ASSOCIATED BANC-CORP - Quarter Report: 2022 September (Form 10-Q)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)


☑			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended: September 30, 2022


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
			For the transition period from to

Commission file number: 001-31343

Associated Banc-Corp

(Exact name of registrant as specified in its charter)


Wisconsin									39-1098068
(State or other jurisdiction of incorporation or organization)									(I.R.S. Employer Identification No.)


433 Main Street
Green Bay,	Wisconsin	54301
(Address of principal executive offices)		(Zip Code)

(920) 491-7500

(Registrant’s telephone number, including area code)

(not applicable)

(Former name, former address and former fiscal year, if changed since last report)

Securities Registered Pursuant to Section 12(b) of the Act:


Title of each class	Trading symbol(s)	Name of each exchange on which registered
Common stock, par value $0.01 per share	ASB	New York Stock Exchange
Depositary Shrs, each representing 1/40th intrst in a shr of 5.875% Non-Cum. Perp Pref Stock, Srs E	ASB PrE	New York Stock Exchange
Depositary Shrs, each representing 1/40th intrst in a shr of 5.625% Non-Cum. Perp Pref Stock, Srs F	ASB PrF	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes ☑ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes ☑ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☑

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

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

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ☐ No ☑

APPLICABLE ONLY TO CORPORATE ISSUERS:

The number of shares outstanding of registrant’s common stock, par value $0.01 per share, at October 24, 2022 was 150,359,198.


ASSOCIATED BANC-CORP
Table of Contents


		Page
PART I. Financial Information

	Item 1. Financial Statements (Unaudited):	5

	Consolidated Balance Sheets	5

	Consolidated Statements of Income	6

	Consolidated Statements of Comprehensive Income	7

	Consolidated Statements of Changes in Stockholders’ Equity	8

	Consolidated Statements of Cash Flows	10

	Notes to Consolidated Financial Statements	12

	Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	51

	Item 3. Quantitative and Qualitative Disclosures About Market Risk	75

	Item 4. Controls and Procedures	76

PART II. Other Information

	Item 1. Legal Proceedings	77

	Item 1A. Risk Factors	77

	Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	77

	Item 6. Exhibits	78

	Signatures	79


ASSOCIATED BANC-CORP
Commonly Used Acronyms and Abbreviations
The following listing provides a reference of common acronyms and abbreviations used throughout the document:





ACLL			Allowance for Credit Losses on Loans

AFS			Available for Sale
ALCO			Asset / Liability Committee
ARRC			Alternative Reference Rate Committee
ASC			Accounting Standards Codification
Associated / the Company / Corporation / our / we			Associated Banc-Corp collectively with all of its subsidiaries and affiliates

ASU			Accounting Standards Update
the Bank			Associated Bank, National Association

Basel III			International framework established by the Basel Committee on Banking Supervision for the regulation of capital and liquidity
bp			basis point(s)

CDs			Certificates of Deposit
CDIs			Core Deposit Intangibles
CECL			Current Expected Credit Losses
CET1			Common Equity Tier 1



CRA			Community Reinvestment Act
CRE			Commercial Real Estate

EAR			Earnings at Risk


Exchange Act			Securities Exchange Act of 1934, as amended
FASB			Financial Accounting Standards Board
FDIC			Federal Deposit Insurance Corporation
Federal Reserve			Board of Governors of the Federal Reserve System
FFELP			Federal Family Education Loan Program
FHLB			Federal Home Loan Bank
FHLMC			Federal Home Loan Mortgage Corporation
FICO			Fair Isaac Corporation, provider of a broad-based risk score to aid in credit decisions
FNMA			Federal National Mortgage Association
FOMC			Federal Open Market Committee
FTEs			Full-time equivalent employees
FTP			Funds Transfer Pricing
GAAP			Generally Accepted Accounting Principles
GNMA			Government National Mortgage Association
GSEs			Government-Sponsored Enterprises
HTM			Held to Maturity




LIBOR			London Interbank Offered Rate
LOCOM			Lower of Cost or Market
LTV			Loan-to-Value


MSRs			Mortgage Servicing Rights
MVE			Market Value of Equity
Net Free Funds			Noninterest-bearing sources of funds
NII			Net Interest Income
NPAs			Nonperforming Assets


OREO			Other Real Estate Owned
Parent Company			Associated Banc-Corp individually
PPP			Paycheck Protection Program


RAP			Retirement Account Plan - the Corporation's noncontributory defined benefit retirement plan
Repurchase Agreements			Securities sold under agreements to repurchase
Restricted Stock Awards			Restricted common stock and restricted common stock units to certain key employees
Retirement Eligible Colleagues			Colleagues whose retirement meets the early retirement or normal retirement definitions under the applicable equity compensation plan
ROCET1			Return on Common Equity Tier 1
Rockefeller			Rockefeller Capital Management
S&P			Standard & Poor's
SBA			Small Business Administration
SEC			U.S. Securities and Exchange Commission
Series C Preferred Stock			The Corporation's 6.125% Non-Cumulative Perpetual Preferred Stock, Series C, liquidation preference $1,000 per share
Series D Preferred Stock			The Corporation's 5.375% Non-Cumulative Perpetual Preferred Stock, Series D, liquidation preference $1,000 per share
Series E Preferred Stock			The Corporation's 5.875% Non-Cumulative Perpetual Preferred Stock, Series E, liquidation preference $1,000 per share
Series F Preferred Stock			The Corporation's 5.625% Non-Cumulative Perpetual Preferred Stock, Series F, liquidation preference $1,000 per share
SOFR			Secured Overnight Finance Rate


TDRs			Troubled Debt Restructurings

Whitnell			Whitnell & Co.
YTD			Year-to-Date

Table of Contents


PART I - FINANCIAL INFORMATION

ITEM 1.			Financial Statements:

ASSOCIATED BANC-CORP

Consolidated Balance Sheets


	Sep 30, 2022		Dec 31, 2021
(In Thousands, except share and per share data)	(Unaudited)		(Audited)
Assets
Cash and due from banks	$	386,231	$	343,831
Interest-bearing deposits in other financial institutions	112,173		681,684
Federal funds sold and securities purchased under agreements to resell	4,015		—
AFS investment securities, at fair value	2,487,312		4,332,015
HTM investment securities, net, at amortized cost	3,951,491		2,238,947
Equity securities	24,879		18,352
Federal Home Loan Bank and Federal Reserve Bank stocks, at cost	279,334		168,281
Residential loans held for sale	51,134		136,638

Loans	27,817,280		24,224,949
Allowance for loan losses	(292,904)		(280,015)
Loans, net	27,524,376		23,944,934
Tax credit and other investments	275,247		293,733

Premises and equipment, net	379,462		385,173
Bank and corporate owned life insurance	677,129		680,021
Goodwill	1,104,992		1,104,992
Other intangible assets, net	51,485		58,093
Mortgage servicing rights, net(a)	78,352		54,862

Interest receivable	115,782		80,528
Other assets	546,214		582,168
Total assets	$	38,049,607	$	35,104,253
Liabilities and Stockholders' Equity
Noninterest-bearing demand deposits	$	8,224,579	$	8,504,077
Interest-bearing deposits	20,974,003		19,962,353
Total deposits	29,198,581		28,466,430
Federal funds purchased and securities sold under agreements to repurchase	276,674		319,532
Commercial paper	7,687		34,730

FHLB advances	3,777,478		1,621,047
Other long-term funding	249,484		249,324

Allowance for unfunded commitments	39,776		39,776
Accrued expenses and other liabilities	545,976		348,560
Total liabilities	$	34,095,656	$	31,079,399
Stockholders’ Equity
Preferred equity	$	194,112	$	193,195
Common equity
Common stock	$	1,752	$	1,752
Surplus	1,710,075		1,713,851
Retained earnings	2,830,877		2,672,601
Accumulated other comprehensive (loss)	(255,391)		(10,317)
Treasury stock, at cost	(527,473)		(546,229)
Total common equity	3,759,840		3,831,658
Total stockholders’ equity	3,953,952		4,024,853
Total liabilities and stockholders’ equity	$	38,049,607	$	35,104,253
Preferred shares authorized (par value $1.00 per share)	750,000		750,000
Preferred shares issued and outstanding	200,000		200,000
Common shares authorized (par value $0.01 per share)	250,000,000		250,000,000
Common shares issued	175,216,409		175,216,409
Common shares outstanding	150,328,196		149,342,641

Numbers may not sum due to rounding.

(a) MSRs at December 31, 2021 were carried at LOCOM. On January 1, 2022, the Corporation made the irrevocable election to account for MSRs at fair value.

See accompanying notes to consolidated financial statements.

Table of Contents

Item 1. Financial Statements Continued:

ASSOCIATED BANC-CORP

Consolidated Statements of Income (Unaudited)


	Three Months Ended Sep 30,				Nine Months Ended Sep 30,
(In Thousands, except per share data)	2022		2021		2022		2021
Interest income
Interest and fees on loans	$	275,666	$	174,643	$	643,239	$	522,920
Interest and dividends on investment securities
Taxable	19,221		8,745		54,009		24,600
Tax-exempt	16,538		14,613		49,025		43,141
Other interest	3,284		2,281		7,696		5,802
Total interest income	314,708		200,282		753,969		596,462
Interest expense
Interest on deposits	26,000		4,427		37,590		14,945
Interest on federal funds purchased and securities sold under agreements to repurchase	756		48		1,200		103
Interest on other short-term funding	1		8		2		21
Interest on FHLB advances	20,792		8,962		38,663		27,979
Interest on long-term funding	2,722		3,163		8,182		14,323
Total interest expense	50,270		16,607		85,637		57,371
Net interest income	264,439		183,675		668,332		539,092
Provision for credit losses	16,998		(24,010)		13,006		(82,018)
Net interest income after provision for credit losses	247,440		207,685		655,326		621,110
Noninterest income
Wealth management fees	19,984		22,110		63,719		67,229
Service charges and deposit account fees	15,029		16,962		48,392		47,366
Card-based fees	11,479		11,113		32,847		31,838
Other fee-based revenue	4,487		3,929		12,613		12,769
Capital markets, net	7,675		7,114		24,331		20,928
Mortgage banking, net	2,098		10,657		16,635		42,710
Bank and corporate owned life insurance	1,827		2,760		8,004		8,551

Asset gains, net	18		5,228		1,883		10,024
Investment securities gains (losses), net	5,664		—		5,676		(16)
Gains on sale of branches, net(a)	—		—		—		1,038
Other	2,527		2,205		6,613		8,425
Total noninterest income	70,788		82,076		220,713		250,862
Noninterest expense
Personnel	118,243		107,880		335,720		318,900
Technology	22,694		19,927		65,401		60,902
Occupancy	13,717		15,814		43,948		46,649
Business development and advertising	6,778		6,156		17,388		15,522
Equipment	4,921		5,200		14,841		16,199
Legal and professional	4,159		4,304		14,118		17,495
Loan and foreclosure costs	1,631		1,616		5,121		6,508
FDIC assessment	5,800		5,000		16,300		13,350
Other intangible amortization	2,203		2,203		6,608		6,642

Other	15,645		9,793		31,057		25,547
Total noninterest expense	195,791		177,892		550,503		527,713
Income before income taxes	122,438		111,870		325,536		344,259
Income tax expense	26,163		23,060		68,176		70,142
Net income	96,275		88,809		257,360		274,117
Preferred stock dividends	2,875		4,155		8,625		14,236
Net income available to common equity	$	93,400	$	84,655	$	248,735	$	259,880
Earnings per common share
Basic	$	0.62	$	0.56	$	1.66	$	1.70
Diluted	$	0.62	$	0.56	$	1.65	$	1.69
Average common shares outstanding
Basic	149,321		150,046		149,063		151,473
Diluted	150,262		151,143		150,205		152,701

Numbers may not sum due to rounding.

(a) Includes the deposit premium on the sale of branches net of miscellaneous costs to sell. See Note 2 Acquisitions and Dispositions for additional details on the branch sales.

See accompanying notes to consolidated financial statements.

Table of Contents

Item 1. Financial Statements Continued:

ASSOCIATED BANC-CORP

Consolidated Statements of Comprehensive Income (Unaudited)


	Three Months Ended Sep 30,				Nine Months Ended Sep 30,
($ in Thousands)	2022		2021		2022		2021

Net income	$	96,275	$	88,809	$	257,360	$	274,117
Other comprehensive income (loss), net of tax
AFS investment securities
Net unrealized (losses)	(100,092)		(19,827)		(268,413)		(35,829)
Unrealized (losses) on AFS securities transferred to HTM securities	—		—		(67,604)		—
Amortization of net unrealized losses on AFS securities transferred to HTM securities	2,888		172		7,269		1,335
Reclassification adjustment for net losses (gains) realized in net income	—		—		(12)		16


Income tax benefit	24,810		4,975		83,906		8,548
Other comprehensive (loss) on AFS securities	(72,394)		(14,681)		(244,854)		(25,930)
Defined benefit pension and postretirement obligations
Amortization of prior service cost	(82)		(37)		(244)		(111)
Amortization of actuarial loss	347		1,346		494		3,446

Income tax (expense)	(474)		(330)		(470)		(836)
Other comprehensive income (loss) on pension and postretirement obligations	(209)		979		(221)		2,498
Total other comprehensive (loss)	(72,603)		(13,702)		(245,074)		(23,431)
Comprehensive income	$	23,672	$	75,107	$	12,286	$	250,685

Numbers may not sum due to rounding.

See accompanying notes to consolidated financial statements.

Table of Contents

Item 1. Financial Statements Continued:

ASSOCIATED BANC-CORP

Consolidated Statements of Changes in Stockholders’ Equity (Unaudited)


(In Thousands, except per share data)	Preferred Equity		Common Stock		Surplus		Retained Earnings		Accumulated Other Comprehensive (Loss)		Treasury Stock		Total
Balance, December 31, 2021	$	193,195	$	1,752	$	1,713,851	$	2,672,601	$	(10,317)	$	(546,229)	$	4,024,853
Change in accounting principle(a)	—		—		—		1,713		—		—		1,713
Total shareholder's equity at beginning of period, as adjusted	193,195		1,752		1,713,851		2,674,314		(10,317)		(546,229)		4,026,566
Comprehensive (loss):
Net income	—		—		—		74,262		—		—		74,262
Other comprehensive income (loss)	—		—		—		—		(126,708)		—		(126,708)
Comprehensive (loss)													(52,445)
Common stock issued
Stock-based compensation plans, net	—		—		(11,911)		—		—		18,565		6,654



Purchase of treasury stock, stock-based compensation plans	—		—		—		—		—		(5,193)		(5,193)
Cash dividends
Common stock, $0.20 per share	—		—		—		(30,583)		—		—		(30,583)
Preferred stock(b)	—		—		—		(2,875)		—		—		(2,875)




Stock-based compensation expense, net	—		—		6,164		—		—		—		6,164




Balance, March 31, 2022	$	193,195	$	1,752	$	1,708,104	$	2,715,118	$	(137,024)	$	(532,858)	$	3,948,287

Comprehensive income:
Net income	—		—		—		86,824		—		—		86,824
Other comprehensive income (loss)	—		—		—		—		(45,764)		—		(45,764)
Comprehensive income													41,060
Common stock issued:
Stock-based compensation plans, net	—		—		(1,771)		—		—		1,910		139

Purchase of treasury stock, stock-based compensation plans	—		—		—		—		—		(884)		(884)
Cash dividends:
Common stock, $0.20 per share	—		—		—		(30,331)		—		—		(30,331)
Preferred stock(b)	—		—		—		(2,875)		—		—		(2,875)


Stock-based compensation expense, net	—		—		3,986		—		—		—		3,986
Balance, June 30, 2022	$	193,195	$	1,752	$	1,710,319	$	2,768,736	$	(182,788)	$	(531,832)	$	3,959,382

Comprehensive income:
Net income	—		—		—		96,275		—		—		96,275
Other comprehensive income (loss)	—		—		—		—		(72,603)		—		(72,603)
Comprehensive income													23,672
Common stock issued:
Stock-based compensation plans, net	—		—		(3,274)		—		—		4,540		1,266

Purchase of treasury stock, stock-based compensation plans	—		—		—		—		—		(181)		(181)
Cash dividends:
Common stock, $0.20 per share	—		—		—		(30,342)		—		—		(30,342)
Preferred stock(b)	—		—		—		(2,875)		—		—		(2,875)


Stock-based compensation expense, net	—		—		3,030		—		—		—		3,030
Other	916		—		—		(916)		—		—		—
Balance, September 30, 2022	$	194,112	$	1,752	$	1,710,075	$	2,830,877	$	(255,391)	$	(527,473)	$	3,953,952

Numbers may not sum due to rounding.

(a) MSRs at December 31, 2021 were carried at LOCOM. On January 1, 2022, the Corporation made the irrevocable election to account for MSRs at fair value.

(b) Series E, $0.3671875 per share; and Series F, $0.3515625 per share.

Table of Contents


(In Thousands, except per share data)	Preferred Equity		Common Stock		Surplus		Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Treasury Stock		Total
Balance, December 31, 2020	$	353,512	$	1,752	$	1,720,329	$	2,458,920	$	12,618	$	(456,198)	$	4,090,933


Comprehensive income:
Net income	—		—		—		94,301		—		—		94,301
Other comprehensive income (loss)	—		—		—		—		(16,811)		—		(16,811)

Comprehensive income													77,490
Common stock issued
Stock-based compensation plans, net	—		—		(16,986)		—		—		27,542		10,556


Purchase of treasury stock, open market purchases	—		—		—		—		—		(17,973)		(17,973)
Purchase of treasury stock, stock-based compensation plans	—		—		—		—		—		(3,593)		(3,593)
Cash dividends
Common stock, $0.18 per share	—		—		—		(27,870)		—		—		(27,870)
Preferred stock(a)	—		—		—		(5,207)		—		—		(5,207)


Stock-based compensation expense, net	—		—		3,444		—		—		—		3,444



Balance, March 31, 2021	$	353,512	$	1,752	$	1,706,786	$	2,520,144	$	(4,193)	$	(450,222)	$	4,127,780

Comprehensive income:
Net income	—		—		—		91,007		—		—		91,007
Other comprehensive income (loss)	—		—		—		—		7,082		—		7,082
Comprehensive income													98,088
Common stock issued:
Stock-based compensation plans, net	—		—		(3,632)		—		—		11,250		7,618


Purchase of treasury stock, open market purchases	—		—		—		—		—		(29,972)		(29,972)
Purchase of treasury stock, stock-based compensation plans	—		—		—		—		—		(856)		(856)
Cash dividends:
Common stock, $0.18 per share	—		—		—		(27,822)		—		—		(27,822)
Preferred stock(b)	—		—		—		(4,875)		—		—		(4,875)

Redemption of preferred stock	(63,313)		—		—		(1,687)		—		—		(65,000)


Stock-based compensation expense, net	—		—		5,092		—		—		—		5,092

Balance, June 30, 2021	$	290,200	$	1,752	$	1,708,246	$	2,576,766	$	2,889	$	(469,801)	$	4,110,052

Comprehensive income:
Net income	—		—		—		88,809		—		—		88,809
Other comprehensive income (loss)	—		—		—		—		(13,702)		—		(13,702)
Comprehensive income													75,107
Common stock issued:
Stock-based compensation plans, net	—		—		6		—		—		449		455
Purchase of treasury stock, open market purchases	—		—		—		—		—		(59,998)		(59,998)
Purchase of treasury stock, stock-based compensation plans	—		—		—		—		—		(112)		(112)
Cash dividends:
Common stock, $0.20 per share	—		—		—		(30,546)		—		—		(30,546)
Preferred stock(c)	—		—		—		(4,155)		—		—		(4,155)

Redemption of preferred stock	(97,004)		—		—		(2,454)		—		—		(99,458)
Stock-based compensation expense, net	—		—		3,616		—		—		—		3,616
Balance, September 30, 2021	$	193,195	$	1,752	$	1,711,867	$	2,628,421	$	(10,813)	$	(529,461)	$	3,994,961

Numbers may not sum due to rounding.

(a) Series C, $0.3828125 per share; Series D, $0.3359375 per share; Series E, $0.3671875 per share; and Series F, $0.3515625 per share.

(b) Series C, $0.3197115 per share; Series D, $0.3359375 per share; Series E, $0.3671875 per share; and Series F, $0.3515625 per share.

See accompanying notes to consolidated financial statements.

Table of Contents

Item 1. Financial Statements Continued:

ASSOCIATED BANC-CORP

Consolidated Statements of Cash Flows (Unaudited)


	Nine Months Ended Sep 30,
($ in Thousands)	2022		2021
Cash Flow From Operating Activities
Net income	$	257,360	$	274,117
Adjustments to reconcile net income to net cash provided by operating activities
Provision for credit losses	13,006		(82,018)
Depreciation and amortization	33,743		36,109
Change in MSRs valuation(a)	(22,348)		(12,231)

Amortization of other intangible assets	6,608		6,642
Amortization and accretion on earning assets, funding, and other, net	13,280		12,184
Net amortization of tax credit investments	25,916		25,196
Losses (gains) on sales of investment securities, net	(260)		16
Asset (gains), net	(1,883)		(10,024)
(Gains) on sale of branches, net	—		(1,038)
(Gain) loss on mortgage banking activities, net	5,712		(32,304)
Mortgage loans originated and acquired for sale	(535,694)		(1,345,158)
Proceeds from sales of mortgage loans held for sale	619,940		1,348,006

Changes in certain assets and liabilities
(Increase) decrease in interest receivable	(35,254)		11,252
(Decrease) increase in interest payable	1,795		(13,287)
(Decrease) increase in expense payable	(17,994)		24,509
Decrease in net derivative position	320,972		82,122


Net change in other assets and other liabilities	37,430		40,049
Net cash provided by operating activities	722,330		364,141
Cash Flow From Investing Activities
Net decrease (increase) in loans	(3,595,331)		804,497
Purchases of
AFS securities	(511,401)		(1,985,700)
HTM securities	(245,826)		(250,259)
Federal Home Loan Bank and Federal Reserve Bank stocks and equity securities	(111,057)		(9)
Premises, equipment, and software, net of disposals	(45,441)		(34,337)

Proceeds from
Sales of AFS and equity securities	1,320		158,743


Prepayments, calls, and maturities of AFS securities	392,275		927,053
Prepayments, calls, and maturities of HTM securities	153,163		243,063
Sales, prepayments, calls, and maturities of other assets	31,732		18,149
Net cash received in business segment sale	—		2,415
Net change in tax credit and alternative investments	(50,386)		(45,655)

Net cash (used in) investing activities	(3,980,951)		(162,040)
Cash Flow From Financing Activities
Net increase in deposits	732,347		1,400,162
Net decrease in deposits due to branch sales	—		(31,083)
Net increase (decrease) in short-term funding	(69,902)		70,179
Net increase in short-term FHLB advances	2,583,000		—
Repayment of long-term FHLB advances	(414,004)		(18,276)
Proceeds from long-term FHLB advances	1,838		6,576



(Repayment) proceeds of finance lease principal	327		(1,056)
Repayment of senior notes	—		(300,000)

Proceeds from issuance of common stock for stock-based compensation plans	8,059		18,629
Redemption of preferred shares	—		(164,458)



Purchase of treasury stock, open market purchases	—		(107,943)
Purchase of treasury stock, stock-based compensation plans	(6,259)		(4,562)
Cash dividends on common stock	(91,256)		(86,238)
Cash dividends on preferred stock	(8,625)		(14,236)
Net cash provided by financing activities	2,735,525		767,695
Net increase (decrease) in cash and cash equivalents	(523,096)		969,796
Cash and cash equivalents at beginning of period	1,025,515		716,048
Cash and cash equivalents at end of period(b)	$	502,419	$	1,685,843

Numbers may not sum due to rounding.

(a) On January 1, 2022, the Corporation made the irrevocable election to account for MSRs at fair value. For all prior periods, MSRs were carried at LOCOM.

(b) No restricted cash due to the Federal Reserve reducing the required reserve ratio to zero.

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ASSOCIATED BANC-CORP

Consolidated Statements of Cash Flows (Unaudited)


	Nine Months Ended Sep 30,
($ in Thousands)	2022		2021
Supplemental disclosures of cash flow information
Cash paid for interest	$	83,337	$	69,470
Cash paid for income and franchise taxes	6,087		56,262
Loans and bank premises transferred to OREO	5,052		33,794
Capitalized mortgage servicing rights	6,316		11,761
Loans transferred from held for sale into portfolio, net	1,789		10,071
Transfer of AFS securities to HTM securities	1,621,990		—
Unsettled trades to purchase securities	4,130		9,855
Write-up of equity securities without readily determinable fair values	5,690		—
Fair value adjustments on hedged long-term FHLB advances and subordinated debt	14,703		—

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Item 1. Financial Statements Continued:

ASSOCIATED BANC-CORP

Notes to Consolidated Financial Statements

These interim consolidated financial statements have been prepared according to the rules and regulations of the SEC and, therefore, certain information and footnote disclosures normally presented in accordance with GAAP have been omitted or abbreviated. The information contained on the consolidated financial statements and footnotes in Associated Banc-Corp's 2021 Annual Report on Form 10-K should be referred to in connection with the reading of these unaudited interim consolidated financial statements.

Note 1 Basis of Presentation

In the opinion of management, the accompanying unaudited consolidated financial statements contain all adjustments necessary to present fairly the financial position, results of operations and comprehensive income, changes in stockholders’ equity, and cash flows of the Corporation and Parent Company for the periods presented, and all such adjustments are of a normal recurring nature. The consolidated financial statements include the accounts of all subsidiaries. All significant intercompany transactions and balances have been eliminated in consolidation. The results of operations for the interim periods are not necessarily indicative of the results to be expected for the full year.

Within the tables presented, certain columns and rows may not sum due to the use of rounded numbers for disclosure purposes.

Note 2 Acquisitions and Dispositions

Acquisitions:

The Corporation did not have any acquisitions during the first nine months of 2022 or during 2021.

Dispositions:

2021

On March 1, 2021, the Corporation closed on the sale of its wealth management subsidiary, Whitnell, to Rockefeller for a purchase price of $8 million. Associated reported a first quarter 2021 pre-tax gain of $2 million, included in asset gains, net on the consolidated statements of income, in conjunction with the sale.

On February 26, 2021, the Bank completed the sale of one branch located in Monroe, Wisconsin to Summit Credit Union. Under the terms of the transaction, the Bank sold $31 million in total deposits and no loans. The Bank received an approximately 4% purchase premium on deposits transferred.

Note 3 Summary of Significant Accounting Policies

The accounting and reporting policies of the Corporation conform to U.S. GAAP and to general practice within the financial services industry. A discussion of these policies can be found in Note 1 Summary of Significant Accounting Policies included in the Corporation’s 2021 Annual Report on Form 10-K. As a result of the irrevocable election to account for MSRs under the fair value measurement methodology, as permitted under ASC 860-50-35-3, there has been a change to the Corporation's significant accounting policies since December 31, 2021, which is described below.

