Portfolio Loans | LOANS The loan portfolio is comprised of loans originated by the Company and loans that were acquired in connection with the Company’s acquisitions. These loans are accounted for using the guidance in the Accounting Standards Codification (ASC) section 310-30 and 310-20. Loans accounted for using ASC 310-30 are sometimes referred to as purchased credit impaired, or PCI, loans. The table below shows the loan portfolio composition including carrying value by segment of loans accounted for at amortized cost, which includes our originated loans, and loans accounted for as PCI. (in thousands) December 31, 2017 December 31, 2016 Loans accounted for at amortized cost $ 4,022,896 $ 3,118,392 Loans accounted for as PCI 74,154 39,769 Total loans $ 4,097,050 $ 3,158,161 The following tables refer to loans not accounted for as PCI loans. Below is a summary of loans by category at December 31, 2017 and 2016 : (in thousands) December 31, 2017 December 31, 2016 Commercial and industrial $ 1,918,720 $ 1,632,714 Real estate loans: Commercial - investor owned 769,275 544,808 Commercial - owner occupied 554,589 350,148 Construction and land development 303,091 194,542 Residential 341,312 240,760 Total real estate loans 1,968,267 1,330,258 Consumer and other 137,234 156,182 Loans, before unearned loan (fees) costs 4,024,221 3,119,154 Unearned loan (fees) costs, net (1,325 ) (762 ) Loans, including unearned loan fees $ 4,022,896 $ 3,118,392 Following is a summary of activity for the years ended December 31, 2017 , 2016 , and 2015 of loans to executive officers and directors, or to entities in which such individuals had beneficial interests as a shareholder, officer, or director. Such loans were made in the normal course of business on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable transactions with other customers and did not involve more than the normal risk of collectibility. (in thousands) December 31, 2017 December 31, 2016 December 31, 2015 Balance at beginning of year $ 15,406 $ 4,394 $ 13,513 New loans and advances 1,353 11,539 641 Payments and other reductions (11,410 ) (527 ) (9,760 ) Balance at end of year $ 5,349 $ 15,406 $ 4,394 A summary of activity in the allowance for loan losses and the recorded investment in loans by class and category based on impairment method for the years ended indicated below is as follows: (in thousands) Commercial and industrial CRE - investor owned CRE - owner occupied Construction and land development Residential real estate Consumer and other Total Balance at December 31, 2017 Allowance for loan losses: Balance, beginning of year $ 26,996 $ 3,420 $ 2,890 $ 1,304 $ 2,023 $ 932 $ 37,565 Provision (provision reversal) 8,737 456 404 336 797 34 10,764 Losses charged off (9,872 ) (117 ) (90 ) (254 ) (973 ) (201 ) (11,507 ) Recoveries 545 131 104 101 390 73 1,344 Balance, end of year $ 26,406 $ 3,890 $ 3,308 $ 1,487 $ 2,237 $ 838 $ 38,166 Balance at December 31, 2016 Allowance for loan losses: Balance, beginning of year $ 22,056 $ 3,484 $ 2,969 $ 1,704 $ 1,796 $ 1,432 $ 33,441 Provision (provision reversal) 6,569 (11 ) (1,202 ) (1,334 ) 129 1,400 5,551 Losses charged off (2,303 ) (95 ) — — (25 ) (1,912 ) (4,335 ) Recoveries 674 42 1,123 934 123 12 2,908 Balance, end of year $ 26,996 $ 3,420 $ 2,890 $ 1,304 $ 2,023 $ 932 $ 37,565 Balance at December 31, 2015 Allowance for loan losses: Balance, beginning of year $ 16,983 $ 4,382 $ 3,135 $ 1,715 $ 2,830 $ 1,140 $ 30,185 Provision (provision reversal) 6,976 (303 ) (1,626 ) (335 ) (58 ) 218 4,872 Losses charged off (3,699 ) (664 ) (38 ) (350 ) (1,313 ) (27 ) (6,091 ) Recoveries 1,796 69 1,498 674 337 101 4,475 Balance, end of year $ 22,056 $ 3,484 $ 2,969 $ 1,704 $ 1,796 $ 1,432 $ 33,441 (in thousands) Commercial and industrial CRE - investor owned CRE - owner occupied Construction and land development Residential real estate Consumer and other Total Balance December 31, 2017 Allowance for loan losses - Ending balance: Individually evaluated for impairment $ 2,508 $ — $ 71 $ — $ — $ — $ 2,579 Collectively evaluated for impairment 23,898 3,890 3,237 1,487 2,237 838 35,587 Total $ 26,406 $ 3,890 $ 3,308 $ 1,487 $ 2,237 $ 838 $ 38,166 Loans - Ending balance: Individually evaluated for impairment $ 12,665 $ 422 $ 1,975 $ 136 $ 1,602 $ 375 $ 17,175 Collectively evaluated for impairment 1,906,055 768,853 552,614 302,955 339,710 135,534 4,005,721 Total $ 1,918,720 $ 769,275 $ 554,589 $ 303,091 $ 341,312 $ 135,909 $ 4,022,896 Balance December 31, 2016 Allowance for loan losses - Ending balance: Individually evaluated for impairment $ 2,909 $ — $ — $ 155 $ — $ — $ 3,064 Collectively evaluated for impairment 24,087 3,420 2,890 1,149 2,023 932 34,501 Total $ 26,996 $ 3,420 $ 2,890 $ 1,304 $ 2,023 $ 932 $ 37,565 Loans - Ending balance: Individually evaluated for impairment $ 12,523 $ 430 $ 1,854 $ 1,903 $ 62 $ — $ 16,772 Collectively evaluated for impairment 1,620,191 544,378 348,294 192,639 240,698 155,420 3,101,620 Total $ 1,632,714 $ 544,808 $ 350,148 $ 194,542 $ 240,760 $ 155,420 $ 3,118,392 A summary of nonperforming loans individually evaluated for impairment by category at December 31, 2017 and 2016 , and the income recognized on impaired loans is as follows: December 31, 2017 (in thousands) Unpaid Recorded Recorded Allowance Total Related Allowance Average Commercial and industrial $ 20,750 $ 2,321 $ 10,344 $ 12,665 $ 2,508 $ 16,270 Real estate: Commercial - investor owned 560 422 — 422 — 521 Commercial - owner occupied 487 — 487 487 71 490 Construction and land development 441 136 — 136 — 331 Residential 1,730 1,602 — 1,602 — 1,735 Consumer and other 375 375 — 375 — 375 Total $ 24,343 $ 4,856 $ 10,831 $ 15,687 $ 2,579 $ 19,722 December 31, 2016 (in thousands) Unpaid Recorded Recorded Allowance Total Related Allowance Average Commercial and industrial $ 12,341 $ 566 $ 11,791 $ 12,357 $ 2,909 $ 4,489 Real estate: Commercial - investor owned 525 435 — 435 — 668 Commercial - owner occupied 225 231 — 231 — 227 Construction and land development 1,904 1,947 359 2,306 155 1,918 Residential 62 62 — 62 — 64 Consumer and other — — — — — — Total $ 15,057 $ 3,241 $ 12,150 $ 15,391 $ 3,064 $ 7,366 December 31, (in thousands) 2017 2016 2015 Total interest income that would have been recognized under original terms on impaired loans $ 1,324 $ 1,079 $ 1,038 Total cash received and recognized as interest income on impaired loans 643 251 226 Total interest income recognized on impaired loans still accruing 63 155 36 There were no loans over 90 days past due and still accruing interest at December 31, 2017 or 2016 . The recorded investment in nonperforming loans by category at December 31, 2017 and 2016 , is as follows: December 31, 2017 (in thousands) Non-accrual Restructured, not on non-accrual Total Commercial and industrial $ 11,946 $ 719 $ 12,665 Real estate: Commercial - investor owned 422 — 422 Commercial - owner occupied 487 — 487 Construction and land development 136 — 136 Residential 1,602 — 1,602 Consumer and other 375 — 375 Total $ 14,968 $ 719 $ 15,687 December 31, 2016 (in thousands) Non-accrual Restructured, not on non-accrual Total Commercial and industrial $ 10,046 $ 2,311 $ 12,357 Real estate: Commercial - investor owned 435 — 435 Commercial - owner occupied 231 — 231 Construction and land development 2,286 20 2,306 Residential 62 — 62 Consumer and other — — — Total $ 13,060 $ 2,331 $ 15,391 The recorded investment by category for the portfolio loans that have been restructured during the years ended December 31, 2017 and 2016 , is as follows: Year ended December 31, 2017 Year ended December 31, 2016 (in thousands, except for number of loans) Number of Loans Pre-Modification Outstanding Recorded Balance Post-Modification Outstanding Recorded Balance Number of Loans Pre-Modification Outstanding Recorded Balance Post-Modification Outstanding Recorded Balance Commercial and industrial 1 $ 676 $ 676 4 $ 12,114 $ 12,114 Real estate: Commercial - investor owned — — — 1 248 248 Commercial - owner occupied — — — 1 13 13 Construction and land development — — — 1 20 20 Residential — — — — — — Consumer and other — — — — — — Total 1 $ 676 $ 676 7 $ 12,395 $ 12,395 The restructured portfolio loans primarily resulted from interest rate concessions and changing the terms of the loans. As of December 31, 2017 , the Company allocated no specific reserves to loans that have been restructured. Portfolio loans restructured that subsequently defaulted during the year ended December 31, 2017 , and 2016 , are as follows: Year ended December 31, 2017 Year ended December 31, 2016 (in thousands, except for number of loans) Number of Loans Recorded Balance Number of Loans Recorded Balance Commercial and industrial 2 343 — — Real Estate: Residential 1 5 — — Total 3 348 — — The aging of the recorded investment in past due portfolio