Loans and the Allowance for Credit Losses

12 Months Ended

Dec. 31, 2021

Loans and the Allowance for Credit Losses

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, and discounts on purchased loans. Net deferred fee loan income (costs) were $(3.3) million and $6.2 million at December 31, 2021 and 2020, respectively, including $6.1 million and $13.8 million, respectively, of net deferred income from SBA Payroll Protection Program ("PPP") loans. The un-accreted discount on purchased loans from acquisitions was $25.9 million at December 31, 2021 and $39.4 million at December 31, 2020.


	December 31,		December 31,
(in thousands)	2021		2020
Commercial real estate:
Land and construction	$	833,880	$	668,277
Improved property		4,705,088		5,037,115
Total commercial real estate		5,538,968		5,705,392
Commercial and industrial		1,427,645		1,681,182
Commercial and industrial - PPP		162,675		726,256
Residential real estate		1,721,378		1,720,961
Home equity		605,682		646,387
Consumer		277,130		309,055
Total portfolio loans		9,733,478		10,789,233
Loans held for sale		25,277		168,378
Total loans	$	9,758,755	$	10,957,611

On January 1, 2020, Wesbanco adopted ASU 2016-13 (Topic 326), Measurement of Credit Losses on Financial Instruments. Upon adoption, the Company recognized $41.4 million as an increase to the allowance for credit losses, which represents the difference in the incurred allowance as of December 31, 2019 and the CECL allowance as of January 1, 2020. This adjustment includes a $6.7 million increase to the allowance related to PCD loans as of January 1, 2020. See Note 1, “Summary of Significant Accounting Policies” for the Company’s revised accounting policies related to Loans and Allowance for Credit Losses and adoption of this standard.

The allowance for credit losses under the current expected credit losses methodology (“CECL”) is calculated utilizing the probability of default (“PD”) / loss given default (“LGD”), which is then discounted to net present value. PD is the probability the asset will default within a given time frame and LGD is the percentage of the asset not expected to be collected due to default. The primary macroeconomic drivers of the quantitative model include forecasts of national unemployment and interest rates, as well as modeling adjustments for changes in prepayment speeds, loan risk grades, portfolio mix, concentrations and loan growth. For the calculation as of December 31, 2021, the one-year forecast was based upon a blended rate from three nationally-recognized published economic forecasts through December 31, 2021, and is primarily driven by the national unemployment and interest rate spread forecasts. Wesbanco’s blended forecast of national unemployment, at quarter end, was projected to be 4.7% at December 31, 2021, and subsequently decrease to an average of 4.4% over the remainder of the forecast period. The calculation utilized a one-year reversion period back to the Company’s historical loss rate by loan classification. Included in the qualitative factors were COVID-19 pandemic factors related to the transient credit risk not covered by the traditional allowance process, adjusted to Wesbanco’s regional footprint, deferred interest on modified loans, and hospitality industry concentration. As of December 31, 2021, accrued interest receivable for loans was $46.8 million. Wesbanco made an accounting policy election to exclude accrued interest from the measurement of the allowance for credit losses because the Company has a robust policy in place to reverse or write-off accrued interest when loans are placed on non-accrual. However, Wesbanco does have a $0.1 million reserve on the accrued interest related to loan modifications allowed under the CARES Act due to the timing and nature of these modifications. As of December 31, 2021, accrued interest related to COVID-19 loan modifications as permitted under the CARES Act was $22.0 million.

