LOANS AND ALLOWANCE FOR LOAN LOSSES

At March 31, 2019, the Company’s loan portfolio was $11.74 billion, compared to $11.72 billion at December 31, 2018. The various categories of loans are summarized as follows:



(In thousands)	March 31, 2019		December 31, 2018
Consumer:
Credit cards	$	181,549	$	204,173
Other consumer	213,659		201,297
Total consumer	395,208		405,470
Real Estate:
Construction	1,376,162		1,300,723
Single family residential	1,431,407		1,440,443
Other commercial	3,355,109		3,225,287
Total real estate	6,162,678		5,966,453
Commercial:
Commercial	1,801,422		1,774,909
Agricultural	147,216		164,514
Total commercial	1,948,638		1,939,423
Other	178,026		119,042
Loans	8,684,550		8,430,388
Loans acquired, net of discount and allowance ⁽¹⁾	3,056,187		3,292,783
Total loans	$	11,740,737	$	11,723,171

_____________________________

(1) See Note 5, Loans Acquired, for segregation of loans acquired by loan class.

Loan Origination/Risk Management – The Company seeks to manage its credit risk by diversifying its loan portfolio, determining that borrowers have adequate sources of cash flow for loan repayment without liquidation of collateral; obtaining and monitoring collateral; providing an adequate allowance for loans losses by regularly reviewing loans through the internal loan review process. The loan portfolio is diversified by borrower, purpose and industry. The Company seeks to use diversification within the loan portfolio to reduce its credit risk, thereby minimizing the adverse impact on the portfolio, if weaknesses develop in either the economy or a particular segment of borrowers. Collateral requirements are based on credit assessments of borrowers and may be used to recover the debt in case of default. Furthermore, a factor that influenced the Company’s judgment regarding the allowance for loan losses consists of a nine-year historical loss average segregated by each primary loan sector. On an annual basis, historical loss rates are calculated for each sector.

Consumer – The consumer loan portfolio consists of credit card loans and other consumer loans. Credit card loans are diversified by geographic region to reduce credit risk and minimize any adverse impact on the portfolio. Although they are regularly reviewed to facilitate the identification and monitoring of creditworthiness, credit card loans are unsecured loans, making them more susceptible to be impacted by economic downturns resulting in increasing unemployment. Other consumer loans include direct and indirect installment loans and overdrafts. Loans in this portfolio segment are sensitive to unemployment and other key consumer economic measures.

Real estate – The real estate loan portfolio consists of construction loans, single family residential loans and commercial loans. Construction and development loans (“C&D”) and commercial real estate loans (“CRE”) can be particularly sensitive to valuation of real estate. Commercial real estate cycles are inevitable. The long planning and production process for new properties and rapid shifts in business conditions and employment create an inherent tension between supply and demand for commercial properties. While general economic trends often move individual markets in the same direction over time, the timing and magnitude of changes are determined by other forces unique to each market. CRE cycles tend to be local in nature and longer than other credit cycles. Factors influencing the CRE market are traditionally different from those affecting residential real estate markets; thereby making predictions for one market based on the other difficult. Additionally, submarkets within commercial real estate – such as office, industrial, apartment, retail and hotel – also experience different cycles, providing an opportunity to lower the overall risk through diversification across types of CRE loans. Management realizes that local demand and supply conditions will also mean that different geographic areas will experience cycles of different amplitude and length. The Company monitors these loans closely.

Commercial – The commercial loan portfolio includes commercial and agricultural loans, representing loans to commercial customers and farmers for use in normal business or farming operations to finance working capital needs, equipment purchases or other expansion projects. Collection risk in this portfolio is driven by the creditworthiness of the underlying borrowers, particularly cash flow from customers’ business or farming operations. The Company continues its efforts to keep loan terms short, reducing the negative impact of upward movement in interest rates. Term loans are generally set up with one or three year balloons, and the Company has instituted a pricing mechanism for commercial loans. It is standard practice to require personal guaranties on commercial loans for closely-held or limited liability entities.

Nonaccrual and Past Due Loans – Loans are considered past due if the required principal and interest payments have not been received as of the date such payments were due. Loans are placed on nonaccrual status when, in management’s opinion, the borrower may be unable to meet payment obligations as they become due, as well as when required by regulatory provisions. Loans may be placed on nonaccrual status regardless of whether or not such loans are considered past due. When interest accrual is discontinued, all unpaid accrued interest is reversed. Interest income is subsequently recognized only to the extent cash payments are received in excess of principal due. Loans are returned to accrual status when all the principal and interest amounts contractually due are brought current and future payments are reasonably assured.

