Companies: 10,796     total market cap: โ‚น13365.494 T
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Associated Banc-Corp
ASB
#3086
Rank
โ‚น490.02 B
Marketcap
๐Ÿ‡บ๐Ÿ‡ธ United States
Country
โ‚น2,602
Share price
2.51%
Change (1 day)
55.90%
Change (1 year)
๐Ÿฆ Banks๐Ÿ’ณ Financial services
Categories
  1. Associated Banc-Corp
  2. Quarterly Reports (10-Q)
  3. Financial Year FY2023 Q2

Associated Banc-Corp - 10-Q quarterly report FY2023 Q2


Text size:
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
☑QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended: June 30, 2023
☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from             to 
Commission file number: 001-31343

Associated Banc-Corp
(Exact name of registrant as specified in its charter)
Wisconsin39-1098068
(State or other jurisdiction of
incorporation or organization)		(I.R.S. Employer
Identification No.)
433 Main Street
Green Bay,Wisconsin54301
(Address of principal executive offices)(Zip Code)
(920) 491-7500
(Registrant’s telephone number, including area code)
(not applicable)
(Former name, former address and former fiscal year, if changed since last report)

Securities Registered Pursuant to Section 12(b) of the Act:
Title of each classTrading symbol(s)Name of each exchange on which registered
Common stock, par value $0.01 per shareASBNew York Stock Exchange
Depositary Shrs, each representing 1/40th intrst in a shr of 5.875% Non-Cum. Perp Pref Stock, Srs EASB PrENew York Stock Exchange
Depositary Shrs, each representing 1/40th intrst in a shr of 5.625% Non-Cum. Perp Pref Stock, Srs FASB PrFNew York Stock Exchange
6.625% Fixed-Rate Reset Subordinated Notes due 2033ASBANew York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes  ☑        No  ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Yes  ☑        No  ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer☑Accelerated filer ☐
Non-accelerated filer  ☐Smaller reporting company  ☐
Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes  ☐        No  ☑
APPLICABLE ONLY TO CORPORATE ISSUERS:

The number of shares outstanding of registrant’s common stock, par value $0.01 per share, at July 24, 2023 was 150,921,090.
1

ASSOCIATED BANC-CORP
Table of Contents

2

ASSOCIATED BANC-CORP
Commonly Used Acronyms, Abbreviations, and Defined Terms
The following listing provides a reference of common acronyms and abbreviations used throughout the document:
ACLLAllowance for Credit Losses on Loans
AFSAvailable for Sale
ALCO Asset / Liability Committee
ASUAccounting Standards Update
the BankAssociated Bank, National Association
Basel IIIInternational framework established by the Basel Committee on Banking Supervision for the regulation of capital and liquidity
bpbasis point(s)
BTFPBank Term Funding Program
Call ReportConsolidated Reports of Condition and Income
CDsCertificates of Deposit
CDIsCore Deposit Intangibles
CECLCurrent Expected Credit Losses
CET1Common Equity Tier 1
Corporation / our / weAssociated Banc-Corp collectively with all of its subsidiaries and affiliates
CRACommunity Reinvestment Act
CRECommercial Real Estate
EAREarnings at Risk
ESPPAssociated Banc-Corp Employee Stock Purchase Plan
Exchange ActSecurities Exchange Act of 1934, as amended
FASBFinancial Accounting Standards Board
FDICFederal Deposit Insurance Corporation
Federal ReserveBoard of Governors of the Federal Reserve System
FFELPFederal Family Education Loan Program
FHLBFederal Home Loan Bank
FHLMCFederal Home Loan Mortgage Corporation
FICOFair Isaac Corporation, provider of a broad-based risk score to aid in credit decisions
FNMAFederal National Mortgage Association
FTEsFull-time equivalent employees
FTPFunds Transfer Pricing
GAAPGenerally Accepted Accounting Principles
GNMAGovernment National Mortgage Association
GSEsGovernment-Sponsored Enterprises
HTMHeld to Maturity
LIBORLondon Interbank Offered Rate
LOCOMLower of Cost or Market
LTVLoan-to-Value
Moody's
Moody’s Investors Service
MSRsMortgage Servicing Rights
MVEMarket Value of Equity
Net Free FundsNoninterest-bearing sources of funds
NPAsNonperforming Assets
OCIOther Comprehensive Income
OREOOther Real Estate Owned
Parent CompanyAssociated Banc-Corp individually
3

RAPRetirement Account Plan - the Corporation's noncontributory defined benefit retirement plan
Repurchase AgreementsSecurities sold under agreements to repurchase
Restricted Stock AwardsRestricted common stock and restricted common stock units to certain key employees
Retirement Eligible ColleaguesColleagues whose retirement meets the early retirement or normal retirement definitions under the applicable equity compensation plan
ROCET1
Return on Common Equity Tier 1
SBASmall Business Administration
SECU.S. Securities and Exchange Commission
Series E Preferred StockThe Corporation's 5.875% Non-Cumulative Perpetual Preferred Stock, Series E, liquidation preference $1,000 per share
Series F Preferred StockThe Corporation's 5.625% Non-Cumulative Perpetual Preferred Stock, Series F, liquidation preference $1,000 per share
SOFRSecured Overnight Finance Rate
TDRsTroubled Debt Restructurings
YTDYear-to-Date

4

PART I - FINANCIAL INFORMATION
ITEM 1.Financial Statements:
ASSOCIATED BANC-CORP
Consolidated Balance Sheets
 Jun 30, 2023Dec 31, 2022
 (In thousands, except share and per share data)
(Unaudited)(Audited)
Assets
Cash and due from banks$407,620 $436,952 
Interest-bearing deposits in other financial institutions190,881 156,693 
Federal funds sold and securities purchased under agreements to resell31,160 27,810 
AFS investment securities, at fair value3,504,777 2,742,025 
HTM investment securities, net, at amortized cost3,938,877 3,960,398 
Equity securities30,883 25,216 
Federal Home Loan Bank and Federal Reserve Bank stocks, at cost271,637 295,496 
Residential loans held for sale38,083 20,383 
Commercial loans held for sale15,000 — 
Loans29,848,904 28,799,569 
Allowance for loan losses(338,750)(312,720)
Loans, net29,510,153 28,486,849 
Tax credit and other investments263,583 276,773 
Premises and equipment, net374,866 376,906 
Bank and corporate owned life insurance678,578 676,530 
Goodwill1,104,992 1,104,992 
Other intangible assets, net44,877 49,282 
Mortgage servicing rights, net80,449 77,351 
Interest receivable159,185 144,449 
Other assets573,870 547,621 
Total assets$41,219,473 $39,405,727 
Liabilities and stockholders' equity
Noninterest-bearing demand deposits$6,565,666 $7,760,811 
Interest-bearing deposits25,448,743 21,875,343 
Total deposits32,014,409 29,636,154 
Federal funds purchased and securities sold under agreements to repurchase325,927 585,139 
Commercial paper15,327 20,798 
FHLB advances3,630,747 4,319,861 
Other long-term funding534,273 248,071 
Allowance for unfunded commitments38,276 38,776 
Accrued expenses and other liabilities537,640 541,438 
Total liabilities$37,096,599 $35,390,237 
Stockholders’ equity
Preferred equity$194,112 $194,112 
Common equity
Common stock$1,752 $1,752 
Surplus1,708,303 1,712,733 
Retained earnings3,025,637 2,904,882 
Accumulated other comprehensive (loss)(291,642)(272,799)
Treasury stock, at cost(515,287)(525,190)
Total common equity3,928,762 3,821,378 
Total stockholders’ equity4,122,874 4,015,490 
Total liabilities and stockholders’ equity$41,219,473 $39,405,727 
Preferred shares authorized (par value $1.00 per share)
750,000 750,000 
Preferred shares issued and outstanding200,000 200,000 
Common shares authorized (par value $0.01 per share)
250,000,000 250,000,000 
Common shares issued175,216,409 175,216,409 
Common shares outstanding150,918,628 150,444,019 
Numbers may not sum due to rounding.

See accompanying notes to consolidated financial statements.
5

Item 1. Financial Statements Continued:
ASSOCIATED BANC-CORP
Consolidated Statements of Income (Unaudited)
 Three Months Ended Jun 30,Six Months Ended Jun 30,
 (In thousands, except per share data)
2023202220232022
Interest income
Interest and fees on loans$423,307 $199,876 $814,626 $367,573 
Interest and dividends on investment securities
Taxable35,845 18,317 65,987 34,789 
Tax-exempt15,994 16,379 32,019 32,487 
Other interest6,086 2,420 11,415 4,413 
Total interest income481,231 236,991 924,048 439,261 
Interest expense
Interest on deposits162,196 8,019 271,618 11,591 
Interest on federal funds purchased and securities sold under agreements to repurchase2,261 406 5,404 444 
Interest on other short-term funding— 1 1 2 
Interest on FHLB advances49,261 9,689 99,222 17,871 
Interest on long-term funding9,596 2,730 15,876 5,460 
Total interest expense223,314 20,845 392,121 35,367 
Net interest income257,917 216,146 531,927 403,893 
Provision for credit losses22,100 (2)40,071 (3,992)
Net interest income after provision for credit losses235,817 216,148 491,856 407,886 
Noninterest income
Wealth management fees20,483 21,332 40,672 43,735 
Service charges and deposit account fees12,372 16,506 25,366 33,363 
Card-based fees11,396 11,442 21,982 21,368 
Other fee-based revenue4,465 4,360 8,740 8,126 
Capital markets, net5,093 8,010 10,176 16,656 
Mortgage banking, net7,768 6,145 11,313 14,536 
Bank and corporate owned life insurance 2,172 4,106 4,835 6,177 
Asset gains (losses), net(299)1,677 (35)1,865 
Investment securities gains (losses), net14 (8)66 12 
Other2,080 1,888 4,501 4,086 
Total noninterest income65,543 75,458 127,616 149,925 
Noninterest expense
Personnel114,089 112,666 230,510 217,477 
Technology24,220 21,223 47,818 42,707 
Occupancy13,587 14,151 28,650 30,231 
Business development and advertising7,106 5,655 12,955 10,610 
Equipment4,975 4,960 9,906 9,920 
Legal and professional4,831 4,873 8,688 9,960 
Loan and foreclosure costs1,635 1,476 2,773 3,490 
FDIC assessment9,550 5,400 16,425 10,500 
Other intangible amortization2,203 2,203 4,405 4,405 
Other8,476 8,815 15,955 15,412 
Total noninterest expense190,673 181,420 378,086 354,712 
Income before income taxes110,687 110,187 241,386 203,099 
Income tax expense23,533 23,363 50,873 42,013 
Net income87,154 86,824 190,514 161,086 
Preferred stock dividends2,875 2,875 5,750 5,750 
Net income available to common equity$84,279 $83,949 $184,764 $155,336 
Earnings per common share
Basic$0.56 $0.56 $1.23 $1.04 
Diluted$0.56 $0.56 $1.22 $1.03 
Average common shares outstanding
Basic149,986 149,083 149,875 148,933 
Diluted150,870 150,203 150,903 150,265 

Numbers may not sum due to rounding.
See accompanying notes to consolidated financial statements.
6

Item 1. Financial Statements Continued:
ASSOCIATED BANC-CORP
Consolidated Statements of Comprehensive Income (Unaudited)
Three Months Ended Jun 30,Six Months Ended Jun 30,
 ($ in thousands)
2023202220232022
Net income$87,154 $86,824 $190,514 $161,086 
Other comprehensive (loss), net of tax
AFS investment securities
Net unrealized (losses)(49,066)(65,038)(12,588)(168,321)
Unrealized (losses) on AFS securities transferred to HTM securities— — — (67,604)
Amortization of net unrealized losses on AFS securities transferred to HTM securities2,289 3,273 4,556 4,381 
Reclassification adjustment for net losses (gains) realized in net income— 8 — (12)
Income tax benefit11,843 15,998 1,951 59,096 
Other comprehensive (loss) on AFS securities(34,934)(45,758)(6,081)(172,460)
Cash flow hedge derivatives
Net unrealized (losses)(34,147)— (20,384)— 
Reclassification adjustment for net losses realized in net income3,319 — 4,581 — 
Income tax benefit7,867 — 3,173 — 
Other comprehensive (loss) on cash flow hedge derivatives(22,961)— (12,630)— 
Defined benefit pension and postretirement obligations
Amortization of prior service cost(81)(81)(163)(163)
Amortization of actuarial loss(7)74 22 147 
Income tax benefit (expense)(71)2 8 4 
Other comprehensive (loss) on pension and postretirement obligations(159)(6)(132)(12)
Total other comprehensive (loss)(58,054)(45,764)(18,843)(172,472)
Comprehensive income (loss)$29,100 $41,060 $171,671 $(11,386)
Numbers may not sum due to rounding.
See accompanying notes to consolidated financial statements.

7

Item 1. Financial Statements Continued:    
ASSOCIATED BANC-CORP
Consolidated Statements of Changes in Stockholders’ Equity (Unaudited)
(In thousands, except per share data)Preferred EquityCommon StockSurplusRetained
Earnings		Accumulated
Other
Comprehensive
 (Loss)		Treasury StockTotal
Balance, December 31, 2022$194,112 $1,752 $1,712,733 $2,904,882 $(272,799)$(525,190)$4,015,490 
Comprehensive income:
Net income— — — 103,360 — — 103,360 
Other comprehensive income— — — — 39,211 — 39,211 
Comprehensive income142,571 
Common stock issued:
Stock-based compensation plans, net— — (12,612)— — 14,379 1,766 
Purchase of treasury stock, stock-based compensation plans— — — — — (5,362)(5,362)
Cash dividends:
Common stock, $0.21 per share— — — (32,013)— — (32,013)
Preferred stock(a)
— — — (2,875)— — (2,875)
Stock-based compensation expense, net— — 6,086 — — — 6,086 
Balance, March 31, 2023$194,112 $1,752 $1,706,206 $2,973,354 $(233,588)$(516,173)$4,125,663 
Comprehensive income:
Net income— — — 87,154 — — 87,154 
Other comprehensive (loss)— — — — (58,054)— (58,054)
Comprehensive income29,100 
Common stock issued:
Stock-based compensation plans, net— — (1,677)— — 1,770 93 
Purchase of treasury stock, stock-based compensation plans— — — — — (884)(884)
Cash dividends:
Common stock, $0.21 per share— — — (31,996)— — (31,996)
Preferred stock(a)
— — — (2,875)— — (2,875)
Stock-based compensation expense, net— — 3,773 — — — 3,773 
Balance, June 30, 2023$194,112 $1,752 $1,708,303 $3,025,637 $(291,642)$(515,287)$4,122,874 
Numbers may not sum due to rounding.
(a) Series E, $0.3671875 per share; and Series F, $0.3515625 per share.


8

(In thousands, except per share data)Preferred EquityCommon StockSurplusRetained
Earnings		Accumulated
Other
Comprehensive
Income (Loss)		Treasury StockTotal
Balance, December 31, 2021$193,195 $1,752 $1,713,851 $2,672,601 $(10,317)$(546,229)$4,024,853 
Change in accounting principle(a)
— — — 1,713 — — 1,713 
Total stockholders' equity at beginning of period, as adjusted193,195 1,752 1,713,851 2,674,314 (10,317)(546,229)4,026,566 
Comprehensive (loss):
Net income— — — 74,262 — — 74,262 
Other comprehensive (loss)— — — — (126,708)— (126,708)
Comprehensive (loss)(52,445)
Common stock issued:
Stock-based compensation plans, net— — (11,911)— — 18,565 6,654 
Purchase of treasury stock, stock-based compensation plans— — — — — (5,193)(5,193)
Cash dividends:
Common stock, $0.20 per share— — — (30,583)— — (30,583)
Preferred stock(b)
— — — (2,875)— — (2,875)
Stock-based compensation expense, net— — 6,164 — — — 6,164 
Balance, March 31, 2022$193,195 $1,752 $1,708,104 $2,715,118 $(137,024)$(532,858)$3,948,287 
Comprehensive income:
Net income— — — 86,824 — — 86,824 
Other comprehensive (loss)— — — — (45,764)— (45,764)
Comprehensive income41,060 
Common stock issued:
Stock-based compensation plans, net— — (1,771)— — 1,910 139 
Purchase of treasury stock, stock-based compensation plans— — — — — (884)(884)
Cash dividends:
Common stock, $0.20 per share— — — (30,331)— — (30,331)
Preferred stock(b)
— — — (2,875)— — (2,875)
Stock-based compensation expense, net— — 3,986 — — — 3,986 
Balance, June 30, 2022$193,195 $1,752 $1,710,319 $2,768,736 $(182,788)$(531,832)$3,959,382 
Numbers may not sum due to rounding.
(a) MSRs at December 31, 2021 were carried at LOCOM. On January 1, 2022, the Corporation made the irrevocable election to account for MSRs at fair value.
(b) Series E, $0.3671875 per share; and Series F, $0.3515625 per share.


See accompanying notes to consolidated financial statements.




9

Item 1. Financial Statements Continued:
ASSOCIATED BANC-CORP
Consolidated Statements of Cash Flows (Unaudited)
Six Months Ended Jun 30,
 ($ in thousands)
20232022
Cash flows from operating activities
Net income$190,514 $161,086 
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for credit losses40,071 (3,992)
Depreciation and amortization22,914 22,741 
Change in MSRs valuation(5,135)(19,400)
Amortization of other intangible assets4,405 4,405 
Amortization and accretion on earning assets, funding, and other, net16,509 10,315 
Net amortization of tax credit investments17,227 17,072 
(Gains) on sales of investment securities, net— (12)
Asset losses (gains), net35 (1,865)
Loss on mortgage banking activities, net1,389 3,036 
Mortgage loans originated and acquired for sale(168,395)(403,951)
Proceeds from sales of mortgage loans held for sale151,167 500,410 
Changes in certain assets and liabilities:
(Increase) in interest receivable(14,736)(14,898)
Increase in interest payable44,367 1,501 
(Decrease) in expense payable(40,882)(24,791)
(Decrease) increase in net derivative position(37,175)231,332 
Net change in other assets and other liabilities(43,503)6,051 
Net cash provided by operating activities178,771 489,039 
Cash flows from investing activities
Net (increase) in loans(1,054,924)(2,271,051)
Purchases of:
AFS securities(948,326)(502,012)
HTM securities(41,524)(202,271)
Federal Home Loan Bank and Federal Reserve Bank stocks and equity securities(97,622)(70,239)
Proceeds from:
Sales of AFS securities— 1,061 
Sale of Federal Home Loan Bank and Federal Reserve Bank stocks and equity securities115,975 8 
Prepayments, calls, and maturities of AFS securities 172,680 296,179 
Prepayments, calls, and maturities of HTM securities 62,212 111,796 
Sales, prepayments, calls, and maturities of other assets17,988 23,523 
Premises, equipment, and software, net of disposals(29,663)(33,373)
Net change in tax credit and alternative investments(14,116)(34,186)
Net cash (used in) investing activities(1,817,320)(2,680,566)
Cash flows from financing activities
Net increase in deposits2,378,308 110,280 
Net increase (decrease) in short-term funding(264,684)351,358 
Net increase (decrease) in short-term FHLB advances(685,000)2,045,000 
Repayment of long-term FHLB advances(537)(408,870)
Proceeds from long-term FHLB advances115 916 
Proceeds from issuance of long-term funding292,740 — 
(Repayment) proceeds of finance lease principal(43)348 
Proceeds from issuance of common stock for stock-based compensation plans1,859 6,793 
Purchase of treasury stock, stock-based compensation plans(6,246)(6,078)
Cash dividends on common stock(64,009)(60,914)
Cash dividends on preferred stock(5,750)(5,750)
Net cash provided by financing activities1,646,755 2,033,084 
Net increase (decrease) in cash and cash equivalents8,207 (158,444)
Cash and cash equivalents at beginning of period621,455 1,025,515 
Cash and cash equivalents at end of period(a)
$629,662 $867,071 
Numbers may not sum due to rounding.
(a) No restricted cash due to the Federal Reserve reducing the required reserve ratio to zero.
10

ASSOCIATED BANC-CORP
Consolidated Statements of Cash Flows (Unaudited)
Six Months Ended Jun 30,
 ($ in thousands)
20232022
Supplemental disclosures of cash flow information
Cash paid for interest$347,202 $33,533 
Cash paid for income and franchise taxes58,985 2,432 
Loans and bank premises transferred to OREO3,632 1,817 
Capitalized mortgage servicing rights1,322 5,231 
Loans transferred into (from) held for sale from (into) portfolio, net(840)4,149 
Transfer of AFS securities to HTM securities— 1,621,990 
Unsettled trades to purchase securities— 1,450 
Fair value adjustments on hedged long-term FHLB advances and subordinated debt9,651 — 
Fair value adjustment on cash flow hedges(12,630)— 

11

Item 1. Financial Statements Continued:
ASSOCIATED BANC-CORP
Notes to Consolidated Financial Statements
These interim consolidated financial statements have been prepared according to the rules and regulations of the SEC and, therefore, certain information and footnote disclosures normally presented in accordance with GAAP have been omitted or abbreviated. The information contained on the consolidated financial statements and footnotes in Associated Banc-Corp's 2022 Annual Report on Form 10-K should be referred to in connection with the reading of these unaudited interim consolidated financial statements.
Note 1 Basis of Presentation
In the opinion of management, the accompanying unaudited consolidated financial statements contain all adjustments necessary to present fairly the financial position, results of operations and comprehensive income, changes in stockholders’ equity, and cash flows of the Corporation and Parent Company for the periods presented, and all such adjustments are of a normal recurring nature. The consolidated financial statements include the accounts of all subsidiaries. All significant intercompany transactions and balances have been eliminated in consolidation. The results of operations for the interim periods are not necessarily indicative of the results to be expected for the full year.
In preparing the consolidated financial statements, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the balance sheet and revenues and expenses for the period. Actual results could differ significantly from those estimates. Estimates that are particularly susceptible to significant change include the determination of the ACLL. Management has evaluated subsequent events for potential recognition or disclosure.
Within the tables presented, certain columns and rows may not sum due to the use of rounded numbers for disclosure purposes.
Note 2 Summary of Significant Accounting Policies
The accounting and reporting policies of the Corporation conform to U.S. GAAP and to general practice within the financial services industry. A discussion of these policies can be found in Note 1 Summary of Significant Accounting Policies included in the Corporation’s 2022 Annual Report on Form 10-K.
New Accounting Pronouncements Adopted
StandardDescriptionDate of adoptionEffect on financial statements
ASU 2022-02 Financial Instruments-Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage DisclosuresThe FASB issued these amendments to eliminate accounting guidance for TDRs by creditors in Subtopic 310-40, Receivables-Troubled Debt Restructurings by Creditors, while enhancing disclosure requirements for certain loan refinancings and restructurings by creditors when a borrower is experiencing financial difficulty, and to require that an entity disclose current-period gross writeoffs by year of origination for financing receivables and net investments in leases within the scope of Subtopic 326-20, Financial Instruments-Credit Losses-Measured at Amortized Cost. The amendments in this Update are effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years, and should be applied prospectively, except as provided in the next sentence. For the transition method related to the recognition and measurement of TDRs, an entity has the option to apply a modified retrospective transition method, resulting in a cumulative-effect adjustment to retained earnings in the period of adoption. Early adoption is permitted if an entity has adopted the amendments in Update 2016-03, including adoption in an interim period.1st Quarter 2023Adoption of this amendment did not have a material impact on the Corporation's results of operation, financial position or liquidity, but resulted in additional disclosure requirements related to gross charge offs by vintage year and the removal of TDR disclosures, replaced by additional disclosures on the types of modifications of loans to borrowers experiencing financial difficulties. The Corporation has adopted this update prospectively.
12

Future Accounting Pronouncements
The expected impact of applicable material accounting pronouncements recently issued or proposed but not yet required to be adopted are discussed in the table below. To the extent that the adoption of new accounting standards materially affects the Corporation's financial condition, results of operations, liquidity or disclosures, the impacts are discussed in the applicable sections of this financial review.
StandardDescriptionDate of anticipated adoptionEffect on financial statements
ASU 2023-02 Investments-Equity Method and Joint Ventures (Topic 323): Accounting for Investments in Tax Credit Structures Using the Proportional Amortization MethodThe amendments in this update permit reporting entities to elect to account for their tax equity investments, regardless of the tax credit program from which the income tax credits are received, using the proportional amortization method if certain conditions are met. A reporting entity may make an accounting policy election to apply the proportional amortization method on a tax-credit-program-by-tax-credit-program basis rather than electing to apply the proportional amortization method at the reporting entity level or to individual investments. The amendments in this update also remove certain guidance for Qualified Affordable Housing Project investments and require the application of the delayed equity contribution guidance to all tax equity investments. The amendments in this update are effective for fiscal years beginning after December 15, 2023, and must be applied on either a modified retrospective or a retrospective basis. Early adoption is permitted in any interim period, however if adopted in an interim period the entity shall adopt the amendments in this update as of the beginning of the fiscal year that includes the interim period. 1st Quarter 2024The Corporation is currently evaluating the impact on its results of operation, financial position, liquidity, and disclosures.
Note 3 Earnings Per Common Share
Earnings per common share are calculated utilizing the two-class method. Basic earnings per common share are calculated by dividing the sum of distributed earnings to common shareholders and undistributed earnings allocated to common shareholders by the weighted average number of common shares outstanding. Diluted earnings per common share are calculated by dividing the sum of distributed earnings to common shareholders and undistributed earnings allocated to common shareholders by the weighted average number of common shares outstanding adjusted for the dilutive effect of common stock awards (outstanding stock options and unvested restricted stock awards). Presented below are the calculations for basic and diluted earnings per common share:
 Three Months Ended Jun 30,Six Months Ended Jun 30,
 ($ in thousands, except per share data)2023202220232022
Net income$87,154 $86,824 $190,514 $161,086 
Preferred stock dividends(2,875)(2,875)(5,750)(5,750)
Net income available to common equity$84,279 $83,949 $184,764 $155,336 
Common shareholder dividends(31,802)(30,126)(63,611)(60,499)
Unvested share-based payment awards(194)(205)(398)(415)
Undistributed earnings$52,283 $53,618 $120,755 $94,422 
Undistributed earnings allocated to common shareholders$51,965 $53,257 $120,047 $93,807 
Undistributed earnings allocated to unvested share-based payment awards318 361 708 615 
Undistributed earnings$52,283 $53,618 $120,755 $94,422 
Basic
Distributed earnings to common shareholders$31,802 $30,126 $63,611 $60,499 
Undistributed earnings allocated to common shareholders51,965 53,257 120,047 93,807 
Total common shareholders earnings, basic$83,768 $83,383 $183,658 $154,306 
Diluted
Distributed earnings to common shareholders$31,802 $30,126 $63,611 $60,499 
Undistributed earnings allocated to common shareholders51,965 53,257 120,047 93,807 
Total common shareholders earnings, diluted$83,768 $83,383 $183,658 $154,306 
Weighted average common shares outstanding149,986 149,083 149,875 148,933 
Effect of dilutive common stock awards884 1,121 1,027 1,332 
Diluted weighted average common shares outstanding150,870 150,203 150,903 150,265 
Basic earnings per common share$0.56 $0.56 $1.23 $1.04 
Diluted earnings per common share$0.56 $0.56 $1.22 $1.03 
Approximately 5 million and 3 million anti-dilutive common stock shares were excluded from the earnings per common share calculation for the three months ended June 30, 2023 and 2022, respectively, and approximately 3 million anti-dilutive common
13

