and December 31, 2022, respectively.

Contingent obligations to purchase loans funded by other entities include credit card guarantees, loans sold with recourse as well as obligations to the FHLB. Credit card guarantees are credit card balances not owned by Wesbanco, whereby the Bank guarantees the performance of the cardholder.

The following table presents total commitments to extend credit, guarantees and various letters of credit outstanding:


	September 30,		December 31,
(unaudited, in thousands)	2023		2022
Lines of credit	$	4,130,549	$	3,806,398
Loans approved but not closed		412,089		398,204
Overdraft limits		389,574		380,143
Letters of credit		33,429		30,362
Contingent obligations and other guarantees		30,787		30,782

Contingent Liabilities — Wesbanco is a party to various legal and administrative proceedings and claims. While any litigation contains an element of uncertainty, management does not believe that a material loss related to such proceedings or claims pending or known to be threatened is reasonably possible.

NOTE 11. BUSINESS SEGMENTS

Wesbanco operates two reportable segments: community banking and trust and investment services. Wesbanco’s community banking segment offers services traditionally offered by full-service commercial banks, including commercial demand, individual demand and time deposit accounts, as well as commercial, mortgage and individual installment loans, and certain non-traditional offerings, such as insurance and securities brokerage services. The trust and investment services segment offers trust services as well as various alternative investment products including mutual funds. The market value of assets managed or held in custody by the trust and investment services segment was approximately $ 5.0 billion and $ 4.6 billion at September 30, 2023 and 2022, respectively. These assets are held by Wesbanco in fiduciary or agency capacities for their customers and therefore are not included as assets on Wesbanco’s Consolidated Balance Sheets.

Condensed financial information by business segment is presented below:


				Trust and
	Community			Investment
(unaudited, in thousands)	Banking			Services		Consolidated
For The Three Months Ended September 30, 2023
Interest and dividend income	$	183,589		$	—	$	183,589
Interest expense		65,907			—		65,907
Net interest income		117,682			—		117,682
Provision for credit losses		6,327			—		6,327
Net interest income after provision for credit losses		111,355			—		111,355
Non-interest income		24,175			6,704		30,879
Non-interest expense		92,815			5,124		97,939
Income before provision for income taxes		42,715			1,580		44,295
Provision for income taxes		7,121			332		7,453
Net income		35,594			1,248		36,842
Preferred stock dividends		2,531			—		2,531
Net income available to common shareholders	$	33,063		$	1,248	$	34,311

For The Three Months Ended September 30, 2022
Interest and dividend income	$	134,117		$	—	$	134,117
Interest expense		9,616			—		9,616
Net interest income		124,501			—		124,501
Provision for credit losses		( 535	)		—		( 535	)
Net interest income after provision for credit losses		125,036			—		125,036
Non-interest income		25,739			6,517		32,256
Non-interest expense		88,144			3,797		91,941
Income before provision for income taxes		62,631			2,720		65,351
Provision for income taxes		11,747			571		12,318
Net income		50,884			2,149		53,033
Preferred stock dividends		2,531			—		2,531
Net income available to common shareholders	$	48,353		$	2,149	$	50,502

For the Nine Months Ended September 30, 2023
Interest and dividend income	$	520,198		$	—	$	520,198
Interest expense		156,618			—		156,618
Net interest income		363,580			—		363,580
Provision for credit losses		12,932			—		12,932
Net interest income after provision for credit losses		350,648			—		350,648
Non-interest income		69,256			21,116		90,372
Non-interest expense		276,247			14,251		290,498
Income before provision for income taxes		143,657			6,865		150,522
Provision for income taxes		25,016			1,442		26,458
Net income		118,641			5,423		124,064
Preferred stock dividends		7,594			—		7,594
Net income available to common shareholders	$	111,047		$	5,423	$	116,470

For the Nine Months Ended September 30, 2022
Interest and dividend income	$	364,738		$	—	$	364,738
Interest expense		20,299			—		20,299
Net interest income		344,439			—		344,439
Provision for credit losses		( 4,785	)		—		( 4,785	)
Net interest income after provision for credit losses		349,224			—		349,224
Non-interest income		68,743			20,879		89,622
Non-interest expense		254,484			12,027		266,511
Income before provision for income taxes		163,483			8,852		172,335
Provision for income taxes		30,573			1,859		32,432
Net income		132,910			6,993		139,903
Preferred stock dividends		7,594			—		7,594
Net income available to common shareholders	$	125,316		$	6,993	$	132,309

Total non-fiduciary assets of the trust and investment services segment were $ 3.3 million (including $ 1.0 million of trust customer intangibles) and $ 3.5 million (including $ 1.2 million of trust customer intangibles) at September 30, 2023 and 2022 , respectively. All other assets, including goodwill and the remainder of other intangible assets, were allocated to the Community Banking segment.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Management’s Discussion and Analysis (“MD&A”) represents an overview of the results of operations and financial condition of Wesbanco for the three and nine months ended September 30, 2023. This discussion and analysis should be read in conjunction with the Consolidated Financial Statements and Notes thereto.

FORWARD-LOOKING STATEMENTS

Forward-looking statements in this report relating to Wesbanco’s plans, strategies, objectives, expectations, intentions and adequacy of resources, are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. The information contained in this report should be read in conjunction with Wesbanco’s Form 10-K for the year ended December 31, 2022 and documents subsequently filed by Wesbanco with the Securities and Exchange Commission (“SEC”), including Wesbanco's Form 10-Q for the quarters ending March 31, 2023 and June 30, 2023, which are available at the SEC’s website, www.sec.gov or at Wesbanco’s website, www.wesbanco.com. Investors are cautioned that forward-looking statements, which are not historical fact, involve risks and uncertainties, including those detailed in Wesbanco’s most recent Annual Report on Form 10-K filed with the SEC under “Risk Factors” in Part I, Item 1A. Such statements are subject to important factors that could cause actual results to differ materially from those contemplated by such statements, including, without limitation, the effects of changing regional and national economic conditions; changes in interest rates, spreads on earning assets and interest-bearing liabilities, and associated interest rate sensitivity; sources of liquidity available to Wesbanco and its related subsidiary operations; potential future credit losses and the credit risk of commercial, real estate, and consumer loan customers and their borrowing activities; actions of the Federal Reserve Board, the Federal Deposit Insurance Corporation, the SEC, the Financial Institution Regulatory Authority, the Municipal Securities Rulemaking Board, the Securities Investors Protection Corporation, the Consumer Financial Protection Bureau and other regulatory bodies; potential legislative and federal and state regulatory actions and reform, including, without limitation, the impact of the implementation of the Dodd-Frank Act; adverse decisions of federal and state courts; fraud, scams and schemes of third parties; cyber-security breaches; competitive conditions in the financial services industry; rapidly changing technology affecting financial services; marketability of debt instruments and corresponding impact on fair value adjustments; and/or other external developments materially impacting Wesbanco’s operational and financial performance. Wesbanco does not assume any duty to update forward-looking statements.

OVERVIEW

Wesbanco is a multi-state bank holding company operating through 192 branches and 183 ATM machines in West Virginia, Ohio, western Pennsylvania, Kentucky, southern Indiana and Maryland, offering retail banking, corporate banking, personal and corporate trust services, brokerage services, mortgage banking and insurance. Wesbanco’s businesses are significantly impacted by economic factors such as market interest rates, federal monetary and regulatory policies, local and regional economic conditions and the competitive environment’s effect upon Wesbanco’s business volumes. Wesbanco’s deposit levels are affected by numerous factors including personal savings rates, personal income, and competitive rates on alternative investments, as well as competition from other financial institutions within the markets we serve and liquidity needs of Wesbanco. Loan levels are also subject to various factors including construction demand, business financing needs, consumer spending and interest rates, as well as loan terms offered by competing lenders.

APPLICATION OF CRITICAL ACCOUNTING POLICIES AND ESTIMATES

Wesbanco’s critical accounting policies involving the significant judgments and assumptions used in the preparation of the Consolidated Financial Statements as of September 30, 2023 have remained unchanged from the disclosures presented in Wesbanco’s Annual Report on Form 10-K for the year ended December 31, 2022 within the section “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

RESULTS OF OPERATIONS

EARNINGS SUMMARY

Net income available to common shareholders for the third quarter of 2023 was $34.3 million, with diluted earnings per share of $0.58, compared to $50.5 million or $0.85 per diluted share, for the third quarter of 2022. For the nine months ended September 30, 2023, net income was $116.5 million or $1.96 per diluted share, compared to $132.3 million or $2.19 per diluted share, for the 2022 period. As noted in the following table, net income available to common shareholders, excluding after-tax restructuring and merger-related expenses, for the nine months ended September 30, 2023, was $119.5 million or $2.01 per diluted share, as compared to $133.7 million or $2.21 per diluted share in the prior year period (non-GAAP measures).


	For the Three Months Ended September 30,											For the Nine Months Ended September 30,
	2023						2022					2023						2022
(unaudited, dollars in thousands, except per share amounts)	Net Income			Diluted Earnings Per Share			Net Income			Diluted Earnings Per Share		Net Income			Diluted Earnings Per Share			Net Income			Diluted Earnings Per Share
Net income available to common shareholders (Non-GAAP) (1)	$	34,817		$	0.59		$	50,554		$	0.85	$	119,496		$	2.01		$	133,661		$	2.21
Less: After-tax restructuring and merger-related expenses		(506	)		(0.01	)		(52	)		—		(3,026	)		(0.05	)		(1,352	)		(0.02	)
Net income available to common shareholders (GAAP)	$	34,311		$	0.58		$	50,502		$	0.85	$	116,470		$	1.96		$	132,309		$	2.19

(1)

Non-GAAP net income excludes after-tax restructuring and merger-related expenses. The above non-GAAP financial measures used by Wesbanco provide information useful to investors in understanding Wesbanco’s operating performance and trends, and facilitate comparisons with the performance of Wesbanco’s peers.

Net interest income decreased $6.8 million or 5.5% in the third quarter of 2023 compared to the same quarter of 2022, due to the 525 basis point increase in the federal funds rate since March 2022 and the subsequent increase in funding costs which has occurred steadily throughout 2023, which, in turn, resulted in a 30 basis point decrease in the net interest margin over the same period. The increase in funding costs has been partially offset by higher yields in all earning asset categories, due to the repricing of existing loans and higher investment rates offered in the current market environment. Over the same time period, the yield on earning assets increased by a total of 113 basis points while the cost of interest bearing liabilities increased 211 basis points from increasing deposit costs and higher cost wholesale borrowings. Average loan balances increased by 10.2% from the third quarter of 2022, mainly attributable to commercial loan demand, while average securities decreased by 11.3% over the same time period as investment maturities and calls were used to partially fund the loan growth. Average deposits decreased 4.7% over the same time period as a result of interest rate and inflationary pressures and rising costs across the economy. Accretion from prior acquisitions benefited the third quarter 2023 net interest margin by two basis points, as compared to five basis points in the prior year period. For the nine months ended September 30, 2023, net interest income increased $19.1 million or 5.6% from the first nine months of 2022 for the same reasons as mentioned for the three months ended, as the deposit cost increases lagged until 2023.

Loan growth, adjustments in macroeconomic factors, and a $2.9 million specific reserve on one hospitality loan, resulted in a provision for credit losses of $6.3 million in the third quarter of 2023, as compared to a negative provision of $0.5 million in the third quarter of 2022. Annualized net loan charge-offs, as a percentage of average portfolio loans, were 0.01% and 0.04% for the third quarter of 2023 and 2022, respectively.

