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LOANS
 12 Months Ended
Dec. 31, 2022
Receivables [Abstract]  
LOANS LOANS
The Company uses four different categories to classify loans in its portfolio based on the underlying collateral securing each loan. The loans grouped together in each category have been determined to share similar risk characteristics with respect to credit quality. Those four categories are commercial, financial and agriculture, commercial real estate, consumer real estate, consumer installment;
Commercial, financial and agriculture - Commercial, financial and agriculture loans include loans to business entities issued for commercial, industrial, or other business purposes. This type of commercial loan shares a similar risk characteristic in that unlike commercial real estate loans, repayment is largely dependent on cash flow generated from the operation of the business.
Commercial real estate - Commercial real estate loans are grouped as such because repayment is mainly dependent upon either the sale of the real estate, operation of the business occupying the real estate, or refinance of the debt obligation. This includes both owner-occupied and non-owner occupied CRE secured loans, because they share similar risk characteristics related to these variables.
Consumer real estate - Consumer real estate loans consist primarily of loans secured by 1-4 family residential properties and/or residential lots. This includes loans for the purpose of constructing improvements on the residential property, as well as home equity lines of credit.
Consumer installment - Installment and other loans are all loans issued to individuals that are not for any purpose related to operation of a business, and not secured by real estate. Repayment on these loans is mostly dependent on personal income, which may be impacted by general economic conditions.
The composition of the loan portfolio as of December 31, 2022 and December 31, 2021, is summarized below:
($ in thousands)December 31, 2022December 31, 2021
Loans held for sale
Mortgage loans held for sale$4,443 $7,678 
Total LHFS$4,443 $7,678 
  
Loans held for investment  
Commercial, financial and agriculture (1)$536,192 $397,516 
Commercial real estate2,135,263 1,683,698 
Consumer real estate1,058,999 838,654 
Consumer installment43,703 39,685 
Total loans3,774,157 2,959,553 
Less allowance for credit losses (38,917)(30,742)
Net LHFI$3,735,240 $2,928,811 
______________________________________
(1)Loan balance includes $710 thousand and $41.1 million in PPP loans as of December 31, 2022 and 2021, respectively.
Loans held for sale consist of mortgage loans originated by the Bank and sold into the secondary market. Commitments from investors to purchase the loans are obtained upon origination.
Accrued interest receivable is not included in the amortized cost basis of the Company’s LHFI. At December 31, 2022 and 2021, accrued interest receivable for LHFI totaled $18.0 million and $16.4 million, respectively, with no related ACL and was reported in interest receivable on the accompanying consolidated balance sheet.
Nonaccrual and Past Due LHFI
Past due LHFI are loans contractually past due 30 days or more as to principal or interest payments. Generally, the Company will place a delinquent loan in nonaccrual status when the loan becomes 90 days or more past due. At the time a loan is placed in nonaccrual status, all interest which has been accrued on the loan but remains unpaid is reversed and deducted from earnings as a reduction of reported interest income. No additional interest is accrued on the loan balance until the collection of both principal and interest becomes reasonably certain.
The following tables presents the aging of the amortized cost basis in past due loans in addition to those loans classified as nonaccrual including PCD loans:
December 31, 2022
($ in thousands)Past Due
30 to 89
Days		Past Due 90
Days or More
and
Still Accruing		NonaccrualPCDTotal
Past Due,
Nonaccrual
and PCD		Total
LHFI		Nonaccrual
and PCD
with No
ACL
Commercial, financial and agriculture (1)$220 $— $19 $— $239 $536,192 $— 
Commercial real estate1,984 — 7,445 1,129 10,558 2,135,263 4,560 
Consumer real estate3,386 289 2,965 1,032 7,672 1,058,999 791 
Consumer installment173 — 1 — 174 43,703 — 
Total$5,763 $289 $10,430 $2,161 $18,643 $3,774,157 $5,351 
______________________________________
(1)Total loan balance includes $710 thousand in PPP loans as of December 31, 2022.
