Allowance for Loan Losses

(In Thousands)

The following is a summary of total non purchased and purchased loans as of the dates presented:



	March 31, 2019			December 31, 2018
Commercial, financial, agricultural	$	1,308,457		$	1,295,912
Lease financing	61,539			64,992
Real estate – construction	741,073			740,668
Real estate – 1-4 family mortgage	2,769,173			2,795,343
Real estate – commercial mortgage	4,083,632			4,051,509
Installment loans to individuals	127,307			137,832
Gross loans	9,091,181			9,086,256
Unearned income	(2,888		)	(3,127		)
Loans, net of unearned income	9,088,293			9,083,129
Allowance for loan losses	(49,835		)	(49,026		)
Net loans	$	9,038,458		$	9,034,103

Allowance for Loan Losses

The allowance for loan losses is maintained at a level believed adequate by management based on its ongoing analysis of the loan portfolio to absorb probable credit losses inherent in the entire loan portfolio, including collective impairment as recognized under ASC 450, “Contingencies”. Collective impairment is calculated based on loans grouped by grade. Another component of the allowance is losses on loans assessed as impaired under ASC 310. The balance of these loans and their related allowance is included in management’s estimation and analysis of the allowance for loan losses. Management and the internal loan review staff evaluate the adequacy of the allowance for loan losses quarterly. The allowance for loan losses is evaluated based on a continuing assessment of problem loans, the types of loans, historical loss experience, new lending products, emerging credit trends, changes in the size and character of loan categories and other factors, including its risk rating system, regulatory guidance and economic conditions. This evaluation is inherently subjective, as it requires estimates that are susceptible to significant revision as more information becomes available. The allowance for loan losses is established through a provision for loan losses charged to earnings resulting from measurements of inherent credit risk in the loan portfolio and estimates of probable losses or impairments of individual loans. Loan losses are charged against the allowance when management believes the uncollectability of a loan balance is confirmed. Subsequent recoveries, if any, are credited to the allowance.

The following table provides a roll forward of the allowance for loan losses by loan category and a breakdown of the ending balance of the allowance based on the Company’s impairment methodology for the periods presented:



	Commercial			Real Estate - Construction		Real Estate - 1-4 Family Mortgage			Real Estate - Commercial Mortgage			Installment and Other⁽¹⁾			Total
Three Months Ended March 31, 2019
Allowance for loan losses:
Beginning balance	$	8,269		$	4,755	$	10,139		$	24,492		$	1,371		$	49,026
Charge-offs	(258		)	—		(497		)	(562		)	(220		)	(1,537		)
Recoveries	374			7		197			245			23			846
Net recoveries (charge-offs)	116			7		(300		)	(317		)	(197		)	(691		)
Provision for loan losses charged to operations	1,237			16		(348		)	468			127			1,500
Ending balance	$	9,622		$	4,778	$	9,491		$	24,643		$	1,301		$	49,835
Period-End Amount Allocated to:
Individually evaluated for impairment	$	1,181		$	58	$	127		$	842		$	5		$	2,213
Collectively evaluated for impairment	8,312			4,720		8,944			21,828			1,294			45,098
Purchased with deteriorated credit quality	129			—		420			1,973			2			2,524
Ending balance	$	9,622		$	4,778	$	9,491		$	24,643		$	1,301		$	49,835


(1)	Includes lease financing receivables.




	Commercial			Real Estate - Construction		Real Estate - 1-4 Family Mortgage			Real Estate - Commercial Mortgage			Installment and Other⁽¹⁾			Total

Three Months Ended March 31, 2018
Allowance for loan losses:
Beginning balance	$	5,542		$	3,428	$	12,009		$	23,384		$	1,848		$	46,211
Charge-offs	(659		)	—		(671		)	(613		)	(122		)	(2,065		)
Recoveries	235			4		133			108			25			505
Net (charge-offs) recoveries	(424		)	4		(538		)	(505		)	(97		)	(1,560		)
Provision for loan losses charged to operations	1,953			766		(67		)	(965		)	63			1,750
Ending balance	$	7,071		$	4,198	$	11,404		$	21,914		$	1,814		$	46,401
Period-End Amount Allocated to:
Individually evaluated for impairment	$	272		$	1	$	168		$	1,026		$	5		$	1,472
Collectively evaluated for impairment	6,494			4,197		10,750			19,865			1,806			43,112
Purchased with deteriorated credit quality	305			—		486			1,023			3			1,817
Ending balance	$	7,071		$	4,198	$	11,404		$	21,914		$	1,814		$	46,401


(1)	Includes lease financing receivables.

The following table provides the recorded investment in loans, net of unearned income, based on the Company’s impairment methodology as of the dates presented:



	Commercial		Real Estate - Construction		Real Estate - 1-4 Family Mortgage		Real Estate - Commercial Mortgage		Installment and Other⁽¹⁾		Total
March 31, 2019
Individually evaluated for impairment	$	5,809	$	8,805	$	13,952	$	9,442	$	598	$	38,606
Collectively evaluated for impairment	1,277,801		732,268		2,711,397		3,937,908		181,467		8,840,841
Purchased with deteriorated credit quality	24,847		—		43,824		136,282		3,893		208,846
Ending balance	$	1,308,457	$	741,073	$	2,769,173	$	4,083,632	$	185,958	$	9,088,293
December 31, 2018
Individually evaluated for impairment	$	2,445	$	10,043	$	14,238	$	8,059	$	493	$	35,278
Collectively evaluated for impairment	1,264,324		730,625		2,732,862		3,903,012		194,774		8,825,597
Purchased with deteriorated credit quality	29,143		—		48,243		140,438		4,430		222,254
Ending balance	$	1,295,912	$	740,668	$	2,795,343	$	4,051,509	$	199,697	$	9,083,129


(1)	Includes lease financing receivables.