Loans and leases and the allowance for credit losses | 4. Loans and leases and the allowance for credit losses A summary of current, past due and nonaccrual loans as of March 31, 2023 and December 31, 2022 follows: Current 30-89 Days Accruing Past Nonaccrual Total (In thousands) March 31, 2023 Commercial, financial, leasing, etc. $ 42,825,221 $ 489,322 $ 61,550 $ 382,268 $ 43,758,361 Real estate: Commercial 35,250,019 399,114 37,137 1,516,655 37,202,925 Residential builder and developer 1,126,693 111,894 — 3,303 1,241,890 Other commercial construction 6,231,642 242,226 10,843 143,015 6,627,726 Residential 21,726,963 496,225 292,950 253,646 22,769,784 Residential — limited documentation 925,180 26,046 — 68,935 1,020,161 Consumer: Home equity lines and loans 4,751,822 26,679 — 80,766 4,859,267 Recreational finance 9,066,587 48,448 — 34,186 9,149,221 Automobile 4,249,035 35,270 — 26,842 4,311,147 Other 1,928,364 16,686 4,977 47,183 1,997,210 Total $ 128,081,526 $ 1,891,910 $ 407,457 $ 2,556,799 $ 132,937,692 December 31, 2022 Commercial, financial, leasing, etc. $ 40,982,398 $ 448,462 $ 72,502 $ 347,204 $ 41,850,566 Real estate: Commercial 34,972,627 311,188 67,696 1,396,662 36,748,173 Residential builder and developer 1,304,798 8,703 — 1,229 1,314,730 Other commercial construction 6,936,661 239,521 549 124,937 7,301,668 Residential 21,491,506 595,897 345,402 272,090 22,704,895 Residential — limited documentation 950,782 22,456 — 77,814 1,051,052 Consumer: Home equity lines and loans 4,891,311 30,787 — 84,788 5,006,886 Recreational finance 8,974,171 54,593 — 44,630 9,073,394 Automobile 4,393,206 44,486 — 39,584 4,477,276 Other 1,958,196 22,961 4,869 49,497 2,035,523 Total $ 126,855,656 $ 1,779,054 $ 491,018 $ 2,438,435 $ 131,564,163 4. Loans and leases and the allowance for credit losses, continued One-to-four family residential mortgage loans held for sale were $ 152 million and $ 32 million at March 31, 2023 and December 31, 2022, respectively. Commercial real estate loans held for sale were $ 321 million at March 31, 2023 and $ 131 million at December 31, 2022. Credit quality indicators The Company utilizes a loan grading system to differentiate risk amongst its commercial loans and commercial real estate loans. Loans with a lower expectation of default are assigned one of ten possible “pass” loan grades and are generally ascribed lower loss factors when determining the allowance for credit losses. Loans with an elevated level of credit risk are classified as “criticized” and are ascribed a higher loss factor when determining the allowance for credit losses. Criticized loans may be classified as “nonaccrual” if the Company no longer expects to collect all amounts according to the contractual terms of the loan agreement or the loan is delinquent 90 days or more. Line of business personnel in different geographic locations with support from and review by the Company’s credit risk personnel review and reassign loan grades based on their detailed knowledge of individual borrowers and their judgment of the impact on such borrowers resulting from changing conditions in their respective regions. Factors considered in assigning loan grades include borrower-specific information related to expected future cash flows and operating results, collateral values, geographic location, financial condition and performance, payment status, and other information. The Company’s policy is that at least annually, updated financial information be obtained from commercial borrowers associated with pass grade loans and additional analysis performed. On a quarterly basis, the Company’s credit personnel review all criticized commercial loans and commercial real estate loans greater than $ 1 million to determine the appropriateness of the assigned loan grade, including whether the loan should be reported as accruing or nonaccruing. 