| ALLOWANCE FOR CREDIT LOSSES ON LOANS AND LEASES The ACL is maintained for credit losses expected in the existing loan and lease portfolio and is presented as a reserve against loans and leases on the Consolidated Balance Sheets. Loan and lease losses are charged off against the ACL, with recoveries of amounts previously charged off credited to the ACL. Provisions for credit losses are charged to operations based on management’s periodic evaluation of the appropriate level of the ACL. Following is a summary of changes in the ACL, by loan and lease class: TABLE 5.1 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | (in millions) | Balance at
Beginning of
Period | | Charge-
Offs | | Recoveries | | Net
(Charge-
Offs) Recoveries | | Provision for Credit Losses | | | | | | Balance at
End of
Period | | Three Months Ended June 30, 2025 | | | | | | | | | | | | | | | | | Commercial real estate | $ | 173.4 | | | $ | (3.0) | | | $ | 0.2 | | | $ | (2.8) | | | $ | 8.9 | | | | | | | $ | 179.5 | | | Commercial and industrial | 88.6 | | | (18.1) | | | 2.5 | | | (15.6) | | | 15.3 | | | | | | | 88.3 | | | Commercial leases | 22.8 | | | (0.1) | | | — | | | (0.1) | | | (1.1) | | | | | | | 21.6 | | | Other | 4.4 | | | (1.1) | | | 0.2 | | | (0.9) | | | 1.1 | | | | | | | 4.6 | | | Total commercial loans and leases | 289.2 | | | (22.3) | | | 2.9 | | | (19.4) | | | 24.2 | | | | | | | 294.0 | | | Direct installment | 28.1 | | | (0.2) | | | 0.2 | | | — | | | (1.5) | | | | | | | 26.6 | | | Residential mortgages | 94.1 | | | (1.4) | | | 0.1 | | | (1.3) | | | 2.6 | | | | | | | 95.4 | | | Indirect installment | 9.2 | | | (1.7) | | | 0.8 | | | (0.9) | | | 1.0 | | | | | | | 9.3 | | | Consumer lines of credit | 8.3 | | | (0.3) | | | 0.1 | | | (0.2) | | | (1.3) | | | | | | | 6.8 | | | Total consumer loans | 139.7 | | | (3.6) | | | 1.2 | | | (2.4) | | | 0.8 | | | | | | | 138.1 | | | Total allowance for credit losses on loans and leases | 428.9 | | | (25.9) | | | 4.1 | | | (21.8) | | | 25.0 | | | | | | | 432.1 | | | Allowance for unfunded loan commitments | 20.3 | | | — | | | — | | | — | | | 0.7 | | | | | | | 21.0 | | | Total allowance for credit losses on loans and leases and allowance for unfunded loan commitments | $ | 449.2 | | | $ | (25.9) | | | $ | 4.1 | | | $ | (21.8) | | | $ | 25.7 | | | | | | | $ | 453.1 | | | | | | | | | | | | | | | | | | | Six Months Ended June 30, 2025 | | | | | | | | | | | | | | | | | Commercial real estate | $ | 166.9 | | | $ | (10.6) | | | $ | 0.6 | | | $ | (10.0) | | | $ | 22.6 | | | | | | | $ | 179.5 | | | Commercial and industrial | 85.6 | | | (22.4) | | | 5.0 | | | (17.4) | | | 20.1 | | | | | | | 88.3 | | | Commercial leases | 22.9 | | | (0.2) | | | — | | | (0.2) | | | (1.1) | | | | | | | 21.6 | | | Other | 4.3 | | | (2.2) | | | 0.5 | | | (1.7) | | | 2.0 | | | | | | | 4.6 | | | Total commercial loans and leases | 279.7 | | | (35.4) | | | 6.1 | | | (29.3) | | | 43.6 | | | | | | | 294.0 | | | Direct installment | 29.1 | | | (0.6) | | | 0.3 | | | (0.3) | | | (2.2) | | | | | | | 26.6 | | | Residential mortgages | 95.9 | | | (1.8) | | | 0.2 | | | (1.6) | | | 1.1 | | | | | | | 95.4 | | | Indirect installment | 9.5 | | | (3.9) | | | 1.2 | | | (2.7) | | | 2.5 | | | | | | | 9.3 | | | Consumer lines of credit | 8.6 | | | (0.6) | | | 0.2 | | | (0.4) | | | (1.4) | | | | | | | 6.8 | | | Total consumer loans | 143.1 | | | (6.9) | | | 1.9 | | | (5.0) | | | — | | | | | | | 138.1 | | | Total allowance for credit losses on loans and leases | 422.8 | | | (42.3) | | | 8.0 | | | (34.3) | | | 43.6 | | | | | | | 432.1 | | | Allowance for unfunded loan commitments | 21.4 | | | — | | | — | | | — | | | (0.4) | | | | | | | 21.0 | | | Total allowance for credit losses on loans and leases and allowance for unfunded loan commitments | $ | 444.2 | | | $ | (42.3) | | | $ | 8.0 | | | $ | (34.3) | | | $ | 43.2 | | | | | | | $ | 453.1 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | (in millions) | Balance at