December 31, 2021
($ in thousands)Past Due
30 to 89
Days		Past Due 90
Days or More
and
Still Accruing		NonaccrualPCDTotal
Past Due,
Nonaccrual
and PCD		Total
LHFI		Nonaccrual
and PCD
with No
ACL
Commercial, financial and agriculture (1)$246 $— $190 $— $436 $397,516 $— 
Commercial real estate453 — 19,445 2,082 21,980 1,683,698 1,661 
Consumer real estate2,140 45 3,776 2,512 8,473 838,654 1,488 
Consumer installment121 — 7 1 129 39,685 — 
Total$2,960 $45 $23,418 $4,595 $31,018 $2,959,553 $3,149 
______________________________________
(1)Total loan balance includes $41.1 million in PPP loans as of December 31, 2021.
Acquired Loans
In connection with the acquisitions, the Company acquired loans both with and without evidence of credit quality deterioration since origination. Acquired loans are recorded at their fair value at the time of acquisition with no carryover from the acquired institution's previously recorded allowance for credit losses. Acquired loans are accounted for under the following accounting pronouncements: ASC 326, Financial Instruments - Credit Losses.
The fair value for acquired loans recorded at the time of acquisition is based upon several factors including the timing and payment of expected cash flows, as adjusted for estimated credit losses and prepayments, and then discounting these cash flows using comparable market rates. The resulting fair value adjustment is recorded in the form of premium or discount to the unpaid principal balance of each acquired loan. As it relates to acquired PCD loans, the net premium or net discount is adjusted to reflect the Company's allowance for credit losses ("ACL") recorded for PCD loans at the time of acquisition, and the remaining fair value adjustment is accreted or amortized into interest income over the remaining life of the loan. As it relates to acquired loans not classified as PCD ("non-PCD") loans, the credit loss and yield components of the fair value adjustments are aggregated, and the resulting net premium or net discount is accreted or amortized into interest income over the average remaining life of those loans. The Company records an ACL for non-PCD loans at the time of acquisition through provision expense, and therefore, no further adjustments are made to the net premium or net discount for non-PCD loans.
The estimated fair value of the non-PCD loans acquired in the BBI acquisition was $460.0 million, which is net of a $8.8 million discount. The gross contractual amounts receivable of the acquired non-PCD loans at acquisition was approximately $468.8 million, of which $6.4 million is the amount of contractual cash flows not expected to be collected.
The following table shows the carrying amount of loans acquired in the BBI acquisition transaction for which there was, at the date of acquisition, more than insignificant deterioration of credit quality since origination:
($ in thousands)Carrying Amount
Purchase price of loans at acquisition$27,669 
Allowance for credit losses at acquisition1,303 
Non-credit discount (premium) at acquisition530 
Par value of acquired loans at acquisition$29,502 
As of December 31, 2022 and 2021, the amortized cost of the Company’s PCD loans totaled $24.0 million and $8.6 million, respectively, which had an estimated ACL of $1.7 million and $855 thousand, respectively.
Impaired LHFI
Prior to the adoption of FASB ASC 326, the Company individually evaluated impaired LHFI. The following table provides a detail of impaired loans broken out according to class as of December 31, 2020. The following table does not include PCI loans. The recorded investment included in the following table represents customer balances net of any partial
charge-offs recognized on the loans, net of any deferred fees and costs. Recorded investment excludes any insignificant amount of accrued interest receivable on loans 90-days or more past due and still accruing. The unpaid balance represents the recorded balance prior to any partial charge-offs.
December 31, 2020Recorded
Investment		Unpaid
Balance		Related
Allowance		Average
Recorded
Investment
YTD		Interest
Income
Recognized
YTD
($ in thousands)
Impaired loans with no related allowance:
Commercial, financial and agriculture$— $— $— $198 $— 
Commercial real estate5,884 6,087 — 11,433 47 
Consumer real estate712 758 — 790 5 
Consumer installment23 24 — 17 — 
Total$6,619 $6,869 $— $12,438 $52 
Impaired loans with a related allowance:
Commercial, financial and agriculture$2,241 $2,254 $1,235 $2,186 $58 
Commercial real estate17,973 18,248 4,244 13,687 36 
Consumer real estate536 544 176 734 4 
Consumer installment26 26 14 86 — 
Total$20,776 $21,072 $5,669 $16,693 $98 
Total impaired loans:
Commercial, financial and agriculture$2,241 $2,254 $1,235 $2,384 $58 
Commercial real estate23,857 24,335 4,244 25,120 83 
Consumer real estate1,248 1,302 176 1,524 9 
Consumer installment49 50 14 103 — 
Total Impaired Loans $27,395 $27,941 $5,669 $29,131 $150 
The cash basis interest earned in the chart above is materially the same as the interest recognized during impairment for the year ended December 31, 2020.
