Loans | Loans The period end loan composition was as follows: ($ in Thousands) Sep 30, 2022 Dec 31, 2021 PPP $ 1,050 $ 66,070 Asset-based lending & equipment finance (a) 380,830 178,027 Commercial and industrial 9,190,045 8,208,289 Commercial real estate — owner occupied 999,786 971,326 Commercial and business lending 10,571,711 9,423,711 Commercial real estate — investor 5,064,289 4,384,569 Real estate construction 1,835,159 1,808,976 Commercial real estate lending 6,899,449 6,193,545 Total commercial 17,471,159 15,617,256 Residential mortgage 8,314,902 7,567,310 Auto finance 1,117,136 143,045 Home equity 612,608 595,615 Other consumer 301,475 301,723 Total consumer 10,346,121 8,607,693 Total loans $ 27,817,280 $ 24,224,949 (a) Dec 31, 2021 does not include equipment finance . Accrued interest receivable on loans totaled $88 million at September 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 $189,000 and $328,000 for the three and nine months ended September 30, 2022, respectively, and approximately $91,000 and $329,000 for the three and nine months ended September 30, 2021, respectively. The following table presents commercial and consumer loans by credit quality indicator by origination year at September 30, 2022: Term Loans Amortized Cost Basis by Origination Year (a) ($ 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 $ — $ — $ 21 $ 960 $ 28 $ — $ — $ — $ 1,009 Potential Problem — — 40 — — — — — 40 PPP $ — $ — $ 62 $ 960 $ 28 $ — $ — $ — $ 1,050 Asset-based lending & equipment finance: Risk rating: Pass $ — $ 29,680 $ 202,201 $ 112,162 $ 16,349 $ 765 $ 133 $ — $ 361,291 Special Mention — — — — 274 — — — 274 Potential Problem — 1,266 1,500 — 16,500 — — — 19,266 Asset-based lending & equipment finance $ — $ 30,946 $ 203,701 $ 112,162 $ 33,123 $ 765 $ 133 $ — $ 380,830 Commercial and industrial: Risk rating: Pass $ 488 $ 2,281,083 $ 2,283,710 $ 2,422,332 $ 593,095 $ 639,386 $ 353,799 $ 452,229 $ 9,025,634 Special Mention — 9,329 98 14,885 4,675 — 21 30,577 59,585 Potential Problem 154 14,557 17,644 4,615 6,105 39,087 2 7,240 89,250 Nonaccrual 3,979 — 5,379 — 10,182 — — 15 15,576 Commercial and industrial $ 4,621 $ 2,304,968 $ 2,306,830 $ 2,441,833 $ 614,058 $ 678,473 $ 353,821 $ 490,062 $ 9,190,045 Commercial real estate - owner occupied: Risk rating: Pass $ — $ 13,623 $ 179,172 $ 243,087 $ 165,701 $ 163,570 $ 88,718 $ 109,126 $ 962,997 Special Mention — — — — 6,995 1,506 — — 8,502 Potential Problem — 850 475 8,104 3,375 10,473 374 4,635 28,287 Commercial real estate - owner occupied $ — $ 14,473 $ 179,648 $ 251,191 $ 176,071 $ 175,549 $ 89,092 $ 113,761 $ 999,786 Commercial and business lending: Risk rating: Pass $ 488 $ 2,324,387 $ 2,665,105 $ 2,778,541 $ 775,174 $ 803,720 $ 442,650 $ 561,355 $ 10,350,931 Special Mention — 9,329 98 14,885 11,944 1,506 21 30,577 68,360 Potential Problem 154 16,673 19,660 12,719 25,980 49,560 376 11,875 136,843 Nonaccrual 3,979 — 5,379 — 10,182 — — 15 15,576 Commercial and business lending $ 4,621 $ 2,350,388 $ 2,690,241 $ 2,806,146 $ 823,280 $ 854,787 $ 443,047 $ 603,822 $ 10,571,711 Commercial real estate - investor: Risk rating: Pass $ 38,623 $ 64,392 $ 1,285,655 $ 1,568,948 $ 815,494 $ 526,134 $ 289,786 $ 261,243 $ 4,811,653 Special Mention — — 43,113 24,786 8,296 20,855 — 126 97,176 Potential Problem — — 442 44,388 19,432 25,285 19,025 9,409 117,982 Nonaccrual — — 805 36,230 — 444 — — 37,479 Commercial real estate - investor $ 38,623 $ 64,392 $ 1,330,015 $ 1,674,352 $ 843,223 $ 572,718 $ 308,811 $ 270,778 $ 5,064,289 Real estate construction: Risk rating: Pass $ — $ 26,489 $ 568,302 $ 931,799 $ 225,552 $ 21,908 $ 2,572 $ 10,321 $ 1,786,943 Special Mention — — — — 12,014 36,061 — — 48,076 Nonaccrual — — — — — — — 141 141 Real estate construction $ — $ 26,489 $ 568,302 $ 931,799 $ 237,566 $ 57,969 $ 2,572 $ 10,462 $ 1,835,159 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 $ 90,882 $ 1,853,957 $ 2,500,747 $ 1,041,046 $ 548,041 $ 292,358 $ 271,564 $ 6,598,595 Special Mention — — 43,113 24,786 20,310 56,916 — 126 145,251 Potential Problem — — 442 44,388 19,432 25,285 19,025 9,409 117,982 Nonaccrual — — 805 36,230 — 444 — 141 37,620 Commercial real estate lending $ 38,623 $ 90,882 $ 1,898,317 $ 2,606,151 $ 1,080,789 $ 630,687 $ 311,383 $ 281,241 $ 6,899,449 Total commercial: Risk rating: Pass $ 39,111 $ 2,415,268 $ 4,519,062 $ 5,279,288 $ 1,816,220 $ 1,351,761 $ 735,008 $ 832,919 $ 16,949,527 Special Mention — 9,329 43,211 39,671 32,254 58,423 21 30,703 213,611 Potential Problem 154 16,673 20,101 57,108 45,412 74,846 19,401 21,285 254,825 Nonaccrual 3,979 — 6,183 36,230 10,182 444 — 156 53,196 Total commercial $ 43,243 $ 2,441,270 $ 4,588,558 $ 5,412,296 $ 1,904,069 $ 1,485,474 $ 754,429 $ 885,063 $ 17,471,159 Residential mortgage: Risk rating: Pass $ — $ — $ 1,175,995 $ 2,094,652 $ 1,750,699 $ 832,300 $ 379,935 $ 2,022,844 $ 8,256,426 Special Mention — — — — — — — 146 146 Potential Problem — — 324 201 — 746 626 948 2,845 Nonaccrual — — 4,815 2,479 4,886 3,984 6,411 32,910 55,485 Residential mortgage $ — $ — $ 1,181,134 $ 2,097,333 $ 1,755,585 $ 837,030 $ 386,972 $ 2,056,849 $ 8,314,902 Auto finance: Risk rating: Pass $ — $ — $ 998,531 $ 114,979 $ 416 $ 1,564 $ 598 $ 103 $ 1,116,192 Special Mention — — 509 132 — 1 — — 642 Nonaccrual — — 149 128 — 18 7 — 302 Auto finance $ — $ — $ 999,189 $ 115,240 $ 416 $ 1,583 $ 605 $ 103 $ 1,117,136 Home equity: Risk rating: Pass $ 5,637 $ 502,745 $ 22,620 $ 4,873 $ 1,787 $ 6,113 $ 7,174 $ 58,873 $ 604,186 Special Mention 456 221 — 18 97 — — 575 912 Potential Problem — — — — — 35 5 146 185 Nonaccrual 1,077 50 36 15 67 229 340 6,587 7,325 Home equity $ 7,170 $ 503,016 $ 22,657 $ 4,906 $ 1,951 $ 6,377 $ 7,519 $ 66,181 $ 612,608 Other consumer: Risk rating: Pass $ 97 $ 199,564 $ 6,028 $ 5,093 $ 2,469 $ 1,323 $ 227 $ 86,169 $ 300,873 Special Mention 1 466 5 21 3 8 — 1 504 Nonaccrual 8 53 — 10 8 18 — 9 98 Other consumer $ 106 $ 200,084 $ 6,033 $ 5,124 $ 2,480 $ 1,349 $ 227 $ 86,179 $ 301,475 Total consumer: Risk rating: Pass $ 5,734 $ 702,309 $ 2,203,175 $ 2,219,597 $ 1,755,371 $ 841,300 $ 387,934 $ 2,167,990 $ 10,277,677 Special Mention 458 687 513 172 100 9 — 723 2,204 Potential Problem — — 324 201 — 781 631 1,094 3,030 Nonaccrual 1,085 103 5,001 2,632 4,961 4,249 6,758 39,506 63,210 Total consumer $ 7,277 $ 703,100 $ 2,209,013 $ 2,222,602 $ 1,760,432 $ 846,338 $ 395,323 $ 2,209,313 $ 10,346,121 Total loans: Risk rating: Pass $ 44,845 $ 3,117,577 $ 6,722,237 $ 7,498,885 $ 3,571,591 $ 2,193,062 $ 1,122,942 $ 3,000,909 $ 27,227,203 Special Mention 458 10,016 43,724 39,843 32,354 58,431 21 31,426 215,816 Potential Problem 154 16,673 20,425 57,309 45,412 75,626 20,032 22,378 257,855 Nonaccrual 5,063 103 11,184 38,861 15,143 4,693 6,758 39,662 116,406 Total loans $ 50,520 $ 3,144,369 $ 6,797,570 $ 7,634,899 $ 3,664,501 $ 2,331,812 $ 1,149,753 $ 3,094,376 $ 27,817,280 (a) Revolving loans converted to term loans are those converted during the reporting period and 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 origination 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 those converted during the reporting period and 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 September 30, 2022: Accruing ($ in Thousands) Current 30-59 Days 60-89 Days 90+ Days Nonaccrual (a)(b) Total PPP $ 798 $ 231 $ 21 $ — $ — $ 1,050 Asset-based lending & equipment finance 380,830 — — — — 380,830 Commercial and industrial 9,172,739 1,505 104 121 15,576 9,190,045 Commercial real estate - owner occupied 999,786 — — — — 999,786 Commercial and business lending 10,554,153 1,736 124 121 15,576 10,571,711 Commercial real estate - investor 5,026,810 — — — 37,479 5,064,289 Real estate construction 1,834,975 43 — — 141 1,835,159 Commercial real estate