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Allowance for Credit Losses

3 Months Ended

Mar. 31, 2023

Allowance for Credit Losses Methodology

The ACL represents management's estimate of lifetime credit losses for assets within its scope, specifically loans and leases and unfunded commitments. To calculate the ACL, management uses models to estimate the PD and LGD for loans utilizing inputs that include forecasted future economic conditions and that are dependent upon specific macroeconomic variables relevant to each of the Bank's loan and lease portfolios. Moody's Analytics, a third party, provided the historical and forward-looking macroeconomic data utilized in the models used to calculate the ACL.

In calculating ACL, the Bank considered the financial and economic environment at the time of assessment and economic scenarios that differed in the levels of severity and sensitivity to the ACL results. At each measurement date, the Bank selects the scenario that reflects its view of future economic conditions and is determined to be the most probable outcome.

All forecasts are updated for each variable where applicable and incorporated as relevant into the ACL calculation. Actual credit loss results and the timing thereof will differ from the estimate of credit losses, either in a strong economy or a recession, as the portfolio will change through time due to growth, risk mitigation actions and other factors. In addition, the scenarios used will differ and change through time as economic conditions change. Economic scenarios might not capture deterioration or improvement in the economy timely enough for the Bank to be able to adequately address the impact to the ACL.

Select macroeconomic variables are projected over the forecast period, and they could have a material impact in determining the ACL. As the length of the forecast period increases, information about the future becomes less readily available and projections are inherently less certain.

The following is a discussion of the changes in the factors that influenced management's current estimate of expected credit losses. The changes in the ACL estimate for all portfolio segments, during the three months ended March 31, 2023, were primarily related to the initial provision booked at the Merger Date for the acquired Columbia loan portfolio and changes in the economic assumptions. Because of the uncertain economic environment, the Bank opted to use Moody's Analytics' February baseline economic forecast for estimating the ACL as of March 31, 2023.

In the baseline scenario selected, the probability that the economy will perform better than this baseline is equal to the probability that it will perform worse and included the following factors:

•U.S. real GDP average annualized growth of 1.3% in 2023, 2.2% in 2024, 2.7% in 2025, and 2.6% in 2026;

•U.S. unemployment rate average of 3.5% in 2023, 3.9% in 2024, 4.0% in 2025, and 4.1% 2026;

•The forecasted average federal funds rate is expected to be 4.8% in 2023, 4.2% in 2024, 3.2% 2025 and 2.5% in 2026.

The Bank uses an additional scenario that differs in terms of severity within the variables, both favorable and unfavorable, to assess the sensitivity in the ACL results and to inform qualitative adjustments. The Bank selected the Moody's Analytics' February S2 scenario for this analysis. In the scenario selected, there is a 75% probability that the economy will perform better, broadly speaking, and a 25% probability that it will perform worse; and the scenario includes the following factors:

•The combination of supply-side shortages, rising political tensions, still-high inflation, and still-elevated interest rates causes the economy to fall into recession in the second quarter of 2023. The decline lasts for three quarters and the peak-to-trough decline is 0.9%. The unemployment rate rises to a peak of 6.4% in early 2024;

•Because the Fed remains concerned about inflation, it keeps the fed funds rate elevated, though it is slightly below the baseline because of the weakening economy. Worries grow that China might block the Taiwan Strait, limiting the supply of semiconductor chips from Taiwan and raising fears of a wider war. Business and consumer confidence fall;

•The supply-chain shortages weaken manufacturing and also keep inflation elevated;

•U.S. real GDP average annualized growth of 0.4% in 2023, 0.4% in 2024, 3.2% in 2025, and 3.1% in 2026;

•U.S. unemployment rate average of 4.8% in 2023, 5.8% in 2024, 4.2% in 2025, and 4.1% in 2026;

•The forecasted average federal funds rate is expected to be 4.6% in 2023, 3.1% in 2024, 2.1% in 2025 and 2.4% in 2026.

The results using the comparison scenario as well as changes to the macroeconomic variables subsequent to selected February economic forecast scenarios for sensitivity analysis were reviewed by management and were considered when evaluating the qualitative factor adjustments.

The ACL is measured on a collective (pool) basis when similar characteristics exist. The Company has selected models at the portfolio level using a risk-based approach, with larger, more complex portfolios having more complex models. Except as noted below, the macroeconomic variables that are inputs to the models are reasonable and supportable over the life of the loans in that they reasonably project the key economic variables in the near term and then converge to a long run equilibrium trend. These models produce reasonable and supportable estimates of loss over the life of the loans as the projected credit losses will also converge to a steady state in line with the variables applied. The Company measures the ACL using the following methods:

Commercial Real Estate: Non-owner occupied commercial real estate, multifamily, and construction loans are analyzed using a model that uses four primary property variables: net operating income, property value, property type, and location. For PD estimation, the model simulates potential future paths of net operating income given commercial real estate market factors determined from macroeconomic and regional commercial real estate forecasts. Using the resulting expected debt service coverage ratios, together with predicted loan-to-values and other variables, the model estimates PD from the range of conditional possibilities. In addition, the model estimates maturity PD capturing refinance default risk to produce a total PD for the loan. The model estimates LGD, inclusive of principal loss and liquidation expenses, empirically using predicted loan-to-value as well as certain market and other factors. The LGD calculation also includes a separate maturity risk component. The primary economic drivers in the model are GDP growth, U.S. unemployment rate, and 10-Year Treasury yield. These economic drivers are translated into a forecast provided by Moody's Analytics' REIS of real estate metrics, such as rental rates, vacancies, and cap rates. The model produces PD and LGD on a quarter-by-quarter basis for the life of loan.

