In accordance with ASC 326, the Company is required to measure the allowance for credit losses of financial assets with similar risk characteristics on a collective or pooled basis. In considering the segmentation of financial assets measured at amortized cost into pools, the Company considered various risk characteristics in its analysis. Generally, the segmentation utilized represents the level at which the Company develops and documents its systematic methodology to determine the allowance for credit losses for the financial assets held at amortized cost, specifically the Company's loan portfolio and debt securities classified as held-to-maturity. Below is a summary of the Company's loan portfolio segments and major debt security types:

Commercial loans, including PPP loans: The Company makes commercial loans for many purposes, including working capital lines and leasing arrangements, that are generally renewable annually and supported by business assets, personal guarantees and additional collateral. Underlying collateral includes receivables, inventory, enterprise value and the assets of the business. Commercial business lending is generally considered to involve a slightly higher degree of risk than traditional consumer bank lending. This portfolio includes a range of industries, including manufacturing, restaurants, franchise, professional services, equipment finance and leasing, mortgage warehouse lending and industrial. Individually assessed collateral dependent commercial loans are primarily collateralized by equipment and the enterprise value or assets of the specific business.

The Company also originated loans through the PPP. Administered by the SBA, the PPP provided short-term relief primarily related to the disruption from COVID-19 to companies and non-profits that meet the SBA’s definition of an eligible small business. Under the program, the SBA will forgive all or a portion of the loan if, during a certain period, loans were used for qualifying expenses. If all or a portion of the loan was not forgiven, the borrower is responsible for repayment. PPP loans are fully guaranteed by the SBA, including any portion not forgiven. The SBA guarantee existed at the inception of the loan and throughout its life and is not separated from the loan if the loan is subsequently sold or transferred. As it is not considered a freestanding contract, the Company considers the impact of the SBA guarantee when measuring the allowance for credit losses.

Commercial real estate loans, including construction and development, and non-construction: The Company's commercial real estate loans are generally secured by a first mortgage lien and assignment of rents on the underlying property (utilized in related assessment of individually assessed collateral dependent loans). Since most of the Company's bank branches are located in the Chicago metropolitan area and southern Wisconsin, a significant portion of the Company's commercial real estate loan portfolio is located in this region. As the risks and circumstances of such loans in construction phase vary from that of non-construction commercial real estate loans, the Company assesses the allowance for credit losses separately for these two segments.

Home equity loans: The Company's home equity loans and lines of credit are primarily originated by each of the bank subsidiaries in their local markets where there is a strong understanding of the underlying real estate value. The Company's banks monitor and manage these loans, and conduct an automated review of all home equity lines of credit at least twice per year. The bank’s subsidiaries use this information to manage loans that may be higher risk and to determine whether to obtain additional credit information or updated property valuations. In a limited number of cases, the Company may issue home equity credit together with first mortgage financing, and requests for such financing are evaluated on a combined basis.

five years, construction loans to individuals and bridge financing loans for qualifying customers, as well as certain long-term fixed rate loans. The Company's residential mortgages relate to properties located principally in the Chicago metropolitan area and southern Wisconsin or vacation homes owned by local residents. Due to interest rate risk considerations, the Company generally sells in the secondary market loans originated with long-term fixed rates, however, certain of these loans may be retained within the banks’ own loan portfolios where they are non-agency conforming, or where the terms of the loans make them favorable to retain. The Company believes that since this loan portfolio consists primarily of locally-originated loans, and since the majority of the borrowers are longer-term customers with lower LTV ratios, the Company faces a relatively low risk of borrower default and delinquency. Collateral dependent residential real estate loans that are individually assessed when measuring the allowance for credit losses are primarily collateralized by such one- to four-family properties noted above. It is not the Company's current practice to underwrite, and there are no plans to underwrite subprime, Alt A, no or little documentation loans, or option ARM loans.

Additionally, early buy-out loans guaranteed by U.S. government agencies include loans in which the Company is eligible or has exercised its option under the Government National Mortgage Association (“GNMA”) securitization program to repurchase certain delinquent mortgage loans. Such loans were previously transferred by the Company with servicing of such loans retained. Early buy-out loans are insured or guaranteed by the Federal Housing Administration (“FHA”) or the U.S. Department of Veterans Affairs, subject to indemnifications and insurance limits for certain loans.