lending 6,861,786 43 — — 37,620 6,899,449 Total commercial 17,415,939 1,779 124 121 53,196 17,471,159 Residential mortgage 8,252,714 6,371 146 186 55,485 8,314,902 Auto finance 1,110,628 5,564 642 — 302 1,117,136 Home equity 601,049 3,322 912 — 7,325 612,608 Other consumer 298,675 995 596 1,111 98 301,475 Total consumer 10,263,065 16,252 2,296 1,297 63,210 10,346,121 Total loans $ 27,679,004 $ 18,032 $ 2,421 $ 1,417 $ 116,406 $ 27,817,280 (a) Of the total nonaccrual loans, $72 million, or 62%, were current with respect to payment at September 30, 2022. (b) No interest income was recognized on nonaccrual loans for the three and nine months ended September 30, 2022. In addition, there were $21 million of nonaccrual loans for which there was no related ACLL at September 30, 2022. The following table presents loans by past due status at December 31, 2021: Accruing ($ 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 $9 million of nonaccrual loans for which there was no related ACLL at December 31, 2021. (c) Includes equipment finance. Troubled Debt Restructurings Loans are considered restructured loans if concessions have been granted to borrowers that are experiencing financial difficulty. The following table presents nonaccrual and performing restructured loans by loan portfolio: Sep 30, 2022 Dec 31, 2021 ($ in Thousands) Performing Nonaccrual Restructured Loans (a) Performing Nonaccrual Restructured Loans (a) Commercial and industrial $ 14,829 $ — $ 8,687 $ — Commercial real estate — owner occupied 369 — 967 — Commercial real estate — investor 733 3,268 12,866 3,093 Real estate construction 165 42 242 45 Residential mortgage 16,169 17,372 16,316 13,483 Home equity 2,103 967 2,648 806 Other consumer 764 — 803 — Total restructured loans $ 35,132 $ 21,650 $ 42,530 $ 17,426 (a) Nonaccrual restructured loans have been included within nonaccrual loans. The Corporation had a recorded investment of $11 million in loans modified as TDRs during the nine months ended September 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 $10 million were in nonaccrual within the credit quality tables, pending a sustained period of repayment. The following table provides the number of loans modified in a TDR by loan portfolio, the recorded investment, and unpaid principal balance for the nine months ended September 30, 2022 and 2021: Nine Months Ended September 30, 2022 Nine Months Ended September 30, 2021 ($ in Thousands) Number Recorded Investment (a) Unpaid Principal Balance (b) Number Recorded Investment (a) Unpaid Principal Balance (b) Commercial and industrial 2 $ 265 $ 265 4 $ 638 $ 638 Commercial real estate — investor 1 547 573 4 1,682 1,682 Residential mortgage 44 9,641 9,833 55 10,434 10,460 Home equity 12 390 412 7 916 963 Total loans modified 59 $ 10,844 $ 11,083 70 $ 13,670 $ 13,744 (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 nine months ended September 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 nine months ended September 30, 2022. The following table provides the number of loans modified in a TDR during the previous twelve months which subsequently defaulted during the nine months ended September 30, 2022 and 2021, and the recorded investment in these restructured loans as of September 30, 2022 and 2021: Nine Months Ended September 30, 2022 Nine Months Ended September 30, 2021 ($ in Thousands) Number of Recorded Number of Recorded Residential mortgage 4 $ 1,178 2 $ 200 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 September 30, 2022, the Corporation had no loans meeting this classification compared to $7 million at December 31, 2021. Allowance for Credit Losses on Loans The ACLL is comprised of the allowance for loan losses and the allowance for unfunded commitments. The level of the ACLL represents management’s estimate of an amount appropriate to provide for expected lifetime