Loans and Allowance for Loan Losses | Note 6 — Loans and Allowance for Loan Losses The following is a summary of non-acquired loans: September 30, December 31, September 30, (Dollars in thousands) 2017 2016 2016 Non-acquired loans: Commercial non-owner occupied real estate: Construction and land development $ 766,957 $ 580,464 $ 562,336 Commercial non-owner occupied 949,870 714,715 630,437 Total commercial non-owner occupied real estate 1,716,827 1,295,179 1,192,773 Consumer real estate: Consumer owner occupied 1,454,758 1,197,621 1,183,441 Home equity loans 419,760 383,218 363,825 Total consumer real estate 1,874,518 1,580,839 1,547,266 Commercial owner occupied real estate 1,278,487 1,177,745 1,153,480 Commercial and industrial 781,757 671,398 617,525 Other income producing property 194,335 178,238 179,595 Consumer 371,758 324,238 305,687 Other loans 12,645 13,404 11,787 Total non-acquired loans 6,230,327 5,241,041 5,008,113 Less allowance for loan losses (41,541) (36,960) (37,319) Non-acquired loans, net $ 6,188,786 $ 5,204,081 $ 4,970,794 The following is a summary of acquired non-credit impaired loans accounted for under FASB ASC Topic 310-20, net of related discount: September 30, December 31, September 30, (Dollars in thousands) 2017 2016 2016 FASB ASC Topic 310-20 acquired loans: Commercial non-owner occupied real estate: Construction and land development $ 76,886 $ 10,090 $ 10,683 Commercial non-owner occupied 199,704 34,628 35,775 Total commercial non-owner occupied real estate 276,590 44,718 46,458 Consumer real estate: Consumer owner occupied 492,615 408,270 435,132 Home equity loans 164,291 160,879 168,758 Total consumer real estate 656,906 569,149 603,890 Commercial owner occupied real estate 207,572 27,195 29,444 Commercial and industrial 101,427 13,641 14,201 Other income producing property 76,924 39,342 43,152 Consumer 136,136 142,654 148,512 Total FASB ASC Topic 310-20 acquired loans $ 1,455,555 $ 836,699 $ 885,657 The unamortized discount related to the acquired non-credit impaired loans totaled $20.7 million, $11.6 million, and $12.6 million at September 30, 2017, December 31, 2016, and September 30, 2016, respectively. In accordance with FASB ASC Topic 310-30, the Company aggregated acquired loans that have common risk characteristics into pools of loan categories as described in the table below. The following is a summary of acquired credit impaired loans accounted for under FASB ASC Topic 310-30 (identified as credit impaired at the time of acquisition), net of related discount: September 30, December 31, September 30, (Dollars in thousands) 2017 2016 2016 FASB ASC Topic 310-30 acquired loans: Commercial loans greater than or equal to $1 million-Community Bank & Trust ("CBT") $ 8,439 $ 8,617 $ 10,958 Commercial real estate 199,082 210,204 220,489 Commercial real estate—construction and development 46,248 44,373 47,081 Residential real estate 249,666 258,100 268,968 Consumer 53,302 59,300 61,866 Commercial and industrial 25,796 25,347 26,658 Total FASB ASC Topic 310-30 acquired loans 582,533 605,941 636,020 Less allowance for loan losses (3,670) (3,395) (3,403) FASB ASC Topic 310-30 acquired loans, net $ 578,863 $ 602,546 $ 632,617 Contractual loan payments receivable, estimates of amounts not expected to be collected, other fair value adjustments and the resulting fair values of FASB ASC Topic 310-30 acquired loans impaired and non-impaired at the acquisition date for SBFC (January 3, 2017) are as follows: January 3, 2017 Loans Impaired (Dollars in thousands) at Acquisition Contractual principal and interest $ 73,365 Non-accretable difference (12,912) Cash flows expected to be collected 60,453 Accretable difference (4,603) Carrying value $ 55,850 The table above excludes $991.5 million ($1.01 billion in contractual principal less a $18.8 million fair value adjustment) in acquired loans at fair value that were identified as either performing with no discount related to the credit or as revolving lines of credit (commercial or consumer) as of the acquisition date and will be accounted