
	For the Year Ended
	December 31, 2021
(In thousands)	Beginning Balance		Initial Allowance on PCD Loans Acquired During the Period		Provision for Loan Losses		Charge- Offs		Recoveries		TDR Allowance Adjustments		Ending Balance
Construction and land development	$	4,920	$	—	$	(2,300)	$	—	$	133	$	(2)	$	2,751
Commercial real estate - owner occupied	9,868		—		(1,289)		—		—		—		8,579
Commercial real estate - non-owner occupied	38,266		1,327		(1,664)		(1,327)		15		—		36,617
Residential real estate	17,500		—		(5,822)		(57)		1,196		(6)		12,811
Commercial and financial	18,690		1,719		2,292		(3,987)		1,030		—		19,744
Consumer	3,489		—		(638)		(727)		697		(8)		2,813
Paycheck Protection Program	—		—		—		—		—		—		—
Total	$	92,733	$	3,046	$	(9,421)	$	(6,098)	$	3,071	$	(16)	$	83,315


	For the Year Ended
	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.


	For the Year Ended
	December 31, 2019
(In thousands)	Beginning Balance		Provision for Loan Losses		Charge- Offs		Recoveries		TDR Allowance Adjustments		Ending Balance
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

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, 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 recurring COVID-19 infections, including from variants, actions contemplated by the Federal Reserve to address inflation through changes in monetary policy, and the resulting potential impact on the progress of the economic recovery. 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 year reflects lower loan balances and 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, increases in the allowance resulting from loan growth were offset by the impact of improved economic variables primarily relating to unemployment. Risk characteristics include but are not limited to, collateral type, note structure, and loan seasoning.

In the Commercial Real Estate - Non Owner-Occupied segment, the decrease in reserves reflects improved economic forecast variables including lower unemployment, partially offset by higher loan balances. 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, note structure, and loan seasoning 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 improved economic forecast variables including lower unemployment partially offset by higher loan balances. Risk characteristics considered for this segment include, but are not limited to, borrower FICO score, 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 is attributed to higher loan balances partially offset by improved economic variables primarily relating to unemployment. 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. The decline in the reserve during the year reflects improved economic forecast variables and lower loan balances.

The allowance for credit losses is comprised 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, 2021 and 2020 is shown in the following tables.


	December 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	$	271	$	92	$	230,553	$	2,659	$	230,824	$	2,751
Commercial real estate - owner occupied	5,131		419		1,192,643		8,160		1,197,774		8,579
Commercial real estate - non-owner occupied	5,905		27		1,730,534		36,590		1,736,439		36,617
Residential real estate	16,345		646		1,409,009		12,165		1,425,354		12,811
Commercial and financial	11,470		2,885		1,057,886		16,859		1,069,356		19,744
Consumer	741		685		173,434		2,128		174,175		2,813
Paycheck Protection Program	—		—		91,107		—		91,107		—
Total	$	39,863	$	4,754	$	5,885,166	$	78,561	$	5,925,029	$	83,315


	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