LOANS

3 Months Ended

Mar. 31, 2016

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. The Bank also purchased 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. 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 automobile loans, boat and recreational vehicle financing, and both 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. Balances within the major loan categories are presented in the following table:

	March 31,		December 31,		March 31,
(Dollars in Thousands)	2016		2015		2015
Commercial, financial and agricultural	$	434,073	$	449,623	$	334,917
Real estate – construction and development		264,820		244,693		178,568
Real estate – commercial and farmland		1,154,887		1,104,991		947,274
Real estate – residential		629,138		570,430		496,043
Consumer installment		31,901		31,125		29,113
Other		13,188		6,015		13,505
	$	2,528,007	$	2,406,877	$	1,999,420

Purchased non-covered loans are defined as loans that were acquired in bank acquisitions that are not covered, or are no longer covered, by a loss-sharing agreement with the Federal Deposit Insurance Corporation (“FDIC”). Purchased non-covered loans totaling $1.13 billion, $771.6 million and $643.1 million at March 31, 2016, December 31, 2015 and March 31, 2015, respectively, are not included in the above schedule.

Purchased non-covered loans are shown below according to major loan type as of the end of the periods shown:

	March 31,		December 31,		March 31,
(Dollars in Thousands)	2016		2015		2015
Commercial, financial and agricultural	$	111,537	$	45,462	$	36,258
Real estate – construction and development		103,753		72,080		53,668
Real estate – commercial and farmland		598,935		390,755		291,760
Real estate – residential		309,770		258,153		257,216
Consumer installment		5,924		5,104		4,190
	$	1,129,919	$	771,554	$	643,092

Purchased loan pools are defined as groups of loans that were not acquired in bank acquisitions or FDIC-assisted transactions. As of March 31, 2016, purchased loan pools totaled $656.7 million and consisted of whole-loan, adjustable rate residential mortgages on properties outside the Company’s markets, with principal balances totaling $644.3 million and $12.4 million of remaining purchase premium paid at acquisition. As of December 31, 2015, purchased loan pools totaled $593.0 million and consisted of whole-loan, adjustable rate residential mortgages on properties outside the Company’s markets, with principal balances totaling $580.7 million and $12.3 million of purchase premium paid at acquisition. The Company did not have any purchased loan pools at March 31, 2015. At March 31, 2016 and December 31, 2015, all loans included in the purchased loan pools were performing current loans, all risk-rated grade 20. At March 31, 2016 and December 31, 2015, the Company had allocated $1.3 million and $581,000, respectively, of allowance for loan losses for the purchased loan pools. As part of the due diligence process prior to purchasing an individual mortgage pool, a complete re-underwrite of the individual loan files was conducted. The underwriting process included a review of all income, asset, credit and property related documentation that was used to originate the loan. Underwriters utilized the originating lender’s program guidelines, as well as general prudent mortgage lending standards, to assess each individual loan file. Additional research was conducted to assess the real estate market conditions and market expectations in the geographic areas where a collateral concentration existed. As part of this review, an automated valuation model was employed to provide current collateral valuations and to support individual loan-to-value ratios. Additionally, a sample of site inspections was completed to provide further assurance. The results of the due diligence review were evaluated by officers of the Company in order to determine overall conformance to the Bank’s credit and lending policies.

Covered loans are defined as loans that were acquired in FDIC-assisted transactions and are still covered by a loss-sharing agreement with the FDIC. Covered loans totaling $130.3 million, $137.5 million and $245.7 million at March 31, 2016, December 31, 2015 and March 31, 2015, respectively, are not included in the above schedules.

Covered loans are shown below according to loan type as of the end of the periods shown:

	March 31,		December 31,		March 31,
(Dollars in Thousands)	2016		2015		2015
Commercial, financial and agricultural	$	4,739	$	5,546	$	20,905
Real estate – construction and development		7,205		7,612		19,519
Real estate – commercial and farmland		67,055		71,226		130,290
Real estate – residential		51,176		53,038		74,847
Consumer installment		104		107		184
	$	130,279	$	137,529	$	245,745

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 to 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.

The following table presents an analysis of loans accounted for on a nonaccrual basis, excluding purchased non-covered and covered loans:

	March 31,		December 31,		March 31,
(Dollars in Thousands)	2016		2015		2015
Commercial, financial and agricultural	$	1,266	$	1,302	$	1,015
Real estate – construction and development		1,776		1,812		3,286
Real estate – commercial and farmland		7,067		7,019		7,893
Real estate – residential		5,191		6,278		8,246
Consumer installment		400		449		401
	$	15,700	$	16,860	$	20,841

The following table presents an analysis of purchased non-covered loans accounted for on a nonaccrual basis:

	March 31,		December 31,		March 31,
(Dollars in Thousands)	2016		2015		2015
Commercial, financial and agricultural	$	660	$	1,064	$	198
Real estate – construction and development		1,620		1,106		785
Real estate – commercial and farmland		10,895		4,920		9,096
Real estate – residential		5,925		6,168		7,202
Consumer installment		87		72		27
	$	19,187	$	13,330	$	17,308

The following table presents an analysis of covered loans accounted for on a nonaccrual basis:

	March 31,		December 31,		March 31,
(Dollars in Thousands)	2016		2015		2015
Commercial, financial and agricultural	$	2,799	$	2,803	$	8,404
Real estate – construction and development		1,537		1,701		6,262
Real estate – commercial and farmland		5,265		5,034		17,000
Real estate – residential		3,694		3,663		6,606
Consumer installment		36		37		87
	$	13,331	$	13,238	$	38,359

