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 and Dallas; 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 $71.5 million and $76.2 million at June 30, 2021 and December 31, 2020, respectively. Included in commercial non-real estate loans at June 30, 2021 and December 31, 2020 was $1.4 billion and $2.0 billion, respectively, of Paycheck Protection Program loans, described in more detail below. The following table presents loans, net of unearned income, by portfolio class at June 30, 2021 and December 31, 2020.

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; this origination fee 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 a small amount of 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 following tables show activity in the allowance for credit losses by portfolio class for the six months ended June 30, 2021 and 2020, as well as the corresponding recorded investment in loans at the end of each period. Effective January 1, 2020, the Company adopted the provisions of Accounting Standards Codification (ASC) 326, “Financial Instruments – Credit Losses,” using a modified retrospective basis. ASC 326, commonly referred to as CECL, prescribed a change in computing allowance for credit losses from an incurred methodology to a life of loan methodology. For the six months ended June 30, 2020, the difference between the December 31, 2019 incurred allowance and the CECL allowance is reflected as a cumulative effect of change in accounting principle.

				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
	Six Months Ended June 30, 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		(28,932	)		(1,682	)		(30,614	)		(231	)		(256	)		(207	)		(6,618	)		(37,926	)
Recoveries		4,187			287			4,474			—			1,164			437			3,099			9,174
Net provision for loan losses		(12,425	)		(5,967	)		(18,392	)		14,537			(642	)		(12,607	)		(4,653	)		(21,757	)
Ending balance - allowance for loan losses	$	112,523		$	61,772		$	174,295		$	123,780		$	26,728		$	36,465		$	38,400		$	399,668
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		1,174			(73	)		1,101			244			(1,470	)		(6	)		(252	)		(383	)
Ending balance - reserve for unfunded lending commitments		5,703			308			6,011			1,343			21,224			13			933			29,524
Total allowance for credit losses	$	118,226		$	62,080		$	180,306		$	125,123		$	47,952		$	36,478		$	39,333		$	429,192
Allowance for loan losses:
Individually evaluated	$	2,675		$	669		$	3,344		$	21		$	21		$	437		$	204		$	4,027
Collectively evaluated		109,848			61,103			170,951			123,759			26,707			36,028			38,196			395,641
Allowance for loan losses	$	112,523		$	61,772		$	174,295		$	123,780		$	26,728		$	36,465		$	38,400		$	399,668
Reserve for unfunded lending commitments:
Individually evaluated	$	241		$	—		$	241		$	—		$	—		$	—		$	—		$	241
Collectively evaluated		5,462			308			5,770			1,343			21,224			13			933			29,283
Reserve for unfunded lending commitments:	$	5,703		$	308		$	6,011		$	1,343		$	21,224		$	13		$	933		$	29,524
Total allowance for credit losses	$	118,226		$	62,080		$	180,306		$	125,123		$	47,952		$	36,478		$	39,333		$	429,192
Loans:
Individually evaluated	$	13,642		$	7,079		$	20,721		$	4,018		$	129		$	6,347		$	2,663		$	33,878
Collectively evaluated		9,519,068			2,802,789			12,321,857			3,415,010			1,294,907			2,406,112			1,676,766			21,114,652
Total loans	$	9,532,710		$	2,809,868		$	12,342,578		$	3,419,028		$	1,295,036		$	2,412,459		$	1,679,429		$	21,148,530

				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
	Six Months Ended June 30, 2020
Allowance for credit losses
Allowance for loan losses:
Beginning balance	$	106,432		$	10,977		$	117,409		$	20,869		$	9,350		$	20,331		$	23,292		$	191,251
Cumulative effect of change in accounting principle		(244	)		14,877			14,633			7,287			7,478			12,921			7,092			49,411
Charge-offs		(339,566	)		(1,706	)		(341,272	)		(1,501	)		(5	)		(141	)		(10,736	)		(353,655	)
Recoveries		3,299			107			3,406			46			451			761			2,543			7,207
Net provision for loan losses		375,050			37,211			412,261			71,210			13,965			23,479			27,509			548,424
Ending balance - allowance for loan losses	$	144,971		$	61,466		$	206,437		$	97,911		$	31,239		$	57,351		$	49,700		$	442,638
Reserve for unfunded lending commitments:
Beginning balance	$	3,974		$	—		$	3,974		$	—		$	—		$	—		$	—		$	3,974
Cumulative effect of change in accounting principle		5,772			288			6,060			449			15,658			17			5,146			27,330
Provision for losses on unfunded commitments		(2,900	)		427			(2,473	)		649			10,455			5			(3,369	)		5,267
Ending balance - reserve for unfunded lending commitments		6,846			715			7,561			1,098			26,113			22			1,777			36,571
Total allowance for credit losses	$	151,817		$	62,181		$	213,998		$	99,009		$	57,352		$	57,373		$	51,477		$	479,209