loans by portfolio class and category at December 31, 2017 and 2016 is shown below: December 31, 2017 (in thousands) 30-89 Days Past Due 90 or More Past Due Total Past Due Current Total Commercial and industrial $ 7,882 $ 1,770 $ 9,652 $ 1,909,068 $ 1,918,720 Real estate: Commercial - investor owned 934 — 934 768,341 769,275 Commercial - owner occupied — — — 554,589 554,589 Construction and land development 76 — 76 303,015 303,091 Residential 1,529 945 2,474 338,838 341,312 Consumer and other 407 — 407 135,502 135,909 Total $ 10,828 $ 2,715 $ 13,543 $ 4,009,353 $ 4,022,896 December 31, 2016 (in thousands) 30-89 Days Past Due 90 or More Past Due Total Past Due Current Total Commercial and industrial $ 334 $ 171 $ 505 $ 1,632,209 $ 1,632,714 Real estate: Commercial - investor owned — 175 175 544,633 544,808 Commercial - owner occupied 212 225 437 349,711 350,148 Construction and land development 355 1,528 1,883 192,659 194,542 Residential 91 — 91 240,669 240,760 Consumer and other 7 — 7 155,413 155,420 Total $ 999 $ 2,099 $ 3,098 $ 3,115,294 $ 3,118,392 The Company categorizes loans into risk categories based on relevant information about the ability of borrowers to service their debt, such as current financial information, historical payment experience, credit documentation, and current economic factors among other factors. This analysis is performed on a quarterly basis. The Company uses the following definitions for risk ratings: • Grades 1 , 2 , and 3 – Includes loans to borrowers with a continuous record of strong earnings, sound balance sheet condition and capitalization, ample liquidity with solid cash flow, and whose management team has experience and depth within their industry. • Grade 4 – Includes loans to borrowers with positive trends in profitability, satisfactory capitalization and balance sheet condition, and sufficient liquidity and cash flow. • Grade 5 – Includes loans to borrowers that may display fluctuating trends in sales, profitability, capitalization, liquidity, and cash flow. • Grade 6 – Includes loans to borrowers where an adverse change or perceived weakness has occurred, but may be correctable in the near future. Alternatively, this rating category may also include circumstances where the borrower is starting to reverse a negative trend or condition, or has recently been upgraded from a 7 , 8 , or 9 rating. • Grade 7 – Watch credits are borrowers that have experienced financial setback of a nature that is not determined to be severe or influence ‘ongoing concern’ expectations. Although possible, no loss is anticipated, due to strong collateral and/or guarantor support. • Grade 8 – Substandard credits will include those borrowers characterized by significant losses and sustained downward trends in balance sheet condition, liquidity, and cash flow. Repayment reliance may have shifted to secondary sources. Collateral exposure may exist and additional reserves may be warranted. • Grade 9 – Doubtful credits include borrowers that may show deteriorating trends that are unlikely to be corrected. Collateral values may appear insufficient for full recovery, therefore requiring a partial charge-off, or debt renegotiation with the borrower. The borrower may have declared bankruptcy or bankruptcy is likely in the near term. All doubtful rated credits will be on non-accrual. The recorded investment by risk category of the loans by portfolio class and category at December 31, 2017 and December 31, 2016 is as follows: December 31, 2017 (in thousands) Pass (1-6) Watch (7) Substandard (8) Total Commercial and industrial $ 1,769,102 $ 94,002 $ 55,616 $ 1,918,720 Real estate: Commercial - investor owned 754,010 10,840 4,425 769,275 Commercial - owner occupied 514,616 34,440 5,533 554,589 Construction and land development 292,766 9,983 342 303,091 Residential 329,742 3,648 7,922 341,312 Consumer and other 134,704 10 1,195 135,909 Total $ 3,794,940 $ 152,923 $ 75,033 $ 4,022,896 December 31, 2016 (in thousands) Pass (1-6) Watch (7) Substandard (8) Total Commercial and industrial $ 1,499,114 $ 57,416 $ 76,184 $ 1,632,714 Real estate: Commercial - investor owned 530,494 10,449 3,865 544,808 Commercial - owner occupied 306,658 39,249 4,241 350,148 Construction and land development 185,505 6,575 2,462 194,542 Residential 233,479 2,997 4,284 240,760 Consumer and other 153,984 — 1,436 155,420 Total $ 2,909,234 $ 116,686 $ 92,472 $ 3,118,392 |