Note 6. Loans

The following table summarizes the components of First Guaranty's loan portfolio as of the dates indicated:

	December 31, 2017						December 31, 2016
(in thousands except for %)	Balance			As % of Category			Balance			As % of Category
Real Estate:
Construction & land development	$	112,603			9.8	%	$	84,239			8.9	%
Farmland		25,691			2.2	%		21,138			2.2	%
1-4 Family		158,733			13.8	%		135,211			14.2	%
Multi-family		16,840			1.4	%		12,450			1.3	%
Non-farm non-residential		540,231			46.9	%		417,014			43.9	%
Total Real Estate		854,098			74.1	%		670,052			70.5	%
Non-Real Estate:
Agricultural		21,514			1.9	%		23,783			2.5	%
Commercial and industrial		220,700			19.2	%		193,969			20.4	%
Consumer and other		55,185			4.8	%		63,011			6.6	%
Total Non-Real Estate		297,399			25.9	%		280,763			29.5	%
Total Loans Before Unearned Income		1,151,497			100.0	%		950,815			100.0	%
Unearned income		(2,483	)					(1,894	)
Total Loans Net of Unearned Income	$	1,149,014					$	948,921

The following table summarizes fixed and floating rate loans by contractual maturity, excluding nonaccrual loans, as of December 31, 2017 and December 31, 2016 unadjusted for scheduled principal payments, prepayments, or repricing opportunities. The average life of the loan portfolio may be substantially less than the contractual terms when these adjustments are considered.

	December 31, 2017							December 31, 2016
(in thousands)	Fixed		Floating		Total			Fixed		Floating		Total
One year or less	$	89,383	$	75,361	$	164,744		$	97,713	$	51,965	$	149,678
One to five years		390,333		251,135		641,468			352,000		206,676		558,676
Five to 15 years		124,215		70,273		194,488			115,691		46,116		161,807
Over 15 years		70,366		67,881		138,247			53,150		5,830		58,980
Subtotal	$	674,297	$	464,650		1,138,947		$	618,554	$	310,587		929,141
Nonaccrual loans						12,550							21,674
Total Loans Before Unearned Income						1,151,497							950,815
Unearned income						(2,483	)						(1,894	)
Total Loans Net of Unearned Income					$	1,149,014						$	948,921

As of December 31, 2017, $95.4 million of floating rate loans were at their interest rate floor. At December 31, 2016, $127.7 million of floating rate loans were at the floor rate. Nonaccrual loans have been excluded from these totals.

The following tables present the age analysis of past due loans for the periods indicated:

	As of December 31, 2017
(in thousands)	30-89 Days Past Due		90 Days or Greater Past Due		Total Past Due		Current		Total Loans			Recorded Investment 90 Days Accruing
Real Estate:
Construction & land development	$	95	$	371	$	466	$	112,137	$	112,603		$	-
Farmland		175		65		240		25,451		25,691			-
1-4 family		1,481		1,953		3,434		155,299		158,733			-
Multi-family		-		-		-		16,840		16,840			-
Non-farm non-residential		1,006		3,758		4,764		535,467		540,231			-
Total Real Estate		2,757		6,147		8,904		845,194		854,098			-
Non-Real Estate:
Agricultural		239		1,537		1,776		19,738		21,514			41
Commercial and industrial		630		5,624		6,254		214,446		220,700			798
Consumer and other		463		81		544		54,641		55,185			-
Total Non-Real Estate		1,332		7,242		8,574		288,825		297,399			839
Total Loans Before Unearned Income	$	4,089	$	13,389	$	17,478	$	1,134,019		1,151,497		$	839
Unearned income										(2,483	)
Total Loans Net of Unearned Income									$	1,149,014

	As of December 31, 2016
(in thousands)	30-89 Days Past Due		90 Days or Greater Past Due		Total Past Due		Current		Total Loans			Recorded Investment 90 Days Accruing
Real Estate:
Construction & land development	$	173	$	585	$	758	$	83,481	$	84,239		$	34
Farmland		234		105		339		20,799		21,138			-
1-4 family		1,108		2,387		3,495		131,716		135,211			145
Multi-family		-		5,014		5,014		7,436		12,450			-
Non-farm non-residential		1,618		2,753		4,371		412,643		417,014			-
Total Real Estate		3,133		10,844		13,977		656,075		670,052			179
Non-Real Estate:
Agricultural		64		1,958		2,022		21,761		23,783			-
Commercial and industrial		552		8,070		8,622		185,347		193,969			-
Consumer and other		182		981		1,163		61,848		63,011			-
Total Non-Real Estate		798		11,009		11,807		268,956		280,763			-
Total Loans Before Unearned Income	$	3,931	$	21,853	$	25,784	$	925,031		950,815		$	179
Unearned income										(1,894	)
Total Loans Net of Unearned Income									$	948,921

The tables above include $12.6 million and $21.7 million of nonaccrual loans for December 31, 2017 and 2016, respectively. See the tables below for more detail on nonaccrual loans.

