Loans | Loans Major classifications of loans at September 30, 2015 and December 31, 2014 were as follows (in thousands): September 30, 2015 December 31, 2014 Commercial real estate loans: Construction $ 451,713 $ 316,492 Mortgage(1) 1,301,897 1,252,225 1,753,610 1,568,717 Consumer real estate loans: Construction 8,676 10,393 Mortgage 153,520 131,031 162,196 141,424 Commercial and industrial loans 1,133,114 1,016,414 Loans to individuals, excluding real estate 20,681 18,316 Nonaccrual loans 35,653 21,228 Other loans 13,600 8,165 3,118,854 2,774,264 Less allowance for loan losses (53,076 ) (42,336 ) Loans, net $ 3,065,778 $ 2,731,928 (1) Included in commercial real estate loans, mortgage, are owner-occupied real estate loans of $421.2 million at September 30, 2015 and $419.3 million at December 31, 2014 . A summary of changes in the allowance for loan losses during the three and nine months ended September 30, 2015 and September 30, 2014 is as follows (in thousands): For the Three Months Ended September 30, For the Nine Months Ended September 30, 2015 2014 2015 2014 Balance, beginning of period $ 50,351 $ 37,403 $ 42,336 $ 32,143 Provision charged to operations 3,000 3,000 11,600 9,000 Charge-offs (287 ) (137 ) (1,192 ) (906 ) Recoveries 12 34 332 63 Balance, end of period $ 53,076 $ 40,300 $ 53,076 $ 40,300 The allowance for loan losses and recorded investment in loans, including loans acquired with deteriorated credit quality, as of the dates indicated are as follows (in thousands): September 30, 2015 Construction Commercial Real Estate Consumer Real Estate Commercial and Industrial Consumer Total Allowance for loan losses: Balance, beginning of period $ 4,030 $ 14,965 $ 3,316 $ 19,814 $ 211 $ 42,336 Charge-offs (12 ) (783 ) (55 ) (289 ) (53 ) (1,192 ) Recoveries — 246 4 67 15 332 Provision 2,298 2,996 462 5,844 — 11,600 Balance, end of period $ 6,316 $ 17,424 $ 3,727 $ 25,436 $ 173 $ 53,076 Ending balances: Individually evaluated for impairment $ 6 $ 4,024 $ 324 $ 9,070 $ — $ 13,424 Collectively evaluated for impairment $ 6,310 $ 13,400 $ 3,403 $ 16,366 $ 173 $ 39,652 Loans receivable: Ending balance-total $ 461,459 $ 1,313,173 $ 156,498 $ 1,166,889 $ 20,835 $ 3,118,854 Ending balances: Individually evaluated for impairment $ 754 $ 13,053 $ 3,058 $ 20,210 $ 71 $ 37,146 Collectively evaluated for impairment $ 460,705 $ 1,300,120 $ 153,440 $ 1,146,679 $ 20,764 $ 3,081,708 September 30, 2014 Construction Commercial Real Estate Consumer Real Estate Commercial and Industrial Consumer Total Allowance for loan losses: Balance, beginning of period $ 2,790 $ 13,780 $ 2,656 $ 12,677 $ 240 $ 32,143 Charge-offs (18 ) (441 ) (47 ) (304 ) (96 ) (906 ) Recoveries — 1 — 46 16 63 Provision 1,325 2,228 347 5,011 89 9,000 Balance, end of period $ 4,097 $ 15,568 $ 2,956 $ 17,430 $ 249 $ 40,300 Ending balances: Individually evaluated for impairment $ — $ 1,471 $ 938 $ 2,180 $ 1 $ 4,590 Collectively evaluated for impairment $ 4,097 $ 14,097 $ 2,018 $ 15,250 $ 248 $ 35,710 Loans receivable: Ending balance-total $ 318,145 $ 1,219,682 $ 131,027 $ 1,008,174 $ 21,591 $ 2,698,619 Ending balances: Individually evaluated for impairment $ 927 $ 13,942 $ 2,066 $ 5,636 $ 3 $ 22,574 Collectively evaluated for impairment $ 317,218 $ 1,205,740 $ 128,961 $ 1,002,538 $ 21,588 $ 2,676,045 Credit quality indicators on the Company’s loan portfolio, including loans acquired with deteriorated credit quality, as of the dates indicated were as follows (in thousands): September 30, 2015 Pass and Pass/Watch Special Mention Substandard Doubtful Total Construction $ 446,121 $ — $ 15,338 $ — $ 461,459 Commercial real estate 1,258,670 12,334 42,169 — 1,313,173 Consumer real estate 150,261 56 6,181 — 156,498 Commercial and industrial 1,050,880 6,995 94,014 15,000 1,166,889 Consumer 20,630 4 201 — 20,835 Total loans $ 2,926,562 $ 19,389 $ 157,903 $ 15,000 $ 3,118,854 