stock shares were excluded from the earnings per common share calculation for both the six months ended June 30, 2023 and 2022.
Note 4 Stock-Based Compensation
The fair values of stock options and restricted stock awards are amortized as compensation expense on a straight-line basis over the vesting period of the grants. For colleagues who meet the definition of retirement eligible under the 2017 Incentive Compensation Plan and the 2020 Incentive Compensation Plan, expenses related to stock options and restricted stock awards are fully recognized on the date the colleague meets the definition of normal or early retirement. Compensation expense recognized is included in personnel expense on the consolidated statements of income.
A summary of the Corporation’s stock option activity for the six months ended June 30, 2023 is presented below:
Stock Options
Shares(a)
Weighted Average
Exercise Price		Weighted Average Remaining Contractual Term
Aggregate Intrinsic Value(a)
Outstanding at December 31, 20223,994 $21.06 5.11 years$10,525 
Exercised35 17.06 
Forfeited or expired10 23.45 
Outstanding at June 30, 20233,949 $21.09 4.63 years$— 
Options Exercisable at June 30, 20233,735 $21.27 4.52 years$— 
(a) In thousands
Intrinsic value represents the amount by which the fair market value of the underlying stock exceeds the exercise price of the stock option. For the six months ended June 30, 2023, the intrinsic value of stock options exercised was approximately $220,000, compared to $3 million for the six months ended June 30, 2022. For the six months ended June 30, 2023, the total fair value of stock options vested was approximately $955,000 compared to $2 million for the six months ended June 30, 2022.
The Corporation recognized compensation expense for the vesting of stock options of approximately $186,000 for the six months ended June 30, 2023, compared to approximately $469,000 for the six months ended June 30, 2022. At June 30, 2023, the Corporation had approximately $192,000 of unrecognized compensation expense related to stock options that is expected to be recognized over the remaining requisite service periods that extend predominately through the first quarter of 2024.
The Corporation also has issued time-based and performance-based restricted stock awards under the 2017 Incentive Compensation Plan and subsequent 2020 Incentive Compensation Plan. Performance awards are based on performance goals determined by the Compensation and Benefits Committee of the Corporation's Board of Directors, with vesting ranging from a minimum of 0% to a maximum of 150% of the target award. Performance awards are valued utilizing a Monte Carlo simulation model to estimate fair value of the awards at the grant date.
The following table summarizes information about the Corporation’s restricted stock awards activity for the six months ended June 30, 2023:
Restricted Stock
Shares(a)
Weighted Average
Grant Date Fair Value
Outstanding at December 31, 20222,303 $20.81 
Granted822 22.61 
Vested737 21.13 
Forfeited22 22.14 
Outstanding at June 30, 20232,366 $21.33 
(a) In thousands
The Corporation amortizes the expense related to restricted stock awards as compensation expense over the vesting period specified in the grant's award agreement. Performance-based restricted stock awards granted during 2022 and 2023 will cliff-vest after the three year performance period has ended. Service-based restricted stock awards granted during 2022 and 2023 will generally vest ratably over a period of four years. Expense for restricted stock awards of $10 million was recorded for both the six months ended June 30, 2023 and the six months ended June 30, 2022. Included in compensation expense for the first six months of 2023 was $3 million of expense for the accelerated vesting of restricted stock awards granted to retirement eligible colleagues. The Corporation had $27 million of unrecognized compensation costs related to restricted stock awards at June 30, 2023 that are expected to be recognized over the remaining requisite service periods that extend predominately through the first quarter of 2027.
The Corporation has the ability to issue shares from treasury or new shares upon the exercise of stock options or the granting of restricted stock awards. The Board of Directors has authorized management to repurchase shares of the Corporation’s common stock, to be made available for issuance in connection with the Corporation’s employee incentive plans and for other corporate
14

purposes. The repurchase of shares, if any, will be based on market and investment opportunities, capital levels, growth prospects, and regulatory constraints. Such repurchases may occur from time to time in open market purchases, block transactions, private transactions, accelerated share repurchase programs, or similar facilities.
Note 5 Investment Securities
Investment securities are designated as AFS, HTM, or equity on the consolidated balance sheets at the time of purchase. The amortized cost and fair values of AFS and HTM securities at June 30, 2023 were as follows:
($ in thousands)Amortized
Cost		Gross
Unrealized
Gains		Gross
Unrealized
(Losses)		Fair Value
AFS investment securities
U. S. Treasury securities$124,516 $— $(14,563)$109,954 
Agency securities15,000 — (1,483)13,517 
Obligations of state and political subdivisions (municipal securities)227,928 75 (5,515)222,487 
Residential mortgage-related securities:
FNMA/FHLMC1,734,097 108 (213,265)1,520,939 
GNMA1,309,202 198 (18,761)1,290,640 
Commercial mortgage-related securities:
FNMA/FHLMC18,866 — (1,772)17,095 
GNMA191,630 — (8,284)183,346 
Asset backed securities:
FFELP144,376 — (4,211)140,166 
SBA3,757 11 (47)3,721 
Other debt securities3,000 — (87)2,913 
Total AFS investment securities$3,772,373 $392 $(267,987)$3,504,777 
HTM investment securities
U. S. Treasury securities$999 $— $(59)$940 
Obligations of state and political subdivisions (municipal securities)1,713,510 1,978 (162,587)1,552,901 
Residential mortgage-related securities:
FNMA/FHLMC969,503 29,137 (171,849)826,791 
GNMA52,260 48 (3,500)48,808 
Private-label355,442 10,734 (72,395)293,782 
Commercial mortgage-related securities:
FNMA/FHLMC784,327 14,008 (174,942)623,393 
GNMA62,961 461 (7,946)55,477 
Total HTM investment securities$3,939,001 $56,368 $(593,278)$3,402,092 


15

The amortized cost and fair values of AFS and HTM securities at December 31, 2022 were as follows:
($ in thousands)Amortized
Cost		Gross
Unrealized
Gains		Gross
Unrealized
(Losses)		Fair Value
AFS investment securities
U. S. Treasury securities$124,441 $— $(15,063)$109,378 
Agency securities15,000 — (1,468)13,532 
Obligations of state and political subdivisions (municipal securities)235,693 96 (5,074)230,714 
Residential mortgage-related securities:
FNMA/FHLMC1,820,642 404 (216,436)1,604,610 
GNMA502,537 314 (5,255)497,596 
Commercial mortgage-related securities:
FNMA/FHLMC19,038 — (1,896)17,142 
GNMA115,031 — (4,569)110,462 
Asset backed securities:
FFELP157,138 — (5,947)151,191 
SBA4,512 15 (51)4,477 
Other debt securities3,000 — (78)2,922 
Total AFS investment securities$2,997,032 $830 $(255,837)$2,742,025 
HTM investment securities
U. S. Treasury securities$999 $— $(62)$936 
Obligations of state and political subdivisions (municipal securities)1,732,351 1,994 (182,697)1,551,647 
Residential mortgage-related securities:
FNMA/FHLMC961,231 31,301 (175,760)816,771 
GNMA52,979 85 (3,436)49,628 
Private-label364,728 11,697 (72,920)303,505 
Commercial mortgage-related securities:
FNMA/FHLMC778,796 15,324 (178,281)615,839 
GNMA69,369 577 (7,254)62,691 
 Total HTM investment securities$3,960,451 $60,978 $(620,411)$3,401,018 
Expected maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties. The expected maturities of AFS and HTM securities at June 30, 2023, are shown below:
 AFSHTM
($ in thousands)Amortized
Cost		Fair
Value		Amortized
Cost		Fair
Value
Due in one year or less$5,127 $5,115 $18,531 $18,528 
Due after one year through five years188,712 171,404 48,044 47,613 
Due after five years through ten years140,309 136,754 155,014 151,579 
Due after ten years36,296 35,598 1,492,920 1,336,121 
Total debt securities370,444 348,871 1,714,509 1,553,841 
Residential mortgage-related securities:
FNMA/FHLMC1,734,097 1,520,939 969,503 826,791 
GNMA1,309,202 1,290,640 52,260 48,808 
Private-label— — 355,442 293,782 
Commercial mortgage-related securities:
FNMA/FHLMC18,866 17,095 784,327 623,393 
GNMA191,630 183,346 62,961 55,477 
Asset backed securities:
FFELP 144,376 140,166 — — 
SBA3,757 3,721 — — 
Total investment securities$3,772,373 $3,504,777 $3,939,001 $3,402,092 
Ratio of fair value to amortized cost92.9 %86.4 %
16

On a quarterly basis, the Corporation refreshes the credit quality of each HTM security. The following table summarizes the credit quality indicators of HTM securities at amortized cost at June 30, 2023:
($ in thousands)AAAAAANot RatedTotal
U. S. Treasury securities$999 $— $— $— $999 
Obligations of state and political subdivisions (municipal securities)781,385 924,263 6,705 1,156 1,713,510 
Residential mortgage-related securities:
FNMA/FHLMC969,503 — — — 969,503 
GNMA52,260 — — — 52,260 
Private-label355,442 — — — 355,442 
Commercial mortgage-related securities:
FNMA/FHLMC784,327 — — — 784,327 
GNMA 62,961 — — — 62,961 
Total HTM securities$3,006,877 $924,263 $6,705 $1,156 $3,939,001 
The following table summarizes the credit quality indicators of HTM securities at amortized cost at December 31, 2022:
($ in thousands)AAAAAANot RatedTotal
U. S. Treasury securities$999 $— $— $— $999 
Obligations of state and political subdivisions (municipal securities)806,529 917,059 7,604 1,158 1,732,351 
Residential mortgage-related securities:
FNMA/FHLMC961,231 — — — 961,231 
GNMA52,979 — — — 52,979 
Private-label364,728 — — — 364,728 
Commercial mortgage-related securities:
FNMA/FHLMC778,796 — — — 778,796 
GNMA 69,369 — — — 69,369 
Total HTM securities$3,034,630 $917,059 $7,604 $1,158 $3,960,451 
The following table summarizes gross realized gains and losses on AFS securities, net write-up of equity securities, and proceeds from the sale of AFS investment securities for the three and six months ended June 30, 2023 and 2022:
Three Months Ended Jun 30,Six Months Ended Jun 30,
($ in thousands)2023202220232022
Gross realized gains on AFS securities$— $— $— $21 
Gross realized (losses) on AFS securities— (8)— (8)
Net write-up of equity securities14 — 66 — 
Investment securities gains (losses), net$14 $(8)$66 $12 
Proceeds from sales of AFS investment securities$— $327 $— $1,061 
Investment securities with a carrying value of $1.8 billion and $2.3 billion at June 30, 2023 and December 31, 2022, respectively, were pledged as required to secure certain deposits or for other purposes.
Accrued interest receivable on HTM securities totaled $18 million and $19 million at June 30, 2023 and December 31, 2022, respectively. Accrued interest receivable on AFS securities totaled $13 million and $9 million at June 30, 2023 and December 31, 2022, respectively. Accrued interest receivable on both HTM and AFS securities is included in interest receivable on the consolidated balance sheets. There was no interest income reversed for investments going into nonaccrual at both June 30, 2023 and December 31, 2022.
A security is considered past due once it is 30 days past due under the terms of the agreement. At both June 30, 2023 and December 31, 2022, the Corporation had no past due HTM securities.

The allowance for credit losses on HTM securities was approximately $125,000 at June 30, 2023 and approximately $54,000 at December 31, 2022, attributable entirely to the Corporation's municipal securities, included in HTM investment securities, net, at amortized cost on the consolidated balance sheets. The Corporation also holds U.S. Treasury, municipal, and mortgage-related securities issued by the U.S. government or a GSE which are backed by the full faith and credit of the U.S. government and private-label residential mortgage-related securities that have credit enhancement which covers the first 15% of losses and, as a result, no allowance for credit losses has been recorded related to these securities.

17

The following represents gross unrealized losses and the related fair value of AFS and HTM securities, aggregated by investment category and length of time individual securities have been in a continuous unrealized loss position, at June 30, 2023:
 Less than 12 months12 months or moreTotal
($ in thousands)Number
of
Securities		Unrealized
(Losses)		Fair
Value		Number
of
Securities		Unrealized
(Losses)		Fair
Value		Unrealized
(Losses)		Fair
Value
AFS investment securities
U.S. Treasury securities— $— $— 7 $(14,563)$109,954 $(14,563)$109,954 
Agency securities— — — 1 (1,483)13,517 (1,483)13,517 
Obligations of state and political subdivisions (municipal securities)285 (3,452)155,382 79 (2,063)43,862 (5,515)199,244 
Residential mortgage-related securities:
FNMA/FHLMC26 (899)33,479 100 (212,366)1,473,501 (213,265)1,506,980 
GNMA60 (14,873)1,074,681 13 (3,887)56,951 (18,761)1,131,632 
Commercial mortgage-related securities:
FNMA/FHLMC— — — 1 (1,772)17,095 (1,772)17,095 
GNMA11 (3,539)110,951 31 (4,745)72,395 (8,284)183,346 
Asset backed securities:
FFELP— — — 15 (4,211)140,166 (4,211)140,166 
SBA2 — 740 7 (47)1,754 (47)2,493 
Other debt securities1 (15)985 2 (72)1,928 (87)2,913 
Total385 $(22,779)$1,376,217 256 $(245,208)$1,931,121 $(267,987)$3,307,339 
HTM investment securities
U.S. Treasury securities— $— $— 1 $(59)$940 $(59)$940 
Obligations of state and political subdivisions (municipal securities)485 (12,109)650,323 444 (150,479)647,004 (162,587)1,297,327 
Residential mortgage-related securities:
FNMA/FHLMC64 (2,536)65,400 57 (169,313)761,207 (171,849)826,607 
GNMA21 (330)14,665 63 (3,171)31,369 (3,500)46,034 
Private-label— — — 18 (72,395)293,782 (72,395)293,782 
 Commercial mortgage-related securities:
FNMA/FHLMC4 (1,212)28,920 41 (173,730)594,472 (174,942)623,393 
GNMA— — — 13 (7,946)55,477 (7,946)55,477 
Total574 $(16,186)$759,309 637 $(577,092)$2,384,250 $(593,278)$3,143,559 
18

For comparative purposes, the following represents gross unrealized losses and the related fair value of AFS and HTM securities, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, at December 31, 2022:
 Less than 12 months12 months or moreTotal
($ in thousands)Number
of
Securities		Unrealized
(Losses)		Fair
Value		Number
of
Securities		Unrealized
(Losses)		Fair
Value		Unrealized
(Losses)		Fair
Value
AFS investment securities
U.S. Treasury securities— $— $— 7 $(15,063)$109,378 $(15,063)$109,378 
Agency securities— — — 1 (1,468)13,532 (1,468)13,532 
Obligations of state and political subdivisions (municipal securities)358 (5,066)201,260 4 (8)1,916 (5,074)203,176 
Residential mortgage-related securities:
FNMA/FHLMC24 (31,266)260,986 84 (185,170)1,321,420 (216,436)1,582,406 
GNMA23 (4,415)220,276 2 (840)11,096 (5,255)231,372 
Commercial mortgage-related securities:
FNMA/FHLMC1 (1,896)17,142 — — — (1,896)17,142 
GNMA33 (3,920)101,036 4 (649)9,426 (4,569)110,462 
Asset backed securities:
FFELP3 (1,668)44,304 12 (4,278)106,887 (5,947)151,191 
SBA2 (1)417 6 (50)2,057 (51)2,474 
Other debt securities2 (30)1,970 1 (49)951 (78)2,922 
Total446 $(48,263)$847,391 121 $(207,575)$1,576,665 $(255,837)$2,424,055 
HTM investment securities
U.S. Treasury securities1 $(62)$936 — $— $— $(62)$936 
Obligations of state and political subdivisions (municipal securities)771 (96,282)1,079,216 156 (86,415)231,022 (182,697)1,310,238 
Residential mortgage-related securities:
FNMA/FHLMC79 (18,925)143,201 22 (156,836)671,570 (175,760)814,770 
GNMA81 (3,436)44,476 — — — (3,436)44,476 
Private-label3 (9,509)58,733 15 (63,411)244,772 (72,920)303,505 
Commercial mortgage-related securities:
FNMA/FHLMC4 (3,814)20,338 39 (174,467)576,911 (178,281)597,249 
GNMA8 (2,528)34,612 6 (4,726)28,080 (7,254)62,691 
Total947 $(134,556)$1,381,511 238 $(485,855)$1,752,354 $(620,411)$3,133,865 
The Corporation reviews the AFS investment securities portfolio on a quarterly basis to monitor its credit exposure. A determination as to whether a security’s decline in fair value is the result of credit risk takes into consideration numerous factors and the relative significance of any single factor can vary by security. Some factors the Corporation may consider in this impairment analysis include the extent to which the security has been in an unrealized loss position, the change in security rating, financial condition and near-term prospects of the issuer, as well as the security and industry specific economic conditions.
Based on the Corporation’s evaluation, management does not believe any unrealized losses at June 30, 2023 represent credit deterioration as these unrealized losses are primarily attributable to changes in interest rates and the current market conditions. The Corporation does not intend to sell, nor does it believe that it will be required to sell, the securities in an unrealized loss position before recovery of their amortized cost basis.
FHLB and Federal Reserve Bank stocks: The Corporation is required to maintain Federal Reserve Bank stock and FHLB stock as a member bank of both the Federal Reserve System and the FHLB, and in amounts as required by these institutions. These equity securities are “restricted” in that they can only be sold back to the respective institutions or another member institution at par. Therefore, they are less liquid than other marketable equity securities and their fair value is equal to amortized cost. The Corporation had FHLB stock of $185 million and $209 million at June 30, 2023 and December 31, 2022, respectively. The Corporation had Federal Reserve Bank stock of $87 million at both June 30, 2023 and December 31, 2022. Accrued interest receivable on FHLB stock totaled $3 million at both June 30, 2023 and December 31, 2022. There was no accrued interest receivable on Federal Reserve Bank Stock at both June 30, 2023, and December 31, 2022. Accrued interest receivable on both FHLB stock and Federal Reserve Bank stock is included in interest receivable on the consolidated balance sheets.
19

Equity Securities
Equity securities with readily determinable fair values: The Corporation's portfolio of equity securities with readily determinable fair values is primarily comprised of CRA Qualified Investment mutual funds and other mutual funds. The Corporation had equity securities with readily determinable fair values of $7 million at June 30, 2023 and $6 million at December 31, 2022.
Equity securities without readily determinable fair values: The Corporation's portfolio of equity securities without readily determinable fair values, which primarily consists of Visa Class B restricted shares and an investment in a private SBA loan fund, was carried at $24 million and $19 million at June 30, 2023 and December 31, 2022, respectively.
Note 6 Loans
The period end loan composition was as follows:
($ in thousands)Jun 30, 2023Dec 31, 2022
Commercial and industrial$10,055,487 $9,759,454 
Commercial real estate — owner occupied1,058,237 991,722 
Commercial and business lending11,113,724 10,751,176 
Commercial real estate — investor5,312,928 5,080,344 
Real estate construction2,009,060 2,155,222 
Commercial real estate lending7,321,988 7,235,565 
Total commercial18,435,711 17,986,742 
Residential mortgage8,746,345 8,511,550 
Auto finance1,777,974 1,382,073 
Home equity615,506 624,353 
Other consumer273,367 294,851 
Total consumer11,413,193 10,812,828 
Total loans$29,848,904 $28,799,569 
Accrued interest receivable on loans totaled $124 million at June 30, 2023, and $113 million at December 31, 2022, and is included in interest receivable on the consolidated balance sheets. Interest accrued but not received for loans placed on nonaccrual is reversed against interest income. The amount of accrued interest reversed was $1 million for the three and six months ended June 30, 2023, and immaterial for the three and six months ended June 30, 2022.

20

The following table presents loans by credit quality indicator by origination year at June 30, 2023:
Term Loans Amortized Cost Basis by Origination Year(a)
($ in thousands)
Rev Loans Converted to Term(a)
Rev Loans Amortized Cost BasisYTD 20232022202120202019PriorTotal
Commercial and industrial:
Risk rating:
Pass$375 $2,016,151 $894,287 $3,101,942 $2,118,259 $450,305 $489,900 $617,543 $9,688,387 
Special mention57 44,943 57 35,706 9,319 6,240 — 30,700 126,964 
Potential problem642 89,637 873 19,850 73,809 20,187 91 781 205,228 
Nonaccrual10,583 — 3,230 16,863 6,457 8,357 — — 34,907 
Commercial and industrial$11,657 $2,150,731 $898,447 $3,174,361 $2,207,845 $485,088 $489,991 $649,023 $10,055,487 
Commercial real estate - owner occupied:
Risk rating:
Pass$— $19,693 $132,242 $209,736 $230,821 $147,000 $147,706 $127,909 $1,015,108 
Special mention— 579 — — — 3,434 8,276 — 12,289 
Potential problem— — 2,656 864 9,052 4,002 500 12,322 29,396 
Nonaccrual— — 1,444 — — — — — 1,444 
Commercial real estate - owner occupied$— $20,272 $136,342 $210,600 $239,873 $154,436 $156,482 $140,231 $1,058,237 
Commercial and business lending:
Risk rating:
Pass$375 $2,035,845 $1,026,529 $3,311,678 $2,349,081 $597,305 $637,606 $745,452 $10,703,495 
Special mention57 45,522 57 35,706 9,319 9,673 8,276 30,700 139,253 
Potential problem642 89,637 3,528 20,714 82,861 24,190 592 13,103 234,624 
Nonaccrual10,583 — 4,675 16,863 6,457 8,357 — — 36,352 
Commercial and business lending$11,657 $2,171,004 $1,034,789 $3,384,961 $2,447,717 $639,524 $646,474 $789,254 $11,113,724 
Commercial real estate - investor:
Risk rating:
Pass$— $131,996 $610,875 $1,549,321 $1,339,075 $637,693 $435,601 $386,283 $5,090,844 
Special mention— — 15,259 52,277 25,817 — — — 93,353 
Potential problem— — 24,842 21,538 31,398 8,225 1,008 19,650 106,662 
Nonaccrual— — — — 21,801 — — 267 22,068 
Commercial real estate - investor$— $131,996 $650,976 $1,623,135 $1,418,092 $645,919 $436,609 $406,200 $5,312,928 
Real estate construction:
Risk rating:
Pass$— $30,596 $107,275 $1,037,825 $680,661 $123,350 $6,947 $9,974 $1,996,627 
Special mention— — — — — 12,308 — — 12,308 
Nonaccrual— — — — — — — 125 125 
Real estate construction$— $30,596 $107,275 $1,037,825 $680,661 $135,658 $6,947 $10,099 $2,009,060 
Commercial real estate lending:
Risk rating:
Pass$— $162,592 $718,150 $2,587,145 $2,019,736 $761,044 $442,548 $396,257 $7,087,472 
Special mention— — 15,259 52,277 25,817 12,308 — — 105,661 
Potential problem— — 24,842 21,538 31,398 8,225 1,008 19,650 106,662 
Nonaccrual— — — — 21,801 — — 392 22,193 
Commercial real estate lending$— $162,592 $758,251 $2,660,960 $2,098,753 $781,577 $443,556 $416,299 $7,321,988 
Total commercial:
Risk rating:
Pass$375 $2,198,437 $1,744,679 $5,898,823 $4,368,817 $1,358,348 $1,080,154 $1,141,709 $17,790,967 
Special mention57 45,522 15,316 87,983 35,136 21,981 8,276 30,700 244,914 
Potential problem642 89,637 28,370 42,252 114,259 32,415 1,600 32,753 341,286 
Nonaccrual10,583 — 4,675 16,863 28,258 8,357 — 392 58,544 
Total commercial$11,657 $2,333,596 $1,793,040 $6,045,921 $4,546,470 $1,421,101 $1,090,030 $1,205,553 $18,435,711 
21

Term Loans Amortized Cost Basis by Origination Year(a)
($ in thousands)
Rev Loans Converted to Term(a)
Rev Loans Amortized Cost BasisYTD 20232022202120202019PriorTotal
Residential mortgage:
Risk rating:
Pass$— $— $224,502 $1,629,017 $2,226,398 $1,651,621 $766,715 $2,184,280 $8,682,533 
Special mention— — — — 278 — — 170 448 
Potential problem— — 109 173 613 — 547 205 1,646 
Nonaccrual— — 605 6,204 4,738 8,236 6,424 35,511 61,718 
Residential mortgage$— $— $225,216 $1,635,393 $2,232,027 $1,659,856 $773,686 $2,220,166 $8,746,345 
Auto finance:
Risk rating:
Pass$— $— $565,583 $1,115,791 $90,632 $240 $778 $289 $1,773,314 
Special mention— — 181 1,330 84 — — — 1,596 
Nonaccrual— — 44 2,323 689 — 9 — 3,065 
Auto finance$— $— $565,808 $1,119,445 $91,405 $240 $787 $289 $1,777,974 
Home equity:
Risk rating:
Pass$4,681 $504,626 $365 $30,687 $6,819 $2,220 $5,351 $56,666 $606,734 
Special mention276 94 — — — 99 — 552 744 
Potential problem13 — 13 194 — — 34 — 240 
Nonaccrual457 113 — 353 106 119 295 6,802 7,788 
Home equity$5,426 $504,833 $377 $31,234 $6,925 $2,438 $5,680 $64,020 $615,506 
Other consumer:
Risk rating:
Pass$198 $187,462 $3,950 $4,696 $3,424 $1,690 $704 $70,631 $272,559 
Special mention25 547 — 28 2 33 — 36 646 
Nonaccrual23 46 — 10 25 6 12 64 163 
Other consumer$246 $188,055 $3,950 $4,734 $3,451 $1,729 $717 $70,732 $273,367 
Total consumer:
Risk rating:
Pass$4,879 $692,088 $794,400 $2,780,192 $2,327,273 $1,655,771 $773,549 $2,311,866 $11,335,139 
Special mention301 640 181 1,358 364 131 — 758 3,434 
Potential problem13 — 122 367 613 — 580 205 1,886 
Nonaccrual480 159 649 8,890 5,557 8,360 6,741 42,378 72,733 
Total consumer$5,673 $692,887 $795,352 $2,790,806 $2,333,808 $1,664,262 $780,870 $2,355,207 $11,413,193 
Total loans:
Risk rating:
Pass$5,254 $2,890,525 $2,539,079 $8,679,015 $6,696,090 $3,014,119 $1,853,703 $3,453,575 $29,126,106 
Special mention357 46,162 15,497 89,341 35,500 22,113 8,276 31,458 248,348 
Potential problem655 89,637 28,492 42,619 114,872 32,415 2,180 32,958 343,173 
Nonaccrual11,063 159 5,324 25,753 33,816 16,717 6,741 42,769 131,278 
Total loans$17,329 $3,026,483 $2,588,392 $8,836,728 $6,880,278 $3,085,363 $1,870,900 $3,560,760 $29,848,904 
(a) Revolving loans converted to term loans are those converted during the reporting period and are also reported in their year of origination.