credit losses in the loan portfolio at the balance sheet date. The expected lifetime credit losses are the product of multiplying the Corporation's estimates of probability of default, loss given default, and the individual loan level exposure at default on an undiscounted basis. A main factor in the determination of the ACLL is the economic forecast. The Corporation utilized Moody's baseline forecast, updated during August 2022 and reviewed against the September 2022 forecast for material updates, in the allowance model. The forecast is applied over a 2 year reasonable and supportable period with straight-line reversion to the historical losses over the second year of the period. The allowance for unfunded commitments is maintained at a level believed by management to be sufficient to absorb expected lifetime losses related to unfunded credit facilities (including unfunded loan commitments and letters of credit). See Note 12 for additional information on the change in the allowance for unfunded commitments. The following table presents a summary of the changes in the ACLL by portfolio segment for the nine months ended September 30, 2022: ($ in Thousands) Dec 31, 2021 Charge offs Recoveries Net Charge offs Provision for credit losses Sep 30, 2022 ACLL / Loans Allowance for loan losses PPP $ 51 $ — $ — $ — $ (50) $ 1 Asset-based lending & equipment finance 4,182 — — — 1,406 5,588 Commercial and industrial 85,624 (3,644) 4,157 512 16,107 102,243 Commercial real estate — owner occupied 11,473 — 10 10 (2,852) 8,631 Commercial and business lending 101,330 (3,644) 4,167 523 14,611 116,464 Commercial real estate — investor 72,803 — — — (12,032) 60,771 Real estate construction 37,643 (48) 90 43 (1,266) 36,419 Commercial real estate lending 110,446 (48) 90 43 (13,299) 97,190 Total commercial 211,776 (3,692) 4,258 565 1,313 213,654 Residential mortgage 40,787 (287) 752 465 (2,345) 38,907 Auto finance 1,999 (228) 53 (175) 13,917 15,741 Home equity 14,011 (524) 1,199 675 (601) 14,086 Other consumer 11,441 (2,434) 792 (1,642) 716 10,516 Total consumer 68,239 (3,472) 2,796 (676) 11,687 79,250 Total loans $ 280,015 $ (7,165) $ 7,054 $ (111) $ 13,000 $ 292,904 Allowance for unfunded commitments Asset-based lending & equipment finance $ 857 $ — $ — $ — $ 184 $ 1,042 Commercial and industrial 17,601 — — — 4 17,606 Commercial real estate — owner occupied 208 — — — (119) 89 Commercial and business lending 18,667 — — — 70 18,737 Commercial real estate — investor 936 — — — (303) 633 Real estate construction 15,586 — — — 552 16,138 Commercial real estate lending 16,522 — — — 249 16,771 Total commercial 35,189 — — — 319 35,508 Home equity 2,592 — — — — 2,592 Other consumer 1,995 — — — (319) 1,675 Total consumer 4,587 — — — (319) 4,268 Total loans $ 39,776 $ — $ — $ — $ — $ 39,776 Allowance for credit losses on loans PPP $ 51 $ — $ — $ — $ (50) $ 1 0.10 % Asset-based lending & equipment finance 5,040 — — — 1,590 6,630 1.74 % Commercial and industrial 103,225 (3,644) 4,157 512 16,112 119,849 1.30 % Commercial real estate — owner occupied 11,681 — 10 10 (2,971) 8,721 0.87 % Commercial and business lending 119,997 (3,644) 4,167 523 14,681 135,200 1.28 % Commercial real estate — investor 73,739 — — — (12,335) 61,404 1.21 % Real estate construction 53,229 (48) 90 43 (714) 52,557 2.86 % Commercial real estate lending 126,968 (48) 90 43 (13,049) 113,961 1.65 % Total commercial 246,965 (3,692) 4,258 565 1,632 249,162 1.43 % Residential mortgage 40,787 (287) 752 465 (2,345) 38,907 0.47 % Auto finance 1,999 (228) 53 (175) 13,917 15,741 1.41 % Home equity 16,603 (524) 1,199 675 (600) 16,678 2.72 % Other consumer 13,436 (2,434) 792 (1,642) 397 12,191 4.04 % Total consumer 72,825 (3,472) 2,796 (676) 11,368 83,517 0.81 % Total loans $ 319,791 $ (7,165) $ 7,054 $ (111) $ 13,000 $ 332,680 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 % |