The Company generally makes loans in its market areas of south and central Mississippi; southern and central Alabama; northwest, central and south Louisiana; the northern, central and panhandle regions of Florida; certain areas of east and northeast Texas, including Houston, Beaumont, Dallas, and San Antonio; and Nashville, Tennessee.

Loans, net of unearned income, by portfolio are presented at amortized cost basis in the table below. Amortized cost does not include accrued interest, which is reflected in the accrued interest line item in the Consolidated Balance Sheets, totaling $69.3 million and $67.8 million at March 31, 2022 and December 31, 2021, respectively. Included in commercial non-real estate loans at March 31, 2022 and December 31, 2021 was $334.8 million and $531.1 million, respectively, of Paycheck Protection Program loans, described in more detail below. The following table presents loans, net of unearned income, by portfolio class at March 31, 2022 and December 31, 2021.

The following briefly describes the composition of each loan category and portfolio class.

Commercial and industrial loans are made available to businesses for working capital (including financing of inventory and receivables), business expansion, to facilitate the acquisition of a business, and the purchase of equipment and machinery, including equipment leasing. These loans are primarily made based on the identified cash flows of the borrower and, when secured, have the added strength of the underlying collateral.

Commercial non-real estate loans may be secured by the assets being financed or other tangible or intangible business assets such as accounts receivable, inventory, ownership, enterprise value or commodity interests, and may incorporate a personal or corporate guarantee; however, some short-term loans may be made on an unsecured basis, including a small portfolio of corporate credit cards, generally issued as a part of overall customer relationships.

Commercial non-real estate loans also include loans made under the Small Business Administration’s (SBA) Paycheck Protection Program (PPP). PPP loans are guaranteed by the SBA and are forgivable to the debtor upon satisfaction of certain criteria. The loans bear interest at 1% per annum and have two or five year terms, depending on the date of origination. These loans also earn an origination fee of 1%, 3%, or 5%, depending on the loan size, which is deferred and amortized over the estimated life of the loan using the effective yield method.

Commercial real estate – owner occupied loans consist of commercial mortgages on properties where repayment is generally dependent on the cash flow from the ongoing operations and activities of the borrower. Like commercial non-real estate, these loans are primarily made based on the identified cash flows of the borrower, but also have the added strength of the value of underlying real estate collateral.

Commercial real estate – income producing loans consist of loans secured by commercial mortgages on properties where the loan is made to real estate developers or investors and repayment is dependent on the sale, refinance, or income generated from the operation of the property. Properties financed include retail, office, multifamily, senior housing, hotel/motel, skilled nursing facilities and other commercial properties.

Construction and land development loans are made to facilitate the acquisition, development, improvement and construction of both commercial and residential-purpose properties. Such loans are made to builders and investors where repayment is expected to be made from the sale, refinance or operation of the property or to businesses to be used in their business operations. This portfolio also includes residential construction loans and loans secured by raw land not yet under development.

Residential mortgages consist of closed-end loans secured by first liens on 1- 4 family residential properties. The portfolio includes both fixed and adjustable rate loans, although most longer term, fixed rate loans originated are sold in the secondary mortgage market.

Consumer loans include second lien mortgage home loans, home equity lines of credit and nonresidential consumer purpose loans. Nonresidential consumer loans include both direct and indirect loans. Direct nonresidential consumer loans are made to finance the purchase of personal property, including automobiles, recreational vehicles and boats, and for other personal purposes (secured and unsecured), and deposit account secured loans. Indirect nonresidential consumer loans include automobile financing provided to the consumer through an agreement with automobile dealerships, though the Company is no longer engaged in this type of lending and the remaining portfolio is in runoff. Consumer loans also include a small portfolio of credit card receivables issued on the basis of applications received through referrals from the Bank’s branches, online and other marketing efforts.

