Allowance for Loan and Lease Losses (ALLL) | NOTE 6: ALLOWANCE FOR LOAN AND LEASE LOSSES (ALLL) The following tables summarize the Company's allowance for loan and lease losses for the periods indicated (dollars in thousands) : Three Months Ended September 30 2015 2014 Organic Loans Purchased Non-Credit Impaired Loans Purchased Credit Impaired Loans Total Organic Loans Purchased Credit Impaired Loans Total Balance, beginning of period $ 19,594 $ — $ 9,975 $ 29,569 $ 17,885 $ 17,722 $ 35,607 Loans charged-off (63 ) — (3,282 ) (3,345 ) (87 ) (5,329 ) (5,416 ) Recoveries of loans previously charged-off 31 6 2,934 2,971 30 2,417 2,447 Net (charge-offs) recoveries (32 ) 6 (348 ) (374 ) (57 ) (2,912 ) (2,969 ) Provision for loan and lease losses before amount attributable to FDIC loss share agreements 614 (6 ) (873 ) (265 ) 1,000 (6,407 ) (5,407 ) Amount attributable to FDIC loss share agreements — — — — — 5,823 5,823 Total provision for loan and lease losses charged to operations 614 (6 ) (873 ) (265 ) 1,000 (584 ) 416 Provision for loan and lease losses recorded through the FDIC loss share receivable — — — — — (5,823 ) (5,823 ) Balance, end of period $ 20,176 $ — $ 8,754 $ 28,930 $ 18,828 $ 8,403 $ 27,231 Nine Months Ended September 30 2015 2014 Organic Loans Purchased Non-Credit Impaired Loans Purchased Credit Impaired Loans Total Organic Loans Purchased Credit Impaired Loans Total Balance, beginning of period $ 18,392 $ — $ 10,246 $ 28,638 $ 16,656 $ 17,409 $ 34,065 Loans charged-off (203 ) (48 ) (8,666 ) (8,917 ) (302 ) (16,880 ) (17,182 ) Recoveries of loans previously charged-off 81 6 5,085 5,172 474 10,974 11,448 Net recoveries (charge-offs) (122 ) (42 ) (3,581 ) (3,745 ) 172 (5,906 ) (5,734 ) Provision for loan and lease losses before amount attributable to FDIC loss share agreements 1,906 42 2,089 4,037 2,000 (3,100 ) (1,100 ) Amount attributable to FDIC loss share agreements — — (1,045 ) (1,045 ) — 2,807 2,807 Total provision for loan and lease losses charged to operations 1,906 42 1,044 2,992 2,000 (293 ) 1,707 Provision for loan and lease losses recorded through the FDIC loss share receivable — — 1,045 1,045 — (2,807 ) (2,807 ) Balance, end of period $ 20,176 $ — $ 8,754 $ 28,930 $ 18,828 $ 8,403 $ 27,231 ALLL activity on PNCI loans included no charge-offs for the three months ended September 30, 2015 and $48,000 in consumer and residential real estate charge-offs for the nine months ended September 30, 2015 . The activity also included consumer and residential real estate recoveries of $6,000 for both the three and nine months ended September 30, 2015 . The provision for loan and lease losses recorded was negative $6,000 for the three months ended September 30, 2015 and $42,000 for the nine months ended September 30, 2015 , resulting in no ending allowance at September 30, 2015 . At September 30, 2015 purchased non-credit impaired commercial real estate loans totaling $991,000 were individually evaluated for impairment. Our purchased non-credit impaired loans portfolio was established during the fourth quarter of 2014; therefore, no provision for loan and leases losses was recorded for purchased non-credit impaired loans for the three or nine months ended September 30, 2014 . Activity in the allowance for loan and lease losses on organic loans is detailed as follows by portfolio segment for the periods indicated (dollars in thousands) : Organic Loans Commercial Real Estate Residential Real Estate Owner-Occupied Real Estate Commercial, Financial & Agricultural Leases Consumer Total Three Months Ended September 30, 2015 Beginning