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 $70.5 million and $76.2 million at September 30, 2021 and December 31, 2020, respectively. Included in commercial non-real estate loans at September 30, 2021 and December 31, 2020 was $935.3 million 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 September 30, 2021 and December 31, 2020.

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; 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 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 present activity in the allowance for credit losses (ACL) by portfolio class for the nine months ended September 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. The difference between the December 31, 2019 incurred allowance and the CECL allowance is reflected as a cumulative effect of change in accounting principle in the ACL activity for the nine months ended September 30, 2020.

				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
	Nine Months Ended September 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		(32,369	)		(1,722	)		(34,091	)		(231	)		(267	)		(218	)		(9,874	)		(44,681	)
Recoveries		6,579			363			6,942			100			1,548			933			4,636			14,159
Net provision for loan losses		(17,594	)		(10,642	)		(28,236	)		11,752			(5,167	)		(18,484	)		(7,999	)		(48,134	)
Ending balance - allowance for loan losses	$	106,309		$	57,133		$	163,442		$	121,095		$	22,576		$	31,073		$	33,335		$	371,521
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		(176	)		(131	)		(307	)		124			(383	)		(8	)		(387	)		(961	)
Ending balance - reserve for unfunded lending commitments		4,353			250			4,603			1,223			22,311			11			798			28,946
Total allowance for credit losses	$	110,662		$	57,383		$	168,045		$	122,318		$	44,887		$	31,084		$	34,133		$	400,467
Allowance for loan losses:
Individually evaluated	$	113		$	33		$	146		$	20		$	20		$	447		$	202		$	835
Collectively evaluated		106,196			57,100			163,296			121,075			22,556			30,626			33,133			370,686
Allowance for loan losses	$	106,309		$	57,133		$	163,442		$	121,095		$	22,576		$	31,073		$	33,335		$	371,521
Reserve for unfunded lending commitments:
Individually evaluated	$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—
Collectively evaluated		4,353			250			4,603			1,223			22,311			11			798			28,946
Reserve for unfunded lending commitments:	$	4,353		$	250		$	4,603		$	1,223		$	22,311		$	11		$	798		$	28,946
Total allowance for credit losses	$	110,662		$	57,383		$	168,045		$	122,318		$	44,887		$	31,084		$	34,133		$	400,467
Loans:
Individually evaluated	$	5,929		$	5,618		$	11,547		$	4,004		$	127		$	5,083		$	1,315		$	22,076
Collectively evaluated		9,411,061			2,807,308			12,218,369			3,463,935			1,213,864			2,345,970			1,621,801			20,863,939
Total loans	$	9,416,990		$	2,812,926		$	12,229,916		$	3,467,939		$	1,213,991		$	2,351,053		$	1,623,116		$	20,886,015

				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
	Nine Months Ended September 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		(364,123	)		(1,828	)		(365,951	)		(2,211	)		(7	)		(170	)		(13,640	)		(381,979	)
Recoveries		4,831			659			5,490			46			549			1,078			4,360			11,523
Net provision for loan losses		401,155			41,336			442,491			78,661			12,325			17,613			27,378			578,468
Ending balance - allowance for loan losses	$	148,051		$	66,021		$	214,072		$	104,652		$	29,695		$	51,773		$	48,482		$	448,674
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		(3,786	)		187			(3,599	)		1,599			6,046			(11	)		(3,813	)		222
Ending balance - reserve for unfunded lending commitments		5,960			475			6,435			2,048			21,704			6			1,333			31,526
Total allowance for credit losses	$	154,011		$	66,496		$	220,507		$	106,700		$	51,399		$	51,779		$	49,815		$	480,200

Allowance for loan losses:
Individually evaluated for impairment	$	27,304		$	1,344		$	28,648		$	24		$	169		$	416		$	456		$	29,713
Collectively evaluated for impairment		120,747			64,677			185,424			104,628			29,526			51,357			48,026			418,961
Allowance for loan losses	$	148,051		$	66,021		$	214,072		$	104,652		$	29,695		$	51,773		$	48,482		$	448,674
Reserve for unfunded lending commitments:
Individually evaluated	$	992		$	—		$	992		$	—		$	—		$	—		$	5		$	997
Collectively evaluated		4,968			475			5,443			2,048			21,704			6			1,328			30,529
Reserve for unfunded lending commitments:		5,960			475			6,435			2,048			21,704			6			1,333			31,526
Total allowance for credit losses	$	154,011		$	66,496		$	220,507		$	106,700		$	51,399		$	51,779		$	49,815		$	480,200
Loans:
Individually evaluated for impairment	$	73,139		$	11,124		$	84,263		$	5,549		$	1,837		$	6,064		$	3,924		$	101,637
Collectively evaluated for impairment		10,184,649			2,768,283			12,952,932			3,401,005			1,094,312			2,748,324			1,941,994			22,138,567
Total loans	$	10,257,788		$	2,779,407		$	13,037,195		$	3,406,554		$	1,096,149		$	2,754,388		$	1,945,918		$	22,240,204

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 September 30, 2021 allowance, the Company weighted the September 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 50%. The September 2021 baseline scenario assumes: (1) coronavirus herd resiliency was achieved in late August 2021, with infection abatement in November 2021; (2) no new widespread economic shutdowns will occur in response to virus outbreaks; (3) the unemployment rate continues to decline, with fourth quarter 2021 averaging 4.5%, and full year 2021, 2022 and 2023 rates averaging 5.5%, 3.6% and 3.5%, respectively; (4) gross domestic product will increase an average of 6.0% in 2021, 4.3% in 2022 and 2.3% in 2023; (5) the Build Back Better infrastructure and social legislation package, forecasted to be passed in late 2021 at $2.5 trillion, 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 50% to incorporate a reasonably possible alternative economic outcome. The S-2 scenario reflects a slower economic recovery as compared to the baseline, with key assumptions that include a delay in infection abatement, continued supply chain disruptions, a scaled back stimulus package resulting in less of a rise in real consumer spending and a near-term rise in unemployment that impedes growth in late 2021 and in 2022. The modest release during the third quarter of 2021 reflects 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.


