Loans | Note 4 - Loans Loans consisted of the following: (Dollars in thousands) June 30, 2020 December 31, 2019 Loans held for sale $ 121,541 $ 64,837 LHFI: Loans secured by real estate: Commercial real estate $ 1,306,266 $ 1,279,177 Construction/land/land development 570,032 517,688 Residential real estate 769,354 689,555 Total real estate 2,645,652 2,486,420 Commercial and industrial (1) 1,862,534 1,343,475 Mortgage warehouse lines of credit 769,157 274,659 Consumer 17,363 20,971 Total loans accounted for at amortized cost 5,294,706 4,125,525 Loan accounted for at fair value 17,488 17,670 Total LHFI (2) 5,312,194 4,143,195 Less: allowance for credit losses 70,468 37,520 LHFI, net $ 5,241,726 $ 4,105,675 ____________________________ (1) Includes $549.1 million of PPP loans at June 30, 2020. No PPP loans were outstanding at December 31, 2019. (2) Includes net deferred loan fees of $18.3 million and $3.6 million at June 30, 2020, and December 31, 2019, respectively. The large increase in net deferred loan fees during the first half of the year was primarily due to the origination of PPP loans. Included in total LHFI were $17.5 million and $17.7 million of commercial real estate loans for which the fair value option was elected as of June 30, 2020, and December 31, 2019, respectively. The Company mitigates the interest rate component of fair value risk on loans at fair value by entering into derivative interest rate contracts. See Note 5 - Fair Value of Financial Instruments for more information on loans for which the fair value option has been elected. Credit quality indicators . As part of the Company's commitment to manage the credit quality of its loan portfolio, management continually updates and evaluates certain credit quality indicators, which include but are not limited to (i) weighted-average risk rating of the loan portfolio, (ii) net charge-offs, (iii) level of non-performing loans, (iv) level of classified loans, and (v) the general economic conditions in the states in which the Company operates. The Company maintains an internal risk rating system where ratings are assigned to individual loans based on assessed risk. Loan risk ratings are the primary indicator of credit quality for the loan portfolio and are continually evaluated to ensure they are appropriate based on currently available information. The following is a summary description of the Company's internal risk ratings: • Pass (1-6) Loans within this risk rating are further categorized as follows: Minimal risk (1) Well-collateralized by cash equivalent instruments held by the Bank. Moderate risk (2) Borrowers with excellent asset quality and liquidity. Borrowers' capitalization and liquidity exceed industry norms. Borrowers in this category have significant levels of liquid assets and have a low level of leverage. Better than average risk (3) Borrowers with strong financial strength and excellent liquidity that consistently demonstrate strong operating performance. Borrowers in this category generally have a sizable net worth that can be converted into liquid assets within 12 months. Average risk (4) Borrowers with sound credit quality and financial performance, including liquidity. Borrowers are supported by sufficient cash flow coverage generated through operations across the full business cycle. Marginally acceptable risk (5) Loans generally meet minimum requirements for an acceptable loan in accordance with lending policy, but possess one or more attributes that cause the overall risk profile to be higher than the majority of newly approved loans. Watch (6) A passing loan with one or more factors that identify a potential weakness in the overall ability of the borrower to repay the loan. These weaknesses are generally mitigated by other factors that reduce the risk of delinquency or loss. • Special Mention (7) This grade is intended to be temporary and includes borrowers whose credit quality has deteriorated and is at risk of further decline. • Substandard (8) This grade includes "Substandard" loans under regulatory guidelines. Substandard loans exhibit a well-defined weakness that jeopardizes debt repayment in accordance with contractual agreements, even though the loan may be performing. These obligations are characterized by the distinct