Allowance for loan losses:
Individually evaluated for impairment	$	12,619		$	1,237		$	13,856		$	457		$	55		$	477		$	377		$	15,222
Collectively evaluated for impairment		132,352			60,229			192,581			97,454			31,184			56,874			49,323			427,416
Allowance for loan losses	$	144,971		$	61,466		$	206,437		$	97,911		$	31,239		$	57,351		$	49,700		$	442,638
Reserve for unfunded lending commitments:
Individually evaluated	$	751		$	—		$	751		$	—		$	—		$	—		$	—		$	751
Collectively evaluated		6,095			715			6,810			1,098			26,113			22			1,777			35,820
Reserve for unfunded lending commitments:		6,846			715			7,561			1,098			26,113			22			1,777			36,571
Total allowance for credit losses	$	151,817		$	62,181		$	213,998		$	99,009		$	57,352		$	57,373		$	51,477		$	479,209
Loans:
Individually evaluated for impairment	$	89,314		$	9,982		$	99,296		$	6,222		$	1,007		$	5,710		$	3,970		$	116,205
Collectively evaluated for impairment		10,375,966			2,752,277			13,128,243			3,344,077			1,127,952			2,871,606			2,040,294			22,512,172
Total loans	$	10,465,280		$	2,762,259		$	13,227,539		$	3,350,299		$	1,128,959		$	2,877,316		$	2,044,264		$	22,628,377

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. In the calculation of the June 30, 2021 allowance, the Company weighted the June 2021 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, at 65%. The June 2021 baseline scenario assumes: (1) there will be no new widespread economic shutdowns in response to the coronavirus; (2) coronavirus outbreaks will be relatively small/localized, without taxing health systems; (3) the unemployment rate continues to decline, and at a slightly faster rate for the near term than the prior forecast, with fourth quarter of 2021 forecasted at 4.5% and full year 2021, 2022 and 2023 rates averaging 5.4%, 3.7% and 3.5%, respectively; (4) gross domestic product will increase an average of 6.9% in 2021, 5.0% in 2022 and 2.3% in 2023; (5) the Build Back Better infrastructure and social legislation package, forecasted to be passed in late 2021, will provide an additional boost to the economy; and (6) the Federal Reserve will continue to respond to the economic impact of COVID-19 by maintaining rates at or near zero until the first quarter of 2023. The downside scenario S-2 was weighted at 35% to incorporate a reasonably possible alternative economic outcome. The S-2 scenario reflects a slower economic recovery, including slower vaccination rates and concerns about resistant strains leading to lower spending and hesitancy over air travel and hotel stays; a less effective stimulus with a slower return to spending; a near-term rise in unemployment; and smaller infrastructure and social benefit legislation, which further impedes growth in the second half of 2021 and in 2022. The modest release across most portfolios during the second quarter of 2021 reflects the improvements in the economic forecast. The continued elevated allowance level is a result of uncertainty surrounding payment performance of borrowers in certain regions and/or industries that have not returned to pre-pandemic circumstances and as the impact of federal stimulus diminishes and modifications expire.

