LOANS AND ALLOWANCE FOR LOAN LOSSES | NOTE 4 LOANS The Bank engages in a full complement of lending activities, including real estate-related loans, agriculture-related loans, commercial and financial loans and consumer installment loans within select markets in Georgia, Alabama, Florida and South Carolina. During the third quarter of 2016, the Bank began purchasing from an unrelated third party consumer installment home improvement loans made to borrowers throughout the United States. The Bank also purchased residential mortgage loan pools during 2015 and 2016 collateralized by properties located outside our Southeast markets, specifically in California, Washington and Illinois. The Bank concentrates the majority of its lending activities in real estate loans. While risk of loss in the Company’s portfolio is primarily tied to the credit quality of the various borrowers, risk of loss may increase due to factors beyond the Company’s control, such as local, regional and/or national economic downturns. General conditions in the real estate market may also impact the relative risk in the real estate portfolio. A substantial portion of the Bank’s loans are secured by real estate in the Bank’s primary market area. In addition, a substantial portion of the OREO is located in those same markets. Accordingly, the ultimate collectability of a substantial portion of the Bank’s loan portfolio and the recovery of a substantial portion of the carrying amount of OREO are susceptible to changes in real estate conditions in the Bank’s primary market area. Commercial, financial and agricultural loans include both secured and unsecured loans for working capital, expansion, crop production, and other business purposes, including SBA guaranteed loans and municipal loans. Short-term working capital loans are secured by non-real estate collateral such as accounts receivable, crops, inventory and equipment. The Bank 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 home 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. Residential loans represent permanent mortgage financing and are secured by residential properties located within the Bank's market areas, along with warehouse lines of credit secured by residential mortgages. Consumer installment loans and other loans include home improvement loans, 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 $ 625,947 $ 449,623 $ 427,747 Real estate construction and development 328,308 244,693 220,798 Real estate commercial and farmland 1,297,582 1,104,991 1,067,828 Real estate residential 766,933 570,430 532,285 Consumer installment 68,305 31,125 31,299 Other 3,964 6,015 10,692 $ 3,091,039 $ 2,406,877 $ 2,290,649 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 Federal Deposit Insurance Corporation (the “FDIC”). Purchased non-covered loans totaling $ 1.07 771.6 767.5 (Dollars in Thousands) September 30, December 31, September 30, Commercial, financial and agricultural $ 99,596 $ 45,462 $ 42,350 Real estate construction and development 86,099 72,080 71,109 Real estate commercial and farmland 590,388 390,755 385,032 Real estate residential 286,169 258,153 263,312 Consumer installment 4,838 5,104 5,691 $ 1,067,090 $ 771,554 $ 767,494 Purchased loan pools are defined as groups of residential mortgage loans that were not acquired in bank acquisitions or FDIC-assisted transactions. As of September 30, 2016, purchased loan pools totaled $ 624.9 614.4 10.5 593.0 580.7 12.3 410.1 402.1 8.0 864,000 2.0 581,000 402,000 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 $ 62.3 137.5 191.0 (Dollars in Thousands) September 30, December 31, September 30, Commercial, financial and agricultural $ 830 $ 5,546 $ 13,349 Real estate construction and development 3,220 7,612 14,266 Real estate commercial and farmland 13,688 71,226 103,399 Real estate residential 44,457 53,038 59,835 Consumer installment 96 107 172 $ 62,291 $ 137,529 $ 191,021 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 on loans that are classified as nonaccrual is subsequently applied to principal until the loans are returned to accrual status. 