Mortgage Servicing Rights

The Corporation sells residential mortgage loans in the secondary market and typically retains the rights to service the loans sold. Upon sale, a MSRs asset is capitalized, which represents the then current fair value of future net cash flows expected to be realized for performing servicing activities. On January 1, 2022, the Corporation made the irrevocable election to account for its MSRs asset under the fair value measurement method. As a result of the change, a cumulative effect adjustment of $2 million, increasing retained earnings on the consolidated balance sheets, was recognized. Under this methodology, changes in the fair value are recognized in earnings as they occur through mortgage banking, net on the consolidated statements of income.

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MSRs are not traded in active markets. A cash flow model is used to determine fair value. Key assumptions and estimates, including projected prepayment speeds, assumed servicing costs, ancillary income, costs to service delinquent loans, costs of foreclosure, and discount rates with option-adjusted spreads, used by this model are based on current market sources. Assumptions used to value MSRs are considered significant unobservable inputs. A separate third-party model is used to estimate prepayment speeds based on interest rates, housing turnover rates, estimated loan curtailment, anticipated defaults and other relevant factors. Fair value estimates from outside sources are received periodically to corroborate the results of the valuation model.

New Accounting Pronouncements Adopted

There were no applicable material accounting pronouncements adopted by the Corporation since December 31, 2021.

Future Accounting Pronouncements

The expected impact of applicable material accounting pronouncements recently issued or proposed but not yet required to be adopted are discussed in the table below. To the extent that the adoption of new accounting standards materially affects the Corporation's financial condition, results of operations, liquidity or disclosures, the impacts are discussed in the applicable sections of this financial review.


Standard	Description	Date of anticipated adoption	Effect on financial statements

ASU 2022-02 Financial Instruments-Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures	The FASB issued these amendments to eliminate accounting guidance for TDRs by creditors in Subtopic 310-40, Receivables-Troubled Debt Restructurings by Creditors, while enhancing disclosure requirements for certain loan refinancings and restructurings by creditors when a borrower is experiencing financial difficulty, and to require that an entity disclose current-period gross writeoffs by year of origination for financing receivables and net investments in leases within the scope of Subtopic 326-20, Financial Instruments-Credit Losses-Measured at Amortized Cost. The amendments in this Update are effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years, and should be applied prospectively, except as provided in the next sentence. For the transition method related to the recognition and measurement of TDRs, an entity has the option to apply a modified retrospective transition method, resulting in a cumulative-effect adjustment to retained earnings in the period of adoption. Early adoption is permitted if an entity has adopted the amendments in Update 2016-03, including adoption in an interim period.	1st Quarter 2023	Adoption of this amendment is not expected to have a material impact on the Corporation's results of operation, financial position or liquidity, but will result in additional disclosure requirements related to gross charge offs by vintage year and the removal of TDR disclosures, replaced by additional disclosures on the types of modifications of loans to borrowers experiencing financial difficulties. The Corporation intends to adopt this update prospectively.

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Note 4 Earnings Per Common Share

Earnings per common share are calculated utilizing the two-class method. Basic earnings per common share are calculated by dividing the sum of distributed earnings to common shareholders and undistributed earnings allocated to common shareholders by the weighted average number of common shares outstanding. Diluted earnings per common share are calculated by dividing the sum of distributed earnings to common shareholders and undistributed earnings allocated to common shareholders by the weighted average number of common shares outstanding adjusted for the dilutive effect of common stock awards (outstanding stock options and unvested restricted stock awards). Presented below are the calculations for basic and diluted earnings per common share:


	Three Months Ended Sep 30,				Nine Months Ended Sep 30,
(In Thousands, except per share data)	2022		2021			2022		2021
Net income	$	96,275	$	88,809		$	257,360	$	274,117
Preferred stock dividends	(2,875)		(4,155)			(8,625)		(14,236)
Net income available to common equity	$	93,400	$	84,655		$	248,735	$	259,880
Common shareholder dividends	(30,149)		(30,323)			(90,647)		(85,604)
Unvested share-based payment awards	(194)		(222)			(609)		(634)
Undistributed earnings	$	63,057	$	54,109		$	157,479	$	173,642
Undistributed earnings allocated to common shareholders	$	62,648	$	53,716		$	156,454	$	172,436
Undistributed earnings allocated to unvested share-based payment awards	409		393			1,025		1,206
Undistributed earnings	$	63,057	$	54,109		$	157,479	$	173,642
Basic
Distributed earnings to common shareholders	$	30,149	$	30,323		$	90,647	$	85,604
Undistributed earnings allocated to common shareholders	62,648		53,716			156,454		172,436
Total common shareholders earnings, basic	$	92,796	$	84,039		$	247,102	$	258,040
Diluted
Distributed earnings to common shareholders	$	30,149	$	30,323		$	90,647	$	85,604
Undistributed earnings allocated to common shareholders	62,648		53,716			156,454		172,436
Total common shareholders earnings, diluted	$	92,796	$	84,039		$	247,102	$	258,040
Weighted average common shares outstanding	149,321		150,046			149,063		151,473
Effect of dilutive common stock awards	942		1,096			1,141		1,228

Diluted weighted average common shares outstanding	150,262		151,143			150,205		152,701
Basic earnings per common share	$	0.62	$	0.56		$	1.66	$	1.70
Diluted earnings per common share	$	0.62	$	0.56		$	1.65	$	1.69

Approximately 3 million anti-dilutive common stock options were excluded from the earnings per common share calculation for the three and nine months ended September 30, 2022 and 2021.

Note 5 Stock-Based Compensation

The fair values of stock options and restricted stock awards are amortized as compensation expense on a straight-line basis over the vesting period of the grants. For colleagues who meet the definition of retirement eligible under the 2017 Incentive Compensation Plan and the 2020 Incentive Compensation Plan, expenses related to stock options and restricted stock awards are fully recognized on the date the colleague meets the definition of normal or early retirement. Compensation expense recognized is included in personnel expense on the consolidated statements of income.

A summary of the Corporation’s stock option activity for the nine months ended September 30, 2022 is presented below:


Stock Options	Shares(a)	Weighted Average Exercise Price		Weighted Average Remaining Contractual Term	Aggregate Intrinsic Value(a)
Outstanding at December 31, 2021	4,814	$	20.72	5.96 years	$	12,532

Exercised	436	17.61
Forfeited or expired	62	19.83
Outstanding at September 30, 2022	4,316	$	21.05	5.14 years	$	4,506
Options Exercisable at September 30, 2022	3,735	$	21.35	4.82 years	$	3,547

(a) In thousands

Intrinsic value represents the amount by which the fair market value of the underlying stock exceeds the exercise price of the stock option. For the nine months ended September 30, 2022, the intrinsic value of stock options exercised was $3 million compared to $6 million for the nine months ended September 30, 2021. For the nine months ended September 30, 2022, the total fair value of stock options vested was $2 million compared to $3 million for the nine months ended September 30, 2021.

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The Corporation recognized compensation expense for the vesting of stock options of approximately $587,000 for the nine months ended September 30, 2022, compared to $1 million for the nine months ended September 30, 2021. Compensation expense for the nine months ended September 30, 2022 related to accelerated vesting of stock options for retirement eligible colleagues was immaterial. At September 30, 2022, the Corporation had approximately $563,000 of unrecognized compensation expense related to stock options that is expected to be recognized over the remaining requisite service periods that extend predominately through the first quarter of 2024.

The Corporation also has issued time-based and performance-based restricted stock awards under the 2017 Incentive Compensation Plan and subsequent 2020 Incentive Compensation Plan. Performance awards are based on performance goals determined by the Corporation's Compensation and Benefits Committee, with vesting ranging from a minimum of 0% to a maximum of 150% of the target award. Performance awards are valued utilizing a Monte Carlo simulation model to estimate fair value of the awards at the grant date.

The following table summarizes information about the Corporation’s restricted stock awards activity for the nine months ended September 30, 2022:


Restricted Stock Awards	Shares(a)	Weighted Average Grant Date Fair Value
Outstanding at December 31, 2021	2,635	$	19.87
Granted	785	22.91
Vested	948	21.83
Forfeited	109	20.30
Outstanding at September 30, 2022	2,363	$	20.91

(a) In thousands

The Corporation amortizes the expense related to restricted stock awards as compensation expense over the vesting period specified in the grant's award agreement. Performance-based restricted stock awards granted during 2021 and 2022 will cliff-vest after the three year performance period has ended. Service-based restricted stock awards granted during 2021 and 2022 will vest ratably over a period of four years. Expense for restricted stock awards of $13 million was recorded for the nine months ended September 30, 2022 and $11 million was recorded for the nine months ended September 30, 2021. Included in compensation expense for the first nine months of 2022 was $3 million of expense for the accelerated vesting of restricted stock awards granted to retirement eligible colleagues. The Corporation had $24 million of unrecognized compensation costs related to restricted stock awards at September 30, 2022 that are expected to be recognized over the remaining requisite service periods that extend predominately through the first quarter of 2026.

The Corporation has the ability to issue shares from treasury or new shares upon the exercise of stock options or the granting of restricted stock awards. The Board of Directors has authorized management to repurchase shares of the Corporation’s common stock in the market, to be made available for issuance in connection with the Corporation’s employee incentive plans and for other corporate purposes. The repurchase of shares, if any, will be based on market and investment opportunities, capital levels, growth prospects, and regulatory constraints. Such repurchases may occur from time to time in open market purchases, block transactions, private transactions, accelerated share repurchase programs, or similar facilities.

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Note 6 Investment Securities

Investment securities are designated as AFS, HTM, or equity on the consolidated balance sheets at the time of purchase. The amortized cost and fair values of AFS and HTM securities at September 30, 2022 were as follows:


($ in Thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized (Losses)		Fair Value


AFS investment securities
U. S. Treasury securities	$	124,403	$	—	$	(16,119)	$	108,284
Agency securities	15,000		—		(1,601)		13,399
Obligations of state and political subdivisions (municipal securities)	356,539		28		(15,669)		340,898
Residential mortgage-related securities
FNMA / FHLMC	1,882,668		413		(227,020)		1,656,061
GNMA	82,263		—		(4,234)		78,029

Commercial mortgage-related securities
FNMA / FHLMC	19,123		—		(1,837)		17,286
GNMA	111,286		—		(4,192)		107,094
Asset backed securities
FFELP	163,314		—		(4,757)		158,556
SBA	4,797		20		(45)		4,772

Other debt securities	3,000		—		(67)		2,933
Total AFS investment securities	$	2,762,393	$	461	$	(275,542)	$	2,487,312
HTM investment securities
U. S. Treasury securities	$	998	$	—	$	(66)	$	932
Obligations of state and political subdivisions (municipal securities)	1,737,135		273		(272,360)		1,465,048
Residential mortgage-related securities
FNMA / FHLMC	961,946		32,561		(182,409)		812,099
GNMA	43,168		27		(3,872)		39,323
Private-label	369,711		12,167		(74,906)		306,972
Commercial mortgage-related securities
FNMA/FHLMC	762,377		16,045		(176,822)		601,600
GNMA	76,217		716		(7,147)		69,787
Total HTM investment securities	$	3,951,553	$	61,791	$	(717,582)	$	3,295,760

During the first quarter of 2022, the Corporation redesignated approximately $1.6 billion of mortgage-related securities from AFS to HTM. The reclassification of these investment securities was accounted for at fair value. Management elected to transfer these investment securities as the Corporation has the positive intent and ability to hold these investment securities to maturity. See Note 16 for additional information on the unrealized losses on investment securities transferred from AFS to HTM.

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The amortized cost and fair values of AFS and HTM securities at December 31, 2021 were as follows:


($ in Thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized (Losses)		Fair Value


AFS investment securities
U. S. Treasury securities	$	124,291	$	—	$	(1,334)	$	122,957
Agency securities	15,000		—		(103)		14,897
Obligations of state and political subdivisions (municipal securities)	381,517		18,940		—		400,457
Residential mortgage-related securities
FNMA / FHLMC	2,709,399		3,729		(21,249)		2,691,879
GNMA	66,189		1,591		—		67,780
Private-label	332,028		31		(2,335)		329,724
Commercial mortgage-related securities
FNMA / FHLMC	357,240		2,686		(9,302)		350,623
GNMA	165,439		1,360		—		166,799
Asset backed securities
FFELP	177,974		475		(1,123)		177,325
SBA	6,594		39		(54)		6,580
Other debt securities	3,000		—		(6)		2,994
Total AFS investment securities	$	4,338,671	$	28,850	$	(35,506)	$	4,332,015
HTM investment securities
U. S. Treasury securities	$	1,000	$	1	$	—	$	1,001
Obligations of state and political subdivisions (municipal securities)	1,628,759		113,179		(1,951)		1,739,988
Residential mortgage-related securities
FNMA / FHLMC	34,347		1,792		—		36,139
GNMA	48,053		1,578		—		49,631
Commercial mortgage-related securities
FNMA / FHLMC	425,937		122		(6,659)		419,400
GNMA	100,907		1,799		(200)		102,506
Total HTM investment securities	$	2,239,003	$	118,471	$	(8,809)	$	2,348,664

Expected maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties. The expected maturities of AFS and HTM securities at September 30, 2022, are shown below:


	AFS					HTM
($ in Thousands)	Amortized Cost		Fair Value			Amortized Cost		Fair Value
Due in one year or less	$	9,023	$	9,000		$	16,969	$	16,931
Due after one year through five years	105,078		97,875			32,282		31,668
Due after five years through ten years	347,517		323,983			164,216		157,427
Due after ten years	37,325		34,656			1,524,666		1,259,955
Total debt securities	498,943		465,514			1,738,134		1,465,980
Residential mortgage-related securities
FNMA / FHLMC	1,882,668		1,656,061			961,946		812,099
GNMA	82,263		78,029			43,168		39,323
Private-label	—		—			369,711		306,972
Commercial mortgage-related securities
FNMA / FHLMC	19,123		17,286			762,377		601,600
GNMA	111,286		107,094			76,217		69,787
Asset backed securities
FFELP	163,314		158,556			—		—
SBA	4,797		4,772			—		—

Total investment securities	$	2,762,393	$	2,487,312		$	3,951,553	$	3,295,760
Ratio of fair value to amortized cost			90.0		%			83.4		%

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On a quarterly basis, the Corporation refreshes the credit quality of each HTM security. The following table summarizes the credit quality indicators of HTM securities at amortized cost at September 30, 2022:


($ in Thousands)	AAA		AA		A		Not Rated		Total
U. S. Treasury securities	$	998	$	—	$	—	$	—	$	998
Obligations of state and political subdivisions (municipal securities)	807,240		920,765		7,972		1,158		1,737,135
Residential mortgage-related securities
FNMA / FHLMC	961,946		—		—		—		961,946
GNMA	43,168		—		—		—		43,168
Private-label	369,711		—		—		—		369,711
Commercial mortgage-related securities
FNMA / FHLMC	762,377		—		—		—		762,377
GNMA	76,217		—		—		—		76,217
Total HTM securities	$	3,021,657	$	920,765	$	7,972	$	1,158	$	3,951,553

The following table summarizes the credit quality indicators of HTM securities at amortized cost at December 31, 2021:


($ in Thousands)	AAA		AA		A		Not Rated		Total
U. S. Treasury securities	$	1,000	$	—	$	—	$	—	$	1,000
Obligations of state and political subdivisions (municipal securities)	702,399		914,591		10,873		896		1,628,759
Residential mortgage-related securities
FNMA / FHLMC	34,347		—		—		—		34,347
GNMA	48,053		—		—		—		48,053
Commercial mortgage-related securities
FNMA / FHLMC	425,937		—		—		—		425,937
GNMA	100,907		—		—		—		100,907
Total HTM securities	$	1,312,642	$	914,591	$	10,873	$	896	$	2,239,003

The following table summarizes gross realized gains and losses on AFS securities, the gain on sale and net write-up of equity securities, and proceeds from the sale of investment securities for the three and nine months ended September 30, 2022 and 2021:


	Three Months Ended Sep 30,				Nine Months Ended Sep 30,
($ in Thousands)	2022		2021		2022		2021
Gross gains on AFS securities	$	—	$	—	$	21	$	421


Gross (losses) on AFS securities	—		—		(8)		(437)


Gain on sale and net write-up of equity securities	5,664		—		5,664		—
Investment securities gains (losses), net	$	5,664	$	—	$	5,676	$	(16)
Proceeds from sales of investment securities	$	248	$	—	$	1,309	$	158,708

During the third quarter of 2022, the Corporation sold its Visa Class B restricted shares obtained in the acquisition of First Staunton, which were carried at a zero-cost basis. The remaining shares, which are carried at fair value, were subsequently written up to reflect the new observable price resulting from that sale.

During the second quarter of 2021, the Corporation sold $107 million of lower yielding FFELP student loan asset backed securities at an immaterial gain and reinvested the proceeds into higher yielding mortgage backed securities. During the first quarter of 2021, the Corporation sold $51 million of lower yielding U.S. Treasury and Agency securities at an immaterial loss to take advantage of the steeper yield curve by reinvesting the proceeds into similar but higher yielding, longer duration securities.

Investment securities with a carrying value of $2.4 billion and $2.3 billion at September 30, 2022 and December 31, 2021, respectively, were pledged to secure certain deposits or for other purposes.

Accrued interest receivable on HTM securities totaled $16 million and $15 million at September 30, 2022 and December 31, 2021, respectively. Accrued interest receivable on AFS securities totaled $8 million and $9 million at September 30, 2022 and December 31, 2021, respectively. Accrued interest receivable on both HTM and AFS securities is included in interest receivable on the consolidated balance sheets. There was no interest income reversed for investments going into nonaccrual at both September 30, 2022 and 2021.

A security is considered past due once it is 30 days past due under the terms of the agreement. At both September 30, 2022 and December 31, 2021, the Corporation had no past due HTM securities.

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The allowance for credit losses on HTM securities was approximately $61,000 at September 30, 2022 and approximately $55,000 at December 31, 2021, attributable entirely to the Corporation's municipal securities, included in HTM investment securities, net, at amortized cost on the consolidated balance sheets. The Corporation also holds U.S. Treasury, municipal, and mortgage-related securities issued by the U.S. government or a GSE which are backed by the full faith and credit of the U.S. government and private-label residential mortgage-related securities that have credit enhancement which covers the first 15% of losses and, as a result, no allowance for credit losses has been recorded related to these securities.

The following represents gross unrealized losses and the related fair value of AFS and HTM securities, aggregated by investment category and length of time individual securities have been in a continuous unrealized loss position, at September 30, 2022:


	Less than 12 months					12 months or more					Total
($ in Thousands)	Number of Securities	Unrealized (Losses)		Fair Value		Number of Securities	Unrealized (Losses)		Fair Value		Unrealized (Losses)		Fair Value
AFS investment securities
U.S. Treasury securities	1	$	(651)	$	4,293	6	$	(15,468)	$	103,991	$	(16,119)	$	108,284
Agency securities	—	—		—		1	(1,601)		13,399		(1,601)		13,399
Obligations of state and political subdivisions (municipal securities)	605	(15,669)		328,806		—	—		—		(15,669)		328,806
Residential mortgage-related securities
FNMA / FHLMC	68	(109,670)		827,116		40	(117,350)		802,215		(227,020)		1,629,330
GNMA	17	(4,234)		78,029		—	—		—		(4,234)		78,029

Commercial mortgage-related securities
FNMA / FHLMC	1	(1,837)		17,286		—	—		—		(1,837)		17,286
GNMA	36	(4,192)		107,094		—	—		—		(4,192)		107,094
Asset backed securities
FFELP	5	(1,735)		66,349		10	(3,022)		92,207		(4,757)		158,556
SBA	1	—		350		7	(45)		2,218		(45)		2,569
Other debt securities	2	(21)		1,979		1	(46)		954		(67)		2,933

Total	736	$	(138,010)	$	1,431,302	65	$	(137,533)	$	1,014,983	$	(275,542)	$	2,446,286
HTM investment securities
U.S. Treasury securities	1	$	(66)	$	932	—	$	—	$	—	$	(66)	$	932
Obligations of state and political subdivisions (municipal securities)	1,123	(244,555)		1,350,294		29	(27,805)		53,371		(272,360)		1,403,665
Residential mortgage-related securities
FNMA / FHLMC	87	(105,032)		496,903		11	(77,377)		314,998		(182,409)		811,900
GNMA	78	(3,872)		39,323		—	—		—		(3,872)		39,323
Private-label	16	(59,733)		252,382		2	(15,173)		54,590		(74,906)		306,972
Commercial mortgage-related securities
FNMA / FHLMC	13	(76,439)		221,584		30	(100,382)		380,012		(176,822)		601,596
GNMA	13	(5,252)		58,883		1	(1,895)		10,904		(7,147)		69,787
Total	1,331	$	(494,950)	$	2,420,301	73	$	(222,632)	$	813,874	$	(717,582)	$	3,234,175

Table of Contents

For comparative purposes, the following represents gross unrealized losses and the related fair value of AFS and HTM securities, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, at December 31, 2021:


	Less than 12 months					12 months or more					Total
($ in Thousands)	Number of Securities	Unrealized (Losses)		Fair Value		Number of Securities	Unrealized (Losses)		Fair Value		Unrealized (Losses)		Fair Value
AFS investment securities
U.S. Treasury securities	7	$	(1,334)	$	122,957	—	$	—	$	—	$	(1,334)	$	122,957
Agency securities	1	(103)		14,897		—	—		—		(103)		14,897

Residential mortgage-related securities
FNMA / FHLMC	74	(21,249)		2,172,837		—	—		—		(21,249)		2,172,837

Private-label	12	(2,335)		248,617		—	—		—		(2,335)		248,617

FNMA / FHLMC commercial mortgage-related securities	19	(9,302)		328,568		—	—		—		(9,302)		328,568
Asset backed securities
FFELP	4	(256)		64,282		8	(867)		62,576		(1,123)		126,858
SBA	—	—		—		9	(54)		3,902		(54)		3,902
Other debt securities	3	(6)		2,994		—	—		—		(6)		2,994

Total	120	$	(34,586)	$	2,955,152	17	$	(920)	$	66,478	$	(35,506)	$	3,021,630
HTM investment securities
Obligations of state and political subdivisions (municipal securities)	49	$	(1,951)	$	112,038	—	$	—	$	—	$	(1,951)	$	112,038


Commercial mortgage-related securities
FNMA/FHLMC	18	(6,272)		388,072		1	(387)		10,775		(6,659)		398,847
GNMA	5	(200)		33,468		—	—		—		(200)		33,468
Total	72	$	(8,422)	$	533,577	1	$	(387)	$	10,775	$	(8,809)	$	544,352

The Corporation reviews the AFS investment securities portfolio on a quarterly basis to monitor its credit exposure. A determination as to whether a security’s decline in fair value is the result of credit risk takes into consideration numerous factors and the relative significance of any single factor can vary by security. Some factors the Corporation may consider in this impairment analysis include the extent to which the security has been in an unrealized loss position, the change in security rating, financial condition and near-term prospects of the issuer, as well as the security and industry specific economic conditions.

Based on the Corporation’s evaluation, management does not believe any unrealized losses at September 30, 2022 represent credit deterioration as these unrealized losses are primarily attributable to changes in interest rates and the current market conditions. The Corporation does not intend to sell nor does it believe that it will be required to sell the securities in an unrealized loss position before recovery of their amortized cost basis.

FHLB and Federal Reserve Bank stocks: The Corporation is required to maintain Federal Reserve Bank stock and FHLB stock as a member bank of both the Federal Reserve System and the FHLB, and in amounts as required by these institutions. These equity securities are “restricted” in that they can only be sold back to the respective institutions or another member institution at par. Therefore, they are less liquid than other marketable equity securities and their fair value is equal to amortized cost. The Corporation had FHLB stock of $193 million and $82 million at September 30, 2022 and December 31, 2021, respectively. The Corporation had Federal Reserve Bank stock of $87 million at both September 30, 2022 and December 31, 2021. Accrued interest receivable on FHLB stock totaled $2 million and approximately $975,000 at September 30, 2022 and December 31, 2021, respectively. There was approximately $819,000 of accrued interest receivable on Federal Reserve Bank Stock at September 30, 2022 and none at December 31, 2021. Accrued interest receivable on both FHLB stock and Federal Reserve Bank stock is included in interest receivable on the consolidated balance sheets.

Equity Securities

Equity securities with readily determinable fair values: The Corporation's portfolio of equity securities with readily determinable fair values is primarily comprised of CRA Qualified Investment mutual funds and other mutual funds. At September 30, 2022 and December 31, 2021, the Corporation had equity securities with readily determinable fair values of $6 million and $5 million, respectively.

Equity securities without readily determinable fair values: The Corporation's portfolio of equity securities without readily determinable fair values, which primarily consists of Visa Class B restricted shares, was carried at $19 million and $14 million at September 30, 2022 and December 31, 2021, respectively.

Table of Contents

Note 7 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.

Table of Contents

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

Table of Contents


					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.

Table of Contents

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

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					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.

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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 Past Due		60-89 Days Past Due		90+ Days Past Due		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.

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The following table presents loans by past due status at December 31, 2021:


	Accruing
($ in Thousands)	Current		30-59 Days Past Due		60-89 Days Past Due		90+ Days Past Due		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.

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 Restructured Loans		Nonaccrual Restructured Loans(a)		Performing Restructured Loans		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 of Loans	Recorded Investment(a)		Unpaid Principal Balance(b)		Number of Loans	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.
(b) Represents pre-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

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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 Loans	Recorded Investment		Number of Loans	Recorded Investment





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.

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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	%

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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	%

(a) Includes equipment finance.

Note 8 Goodwill and Other Intangible Assets

Goodwill

Goodwill is not amortized but is instead subject to impairment tests on at least an annual basis, and more frequently if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount.

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The Corporation conducted its most recent annual impairment testing in May 2022, utilizing a qualitative assessment. Factors that management considered in this assessment included macroeconomic conditions, industry and market considerations, overall financial performance of the Corporation and each reporting unit (both current and projected), changes in management strategy, and changes in the composition or carrying amount of net assets. In addition, management considered the changes in both the Corporation's common stock price and in the overall bank common stock index (based on the S&P 400 Regional Bank Sub-Industry Index), as well as the Corporation's earnings per common share trend over the past year. Based on these assessments, management concluded that it is more likely than not that the estimated fair value exceeded the carrying value (including goodwill) for each reporting unit. Therefore, a step one quantitative analysis was not required. There have been no events since the May 2022 impairment test that have changed the Corporation's impairment assessment conclusion. There were no impairment charges recorded in 2021 or the first nine months of 2022.

The Corporation had goodwill of $1.1 billion at both September 30, 2022 and December 31, 2021.

