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 June 30 2017 2016 Organic Loans Purchased Non-Credit Impaired Loans Purchased Credit Impaired Loans Total Organic Loans Purchased Non-Credit Impaired Loans Purchased Credit Impaired Loans Total Balance, beginning of period $ 21,885 $ 491 $ 4,600 $ 26,976 $ 22,626 $ 166 $ 7,553 $ 30,345 Charge-offs (536 ) (197 ) (214 ) (947 ) (2,307 ) (1 ) (606 ) (2,914 ) Recoveries 113 1 — 114 54 28 80 162 Net (charge-offs) recoveries (423 ) (196 ) (214 ) (833 ) (2,253 ) 27 (526 ) (2,752 ) Provision for loan and lease losses 1,098 372 375 1,845 1,635 (35 ) (1,594 ) 6 Balance, end of period $ 22,560 $ 667 $ 4,761 $ 27,988 $ 22,008 $ 158 $ 5,433 $ 27,599 Six Months Ended June 30 2017 2016 Organic Loans Purchased Non-Credit Impaired Loans Purchased Credit Impaired Loans Total Organic Loans Purchased Non-Credit Impaired Loans Purchased Credit Impaired Loans Total Balance, beginning of period $ 21,086 $ 439 $ 5,073 $ 26,598 $ 21,224 $ 53 $ 7,798 $ 29,075 Charge-offs (1,076 ) (245 ) (328 ) (1,649 ) (2,547 ) (64 ) (2,122 ) (4,733 ) Recoveries 190 2 — 192 150 61 3,174 3,385 Net recoveries (charge-offs) (886 ) (243 ) (328 ) (1,457 ) (2,397 ) (3 ) 1,052 (1,348 ) Provision for loan and lease losses 2,360 471 16 2,847 3,181 108 (3,417 ) (128 ) Balance, end of period $ 22,560 $ 667 $ 4,761 $ 27,988 $ 22,008 $ 158 $ 5,433 $ 27,599 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 June 30, 2017 Beginning balance $ 12,112 $ 1,666 $ 2,108 $ 4,514 $ 710 $ 775 $ 21,885 Charge-offs (187 ) (25 ) — (82 ) (135 ) (107 ) (536 ) Recoveries — 3 — 22 68 20 113 Provision 1,412 197 (72 ) (791 ) 182 170 1,098 Ending balance $ 13,337 $ 1,841 $ 2,036 $ 3,663 $ 825 $ 858 $ 22,560 Six Months Ended June 30, 2017 Beginning balance $ 11,767 $ 1,786 $ 2,239 $ 4,093 $ 655 $ 546 $ 21,086 Charge-offs (187 ) (48 ) — (142 ) (499 ) (200 ) (1,076 ) Recoveries — 6 — 51 109 24 190 Provision 1,757 97 (203 ) (339 ) 560 488 2,360 Ending balance $ 13,337 $ 1,841 $ 2,036 $ 3,663 $ 825 $ 858 $ 22,560 Three Months Ended June 30, 2016 Beginning balance $ 14,292 $ 1,967 $ 1,931 $ 2,918 $ 1,045 $ 473 $ 22,626 Charge-offs (2,125 ) — — (77 ) (105 ) — (2,307 ) Recoveries — 2 44 — 7 1 54 Provision 776 (79 ) 7 993 (66 ) 4 1,635 Ending balance $ 12,943 $ 1,890 $ 1,982 $ 3,834 $ 881 $ 478 $ 22,008 Six Months Ended June 30, 2016 Beginning balance $ 13,607 $ 2,053 $ 1,920 $ 2,509 $ 865 $ 270 $ 21,224 Charge-offs (2,125 ) (28 ) — (164 ) (215 ) (15 ) (2,547 ) Recoveries — 3 44 95 7 1 150 Provision 1,461 (138 ) 18 1,394 224 222 3,181 Ending balance $ 12,943 $ 1,890 $ 1,982 $ 3,834 $ 881 $ 478 $ 22,008 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 June 30, 2017 Commercial real estate $ 107 $ 13,230 $ 13,337 $ 215 $ 1,374,104 $ 1,374,319 Residential real estate 327 1,514 1,841 654 167,101 167,755 Owner-occupied real estate — 2,036 2,036 — 244,637 244,637 Commercial, financial & agricultural 93 3,570 3,663 515 355,114 355,629 Leases — 825 825 — 73,103 73,103 Consumer 19 839 858 38 59,990 60,028 Total organic loans $ 546 $ 22,014 $ 22,560 $ 1,422 $ 2,274,049 $ 2,275,471 December 31, 2016 Commercial real estate $ 201 $ 11,566 $ 11,767 $ 5,057 $ 1,249,751 $ 1,254,808 Residential real estate 413 1,373 1,786 825 143,470 144,295 Owner-occupied real estate — 2,239 2,239 — 256,317 256,317 