for under FASB ASC Topic 310-20. Contractual loan payments receivable, estimates of amounts not expected to be collected, other fair value adjustments and the resulting carrying values of acquired credit impaired loans as of September 30, 2017, December 31, 2016 and September 30, 2016 are as follows: September 30, December 31, September 30, (Dollars in thousands) 2017 2016 2016 Contractual principal and interest $ 741,268 $ 778,822 $ 822,340 Non-accretable difference (26,160) (17,502) (22,222) Cash flows expected to be collected 715,108 761,320 800,118 Accretable yield (132,575) (155,379) (164,098) Carrying value $ 582,533 $ 605,941 $ 636,020 Allowance for acquired loan losses $ (3,670) $ (3,395) $ (3,403) Income on acquired credit impaired loans that are not impaired at the acquisition date is recognized in the same manner as loans impaired at the acquisition date. A portion of the fair value discount on acquired non-impaired loans has been ascribed as an accretable difference that is accreted into interest income over the estimated remaining life of the loans. The remaining nonaccretable difference represents cash flows not expected to be collected. The following are changes in the carrying value of acquired credit impaired loans: Nine Months Ended September 30, (Dollars in thousands) 2017 2016 Balance at beginning of period $ 602,546 $ 733,870 Fair value of acquired loans 55,850 — Net reductions for payments, foreclosures, and accretion (79,258) (101,556) Change in the allowance for loan losses on acquired loans (275) 303 Balance at end of period, net of allowance for loan losses on acquired loans $ 578,863 $ 632,617 The table below reflects refined accretable yield balance for acquired credit impaired loans: Nine Months Ended September 30, (Dollars in thousands) 2017 2016 Balance at beginning of period $ 155,379 $ 201,538 Addition from the SBFC acquisition 4,603 — Accretion (43,873) (56,850) Reclass of nonaccretable difference due to improvement in expected cash flows 16,772 18,631 Other changes, net (306) 779 Balance at end of period $ 132,575 $ 164,098 In the third quarter of 2017, the accretable yield balance declined by $14.3 million as loan accretion (income) was recognized. This was partially offset by improved expected cash flows of $7.8 million during the third quarter of 2017. Our loan loss policy adheres to GAAP as well as interagency guidance. The ALLL is based upon estimates made by management. We maintain an ALLL at a level that we believe is appropriate to cover estimated credit losses on individually evaluated loans that are determined to be impaired as well as estimated credit losses inherent in the remainder of our loan portfolio. Arriving at the allowance involves a high degree of management judgment and results in a range of estimated losses. We regularly evaluate the adequacy of the allowance through our internal risk rating system, outside credit review, and regulatory agency examinations to assess the quality of the loan portfolio and identify problem loans. The evaluation process also includes our analysis of current economic conditions, composition of the loan portfolio, past due and nonaccrual loans, concentrations of credit, lending policies and procedures, and historical loan loss experience. While management uses available information to recognize losses on loans, future additions to the allowance may be necessary based on, among other factors, changes in economic conditions in our markets. In addition, as noted above, regulatory agencies, as an integral part of their examination process, periodically review our allowances for losses on loans. These agencies may require management to recognize additions to the allowances based on their judgments about information available to them at the time of their examination. Because of these and other factors, it is possible that the allowances for losses on loans may change. The provision for loan losses is charged to expense in an amount necessary to maintain the allowance at an appropriate level. The ALLL on non‑acquired loans