Other Intangible Assets

The Corporation has CDIs and historically had other intangible assets, both of which are amortized. For CDIs and other intangibles, changes in the gross carrying amount, accumulated amortization, and net book value were as follows:


($ in Thousands)	Nine Months Ended September 30, 2022		Year Ended Dec 31, 2021
Core deposit intangibles
Gross carrying amount at the beginning of period	$	88,109	$	88,109

Accumulated amortization	(36,624)		(30,016)
Net book value	$	51,485	$	58,093
Amortization during the period	$	6,608	$	8,811
Other intangibles
Gross carrying amount at the beginning of period	$	—	$	2,000

Reductions due to sale	—		(1,317)
Accumulated amortization	—		(683)
Net book value	$	—	$	—
Amortization during the period	$	—	$	33

Mortgage Servicing Rights

The Corporation sells residential mortgage loans in the secondary market and typically retains the right to service the loans sold. On January 1, 2022, the Corporation made the irrevocable election to account for its MSRs under the fair value measurement method, with any change in fair value being recognized through earnings in mortgage banking, net on the consolidated statements of income. MSRs are not traded in active markets. As a result, a cash flow model is used to determine fair value. Key assumptions and estimates, projected prepayment speeds, assumed servicing costs, ancillary income, costs to service delinquent loans, costs of foreclosure, and discount rates with option-adjusted spreads, are used in measuring the fair value of the MSRs asset. These assumptions are considered significant unobservable inputs. See Note 12 for a discussion of the recourse provisions on sold residential mortgage loans. See Note 13 which further discusses fair value measurement relative to the MSRs asset.

A summary of changes in the balance of the MSRs asset under the fair value measurement method for the nine months ended September 30, 2022 is as follows:


($ in Thousands)	Nine Months Ended September 30, 2022
Mortgage servicing rights
Mortgage servicing rights at beginning of period	$	54,862
Cumulative effect of accounting methodology change	2,296
Balance at beginning of period, adjusted	$	57,158
Additions	6,316
Paydowns	(7,470)
Valuation:
Change in fair value model assumptions	5,715
Changes in fair value of asset	16,633


Mortgage servicing rights at end of period	$	78,352





Portfolio of residential mortgage loans serviced for others (“servicing portfolio”)	$	6,800,404
Mortgage servicing rights to servicing portfolio	1.15		%

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Prior to January 1, 2022, the Corporation accounted for its MSRs under the amortization methodology. Under this methodology the Corporation evaluated its MSRs asset for impairment at minimum on a quarterly basis. Impairment was assessed based on fair value at each reporting date using estimated prepayment speeds of the underlying mortgage loans serviced and stratifications based on the risk characteristics of the underlying loans (predominantly loan type and note interest rate). As mortgage interest rates fell, prepayment speeds were usually faster and the value of the MSRs asset generally decreased, requiring additional valuation reserve. Conversely, as mortgage interest rates rose, prepayment speeds were usually slower and the value of the MSRs asset generally increased, requiring less valuation reserve. A valuation allowance was established, through a charge to earnings, to the extent the amortized cost of the MSRs exceeded the estimated fair value by stratification. An other-than-temporary impairment (i.e., recoverability was considered remote when considering interest rates and loan pay off activity) was recognized as a write-down of the MSRs asset and the related valuation allowance (to the extent a valuation allowance was available) and then against earnings. A direct write-down permanently reduced the carrying value of the MSRs asset and valuation allowance, precluding subsequent recoveries.

A summary of changes in the balance of the MSRs asset and the MSRs valuation allowance under the amortization method for the year ended December 31, 2021 is as follows:


($ in Thousands)	Year Ended Dec 31, 2021
Mortgage servicing rights
Mortgage servicing rights at beginning of period	$	59,967

Additions	16,151
Amortization	(19,436)
Mortgage servicing rights at end of period	$	56,682
Valuation allowance at beginning of period	$	(18,006)
Recoveries, net	16,186
Valuation allowance at end of period	$	(1,820)
Mortgage servicing rights, net	$	54,862
Fair value of mortgage servicing rights	$	57,259
Portfolio of residential mortgage loans serviced for others (“servicing portfolio”)	$	6,994,834
Mortgage servicing rights, net to servicing portfolio	0.78		%
Mortgage servicing rights expense(a)	$	3,250

(a) Includes the amortization of mortgage servicing rights and additions / recoveries to the valuation allowance of mortgage servicing rights, and is a component of mortgage banking, net on the consolidated statements of income.

The projections of amortization expense for CDIs and decay for MSRs are based on existing asset balances, the current interest rate environment, and prepayment speeds as of September 30, 2022. The actual expense the Corporation recognizes in any given period may be significantly different depending upon acquisition or sale activities, changes in interest rates, prepayment speeds, market conditions, regulatory requirements, and events or circumstances that indicate the carrying amount of an asset may not be recoverable. The following table shows the estimated future amortization expense for CDIs and the decay for MSRs:


($ in Thousands)	Core Deposit Intangibles		Mortgage Servicing Rights
Three months ending December 31, 2022	$	2,203	$	3,585
2023	8,811		13,582
2024	8,811		11,827
2025	8,811		10,246
2026	8,811		8,800
2027	8,811		7,451
Beyond 2027	5,227		22,861
Total estimated amortization expense	$	51,485	$	78,352

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Note 9 Short and Long-Term Funding

The following table presents the components of short-term funding (funding with original contractual maturities of one year or less) and long-term funding (funding with original contractual maturities greater than one year):


($ in Thousands)	Sep 30, 2022		Dec 31, 2021
Short-Term Funding
Federal funds purchased	$	505	$	120
Securities sold under agreements to repurchase	276,169		319,412
Federal funds purchased and securities sold under agreements to repurchase	276,674		319,532
Commercial paper	7,687		34,730
Total short-term funding	$	284,361	$	354,262
Long-Term Funding


Corporation subordinated notes, at par, due 2025	$	250,000	$	250,000

Capitalized costs	(617)		(839)
Subordinated debt fair value hedge liability(a)	(389)		—
Finance leases	490		163
Total long-term funding	$	249,484	$	249,324

Total short and long-term funding, excluding FHLB advances	$	533,844	$	603,587
FHLB Advances
Short-term FHLB advances	$	2,583,000	$	—
Long-term FHLB advances	1,208,791		1,621,047
FHLB advance fair value hedge liability(a)	(14,314)		—
Total FHLB advances	$	3,777,478	$	1,621,047

Total short and long-term funding	$	4,311,322	$	2,224,633

(a) For additional information on the fair value hedge liability, see Note 10.

Securities Sold Under Agreements to Repurchase

The Corporation enters into agreements under which it sells securities subject to an obligation to repurchase the same or similar securities. Under these arrangements, the Corporation may transfer legal control over the assets but still retain effective control through an agreement that both entitles and obligates the Corporation to repurchase the assets. The obligation to repurchase the securities is reflected as a liability on the Corporation’s consolidated balance sheets, while the securities underlying the repurchase agreements remain in the respective investment securities asset accounts (i.e., there is no offsetting or netting of the investment securities assets with the repurchase agreement liabilities).

The Corporation utilizes securities sold under agreements to repurchase to facilitate the needs of its customers. The fair value of securities pledged to secure repurchase agreements may decline. At September 30, 2022, the Corporation had pledged securities valued at 164% of the gross outstanding balance of repurchase agreements to manage this risk.

The remaining contractual maturity of the securities sold under agreements to repurchase on the consolidated balance sheets as of September 30, 2022 and December 31, 2021 are presented in the following table:


	Overnight and Continuous
($ in Thousands)	Sep 30, 2022		Dec 31, 2021
Repurchase agreements
Agency mortgage-related securities	$	276,169	$	319,412

Long-Term Funding

Subordinated Notes

In November 2014, the Corporation issued $250 million of 10-year subordinated notes, due January 2025, and callable October 2024. The subordinated notes have a fixed coupon interest rate of 4.25% and were issued at a discount.

Finance Leases

Finance leases are used in conjunction with branch operations. See Note 18 for additional disclosure regarding the Corporation’s leases.

FHLB Advances

The Corporation prepaid $400 million in long-term FHLB advances during the first quarter of 2022 with no prepayment fee.

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Note 10 Derivative and Hedging Activities

The Corporation is exposed to certain risk arising from both its business operations and economic conditions. The Corporation principally manages its exposures to a wide variety of business and operational risks through management of its core business activities. The Corporation manages economic risks, including interest rate, liquidity, and credit risk, primarily by managing the amount, sources, and duration of its assets and liabilities and the use of derivative financial instruments. Specifically, the Corporation enters into derivative financial instruments to manage exposures that arise from business activities that result in the receipt or payment of future known and uncertain cash amounts, the values of which are determined by interest rates. The Corporation's derivative financial instruments are used to manage differences in the amount, timing, and duration of the Corporation's known or expected cash receipts and its known or expected cash payments principally related to the Corporation's assets.

The contract or notional amount of a derivative is used to determine, along with the other terms of the derivative, the amounts to be exchanged between the counterparties. The Corporation is exposed to credit risk in the event of nonperformance by counterparties to financial instruments. To mitigate the counterparty risk, contracts generally contain language outlining collateral pledging requirements for each counterparty. For non-centrally cleared derivatives, collateral must be posted when the market value exceeds certain mutually agreed upon threshold limits. Securities and cash are often pledged as collateral. The Corporation pledged $81 million and $71 million of investment securities as collateral at September 30, 2022 and December 31, 2021, respectively. The Corporation's required cash collateral was immaterial at September 30, 2022, compared to $11 million at December 31, 2021.

Federal regulations require the Corporation to clear all LIBOR and compound SOFR interest rate swaps through a clearing house, if possible. For derivatives cleared through central clearing houses, the variation margin payments are legally characterized as daily settlements of the derivative rather than collateral. The Corporation's clearing agent for interest rate derivative contracts that are centrally cleared through the Chicago Mercantile Exchange and the London Clearing House settles the variation margin daily. As a result, the variation margin payment and the related derivative instruments are considered a single unit of account for accounting and financial reporting purposes. Depending on the net position, the fair value is reported in other assets or accrued expenses and other liabilities on the consolidated balance sheets. The daily settlement of the derivative exposure does not change or reset the contractual terms of the instrument.

Fair Value Hedges of Interest Rate Risk

The Corporation is exposed to changes in the fair value of its fixed-rate debt due to changes in benchmark interest rates. The Corporation uses interest rate swaps to manage its exposure to changes in fair value on these instruments attributable to changes in the designated benchmark interest rates. Interest rate swaps designated as fair value hedges involve receiving payment of fixed-rate amounts from a counterparty in exchange for the Corporation paying variable-rate payments over the life of the agreements without the exchange of the underlying notional amount.

For derivatives designated and that qualify as fair value hedges, as allowed under U.S. GAAP, we applied the "shortcut" method of accounting, which permits the assumption of perfect effectiveness. The gain or loss on the derivative as well as the offsetting loss or gain on the hedged item attributable to the hedged risk are recognized in interest expense. These items, along with the net interest from the derivative, are reported in the same income statement line as the fixed-rate debt expense.

Derivatives to Accommodate Customer Needs

The Corporation facilitates customer borrowing activity by entering into various derivative contracts which are designated as free standing derivative contracts. Free standing derivative products are entered into primarily for the benefit of commercial customers seeking to manage their exposures to interest rate risk, foreign currency, and until early 2022, commodity prices. As of the end of the first quarter of 2022, the Corporation no longer had any outstanding commodity contracts. These derivative contracts are not designated against specific assets and liabilities on the consolidated balance sheets or forecasted transactions and, therefore, do not qualify for hedge accounting treatment. Such derivative contracts are carried at fair value in other assets and accrued expenses and other liabilities on the consolidated balance sheets with changes in the fair value recorded as a component of capital markets, net, and typically include interest rate-related instruments (swaps and caps), foreign currency exchange forwards, and until the end of the first quarter of 2022, commodity contracts. See Note 11 for additional information and disclosures on balance sheet offsetting.

Interest rate-related and other instruments: The Corporation provides interest rate risk management services to commercial customers, primarily forward interest rate swaps and caps. The Corporation’s market risk from unfavorable movements in interest rates related to these derivative contracts is generally economically hedged by concurrently entering into offsetting derivative contracts. The offsetting derivative contracts have identical notional values, terms, and indices. The Corporation also enters into credit risk participation agreements with financial institution counterparties for interest rate swaps related to loans in

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which we are either a participant or a lead bank. The risk participation agreements entered into by the Corporation as a participant bank provide credit protection to the financial institution counterparty should the borrower fail to perform on its interest rate derivative contract with that financial institution.

Foreign currency exchange forwards: The Corporation provides foreign currency exchange services to customers, primarily forward contracts. The Corporation's customers enter into a foreign currency exchange forward with the Corporation as a means for them to mitigate exchange rate risk. The Corporation mitigates its risk by then entering into an offsetting foreign currency exchange derivative contract.

Commodity contracts: As of the end of the first quarter of 2022, the Corporation no longer had any outstanding commodity contracts. Historically, commodity contracts were entered into primarily for the benefit of commercial customers seeking to manage their exposure to fluctuating commodity prices. The Corporation mitigated its risk by then entering into an offsetting commodity derivative contract.

Mortgage Derivatives

Interest rate lock commitments to originate residential mortgage loans held for sale and forward commitments on residential mortgage loans are considered derivative instruments, and the fair value of these commitments is recorded in other assets and accrued expenses and other liabilities on the consolidated balance sheets with the changes in fair value recorded as a component of mortgage banking, net on the consolidated statements of income.

Interest rate-related instruments for MSRs hedge: The fair value of the Corporation's MSRs asset changes in response to changes in primary mortgage loan rates and other assumptions. To mitigate the earnings volatility caused by changes in the fair value of MSRs, the Corporation designates certain financial instruments as an economic hedge. Changes in the fair value of these instruments are generally expected to partially offset changes in the fair value of MSRs and are recorded in other assets and accrued expenses and other liabilities on the consolidated balance sheets with the changes in fair value recorded as a component of mortgage banking, net on the consolidated statements of income.

The following table presents the total notional amounts and gross fair values of the Corporation’s derivatives, as well as the balance sheet netting adjustments as of September 30, 2022 and December 31, 2021. The derivative assets and liabilities are presented on a gross basis prior to the application of bilateral collateral and master netting agreements, but after the variation margin payments with central clearing organizations have been applied as settlement, as applicable. Total derivative assets and liabilities are adjusted to take into consideration the effects of legally enforceable master netting agreements and cash collateral received or paid as of September 30, 2022 and December 31, 2021. The resulting net derivative asset and liability fair values are included in other assets and accrued expenses and other liabilities, respectively, on the consolidated balance sheets.


	Sep 30, 2022								Dec 31, 2021
	Asset				Liability				Asset				Liability
($ in Thousands)	Notional Amount		Fair Value		Notional Amount		Fair Value		Notional Amount		Fair Value		Notional Amount		Fair Value
Designated as hedging instruments
Interest rate-related instruments	$	—	$	—	$	850,000	$	906	$	—	$	—	$	—	$	—
Not designated as hedging instruments
Interest rate-related and other instruments	4,250,397		59,618		4,535,166		264,212		3,874,781		83,626		3,874,781		26,231
Foreign currency exchange forwards	482,983		10,109		458,140		9,524		490,057		5,490		478,745		5,441
Commodity contracts	—		—		—		—		3,894		1,264		3,910		1,248
Mortgage banking(a)(b)	41,327		3,492		88,000		403		133,990		2,647		245,016		—
Total not designated as hedging instruments	73,218				274,139				93,026				32,921
Gross derivatives before netting			73,218				275,045				93,026				32,921
Less: Legally enforceable master netting agreements	869				869				2,143				2,143
Less: Cash collateral pledged/received	63,699				—				1,313				11,357
Total derivative instruments, after netting	$	8,650			$	274,176			$	89,570			$	19,421

(a) The notional amount of the mortgage derivative asset includes interest rate lock commitments, while the notional amount of the mortgage derivative liability includes forward commitments.
(b) At September 30, 2022, the mortgage derivative asset includes approximately $3 million of forward commitments fair value, while the mortgage derivative liability includes approximately $403,000 of interest rate lock commitments fair value. At December 31, 2021, the mortgage derivative asset included approximately $30,000 of forward commitments fair value.

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The following table presents amounts that were recorded on the consolidated balance sheets related to cumulative basis adjustments for fair value hedges:


	Line Item in the Consolidated Balance Sheets in Which the Hedged Item is Included
	Carrying Amount of the Hedged Assets/(Liabilities)		Cumulative Amount of Fair Value Hedging Adjustment Included in the Carrying Amount of the Hedged Assets/(Liabilities)
($ in Thousands)	September 30, 2022
Other long-term funding	$	(249,611)	$	389
FHLB Advances	(585,686)		14,314
Total	$	(835,297)	$	14,703

The Corporation terminated its $500 million fair value hedge on loans and investment securities receivables during the fourth quarter of 2019. At September 30, 2022, the amortized cost basis of the closed portfolios which had previously been used in the terminated hedging relationship was $340 million and is included in loans on the consolidated balance sheets. This amount includes $2 million of hedging adjustments on the discontinued hedging relationships, which are not presented in the table above.

The table below identifies the effect of fair value hedge accounting on the Corporation's consolidated statements of income for the three and nine months ended September 30, 2022 and 2021:


	Location and Amount Recognized on the Consolidated Statements of Income in Fair Value and Cash Flow Hedging Relationships
	Three months ended Sep 30,					Nine Months Ended Sep 30,
	2022				2021	2022		2021
($ in Thousands)	Interest Income		Interest Expense			Interest Income		Interest Income		Interest Expense		Interest Income
Total amounts of income presented on the consolidated statements of income in which the effects of the fair value hedge are recorded	$	(120)	$	(380)		$	(292)	$	(428)	$	(380)	$	(1,128)
The effects of fair value hedging: Impact on fair value hedging relationships in Subtopic 815-20
Interest contracts
Hedged items	(120)		(14,703)			(292)		(428)		(14,703)		(1,128)
Derivatives designated as hedging instruments(a)	—		14,323			—		—		14,323		—

(a) Includes net settlements on the derivatives.

The table below identifies the effect of derivatives not designated as hedging instruments on the Corporation's consolidated statements of income for the three and nine months ended September 30, 2022 and 2021:


	Consolidated Statements of Income Category of Gain / (Loss) Recognized in Income	Three Months Ended Sep 30,				Nine Months Ended Sep 30,
($ in Thousands)		2022		2021		2022		2021
Derivative Instruments
Interest rate-related and other instruments — customer and mirror, net	Capital markets, net	$	(33)	$	557	$	548	$	2,546
Interest rate-related instruments — MSRs hedge	Mortgage banking, net	(3,547)		—		(12,559)		—
Foreign currency exchange forwards	Capital markets, net	159		(8)		536		109
Commodity contracts	Capital markets, net	—		(124)		(16)		(1,256)
Interest rate lock commitments (mortgage)	Mortgage banking, net	(1,389)		(1,356)		(3,020)		(4,438)
Forward commitments (mortgage)	Mortgage banking, net	3,543		1,402		3,415		3,017

Note 11 Balance Sheet Offsetting

Interest Rate-Related Instruments, Commodity Contracts, and Foreign Exchange Forwards (“Interest, Commodity, and Foreign Exchange Agreements”)

The Corporation enters into interest rate-related instruments to facilitate the interest rate risk management strategies of commercial customers and foreign exchange forwards to manage customers' exposure to fluctuating foreign exchange rates. The Corporation mitigates these risks by entering into equal and offsetting agreements with highly rated third-party financial institutions. Historically, the Corporation entered into commodity contracts to manage commercial customers' exposure to fluctuating commodity prices. As of the end of the first quarter of 2022, the Corporation no longer had any outstanding commodity contracts. The Corporation is party to master netting arrangements with some of its financial institution counterparties that create single net settlements of all legal claims or obligations to pay or receive the net amount of settlement of the individual interest and foreign exchange agreements. Collateral, usually in the form of investment securities and cash, is

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posted by the counterparty with net liability positions in accordance with contract thresholds. Derivatives subject to a legally enforceable master netting agreement are reported with assets and liabilities offset resulting in a net position which is further offset by any cash and investment securities collateral, and is reported in other assets and accrued expenses and other liabilities on the face of the consolidated balance sheets. See Note 10 for additional information on the Corporation’s derivative and hedging activities.

The following table presents the interest rate and foreign exchange assets and liabilities subject to an enforceable master netting arrangement as of September 30, 2022 and interest rate, commodity, and foreign exchange assets and liabilities subject to an enforceable master netting arrangement as of December 31, 2021. The interest and foreign exchange agreements the Corporation has with its commercial customers and the commodity agreements the Corporation had with its commercial customers are not subject to an enforceable master netting arrangement and are therefore excluded from this table:


	Gross Amounts Recognized		Gross Amounts Subject to Master Netting Arrangements Offset on the Consolidated Balance Sheets				Net Amounts Presented on the Consolidated Balance Sheets
($ in Thousands)			Derivative Liabilities Offset		Cash Collateral Received
Derivative assets
September 30, 2022	$	67,819	$	(869)	$	(63,699)	$	3,252
December 31, 2021	3,567		(2,143)		(1,313)		111

	Gross Amounts Recognized		Gross Amounts Subject to Master Netting Arrangements Offset on the Consolidated Balance Sheets				Net Amounts Presented on the Consolidated Balance Sheets
($ in Thousands)			Derivative Assets Offset		Cash Collateral Pledged
Derivative liabilities
September 30, 2022	$	870	$	(869)	$	—	$	1
December 31, 2021	15,620		(2,143)		(11,357)		2,120

Note 12 Commitments, Off-Balance Sheet Arrangements, Legal Proceedings, Regulatory Matters and Operational Matters


($ in Thousands)	Sep 30, 2022		Dec 31, 2021
Commitments to extend credit, excluding commitments to originate residential mortgage loans held for sale(a)(b)	$	12,270,556	$	10,848,136
Commercial letters of credit(a)	5,170		5,992
Standby letters of credit(c)	240,487		230,661

(a) These off-balance sheet financial instruments are exercisable at the market rate prevailing at the date the underlying transaction will be completed and, thus, are deemed to have no current fair value, or the fair value is based on fees currently charged to enter into similar agreements and was not material at September 30, 2022 or December 31, 2021.

(b) Interest rate lock commitments to originate residential mortgage loans held for sale are considered derivative instruments and are disclosed in Note 10.

(c) Standby letters of credit are presented excluding participations. The Corporation has established a liability of $2 million at both September 30, 2022 and December 31, 2021, as an estimate of the fair value of these financial instruments.

Lending-related Commitments

As a financial services provider, the Corporation routinely enters into commitments to extend credit. Such commitments are subject to the same credit policies and approval process accorded to loans made by the Corporation, with each customer’s creditworthiness evaluated on a case-by-case basis. The commitments generally have fixed expiration dates or other termination clauses and may require the payment of a fee. The Corporation’s exposure to credit loss in the event of nonperformance by the other party to these financial instruments is represented by the contractual amount of those instruments. The amount of collateral obtained, if deemed necessary by the Corporation upon extension of credit, is based on management’s credit evaluation of the customer. Since a significant portion of commitments to extend credit are subject to specific restrictive loan covenants or may expire without being drawn upon, the total commitment amounts do not necessarily represent future cash flow requirements. An allowance for unfunded commitments is maintained at a level believed by management to be sufficient

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to absorb expected lifetime losses related to unfunded commitments (including unfunded loan commitments and letters of credit).

The following table presents a summary of the changes in the allowance for unfunded commitments:


($ in Thousands)	Nine Months Ended September 30, 2022		Year Ended December 31, 2021
Allowance for Unfunded Commitments
Balance at beginning of period	$	39,776	$	47,776


Provision for unfunded commitments	—		(8,000)

Balance at end of period	$	39,776	$	39,776

Lending-related commitments include commitments to extend credit, commitments to originate residential mortgage loans held for sale, commercial letters of credit, and standby letters of credit. Commitments to extend credit are legally binding agreements to lend to customers at predetermined interest rates, as long as there is no violation of any condition established in the contracts. Interest rate lock commitments to originate residential mortgage loans held for sale and forward commitments on residential mortgage loans are considered derivative instruments, and the fair value of these commitments is recorded in other assets and accrued expenses and other liabilities on the consolidated balance sheets. The Corporation’s derivative and hedging activity is further described in Note 10. Commercial and standby letters of credit are conditional commitments issued to guarantee the performance of a customer to a third party. Commercial letters of credit are issued specifically to facilitate commerce and typically result in the commitment being drawn on when the underlying transaction is consummated between the customer and the third party, while standby letters of credit generally are contingent upon the failure of the customer to perform according to the terms of the underlying contract with the third party.

Other Commitments

The Corporation invests in qualified affordable housing projects, historic projects, new market projects, and opportunity zone funds for the purpose of community reinvestment and obtaining tax credits and other tax benefits. Return on the Corporation's investment in these projects and funds comes in the form of the tax credits and tax losses that pass through to the Corporation, and deferral or elimination of capital gain recognition for tax purposes. The aggregate carrying value of these investments at September 30, 2022 was $250 million, compared to $268 million at December 31, 2021, included in tax credit and other investments on the consolidated balance sheets. The Corporation utilizes the proportional amortization method to account for investments in qualified affordable housing projects.

Under the proportional amortization method, the Corporation amortizes the initial cost of the investment in proportion to the tax credits and other tax benefits. The Corporation recognized additional income tax expense attributable to the amortization of investments in qualified affordable housing projects of $25 million and $24 million for the nine months ended September 30, 2022 and September 30, 2021, respectively, and $9 million and $8 million for the three months ended September 30, 2022 and September 30, 2021, respectively. The Corporation's remaining investment in qualified affordable housing projects accounted for under the proportional amortization method totaled $246 million at September 30, 2022 and $262 million at December 31, 2021.

The Corporation’s unfunded equity contributions relating to investments in qualified affordable housing and historic projects are recorded in accrued expenses and other liabilities on the consolidated balance sheets. The Corporation’s remaining unfunded equity contributions totaled $38 million at September 30, 2022 and $80 million at December 31, 2021.

For the nine months ended September 30, 2022 and the year ended December 31, 2021, the Corporation did not record any impairment related to qualified affordable housing investments.

The Corporation has principal investment commitments to provide capital-based financing to private companies through either direct investment in specific companies or through investment funds and partnerships. The timing of future cash requirements to fund such principal investment commitments is generally dependent on the investment cycle, whereby privately held companies are funded by private equity investors and ultimately sold, merged, or taken public through an initial offering, which can vary based on overall market conditions, as well as the nature and type of industry in which the companies operate. The Corporation also invests in loan pools that support CRA loans. The timing of future cash requirements to fund these pools is dependent upon loan demand, which can vary over time. The aggregate carrying value of these investments was $25 million at both September 30, 2022 and December 31, 2021, included in tax credit and other investments on the consolidated balance sheets.