The calculation of the allowance for credit losses is performed using two primary approaches: a collective approach for pools of loans that have similar risk characteristics using a loss rate analysis, and a specific reserve analysis for credits individually evaluated. The allowance for credit losses was developed using multiple Moody’s Analytics (“Moody’s") macroeconomic forecasts applied to internally developed credit models for a two year reasonable and supportable period. The following tables present activity in the allowance for credit losses (ACL) by portfolio class for the three months ended March 31, 2022 and 2021, as well as the corresponding recorded investment in loans at the end of each period.


				Commercial			Total			Commercial
	Commercial			real estate-			commercial			real estate-			Construction
	non-real			owner			and			income			and land			Residential
(in thousands)	estate			occupied			industrial			producing			development			mortgages			Consumer			Total
	Three Months Ended March 31, 2022
Allowance for credit losses
Allowance for loan losses:
Beginning balance	$	95,888		$	53,433		$	149,321		$	108,058		$	22,102		$	30,623		$	31,961		$	342,065
Charge-offs		(2,659	)		—			(2,659	)		(4	)		—			(42	)		(2,680	)		(5,385	)
Recoveries		2,142			389			2,531			878			68			61			1,528			5,066
Net provision for loan losses		(8,072	)		(5,361	)		(13,433	)		(3,565	)		(1,082	)		(4,307	)		(1,516	)		(23,903	)
Ending balance - allowance for loan losses	$	87,299		$	48,461		$	135,760		$	105,367		$	21,088		$	26,335		$	29,293		$	317,843
Reserve for unfunded lending commitments:
Beginning balance	$	4,522		$	323		$	4,845		$	1,694		$	21,907		$	22		$	866		$	29,334
Provision for losses on unfunded commitments		(246	)		108			(138	)		453			474			(3	)		590			1,376
Ending balance - reserve for unfunded lending commitments		4,276			431			4,707			2,147			22,381			19			1,456			30,710
Total allowance for credit losses	$	91,575		$	48,892		$	140,467		$	107,514		$	43,469		$	26,354		$	30,749		$	348,553
Allowance for loan losses:
Individually evaluated	$	112		$	32		$	144		$	20		$	20		$	408		$	174		$	766
Collectively evaluated		87,187			48,429			135,616			105,347			21,068			25,927			29,119			317,077
Allowance for loan losses	$	87,299		$	48,461		$	135,760		$	105,367		$	21,088		$	26,335		$	29,293		$	317,843
Reserve for unfunded lending commitments:
Individually evaluated	$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—
Collectively evaluated		4,276			431			4,707			2,147			22,381			19			1,456			30,710
Reserve for unfunded lending commitments:	$	4,276		$	431		$	4,707		$	2,147		$	22,381		$	19		$	1,456		$	30,710
Total allowance for credit losses	$	91,575		$	48,892		$	140,467		$	107,514		$	43,469		$	26,354		$	30,749		$	348,553
Loans:
Individually evaluated	$	1,742		$	951		$	2,693		$	1,309		$	122		$	4,534		$	929		$	9,587
Collectively evaluated		9,582,738			2,867,282			12,450,020			3,561,990			1,286,533			2,458,366			1,556,845			21,313,754
Total loans	$	9,584,480		$	2,868,233		$	12,452,713		$	3,563,299		$	1,286,655		$	2,462,900		$	1,557,774		$	21,323,341