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 30 days or more. In some cases, where borrowers are experiencing financial difficulties, loans may be restructured to provide terms significantly different from the original contractual terms. (Dollars in Thousands) September 30, December 31, September 30, Commercial, financial and agricultural $ 1,313 $ 1,302 $ 1,995 Real estate construction and development 1,255 1,812 1,753 Real estate commercial and farmland 7,485 7,019 11,645 Real estate residential 5,999 6,278 4,810 Consumer installment 518 449 355 $ 16,570 $ 16,860 $ 20,558 (Dollars in Thousands) September 30, December 31, September 30, Commercial, financial and agricultural $ 744 $ 1,064 $ 214 Real estate construction and development 2,403 1,106 916 Real estate commercial and farmland 7,796 4,920 4,728 Real estate residential 7,012 6,168 5,464 Consumer installment 38 72 52 $ 17,993 $ 13,330 $ 11,374 (Dollars in Thousands) September 30, December 31, September 30, Commercial, financial and agricultural $ 128 $ 2,803 $ 7,916 Real estate construction and development 60 1,701 2,934 Real estate commercial and farmland 1,540 5,034 18,164 Real estate residential 4,078 3,663 3,979 Consumer installment 28 37 91 $ 5,834 $ 13,238 $ 33,084 The following table presents an analysis of past-due loans, excluding purchased non-covered and covered past-due loans as of September 30, 2016, December 31, 2015 and September 30, 2015: Loans Loans Loans 90 Total Current Total Loans 90 (Dollars in Thousands) As of September 30, 2016: Commercial, financial & agricultural $ 798 $ 336 $ 1,134 $ 2,268 $ 623,679 $ 625,947 $ - Real estate construction & development 5,320 177 1,136 6,633 321,675 328,308 - Real estate commercial & farmland 2,726 199 5,788 8,713 1,288,869 1,297,582 - Real estate residential 2,890 802 5,035 8,727 758,206 766,933 - Consumer installment loans 513 174 309 996 67,309 68,305 - Other - - - - 3,964 3,964 - Total $ 12,247 $ 1,688 $ 13,402 $ 27,337 $ 3,063,702 $ 3,091,039 $ - Loans Loans Loans 90 Total Current Total Loans 90 (Dollars in Thousands) As of December 31, 2015: Commercial, financial & agricultural $ 568 $ 271 $ 835 $ 1,674 $ 447,949 $ 449,623 $ - Real estate construction & development 1,413 261 1,739 3,413 241,280 244,693 - Real estate commercial & farmland 1,781 641 6,912 9,334 1,095,657 1,104,991 - Real estate residential 3,806 2,120 5,121 11,047 559,383 570,430 - Consumer installment loans 374 188 238 800 30,325 31,125 - Other - - - - 6,015 6,015 - Total $ 7,942 $ 3,481 $ 14,845 $ 26,268 $ 2,380,609 $ 2,406,877 $ - 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 September 30, 2016: Commercial, financial & agricultural $ 244 $ - $ 624 $ 868 $ 98,728 $ 99,596 $ - Real estate construction & development 1,082 233 2,070 3,385 82,714 86,099 - Real estate commercial & farmland 1,806 599 6,369 8,774 581,614 590,388 - Real estate residential 1,481 2,144 5,379 9,004 277,165 286,169 - Consumer installment loans 33 267 38 338 4,500 4,838 - Total $ 4,646 $ 3,243 $ 14,480 $ 22,369 $ 1,044,721 $ 1,067,090 $ - Loans Loans Loans 