Allowance for Credit Losses

3 Months Ended

Mar. 31, 2025

The ACL for loans represents management's estimate of life of loan credit losses in the portfolio as of the end of the period. The ACL related to unfunded commitments is included in other liabilities in the consolidated balance sheet. The following tables present the balance sheet activity in the ACL by portfolio segment for loans for the three month periods ended March 31, 2025 and March 31, 2024.



(dollars in thousands)	Balance December 31, 2024		Charge-Offs		Recoveries		Provision for credit losses on loans		Balance, March 31, 2025
Three Months Ended March 31, 2025
Construction, land & land development	$	1,306	$	—	$	1	$	(229)	$	1,078
Other commercial real estate	6,459		(180)		5		231		6,515
Total commercial real estate	7,765		(180)		6		2		7,593
Residential real estate	5,502		(1)		40		212		5,753
Commercial, financial & agricultural	2,904		(262)		55		848		3,545
Consumer and other	2,809		(276)		12		561		3,106
Total allowance for credit losses on loans	$	18,980	$	(719)	$	113	$	1,623	$	19,997


(dollars in thousands)	Balance December 31, 2023		Charge-Offs		Recoveries		Provision for credit losses on loans		Balance, March 31, 2024
Three Months Ended March 31, 2024
Construction, land & land development	$	2,204	$	—	$	1	$	(159)	$	2,046
Other commercial real estate	7,064		(20)		9		336		7,389
Total commercial real estate	9,268		(20)		10		177		9,435
Residential real estate	5,105		(70)		168		124		5,327
Commercial, financial & agricultural	2,110		(658)		22		546		2,020
Consumer and other	1,888		(120)		4		103		1,875
Total allowance for credit losses on loans	$	18,371	$	(868)	$	204	$	950	$	18,657

Colony used a one-year reasonable and supportable forecast period. The changes in loss rates used as the basis for the estimate of credit losses during this period were modeled using historical data from peer banks and macroeconomic forecast data obtained from a third party vendor, which were then applied to Colony's recent default experience as a starting point. As of March 31, 2025, the Company expects that the markets in which it operates will experience stable economic and unemployment conditions with the trend of delinquencies returning to more normalized levels, over the next year. Management adjusted the historical loss experience for these expectations. No reversion adjustments were necessary, as the starting point for the Company's estimate was a cumulative loss rate covering the expected contractual term of the portfolio.

The Company determines its individual reserves during its quarterly review of substandard loans. This process involves reviewing all loans with a risk grade of 7, 8, 9, 10 or 99 and an outstanding balance of $500,000 or more, regardless of the loans impairment classification.

The Company maintains an allowance for off-balance sheet credit exposures such as unfunded balances for existing lines of credit, commitments to extend future credit, as well as both standby and commercial letters of credit when there is a contractual obligation to extend credit and when this extension of credit is not unconditionally cancellable. The allowance for off-balance sheet credit exposures is adjusted as a provision for credit loss expense. The estimate includes consideration of the likelihood that funding will occur, which is based on a historical funding study derived from internal information, and an estimate of expected credit losses on commitments expected to be funded over its estimated life, which are the same loss rates that are used in computing the allowance for credit losses on loans. The allowance for credit losses for unfunded commitments is separately classified on the balance sheet within other liabilities.

The following table presents the balance and activity in the allowance for credit losses for unfunded commitments for the three month periods ended March 31, 2025 and March 31, 2024.


	Three Months Ended March 31,
(dollars in thousands)	2025		2024







Beginning balance	$	813	$	1,375

Provision for (recovery of) unfunded commitments	(123)		50
Ending balance	$	690	$	1,425