Nonaccrual loans, excluding loans acquired, segregated by class of loans, are as follows:



(In thousands)	March 31, 2019		December 31, 2018
Consumer:
Credit cards	$	338	$	296
Other consumer	1,555		2,159
Total consumer	1,893		2,455
Real estate:
Construction	2,570		1,269
Single family residential	15,324		11,939
Other commercial	8,612		7,205
Total real estate	26,506		20,413
Commercial:
Commercial	31,409		10,049
Agricultural	1,117		1,284
Total commercial	32,526		11,333
Total	$	60,925	$	34,201

An age analysis of past due loans, excluding loans acquired, segregated by class of loans, is as follows:



(In thousands)	Gross 30-89 Days Past Due		90 Days or More Past Due		Total Past Due		Current		Total Loans		90 Days Past Due & Accruing
March 31, 2019
Consumer:
Credit cards	$	733	$	561	$	1,294	$	180,255	$	181,549	$	222
Other consumer	3,018		489		3,507		210,152		213,659		52
Total consumer	3,751		1,050		4,801		390,407		395,208		274
Real estate:
Construction	961		909		1,870		1,374,292		1,376,162		—
Single family residential	10,226		5,491		15,717		1,415,690		1,431,407		7
Other commercial	4,384		4,652		9,036		3,346,073		3,355,109		—
Total real estate	15,571		11,052		26,623		6,136,055		6,162,678		7
Commercial:
Commercial	6,845		8,611		15,456		1,785,966		1,801,422		—
Agricultural	202		954		1,156		146,060		147,216		—
Total commercial	7,047		9,565		16,612		1,932,026		1,948,638		—
Other	—		—		—		178,026		178,026		—
Total	$	26,369	$	21,667	$	48,036	$	8,636,514	$	8,684,550	$	281

December 31, 2018
Consumer:
Credit cards	$	1,033	$	506	$	1,539	$	202,634	$	204,173	$	209
Other consumer	4,264		896		5,160		196,137		201,297		4
Total consumer	5,297		1,402		6,699		398,771		405,470		213
Real estate:
Construction	533		308		841		1,299,882		1,300,723		—
Single family residential	7,769		4,127		11,896		1,428,547		1,440,443		—
Other commercial	3,379		2,773		6,152		3,219,135		3,225,287		—
Total real estate	11,681		7,208		18,889		5,947,564		5,966,453		—
Commercial:
Commercial	4,472		5,105		9,577		1,765,332		1,774,909		11
Agricultural	467		1,055		1,522		162,992		164,514		—
Total commercial	4,939		6,160		11,099		1,928,324		1,939,423		11
Other	—		—		—		119,042		119,042		—
Total	$	21,917	$	14,770	$	36,687	$	8,393,701	$	8,430,388	$	224

Impaired Loans – A loan is considered impaired when it is probable that the Company will not receive all amounts due according to the contractual terms of the loans, including scheduled principal and interest payments. This includes loans that are delinquent 90 days or more, nonaccrual loans and certain other loans identified by management. Certain other loans identified by management consist of performing loans with specific allocations of the allowance for loan losses. Impaired loans are carried at the present value of estimated future cash flows using the loan’s existing rate, or the fair value of the collateral if the loan is collateral dependent.

Impairment is evaluated in total for smaller-balance loans of a similar nature and on an individual loan basis for other loans. Impaired loans, or portions thereof, are charged-off when deemed uncollectible.

Impaired loans, net of government guarantees and excluding loans acquired, segregated by class of loans, are as follows:



(In thousands)	Unpaid Contractual Principal Balance		Recorded Investment With No Allowance		Recorded Investment With Allowance		Total Recorded Investment		Related Allowance		Average Investment in Impaired Loans		Interest Income Recognized
March 31, 2019											Three Months Ended March 31, 2019
Consumer:
Credit cards	$	338	$	338	$	—	$	338	$	—	$	317	$	30
Other consumer	1,699		1,555		—		1,555		—		1,857		13
Total consumer	2,037		1,893		—		1,893		—		2,174		43
Real estate:
Construction	2,648		2,090		480		2,570		237		1,920		14
Single family residential	16,379		11,891		3,432		15,323		38		13,703		98
Other commercial	14,279		3,882		3,201		7,083		137		8,992		64
Total real estate	33,306		17,863		7,113		24,976		412		24,615		176
Commercial:
Commercial	38,420		6,268		23,327		29,595		108		20,739		148
Agricultural	2,215		583		532		1,115		1		1,147		8
Total commercial	40,635		6,851		23,859		30,710		109		21,886		156
Total	$	75,978	$	26,607	$	30,972	$	57,579	$	521	$	48,675	$	375