balance $ 13,218 $ 1,575 $ 2,216 $ 1,966 $ 433 $ 186 $ 19,594 Charge-offs — — — (58 ) — (5 ) (63 ) Recoveries — 9 — 21 — 1 31 Provision (272 ) 195 (165 ) 511 279 66 614 Ending balance $ 12,946 $ 1,779 $ 2,051 $ 2,440 $ 712 $ 248 $ 20,176 Nine Months Ended September 30, 2015 Beginning balance $ 13,134 $ 1,190 $ 1,928 $ 1,770 $ 262 $ 108 $ 18,392 Charge-offs — — — (185 ) — (18 ) (203 ) Recoveries 1 10 — 62 — 8 81 Provision (189 ) 579 123 793 450 150 1,906 Ending balance $ 12,946 $ 1,779 $ 2,051 $ 2,440 $ 712 $ 248 $ 20,176 Three Months Ended September 30, 2014 Beginning balance $ 12,741 $ 1,080 $ 2,437 $ 1,503 $ — $ 124 $ 17,885 Charge-offs (12 ) — — (70 ) — (5 ) (87 ) Recoveries 1 1 5 22 — 1 30 Provision 451 29 (142 ) 366 259 37 1,000 Ending balance $ 13,181 $ 1,110 $ 2,300 $ 1,821 $ 259 $ 157 $ 18,828 Nine Months Ended September 30, 2014 Beginning balance $ 11,163 $ 1,015 $ 2,535 $ 1,799 $ — $ 144 $ 16,656 Charge-offs (77 ) (1 ) — (207 ) — (17 ) (302 ) Recoveries 291 25 5 152 — 1 474 Provision 1,804 71 (240 ) 77 259 29 2,000 Ending balance $ 13,181 $ 1,110 $ 2,300 $ 1,821 $ 259 $ 157 $ 18,828 The following table presents the balance of organic loans and the allowance for loan and lease losses based on the method of determining the allowance at the dates indicated (dollars in thousands) : Allowance for Loan and Lease Losses Loans Organic Loans Individually Evaluated for Impairment Collectively Evaluated for Impairment Total Allowance Individually Evaluated for Impairment Collectively Evaluated for Impairment Total Loans September 30, 2015 Commercial real estate $ 317 $ 12,629 $ 12,946 $ 3,903 $ 1,114,501 $ 1,118,404 Residential real estate 179 1,600 1,779 359 127,464 127,823 Owner-occupied real estate 197 1,854 2,051 394 211,777 212,171 Commercial, financial & agricultural 216 2,224 2,440 432 164,873 165,305 Leases — 712 712 — 54,814 54,814 Consumer 14 234 248 28 16,404 16,432 Total organic loans $ 923 $ 19,253 $ 20,176 $ 5,116 $ 1,689,833 $ 1,694,949 December 31, 2014 Commercial real estate $ 330 $ 12,804 $ 13,134 $ 4,089 $ 916,376 $ 920,465 Residential real estate 58 1,132 1,190 1,263 90,185 91,448 Owner-occupied real estate 22 1,906 1,928 44 188,889 188,933 Commercial, financial & agricultural 66 1,704 1,770 131 90,799 90,930 Leases — 262 262 — 19,959 19,959 Consumer 10 98 108 19 8,639 8,658 Total organic loans $ 486 $ 17,906 $ 18,392 $ 5,546 $ 1,314,847 $ 1,320,393 Activity in the allowance for loan and lease losses on purchased credit impaired loans is detailed as follows by portfolio segment for the periods indicated (dollars in thousands) : Purchased Credit Impaired Loans Commercial Real Estate Residential Real Estate Owner-Occupied Real Estate Commercial, Financial & Agricultural Consumer Total Three Months Ended September 30, 2015 Beginning balance $ 4,264 $ 2,355 $ 2,713 $ 625 $ 18 $ 9,975 Charge-offs (2,204 ) (283 ) (223 ) (557 ) (15 ) (3,282 ) Recoveries 2,275 96 325 230 8 2,934 Provision (466 ) (111 ) (89 ) (205 ) (2 ) (873 ) Amount attributable to FDIC loss share agreements — — — — — — Provision charged to income (466 ) (111 ) (89 ) (205 ) (2 ) (873 ) Provision recorded through the FDIC loss share receivable — — — — — — Ending balance $ 3,869 $ 2,057 $ 2,726 $ 93 $ 9 $ 8,754 Nine Months Ended September 30, 2015 Beginning balance $ 5,461 $ 2,298 1,916 $ 567 $ 4 $ 10,246 Charge-offs (4,718 ) (1,009 ) (1,275 ) (1,533 ) (131 ) (8,666 ) Recoveries 2,927 332 848 789 189 5,085 Provision 199 436 1,237 270 (53 ) 2,089 Amount attributable to FDIC loss share agreements (313 ) (182 ) (402 ) (140 ) (8 ) (1,045 ) Provision charged to income (114 ) 254 835 130 (61 ) 1,044 Provision recorded through the FDIC loss share receivable 313 182 402 140 8 1,045 Ending balance $ 3,869 $ 2,057 $ 2,726 $ 93 $ 9 $ 8,754 Three Months Ended September 30, 2014 Beginning balance $ 10,606 $ 3,873 $ 2,475 $ 693 $ 75 $ 17,722 Charge-offs (3,858 ) (355 ) (590 ) (472 ) (54 ) (5,329 ) Recoveries 1,863 143 295 111 5 2,417 Provision (5,025 ) (935 ) (643 ) 221 (25 ) (6,407 ) Amount attributable to FDIC loss share agreements 4,567 850 584 (200 ) 22 5,823 Provision charged to income (458 ) (85 ) (59 ) 21 (3 ) (584 ) Provision recorded through the FDIC loss share receivable (4,567 ) (850 ) (584 ) 200 (22 ) (5,823 ) Ending balance $ 3,586 $ 2,726 $ 1,537 $ 553 $ 1 $ 8,403 Nine Months Ended September 30, 2014 Beginning balance $ 11,226 $ 2,481 $ 1,950 $ 1,680 $ 72 $ 17,409 Charge-offs (12,042 ) (1,011 ) (2,359 ) (1,404 ) (64 ) (16,880 ) Recoveries 7,697 1,159 1,294 763 61 10,974 Provision (3,295 ) 97 652 (486 ) (68 ) (3,100 ) Amount attributable to FDIC loss share agreements 2,989 (91 ) (597 ) 445 61 2,807 Provision charged to income (306 ) 6 55 (41 ) (7 ) (293 ) Provision recorded through the FDIC loss share receivable (2,989 ) 91 597 (445 ) (61 ) (2,807 ) Ending balance $ 3,586 $ 2,726 $ 1,537 $ 553 $ 1 $ 8,403 The following table presents the balance of purchased credit impaired loans and the allowance for loan and lease losses based on the method of determining the allowance at the dates indicated (dollars in thousands) : Allowance for Loan and Lease Losses Loans Purchased Credit Impaired Loans Individually Evaluated for Impairment Collectively Evaluated for Impairment Total Allowance Individually Evaluated for Impairment Collectively Evaluated for Impairment Total Loans September 30, 2015 Commercial real estate $ 1,793 $ 2,076 $ 3,869 $ 27,237 $ 31,873 $ 59,110 Residential real estate 925 1,132 2,057 4,175 63,043 67,218 Owner-occupied real estate 2,495 231 2,726 13,603 17,052 30,655 Commercial, financial & agricultural 2 91 93 311 1,821 2,132 Consumer — 9 9 8 200 208 Total purchased credit impaired loans $ 5,215 $ 3,539 $ 8,754 $ 45,334 $ 113,989 $ 159,323 December 31, 2014 Commercial real estate $ 1,830 $ 3,631 $ 5,461 $ 42,721 $ 40,503 $ 83,224 Residential real estate 1,094 1,204 2,298 3,718 75,075 78,793 Owner-occupied real estate 1,462 454 1,916 19,736 22,432 42,168 Commercial, financial & agricultural — 567 567 353 1,600 1,953 Consumer — 4 4 31 170 201 Total purchased credit impaired loans $ 4,386 $ 5,860 $ 10,246 $ 66,559 $ 139,780 $ 206,339 For each period indicated, a portion of the Company's purchased credit impaired loans were past due, including many that were 90 days or more past due; however, such delinquencies were included in the Company's performance expectations in determining the fair values of purchased credit impaired loans at each acquisition and at subsequent valuation dates. All purchased credit impaired loan cash flows and the timing of such cash flows continue to be estimable and probable of collection and thus accretion income continues to be recognized on these assets. As such, the referenced purchased credit impaired loans are not considered nonperforming assets. Impaired organic and purchased non-credit impaired loans, segregated by class of loans, are presented in the following table (dollars in thousands) : September 30, 2015 December 31, 2014 Unpaid Principal Balance Recorded Investment Related Allowance Unpaid Principal Balance Recorded Investment Related Allowance Impaired Loans: Organic and Purchased Non-Credit Impaired With no related allowance recorded: Construction, land & land development $ 4,677 $ 3,293 $ — $ 4,616 $ 3,426 $ — Other commercial real estate 991 1,006 — — — — Total commercial real estate 5,668 4,299 — 4,616 3,426 — Residential real estate 186 157 — 875 875 — Owner-occupied real estate 362 338 — — — — Commercial, financial & agricultural 118 106 — — — — Consumer 10 9 — — — — Subtotal 6,344 4,909 — 5,491 4,301 — With related allowance recorded: Construction, land & land development 38 37 18 3 3 1 Other commercial real estate 949 597 299 834 659 329 Total commercial real estate 987 634 317 837 662 330 Residential real estate 407 359 179 432 399 58 Owner-occupied real estate 408 394 197 44 44 22 Commercial, financial & agricultural 447 432 216 227 227 66 Consumer 33 28 14 21 20 10 Subtotal 2,282 1,847 923 1,561 1,352 486 Total impaired loans $ 8,626 $ 6,756 $ 923 $ 7,052 $ 5,653 $ 486 The following table presents information related to the average recorded investment and interest income recognized on impaired organic and purchased non-credit impaired loans, for the periods presented (dollars in thousands) : September 30, 2015 September 30, 2014 Average Recorded Investment (1) Interest Income Recognized (2) Average Recorded Investment (1) Interest Income Recognized (2) Three Months Ended Construction, land & land development $ 3,353 $ 34 $ 75 $ 1 Other commercial real estate 1,606 12 336 9 Total commercial real estate 4,959 46 411 10 Residential real estate 534 3 1,227 — Owner-occupied real estate 659 5 130 — Commercial, financial & agricultural 547 4 135 — Consumer 43 — 17 — Total impaired loans $ 6,742 $ 58 $ 1,920 $ 10 Nine Months Ended Construction, land & land development $ 3,386 $ 75 $ 225 $ 45 Other commercial real estate 981 31 459 18 Total commercial real estate 4,367 106 684 63 Residential real estate 449 9 1,229 6 Owner-occupied real estate 415 8 122 — Commercial, financial & agricultural 367 8 189 2 Consumer 34 — 18 3 Total impaired loans $ 5,632 $ 131 $ 2,242 $ 74 (1) The average recorded investment for troubled debt restructurings was $3.3 million for both the three and nine months ended September 30, 2015 and was $875,000 and $871,000 for the three and nine months ended September 30, 2014 , respectively. (2) The interest income recognized on troubled debt restructurings for the three and nine months ended September 30, 2015 was $34,000 and $75,000 , respectively, and no interest income was recognized for the three and nine months ended September 30, 2014 . The following table presents the recorded investment in nonaccrual loans by loan class at the dates indicated (dollars in thousands) : Nonaccrual Loans (1): September 30, 2015 December 31, 2014 Construction, land & land development $ 3,330 $ 3,429 Other commercial real estate 1,603 659 Total commercial real estate 4,933 4,088 Residential real estate 516 1,274 Owner-occupied real estate 732 44 Commercial, financial & agricultural 538 227 Consumer 37 20 Total nonaccrual loans $ 6,756 $ 5,653 (1) Includes both organic and purchased non-credit impaired nonaccrual loans. Purchased non-credit impaired nonaccrual loans totaled $1.6 million at September 30, 2015 and $107,000 at December 31, 2014 . The following table presents an analysis of past due organic loans, by class of loans, at the dates indicated (dollars in thousands) : Organic Loans 30 - 89 Days Past Due 90 Days or Greater Past Due Total Past Due Current Total Loans Loans > 90 Days and Accruing September 30, 2015 Construction, land & land development $ 59 $ 36 $ 95 $ 412,693 $ 412,788 $ — Other commercial real estate — 19 19 705,597 705,616 — Total commercial real