The owner-occupied commercial real-estate portfolio utilizes a top-down macroeconomic model using linear regression. This model produces portfolio level quarterly net charge-off rates for 10 years and carries forward the last quarter's expected loss percentage projection to remaining periods. The primary economic drivers for this model are CRE price index and a five-state average unemployment rate.

Commercial: Non-homogeneous commercial loans and leases and residential development loans are analyzed in a multi-step process. An initial PD is estimated using a model driven by an obligor's selected financial statement ratios, together with cycle-adjusting information based on the obligor's state and industry. An initial LGD is derived separately based on collateral type using collateral value and a haircut to reflect the loss in liquidation. Another model then applies an auto-regression technique to the initial PD and LGD metrics to estimate the PD and LGD curves according to the macroeconomic scenario over a one-year reasonable and supportable forecast. The primary economic drivers in the model are the S&P 500 Stock Price Index, S&P 500 Market Volatility Index, U.S. unemployment rate, as well as appropriate yield curves and credit spreads. This model utilizes output reversion methodology, which, after one year, reverts on a straight-line basis over two years to long-term PD estimated using financial statement ratios of each obligor.

The model for the homogeneous lease and equipment finance agreement portfolio uses lease and equipment finance agreement information, such as origination and performance, as well as macroeconomic variables to calculate PD and LGD values. The PD calculation is based on survival analysis while LGD is calculated using a two-step regression. The model calculates LGD using an estimate of the probability that a defaulted lease or equipment finance agreement will have a loss, and an estimate of the loss amount. The primary economic drivers for the model are GDP, U.S. unemployment rate, and a home price growth index. The model produces PD and LGD curves at the lease or equipment finance agreement level for each month in the forecast horizon.

Residential: The models for residential real estate and HELOCs utilize loan level variables, such as origination and performance, as well as macroeconomic variables to calculate PD and LGD. The U.S. unemployment rate and home price growth rate indexes are primary economic drivers in both the residential real estate and HELOC models. In addition, the prime rate is also a primary driver in the HELOC model. The models focus on establishing an empirical relationship between default probabilities and a set of loan-level, borrower, and macroeconomic credit risk drivers. The LGD calculation for residential real estate is based on an estimate of the probability that a defaulted loan will have a loss, and then an estimate of the loss amount. HELOCs utilize the same model using residential real estate LGD values to assign loans to cohorts based on FICO scores and loan age. The model produces PD and LGD curves at the loan level for each quarter in the forecast horizon.

Consumer: Historical net charge-off information as well as economic forecast assumptions are used to project loss rates for the Consumer segment.

All loans and leases that have not been modeled receive a loss rate via an extrapolated rate methodology. The loans and leases receiving an extrapolated rate include loans acquired through the Merger, newly originated loans and leases, and loans and leases without the granularity of data necessary to be modeled. Based on the vintage year, credit classification, and reporting category of the modeled loans and leases, a loss factor is calculated and applied to the non-modeled loans and leases. The results are evaluated qualitatively to ensure reasonability and compliance with CECL.

Along with the quantitative factors produced by the above models, management also considers prepayment speeds and qualitative factors when determining the ACL. The Company uses a prepayment model that forecasts the constant prepayment rates based on institution specific data for the commercial real estate, commercial and industrial and consumer portfolios and a forward curve approach that changes with macro-economic input variables for the residential and leases portfolios. Below are the nine qualitative factors considered where applicable:

•Changes in lending policies and procedures, including changes in underwriting standards and collection, charge-off, and recovery practices not considered elsewhere in estimating credit losses.

•Changes in national, regional, and local economic and business conditions and developments that affect the collectability of the portfolio, including the condition of various market segments.

•Changes in the nature and volume of the portfolio and in the terms of loans and leases.

•Changes in the experience, ability, and depth of lending management and other relevant staff.

•Changes in the volume and severity of past due loans and leases, the volume of non-accrual loans and leases, and the volume and severity of adversely classified or graded loans and leases.

•Changes in the quality of the Bank's credit review system.

•Changes in the value of the underlying collateral for collateral-dependent loans and leases.

•The existence and effect of any concentrations of credit, and changes in the level of such concentrations.

•The effect of other external factors such as competition and legal and regulatory requirements on the level of estimated credit losses in the Bank's existing portfolio.

The Company evaluated each qualitative factor as of March 31, 2023, and concluded that a material adjustment to the amounts indicated by the models was not necessary as the models adequately reflected the significant changes in credit conditions and overall portfolio risk.

Loss factors from the models, prepayment speeds, and qualitative factors are input into the Company's CECL accounting application which aggregates the information. The Company then uses two methods to calculate the current expected credit loss: 1) the DCF method, which is used for all loans except lines of credit and 2) the non-DCF method which is used for lines of credit due to difficulty of calculating an effective interest rate when lines have yet to be drawn on. The DCF method utilizes the effective interest rate of individual assets to discount the expected credit losses adjusted for prepayments. The difference in the net present value and the amortized cost of the asset will result in the required allowance. The non-DCF method uses the exposure at default, along with the expected credit losses adjusted for prepayments to calculate the required allowance.