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


	For the Year Ended December 31, 2021
(in thousands)	Commercial Real Estate- Land and Construction			Commercial Real Estate- Improved Property			Commercial & Industrial			Residential Real Estate			Home Equity			Consumer			Deposit Overdrafts			Total
Balance at beginning of year:
Allowance for credit losses - loans	$	10,841		$	110,652		$	37,850		$	17,851		$	1,487		$	6,507		$	639		$	185,827
Allowance for credit losses - loan commitments		6,508			712			1,275			955			45			19			—			9,514
Total beginning allowance for credit losses - loans and loan commitments		17,349			111,364			39,125			18,806			1,532			6,526			639			195,341
Impact of adopting ASC 326																							—
Provision for credit losses:
Provision for loan losses		(3,698	)		(44,831	)		(10,749	)		(2,708	)		(899	)		(2,286	)		2,694			(62,477	)
Provision for loan commitments		(2,328	)		(511	)		222			621			4			253			—			(1,739	)
Total provision for credit losses - loans and loan commitments		(6,026	)		(45,342	)		(10,527	)		(2,087	)		(895	)		(2,033	)		2,694			(64,216	)
Charge-offs		(22	)		(1,825	)		(2,521	)		(873	)		(414	)		(2,995	)		(1,486	)		(10,136	)
Recoveries		189			1,359			2,295			1,131			550			2,511			373			8,408
Net recoveries (charge-offs)		167			(466	)		(226	)		258			136			(484	)		(1,113	)		(1,728	)
Balance at end of period:
Allowance for credit losses - loans		7,310			65,355			26,875			15,401			724			3,737			2,220			121,622
Allowance for credit losses - loan commitments		4,180			201			1,497			1,576			49			272			—			7,775
Total ending allowance for credit losses - loans and loan commitments	$	11,490		$	65,556		$	28,372		$	16,977		$	773		$	4,009		$	2,220		$	129,397


	For the Year Ended December 31, 2020
(in thousands)	Commercial Real Estate- Land and Construction			Commercial Real Estate- Improved Property			Commercial & Industrial			Residential Real Estate			Home Equity			Consumer			Deposit Overdrafts			Total
Balance at beginning of year:
Allowance for credit losses - loans	$	4,949		$	20,293		$	14,116		$	4,311		$	4,422		$	2,951		$	1,387		$	52,429
Allowance for credit losses - loan commitments		235			22			311			15			250			41			—			874
Total beginning allowance for credit losses - loans and loan commitments		5,184			20,315			14,427			4,326			4,672			2,992			1,387			53,303
Impact of adopting ASC 326		1,524			13,078			22,357			5,630			(3,936	)		2,576			213			41,442
Provision for credit losses:
Provision for loan losses		6,929			78,210			3,918			9,065			1,234			2,980			(376	)		101,960
Provision for loan commitments		3,671			712			693			560			30			19			—			5,685
Total provision for credit losses - loans and loan commitments		10,600			78,922			4,611			9,625			1,264			2,999			(376	)		107,645
Charge-offs		(51	)		(1,747	)		(3,727	)		(1,415	)		(969	)		(3,615	)		(1,011	)		(12,535	)
Recoveries		92			796			1,457			640			501			1,574			426			5,486
Net recoveries (charge-offs)		41			(951	)		(2,270	)		(775	)		(468	)		(2,041	)		(585	)		(7,049	)
Balance at end of period:
Allowance for credit losses - loans		10,841			110,652			37,850			17,851			1,487			6,507			639			185,827
Allowance for credit losses - loan commitments		6,508			712			1,275			955			45			19			—			9,514
Total ending allowance for credit losses - loans and loan commitments	$	17,349		$	111,364		$	39,125		$	18,806		$	1,532		$	6,526		$	639		$	195,341


