Loans | Loans The period end loan composition was as follows: ($ in Thousands) Jun 30, 2022 Dec 31, 2021 PPP $ 9,514 $ 66,070 Asset-based lending & equipment finance (a) 263,044 178,027 Commercial and industrial 8,984,127 8,208,289 Commercial real estate — owner occupied 928,152 971,326 Commercial and business lending 10,184,836 9,423,711 Commercial real estate — investor 4,790,241 4,384,569 Real estate construction 1,775,648 1,808,976 Commercial real estate lending 6,565,889 6,193,545 Total commercial 16,750,726 15,617,256 Residential mortgage 8,002,943 7,567,310 Auto finance 847,969 143,045 Home equity 592,843 595,615 Other consumer 300,217 301,723 Total consumer 9,743,972 8,607,693 Total loans $ 26,494,698 $ 24,224,949 (a) Dec 31, 2021 does not include equipment finance . Accrued interest receivable on loans totaled $68 million at June 30, 2022, and $55 million at December 31, 2021, 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 totaled approximately $44,000 and $139,000 for the three and six months ended June 30, 2022, respectively, and approximately $140,000 and $238,000 for the three and six months ended June 30, 2021, respectively. The following table presents commercial and consumer loans by credit quality indicator by vintage year at June 30, 2022: Term Loans Amortized Cost Basis by Origination Year (a) ($ in Thousands) Rev Loans Converted to Term (a) Rev Loans Amortized Cost Basis YTD 2022 2021 2020 2019 2018 Prior Total PPP: (b) Risk rating: Pass $ — $ — $ 49 $ 8,527 $ 891 $ — $ — $ — $ 9,467 Potential Problem — — 47 — — — — — 47 PPP $ — $ — $ 96 $ 8,527 $ 891 $ — $ — $ — $ 9,514 Asset-based lending & equipment finance: Risk rating: Pass $ — $ 19,968 $ 77,441 $ 100,349 $ 44,012 $ 977 $ 192 $ 8 $ 242,947 Special Mention — — — — 285 — — — 285 Potential Problem — 1,563 1,500 — 16,750 — — — 19,813 Asset-based lending & equipment finance $ — $ 21,531 $ 78,941 $ 100,349 $ 61,047 $ 977 $ 192 $ 8 $ 263,044 Commercial and industrial: Risk rating: Pass $ — $ 2,252,288 $ 1,499,191 $ 2,520,309 $ 695,696 $ 772,615 $ 541,349 $ 542,828 $ 8,824,277 Special Mention — 16,663 1,500 5,242 17,308 — — 33,509 74,222 Potential Problem 71 10,237 17,655 1,312 3,751 44,715 175 6,940 84,785 Nonaccrual — — — — 843 — — — 843 Commercial and industrial $ 71 $ 2,279,187 $ 1,518,346 $ 2,526,863 $ 717,599 $ 817,331 $ 541,524 $ 583,277 $ 8,984,127 Commercial real estate - owner occupied: Risk rating: Pass $ — $ 6,344 $ 57,860 $ 251,874 $ 170,340 $ 173,189 $ 95,730 $ 126,926 $ 882,263 Special Mention — — — — 7,260 — — — 7,260 Potential Problem — 211 898 8,779 3,752 9,073 5,282 10,634 38,628 Commercial real estate - owner occupied $ — $ 6,555 $ 58,757 $ 260,653 $ 181,352 $ 182,262 $ 101,012 $ 137,560 $ 928,152 Commercial and business lending: Risk rating: Pass $ — $ 2,278,600 $ 1,634,541 $ 2,881,059 $ 910,939 $ 946,782 $ 637,271 $ 669,762 $ 9,958,954 Special Mention — 16,663 1,500 5,242 24,853 — — 33,509 81,767 Potential Problem 71 12,010 20,100 10,091 24,253 53,788 5,457 17,574 143,273 Nonaccrual — — — — 843 — — — 843 Commercial and business lending $ 71 $ 2,307,273 $ 1,656,141 $ 2,896,392 $ 960,888 $ 1,000,570 $ 642,728 $ 720,844 $ 10,184,836 Commercial real estate - investor: Risk rating: Pass $ 38,623 $ 91,473 $ 1,069,896 $ 1,488,158 $ 731,756 $ 569,142 $ 274,865 $ 294,879 $ 4,520,168 Special Mention — — — 69,497 — 20,906 — 212 