90 Total Current Total Loans 90 (Dollars in Thousands) As of December 31, 2015: Commercial, financial & agricultural $ 248 $ 13 $ 846 $ 1,107 $ 44,355 $ 45,462 $ - Real estate construction & development 416 687 420 1,523 70,557 72,080 - Real estate commercial & farmland 2,479 1,629 3,347 7,455 383,300 390,755 - Real estate residential 4,965 2,176 4,928 12,069 246,084 258,153 - Consumer installment loans 31 9 70 110 4,994 5,104 - Total $ 8,139 $ 4,514 $ 9,611 $ 22,264 $ 749,290 $ 771,554 $ - 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 September 30, 2016: Commercial, financial & agricultural $ - $ - $ 128 $ 128 $ 702 $ 830 $ - Real estate construction & development 114 4 - 118 3,102 3,220 - Real estate commercial & farmland 906 - 1 907 12,781 13,688 - Real estate residential 1,047 943 2,589 4,579 39,878 44,457 - Consumer installment loans - - - - 96 96 - Total $ 2,067 $ 947 $ 2,718 $ 5,732 $ 56,559 $ 62,291 $ - Loans Loans Loans 90 Total Current Total Loans 90 (Dollars in Thousands) As of December 31, 2015: Commercial, financial & agricultural $ - $ - $ 2,802 $ 2,802 $ 2,744 $ 5,546 $ - Real estate construction & development 96 - 1,633 1,729 5,883 7,612 - Real estate commercial & farmland 170 205 3,064 3,439 67,787 71,226 - Real estate residential 2,155 1,001 2,658 5,814 47,224 53,038 - Consumer installment loans - - 37 37 70 107 - Total $ 2,421 $ 1,206 $ 10,194 $ 13,821 $ 123,708 $ 137,529 $ - 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 $ - 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. Impaired loans include loans on nonaccrual status and accruing troubled debt restructurings. 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. The Company individually assesses for impairment all nonaccrual loans greater than $ 100,000 100,000 As of and For the Period Ended September 30, December 31, September 30, (Dollars in Thousands) Nonaccrual loans $ 16,570 $ 16,860 $ 20,558 Troubled debt restructurings not included above 14,013 14,418 12,075 Total impaired loans $ 30,583 $ 31,278 $ 32,633 Quarter-to-date interest income recognized on impaired loans $ 252 $ 274 $ 241 Year-to-date interest income recognized on impaired loans $ 808 $ 909 $ 635 Quarter-to-date foregone interest income on impaired loans $ 239 $ 265 $ 309 Year-to-date foregone interest income on impaired loans $ 710 $ 1,204 $ 939 The following table presents an analysis of information pertaining to impaired loans, excluding purchased non-covered and covered loans as of September 30, 2016, December 31, 2015 and September 30, 2015: Unpaid Recorded Recorded Total Related Three Nine (Dollars in Thousands) As of September 30, 2016: Commercial, financial & agricultural $ 2,568 $ 252 $ 1,114 $ 1,366 $ 118 $ 1,736 $ 1,640 Real estate construction & development 2,972 - 1,946 1,946 537 2,001 2,214 Real estate commercial & farmland 14,015 5,499 7,520 13,019 873 12,776 12,837 Real estate residential 14,350 2,046 11,667 13,713 2,648 13,686 13,516 Consumer installment loans 586 - 539 539 6 492 479 Total $ 34,491 $ 7,797 $ 22,786 $ 30,583 $ 4,182 $ 30,691 $ 30,686 Unpaid Recorded Recorded Total Related Three Twelve (Dollars in Thousands) As of December 31, 2015: Commercial, financial & agricultural $ 3,062 $ 158 $ 1,385 $ 1,543 $ 135 $ 1,887 $ 2,275 Real estate construction & development 3,581 230 2,374 2,604 774 2,598 3,228 Real estate commercial & farmland 14,385 6,702 6,083 12,785 1,067 15,074 15,105 Real estate residential 15,809 1,621 12,230 13,851 2,224 11,935 11,977 Consumer installment loans 592 - 495 495 9 461 488 Total $ 37,429 $ 8,711 $ 22,567 $ 31,278 $ 