4. Loans and leases and the allowance for credit losses, continued The following table summarizes the loan grades applied at March 31, 2023 to the various classes of the Company’s commercial loans and commercial real estate loans and gross charge-offs for those types of loans for the three months ended March 31, 2023 by origination year. Term Loans by Origination Year Revolving Revolving Loans Converted to Term 2023 2022 2021 2020 2019 Prior Loans Loans Total (In thousands) Commercial, financial, leasing, etc.: Loan grades: Pass $ 2,250,004 8,170,214 4,708,911 1,809,434 1,606,622 2,562,970 20,254,352 42,666 $ 41,405,173 Criticized accrual 42,754 280,361 271,872 190,293 134,573 305,353 726,296 19,418 1,970,920 Criticized nonaccrual 258 24,490 44,960 32,392 27,903 92,676 152,114 7,475 382,268 Total commercial, $ 2,293,016 8,475,065 5,025,743 2,032,119 1,769,098 2,960,999 21,132,762 69,559 $ 43,758,361 Gross charge-offs $ 107 4,104 3,405 2,753 2,303 5,557 773 — $ 19,002 Real estate: Commercial: Loan grades: Pass $ 1,325,649 3,942,090 3,262,243 3,261,936 4,618,336 13,821,937 765,232 — $ 30,997,423 Criticized accrual 2,491 385,474 463,714 344,587 800,868 2,662,161 29,552 — 4,688,847 Criticized nonaccrual — 27,340 26,015 260,829 247,845 932,736 21,890 — 1,516,655 Total commercial real $ 1,328,140 4,354,904 3,751,972 3,867,352 5,667,049 17,416,834 816,674 — $ 37,202,925 Gross charge-offs $ — — — — 26,390 2,478 — — $ 28,868 Residential builder and developer: Loan grades: Pass $ 83,843 602,093 175,624 11,345 18,198 14,911 120,680 — $ 1,026,694 Criticized accrual 987 8,381 25,225 4,161 113,186 30,928 29,025 — 211,893 Criticized nonaccrual — 1 720 — 518 2,064 — — 3,303 Total residential builder $ 84,830 610,475 201,569 15,506 131,902 47,903 149,705 — $ 1,241,890 Gross charge-offs $ — — — — — 11 1,506 — $ 1,517 Other commercial construction: Loan grades: Pass $ 155,587 1,193,762 1,064,242 1,125,568 873,449 370,721 28,802 — $ 4,812,131 Criticized accrual 196 26,116 124,624 325,712 796,275 399,657 — — 1,672,580 Criticized nonaccrual — — 9,976 43,194 61,154 26,265 2,426 — 143,015 Total other commercial $ 155,783 1,219,878 1,198,842 1,494,474 1,730,878 796,643 31,228 — $ 6,627,726 Gross charge-offs $ — — — — — — — — $ — 4. Loans and leases and the allowance for credit losses, continued The Company considers repayment performance a significant indicator of credit quality for its residential real estate loan and consumer loan portfolios. A summary of loans in accrual and nonaccrual status at March 31, 2023 for the various classes of the Company’s residential real estate loans and consumer loans and gross charge-offs for those types of loans for the three months ended March 31, 2023 by origination year follows. Term Loans by Origination Year Revolving Revolving Loans Converted to Term 2023 2022 2021 2020 2019 Prior Loans Loans Total (In thousands) Residential: Current $ 497,138 5,056,599 3,968,015 2,722,670 1,360,032 8,098,258 24,251 — $ 21,726,963 30-89 days past due 1,408 55,995 50,487 25,710 19,711 340,852 2,062 — 496,225 Accruing loans past due — 14,957 28,430 17,231 11,726 220,606 — — 292,950 Nonaccrual — 7,087 12,270 2,528 8,859 216,014 6,888 — 253,646 Total residential $ 498,546 5,134,638 4,059,202 2,768,139 1,400,328 8,875,730 33,201 — $ 22,769,784 Gross charge-offs $ — 75 115 21 68 1,286 — — $ 1,565 Residential - limited documentation: Current $ — — — — — 925,180 — — $ 925,180 30-89 days past due — — — — — 26,046 — — 26,046 Accruing loans past due — — — — — — — — — Nonaccrual — — — — — 68,935 — — 68,935 Total residential - limited $ — — — — — 1,020,161 — — $ 1,020,161 Gross charge-offs $ — — — — — 136 — — $ 136 Consumer: Home equity lines and Current $ 172 33 2,007 2,265 15,068 113,605 3,138,593 1,480,079 $ 4,751,822 30-89 days past due — — 10 55 26 1,563 — 25,025 26,679 Accruing loans past due — — — — — — — — — Nonaccrual — — 15 — 65 8,110 1,880 70,696 80,766 Total home equity lines and $ 172 33 2,032 2,320 15,159 123,278 3,140,473 1,575,800 $ 4,859,267 Gross charge-offs $ — — — — — 31 1,298 704 $ 2,033 