	For the Year Ended December 31, 2019
(in thousands)	Commercial Real Estate- Land and Construction			Commercial Real Estate- Improved Property			Commercial & Industrial			Residential Real Estate			Home Equity			Consumer			Deposit Overdrafts			Total
Balance at beginning of year:
Allowance for loan losses	$	4,039		$	20,848		$	12,114		$	3,822		$	4,356		$	2,797		$	972		$	48,948
Allowance for loan commitments		169			33			262			12			226			39			—			741
Total beginning allowance for credit losses		4,208			20,881			12,376			3,834			4,582			2,836			972			49,689
Provision for credit losses:
Provision for loan losses		746			2,560			2,714			1,400			851			1,130			1,664			11,065
Provision for loan commitments		66			(11	)		49			3			24			2			—			133
Total provision for credit losses		812			2,549			2,763			1,403			875			1,132			1,664			11,198
Charge-offs		(107	)		(3,867	)		(1,816	)		(1,276	)		(1,213	)		(2,719	)		(1,659	)		(12,657	)
Recoveries		271			752			1,104			365			428			1,743			410			5,073
Net recoveries (charge-offs)		164			(3,115	)		(712	)		(911	)		(785	)		(976	)		(1,249	)		(7,584	)
Balance at end of period:
Allowance for loan losses		4,949			20,293			14,116			4,311			4,422			2,951			1,387			52,429
Allowance for loan commitments		235			22			311			15			250			41			—			874
Total ending allowance for credit losses	$	5,184		$	20,315		$	14,427		$	4,326		$	4,672		$	2,992		$	1,387		$	53,303

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


	Allowance for Credit Losses and Recorded Investment in Loans
(in thousands)	Commercial Real Estate- Land and Construction		Commercial Real Estate- Improved Property		Commercial and Industrial		Residential Real Estate		Home Equity		Consumer		Deposit Overdrafts		Total
December 31, 2021
Allowance for credit losses:
Loans individually-evaluated	$	381	$	8,560	$	333	$	—	$	—	$	—	$	—	$	9,274
Loans collectively-evaluated		6,929		56,795		26,542		15,401		724		3,737		2,220		112,348
Loan commitments		4,180		201		1,497		1,576		49		272		—		7,775
Total allowance for credit losses - loans and commitments	$	11,490	$	65,556	$	28,372	$	16,977	$	773	$	4,009	$	2,220	$	129,397

Portfolio loans:
Individually-evaluated for credit losses(1)	$	1,248	$	66,635	$	576	$	—	$	—	$	—	$	—	$	68,459
Collectively-evaluated for credit losses		832,632		4,638,453		1,589,744		1,721,378		605,682		277,130		—		9,665,019
Total portfolio loans	$	833,880	$	4,705,088	$	1,590,320	$	1,721,378	$	605,682	$	277,130	$	—	$	9,733,478

December 31, 2020
Allowance for credit losses:
Loans individually-evaluated	$	602	$	4,196	$	1,484	$	—	$	—	$	—	$	—	$	6,282
Loans collectively-evaluated		10,239		106,456		36,366		17,851		1,487		6,507		639		179,545
Loan commitments		6,508		712		1,275		955		45		19		-		9,514
Total allowance for credit losses - loans and commitments	$	17,349	$	111,364	$	39,125	$	18,806	$	1,532	$	6,526	$	639	$	195,341

Portfolio loans:
Individually-evaluated for credit losses(1)	$	1,455	$	40,372	$	2,863	$	—	$	—	$	—	$	—	$	44,690
Collectively-evaluated for credit losses		666,822		4,996,743		2,404,575		1,720,961		646,387		309,055		—		10,744,543
Total portfolio loans	$	668,277	$	5,037,115	$	2,407,438	$	1,720,961	$	646,387	$	309,055	$	—	$	10,789,233

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

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

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

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

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

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

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


	Commercial Loans by Internally Assigned Risk Grade
(in thousands)	Commercial Real Estate- Land and Construction		Commercial Real Estate- Improved Property		Commercial & Industrial		Total Commercial Loans
As of December 31, 2021
Pass	$	823,316	$	4,400,872	$	1,540,569	$	6,764,757
Criticized—compromised		7,955		222,830		17,733		248,518
Classified—substandard		2,609		81,386		32,018		116,013
Classified—doubtful		—		—		—		—
Total	$	833,880	$	4,705,088	$	1,590,320	$	7,129,288

As of December 31, 2020
Pass	$	657,435	$	4,609,726	$	2,350,724	$	7,617,885
Criticized—compromised		7,397		320,301		34,597		362,295
Classified—substandard		3,445		107,088		22,117		132,650
Classified—doubtful		—		—		—		—
Total	$	668,277	$	5,037,115	$	2,407,438	$	8,112,830

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 $30.2 million at December 31, 2021 and $27.7 million at December 31, 2020, of which $7.4 million and $4.1 million were accruing, for each period, respectively. These loans are not included in the tables above. In addition, $21.7 million and $28.7 million of unfunded criticized and classified commercial loan commitments are not included in the tables above for December 31, 2021 and 2020, respectively.