4,209 $ 31,955 $ 33,073 Unpaid Recorded Recorded Total Related Three Nine (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 As of and For the Period Ended September 30, December 31, September 30, (Dollars in Thousands) Nonaccrual loans $ 17,993 $ 13,330 $ 11,374 Troubled debt restructurings not included above 9,294 9,373 7,188 Total impaired loans $ 27,287 $ 22,703 $ 18,562 Quarter-to-date interest income recognized on impaired loans $ 1,339 $ 442 $ 158 Year-to-date interest income recognized on impaired loans $ 1,885 $ 785 $ 342 Quarter-to-date foregone interest income on impaired loans $ 264 $ 245 $ 198 Year-to-date foregone interest income on impaired loans $ 883 $ 1,365 $ 1,121 The following table presents an analysis of information pertaining to purchased non-covered impaired loans as of September 30, 2016, December 31, 2015 and September 30, 2015: Unpaid Recorded Recorded Total Related Three Nine (Dollars in Thousands) As of September 30, 2016: Commercial, financial & agricultural $ 4,801 $ 520 $ 225 $ 745 $ - $ 710 $ 787 Real estate construction & development 23,284 233 2,699 2,932 183 2,306 2,053 Real estate commercial & farmland 34,021 1,778 11,858 13,636 380 13,310 13,732 Real estate residential 12,458 2,705 7,227 9,932 722 9,685 9,163 Consumer installment loans 55 42 - 42 - 43 64 Total $ 74,619 $ 5,278 $ 22,009 $ 27,287 $ 1,285 $ 26,054 $ 25,799 Unpaid Recorded Recorded Total Related Three Twelve (Dollars in Thousands) As of December 31, 2015: Commercial, financial & agricultural $ 3,103 $ 1,066 $ - $ 1,066 $ - $ 640 $ 392 Real estate construction & development 8,987 1,469 - 1,469 - 1,369 1,429 Real estate commercial & farmland 14,999 11,134 - 11,134 - 9,966 10,806 Real estate residential 14,946 8,957 - 8,957 - 8,591 8,067 Consumer installment loans 94 77 - 77 - 67 65 Total $ 42,129 $ 22,703 $ - $ 22,703 $ - $ 20,633 $ 20,759 Unpaid Recorded Recorded Total Related Three Nine (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 As of and For the Period Ended September 30, December 31, September 30, (Dollars in Thousands) Nonaccrual loans $ 5,834 $ 13,238 $ 33,084 Troubled debt restructurings not included above 11,823 13,283 16,576 Total impaired loans $ 17,657 $ 26,521 $ 49,660 Quarter-to-date interest income recognized on impaired loans $ 154 $ 154 $ 268 Year-to-date interest income recognized on impaired loans $ 493 $ 886 $ 732 Quarter-to-date foregone interest income on impaired loans $ 82 $ 181 $ 468 Year-to-date foregone interest income on impaired loans $ 400 $ 1,596 $ 1,416 The following table presents an analysis of information pertaining to covered impaired loans as of September 30, 2016, December 31, 2015 and September 30, 2015: Unpaid Recorded Recorded Total Related Three Nine (Dollars in Thousands) As of September 30, 2016: Commercial, financial & agricultural $ 296 $ 128 $ - $ 128 $ - $ 128 $ 1,464 Real estate construction & development 969 63 810 873 1 1,640 2,022 Real estate commercial & farmland 7,077 83 3,258 3,341 22 4,886 5,837 Real estate residential 14,450 4,768 8,513 13,281 213 13,418 13,730 Consumer installment loans 43 34 - 34 - 37 41 Total $ 22,835 $ 5,076 $ 12,581 $ 17,657 $ 236 $ 20,109 $ 23,094 Unpaid Recorded Recorded Total Related Three Twelve (Dollars in Thousands) As of December 31, 2015: Commercial, financial & agricultural $ 5,188 $ 2,802 $ - $ 2,802 $ - $ 5,360 $ 7,408 Real estate construction & development 15,119 2,480 - 2,480 - 4,130 6,906 Real estate commercial & farmland 20,508 7,001 - 7,001 - 14,133 18,504 Real estate residential 15,830 14,192 - 14,192 - 14,399 16,010 Consumer installment loans 60 46 - 46 - 69 86 Total $ 56,705 $ 26,521 $ - $ 26,521 $ - $ 38,091 $ 48,914 Unpaid Recorded Recorded Total Related Three Nine (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 Credit Quality Indicators The Company uses a nine category risk grading system to assign a risk grade to each loan in the portfolio. 