The gross interest income that would have been recorded in the period that ended if the nonaccrual loans had been current in accordance with their original terms and had been outstanding throughout the period or since origination, if held for part of twelve months for the year ended December 31, 2020, was $1.5 million. The Company had no loan commitments to borrowers in nonaccrual status at December 31, 2020.
Troubled Debt Restructurings
If the Company grants a concession to a borrower for economic or legal reasons related to a borrower’s financial difficulties that it would not otherwise consider, the loan is classified as TDRs.
As of December 31, 2022, 2021, and 2020 the Company had TDRs totaling $21.8 million, $24.2 million, and $27.5 million, respectively. As of December 31, 2022, the Company had no additional amount committed on any loan classified as TDR. As of December 31, 2022 and 2021, TDRs had a related ACL of $841 thousand and $4.3 million, respectively, compared to a related allowance for loan loss of $4.1 million at December 31, 2020.
The following table presents LHFI by class modified as TDRs that occurred during the twelve months ended December 31, 2022, 2021, and 2020 ($ in thousands, except for number of loans).
December 31, 2022Number of
Loans		Outstanding
Recorded
Investment
Pre-Modification		Outstanding
Recorded
Investment
Post-Modification		Interest
Income
Recognized
Consumer real estate1$134 $135 $7 
Total1$134 $135 $7 
December 31, 2021
Commercial, financial and agriculture1$38 $37 $4 
Commercial real estate55,151 4,890 230 
Consumer real estate4222 187 5 
Consumer installment113 1 — 
Total11$5,424 $5,115 $239 
December 31, 2020
Commercial, financial and agriculture1$12 $9 $2 
Commercial real estate72,067 2,042 40 
Consumer installment11 1 — 
Total9$2,080 $2,052 $42 
The TDRs presented above increased the ACL $22 thousand and $1.6 million and increased the allowance for loan losses $127 thousand and resulted in no charge-offs for the years ended December 31, 2022, 2021, and 2020, respectively.
The following table presents loans by class modified as TDRs for which there was a payment default within twelve months following the modification during the year ending December 31, 2022, 2021, and 2020 ($ in thousands, except for number of loans).
202220212020
Troubled Debt Restructurings
That Subsequently Defaulted:		Number of
Loans		Recorded
Investment		Number of
Loans		Recorded
Investment		Number of
Loans		Recorded
Investment
Commercial real estate—$— —$— 4$1,121 
Consumer real estate1134 255 —— 
Total1$134 2$55 4$1,121 
The modifications described above included one of the following or a combination of the following: maturity date extensions, interest only payments, amortizations were extended beyond what would be available on similar type loans, and payment waiver. No interest rate concessions were given on these loans nor were any of these loans written down. A loan is considered to be in a payment default once it is 30 days contractually past due under the modified terms. The TDRs presented above increased the ACL $22 thousand and $21 thousand and the allowance for loan losses $81 thousand and resulted in no charge-offs for the years ended December 31, 2022, 2021, and 2020 respectively.
