Old National’s loans consist primarily of loans made to consumers and commercial clients in many diverse industries, including real estate rental and leasing, manufacturing, healthcare, wholesale trade, construction, and agriculture, among others. Most of Old National’s lending activity occurs within our principal geographic markets in the Midwest region. Old National manages concentrations of credit exposure by industry, product, geography, client relationship, and loan size.

The loan categories used to monitor and analyze interest income and yields are different than the portfolio segments used to determine the allowance for credit losses on loans. The allowance for credit losses was calculated by pooling loans of similar credit risk characteristics and credit monitoring procedures. The four loan portfolios used to monitor and analyze interest income and yields – commercial, commercial real estate, residential real estate, and consumer – are reclassified into seven segments of loans – commercial, commercial real estate, BBCC, residential real estate, indirect, direct, and home equity for purposes of determining the allowance for credit losses on loans. The commercial and commercial real estate loan categories shown on the balance sheet include the same pool of loans as the commercial, commercial real estate, and BBCC portfolio segments. The consumer loan category shown on the balance sheet is comprised of the same loans in the indirect, direct, and home equity portfolio segments. The portfolio segment reclassifications follow:


	Balance Sheet Line Item		Portfolio Segment Reclassifications		After Reclassifications

(dollars in thousands)
September 30, 2023
Loans:
Commercial	$	9,333,448	$	(226,353)	$	9,107,095
Commercial real estate	13,916,221		(165,593)		13,750,628
BBCC	N/A		391,946		391,946
Residential real estate	6,696,288		—		6,696,288
Consumer	2,631,877		(2,631,877)		N/A
Indirect	N/A		1,047,224		1,047,224
Direct	N/A		542,689		542,689
Home equity	N/A		1,041,964		1,041,964
Total	$	32,577,834	$	—	$	32,577,834

December 31, 2022
Loans:
Commercial	$	9,508,904	$	(210,280)	$	9,298,624
Commercial real estate	12,457,070		(158,322)		12,298,748
BBCC	N/A		368,602		368,602
Residential real estate	6,460,441		—		6,460,441
Consumer	2,697,226		(2,697,226)		N/A
Indirect	N/A		1,034,257		1,034,257
Direct	N/A		629,186		629,186
Home equity	N/A		1,033,783		1,033,783
Total	$	31,123,641	$	—	$	31,123,641


(dollars in thousands)	September 30, 2023		December 31, 2022
Commercial (1)	$	9,107,095	$	9,298,624
Commercial real estate	13,750,628		12,298,748
BBCC	391,946		368,602
Residential real estate	6,696,288		6,460,441
Indirect	1,047,224		1,034,257
Direct	542,689		629,186
Home equity	1,041,964		1,033,783
Total loans	32,577,834		31,123,641
Allowance for credit losses on loans	(303,982)		(303,671)
Net loans	$	32,273,852	$	30,819,970

Commercial loans are classified primarily on the identified cash flows of the borrower and secondarily on the underlying collateral provided by the borrower. The cash flows of borrowers, however, may not be as expected and the collateral securing these loans may fluctuate in value. Most commercial loans are secured by the assets being financed or other business assets such as accounts receivable or inventory and may incorporate a personal guarantee; however, some loans may be made on an unsecured basis. In the case of loans secured by accounts receivable, the availability of funds for the repayment of these loans may be substantially dependent on the ability of the borrower to collect amounts due from its clients.

Commercial real estate loans are viewed primarily as cash flow loans and secondarily as loans secured by real estate. Commercial real estate lending typically involves higher loan principal amounts, and the repayment of these loans is generally dependent on the successful operation of the property securing the loan or the business conducted on the property securing the loan. Commercial real estate loans may be adversely affected by conditions in the real estate markets or in the general economy. The properties securing Old National’s commercial real estate portfolio are diverse in terms of type and geographic location. Management monitors and evaluates commercial real estate loans based on collateral, geography, and risk grade criteria. In addition, management tracks the level of owner-occupied commercial real estate loans versus non-owner occupied loans.