The following table presents an analysis of past due loans, excluding purchased non-covered and covered loans, as of March 31, 2016, December 31, 2015 and March 31, 2015:

													Loans 90
													Days or
	Loans		Loans		Loans 90								More Past
	30-59		60-89		or More		Total						Due and
	Days Past		Days		Days Past		Loans		Current		Total		Still
	Due		Past Due		Due		Past Due		Loans		Loans		Accruing
	(Dollars in Thousands)
As of March 31, 2016:
Commercial, financial & agricultural	$	1,161	$	633	$	870	$	2,664	$	431,409	$	434,073	$	-
Real estate – construction & development		793		709		1,476		2,978		261,842		264,820		-
Real estate – commercial & farmland		1,015		539		6,955		8,509		1,146,378		1,154,887		-
Real estate – residential		6,078		1,084		4,176		11,338		617,800		629,138		-
Consumer installment loans		399		92		291		782		31,119		31,901		-
Other		-		-		-		-		13,188		13,188		-
Total	$	9,446	$	3,057	$	13,768	$	26,271	$	2,501,736	$	2,528,007	$	-

													Loans 90
													Days or
	Loans		Loans		Loans 90								More Past
	30-59		60-89		or More		Total						Due and
	Days Past		Days		Days Past		Loans		Current		Total		Still
	Due		Past Due		Due		Past Due		Loans		Loans		Accruing
	(Dollars in Thousands)
As of December 30, 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 90
													Days or
	Loans		Loans		Loans 90								More Past
	30-59		60-89		or More		Total						Due and
	Days Past		Days		Days Past		Loans		Current		Total		Still
	Due		Past Due		Due		Past Due		Loans		Loans		Accruing
	(Dollars in Thousands)
As of March 31, 2015:
Commercial, financial & agricultural	$	1,258	$	2,821	$	984	$	5,063	$	329,854	$	334,917	$	-
Real estate – construction & development		404		240		3,205		3,849		174,719		178,568		-
Real estate – commercial & farmland		6,398		1,285		7,732		15,415		931,859		947,274		-
Real estate – residential		4,430		1,879		7,569		13,878		482,165		496,043		-
Consumer installment loans		367		136		256		759		28,354		29,113		-
Other		-		-		-		-		13,505		13,505		-
Total	$	12,857	$	6,361	$	19,746	$	38,964	$	1,960,456	$	1,999,420	$	-

The following table presents an analysis of purchased non-covered past-due loans as of March 31, 2016, December 31, 2015 and March 31, 2015:

													Loans 90
													Days or
	Loans		Loans		Loans 90								More Past
	30-59		60-89		or More		Total						Due and
	Days Past		Days		Days Past		Loans		Current		Total		Still
	Due		Past Due		Due		Past Due		Loans		Loans		Accruing
	(Dollars in Thousands)
As of March 31, 2016:
Commercial, financial & agricultural	$	172	$	73	$	445	$	690	$	110,847	$	111,537	$	-
Real estate – construction & development		1,481		32		1,149		2,662		101,091		103,753		-
Real estate – commercial & farmland		2,204		488		9,126		11,818		587,117		598,935		-
Real estate – residential		2,951		2,172		4,652		9,775		299,995		309,770		-
Consumer installment loans		4		-		66		70		5,854		5,924		-
Total	$	6,812	$	2,765	$	15,438	$	25,015	$	1,104,904	$	1,129,919	$	-

													Loans 90
													Days or
	Loans		Loans		Loans 90								More Past
	30-59		60-89		or More		Total						Due and
	Days Past		Days		Days Past		Loans		Current		Total		Still
	Due		Past Due		Due		Past Due		Loans		Loans		Accruing
	(Dollars in Thousands)
As of December 30, 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 90
													Days or
	Loans		Loans		Loans 90								More Past
	30-59		60-89		or More		Total						Due and
	Days Past		Days		Days Past		Loans		Current		Total		Still
	Due		Past Due		Due		Past Due		Loans		Loans		Accruing
	(Dollars in Thousands)
As of March 31, 2015:
Commercial, financial & agricultural	$	216	$	-	$	85	$	301	$	35,957	$	36,258	$	-
Real estate – construction & development		393		17		766		1,176		52,492		53,668		-
Real estate – commercial & farmland		1,611		831		8,495		10,937		280,823		291,760		-
Real estate – residential		3,113		2,454		6,490		12,057		245,159		257,216		-
Consumer installment loans		100		-		19		119		4,071		4,190		-
Total	$	5,433	$	3,302	$	15,855	$	24,590	$	618,502	$	643,092	$	-

The following table presents an analysis of covered past-due loans as of March 31, 2016, December 31, 2015 and March 31, 2015:

													Loans 90
													Days or
	Loans		Loans		Loans 90								More Past
	30-59		60-89		or More		Total						Due and
	Days Past		Days		Days Past		Loans		Current		Total		Still
	Due		Past Due		Due		Past Due		Loans		Loans		Accruing
	(Dollars in Thousands)
As of March 31, 2016:
Commercial, financial & agricultural	$	75	$	-	$	2,757	$	2,832	$	1,907	$	4,739	$	-
Real estate – construction & development		87		-		1,471		1,558		5,647		7,205		-
Real estate – commercial & farmland		744		50		2,736		3,530		63,525		67,055		-
Real estate – residential		1,532		805		2,580		4,917		46,259		51,176		-
Consumer installment loans		-		-		36		36		68		104		-
Total	$	2,438	$	855	$	9,580	$	12,873	$	117,406	$	130,279	$	-

