
	Three Months Ended September 30, 2020
(In thousands)	Beginning Balance		Initial Allowance on PCD Loans Acquired During the Period		Provision for Credit Losses1		Charge- Offs		Recoveries		TDR Allowance Adjustments		Ending Balance
Construction and land development	$	7,161	$	39	$	475	$	—	$	26	$	—	$	7,701
Commercial real estate - owner-occupied	5,562		954		689		—		26		(12)		7,219
Commercial real estate - non owner-occupied	38,992		2,096		(7,050)		(25)		5		—		34,018
Residential real estate	20,453		27		(3,196)		(19)		65		(5)		17,325
Commercial and financial	15,514		2,632		8,081		(1,776)		203		—		24,654
Consumer	3,568		15		(244)		(355)		114		(2)		3,096
Paycheck Protection Program	—		—		—		—		—		—		—
Totals	$	91,250	$	5,763	$	(1,245)	$	(2,175)	$	439	$	(19)	$	94,013
1In addition to a reversal of provision for credit losses on loans of $1.2 million in the third quarter of 2020, the Company also recorded a $0.4 million provision to establish a valuation allowance on accrued interest receivable.


	Three Months Ended September 30, 2019
(In thousands)	Beginning Balance		Provision for Loan Losses		Charge- Offs		Recoveries		TDR Allowance Adjustments		Ending Balance
Construction and land development	$	2,243	$	(395)	$	—	$	6	$	—	$	1,854
Commercial real estate	11,870		1,368		(232)		10		(19)		12,997
Residential real estate	7,508		87		(38)		52		(20)		7,589
Commercial and financial	8,912		769		(1,625)		295		—		8,351
Consumer	2,972		422		(697)		118		(1)		2,814
Totals	$	33,505	$	2,251	$	(2,592)	$	481	$	(40)	$	33,605


	Nine Months Ended September 30, 2020
(In thousands)	Beginning Balance		Impact of Adoption of ASC 326		Initial Allowance on PCD Loans Acquired During the Period		Provision for Credit Losses1		Charge- Offs		Recoveries		TDR Allowance Adjustments		Ending Balance
Construction and land development	$	1,842	$	1,479	$	87	$	4,202	$	—	$	92	$	(1)	$	7,701
Commercial real estate - owner-occupied	5,361		80		1,161		655		(45)		44		(37)		7,219
Commercial real estate - non owner-occupied	7,863		9,341		2,236		14,578		(37)		37		—		34,018
Residential real estate	7,667		5,787		124		3,638		(150)		283		(24)		17,325
Commercial and financial	9,716		3,677		2,643		12,144		(4,642)		1,116		—		24,654
Consumer	2,705		862		28		662		(1,442)		284		(3)		3,096
Paycheck Protection Program	—		—		—		—		—		—		—		—
Totals	$	35,154	$	21,226	$	6,279	$	35,879	$	(6,316)	$	1,856	$	(65)	$	94,013
1In addition to a reversal of provision for credit losses on loans of $1.2 million in the third quarter of 2020, the Company also recorded a $0.4 million provision to establish a valuation allowance on accrued interest receivable.


	Nine Months Ended September 30, 2019
(In thousands)	Beginning Balance		Provision for Loan Losses		Charge- Offs		Recoveries		TDR Allowance Adjustments		Ending Balance
Construction and land development	$	2,233	$	(391)	$	—	$	13	$	(1)	$	1,854
Commercial real estate	11,112		1,560		(248)		622		(49)		12,997
Residential real estate	7,775		(276)		(102)		242		(50)		7,589
Commercial and financial	8,585		3,736		(4,450)		480		—		8,351
Consumer	2,718		1,570		(1,915)		443		(2)		2,814
Totals	$	32,423	$	6,199	$	(6,715)	$	1,800	$	(102)	$	33,605

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 September 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 potential resurgence of virus infections in Florida and other states, and the resulting potential decline in consumer spending and financial implications for 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 reserves during the quarter was affected by both the outlook for commercial real estate valuations, 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, the increase in reserves reflects both the impact of higher loan balances and an improved outlook for unemployment, partially offset by lower forecasted commercial real estate valuations. Risk characteristics include but are not limited to, collateral type, loan seasoning, and lien position.

In the Commercial Real Estate - Non Owner-Occupied segment, the decrease in reserves reflects lower estimated unemployment and an improved outlook for corporate profits over the forecast period. 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.

The Residential Real Estate segment includes first mortgages secured by residential property, and home equity lines of credit. The decrease in reserves reflects an improved outlook for unemployment, and continued strength in the Florida housing market. Risk characteristics considered for this segment include, but are not limited to, collateral type, lien position, loan to value ratios, and loan seasoning.

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. The increase in reserves reflects an increased proportion of working capital lines compared to loans secured by business assets. Industry, collateral type, estimated collateral values and loan seasoning are among the relevant factors in assessing expected losses.

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 is attributed to lower loan balances and an improved outlook for unemployment.

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 September 30, 2020 and December 31, 2019 is shown in the following tables:


	September 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	$	723	$	13	$	279,887	$	7,688	$	280,610	$	7,701
Commercial real estate - owner-occupied	5,590		788		1,119,870		6,431		1,125,460		7,219
Commercial real estate - non owner-occupied	12,902		1,863		1,381,562		32,155		1,394,464		34,018
Residential real estate	22,966		2,019		1,370,430		15,306		1,393,396		17,325
Commercial and financial	13,824		3,488		819,259		21,166		833,083		24,654
Consumer	615		116		191,601		2,980		192,216		3,096
Paycheck Protection Program	—		—		638,800		—		638,800		—
Totals	$	56,620	$	8,287	$	5,801,409	$	85,726	$	5,858,029	$	94,013


	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