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Wesbanco Bank Community Development Corporation | 12 Months Ended
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Dec. 31, 2022
Organization, Consolidation and Presentation of Financial Statements [Abstract] |
Wesbanco Bank Community Development Corporation | NOTE 19. WESBANCO BANK COMMUNITY DEVELOPMENT CORPORATION Wesbanco Bank Community Development Corporation (“WBCDC”), a consolidated subsidiary of Wesbanco Bank, is a Certified Development Entity (“CDE”) with $125.0 million of New Markets Tax Credits (“NMTC”) all of which had been invested in WBCDC at December 31, 2022. The NMTC program is administered by the Community Development Financial Institutions Fund of the U.S. Treasury and is aimed at stimulating economic and community development and job creation in low-income communities. The program provides federal tax credits to investors who make qualified equity investments (“QEIs”) in a CDE. The CDE is required to invest the proceeds of each QEI in low-income communities, which are generally defined as those census tracts with poverty rates greater than 20% and/or median family incomes that are less than or equal to 80% of the area median family income. The credit provided to the investor totals 39% of each QEI in a CDE and is claimed over a seven-year credit allowance period. In each of the first three years, the investor receives a credit equal to 5% of the total amount the investor paid to the CDE for each QEI. For each of the remaining four years, the investor receives a credit equal to 6% of the total amount the investor paid to the CDE for each QEI. As of December 31, 2022, Wesbanco has received $32.8 million in tax credits over the seven-year credit allowance periods for its $125.0 million NMTC authority invested in WBCDC. Wesbanco is eligible to receive an additional $16.0 million in tax credits with respect to aggregate QEI amounts invested over their remaining credit allowance period. Wesbanco Bank recognized $3.5 million, $2.6 million and $2.0 million in NMTC in its income tax provision for the years ended December 31, 2022, 2021 and 2020, respectively. These tax credits are subject to certain general business tax credit limitations and are therefore limited in deductibility on Wesbanco’s federal income tax return. As of December 31, 2022, no prior NMTC has been carried forward to future tax years. The NMTC claimed by Wesbanco Bank with respect to each QEI remain subject to recapture over each QEI’s credit allowance period upon the occurrence of any of the following: • if less than substantially all (generally defined as 85%) of the QEI proceeds are not used by WBCDC to make qualified low-income community investments; • WBCDC ceases to be a CDE; or • WBCDC redeems its QEI investment prior to the end of the current credit allowance periods. As of December 31, 2022, 2021 and 2020, none of the above recapture events had occurred, nor in the opinion of management are such events anticipated to occur in the foreseeable future. Approximately half of the tax credits are no longer subject to recapture. For the years ended December 31, 2022 and 2021, respectively, WBCDC recognized net (losses) gains of ($1.0) million and $3.8 million on an investment that it made in a start-up firm more than ten years ago that was acquired in 2021 by a public company. This gain is reported on the Consolidated Income Statements within net gain (loss) on other real estate owned and other assets. The following condensed financial statements summarize the financial position of WBCDC as of December 31, 2022, and the results of its operations and cash flows for the year ended December 31, 2022: BALANCE SHEET
(in thousands) |  | December 31, 2022 |
Assets |  |  |
Cash and due from banks |  | $ | 79,979 |
Loans, net of allowance for credit losses of $0.8 million |  |  | 61,214 |
Other assets |  |  | 3,494 |
Total Assets |  | $ | 144,687 |
Liabilities |  | $ | 1,117 |
Shareholder Equity |  |  | 143,570 |
Total Liabilities and Shareholder Equity |  | $ | 144,687 |
STATEMENT OF INCOME
(in thousands) |  | For the Year Ended December 31, 2022 |
Interest income |  |  |
Loans |  | $ | 1,360 |
Total interest income |  |  | 1,360 |
Provision for credit losses |  |  | (43 | )
Net interest income after provision for credit losses |  |  | 1,403 |
Loss on investments |  |  | (1,044 | )
Non-interest expense |  |  | 298 |
Income before provision for income taxes |  |  | 61 |
Provision for income taxes |  |  | (47 | )
Net income |  | $ | 108 |
STATEMENT OF CASH FLOWS
(in thousands) |  | For the Year Ended December 31, 2022 |
Operating Activities |  |  |
Net income |  | $ | 108 |
Provision for credit losses |  |  | (43 | )
Loss on investments |  |  | 1,044 |
Net change in other assets |  |  | (1,687 | )
Net change in other liabilities |  |  | 197 |
Net cash used in operating activities |  |  | (381 | )
Investing Activities |  |  |
Increase in loans |  |  | (4,654 | )
Proceeds from sale of investments |  |  | 4,373 |
Net cash used in investing activities |  |  | (281 | )
Financing Activities |  |  |
Qualified equity investment by parent company |  |  | 12,500 |
Net cash provided by financing activities |  |  | 12,500 |
Net increase in cash and cash equivalents |  |  | 11,838 |
Cash and cash equivalents at beginning of year |  |  | 68,141 |
Cash and cash equivalents at end of year |  | $ | 79,979 |

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