For the third quarter of 2023, non-interest income decreased $1.4 million or 4.3% compared to the third quarter of 2022, primarily due to a $1.5 million gain on the sale of underlying equity investments held by Wesbanco Community Development Corporation ("Wesbanco CDC") in the prior year's third quarter, which was recorded in net gains on other real estate owned and other assets. Net securities losses of $0.3 million in the third quarter of 2023 decreased $1.0 million year-over-year due to market fluctuations from equity securities in the deferred compensation plan. Offsetting these decreases somewhat are net swap fees and valuation income, which is now reflected as a line item within the consolidated income statement. Commercial swap fees increased $0.8 million from the prior year period to $2.5 million, while associated fair market value adjustments totaled $1.4 million during the third quarter, as compared to $0.8 million last year. Bank-owned life insurance increased by $0.4 million or 20.0% in the third quarter of 2023 as compared to the third quarter of 2022 due to an increase in death benefits received.

Non-interest expense, excluding restructuring and merger-related expenses, increased in the third quarter of 2023 by $5.4 million, or 5.9%, to $97.3 million, compared to the third quarter of 2022, reflecting increased salaries and wages, employee benefits, equipment and software expense and FDIC insurance. Salaries and wages increased $1.1 million, or 2.4%, from the third quarter of 2022 to the third quarter of 2023 due to higher salary expense relating to new revenue-producing hires, mostly commercial lenders, and annual merit increases. Employee benefits expense increased $1.2 million from last year's third quarter due mainly to higher health insurance costs. Equipment and software expense increased $1.0 million in the third quarter of 2023 compared to the prior year third quarter due to the planned upgrade to one-third of our ATM fleet with newer technology and general inflationary cost increases for existing service agreements. FDIC insurance expense increased by $0.7 million in the third quarter of 2023 from the third quarter of 2022 due to an increase in the minimum rate for all banks in 2023.

For the first nine months of 2023, the effective tax rate was 17.6% as compared to 18.8% for the nine months ended September 30, 2022, and the provision for income taxes decreased by $6.0 million over the same time period. Both of these decreases are due to the decrease in pre-tax income over the same period.

NET INTEREST INCOME

TABLE 1. NET INTEREST INCOME


	For the Three Months Ended September 30,						For the Nine Months Ended September 30,
(unaudited, dollars in thousands)	2023			2022			2023			2022
Net interest income	$	117,682		$	124,501		$	363,580		$	344,439
Taxable equivalent adjustment to net interest income		1,244			1,307			3,772			3,712
Net interest income, fully taxable equivalent	$	118,926		$	125,808		$	367,352		$	348,151
Net interest spread, non-taxable equivalent		2.17	%		3.15	%		2.44	%		2.97	%
Benefit of net non-interest bearing liabilities		0.83	%		0.15	%		0.72	%		0.11	%
Net interest margin		3.00	%		3.30	%		3.16	%		3.08	%
Taxable equivalent adjustment		0.03	%		0.03	%		0.03	%		0.03	%
Net interest margin, fully taxable equivalent		3.03	%		3.33	%		3.19	%		3.11	%

Net interest income, which is Wesbanco’s largest source of revenue, is the difference between interest income on earning assets, primarily loans and securities, and interest expense on liabilities, primarily deposits and short and long-term borrowings. Net interest income is affected by the general level of, and changes in interest rates, the steepness and shape of the yield curve, changes in the amount and composition of interest earning assets and interest bearing liabilities, as well as the frequency of repricing of existing assets and liabilities. Net interest income decreased $6.8 million or 5.5% in the third quarter of 2023 compared to the third quarter of 2022. This decrease was due to a 30 basis point decrease year over year in the net interest margin to 3.03% for the third quarter of 2023. The decrease in margin is due to higher funding costs resulting from the 525 basis point increase in the federal funds rate since March of 2022. Portfolio loans increased by 10.1% from September 30, 2022, due to strong new loan growth and strategic loan production office and lender hiring initiatives. Total purchase accounting accretion continued to decrease in the third quarter of 2023 as compared to the third quarter of 2022, as approximately two basis points of accretion from prior acquisitions was included in the third quarter 2023 net interest margin as compared to five basis points in the 2022 third quarter net interest margin. Total average deposits, excluding CDs, decreased in the third quarter of 2023 by $659.0 million or 5.2% compared to the third quarter of 2022. The cost of interest bearing deposits increased by 174 basis points and the cost of total interest bearing liabilities increased by 211 basis points from the third quarter of 2022 to the third quarter of 2023. The increase in the cost is primarily due to rate increases for interest bearing deposits in response to the general increase in overall borrowing rates in the marketplace resulting from the previously mentioned federal fund rate increases in 2022 and 2023.

Interest income increased $49.5 million or 36.9% in the third quarter of 2023 compared to the same period of 2022 and $155.5 million or 42.6% in the first nine months of 2023 compared to the same period in 2022 due to the 525 basis point increase in the federal funds rate since March of 2022. Average loan balances increased $1.0 billion or 10.2% in the third quarter of 2023 compared to the third quarter of 2022, while loan yields increased by 121 basis points during this same period to 5.46% due to the previously mentioned rising rate environment and its effect on the repricing of portfolio loans, as well as higher offered rates on new loans. Loans provide the greatest impact on interest income and the yield on earning assets as they have the largest balance and the highest yield within major earning asset categories. In the third quarter of 2023, average loans represented 72.5% of average earning assets, an increase from 68.2% in the third quarter of 2022. Average total securities balances decreased $492.6 million or 11.3% from the third quarter of 2022, and represented 24.9% of total earning assets in the third quarter of 2023. Taxable securities yields increased by 35 basis points in the third quarter of 2023 from the third quarter of 2022 due to increased rates on the variable rate portion of the investment portfolio. Tax-exempt securities yields, which are the highest yields within total securities, remained relatively flat with an increase of two basis points from the third quarter of 2022 to the third quarter of 2023.

Interest expense increased $56.3 million in the third quarter of 2023 and $136.3 million in first nine months of 2023 as compared to the same periods in 2022, due to the timing of the previously mentioned federal funds rate increases and their effect on the costs of deposits and borrowings. The cost of interest bearing liabilities increased by 211 basis points from the third quarter of 2022 to 2.52% in the third quarter of 2023. Average interest bearing deposits decreased $89.9 million or 1.0% from the third quarter of 2022. The rate on interest bearing deposits increased 174 basis points to 2.01% from the third quarter of 2022, primarily from increases in rates on interest bearing public funds, money market funds and savings deposits, which were previously near their floors, and a mix shift from non-interest bearing demand deposits into interest bearing demand deposits and certificates of deposit. Average non-interest bearing demand deposit balances decreased from the third quarter of 2022 to the third quarter of 2023 by $553.7 million or 11.6%, and were 32.5% of total average deposits at September 30, 2023, compared to 35.1% at September 30, 2022, reflecting customers' preferences in the previously mentioned interest rate environment. For the third quarter of 2023, Wesbanco's average loans to average deposits ratio was 86.8%, reflecting additional capacity to lend. The average balance of FHLB borrowings increased $1.1 billion from the third quarter of 2022 to the third quarter of 2023, due to increased loan funding demand and for liquidity purposes. Average repurchase agreements decreased $35.9 million or 24.3% from the third quarter of 2022 to the third quarter of 2023, while average subordinated and junior subordinated debt balances remained flat.

TABLE 2. AVERAGE BALANCE SHEETS AND NET INTEREST MARGIN ANALYSIS


	For The Three Months Ended September 30,										For the Nine Months Ended September 30,
	2023					2022					2023					2022
	Average		Average			Average		Average			Average		Average			Average		Average
(unaudited, dollars in thousands)	Balance		Rate			Balance		Rate			Balance		Rate			Balance		Rate
ASSETS
Due from banks - interest bearing	$	341,206		5.21	%	$	375,136		2.09	%	$	353,312		5.18	%	$	757,325		0.67	%
Loans, net of unearned income (1)		11,271,211		5.46	%		10,224,494		4.25	%		11,012,054		5.27	%		9,958,318		4.02	%
Securities: (2)
Taxable		3,100,769		2.31	%		3,548,271		1.96	%		3,199,826		2.33	%		3,472,211		1.83	%
Tax-exempt (3)		778,069		3.02	%		823,133		3.00	%		788,250		3.05	%		782,141		3.02	%
Total securities		3,878,838		2.46	%		4,371,404		2.16	%		3,988,076		2.47	%		4,254,352		2.05	%
Other earning assets		60,963		7.41	%		12,808		4.05	%		56,207		5.53	%		13,840		3.89	%
Total earning assets (3)		15,552,218		4.72	%		14,983,842		3.59	%		15,409,649		4.55	%		14,983,835		3.29	%
Other assets		1,789,741					1,887,813					1,793,998					1,960,951
Total Assets	$	17,341,959				$	16,871,655				$	17,203,647				$	16,944,786

LIABILITIES AND SHAREHOLDERS' EQUITY
Interest bearing demand deposits	$	3,294,370		2.51	%	$	3,306,339		0.35	%	$	3,185,340		2.06	%	$	3,363,152		0.20	%
Money market accounts		1,797,562		2.39	%		1,780,338		0.22	%		1,689,350		1.77	%		1,785,703		0.13	%
Savings deposits		2,604,075		1.02	%		2,714,684		0.16	%		2,702,050		0.82	%		2,681,084		0.08	%
Certificates of deposit		1,065,140		2.23	%		1,049,694		0.36	%		947,404		1.42	%		1,154,812		0.39	%
Total interest bearing deposits		8,761,147		2.01	%		8,851,055		0.27	%		8,524,144		1.54	%		8,984,751		0.17	%
Federal Home Loan Bank borrowings		1,212,554		5.39	%		113,530		1.22	%		1,157,821		5.14	%		138,766		1.29	%
Repurchase agreements		112,233		2.63	%		148,179		0.39	%		116,159		1.90	%		150,126		0.22	%
Subordinated debt and junior subordinated debt		281,943		6.06	%		281,002		4.48	%		281,715		5.86	%		237,046		4.02	%
Total interest bearing liabilities (4)		10,367,877		2.52	%		9,393,766		0.41	%		10,079,839		2.08	%		9,510,689		0.29	%
Non-interest bearing demand deposits		4,225,529					4,779,216					4,393,714					4,690,218
Other liabilities		269,891					209,735					253,410					193,070
Shareholders’ equity		2,478,662					2,488,938					2,476,684					2,550,809
Total Liabilities and Shareholders’ Equity	$	17,341,959				$	16,871,655				$	17,203,647				$	16,944,786
Taxable equivalent net interest spread				2.20	%				3.18	%				2.47	%				3.00	%
Taxable equivalent net interest margin				3.03	%				3.33	%				3.19	%				3.11	%

(1)

Gross of allowance for credit losses and net of unearned income. Includes non-accrual and loans held for sale. Loan fees included in interest income on loans were $0.8 million and $1.4 million for the three months ended September 30, 2023 and 2022, respectively, and were $1.9 million and $8.0 million for the nine months ended September 30, 2023 and 2022, respectively. Additionally, loan accretion included in interest income on loans acquired from prior acquisitions was $1.0 million and $1.7 million for the three months ended September 30, 2023 and 2022, respectively, and $3.5 million and $6.2 million for the nine months ended September 30, 2023 and 2022, respectively.

(2)

Average yields on available-for-sale debt securities are calculated based on amortized cost.

(3)

Taxable equivalent basis is calculated on tax-exempt securities using a federal statutory rate of 21% for each period presented.

(4)

Accretion on interest bearing liabilities acquired from prior acquisitions was $35 thousand and $0.2 million for the three months ended September 30, 2023 and 2022, respectively, and $0.3 million and $0.9 million for the nine months ended September 30, 2023 and 2022, respectively.

