Risk Factors Update Summary

• Total loans increased by $417 million, or 19%, driven by increases across all major loan portfolios.
• Proposed rule changes by federal banking agencies could significantly increase compliance costs for institutions growing over $50 billion in assets.
• Total short and long-term funding increased by $1.16 billion, or 25%, to $5.73 billion.
• The FOMC raised the target range for the federal funds rate from 4.25% to 5.50%.
• Recent banking sector volatility led to failures of SVB, SBNY, and First Republic Bank, impacting the Corporation's share price by 22%.
• Significant increase in Allowance for Credit Losses on Loans from $87,000 to $351,094.
• Average loans increased by $3.3 billion, or 13%, compared to 2022.
• Net cash provided by operating activities increased significantly from $36 to $254.
• Potential problem loans increased by $166 million, or 62%, driven by increases in real estate construction and CRE-investor portfolios.
• Net cash received in business segment sale decreased from $2,415 to $0.
• The FDIC issued a final rule to recover $16.3 billion associated with the resolution of failed banks.
• Addition of Kellogg Asset Management, LLC and the creation of nonbank subsidiaries SUBI - AB - 24 Portfolio and SUBI - 35 Portfolio.
• Increase in time deposits by $5.4 billion, primarily due to the addition of brokered CDs. This might impact liquidity.
• Service charges and deposit account fees increased from $18 to $23, a significant change.
• FDIC issued a final rule for a special assessment of $16.3 billion to recover losses from SVB and SBNY resolutions.
• Industrial loans increased by $392 million, from $9 million to $401 million.
• The Corporation undertook a review of APSN Fees and Representment Fees practices, which could reduce fee income significantly.
• Noninterest expense increased by $33 million primarily due to higher FDIC assessment and management incentive plan expenses.
• The total book value of the securities portfolio increased from $7.07 billion to $7.15 billion.
• ACLL for Commercial and Industrial loans rose from $51,859 to $128,263.
• Noninterest income decreased by $219 million in 2023, primarily due to changes in mortgage banking income and wealth management fees.
• Addition of a clawback policy requiring executives to return Erroneously Awarded Compensation to the Company Group.
• Total commercial loans increased by $188 million, from $18,000,000 to $18,188,898.
• Commercial real estate - owner-occupied loans increased by 70,700, from 991,000 to 1,061,700.
• Total nonaccrual loans increased by $38 million, or 15%, primarily due to increases in commercial and industrial and residential mortgage portfolios.
• The Corporation collected approximately $14 million in overdraft transaction fees in 2023.
• Card-based fees increased from $38,605 to $45,121, a notable rise.
• A decrease in short-term FHLB advances by $2.4 billion, offset by issuing brokered CDs. This affects immediate funding availability.
• Sale of mortgage portfolio increased from $844 to $362.
• Provision for credit losses increased to $83 million in 2023 from $33 million in 2022.
• Inclusion of a Clawback Policy effective December 1, 2023, allowing recovery of Erroneously Awarded Compensation.
• ACLL for Commercial Real Estate Investor loans increased from $10,697 to $67,858.
• Provision for credit losses increased by $51 million due to loan growth during the year.
• Net cash used in financing activities decreased by $128 million to $128 million.
• Home equity loans increased by $104 million, from $628,526 to $732,073.
• The goodwill decreased from 28% to 26% of stockholders' equity.
• Mortgage repurchased loans decreased from $6 million in 2022 to $5 million in 2023.
• Net interest income increased by $82 million, or 11%, driven by higher federal funds target rates.
• Requirement for Executive Officers to sign an Acknowledgement Form agreeing to comply with the Policy.
• Average interest-bearing liabilities increased by $5.4 billion, or 22%, compared to 2021.
• Residential mortgage loans increased by $647 million, from $7,864,891 to $8,511,550.
• The addition of a provision allowing the Company to redeem the Subordinated Notes in whole or in part on the Reset Date and thereafter.
• Commercial and business lending increased by $42 million, from $751 million to $793 million.