22

The following table presents loans by credit quality indicator by origination year at December 31, 2022:
Term Loans Amortized Cost Basis by Origination Year(a)
($ in thousands)
Rev Loans Converted to Term(a)
Rev Loans Amortized Cost Basis20222021202020192018PriorTotal
Commercial and industrial:
Risk rating:
Pass$1,423 $1,938,777 $3,245,546 $2,367,008 $567,833 $573,120 $330,642 $432,906 $9,455,833 
Special mention— 93,209 3,411 23,607 — — 19 32,497 152,744 
Potential problem447 24,549 41,400 4,193 21,887 38,169 218 6,133 136,549 
Nonaccrual3,926 — 5,210 — 9,119 — — — 14,329 
Commercial and industrial$5,796 $2,056,535 $3,295,567 $2,394,809 $598,839 $611,289 $330,879 $471,535 $9,759,454 
Commercial real estate - owner occupied:
Risk rating:
Pass$— $12,447 $211,645 $225,627 $163,965 $160,370 $73,487 $97,420 $944,961 
Special mention— — — — 1,136 1,491 9,713 — 12,339 
Potential problem— 1,325 1,238 11,141 5,523 10,769 370 4,055 34,422 
Commercial real estate - owner occupied$— $13,772 $212,883 $236,769 $170,624 $172,630 $83,570 $101,475 $991,722 
Commercial and business lending:
Risk rating:
Pass$1,423 $1,951,224 $3,457,191 $2,592,636 $731,798 $733,490 $404,129 $530,326 $10,400,794 
Special mention— 93,209 3,411 23,607 1,136 1,491 9,732 32,497 165,083 
Potential problem447 25,874 42,638 15,335 27,410 48,938 589 10,188 170,971 
Nonaccrual3,926 — 5,210 — 9,119 — — — 14,329 
Commercial and business lending$5,796 $2,070,307 $3,508,450 $2,631,578 $769,463 $783,919 $414,449 $573,010 $10,751,176 
Commercial real estate - investor:
Risk rating:
Pass$38,412 $106,280 $1,633,094 $1,419,000 $683,121 $530,444 $262,858 $210,299 $4,845,096 
Special mention— — 61,968 24,149 7,361 9,400 — 10,455 113,333 
Potential problem— — 16,147 21,303 27,635 1,333 19,017 7,099 92,535 
Nonaccrual— — 2,177 25,668 — — — 1,535 29,380 
Commercial real estate - investor$38,412 $106,280 $1,713,387 $1,490,120 $718,117 $541,177 $281,875 $229,387 $5,080,344 
Real estate construction:
Risk rating:
Pass$— $29,892 $900,593 $913,107 $241,230 $12,062 $2,226 $9,775 $2,108,885 
Special mention— — — — 12,174 33,087 — — 45,261 
Potential problem— — — — 970 — — — 970 
Nonaccrual— — — — — — — 105 105 
Real estate construction$— $29,892 $900,593 $913,107 $254,374 $45,149 $2,226 $9,880 $2,155,222 
Commercial real estate lending:
Risk rating:
Pass$38,412 $136,173 $2,533,687 $2,332,107 $924,351 $542,505 $265,083 $220,073 $6,953,981 
Special mention— — 61,968 24,149 19,535 42,487 — 10,455 158,595 
Potential problem— — 16,147 21,303 28,605 1,333 19,017 7,099 93,505 
Nonaccrual— — 2,177 25,668 — — — 1,640 29,485 
Commercial real estate lending$38,412 $136,173 $2,613,980 $2,403,227 $972,492 $586,326 $284,101 $239,267 $7,235,565 
23

Term Loans Amortized Cost Basis by Origination Year(a)
($ in thousands)
Rev Loans Converted to Term(a)
Rev Loans Amortized Cost Basis20222021202020192018PriorTotal
Total commercial:
Risk rating:
Pass$39,835 $2,087,396 $5,990,879 $4,924,743 $1,656,149 $1,275,996 $669,213 $750,399 $17,354,774 
Special mention— 93,209 65,379 47,756 20,671 43,978 9,732 42,952 323,677 
Potential problem447 25,874 58,785 36,638 56,016 50,271 19,606 17,287 264,476 
Nonaccrual3,926 — 7,387 25,668 9,119 — — 1,640 43,814 
Total commercial$44,208 $2,206,480 $6,122,430 $5,034,805 $1,741,955 $1,370,245 $698,550 $812,278 $17,986,742 
Residential mortgage:
Risk rating:
Pass$— $— $1,410,566 $2,184,125 $1,716,663 $817,164 $370,724 $1,951,406 $8,450,648 
Special mention— — — 284 96 — — 63 444 
Potential problem— — 455 71 — 738 29 685 1,978 
Nonaccrual— — 8,506 3,851 6,219 3,744 5,014 31,145 58,480 
Residential mortgage$— $— $1,419,527 $2,188,332 $1,722,979 $821,645 $375,768 $1,983,299 $8,511,550 
Auto finance:
Risk rating:
Pass$— $— $1,271,205 $106,102 $333 $1,267 $446 $61 $1,379,414 
Special mention— — 1,052 118 — — — — 1,170 
Nonaccrual— — 1,149 331 — 9 — — 1,490 
Auto finance$— $— $1,273,406 $106,551 $333 $1,276 $446 $61 $1,382,073 
Home equity:
Risk rating:
Pass$7,254 $508,212 $31,389 $6,508 $2,112 $6,197 $6,966 $54,827 $616,211 
Special mention47 102 — — — — 47 310 458 
Potential problem— 15 — — — 34 2 146 197 
Nonaccrual1,590 — 306 102 131 307 319 6,322 7,487 
Home equity$8,891 $508,329 $31,695 $6,610 $2,243 $6,538 $7,333 $61,605 $624,353 
Other consumer:
Risk rating:
Pass$64 $199,942 $7,429 $5,256 $2,468 $1,238 $174 $77,611 $294,117 
Special mention6 490 11 — 5 5 — 25 537 
Nonaccrual78 56 11 21 10 56 10 34 197 
Other consumer$147 $200,488 $7,452 $5,276 $2,482 $1,300 $184 $77,670 $294,851 
Total consumer:
Risk rating:
Pass$7,318 $708,154 $2,720,589 $2,301,991 $1,721,576 $825,866 $378,310 $2,083,904 $10,740,390 
Special mention52 592 1,063 403 101 5 47 398 2,609 
Potential problem— 15 455 71 — 772 31 831 2,175 
Nonaccrual1,668 56 9,973 4,304 6,360 4,116 5,343 37,501 67,654 
Total consumer$9,038 $708,817 $2,732,080 $2,306,769 $1,728,037 $830,759 $383,731 $2,122,635 $10,812,828 
Total loans:
Risk rating:
Pass$47,152 $2,795,551 $8,711,468 $7,226,734 $3,377,725 $2,101,861 $1,047,522 $2,834,303 $28,095,164 
Special mention52 93,801 66,443 48,159 20,772 43,983 9,778 43,350 326,286 
Potential problem447 25,889 59,240 36,709 56,016 51,043 19,637 18,118 266,651 
Nonaccrual5,595 56 17,360 29,972 15,479 4,116 5,343 39,141 111,467 
Total loans$53,246 $2,915,297 $8,854,510 $7,341,574 $3,469,992 $2,201,004 $1,082,280 $2,934,912 $28,799,569 
(a) Revolving loans converted to term loans are those converted during the reporting period and are also reported in their year of origination.

24

The following table presents gross charge offs by origination year at June 30, 2023:
Gross Charge Offs by Origination Year
($ in thousands)Rev Loans Amortized Cost BasisYTD 20232022202120202019PriorTotal
Commercial and industrial$1,789 $5,158 $249 $5,140 $— $— $2,152 $14,489 
Commercial and business lending1,789 5,158 249 5,140 — — 2,152 14,489 
Commercial real estate-investor— — — — — — 242 242 
Real estate construction— — — — — — 25 25 
Commercial real estate lending— — — — — — 266 266 
Total commercial1,789 5,158 249 5,140 — — 2,418 14,755 
Residential mortgage— — 128 22 8 7 410 574 
Auto finance— 24 2,048 262 — — — 2,335 
Home equity— — 43 14 — 22 108 186 
Other consumer2,226 — 129 60 12 10 70 2,506 
Total consumer2,226 24 2,348 358 20 39 588 5,601 
Total gross charge offs$4,015 $5,182 $2,597 $5,498 $20 $39 $3,006 $20,356 
Factors that are important to managing overall credit quality are sound loan underwriting and administration, systematic monitoring of existing loans and commitments, effective loan review on an ongoing basis, early identification of potential problems, and appropriate policies for ACLL, nonaccrual loans, and charge offs.
For commercial loans, management has determined the pass credit quality indicator to include credits exhibiting acceptable financial statements, cash flow, and leverage. If any risk exists, it is mitigated by the loan structure, collateral, monitoring, or control. For consumer loans, performing loans include credits performing in accordance with the original contractual terms.
Loans are considered past due if the required principal and interest payments have not been received as of the date such payments were due. Special mention credits have potential weaknesses that warrant specific attention from management. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the credit. Accruing loan modifications could be pass or special mention, depending on the risk rating on the loan. Potential problem loans are considered inadequately protected by the current net worth and paying capacity of the obligor or the collateral pledged. These loans generally have a well-defined weakness, or weaknesses, which may jeopardize liquidation of the debt, and are characterized by the distinct possibility the Corporation will sustain some loss if the deficiencies are not corrected. Management has determined commercial loan relationships in nonaccrual status, and commercial and consumer loan relationships with their terms restructured in a loan modification, meet the criteria to be individually evaluated. Commercial loans classified as special mention, potential problem, and nonaccrual are reviewed at a minimum on a quarterly basis, while pass credits, which are performing rated credits, are generally reviewed on an annual basis or more frequently if the loan renewal is less than one year or if otherwise warranted.
The following table presents loans by past due status at June 30, 2023:
Accruing
($ in thousands)Current30-59 Days
Past Due		60-89 Days
Past Due		90+ Days
Past Due
Nonaccrual(a)(b)
Total
Commercial and industrial$10,008,208 $11,837 $168 $366 $34,907 $10,055,487 
Commercial real estate - owner occupied1,055,309 1,484 — — 1,444 1,058,237 
Commercial and business lending11,063,517 13,321 168 366 36,352 11,113,724 
Commercial real estate - investor5,290,860 — — — 22,068 5,312,928 
Real estate construction2,008,859 76 — — 125 2,009,060 
Commercial real estate lending7,299,719 76 — — 22,193 7,321,988 
Total commercial18,363,236 13,396 168 366 58,544 18,435,711 
Residential mortgage8,675,666 8,791 170 — 61,718 8,746,345 
Auto finance1,763,481 9,833 1,596 — 3,065 1,777,974 
Home equity603,688 3,286 744 — 7,788 615,506 
Other consumer269,820 1,279 745 1,360 163 273,367 
Total consumer11,312,656 23,189 3,255 1,360 72,733 11,413,193 
Total loans$29,675,892 $36,585 $3,423 $1,726 $131,278 $29,848,904 
(a) Of the total nonaccrual loans, $77 million, or 58%, were current with respect to payment at June 30, 2023.
(b) No interest income was recognized on nonaccrual loans for the three and six months ended June 30, 2023. In addition, there were $29 million of nonaccrual loans for which there was no related ACLL at June 30, 2023.

25

The following table presents loans by past due status at December 31, 2022:
Accruing
($ in thousands)Current30-59 Days
Past Due		60-89 Days
Past Due		90+ Days 
Past Due
Nonaccrual(a)(b)
Total
Commercial and industrial$9,738,561 $716 $5,566 $282 $14,329 $9,759,454 
Commercial real estate - owner occupied991,493 218 12 — — 991,722 
Commercial and business lending10,730,053 934 5,578 282 14,329 10,751,176 
Commercial real estate - investor5,049,897 1,067 — — 29,380 5,080,344 
Real estate construction2,155,077 39 — — 105 2,155,222 
Commercial real estate lending7,204,975 1,105 — — 29,485 7,235,565 
Total commercial17,935,028 2,040 5,578 282 43,814 17,986,742 
Residential mortgage8,443,072 9,811 63 124 58,480 8,511,550 
Auto finance1,371,176 8,238 1,170 — 1,490 1,382,073 
Home equity611,259 5,149 458 — 7,487 624,353 
Other consumer291,722 1,018 592 1,322 197 294,851 
Total consumer10,717,229 24,216 2,283 1,446 67,654 10,812,828 
Total loans$28,652,257 $26,256 $7,861 $1,728 $111,467 $28,799,569 
(a) Of the total nonaccrual loans, $64 million, or 58%, were current with respect to payment at December 31, 2022.
(b) No interest income was recognized on nonaccrual loans for the year ended December 31, 2022. In addition, there were $11 million of nonaccrual loans for which there was no related ACLL at December 31, 2022.

Loan Modifications and Troubled Debt Restructurings
Under ASU 2022-02, effective January 1, 2023, loan modifications are reported if concessions have been granted to borrowers that are experiencing financial difficulty. Information on these loan modifications originated after the effective date is presented according to the new accounting guidance. Reporting periods prior to the adoption of ASU 2022-02 present information on TDRs under the previous disclosure requirements.
The following tables show the composition of loan modifications made to borrowers experiencing financial difficulty by the loan portfolio and type of concessions granted during the six months ended June 30, 2023. Each of the types of concessions granted comprised less than 1% of their respective classes of loan portfolios at June 30, 2023.
Interest Rate Concession
($ in thousands)Amortized Cost
Commercial and industrial$168 
Auto80 
Home equity78 
Other consumer988 
Total loans modified$1,314 
Term Extension
($ in thousands)Amortized Cost
Residential mortgage$208 
Home equity27 
Total loans modified$235 
Combination - Interest Rate Concession and Term Extension
($ in thousands)Amortized Cost
Residential mortgage$519 
Home equity168 
Total loans modified$687 

26

The following tables summarize, by loan portfolio, the financial effect of the Corporation's loan modifications on the modified loans as of June 30, 2023:
Interest Rate Concession
Loan Type
Financial Effect, Weighted Average Contractual Interest Rate (Decrease) Increase(a)
Commercial and industrial(17)%
Auto(4)%
Home equity— %
Other consumer(20)%
Total loans modified(10)%
(a) Due to market conditions, some interest rate concessions on floating rate loans may involve an increase in rate that was lower in comparison to the rate of increase for floating rate loans not modified.
Term Extension
Loan Type
Financial Effect, Weighted Average Term Increase(a)
Residential mortgage26 months
Total loans modified26 months
(a) During the six months ended June 30, 2023, term extensions changed the weighted average term on modified loans from 334 to 360 months.
The Corporation closely monitors the performance of loans that are modified to borrowers experiencing financial difficulty to understand the effectiveness of its modification efforts. The following table depicts the performance of loans that have been modified in the six months ended June 30, 2023:
Payment Status (Amortized Cost Basis)
($ in thousands)Current30-89 Days Past Due90+ Days Past DueNonaccrual
Commercial and industrial$168 $— $— $— 
Residential mortgage126 — — 601 
Auto80 — — — 
Home equity78 — — 195 
Other consumer988 — — — 
Total loans modified$1,439 $— $— $796 
The following table provides the amortized cost of loan modifications by loan portfolio and type of concession that were modified in the previous six months and subsequently had a payment default, as of June 30, 2023:
Amortized Cost of Loan Modifications that Subsequently Defaulted
($ in thousands)Interest Rate ConcessionTerm ExtensionCombination Interest Rate Reduction and Term Extension
Residential mortgage$— $201 $128 
Home equity— — 60 
Total loans modified$— $201 $187 
The following table presents nonaccrual and performing restructured loans by loan portfolio at December 31, 2022:
 ($ in thousands)Performing Restructured Loans
Nonaccrual Restructured Loans(a)
Commercial and industrial$12,453 $— 
Commercial real estate — owner occupied316 — 
Commercial real estate — investor128 2,074 
Real estate construction195 9 
Residential mortgage16,829 17,117 
Home equity2,148 927 
Other consumer798 — 
   Total restructured loans$32,868 $20,127 
(a) Nonaccrual restructured loans have been included within nonaccrual loans.
27

The following table provides the number of loans modified in a TDR by loan portfolio, the recorded investment, and unpaid principal balance for the six months ended June 30, 2022:
 ($ in thousands)Number of Loans
Recorded Investment(a)
Unpaid Principal Balance(b)
Commercial and industrial2 $275 $275 
Commercial real estate — investor1 553 573 
Residential mortgage35 8,149 8,315 
Home equity8 291 312 
   Total loans modified 46 $9,267 $9,474 
(a) Represents post-modification outstanding recorded investment.
(b) Represents pre-modification outstanding recorded investment.
During the six months ended June 30, 2022, restructured loan modifications of commercial loans primarily included maturity date extensions and payment schedule modifications. Restructured loan modifications of consumer loans for the six months ended June 30, 2022 primarily included maturity date extensions, interest rate concessions, non-reaffirmed Chapter 7 bankruptcies, or a combination of these concessions.
The following table provides the number of loans modified during the previous twelve months which subsequently defaulted during the six months ended June 30, 2022, and the recorded investment in these restructured loans at the time of default as of June 30, 2022:
 Six Months Ended June 30, 2022
 ($ in thousands)Number of
Loans		Recorded
Investment
Residential mortgage4 $1,178 
The nature and extent of the impairment of modified loans, including those which have experienced a subsequent payment default, are considered in the determination of an appropriate level of the ACLL.
Allowance for Credit Losses on Loans
The ACLL is comprised of the allowance for loan losses and the allowance for unfunded commitments. The level of the ACLL represents management’s estimate of an amount appropriate to provide for expected lifetime credit losses in the loan portfolio at the balance sheet date. The expected lifetime credit losses are the product of multiplying the Corporation's estimates of probability of default, loss given default, and the individual loan level exposure at default on an undiscounted basis. A main factor in the determination of the ACLL is the economic forecast. The forecast the Corporation used for June 30, 2023 was the Moody's baseline scenario from May 2023, which was reviewed against the June 2023 baseline scenario with no material updates made, over a 2 year reasonable and supportable period with straight-line reversion to the historical losses over the second year of the period. The allowance for unfunded commitments is maintained at a level believed by management to be sufficient to absorb expected lifetime losses related to unfunded credit facilities (including unfunded loan commitments and letters of credit). See Note 11 for additional information on the change in the allowance for unfunded commitments.

28

The following table presents a summary of the changes in the ACLL by portfolio segment for the six months ended June 30, 2023:
($ in thousands)Dec 31, 2022Charge offsRecoveriesNet Charge offsProvision for credit lossesJun 30, 2023ACLL / Loans
Allowance for loan losses
Commercial and industrial$119,076 $(14,489)$1,552 $(12,936)$17,011 $123,151 
Commercial real estate — owner occupied9,475 — 6 6 1,565 11,047 
Commercial and business lending128,551 (14,489)1,558 (12,930)18,576 134,197 
Commercial real estate — investor54,398 (242)2,517 2,276 9,953 66,627 
Real estate construction45,589 (25)24 — 3,106 48,694 
Commercial real estate lending99,986 (266)2,542 2,275 13,059 115,321 
Total commercial228,538 (14,755)4,100 (10,655)31,636 249,518 
Residential mortgage38,298 (574)238 (336)3,227 41,189 
Auto finance19,619 (2,335)331 (2,004)2,735 20,350 
Home equity14,875 (186)710 524 105 15,504 
Other consumer11,390 (2,506)508 (1,998)2,798 12,189 
Total consumer84,182 (5,601)1,787 (3,815)8,864 89,232 
Total loans$312,720 $(20,356)$5,886 $(14,470)$40,500 $338,750 
Allowance for unfunded commitments
Commercial and industrial$12,997 $— $— $— $(969)$12,028 
Commercial real estate — owner occupied103 — — — 6 109 
Commercial and business lending13,101 — — — (964)12,137 
Commercial real estate — investor710 — — — 98 807 
Real estate construction20,583 — — — 693 21,276 
Commercial real estate lending21,292 — — — 791 22,084 
Total commercial34,393 — — — (173)34,221 
Home equity2,699 — — — 107 2,806 
Other consumer1,683 — — — (434)1,249 
Total consumer4,382 — — — (327)4,055 
Total loans$38,776 $— $— $— $(500)$38,276 
Allowance for credit losses on loans
Commercial and industrial$132,073 $(14,489)$1,552 $(12,936)$16,042 $135,179 1.34 %
Commercial real estate — owner occupied9,579 — 6 6 1,571 11,156 1.05 %
Commercial and business lending141,652 (14,489)1,558 (12,930)17,613 146,335 1.32 %
Commercial real estate — investor55,108 (242)2,517 2,276 10,051 67,434 1.27 %
Real estate construction66,171 (25)24 — 3,799 69,970 3.48 %
Commercial real estate lending121,279 (266)2,542 2,275 13,850 137,404 1.88 %
Total commercial262,931 (14,755)4,100 (10,655)31,463 283,739 1.54 %
Residential mortgage38,298 (574)238 (336)3,227 41,189 0.47 %
Auto finance19,619 (2,335)331 (2,004)2,735 20,350 1.14 %
Home equity17,574 (186)710 524 212 18,310 2.97 %
Other consumer13,073 (2,506)508 (1,998)2,363 13,438 4.92 %
Total consumer88,565 (5,601)1,787 (3,815)8,537 93,287 0.82 %
Total loans$351,496 $(20,356)$5,886 $(14,470)$40,000 $377,027 1.26 %




29

The following table presents a summary of the changes in the ACLL by portfolio segment for the year ended December 31, 2022:
($ in thousands)Dec 31, 2021Charge offsRecoveriesNet Charge offsProvision for credit lossesDec 31, 2022ACLL / Loans
Allowance for loan losses
Commercial and industrial$89,857 $(4,491)$5,282 $791 $28,428 $119,076 
Commercial real estate — owner occupied11,473 — 13 13 (2,011)9,475 
Commercial and business lending101,330 (4,491)5,295 804 26,418 128,551 
Commercial real estate — investor72,803 (50)50 — (18,405)54,398 
Real estate construction37,643 (48)106 58 7,887 45,589 
Commercial real estate lending110,446 (98)156 58 (10,518)99,986 
Total commercial211,776 (4,588)5,451 862 15,900 228,538 
Residential mortgage40,787 (567)908 341 (2,830)38,298 
Auto finance1,999 (1,041)98 (943)18,563 19,619 
Home equity14,011 (587)1,385 798 66 14,875 
Other consumer11,441 (3,363)1,010 (2,353)2,301 11,390 
Total consumer68,239 (5,558)3,401 (2,157)18,100 84,182 
Total loans$280,015 $(10,146)$8,852 $(1,294)$34,000 $312,720 
Allowance for unfunded commitments
Commercial and industrial$18,459 $— $— $— $(5,462)$12,997 
Commercial real estate — owner occupied208 — — — (105)103 
Commercial and business lending18,667 — — — (5,566)13,101 
Commercial real estate — investor936 — — — (226)710 
Real estate construction15,586 — — — 4,997 20,583 
Commercial real estate lending16,522 — — — 4,770 21,292 
Total commercial35,189 — — — (796)34,393 
Home equity2,592 — — — 107 2,699 
Other consumer1,995 — — — (311)1,683 
Total consumer4,587 — — — (204)4,382 
Total loans$39,776 $— $— $— $(1,000)$38,776 
Allowance for credit losses on loans
Commercial and industrial$108,316 $(4,491)$5,282 $791 $22,967 $132,073 1.35 %
Commercial real estate — owner occupied11,681 — 13 13 (2,115)9,579 0.97 %
Commercial and business lending119,997 (4,491)5,295 804 20,852 141,652 1.32 %
Commercial real estate — investor73,739 (50)50 — (18,631)55,108 1.08 %
Real estate construction53,229 (48)106 58 12,884 66,171 3.07 %
Commercial real estate lending126,968 (98)156 58 (5,748)121,279 1.68 %
Total commercial246,965 (4,588)5,451 862 15,104 262,931 1.46 %
Residential mortgage40,787 (567)908 341 (2,830)38,298 0.45 %
Auto finance1,999 (1,041)98 (943)18,563 19,619 1.42 %
Home equity16,603 (587)1,385 798 173 17,574 2.81 %
Other consumer13,436 (3,363)1,010 (2,353)1,990 13,073 4.43 %
Total consumer72,825 (5,558)3,401 (2,157)17,896 88,565 0.82 %
Total loans$319,791 $(10,146)$8,852 $(1,294)$33,000 $351,496 1.22 %
Note 7 Goodwill and Other Intangible Assets
Goodwill
Goodwill is not amortized but is instead subject to impairment tests on at least an annual basis, and more frequently if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount.
The Corporation conducted its most recent annual impairment testing in May 2023, utilizing a qualitative assessment. Factors that management considered in this assessment included macroeconomic conditions, industry and market considerations, overall financial performance of the Corporation and each reporting unit (both current and projected), changes in management strategy, and changes in the composition or carrying amount of net assets. In addition, management considered the changes in both the Corporation's common stock price and in the KBW Nasdaq Regional Banking Index (KRX), as well as the Corporation's earnings per common share trend over the past year. Based on these assessments, management concluded that it is
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more likely than not that the estimated fair value exceeded the carrying value (including goodwill) for each reporting unit. Therefore, a step one quantitative analysis was not required. There have been no events since the May 2023 impairment test that have changed the Corporation's impairment assessment conclusion. There were no impairment charges recorded in 2022 or the first six months of 2023.
The Corporation had goodwill of $1.1 billion at both June 30, 2023 and December 31, 2022.
Core Deposit Intangibles
The Corporation has CDIs which are amortized. Changes in the gross carrying amount, accumulated amortization, and net book value for CDIs were as follows:
($ in thousands)Six Months Ended June 30, 2023Year Ended Dec 31, 2022
Core deposit intangibles
Gross carrying amount at the beginning of period$88,109 $88,109 
Accumulated amortization(43,233)(38,827)
Net book value$44,877 $49,282 
Amortization during the period$4,405 $8,811 
Mortgage Servicing Rights
The Corporation sells residential mortgage loans in the secondary market and typically retains the right to service the loans sold. MSRs are not traded in active markets. As a result, a cash flow model is used to determine fair value. Key assumptions and estimates, projected prepayment speeds, assumed servicing costs, ancillary income, costs to service delinquent loans, costs of foreclosure, and discount rates with option-adjusted spreads, are used in measuring the fair value of the MSRs asset. These assumptions are considered significant unobservable inputs. See Note 11 for a discussion of the recourse provisions on sold residential mortgage loans. See Note 12 which further discusses fair value measurement relative to the MSRs asset.
A summary of changes in the balance of the MSRs asset under the fair value measurement method for the six months ended June 30, 2023 and the year ended December 31, 2022 is as follows:
($ in thousands)Six Months Ended June 30, 2023Year Ended Dec 31, 2022
Mortgage servicing rights
Mortgage servicing rights at beginning of period$77,351 $54,862 
Cumulative effect of accounting methodology changeN/A2,296 
Balance at beginning of period, adjusted$77,351 $57,158 
Additions1,322 7,279 
Paydowns(3,359)(9,350)
Valuation:
Change in fair value model assumptions4,979 5,715 
Changes in fair value of asset156 16,549 
Mortgage servicing rights at end of period$80,449 $77,351 
Portfolio of residential mortgage loans serviced for others (“servicing portfolio”)$6,524,528 $6,711,820 
Mortgage servicing rights to servicing portfolio1.23 %1.15 %
The projections of amortization expense for CDIs and decay for MSRs are based on existing asset balances, the current interest rate environment, and prepayment speeds as of June 30, 2023. The actual expense the Corporation recognizes in any given period may be significantly different depending upon acquisition or sale activities, changes in interest rates, prepayment speeds, market conditions, regulatory requirements, and events or circumstances that indicate the carrying amount of an asset may not be recoverable. The following table shows the estimated future amortization expense for CDIs and decay for MSRs:
($ in thousands)Core Deposit IntangiblesMortgage Servicing Rights
Six months ended December 31, 2023$4,405 $6,707 
20248,811 12,685 
20258,811 11,185 
20268,811 9,854 
20278,811 8,519 
20283,485 7,491 
Beyond 20281,742 24,008 
Total estimated amortization expense and MSRs decay$44,877 $80,449 
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Note 8 Short and Long-Term Funding
The following table presents the components of short-term funding (funding with original contractual maturities of one year or less), and long-term funding (funding with original contractual maturities greater than one year):
($ in thousands)Jun 30, 2023Dec 31, 2022
Short-term funding
Federal funds purchased$170,380 $344,170 
Securities sold under agreements to repurchase155,547 240,969 
Federal funds purchased and securities sold under agreements to repurchase325,927 585,139 
Commercial paper15,327 20,798 
Total short-term funding$341,253 $605,937 
Long-term funding
Corporation subordinated notes, at par$550,000 $250,000 
Discount and capitalized costs(8,307)(544)
Subordinated debt fair value hedge(a)
(7,847)(1,855)
Finance leases427 469 
Total long-term funding$534,273 $248,071 
   Total short and long-term funding, excluding FHLB advances$875,526 $854,007 
FHLB advances
Short-term FHLB advances$2,440,000 $3,125,000 
Long-term FHLB advances1,208,714 1,209,170 
FHLB advances fair value hedge(a)
(17,967)(14,308)
Total FHLB advances$3,630,747 $4,319,861 
Total short and long-term funding$4,506,273 $5,173,869 
(a) For additional information on the fair value hedges, see Note 9.
Securities Sold Under Agreements to Repurchase
The Corporation enters into agreements under which it sells securities subject to an obligation to repurchase the same or similar securities. Under these arrangements, the Corporation may transfer legal control over the assets but still retain effective control through an agreement that both entitles and obligates the Corporation to repurchase the assets. The obligation to repurchase the securities is reflected as a liability on the Corporation’s consolidated balance sheets, while the securities underlying the repurchase agreements remain in the respective investment securities asset accounts (i.e., there is no offsetting or netting of the investment securities assets with the repurchase agreement liabilities).
The Corporation utilizes repurchase agreements to facilitate the needs of its customers. The fair value of securities pledged to secure repurchase agreements may decline. At June 30, 2023, the Corporation had pledged securities valued at 170% of the gross outstanding balance of repurchase agreements to manage this risk.
The remaining contractual maturity of the securities sold under agreements to repurchase on the consolidated balance sheets as of June 30, 2023 and December 31, 2022 are presented in the following table:
Overnight and Continuous
($ in thousands)Jun 30, 2023Dec 31, 2022
Repurchase agreements
Agency mortgage-related securities$155,547 $240,969 
Long-Term Funding
Subordinated Notes 
In November 2014, the Corporation issued $250 million of 10-year subordinated notes, due January 2025, and callable October 2024. The subordinated notes have a fixed coupon interest rate of 4.25% and were issued at a discount.
In February 2023, the Corporation issued $300 million of 10-year subordinated notes, due March 1, 2033 and redeemable (i) on the reset date of March 1, 2028 and on any interest payment date thereafter, (ii) at any time on or after the three month period prior to the maturity date, and (iii) upon the occurrence of a Regulatory Capital Treatment Event (as defined in the Global Note). The subordinated notes have a fixed coupon interest rate of 6.625% until the reset date, after which the rate will be equal to the Five-Year U.S. Treasury Rate as of the reset date plus 2.812% per annum. The notes were issued at a discount.
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Finance Leases
Finance leases are used in conjunction with branch operations. See Note 16 for additional disclosure regarding the Corporation’s leases.
Note 9 Derivative and Hedging Activities
The Corporation is exposed to certain risk arising from both its business operations and economic conditions. The Corporation principally manages its exposures to a wide variety of business and operational risks through management of its core business activities. The Corporation manages economic risks, including interest rate, liquidity, and credit risk, primarily by managing the amount, sources, and duration of its assets and liabilities and the use of derivative financial instruments. Specifically, the Corporation enters into derivative financial instruments to manage exposures that arise from business activities that result in the receipt or payment of future known and uncertain cash amounts, the values of which are determined by interest rates. The Corporation's derivative financial instruments are used to manage differences in the amount, timing, and duration of the Corporation's known or expected cash receipts and its known or expected cash payments principally related to the Corporation's assets.
The contract or notional amount of a derivative is used to determine, along with the other terms of the derivative, the amounts to be exchanged between the counterparties. The Corporation is exposed to credit risk in the event of nonperformance by counterparties to financial instruments. To mitigate the counterparty risk, contracts generally contain language outlining collateral pledging requirements for each counterparty. For non-centrally cleared derivatives, collateral must be posted when the market value exceeds certain mutually agreed upon threshold limits. Securities and cash are often pledged as collateral. The Corporation pledged $101 million and $92 million of investment securities as collateral at June 30, 2023 and December 31, 2022, respectively. Cash is often pledged as collateral for derivatives that are not centrally cleared. The Corporation's required cash collateral was approximately $2 million at June 30, 2023, compared to $3 million at December 31, 2022.
Federal regulations require the Corporation to clear all LIBOR and compound SOFR interest rate swaps through a clearing house, if possible. For derivatives cleared through central clearing houses, the variation margin payments are legally characterized as daily settlements of the derivative rather than collateral. The Corporation's clearing agent for interest rate derivative contracts that are centrally cleared through the Chicago Mercantile Exchange and the London Clearing House settles the variation margin daily. As a result, the variation margin payment and the related derivative instruments are considered a single unit of account for accounting and financial reporting purposes. Depending on the net position, the fair value is reported in other assets or accrued expenses and other liabilities on the consolidated balance sheets. The daily settlement of the derivative exposure does not change or reset the contractual terms of the instrument.
Fair Value Hedges of Interest Rate Risk
The Corporation is exposed to changes in the fair value of its fixed-rate debt due to changes in benchmark interest rates. The Corporation uses interest rate swaps to manage its exposure to changes in fair value on these instruments attributable to changes in the designated benchmark interest rates. Interest rate swaps designated as fair value hedges involve receiving payment of fixed-rate amounts from a counterparty in exchange for the Corporation paying variable-rate payments over the life of the agreements without the exchange of the underlying notional amount.
For derivatives designated and that qualify as fair value hedges, as allowed under U.S. GAAP, the Corporation applied the "shortcut" method of accounting, which permits the assumption of perfect effectiveness. The gain or loss on the derivative as well as the offsetting loss or gain on the hedged item attributable to the hedged risk are recognized in interest expense. These items, along with the net interest from the derivative, are reported in the same income statement line as the fixed-rate debt expense.
Cash Flow Hedges of Interest Rate Risk
The Corporation is exposed to variability in cash flows on its floating rate assets due to changes in benchmark interest rates. The Corporation uses interest rate swaps to hedge certain forecasted transactions for the variability in cash flows attributable to the contractually specified interest rate in order to add stability to net interest income and to manage its exposure to interest rate movements. Interest rate swaps designated as cash flow hedges involve receiving fixed-rate amounts from a counterparty in exchange for the Corporation making variable-rate payments over the life of the agreements without the exchange of the underlying notional amount. These items, along with the net interest from the derivative, are reported in the same income statement line as the interest income from the floating-rate assets.
When the relationship between the hedged item and hedging instrument is highly effective at achieving offsetting changes in cash flows attributable to the hedged risk, changes in the fair value of these cash flow hedges are recorded in accumulated other
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comprehensive income (loss) and are subsequently reclassified to interest income as interest payments are made on such variable rate loans.
Derivatives to Accommodate Customer Needs
The Corporation facilitates customer borrowing activity by entering into various derivative contracts which are designated as free standing derivative contracts. Free standing derivative products are entered into primarily for the benefit of commercial customers seeking to manage their exposures to interest rate risk and foreign currency. These derivative contracts are not designated against specific assets and liabilities on the consolidated balance sheets or forecasted transactions and, therefore, do not qualify for hedge accounting treatment. Such derivative contracts are carried at fair value in other assets and accrued expenses and other liabilities on the consolidated balance sheets with changes in the fair value recorded as a component of capital markets, net, and typically include interest rate-related instruments (swaps and caps) and foreign currency exchange forwards. See Note 10 for additional information and disclosures on balance sheet offsetting.
Interest rate-related and other instruments: The Corporation provides interest rate risk management services to commercial customers, primarily interest rate swaps and caps. The Corporation’s market risk from unfavorable movements in interest rates related to these derivative contracts is generally economically hedged by concurrently entering into offsetting derivative contracts. The offsetting derivative contracts have identical notional values, terms, and indices, except in rare circumstances where the indices are not identical which creates a negligible basis mismatch. The Corporation also enters into credit risk participation agreements with financial institution counterparties for interest rate swaps related to loans as either a participant or a lead bank. The risk participation agreements entered into by the Corporation as a participant bank provide credit protection to the financial institution counterparty should the borrower fail to perform on its interest rate derivative contract with that financial institution.
Foreign currency exchange forwards: The Corporation provides foreign currency exchange services to customers, primarily forward contracts. The Corporation's customers enter into a foreign currency exchange forward with the Corporation as a means for them to mitigate exchange rate risk. The Corporation mitigates its risk by then entering into an offsetting foreign currency exchange derivative contract.
Mortgage Derivatives
Interest rate lock commitments to originate residential mortgage loans held for sale and forward commitments to sell residential mortgage loans are considered derivative instruments, and the fair value of these commitments are recorded in other assets and accrued expenses and other liabilities on the consolidated balance sheets with the changes in fair value recorded as a component of mortgage banking, net on the consolidated statements of income.
Interest rate-related instruments for MSRs hedge: The fair value of the Corporation's MSRs asset changes in response to changes in primary mortgage loan rates and other assumptions. To mitigate the earnings volatility caused by changes in the fair value of MSRs, the Corporation designates certain financial instruments as an economic hedge. Changes in the fair value of these instruments are generally expected to partially offset changes in the fair value of MSRs and are recorded in other assets and accrued expenses and other liabilities on the consolidated balance sheets with the changes in fair value recorded as a component of mortgage banking, net on the consolidated statements of income.
The following table presents the total notional amounts and gross fair values of the Corporation’s derivatives, as well as the balance sheet netting adjustments as of June 30, 2023 and December 31, 2022. The derivative assets and liabilities are presented on a gross basis prior to the application of bilateral collateral and master netting agreements, but after the variation margin payments with central clearing organizations have been applied as settlement, as applicable. Total derivative assets and liabilities are adjusted to take into consideration the effects of legally enforceable master netting agreements and cash collateral received or paid as of June 30, 2023 and December 31, 2022. The resulting net derivative asset and liability fair values are included in other assets and accrued expenses and other liabilities, respectively, on the consolidated balance sheets.
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 Jun 30, 2023Dec 31, 2022
AssetLiabilityAssetLiability
($ in thousands)Notional AmountFair ValueNotional AmountFair ValueNotional AmountFair ValueNotional AmountFair Value
Designated as hedging instruments:
Interest rate-related instruments$100,000 $1,587 $2,750,000 $12,682 $900,000 $4,349 $1,150,000 $1,260 
Not designated as hedging instruments:
Interest rate-related and other instruments4,344,168 115,311 4,698,706 242,507 4,246,823 62,401 4,599,391 251,398 
Foreign currency exchange forwards486,539 3,295 478,848 3,038 499,078 1,922 461,134 1,801 
Mortgage banking(a)(b)
39,392 768 71,500 — 21,265 86 33,000 46 
Total not designated as hedging instruments119,374 245,544 64,410 253,245 
Gross derivatives before netting120,961 258,226 68,759 254,506 
Less: Legally enforceable master netting agreements3,924 3,924 2,788 2,788 
Less: Cash collateral pledged/received63,452 12 26,898 217 
Total derivative instruments, after netting$53,584 $254,290 $39,072 $251,500 

