LOANS | NOTE 5 LOANS The Commercial, financial and agricultural loans include both secured and unsecured loans for working capital, expansion, crop production and other business purposes. Short-term working capital loans are secured by non-real estate collateral such as accounts receivable, crops, inventory and equipment. The Company evaluates the financial strength, cash flow, management, credit history of the borrower and the quality of the collateral securing the loan. The Bank often requires personal guarantees and secondary sources of repayment on commercial, financial and agricultural loans. Real estate loans include construction and development loans, commercial and farmland loans and residential loans. Construction and development loans include loans for the development of residential neighborhoods, one-to-four family residential construction loans to builders and consumers, and commercial real estate construction loans, primarily for owner-occupied properties. The Company limits its construction lending risk through adherence to established underwriting procedures. Commercial real estate loans include loans secured by owner-occupied commercial buildings for office, storage, retail, farmland and warehouse space. They also include non-owner occupied commercial buildings such as leased retail and office space. Commercial real estate loans may be larger in size and may involve a greater degree of risk than one-to-four family residential mortgage loans. Payments on such loans are often dependent on successful operation or management of the properties. The Company's residential loans represent permanent mortgage financing and are secured by residential properties located within the Bank's market areas. Consumer installment loans and other loans include automobile loans, boat and recreational vehicle financing, and secured and unsecured personal loans. Consumer loans carry greater risks than other loans, as the collateral can consist of rapidly depreciating assets such as automobiles and equipment that may not provide an adequate source of repayment of the loan in the case of default. Loans are stated at unpaid balances, net of unearned income and deferred loan fees. (Dollars in Thousands) September 30, December 31, September 30, Commercial, financial and agricultural $ 427,747 $ 319,654 $ 334,783 Real estate construction and development 220,798 161,507 154,315 Real estate commercial and farmland 1,067,828 907,524 882,160 Real estate residential 532,285 456,106 436,515 Consumer installment 31,299 30,782 31,403 Other 10,692 14,308 9,583 $ 2,290,649 $ 1,889,881 $ 1,848,759 Purchased non-covered loans are defined as loans that were acquired in bank acquisitions that are not covered by a loss-sharing agreement with the FDIC, including purchased loans where the loss-sharing agreement with the FDIC has expired. 767.5 674.2 673.7 (Dollars in Thousands) September 30, December 31, September 30, Commercial, financial and agricultural $ 42,350 $ 38,041 $ 38,077 Real estate construction and development 71,109 58,362 60,262 Real estate commercial and farmland 385,032 306,706 296,790 Real estate residential 263,312 266,342 273,347 Consumer installment 5,691 4,788 5,248 $ 767,494 $ 674,239 $ 673,724 Purchased loan pools are defined as groups of loans that were not acquired in bank acquisitions or FDIC-assisted transactions. As of September 30, 2015, purchased loan pools totaled $ 410.1 402.1 8.0 Covered loans are defined as loans that were acquired in FDIC-assisted transactions that are covered by a loss-sharing agreement with the FDIC. Covered loans totaling $ 191.0 271.3 313.6 (Dollars in Thousands) September 30, December 31, September 30, Commercial, financial and agricultural $ 13,349 $ 21,467 $ 22,545 Real estate construction and development 14,266 23,447 27,756 Real estate commercial and farmland 103,399 147,627 180,566 Real estate residential 59,835 78,520 82,445 Consumer installment 172 218 277 $ 191,021 $ 271,279 $ 313,589 Nonaccrual and Past Due Loans A loan is placed on nonaccrual status when, in