Premium finance receivables: The Company makes loans to businesses to finance the insurance premiums they pay on their property and casualty insurance policies. The loans are indirectly originated by working through independent medium and large insurance agents and brokers located throughout the United States and Canada. The insurance premiums financed are primarily for commercial customers’ purchases of liability, property and casualty and other commercial insurance. This lending involves relatively rapid turnover of the loan portfolio and high volume of loan originations. The Company performs ongoing credit and other reviews of the agents and brokers to mitigate against the risk of fraud.

In accordance with ASC 326, the Company elected to not measure an allowance for credit losses on accrued interest. As such accrued interest is written off in a timely manner when deemed uncollectible. Any such write-off of accrued interest will reverse previously recognized interest income. In addition, the Company elected to not include accrued interest within presentation and disclosures of the carrying amount of financial assets held at amortized cost. This election is applicable to the various disclosures included within the Company's financial statements. Accrued interest related to financial assets held at amortized cost is included within accrued interest receivable and other assets within the Company's Consolidated Statements of


As of June 30, 2022			90+ days and still accruing		60-89 days past due		30-59 days past due
(In thousands)	Nonaccrual								Current		Total Loans
Loan Balances (includes PCD):
Commercial






Commercial, industrial and other, excluding PPP loans	$	32,436	$	—	$	7,756	$	13,897	$	11,910,927	$	11,965,016
Commercial PPP loans	—		—		9,033		223		72,833		82,089
Commercial real estate
Construction and development	889		—		—		1,144		1,504,285		1,506,318
Non-construction	9,829		—		6,771		33,076		7,851,211		7,900,887







Home equity	1,084		—		154		930		323,658		325,826

Residential real estate, excluding early buy-out loans	8,330		—		534		147		1,956,040		1,965,051


Premium finance receivables
Property and casualty insurance loans	13,303		6,447		15,299		23,313		5,483,085		5,541,447
Life insurance loans	—		—		1,796		65,155		7,541,482		7,608,433

Consumer and other	8		25		8		119		44,020		44,180
Total loans, net of unearned income, excluding early buy-out loans	$	65,879	$	6,472	$	41,351	$	138,004	$	36,687,541	$	36,939,247
Early buy-out loans guaranteed by U.S. government agencies (1)	23,815		50,314		272		—		39,455		113,856
Total loans, net of unearned income	$	89,694	$	56,786	$	41,623	$	138,004	$	36,726,996	$	37,053,103


As of December 31, 2021			90+ days and still accruing		60-89 days past due		30-59 days past due
(In thousands)	Nonaccrual								Current		Total Loans
Loan Balances (includes PCD):
Commercial






Commercial, industrial and other, excluding PPP loans	$	20,399	$	—	$	23,492	$	42,933	$	11,258,961	$	11,345,785
Commercial PPP loans	—		15		770		928		556,570		558,283
Commercial real estate
Construction and development	1,377		—		—		2,809		1,352,018		1,356,204
Non-construction	20,369		—		284		37,634		7,575,795		7,634,082







Home equity	2,574		—		—		1,120		331,461		335,155

Residential real estate, excluding early buy-out loans	16,440		—		982		12,145		1,576,704		1,606,271

Premium finance receivables
Property and casualty insurance loans	5,433		7,210		15,490		22,419		4,804,935		4,855,487
Life insurance loans	—		7		12,614		66,651		6,963,538		7,042,810

Consumer and other	477		137		34		509		23,042		24,199
Total loans, net of unearned income, excluding early buy-out loans	$	67,069	$	7,369	$	53,666	$	187,148	$	34,443,024	$	34,758,276
Early buy-out loans guaranteed by U.S. government agencies (1)	—		—		—		275		30,553		30,828
Total loans, net of unearned income	$	67,069	$	7,369	$	53,666	$	187,423	$	34,473,577	$	34,789,104


As of June 30, 2021			90+ days and still accruing		60-89 days past due		30-59 days past due
(In thousands)	Nonaccrual								Current		Total Loans
Loan Balances (includes PCD):
Commercial






Commercial, industrial and other, excluding PPP loans	$	23,232	$	1,244	$	5,204	$	18,468	$	9,514,721	$	9,562,869
Commercial PPP loans	—		—		—		10		1,879,397		1,879,407
Commercial real estate
Construction and development	1,030		—		—		2,207		1,382,012		1,385,249
Non-construction	25,005		—		4,382		17,491		7,246,242		7,293,120







Home equity	3,478		—		301		777		365,250		369,806

Residential real estate, excluding early buy-out loans	23,050		—		1,584		2,139		1,452,734		1,479,507