The following tables represents the Company’s TDRs at December 31, 2022 and 2021:
December 31, 2022
($ in thousands)Current
Loans		Past Due
30-89		Past Due 90
days and still
accruing		 NonaccrualTotal
Commercial, financial and agriculture $49 $— $— $— $49 
Commercial real estate13,561 — — 6,121 19,682 
Consumer real estate1,077 — — 929 2,006 
Consumer installment14 — — — 14 
Total$14,701 $— $— $7,050 $21,751 
Allowance for credit losses$350 $— $— $491 $841 
December 31, 2021
($ in thousands)Current
Loans		Past Due
30-89		Past Due 90
days and still
accruing		NonaccrualTotal
Commercial, financial and agriculture$63 $— $— $107 $170 
Commercial real estate3,367 — — 16,858 20,225 
Consumer real estate1,772 — — 1,973 3,745 
Consumer installment18 — — — 18 
Total$5,220 $— $— $18,938 $24,158 
Allowance for loan losses$90 $— $— $4,217 $4,307 
Collateral Dependent Loans
The following table presents the amortized cost basis of collateral dependent individually evaluated loans by class of loans as of December 31, 2022 and 2021:
December 31, 2022
($ in thousands)Real PropertyTotal
Commercial real estate$4,560 $4,560 
Consumer real estate998 998 
Total$5,558 $5,558 
December 31, 2021
($ in thousands)Real PropertyTotal
Commercial real estate$1,712 $1,712 
Consumer real estate1,858 1,858 
Total$3,570 $3,570 
A loan is collateral dependent when the borrower is experiencing financial difficulty and repayment of the loan is expected to be provided substantially through the sale of the collateral. The following provides a qualitative description by class of loan of the collateral that secures the Company’s collateral-dependent LHFI:
•Commercial, financial and agriculture – Loans within these loan classes are secured by equipment, inventory accounts, and other non-real estate collateral.
•Commercial real estate – Loans within these loan classes are secured by commercial real property.
•Consumer real estate - Loans within these loan classes are secured by consumer real property.
•Consumer installment - Loans within these loan classes are secured by consumer goods, equipment, and non-real estate collateral.
There have been no significant changes to the collateral that secures these financial assets during the period.
Loan Participations
The Company has loan participations, which qualify as participating interest, with other financial institutions. As of December 31, 2022, these loans totaled $202.6 million, of which $100.1 million had been sold to other financial institutions and $102.5 million was purchased by the Company. As of December 31, 2021, these loans totaled $118.4 million, of which $77.8 million had been sold to other financial institutions and $40.6 million was purchased by the company. The loan participations convey proportionate ownership rights with equal priority to each participating interest holder; involving no recourse (other than ordinary representations and warranties) to, or subordination by, any participating interest holder; all cash flows are divided among the participating interest holders in proportion to each holder’s share of ownership; and no holder has the right to pledge the entire financial asset unless all participating interest holders agree.
Credit Quality Indicators
The Company categorizes loans into risk categories based on relevant information about the ability of borrowers to service their debt, such as current financial information, historical payment experience, credit documentation, public information, and current economic trends, among other factors. The Company analyzes loans individually to classify the loans as to credit risk. The Company uses the following definitions for risk ratings:
Pass: Loan classified as pass are deemed to possess average to superior credit quality, requiring no more than normal attention.
Special Mention: Loans classified as special mention have a potential weakness that deserves management's close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or of the Company’s credit position at some future date.
Substandard: Loans classified as substandard are inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. Loans so classified have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the institution will sustain some loss if the deficiencies are not corrected.
Doubtful: Loans classified as doubtful have all the weaknesses inherent in those classified as substandard, with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable.
These above classifications were the most current available as of December 31, 2022, and were generally updated within the prior year.
The tables below present the amortized cost basis of loans by credit quality indicator and class of loans based on the most recent analysis performed at year ends December 31, 2022 and 2021 . Revolving loans converted to term as of year ended December 31, 2022 and 2021 were not material to the total loan portfolio.