management’s judgment, the collection of the interest income appears doubtful. Interest receivable that has been accrued and is subsequently determined to have doubtful collectability is charged against interest income. Interest payments on nonaccrual loans are typically applied to principal unless collectability of the principal amount is reasonably assured, in which case interest is recognized on a cash basis. Loans are returned to accrual status when all the principal and interest amounts contractually due are brought current and future payments are reasonably assured. Past due loans are loans whose principal or interest is past due 90 (Dollars in Thousands) September 30, December 31, September 30, Commercial, financial and agricultural $ 1,995 $ 1,672 $ 2,695 Real estate construction and development 1,753 3,774 3,037 Real estate commercial and farmland 11,645 8,141 8,983 Real estate residential 4,810 7,663 7,608 Consumer installment 355 478 487 $ 20,558 $ 21,728 $ 22,810 (Dollars in Thousands) September 30, December 31, September 30, Commercial, financial and agricultural $ 214 $ 175 $ 54 Real estate construction and development 916 1,119 1,969 Real estate commercial and farmland 4,728 10,242 8,776 Real estate residential 5,464 6,644 6,132 Consumer installment 52 69 76 $ 11,374 $ 18,249 $ 17,007 (Dollars in Thousands) September 30, December 31, September 30, Commercial, financial and agricultural $ 7,916 $ 8,541 $ 8,441 Real estate construction and development 2,934 7,601 8,896 Real estate commercial and farmland 18,164 12,584 14,617 Real estate residential 3,979 6,595 7,227 Consumer installment 91 91 102 $ 33,084 $ 35,412 $ 39,283 Loans Loans Loans 90 Total Current Total Loans 90 (Dollars in Thousands) As of September 30, 2015: Commercial, financial & agricultural $ 781 $ 714 $ 1,799 $ 3,294 $ 424,453 $ 427,747 $ - Real estate construction & development 1,184 417 1,753 3,354 217,444 220,798 - Real estate commercial & farmland 4,275 399 8,082 12,756 1,055,072 1,067,828 - Real estate residential 6,424 1,558 4,247 12,229 520,056 532,285 - Consumer installment loans 326 82 227 635 30,664 31,299 - Other - - - - 10,692 10,692 - Total $ 12,990 $ 3,170 $ 16,108 $ 32,268 $ 2,258,381 $ 2,290,649 $ - Loans Loans Loans 90 Total Current Total Loans 90 (Dollars in Thousands) As of December 31, 2014: Commercial, financial & agricultural $ 900 $ 233 $ 1,577 $ 2,710 $ 316,944 $ 319,654 $ - Real estate construction & development 1,382 286 3,367 5,035 156,472 161,507 - Real estate commercial & farmland 2,859 635 7,668 11,162 896,362 907,524 - Real estate residential 3,953 2,334 6,755 13,042 443,064 456,106 - Consumer installment loans 634 158 366 1,158 29,624 30,782 1 Other - - - - 14,308 14,308 - Total $ 9,728 $ 3,646 $ 19,733 $ 33,107 $ 1,856,774 $ 1,889,881 $ 1 Loans Loans Loans 90 Total Current Total Loans 90 (Dollars in Thousands) As of September 30, 2014: Commercial, financial & agricultural $ 271 $ 400 $ 2,483 $ 3,154 $ 331,629 $ 334,783 $ - Real estate construction & development 1,232 285 2,899 4,416 149,899 154,315 - Real estate commercial & farmland 3,025 484 8,918 12,427 869,733 882,160 - Real estate residential 4,416 2,085 7,303 13,804 422,711 436,515 - Consumer installment loans 333 113 396 842 30,561 31,403 - Other - - - - 9,583 9,583 - Total $ 9,277 $ 3,367 $ 21,999 $ 34,643 $ 1,814,116 $ 1,848,759 $ - Loans Loans Loans 90 Total Current Total Loans 90 (Dollars in Thousands) As of September 30, 2015: Commercial, financial & agricultural $ 140 $ 11 $ 112 $ 263 $ 42,087 $ 42,350 $ - Real estate construction & development 322 - 459 781 70,328 71,109 - Real estate commercial & farmland 2,681 613 3,391 6,685 378,347 385,032 - Real estate residential 3,822 1,672 4,901 10,395 252,917 263,312 - Consumer installment loans 5 - 49 54 5,637 5,691 - Total $ 6,970 $ 2,296 $ 8,912 $ 18,178 $ 749,316 $ 767,494 $ - Loans Loans Loans 90 Total Current Total Loans 90 (Dollars in Thousands) As of December 30, 2014: Commercial, financial & agricultural $ 461 $ 90 $ 175 $ 726 $ 37,315 $ 38,041 $ - Real estate