TABLE 3. RATE/VOLUME ANALYSIS OF CHANGES IN INTEREST INCOME AND INTEREST EXPENSE


	For the Three Months Ended September 30, 2023									For the Nine Months Ended September 30, 2023
	Compared to September 30, 2022									Compared to September 30, 2022
(unaudited, in thousands)	Volume			Rate			Net Increase (Decrease)			Volume			Rate		Net Increase (Decrease)
Increase (decrease) in interest income:
Due from banks - interest bearing	$	(194	)	$	2,700		$	2,506		$	(3,036	)	$	12,906	$	9,870
Loans, net of unearned income		12,061			33,583			45,644			34,152			101,106		135,258
Taxable securities		(2,375	)		2,926			551			(3,950	)		12,133		8,183
Tax-exempt securities (1)		(343	)		43			(300	)		139			147		286
Other earning assets		826			182			1,008			1,689			234		1,923
Total interest income change (1)		9,975			39,434			49,409			28,994			126,526		155,520
Increase (decrease) in interest expense:
Interest bearing demand deposits		(11	)		17,931			17,920			(274	)		44,538		44,264
Money market accounts		9			9,864			9,873			(95	)		20,736		20,641
Savings deposits		(45	)		5,677			5,632			13			14,884		14,897
Certificates of deposit		14			5,011			5,025			(702	)		7,447		6,745
Federal Home Loan Bank borrowings		11,900			4,215			16,115			30,642			12,501		43,143
Repurchase agreements		(44	)		642			598			(67	)		1,477		1,410
Subordinated debt and junior subordinated debt		11			1,117			1,128			1,521			3,698		5,219
Total interest expense change		11,834			44,457			56,291			31,038			105,281		136,319
Net interest income change (1)	$	(1,859	)	$	(5,023	)	$	(6,882	)	$	(2,044	)	$	21,245	$	19,201

(1)

Taxable equivalent basis is calculated on tax-exempt securities using a federal statutory tax rate of 21%.

PROVISION FOR CREDIT LOSSES – LOANS AND LOAN COMMITMENTS

The provision for credit losses – loans is the amount to be added to the allowance for credit losses – loans after net (charge-offs) recoveries have been (deducted) added to bring the allowance to a level considered appropriate to absorb lifetime expected losses for all portfolio loans. The provision for credit losses – loan commitments is the amount to be added to the allowance for credit losses for loan commitments to bring that allowance to a level considered appropriate to absorb lifetime expected losses on unfunded loan commitments. The provision for credit losses - loans and loan commitments increased to $6.3 million in the third quarter of 2023 compared to a negative provision of $0.5 million in the third quarter of 2022. While the provision increased year-over-year, the $6.3 million provision in the third quarter of 2023 was a result of continued loan growth and adjustments in regional macroeconomic factors and loan concentrations as well as a $2.9 million specific reserve on one hospitality loan. Non-performing loans were 0.26% of total portfolio loans as of September 30, 2023, decreasing from 0.32% of total portfolio loans at the end of the third quarter of 2022. Criticized and classified loans were 2.22% of total portfolio loans as of September 30, 2023, decreasing from 2.43% as of September 30, 2022, primarily due to risk rating improvements. Past due loans at September 30, 2023 were 0.22% of total portfolio loans, compared to 0.45% at September 30, 2022. Annualized net loan charge-offs were 0.03% for the nine months ended September 30, 2023, compared to 0.02% for the nine months ended September 30, 2022. Please see the Allowance for Credit Losses – Loans and Loan Commitments section of this MD&A for additional discussion.

NON-INTEREST INCOME

TABLE 4. NON-INTEREST INCOME


	For the Three Months Ended September 30,											For the Nine Months Ended September 30,
(unaudited, dollars in thousands)	2023			2022		$ Change			% Change			2023		2022			$ Change			% Change
Trust fees	$	6,705		$	6,517	$	188			2.9		$	21,116	$	20,879		$	237			1.1
Service charges on deposits		6,726			6,942		(216	)		(3.1	)		19,128		19,520			(392	)		(2.0	)
Electronic banking fees		4,949			4,808		141			2.9			14,564		15,307			(743	)		(4.9	)
Net swap fee and valuation income		3,845			2,430		1,415			58.2			7,257		6,053			1,204			19.9
Net securities brokerage revenue		2,394			2,491		(97	)		(3.9	)		7,492		6,969			523			7.5
Bank-owned life insurance		2,398			1,999		399			20.0			7,547		8,263			(716	)		(8.7	)
Net securities (losses) gains		(337	)		656		(993	)		(151.4	)		13		(1,176	)		1,189			101.1
Mortgage banking income		975			1,257		(282	)		(22.4	)		2,002		4,508			(2,506	)		(55.6	)
Net insurance services revenue		827			1,004		(177	)		(17.6	)		2,584		2,955			(371	)		(12.6	)
Payment processing fees		939			818		121			14.8			2,761		2,436			325			13.3
Net (loss) gain on other real estate owned and other assets		(28	)		2,040		(2,068	)		(101.4	)		1,075		(68	)		1,143		NM
Other		1,486			1,294		192			14.8			4,833		3,976			857			21.6
Total non-interest income	$	30,879		$	32,256	$	(1,377	)		(4.3	)	$	90,372	$	89,622		$	750			0.8

NM = Not Meaningful

Non-interest income is a significant source of revenue and an important part of Wesbanco’s results of operations, as it represents 20.8% of total revenue for the three months ended September 30, 2023. Wesbanco offers its customers a wide range of retail, commercial, investment and electronic banking services, which are viewed as a vital component of Wesbanco’s ability to attract and maintain customers, as well as providing additional fee income beyond normal spread-related income to Wesbanco. For the third quarter of 2023, non-interest income decreased $1.4 million or 4.3% compared to the third quarter of 2022, primarily due to a $2.1 million decrease in net (loss) gain on other real estate owned and other assets and a $1.0 million decrease in net securities (losses) gains. These decreases were slightly offset by a $1.4 million increase in net swap fee and valuation income.

Trust fees increased $0.2 million or 2.9% compared to the third quarter of 2022, due to market value increases. Total trust assets were $5.0 billion at September 30, 2023 as compared to $4.6 billion at September 30, 2022. As of September 30, 2023, trust assets include managed assets of $4.0 billion and non-managed (custodial) assets of $1.0 billion. Assets managed for the WesMark Funds, a proprietary group of mutual funds that is advised by Wesbanco Trust and Investment Services, were $0.8 billion as of September 30, 2023 and September 30, 2022, respectively, and are included in managed assets. Trust fees increased $0.2 million or 1.1% in the first nine months of 2023 as compared to the first nine months of 2022.

Net swap fee and valuation income, which includes fair value adjustments, increased $1.4 million in the third quarter of 2023 compared to the third quarter of 2022, due to a higher volume of new swaps originated and increased fair value adjustments. For the three months ended September 30, 2023, new swaps executed totaled $178.1 million in notional principal, resulting in $2.5 million of fee income, compared to new swaps executed of $82.3 million in notional principal resulting in $1.6 million of fee income for the three months ended September 30, 2022. Fair value adjustments on existing swaps for the three months ended September 30, 2023 were $1.4 million as compared to $0.8 million for the three months ended September 30, 2022. For the first nine months of 2023, net swap fee and valuation income increased by $1.2 million or 19.9% from the first nine months of 2022. During this time period, gross new swap fee income increased by $4.1 million, but was offset by a $2.9 million decrease in net fair value adjustments on existing swaps.

Net securities (losses) gains include both gains and losses on investment security transactions as well as market value adjustments on Wesbanco's deferred compensation plan. For the three months ended September 30, 2023, net securities (losses) gains decreased $1.0 million compared to the same period of 2022, due to a $0.2 million decrease in market adjustments on the deferred compensation plan in the third quarter of 2023 as compared to a $0.8 million increase in market adjustments in the third quarter of 2022. These market adjustments had an offsetting effect in employee benefits expense. For the nine months ended September 30, 2023, net securities (losses) gains increased by $1.2 million from the first nine months of 2022 for the same reasons.

Mortgage banking income decreased $0.3 million or 22.4% in the third quarter of 2023 compared to the third quarter of 2022, due to lower margins on sales and increased deferred loan costs on mortgage loans. For the third quarter of 2023, total mortgage production was $165.6 million, which decreased by 29.6% from the third quarter of 2022. For the three months ended September 30, 2023, $102.0 million in mortgages were sold into the secondary market as compared to $66.6 million in the comparable 2022 period. Included in mortgage banking income above are gains of $0.6 million and $0.3 million from the fair value adjustments on mortgage loan commitments and related derivatives for the three months ended September 30, 2023 and 2022, respectively. Mortgage banking income decreased by $2.5 million or 55.6% from the first nine months of 2022 to the first nine months of 2023 for similar reasons as that for the three months ended as well as lower fair market value adjustments.

Net (loss) gain on other real estate owned and other assets decreased $2.1 million or 101.4% in the three months ended September 30, 2023 as compared to the same period in 2022, due primarily to a $1.5 million gain on sale of the underlying equity investments held by Wesbanco Community Development Corporation ("Wesbanco CDC") recorded in the third quarter of 2022. Net (loss) gain on other real estate owned and other assets increased $1.1 million in the first nine months of 2023 as compared to the same period in 2022 due to negative market value adjustments on the same investment recorded in the first and second quarters of 2022 prior to its sale in the third quarter.

NON-INTEREST EXPENSE

TABLE 5. NON-INTEREST EXPENSE


	For the Three Months Ended September 30,										For the Nine Months Ended September 30,
(unaudited, dollars in thousands)	2023		2022		$ Change			% Change			2023		2022		$ Change			% Change
Salaries and wages	$	45,351	$	44,271	$	1,080			2.4		$	131,774	$	124,421	$	7,353			5.9
Employee benefits		11,922		10,693		1,229			11.5			35,492		28,574		6,918			24.2
Net occupancy		6,146		6,489		(343	)		(5.3	)		18,921		19,843		(922	)		(4.6	)
Equipment and software		9,132		8,083		1,049			13.0			27,018		23,795		3,223			13.5
Marketing		3,115		2,377		738			31.0			8,203		7,546		657			8.7
FDIC insurance		3,125		2,391		734			30.7			8,880		5,850		3,030			51.8
Amortization of intangible assets		2,262		2,560		(298	)		(11.6	)		6,845		7,738		(893	)		(11.5	)
Restructuring and merger-related expenses		641		66		575			871.2			3,830		1,712		2,118			123.7
Franchise and other miscellaneous taxes		2,874		2,414		460			19.1			8,787		8,359		428			5.1
Consulting, regulatory, accounting and advisory fees		3,091		2,742		349			12.7			9,190		9,953		(763	)		(7.7	)
ATM and electronic banking interchange expenses		1,744		1,510		234			15.5			5,143		4,460		683			15.3
Legal fees		981		977		4			0.4			2,158		2,648		(490	)		(18.5	)
Communications		1,287		1,212		75			6.2			4,029		3,427		602			17.6
Other real estate owned and foreclosure expenses		109		204		(95	)		(46.6	)		273		710		(437	)		(61.5	)
Supplies, postage and other		6,159		5,952		207			3.5			19,955		17,475		2,480			14.2
Total non-interest expense	$	97,939	$	91,941	$	5,998			6.5		$	290,498	$	266,511	$	23,987			9.0

Non-interest expense in the third quarter of 2023 increased $6.0 million or 6.5% as compared to the same quarter in 2022, principally from a $1.1 million increase in salaries and wages, a $1.2 million increase in employee benefits, a $1.0 million increase in equipment and software expense, a $0.7 million increase in FDIC insurance expense and other smaller increases in other expense line items.

Salaries and wages increased $1.1 million or 2.4% in the third quarter of 2023 as compared to the third quarter of 2022 due to higher salary expense related to higher staffing levels in revenue-producing positions, mainly commercial lenders, normal merit increases and stock option expense acceleration for an executive retirement. Total full time equivalent employees remained relatively unchanged from the third quarter of 2022. Salaries and wages increases were slightly offset by a reduction in bonus expense in the third quarter of 2023. Salaries and wages increased $7.4 million or 5.9% in the first nine months of 2023 as compared to the first nine months of 2022 for the same reasons.

Employee benefits expense increased by $1.2 million or 11.5% in the third quarter of 2023 as compared to the third quarter of 2022. This increase was primarily due to a $1.0 million increase in health insurance contributions and a $0.7 million increase in pension fund expenses. Employee benefits expense increased $6.9 million or 24.2% in the first nine months of 2023 as compared to the first nine months of 2022 for the same reasons.