Commercial, financial & agricultural 146 3,947 4,093 298 327,083 327,381 Leases — 655 655 — 71,724 71,724 Consumer 27 519 546 54 35,985 36,039 Total organic loans $ 787 $ 20,299 $ 21,086 $ 6,234 $ 2,084,330 $ 2,090,564 Activity in the allowance for loan and lease losses on purchased non-credit impaired loans is detailed as follows by portfolio segment for the periods indicated (dollars in thousands) : Purchased Non-Credit Impaired Loans Commercial Real Estate Residential Real Estate Owner-Occupied Real Estate Commercial, Financial & Agricultural Consumer Total Three Months Ended June 30, 2017 Beginning balance $ 239 $ 175 $ 76 $ — $ 1 $ 491 Charge-offs — — (80 ) (115 ) (2 ) (197 ) Recoveries — — — — 1 1 Provision (94 ) 167 156 141 2 372 Ending balance $ 145 $ 342 $ 152 $ 26 $ 2 $ 667 Six Months Ended June 30, 2017 Beginning balance $ 88 $ 72 $ 44 $ 235 $ — $ 439 Charge-offs — — (80 ) (160 ) (5 ) (245 ) Recoveries — — — — 2 2 Provision 57 270 188 (49 ) 5 471 Ending balance $ 145 $ 342 $ 152 $ 26 $ 2 $ 667 Three Months Ended June 30, 2016 Beginning balance $ — $ — $ — $ 166 $ — $ 166 Charge-offs — — — (1 ) — (1 ) Recoveries — 28 — — — 28 Provision — (28 ) — (7 ) — (35 ) Ending balance $ — $ — $ — $ 158 $ — $ 158 Six Months Ended June 30, 2016 Beginning balance $ — $ 53 $ — $ — $ — $ 53 Charge-offs — (62 ) — (1 ) (1 ) (64 ) Recoveries — 44 — — 17 61 Provision — (35 ) — 159 (16 ) 108 Ending balance $ — $ — $ — $ 158 $ — $ 158 The following table presents the balance of purchased non-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 Non-Credit Impaired Loans Individually Evaluated for Impairment Collectively Evaluated for Impairment Total Allowance Individually Evaluated for Impairment Collectively Evaluated for Impairment Total Loans June 30, 2017 Commercial real estate $ — $ 145 $ 145 $ 49 $ 202,948 $ 202,997 Residential real estate — 342 342 359 117,090 117,449 Owner-occupied real estate — 152 152 2,752 111,686 114,438 Commercial, financial & agricultural 26 — 26 2,005 29,649 31,654 Consumer — 2 2 12 3,381 3,393 Total purchased non-credit impaired loans $ 26 $ 641 $ 667 $ 5,177 $ 464,754 $ 469,931 December 31, 2016 Commercial real estate $ — $ 88 $ 88 $ 56 $ 260,683 $ 260,739 Residential real estate — 72 72 320 144,276 144,596 Owner-occupied real estate 44 — 44 1,875 113,691 115,566 Commercial, financial & agricultural — 235 235 1,128 35,078 36,206 Consumer — — — 2 6,253 6,255 Total purchased non-credit impaired loans $ 44 $ 395 $ 439 $ 3,381 $ 559,981 $ 563,362 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 June 30, 2017 Beginning balance $ 2,073 $ 959 $ 1,531 $ 37 $ — $ 4,600 Charge-offs (160 ) (38 ) — (15 ) (1 ) (214 ) Recoveries — — — — — — Provision 218 47 80 15 15 375 Ending balance $ 2,131 $ 968 $ 1,611 $ 37 $ 14 $ 4,761 Six Months Ended June 30, 2017 Beginning balance $ 2,183 $ 1,196 $ 1,655 $ 38 $ 1 $ 5,073 Charge-offs (233 ) (42 ) (36 ) (16 ) (1 ) (328 ) Recoveries — — — — — — Provision 181 (186 ) (8 ) 15 14 16 Ending balance $ 2,131 $ 968 $ 1,611 $ 37 $ 14 $ 4,761 Three Months Ended June 30, 2016 Beginning balance $ 3,430 $ 1,643 $ 2,422 $ 50 $ 8 $ 7,553 Charge-offs (225 ) (377 ) — — (4 ) (606 ) Recoveries 72 6 — 2 — 80 Provision (443 ) (247 ) (920 ) 17 (1 ) (1,594 ) Ending balance $ 2,834 $ 1,025 $ 1,502 $ 69 $ 3 $ 5,433 Six Months Ended June 30, 