Premium finance receivables
Property and casualty insurance loans	6,418		3,570		7,759		8,793		4,495,331		4,521,871
Life insurance loans	—		—		—		23,965		6,335,591		6,359,556

Consumer and other	485		178		22		75		8,264		9,024
Total loans, net of unearned income, excluding early buy-out loans	$	82,698	$	4,992	$	19,252	$	73,925	$	32,679,542	$	32,860,409
Early buy-out loans guaranteed by U.S. government agencies (1)	—		—		—		—		50,778		50,778
Total loans, net of unearned income	$	82,698	$	4,992	$	19,252	$	73,925	$	32,730,320	$	32,911,187

The Company's ability to manage credit risk depends in large part on its ability to properly identify and manage problem loans. To do so, the Company operates a credit risk rating system under which credit management personnel assign a credit risk rating (1 to 10 rating) to each loan at the time of origination and review loans on a regular basis. For loans measured at amortized cost (or excluding loans measured at fair value, such as early buy-out loans guaranteed by U.S. government agencies), these credit risk ratings are also an important aspect of the Company's allowance for credit losses measurement methodology. The credit risk rating structure and classifications are shown below:

The Company’s Problem Loan Reporting system includes all such loans described above with credit risk ratings of 6 through 9. This system is designed to provide an ongoing detailed tracking mechanism for each problem loan. Once management determines that a loan has deteriorated to a point where it has a credit risk rating of 6 or worse, the Company’s Managed Asset Division performs an overall credit and collateral review. As part of this review, all underlying collateral is identified and the valuation methodology is analyzed and tracked. As a result of this initial review by the Company’s Managed Asset Division, the credit risk rating is reviewed and a portion of the outstanding loan balance may be deemed uncollectible and, as a result, no longer share similar risk characteristics as its related pool. If that is the case, the individual loan is considered collateral dependent and individually assessed for an allowance for credit loss. The Company’s individual assessment utilizes an independent re-appraisal of the collateral (unless such a third-party evaluation is not possible due to the unique nature of the collateral, such as a closely-held business or thinly traded securities). In the case of commercial real estate collateral, an independent third party appraisal is ordered by the Company’s Real Estate Services Group to determine if there has been any change in the underlying collateral value. These independent appraisals are reviewed by the Real Estate Services Group and sometimes by independent third party valuation experts and may be adjusted depending upon market conditions.

Through the credit risk rating process, such loans are reviewed to determine if they are performing in accordance with the original contractual terms. If the borrower has failed to comply with the original contractual terms, further action may be required by the Company, including a downgrade in the credit risk rating, movement to nonaccrual status or a charge-off. If the Company determines that a loan amount or portion thereof is uncollectible, the loan’s credit risk rating is immediately downgraded to an 8 or 9 and the uncollectible amount is charged-off. Any loan that has a partial charge-off continues to be assigned a credit risk rating of an 8 or 9 for the duration of time that a balance remains outstanding. The Company undertakes a thorough and ongoing analysis to determine if additional impairment and/or charge-offs are appropriate and to begin a workout plan for the credit to minimize actual losses. In determining the appropriate charge-off for collateral-dependent loans, the Company considers the results of appraisals for the associated collateral.