Acquired OLBK Loans —In conjunction with the OLBK acquisition, Wesbanco acquired loans with a book value of $2,570.0 million as of November 22, 2019. These loans were recorded at the preliminary fair value of $2,514.1 million, with $2,544.4 million categorized as ASC 310-20 loans, of which $56.6 million of loans were sold during the first quarter of 2020 for $36.4 million. For the loans sold, the acquisition date fair value was adjusted to the sale price resulting in no recognized gain or loss. The fair market value adjustment on these retained loans of $28.9 million at acquisition date will be recognized into interest income on a level yield basis over the remaining expected life of the loans. Loans acquired with deteriorated credit quality (ASC 310-30) with a book value of $25.6 million were recorded at a fair value of $18.7 million, of which $4.0 million were accounted for under the cost recovery method as cash flows could not be reasonably estimated, and therefore they are categorized as non-accrual. Upon adoption of CECL on January 1, 2020, $6.1 million of credit mark on OLBK PCD loans was reclassified to allowance for credit losses. At December 31, 2021, the remaining allowance for credit losses on individually analyzed OLBK-acquired loans was $3.7 million. The carrying amount of loans acquired with deteriorated credit quality at December 31, 2021 was $13.6 million, while the outstanding customer balance was $13.8 million, and included $1.1 million of non-performing loans.

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


	Age Analysis of Loans
(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 December 31, 2021
Commercial real estate:
Land and construction	$	833,755	$	—	$	—	$	125	$	125	$	833,880	$	51
Improved property		4,681,028		6,377		7,728		9,955		24,060		4,705,088		3,042
Total commercial real estate		5,514,783		6,377		7,728		10,080		24,185		5,538,968		3,093
Commercial and industrial		1,583,347		2,275		1,213		3,485		6,973		1,590,320		559
Residential real estate		1,702,587		2,331		3,254		13,206		18,791		1,721,378		2,840
Home equity		599,189		2,240		602		3,651		6,493		605,682		685
Consumer		273,577		1,532		1,208		813		3,553		277,130		627
Total portfolio loans		9,673,483		14,755		14,005		31,235		59,995		9,733,478		7,804
Loans held for sale		25,277		—		—		—		—		25,277		—
Total loans	$	9,698,760	$	14,755	$	14,005	$	31,235	$	59,995	$	9,758,755	$	7,804

Nonperforming loans included above are as follows:
Non-accrual loans	$	11,174	$	914	$	564	$	23,090		24,568	$	35,742
TDRs accruing interest (1)		3,275		3		127		341		471		3,746
Total non-performing	$	14,449	$	917	$	691	$	23,431	$	25,039	$	39,488

As of December 31, 2020
Commercial real estate:
Land and construction	$	664,990	$	582	$	2,276	$	429	$	3,287	$	668,277	$	288
Improved property		5,016,812		4,876		4,118		11,309		20,303		5,037,115		2,713
Total commercial real estate		5,681,802		5,458		6,394		11,738		23,590		5,705,392		3,001
Commercial and industrial		2,395,844		4,372		2,197		5,025		11,594		2,407,438		1,899
Residential real estate		1,698,636		2,614		5,654		14,057		22,325		1,720,961		2,863
Home equity		639,319		2,414		775		3,879		7,068		646,387		706
Consumer		305,483		1,998		1,031		543		3,572		309,055		377
Total portfolio loans		10,721,084		16,856		16,051		35,242		68,149		10,789,233		8,846
Loans held for sale		168,378		—		—		—		—		168,378		—
Total loans	$	10,889,462	$	16,856	$	16,051	$	35,242	$	68,149	$	10,957,611	$	8,846

