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Securities | 3 Months Ended
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Mar. 31, 2021
Investments Debt And Equity Securities [Abstract] |
Securities | NOTE 3. SECURITIES The following table presents the fair value and amortized cost of available-for-sale and held-to-maturity debt securities:
|  | March 31, 2021 |  |  | December 31, 2020 |
(unaudited, in thousands) |  | Amortized Cost |  |  | Gross Unrealized Gains |  |  | Gross Unrealized Losses |  |  | Estimated Fair Value |  |  | Amortized Cost |  |  | Gross Unrealized Gains |  |  | Gross Unrealized Losses |  |  | Estimated Fair Value |
Available-for-sale debt securities |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
U.S. Treasury |  | $ | 29,986 |  |  | $ | 11 |  |  | $ | — |  |  | $ | 29,997 |  |  | $ | 39,975 |  |  | $ | 7 |  |  | $ | — |  |  | $ | 39,982 |
U.S. Government sponsored entities and agencies |  |  | 174,472 |  |  |  | 4,564 |  |  |  | (2,706 | ) |  |  | 176,330 |  |  |  | 204,109 |  |  |  | 7,715 |  |  |  | (142 | ) |  |  | 211,682 |
Residential mortgage-backed securities and collateralized mortgage obligations of government sponsored entities and agencies |  |  | 2,123,853 |  |  |  | 30,901 |  |  |  | (13,961 | ) |  |  | 2,140,793 |  |  |  | 1,230,106 |  |  |  | 35,979 |  |  |  | (1,348 | ) |  |  | 1,264,737 |
Commercial mortgage-backed securities and collateralized mortgage obligations of government sponsored entities and agencies |  |  | 284,440 |  |  |  | 7,962 |  |  |  | (721 | ) |  |  | 291,681 |  |  |  | 308,903 |  |  |  | 11,464 |  |  |  | (269 | ) |  |  | 320,098 |
Obligations of states and political subdivisions |  |  | 105,778 |  |  |  | 6,056 |  |  |  | (36 | ) |  |  | 111,798 |  |  |  | 108,602 |  |  |  | 7,160 |  |  |  | — |  |  |  | 115,762 |
Corporate debt securities |  |  | 23,953 |  |  |  | 660 |  |  |  | — |  |  |  | 24,613 |  |  |  | 24,963 |  |  |  | 912 |  |  |  | — |  |  |  | 25,875 |
Total available-for-sale debt securities |  | $ | 2,742,482 |  |  | $ | 50,154 |  |  | $ | (17,424 | ) |  | $ | 2,775,212 |  |  | $ | 1,916,658 |  |  | $ | 63,237 |  |  | $ | (1,759 | ) |  | $ | 1,978,136 |
Held-to-maturity debt securities |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
U.S. Government sponsored entities and agencies |  | $ | 7,611 |  |  | $ | 106 |  |  | $ | — |  |  | $ | 7,717 |  |  | $ | 7,779 |  |  | $ | 265 |  |  | $ | — |  |  | $ | 8,044 |
Residential mortgage-backed securities and collateralized mortgage obligations of government sponsored entities and agencies |  |  | 80,376 |  |  |  | 2,738 |  |  |  | (5 | ) |  |  | 83,109 |  |  |  | 89,151 |  |  |  | 3,251 |  |  |  | — |  |  |  | 92,402 |
Obligations of states and political subdivisions |  |  | 692,616 |  |  |  | 24,501 |  |  |  | (3,811 | ) |  |  | 713,306 |  |  |  | 601,128 |  |  |  | 30,173 |  |  |  | (59 | ) |  |  | 631,242 |
Corporate debt securities |  |  | 33,137 |  |  |  | 2,603 |  |  |  | — |  |  |  | 35,740 |  |  |  | 33,154 |  |  |  | 3,341 |  |  |  | — |  |  |  | 36,495 |
Total held-to-maturity debt securities |  | $ | 813,740 |  |  | $ | 29,948 |  |  | $ | (3,816 | ) |  | $ | 839,872 |  |  | $ | 731,212 |  |  | $ | 37,030 |  |  | $ | (59 | ) |  | $ | 768,183 |
Total debt securities |  | $ | 3,556,222 |  |  | $ | 80,102 |  |  | $ | (21,240 | ) |  | $ | 3,615,084 |  |  | $ | 2,647,870 |  |  | $ | 100,267 |  |  | $ | (1,818 | ) |  | $ | 2,746,319 |
(1) | Total held-to-maturity debt securities are presented on the balance sheet net of their allowance for credit losses totaling $0.3 million at March 31, 2021 and December 31, 2020.
