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Table of Contents

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended March 31, 2015

 

¨ 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 000-08467

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)

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  þ    No  ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted 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 and post such files).    Yes  þ    No  ¨

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

 

Large accelerated filer   þ    Accelerated filer   ¨
Non-accelerated filer   ¨  (Do not check if a smaller reporting company)    Smaller reporting company   ¨

Indicate by check mark whether the registrant is a shell company (as defined by Rule 12b-2 of the Exchange Act).    Yes  ¨    No  þ

As of April 30, 2015, there were 38,449,812 shares of WesBanco, Inc. common stock, $2.0833 par value, outstanding.

 

 

 


Table of Contents

WESBANCO, INC.

TABLE OF CONTENTS

 

Item
No.

 

ITEM

  

Page
No.

 
 

PART I - FINANCIAL INFORMATION

  
1  

Financial Statements

  
 

Consolidated Balance Sheets at March 31, 2015 (unaudited) and December 31, 2014

     3   
 

Consolidated Statements of Comprehensive Income for the three months ended March 31, 2015 and 2014 (unaudited)

     4   
 

Consolidated Statements of Changes in Shareholders’ Equity for the three months ended March 31, 2015 and 2014 (unaudited)

     5   
 

Consolidated Statements of Cash Flows for the three months ended March 31, 2015 and 2014 (unaudited)

     6   
 

Notes to Consolidated Financial Statements (unaudited)

     7   
2  

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

     28   
3  

Quantitative and Qualitative Disclosures About Market Risk

     47   
4  

Controls and Procedures

     49   
 

PART II - OTHER INFORMATION

  
1  

Legal Proceedings

     50   
2  

Unregistered Sales of Equity Securities and Use of Proceeds

     51   
6  

Exhibits

     52   
 

Signatures

     53   

 

2


Table of Contents

PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

WESBANCO, INC. CONSOLIDATED BALANCE SHEETS

 

 

(unaudited, in thousands, except shares)

   March 31,
2015
    December 31,
2014
 

ASSETS

    

Cash and due from banks, including interest bearing amounts of $17,871 and $8,405, respectively

   $ 92,974      $ 94,002   

Securities:

    

Available-for-sale, at fair value

     1,654,264        917,424   

Held-to-maturity (fair values of $772,843 and $619,617, respectively)

     743,925        593,670   
  

 

 

   

 

 

 

Total securities

     2,398,189        1,511,094   
  

 

 

   

 

 

 

Loans held for sale

     6,064        5,865   
  

 

 

   

 

 

 

Portfolio loans, net of unearned income

     4,873,721        4,086,766   

Allowance for loan losses

     (44,173     (44,654
  

 

 

   

 

 

 

Net portfolio loans

     4,829,548        4,042,112   
  

 

 

   

 

 

 

Premises and equipment, net

     110,900        93,135   

Accrued interest receivable

     25,232        18,481   

Goodwill and other intangible assets, net

     493,176        319,506   

Bank-owned life insurance

     153,991        123,298   

Other assets

     123,205        89,072   
  

 

 

   

 

 

 

Total Assets

   $ 8,233,279      $ 6,296,565   
  

 

 

   

 

 

 

LIABILITIES

    

Deposits:

    

Non-interest bearing demand

   $ 1,249,521      $ 1,061,075   

Interest bearing demand

     1,199,801        885,037   

Money market

     1,018,184        954,957   

Savings deposits

     1,064,808        842,818   

Certificates of deposit

     1,883,888        1,305,096   
  

 

 

   

 

 

 

Total deposits

     6,416,202        5,048,983   
  

 

 

   

 

 

 

Federal Home Loan Bank borrowings

     432,456        223,126   

Other short-term borrowings

     76,630        80,690   

Junior subordinated debt owed to unconsolidated subsidiary trusts

     142,269        106,176   
  

 

 

   

 

 

 

Total borrowings

     651,355        409,992   
  

 

 

   

 

 

 

Accrued interest payable

     2,297        1,620   

Other liabilities

     72,041        47,780   
  

 

 

   

 

 

 

Total Liabilities

     7,141,895        5,508,375   
  

 

 

   

 

 

 

SHAREHOLDERS’ EQUITY

    

Preferred stock, no par value; 1,000,000 shares authorized; none outstanding

     —          —     

Common stock, $2.0833 par value; 50,000,000 shares authorized; 38,546,042 and 29,367,511 issued in 2015 and 2014, respectively; outstanding: 38,449,812 and 29,298,188 shares in 2015 and 2014, respectively

     80,304        61,182   

Capital surplus

     520,596        244,661   

Retained earnings

     509,622        504,578   

Treasury stock (96,230 and 69,323 shares in 2015 and 2014, respectively, at cost)

     (3,061     (2,151

Accumulated other comprehensive loss

     (13,624     (18,825

Deferred benefits for directors

     (2,453     (1,255
  

 

 

   

 

 

 

Total Shareholders’ Equity

     1,091,384        788,190   
  

 

 

   

 

 

 

Total Liabilities and Shareholders’ Equity

   $ 8,233,279      $ 6,296,565   
  

 

 

   

 

 

 

See Notes to Consolidated Financial Statements.

 

3


Table of Contents

WESBANCO, INC. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

 

 

     For the Three Months Ended
March 31,
 

(unaudited, in thousands, except shares and per share amounts)

   2015      2014  

INTEREST AND DIVIDEND INCOME

     

Loans, including fees

   $ 47,713       $ 42,746   

Interest and dividends on securities:

     

Taxable

     8,498         7,225   

Tax-exempt

     3,533         3,385   
  

 

 

    

 

 

 

Total interest and dividends on securities

     12,031         10,610   
  

 

 

    

 

 

 

Other interest income

     635         101   
  

 

 

    

 

 

 

Total interest and dividend income

     60,379         53,457   
  

 

 

    

 

 

 

INTEREST EXPENSE

     

Interest bearing demand deposits

     422         374   

Money market deposits

     456         440   

Savings deposits

     148         130   

Certificates of deposit

     2,872         3,630   
  

 

 

    

 

 

 

Total interest expense on deposits

     3,898         4,574   
  

 

 

    

 

 

 

Federal Home Loan Bank borrowings

     557         211   

Other short-term borrowings

     75         557   

Junior subordinated debt owed to unconsolidated subsidiary trusts

     894         790   
  

 

 

    

 

 

 

Total interest expense

     5,424         6,132   
  

 

 

    

 

 

 

NET INTEREST INCOME

     54,955         47,325   

Provision for credit losses

     1,289         2,199   
  

 

 

    

 

 

 

Net interest income after provision for credit losses

     53,666         45,126   
  

 

 

    

 

 

 

NON-INTEREST INCOME

     

Trust fees

     6,053         5,648   

Service charges on deposits

     3,652         3,860   

Electronic banking fees

     3,325         3,013   

Net securities brokerage revenue

     2,059         1,829   

Bank-owned life insurance

     1,251         875   

Net gains on sales of mortgage loans

     272         154   

Net securities gains

     22         10   

Net gain on other real estate owned and other assets

     122         113   

Other income

     1,434         1,547   
  

 

 

    

 

 

 

Total non-interest income

     18,190         17,049   
  

 

 

    

 

 

 

NON-INTEREST EXPENSE

     

