Loans and Allowance for Loan Losses | LOANS AND ALLOWANCE FOR CREDIT LOSSES At March 31, 2020 , the Company’s loan portfolio was $14.37 billion , compared to $14.43 billion at December 31, 2019 . The various categories of loans are summarized as follows: (In thousands) March 31, 2020 December 31, 2019 Consumer: Credit cards $ 188,596 $ 204,802 Other consumer 267,870 249,195 Total consumer 456,466 453,997 Real Estate: Construction and development 2,024,118 2,248,673 Single family residential 2,343,543 2,414,753 Other commercial 6,466,104 6,358,514 Total real estate 10,833,765 11,021,940 Commercial: Commercial 2,314,472 2,451,119 Agricultural 191,535 191,525 Total commercial 2,506,007 2,642,644 Other 578,039 307,123 Total loans $ 14,374,277 $ 14,425,704 The above table presents total loans at amortized cost. The difference between amortized cost and unpaid principal balance is primarily premiums and discounts associated with acquisition date fair value adjustments on acquired loans as well as net deferred origination fees totaling $72.4 million and $91.6 million at March 31, 2020 and December 31, 2019 , respectively. Accrued interest on loans, which is excluded from the amortized cost of loans held for investment, totaled $47.0 million and $48.9 million at March 31, 2020 and December 31, 2019 , respectively, and is included in interest receivable on the consolidated balance sheets. 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 credit 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. 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 and development 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. The amortized cost basis of nonaccrual loans segregated by class of loans are as follows: (In thousands) March 31, 2020 December 31, 2019 Consumer: Credit cards $ 265 $ 382 Other consumer 2,111 1,705 Total consumer 2,376 2,087 Real estate: Construction and development 6,604 5,289 Single family residential 30,829 27,695 Other commercial 36,428 16,582 Total real estate 73,861 49,566 Commercial: Commercial 78,944 40,924 Agricultural 682 753 Total commercial 79,626 41,677 Total $ 155,863 $ 93,330 Nonaccrual loans for which there is no related allowance for credit losses as of March 31, 2020 had an amortized cost of $22.4 million . These loans are individually assessed and do not hold an allowance due to being adequately collateralized under the collateral-dependent valuation method. An age analysis of the amortized cost basis of past due loans, including nonaccrual loans, 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, 2020 Consumer: Credit cards $ 866 $ 325 $ 1,191 $ 187,405 $ 188,596 $ 115 Other consumer 4,540 1,131 5,671 262,199 267,870 — Total consumer 5,406 1,456 6,862 449,604 456,466 115 Real estate: Construction and development 2,713 5,013 7,726 2,016,392 2,024,118 — Single family residential 31,236 15,246 46,482 2,297,061 2,343,543 321 Other commercial 23,524 10,673 34,197 6,431,907 6,466,104 1 Total real estate 57,473 30,932 88,405 10,745,360 10,833,765 322 Commercial: Commercial 16,361 25,130 41,491 2,272,981 2,314,472 723 Agricultural 377 560 937 190,598 191,535 — Total commercial 16,738 25,690 42,428 2,463,579 2,506,007 723 Other — — — 578,039 578,039 — Total $ 79,617 $ 58,078 $ 137,695 $ 14,236,582 $ 14,374,277 $ 1,160 December 31, 2019 Consumer: Credit cards $ 848 $ 641 $ 1,489 $ 203,313 $ 204,802 $ 259 Other consumer 4,884 735 5,619 243,576 249,195 — Total consumer 5,732 1,376 7,108 446,889 453,997 259 Real estate: Construction and development 5,792 1,078 6,870 2,241,803 2,248,673 — Single family residential 26,318 13,789 40,107 2,374,646 2,414,753 597 Other commercial 7,645 6,450 14,095 6,344,419 6,358,514 — Total real estate 39,755 21,317 61,072 10,960,868 11,021,940 597 Commercial: Commercial 10,579 13,551 24,130 2,426,989 2,451,119 — Agricultural 1,223 456 1,679 189,846 191,525 — Total commercial 11,802 14,007 25,809 2,616,835 2,642,644 — Other — — — 307,123 307,123 — Total $ 57,289 $ 36,700 $ 93,989 $ 14,331,715 $ 14,425,704 $ 856 The following table presents information pertaining to impaired loans as of December 31, 2019 , in accordance with previous US GAAP prior to the adoption of ASU 2016-13. (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 December 31, 2019 Three Months Ended Consumer: Credit cards $ 382 $ 382 $ — $ 382 $ — $ 317 $ 30 Other consumer 1,537 1,378 — 1,378 — 1,857 13 Total consumer 1,919 1,760 — 1,760 — 2,174 43 Real estate: Construction and development 4,648 4,466 72 4,538 4 1,920 14 Single family residential 19,466 15,139 2,963 18,102 42 13,703 98 Other commercial 10,645 4,713 3,740 8,453 694 8,992 64 Total real estate 34,759 24,318 6,775 31,093 740 24,615 176 Commercial: Commercial 53,436 6,582 28,998 35,580 5,007 20,739 148 Agricultural 525 383 116 499 — 1,147 8 Total commercial 53,961 6,965 29,114 36,079 5,007 21,886 156 Total $ 90,639 $ 33,043 $ 35,889 $ 68,932 $ 5,747 $ 48,675 $ 375 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” (“TDR”) 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. 