2016 Beginning balance $ 3,388 $ 1,893 $ 2,449 $ 60 $ 8 $ 7,798 Charge-offs (733 ) (894 ) (211 ) (228 ) (56 ) (2,122 ) Recoveries 2,281 400 207 233 53 3,174 Provision (2,102 ) (374 ) (943 ) 4 (2 ) (3,417 ) Ending balance $ 2,834 $ 1,025 $ 1,502 $ 69 $ 3 $ 5,433 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 June 30, 2017 Commercial real estate $ 807 $ 1,324 $ 2,131 $ 20,082 $ 42,853 $ 62,935 Residential real estate 135 833 968 1,864 43,649 45,513 Owner-occupied real estate 1,357 254 1,611 8,509 14,753 23,262 Commercial, financial & agricultural 6 31 37 69 3,548 3,617 Consumer — 14 14 2 269 271 Total purchased credit impaired loans $ 2,305 $ 2,456 $ 4,761 $ 30,526 $ 105,072 $ 135,598 December 31, 2016 Commercial real estate $ 760 $ 1,423 $ 2,183 $ 29,387 $ 47,892 $ 77,279 Residential real estate 156 1,040 1,196 1,897 52,610 54,507 Owner-occupied real estate 1,471 184 1,655 8,376 15,604 23,980 Commercial, financial & agricultural 2 36 38 86 4,447 4,533 Consumer — 1 1 8 339 347 Total purchased credit impaired loans $ 2,389 $ 2,684 $ 5,073 $ 39,754 $ 120,892 $ 160,646 Impaired loans, segregated by class of loans, are presented in the following table (dollars in thousands) : June 30, 2017 December 31, 2016 Unpaid Principal Balance Recorded Investment Related Allowance Unpaid Principal Balance Recorded Investment Related Allowance Impaired Loans (1) With no related allowance recorded: Construction, land & land development $ — $ — $ — $ 4,565 $ 2,933 $ — Other commercial real estate 49 49 — 56 56 — Total commercial real estate 49 49 — 4,621 2,989 — Residential real estate 368 359 — 388 320 — Owner-occupied real estate 2,865 2,752 — 193 188 — Commercial, financial & agricultural 2,053 1,607 — 1,335 1,128 — Consumer 20 12 — 2 2 — Subtotal 5,355 4,779 — 6,539 4,627 — With related allowance recorded: Construction, land & land development 217 215 107 4,277 2,124 201 Other commercial real estate — — — — — — Total commercial real estate 217 215 107 4,277 2,124 201 Residential real estate 714 654 327 891 825 413 Owner-occupied real estate — — — 1,706 1,687 44 Commercial, financial & agricultural 940 913 119 308 298 146 Consumer 62 38 19 55 54 27 Subtotal 1,933 1,820 572 7,237 4,988 831 Total impaired loans $ 7,288 $ 6,599 $ 572 $ 13,776 $ 9,615 $ 831 (1) Includes loans with SBA guaranteed balances of $4.4 million and $3.0 million at June 30, 2017 and December 31, 2016 , respectively. The following table presents information related to the average recorded investment and interest income recognized on impaired loans, for the periods presented (dollars in thousands) : June 30, 2017 June 30, 2016 Impaired Loans Average Recorded Investment (1) Interest Income Recognized (2) Average Recorded Investment (1) Interest Income Recognized (2) Three Months Ended Construction, land & land development $ 3,458 $ — $ 5,832 $ — Other commercial real estate 51 — 239 — Total commercial real estate 3,509 — 6,071 — Residential real estate 1,018 — 1,803 — Owner-occupied real estate 2,788 — — 3 Commercial, financial & agricultural 2,682 1 1,709 16 Consumer 72 — 34 — Total impaired loans $ 10,069 $ 1 $ 9,617 $ 19 Six Months Ended Construction, land & land development $ 4,297 $ — $ 6,845 $ — Other commercial real estate 53 — 321 — Total commercial real estate 4,350 — 7,166 — Residential real estate 