Nonperforming loans included above are as follows:
Non-accrual loans	$	9,560	$	630	$	466	$	26,224		27,320	$	36,880
TDRs accruing interest (1)		3,540		63		152		172		387		3,927
Total non-performing	$	13,100	$	693	$	618	$	26,396	$	27,707	$	40,807

(1)

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

The following tables summarize nonperforming loans:


	Nonperforming Loans
	December 31, 2021						December 31, 2020
(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	$	74	$	73	$	—	$	469	$	469	$	—
Improved property		9,846		8,089		—		9,597		8,055	—
Commercial and industrial		6,528		5,256		—		4,401		3,413	—
Residential real estate		25,492		20,065		—		23,055		20,704	—
Home equity		6,985		5,440		—		6,635		5,708	—
Consumer		869		565		—		602		364	—
Total nonperforming loans without a specific allowance		49,794		39,488		—		44,759		38,713		—
With a specific allowance recorded:
Commercial real estate:
Land and construction		—		—		—	—		—		—
Improved property		—		—		—		2,094		2,094		136
Commercial and industrial		—		—		—	—		—		—
Residential real estate		—		—		—	—		—		—
Home equity		—		—		—	—		—		—
Consumer		—		—		—	—		—		—
Total nonperforming loans with a specific allowance		—		—		—		2,094		2,094		136
Total nonperforming loans	$	49,794	$	39,488	$	—	$	46,853	$	40,807	$	136

(1)

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


	Nonperforming Loans
	For the Year Ended December 31, 2021				For the Year Ended December 31, 2020				For the Year Ended December 31, 2019
(in thousands)	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
With no related specific allowance recorded:
Commercial real estate:
Land and construction	$	176	$	—	$	571	$	—	$	343	$	—
Improved property		7,207		32		7,193		61		7,216		84
Commercial and industrial		4,077		11		5,256		7		5,207		15
Residential real estate		20,971		155		19,651		168		14,192		211
Home equity		5,561		13		5,806		22		4,930		28
Consumer		420		3		377		2		423		3
Total nonperforming loans without a specific allowance		38,413		214		38,854		260		32,311		341
With a specific allowance recorded:
Commercial real estate:
Land and construction		—		—		—		—		—		—
Improved property		1,669		—		2,672		—		3,317		—
Commercial and industrial		—		—		38		—		175		—
Residential real estate		—		—		878		—		3,811		—
Home equity		—		—		141		—		634		—
Consumer		—		—		11		—		58		—
Total nonperforming loans with a specific allowance		1,669		—		3,740		—		7,995		—
Total nonperforming loans	$	40,082	$	214	$	42,594	$	260	$	40,306	$	341

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


	Non-accrual Loans (1)
(in thousands)	December 31, 2021		December 31, 2020
Commercial real estate:
Land and construction	$	73	$	469
Improved property		7,715		9,494
Total commercial real estate		7,788		9,963
Commercial and industrial		5,064		3,302
Residential real estate		17,190		17,925
Home equity		5,163		5,345
Consumer		537		345
Total	$	35,742	$	36,880

(1)

At December 31, 2021, there were three borrowers with loan balances greater than $1.0 million totaling $4.1 million, as compared to one borrower with a loan balance greater than $1.0 million totaling $2.1 million at December 31, 2020. Total non-accrual loans include loans that are also TDRs. Such loans are also set forth in the following table as non-accrual TDRs.


