ASSOCIATED BANC-CORP (Form: 10-Q, Received: 04/28/2022 16:49:18)

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Table of Contents

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: March 31, 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	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 April 25, 2022 was 150,043,865.


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	9

	Notes to Consolidated Financial Statements	11

	Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	50

	Item 3. Quantitative and Qualitative Disclosures About Market Risk	74

	Item 4. Controls and Procedures	75

PART II. Other Information

	Item 1. Legal Proceedings	76

	Item 1A. Risk Factors	76

	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 / 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


CFPB			Consumer Financial Protection Bureau
CRA			Community Reinvestment Act
CRE			Commercial Real Estate
Dodd-Frank Act			Dodd-Frank Wall Street Reform and Consumer Protection Act
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

TBA			To-Be-Announced
TDRs			Troubled Debt Restructurings
UDAAPs			Unfair, Deceptive, or Abusive Acts or Practices
Whitnell			Whitnell & Co.
YTD			Year-to-Date

Table of Contents


PART I - FINANCIAL INFORMATION

ITEM 1.			Financial Statements:

ASSOCIATED BANC-CORP

Consolidated Balance Sheets


	Mar 31, 2022		Dec 31, 2021
(In Thousands, except share and per share data)	(Unaudited)		(Audited)
Assets
Cash and due from banks	$	334,138	$	343,831
Interest-bearing deposits in other financial institutions	166,929		681,684

Investment securities AFS, at fair value	2,780,803		4,332,015
Investment securities HTM, net, at amortized cost	3,939,855		2,238,947
Equity securities	18,560		18,352
Federal Home Loan Bank and Federal Reserve Bank stocks, at cost	168,281		168,281
Residential loans held for sale	91,582		136,638

Loans	24,531,926		24,224,949
Allowance for loan losses	(279,058)		(280,015)
Loans, net	24,252,867		23,944,934
Tax credit and other investments	284,561		293,733

Premises and equipment, net	387,550		385,173
Bank and corporate owned life insurance	679,538		680,021
Goodwill	1,104,992		1,104,992
Other intangible assets, net	55,890		58,093
Mortgage servicing rights, net(a)	67,015		54,862

Interest receivable	83,120		80,528
Other assets	540,218		582,168
Total assets	$	34,955,900	$	35,104,253
Liabilities and Stockholders' Equity
Noninterest-bearing demand deposits	$	8,315,699	$	8,504,077
Interest-bearing deposits	20,089,710		19,962,353
Total deposits	28,405,409		28,466,430
Federal funds purchased and securities sold under agreements to repurchase	368,768		319,532
Commercial paper	30,593		34,730

FHLB advances	1,537,948		1,621,047
Other long-term funding	249,797		249,324

Allowance for unfunded commitments	38,776		39,776
Accrued expenses and other liabilities	376,322		348,560
Total liabilities	$	31,007,613	$	31,079,399
Stockholders’ Equity
Preferred equity	$	193,195	$	193,195
Common equity
Common stock	$	1,752	$	1,752
Surplus	1,708,104		1,713,851
Retained earnings	2,715,118		2,672,601
Accumulated other comprehensive (loss)	(137,024)		(10,317)
Treasury stock, at cost	(532,858)		(546,229)
Total common equity	3,755,092		3,831,658
Total stockholders’ equity	3,948,287		4,024,853
Total liabilities and stockholders’ equity	$	34,955,900	$	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	150,037,780		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 Mar 31,
(In Thousands, except per share data)	2022		2021
Interest income
Interest and fees on loans	$	167,697	$	174,049
Interest and dividends on investment securities
Taxable	16,472		7,014
Tax-exempt	16,108		14,162
Other interest	1,993		1,694
Total interest income	202,270		196,920
Interest expense
Interest on deposits	3,571		5,909
Interest on federal funds purchased and securities sold under agreements to repurchase	38		26
Interest on other short-term funding	1		6
Interest on FHLB advances	8,182		9,493
Interest on long-term funding	2,730		5,585
Total interest expense	14,522		21,018
Net interest income	187,747		175,902
Provision for credit losses	(3,990)		(23,004)
Net interest income after provision for credit losses	191,737		198,906
Noninterest income
Wealth management fees	22,404		22,414
Service charges and deposit account fees	16,856		14,855
Card-based fees	9,926		9,743
Other fee-based revenue	3,766		4,596
Capital markets, net	8,646		8,118
Mortgage banking, net	8,391		23,925
Bank and corporate owned life insurance	2,071		2,702

Asset gains, net	188		4,809
Investment securities gains (losses), net	21		(39)
Gains on sale of branches, net(a)	—		1,002
Other	2,198		3,216
Total noninterest income	74,467		95,343
Noninterest expense
Personnel	104,811		104,026
Technology	21,485		20,740
Occupancy	16,080		16,156
Business development and advertising	4,954		4,395
Equipment	4,960		5,518
Legal and professional	5,087		6,530
Loan and foreclosure costs	2,014		2,220
FDIC assessment	5,100		4,750
Other intangible amortization	2,203		2,236

Other	6,597		8,775
Total noninterest expense	173,292		175,347
Income before income taxes	92,912		118,903
Income tax expense	18,650		24,602
Net income	74,262		94,301
Preferred stock dividends	2,875		5,207
Net income available to common equity	$	71,387	$	89,094
Earnings per common share
Basic	$	0.48	$	0.58
Diluted	$	0.47	$	0.58
Average common shares outstanding
Basic	148,781		152,355
Diluted	150,492		153,688

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 Mar 31,
($ in Thousands)	2022		2021

Net income	$	74,262	$	94,301
Other comprehensive income (loss), net of tax
Investment securities AFS
Net unrealized (losses)	(103,284)		(23,979)
Unrealized (losses) on AFS securities transferred to HTM securities	(67,604)		—
Amortization of net unrealized losses on AFS securities transferred to HTM securities	1,108		518
Reclassification adjustment for net losses (gains) realized in net income	(21)		39


Income tax benefit	43,098		5,851
Other comprehensive (loss) on AFS securities	(126,702)		(17,571)
Defined benefit pension and postretirement obligations
Amortization of prior service cost	(81)		(37)
Amortization of actuarial loss	74		1,050

Income tax (expense) benefit	2		(253)
Other comprehensive income (loss) on pension and postretirement obligations	(6)		760
Total other comprehensive (loss)	(126,708)		(16,811)
Comprehensive income (loss)	$	(52,445)	$	77,490

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 Income (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 income (loss)
Net income	—		—		—		74,262		—		—		74,262
Other comprehensive (loss)	—		—		—		—		(126,708)		—		(126,708)
Comprehensive (loss)													(52,445)
Common stock issued
Stock-based compensation plans, net	—		—		(11,911)		—		—		18,565		6,654



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




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




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

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.


(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 (loss)
Net income	—		—		—		94,301		—		—		94,301
Other comprehensive (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

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.

See accompanying notes to consolidated financial statements.

Table of Contents

Item 1. Financial Statements Continued:

ASSOCIATED BANC-CORP

Consolidated Statements of Cash Flows (Unaudited)


	Three Months Ended Mar 31,
($ in Thousands)	2022		2021
Cash Flow From Operating Activities
Net income	$	74,262	$	94,301
Adjustments to reconcile net income to net cash provided by (used in) operating activities
Provision for credit losses	(3,990)		(23,004)
Depreciation and amortization	11,680		12,038
Change in MSRs valuation(a)	(9,451)		(10,578)

Amortization of other intangible assets	2,203		2,236
Amortization and accretion on earning assets, funding, and other, net	5,338		7,941
Net amortization of tax credit investments	8,535		8,301
Losses (gains) on sales of investment securities, net	(21)		39
Asset (gains), net	(188)		(4,809)
(Gains) on sale of branch, net	—		(1,002)
(Gain) loss on mortgage banking activities, net	4,183		(10,326)
Mortgage loans originated and acquired for sale	(252,113)		(412,645)
Proceeds from sales of mortgage loans held for sale	296,089		400,135

Changes in certain assets and liabilities
(Increase) decrease in interest receivable	(2,592)		3,797
(Decrease) in interest payable	(1,917)		(8,694)
(Decrease) in expense payable	(46,737)		(12,818)
(Increase) decrease in net derivative position	152,545		69,829


Net change in other assets and other liabilities	8,292		43,027
Net cash provided by operating activities	246,119		157,768
Cash Flow From Investing Activities
Net decrease (increase) in loans	(305,878)		274,733
Purchases of
AFS securities	(409,376)		(809,140)
HTM securities	(135,301)		(37,215)
Federal Home Loan Bank and Federal Reserve Bank stocks and equity securities	(1)		(1)
Premises, equipment, and software, net of disposals	(17,141)		(6,477)

Proceeds from
Sales of AFS and equity securities	742		51,295


Prepayments, calls, and maturities of AFS securities	167,986		419,235
Prepayments, calls, and maturities of HTM securities	51,206		97,196
Sales, prepayments, calls, and maturities of other assets	18,012		8,525
Net cash received in business segment sale	—		2,484
Net change in tax credit and alternative investments	(10,293)		(12,990)

Net cash (used in) investing activities	(640,045)		(12,354)
Cash Flow From Financing Activities
Net increase (decrease) in deposits	(60,949)		1,225,867
Net decrease in deposits due to branch sales	—		(31,083)
Net increase (decrease) in short-term funding	45,098		(62,639)
Net increase in short-term FHLB advances	320,000		—
Repayment of long-term FHLB advances	(414,578)		(2,954)
Proceeds from long-term FHLB advances	11,506		251



(Repayment) proceeds of finance lease principal	399		(37)


Proceeds from issuance of common stock for stock-based compensation plans	6,654		10,556




Purchase of treasury stock, open market purchases	—		(17,973)
Purchase of treasury stock, stock-based compensation plans	(5,193)		(3,593)
Cash dividends on common stock	(30,583)		(27,870)
Cash dividends on preferred stock	(2,875)		(5,207)
Net cash provided by (used in) financing activities	(130,521)		1,085,319
Net increase (decrease) in cash and cash equivalents	(524,447)		1,230,732
Cash and cash equivalents at beginning of period	1,025,515		716,048
Cash and cash equivalents at end of period(b)	$	501,068	$	1,946,780

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.

Table of Contents

ASSOCIATED BANC-CORP

Consolidated Statements of Cash Flows (Unaudited)


	Three Months Ended Mar 31,
($ in Thousands)	2022		2021
Supplemental disclosures of cash flow information
Cash paid for interest	$	16,267	$	29,258
Cash (received from) income and franchise taxes	(1,471)		(114)
Loans and bank premises transferred to OREO	426		15,426
Capitalized mortgage servicing rights	3,042		3,348
Loans transferred into held for sale from portfolio, net	2,644		5,582
Transfer of AFS securities to HTM securities	1,621,990		—
Unsettled trades to purchase securities	4,246		3,000

Table of Contents

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 three 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.

Table of Contents

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, or liquidity, 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.

Table of Contents

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 Mar 31,
(In Thousands, except per share data)	2022		2021
Net income	$	74,262	$	94,301
Preferred stock dividends	(2,875)		(5,207)
Net income available to common equity	$	71,387	$	89,094
Common shareholder dividends	(30,372)		(27,661)
Unvested share-based payment awards	(211)		(209)
Undistributed earnings	$	40,804	$	61,224
Undistributed earnings allocated to common shareholders	$	40,548	$	60,836
Undistributed earnings allocated to unvested share-based payment awards	256		387
Undistributed earnings	$	40,804	$	61,224
Basic
Distributed earnings to common shareholders	$	30,372	$	27,661
Undistributed earnings allocated to common shareholders	40,548		60,836
Total common shareholders earnings, basic	$	70,920	$	88,497
Diluted
Distributed earnings to common shareholders	$	30,372	$	27,661
Undistributed earnings allocated to common shareholders	40,548		60,836
Total common shareholders earnings, diluted	$	70,920	$	88,497
Weighted average common shares outstanding	148,781		152,355
Effect of dilutive common stock awards	1,711		1,333

Diluted weighted average common shares outstanding	150,492		153,688
Basic earnings per common share	$	0.48	$	0.58
Diluted earnings per common share	$	0.47	$	0.58

Anti-dilutive common stock options of approximately 2 million and 3 million for the three months ended March 31, 2022 and 2021, respectively, were excluded from the earnings per common share calculation.

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 three months ended March 31, 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	(362)	17.65

Outstanding at March 31, 2022	4,452	$	20.97	5.85 years	$	11,138
Options Exercisable at March 31, 2022	3,775	$	21.29	5.52 years	$	8,661

(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 both the three months ended March 31, 2022 and 2021, the intrinsic value of stock options exercised was $3 million. For the three months ended March 31, 2022, the total fair value of stock options vested was $2 million compared to $3 million for the three months ended March 31, 2021.

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The Corporation recognized compensation expense for the vesting of stock options of approximately $241,000 for the three months ended March 31, 2022, compared to approximately $403,000 for the three months ended March 31, 2021. Compensation expense for the first quarter of 2022 related to accelerated vesting of stock options for retirement eligible colleagues was immaterial. At March 31, 2022, the Corporation had $1 million 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 three months ended March 31, 2022:


Restricted Stock Awards	Shares(a)	Weighted Average Grant Date Fair Value
Outstanding at December 31, 2021	2,635	$	19.87
Granted	650	23.69
Vested	(618)	23.73
Forfeited	(1)	21.97
Outstanding at March 31, 2022	2,666	$	20.70

(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 $6 million was recorded for the three months ended March 31, 2022 and $3 million was recorded for the three months ended March 31, 2021. Included in compensation expense for the first three months of 2022 was $3 million of expense for the accelerated vesting of restricted stock awards granted to retirement eligible colleagues. The Corporation had $31 million of unrecognized compensation costs related to restricted stock awards at March 31, 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 March 31, 2022 were as follows:


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


Investment securities AFS
U. S. Treasury securities	$	124,328	$	—	$	(8,196)	$	116,132
Agency securities	15,000		—		(800)		14,200
Obligations of state and political subdivisions (municipal securities)	368,831		3,764		(195)		372,401
Residential mortgage-related securities
FNMA / FHLMC	1,993,893		937		(100,011)		1,894,819
GNMA	59,470		166		(726)		58,909

Commercial mortgage-related securities
FNMA / FHLMC	19,290		496		—		19,786
GNMA	128,019		18		(1,278)		126,760
Asset backed securities
FFELP	173,068		—		(4,090)		168,978
SBA	5,865		33		(53)		5,845

Other debt securities	3,000		—		(27)		2,973
Total investment securities AFS	$	2,890,763	$	5,416	$	(115,376)	$	2,780,803
Investment securities HTM
U. S. Treasury securities	$	998	$	—	$	(34)	$	964
Obligations of state and political subdivisions (municipal securities)	1,696,536		32,201		(80,896)		1,647,842
Residential mortgage-related securities
FNMA / FHLMC	956,470		35,739		(72,418)		919,790
GNMA	44,742		116		(643)		44,215
Private-label	384,016		13,460		(28,955)		368,521
Commercial mortgage-related securities
FNMA/FHLMC	764,775		17,620		(88,784)		693,610
GNMA	92,383		1,032		(3,456)		89,959
Total investment securities HTM	$	3,939,920	$	100,167	$	(275,186)	$	3,764,901

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


Investment securities AFS
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 investment securities AFS	$	4,338,671	$	28,850	$	(35,506)	$	4,332,015
Investment securities HTM
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 investment securities HTM	$	2,239,003	$	118,471	$	(8,809)	$	2,348,664

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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 March 31, 2022, are shown below:


	AFS					HTM
($ in Thousands)	Amortized Cost		Fair Value			Amortized Cost		Fair Value
Due in one year or less	$	5,167	$	5,171		$	18,432	$	18,503
Due after one year through five years	89,914		87,185			34,156		34,343
Due after five years through ten years	378,692		374,733			163,456		164,057
Due after ten years	37,386		38,617			1,481,489		1,431,903
Total debt securities	511,159		505,706			1,697,534		1,648,806
Residential mortgage-related securities
FNMA / FHLMC	1,993,893		1,894,819			956,470		919,790
GNMA	59,470		58,909			44,742		44,215
Private-label	—		—			384,016		368,521
Commercial mortgage-related securities
FNMA / FHLMC	19,290		19,786			764,775		693,610
GNMA	128,019		126,760			92,383		89,959
Asset backed securities
FFELP	173,068		168,978			—		—
SBA	5,865		5,845			—		—

Total investment securities	$	2,890,763	$	2,780,803		$	3,939,920	$	3,764,901
Ratio of fair value to amortized cost			96.2		%			95.6		%

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 March 31, 2022:


($ in Thousands)	AAA		AA		A		Not Rated		Total
U. S. Treasury securities	$	998	$	—	$	—	$	—	$	998
Obligations of state and political subdivisions (municipal securities)	762,066		920,883		12,692		895		1,696,536
Residential mortgage-related securities
FNMA / FHLMC	956,470		—		—		—		956,470
GNMA	44,742		—		—		—		44,742
Private-label	384,016		—		—		—		384,016
Commercial mortgage-related securities
FNMA / FHLMC	764,775		—		—		—		764,775
GNMA	92,383		—		—		—		92,383
Total HTM securities	$	3,005,450	$	920,883	$	12,692	$	895	$	3,939,920

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

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Investment securities gains (losses), net includes proceeds from the sale of AFS investment securities. The proceeds from the sale of AFS investment securities for the three months ended March 31, 2022 and 2021, are shown below:


	Three Months Ended Mar 31,
($ in Thousands)	2022		2021
Gross gains on AFS securities	$	21	$	36


Gross (losses) on AFS securities	—		(75)



Investment securities gains (losses), net	21		(39)
Proceeds from sales of investment securities AFS	$	734	$	51,295

During the first quarter of 2021, the Corporation sold $51 million of lower yielding U.S. Treasury and Agency securities at a slight 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 $2.2 billion and $2.3 billion at March 31, 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 March 31, 2022 and December 31, 2021, respectively. Accrued interest receivable on AFS securities totaled $8 million and $9 million at March 31, 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 March 31, 2022 and 2021.

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

The allowance for credit losses on HTM securities was approximately $65,000 at March 31, 2022 and approximately $55,000 at December 31, 2021, attributable entirely to the Corporation's municipal securities, included in investment securities HTM, 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, as a result, no allowance for credit losses has been recorded related to these securities.

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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 March 31, 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
Investment securities AFS
U.S. Treasury securities	5	$	(7,346)	$	107,050	2	(850)		$	9,082	$	(8,196)	$	116,132
Agency securities	1	(800)		14,200		—	—		—		(800)		14,200
Obligations of state and political subdivisions (municipal securities)	64	(195)		35,501		—	—		—		(195)		35,501
Residential mortgage-related securities
FNMA / FHLMC	88	(80,850)		1,617,123		8	(19,161)		235,380		(100,011)		1,852,503
GNMA	9	(726)		44,614		—	—		—		(726)		44,614



GNMA commercial mortgage-related securities	31	(1,278)		113,831		—	—		—		(1,278)		113,831
Asset backed securities
FFELP	7	(1,955)		110,489		8	(2,135)		58,489		(4,090)		168,978
SBA	—	—		—		8	(53)		2,763		(53)		2,763
Other debt securities	2	(27)		1,973		—	—		—		(27)		1,973

Total	207	$	(93,177)	$	2,044,781	26	$	(22,199)	$	305,713	$	(115,376)	$	2,350,494
Investment securities HTM
U.S. Treasury securities	1	$	(34)	$	964	—	$	—	$	—	$	(34)	$	964
Obligations of state and political subdivisions (municipal securities)	346	(79,571)		576,351		5	(1,325)		5,100		(80,896)		581,451
Residential mortgage-related securities
FNMA / FHLMC	51	(72,418)		896,284		—	—		—		(72,418)		896,284
GNMA	46	(643)		33,468		—	—		—		(643)		33,468
Private-label	18	(28,955)		368,521		—	—		—		(28,955)		368,521
Commercial mortgage-related securities
FNMA / FHLMC	15	(79,178)		342,543		7	(9,606)		72,787		(88,784)		415,331
GNMA	33	(3,456)		368,244		—	—		—		(3,456)		368,244
Total	510	$	(264,255)	$	2,586,375	12	$	(10,930)	$	77,887	$	(275,186)	$	2,664,262

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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
Investment securities AFS
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
Investment securities HTM
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 March 31, 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 $82 million at both March 31, 2022 and December 31, 2021. The Corporation had Federal Reserve Bank stock of $87 million at both March 31, 2022 and December 31, 2021. Accrued interest receivable on FHLB stock totaled approximately $962,000 and $975,000 at March 31, 2022 and December 31, 2021, respectively. There was $520,000 accrued interest receivable on Federal Reserve Bank stock at March 31, 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 both March 31, 2022 and December 31, 2021, the Corporation had equity securities with readily determinable fair values of $5 million.

Equity securities without readily determinable fair values: The Corporation's portfolio of equity securities without readily determinable fair values, which primarily consists of approximately 78,000 Visa Class B restricted shares, was carried at $14 million at both March 31, 2022 and December 31, 2021.

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Note 7 Loans

The period end loan composition was as follows:


($ in Thousands)	Mar 31, 2022		Dec 31, 2021
PPP	$	17,995	$	66,070
Asset-based lending & equipment finance(a)	231,040		178,027
Commercial and industrial	8,102,380		8,208,289
Commercial real estate — owner occupied	973,572		971,326
Commercial and business lending	9,324,986		9,423,711
Commercial real estate — investor	4,469,241		4,384,569
Real estate construction	1,760,076		1,808,976
Commercial real estate lending	6,229,317		6,193,545
Total commercial	15,554,303		15,617,256
Residential mortgage	7,609,343		7,567,310
Auto finance	497,523		143,045
Home equity	580,867		595,615
Other consumer	289,889		301,723
Total consumer	8,977,622		8,607,693
Total loans	$	24,531,926	$	24,224,949

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

Accrued interest receivable on loans totaled $58 million at March 31, 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 $95,000 and $98,000 for the three months ended March 31, 2022 and March 31, 2021, respectively.

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The following table presents commercial and consumer loans by credit quality indicator by vintage year at March 31, 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	$	—	$	—	$	—	$	16,118	$	1,782	$	—	$	—	$	—	$	17,900

Potential Problem	—		—		—		—		54		—		—		—		54
Nonaccrual	—		—		—		—		41		—		—		—		41
PPP	$	—	$	—	$	—	$	16,118	$	1,877	$	—	$	—	$	—	$	17,995
Asset-based lending & equipment finance:
Risk rating:
Pass	$	—	$	27,624	$	22,962	$	116,851	$	42,930	$	1,243	$	223	$	150	$	211,982

Potential Problem	—		2,057		—		—		17,000		—		—		—		19,057

Asset-based lending & equipment finance	$	—	$	29,681	$	22,962	$	116,851	$	59,930	$	1,243	$	223	$	150	$	231,040
Commercial and industrial:
Risk rating:
Pass	$	—	$	2,113,051	$	320,013	$	2,622,986	$	802,154	$	905,744	$	582,722	$	602,568	$	7,949,237
Special Mention	—		11,619		—		5,900		3,226		—		—		38,777		59,521
Potential Problem	37		3,793		17,540		1,369		3,540		45,200		20,584		1,372		93,396
Nonaccrual	71		—		71		—		154		—		—		—		225
Commercial and industrial	$	108	$	2,128,462	$	337,623	$	2,630,255	$	809,074	$	950,944	$	603,306	$	642,716	$	8,102,380
Commercial real estate - owner occupied:
Risk rating:
Pass	$	—	$	19,947	$	28,850	$	273,534	$	183,174	$	181,284	$	106,991	$	154,061	$	947,840
Special Mention	—		247		—		—		1,310		—		—		169		1,726
Potential Problem	—		—		635		5,632		2,195		10,571		—		4,972		24,005

Commercial real estate - owner occupied	$	—	$	20,194	$	29,485	$	279,166	$	186,678	$	191,855	$	106,991	$	159,202	$	973,572
Commercial and business lending:
Risk rating:
Pass	$	—	$	2,160,622	$	371,825	$	3,029,488	$	1,030,039	$	1,088,271	$	689,936	$	756,778	$	9,126,959
Special Mention	—		11,865		—		5,900		4,537		—		—		38,946		61,248
Potential Problem	37		5,850		18,175		7,001		22,788		55,771		20,584		6,344		136,513
Nonaccrual	71		—		71		—		195		—		—		—		266
Commercial and business lending	$	108	$	2,178,337	$	390,071	$	3,042,390	$	1,057,559	$	1,144,041	$	710,520	$	802,068	$	9,324,986
Commercial real estate - investor:
Risk rating:
Pass	$	—	$	90,319	$	391,108	$	1,616,587	$	704,283	$	713,819	$	308,963	$	318,092	$	4,143,170
Special Mention	—		—		2,750		55,652		16,289		32,847		—		6,855		114,393
Potential Problem	—		—		21,291		21,155		28,694		25,722		28,804		5,125		130,792
Nonaccrual	—		—		573		65,404		7,906		7,003		—		—		80,886
Commercial real estate - investor	$	—	$	90,319	$	415,721	$	1,758,799	$	757,172	$	779,391	$	337,767	$	330,071	$	4,469,241
Real estate construction:
Risk rating:
Pass	$	—	$	27,848	$	105,439	$	867,680	$	517,765	$	152,883	$	45,941	$	12,395	$	1,729,950
Special Mention	—		—		—		934		11,929		16,454		—		—		29,317
Potential Problem	—		—		—		84		116		—		—		—		200
Nonaccrual	—		—		—		—		—		—		—		609		609
Real estate construction	$	—	$	27,848	$	105,439	$	868,698	$	529,810	$	169,337	$	45,941	$	13,004	$	1,760,076

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	$	—	$	118,167	$	496,547	$	2,484,267	$	1,222,047	$	866,702	$	354,904	$	330,487	$	5,873,120
Special Mention	—		—		2,750		56,586		28,218		49,302		—		6,855		143,711
Potential Problem	—		—		21,291		21,239		28,810		25,722		28,804		5,125		130,992
Nonaccrual	—		—		573		65,404		7,906		7,003		—		609		81,495
Commercial real estate lending	$	—	$	118,167	$	521,160	$	2,627,496	$	1,286,982	$	948,729	$	383,708	$	343,075	$	6,229,317
Total commercial:
Risk rating:
Pass	$	—	$	2,278,789	$	868,372	$	5,513,755	$	2,252,087	$	1,954,972	$	1,044,840	$	1,087,265	$	15,000,080
Special Mention	—		11,865		2,750		62,486		32,755		49,302		—		45,800		204,958
Potential Problem	37		5,850		39,466		28,241		51,598		81,493		49,388		11,469		267,505
Nonaccrual	71		—		644		65,404		8,101		7,003		—		609		81,761
Total commercial	$	108	$	2,296,504	$	911,231	$	5,669,886	$	2,344,541	$	2,092,770	$	1,094,228	$	1,145,143	$	15,554,303
Residential mortgage:
Risk rating:
Pass	$	—	$	—	$	247,943	$	1,874,892	$	1,859,312	$	916,031	$	407,380	$	2,246,835	$	7,552,394
Special Mention	—		—		—		—		—		—		—		90		90
Potential Problem	—		—		276		468		288		578		280		1,142		3,032
Nonaccrual	—		—		979		2,160		3,102		3,955		6,946		36,684		53,827
Residential mortgage	$	—	$	—	$	249,198	$	1,877,520	$	1,862,703	$	920,564	$	414,606	$	2,284,751	$	7,609,343
Auto finance:
Risk rating:
Pass	$	—	$	—	$	357,813	$	135,564	$	578	$	2,262	$	921	$	295	$	497,432
Special Mention	—		—		—		42		—		—		—		1		42

Nonaccrual	—		—		—		—		—		35		14		—		49
Auto finance	$	—	$	—	$	357,813	$	135,606	$	578	$	2,296	$	934	$	296	$	497,523
Home equity:
Risk rating:
Pass	$	2,698	$	486,976	$	2,212	$	2,245	$	1,480	$	6,900	$	8,143	$	64,691	$	572,646
Special Mention	91		122		—		—		—		14		56		384		575
Potential Problem	—		—		—		—		—		—		10		146		156
Nonaccrual	171		55		—		9		119		145		328		6,834		7,490
Home equity	$	2,960	$	487,152	$	2,212	$	2,254	$	1,599	$	7,058	$	8,537	$	72,054	$	580,867
Other consumer:
Risk rating:
Pass	$	76	$	174,209	$	1,843	$	9,113	$	3,504	$	2,109	$	340	$	98,217	$	289,335
Special Mention	4		429		—		10		12		—		—		8		459

Nonaccrual	1		49		—		—		12		6		—		28		95
Other consumer	$	80	$	174,687	$	1,843	$	9,123	$	3,528	$	2,115	$	340	$	98,253	$	289,889
Total consumer:
Risk rating:
Pass	$	2,774	$	661,185	$	609,810	$	2,021,815	$	1,864,874	$	927,302	$	416,784	$	2,410,038	$	8,911,807
Special Mention	94		551		—		52		12		14		56		482		1,167
Potential Problem	—		—		276		468		288		578		290		1,288		3,188
Nonaccrual	171		103		979		2,169		3,234		4,141		7,288		43,546		61,460
Total consumer	$	3,040	$	661,840	$	611,065	$	2,024,504	$	1,868,408	$	932,034	$	424,418	$	2,455,354	$	8,977,622
Total loans:
Risk rating:
Pass(c)	$	2,774	$	2,939,973	$	1,478,182	$	7,535,570	$	4,116,960	$	2,882,275	$	1,461,624	$	3,497,303	$	23,911,887
Special Mention	94		12,417		2,750		62,538		32,767		49,315		56		46,283		206,125
Potential Problem	37		5,850		39,742		28,709		51,886		82,071		49,678		12,757		270,693
Nonaccrual	242		103		1,623		67,573		11,335		11,143		7,288		44,154		143,221
Total loans	$	3,148	$	2,958,343	$	1,522,296	$	7,694,390	$	4,212,949	$	3,024,804	$	1,518,646	$	3,600,497	$	24,531,926

(a) Revolving loans converted to term loans are also reported in their year of origination.

(b) The Corporation’s policy is to assign risk ratings at the borrower level. PPP loans are 100% guaranteed by the SBA and therefore the Corporation considers these loans to have a risk profile similar to pass rated loans.