Included with commercial real estate are construction loans, which are underwritten utilizing independent appraisal reviews, sensitivity analysis of absorption and lease rates, financial analysis of the developers and property owners, and feasibility studies, if available. Construction loans are generally based on estimates of costs and value associated with the complete project. These estimates may be inaccurate. Construction loans often involve the disbursement of substantial funds with repayment substantially dependent on the success of the ultimate project. Sources of repayment for these types of loans may be pre-committed permanent loans from approved long-term lenders (including Old National), sales of developed property, or an interim loan commitment from Old National until permanent financing is obtained. These loans are closely monitored by on-site inspections and are considered to have higher risks than other real estate loans due to their ultimate repayment being sensitive to interest rate changes, governmental regulation of real property, general economic conditions, and the availability of long-term financing.

BBCC loans are typically granted to small businesses with gross revenues of less than $5 million and aggregate debt of less than $1 million. Old National has established minimum debt service coverage ratios, minimum FICO scores for owners and guarantors, and the ability to show relatively stable earnings as criteria to help mitigate risk. Repayment of these loans depends on the personal income of the borrowers and the cash flows of the business. These factors can be affected by factors such as changes in economic conditions and unemployment levels.

With respect to residential loans that are secured by 1 - 4 family residences and are generally owner occupied, Old National typically establishes a maximum loan-to-value ratio and generally requires private mortgage insurance if that ratio is exceeded. Repayment of these loans is primarily dependent on the personal income of the borrowers, which can be impacted by economic conditions in their market areas such as unemployment levels. Repayment can also be impacted by changes in residential property values. Portfolio risk is mitigated by the fact that the loans are of smaller individual amounts and spread over a large number of borrowers.

Indirect loans are secured by automobile collateral, generally new and used cars and trucks from auto dealers that operate within our footprint. Old National typically mitigates the risk of indirect loans by establishing minimum FICO scores, maximum loan-to-value ratios, and maximum debt-to-income ratios. Repayment of these loans depends largely on the personal income of the borrowers, which can be affected by changes in economic conditions

Direct loans are typically secured by collateral such as auto or real estate or are unsecured. Old National has established conservative underwriting standards such as minimum FICO scores, maximum loan-to-value ratios, and maximum debt-to-income ratios. Repayment of these loans depends largely on the personal income of the borrowers, which can be affected by changes in economic conditions such as unemployment levels. Portfolio risk is mitigated by the fact that the loans are of smaller amounts spread over many borrowers along with conservative credit policies.

Home equity loans are generally secured by 1 - 4 family residences that are owner occupied. Old National has established conservative underwriting standards such as minimum FICO scores, maximum loan-to-value ratios, and maximum debt-to-income ratios. Repayment of these loans depends largely on the personal income of the borrowers, which can be affected by changes in economic conditions such as unemployment levels. Portfolio risk is mitigated by the fact that the loans are of smaller amounts spread over many borrowers, along with conservative credit policies as well as monitoring of updated borrower credit scores.

Credit quality within the loans held for investment portfolio is continuously monitored by management and is reflected within the allowance for credit losses on loans. The allowance for credit losses is an estimate of expected losses inherent within the Company’s loans held for investment portfolio. Credit quality is assessed and monitored by evaluating various attributes and the results of those evaluations are utilized in underwriting new loans and in our process for estimating expected credit losses. Expected credit loss inherent in non-cancelable off-balance-sheet credit exposures is accounted for as a separate liability included in other liabilities on the balance sheet. The allowance for credit losses on loans held for investment is adjusted by a credit loss expense, which is reported in earnings, and reduced by the charge-off of loan amounts, net of recoveries. Old National has made a policy election to report accrued interest receivable as a separate line item on the balance sheet. Accrued interest receivable on loans is excluded from the estimate of credit losses and totaled $162.8 million at September 30, 2023 and $137.7 million at December 31, 2022.

The allowance for credit loss estimation process involves procedures to appropriately consider the unique characteristics of our loan portfolio segments. These segments are further disaggregated into loan classes based on the level at which credit risk is monitored. When computing the level of expected credit losses, credit loss assumptions are estimated using a model that categorizes loan pools based on loss history, delinquency status, and other credit trends and risk characteristics, including current conditions and reasonable and supportable forecasts about the future. Determining the appropriateness of the allowance is complex and requires judgment by management about the effect of matters that are inherently uncertain. In future periods, evaluations of the overall loan portfolio, in light of the factors and forecasts then prevailing, may result in significant changes in the allowance and credit loss expense in those future periods.