At March 31, 2021 and December 31, 2020, 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 $10.1 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 $13.1 million and $13.0 million at March 31, 2021 and December 31, 2020, respectively. The following table presents the amortized cost and fair value of available-for-sale and held-to-maturity debt securities by contractual maturity date at March 31, 2021. Actual maturities will differ from contractual maturities because borrowers may have the right to call or prepay debt obligations with or without prepayment penalties. Mortgage-backed securities and collateralized mortgage obligations are classified in the table below based on their contractual maturity date; however, regular principal payments and prepayments of principal are received on a monthly basis.
(unaudited, in thousands) |  | Amortized Cost |  |  | Fair Value |
Available-for-sale debt securities |  |  |  |  |  |  |  |
Less than one year |  | $ | 47,465 |  |  | $ | 47,583 |
1-5 years |  |  | 145,739 |  |  |  | 152,800 |
5-10 years |  |  | 358,854 |  |  |  | 366,119 |
Over 10 years |  |  | 2,190,424 |  |  |  | 2,208,710 |
Total available-for-sale debt securities |  | $ | 2,742,482 |  |  | $ | 2,775,212 |
Held-to-maturity debt securities |  |  |  |  |  |  |  |
Less than one year |  | $ | 11,759 |  |  | $ | 11,872 |
1-5 years |  |  | 133,053 |  |  |  | 140,315 |
5-10 years |  |  | 228,148 |  |  |  | 237,907 |
Over 10 years |  |  | 440,780 |  |  |  | 449,778 |
Total held-to-maturity debt securities |  | $ | 813,740 |  |  | $ | 839,872 |
Total debt securities |  | $ | 3,556,222 |  |  | $ | 3,615,084 |
Securities with an aggregate fair value of $1.8 billion at March 31, 2021 and December 31, 2020, 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 $0 million and $222.7 million for the three months ended March 31, 2021 and 2020, respectively. Net unrealized gains on available-for-sale securities included in accumulated other comprehensive income, net of tax, as of March 31, 2021 and December 31, 2020 were $24.8 million and $46.9 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 months ended March 31, 2021 and 2020, respectively. All gains and losses presented in the table below are included in the net securities gains (losses) line item of the income statement. For those equity securities relating to the key officer and director deferred compensation plan, the corresponding change in the obligation to the participant is recognized in employee benefits expense.
|  | For the Three Months Ended March 31, |
(unaudited, in thousands) |  | 2021 |  |  | 2020 |
Debt securities: |  |  |  |  |  |  |  |
Gross realized gains |  | $ | 140 |  |  | $ | 3,335 |
Gross realized losses |  |  | (39 | ) |  |  | (1,031 | )
Net gains on debt securities |  | $ | 101 |  |  | $ | 2,304 |
Equity securities: |  |  |  |  |  |  |  |
Net unrealized gains (losses) recognized on securities still held |  | $ | 178 |  |  | $ | (805 | )
Net realized losses recognized on securities sold |  |  | — |  |  |  | (8 | )
Net gains (losses) on equity securities |  | $ | 178 |  |  | $ | (813 | )
Net securities gains |  | $ | 279 |  |  | $ | 1,491 |
The corporate and municipal bonds in Wesbanco’s held-to-maturity debt portfolio are analyzed quarterly to determine if an allowance for current expected credit losses is warranted. Wesbanco uses a database of historical financials of all corporate and municipal issuers and actual historic default and recovery rates on rated and non-rated transactions to estimate expected credit losses on an individual security basis. The expected credit losses are adjusted quarterly and are recorded in an allowance for expected credit losses on the balance sheet, which is deducted from the amortized cost basis of the held-to-maturity portfolio as a contra asset. The losses are recorded on the income statement in the provision for credit losses. Accrued interest receivable on held-to-maturity securities, which was $6.3 million and $5.3 million as of March 31, 2021 and December 31, 2020, 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 economical 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 three months ended March 31, 2021 and March 31, 2020, respectively:
| Allowance for Credit Losses By Category |
| For the Three Months Ended March 31, 2021 and 2020 |
|  |  |  | Residential mortgage |  |  |  |  |  |  |  |  |  |
|  |  |  | -backed |  |  |  |  |  |  |  |  |  |
|  |  |  | securities and |  |  |  |  |  |  |  |  |  |
|  |  |  | collateralized |  |  |  |  |  |  |  |  |  |
|  |  |  | mortgage obligations |  | Obligations of |  |  |  |  |  |  |
| U.S. Government |  | of government |  | state and |  | Corporate |  |  |  |
| sponsored |  | sponsored entities |  | political |  | debt |  |  |  |
(unaudited, in thousands) | entities and agencies |  | and agencies |  | subdivisions |  | Securities |  | Total |
Balance at December 31, 2020 | $ | — |  | $ | — |  | $ | 130 |  | $ | 196 |  | $ | 326 |
Current period provision |  | — |  |  | — |  |  | (12 | ) |  | (24 | ) |  | (36 | )
Write-offs |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Recoveries |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Balance at March 31, 2021 | $ | — |  | $ | — |  | $ | 118 |  | $ | 172 |  | $ | 290 |
. |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Balance at December 31, 2019 | $ | — |  | $ | — |  | $ | — |  | $ | — |  | $ | — |
Impact of adopting ASC 326 |  | — |  |  | — |  |  | 96 |  |  | 133 |  |  | 229 |
Current period provision |  | — |  |  | — |  |  | 2 |  |  | 5 |  |  | 7 |
Write-offs |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Recoveries |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Balance at March 31, 2020 | $ | — |  | $ | — |  | $ | 98 |  | $ | 138 |  | $ | 236 |
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 March 31, 2021 and December 31, 2020, respectively:
|  | March 31, 2021 |
|  | 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 |  | $ | 56,270 |  |  | $ | (2,706 | ) |  |  | 6 |  |  | $ | — |  |  | $ | — |  |  |  | — |  |  | $ | 56,270 |  |  | $ | (2,706 | ) |  |  | 6 |
Residential mortgage-backed securities and collateralized mortgage obligations of government sponsored entities and agencies |  |  | 973,961 |  |  |  | (13,879 | ) |  |  | 98 |  |  |  | 3,531 |  |  |  | (82 | ) |  |  | 4 |  |  |  | 977,492 |  |  |  | (13,961 | ) |  |  | 102 |
Commercial mortgage-backed securities and collateralized mortgage obligations of government sponsored entities and agencies |  |  | 94,186 |  |  |  | (721 | ) |  |  | 9 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 94,186 |  |  |  | (721 | ) |  |  | 9 |
Obligations of state and political subdivisions |  |  | 3,767 |  |  |  | (36 | ) |  |  | 1 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 3,767 |  |  |  | (36 | ) |  |  | 1 |
Total |  | $ | 1,128,184 |  |  | $ | (17,342 | ) |  |  | 114 |  |  | $ | 3,531 |  |  | $ | (82 | ) |  |  | 4 |  |  | $ | 1,131,715 |  |  | $ | (17,424 | ) |  | $ | 118 |
|  | December 31, 2020 |
|  | 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 |  | $ | 18,308 |  |  | $ | (142 | ) |  |  | 2 |  |  | $ | — |  |  | $ | — |  |  |  | — |  |  | $ | 18,308 |  |  | $ | (142 | ) |  |  | 2 |
Residential mortgage-backed securities and collateralized mortgage obligations of government sponsored entities and agencies |  |  | 224,448 |  |  |  | (1,227 | ) |  |  | 41 |  |  |  | 4,136 |  |  |  | (121 | ) |  |  | 3 |  |  |  | 228,584 |  |  |  | (1,348 | ) |  |  | 44 |
Commercial mortgage-backed securities and collateralized mortgage obligations of government sponsored entities and agencies |  |  | 97,266 |  |  |  | (269 | ) |  |  | 10 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 97,266 |  |  |  | (269 | ) |  |  | 10 |
Obligations of states and political subdivisions |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Total |  | $ | 340,022 |  |  | $ | (1,638 | ) |  |  | 53 |  |  | $ | 4,136 |  |  | $ | (121 | ) |  |  | 3 |  |  | $ | 344,158 |  |  | $ | (1,759 | ) |  |  | 56 |
Unrealized losses on debt securities in the table above represents 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 and Indianapolis stock totaling $29.3 million and $34.0 million at March 31, 2021 and December 31, 2020, 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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