consists of general and specific reserves. The general reserves are determined by applying loss percentages to the portfolio that are based on historical loss experience for each class of loans and management’s evaluation and “risk grading” of the loan portfolio. Additionally, the general economic and business conditions affecting key lending areas, credit quality trends, collateral values, loan volumes and concentrations, seasoning of the loan portfolio, the findings of internal and external credit reviews and results from external bank regulatory examinations are included in this evaluation. Currently, these adjustments are applied to the non‑acquired loan portfolio when estimating the level of reserve required. The specific reserves are determined on a loan‑by‑loan basis based on management’s evaluation of our exposure for each credit, given the current payment status of the loan and the value of any underlying collateral. These are loans classified by management as doubtful or substandard. For such loans that are also classified as impaired, an allowance is established when the discounted cash flows (or collateral value or observable market price) of the impaired loan is lower than the carrying value of that loan. Generally, the need for specific reserve is evaluated on impaired loans, and once a specific reserve is established for a loan, a charge off of that amount occurs in the quarter subsequent to the establishment of the specific reserve. Loans that are determined to be impaired are provided a specific reserve, if necessary, and are excluded from the calculation of the general reserves. Beginning with the First Financial Holdings, Inc. (“FFHI”) acquisition in 2013, the Company segregates the acquired loan portfolio into performing loans (“non‑credit impaired) and purchased credit impaired loans. The performing loans and revolving type loans are accounted for under FASB ASC 310‑20, with each loan being accounted for individually. The ALLL on these loans will be measured and recorded consistent with non‑acquired loans. The acquired credit impaired loans will follow the description in the next paragraph. In determining the acquisition date fair value of purchased loans, and in subsequent accounting, the Company generally aggregates purchased loans into pools of loans with common risk characteristics. Expected cash flows at the acquisition date in excess of the fair value of loans are recorded as interest income over the life of the loans using a level yield method if the timing and amount of the future cash flows of the pool is reasonably estimable. Subsequent to the acquisition date, increases in cash flows over those expected at the acquisition date are reclassified from the non‑accretable difference to accretable yield and recognized as interest income prospectively. Decreases in expected cash flows after the acquisition date are recognized by recording an ALLL. Management analyzes the acquired loan pools using various assessments of risk to determine an expected loss. The expected loss is derived based upon a loss given default based upon the collateral type and/or detailed review by loan officers and the probability of default that is determined based upon historical data at the loan level. All acquired loans managed by Special Asset Management are reviewed quarterly and assigned a loss given default. Acquired loans not managed by Special Asset Management are reviewed twice a year in a similar method to the Company’s originated portfolio of loans which follow review thresholds based on risk rating categories. In the fourth quarter of 2015, the Company modified its methodology to a more granular approach in determining loss given default on substandard loans with a net book balance between $100,000 and $500,000 by adjusting the loss given default to 90% of the most current collateral valuation based on appraised value. Substandard loans greater than $500,000 were individually assigned loss given defaults each quarter. Trends are reviewed in terms of accrual status, past due status, and