
	September 30, 2020		December 31, 2019
Commercial, financial, agricultural	$	2,648,062	$	1,367,972
Lease financing	87,257		85,700
Real estate – construction:
Residential	264,525		289,050
Commercial	508,594		537,433
Total real estate – construction	773,119		826,483
Real estate – 1-4 family mortgage:
Primary	1,762,897		1,781,948
Home equity	537,615		573,540
Rental/investment	306,378		335,100
Land development	153,504		176,025
Total real estate – 1-4 family mortgage	2,760,394		2,866,613
Real estate – commercial mortgage:
Owner-occupied	1,672,402		1,637,281
Non-owner occupied	2,754,241		2,450,895
Land development	150,366		156,089
Total real estate – commercial mortgage	4,577,009		4,244,265
Installment loans to individuals	243,226		302,430
Gross loans	11,089,067		9,693,463
Unearned income	(4,329)		(3,825)
Loans, net of unearned income	11,084,738		9,689,638
Allowance for credit losses on loans	(168,098)		(52,162)
Net loans	$	10,916,640	$	9,637,476

The allowance for credit losses is an estimate of expected losses inherent within the Company’s loans held for investment portfolio and is maintained at a level believed adequate by management to absorb credit losses inherent in the entire loan portfolio. Management evaluates the adequacy of the allowance for credit losses on a quarterly basis. Expected credit loss inherent in non-cancellable off-balance-sheet credit exposures is accounted for as a separate liability in the Consolidated Balance Sheets. The allowance for credit losses for loans held for investment, as reported in the Company’s Consolidated Balance Sheets, is adjusted by a provision for credit losses, which is reported in earnings, and reduced by net charge-offs. Loan losses are charged against the allowance for credit losses when management believes the uncollectability of a loan balance is confirmed. Subsequent recoveries, if any, are credited to the allowance.

The credit loss estimation process involves procedures to appropriately consider the unique characteristics of the Company’s loan portfolio segments. Credit quality is assessed and monitored by evaluating various attributes, and the results of those evaluations are utilized in underwriting new loans and in the Company’s process for the estimation of expected credit losses. Credit quality monitoring procedures and indicators can include an 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 the Company’s risk rating system, regulatory guidance and economic conditions, such as the unemployment rate and GDP growth in the markets in which the Company operates, as well as trends in the market values of underlying collateral securing loans, all as determined based on input from management, loan review staff and other sources. This evaluation is complex and inherently subjective, as it requires estimates by management that are inherently uncertain and therefore susceptible to significant revision as more information becomes available. In future periods, evaluations of the overall

The methodology for estimating the amount of expected credit losses reported in the allowance for credit losses has two basic components: first, a collective or pooled component for estimating expected credit losses for pools of loans that share similar risk characteristics; and second, 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.

Commercial, Financial, and Agricultural (“Commercial”) - Commercial loans are customarily granted to established local business customers in the Company’s market area on a collateralized basis to meet their credit needs. Maturities are typically short term in nature and are commensurate with the secondary source of repayment that serves as the Company’s collateral. Although commercial loans may be collateralized by equipment or other business assets, the repayment of this type of loan depends primarily on the creditworthiness and projected cash flow of the borrower (and any guarantors). Thus, the chief considerations when assessing the risk of a commercial loan are the local business borrower’s ability to sell its products/services, thereby generating sufficient operating revenue to repay the Company under the agreed upon terms and conditions, and the general business conditions of the local economy or other market that the business serves.

Real Estate - Construction - The Company’s construction loan portfolio consists of loans for the construction of single family residential properties, multi-family properties and commercial projects. Maturities for construction loans generally range from 9 to 12 months for residential properties and from 24 to 36 months for non-residential and multi-family properties. The source of repayment of a construction loan comes from the sale or lease of newly-constructed property, although often construction loans are repaid with the proceeds of a commercial real estate loan that the Company makes to the owner or lessor of the newly-constructed property.