Salaries and wages

     18,357         16,467   

Employee benefits

     7,316         5,708   

Net occupancy

     3,490         3,491   

Equipment

     2,973         2,783   

Marketing

     965         1,003   

FDIC insurance

     910         877   

Amortization of intangible assets

     566         495   

Restructuring and merger-related expense

     9,733         —     

Other operating expenses

     9,131         9,271   
  

 

 

    

 

 

 

Total non-interest expense

     53,441         40,095   
  

 

 

    

 

 

 

Income before provision for income taxes

     18,415         22,080   

Provision for income taxes

     4,528         5,659   
  

 

 

    

 

 

 

NET INCOME

   $ 13,887       $ 16,421   
  

 

 

    

 

 

 

EARNINGS PER COMMON SHARE

     

Basic

   $ 0.40       $ 0.56   

Diluted

   $ 0.40       $ 0.56   
  

 

 

    

 

 

 

AVERAGE COMMON SHARES OUTSTANDING

     

Basic

     34,393,137         29,182,183   

Diluted

     34,478,335         29,262,680   
  

 

 

    

 

 

 

DIVIDENDS DECLARED PER COMMON SHARE

   $ 0.23       $ 0.22   
  

 

 

    

 

 

 

COMPREHENSIVE INCOME

   $ 19,088       $ 19,694   
  

 

 

    

 

 

 

See Notes to Consolidated Financial Statements.

 

4


Table of Contents

WESBANCO, INC. CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

 

For the Three Months Ended March 31, 2015 and 2014

 

     Common Stock                        Accumulated
Other
    Deferred        

(unaudited, in thousands, except
shares and per share amounts)

   Shares
Outstanding
    Amount      Capital
Surplus
    Retained
Earnings
    Treasury
Stock
    Comprehensive
Income (Loss)
    Benefits for
Directors
    Total  

December 31, 2014

     29,298,188      $ 61,182       $ 244,661      $ 504,578      $ (2,151   $ (18,825   $ (1,255   $ 788,190   
  

 

 

   

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income

     —          —           —          13,887        —          —          —          13,887   

Other comprehensive income

     —          —           —          —          —          5,201        —          5,201   
                 

 

 

 

Comprehensive income

     —          —           —          —          —          —          —          19,088   

Common dividends declared ($0.23 per share)

     —          —           —          (8,843     —          —          —          (8,843

Shares issued for acquisition

     9,178,531        19,122         274,507        —          —          —          —          293,629   

Treasury shares acquired

     (38,237     —           —          —          (1,262     —          —          (1,262

Stock options exercised

     11,330        —           (44     —          352        —          —          308   

Restricted stock granted

     —          —           —          —          —          —          —          —     

Stock compensation expense

     —          —           274        —          —          —          —          274   

Deferred benefits for directors- net

     —          —           1,198        —          —          —          (1,198     —     
  

 

 

   

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

March 31, 2015

     38,449,812      $ 80,304       $ 520,596      $ 509,622      $ (3,061   $ (13,624   $ (2,453   $ 1,091,384   
  

 

 

   

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

December 31, 2013

     29,175,236      $ 61,182       $ 244,974      $ 460,351      $ (5,969   $ (12,734   $ (1,209   $ 746,595   
  

 

 

   

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income

     —          —           —          16,421        —          —          —          16,421   

Other comprehensive income

     —          —           —          —          —          3,273        —          3,273   
                 

 

 

 

Comprehensive income

     —          —           —          —          —          —          —          19,694   

Common dividends declared ($0.22 per share)

     —          —           —          (6,420     —          —          —          (6,420

Treasury shares acquired

     (2,258     —           49        —          (68     —          —          (19

Stock options exercised

     37,092        —           (176     —          1,152        —          —          976   

Restricted stock granted

     2,040        —           (63     —          63        —          —          —     

Stock compensation expense

     —          —           291        —          —          —          —          291   

Deferred benefits for directors- net

     —          —           10        —          —          —          (10     —     
  

 

 

   

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

March 31, 2014

     29,212,110      $ 61,182       $ 245,085      $ 470,352      $ (4,822   $ (9,461   $ (1,219   $ 761,117   
  

 

 

   

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

See Notes to Consolidated Financial Statements.

 

5


Table of Contents

WESBANCO, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS

 

 

     For the Three Months Ended
March 31,
 

(unaudited, in thousands)

   2015     2014  

NET CASH PROVIDED BY OPERATING ACTIVITIES

   $ 36,064      $ 23,985   
  

 

 

   

 

 

 

INVESTING ACTIVITIES

    

Net (increase) decrease in loans

     (94,812     3,446   

Securities available-for-sale:

    

Proceeds from sales

     560,676        3,155   

Proceeds from maturities, prepayments and calls

     52,783        53,631   

Purchases of securities

     (405,998     (77,725

Securities held-to-maturity:

    

Proceeds from maturities, prepayments and calls

     9,430        12,325   

Purchases of securities

     (51,246     (12,240

Proceeds from bank-owned life insurance

     1,185        —     

Cash paid to acquire a business, net of cash acquired

     (28,551     —     

Purchases of premises and equipment - net

     (2,033     (1,485
  

 

 

   

 

 

 

Net cash provided by (used in) investing activities

     41,434        (18,893
  

 

 

   

 

 

 

FINANCING ACTIVITIES

    

Increase in deposits

     120,954        153,387   

Proceeds from Federal Home Loan Bank borrowings

     325,000        —     

Repayment of Federal Home Loan Bank borrowings

     (507,982     (16,181

Decrease in other short-term borrowings

     (9,060     (37,682

Decrease in federal funds purchased

     —          (20,000

Dividends paid to common shareholders

     (6,446     (5,833

Treasury shares (purchased) sold - net

     (992     862   
  

 

 

   

 

 

 

Net cash (used in) provided by financing activities

     (78,526     74,553   
  

 

 

   

 

 

 

Net (decrease) increase in cash and cash equivalents

     (1,028     79,645   

Cash and cash equivalents at beginning of the period

     94,002        95,551   
  

 

 

   

 

 

 

Cash and cash equivalents at end of the period

   $ 92,974      $ 175,196   
  

 

 

   

 

 

 

SUPPLEMENTAL DISCLOSURES

    

Interest paid on deposits and other borrowings

   $ 5,522      $ 6,589   

Income taxes paid

     100        —     

Transfers of loans to other real estate owned

     344        1,287   

Non-cash transactions related to ESB acquisition

     301,933        —     
  

 

 

   

 

 

 

See Notes to Consolidated Financial Statements.

 

6


Table of Contents

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, 2014.

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 2014 Annual Report on Form 10-K filed with the Securities and Exchange Commission. 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. Results of operations for interim periods are not necessarily indicative of the results of operations that may be expected for a full year.

Recent accounting pronouncements — In April 2015, the Financial Accounting Standards Board (the “FASB”) issued an Accounting Standards Update (“ASU”) (ASU 2015-05) that provides guidance on when to account for a cloud computing arrangement as a software license. The guidance applies only to internal-use software that a customer obtains access to in a hosting arrangement if both of the following criteria are met: (1) The customer has the contractual right to take possession of the software at any time during the hosting period without significant penalty, (2) it is feasible for the customer to either run the software on its own hardware or contract with another party unrelated to the vendor to host the software. The pronouncement is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2015. Early adoption is permitted. The adoption of this pronouncement is not expected to have a material impact on WesBanco’s Consolidated Financial Statements.