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


		June 30,						December 31,
	2021							2020
(in thousands)		Total nonaccrual			Nonaccrual without allowance for loan loss			Total nonaccrual			Nonaccrual without allowance for loan loss
Commercial non-real estate	$		19,124	$		5,275	$		52,836	$		15,268
Commercial real estate - owner occupied			8,115			5,489			13,856			7,038
Total commercial and industrial			27,239			10,764			66,692			22,306
Commercial real estate - income producing			5,061			3,932			6,743			—
Construction and land development			2,012			—			2,486			1,116
Residential mortgages			32,775			2,928			40,573			1,705
Consumer			16,464			1,583			23,385			—
Total loans	$		83,551	$		19,207	$		139,879	$		25,127

Nonaccrual loans include nonaccruing loans modified in troubled debt restructurings (“TDRs”) of $6.8 million and $21.6 million at June 30, 2021 and December 31, 2020, respectively. Total TDRs, both accruing and nonaccruing, were $10.6 million at June 30, 2021 and $25.8 million at December 31, 2020. All TDRs are individually evaluated for credit loss. At June 30, 2021 and December 31, 2020, the Company had unfunded commitments of $1.4 million and $4.6 million, respectively, to borrowers whose loan terms have been modified in a TDR.

The tables below detail by portfolio class TDRs that were modified during the three and six months ended June 30, 2021 and 2020. All such loans are individually evaluated for credit loss.

	Three Months Ended
($ in thousands)	June 30, 2021						June 30, 2020
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		—	$	—	$	—		2	$	350	$	350
Commercial real estate - owner occupied		—		—		—		—		—		—
Total commercial and industrial		—		—		—		2		350		350
Commercial real estate - income producing		—		—		—		—		—		—
Construction and land development		—		—		—		1		15		15
Residential mortgages		1		109		132		8		1,810		1,810
Consumer		3		32		32		2		30		30
Total loans		4	$	141	$	164		13	$	2,205	$	2,205

	Six Months Ended
($ in thousands)	June 30, 2021						June 30, 2020
			Pre- Modification		Post- Modification				Pre- Modification		Post- Modification
	Number		Outstanding		Outstanding		Number		Outstanding		Outstanding
	of		Recorded		Recorded		of		Recorded		Recorded
Troubled Debt Restructurings:	Contracts		Investment		Investment		Contracts		Investment		Investment
Commercial non-real estate		3	$	6,935	$	6,935		3	$	745	$	745
Commercial real estate - owner occupied		—		—		—		—		—		—
Total commercial and industrial		3		6,935		6,935		3		745		745
Commercial real estate - income producing		—		—		—		—		—		—
Construction and land development		—		—		—		1		15		15
Residential mortgages		2		319		342		9		2,066		2,066
Consumer		4		86		86		5		64		64
Total loans		9	$	7,340	$	7,363		18	$	2,890	$	2,890

The TDRs modified during the six months ended June 30, 2021 reflected in the table above include $7.1 million of loans with extended amortization terms or other payment concessions $0.3 million of loans with other modifications. The TDRs modified during the six months ended June 30, 2020 include $0.7 million of loans with extended amortization terms or other payment concessions, $0.4 million with significant covenant waivers and $1.8 million with other modifications.

One residential loan totaling $0.6 million that defaulted during the six months ended June 30, 2021 had been modified in a TDR during the twelve months prior to default. One commercial non-real estate loan totaling $0.4 million, one residential mortgage loan totaling $0.6 million and two consumer loans totaling $0.2 million that defaulted during the six months ended June 30, 2020 had been modified in a TDR during the twelve months prior to default.

The TDR disclosures above do not include loans eligible for exclusion from TDR assessment under Section 4013 of the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”). Loans modified under the CARES Act are 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 June 30, 2021 and December 31, 2020.

June 30, 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	$	4,819	$	6,947	$	14,061	$	25,827	$	9,506,883	$	9,532,710	$	1,657
Commercial real estate - owner occupied		2,321		245		8,422		10,988		2,798,880		2,809,868		5,614
Total commercial and industrial		7,140		7,192		22,483		36,815		12,305,763		12,342,578		7,271
Commercial real estate - income producing		1,771		29		4,894		6,694		3,412,334		3,419,028		—
Construction and land development		370		358		1,313		2,041		1,292,995		1,295,036		23
Residential mortgages		3,052		4,314		21,404		28,770		2,383,689		2,412,459		755
Consumer		6,547		2,262		8,559		17,368		1,662,061		1,679,429		876
Total	$	18,880	$	14,155	$	58,653	$	91,688	$	21,056,842	$	21,148,530	$	8,925