($ in thousands)Term Loans Amortized Cost Basis by Origination Year
As of December 31, 2022
20222021202020192018PriorRevolving
Loans		Total
Commercial, financial and agriculture:
Risk Rating
Pass$181,761 $141,174 $55,690 $53,954 $43,441 $52,038 $181 $528,239 
Special mention380 5,188 1,664 — — 412 — 7,644 
Substandard50 — — 34 33 192 — 309 
Doubtful— — — — — — — — 
Total commercial, financial and agriculture$182,191 $146,362 $57,354 $53,988 $43,474 $52,642 $181 $536,192 
Commercial real estate:        
Risk Rating
Pass$582,895 $436,661 $305,140 $217,626 $140,682 $368,185 $1,765 $2,052,954 
Special mention672 1,345 3,938 11,643 9,885 16,612 — 44,095 
Substandard50 2,830 908 1,694 4,797 27,935 — 38,214 
Doubtful— — — — — — — — 
Total commercial real estate$583,617 $440,836 $309,986 $230,963 $155,364 $412,732 $1,765 $2,135,263 
Consumer real estate:        
Risk Rating
Pass$325,853 $226,355 $136,052 $59,376 $51,515 $129,923 $112,278 $1,041,352 
Special mention— — — — 823 3,846 — 4,669 
Substandard519 554 1,481 648 1,706 6,894 1,176 12,978 
Doubtful— — — — — — — — 
Total consumer real estate$326,372 $226,909 $137,533 $60,024 $54,044 $140,663 $113,454 $1,058,999 
Consumer installment:
Risk Rating
Pass$18,925 $11,618 $5,031 $2,078 $832 $1,445 $3,725 $43,654 
Special mention— — — — — — — — 
Substandard4 13 24 — 3 5 — 49 
Doubtful— — — — — — — — 
Total consumer installment$18,929 $11,631 $5,055 $2,078 $835 $1,450 $3,725 $43,703 
Total
Pass$1,109,434 $815,808 $501,913 $333,034 $236,470 $551,591 $117,949 $3,666,199 
Special mention1,052 6,533 5,602 11,643 10,708 20,870 — 56,408 
Substandard623 3,397 2,413 2,376 6,539 35,026 1,176 51,550 
Doubtful— — — — — — — — 
Total$1,111,109 $825,738 $509,928 $347,053 $253,717 $607,487 $119,125 $3,774,157 
($ in thousands)Term Loans Amortized Cost Basis by Origination Year
As of December 31, 2021
20212020201920182017PriorRevolving
Loans		Total
Commercial, financial and agriculture:
Risk Rating
Pass$152,798 $60,106 $52,802 $47,988 $22,083 $43,773 $178 $379,728 
Special mention— 255 749 90 481 29 — 1,604 
Substandard— — 1,398 6,184 360 8,242 — 16,184 
Doubtful— — — — — — — — 
Total commercial, financial and agriculture$152,798 $60,361 $54,949 $54,262 $22,924 $52,044 $178 $397,516 
Commercial real estate:        
Risk Rating
Pass$402,284 $313,288 $207,879 $177,943 $134,234 $332,588 $— $1,568,216 
Special mention1,326 2,259 1,782 15,076 2,779 15,519 — 38,741 
Substandard3,904 3,189 1,931 17,147 18,814 31,756 — 76,741 
Doubtful— — — — — — — — 
Total commercial real estate$407,514 $318,736 $211,592 $210,166 $155,827 $379,863 $— $1,683,698 
Consumer real estate:        
Risk Rating
Pass$243,340 $164,359 $70,465 $66,940 $51,988 $121,238 $98,444 $816,774 
Special mention— — 331 26 1,746 1,949 — 4,052 
Substandard444 532 1,280 3,410 1,288 9,241 1,633 17,828 
Doubtful— — — — — — — — 
Total consumer real estate$243,784 $164,891 $72,076 $70,376 $55,022 $132,428 $100,077 $838,654 
Consumer installment:
Risk Rating
Pass$17,980 $9,245 $4,222 $1,645 $1,088 $1,758 $3,697 $39,635 
Special mention— — — — 1 — — 1 
Substandard— 26 3 5 8 7 — 49 
Doubtful— — — — — — — — 
Total consumer installment$17,980 $9,271 $4,225 $1,650 $1,097 $1,765 $3,697 $39,685 
Total
Pass$816,402 $546,998 $335,368 $294,516 $209,393 $499,357 $102,319 $2,804,353 
Special mention1,326 2,514 2,862 15,192 5,007 17,497 — 44,398 
Substandard4,348 3,747 4,612 26,746 20,470 49,246 1,633 110,802 
Doubtful— — — — — — — — 
Total $822,076 $553,259 $342,842 $336,454 $234,870 $566,100 $103,952 $2,959,553 
Allowance for Credit Losses (ACL)
The ACL is a valuation account that is deducted from loans’ amortized cost basis to present the net amount expected to be collected on the loans. It is comprised of a general allowance for loans that are collectively assessed in pools with similar risk characteristics and a specific allowance for individually assessed loans. The allowance is continuously monitored by management to maintain a level adequate to absorb expected losses inherent in the loan portfolio.