(a) The notional amount of the mortgage derivative asset includes interest rate lock commitments, while the notional amount of the mortgage derivative liability includes forward commitments.
(b) At June 30, 2023 the mortgage derivative asset included approximately $336,000 of forward commitments fair value.

The following table presents amounts that were recorded on the consolidated balance sheets related to cumulative basis adjustments for fair value hedges:
Line Item in the Consolidated Balance Sheets in Which the Hedged Item is Included
Carrying Amount of the Hedged Assets/(Liabilities)Cumulative Amount of Fair Value Hedging Adjustment Included in the Carrying Amount of the Hedged Assets/(Liabilities)Carrying Amount of the Hedged Assets/(Liabilities)Cumulative Amount of Fair Value Hedging Adjustment Included in the Carrying Amount of the Hedged Assets/(Liabilities)
($ in thousands)June 30, 2023December 31, 2022
Other long-term funding$(542,153)$7,847 $(248,145)$1,855 
FHLB Advances(582,033)17,967 (585,692)14,308 
Total$(1,124,186)$25,814 $(833,837)$16,163 
The Corporation terminated its $500 million fair value hedge during the fourth quarter of 2019. At June 30, 2023, the amortized cost basis of the closed portfolios which had previously been used in the terminated hedging relationship was $306 million and is included in loans on the consolidated balance sheets. This amount includes $1 million of hedging adjustments on the discontinued hedging relationships, which are not presented in the table above.
The table below identifies the effect of fair value and cash flow hedge accounting on the Corporation's consolidated statements of income for the three and six months ended June 30, 2023 and 2022:
Location and Amount Recognized on the Consolidated Statements of Income in
Fair Value and Cash Flow Hedging Relationships
Three months ended Jun 30,Six Months Ended Jun 30,
2023202220232022
($ in thousands)Interest Income Interest ExpenseInterest IncomeInterest IncomeInterest ExpenseInterest Income
Total amounts of income/expense presented on the consolidated statements of income in which the effects of the fair value or cash flow hedges are recorded(a)
$(3,376)$4,329 $(129)$(4,697)$6,844 $(308)
The effects of fair value and cash flow hedging: Impact on fair value hedging relationships in Subtopic 815-20
Interest contracts:
Hedged items (57)(20,375)(129)(115)(9,651)(308)
Derivatives designated as hedging instruments(a)
(3,319)24,704 — (4,581)16,495 — 
(a) Includes net settlements on the derivatives.
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The following table presents the effect of cash flow hedge accounting on accumulated other comprehensive income (loss) for the three and six months ended June 30, 2023 and 2022:
Three Months Ended Jun 30,Six Months Ended Jun 30,
($ in thousands)2023202220232022
Interest rate-related instruments designated as cash flow hedging instruments
Amount of (loss) recognized in OCI on cash flow hedge derivative(a)
$(34,147)$— $(20,384)$— 
Amount of loss reclassified from accumulated other comprehensive income (loss) into interest income(a)
3,319 — 4,581 — 
(a) The entirety of (losses) recognized in OCI as well as the losses reclassified from accumulated other comprehensive income (loss) into interest income were included components in the assessment of hedge effectiveness.
Amounts reported in accumulated other comprehensive income (loss) related to cash flow hedge derivatives are reclassified to interest income as interest payments are made on the hedged variable interest rate assets. The Corporation estimates that $17 million will be reclassified as a decrease to interest income over the next 12 months. This amount could differ from amounts actually recognized due to changes in interest rates, hedge de-designations, or the addition of other hedges subsequent to June 30, 2023. The maximum length of time over which the Corporation is hedging its exposure to the variability in future cash flows is 41 months as of June 30, 2023.
The table below identifies the effect of derivatives not designated as hedging instruments on the Corporation's consolidated statements of income for the three and six months ended June 30, 2023 and 2022:
Consolidated Statements of Income Category of Gain / (Loss) 
Recognized in Income		Three Months Ended Jun 30,Six Months Ended Jun 30,
($ in thousands)2023202220232022
Derivative instruments
Interest rate-related and other instruments — customer and mirror, netCapital markets, net$207 $8 $138 $565 
Interest rate-related instruments — MSRs hedgeMortgage banking, net(2,195)(5,346)326 (9,012)
Foreign currency exchange forwardsCapital markets, net138 254 136 377 
Interest rate lock commitments (mortgage)Mortgage banking, net93 1,210 345 (1,631)
Forward commitments (mortgage)Mortgage banking, net777 (4,885)382 (128)
Note 10 Balance Sheet Offsetting
Interest Rate-Related Instruments and Foreign Exchange Forwards (“Interest and Foreign Exchange Agreements”)
The Corporation enters into interest rate-related instruments to facilitate the interest rate risk management strategies of commercial customers and foreign exchange forwards to manage customers' exposure to fluctuating foreign exchange rates. The Corporation typically mitigates these risks by entering into equal and offsetting agreements with highly rated third-party financial institutions, though in rare circumstances the agreements are not perfectly equal and offsetting, which creates a negligible basis mismatch. The Corporation is party to master netting arrangements with some of its financial institution counterparties that create single net settlements of all legal claims or obligations to pay or receive the net amount of settlement of the individual interest and foreign exchange agreements. Collateral, usually in the form of investment securities and cash, is posted by the counterparty with net liability positions in accordance with contract thresholds. Derivatives subject to a legally enforceable master netting agreement are reported with assets and liabilities offset resulting in a net position which is further offset by any cash collateral, and is reported in other assets and accrued expenses and other liabilities on the face of the consolidated balance sheets. For disclosure purposes, the net position on the consolidated balance sheets can be further netted down by investment securities collateral received or pledged. See Note 9 for additional information on the Corporation’s derivative and hedging activities.
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The following table presents the interest rate and foreign exchange assets and liabilities subject to an enforceable master netting arrangement as of June 30, 2023 and December 31, 2022. The interest rate and foreign exchange agreements the Corporation has with its commercial customers are not subject to an enforceable master netting arrangement and are therefore excluded from this table:
 Gross Amounts RecognizedGross Amounts Subject to Master Netting Arrangements Offset on the Consolidated Balance SheetsNet Amounts Presented on the Consolidated Balance SheetsGross Amounts Not Offset on the Consolidated Balance Sheets 
 ($ in thousands)Derivative
Liabilities Offset		Cash Collateral ReceivedSecurity Collateral ReceivedNet
 Amount
Derivative assets
June 30, 2023$111,588 $(3,924)$(63,452)$44,211 $(32,563)$11,648 
December 31, 202263,029 (2,788)(26,898)33,342 (30,753)2,589 
 Gross Amounts RecognizedGross Amounts Subject to Master Netting Arrangements Offset on the Consolidated Balance SheetsNet Amounts Presented on the Consolidated Balance SheetsGross Amounts Not Offset on the Consolidated Balance Sheets 
 ($ in thousands)Derivative
Assets Offset		Cash Collateral PledgedSecurity Collateral PledgedNet
 Amount
Derivative liabilities
June 30, 2023$16,392 $(3,924)$(12)$12,456 $— $12,456 
December 31, 20223,096 (2,788)(217)91 — 91 
Note 11 Commitments, Off-Balance Sheet Arrangements, Legal Proceedings, and Regulatory Matters
The Corporation utilizes a variety of financial instruments in the normal course of business to meet the financial needs of its customers and to manage its own exposure to fluctuations in interest rates. These financial instruments include lending-related and other commitments (see below) as well as derivative instruments (see Note 9). The following is a summary of lending-related commitments:
($ in thousands)Jun 30, 2023Dec 31, 2022
Commitments to extend credit, excluding commitments to originate residential mortgage loans held for sale(a)(b)
$11,516,228 $12,444,275 
Commercial letters of credit(a)
3,728 3,188 
Standby letters of credit(c)
252,513 270,692 
(a) These off-balance sheet financial instruments are exercisable at the market rate prevailing at the date the underlying transaction will be completed and, thus, are deemed to have no current fair value, or the fair value is based on fees currently charged to enter into similar agreements and was not material at June 30, 2023 or December 31, 2022.
(b) Interest rate lock commitments to originate residential mortgage loans held for sale are considered derivative instruments and are disclosed in Note 9.
(c) Standby letters of credit are presented excluding participations. The Corporation has established a liability of $3 million at both June 30, 2023 and December 31, 2022, as an estimate of the fair value of these financial instruments.
Lending-related Commitments
As a financial services provider, the Corporation routinely enters into commitments to extend credit. Such commitments are subject to the same credit policies and approval process accorded to loans made by the Corporation, with each customer’s creditworthiness evaluated on a case-by-case basis. The commitments generally have fixed expiration dates or other termination clauses and may require the payment of a fee. The Corporation’s exposure to credit loss in the event of nonperformance by the other party to these financial instruments is represented by the contractual amount of those instruments. The amount of collateral obtained, if deemed necessary by the Corporation upon extension of credit, is based on management’s credit evaluation of the customer. Since a significant portion of commitments to extend credit are subject to specific restrictive loan covenants or may expire without being drawn upon, the total commitment amounts do not necessarily represent future cash flow requirements. An allowance for unfunded commitments is maintained at a level believed by management to be sufficient to absorb expected lifetime losses related to unfunded commitments (including unfunded loan commitments and letters of credit).
The following table presents a summary of the changes in the allowance for unfunded commitments:
($ in thousands)Six Months Ended June 30, 2023Year Ended December 31, 2022
Allowance for unfunded commitments
Balance at beginning of period$38,776 $39,776 
Provision for unfunded commitments(500)(1,000)
Balance at end of period$38,276 $38,776 
Lending-related commitments include commitments to extend credit, commitments to originate residential mortgage loans held for sale, commercial letters of credit, and standby letters of credit. Commitments to extend credit are legally binding agreements
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to lend to customers at predetermined interest rates, as long as there is no violation of any condition established in the contracts. Interest rate lock commitments to originate residential mortgage loans held for sale and forward commitments to sell residential mortgage loans are considered derivative instruments, and the fair value of these commitments is recorded in other assets and accrued expenses and other liabilities on the consolidated balance sheets. The Corporation’s derivative and hedging activity is further described in Note 9. Commercial and standby letters of credit are conditional commitments issued to guarantee the performance of a customer to a third party. Commercial letters of credit are issued specifically to facilitate commerce and typically result in the commitment being drawn on when the underlying transaction is consummated between the customer and the third party, while standby letters of credit generally are contingent upon the failure of the customer to perform according to the terms of the underlying contract with the third party.
Other Commitments
The Corporation invests in qualified affordable housing projects, historic projects, new market projects, and opportunity zone funds for the purpose of community reinvestment and obtaining tax credits and other tax benefits. Return on the Corporation's investment in these projects and funds comes in the form of the tax credits and tax losses that pass through to the Corporation, and deferral or elimination of capital gain recognition for tax purposes. The aggregate carrying value of these investments at June 30, 2023 was $231 million, compared to $250 million at December 31, 2022, included in tax credit and other investments on the consolidated balance sheets. The Corporation utilizes the proportional amortization method to account for investments in qualified affordable housing projects.
Under the proportional amortization method, the Corporation amortizes the initial cost of the investment in proportion to the tax credits and other tax benefits. The Corporation recognized additional income tax expense attributable to the amortization of investments in qualified affordable housing projects of $17 million and $16 million for the six months ended June 30, 2023 and June 30, 2022, respectively, and $9 million and $8 million for the three months ended June 30, 2023 and June 30, 2022, respectively. The Corporation's remaining investment in qualified affordable housing projects accounted for under the proportional amortization method totaled $228 million at June 30, 2023 and $246 million at December 31, 2022.
The Corporation’s unfunded equity contributions relating to investments in qualified affordable housing and historic projects are recorded in accrued expenses and other liabilities on the consolidated balance sheets. The Corporation’s remaining unfunded equity contributions totaled $30 million at June 30, 2023 and $40 million at December 31, 2022. Additionally, at June 30, 2023, the Corporation also invests in a private SBA loan fund, recorded in equity securities on the consolidated balance sheets, the purpose of which is to identify CRA qualifying loans within a target region, which has a remaining unfunded equity contribution of $5 million.
For the six months ended June 30, 2023 and the year ended December 31, 2022, the Corporation did not record any impairment related to qualified affordable housing investments.
The Corporation has principal investment commitments to provide capital-based financing to private companies through either direct investment in specific companies or through investment funds and partnerships. The timing of future cash requirements to fund such principal investment commitments is generally dependent on the investment cycle, whereby privately held companies are funded by private equity investors and ultimately sold, merged, or taken public through an initial offering, which can vary based on overall market conditions, as well as the nature and type of industry in which the companies operate. The Corporation also invests in loan pools that support CRA loans. The timing of future cash requirements to fund these pools is dependent upon loan demand, which can vary over time. The aggregate carrying value of these investments was $32 million at June 30, 2023 and $27 million at December 31, 2022, included in tax credit and other investments on the consolidated balance sheets.
Legal Proceedings
The Corporation is party to various pending and threatened claims and legal proceedings arising in the normal course of business activities, some of which involve claims for substantial amounts. Although there can be no assurance as to the ultimate outcomes, the Corporation believes it has meritorious defenses to the claims asserted against it in its currently outstanding matters and intends to continue to defend itself vigorously with respect to such legal proceedings. The Corporation will consider settlement of cases when, in management’s judgment, it is in the best interests of the Corporation and its shareholders.
On at least a quarterly basis, the Corporation assesses its liabilities and contingencies in connection with all pending or threatened claims and litigation, utilizing the most recent information available. On a matter by matter basis, an accrual for loss is established for those matters which the Corporation believes it is probable that a loss may be incurred and that the amount of such loss can be reasonably estimated. Once established, each accrual is adjusted as appropriate to reflect any subsequent developments. Accordingly, management’s estimate will change from time to time, and actual losses may be more or less than
38

the current estimate. For matters where a loss is not probable, or the amount of the loss cannot be estimated, no accrual is established.
Resolution of legal claims is inherently unpredictable, and in many legal proceedings various factors exacerbate this inherent unpredictability, including where the damages sought are unsubstantiated or indeterminate, it is unclear whether a case brought as a class action will be allowed to proceed on that basis, discovery is not complete, the proceeding is not yet in its final stages, the matters present legal uncertainties, there are significant facts in dispute, there are a large number of parties (including where it is uncertain how liability, if any, will be shared among multiple defendants), or there is a wide range of potential results.
The Corporation believes that the legal proceedings currently pending against it should not have a material adverse effect on the Corporation’s consolidated financial condition. The Corporation notes, however, that in light of the uncertainties involved in such proceedings, there is no assurance that the ultimate resolution of these matters will not significantly exceed the reserves it has currently accrued or that a matter will not have material reputational consequences. As a result, the outcome of a particular matter may be material to the Corporation’s operating results for a particular period, depending on, among other factors, the size of the loss or liability imposed and the level of the Corporation’s income for that period.
Regulatory Matters
A variety of consumer products, including mortgage and deposit products, and certain fees and charges related to such products, have come under increased regulatory scrutiny. It is possible that regulatory authorities could bring enforcement actions, including civil money penalties, or take other actions against the Corporation in regard to these consumer products. The Bank could also determine of its own accord, or be required by regulators, to refund or otherwise make remediation payments to customers in connection with these products. It is not possible at this time for management to assess the probability of a material adverse outcome or reasonably estimate the amount of any potential loss related to such matters.
Mortgage Repurchase Reserve
The Corporation sells residential mortgage loans to investors in the normal course of business. Residential mortgage loans sold to others are predominantly conventional residential first lien mortgages originated under the Corporation's usual underwriting procedures, and are most often sold on a nonrecourse basis, primarily to the GSEs. The Corporation’s agreements to sell residential mortgage loans in the normal course of business usually require certain representations and warranties on the underlying loans sold, related to credit information, loan documentation, collateral, and insurability. Subsequent to being sold, if a material underwriting deficiency or documentation defect is discovered, the Corporation may be obligated to repurchase the loan or reimburse the GSEs for losses incurred (collectively, “make whole requests”). The make whole requests and any related risk of loss under the representations and warranties are largely driven by borrower performance. The Corporation also sells qualifying residential mortgage loans guaranteed by U.S. government agencies into GNMA pools.
As a result of make whole requests, the Corporation has repurchased loans with aggregate principal balances of $4 million and $6 million for the six months ended June 30, 2023 and the year ended December 31, 2022, respectively. There were no loss reimbursement and settlement claims paid in the six months ended June 30, 2023 or for the year ended December 31, 2022. Make whole requests since January 1, 2022 generally arose from loans originated since January 1, 2021 with such balances totaling $2.6 billion at the time of sale, consisting primarily of loans sold to GSEs. As of June 30, 2023, $2.2 billion of those loans originated since January 1, 2021 remain outstanding.
The balance in the mortgage repurchase reserve at the balance sheet date reflects the estimated amount of potential loss the Corporation could incur from repurchasing a loan, as well as loss reimbursements, indemnifications, and other settlement resolutions. The mortgage repurchase reserve, included in accrued expenses and other liabilities on the consolidated balance sheets, was approximately $522,000 at June 30, 2023 and $1 million at December 31, 2022.
The Corporation may also sell residential mortgage loans with limited recourse (limited in that the recourse period ends prior to the loan’s maturity, usually after certain time and/or loan paydown criteria have been met), whereby repurchase could be required if the loan had defined delinquency issues during the limited recourse periods. At June 30, 2023 and December 31, 2022, there were $15 million and $7 million, respectively, of residential mortgage loans sold with such recourse risk. There have been limited instances and immaterial historical losses on repurchases for recourse under the limited recourse criteria.
The Corporation has a subordinate position to the FHLB in the credit risk on residential mortgage loans it sold to the FHLB in exchange for a monthly credit enhancement fee. The Corporation has not sold loans to the FHLB with such credit risk retention since February 2005. At June 30, 2023 and December 31, 2022, there were $18 million and $19 million, respectively, of such residential mortgage loans with credit risk recourse, upon which there have been immaterial historical losses to the Corporation.
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Note 12 Fair Value Measurements
Fair value represents the estimated price at which an orderly transaction to sell an asset or to transfer a liability would take place between market participants at the measurement date under current market conditions (i.e., an exit price concept).
The valuation methodologies for assets and liabilities measured at fair value on a recurring and non-recurring basis are described in the Fair Value Measurements note in the Corporation’s 2022 Annual Report on Form 10-K.
The table below presents the Corporation’s financial instruments measured at fair value on a recurring basis as of June 30, 2023 and December 31, 2022, aggregated by the level in the fair value hierarchy within which those measurements fall:
 ($ in thousands)Fair Value HierarchyJun 30, 2023Dec 31, 2022
Assets
AFS investment securities:
U.S. Treasury securities Level 1$109,954 $109,378 
Agency securitiesLevel 213,517 13,532 
Obligations of state and political subdivisions (municipal securities)Level 2222,487 230,714 
Residential mortgage-related securities:
FNMA / FHLMC Level 21,520,939 1,604,610 
GNMA Level 21,290,640 497,596 
Commercial mortgage-related securities:
FNMA / FHLMCLevel 217,095 17,142 
GNMA Level 2183,346 110,462 
Asset backed securities:
FFELP Level 2140,166 151,191 
SBALevel 23,721 4,477 
Other debt securities Level 22,913 2,922 
Total AFS investment securities Level 1$109,954 $109,378 
Total AFS investment securities Level 23,394,824 2,632,647 
Equity securities with readily determinable fair values Level 16,652 5,991 
Residential loans held for sale Level 238,083 20,383 
Mortgage servicing rights, netLevel 380,449 77,351 
Interest rate-related instruments designated as hedging instruments(a)
Level 21,587 4,349 
Interest rate-related and other instruments not designated as hedging instruments(a)
 Level 2115,311 62,401 
Foreign currency exchange forwards(a)
 Level 23,295 1,922 
Interest rate lock commitments to originate residential mortgage loans held for sale Level 3431 86 
Forward commitments to sell residential mortgage loansLevel 3336 — 
Liabilities
Interest rate-related instruments designated as hedging instruments(a)
Level 2$12,682 $1,260 
Interest rate-related and other instruments not designated as hedging instruments(a)
 Level 2242,507 251,398 
Foreign currency exchange forwards(a)
 Level 23,038 1,801 
Forward commitments to sell residential mortgage loans Level 3— 46 
(a) Figures are presented gross before netting. See Note 9 and Note 10 for information relating to the impact of offsetting derivative assets and liabilities and cash collateral with the
    same counterparty where there is a legally enforceable master netting agreement in place.
40

