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Income Taxes | 12 Months Ended
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Dec. 31, 2022
Income Tax Disclosure [Abstract] |
Income Taxes | NOTE 15. INCOME TAXES On March 27, 2020, the CARES Act was signed into law. The Act provided for the opportunity to carryback certain federal net operating losses up to five years. Wesbanco’s net operating losses had previously been recorded at the current statutory rate of 21%. As a result of the CARES Act, Wesbanco recorded an income tax benefit of $0.2 million in 2020 in recognition of the rate differential between the current statutory rate and the rate in effect for which year the net operating loss will be carried back. Reconciliation from the federal statutory income tax rate to the effective tax rate is as follows:
|  | For the Years Ended December 31, |
|  | 2022 |  |  | 2021 |  |  | 2020 |
Federal statutory tax rate |  |  | 21.0 | % |  |  | 21.0 | % |  |  | 21.0 | %
Net tax-exempt interest income on securities and loans of state and political subdivisions |  |  | (2.6 | %) |  |  | (1.8 | %) |  |  | (4.2 | %)
State income taxes, net of federal tax effect |  |  | 3.1 | % |  |  | 2.3 | % |  |  | 1.9 | %
Bank-owned life insurance |  |  | (1.0 | %) |  |  | (0.6 | %) |  |  | (1.1 | %)
General business credits |  |  | (3.0 | %) |  |  | (1.9 | %) |  |  | (3.7 | %)
All other—net |  |  | 1.2 | % |  |  | 0.7 | % |  |  | 2.0 | %
Effective tax rate |  |  | 18.7 | % |  |  | 19.7 | % |  |  | 15.9 | %
The provision for income taxes applicable to income before taxes consists of the following:
|  | For the Years Ended December 31, |
(in thousands) |  | 2022 |  |  | 2021 |  |  | 2020 |
Current: |  |  |  |  |  |  |  |  |
Federal |  | $ | 31,560 |  |  | $ | 33,042 |  |  | $ | 27,924 |
State |  |  | 8,239 |  |  |  | 7,655 |  |  |  | 5,629 |
Deferred: |  |  |  |  |  |  |  |  |
Federal |  |  | 3,560 |  |  |  | 17,679 |  |  |  | (8,418 | )
State |  |  | 929 |  |  |  | 1,213 |  |  |  | (2,100 | )
Total |  | $ | 44,288 |  |  | $ | 59,589 |  |  | $ | 23,035 |
The following income tax amounts were recorded in shareholders’ equity as elements of other comprehensive income:
(in thousands) |  | 2022 |  |  | 2021 |  |  | 2020 |
Securities and defined benefit pension plan unrecognized items |  | $ | (82,295 | ) |  | $ | (11,322 | ) |  | $ | 9,730 |
Deferred tax assets and liabilities consist of the following:
|  | December 31, |
(in thousands) |  | 2022 |  |  | 2021 |  |  | 2020 |
Deferred tax assets: |  |  |  |  |  |  |  |  |
Allowance for credit losses |  | $ | 28,535 |  |  | $ | 29,208 |  |  | $ | 44,859 |
Compensation and benefits |  |  | — |  |  |  | 1,154 |  |  |  | 6,894 |
Security gains |  |  | 1,472 |  |  |  | 1,565 |  |  |  | 2,113 |
Non-accrual interest income |  |  | 848 |  |  |  | 766 |  |  |  | 1,135 |
Partnership adjustments |  |  | 338 |  |  |  | — |  |  |  | — |
Net operating loss carryforwards |  |  | 5,685 |  |  |  | 6,480 |  |  |  | 5,472 |
Fair value adjustments on securities available-for-sale |  |  | 83,734 |  |  |  | 1,484 |  |  |  | — |
Lease accrual |  |  | 10,410 |  |  |  | 11,399 |  |  |  | 13,530 |
Other |  |  | 3,732 |  |  |  | 4,617 |  |  |  | 5,441 |
Gross deferred tax assets |  |  | 134,754 |  |  |  | 56,673 |  |  |  | 79,444 |
Deferred tax liabilities: |  |  |  |  |  |  |  |  |
Depreciation and amortization |  |  | (4,786 | ) |  |  | (3,748 | ) |  |  | (3,414 | )
Accretion on securities |  |  | (383 | ) |  |  | (251 | ) |  |  | (274 | )
Deferred fees and costs |  |  | (3,289 | ) |  |  | (2,368 | ) |  |  | (3,018 | )
Purchase accounting adjustments |  |  | (9,594 | ) |  |  | (9,996 | ) |  |  | (8,669 | )
Compensation and benefits |  |  | (47 | ) |  |  | — |  |  |  | — |
Fair value adjustments on securities available-for-sale |  |  | — |  |  |  | — |  |  |  | (14,865 | )
Partnership adjustments |  |  | — |  |  |  | (127 | ) |  |  | (555 | )
Lease - right of use assets |  |  | (9,391 | ) |  |  | (10,342 | ) |  |  | (12,438 | )
Other |  |  | (763 | ) |  |  | (1,144 | ) |  |  | (168 | )
Gross deferred tax liabilities |  |  | (28,253 | ) |  |  | (27,976 | ) |  |  | (43,401 | )
Net deferred tax assets |  | $ | 106,501 |  |  | $ | 28,697 |  |  | $ | 36,043 |