The ACL represents the estimated losses for financial assets accounted for on an amortized cost basis. Expected losses are calculated using relevant information, from internal and external sources, about past events, including historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amount. Historical credit loss experience provides the basis for the estimation of expected credit losses. Adjustments to historical loss information are made for differences in current loan-specific risk characteristics such as differences in underwriting standards, portfolio mix, delinquency level, or term as well as for changes in environment conditions, such as changes in unemployment rates, property values, or other relevant factors. Management may selectively apply external market data to subjectively adjust the Company’s own loss history including index or peer data. Expected losses are estimated over the contractual term of the loans, adjusted for expected prepayments. The contractual term excludes expected extensions, renewals, and modifications. Loans are charged-off against the allowance when management believes the uncollectibility of a loan balance is confirmed and recoveries are credited to the allowance when received. Expected recovery amounts may not exceed the aggregate of amounts previously charged-off.
The ACL is measured on a collective basis when similar risk characteristics exist. Generally, collectively assessed loans are grouped by call code (segments). Segmenting loans by call code will group loans that contain similar types of collateral, purposes, and are usually structured with similar terms making each loan’s risk profile very similar to the rest in that segment. Each of these segments then flows up into one of the four bands (bands), Commercial, Financial, and Agriculture, Commercial Real Estate, Consumer Real Estate, and Consumer Installment. In accordance with the guidance in ASC 326, the Company redefined its LHFI portfolio segments and related loan classes based on the level at which risk is monitored within the ACL methodology. Construction loans for 1-4 family residential properties with a call code 1A1, and other construction, all land development and other land loans with a call code 1A2 were previously separated between the Commercial Real Estate or Consumer Real Estate bands based on loan type code. Under our ASC 326 methodology 1A1 loans are all defined as part of the Consumer Real Estate band and 1A2 loans are all defined as part of the Commercial Real Estate Band.
The PD calculation analyzes the historical loan portfolio over the given lookback period to identify, by segment, loans that have defaulted. A default is defined as a loan that has moved to past due 90 days and greater, nonaccrual status, or experienced a charge-off during the period. The model observes loans over a 12-month window, detecting any events previously defined. This information is then used by the model to calculate annual iterative count-based PD rates for each segment. This process is then repeated for all dates within the historical data range. These averaged PD’s are used for an immediate reversion back to the historical mean. The historical data used to calculate this input was captured by the Company from 2009 through the most recent quarter end.
The Company utilizes reasonable and supportable forecasts of future economic conditions when estimating the ACL on loans. The model’s calculation also includes a 24-month forecasted PD based on a regression model that calculated a comparison of the Company’s historical loan data to various national economic metrics during the same periods. The results showed the Company’s past losses having a high rate of correlation to unemployment, both regionally and nationally. Using this information, along with the most recently published Wall Street Journal survey of sixty economists’ forecasts predicting unemployment rates out over the next eight quarters, a corresponding future PD can be calculated for the forward-looking 24-month period. This data can also be used to predict loan losses at different levels of stress, including a baseline, adverse and severely adverse economic condition. After the forecast period, PD rates revert to the historical mean of the entire data set.
The LGD calculation is based on actual losses (charge-offs, net recoveries) at a loan level experienced over the entire lookback period aggregated to get a total for each segment of loans. The aggregate loss amount is divided by the exposure at default to determine an LGD rate. Defaults occurring during the lookback period are included in the denominator, whether a loss occurred or not and exposure at default is determined by the loan balance immediately preceding the default event. If there is not a minimum of five past defaults in a loan segment, or less than 15.0% calculated LGD rate, or the total balance at default is less than 1.0% of the balance in the respective call code as of the model run date, a proxy index is used. This index is proprietary to the Company’s ACL modeling vendor derived from loss data of other client institutions similar in organization structure to the Company. The vendor also provides a “crisis” index derived from loss data between the post-recessionary years of 2008-2013 that the Company uses.