The allowance level is influenced by loan volumes, loan AQR migration or delinquency status, changes in historical loss experience, and other conditions influencing loss expectations, such as reasonable and supportable forecasts of economic conditions. The methodology for estimating the amount of expected credit losses reported in the allowance for credit losses has two basic components: first, an asset-specific component involving individual loans that do not share risk characteristics with other loans and the measurement of expected credit losses for such individual loans; and second, a pooled component for estimated expected credit losses for pools of loans that share similar risk characteristics.

The base forecast scenario considers unemployment, gross domestic product, and the BBB ratio (BBB spread to the 10-year U.S. Treasury rate). In addition to the quantitative inputs, several qualitative factors are considered. These factors include the risk that unemployment, gross domestic product, housing product index, and the BBB ratio prove to be more severe and/or prolonged than our baseline forecast due to a variety of factors including monetary actions to control inflation, recent instability in the banking sector, conflict in Ukraine, and global supply chain issues. Old National’s activity in the allowance for credit losses on loans by portfolio segment was as follows:


(dollars in thousands)	Balance at Beginning of Period		Allowance Established for Acquired PCD Loans		Charge-offs		Recoveries		Provision for Loan Losses		Balance at End of Period
Three Months Ended September 30, 2023
Commercial	$	127,403	$	—	$	(16,705)	$	1,616	$	12,441	$	124,755
Commercial real estate	136,897		—		(2,291)		102		10,267		144,975
BBCC	2,776		—		(1,049)		70		912		2,709
Residential real estate	20,421		—		(15)		28		346		20,780
Indirect	1,407		—		(490)		325		79		1,321
Direct	4,755		—		(2,180)		580		416		3,571
Home equity	6,896		—		(20)		341		(1,346)		5,871
Total	$	300,555	$	—	$	(22,750)	$	3,062	$	23,115	$	303,982

Three Months Ended September 30, 2022
Commercial	$	102,819	$	3,740	$	(2,696)	$	2,206	$	6,344	$	112,413
Commercial real estate	141,802		6,818		(4,772)		287		(45)		144,090
BBCC	2,064		—		—		108		(4)		2,168
Residential real estate	19,729		—		(20)		66		1,481		21,256
Indirect	1,641		—		(624)		379		189		1,585
Direct	14,412		—		(3,299)		442		4,541		16,096
Home equity	5,536		—		(29)		357		(1,218)		4,646
Total	$	288,003	$	10,558	$	(11,440)	$	3,845	$	11,288	$	302,254

Nine Months Ended September 30, 2023
Commercial	$	120,612	$	—	$	(37,459)	$	3,713	$	37,889	$	124,755
Commercial real estate	138,244		—		(5,938)		1,394		11,275		144,975
BBCC	2,431		—		(1,171)		174		1,275		2,709
Residential real estate	21,916		—		(256)		153		(1,033)		20,780
Indirect	1,532		—		(2,089)		1,349		529		1,321
Direct	12,116		—		(8,018)		1,798		(2,325)		3,571
Home equity	6,820		—		(330)		471		(1,090)		5,871
Total	$	303,671	$	—	$	(55,261)	$	9,052	$	46,520	$	303,982

Nine Months Ended September 30, 2022
Commercial	$	27,232	$	38,780	$	(5,919)	$	3,219	$	49,101	$	112,413
Commercial real estate	64,004		49,419		(5,596)		789		35,474		144,090
BBCC	2,458		—		(48)		256		(498)		2,168
Residential real estate	9,347		136		(344)		636		11,481		21,256
Indirect	1,743		—		(1,636)		921		557		1,585
Direct	528		31		(6,550)		1,712		20,375		16,096
Home equity	2,029		723		(107)		540		1,461		4,646
Total	$	107,341	$	89,089	$	(20,200)	$	8,073	$	117,951	$	302,254