1,031 — 1,868 — Owner-occupied real estate 2,824 — 380 3 Commercial, financial & agricultural 2,736 1 2,242 24 Consumer 77 — 38 — Total impaired loans $ 11,018 $ 1 $ 11,694 $ 27 (1) The average recorded investment for troubled debt restructurings was $3.2 million and $4.1 million for the three and six months ended June 30, 2017 , respectively, and was $5.8 million and $7.7 million for the three and six months ended June 30, 2016 , respectively. (2) The interest income recognized on troubled debt restructurings was $0 for both the three and six months ended June 30, 2017 , and was $16,000 and $24,000 for the three and six months ended June 30, 2016 , respectively. The following table presents the recorded investment in nonaccrual loans by loan class at the dates indicated (dollars in thousands) : Nonaccrual Loans June 30, 2017 December 31, 2016 Construction, land & land development $ 215 $ 5,057 Other commercial real estate 49 56 Total commercial real estate 264 5,113 Residential real estate 1,013 1,146 Owner-occupied real estate 2,752 1,874 Commercial, financial & agricultural 2,484 1,426 Consumer 50 56 Total nonaccrual loans $ 6,563 $ 9,615 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 June 30, 2017 Construction, land & land development $ — $ 215 $ 215 $ 413,342 $ 413,557 $ — Other commercial real estate — — — 960,762 960,762 — Total commercial real estate — 215 215 1,374,104 1,374,319 — Residential real estate 248 99 347 167,408 167,755 — Owner-occupied real estate 622 — 622 244,015 244,637 — Commercial, financial & agricultural 189 472 661 354,968 355,629 — Leases — — — 73,103 73,103 — Consumer 112 — 112 59,916 60,028 — Total organic loans $ 1,171 $ 786 $ 1,957 $ 2,273,514 $ 2,275,471 $ — December 31, 2016 Construction, land & land development $ 49 $ 12 $ 61 $ 499,957 $ 500,018 $ — Other commercial real estate — — — 754,790 754,790 — Total commercial real estate 49 12 61 1,254,747 1,254,808 — Residential real estate 157 118 275 144,020 144,295 — Owner-occupied real estate 40 — 40 256,277 256,317 — Commercial, financial & agricultural 247 283 530 326,851 327,381 — Leases — — — 71,724 71,724 — Consumer 350 31 381 35,658 36,039 — Total organic loans $ 843 $ 444 $ 1,287 $ 2,089,277 $ 2,090,564 $ — 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 June 30, 2017 Construction, land & land development $ — $ — $ — $ 31,083 $ 31,083 $ — Other commercial real estate — 50 50 171,864 171,914 — Total commercial real estate — 50 50 202,947 202,997 — Residential real estate 458 93 551 116,898 117,449 — Owner-occupied real estate 164 2,579 2,743 111,695 114,438 — Commercial, financial & agricultural 892 706 1,598 30,056 31,654 — Consumer 1 5 6 3,387 3,393 — Total purchased non-credit impaired loans $ 1,515 $ 3,433 $ 4,948 $ 464,983 $ 469,931 $ — December 31, 2016 Construction, land & land development $ 495 $ — $ 495 $ 50,713 $ 51,208 $ — Other commercial real estate 17 56 73 209,458 209,531 — Total commercial real estate 512 56 568 260,171 260,739 — Residential real estate 274 165 439 144,157 144,596 — Owner-occupied real estate 387 1,687 2,074 113,492 115,566 — Commercial, financial & agricultural 144 552 696 35,510 36,206 — Consumer 38 2 40 6,215 6,255 — Total purchased non-credit impaired loans $ 1,355 $ 2,462 $ 3,817 $ 559,545 $ 563,362 $ — 