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 ("PCI") loans. The table below shows the loan portfolio composition including carrying value categorized by loans accounted for at amortized cost, which includes our originated loans, and by loans accounted for as PCI. (in thousands) June 30, 2018 December 31, 2017 Loans accounted for at amortized cost $ 4,214,996 $ 4,022,896 Loans accounted for as PCI 60,765 74,154 Total loans $ 4,275,761 $ 4,097,050 The following tables refer to loans not accounted for as PCI loans. Below is a summary of loans by category at June 30, 2018 and December 31, 2017 : (in thousands) June 30, 2018 December 31, 2017 Commercial and industrial $ 2,038,040 $ 1,918,720 Real estate: Commercial - investor owned 819,427 769,275 Commercial - owner occupied 593,138 554,589 Construction and land development 300,117 303,091 Residential 318,055 341,312 Total real estate loans 2,030,737 1,968,267 Consumer and other 147,304 137,234 Loans, before unearned loan fees 4,216,081 4,024,221 Unearned loan fees, net (1,085 ) (1,325 ) Loans, including unearned loan fees $ 4,214,996 $ 4,022,896 A summary of the activity in the allowance for loan losses and the recorded investment in loans by class and category based on impairment methodology through June 30, 2018 , and at December 31, 2017 , 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 Allowance for loan losses: Balance at December 31, 2017 $ 26,406 $ 3,890 $ 3,308 $ 1,487 $ 2,237 $ 838 $ 38,166 Provision (provision reversal) for loan losses 780 648 190 35 259 (41 ) 1,871 Losses charged off (732 ) — — — (254 ) (49 ) (1,035 ) Recoveries 956 8 4 206 73 14 1,261 Balance at March 31, 2018 $ 27,410 $ 4,546 $ 3,502 $ 1,728 $ 2,315 $ 762 $ 40,263 Provision (provision reversal) for loan losses 2,852 5 340 (206 ) (573 ) (33 ) 2,385 Losses charged off (956 ) — — — (38 ) (33 ) (1,027 ) Recoveries 118 10 3 168 59 28 386 Balance at June 30, 2018 $ 29,424 $ 4,561 $ 3,845 $ 1,690 $ 1,763 $ 724 — $ 42,007 (in thousands) Commercial and industrial CRE - investor owned CRE - owner occupied Construction and land development Residential real estate Consumer and other Total Balance June 30, 2018 Allowance for loan losses - Ending balance: Individually evaluated for impairment $ 3,667 $ — $ 219 $ — $ — $ — $ 3,886 Collectively evaluated for impairment 25,757 4,561 3,626 1,690 1,763 724 38,121 Total $ 29,424 $ 4,561 $ 3,845 $ 1,690 $ 1,763 $ 724 $ 42,007 Loans - Ending balance: Individually evaluated for impairment $ 11,226 $ 410 $ 2,150 $ 435 $ 1,669 $ 318 $ 16,208 Collectively evaluated for impairment 2,026,814 819,017 590,988 299,682 316,386 145,901 4,198,788 Total $ 2,038,040 $ 819,427 $ 593,138 $ 300,117 $ 318,055 $ 146,219 $ 4,214,996 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 A summary of nonperforming loans individually evaluated for impairment by category at June 30, 2018 and December 31, 2017 , and the income recognized on impaired loans is as follows: June 30, 2018 (in thousands) Unpaid Recorded Recorded Allowance Total Related Allowance Average Commercial and industrial $ 20,915 $ 1,900 $ 9,326 $ 11,226 $ 3,667 $ 12,591 Real estate: Commercial - investor owned 557 410 — 410 — 415 Commercial - owner occupied 751 259 484 743 219 750 Construction and land development 444 435 — 435 — 494 Residential 1,835 1,669 — 1,669 — 1,688 Consumer and other 332 318 — 318 — 333 Total $ 24,834 $ 4,991 $ 9,810 $ 14,801 $ 3,886 $ 16,271 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 Three months ended June 30, Six months ended June 30, (in thousands) 2018 2017 2018 2017 Total interest income that would have been recognized under original terms $ 467 $ 340 $ 1,001 $ 655 Total cash received and recognized as interest income on non-accrual loans 78 16 89 39 Total interest income recognized on accruing, impaired loans 13 14 23 47 The recorded investment in nonperforming loans by category at June 30, 2018 and December 31, 2017 , is as follows: June 30, 2018 (in thousands) Non-accrual Restructured, not on non-accrual Total Commercial and industrial $ 10,593 $ 633 $ 11,226 Real estate: Commercial - investor owned 410 — 410 Commercial - owner occupied 743 — 743 Construction and land development 435 — 435 Residential 1,669 — 1,669 Consumer and other 318 — 318 Total $ 14,168 $ 633 $ 14,801 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 At June 30, 2018, performing loans over 90 days past due and still accruing interest totaled $4.1 million . There were no loans over 90 days past due and still accruing interest at December 31, 2017 . There were no portfolio loans restructured during the three and six months ended June 30, 2018 and 2017. As of June 30, 2018 , the Company had $2.0 million in specific reserves allocated to $7.9 million of loans that have been restructured. During the three and six months ended June 30, 2018 and 2017, there were no portfolio loans that subsequently defaulted. The aging of the recorded investment in past due loans by portfolio class and category at June 30, 2018 and December 31, 2017 is shown below. June 30, 2018 (in thousands) 30-89 Days Past Due 90 or More Past Due Total Past Due Current Total Commercial and industrial $ 2,180 $ 8,070 $ 10,250 $ 2,027,790 $ 2,038,040 Real estate: Commercial - investor owned 1,141 — 1,141 818,286 819,427 Commercial - owner occupied 958 484 1,442 591,696 593,138 Construction and land development — — — 300,117 300,117 Residential 895 1,031 1,926 316,129 318,055 Consumer and other — — — 146,219 146,219 Total $ 5,174 $ 9,585 $ 14,759 $ 4,200,237 $ 4,214,996 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 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, 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 June 30, 2018 , which is based upon the most recent analysis performed, and December 31, 2017 is as follows: June 30, 2018 (in thousands) Pass (1-6) Watch (7) Substandard (8) Total Commercial and industrial $ 1,853,440 $ 128,087 $ 56,513 $ 2,038,040 Real estate: Commercial - investor owned 785,920 28,442 5,065 819,427 Commercial - owner occupied 537,740 49,926 5,472 593,138 Construction and land development 289,263 10,301 553 300,117 Residential 307,727 2,859 7,469 318,055 Consumer and other 145,289 612 318 146,219 Total $ 3,919,379 $ 220,227 $ 75,390 $ 4,214,996 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 |