December 31, 2020	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	$	7,963	$	2,564	$	39,530	$	50,057	$	9,936,926	$	9,986,983	$	583
Commercial real estate - owner occupied		1,525		753		13,663		15,941		2,841,504		2,857,445		955
Total commercial and industrial		9,488		3,317		53,193		65,998		12,778,430		12,844,428		1,538
Commercial real estate - income producing		1,494		798		5,744		8,036		3,349,903		3,357,939		182
Construction and land development		4,168		284		2,001		6,453		1,058,604		1,065,057		—
Residential mortgages		29,319		9,858		27,886		67,063		2,598,149		2,665,212		912
Consumer		12,215		5,012		11,714		28,941		1,828,354		1,857,295		729
Total	$	56,684	$	19,269	$	100,538	$	176,491	$	21,613,440	$	21,789,931	$	3,361

The following tables present the credit quality indicators by segment and portfolio class of loans held for investment at June 30, 2021 and December 31, 2020. The Company routinely assesses the ratings of loans in its portfolio through an established and comprehensive portfolio management process. In addition, the Company often examines portfolios of loans to determine if there are areas of risk not specifically identified in its loan by loan approach.

	June 30, 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	$	9,095,043	$	2,612,208	$	11,707,251	$	3,300,199	$	1,275,941	$	16,283,391
Pass-Watch		237,873		111,000		348,873		79,590		15,186		443,649
Special Mention		45,555		23,258		68,813		4,176		2,101		75,090
Substandard		154,239		63,402		217,641		35,063		1,808		254,512
Doubtful		—		—		—		—		—		—
Total	$	9,532,710	$	2,809,868	$	12,342,578	$	3,419,028	$	1,295,036	$	17,056,642

	December 31, 2020
(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	$	9,439,264	$	2,641,423	$	12,080,687	$	3,219,155	$	1,033,060	$	16,332,902
Pass-Watch		314,739		114,358		429,097		89,968		22,820		541,885
Special Mention		79,613		46,239		125,852		5,989		5,751		137,592
Substandard		153,367		55,425		208,792		42,827		3,426		255,045
Doubtful		—		—		—		—		—		—
Total	$	9,986,983	$	2,857,445	$	12,844,428	$	3,357,939	$	1,065,057	$	17,267,424

The following table presents credit quality disclosures of amortized cost by class and vintage for term loans and by revolving and revolving converted to amortizing at June 30, 2021. The Company defines vintage as the later of origination, renewal or restructure date.

	Term Loans
	Amortized Cost Basis by Origination Year
		2021		2020		2019		2018		2017		Prior		Revolving Loans		Revolving Loans Converted to Term Loans		Total
Commercial Loans:
Pass		$	3,105,699	$	3,786,344	$	2,522,262	$	1,519,030	$	1,168,590	$	1,700,798	$	2,374,150	$	106,518	$	16,283,391
Pass-Watch			35,706		65,397		93,299		32,980		39,412		94,821		75,154		6,880		443,649
Special Mention			13,328		2,734		7,601		11,757		15,009		9,447		13,030		2,184		75,090
Substandard			34,137		57,537		46,726		17,937		45,110		25,747		22,488		4,830		254,512
Doubtful			—		—		—		—		—		—		—		—		—
Total Commercial Loans		$	3,188,870	$	3,912,012	$	2,669,888	$	1,581,704	$	1,268,121	$	1,830,813	$	2,484,822	$	120,412	$	17,056,642
Residential Mortgage and Consumer Loans:
Performing		$	238,432	$	429,863	$	433,925	$	314,469	$	417,118	$	1,063,622	$	1,135,616	$	6,421		4,039,466
Nonperforming			305		1,284		2,396		5,053		9,446		30,531		1,998		1,409		52,422
Total Consumer Loans		$	238,737	$	431,147	$	436,321	$	319,522	$	426,564	$	1,094,153	$	1,137,614	$	7,830	$	4,091,888

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 June 30, 2021 and December 31, 2020 was $8.3 million and $17.2 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 $4.5 million and $3.4 million of foreclosed single family residential properties in other real estate owned at June 30, 2021 and December 31, 2020, respectively.

Loans held for sale is composed primarily of mortgage loans originated for sale in the secondary market.