Recreational finance: Current $ 521,520 2,711,445 2,171,200 1,511,470 918,584 1,232,368 — — $ 9,066,587 30-89 days past due 280 8,378 9,892 9,833 7,475 12,590 — — 48,448 Accruing loans past due — — — — — — — — — Nonaccrual — 2,875 6,473 7,112 5,256 12,470 — — 34,186 Total recreational finance $ 521,800 2,722,698 2,187,565 1,528,415 931,315 1,257,428 — — $ 9,149,221 Gross charge-offs $ — 2,369 3,013 2,985 2,412 4,042 — — $ 14,821 Automobile: Current $ 253,110 1,414,115 1,419,830 625,620 328,506 207,854 — — $ 4,249,035 30-89 days past due 397 6,688 10,828 5,844 5,330 6,183 — — 35,270 Accruing loans past due — — — — — — — — — Nonaccrual — 2,669 8,430 4,674 4,445 6,624 — — 26,842 Total automobile $ 253,507 1,423,472 1,439,088 636,138 338,281 220,661 — — $ 4,311,147 Gross charge-offs $ — 1,636 2,068 1,169 957 881 — — $ 6,711 Other: Current 72,524 246,430 156,659 51,040 31,557 26,567 1,337,730 5,857 1,928,364 30-89 days past due $ 2,119 1,617 1,336 198 272 555 10,045 544 $ 16,686 Accruing loans past due — — — — — 198 4,779 — 4,977 Nonaccrual 1,711 588 535 195 149 258 43,631 116 47,183 Total other $ 76,354 248,635 158,530 51,433 31,978 27,578 1,396,185 6,517 $ 1,997,210 Gross charge-offs $ 912 8,657 2,735 1,395 1,581 4,986 20 — $ 20,286 Total loans and leases at $ 5,212,148 24,189,798 18,024,543 12,395,896 12,015,988 32,747,215 26,700,228 1,651,876 $ 132,937,692 Total gross charge-offs for $ 1,019 16,841 11,336 8,323 33,711 19,408 3,597 704 $ 94,939 4. Loans and leases and the allowance for credit losses, continued The following table summarizes the loan grades applied at December 31, 2022 to the various classes of the Company’s commercial loans and commercial real estate loans by origination year. Term Loans by Origination Year Revolving Revolving Loans Converted to Term 2022 2021 2020 2019 2018 Prior Loans Loans Total (In thousands) Commercial, financial, leasing, etc.: Loan grades: Pass $ 8,575,130 4,952,758 2,024,603 1,796,047 817,569 1,970,947 19,444,247 40,471 $ 39,621,772 Criticized accrual 247,626 222,861 190,368 116,881 71,485 246,846 768,497 17,026 1,881,590 Criticized nonaccrual 18,379 52,067 37,608 36,241 35,689 59,146 100,972 7,102 347,204 Total commercial, $ 8,841,135 5,227,686 2,252,579 1,949,169 924,743 2,276,939 20,313,716 64,599 $ 41,850,566 Real estate: Commercial: Loan grades: Pass $ 4,136,890 3,379,900 3,388,590 4,557,065 3,293,380 10,905,956 869,981 — $ 30,531,762 Criticized accrual 324,652 463,484 467,557 688,239 937,421 1,890,297 48,099 — 4,819,749 Criticized nonaccrual 11,541 22,459 183,986 297,106 170,382 688,079 23,109 — 1,396,662 Total commercial real $ 4,473,083 3,865,843 4,040,133 5,542,410 4,401,183 13,484,332 941,189 — $ 36,748,173 Residential builder and developer: Loan grades: Pass $ 680,705 230,079 11,280 22,111 12,812 9,865 150,404 — $ 1,117,256 Criticized accrual 2,969 28,472 9,952 108,968 15,069 — 30,815 — 196,245 Criticized nonaccrual 57 654 — 518 — — — — 1,229 Total residential builder $ 683,731 259,205 21,232 131,597 27,881 9,865 181,219 — $ 1,314,730 Other commercial construction: Loan grades: Pass $ 1,032,774 1,080,141 1,225,845 1,185,685 366,686 297,355 15,575 — $ 5,204,061 Criticized accrual 37,893 145,199 320,463 1,025,371 299,350 144,394 — — 1,972,670 Criticized nonaccrual — 9,992 44,037 35,841 10,542 22,099 2,426 — 124,937 Total other commercial $ 1,070,667 1,235,332 1,590,345 2,246,897 676,578 463,848 18,001 — $ 7,301,668 4. Loans and leases and the allowance for credit losses, continued A summary of loans in accrual and nonaccrual status at December 31, 2022 for the various classes of the Company’s residential real estate loans and consumer loans by origination year follows. Term Loans by Origination Year Revolving Revolving Loans Converted to Term 2022 2021 2020 2019 2018 Prior Loans Loans Total (In thousands) Residential: Current $ 5,071,379 4,001,652 2,717,371 1,392,866 753,908 7,523,890 30,440 — $ 21,491,506 30-89 days past due 59,477 51,308 40,337 21,849 