WESBANCO INC Income Taxes Disclosure
NOTE 16. INCOME TAXES
Reconciliation of income tax expense and the effective tax rate is as follows for 2025:
(dollars in thousands) |
|
For The Year Ended December 31, 2025 |
|
|||||
Federal statutory tax rate |
|
$ |
58,640 |
|
|
|
21.0 |
% |
(1) |
|
|
6,672 |
|
|
|
2.4 |
|
Low-income housing and historic tax credits |
|
|
(9,102 |
) |
|
|
(3.3 |
) |
New markets tax credits |
|
|
(3,900 |
) |
|
|
(1.4 |
) |
Nontaxable and nondeductible items: |
|
|
|
|
|
|
||
Net tax-exempt interest income on securities and loans of state and political |
|
|
(5,841 |
) |
|
|
(2.1 |
) |
Bank-owned life insurance |
|
|
(3,171 |
) |
|
|
(1.1 |
) |
Nondeductible expenses |
|
|
3,534 |
|
|
|
1.3 |
|
Other adjustments: |
|
|
|
|
|
|
||
Proportional amortization of investments that generate low-income housing |
|
|
10,941 |
|
|
|
3.9 |
|
Other tax benefits related to investments that generate low-income |
|
|
(2,545 |
) |
|
|
(0.9 |
) |
Other |
|
|
905 |
|
|
|
0.3 |
|
Income tax expense |
|
$ |
56,133 |
|
|
|
20.1 |
% |
(1) The states of West Virginia and Maryland make up the majority (more than 50%) of the total of state taxes.
Reconciliation from the federal statutory income tax rate to the effective tax rate is as follows for 2024 and 2023:
|
|
For the Years Ended |
|
|||||
|
|
2024 |
|
|
2023 |
|
||
Federal statutory tax rate |
|
|
21.0 |
% |
|
|
21.0 |
% |
Net tax-exempt interest income on securities and loans of state and |
|
|
(3.2 |
) |
|
|
(3.1 |
) |
State income taxes, net of federal tax effect |
|
|
2.8 |
|
|
|
3.0 |
|
Bank-owned life insurance |
|
|
(1.1 |
) |
|
|
(1.2 |
) |
General business credits |
|
|
(4.4 |
) |
|
|
(3.9 |
) |
All other—net |
|
|
3.1 |
|
|
|
2.3 |
|
Effective tax rate |
|
|
18.2 |
% |
|
|
18.1 |
% |
The provision for income taxes applicable to income before taxes consists of the following:
|
|
For the Years Ended December 31, |
|
|||||||||
(in thousands) |
|
2025 |
|
|
2024 |
|
|
2023 |
|
|||
Current: |
|
|
|
|
|
|
|
|
|
|||
Federal |
|
$ |
11,719 |
|
|
$ |
30,314 |
|
|
$ |
31,935 |
|
State |
|
|
2,403 |
|
|
|
6,517 |
|
|
|
6,763 |
|
Deferred: |
|
|
|
|
|
|
|
|
|
|||
Federal |
|
|
35,968 |
|
|
|
(3,149 |
) |
|
|
(4,328 |
) |
State |
|
|
6,043 |
|
|
|
(78 |
) |
|
|
647 |
|
Total |
|
$ |
56,133 |
|
|
$ |
33,604 |
|
|
$ |
35,017 |
|
The following income tax amounts were recorded in shareholders’ equity as elements of other comprehensive income:
(in thousands) |
|
2025 |
|
|
2024 |
|
|
2023 |
|
|||
Securities and defined benefit pension plan unrecognized items |
|
$ |
(26,446 |
) |
|
$ |
2,600 |
|
|
$ |
12,369 |
|
The following table presents income taxes paid (net of refunds received):
|
|
For the Year Ended December 31, |
|
|
(in thousands) |
|
2025 |
|
|
U.S. Federal |
|
$ |
26,500 |
|
U.S. state and local |
|
|
|
|
Maryland |
|
|
2,000 |
|
Other |
|
|
3,236 |
|
Total |
|
$ |
31,736 |
|
Deferred tax assets and liabilities consist of the following:
|
|
December 31, |
|
|||||||||
(in thousands) |
|
2025 |
|
|
2024 |
|
|
2023 |
|
|||
Deferred tax assets: |
|
|
|
|
|
|
|
|
|
|||
Allowance for credit losses |
|
$ |
50,480 |
|
|
$ |
33,242 |
|
|
$ |
31,571 |
|
Security gains |
|
|
8,400 |
|
|
|
969 |
|
|
|
1,320 |
|
Non-accrual interest income |
|
|
1,814 |
|
|
|
829 |
|
|
|
833 |
|
Partnership adjustments |
|
|
1,812 |
|
|
|
995 |
|
|
|
553 |
|
Net operating loss carryforwards |
|
|
3,060 |
|
|
|
3,570 |
|
|
|
4,709 |
|
Purchase accounting adjustments |
|
|
36,202 |
|
|
|
— |
|
|
|
— |
|
Fair value adjustments on securities available-for-sale |
|
|
42,559 |
|
|
|
70,793 |
|
|
|
72,932 |
|
Lease accrual |
|
|
10,623 |
|
|
|
9,344 |
|
|
|
11,178 |
|
Other |
|
|
7,102 |
|
|
|
4,323 |
|
|
|
3,963 |
|
Gross deferred tax assets |
|
|
162,052 |
|
|
|
124,065 |
|
|
|
127,059 |
|
Deferred tax liabilities: |
|
|
|
|
|
|
|
|
|
|||