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 June 30, 2017 Construction, land & land development $ 48 $ 1,909 $ 1,957 $ 14,900 $ 16,857 Other commercial real estate 657 3,775 4,432 41,646 46,078 Total commercial real estate 705 5,684 6,389 56,546 62,935 Residential real estate 2,462 2,251 4,713 40,800 45,513 Owner-occupied real estate 119 2,619 2,738 20,524 23,262 Commercial, financial & agricultural 52 6 58 3,559 3,617 Consumer 15 3 18 253 271 Total purchased credit impaired loans $ 3,353 $ 10,563 $ 13,916 $ 121,682 $ 135,598 December 31, 2016 Construction, land & land development $ 722 $ 1,853 $ 2,575 $ 13,962 $ 16,537 Other commercial real estate 346 3,148 3,494 57,248 60,742 Total commercial real estate 1,068 5,001 6,069 71,210 77,279 Residential real estate 1,210 2,787 3,997 50,510 54,507 Owner-occupied real estate 661 3,507 4,168 19,812 23,980 Commercial, financial & agricultural 29 61 90 4,443 4,533 Consumer — 5 5 342 347 Total purchased credit impaired loans $ 2,968 $ 11,361 $ 14,329 $ 146,317 $ 160,646 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. 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 June 30, 2017 Construction, land & land development $ 382,550 $ 30,606 $ 88 $ 313 $ — $ 413,557 Other commercial real estate 927,904 32,858 — — — 960,762 Total commercial real estate 1,310,454 63,464 88 313 — 1,374,319 Residential real estate 162,901 3,307 118 1,429 — 167,755 Owner-occupied real estate 226,007 16,387 1,631 612 — 244,637 Commercial, financial & agricultural 353,593 770 744 522 — 355,629 Leases 66,042 7,061 — — — 73,103 Consumer 59,841 63 — 124 — 60,028 Total organic loans $ 2,178,838 $ 91,052 $ 2,581 $ 3,000 $ — $ 2,275,471 December 31, 2016 Construction, land & land development $ 470,686 $ 24,178 $ 97 $ 5,057 $ — $ 500,018 Other commercial real estate 718,969 35,821 — — — 754,790 Total commercial real estate 1,189,655 59,999 97 5,057 — 1,254,808 Residential real estate 139,393 2,484 460 1,958 — 144,295 Owner-occupied real estate 237,753 14,967 3,577 20 — 256,317 Commercial, financial & agricultural 325,161 920 624 676 — 327,381 Leases 60,849 10,875 — — — 71,724 Consumer 35,844 47 2 145 1 36,039 Total organic loans $ 1,988,655 $ 89,292 $ 4,760 $ 7,856 $ 1 $ 2,090,564 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 June 30, 2017 Construction, land & land development $ 30,629 $ 454 $ — $ — $ — $ 31,083 Other commercial real estate 169,000 2,287 578 49 — 171,914 Total commercial real estate 199,629 2,741 578 49 — 202,997 Residential real estate 114,387 2,581 122 359 — 117,449 Owner-occupied real estate 106,386 4,765 — 3,287 — 114,438 Commercial, financial & agricultural 29,472 — 87 2,095 — 31,654 Consumer 3,378 1 — 14 — 3,393 Total purchased non-credit impaired loans $ 453,252 $ 10,088 $ 787 $ 5,804 $ — $ 469,931 December 31, 2016 Construction, land & land development $ 51,208 $ — $ — $ — $ — $ 51,208 Other commercial real estate 206,515 803 2,157 56 — 209,531 Total commercial real estate 257,723 803 2,157 56 — 260,739 Residential real estate 142,079 1,883 314 320 — 144,596 Owner-occupied real estate 107,096 6,310 — 2,160 — 115,566 Commercial, financial & agricultural 34,747 310 21 1,128 — 36,206 Consumer 6,247 5 — 3 — 6,255 Total purchased non-credit impaired loans $ 547,892 $ 9,311 $ 2,492 $ 3,667 $ — $ 563,362 