Beginning of
Period | | Charge-
Offs | | Recoveries | | Net
(Charge-
Offs) Recoveries | | Provision
for Credit
Losses | | | | | | Balance at
End of
Period | | Three Months Ended June 30, 2024 | | | | | | | | | | | | | | | | Commercial real estate | $ | 161.9 | | | $ | (3.2) | | | $ | 0.8 | | | $ | (2.4) | | | $ | (1.8) | | | | | | | $ | 157.7 | | | Commercial and industrial | 86.9 | | | (4.7) | | | 1.7 | | | (3.0) | | | 9.6 | | | | | | | 93.5 | | | Commercial leases | 22.4 | | | — | | | 0.1 | | | 0.1 | | | 0.4 | | | | | | | 22.9 | | | Other | 4.1 | | | (1.0) | | | 0.6 | | | (0.4) | | | 0.3 | | | | | | | 4.0 | | | Total commercial loans and leases | 275.3 | | | (8.9) | | | 3.2 | | | (5.7) | | | 8.5 | | | | | | | 278.1 | | | Direct installment | 30.6 | | | (0.4) | | | 0.2 | | | (0.2) | | | 0.5 | | | | | | | 30.9 | | | Residential mortgages | 79.3 | | | (0.2) | | | 0.1 | | | (0.1) | | | 9.0 | | | | | | | 88.2 | | | Indirect installment | 12.5 | | | (2.5) | | | 0.9 | | | (1.6) | | | 2.2 | | | | | | | 13.1 | | | Consumer lines of credit | 8.6 | | | (0.3) | | | 0.1 | | | (0.2) | | | 0.1 | | | | | | | 8.5 | | | Total consumer loans | 131.0 | | | (3.4) | | | 1.3 | | | (2.1) | | | 11.8 | | | | | | | 140.7 | | | Total allowance for credit losses on loans and leases | 406.3 | | | (12.3) | | | 4.5 | | | (7.8) | | | 20.3 | | | | | | | 418.8 | | | Allowance for unfunded loan commitments | 21.9 | | | — | | | — | | | — | | | (0.1) | | | | | | | 21.8 | | | Total allowance for credit losses on loans and leases and allowance for unfunded loan commitments | $ | 428.2 | | | $ | (12.3) | | | $ | 4.5 | | | $ | (7.8) | | | $ | 20.2 | | | | | | | $ | 440.6 | | | Six Months Ended June 30, 2024 | | | | | | | | | | | | | | | | | Commercial real estate | $ | 166.6 | | | $ | (10.3) | | | $ | 1.2 | | | $ | (9.1) | | | $ | 0.2 | | | | | | | $ | 157.7 | | | Commercial and industrial | 87.8 | | | (8.6) | | | 2.5 | | | (6.1) | | | 11.8 | | | | | | | 93.5 | | | Commercial leases | 21.2 | | | (0.2) | | | 0.1 | | | (0.1) | | | 1.8 | | | | | | | 22.9 | | | Other | 3.7 | | | (1.9) | | | 0.9 | | | (1.0) | | | 1.3 | | | | | | | 4.0 | | | Total commercial loans and leases | 279.3 | | | (21.0) | | | 4.7 | | | (16.3) | | | 15.1 | | | | | | | 278.1 | | | Direct installment | 33.8 | | | (0.6) | | | 0.4 | | | (0.2) | | | (2.7) | | | | | | | 30.9 | | | Residential mortgages | 70.5 | | | (0.2) | | | 0.1 | | | (0.1) | | | 17.8 | | | | | | | 88.2 | | | Indirect installment | 12.8 | | | (5.4) | | | 1.5 | | | (3.9) | | | 4.2 | | | | | | | 13.1 | | | Consumer lines of credit | 9.2 | | | (0.6) | | | 0.5 | | | (0.1) | | | (0.6) | | | | | | | 8.5 | | | Total consumer loans | 126.3 | | | (6.8) | | | 2.5 | | | (4.3) | | | 18.7 | | | | | | | 140.7 | | | Total allowance for credit losses on loans and leases | 405.6 | | | (27.8) | | | 7.2 | | | (20.6) | | | 33.8 | | | | | | | 418.8 | | | Allowance for unfunded loan commitments | 21.5 | | | — | | | — | | | — | | | 0.3 | | | | | | | 21.8 | | | Total allowance for credit losses on loans and leases and allowance for unfunded loan commitments | $ | 427.1 | | | $ | (27.8) | | | $ | 7.2 | | | $ | (20.6) | | | $ | 34.1 | | | | | | | $ | 440.6 | |