Legal Proceedings

The Corporation is party to various pending and threatened claims and legal proceedings arising in the normal course of business activities, some of which involve claims for substantial amounts. Although there can be no assurance as to the ultimate

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outcomes, the Corporation believes it has meritorious defenses to the claims asserted against it in its currently outstanding matters and intends to continue to defend itself vigorously with respect to such legal proceedings. The Corporation will consider settlement of cases when, in management’s judgment, it is in the best interests of the Corporation and its shareholders.

On at least a quarterly basis, the Corporation assesses its liabilities and contingencies in connection with all pending or threatened claims and litigation, utilizing the most recent information available. On a matter by matter basis, an accrual for loss is established for those matters which the Corporation believes it is probable that a loss may be incurred and that the amount of such loss can be reasonably estimated. Once established, each accrual is adjusted as appropriate to reflect any subsequent developments. Accordingly, management’s estimate will change from time to time, and actual losses may be more or less than the current estimate. For matters where a loss is not probable, or the amount of the loss cannot be estimated, no accrual is established.

Resolution of legal claims is inherently unpredictable, and in many legal proceedings various factors exacerbate this inherent unpredictability, including where the damages sought are unsubstantiated or indeterminate, it is unclear whether a case brought as a class action will be allowed to proceed on that basis, discovery is not complete, the proceeding is not yet in its final stages, the matters present legal uncertainties, there are significant facts in dispute, there are a large number of parties (including where it is uncertain how liability, if any, will be shared among multiple defendants), or there is a wide range of potential results.

A lawsuit, Evans et al v. Associated Banc-Corp et al, was filed in the United States District Court for the Eastern District of Wisconsin - Green Bay Division on January 13, 2021 by one current and one former participant in the Associated Banc-Corp 401(k) and Employee Stock Ownership Plan (the “Plan”) as representatives of a putative class. The plaintiffs alleged that Associated Banc-Corp, the Associated Banc-Corp Plan Administrative Committee, and current and past members of such committee during the relevant time period (the “Defendants”) breached their fiduciary duties with respect to the Plan in violation of Employee Retirement Income Security Act of 1974, as amended, by applying an imprudent and inappropriate preference for products associated with Associated Banc-Corp within the Plan, and that the Defendants failed to monitor or control the recordkeeping expenses paid to Associated Trust Company, N.A. On March 18, 2021, the Defendants filed a motion to dismiss. On April 8, 2021, the plaintiffs filed an amended complaint which dropped the record keeping claim, added Associated Trust Company N.A. and Kellogg Asset Management, LLC as defendants, and alleged various breaches of fiduciary duty related to the selection and monitoring of, and the fees charged by, proprietary collective investment trusts. The plaintiffs, in part, sought an accounting and disgorgement of certain profits, as well as certain equitable restitution and equitable monetary relief. On September 30, 2022, the Defendants' motion to dismiss was granted. On October 11, 2022, the plaintiffs agreed not to appeal the dismissal in exchange for the Defendants' agreement not to seek attorneys' fees.

Regulatory Matters

A variety of consumer products, including mortgage and deposit products, and certain fees and charges related to such products, have come under increased regulatory scrutiny. It is possible that regulatory authorities could bring enforcement actions, including civil money penalties, or take other actions against the Corporation and the Bank in regard to these consumer products. The Bank could also determine of its own accord, or be required by regulators, to refund or otherwise make remediation payments to customers in connection with these products. It is not possible at this time for management to assess the probability of a material adverse outcome or reasonably estimate the amount of any potential loss related to such matters.

Operational Matters

In November 2021, we became aware that during several routine purges of old documents, certain documents that were more than seven years old relating to active accounts were inadvertently purged from our electronic database. The active account documents that were inadvertently purged related to (1) certain customer documents obtained as part of bank acquisitions, and (2) certain customer documents that were transferred to a new cold storage system without correct retention coding. Both the acquisitions and the transfer occurred years ago. The majority of the documents inadvertently purged were signature cards. We have undertaken measures to replace (if possible) or otherwise lessen the impact on customers of any inadvertently purged documents. While the impact on the Company of this incident has been immaterial to date, and we are not aware of any material adverse customer impact, it is not possible at this time for management to reasonably estimate the amount of any potential loss related to this incident.

Mortgage Repurchase Reserve

The Corporation sells residential mortgage loans to investors in the normal course of business. Residential mortgage loans sold to others are predominantly conventional residential first lien mortgages originated under the Corporation's usual underwriting procedures, and are most often sold on a nonrecourse basis, primarily to the GSEs. The Corporation’s agreements to sell residential mortgage loans in the normal course of business usually require certain representations and warranties on the underlying loans sold, related to credit information, loan documentation, collateral, and insurability. Subsequent to being sold,

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if a material underwriting deficiency or documentation defect is discovered, the Corporation may be obligated to repurchase the loan or reimburse the GSEs for losses incurred (collectively, “make whole requests”). The make whole requests and any related risk of loss under the representations and warranties are largely driven by borrower performance. Additionally, beginning in the third quarter of 2021, qualifying residential mortgage loans guaranteed by U.S. government agencies have been sold into GNMA pools.

As a result of make whole requests, the Corporation has repurchased loans with aggregate principal balances of $4 million and $8 million for the nine months ended September 30, 2022 and the year ended December 31, 2021, respectively. There were no loss reimbursement and settlement claims paid in the nine months ended September 30, 2022, and approximately $114,000 of such claims were paid for the year ended December 31, 2021. Make whole requests since January 1, 2021 generally arose from loans originated during the period of January 1, 2018 to June 30, 2022. Since January 1, 2018, loans sold totaled $6.7 billion at the time of sale, and consisted primarily of loans sold to GSEs. As of September 30, 2022, $4.3 billion of loans originated since January 1, 2018 remain outstanding.

The balance in the mortgage repurchase reserve at the balance sheet date reflects the estimated amount of potential loss the Corporation could incur from repurchasing a loan, as well as loss reimbursements, indemnifications, and other settlement resolutions. The mortgage repurchase reserve, included in accrued expenses and other liabilities on the consolidated balance sheets, was $1 million at both September 30, 2022 and December 31, 2021.

The Corporation may also sell residential mortgage loans with limited recourse (limited in that the recourse period ends prior to the loan’s maturity, usually after certain time and / or loan paydown criteria have been met), whereby repurchase could be required if the loan had defined delinquency issues during the limited recourse periods. At September 30, 2022 and December 31, 2021, there were $7 million and $10 million, respectively, of residential mortgage loans sold with such recourse risk. There have been limited instances and immaterial historical losses on repurchases for recourse under the limited recourse criteria.

The Corporation has a subordinate position to the FHLB in the credit risk on residential mortgage loans it sold to the FHLB in exchange for a monthly credit enhancement fee. The Corporation has not sold loans to the FHLB with such credit risk retention since February 2005. At September 30, 2022 and December 31, 2021, there were $20 million and $24 million, respectively, of such residential mortgage loans with credit risk recourse, upon which there have been immaterial historical losses to the Corporation.

Note 13 Fair Value Measurements

Fair value represents the estimated price at which an orderly transaction to sell an asset or to transfer a liability would take place between market participants at the measurement date under current market conditions (i.e., an exit price concept).

The valuation methodologies for assets and liabilities measured at fair value on a recurring and non-recurring basis are described in the Fair Value Measurements note in the Corporation’s 2021 Annual Report on Form 10-K. There has been one significant change to the methodologies for assets and liabilities measured at fair value on a recurring basis:

Mortgage Servicing Rights: The Corporation sells residential mortgage loans in the secondary market and typically retains the rights to service the loans sold. Upon sale, a MSRs asset is capitalized, which represents the then current fair value of future net cash flows expected to be realized for performing servicing activities. On January 1, 2022, the Corporation made the irrevocable election to account for its MSRs asset under the fair value measurement method. Under this methodology, changes in the fair value are recognized in earnings as they occur through mortgage banking, net on the consolidated statements of income.

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The table below presents the Corporation’s financial instruments measured at fair value on a recurring basis as of September 30, 2022 and December 31, 2021, aggregated by the level in the fair value hierarchy within which those measurements fall:


($ in Thousands)	Fair Value Hierarchy	Sep 30, 2022		Dec 31, 2021
Assets
AFS investment securities
U.S. Treasury securities	Level 1	$	108,284	$	122,957
Agency securities	Level 2	13,399		14,897
Obligations of state and political subdivisions (municipal securities)	Level 2	340,898		400,457
Residential mortgage-related securities
FNMA / FHLMC	Level 2	1,656,061		2,691,879
GNMA	Level 2	78,029		67,780
Private-label	Level 2	—		329,724
Commercial mortgage-related securities
FNMA / FHLMC	Level 2	17,286		350,623
GNMA	Level 2	107,094		166,799
Asset backed securities
FFELP	Level 2	158,556		177,325
SBA	Level 2	4,772		6,580
Other debt securities	Level 2	2,933		2,994

Total AFS investment securities	Level 1	$	108,284	$	122,957
Total AFS investment securities	Level 2	2,379,028		4,209,058

Equity securities with readily determinable fair values	Level 1	5,655		4,810
Residential loans held for sale	Level 2	51,134		136,638
Mortgage servicing rights, net(a)	Level 3	78,352		N/A
Interest rate-related and other instruments not designated as hedging instruments(b)	Level 2	59,618		83,626
Foreign currency exchange forwards(b)	Level 2	10,109		5,490

Commodity contracts(b)	Level 2	—		1,264


Interest rate lock commitments to originate residential mortgage loans held for sale	Level 3	—		2,617
Forward commitments on residential mortgage loans	Level 3	3,492		30

Liabilities
Interest rate-related instruments designated as hedging instruments	Level 2	$	906	$	—
Interest rate-related and other instruments not designated as hedging instruments(b)	Level 2	264,212		26,231
Foreign currency exchange forwards(b)	Level 2	9,524		5,441
Commodity contracts(b)	Level 2	—		1,248

Interest rate lock commitments to originate residential mortgage loans held for sale	Level 3	403		—

(a) MSRs at December 31, 2021 were carried at LOCOM. On January 1, 2022, the Corporation made the irrevocable election to account for MSRs at fair value on a recurring basis.
(b) Figures are presented gross before netting. See Note 10 and Note 11 for information relating to the impact of offsetting derivative assets and liabilities and cash collateral with the
same counterparty where there is a legally enforceable master netting agreement in place.

The table below presents a rollforward of the consolidated balance sheets amounts for the nine months ended September 30, 2022 and the year ended December 31, 2021, for the Corporation's mortgage derivatives measured on a recurring basis and classified within Level 3 of the fair value hierarchy:


($ in Thousands)	Interest rate lock commitments to originate residential mortgage loans held for sale		Forward commitments on residential mortgage loans		Total
Balance December 31, 2020	$	9,624	$	2,046	$	7,579
New production	53,686		(3,281)		56,966
Closed loans / settlements	(53,477)		3,740		(57,217)
Other	(7,216)		(2,535)		(4,680)
Change in mortgage derivative	(7,007)		(2,076)		(4,932)

Balance December 31, 2021	$	2,617	$	(30)	$	2,647
New production	$	9,526	$	(1,734)	$	11,260
Closed loans / settlements	(641)		21,244		(21,885)
Other	(11,905)		(22,972)		11,067
Change in mortgage derivative	(3,020)		(3,462)		442

Balance September 30, 2022	$	(403)	$	(3,492)	$	3,089

The following table presents the carrying value of equity securities without readily determinable fair values as of September 30, 2022 that are measured under the measurement alternative and the related adjustments recorded during the periods presented for those securities with observable price changes. These securities are included in the nonrecurring fair value tables when

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applicable price changes are observable. Also shown are the cumulative upward and downward adjustments for the Corporation's equity securities without readily determinable fair values as of September 30, 2022:


($ in Thousands)
Equity securities without readily determinable fair values
Carrying value as of December 31, 2021	$	13,542
Carrying value changes	5,690
Additions	4
Sales	(12)

Carrying value as of September 30, 2022	$	19,224

Cumulative upward carrying value changes between January 1, 2018 and September 30, 2022	$	19,134
Cumulative downward carrying value changes/impairment between January 1, 2018 and September 30, 2022	$	—

The table below presents the Corporation’s assets measured at fair value on a nonrecurring basis, aggregated by the level in the fair value hierarchy within which those measurements fall:

($ in Thousands)

Fair Value Hierarchy

Fair Value

Consolidated Statements of Income Category of Adjustment Recognized in Income

Adjustment Recognized on the Consolidated Statements of Income(a)

September 30, 2022

Assets

Individually evaluated loans(b)

Level 3

29,558

Provision for credit losses

5,010

OREO(c)

Level 2

3,534

Other noninterest expense / provision for credit losses(d)

1,639

Equity securities without readily determinable fair values

Level 3

19,134

Investment securities gains (losses), net

5,690

December 31, 2021

Assets

Individually evaluated loans(b)

Level 3

69,917

Provision for credit losses

(3,045)

OREO(c)

Level 2

21,299

Other noninterest expense / provision for credit losses(d)

7,345

Mortgage servicing rights(e)

Level 3

57,259

Mortgage banking, net

16,186

(a) Includes the full year impact on the consolidated statements of income.
(b) Includes probable TDRs which are individually analyzed, net of the related ACLL, of which there were none at September 30, 2022.
(c) If the fair value of the collateral exceeds the carrying amount of the asset, no charge off or adjustment is necessary, the asset is not considered to be carried at fair value, and is therefore not included in the table.
(d) When a property's value is written down at the time it is transferred to OREO, the charge off is booked to the provision for credit losses. When a property is already in OREO and subsequently written down, the charge off is booked to other noninterest expense.
(e) MSRs at December 31, 2021 were carried at LOCOM. On January 1, 2022, the Corporation made the irrevocable election to account for MSRs at fair value on a recurring basis.

Certain nonfinancial assets and nonfinancial liabilities measured at fair value on a nonrecurring basis include the fair value analysis in the goodwill impairment test as well as intangible assets and other nonfinancial long-lived assets measured at fair value for the purpose of impairment assessment.

The table below presents the unobservable inputs that are readily quantifiable pertaining to Level 3 measurements:


September 30, 2022	Valuation Technique	Significant Unobservable Input	Range of Inputs			Weighted Average Input Applied
Mortgage servicing rights	Discounted cash flow	Option adjusted spread	6%	-	9%	7%
Mortgage servicing rights	Discounted cash flow	Constant prepayment rate	0%	-	100%	9%
Individually evaluated loans	Appraisals / Discounted cash flow	Collateral / Discount factor	29%	-	52%	36%
Interest rate lock commitments to originate residential mortgage loans held for sale	Discounted cash flow	Closing Ratio	17%	-	100%	83%

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Fair Value of Financial Instruments

The Corporation is required to disclose estimated fair values for its financial instruments.

Fair value estimates are set forth below for the Corporation’s financial instruments:


		Sep 30, 2022				Dec 31, 2021
($ in Thousands)	Fair Value Hierarchy Level	Carrying Amount		Fair Value		Carrying Amount		Fair Value

Financial assets
Cash and due from banks	Level 1	$	386,231	$	386,231	$	343,831	$	343,831
Interest-bearing deposits in other financial institutions	Level 1	112,173		112,173		681,684		681,684
Federal funds sold and securities purchased under agreements to resell	Level 1	4,015		4,015		—		—
AFS investment securities	Level 1	108,284		108,284		122,957		122,957
AFS investment securities	Level 2	2,379,028		2,379,028		4,209,058		4,209,058
HTM investment securities, net	Level 1	998		932		1,000		1,001
HTM investment securities, net	Level 2	3,950,493		3,294,767		2,237,947		2,347,608

Equity securities with readily determinable fair values	Level 1	5,655		5,655		4,810		4,810
Equity securities without readily determinable fair values	Level 3	19,224		19,224		13,542		13,542
FHLB and Federal Reserve Bank stocks	Level 2	279,334		279,334		168,281		168,281
Residential loans held for sale	Level 2	51,134		51,134		136,638		136,638

Loans, net	Level 3	27,524,376		26,285,810		23,944,934		23,980,330
Bank and corporate owned life insurance	Level 2	677,129		677,129		680,021		680,021

Mortgage servicing rights, net(a)	Level 3	78,352		78,352		54,862		57,259
Derivatives (other assets)(b)	Level 2	69,726		69,726		90,379		90,379
Interest rate lock commitments to originate residential mortgage loans held for sale (other assets)	Level 3	—		—		2,617		2,617
Forward commitments on residential mortgage loans (other assets)	Level 3	3,492		3,492		30		30

Financial liabilities
Noninterest-bearing demand, savings, interest-bearing demand, and money market accounts	Level 3	$	27,964,749	$	27,964,749	$	27,119,167	$	27,119,167
Time deposits(c)	Level 2	1,233,833		1,233,833		1,347,262		1,347,262
Short-term funding	Level 2	284,361		283,755		354,262		354,248
FHLB advances	Level 2	3,777,478		3,780,744		1,621,047		1,680,814
Other long-term funding	Level 2	249,484		243,586		249,324		265,545

Standby letters of credit(d)	Level 2	2,457		2,457		2,367		2,367

Derivatives (accrued expenses and other liabilities)(b)	Level 2	274,642		274,642		32,921		32,921
Interest rate lock commitments to originate residential mortgage loans held for sale (accrued expenses and other liabilities)	Level 3	403		403		—		—

(a) MSRs at December 31, 2021 were carried at LOCOM. On January 1, 2022, the Corporation made the irrevocable election to account for MSRs at fair value.
(b) Figures are presented gross before netting. See Note 10 and Note 11 for information relating to the impact of offsetting derivative assets and liabilities and cash collateral with the
same counterparty where there is a legally enforceable master netting agreement in place.
(c) When the estimated fair value is less than the carrying value, the carrying value is reported as the fair value.
(d) The commitment on standby letters of credit was $240 million at September 30, 2022 and $231 million at December 31, 2021. See Note 12 for additional information on the standby letters of credit and for information on the fair value of lending-related commitments.

Note 14 Retirement Plans

The Corporation has a noncontributory defined benefit RAP, covering substantially all employees who meet participation requirements. The benefits are based primarily on years of service and the employee’s compensation paid. Employees of acquired entities generally participate in the RAP after consummation of the business combinations. Any retirement plans of acquired entities are typically merged into the RAP after completion of the mergers, and credit is usually given to employees for years of service at the acquired institution for vesting and eligibility purposes.

The Corporation also provides legacy healthcare access to a limited group of retired employees from a previous acquisition in the Postretirement Plan. There are no other active retiree healthcare plans.

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The components of net periodic pension cost and net periodic benefit cost for the RAP and Postretirement Plan for the three and nine months ended September 30, 2022 and 2021 were as follows:


	Three Months Ended Sep 30,				Nine Months Ended Sep 30,
($ in Thousands)	2022		2021		2022		2021
Components of Net Periodic Benefit Cost
RAP
Service cost	$	906	$	1,684	$	2,752	$	5,835
Interest cost	1,820		1,682		5,364		4,927
Expected return on plan assets	(6,706)		(6,395)		(20,177)		(19,256)
Amortization of prior service cost	(63)		(19)		(188)		(55)
Amortization of actuarial loss	347		1,346		494		3,446
Total net periodic pension cost	$	(3,696)	$	(1,701)	$	(11,754)	$	(5,103)







Postretirement Plan
Interest cost	$	13	$	13	$	40	$	39
Amortization of prior service cost	(19)		(19)		(56)		(56)

Total net periodic benefit cost	$	(6)	$	(6)	$	(17)	$	(17)

The components of net periodic pension cost and net periodic benefit cost, other than the service cost component, are included in the line item other of noninterest expense on the consolidated statements of income. The service cost components are included in personnel on the consolidated statements of income.

The Corporation’s funding policy is to pay at least the minimum amount required by federal law and regulations, with consideration given to the maximum funding amounts allowed. The Corporation regularly reviews the funding of its RAP. There were no contributions during the nine months ended September 30, 2022 and 2021.

Note 15 Segment Reporting

The Corporation utilizes a risk-based internal profitability measurement system to provide strategic business unit reporting. The profitability measurement system is based on internal management methodologies designed to produce consistent results and reflect the underlying economics of the units. Certain strategic business units have been combined for segment information reporting purposes where the nature of the products and services, the type of customer, and the distribution of those products and services are similar. The three reportable segments are Corporate and Commercial Specialty; Community, Consumer, and Business; and Risk Management and Shared Services. The financial information of the Corporation’s segments has been compiled utilizing the accounting policies described in the Corporation’s 2021 Annual Report on Form 10-K with certain exceptions. The more significant of these exceptions are described herein.

The reportable segment results are presented based on the Corporation's internal management accounting process. The management accounting policies and processes utilized in compiling segment financial information are highly subjective and, unlike financial accounting, are not based on authoritative guidance similar to U.S. GAAP. As a result, reported segments and the financial information of the reported segments are not necessarily comparable with similar information reported by other financial institutions. Furthermore, changes in management structure or allocation methodologies and procedures may result in changes in previously reported segment financial data. Additionally, the information presented is not indicative of how the segments would perform if they operated as independent entities.

To determine financial performance of each segment, the Corporation allocates FTP assignments, the provision for credit losses, certain noninterest expenses, income taxes, and equity to each segment. Allocation methodologies are subject to periodic adjustment as the internal management accounting system is revised, the interest rate environment evolves, and business or product lines within the segments change. Also, because the development and application of these methodologies is a dynamic process, the financial results presented may be periodically reviewed.

The Corporation allocates net interest income using an internal FTP methodology that charges users of funds (assets, primarily loans) and credits providers of funds (liabilities, primarily deposits) based on the maturity, prepayment and / or re-pricing characteristics of the assets and liabilities. The net effect of this allocation is offset in the Risk Management and Shared Services segment to ensure consolidated totals reflect the Corporation's net interest income. The net FTP allocation is reflected as net intersegment interest income (expense) in the accompanying tables.

The provision for credit losses is allocated to segments based on the expected long-term annual net charge off rates attributable to the credit risk of loans managed by the segment during the period. In contrast, the level of the consolidated provision for credit losses is determined based on an ACLL model using the methodologies described in the Corporation’s 2021 Annual Report on Form 10-K. The net effect of the credit provision is recorded in Risk Management and Shared Services. Indirect

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expenses incurred by certain centralized support areas are allocated to segments based on actual usage (for example, volume measurements) and other criteria. Certain types of administrative expense and bank-wide expense accruals (including amortization of CDIs and other intangible assets associated with acquisitions, acquisition-related costs, and asset gains on disposed business units) are generally not allocated to segments. Income taxes are allocated to segments based on the Corporation’s estimated effective tax rate, with certain segments adjusted for any tax-exempt income or non-deductible expenses. Equity is allocated to the segments based on regulatory capital requirements and in proportion to an assessment of the inherent risks associated with the business of the segment (including interest, credit and operating risk).

A brief description of each business segment is presented below. A more in-depth discussion of these segments can be found in the Segment Reporting note in the Corporation’s 2021 Annual Report on Form 10-K.

The Corporate and Commercial Specialty segment serves a wide range of customers including larger businesses, developers, not-for-profits, municipalities, and financial institutions by providing lending and deposit solutions as well as the support to deliver, fund, and manage such banking solutions. In addition, this segment provides a variety of investment, fiduciary, and retirement planning products and services to individuals and small to mid-sized businesses. During the first quarter of 2021, the Corporation sold its wealth management subsidiary Whitnell. The Community, Consumer, and Business segment serves individuals, as well as small and mid-sized businesses, by providing lending and deposit solutions. The Risk Management and Shared Services segment includes key shared operational functions and also includes residual revenue and expenses, representing the difference between actual amounts incurred and the amounts allocated to operating segments, including interest rate risk residuals (FTP mismatches) and credit risk and provision residuals (long-term credit charge mismatches).

Effective during the third quarter of 2022, the product and marketing functions were moved to the Risk Management and Shared Services segment from the Community, Consumer, and Business and Corporate and Commercial Specialty segments in order to centralize these functions under common leadership.

Effective during the first quarter of 2022, certain support functions and a select group of banking regions were realigned into the Community, Consumer, and Business segment from the Corporate and Commercial Specialty segment.

Information about the Corporation’s segments is presented below:


	Corporate and Commercial Specialty
	Three Months Ended Sep 30,				Nine Months Ended Sep 30,
($ in Thousands)	2022		2021		2022		2021
Net interest income	$	161,143	$	91,012	$	363,135	$	270,712
Net intersegment interest income (expense)	(37,998)		3,696		(34,774)		12,690
Segment net interest income	123,145		94,709		328,361		283,403
Noninterest income(a)	35,663		41,892		112,620		120,991
Total revenue	158,808		136,601		440,981		404,394
Provision for credit losses	11,904		14,349		36,803		46,745
Noninterest expense	58,934		56,209		172,141		165,568
Income before income taxes	87,970		66,043		232,037		192,082
Income tax expense	16,420		11,920		42,692		35,021
Net income	$	71,551	$	54,123	$	189,346	$	157,060






Allocated goodwill					$	525,836	$	525,836


	Community, Consumer, and Business
	Three Months Ended Sep 30,				Nine Months Ended Sep 30,
($ in Thousands)	2022		2021		2022		2021
Net interest income	$	87,156	$	73,616	$	233,699	$	218,868
Net intersegment interest income	49,575		15,283		99,046		46,165
Segment net interest income	136,731		88,899		332,745		265,033
Noninterest income	26,745		37,053		92,072		117,351
Total revenue	163,476		125,952		424,817		382,384
Provision for credit losses	5,378		4,748		14,958		15,955
Noninterest expense	107,782		98,172		311,210		300,913
Income before income taxes	50,316		23,032		98,649		65,517
Income tax expense	10,567		4,837		20,716		13,758
Net income	$	39,749	$	18,196	$	77,933	$	51,758






Allocated goodwill					$	579,156	$	579,156

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	Risk Management and Shared Services
	Three Months Ended Sep 30,				Nine Months Ended Sep 30,
($ in Thousands)	2022		2021		2022		2021
Net interest income	$	16,140	$	19,047	$	71,498	$	49,511
Net intersegment (expense)	(11,577)		(18,980)		(64,272)		(58,855)
Segment net interest income (loss)	4,563		68		7,227		(9,344)
Noninterest income	8,381		3,131		16,021		12,520
Total revenue	12,943		3,199		23,247		3,176
Provision for credit losses	(283)		(43,107)		(38,756)		(144,717)
Noninterest expense	29,076		23,512		67,153		61,233
Income (loss) before income taxes	(15,849)		22,794		(5,150)		86,660
Income tax expense (benefit)	(824)		6,304		4,769		21,363
Net income (loss)	$	(15,025)	$	16,490	$	(9,918)	$	65,298






Allocated goodwill					$	—	$	—


	Consolidated Total
	Three Months Ended Sep 30,				Nine Months Ended Sep 30,
($ in Thousands)	2022		2021		2022		2021
Net interest income	$	264,439	$	183,675	$	668,332	$	539,092
Net intersegment interest income	—		—		—		—
Segment net interest income	264,439		183,675		668,332		539,092
Noninterest income(a)	70,788		82,076		220,713		250,862
Total revenue	335,227		265,752		889,045		789,954
Provision for credit losses	16,998		(24,010)		13,006		(82,018)
Noninterest expense	195,791		177,892		550,503		527,713
Income before income taxes	122,438		111,870		325,536		344,259
Income tax expense	26,163		23,060		68,176		70,142
Net income	$	96,275	$	88,809	$	257,360	$	274,117






Allocated goodwill					$	1,104,992	$	1,104,992

(a) For the nine months ended September 30, 2021, the Corporation recognized a $2 million pre-tax gain on sale of Whitnell.