December 31, 2018											Three Months Ended March 31, 2018
Consumer:
Credit cards	$	296	$	296	$	—	$	296	$	—	$	234	$	15
Other consumer	2,311		2,159		—		2,159		—		4,658		34
Total consumer	2,607		2,455		—		2,455		—		4,892		49
Real estate:
Construction	1,344		784		485		1,269		211		2,082		16
Single family residential	12,906		11,468		616		12,084		36		13,523		100
Other commercial	8,434		5,442		5,458		10,900		—		16,287		120
Total real estate	22,684		17,694		6,559		24,253		247		31,892		236
Commercial:
Commercial	10,361		7,254		4,628		11,882		437		7,226		53
Agricultural	2,419		1,180		—		1,180		—		1,586		12
Total commercial	12,780		8,434		4,628		13,062		437		8,812		65
Total	$	38,071	$	28,583	$	11,187	$	39,770	$	684	$	45,596	$	350

At March 31, 2019 and December 31, 2018, impaired loans, net of government guarantees and excluding loans acquired, totaled $57.6 million and $39.8 million, respectively. Allocations of the allowance for loan losses relative to impaired loans were $521,000 and $684,000 at March 31, 2019 and December 31, 2018, respectively. Approximately $375,000 of interest income was recognized on average impaired loans of $48.7 million for the three months ended March 31, 2019. Interest income recognized on impaired loans on a cash basis during the three months ended March 31, 2019 and 2018 was not material.

Included in certain impaired loan categories are troubled debt restructurings (“TDRs”). When the Company restructures a loan to a borrower that is experiencing financial difficulty and grants a concession that it would not otherwise consider, a “troubled debt restructuring” results and the Company classifies the loan as a TDR. The Company grants various types of concessions, primarily interest rate reduction and/or payment modifications or extensions, with an occasional forgiveness of principal.

Under ASC Topic 310-10-35 – Subsequent Measurement, a TDR is considered to be impaired, and an impairment analysis must be performed. The Company assesses the exposure for each modification, either by collateral discounting or by calculation of the present value of future cash flows, and determines if a specific allocation to the allowance for loan losses is needed.

Once an obligation has been restructured because of such credit problems, it continues to be considered a TDR until paid in full; or, if an obligation yields a market interest rate and no longer has any concession regarding payment amount or amortization, then it is not considered a TDR at the beginning of the calendar year after the year in which the improvement takes place. The Company returns TDRs to accrual status only if (1) all contractual amounts due can reasonably be expected to be repaid within a prudent period, and (2) repayment has been in accordance with the contract for a sustained period, typically at least six months.

The following table presents a summary of troubled debt restructurings, excluding loans acquired, segregated by class of loans.



	Accruing TDR Loans			Nonaccrual TDR Loans			Total TDR Loans
(Dollars in thousands)	Number	Balance		Number	Balance		Number	Balance
March 31, 2019
Real estate:
Construction	—	$	—	3	$	480	3	$	480
Single-family residential	6	227		9	593		15	820
Other commercial	2	3,250		2	1,003		4	4,253
Total real estate	8	3,477		14	2,076		22	5,553
Commercial:
Commercial	4	2,820		5	427		9	3,247
Total commercial	4	2,820		5	427		9	3,247
Total	12	$	6,297	19	$	2,503	31	$	8,800

December 31, 2018
Real estate:
Construction	—	$	—	3	$	485	3	$	485
Single-family residential	6	230		10	616		16	846
Other commercial	2	3,306		2	1,027		4	4,333
Total real estate	8	3,536		15	2,128		23	5,664
Commercial:
Commercial	4	2,833		6	718		10	3,551
Total commercial	4	2,833		6	718		10	3,551
Total	12	$	6,369	21	$	2,846	33	$	9,215

There were no loans restructured as TDRs during the three months ended March 31, 2019. The following table presents loans that were restructured as TDRs during the three months ended March 31, 2018, excluding loans acquired, segregated by class of loans.