Real Estate - 1-4 Family Mortgage - This segment of the Company’s loan portfolio includes loans secured by first or second liens on residential real estate in which the property is the principal residence of the borrower, as well as loans secured by residential real estate in which the property is rented to tenants or is not the principal residence of the borrower; loans for the preparation of residential real property prior to construction are also included in this segment. Finally, this segment includes home equity loans or lines of credit and term loans secured by first and second mortgages on the residences of borrowers who elect to use the accumulated equity in their homes for purchases, refinances, home improvements, education and other personal expenditures. The Company attempts to minimize the risk associated with residential real estate loans by scrutinizing the financial condition of the borrower; typically, the maximum loan-to-value ratio is also limited.

Real Estate - Commercial Mortgage - Included in this portfolio segment (referred to collectively as “commercial real estate loans”) are “owner-occupied” loans in which the owner develops a property with the intention of locating its business there. Payments on these loans are dependent on the successful development and management of the business as well as the borrower’s ability to generate sufficient operating revenue to repay the loan. In some instances, in addition to the mortgage on the underlying real estate of the business, the commercial real estate loans are secured by other non-real estate collateral, such as equipment or other assets used in the business. In addition to owner-occupied commercial real estate loans, the Company offers loans in which the owner develops a property where the source of repayment of the loan will come from the sale or lease of the developed property, for example, retail shopping centers, hotels, storage facilities, etc. These loans are referred to as “non-owner occupied” commercial real estate loans. The Company also offers commercial real estate loans to developers of commercial properties for purposes of site acquisition and preparation and other development prior to actual construction (referred to as “commercial land development loans”). Non-owner occupied commercial real estate loans and commercial land development loans are dependent on the successful completion of the project and may be affected by adverse conditions in the real estate market or the economy as a whole.

Lease Financing - This segment of the Company’s loan portfolio includes loans granted to provide capital to businesses for commercial equipment needs. These loans are generally granted for periods ranging between two and five years at fixed rates of interest. Loss or decline of income by the borrower due to unplanned occurrences represents the primary risk of default to the Company. In the event of default, a shortfall in the value of the collateral may pose a loss in this loan category. The Company obtains a lien against the collateral securing the loan and holds title (if applicable) until the loan is repaid in full. Transportation, manufacturing, healthcare, material handling, printing and construction are the industries that typically obtain lease financing.

Installment Loans to Individuals - Installment loans to individuals (or “consumer loans”) are granted to individuals for the purchase of personal goods. Loss or decline of income by the borrower due to unplanned occurrences represents the primary risk of default to the Company. In the event of default, a shortfall in the value of the collateral may pose a loss in this loan category. Before granting a consumer loan, the Company assesses the applicant’s credit history and ability to meet existing and proposed debt obligations. Although the applicant’s creditworthiness is the primary consideration, the underwriting process also includes a comparison of the value of the collateral, if any, to the proposed loan amount. The Company obtains a lien against the collateral securing the loan and holds title until the loan is repaid in full.

In determining the allowance for credit losses on loans evaluated on a collective basis, the Company categorizes loan pools based on loan type and/or risk rating. The Company uses two CECL models: (1) a loss rate model, based on average historical life-of-loan loss rates, is used for the Real Estate - 1-4 Family Mortgage, Real Estate - Construction and the Installment Loans to Individuals portfolio segments, and (2) for the Commercial, Real Estate - Commercial Mortgage and Lease Financing portfolio segments, the Company uses a probability of default/loss given default model, which calculates an expected loss percentage for each loan pool by considering (a) the probability of default, based on the migration of loans from performing (using risk ratings) to default using life-of-loan analysis periods, and (b) the historical severity of loss, based on the aggregate net lifetime losses incurred per loan pool.

The historical loss rates calculated as described above are adjusted, as necessary, for both internal and external qualitative factors where there are differences in the historical loss data of the Company and current or projected future conditions. Internal factors include loss history, changes in credit quality (including movement between risk ratings) and/or credit concentration, the nature and volume of the respective loan portfolio segments, and changes in lending or loan review staffing. External factors include current and reasonable and supportable forecasted economic conditions, the competitive environment and changes in collateral values. These factors are used to adjust the historical loss rates (as described above) to ensure that they reflect management’s expectation of future conditions based on a reasonable and supportable forecast period. To the extent the lives of the loans in the portfolio extend beyond the period for which a reasonable and supportable forecast can be made, when necessary, the models immediately revert back to the historical loss rates adjusted for qualitative factors related to current conditions.