The table below presents a rollforward of the consolidated balance sheets amounts for the six months ended June 30, 2023 and the year ended December 31, 2022, for the Corporation's mortgage derivatives measured on a recurring basis and classified within Level 3 of the fair value hierarchy:
($ in thousands)Interest rate lock commitments to originate residential mortgage loans held for saleForward commitments to sell residential mortgage loansTotal
Balance December 31, 2021$2,617 $(30)$2,647 
New production10,442 (2,028)12,470 
Closed loans / settlements(913)24,766 (25,679)
Other(12,060)(22,662)10,603 
Change in mortgage derivative(2,531)76 (2,607)
Balance December 31, 2022$86 $46 $40 
New production$2,594 $(790)$3,384 
Closed loans / settlements(1,370)519 (1,890)
Other(879)(112)(767)
Change in mortgage derivative345 (382)727 
Balance June 30, 2023$431 $(336)$768 
The following table presents the carrying value of equity securities without readily determinable fair values still held as of June 30, 2023 that are measured under the measurement alternative and the related adjustments recorded during the periods presented for those securities with observable price changes. These securities are included in the nonrecurring fair value tables when applicable price changes are observable. Also shown are the cumulative upward and downward adjustments for the Corporation's equity securities without readily determinable fair values as of June 30, 2023:
 ($ in thousands)
Equity securities without readily determinable fair values
Carrying value as of December 31, 2022
$19,225 
Purchases5,006 
Carrying value as of June 30, 2023
$24,231 
Cumulative upward carrying value changes between January 1, 2018 and June 30, 2023
$19,134 
Cumulative downward carrying value changes/impairment between January 1, 2018 and June 30, 2023
$— 
The table below presents the Corporation’s assets measured at fair value on a nonrecurring basis, aggregated by the level in the fair value hierarchy within which those measurements fall:
($ in thousands)Fair Value HierarchyFair ValueConsolidated Statements of Income Category of Adjustment Recognized in Income
Adjustment Recognized on the Consolidated Statements of Income(a)
June 30, 2023
Assets
Individually evaluated loansLevel 3$39,384 Provision for credit losses$15,549 
OREO(b)
Level 2801 
Other noninterest expense / provision for credit losses(c)
359 
December 31, 2022
Assets
Individually evaluated loansLevel 3$23,584 Provision for credit losses$4,405 
OREO(b)
Level 22,196 
Other noninterest expense / provision for credit losses(c)
971 
Equity securities without readily determinable fair valuesLevel 319,134 Investment securities gains (losses), net5,690 
(a) Includes the full year impact on the consolidated statements of income.
(b) If the fair value of the collateral exceeds the carrying amount of the asset, no charge off or adjustment is necessary, the asset is not considered to be carried at fair value and is therefore not included in the table.
(c) When a property's value is written down at the time it is transferred to OREO, the charge off is booked to the provision for credit losses. When a property is already in OREO and subsequently written down, the charge off is booked to other noninterest expense.
Certain nonfinancial assets and nonfinancial liabilities measured at fair value on a nonrecurring basis include the fair value analysis in the goodwill impairment test as well as intangible assets and other nonfinancial long-lived assets measured at fair value for the purpose of impairment assessment.
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The table below presents the unobservable inputs that are readily quantifiable pertaining to Level 3 measurements:
June 30, 2023Valuation TechniqueSignificant Unobservable InputRange of InputsWeighted Average Input Applied
Mortgage servicing rightsDiscounted cash flowOption adjusted spread7%-9%7%
Mortgage servicing rightsDiscounted cash flowConstant prepayment rate1%-100%6%
Individually evaluated loansAppraisals / Discounted cash flowCollateral / Discount factor19%-48%38%
Interest rate lock commitments to originate residential mortgage loans held for saleDiscounted cash flowClosing Ratio40%-100%85%
Fair Value of Financial Instruments
The Corporation is required to disclose estimated fair values for its financial instruments.
Fair value estimates are set forth below for the Corporation’s financial instruments:
 Jun 30, 2023Dec 31, 2022
($ in thousands)Fair Value Hierarchy LevelCarrying AmountFair ValueCarrying AmountFair Value
Financial assets
Cash and due from banks Level 1$407,620 $407,620 $436,952 $436,952 
Interest-bearing deposits in other financial institutions Level 1190,881 190,881 156,693 156,693 
Federal funds sold and securities purchased under agreements to resell Level 131,160 31,160 27,810 27,810 
AFS investment securities Level 1109,954 109,954 109,378 109,378 
AFS investment securitiesLevel 23,394,824 3,394,824 2,632,647 2,632,647 
HTM investment securities, netLevel 1999 940 999 936 
HTM investment securities, netLevel 23,937,878 3,401,027 3,959,399 3,400,028 
Equity securities with readily determinable fair valuesLevel 16,652 6,652 5,991 5,991 
Equity securities without readily determinable fair valuesLevel 25,000 5,000 — — 
Equity securities without readily determinable fair valuesLevel 319,231 19,231 19,225 19,225 
FHLB and Federal Reserve Bank stocksLevel 2271,637 271,637 295,496 295,496 
Residential loans held for saleLevel 238,083 38,083 20,383 20,383 
Commercial loans held for saleLevel 215,000 15,000 — — 
Loans, netLevel 329,510,153 28,581,324 28,486,849 27,481,426 
Bank and corporate owned life insuranceLevel 2678,578 678,578 676,530 676,530 
Mortgage servicing rights, netLevel 380,449 80,449 77,351 77,351 
Derivatives (other assets)(a)
Level 2120,193 120,193 68,672 68,672 
Interest rate lock commitments to originate residential mortgage loans held for sale (other assets)Level 3431 431 86 86 
Forward commitments to sell residential mortgage loans (other assets)Level 3336 336 — — 
Financial liabilities
Noninterest-bearing demand, savings, interest-bearing demand, and money market accountsLevel 3$25,902,970 $25,902,970 $27,705,996 $27,705,996 
Brokered CDs and other time deposits(b)
Level 26,111,439 6,111,439 1,930,158 1,930,158 
Short-term fundingLevel 2341,253 341,159 605,937 605,205 
FHLB advancesLevel 23,630,747 3,616,943 4,319,861 4,322,264 
Other long-term fundingLevel 2534,273 516,464 248,071 242,151 
Standby letters of credit(c)
Level 22,719 2,719 2,881 2,881 
Derivatives (accrued expenses and other liabilities)(a)
Level 2258,226 258,226 254,459 254,459 
Forward commitments to sell residential mortgage loans (accrued expenses and other liabilities) Level 3— — 46 46 
(a) Figures are presented gross before netting. See Note 9 and Note 10 for information relating to the impact of offsetting derivative assets and liabilities and cash collateral with the
    same counterparty where there is a legally enforceable master netting agreement in place.
(b) When the estimated fair value is less than the carrying value, the carrying value is reported as the fair value.
(c) The commitment on standby letters of credit was $253 million at June 30, 2023 and $271 million at December 31, 2022. See Note 11 for additional information on the standby letters of credit and for information on the fair value of lending-related commitments.
Note 13 Retirement Plans
The Corporation has a noncontributory defined benefit RAP, covering substantially all employees who meet participation requirements. The benefits are based primarily on years of service and the employee’s compensation paid. Employees of acquired entities generally participate in the RAP after consummation of the business combinations. Any retirement plans of
42

acquired entities are typically merged into the RAP after completion of the mergers, and credit is usually given to employees for years of service at the acquired institution for vesting and eligibility purposes.
The Corporation also provides legacy healthcare access to a limited group of retired employees from a previous acquisition in the Postretirement Plan. There are no other active retiree healthcare plans.
The components of net periodic pension cost and net periodic benefit cost for the RAP and Postretirement Plan for the three and six months ended June 30, 2023 and 2022 were as follows:
Three Months Ended Jun 30,Six Months Ended Jun 30,
($ in thousands)2023202220232022
RAP
Service cost$796 $923 $1,592 $1,847 
Interest cost2,686 1,772 5,372 3,545 
Expected return on plan assets(8,202)(6,736)(16,404)(13,472)
Amortization of prior service cost(63)(63)(125)(125)
Amortization of actuarial loss— 74 37 147 
Total net periodic pension cost$(4,783)$(4,029)$(9,528)$(8,059)
Postretirement Plan
Interest cost$20 $13 $39 $27 
Amortization of prior service cost(19)(19)(38)(38)
Amortization of actuarial loss (gain)(7)— (15)— 
Total net periodic benefit cost$(7)$(6)$(13)$(11)
The components of net periodic pension cost and net periodic benefit cost, other than the service cost component, are included in the line item other of noninterest expense on the consolidated statements of income. The service cost components are included in personnel on the consolidated statements of income.
The Corporation’s funding policy is to pay at least the minimum amount required by federal law and regulations, with consideration given to the maximum funding amounts allowed. The Corporation regularly reviews the funding of its RAP. There were no contributions during 2022 or the six months ended June 30, 2023.
Note 14 Segment Reporting
The Corporation utilizes a risk-based internal profitability measurement system to provide strategic business unit reporting. The profitability measurement system is based on internal management methodologies designed to produce consistent results and reflect the underlying economics of the units. Certain strategic business units have been combined for segment information reporting purposes where the nature of the products and services, the type of customer, and the distribution of those products and services are similar. The three reportable segments are Corporate and Commercial Specialty; Community, Consumer, and Business; and Risk Management and Shared Services. The financial information of the Corporation’s segments has been compiled utilizing the accounting policies described in the Corporation’s 2022 Annual Report on Form 10-K, with certain exceptions. The more significant of these exceptions are described herein.
The reportable segment results are presented based on the Corporation's internal management accounting process. The management accounting policies and processes utilized in compiling segment financial information are highly subjective and, unlike financial accounting, are not based on authoritative guidance similar to U.S. GAAP. As a result, reported segments and the financial information of the reported segments are not necessarily comparable with similar information reported by other financial institutions. Furthermore, changes in management structure or allocation methodologies and procedures may result in changes in previously reported segment financial data. Additionally, the information presented is not indicative of how the segments would perform if they operated as independent entities.
To determine financial performance of each segment, the Corporation allocates FTP assignments, the provision for credit losses, certain noninterest expenses, income taxes, and equity to each segment. Allocation methodologies are subject to periodic adjustment as the internal management accounting system is revised, the interest rate environment evolves, and business or product lines within the segments change. Also, because the development and application of these methodologies is a dynamic process, the financial results presented may be periodically reviewed.
The Corporation allocates net interest income using an internal FTP methodology that charges users of funds (assets, primarily loans) and credits providers of funds (liabilities, primarily deposits) based on the maturity, prepayment and/or re-pricing characteristics of the assets and liabilities. The net effect of this allocation is offset in the Risk Management and Shared
43

Services segment to ensure consolidated totals reflect the Corporation's net interest income. The net FTP allocation is reflected as net intersegment interest income (expense) in the accompanying tables.
The provision for credit losses is allocated to segments based on the expected long-term annual net charge off rates attributable to the credit risk of loans managed by the segment during the period. In contrast, the level of the consolidated provision for credit losses is determined based on an ACLL model using the methodologies described in the Corporation’s 2022 Annual Report on Form 10-K. The net effect of the credit provision is recorded in Risk Management and Shared Services. Indirect expenses incurred by certain centralized support areas are allocated to segments based on actual usage (for example, volume measurements) and other criteria. Certain types of administrative expense and bank-wide expense accruals (including, when applicable, amortization of CDIs and other intangible assets associated with acquisitions, acquisition-related costs, and asset gains on disposed business units) are generally not allocated to segments. Income taxes are allocated to segments based on the Corporation’s estimated effective tax rate, with certain segments adjusted for any tax-exempt income or non-deductible expenses. Equity is allocated to the segments based on regulatory capital requirements and in proportion to an assessment of the inherent risks associated with the business of the segment (including interest, credit and operating risk).
A brief description of each business segment is presented below. A more in-depth discussion of these segments can be found in the Segment Reporting note in the Corporation’s 2022 Annual Report on Form 10-K.
The Corporate and Commercial Specialty segment serves a wide range of customers including larger businesses, developers, not-for-profits, municipalities, and financial institutions by providing lending and deposit solutions as well as the support to deliver, fund, and manage such banking solutions. In addition, this segment provides a variety of investment, fiduciary, and retirement planning products and services to individuals and small to mid-sized businesses. The Community, Consumer, and Business segment serves individuals, as well as small and mid-sized businesses, by providing lending and deposit solutions. The Risk Management and Shared Services segment includes key shared operational functions and also includes residual revenue and expenses, representing the difference between actual amounts incurred and the amounts allocated to operating segments, including interest rate risk residuals (FTP mismatches) and credit risk and provision residuals (long-term credit charge mismatches).
Information about the Corporation’s segments is presented below:
Corporate and Commercial Specialty
Three Months Ended Jun 30,Six Months Ended Jun 30,
($ in thousands)2023202220232022
Net interest income$240,542 $111,359 $459,665 $201,992 
Net intersegment interest income (expense)(100,711)(5,301)(181,691)3,224 
Segment net interest income139,831 106,058 277,975 205,216 
Noninterest income32,447 39,229 65,162 76,958 
Total revenue172,278 145,287 343,136 282,174 
Provision for credit losses13,674 12,246 27,456 24,900 
Noninterest expense61,083 56,679 123,144 113,207 
Income before income taxes97,521 76,361 192,536 144,067 
Income tax expense17,096 13,974 34,833 26,281 
Net income$80,425 $62,387 $157,703 $117,786 
Allocated goodwill$525,836 $525,836 
Community, Consumer, and Business
Three Months Ended Jun 30,Six Months Ended Jun 30,
($ in thousands)2023202220232022
Net interest income$72,460 $76,999 $152,744 $146,543 
Net intersegment interest income105,841 30,638 193,920 49,470 
Segment net interest income178,301 107,636 346,664 196,013 
Noninterest income30,256 32,121 56,206 65,327 
Total revenue208,558 139,757 402,870 261,341 
Provision for credit losses7,328 4,924 14,086 9,580 
Noninterest expense109,028 104,967 220,722 203,428 
Income before income taxes92,201 29,866 168,062 48,332 
Income tax expense19,362 6,272 35,293 10,150 
Net income$72,839 $23,594 $132,769 $38,183 
Allocated goodwill$579,156 $579,156 
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 Risk Management and Shared Services
Three Months Ended Jun 30,Six Months Ended Jun 30,
($ in thousands)2023202220232022
Net interest income$(55,085)$27,789 $(80,483)$55,358 
Net intersegment (expense)(5,130)(25,337)(12,229)(52,694)
Segment net interest income (loss)(60,216)2,452 (92,712)2,664 
Noninterest income2,840 4,108 6,249 7,640 
Total revenue(57,376)6,560 (86,463)10,304 
Provision for credit losses1,097 (17,172)(1,471)(38,472)
Noninterest expense20,562 19,774 34,219 38,077 
Income (loss) before income taxes(79,035)3,959 (119,211)10,700 
Income tax expense (benefit)(12,926)3,117 (19,254)5,583 
Net income (loss)$(66,109)$842 $(99,958)$5,117 
Allocated goodwill$— $— 
Consolidated Total
Three Months Ended Jun 30,Six Months Ended Jun 30,
($ in thousands)2023202220232022
Net interest income$257,917 $216,146 $531,927 $403,893 
Net intersegment interest income— — — — 
Segment net interest income257,917 216,146 531,927 403,893 
Noninterest income65,543 75,458 127,616 149,925 
Total revenue323,460 291,604 659,543 553,819 
Provision for credit losses22,100 (2)40,071 (3,992)
Noninterest expense190,673 181,420 378,086 354,712 
Income before income taxes110,687 110,187 241,386 203,099 
Income tax expense23,533 23,363 50,873 42,013 
Net income$87,154 $86,824 $190,514 $161,086 
Allocated goodwill$1,104,992 $1,104,992 
















45

Note 15 Accumulated Other Comprehensive Income (Loss)
The following tables summarize the components of accumulated other comprehensive income (loss) at June 30, 2023 and 2022, including changes during the preceding three and six month periods as well as any reclassifications out of accumulated other comprehensive income (loss):
($ in thousands)AFS Investment
Securities		Cash Flow Hedge DerivativesDefined Benefit
Pension and
Postretirement
Obligations		Accumulated
Other
Comprehensive
Income (Loss)
Balance December 31, 2022
$(233,192)$3,360 $(42,968)$(272,799)
Other comprehensive (loss) before reclassifications(12,588)— — (12,588)
Amounts reclassified from accumulated other comprehensive income (loss):
HTM investment securities, net, at amortized cost4,556 — — 4,556 
Other assets / accrued expenses and other liabilities— (20,384)— (20,384)
Interest income— 4,581 — 4,581 
Personnel expense— — (163)(163)
Other expense— — 22 22 
Income tax benefit1,951 3,173 8 5,132 
Net other comprehensive loss during period(6,081)(12,630)(132)(18,843)
Balance June 30, 2023$(239,273)$(9,270)$(43,099)$(291,642)
Balance December 31, 2021
$(5,266)$— $(5,051)$(10,317)
Other comprehensive (loss) before reclassifications(168,321)— — (168,321)
Unrealized (losses) on AFS securities transferred to HTM securities(67,604)— — (67,604)
Amounts reclassified from accumulated other comprehensive income (loss):
Investment securities (gains), net(12)— — (12)
HTM investment securities, net, at amortized cost4,381 — — 4,381 
Personnel expense— — (163)(163)
Other expense— — 147 147 
Income tax benefit59,096 — 4 59,100 
Net other comprehensive (loss) during period(172,460)— (12)(172,472)
Balance June 30, 2022$(177,726)$— $(5,062)$(182,788)
($ in thousands)AFS Investment
Securities		Cash Flow Hedge DerivativesDefined Benefit
Pension and
Postretirement
Obligations		Accumulated
Other
Comprehensive
Income (Loss)
Balance March 31, 2023
$(204,339)$13,691 $(42,940)$(233,588)
Other comprehensive (loss) before reclassifications(49,066)— — (49,066)
Amounts reclassified from accumulated other comprehensive income (loss):
HTM investment securities, net, at amortized cost2,289 — — 2,289 
Other assets / accrued expenses and other liabilities— (34,147)— (34,147)
Interest income— 3,319 — 3,319 
Personnel expense— — (81)(81)
Other expense— — (7)(7)
Income tax (expense) benefit11,843 7,867 (71)19,639 
Net other comprehensive (loss) during period(34,934)(22,961)(159)(58,054)
Balance June 30, 2023$(239,273)$(9,270)$(43,099)$(291,642)
Balance March 31, 2022$(131,968)$— $(5,057)$(137,024)
Other comprehensive (loss) before reclassifications(65,038)— — (65,038)
Amounts reclassified from accumulated other comprehensive income (loss):
Investment securities losses, net8 — — 8 
HTM investment securities, net, at amortized cost3,273 — — 3,273 
Personnel expense— — (81)(81)
Other expense— — 74 74 
Income tax benefit15,998 — 2 16,000 
Net other comprehensive (loss) during period(45,758)— (6)(45,764)
Balance June 30, 2022$(177,726)$— $(5,062)$(182,788)
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Note 16 Leases
The Corporation has operating leases for retail and corporate offices and land. The Corporation also has a finance lease for retail and corporate offices.
These leases have original terms of 1 year or longer with remaining maturities up to 39 years, some of which include options to extend the lease term. An analysis of the lease options has been completed and any purchase options or optional periods that the Corporation is reasonably likely to extend have been included in the capitalization.
The discount rate used to capitalize the operating leases is the Corporation's FHLB borrowing rate on the date of lease commencement. When determining the rate to discount specific lease obligations, the repayment period and term are considered.
Operating and finance lease costs and cash flows resulting from these leases are presented below:
Three Months Ended Jun 30,Six Months Ended Jun 30,
($ in thousands)2023202220232022
Operating lease costs$1,479 $1,926 $2,942 $3,724 
Finance lease costs23 32 46 73 
Operating lease cash flows1,698 2,327 3,526 4,735 
Finance lease cash flows23 37 46 80 
The lease classifications on the consolidated balance sheets were as follows:
($ in thousands)Consolidated Balance Sheets CategoryJun 30, 2023Dec 31, 2022
Operating lease right-of-use assetPremises and equipment$23,793 $25,617 
Finance lease right-of-use assetOther assets412 455 
Operating lease liabilityAccrued expenses and other liabilities26,108 28,357 
Finance lease liabilityOther long-term funding427 469 
The lease payment obligations, weighted-average remaining lease term, and weighted-average original discount rate were as follows:
Jun 30, 2023Dec 31, 2022
($ in thousands)Lease paymentsWeighted-average lease term (in years)Weighted-average discount rateLease paymentsWeighted-average lease term (in years)Weighted-average discount rate
Operating leases
Retail and corporate offices$23,972 5.582.74 %$26,140 5.922.62 %
Land4,371 7.293.16 %4,766 7.593.14 %
Total operating leases$28,343 5.832.80 %$30,906 6.172.70 %
Finance leases
Retail and corporate offices$440 4.751.32 %$485 5.251.32 %
Total finance leases$440 4.751.32 %$485 5.251.32 %
Contractual lease payment obligations for each of the next five years and thereafter, in addition to a reconciliation to the Corporation’s lease liability, were as follows:
($ in thousands)Operating LeasesFinance LeasesTotal Leases
Six months ended December 31, 2023$3,004 $46 $3,050 
20245,757 93 5,850 
20254,830 93 4,923 
20264,481 93 4,574 
20273,807 93 3,899 
Beyond 20276,464 23 6,488 
Total lease payments$28,343 $440 $28,783 
Less: interest2,235 13 2,248 
Present value of lease payments$26,108 $427 $26,535 
As of June 30, 2023 and December 31, 2022, additional operating leases, primarily retail and corporate offices, that had not yet commenced totaled $12 million and $13 million, respectively. The leases that had not yet commenced as of June 30, 2023 will commence between July 2023 and December 2024 with lease terms of 1 year to 7 years.
47

ITEM 2.Management's Discussion and Analysis of Financial Condition and Results of Operations
Special Note Regarding Forward-Looking Statements
This report contains statements that may constitute forward-looking statements within the meaning of the safe-harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995, such as statements other than historical facts contained or incorporated by reference into this report. These forward-looking statements include statements with respect to the Corporation’s financial condition, results of operations, plans, objectives, future performance and business, including statements preceded by, followed by or that include the words “believes,” “expects,” or “anticipates,” references to estimates or similar expressions. Future filings by the Corporation with the SEC, and future statements other than historical facts contained in written material, press releases and oral statements issued by, or on behalf of the Corporation may also constitute forward-looking statements.
All forward-looking statements contained in this report or which may be contained in future statements made for or on behalf of the Corporation are based upon information available at the time the statement is made and the Corporation assumes no obligation to update any forward-looking statements, except as required by federal securities law. Forward-looking statements are subject to significant risks and uncertainties, and the Corporation’s actual results may differ materially from the expected results discussed in such forward-looking statements. Factors that might cause actual results to differ from the results discussed in forward-looking statements include, but are not limited to, the risk factors in Item 1A, Risk Factors, in the Corporation’s Annual Report on Form 10-K for the year ended December 31, 2022, and as may be described from time to time in the Corporation’s subsequent SEC filings.
Overview
The following discussion and analysis is presented to assist in the understanding and evaluation of the Corporation’s financial condition and results of operations. It is intended to complement the unaudited consolidated financial statements, footnotes, and supplemental financial data appearing elsewhere in this Quarterly Report on Form 10-Q and should be read in conjunction therewith. Management continually evaluates strategic acquisition opportunities and various other strategic alternatives that could involve the sale or acquisition of branches or other assets, or the consolidation or creation of subsidiaries. Within the tables presented, certain columns and rows may not sum due to the use of rounded numbers for disclosure purposes.
Performance Summary
•Average loans of $29.1 billion increased $4.4 billion, or 18%, from the first six months of 2022, with growth in all major loan categories. For 2023, the Corporation expects period end loan growth of 6% to 8%.
•Average deposits of $30.6 billion increased $2.2 billion, or 8%, from the first six months of 2022, driven by increases in time deposits and network transaction deposits. For 2023, the Corporation expects end of period core customer deposit compression of 3% with growth of 2% in the second half of the year.
•Net interest income of $532 million increased $128 million, or 32%, from the first six months of 2022, and net interest margin was 2.93% compared to 2.57% for the first six months of 2022. The increase in net interest income was driven by higher interest income as a result of growth in balances across all loan categories, which also benefited from the Federal Reserve increasing the federal funds target interest rate 350 bp since June 30, 2022. For 2023, the Corporation expects net interest income growth of 10% to 12%.
•Provision for credit losses had a provision of $40 million, compared to a release of $4 million for the first six months of 2022, primarily due to loan growth, limited credit movement, and macro trends. For 2023, the Corporation expects to adjust provision to reflect changes to risk grades, economic conditions, loan volumes, and other indications of credit quality.
•Noninterest income of $128 million decreased $22 million, or 15%, from the first six months of 2022, partially driven by an $8 million, or 24%, decrease in service charges and deposit account fees primarily due to previously announced initiatives to reduce or eliminate many deposit account fees. Additionally, capital markets, net decreased $6 million, or 39%, as a result of lower interest rate swap revenue and syndication fees. For 2023, the Corporation expects total noninterest income to compress by 8% to 10%.
•Noninterest expense of $378 million increased $23 million, or 7%, from the first six months of 2022, primarily driven by higher personnel expense largely as a result of increased FTEs due to hiring related to previously announced initiatives and continued investment in our employees. For 2023, the Corporation expects total noninterest expense to grow by 3% to 4%.
48