Old National maintains an allowance for credit losses on unfunded loan commitments to provide for the risk of loss inherent in these arrangements. The allowance is computed using a methodology similar to that used to determine the allowance for credit losses on loans, modified to take into account the probability of a drawdown on the commitment. The allowance for credit losses on unfunded loan commitments is classified as a liability account on the balance sheet within accrued expenses and other liabilities, while the corresponding provision for unfunded loan commitments is included in the provision for credit losses. Old National’s activity in the allowance for credit losses on unfunded loan commitments was as follows:


	Three Months Ended September 30,				Nine Months Ended September 30,
(dollars in thousands)	2023		2022		2023		2022
Allowance for credit losses on unfunded loan commitments:
Balance at beginning of period	$	37,007	$	21,966	$	32,188	$	10,879
Provision for credit losses on unfunded loan commitments acquired during the period	—		—		—		11,013
(Recapture of) provision for credit losses on unfunded loan commitments	(4,047)		4,203		772		4,277
Balance at end of period	$	32,960	$	26,169	$	32,960	$	26,169

Old National’s management monitors the credit quality of its loans on an ongoing basis with the AQR for commercial loans reviewed annually or at renewal and the performance of its residential and consumer loans based upon the accrual status refreshed at least quarterly. Internally, management assigns an AQR to each non-homogeneous commercial, commercial real estate, and BBCC loan in the portfolio. The primary determinants of the AQR are the reliability of the primary source of repayment and the past, present, and projected financial condition of the borrower. The AQR will also consider current industry conditions. Major factors used in determining the AQR can vary based on the nature of the loan, but commonly include factors such as debt service coverage, internal cash flow, liquidity, leverage, operating performance, debt burden, FICO scores, occupancy, interest rate sensitivity, and expense burden. Old National uses the following definitions for risk ratings:

Classified – Substandard. Loans classified as substandard are inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. Loans so classified have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the institution will sustain some loss if the deficiencies are not corrected.


(dollars in thousands)	Origination Year														Revolving to Term
	2023		2022		2021		2020		2019		Prior		Revolving				Total
September 30, 2023
Commercial:

Pass	$	1,615,716	$	1,690,168	$	1,095,758	$	553,187	$	479,907	$	501,610	$	2,000,147	$	454,995	$	8,391,488
Criticized	27,469		110,893		21,107		46,241		22,674		54,738		107,105		32,247		422,474
Classified:
Substandard	19,509		40,694		32,135		38,892		9,970		20,431		66,977		15,417		244,025
Nonaccrual	—		5,748		2,034		284		2,718		—		—		—		10,784
Doubtful	—		18,838		5,626		1,762		962		11,136		—		—		38,324
Total	$	1,662,694	$	1,866,341	$	1,156,660	$	640,366	$	516,231	$	587,915	$	2,174,229	$	502,659	$	9,107,095


Commercial real estate:

Pass	$	1,805,852	$	3,432,536	$	2,715,562	$	1,734,359	$	1,117,895	$	1,273,742	$	73,590	$	796,442	$	12,949,978
Criticized	58,440		62,461		42,128		28,716		27,978		90,549		9,959		21,023		341,254
Classified:
Substandard	21,214		84,269		23,589		16,822		78,165		41,313		—		50,424		315,796
Nonaccrual	—		2,983		11,470		1,428		52		11,385		—		792		28,110
Doubtful	—		1,649		33,564		4,142		38,199		37,936		—		—		115,490
Total	$	1,885,506	$	3,583,898	$	2,826,313	$	1,785,467	$	1,262,289	$	1,454,925	$	83,549	$	868,681	$	13,750,628


BBCC:

Pass	$	74,658	$	76,281	$	49,463	$	42,980	$	30,085	$	14,488	$	66,281	$	18,582	$	372,818
Criticized	2,295		2,469		1,114		76		1,110		—		2,470		2,264		11,798
Classified:
Substandard	98		733		619		24		401		1,196		100		438		3,609
Nonaccrual	216		451		310		340		—		87		477		278		2,159
Doubtful	—		865		492		50		67		88		—		—		1,562
Total	$	77,267	$	80,799	$	51,998	$	43,470	$	31,663	$	15,859	$	69,328	$	21,562	$	391,946