Table of Contents

The following table presents commercial and consumer loans by credit quality indicator by vintage year at December 31, 2021:


					Term Loans Amortized Cost Basis by Origination Year(a)
($ in Thousands)	Rev Loans Converted to Term(a)		Rev Loans Amortized Cost Basis		2021		2020		2019		2018		2017		Prior		Total
PPP:(b)
Risk rating:
Pass	$	—	$	—	$	44,921	$	18,610	$	—	$	—	$	—	$	—	$	63,531
Special Mention	—		—		212		281		—		—		—		—		493
Potential Problem	—		—		2,000		—		—		—		—		—		2,000
Nonaccrual	—		—		—		46		—		—		—		—		46
PPP	$	—	$	—	$	47,134	$	18,936	$	—	$	—	$	—	$	—	$	66,070
Commercial and industrial:(c)
Risk rating:
Pass	$	2,084	$	2,371,605	$	2,631,753	$	852,758	$	986,300	$	710,491	$	177,568	$	493,876	$	8,224,351
Special Mention	—		7,068		5,900		1,695		—		—		—		2,811		17,474
Potential Problem	2,706		26,387		23,415		19,960		46,296		20,924		104		1,172		138,258
Nonaccrual	76		—		5,996		161		52		24		—		—		6,233
Commercial and industrial	$	4,867	$	2,405,059	$	2,667,064	$	874,575	$	1,032,647	$	731,439	$	177,671	$	497,860	$	8,386,316
Commercial real estate - owner occupied:
Risk rating:
Pass	$	10,092	$	30,869	$	261,418	$	178,424	$	187,073	$	110,169	$	54,538	$	117,011	$	939,503
Special Mention	—		226		—		4,628		—		—		—		245		5,100
Potential Problem	—		526		5,953		4,721		10,047		727		2,204		2,546		26,723

Commercial real estate - owner occupied	$	10,092	$	31,621	$	267,371	$	187,773	$	197,120	$	110,896	$	56,742	$	119,802	$	971,326
Commercial and business lending:
Risk rating:
Pass	$	12,176	$	2,402,474	$	2,938,092	$	1,049,792	$	1,173,373	$	820,660	$	232,106	$	610,887	$	9,227,385
Special Mention	—		7,294		6,112		6,604		—		—		—		3,056		23,066
Potential Problem	2,706		26,913		31,368		24,681		56,343		21,651		2,307		3,718		166,981
Nonaccrual	76		—		5,996		207		52		24		—		—		6,279
Commercial and business lending	$	14,958	$	2,436,680	$	2,981,569	$	1,081,284	$	1,229,767	$	842,335	$	234,414	$	617,662	$	9,423,711
Commercial real estate - investor:
Risk rating:
Pass	$	37,430	$	105,521	$	1,650,936	$	685,423	$	867,606	$	414,079	$	139,320	$	230,452	$	4,093,337
Special Mention	—		—		57,163		27,384		33,016		72		—		6,781		124,416
Potential Problem	—		—		21,309		9,860		22,243		34,591		3,564		14,573		106,138
Nonaccrual	—		—		45,502		8,158		6,820		—		—		197		60,677
Commercial real estate - investor	$	37,430	$	105,521	$	1,774,910	$	730,825	$	929,685	$	448,741	$	142,883	$	252,003	$	4,384,569
Real estate construction:
Risk rating:
Pass	$	—	$	31,773	$	843,664	$	614,469	$	204,337	$	48,647	$	2,229	$	12,212	$	1,757,331
Special Mention	—		—		2,203		11,929		—		15,885		41		2		30,060
Potential Problem	—		—		37		120		21,251		—		—		—		21,408
Nonaccrual	—		—		—		—		—		—		—		177		177
Real estate construction	$	—	$	31,773	$	845,903	$	626,518	$	225,588	$	64,532	$	2,270	$	12,392	$	1,808,976
Commercial real estate lending:
Risk rating:
Pass	$	37,430	$	137,294	$	2,494,600	$	1,299,893	$	1,071,943	$	462,726	$	141,549	$	242,664	$	5,850,668
Special Mention	—		—		59,366		39,313		33,016		15,957		41		6,784		154,476
Potential Problem	—		—		21,345		9,980		43,494		34,591		3,564		14,573		127,546
Nonaccrual	—		—		45,502		8,158		6,820		—		—		374		60,855
Commercial real estate lending	$	37,430	$	137,294	$	2,620,814	$	1,357,343	$	1,155,273	$	513,273	$	145,153	$	264,395	$	6,193,545

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		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(d)	$	56,777	$	3,219,121	$	7,352,605	$	4,301,809	$	3,232,703	$	1,722,157	$	1,055,380	$	2,734,332	$	23,618,106
Special Mention	140		7,745		65,478		46,023		33,021		16,241		41		10,946		179,495
Potential Problem	2,713		26,913		53,194		34,992		100,240		56,519		5,952		19,095		296,905
Nonaccrual	1,006		154		53,501		11,382		11,605		6,569		6,340		40,891		130,443
Total loans	$	60,636	$	3,253,933	$	7,524,778	$	4,394,206	$	3,377,569	$	1,801,486	$	1,067,713	$	2,805,265	$	24,224,949

(a) Revolving loans converted to term loans are also reported in their year of origination.

(d) Accruing TDRs are included in pass unless otherwise rated as special mention.

Table of Contents

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. 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 March 31, 2022:


	Accruing
($ in Thousands)	Current		30-59 Days Past Due		60-89 Days Past Due		90+ Days Past Due		Nonaccrual(a)(b)		Total
PPP	$	17,953	$	—	$	1	$	—	$	41	$	17,995
Asset-based lending & equipment finance	231,040		—		—		—		—		231,040
Commercial and industrial	8,100,945		923		162		125		225		8,102,380
Commercial real estate - owner occupied	973,374		198		—		—		—		973,572
Commercial and business lending	9,323,311		1,121		163		125		266		9,324,986
Commercial real estate - investor	4,388,355		—		—		—		80,886		4,469,241
Real estate construction	1,759,467		—		—		—		609		1,760,076
Commercial real estate lending	6,147,823		—		—		—		81,495		6,229,317
Total commercial	15,471,134		1,121		163		125		81,761		15,554,303
Residential mortgage	7,550,015		4,867		90		544		53,827		7,609,343
Auto finance	496,526		906		42		—		49		497,523
Home equity	569,170		3,632		575		—		7,490		580,867
Other consumer	287,636		707		525		926		95		289,889
Total consumer	8,903,347		10,112		1,232		1,470		61,460		8,977,622
Total loans	$	24,374,481	$	11,233	$	1,396	$	1,595	$	143,221	$	24,531,926

(a) Of the total nonaccrual loans, $98 million, or 69%, were current with respect to payment at March 31, 2022.

(b) No interest income was recognized on nonaccrual loans for the three months ended March 31, 2022. In addition, there were $24 million of nonaccrual loans for which there was no related ACLL at March 31, 2022.

Table of Contents

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:


	Mar 31, 2022				Dec 31, 2021
($ in Thousands)	Performing Restructured Loans		Nonaccrual Restructured Loans(a)		Performing Restructured Loans		Nonaccrual Restructured Loans(a)

Commercial and industrial	$	7,426	$	—	$	8,687	$	—
Commercial real estate — owner occupied	473		—		967		—
Commercial real estate — investor	2,045		3,042		12,866		3,093
Real estate construction	183		44		242		45
Residential mortgage	16,644		15,336		16,316		13,483

Home equity	2,486		931		2,648		806
Other consumer	747		—		803		—
Total restructured loans	$	30,003	$	19,352	$	42,530	$	17,426

(a) Nonaccrual restructured loans have been included within nonaccrual loans.

The Corporation had a recorded investment of $7 million in loans modified as TDRs during the three months ended March 31, 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 $6 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 three months ended March 31, 2022 and 2021:


	Three months ended Mar 31, 2022					Three months ended Mar 31, 2021
($ in Thousands)	Number of Loans	Recorded Investment(a)		Unpaid Principal Balance(b)		Number of Loans	Recorded Investment(a)		Unpaid Principal Balance(b)



Commercial real estate — investor	—	$	—	$	—	4	$	1,693	$	1,693

Residential mortgage	24	6,421		6,502		20	3,876		3,902
Home equity	3	80		101		1	430		430

Total loans modified	27	$	6,500	$	6,603	25	$	5,999	$	6,025

(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 combination of these concessions. During the three months ended March 31, 2022, there were no restructured loan

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modifications of commercial loans, but when such modifications do occur, they primarily include 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 three months ended March 31, 2022.

The following table provides the number of loans modified in a TDR during the previous twelve months which subsequently defaulted during the three months ended March 31, 2022 and 2021, and the recorded investment in these restructured loans as of March 31, 2022 and 2021:


	Three months ended Mar 31, 2022			Three months ended Mar 31, 2021
($ in Thousands)	Number of Loans	Recorded Investment		Number of Loans	Recorded Investment





Residential mortgage	1	$	884	1	$	97

All loans modified in a TDR are individually evaluated for impairment. The nature and extent of the impairment of restructured loans, including those which have experienced a subsequent payment default, are considered in the determination of an appropriate level of the ACLL.

The Corporation analyzes loans for classification as a probable TDR. This analysis includes identifying customers that are showing possible liquidity issues in the near term without reasonable access to alternative sources of capital. At March 31, 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 February 2022, 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 three months ended March 31, 2022:


($ in Thousands)	Dec 31, 2021		Charge offs		Recoveries		Net Charge offs		Provision for credit losses		Mar 31, 2022		ACLL / Loans
Allowance for loan losses
PPP	$	51	$	—	$	—	$	—	$	(39)	$	11
Asset-based lending & equipment finance	4,182		—		—		—		901		5,083
Commercial and industrial	85,624		(1,104)		2,958		1,854		(5,485)		81,993
Commercial real estate — owner occupied	11,473		—		3		3		(349)		11,127
Commercial and business lending	101,330		(1,104)		2,961		1,857		(4,973)		98,214
Commercial real estate — investor	72,803		—		—		—		558		73,361
Real estate construction	37,643		—		32		32		2,082		39,757
Commercial real estate lending	110,446		—		32		32		2,640		113,118
Total commercial	211,776		(1,104)		2,993		1,889		(2,333)		211,332
Residential mortgage	40,787		(43)		331		288		(3,974)		37,101
Auto finance	1,999		(23)		26		4		4,188		6,190
Home equity	14,011		(125)		440		315		(995)		13,331
Other consumer	11,441		(733)		282		(451)		114		11,104
Total consumer	68,239		(924)		1,079		155		(667)		67,727
Total loans	$	280,015	$	(2,028)	$	4,072	$	2,044	$	(3,000)	$	279,058
Allowance for unfunded commitments

Asset-based lending & equipment finance	$	857	$	—	$	—	$	—	$	(62)	$	796
Commercial and industrial	17,601		—		—		—		(2,694)		14,907
Commercial real estate — owner occupied	208		—		—		—		(64)		144
Commercial and business lending	18,667		—		—		—		(2,820)		15,847
Commercial real estate — investor	936		—		—		—		(302)		634
Real estate construction	15,586		—		—		—		2,415		18,001
Commercial real estate lending	16,522		—		—		—		2,114		18,636
Total commercial	35,189		—		—		—		(707)		34,482


Home equity	2,592		—		—		—		(68)		2,523
Other consumer	1,995		—		—		—		(225)		1,770
Total consumer	4,587		—		—		—		(293)		4,293
Total loans	$	39,776	$	—	$	—	$	—	$	(1,000)	$	38,776
Allowance for credit losses on loans
PPP	$	51	$	—	$	—	$	—	$	(39)	$	11	0.06	%
Asset-based lending & equipment finance	5,040		—		—		—		839		5,879		2.54	%
Commercial and industrial	103,225		(1,104)		2,958		1,854		(8,179)		96,900		1.20	%
Commercial real estate — owner occupied	11,681		—		3		3		(413)		11,270		1.16	%
Commercial and business lending	119,997		(1,104)		2,961		1,857		(7,793)		114,061		1.22	%
Commercial real estate — investor	73,739		—		—		—		256		73,995		1.66	%
Real estate construction	53,229		—		32		32		4,497		57,758		3.28	%
Commercial real estate lending	126,968		—		32		32		4,754		131,754		2.12	%
Total commercial	246,965		(1,104)		2,993		1,889		(3,039)		245,814		1.58	%
Residential mortgage	40,787		(43)		331		288		(3,974)		37,101		0.49	%
Auto finance	1,999		(23)		26		4		4,188		6,190		1.24	%
Home equity	16,603		(125)		440		315		(1,063)		15,855		2.73	%
Other consumer	13,436		(733)		282		(451)		(111)		12,874		4.44	%
Total consumer	72,825		(924)		1,079		155		(961)		72,020		0.80	%
Total loans	$	319,791	$	(2,028)	$	4,072	$	2,044	$	(4,000)	$	317,835	1.30	%

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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.

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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.

The Corporation conducted its most recent annual impairment testing in May 2021, 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 2021 impairment test that have changed the Corporation's impairment assessment conclusion. There were no impairment charges recorded in 2021 or the first three months of 2022.

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

Other Intangible Assets

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


($ in Thousands)	Three months ended Mar 31, 2022		Year Ended Dec 31, 2021
Core deposit intangibles
Gross carrying amount at the beginning of period	$	88,109	$	88,109

Accumulated amortization	(32,219)		(30,016)
Net book value	$	55,890	$	58,093
Amortization during the period	$	2,203	$	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. MSRs are accounted for 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.

On January 1, 2022, the Corporation made the irrevocable election to account for its MSRs asset under the fair value measurement methodology. 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. 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.

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A summary of changes in the balance of the MSRs asset under the fair value measurement method for the quarter ended March 31, 2022 is as follows:


($ in Thousands)	Three months ended Mar 31, 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	3,042
Paydowns	(2,637)
Valuation:
Change in fair value model assumptions	2,345
Changes in fair value of asset	7,106


Mortgage servicing rights at end of period	$	67,015





Portfolio of residential mortgage loans serviced for others (“servicing portfolio”)	$	6,972,242
Mortgage servicing rights to servicing portfolio	0.96		%

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)
(Additions) 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.

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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 March 31, 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 amortizing intangible assets:


($ in Thousands)	Core Deposit Intangibles		Mortgage Servicing Rights
Nine months ended December 31, 2022	$	6,608	$	8,956
2023	8,811		11,320
2024	8,811		9,663
2025	8,811		8,227
2026	8,811		6,874
2027	8,811		5,913
Beyond 2027	5,227		16,062
Total Estimated Amortization Expense	$	55,890	$	67,015

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)	Mar 31, 2022		Dec 31, 2021
Short-Term Funding
Federal funds purchased	$	100,060	$	120
Securities sold under agreements to repurchase	268,708		319,412
Federal funds purchased and securities sold under agreements to repurchase	368,768		319,532
Commercial paper	30,593		34,730
Total short-term funding	$	399,361	$	354,262
Long-Term Funding


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

Capitalized costs	(765)		(839)
Finance leases	562		163
Total long-term funding	249,797		249,324

Total short and long-term funding, excluding FHLB advances	$	649,158	$	603,587
FHLB Advances
Short-term FHLB advances	$	320,000	$	—
Long-term FHLB advances	1,217,948		1,621,047
Total FHLB advances	$	1,537,948	$	1,621,047

Total short and long-term funding	$	2,187,106	$	2,224,633

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 March 31, 2022, the Corporation has pledged securities valued at 129% 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 March 31, 2022 and December 31, 2021 are presented in the following table:


	Overnight and Continuous
($ in Thousands)	March 31, 2022		December 31, 2021
Repurchase agreements
Agency mortgage-related securities	$	268,708	$	319,412

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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 at no cost.

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 value 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 $76 million and $71 million of investment securities as collateral at March 31, 2022, and December 31, 2021, respectively. At March 31, 2022, the Corporation posted $6 million of required cash collateral 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 (CME) and the London Clearing House (LCH) 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.

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 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

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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.

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 and TBA securities 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 change 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 Company’s derivatives, as well as the balance sheet netting adjustments as of March 31, 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 March 31, 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.


