
	Three Months Ended March 31, 2021
(In thousands)	Beginning Balance		Provision for Credit Losses		Charge- Offs		Recoveries		TDR Allowance Adjustments		Ending Balance
Construction and land development	$	4,920	$	(510)	$	—	$	18	$	—	$	4,428
Commercial real estate - owner-occupied	9,868		(76)		—		—		—		9,792
Commercial real estate - non owner-occupied	38,266		(2,038)		—		1		—		36,229
Residential real estate	17,500		(3,372)		—		229		(4)		14,353
Commercial and financial	18,690		775		(756)		207		—		18,916
Consumer	3,489		(494)		(185)		116		(1)		2,925
Paycheck Protection Program	—		—		—		—		—		—
Totals	$	92,733	$	(5,715)	$	(941)	$	571	$	(5)	$	86,643


	Three Months Ended March 31, 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	$	1,248	$	—	$	29	$	—	$	4,646
Commercial real estate - owner occupied	5,361		80		207		(264)		(44)		—		(13)		5,327
Commercial real estate - non-owner occupied	7,863		9,341		140		18,283		(12)		28		—		35,643
Residential real estate	7,667		5,787		97		6,260		(18)		116		(10)		19,899
Commercial and financial	9,716		3,677		11		2,746		(1,100)		420		—		15,470
Consumer	2,705		862		13		1,240		(473)		80		(1)		4,426

Totals	$	35,154	$	21,226	$	516	$	29,513	$	(1,647)	$	673	$	(24)	$	85,411

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 March 31, 2021, the Company utilized Moody’s most recent “U.S. Macroeconomic Outlook Baseline” scenario and considered the uncertainty associated with the assumptions in the Baseline scenario, including the potential for increasing COVID-19 infections and the resulting potential erosion in consumer confidence, and the risk that government stimulus programs are less effective than expected. 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 economic conditions, and for additional dimensions of risk not captured in the quantitative model.

In the Construction and Land Development segment, the decrease in reserves during the quarter reflects the impact of lower loan balances within the segment as well as improved economic variables relating to residential real estate and consumer confidence. 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 decrease in reserves is the result of lower loan balances within this segment. 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 is the result of lower loan balances within this segment, and reflects improved economic forecast variables including lower unemployment and an improvement in expectations 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 the impact of lower loan balances within the segment, a decrease in reserves on individually evaluated loans, improved economic forecast variables including 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 corresponds with the increase in loan balances within the segment. 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 lower 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 March 31, 2021 and December 31, 2020 is shown in the following tables:


	March 31, 2021
	Individually Evaluated				Collectively Evaluated				Total
(In thousands)	Recorded Investment		Associated Allowance		Recorded Investment		Associated Allowance		Recorded Investment		Associated Allowance
Construction and land development	$	261	$	11	$	226,856	$	4,417	$	227,117	$	4,428
Commercial real estate - owner occupied	9,209		422		1,123,876		9,370		1,133,085		9,792
Commercial real estate - non owner-occupied	7,871		1,746		1,430,494		34,483		1,438,365		36,229
Residential real estate	19,057		1,280		1,227,492		13,073		1,246,549		14,353
Commercial and financial	12,536		2,749		848,277		16,167		860,813		18,916
Consumer	667		104		173,243		2,821		173,910		2,925
Paycheck Protection Program	—		—		581,653		—		581,653		—
Totals	$	49,601	$	6,312	$	5,611,891	$	80,331	$	5,661,492	$	86,643