estate 59 55 114 1,118,290 1,118,404 — Residential real estate 721 70 791 127,032 127,823 — Owner-occupied real estate — 141 141 212,030 212,171 — Commercial, financial & agricultural 49 249 298 165,007 165,305 — Leases — — — 54,814 54,814 — Consumer 39 15 54 16,378 16,432 — Total organic loans $ 868 $ 530 $ 1,398 $ 1,693,551 $ 1,694,949 $ — December 31, 2014 Construction, land & land development $ — $ — $ — $ 310,987 $ 310,987 $ — Other commercial real estate 24 385 409 609,069 609,478 — Total commercial real estate 24 385 409 920,056 920,465 — Residential real estate 527 893 1,420 90,028 91,448 — Owner-occupied real estate 287 44 331 188,602 188,933 — Commercial, financial & agricultural — 108 108 90,822 90,930 — Leases — — — 19,959 19,959 — Consumer 25 12 37 8,621 8,658 — Total organic loans $ 863 $ 1,442 $ 2,305 $ 1,318,088 $ 1,320,393 $ — The following table presents an analysis of past due purchased non-credit impaired loans, by class of loans, at the dates indicated (dollars in thousands) : Purchased Non-Credit Impaired Loans 30 - 89 Days Past Due 90 Days or Greater Past Due Total Past Due Current Total Loans Loans > 90 Days and Accruing September 30, 2015 Construction, land & land development $ 92 $ 24 $ 116 $ 37,210 $ 37,326 $ — Other commercial real estate — 1,006 1,006 78,872 79,878 — Total commercial real estate 92 1,030 1,122 116,082 117,204 — Residential real estate 246 76 322 75,665 75,987 — Owner-occupied real estate 362 — 362 69,257 69,619 — Commercial, financial & agricultural — — — 19,529 19,529 — Consumer 13 — 13 3,067 3,080 — Total purchased non-credit impaired loans $ 713 $ 1,106 $ 1,819 $ 283,600 $ 285,419 $ — December 31, 2014 Construction, land & land development $ — $ — $ — $ 2,166 $ 2,166 $ — Other commercial real estate — — — 26,793 26,793 — Total commercial real estate — — — 28,959 28,959 — Residential real estate 490 11 501 43,168 43,669 — Owner-occupied real estate — — — 22,743 22,743 — Commercial, financial & agricultural — — — 11,635 11,635 — Consumer — — — 791 791 — Total purchased non-credit impaired loans $ 490 $ 11 $ 501 $ 107,296 $ 107,797 $ — The following table presents an analysis of past due purchased credit impaired loans, by class of loans, at the dates indicated (dollars in thousands) : Purchased Credit Impaired Loans 30 - 89 Days Past Due 90 Days or Greater Past Due Total Past Due Current Total Loans September 30, 2015 Construction, land & land development $ 666 $ 2,730 $ 3,396 $ 13,077 $ 16,473 Other commercial real estate 767 5,008 5,775 36,862 42,637 Total commercial real estate 1,433 7,738 9,171 49,939 59,110 Residential real estate 3,183 5,199 8,382 58,836 67,218 Owner-occupied real estate 2,361 2,536 4,897 25,758 30,655 Commercial, financial & agricultural 1 74 75 2,057 2,132 Consumer 1 24 25 183 208 Total purchased credit impaired loans $ 6,979 $ 15,571 $ 22,550 $ 136,773 $ 159,323 December 31, 2014 Construction, land & land development $ 1,235 $ 8,797 $ 10,032 $ 14,512 $ 24,544 Other commercial real estate 1,443 4,957 6,400 52,280 58,680 Total commercial real estate 2,678 13,754 16,432 66,792 83,224 Residential real estate 3,525 6,577 10,102 68,691 78,793 Owner-occupied real estate 1,113 4,148 5,261 36,907 42,168 Commercial, financial & agricultural — 340 340 1,613 1,953 Consumer — 101 101 100 201 Total purchased credit impaired loans $ 7,316 $ 24,920 $ 32,236 $ 174,103 $ 206,339 Asset Quality Grades: The Company assigns loans into risk categories based on relevant information about the ability of borrowers to pay their debts, such as current financial information, historical payment