The following tables summarize activity related to the allowance for credit losses by portfolio segment for the three months ended March 31, 2023 and 2022:




















	Three Months Ended March 31, 2023
(in thousands)	Commercial Real Estate		Commercial		Residential		Consumer & Other		Total
Allowance for credit losses on loans and leases
Balance, beginning of period	$	77,813	$	167,135	$	50,329	$	5,858	$	301,135
Initial ACL on PCD loans acquired during the period	8,736		17,204		454		98		26,492
Provision for credit losses for loans and leases (1)	24,483		70,997		9,955		1,063		106,498
Charge-offs	—		(19,248)		(248)		(773)		(20,269)
Recoveries	58		3,058		123		369		3,608
Net recoveries (charge-offs)	58		(16,190)		(125)		(404)		(16,661)
Balance, end of period	$	111,090	$	239,146	$	60,613	$	6,615	$	417,464
Reserve for unfunded commitments
Balance, beginning of period	$	7,207	$	3,049	$	3,196	$	769	$	14,221
Initial ACL recorded for unfunded commitments acquired during the period	2,257		3,066		268		176		5,767
(Recapture) provision for credit losses on unfunded commitments	(1,059)		266		(144)		(22)		(959)
Balance, end of period	8,405		6,381		3,320		923		19,029
Total allowance for credit losses	$	119,495	$	245,527	$	63,933	$	7,538	$	436,493

(1) Includes $88.4 million initial provision related to non-PCD loans acquired during the period.

















	Three Months Ended March 31, 2022
(in thousands)	Commercial Real Estate		Commercial		Residential		Consumer & Other		Total
Allowance for credit losses on loans and leases
Balance, beginning of period	$	99,075	$	117,573	$	29,068	$	2,696	$	248,412
(Recapture) provision for credit losses for loans and leases	(7,462)		8,812		2,872		1,474		5,696
Charge-offs	—		(7,858)		(167)		(885)		(8,910)
Recoveries	25		2,545		173		623		3,366
Net recoveries (charge-offs)	25		(5,313)		6		(262)		(5,544)
Balance, end of period	$	91,638	$	121,072	$	31,946	$	3,908	$	248,564
Reserve for unfunded commitments
Balance, beginning of period	$	8,461	$	2,028	$	1,957	$	321	$	12,767
Provision (recapture) for credit losses on unfunded commitments	277		(408)		236		46		151
Balance, end of period	8,738		1,620		2,193		367		12,918
Total allowance for credit losses	$	100,376	$	122,692	$	34,139	$	4,275	$	261,482

Asset Quality and Non-Performing Loans and Leases

The Bank manages asset quality and controls credit risk through diversification of the loan and lease portfolio and the application of policies designed to promote sound underwriting and loan and lease monitoring practices. The Bank's Credit Quality Administration department is charged with monitoring asset quality, establishing credit policies and procedures, and enforcing the consistent application of these policies and procedures across the Bank. Reviews of non-performing, past due loans and leases and larger credits, designed to identify potential charges to the allowance for credit losses, and to determine the adequacy of the allowance, are conducted on an ongoing basis. These reviews consider such factors as the financial strength of borrowers, the value of the applicable collateral, loan and lease loss experience, estimated loan and lease losses, growth in the loan and lease portfolio, prevailing economic conditions, and other factors.

Loans and Leases Past Due and Non-Accrual Loans and Leases

Typically, loans in a non-accrual status will not have an allowance for credit loss as they will be written down to their net realizable value or charged-off. However, the net realizable value for homogeneous leases and equipment finance agreements is determined by the LGD calculated by the CECL model and therefore leases and equipment finance agreements on non-accrual will have an allowance for credit losses until they become 181 days past due, at which time they are charged-off. The Company recognized no interest income on non-accrual loans and leases during the three months ended March 31, 2023 and 2022.

The following tables present the carrying value of the loans and leases past due, by loan and lease class, as of March 31, 2023 and December 31, 2022:


	March 31, 2023
(in thousands)	Greater than 30 to 59 Days Past Due		60 to 89 Days Past Due		90 Days or More and Accruing		Total Past Due		Non-Accrual (1)		Current		Total Loans and Leases
Commercial real estate
Non-owner occupied term, net	$	2,929	$	683	$	—	$	3,612	$	4,016	$	6,345,922	$	6,353,550
Owner occupied term, net	1,190		738		1		1,929		11,596		5,143,323		5,156,848
Multifamily, net	—		—		—		—		—		5,590,587		5,590,587
Construction & development, net	—		—		—		—		—		1,467,561		1,467,561
Residential development, net	—		—		—		—		—		440,667		440,667
Commercial
Term, net	3,451		1,550		93		5,094		9,640		5,892,040		5,906,774
Lines of credit & other, net	1,996		1,213		58		3,267		1,681		2,179,814		2,184,762
Leases & equipment finance, net	28,956		16,253		—		45,209		30,980		1,670,078		1,746,267
Residential
Mortgage, net (2)	7,993		5,112		20,867		33,972		—		6,153,992		6,187,964
Home equity loans & lines, net	3,843		2,024		1,958		7,825		—		1,862,177		1,870,002
Consumer & other, net	470		240		140		850		—		185,448		186,298
Total, net of deferred fees and costs	$	50,828	$	27,813	$	23,117	$	101,758	$	57,913	$	36,931,609	$	37,091,280

(1) Loans and leases on non-accrual with an amortized cost basis of $57.9 million had a related allowance for credit losses of $30.4 million at March 31, 2023.

(2) Includes government guaranteed mortgage loans that Columbia has the right but not the obligation to repurchase that are past due 90 days or more, totaling $5.4 million at March 31, 2023.