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 provisions in the CARES Act included an election to not apply the guidance on accounting for TDRs to loan modifications, such as extensions or deferrals, related to COVID-19 made between March 1, 2020 and the earlier of (i) December 31, 2020 or (ii) 60 days after the President terminates the COVID-19 national emergency declaration. The relief can only be applied to modifications for borrowers that were not more than 30 days past due as of December 31, 2019. The Company elected to adopt these provisions of the CARES Act. See discussion of the loans modified under the CARES Act in Note 24, Recent Events. TDRs are individually evaluated for expected credit losses. The Company assesses the exposure for each modification, either by the fair value of the underlying collateral or the present value of expected cash flows, and determines if a specific allowance for credit losses is needed. The following table presents a summary of TDRs 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, 2020 Real estate: Construction and development — $ — 1 $ 71 1 $ 71 Single-family residential 7 898 12 904 19 1,802 Other commercial 1 455 2 75 3 530 Total real estate 8 1,353 15 1,050 23 2,403 Commercial: Commercial 4 2,757 3 73 7 2,830 Total commercial 4 2,757 3 73 7 2,830 Total 12 $ 4,110 18 $ 1,123 30 $ 5,233 December 31, 2019 Real estate: Construction and development — $ — 1 $ 72 1 $ 72 Single-family residential 7 1,151 12 671 19 1,822 Other commercial 1 476 2 80 3 556 Total real estate 8 1,627 15 823 23 2,450 Commercial: Commercial 4 2,784 3 79 7 2,863 Total commercial 4 2,784 3 79 7 2,863 Total 12 $ 4,411 18 $ 902 30 $ 5,313 There were no loans restructured as TDRs during the three month periods ended March 31, 2020 or 2019 . There were no loans considered TDRs for which a payment default occurred during the three months ended March 31, 2020 . 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. The Company defines a payment default as a payment received more than 90 days after its due date. There were no TDRs with pre-modification loan balances for which OREO was received in full or partial satisfaction of the loans during the three month periods ended March 31, 2020 or 2019 . At March 31, 2020 and December 31, 2019 , the Company had $5,301,000 and $5,789,000 , respectively, of consumer mortgage loans secured by residential real estate properties for which formal foreclosure proceedings are in process. At March 31, 2020 and December 31, 2019 , the Company had $2,672,000 and $4,458,000 , 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 of the Company’s local markets. 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. Risk ratings are updated on an ongoing basis and are subject to change by continuous loan monitoring processes including lending management monitoring, executive management and board committee oversight, and independent credit review. 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. The Company monitors credit quality in the consumer portfolio by delinquency status. The delinquency status of loans is updated daily. A description of the delinquency credit quality indicators is as follows: • Current - Loans in this category are either current in payments or are under 30 days past due. These loans are considered to have a normal level of risk. • 30-89 Days Past Due - Loans in this category are between 30 and 89 days past due and are subject to the Company’s loss mitigation process. These loans are considered to have a moderate level of risk. • 90+ Days Past Due - Loans in this category are over 90 days past due and are placed on nonaccrual status. These loans have been subject to the Company’s loss mitigation process and foreclosure and/or charge-off proceedings have commenced. The following table presents a summary of loans by credit quality indicator as of March 31, 2020 segregated by class of loans. Term Loans Amortized Cost Basis by Origination Year (In thousands) 2020 (YTD) 2019 2018 2017 2016 2015 and Prior Lines of Credit Amortized Cost Basis Lines of Credit Converted to Term Loans Amortized Cost Basis Total March 31, 2020 Consumer - credit cards Delinquency: 30-89 days past due $ — $ — $ — $ — $ — $ — $ 866 $ — $ 866 90+ days past due — — — — — — 325 — 325 Total consumer - credit cards — — — — — — 1,191 — 1,191 Consumer - other Delinquency: 30-89 days past due 47 1,109 636 1,188 1,182 251 128 — 4,541 90+ days past due — 147 97 446 203 60 178 — 1,131 Total consumer - other 47 1,256 733 1,634 1,385 311 306 — 5,672 Real estate - C&D Risk rating: 5 internal grade — 45 19 1,957 21 — — — 2,042 6 internal grade — 3,569 620 206 432 626 2,401 209 8,063 7 internal grade — — — — — — — — — Total real estate - C&D — 3,614 639 2,163 453 626 2,401 209 10,105 Real estate - SF residential Delinquency: 30-89 days past due 33 4,672 6,168 4,648 5,010 8,233 2,471 — 31,235 90+ days past due — 