December 31, 2014 Pass and Pass/Watch Special Mention Substandard Doubtful Total Construction $ 313,987 $ 2 $ 13,688 $ — $ 327,677 Commercial real estate 1,215,673 1,613 47,085 — 1,264,371 Consumer real estate 128,507 60 4,383 — 132,950 Commercial and industrial 1,005,829 — 24,800 — 1,030,629 Consumer 18,247 7 383 — 18,637 Total loans $ 2,682,243 $ 1,682 $ 90,339 $ — $ 2,774,264 The table above as of September 30, 2015 included $3.2 million of substandard loans which are loans acquired with deteriorated credit quality. As of December 31, 2014 , included in the above table were $5.4 million of substandard loans and $1.6 million of special mention loans all of which are loans acquired with deteriorated credit quality. Included in the table above as of September 30, 2015 was $15.0 million in commercial loans classified as doubtful which were evaluated for a specific allowance and determined that no allowance was necessary as of September 30, 2015 . The above classifications follow regulatory guidelines and can generally be described as follows: • Pass and pass/watch loans are of satisfactory quality. • Special mention loans have an existing weakness that could cause future impairment, including the deterioration of financial ratios, past due status, questionable management capabilities, and possible reduction in the collateral values. • Substandard loans have an existing specific and well-defined weakness that may include poor liquidity and deterioration of financial ratios. The loan may be past due and related deposit accounts experiencing overdrafts. Immediate corrective action is necessary. • Doubtful loans have specific weaknesses that are severe enough to make collection or liquidation in full improbable. An aged analysis of past due loans, including loans acquired with deteriorated credit quality, as of the dates indicated is as follows (in thousands): September 30, 2015 Greater Than 30 and Fewer Than 90 Days Past Due 90 Days and Greater Past Due Total Past Due Current Loans Total Loans Real estate loans: Construction $ 13 $ 1,069 $ 1,082 $ 460,377 $ 461,459 Commercial real estate 898 9,986 10,884 1,302,289 1,313,173 Consumer real estate 1,228 1,712 2,940 153,558 156,498 Total real estate loans 2,139 12,767 14,906 1,916,224 1,931,130 Other loans: Commercial and industrial 67 5,172 5,239 1,161,650 1,166,889 Consumer 283 182 465 20,370 20,835 Total other loans 350 5,354 5,704 1,182,020 1,187,724 Total loans $ 2,489 $ 18,121 $ 20,610 $ 3,098,244 $ 3,118,854 December 31, 2014 Greater Than 30 and Fewer Than 90 Days Past Due 90 Days and Greater Past Due Total Past Due Current Loans Total Loans Real estate loans: Construction $ 97 $ 750 $ 847 $ 326,830 $ 327,677 Commercial real estate 2,497 9,545 12,042 1,252,329 1,264,371 Consumer real estate 1,623 1,255 2,878 130,072 132,950 Total real estate loans 4,217 11,550 15,767 1,709,231 1,724,998 Other loans: Commercial and industrial 159 4,426 4,585 1,026,044 1,030,629 Consumer 564 322 886 17,751 18,637 Total other loans 723 4,748 5,471 1,043,795 1,049,266 Total loans $ 4,940 $ 16,298 $ 21,238 $ 2,753,026 $ 2,774,264 The following is a summary of information pertaining to impaired loans excluding loans acquired with deteriorated credit quality, as of the periods indicated (in thousands): September 30, 2015 Recorded Investment Contractual Balance Related Allowance With no related allowance recorded: Construction $ 711 $ 711 $ — Commercial real estate 1,948 2,168 — Consumer real estate 2,324 2,402 — Commercial and industrial 332 336 — Consumer 71 72 — Total $ 5,386 $ 5,689 $ — With an allowance recorded: Construction $ 43 $ 48 $ 6 Commercial real estate 11,105 11,336 4,024 Consumer real estate 734 746 324 Commercial and industrial 19,878 20,186 9,070 Consumer — — — Total $ 31,760 $ 32,316 $ 13,424 Total impaired loans: Construction $ 754 $ 759 $ 6 Commercial real estate 13,053 