weighted‑average grade of the loans within each of the accounting pools. In addition, the relationship between the change in the unpaid principal balance and change in the mark is assessed to correlate the directional consistency of the expected loss for each pool. Prior to the termination of our loss share agreements in June 2016, as discussed below, which offset the impact of the provision established for acquired loans covered under FDIC loss share agreements, the receivable from the FDIC was adjusted to reflect the indemnified portion of the post‑acquisition exposure with a corresponding credit to the provision for loan losses. On June 23, 2016, the Bank entered into an early termination agreement with the FDIC with respect to all of its outstanding loss share agreements. The loss share agreements were entered into with the FDIC in 2009, 2010, 2011 and 2012 either by the Bank or by First Federal Bank, which was acquired by the Bank in July of 2013. As a result of the termination agreement, all assets previously classified as covered became uncovered effective June 23, 2016, and as a result the Bank will now recognize the full amount of future charge-offs, recoveries, gains, losses, and expenses related to these previously covered assets, as the FDIC will no longer share in these amounts. An aggregated analysis of the changes in allowance for loan losses is as follows: Non-acquired Acquired Non-Credit Acquired Credit (Dollars in thousands) Loans Impaired Loans Impaired Loans Total Three Months Ended September 30, 2017: Balance at beginning of period $ 40,149 $ — $ 3,741 $ 43,890 Loans charged-off (1,383) (275) — (1,658) Recoveries of loans previously charged off (1) 836 279 — 1,115 Net charge-offs (547) 4 — (543) Provision for loan losses charged to operations 1,939 (4) 127 2,062 Provision for loan losses recorded through the FDIC loss share receivable — — — — Reduction due to loan removals — — (198) (198) Balance at end of period $ 41,541 $ — $ 3,670 $ 45,211 Three Months Ended September 30, 2016: Balance at beginning of period $ 36,939 $ — $ 3,752 $ 40,691 Loans charged-off (1,108) (280) — (1,388) Recoveries of loans previously charged off (1) 713 120 — 833 Net charge-offs (395) (160) — (555) Provision 775 160 (23) 912 Benefit attributable to FDIC loss share agreements — — — — Provision for loan losses charged to operations 775 160 (23) 912 Provision for loan losses recorded through the FDIC loss share receivable — — — — Reduction due to loan removals — — (326) (326) Balance at end of period $ 37,319 $ — $ 3,403 $ 40,722 Non-acquired Acquired Non-Credit Acquired Credit (Dollars in thousands) Loans Impaired Loans Impaired Loans Total Nine Months Ended September 30, 2017: Balance at beginning of period $ 36,960 $ — $ 3,395 $ 40,355 Loans charged-off (3,972) (1,165) — (5,137) Recoveries of loans previously charged off (1) 2,041 414 — 2,455 Net charge-offs (1,931) (751) — (2,682) Provision 6,512 751 819 8,082 Benefit attributable to FDIC loss share agreements — — — — Total provision for loan losses charged to operations 6,512 751 819 8,082 Provision for loan losses recorded through the FDIC loss share receivable — — — — Reduction due to loan removals — — (544) (544) Balance at end of period $ 41,541 $ — $ 3,670 $ 45,211 Nine Months Ended September 30, 2016: Balance at beginning of period $ 34,090 $ — $ 3,706 $ 37,796 Loans charged-off (4,384) (810) — (5,194) Recoveries of loans previously charged off (1) 2,358 262 — 2,620 Net charge-offs (2,026) (548) — (2,574) Provision 5,255 548 372 6,175 Benefit attributable to FDIC loss share agreements — — 23 23 Total provision for loan losses charged to operations 5,255 548 395 6,198 Provision for loan losses recorded through the FDIC loss share receivable — — (23) (23) Reduction due to loan removals — — (675) (675) Balance at end of period $ 37,319 $ — $ 3,403 $ 40,722 (1) – Recoveries related to acquired credit impaired loans are recorded through other noninterest income on the consolidated statement of income and do not run through the ALLL. The following tables present