2,115 4,074 2,394 1,829 3,748 1,086 — 15,246 Total real estate - SF residential 33 6,787 10,242 7,042 6,839 11,981 3,557 — 46,481 Real estate - other commercial Risk rating: 5 internal grade 1,037 23,628 2,116 985 4,845 3,379 12,477 — 48,467 6 internal grade 2,728 16,060 17,211 4,369 6,860 20,059 37,552 1,037 105,876 7 internal grade — — — — — — — — — Total real estate - other commercial 3,765 39,688 19,327 5,354 11,705 23,438 50,029 1,037 154,343 Commercial Risk rating: 5 internal grade — 209 14 270 407 77 25,418 — 26,395 6 internal grade 16 11,925 6,994 16,480 1,264 764 54,993 743 93,179 7 internal grade — — — — — — — — — Total commercial 16 12,134 7,008 16,750 1,671 841 80,411 743 119,574 Commercial - agriculture Risk rating: 5 internal grade — 67 — 25 12 — 17 — 121 6 internal grade — 115 177 169 88 8 230 — 787 7 internal grade — — — — — — — — — Total commercial - agriculture — 182 177 194 100 8 247 — 908 Total $ 3,861 $ 63,661 $ 38,126 $ 33,137 $ 22,153 $ 37,205 $ 138,142 $ 1,989 $ 338,274 The following table presents a summary of loans by credit risk rating as of December 31, 2019 segregated by class of loans. (In thousands) Risk Rate 1-4 Risk Rate 5 Risk Rate 6 Risk Rate 7 Risk Rate 8 Total December 31, 2019 Consumer: Credit cards $ 204,161 $ — $ 641 $ — $ — $ 204,802 Other consumer 247,668 — 2,026 — — 249,694 Total consumer 451,829 — 2,667 — — 454,496 Real estate: Construction and development 2,229,019 70 7,735 — 37 2,236,861 Single family residential 2,394,284 6,049 41,601 130 — 2,442,064 Other commercial 6,068,425 69,745 67,429 — — 6,205,599 Total real estate 10,691,728 75,864 116,765 130 37 10,884,524 Commercial: Commercial 2,384,263 26,713 84,317 43 180 2,495,516 Agricultural 309,741 41 5,672 — — 315,454 Total commercial 2,694,004 26,754 89,989 43 180 2,810,970 Other 275,714 — — — — 275,714 Total $ 14,113,275 $ 102,618 $ 209,421 $ 173 $ 217 $ 14,425,704 Allowance for Credit Losses Allowance for Credit Losses – The allowance for credit losses is a reserve established through a provision for credit losses charged to expense, which represents management’s best estimate of lifetime expected losses based on reasonable and supportable forecasts, historical loss experience, and other qualitative considerations. The allowance, in the judgment of management, is necessary to reserve for expected loan losses and risks inherent in the loan portfolio. The Company’s allowance for credit loss methodology includes reserve factors calculated to estimate current expected credit losses to amortized cost balances over the remaining contractual life of the portfolio, adjusted for the effective interest rate used to discount prepayments, in accordance with ASC Topic 326-20, Financial Instruments - Credit Losses . Accordingly, the methodology is based on the Company’s reasonable and supportable economic forecasts, historical loss experience, and other qualitative adjustments. Loans with similar risk characteristics such as loan type, collateral type, and internal risk ratings are aggregated into homogeneous segments for assessment. Reserve factors are based on estimated probability of default and loss given default for each segment. The estimates are determined based on economic forecasts over the reasonable and supportable forecast period based on projected performance of economic variables that have a statistical correlation with the historical loss experience of the segments. For contractual periods that extend beyond the one-year forecast period, the estimates revert to average historical loss experiences over a one-year period on a straight-line basis. The Company also includes qualitative adjustments to the allowance based on factors and considerations that have not otherwise been fully accounted for. Qualitative adjustments include, but are not limited to: • Changes in asset quality - Adjustments related to trending credit quality metrics including delinquency, nonperforming loans, charge-offs, and risk ratings that may not be fully accounted for in the reserve factor. • Changes in the nature and volume of the portfolio - Adjustments related to current changes in the loan portfolio that are not fully represented or accounted for in the reserve factors. • Changes in lending and loan monitoring policies and procedures - Adjustments related to current changes in lending and loan monitoring procedures as well as review of specific internal policy compliance metrics. • Change in the experience, ability, and depth of lending management and other relevant staff - Adjustments to measure increasing or decreasing credit risk related to lending and loan monitoring management. • Changes in the value of underlying collateral of collateralized loans - Adjustments related to improving or deterioration of the value of underlying collateral that are not fully captured in the reserve factors. • Changes in and the existence and effect of any concentrations of credit - Adjustments related to credit risk of specific industries