In February 2015, the FASB issued ASU 2015-02 that revised the consolidation model, requiring reporting entities to reevaluate whether they should consolidate certain legal entities under the revised model. The amendments in this Update modify the evaluation of whether limited partnerships and similar legal entities are variable interest entities (VIEs) or voting interest entities, and eliminate the presumption that a general partner should consolidate and affect the consolidation analysis of reporting entities that are involved with VIEs, particularly those that have fee arrangements and related party relationships. The pronouncement also provides for a scope exception from consolidation guidance for reporting entities with interests in legal entities that are required to comply with or operate in accordance with requirements similar to those in Rule 2a-7 of the Investment Company Act of 1940 for registered money market funds. The pronouncement is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2015. Early adoption is permitted. The adoption of this pronouncement is not expected to have a material impact on WesBanco’s Consolidated Financial Statements.

In August 2014, the FASB issued ASU 2014-14 related to the classification of certain government-guaranteed mortgage loans upon foreclosure. The amendments in this update require that a mortgage loan be derecognized and that a separate other receivable be recognized upon foreclosure if the following conditions are met: (1) The loan has a government guarantee that is not separable from the loan before foreclosure, (2) at the time of foreclosure, the creditor has the intent to convey the real estate property to the guarantor and make a claim on the guarantee, and the creditor has the ability to recover under that claim, (3) at the time of foreclosure, any amount of the claim that is determined on the basis of the fair value of the real estate is fixed. Upon foreclosure, the separate other receivable should be measured based upon the amount of the loan balance (principal and interest) expected to be recovered from the guarantor. The pronouncement is effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2014 and may be adopted under either a modified retrospective transition method or a prospective transition method. However, the same method of transition as elected under ASU 2014-04 must be applied. Early adoption is permitted. The adoption of this pronouncement did not have a material impact on WesBanco’s Consolidated Financial Statements.

In June 2014, the FASB issued ASU 2014-11 related to repurchase-to-maturity transactions, repurchase financing and disclosures. The pronouncement changes the accounting for repurchase-to-maturity transactions and linked repurchase financings to secured borrowing accounting, which is consistent with the accounting for other repurchase agreements. The pronouncement also requires two new disclosures. The first disclosure requires an entity to disclose information on transfers accounted for as sales in transactions that are economically similar to repurchase agreements. The second disclosure provides increased transparency about the types of collateral pledged in repurchase agreements and similar transactions accounted for as secured borrowings. The pronouncement is effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2014. Early adoption is not permitted. The adoption of this pronouncement did not have a material impact on WesBanco’s Consolidated Financial Statements.

        In May 2014, the FASB issued ASU 2014-09 related to the recognition of revenue from contracts with customers. The new revenue pronouncement creates a single source of revenue guidance for all companies in all industries and is more principles-based than current revenue guidance. The pronouncement provides a five-step model for a company to recognize revenue when it transfers control of goods or services to customers at an amount that reflects the consideration to which it expects to be entitled in exchange for those goods or services. The five steps are (1) identify the contract with the customer, (2) identify the separate performance obligations in the contract, (3) determine the transaction price, (4) allocate the transaction price to the separate performance obligations and (5) recognize revenue when each performance obligation is satisfied. The pronouncement is effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2016 using either a full retrospective approach for all periods presented in the period of adoption or a modified retrospective approach. Early adoption is not permitted. In April 2015, the FASB issued an exposure draft of a proposed ASU that would delay by one year the effective date of ASU 2014-11. Under the proposal, the standard would be effective for annual reporting periods beginning after December 15, 2017 and interim periods therein. WesBanco is currently evaluating the impact of the adoption of this pronouncement on its Consolidated Financial Statements.

 

7


Table of Contents

NOTE 2. MERGERS AND ACQUISITIONS

On February 10, 2015, WesBanco completed its acquisition of ESB Financial Corporation (“ESB”), and its wholly-owned banking subsidiary, ESB Bank (“ESB Bank”), a Pennsylvania-chartered stock savings bank headquartered in Ellwood City, Pennsylvania. The transaction expanded WesBanco’s franchise in the Pittsburgh region of western Pennsylvania from 16 to 38 offices.

On the acquisition date, ESB had $1.9 billion in assets, excluding goodwill, which included $700.8 million in loans, and $486.9 million in securities. The ESB acquisition was valued at $339.0 million, based on WesBanco’s closing stock price on February 10, 2015 of $32.00, and resulted in WesBanco issuing 9,178,531 shares of its common stock and $45.0 million in cash and other assets in exchange for ESB common stock. The assets and liabilities of ESB were recorded on WesBanco’s balance sheet at their preliminary estimated fair values as of February 10, 2015, the acquisition date, and ESB’s results of operations have been included in WesBanco’s Consolidated Statements of Income since that date. ESB was merged into WesBanco and ESB Bank was merged into WesBanco Bank, Inc. (the “Bank”) on February 10, 2015. Based on a preliminary purchase price allocation, WesBanco recorded $168.9 million in goodwill and $5.3 million in core deposit intangibles in its community banking segment. The fair values for the assets acquired and liabilities assumed are provisional amounts and are currently under review. Due to the timing of the ESB acquisition, WesBanco is still in the process of completing its fair market valuation, including the valuation of certain tangible and intangible assets as well as deferred income taxes. None of the goodwill is deductible for income tax purposes as the acquisition is accounted for as a tax-free exchange for tax purposes.

For the three months ended March 31, 2015, WesBanco recorded merger-related expenses of $9.7 million associated with the ESB acquisition. In 2014 WesBanco recognized $1.3 million in merger-related expenses in connection with the ESB acquisition.

The total of net interest income and non-interest income of the acquired operations of ESB was approximately $6.5 million and net income was approximately $2.7 million from February 11, 2015 through March 31, 2015. If the ESB acquisition had occurred on January 1, 2014, unaudited proforma net interest income and non-interest income of the combined entity for the three months ended March 31, 2014 would have totaled approximately $76.1 million and unaudited proforma net income would have been approximately $19.8 million as compared to proforma results of $78.2 million and $22.2 million, respectively, for the three months ended March 31, 2015. Merger-related expenses were excluded from the pro-forma results.

The purchase price of the ESB acquisition and resulting goodwill is summarized as follows:

 

(unaudited, in thousands)

   February 10, 2015  

Purchase Price:

  

Fair value of WesBanco shares issued, (net of equity issuance costs of $0.1 million)

   $ 293,933   

Cash consideration for outstanding ESB shares, options and restricted stock

     37,036   

Settlement of pre-existing loan to ESB

     8,000   
  

 

 

 

Total purchase price

   $ 338,969   

Fair value of:

  

Tangible assets acquired

   $ 1,859,865   

Core deposit and other intangible assets acquired

     5,346   

Liabilities assumed

     (1,703,616

Net cash received in the acquisition

     8,485   
  

 

 

 

Fair value of net assets acquired

     170,080   
  

 

 

 

Goodwill recognized

   $ 168,889   
  

 

 

 

The following table presents the preliminary allocation of the purchase price of the assets acquired and the liabilities assumed at the date of acquisition, as WesBanco intends to finalize its accounting for the acquisition of ESB during 2015:

 

(unaudited, in thousands)

   February 10, 2015  

Assets

  

Cash and due from banks

   $ 8,485   

Securities

     486,891   

Loans

     700,849   

Goodwill and other intangible assets

     174,235   

Accrued income and other assets (1)

     672,125   
  

 

 

 

Total Assets

   $ 2,042,585   
  

 

 

 

Liabilities

  

Deposits

   $ 1,246,992   

Borrowings

     433,454   

Accrued expenses and other liabilities

     23,170   
  

 

 

 

Total liabilities

     1,703,616   
  

 

 

 

Purchase price

   $ 338,969   
  

 

 

 

 

(1) 

Includes receivables of $560.7 million from the sale of available-for-sale securities prior to the acquisition date.