a disaggregated analysis of activity in the allowance for loan losses and loan balances for non-acquired loans: Construction Commercial Commercial Consumer Other Income & Land Non-owner Owner Owner Home Commercial Producing Other (Dollars in thousands) Development Occupied Occupied Occupied Equity & Industrial Property Consumer Loans Total Three Months Ended September 30, 2017 Allowance for loan losses: Balance, June 30, 2017 $ 5,746 $ 6,164 $ 7,539 $ 8,569 $ 3,247 $ 5,143 $ 1,379 $ 2,532 $ (170) $ 40,149 Charge-offs (19) — — — (17) (440) (10) (897) — (1,383) Recoveries 333 80 92 65 38 31 29 168 — 836 Provision (benefit) (88) (7) 479 492 (171) 469 (10) 889 (114) 1,939 Balance, September 30, 2017 $ 5,972 $ 6,237 $ 8,110 $ 9,126 $ 3,097 $ 5,203 $ 1,388 $ 2,692 $ (284) $ 41,541 Loans individually evaluated for impairment $ 1,266 $ 133 $ 64 $ 47 $ 116 $ 18 $ 211 $ 7 $ — $ 1,862 Loans collectively evaluated for impairment $ 4,706 $ 6,104 $ 8,046 $ 9,079 $ 2,981 $ 5,185 $ 1,177 $ 2,685 $ (284) $ 39,679 Loans: Loans individually evaluated for impairment $ 42,638 $ 716 $ 5,874 $ 4,455 $ 2,623 $ 627 $ 3,605 $ 254 $ — $ 60,792 Loans collectively evaluated for impairment 724,319 949,154 1,272,613 1,450,303 417,137 781,130 190,730 371,504 12,645 6,169,535 Total non-acquired loans $ 766,957 $ 949,870 $ 1,278,487 $ 1,454,758 $ 419,760 $ 781,757 $ 194,335 $ 371,758 $ 12,645 $ 6,230,327 Three Months Ended September 30, 2016 Allowance for loan losses: Balance , June 30, 2016 $ 4,665 $ 4,656 $ 8,003 $ 7,530 $ 3,148 $ 4,269 $ 1,812 $ 2,014 $ 842 $ 36,939 Charge-offs — — (16) (45) — (31) — (1,016) — (1,108) Recoveries 241 28 25 27 64 104 8 216 — 713 Provision (benefit) (795) (93) 516 338 69 368 (201) 1,094 (521) 775 Balance, September 30, 2016 $ 4,111 $ 4,591 $ 8,528 $ 7,850 $ 3,281 $ 4,710 $ 1,619 $ 2,308 $ 321 $ 37,319 Loans individually evaluated for impairment $ 359 $ 181 $ 65 $ 58 $ 38 $ 385 $ 289 $ 4 $ — $ 1,379 Loans collectively evaluated for impairment $ 3,752 $ 4,410 $ 8,463 $ 7,792 $ 3,243 $ 4,325 $ 1,330 $ 2,304 $ 321 $ 35,940 Loans: Loans individually evaluated for impairment $ 3,431 $ 764 $ 6,352 $ 3,127 $ 1,599 $ 1,453 $ 4,319 $ 142 $ — $ 21,187 Loans collectively evaluated for impairment 558,905 629,673 1,147,128 1,180,314 362,226 616,072 175,276 305,545 11,787 4,986,926 Total non-acquired loans $ 562,336 $ 630,437 $ 1,153,480 $ 1,183,441 $ 363,825 $ 617,525 $ 179,595 $ 305,687 $ 11,787 $ 5,008,113 Construction Commercial Commercial Consumer Other Income & Land Non-owner Owner Owner Home Commercial Producing Other (Dollars in thousands) Development Occupied Occupied Occupied Equity & Industrial Property Consumer Loans Total Nine Months Ended September 30, 2017 Allowance for loan losses: Balance, December 31, 2016 $ 4,091 $ 4,980 $ 8,022 $ 7,820 $ 3,211 $ 4,842 $ 1,542 $ 2,350 $ 102 $ 36,960 Charge-offs (493) — — (185) (241) (629) (17) (2,407) — (3,972) Recoveries 555 128 197 141 133 264 77 546 — 2,041 Provision (benefit) 1,819 1,129 (109) 1,350 (6) 726 (214) 2,203 (386) 6,512 Balance, September 30, 2017 $ 5,972 $ 6,237 $ 8,110 $ 9,126 $ 3,097 $ 5,203 $ 1,388 $ 2,692 $ (284) $ 41,541 Nine Months Ended September 30, 2016 Allowance for loan losses: Balance, December 31, 2015 $ 4,116 $ 3,568 $ 8,341 $ 7,212 $ 2,929 $ 3,974 $ 1,963 $ 1,694 $ 293 $ 34,090 Charge-offs (159) — (117) (174) (767) (358) (7) (2,802) — (4,384) Recoveries 848 59 46 125 239 207 47 787 — 2,358 Provision (benefit) (694) 964 258 687 880 887 (384) 2,629 28 5,255 Balance, September 30, 2016 $ 4,111 $ 4,591 $ 8,528 $ 7,850 $ 3,281 $ 4,710 $ 1,619 $ 2,308 $ 321 $ 37,319 The following tables present a disaggregated analysis of activity in the allowance for loan losses and loan balances for acquired non-credit impaired loans: Construction Commercial Commercial Consumer Other Income & Land Non-owner Owner Owner Home Commercial Producing (Dollars in thousands) Development Occupied Occupied Occupied Equity & Industrial Property Consumer Total Three Months Ended September 30, 2017 Allowance for loan losses: Balance at beginning of period $ — $ — $ — $ — $ — $ — $ — $ — $ — Charge-offs — — — (80) (71) (1) — (123) (275) Recoveries 1 — 1 — 274 1 — 2 279 Provision (benefit) (1) — (1) 80 (203) — — 121 (4) Balance, September 30, 2017 $ — $ — $ — $ — $ — $ — $ — $ — $ — Loans individually evaluated for impairment $ — $ — $ — $ — $ — $ — $ — $ — $ — Loans collectively evaluated for impairment $ — $ — $ — $ — $ — $ — $ — $ — $ — Loans: Loans individually evaluated for impairment $ — $ — $ — $ — $ — $ — $ — $ — $ — Loans collectively evaluated for impairment 76,886 199,704 207,572 492,615 164,291 101,427 76,924 136,136 1,455,555 Total acquired non-credit impaired loans $ 76,886 $ 199,704 $ 207,572 $ 492,615 $ 164,291 $ 101,427 $ 76,924 $ 136,136 $ 1,455,555 Three Months Ended September 30, 2016 Allowance for loan losses: Balance at beginning of period $ — $ — $ — $ — $ — $ — $ — $ — $ — Charge-offs — — (3) — (105) (23) — (149) (280) Recoveries 1 — — 3 89 1 — 26 120 Provision (benefit) (1) — 3 (3) 16 22 — 123 160 Balance, September 30, 2016 $ — $ — $ — $ — $ — $ — $ — $ — $ — Loans individually evaluated for impairment $ — $ — $ — $ — $ — $ — $ — $ — $ — Loans collectively evaluated for impairment $ — $ — $ — $ — $ — $ — $ — $ — $ — Loans: Loans individually evaluated for impairment $ — $ — $ — $ — $ — $ — $ — $ — $ — Loans collectively evaluated for impairment 10,683 35,775 29,444 435,132 168,758 14,201 43,152 148,512 885,657 Total acquired non-credit impaired loans $ 10,683 $ 35,775 $ 29,444 $ 435,132 $ 168,758 $ 14,201 $ 43,152 $ 148,512 $ 885,657 Construction Commercial Commercial Consumer Other Income & Land Non-owner Owner Owner Home Commercial Producing (Dollars in thousands) Development Occupied Occupied Occupied Equity & Industrial Property Consumer Total Nine Months Ended September 30, 2017 Allowance for loan losses: Balance, December 31, 2016 $ — $ — $ — $ — $ — $ — $ — $ — $ — Charge-offs — — — (89) (736) (3) — (337) (1,165) Recoveries 3 — 1 42 343 3 1 21 414 Provision (benefit) (3) — (1) 47 393 — (1) 316 751 Balance, September 30, 2017 $ — $ — $ — $ — $ — $ — $ — $ — $ — Nine Months Ended September 30, 2016 Allowance for loan losses: Balance, December 31, 2015 $ — $ — $ — $ — $ — $ — $ — $ — $ — Charge-offs — — (3) — (292) (30) — (485) (810) Recoveries 3 — — 9 197 3 1 49 262 Provision (benefit) (3) — 3 (9) 95 27 (1) 436 548 Balance, September 30, 2016 $ — $ — $ — $ — $ — $ — $ — $ — $ — The following tables present a disaggregated analysis of activity in the allowance for loan losses and loan balances for acquired credit impaired loans: Commercial Commercial Loans Greater Real Estate- Than or Equal Commercial Construction and Residential Commercial (Dollars in thousands) to $1 Million-CBT Real Estate Development Real Estate Consumer and Industrial Single Pay Total Three Months Ended September 30, 2017 Allowance for loan losses: Balance, June 30, 2017 $ — $ 40 $ 92 $ 2,741 $ 548 $ 320 $ — $ 3,741 Provision (benefit) for loan losses before benefit attributable to FDIC loss share agreements — (40) 133 184 (65) — 127 Benefit attributable to FDIC loss share agreements — — — — — — — — Total provision (benefit) for loan losses charged to operations — (40) 133 184 (65) — 127 Provision for loan losses recorded through the FDIC loss share receivable — — — — — — — — Reduction due to loan removals — — — Balance, September 30, 2017 $ — $ — $ 189 $ 2,776 $ 462 $ 243 $ — $ 3,670 Loans individually evaluated for impairment $ — $ — $ — $ — $ — $ — $ — $ — Loans collectively evaluated for impairment $ — $ — $ 189 $ 2,776 $ 462 $ 243 $ — $ 3,670 Loans:* Loans individually evaluated for impairment $ — $ — $ — $ — $ — $ — $ — $ — Loans collectively evaluated for impairment 8,439 199,082 46,248 249,666 53,302 25,796 — 582,533 Total acquired credit impaired loans $ 8,439 $ 199,082 $ 46,248 $ 249,666 $ 53,302 $ 25,796 $ — $ 582,533 Three Months Ended September 30, 2016 Allowance for loan losses: Balance , June 30, 2016 $ — $ 35 $ 151 $ 2,592 $ 778 $ 196 $ — $ 3,752 Provision (benefit) for loan losses before benefit attributable to FDIC loss share agreements — — — 2 (23) (2) — (23) Benefit attributable to FDIC loss share agreements — — — — — — — — Total provision (benefit) for loan losses charged to operations — — — 2 (23) (2) — (23) Provision for loan losses recorded through the FDIC loss share receivable — — — — — — — — Reduction due to loan removals — 5 (6) (102) (211) (12) — (326) Balance, September 30, 2016 $ — $ 40 $ 145 $ 2,492 $ 544 $ 182 $ — $ 3,403 Loans individually evaluated for impairment $ — $ — $ — $ — $ — $ — $ — $ — Loans collectively evaluated for impairment $ — $ 40 $ 145 $ 2,492 $ 544 $ 182 $ — $ 3,403 Loans:* Loans individually evaluated for impairment $ — $ — $ — $ — $ — $ — $ — $ — Loans collectively evaluated for impairment 10,958 220,489 47,081 268,968 61,866 26,658 — 636,020 Total acquired credit impaired loans $ 10,958 $ 220,489 $ 47,081 $ 268,968 $ 61,866 $ 26,658 $ — $ 636,020 Commercial Commercial Loans Greater Real Estate- Than or Equal Commercial Construction and Residential Commercial (Dollars in thousands) to $1 Million-CBT Real Estate Development Real Estate Consumer and Industrial Single Pay Total Nine Months Ended September 30, 2017 Allowance for loan losses: Balance, December 31, 2016 $ — $ 41 $ 139 $ 2,419 $ 558 $ 238 $ — $ 3,395 Provision (benefit) for loan losses before benefit attributable to FDIC loss share agreements — (40) 130 743 (85) 71 — 819 Benefit attributable to FDIC loss share agreements — — — — — — — — Total provision (benefit) for loan losses charged to operations — (40) 130 743 (85) 71 — 819 Provision (benefit) for loan losses recorded through the FDIC loss share receivable — — — — — — — — Reduction due to loan removals — (1) (80) (386) (11) (66) — (544) Balance, September 30, 2017 $ — $ — $ 189 $ 2,776 $ 462 $ 243 $ — $ 3,670 Nine Months Ended September 30, 2016 Allowance for loan losses: Balance, December 31, 2015 $ — $ 56 $ 177 $ 2,986 $ 313 $ 174 $ — $ 3,706 Provision (benefit) for loan losses before benefit attributable to FDIC loss share agreements — 1 — (178) 511 38 — 372 Benefit attributable to FDIC loss share agreements — — — 23 — — — 23 Total provision (benefit) for loan losses charged to operations — 1 — (155) 511 38 — 395 Provision for loan losses recorded through the FDIC loss share receivable — — — (23) — — — (23) Reduction due to loan removals — (16) (32) (316) (281) (30) — (675) Balance, September 30, 2016 $ — $ 41 $ 145 $ 2,492 $ 543 $ 182 $ — $ 3,403 *— The carrying value of acquired credit impaired loans includes a non accretable difference which is primarily associated with the assessment of credit quality of acquired loans. As part of the ongoing monitoring of the credit quality of the Company’s loan portfolio, management tracks certain credit quality indicators, including trends related to (i) the level of classified loans, (ii) net charge-offs, (iii) non-performing loans (see details below), and (iv) the general economic conditions of the markets that we serve. The Company utilizes a risk grading matrix to assign a risk grade to each of its loans. A description of the general characteristics of the risk grades is as follows: · Pass—These loans range from minimal credit risk to average, however, still acceptable credit risk. · Special mention—A special mention loan has 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 the institution’s credit position at some future date. · Substandard—A substandard loan is inadequately protected by the current sound worth and paying capacity of the obligor or of the collateral pledged, if any. Loans so classified must have a well-defined weakness, or weaknesses, that may jeopardize the liquidation of the debt. A substandard loan is characterized by the distinct possibility that the Bank will sustain some loss if the deficiencies are not corrected. · Doubtful—A doubtful loan has all of the weaknesses inherent in one classified as substandard with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of the currently existing facts, conditions and values, highly questionable and improbable. The following table presents the credit risk profile by risk grade of