Company: WSBC
Filing Date: 2025-03-03
Form Type: 10-K
Source: 0000950170-25-030795
Chunk: 28

Company: WESBANCO INC
Filing Date: 2025-03-03
Form: 10-K
Item: Item 8
Chunk 28
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 the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the account or disclosure to which it relates.

    Allowance for credit losses - loans

    Description of the Matter
     
    The Company’s loan portfolio totaled $12.7 billion as of December 31, 2024 and the associated allowance for credit losses - loans (ACL) was $138.8 million. As discussed in Note 1 and 5 to the consolidated financial statements, the ACL reflects the lifetime expected credit losses on the Company’s loan portfolio. The ACL is calculated utilizing the probability of default / loss given default approach to calculate the expected loss for each segment, which is then discounted to net present value. The primary macroeconomic drivers of the quantitative model includes the forecast of national unemployment and interest rate spreads. The evaluation also considers qualitative factor adjustments such as economic trends and conditions, which includes adjustments related to distressed industries and the level of criticized and classified loans within the commercial loan segments. Management relies on observable data from internal and external sources to the extent it is available to evaluate each of these factors and adjusts the model’s quantitative results to reflect the impact these factors may have on probable losses in the portfolio. Additionally, commercial loans that have unique characteristics are evaluated individually for estimated credit losses and specific reserves are established when appropriate.Auditing management’s ACL estimate was complex and involves a high degree of subjectivity and judgement in evaluating management’s determination of the qualitative factor adjustments for distressed industries and the 

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    level of criticized and classified loans within the commercial loan segments. We identified auditing the reasonableness of management’s determination of the qualitative factor adjustments for distressed industries and the level of criticized and classified loans within the commercial loan segments in the ACL as a critical audit matter as it involves especially subjective auditor judgment. 

    How We Addressed the Matter in Our Audit
     
    We obtained an understanding, evaluated the design, and tested the operating effectiveness of the Company’s controls over the ACL process, which included management’s review and approval controls designed to assess the appropriateness of the ACL methodology, reliability and accuracy of the data used in developing