													Loans 90
													Days or
	Loans		Loans		Loans 90								More Past
	30-59		60-89		or More		Total						Due and
	Days Past		Days		Days Past		Loans		Current		Total		Still
	Due		Past Due		Due		Past Due		Loans		Loans		Accruing
	(Dollars in Thousands)
As of December 30, 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 90
													Days or
	Loans		Loans		Loans 90								More Past
	30-59		60-89		or More		Total						Due and
	Days Past		Days		Days Past		Loans		Current		Total		Still
	Due		Past Due		Due		Past Due		Loans		Loans		Accruing
	(Dollars in Thousands)
As of March 31, 2015:
Commercial, financial & agricultural	$	165	$	225	$	1,776	$	2,166	$	18,739	$	20,905	$	-
Real estate – construction & development		455		-		5,605		6,060		13,459		19,519		-
Real estate – commercial & farmland		2,364		1,150		11,063		14,577		115,713		130,290		-
Real estate – residential		2,293		1,019		4,999		8,310		66,536		74,847		-
Consumer installment loans		-		-		87		87		97		184		-
Total	$	5,277	$	2,394	$	23,530	$	31,201	$	214,544	$	245,745	$	-

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 $125,000 and all troubled debt restructurings greater than $100,000. The tables below include all loans deemed impaired, whether or not individually assessed for impairment. 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.

The following is a summary of information pertaining to impaired loans, excluding purchased non-covered and covered loans:

	As of and For the Period Ended
	March 31,		December 31,		March 31,
	2016		2015		2015
	(Dollars in Thousands)
Nonaccrual loans	$	15,700	$	16,860	$	20,841
Troubled debt restructurings not included above		14,385		14,418		12,935
Total impaired loans	$	30,085	$	31,278	$	33,776

Interest income recognized on impaired loans	$	318	$	909	$	168
Foregone interest income on impaired loans	$	242	$	1,204	$	109

The following table presents an analysis of information pertaining to impaired loans, excluding purchased non-covered and covered loans as of March 31, 2016, December 31, 2015 and March 31, 2015:

	Unpaid		Recorded		Recorded
	Contractual		Investment		Investment		Total				Average
	Principal		With No		With		Recorded		Related		Recorded
	Balance		Allowance		Allowance		Investment		Allowance		Investment
	(Dollars in Thousands)
As of March 31, 2016:
Commercial, financial & agricultural	$	3,150	$	339	$	1,206	$	1,545	$	408	$	1,544
Real estate – construction & development		3,278		230		2,022		2,252		742		2,428
Real estate – commercial & farmland		14,530		5,142		7,870		13,012		874		12,898
Real estate – residential		13,976		1,662		11,177		12,839		2,223		13,345
Consumer installment loans		519		-		437		437		7		466
Total	$	35,453	$	7,373	$	22,712	$	30,085	$	4,254	$	30,681

	Unpaid		Recorded		Recorded
	Contractual		Investment		Investment		Total				Average
	Principal		With No		With		Recorded		Related		Recorded
	Balance		Allowance		Allowance		Investment		Allowance		Investment
	(Dollars in Thousands)
As of December 31, 2015:
Commercial, financial & agricultural	$	3,062	$	158	$	1,385	$	1,543	$	135	$	2,275
Real estate – construction & development		3,581		230		2,374		2,604		774		3,228
Real estate – commercial & farmland		14,385		6,702		6,083		12,785		1,067		15,105
Real estate – residential		15,809		1,621		12,230		13,851		2,224		11,977
Consumer installment loans		592		-		495		495		9		488
Total	$	37,429	$	8,711	$	22,567	$	31,278	$	4,209	$	33,073

	Unpaid		Recorded		Recorded
	Contractual		Investment		Investment		Total				Average
	Principal		With No		With		Recorded		Related		Recorded
	Balance		Allowance		Allowance		Investment		Allowance		Investment
	(Dollars in Thousands)
As of March 31, 2015:
Commercial, financial & agricultural	$	2,378	$	5	$	1,287	$	1,292	$	240	$	1,627
Real estate – construction & development		7,397		274		3,801		4,075		667		4,264
Real estate – commercial & farmland		16,980		3,280		11,922		15,202		2,127		14,909
Real estate – residential		14,181		1,592		11,166		12,758		1,869		12,833
Consumer installment loans		548		-		449		449		6		491
Total	$	41,484	$	5,151	$	28,625	$	33,776	$	4,909	$	34,124

The following is a summary of information pertaining to purchased non-covered impaired loans:

	As of and For the Period Ended
	March 31,		December 31,		March 31,
	2016		2015		2015
	(Dollars in Thousands)
Nonaccrual loans	$	19,187	$	13,330	$	17,308
Troubled debt restructurings not included above		9,193		9,373		1,526
Total impaired loans	$	28,380	$	22,703	$	18,834

Interest income recognized on impaired loans	$	357	$	785	$	18
Foregone interest income on impaired loans	$	356	$	1,365	$	21

The following table presents an analysis of information pertaining to impaired purchased non-covered loans as of March 31, 2016, December 31, 2015 and March 31, 2015:

	Unpaid		Recorded		Recorded
	Contractual		Investment		Investment		Total				Average
	Principal		With No		With		Recorded		Related		Recorded
	Balance		Allowance		Allowance		Investment		Allowance		Investment
	(Dollars in Thousands)
As of March 31, 2016:
Commercial, financial & agricultural	$	2,632	$	236	$	426	$	662	$	-	$	864
Real estate – construction & development		3,599		892		1,237		2,129		2		1,799
Real estate – commercial & farmland		15,358		8,480		8,694		17,174		182		14,154
Real estate – residential		9,774		1,648		6,675		8,323		270		8,640
Consumer installment loans		87		92		-		92		-		85
Total	$	31,450	$	11,348	$	17,032	$	28,380	$	454	$	25,542