						Modification Type
(Dollars in thousands)	Number of Loans	Balance Prior to TDR		Balance at March 31,		Change in Maturity Date		Change in Rate		Financial Impact on Date of Restructure
Three Months Ended March 31, 2018
Consumer:
Other consumer	1	$	91	$	91	$	91	$	—	$	—
Total consumer	1	91		91		91		—		—
Real estate:
Single-family residential	1	61		62		62		—		—
Total real estate	1	61		62		62		—		—
Total	2	$	152	$	153	$	153	$	—	$	—

During the three months ended March 31, 2018, the Company modified 2 loans with a recorded investment of $152,000 prior to modification which were deemed troubled debt restructuring. The restructured loans were modified by deferring amortized principal payments, changing the maturity date and requiring interest only payments for a period of up to 12 months. A specific reserve was not considered necessary for these loans based upon the fair value of the collateral. Also, there was no immediate financial impact from the restructuring of these loans, as it was not considered necessary to charge-off interest or principal on the date of restructure.

There was one commercial loan considered a TDR for which a payment default occurred during the three months ended March 31, 2019. A charge-off of approximately $138,000 was recorded for this loan. There was one commercial real estate loan for which a payment default occurred during the three months ended March 31, 2018. A charge-off of $66,300 was recorded for this loan and $294,300 was transferred to OREO. The Company defines a payment default as a payment received more than 90 days after its due date.

In addition to the TDRs that occurred during the periods provided in the preceding tables, the Company had TDRs with pre-modification loan balances, specifically in commercial real estate, of $294,300 at March 31, 2018, for which OREO was received in full or partial satisfaction of the loans. There were no TDRs with pre-modification loan balance for which OREO was received in full or partial satisfaction of the loans during the three month period ended March 31, 2019. At March 31, 2019 and December 31, 2018, the Company had $3,498,000 and $3,899,000, respectively, of consumer mortgage loans secured by residential real estate properties for which formal foreclosure proceedings are in process. At March 31, 2019 and December 31, 2018, the Company had $4,716,000 and $3,530,000, respectively, of OREO secured by residential real estate properties.

Credit Quality Indicators – As part of the on-going monitoring of the credit quality of the Company’s loan portfolio, management tracks certain credit quality indicators including trends related to (i) the weighted-average risk rating of commercial and real estate loans, (ii) the level of classified commercial and real estate loans, (iii) net charge-offs, (iv) non-performing loans (see details above) and (v) the general economic conditions in the States of Arkansas, Colorado, Kansas, Missouri, Oklahoma, Tennessee and Texas.

The Company utilizes a risk rating matrix to assign a risk rate to each of its commercial and real estate loans. Loans are rated on a scale of 1 to 8. A description of the general characteristics of the 8 risk ratings is as follows:


•	Risk Rate 1 – Pass (Excellent) – This category includes loans which are virtually free of credit risk. Borrowers in this category represent the highest credit quality and greatest financial strength.


•	Risk Rate 2 – Pass (Good) - Loans under this category possess a nominal risk of default. This category includes borrowers with strong financial strength and superior financial ratios and trends. These loans are generally fully secured by cash or equivalents (other than those rated “excellent”).


•	Risk Rate 3 – Pass (Acceptable – Average) - Loans in this category are considered to possess a normal level of risk. Borrowers in this category have satisfactory financial strength and adequate cash flow coverage to service debt requirements. If secured, the perfected collateral should be of acceptable quality and within established borrowing parameters.

•

Risk Rate 4 – Pass (Monitor) - Loans in the Watch (Monitor) category exhibit an overall acceptable level of risk, but that risk may be increased by certain conditions, which represent “red flags”. These “red flags” require a higher level of supervision or monitoring than the normal “Pass” rated credit. The borrower may be experiencing these conditions for the first time, or it may be recovering from weakness, which at one time justified a higher rating. These conditions may include: weaknesses in financial trends; marginal cash flow; one-time negative operating results; non-compliance with policy or borrowing agreements; poor diversity in operations; lack of adequate monitoring information or lender supervision; questionable management ability/stability.

•

Risk Rate 5 – Special Mention - A loan in this category has potential weaknesses that deserve management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the asset or in the institution’s credit position at some future date. Special Mention loans are not adversely classified (although they are “criticized”) and do not expose an institution to sufficient risk to warrant adverse classification. Borrowers may be experiencing adverse operating trends, or an ill-proportioned balance sheet. Non-financial characteristics of a Special Mention rating may include management problems, pending litigation, a non-existent, or ineffective loan agreement or other material structural weakness, and/or other significant deviation from prudent lending practices.