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 June 30, 2017 Construction, land & land development $ 9,331 $ 1,254 $ 933 $ 5,339 $ — $ 16,857 Other commercial real estate 20,527 12,874 2,215 10,462 — 46,078 Total commercial real estate 29,858 14,128 3,148 15,801 — 62,935 Residential real estate 24,213 7,587 2,048 11,402 263 45,513 Owner-occupied real estate 7,694 5,028 813 9,727 — 23,262 Commercial, financial & agricultural 2,616 297 202 502 — 3,617 Consumer 38 60 157 15 1 271 Total purchased credit impaired loans $ 64,419 $ 27,100 $ 6,368 $ 37,447 $ 264 $ 135,598 December 31, 2016 Construction, land & land development $ 7,798 $ 1,150 $ 1,416 $ 6,173 $ — $ 16,537 Other commercial real estate 33,423 13,103 2,770 11,446 — 60,742 Total commercial real estate 41,221 14,253 4,186 17,619 — 77,279 Residential real estate 28,628 10,371 2,840 12,396 272 54,507 Owner-occupied real estate 7,736 4,884 794 10,566 — 23,980 Commercial, financial & agricultural 3,381 310 273 569 — 4,533 Consumer 53 100 173 21 — 347 Total purchased credit impaired loans $ 81,019 $ 29,918 $ 8,266 $ 41,171 $ 272 $ 160,646 Allowance Estimation During the first quarter of 2017, the Company implemented an automated solution broadly deployed throughout the industry for its estimation of the allowance for loan and lease losses on its organic and purchased non-credit impaired loans. No change was made to the allowance estimation for purchased credit impaired loans. No material changes were made to the methodology used. However, the new model does allow for further granularity within our loan pools. The Company validated the new model against its existing model for three quarters prior to implementation. Troubled Debt Restructurings (TDRs) There were no troubled debt restructurings (TDRs) at June 30, 2017 . At December 31, 2016 , TDRs totaled $5.0 million with $148,000 in related allowance. At December 31, 2016 , there was no commitment to extend credit to a borrower with an existing troubled debt restructuring. 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. The following table provides information on loans that were modified as TDRs during the periods presented (dollars in thousands) : June 30, 2017 June 30, 2016 TDR Additions (1) Number of Contracts Pre-Modification Outstanding Recorded Investment Post-Modification Outstanding Recorded Investment Number of Contracts Pre-Modification Outstanding Recorded Investment Post-Modification Outstanding Recorded Investment Six Months Ended Construction, land & land development — $ — $ — 1 $ 4,168 $ 4,168 Other commercial real estate — — — — — — Total commercial real estate — — — 1 4,168 4,168 Commercial & industrial — — — — — — Owner-occupied real estate — — — — — — Residential real estate — — — — — — Consumer & Other — — — — — — Total modifications — $ — $ — 1 $ 4,168 $ 4,168 (1) The pre-modification and post-modification recorded investment amount represents the recorded investment on the date of the loan modification. Since the modifications on this loan were an interest rate concession and payment term extension, not principal reductions, the pre-modification and post-modification recorded investment amount is the same. During the six months ended June 30, 2017 and 2016 , there were no TDRs that subsequently defaulted within twelve months of their modification dates. |