	Year of Origination														Revolving		Total
(In thousands)	2022		2021		2020		2019		2018		Prior		Revolving		to Term		Loans
Loan Balances:
Commercial, industrial and other
Pass	$	1,260,184	$	2,565,443	$	1,279,656	$	758,679	$	558,129	$	963,346	$	4,008,344	$	45,005	$	11,438,786
Special mention	5,275		40,753		38,258		62,110		54,302		42,247		82,418		235		325,598
Substandard accrual	1,993		43,404		26,150		18,264		7,454		8,171		62,689		71		168,196
Substandard nonaccrual/doubtful	—		94		3,594		4,729		12,493		3,555		7,971		—		32,436
Total commercial, industrial and other	$	1,267,452	$	2,649,694	$	1,347,658	$	843,782	$	632,378	$	1,017,319	$	4,161,422	$	45,311	$	11,965,016
Commercial PPP
Pass	$	—	$	63,524	$	17,374	$	—	$	—	$	—	$	—	$	—	$	80,898
Special mention	—		18		680		—		—		—		—		—		698
Substandard accrual	—		—		493		—		—		—		—		—		493
Substandard nonaccrual/doubtful	—		—		—		—		—		—		—		—		—
Total commercial PPP	$	—	$	63,542	$	18,547	$	—	$	—	$	—	$	—	$	—	$	82,089
Construction and development
Pass	$	177,013	$	452,444	$	447,683	$	201,983	$	41,299	$	107,465	$	19,842	$	—	$	1,447,729
Special mention	—		1,051		—		3,583		17,951		2,001		—		—		24,586
Substandard accrual	—		—		8,458		310		11,743		12,603		—		—		33,114
Substandard nonaccrual/doubtful	—		—		—		—		—		889		—		—		889
Total construction and development	$	177,013	$	453,495	$	456,141	$	205,876	$	70,993	$	122,958	$	19,842	$	—	$	1,506,318
Non-construction
Pass	$	954,387	$	1,534,813	$	1,061,773	$	871,589	$	667,917	$	2,356,129	$	153,903	$	3,425	$	7,603,936
Special mention	4,405		3,881		7,518		37,670		48,762		93,106		—		—		195,342
Substandard accrual	—		—		—		18,124		26,759		46,897		—		—		91,780
Substandard nonaccrual/doubtful	—		—		—		—		—		9,829		—		—		9,829
Total non-construction	$	958,792	$	1,538,694	$	1,069,291	$	927,383	$	743,438	$	2,505,961	$	153,903	$	3,425	$	7,900,887
Home equity
Pass	$	—	$	—	$	—	$	56	$	—	$	5,352	$	304,216	$	—	$	309,624
Special mention	—		—		—		—		238		61		4,281		—		4,580


Substandard accrual	—		—		—		—		—		8,847		702		989		10,538
Substandard nonaccrual/doubtful	—		—		—		—		43		1,041		—		—		1,084
Total home equity	$	—	$	—	$	—	$	56	$	281	$	15,301	$	309,199	$	989	$	325,826
Residential real estate
Early buy-out loans guaranteed by U.S. government agencies	$	—	$	1,021	$	5,575	$	19,486	$	18,474	$	69,300	$	—	$	—	$	113,856
Pass	502,728		839,183		244,861		129,292		53,337		168,254		—		—		1,937,655
Special mention	280		576		169		765		2,046		4,071		—		—		7,907
Substandard accrual	554		1,088		2,936		572		247		5,762		—		—		11,159
Substandard nonaccrual/doubtful	—		93		253		1,858		424		5,702		—		—		8,330
Total residential real estate	$	503,562	$	841,961	$	253,794	$	151,973	$	74,528	$	253,089	$	—	$	—	$	2,078,907
Premium finance receivables - property and casualty
Pass	$	4,519,689	$	899,305	$	13,424	$	4,835	$	302	$	—	$	—	$	—	$	5,437,555
Special mention	77,334		10,917		54		—		—		—		—		—		88,305
Substandard accrual	951		1,333		—		—		—		—		—		—		2,284
Substandard nonaccrual/doubtful	2,540		10,729		34		—		—		—		—		—		13,303
Total premium finance receivables - property and casualty	$	4,600,514	$	922,284	$	13,512	$	4,835	$	302	$	—	$	—	$	—	$	5,541,447
Premium finance receivables - life
Pass	$	170,609	$	654,884	$	982,199	$	854,124	$	732,262	$	4,213,755	$	—	$	—	$	7,607,833
Special mention	—		600		—		—		—		—		—		—		600
Substandard accrual	—		—		—		—		—		—		—		—		—
Substandard nonaccrual/doubtful	—		—		—		—		—		—		—		—		—
Total premium finance receivables - life	$	170,609	$	655,484	$	982,199	$	854,124	$	732,262	$	4,213,755	$	—	$	—	$	7,608,433
Consumer and other
Pass	$	1,347	$	2,141	$	522	$	787	$	928	$	11,500	$	26,724	$	—	$	43,949
Special mention	—		2		1		5		—		120		7		—		135
Substandard accrual	—		6		1		—		—		72		9		—		88
Substandard nonaccrual/doubtful	—		7		—		1		—		—		—		—		8
Total consumer and other	$	1,347	$	2,156	$	524	$	793	$	928	$	11,692	$	26,740	$	—	$	44,180
Total loans
Early buy-out loans guaranteed by U.S. government agencies	$	—	$	1,021	$	5,575	$	19,486	$	18,474	$	69,300	$	—	$	—	$	113,856
Pass	7,585,957		7,011,737		4,047,492		2,821,345		2,054,174		7,825,801		4,513,029		48,430		35,907,965
Special mention	87,294		57,798		46,680		104,133		123,299		141,606		86,706		235		647,751
Substandard accrual	3,498		45,831		38,038		37,270		46,203		82,352		63,400		1,060		317,652
Substandard nonaccrual/doubtful	2,540		10,923		3,881		6,588		12,960		21,016		7,971		—		65,879
Total loans	$	7,679,289	$	7,127,310	$	4,141,666	$	2,988,822	$	2,255,110	$	8,140,075	$	4,671,106	$	49,725	$	37,053,103