	Mar 31, 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
Not designated as hedging instruments
Interest rate-related instruments	$	4,090,770	$	31,728	$	4,130,770	$	112,029	$	3,874,781	$	83,626	$	3,874,781	$	26,231
Foreign currency exchange forwards	506,185		1,986		501,213		1,815		490,057		5,490		478,745		5,441
Commodity contracts	—		—		—		—		3,894		1,264		3,910		1,248
Mortgage banking(a)(b)	114,909		4,796		197,000		234		133,990		2,647		245,016		—

Gross derivatives before netting			$	38,511			$	114,078			$	93,026			$	32,921
Less: Legally enforceable master netting agreements	2,514				2,514				2,143				2,143
Less: Cash collateral pledged/received	7,816				987				1,313				11,357
Total derivative instruments, after netting	$	28,181			$	110,577			$	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 March 31, 2022, the mortgage derivative asset includes $5 million of forward commitments fair value, while the mortgage derivative liability includes approximately $224,000 of interest rate lock commitments fair value. At December 31, 2021, the mortgage derivative asset included approximately $30,000 of forward commitments fair value.

The Corporation terminated its $500 million fair value hedge during the fourth quarter of 2019. At March 31, 2022, the amortized cost basis of the closed portfolios which had previously been used in the terminated hedging relationship was $390 million and is included in loans on the consolidated balance sheets. This amount includes $2 million of hedging adjustments on the discontinued hedging relationships.

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The table below identifies the effect of fair value hedge accounting on the Corporation's consolidated statements of income for the three months ended March 31, 2022 and 2021:


	Location and Amount of Gain or (Loss) Recognized on the Consolidated Statements of Income in Fair Value and Cash Flow Hedging Relationships
	Three months ended Mar 31,
	2022		2021
($ in Thousands)	Interest Income
Total amounts of income presented on the consolidated statements of income in which the effects of the fair value hedge is recorded	$	(179)		$	(485)
The effects of fair value hedging: (Loss) on fair value hedging relationships in Subtopic 815-20
Interest contracts
Hedged items	(179)			(485)

The table below identifies the effect of derivatives not designated as hedging instruments on the Corporation's consolidated statements of income for the three months ended March 31, 2022 and 2021:


	Consolidated Statements of Income Category of Gain / (Loss) Recognized in Income	Three Months Ended Mar 31,
($ in Thousands)		2022		2021
Derivative Instruments
Interest rate-related instruments — customer and mirror, net	Capital markets, net	$	573	$	2,938
Interest rate-related instruments — MSRs hedge	Mortgage banking, net	$	(3,666)	$	—
Foreign currency exchange forwards	Capital markets, net	123		143
Commodity contracts	Capital markets, net	(16)		(621)
Interest rate lock commitments (mortgage)	Mortgage banking, net	(2,842)		(2,708)
Forward commitments (mortgage)	Mortgage banking, net	(4,757)		(6,300)

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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 its financial institution counterparties that create single net settlements of all legal claims or obligations to pay or receive the net amount of settlement of the individual interest and foreign exchange agreements. Collateral, usually in the form of investment securities and cash, is posted by the counterparty with net liability positions in accordance with contract thresholds. Derivatives subject to a legally enforceable master netting agreement are reported with assets and liabilities offset resulting in a net position which is further offset by any cash collateral, and is reported in other assets and accrued expenses and other liabilities, on the face of the consolidated balance sheets. 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 March 31, 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
March 31, 2022	$	15,021	$	(2,514)	$	(7,816)	$	4,691
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
March 31, 2022	$	3,535	$	(2,514)	$	(987)	$	34
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)	Mar 31, 2022		Dec 31, 2021
Commitments to extend credit, excluding commitments to originate residential mortgage loans held for sale(a)(b)	$	10,973,357	$	10,848,136
Commercial letters of credit(a)	9,827		5,992
Standby letters of credit(c)	257,039		248,292

(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 March 31, 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) The Corporation has established a liability of $2 million for both March 31, 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

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collateral obtained, if deemed necessary by the Corporation upon extension of credit, is based on management’s credit evaluation of the customer. Since a significant portion of commitments to extend credit are subject to specific restrictive loan covenants or may expire without being drawn upon, the total commitment amounts do not necessarily represent future cash flow requirements. An allowance for unfunded commitments is maintained at a level believed by management to be sufficient to absorb expected lifetime losses related to unfunded commitments (including unfunded loan commitments and letters of credit).

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


($ in Thousands)	Three months ended Mar 31, 2022		Year Ended Dec 31, 2021
Allowance for Unfunded Commitments
Balance at beginning of period	$	39,776	$	47,776


Provision for unfunded commitments	(1,000)		(8,000)

Balance at end of period	$	38,776	$	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 and TBA securities 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 March 31, 2022 was $259 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 $8 million for the three months ended March 31, 2022 and 2021, respectively. The Corporation's remaining investment in qualified affordable housing projects accounted for under the proportional amortization method totaled $253 million at March 31, 2022 and $262 million at December 31, 2021.

The Corporation’s unfunded equity contributions relating to investments in federal and state qualified affordable housing and federal and state historic projects are recorded in accrued expenses and other liabilities on the consolidated balance sheets. The Corporation’s remaining unfunded equity contributions totaled $69 million at March 31, 2022 and $80 million at December 31, 2021.

For the three months ended March 31, 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 March 31, 2022 and December 31, 2021, included in tax credit and other investments on the consolidated balance sheets.

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Legal Proceedings

The Corporation is party to various pending and threatened claims and legal proceedings arising in the normal course of business activities, some of which involve claims for substantial amounts. Although there can be no assurance as to the ultimate outcomes, the Corporation believes it has meritorious defenses to the claims asserted against it in its currently outstanding matters and intends to continue to defend itself vigorously with respect to such legal proceedings. The Corporation will consider settlement of cases when, in management’s judgment, it is in the best interests of the Corporation and its shareholders.

On at least a quarterly basis, the Corporation assesses its liabilities and contingencies in connection with all pending or threatened claims and litigation, utilizing the most recent information available. On a matter by matter basis, an accrual for loss is established for those matters which the Corporation believes it is probable that a loss may be incurred and that the amount of such loss can be reasonably estimated. Once established, each accrual is adjusted as appropriate to reflect any subsequent developments. Accordingly, management’s estimate will change from time to time, and actual losses may be more or less than 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, seek an accounting and disgorgement of certain profits, as well as certain equitable restitution and equitable monetary relief. The Corporation intends to vigorously defend against this lawsuit. It is not possible for management to assess the probability of a material adverse outcome or reasonably estimate the amount of any potential loss at this time with respect to this lawsuit.

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.

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Mortgage Repurchase Reserve

The Corporation sells residential mortgage loans to investors in the normal course of business. Residential mortgage loans sold to others are predominantly conventional residential first lien mortgages originated under the Corporation's usual underwriting procedures, and are most often sold on a nonrecourse basis, primarily to the GSEs. The Corporation’s agreements to sell residential mortgage loans in the normal course of business usually require certain representations and warranties on the underlying loans sold, related to credit information, loan documentation, collateral, and insurability. Subsequent to being sold, if a material underwriting deficiency or documentation defect is discovered, the Corporation may be obligated to repurchase the loan or reimburse the GSEs for losses incurred (collectively, “make whole requests”). The make whole requests and any related risk of loss under the representations and warranties are largely driven by borrower performance. 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 $2 million and $8 million for the three months ended March 31, 2022 and the year ended December 31, 2021, respectively. There were no loss reimbursement and settlement claims paid in the three months ended March 31, 2022, and approximately $114,000 of such claims were paid for the year ended December 31, 2021. Make whole requests during 2021 and the first three months of 2022 generally arose from loans sold during the period of January 1, 2017 to December 31, 2021. Since January 1, 2017, loans sold totaled $7.2 billion at the time of sale, and consisted primarily of loans sold to GSEs. As of March 31, 2022, $4.6 billion of loans originated since January 1, 2017 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 March 31, 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 March 31, 2022 and December 31, 2021, there were $8 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 March 31, 2022 and December 31, 2021, there were $23 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 March 31, 2022 and December 31, 2021, aggregated by the level in the fair value hierarchy within which those measurements fall:


($ in Thousands)	Fair Value Hierarchy	Mar 31, 2022		Dec 31, 2021
Assets
Investment securities AFS
U.S. Treasury securities	Level 1	$	116,132	$	122,957
Agency securities	Level 2	14,200		14,897
Obligations of state and political subdivisions (municipal securities)	Level 2	372,401		400,457
Residential mortgage-related securities
FNMA / FHLMC	Level 2	1,894,819		2,691,879
GNMA	Level 2	58,909		67,780
Private-label	Level 2	—		329,724
Commercial mortgage-related securities
FNMA / FHLMC	Level 2	19,786		350,623
GNMA	Level 2	126,760		166,799
Asset backed securities
FFELP	Level 2	168,978		177,325
SBA	Level 2	5,845		6,580
Other debt securities	Level 2	2,973		2,994

Total investment securities AFS	Level 1	$	116,132	$	122,957
Total investment securities AFS	Level 2	2,664,671		4,209,058

Equity securities with readily determinable fair values	Level 1	5,025		4,810
Residential loans held for sale	Level 2	91,582		136,638
Mortgage servicing rights, net(a)	Level 3	67,015		N/A
Interest rate-related instruments(b)	Level 2	31,728		83,626
Foreign currency exchange forwards(b)	Level 2	1,986		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	4,796		30
Liabilities
Interest rate-related instruments(b)	Level 2	$	112,029	$	26,231
Foreign currency exchange forwards(b)	Level 2	1,815		5,441
Commodity contracts(b)	Level 2	—		1,248


Interest rate lock commitments to originate residential mortgage loans held for sale	Level 3	224		—
Forward commitments on TBA securities	Level 3	9		—

(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 three months ended March 31, 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 and TBA securities		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)
Mortgage derivative (loss)	(7,007)		(2,076)		(4,932)

Balance December 31, 2021	$	2,617	$	(30)	$	2,647
New production	$	5,002	$	(887)	$	5,890
Closed loans / settlements	(455)		9,099		(9,554)
Other	(7,389)		(12,969)		5,580
Mortgage derivative gain (loss)	(2,842)		(4,757)		1,916

Balance March 31, 2022	$	(224)	$	(4,787)	$	4,563

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The closing ratio on interest rate lock commitments to originate residential mortgage loans held for sale is a Level 3 measurement, and was 79% at March 31, 2022.

The following table presents the carrying value of equity securities without readily determinable fair values as of March 31, 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 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 March 31, 2022:


($ in Thousands)
Equity securities without readily determinable fair values
Carrying value as of December 31, 2021	$	13,542

Additions	1
Sales	(8)

Carrying value as of March 31, 2022	$	13,535

Cumulative upward carrying value changes between January 1, 2018 and March 31, 2022	$	13,444
Cumulative downward carrying value changes/impairment between January 1, 2018 and March 31, 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:

Consolidated Statements of Income
Category of Adjustment
Recognized in Income

($ in Thousands)

Fair Value Hierarchy

Fair Value

Adjustment Recognized on the Consolidated Statements of Income(c)

March 31, 2022

Assets

Individually evaluated loans(a)

Level 3

43,882

Provision for credit losses

(397)

OREO(b)

Level 2

985

Other noninterest expense / provision for credit losses(d)

102

December 31, 2021

Assets

Individually evaluated loans(a)

Level 3

69,917

Provision for credit losses

(3,045)

OREO(b)

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 probable TDRs which are individually analyzed, net of the related ACLL.
(b) If the fair value of the collateral exceeds the carrying amount of the asset, no charge off or adjustment is necessary, the asset is not considered to be carried at fair value, and is therefore not included in the table.
(c) Includes the full year impact on the consolidated statements of income
(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 Corporation's significant Level 3 measurements which employ unobservable inputs that are readily quantifiable pertain to individually evaluated loans.

The table below presents information about these inputs and further discussion is found above:

March 31, 2022

Valuation Technique

Significant Unobservable Input

Range of Inputs

Weighted Average Input Applied

Individually evaluated loans

Appraisals / Discounted cash flow

Collateral / Discount factor

21%

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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:


		Mar 31, 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	$	334,138	$	334,138	$	343,831	$	343,831
Interest-bearing deposits in other financial institutions	Level 1	166,929		166,929		681,684		681,684

Investment securities AFS	Level 1	116,132		116,132		122,957		122,957
Investment securities AFS	Level 2	2,664,671		2,664,671		4,209,058		4,209,058
Investment securities HTM, net	Level 1	998		964		1,000		1,001
Investment securities HTM, net	Level 2	3,938,857		3,763,872		2,237,947		2,347,608

Equity securities with readily determinable fair values	Level 1	5,025		5,025		4,810		4,810
Equity securities without readily determinable fair values	Level 3	13,535		13,535		13,542		13,542
FHLB and Federal Reserve Bank stocks	Level 2	168,281		168,281		168,281		168,281
Residential loans held for sale	Level 2	91,582		91,582		136,638		136,638

Loans, net	Level 3	24,252,867		23,485,798		23,944,934		23,980,330
Bank and corporate owned life insurance	Level 2	679,538		679,538		680,021		680,021

Mortgage servicing rights, net(a)	Level 3	67,015		67,015		54,862		57,259
Derivatives (other assets)(b)	Level 2	33,715		33,715		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 to sell residential mortgage loans (other assets)	Level 3	4,796		4,796		30		30
Financial liabilities
Noninterest-bearing demand, savings, interest-bearing demand, and money market accounts	Level 3	$	27,116,495	$	27,116,495	$	27,119,167	$	27,119,167
Time deposits(c)	Level 2	1,288,913		1,288,913		1,347,262		1,347,262
Short-term funding	Level 2	399,361		399,270		354,262		354,248
FHLB advances	Level 2	1,537,948		1,546,821		1,621,047		1,680,814
Other long-term funding	Level 2	249,797		254,355		249,324		265,545

Standby letters of credit(d)	Level 2	2,473		2,473		2,367		2,367

Derivatives (accrued expenses and other liabilities)(b)	Level 2	113,844		113,844		32,921		32,921
Interest rate lock commitments to originate residential mortgage loans held for sale (accrued expenses and other liabilities)	Level 3	224		224		—		—
Forward commitments on TBA securities (accrued expenses and other liabilities)	Level 3	9		9		—		—

(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 $257 million at March 31, 2022 and $248 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 months ended March 31, 2022 and 2021 were as follows:


	Three Months Ended Mar 31,
($ in Thousands)	2022		2021
Components of Net Periodic Benefit Cost
RAP
Service cost	$	923	$	2,075
Interest cost	1,772		1,623
Expected return on plan assets	(6,736)		(6,430)
Amortization of prior service cost	(63)		(18)
Amortization of actuarial loss	74		1,050
Total net periodic pension cost	$	(4,029)	$	(1,701)







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

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

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 three months ended March 31, 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

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Report on Form 10-K. The net effect of the credit provision is recorded in Risk Management and Shared Services. Indirect expenses incurred by certain centralized support areas are allocated to segments based on actual usage (for example, volume measurements) and other criteria. Certain types of administrative expense and bank-wide expense accruals (including 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 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 Mar 31,
($ in Thousands)	2022		2021
Net interest income	$	90,633	$	89,661
Net intersegment interest income	8,525		4,670
Segment net interest income	99,158		94,331
Noninterest income(a)	37,790		41,828
Total revenue	136,948		136,160
Provision for credit losses	12,653		16,680
Noninterest expense	56,559		55,448
Income before income taxes	67,736		64,032
Income tax expense	12,313		11,891
Net income	$	55,423	$	52,141






