Effective January 1, 2020, the Bank adopted ASU 2016-13. CECL Adoption replaced the ALL with the ACL on loans and replaced the related provision for loan losses with the provision for credit losses on loans.

The baseline loss rates used to calculate the ACL on loans at January 1, 2020 utilized the Bank's average quarterly historical loss information from December 31, 2007 through December 31, 2019. The baseline loss rate for the ACL at December 31, 2020 used historical losses beginning December 31, 2012 through the balance sheet date. The Bank updated the historical loss period during the year ended December 31, 2020 as it believed the economic cycle has ended with the onset of the COVID-19 recession. The Bank believes the historic loss rates are viable inputs to the current expected credit loss methodology as the Bank's lending practice and business has remained relatively stable throughout the periods. While the Bank's assets have grown, the credit culture has stayed relatively consistent.

Prepayments included in the CECL model at January 1, 2020 were based on the 48-month rolling historical averages for each segment, which management believes is an accurate representation of future prepayment activity. There were no changes to this assumption during the year ended December 31, 2020.

The reasonable and supportable period used in the CECL model as of January 1, 2020 was four quarters and was increased to five quarters for the model as of December 31, 2020 to include the additional impact of certain macroeconomic factors with lagged periods. Management believes that forecasts beyond this five quarter time period tend to diverge in economic assumptions and may be less comparable to actual future events. As the length of the reasonable and supportable period increases, the degree of judgment involved in estimating the allowance will likely increase.

The Bank used a two-quarter reversion period in calculating the ACL as of January 1, 2020 and December 31, 2020 as it believes the historical loss information is relevant to the expected credit losses and recognizes the declining precision and increasing uncertainty of estimating credit losses in those periods beyond which it can make reasonable and supportable forecasts.

The macroeconomic forecast used in the CECL model as of January 1, 2020 predicted continued economic expansion with steady GDP growth and low unemployment rates, among other factors. The onset of the COVID-19 pandemic resulted in the identification of an economic recession during the second quarter of 2020 as evidenced by certain economic forecasts signaling prolonged, profound, and pervasive contraction in economic activities due to the COVID-19 pandemic. The GDP contracted and unemployment rates increased, amount other factors, during the year ended December 31, 2020. The macroeconomic forecast used in the CECL model as of December 31, 2020 reflected a slow recovery from the COVID-19 recession, modeled to last through the end of 2021. The macroeconomic forecast as of December 31, 2020 considered the COVID-19 vaccine progress as well as anticipated government stimulus plans; however, uncertainty remained over the time necessary to return the economy to pre-pandemic levels.


	Year Ended December 31,
	2020		2019		2018
	(In thousands)
Balance at the beginning of the year	$	36,171	$	35,042	$	32,086
Impact of CECL Adoption	1,822		—		—
Balance at the beginning of the year, as adjusted	37,993		35,042		32,086
Charge-offs	(5,622)		(4,989)		(3,605)
Recoveries of loans previously charged-off	2,381		1,807		1,432
Provision for loan losses	35,433		4,311		5,129
Balance at the end of the year	$	70,185	$	36,171	$	35,042


	Beginning Balance		Impact of CECL Adoption		Beginning Balance, as Adjusted		Charge-offs		Recoveries		Provision for Credit Losses		Ending Balance
	(In thousands)
Commercial business:
Commercial and industrial	$	11,739	$	(1,348)	$	10,391	$	(3,616)	$	1,513	$	21,722	$	30,010
SBA PPP	—		—		$	—	—		—		—		—
Owner-occupied CRE	4,512		452		4,964		(135)		17		4,640		9,486
Non-owner occupied CRE	7,682		(2,039)		5,643		—		—		4,469		10,112
Total commercial business	23,933		(2,935)		20,998		(3,751)		1,530		30,831		49,608
Residential real estate	1,458		1,471		2,929		—		3		(1,341)		1,591
Real estate construction and land development:
Residential	1,455		(571)		884		—		278		789		1,951
Commercial and multifamily	1,605		7,240		8,845		(417)		—		2,713		11,141
Total real estate construction and land development	3,060		6,669		9,729		(417)		278		3,502		13,092
Consumer	6,821		(2,484)		4,337		(1,454)		570		2,441		5,894
Unallocated	899		(899)		—		—		—		—		—
Total	$	36,171	$	1,822	$	37,993	$	(5,622)	$	2,381	$	35,433	$	70,185

The Bank recognized net charge-offs of $3.2 million during the year ended December 31, 2020 primarily due to a commercial and industrial charge-off of $1.7 million related to issues surrounding control of the underlying loan collateral. The Bank determined it appropriate to charge-off this entire loan relationship balance and pursue an aggressive collection strategy. Net charge-offs also included two commercial and industrial loan relationships totaling $447,000 as a result of impacts from the COVID-19 pandemic, a partial charge-off of one commercial and multifamily real estate construction and land development loan totaling $417,000 as a result of cost overruns and delays in construction and small dollar net charge-offs on a large volume of consumer loans of $884,000. Net charge-offs were offset partially by the full recovery of a commercial and industrial agricultural lending relationship of $963,000 during the year ended December 31, 2020, which was charged-off during the year ended December 31, 2019.