The Company conducts an assessment of its investment securities, including those classified as held-to-maturity, at the time of purchase and on at least an annual basis to ensure such investment securities remain within appropriate levels of risk and continue to perform satisfactorily in fulfilling its obligations. The Company considers, among other factors, the nature of the securities and credit ratings or financial condition of the issuer. If available, the Company obtains a credit rating for issuers from a Nationally Recognized Statistical Rating Organization (“NRSRO”) for consideration. If no such rating is available for an issuer, the Company performs an internal rating based on the scale utilized within the loan portfolio as discussed above. For purposes of the table below, the Company has converted any issuer rating from an NRSRO into the Company’s internal ratings based on Investment Policy and review by the Company’s management.

The Company's allowance for credit losses consists of the allowance for loan losses, the allowance for unfunded commitment losses and the allowance for held-to-maturity debt security losses. In accordance with ASC 326, the Company measures the allowance for credit losses at the time of origination or purchase of a financial asset, representing an estimate of lifetime expected credit losses on the related asset. When developing its estimate, the Company considers available information relevant to assessing the collectability of cash flows, from both internal and external sources. Historical credit loss experience is one input in the estimation process as well as inputs relevant to current conditions and reasonable and supportable forecasts. In considering past events, the Company considers the relevance, or lack thereof, of historical information due to changes in such things as financial asset underwriting or collection practices, and changes in portfolio mix due to changing business plans and strategies. In considering current conditions and forecasts, the Company considers both the current economic environment and the forecasted direction of the economic environment with emphasis on those factors deemed relevant to or driving changes in expected credit losses. As significant judgment is required, the review of the appropriateness of the allowance for credit losses is performed quarterly by various committees with participation by the Company's executive management.

The allowance for credit losses is measured on a collective or pooled basis when similar risk characteristics exist, based upon the segmentation discussed above. The Company utilizes modeling methodologies that estimate lifetime credit loss rates on each pool, including methodologies estimating the probability of default and loss given default on specific segments. Historical credit loss history is adjusted for reasonable and supportable forecasts developed by the Company on a quantitative or qualitative basis and incorporates third party economic forecasts. Reasonable and supportable forecasts consider the macroeconomic factors that are most relevant to evaluating and predicting expected credit losses in the Company's financial assets. Currently, the Company utilizes an eight quarter forecast period using a single macroeconomic scenario provided by a

third party and reviewed within the Company's governance structure. For periods beyond the ability to develop reasonable and supportable forecasts, the Company reverts to historical loss rates at an input level, straight-line over a four quarter reversion period. Expected credit losses are measured over the contractual term of the financial asset with consideration of expected prepayments. Expected extensions, renewals or modifications of the financial asset are only considered when either 1) the expected extension, renewal or modification is contained within the existing agreement and is not unconditionally cancelable, or 2) the expected extension, renewal or modification is reasonably expected to result in a TDR. The methodologies discussed above are applied to both current asset balances on the Company's Consolidated Statements of Condition and off-balance sheet commitments (i.e. unfunded lending-related commitments).

Assets that do not share similar risk characteristics with a pool are assessed for the allowance for credit losses on an individual basis. These typically include assets experiencing financial difficulties, including assets rated as substandard nonaccrual and doubtful as well as assets currently classified or expected to be classified as TDRs. If foreclosure is probable or the asset is considered collateral-dependent, expected credit losses are measured based upon the fair value of the underlying collateral adjusted for selling costs, if appropriate. Underlying collateral across the Company's segments consist primarily of real estate, land and construction assets as well as general business assets of the borrower. As of June 30, 2022, excluding loans carried at fair value, substandard nonaccrual loans totaling $25.7 million in carrying balance had no related allowance for credit losses. For certain accruing current and expected TDRs, expected credit losses are measured based upon the present value of future cash flows of the modified asset terms compared to the amortized cost of the asset. Loans identified as being reasonably expected to be modified into TDRs in the future totaled $135,000 as of June 30, 2022.