•

Risk Rate 6 – Substandard - A Substandard loan is inadequately protected by the current sound worth and paying capacity of the borrower or of the collateral pledged, if any. Loans so classified must have a well-defined weakness, or weaknesses, that jeopardize the liquidation of the debt. The loans are characterized by the distinct possibility that the Company will sustain some loss if the deficiencies are not corrected. This does not imply ultimate loss of the principal, but may involve burdensome administrative expenses and the accompanying cost to carry the loan.

•

Risk Rate 7 – Doubtful - A loan classified Doubtful has all the weaknesses inherent in a substandard loan except that the weaknesses make collection or liquidation in full (on the basis of currently existing facts, conditions, and values) highly questionable and improbable. Doubtful borrowers are usually in default, lack adequate liquidity, or capital, and lack the resources necessary to remain an operating entity. The possibility of loss is extremely high, but because of specific pending events that may strengthen the asset, its classification as loss is deferred. Pending factors include: proposed merger or acquisition; liquidation procedures; capital injection; perfection of liens on additional collateral; and refinancing plans. Loans classified as Doubtful are placed on nonaccrual status.

•

Risk Rate 8 – Loss - Loans classified Loss are considered uncollectible and of such little value that their continuance as bankable assets is not warranted. This classification does not mean that the loans has absolutely no recovery or salvage value, but rather it is not practical or desirable to defer writing off this basically worthless loan, even though partial recovery may be affected in the future. Borrowers in the Loss category are often in bankruptcy, have formally suspended debt repayments, or have otherwise ceased normal business operations. Loans should be classified as Loss and charged-off in the period in which they become uncollectible.

Loans acquired are evaluated using this internal grading system. Loans acquired are evaluated individually and include purchased credit impaired loans of $3.7 million and $4.1 million that are accounted for under ASC Topic 310-30 and are classified as substandard (Risk Rating 6) as of March 31, 2019 and December 31, 2018, respectively. Of the remaining loans acquired and accounted for under ASC Topic 310-20, $77.2 million and $50.4 million were classified (Risk Ratings 6, 7 and 8 – see classified loans discussion below) at March 31, 2019 and December 31, 2018, respectively.

Purchased credit impaired loans are loans that showed evidence of deterioration of credit quality since origination and for which it is probable, at acquisition, that the Company will be unable to collect all amounts contractually owed. Their fair value was initially based on the estimate of cash flows, both principal and interest, expected to be collected or estimated collateral values if cash flows are not estimable, discounted at prevailing market rates of interest. The difference between the undiscounted cash flows expected at acquisition and the fair value at acquisition is recognized as interest income on a level-yield method over the life of the loan. Contractually required payments for interest and principal that exceed the undiscounted cash flows expected at acquisition are not recognized as a yield adjustment. Increases in expected cash flows subsequent to the initial investment are recognized prospectively through adjustment of the yield on the loan over its remaining life. Decreases in expected cash flows are recognized as impairment.

Classified loans for the Company include loans in Risk Ratings 6, 7 and 8. Loans may be classified, but not considered impaired, due to one of the following reasons: (1)The Company has established minimum dollar amount thresholds for loan impairment testing. Loans rated 6 – 8 that fall under the threshold amount are not tested for impairment and therefore are not included in impaired loans. (2) Of the loans that are above the threshold amount and tested for impairment, after testing, some are considered to not be impaired and are not included in impaired loans. Total classified loans, excluding loans accounted for under ASC Topic 310-30, were $177.4 million and $119.0 million, as of March 31, 2019 and December 31, 2018, respectively.

The following table presents a summary of loans by credit risk rating as of March 31, 2019 and December 31, 2018, segregated by class of loans. Loans accounted for under ASC Topic 310-30 are all included in Risk Rate 1-4 in this table.