90,615 Potential Problem — — 267 48,237 28,728 25,497 18,746 11,161 132,635 Nonaccrual — — 814 37,922 7,642 444 — — 46,823 Commercial real estate - investor $ 38,623 $ 91,473 $ 1,070,977 $ 1,643,814 $ 768,126 $ 615,989 $ 293,611 $ 306,252 $ 4,790,241 Real estate construction: Risk rating: Pass $ — $ 27,288 $ 263,216 $ 962,486 $ 375,197 $ 65,237 $ 23,355 $ 11,039 $ 1,727,819 Special Mention — — — 941 11,929 34,274 — — 47,144 Potential Problem — — — 82 — — — — 82 Nonaccrual — — — — — — — 604 604 Real estate construction $ — $ 27,288 $ 263,216 $ 963,509 $ 387,126 $ 99,511 $ 23,355 $ 11,643 $ 1,775,648 Term Loans Amortized Cost Basis by Origination Year (a) ($ in Thousands) Rev Loans Converted to Term (a) Rev Loans Amortized Cost Basis YTD 2022 2021 2020 2019 2018 Prior Total Commercial real estate lending: Risk rating: Pass $ 38,623 $ 118,762 $ 1,333,112 $ 2,450,644 $ 1,106,953 $ 634,379 $ 298,220 $ 305,917 $ 6,247,987 Special Mention — — — 70,438 11,929 55,180 — 212 137,758 Potential Problem — — 267 48,318 28,728 25,497 18,746 11,161 132,717 Nonaccrual — — 814 37,922 7,642 444 — 604 47,427 Commercial real estate lending $ 38,623 $ 118,762 $ 1,334,193 $ 2,607,322 $ 1,155,252 $ 715,500 $ 316,966 $ 317,895 $ 6,565,889 Total commercial: Risk rating: Pass $ 38,623 $ 2,397,362 $ 2,967,653 $ 5,331,703 $ 2,017,892 $ 1,581,161 $ 935,492 $ 975,679 $ 16,206,941 Special Mention — 16,663 1,500 75,680 36,782 55,180 — 33,721 219,525 Potential Problem 71 12,010 20,367 58,409 52,981 79,285 24,203 28,735 275,990 Nonaccrual — — 814 37,922 8,485 444 — 604 48,270 Total commercial $ 38,694 $ 2,426,035 $ 2,990,334 $ 5,503,714 $ 2,116,140 $ 1,716,070 $ 959,695 $ 1,038,739 $ 16,750,726 Residential mortgage: Risk rating: Pass $ — $ — $ 825,055 $ 1,959,667 $ 1,789,114 $ 865,412 $ 389,154 $ 2,118,258 $ 7,946,661 Special Mention — — — — 99 — — 46 145 Potential Problem — — 330 462 96 754 633 1,022 3,297 Nonaccrual — — 3,839 1,925 3,497 3,928 6,295 33,355 52,840 Residential mortgage $ — $ — $ 829,224 $ 1,962,054 $ 1,792,807 $ 870,095 $ 396,082 $ 2,152,682 $ 8,002,943 Auto finance: Risk rating: Pass $ — $ — $ 719,132 $ 125,195 $ 476 $ 1,904 $ 760 $ 179 $ 847,646 Special Mention — — 130 140 — — — — 271 Nonaccrual — — — 21 — 21 11 — 53 Auto finance $ — $ — $ 719,263 $ 125,356 $ 476 $ 1,925 $ 771 $ 179 $ 847,969 Home equity: Risk rating: Pass $ 5,461 $ 493,282 $ 9,466 $ 3,966 $ 1,675 $ 6,664 $ 7,840 $ 62,133 $ 585,026 Special Mention 109 65 — — 33 26 39 366 529 Potential Problem — — — — — 35 7 146 188 Nonaccrual 759 8 — 15 68 165 346 6,497 7,100 Home equity $ 6,328 $ 493,356 $ 9,466 $ 3,981 $ 1,776 $ 6,890 $ 8,232 $ 69,143 $ 592,843 Other consumer: Risk rating: Pass $ 111 $ 190,483 $ 4,065 $ 6,704 $ 3,204 $ 1,786 $ 307 $ 93,134 $ 299,685 Special Mention 1 430 — 18 — — — 1 449 Nonaccrual 15 14 — — 29 9 5 27 83 Other consumer $ 127 $ 190,927 $ 4,065 $ 6,723 $ 3,233 $ 1,795 $ 312 $ 93,162 $ 300,217 Total consumer: Risk rating: Pass $ 5,572 $ 683,766 $ 1,557,718 $ 2,095,532 $ 1,794,469 $ 875,766 $ 398,061 $ 2,273,705 $ 9,679,017 Special Mention 109 495 130 159 131 26 39 413 1,394 Potential Problem — — 330 462 96 789 640 1,168 3,486 Nonaccrual 774 22 3,839 1,961 3,594 4,123 6,657 39,880 60,075 Total consumer $ 6,455 $ 684,283 $ 1,562,017 $ 2,098,113 $ 1,798,292 $ 880,705 $ 405,397 $ 2,315,166 $ 9,743,972 Total loans: Risk rating: Pass $ 44,195 $ 3,081,128 $ 