construction & development 790 1,735 1,117 3,642 54,720 58,362 - Real estate commercial & farmland 2,107 1,194 9,529 12,830 293,876 306,706 - Real estate residential 6,907 1,401 6,369 14,677 251,665 266,342 - Consumer installment loans 82 - 65 147 4,641 4,788 - Total $ 10,347 $ 4,420 $ 17,255 $ 32,022 $ 642,217 $ 674,239 $ - Loans Loans Loans 90 Total Current Total Loans 90 (Dollars in Thousands) As of September 30, 2014: Commercial, financial & agricultural $ 33 $ 46 $ 55 $ 134 $ 37,943 $ 38,077 $ - Real estate construction & development 520 135 3,069 3,724 56,538 60,262 1,100 Real estate commercial & farmland 3,497 1,227 8,266 12,990 283,800 296,790 258 Real estate residential 3,915 1,440 5,929 11,284 262,063 273,347 - Consumer installment loans 36 5 76 117 5,131 5,248 - Total $ 8,001 $ 2,853 $ 17,395 $ 28,249 $ 645,475 $ 673,724 $ 1,358 Loans Loans Loans 90 Total Current Total Loans 90 (Dollars in Thousands) As of September 30, 2015: Commercial, financial & agricultural $ 40 $ 48 $ 7,886 $ 7,974 $ 5,375 $ 13,349 $ - Real estate construction & development 1,548 68 2,408 4,024 10,242 14,266 - Real estate commercial & farmland 1,003 550 6,573 8,126 95,273 103,399 - Real estate residential 2,612 783 2,140 5,535 54,300 59,835 - Consumer installment loans - - 49 49 123 172 - Total $ 5,203 $ 1,449 $ 19,056 $ 25,708 $ 165,313 $ 191,021 $ - Loans Loans Loans 90 Total Current Total Loans 90 (Dollars in Thousands) As of December 31, 2014: Commercial, financial & agricultural $ 451 $ 136 $ 1,878 $ 2,465 $ 19,002 $ 21,467 $ - Real estate construction & development 238 226 6,703 7,167 16,280 23,447 - Real estate commercial & farmland 4,371 1,486 7,711 13,568 134,059 147,627 714 Real estate residential 3,464 962 5,656 10,082 68,438 78,520 - Consumer installment loans 10 - 91 101 117 218 - Total $ 8,534 $ 2,810 $ 22,039 $ 33,383 $ 237,896 $ 271,279 $ 714 Loans Loans Loans 90 Total Current Total Loans 90 (Dollars in Thousands) As of September 30, 2014: Commercial, financial & agricultural $ 568 $ 188 $ 1,978 $ 2,734 $ 19,811 $ 22,545 $ - Real estate construction & development 632 72 8,659 9,363 18,393 27,756 - Real estate commercial & farmland 7,100 322 8,930 16,352 164,214 180,566 305 Real estate residential 2,694 1,473 5,563 9,730 72,715 82,445 65 Consumer installment loans 2 7 101 110 167 277 - Total $ 10,996 $ 2,062 $ 25,231 $ 38,289 $ 275,300 $ 313,589 $ 370 Impaired Loans Loans are considered impaired when, based on current information and events, it is probable the Company will be unable to collect all amounts due in accordance with the original contractual terms of the loan agreements. When determining if the Company will be unable to collect all principal and interest payments due in accordance with the contractual terms of the loan agreement, the Company considers the borrower’s capacity to pay, which includes such factors as the borrower’s current financial statements, an analysis of global cash flow sufficient to pay all debt obligations and an evaluation of secondary sources of repayment, such as guarantor support and collateral value. Impaired loans include loans on nonaccrual status and troubled debt restructurings. The Company individually assesses for impairment all nonaccrual loans greater than $200,000 and rated substandard or worse and all troubled debt restructurings greater than $100,000. If a loan is deemed impaired, a specific valuation allowance is allocated, if necessary, so that the loan is reported net, at the present value of estimated future cash flows using the loan’s existing rate or at the fair value of collateral if repayment is expected solely from the collateral. Interest payments on impaired loans are typically applied to principal unless collectability of the principal amount is reasonably assured, in which case interest is recognized on a cash basis. As of and For the Period Ended September 30, December 31, September 30, (Dollars in Thousands) Nonaccrual loans $ 20,558 $ 21,728 $ 22,810 Troubled debt restructurings not included above 12,075 12,759 17,261 Total impaired