The provision for credit losses on loans of $35.4 million for the year ended December 31, 2020 was necessary to build the allowance to account for the current and forecasted economic conditions amidst the COVID-19 pandemic, including the credit losses estimated on collectively and individually evaluated loans.

The following table details the activity in the ALL disaggregated by segment and class for the year ended December 31, 2019 under the incurred loss methodology, including the ASC 310-30 methodology for PCI loans:


	Beginning Balance		Charge-offs		Recoveries		Provision for Loan Losses		Ending Balance
	(In thousands)
Commercial business:
Commercial and industrial	$	11,343	$	(2,692)	$	166	$	2,922	$	11,739
Owner-occupied CRE	4,898		—		50		(436)		4,512
Non-owner occupied CRE	7,470		—		441		(229)		7,682
Total commercial business	23,711		(2,692)		657		2,257		23,933
Residential real estate	1,203		(60)		—		315		1,458
Real estate construction and land development:
Residential	1,240		(133)		637		(289)		1,455
Commercial and multifamily	954		—		—		651		1,605
Total real estate construction and land development	2,194		(133)		637		362		3,060
Consumer	6,581		(2,104)		513		1,831		6,821
Unallocated	1,353		—		—		(454)		899
Total	$	35,042	$	(4,989)	$	1,807	$	4,311	$	36,171

The following table details the ALL disaggregated on the basis of the Company's impairment method as of December 31, 2019 under the incurred loss methodology, including the ASC 310-30 methodology for PCI loans:


	Loans Individually Evaluated for Impairment		Loans Collectively Evaluated for Impairment		PCI Loans		Total ALL
	(In thousands)
Commercial business:
Commercial and industrial	$	1,372	$	9,772	$	595	$	11,739
Owner-occupied CRE	426		3,558		528		4,512
Non-owner occupied CRE	146		7,064		472		7,682
Total commercial business	1,944		20,394		1,595		23,933
Residential real estate	56		1,316		86		1,458
Real estate construction and land development:
Residential	—		1,296		159		1,455
Commercial and multifamily	—		1,527		78		1,605
Total real estate construction and land development	—		2,823		237		3,060
Consumer	143		6,327		351		6,821
Unallocated			899				899
Total	$	2,143	$	31,759	$	2,269	$	36,171

The following table details the amortized cost of the loan receivables disaggregated on the basis of the Company’s impairment method as of December 31, 2019 under the incurred loss methodology, including the ASC 310-30 methodology for PCI loans:


	Loans Individually Evaluated for Impairment		Loans Collectively Evaluated for Impairment		PCI Loans		Loans Receivable
	(In thousands)
Commercial business:
Commercial and industrial	$	43,808	$	806,044	$	2,368	$	852,220
Owner-occupied CRE	6,336		793,984		4,914		805,234
Non-owner occupied CRE	6,324		1,276,964		5,491		1,288,779
Total commercial business	56,468		2,876,992		12,773		2,946,233
Residential real estate	215		127,870		3,575		131,660
Real estate construction and land development:
Residential	237		104,059		—		104,296
Commercial and multifamily	—		170,350		—		170,350
Total real estate construction and land development	237		274,409		—		274,646
Consumer	561		413,017		1,762		415,340
Total	$	57,481	$	3,692,288	$	18,110	$	3,767,879

The following table details the activity in the ALL disaggregated by segment and class for the year ended December 31, 2018 under the incurred loss methodology, including the ASC 310-30 methodology for PCI loans:


	Balance at Beginning of Year		Charge-offs		Recoveries		Provision for Loan Losses		Balance at End of Year
	(In thousands)
Commercial business:
Commercial and industrial	$	9,910	$	(1,250)	$	901	$	1,782	$	11,343
Owner-occupied CRE	3,992		(1)		7		900		4,898
Non-owner occupied CRE	8,097		(149)		—		(478)		7,470
Total commercial business	21,999		(1,400)		908		2,204		23,711
Residential real estate	1,056		(45)		—		192		1,203
Real estate construction and land development:
Residential	862		—		11		367		1,240
Commercial and multifamily	1,190		—		—		(236)		954
Total real estate construction and land development	2,052		—		11		131		2,194
Consumer	6,081		(2,160)		513		2,147		6,581
Unallocated	898		—		—		455		1,353
Total	$	32,086	$	(3,605)	$	1,432	$	5,129	$	35,042