13,504 4,024 Consumer real estate 3,058 3,148 324 Commercial and industrial 20,210 20,522 9,070 Consumer 71 72 — Total $ 37,146 $ 38,005 $ 13,424 December 31, 2014 Recorded Investment Contractual Balance Related Allowance With no related allowance recorded: Construction $ 927 $ 927 $ — Commercial real estate 7,175 7,453 — Consumer real estate 2,085 2,097 — Commercial and industrial 436 498 — Consumer 256 256 — Total $ 10,879 $ 11,231 $ — With an allowance recorded: Construction $ — $ — $ — Commercial real estate 5,955 6,235 3,138 Consumer real estate — — — Commercial and industrial 14,721 14,774 5,889 Consumer 3 3 1 Total $ 20,679 $ 21,012 $ 9,028 Total impaired loans: Construction $ 927 $ 927 $ — Commercial real estate 13,130 13,688 3,138 Consumer real estate 2,085 2,097 — Commercial and industrial 15,157 15,272 5,889 Consumer 259 259 1 Total $ 31,558 $ 32,243 $ 9,028 For the Three Months Ended September 30, 2015 September 30, 2014 Average Recorded Investment Interest Income Recognized Average Recorded Investment Interest Income Recognized With no related allowance recorded: Construction $ 783 $ — $ 488 $ 9 Commercial real estate 1,915 — 6,891 7 Consumer real estate 2,467 8 1,672 1 Commercial and industrial 336 1 642 — Consumer 71 1 — — Total $ 5,572 $ 10 $ 9,693 $ 17 With an allowance recorded: Construction $ 43 $ — $ 156 $ — Commercial real estate 11,272 — 6,142 3 Consumer real estate 662 6 677 3 Commercial and industrial 18,635 346 4,335 4 Consumer — — 3 — Total $ 30,612 $ 352 $ 11,313 $ 10 Total impaired loans: Construction $ 826 $ — $ 644 $ 9 Commercial real estate 13,187 — 13,033 10 Consumer real estate 3,129 14 2,349 4 Commercial and industrial 18,971 347 4,977 4 Consumer 71 1 3 — Total $ 36,184 $ 362 $ 21,006 $ 27 For the Nine Months Ended September 30, 2015 September 30, 2014 Average Recorded Investment Interest Income Recognized Average Recorded Investment Interest Income Recognized With no related allowance recorded: Construction $ 819 $ 18 $ 464 $ 37 Commercial real estate 4,562 14 6,164 123 Consumer real estate 2,205 11 1,668 1 Commercial and industrial 384 1 800 16 Consumer 164 1 — — Total $ 8,134 $ 45 $ 9,096 $ 177 With an allowance recorded: Construction $ 22 $ — $ 155 $ 1 Commercial real estate 8,527 60 5,713 6 Consumer real estate 370 6 861 13 Commercial and industrial 17,300 350 4,021 4 Consumer 2 — 2 — Total $ 26,221 $ 416 $ 10,752 $ 24 Total impaired loans: Construction $ 841 $ 18 $ 619 $ 38 Commercial real estate 13,089 74 11,877 129 Consumer real estate 2,575 17 2,529 14 Commercial and industrial 17,684 351 4,821 20 Consumer 166 1 2 — Total $ 34,355 $ 461 $ 19,848 $ 201 Also presented in the above table is the average recorded investment of the impaired loans and the related amount of interest recognized during the time within the period that the impaired loans were impaired. When the ultimate collectability of the total principal of an impaired loan is in doubt and the loan is on nonaccrual status, all payments are applied to principal under the cost recovery method. When the ultimate collectability of the total principal of an impaired loan is not in doubt and the loan is in nonaccrual status, contractual interest is credited to interest income when received under the cash basis method. In the table above, all interest recognized represents cash collected. The average balances are calculated based on the month-end balances of the financing receivables of the period reported. As of September 30, 2015 and December 31, 2014 , there were $37 thousand and $28 thousand , respectively, in cash secured tuition loans that were past due 90 days or more still accruing interest. The following is a summary of information pertaining to nonaccrual loans as of the periods indicated (in thousands): September 30, 2015 December 31, 2014 Nonaccrual loans: Construction $ 1,070 $ 792 Commercial real estate 11,276 