	TDRs
	December 31, 2021						December 31, 2020
(in thousands)	Accruing		Non-Accrual		Total		Accruing		Non-Accrual		Total
Commercial real estate:
Land and construction	$	—	$	—	$	—	$	—	$	—	$	—
Improved property		374		133		507		655		165		820
Total commercial real estate		374		133		507		655		165		820
Commercial and industrial		192		—		192		111		—		111
Residential real estate		2,875		1,156		4,031		2,779		1,354		4,133
Home equity		277		258		535		363		300		663
Consumer		28		—		28		19		9		28
Total	$	3,746	$	1,547	$	5,293	$	3,927	$	1,828	$	5,755

As of December 31, 2021 and December 31, 2020, there were no 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 six months. Wesbanco had unfunded commitments to debtors whose loans were classified as nonperforming of $0.1 million and $0.9 million as of December 31, 2021 and 2020, respectively.

The following table presents details related to loans identified as TDRs during the years ended December 31, 2021 and 2020:


	New TDRs (1) For the Year Ended December 31, 2021						New TDRs (1) For the Year Ended December 31, 2020
(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		—	$	—	$	—		—	$	—	$	—
Improved property		—		—		—		—		—		—
Total commercial real estate		—		—		—		—		—		—
Commercial and industrial		1		178		172		—		—		—
Residential real estate		1		103		100		3		360		350
Home equity		1		57		54		4		93		86
Consumer		—		—		—		1		7		7
Total		3	$	338	$	326		8	$	460	$	443

(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.

The following table summarizes TDRs which defaulted (defined as past due 90 days) during the years ended December 31, 2021 and 2020 that were restructured within the last twelve months prior to December 31, 2021 and 2020:


	Defaulted TDRs (1) For the Year Ended December 31, 2021				Defaulted TDRs (1) For the Year Ended December 31, 2020
(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		1		234		1		155
Home equity		—		—		—		—
Consumer		—		—		—		—
Total		1	$	234		1	$	155

(1)

Excludes loans that were either charged-off or cured by period end. The recorded investment is as of December 31, 2021 and 2020.

TDRs that default are placed on non-accrual status unless they are both well-secured and in the process of collection. The loans in the table above were not accruing interest.

Section 4013 of the CARES Act allows financial institutions the option to temporarily suspend certain requirements under GAAP related to TDRs for a limited period of time during the COVID-19 pandemic. These customers must meet certain criteria, such as they were in good standing and not more than 30 days past due either as of December 31, 2019, or as of the implementation of the modification program under the Interagency Statement, as well as other requirements noted in the regulatory agencies’ revised statement. Based on this guidance, Wesbanco does not classify the COVID-19 loan modifications as TDRs, nor are the customers considered past due with regard to their delayed payments. Upon exiting the loan modification deferral program, the measurement of loan delinquency will resume where it left off upon entry into the program. Under the CARES Act, Wesbanco has modified approximately 3,553 loans totaling $2.2 billion, of which $51.8 million remain in their deferral period as of December 31, 2021. Wesbanco originally offered three to six months of deferred payments to commercial and retail customers impacted by the COVID-19 pandemic depending on the type of loan and the industry for commercial loans. In the fourth quarter of 2020, Wesbanco offered up to an additional twelve months of deferred payments to certain commercial loan customers, predominantly in the hospitality industry, based on specific criteria related to the borrower, the underlying property and the potential for guarantors / co-borrowers. On December 27, 2020, the Economic Aid Act was signed into law and among other things, extended the relief granted by the CARES Act for TDRs, initially slated to end on December 31, 2020, by one year to December 31, 2021.

The following table summarizes the recognition of interest income on nonperforming loans:


	For the years ended December 31,
(in thousands)	2021		2020		2019
Average nonperforming loans	$	40,082	$	42,594	$	40,306
Amount of contractual interest income on nonperforming loans		1,213		2,827		3,047
Amount of interest income recognized on nonperforming loans		214		260		341

The following table summarizes amortized cost basis loan balances by year of origination and credit quality indicator.