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Note 16 Accumulated Other Comprehensive Income (Loss)

The following tables summarize the components of accumulated other comprehensive income (loss) at September 30, 2022 and 2021, including changes during the preceding three and nine month periods as well as any reclassifications out of accumulated other comprehensive income (loss):


($ in Thousands)	AFS Investment Securities		Defined Benefit Pension and Postretirement Obligations		Accumulated Other Comprehensive Income (Loss)
Balance December 31, 2021	$	(5,266)	$	(5,051)	$	(10,317)
Other comprehensive (loss) before reclassifications	(268,413)		—		(268,413)
Unrealized (losses) on AFS securities transferred to HTM securities	(67,604)		—		(67,604)
Amounts reclassified from accumulated other comprehensive income (loss)
Investment securities (gains), net	(12)		—		(12)
HTM investment securities, net, at amortized cost	7,269		—		7,269
Personnel (expense)	—		(244)		(244)
Other expense	—		494		494
Income tax (expense) benefit	83,906		(470)		83,436
Net other comprehensive (loss) during period	(244,854)		(221)		(245,074)
Balance September 30, 2022	$	(250,120)	$	(5,272)	$	(255,391)

Balance December 31, 2020	$	41,325	$	(28,707)	$	12,618
Other comprehensive (loss) before reclassifications	(35,829)		—		(35,829)

Amounts reclassified from accumulated other comprehensive income (loss)
Investment securities losses, net	16		—		16
HTM investment securities, net, at amortized cost	1,335		—		1,335
Personnel (expense)	—		(111)		(111)
Other expense	—		3,446		3,446
Income tax (expense) benefit	8,548		(836)		7,712
Net other comprehensive income (loss) during period	(25,930)		2,498		(23,431)
Balance September 30, 2021	$	15,395	$	(26,209)	$	(10,813)


($ in Thousands)	AFS Investment Securities		Defined Benefit Pension and Post Retirement Obligations		Accumulated Other Comprehensive Income (Loss)
Balance June 30, 2022	$	(177,726)	$	(5,062)	$	(182,788)
Other comprehensive (loss) before reclassifications	(100,092)		—		(100,092)

Amounts reclassified from accumulated other comprehensive income (loss)

HTM investment securities, net, at amortized cost	2,888		—		2,888
Personnel (expense)	—		(82)		(82)
Other expense	—		347		347
Income tax (expense) benefit	24,810		(474)		24,336
Net other comprehensive (loss) during period	(72,394)		(209)		(72,603)
Balance September 30, 2022	$	(250,120)	$	(5,272)	$	(255,391)

Balance June 30, 2021	$	30,076	$	(27,187)	$	2,889
Other comprehensive (loss) before reclassifications	(19,827)		—		(19,827)

Amounts reclassified from accumulated other comprehensive income (loss)

HTM investment securities, net, at amortized cost	172		—		172
Personnel (expense)	—		(37)		(37)
Other expense	—		1,346		1,346
Income tax (expense) benefit	4,975		(330)		4,644
Net other comprehensive (loss) during period	(14,681)		979		(13,702)
Balance September 30, 2021	$	15,395	$	(26,209)	$	(10,813)

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Note 17 Revenue from Contracts with Customers

Revenue from contracts with customers is recognized when obligations under the terms of a contract with the Corporation's customer are satisfied. Revenue is measured as the amount of consideration we expect to receive in exchange for transferring goods or providing services. We do not have any material significant payment terms as payment is received at or shortly after the satisfaction of the performance obligation.

The Corporation's disaggregated revenue by major source is presented below:


	Corporate and Commercial Specialty
	Three Months Ended Sep 30,				Nine Months Ended Sep 30,
($ in Thousands)	2022		2021		2022		2021
Wealth management fees	$	19,984	$	22,110	$	63,719	$	67,229
Service charges and deposit account fees	3,128		3,948		10,636		11,748
Card-based fees(a)	424		381		1,203		1,011

Other revenue	395		738		2,288		2,552
Noninterest income (in-scope of Topic 606)	$	23,931	$	27,176	$	77,846	$	82,540
Noninterest income (out-of-scope of Topic 606)(b)	11,732		14,717		34,774		38,451
Total noninterest income	$	35,663	$	41,892	$	112,620	$	120,991



	Community, Consumer, and Business
	Three Months Ended Sep 30,				Nine Months Ended Sep 30,
($ in Thousands)	2022		2021		2022		2021

Service charges and deposit account fees	$	11,896	$	13,009	$	37,743	$	35,591
Card-based fees(a)	10,970		10,707		31,629		30,830

Other revenue	1,637		2,088		5,270		8,563
Noninterest income (in-scope of Topic 606)	$	24,503	$	25,803	$	74,642	$	74,984
Noninterest income (out-of-scope of Topic 606)	2,241		11,250		17,431		42,366
Total noninterest income	$	26,745	$	37,053	$	92,072	$	117,351


	Risk Management and Shared Services
	Three Months Ended Sep 30,				Nine Months Ended Sep 30,
($ in Thousands)	2022		2021		2022		2021

Service charges and deposit account fees	$	5	$	5	$	13	$	27
Card-based fees(a)	118		60		101		79

Other revenue	454		55		373		752
Noninterest income (in-scope of Topic 606)	$	577	$	120	$	486	$	858
Noninterest income (out-of-scope of Topic 606)	7,804		3,011		15,535		11,662
Total noninterest income	$	8,381	$	3,131	$	16,021	$	12,520


	Consolidated Total
	Three Months Ended Sep 30,				Nine Months Ended Sep 30,
($ in Thousands)	2022		2021		2022		2021

Wealth management fees	$	19,984	$	22,110	$	63,719	$	67,229
Service charges and deposit account fees	15,029		16,962		48,392		47,366
Card-based fees(a)	11,512		11,147		32,933		31,920

Other revenue	2,486		2,880		7,930		11,868
Noninterest income (in-scope of Topic 606)	$	49,011	$	53,099	$	152,974	$	158,383
Noninterest income (out-of-scope of Topic 606)(b)	21,777		28,977		67,740		92,479
Total noninterest income	$	70,788	$	82,076	$	220,713	$	250,862

(a) Certain card-based fees are out-of-scope of Topic 606.

(b) For the nine months ended September 30, 2021, the Corporation recognized a $2 million pre-tax gain on the sale of Whitnell.

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Below is a listing of performance obligations for the Corporation's main revenue streams:


Revenue Stream			Noninterest income in-scope of Topic 606

Service charges and deposit account fees			Service charges and deposit account fees consist of monthly service fees (i.e. business analyzed fees and consumer service charges) and other deposit account related fees. The Corporation's performance obligation for monthly service fees is generally satisfied, and the related revenue recognized, over the period in which the service is provided. Other deposit account related fees are largely transactional based, and therefore, the Corporation's performance obligation is satisfied, and related revenue recognized, at a point in time. Payment for service charges and deposit account fees is primarily received immediately or in the following month through a direct charge to customers’ accounts.
Card-based fees(a)			Card-based fees are primarily comprised of debit and credit card income, ATM fees, and merchant services income. Debit and credit card income is primarily comprised of interchange fees earned whenever the Corporation's debit and credit cards are processed through card payment networks. ATM and merchant fees are largely transactional based, and therefore, the Corporation's performance obligation is satisfied, and related revenue recognized, at a point in time. Payment is typically received immediately or in the following month.
Trust and asset management fees(b)			Trust and asset management income is primarily comprised of fees earned from the management and administration of trusts and other customer assets. The Corporation's performance obligation is generally satisfied over time and the resulting fees are recognized monthly, based upon the month-end market value of the assets under management and the applicable fee rate. Payment is generally received a few days after month end through a direct charge to the customers’ accounts. The Corporation's performance obligation for these transactional-based services is generally satisfied, and related revenue recognized, at a point in time (i.e., as incurred). Payment is received shortly after services are rendered.
Brokerage and advisory fees(b)			Brokerage and advisory fees primarily consist of investment advisory, brokerage, retirement services, and annuities. The Corporation's performance obligation for investment advisory services and retirement services is generally satisfied, and the related revenue recognized, over the period in which the services are provided. The performance obligation for annuities is satisfied upon sale of the annuity, and therefore, the related revenue is primarily recognized at the time of sale. Payment for these services are typically received immediately or in advance of the service.

(a) Certain card-based fees are out-of-scope of Topic 606.

(b) Trust and asset management fees and brokerage and advisory fees are included in wealth management fees.

Note 18 Leases

The Corporation has operating leases for retail and corporate offices, land, and equipment. The Corporation also has a finance lease for retail and corporate offices.

These leases have original terms of 1 year or longer with remaining maturities up to 40 years, some of which include options to extend the lease term. An analysis of the lease options has been completed and any purchase options or optional periods that the Corporation is reasonably likely to extend have been included in the capitalization.

The discount rate used to capitalize the operating leases is the Corporation's FHLB borrowing rate on the date of lease commencement. When determining the rate to discount specific lease obligations, the repayment period and term are considered.

Operating and finance lease costs and cash flows resulting from these leases are presented below:


	Three Months Ended Sep 30,				Nine Months Ended Sep 30,
($ in Thousands)	2022		2021		2022		2021
Operating lease costs	$	1,637	$	2,367	$	5,361	$	6,850
Finance lease costs	23		17		96		76
Operating lease cash flows	1,880		2,858		6,614		8,598
Finance lease cash flows	22		21		103		101

The lease classifications on the consolidated balance sheets were as follows:


($ in Thousands)	Consolidated Balance Sheets Category	Sep 30, 2022		Dec 31, 2021
Operating lease right-of-use asset	Premises and equipment	$	26,970	$	28,299
Finance lease right-of-use asset	Other assets	477		143
Operating lease liability	Accrued expenses and other liabilities	29,897		31,345
Finance lease liability	Other long-term funding	490		163

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The lease payment obligations, weighted-average remaining lease term, and weighted-average original discount rate were as follows:


	Sep 30, 2022					Dec 31, 2021
($ in Thousands)	Lease payments		Weighted-average lease term (in years)	Weighted-average discount rate		Lease payments		Weighted-average lease term (in years)	Weighted-average discount rate
Operating leases
Retail and corporate offices	$	27,640	6.07	2.56	%	$	29,008	5.56	3.26	%
Land	4,963		7.53	3.13	%	5,551		8.29	3.12	%
Equipment	—		0.00	—	%	192		1.50	0.45	%
Total operating leases	$	32,604	6.28	2.65	%	$	34,751	5.94	3.22	%
Finance leases
Retail and corporate offices	$	508	5.50	1.32	%	$	112	1.25	1.32	%
Land	—		0.00	—	%	51		0.67	1.07	%
Total finance leases	$	508	5.50	1.32	%	$	164	1.07	1.24	%

Contractual lease payment obligations for each of the next five years and thereafter, in addition to a reconciliation to the Corporation’s lease liability, were as follows:


($ in Thousands)	Operating Leases		Finance Leases		Total Leases
Three months ending December 31, 2022	$	1,641	$	22	$	1,664
2023	6,224		92		6,316
2024	5,669		93		5,761
2025	4,548		93		4,641
2026	4,249		93		4,342
Beyond 2026	10,272		116		10,388
Total lease payments	$	32,604	$	508	$	33,111
Less: interest	2,707		18		2,724
Present value of lease payments	$	29,897	$	490	$	30,387

As of September 30, 2022 and December 31, 2021, additional operating leases, primarily retail and corporate offices, that had not yet commenced totaled $14 million and $13 million, respectively. The leases that had not yet commenced as of September 30, 2022 will commence between October 2022 and October 2023 with lease terms of 1 year to 6 years.

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ITEM 2.			Management's Discussion and Analysis of Financial Condition and Results of Operations

Special Note Regarding Forward-Looking Statements

This report contains statements that may constitute forward-looking statements within the meaning of the safe-harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995, such as statements other than historical facts contained or incorporated by reference into this report. These forward-looking statements include statements with respect to the Corporation’s financial condition, results of operations, plans, objectives, future performance and business, including statements preceded by, followed by or that include the words “believes,” “expects,” or “anticipates,” references to estimates or similar expressions. Future filings by the Corporation with the SEC, and future statements other than historical facts contained in written material, press releases and oral statements issued by, or on behalf of the Corporation may also constitute forward-looking statements.

All forward-looking statements contained in this report or which may be contained in future statements made for or on behalf of the Corporation are based upon information available at the time the statement is made and the Corporation assumes no obligation to update any forward-looking statements, except as required by federal securities law. Forward-looking statements are subject to significant risks and uncertainties, and the Corporation’s actual results may differ materially from the expected results discussed in such forward-looking statements. Factors that might cause actual results to differ from the results discussed in forward-looking statements include, but are not limited to, the risk factors in Item 1A, Risk Factors, in the Corporation’s Annual Report on Form 10-K for the year ended December 31, 2021, in the Corporation's Quarterly Report on Form 10-Q for the quarters ended June 30, 2022 and March 31, 2022, in Item 1A of Part II and as may be described from time to time in the Corporation’s subsequent SEC filings.

Overview

The following discussion and analysis is presented to assist in the understanding and evaluation of the Corporation’s financial condition and results of operations. It is intended to complement the unaudited consolidated financial statements, footnotes, and supplemental financial data appearing elsewhere in this Quarterly Report on Form 10-Q and should be read in conjunction therewith. Management continually evaluates strategic acquisition opportunities and various other strategic alternatives that could involve the sale or acquisition of branches or other assets, or the consolidation or creation of subsidiaries. Within the tables presented, certain columns and rows may not sum due to the use of rounded numbers for disclosure purposes.

Performance Summary

•Average loans of $25.5 billion increased $1.4 billion, or 6%, compared to the first nine months of 2021, with growth across nearly all loan categories.

•Average deposits of $28.6 billion increased $1.1 billion, or 4%, from the first nine months of 2021, driven primarily by increases in lower cost deposits partially offset by decreases in higher cost deposits.

•Net interest income of $668 million increased $129 million, or 24%, from the first nine months of 2021, and net interest margin was 2.76% compared to 2.38% for the first nine months of 2021. The increase in net interest income was driven by higher interest income as a result of growth in nearly all loan categories, along with higher investment balances resulting in more interest income. Both of these further benefited from the Federal Reserve increasing the federal funds target interest rate 300 bp during the first nine months of 2022. For 2022, the Corporation expects net interest income of more than $935 million, assuming a 75 bp rate increase in November and a 50 bp rate increase in December at the FOMC meeting.

•Provision for credit losses had a provision of $13 million, compared to a release of $82 million for the first nine months of 2021, due to loan growth within the portfolio.

•Noninterest income of $221 million decreased $30 million, or 12%, from the first nine months of 2021, primarily driven by the $26 million, or 61%, decrease in mortgage banking, net, resulting from decreased gains on sold loans due to lower mortgage settlements.

•Noninterest expense of $551 million increased $23 million, or 4%, from the first nine months of 2021, primarily driven by higher personnel expense due to additional staffing for implementation of recently announced initiatives and continued investment in our employees. For 2022, the Corporation expects noninterest expense will be approximately $740 million to $750 million.

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Table 1 Summary Results of Operations: Trends


	Nine months ended						Three months ended
($ in Thousands, except per share data)	Sep 30, 2022			Sep 30, 2021			Sep 30, 2022			Jun 30, 2022			Mar 31, 2022			Dec 31, 2021			Sep 30, 2021
Net income	$	257,360		$	274,117		$	96,275		$	86,824		$	74,262		$	76,877		$	88,809
Net income available to common equity	248,735			259,880			93,400			83,949			71,387			74,002			84,655
Earnings per common share - basic	1.66			1.70			0.62			0.56			0.48			0.49			0.56
Earnings per common share - diluted	1.65			1.69			0.62			0.56			0.47			0.49			0.56
Effective tax rate	20.94		%	20.37		%	21.37		%	21.20		%	20.07		%	16.48		%	20.61		%

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Income Statement Analysis

Net Interest Income

Table 2 Net Interest Income Analysis


	Nine Months Ended Sep 30,
	2022						2021
($ in Thousands)	Average Balance		Interest Income / Expense		Average Yield / Rate		Average Balance		Interest Income / Expense		Average Yield / Rate
Assets
Earning assets
Loans(a)(b)(c)
Commercial PPP lending	$	20,633	$	1,885	12.21	%	$	592,571	$	28,582	6.45	%
Asset-based lending (ABL) & equipment finance(d)	255,442		7,658		4.01	%	119,352		2,732		3.06	%
Commercial and business lending (excl PPP, ABL and equipment finance)	9,347,852		227,429		3.25	%	8,442,471		159,343		2.52	%
Commercial real estate lending	6,438,335		176,006		3.65	%	6,163,684		133,314		2.89	%
Total commercial	16,062,262		412,977		3.44	%	15,318,077		323,971		2.83	%
Residential mortgage	7,920,382		177,906		2.99	%	7,879,992		166,146		2.81	%
Auto finance	657,150		17,837		3.63	%	8,591		284		4.41	%
Other retail	888,241		35,900		5.40	%	939,858		33,664		4.78	%
Total loans	25,528,036		644,621		3.37	%	24,146,518		524,065		2.90	%
Investment securities
Taxable	4,385,580		54,009		1.64	%	3,152,994		24,600		1.04	%
Tax-exempt(a)	2,416,064		61,771		3.41	%	1,961,528		54,357		3.69	%
Other short-term investments	625,748		7,696		1.64	%	1,662,571		5,802		0.47	%
Investments and other	7,427,392		123,477		2.22	%	6,777,093		84,759		1.67	%
Total earning assets	32,955,428		$	768,098	3.11	%	30,923,610		$	608,824	2.63	%
Other assets, net	3,120,342						3,354,657
Total assets	$	36,075,770					$	34,278,268
Liabilities and Stockholders' Equity
Interest-bearing liabilities
Interest-bearing deposits
Savings	$	4,650,105	$	1,427	0.04	%	$	4,061,728	$	1,066	0.04	%
Interest-bearing demand	6,573,680		14,307		0.29	%	5,981,295		3,596		0.08	%
Money market	7,090,960		12,642		0.24	%	6,956,591		3,101		0.06	%
Network transaction deposits	795,059		6,460		1.09	%	960,308		880		0.12	%
Time deposits	1,266,116		2,754		0.29	%	1,533,466		6,302		0.55	%
Total interest-bearing deposits	20,375,920		37,590		0.25	%	19,493,387		14,945		0.10	%
Federal funds purchased and securities sold under agreements to repurchase	376,687		1,200		0.43	%	177,875		103		0.08	%
Commercial paper	23,106		2		0.01	%	51,330		21		0.05	%


FHLB advances	2,445,486		38,663		2.11	%	1,624,320		27,979		2.30	%
Long-term funding	249,759		8,182		4.37	%	461,390		14,323		4.14	%
Total short and long-term funding	3,095,039		48,047		2.07	%	2,314,915		42,425		2.45	%
Total interest-bearing liabilities	23,470,959		$	85,637	0.49	%	21,808,303		$	57,371	0.35	%
Noninterest-bearing demand deposits	8,189,067						7,961,119
Other liabilities	446,249						403,925
Stockholders’ equity	3,969,495						4,104,921
Total liabilities and stockholders’ equity	$	36,075,770					$	34,278,268
Interest rate spread					2.62	%					2.28	%
Net free funds					0.14	%					0.10	%
Fully tax-equivalent net interest income and net interest margin ("NIM")			$	682,461	2.76	%			$	551,453	2.38	%
Fully tax-equivalent adjustment			14,129						12,362
Net interest income			$	668,332					$	539,092

(a) The yield on tax-exempt loans and securities is computed on a fully tax-equivalent basis using a tax rate of 21% and is net of the effects of certain disallowed interest deductions.

(b) Nonaccrual loans and loans held for sale have been included in the average balances.
(c) Interest income includes amortization of net deferred loan origination costs and net accreted purchase loan discount.

(d) Periods prior to March 31, 2022 do not include equipment finance.

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Table 2 Net Interest Income Analysis


	Three Months Ended
	Sep 30, 2022						Jun 30, 2022						Sep 30, 2021
($ in Thousands)	Average Balance		Interest Income / Expense		Average Yield / Rate		Average Balance		Interest Income / Expense		Average Yield / Rate		Average Balance		Interest Income / Expense		Average Yield / Rate
Assets
Earning assets
Loans(a)(b)(c)
Commercial PPP lending	$	4,531	$	261	22.83	%	$	14,026	$	346	9.91	%	$	275,414	$	9,633	13.88	%
Asset-based lending (ABL) & equipment finance(d)	317,857		4,027		5.03	%	244,369		2,181		3.58	%	99,463		766		3.06	%
Commercial and business lending (excl PPP, ABL and equipment finance)	9,870,075		105,927		4.26	%	9,346,218		68,748		2.95	%	8,609,196		53,333		2.46	%
Commercial real estate lending	6,768,054		78,887		4.62	%	6,363,395		53,233		3.36	%	6,160,241		44,859		2.89	%
Total commercial	16,960,517		189,101		4.42	%	15,968,007		124,509		3.13	%	15,144,314		108,591		2.85	%
Residential mortgage	8,223,531		64,069		3.12	%	7,860,220		58,434		2.97	%	7,817,737		55,305		2.83	%
Auto finance	969,918		9,170		3.75	%	689,027		6,017		3.50	%	7,157		79		4.39	%
Other retail	901,738		13,868		6.13	%	880,910		11,370		5.17	%	914,749		11,041		4.81	%
Total loans	27,055,703		276,209		4.06	%	25,398,163		200,331		3.16	%	23,883,957		175,016		2.92	%
Investment securities
Taxable	4,344,409		19,221		1.77	%	4,448,811		18,317		1.65	%	3,258,587		8,745		1.07	%
Tax-exempt(a)	2,435,957		20,838		3.42	%	2,427,068		20,637		3.40	%	2,029,126		18,412		3.63	%
Other short-term investments	378,528		3,284		3.45	%	352,310		2,420		2.75	%	2,215,805		2,281		0.41	%
Investments and other	7,158,894		43,342		2.42	%	7,228,189		41,374		2.29	%	7,503,518		29,439		1.57	%
Total earning assets	34,214,597		$	319,551	3.72	%	32,626,351		$	241,705	2.97	%	31,387,475		$	204,455	2.59	%
Other assets, net	3,057,182						3,106,232						3,372,013
Total assets	$	37,271,779					$	35,732,583					$	34,759,489
Liabilities and Stockholders' equity
Interest-bearing liabilities
Interest-bearing deposits
Savings	$	4,735,285	$	516	0.04	%	$	4,682,783	$	530	0.05	%	$	4,248,493	$	377	0.04	%
Interest-bearing demand	6,587,404		10,306		0.62	%	6,413,077		2,977		0.19	%	6,344,504		1,361		0.09	%
Money market	7,328,165		9,474		0.51	%	6,910,505		2,203		0.13	%	7,011,075		1,019		0.06	%
Network transaction deposits	873,168		4,716		2.14	%	775,593		1,480		0.77	%	893,991		290		0.13	%
Time deposits	1,230,859		989		0.32	%	1,255,292		829		0.26	%	1,434,588		1,379		0.38	%
Total interest-bearing deposits	20,754,882		26,000		0.50	%	20,037,250		8,019		0.16	%	19,932,650		4,427		0.09	%
Federal funds purchased and securities sold under agreements to repurchase	380,674		756		0.79	%	454,519		406		0.36	%	238,735		48		0.08	%
Commercial paper	18,308		1		0.01	%	23,154		1		0.01	%	55,864		8		0.05	%


FHLB advances	3,283,328		20,792		2.51	%	2,423,771		9,689		1.60	%	1,620,790		8,962		2.19	%
Long-term funding	249,838		2,722		4.36	%	249,805		2,730		4.37	%	288,236		3,163		4.39	%
Total short and long-term funding	3,932,149		24,270		2.45	%	3,151,249		12,826		1.63	%	2,203,625		12,180		2.20	%
Total interest-bearing liabilities	24,687,031		$	50,270	0.81	%	23,188,499		$	20,845	0.36	%	22,136,276		$	16,607	0.30	%
Noninterest-bearing demand deposits	8,119,475						8,133,492						8,141,723
Other liabilities	480,672						473,478						401,077
Stockholders’ Equity	3,984,602						3,937,114						4,080,413
Total liabilities and stockholders’ equity	$	37,271,779					$	35,732,583					$	34,759,489
Interest rate spread					2.91	%					2.61	%					2.29	%
Net free funds					0.22	%					0.10	%					0.09	%
Fully tax-equivalent net interest income and net interest margin ("NIM")			$	269,281	3.13	%			$	220,860	2.71	%			$	187,848	2.38	%
Fully tax-equivalent adjustment			4,843						4,713						4,172
Net interest income			$	264,439					$	216,146					$	183,675

(a) The yield on tax-exempt loans and securities is computed on a fully tax-equivalent basis using a tax rate of 21% and is net of the effects of certain disallowed interest deductions.

(d) Periods prior to March 31, 2022 do not include equipment finance.

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Notable Contributions to the Change in Net Interest Income

•Fully tax-equivalent net interest income and net interest income were $131 million, or 24%, and $129 million, or 24%, higher than the first nine months of 2021, respectively. Average loans increased $1.4 billion, or 6%, while average investments and other short-term investments increased $650 million, or 10%, from the first nine months of 2021. The increase in net interest income was driven by higher interest income as a result of growth in nearly all loan categories, along with higher investment balances resulting in more interest income. Both of these further benefited from the Federal Reserve increasing the federal funds target interest rate 300 bp during the first nine months of 2022, which resulted in the yield on earning assets increasing by 48 bp. See sections Interest Rate Risk and Quantitative and Qualitative Disclosures about Market Risk for a discussion of interest rate risk and market risk.

• Average interest-bearing liabilities were up $1.7 billion, or 8%, compared to the first nine months of 2021. Interest-bearing deposits increased $883 million, or 5%, driven primarily by increases in low cost deposits partially offset by decreases in higher cost deposits. Average noninterest-bearing demand deposits were up $228 million, or 3%, versus the first nine months of 2021. FHLB advances increased $821 million, or 51%, to fund loan growth. The cost of interest-bearing liabilities increased 14 bp from the first nine months of 2021.