• CFPB enforcement actions against financial institutions for unlawful overdraft practices may impact noninterest income.
• The Corporation's total assets increased from $4,301,191 in 2022 to $4,734,666 in 2023.
• Net charge-offs decreased by $22 million, or 95%, primarily due to decreased charge-off amounts in commercial and industrial portfolios.
• Other revenue increased from $66,208 to $764,891, a substantial increase.
• An increase in long-term funding by $427 million, driven by prepayment of long-term FHLB advances. This impacts long-term capital structure.
• Net cash used in investing activities decreased from $1,436,257 to $5,254,811.
• Average loans increased by $3 billion in 2023, driven by growth in commercial, auto finance, and residential mortgages.
• Net interest income increased by $82 million in 2023, driven by strategic initiatives and rising earning assets.
• The Federal Reserve announced a downgrade in the U.S. long-term foreign-currency issuer default rating from AAA to AA+.
• Total loans rose from $312,720 to $351,094, with Net Charge Offs increasing from $10,142 to $48,626.
• Net income increased by $16 million to $182,956 million, driven by improved performance in various segments.
• Proceeds from issuance of long-term funding increased from $330 to $292.
• Noninterest income (in-scope of Topic 606) decreased from $246,077 to $186,560.
• Net income decreased from $366,122 in 2022 to $182,956 in 2023.
• The Corporation sold lower yielding AFS securities worth $715 million at a net loss of $65 million and reinvested in higher yielding GNMA securities.
• ACLL for Auto Finance loans increased from $10,051 to $24,961.
• OCC identified risks with overdraft protection programs, emphasizing sound risk management practices.
• Inclusion of legal remedies available to the Company Group under applicable law and agreements.
• FDIC assessment expense increased by $44 million, or 196%, primarily due to a one-time assessment.
• Average loan balances increased by $1.5 billion, primarily due to growth in auto finance and residential mortgage lending.
• Redemption of preferred stock decreased by $96 million to $11.5 million.
• Total interest-bearing deposits increased by $2.1 billion in 2023, driven by growth in core customer deposits.
• Auto finance loans decreased by $256 million, from $2,256,162 to $2,000,000.
• Net increase in deposits increased from $1,169,983 to $3,809,948.
• Regulatory scrutiny led to modifications in overdraft practices, including discontinuing overdraft transaction fees.
• Purchase of treasury stock, open market purchases decreased by $132 million to $0.
• ACLL for Other Consumer loans rose from $5,723 to $12,638.
• Noninterest income (out-of-scope of Topic 606) increased from $267,979 to $183,486.
• Wealth management fees decreased by $1.96 million, or 2%.
• The Corporation redesigned the allowance for credit losses on investments during 2023 as part of balance sheet repositioning.
• Preferred equity increased from $193 million in 2022 to $194 million in 2023.
• Average deposit balances decreased by $208 million, mainly due to a reduction in noninterest-bearing demand deposits.
• Net increase in short-term funding decreased from $279,157 to $101,946.
• Equity securities carrying value increased to $41,651 million in 2023 from $25,216 million in 2022.
• Cash dividends on common stock increased by $6.5 million to $129.5 million.
• Wealth management fees decreased from $84,957 to $82,502, a slight decrease.
• Competitive pressures led to the Corporation reducing the number of overdraft fee occurrences.
• Total stockholders' equity increased from $4,015,490 in 2022 to $4,173,973 in 2023.
• ACLL for Real Estate Construction loans increased from $7,910 to $53,554.
• Mortgage loans originated for sale decreased by $204.28 million, or 34%.
• Comprehensive income decreased by $181 million, impacted by changes in other comprehensive income and stockholder equity.
• Redemption of preferred shares decreased from $164,458 to $0.
• Net increase in cash and cash equivalents decreased by $19 million to $1.9 million.
• Purchase of treasury stock for stock-based compensation plans decreased from $6,593 to $4,297.
• The dividend per common share increased from $0.21 to $0.22, a minor increase.
• Total noninterest expense increased by $66 million, driven by higher personnel and technology expenses.