Table 1 Summary Results of Operations: Trends
Six months endedThree months ended
($ in thousands, except per share data)Jun 30, 2023Jun 30, 2022Jun 30, 2023Mar 31, 2023Dec 31, 2022Sep 30, 2022Jun 30, 2022
Net income$190,514 $161,086 $87,154 $103,360 $108,762 $96,275 $86,824 
Net income available to common equity184,764 155,336 84,279 100,485 105,887 93,400 83,949 
Earnings per common share - basic 1.23 1.04 0.56 0.67 0.70 0.62 0.56 
Earnings per common share - diluted1.22 1.03 0.56 0.66 0.70 0.62 0.56 
Effective tax rate21.08 %20.69 %21.26 %20.92 %18.89 %21.37 %21.20 %
49
Income Statement Analysis
Net Interest Income
Table 2 Net Interest Income Analysis
 Six Months Ended Jun 30,
 20232022
 ($ in thousands)
Average
Balance		Interest
Income /
Expense		Average
Yield /
Rate		Average
Balance		Interest
Income /
Expense		Average
Yield /
Rate
Assets
Earning assets
Loans(a)(b)(c)
Commercial and business lending$10,758,464 $351,254 6.58%$9,334,947 $126,756 2.74%
Commercial real estate lending7,273,402 247,054 6.85%6,270,743 97,119 3.12%
Total commercial18,031,866 598,308 6.69%15,605,690 223,876 2.89%
Residential mortgage8,643,335 142,767 3.30%7,766,296 113,837 2.93%
Auto finance1,572,773 36,159 4.64%498,175 8,667 3.51%
Other retail895,720 38,629 8.65%881,382 22,032 5.02%
Total loans29,143,694 815,864 5.64%24,751,542 368,412 2.99%
Investment securities
Taxable5,109,481 65,987 2.58%4,392,926 34,789 1.58%
Tax-exempt(a)
2,322,132 40,344 3.47%2,405,952 40,933 3.40%
Other short-term investments502,325 11,415 4.58%751,407 4,413 1.18%
Investments and other7,933,938 117,746 2.97%7,550,285 80,135 2.12%
Total earning assets37,077,632 $933,610 5.06%32,301,828 $448,547 2.79%
Other assets, net3,007,684 3,166,026 
Total assets$40,085,316 $35,467,853 
Liabilities and Stockholders' Equity
Interest-bearing liabilities
Interest-bearing deposits
Savings$4,707,451 $25,019 1.07%$4,606,809 $910 0.04%
Interest-bearing demand6,738,715 64,880 1.94%6,566,704 4,002 0.12%
Money market7,137,912 85,167 2.41%6,970,392 3,168 0.09%
Network transaction deposits1,308,434 31,252 4.82%755,357 1,745 0.47%
Time deposits3,681,352 65,301 3.58%1,284,037 1,766 0.28%
Total interest-bearing deposits23,573,864 271,618 2.32%20,183,299 11,591 0.12%
Federal funds purchased and securities sold under agreements to repurchase357,369 5,404 3.05%374,661 444 0.24%
Commercial paper14,745 1 0.01%25,545 2 0.01%
FHLB advances4,024,052 99,222 4.97%2,019,622 17,871 1.78%
Long-term funding475,961 15,876 6.67%249,719 5,460 4.37%
Total short and long-term funding4,872,128 120,503 4.98%2,669,547 23,776 1.79%
Total interest-bearing liabilities28,445,992 $392,121 2.78%22,852,845 $35,367 0.31%
Noninterest-bearing demand deposits7,003,151 8,224,440 
Other liabilities540,457 428,752 
Stockholders’ equity4,095,717 3,961,816 
Total liabilities and stockholders’ equity$40,085,316 $35,467,853 
Interest rate spread2.28%2.48%
Net free funds0.65%0.09%
Fully tax-equivalent net interest income and net interest margin$541,490 2.93%$413,179 2.57%
Fully tax-equivalent adjustment9,563 9,286 
Net interest income$531,927 $403,893 
(a) The yield on tax-exempt loans and securities is computed on a fully tax-equivalent basis using a tax rate of 21% and is net of the effects of certain disallowed interest deductions.
(b) Nonaccrual loans and loans held for sale have been included in the average balances.
(c) Interest income includes amortization of net deferred loan origination costs and net accreted purchase loan discount.
50
Table 2 Net Interest Income Analysis
 Three Months Ended,
 Jun 30, 2023Mar 31, 2023Jun 30, 2022
 ($ in thousands)Average
Balance		Interest
Income /
Expense		Average
Yield /
Rate		Average
Balance		Interest
Income /
Expense		Average
Yield /
Rate		Average
Balance		Interest
Income /
Expense		Average
Yield /
Rate
Assets
Earning assets
Loans(a)(b)(c)
Commercial and business lending$10,899,337 $184,080 6.77%$10,616,026 $167,174 6.39%$9,604,612 $71,276 2.98%
Commercial real estate lending7,295,367 127,967 7.04%7,251,193 119,087 6.66%6,363,395 53,233 3.36%
Total commercial18,194,703 312,047 6.88%17,867,219 286,262 6.50%15,968,007 124,509 3.13%
Residential mortgage8,701,496 72,056 3.31%8,584,528 70,711 3.30%7,860,220 58,434 2.97%
Auto finance1,654,523 19,701 4.78%1,490,115 16,458 4.48%689,027 6,017 3.50%
Other retail887,574 20,135 9.08%903,956 18,494 8.23%880,910 11,370 5.17%
Total loans29,438,297 423,939 5.77%28,845,818 391,925 5.49%25,398,163 200,331 3.16%
Investment securities
Taxable5,304,381 35,845 2.70%4,912,416 30,142 2.45%4,435,273 18,317 1.65%
Tax-exempt(a)
2,314,825 20,152 3.48%2,329,519 20,192 3.47%2,427,068 20,637 3.40%
Other short-term investments511,487 6,086 4.77%493,061 5,329 4.37%352,310 2,420 2.75%
Investments and other8,130,693 62,083 3.05%7,734,996 55,664 2.88%7,214,651 41,374 2.29%
Total earning assets37,568,991 $486,022 5.18%36,580,814 $447,589 4.94%32,612,813 $241,705 2.97%
Other assets, net2,989,321 3,026,251 3,119,770 
Total assets$40,558,311 $39,607,065 $35,732,583 
Liabilities and stockholders' equity
Interest-bearing liabilities
Interest-bearing deposits
Savings$4,749,808 $15,160 1.28%$4,664,624 $9,859 0.86%$4,682,783 $530 0.05%
Interest-bearing demand6,663,775 34,961 2.10%6,814,487 29,918 1.78%6,413,077 2,977 0.19%
Money market6,743,810 43,529 2.59%7,536,393 41,637 2.24%6,910,505 2,203 0.13%
Network transaction deposits1,468,006 18,426 5.03%1,147,089 12,825 4.53%775,593 1,480 0.77%
Time deposits4,985,949 50,119 4.03%2,362,260 15,182 2.61%1,255,292 829 0.26%
Total interest-bearing deposits24,611,348 162,196 2.64%22,524,853 109,422 1.97%20,037,250 8,019 0.16%
Federal funds purchased and securities sold under agreements to repurchase285,754 2,261 3.17%429,780 3,143 2.97%454,519 406 0.36%
Commercial paper12,179 — 0.01%17,339 — 0.01%23,154 1 0.01%
FHLB advances3,796,106 49,261 5.20%4,254,532 49,960 4.76%2,423,771 9,689 1.60%
Long-term funding543,003 9,596 7.07%408,175 6,281 6.16%249,805 2,730 4.37%
Total short and long-term funding4,637,042 61,118 5.28%5,109,826 59,384 4.71%3,151,249 12,826 1.63%
Total interest-bearing liabilities29,248,389 $223,314 3.06%27,634,679 $168,807 2.48%23,188,499 $20,845 0.36%
Noninterest-bearing demand deposits6,669,787 7,340,219 8,133,492 
Other liabilities511,074 570,166 473,478 
Stockholders’ equity4,129,061 4,062,001 3,937,114 
Total liabilities and stockholders’ equity$40,558,311 $39,607,065 $35,732,583 
Interest rate spread2.12%2.46%2.61%
Net free funds0.68%0.61%0.10%
Fully tax-equivalent net interest income and net interest margin$262,708 2.80%$278,782 3.07%$220,860 2.71%
Fully tax-equivalent adjustment4,791 4,772 4,713 
Net interest income$257,917 $274,010 $216,146 

(a) The yield on tax-exempt loans and securities is computed on a fully tax-equivalent basis using a tax rate of 21% and is net of the effects of certain disallowed interest deductions.
(b) Nonaccrual loans and loans held for sale have been included in the average balances.
(c) Interest income includes amortization of net deferred loan origination costs and net accreted purchase loan discount.



51
Notable Contributions to the Change in Net Interest Income
•Fully tax-equivalent net interest income and net interest income were $128 million, or 31%, and $128 million, or 32%, higher than the first six months of 2022, respectively. Average loans increased $4.4 billion, or 18%, and average investments and other short-term investments increased $384 million, or 5%, from the first six months of 2022. The increase in net interest income was driven by a higher federal funds target rate combined with growth in all major loan categories. Since June 30, 2022, the Federal Reserve increased the federal funds target interest rate 350 bp, which contributed to the yield on earning assets increasing by 227 bp. See sections Interest Rate Risk and Quantitative and Qualitative Disclosures about Market Risk for a discussion of interest rate risk and market risk.
•    Average interest-bearing liabilities increased $5.6 billion, or 24%, compared to the first six months of 2022. Average interest-bearing deposits increased $3.4 billion, or 17%, primarily driven by increases in time deposits and network transaction deposits. Average noninterest-bearing demand deposits decreased $1.2 billion, or 15%, versus the first six months of 2022. Average FHLB advances increased $2.0 billion, or 99%, to fund balance sheet growth. The cost of interest-bearing liabilities increased 247 bp from the first six months of 2022.
Provision for Credit Losses
The provision for credit losses is predominantly a function of the Corporation’s reserving methodology and judgments as to other qualitative and quantitative factors used to determine the appropriate level of the ACLL, which focuses on changes in the size and character of the loan portfolio, changes in levels of individually evaluated and other nonaccrual loans, historical losses and delinquencies in each portfolio category, the risk inherent in specific loans, concentrations of loans to specific borrowers or industries, existing economic conditions and economic forecasts, the fair value of underlying collateral, and other factors which could affect potential credit losses. The forecast the Corporation used for June 30, 2023 was the Moody's baseline scenario from May 2023, which was reviewed against the June 2023 baseline scenario with no material updates made, over a 2 year reasonable and supportable period with straight-line reversion to historical losses over the second year of the period. See additional discussion under the sections titled Loans, Credit Risk, Nonperforming Assets, and Allowance for Credit Losses on Loans.
Noninterest Income
Table 3 Noninterest Income
Six months endedThree months endedChanges vs
($ in thousands, except as noted)Jun 30, 2023Jun 30, 2022YTD % ChangeJun 30, 2023Mar 31, 2023Dec 31, 2022Sep 30, 2022Jun 30, 2022Mar 31, 2023Jun 30, 2022
Wealth management fees$40,672 $43,735 (7)%$20,483 $20,189 $20,403 $19,984 $21,332 1 %(4)%
Service charges and deposit account fees25,366 33,363 (24)%12,372 12,994 13,918 15,029 16,506 (5)%(25)%
Card-based fees21,982 21,368 3 %11,396 10,586 11,167 11,479 11,442 8 %— %
Other fee-based revenue8,740 8,126 8 %4,465 4,276 3,290 4,487 4,360 4 %2 %
Total fee-based revenue96,760 106,592 (9)%48,715 48,045 48,779 50,979 53,641 1 %(9)%
Capital markets, net10,176 16,656 (39)%5,093 5,083 5,586 7,675 8,010 — %(36)%
Mortgage banking, net11,313 14,536 (22)%7,768 3,545 2,238 2,098 6,145 119 %26 %
Bank and corporate owned life insurance4,835 6,177 (22)%2,172 2,664 3,427 1,827 4,106 (18)%(47)%
Other4,501 4,086 10 %2,080 2,422 4,102 2,527 1,888 (14)%10 %
Subtotal127,586 148,048 (14)%65,827 61,758 64,132 65,106 73,790 7 %(11)%
Asset gains (losses), net(35)1,865 N/M(299)263 (545)18 1,677 N/MN/M
Investment securities gains (losses), net66 12 N/M14 51 (1,930)5,664 (8)(73)%N/M
Total noninterest income$127,616 $149,925 (15)%$65,543 $62,073 $61,657 $70,788 $75,458 6 %(13)%
Mortgage loans originated for sale during period$168,395 $403,951 (58)%$99,141 $69,254 $64,419 $131,743 $151,838 43 %(35)%
Mortgage loan settlements during period151,167 500,410 (70)%96,514 54,652 94,682 119,942 204,321 77 %(53)%
Assets under management, at market value(a)
12,995 12,412 11,843 11,142 11,561 5 %12 %
N/M = Not Meaningful
(a) $ in millions. Excludes assets held in brokerage accounts.
52
Notable Contributions to the Change in Noninterest Income
•Service charges and deposit account fees decreased $8 million from the first six months of 2022, primarily due to previously announced initiatives to reduce or eliminate many deposit account fees.
•Capital markets, net decreased $6 million from the first six months of 2022, as a result of lower interest rate swap revenue and syndication fees.
•Mortgage banking, net decreased $3 million from the first six months of 2022, which was primarily the result of increased MSRs expense related to the net valuation adjustments of the MSRs asset.
•Wealth management fees decreased $3 million from the first six months of 2022, mainly driven by market conditions.
Noninterest Expense
Table 4 Noninterest Expense
Six months endedThree months endedChange vs
($ in thousands)Jun 30, 2023Jun 30, 2022YTD % ChangeJun 30, 2023Mar 31, 2023Dec 31, 2022Sep 30, 2022Jun 30, 2022Mar 31, 2023Jun 30, 2022
Personnel$230,510 $217,477 6 %$114,089 $116,420 $118,381 $118,243 $112,666 (2)%1 %
Technology47,818 42,707 12 %24,220 23,598 25,299 22,694 21,223 3 %14 %
Occupancy28,650 30,231 (5)%13,587 15,063 15,846 13,717 14,151 (10)%(4)%
Business development and advertising12,955 10,610 22 %7,106 5,849 8,136 6,778 5,655 21 %26 %
Equipment9,906 9,920 — %4,975 4,930 4,791 4,921 4,960 1 %— %
Legal and professional8,688 9,960 (13)%4,831 3,857 4,132 4,159 4,873 25 %(1)%
Loan and foreclosure costs2,773 3,490 (21)%1,635 1,138 804 1,631 1,476 44 %11 %
FDIC assessment16,425 10,500 56 %9,550 6,875 6,350 5,800 5,400 39 %77 %
Other intangible amortization4,405 4,405 — %2,203 2,203 2,203 2,203 2,203 — %— %
Other15,955 15,412 4 %8,476 7,479 10,618 15,645 8,815 13 %(4)%
Total noninterest expense$378,086 $354,712 7 %$190,673 $187,412 $196,560 $195,791 $181,420 2 %5 %
Average FTEs(a)
4,223 4,060 4 %4,227 4,219 4,169 4,182 4,101 — %3 %

(a) Average FTEs without overtime
Notable Contributions to the Change in Noninterest Expense
•Personnel expense increased $13 million from the first six months of 2022, largely as a result of increased FTEs due to hiring related to previously announced initiatives and continued investment in our employees.
•FDIC expense increased $6 million from the first six months of 2022, primarily driven by the FDIC's assessment rate change on January 1, 2023. The Corporation is expecting additional FDIC assessment expense associated with the special assessment that was proposed by the FDIC in May 2023. The proposal would assess a 12.5 bp annual special assessment on the Bank's uninsured deposits reported in the Call Report for December 31, 2022, excluding the first $5 billion of uninsured deposits, and would be in place for two years. The Bank's Call Report uninsured deposits at December 31, 2022 were $15.7 billion. Once an assessment is approved, the full expense for the two year period will be recognized.
•Technology expense increased $5 million from the first six months of 2022, driven by digital investments tied to our strategic initiatives.
Income Taxes
The Corporation recognized income tax expense of $51 million for the six months ended June 30, 2023, compared to income tax expense of $42 million for the six months ended June 30, 2022. The Corporation's effective tax rate was 21.08% for the first six months of 2023, compared to an effective tax rate of 20.69% for the first six months of 2022. The increase in income tax expense during the first six months of 2023 was primarily driven by an increase in income before tax. The increase in the effective tax rate was primarily driven by an increase in state tax expense. The Corporation expects a full year effective tax rate of 20 to 21%, assuming no change in the statutory corporate tax rate.
Income tax expense recorded on the consolidated statements of income involves the interpretation and application of certain accounting pronouncements and federal and state tax laws and regulations. The Corporation is subject to examination by various taxing authorities. Examination by taxing authorities may impact the amount of tax expense and/or the reserve for uncertainty in income taxes if their interpretations differ from those of management, based on their judgments about information available to them at the time of their examinations.
53
Balance Sheet Analysis
•At June 30, 2023, total assets were $41.2 billion, up $1.8 billion, or 5%, from December 31, 2022 and up $4.0 billion, or 11%, from June 30, 2022.
•Interest bearing deposits in other financial institutions were $191 million at June 30, 2023, up $34 million, or 22%, from December 31, 2022 and down $246 million, or 56%, from June 30, 2022.
•AFS investment securities, at fair value were $3.5 billion at June 30, 2023, up $763 million, or 28%, from December 31, 2022, and up $827 million, or 31%, from June 30, 2022. HTM investment securities, net, at amortized cost were $3.9 billion at June 30, 2023, effectively flat from December 31, 2022 and June 30, 2022. See Note 5 Investment Securities of the notes to consolidated financial statements for additional details.
•Loans of $29.8 billion at June 30, 2023 were up $1.0 billion, or 4%, from December 31, 2022 and up $3.4 billion, or 13%, from June 30, 2022. See Note 6 Loans of the notes to consolidated financial statements for additional details.
•At June 30, 2023, total deposits of $32.0 billion were up $2.4 billion, or 8%, from December 31, 2022, and were up $3.4 billion, or 12%, from June 30, 2022. See section Deposits and Customer Funding for additional information on deposits.
•Federal funds purchased and securities sold under agreements to repurchase were $326 million at June 30, 2023, down $259 million, or 44%, from December 31, 2022 and down $357 million, or 52%, from June 30, 2022. See Note 8 Short and Long-Term Funding of the notes to consolidated financial statements for additional details.
•FHLB advances were $3.6 billion at June 30, 2023, down $689 million, or 16%, from December 31, 2022, and up $373 million, or 11%, from June 30, 2022. See Note 8 Short and Long-Term Funding of the notes to consolidated financial statements for additional details.
•Other long-term funding was $534 million at June 30, 2023, up $286 million, or 115%, from December 31, 2022, and up $284 million, or 114%, from June 30, 2022, primarily driven by the Corporation's issuance of subordinated notes in February 2023. See Note 8 Short and Long-Term Funding of the notes to consolidated financial statements for additional details.
Loans
Table 5 Period End Loan Composition
 Jun 30, 2023Mar 31, 2023Dec 31, 2022Sep 30, 2022Jun 30, 2022
 ($ in thousands)Amount% of
Total		Amount% of
Total		Amount% of
Total		Amount% of
Total		Amount% of
Total
Commercial and industrial$10,055,487 34 %$9,869,781 34 %$9,759,454 34 %$9,571,925 34 %$9,256,685 35 %
Commercial real estate — owner occupied1,058,237 4 %1,050,236 4 %991,722 3 %999,786 4 %928,152 4 %
Commercial and business lending11,113,724 37 %10,920,017 37 %10,751,176 37 %10,571,711 38 %10,184,836 38 %
Commercial real estate — investor5,312,928 18 %5,094,249 17 %5,080,344 18 %5,064,289 18 %4,790,241 18 %
Real estate construction2,009,060 7 %2,147,070 7 %2,155,222 7 %1,835,159 7 %1,775,648 7 %
Commercial real estate lending7,321,988 25 %7,241,318 25 %7,235,565 25 %6,899,449 25 %6,565,889 25 %
Total commercial18,435,711 62 %18,161,335 62 %17,986,742 62 %17,471,159 63 %16,750,726 63 %
Residential mortgage8,746,345 29 %8,605,164 29 %8,511,550 30 %8,314,902 30 %8,002,943 30 %
Auto finance1,777,974 6 %1,551,538 5 %1,382,073 5 %1,117,136 4 %847,969 3 %
Home equity615,506 2 %609,787 2 %624,353 2 %612,608 2 %592,843 2 %
Other consumer273,367 1 %279,248 1 %294,851 1 %301,475 1 %300,217 1 %
Total consumer11,413,193 38 %11,045,737 38 %10,812,828 38 %10,346,121 37 %9,743,972 37 %
Total loans$29,848,904 100 %$29,207,072 100 %$28,799,569 100 %$27,817,280 100 %$26,494,698 100 %
The Corporation has long-term guidelines relative to the proportion of Commercial and Business, CRE, and Consumer loan commitments within the overall loan portfolio, with each targeted to represent 30 to 40% of the overall loan portfolio. The targeted long-term guidelines were unchanged during 2022 and the first six months of 2023. Furthermore, certain sub-asset classes within the respective portfolios are further defined and dollar limitations are placed on these sub-portfolios. These guidelines and limits are reviewed quarterly and approved annually by the Enterprise Risk Committee of the Corporation’s Board of Directors. These guidelines and limits are designed to create balance and diversification within the loan portfolios.
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The Corporation’s loan distribution and interest rate sensitivity as of June 30, 2023 are summarized in the following table:
Table 6 Loan Distribution and Interest Rate Sensitivity
($ in thousands)
Within 1 Year(a)
1-5 Years5-15 YearsOver 15 YearsTotal% of Total
Commercial and industrial$9,183,930 $598,847 $263,925 $8,785 $10,055,487 34 %
Commercial real estate — owner occupied655,338 273,263 129,085 551 1,058,237 4 %
Commercial real estate — investor4,935,559 226,478 150,891 — 5,312,928 18 %
Real estate construction1,926,421 43,163 30,511 8,964 2,009,060 7 %
Commercial - adjustable11,097,930 23,442 14,287 — 11,135,660 37 %
Commercial - fixed5,603,318 1,118,309 560,124 18,300 7,300,051 24 %
Residential mortgage - adjustable300,091 930,644 1,924,361 303 3,155,400 11 %
Residential mortgage - fixed4,714 93,998 564,358 4,927,876 5,590,945 19 %
Auto finance404 573,279 1,204,291 — 1,777,974 6 %
Home equity547,957 14,361 43,895 9,293 615,506 2 %
Other consumer196,469 36,126 27,129 13,643 273,367 1 %
Total loans$17,750,885 $2,790,159 $4,338,445 $4,969,415 $29,848,904 100 %
Fixed-rate$5,652,691 $1,834,401 $2,399,797 $4,969,112 $14,856,000 50 %
Floating or adjustable rate12,098,194 955,758 1,938,648 303 14,992,904 50 %
Total$17,750,885 $2,790,159 $4,338,445 $4,969,415 $29,848,904 100 %
(a) Demand loans, past due loans, overdrafts, and credit cards are reported in the “Within 1 Year” category.
At June 30, 2023, $20.6 billion, or 69%, of the loans outstanding and $16.7 billion, or 91%, of the commercial loans outstanding were floating rate, adjustable rate, re-pricing within one year, or maturing within one year.
Credit Risk
An active credit risk management process is used for commercial loans to ensure that sound and consistent credit decisions are made. Credit risk is controlled by detailed underwriting procedures, comprehensive loan administration, and periodic review of borrowers’ outstanding loans and commitments. Borrower relationships are formally reviewed and graded on an ongoing basis for early identification of potential problems. Further analysis by customer, industry, and geographic location are performed to monitor trends, financial performance, and concentrations. See Note 6 Loans of the notes to consolidated financial statements for additional information on managing overall credit quality.
The loan portfolio is widely diversified by types of borrowers, industry groups, and market areas within the Corporation's branch footprint. Significant loan concentrations are considered to exist when there are amounts loaned to numerous borrowers engaged in similar activities that would cause them to be similarly impacted by economic or other conditions. At June 30, 2023, no significant concentrations existed in the Corporation’s portfolio in excess of 10% of total loan exposure.
Commercial and business lending: The commercial and business lending classification primarily includes commercial loans to large corporations, middle market companies, small businesses, and asset-based and equipment financing.
Table 7 Largest Commercial and Industrial Industry Group Exposures, by NAICS Subsector
June 30, 2023NAICS SubsectorOutstanding BalanceTotal Exposure% of Total Loan Exposure
Real Estate(a)
531$1,925,372 $3,536,824 9 %
Utilities(b)
2212,323,847 2,697,698 7 %
Credit Intermediation and Related Activities(c)
522878,548 1,902,378 5 %
(a) Includes REIT lines.
(b) 51% of the total exposure comes from renewable energy sources (wind, solar, hydroelectric, and geothermal).
(c) Includes mortgage warehouse lines.
The remaining commercial and industrial portfolio is spread over a diverse range of industries, none of which exceed 2% of total loan exposure.
The CRE-owner occupied portfolio is spread over a diverse range of industries, none of which exceed 2% of total loan exposure.
The credit risk related to commercial and business lending is largely influenced by general economic conditions and the resulting impact on a borrower’s operations or on the value of underlying collateral, if any.
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Commercial real estate - investor: CRE-investor is comprised of loans secured by various non-owner occupied or investor income producing property types.
Table 8 Largest Commercial Real Estate Investor Property Type Exposures
June 30, 2023% of Total Loan Exposure% of Total Commercial Real Estate - Investor Loan Exposure
Multi-Family5 %34 %
Industrial3 %25 %
Office3 %21 %
The remaining CRE-investor portfolio is spread over various other property types, none of which exceed 2% of total loan exposure.
Credit risk is managed in a similar manner to commercial and business lending by employing sound underwriting guidelines, lending primarily to borrowers in local markets and businesses, periodically evaluating the underlying collateral, and formally reviewing the borrower’s financial soundness and relationship on an ongoing basis.
Real estate construction: Real estate construction loans are primarily short-term or interim loans that provide financing for the acquisition or development of commercial income properties, multi-family projects, or residential development, both single family and condominium. Real estate construction loans are made to developers and project managers who are generally well known to the Corporation and have prior successful project experience. The credit risk associated with real estate construction loans is generally confined to specific geographic areas but is also influenced by general economic conditions. The Corporation controls the credit risk on these types of loans by making loans in familiar markets to developers, reviewing the merits of individual projects, controlling loan structure, and monitoring project progress and construction advances.
Table 9 Largest Real Estate Construction Property Type Exposures
June 30, 2023% of Total Loan Exposure% of Total Real Estate Construction Loan Exposure
Multi-Family4 %43 %
Industrial2 %24 %
The remaining real estate construction portfolio is spread over various other property types, none of which exceed 2% of total loan exposure.
The Corporation’s current lending standards for CRE and real estate construction lending are determined by property type and specifically address many criteria, including: maximum loan amounts, maximum LTV, requirements for pre-leasing and/or presales, minimum borrower equity, and maximum loan-to-cost. Currently, the maximum standard for LTV is 80%, with lower limits established for certain higher risk types, such as raw land that has a 50% LTV maximum. The Corporation’s LTV guidelines are in compliance with regulatory supervisory limits. In most cases, for real estate construction loans, the loan amounts include interest reserves, which are built into the loans and sized to fund loan payments through construction and lease up and/or sell out.
Residential mortgages: Residential mortgage loans are primarily first lien home mortgages with a maximum loan-to-collateral value without credit enhancement (e.g. private mortgage insurance) of 80%. The residential mortgage portfolio is focused primarily in the Corporation's three-state branch footprint, with approximately 87% of the outstanding loan balances in the Corporation's branch footprint at June 30, 2023. The rates on adjustable rate mortgages adjust based upon the movement in the underlying index which is then added to a margin and rounded to the nearest 0.125%. That result is then subjected to any periodic caps to produce the borrower's interest rate for the coming term. Most of the adjustable rate mortgages have an initial fixed rate term of 3, 5, 7 or 10 years.
The Corporation generally retains certain fixed-rate residential real estate mortgages in its loan portfolio, including retail and private banking jumbo mortgages and CRA-related mortgages. As part of management’s historical practice of originating and servicing residential mortgage loans, generally the Corporation’s 30 year, agency conforming, fixed-rate residential real estate mortgage loans have been sold in the secondary market with servicing rights retained. Subject to management’s analysis of the current interest rate environment, among other market factors, the Corporation may choose to retain mortgage loan production on its balance sheet.
The Corporation’s underwriting and risk-based pricing guidelines for residential mortgage loans include minimum borrower FICO score and maximum LTV of the property securing the loan. Residential mortgage products generally are underwritten using FHLMC and FNMA secondary marketing guidelines.
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Home equity: Home equity consists of both home equity lines of credit and closed-end home equity loans. The Corporation’s credit risk monitoring guidelines for home equity are based on an ongoing review of loan delinquency status, as well as a quarterly review of FICO score deterioration and property devaluation. The Corporation does not routinely obtain appraisals on performing loans to update LTV ratios after origination; however, the Corporation monitors the local housing markets by reviewing the various home price indices and incorporates the impact of the changing market conditions in its ongoing credit monitoring process. For junior lien home equity loans, the Corporation is unable to track the performance of the first lien loan if it does not own or service the first lien loan. However, the Corporation obtains a refreshed FICO score on a quarterly basis and monitors this as part of its assessment of the home equity portfolio.
The Corporation’s underwriting and risk-based pricing guidelines for home equity lines of credit and loans consist of a combination of both borrower FICO score and the original cumulative LTV against the property securing the loan. Currently, the Corporation's policy sets the maximum acceptable LTV at 90%. The Corporation's current home equity line of credit offering is priced based on floating rate indices and generally allows 10 years of interest-only payments followed by a 20-year amortization of the outstanding balance. The loans in the Corporation's portfolio generally have an original term of 20 years with principal and interest payments required.
Indirect Auto: The Corporation currently purchases retail auto sales contracts via a network of approved auto dealerships across 14 states throughout the Northeast, Mid-Atlantic and Midwestern United States. The auto dealerships finance the sale of automobiles as the initial lender and then assign the contracts to the Corporation pursuant to dealer agreements. The Corporation’s underwriting and pricing guidelines are based on a dual risk grade derived from a combination of FICO auto score and proprietary internal custom score. Minimum grade and FICO score standards ensure the credit risk is appropriately managed to the Corporation’s risk appetite. Further, the grade influences loan-specific parameters such as vehicle age, term, LTV, loan amount, mileage, payment and debt service thresholds, and pricing. Maximum loan terms offered are 84 months on select grades with vehicle age, mileage, and other limitations in place to qualify. The program is designed to capture primarily prime and super prime contracts. Over time, the Corporation expects roughly 60% of originations to be secured by used vehicles.
Other consumer: Other consumer consists of student loans, short-term personal installment loans, and credit cards. The Corporation had $69 million and $76 million of student loans at June 30, 2023 and December 31, 2022, respectively, the majority of which are government guaranteed. Federally guaranteed student loan payments are scheduled to resume in October 2023 after over three years of payment moratoriums that began as a result of the COVID-19 pandemic. The Corporation is not originating new student loans and the student loan portfolio is in run-off. Credit risk for non-government guaranteed student loans, short-term personal installment loans, and credit cards is influenced by general economic conditions, the characteristics of individual borrowers, and the nature of the loan collateral. Risks of loss are generally on smaller average balances per loan spread over many borrowers. Once charged off, there is usually less opportunity for recovery of these smaller consumer loans. Credit risk is primarily controlled by reviewing the creditworthiness of the borrowers, monitoring payment histories, and taking appropriate collateral and guarantee positions.