(dollars in thousands)	Origination Year														Revolving to Term
	2022		2021		2020		2019		2018		Prior		Revolving				Total
December 31, 2022
Commercial:

Pass	$	2,388,618	$	1,754,364	$	796,340	$	738,208	$	362,986	$	388,617	$	1,988,763	$	329,119	$	8,747,015
Criticized	40,856		30,661		63,557		33,490		9,195		5,312		61,036		4,327		248,434
Classified:
Substandard	37,223		47,522		16,540		22,925		4,844		21,204		67,402		25,143		242,803
Nonaccrual	3,627		1,453		566		—		—		—		1,634		6,623		13,903
Doubtful	2,821		17,604		3,720		8,005		5,968		8,351		—		—		46,469
Total	$	2,473,145	$	1,851,604	$	880,723	$	802,628	$	382,993	$	423,484	$	2,118,835	$	365,212	$	9,298,624

Commercial real estate:

Pass	$	3,066,960	$	2,828,758	$	1,989,000	$	1,219,025	$	675,572	$	1,018,719	$	57,818	$	689,553	$	11,545,405
Criticized	75,306		34,422		22,569		82,637		86,504		56,864		—		23,282		381,584
Classified:
Substandard	46,231		16,928		24,319		78,468		57,824		21,591		—		4,108		249,469
Nonaccrual	3,151		9,541		5,014		—		2,312		22,155		—		3,257		45,430
Doubtful	1,934		38,386		10,011		4,605		1,523		20,401		—		—		76,860
Total	$	3,193,582	$	2,928,035	$	2,050,913	$	1,384,735	$	823,735	$	1,139,730	$	57,818	$	720,200	$	12,298,748

BBCC:

Pass	$	90,341	$	64,161	$	52,304	$	36,868	$	23,618	$	11,333	$	60,016	$	18,881	$	357,522
Criticized	1,504		525		368		692		353		—		1,006		1,603		6,051
Classified:
Substandard	811		143		—		421		—		—		543		682		2,600
Nonaccrual	42		37		118		—		429		284		—		639		1,549
Doubtful	40		107		439		157		64		73		—		—		880
Total	$	92,738	$	64,973	$	53,229	$	38,138	$	24,464	$	11,690	$	61,565	$	21,805	$	368,602

For residential real estate and consumer loan classes, Old National evaluates credit quality based on the aging status of the loan and by payment activity. The performing or nonperforming status is updated on an on-going basis dependent upon improvement and deterioration in credit quality. The following table presents the amortized cost of term residential real estate and consumer loans based on payment activity and origination year:


	Origination Year														Revolving to Term
(dollars in thousands)	2023		2022		2021		2020		2019		Prior		Revolving				Total
September 30, 2023
Residential real estate:
Risk Rating:
Performing	$	362,518	$	1,504,933	$	1,861,729	$	1,732,039	$	444,411	$	750,037	$	—	$	279	$	6,655,946
Nonperforming	—		3,529		2,905		4,538		3,343		26,027		—		—		40,342
Total	$	362,518	$	1,508,462	$	1,864,634	$	1,736,577	$	447,754	$	776,064	$	—	$	279	$	6,696,288


Indirect:
Risk Rating:
Performing	$	309,220	$	390,012	$	181,235	$	96,148	$	46,877	$	19,666	$	—	$	196	$	1,043,354
Nonperforming	120		1,270		1,175		604		361		340		—		—		3,870
Total	$	309,340	$	391,282	$	182,410	$	96,752	$	47,238	$	20,006	$	—	$	196	$	1,047,224


Direct:
Risk Rating:
Performing	$	84,749	$	99,625	$	107,539	$	54,070	$	35,065	$	87,207	$	63,877	$	4,852	$	536,984
Nonperforming	87		486		522		403		316		3,874		6		11		5,705
Total	$	84,836	$	100,111	$	108,061	$	54,473	$	35,381	$	91,081	$	63,883	$	4,863	$	542,689


Home equity:
Risk Rating:
Performing	$	1	$	692	$	387	$	690	$	743	$	5,736	$	994,797	$	23,918	$	1,026,964
Nonperforming	—		24		219		203		758		4,810		1,692		7,294		15,000
Total	$	1	$	716	$	606	$	893	$	1,501	$	10,546	$	996,489	$	31,212	$	1,041,964