(In thousands)	Risk Rate 1-4		Risk Rate 5		Risk Rate 6		Risk Rate 7		Risk Rate 8		Total
March 31, 2019
Consumer:
Credit cards	$	180,988	$	—	$	561	$	—	$	—	$	181,549
Other consumer	211,642		—		2,017		—		—		213,659
Total consumer	392,630		—		2,578		—		—		395,208
Real estate:
Construction	1,372,113		443		3,606		—		—		1,376,162
Single family residential	1,407,554		1,784		21,839		230		—		1,431,407
Other commercial	3,313,139		21,629		20,341		—		—		3,355,109
Total real estate	6,092,806		23,856		45,786		230		—		6,162,678
Commercial:
Commercial	1,745,162		9,671		46,589		—		—		1,801,422
Agricultural	145,828		67		1,321		—		—		147,216
Total commercial	1,890,990		9,738		47,910		—		—		1,948,638
Other	178,026		—		—		—		—		178,026
Loans acquired	2,930,179		45,157		80,515		336		—		3,056,187
Total	$	11,484,631	$	78,751	$	176,789	$	566	$	—	$	11,740,737



(In thousands)	Risk Rate 1-4		Risk Rate 5		Risk Rate 6		Risk Rate 7		Risk Rate 8		Total
December 31, 2018
Consumer:
Credit cards	$	203,667	$	—	$	506	$	—	$	—	$	204,173
Other consumer	198,840		—		2,457		—		—		201,297
Total consumer	402,507		—		2,963		—		—		405,470
Real estate:
Construction	1,296,988		1,910		1,825		—		—		1,300,723
Single family residential	1,420,052		1,628		18,528		235		—		1,440,443
Other commercial	3,193,289		17,169		14,829		—		—		3,225,287
Total real estate	5,910,329		20,707		35,182		235		—		5,966,453
Commercial:
Commercial	1,742,002		8,357		24,550		—		—		1,774,909
Agricultural	162,824		75		1,615		—		—		164,514
Total commercial	1,904,826		8,432		26,165		—		—		1,939,423
Other	119,042		—		—		—		—		119,042
Loans acquired	3,187,083		51,255		54,097		348		—		3,292,783
Total	$	11,523,787	$	80,394	$	118,407	$	583	$	—	$	11,723,171

Allowance for Loan Losses

Allowance for Loan Losses – The allowance for loan losses is a reserve established through a provision for loan losses charged to expense, which represents management’s best estimate of probable losses that have been incurred within the existing portfolio of loans. The allowance, in the judgment of management, is necessary to reserve for estimated loan losses and risks inherent in the loan portfolio. The Company’s allowance for loan loss methodology includes allowance allocations calculated in accordance with ASC Topic 310-10, Receivables, and allowance allocations calculated in accordance with ASC Topic 450-20, Loss Contingencies. Accordingly, the methodology is based on the Company’s internal grading system, specific impairment analysis, qualitative and quantitative factors.

As mentioned above, allocations to the allowance for loan losses are categorized as either specific allocations or general allocations.

A loan is considered impaired when it is probable that the Company will not receive all amounts due according to the contractual terms of the loan, including scheduled principal and interest payments. For a collateral dependent loan, the Company’s evaluation process includes a valuation by appraisal or other collateral analysis. This valuation is compared to the remaining outstanding principal balance of the loan. If a loss is determined to be probable, the loss is included in the allowance for loan losses as a specific allocation. If the loan is not collateral dependent, the measurement of loss is based on the difference between the expected and contractual future cash flows of the loan.

The general allocation is calculated monthly based on management’s assessment of several factors such as (1) historical loss experience based on volumes and types, (2) volume and trends in delinquencies and nonaccruals, (3) lending policies and procedures including those for loan losses, collections and recoveries, (4) national, state and local economic trends and conditions, (5) external factors and pressure from competition, (6) the experience, ability and depth of lending management and staff, (7) seasoning of new products obtained and new markets entered through acquisition and (8) other factors and trends that will affect specific loans and categories of loans. The Company establishes general allocations for each major loan category. This category also includes allocations to loans which are collectively evaluated for loss such as credit cards, one-to-four family owner occupied residential real estate loans and other consumer loans.

The following table details activity in the allowance for loan losses by portfolio segment for legacy loans for the three months ended March 31, 2019. Allocation of a portion of the allowance to one category of loans does not preclude its availability to absorb losses in other categories.