possibility that a loss may be incurred if these weaknesses are not corrected and repayment may be dependent upon collateral liquidation or secondary source of repayment. • Doubtful (9) This grade includes "Doubtful" loans under regulatory guidelines. Such loans are placed on nonaccrual status and repayment may be dependent upon collateral with no readily determinable valuation or valuations that are highly subjective in nature. Repayment for these loans is considered improbable based on currently existing facts and circumstances. • Loss (0) This grade includes "Loss" loans under regulatory guidelines. Loss loans are charged-off or written down when repayment is not expected. In connection with the review of the loan portfolio, the Company considers risk elements attributable to particular loan types or categories in assessing the quality of individual loans. Some of the risk elements considered include: • for commercial real estate loans, the debt service coverage ratio, operating results of the owner in the case of owner occupied properties, the loan to value ratio, the age and condition of the collateral and the volatility of income, property value and future operating results typical of properties of that type; • for construction, land and land development loans, the perceived feasibility of the project, including the ability to sell developed lots or improvements constructed for resale or the ability to lease property constructed for lease, the quality and nature of contracts for presale or prelease, if any, experience and ability of the developer and loan to value ratio; • for residential mortgage loans, the borrower's ability to repay the loan, including a consideration of the debt to income ratio and employment and income stability, the loan-to-value ratio, and the age, condition and marketability of the collateral; and • for commercial and industrial loans, the debt service coverage ratio (income from the business in excess of operating expenses compared to loan repayment requirements), the operating results of the commercial, industrial or professional enterprise, the borrower's business, professional and financial ability and expertise, the specific risks and volatility of income and operating results typical for businesses in that category and the value, nature and marketability of collateral. The following table reflects recorded investments in loans by credit quality indicator and origination year at June 30, 2020, excluding loans held for sale and loans accounted for at fair value. The Company had an immaterial amount of revolving loans converted to term loans at June 30, 2020. Term Loans Amortized Cost Basis by Origination Year (Dollars in thousands) 2020 2019 2018 2017 2016 Prior Revolving Loans Amortized Cost Basis Total Commercial real estate: (1) Pass $ 194,867 $ 309,729 $ 339,207 $ 176,380 $ 59,671 $ 159,112 $ 16,327 $ 1,255,293 Special mention — 826 2,427 14,411 — — 2,145 19,809 Classified 1,955 812 6,271 6,729 1,698 12,306 1,393 31,164 Total commercial real estate loans $ 196,822 $ 311,367 $ 347,905 $ 197,520 $ 61,369 $ 171,418 $ 19,865 $ 1,306,266 Current period gross charge-offs $ — $ — $ — $ 3,622 $ — $ 46 $ — $ 3,668 Current period gross recoveries — — — — — 6 — 6 Current period net charge-offs $ — $ — $ — $ 3,622 $ — $ 40 $ — $ 3,662 (1) Excludes $17.5 million of commercial real estate loans at fair value, which are not included in the loss estimation methodology due to the fair value option election. Construction/land/land development: Pass $ 98,578 $ 199,629 $ 197,499 $ 41,666 $ 2,404 $ 2,001 $ 18,002 $ 559,779 Special mention 336 4,289 436 — — — — 5,061 Classified — 1,220 314 3,177 150 181 150 5,192 Total construction/land/land development loans $ 98,914 $ 205,138 $ 198,249 $ 44,843 $ 2,554 $ 2,182 $ 18,152 $ 570,032 Current period gross charge-offs $ — $ — $ — $ — $ — $ — $ — $ — Current period gross recoveries — — — — — — — — Current period net charge-offs $ — $ — $ — $ — $ — $ — $ — $ — Residential real estate: Pass $ 137,044 $ 176,653 $ 101,224 $ 131,778 $ 45,880 $ 102,169 $ 49,444 $ 744,192 Special mention 195 113 1,234 1,929 10,161 811 — 14,443 Classified 242 2,838 1,660 1,962 1,467 2,495 55 10,719 Total residential real estate loans $ 137,481 $ 179,604 $ 104,118 $ 135,669 $ 57,508 $ 