	December 31, 2022
(in thousands)	Greater than 30 to 59 Days Past Due		60 to 89 Days Past Due		90 Days or More and Accruing		Total Past Due		Non-Accrual (1)		Current and Other		Total Loans and Leases
Commercial real estate
Non-owner occupied term, net	$	811	$	538	$	—	$	1,349	$	2,963	$	3,890,528	$	3,894,840
Owner occupied term, net	168		50		1		219		2,048		2,565,494		2,567,761
Multifamily, net	—		—		—		—		—		5,285,791		5,285,791
Construction & development, net	—		—		—		—		—		1,077,346		1,077,346
Residential development, net	—		—		—		—		—		200,838		200,838
Commercial
Term, net	1,241		1,489		19		2,749		5,303		3,021,495		3,029,547
Lines of credit & other, net	514		419		4		937		—		959,117		960,054
Leases & equipment finance, net	19,929		23,288		7,886		51,103		20,388		1,634,681		1,706,172
Residential
Mortgage, net (2)	847		10,619		24,943		36,409		—		5,610,626		5,647,035
Home equity loans & lines, net	2,808		1,526		1,569		5,903		—		1,626,062		1,631,965
Consumer & other, net	446		200		134		780		—		153,852		154,632
Total, net of deferred fees and costs	$	26,764	$	38,129	$	34,556	$	99,449	$	30,702	$	26,025,830	$	26,155,981

(1) Loans and leases on non-accrual with an amortized cost basis of $30.7 million had a related allowance for credit losses of $17.5 million at December 31, 2022.

(2) Includes government guaranteed mortgage loans that Columbia has the right but not the obligation to repurchase that are past due 90 days or more, totaling $6.6 million at December 31, 2022.

Collateral Dependent Loans and Leases

Loans are classified as collateral dependent when it is probable that the Bank will be unable to collect the scheduled payments of principal and interest when due, and repayment is expected to be provided substantially through the operation or sale of the collateral. There have been no significant changes in the level of collateralization from the prior periods. The following table summarizes the amortized cost basis of the collateral dependent loans and leases by the type of collateral securing the assets as of March 31, 2023:


(in thousands)	Residential Real Estate		Commercial Real Estate		General Business Assets		Other		Total
Commercial real estate
Non-owner occupied term, net	$	—	$	3,639	$	—	$	—	$	3,639
Owner occupied term, net	—		11,168		—		—		11,168



Commercial
Term, net	2,324		687		3,737		316		7,064
Line of credit & other, net	—		447		760		88		1,295
Leases & equipment finance, net	—		—		30,980		—		30,980
Residential
Mortgage, net	41,133		—		—		—		41,133
Home equity loans & lines, net	3,057		—		—		—		3,057

Total, net of deferred fees and costs	$	46,514	$	15,941	$	35,477	$	404	$	98,336

Loan and Lease Modifications Made to Borrowers Experiencing Financial Difficulty

In January 2023, the Company adopted ASU 2022-02, which eliminated the accounting guidance for troubled debt restructurings while enhancing disclosure requirements for certain loan refinancing and restructurings by creditors when a borrower is experiencing financial difficulty. This guidance was applied on a prospective basis. Upon adoption of this guidance, the Company no longer establishes a specific reserve for modifications to borrowers experiencing financial difficulty. Instead, these modifications are included in their respective cohort and a historical loss rate is applied to the current loan balance to arrive at the quantitative baseline portion of the allowance.

Modifications to borrowers in financial difficulty may include term extensions, interest rate reductions, principal or interest forgiveness, or an other-than-insignificant payment delay. In some cases, the Company provides multiple types of concessions on one loan. Typically, one type of concession, such as a term extension, is granted initially. If the borrower continues to experience financial difficulty, another concession, such as principal forgiveness, may be granted. For the loans included in the "combination" columns below, multiple types of modifications have been made on the same loan within the current reporting period. The combination is at least two of the following: term extension, principal forgiveness, an other-than-insignificant payment delay, or an interest rate reduction.

The following table presents the amortized cost basis of loans at March 31, 2023, that were both experiencing financial difficulty and modified during the three months ended March 31, 2023, by class and type of modification. The percentage of the amortized cost basis of loans that were modified to borrowers in financial distress as compared to the amortized cost basis of each class of financing receivable is also presented below.


(in thousands)	Term Extension			Other -Than-Insignificant Payment Delay			Combination - Interest Rate Reduction and Term Extension			Combination - Term Extension and Principal Forgiveness			Combination - Principal forgiveness and other than insignificant payment delay			% of total class of financing receivable






Commercial

Lines of credit & other, net		$	1,355		$	—		$	—		$	—		$	—		0.06	%
Leases & equipment finance, net		—			429			—			—			—			0.02	%
Residential
Mortgage, net		—			—			—			1,938			8,987			0.18	%
Home equity loans & lines, net		—			—			207			—			—			0.01	%

Total loans and leases experiencing financial difficulty		$	1,355		$	429		$	207		$	1,938		$	8,987		0.03	%

Type of Modification

Loan Type

Financial Effect

Term extension

Lines of credit & other, net

Added a weighted average 10 months to the life of the loans, which reduced monthly payments for the borrowers

Other-than-insignificant payment delay

Leases & equipment finance, net

Delayed payment for 9 months

Combination - term extension and principal forgiveness

Home equity loans & lines, net

Added a weighted average 7.1 years to the life of the loan and decreased the weighted average interest rate by 3.24%.

Combination - term extension and principal forgiveness

Mortgage, net

Added a weighted average 13.3 years to the life of the loan and deferred $179,000 of principal payments at the maturity of the loan.

Combination - principal forgiveness and other-than-insignificant payment delay

Mortgage, net

Deferred $320,000 of principal payments at the maturity of the loan.