experience, credit documentation, public information and current economic trends, among other factors. A loan's risk grade is assigned at inception based upon the strength of the repayment sources and reassessed periodically throughout the year. Loans over certain dollar thresholds identified as having weaknesses are subject to more frequent review. In addition, the Company's internal loan review department provides an ongoing, comprehensive and independent assessment of credit risk within the Company. Loans are graded on a scale of 1 to 8. Pass grades are from 1 to 4. Descriptions of the general characteristics of grades 5 and above are as follows: Watch (Grade 5) —Loans graded Watch are pass credits that have not met performance expectations or that have higher inherent risk characteristics warranting continued supervision and attention. OAEM (Grade 6) —Loans graded OAEM (other assets especially mentioned) have potential weaknesses that deserve management's close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or in the Company's credit position at some future date. OAEM loans are not adversely classified and do not expose the institution to sufficient risk to warrant adverse classification. Substandard (Grade 7) —Loans classified as substandard are inadequately protected by the current sound worth and payment capacity of the obligor or of the collateral pledged, if any. Loans so classified have a well-defined weakness, or weaknesses, that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the institution will sustain some loss if the deficiencies are not corrected. Doubtful (Grade 8) —Loans classified as doubtful have all the weaknesses inherent in those classified as substandard, with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable. The following table presents the risk grades of the organic loan portfolio, by class of loans, at the dates indicated (dollars in thousands) : Organic Loans Pass Watch OAEM Substandard Doubtful Total September 30, 2015 Construction, land & land development $ 388,385 $ 21,086 $ 11 $ 3,306 $ — $ 412,788 Other commercial real estate 672,082 30,213 2,324 997 — 705,616 Total commercial real estate 1,060,467 51,299 2,335 4,303 — 1,118,404 Residential real estate 117,770 8,903 166 974 10 127,823 Owner-occupied real estate 192,061 18,795 921 394 — 212,171 Commercial, financial & agricultural 162,943 1,246 540 576 — 165,305 Leases 54,814 — — — — 54,814 Consumer 16,140 214 — 78 — 16,432 Total organic loans $ 1,604,195 $ 80,457 $ 3,962 $ 6,325 $ 10 $ 1,694,949 December 31, 2014 Construction, land & land development $ 272,847 $ 34,702 $ — $ 3,438 $ — $ 310,987 Other commercial real estate 572,098 35,434 905 1,041 — 609,478 Total commercial real estate 844,945 70,136 905 4,479 — 920,465 Residential real estate 69,828 19,656 287 1,677 — 91,448 Owner-occupied real estate 162,929 17,999 1,157 6,848 — 188,933 Commercial, financial & agricultural 87,819 1,754 798 559 — 90,930 Leases 19,959 — — — — 19,959 Consumer 8,302 27 9 320 — 8,658 Total organic loans $ 1,193,782 $ 109,572 $ 3,156 $ 13,883 $ — $ 1,320,393 The following table presents the risk grades of the purchased non-credit impaired loan portfolio, by class of loans, at the dates indicated (dollars in thousands) : Purchased Non-Credit Impaired Loans Pass Watch OAEM Substandard Doubtful Total September 30, 2015 Construction, land & land development $ 37,043 $ 259 $ — $ 24 $ — $ 37,326 Other commercial real estate 74,286 4,586 — 1,006 — 79,878 Total commercial real estate 111,329 4,845 — 1,030 — 117,204 Residential real estate 71,663 4,167 — 157 — 75,987 