Allocated goodwill	$	525,836	$	525,836


	Community, Consumer, and Business
	Three Months Ended Mar 31,
($ in Thousands)	2022		2021
Net interest income	$	69,544	$	71,775
Net intersegment interest income	18,833		14,889
Segment net interest income	88,377		86,664
Noninterest income	33,207		47,331
Total revenue	121,584		133,995
Provision for credit losses	4,656		5,928
Noninterest expense	98,660		100,353
Income before income taxes	18,267		27,714
Income tax expense	3,836		5,820
Net income	$	14,431	$	21,894






Allocated goodwill	$	579,156	$	579,156

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	Risk Management and Shared Services
	Three Months Ended Mar 31,
($ in Thousands)	2022		2021
Net interest income	$	27,570	$	14,465
Net intersegment interest (expense)	(27,358)		(19,559)
Segment net interest income	212		(5,094)
Noninterest income	3,470		6,184
Total revenue	3,683		1,091
Provision for credit losses	(21,300)		(45,612)
Noninterest expense	18,073		19,546
Income before income taxes	6,909		27,156
Income tax expense	2,501		6,890
Net income	$	4,409	$	20,266






Allocated goodwill	$	—	$	—


	Consolidated Total
	Three Months Ended Mar 31,
($ in Thousands)	2022		2021
Net interest income	$	187,747	$	175,902
Net intersegment interest income	—		—
Segment net interest income	187,747		175,902
Noninterest income(a)	74,467		95,343
Total revenue	262,214		271,245
Provision for credit losses	(3,990)		(23,004)
Noninterest expense	173,292		175,347
Income before income taxes	92,912		118,903
Income tax expense	18,650		24,602
Net income	$	74,262	$	94,301






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

(a) For the three months ended March 31, 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 March 31, 2022 and 2021, including changes during the preceding three month periods as well as any reclassifications out of accumulated other comprehensive income (loss):


($ in Thousands)	Investment Securities AFS		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	(103,284)		—		(103,284)
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	(21)		—		(21)

Investment securities HTM, net, at amortized cost	1,108		—		1,108
Personnel expense	—		(81)		(81)
Other expense	—		74		74


Income tax benefit	43,098		2		43,100
Net other comprehensive (loss) during period	(126,702)		(6)		(126,708)
Balance March 31, 2022	$	(131,968)	$	(5,057)	$	(137,024)

Balance December 31, 2020	$	41,325	$	(28,707)	$	12,618
Other comprehensive (loss) before reclassifications	(23,979)		—		(23,979)
Amounts reclassified from accumulated other comprehensive income (loss)
Investment securities losses , net	39		—		39
Investment securities HTM, net, at amortized cost	518		—		518
Personnel expense	—		(37)		(37)
Other expense	—		1,050		1,050


Income tax (expense) benefit	5,851		(253)		5,598
Net other comprehensive income (loss) during period	(17,571)		760		(16,811)
Balance March 31, 2021	$	23,754	$	(27,947)	$	(4,193)

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 Mar 31,
($ in Thousands)	2022		2021
Wealth management fees	$	22,404	$	22,414
Service charges and deposit account fees	3,784		3,941
Card-based fees(a)	417		346

Other revenue	1,235		664
Noninterest income (in-scope of Topic 606)	$	27,840	$	27,365
Noninterest income (out-of-scope of Topic 606)(b)	9,950		14,464
Total noninterest income	$	37,790	$	41,828



	Community, Consumer, and Business
	Three Months Ended Mar 31,
($ in Thousands)	2022		2021

Service charges and deposit account fees	$	13,069	$	10,900
Card-based fees(a)	9,524		9,414

Other revenue	1,862		3,674
Noninterest income (in-scope of Topic 606)	$	24,455	$	23,988
Noninterest income (out-of-scope of Topic 606)	8,751		23,342
Total noninterest income	$	33,207	$	47,331

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	Risk Management and Shared Services
	Three Months Ended Mar 31,
($ in Thousands)	2022		2021

Service charges and deposit account fees	$	3	$	15
Card-based fees(a)	7		4

Other revenue	38		391
Noninterest income (in-scope of Topic 606)	$	49	$	409
Noninterest income (out-of-scope of Topic 606)	3,421		5,775
Total noninterest income	$	3,470	$	6,184



	Consolidated Total
	Three Months Ended Mar 31,
($ in Thousands)	2022		2021

Wealth management fees	$	22,404	$	22,414
Service charges and deposit account fees	16,856		14,855
Card-based fees(a)	9,949		9,764

Other revenue	3,135		4,729
Noninterest income (in-scope of Topic 606)	$	52,344	$	51,762
Noninterest income (out-of-scope of Topic 606)(b)	22,123		43,581
Total noninterest income	$	74,467	$	95,343

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

(b) For the three months ended March 31, 2021, the Corporation recognized a $2 million pre-tax gain on the sale of Whitnell.

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 finance leases for land and retail and corporate offices.

These leases have original terms of 1 year or longer with remaining maturities up to 41 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.

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


	Three Months Ended Mar 31,
($ in Thousands)	2022		2021
Operating lease costs	$	1,798	$	2,240
Finance lease costs	41		39
Operating lease cash flows	2,407		2,963
Finance lease cash flows	44		40

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


($ in Thousands)	Consolidated Balance Sheets Category	Mar 31, 2022		Dec 31, 2021
Operating lease right-of-use asset	Premises and equipment	$	28,354	$	28,299
Finance lease right-of-use asset	Other assets	545		143
Operating lease liability	Accrued expenses and other liabilities	31,585		31,345
Finance lease liability	Other long-term funding	562		163

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


	Mar 31, 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
Equipment	$	191	1.25	0.44	%	$	192	1.50	0.45	%
Retail and corporate offices	28,482		5.76	2.24	%	29,008		5.56	3.26	%
Land	5,356		8.11	3.12	%	5,551		8.29	3.12	%
Total operating leases	$	34,028	6.08	2.37	%	$	34,751	5.94	3.22	%
Finance leases
Retail and corporate offices	$	553	6.00	1.32	%	$	112	1.25	1.32	%
Land	30		0.42	1.07	%	51		0.67	1.07	%
Total finance leases	$	583	5.70	1.31	%	$	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
Nine months ended December 31, 2022	$	5,692	$	98	$	5,790
2023	6,252		92		6,344
2024	5,660		93		5,752
2025	4,363		93		4,456
2026	3,799		93		3,891
Beyond 2026	8,263		116		8,379
Total lease payments	$	34,028	$	583	$	34,611
Less: interest	2,444		21		2,465
Present value of lease payments	$	31,585	$	562	$	32,147

As of March 31, 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 March 31, 2022 will commence between April 2022 and October 2023 with lease terms of 3 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 Item 1A of Part 2 herein, 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 $24.1 billion decreased $366 million, or 1%, compared to the first three months of 2021. For 2022, the Corporation expects auto finance loan growth of more than $1.2 billion and commercial loan growth, including asset-based lending and equipment finance, of $750 million to $1.0 billion.

•Average deposits of $28.6 billion increased $1.8 billion, or 7%, from the first three months of 2021, driven primarily by increases in low cost deposits partially offset by decreases in higher cost deposits.

•Net interest income of $188 million increased $12 million, or 7%, from the first three months of 2021, and net interest margin was 2.42% compared to 2.39% for the first three months of 2021. The increase in net interest income was driven by higher investment income and lower interest-bearing liability costs, partially offset by lower commercial PPP lending income. For 2022, the Corporation expects net interest income of more than $840 million, assuming a 25 bp increase at each FOMC meeting this year.

•Provision for credit losses had a release of $4 million, compared to a release of $23 million for the first three months of 2021. For 2022, the Corporation expects to adjust the provision to reflect changes to risk grades, economic conditions, loan volumes, and other indications of credit quality.

•Noninterest income of $74 million decreased $21 million, or 22%, from the first three months of 2021, primarily driven by the $16 million, or 65%, decrease in mortgage banking, net, driven by decreased gains on sold loans due to lower mortgage settlements and a reduction of $5 million due to changes in MSRs valuation, net of economic hedges. For 2022, the Corporation expects noninterest income of $290 million to $300 million.

•Noninterest expense of $173 million decreased $2 million, or 1%, from the first three months of 2021. For 2022, the Corporation expects noninterest expense will be approximately $725 million to $740 million.

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Table 1 Summary Results of Operations: Trends


	Three months ended
($ in Thousands, except per share data)		Mar 31, 2022			Dec 31, 2021			Sep 30, 2021			Jun 30, 2021			Mar 31, 2021
Net income		$	74,262		$	76,877		$	88,809		$	91,007		$	94,301
Net income available to common equity		71,387			74,002			84,655			86,131			89,094
Earnings per common share - basic		0.48			0.49			0.56			0.56			0.58
Earnings per common share - diluted		0.47			0.49			0.56			0.56			0.58
Effective tax rate		20.07		%	16.48		%	20.61		%	19.81		%	20.69		%

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Table 2 Net Interest Income Analysis


	Three Months Ended
	Mar 31, 2022						Dec 31, 2021						Mar 31, 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	$	43,774	$	1,277	11.83	%	$	115,074	$	5,055	17.43	%	$	806,699	$	8,900	4.47	%
Asset-based lending (ABL) & equipment finance (d)	202,836		1,449		2.90	%	125,507		971		3.07	%	137,862		1,072		3.15	%
Commercial and business lending (excl PPP, ABL and equipment finance)	8,815,676		52,754		2.43	%	8,715,796		53,401		2.43	%	8,399,439		53,019		2.56	%
Commercial real estate lending	6,177,062		43,886		2.88	%	6,134,049		45,040		2.91	%	6,171,202		44,315		2.91	%
Total commercial	15,239,348		99,366		2.64	%	15,090,427		104,468		2.75	%	15,515,202		107,307		2.80	%
Residential mortgage	7,671,329		55,403		2.89	%	7,751,337		54,952		2.84	%	7,962,691		55,504		2.79	%
Auto finance	305,202		2,649		3.52	%	53,120		587		4.39	%	10,190		111		4.43	%
Other retail	881,859		10,662		4.87	%	900,369		11,188		4.95	%	975,266		11,519		4.75	%
Total loans	24,097,738		168,081		2.81	%	23,795,253		171,195		2.86	%	24,463,349		174,442		2.88	%
Investment securities
Taxable	4,363,733		16,472		1.51	%	4,067,612		13,317		1.31	%	2,976,469		7,014		0.94	%
Tax-exempt(a)	2,384,601		20,296		3.40	%	2,257,106		19,617		3.48	%	1,900,346		17,844		3.76	%
Other short-term investments	1,154,939		1,993		0.70	%	1,592,840		2,031		0.51	%	991,844		1,694		0.69	%
Investments and other	7,903,273		38,761		1.96	%	7,917,558		34,965		1.76	%	5,868,659		26,553		1.81	%
Total earning assets	32,001,010		$	206,842	2.60	%	31,712,810		$	206,160	2.59	%	30,332,008		$	200,994	2.67	%
Other assets, net	3,199,172						3,303,349						3,352,135
Total assets	$	35,200,182					$	35,016,159					$	33,684,143
Liabilities and Stockholders' equity
Interest-bearing liabilities
Interest-bearing deposits
Savings	$	4,529,991	$	380	0.03	%	$	4,367,233	$	369	0.03	%	$	3,810,321	$	332	0.04	%
Interest-bearing demand	6,722,038		1,025		0.06	%	6,506,438		1,015		0.06	%	5,713,270		1,178		0.08	%
Money market	7,030,945		965		0.06	%	6,892,803		927		0.05	%	6,875,730		1,059		0.06	%
Network transaction deposits	734,895		265		0.15	%	838,255		239		0.11	%	1,080,109		327		0.12	%
Time deposits	1,313,101		937		0.29	%	1,381,092		1,127		0.32	%	1,658,568		3,014		0.74	%
Total interest-bearing deposits	20,330,970		3,571		0.07	%	19,985,821		3,677		0.07	%	19,137,998		5,909		0.13	%
Federal funds purchased and securities sold under agreements to repurchase	293,915		38		0.05	%	293,948		40		0.05	%	136,144		26		0.08	%
Commercial paper	27,963		1		0.01	%	44,250		2		0.01	%	42,774		6		0.05	%


FHLB advances	1,610,983		8,182		2.06	%	1,621,097		8,514		2.08	%	1,631,895		9,493		2.36	%
Long-term funding	249,632		2,730		4.38	%	249,223		2,730		4.38	%	549,585		5,585		4.07	%
Total short and long-term funding	2,182,492		10,951		2.03	%	2,208,518		11,286		2.03	%	2,360,397		15,109		2.58	%
Total interest-bearing liabilities	22,513,462		$	14,522	0.26	%	22,194,339		$	14,963	0.27	%	21,498,395		$	21,018	0.40	%
Noninterest-bearing demand deposits	8,316,399						8,416,525						7,666,561
Other liabilities	383,528						401,433						415,195
Stockholders’ Equity	3,986,792						4,003,863						4,103,991
Total liabilities and stockholders’ equity	$	35,200,182					$	35,016,159					$	33,684,143
Interest rate spread					2.34	%					2.32	%					2.27	%
Net free funds					0.08	%					0.08	%					0.12	%
Fully tax-equivalent net interest income and net interest margin ("NIM")			$	192,320	2.42	%			$	191,197	2.40	%			$	179,976	2.39	%
Fully tax-equivalent adjustment			4,573						4,434						4,074
Net interest income			$	187,747					$	186,763					$	175,902

(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 the first quarter of 2022 do not include equipment finance.

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Notable Contributions to the Change in Net Interest Income

•Net interest income and fully tax-equivalent net interest income was $12 million, or 7%, higher than the first three months of 2021. Average investments and other short-term investments increased $2.0 billion, or 35%. The increase in net interest income was driven by higher investment income and lower interest-bearing liability costs, partially offset by lower commercial PPP lending income. 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 $1.0 billion, or 5%, compared to the first three months of 2021. Interest-bearing deposits increased $1.2 billion, or 6%, primarily driven by an increase in low cost deposits partially offset by decreases in higher cost deposits. Average noninterest-bearing demand deposits were up $650 million, or 8%, versus the first three months of 2021.

• The cost of interest-bearing liabilities decreased 14 bp from the first three months of 2021, primarily attributable to a favorable mix with lower cost core deposit balances increasing and higher cost deposits and long-term funding decreasing.

•The Federal Reserve raised the federal funds target interest to a range of 0.25% to 0.50% in March 2022, which was the first change since the first quarter of 2020.

