CHFC 2018 Annual Report

A summary of the activity in the allowance for loan losses for the five years ended December 31, 2018 is included in the table below. Years Ended December 31, (Dollars in thousands) 2018 2017 2016 2015 2014 Allowance for loan losses - originated loan portfolio Allowance for loan losses - beginning of year $ 91,887 $ 78,268 $ 73,328 $ 75,183 $ 78,572 Provision for loan losses 30,330 23,300 14,875 6,500 6,100 Loan charge-offs: Commercial (4,775) (7,274) (6,012) (3,051) (3,169) Commercial real estate: Owner-occupied (2,332) (996) (2,318) (2,123) (1,483) Non-owner occupied (1,071) (161) (268) (523) (1,175) Vacant land (1,376) (129) (266) (47) (271) Total commercial real estate (4,779) (1,286) (2,852) (2,693) (2,929) Real estate construction and land development (9) (10) (42) (141) (301) Residential mortgage (1,475) (1,206) (1,080) (2,427) (2,277) Consumer installment (6,377) (6,281) (4,751) (4,182) (4,194) Home equity (1,049) (810) (565) (507) (1,359) Total loan charge-offs (18,464) (16,867) (15,302) (13,001) (14,229) Recoveries of loans previously charged off: Commercial 1,815 2,075 1,258 970 900 Commercial real estate: Owner-occupied 1,119 1,146 892 639 473 Non-owner occupied 555 888 889 547 392 Vacant land 9 386 10 32 8 Total Commercial real estate 1,683 2,420 1,791 1,218 873 Real estate construction and land development 35 — 36 — 836 Residential mortgage 318 472 376 515 651 Consumer installment 1,683 2,049 1,703 1,391 1,279 Home equity 277 170 203 552 201 Total loan recoveries 5,811 7,186 5,367 4,646 4,740 Net loan charge-offs (12,653) (9,681) (9,935) (8,355) (9,489) Allowance for loan losses - end of year 109,564 91,887 78,268 73,328 75,183 Allowance for loan losses - acquired loan portfolio Allowance for loan losses - beginning of period — — — 500 500 Provision for loan losses 420 — — — — Net loan charge-offs - acquired (commercial) — — — (500) — Allowance for loan losses - end of period 420 — — — 500 Total allowance for loan losses $ 109,984 $ 91,887 $ 78,268 $ 73,328 $ 75,683 Net loan charge-offs as a percentage of average loans 0.09% 0.07% 0.11% 0.13% 0.19% 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 allowances attributable to originated and acquired loans are available to absorb future loan losses within the originated and acquired loan portfolios without regard to the categories in which the loan losses are classified. The allocation of the allowances is based upon a combination of factors, including historical loss factors, credit-risk grading, past-due experiences, and other factors, as discussed above. 64