23,126 399,301 499 — 595,897 Accruing loans past due 12,012 39,934 20,067 14,050 14,007 245,332 — — 345,402 Nonaccrual 5,686 10,865 2,583 9,860 4,650 231,093 7,353 — 272,090 Total residential $ 5,148,554 4,103,759 2,780,358 1,438,625 795,691 8,399,616 38,292 — $ 22,704,895 Residential - limited documentation: Current $ — — — — — 950,782 — — $ 950,782 30-89 days past due — — — — — 22,456 — — 22,456 Accruing loans past due — — — — — — — — — Nonaccrual — — — — — 77,814 — — 77,814 Total residential - limited $ — — — — — 1,051,052 — — $ 1,051,052 Consumer: Home equity lines and Current $ 930 2,109 2,441 15,361 23,321 97,282 3,262,533 1,487,334 $ 4,891,311 30-89 days past due — — — 171 126 2,030 — 28,460 30,787 Accruing loans past due — — — — — — — — — Nonaccrual — 15 — 536 334 6,458 2,799 74,646 84,788 Total home equity lines and $ 930 2,124 2,441 16,068 23,781 105,770 3,265,332 1,590,440 $ 5,006,886 Recreational finance: Current $ 2,842,091 2,280,627 1,587,629 963,907 486,964 812,953 — — $ 8,974,171 30-89 days past due 8,648 9,525 12,412 8,387 5,202 10,419 — — 54,593 Accruing loans past due — — — — — — — — — Nonaccrual 3,533 7,440 9,427 7,625 5,344 11,261 — — 44,630 Total recreational finance $ 2,854,272 2,297,592 1,609,468 979,919 497,510 834,633 — — $ 9,073,394 Automobile: Current $ 1,491,076 1,557,676 702,711 378,962 167,438 95,343 — — $ 4,393,206 30-89 days past due 6,926 13,324 7,284 7,239 5,464 4,249 — — 44,486 Accruing loans past due — — — — — — — — — Nonaccrual 2,493 10,698 7,372 7,520 5,620 5,881 — — 39,584 Total automobile $ 1,500,495 1,581,698 717,367 393,721 178,522 105,473 — — $ 4,477,276 Other: Current $ 274,530 172,238 58,339 38,439 8,217 23,163 1,375,049 8,221 $ 1,958,196 30-89 days past due 3,783 1,450 326 386 141 569 15,655 651 22,961 Accruing loans past due — — — — — 226 4,643 — 4,869 Nonaccrual 2,745 830 332 371 120 465 44,449 185 49,497 Total other $ 281,058 174,518 58,997 39,196 8,478 24,423 1,439,796 9,057 $ 2,035,523 Total loans and leases at $ 24,853,925 18,747,757 13,072,920 12,737,602 7,534,367 26,755,951 26,197,545 1,664,096 $ 131,564,163 4. Loans and leases and the allowance for credit losses, continued Allowance for credit losses For purposes of determining the level of the allowance for credit losses, the Company evaluates its loan and lease portfolio by type. Changes in the allowance for credit losses for the three months ended March 31, 2023 and 2022 were as follows: Commercial, Real Estate Leasing, etc. Commercial Residential Consumer Total (In thousands) Three Months Ended March 31, 2023 Beginning balance $ 502,153 676,684 115,092 631,402 $ 1,925,331 Provision for credit losses 12,187 95,992 ( 1,522 ) 13,343 120,000 Net charge-offs Charge-offs ( 19,002 ) ( 30,385 ) ( 1,701 ) ( 43,851 ) ( 94,939 ) Recoveries 9,441 1,330 1,323 12,624 24,718 Net charge-offs ( 9,561 ) ( 29,055 ) ( 378 ) ( 31,227 ) ( 70,221 ) Ending balance $ 504,779 743,621 113,192 613,518 $ 1,975,110 Commercial, Financial, Real Estate Leasing, etc. Commercial Residential Consumer Total (In thousands) Three Months Ended March 31, 2022 Beginning balance $ 283,899 557,239 71,726 556,362 $ 1,469,226 Provision for credit losses 28,725 ( 30,938 ) 1,720 10,493 10,000 Net charge-offs Charge-offs ( 19,234 ) ( 1,800 ) ( 3,972 ) ( 26,032 ) ( 51,038 ) Recoveries 13,665 14,943 3,107 12,456 44,171 Net (charge-offs) recoveries ( 5,569 ) 13,143 ( 865 ) ( 13,576 ) ( 6,867 ) Ending balance $ 307,055 539,444 72,581 553,279 $ 1,472,359 4. Loans and leases and the allowance for credit losses, continued Despite the allocation in the preceding tables, the allowance for credit losses is general in nature and is available to absorb losses from any loan or lease type. In determining the allowance for credit losses, accruing loans with similar risk characteristics are generally evaluated collectively. The Company utilizes statistically developed models to project principal balances over the remaining contractual lives of the loan portfolios