Equipment and software costs increased $1.0 million or 13.0% in the third quarter of 2023 as compared to the third quarter of 2022, due primarily to general inflationary cost increases for existing service agreements as well as the continuation of the planned upgrade of Wesbanco's ATM fleet with newer technology. Similarly, equipment and software costs increased $3.2 million or 13.5% in the first nine months of 2023 as compared to the first nine months of 2022.

FDIC insurance expense increased $0.7 million or 30.7% in the third quarter of 2023 as compared to the third quarter of 2022 due primarily to the two basis point increase in the minimum FDIC assessment rate for all banks in the first assessment period of 2023. Similarly, FDIC insurance expense increased $3.0 million or 51.8% in the first nine months of 2023 as compared to 2022.

Restructuring and merger-related expenses totaled $0.6 million in the third quarter of 2023. These expenses were comprised mostly of severance expenses associated with the restructuring of the residential mortgage department. Restructuring and merger-related expenses increased $2.1 million in the first nine months of 2023 as compared to the first nine months of 2022 due to fixed asset write-downs and lease termination expenses associated with the closure of branches and back-office buildings from the continuation of the branch optimization strategy.

INCOME TAXES

The provision for income taxes was $7.5 million for the three months ended September 30, 2023, which is a $4.9 million decrease compared to the provision for the three months ended September 30, 2022. The provision for income taxes was $26.5 million for the nine months ended September 30, 2023, which is a $6.0 million decrease compared to the provision for the same period in 2022. The decrease in the provision for income taxes is due to a decrease in pre-tax income from the prior year period resulting in a decrease in the effective tax rate from 18.8% in the first nine months of 2022 to 17.6% in the first nine months of 2023.

FINANCIAL CONDITION

Total assets increased 2.4%, while shareholders' equity increased 0.9% and total deposits decreased 0.3% at September 30, 2023 as compared to December 31, 2022. Total securities decreased $370.6 million or 9.8% from December 31, 2022 to September 30, 2023, as investment runoff was used to fund loan growth. Total portfolio loans increased $613.1 million or 5.7% as new originations outpaced pay downs. Deposits decreased $40.9 million, or 0.3% from December 31, 2022, as decreases of 4.7% and 6.6% in demand deposits and savings deposits, respectively, were partially offset by increases of 32.8% and 13.1% in certificate of deposits and money market deposits, respectively. The overall decrease in transaction-based accounts is primarily attributable to customers' preferences as deposit rates have risen in the current market environment. Deposits were also somewhat impacted by bonus and royalty payments for Marcellus and Utica shale gas payments from energy companies in Wesbanco’s southwestern Pennsylvania, eastern Ohio, and northern West Virginia markets. Total borrowings increased $392.3 million or 35.0% during the first nine months of 2023, which was primarily due to a $420.0 million increase in FHLB borrowings and partially offset by a $28.4 million decrease in other short-term borrowings. Shareholders' equity increased $21.3 million or 0.9% from December 31, 2022, to $2.4 billion at September 30, 2023. The increase resulted primarily from net income during the current nine-month period of $124.1 million, exceeding the declaration of common and preferred shareholder dividends totaling $61.7 million and $7.6 million, respectively, and was slightly offset by a $35.5 million other comprehensive loss for the nine months ended September 30, 2023.

SECURITIES

TABLE 6. COMPOSITION OF SECURITIES (1)


	September 30,			December 31,
(unaudited, dollars in thousands)	2023			2022			Change ($)			Change (%)
Equity securities (at fair value)	$	11,453		$	11,506		$	(53	)		(0.5	)
Available-for-sale debt securities (at fair value)
U.S. Government sponsored entities and agencies		201,512			225,970			(24,458	)		(10.8	)
Residential mortgage-backed securities and collateralized mortgage obligations of government sponsored entities and agencies		1,615,276			1,846,053			(230,777	)		(12.5	)
Commercial mortgage-backed securities and collateralized mortgage obligations of government sponsored entities and agencies		293,247			349,731			(56,484	)		(16.2	)
Obligations of states and political subdivisions		74,447			92,228			(17,781	)		(19.3	)
Corporate debt securities		11,659			15,158			(3,499	)		(23.1	)
Total available-for-sale debt securities	$	2,196,141		$	2,529,140		$	(332,999	)		(13.2	)
Held-to-maturity debt securities (at amortized cost)
U.S. Government sponsored entities and agencies	$	3,807		$	4,357		$	(550	)		(12.6	)
Residential mortgage-backed securities and collateralized mortgage obligations of government sponsored entities and agencies		40,527			45,909			(5,382	)		(11.7	)
Obligations of states and political subdivisions		1,146,362			1,177,986			(31,624	)		(2.7	)
Corporate debt securities		20,296			20,377			(81	)		(0.4	)
Total held-to-maturity debt securities		1,210,992			1,248,629			(37,637	)		(3.0	)
Total securities	$	3,418,586		$	3,789,275		$	(370,689	)		(9.8	)
Available-for-sale and equity securities:
Weighted average yield at the respective period end (2)		2.29	%		2.23	%
As a % of total securities		64.6	%		67.0	%
Weighted average life (in years)		6.5			6.7
Held-to-maturity securities:
Weighted average yield at the respective period end (2)		2.96	%		2.96	%
As a % of total securities		35.4	%		33.0	%
Weighted average life (in years)		9.5			9.5
Total securities:
Weighted average yield at the respective period end (2)		2.50	%		2.45	%
As a % of total securities		100.0	%		100.0	%
Weighted average life (in years)		7.5			7.6

(1)

(2)

Weighted average yields have been calculated on a taxable-equivalent basis using the federal statutory tax rate of 21%.

Total investment securities, which are a source of liquidity for Wesbanco as well as a contributor to interest income, decreased by $370.7 million or 9.8% from December 31, 2022 to September 30, 2023. Through the first nine months of the year, the available-for-sale portfolio decreased by $333.0 million or 13.2%, primarily due to $231.0 million in paydowns, $31.0 million in sales, $23.6 million in maturities and calls and an increase of $47.3 million in unrealized losses. The held-to-maturity portfolio decreased by $37.6 million or 3.0% due primarily to maturities and calls of municipal securities. The weighted average yield of the portfolio increased 5 basis points from 2.45% at December 31, 2022 to 2.50% at September 30, 2023, primarily due to increases in the indices tied to variable rate securities.

Total gross unrealized securities losses increased $94.3 million from $510.7 million at December 31, 2022 to $605.0 million at September 30, 2023. The increase in unrealized losses from December 31, 2022 was due to an increase in market rates in 2023 to date, causing market prices to decrease, particularly on the municipal securities segment of the portfolio. Wesbanco did not allocate any allowance for credit losses to the unrealized losses on available-for-sale debt securities at September 30, 2023. Please refer to Note 4, “Securities,” of the Consolidated Financial Statements for additional information. Wesbanco does not have any investments in private mortgage-backed securities or those that are collateralized by sub-prime mortgages, nor does Wesbanco have any exposure to collateralized debt obligations or government-sponsored enterprise preferred stocks.

Net unrealized losses on available-for-sale securities included in accumulated other comprehensive income, net of tax, as of September 30, 2023 and December 31, 2022 were $297.6 million and $261.8 million, respectively. These net unrealized pre-tax losses represent temporary fluctuations resulting from changes in market rates in relation to fixed yields in the available-for-sale portfolio, and on an after-tax basis are accounted for as an adjustment to other comprehensive income in shareholders’ equity. Net unrealized pre-tax losses in the held-to-maturity portfolio, which are not accounted for in other comprehensive income, were $212.0 million at September 30, 2023, compared to $164.2 million at December 31, 2022. With approximately 35.4% of the investment portfolio in the held-to-maturity category, the recent volatility in interest rates does not have as much impact on other comprehensive income as if the entire portfolio were included in the available-for-sale category.

Equity securities, of which a portion consists of investments in various mutual funds held in grantor trusts formed in connection with a key officer and director deferred compensation plan, are recorded at fair value. Gains and losses due to fair value fluctuations on equity securities are included in net securities gains or losses. For those equity securities relating to the key officer and director deferred compensation plan, the corresponding change in the obligation to the employee is recognized in employee benefits expense.

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 consolidated income statement in the provision for credit losses. Accrued interest receivable on held-to-maturity securities, which was $8.8 million and $9.5 million as of September 30, 2023 and December 31, 2022, 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.

Wesbanco uses prices from independent pricing services and, to a lesser extent, indicative (non-binding) quotes from independent brokers, to measure the fair value of its securities. Wesbanco validates prices received from pricing services or brokers using a variety of methods, including, but not limited to, comparison to secondary pricing services, corroboration of pricing by reference to other independent market data such as secondary broker quotes and relevant benchmark indices, review of pricing by personnel familiar with market liquidity and other market-related conditions, review of pricing service methodologies, review of independent auditor reports received from the pricing service regarding its internal controls, and through review of inputs and assumptions used in pricing certain securities thinly traded or with limited observable data points. The procedures in place provide management with a sufficient understanding of the valuation models, assumptions, inputs and pricing to reasonably measure the fair value of Wesbanco’s securities. For additional disclosure relating to fair value measurements, refer to Note 7, “Fair Value Measurement” in the Consolidated Financial Statements.

LOANS AND CREDIT RISK

Loans represent Wesbanco’s single largest balance sheet asset classification and the largest source of interest income. Business purpose loans consist of CRE loans and other C&I loans that are not secured by real estate. CRE loans are further segmented into land and construction loans, and loans for improved property. Consumer purpose loans consist of residential real estate loans, home equity lines of credit and other consumer loans. Loans held for sale generally consist of residential real estate loans originated for sale in the secondary market, but at times may also include other types of loans. The outstanding balance of each major category of the loan portfolio is summarized in Table 10.

The risk that borrowers will be unable or unwilling to repay their obligations and default on loans is inherent in all lending activities. Credit risk arises from many sources including general economic conditions, external events that impact businesses or industries, isolated events that impact a major employer, individual loss of employment or other personal hardships, as well as changes in interest rates or the value of collateral. Credit risk is also impacted by a concentration of exposure within a geographic market or to one or more borrowers, industries or collateral types. The primary goal in managing credit risk is to minimize the impact of default by an individual borrower or group of borrowers. Credit risk is managed through the initial underwriting process as well as through ongoing monitoring and administration of the portfolio that varies by the type of loan. The Bank’s credit policies establish standard underwriting guidelines for each type of loan and require an appropriate evaluation of the credit characteristics of each borrower. This evaluation includes the borrower’s primary source of repayment capacity; the adequacy of collateral, if any, to secure the loan; the potential value of personal guarantees as secondary sources of repayment; and other factors unique to each loan that may increase or mitigate its risk. Credit bureau scores are also considered when evaluating consumer purpose loans as well as guarantors of business purpose loans. However, the Bank does not periodically update credit bureau scores subsequent to when loans are made to determine changes in credit history.

Credit risk is mitigated for all types of loans by continuously monitoring delinquency levels and pursuing collection efforts at the earliest stage of delinquency. The Bank also monitors general economic conditions, including employment, housing activity and real estate values in its market. The Bank also periodically evaluates and changes its underwriting standards when warranted based on market conditions, the historical performance of a category of the portfolio, or other external factors. Credit risk is also regularly evaluated for the impact of adverse economic and other events that increase the risk of default and the potential loss in the event of default, to understand the impact on the Bank’s earnings and capital.

Commercial loan risk grades are determined based on an evaluation of the relevant characteristics of each loan, assigned at inception and adjusted thereafter at any time to reflect changes in the risk profile throughout the life of each loan. The primary factors used to determine the risk grade are the sufficiency, reliability and sustainability of the primary source of repayment and overall financial strength of the borrower. The rating system more heavily weights the debt service coverage, leverage and loan-to-value factors to derive the risk grade. Other factors that are considered at a lesser weighting include management, industry or property-type risks, payment history, collateral and personal guarantees.