4,525,371 $ 7,427,234 $ 3,812,361 $ 2,456,927 $ 1,333,552 $ 3,249,384 $ 25,885,958 Special Mention 109 17,158 1,630 75,838 36,913 55,206 39 34,134 220,919 Potential Problem 71 12,010 20,697 58,871 53,077 80,074 24,843 29,903 279,475 Nonaccrual 774 22 4,653 39,883 12,079 4,567 6,657 40,484 108,345 Total loans $ 45,149 $ 3,110,318 $ 4,552,351 $ 7,601,827 $ 3,914,431 $ 2,596,775 $ 1,365,091 $ 3,353,905 $ 26,494,698 (a) Revolving loans converted to term loans are also reported in their year of origination. (b) The Corporation’s policy is to assign risk ratings at the borrower level. PPP loans are 100% guaranteed by the SBA and therefore the Corporation considers these loans to have a risk profile similar to pass rated loans. The following table presents commercial and consumer loans by credit quality indicator by vintage year at December 31, 2021: Term Loans Amortized Cost Basis by Origination Year (a) ($ in Thousands) Rev Loans Converted to Term (a) Rev Loans Amortized Cost Basis 2021 2020 2019 2018 2017 Prior Total PPP: (b) Risk rating: Pass $ — $ — $ 44,921 $ 18,610 $ — $ — $ — $ — $ 63,531 Special Mention — — 212 281 — — — — 493 Potential Problem — — 2,000 — — — — — 2,000 Nonaccrual — — — 46 — — — — 46 PPP $ — $ — $ 47,134 $ 18,936 $ — $ — $ — $ — $ 66,070 Commercial and industrial: (c) Risk rating: Pass $ 2,084 $ 2,371,605 $ 2,631,753 $ 852,758 $ 986,300 $ 710,491 $ 177,568 $ 493,876 $ 8,224,351 Special Mention — 7,068 5,900 1,695 — — — 2,811 17,474 Potential Problem 2,706 26,387 23,415 19,960 46,296 20,924 104 1,172 138,258 Nonaccrual 76 — 5,996 161 52 24 — — 6,233 Commercial and industrial $ 4,867 $ 2,405,059 $ 2,667,064 $ 874,575 $ 1,032,647 $ 731,439 $ 177,671 $ 497,860 $ 8,386,316 Commercial real estate - owner occupied: Risk rating: Pass $ 10,092 $ 30,869 $ 261,418 $ 178,424 $ 187,073 $ 110,169 $ 54,538 $ 117,011 $ 939,503 Special Mention — 226 — 4,628 — — — 245 5,100 Potential Problem — 526 5,953 4,721 10,047 727 2,204 2,546 26,723 Commercial real estate - owner occupied $ 10,092 $ 31,621 $ 267,371 $ 187,773 $ 197,120 $ 110,896 $ 56,742 $ 119,802 $ 971,326 Commercial and business lending: Risk rating: Pass $ 12,176 $ 2,402,474 $ 2,938,092 $ 1,049,792 $ 1,173,373 $ 820,660 $ 232,106 $ 610,887 $ 9,227,385 Special Mention — 7,294 6,112 6,604 — — — 3,056 23,066 Potential Problem 2,706 26,913 31,368 24,681 56,343 21,651 2,307 3,718 166,981 Nonaccrual 76 — 5,996 207 52 24 — — 6,279 Commercial and business lending $ 14,958 $ 2,436,680 $ 2,981,569 $ 1,081,284 $ 1,229,767 $ 842,335 $ 234,414 $ 617,662 $ 9,423,711 Commercial real estate - investor: Risk rating: Pass $ 37,430 $ 105,521 $ 1,650,936 $ 685,423 $ 867,606 $ 414,079 $ 139,320 $ 230,452 $ 4,093,337 Special Mention — — 57,163 27,384 33,016 72 — 6,781 124,416 Potential Problem — — 21,309 9,860 22,243 34,591 3,564 14,573 106,138 Nonaccrual — — 45,502 8,158 6,820 — — 197 60,677 Commercial real estate - investor $ 37,430 $ 105,521 $ 1,774,910 $ 730,825 $ 929,685 $ 448,741 $ 142,883 $ 252,003 $ 4,384,569 Real estate construction: Risk rating: Pass $ — $ 31,773 $ 843,664 $ 614,469 $ 204,337 $ 48,647 $ 2,229 $ 12,212 $ 1,757,331 Special Mention — — 2,203 11,929 — 15,885 41 2 30,060 Potential Problem — — 37 120 21,251 — — — 21,408 Nonaccrual — — — — — — — 177 177 Real estate construction $ — $ 31,773 $ 845,903 $ 626,518 $ 225,588 $ 64,532 $ 2,270 $ 12,392 $ 1,808,976 