At March 31, 2015 the carrying value of goodwill increased by $168.9 million from December 31, 2014 to $481.0 million.

 

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NOTE 3. EARNINGS PER COMMON SHARE

Earnings per common share are calculated as follows:

 

     For the Three Months Ended
March 31,
 

(unaudited, in thousands, except shares and per share amounts)

   2015      2014  

Numerator for both basic and diluted earnings per common share:

     

Net income

   $ 13,887       $ 16,421   
  

 

 

    

 

 

 

Denominator:

     

Total average basic common shares outstanding

     34,393,137         29,182,183   

Effect of dilutive stock options and warrant

     85,198         80,497   
  

 

 

    

 

 

 

Total diluted average common shares outstanding

     34,478,335         29,262,680   
  

 

 

    

 

 

 

Earnings per common share - basic

   $ 0.40       $ 0.56   

Earnings per common share - diluted

   $ 0.40       $ 0.56   
  

 

 

    

 

 

 

All stock options outstanding were included in the computation of diluted earnings per share for the three months ended March 31, 2015 as all were considered dilutive, while 33,000 were not included in March 31, 2014, because to do so would have been anti-dilutive.

On February 10, 2015, WesBanco issued 9,178,531 shares to complete its acquisition of ESB. These shares are included in average shares outstanding beginning on that date. For additional information relating to the ESB acquisition, refer to Note 2, “Mergers and Acquisitions.”

 

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NOTE 4. SECURITIES

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

 

    March 31, 2015     December 31, 2014  

(unaudited, in thousands)

  Amortized
Cost
    Gross
Unrealized
Gains
    Gross
Unrealized
Losses
    Estimated
Fair
Value
    Amortized
Cost
    Gross
Unrealized
Gains
    Gross
Unrealized
Losses
    Estimated
Fair
Value
 

Available-for-sale

               

Obligations of government agencies

  $ 79,315      $ 1,486      $ (33   $ 80,768      $ 86,964      $ 1,087      $ (315   $ 87,736   

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

    1,279,350        8,091        (3,996     1,283,445        703,535        4,336        (6,758     701,113   

Obligations of states and political subdivisions

    89,977        5,693        (17     95,653        86,073        5,365        (5     91,433   

Corporate debt securities

    182,781        430        (121     183,090        25,974        141        (119     25,996   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total debt securities

  $ 1,631,423      $ 15,700      $ (4,167   $ 1,642,956      $ 902,546      $ 10,929      $ (7,197   $ 906,278   

Equity securities

    10,702        606        —          11,308        10,304        842        —          11,146   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total available-for-sale securities

  $ 1,642,125      $ 16,306      $ (4,167   $ 1,654,264      $ 912,850      $ 11,771      $ (7,197   $ 917,424   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Held-to-maturity

               

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

  $ 126,935      $ 3,244      $ (208   $ 129,971      $ 79,004      $ 3,262      $ (246   $ 82,020   

Obligations of states and political subdivisions

    610,249        26,560        (878     635,931        507,927        23,917        (1,043     530,801   

Corporate debt securities

    6,741        200        —          6,941        6,739        106        (49     6,796   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total held-to-maturity securities

  $ 743,925      $ 30,004      $ (1,086   $ 772,843      $ 593,670      $ 27,285      $ (1,338   $ 619,617   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total securities

  $ 2,386,050      $ 46,310      $ (5,253   $ 2,427,107      $ 1,506,520      $ 39,056      $ (8,535   $ 1,537,041   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

At March 31, 2015, and December 31, 2014, there were no holdings of any one issuer, other than the U.S. government and its agencies, in an amount greater than 10% of WesBanco’s shareholders’ equity.

The following table presents the fair value of available-for-sale and held-to-maturity securities by contractual maturity at March 31, 2015. In some instances, the issuers may have the right to call or prepay obligations without penalty prior to the contractual maturity date.

 

     March 31, 2015  

(unaudited, in thousands)

   One Year
or less
     One to
Five Years
     Five to
Ten Years
     After
Ten Years
     Mortgage-backed
and Equity
     Total  

Available-for-sale

                 

Obligations of government agencies

   $ —         $ 23,276       $ 40,297       $ 17,195       $ —         $ 80,768   

Residential mortgage-backed securities and collateralized mortgage obligations of government agencies (1)

     —           —           —           —           1,283,445         1,283,445   

Obligations of states and political subdivisions

     5,254         33,049         21,417         35,933         —           95,653   

Corporate debt securities

     82,193         62,312         33,658         4,927         —           183,090   

Equity securities (2)

     —           —           —           —           11,308         11,308   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total available-for-sale securities

   $ 87,447       $ 118,637       $ 95,372       $ 58,055       $ 1,294,753       $ 1,654,264   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Held-to-maturity (3)

                 

Residential mortgage-backed securities and collateralized mortgage obligations of government agencies (1)

   $ —         $ —         $ —         $ —         $ 129,971       $ 129,971   

Obligations of states and political subdivisions

     2,852         17,024         259,231         356,824         —           635,931   

Corporate debt securities

     —           —           6,941         —           —           6,941   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total held-to-maturity securities

   $ 2,852       $ 17,024       $ 266,172       $ 356,824       $ 129,971       $ 772,843   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total securities

   $ 90,299       $ 135,661       $ 361,544       $ 414,879       $ 1,424,724       $ 2,427,107   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

(1)

Mortgage-backed and collateralized mortgage securities, which have prepayment provisions, are not assigned to maturity categories due to fluctuations in their prepayment speeds.

(2)

Equity securities, which have no stated maturity, are not assigned a maturity category.

(3) 

The held-to-maturity portfolio is carried at an amortized cost of $743.9 million.

 

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Securities with aggregate fair values of $1.1 billion and $706.5 million at March 31, 2015 and December 31, 2014, respectively, were pledged as security for public and trust funds, and securities sold under agreements to repurchase. Proceeds from the sale of available-for-sale securities were $560.7 million, entirely due to the ESB portfolio restructuring, and $3.2 million for the three months ended March 31, 2015 and 2014, respectively. Net unrealized gains on available-for-sale securities included in accumulated other comprehensive income net of tax, as of March 31, 2015 and December 31, 2014 were $7.7 million and $2.9 million, respectively.

The following table presents the gross realized gains and losses on sales and calls of securities for the three months ended March 31, 2015 and 2014, respectively.

