Allowance for Credit Losses

3 Months Ended

Mar. 31, 2020

Allowance for Credit Losses

Allowance for Credit Losses

Note 6 — Allowance for Credit Losses (ACL)

See Note 2 - Summary of Significant Accounting Policies in this Quarterly Report on Form 10-Q for further detailed descriptions of our estimation process and methodology related to the allowance for credit losses.

The following table presents a disaggregated analysis of activity in the allowance for credit losses as follows:

	Consumer				Consumer				Ready						CRE-OO		CRE and		BEX and
(Dollars in thousands)	Mortgage		HELOC		Non Mobile Home		Mobile Home		Reserves		Overdrafts		Land		and C&I		OIPP		Micro		Other		Total
Three Months Ended March 31, 2020
Allowance for credit losses:
Balance at beginning of period January 1, 2020	$	5,076	$	4,310	$	1,142	$	2,176	$	231	$	561	$	3,055	$	18,189	$	20,800	$	1,148	$	239	$	56,927
Impact of Adoption		4,757		3,836		1,079		1,426		220		537		2,574		16,487		18,878		1,007		229		51,030
Initial PCD Allowance		98		286		14		655						348		907		1,010		90		—		3,408
Adjusted CECL balance at January 1, 2020	$	9,931	$	8,432	$	2,235	$	4,257	$	451	$	1,098	$	5,977	$	35,583	$	40,688	$	2,245	$	468	$	111,365
Charge-offs		(304)		(615)		(230)		(380)		(99)		(1,076)		(105)		(361)		—		(53)		—		(3,223)
Recoveries		219		405		35		53		5		374		172		245		201		200		—		1,909
Net charge offs		(85)		(210)		(195)		(327)		(94)		(702)		67		(116)		201		147		—		(1,314)
Provision (benefit) (1)		6,187		3,828		692		528		156		459		1,210		4,878		16,548		273		(25)		34,734
Balance at end of period March 31, 2020	$	16,033	$	12,050	$	2,732	$	4,458	$	513	$	855	$	7,254	$	40,345	$	57,437	$	2,665	$	443	$	144,785
Allowance for credit losses:
Quantitative allowance
Collectively evaluated	$	10,278	$	7,489	$	1,873	$	3,719	$	382	$	772	$	8,019	$	24,417	$	20,580	$	1,722	$	—	$	79,251
Individually evaluated		182		314		—		—		—		—		64		570		30		152		—		1,312
Total quantitative allowance		10,460		7,803		1,873		3,719		382		772		8,083		24,987		20,610		1,874		—		80,563
Qualitative allowance		5,573		4,247		859		739		131		83		(829)		15,358		36,827		791		443		64,222
Balance at end of period March 31, 2020	$	16,033	$	12,050	$	2,732	$	4,458	$	513	$	855	$	7,254	$	40,345	$	57,437	$	2,665	$	443	$	144,785

(1) – Additional provision for credit losses of $1,799 was recorded during the first quarter of 2020 for the allowance for credit losses for unfunded commitments that is not considered in the above table. See Note 13

An aggregated analysis of the changes in allowance for loan losses, for comparative periods, prior to the adoption of ASU 2016-13 is as follows:

	Non-acquired		Acquired Non-Credit		Acquired Credit
(Dollars in thousands)	Loans		Impaired Loans		Impaired Loans		Total
Three Months Ended March 31, 2019:
Balance at beginning of period	$	51,194	$	—	$	4,604	$	55,798
Loans charged-off		(1,245)		(374)		—		(1,619)
Recoveries of loans previously charged off (1)		752		206		—		958
Net charge-offs		(493)		(168)		—		(661)
Provision for loan losses charged to operations		1,307		168		13		1,488
Reduction due to loan removals		—		—		(103)		(103)
Balance at end of period	$	52,008	$	—	$	4,514	$	56,522

(1) Recoveries related to acquired credit impaired loans are recorded through other noninterest income on the consolidated statement of income and do not run through the ALLL.