	Origination Year														Revolving to Term
	2022		2021		2020		2019		2018		Prior		Revolving				Total
December 31, 2022
Residential real estate:
Risk Rating:
Performing	$	1,327,168	$	1,945,792	$	1,825,762	$	478,529	$	136,260	$	712,175	$	7	$	88	$	6,425,781
Nonperforming	59		529		861		873		1,826		30,512		—		—		34,660
Total	$	1,327,227	$	1,946,321	$	1,826,623	$	479,402	$	138,086	$	742,687	$	7	$	88	$	6,460,441

Indirect:
Risk Rating:
Performing	$	504,410	$	249,407	$	144,265	$	82,304	$	31,484	$	19,095	$	—	$	62	$	1,031,027
Nonperforming	348		1,074		645		531		304		328		—		—		3,230
Total	$	504,758	$	250,481	$	144,910	$	82,835	$	31,788	$	19,423	$	—	$	62	$	1,034,257

Direct:
Risk Rating:
Performing	$	132,934	$	164,126	$	77,406	$	57,919	$	45,299	$	59,212	$	87,622	$	671	$	625,189
Nonperforming	115		851		614		205		327		1,526		5		354		3,997
Total	$	133,049	$	164,977	$	78,020	$	58,124	$	45,626	$	60,738	$	87,627	$	1,025	$	629,186

Home equity:
Risk Rating:
Performing	$	919	$	896	$	1,849	$	1,497	$	983	$	11,646	$	990,001	$	14,792	$	1,022,583
Nonperforming	166		160		166		446		794		4,308		1,698		3,462		11,200
Total	$	1,085	$	1,056	$	2,015	$	1,943	$	1,777	$	15,954	$	991,699	$	18,254	$	1,033,783


	Origination Year
(dollars in thousands)	2023		2022		2021		2020		2019		Prior		Revolving		Total
Three Months Ended September 30, 2023
Commercial	$	—	$	4,154	$	12,271	$	—	$	—	$	63	$	217		$	16,705
Commercial real estate	—		—		—		1,744		—		547		—			2,291
BBCC	499		501		49		—		—		—		—			1,049
Residential real estate	—		—		—		—		—		15		—			15
Indirect	75		276		86		12		10		31		—			490
Direct	19		429		423		112		270		60		867			2,180
Home equity	—		—		—		—		—		20		—			20
Total gross charge-offs	$	593	$	5,360	$	12,829	$	1,868	$	280	$	736	$	1,084		$	22,750

Nine Months Ended September 30, 2023
Commercial	$	—	$	6,254	$	23,432	$	120	$	6,789	$	302	$	562		$	37,459
Commercial real estate	—		54		735		2,144		—		3,005		—			5,938
BBCC	499		548		77		47		—		—		—			1,171
Residential real estate	—		—		—		—		—		256		—			256
Indirect	85		954		640		153		137		120		—			2,089
Direct	19		1,330		1,805		570		1,011		450		2,833			8,018
Home equity	—		—		—		—		—		330		—			330
Total gross charge-offs	$	603	$	9,140	$	26,689	$	3,034	$	7,937	$	4,463	$	3,395		$	55,261

Old National does not record interest on nonaccrual loans until principal is recovered. For all loan classes, a loan is generally placed on nonaccrual status when principal or interest becomes 90 days past due unless it is well secured and in the process of collection, or earlier when concern exists as to the ultimate collectability of principal or interest. Interest accrued but not received is reversed against earnings. Cash interest received on these loans is applied to the principal balance until the principal is recovered or until the loan returns to accrual status. Loans may be returned to accrual status when all the principal and interest amounts contractually due are brought current, remain current for a prescribed period, and future payments are reasonably assured.


