
	Three Months Ended June 30, 2020
(In thousands)	Beginning Balance		Provision for Credit Losses		Charge- Offs		Recoveries		TDR Allowance Adjustments		Ending Balance
Construction and land development	$	4,646	$	2,478	$	—	$	37	$	—	$	7,161
Commercial real estate - owner-occupied	5,327		229		—		18		(12)		5,562
Commercial real estate - non owner-occupied	35,643		3,345		—		4		—		38,992
Residential real estate	19,899		574		(113)		101		(8)		20,453
Commercial and financial	15,470		1,319		(1,768)		493		—		15,514
Consumer	4,426		(334)		(614)		91		(1)		3,568
Paycheck Protection Program	—		—		—		—		—		—
Totals	$	85,411	$	7,611	$	(2,495)	$	744	$	(21)	$	91,250


	Three Months Ended June 30, 2019
(In thousands)	Beginning Balance		Provision for Loan Losses		Charge- Offs		Recoveries		TDR Allowance Adjustments		Ending Balance
Construction and land development	$	2,320	$	(79)	$	(1)	$	3	$	—	$	2,243
Commercial real estate	11,753		(433)		—		565		(15)		11,870
Residential real estate	7,445		51		(28)		51		(11)		7,508
Commercial and financial	8,573		2,114		(1,881)		106		—		8,912
Consumer	2,731		898		(734)		78		(1)		2,972
Totals	$	32,822	$	2,551	$	(2,644)	$	803	$	(27)	$	33,505


	Six Months Ended June 30, 2020
(In thousands)	Beginning Balance		Impact of Adoption of ASC 326		Initial Allowance on PCD Loans Acquired During the Period		Provision for Credit Losses		Charge- Offs		Recoveries		TDR Allowance Adjustments		Ending Balance
Construction and land development	$	1,842	$	1,479	$	48	$	3,727	$	—	$	66	$	(1)	$	7,161
Commercial real estate - owner-occupied	5,361		80		207		(34)		(45)		18		(25)		5,562
Commercial real estate - non owner-occupied	7,863		9,341		140		21,628		(12)		32		—		38,992
Residential real estate	7,667		5,787		97		6,834		(131)		218		(19)		20,453
Commercial and financial	9,716		3,677		11		4,063		(2,866)		913		—		15,514
Consumer	2,705		862		13		906		(1,087)		170		(1)		3,568
Paycheck Protection Program	—		—		—		—		—		—		—		—
Totals	$	35,154	$	21,226	$	516	$	37,124	$	(4,141)	$	1,417	$	(46)	$	91,250


	Six Months Ended June 30, 2019
(In thousands)	Beginning Balance		Provision for Loan Losses		Charge- Offs		Recoveries		TDR Allowance Adjustments		Ending Balance
Construction and land development	$	2,233	$	4	$	—	$	7	$	(1)	$	2,243
Commercial real estate	11,112		192		(16)		612		(30)		11,870
Residential real estate	7,775		(363)		(65)		190		(29)		7,508
Commercial and financial	8,585		2,967		(2,825)		185		—		8,912
Consumer	2,718		1,148		(1,217)		325		(2)		2,972
Totals	$	32,423	$	3,948	$	(4,123)	$	1,319	$	(62)	$	33,505

Management establishes the allowance using relevant available information from both internal and external sources, relating to past events, current conditions, and reasonable and supportable forecasts to project losses over a three-year forecast period. Forecast data is sourced primarily from Moody’s Analytics, a firm widely recognized for its research, analysis, and economic forecasts. For portfolio segments with a weighted average life longer than three years, the Company reverts to longer-term historical loss experience to estimate losses over the remaining life of the loans within each segment.

Historical credit losses provide the basis for the estimation of expected credit losses. Adjustments to historical loss information are made for differences in current loan-specific risk characteristics such as differences in underwriting standards, portfolio mix, delinquency level, loan to value ratios, borrower credit characteristics, loan seasoning or term as well as for changes in current and forecasted environmental conditions, such as changes in unemployment rates, property values, occupancy rates, and other macroeconomic metrics.

As of June 30, 2020, the Company utilized Moody’s most recent “U.S. Macroeconomic Outlook Baseline” scenario and considered the significant uncertainty associated with the assumptions in the Baseline scenario, including, the resurgence of virus infections in Florida and other states beginning late in the second quarter, and the resulting potential for renewed stay-at-home orders and other limitations on businesses. The Company also considered the amount and availability of fiscal stimulus, including programs offered under the CARES Act and other potential future government programs and actions. Outcomes in any or all of these factors could differ from the Baseline scenario, and the Company incorporated qualitative considerations reflecting the risk of uncertain, and possibly further deteriorating, economic conditions, and for additional dimensions of risk not captured in the quantitative model.

