XML 21 R13.htm IDEA: XBRL DOCUMENT v3.23.2
Allowance for Credit Losses
 6 Months Ended
Jun. 30, 2023
Receivables [Abstract]  
Allowance for Credit Losses Allowance for Credit Losses
As previously mentioned in Note 1, since the adoption of ASC 326 on January 1, 2023, the ACL for loans represents management's estimate of life of loan credit losses in the portfolio as of the end of the period. The ACL related to unfunded commitments is included in other liabilities in the consolidated balance sheet. The following tables present the balance sheet activity in the ACL by portfolio segment for loans for the three and six month periods ended June 30, 2023 and June 30, 2022 .
CECL
(dollars in thousands)Balance March 31, 2023Charge-OffsRecoveries Provision for credit losses on loansBalance, June 30, 2023
Three Months Ended June 30, 2023
Construction, land & land development$2,342 $— $5 $(66)$2,281 
Other commercial real estate8,122 — 11 600 8,733 
   Total commercial real estate10,464 — 16 534 11,014 
Residential real estate4,112 — 26 (1,496)2,642 
Commercial, financial & agricultural1,657 (170)160 1,337 2,984 
Consumer and other366 — 5 55 426 
     Total allowance for credit losses on loans$16,599 $(170)$207 $430 $17,066 
(dollars in thousands)Balance December 31, 2022Adoption of ASU 2016-13Charge-OffsRecoveries Provision for credit losses on loansBalance, June 30, 2023
Six Months Ended June 30, 2023
Construction, land & land development$1,959 $148 $— $8 $166 2,281 
Other commercial real estate8,886 (630)— 25 452 8,733 
   Total commercial real estate10,845 (482)— 33 618 11,014 
Residential real estate2,354 1,053 — 37 (802)2,642 
Commercial, financial & agricultural2,709 (690)(443)167 1,241 2,984 
Consumer and other220 66 (3)9 134 426 
     Total allowance for credit losses on loans$16,128 $(53)$(446)$246 $1,191 $17,066 

Incurred Loss
(dollars in thousands)Balance March 31, 2022Charge-OffsRecoveriesProvisionBalance, June 30, 2022
Three Months Ended June 30, 2022
Construction, land & land development$1,339 $— $5 $(292)$1,052 
Other commercial real estate7,355 — 67 606 8,028 
   Total commercial real estate8,694 — 72 314 9,080 
Residential real estate1,811 (30)18 (311)1,488 
Commercial, financial & agricultural2,087 (132)12 (289)1,678 
Consumer and other327 (5)9 1,386 1,717 
     Total allowance for loan losses$12,919 $(167)$111 $1,100 $13,963 
(dollars in thousands)Balance December 31, 2021Charge-OffsRecoveriesProvisionBalance, June 30, 2022
Six Months Ended June 30, 2022
Construction, land & land development$1,127 $— $11 $(86)$1,052 
Other commercial real estate7,691 (58)74 321 8,028 
   Total commercial real estate8,818 (58)85 235 9,080 
Residential real estate1,805 (48)22 (291)1,488 
Commercial, financial & agricultural1,083 (148)56 687 1,678 
Consumer and other1,204 (21)15 519 1,717 
     Total allowance for loan losses$12,910 $(275)$178 $1,150 $13,963 
As of June 30, 2023, Colony used a one-year reasonable and supportable forecast period. The changes in loss rates used as the basis for the estimate of credit losses during this period were modeled using historical data from peer banks and macroeconomic forecast data obtained from a third party vendor, which were then applied to Colony's recent default experience as a starting point. As of June 30, 2023, the Company expects that the markets in which it operates will experience a decline in economic conditions and an increase in the unemployment rate and level and trend of delinquencies, over the next two years. Management adjusted the historical loss experience for these expectations. No reversion adjustments were necessary, as the starting point for the Company's estimate was a cumulative loss rate covering the expected contractual term of the portfolio.
The following table represents the recorded investment in loans by portfolio segment and the balance of the allowance assigned to each segment based on the incurred loss methodology of evaluating the loans for impairment as of December 31, 2022.
(dollars in thousands)Construction, land & land developmentOther commercial real estateResidential real estateCommercial, financial & agriculturalConsumer and otherTotal
Year ended December 31, 2022
Period end amount allocated to
Individually evaluated for impairment$44 $— $— $— $— $44 
Collectively evaluated for impairment1,915 8,853 2,354 2,709 220 16,051 
Purchase credit impaired— 33 — — — 33 
Ending Balance$1,959 $8,886 $2,354 $2,709 $220 $16,128 
Loans
Individually evaluated for impairment$514 $3,754 $62 $— $— $4,330 
Collectively evaluated for impairment228,921 970,895 289,992 223,923 18,247 1,731,978 
Purchase credit impaired— 798 — — — 798 
Ending Balance$229,435 $975,447 $290,054 $223,923 $18,247 $1,737,106 
The Company determines its individual reserves during its quarterly review of substandard loans. This process involves reviewing all loans with a risk grade of 6 or greater and an outstanding balance of $500,000 or more, regardless of the loans impairment classification.
The Company maintains an allowance for off-balance sheet credit exposures such as unfunded balances for existing lines of credit, commitments to extend future credit, as well as both standby and commercial letters of credit when there is a contractual obligation to extend credit and when this extension of credit is not unconditionally cancellable. The allowance for off-balance sheet credit exposures is adjusted as a provision for credit loss expense. The estimate includes consideration
of the likelihood that funding will occur, which is based on a historical funding study derived from internal information, and an estimate of expected credit losses on commitments expected to be funded over its estimated life, which are the same loss rates that are used in computing the allowance for credit losses on loans. The allowance for credit losses for unfunded commitments is separately classified on the balance sheet within Other liabilities.
The following table presents the balance and activity in the allowance for credit losses for unfunded commitments for the three and six months ended June 30, 2023.
(dollars in thousands)Total Allowance for Credit Losses-Unfunded Commitments
Three Months Ended
Balance, March 31, 2023$1,800 
Change in unfunded commitments(230)
Balance, June 30, 2023$1,570 
Six Months Ended
Balance, December 31, 2022$— 
Adjustment to allowance for unfunded commitments for adoption of ASU 2016-131,661 
Change in unfunded commitments(91)
Balance, June 30, 2023$1,570