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Nonperforming Assets
Management is committed to a proactive nonaccrual and problem loan identification philosophy. This philosophy is implemented through the ongoing monitoring and review of all pools of risk in the loan portfolio to ensure that problem loans are identified quickly and the risk of loss is minimized. Table 10 provides detailed information regarding NPAs, which include nonaccrual loans, OREO, and repossessed assets:
Table 10 Nonperforming Assets
 ($ in thousands)Jun 30,
2023		Mar 31,
2023		Dec 31,
2022		Sep 30,
2022		Jun 30,
2022
Nonperforming assets
Commercial and industrial$34,907 $22,735 $14,329 $15,576 $843 
Commercial real estate — owner occupied1,444 1,478 — — — 
Commercial and business lending36,352 24,213 14,329 15,576 843 
Commercial real estate — investor22,068 25,122 29,380 37,479 46,823 
Real estate construction125 178 105 141 604 
Commercial real estate lending22,193 25,300 29,485 37,620 47,427 
Total commercial58,544 49,513 43,814 53,196 48,270 
Residential mortgage61,718 58,274 58,480 55,485 52,840 
Auto finance3,065 2,436 1,490 302 53 
Home equity7,788 7,246 7,487 7,325 7,100 
Other consumer163 100 197 98 83 
Total consumer72,733 68,056 67,654 63,210 60,075 
Total nonaccrual loans131,278 117,569 111,467 116,406 108,345 
Commercial real estate owned1,062 3,071 325 325 957 
Residential real estate owned870 2,987 2,878 2,560 3,042 
Bank properties real estate owned(a)
5,643 9,125 11,580 13,487 13,880 
OREO7,575 15,184 14,784 16,373 17,879 
Repossessed assets348 92 215 299 102 
Total nonperforming assets$139,201 $132,845 $126,466 $133,078 $126,327 
Accruing loans past due 90 days or more
Commercial$366 $323 $282 $121 $133 
Consumer1,360 1,380 1,446 1,297 1,422 
Total accruing loans past due 90 days or more$1,726 $1,703 $1,728 $1,417 $1,555 
Restructured loans (accruing)(b)
Commercial$168 $47 $13,093 $16,097 $15,425 
Consumer1,271 716 19,775 19,036 18,828 
Total restructured loans (accruing)$1,439 $763 $32,868 $35,132 $34,253 
Nonaccrual restructured loans (included in nonaccrual loans)(b)
$796 $341 $20,127 $21,650 $22,172 
Ratios
Nonaccrual loans to total loans0.44 %0.40 %0.39 %0.42 %0.41 %
NPAs to total loans plus OREO and repossessed assets0.47 %0.45 %0.44 %0.48 %0.48 %
NPAs to total assets0.34 %0.33 %0.32 %0.35 %0.34 %
Allowance for credit losses on loans to nonaccrual loans287.20 %311.48 %315.34 %285.79 %293.09 %
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Table 10 Nonperforming Assets (continued)
 ($ in thousands)Jun 30,
2023		Mar 31,
2023		Dec 31,
2022		Sep 30,
2022		Jun 30,
2022
Accruing loans 30-89 days past due
Commercial and industrial$12,005 $4,239 $6,283 $1,861 $1,642 
Commercial real estate — owner occupied1,484 2,955 230 — — 
Commercial and business lending13,489 7,195 6,512 1,861 1,642 
Commercial real estate — investor— — 1,067 — 5,484 
Real estate construction76 — 39 43 — 
Commercial real estate lending76 — 1,105 43 5,484 
Total commercial13,565 7,195 7,618 1,904 7,126 
Residential mortgage 8,961 7,626 9,874 6,517 5,315 
Auto finance11,429 8,640 9,408 6,206 2,906 
Home equity 4,030 4,113 5,607 4,234 2,961 
Other consumer2,025 1,723 1,610 1,592 1,365 
Total consumer26,444 22,102 26,499 18,549 12,547 
Total accruing loans 30-89 days past due$40,008 $29,297 $34,117 $20,452 $19,673 
Potential problem loans
Commercial and industrial$205,228 $135,047 $136,549 $108,556 $104,645 
Commercial real estate — owner occupied29,396 32,077 34,422 28,287 38,628 
Commercial and business lending234,624 167,124 170,971 136,843 143,273 
Commercial real estate — investor106,662 89,653 92,535 117,982 132,635 
Real estate construction— — 970 — 82 
Commercial real estate lending106,662 89,653 93,505 117,982 132,717 
Total commercial341,286 256,776 264,476 254,825 275,990 
Residential mortgage 1,646 1,684 1,978 2,845 3,297 
Home equity 240 244 197 185 188 
Total consumer1,886 1,928 2,175 3,030 3,486 
Total potential problem loans$343,173 $258,704 $266,651 $257,855 $279,475 
(a) Primarily closed branches and other bank operated real estate facilities, pending disposition.
(b) On January 1, 2023, the Corporation adopted ASU 2022-02. Under this update, TDRs were eliminated and replaced with a modified loan classification. As a result, amounts reported for March 31, 2023 and forward will not be comparable to prior period reported amounts.
Nonaccrual loans: Nonaccrual loans are considered to be one indicator of potential future loan losses. See Note 6 Loans of the notes to consolidated financial statements for additional nonaccrual loan disclosures. See also sections Credit Risk and Allowance for Credit Losses on Loans.
Accruing loans past due 90 days or more: Loans past due 90 days or more but still accruing interest are classified as such where the underlying loans are both well secured (the collateral value is sufficient to cover principal and accrued interest) and are in the process of collection.
Restructured loans: Loans are considered restructured loans if concessions have been granted to borrowers that are experiencing financial difficulty. On January 1, 2023, the Corporation adopted ASU 2022-02 prospectively. As a result, loans that were restructured prior to adoption are no longer considered TDRs, and loans restructured since January 1, 2023 are considered restructured. As a result, periods prior to 2023 are no longer comparable. See also Note 6 Loans of the notes to consolidated financial statements for additional restructured loans disclosures.
Potential problem loans: The level of potential problem loans is another predominant factor in determining the relative level of risk in the loan portfolio and in determining the appropriate level of the ACLL. Potential problem loans are generally defined by management to include loans rated as substandard by management that are collectively evaluated; however, there are circumstances present to create doubt as to the ability of the borrower to comply with present repayment terms. The decision of management to include performing loans in potential problem loans does not necessarily mean that the Corporation expects losses to occur, but that management recognizes a higher degree of risk associated with these loans.
OREO: Management actively seeks to ensure OREO properties held are monitored to minimize the Corporation’s risk of loss.
Allowance for Credit Losses on Loans
Credit risks within the loan portfolio are inherently different for each loan type. Credit risk is controlled and monitored through the use of lending standards, a thorough review of potential borrowers, and ongoing review of loan payment performance. Active asset quality administration, including early problem loan identification and timely resolution of problems, aids in the
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management of credit risk and the minimization of loan losses. Credit risk management for each loan type is discussed in the section entitled Credit Risk. See Note 6 Loans of the notes to consolidated financial statements for additional disclosures on the ACLL.
To assess the appropriateness of the ACLL, the Corporation focuses on the evaluation of many factors, including but not limited to: evaluation of facts and issues related to specific loans, management’s ongoing review and grading of the loan portfolio, credit report refreshes, consideration of historical loan loss and delinquency experience on each portfolio category, trends in past due and nonaccrual loans, the level of potential problem loans, the risk characteristics of the various classifications of loan segments, changes in the size and character of the loan portfolio, concentrations of loans to specific borrowers or industries, existing economic conditions and economic forecasts, the fair value of underlying collateral, funding assumptions on lines, and other qualitative and quantitative factors which could affect potential credit losses. The forecast the Corporation used for June 30, 2023 was the Moody's baseline scenario from May 2023, which was reviewed against the June 2023 baseline scenario with no material updates made, over a 2 year reasonable and supportable period with straight-line reversion to historical losses over the second year of the period. Assessing these factors involves significant judgment. Because each of the criteria used is subject to change, the ACLL is not necessarily indicative of the trend of future credit losses on loans in any particular segment. Therefore, management considers the ACLL a critical accounting estimate, see section Critical Accounting Estimates for additional information on the ACLL. See section Nonperforming Assets for a detailed discussion on asset quality. See also Note 6 Loans of the notes to consolidated financial statements for additional ACLL disclosures. Table 5 provides information on loan growth and period end loan composition, Table 10 provides additional information regarding NPAs, and Table 11 and Table 12 provide additional information regarding activity in the ACLL.
The loan segmentation used in calculating the ACLL at June 30, 2023 and December 31, 2022 was generally comparable. The methodology to calculate the ACLL consists of the following components: a valuation allowance estimate is established for commercial and consumer loans determined by the Corporation to be individually evaluated, using discounted cash flows, estimated fair value of underlying collateral, and/or other data available. Loans are segmented for criticized loan pools by loan type as well as for non-criticized loan pools by loan type, primarily based on risk rating rates after considering loan type, historical loss and delinquency experience, credit quality, and industry classifications. Loans that have been criticized are considered to have a higher risk of default than non-criticized loans, as circumstances were present to support the lower loan grade, warranting higher loss factors. Additionally, management allocates ACLL to absorb losses that may not be provided for by the other components due to qualitative factors evaluated by management, such as limitations within the credit risk grading process, known current economic or business conditions that may not yet show in trends, industry or other concentrations with current issues that impose higher inherent risks than are reflected in the loss factors, and other relevant considerations. The total allowance is available to absorb losses from any segment of the loan portfolio.

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Table 11 Allowance for Credit Losses on Loans
YTDQuarter Ended
($ in thousands)Jun 30,
2023		Jun 30,
2022		Jun 30,
2023		Mar 31,
2023		Dec 31,
2022		Sep 30,
2022		Jun 30,
2022
Allowance for loan losses
Balance at beginning of period$312,720 $280,015 $326,432 $312,720 $292,904 $280,771 $279,058 
Provision for loan losses40,500 (1,000)23,500 17,000 21,000 14,000 2,000 
Charge offs(20,356)(3,819)(14,855)(5,501)(2,982)(3,346)(1,791)
Recoveries5,886 5,576 3,674 2,212 1,798 1,478 1,504 
Net (charge offs) recoveries(14,470)1,757 (11,181)(3,289)(1,183)(1,867)(287)
Balance at end of period$338,750 $280,771 $338,750 $326,432 $312,720 $292,904 $280,771 
Allowance for unfunded commitments
Balance at beginning of period$38,776 $39,776 $39,776 $38,776 $39,776 $36,776 $38,776 
Provision for unfunded commitments(500)(3,000)(1,500)1,000 (1,000)3,000 (2,000)
Balance at end of period$38,276 $36,776 $38,276 $39,776 $38,776 $39,776 $36,776 
Allowance for credit losses on loans$377,027 $317,547 $377,027 $366,208 $351,496 $332,680 $317,547 
Provision for credit losses on loans40,000 (4,000)22,000 18,000 20,000 17,000 — 
Net loan (charge offs) recoveries
Commercial and industrial(12,936)1,410 (11,177)(1,759)278 (897)(444)
Commercial real estate — owner occupied6 7 3 3 3 3 4 
Commercial and business lending(12,930)1,417 (11,174)(1,756)281 (894)(440)
Commercial real estate — investor2,276 — 2,276 — — — — 
Real estate construction— 33 (18)18 16 9 2 
Commercial real estate lending2,275 33 2,257 18 16 9 2 
Total commercial(10,655)1,450 (8,917)(1,738)297 (885)(439)
Residential mortgage(336)508 (283)(53)(125)(42)220 
Auto finance(2,004)(10)(1,048)(957)(768)(165)(14)
Home equity524 776 183 340 123 (101)461 
Other consumer(1,998)(967)(1,117)(881)(711)(675)(516)
Total consumer(3,815)306 (2,264)(1,550)(1,480)(983)151 
Total net (charge offs) recoveries$(14,470)$1,757 $(11,181)$(3,289)$(1,183)$(1,867)$(287)
Ratios
Allowance for credit losses on loans to total loans1.26 %1.25 %1.22 %1.20 %1.20 %
Allowance for credit losses on loans to net charge offs (annualized)12.9xN/M8.4x27.5x74.9x44.9xN/M
Loan evaluation method for ACLL
Individually evaluated for impairment$12,268 $11,585 $10,324 $15,739 $10,068 
Collectively evaluated for impairment364,759 354,623 341,172 316,942 307,480 
     Total ACLL$377,027 $366,208 $351,496 $332,680 $317,547 
Loan balance
Individually evaluated for impairment$58,109 $48,934 $76,577 $87,712 $81,457 
Collectively evaluated for impairment29,790,795 29,158,138 28,722,992 27,729,568 26,413,241 
     Total loan balance$29,848,904 $29,207,072 $28,799,569 $27,817,280 $26,494,698 
N/M = Not Meaningful
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Table 12 Annualized Net (Charge Offs) Recoveries(a)
YTDQuarter Ended
(In basis points)Jun 30,
2023		Jun 30,
2022		Jun 30,
2023		Mar 31,
2023		Dec 31,
2022		Sep 30,
2022		Jun 30,
2022
Net loan (charge offs) recoveries
Commercial and industrial(27)3 (46)(7)1 (4)(2)
Commercial real estate — owner occupied— — — — — — — 
Commercial and business lending(24)3 (41)(7)1 (3)(2)
Commercial real estate — investor9 — 18 — — — — 
Real estate construction— — — — — — — 
Commercial real estate lending6 — 12 — — — — 
Total commercial(12)2 (20)(4)1 (2)(1)
Residential mortgage(1)1 (1)— (1)— 1 
Auto finance(26)— (25)(26)(24)(7)(1)
Home equity17 27 12 22 8 (7)32 
Other consumer(144)(66)(163)(125)(95)(89)(70)
Total consumer(7)1 (8)(6)(6)(4)1 
Total net (charge offs) recoveries(10)1 (15)(5)(2)(3)— 
(a) Annualized ratio of net charge offs to average loans by loan type.
Notable Contributions to the Change in the Allowance for Credit Losses on Loans
•Total loans increased $1.0 billion, or 4%, from December 31, 2022, and increased $3.4 billion, or 13%, from June 30, 2022. The increase from June 30, 2022 was driven by growth across nearly all major loan portfolios resulting from the Corporation's strategic initiatives. See also Note 6 Loans of the notes to consolidated financial statements for additional information on loans.
•Potential problem loans increased $77 million, or 29%, from December 31, 2022, and increased $64 million, or 23%, from June 30, 2022. The increase from December 31, 2022 was primarily driven by increases in potential problem loans within commercial and industrial and CRE-investor lending. The increase from June 30, 2022 was primarily driven by an increase within commercial and industrial lending, partially offset by a decrease within CRE-investor lending. See Table 10 for additional information regarding potential problem loans.
•Total nonaccrual loans increased $20 million, or 18%, from December 31, 2022, and increased $23 million, or 21%, from June 30, 2022. The increase from December 31, 2022 was primarily due to increases in nonaccrual loans within commercial and industrial lending, partially offset by a decrease within CRE-investor lending. The increase from June 30, 2022 was primarily driven by increases in commercial and industrial lending and residential mortgage lending, partially offset by a decrease in CRE-investor lending. See Note 6 Loans of the notes to consolidated financial statements and Table 10 for additional disclosures on the changes in asset quality.
•YTD net charge offs increased $16 million from June 30, 2022, primarily driven by an increase in net charge offs within commercial and industrial lending. See Table 11 and Table 12 for additional information on the activity in the ACLL.
Management believes the level of ACLL to be appropriate at June 30, 2023.
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Deposits and Customer Funding
The following table summarizes the composition of our deposits and customer funding:
Table 13 Period End Deposit and Customer Funding Composition
Jun 30, 2023Mar 31, 2023Dec 31, 2022Sep 30, 2022Jun 30, 2022
 ($ in thousands)Amount% of
Total		Amount% of
Total		Amount% of
Total		Amount% of
Total		Amount% of
Total
Noninterest-bearing demand$6,565,666 21 %$7,328,689 24 %$7,760,811 26 %$8,224,579 28 %$8,085,702 28 %
Savings4,777,415 15 %4,730,472 16 %4,604,848 16 %4,708,720 16 %4,708,156 16 %
Interest-bearing demand7,037,959 22 %6,977,121 23 %7,100,727 24 %7,122,218 24 %6,789,722 24 %
Money market7,521,930 23 %8,357,625 28 %8,239,610 28 %7,909,232 27 %7,769,415 27 %
Brokered CDs3,818,325 12 %1,185,565 4 %541,916 2 %— — %2,121 — %
Other time deposits2,293,114 7 %1,752,351 6 %1,388,242 5 %1,233,833 4 %1,221,460 4 %
   Total deposits$32,014,409 100 %$30,331,824 100 %$29,636,154 100 %$29,198,581 100 %$28,576,577 100 %
Other customer funding(a)
170,873 226,258 261,767 283,856 296,440 
Total deposits and other customer funding$32,185,282 $30,558,081 $29,897,921 $29,482,437 $28,873,017 
Network transaction deposits(b)
$1,600,619 $1,273,420 $979,003 $864,086 $891,902 
Net deposits and other customer funding(c)
26,766,338 28,099,096 28,377,001 28,618,351 27,978,993 
Time deposits of more than $250,000465,446 345,169 282,206 222,318 180,705 
(a) Includes repurchase agreements and commercial paper.
(b) Included above in interest-bearing demand and money market.
(c) Total deposits and other customer funding, excluding brokered CDs and network transaction deposits.
•Total deposits, which are the Corporation's largest source of funds, increased $2.4 billion, or 8%, from December 31, 2022, and increased $3.4 billion, or 12%, from June 30, 2022, primarily due to increases in brokered CDs, other time deposits, and network transaction deposits, partially offset by a decrease in noninterest-bearing demand deposit accounts.
•Estimated uninsured and uncollateralized deposits, excluding intercompany deposits, were 20.8% of total deposits at June 30, 2023, compared to 26.4% at both December 31, 2022 and June 30, 2022.
Liquidity
The objective of liquidity risk management is to ensure that the Corporation has the ability to generate sufficient cash or cash equivalents in a timely and cost effective manner to satisfy the cash flow requirements of depositors and borrowers and to meet its other commitments as they become due. The Corporation’s liquidity risk management process is designed to identify, measure, and manage the Corporation’s funding and liquidity risk to meet its daily funding needs in the ordinary course of business, as well as to address expected and unexpected changes in its funding requirements. The Corporation engages in various activities to manage its liquidity risk, including diversifying its funding sources, stress testing, and holding readily-marketable assets which can be used as a source of liquidity, if needed.
The Corporation performs dynamic scenario analysis in accordance with industry best practices. Measures have been established to ensure the Corporation has sufficient high quality short-term liquidity to meet cash flow requirements under stressed scenarios. In addition, the Corporation also reviews static measures such as deposit funding as a percentage of total assets and liquid asset levels. Strong capital ratios, credit quality, and core earnings are also essential to maintaining cost effective access to wholesale funding markets. At June 30, 2023, the Corporation was in compliance with its internal liquidity objectives and had sufficient asset-based liquidity to meet its obligations even under a stressed scenario.
The Corporation maintains diverse and readily available liquidity sources, including:
•Lines of credit with the Federal Reserve Bank and FHLB, which require eligible loan and investment collateral to be pledged. Based on the amount of collateral pledged, the FHLB established a collateral value from which the Bank may draw advances, and issue letters of credit in favor of public fund depositors, against the collateral. As of June 30, 2023, the Bank had $5.1 billion available for future funding. The Federal Reserve Bank also establishes a collateral value of assets to support borrowings from the discount window. As of June 30, 2023, the Bank had $1.6 billion available for discount window borrowings.
•The BTFP, against which the Corporation can borrow with qualifying investment securities collateral, valued at par as permitted by the terms of the program. As of June 30, 2023, the Bank had up to $634 million available for borrowing under the BTFP.
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•A $200 million Parent Company commercial paper program, of which $15 million was outstanding as of June 30, 2023.
•Dividends and service fees from subsidiaries, as well as the proceeds from issuance of capital, which are also funding sources for the Parent Company.
•Acquisition related equity issuances by the Parent Company; the Corporation has filed a shelf registration statement with the SEC under which the Parent Company may, from time to time, offer shares of the Corporation’s common stock in connection with acquisitions of businesses, assets, or securities of other companies.
•Other issuances by the Parent Company; the Corporation maintains on file with the SEC a universal shelf registration statement, under which the Parent Company may offer the following securities, either separately or in units: debt securities, preferred stock, depositary shares, common stock, and warrants.
•Bank issuances; the Bank may also issue institutional CDs, network transaction deposits, and brokered CDs.
•Global Bank Note Program issuances; the Bank has implemented a program pursuant to which it may from time to time offer up to $2.0 billion aggregate principal amount of its unsecured senior and subordinated notes.
The following table presents secured and total available liquidity sources, estimated uninsured and uncollateralized deposits (excluding intercompany deposits), and coverage of estimated uninsured and uncollateralized deposits at March 31, 2023 and June 30, 2023.
Table 14 Liquidity Sources and Uninsured Deposit Coverage Ratio
($ in thousands)March 31, 2023June 30, 2023
Federal Reserve Bank balance$504,169 $178,983 
Available FHLB Chicago capacity3,453,813 5,148,360 
Available Federal Reserve Bank discount window capacity1,799,453 1,635,140 
Available BTFP capacity644,915 633,817 
     Funding available within one business day(a)
6,402,351 7,596,300 
Available federal funds lines2,773,000 2,623,000 
Available brokered deposits capacity(b)
3,646,393 761,301 
Unsecured debt capacity(c)
1,000,000 1,000,000 
     Total available liquidity$13,821,744 $11,980,601 
Uninsured and uncollateralized deposits$7,337,286 $6,674,744 
Coverage ratio of uninsured and uncollateralized deposits with secured funding87 %114 %
Coverage ratio of uninsured and uncollateralized deposits with total funding188 %179 %
(a) Estimated based on normal course of operations with indicated institution.
(b) Availability based on internal policy limitations. The Corporation includes outstanding deposits that have received a primary purpose exemption in the brokered deposit classification as they have similar funding characteristics and risk as brokered deposits.
(c) Availability based on internal policy limitations.
Based on contractual obligations and ongoing operations, the Corporation's sources of liquidity are sufficient to meet present and future liquidity needs. See Table 18 for information about the Corporation's contractual obligations and other commitments. See section Deposits and Customer Funding for information about uninsured deposits and concentrations.
Credit ratings impact the Corporation's ability to issue debt securities and the cost to borrow money. Adverse changes in credit ratings impact not only the ability to raise funds in the capital markets but also the cost of these funds. For additional information regarding risks related to adverse changes in our credit ratings, see Part II, Item 1A, Risk Factors.
For the six months ended June 30, 2023, net cash provided by operating and financing activities was $179 million and $1.6 billion, respectively, while net cash used in investing activities was $1.8 billion, for a net increase in cash and cash equivalents of $8 million since year-end 2022. At June 30, 2023, assets of $41.2 billion increased $1.8 billion, or 5%, from year-end 2022, primarily due to loan growth and increases in AFS securities. On the funding side, deposits of $32.0 billion increased $2.4 billion, or 8%, from year-end 2022, FHLB advances decreased $689 million, or 16%, while other long-term funding increased $286 million, or 115%, the latter due to the issuance of subordinated debt.
For the six months ended June 30, 2022, net cash provided by operating and financing activities was $489 million and $2.0 billion, respectively, while net cash used in investing activities was $2.7 billion, for a net decrease in cash and cash equivalents of $158 million since year-end 2021. At June 30, 2022, assets of $37.2 billion increased $2.1 billion, or 6%, from year-end 2021, primarily due to loan growth. On the funding side, deposits of $28.6 billion increased $110 million from year-end 2021 and FHLB advances increased $1.6 billion to fund loan growth.
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Quantitative and Qualitative Disclosures about Market Risk
Market risk and interest rate risk are managed centrally. Market risk is the potential for loss arising from adverse changes in the fair value of fixed-income securities, equity securities, other earning assets, and derivative financial instruments as a result of changes in interest rates or other factors. Interest rate risk is the potential for reduced net interest income resulting from adverse changes in the level of interest rates. As a financial institution that engages in transactions involving an array of financial products, the Corporation is exposed to both market risk and interest rate risk. In addition to market risk, interest rate risk is measured and managed through a number of methods. The Corporation uses financial modeling simulation techniques that measure the sensitivity of future earnings due to changing rate environments to measure interest rate risk.
Policies established by the Corporation’s ALCO and approved by the Board of Directors are intended to limit these risks. The Board has delegated day-to-day responsibility for managing market and interest rate risk to ALCO. The primary objectives of market risk management are to minimize any adverse effect that changes in market risk factors may have on net interest income and to offset the risk of price changes for certain assets recorded at fair value.
Interest Rate Risk
The primary goal of interest rate risk management is to control exposure to interest rate risk within policy limits approved by the Board of Directors. These limits and guidelines reflect the Corporation's risk appetite for interest rate risk over both short-term and long-term horizons.
The major sources of the Corporation's non-trading interest rate risk are timing differences in the maturity and re-pricing characteristics of assets and liabilities, changes in the shape of the yield curve, and the potential exercise of explicit or embedded options. We measure these risks and their impact by identifying and quantifying exposures through the use of sophisticated simulation and valuation models which are employed by management to understand interest rate sensitive EAR and MVE at risk. The Corporation’s interest rate risk profile is such that, generally, a higher yield curve adds to income while a lower yield curve has a negative impact on earnings. The Corporation's EAR profile is asset sensitive at June 30, 2023.
For further discussion of the Corporation's interest rate risk and corresponding key assumptions, see the Interest Rate Risk section of Management’s Discussion and Analysis of Financial Condition and Results of Operations included in the Corporation’s 2022 Annual Report on Form 10-K.
The sensitivity analysis included below is measured as a percentage change in EAR due to gradual moves in benchmark interest rates from a baseline scenario over 12 months. We evaluate the sensitivity using: 1) a dynamic forecast incorporating expected growth in the balance sheet, and 2) a static forecast where the current balance sheet is held constant.
While a gradual shift in interest rates was used in this analysis to provide an estimate of exposure under a probable scenario, an instantaneous shift in interest rates would have a more significant impact. No EAR breaches occurred during the first six months of 2023.
Table 15 Estimated % Change in Rate Sensitive Earnings at Risk Over 12 Months
Jun 30, 2023Dec 31, 2022
 Dynamic ForecastStatic ForecastDynamic ForecastStatic Forecast
Gradual Rate Change
100 bp increase in interest rates1.9 %1.7 %3.9 %3.4 %
200 bp increase in interest rates4.0 %3.3 %7.8 %6.8 %
100 bp decrease in interest rates(1.2)%(0.5)%(3.4)%(2.9)%
200 bp decrease in interest rates(1.8)%(0.7)%(6.7)%(5.7)%
At June 30, 2023, the MVE profile indicates a decrease in net balance sheet value due to instantaneous upward changes in rates and an increase in net balance sheet value due to instantaneous downward changes in rates.
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Table 16 Market Value of Equity Sensitivity
Jun 30, 2023Dec 31, 2022
Instantaneous Rate Change
100 bp increase in interest rates(8.8)%(4.2)%
200 bp increase in interest rates(17.5)%(8.2)%
100 bp decrease in interest rates8.7 %4.3 %
200 bp decrease in interest rates16.4 %8.0 %
Since MVE measures the discounted present value of cash flows over the estimated lives of instruments, the change in MVE does not directly correlate to the degree that earnings would be impacted over a shorter time horizon (i.e., the current year). Further, MVE does not take into account factors such as future balance sheet growth, changes in product mix, changes in yield curve relationships, and changes in product spreads that could mitigate the adverse impact of changes in interest rates. The MVE measure in the 200 bp increase in interest rates scenario is outside of the policy limit, which has been reported to the Board.
The above EAR, and MVE measures do not include all actions that management may undertake to manage this risk in response to anticipated changes in interest rates.