Three months ended June 30, 2022			Commercial Real Estate		Home Equity		Residential Real Estate		Premium Finance Receivables		Consumer and Other		Total Loans
(In thousands)	Commercial

Allowance for credit losses at beginning of period	$	120,911	$	144,906	$	10,566	$	9,429	$	14,722	$	634	$	301,168

Other adjustments	—		—		—		—		(56)		—		(56)
Charge-offs	(8,928)		(40)		(192)		—		(2,903)		(253)		(12,316)
Recoveries	996		553		123		6		1,119		23		2,820
Provision for credit losses	29,940		(1,687)		(3,507)		1,044		(5,380)		83		20,493


Allowance for credit losses at period end	$	142,919	$	143,732	$	6,990	$	10,479	$	7,502	$	487	$	312,109
By measurement method:
Individually measured	$	5,674	$	99	$	105	$	790	$	—	$	—	$	6,668
Collectively measured	137,245		143,633		6,885		9,689		7,502		487		305,441

Loans at period end
Individually measured	$	34,892	$	20,377	$	11,876	$	18,333	$	—	$	79	$	85,557
Collectively measured	12,012,213		9,386,828		313,950		1,937,817		13,149,880		44,101		36,844,789

Loans held at fair value	—		—		—		122,757		—		—		122,757


Three months ended June 30, 2021	Commercial		Commercial Real Estate		Home Equity		Residential Real Estate		Premium Finance Receivables		Consumer and Other		Total Loans
(In thousands)

Allowance for credit losses at beginning of period	$	95,640	$	181,792	$	11,382	$	14,242	$	17,477	$	676	$	321,209

Other adjustments	—		—		—		—		33		—		33

Charge-offs	(3,237)		(1,412)		(142)		(3)		(2,077)		(104)		(6,975)
Recoveries	902		514		328		36		3,239		34		5,053
Provision for credit losses	5,202		(22,372)		(361)		1,409		1,227		(394)		(15,289)
Allowance for credit losses at period end	$	98,507	$	158,522	$	11,207	$	15,684	$	19,899	$	212	$	304,031
By measurement method:
Individually measured	$	8,625	$	1,257	$	213	$	1,045	$	—	$	77	$	11,217
Collectively measured	89,882		157,265		10,994		14,639		19,899		135		292,814

Loans at period end
Individually measured	$	30,144	$	35,694	$	18,080	$	29,384	$	—	$	552	$	113,854
Collectively measured	11,412,132		8,642,675		351,726		1,445,561		10,881,427		8,472		32,741,993

Loans held at fair value	—		—		—		55,340		—		—		55,340


Six months ended June 30, 2022			Commercial Real Estate		Home Equity		Residential Real Estate		Premium Finance Receivables		Consumer and Other		Total Loans
(In thousands)	Commercial

Allowance for credit losses at beginning of period	$	119,307	$	144,583	$	10,699	$	8,782	$	15,859	$	423	$	299,653

Other adjustments	—		—		—		—		(34)		—		(34)
Charge-offs	(10,342)		(817)		(389)		(466)		(4,581)		(446)		(17,041)
Recoveries	1,534		585		216		11		2,595		72		5,013
Provision for credit losses	32,420		(619)		(3,536)		2,152		(6,337)		438		24,518


Allowance for credit losses at period end	$	142,919	$	143,732	$	6,990	$	10,479	$	7,502	$	487	$	312,109


Six months ended June 30, 2021			Commercial Real Estate		Home Equity		Residential Real Estate		Premium Finance Receivables		Consumer and Other		Total Loans
(In thousands)	Commercial

Allowance for credit losses at beginning of period	$	94,212	$	243,603	$	11,437	$	12,459	$	17,777	$	422	$	379,910

Other adjustments	—		—		—		—		63		—		63
Charge-offs	(15,018)		(2,392)		(142)		(5)		(5,316)		(218)		(23,091)
Recoveries	1,354		714		429		240		5,021		66		7,824
Provision for credit losses	17,959		(83,403)		(517)		2,990		2,354		(58)		(60,675)
Allowance for credit losses at period end	$	98,507	$	158,522	$	11,207	$	15,684	$	19,899	$	212	$	304,031

For the three and six months ended June 30, 2022, the Company recognized approximately $20.5 million and $24.5 million of provision for credit losses, respectively, related to loans and lending agreements. The provision for each period was primarily the result of loan growth during the second quarter as well as the Company's macroeconomic forecasts of key model inputs (most notably, Baa corporate credit spreads). Uncertainties remain regarding expected economic performance and macroeconomic forecasts utilized in the measurement of the allowance for credit losses as of June 30, 2022. Other key drivers of provision for credit losses in these portfolios include, but are not limited to, stable loan risk rating migration. Net charge-offs in the three and six month periods ending June 30, 2022, totaled $9.5 million and $12.0 million, respectively.