	Unpaid		Recorded		Recorded
	Contractual		Investment		Investment		Total				Average
	Principal		With No		With		Recorded		Related		Recorded
	Balance		Allowance		Allowance		Investment		Allowance		Investment
	(Dollars in Thousands)
As of December 31, 2015:
Commercial, financial & agricultural	$	3,103	$	1,066	$	-	$	1,066	$	-	$	392
Real estate – construction & development		8,987		1,469		-		1,469		-		1,429
Real estate – commercial & farmland		14,999		11,134		-		11,134		-		10,806
Real estate – residential		14,946		8,957		-		8,957		-		8,067
Consumer installment loans		94		77		-		77		-		65
Total	$	42,129	$	22,703	$	-	$	22,703	$	-	$	20,759

	Unpaid		Recorded		Recorded
	Contractual		Investment		Investment		Total				Average
	Principal		With No		With		Recorded		Related		Recorded
	Balance		Allowance		Allowance		Investment		Allowance		Investment
	(Dollars in Thousands)
As of March 31, 2015:
Commercial, financial & agricultural	$	1,331	$	198	$	-	$	198	$	-	$	187
Real estate – construction & development		2,153		1,113		-		1,113		-		1,275
Real estate – commercial & farmland		13,911		9,816		-		9,816		-		10,202
Real estate – residential		12,183		7,679		-		7,679		-		7,435
Consumer installment loans		38		28		-		28		-		50
Total	$	29,616	$	18,834	$	-	$	18,834	$	-	$	19,148

The following is a summary of information pertaining to covered impaired loans:

	As of and For the Period Ended
	March 31,		December 31,		March 31,
	2016		2015		2015
	(Dollars in Thousands)
Nonaccrual loans	$	13,331	$	13,238	$	38,359
Troubled debt restructurings not included above		12,308		13,283		20,721
Total impaired loans	$	25,639	$	26,521	$	59,080

Interest income recognized on impaired loans	$	185	$	886	$	220
Foregone interest income on impaired loans	$	170	$	1,596	$	130

The following table presents an analysis of information pertaining to impaired covered loans as of March 31, 2016, December 31, 2015 and March 31, 2015:

	Unpaid		Recorded		Recorded
	Contractual		Investment		Investment		Total				Average
	Principal		With No		With		Recorded		Related		Recorded
	Balance		Allowance		Allowance		Investment		Allowance		Investment
	(Dollars in Thousands)
As of March 31, 2016:
Commercial, financial & agricultural	$	4,842	$	-	$	3,107	$	3,107	$	111	$	2,801
Real estate – construction & development		8,347		-		2,354		2,354		84		2,403
Real estate – commercial & farmland		10,264		-		6,712		6,712		168		6,789
Real estate – residential		15,457		4,167		9,256		13,423		166		14,042
Consumer installment loans		51		43		-		43		-		45
Total	$	38,961	$	4,210	$	21,429	$	25,639	$	529	$	26,080

	Unpaid		Recorded		Recorded
	Contractual		Investment		Investment		Total				Average
	Principal		With No		With		Recorded		Related		Recorded
	Balance		Allowance		Allowance		Investment		Allowance		Investment
	(Dollars in Thousands)
As of December 31, 2015:
Commercial, financial & agricultural	$	5,188	$	2,802	$	-	$	2,802	$	-	$	7,408
Real estate – construction & development		15,119		2,480		-		2,480		-		6,906
Real estate – commercial & farmland		20,508		7,001		-		7,001		-		18,504
Real estate – residential		15,830		14,192		-		14,192		-		16,010
Consumer installment loans		60		46		-		46		-		86
Total	$	56,705	$	26,521	$	-	$	26,521	$	-	$	48,914

	Unpaid		Recorded		Recorded
	Contractual		Investment		Investment		Total				Average
	Principal		With No		With		Recorded		Related		Recorded
	Balance		Allowance		Allowance		Investment		Allowance		Investment
	(Dollars in Thousands)
As of March 31, 2015:
Commercial, financial & agricultural	$	13,512	$	8,407	$	-	$	8,407	$	-	$	8,495
Real estate – construction & development		24,503		9,080		-		9,080		-		9,859
Real estate – commercial & farmland		35,493		23,462		-		23,462		-		22,062
Real estate – residential		23,585		18,042		-		18,042		-		18,048
Consumer installment loans		119		89		-		89		-		92
Total	$	97,212	$	59,080	$	-	$	59,080	$	-	$	58,556

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 – This grade represents loans to the Company’s most creditworthy borrowers or loans that are secured by cash or cash equivalents.

Grade 15 – Good Credit – This grade includes loans that exhibit one or more characteristics better than that of a Satisfactory Credit. Generally, debt service coverage and borrower’s liquidity is materially better than required by the Company’s loan policy.

Grade 20 – Satisfactory Credit – This grade is assigned to loans to borrowers who exhibit satisfactory credit histories, contain acceptable loan structures and demonstrate ability to repay.

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%, based on a documented collateral valuation.