The following tables present a disaggregated analysis of activity in the allowance for loan losses and loan balances for non-acquired loans, for comparative periods, prior to the adoption of ASU 2016-13:

	Construction		Commercial		Commercial		Consumer						Other Income
	& Land		Non-owner		Owner		Owner		Home		Commercial		Producing				Other
(Dollars in thousands)	Development		Occupied		Occupied		Occupied		Equity		& Industrial		Property		Consumer		Loans		Total
Three Months Ended March 31, 2019
Allowance for loan losses:
Balance, December 31, 2018	$	5,682	$	8,754	$	9,369	$	11,913	$	3,434	$	7,454	$	1,446	$	3,101	$	41	$	51,194
Charge-offs		—		—		(12)		(37)		(15)		(19)		—		(1,162)		—		(1,245)
Recoveries		299		22		25		2		36		71		45		252		—		752
Provision (benefit)		(610)		964		247		180		(182)		(257)		(104)		1,004		65		1,307
Balance, March 31, 2019	$	5,371	$	9,740	$	9,629	$	12,058	$	3,273	$	7,249	$	1,387	$	3,195	$	106	$	52,008
Loans individually evaluated for impairment	$	786	$	60	$	21	$	37	$	161	$	420	$	111	$	3	$	—	$	1,599
Loans collectively evaluated for impairment	$	4,585	$	9,680	$	9,608	$	12,021	$	3,112	$	6,829	$	1,276	$	3,192	$	106	$	50,409
Loans:
Loans individually evaluated for impairment	$	38,257	$	375	$	4,220	$	6,885	$	2,754	$	1,315	$	2,357	$	110	$	—	$	56,273
Loans collectively evaluated for impairment		772,294		1,615,041		1,597,140		1,998,429		505,572		1,070,755		211,878		465,007		18,224		8,254,340
Total non-acquired loans	$	810,551	$	1,615,416	$	1,601,360	$	2,005,314	$	508,326	$	1,072,070	$	214,235	$	465,117	$	18,224	$	8,310,613

The following tables present a disaggregated analysis of activity in the allowance for loan losses and loan balances for acquired non-credit impaired loans, for comparative periods, prior to the adoption of ASU 2016-13:

	Construction		Commercial		Commercial		Consumer						Other Income
	& Land		Non-owner		Owner		Owner		Home		Commercial		Producing
(Dollars in thousands)	Development		Occupied		Occupied		Occupied		Equity		& Industrial		Property		Consumer		Other		Total
Three Months Ended March 31, 2019
Allowance for loan losses:
Balance at beginning of period	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Charge-offs		(6)		—		—		—		(72)		(134)		(26)		(136)		—		(374)
Recoveries		1		—		—		2		22		165		—		16		—		206
Provision (benefit)		5		—		—		(2)		50		(31)		26		120		—		168
Balance, March 31, 2019	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Loans individually evaluated for impairment	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Loans collectively evaluated for impairment	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Loans:
Loans individually evaluated for impairment	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Loans collectively evaluated for impairment		113,572		629,394		400,658		610,376		225,278		173,840		120,696		104,923		—		2,378,737
Total acquired non-credit impaired loans	$	113,572	$	629,394	$	400,658	$	610,376	$	225,278	$	173,840	$	120,696	$	104,923	$	—	$	2,378,737

The following tables present a disaggregated analysis of activity in the allowance for loan losses and loan balances for acquired credit impaired loans, for comparative periods, prior to the adoption of ASU 2016-13:

			Commercial
			Real Estate-
	Commercial		Construction and		Residential				Commercial
(Dollars in thousands)	Real Estate		Development		Real Estate		Consumer		and Industrial		Total
Three Months Ended March 31, 2019
Allowance for loan losses:
Balance , December 31, 2018	$	801	$	717	$	2,246	$	761	$	79	$	4,604
Provision (benefit) for loan losses		51		—		16		(54)		—		13
Reduction due to loan removals		(5)		—		(98)		—		—		(103)
Balance, March 31, 2019	$	847	$	717	$	2,164	$	707	$	79	$	4,514
Loans individually evaluated for impairment	$	—	$	—	$	—	$	—	$	—	$	—
Loans collectively evaluated for impairment	$	847	$	717	$	2,164	$	707	$	79	$	4,514
Loans:*
Loans individually evaluated for impairment	$	—	$	—	$	—	$	—	$	—	$	—
Loans collectively evaluated for impairment		173,707		32,257		199,701		40,182		10,925		456,772
Total acquired credit impaired loans	$	173,707	$	32,257	$	199,701	$	40,182	$	10,925	$	456,772

*— The carrying value of acquired credit impaired loans includes a non-accretable difference which is primarily associated with the assessment of credit quality of acquired loans.