The Company closely monitors the performance of loans that are modified for borrowers experiencing financial difficulty to understand the effectiveness of its modification efforts. All modified loans are current and there were no loan modifications made to borrowers experiencing financial difficulty during the quarter ended March 31, 2023, that subsequently defaulted.

Credit Quality Indicators

Management regularly reviews loans and leases in the portfolio to assess credit quality indicators and to determine appropriate loan classification and grading. In addition, the Company's board of directors reviews and approves the credit quality indicators each year. The Bank differentiates its lending portfolios into homogeneous and non-homogeneous loans and leases. Homogeneous loans and leases are initially risk rated on a single risk rating scale based on the past due status of the loan or lease. Homogeneous loans and leases that have risk-based modifications or forbearances enter into an alternative elevated risk rating scale that freezes the elevated risk rating and requires six consecutive months of scheduled payments without delinquency before the loan or lease can return to the delinquency-based risk rating scale. Homogeneous loans and leases with other defined risk factors such as confirmed bankruptcy, business closure, death of a guarantor or fraud will be set to a floor substandard rating.

The Bank's risk rating methodology for its non-homogeneous loans and leases uses a dual risk rating approach to assess the credit risk. This approach uses two scales to provide a comprehensive assessment of credit default risk and recovery risk. The probability of default scale measures a borrower's credit default risk using risk ratings ranging from 1 to 16, where a higher rating represents higher risk. For non-homogeneous loans and leases, PD ratings of 1 through 9 are "pass" grades, while PD ratings of 10 and 11 are "watch" grades. PD ratings of 12-16 correspond to the regulatory-defined categories of special mention (12), substandard (13-14), doubtful (15), and loss (16). The loss given default scale measures the amount of loss that may not be recovered in the event of a default, using six alphabetic ratings from A-F, where a higher rating represents higher risk. The LGD scale quantifies recovery risk associated with an event of default and predicts the amount of loss that would be incurred on a loan or lease if a borrower were to experience a major default and includes variables that may be external to the borrower, such as industry, geographic location, and credit cycle stage. It could also include variables specific to the loan or lease, including collateral valuation, covenant structure and debt type. The product of the borrower's PD and a loan or lease LGD is the loan or lease expected loss, expressed as a percentage. This provides a common language of credit risk across different loans.

The PD scale estimates the likelihood that a borrower will experience a major default on any of its debt obligations within a specified time period. Examples of major defaults include payments 90 days or more past due, non-accrual classification, bankruptcy filing, or a full or partial charge-off of a loan or lease. As such, the PD scale represents the credit quality indicator for non-homogeneous loans and leases.

The credit quality indicator rating categories follow regulatory classification and can be generally described by the following groupings for loans and leases:

Pass/Watch—A pass loan or lease is a loan or lease with a credit risk level acceptable to the Bank for extending credit and maintaining normal credit monitoring. A watch loan or lease is considered pass rated but has a heightened level of unacceptable default risk due to an emerging risk element or declining performance trend. Watch ratings are expected to be temporary, with issues resolved or manifested to the extent that a higher or lower risk rating would be appropriate within a short period of time.

Special Mention—A special mention loan or lease has potential weaknesses that deserve management's close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the asset or in the institution's credit position at some future date. These borrowers have an elevated probability of default but not to the point of a substandard classification.

Substandard—A substandard loan or lease is inadequately protected by the current net worth and paying capacity of the borrower or of the collateral pledged, if any. Loans and leases classified as substandard have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the Bank will sustain some loss if the deficiencies are not corrected.

Doubtful—Loans or leases classified as doubtful have all the weaknesses inherent in those classified as substandard with the added characteristic that the weaknesses make collection or liquidation in full, based on currently existing facts, conditions, and values, highly questionable and improbable.

Loss—Loans or leases classified as loss are considered uncollectible and of such little value that their continuance as bankable assets is not warranted.

The following tables represent the amortized costs basis of the loans and leases by credit classification and vintage year by loan and lease class of financing receivable as of March 31, 2023 and December 31, 2022:


(in thousands)		Term Loans Amortized Cost Basis by Origination Year												Revolving Loans Amortized Cost Basis		Revolving to Non-Revolving Loans Amortized Cost
	March 31, 2023	2023		2022		2021		2020		2019		Prior						Total
Commercial real estate:
Non-owner occupied term, net
Credit quality indicator:
	Pass/Watch	$	124,614	$	1,285,216	$	1,161,873	$	675,468	$	818,898	$	2,053,533	$	57,328	$	21,308	$	6,198,238
	Special mention	—		1,176		3,276		1,449		10,506		17,329		—		1,431		35,167
	Substandard	—		451		—		1,599		19,446		93,831		—		4,608		119,935
	Doubtful	—		—		—		—		—		197		—		—		197
	Loss	—		—		—		—		—		13		—		—		13
Total non-owner occupied term, net		$	124,614	$	1,286,843	$	1,165,149	$	678,516	$	848,850	$	2,164,903	$	57,328	$	27,347	$	6,353,550
Current YTD period:
	Gross charge-offs	—		—		—		—		—		—		—		—		—
Owner occupied term, net
Credit quality indicator:
	Pass/Watch	$	114,598	$	1,193,947	$	1,054,672	$	481,430	$	592,964	$	1,502,448	$	56,923	$	31,581	$	5,028,563
	Special mention	296		462		21,989		3,991		11,299		22,274		—		—		60,311
	Substandard	—		2,091		5,245		17,714		19,496		22,201		71		—		66,818
	Doubtful	—		—		—		—		—		—		—		—		—
	Loss	—		—		—		—		1,052		104		—		—		1,156
Total owner occupied term, net		$	114,894	$	1,196,500	$	1,081,906	$	503,135	$	624,811	$	1,547,027	$	56,994	$	31,581	$	5,156,848
Current YTD period:
	Gross charge-offs	—		—		—		—		—		—		—		—		—
Multifamily, net
Credit quality indicator:
	Pass/Watch	$	13,039	$	2,034,323	$	1,617,754	$	412,892	$	616,116	$	841,765	$	42,973	$	8,852	$	5,587,714
	Special mention	—		—		1,297		—		—		—		—		—		1,297
	Substandard	—		—		—		—		—		1,576		—		—		1,576
	Doubtful	—		—		—		—		—		—		—		—		—
	Loss	—		—		—		—		—		—		—		—		—
Total multifamily, net		$	13,039	$	2,034,323	$	1,619,051	$	412,892	$	616,116	$	843,341	$	42,973	$	8,852	$	5,590,587
Current YTD period:
	Gross charge-offs	—		—		—		—		—		—		—		—		—
Construction & development, net
Credit quality indicator:
	Pass/Watch	$	36,112	$	430,366	$	669,754	$	183,298	$	94,147	$	36,895	$	13,685	$	1,586	$	1,465,843
	Special mention	—		—		—		—		—		—		—		—		—
	Substandard	—		—		—		—		—		1,718		—		—		1,718
	Doubtful	—		—		—		—		—		—		—		—		—
	Loss	—		—		—		—		—		—		—		—		—
Total construction & development, net		$	36,112	$	430,366	$	669,754	$	183,298	$	94,147	$	38,613	$	13,685	$	1,586	$	1,467,561
Current YTD period:
	Gross charge-offs	—		—		—		—		—		—		—		—		—


(in thousands)		Term Loans Amortized Cost Basis by Origination Year												Revolving Loans Amortized Cost Basis		Revolving to Non-Revolving Loans Amortized Cost
	March 31, 2023	2023		2022		2021		2020		2019		Prior						Total
Residential development, net
Credit quality indicator:
	Pass/Watch	$	13,358	$	129,916	$	56,067	$	3,334	$	—	$	1,842	$	234,748	$	1,402	$	440,667
	Special mention	—		—		—		—		—		—		—		—		—
	Substandard	—		—		—		—		—		—		—		—		—
	Doubtful	—		—		—		—		—		—		—		—		—
	Loss	—		—		—		—		—		—		—		—		—
Total residential development, net		$	13,358	$	129,916	$	56,067	$	3,334	$	—	$	1,842	$	234,748	$	1,402	$	440,667
Current YTD period:
	Gross charge-offs	—		—		—		—		—		—		—		—		—

Total commercial real estate		$	302,017	$	5,077,948	$	4,591,927	$	1,781,175	$	2,183,924	$	4,595,726	$	405,728	$	70,768	$	19,009,213

Commercial:
Term, net
Credit quality indicator:
	Pass/Watch	$	148,566	$	1,329,643	$	1,113,593	$	449,838	$	337,845	$	755,284	$	1,323,569	$	188,984	$	5,647,322
	Special mention	—		38,165		47,723		331		4,457		10,658		—		887		102,221
	Substandard	—		5,006		9,425		4,464		17,472		39,141		60,731		18,752		154,991
	Doubtful	—		—		120		700		—		317		—		47		1,184
	Loss	—		—		18		—		—		1,006		—		32		1,056
Total term, net		$	148,566	$	1,372,814	$	1,170,879	$	455,333	$	359,774	$	806,406	$	1,384,300	$	208,702	$	5,906,774
Current YTD period:
	Gross charge-offs	—		13		—		—		—		22		—		—		35
Lines of credit & other, net
Credit quality indicator:
	Pass/Watch	$	54,159	$	112,845	$	49,633	$	13,090	$	34,820	$	12,208	$	1,740,319	$	52,498	$	2,069,572
	Special mention	1,673		1,969		—		—		—		—		72,892		481		77,015
	Substandard	—		—		—		—		—		8,079		20,114		9,640		37,833
	Doubtful	—		—		—		—		—		—		99		210		309
	Loss	—		—		—		—		—		—		—		33		33
Total lines of credit & other, net		$	55,832	$	114,814	$	49,633	$	13,090	$	34,820	$	20,287	$	1,833,424	$	62,862	$	2,184,762
Current YTD period:
	Gross charge-offs	—		—		—		—		—		—		193		286		479
Leases & equipment finance, net
Credit quality indicator:
	Pass/Watch	$	245,504	$	709,291	$	317,866	$	161,083	$	127,018	$	86,193	$	—	$	—	$	1,646,955
	Special mention	173		16,040		9,755		3,545		2,356		838		—		—		32,707
	Substandard	584		13,072		6,508		2,445		2,047		962		—		—		25,618
	Doubtful	12		16,080		12,945		4,107		2,554		825		—		—		36,523
	Loss	—		2,192		1,196		541		390		145		—		—		4,464
Total leases & equipment finance, net		$	246,273	$	756,675	$	348,270	$	171,721	$	134,365	$	88,963	$	—	$	—	$	1,746,267
Current YTD period:
	Gross charge-offs	2		6,326		7,058		2,228		1,788		1,332		—		—		18,734

Total commercial		$	450,671	$	2,244,303	$	1,568,782	$	640,144	$	528,959	$	915,656	$	3,217,724	$	271,564	$	9,837,803