The allowance for credit losses on its held-to-maturity debt securities is presented as a reduction to the amortized cost basis of held-to-maturity securities on the Company's Consolidated Statements of Condition. For the three and six month periods ended June 30, 2022, the Company recognized approximately $(76,000) and $5,000 of provision for credit losses related to held-to-maturity securities, respectively. At June 30, 2022, the Company did not identify any losses within its portfolio that it would deem a credit loss and require additional measurement of an allowance for credit losses.

The Company’s approach to restructuring loans is built on its credit risk rating system, which requires credit management personnel to assign a credit risk rating to each loan. In each case, the loan officer is responsible for recommending a credit risk rating for each loan and ensuring the credit risk ratings are appropriate. These credit risk ratings are then reviewed and approved by the bank’s chief credit officer and/or concurrence credit officer. Credit risk ratings are determined by evaluating a number of factors, including a borrower’s financial strength, cash flow coverage, collateral protection and guarantees. The Company’s credit risk rating scale is one through ten with higher scores indicating higher risk. In the case of loans rated six or worse following modification, the Company’s Managed Assets Division evaluates the loan and the credit risk rating and determines that the loan has been restructured to be reasonably assured of repayment and of performance according to the modified terms and is supported by a current, well-documented credit assessment of the borrower’s financial condition and prospects for repayment under the revised terms.

A modification of a loan with an existing credit risk rating of 6 or worse or a modification of any other credit, which will result in a restructured credit risk rating of 6 or worse must be reviewed for possible TDR classification. In that event, the Company’s Managed Assets Division conducts an overall credit and collateral review. A modification of a loan is considered to be a TDR if both (1) the borrower is experiencing financial difficulty and (2) for economic or legal reasons, the bank grants a concession to a borrower that it would not otherwise consider. The modification of a loan where the credit risk rating is 5 or better after such modification is not considered to be a TDR. Based on the Company’s credit risk rating system, it considers that borrowers whose credit risk rating is 5 or better are not experiencing financial difficulties and therefore, are not considered TDRs.

All credits determined to be a TDR will continue to be classified as a TDR in all subsequent periods, unless the borrower has been in compliance with the loan’s modified terms for a period of six months (including over a calendar year-end) and the current interest rate represents a market rate at the time of restructuring. The Managed Assets Division, in consultation with the respective loan officer, determines whether the modified interest rate represented a current market rate at the time of restructuring. Using knowledge of current market conditions and rates, competitive pricing on recent loan originations, and an assessment of various characteristics of the modified loan (including collateral position and payment history), an appropriate market rate for a new borrower with similar risk is determined. If the modified interest rate meets or exceeds this market rate for a new borrower with similar risk, the modified interest rate represents a market rate at the time of restructuring. Additionally, before removing a loan from TDR classification, a review of the current or previously measured impairment on the loan and any concerns related to future performance by the borrower is conducted. If concerns exist about the future ability of the borrower to meet its obligations under the loans based on a credit review by the Managed Assets Division, the TDR classification is not removed from the loan.

TDRs are individually assessed at the time of the modification and on a quarterly basis to measure an allowance for credit loss. The carrying amount of the loan is compared to the expected payments to be received, discounted at the loan's original rate, or for collateral dependent loans, to the fair value of the collateral. Any shortfall is recorded as a reserve. Each TDR was individually assessed at June 30, 2022 and approximately $2.3 million of reserve was present and appropriately reserved for through the Company’s normal reserving methodology.