105,475 $ 49,499 $ 769,354 Current period gross charge-offs $ — $ 42 $ — $ 7 $ — $ — $ — $ 49 Current period gross recoveries — — — — — 169 — 169 Current period net charge-offs (recoveries) $ — $ 42 $ — $ 7 $ — $ (169) $ — $ (120) Term Loans Amortized Cost Basis by Origination Year (Dollars in thousands) 2020 2019 2018 2017 2016 Prior Revolving Loans Amortized Cost Basis Total Commercial and industrial: Pass $ 740,888 $ 211,156 $ 161,231 $ 61,154 $ 21,735 $ 39,488 $ 519,000 $ 1,754,652 Special mention 45 12,837 9,998 1,643 6,196 15,612 12,617 58,948 Classified 1,133 18,147 2,555 2,575 6,840 7,865 9,819 48,934 Total commercial and industrial loans $ 742,066 $ 242,140 $ 173,784 $ 65,372 $ 34,771 $ 62,965 $ 541,436 $ 1,862,534 Current period gross charge-offs $ 135 $ 106 $ 63 $ 121 $ 2,632 $ 216 $ 980 $ 4,253 Current period gross recoveries — 14 20 63 71 56 32 256 Current period net charge-offs $ 135 $ 92 $ 43 $ 58 $ 2,561 $ 160 $ 948 $ 3,997 Mortgage Warehouse Lines of Credit: Pass $ — $ — $ — $ — $ — $ — $ 769,157 $ 769,157 Current period gross charge-offs $ — $ — $ — $ — $ — $ — $ — $ — Current period gross recoveries — — — — — — — — Current period net charge-offs $ — $ — $ — $ — $ — $ — $ — $ — Consumer: Pass $ 3,499 $ 5,137 $ 2,369 $ 482 $ 239 $ 138 $ 5,380 $ 17,244 Special mention — — — — — — — — Classified 21 43 — 17 9 10 19 119 Total consumer loans $ 3,520 $ 5,180 $ 2,369 $ 499 $ 248 $ 148 $ 5,399 $ 17,363 Current period gross charge-offs $ — $ 7 $ 23 $ 7 $ — $ 4 $ 1 $ 42 Current period gross recoveries — — — 2 2 2 1 7 Current period net charge-offs (recoveries) $ — $ 7 $ 23 $ 5 $ (2) $ 2 $ — $ 35 The recorded investment in loans by credit quality indicator at December 31, 2019, excluding loans held for sale, were as follows: December 31, 2019 (Dollars in thousands) Pass Special Mention Substandard Doubtful Loss Total Loans secured by real estate: Commercial real estate $ 1,269,493 $ 12,479 $ 14,875 $ — $ — $ 1,296,847 Construction/land/land development 512,901 149 4,638 — — 517,688 Residential real estate 680,046 1,558 7,951 — — 689,555 Total real estate 2,462,440 14,186 27,464 — — 2,504,090 Commercial and industrial 1,277,564 28,478 37,433 — — 1,343,475 Mortgage warehouse lines of credit 274,659 — — — — 274,659 Consumer 20,808 — 163 — — 20,971 Total LHFI $ 4,035,471 $ 42,664 $ 65,060 $ — $ — $ 4,143,195 The following tables present the Company's loan portfolio aging analysis at the dates indicated: June 30, 2020 (Dollars in thousands) 30-59 Days Past Due 60-89 Days Past Due Loans Past Due 90 Days or More Total Past Due Current Loans Total Loans Receivable Accruing Loans 90 or More Days Past Due Loans secured by real estate: Commercial real estate $ 385 $ 2,752 $ 1,544 $ 4,681 $ 1,319,073 $ 1,323,754 $ — Construction/land/land development 3 75 26 104 569,928 570,032 — Residential real estate 611 1,308 412 2,331 767,023 769,354 — Total real estate 999 4,135 1,982 7,116 2,656,024 2,663,140 — Commercial and industrial 393 1,655 14,462 16,510 1,846,024 1,862,534 — Mortgage warehouse lines of credit — — — — 769,157 769,157 — Consumer 113 5 7 125 17,238 17,363 — Total LHFI $ 1,505 $ 5,795 $ 16,451 $ 23,751 $ 5,288,443 $ 5,312,194 $ — December 31, 2019 (Dollars in thousands) 30-59 Days Past Due 60-89 Days Past Due Loans Past Due 90 Days or More Total Past Due Current Loans Total Loans Receivable Accruing Loans 90 or More Days Past Due Loans secured by real estate: Commercial real estate $ 917 $ — $ 5,891 $ 6,808 $ 1,290,039 $ 1,296,847 $ — Construction/land/land development 3,569 133 56 3,758 513,930 517,688 — Residential real estate 2,174 1,918 913 5,005 684,550 689,555 — Total real estate 6,660 2,051 6,860 15,571 2,488,519 2,504,090 — Commercial and industrial 1,588 1,037 11,545 14,170 1,329,305 1,343,475 — Mortgage warehouse lines of credit — — — — 274,659 274,659 — Consumer 164 35 40 239 20,732 20,971 — Total LHFI $ 8,412 $ 3,123 $ 18,445 $ 29,980 $ 4,113,215 $ 4,143,195 $ — The following tables detail activity in the allowance for credit losses by portfolio segment. Accrued interest of $19.5 million was not included in the book value for the purposes of calculating the allowance at June 30, 2020. Allocation of a portion of the allowance to one category of loans does not preclude its availability to absorb losses in