TABLE 10. COMPOSITION OF LOANS (1)


	September 30, 2023				December 31, 2022
(unaudited, dollars in thousands)	Amount		% of Loans		Amount		% of Loans
Commercial real estate:
Land and construction	$	870,066		7.7	$	943,887		8.8
Improved property		5,517,117		48.6		5,117,457		47.8
Total commercial real estate		6,387,183		56.3		6,061,344		56.6
Commercial and industrial		1,587,611		14.0		1,579,395		14.7
Residential real estate		2,392,531		21.1		2,140,584		20.0
Home equity		715,186		6.3		695,065		6.5
Consumer		233,362		2.1		226,340		2.1
Total portfolio loans		11,315,873		99.8		10,702,728		99.9
Loans held for sale		17,677		0.2		8,249		0.1
Total loans	$	11,333,550		100.0	$	10,710,977		100.0

(1)

Loans are presented gross of the allowance for loan credit losses – loans and net of unearned income, credit valuation adjustments, and unamortized net deferred loan fee income and loan origination costs.

Total portfolio loans increased $613.1 million or 5.7% from December 31, 2022, and have increased $1.0 billion or 10.1% over the past twelve months. The increase over the last twelve months was driven by a 13.2% growth in improved property loans due to increased originations and continued low prepayment rates, as well as a 19.0% increase in residential real estate balances, which also stems from low prepayment rates and construction advances, despite efforts to sell more loans into the secondary market. Land and construction loans declined by 9.0% as a large number of construction projects were completed and subsequently transferred to improved property loans, which further increased those balances. Home equity loans have increased 17.3% and commercial and industrial loans have increased 4.7% over the 12 month period, while consumer loans have decreased 24.6%.

Total loan commitments of $5.0 billion, including loans approved but not closed, increased $350.5 million or 7.6% from December 31, 2022 due primarily to increased availabilities under lines of credit and loans approved but not closed. The average line utilization percentage for the commercial portfolio was 31.1% for the three months ended September 30, 2023 compared to 34.7% for the three months ended December 31, 2022.

The commercial portfolio is monitored for potential concentrations of credit risk by market, type of lending, CRE property type, C&I and owner-occupied CRE by industry, investment CRE dependence on common tenants and industries or property types that are similarly impacted by external factors.

Loans held for sale at both September 30, 2023 and December 31, 2022 are originated residential mortgages that are committed to be sold into the secondary market. Loans held for sale increased by $9.4 million or 114.3% from December 31, 2022 due to an ongoing effort to increase the volume of fixed-rate mortgage originations, which may subsequently be sold.

NON-PERFORMING ASSETS AND LOANS PAST DUE 90 DAYS OR MORE

Non-performing assets consist of non-accrual loans, other real estate acquired through or in lieu of foreclosure, bank premises held for sale, and repossessed automobiles acquired to satisfy defaulted consumer loans.

TABLE 11. NON-PERFORMING ASSETS


(unaudited, dollars in thousands)	September 30, 2023			December 31, 2022
Non-accrual loans:
Commercial real estate - land and construction	$	—		$	112
Commercial real estate - improved property		11,289			16,254
Commercial and industrial		2,138			2,946
Residential real estate		11,013			13,695
Home equity		5,322			5,044
Consumer		116			134
Total non-accrual loans (1)		29,878			38,185
TDRs accruing interest (2) :
Commercial real estate - land and construction		—			—
Commercial real estate - improved property		—			347
Commercial and industrial		—			166
Residential real estate		—			2,362
Home equity		—			330
Consumer		—			25
Total TDRs accruing interest (1)		—			3,230
Total non-performing loans	$	29,878		$	41,415
Other real estate owned and repossessed assets		1,333			1,486
Total non-performing assets	$	31,211		$	42,901
Non-performing loans/total portfolio loans		0.26	%		0.39	%
Non-accrual loans/total portfolio loans		0.26	%		0.36	%
Non-performing assets/total assets		0.18	%		0.25	%
Non-performing assets/total portfolio loans, other real estate and repossessed assets		0.28	%		0.40	%

(1)

Loans previously designated as TDRs that were also on non-accrual of $1.7 million are included in total non-accrual loans as of December 31, 2022.

(2)

Wesbanco eliminated the TDR classification as of January 1, 2023 due to the adoption of ASU 2022-02.

As of the adoption of ASU 2022-02, non-performing loans consist only of non-accrual loans. Non-performing loans in prior periods also include loans that were previously designated as TDRs. Non-performing loans decreased $11.5 million or 27.9%, from December 31, 2022 due in part to this change. Non-accrual loans decreased $8.3 million or 21.8%. (Please see the Notes to the Consolidated Financial Statements for additional discussion).

The following table presents past due and accruing loans excluding non-accruals:

TABLE 12. PAST DUE AND ACCRUING LOANS EXCLUDING NON-ACCRUALS


(unaudited, dollars in thousands)	September 30, 2023			December 31, 2022
Loans past due 90 days or more:
Commercial real estate - land and construction	$	—		$	629
Commercial real estate - improved property		4,131			84
Commercial and industrial		292			1,586
Residential real estate		1,991			1,551
Home equity		1,475			1,063
Consumer		717			530
Total loans past due 90 days or more		8,606			5,443
Loans past due 30 to 89 days:
Commercial real estate - land and construction		—			910
Commercial real estate - improved property		2,943			2,459
Commercial and industrial		681			984
Residential real estate		3,683			3,582
Home equity		4,537			3,920
Consumer		4,186			3,584
Total loans past due 30 to 89 days		16,030			15,439
Total loans 30 days or more past due	$	24,636		$	20,882
Loans past due 90 days or more and accruing to total portfolio loans		0.08	%		0.05	%
Loans past due 30-89 days and accruing to total portfolio loans		0.14	%		0.14	%

Loans past due 30 days or more and accruing interest, excluding non-accruals, increased $3.8 million or 18.0% from December 31, 2022. These loans continue to accrue interest because they are both well-secured and in the process of collection. Loans 90 days or more past due increased $3.2 million and represented 0.08% of total portfolio loans at September 30, 2023 and 0.05% at December 31, 2022. Loans 30 to 89 days past due represented 0.14% of total portfolio loans at both September 30, 2023 and December 31, 2022.

ALLOWANCE FOR CREDIT LOSSES - LOANS AND LOAN COMMITMENTS

As of September 30, 2023, the total allowance for credit losses – loans and commitments was $136.3 million, of which $126.6 million related to loans and $9.7 million related to loan commitments. The allowance for credit losses – loans was 1.12% of total portfolio loans as of September 30, 2023, compared to 1.10% as of December 31, 2022. Excluded from the allowance for credit losses and related coverage ratio are fair market value adjustments on previously acquired loans representing 0.13% of total portfolio loans at September 30, 2023. The allowance for credit losses – loans individually-evaluated increased $1.8 million from December 31, 2022 to September 30, 2023. The population of individually-evaluated loans consisted of seven loans, with a total outstanding loan balance of $27.1 million. The allowance for loans collectively-evaluated increased from December 31, 2022 to September 30, 2023 by $7.0 million. The allowance for credit losses- loan commitments was $9.7 million at September 30, 2023 as compared to $8.4 million as of December 31, 2022, and is included in other liabilities on the Consolidated Balance Sheets.

The allowance for credit losses by loan category, presented in Note 4, “Loans and the Allowance for Credit Losses” of the Consolidated Financial Statements, summarizes the impact of changes in various factors that affect the allowance for loan losses in each segment of the portfolio. The allowance for credit losses under the current expected credit losses methodology ("CECL") is calculated utilizing the probability of default (“PD”)/ loss given default (“LGD”), which is then discounted to net present value. PD is the probability the asset will default within a given time frame and LGD is the percentage of the asset not expected to be collected due to default. The primary macroeconomic drivers of the quantitative model include forecasts of national unemployment and interest rates, as well as modeling adjustments for changes in prepayment speeds, loan risk grades, portfolio mix, concentrations and loan growth. For the calculation as of September 30, 2023, the forecast was based upon a probability weighted approach which is designed to incorporate loss projections from a baseline, upside and downside economy. Due to the nonlinearity of credit losses to the economy, the asymmetry is best captured by evaluating multiple economic scenarios through a probability weighted approach. At quarter-end, national unemployment was projected to be 4.3%, and subsequently increase to an average of 4.7% over the remainder of the forecast period. Loan growth along with economic drivers of the quantitative model, including those for prepayment speed fluctuations, caused the allowance for credit losses - loans to increase from December 31, 2022 to September 30, 2023, by $8.8 million.

Criticized and classified loans were 2.22% of total portfolio loans, or $251.1 million, at September 30, 2023, decreasing from 2.34% of total portfolio loans at December 31, 2022, while the balance remained virtually unchanged. See Note 4, “Loans and the Allowance for Credit Losses” for more information.

Table 13 summarizes the allocation of the allowance for credit losses to each category of the loan portfolio.

TABLE 13. ALLOCATION OF THE ALLOWANCE FOR CREDIT LOSSES – LOANS AND LOAN COMMITMENTS


(unaudited, dollars in thousands)	September 30, 2023		Percent of Total		December 31, 2022		Percent of Total
Allowance for credit losses - loans:
Commercial real estate - land and construction	$	6,108		4.5	$	6,737		5.3
Commercial real estate - improved property		59,625		43.8		52,659		41.7
Commercial and industrial		34,716		25.5		31,540		25.0
Residential real estate		20,441		15.0		18,208		14.4
Home equity		994		0.7		4,234		3.4
Consumer		3,442		2.5		3,127		2.5
Deposit account overdrafts		1,289		0.9		1,285		1.0
Total allowance for credit losses - loans	$	126,615		92.9	$	117,790		93.3
Allowance for credit losses - loan commitments:
Commercial real estate - land and construction	$	7,272		5.3	$	6,025		4.8
Commercial real estate - improved property		—		—		—		0.0
Commercial and industrial		1,087		0.8		—		0.0
Residential real estate		1,352		1.0		2,215		1.8
Home equity		18		0.0		128		0.1
Consumer		—		0.0		—		0.0
Total allowance for credit losses - loan commitments		9,729		7.1		8,368		6.7
Total allowance for credit losses - loans and loan commitments	$	136,344		100.0	$	126,158		100.0

Although the allowance for credit losses is allocated as described in Table 13, the total allowance is available to absorb actual losses in any category of the loan portfolio. However, differences between management’s estimation of probable losses and actual net charge-offs in subsequent periods for any category may necessitate future adjustments to the allowance for credit losses applicable to the category. Management believes the allowance for credit losses is appropriate to absorb expected losses at September 30, 2023.

DEPOSITS

TABLE 14. DEPOSITS


(unaudited, dollars in thousands)	September 30, 2023		December 31, 2022		$ Change			% Change
Deposits
Non-interest bearing demand	$	4,169,956	$	4,700,438	$	(530,482	)		(11.3	)
Interest bearing demand		3,278,956		3,119,807		159,149			5.1
Money market		1,905,001		1,684,023		220,978			13.1
Savings deposits		2,559,894		2,741,004		(181,110	)		(6.6	)
Certificates of deposit		1,176,421		885,818		290,603			32.8
Total deposits	$	13,090,228	$	13,131,090	$	(40,862	)		(0.3	)

Deposits, which represent Wesbanco’s primary source of funds, are offered in various account forms at various rates through Wesbanco’s 192 financial centers. The FDIC insures deposits up to $250,000 per account owner.