TDRs may arise when, due to financial difficulties experienced by the borrower, the Company obtains through physical possession one or more collateral assets in satisfaction of all or part of an existing credit. Once possession is obtained, the Company reclassifies the appropriate portion of the remaining balance of the credit from loans to other real estate owned (“OREO”), which is included within other assets in the Consolidated Statements of Condition. For any residential real estate property collateralizing a consumer mortgage loan, the Company is considered to possess the related collateral only if legal title is obtained upon completion of foreclosure, or the borrower conveys all interest in the residential real estate property to the Company through completion of a deed in lieu of foreclosure or similar legal agreement. At June 30, 2022, the Company had $1.8 million of foreclosed residential real estate properties included within OREO. Further, the recorded investment in residential mortgage loans secured by residential real estate properties for which foreclosure proceedings are in process totaled $10.9 million and $14.2 million at June 30, 2022 and 2021, respectively.


Three months ended June 30, 2022 (Dollars in thousands)	Total (1)(2)			Extension at Below Market Terms (2)			Reduction of Interest Rate (2)			Modification to Interest-only Payments (2)			Forgiveness of Debt (2)
	Count	Balance		Count	Balance		Count	Balance		Count	Balance		Count	Balance
Commercial
Commercial, industrial and other	2	$	186	2	$	185	—	$	—	—	$	—	—	$	—


Commercial real estate
Non-construction	—	—		—	—		—	—		—	—		—	—




Residential real estate and other	14	2,235		14	2,235		10	1,805		—	—		—	—
Total loans	16	$	2,421	16	$	2,420	10	$	1,805	—	$	—	—	$	—


Three months ended June 30, 2021 (Dollars in thousands)	Total (1)(2)			Extension at Below Market Terms (2)			Reduction of Interest Rate (2)			Modification to Interest-only Payments (2)			Forgiveness of Debt (2)
	Count	Balance		Count	Balance		Count	Balance		Count	Balance		Count	Balance
Commercial
Commercial, industrial and other	3	$	395	3	$	395	—	$	—	—	$	—	—	$	—


Commercial real estate




Non-construction	3	2,707		2	2,164		1	543		—	—		—	—
Residential real estate and other	10	1,097		10	1,097		2	616		—	—		—	—
Total loans	16	$	4,199	15	$	3,656	3	$	1,159	—	$	—	—	$	—

During the three months ended June 30, 2022, 16 loans totaling $2.4 million were determined to be TDRs, compared to 16 loans totaling $4.2 million during the three months ended June 30, 2021. Of these loans extended at below market terms, the weighted average extension had a term of approximately 63 months during the quarter ended June 30, 2022 compared to 106 months for the quarter ended June 30, 2021. Further, the weighted average decrease in the stated interest rate for loans with a reduction of interest rate during the period was approximately 96 basis points and 183 basis points during the three months ended June 30, 2022 and 2021, respectively. Additionally, no principal balances were forgiven during the quarters ended June 30, 2022 and 2021.


Six months ended June 30, 2022 (Dollars in thousands)	Total (1)(2)			Extension at Below Market Terms (2)			Reduction of Interest Rate (2)			Modification to Interest-only Payments (2)			Forgiveness of Debt(2)
	Count	Balance		Count	Balance		Count	Balance		Count	Balance		Count	Balance
Commercial
Commercial, industrial and other	5	$	468	4	$	305	1	$	85	2	$	247	—	$	—

Commercial real estate




Non-construction	2	1,907		1	1,178		1	1,178		2	1,907		—	—
Residential real estate and other	22	3,143		22	3,143		17	2,567		—	—		—	—
Total loans	29	$	5,518	27	$	4,626	19	$	3,830	4	$	2,154	—	$	—


Six months ended June 30, 2021 (Dollars in thousands)	Total (1)(2)			Extension at Below Market Terms (2)			Reduction of Interest Rate (2)			Modification to Interest-only Payments (2)			Forgiveness of Debt(2)
	Count	Balance		Count	Balance		Count	Balance		Count	Balance		Count	Balance
Commercial
Commercial, industrial and other	5	$	546	5	$	546	—	$	—	—	$	—	—	$	—


Commercial real estate




Non-construction	5	2,944		4	2,401		2	656		1	113		—	—
Residential real estate and other	26	2,835		26	2,835		11	1,906		—	—		—	—
Total loans	36	$	6,325	35	$	5,782	13	$	2,562	1	$	113	—	$	—

for the six months ended June 30, 2021. Further, the weighted average decrease in the stated interest rate for loans with a reduction of interest rate during the period was approximately 87 basis points and 152 basis points for the year-to-date periods ended June 30, 2022 and 2021, respectively. Interest-only payment terms were approximately four months and six months during the six months ended June 30, 2022 and 2021, respectively. Additionally, no balances were forgiven in the first six months ended June 30, 2022 and 2021.