(dollars in thousands)	30-59 Days Past Due		60-89 Days Past Due		Past Due 90 Days or More		Total Past Due		Current		Total Loans
September 30, 2023
Commercial	$	2,754	$	4,214	$	12,504	$	19,472	$	9,087,623	$	9,107,095
Commercial real estate	15,954		6,295		21,366		43,615		13,707,013		13,750,628
BBCC	1,273		511		712		2,496		389,450		391,946
Residential	29,762		6,784		12,733		49,279		6,647,009		6,696,288
Indirect	5,576		1,368		1,156		8,100		1,039,124		1,047,224
Direct	3,626		1,059		1,588		6,273		536,416		542,689
Home equity	5,840		1,808		6,077		13,725		1,028,239		1,041,964
Total	$	64,785	$	22,039	$	56,136	$	142,960	$	32,434,874	$	32,577,834

December 31, 2022
Commercial	$	14,147	$	4,801	$	11,080	$	30,028	$	9,268,596	$	9,298,624
Commercial real estate	47,240		1,312		32,892		81,444		12,217,304		12,298,748
BBCC	730		365		603		1,698		366,904		368,602
Residential	24,181		5,033		11,753		40,967		6,419,474		6,460,441
Indirect	6,302		2,118		958		9,378		1,024,879		1,034,257
Direct	5,404		2,118		1,928		9,450		619,736		629,186
Home equity	6,585		1,966		4,707		13,258		1,020,525		1,033,783
Total	$	104,589	$	17,713	$	63,921	$	186,223	$	30,937,418	$	31,123,641


	September 30, 2023						December 31, 2022
(dollars in thousands)	Nonaccrual Amortized Cost		Nonaccrual With No Related Allowance		Past Due 90 Days or More and Accruing		Nonaccrual Amortized Cost		Nonaccrual With No Related Allowance		Past Due 90 Days or More and Accruing
Commercial	$	49,108	$	13,432	$	577	$	60,372	$	7,873	$	152
Commercial real estate	143,600		29,721		104		122,290		33,445		—
BBCC	3,721		—		—		2,429		—		—
Residential	40,342		—		—		34,660		—		1,808
Indirect	3,870		—		54		3,230		—		28
Direct	5,705		—		109		3,997		—		133
Home equity	15,000		—		348		11,200		—		529
Total	$	261,346	$	43,153	$	1,192	$	238,178	$	41,318	$	2,650

When management determines that foreclosure is probable, expected credit losses for collateral dependent loans are based on the fair value of the collateral at the reporting date, adjusted for selling costs as appropriate. A loan is considered collateral dependent when the borrower is experiencing financial difficulty and the loan is expected to be repaid substantially through the operation or sale of the collateral. The class of loan represents the primary collateral type associated with the loan. Significant quarter-over-quarter changes are reflective of changes in nonaccrual status and not necessarily associated with credit quality indicators like appraisal value. The following table presents the amortized cost basis of collateral dependent loans by class of loan:


	Type of Collateral
(dollars in thousands)	Real Estate		Blanket Lien		Investment Securities/Cash		Auto		Other
September 30, 2023
Commercial	$	13,635	$	31,856	$	466	$	288	$	347
Commercial real estate	131,826		—		1,205		—		6,184
BBCC	2,131		1,174		—		416		—
Residential	40,342		—		—		—		—
Indirect	—		—		—		3,870		—
Direct	4,622		1		3		296		31
Home equity	15,000		—		—		—		—
Total loans	$	207,556	$	33,031	$	1,674	$	4,870	$	6,562

December 31, 2022
Commercial	$	8,962	$	42,754	$	2,690	$	1,611	$	980
Commercial real estate	108,871		—		1,718		—		6,411
BBCC	1,939		478		—		12		—
Residential	34,660		—		—		—		—
Indirect	—		—		—		3,230		—
Direct	2,991		13		—		232		23
Home equity	11,200		—		—		—		—
Total loans	$	168,623	$	43,245	$	4,408	$	5,085	$	7,414

Old National has loan participations, which qualify as participating interests, with other financial institutions. At September 30, 2023, these loans totaled $2.8 billion, of which $1.2 billion had been sold to other financial institutions and $1.6 billion was retained by Old National. The loan participations convey proportionate ownership rights with equal priority to each participating interest holder; involve no recourse (other than ordinary representations and warranties) to, or subordination by, any participating interest holder; all cash flows are divided among the participating interest holders in proportion to each holder’s share of ownership; and no holder has the right to pledge the entire financial asset unless all participating interest holders agree.