(in thousands)		Term Loans Amortized Cost Basis by Origination Year												Revolving Loans Amortized Cost Basis		Revolving to Non-Revolving Loans Amortized Cost
	March 31, 2023	2023		2022		2021		2020		2019		Prior						Total
Residential:
Mortgage, net
Credit quality indicator:
	Pass/Watch	$	17,122	$	1,689,103	$	2,623,063	$	538,990	$	472,233	$	818,883	$	—	$	—	$	6,159,394
	Special mention	—		688		2,158		1,624		2,132		6,503		—		—		13,105
	Substandard	—		—		1,001		918		1,328		9,456		—		—		12,703
	Doubtful	—		—		—		—		—		—		—		—		—
	Loss	—		—		329		863		154		1,416		—		—		2,762
Total mortgage, net		$	17,122	$	1,689,791	$	2,626,551	$	542,395	$	475,847	$	836,258	$	—	$	—	$	6,187,964
Current YTD period:
	Gross charge-offs	—		—		—		—		—		—		—		—		—
Home equity loans & lines, net
Credit quality indicator:
	Pass/Watch	$	238	$	1,087	$	762	$	—	$	32	$	9,486	$	1,811,602	$	39,164	$	1,862,371
	Special mention	—		—		—		—		—		97		4,193		1,577		5,867
	Substandard	—		—		—		—		—		60		360		304		724
	Doubtful	—		—		—		—		—		—		—		—		—
	Loss	—		—		—		—		—		32		650		358		1,040
Total home equity loans & lines, net		$	238	$	1,087	$	762	$	—	$	32	$	9,675	$	1,816,805	$	41,403	$	1,870,002
Current YTD period:
	Gross charge-offs	—		—		—		—		—		—		248		—		248

Total residential		$	17,360	$	1,690,878	$	2,627,313	$	542,395	$	475,879	$	845,933	$	1,816,805	$	41,403	$	8,057,966

Consumer & other, net:
Credit quality indicator:
	Pass/Watch	$	18,382	$	21,474	$	9,523	$	6,931	$	5,812	$	7,741	$	113,244	$	2,343	$	185,450
	Special mention	—		51		11		53		37		69		371		117		709
	Substandard	—		5		—		—		—		28		87		9		129
	Doubtful	—		—		—		—		—		—		—		—		—
	Loss	—		—		—		—		—		7		3		—		10
Total consumer & other, net		$	18,382	$	21,530	$	9,534	$	6,984	$	5,849	$	7,845	$	113,705	$	2,469	$	186,298
Current YTD period:
	Gross charge-offs	507		4		9		1		17		18		124		93		773

Grand total		$	788,430	$	9,034,659	$	8,797,556	$	2,970,698	$	3,194,611	$	6,365,160	$	5,553,962	$	386,204	$	37,091,280


(in thousands)		Term Loans Amortized Cost Basis by Origination Year												Revolving Loans Amortized Cost Basis		Revolving to Non-Revolving Loans Amortized Cost
	December 31, 2022	2022		2021		2020		2019		2018		Prior						Total
Commercial real estate:
Non-owner occupied term, net
Credit quality indicator:
	Pass/Watch	$	726,865	$	746,833	$	389,476	$	590,571	$	404,905	$	968,254	$	4,327	$	4,442	$	3,835,673
	Special mention	1,185		—		1,482		4,597		4,002		4,603		—		—		15,869
	Substandard	452		—		—		311		34,393		8,129		—		—		43,285
	Doubtful	—		—		—		—		—		—		—		—		—
	Loss	—		—		—		—		—		13		—		—		13
Total non-owner occupied term, net		$	728,502	$	746,833	$	390,958	$	595,479	$	443,300	$	980,999	$	4,327	$	4,442	$	3,894,840
Owner occupied term, net
Credit quality indicator:
	Pass/Watch	$	660,479	$	544,011	$	183,996	$	307,944	$	211,539	$	585,740	$	4,552	$	117	$	2,498,378
	Special mention	2,091		20,328		239		3,279		9,527		19,562		—		—		55,026
	Substandard	—		—		404		660		1,356		11,833		—		—		14,253
	Doubtful	—		—		—		—		—		—		—		—		—
	Loss	—		—		—		—		—		104		—		—		104
Total owner occupied term, net		$	662,570	$	564,339	$	184,639	$	311,883	$	222,422	$	617,239	$	4,552	$	117	$	2,567,761
Multifamily, net
Credit quality indicator:
	Pass/Watch	$	1,944,714	$	1,556,986	$	364,306	$	618,523	$	219,260	$	496,628	$	82,467	$	2,907	$	5,285,791
	Special mention	—		—		—		—		—		—		—		—		—
	Substandard	—		—		—		—		—		—		—		—		—
	Doubtful	—		—		—		—		—		—		—		—		—
	Loss	—		—		—		—		—		—		—		—		—
Total multifamily, net		$	1,944,714	$	1,556,986	$	364,306	$	618,523	$	219,260	$	496,628	$	82,467	$	2,907	$	5,285,791
Construction & development, net
Credit quality indicator:
	Pass/Watch	$	248,437	$	505,680	$	205,577	$	83,808	$	—	$	18,183	$	2,393	$	—	$	1,064,078
	Special mention	—		13,268		—		—		—		—		—		—		13,268
	Substandard	—		—		—		—		—		—		—		—		—
	Doubtful	—		—		—		—		—		—		—		—		—
	Loss	—		—		—		—		—		—		—		—		—
Total construction & development, net		$	248,437	$	518,948	$	205,577	$	83,808	$	—	$	18,183	$	2,393	$	—	$	1,077,346
Residential development, net
Credit quality indicator:
	Pass/Watch	$	38,662	$	20,609	$	417	$	—	$	—	$	—	$	141,150	$	—	$	200,838
	Special mention	—		—		—		—		—		—		—		—		—
	Substandard	—		—		—		—		—		—		—		—		—
	Doubtful	—		—		—		—		—		—		—		—		—
	Loss	—		—		—		—		—		—		—		—		—
Total residential development, net		$	38,662	$	20,609	$	417	$	—	$	—	$	—	$	141,150	$	—	$	200,838
Total commercial real estate		$	3,622,885	$	3,407,715	$	1,145,897	$	1,609,693	$	884,982	$	2,113,049	$	234,889	$	7,466	$	13,026,576


