ALLOWANCE FOR LOAN AND LEASE LOSSES

12 Months Ended

Dec. 31, 2022

4. ALLOWANCE FOR CREDIT LOSSES AND RESERVE FOR OFF-BALANCE SHEET CREDIT EXPOSURES

The following tables present the activity in the ACL for loans by class for the years ended December 31, 2022, 2021 and 2020:


	Commercial, Financial and Agricultural				Real Estate
(Dollars in thousands)	SBA PPP		Other		Construction		Residential Mortgage		Home Equity		Commercial Mortgage		Consumer		Total
Year ended December 31, 2022
Beginning balance	$	77	$	10,314	$	3,908	$	12,463	$	4,509	$	18,411	$	18,415	$	68,097


Provision (credit) for credit losses on loans	(75)		(2,518)		(1,117)		(954)		(431)		(509)		5,892		288
Subtotal	2		7,796		2,791		11,509		4,078		17,902		24,307		68,385
Charge-offs	—		1,969		—		—		—		—		6,399		8,368
Recoveries	—		995		76		295		36		—		2,319		3,721
Net charge-offs (recoveries)	—		974		(76)		(295)		(36)		—		4,080		4,647
Ending balance	$	2	$	6,822	$	2,867	$	11,804	$	4,114	$	17,902	$	20,227	$	63,738


	Commercial, Financial and Agricultural				Real Estate
(Dollars in thousands)	SBA PPP		Other		Construction		Residential Mortgage		Home Equity		Commercial Mortgage		Consumer		Total
Year ended December 31, 2021
Beginning balance	$	304	$	18,717	$	4,277	$	16,484	$	5,449	$	22,163	$	15,875	$	83,269


Provision (credit) for credit losses on loans [1]	(227)		(7,684)		(1,528)		(4,379)		(949)		(3,825)		4,269		(14,323)
Subtotal	77		11,033		2,749		12,105		4,500		18,338		20,144		68,946
Charge-offs	—		1,723		—		—		—		—		4,402		6,125
Recoveries	—		1,004		1,159		358		9		73		2,673		5,276
Net charge-offs (recoveries)	—		719		(1,159)		(358)		(9)		(73)		1,729		849
Ending balance	$	77	$	10,314	$	3,908	$	12,463	$	4,509	$	18,411	$	18,415	$	68,097


	Commercial, Financial and Agricultural				Real Estate
(Dollars in thousands)	SBA PPP		Other		Construction		Residential Mortgage		Home Equity		Commercial Mortgage		Consumer		Total
Year ended December 31, 2020
Beginning balance	$	—	$	8,136	$	1,792	$	13,327	$	4,206	$	11,113	$	9,397	$	47,971
Impact of adoption of ASC 326	—		(627)		479		608		(1,614)		2,624		2,096		3,566
Balance after adoption of ASC 326	—		7,509		2,271		13,935		2,592		13,737		11,493		51,537
Provision for credit losses on loans [1]	304		13,077		1,875		2,383		2,824		8,485		9,982		38,930
Subtotal	304		20,586		4,146		16,318		5,416		22,222		21,475		90,467
Charge-offs	—		3,026		—		63		—		75		8,191		11,355
Recoveries	—		1,157		131		229		33		16		2,591		4,157
Net charge-offs	—		1,869		(131)		(166)		(33)		59		5,600		7,198
Ending balance	$	304	$	18,717	$	4,277	$	16,484	$	5,449	$	22,163	$	15,875	$	83,269

[1] In 2020, the Company recorded a reserve on accrued interest receivable for loans on active payment forbearance or deferral, which were granted to borrowers impacted by the COVID-19 pandemic. This reserve was recorded as a contra-asset against accrued interest receivable with the offset to provision for credit losses. Due to the significant decline in loans on active forbearance or deferral, the Company reversed the $0.2 million reserve during the second quarter of 2021 and no longer has a reserve on accrued interest receivable as of December 31, 2022 and 2021. The provision for credit losses presented in this table excludes the provision (credit) for credit losses on accrued interest receivable of $0.2 million.

The following table presents the activity in the reserve for off-balance sheet credit exposures, included in other liabilities, under ASC 326 during the years ended December 31, 2022, 2021 and 2020.


	Year Ended December 31,
(Dollars in thousands)	2022		2021		2020
Balance, beginning of year	$	4,804	$	4,884	$	1,272
Impact of adoption of ASC 326	—		—		740
Balance after adoption of ASC 326	4,804		4,884		2,012
(Credit) provision for off-balance sheet credit exposures	(1,561)		(80)		2,872
Balance, end of year	$	3,243	$	4,804	$	4,884

In accordance with GAAP, loans held for sale and other real estate assets are not included in our assessment of the ACL.

In determining the amount of our ACL, the Company relies on an analysis of its loan portfolio, experience and evaluation of general economic conditions, as well as regulatory requirements and input. If assumptions prove to be incorrect, the current ACL may not be sufficient to cover future credit losses and the Company may experience significant increases to the provision.