In arriving at the March 31, 2022 allowance, the Company weighted the March 2022 baseline economic forecast, which Moody’s defines as the “most likely outcome” based on current conditions and its view of where the economy is headed, with a 40% probability. The March 31, 2022 baseline scenario assumes COVID-19 infections have already abated; the disruption to the U.S. economy from the Russian invasion of Ukraine will be limited and temporary; the legislature passes a $600 billion social and climate package; full-employment economy being achieved in late 2022 or early 2023; GDP continues to grow between 3%-3.5% in 2022 and 2023; and the Federal Reserve has four 25-basis point interest rate increases in 2022. Alternative Moody’s forecast scenarios have varying depictions of economic performance as compared to the baseline. Consistent with our December 31, 2021 calculation, management determined that assumptions provided for in the downside slower near-term growth (S-2) to be somewhat more likely than the baseline scenario; as such, the S-2 scenario was given a 60% probability weighting in the allowance for credit losses calculation at March 31, 2022. The S-2 scenario assumes that, when compared to baseline, the conflict between Russian and Ukraine spans longer than anticipated and that global supply chain issues worsen, prompting a higher rate of inflation, and as a result, the Federal Reserve raises interest rates more often, generating corrections in equity markets and declines in spending. Further, the S-2 scenario assumes the economic legislation package will be less effective; unemployment begins to rise in the second quarter of 2022, with the return to full employment not occurring until the fourth quarter of 2023; and the number of COVID-19 cases slows consumer spending on retail goods and travel and leisure activities. Despite the lingering economic effects of the COVID-19 pandemic and the emergence of new risks stemming from geopolitical conflict, overall credit loss outlook on our portfolio has not changed materially since year-end. Positive economic indicators of growth in our markets, continued improvements in our asset quality metrics and minimal credit losses in recent periods allowed for a release of credit loss reserves across all portfolios at March 31, 2022.


				Commercial			Total			Commercial
	Commercial			real estate-			commercial			real estate-			Construction
	non-real			owner			and			income			and land			Residential
(in thousands)	estate			occupied			industrial			producing			development			mortgages			Consumer			Total
	Three Months Ended March 31, 2021
Allowance for credit losses
Allowance for loan losses:
Beginning balance	$	149,693		$	69,134		$	218,827		$	109,474		$	26,462		$	48,842		$	46,572		$	450,177
Charge-offs		(17,512	)		(347	)		(17,859	)		(194	)		(248	)		(109	)		(3,694	)		(22,104	)
Recoveries		1,899			37			1,936			—			159			206			1,549			3,850
Net provision for loan losses		(5,144	)		(2,301	)		(7,445	)		6,899			(1,200	)		(6,420	)		603			(7,563	)
Ending balance - allowance for loan losses	$	128,936		$	66,523		$	195,459		$	116,179		$	25,173		$	42,519		$	45,030		$	424,360
Reserve for unfunded lending commitments:
Beginning balance	$	4,529		$	381		$	4,910		$	1,099		$	22,694		$	19		$	1,185		$	29,907
Provision for losses on unfunded commitments		2,642			131			2,773			439			(617	)		3			54			2,652
Ending balance - reserve for unfunded lending commitments		7,171			512			7,683			1,538			22,077			22			1,239			32,559
Total allowance for credit losses	$	136,107		$	67,035		$	203,142		$	117,717		$	47,250		$	42,541		$	46,269		$	456,919

Allowance for loan losses:
Individually evaluated for impairment	$	4,564		$	1,242		$	5,806		$	22		$	21		$	486		$	739		$	7,074
Collectively evaluated for impairment		124,372			65,281			189,653			116,157			25,152			42,033			44,291			417,286
Allowance for loan losses	$	128,936		$	66,523		$	195,459		$	116,179		$	25,173		$	42,519		$	45,030		$	424,360
Reserve for unfunded lending commitments:
Individually evaluated	$	190		$	51		$	241		$	—		$	—		$	—		$	—		$	241
Collectively evaluated		6,981			461			7,442			1,538			22,077			22			1,239			32,318
Reserve for unfunded lending commitments:	$	7,171		$	512		$	7,683		$	1,538		$	22,077		$	22		$	1,239		$	32,559
Total allowance for credit losses	$	136,107		$	67,035		$	203,142		$	117,717		$	47,250		$	42,541		$	46,269		$	456,919
Loans:
Individually evaluated for impairment	$	20,132		$	10,047		$	30,179		$	4,363		$	131		$	5,241		$	2,779		$	42,693
Collectively evaluated for impairment		10,071,210			2,785,057			12,856,267			3,406,665			1,122,010			2,483,551			1,753,673			21,622,166
Total loans	$	10,091,342		$	2,795,104		$	12,886,446		$	3,411,028		$	1,122,141		$	2,488,792		$	1,756,452		$	21,664,859