12,146 Consumer real estate 2,978 1,919 Commercial and industrial 20,175 6,051 Consumer 154 320 Total $ 35,653 $ 21,228 As of September 30, 2015 and December 31, 2014 , the average recorded investment in nonaccrual loans was $26.7 million and $19.6 million , respectively. The amount of interest income that would have been recognized on nonaccrual loans based on contractual terms was $1.1 million and $1.0 million at September 30, 2015 and December 31, 2014 , respectively. As of September 30, 2015 , the Company was not committed to lend additional funds to any customer whose loan was classified as impaired. ASC 310-30 Loans During 2011, the Company acquired certain loans from the Federal Deposit Insurance Corporation, as receiver for Central Progressive Bank, that are subject to ASC 310-30. ASC 310-30 provides recognition, measurement, and disclosure requirements for acquired loans that have evidence of deterioration of credit quality since origination for which it is probable, at acquisition, that the Company will be unable to collect all contractual amounts owed. The Company’s allowance for loan losses for all acquired loans subject to ASC 310-30 would reflect only those losses incurred after acquisition. There were no loans acquired from the Federal Deposit Insurance Corporation, as receiver for First National Bank of Crestview, that were subject to ASC 310-30. The following is a summary of changes in the accretable yields of acquired loans as of the periods indicated (in thousands): September 30, 2015 September 30, 2014 Balance, beginning of period $ 115 $ 170 Acquisition — — Net transfers from nonaccretable difference to accretable yield — 816 Accretion (86 ) (832 ) Balance, end of period $ 29 $ 154 Information about the Company’s troubled debt restructurings (TDRs) at September 30, 2015 and September 30, 2014 is presented in the following tables (in thousands): Current Greater Than 30 Days Past Due Nonaccrual TDRs Total TDRs As of September 30, 2015 Real estate loans: Construction $ 2 $ — $ 43 $ 45 Commercial real estate 2,227 — — 2,227 Consumer real estate 587 — 131 718 Total real estate loans 2,816 — 174 2,990 Other loans: Commercial and industrial 477 — 12,058 12,535 Total loans $ 3,293 $ — $ 12,232 $ 15,525 Current Greater Than 30 Days Past Due Nonaccrual TDRs Total TDRs As of September 30, 2014 Real estate loans: Construction $ 237 $ — $ — $ 237 Commercial real estate 349 — 103 452 Consumer real estate 610 — 139 749 Total real estate loans 1,196 — 242 1,438 Other loans: Commercial and industrial 291 — — 291 Total loans $ 1,487 $ — $ 242 $ 1,729 There were TDRs of $12.1 million modified and moved to interest-only payments during the nine months ended September 30, 2015 . There were no new TDRs which were modified during the nine months ended September 30, 2014 . A summary of information pertaining to modified terms of loans, as of the dates indicated, is as follows: As of September 30, 2015 Number of Contracts Pre- Modification Outstanding Recorded Investment Post- Modification Outstanding Recorded Investment Troubled debt restructuring: Construction 2 $ 45 $ 45 Commercial real estate 2 2,227 2,227 Consumer real estate 3 718 718 Commercial and industrial 3 12,535 12,535 10 $ 15,525 $ 15,525 As of September 30, 2014 Number of Contracts Pre- Modification Outstanding Recorded Investment Post- Modification Outstanding Recorded Investment Troubled debt restructuring: Construction 4 $ 237 $ 237 Commercial real estate 1 452 452 Consumer real estate 2 749 749 Commercial and industrial 1 291 291 8 $ 1,729 $ 1,729 None of the performing TDRs defaulted subsequent to the restructuring through the date the financial statements were available to be issued. As of September 30, 2015 and December 31, 2014 , the Company was not committed to lend additional funds to any customer whose loan was classified as impaired or as a TDR. |