For loans that do not share similar risk characteristics with other loans, an individual analysis is performed to determine the expected credit loss. If the respective loan is collateral dependent (that is, when the borrower is experiencing financial difficulty and repayment is expected to be provided substantially through the operation or sale of the collateral), the expected credit loss is measured as the difference between the amortized cost basis of the loan and the fair value of the collateral. The fair value of collateral is initially based on external appraisals. Generally, collateral values for loans for which measurement of expected losses is dependent on the fair value of such collateral are updated every twelve months, either from external third parties or in-house certified appraisers. Third-party appraisals are obtained from a pre-approved list of independent, third-party, local appraisal firms. The fair value of the collateral derived from external appraisal is then adjusted for the estimated cost to sell if repayment or satisfaction of a loan is dependent on the sale (rather than only on the operation) of the collateral. Other acceptable methods for determining the expected credit losses for individually evaluated loans (typically used when the loan is not collateral dependent) is a discounted cash flow approach or, if applicable, an observable market price. Once the expected credit loss amount is determined, an allowance equal to such expected credit loss is included in the allowance for credit losses.



	Commercial		Real Estate - Construction		Real Estate - 1-4 Family Mortgage		Real Estate - Commercial Mortgage		Lease Financing		Installment Loans to Individuals		Total
Three Months Ended September 30, 2020
Allowance for credit losses:
Beginning balance	$	30,685	$	12,538	$	29,401	$	60,061	$	1,812	$	10,890	$	145,387

Charge-offs	(420)		(136)		(720)		(553)		(168)		(1,579)		(3,576)
Recoveries	698		31		152		711		1		1,594		3,187
Net (charge-offs) recoveries	278		(105)		(568)		158		(167)		15		(389)
Provision for credit losses on loans	7,232		1,386		3,872		10,363		187		60		23,100
Ending balance	$	38,195	$	13,819	$	32,705	$	70,582	$	1,832	$	10,965	$	168,098
Nine Months Ended September 30, 2020
Allowance for credit losses:
Beginning balance	$	10,658	$	5,029	$	9,814	$	24,990	$	910	$	761	$	52,162
Impact of the adoption of ASC 326	11,351		3,505		14,314		4,293		521		8,500		42,484
Charge-offs	(1,969)		(668)		(1,083)		(2,600)		(168)		(6,003)		(12,491)
Recoveries	996		31		288		2,451		11		5,816		9,593
Net (charge-offs) recoveries	(973)		(637)		(795)		(149)		(157)		(187)		(2,898)
Provision for credit losses on loans	17,159		5,922		9,372		41,448		558		1,891		76,350
Ending balance	$	38,195	$	13,819	$	32,705	$	70,582	$	1,832	$	10,965	$	168,098
Period-End Amount Allocated to:
Individually evaluated	$	10,211	$	—	$	275	$	380	$	—	$	270	$	11,136
Collectively evaluated	27,984		13,819		32,430		70,202		1,832		10,695		156,962
Ending balance	$	38,195	$	13,819	$	32,705	$	70,582	$	1,832	$	10,965	$	168,098
Loans:
Individually evaluated	$	17,670	$	—	$	4,718	$	6,596	$	—	$	618	$	29,602
Collectively evaluated	2,630,392		773,119		2,755,676		4,570,413		82,928		242,608		11,055,136
Ending balance	$	2,648,062	$	773,119	$	2,760,394	$	4,577,009	$	82,928	$	243,226	$	11,084,738

Nonaccruing loans with no allowance for credit losses	$	589	$	—	$	4,147	$	3,644	$	—	$	—	$	8,380