Grade 25 – Minimum Acceptable Credit – This grade includes loans which exhibit all the characteristics of a Satisfactory Credit, but warrant more than normal level of banker supervision due to: (i) circumstances which elevate the risks of performance (such as start-up operations, untested management, heavy leverage and interim losses); (ii) adverse, extraordinary events that have affected, or could affect, the borrower’s cash flow, financial condition, ability to continue operating profitability or refinancing (such as death of principal, fire and divorce); (iii) loans that require more than the normal servicing requirements (such as any type of construction financing, acquisition and development loans, accounts receivable or inventory loans and floor plan loans); (iv) existing technical exceptions which raise some doubts about the Bank’s perfection in its collateral position or the continued financial capacity of the borrower; or (v) improvements in formerly criticized borrowers, which may warrant banker supervision.

Grade 30 – Other Asset Especially Mentioned – This grade includes loans that exhibit potential weaknesses that deserve management’s close attention. If left uncorrected, these weaknesses may result in deterioration of the repayment prospects for the asset or in the Company’s credit position at some future date.

Grade 40 – Substandard – This grade represents loans which are inadequately protected by the current credit worthiness and paying capacity of the borrower or of the collateral pledged, if any. These assets exhibit a well-defined weakness or are characterized by the distinct possibility that the Bank will sustain some loss if the deficiencies are not corrected. These weaknesses may be characterized by past due performance, operating losses or questionable collateral values.

Grade 50 – Doubtful – This grade includes loans which exhibit all of the characteristics of a substandard loan with the added provision that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions and values, highly questionable or improbable.

Grade 60 – Loss – This grade is assigned to loans which are considered uncollectible and of such little value that their continuance as active assets of the Bank is not warranted. This classification does not mean that the loss has absolutely no recovery or salvage value, but rather it is not practical or desirable to defer writing it off.

The following table presents the loan portfolio, excluding purchased non-covered and covered loans, by risk grade as of March 31, 2016:

	Commercial,		Real estate -		Real estate -
Risk	financial &		construction &		commercial &		Real estate -		Consumer
Grade	agricultural		development		farmland		residential		installment loans		Other		Total
	(Dollars in Thousands)
10	$	243,355	$	-	$	2,316	$	1,479	$	7,053	$	-	$	254,203
15		22,705		4,170		112,167		73,341		1,127		-		213,510
20		90,196		58,014		729,346		434,434		20,872		13,188		1,346,050
23		581		7,414		10,040		6,813		199		-		25,047
25		72,557		188,385		275,297		89,834		1,969		-		628,042
30		1,908		3,829		10,517		5,730		157		-		22,141
40		2,771		3,008		15,204		17,507		523		-		39,013
50		-		-		-		-		-		-		-
60		-		-		-		-		1		-		1
Total	$	434,073	$	264,820	$	1,154,887	$	629,138	$	31,901	$	13,188	$	2,528,007

The following table presents the loan portfolio, excluding purchased non-covered and covered loans, by risk grade as of December 31, 2015:

	Commercial,		Real estate -		Real estate -
Risk	financial &		construction &		commercial &		Real estate -		Consumer
Grade	agricultural		development		farmland		Residential		installment loans		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 March 31, 2015:


	Commercial,		Real estate -		Real estate -
Risk	financial &		construction &		commercial &		Real estate -		Consumer
Grade	agricultural		development		farmland		Residential		installment loans		Other		Total
	(Dollars in Thousands)
10	$	147,820	$	1,751	$	152	$	1,727	$	6,011	$	-	$	157,461
15		24,619		3,504		119,032		57,583		1,191		-		205,929
20		90,407		47,148		541,490		303,463		16,720		13,505		1,012,733
23		981		8,521		11,934		7,141		66		-		28,643
25		60,018		110,570		238,026		100,175		4,222		-		513,011
30		3,911		1,890		11,364		8,007		289		-		25,461
40		7,161		5,184		25,276		17,947		610		-		56,178
50		-		-		-		-		4		-		4
60		-		-		-		-		-		-		-
Total	$	334,917	$	178,568	$	947,274	$	496,043	$	29,113	$	13,505	$	1,999,420

The following table presents the purchased non-covered loan portfolio by risk grade as of March 31, 2016:

	Commercial,		Real estate -		Real estate -
Risk	financial &		construction &		commercial &		Real estate -		Consumer
Grade	agricultural		development		farmland		residential		installment loans		Other		Total
	(Dollars in Thousands)
10	$	9,306	$	-	$	-	$	138	$	1,061	$	-	$	10,505
15		1,206		1,135		9,302		35,904		682		-		48,229
20		20,666		13,477		188,912		119,213		2,211		-		344,479
23		-		4,334		9,773		13,338		-		-		27,445
25		73,016		73,700		343,928		115,422		1,772		-		607,838
30		5,308		7,948		25,615		11,613		33		-		50,517
40		2,003		3,159		21,405		14,142		165		-		40,874
50		30		-		-		-		-		-		30
60		2		-		-		-		-		-		2
Total	$	111,537	$	103,753	$	598,935	$	309,770	$	5,924	$	-	$	1,129,919

The following table presents the purchased non-covered loan portfolio by risk grade as of December 31, 2015:

	Commercial,		Real estate -		Real estate -
Risk	financial &		construction &		commercial &		Real estate -		Consumer
Grade	agricultural		development		farmland		residential		installment loans		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 March 31, 2015:

	Commercial,		Real estate -		Real estate -
Risk	financial &		construction &		commercial &		Real estate -		Consumer
Grade	agricultural		development		farmland		residential		installment loans		Other		Total
	(Dollars in Thousands)
10	$	6,696	$	-	$	-	$	289	$	459	$	-	$	7,444
15		995		641		9,396		12,136		472		-		23,640
20		13,751		13,746		115,359		62,056		1,568		-		206,480
23		73		-		3,174		6,777		-		-		10,024
25		12,585		31,512		136,581		155,187		1,521		-		337,386
30		958		3,564		9,404		8,332		65		-		22,323
40		1,170		4,205		17,846		12,417		105		-		35,743
50		30		-		-		22		-		-		52
60		-		-		-		-		-		-		-
Total	$	36,258	$	53,668	$	291,760	$	257,216	$	4,190	$	-	$	643,092