(In thousands)	Commercial			Real Estate			Credit Card			Other Consumer and Other			Total
Three Months Ended March 31, 2019
Balance, beginning of period ⁽²⁾	$	20,514		$	29,743		$	3,923		$	2,419		$	56,599
Provision for loan losses ⁽¹⁾	1,874			2,843			898			1,206			6,821
Charge-offs	(1,968		)	(374		)	(1,142		)	(1,533		)	(5,017		)
Recoveries	158			142			240			300			840
Net charge-offs	(1,810		)	(232		)	(902		)	(1,233		)	(4,177		)
Balance, March 31, 2019 ⁽²⁾	$	20,578		$	32,354		$	3,919		$	2,392		$	59,243

Period-end amount allocated to:
Loans individually evaluated for impairment	$	109		$	412		$	—		$	—		$	521
Loans collectively evaluated for impairment	20,469			31,942			3,919			2,392			58,722
Balance, March 31, 2019 ⁽²⁾	$	20,578		$	32,354		$	3,919		$	2,392		$	59,243

Activity in the allowance for loan losses for the three months ended March 31, 2018 was as follows:



(In thousands)	Commercial			Real Estate			Credit Card			Other Consumer and Other			Total
Three Months Ended March 31, 2018
Balance, beginning of period ⁽³⁾	$	7,007		$	27,281		$	3,784		$	3,596		$	41,668
Provision for loan losses ⁽¹⁾	4,286			3,286			751			759			9,082
Charge-offs	(1,761		)	(455		)	(999		)	(1,056		)	(4,271		)
Recoveries	69			302			263			94			728
Net charge-offs	(1,692		)	(153		)	(736		)	(962		)	(3,543		)
Balance, March 31, 2018 ⁽²⁾	$	9,601		$	30,414		$	3,799		$	3,393		$	47,207

Period-end amount allocated to:
Loans individually evaluated for impairment	$	18		$	426		$	—		$	—		$	444
Loans collectively evaluated for impairment	9,583			29,988			3,799			3,393			46,763
Balance, March 31, 2018 ⁽²⁾	$	9,601		$	30,414		$	3,799		$	3,393		$	47,207

Period-end amount allocated to:
Loans individually evaluated for impairment	$	437		$	247		$	—		$	—		$	684
Loans collectively evaluated for impairment	20,077			29,496			3,923			2,419			55,915
Balance, December 31, 2018⁽²⁾	$	20,514		$	29,743		$	3,923		$	2,419		$	56,599

______________________

(1) Provision for loan losses of $2,464,000 attributable to loans acquired was excluded from this table for the three months ended March 31, 2019 (total provision for loan losses for the three months ended March 31, 2019 was $9,285,000). There were $1,247,000 in charge-offs for loans acquired during the three months ended March 31, 2019, resulting in an ending balance in the allowance related to loans acquired of $1,312,000. Provision for loan losses of $68,000 attributable to loans acquired was excluded from this table for the three months ended March 31, 2018 (total provision for loan losses for the three months ended March 31, 2018 was $9,150,000). There were $79,000 in charge-offs for loans acquired during the three months ended March 31, 2018, resulting in an ending balance in the allowance related to loans acquired of $407,000.

(2) Allowance for loan losses at March 31, 2019 includes $1,312,000 allowance for loans acquired (not shown in the table above). Allowance for loan losses at December 31, 2018 and March 31, 2018 includes $95,000 and $407,000, respectively, of allowance for loans acquired (not shown in the table above). The total allowance for loan losses at March 31, 2019 was $60,555,000 and total allowance for loan losses at December 31, 2018 and March 31, 2018 was $56,694,000 and $47,614,000, respectively.

(3) Allowance for loan losses at December 31, 2017 includes $418,000 allowance for loans acquired (not shown in the table above). The total allowance for loan losses at December 31, 2017 was $42,086,000.

The Company’s recorded investment in loans, excluding loans acquired, related to each balance in the allowance for loan losses by portfolio segment on the basis of the Company’s impairment methodology was as follows:



(In thousands)	Commercial		Real Estate		Credit Card		Other Consumer and Other		Total
March 31, 2019
Loans individually evaluated for impairment	$	30,710	$	24,976	$	338	$	1,555	$	57,579
Loans collectively evaluated for impairment	1,917,928		6,137,702		181,211		390,130		8,626,971
Balance, end of period	$	1,948,638	$	6,162,678	$	181,549	$	391,685	$	8,684,550

December 31, 2018
Loans individually evaluated for impairment	$	13,062	$	24,253	$	296	$	2,159	$	39,770
Loans collectively evaluated for impairment	1,926,361		5,942,200		203,877		318,180		8,390,618
Balance, end of period	$	1,939,423	$	5,966,453	$	204,173	$	320,339	$	8,430,388