 

     For the Three Months Ended
March 31,
 

(unaudited, in thousands)

   2015      2014  

Gross realized gains

   $ 24       $ 195   

Gross realized losses

     (2      (185
  

 

 

    

 

 

 

Net realized gains (losses)

   $ 22       $ 10   
  

 

 

    

 

 

 

The following tables provide information on unrealized losses on investment securities that have been in an unrealized loss position for less than twelve months and twelve months or more as of March 31, 2015 and December 31, 2014:

 

    March 31, 2015  
    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
 

Obligations of government agencies

    17,953        (33     3        —          —          0        17,953        (33     3   

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

    260,103        (681     55        168,693        (3,523     32        428,796        (4,204     87   

Obligations of states and political subdivisions

    68,439        (450     79        20,777        (445     31        89,216        (895     110   

Corporate debt securities

    53,122        (113     16        1,978        (8     1        55,100        (121     17   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total temporarily impaired securities

    399,617        (1,277     153        191,448        (3,976     64        591,065        (5,253     217   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
    December 31, 2014  
    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
 

Obligations of government agencies

  $ 19,362      $ (77     5      $ 19,757      $ (238     4      $ 39,119      $ (315     9   

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

    78,786        (386     19        240,055        (6,618     43        318,841        (7,004     62   

Obligations of states and political subdivisions

    12,615        (96     15        61,548        (952     93        74,163        (1,048     108   

Corporate debt securities

    2,969        (31     1        4,573        (137     2        7,542        (168     3   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total temporarily impaired securities

  $ 113,732      $ (590     40      $ 325,933      $ (7,945     142      $ 439,665      $ (8,535     182   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Unrealized losses on debt securities in the tables 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 there are no debt securities rated below 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, and therefore, management believes the unrealized losses detailed above are temporary and no impairment loss relating to these securities has been recognized.

Securities that do not have readily determinable fair values and for which WesBanco does not exercise significant influence are carried at cost. Cost method investments consist primarily of FHLB of Pittsburgh and FHLB of Cincinnati stock totaling $20.9 million and $11.6 million at March 31, 2015 and December 31, 2014, 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.

 

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NOTE 5. 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 of $2.2 million and $2.4 million at March 31, 2015 and December 31, 2014, respectively.

 

(unaudited, in thousands)

   March 31,
2015
     December 31,
2014
 

Commercial real estate:

     

Land and construction

   $ 288,075       $ 262,643   

Improved property

     1,908,869         1,682,817   
  

 

 

    

 

 

 

Total commercial real estate

     2,196,944         1,945,460   
  

 

 

    

 

 

 

Commercial and industrial

     709,621         638,410   

Residential real estate

     1,239,163         928,770   

Home equity

     362,163         330,031   

Consumer

     365,830         244,095   
  

 

 

    

 

 

 

Total portfolio loans

     4,873,721         4,086,766   
  

 

 

    

 

 

 

Loans held for sale

     6,064         5,865   
  

 

 

    

 

 

 

Total loans

   $ 4,879,785       $ 4,092,631   
  

 

 

    

 

 

 

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 Three Months Ended March 31, 2015 and 2014
 

(unaudited, in thousands)

  Commercial
Real Estate-
Land and
Construction
    Commercial
Real Estate-
Improved
Property
    Commercial
& Industrial
    Residential
Real Estate
    Home
Equity
    Consumer     Deposit
Overdraft
    Total  

Balance at December 31, 2014:

               

Allowance for loan losses

  $ 5,654      $ 17,573      $ 9,063      $ 5,382      $ 2,329      $ 4,078      $ 575      $ 44,654   

Allowance for loan commitments

    194        10        112        9        90        40        —          455   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total beginning allowance for credit losses

    5,848        17,583        9,175        5,391        2,419        4,118        575        45,109   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Provision for credit losses:

               

Provision for loan losses

    (323     903        (44     (208     747        133        58        1,266   

Provision for loan commitments

    (16     8        8        4        17        2        —          23   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total provision for credit losses

    (339     911        (36     (204     764        135        58        1,289   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Charge-offs

    —          (577     (122     (358     (589     (717     (154     (2,517

Recoveries

    —          136        114        218        10        229        63        770   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net charge-offs

    —          (441     (8     (140     (579     (488     (91     (1,747
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Balance at March 31, 2015:

               

Allowance for loan losses

    5,331        18,035        9,011        5,034        2,497        3,723        542        44,173   

Allowance for loan commitments

    178        18        120        13        107        42        —          478   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total ending allowance for credit losses

  $ 5,509      $ 18,053      $ 9,131      $ 5,047      $ 2,604      $ 3,765      $ 542      $ 44,651   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Balance at December 31, 2013:

               

Allowance for loan losses

  $ 6,056      $ 18,157      $ 9,925      $ 5,673      $ 2,017      $ 5,020      $ 520      $ 47,368   

Allowance for loan commitments

    301        62        130        5        85        19        —          602   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total beginning allowance for credit losses

    6,357        18,219        10,055        5,678        2,102        5,039        520        47,970   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Provision for credit losses:

               

Provision for loan losses

    (1,051     (509     2,128        869        153        305        361        2,256   

Provision for loan commitments

    (8     (53     3        —          1        —          —          (57
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total provision for credit losses

    (1,059     (562     2,131        869        154        305        361        2,199   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Charge-offs

    —          (493     (2,276     (879     (155     (752     (180     (4,735

Recoveries

    —          120        65        109        11        227        62        594   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net charge-offs

    —          (373     (2,211     (770     (144     (525     (118     (4,141
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Balance at March 31, 2014:

               

Allowance for loan losses

    5,005        17,275        9,842        5,772        2,026        4,800        763        45,483   

Allowance for loan commitments

    293        9        133        5        86        19        —          545   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total ending allowance for credit losses

  $ 5,298      $ 17,284      $ 9,975      $ 5,777      $ 2,112      $ 4,819      $ 763      $ 46,028   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

12


Table of Contents

The following tables present the allowance for credit losses and recorded investments in loans by category:

 

     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      Over-draft      Total  

March 31, 2015

                       

Allowance for credit losses:

                       

Allowance for loans individually evaluated for impairment

   $ —         $ 2,828       $ 873       $ —         $ —         $ —         $ —         $ 3,701   

Allowance for loans collectively evaluated for impairment

     5,331         15,207         8,138         5,034         2,497         3,723         542         40,472   

Allowance for loan commitments

     178         18         120         13         107         42         —           478   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total allowance for credit losses

   $ 5,509       $ 18,053       $ 9,131       $ 5,047       $ 2,604       $ 3,765       $ 542       $ 44,651   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Portfolio loans:

                       

Individually evaluated for impairment (1)

   $ —         $ 9,822       $ 2,722       $ —         $ —         $ —         $ —         $ 12,544   

Collectively evaluated for impairment

     288,075         1,899,047         706,899         1,239,163         362,163         365,830         —           4,861,177   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total portfolio loans

   $ 288,075       $ 1,908,869       $ 709,621       $ 1,239,163       $ 362,163       $ 365,830       $ —         $ 4,873,721   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

December 31, 2014

                       

Allowance for credit losses:

                       

Allowance for loans individually evaluated for impairment

   $ —         $ 2,765       $ 1,033       $ —         $ —         $ —         $ —         $ 3,798   

Allowance for loans collectively evaluated for impairment

     5,654         14,808         8,030         5,382         2,329         4,078         575         40,856   

Allowance for loan commitments

     194         10         112         9         90         40         —           455   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total allowance for credit losses

   $ 5,848       $ 17,583       $ 9,175       $ 5,391       $ 2,419       $ 4,118       $ 575       $ 45,109   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Portfolio loans:

                       

Individually evaluated for impairment (1)

   $ —         $ 11,469       $ 2,844       $ —         $ —         $ —         $ —         $ 14,313   

Collectively evaluated for impairment

     262,643         1,671,348         635,566         928,770         330,031         244,095         —           4,072,453   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total portfolio loans

   $ 262,643       $ 1,682,817       $ 638,410       $ 928,770       $ 330,031       $ 244,095       $ —         $ 4,086,766   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

(1) 

Commercial loans greater than $1 million that are reported as non-accrual or as a troubled debt restructuring (“TDR”) are individually evaluated for impairment.