The following table presents the covered loan portfolio by risk grade as of March 31, 2016:

	Commercial,		Real estate -		Real estate -
Risk	financial &		construction &		commercial &		Real estate -		Consumer
Grade	agricultural		development		farmland		residential		installment loans		Other		Total
	(Dollars in Thousands)
10	$	-	$	-	$	-	$	-	$	-	$	-	$	-
15		-		-		-		-		-		-		-
20		47		770		10,443		9,635		-		-		20,895
23		25		-		1,797		5,024		-		-		6,846
25		1,932		3,704		37,276		23,388		11		-		66,311
30		4		823		3,003		4,338		48		-		8,216
40		2,731		1,908		14,536		8,791		45		-		28,011
50		-		-		-		-		-		-		-
60		-		-		-		-		-		-		-
Total	$	4,739	$	7,205	$	67,055	$	51,176	$	104	$	-	$	130,279

The following table presents the covered loan portfolio by risk grade as of December 31, 2015:

	Commercial,		Real estate -		Real estate -
Risk	financial &		construction &		commercial &		Real estate -		Consumer
Grade	agricultural		development		farmland		residential		installment loans		Other		Total
	(Dollars in Thousands)
10	$	-	$	-	$	-	$	-	$	-	$	-	$	-
15		-		-		-		-		-		-		-
20		93		800		11,698		10,040		-		-		23,631
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 March 31, 2015:

	Commercial,		Real estate -		Real estate -
Risk	financial &		construction &		commercial &		Real estate -		Consumer
Grade	agricultural		development		farmland		residential		installment loans		Other		Total
	(Dollars in Thousands)
10	$	-	$	-	$	-	$	-	$	-	$	-	$	-
15		667		1,847		734		522		-		-		3,770
20		75		458		21,010		13,353		51		-		34,947
23		4,481		8,567		6,382		6,130		-		-		25,560
25		5,094		2,594		69,536		36,510		37		-		113,771
30		10,588		6,053		4,053		5,893		9		-		26,596
40		-		-		28,575		12,439		87		-		41,101
50		-		-		-		-		-		-		-
60		-		-		-		-		-		-		-
Total	$	20,905	$	19,519	$	130,290	$	74,847	$	184	$	-	$	245,745

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 three months of 2016 and 2015 totaling $36.8 million and $32.0 million, respectively, under such parameters

As of March 31, 2016, December 31, 2015 and March 31, 2015, the Company had a balance of $17.5 million, $16.4 million and $13.9 million, respectively, in troubled debt restructurings, excluding purchased non-covered and covered loans. The Company has recorded $1.2 million, $1.3 million and $1.6 million in previous charge-offs on such loans at March 31, 2016, December 31, 2015 and March 31, 2015, respectively. The Company’s balance in the allowance for loan losses allocated to such troubled debt restructurings was $2.7 million, $2.7 million and $1.6 million at March 31, 2016, December 31, 2015 and March 31, 2015, respectively. At March 31, 2016, the Company did not have any commitments to lend additional funds to debtors whose terms have been modified in troubled restructurings.

During the three months ending March 31, 2016 and 2015, the Company modified loans as troubled debt restructurings, excluding purchased non-covered and covered loans, with principal balances of $1.7 million and $2.7 million, respectively, and these modifications did not have a material impact on the Company’s allowance for loan loss. The following table presents the loans by class modified as troubled debt restructurings, excluding purchased non-covered and covered loans, which occurred during the three months ending March 31, 2016 and 2015:

	March 31, 2016				March 31, 2015
			Balance				Balance
Loan class:	#		(in thousands)		#		(in thousands)
Commercial, financial & agricultural		1	$	12		-	$	-
Real estate – construction & development		-		-		-		-
Real estate – commercial & farmland		2		1,605		2		2,015
Real estate – residential		1		60		7		666
Consumer installment		-		-		3		17
Total		4	$	1,676		12	$	2,698

Troubled debt restructurings, excluding purchased non-covered and covered loans, with an outstanding balance of $793,000 and $1.5 million defaulted during the three months ended March 31, 2016 and 2015, respectively, and these defaults did not have a material impact on the Company’s allowance for loan loss. The following table presents the troubled debt restructurings by class that defaulted (defined as 30 days past due) during the three months ending March 31, 2016 and 2015:

	March 31, 2016				March 31, 2015
			Balance				Balance
Loan class:	#		(in thousands)		#		(in thousands)
Commercial, financial & agricultural		2	$	7		1	$	5
Real estate – construction & development		1		18		-		-
Real estate – commercial & farmland		1		194		3		746
Real estate – residential		9		563		6		748
Consumer installment		1		11		4		20
Total		14	$	793		14	$	1,519

The following table presents the amount of troubled debt restructurings by loan class, excluding purchased non-covered and covered loans, classified separately as accrual and nonaccrual at March 31, 2016, December 31, 2015 and March 31, 2015:

As of March 31, 2016	Accruing Loans				Non-Accruing Loans
			Balance				Balance
Loan class:	#		(in thousands)		#		(in thousands)
Commercial, financial & agricultural		5	$	279		10	$	75
Real estate – construction & development		9		476		2		30
Real estate – commercial & farmland		17		5,945		3		1,871
Real estate – residential		52		7,648		19		1,040
Consumer installment		10		37		21		87
Total		93	$	14,385		55	$	3,103