other categories. Three Months Ended June 30, 2020 (Dollars in thousands) Beginning Balance Charge-offs Recoveries Provision (Benefit) (1) Ending Balance Loans secured by real estate: Commercial real estate $ 9,254 $ 3,496 $ 4 $ 4,284 $ 10,046 Construction/land/land development 5,054 — — 1,806 6,860 Residential real estate 4,495 — 20 2,396 6,911 Commercial and industrial 35,823 3,073 87 12,444 45,281 Mortgage warehouse lines of credit 779 — — (177) 602 Consumer 658 18 3 125 768 Total $ 56,063 $ 6,587 $ 114 $ 20,878 $ 70,468 ____________________________ (1) The $21.4 million provision for credit losses on the consolidated statements of income includes a $20.9 million net loan loss provision, a $476,000 provision for off-balance sheet commitments and a $48,000 held to maturity credit loss provision for the three months ended June 30, 2020. Three Months Ended June 30, 2019 (Dollars in thousands) Beginning Balance Charge-offs Recoveries Provision (Benefit) (1) Ending Balance Loans secured by real estate: Commercial real estate $ 9,258 $ 106 $ 8 $ 260 $ 9,420 Construction/land/land development 3,679 38 — 300 3,941 Residential real estate 5,577 — 18 37 5,632 Commercial and industrial 16,475 622 121 1,203 17,177 Mortgage warehouse lines of credit 365 29 — (73) 263 Consumer 224 45 16 55 250 Total $ 35,578 $ 840 $ 163 $ 1,782 $ 36,683 ____________________________ (1) The $2.0 million provision for credit losses on the consolidated statements of income includes a $1.8 million net loan loss provision and a $203,000 release of provision for off-balance sheet commitments for the three months ended June 30, 2019. Six Months Ended June 30, 2020 (Dollars in thousands) Beginning Balance Impact of Adopting ASC 326 Charge-offs Recoveries Provision (1) Ending Balance Loans secured by real estate: Commercial real estate $ 10,013 $ (5,052) $ 3,668 $ 6 $ 8,747 $ 10,046 Construction/land/land development 3,711 1,141 — — 2,008 $ 6,860 Residential real estate 6,332 (2,526) 49 169 2,985 $ 6,911 Commercial and industrial 16,960 7,296 4,253 256 25,022 $ 45,281 Mortgage warehouse lines of credit 262 29 — — 311 $ 602 Consumer 242 360 42 7 201 768 Total $ 37,520 $ 1,248 $ 8,012 $ 438 $ 39,274 $ 70,468 ____________________________ (1) The $39.9 million provision for credit losses on the consolidated statements of income includes a $39.3 million net loan loss provision, a $611,000 provision for off-balance sheet commitments and a $48,000 held to maturity credit loss provision for the six months ended June 30, 2020. The provision for loan credit losses for the six months ended June 30, 2020, was driven by a significant increase in uncertainty related to the ongoing economic impact and duration of the current COVID-19 pandemic. Based upon the requirement of CECL, economic forecasts are essential for estimating the life of loan losses. The increased risk, as reflected in current and forecast adjustments, resulted in approximately $20.8 million in provision expense across the Company’s risk pools. An additional $6.1 million in provision expense was due to the current and forecast effects of individually evaluated loans. The provision for commercial and industrial loans included approximately $13.3 million related to current and forecasted factors as well as approximately $6.0 million related to individually evaluated loans. There were two significant charge-offs in commercial and industrial loans during the first half of 2020 totaling $2.5 million, as well as two significant charge-offs in commercial real estate loans totaling $3.4 million during the same period. Six Months Ended June 30, 2019 (Dollars in thousands) Beginning Balance Charge-offs Recoveries Provision (Benefit) (1) Ending Balance Loans secured by real estate: Commercial real estate $ 8,999 $ 195 $ 59 $ 557 $ 9,420 Construction/land/land development 3,331 38 1 647 3,941 Residential real estate 5,705 — 45 (118) 5,632 Commercial and industrial 15,616 1,133 1,195 1,499 17,177 Mortgage warehouse lines of credit 316 29 — (24) 263 Consumer 236 53 23 44 250 Total $ 34,203 $ 1,448 $ 1,323 $ 2,605 $ 36,683 ____________________________ (1) The $3.0 million provision for credit losses on the consolidated statements of income includes a $2.6 million net loan loss provision and a $385,000 provision for