loans $ 32,633 $ 34,487 $ 40,071 Quarter-to-date interest income recognized on impaired loans $ 241 $ 237 $ 332 Year-to-date interest income recognized on impaired loans $ 635 $ 1,991 $ 1,754 Quarter-to-date foregone interest income on impaired loans $ 309 $ 323 $ 353 Year-to-date foregone interest income on impaired loans $ 939 $ 1,491 $ 1,168 The following table presents an analysis of information pertaining to impaired loans, excluding purchased non-covered and covered loans as of September 30, 2015, December 31, 2014 and September 30, 2014: Unpaid Recorded Recorded Total Related Allowance Three Month Average Nine Month Average (Dollars in Thousands) As of September 30, 2015: Commercial, financial & agricultural $ 3,761 $ 471 $ 1,762 $ 2,233 $ 528 $ 3,289 $ 2,458 Real estate construction & development 3,757 230 2,361 2,591 731 2,503 3,384 Real estate commercial & farmland 18,652 5,870 11,494 17,364 1,635 16,459 15,684 Real estate residential 11,549 1,752 8,266 10,018 1,872 10,185 11,509 Consumer installment loans 524 - 426 426 7 483 487 Total $ 38,243 $ 8,323 $ 24,309 $ 32,632 $ 4,773 $ 32,919 $ 33,522 Unpaid Recorded Recorded Total Related Three Month Twelve Month (Dollars in Thousands) As of December 31, 2014: Commercial, financial & agricultural $ 3,387 $ 6 $ 1,956 $ 1,962 $ 395 $ 2,457 $ 3,021 Real estate construction & development 8,325 448 4,005 4,453 771 4,703 5,368 Real estate commercial & farmland 17,514 4,967 9,651 14,618 1,859 15,341 15,972 Real estate residential 15,571 3,514 9,407 12,921 974 14,244 16,317 Consumer installment loans 618 - 533 533 9 527 519 Total $ 45,415 $ 8,935 $ 25,552 $ 34,487 $ 4,008 $ 37,272 $ 41,197 Unpaid Recorded Recorded Total Related Three Month Nine Month (Dollars in Thousands) As of September 30, 2014: Commercial, financial & agricultural $ 4,445 $ 8 $ 2,943 $ 2,951 $ 631 $ 2,402 $ 3,285 Real estate construction & development 8,824 211 4,743 4,954 612 5,243 5,596 Real estate commercial & farmland 18,955 7,311 8,753 16,064 1,698 16,242 16,312 Real estate residential 18,251 5,635 9,946 15,581 1,286 15,356 17,169 Consumer installment loans 606 - 521 521 10 517 516 Total $ 51,081 $ 13,165 $ 26,906 $ 40,071 $ 4,237 $ 39,760 $ 42,878 The following is a summary of information pertaining to purchased non-covered impaired loans: As of and For the Period Ended September 30, December 31, September 30, (Dollars in Thousands) Nonaccrual loans $ 11,374 $ 18,249 $ 17,007 Troubled debt restructurings not included above 7,188 1,212 583 Total impaired loans $ 18,562 $ 19,461 $ 17,590 Quarter-to-date interest income recognized on impaired loans $ 158 $ 64 $ 27 Year-to-date interest income recognized on impaired loans $ 342 $ 132 $ 68 Quarter-to-date foregone interest income on impaired loans $ 198 $ 521 $ 587 Year-to-date foregone interest income on impaired loans $ 1,121 $ 1,759 $ 1,239 The following table presents an analysis of information pertaining to purchased non-covered impaired loans as of September 30, 2015, December 31, 2014 and September 30, 2014: Unpaid Recorded Recorded Total Related Three Month Nine Month (Dollars in Thousands) As of September 30, 2015: Commercial, financial & agricultural $ 1,137 $ 214 $ - $ 214 $ - $ 262 $ 224 Real estate construction & development 9,211 1,268 - 1,268 - 1,563 1,419 Real estate commercial & farmland 13,399 8,799 - 8,799 - 11,245 10,724 Real estate residential 12,443 8,224 - 8,224 - 8,255 7,845 Consumer installment loans 74 57 - 57 - 76 63 Total $ 36,264 $ 18,562 $ - $ 18,562 $ - $ 21,402 $ 20,275 Unpaid Recorded Recorded Total Related Three Month Twelve Month (Dollars in Thousands) As of December 31, 2014: Commercial, financial & agricultural $ 1,366 $ 175 $ - $ 175 $ - $ 277 $ 165 Real estate construction & development 5,161 1,436 - 1,436 - 2,242 1,643 Real estate commercial & farmland 15,007 10,588 - 10,588 - 11,148 7,484 Real estate residential 12,283 7,191 - 7,191 - 8,447 7,084 Consumer installment loans 172 71 - 71 - 124 68 Total $ 33,989 $ 19,461 $ - $ 19,461 $ - $ 22,238 $ 16,444 Unpaid Recorded Recorded Total