
	December 31, 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	$	1,399	$	—	$	114	$	(1)	$	4,920
Commercial real estate - owner occupied	5,361		80		1,161		3,632		(310)		18		(74)		9,868
Commercial real estate - non-owner occupied	7,863		9,341		2,236		18,966		(177)		37		—		38,266
Residential real estate	7,667		5,787		124		3,840		(240)		350		(28)		17,500
Commercial and financial	9,716		3,677		2,643		8,329		(7,091)		1,416		—		18,690
Consumer	2,705		862		28		1,613		(2,024)		316		(11)		3,489
Paycheck Protection Program	—		—		—		—		—		—		—		—
Total	$	35,154	$	21,226	$	6,279	$	37,779	$	(9,842)	$	2,251	$	(114)	$	92,733
1In addition, the Company recorded a $0.4 million provision to establish a valuation allowance on accrued interest receivable.


(In thousands)	Beginning Balance		Provision for Loan Losses		Charge- Offs		Recoveries		TDR Allowance Adjustments		Ending Balance
December 31, 2019
Construction and land development	$	2,233	$	(421)	$	—	$	31	$	(1)	$	1,842
Commercial real estate	11,112		1,677		(248)		744		(61)		13,224
Residential real estate	7,775		(231)		(152)		338		(63)		7,667
Commercial and financial	8,585		7,969		(7,550)		712		—		9,716
Consumer	2,718		2,005		(2,609)		595		(4)		2,705
Total	$	32,423	$	10,999	$	(10,559)	$	2,420	$	(129)	$	35,154

December 31, 2018
Construction and land development	$	1,642	$	564	$	—	$	27	—		$	2,233
Commercial real estate	9,285		4,736		(3,139)		292		(62)		11,112
Residential real estate	7,131		29		(80)		816		(121)		7,775
Commercial and financial	7,297		4,359		(3,396)		325		—		8,585
Consumer	1,767		2,042		(1,411)		329		(9)		2,718
Total	$	27,122	$	11,730	$	(8,026)	$	1,789	$	(192)	$	32,423

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 December 31, 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 uncertainty of economic conditions, the possibility that the characteristics of the economic downturn could be sustained over a more extended period, and for additional dimensions of risk not captured in the quantitative model.

After the adoption of ASC Topic 326 on January 1, 2020, changes in the allowance for credit losses during the year were largely the result of deterioration in economic conditions due to the COVID-19 pandemic, including higher unemployment and losses of business revenue, and expectations as to the severity and duration of the economic recession.

In the Construction and Land Development segment, the increase in reserves during the year 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, higher unemployment levels, and 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 increase in reserves reflects higher unemployment levels and deterioration in 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 increase in reserves reflects higher unemployment, partially offset by lower loan balances 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, higher overall balances, and recessionary conditions. 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, partially offset by higher unemployment and recessionary conditions.

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 December 31, 2020 and 2019 is shown in the following tables.


	December 31, 2020
	Individually Evaluated				Collectively Evaluated				Total
(In thousands)	Recorded Investment		Associated Allowance		Recorded Investment		Associated Allowance		Recorded Investment		Associated Allowance
Construction and land development	$	276	$	13	$	244,832	$	4,907	$	245,108	$	4,920
Commercial real estate - owner occupied	10,243		402		1,131,067		9,466		1,141,310		9,868
Commercial real estate - non-owner occupied	8,083		1,640		1,387,771		36,626		1,395,854		38,266
Residential real estate	16,506		2,064		1,326,122		15,436		1,342,628		17,500
Commercial and financial	13,281		3,498		841,472		15,192		854,753		18,690
Consumer	807		91		187,928		3,398		188,735		3,489
Paycheck Protection Program	—		—		566,961		—		566,961		—
Total	$	49,196	$	7,708	$	5,686,153	$	85,025	$	5,735,349	$	92,733


	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
Total	$	48,762	$	2,858	$	5,149,642	$	32,296	$	5,198,404	$	35,154