Commercial real estate lending: Risk rating: Pass $ 37,430 $ 137,294 $ 2,494,600 $ 1,299,893 $ 1,071,943 $ 462,726 $ 141,549 $ 242,664 $ 5,850,668 Special Mention — — 59,366 39,313 33,016 15,957 41 6,784 154,476 Potential Problem — — 21,345 9,980 43,494 34,591 3,564 14,573 127,546 Nonaccrual — — 45,502 8,158 6,820 — — 374 60,855 Commercial real estate lending $ 37,430 $ 137,294 $ 2,620,814 $ 1,357,343 $ 1,155,273 $ 513,273 $ 145,153 $ 264,395 $ 6,193,545 Term Loans Amortized Cost Basis by Origination Year (a) ($ in Thousands) Rev Loans Converted to Term (a) Rev Loans Amortized Cost Basis 2021 2020 2019 2018 2017 Prior Total Total commercial: Risk rating: Pass $ 49,606 $ 2,539,768 $ 5,432,693 $ 2,349,685 $ 2,245,316 $ 1,283,386 $ 373,655 $ 853,551 $ 15,078,053 Special Mention — 7,294 65,478 45,917 33,016 15,957 41 9,840 177,543 Potential Problem 2,706 26,913 52,713 34,660 99,837 56,241 5,871 18,291 294,527 Nonaccrual 76 — 51,498 8,365 6,872 24 — 374 67,134 Total commercial $ 52,388 $ 2,573,974 $ 5,602,382 $ 2,438,627 $ 2,385,040 $ 1,355,608 $ 379,567 $ 882,057 $ 15,617,256 Residential mortgage: Risk rating: Pass $ — $ — $ 1,771,447 $ 1,945,029 $ 974,188 $ 428,459 $ 673,447 $ 1,716,419 $ 7,508,989 Special Mention — — — — — 285 — 461 746 Potential Problem — — 475 332 404 265 81 658 2,214 Nonaccrual — — 1,993 2,911 4,479 6,224 6,019 33,734 55,362 Residential mortgage $ — $ — $ 1,773,915 $ 1,948,272 $ 979,071 $ 435,233 $ 679,547 $ 1,751,272 $ 7,567,310 Auto finance: Risk rating: Pass $ — $ — $ 137,952 $ 707 $ 2,675 $ 1,200 $ 352 $ 107 $ 142,993 Nonaccrual — — — — 36 15 — — 52 Auto finance $ — $ — $ 137,952 $ 707 $ 2,711 $ 1,216 $ 352 $ 107 $ 143,045 Home equity: Risk rating: Pass $ 6,728 $ 498,970 $ 1,216 $ 1,401 $ 7,640 $ 8,742 $ 7,660 $ 61,251 $ 586,880 Special Mention 133 100 — 102 4 — — 638 844 Potential Problem 6 — 6 — — 13 — 146 165 Nonaccrual 925 35 9 92 211 305 302 6,772 7,726 Home equity $ 7,792 $ 499,104 $ 1,232 $ 1,595 $ 7,856 $ 9,059 $ 7,962 $ 68,807 $ 595,615 Other consumer: Risk rating: Pass $ 443 $ 180,312 $ 9,297 $ 4,987 $ 2,884 $ 371 $ 265 $ 103,075 $ 301,191 Special Mention 7 351 — 4 — — — 7 363 Nonaccrual 6 120 — 14 7 — 19 11 170 Other consumer $ 456 $ 180,783 $ 9,297 $ 5,005 $ 2,890 $ 371 $ 284 $ 103,093 $ 301,723 Total consumer: Risk rating: Pass $ 7,171 $ 679,353 $ 1,919,912 $ 1,952,124 $ 987,387 $ 438,771 $ 681,725 $ 1,880,781 $ 8,540,053 Special Mention 140 451 — 106 4 285 — 1,106 1,952 Potential Problem 6 — 481 332 404 277 81 804 2,379 Nonaccrual 931 154 2,003 3,017 4,733 6,545 6,340 40,517 63,309 Total consumer $ 8,248 $ 679,959 $ 1,922,396 $ 1,955,579 $ 992,528 $ 445,878 $ 688,145 $ 1,923,208 $ 8,607,693 Total loans: Risk rating: Pass $ 56,777 $ 3,219,121 $ 7,352,605 $ 4,301,809 $ 3,232,703 $ 1,722,157 $ 1,055,380 $ 2,734,332 $ 23,618,106 Special Mention 140 7,745 65,478 46,023 33,021 16,241 41 10,946 179,495 Potential Problem 2,713 26,913 53,194 34,992 100,240 56,519 5,952 19,095 296,905 Nonaccrual 1,006 154 53,501 11,382 11,605 6,569 6,340 40,891 130,443 Total loans $ 60,636 $ 3,253,933 $ 7,524,778 $ 4,394,206 $ 3,377,569 $ 1,801,486 $ 1,067,713 $ 2,805,265 $ 24,224,949 (a) Revolving loans converted to term loans are also reported in their year of origination. (b) The Corporation’s policy is to assign risk ratings at the borrower level. PPP loans are 100% guaranteed by the SBA and therefore the Corporation considers these loans to have a risk profile similar to pass rated loans. (c) Includes asset-based lending & equipment finance. 