Related Three Month Average Nine Month Average (Dollars in Thousands) As of September 30, 2014: Commercial, financial & agricultural $ 438 $ 54 $ - $ 54 $ - $ 98 $ 81 Real estate construction & development 3,794 2,274 - 2,274 - 2,273 1,501 Real estate commercial & farmland 12,354 8,776 - 8,776 - 7,712 5,976 Real estate residential 9,610 6,407 - 6,407 - 6,533 6,233 Consumer installment loans 184 79 - 79 - 64 43 Total $ 26,380 $ 17,590 $ - $ 17,590 $ - $ 16,680 $ 13,834 The following is a summary of information pertaining to covered impaired loans: As of and For the Period Ended September 30, December 31, September 30, (Dollars in Thousands) Nonaccrual loans $ 33,084 $ 35,412 $ 39,283 Troubled debt restructurings not included above 16,576 22,619 22,757 Total impaired loans $ 49,660 $ 58,031 $ 62,040 Quarter-to-date interest income recognized on impaired loans $ 268 $ 443 $ 420 Year-to-date interest income recognized on impaired loans $ 732 $ 2,057 $ 1,614 Quarter-to-date foregone interest income on impaired loans $ 468 $ 571 $ 660 Year-to-date foregone interest income on impaired loans $ 1,416 $ 3,123 $ 2,552 Unpaid Recorded Recorded Total Related Three Month Nine Month (Dollars in Thousands) As of September 30, 2015: Commercial, financial & agricultural $ 11,794 $ 7,918 $ - $ 7,918 $ - $ 8,625 $ 8,560 Real estate construction & development 29,596 5,780 - 5,780 - 6,166 8,013 Real estate commercial & farmland 41,724 21,265 - 21,265 - 20,697 21,380 Real estate residential 18,097 14,605 - 14,605 - 14,881 16,465 Consumer installment loans 126 92 - 92 - 101 96 Total $ 101,337 $ 49,660 $ - $ 49,660 $ - $ 50,470 $ 54,514 Unpaid Recorded Recorded Total Related Three Month Twelve Month (Dollars in Thousands) As of December 31, 2014: Commercial, financial & agricultural $ 14,385 $ 8,582 $ - $ 8,582 $ - $ 8,525 $ 9,325 Real estate construction & development 27,289 10,638 - 10,638 - 11,279 13,935 Real estate commercial & farmland 31,309 20,663 - 20,663 - 21,890 28,057 Real estate residential 22,860 18,054 - 18,054 - 18,242 20,776 Consumer installment loans 124 94 - 94 - 100 160 Total $ 95,967 $ 58,031 $ - $ 58,031 $ - $ 60,036 $ 72,253 Unpaid Recorded Recorded Total Related Three Month Nine Month (Dollars in Thousands) As of September 30, 2014: Commercial, financial & agricultural $ 11,356 $ 8,467 $ - $ 8,467 $ - $ 10,367 $ 9,511 Real estate construction & development 13,268 11,920 - 11,920 - 11,484 14,760 Real estate commercial & farmland 26,624 23,118 - 23,118 - 23,562 29,904 Real estate residential 20,331 18,430 - 18,430 - 19,112 21,456 Consumer installment loans 134 105 - 105 - 116 177 Total $ 71,713 $ 62,040 $ - $ 62,040 $ - $ 64,641 $ 75,808 Credit Quality Indicators The Company uses a nine category risk grading system to assign a risk grade to each loan in the portfolio. Procedures provide for the assignment of a risk rating for every loan included in the total loan portfolio, with the exception of certain mortgage loans serviced at a third party, mortgage warehouse lines and overdraft protection loans, which are treated as pools for risk-rating purposes. Relationships greater than $1.0 million and a sample of relationships greater than $250,000 are reviewed annually by the Bank’s independent internal loan review department. The following is a description of the general characteristics of the grades: Grade 10 Prime Credit Grade 15 Good Credit Satisfactory Credit Grade 20 Satisfactory Credit Grade 23 Performing, Under-Collateralized Credit 110 Grade 25 Minimum Acceptable Credit Satisfactory Credit Grade 30 Other Asset Especially Mentioned Grade 40 Substandard Grade 50 Doubtful Grade 60 Loss Risk Commercial, Real estate - Real estate - Real estate - Consumer Other Total (Dollars in Thousands) 10 $ 222,693 $ 294 $ 116 $ 1,490 $ 6,688 $ - $ 231,281 15 23,807 2,150 123,515 83,361 1,352 - 234,185 20 99,414 45,091 645,949 327,576 19,302 10,692 1,148,024 23 645 7,754 11,792 6,240 46 - 26,477 25 75,635 159,944 250,575 90,320 3,168 - 579,642 30 2,378 2,035 9,762 7,811 204 - 22,190 40 3,175 3,530 26,119 15,487 