		September 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	$		9,948	$		5,449	$		52,836	$		15,268
Commercial real estate - owner occupied			6,720			5,379			13,856			7,038
Total commercial and industrial			16,668			10,828			66,692			22,306
Commercial real estate - income producing			4,249			3,922			6,743			—
Construction and land development			1,238			—			2,486			1,116
Residential mortgages			25,964			1,598			40,573			1,705
Consumer			12,238			250			23,385			—
Total loans	$		60,357	$		16,598	$		139,879	$		25,127

Nonaccrual loans include nonaccruing loans modified in troubled debt restructurings (“TDRs”) of $7.2 million and $21.6 million at September 30, 2021 and December 31, 2020, respectively. Total TDRs, both accruing and nonaccruing, were $10.3 million at September 30, 2021 and $25.8 million at December 31, 2020. All TDRs are individually evaluated for credit loss. At September 30, 2021, the Company had no unfunded commitments to borrowers whose loan terms have been modified in a TDR and $4.6 million at December 31, 2020.

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

	Three Months Ended
($ in thousands)	September 30, 2021						September 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		—	$	—	$	—		—	$	—	$	—
Commercial real estate - owner occupied		—		—		—		—		—		—
Total commercial and industrial		—		—		—		—		—		—
Commercial real estate - income producing		—		—		—		—		—		—
Construction and land development		—		—		—		—		—		—
Residential mortgages		1		196		196		5		1,358		1,358
Consumer		—		—		—		2		25		25
Total loans		1	$	196	$	196		7	$	1,383	$	1,383

	Nine Months Ended
($ in thousands)	September 30, 2021						September 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		3		515		538		14		3,424		3,424
Consumer		4		86		86		7		89		89
Total loans		10	$	7,536	$	7,559		25	$	4,273	$	4,273

The TDRs modified during the nine months ended September 30, 2021 reflected in the table above include $7.1 million of loans with extended amortization terms or other payment concessions and $0.5 million of loans with other modifications. The TDRs modified during the nine months ended September 30, 2020 include $0.7 million of loans with extended amortization terms or other payment concessions, $1.1 million with reduced interest rates, $0.4 million with significant covenant waivers, and $2.1 million with other modifications.

One residential mortgage loan totaling $0.6 million that defaulted during the nine months ended September 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 nine months ended September 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 September 30, 2021 and December 31, 2020.

September 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	$	5,623	$	2,100	$	14,568	$	22,291	$	9,394,699	$	9,416,990	$	7,228
Commercial real estate - owner occupied		5,761		762		1,548		8,071		2,804,855		2,812,926		142
Total commercial and industrial		11,384		2,862		16,116		30,362		12,199,554		12,229,916		7,370
Commercial real estate - income producing		1,175		1,474		5,441		8,090		3,459,849		3,467,939		1,346
Construction and land development		369		733		1,035		2,137		1,211,854		1,213,991		57
Residential mortgages		3,799		5,579		17,567		26,945		2,324,108		2,351,053		254
Consumer		13,750		3,108		7,331		24,189		1,598,927		1,623,116		943
Total	$	30,477	$	13,756	$	47,490	$	91,723	$	20,794,292	$	20,886,015	$	9,970

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 September 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.

	September 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	$	9,032,981	$	2,659,738	$	11,692,719	$	3,363,503	$	1,190,718	$	16,246,940
Pass-Watch		204,260		68,660		272,920		79,328		19,048		371,296
Special Mention		46,263		24,878		71,141		4,739		1,887		77,767
Substandard		133,486		59,650		193,136		20,369		2,338		215,843
Doubtful		—		—		—		—		—		—
Total	$	9,416,990	$	2,812,926	$	12,229,916	$	3,467,939	$	1,213,991	$	16,911,846

	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 segment and vintage for term loans and by revolving and revolving converted to amortizing at September 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		$	3,916,476	$	3,333,009	$	2,308,701	$	1,374,599	$	1,105,917	$	1,520,061	$	2,582,321	$	105,856	$	16,246,940
Pass-Watch			40,835		59,789		71,484		31,238		22,528		82,569		47,600		15,253		371,296
Special Mention			15,346		3,105		6,857		11,061		19,648		8,613		11,841		1,296		77,767
Substandard			26,982		51,212		38,745		17,302		27,220		22,332		25,384		6,666		215,843
Doubtful			—		—		—		—		—		—		—		—		—
Total Commercial Loans		$	3,999,639	$	3,447,115	$	2,425,787	$	1,434,200	$	1,175,313	$	1,633,575	$	2,667,146	$	129,071	$	16,911,846
Residential Mortgage and Consumer Loans:
Performing		$	330,316	$	461,269	$	401,774	$	265,787	$	367,106	$	973,576	$	1,128,048	$	5,619	$	3,933,495
Nonperforming			433		1,101		1,902		3,599		5,614		25,114		1,424		1,487		40,674
Total Consumer Loans		$	330,749	$	462,370	$	403,676	$	269,386	$	372,720	$	998,690	$	1,129,472	$	7,106	$	3,974,169

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 September 30, 2021 and December 31, 2020 was $6.1 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 $4.0 million and $3.4 million of foreclosed single family residential properties in other real estate owned at September 30, 2021 and December 31, 2020, respectively.

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