(in thousands)		Term Loans Amortized Cost Basis by Origination Year												Revolving Loans Amortized Cost Basis		Revolving to Non-Revolving Loans Amortized Cost
	December 31, 2022	2022		2021		2020		2019		2018		Prior						Total
Commercial:
Term, net
Credit quality indicator:
	Pass/Watch	$	792,764	$	643,930	$	174,188	$	156,068	$	130,309	$	278,695	$	744,193	$	44,033	$	2,964,180
	Special mention	—		1,138		3		100		1,488		935		—		411		4,075
	Substandard	16,424		1,403		1,362		1,358		10,619		2,211		27,240		—		60,617
	Doubtful	—		—		675		—		—		—		—		—		675
	Loss	—		—		—		—		—		—		—		—		—
Total term, net		$	809,188	$	646,471	$	176,228	$	157,526	$	142,416	$	281,841	$	771,433	$	44,444	$	3,029,547
Lines of credit & other, net
Credit quality indicator:
	Pass/Watch	$	57,715	$	6,271	$	4,660	$	13,304	$	8,653	$	1,257	$	813,110	$	36,573	$	941,543
	Special mention	—		—		—		—		—		—		5,833		1,933		7,766
	Substandard	—		314		—		—		—		1,102		6,031		3,294		10,741
	Doubtful	—		—		—		—		—		—		—		1		1
	Loss	—		—		—		—		—		—		3		—		3
Total lines of credit & other, net		$	57,715	$	6,585	$	4,660	$	13,304	$	8,653	$	2,359	$	824,977	$	41,801	$	960,054
Leases & equipment finance, net
Credit quality indicator:
	Pass/Watch	$	812,537	$	362,612	$	190,507	$	149,667	$	62,292	$	40,328	$	—	$	—	$	1,617,943
	Special mention	9,840		8,403		2,902		2,423		665		182		—		—		24,415
	Substandard	11,531		8,165		3,452		2,697		1,477		177		—		—		27,499
	Doubtful	11,822		13,034		4,326		3,419		1,211		197		—		—		34,009
	Loss	1,243		505		275		236		28		19		—		—		2,306
Total leases & equipment finance, net		$	846,973	$	392,719	$	201,462	$	158,442	$	65,673	$	40,903	$	—	$	—	$	1,706,172
Total commercial		$	1,713,876	$	1,045,775	$	382,350	$	329,272	$	216,742	$	325,103	$	1,596,410	$	86,245	$	5,695,773

Residential:
Mortgage, net
Credit quality indicator:
	Pass/Watch	$	1,465,067	$	2,389,861	$	485,576	$	471,416	$	143,611	$	661,715	$	—	$	—	$	5,617,246
	Special mention	307		1,351		1,203		2,365		752		5,487		—		—		11,465
	Substandard	—		1,664		1,041		2,693		2,015		9,907		—		—		17,320
	Doubtful	—		—		—		—		—		—		—		—		—
	Loss	—		561		—		193		193		57		—		—		1,004
Total mortgage, net		$	1,465,374	$	2,393,437	$	487,820	$	476,667	$	146,571	$	677,166	$	—	$	—	$	5,647,035
Home equity loans & lines, net
Credit quality indicator:
	Pass/Watch	$	1,117	$	630	$	—	$	—	$	16	$	7,320	$	1,584,200	$	32,778	$	1,626,061
	Special mention	—		—		—		—		—		79		3,208		1,047		4,334
	Substandard	—		—		—		—		—		53		557		154		764
	Doubtful	—		—		—		—		—		—		—		—		—
	Loss	—		—		—		—		—		—		357		449		806
Total home equity loans & lines, net		$	1,117	$	630	$	—	$	—	$	16	$	7,452	$	1,588,322	$	34,428	$	1,631,965
Total residential		$	1,466,491	$	2,394,067	$	487,820	$	476,667	$	146,587	$	684,618	$	1,588,322	$	34,428	$	7,279,000


(in thousands)		Term Loans Amortized Cost Basis by Origination Year												Revolving Loans Amortized Cost Basis		Revolving to Non-Revolving Loans Amortized Cost
	December 31, 2022	2022		2021		2020		2019		2018		Prior						Total
Consumer & other, net:
Credit quality indicator:
	Pass/Watch	$	22,959	$	7,990	$	6,701	$	6,232	$	2,626	$	4,436	$	102,465	$	442	$	153,851
	Special mention	6		—		27		14		42		66		371		122		648
	Substandard	—		9		1		9		—		32		47		25		123
	Doubtful	—		—		—		—		—		—		—		—		—
	Loss	—		—		—		—		—		7		3		—		10
Total consumer & other, net		$	22,965	$	7,999	$	6,729	$	6,255	$	2,668	$	4,541	$	102,886	$	589	$	154,632
Grand total		$	6,826,217	$	6,855,556	$	2,022,796	$	2,421,887	$	1,250,979	$	3,127,311	$	3,522,507	$	128,728	$	26,155,981