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 March 31, 2022 was the Moody's baseline forecast from February 2022 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


	Three months ended									Changes vs
($ in Thousands, except as noted)		Mar 31, 2022		Dec 31, 2021		Sep 30, 2021		Jun 30, 2021		Mar 31, 2021		Dec 31, 2021		Mar 31, 2021
Wealth management fees(a)		$	22,404	$	22,625	$	22,110	$	22,706	$	22,414	(1)	%	—	%
Service charges and deposit account fees		16,856		17,039		16,962		15,549		14,855		(1)	%	13	%
Card-based fees		9,926		11,176		11,113		10,982		9,743		(11)	%	2	%
Other fee-based revenue		3,766		4,316		3,929		4,244		4,596		(13)	%	(18)	%
Total fee-based revenue		52,952		55,157		54,113		53,480		51,608		(4)	%	3	%
Capital markets, net		8,646		9,674		7,114		5,696		8,118		(11)	%	7	%
Mortgage servicing fees, net(b)		1,830		795		323		(155)		(1,397)		130	%	N/M
Gains and fair value adjustments on loans held for sale		785		3,290		8,341		8,623		14,744		(76)	%	(95)	%


Changes in mortgage servicing rights valuation, net of economic hedge(c)		5,776		3,955		1,993		(340)		10,578		46	%	(45)	%
Mortgage banking, net		8,391		8,041		10,657		8,128		23,925		4	%	(65)	%
Bank and corporate owned life insurance		2,071		4,704		2,760		3,088		2,702		(56)	%	(23)	%

Other		2,198		2,941		2,205		3,004		3,216		(25)	%	(32)	%
Subtotal		74,258		80,517		76,848		73,397		89,570		(8)	%	(17)	%
Asset gains (losses), net		188		985		5,228		(14)		4,809		(81)	%	(96)	%
Investment securities gains(losses), net		21		—		—		24		(39)		N/M		N/M
Gain on the sale of branches, net(d)		—		—		—		36		1,002		N/M		(100)	%
Total noninterest income		$	74,467	$	81,502	$	82,076	$	73,443	$	95,343	(9)	%	(22)	%
Mortgage loans originated for sale during period		$	252,113	$	404,398	$	455,842	$	476,670	$	412,645	(38)	%	(39)	%
Mortgage loan settlements during period		296,089		426,785		463,425		484,446		400,135		(31)	%	(26)	%

Assets under management, at market value(e)		12,937		13,679		13,148		13,141		12,553		(5)	%	3	%

N/M = Not Meaningful
(a) Includes trust, asset management, brokerage, and annuity fees.
(b) Includes mortgage origination and servicing fees, net of MSRs amortization/decay.
(c) 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.
(d) 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.
(e) $ in millions. Excludes assets held in brokerage accounts.

Notable Contributions to the Change in Noninterest Income

•Mortgage banking, net decreased $16 million from the first three months of 2021, driven by decreased gains on sold loans due to lower mortgage settlements and a reduction of $5 million due to changes in MSRs valuation, net of economic hedges.

•Asset gains (losses), net decreased $5 million from the first three months of 2021, due to a gain of $2 million from the sale of Whitnell and higher gains from private equity investments during the first three months of 2021.

•Service charges and deposit account fees increased $2 million from the first three months of 2021 as a result of higher overdraft and insufficient funds fees. See Recent Developments for additional details on the Corporation's announcement related to overdraft and insufficient funds fees.

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Noninterest Expense

Table 4 Noninterest Expense


	Three months ended									Change vs
($ in Thousands)		Mar 31, 2022		Dec 31, 2021		Sep 30, 2021		Jun 30, 2021		Mar 31, 2021		Dec 31, 2021		Mar 31, 2021
Personnel		$	104,811	$	107,787	$	107,880	$	106,994	$	104,026	(3)	%	1	%
Technology		21,485		20,787		19,927		20,236		20,740		3	%	4	%
Occupancy		16,080		16,863		15,814		14,679		16,156		(5)	%	—	%
Business development and advertising		4,954		5,627		6,156		4,970		4,395		(12)	%	13	%
Equipment		4,960		4,905		5,200		5,481		5,518		1	%	(10)	%
Legal and professional		5,087		4,428		4,304		6,661		6,530		15	%	(22)	%
Loan and foreclosure costs		2,014		1,636		1,616		2,671		2,220		23	%	(9)	%
FDIC assessment		5,100		4,800		5,000		3,600		4,750		6	%	7	%
Other intangible amortization		2,203		2,203		2,203		2,203		2,236		—	%	(1)	%

Other		6,597		13,173		9,793		6,979		8,775		(50)	%	(25)	%
Total noninterest expense		$	173,292	$	182,210	$	177,892	$	174,475	$	175,347	(5)	%	(1)	%
Average FTEs(a)		4,018		3,992		4,010		3,990		4,020		1	%	—	%

N/M = Not Meaningful
(a) Average FTEs without overtime

Notable Contributions to the Change in Noninterest Expense

•Legal and professional expenses decreased $1 million from the first three months of 2021 as a result of lower consulting costs associated with mortgage activity.

•Other expenses decreased $2 million from the first three months of 2021, primarily driven by a reduction in pension expense.

Income Taxes

The Corporation recognized income tax expense of $19 million for the three months ended March 31, 2022, compared to income tax expense of $25 million for the three months ended March 31, 2021. The Corporation's effective tax rate was 20.07% for the first three months of 2022, compared to an effective tax rate of 20.69% for the first three months of 2021. The decrease in income tax expense during the first three months of 2022 was primarily driven by a decrease in income before tax. The decrease in the effective tax rate was primarily driven by an increase in tax-exempt interest income. The Corporation expects a full year effective tax rate of 19% to 21%, assuming no change in the statutory corporate tax rate.

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

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Balance Sheet Analysis

•At March 31, 2022, total assets were $35.0 billion, down $148 million from December 31, 2021 and up $381 million, or 1%, from March 31, 2021.

•Interest bearing deposits in other financial institutions were $167 million at March 31, 2022, down $515 million, or 76%, from December 31, 2021 and down $1.4 billion, or 90%, from March 31, 2021, due to the deployment of excess liquidity into investment securities purchases and loan growth.

•Investment securities AFS, at fair value were $2.8 billion at March 31, 2022, down $1.6 billion, or 36%, from December 31, 2021, and down $576 million, or 17%, from March 31, 2021. Investment securities HTM, net, at amortized cost were $3.9 billion at March 31, 2022, up $1.7 billion, or 76%, from December 31, 2021 and up $2.1 billion, or 112%, from March 31, 2021, driven by the deployment of cash into higher yielding assets and a $1.6 billion transfer of investment securities AFS, at fair value, to investment securities HTM, net, at amortized cost during the first quarter of 2022. See Note 6 Investment Securities for additional details.

•Loans of $24.5 billion at March 31, 2022 were up $307 million, or 1%, from December 31, 2021 and up $370 million, or 2%, from March 31, 2021. See Note 7 Loans for additional details.

•At March 31, 2022, total deposits of $28.4 billion were down $61 million from December 31, 2021 and were up $728 million, or 3%, from March 31, 2021. Government stimulus programs and changed savings habits have led to customers holding higher deposit balances. See section Deposits and Customer Funding for additional information on deposits.

•Other long-term funding was $250 million at March 31, 2022 and $249 million at December 31, 2021 and was down $300 million, or 55%, from March 31, 2021, primarily driven by the redemption of the Bank's senior notes on July 13, 2021. See Note 9 Short and Long-Term Funding for additional details.

•Preferred equity was $193 million at March 31, 2022 and December 31, 2021 and was down $160 million, or 45%, from March 31, 2021, as a result of the redemption of the Corporation's Series C Preferred Stock during the second quarter of 2021 and the redemption of the Corporation's Series D Preferred Stock during the third quarter of 2021.

Loans

Table 5 Period End Loan Composition


	Mar 31, 2022				Dec 31, 2021				Sep 30, 2021				Jun 30, 2021				Mar 31, 2021
($ in Thousands)	Amount		% of Total		Amount		% of Total		Amount		% of Total		Amount		% of Total		Amount		% of Total
PPP	$	17,995	—	%	$	66,070	—	%	$	182,121	1	%	$	405,482	2	%	$	836,566	3	%
Asset-based lending & equipment finance(a)	231,040		1	%	178,027		1	%	111,027		—	%	105,726		—	%	137,537		1	%
Commercial and industrial	8,102,380		33	%	8,208,289		34	%	7,816,432		33	%	7,803,393		33	%	7,526,964		31	%
Commercial real estate — owner occupied	973,572		4	%	971,326		4	%	879,554		4	%	880,755		4	%	883,237		4	%
Commercial and business lending	9,324,986		38	%	9,423,711		39	%	8,989,133		38	%	9,195,355		38	%	9,384,303		39	%
Commercial real estate — investor	4,469,241		18	%	4,384,569		18	%	4,296,489		18	%	4,300,651		18	%	4,260,706		18	%
Real estate construction	1,760,076		7	%	1,808,976		7	%	1,834,871		8	%	1,880,897		8	%	1,882,299		8	%
Commercial real estate lending	6,229,317		25	%	6,193,545		26	%	6,131,360		26	%	6,181,549		26	%	6,143,004		25	%
Total commercial	15,554,303		63	%	15,617,256		64	%	15,120,493		64	%	15,376,904		64	%	15,527,307		64	%
Residential mortgage	7,609,343		31	%	7,567,310		31	%	7,590,895		32	%	7,638,372		32	%	7,685,218		32	%
Auto finance	497,523		2	%	143,045		1	%	6,739		—	%	7,817		—	%	9,165		—	%


Home equity	580,867		2	%	595,615		2	%	608,566		3	%	631,783		3	%	651,647		3	%
Other consumer	289,889		1	%	301,723		1	%	294,979		1	%	292,660		1	%	288,990		1	%
Total consumer	8,977,622		37	%	8,607,693		36	%	8,501,180		36	%	8,570,632		36	%	8,635,020		36	%
Total loans	$	24,531,926	100	%	$	24,224,949	100	%	$	23,621,673	100	%	$	23,947,536	100	%	$	24,162,328	100	%

(a) Periods prior to the first quarter of 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 three 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 March 31, 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	$	1,640	$	16,355	$	—	$	—	$	17,995	—	%
Asset-based lending & equipment finance	176,817		40,122		14,101		—		231,040		1	%
Commercial and industrial	7,579,861		419,869		84,386		18,264		8,102,380		33	%
Commercial real estate — owner occupied	548,348		301,720		122,925		578		973,572		4	%
Commercial real estate — investor	4,040,023		277,790		151,149		280		4,469,241		18	%
Real estate construction	1,704,706		45,061		3,143		7,166		1,760,076		7	%
Commercial - adjustable	8,321,120		147,966		12,970		6,769		8,488,825		35	%
Commercial - fixed	5,730,275		952,951		362,734		19,519		7,065,479		29	%
Residential mortgage - adjustable	367,114		594,375		1,454,319		271		2,416,079		10	%
Residential mortgage - fixed	29,390		97,088		601,445		4,465,341		5,193,263		21	%
Auto finance	294		93,605		403,624		—		497,523		2	%
Home equity	22,315		67,747		97,668		393,137		580,867		2	%
Other consumer	53,423		47,647		156,294		32,526		289,889		1	%
Total loans	$	14,523,931	$	2,001,378	$	3,089,053	$	4,917,562	$	24,531,926	100	%
Fixed-rate	$	5,760,092	$	1,125,296	$	750,299	$	4,888,686	$	12,524,372	51	%
Floating or adjustable rate	8,763,840		876,083		2,338,755		28,877		12,007,554		49	%
Total	$	14,523,931	$	2,001,378	$	3,089,053	$	4,917,562	$	24,531,926	100	%

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

At March 31, 2022, $17.8 billion, or 72%, of the loans outstanding and $14.2 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 March 31, 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


March 31, 2022	NAICS Subsector	Outstanding Balance		Total Exposure		% of Total Loan Exposure
Credit Intermediation and Related Activities(a)	522	$	1,130,942	$	2,773,669	8	%
Real Estate(b)	531	1,510,493		2,735,180		8	%
Utilities(c)	221	1,827,305		2,019,958		6	%

(a) Includes mortgage warehouse lines

(b) Includes REIT 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


March 31, 2022	% of Total Loan Exposure		% of Total Commercial Real Estate - Investor Loan Exposure
Multi-Family	4	%	29	%
Office	3	%	24	%
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


March 31, 2022	% of Total Loan Exposure		% of Total Real Estate Construction Loan Exposure
Multi-Family	4	%	34	%
Single Family	3	%	24	%
Industrial	3	%	23	%

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 March 31, 2022. The majority of the on balance sheet residential mortgage portfolio consists of constant maturity treasury based, hybrid, adjustable rate mortgage loans with initial fixed rate terms of 3, 5, 7, or 10 years. The rates on these 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.

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

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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.

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% and the minimum acceptable FICO score at 670. 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 $96 million and $101 million of student loans at March 31, 2022 and December 31, 2021, respectively, the majority of which are government guaranteed. Currently, there is federal student loan relief in effect through August 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 other NPAs:

Table 10 Nonperforming Assets


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

Commercial and industrial	225			6,233			8,497			18,380			33,192
Commercial real estate — owner occupied	—			—			7			7			7
Commercial and business lending	266			6,279			8,504			18,387			33,200
Commercial real estate — investor	80,886			60,677			61,504			63,003			58,485
Real estate construction	609			177			247			247			327
Commercial real estate lending	81,495			60,855			61,751			63,250			58,813
Total commercial	81,761			67,134			70,256			81,637			92,012
Residential mortgage	53,827			55,362			56,678			56,795			61,256
Auto finance	49			52			67			56			36
Home equity	7,490			7,726			7,838			8,517			9,792
Other consumer	95			170			222			131			195
Total consumer	61,460			63,309			64,806			65,498			71,280
Total nonaccrual loans	143,221			130,443			135,062			147,135			163,292
Commercial real estate owned	861			984			1,005			1,318			2,092
Residential real estate owned	2,209			3,666			2,126			2,438			1,501
Bank properties real estate owned(a)	15,123			24,969			30,724			20,244			20,995
OREO	18,194			29,619			33,855			24,000			24,588

Total nonperforming assets	$	161,414		$	160,062		$	168,917		$	171,135		$	187,880








Accruing loans past due 90 days or more
Commercial	$	125		$	151		$	98		$	203		$	190
Consumer	1,470			1,111			932			1,099			1,485
Total accruing loans past due 90 days or more	$	1,595		$	1,263		$	1,029		$	1,302		$	1,675
Restructured loans (accruing)
Commercial	$	10,127		$	22,763		$	25,582		$	26,353		$	27,356
Consumer	19,876			19,768			18,917			15,582			13,464
Total restructured loans (accruing)	$	30,003		$	42,530		$	44,499		$	41,935		$	40,820
Nonaccrual restructured loans (included in nonaccrual loans)	$	19,352		$	17,426		$	15,226		$	17,237		$	17,624
Ratios
Nonaccrual loans to total loans	0.58		%	0.54		%	0.57		%	0.61		%	0.68		%
NPAs to total loans plus OREO	0.66		%	0.66		%	0.71		%	0.71		%	0.78		%
NPAs to total assets	0.46		%	0.46		%	0.49		%	0.50		%	0.54		%

Allowance for credit losses on loans to nonaccrual loans	221.92		%	245.16		%	246.02		%	247.45		%	247.23		%

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Table 10 Nonperforming Assets (continued)


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

Commercial and industrial	1,085		632		1,229		258		526
Commercial real estate — owner occupied	198		163		30		47		—
Commercial and business lending	1,284		878		1,827		306		526
Commercial real estate — investor	—		616		17,021		391		5,999
Real estate construction	—		1,620		—		117		977
Commercial real estate lending	—		2,236		17,021		509		6,976
Total commercial	1,284		3,114		18,848		814		7,502
Residential mortgage	4,957		6,169		7,095		5,015		3,973
Auto finance	949		11		10		38		24


Home equity	4,207		3,711		2,931		2,472		2,352
Other consumer	1,232		2,307		1,272		1,036		1,246
Total consumer	11,345		12,198		11,308		8,562		7,594
Total accruing loans 30-89 days past due	$	12,629	$	15,312	$	30,156	$	9,376	$	15,097








Potential problem loans
PPP(b)	$	54	$	2,000	$	4,160	$	8,695	$	22,398
Asset-based lending & equipment finance(c)	19,057		17,697		—		—		—
Commercial and industrial	93,396		120,561		124,990		77,064		122,143
Commercial real estate — owner occupied	24,005		26,723		21,241		17,828		15,965
Commercial and business lending	136,513		166,981		150,391		103,587		160,506
Commercial real estate — investor	130,792		106,138		78,962		71,613		85,752
Real estate construction	200		21,408		19,187		16,465		13,977
Commercial real estate lending	130,992		127,546		98,150		88,078		99,728
Total commercial	267,505		294,527		248,541		191,665		260,234
Residential mortgage	3,032		2,214		2,374		3,024		2,524