The modest release across most portfolios during the first quarter of 2021 reflects the improvements in the economic forecast. The continued elevated allowance level was a result of uncertainty surrounding future performance as the impact of stimulus diminishes and modifications expire. In arriving at the allowance for credit losses at March 31, 2021, the Company weighted the baseline economic forecast at 65% and the downside slower near-term growth scenario S-2 at 35%.

The following table shows the composition of nonaccrual loans and those without an allowance for loan loss, by portfolio class.



		March 31,						December 31,
	2022							2021
(in thousands)		Total nonaccrual			Nonaccrual without allowance for loan loss			Total nonaccrual			Nonaccrual without allowance for loan loss
Commercial non-real estate	$		5,312	$		1,247	$		6,974	$		1,264
Commercial real estate - owner occupied			2,749			716			4,921			729
Total commercial and industrial			8,061			1,963			11,895			1,993
Commercial real estate - income producing			1,956			1,233			5,458			5,207
Construction and land development			584			—			844			—
Residential mortgages			22,744			1,287			25,439			1,997
Consumer			9,094			5			11,887			48
Total loans	$		42,439	$		4,488	$		55,523	$		9,245

Nonaccrual loans include nonaccruing loans modified in troubled debt restructurings (“TDRs”) of $3.6 million and $6.8 million at March 31, 2022 and December 31, 2021, respectively. Total TDRs, both accruing and nonaccruing, were $6.5 million at March 31, 2022 and $10.6 million at December 31, 2021. All TDRs are individually evaluated for credit loss. At March 31, 2022 and December 31, 2021, the Company had no unfunded commitments to borrowers whose loan terms have been modified in a TDR.

The table below provides detail by portfolio class TDRs that were modified during the three months ended March 31, 2022 and 2021. All such loans are individually evaluated for credit loss.


	Three Months Ended
($ in thousands)	March 31, 2022						March 31, 2021
Troubled Debt Restructurings:	Number of Contracts		Pre- Modification Outstanding Recorded Investment		Post- Modification Outstanding Recorded Investment		Number of Contracts		Pre- Modification Outstanding Recorded Investment		Post- Modification Outstanding Recorded Investment
Commercial non-real estate		—	$	—	$	—		3	$	6,935	$	6,935
Commercial real estate - owner occupied		—		—		—		—		—		—
Total commercial and industrial		—		—		—		3		6,935		6,935
Commercial real estate - income producing		—		—		—		—		—		—
Construction and land development		—		—		—		—		—		—
Residential mortgages		2		110		115		1		210		210
Consumer		2		73		73		1		54		54
Total loans		4	$	183	$	188		5	$	7,199	$	7,199

The TDRs modified during the three months ended March 31, 2022 reflected in the table above include $0.1 million of loans with interest rate reduction and $0.1 million with other modifications. The TDRs modified during the three months ended March 31, 2021 include $1.9 million of loans with extended amortization terms or other payment concessions, and $5.3 million with other modifications.

Two commercial non-real estate loans totaling $3.1 million that defaulted during the three months period ended March 31, 2022 had been modified in a TDR during the twelve months prior to default. One residential loan totaling $0.6 million that defaulted during the three months ended March 31, 2021 had been modified in a TDR during the twelve months prior to default.

The TDR disclosures for the three months ended March 31, 2021 do not include loans eligible for exclusion from TDR assessment under Section 4013 of the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”), which expired on December 31, 2021. Any such loan having an eligible modification was reported in the aging analysis that follows based on the modified terms.

The tables below present the aging analysis of past due loans by portfolio class at March 31, 2022 and December 31, 2021.