The following is a summary of nonaccrual loans by class for the periods indicated:

	As of December 31,
(in thousands)	2017		2016
Real Estate:
Construction & land development	$	371	$	551
Farmland		65		105
1-4 family		1,953		2,242
Multi-family		-		5,014
Non-farm non-residential		3,758		2,753
Total Real Estate		6,147		10,665
Non-Real Estate:
Agricultural		1,496		1,958
Commercial and industrial		4,826		8,070
Consumer and other		81		981
Total Non-Real Estate		6,403		11,009
Total Nonaccrual Loans	$	12,550	$	21,674

The following table identifies the credit exposure of the loan portfolio by specific credit ratings for the periods indicated:

	As of December 31, 2017											As of December 31, 2016
(in thousands)	Pass		Special Mention		Substandard		Doubtful		Total			Pass		Special Mention		Substandard		Doubtful		Total
Real Estate:
Construction & land development	$	108,200	$	125	$	4,278	$	-	$	112,603		$	79,069	$	1,162	$	4,008	$	-	$	84,239
Farmland		25,030		569		92		-		25,691			20,652		381		105		-		21,138
1-4 family		149,426		1,856		7,451		-		158,733			123,191		5,460		6,560		-		135,211
Multi-family		9,366		639		6,835		-		16,840			4,268		1,132		7,050		-		12,450
Non-farm non-residential		520,432		2,490		17,309		-		540,231			392,355		6,406		18,253		-		417,014
Total Real Estate		812,454		5,679		35,965		-		854,098			619,535		14,541		35,976		-		670,052
Non-Real Estate:
Agricultural		19,050		995		1,469		-		21,514			20,890		920		1,973		-		23,783
Commercial and industrial		191,784		19,187		5,169		4,560		220,700			182,381		850		3,008		7,730		193,969
Consumer and other		48,225		68		6,892		-		55,185			60,582		1,394		1,035		-		63,011
Total Non-Real Estate		259,059		20,250		13,530		4,560		297,399			263,853		3,164		6,016		7,730		280,763
Total Loans Before Unearned Income	$	1,071,513	$	25,929	$	49,495	$	4,560		1,151,497		$	883,388	$	17,705	$	41,992	$	7,730		950,815
Unearned income										(2,483	)										(1,894	)
Total Loans Net of Unearned Income									$	1,149,014										$	948,921

Purchased Impaired Loans

As part of the acquisition of Premier Bancshares, Inc. on June 16, 2017, First Guaranty purchased credit impaired loans for which there was, at acquisition, evidence of deterioration of credit quality since their origination and it was probable, at acquisition, that all contractually required payments would not be collected. The carrying amount of those loans is as follows at December 31, 2017.

(in thousands)	As of December 31, 2017
Real Estate:
Construction & land development	$	1,135
Farmland		8
1-4 family		50
Multi-family		-
Non-farm non-residential		2,148
Total Real Estate		3,341
Non-Real Estate:
Agricultural		-
Commercial and industrial		1,017
Consumer and other		-
Total Non-Real Estate		1,017
Total Carrying Amount	$	4,358
Contractual principal balance	$	5,436
Carrying amount, net of allowance	$	4,358

For those purchased loans disclosed above, First Guaranty did not increase the allowance for loan losses for the year ended December 31, 2017.

Where First Guaranty can reasonably estimate the cash flows expected to be collected on the loans, a portion of the purchase discount is allocated to an accretable yield adjustment based upon the present value of the future estimated cash flows versus the current carrying value of the loan and the accretable yield portion is being recognized as interest income over the remaining life of the loan.

Where First Guaranty cannot reasonably estimate the cash flows expected to be collected on the loans, it has decided to account for those loans using the cost recovery method of income recognition. As such, no portion of a purchase discount adjustment has been determined to meet the definition of an accretable yield adjustment on those loans accounted for using the cost recovery method. If, in the future, cash flows from the borrower(s) can be reasonably estimated, a portion of the purchase discount would be allocated to an accretable yield adjustment based upon the present value of the future estimated cash flows versus the current carrying value of the loan and the accretable yield portion would be recognized as interest income over the remaining life of the loan. Until such accretable yield can be calculated, under the cost recovery method of income recognition, all payments will be used to reduce the carrying value of the loan and no income will be recognized on the loan until the carrying value is reduced to zero. Any loan accounted for under the cost recovery method is also still included as a non-accrual loan in the amounts presented in the table below.

The accretable yield, or income expected to be collected, on the purchased loans above is as follows at December 31, 2017.

(in thousands)	Year Ended December 31, 2017
Balance, beginning of period	$	-
Acquisition accretable yield		1,195
Accretion		(164	)
Net transfers from nonaccretable difference to accretable yield		-
Balance, end of period	$	1,031

The contractually required payments of purchased impaired loans totaled $7.5 million, while the cash flow expected to be collected at acquisition totaled $5.0 million, and the fair value of the acquired loans totaled $3.8 million.