Provision for Credit Losses

The provision for credit losses is predominantly a function of the Corporation’s reserving methodology and judgments as to other qualitative and quantitative factors used to determine the appropriate level of the ACLL, which focuses on changes in the size and character of the loan portfolio, changes in levels of individually evaluated and other nonaccrual loans, historical losses and delinquencies in each portfolio category, the risk inherent in specific loans, concentrations of loans to specific borrowers or industries, existing economic conditions and economic forecasts, the fair value of underlying collateral, and other factors which could affect potential credit losses. The forecast the Corporation used for September 30, 2022 was the Moody's baseline forecast from August 2022, which was reviewed against the September 2022 forecast for material updates, over a 2 year reasonable and supportable period with straight-line reversion to historical losses over the second year of the period. See additional discussion under the sections titled Loans, Credit Risk, Nonperforming Assets, and Allowance for Credit Losses on Loans.

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Noninterest Income

Table 3 Noninterest Income


	Nine months ended						Three months ended										Changes vs
($ in Thousands, except as noted)	Sep 30, 2022		Sep 30, 2021		YTD % Change		Sep 30, 2022		Jun 30, 2022		Mar 31, 2022		Dec 31, 2021		Sep 30, 2021		Jun 30, 2022		Sep 30, 2021
Wealth management fees	$	63,719	$	67,229	(5)	%	$	19,984	$	21,332	$	22,404	$	22,625	$	22,110	(6)	%	(10)	%
Service charges and deposit account fees	48,392		47,366		2	%	15,029		16,506		16,856		17,039		16,962		(9)	%	(11)	%
Card-based fees	32,847		31,838		3	%	11,479		11,442		9,926		11,176		11,113		—	%	3	%
Other fee-based revenue	12,613		12,769		(1)	%	4,487		4,360		3,766		4,316		3,929		3	%	14	%
Total fee-based revenue	157,571		159,203		(1)	%	50,979		53,641		52,952		55,157		54,113		(5)	%	(6)	%
Capital markets, net	24,331		20,928		16	%	7,675		8,010		8,646		9,674		7,114		(4)	%	8	%
Mortgage servicing fees, net(a)	5,847		(1,230)		N/M		2,135		1,882		1,830		795		323		13	%	N/M
Gains and fair value adjustments on loans held for sale	1,046		31,709		(97)	%	625		(363)		785		3,290		8,341		N/M		(93)	%


Changes in mortgage servicing rights valuation, net of economic hedge(b)	9,742		12,231		(20)	%	(661)		4,627		5,776		3,955		1,993		N/M		N/M
Mortgage banking, net	16,635		42,710		(61)	%	2,098		6,145		8,391		8,041		10,657		(66)	%	(80)	%
Bank and corporate owned life insurance	8,004		8,551		(6)	%	1,827		4,106		2,071		4,704		2,760		(56)	%	(34)	%

Other	6,613		8,425		(22)	%	2,527		1,888		2,198		2,941		2,205		34	%	15	%
Subtotal	213,154		239,817		(11)	%	65,106		73,790		74,258		80,517		76,848		(12)	%	(15)	%
Asset gains, net	1,883		10,024		(81)	%	18		1,677		188		985		5,228		(99)	%	(100)	%
Investment securities gains (losses), net	5,676		(16)		N/M		5,664		(8)		21		—		—		N/M		N/M
Gain on the sale of branches, net(c)	—		1,038		(100)	%	—		—		—		—		—		N/M		N/M
Total noninterest income	$	220,713	$	250,862	(12)	%	$	70,788	$	75,458	$	74,467	$	81,502	$	82,076	(6)	%	(14)	%
Mortgage loans originated for sale during period	$	535,694	$	1,345,158	(60)	%	$	131,743	$	151,838	$	252,113	$	404,398	$	455,842	(13)	%	(71)	%
Mortgage loan settlements during period	619,940		1,348,006		(54)	%	119,530		204,321		296,089		426,785		463,425		(41)	%	(74)	%

Assets under management, at market value(d)							11,142		11,561		12,937		13,679		13,148		(4)	%	(15)	%

N/M = Not Meaningful
(a) Includes mortgage origination and servicing fees, net of MSRs amortization/decay.
(b) On January 1, 2022, the Corporation made the irrevocable election to account for MSRs at fair value. For all prior periods, MSRs were carried at LOCOM.
(c) Includes the deposit premium on the sale of branches net of miscellaneous costs to sell. See Note 2 Acquisitions and Dispositions of the notes to the consolidated financial statements for additional details on the branch sales.
(d) $ in millions. Excludes assets held in brokerage accounts.

Notable Contributions to the Change in Noninterest Income

•Mortgage banking, net decreased $26 million from the first nine months of 2021, driven by decreased gains on sold loans due to lower mortgage settlements offset partially by a decrease in MSRs expense.

•Asset gains, net decreased $8 million from the first nine months of 2021, due to higher gains from private equity investments during the first nine months of 2021 and a gain of $2 million from the sale of Whitnell on March 1, 2021.

•Investment securities gains (losses), net increased $6 million from the first nine months of 2021, primarily due to the sale of Visa Class B restricted shares acquired from First Staunton and the subsequent write up of the remaining shares still held.

•Capital markets, net increased $3 million from the first nine months of 2021 as a result of higher interest rate swap revenue and higher syndication fees.

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Noninterest Expense

Table 4 Noninterest Expense


	Nine months ended						Three months ended										Change vs
($ in Thousands)	Sep 30, 2022		Sep 30, 2021		YTD % Change		Sep 30, 2022		Jun 30, 2022		Mar 31, 2022		Dec 31, 2021		Sep 30, 2021		Jun 30, 2022		Sep 30, 2021
Personnel	$	335,720	$	318,900	5	%	$	118,243	$	112,666	$	104,811	$	107,787	$	107,880	5	%	10	%
Technology	65,401		60,902		7	%	22,694		21,223		21,485		20,787		19,927		7	%	14	%
Occupancy	43,948		46,649		(6)	%	13,717		14,151		16,080		16,863		15,814		(3)	%	(13)	%
Business development and advertising	17,388		15,522		12	%	6,778		5,655		4,954		5,627		6,156		20	%	10	%
Equipment	14,841		16,199		(8)	%	4,921		4,960		4,960		4,905		5,200		(1)	%	(5)	%
Legal and professional	14,118		17,495		(19)	%	4,159		4,873		5,087		4,428		4,304		(15)	%	(3)	%
Loan and foreclosure costs	5,121		6,508		(21)	%	1,631		1,476		2,014		1,636		1,616		11	%	1	%
FDIC assessment	16,300		13,350		22	%	5,800		5,400		5,100		4,800		5,000		7	%	16	%
Other intangible amortization	6,608		6,642		(1)	%	2,203		2,203		2,203		2,203		2,203		—	%	—	%

Other	31,057		25,547		22	%	15,645		8,815		6,597		13,173		9,793		77	%	60	%
Total noninterest expense	$	550,503	$	527,713	4	%	$	195,791	$	181,420	$	173,292	$	182,210	$	177,892	8	%	10	%
Average FTEs(a)	4,101		4,006		2	%	4,182		4,101		4,018		3,992		4,010		2	%	4	%

(a) Average FTEs without overtime

Notable Contributions to the Change in Noninterest Expense

•Personnel expense increased $17 million from the first nine months of 2021, largely as a result of increased FTEs due to hiring related to previously announced initiatives and continued investment in our employees.

•Other expense increased $6 million from the first nine months of 2021, driven by a $6 million contribution to the Corporation's charitable remainder trust to fund donations out of the foundation.

•Legal and professional expenses decreased $3 million from the first nine months of 2021 as a result of lower consulting costs associated with mortgage activity.

•FDIC expense increased $3 million from the first nine months of 2021 due to a decrease in liquid assets.

Income Taxes

The Corporation recognized income tax expense of $68 million for the nine months ended September 30, 2022, compared to income tax expense of $70 million for the nine months ended September 30, 2021. The Corporation's effective tax rate was 20.94% for the first nine months of 2022, compared to an effective tax rate of 20.37% for the first nine months of 2021. The decrease in income tax expense during the first nine months of 2022 was primarily driven by a decrease in income before tax. The increase in the effective tax rate was primarily driven by an increase in state tax expense. The Corporation expects a full year effective tax rate of approximately 21%, assuming no change in the statutory corporate tax rate.

Income tax expense recorded on the consolidated statements of income involves the interpretation and application of certain accounting pronouncements and federal and state tax laws and regulations. The Corporation is subject to examination by various taxing authorities. Examination by taxing authorities may impact the amount of tax expense and/or the reserve for uncertainty in income taxes if their interpretations differ from those of management, based on their judgments about information available to them at the time of their examinations.

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Balance Sheet Analysis

•At September 30, 2022, total assets were $38.0 billion, up $2.9 billion, or 8%, from December 31, 2021 and up $3.6 billion, or 10%, from September 30, 2021.

•Interest bearing deposits in other financial institutions were $112 million at September 30, 2022, down $570 million, or 84%, from December 31, 2021 and down $1.2 billion, or 91%, from September 30, 2021, due to the deployment of excess liquidity into investment securities purchases and loan growth.

•AFS investment securities, at fair value were $2.5 billion at September 30, 2022, down $1.8 billion, or 43%, from December 31, 2021, and down $1.4 billion, or 36%, from September 30, 2021. HTM investment securities, net, at amortized cost were $4.0 billion at September 30, 2022, up $1.7 billion, or 76%, from December 31, 2021 and up $2.0 billion, or 105%, from September 30, 2021, driven by a $1.6 billion transfer of AFS investment securities, at fair value, to HTM investment securities, net, at amortized cost during the first quarter of 2022. See Note 6 Investment Securities of the notes to consolidated financial statements for additional details.

•Loans of $27.8 billion at September 30, 2022 were up $3.6 billion, or 15%, from December 31, 2021 and up $4.2 billion, or 18%, from September 30, 2021. See Note 7 Loans of the notes to consolidated financial statements for additional details.

•At September 30, 2022, total deposits of $29.2 billion were up $732 million, or 3%, from December 31, 2021 and were up $1.3 billion, or 5%, from September 30, 2021. See section Deposits and Customer Funding for additional information on deposits.

•FHLB advances were $3.8 billion at September 30, 2022, up $2.2 billion, or 133%, from both December 31, 2021 and September 30, 2021, mainly due to loan growth. See Note 9 Short and Long-Term Funding of the notes to consolidated financial statements for additional details.

Loans

Table 5 Period End Loan Composition


	Sep 30, 2022				Jun 30, 2022				Mar 31, 2022				Dec 31, 2021				Sep 30, 2021
($ in Thousands)	Amount		% of Total		Amount		% of Total		Amount		% of Total		Amount		% of Total		Amount		% of Total
PPP	$	1,050	—	%	$	9,514	—	%	$	17,995	—	%	$	66,070	—	%	$	182,121	1	%
Asset-based lending & equipment finance(a)	380,830		1	%	263,044		1	%	231,040		1	%	178,027		1	%	111,027		—	%
Commercial and industrial	9,190,045		33	%	8,984,127		34	%	8,102,380		33	%	8,208,289		34	%	7,816,432		33	%
Commercial real estate — owner occupied	999,786		4	%	928,152		4	%	973,572		4	%	971,326		4	%	879,554		4	%
Commercial and business lending	10,571,711		38	%	10,184,836		38	%	9,324,986		38	%	9,423,711		39	%	8,989,133		38	%
Commercial real estate — investor	5,064,289		18	%	4,790,241		18	%	4,469,241		18	%	4,384,569		18	%	4,296,489		18	%
Real estate construction	1,835,159		7	%	1,775,648		7	%	1,760,076		7	%	1,808,976		7	%	1,834,871		8	%
Commercial real estate lending	6,899,449		25	%	6,565,889		25	%	6,229,317		25	%	6,193,545		26	%	6,131,360		26	%
Total commercial	17,471,159		63	%	16,750,726		63	%	15,554,303		63	%	15,617,256		64	%	15,120,493		64	%
Residential mortgage	8,314,902		30	%	8,002,943		30	%	7,609,343		31	%	7,567,310		31	%	7,590,895		32	%
Auto finance	1,117,136		4	%	847,969		3	%	497,523		2	%	143,045		1	%	6,739		—	%


Home equity	612,608		2	%	592,843		2	%	580,867		2	%	595,615		2	%	608,566		3	%
Other consumer	301,475		1	%	300,217		1	%	289,889		1	%	301,723		1	%	294,979		1	%
Total consumer	10,346,121		37	%	9,743,972		37	%	8,977,622		37	%	8,607,693		36	%	8,501,180		36	%
Total loans	$	27,817,280	100	%	$	26,494,698	100	%	$	24,531,926	100	%	$	24,224,949	100	%	$	23,621,673	100	%

(a) Periods prior to March 31, 2022 do not include equipment finance.

The Corporation has long-term guidelines relative to the proportion of Commercial and Business, CRE, and Consumer loan commitments within the overall loan portfolio, with each targeted to represent 30 to 40% of the overall loan portfolio. The targeted long-term guidelines were unchanged during 2021 and the first nine months of 2022. Furthermore, certain sub-asset classes within the respective portfolios are further defined and dollar limitations are placed on these sub-portfolios. These guidelines and limits are reviewed quarterly and approved annually by the Enterprise Risk Committee of the Corporation’s Board of Directors. These guidelines and limits are designed to create balance and diversification within the loan portfolios.

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The Corporation’s loan distribution and interest rate sensitivity as of September 30, 2022 are summarized in the following table:

Table 6 Loan Distribution and Interest Rate Sensitivity


($ in Thousands)	Within 1 Year(a)		1-5 Years		5-15 Years		Over 15 Years		Total		% of Total
PPP	$	62	$	988	$	—	$	—	$	1,050	—	%
Asset-based lending & equipment finance	175,462		134,233		71,135		—		380,830		1	%
Commercial and industrial	8,673,678		387,540		119,480		9,347		9,190,045		33	%
Commercial real estate — owner occupied	610,221		269,484		119,513		568		999,786		4	%
Commercial real estate — investor	4,656,409		257,711		150,170		—		5,064,289		18	%
Real estate construction	1,794,918		35,360		4,881		—		1,835,159		7	%
Commercial - adjustable	8,593,863		17,829		17,326		—		8,629,018		31	%
Commercial - fixed	7,316,888		1,067,486		447,852		9,915		8,842,141		32	%
Residential mortgage - adjustable	316,296		675,107		1,853,298		88,305		2,933,006		11	%
Residential mortgage - fixed	25,430		81,871		627,869		4,646,726		5,381,896		19	%
Auto finance	253		246,150		870,733		—		1,117,136		4	%
Home equity	554,178		16,388		34,671		7,370		612,608		2	%
Other consumer	210,529		38,303		34,265		18,379		301,475		1	%
Total loans	$	17,017,437	$	2,143,135	$	3,886,014	$	4,770,694	$	27,817,280	100	%
Fixed-rate	$	7,921,998	$	1,204,747	$	1,144,682	$	4,682,389	$	14,953,816	54	%
Floating or adjustable rate	9,095,439		938,388		2,741,332		88,305		12,863,464		46	%
Total	$	17,017,437	$	2,143,135	$	3,886,014	$	4,770,694	$	27,817,280	100	%

(a) Demand loans, past due loans, overdrafts, and credit cards are reported in the “Within 1 Year” category.

At September 30, 2022, $20.8 billion, or 75%, of the loans outstanding and $15.9 billion, or 91%, of the commercial loans outstanding were floating rate, adjustable rate, re-pricing within one year, or maturing within one year.

Credit Risk

An active credit risk management process is used for commercial loans to ensure that sound and consistent credit decisions are made. Credit risk is controlled by detailed underwriting procedures, comprehensive loan administration, and periodic review of borrowers’ outstanding loans and commitments. Borrower relationships are formally reviewed and graded on an ongoing basis for early identification of potential problems. Further analysis by customer, industry, and geographic location are performed to monitor trends, financial performance, and concentrations. See Note 7 Loans of the notes to consolidated financial statements for additional information on managing overall credit quality.

The loan portfolio is widely diversified by types of borrowers, industry groups, and market areas within the Corporation's branch footprint. Significant loan concentrations are considered to exist when there are amounts loaned to numerous borrowers engaged in similar activities that would cause them to be similarly impacted by economic or other conditions. At September 30, 2022, no significant concentrations existed in the Corporation’s portfolio in excess of 10% of total loan exposure.

Commercial and business lending: The commercial and business lending classification primarily includes commercial loans to large corporations, middle market companies, small businesses, and lease financing.

Table 7 Largest Commercial and Industrial Industry Group Exposures, by NAICS Subsector


September 30, 2022	NAICS Subsector	Outstanding Balance		Total Exposure		% of Total Loan Exposure
Real Estate(a)	531	$	1,799,566	$	3,319,689	8	%
Credit Intermediation and Related Activities(b)	522	1,000,071		2,477,339		6	%
Utilities(c)	221	2,107,765		2,471,723		6	%
Merchant Wholesalers, Durable Goods	423	423,488		805,326		2	%

(a) Includes REIT lines

(b) Includes mortgage warehouse lines

The remaining commercial and industrial portfolio is spread over a diverse range of industries, none of which exceed 2% of total loan exposure.

The CRE-owner occupied portfolio is spread over a diverse range of industries, none of which exceed 2% of total loan exposure.

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The credit risk related to commercial loans is largely influenced by general economic conditions and the resulting impact on a borrower’s operations or on the value of underlying collateral, if any.

Commercial real estate - investor: CRE-investor is comprised of loans secured by various non-owner occupied or investor income producing property types.

Table 8 Largest Commercial Real Estate Investor Property Type Exposures


September 30, 2022	% of Total Loan Exposure		% of Total Commercial Real Estate - Investor Loan Exposure
Multi-Family	4	%	33	%
Office	3	%	23	%
Industrial	3	%	23	%

The remaining CRE-investor portfolio is spread over various other property types, none of which exceed 2% of total loan exposure.

Credit risk is managed in a similar manner to commercial and business lending by employing sound underwriting guidelines, lending primarily to borrowers in local markets and businesses, periodically evaluating the underlying collateral, and formally reviewing the borrower’s financial soundness and relationship on an ongoing basis.

Real estate construction: Real estate construction loans are primarily short-term or interim loans that provide financing for the acquisition or development of commercial income properties, multi-family projects, or residential development, both single family and condominium. Real estate construction loans are made to developers and project managers who are generally well known to the Corporation and have prior successful project experience. The credit risk associated with real estate construction loans is generally confined to specific geographic areas but is also influenced by general economic conditions. The Corporation controls the credit risk on these types of loans by making loans in familiar markets to developers, reviewing the merits of individual projects, controlling loan structure, and monitoring project progress and construction advances.

Table 9 Largest Real Estate Construction Property Type Exposures


September 30, 2022	% of Total Loan Exposure		% of Total Real Estate Construction Loan Exposure
Multi-Family	4	%	37	%
Industrial	3	%	26	%
Single Family	3	%	21	%

The remaining real estate construction portfolio is spread over various other property types, none of which exceed 2% of total loan exposure.

The Corporation’s current lending standards for CRE and real estate construction lending are determined by property type and specifically address many criteria, including: maximum loan amounts, maximum LTV, requirements for pre-leasing and / or presales, minimum borrower equity, and maximum loan-to-cost. Currently, the maximum standard for LTV is 80%, with lower limits established for certain higher risk types, such as raw land that has a 50% LTV maximum. The Corporation’s LTV guidelines are in compliance with regulatory supervisory limits. In most cases, for real estate construction loans, the loan amounts include interest reserves, which are built into the loans and sized to fund loan payments through construction and lease up and / or sell out.

Residential mortgages: Residential mortgage loans are primarily first lien home mortgages with a maximum loan-to-collateral value without credit enhancement (e.g. private mortgage insurance) of 80%. The residential mortgage portfolio is focused primarily in the Corporation's three-state branch footprint, with approximately 87% of the outstanding loan balances in the Corporation's branch footprint at September 30, 2022. The rates on adjustable rate mortgages adjust based upon the movement in the underlying index which is then added to a margin and rounded to the nearest 0.125%. That result is then subjected to any periodic caps to produce the borrower's interest rate for the coming term. Most of the adjustable rate mortgages have an initial fixed rate term of 3, 5, 7 or 10 years.

The Corporation generally retains certain fixed-rate residential real estate mortgages in its loan portfolio, including retail and private banking jumbo mortgages and CRA-related mortgages. As part of management’s historical practice of originating and servicing residential mortgage loans, generally the Corporation’s 30 year, agency conforming, fixed-rate residential real estate mortgage loans have been sold in the secondary market with servicing rights retained. Subject to management’s analysis of the current interest rate environment, among other market factors, the Corporation may choose to retain mortgage loan production on its balance sheet. See section Loans for additional information on loans.

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The Corporation’s underwriting and risk-based pricing guidelines for residential mortgage loans include minimum borrower FICO score and maximum LTV of the property securing the loan. Residential mortgage products generally are underwritten using FHLMC and FNMA secondary marketing guidelines.

Home equity: Home equity consists of both home equity lines of credit and closed-end home equity loans. The Corporation’s credit risk monitoring guidelines for home equity are based on an ongoing review of loan delinquency status, as well as a quarterly review of FICO score deterioration and property devaluation. The Corporation does not routinely obtain appraisals on performing loans to update LTV ratios after origination; however, the Corporation monitors the local housing markets by reviewing the various home price indices and incorporates the impact of the changing market conditions in its ongoing credit monitoring process. For junior lien home equity loans, the Corporation is unable to track the performance of the first lien loan if it does not own or service the first lien loan. However, the Corporation obtains a refreshed FICO score on a quarterly basis and monitors this as part of its assessment of the home equity portfolio.

The Corporation’s underwriting and risk-based pricing guidelines for home equity lines of credit and loans consist of a combination of both borrower FICO score and the original cumulative LTV against the property securing the loan. Currently, the Corporation's policy sets the maximum acceptable LTV at 90%. The Corporation's current home equity line of credit offering is priced based on floating rate indices and generally allows 10 years of interest-only payments followed by a 20-year amortization of the outstanding balance. The loans in the Corporation's portfolio generally have an original term of 20 years with principal and interest payments required. See section Loans for additional information on loans.

Indirect Auto: The Corporation currently purchases retail auto sales contracts via a network of approved auto dealerships across 13 states throughout the Northeast, Mid-Atlantic and Midwestern United States. The auto dealerships finance the sale of automobiles as the initial lender and then assign the contracts to the Corporation pursuant to dealer agreements. The Corporation’s underwriting and pricing guidelines are based on a dual risk grade derived from a combination of FICO auto score and proprietary internal custom score. Minimum grade and FICO score standards ensure the credit risk is appropriately managed to the Corporation’s risk appetite. Further, the grade influences loan-specific parameters such as vehicle age, term, LTV, loan amount, mileage, payment and debt service thresholds, and pricing. Maximum loan terms offered are 84 months on select grades with vehicle age, mileage, and other limitations in place to qualify. The program is designed to capture primarily prime and super prime contracts. Over time, the Corporation expects roughly 60% of originations to be secured by used vehicles.

Other consumer: Other consumer consists of student loans, short-term personal installment loans, and credit cards. The Corporation had $85 million and $101 million of student loans at September 30, 2022 and December 31, 2021, respectively, the majority of which are government guaranteed. Currently, there is federal student loan relief in effect through December 31, 2022. Credit risk for non-government guaranteed student loans, short-term personal installment loans, and credit cards is influenced by general economic conditions, the characteristics of individual borrowers, and the nature of the loan collateral. Risks of loss are generally on smaller average balances per loan spread over many borrowers. Once charged off, there is usually less opportunity for recovery of these smaller consumer loans. Credit risk is primarily controlled by reviewing the creditworthiness of the borrowers, monitoring payment histories, and taking appropriate collateral and guarantee positions. The student loan portfolio is in run-off and no new student loans are being originated.

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Nonperforming Assets

Management is committed to a proactive nonaccrual and problem loan identification philosophy. This philosophy is implemented through the ongoing monitoring and review of all pools of risk in the loan portfolio to ensure that problem loans are identified quickly and the risk of loss is minimized. Table 10 provides detailed information regarding NPAs, which include nonaccrual loans, OREO, and repossessed assets:

Table 10 Nonperforming Assets


($ in Thousands)	Sep 30, 2022			Jun 30, 2022			Mar 31, 2022			Dec 31, 2021			Sep 30, 2021
Nonperforming assets
PPP	$	—		$	—		$	41		$	46		$	—

Commercial and industrial	15,576			843			225			6,233			8,497
Commercial real estate — owner occupied	—			—			—			—			7
Commercial and business lending	15,576			843			266			6,279			8,504
Commercial real estate — investor	37,479			46,823			80,886			60,677			61,504
Real estate construction	141			604			609			177			247
Commercial real estate lending	37,620			47,427			81,495			60,855			61,751
Total commercial	53,196			48,270			81,761			67,134			70,256
Residential mortgage	55,485			52,840			53,827			55,362			56,678
Auto finance	302			53			49			52			67
Home equity	7,325			7,100			7,490			7,726			7,838
Other consumer	98			83			95			170			222
Total consumer	63,210			60,075			61,460			63,309			64,806
Total nonaccrual loans	116,406			108,345			143,221			130,443			135,062
Commercial real estate owned	325			957			861			984			1,005
Residential real estate owned	2,560			3,042			2,209			3,666			2,126
Bank properties real estate owned(a)	13,487			13,880			15,123			24,969			30,724
OREO	16,373			17,879			18,194			29,619			33,855

Repossessed assets	299			102			—			—			—
Total nonperforming assets	$	133,078		$	126,327		$	161,414		$	160,062		$	168,917








Accruing loans past due 90 days or more
Commercial	$	121		$	133		$	125		$	151		$	98
Consumer	1,297			1,422			1,470			1,111			932
Total accruing loans past due 90 days or more	$	1,417		$	1,555		$	1,595		$	1,263		$	1,029
Restructured loans (accruing)
Commercial	$	16,097		$	15,425		$	10,127		$	22,763		$	25,582
Consumer	19,036			18,828			19,876			19,768			18,917
Total restructured loans (accruing)	$	35,132		$	34,253		$	30,003		$	42,530		$	44,499
Nonaccrual restructured loans (included in nonaccrual loans)	$	21,650		$	22,172		$	19,352		$	17,426		$	15,226
Ratios
Nonaccrual loans to total loans	0.42		%	0.41		%	0.58		%	0.54		%	0.57		%
NPAs to total loans plus OREO and repossessed assets	0.48		%	0.48		%	0.66		%	0.66		%	0.71		%
NPAs to total assets	0.35		%	0.34		%	0.46		%	0.46		%	0.49		%

Allowance for credit losses on loans to nonaccrual loans	285.79		%	293.09		%	221.92		%	245.16		%	246.02		%

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Table 10 Nonperforming Assets (continued)


($ in Thousands)	Sep 30, 2022		Jun 30, 2022		Mar 31, 2022		Dec 31, 2021		Sep 30, 2021
Accruing loans 30-89 days past due
PPP	$	252	$	1,475	$	1	$	83	$	568

Commercial and industrial	1,609		167		1,085		632		1,229
Commercial real estate — owner occupied	—		—		198		163		30
Commercial and business lending	1,861		1,642		1,284		878		1,827
Commercial real estate — investor	—		5,484		—		616		17,021
Real estate construction	43		—		—		1,620		—
Commercial real estate lending	43		5,484		—		2,236		17,021
Total commercial	1,904		7,126		1,284		3,114		18,848
Residential mortgage	6,517		5,315		4,957		6,169		7,095
Auto finance	6,206		2,906		949		11		10


Home equity	4,234		2,961		4,207		3,711		2,931
Other consumer	1,592		1,365		1,232		2,307		1,272
Total consumer	18,549		12,547		11,345		12,198		11,308
Total accruing loans 30-89 days past due	$	20,452	$	19,673	$	12,629	$	15,312	$	30,156








Potential problem loans
PPP(b)	$	40	$	47	$	54	$	2,000	$	4,160
Asset-based lending & equipment finance(c)	19,266		19,813		19,057		17,697		—
Commercial and industrial	89,250		84,785		93,396		120,561		124,990
Commercial real estate — owner occupied	28,287		38,628		24,005		26,723		21,241
Commercial and business lending	136,843		143,273		136,513		166,981		150,391
Commercial real estate — investor	117,982		132,635		130,792		106,138		78,962
Real estate construction	—		82		200		21,408		19,187
Commercial real estate lending	117,982		132,717		130,992		127,546		98,150
Total commercial	254,825		275,990		267,505		294,527		248,541
Residential mortgage	2,845		3,297		3,032		2,214		2,374

Home equity	185		188		156		165		171

Total consumer	3,030		3,486		3,188		2,379		2,546
Total potential problem loans	$	257,855	$	279,475	$	270,693	$	296,905	$	251,087

(a) Primarily closed branches and other bank operated real estate facilities, pending disposition.