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 TDRs 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 TDR, 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, 2022: Accruing ($ in Thousands) Current 30-59 Days 60-89 Days 90+ Days Nonaccrual (a)(b) Total PPP $ 8,039 $ 1,361 $ 113 $ — $ — $ 9,514 Asset-based lending & equipment finance 263,044 — — — — 263,044 Commercial and industrial 8,982,984 106 61 133 843 8,984,127 Commercial real estate - owner occupied 928,152 — — — — 928,152 Commercial and business lending 10,182,219 1,467 174 133 843 10,184,836 Commercial real estate - investor 4,737,934 5,484 — — 46,823 4,790,241 Real estate construction 1,775,044 — — — 604 1,775,648 Commercial real estate lending 6,512,978 5,484 — — 47,427 6,565,889 Total commercial 16,695,197 6,952 174 133 48,270 16,750,726 Residential mortgage 7,944,365 5,213 102 423 52,840 8,002,943 Auto finance 845,010 2,635 271 — 53 847,969 Home equity 582,782 2,448 514 — 7,100 592,843 Other consumer 297,770 807 557 999 83 300,217 Total consumer 9,669,928 11,104 1,444 1,422 60,075 9,743,972 Total loans $ 26,365,125 $ 18,055 $ 1,618 $ 1,555 $ 108,345 $ 26,494,698 (a) Of the total nonaccrual loans, $65 million, or 60%, were current with respect to payment at June 30, 2022. (b) No interest income was recognized on nonaccrual loans for the three and six months ended June 30, 2022. In addition, there were $15 million of nonaccrual loans for which there was no related ACLL at June 30, 2022. The following table presents loans by past due status at December 31, 2021: Accruing ($ in Thousands) Current 30-59 Days 60-89 Days 90+ Days Nonaccrual (a)(b) Total PPP $ 65,941 $ 40 $ 43 $ — $ 46 $ 66,070 Asset-based lending 178,027 — — — — 178,027 Commercial and industrial (c) 8,201,272 579 54 151 6,233 8,208,289 Commercial real estate - owner occupied 971,163 163 — — — 971,326 Commercial and business lending 9,416,403 781 97 151 6,279 9,423,711 Commercial real estate - investor 4,323,276 142 474 — 60,677 4,384,569 Real estate construction 1,807,178 1,618 2 — 177 1,808,976 Commercial real estate lending 6,130,454 1,759 477 — 60,855 6,193,545 Total commercial 15,546,857 2,541 573 151 67,134 15,617,256 Residential mortgage 7,505,654 5,500 669 126 55,362 7,567,310 Auto finance 142,982 11 — — 52 143,045 Home equity 584,177 2,867 844 — 7,726 595,615 Other consumer 298,261 1,835 472 986 170 301,723 Total consumer 8,531,074 10,213 1,985 1,111 63,309 8,607,693 Total loans $ 24,077,931 $ 12,754 $ 2,558 $ 1,263 $ 130,443 $ 24,224,949 (a) Of the total nonaccrual loans, $84 million, or 65%, were current with respect to payment at December 31, 2021. (b) No interest income was recognized on nonaccrual loans for the year ended December 31, 2021. In addition, there were $9 million of nonaccrual loans for which there was no related ACLL at December 31, 2021. (c) Includes equipment finance. Troubled Debt Restructurings Loans are considered restructured loans if concessions have been granted to borrowers that are experiencing financial difficulty. The following table presents nonaccrual and performing restructured loans by loan portfolio: Jun 30, 2022 Dec 31, 2021 ($ in Thousands) Performing Nonaccrual Restructured Loans (a) Performing