537 - 48,848 50 - - - - 2 - 2 60 - - - - - - - Total $ 427,747 $ 220,798 $ 1,067,828 $ 532,285 $ 31,299 $ 10,692 $ 2,290,649 The following table presents the loan portfolio, excluding purchased non-covered and covered loans, by risk grade as of December 31, 2014: Risk Commercial, Real estate - Real estate - Real estate - Consumer Other Total (Dollars in Thousands) 10 $ 121,355 $ 268 $ 155 $ 226 $ 6,573 $ - $ 128,577 15 25,318 4,010 128,170 59,301 1,005 - 217,804 20 100,599 47,541 511,198 256,758 17,544 14,308 947,948 23 56 8,933 10,507 9,672 37 - 29,205 25 62,519 93,514 224,464 102,998 4,692 - 488,187 30 3,758 1,474 13,035 7,459 257 - 25,983 40 6,049 5,767 19,995 19,692 673 - 52,176 50 - - - - 1 - 1 60 - - - - - - - Total $ 319,654 $ 161,507 $ 907,524 $ 456,106 $ 30,782 $ 14,308 $ 1,889,881 The following table presents the loan portfolio, excluding purchased non-covered and covered loans, by risk grade as of September 30, 2014: Risk Commercial, Real estate - Real estate - Real estate - Consumer Other Total (Dollars in Thousands) 10 $ 114,298 $ 171 $ 251 $ 479 $ 6,287 $ - $ 121,486 15 29,665 4,114 136,303 51,508 1,124 - 222,714 20 110,337 50,427 478,551 241,457 17,700 9,583 908,055 23 186 9,292 9,574 9,469 305 - 28,826 25 73,251 83,245 217,226 105,635 4,842 - 484,199 30 3,438 1,781 16,217 10,060 254 - 31,750 40 3,608 5,285 23,950 17,907 890 - 51,640 50 - - 88 - - - 88 60 - - - - 1 - 1 Total $ 334,783 $ 154,315 $ 882,160 $ 436,515 $ 31,403 $ 9,583 $ 1,848,759 Risk Commercial, Real estate - Real estate - Real estate - Consumer Other Total (Dollars in Thousands) 10 $ 8,741 $ - $ - $ - $ 1,060 $ - $ 9,801 15 1,229 1,805 8,440 38,643 789 - 50,906 20 10,982 13,518 187,329 133,914 2,291 - 348,034 23 - 230 4,079 6,303 - - 10,612 25 17,873 48,137 159,816 63,049 1,397 - 290,272 30 2,379 3,418 12,997 7,609 55 - 26,458 40 1,116 4,001 12,371 13,794 99 - 31,381 50 30 - - - - - 30 60 - - - - - - - Total $ 42,350 $ 71,109 $ 385,032 $ 263,312 $ 5,691 $ - $ 767,494 The following table presents the purchased non-covered loan portfolio by risk grade as of December 31, 2014: Risk Commercial, Real estate - Real estate - Real estate - Consumer Other Total (Dollars in Thousands) 10 $ 6,624 $ - $ - $ 290 $ 480 $ - $ 7,394 15 1,376 552 13,277 14,051 501 - 29,727 20 13,657 12,991 116,308 64,083 1,647 - 208,686 23 73 - 3,207 3,298 - - 6,578 25 13,753 36,230 144,293 164,959 1,920 - 361,155 30 1,618 4,365 12,279 7,444 41 - 25,747 40 910 4,254 17,342 12,184 199 - 34,889 50 30 - - 33 - - 63 60 - - - - - - - Total $ 38,041 $ 58,362 $ 306,706 $ 266,342 $ 4,788 $ - $ 674,239 The following table presents the purchased non-covered loan portfolio by risk grade as of September 30, 2014: Risk Commercial, Real estate - Real estate - Real estate - Consumer Other Total (Dollars in Thousands) 10 $ 3,187 $ - $ - $ 292 $ 486 $ - $ 3,965 15 5,023 447 14,136 15,336 519 - 35,461 20 11,230 12,345 90,915 64,178 2,034 - 180,702 23 8 - - 1,208 - - 1,216 25 16,467 38,426 167,458 175,313 2,065 - 399,729 30 1,494 2,164 9,300 7,071 19 - 20,048 40 668 6,880 14,981 9,915 121 - 32,565 50 - - - 34 4 - 38 60 - - - - - - - Total $ 38,077 $ 60,262 $ 296,790 $ 273,347 $ 5,248 $ - $ 673,724 Risk Commercial, Real estate - Real estate - Real estate - Consumer Other Total (Dollars in Thousands) 10 $ - $ - $ - $ - $ - $ - $ - 15 - - 478 115 - - 593 20 327 1,147 16,211 12,304 42 - 30,031 23 53 - 4,783 6,396 - - 11,232 25 4,476 8,241 53,126 27,795 37 - 93,675 30 4,060 1,965 5,539 5,481 - - 17,045 40 4,431 2,913 23,262 7,744 93 - 38,443 50 - - - - - - - 60 2 - - - - - 2 Total $ 13,349 $ 14,266 $ 103,399 $ 59,835 $ 172 $ - $ 191,021 The following table presents the covered loan portfolio by risk grade as of December 31, 2014: Risk Commercial, Real estate - Real estate - Real estate - Consumer Other Total (Dollars in Thousands) 10 $ - $ - $ - $ - $ - $ - $ - 15 - 1 761 525 - - 1,287 20 917 3,184 23,167 14,089 77 - 41,434 23 164 537 11,404 6,642 - - 18,747 25 5,181 9,406 80,334 33,124 37 - 128,082 30 4,808 2,753 5,302 8,050 - - 20,913 40 10,397 7,566 26,659 16,090 104 - 