and to determine estimated credit losses through a reasonable and supportable forecast period. Individual loan credit quality indicators, including loan grade and borrower repayment performance, can inform the models, which have been statistically developed based on historical correlations of credit losses with prevailing economic metrics, including unemployment, gross domestic product and real estate prices. Model forecasts may be adjusted for inherent limitations or biases that have been identified through independent validation and back-testing of model performance to actual realized results. At each of March 31, 2023 and December 31, 2022, the Company utilized a reasonable and supportable forecast period of two years. Subsequent to this forecast period the Company reverted, ratably over a one-year period, to historical loss experience to inform its estimate of losses for the remaining contractual life of each portfolio. The Company also estimates losses attributable to specific troubled credits identified through both normal and targeted credit review processes. The amounts of specific loss components in the Company’s loan and lease portfolios are determined through a loan-by-loan analysis of larger balance commercial loans and commercial real estate loans that are in nonaccrual status. Such loss estimates are typically based on expected future cash flows, collateral values and other factors that may impact the borrower’s ability to pay. To the extent that those loans are collateral-dependent, they are evaluated based on the fair value of the loan’s collateral as estimated at or near the financial statement date. As the quality of a loan deteriorates to the point of classifying the loan as “criticized,” the process of obtaining updated collateral valuation information is usually initiated, unless it is not considered warranted given factors such as the relative size of the loan, the characteristics of the collateral or the age of the last valuation. In those cases where current appraisals may not yet be available, prior appraisals are utilized with adjustments, as deemed necessary, for estimates of subsequent declines in values as determined by line of business and/or loan workout personnel. Those adjustments are reviewed and assessed for reasonableness by the Company’s credit risk personnel. Accordingly, for real estate collateral securing larger nonaccrual commercial loans and commercial real estate loans, estimated collateral values are based on current appraisals and estimates of value. For non-real estate loans, collateral is assigned a discounted estimated liquidation value and, depending on the nature of the collateral, is verified through field exams or other procedures. In assessing collateral, real estate and non-real estate values are reduced by an estimate of selling costs. For residential real estate loans, including home equity loans and lines of credit, the excess of the loan balance over the net realizable value of the property collateralizing the loan is charged-off when the loan becomes 150 days delinquent. That charge-off is based on recent indications of value from external parties that are generally obtained shortly after a loan becomes nonaccrual. Loans to consumers that file for bankruptcy are generally charged-off to estimated net collateral value shortly after the Company is notified of such filings. When evaluating individual home equity loans and lines of credit for charge off and for purposes of estimating losses in determining the allowance for credit losses, the Company gives consideration to the required repayment of any first lien positions related to collateral property. Changes in the amount of the allowance for credit losses reflect the outcome of the procedures described herein, including the impact of changes in macroeconomic forecasts as compared with previous forecasts, as well as the impact of portfolio concentrations, imprecision in economic forecasts, geopolitical conditions and other risk factors that might influence the loss estimation process. The Company’s reserve for off-balance sheet credit exposures was not material at March 31, 2023 and December 31, 2022. 