Nonaccrual loans: Nonaccrual loans are considered to be one indicator of potential future loan losses. See Note 7 Loans of the notes to consolidated financial statements for additional nonaccrual loan disclosures. See also sections Credit Risk and Allowance for Credit Losses on Loans.

Accruing loans past due 90 days or more: Loans past due 90 days or more but still accruing interest are classified as such where the underlying loans are both well secured (the collateral value is sufficient to cover principal and accrued interest) and are in the process of collection.

Restructured loans: Loans are considered restructured loans if concessions have been granted to borrowers that are experiencing financial difficulty. See also Note 7 Loans of the notes to consolidated financial statements for additional restructured loans disclosures.

Potential problem loans: The level of potential problem loans is another predominant factor in determining the relative level of risk in the loan portfolio and in determining the appropriate level of the ACLL. Potential problem loans are generally defined by management to include loans rated as substandard by management that are collectively evaluated (not nonaccrual loans or accruing TDRs); however, there are circumstances present to create doubt as to the ability of the borrower to comply with present repayment terms. The decision of management to include performing loans in potential problem loans does not necessarily mean that the Corporation expects losses to occur, but that management recognizes a higher degree of risk associated with these loans.

OREO: Management actively seeks to ensure OREO properties held are monitored to minimize the Corporation’s risk of loss.

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Allowance for Credit Losses on Loans

Credit risks within the loan portfolio are inherently different for each loan type. Credit risk is controlled and monitored through the use of lending standards, a thorough review of potential borrowers, and ongoing review of loan payment performance. Active asset quality administration, including early problem loan identification and timely resolution of problems, aids in the management of credit risk and the minimization of loan losses. Credit risk management for each loan type is discussed in the section entitled Credit Risk. See Note 7 Loans of the notes to consolidated financial statements for additional disclosures on the ACLL.

To assess the appropriateness of the ACLL, the Corporation focuses on the evaluation of many factors, including but not limited to: evaluation of facts and issues related to specific loans, management’s ongoing review and grading of the loan portfolio, credit report refreshes, consideration of historical loan loss and delinquency experience on each portfolio category, trends in past due and nonaccrual loans, the level of potential problem loans, the risk characteristics of the various classifications of loan segments, changes in the size and character of the loan portfolio, concentrations of loans to specific borrowers or industries, existing economic conditions and economic forecasts, the fair value of underlying collateral, funding assumptions on lines, and other qualitative and quantitative factors which could affect potential credit losses. The Corporation utilized the Moody's baseline forecast for August 2022 which was compared to 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 historical losses over the second year of the period. Assessing these factors involves significant judgment. Because each of the criteria used is subject to change, the ACLL is not necessarily indicative of the trend of future credit losses on loans in any particular segment. Therefore, management considers the ACLL a critical accounting estimate, see section Critical Accounting Estimates for additional information on the ACLL. See section Nonperforming Assets for a detailed discussion on asset quality. See also Note 7 Loans of the notes to consolidated financial statements for additional ACLL disclosures. Table 5 provides information on loan growth and period end loan composition, Table 10 provides additional information regarding NPAs, and Table 11 and Table 12 provide additional information regarding activity in the ACLL.

The loan segmentation used in calculating the ACLL at September 30, 2022 and December 31, 2021 was generally comparable. The methodology to calculate the ACLL consists of the following components: a valuation allowance estimate is established for commercial and consumer loans determined by the Corporation to be individually evaluated, using discounted cash flows, estimated fair value of underlying collateral, and/or other data available. Loans are segmented for criticized loan pools by loan type as well as for non-criticized loan pools by loan type, primarily based on risk rating rates after considering loan type, historical loss and delinquency experience, credit quality, and industry classifications. Loans that have been criticized are considered to have a higher risk of default than non-criticized loans, as circumstances were present to support the lower loan grade, warranting higher loss factors. Additionally, management allocates ACLL to absorb losses that may not be provided for by the other components due to qualitative factors evaluated by management, such as limitations within the credit risk grading process, known current economic or business conditions that may not yet show in trends, industry or other concentrations with current issues that impose higher inherent risks than are reflected in the loss factors, and other relevant considerations. The total allowance is available to absorb losses from any segment of the loan portfolio.

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Table 11 Allowance for Credit Losses on Loans


	YTD				Quarter Ended
($ in Thousands)	Sep 30, 2022		Sep 30, 2021		Sep 30, 2022			Jun 30, 2022			Mar 31, 2022			Dec 31, 2021			Sep 30, 2021
Allowance for Loan Losses
Balance at beginning of period	$	280,015	$	383,702	$	280,771		$	279,058		$	280,015		$	290,997		$	318,811


Provision for loan losses	13,000		(75,500)		14,000			2,000			(3,000)			(4,500)			(20,000)


Charge offs	(7,165)		(31,784)		(3,346)			(1,791)			(2,028)			(8,869)			(10,929)
Recoveries	7,054		14,579		1,478			1,504			4,072			2,387			3,115
Net (charge offs) recoveries	(111)		(17,205)		(1,867)			(287)			2,044			(6,482)			(7,814)
Balance at end of period	$	292,904	$	290,997	$	292,904		$	280,771		$	279,058		$	280,015		$	290,997
Allowance for Unfunded Commitments
Balance at beginning of period	$	39,776	$	47,776	$	36,776		$	38,776		$	39,776		$	41,276		$	45,276


Provision for unfunded commitments	—		(6,500)		3,000			(2,000)			(1,000)			(1,500)			(4,000)

Balance at end of period	$	39,776	$	41,276	$	39,776		$	36,776		$	38,776		$	39,776		$	41,276
Allowance for credit losses on loans	$	332,680	$	332,273	$	332,680		$	317,547		$	317,835		$	319,791		$	332,273
Provision for credit losses on loans	13,000		(82,000)		17,000			—			(4,000)			(6,000)			(24,000)
Net loan (charge offs) recoveries

Asset-based lending & equipment finance(a)	$	—	$	385	$	—		$	—		$	—		$	27		$	91
Commercial and industrial	512		(6,743)		(897)			(444)			1,854			(6,669)			(9,149)
Commercial real estate — owner occupied	10		115		3			4			3			4			106
Commercial and business lending	523		(6,242)		(894)			(440)			1,857			(6,638)			(8,951)
Commercial real estate — investor	—		(11,293)		—			—			—			109			181
Real estate construction	43		69		9			2			32			52			18
Commercial real estate lending	43		(11,224)		9			2			32			162			199
Total commercial	565		(17,467)		(885)			(439)			1,889			(6,476)			(8,752)
Residential mortgage	465		(32)		(42)			220			288			(6)			300
Auto finance	(175)		20		(165)			(14)			4			(11)			8


Home equity	675		1,640		(101)			461			315			546			959
Other consumer	(1,642)		(1,366)		(675)			(516)			(451)			(534)			(329)
Total consumer	(676)		262		(983)			151			155			(6)			938
Total net (charge offs) recoveries	$	(111)	$	(17,205)	$	(1,867)		$	(287)		$	2,044		$	(6,482)		$	(7,814)








Ratios

Allowance for credit losses on loans to total loans					1.20		%	1.20		%	1.30		%	1.32		%	1.41		%

Allowance for credit losses on loans to net charge offs (annualized)	N/M		14.4x		44.9x			N/M			N/M			12.4x			10.7x
Loan Evaluation Method for ACLL
Individually evaluated for impairment					$	15,739		$	10,068		$	13,625		$	15,194		$	19,913
Collectively evaluated for impairment					316,942			307,480			304,210			304,597			312,359
Total ACLL					$	332,680		$	317,547		$	317,835		$	319,791		$	332,273
Loan Balance
Individually evaluated for impairment					$	87,712		$	81,457		$	110,445		$	115,643		$	131,484
Collectively evaluated for impairment					27,729,568			26,413,241			24,421,481			24,109,306			23,490,189
Total loan balance					$	27,817,280		$	26,494,698		$	24,531,926		$	24,224,949		$	23,621,673

N/M = Not Meaningful

(a) Periods prior to March 31, 2022 do not include equipment finance.

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Table 12 Annualized Net (Charge Offs) Recoveries(a)


	YTD		Quarter Ended
(In basis points)	Sep 30, 2022	Sep 30, 2021	Sep 30, 2022	Jun 30, 2022	Mar 31, 2022	Dec 31, 2021	Sep 30, 2021
Net loan (charge offs) recoveries

Asset-based lending & equipment finance(b)	—	43	—	—	—	9	36
Commercial and industrial	1	(12)	(4)	(2)	10	(34)	(47)
Commercial real estate — owner occupied	—	2	—	—	—	—	5
Commercial and business lending	1	(9)	(3)	(2)	8	(29)	(40)
Commercial real estate — investor	—	(35)	—	—	—	1	2
Real estate construction	—	—	—	—	1	1	—
Commercial real estate lending	—	(24)	—	—	—	1	1
Total commercial	—	(15)	(2)	(1)	5	(17)	(23)
Residential mortgage	1	—	—	1	2	—	2
Auto finance	(4)	31	(7)	(1)	1	(9)	43
Home equity	15	34	(7)	32	22	36	61
Other consumer	(74)	(62)	(89)	(70)	(62)	(71)	(44)
Total consumer	(1)	—	(4)	1	1	—	4
Total net (charge offs) recoveries	—	(10)	(3)	—	3	(11)	(13)

(a) Annualized ratio of net charge offs to average loans by loan type.

(b) Periods prior to March 31, 2022 do not include equipment finance.

Notable Contributions to the Change in the Allowance for Credit Losses on Loans

•Potential problem loans decreased $39 million, or 13%, from December 31, 2021, and increased $7 million, or 3%, from September 30, 2021. The decrease from December 31, 2021 was primarily driven by decreases in commercial and industrial and real estate construction lending, partially offset by an increase in CRE-investor lending. The increase from September 30, 2021 was primarily driven by increases in CRE-investor and asset-based lending and equipment finance, partially offset by decreases in commercial and industrial and real estate construction lending. See Table 10 for additional information regarding potential problem loans.

•Total nonaccrual loans decreased $14 million, or 11%, from December 31, 2021, and decreased $19 million, or 14%, from September 30, 2021. The decreases from both December 31, 2021 and September 30, 2021 were primarily due to a decrease in CRE-investor lending, partially offset by an increase in commercial and industrial lending. See Note 7 Loans of the notes to consolidated financial statements and Table 10 for additional disclosures on the changes in asset quality.

•YTD net charge offs decreased $17 million from September 30, 2021, primarily driven by no charge offs in the CRE-investor portfolio in the current period, combined with a net recovery within the commercial portfolio. See Table 11 and Table 12 for additional information on the activity in the ACLL.

Management believes the level of ACLL to be appropriate at September 30, 2022.

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Deposits and Customer Funding

The following table summarizes the composition of our deposits and customer funding:

Table 13 Period End Deposit and Customer Funding Composition


	Sep 30, 2022				Jun 30, 2022				Mar 31, 2022				Dec 31, 2021				Sep 30, 2021
($ in Thousands)	Amount		% of Total		Amount		% of Total		Amount		% of Total		Amount		% of Total		Amount		% of Total
Noninterest-bearing demand	$	8,224,579	28	%	$	8,085,702	28	%	$	8,315,699	29	%	$	8,504,077	30	%	$	8,170,105	29	%
Savings	4,708,720		16	%	4,708,156		16	%	4,661,232		16	%	4,410,198		15	%	4,278,453		15	%
Interest-bearing demand	7,122,218		24	%	6,789,722		24	%	6,616,767		23	%	7,019,782		25	%	6,407,844		23	%
Money market	7,909,232		27	%	7,769,415		27	%	7,522,797		26	%	7,185,111		25	%	7,583,978		27	%
Time deposits	1,233,833		4	%	1,223,581		4	%	1,288,913		5	%	1,347,262		5	%	1,410,886		5	%

Total deposits	$	29,198,581	100	%	$	28,576,577	100	%	$	28,405,409	100	%	$	28,466,430	100	%	$	27,851,266	100	%
Customer funding(a)	283,856				296,440				299,301				354,142				322,081
Total deposits and customer funding	$	29,482,437			$	28,873,017			$	28,704,710			$	28,820,572			$	28,173,348
Network transaction deposits(b)	$	864,086			$	891,902			$	762,680			$	766,965			$	929,174

Net deposits and customer funding (total deposits and customer funding, excluding network transaction deposits)	28,618,351				27,981,114				27,942,029				28,053,607				27,244,174

Time deposits of more than $250,000	222,318				180,705				209,208				215,100				223,075

(a) Securities sold under agreement to repurchase and commercial paper.
(b) Included above in interest-bearing demand and money market.

•Total deposits, which are the Corporation's largest source of funds, increased $732 million, or 3%, from December 31, 2021, and increased $1.3 billion, or 5%, from September 30, 2021.

Liquidity

The objective of liquidity risk management is to ensure that the Corporation has the ability to generate sufficient cash or cash equivalents in a timely and cost effective manner to satisfy the cash flow requirements of depositors and borrowers and to meet its other commitments as they become due. The Corporation’s liquidity risk management process is designed to identify, measure, and manage the Corporation’s funding and liquidity risk to meet its daily funding needs in the ordinary course of business, as well as to address expected and unexpected changes in its funding requirements. The Corporation engages in various activities to manage its liquidity risk, including diversifying its funding sources, stress testing, and holding readily-marketable assets which can be used as a source of liquidity, if needed.

The Corporation performs dynamic scenario analysis in accordance with industry best practices. Measures have been established to ensure the Corporation has sufficient high quality short-term liquidity to meet cash flow requirements under stressed scenarios. In addition, the Corporation also reviews static measures such as deposit funding as a percentage of total assets and liquid asset levels. Strong capital ratios, credit quality, and core earnings are also essential to maintaining cost effective access to wholesale funding markets. At September 30, 2022, the Corporation was in compliance with its internal liquidity objectives and had sufficient asset-based liquidity to meet its obligations under a stressed scenario.

The Corporation maintains diverse and readily available liquidity sources, including:

•Investment securities, which are an important tool to the Corporation’s liquidity objective and can be pledged or sold to enhance liquidity, if necessary. See Note 6 Investment Securities of the notes to consolidated financial statements for additional information on the Corporation's investment securities portfolio, including pledged investment securities.

•Pledgeable loan collateral, which is eligible collateral with both the Federal Reserve Bank and the FHLB under established lines of credit. Based on the amount of collateral pledged, the FHLB established a collateral value from which the Bank may draw advances, and issue letters of credit in favor of public fund depositors, against the collateral. As of September 30, 2022, the Bank had $1.4 billion available for future funding. The Federal Reserve Bank also establishes a collateral value of assets to support borrowings from the discount window. As of September 30, 2022, the Bank had $566 million available for discount window borrowings.

•A $200 million Parent Company commercial paper program, of which $8 million was outstanding as of September 30, 2022.

•Dividends and service fees from subsidiaries, as well as the proceeds from issuance of capital, which are also funding sources for the Parent Company.

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•Acquisition related equity issuances by the Parent Company; the Corporation has filed a shelf registration statement with the SEC under which the Parent Company may, from time to time, offer shares of the Corporation’s common stock in connection with acquisitions of businesses, assets, or securities of other companies.

•Other issuances by the Parent Company; the Corporation maintains on file with the SEC a universal shelf registration statement, under which the Parent Company may offer the following securities, either separately or in units: debt securities, preferred stock, depositary shares, common stock, and warrants.

•Bank issuances; the Bank may also issue institutional CDs, network transaction deposits, and brokered CDs.

•Global Bank Note Program issuances; the Bank has implemented a program pursuant to which it may from time to time offer up to $2.0 billion aggregate principal amount of its unsecured senior and subordinated notes.

Credit ratings relate to the Corporation’s ability to issue debt securities and the cost to borrow money, and should not be viewed as an indication of future stock performance or a recommendation to buy, sell, or hold securities. Adverse changes in these factors could result in a negative change in credit ratings and impact not only the ability to raise funds in the capital markets but also the cost of these funds. The credit ratings of the Parent Company and the Bank at September 30, 2022 are displayed below:

Table 14 Credit Ratings


	Moody’s	S&P
Bank short-term deposits	P-1	-
Bank long-term deposits/issuer	A1	BBB+
Corporation commercial paper	P-2	-
Corporation long-term senior debt/issuer	Baa1	BBB
Outlook	Negative	Stable

For the nine months ended September 30, 2022, net cash provided by operating and financing activities was $722 million and $2.7 billion, respectively, while net cash used in investing activities was $4.0 billion, for a net decrease in cash and cash equivalents of $523 million since year-end 2021. At September 30, 2022, assets of $38.0 billion increased $2.9 billion, or 8%, from year-end 2021, primarily due to loan growth. On the funding side, deposits of $29.2 billion increased $732 million, or 3%, from year-end 2021 and FHLB advances increased $2.2 billion, or 133%, to fund loan growth.

For the nine months ended September 30, 2021, net cash provided by operating activities and financing activities was $364 million and $768 million, respectively, while net cash used in investing activities was $162 million, for a net increase in cash and cash equivalents of $970 million from year-end 2020. At September 30, 2021, assets of $34.4 billion increased $1.0 billion, or 3%, from year-end 2020, primarily driven by a $983 million increase in interest-bearing deposits in other financial institutions and an increase of $808 million, or 26%, in AFS investment securities, at fair value, partially offset by a $830 million, or 3%, decrease in loans. On the funding side, deposits of $27.9 billion increased $1.4 billion, or 5%, from year-end 2020 related to deposit inflows from government stimulus programs and changing customer savings habits.

Quantitative and Qualitative Disclosures about Market Risk

Market risk and interest rate risk are managed centrally. Market risk is the potential for loss arising from adverse changes in the fair value of fixed-income securities, equity securities, other earning assets and derivative financial instruments as a result of changes in interest rates or other factors. Interest rate risk is the potential for reduced net interest income resulting from adverse changes in the level of interest rates. As a financial institution that engages in transactions involving an array of financial products, the Corporation is exposed to both market risk and interest rate risk. In addition to market risk, interest rate risk is measured and managed through a number of methods. The Corporation uses financial modeling simulation techniques that measure the sensitivity of future earnings due to changing rate environments to measure interest rate risk.

Policies established by the Corporation’s ALCO and approved by the Board of Directors are intended to limit these risks. The Board has delegated day-to-day responsibility for managing market and interest rate risk to ALCO. The primary objectives of market risk management are to minimize any adverse effect that changes in market risk factors may have on net interest income and to offset the risk of price changes for certain assets recorded at fair value.

Interest Rate Risk

The primary goal of interest rate risk management is to control exposure to interest rate risk within policy limits approved by the Board of Directors. These limits and guidelines reflect the Corporation's risk appetite for interest rate risk over both short-term and long-term horizons. No interest rate limit breaches occurred during the first nine months of 2022.

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The major sources of the Corporation's non-trading interest rate risk are timing differences in the maturity and re-pricing characteristics of assets and liabilities, changes in the shape of the yield curve, and the potential exercise of explicit or embedded options. We measure these risks and their impact by identifying and quantifying exposures through the use of sophisticated simulation and valuation models which are employed by management to understand NII at risk, interest rate sensitive EAR, and MVE at risk. The Corporation’s interest rate risk profile is such that a higher or steeper yield curve adds to income while a flatter yield curve is relatively neutral, and a lower or inverted yield curve generally has a negative impact on earnings. The Corporation's EAR profile is asset sensitive at September 30, 2022.

For further discussion of the Corporation's interest rate risk and corresponding key assumptions, see the Interest Rate Risk section of Management’s Discussion and Analysis of Financial Condition and Results of Operations included in the Corporation’s 2021 Annual Report on Form 10-K.

The sensitivity analysis included below is measured as a percentage change in NII and EAR due to gradual moves in benchmark interest rates from a baseline scenario over 12 months. We evaluate the sensitivity using: 1) a dynamic forecast incorporating expected growth in the balance sheet, and 2) a static forecast where the current balance sheet is held constant.

While a gradual shift in interest rates was used in this analysis to provide an estimate of exposure under a probable scenario, an instantaneous shift in interest rates would have a more significant impact.

Table 15 Estimated % Change in Rate Sensitive Earnings at Risk Over 12 Months


	Sep 30, 2022				Dec 31, 2021
	Dynamic Forecast		Static Forecast		Dynamic Forecast		Static Forecast
Gradual Rate Change
100 bp increase in interest rates	4.6	%	3.4	%	5.0	%	5.4	%
200 bp increase in interest rates	9.2	%	6.8	%	10.6	%	11.7	%

At September 30, 2022, the MVE profile indicates a decrease in net balance sheet value due to instantaneous upward changes in rates.

Table 16 Market Value of Equity Sensitivity


	Sep 30, 2022		Dec 31, 2021
Instantaneous Rate Change
100 bp increase in interest rates	(4.2)	%	(1.8)	%
200 bp increase in interest rates	(8.2)	%	(3.7)	%

Since MVE measures the discounted present value of cash flows over the estimated lives of instruments, the change in MVE does not directly correlate to the degree that earnings would be impacted over a shorter time horizon (i.e., the current year). Further, MVE does not take into account factors such as future balance sheet growth, changes in product mix, changes in yield curve relationships, and changes in product spreads that could mitigate the adverse impact of changes in interest rates.

The above NII, EAR, and MVE measures do not include all actions that management may undertake to manage this risk in response to anticipated changes in interest rates.

In 2014, the Financial Stability Oversight Council and Financial Stability Board raised concerns about the reliability and robustness of LIBOR and called for the development of alternative interest rate benchmarks. The ARRC, through authority from the Federal Reserve, has selected SOFR as the alternative rate and developed a paced transition plan which addresses the risk that LIBOR may not exist beyond June 2023.

As part of the Corporation's efforts to limit exposure to LIBOR based loans, performing borrowers can modify or refinance their residential mortgage loans to a fixed interest rate or an adjustable rate mortgage tied to the one-year treasury adjusted to a constant maturity of one year with an appropriate margin. This provides the Bank and borrower with greater certainty around the loan structure. The Bank has not booked a LIBOR adjustable rate mortgage since the first quarter of 2020.

Additionally, the Corporation has been monitoring its volume of commercial credits and derivatives tied to LIBOR. In 2021, the Corporation began prioritizing SOFR, Prime and Ameribor as the preferred alternative reference rates and ceased booking LIBOR based commitments after the end of 2021. Loans with a maturity after June 2023 are being reviewed and monitored to ensure there is appropriate fallback language in place when LIBOR is no longer published. Loans with a maturity date before that time should naturally mature and be re-underwritten with an appropriate alternative index rate.

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Contractual Obligations, Commitments, Off-Balance Sheet Arrangements, and Contingent Liabilities

The following table summarizes significant contractual obligations and other commitments at September 30, 2022, at those amounts contractually due to the recipient, including any unamortized premiums or discounts, hedge basis adjustments, or other similar carrying value adjustments.

Table 17 Contractual Obligations and Other Commitments


($ in Thousands)	Note Reference	One Year or Less		One to Three Years		Three to Five Years		Over Five Years		Total
Time deposits		$	982,413	$	211,002	$	40,412	$	5	$	1,233,833
Short-term funding	9	284,361		—		—		—		284,361
FHLB advances	9	2,583,485		393,670		605,195		195,129		3,777,478

Other long-term funding	9	85		249,170		182		46		249,484

Operating leases	18	5,679		9,640		7,659		6,920		29,897

Total		$	3,856,023	$	863,482	$	653,448	$	202,100	$	5,575,052

The Corporation utilizes a variety of financial instruments in the normal course of business to meet the financial needs of its customers and to manage its own exposure to fluctuations in interest rates. These financial instruments include derivatives and lending-related commitments. Additional discussion of these instruments can be found in Note 10 Derivative and Hedging Activities and Note 12 Commitments, Off-Balance Sheet Arrangements, Legal Proceedings, Regulatory Matters and Operational Matters of the notes to consolidated financial statements, respectively. The Corporation also has obligations under its retirement plans as described in Note 14 Retirement Plans of the notes to the consolidated financial statements.

Capital

Management actively reviews capital strategies for the Corporation and each of its subsidiaries in light of perceived business risks, future growth opportunities, industry standards, and compliance with regulatory requirements. The assessment of overall capital adequacy depends on a variety of factors, including asset quality, liquidity, stability of earnings, changing competitive forces, economic condition in markets served, and strength of management. At September 30, 2022, the capital ratios of the Corporation and its banking subsidiaries were in excess of regulatory minimum requirements. The Corporation’s capital ratios are summarized in the following table.