Total deposits decreased $40.9 million or 0.3% during the first nine months of 2023. Savings deposits decreased 6.6% and demand deposits decreased 4.7%, while money market deposit accounts increased 13.1%. The overall decrease in transaction-based accounts is primarily attributable to interest rate and inflationary pressures and rising costs across the economy, combined with the Federal Reserve's tightening actions to control inflation which has resulted in industry-wide deposit contraction. Deposit balances were also impacted by bonus and royalty payments for Marcellus and Utica shale gas payments from energy companies in Wesbanco’s southwestern Pennsylvania, eastern Ohio and northern West Virginia markets. In addition, Wesbanco also participates in the Insured Cash Sweep (ICS®) deposit program. ICS® reciprocal balances totaled $859.1 million at September 30, 2023 compared to $580.6 million at December 31, 2022. In addition, ICS® one-way buys totaled $200.6 million at September 30, 2023 compared to none at December 31, 2022.

Certificates of deposit increased 32.8% from December 31, 2022 to September 30, 2023. Wesbanco does not generally solicit brokered or other deposits out-of-market or over the internet, but does participate in the Certificate of Deposit Account Registry Services (CDARS®) program. CDARS® balances totaled $99.3 million in outstanding balances at September 30, 2023, of which $63.7 million represented one-way buys, compared to $21.0 million in total outstanding balances, none of which represented one-way buys, at December 31, 2022. Certificates of deposit greater than $250,000 were approximately $192.1 million at September 30, 2023 compared to $133.9 million at December 31, 2022. Certificates of deposit totaling approximately $897.8 million at September 30, 2023 with a cost of 3.00% are scheduled to mature within the next 12 months. From time to time, the Bank may offer special promotions or match competitor rates on certain certificates of deposit maturities and savings products based on competition, sales strategies, liquidity needs and wholesale borrowing costs.

BORROWINGS

TABLE 15. BORROWINGS


(unaudited, dollars in thousands)	September 30, 2023		December 31, 2022		$ Change			% Change
Federal Home Loan Bank Borrowings	$	1,125,000	$	705,000	$	420,000			59.6
Other short-term borrowings		106,693		135,069		(28,376	)		(21.0	)
Subordinated debt and junior subordinated debt		282,079		281,404		675			0.2
Total	$	1,513,772	$	1,121,473	$	392,299			35.0

While borrowings are a significant source of funding for Wesbanco, they are less significant as compared to total deposits. FHLB borrowings increased $420.0 million from December 31, 2022 to September 30, 2023, as $1.4 billion in new advances were partially offset by $1.0 billion in maturities. The average cost of maturing FHLB advances was 5.17% during the first nine months of 2023, compared to an average cost of 5.27% for new borrowings during the first nine months of 2023.

Other short-term borrowings, which may consist of federal funds purchased, callable repurchase agreements and overnight sweep checking accounts were $106.7 million at September 30, 2023, compared to $135.1 million at December 31, 2022. There were no outstanding federal funds purchased at either September 30, 2023 or December 31, 2022.

CAPITAL RESOURCES

Shareholders' equity increased $21.3 million or 0.9% from December 31, 2022, to $2.4 billion at September 30, 2023. The increase resulted from net income during the current nine-month period of $124.1 million, exceeding the declaration of common and preferred shareholder dividends totaling $61.7 million and $7.6 million, respectively, and was slightly offset by a $35.5 million other comprehensive loss for the nine months ended September 30, 2023. Wesbanco also increased its quarterly dividend rate $0.01 per quarter to $0.35 per share in November 2022, representing a 2.9% increase over the prior quarterly rate and a cumulative 150% increase since 2010.

Wesbanco purchased a total of 162,700 shares of its common stock at a total cost of $3.7 million or $23.04 per share during the nine month period ended September 30, 2023 under the current share repurchase authorization, none of which was purchased during the three months ended September 30, 2023. These purchases included both those on the open market for general corporate purposes as well as those purchased from employees for the payment of withholding taxes to facilitate a stock compensation transaction. At September 30, 2023, the remaining shares authorized to be purchased under the last approved repurchase plan totaled 1,021,901 shares.

Regulatory guidelines require bank holding companies and commercial banks to maintain certain minimum capital ratios and define companies as “well capitalized” that sufficiently exceed the minimum ratios. At September 30, 2023, regulatory capital levels for both the Bank and Wesbanco were substantially greater than the minimum amounts needed to be considered “well capitalized” under the regulations. There are various legal limitations under federal and state laws that limit the payment of dividends from the Bank to Wesbanco. As of September 30, 2023, under FDIC regulations, Wesbanco could receive, without prior regulatory approval, a dividend of approximately $103.1 million from the Bank.

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 September 30, 2023 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 11 to 15 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 for the periods indicated:


							September 30, 2023							December 31, 2022
	Minimum			Well-								Minimum							Minimum
(unaudited, dollars in thousands)	Value (1)			Capitalized (2)			Amount		Ratio			Amount (1)		Amount		Ratio			Amount (1)
Wesbanco, Inc.
Tier 1 leverage		4.00	%		5.00	%	$	1,631,098		9.84	%	$	663,289	$	1,576,764		9.90	%	$	636,966
Common equity Tier 1		4.50	%		6.50	%		1,486,614		11.00	%		607,938		1,432,280		11.20	%		575,500
Tier 1 capital to risk-weighted assets		6.00	%		8.00	%		1,631,098		12.07	%		810,584		1,576,764		12.33	%		767,344
Total capital to risk-weighted assets		8.00	%		10.00	%		2,022,731		14.97	%		1,080,778		1,933,007		15.11	%		1,023,112
Wesbanco Bank, Inc.
Tier 1 leverage		4.00	%		5.00	%	$	1,624,743		9.82	%	$	662,139	$	1,558,305		9.80	%	$	636,033
Common equity Tier 1		4.50	%		6.50	%		1,624,743		12.06	%		606,136		1,558,305		12.22	%		574,079
Tier 1 capital to risk-weighted assets		6.00	%		8.00	%		1,624,743		12.06	%		808,182		1,558,305		12.22	%		765,439
Total capital to risk-weighted assets		8.00	%		10.00	%		1,736,377		12.89	%		1,077,576		1,634,548		12.81	%		1,020,585

(1)

Minimum requirements to remain adequately capitalized.

(2)

Well-capitalized under prompt corrective action regulations.

LIQUIDITY RISK

Liquidity is defined as a financial institution’s capacity to meet its cash and collateral obligations at a reasonable cost. Liquidity risk is the risk that an institution’s financial condition or overall safety and soundness is adversely affected by an inability, or perceived inability, to meet its obligations. An institution’s obligations, and the funding sources to meet them, depend significantly on its business mix, balance sheet structure, and the cash flows of its on- and off-balance sheet obligations. Institutions confront various internal and external situations that can give rise to increased liquidity risk including funding mismatches, market constraints on funding sources, contingent liquidity events, changes in economic conditions, and exposure to credit, market, operation, legal and reputation risk. Wesbanco actively manages liquidity risk through its ability to provide adequate funds to meet changes in loan demand, unexpected outflows in deposits and other borrowings as well as to take advantage of market opportunities and meet operating cash needs. This is accomplished by maintaining liquid assets in the form of securities, sufficient borrowing capacity and a stable core deposit base. Liquidity is centrally monitored by Wesbanco’s Asset/Liability Committee (“ALCO”).

Wesbanco determines the degree of required liquidity by the relationship of total holdings of liquid assets to the possible need for funds to meet unexpected deposit losses and/or loan demands. The ability to quickly convert assets to cash at a minimal loss is a primary function of Wesbanco’s investment portfolio management. Wesbanco believes its cash flow from the loan portfolio, the investment portfolio, and other sources, adequately meet its liquidity requirements. Wesbanco’s net loans to assets ratio was 64.5% at September 30, 2023 and deposit balances funded 75.5% of assets.

The following table lists the sources of liquidity from assets at September 30, 2023 expected within the next year:


(unaudited, in thousands)
Cash and cash equivalents	$	495,082
Securities with a maturity date within the next year and callable securities		259,823
Projected payments and prepayments on mortgage-backed securities and collateralized mortgage obligations (1)		317,303
Loans held for sale		17,677
Accruing loans scheduled to mature		1,108,324
Normal loan repayments		1,243,684
Total sources of liquidity expected within the next year	$	3,441,893

(1)

Projected prepayments are based on current prepayment speeds.

Deposit flows are another principal factor affecting overall Wesbanco liquidity. Deposits totaled $13.1 billion at September 30, 2023. Deposit flows are impacted by current interest rates, products and rates offered by Wesbanco versus various forms of competition, as well as customer behavior. Certificates of deposit scheduled to mature within one year totaled $897.8 million at September 30, 2023, with a weighted average cost of 3.00%, which includes jumbo regular certificates of deposit totaling $399.5 million with a weighted-average cost of 3.44%, and jumbo CDARS® deposits of $92.5 million with a weighted-average cost of 4.30%, which included $63.3 million one-way buys.

Uninsured deposits, as reported for regulatory purposes, totaled $4.0 billion at September 30, 2023, or 31% of total deposits. Uninsured deposits include $888.3 million of public funds deposits that are over the FDIC-insured limit. Wesbanco secures these public funds deposits by pledging investment securities with a market value at or above the deposit balance. Excluding these public funds, at September 30, 2023, uninsured deposits were $3.2 billion, or 24% of total deposits.

Wesbanco maintains a line of credit with the FHLB as an additional funding source. Available credit with the FHLB approximated $3.5 billion and $3.6 billion at September 30, 2023 and December 31, 2022, respectively. The FHLB requires securities to be specifically pledged to the FHLB and maintained in a FHLB-approved custodial arrangement if the member wishes to include such securities in the maximum borrowing capacity calculation. Wesbanco has elected not to specifically pledge to the FHLB otherwise unpledged securities. At September 30, 2023, the Bank had unpledged available-for-sale securities with an estimated fair value of $396.6 million, or 18.5% of the total available-for-sale portfolio. A portion of these securities could be sold for additional liquidity, or such securities could be pledged to secure additional FHLB borrowings. A significant portion of the portfolio is pledged to public deposit customers, as public deposit balances have increased significantly through the several acquisitions made since 2015. In addition, at September 30, 2023, the Bank had unpledged held-to-maturity securities with an estimated fair value of $763.4 million. Most of these securities are tax-exempt municipal securities, which can only be pledged in limited circumstances. Generally, these securities cannot be sold without tainting the remainder of the held-to-maturity portfolio. If tainting occurs, all remaining securities with the held-to-maturity designation would be required to be reclassified as available-for-sale, and the held-to-maturity designation would not be available to Wesbanco for a period of time.

Wesbanco participates in the Federal Reserve Bank’s Borrower-in-Custody Program (“BIC”) whereby Wesbanco pledges certain consumer loans as collateral for borrowings. Wesbanco did not have any BIC borrowings outstanding at September 30, 2023. Alternative funding sources may include the utilization of existing overnight lines of credit with third party banks totaling $235.0 million, none of which was outstanding at September 30, 2023, along with seeking other lines of credit, borrowings under repurchase agreement lines, increasing deposit rates to attract additional funds, accessing brokered deposits, or selling securities available-for-sale or certain types of loans. In addition, in March 2023, the Federal Reserve announced that it would make available additional funding to eligible depository institutions through the creation of a new Bank Term Funding Program ("BTFP"). The BTFP would offer loans of up to one year in length to eligible depository institutions that pledge U.S. Treasuries, agency debt and mortgage-backed securities, or other qualifying assets as collateral. As of September 30, 2023, Wesbanco has not utilized the BTFP for funding, but does have $393.7 million in par value of qualifying investment securities that could be used to access funds from the program.

Other short-term borrowings of $106.7 million at September 30, 2023 consisted of callable repurchase agreements and overnight sweep checking accounts for large commercial customers. Other short-term borrowings may also include federal funds purchased. The overnight sweep checking accounts require U.S. Government securities to be pledged equal to or greater than the average deposit balance in the related customer accounts.