4. Loans and leases and the allowance for credit losses, continued Information with respect to loans and leases that were considered nonaccrual at the beginning and end of the reporting period and the interest income recognized on such loans for three-month periods ended March 31, 2023 and 2022 follows. Amortized Cost with Allowance Amortized Cost without Allowance Total Amortized Cost Interest Income Recognized March 31, 2023 January 1, 2023 Three Months Ended March 31, 2023 (In thousands) Commercial, financial, leasing, etc. $ 185,867 $ 196,401 $ 382,268 $ 347,204 $ 2,279 Real estate: Commercial 404,564 1,112,091 1,516,655 1,396,662 5,501 Residential builder and developer 3,303 — 3,303 1,229 366 Other commercial construction 94,188 48,827 143,015 124,937 1,662 Residential 124,574 129,072 253,646 272,090 4,376 Residential — limited documentation 40,165 28,770 68,935 77,814 164 Consumer: Home equity lines and loans 39,131 41,635 80,766 84,788 2,221 Recreational finance 24,409 9,777 34,186 44,630 171 Automobile 22,926 3,916 26,842 39,584 35 Other 47,152 31 47,183 49,497 88 Total $ 986,279 $ 1,570,520 $ 2,556,799 $ 2,438,435 $ 16,863 March 31, 2022 January 1, 2022 Three Months Ended March 31, 2022 (In thousands) Commercial, financial, leasing, etc. $ 171,322 $ 103,824 $ 275,146 $ 221,022 $ 13,594 Real estate: Commercial 222,771 934,915 1,157,686 1,069,280 6,131 Residential builder and developer 524 2,392 2,916 3,005 1,428 Other commercial construction 29,914 20,941 50,855 111,405 626 Residential 191,495 150,176 341,671 355,858 6,541 Residential — limited documentation 80,590 42,922 123,512 122,888 196 Consumer: Home equity lines and loans 32,783 38,706 71,489 70,488 809 Recreational finance 24,350 7,196 31,546 27,811 161 Automobile 30,129 5,221 35,350 34,037 38 Other 43,964 96 44,060 44,289 92 Total $ 827,842 $ 1,306,389 $ 2,134,231 $ 2,060,083 $ 29,616 Loan modifications During the normal course of business, the Company modifies loans to maximize recovery efforts from borrowers experiencing financial difficulty. Such loan modifications typically include payment deferrals and interest rate reductions, but may also include other modified terms. Those modified loans may be considered nonaccrual if the Company does not expect to collect the contractual cash flows owed under the loan agreement. On January 1, 2023 the Company adopted amended guidance that eliminated the accounting guidance for troubled debt restructurings while expanding disclosure requirements for certain loan refinancings and restructurings by creditors when a borrower is experiencing financial difficulty. The amended guidance also requires disclosure of current period gross charge-offs by year of origination. 4. Loans and leases and the allowance for credit losses, continued The table that follows summarizes the Company’s loan modification activities to borrowers experiencing financial difficulty for the three-month period ended March 31, 2023: Payment Deferral Interest Rate Reduction Other Combination of Modification Types (a) Total (b) Percent of Total Loan Class (Dollars in thousands) Three Months Ended March 31, 2023 Commercial, financial, leasing, etc. $ 43,564 $ — $ — $ 286 $ 43,850 0.10 % Real estate: Commercial 120,304 — — — 120,304 0.32 % Residential builder and developer 7,983 — — — 7,983 0.64 % Other commercial construction 91,811 — — — 91,811 1.39 % Residential 32,460 — — 1,963 34,423 0.15 % Residential — limited documentation 5,237 — — — 5,237 0.51 % Consumer: Home equity lines and loans — — — 442 442 0.01 % Recreational finance 136 — — — 136 0.00 % Automobile 45 — — — 45 0.00 % Other — — — — — — Total $ 301,540 $ — $ — $ 2,691 $ 304,231 0.23 % (a) Predominantly payment deferrals combined with interest rate