Table 18 Capital Ratios


	YTD				Quarter Ended
($ in Thousands)	Sep 30, 2022		Sep 30, 2021		Sep 30, 2022			Jun 30, 2022			Mar 31, 2022			Dec 31, 2021			Sep 30, 2021
Risk-based Capital(a)
CET1					$	2,955,710		$	2,896,675		$	2,837,789		$	2,808,289		$	2,779,943
Tier 1 capital					3,149,822			3,089,593			3,030,579			3,001,074			2,972,622
Total capital					3,582,099			3,506,864			3,448,108			3,570,026			3,550,556
Total risk-weighted assets					31,405,843			29,863,512			27,780,642			27,242,735			26,303,703
Modified CECL transitional amount					67,276			67,276			67,276			89,702			92,822
CET1 capital ratio					9.41		%	9.70		%	10.22		%	10.31		%	10.57		%
Tier 1 capital ratio					10.03		%	10.35		%	10.91		%	11.02		%	11.30		%
Total capital ratio					11.41		%	11.74		%	12.41		%	13.10		%	13.50		%
Tier 1 leverage ratio					8.66		%	8.87		%	8.86		%	8.83		%	8.81		%
Selected Equity and Performance Ratios
Total stockholders’ equity / assets					10.39		%	10.63		%	11.30		%	11.47		%	11.60		%
Dividend payout ratio(b)	36.14	%	32.94	%	32.26		%	35.71		%	41.67		%	40.82		%	35.71		%
Return on average assets	0.95	%	1.07	%	1.02		%	0.97		%	0.86		%	0.87		%	1.01		%
Annualized noninterest expense / average assets	2.04	%	2.06	%	2.08		%	2.04		%	2.00		%	2.06		%	2.03		%

(a) The Federal Reserve establishes regulatory capital requirements, including well-capitalized standards for the Corporation. The Corporation follows Basel III, subject to certain
transition provisions. These regulatory capital measurements are used by management, regulators, investors, and analysts to assess, monitor and compare the quality and
composition of the Corporation's capital with the capital of other financial services companies.
(b) Ratio is based upon basic earnings per common share.

See Part II, Item 2, Unregistered Sales of Equity Securities and Use of Proceeds, for information on the shares repurchased during the third quarter of 2022.

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Non-GAAP Measures

Table 19 Non-GAAP Measures


	YTD						Quarter Ended
($ in Thousands)	Sep 30, 2022			Sep 30, 2021			Sep 30, 2022			Jun 30, 2022			Mar 31, 2022			Dec 31, 2021			Sep 30, 2021
Selected equity and performance ratios(a)(b)(c)
Tangible common equity / tangible assets							7.06		%	7.23		%	7.68		%	7.86		%	7.92		%
Return on average equity	8.67		%	8.93		%	9.59		%	8.85		%	7.55		%	7.62		%	8.63		%
Return on average tangible common equity	12.96		%	13.56		%	14.32		%	13.29		%	11.26		%	11.34		%	12.97		%
Return on average CET1	11.60		%	12.62		%	12.69		%	11.77		%	10.27		%	10.50		%	12.11		%

Return on average tangible assets	1.00		%	1.13		%	1.08		%	1.03		%	0.90		%	0.92		%	1.07		%
Average stockholders' equity / average assets	11.00		%	11.98		%	10.69		%	11.02		%	11.33		%	11.43		%	11.74		%
Tangible common equity reconciliation(a)
Common equity							$	3,759,840		$	3,766,187		$	3,755,092		$	3,831,658		$	3,801,766
Goodwill and other intangible assets, net							(1,156,477)			(1,158,680)			(1,160,883)			(1,163,085)			(1,165,288)
Tangible common equity							$	2,603,363		$	2,607,507		$	2,594,209		$	2,668,573		$	2,636,478
Tangible assets reconciliation(a)
Total assets							$	38,049,607		$	37,235,990		$	34,955,900		$	35,104,253		$	34,439,666
Goodwill and other intangible assets, net							(1,156,477)			(1,158,680)			(1,160,883)			(1,163,085)			(1,165,288)
Tangible assets							$	36,893,130		$	36,077,310		$	33,795,017		$	33,941,167		$	33,274,378
Average tangible common equity and average CET1 reconciliation(a)
Common equity	$	3,776,296		$	3,782,141		$	3,791,396		$	3,743,919		$	3,793,597		$	3,810,668		$	3,807,083
Goodwill and other intangible assets, net	(1,159,982)			(1,169,964)			(1,157,754)			(1,160,035)			(1,162,204)			(1,164,394)			(1,166,589)
Tangible common equity	2,616,314			2,612,177			2,633,642			2,583,884			2,631,393			2,646,273			2,640,494
Modified CECL transitional amount	67,276			106,277			67,276			67,276			67,276			90,528			97,420
Accumulated other comprehensive loss (income)	147,258			(4,589)			189,935			170,253			80,383			18,513			(5,320)
Deferred tax assets, net	36,085			40,135			29,875			39,072			39,411			39,640			39,893
Average CET1	$	2,866,934		$	2,754,000		$	2,920,729		$	2,860,485		$	2,818,464		$	2,794,954		$	2,772,487
Average tangible assets reconciliation(a)
Total assets	$	36,075,770		$	34,278,268		$	37,271,779		$	35,732,583		$	35,200,182		$	35,016,159		$	34,759,489
Goodwill and other intangible assets, net	(1,159,982)			(1,169,964)			(1,157,754)			(1,160,035)			(1,162,204)			(1,164,394)			(1,166,589)
Tangible assets	$	34,915,788		$	33,108,304		$	36,114,025		$	34,572,548		$	34,037,978		$	33,851,765		$	33,592,900




Adjusted net income reconciliation(b)
Net income	$	257,360		$	274,117		$	96,275		$	86,824		$	74,262		$	76,877		$	88,809
Other intangible amortization, net of tax	4,956			4,981			1,652			1,652			1,652			1,652			1,652
Adjusted net income	$	262,316		$	279,098		$	97,927		$	88,476		$	75,914		$	78,529		$	90,461
Adjusted net income available to common equity reconciliation(b)
Net income available to common equity	$	248,735		$	259,880		$	93,400		$	83,949		$	71,387		$	74,002		$	84,655
Other intangible amortization, net of tax	4,956			4,981			1,652			1,652			1,652			1,652			1,652
Adjusted net income available to common equity	$	253,691		$	264,861		$	95,052		$	85,601		$	73,039		$	75,654		$	86,307
Efficiency ratio reconciliation(d)
Federal Reserve efficiency ratio	62.32		%	65.98		%	60.32		%	61.53		%	65.71		%	67.36		%	65.43		%
Fully tax-equivalent adjustment	(0.98)		%	(1.02)		%	(0.87)		%	(0.98)		%	(1.13)		%	(1.10)		%	(1.01)		%
Other intangible amortization	(0.75)		%	(0.84)		%	(0.67)		%	(0.76)		%	(0.84)		%	(0.82)		%	(0.83)		%
Fully tax-equivalent efficiency ratio	60.60		%	64.13		%	58.79		%	59.80		%	63.76		%	65.46		%	63.61		%
Provision for unfunded commitments adjustment	—		%	0.81		%	(0.90)		%	0.67		%	0.37		%	0.55		%	1.48		%
Asset gains, net adjustment	0.13		%	0.82		%	—		%	0.34		%	0.05		%	0.24		%	1.29		%
Acquisitions, branch sales, and initiatives	(0.20)		%	(0.22)		%	(0.53)		%	—		%	—		%	(1.43)		%	(0.91)		%
Adjusted efficiency ratio	60.53		%	65.54		%	57.36		%	60.82		%	64.18		%	64.82		%	65.46		%

(a) Tangible common equity and tangible assets exclude goodwill and other intangible assets, net.

(b) Adjusted net income and adjusted net income available to common equity, which are used in the calculation of return on average tangible assets and return on average tangible common equity, respectively, add back other intangible amortization, net of tax.

(c) These capital measurements are used by management, regulators, investors, and analysts to assess, monitor and compare the quality and composition of our capital with the capital of other financial services companies.

(d) The efficiency ratio as defined by the Federal Reserve guidance is noninterest expense (which includes the provision for unfunded commitments) divided by the sum of net interest income plus noninterest income, excluding investment securities gains (losses), net. The fully tax-equivalent efficiency ratio is noninterest expense (which includes the provision for unfunded commitments), excluding other intangible amortization, divided by the sum of fully tax-equivalent net interest income plus noninterest income, excluding investment securities gains (losses), net. The adjusted efficiency ratio is noninterest expense, which excludes the provision for unfunded commitments, other intangible amortization, acquisition related costs, and announced initiatives, divided by the sum of fully tax-equivalent net interest income plus noninterest income, excluding investment securities gains (losses), net, asset gains, net, and gain on sale of branches, net. Management believes the adjusted efficiency ratio is a meaningful measure as it enhances the comparability of net interest income arising from taxable and tax-exempt sources and provides a better measure as to how the Corporation is managing its expenses by adjusting for acquisition related costs, provision for unfunded commitments, asset gains, net, branch sales, and announced initiatives.

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Sequential Quarter Results

The Corporation reported net income of $96 million for the third quarter of 2022, compared to net income of $87 million for the second quarter of 2022. Net income available to common equity was $93 million for the third quarter of 2022, or $0.62 for both basic and diluted earnings per common share. Comparatively, net income available to common equity for the second quarter of 2022 was $84 million, or $0.56 for both basic and diluted earnings per common share (see Table 1).

Fully tax-equivalent net interest income for the third quarter of 2022 was $269 million, $48 million, or 22%, higher than the second quarter of 2022. The net interest margin in the third quarter of 2022 was up 42 bp to 3.13%. The increases in net interest income and net interest margin were due to increased earning assets as well as higher interest on earning assets resulting from the Federal Reserve increasing their federal funds target rate. Average earning assets increased $1.6 billion, or 5%, to $34.2 billion in the third quarter of 2022. Average loans increased $1.7 billion, or 7%, driven by growth across nearly all loan categories. On the funding side, average FHLB advances increased $860 million, or 35%, and total interest-bearing deposits increased $718 million, or 4% (see Table 2).

The provision for credit losses had a $17 million provision for the third quarter of 2022, compared to a negligible release for the second quarter of 2022 (see Table 11). See discussion under sections: Provision for Credit Losses, Nonperforming Assets, and Allowance for Credit Losses on Loans.

Noninterest income for the third quarter of 2022 was $71 million, down $5 million, or 6%, from the second quarter of 2022, driven by lower mortgage banking, net, bank owned life insurance income, and asset gains, net, partially offset by higher investment securities gains (losses), net (see Table 3).

Noninterest expense for the third quarter of 2022 was $196 million, up $14 million, or 8%, from the second quarter of 2022, driven by a $6 million contribution to the Corporation's charitable remainder trust and higher personnel expense (see Table 4).

For the third quarter of 2022, the Corporation recognized income tax expense of $26 million, compared to income tax expense of $23 million for the second quarter of 2022. See Income Taxes section for a detailed discussion on income taxes.

Comparable Quarter Results

The Corporation reported net income of $96 million for the third quarter of 2022, compared to $89 million for the third quarter of 2021. Net income available to common equity was $93 million for the third quarter of 2022, or $0.62 for both basic and diluted earnings per common share. Comparatively, net income available to common equity for the third quarter of 2021 was $85 million, or $0.56 for both basic and diluted earnings per share (see Table 1).

Fully tax-equivalent net interest income for the third quarter of 2022 was $269 million, $81 million, or 43%, higher than the third quarter of 2021. The net interest margin between the comparable quarters was up 75 bp, to 3.13% in the third quarter of 2022. The increases in net interest income and net interest margin were due to increased earning assets as well as higher interest on earning assets resulting from the Federal Reserve increasing their federal funds target rate. Average earning assets increased $2.8 billion, or 9%, to $34.2 billion in the third quarter of 2022 as average loans increased $3.2 billion, or 13%, driven by growth across nearly all loan categories, while investments and other decreased $345 million, or 5%. On the funding side, average interest-bearing deposits increased $822 million, or 4%, from the third quarter of 2021, due to increases in lower cost deposits, partially offset by a decrease in higher cost deposits. Average short and long-term funding increased $1.7 billion, or 78% (see Table 2), primarily driven by an increase in FHLB advances.

The provision for credit losses had a $17 million provision for the third quarter of 2022, compared to a release of $24 million for the third quarter of 2021, (see Table 11). See discussion under sections: Provision for Credit Losses, Nonperforming Assets, and Allowance for Credit Losses on Loans.

Noninterest income for the third quarter of 2022 was $71 million, down $11 million, or 14%, compared to the third quarter of 2021, primarily due to lower income in mortgage banking, net and asset gains, net, partially offset by higher investment securities gains (losses), net (see Table 3).

Noninterest expense increased $18 million, or 10%, to $196 million for the third quarter of 2022, primarily due to higher personnel expenses and a $6 million contribution to the Corporation's charitable remainder trust (see Table 4).

The Corporation recognized income tax expense of $26 million for the third quarter of 2022, compared to an income tax expense of $23 million for the third quarter of 2021. See section Income Taxes for a detailed discussion on income taxes.

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Segment Review

As discussed in Note 15 Segment Reporting of the notes to consolidated financial statements, the Corporation’s reportable segments have been determined based upon its internal profitability reporting system, which is organized by strategic business unit. Certain strategic business units have been combined for segment information reporting purposes where the nature of the products and services, the type of customer, and the distribution of those products and services are similar. The reportable segments are Corporate and Commercial Specialty; Community, Consumer and Business; and Risk Management and Shared Services.

Table 20 Selected Segment Financial Data


	Three Months Ended Sep 30,								Nine Months Ended Sep 30,
($ in Thousands)	2022			2021			% Change		2022			2021			% Change
Corporate and Commercial Specialty
Total revenue(a)	$	158,808		$	136,601		16	%	$	440,981		$	404,394		9	%
Provision for credit losses	11,904			14,349			(17)	%	36,803			46,745			(21)	%
Noninterest expense	58,934			56,209			5	%	172,141			165,568			4	%
Income tax expense	16,420			11,920			38	%	42,692			35,021			22	%
Net income	71,551			54,123			32	%	189,346			157,060			21	%
Average earning assets	16,123,187			14,111,675			14	%	15,213,821			14,062,442			8	%
Average loans	16,118,417			14,110,630			14	%	15,210,316			14,061,619			8	%
Average deposits	9,256,598			8,888,016			4	%	9,139,639			8,690,457			5	%
Average allocated capital (Average CET1)(b)	1,606,052			1,403,893			14	%	1,514,786			1,402,580			8	%
Return on average allocated capital(b)	17.67		%	15.30		%	N/M		16.71		%	14.97		%	174 bp
Community, Consumer, and Business
Total revenue	$	163,476		$	125,952		30	%	$	424,817		$	382,384		11	%
Provision for credit losses	5,378			4,748			13	%	14,958			15,955			(6)	%
Noninterest expense	107,782			98,172			10	%	311,210			300,913			3	%
Income tax expense	10,567			4,837			118	%	20,716			13,758			51	%
Net income	39,749			18,196			118	%	77,933			51,758			51	%
Average earning assets	10,416,253			9,108,909			14	%	9,796,760			9,365,653			5	%
Average loans	10,416,253			9,108,909			14	%	9,796,760			9,365,653			5	%
Average deposits	18,636,223			18,194,868			2	%	18,532,576			17,714,096			5	%
Average allocated capital (Average CET1)(b)	640,571			529,609			21	%	583,265			547,471			7	%
Return on average allocated capital(b)	24.62		%	13.63		%	N/M		17.86		%	12.64		%	N/M
Risk Management and Shared Services
Total revenue	$	12,943		$	3,199		N/M		$	23,247		$	3,176		N/M
Provision for credit losses	(283)			(43,107)			(99)	%	(38,756)			(144,717)			(73)	%
Noninterest expense	29,076			23,512			24	%	67,153			61,233			10	%
Income tax expense (benefit)	(824)			6,304			N/M		4,769			21,363			(78)	%
Net income (loss)	(15,025)			16,490			N/M		(9,918)			65,298			N/M
Average earning assets	7,675,157			8,166,891			(6)	%	7,944,848			7,495,515			6	%
Average loans	521,033			664,419			(22)	%	520,961			719,246			(28)	%
Average deposits	981,535			991,490			(1)	%	892,773			1,049,953			(15)	%
Average allocated capital (Average CET1)(b)	674,106			838,985			(20)	%	768,883			803,950			(4)	%
Return on average allocated capital(b)	(10.54)		%	5.83		%	N/M		(3.22)		%	8.49		%	N/M
Consolidated Total
Total revenue(a)	$	335,227		$	265,752		26	%	$	889,045		$	789,954		13	%
Return on average allocated capital(b)	12.69		%	12.11		%	58 bp		11.60		%	12.62		%	-102 bp

N//M = Not meaningful

(a) For the nine months ended September 30, 2021, the Corporation recognized a $2 million pre-tax gain on sale of Whitnell.

(b) The Federal Reserve establishes capital adequacy requirements for the Corporation, including CET1. For segment reporting purposes, the ROCET1 reflects return on average allocated CET1. The ROCET1 for the Risk Management and Shared Services segment and the Consolidated Total is inclusive of the annualized effect of the preferred stock
dividends.

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Notable Changes in Segment Financial Data

The Corporate and Commercial Specialty segment consists of lending and deposit solutions to larger businesses, developers, not-for-profits, municipalities, and financial institutions, and the support to deliver, fund, and manage such banking solutions. In addition, this segment provides a variety of investment, fiduciary, and retirement planning products and services to individuals and small to mid-sized businesses.

•Total revenue increased $37 million from the nine months ended September 30, 2021 and increased $22 million from the three months ended September 30, 2021, primarily attributable to higher loan volumes and interest rates.

•Provision for credit losses decreased $10 million from the nine months ended September 30, 2021 and decreased $2 million from the three months ended September 30, 2021, as a result of improving credit quality.

•Average loans increased $1.1 billion from the nine months ended September 30, 2021 and increased $2.0 billion from the three months ended September 30, 2021, driven by loan growth across all categories.

•Average deposits increased $449 million from the nine months ended September 30, 2021 and increased $369 million from the three months ended September 30, 2021, primarily driven by increases in lower cost interest bearing deposits and money market accounts, respectively.

The Community, Consumer, and Business segment consists of lending and deposit solutions to individuals and small to mid-sized businesses.

•Total revenue increased $42 million from the nine months ended September 30, 2021 and increased $38 million from the three months ended September 30, 2021, as a result of receiving FTP credit for providing funding for the Corporation's loan growth.

•Average loans increased $431 million from the nine months ended September 30, 2021 and increased $1.3 billion from the three months ended September 30, 2021, primarily driven by growth in auto finance and residential mortgage lending within the consumer portfolio.

•Noninterest expense increased $10 million from both the nine and three months ended September 30, 2021, driven by increased personnel expense largely driven by hiring related to previously announced initiatives and continued investment in our employees.

•Average deposits increased $818 million from the nine months ended September 30, 2021 and increased $441 million from the three months ended September 30, 2021, as a result of customers holding higher savings account balances.

The Risk Management and Shared Services segment includes key shared Corporate functions, Parent Company activity, intersegment eliminations, and residual revenues and expenses.

•Revenues increased $20 million from the nine months ended September 30, 2021 and increased $10 million from the three months ended September 30, 2021, primarily driven by increased interest income as a result of higher investment income due to the current rate environment, as well as increased investment holdings after deploying excess cash into higher yielding securities earlier in 2022.

•Provision for credit losses increased $106 million from the nine months ended September 30, 2021 and increased $43 million from the three months ended September 30, 2021, driven by larger provision releases during 2021.

•Average loans decreased $198 million from the nine months ended September 30, 2021 and decreased $143 million from the three months ended September 30, 2021, primarily driven by decreases in commercial and business lending.

•Average deposits decreased $157 million from the nine months ended September 30, 2021 and decreased $10 million from the three months ended September 30, 2021, primarily driven by decreases in network deposits.

Critical Accounting Estimates

In preparing the consolidated financial statements, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the balance sheet and revenues and expenses for the period. Actual results could differ significantly from those estimates. Estimates that are particularly susceptible to significant change include the determination of the ACLL and MSRs valuation. A discussion of these estimates can be found in the Critical Accounting Estimates section in Management's Discussion and Analysis of Financial Condition and Results of Operations included in the Corporation’s 2021 Annual Report on Form 10-K. There has been one change in the Corporation's application of critical

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accounting estimates since December 31, 2021 driven by the irrevocable election to account for MSRs under the fair value measurement methodology.

Mortgage Servicing Rights Valuation: We have a significant investment in MSRs. Our MSRs are primarily retained from sales in the secondary market of residential mortgage loans we have originated or purchased from correspondent lenders. MSRs are initially recognized and subsequently carried at fair value. Changes in fair value are recognized in earnings as they occur through mortgage banking, net on the consolidated statements of income.

MSRs are not traded in active markets. The fair value of MSRs is determined by discounting the projected cash flows. Certain significant assumptions and estimates used in valuing MSRs are based on current market sources including projected prepayment speeds, assumed servicing costs, ancillary income, costs to service delinquent loans, costs of foreclosure, and discount rates with option-adjusted spreads. Assumptions used to value our MSRs are considered significant unobservable inputs and represent our best estimate of assumptions that market participants would use to value this asset. A separate third party model is used to estimate prepayment speeds based on interest rates, housing turnover rates, estimated loan curtailment, anticipated defaults and other relevant factors. The prepayment model is updated periodically for changes in market conditions and adjusted to better correlate with actual performance of our servicing portfolio. The option-adjusted spread is added to the discount rate across all interest rate paths generated in a stochastic process, which will properly capture the embedded options for MSRs cash flows.

The assumptions used in this model are primarily based on mortgage interest rates. Evaluation of the effect of a change in one assumption without considering the effect of that change on other assumptions is not meaningful. Considering all related assumptions, we expect a 50 basis point increase in the yield curve to increase the fair value of our servicing rights by $3 million and decrease the value of the hedge by $3 million. Likewise, we expect a 50 basis point decrease in the yield curve to decrease the fair value of our servicing rights by $4 million and increase the value of our hedge by $3 million.

Recent Developments

On October 25, 2022, the Corporation’s Board of Directors declared a regular quarterly cash dividend of $0.21 per common share, payable on December 15, 2022 to shareholders of record at the close of business on December 1, 2022. This is an increase of $0.01 from the previous quarterly cash dividend of $0.20 per common share. The Board of Directors also declared a regular quarterly cash dividend of $0.3671875 per depositary share on Associated's 5.875% Series E Perpetual Preferred Stock, payable on December 15, 2022 to shareholders of record at the close of business on December 1, 2022. The Board of Directors also declared a regular quarterly cash dividend of $0.3515625 per depositary share on Associated's 5.625% Series F Perpetual Preferred Stock, payable on December 15, 2022 to shareholders of record at the close of business on December 1, 2022.


ITEM 3.			Quantitative and Qualitative Disclosures About Market Risk

Information required by this item is set forth in Item 2 under the captions Quantitative and Qualitative Disclosures about Market Risk and Interest Rate Risk.

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ITEM 4.			Controls and Procedures

The Corporation maintains disclosure controls and procedures as required under Rule 13a-15 promulgated under the Securities Exchange Act of 1934, as amended, that are designed to ensure that information required to be disclosed in the Corporation's Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to the Corporation’s management, including its Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

As of September 30, 2022, the Corporation’s management carried out an evaluation, under the supervision and with the participation of the Corporation’s Chief Executive Officer and Chief Financial Officer, of the effectiveness of its disclosure controls and procedures. Based on the foregoing, its Chief Executive Officer and Chief Financial Officer concluded that the Corporation’s disclosure controls and procedures were effective as of September 30, 2022.

No changes were made to the Corporation’s internal control over financial reporting (as defined in Rule 13a-15(f) of the Exchange Act of 1934) during the last fiscal quarter that have materially affected, or are reasonably likely to materially affect, the Corporation’s internal control over financial reporting.

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PART II - OTHER INFORMATION


ITEM 1.			Legal Proceedings

The information required by this item is set forth in Part I, Item 1 under Note 12 Commitments, Off-Balance Sheet Arrangements, Legal Proceedings, Regulatory Matters and Operational Matters of the notes to consolidated financial statements.


ITEM 1A.			Risk Factors

There have been no material changes in the Risk Factors described in the Corporation’s 2021 Annual Report on Form 10-K other than as set out in the Corporation's Quarterly Reports on Form 10-Q for the quarters ended March 31, 2022 and June 30, 2022, in Item 1A of Part II.


ITEM 2.			Unregistered Sales of Equity Securities and Use of Proceeds

During the third quarter of 2022, the Corporation repurchased approximately $181,000 of common stock, or approximately 9,000 shares, all of which were repurchases related to tax withholding on equity compensation with no open market purchases during the quarter. The repurchase details are presented in the table below:

Common Stock Purchases


	Total Number of Shares Purchased(a)	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs(b)
Period

July 1, 2022 - July 31, 2022	4,612	$	18.53	—	—
August 1, 2022 - August 31, 2022	4,024	20.30		—	—
September 1, 2022 - September 30, 2022	703	20.08		—	—
Total	9,339	$	19.41	—	3,966,430

(a) During the third quarter of 2022, the Corporation repurchased 9,339 common shares for minimum tax withholding settlements on equity compensation. These purchases do not count against the maximum value of shares remaining available for purchase under the Board of Directors' authorization.

(b) At September 30, 2022, there remained $80 million authorized to be repurchased in the aggregate. Approximately 4 million shares of common stock remained available to be repurchased under this Board authorization given the closing share price on September 30, 2022.

Repurchases under Board authorized repurchase programs are subject to any necessary regulatory approvals and other limitations and may occur from time to time in open market purchases, block transactions, private transactions, accelerated share repurchases, or similar facilities.


ITEM 6.			Exhibits

(a) Exhibits:


Exhibit (10.1), Separation Agreement between Associated Banc-Corp and Michael Meinolf, dated September 30, 2022.

Exhibit (31.1), Certification Under Section 302 of Sarbanes-Oxley by Andrew J. Harmening, Chief Executive Officer.
Exhibit (31.2), Certification Under Section 302 of Sarbanes-Oxley by Derek S. Me yer , Chief Financial Officer.
Exhibit (32), Certification by the Chief Executive Officer and Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of Sarbanes-Oxley.
Exhibit (101), Interactive data files pursuant to Rule 405 of Regulation S-T: (i) Unaudited Consolidated Balance Sheets, (ii) Unaudited Consolidated Statements of Income, (iii) Unaudited Consolidated Statements of Comprehensive Income, (iv) Unaudited Consolidated Statements of Changes in Stockholders’ Equity, (v) Unaudited Consolidated Statements of Cash Flows, and (vi) Notes to Consolidated Financial Statements.
Exhibit (104), The cover page from the Corporation's Quarterly Report on Form 10-Q for the quarter ended September 30, 2022 has been formatted in Inline XBRL (Inline Extensible Business Reporting Language) and contained in Exhibits in 101.


Signatures

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.



						ASSOCIATED BANC-CORP
						(Registrant)

Date: October 27, 2022						/s/ Andrew J. Harmening
						Andrew J. Harmening
						President and Chief Executive Officer

Date: October 27, 2022						/s/ Derek S. Meyer
						Derek S. Meyer
						Chief Financial Officer

Date: October 27, 2022						/s/ Tammy C. Stadler
						Tammy C. Stadler
						Chief Accounting Officer