Home equity	156		165		171		1,558		1,729

Total consumer	3,188		2,379		2,546		4,583		4,254
Total potential problem loans	$	270,693	$	296,905	$	251,087	$	196,248	$	264,488

(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 February 2022 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 March 31, 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 historical loss 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. The loss factors applied in the methodology are periodically re-evaluated and adjusted to reflect changes in historical loss levels or other risks. 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


	Quarter Ended
($ in Thousands)		Mar 31, 2022			Dec 31, 2021			Sep 30, 2021			Jun 30, 2021			Mar 31, 2021
Allowance for Loan Losses
Balance at beginning of period		$	280,015		$	290,997		$	318,811		$	352,938		$	383,702


Provision for loan losses		(3,000)			(4,500)			(20,000)			(29,500)			(26,000)


Charge offs		(2,028)			(8,869)			(10,929)			(7,681)			(13,174)
Recoveries		4,072			2,387			3,115			3,054			8,410
Net (charge offs) recoveries		2,044			(6,482)			(7,814)			(4,628)			(4,764)
Balance at end of period		$	279,058		$	280,015		$	290,997		$	318,811		$	352,938
Allowance for Unfunded Commitments
Balance at beginning of period		$	39,776		$	41,276		$	45,276		$	50,776		$	47,776


Provision for unfunded commitments		(1,000)			(1,500)			(4,000)			(5,500)			3,000

Balance at end of period		$	38,776		$	39,776		$	41,276		$	45,276		$	50,776
Allowance for credit losses on loans		$	317,835		$	319,791		$	332,273		$	364,087		$	403,714
Provision for credit losses on loans		(4,000)			(6,000)			(24,000)			(35,000)			(23,000)
Net loan (charge offs) recoveries

Asset-based lending & equipment finance(a)		$	—		$	27		$	91		$	261		$	33
Commercial and industrial		1,854			(6,669)			(9,149)			1,072			1,334
Commercial real estate — owner occupied		3			4			106			5			4
Commercial and business lending		1,857			(6,638)			(8,951)			1,338			1,370
Commercial real estate — investor		—			109			181			(5,589)			(5,886)
Real estate construction		32			52			18			23			29
Commercial real estate lending		32			162			199			(5,566)			(5,857)
Total commercial		1,889			(6,476)			(8,752)			(4,228)			(4,487)
Residential mortgage		288			(6)			300			(223)			(109)
Auto finance		4			(11)			8			3			9


Home equity		315			546			959			337			344
Other consumer		(451)			(534)			(329)			(517)			(521)
Total consumer		155			(6)			938			(400)			(277)
Total net (charge offs) recoveries		$	2,044		$	(6,482)		$	(7,814)		$	(4,628)		$	(4,764)








Ratios

Allowance for credit losses on loans to total loans		1.30		%	1.32		%	1.41		%	1.52		%	1.67		%

Allowance for credit losses on loans to net charge offs (annualized)		N/M			12.4x			10.7x			19.6x			20.9x
Loan Evaluation Method for ACLL
Individually evaluated for impairment		$	13,625		$	15,194		$	19,913		$	29,352		$	43,262
Collectively evaluated for impairment		304,210			304,597			312,359			334,734			360,452
Total ACLL		$	317,835		$	319,791		$	332,273		$	364,087		$	403,714
Loan Balance
Individually evaluated for impairment		$	110,445		$	115,643		$	131,484		$	141,817		$	180,006
Collectively evaluated for impairment		24,421,481			24,109,306			23,490,189			23,805,719			23,982,321
Total loan balance		$	24,531,926		$	24,224,949		$	23,621,673		$	23,947,536		$	24,162,328

(a) Periods prior to the first quarter of 2022 do not include equipment finance.

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


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

Asset-based lending & equipment finance(b)		—	9	36	87	10
Commercial and industrial		10	(34)	(47)	6	7
Commercial real estate — owner occupied		—	—	5	—	—
Commercial and business lending		8	(29)	(40)	6	6
Commercial real estate — investor		—	1	2	(52)	(55)
Real estate construction		1	1	—	1	1
Commercial real estate lending		—	1	1	(36)	(38)
Total commercial		5	(17)	(23)	(11)	(12)
Residential mortgage		2	—	2	(1)	(1)
Auto finance		1	(9)	43	15	37
Home equity		22	36	61	21	21
Other consumer		(62)	(71)	(44)	(72)	(72)
Total consumer		1	—	4	(2)	(1)
Total net (charge offs) recoveries		3	(11)	(13)	(8)	(8)

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

(b) Periods prior to the first quarter of 2022 do not include equipment finance.

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

•Potential problem loans decreased $26 million, or 9%, from December 31, 2021, and increased $6 million, or 2%, from March 31, 2021. The decrease from December 31, 2021 was primarily driven by commercial and industrial and real estate construction lending, partially offset by an increase in CRE-investor lending. The increase from March 31, 2021 was primarily driven by increases in CRE-investor, asset-based, and CRE-owner occupied lending. These increases were partially offset by decreases in commercial and industrial, PPP, and real estate construction lending. See Table 10 for additional information regarding potential problem loans.

•Total nonaccrual loans increased $13 million, or 10%, from December 31, 2021, and decreased $20 million, or 12%, from March 31, 2021. The increase from December 31, 2021 was primarily due to an increase in CRE-investor lending, which was partially offset by a decrease in commercial and industrial lending. The decrease from March 31, 2021 was primarily driven by decreases in commercial and industrial, residential mortgage, and home equity lending. These decreases were partially offset by an increase in CRE-investor lending. See Note 7 Loans of the notes to consolidated financial statements and Table 10 for additional disclosures on the changes in asset quality.

•Net charge offs (recoveries) decreased $7 million from March 31, 2021 to a recovery position, primarily driven by no charge offs in the CRE-investor portfolio in the current period, combined with net recoveries in the commercial and industrial 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 March 31, 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


	Mar 31, 2022				Dec 31, 2021				Sep 30, 2021				Jun 30, 2021				Mar 31, 2021
($ in Thousands)	Amount		% of Total		Amount		% of Total		Amount		% of Total		Amount		% of Total		Amount		% of Total
Noninterest-bearing demand	$	8,315,699	29	%	$	8,504,077	30	%	$	8,170,105	29	%	$	7,999,143	29	%	$	8,496,194	31	%
Savings	4,661,232		16	%	4,410,198		15	%	4,278,453		15	%	4,182,651		15	%	4,032,830		15	%
Interest-bearing demand	6,616,767		23	%	7,019,782		25	%	6,407,844		23	%	5,969,285		22	%	5,748,353		21	%
Money market	7,522,797		26	%	7,185,111		25	%	7,583,978		27	%	7,640,825		28	%	7,838,437		28	%
Time deposits	1,288,913		5	%	1,347,262		5	%	1,410,886		5	%	1,472,395		5	%	1,561,352		6	%

Total deposits	$	28,405,409	100	%	$	28,466,430	100	%	$	27,851,266	100	%	$	27,264,299	100	%	$	27,677,166	100	%
Customer funding(a)	299,301				354,142				322,081				226,160				182,228
Total deposits and customer funding	$	28,704,710			$	28,820,572			$	28,173,348			$	27,490,459			$	27,859,394
Network transaction deposits(b)	$	762,680			$	766,965			$	929,174			$	871,603			$	1,054,634

Net deposits and customer funding (total deposits and customer funding, excluding network transaction deposits)	$	27,942,029			$	28,053,607			$	27,244,174			$	26,618,856			$	26,804,761

Time deposits of more than $250,000	$	209,208			$	215,100			$	223,075			$	232,035			$	246,037

(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, decreased $61 million from December 31, 2021, and increased $728 million, or 3%, from March 31, 2021, driven by a change in customer savings habits.

•Time deposits decreased $58 million, or 4%, from December 31, 2021, and decreased $272 million, or 17%, from March 31, 2021, due to higher priced time deposits rolling off as they mature.

•Network deposits, primarily sourced from other financial institutions and intermediaries, represented 3% of the Corporation's total deposits at March 31, 2022. Network deposits decreased $4 million, or 1%, from December 31, 2021, and decreased $292 million, or 28%, from March 31, 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 March 31, 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 March 31, 2022, the Bank had $3.9 billion available for future funding. The Federal Reserve Bank also establishes a collateral value

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of assets to support borrowings from the discount window. As of March 31, 2022, the Bank had $742 million available for discount window borrowings.

•A $200 million Parent Company commercial paper program, of which $31 million was outstanding as of March 31, 2022.

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

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

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

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

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

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 March 31, 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 three months ended March 31, 2022, net cash provided by operating activities was $246 million, while net cash used in investing and financing activities was $640 million and $131 million, respectively, for a net decrease in cash and cash equivalents of $524 million since year-end 2021. At March 31, 2022, assets of $35.0 billion decreased $148 million from year-end 2021. On the funding side, deposits of $28.4 billion decreased $61 million from year-end 2021.

For the three months ended March 31, 2021, net cash provided by operating and financing activities was $158 million and $1.1 billion, respectively, while net cash used in investing activities was $12 million, for a net increase in cash and cash equivalents of $1.2 billion from year-end 2020. At March 31, 2021, assets of $34.6 billion increased $1.2 billion, or 3%, from year-end 2020, primarily driven by a $1.3 billion increase in interest-bearing deposits in other financial institutions, partially offset by a $289 million, or 1%, decrease in loans. On the funding side, deposits of $27.7 billion increased $1.2 billion, or 5%, from year-end 2020 related to deposit inflows from government stimulus programs.

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.

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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 three months of 2022.

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 March 31, 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


	Mar 31, 2022				Dec 31, 2021
	Dynamic Forecast		Static Forecast		Dynamic Forecast		Static Forecast
Gradual Rate Change
100 bp increase in interest rates	5.1	%	5.9	%	5.0	%	5.4	%
200 bp increase in interest rates	10.4	%	11.9	%	10.6	%	11.7	%

At March 31, 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


	Mar 31, 2022		Dec 31, 2021
Instantaneous Rate Change
100 bp increase in interest rates	(3.0)	%	(1.8)	%
200 bp increase in interest rates	(5.6)	%	(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 the 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.

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Additionally, the Corporation has been monitoring its volume of commercial credits 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.

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

The following table summarizes significant contractual obligations and other commitments at March 31, 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		$	1,026,754	$	215,668	$	46,487	$	5	$	1,288,913
Short-term funding	9	399,361		—		—		—		399,361
FHLB advances	9	330,270		633		1,005,006		202,039		1,537,948

Other long-term funding	9	114		249,411		180		92		249,797

Operating leases	18	6,722		10,528		7,349		6,985		31,585

Total		$	1,763,220	$	476,240	$	1,059,023	$	209,122	$	3,507,604

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.

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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 March 31, 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


	Quarter Ended
($ in Thousands)		Mar 31, 2022			Dec 31, 2021			Sep 30, 2021			Jun 30, 2021			Mar 31, 2021
Risk-based Capital(a)
CET1		$	2,837,789		$	2,808,289		$	2,779,943		$	2,790,392		$	2,759,473
Tier 1 capital		3,030,579			3,001,074			2,972,622			3,080,015			3,112,239
Total capital		3,448,108			3,570,026			3,550,556			3,655,411			3,682,720
Total risk-weighted assets		27,780,642			27,242,735			26,303,703			26,072,881			25,640,395
Modified CECL transitional amount		67,276			89,702			92,822			100,776			110,683
CET1 capital ratio		10.22		%	10.31		%	10.57		%	10.70		%	10.76		%
Tier 1 capital ratio		10.91		%	11.02		%	11.30		%	11.81		%	12.14		%
Total capital ratio		12.41		%	13.10		%	13.50		%	14.02		%	14.36		%
Tier 1 leverage ratio		8.86		%	8.83		%	8.81		%	9.23		%	9.53		%
Selected Equity and Performance Ratios
Total stockholders’ equity / assets		11.30		%	11.47		%	11.60		%	12.03		%	11.94		%
Dividend payout ratio(b)		41.67		%	40.82		%	35.71		%	32.14		%	31.03		%
Return on average assets		0.86		%	0.87		%	1.01		%	1.06		%	1.14		%
Annualized noninterest expense / average assets		2.00		%	2.06		%	2.03		%	2.04		%	2.11		%

(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 first quarter of 2022.

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Non-GAAP Measures

Table 19 Non-GAAP Measures


	Quarter Ended
($ in Thousands)		Mar 31, 2022			Dec 31, 2021			Sep 30, 2021			Jun 30, 2021			Mar 31, 2021
Selected equity and performance ratios(a)(b)
Tangible common equity / tangible assets		7.68		%	7.86		%	7.92		%	8.04		%	7.80		%
Return on average equity		7.55		%	7.62		%	8.63		%	8.84		%	9.32		%
Return on average tangible common equity		11.00		%	11.09		%	12.72		%	13.19		%	14.03		%
Return on average CET1		10.27		%	10.50		%	12.11		%	12.51		%	13.25		%

Return on average tangible assets		0.88		%	0.90		%	1.05		%	1.10		%	1.18		%
Average stockholders' equity / average assets		11.33		%	11.43		%	11.74		%	12.01		%	12.18		%
Tangible common equity reconciliation(a)
Common equity		$	3,755,092		$	3,831,658		$	3,801,766		$	3,819,852		$	3,774,268
Goodwill and other intangible assets, net		(1,160,883)			(1,163,085)			(1,165,288)			(1,167,491)			(1,169,694)
Tangible common equity		$	2,594,209		$	2,668,573		$	2,636,478		$	2,652,361		$	2,604,575
Tangible Assets Reconciliation(a)
Total assets		$	34,955,900		$	35,104,253		$	34,439,666		$	34,152,625		$	34,575,255
Goodwill and other intangible assets, net		(1,160,883)			(1,163,085)			(1,165,288)			(1,167,491)			(1,169,694)
Tangible assets		$	33,795,017		$	33,941,167		$	33,274,378		$	32,985,134		$	33,405,561
Average tangible common equity and average CET1 reconciliation(a)(b)
Common equity		$	3,793,597		$	3,810,668		$	3,807,083		$	3,788,237		$	3,750,479
Goodwill and other intangible assets, net		(1,162,204)			(1,164,394)			(1,166,589)			(1,168,774)			(1,174,617)
Tangible common equity		2,631,393			2,646,273			2,640,494			2,619,464			2,575,862
Modified CECL transitional amount		67,276			90,528			97,420			105,961			115,649
Accumulated other comprehensive loss (income)		80,383			18,513			(5,320)			(3,111)			(5,337)
Deferred tax assets, net		39,411			39,640			39,893			39,915			40,608
Average CET1		$	2,818,464		$	2,794,954		$	2,772,487		$	2,762,229		$	2,726,782
Average tangible assets reconciliation(a)
Total assets		$	35,200,182		$	35,016,159		$	34,759,489		$	34,379,647		$	33,684,143
Goodwill and other intangible assets, net		(1,162,204)			(1,164,394)			(1,166,589)			(1,168,774)			(1,174,617)
Tangible assets		$	34,037,978		$	33,851,765		$	33,592,900		$	33,210,873		$	32,509,526




Efficiency ratio reconciliation(c)
Federal Reserve efficiency ratio		65.71		%	67.36		%	65.43		%	66.81		%	65.74		%
Fully tax-equivalent adjustment		(1.13)		%	(1.10)		%	(1.01)		%	(1.07)		%	(0.97)		%
Other intangible amortization		(0.84)		%	(0.82)		%	(0.83)		%	(0.87)		%	(0.82)		%
Fully tax-equivalent efficiency ratio		63.76		%	65.46		%	63.61		%	64.88		%	63.96		%
Provision for unfunded commitments adjustment		0.37		%	0.55		%	1.48		%	2.14		%	(1.09)		%
Asset gains, net adjustment		0.05		%	0.24		%	1.29		%	—		%	1.12		%
Acquisitions, branch sales, and initiatives		—		%	(1.43)		%	(0.91)		%	0.01		%	0.22		%
Adjusted efficiency ratio		64.18		%	64.82		%	65.46		%	67.02		%	64.21		%

(a) The ratio tangible common equity to tangible assets excludes goodwill and other intangible assets, net. This financial measure has been included as it is considered to be a critical metric with which to analyze and evaluate financial condition and capital strength.