commercial loans for non-acquired loans: Construction & Development Commercial Non-owner Occupied Commercial Owner Occupied September 30, December 31, September 30, September 30, December 31, September 30, September 30, December 31, September 30, (Dollars in thousands) 2017 2016 2016 2017 2016 2016 2017 2016 2016 Pass $ 755,633 $ 567,398 $ 548,984 $ 939,125 $ 701,150 $ 615,521 $ 1,247,881 $ 1,149,417 $ 1,118,421 Special mention 7,445 8,421 8,492 8,475 11,434 11,499 24,277 22,133 26,429 Substandard 3,879 4,645 4,860 2,270 2,131 3,417 6,329 6,195 8,630 Doubtful — — — — — — — — — $ 766,957 $ 580,464 $ 562,336 $ 949,870 $ 714,715 $ 630,437 $ 1,278,487 $ 1,177,745 $ 1,153,480 Commercial & Industrial Other Income Producing Property Commercial Total September 30, December 31, September 30, September 30, December 31, September 30, September 30, December 31, September 30, 2017 2016 2016 2017 2016 2016 2017 2016 2016 Pass $ 770,975 $ 655,157 $ 604,058 $ 186,639 $ 167,025 $ 165,451 $ 3,900,253 $ 3,240,147 $ 3,052,435 Special mention 8,894 14,325 11,246 6,090 9,280 12,099 55,181 65,593 69,765 Substandard 1,888 1,916 2,221 1,606 1,933 2,045 15,972 16,820 21,173 Doubtful — — — — — — — — — $ 781,757 $ 671,398 $ 617,525 $ 194,335 $ 178,238 $ 179,595 $ 3,971,406 $ 3,322,560 $ 3,143,373 The following table presents the credit risk profile by risk grade of consumer loans for non-acquired loans: Consumer Owner Occupied Home Equity Consumer September 30, December 31, September 30, September 30, December 31, September 30, September 30, December 31, September 30, (Dollars in thousands) 2017 2016 2016 2017 2016 2016 2017 2016 2016 Pass $ 1,427,278 $ 1,167,768 $ 1,155,481 $ 405,945 $ 368,655 $ 349,382 $ 370,258 $ 322,654 $ 304,117 Special mention 14,914 15,283 14,370 7,346 8,145 8,493 316 468 611 Substandard 12,566 14,570 13,590 6,469 6,418 5,950 1,184 1,116 959 Doubtful — — — — — — — — — $ 1,454,758 $ 1,197,621 $ 1,183,441 $ 419,760 $ 383,218 $ 363,825 $ 371,758 $ 324,238 $ 305,687 Other Consumer Total September 30, 2017 December 31, 2016 September 30, 2016 September 30, 2017 December 31, 2016 September 30, 2016 Pass $ 12,645 $ 13,404 $ 11,787 $ 2,216,126 $ 1,872,481 $ 1,820,767 Special mention — — — 22,576 23,896 23,474 Substandard — — — 20,219 22,104 20,499 Doubtful — — — — — — $ 12,645 $ 13,404 $ 11,787 $ 2,258,921 $ 1,918,481 $ 1,864,740 The following table presents the credit risk profile by risk grade of total non-acquired loans: Total Non-acquired Loans September 30, December 31, September 30, (Dollars in thousands) 2017 2016 2016 Pass $ 6,116,379 $ 5,112,628 $ 4,873,202 Special mention 77,757 89,489 93,239 Substandard 36,191 38,924 41,672 Doubtful — — — $ 6,230,327 $ 5,241,041 $ 5,008,113 The following table presents the credit risk profile by risk grade of commercial loans for acquired non-credit impaired loans: Commercial Non-owner Construction & Development Occupied Commercial Owner Occupied September 30, December 31, September 30, September 30, December 31, September 30, September 30, December 31, September 30, (Dollars in thousands) 2017 2016 2016 2017 2016 2016 2017 2016 2016 Pass $ 74,665 $ 8,997 $ 9,562 $ 195,808 $ 28,368 $ 29,509 $ 201,498 $ 26,920 $ 28,926 Special mention 1,403 253 278 3,806 6,171 6,173 4,048 — — Substandard 818 840 843 90 89 93 2,026 275 518 Doubtful — — — — — — — — — $ 76,886 $ 10,090 $ 10,683 $ 199,704 $ 34,628 $ 35,775 $ 207,572 $ 27,195 $ 29,444 Other Income Producing Commercial & Industrial Property Commercial Total September 30, December 31, September 30, September 30, December 31, September 30, September 30, December 31, September 30, 2017 2016 2016 2017 2016 2016 2017 2016 2016 Pass $ 95,523 $ 13,475 $ 14,016 $ 74,994 $ 38,361 $ 42,159 $ 642,488 $ 116,121 $ 124,172 Special mention 5,385 117 122 1,208 273 276 15,850 6,814 6,849 Substandard 519 49 63 722 708 717 4,175 1,961 2,234 Doubtful — — — — — — — — — $ 101,427 $ 13,641 $ 14,201 $ 76,924 $ 39,342 $ 43,152 $ 662,513 $ 124,896 $ 133,255 The following table presents the credit risk profile by risk grade of consumer loans for acquired |