off-balance sheet commitments for the six months ended June 30, 2019. The following table shows the recorded investment in loans by loss estimation methodology at June 30, 2020. June 30, 2020 Collectively Evaluated Individually Evaluated (Dollars in thousands) Probability of Default Fair Value of Collateral Discounted Cash Flow Total Loans secured by real estate: Commercial real estate (1) $ 1,301,214 $ 4,190 $ 862 $ 1,306,266 Construction/land/land development 566,310 3,356 366 570,032 Residential real estate 763,292 3,076 2,986 769,354 Commercial and industrial 1,846,637 5,374 10,523 1,862,534 Mortgage warehouse lines of credit 769,157 — — 769,157 Consumer 17,343 — 20 17,363 Total $ 5,263,953 $ 15,996 $ 14,757 $ 5,294,706 ____________________________ (1) Excludes $17.5 million of commercial real estate loans at fair value, which are not included in the loss estimation methodology due to the fair value option election. The following table shows the allowance for credit losses by loss estimation methodology at June 30, 2020. June 30, 2020 Collectively Evaluated Individually Evaluated (Dollars in thousands) Probability of Default Fair Value of Collateral Discounted Cash Flow Total Loans secured by real estate: Commercial real estate $ 10,046 $ — $ — $ 10,046 Construction/land/land development 6,857 — 3 6,860 Residential real estate 6,832 79 — 6,911 Commercial and industrial 39,134 2,711 3,436 45,281 Mortgage warehouse lines of credit 602 — — 602 Consumer 768 — — 768 Total $ 64,239 $ 2,790 $ 3,439 $ 70,468 The following table presents the balance of loans receivable by method of impairment evaluation at December 31, 2019: (Dollars in thousands) December 31, 2019 Loans secured by real estate: Period End Allowance Allocated to Loans Individually Evaluated for Impairment Period End Allowance Allocated to Loans Collectively Evaluated for Impairment Period End Loan Balance Individually Evaluated for Impairment Period End Loan Balance Collectively Evaluated for Impairment (1) Commercial real estate $ 3 $ 10,010 $ 7,446 $ 1,271,731 Construction/land/land development 3 3,708 4,329 513,359 Residential real estate 21 6,311 4,937 684,618 Commercial and industrial 168 16,792 15,662 1,327,813 Mortgage warehouse lines of credit — 262 — 274,659 Consumer 4 238 100 20,871 Total $ 199 $ 37,321 $ 32,474 $ 4,093,051 ____________________________ (1) Excludes $17.7 million of commercial real estate loans at fair value, which are not evaluated for impairment due to the fair value option election. The following table present impaired loans at December 31, 2019. No mortgage warehouse lines of credit were impaired at December 31, 2019. (Dollars in thousands) December 31, 2019 Loans secured by real estate: Unpaid Contractual Principal Balance Recorded Investment with no Allowance Recorded Investment with an Allowance Total Recorded Investment Allocation of Allowance for Loan Losses Commercial real estate $ 10,788 $ 7,375 $ 71 $ 7,446 $ 3 Construction/land/land development 4,692 4,256 73 4,329 3 Residential real estate 5,846 4,407 530 4,937 21 Total real estate 21,326 16,038 674 16,712 27 Commercial and industrial 22,857 14,385 1,277 15,662 168 Consumer 110 — 100 100 4 Total impaired loans $ 44,293 $ 30,423 $ 2,051 $ 32,474 $ 199 Note that the Company is not using the collateral maintenance agreement practical expedient. All fair value of collateral is real estate related. Collateral-dependent loans consist primarily of commercial real estate and commercial and industrial loans. These loans are individually evaluated when foreclosure is probable or when the repayment of the loan is expected to be provided substantially through the operation or sale of the underlying collateral. Loan balances are charged down to the underlying collateral value when they are deemed uncollectible. Nonaccrual LHFI were as follows: June 30, December 31, 2019 (Dollars in thousands) Nonaccrual With No Allowance for Credit Loss Nonaccrual Nonaccrual Loans secured by real estate: Commercial real estate $ 4,675 $ 4,717 $ 6,994 Construction/land/land development 3,606 3,726 4,337 Residential real estate 4,318 6,713 5,132 Total real estate 12,599 15,156 16,463 Commercial and industrial 409 14,772 14,520 Consumer 20 119 163 Total $ 13,028 $ 30,047 $ 31,146 All interest accrued