Upon adoption of ASC 326 on January 1, 2020, the allowance for credit losses on loans was increased by $42,484. The Company recorded a third quarter provision for credit losses on loans of $23,100 and has recorded $76,350 in total provision for credit losses on loans during the nine months ending September 30, 2020. The provision recorded during the current quarter and year-to-date period is primarily driven by the current and future economic uncertainty caused by the COVID-19 pandemic, including the current projections of a continued elevated national unemployment rate throughout 2020 and into 2021 and 2022 and forecasted negative to minimal GDP growth relative to pre-pandemic levels, and the increased likelihood of a more prolonged economic recovery period than previously expected. The Company also factored into its estimate the potential benefit and risk of the government programs implemented through the CARES Act and the internal loan deferral program

offered to qualified customers. The Company utilized a two year reasonable and supportable forecast range during the current period. The Company continues its heightened monitoring efforts with respect to loans in certain industries the Company currently believes pose a greater risk in the current environment (i.e., hospitality and healthcare). In addition, the Company will continue to monitor the performance of all portfolios, the severity and duration of the pandemic and potential subsequent recovery of the economic environment.



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

Three Months Ended September 30, 2019
Allowance for credit losses:
Beginning balance	$	9,534	$	5,302	$	9,616	$	24,302	$	1,305	$	50,059
Charge-offs	(757)		—		(268)		(677)		(3,263)		(4,965)
Recoveries	761		—		219		33		3,007		4,020
Net (charge-offs) recoveries	4		—		(49)		(644)		(256)		(945)



Provision for credit losses on loans	750		(175)		282		381		462		1,700
Ending balance	$	10,288	$	5,127	$	9,849	$	24,039	$	1,511	$	50,814
Nine Months Ended September 30, 2019
Allowance for credit losses:
Beginning balance	$	8,269	$	4,755	$	10,139	$	24,492	$	1,371	$	49,026
Charge-offs	(1,709)		—		(1,143)		(1,406)		(3,695)		(7,953)
Recoveries	1,376		7		531		644		3,083		5,641
Net (charge-offs) recoveries	(333)		7		(612)		(762)		(612)		(2,312)



Provision for credit losses on loans	2,352		365		322		309		752		4,100
Ending balance	$	10,288	$	5,127	$	9,849	$	24,039	$	1,511	$	50,814
Period-End Amount Allocated to:
Individually evaluated for impairment	$	1,382	$	24	$	186	$	450	$	3	$	2,045
Collectively evaluated for impairment	8,778		5,103		9,313		21,521		1,506		46,221
Purchased with deteriorated credit quality	128		—		350		2,068		2		2,548
Ending balance	$	10,288	$	5,127	$	9,849	$	24,039	$	1,511	$	50,814


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




December 31, 2019
Individually evaluated for impairment	$	8,460	$	12,416	$	20,262	$	9,550	$	491	$	51,179
Collectively evaluated for impairment	1,329,974		813,204		2,810,808		4,131,582		380,627		9,466,195
Purchased with deteriorated credit quality	29,538		863		35,543		103,133		3,187		172,264
Ending balance	$	1,367,972	$	826,483	$	2,866,613	$	4,244,265	$	384,305	$	9,689,638

The Company maintains a separate allowance for credit losses on unfunded loan commitments, which is included in the “Other liabilities” line item on the Consolidated Balance Sheets. Management estimates the amount of expected losses on unfunded loan commitments by calculating a likelihood of funding over the contractual period for exposures that are not unconditionally cancellable by the Company and applying the loss factors used in the allowance for credit losses on loans methodology described above to unfunded commitments for each loan type. No credit loss estimate is reported for off-balance-sheet credit exposures that are unconditionally cancellable by the Company. The following tables provide a roll-forward of the allowance for credit losses on unfunded loan commitments for the periods presented.



Three Months Ended September 30, 2020
Allowance for credit losses on unfunded loan commitments:
Beginning balance	$	17,335

Provision for credit losses on unfunded loan commitments (included in other noninterest expense)	2,700
Ending balance	$	20,035

Nine Months Ended September 30, 2020
Allowance for credit losses on unfunded loan commitments:
Beginning balance	$	946
Impact of the adoption of ASC 326	10,389
Provision for credit losses on unfunded loan commitments (included in other noninterest expense)	8,700
Ending balance	$	20,035