March 31, 2022	30-59 days past due		60-89 days past due		Greater than 90 days past due		Total past due		Current		Total Loans		Recorded investment > 90 days and still accruing
(in thousands)
Commercial non-real estate	$	7,206	$	2,033	$	5,247	$	14,486	$	9,569,994	$	9,584,480	$	701
Commercial real estate - owner occupied		2,443		1,245		3,153		6,841		2,861,392		2,868,233		1,721
Total commercial and industrial		9,649		3,278		8,400		21,327		12,431,386		12,452,713		2,422
Commercial real estate - income producing		1,769		9		1,870		3,648		3,559,651		3,563,299		—
Construction and land development		8,470		99		333		8,902		1,277,753		1,286,655		3
Residential mortgages		29,874		2,766		9,723		42,363		2,420,537		2,462,900		209
Consumer		7,093		2,743		4,666		14,502		1,543,272		1,557,774		1,634
Total	$	56,855	$	8,895	$	24,992	$	90,742	$	21,232,599	$	21,323,341	$	4,268


December 31, 2021	30-59 days past due		60-89 days past due		Greater than 90 days past due		Total past due		Current		Total Loans		Recorded investment > 90 days and still accruing
(in thousands)
Commercial non-real estate	$	8,381	$	3,123	$	7,041	$	18,545	$	9,593,915	$	9,612,460	$	2,818
Commercial real estate - owner occupied		704		653		1,563		2,920		2,818,326		2,821,246		142
Total commercial and industrial		9,085		3,776		8,604		21,465		12,412,241		12,433,706		2,960
Commercial real estate - income producing		281		107		5,307		5,695		3,458,931		3,464,626		—
Construction and land development		2,624		1,022		587		4,233		1,224,437		1,228,670		83
Residential mortgages		23,306		4,638		15,339		43,283		2,380,607		2,423,890		310
Consumer		6,806		2,805		7,447		17,058		1,566,332		1,583,390		2,171
Total	$	42,102	$	12,348	$	37,284	$	91,734	$	21,042,548	$	21,134,282	$	5,524

The following tables present the credit quality indicators by segment and portfolio class of loans at March 31, 2022 and December 31, 2021. The Company routinely assesses the ratings of loans in its portfolio through an established and comprehensive portfolio management process.


	March 31, 2022
(in thousands)	Commercial non-real estate		Commercial real estate - owner- occupied		Total commercial and industrial		Commercial real estate - income producing		Construction and land development		Total commercial
Grade:
Pass	$	9,223,834	$	2,707,795	$	11,931,629	$	3,494,699	$	1,260,421	$	16,686,749
Pass-Watch		186,008		72,436		258,444		50,088		24,916		333,448
Special Mention		52,307		19,770		72,077		3,615		566		76,258
Substandard		122,331		68,232		190,563		14,897		752		206,212
Doubtful		—		—		—		—		—		—
Total	$	9,584,480	$	2,868,233	$	12,452,713	$	3,563,299	$	1,286,655	$	17,302,667


	December 31, 2021
(in thousands)	Commercial non-real estate		Commercial real estate - owner- occupied		Total commercial and industrial		Commercial real estate - income producing		Construction and land development		Total commercial
Grade:
Pass	$	9,279,719	$	2,650,399	$	11,930,118	$	3,373,099	$	1,216,177	$	16,519,394
Pass-Watch		157,815		86,133		243,948		67,157		9,289		320,394
Special Mention		43,344		23,377		66,721		4,466		1,909		73,096
Substandard		131,582		61,337		192,919		19,904		1,295		214,118
Doubtful		—		—		—		—		—		—
Total	$	9,612,460	$	2,821,246	$	12,433,706	$	3,464,626	$	1,228,670	$	17,127,002

The following tables presents credit quality disclosures of amortized cost by segment and vintage for term loans and by revolving and revolving converted to amortizing at March 31, 2022 and December 31, 2021. The Company defines vintage as the later of origination, renewal or restructure date.