Following is a summary of changes in the AULC by portfolio segment: TABLE 5.2 | | | | | | | | | | | | | | | | | | | | | | | | | Three Months Ended
June 30, | | Six Months Ended
June 30, | | 2025 | | 2024 | | 2025 | | 2024 | | (in millions) | | | | | | | | | Balance at beginning of period | $ | 20.3 | | | $ | 21.9 | | | $ | 21.4 | | | $ | 21.5 | | | Provision for unfunded loan commitments and letters of credit: | | | | | | | | | Commercial portfolio | 0.8 | | | (0.1) | | | (0.3) | | | 0.4 | | | Consumer portfolio | (0.1) | | | — | | | (0.1) | | | (0.1) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Balance at end of period | $ | 21.0 | | | $ | 21.8 | | | $ | 21.0 | | | $ | 21.8 | |
The model used to calculate the ACL is dependent on the portfolio composition and credit quality, as well as historical experience, current conditions and forecasts of economic conditions and interest rates. Specifically, the following considerations are incorporated into the ACL calculation: •a third-party macroeconomic forecast scenario; •a 24-month R&S forecast period for macroeconomic factors with a reversion to the historical mean on a straight-line basis over a 12-month period; and •the historical through-the-cycle mean was calculated using an expanded period to include a prior recessionary period. At June 30, 2025 and December 31, 2024, we utilized a third-party consensus macroeconomic forecast reflecting the current and projected macroeconomic environment. For our ACL calculation at June 30, 2025, the macroeconomic variables that we utilized included, but were not limited to: (i) the purchase only Housing Price Index, which increases 5.6% over our R&S forecast period, (ii) a Commercial Real Estate Price Index, which decreases 1.3% over our R&S forecast period, (iii) S&P Volatility, which increases 87.7% in 2025 and decreases 22.7% in 2026 and (iv) personal and business bankruptcies, which increase steadily over the R&S forecast period but average below the historical through-the-cycle period. Macroeconomic variables that we utilized for our ACL calculation as of December 31, 2024 included, but were not limited to: (i) the purchase only Housing Price Index, which increases 7.4% over our R&S forecast period, (ii) a Commercial Real Estate Price Index, which increases 3.9% over our R&S forecast period, (iii) S&P Volatility, which increases 34.9% in 2025 and 2.5% in 2026 and (iv) personal and business bankruptcies, which increase steadily over the R&S forecast period but average below the historical through-the-cycle period. The ACL on loans and leases of $432.1 million at June 30, 2025 increased $9.3 million, or 2.2%, from December 31, 2024. Our ending ACL coverage ratio at June 30, 2025 was 1.25%, unchanged from December 31, 2024. Total provision for credit losses for the three months ended June 30, 2025 was $25.7 million, compared to $20.2 million for the same period of 2024. The second quarter of 2025 reflected net charge-offs of $21.8 million, or 0.25% annualized of average total loans, compared to $7.8 million, or 0.09% annualized, in the second quarter of 2024. Total provision for credit losses for the six months ended June 30, 2025 was $43.1 million, compared to $34.1 million in the same period of 2024. Net charge-offs were $34.3 million, or 0.20% annualized of average total loans, during the six months ended June 30, 2025, compared to $20.6 million, or 0.13% annualized, for the same period of 2024.
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