	Loans As of December 31, 2021
	Amortized Cost Basis by Origination Year
(in thousands)	2021		2020		2019		2018		2017		Prior		Revolving Loans Amortized Cost Basis		Revolving Loans Converted to Term		Total
Commercial real estate: land and construction
Risk rating:
Pass	$	135,179	$	217,389	$	198,974	$	117,157	$	27,186	$	29,696	$	35,059	$	62,676	$	823,316
Criticized - compromised		85		6,236		-		33		-		219		856		526		7,955
Classified - substandard		—		73		-		—		-		1,280		—		1,256		2,609
Classified - doubtful		—		—		—		—		—		—		—		—		—
Total	$	135,264	$	223,698	$	198,974	$	117,190	$	27,186	$	31,195	$	35,915	$	64,458	$	833,880

Commercial real estate: improved property
Risk rating:
Pass	$	713,697	$	660,856	$	589,674	$	405,689	$	404,241	$	1,539,275	$	58,933	$	28,507	$	4,400,872
Criticized - compromised		7,755		15,195		52,859		17,697		14,490		99,687		1,414		13,733		222,830
Classified - substandard		9,355		2,686		4,855		3,730		11,010		49,667		34		49		81,386
Classified - doubtful		—		—		—		—		—		—		—		—		—
Total	$	730,807	$	678,737	$	647,388	$	427,116	$	429,741	$	1,688,629	$	60,381	$	42,289	$	4,705,088

Commercial and industrial
Risk rating:
Pass	$	406,495	$	159,878	$	99,472	$	136,146	$	89,049	$	223,514	$	409,789	$	16,226	$	1,540,569
Criticized - compromised		590		551		693		2,558		1,645		1,278		5,389		5,029		17,733
Classified - substandard		134		236		18,465		766		2,139		1,419		3,723		5,136		32,018
Classified - doubtful		—		—		—		—		—		—		—		—		—
Total	$	407,219	$	160,665	$	118,630	$	139,470	$	92,833	$	226,211	$	418,901	$	26,391	$	1,590,320

Residential real estate
Loan delinquency:
Current	$	599,244	$	292,653	$	116,147	$	71,253	$	56,917	$	536,444	$	—	$	29,929	$	1,702,587
30-59 days past due		1,127		—		—		69		105		1,030		—		—		2,331
60-89 days past due		563		91		—		271		43		2,286		—		—		3,254
90 days or more past due		1,933		673		895		88		762		8,802		—		53		13,206
Total	$	602,867	$	293,417	$	117,042	$	71,681	$	57,827	$	548,562	$	—	$	29,982	$	1,721,378

Home equity
Loan delinquency:
Current	$	10,076	$	835	$	649	$	379	$	566	$	18,064	$	567,478	$	1,142	$	599,189
30-59 days past due		—		84		45		128		50		628		1,247		58		2,240
60-89 days past due		—		—		132		15		188		267		-		-		602
90 days or more past due		187		88		119		112		234		2,550		-		361		3,651
Total	$	10,263	$	1,007	$	945	$	634	$	1,038	$	21,509	$	568,725	$	1,561	$	605,682

Consumer
Loan delinquency:
Current	$	60,907	$	43,871	$	50,317	$	19,289	$	11,084	$	32,343	$	55,739	$	27	$	273,577
30-59 days past due		435		370		214		136		85		241		51		—		1,532
60-89 days past due		413		375		82		19		33		286		-		—		1,208
90 days or more past due		115		141		222		65		1		265		4		—		813
Total	$	61,870	$	44,757	$	50,835	$	19,509	$	11,203	$	33,135	$	55,794	$	27	$	277,130


