CHFC 2017 Annual Report

A summary of the activity in the allowance for loan losses for the five years ended December 31, 2017 is included in the table below. Years Ended December 31, (Dollars in thousands) 2017 2016 2015 2014 2013 Allowance for loan losses - originated loan portfolio Allowance for loan losses - beginning of year $ 78,268 $ 73,328 $ 75,183 $ 78,572 $ 83,991 Provision for loan losses 23,300 14,875 6,500 6,100 11,000 Loan charge-offs: Commercial (7,274) (6,012) (3,051) (3,169) (4,104) Commercial real estate (1,286) (2,852) (2,693) (2,929) (7,363) Real estate construction and land development (10) (42) (141) (301) (813) Residential mortgage (1,206) (1,080) (2,427) (2,277) (2,878) Consumer installment (6,281) (4,751) (4,182) (4,194) (3,993) Home equity (810) (565) (507) (1,359) (1,995) Total loan charge-offs (16,867) (15,302) (13,001) (14,229) (21,146) Recoveries of loans previously charged off: Commercial 2,075 1,258 970 900 1,783 Commercial real estate 2,420 1,791 1,218 873 1,086 Real estate construction and land development — 36 — 836 23 Residential mortgage 472 376 515 651 346 Consumer installment 2,049 1,703 1,391 1,279 1,350 Home equity 170 203 552 201 139 Total loan recoveries 7,186 5,367 4,646 4,740 4,727 Net loan charge-offs (9,681) (9,935) (8,355) (9,489) (16,419) Allowance for loan losses - end of year 91,887 78,268 73,328 75,183 78,572 Allowance for loan losses - acquired loan portfolio Allowance for loan losses - beginning of period — — 500 500 500 Provision for loan losses — — — — — Net loan charge-offs - acquired (commercial) — — (500) — — Allowance for loan losses - end of period — — — 500 500 Total allowance for loan losses $ 91,887 $ 78,268 $ 73,328 $ 75,683 $ 79,072 Net loan charge-offs as a percentage of average loans outstanding 0.07% 0.11% 0.13% 0.19% 0.38% The allocation of the allowance for loan losses in the table below is based upon ranges of estimates and is not intended to imply either limitations on the usage of the allowance or exactness of the specific amounts. The entire allowance attributable to originated loans is available to absorb future loan losses within the originated loan portfolio without regard to the categories in which the loan losses are classified. The allocation of the allowance is based upon a combination of factors, including historical loss factors, credit-risk grading, past-due experiences, and other factors, as discussed above. 60