Allowance for Credit Losses

12 Months Ended

Dec. 31, 2020

(In Thousands, Except Number of Loans)

The following is a summary of non purchased and purchased loans and leases at December 31:


	2020		2019
Commercial, financial, agricultural	$	2,536,984	$	1,367,972
Lease financing	80,022		85,700
Real estate – construction:
Residential	246,673		289,050
Commercial	611,431		537,433
Total real estate – construction	858,104		826,483
Real estate – 1-4 family mortgage:
Primary	1,750,951		1,781,948
Home equity	513,160		573,540
Rental/investment	296,364		335,100
Land development	137,833		176,025
Total real estate – 1-4 family mortgage	2,698,308		2,866,613
Real estate – commercial mortgage:
Owner-occupied	1,657,806		1,637,281
Non-owner occupied	2,747,467		2,450,895
Land development	149,579		156,089
Total real estate – commercial mortgage	4,554,852		4,244,265
Installment loans to individuals	209,537		302,430
Gross loans	10,937,807		9,693,463
Unearned income	(4,160)		(3,825)
Loans, net of unearned income	10,933,647		9,689,638
Allowance for credit losses on loans	(176,144)		(52,162)
Net loans	$	10,757,503	$	9,637,476

Allowance for Credit Losses on Loans

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


	Commercial		Real Estate - Construction		Real Estate - 1-4 Family Mortgage		Real Estate - Commercial Mortgage		Lease Financing		Installment Loans to Individuals		Total
Year Ended December 31, 2020
Allowance for credit losses on loans:
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	(3,577)		(716)		(1,167)		(2,642)		(168)		(7,835)		(16,105)
Recoveries	1,263		31		838		2,478		11		7,632		12,253
Net charge-offs	(2,314)		(685)		(329)		(164)		(157)		(203)		(3,852)
Provision for credit losses on loans	19,336		8,198		8,366		47,008		350		2,092		85,350
Ending balance	$	39,031	$	16,047	$	32,165	$	76,127	$	1,624	$	11,150	$	176,144
Period-End Amount Allocated to:
Individually evaluated	$	10,345	$	497	$	300	$	2,444	$	—	$	604	$	14,190
Collectively evaluated	28,686		15,550		31,865		73,683		1,624		10,546		161,954
Ending balance	$	39,031	$	16,047	$	32,165	$	76,127	$	1,624	$	11,150	$	176,144
Loans:
Individually evaluated	$	16,091	$	497	$	5,379	$	21,764	$	—	$	619	$	44,350
Collectively evaluated	2,520,893		857,607		2,692,929		4,533,088		75,862		208,918		10,889,297
Ending balance	$	2,536,984	$	858,104	$	2,698,308	$	4,554,852	$	75,862	$	209,537	$	10,933,647

Nonaccruing loans with no allowance for credit losses	$	541	$	—	$	4,054	$	4,382	$	—	$	—	$	8,977

Upon adoption of ASC 326 on January 1, 2020, the allowance for credit losses on loans was increased by $42,484. The Company recorded $85,350 in total provision for credit losses on loans during 2020. The provision recorded during the year was primarily driven by the current and future economic uncertainty caused by the COVID-19 pandemic, including the current projections of an improving, but continued elevated national unemployment rate into 2021 and 2022 and nominal GDP growth relative to pre-pandemic levels. The Company also factored into its estimate the potential benefit and risk of participation in 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.

Although the Company made an accounting policy election to exclude accrued interest from the amortized cost of loans and therefore the allowance calculation, the Company recorded $1,500 in provision for credit losses to establish an allowance for the interest deferred as part of the loan deferral program.


	Commercial		Real Estate - Construction		Real Estate - 1-4 Family Mortgage		Real Estate - Commercial Mortgage		Installment and Other(1)		Total
Year Ended December 31, 2019
Allowance for loan losses:
Beginning balance	$	8,269	$	4,755	$	10,139	$	24,492	$	1,371	$	49,026
Charge-offs	(2,681)		—		(1,602)		(1,490)		(7,705)		(13,478)
Recoveries	1,428		21		712		689		6,714		9,564
Net charge-offs	(1,253)		21		(890)		(801)		(991)		(3,914)
Provision for loan losses	3,642		253		565		1,299		1,291		7,050


Ending balance	$	10,658	$	5,029	$	9,814	$	24,990	$	1,671	$	52,162
Period-End Amount Allocated to:
Individually evaluated for impairment	$	1,434	$	16	$	160	$	396	$	6	$	2,012
Collectively evaluated for impairment	8,932		5,013		9,363		23,208		1,663		48,179
Purchased with deteriorated credit quality	292		—		291		1,386		2		1,971
Ending balance	$	10,658	$	5,029	$	9,814	$	24,990	$	1,671	$	52,162
Year Ended December 31, 2018
Allowance for loan losses:
Beginning balance	$	5,542	$	3,428	$	12,009	$	23,384	$	1,848	$	46,211
Charge-offs	(2,415)		(51)		(2,023)		(1,197)		(742)		(6,428)
Recoveries	618		13		573		1,108		121		2,433
Net charge-offs	(1,797)		(38)		(1,450)		(89)		(621)		(3,995)
Provision for loan losses	4,524		1,365		(420)		1,197		144		6,810



Ending balance	$	8,269	$	4,755	$	10,139	$	24,492	$	1,371	$	49,026
Period-End Amount Allocated to:
Individually evaluated for impairment	$	336	$	68	$	79	$	1,027	$	4	$	1,514
Collectively evaluated for impairment	7,772		4,687		9,572		21,564		1,365		44,960
Purchased with deteriorated credit quality	161		—		488		1,901		2		2,552
Ending balance	$	8,269	$	4,755	$	10,139	$	24,492	$	1,371	$	49,026

(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





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
Acquired 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

(1)Includes lease financing receivables.

Allowance for Credit Losses on Unfunded Loan Commitments

The following table provides a roll-forward of the allowance for credit losses on unfunded loan commitments for the period presented.



Year Ended December 31, 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)	9,200
Ending balance	$	20,535