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 This grade is assigned to loans that are currently performing and supported by adequate financial information that reflects repayment capacity but exhibits a loan-to-value ratio greater than 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 $ 381,814 $ - $ 9,053 $ 127 $ 7,787 $ - $ 398,781 15 23,627 6,732 105,298 54,346 386 - 190,389 20 105,573 41,759 835,021 596,886 24,870 3,964 1,608,073 23 372 7,126 8,719 6,530 16 - 22,763 25 108,887 266,728 299,714 87,480 34,339 - 797,148 30 967 3,087 23,457 4,165 88 - 31,764 40 4,707 2,876 16,320 17,399 819 - 42,121 50 - - - - - - - 60 - - - - - - - Total $ 625,947 $ 328,308 $ 1,297,582 $ 766,933 $ 68,305 $ 3,964 $ 3,091,039 The following table presents the loan portfolio, excluding purchased non-covered and covered loans, by risk grade as of December 31, 2015: Risk Commercial, Real estate - Real estate - Real estate - Consumer Other Total (Dollars in Thousands) 10 $ 241,721 $ 294 $ 116 $ 1,606 $ 6,872 $ - $ 250,609 15 28,420 2,074 117,880 78,165 1,191 - 227,730 20 97,142 46,221 685,538 369,624 19,780 6,015 1,224,320 23 559 7,827 13,073 6,112 36 - 27,607 25 77,829 183,512 254,012 91,465 2,595 - 609,413 30 1,492 1,620 13,821 7,347 143 - 24,423 40 2,460 3,145 20,551 16,111 506 - 42,773 50 - - - - - - - 60 - - - - 2 - 2 Total $ 449,623 $ 244,693 $ 1,104,991 $ 570,430 $ 31,125 $ 6,015 $ 2,406,877 The following table presents the loan portfolio, excluding purchased non-covered and covered loans, by risk grade as of September 30, 2015: 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 Risk Commercial, Real estate - Real estate - Real estate - Consumer Other Total (Dollars in Thousands) 10 $ 5,676 $ - $ - $ - $ 867 $ - $ 6,543 15 1,055 - 7,842 32,763 597 - 42,257 20 16,726 7,741 196,901 108,007 1,934 - 331,309 23 - 3,677 11,925 11,902 - - 27,504 25 70,241 63,343 328,657 111,720 1,319 - 575,280 30 4,716 7,609 26,782 5,731 - - 44,838 40 1,182 3,729 18,281 16,046 121 - 39,359 50 - - - - - - - 60 - - - - - - - Total $ 99,596 $ 86,099 $ 590,388 $ 286,169 $ 4,838 $ - $ 1,067,090 The following table presents the purchased non-covered loan portfolio by risk grade as of December 31, 2015: Risk Commercial, Real estate - Real estate - Real estate - Consumer Other Total (Dollars in Thousands) 10 $ 8,592 $ - $ - $ - $ 1,010 $ - $ 9,602 15 1,186 1,143 10,490 37,808 541 - 51,168 20 10,057 13,678 183,219 128,005 2,031 - 336,990 23 - 438 5,177 6,414 - - 12,029 25 17,565 47,517 162,253 66,166 1,328 - 294,829 30 6,657 4,185 14,297 5,503 51 - 30,693 40 1,373 5,119 15,319 14,257 143 - 36,211 50 30 - - - - - 30 60 2 - - - - - 2 Total $ 45,462 $ 72,080 $ 390,755 $ 258,153 $ 5,104 $ - $ 771,554 The following table presents the purchased non-covered loan portfolio by risk grade as of September 30, 2015: 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 Risk Commercial, Real estate - Real estate - Real estate - Consumer Other Total (Dollars in Thousands) 10 $ - $ - $ - $ - $ - $ - $ - 15 - - - - - - - 20 23 551 2,203 7,458 - - 10,235 23 23 - 298 4,016 - - 4,337 25 657 2,214 5,757 20,349 15 - 28,992 30 - 357 1,825 3,625 46 - 5,853 40 127 98 3,605 9,009 35 - 12,874 50 - - - - - - - 60 - - - - - - - Total $ 830 $ 3,220 $ 13,688 $ 44,457 $ 96 $ - $ 62,291 The following table presents the covered loan portfolio by risk grade as of December 31, 2015: Risk Commercial, Real estate - Real estate - Real estate - Consumer Other Total (Dollars in Thousands) 10 $ - $ - $ - $ - $ - $ - $ - 15 - - - - - - - 20 93 800 11,698 10,040 - - 22,631 23 52 - 2,957 5,723 - - 8,732 25 2,594 3,907 38,741 24,345 11 - 69,598 30 5 828 2,857 4,552 - - 8,242 40 2,802 2,077 14,973 8,378 96 - 28,326 50 - - - - - - - 60 - - - - - - - Total $ 5,546 $ 7,612 $ 71,226 $ 53,038 $ 107 $ - $ 137,529 The following table presents the covered loan portfolio by risk grade as of September 30, 2015: 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 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 2016 and 2015 totaling $58.2 million and $ 77.4 As of September 30, 2016, December 31, 2015 and September 30, 2015, the Company had a balance of $ 17.1 16.4 13.9 1.2 1.3 1.3 2.8 2.7 183,000 During the nine months ending September 30, 2016 and 2015, the Company modified loans as troubled debt restructurings, excluding purchased non-covered and covered loans, with principal balances of $ 2.9 4.3 September 30, 2016 September 30, 2015 Balance Balance Loan class: # (in thousands) # (in thousands) Commercial, financial & agricultural 5 $ 59 4 $ 26 Real estate construction & development 2 251 2 15 Real estate commercial & farmland 4 1,658 2 2,125 Real estate residential 7 887 28 2,089 Consumer installment 9 44 13 47 Total 27 $ 2,899 49 $ 4,302 Troubled debt restructurings, excluding purchased non-covered and covered loans, with an outstanding balance of $ 793,000 2.6 September 30, 2016 September 30, 2015 Balance Balance Loan class: # (in thousands) # (in thousands) Commercial, financial & agricultural 5 $ 51 4 $ 18 Real estate construction & development - - 2 34 Real estate commercial & farmland 5 517 5 1,011 Real estate residential 3 219 18 1,473 Consumer installment 2 6 9 32 Total 15 $ 793 38 $ 2,568 As of September 30, 2016 Accruing Loans Non-Accruing Loans Balance Balance Loan class: # (in thousands) # (in thousands) Commercial, financial & agricultural 4 $ 53 14 $ 112 Real estate construction & development 8 691 2 35 Real estate commercial & farmland 17 5,535 5 2,015 Real estate residential 53 7,713 19 849 Consumer installment 7 21 29 120 Total 89 $ 14,013 69 $ 3,131 As of December 31, 2015 Accruing Loans Non-Accruing Loans Balance Balance Loan class: # (in thousands) # (in thousands) Commercial, financial & agricultural 4 $ 240 10 $ 110 Real estate construction & development 11 792 3 63 Real estate commercial & farmland 16 5,766 3 596 Real estate residential 51 7,574 20 1,123 Consumer installment 12 46 23 94 Total 94 $ 14,418 59 $ 1,986 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 September 30, 2016, December 31, 2015 and September 30, 2015, the Company had a balance of $ 10.4 10.0 7.7 752,000 377,000 60,000 During the nine months ending September 30, 2016 and 2015, the Company modified purchased non-covered loans as troubled debt restructurings, with principal balances of $ 1.3 2.4 September 30, 2016 September 30, 2015 Balance Balance Loan class: # (in thousands) # (in thousands) Commercial, financial & agricultural - $ - 1 $ 1 Real estate construction & development - - 2 30 Real estate commercial & farmland 2 235 3 622 Real estate residential 6 1,076 7 1,730 Consumer installment - - 3 8 Total 8 $ 1,311 16 $ 2,391 Troubled debt restructurings included in purchased non-covered loans with an outstanding balance of $ 217,000 618,000 September 30, 2016 September 30, 2015 Balance Balance Loan class: # |