Owner-occupied real estate 62,995 5,943 — 681 — 69,619 Commercial, financial & agricultural 17,658 436 — 1,435 — 19,529 Consumer 3,062 9 — 9 — 3,080 Total purchased non-credit impaired loans $ 266,707 $ 15,400 $ — $ 3,312 $ — $ 285,419 December 31, 2014 Construction, land & land development $ 2,166 $ — $ — $ — $ — $ 2,166 Other commercial real estate 24,257 2,536 — — — 26,793 Total commercial real estate 26,423 2,536 — — — 28,959 Residential real estate 41,868 1,694 — 107 — 43,669 Owner-occupied real estate 21,862 881 — — — 22,743 Commercial, financial & agricultural 9,800 1,475 264 96 — 11,635 Consumer 773 18 — — — 791 Total purchased non-credit impaired loans $ 100,726 $ 6,604 $ 264 $ 203 $ — $ 107,797 Classifications on purchased credit impaired loans are based upon the borrower's ability to pay the current unpaid principal balance without regard to the net carrying value of the loan on the Company's balance sheet. Because the values shown in the table below are based on each loan's estimated cash flows, any expected losses should be covered by a combination of the specific reserves established in the allowance for loan and lease losses on purchased credit impaired loans plus the discounts to the unpaid principal balances reflected in the recorded investment of each loan. The following table presents the risk grades of the purchased credit impaired loan portfolio, by class of loans (dollars in thousands) : Purchased Credit Impaired Loans Pass Watch OAEM Substandard Doubtful Total September 30, 2015 Construction, land & land development $ 4,626 $ 1,996 $ 942 $ 7,877 $ 1,032 $ 16,473 Other commercial real estate 4,393 21,400 3,615 12,197 1,032 42,637 Total commercial real estate 9,019 23,396 4,557 20,074 2,064 59,110 Residential real estate 35,935 9,805 3,892 13,039 4,547 67,218 Owner-occupied real estate 11,373 3,748 3,614 11,906 14 30,655 Commercial, financial & agricultural 1,041 468 134 220 269 2,132 Consumer 114 48 1 20 25 208 Total purchased credit impaired loans $ 57,482 $ 37,465 $ 12,198 $ 45,259 $ 6,919 $ 159,323 December 31, 2014 Construction, land & land development $ 5,833 $ 2,228 $ 195 $ 14,485 $ 1,803 $ 24,544 Other commercial real estate 5,893 24,139 8,397 18,383 1,868 58,680 Total commercial real estate 11,726 26,367 8,592 32,868 3,671 83,224 Residential real estate 35,829 11,092 8,649 17,698 5,525 78,793 Owner-occupied real estate 15,234 12,786 3,694 9,405 1,049 42,168 Commercial, financial & agricultural 1,048 142 123 308 332 1,953 Consumer 32 24 — 25 120 201 Total purchased credit impaired loans $ 63,869 $ 50,411 $ 21,058 $ 60,304 $ 10,697 $ 206,339 Troubled Debt Restructurings (TDRs) Total organic troubled debt restructurings (TDRs) were $3.3 million and $4.3 million at September 30, 2015 and December 31, 2014 , respectively, with no related allowance for loans losses for the same periods. At September 30, 2015 and December 31, 2014 , there were no commitments to extend credit to any of the borrowers with an existing troubled debt restructuring. At September 30, 2015 and December 31, 2014 , there were no purchased non-credit impaired TDRs. Purchased credit impaired loans modified post-acquisition are not removed from their accounting pools and accounted for as TDRs, even if those loans would otherwise be deemed TDRs. During the three and nine months ended September 30, 2015 and 2014 , there were no organic loans modified under the terms of a TDR. During the three and nine months ended September 30, 2015 and 2014 , there were no organic TDRs that subsequently defaulted within twelve months of their modification dates. |