that are not fully captured in the reserve factors. • Changes in regional and local economic and business conditions and developments - Adjustments related to expected and current economic conditions at a regional or local-level that are not fully captured within the Company’s reasonable and supportable forecast. • Data imprecisions due to limited historical loss data - Adjustments related to limited historical loss data that is representative of the collective loan portfolio. Loans that do not share similar risk characteristics are evaluated on an individual basis. These evaluations are typically performed on loans with a deteriorated internal risk rating or are classified as a troubled debt restructuring. The allowance for credit loss is determined based on several methods including estimating the fair value of the underlying collateral or the present value of expected cash flows. For a collateral dependent loan, the Company’s evaluation process includes a valuation by appraisal or other collateral analysis adjusted for selling costs, when appropriate. 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 credit 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. Loans for which the repayment is expected to be provided substantially through the operation or sale of collateral and where the borrower is experiencing financial difficulty had an amortized cost of $75.7 million as further detailed in the table below. The collateral securing these loans consist of commercial real estate properties, residential properties, other business assets, and secured energy production assets. (In thousands) Real Estate Collateral Energy Other Collateral Total Construction and development $ 3,078 $ — $ — $ 3,078 Single family residential 3,586 — — 3,586 Other commercial real estate 16,984 — — 16,984 Commercial — 43,573 8,449 52,022 Total $ 23,648 $ 43,573 $ 8,449 $ 75,670 The following table details activity in the allowance for credit losses by portfolio segment for loans for the three months ended March 31, 2020 . 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, 2020 Allowance for credit losses: Beginning balance, prior to adoption of CECL $ 22,863 $ 39,161 $ 4,051 $ 2,169 $ 68,244 Impact of CECL adoption 22,733 114,314 2,232 12,098 151,377 Provision for credit loss expense 30,907 (12,158 ) 2,750 4,698 26,197 Charge-offs (523 ) (396 ) (1,441 ) (1,379 ) (3,739 ) Recoveries 347 101 225 443 1,116 Net charge-offs (176 ) (295 ) (1,216 ) (936 ) (2,623 ) Balance, March 31, 2020 $ 76,327 $ 141,022 $ 7,817 $ 18,029 $ 243,195 Activity in the allowance for credit losses for the three months ended March 31, 2019 was as follows: (In thousands) Commercial Real Estate Credit Card Other Consumer and Other Total Three Months Ended March 31, 2019 Balance, beginning of period $ 20,514 $ 29,838 $ 3,923 $ 2,419 $ 56,694 Provision for credit losses 1,874 5,307 898 1,206 9,285 Charge-offs (3,152 ) (417 ) (1,142 ) (1,553 ) (6,264 ) Recoveries 158 142 240 300 840 Net charge-offs (2,994 ) (275 ) (902 ) (1,253 ) (5,424 ) Balance, March 31, 2019 $ 19,394 $ 34,870 $ 3,919 $ 2,372 $ 60,555 A change in forecast methodology, as well as the composition of the loans resulted in a negative provision in the real estate-construction and development loan segment during the first quarter of 2020. Under the current stressed economic conditions, the Company’s forecast of expected losses in the construction and development segment no longer produced a forecast that was considered reasonable and supportable. As such, management adjusted the forecast methodology of this segment to better align with management’s expectation of loss under the modeled economic conditions. The other categories saw increases in the provision related to increased concern over the economic stresses related to COVID-19, as well as increased specific provisions of $22 million for two energy credits, previously identified as problem loans, both of which experienced further deterioration during the first quarter of 2020 and were negatively impacted by the sharp decline in commodity pricing. Reserve for Unfunded Commitments In addition to the allowance for credit losses, the Company has established a reserve for unfunded commitments, classified in other liabilities. This reserve is maintained at a level management believes to be sufficient to absorb losses arising from unfunded loan commitments. The reserve for unfunded commitments as of March 31, 2020 and December 31, 2019 was $29.4 million and $8.4 million , respectively. The increase from year end was due to the adoption of CECL. The adequacy of the reserve for unfunded commitments is determined monthly based on methodology similar to the methodology for determining the allowance for credit losses. For the three months ended March 31, 2020 and 2019 , net adjustments to the reserve for unfunded commitments were a benefit of $3.0 million and an expense of $300,000 , respectively, and were included in other non-interest expense. |