The principal sources of parent company liquidity are dividends from the Bank and $268.7 million in cash on hand. There are various legal limitations under federal and state laws that limit the payment of dividends from the Bank to the parent company. As of September 30, 2023, under FDIC and State of West Virginia regulations, Wesbanco could receive, without prior regulatory approval, dividends of approximately $103.1 million from the Bank. Management believes these are appropriate levels of cash for the parent company given the current environment. Management continuously monitors the adequacy of parent company cash levels and sources of liquidity through the use of metrics that relate current cash levels to historical and forecasted cash inflows and outflows.

Wesbanco had outstanding commitments to extend credit in the ordinary course of business approximating $4.9 billion and $4.6 billion at September 30, 2023 and December 31, 2022, respectively. On a historical basis, only a portion of these commitments will result in an outflow of funds. Please refer to Note 10, “Commitments and Contingent Liabilities” of the Consolidated Financial Statements and the “Loans and Credit Risk” section of this MD&A for additional information.

Federal financial regulatory agencies have previously issued guidance to provide for sound practices for managing funding and liquidity risk and strengthening liquidity risk management practices. Wesbanco maintains a comprehensive management process for identifying, measuring, monitoring, and controlling liquidity risk, which is fully integrated into its risk management process. Management believes Wesbanco has sufficient current liquidity to meet current obligations to borrowers, depositors and others and that Wesbanco’s current liquidity risk management policies and procedures, as periodically reviewed and adjusted, adequately address this guidance.

LIBOR TRANSITION

LIBOR is a widely used short-term reference interest rate benchmark for variable rate loans and securities, borrowings, and interest rate hedge/swap transactions. In July 2017, the U.K. Financial Conduct Authority (“FCA”) announced the discontinuation of LIBOR after certain banks provided purported interest rate figures which did not truly reflect the rate at which they could borrow. In addition to FCA, as early as 2014, financial institution regulators and the Federal Financial Institutions Examination Council (“FFIEC”) began to work to develop a uniform approach to the phase-out of LIBOR because the continued reliance on LIBOR could present systematic risk to financial institutions. The Board of Governors of the Federal Reserve System and the Federal Reserve Bank of New York convened the Alternative Reference Rates Committee (“AARC”) to identify alternative reference rates to LIBOR. The AARC released consultations on contractual fallback language to prepare for the transition away for LIBOR and on June 22, 2017, identified SOFR as the recommended alternative to LIBOR.

On July 1, 2020, the FFIEC issued a Joint Statement on Managing the LIBOR Transition to further explain that new financial contracts should either utilize a reference rate other than LIBOR or have robust fallback language that defines an alternative reference rate after LIBOR’s discontinuation. The FFIEC statement encouraged supervised financial institutions to continue their efforts to prepare for the change and address the risks associated with the LIBOR transition.

On November 6, 2020, the Board of Governors of the Federal Reserve System, the Office of the Comptroller of the Currency, and the Federal Deposit Insurance Corporation (collectively, the “Agencies”) issued a statement providing that a financial institution may use any reference rate for its loans that the financial institution determines to be appropriate for its funding model and customer needs.

Thereafter, on November 30, 2020, the Agencies issued an additional joint statement encouraging financial institutions to continue to transition away from LIBOR as soon as practicable, but no later than December 31, 2021. Given the risks associated with the use of LIBOR, the Agencies stated that entering into new contracts that use LIBOR as a reference rate after December 31, 2021, would create safety and soundness risks.

On March 5, 2021, the U.K. FCA and Intercontinental Exchange (“ICE”) Benchmark Administration announced that the publication of the overnight, as well as, the one, three, six, and twelve month LIBOR rates will continue through June 30, 2023, which will provide additional time to wind down or renegotiate existing contracts that reference LIBOR.

On October 20, 2021, the Agencies with the Consumer Financial Protection Bureau, National Credit Union Administration, and State Bank and Credit Union Regulators, issued an additional Joint Statement on Managing the LIBOR Transition to once again emphasize the expectation that supervised institutions with LIBOR exposure continue to progress toward an orderly transition away from LIBOR. The statement confirmed that entering into new contracts, including derivatives that use LIBOR as a reference rate after December 31, 2021, would create safety and soundness risks, including litigation, operational, and consumer protection risks.

On March 15, 2022, President Biden signed the Adjustable Interest Rate (LIBOR) Act into law (the “LIBOR Act”). The LIBOR Act provides a clear and uniform federal solution for transitioning legacy contracts that either lack or contain insufficient contractual provisions addressing the permanent cessation of LIBOR by providing for the transition from LIBOR to a replacement rate and avoiding related litigation.

On December 16, 2022, the Federal Reserve Board adopted a final rule that implements the Adjustable Interest Rate (LIBOR) Act by identifying benchmark rates based on SOFR that will replace LIBOR in certain financial contracts after June 30, 2023. The final rule is substantially similar to the proposal with certain clarifying changes made in response to comments.

•

For a LIBOR contract that is a derivative transaction, the “Fallback Rate (SOFR)” as defined in the 2020 IBOR Fallbacks Protocol published by the International Swaps and Derivatives Association (ISDA protocol), which incorporates the statutorily prescribed tenor spread adjustment.

•

For a LIBOR contract that is an FHFA-regulated-entity contract:

•

For Federal Home Loan Bank advances, the “Fallback Rate (SOFR)” as defined in the ISDA protocol; and

•

For all other FHFA-regulated-entity contracts, SOFR (in place of overnight LIBOR) or 30-day compounded average SOFR published by FRBNY (“30-day Average SOFR,” in place of one-, three-, six-, or 12-month LIBOR), plus the applicable statutorily prescribed tenor spread adjustment.

•

For a LIBOR contract that is a FFELP ABS, either (i) 30-day Average SOFR (for one-, six-, and 12-month LIBOR) or (ii) 90-day compounded average SOFR published by FRBNY (for three-month LIBOR), plus the applicable statutorily prescribed tenor spread adjustment.

•

For all other LIBOR contracts, including consumer loans, SOFR (in place of overnight LIBOR) or term SOFR published by CME Group Benchmark Administration, Ltd. (in place of one-, three-, six-, or 12-month LIBOR), plus the statutorily prescribed tenor spread adjustment.

As early as 2018, in anticipation of the potential discontinuance of LIBOR, Wesbanco established a LIBOR transition committee to effectively manage the Company’s transition away from LIBOR in two phases. The first phase included adding additional fallback language to loan documents to allow Wesbanco to replace LIBOR with an equivalent rate index plus the margin to ensure the resulting interest rate is the same as it previously was using LIBOR. Also, as part of the first phase, Wesbanco began quoting to the Treasury Rate published by the Federal Reserve Board instead of the ICE LIBOR Swap Index (which is tied to LIBOR) when repricing certain term loans and originating new loans. The second phase consisted of working to continue to transition existing adjustable-rate loans that fluctuate monthly or periodically that are tied to LIBOR or the ICE LIBOR Swap Index. Wesbanco tracked the dollar amount and number of loans tied to LIBOR or the ICE LIBOR Swap Index, monitored current industry trends, and worked with legal counsel to ensure the smooth transition away from LIBOR. Wesbanco has not offered LIBOR for new contracts after December 31, 2021. With respect to its back-to-back swap program, Wesbanco worked with its swap counterparty customers to institute and accept the International Swaps and Derivatives Association 2020 Interbank Offered Rate Fallbacks Protocol to address LIBOR cessation in swap transactions. Moreover, Wesbanco chose 1M Term SOFR as its replacement index for new loans in the bank’s back-to-back swap program, beginning on January 1, 2022. The final step ahead of the discontinuance of LIBOR on June 30, 2023 was to transition all remaining LIBOR based loans to their appropriate replacement indexes. Ahead of the discontinuance of LIBOR, Wesbanco provided notice to its impacted customers that, for any loan rate reset occurring after the discontinuance of LIBOR, the loan rate would be determined based on a new index consistent with the LIBOR Act and recommendations from the ARRC. Following that customer communication, all necessary changes were made within the applicable loan systems. With the final step now complete, Wesbanco has concluded its transition away from LIBOR. In the coming months, the LIBOR Transition Committee will continue to meet on occasion to ensure no issues arise and to monitor any changing industry trends on the indexes used for pricing new loans.

ITEM 3. QUANTITATIVE AND QUALITATI VE DISCLOSURES ABOUT MARKET RISK

The disclosures set forth in this item are qualified by the section captioned “Forward-Looking Statements” included in Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations of this report.

MARKET RISK

The primary objective of the ALCO is to maximize net interest income within established policy parameters. This objective is accomplished through the management of balance sheet composition, market risk exposures arising from changing economic conditions and liquidity risk.

Market risk is defined as the risk of loss due to adverse changes in the fair value of financial instruments resulting from fluctuations in interest rates and bond prices. Management considers interest rate risk to be Wesbanco’s most significant market risk. Interest rate risk is the exposure to adverse changes in net interest income due to changes in interest rates. The consistency of Wesbanco’s net interest income is largely dependent on effective management of interest rate risk. As interest rates change in the market, rates earned on interest rate-sensitive assets and rates paid on interest rate-sensitive liabilities do not necessarily move concurrently. Differing rate sensitivities may arise because fixed rate assets and liabilities may not have the same maturities, or because variable rate assets and liabilities differ in the timing and/or the percentage of rate changes.

Wesbanco’s ALCO is an executive management committee with Board representation, responsible for monitoring and managing interest rate risk within approved policy limits, utilizing earnings sensitivity simulation and economic value-at-risk models. These models are highly dependent on various assumptions, which change regularly as the balance sheet and market interest rates change. The key assumptions and strategies employed are analyzed, reviewed and documented at least quarterly by the ALCO.

The earnings sensitivity simulation model projects changes in net interest income resulting from the effects of changes in interest rates. Forecasting changes in net interest income requires management to make certain assumptions regarding loan and security prepayment rates, call dates, changes to deposit product betas and non-maturity deposit decay rates, which may not necessarily reflect the manner in which actual cash flows, yields, and costs respond to changes in market interest rates. Assumptions are based on historical experience, current market rates and economic forecasts, and are internally back-tested and periodically reviewed by a third-party consultant. The net interest income sensitivity results presented in Table 1, “Net Interest Income Sensitivity,” assumes that the balance sheet composition of interest sensitive assets and liabilities existing at the end of the period remains constant over the period being measured and also assumes that a particular change in interest rates is reflected uniformly across the yield curve, regardless of the duration of the maturity or re-pricing of specific assets and liabilities. Since the assumptions used in the model relative to changes in interest rates are uncertain, the simulation analysis may not be indicative of actual results. In addition, this analysis does not consider actions that management might employ in response to changes in interest rates, as well as changes in earning asset and costing liability balances.

Interest rate risk policy limits are determined by measuring the anticipated change in net interest income over a twelve-month period, assuming immediate and sustained market interest rate increases of 100 - 200 basis points and decreases of 100 - 400 basis points across the entire yield curve, as compared to a stable rate environment or base model. Wesbanco’s current policy limits this exposure for the noted interest rate changes to a reduction of between 7.5% - 20%, or less, of net interest income from the stable rate base model over a twelve-month period. The table below indicates Wesbanco’s interest rate sensitivity at September 30, 2023 and December 31, 2022, assuming the above-noted interest rate changes, as compared to a base model.

TABLE 1. NET INTEREST INCOME SENSITIVITY


Immediate Change in	Percentage Change in
Interest Rates	Net Interest Income from Base over One Year		ALCO
(basis points)	September 30, 2023	December 31, 2022	Guidelines
+200	2.7%	5.6%	(10.0%)
+100	2.5%	2.8%	(7.5%)
-100	(2.6%)	(4.4%)	(7.5%)
-200	(6.2%)	(9.8%)	(10.0%)
-300	(10.5%)	(15.6%)	(15.0%)
-400	(15.1%)	N/A	(20.0%)

Adjustments to relative sensitivities are due to the impact of the current lower rate and yield curve environment on base case net interest income and the related calculation of parallel rate shock changes in rising and falling rate scenarios. Additional differences typically result from changes in the various earning assets and costing liabilities mix and growth rates, as well as adjustments for various modeling assumptions. Generally, deposit betas utilized in modeling are estimated at more conservative percentages for various rate scenarios than has been the Bank’s historical experience, as a result of both competitive factors in our markets and as public funds and institutional contract terms are renewed. Deposit betas, decay rates and loan prepayment speeds are adjusted periodically in our models for non-maturity deposits and loans. Indicated model asset sensitivity in rising rate scenarios may be less than anticipated due to slower prepayment speeds, rate floors, below forecast new loan yields, spread compression between new asset yields and funding costs, mortgage-related extension risk and other factors. In a decreasing rate environment, asset sensitivity may have greater impact on the margin than currently modeled as prepayment speeds increase, customers refinance or request rate reductions on existing loans, estimated deposit betas do not perform as modeled, or for other reasons.