        WesBanco maintains an internal loan grading system to reflect the credit quality of commercial loans. Commercial loan risk grades are determined based on an evaluation of the relevant characteristics of each loan, assigned at the inception of each loan 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 reliability and sustainability of the primary source of repayment and overall financial strength of the borrower. This includes an analysis of cash flow available to repay debt, profitability, liquidity, leverage, and overall financial trends. Other factors include management, industry or property type risks, an assessment of secondary sources of repayment such as collateral or guarantees, other terms and conditions of the loan that may increase or reduce its risk, and economic conditions and other external factors that may influence repayment capacity and financial condition.

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 net rental income generated by the property to service the debt, the type, quality, industry and mix of tenants, and the terms of leases, but also considers the overall financial capacity of the investors and their experience in owning and managing investment property. The risk grade assigned to owner-occupied commercial real estate and commercial and industrial loans is based primarily on historical and projected earnings, the adequacy of operating cash flow to service all of the business’ debt, and the capital resources, liquidity and leverage of the business, but also considers the industry in which the business operates, the business’ specific competitive advantages or disadvantages, the quality and experience of management, and external influences on the business such as economic conditions. Other factors that are considered for commercial and industrial loans include the type, quality and marketability of non-real estate collateral and whether the structure of the loan increases or reduces its risk. The type, age, condition, location and any environmental risks associated with a property are also considered for all types of commercial real estate. The overall financial condition and repayment capacity of any guarantors is also evaluated to determine the extent to which they mitigate other risks of the loan. The following descriptions of risk grades apply to commercial real estate and commercial and industrial loans:

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.

Criticized or compromised loans are currently protected but have weaknesses, which, if not corrected, may inadequately protect the Bank at some future date. These loans represent an unwarranted credit risk and would generally not be extended in the normal course of lending. Specific issues which may warrant this grade include declining financial results, increased reliance on secondary sources of repayment or guarantor support and adverse external influences that may negatively impact the business or property.

 

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Table of Contents

Substandard and doubtful loans are equivalent to the classifications used by banking regulators. Substandard loans are inadequately protected by the current repayment capacity and equity of the borrower or collateral pledged, if any. Substandard loans have one or more well-defined weaknesses that jeopardize their repayment or collection in full. These loans may or may not be reported as non-accrual. Doubtful loans have all the weaknesses inherent to a substandard loan with the added characteristic that full repayment is highly questionable or improbable on the basis of currently existing facts, conditions and collateral values. However, recognition of loss may be deferred if there are reasonably specific pending factors that will reduce the risk if they occur.

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

 

     Commerical 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 March 31, 2015

           

Pass

   $ 281,730       $ 1,848,655       $ 683,226       $ 2,813,611   

Criticized - compromised

     3,653         18,049         18,957         40,659   

Classified - substandard

     2,692         42,165         7,438         52,295   

Classified - doubtful

     —           —           —           —     
  

 

 

    

 

 

    

 

 

    

 

 

 

Total

   $ 288,075       $ 1,908,869       $ 709,621       $ 2,906,565   
  

 

 

    

 

 

    

 

 

    

 

 

 

As of December 31, 2014

           

Pass

   $ 257,218       $ 1,627,771       $ 617,742       $ 2,502,731   

Criticized - compromised

     3,645         17,873         12,770         34,288   

Classified - substandard

     1,780         37,173         7,898         46,851   

Classified - doubtful

     —           —           —           —     
  

 

 

    

 

 

    

 

 

    

 

 

 

Total

   $ 262,643       $ 1,682,817       $ 638,410       $ 2,583,870   
  

 

 

    

 

 

    

 

 

    

 

 

 

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 were $15.5 million at March 31, 2015 and $15.2 million at December 31, 2014, of which $1.5 and $2.2 million were accruing, for each period, respectively. The aggregate amount of residential real estate, home equity and consumer loans classified as substandard are not included in the tables above.

 

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Table of Contents

Acquired Loans — Loans acquired in connection with acquisitions are recorded at their acquisition-date fair value in accordance with ASC 805, Business Combinations, with no carryover of related allowance for credit losses. Determining the fair value of the acquired loans involves estimating the principal and interest cash flows expected to be collected on the loans and discounting those cash flows at a market rate of interest. Management considers a number of factors in evaluating the acquisition-date fair value including the remaining life of the acquired loans, delinquency status, estimated prepayments, payment options and other loan features, internal risk grade, estimated value of the underlying collateral and interest rate environment.

Loans acquired with deteriorated credit quality are accounted for in accordance with ASC 310-30, Loans and Debt Securities Acquired with Deteriorated Credit Quality (ASC 310-30), and therefore impaired if, at acquisition, the loans have evidence of credit quality deterioration since origination and it is probable that all contractually required payments will not be collected. At acquisition, WesBanco considers several factors as indicators that an acquired loan has evidence of deterioration in credit quality. These factors include loans 90 days or more past due, loans with an internal risk grade of substandard or below, loans classified as non-accrual by the acquired institution, and loans that have been previously modified as a TDR.

Acquired loans that were not individually determined to be impaired are considered performing and are accounted for in accordance with ASC 310-20, Nonrefundable Fees and Other Costs (ASC 310-20), whereby the premium or discount derived from the fair market value adjustment, on a loan-by-loan or pooled basis, is recognized into interest income on a level yield over the remaining expected life of the loan or pool.

Under the ASC 310-30 model, the excess of cash flows expected to be collected at acquisition over recorded fair value is referred to as the accretable yield and is the interest component of expected cash flow. The accretable yield is recognized into income over the remaining life of the loan if the timing and/or amount of cash flows expected to be collected can be reasonably estimated. If the timing or amount of cash flows expected to be collected cannot be reasonably estimated, the cost recovery method of income recognition is used. The difference between the loan’s total scheduled principal and interest payments over all cash flows expected to be collected at acquisition, considering the impact of prepayments, is referred to as the non-accretable difference. The non-accretable difference represents contractually required principal and interest payments which WesBanco does not expect to collect.

Over the life of the loan, management continues to estimate cash flows expected to be collected. Decreases in expected cash flows are recognized as impairments through a charge to the provision for loan losses resulting in an increase in the allowance for loan losses. Subsequent improvements in cash flows result in first, reversal of existing valuation allowances recognized subsequent to acquisition, if any, and next, an increase in the amount of accretable yield to be subsequently recognized in interest income on a prospective basis over the loan’s remaining life.

In conjunction with the ESB acquisition, WesBanco acquired loans with a book value of $716.1 million. These loans were recorded at their fair value of $700.8 million, with $691.1 million categorized as performing. The fair market value adjustment on performing loans of $9.0 million at acquisition date is expected to be recognized into interest income on a level yield over the remaining expected life of the performing loans. Loans acquired with deteriorated credit quality with a book value of $16.0 million were recorded at their estimated fair value of $9.7 million. The accretable yield on the acquired impaired loans is estimated at $2.4 million, while the non-accretable difference is estimated at $3.9 million. The balance of these loans acquired with deteriorated credit quality at March 31, 2015, was $9.3 million, of which $3.6 million were categorized as non-accrual and $5.7 million were categorized as accruing TDRs.