	Loans As of December 31, 2020
	Amortized Cost Basis by Origination Year
(in thousands)	2020		2019		2018		2017		2016		Prior		Revolving Loans Amortized Cost Basis		Revolving Loans Converted to Term		Total
Commercial real estate: land and construction
Risk rating:
Pass	$	133,720	$	314,614	$	109,232	$	27,483	$	16,404	$	29,685	$	26,297	$	—	$	657,435
Criticized - compromised		459		—		1,532		233		79		3,778		1,316		—		7,397
Classified - substandard		—		—		403		58		291		2,693		—		—		3,445
Classified - doubtful		—		—		—		—		—		—		—		—		—
Total	$	134,179	$	314,614	$	111,167	$	27,774	$	16,774	$	36,156	$	27,613	$	—	$	668,277

Commercial real estate: improved property
Risk rating:
Pass	$	809,516	$	670,554	$	646,629	$	474,622	$	572,733	$	1,346,552	$	89,120	$	—	$	4,609,726
Criticized - compromised		2,693		67,261		16,793		59,251		42,284		130,247		1,772		—		320,301
Classified - substandard		102		16,366		4,946		11,647		18,460		55,567		—		—		107,088
Classified - doubtful		—		—		—		—		—		—		—		—		—
Total	$	812,311	$	754,181	$	668,368	$	545,520	$	633,477	$	1,532,366	$	90,892	$	—	$	5,037,115

Commercial and industrial
Risk rating:
Pass	$	977,085	$	240,262	$	193,712	$	160,924	$	85,379	$	265,890	$	427,336	$	136	$	2,350,724
Criticized - compromised		453		2,726		4,206		2,795		324		11,640		12,453		—		34,597
Classified - substandard		—		3,817		1,947		3,771		1,603		5,073		5,906		—		22,117
Classified - doubtful		—		—		—		—		—		—		—		—		—
Total	$	977,538	$	246,805	$	199,865	$	167,490	$	87,306	$	282,603	$	445,695	$	136	$	2,407,438

Residential real estate
Loan delinquency:
Current	$	385,541	$	242,770	$	149,603	$	108,090	$	170,967	$	641,665	$	—	$	—	$	1,698,636
30-59 days past due		—		—		320		533		—		1,761		—		—		2,614
60-89 days past due		—		—		823		—		185		4,646		—		—		5,654
90 days or more past due		—		483		166		761		819		11,828		—		—		14,057
Total	$	385,541	$	243,253	$	150,912	$	109,384	$	171,971	$	659,900	$	—	$	—	$	1,720,961

Home equity
Loan delinquency:
Current	$	18,191	$	3,611	$	3,334	$	975	$	1,110	$	16,477	$	583,486	$	12,135	$	639,319
30-59 days past due		124		—		34		—		—		882		1,247		127		2,414
60-89 days past due		—		—		—		—		—		14		749		12		775
90 days or more past due		—		—		8		156		88		1,786		1,075		766		3,879
Total	$	18,315	$	3,611	$	3,376	$	1,131	$	1,198	$	19,159	$	586,557	$	13,040	$	646,387

Consumer
Loan delinquency:
Current	$	72,847	$	89,637	$	39,584	$	22,118	$	13,144	$	45,735	$	22,253	$	165	$	305,483
30-59 days past due		481		408		210		311		194		379		15		—		1,998
60-89 days past due		273		147		84		100		163		253		11		—		1,031
90 days or more past due		113		72		73		31		12		242		—		—		543
Total	$	73,714	$	90,264	$	39,951	$	22,560	$	13,513	$	46,609	$	22,279	$	165	$	309,055

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


	December 31,
(in thousands)	2021		2020
Other real estate owned	$	—	$	504
Repossessed assets		—		45
Total other real estate owned and repossessed assets	$	—	$	549

Residential real estate included in other real estate owned at December 31, 2021 and December 31, 2020 was $0 and $0.1 million, respectively. At December 31, 2021 and 2020, formal foreclosure proceedings were in process on residential real estate loans totaling $4.0 million and $1.8 million, respectively. As a result of provisions of the CARES Act, certain residential real estate loans are temporarily suspended from entering foreclosure proceedings. The balance of these loans totaled $0.8 million and $2.3 million at December 31, 2021 and December 31, 2020, respectively.