Nonaccrual Restructured Loans (a) Commercial and industrial $ 13,882 $ — $ 8,687 $ — Commercial real estate — owner occupied 421 — 967 — Commercial real estate — investor 943 4,266 12,866 3,093 Real estate construction 179 43 242 45 Residential mortgage 15,829 16,854 16,316 13,483 Home equity 2,246 1,009 2,648 806 Other consumer 753 — 803 — Total restructured loans $ 34,253 $ 22,172 $ 42,530 $ 17,426 (a) Nonaccrual restructured loans have been included within nonaccrual loans. The Corporation had a recorded investment of $9 million in loans modified as TDRs during the six months ended June 30, 2022, of which $1 million were in accrual status, included in pass or special mention based on their risk rating within the credit quality tables, and $8 million were in nonaccrual within the credit quality tables, pending a sustained period of repayment. The following table provides the number of loans modified in a TDR by loan portfolio, the recorded investment, and unpaid principal balance for the six months ended June 30, 2022 and 2021: Six Months Ended June 30, 2022 Six Months Ended June 30, 2021 ($ in Thousands) Number Recorded Investment (a) Unpaid Principal Balance (b) Number Recorded Investment (a) Unpaid Principal Balance (b) Commercial and industrial 2 $ 275 $ 275 2 $ 128 $ 129 Commercial real estate — investor 1 $ 553 $ 573 4 $ 1,690 $ 1,690 Residential mortgage 35 8,149 8,315 37 7,424 7,450 Home equity 8 291 312 4 566 603 Total loans modified 46 $ 9,267 $ 9,474 47 $ 9,808 $ 9,871 (a) Represents post-modification outstanding recorded investment. Restructured loan modifications may include payment schedule modifications, interest rate concessions, maturity date extensions, modification of note structure (A/B Note), non-reaffirmed Chapter 7 bankruptcies, principal reduction, or some combination of these concessions. 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 primarily included maturity date extensions, interest rate concessions, non-reaffirmed Chapter 7 bankruptcies, or a combination of these concessions for the six months ended June 30, 2022. The following table provides the number of loans modified in a TDR during the previous twelve months which subsequently defaulted during the six months ended June 30, 2022 and 2021, and the recorded investment in these restructured loans as of June 30, 2022 and 2021: Six Months Ended June 30, 2022 Six Months Ended June 30, 2021 ($ in Thousands) Number of Recorded Number of Recorded Residential mortgage 4 $ 1,178 1 $ 97 All loans modified in a TDR are individually evaluated for impairment. The nature and extent of the impairment of restructured loans, including those which have experienced a subsequent payment default, are considered in the determination of an appropriate level of the ACLL. The Corporation analyzes loans for classification as a probable TDR. This analysis includes identifying customers that are showing possible liquidity issues in the near term without reasonable access to alternative sources of capital. At June 30, 2022, the Corporation had no loans meeting this classification compared to $7 million at December 31, 2021. Allowance for Credit Losses on Loans The ACLL is comprised of the allowance for loan losses and the allowance for unfunded commitments. The level of the ACLL represents management’s estimate of an amount appropriate to provide for