The model then uses these inputs in a non-discounted version of DCF methodology to calculate the quantitative portion of estimated losses. The model creates loan level amortization schedules that detail out the expected monthly payments for a loan including estimated prepayments and payoffs. These expected cash flows are discounted back to present value using the loan’s coupon rate instead of the effective interest rate. On a quarterly basis, the Company uses internal credit portfolio data, such as changes in portfolio volume and composition, underwriting practices, and levels of past due loans, nonaccruals and classified assets along with other external information not used in the quantitative calculation to determine if any subjective qualitative adjustments are required so that all significant risks are incorporated to form a sufficient basis to estimate credit losses.
The following table presents the activity in the allowance for credit losses by portfolio segment for the year ended December 31, 2022 and the allowance for loan losses for the year ended December 31, 2021:
December 31, 2022
($ in thousands)Commercial,
Financial and
Agriculture		Commercial
Real Estate		Consumer
Real Estate		Consumer
Installment		Total
Allowance for credit losses:    
Beginning balance$4,873 $17,552 $7,889 $428 $30,742 
Initial allowance on PCD loans614 576 113 — 1,303 
Provision for credit losses688 1,742 2,786 134 5,350 
Loans charged-off(259)(72)(204)(683)(1,218)
Recoveries433 591 1,015 701 2,740 
Total ending allowance balance$6,349 $20,389 $11,599 $580 $38,917 
December 31, 2021
($ in thousands)Commercial,
Financial and
Agriculture		Commercial
Real Estate		Consumer
Real Estate		Consumer
Installment		Total
Allowance for credit losses:
Beginning balance$6,214 $24,319 $4,736 $551 $35,820 
Impact of ASC 326 adoption on
non-PCD loans(1,319)(4,607)5,257 (49)(718)
Impact of ASC 326 adoption on
PCD loans166 575 372 2 1,115 
Provision for credit losses (1)1,041 (100)(2,314)(83)(1,456)
Loans charged-off(1,662)(3,523)(473)(555)(6,213)
Recoveries433 888 311 562 2,194 
Total ending allowance balance$4,873 $17,552 $7,889 $428 $30,742 
(1)
The negative provision of $1.5 million for credit losses on the consolidated statements of income is net of a $370 thousand provision for credit marks in the Cadence Branches loans acquired for the year ended December 31, 2022.
The Company recorded a $5.4 million, provision for credit losses for the year ended December 31, 2022, compared to $1.5 million, negative provision for credit losses for the year ended December 31, 2021. The 2022 provision for credit losses includes $3.9 million associated with day one post-merger accounting provision recorded for non-PCD loans and unfunded commitments. A $1.3 million initial allowance was recorded on PCD loans acquired in the BBI merger. The negative provision for 2021 was composed of a $1.5 million decrease in the ACL for LHFI, net of $370 thousand provision for credit marks on the Cadence Branches loans acquired. The negative provision for credit losses in 2021 was primarily due to the improved macroeconomic outlook for 2021.
The following table provides the ending balance in the Company’s LHFI and the ACL, broken down by portfolio segment as of December 31, 2022 and 2021. The table also provides additional detail as to the amount of our loans and allowance that correspond to individual versus collective impairment evaluation ($ in thousands).
Commercial,
Financial and
Agriculture		Commercial
Real Estate		Consumer
Real Estate		Consumer
Installment		Total
December 31, 2022
LHFI
Individually evaluated$— $4,560 $998 $— $5,558 
Collectively evaluated536,192 2,130,703 1,058,001 43,703 3,768,599 
Total$536,192 $2,135,263 $1,058,999 $43,703 $3,774,157 
Allowance for Credit Losses     
Individually evaluated$— $— $5 $— $5 
Collectively evaluated6,349 20,389 11,594 580 38,912 
Total$6,349 $20,389 $11,599 $580 $38,917 
Commercial,
Financial and
Agriculture		Commercial
Real Estate		Consumer
Real Estate		Consumer
Installment		Total
December 31, 2021
LHFI
Individually evaluated$— $1,712 $1,858 $— $3,570 
Collectively evaluated397,516 1,681,986 836,796 39,685 2,955,983 
Total$397,516 $1,683,698 $838,654 $39,685 $2,959,553 
Allowance for Loan Losses     
Individually evaluated$— $4 $2 $— $6 
Collectively evaluated4,873 17,548 7,887 428 30,736 
Total$4,873 $17,552 $7,889 $428 $30,742