reductions. (b) Includes approximately $ 23 million of loans guaranteed by government-related entities (predominantly first lien residential mortgage loans). The financial effects of the modifications in the previous table include an increase in the weighted-average remaining term for commercial loans of 1.1 years, commercial real estate loans of 1.2 years and residential real estate loans of 9.1 years . Modified loans to borrowers experiencing financial difficulty are subject to the allowance for credit losses methodology described herein, including the use of models to inform credit loss estimates and, to the extent larger balance commercial and commercial real estate loans are in nonaccrual status, a loan-by-loan analysis of expected credit losses on those individual loans. Loans to borrowers experiencing financial difficulty that were modified during the three months ended March 31, 2023 and for which there was a subsequent payment default during that period were not material. 4. Loans and leases and the allowance for credit losses, continued Prior to January 1, 2023, if the borrower was experiencing financial difficulty such that the Company did not expect to collect the contractual cash flows owed under the original loan agreement and a concession in loan terms was granted, the Company considered the loan modification as a troubled debt restructuring. The table that follows summarizes the Company’s loan modification activities that were considered troubled debt restructurings for the three-month period ended March 31, 2022. The table is not comparative to the preceding table. The Company no longer designates modified loans as a troubled debt restructuring in conjunction with the adoption of amended accounting guidance on January 1, 2023. Post-modification (a) Number Pre- Principal Deferral Interest Rate Reduction Other Combination of Concession Types Total (Dollars in thousands) Three Months Ended March 31, 2022 Commercial, financial, leasing, etc. 37 $ 10,003 $ 6,920 $ — $ 54 $ 2,780 $ 9,754 Real estate: Commercial 17 7,582 4,376 — 2,101 855 7,332 Residential 97 24,051 15,443 — — 9,961 25,404 Residential — limited documentation 5 1,076 894 — — 193 1,087 Consumer: Home equity lines and loans 35 2,150 1,988 — — 172 2,160 Recreational finance 177 5,997 5,990 — — — 5,990 Automobile 534 10,263 10,233 — — — 10,233 Other 33 334 334 — — — 334 Total 935 $ 61,456 $ 46,178 $ — $ 2,155 $ 13,961 $ 62,294 _____________________________________________ (a) Financial effects impacting the recorded investment included principal payments or advances, ch arge-offs and capitalized escrow arrearages. The present value of interest rate concessions, discounted at the effective rate of the original loan, was not material. The amount of foreclosed property held by the Company, predominantly consisting of residential real estate, was $ 45 million and $ 41 million at March 31, 2023 and December 31, 2022 , respectively. There were $ 194 million and $ 201 million at March 31, 2023 and December 31, 2022, respectively, of loans secured by residential real estate that were in the process of foreclosure. Of all loans in the process of foreclosure at March 31, 2023 , approximately 44 % were government guaranteed. The Company pledged certain loans to secure outstanding borrowings and available lines of credit. At March 31, 2023 , the Company pledged approximately $ 11.6 billion of commercial loans and leases, $ 16.5 billion of commercial real estate loans, $ 19.5 billion of one-to-four family residential real estate loans, $ 2.4 billion of home equity loans and lines of credit and $ 11.1 billion of other consumer loans. At December 31, 2022, the Company pledged approximately $ 10.5 billion of commercial loans and leases, $ 16.3 billion of commercial real estate loans, $ 19.5 billion of one-to-four family residential real estate loans, $ 2.4 billion of homes equity loans and lines of credit and $ 10.7 billion of other consumer loans. |