	Term Loans
	Amortized Cost Basis by Origination Year
March 31, 2022		2022		2021		2020		2019		2018		Prior		Revolving Loans		Revolving Loans Converted to Term Loans		Total
(in thousands)
Commercial Loans:
Pass		$	1,326,731	$	4,549,370	$	2,750,447	$	1,801,058	$	1,068,711	$	2,043,133	$	3,072,931	$	74,369	$	16,686,749
Pass-Watch			21,757		57,011		24,746		42,969		43,367		79,352		59,453		4,792		333,448
Special Mention			4,110		13,566		5,128		8,612		12,472		12,378		19,536		456		76,258
Substandard			31,450		24,783		36,877		37,591		15,382		36,110		23,046		973		206,212
Doubtful			—		—		—		—		—		—		—		—		—
Total Commercial Loans		$	1,384,048	$	4,644,730	$	2,817,198	$	1,890,230	$	1,139,932	$	2,170,973	$	3,174,966	$	80,590	$	17,302,667
Residential Mortgage and Consumer Loans:
Performing		$	170,543	$	557,335	$	486,997	$	314,321	$	197,414	$	1,131,990	$	1,123,451	$	4,492	$	3,986,543
Nonperforming			30		1,250		1,027		2,299		3,360		25,096		746		323		34,131
Total Consumer Loans		$	170,573	$	558,585	$	488,024	$	316,620	$	200,774	$	1,157,086	$	1,124,197	$	4,815	$	4,020,674


	Term Loans
	Amortized Cost Basis by Origination Year
December 31, 2021		2021		2020		2019		2018		2017		Prior		Revolving Loans		Revolving Loans Converted to Term Loans		Total
(in thousands)
Commercial Loans:
Pass		$	4,946,459	$	3,008,160	$	2,035,849	$	1,212,306	$	937,639	$	1,296,382	$	3,002,064	$	80,535	$	16,519,394
Pass-Watch			68,421		19,467		31,598		45,846		27,188		69,310		52,850		5,714		320,394
Special Mention			17,536		2,683		10,296		12,410		10,669		3,656		9,603		6,243		73,096
Substandard			43,895		43,494		36,763		14,664		28,337		16,125		20,358		10,482		214,118
Doubtful			—		—		—		—		—		—		—		—		—
Total Commercial Loans		$	5,076,311	$	3,073,804	$	2,114,506	$	1,285,226	$	1,003,833	$	1,385,473	$	3,084,875	$	102,974	$	17,127,002
Residential Mortgage and Consumer Loans:
Performing		$	580,813	$	467,497	$	355,833	$	223,494	$	320,344	$	892,361	$	1,120,461	$	5,995	$	3,966,798
Nonperforming			565		951		2,018		4,465		4,719		24,365		1,432		1,967		40,482
Total Consumer Loans		$	581,378	$	468,448	$	357,851	$	227,959	$	325,063	$	916,726	$	1,121,893	$	7,962	$	4,007,280

Loans in process of foreclosure include those for which formal foreclosure proceedings are in process according to local requirements of the applicable jurisdiction. Included in loans at March 31, 2022 and December 31, 2021 were $5.6 million and $4.4 million, respectively, of consumer loans secured by single family residential real estate that were in process of foreclosure. In addition to the single family residential real estate loans in process of foreclosure, the Company also held $2.4 million of foreclosed single family residential properties in other real estate owned at March 31, 2022 and December 31, 2021.

Loans held for sale totaled $59.9 million and $93.1 million at March 31, 2022 and December 31, 2021, respectively. Loans held for sale is composed primarily of mortgage loans originated for sale in the secondary market. At March 31, 2022, residential mortgage loans carried at the fair value option totaled $25.0 million with an unpaid principal balance of $25.1 million. At December 31, 2021, residential mortgage loans carried at the fair value option totaled $41.0 million with an unpaid principal balance of $40.1 million. All other loans held for sale are carried at lower of cost or market.