 

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Table of Contents

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 March 31, 2015

                    

Commercial real estate:

                    

Land and construction

   $ 286,883       $ —         $ —         $ 1,192       $ 1,192       $ 288,075       $ —     

Improved property

     1,889,451         1,093         1,435         16,890         19,418         1,908,869         —     
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total commercial real estate

     2,176,334         1,093         1,435         18,082         20,610         2,196,944         —     

Commercial and industrial

     705,380         916         1,518         1,807         4,241         709,621         3   

Residential real estate

     1,226,131         4,981         1,673         6,378         13,032         1,239,163         74   

Home equity

     357,545         1,982         508         2,128         4,618         362,163         684   

Consumer

     362,338         2,117         868         507         3,492         365,830         270   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total portfolio loans

     4,827,728         11,089         6,002         28,902         45,993         4,873,721         1,031   

Loans held for sale

     6,064         —           —           —           —           6,064         —     
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total loans

   $ 4,833,792       $ 11,089       $ 6,002       $ 28,902       $ 45,993       $ 4,879,785       $ 1,031   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Impaired loans included above are as follows:

                    

Non-accrual loans

   $ 9,209       $ 2,008       $ 2,319       $ 27,838       $ 32,165       $ 41,374      

TDRs accruing interest (1)

     16,536         582         179         33         794         17,330      
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

Total impaired

   $ 25,745       $ 2,590       $ 2,498       $ 27,871       $ 32,959       $ 58,704      
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

As of December 31, 2014

                    

Commercial real estate:

                    

Land and construction

   $ 261,356       $ 20       $ —         $ 1,267       $ 1,287       $ 262,643       $ 71   

Improved property

     1,665,363         961         4,772         11,721         17,454         1,682,817         —     
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total commercial real estate

     1,926,719         981         4,772         12,988         18,741         1,945,460         71   

Commercial and industrial

     634,482         1,834         240         1,854         3,928         638,410         22   

Residential real estate

     915,968         1,237         3,384         8,181         12,802         928,770         1,306   

Home equity

     325,291         1,877         895         1,968         4,740         330,031         570   

Consumer

     240,365         2,571         685         474         3,730         244,095         319   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total portfolio loans

     4,042,825         8,500         9,976         25,465         43,941         4,086,766         2,288   

Loans held for sale

     5,865         —           —           —           —           5,865         —     
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total loans

   $ 4,048,690       $ 8,500       $ 9,976       $ 25,465       $ 43,941       $ 4,092,631       $ 2,288   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Impaired loans included above are as follows:

                    

Non-accrual loans

   $ 7,562       $ 2,884       $ 5,552       $ 22,820       $ 31,256       $ 38,818      

TDRs accruing interest (1)

     11,016         151         542         357         1,050         12,066      
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

Total impaired

   $ 18,578       $ 3,035       $ 6,094       $ 23,177       $ 32,306       $ 50,884      
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

(1)

Loans 90 days or more past due and accruing interest exclude TDRs 90 days or more past due and accruing interest.

Impaired Loans — A loan is considered impaired, based on current information and events, if it is probable that WesBanco will be unable to collect the payments of principal and interest when due according to the contractual terms of the loan agreement. Impaired loans generally included all non-accrual loans and TDRs.

Loans are generally placed on non-accrual when they are 90 days past due unless the loan is well-secured and in the process of collection. Loans may also be placed on non-accrual when full collection of principal is in doubt even if payments on such loans remain current, or may remain on non-accrual if they were past due but subsequently brought current.

Loans are categorized as TDRs when the Bank, for economic or legal reasons related to a borrower’s financial difficulties, grants a concession to the borrower that it would not otherwise consider.

Acquired loans that have experienced a deterioration of credit quality from origination to acquisition for which it is probable that WesBanco will be unable to collect all contractually required payments receivable, including both principal and interest, are considered impaired.

 

16


Table of Contents

The following tables summarize impaired loans:

 

     Impaired Loans  
     March 31, 2015      December 31, 2014  

(unaudited, in thousands)

   Unpaid
Principal
Balance (1)
     Recorded
Investment
     Related
Allowance
     Unpaid
Principal
Balance (1)
     Recorded
Investment
     Related
Allowance
 

With no related specific allowance recorded:

                 

Commercial real estate:

                 

Land and construction

   $ 3,101       $ 2,476       $ —         $ 1,588       $ 1,488       $ —     

Improved property

     30,138         22,481         —           16,480         14,684         —     

Commercial and industrial

     3,094         2,432         —           3,152         2,597         —     

Residential real estate

     20,943         19,132         —           20,077         18,544         —     

Home equity

     2,824         2,617         —           2,890         2,663         —     

Consumer

     1,659         1,332         —           1,287         1,086         —     
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total impaired loans without a specific allowance

     61,759         50,470         —           45,474         41,062         —     
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

With a specific allowance recorded:

                 

Commercial real estate:

                 

Land and construction

     —           —           —           —           —           —     

Improved property

     6,466         6,466         2,828         7,980         7,980         2,765   

Commercial and industrial

     1,768         1,768         873         1,842         1,842         1,033   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total impaired loans with a specific allowance

     8,234         8,234         3,701         9,822         9,822         3,798   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total impaired loans

   $ 69,993       $ 58,704       $ 3,701       $ 55,296       $ 50,884       $ 3,798   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

(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 impaired loans.

 

     Impaired Loans  
     For the Three Months Ended
March 31, 2015
     For the Three Months Ended
March 31, 2014
 

(unaudited, in thousands)

   Average
Recorded
Investment
     Interest
Income
Recognized
     Average
Recorded
Investment
     Interest
Income
Recognized
 

With no related specific allowance recorded:

           

Commercial real estate:

           

Land and construction

   $ 2,128       $ 16       $ 2,450       $ 2   

Improved property

     18,932         223         19,158         20   

Commercial and industrial

     2,513         13         3,532         32   

Residential real estate

     18,715         230         19,463         182   

Home equity

     2,641         20         2,367         19   

Consumer

     1,194         20         1,174         28   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total impaired loans without a specific allowance

     46,123         522         48,144         283   
  

 

 

    

 

 

    

 

 

    

 

 

 

With a specific allowance recorded:

           

Commercial real estate:

           

Land and construction

     —           —           —           —     

Improved property

     7,223         —           729         1   

Commercial and industrial

     1,805         19         2,329         12   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total impaired loans with a specific allowance

     9,028         19         3,058         13   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total impaired loans

   $ 55,151       $ 541       $ 51,202       $ 296   
  

 

 

    

 

 

    

 

 

    

 

 

 

 

17


Table of Contents

The following tables present the recorded investment in non-accrual loans and TDRs:

 

     Non-accrual Loans (1)  

(unaudited, in thousands)

   March 31,
2015
     December 31,
2014
 

Commercial real estate:

     

Land and construction

   $ 1,463       $ 1,488   

Improved property

     22,143         20,227   
  

 

 

    

 

 

 

Total commercial real estate

     23,606         21,715   
  

 

 

    

 

 

 

Commercial and industrial

     3,849         4,110   

Residential real estate

     11,249         10,329   

Home equity

     1,899         1,923   

Consumer

     771         741   
  

 

 

    

 

 

 

Total

   $ 41,374       $ 38,818   
  

 

 

    

 

 

 

 

(1) 

Total non-accrual loans include loans that are also restructured. Such loans are also set forth in the following table as non-accrual TDRs.