60,816 50 - - - - - - - 60 - - - - - - - Total $ 21,467 $ 23,447 $ 147,627 $ 78,520 $ 218 $ - $ 271,279 The following table presents the covered loan portfolio by risk grade as of September 30, 2014: Risk Commercial, Real estate - Real estate - Real estate - Consumer Other Total (Dollars in Thousands) 10 $ - $ - $ - $ - $ - $ - $ - 15 - 2 795 531 - - 1,328 20 1,302 3,380 33,200 15,957 71 - 53,910 23 145 547 14,640 5,815 - - 21,147 25 5,687 11,725 89,201 35,344 41 - 141,998 30 4,827 3,006 8,808 8,649 43 - 25,333 40 10,584 9,096 33,922 16,149 122 - 69,873 50 - - - - - - - 60 - - - - - - - Total $ 22,545 $ 27,756 $ 180,566 $ 82,445 $ 277 $ - $ 313,589 Troubled Debt Restructurings The restructuring of a loan is considered a “troubled debt restructuring” if both (i) the borrower is experiencing financial difficulties and (ii) the Company has granted a concession. Concessions may include interest rate reductions to below market interest rates, principal forgiveness, restructuring amortization schedules and other actions intended to minimize potential losses. The Company has exhibited the greatest success for rehabilitation of the loan by a reduction in the rate alone (maintaining the amortization of the debt) or a combination of a rate reduction and the forbearance of previously past due interest or principal. This has most typically been evidenced in certain commercial real estate loans whereby a disruption in the borrower’s cash flow resulted in an extended past due status, of which the borrower was unable to catch up completely as the cash flow of the property ultimately stabilized at a level lower than its original level. A reduction in rate, coupled with a forbearance of unpaid principal and/or interest, allowed the net cash flows to service the debt under the modified terms. The Company’s policy requires a restructure request to be supported by a current, well-documented credit evaluation of the borrower’s financial condition and a collateral evaluation that is no older than six months from the date of the restructure. Key factors of that evaluation include the documentation of current, recurring cash flows, support provided by the guarantor(s) and the current valuation of the collateral. If the appraisal in the file is older than six months, an evaluation must be made as to the continued reasonableness of the valuation. For certain income-producing properties, current rent rolls and/or other income information can be utilized to support the appraisal valuation, when coupled with documented cap rates within our markets and a physical inspection of the collateral to validate the current condition. The Company’s policy states that in the event a loan has been identified as a troubled debt restructuring, it should be assigned a grade of substandard and placed on nonaccrual status until such time the borrower has demonstrated the ability to service the loan payments based on the restructured terms generally defined as six months of satisfactory payment history. Missed payments under the original loan terms are not considered under the new structure; however, subsequent missed payments are considered non-performance and are not considered toward the six month required term of satisfactory payment history. The Company’s loan policy states that a nonaccrual loan may be returned to accrual status when (i) none of its principal and interest is due and unpaid, and the Company expects repayment of the remaining contractual principal and interest or (ii) it otherwise becomes well secured and in the process of collection. Restoration to accrual status on any given loan must be supported by a well-documented credit evaluation of the borrower’s financial condition and the prospects for full repayment, approved by the Company’s Chief Credit Officer. In the normal course of business, the Company renews loans with a modification of the interest rate or terms that are not deemed as troubled debt restructurings because the borrower is not experiencing financial difficulty. The Company modified loans in the first