Depreciation and amortization |
|
|
(7,066 |
) |
|
|
(4,796 |
) |
|
|
(5,366 |
) |
Accretion on securities |
|
|
(1,020 |
) |
|
|
(791 |
) |
|
|
(577 |
) |
Deferred fees and costs |
|
|
(4,822 |
) |
|
|
(3,224 |
) |
|
|
(4,107 |
) |
Purchase accounting adjustments |
|
|
— |
|
|
|
(6,959 |
) |
|
|
(8,398 |
) |
Compensation and benefits |
|
|
(378 |
) |
|
|
(1,981 |
) |
|
|
(1,818 |
) |
Lease - right of use assets |
|
|
(8,782 |
) |
|
|
(8,331 |
) |
|
|
(10,173 |
) |
Other |
|
|
(2 |
) |
|
|
— |
|
|
|
(197 |
) |
Gross deferred tax liabilities |
|
|
(22,070 |
) |
|
|
(26,082 |
) |
|
|
(30,636 |
) |
Net deferred tax assets |
|
$ |
139,982 |
|
|
$ |
97,983 |
|
|
$ |
96,423 |
|
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 Your Community Bankshares ("YCB") in 2016, Old Line Bankshares in 2019 and PFC in 2025, Wesbanco has federal net operating loss (“NOL”) carryforwards of $13.5 million, which expire beginning in 2034, 2037 and 2028, respectively. Wesbanco has Maryland NOL carryforwards of $0.8 million, which expires beginning in 2030. Wesbanco has Kentucky NOL carryforwards of $2.3 million, which expires beginning in 2030. 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, Oak Hill Financial, Inc. and PFC, retained earnings at December 31, 2025 and 2024 included $78.0 million and $45.9 million, respectively, 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 $17.8 million and $10.3 million for 2025 and 2024, respectively. 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 $0.8 million, $0.3 million and $0.2 million for the years ended December 31, 2025, 2024 and 2023, respectively.
Wesbanco had $0.3 million and $0.1 million of unrecognized tax benefits and interest as of December 31, 2025 and 2024, respectively. As of December 31, 2025, $0.3 million represented the amount of unrecognized tax benefits that if recognized would favorably affect the effective tax rate in the future. At December 31, 2025 and December 31, 2024, 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 2022.
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) |
|
2025 |
|
|
2024 |
|
|
2023 |
|
|||
Balance at beginning of year |
|
$ |
116 |
|
|
$ |
58 |
|
|
$ |
158 |
|
Additions based on tax positions related to the current year |
|
|
178 |
|
|
|
58 |
|
|
|
20 |
|
Reductions due to the statute of limitations |
|
|
— |
|
|
|
— |
|
|
|
(120 |
) |
Balance at end of year |
|
$ |
294 |
|
|
$ |
116 |
|
|
$ |
58 |
|
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Mar 2, 2026 | Showing above |
| 2024 | Mar 3, 2025 | |
| 2023 | Feb 26, 2024 | |
| 2022 | Feb 27, 2023 | |
| 2021 | Feb 28, 2022 | |
| 2019 | Feb 28, 2020 | |
| 2018 | Mar 1, 2019 | |
| 2017 | Feb 27, 2018 | |
| 2016 | Feb 24, 2017 | |
| 2015 | Feb 26, 2016 | |
About Income Taxes Disclosures
The income tax disclosure reveals how much a company actually pays in taxes versus what the statutory rate would predict. Analysts focus on the effective tax rate (ETR) reconciliation, which breaks down every item driving the gap between the 21% federal rate and the company's reported ETR — including R&D credits, foreign rate differentials, and state taxes. Deferred tax assets (DTAs) and their valuation allowances signal management's confidence in future profitability: a rising allowance suggests the company doubts it can use accumulated tax benefits. Uncertain tax benefit (UTB) reserves quantify exposure to IRS challenges on aggressive positions.
Key signals to watch: sudden ETR drops without clear operational reasons, large increases in valuation allowances, growing UTB balances, and significant unremitted foreign earnings. Post-TCJA, pay attention to GILTI and BEAT provisions that affect multinational tax structures. Compare the cash taxes paid (from the cash flow statement) against the income tax provision to gauge earnings quality.