but not received for loans placed on nonaccrual status is reversed against interest income. Subsequent receipts on nonaccrual loans are recorded as a reduction of principal, and interest income is recorded only after principal recovery is reasonably assured. Loans are returned to accrual status when all the principal and interest amounts contractually due are brought current and future payments are reasonably assured. At June 30, 2020, the Company had no funding commitments in connection with debtors whose terms have been modified in TDRs. For the six months ended June 30, 2020 and 2019, gross interest income that would have been recorded if the nonaccruing loans had been current in accordance with their original terms was $736,000 and $797,000, respectively. No interest income was recorded on these loans while they were considered nonaccrual during the six months ended June 30, 2020 or 2019. The Company elects the fair value option for recording certain residential mortgage loans held for sale, as well as certain commercial real estate loans in accordance with U.S. GAAP. The Company had $734,000 of nonaccrual mortgage loans held for sale that were recorded using the fair value option election at June 30, 2020, compared to $927,000 at December 31, 2019. There were no nonaccrual LHFI that were recorded using the fair value option election at June 30, 2020, or December 31, 2019. Certain borrowers are currently unable to meet their contractual payment obligations because of the adverse effects of COVID-19. To help mitigate these effects, loan customers may apply for a deferral of payments, or portions thereof, for up to 90 days. In the absence of other intervening factors, such short-term forbearances made on a good faith basis are not categorized as TDRs, nor are loans granted payment deferrals related to COVID-19 reported as past due or placed on non-accrual status (provided the loans were not past due or on non-accrual status prior to the deferral). At June 30, 2020, the Company had 1,386 loans totaling $1.01 billion under COVID-19 related forbearance agreements. The following is a summary of loans classified as TDRs, excluding the impact of forbearances granted due to COVID-19. There were no loans restructured as a TDR during the three months ended June 30, 2020. (Dollars in thousands) June 30, 2020 December 31, 2019 TDRs Nonaccrual TDRs $ 5,817 $ 6,609 Performing TDRs 1,815 1,843 Total $ 7,632 $ 8,452 Three Months Ended June 30, 2019 (Dollars in thousands) Number of Loans Restructured Pre-Modification Recorded Balance Term Concessions Interest Rate Concessions Combination of Term and Rate Concessions Total Modifications Commercial and industrial 2 $ 789 $ 779 $ — $ — $ 779 Consumer 1 11 11 — — 11 Total 3 $ 800 $ 790 $ — $ — $ 790 Six Months Ended June 30, 2020 (Dollars in thousands) Number of Loans Restructured Pre-Modification Recorded Balance Term Concessions Interest Rate Concessions Combination of Term and Rate Concessions Total Modifications Commercial and industrial 2 $ 128 $ 127 $ — $ — $ 127 Six Months Ended June 30, 2019 (Dollars in thousands) Number of Loans Restructured Pre-Modification Recorded Balance Term Concessions Interest Rate Concessions Combination of Term and Rate Concessions Total Modifications Loans secured by real estate: Construction/land/land development 1 $ 361 $ — $ — $ 354 $ 354 Commercial and industrial 3 808 796 — — 796 Consumer 1 11 11 — — 11 Total 5 $ 1,180 $ 807 $ — $ 354 $ 1,161 During the six months ended June 30, 2020, one loan with an outstanding principal balance of $14,000 defaulted after having been modified as a TDR within the previous 12 months. During the six months ended June 30, 2019, no loans defaulted after having been modified as a TDR within the previous 12 months. A payment default is defined as a loan that was 90 or more days past due. The modifications made during the three and six months ended June 30, 2020, did not significantly impact the Company's determination of the allowance for loan credit losses. The Company monitors the performance of the modified loans to their restructured terms on an ongoing basis. In the event of a subsequent default, the allowance for loan credit losses continues to be reassessed on the basis of an individual evaluation of each loan. |