nine months of 2015 and 2014 totaling $ 77.4 16.4 As of September 30, 2015, December 31, 2014 and September 30, 2014, the Company had a balance of $ 13.9 15.3 20.5 1.3 2.2 4.4 183,000 231,000 2.2 During the nine months ending September 30, 2015 and 2014, the Company modified loans as troubled debt restructurings, excluding purchased non-covered and covered loans, with principal balances of $ 4.3 2.4 September 30, 2015 September 30, 2014 Balance Balance Loan class: # (in thousands) # (in thousands) Commercial, financial & agricultural 4 $ 26 4 $ 62 Real estate construction & development 2 15 5 264 Real estate commercial & farmland 2 2,125 4 1,036 Real estate residential 28 2,089 14 985 Consumer installment 13 47 13 50 Total 49 $ 4,302 40 $ 2,397 Troubled debt restructurings, excluding purchased non-covered and covered loans, with an outstanding balance of $ 2.6 1.3 September 30, 2015 September 30, 2014 Balance Balance Loan class: # (in thousands) # (in thousands) Commercial, financial & agricultural 4 $ 18 - $ - Real estate construction & development 2 34 1 33 Real estate commercial & farmland 5 1,011 1 65 Real estate residential 18 1,473 5 289 Consumer installment 9 32 4 62 Total 38 $ 2,568 11 $ 449 As of September 30, 2015 Accruing Loans Non-Accruing Loans Balance Balance Loan class: # (in thousands) # (in thousands) Commercial, financial & agricultural 4 $ 238 8 $ 68 Real estate construction & development 12 838 2 30 Real estate commercial & farmland 15 5,719 4 943 Real estate residential 51 5,209 16 759 Consumer installment 15 71 18 64 Total 97 $ 12,075 48 $ 1,864 As of December 31, 2014 Accruing Loans Non-Accruing Loans Balance Balance Loan class: # (in thousands) # (in thousands) Commercial, financial & agricultural 6 $ 290 2 $ 13 Real estate construction & development 9 679 5 228 Real estate commercial & farmland 19 6,477 3 724 Real estate residential 47 5,258 11 1,485 Consumer installment 11 55 11 73 Total 92 $ 12,759 32 $ 2,523 As of September 30, 2014 Accruing Loans Non-Accruing Loans Balance Balance Loan class: # (in thousands) # (in thousands) Commercial, financial & agricultural 4 $ 257 4 $ 507 Real estate construction & development 11 1,917 4 196 Real estate commercial & farmland 21 7,080 2 1,672 Real estate residential 43 7,973 10 759 Consumer installment 9 34 12 93 Total 88 $ 17,261 32 $ 3,227 As of September 30, 2015, December 31, 2014 and September 30, 2014, the Company had a balance of $ 7.7 1.2 830,000 60,000 29,000 During the nine months ending September 30, 2015 and 2014, the Company modified purchased non-covered loans as troubled debt restructurings, with principal balances of $ 2.4 830,000 4.1 September 30, 2015 September 30, 2014 Balance Balance Loan class: # (in thousands) # (in thousands) Commercial, financial & agricultural 1 $ 1 - $ - Real estate construction & development 2 30 1 305 Real estate commercial & farmland 3 622 - - Real estate residential 7 1,730 6 522 Consumer installment 3 8 1 3 Total 16 $ 2,391 8 $ 830 Troubled debt restructurings included in purchased non-covered loans with an outstanding balance of $ 618,000 September 30, 2015 September 30, 2014 Balance Balance Loan class: # (in thousands) # (in thousands) Commercial, financial & agricultural - $ - - $ - Real estate construction & development - - - - Real estate commercial & farmland - - - - Real estate residential 2 618 - - Consumer installment - - - - Total 2 $ 618 - $ - As of September 30, 2015 Accruing Loans Non-Accruing Loans Balance Balance Loan class: # (in thousands) # (in thousands) Commercial, financial & agricultural - $ - 1 $ 1 Real estate construction & development 1 351 2 30 Real estate commercial & farmland 6 4,071 1 36 Real estate residential 13 2,761 3 397 Consumer installment 2 5 2 3 Total 22 $ 7,188 9 $ 467 As of December 31, 2014 Accruing Loans Non-Accruing Loans Balance Balance Loan class: # (in thousands) # (in thousands) Commercial, financial & agricultural - $ - - $ - Real estate construction & development 1 317 - - Real estate commercial & farmland 1 346 - - Real estate |