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Allowance for Credit Losses
 9 Months Ended
Sep. 30, 2024
Receivables [Abstract]  
Allowance for Credit Losses Allowance for Credit Losses
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 nine month periods ended September 30, 2024 and September 30, 2023.
(dollars in thousands)Balance, June 30, 2024Charge-OffsRecoveries Provision for credit losses on loansBalance, September 30, 2024
Three Months Ended September 30, 2024
Construction, land & land development$1,295 $— $13 $(14)$1,294 
Other commercial real estate7,396 — 25 (375)7,046 
   Total commercial real estate8,691 — 38 (389)8,340 
Residential real estate5,990 (9)45 69 6,095 
Commercial, financial & agricultural2,015 (85)76 885 2,891 
Consumer and other2,110 (215)11 431 2,337 
     Total allowance for credit losses on loans$18,806 $(309)$170 $996 $19,663 

(dollars in thousands)Balance, June 30, 2023Charge-OffsRecoveriesProvision for credit losses on loansBalance, September 30, 2023
Three Months Ended September 30, 2023
Construction, land & land development$2,281 $— $1 $(67)$2,215 
Other commercial real estate8,733 — 8 (21)8,720 
   Total commercial real estate11,014 — 9 (88)10,935 
Residential real estate2,642 — 3 128 2,773 
Commercial, financial & agricultural2,984 (714)13 737 3,020 
Consumer and other426 (14)5 223 640 
     Total allowance for loan losses$17,066 $(728)$30 $1,000 $17,368 
(dollars in thousands)Balance, December 31, 2023Charge-OffsRecoveries Provision for credit losses on loansBalance, September 30, 2024
Nine Months Ended September 30, 2024
Construction, land & land development$2,204 $— $15 $(925)1,294 
Other commercial real estate7,064 (20)43 (41)7,046 
   Total commercial real estate9,268 (20)58 (966)8,340 
Residential real estate5,105 (349)252 1,087 6,095 
Commercial, financial & agricultural2,110 (1,099)135 1,745 2,891 
Consumer and other1,888 (466)19 896 2,337 
     Total allowance for credit losses on loans$18,371 $(1,934)$464 $2,762 $19,663 
(dollars in thousands)Balance December 31, 2021Charge-OffsRecoveriesProvisionBalance, September 30, 2022
Nine Months Ended September 30, 2023Balance December 31, 2022Adoption of ASU 2016-13Charge-OffsRecoveriesProvision for credit losses on loansBalance, September 30, 2023
Construction, land & land development$1,959 $148 $— $9 $99 $2,215 
Other commercial real estate8,886 (630)— 33 431 8,720 
   Total commercial real estate10,845 (482)— 42 530 10,935 
Residential real estate2,354 1,053 — 40 (674)2,773 
Commercial, financial & agricultural2,709 (690)(1,157)180 1,978 3,020 
Consumer and other220 66 (17)14 357 640 
     Total allowance for loan losses$16,128 $(53)$(1,174)$276 $2,191 $17,368 
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 September 30, 2024, the Company expects that the markets in which it operates will experience stable economic and unemployment conditions with the trend of delinquencies returning to more normalized levels, 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 Company determines its individual reserves during its quarterly review of substandard loans. This process involves reviewing all loans with a risk grade of 7, 8, 9, 10 or 99 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 nine month periods ended September 30, 2024 and September 30, 2023.
Three Months Ended
September 30,
Nine Months Ended
September 30,
(dollars in thousands)2024202320242023
Beginning balance$1,259 $1,570 $1,375 $— 
Adjustment to allowance for unfunded commitments for adoption of ASU 2016-13— — — 1,661 
Change in unfunded commitments(246)— (362)(91)
Ending balance$1,013 $1,570 $1,013 $1,570