(b) 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.

(c) 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 (losses), 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 (losses), net, branch sales, and announced initiatives.

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Sequential Quarter Results

The Corporation reported net income of $74 million for the first quarter of 2022, compared to net income of $77 million for the fourth quarter of 2021. Net income available to common equity was $71 million for the first quarter of 2022, or $0.48 for basic and $0.47 for diluted earnings per common share. Comparatively, net income available to common equity for the fourth quarter of 2021 was $74 million, or $0.49 for both basic and diluted earnings per common share (see Table 1).

Fully tax-equivalent net interest income for the first quarter of 2022 was $192 million, $1 million, or 1%, higher than the fourth quarter of 2021. The net interest margin in the first quarter of 2022 was up 2 bp to 2.42%. Average earning assets increased $288 million, or 1%, to $32.0 billion in the first quarter of 2022. Average loans increased $302 million, or 1%. On the funding side, total interest-bearing deposits increased $345 million, or 2%, primarily driven by changing customer savings habits (see Table 2).

The provision for credit losses had a release of $4 million for the first quarter of 2022, compared to a release of $6 million for the fourth 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 first quarter of 2022 was $74 million, down $7 million, or 9%, from the fourth quarter of 2021, driven by fewer bank owned life insurance policy redemptions and lower card-based fees and capital markets revenue. (see Table 3).

Noninterest expense for the first quarter of 2022 was $173 million, down $9 million, or 5%, from the fourth quarter of 2021, driven by a reduction in personnel, pension and donation expenses (see Table 4).

For the first quarter of 2022, the Corporation recognized income tax expense of $19 million, compared to income tax expense of $15 million for the fourth quarter of 2021. See Income Taxes section 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 Mar 31,
($ in Thousands)	2022			2021			% Change
Corporate and Commercial Specialty
Total revenue(a)	$	136,948		$	136,160		1	%
Provision for credit losses	12,653			16,680			(24)	%
Noninterest expense	56,559			55,448			2	%
Income tax expense	12,313			11,891			4	%
Net income	55,423			52,141			6	%
Average earning assets	14,416,342			14,050,208			3	%
Average loans	14,414,631			14,049,949			3	%
Average deposits	9,411,118			8,532,903			10	%
Average allocated capital (Average CET1)(b)	1,421,007			1,397,132			2	%
Return on average allocated capital (ROCET1)(b)	15.82		%	15.14		%	68 bp
Community, Consumer, and Business
Total revenue	$	121,584		$	133,995		(9)	%
Provision for credit losses	4,656			5,928			(21)	%
Noninterest expense	98,660			100,353			(2)	%
Income tax expense	3,836			5,820			(34)	%
Net income	14,431			21,894			(34)	%
Average earning assets	9,175,473			9,614,167			(5)	%
Average loans	9,175,473			9,614,167			(5)	%
Average deposits	18,414,526			17,109,644			8	%
Average allocated capital (Average CET1)(b)	514,543			569,430			(10)	%
Return on average allocated capital (ROCET1)(b)	11.37		%	15.59		%	N/M
Risk Management and Shared Services
Total revenue	$	3,683		$	1,091		N/M
Provision for credit losses	(21,300)			(45,612)			(53)	%
Noninterest expense	18,073			19,546			(8)	%
Income tax expense	2,501			6,890			(64)	%
Net income	4,409			20,266			(78)	%
Average earning assets	8,409,195			6,667,633			26	%
Average loans	507,633			799,233			(36)	%
Average deposits	821,726			1,162,012			(29)	%
Average allocated capital (Average CET1)(b)	882,913			760,220			16	%
Return on average allocated capital (ROCET1)(b)	0.70		%	8.03		%	N/M
Consolidated Total
Total revenue(a)	$	262,214		$	271,245		(3)	%
Return on average allocated capital (ROCET1)(b)	10.27		%	13.25		%	N/M

N//M = Not meaningful

(a) For the three months ended March 31, 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 return on CET1 ("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.

•Provision for credit losses decreased $4 million from the three months ended March 31, 2021 as a result of improving credit quality.

•Noninterest expense increased $1 million from the three months ended March 31, 2021, primarily driven by an increase in business development and advertising expense.

•Average loans increased $365 million from the three months ended March 31, 2021, primarily driven by an increase in commercial and business lending due to the new asset-based and equipment finance verticals and growth in general commercial and industrial loans.

•Average deposits increased $878 million from the three months ended March 31, 2021, primarily driven by increases in interest-bearing demand deposit accounts.

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

•Revenue decreased $12 million from the three months ended March 31, 2021, primarily driven by a decrease in mortgage banking income due to decreased gains on loans sold as a result of lower mortgage settlements. Additionally, the valuation method for MSRs was changed effective January 1, 2022, resulting in a decrease in mortgage banking income due to impairment recoveries recognized in the three months ended March 31, 2021.

•Provision for credit losses decreased $1 million from the three months ended March 31, 2021 as a result of improving credit quality.

•Average loans decreased $439 million from the three months ended March 31, 2021, driven by decreases in residential mortgages and PPP loans, partially offset by an increase in auto finance loans.

•Average deposits increased $1.3 billion from the three months ended March 31, 2021, primarily due to 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 $3 million from the three months ended March 31, 2021, primarily driven by lower interest expense as a result of lower network deposit balances.

•Provision for credit losses increased $24 million from the three months ended March 31, 2021, driven by a larger provision release during the three months ended March 31, 2021.

•Average earning assets increased $1.7 billion from the three months ended March 31, 2021, driven by investment purchases throughout the past year.

•Average loans decreased $292 million from the three months ended March 31, 2021, primarily driven by a decrease in commercial and business lending.

•Average deposits decreased $340 million from the three months ended March 31, 2021, primarily driven by a decrease 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 $4 million and decrease the value of the hedge by $4 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 $4 million.

Recent Developments

On April 21, 2022, the Corporation announced plans to eliminate non-sufficient funds fees, overdraft protection transfer fees, and continuous overdraft fees and reduce the daily limit of overdraft fee occurrences from 4 to 2. The planned changes in the third quarter of 2022 are expected to reduce the total burden of overdrafts to our customers by approximately 30%.

On April 26, 2022, the Corporation’s Board of Directors declared a regular quarterly cash dividend of $0.20 per common share, payable on June 15, 2022 to shareholders of record at the close of business on June 1, 2022. 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 June 15, 2022 to shareholders of record at the close of business on June 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 June 15, 2022 to shareholders of record at the close of business on June 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 March 31, 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 March 31, 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

The following risk factors supplement the Risk Factors described in the Corporation’s 2021 Annual Report on Form 10-K and should be read in conjunction therewith

Macroeconomic and geopolitical challenges and uncertainties affecting the stability of regions and countries around the globe, specifically including Russia and Ukraine, could have a negative impact on our business, financial condition and results of operations. We may experience negative impacts to our businesses and results of operations as a result of macroeconomic and geopolitical challenges, uncertainties and volatility occurring across the globe. For instance, the recent action of Russian military forces in Ukraine has created instability in that region and has escalated tensions between Russia and the United States and across Europe. In response to the actions taken by Russia, the United States has imposed, and is likely to continue to impose, significant financial and economic sanctions and export controls against certain Russian organizations and individuals, with similar actions being either implemented or planned by the European Union and the United Kingdom and other jurisdictions.

The actions taken by Russia in Ukraine, and any further measures that may be taken by the United States or its allies in response to such actions, could have negative impacts on global and regional financial markets and economic conditions. The United States has banned Russian imports of oil, natural gas and coal and other jurisdictions have taken, or are contemplating taking, similar actions. These dynamics are placing additional upward pressure on fuel and energy prices, which already were rising based on factors including a return to pre-pandemic levels of consumption and insufficient global production to match increasing demand. In addition, Ukraine’s ability to function as a significant supplier of commodities—including wheat, neon and platinum—used in the production of key energy, food and industrial outputs has been limited by Russia’s actions and is causing global prices in certain markets to increase. The Russia-Ukraine conflict already has been more protracted than was initially expected and, to the extent that the conflict continues for an extended period of time and/or expands into surrounding regions, global financial conditions could worsen and/or become more volatile. These developments are combining to amplify existing economic uncertainty and cause adjustments to longer-term inflation expectations which, in turn, may cause upward pressure on interest rates and adversely affect economic conditions. For additional information, see “Risk Factors—We are subject to interest rate risk, which recently has increased due to domestic and global economic instability and geopolitical developments.”

Further, the Russia-Ukraine conflict may impact our risk exposure in other areas, most notably our cybersecurity risk. On March 21, 2022, the Biden Administration issued a warning regarding the potential for Russia to engage in malicious cyber activities, specifically including attacks on critical infrastructure such as the financial sector, in response to the international economic sanctions that have been imposed against the Russian government and organizations and individuals within Russia. Institutions that provide critical services, including all members of the financial sector such as the Corporation and the Bank, have been encouraged by the Administration and their supervisors to enhance cyber-defense systems and take steps to further secure their data in anticipation of potential malicious cyber activity by the Russian government or other Russian actors. For additional information regarding the cybersecurity risks for the Corporation and the Bank, please refer to the Corporation’s 2021 Annual Report on Form 10-K.

Each of the developments described above, or any combination of them, could adversely affect our businesses, financial condition and results of operations.

We are subject to interest rate risk, which recently has increased due to domestic and global economic instability and geopolitical developments. Our earnings and cash flows are largely dependent upon our net interest income. Interest rates are highly sensitive to many factors that are beyond our control, including global, domestic and local economic conditions and the policies of various governmental and regulatory agencies and, in particular, the Federal Reserve. On March 16, 2022, the FOMC of the Federal Reserve raised the target range for the federal funds rate to 0.25% to 0.50%, which represented the first increase to the target federal funds rate since 2018. The FOMC, with particular attention being given to ongoing supply chain disruptions, rising energy and commodity prices and the global economic impact of the Russia-Ukraine conflict, has signaled that additional increases may be appropriate if inflation pressures remain elevated or intensify.

Further increases to prevailing interest rates could influence not only the interest we receive on loans and investments and the amount of interest we pay on deposits and borrowings, but such changes could also affect (i) our ability to originate loans and obtain deposits; (ii) the fair value of our financial assets and liabilities; and (iii) the average duration of our mortgage portfolio and other interest-earning assets. Moreover, additional and aggressive increases to the target range for the federal funds rate, combined with ongoing geopolitical instability, raise the risk of economic recession. Any such downturn, especially domestically and in the regions in which we operate, may adversely affect our asset quality, deposit levels, loan demand and results of operations.

The CFPB has taken steps to enhance the supervision of institutions within its jurisdiction, including the Corporation and the Bank, and has adopted strict enforcement policies in respect of the fair lending laws and the prohibition against unfair, deceptive and abusive acts and practices. The CFPB has broad rulemaking authority to administer the provisions of the Dodd-Frank Act regarding financial institutions that offer covered financial products and services to consumers. The CFPB was directed under the Dodd-Frank Act to write rules identifying practices or acts that are unfair, deceptive or abusive in connection with any transaction with a consumer for a consumer financial product or service, or the offering of a consumer financial product or service.

Under the current Administration and leadership of the agency, the CFPB has pursued a more aggressive enforcement policy with respect to a range of regulatory compliance matters. CFPB enforcement actions may serve as precedent for how the CFPB interprets and enforces consumer protection laws, including UDAAPs, with respect to all supervised institutions, which may result in the imposition of higher standards of compliance with such laws. Of note, CFPB Director Rohit Chopra has indicated that the CFPB will prioritize enforcement of the Equal Credit Opportunity Act (“ECOA”), as implemented by the CFPB’s Regulation B, which prohibits discrimination in any aspect of a credit transaction. To that end, on March 16, 2022, the CFPB revised its Supervision and Examination Manual to explicitly incorporate anti-discrimination considerations in respect of evaluations of potential UDAAPs. The CFPB’s action represents not only a continuation of the agency’s commitment to a more aggressive enforcement approach, but also a shift in supervision and examination policy and procedure that may result in the commencement of enforcement actions against financial institutions involving a broader range of cited violations of the federal consumer financial laws and expanded allegations of UDAAPs.

We have not yet determined whether this shift in enforcement policy at the CFPB will necessitate any changes to our business or result in additional compliance risk.


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

During the first quarter of 2022, the Corporation repurchased $5 million of common stock, or approximately 206,000 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

January 1, 2022 - January 31, 2022	23,385	$	24.44	—	—
February 1, 2022 - February 28, 2022	156,809	25.64		—	—
March 1, 2022 - March 31, 2022	25,651	23.41		—	—
Total	205,845	$	25.23	—	3,499,381

(a) During the first quarter of 2022, the Corporation repurchased 205,845 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 March 31, 2022, there remained $80 million authorized to be repurchased in the aggregate. Approximately 3.5 million shares of common stock remained available to be
repurchased under this Board authorization given the closing share price on March 31, 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 (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 Christopher J. Del Moral-Niles, 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 March 31, 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: April 28, 2022						/s/ Andrew J. Harmening
						Andrew J. Harmening
						President and Chief Executive Officer

Date: April 28, 2022						/s/ Christopher J. Del Moral-Niles
						Christopher J. Del Moral-Niles
						Chief Financial Officer

Date: April 28, 2022						/s/ Tammy C. Stadler
						Tammy C. Stadler
						Chief Accounting Officer

Exhibit 31.1

CERTIFICATION UNDER SECTION 302 OF THE

SARBANES-OXLEY ACT OF 2002

CERTIFICATIONS

I, Andrew J. Harmening, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Associated Banc-Corp;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.



Date: April 28, 2022						/s/ Andrew J. Harmening
						Andrew J. Harmening
						President and Chief Executive Officer

Exhibit 31.2

CERTIFICATION UNDER SECTION 302 OF THE

SARBANES-OXLEY ACT OF 2002

CERTIFICATIONS

I, Christopher J. Del Moral-Niles, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Associated Banc-Corp;

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.



Date: April 28, 2022						/s/ Christopher J. Del Moral-Niles
						Christopher J. Del Moral-Niles
						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 the Sarbanes-Oxley Act of 2002

Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, each of the undersigned officers of Associated Banc-Corp, a Wisconsin corporation (the “Company”), does hereby certify that:

1. The accompanying Quarterly Report of the Company on Form 10-Q for the quarter ended March 31, 2022 (the “Report”), fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. Information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.



			/s/ Andrew J. Harmening
			Andrew J. Harmening
			Chief Executive Officer
			April 28, 2022



			/s/ Christopher J. Del Moral-Niles
			Christopher J. Del Moral-Niles
			Chief Financial Officer
			April 28, 2022