Allowance for Credit and Loan Losses

6 Months Ended

Jun. 30, 2023

The following tables represent, by loan portfolio segment, a summary of changes in the ACL on loans for the three and six months ended June 30, 2023 and 2022:


	Three Months Ended June 30, 2023
	Commercial		Real Estate		Mortgage Warehouse		Consumer		Total
Balance, beginning of period	$	31,156	$	4,447	$	798	$	13,125	$	49,526
Credit loss expense (recovery)	(684)		(809)		95		2,139		741
PCD loan charge–offs	(17)		—		—		—		(17)
Charge–offs	(196)		—		—		(472)		(668)
Recoveries	95		10		—		289		394
Balance, end of period	$	30,354	$	3,648	$	893	$	15,081	$	49,976


	Three Months Ended June 30, 2022
	Commercial		Real Estate		Mortgage Warehouse		Consumer		Total
Balance, beginning of period	$	37,789	$	4,351	$	1,055	$	9,313	$	52,508
Credit loss expense (recovery)	(2,948)		111		12		3,065		240
PCD loan charge–offs	(114)		—		—		—		(114)
Charge–offs	(57)		(58)		—		(726)		(841)
Recoveries	132		18		—		407		557
Balance, end of period	$	34,802	$	4,422	$	1,067	$	12,059	$	52,350


	Six Months Ended June 30, 2023
	Commercial		Real Estate		Mortgage Warehouse		Consumer		Total
Balance, beginning of period	$	32,445	$	5,577	$	1,020	$	11,422	$	50,464
Credit loss expense (recovery)	(1,715)		(1,945)		(127)		4,123		336
PCD loan charge–offs	(171)		—		—		—		(171)
Charge–offs	(333)		(4)		—		(1,014)		(1,351)
Recoveries	128		20		—		550		698
Balance, end of period	$	30,354	$	3,648	$	893	$	15,081	$	49,976


	Six Months Ended June 30, 2022
	Commercial		Real Estate		Mortgage Warehouse		Consumer		Total
Balance, beginning of period	$	40,775	$	3,856	$	1,059	$	8,596	$	54,286
Credit loss expense (recovery)	(5,640)		596		8		3,890		(1,146)
PCD loan charge–offs	(370)		—		—		—		(370)
Charge–offs	(137)		(58)		—		(1,013)		(1,208)
Recoveries	174		28		—		586		788
Balance, end of period	$	34,802	$	4,422	$	1,067	$	12,059	$	52,350

The Company utilized the Cumulative Loss Rate method in determining expected future credit losses. The loss rate method measures the amount of loan charge–offs, net of recoveries, (“loan losses”) recognized over the life of a pool and compares those loan losses to the outstanding loan balance of that pool as of a specific point in time (“pool date”).

To estimate a CECL loss rate for the pool, management first identifies the loan losses recognized between the pool date and the reporting date for the pool and determines which loan losses were related to loans outstanding at the pool date. The loss rate method then divides the loan losses recognized on loans outstanding as of the pool date by the outstanding loan balance as of the pool date.

The Company’s expected loss estimate is anchored in historical credit loss experience, with an emphasis on all available portfolio data. The Company's historical look–back period includes January 2008 through the economic cycle, on a quarterly basis. When historical credit loss experience is not sufficient for a specific portfolio, the Company may supplement its own portfolio data with external models or data.

Qualitative reserves reflect management’s overall estimate of the extent to which current expected credit losses on collectively evaluated loans will differ from historical loss experience. The analysis takes into consideration other analytics performed within the organization, such as enterprise and concentration management, along with other credit–related analytics as deemed appropriate. Management attempts to quantify qualitative reserves whenever possible.

The Company’s CECL estimate applies to a forecast that incorporates macroeconomic trends and other environmental factors. Management utilized National, Regional and Local Leading econometrics, as well as management judgment, as the basis for the forecast period. The historical loss rate was utilized as the base rate, and quantitative adjustments were utilized to reflect the forecast and other relevant factors. The forecasted loss rate then reverts to the historical base rate on a straight–line methodology for the remaining life of loan for each pool.

The Company segments the loan portfolio into pools based on the following risk characteristics: financial asset type, loan purpose, collateral type, loan characteristics, credit characteristics, outstanding loan balances, contractual terms and prepayment assumptions, industry of the borrower and concentrations, and historical or expected credit loss patterns.