In addition to the aforementioned parallel rate shock earnings sensitivity simulation model, the ALCO also reviews a “dynamic” forecast scenario to project net interest income over a rolling two-year time period. This forecast is updated at least quarterly, incorporating revisions and updated assumptions into the model for estimated loan and deposit growth, expected balance sheet re-mixing strategies, changes in forecasted rates for various maturities, competitive market spreads for various products and other assumptions. Such modeling is directionally consistent with typical parallel rate shock scenarios, and it assists in predicting changes in forecasted outcomes as well as suggesting potential adjustments to management plans to assist in achieving earnings goals.

Wesbanco also periodically measures the economic value of equity (“EVE”), which is defined as the market value of tangible equity in various rate scenarios. Generally, changes in the economic value of equity relate to changes in various assets and liabilities, changes in the yield curve, as well as changes in loan prepayment speeds and deposit decay rates. The following table presents these results and Wesbanco’s policy limits as of September 30, 2023 and December 31, 2022. Changes in EVE sensitivity since year-end 2022 relate to the change in market interest rates and their impact upon the fair values of earning assets and costing liabilities.


Immediate Change in	Percentage Change in
Interest Rates	Economic Value of Equity from Base over One Year		ALCO
(basis points)	September 30, 2023	December 31, 2022	Guidelines
+200	1.0%	(4.3%)	(20.0%)
+100	2.8%	(1.8%)	(10.0%)
-100	(1.3%)	(0.8%)	(10.0%)
-200	(3.7%)	(7.9%)	(20.0%)
-300	(8.0%)	(17.5%)	(30.0%)
-400	(13.9%)	N/A	(40.0%)

The Bank has significant additional borrowing capacity with the FHLB of Pittsburgh, the Federal Reserve Bank of Cleveland and various correspondent banks, and may utilize these funding sources or interest rate swap strategies as necessary to lengthen liabilities, offset mismatches in various asset maturities and manage liquidity. CDARS® and ICS® deposits also may be utilized for similar purposes for certain customers seeking higher-yielding instruments or maintaining deposit levels below FDIC insurance limits. Significant balance sheet strategies to assist in managing the net interest margin in the current interest rate environment include:

•

increasing total loans, particularly commercial and home equity loans that have variable or adjustable features;

•

selling a percentage of longer-term residential mortgage loan production into the secondary market;

•

growing demand deposit account types to increase the relative portion of these account types to total deposits;

•

employing back-to-back loan swaps for certain commercial loan customers desiring a term fixed-rate loan equivalent, with the Bank receiving a variable rate;

•

adjusting terms for FHLB short-term maturing borrowings to balance asset/liability mismatches; or paying them off with excess liquidity;

•

using CDARS ® and ICS ® deposit programs to manage funding needs and overall liability mix; and

•

adjusting the size, mix or duration of the investment portfolio as part of liquidity and balance sheet management strategies.

Management is aware of the significant effect that inflation or deflation has upon interest rates and ultimately upon financial performance. Wesbanco’s ability to cope with inflation or deflation is best determined by analyzing its capability to respond to changing market interest rates, as well as its ability to manage the various elements of non-interest income and expense during periods of increasing or decreasing inflation or deflation. Wesbanco monitors the level and mix of interest-rate sensitive assets and liabilities through ALCO in order to reduce the impact of inflation or deflation on net interest income. Management also controls the effects of inflation or deflation by conducting periodic reviews of the prices, costs and terms of its various products and services, as well as competitive factors, by approving new products and services or adjusting the terms and availability of existing products and services for both Wesbanco as well as its business loan customers. Over the last few quarters, inflation has been trending higher and has impacted the cost of labor and purchased goods and services. Wesbanco is also monitoring the potential impact that inflation is having on single family home construction and multifamily properties as proposed rental rate caps and controls are put in place in areas across Wesbanco’s footprint.

ITEM 4. CONTROLS AND PROCEDURES

EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES— Wesbanco’s Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”) have concluded that Wesbanco’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended), based on their evaluation of these controls and procedures as of the end of the period covered by this Form 10-Q, are effective to ensure that information required to be disclosed by Wesbanco in the reports it files under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC and that such information is accumulated and communicated to Wesbanco’s management, including its principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure.

LIMITATIONS ON THE EFFECTIVENESS OF CONTROLS— Wesbanco’s management, including the CEO and CFO, does not expect that Wesbanco’s disclosure controls and internal controls will prevent all errors and all fraud. While Wesbanco’s disclosure controls and procedures are designed to provide reasonable assurance of achieving their objective, no control system, no matter how well conceived and operated, can provide absolute assurance that the objectives of the control system are met. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the controls.

CHANGES IN INTERNAL CONTROLS— There were no changes in Wesbanco's internal control over financial reporting that occurred during our fiscal quarter ended September 30, 2023 as required to be reported by paragraph (d) of Rules 13a-15 and 15d-15 under the Securities Exchange Act of 1934, that materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.

PART II – OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

Wesbanco is involved in various lawsuits, claims, investigations and proceedings, which arise in the ordinary course of business. While any litigation contains an element of uncertainty, Wesbanco does not believe that a material loss related to such proceedings or claims pending or known to be threatened is reasonably possible.

ITEM 2. UNREGISTERED SALES OF EQUI TY SECURITIES AND USE OF PROCEEDS

As of September 30, 2023, Wesbanco had one active stock repurchase plan. It was approved by the Board of Directors on February 24, 2022 for 3.2 million shares and provides for shares to be repurchased for general corporate purposes, which may include a subsequent resource for potential acquisitions, shareholder dividend reinvestment and employee benefit plans. The timing, price and quantity of purchases are at the discretion of Wesbanco, and the plan may be discontinued or suspended at any time. The plan has 1,021,901 shares remaining for repurchase.

Other repurchases in the third quarter included those for Wesbanco's Employee Stock Ownership and 401(k) Plan and dividend reinvestment plans.

The following table presents the monthly share purchase activity during the quarter ended September 30, 2023:


Period	Total Number of Shares Purchased (1)		Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans (2)		Maximum Number of Shares that May Yet Be Purchased Under the Plans
Balance at June 30, 2023								1,021,901

July 1, 2023 to July 31, 2023		36,306	$	26.35		—		1,021,901
August 1, 2023 to August 31, 2023		2,517	$	25.81		—		1,021,901
September 1, 2023 to September 30, 2023		2,396	$	24.34		—		1,021,901
Total		41,219	$	26.20		—		1,021,901

(1)

Total shares purchased consist of open market purchases transacted in the KSOP for employee benefit and dividend reinvestment plans.

(2)

Consists of open market purchases and shares purchased from employees for the payment of withholding taxes to facilitate a stock compensation transaction.

ITEM 5. OTHER INFORMATION

Securities Trading Plans of Directors and Executive Officers

During the three months ended September 30, 2023 , none of our directors or executive officers adopted, modified or terminated any Rule 10b5-1 trading arrangement or any “non-Rule 10b5-1 trading arrangement, as those terms are defined in Item 408 of Regulation S-K.”

ITEM 6. EXHIBITS


10.1		Employment Agreement, dated as of July 21, 2023, by and among Wesbanco Bank, Inc., Wesbanco, Inc. and Jeffrey H. Jackson (incorporated by reference to Exhibit 10.1 of Form 8-K filed by the Registrant with the Securities and Exchange Commission on July 21, 2023)

10.2		First Amendment to Amended and Restated Employment Agreement, dated as of July 21, 2023, by and among Wesbanco Bank, Inc., Wesbanco, Inc. and Todd F. Clossin (incorporated by reference to Exhibit 10.2 of Form 8-K filed by the Registrant with the Securities and Exchange Commission on July 21, 2023)

10.3		First Amendment to Restricted Stock Agreement, dated as of July 21, 2023, by and between Wesbanco, Inc. and Todd F. Clossin (incorporated by reference to Exhibit 10.3 of Form 8-K filed by the Registrant with the Securities and Exchange Commission on July 21, 2023)

31.1		Certification of Chief Executive Officer of Periodic Report Pursuant to Rule 13a-15(e) or Rule 15d-15(e).

31.2		Certification of Chief Financial Officer of Periodic Report Pursuant to Rule 13a-15(e) or Rule 15d-15(e).

32.1		Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS		Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document).

101.SCH		Inline XBRL Taxonomy Extension Schema Document

101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF		Inline XBRL Taxonomy Extension Definition Linkbase Document

101.LAB		Inline XBRL Taxonomy Extension Label Linkbase Document

101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase Document

104		Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101).

SIGNAT URES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


	WESBANCO, INC.

Date: November 2, 2023	/s/ Jeffrey H. Jackson
	Jeffrey H. Jackson
	President and Chief Executive Officer (Principal Executive Officer)

Date: November 2, 2023	/s/ Daniel K. Weiss, Jr.
	Daniel K. Weiss, Jr.
	Executive Vice President and Chief Financial Officer
	(Principal Financial Officer)

TABLE OF CONTENTS

Part I - Financial Information Item 1. Financial Statements Item 1. Financi Note 1. Summary Of Significant Accounting Policies Note 2. Earnings Per Common Share Note 3. Securities Note 4. Loans and The Allowance For Credit Losses Note 5. Derivatives and Hedging Activities Note 6. Benefit Plans Note 7. Fair Value Measurement Note 8. Revenue Recognition Note 9. Comprehensive Income/(loss)Note 10. Commitments and Contingent Liabilities Note 11. Business Segments Item 2. Management S Discussion and Analysis Of Financial Condition and Results Of Operations Item 2. Management S Item 3. Quantitative and Qualitative Disclosures About Market Risk Item 3. Quantitative and Qualitati Item 4. Controls and Procedures Item 4. Controls Part II Other Information Item 1. Legal Proceedings Item 1. Legal Item 2. Unregistered Sales Of Equity Securities and Use Of Proceeds Item 2. Unregistered Sales Of Equi Item 5. Other Information Item 6. Exhibits

Exhibits

10.1 Employment Agreement, dated as of July 21, 2023, by and among Wesbanco Bank, Inc., Wesbanco, Inc. and Jeffrey H. Jackson (incorporated by reference to Exhibit 10.1 of Form 8-K filed by the Registrant with the Securities and Exchange Commission on July 21, 2023) 10.2 First Amendment to Amended and Restated Employment Agreement, dated as of July 21, 2023, by and among Wesbanco Bank, Inc., Wesbanco, Inc. and Todd F. Clossin (incorporated by reference to Exhibit 10.2 of Form 8-K filed by the Registrant with the Securities and Exchange Commission on July 21, 2023) 10.3 First Amendment to Restricted Stock Agreement, dated as of July 21, 2023, by and between Wesbanco, Inc. and Todd F. Clossin (incorporated by reference to Exhibit 10.3 of Form 8-K filed by the Registrant with the Securities and Exchange Commission on July 21, 2023) 31.1 Certification of Chief Executive Officer of Periodic Report Pursuant to Rule 13a-15(e) or Rule 15d-15(e). 31.2 Certification of Chief Financial Officer of Periodic Report Pursuant to Rule 13a-15(e) or Rule 15d-15(e). 32.1 Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

WSBC 10-Q Quarter ended Sept. 30, 2023

Exhibits