In the Construction and Land Development segment, the increase in loss estimate during the quarter was affected by both the increase in Baseline scenario forecast from the prior period and qualitative adjustments relating to the uncertainty of economic conditions. In this segment, the primary source of repayment is typically from proceeds of the sale, refinancing, or permanent financing of the underlying property; therefore, industry and collateral type and estimated collateral values are among the relevant factors in assessing expected losses.

In the Commercial Real Estate - Owner-Occupied segment, risk characteristics include but are not limited to, collateral type, loan seasoning, and lien position. The introduction of government-sponsored programs, including the CARES Act, and the Company's expectation that borrowers in this segment will benefit from these programs, offset the otherwise detrimental effect of the negative economic outlook.

In the Commercial Real Estate - Non Owner-Occupied segment, repayment is often dependent upon rental income from the successful operation of the underlying property. Loan performance may be adversely affected by general economic conditions or conditions specific to the real estate market, including property types. Collateral type, loan seasoning, and lien position are among the risk characteristics analyzed for this segment. Modeled results as of June 30, 2020 reflected higher estimated probabilities of default and loss given default, in addition to qualitative adjustments for the uncertainty of macroeconomic factors.

The Residential Real Estate segment includes first mortgages secured by residential property, and home equity lines of credit. Risk characteristics considered for this segment include, but are not limited to, collateral type, lien position loan to value ratios, and loan seasoning. The impact of the forecast on home equity lines of credit increased the estimated expected losses in this segment, while closed-end single-family mortgages were less impacted due to anticipated government stimulus efforts and high borrower FICO scores.

In the Commercial and Financial segment, borrowers are primarily small to medium sized professional firms and other businesses, and loans are generally supported by projected cash flows of the business, collateralized by business assets, and/or

guaranteed by the business owners. Industry, collateral type, estimated collateral values and loan seasoning are among the relevant factors in assessing expected losses. The impact on the reserve of lower outstanding balances at June 30, 2020 compared to March 31, 2020 was more than offset by increases due to the negative economic outlook, in addition to qualitative factors added to consider significant economic uncertainty.

Consumer loans include installment and revolving lines, loans for automobiles, boats, and other personal or family purposes. Risk characteristics considered for this segment include, but are not limited to, collateral type, loan to value ratios, loan seasoning and FICO score. A decrease in the reserve resulted from the expected beneficial impact of individual government stimulus programs, partially offset by an increase in the forecast for expected unemployment rates.

The allowance for credit losses is composed of specific allowances for loans individually evaluated and general allowances for loans grouped into loan pools based on similar characteristics, which are collectively evaluated. The Company’s loan portfolio and related allowance at June 30, 2020 and December 31, 2019 is shown in the following tables:


	June 30, 2020
	Individually Evaluated						Collectively Evaluated						Total
(In thousands)	Recorded Investment		Associated Allowance		Recorded Investment		Associated Allowance		Recorded Investment		Associated Allowance
Construction and land development	$	726	$	20	$	298,109	$	7,141	$	298,835	$	7,161
Commercial real estate - owner-occupied	4,491		160		1,072,159		5,402		1,076,650		5,562
Commercial real estate - non owner-occupied	7,883		254		1,384,904		38,738		1,392,787		38,992
Residential real estate	18,216		1,071		1,449,955		19,382		1,468,171		20,453
Commercial and financial	9,822		3,628		747,410		11,886		757,232		15,514
Consumer	681		107		201,246		3,461		201,927		3,568
Paycheck Protection Program	—		—		576,450		—		576,450		—
Totals	$	41,819	$	5,240	$	5,730,233	$	86,010	$	5,772,052	$	91,250


	December 31, 2019
	Individually Evaluated						Collectively Evaluated						Total
(In thousands)	Recorded Investment		Associated Allowance		Recorded Investment		Associated Allowance		Recorded Investment		Associated Allowance
Construction and land development	$	5,217	$	14	$	319,896	$	1,828	$	325,113	$	1,842
Commercial real estate	20,484		220		2,358,487		13,004		2,378,971		13,224
Residential real estate	16,093		834		1,491,770		6,833		1,507,863		7,667
Commercial and financial	6,631		1,731		771,621		7,985		778,252		9,716
Consumer	337		59		207,868		2,646		208,205		2,705
Totals	$	48,762	$	2,858	$	5,149,642	$	32,296	$	5,198,404	$	35,154