No valuation allowance was established for any deferred tax assets, since management believes that deferred tax assets are likely to be realized through future reversals of existing taxable temporary differences and future taxable income. As a result of the acquisition of YCB in 2016 and OLBK in 2019, Wesbanco has federal net operating loss (“NOL”) carryforwards of $22.4 million, which expire beginning in 2034 and 2037; respectively. Wesbanco has Maryland NOL carryforwards of $4.6 million, which begin expiring in 2029. Wesbanco has Kentucky NOL carryforwards of $23.1 million, which begin expiring in 2028. The use of the federal NOL and other carryforwards are limited by Internal Revenue Code Section 382, but they are currently expected to be utilized before their respective expiration dates. As a result of the previous acquisitions of YCB, ESB Financial Corporation, Fidelity Bancorp, Inc., Western Ohio Financial Corporation, Winton Financial Corporation and Oak Hill Financial, Inc., retained earnings at both December 31, 2022 and 2021 included $45.9 million of qualifying and non-qualifying tax bad debt reserves existing as of December 31, 1987, upon which no provision for income taxes has been recorded. The related amount of unrecognized deferred tax liability is $10.5 million for 2022 and $10.8 million for 2021. If this portion of retained earnings is used in the future for any purpose other than to absorb bad debts, it would be added to future taxable income. Federal and state income taxes applicable to securities transactions totaled ($0.4) million, $0.2 million and $1.0 million for the years ended December 31, 2022, 2021 and 2020, respectively. Wesbanco had $0.2 million of unrecognized tax benefits and interest as of both December 31, 2022 and 2021, respectively. As of December 31, 2022, $0.2 million of these tax benefits would affect the effective tax rate if recognized. At December 31, 2022 and December 31, 2021, accrued interest related to uncertain tax positions was immaterial. Wesbanco provides for interest and penalties related to uncertain tax positions as part of its provision for federal and state income taxes. Wesbanco is subject to U.S. federal income tax as well as to tax in various state income tax jurisdictions. Wesbanco and its prior acquired companies are no longer subject to any income tax examinations for years prior to 2019. Unrecognized Tax Benefits A reconciliation of the beginning and ending amount of unrecognized tax benefits (excluding interest and the federal income tax benefit of unrecognized state tax benefits) is as follows:
|  | For the Years Ended December 31, |
(in thousands) |  | 2022 |  |  | 2021 |  |  | 2020 |
Balance at beginning of year |  | $ | 226 |  |  | $ | 324 |  |  | $ | 434 |
Additions based on tax positions related to the current year |  |  | — |  |  |  | 3 |  |  |  | — |
Reductions due to the statute of limitations |  |  | (68 | ) |  |  | (101 | ) |  |  | (110 | )
Balance at end of year |  | $ | 158 |  |  | $ | 226 |  |  | $ | 324 |

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- Definition The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 21 -URI https://asc.fasb.org/extlink&oid=121826272&loc=d3e32857-109319 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 2 -Subparagraph (SAB Topic 11.C) -URI https://asc.fasb.org/extlink&oid=122134291&loc=d3e330215-122817 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 17 -Subparagraph (b) -URI https://asc.fasb.org/extlink&oid=121826272&loc=d3e32809-109319 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SAB TOPIC 6.I.5.Q1) -URI https://asc.fasb.org/extlink&oid=122134291&loc=d3e330036-122817 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 14 -URI https://asc.fasb.org/extlink&oid=121826272&loc=d3e32705-109319 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 270 -Section 50 -Paragraph 1 -URI https://asc.fasb.org/extlink&oid=6424409&loc=d3e44925-109338 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI https://asc.fasb.org/topic&trid=2144680 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 30 -Section 50 -Paragraph 2 -Subparagraph (a) -URI https://asc.fasb.org/extlink&oid=6424122&loc=d3e41874-109331 Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08(h)(2)) -URI https://asc.fasb.org/extlink&oid=120395691&loc=d3e23780-122690 + Details
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