expected lifetime credit losses in the loan portfolio at the balance sheet date. The expected lifetime credit losses are the product of multiplying the Corporation's estimates of probability of default, loss given default, and the individual loan level exposure at default on an undiscounted basis. A main factor in the determination of the ACLL is the economic forecast. The Corporation utilized Moody's baseline forecast, updated during May 2022 and reviewed against the June 2022 forecast for material updates, in the allowance model. The forecast is applied over a 2 year reasonable and supportable period with straight-line reversion to the historical losses over the second year of the period. The allowance for unfunded commitments is maintained at a level believed by management to be sufficient to absorb expected lifetime losses related to unfunded credit facilities (including unfunded loan commitments and letters of credit). See Note 12 for additional information on the change in the allowance for unfunded commitments. The following table presents a summary of the changes in the ACLL by portfolio segment for the six months ended June 30, 2022: ($ in Thousands) Dec 31, 2021 Charge offs Recoveries Net Charge offs Provision for credit losses Jun 30, 2022 ACLL / Loans Allowance for loan losses PPP $ 51 $ — $ — $ — $ (45) $ 6 Asset-based lending & equipment finance 4,182 — — — 450 4,632 Commercial and industrial 85,624 (1,895) 3,305 1,410 5,018 92,052 Commercial real estate — owner occupied 11,473 — 7 7 (1,074) 10,406 Commercial and business lending 101,330 (1,895) 3,312 1,417 4,349 107,096 Commercial real estate — investor 72,803 — — — (8,412) 64,391 Real estate construction 37,643 — 33 33 (1,537) 36,139 Commercial real estate lending 110,446 — 33 33 (9,949) 100,531 Total commercial 211,776 (1,895) 3,346 1,450 (5,600) 207,626 Residential mortgage 40,787 (138) 646 508 (2,444) 38,851 Auto finance 1,999 (60) 49 (10) 8,440 10,428 Home equity 14,011 (195) 971 776 (1,496) 13,291 Other consumer 11,441 (1,531) 564 (967) 100 10,574 Total consumer 68,239 (1,924) 2,230 306 4,600 73,145 Total loans $ 280,015 $ (3,819) $ 5,576 $ 1,757 $ (1,000) $ 280,771 Allowance for unfunded commitments Asset-based lending & equipment finance $ 857 $ — $ — $ — $ (124) $ 733 Commercial and industrial 17,601 — — — (2,949) 14,652 Commercial real estate — owner occupied 208 — — — (94) 114 Commercial and business lending 18,667 — — — (3,167) 15,500 Commercial real estate — investor 936 — — — (287) 649 Real estate construction 15,586 — — — 901 16,487 Commercial real estate lending 16,522 — — — 614 17,136 Total commercial 35,189 — — — (2,553) 32,636 Home equity 2,592 — — — (150) 2,441 Other consumer 1,995 — — — (296) 1,698 Total consumer 4,587 — — — (447) 4,140 Total loans $ 39,776 $ — $ — $ — $ (3,000) $ 36,776 Allowance for credit losses on loans PPP $ 51 $ — $ — $ — $ (45) $ 6 0.06 % Asset-based lending & equipment finance 5,040 — — — 325 5,365 2.04 % Commercial and industrial 103,225 (1,895) 3,305 1,410 2,069 106,704 1.19 % Commercial real estate — owner occupied 11,681 — 7 7 (1,167) 10,520 1.13 % Commercial and business lending 119,997 (1,895) 3,312 1,417 1,182 122,595 1.20 % Commercial real estate — investor 73,739 — — — (8,699) 65,040 1.36 % Real estate construction 53,229 — 33 33 (636) 52,627 2.96 % Commercial real estate lending 126,968 — 33 33 (9,335) 117,667 1.79 % Total commercial 246,965 (1,895) 3,346 1,450 (8,153) 240,262 1.43 % Residential mortgage 40,787 (138) 646 508 (2,444) 38,851 0.49 % Auto finance 1,999 (60) 49 (10) 8,440 10,428 1.23 % Home equity 16,603 (195) 971 776 (1,647) 15,732 2.65 % Other consumer 13,436 (1,531) 564 (967) (196) 12,273 4.09 % Total consumer 72,825 (1,924) 2,230 306 4,153 77,284 0.79 % Total loans $ 319,791 $ (3,819) $ 5,576 $ 1,757 $ (4,000) $ 317,547 1.20 % The following table presents a summary of the changes in the ACLL by portfolio segment for the year ended December 31, 2021: ($ in Thousands) Dec 31, 2020 Charge offs Recoveries Net Charge offs Provision for credit losses Dec 31, 2021 ACLL / Loans Allowance for loan losses PPP $ 531 $ — $ — $ — $ (480) $ 51 Asset-based lending 2,077 — 412 412 1,693 4,182 Commercial and industrial (a) 140,716 (21,564) 8,152 (13,412) (41,680) 85,624 Commercial real estate — owner occupied 11,274 — 120 120 80 11,473 Commercial and business lending 154,598 (21,564) 8,684 (12,880) (40,388) 101,330 Commercial real estate — investor 93,435 (14,346) 3,162 (11,184) (9,448) 72,803 Real estate construction 59,193 (5) 126 121 (21,672) 37,643 Commercial real estate lending 152,629 (14,351) 3,288 (11,063) (31,120) 110,446 Total commercial 307,226 (35,915) 11,972 (23,943) (71,508) 211,776 Residential mortgage 42,996 (880) 841 (38) (2,170) 40,787 Auto finance 174 (22) 31 9 1,816 1,999 Home equity 18,849 (668) 2,854 2,186 (7,024) 14,011 Other consumer 14,456 (3,168) 1,267 (1,901) (1,113) 11,441 Total consumer 76,475 (4,738) 4,993 256 (8,492) 68,239 Total loans $ 383,702 $ (40,652) $ 16,965 $ (23,687) $ (80,000) $ 280,015 Allowance for unfunded commitments Asset-based lending $ 901 $ — $ — $ — $ (43) $ 857 Commercial and industrial (a) 21,411 — — — (3,809) 17,601 Commercial real estate — owner occupied 266 — — — (58) 208 Commercial and business lending 22,577 — — — (3,911) 18,667 Commercial real estate — investor 636 — — — 300 936 Real estate construction 18,887 — — — (3,301) 15,586 Commercial real estate lending 19,523 — — — (3,001) 16,522 Total commercial 42,101 — — — (6,912) 35,189 Home equity 3,118 — — — (526) 2,592 Other consumer 2,557 — — — (563) 1,995 Total consumer 5,675 — — — (1,088) 4,587 Total loans $ 47,776 $ — $ — $ — $ (8,000) $ 39,776 Allowance for credit losses on loans PPP $ 531 $ — $ — $ — $ (480) $ 51 0.08 % Asset-based lending 2,978 — 412 412 1,649 5,040 2.83 % Commercial and industrial (a) 162,126 (21,564) 8,152 (13,412) (45,490) 103,225 1.26 % Commercial real estate — owner occupied 11,539 — 120 120 22 11,681 1.20 % Commercial and business lending 177,175 (21,564) 8,684 (12,880) (44,299) 119,997 1.27 % Commercial real estate — investor 94,071 (14,346) 3,162 (11,184) (9,148) 73,739 1.68 % Real estate construction 78,080 (5) 126 121 (24,972) 53,229 2.94 % Commercial real estate lending 172,152 (14,351) 3,288 (11,063) (34,121) 126,968 2.05 % Total commercial 349,327 (35,915) 11,972 (23,943) (78,419) 246,965 1.58 % Residential mortgage 42,996 (880) 841 (38) (2,170) 40,787 0.54 % Auto finance 174 (22) 31 9 1,816 1,999 1.40 % Home equity 21,967 (668) 2,854 2,186 (7,550) 16,603 2.79 % Other consumer 17,013 (3,168) 1,267 (1,901) (1,676) 13,436 4.45 % Total consumer 82,150 (4,738) 4,993 256 (9,581) 72,825 0.85 % Total loans $ 431,478 $ (40,652) $ 16,965 $ (23,687) $ (88,000) $ 319,791 1.32 % |