In 2014, the Financial Stability Oversight Council and Financial Stability Board raised concerns about the reliability and robustness of LIBOR and called for the development of alternative interest rate benchmarks. The ARRC, through authority from the Federal Reserve, has selected SOFR as the alternative rate and developed a paced transition plan which addresses the risk that LIBOR may not exist beyond June 2023.
As part of the Corporation's efforts to limit exposure to LIBOR based loans, performing borrowers can modify or refinance their residential mortgage loans to a fixed interest rate or an adjustable rate mortgage tied to the one-year treasury adjusted to a constant maturity of one year with an appropriate margin. This provides the Bank and borrower with greater certainty around the loan structure. The Bank has not booked a LIBOR adjustable rate mortgage since the first quarter of 2020.
Additionally, the Corporation has been monitoring its volume of commercial credits and derivatives tied to LIBOR. In 2021, the Corporation began prioritizing SOFR, Prime, and Ameribor as the preferred alternative reference rates and ceased booking LIBOR based commitments after the end of 2021. Loans with a maturity after June 2023 have been reviewed and appropriate fallback language is in place when LIBOR is no longer published.
As of June 30, 2023, the notional amount of our LIBOR-referenced interest rate derivative contracts was $2.5 billion, all of which were entered specifically to accommodate customer needs, and will fallback to an index similar to the underlying loan upon the index change on that loan.
The following table summarizes the outstanding LIBOR loan exposures at June 30, 2023.
Table 17 LIBOR Loan Exposure
June 30, 2023
($ in thousands)BalanceCommitment
Commercial and industrial$313,465 $582,231 
Commercial real estate - owner occupied127,162 127,662 
Commercial and business lending440,627 709,894 
Commercial real estate - investor1,042,196 1,103,935 
Real estate construction232,532 298,432 
Commercial real estate lending1,274,728 1,402,368 
Total commercial1,715,356 2,112,261 
Residential mortgage342 342 
Total consumer342 342 
Total$1,715,698 $2,112,604 
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Contractual Obligations, Commitments, Off-Balance Sheet Arrangements, and Contingent Liabilities
The following table summarizes significant contractual obligations and other commitments at June 30, 2023, at those amounts contractually due to the recipient, including any unamortized premiums or discounts, hedge basis adjustments, or other similar carrying value adjustments.
Table 18 Contractual Obligations and Other Commitments
($ in thousands)Note ReferenceOne Year
or Less		One to
Three Years		Three to
Five Years		Over
Five Years		Total
Time deposits$5,796,754 $291,076 $23,604 $5 $6,111,439 
Short-term funding8341,253 — — — 341,253 
FHLB advances82,440,633 390,932 796,703 2,479 3,630,747 
Other long-term funding888 246,453 160 287,573 534,273 
Operating leases164,741 9,482 7,236 4,649 26,108 
Total$8,583,468 $937,944 $827,703 $294,706 $10,643,820 
The Corporation also has obligations under its derivatives, lending-related commitments, and retirement plans as described in Note 9 Derivative and Hedging Activities, Note 11 Commitments, Off-Balance Sheet Arrangements, Legal Proceedings, and Regulatory Matters, and Note 13 Retirement Plans of the notes to consolidated financial statements, respectively. Further discussion of the nature of each obligation is included in the referenced note to the consolidated financial statements.
Capital
Management actively reviews capital strategies for the Corporation and each of its subsidiaries in light of perceived business risks, future growth opportunities, industry standards, and compliance with regulatory requirements. The assessment of overall capital adequacy depends on a variety of factors, including asset quality, liquidity, stability of earnings, changing competitive forces, economic conditions in markets served, and strength of management. At June 30, 2023, the capital ratios of the Corporation and its banking subsidiaries were in excess of regulatory minimum requirements. The Corporation’s capital ratios are summarized in the following table.
Compliance with regulatory minimum capital requirements is a tool used in assessing the Corporation's capital adequacy, but not determinative of how the Corporation would fare under extreme stress. Factors that may affect the adequacy of the Corporation's capital include the inherent limitations of fair value estimates and the assumptions thereof, the inherent limitations of the regulatory risk-weights assigned to various asset types, the inherent limitations of accounting classifications of certain investments and the effect on their measurement, external macroeconomic conditions and their effects on capital and the Corporation's ability to raise capital or refinance capital commitments, and the extent of steps taken by state or federal government authorities in periods of extreme stress.
For additional information regarding the potential for additional regulation and supervision, see Part II, Item 1A, Risk Factors in the Corporation's quarterly report on Form 10-Q for the quarter ended March 31, 2023.
67
Table 19 Capital Ratios
YTDQuarter Ended
 ($ in thousands)
Jun 30,
2023		Jun 30,
2022		Jun 30,
2023		Mar 31,
2023		Dec 31,
2022		Sep 30,
2022		Jun 30,
2022
Risk-based Capital(a)
CET1$3,143,131 $3,085,618 $3,035,578 $2,955,710 $2,896,675 
Tier 1 capital3,337,243 3,279,730 3,229,690 3,149,822 3,089,593 
Total capital4,051,096 3,990,606 3,680,227 3,582,099 3,506,864 
Total risk-weighted assets33,146,137 32,648,115 32,472,008 31,405,843 29,863,512 
Modified CECL transitional amount44,851 44,851 67,276 67,276 67,276 
CET1 capital ratio9.48 %9.45 %9.35 %9.41 %9.70 %
Tier 1 capital ratio10.07 %10.05 %9.95 %10.03 %10.35 %
Total capital ratio12.22 %12.22 %11.33 %11.41 %11.74 %
Tier 1 leverage ratio8.40 %8.46 %8.59 %8.66 %8.87 %
Selected Equity and Performance Ratios
Total stockholders’ equity / total assets10.00 %10.14 %10.19 %10.39 %10.63 %
Dividend payout ratio(b)
34.15 %38.46 %37.50 %31.34 %30.00 %32.26 %35.71 %
Return on average assets0.96 %0.92 %0.86 %1.06 %1.12 %1.02 %0.97 %
Annualized noninterest expense / average assets1.90 %2.02 %1.89 %1.92 %2.03 %2.08 %2.04 %
(a) The Federal Reserve establishes regulatory capital requirements, including well-capitalized standards for the Corporation. The Corporation follows Basel III, subject to certain
    transition provisions. These regulatory capital measurements are used by management, regulators, investors, and analysts to assess, monitor, and compare the quality and
    composition of the Corporation's capital with the capital of other financial services companies.
(b) Ratio is based upon basic earnings per common share.
See Part II, Item 2, Unregistered Sales of Equity Securities and Use of Proceeds, for information on the shares repurchased during the second quarter of 2023.
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Non-GAAP Measures
Table 20 Non-GAAP Measures
YTDQuarter Ended
($ in thousands)Jun 30,
2023		Jun 30,
2022		Jun 30,
2023		Mar 31,
2023		Dec 31,
2022		Sep 30,
2022		Jun 30,
2022
Selected equity and performance ratios(a)(b)(c)
Tangible common equity / tangible assets6.94 %7.03 %6.97 %7.06 %7.23 %
Return on average equity9.38 %8.20 %8.47 %10.32 %10.81 %9.59 %8.85 %
Return on average tangible common equity13.79 %12.27 %12.38 %15.26 %16.15 %14.32 %13.29 %
Return on average CET112.11 %11.03 %10.88 %13.38 %14.04 %12.69 %11.77 %
Return on average tangible assets1.00 %0.97 %0.90 %1.11 %1.18 %1.08 %1.03 %
Average stockholders' equity / average assets10.22 %11.17 %10.18 %10.26 %10.40 %10.69 %11.02 %
Tangible common equity reconciliation(a)
Common equity$3,928,762 $3,931,551 $3,821,378 $3,759,840 $3,766,187 
Goodwill and other intangible assets, net(1,149,869)(1,152,072)(1,154,274)(1,156,477)(1,158,680)
Tangible common equity$2,778,893 $2,779,480 $2,667,104 $2,603,363 $2,607,507 
Tangible assets reconciliation(a)
Total assets$41,219,473 $40,702,519 $39,405,727 $38,049,607 $37,235,990 
Goodwill and other intangible assets, net(1,149,869)(1,152,072)(1,154,274)(1,156,477)(1,158,680)
Tangible assets$40,069,604 $39,550,448 $38,251,453 $36,893,130 $36,077,310 
Average tangible common equity and average CET1 reconciliation(a)
Common equity$3,901,605 $3,768,621 $3,934,949 $3,867,890 $3,797,568 $3,791,396 $3,743,919 
Goodwill and other intangible assets, net(1,152,100)(1,161,114)(1,151,039)(1,153,173)(1,155,408)(1,157,754)(1,160,035)
Tangible common equity2,749,505 2,607,507 2,783,910 2,714,716 2,642,160 2,633,642 2,583,884 
Modified CECL transitional amount44,851 67,276 44,851 44,851 67,276 67,276 67,276 
Accumulated other comprehensive loss255,205 125,566 251,624 258,827 254,178 189,935 170,253 
Deferred tax assets, net27,934 39,241 27,714 28,157 29,248 29,875 39,072 
Average CET1$3,077,495 $2,839,591 $3,108,099 $3,046,551 $2,992,862 $2,920,729 $2,860,485 
Average tangible assets reconciliation(a)
Total assets$40,085,316 $35,467,853 $40,558,311 $39,607,065 $38,385,436 $37,271,779 $35,732,583 
Goodwill and other intangible assets, net(1,152,100)(1,161,114)(1,151,039)(1,153,173)(1,155,408)(1,157,754)(1,160,035)
Tangible assets$38,933,216 $34,306,740 $39,407,273 $38,453,892 $37,230,028 $36,114,025 $34,572,548 
Adjusted net income reconciliation(b)
Net income$190,514 $161,086 $87,154 $103,360 $108,762 $96,275 $86,824 
Other intangible amortization, net of tax3,304 3,304 1,652 1,652 1,652 1,652 1,652 
Adjusted net income$193,818 $164,390 $88,806 $105,012 $110,414 $97,927 $88,476 
Adjusted net income available to common equity reconciliation(b)
Net income available to common equity$184,764 $155,336 $84,279 $100,485 $105,887 $93,400 $83,949 
Other intangible amortization, net of tax3,304 3,304 1,652 1,652 1,652 1,652 1,652 
Adjusted net income available to common equity$188,068 $158,640 $85,931 $102,137 $107,539 $95,052 $85,601 
Core customer deposit reconciliation
Total deposits$32,014,409 $30,331,824 $29,636,154 $29,198,581 $28,576,577 
Network transaction deposits(1,600,619)(1,273,420)(979,003)(864,086)(891,902)
Brokered CDs(3,818,325)(1,185,565)(541,916)— (2,121)
     Core customer deposits$26,595,465 $27,872,839 $28,115,235 $28,334,495 $27,682,553 
Efficiency ratio reconciliation(d)
Federal Reserve efficiency ratio 57.26 %63.51 %58.49 %56.07 %55.47 %60.32 %61.53 %
Fully tax-equivalent adjustment(0.82)%(1.05)%(0.85)%(0.79)%(0.77)%(0.87)%(0.98)%
Other intangible amortization(0.67)%(0.80)%(0.68)%(0.66)%(0.62)%(0.67)%(0.76)%
Fully tax-equivalent efficiency ratio55.78 %61.68 %56.96 %54.64 %54.08 %58.79 %59.80 %
(a) Tangible common equity and tangible assets exclude goodwill and other intangible assets, net.
(b) Adjusted net income and adjusted net income available to common equity, which are used in the calculation of return on average tangible assets and return on average tangible common equity, respectively, add back other intangible amortization, net of tax.
(c) These capital measurements are used by management, regulators, investors, and analysts to assess, monitor, and compare the quality and composition of our capital with the capital of other financial services companies.
(d) The efficiency ratio as defined by the Federal Reserve guidance is noninterest expense (which includes the provision for unfunded commitments) divided by the sum of net interest income plus noninterest income, excluding investment securities gains (losses), net. The fully tax-equivalent efficiency ratio is noninterest expense (which includes the provision for unfunded commitments), excluding other intangible amortization, divided by the sum of fully tax-equivalent net interest income plus noninterest income, excluding investment securities gains (losses), net.
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Sequential Quarter Results
The Corporation reported net income of $87 million for the second quarter of 2023, compared to net income of $103 million for the first quarter of 2023. Net income available to common equity was $84 million for the second quarter of 2023, or $0.56 for both basic and diluted earnings per common share. Comparatively, net income available to common equity for the first quarter of 2023 was $100 million, or $0.67 for basic earnings per common share and $0.66 for diluted earnings per common share (see Table 1).
Fully tax-equivalent net interest income for the second quarter of 2023 was $263 million, $16 million, or 6%, lower than the first quarter of 2023. The net interest margin in the second quarter of 2023 was down 27 bp to 2.80%. The decreases in net interest income and net interest margin were due to increased interest-bearing liability costs. Average earning assets increased $988 million, or 3%, to $37.6 billion in the second quarter of 2023. Average loans increased $592 million, or 2%, driven by growth across nearly all loan categories. On the funding side, average total interest-bearing deposits increased $2.1 billion, or 9%, primarily due to increases in time deposits and network transaction deposits. Average FHLB advances decreased $458 million, or 11%, and average long-term funding increased $134 million, or 33%, due to the issuance of subordinated debt in February 2023 (see Table 2).
The provision for credit losses was $22 million for the second quarter of 2023, compared to an $18 million provision for the first quarter of 2023 (see Table 11). See discussion under sections: Provision for Credit Losses, Nonperforming Assets, and Allowance for Credit Losses on Loans.
Noninterest income for the second quarter of 2023 was $66 million, up $3 million, or 6%, from the first quarter of 2023 (see Table 3).
Noninterest expense for the second quarter of 2023 was $191 million, up $3 million, or 2%, from the first quarter of 2023, driven primarily by increases in FDIC assessment (see Table 4).
For the second quarter of 2023, the Corporation recognized income tax expense of $24 million, compared to income tax expense of $27 million for the first quarter of 2023. See Income Taxes section for a detailed discussion on income taxes.
Comparable Quarter Results
The Corporation reported net income of $87 million for both the second quarter of 2023 and the second quarter of 2022. Net income available to common equity was $84 million for the second quarter of 2023, or $0.56 for both basic and diluted earnings per common share. Similarly, net income available to common equity for the second quarter of 2022 was $84 million, or $0.56 for both basic and diluted earnings per share (see Table 1).
Fully tax-equivalent net interest income for the second quarter of 2023 was $263 million, $42 million, or 19%, higher than the second quarter of 2022. The net interest margin between the comparable quarters was up 9 bp, to 2.80% in the second quarter of 2023. The increases in net interest income and net interest margin were due to increased earning assets as well as higher interest on earning assets resulting from the Federal Reserve increasing their federal funds target rate. Average earning assets increased $5.0 billion, or 15%, to $37.6 billion in the second quarter of 2023, as average loans increased $4.0 billion, or 16%, driven by growth across nearly all loan categories and increases in investments and other of $916 million, or 13%. On the funding side, average interest-bearing deposits increased $4.6 billion, or 23%, from the second quarter of 2022, due to increases in time deposits and network transaction deposits. Average short and long-term funding increased $1.5 billion, or 47% (see Table 2), primarily driven by an increase in FHLB advances.
The provision for credit losses had a $22 million provision for the second quarter of 2023, compared to a negligible release of provision for the second quarter of 2022 (see Table 11). See discussion under sections: Provision for Credit Losses, Nonperforming Assets, and Allowance for Credit Losses on Loans.
Noninterest income for the second quarter of 2023 was $66 million, down $10 million, or 13%, compared to the second quarter of 2022, primarily due to lower income in service charges and deposit account fees and capital markets, net (see Table 3).
Noninterest expense increased $9 million, or 5%, to $191 million for the second quarter of 2023, primarily due to higher FDIC assessment and technology expense (see Table 4).
The Corporation recognized income tax expense of $24 million for the second quarter of 2023, compared to an income tax expense of $23 million for the second quarter of 2022. See section Income Taxes for a detailed discussion on income taxes.
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Segment Review
As discussed in Note 14 Segment Reporting of the notes to consolidated financial statements, the Corporation’s reportable segments have been determined based upon its internal profitability reporting system, which is organized by strategic business unit. Certain strategic business units have been combined for segment information reporting purposes where the nature of the products and services, the type of customer, and the distribution of those products and services are similar. The reportable segments are Corporate and Commercial Specialty; Community, Consumer and Business; and Risk Management and Shared Services.
Table 21 Selected Segment Financial Data
Three Months Ended Jun 30,Six Months Ended Jun 30,
($ in thousands)20232022% Change20232022% Change
Corporate and Commercial Specialty
Total revenue$172,278 $145,287 19%$343,136 $282,174 22%
Provision for credit losses13,674 12,246 12%27,456 24,900 10%
Noninterest expense61,083 56,679 8%123,144 113,207 9%
Income tax expense17,096 13,974 22%34,833 26,281 33%
Net income80,425 62,387 29%157,703 117,786 34%
Average earning assets17,444,251 15,083,176 16%17,276,106 14,751,601 17%
Average loans17,426,931 15,079,176 16%17,259,706 14,748,739 17%
Average deposits8,792,906 8,752,899 —%9,240,323 9,080,190 2%
Average allocated capital (Average CET1)(a)
1,713,007 1,515,302 13%1,708,727 1,468,397 16%
Return on average allocated capital(a)
18.83 %16.51 %N/M18.61 %16.18 %N/M
Community, Consumer, and Business
Total revenue$208,558 $139,757 49%$402,870 $261,341 54%
Provision for credit losses7,328 4,924 49%14,086 9,580 47%
Noninterest expense109,028 104,967 4%220,722 203,428 9%
Income tax expense19,362 6,272 N/M35,293 10,150 N/M
Net income72,839 23,594 N/M132,769 38,183 N/M
Average earning assets11,492,005 9,784,918 17%11,373,558 9,481,879 20%
Average loans11,492,005 9,784,918 17%11,373,558 9,481,879 20%
Average deposits18,065,314 18,544,542 (3)%18,093,436 18,479,893 (2)%
Average allocated capital (Average CET1)(a)
732,068 593,296 23%721,844 554,137 30%
Return on average allocated capital(a)
39.91 %15.95 %N/M37.09 %13.90 %N/M
Risk Management and Shared Services
Total revenue$(57,376)$6,560 N/M$(86,463)$10,304 N/M
Provision for credit losses1,097 (17,172)N/M(1,471)(38,472)(96)%
Noninterest expense20,562 19,774 4%34,219 38,077 (10)%
Income tax expense (benefit)(12,926)3,117 N/M(19,254)5,583 N/M
Net income (loss)(66,109)842 N/M(99,958)5,117 N/M
Average earning assets8,632,734 7,744,720 11%8,427,968 8,068,347 4%
Average loans519,361 534,069 (3)%510,431 520,924 (2)%
Average deposits4,422,915 873,301 N/M3,243,256 847,656 N/M
Average allocated capital (Average CET1)(a)
663,024 751,887 (12)%646,925 817,057 (21)%
Return on average allocated capital(a)
(41.73)%(1.08)%N/M(32.95)%(0.16)%N/M
Consolidated Total
Total revenue$323,460 $291,604 11%$659,543 $553,819 19%
Return on average allocated capital(a)
10.88 %11.77 %-89 bp12.11 %11.03 %108 bp
N//M = Not meaningful
(a) The Federal Reserve establishes capital adequacy requirements for the Corporation, including CET1. For segment reporting purposes, the ROCET1 reflects return on average allocated CET1. The ROCET1 for the Risk Management and Shared Services segment and the Consolidated Total is inclusive of the annualized effect of the preferred stock
dividends.
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Notable Changes in Segment Financial Data
The Corporate and Commercial Specialty segment consists of lending and deposit solutions to larger businesses, developers, not-for-profits, municipalities, and financial institutions, and the support to deliver, fund, and manage such banking solutions. In addition, this segment provides a variety of investment, fiduciary, and retirement planning products and services to individuals and small to mid-sized businesses.
•Total revenue increased $61 million from the six months ended June 30, 2022 and increased $27 million from the three months ended June 30, 2022, primarily attributable to higher loan volumes and interest rates driving net interest income higher.
•Noninterest expense increased $10 million from the six months ended June 30, 2022 and increased $4 million from the three months ended June 30, 2022, primarily due to higher personnel costs and allocated corporate overhead.
•Average loans increased $2.5 billion from the six months ended June 30, 2022 and increased $2.3 billion from the three months ended June 30, 2022, primarily driven by growth in commercial and business lending and CRE lending.
•Average deposits increased $160 million from the six months ended June 30, 2022 and increased $40 million from the three months ended June 30, 2022, driven by increases in money market deposits and interest-bearing demand deposits, partially offset by a decease in noninterest bearing demand deposits.
The Community, Consumer, and Business segment consists of lending and deposit solutions to individuals and small to mid-sized businesses.
•Total revenue increased $142 million from the six months ended June 30, 2022 and increased $69 million from the three months ended June 30, 2022, primarily attributable to higher loan volumes and interest rates along with receiving net FTP credit for providing funding for the Corporation.
•Noninterest expense increased $17 million from the six months ended June 30, 2022 and increased $4 million from the three months ended June 30, 2022, driven by higher allocated corporate overhead and increased technology expense, as the Corporation continues to invest in digital investments tied to its strategic initiatives.
•Average loans increased $1.9 billion from the six months ended June 30, 2022 and increased $1.7 billion from the three months ended June 30, 2022, primarily driven by growth in auto finance lending and residential mortgage lending.
•Average deposits decreased $386 million from the six months ended June 30, 2022 and decreased $479 million from the three months ended June 30, 2022, driven by decreases in noninterest bearing demand deposits and money market deposits, partially offset by an increase in time deposits.
The Risk Management and Shared Services segment includes key shared Corporate functions, Parent Company activity, intersegment eliminations, and residual revenues and expenses.
•Total revenue decreased $97 million from the six months ended June 30, 2022 and decreased $64 million from the three months ended June 30, 2022, primarily driven by increased interest expense as a result of holding more brokered CDs and other short term funding.
•Provision for credit losses increased $37 million from the six months ended June 30, 2022 and increased $18 million from the three months ended June 30, 2022, driven by loan growth, limited credit movement, and macro trends.
•Average deposits increased $2.4 billion from the six months ended June 30, 2022 and increased $3.5 billion from the three months ended June 30, 2022, primarily driven by increases in brokered CDs and network deposits.
Critical Accounting Estimates
In preparing the consolidated financial statements, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the balance sheet and revenues and expenses for the period. Actual results could differ significantly from those estimates. The determination of the ACLL is particularly susceptible to significant change. A discussion of these estimates can be found in the Critical Accounting Estimates section in Management's Discussion and Analysis of Financial Condition and Results of Operations included in the Corporation’s 2022 Annual Report on Form 10-K. There have been no changes in the Corporation's application of critical accounting estimates since December 31, 2022.
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Recent Developments
On July 25, 2023, the Corporation’s Board of Directors declared a regular quarterly cash dividend of $0.21 per common share, payable on September 15, 2023 to shareholders of record at the close of business on September 1, 2023. The Board of Directors also declared a regular quarterly cash dividend of $0.3671875 per depositary share on Associated's 5.875% Series E Perpetual Preferred Stock, payable on September 15, 2023 to shareholders of record at the close of business on September 1, 2023. The Board of Directors also declared a regular quarterly cash dividend of $0.3515625 per depositary share on Associated's 5.625% Series F Perpetual Preferred Stock, payable on September 15, 2023 to shareholders of record at the close of business on September 1, 2023.
ITEM 3.    Quantitative and Qualitative Disclosures About Market Risk
Information required by this item is set forth in Item 2 under the captions Quantitative and Qualitative Disclosures about Market Risk and Interest Rate Risk.
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ITEM 4.    Controls and Procedures
The Corporation maintains disclosure controls and procedures as required under Rule 13a-15 promulgated under the Securities Exchange Act of 1934, as amended, that are designed to ensure that information required to be disclosed in the Corporation's Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to the Corporation’s management, including its Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.
As of June 30, 2023, the Corporation’s management carried out an evaluation, under the supervision and with the participation of the Corporation’s Chief Executive Officer and Chief Financial Officer, of the effectiveness of its disclosure controls and procedures. Based on the foregoing, its Chief Executive Officer and Chief Financial Officer concluded that the Corporation’s disclosure controls and procedures were effective as of June 30, 2023.
No changes were made to the Corporation’s internal control over financial reporting (as defined in Rule 13a-15(f) of the Exchange Act of 1934) during the last fiscal quarter that have materially affected, or are reasonably likely to materially affect, the Corporation’s internal control over financial reporting.
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PART II - OTHER INFORMATION

ITEM 1.Legal Proceedings
The information required by this item is set forth in Part I, Item 1 under Note 11 Commitments, Off-Balance Sheet Arrangements, Legal Proceedings, and Regulatory Matters of the notes to consolidated financial statements.

ITEM 1A.Risk Factors
There have been no material changes in the Risk Factors described in the Corporation’s 2022 Annual Report on Form 10-K other than as set out in the Corporation's Quarterly Report on Form 10-Q for the quarter ended March 31, 2023, in Item 1A of Part II.
ITEM 2.Unregistered Sales of Equity Securities and Use of Proceeds
During the second quarter of 2023, the Corporation repurchased approximately $884,000 of common stock, all of which were repurchases related to tax withholding on equity compensation with no open market purchases during the quarter. The repurchase details are presented in the table below:
Common Stock Purchases
Total Number  of
Shares Purchased(a)
Average Price
Paid per Share		Total Number of
Shares Purchased as
Part of Publicly
Announced Plans
or Programs
Maximum Number of
Shares that May Yet
Be Purchased Under
the Plans
or Programs(b)
Period
April 1, 2023 - April 30, 20235,291 $18.17 — — 
May 1, 2023 - May 31, 202343,358 17.63 — — 
June 1, 2023 - June 30, 20231,547 15.31 — — 
Total50,196 $17.61 — 4,907,327 
(a) During the second quarter of 2023, all common shares repurchased were for minimum tax withholding settlements on equity compensation. These purchases do not count against the maximum value of shares remaining available for purchase under the Board of Directors' authorization.
(b) At June 30, 2023, there remained $80 million authorized to be repurchased under the Board of Directors' 2021 authorization. The maximum number of shares that may yet be purchased under this authorization is based on the closing share price on June 30, 2023.
Repurchases under Board authorized repurchase programs are subject to any necessary regulatory approvals and other limitations and may occur from time to time in open market purchases, block transactions, private transactions, accelerated share repurchases, or similar facilities.
During the second quarter of 2023, the Corporation discovered that it had inadvertently failed to update its registration statement filed with the Securities and Exchange Commission relating to securities transactions in the Associated Banc-Corp Employee Stock Purchase Plan. The ESPP is open to the Corporation’s employees who complete an enrollment authorization (each a “Participant”). A Participant may direct that up to 10% of his or her gross wages, but no less than 1%, be withheld and transmitted to an administrator to purchase shares of the Corporation’s common stock. The Corporation subsidizes the Participant’s purchase of Corporation common stock by contributing an amount equal to 10% of the Participant’s withheld amount. The administrator then takes the funds and purchases shares of the Corporation’s common stock on a monthly basis and credits such shares to the Participant’s account. Even though all of the common stock issued under the ESPP is purchased in the open market, the Corporation is required to register the subsequent issuance of shares to Participants. The Corporation previously filed a registration statement with the SEC registering the sale of shares of Corporation common stock under the ESPP, but the number of shares registered was not sufficient to cover the number of shares issued after approximately mid-2018. Between mid-2018 and June 2023, the Corporation estimates that a total of approximately 1.2 million shares of the Corporation’s common stock were purchased under the ESPP. On June 30, 2023, the Corporation filed a Registration Statement on Form S-8 registering the sale of an additional 1.0 million shares for issuance under the ESPP. The Corporation believes that it has provided the Participants with the same information they would have received had the registration statement been timely filed. The Corporation is implementing monitoring and reporting procedures to ensure that, in the future, the Corporation’s registration statements have a sufficient number of shares to cover the shares of Corporation common stock issued under the ESPP. The Corporation has consistently treated the shares purchased under the ESPP as outstanding for financial reporting purposes. The unregistered transactions described above do not represent any additional dilution to shareholders. The Corporation’s inadvertent failure to timely file the registration statement described above may subject the Corporation to civil or other penalties or claims by regulatory authorities or others. However, we do not believe the Corporation’s potential liability for any claims that may arise relating to these matters is material to the Corporation’s financial condition or results of operations.
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ITEM 5.Other Information
During the three months ended June 30, 2023, no director or officer of the Corporation adopted or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408(a) of Regulation S-K.

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ITEM 6.Exhibits
(a)    Exhibits:
Exhibit (31.1), Certification Under Section 302 of Sarbanes-Oxley by Andrew J. Harmening, Chief Executive Officer.
Exhibit (31.2), Certification Under Section 302 of Sarbanes-Oxley by Derek S. Meyer, Chief Financial Officer.
Exhibit (32), Certification by the Chief Executive Officer and Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of Sarbanes-Oxley.
Exhibit (101), Interactive data files pursuant to Rule 405 of Regulation S-T: (i) Unaudited Consolidated Balance Sheets, (ii) Unaudited Consolidated Statements of Income, (iii) Unaudited Consolidated Statements of Comprehensive Income, (iv) Unaudited Consolidated Statements of Changes in Stockholders’ Equity, (v) Unaudited Consolidated Statements of Cash Flows, and (vi) Notes to Consolidated Financial Statements.
Exhibit (104), The cover page from the Corporation's Quarterly Report on Form 10-Q for the quarter ended June 30, 2023 has been formatted in Inline XBRL (Inline Extensible Business Reporting Language) and contained in Exhibits in 101.

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Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
ASSOCIATED BANC-CORP
(Registrant)
Date: July 27, 2023/s/ Andrew J. Harmening
Andrew J. Harmening
President and Chief Executive Officer
Date: July 27, 2023/s/ Derek S. Meyer
  Derek S. Meyer
Chief Financial Officer
Date: July 27, 2023/s/ Tammy C. Stadler
Tammy C. Stadler
Chief Accounting Officer

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