 

     TDRs  
     March 31, 2015      December 31, 2014  

(unaudited, in thousands)

   Accruing      Non-Accrual      Total      Accruing      Non-Accrual      Total  

Commercial real estate:

                 

Land and construction

   $ 1,013       $ 504       $ 1,517       $ —         $ 464       $ 464   

Improved property

     6,804         5,399         12,203         2,437         1,850         4,287   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total commercial real estate

     7,817         5,903         13,720         2,437         2,314         4,751   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Commercial and industrial

     351         376         727         329         478         807   

Residential real estate

     7,883         2,386         10,269         8,215         2,074         10,289   

Home equity

     718         285         1,003         740         245         985   

Consumer

     561         274         835         345         309         654   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total

   $ 17,330       $ 9,224       $ 26,554       $ 12,066       $ 5,420       $ 17,486   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

As of March 31, 2015, there were three TDRs greater than $1.0 million. The concessions granted in the majority of loans reported as accruing and non-accrual TDRs are extensions of the maturity date or the amortization period, reductions in the interest rate below the prevailing market rate for loans with comparable characteristics, and/or permitting interest-only payments for longer than three months.

The following table presents details related to loans identified as TDRs during the three months ended March 31, 2015 and 2014, respectively:

 

     New TDRs (1)
For the Three Months Ended
 
     March 31, 2015      March 31, 2014  

(unaudited, dollars in thousands)

   Number of
Modifications
     Pre-
Modification
Outstanding
Recorded
Investment
     Post-
Modification
Outstanding
Recorded
Investment
     Number of
Modifications
     Pre-
Modification
Outstanding
Recorded
Investment
     Post-
Modification
Outstanding
Recorded
Investment
 

Commercial real estate:

                 

Land and construction

     11       $ 1,414       $ 1,056         —         $ —         $ —     

Improved Property

     7         8,568         8,289         1         91         90   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total commercial real estate

     18         9,982         9,345         1         91         90   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Commercial and industrial

     2         42         57         —           —           —     

Residential real estate

     7         424         421         4         121         118   

Home equity

     1         7         6         —           —           —     

Consumer

     21         269         303         2         33         31   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total

     49       $ 10,724       $ 10,132         7       $ 245       $ 239   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

(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.

 

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The following table summarizes TDRs which defaulted (defined as past due 90 days) during the three months ended March 31, 2015 and 2014, respectively, that were restructured within the last twelve months prior to March 31, 2015 and 2014, respectively:

 

     Defaulted TDRs (1)
For the Three Months Ended
     Defaulted TDRs (1)
For the Three Months Ended
 
     March 31, 2015      March 31, 2014  

(unaudited, dollars in thousands)

   Number of
Defaults
     Recorded
Investment
     Number of
Defaults
     Recorded
Investment
 

Commercial real estate:

           

Land and construction

     —         $ —           —         $ —     

Improved property

     —           —           —           —     
  

 

 

    

 

 

    

 

 

    

 

 

 

Total commercial real estate

     —           —           —           —     
  

 

 

    

 

 

    

 

 

    

 

 

 

Commercial and industrial

     —           —           —           —     

Residential real estate

     —           —           8         481   

Home equity

     1         42         1         3   

Consumer

     1         27         —           —     
  

 

 

    

 

 

    

 

 

    

 

 

 

Total

     2       $ 69         9       $ 484   
  

 

 

    

 

 

    

 

 

    

 

 

 

 

(1) 

Excludes loans that were either charged-off or cured by period end. The recorded investment is as of March 31, 2014 and 2013, respectively.

TDRs that defaulted during the three month period that were restructured within the last twelve months represented 0.3% of the total TDR balance at March 31, 2015. These loans are placed on non-accrual status unless they are both well-secured and in the process of collection. At March 31, 2015, none of the loans in the table above were accruing interest.

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

 

(unaudited, in thousands)

   March 31,
2015
     December 31,
2014
 

Other real estate owned

   $ 5,886       $ 4,920   

Repossessed assets

     340         162   
  

 

 

    

 

 

 

Total other real estate owned and repossessed assets

   $ 6,226       $ 5,082   
  

 

 

    

 

 

 

Residential real estate included in other real estate owned at March 31, 2015 and December 31, 2014 was $0.8 million and $0.6 million, respectively. At March 31, 2015, formal foreclosure proceedings were in process on residential real estate loans totaling $4.3 million.

NOTE 6. PENSION PLAN

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

 

     For the Three Months Ended
March 31,
 

(unaudited, in thousands)

   2015      2014  

Service cost - benefits earned during year

   $ 827       $ 717   

Interest cost on projected benefit obligation

     1,201         1,170   

Expected return on plan assets

     (1,907      (1,783

Amortization of prior service cost

     6         11   

Amortization of net loss

     784         363   
  

 

 

    

 

 

 

Net periodic pension cost

   $ 911       $ 478   
  

 

 

    

 

 

 

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 of $3.1 million is due for 2015 which could be all or partially offset by the Plan’s $34.9 million available credit balance. WesBanco expects to make a voluntary contribution of $7.5 million to the Plan in 2015.

 

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Table of Contents

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:

Securities available-for-sale: The fair value of securities available-for-sale 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. Certain equity securities that are lightly traded in over-the-counter markets are classified as level 2 in the fair value hierarchy, as quoted market prices may not be available on the fair value measurement date. 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.

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

Impaired loans: Impaired loans are carried at the lower of cost or the fair value of the collateral for collateral-dependent loans. Collateral may be in the form of real estate or business assets including equipment, inventory and accounts receivable. The use of independent appraisals, discounted cash flow models and management’s best judgment are significant inputs in arriving at the fair value measure of the underlying collateral and impaired loans are therefore 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.

Loans held for sale: Loans held for sale are carried, in aggregate, at the lower of cost or fair value. 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.

 

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Table of Contents

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 March 31, 2015 and December 31, 2014:

 

          March 31, 2015  
          Fair Value Measurements Using:  

(unaudited, in thousands)

  March 31,
2015
    Quoted Prices in
Active Markets
for Identical
Assets (level  1)
    Significant Other
Observable
Inputs
(level 2)
    Significant
Unobservable
Inputs
(level 3)
 

Recurring fair value measurements

       

Securities - available-for-sale

       

Obligations of government agencies

  $ 80,768      $ —        $ 80,768      $ —     

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

    1,283,445        —          1,283,445        —     

Obligations of state and political subdivisions

    95,653        —          95,653        —     

Corporate debt securities

    183,090        —          183,090        —     

Equity securities

    11,308        8,538        2,770        —     
 

 

 

   

 

 

   

 

 

   

 

 

 

Total securities - available-for-sale

  $ 1,654,264      $ 8,538      $ 1,645,726      $ —     
 

 

 

   

 

 

   

 

 

   

 

 

 

Total recurring fair value measurements

  $ 1,654,264      $ 8,538      $ 1,645,726      $ —     
 

 

 

   

 

 

   

 

 

   

 

 

 

Nonrecurring fair value measurements

       

Impaired loans

  $ 4,533      $ —        $ —        $ 4,533   

Other real estate owned and repossessed assets

    6,226        —          —          6,226   

Loans held for sale

    6,064        —          6,064        —     
 

 

 

   

 

 

   

 

 

   

 

 

 

Total nonrecurring fair value measurements

  $ 16,823      $ —        $ 6,064      $ 10,759   
 

 

 

   

 

 

   

 

 

   

 

 

 
          December 31, 2014  
          Fair Value Measurements Using:  

(unaudited, in thousands)

  December 31,
2014
    Quoted Prices in
Active Markets
for Identical
Assets (level 1)
    Significant Other
Observable
Inputs
(level 2)
    Significant
Unobservable
Inputs
(level 3)
 

Recurring fair value measurements