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 March 31, 2015	Accruing Loans				Non-Accruing Loans
			Balance				Balance
Loan class:	#		(in thousands)		#		(in thousands)
Commercial, financial & agricultural		5	$	277		3	$	17
Real estate – construction & development		9		789		4		90
Real estate – commercial & farmland		20		7,309		1		64
Real estate – residential		42		4,513		11		736
Consumer installment		10		47		15		90
Total		86	$	12,935		34	$	997

As of March 31, 2016, December 31, 2015 and March 31, 2015, the Company had a balance of $9.9 million, $10.0 million and $1.7 million, respectively, in troubled debt restructurings included in purchased non-covered loans. The Company has recorded $377,000 in previous charge-offs on such loans at March 31, 2016 and December 31, 2015. The Company had not recorded any previous charge-offs on such loans at March 31, 2015. At March 31, 2016, the Company did not have any commitments to lend additional funds to debtors whose terms have been modified in troubled restructurings.

During the three months ending March 31, 2016 and 2015, the Company modified purchased non-covered loans as troubled debt restructurings, with principal balances of $494,000 and $5,000, respectively, and these modifications did not have a material impact on the Company’s allowance for loan loss. The following table presents the purchased non-covered loans by class modified as troubled debt restructurings, which occurred during the three months ending March 31, 2016 and 2015:

	March 31, 2016				March 31, 2015
			Balance				Balance
Loan class:	#		(in thousands)		#		(in thousands)
Commercial, financial & agricultural		-	$	-		1	$	1
Real estate – construction & development		-		-		-		-
Real estate – commercial & farmland		1		29		-		-
Real estate – residential		1		465		-		-
Consumer installment		-		-		1		4
Total		2	$	494		2	$	5

Troubled debt restructurings included in purchased non-covered loans with an outstanding balance of $12,000 and $329,000 defaulted during the three months ended March 30, 2015 and 2014, respectively, and these defaults did not have a material impact on the Company’s allowance for loan loss. The following table presents the troubled debt restructurings by class that defaulted (defined as 30 days past due) during the three months ending March 31, 2016 and 2015:

	March 31, 2016				March 31, 2015
			Balance				Balance
Loan class:	#		(in thousands)		#		(in thousands)
Commercial, financial & agricultural		-	$	-		-	$	-
Real estate – construction & development		1		12		1		328
Real estate – commercial & farmland		-		-		-		-
Real estate – residential		-		-		-		-
Consumer installment		-		-		1		1
Total		1	$	12		2	$	329

The following table presents the amount of troubled debt restructurings by loan class of purchased non-covered loans, classified separately as accrual and nonaccrual at March 31, 2016, December 31, 2015 and March 31, 2015:

As of March 31, 2016	Accruing Loans				Non-Accruing Loans
			Balance				Balance
Loan class:	#		(in thousands)		#		(in thousands)
Commercial, financial & agricultural		1	$	2		2	$	19
Real estate – construction & development		2		510		3		39
Real estate – commercial & farmland		12		6,003		4		431
Real estate – residential		12		2,397		5		486
Consumer installment		2		5		2		2
Total		29	$	8,917		16	$	977

As of December 31, 2015	Accruing Loans				Non-Accruing Loans
			Balance				Balance
Loan class:	#		(in thousands)		#		(in thousands)
Commercial, financial & agricultural		1	$	2		2	$	21
Real estate – construction & development		1		363		3		42
Real estate – commercial & farmland		14		6,214		3		412
Real estate – residential		13		2,789		4		180
Consumer installment		2		5		2		3
Total		31	$	9,373		14	$	658

As of March 31, 2015	Accruing Loans				Non-Accruing Loans
			Balance				Balance
Loan class:	#		(in thousands)		#		(in thousands)
Commercial, financial & agricultural		-	$	-		1	$	1
Real estate – construction & development		1		328		-		-
Real estate – commercial & farmland		3		720		1		69
Real estate – residential		5		477		2		93
Consumer installment		1		1		1		4
Total		10	$	1,526		5	$	167

As of March 31, 2016, December 31, 2015 and March 31, 2015, the Company had a balance of $15.7 million, $15.5 million and $23.3 million, respectively, in troubled debt restructurings included in covered loans. The Company has recorded $1.2 million, $1.2 million and $1.1 million in previous charge-offs on such loans at March 31, 2016, December 31, 2015 and March 31, 2015, respectively. At March 31, 2016, the Company did not have any commitments to lend additional funds to debtors whose terms have been modified in troubled restructurings.

During the three months ending March 31, 2016 and 2015, the Company modified covered loans as troubled debt restructurings with principal balances of $574,000 and $115,000, respectively, and these modifications did not have a material impact on the Company’s allowance for loan loss. The following table presents the covered loans by class modified as troubled debt restructurings, during the three months ending March 31, 2016 and 2015:

	March 31, 2016				March 31, 2015
			Balance				Balance
Loan class:	#		(in thousands)		#		(in thousands)
Commercial, financial & agricultural		1	$	76		-	$	-
Real estate – construction & development		-		-		-		-
Real estate – commercial & farmland		1		475		-		-
Real estate – residential		1		23		2		115
Consumer installment		-		-		-		-
Total		3	$	574		2	$	115

Troubled debt restructurings of covered loans with an outstanding balance of $1.1 million and $2.1 million defaulted during the three months ended March 30, 2016 and 2015, respectively, and these defaults did not have a material impact on the Company’s allowance for loan loss. The following table presents the troubled debt restructurings by class that defaulted (defined as 30 days past due) during the three months ending March 31, 2016 and 2015:

	March 31, 2016				March 31, 2015
			Balance				Balance
Loan class:	#		(in thousands)		#		(in thousands)
Commercial, financial & agricultural		-	$	-		-	$	-
Real estate – construction & development		-		-		-		-
Real estate – commercial & farmland		1		613		2		1,728
Real estate – residential		7		489		5		362
Consumer installment		-		-		-		-
Total		8	$	1,102		7	$	2,090

The following table presents the amount of troubled debt restructurings by loan class of covered loans, classified separately as accrual and nonaccrual at March 31, 2016, December 31, 2015 and March 31, 2015:

As of March 31, 2016	Accruing Loans				Non-Accruing Loans
			Balance				Balance
Loan class:	#		(in thousands)		#		(in thousands)
Commercial, financial & agricultural		-	$	-		3	$	77
Real estate – construction & development		4		790		-		-
Real estate – commercial & farmland		3		1,311		5		2,133
Real estate – residential		96		10,200		26		1,224
Consumer installment		1		7		-		-
Total		104	$	12,308		34	$	3,434

As of December 31, 2015	Accruing Loans				Non-Accruing Loans
			Balance				Balance
Loan class:	#		(in thousands)		#		(in thousands)
Commercial, financial & agricultural		-	$	-		2	$	1
Real estate – construction & development		4		779		-		-
Real estate – commercial & farmland		4		1,967		3		1,067
Real estate – residential		97		10,529		26		1,116
Consumer installment		2		8		-		-
Total		107	$	13,283		31	$	2,184

As of March 31, 2015	Accruing Loans				Non-Accruing Loans
			Balance				Balance
Loan class:	#		(in thousands)		#		(in thousands)
Commercial, financial & agricultural		1	$	3		2	$	-
Real estate – construction & development		3		2,819		1		13
Real estate – commercial & farmland		13		6,461		2		1,736
Real estate – residential		97		11,436		10		821
Consumer installment		1		2		-		-
Total		115	$	20,721		15	$	2,570

Allowance for Loan Losses

The allowance for loan losses represents an allowance for probable incurred losses in the loan portfolio. The adequacy of the allowance for loan losses is evaluated periodically based on a review of all significant loans, with a particular emphasis on nonaccrual, past due and other loans that management believes might be potentially impaired or warrant additional attention. The Company segregates the loan portfolio by type of loan and utilizes this segregation in evaluating exposure to risks within the portfolio. In addition, based on internal reviews and external reviews performed by regulatory authorities, the Company further segregates the loan portfolio by loan grades based on an assessment of risk for a particular loan or group of loans. Certain reviewed loans are assigned specific allowances when a review of relevant data determines that a general allocation is not sufficient or when the review affords management the opportunity to adjust the amount of exposure in a given credit. In establishing allowances, management considers historical loan loss experience but adjusts this data with a significant emphasis on current loan quality trends, current economic conditions and other factors in the markets where the Company operates. Factors considered include, among others, current valuations of real estate in the Company’s markets, unemployment rates, the effect of weather conditions on agricultural related entities and other significant local economic events.

The Company has developed a methodology for determining the adequacy of the allowance for loan losses which is monitored by the Company’s Chief Credit Officer. 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. The risk rating schedule provides nine ratings of which five ratings are classified as pass ratings and four ratings are classified as criticized ratings. Each risk rating is assigned a percentage factor to be applied to the loan balance to determine the adequate amount of reserve. All 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. As a result of these loan reviews, certain loans may be identified as having deteriorating credit quality. Other loans that surface as problem loans may also be assigned specific reserves. Past-due loans are assigned risk ratings based on the number of days past due. The calculation of the allowance for loan losses, including underlying data and assumptions, is reviewed regularly by the Company’s Chief Financial Officer and the independent internal loan review department.

Loan losses are charged against the allowance when management believes the collection of a loan’s principal is unlikely. Subsequent recoveries are credited to the allowance. Consumer loans are charged-off in accordance with the Federal Financial Institutions Examination Council’s (“FFIEC”) Uniform Retail Credit Classification and Account Management Policy. Commercial loans are charged-off when they are deemed uncollectible, which usually involves a triggering event within the collection effort. If the loan is collateral dependent, the loss is more easily identified and is charged-off when it is identified, usually based upon receipt of an appraisal. However, when a loan has guarantor support, the Company may carry the estimated loss as a reserve against the loan while collection efforts with the guarantor are pursued. If, after collection efforts with the guarantor are complete, the deficiency is still considered uncollectible, the loss is charged-off and any further collections are treated as recoveries. In all situations, when a loan is downgraded to an Asset Quality Rating of 60 (Loss per the regulatory guidance), the uncollectible portion is charged-off.

The following table details activity in the allowance for loan losses by portfolio segment for the three months ended March 31, 2016, the year ended December 31, 2015 and the three months ended March 31, 2015. Allocation of a portion of the allowance to one category of loans does not preclude its availability to absorb losses in other categories.

	Commercial, financial & agricultural		Real estate – construction & development		Real estate – commercial & farmland		Real estate – residential		Consumer installment loans and Other		Purchased non-covered loans, including pools		Covered loans		Total

Three months ended March 31, 2016:
Balance, January 1, 2016	$	1,144	$	5,009	$	7,994	$	4,760	$	1,574	$	581	$	-	$	21,062
Provision for loan losses		788		(1,051)		(669)		25		399		828		361		681
Loans charged off		(406)		(155)		(347)		(468)		(59)		(307)		(72)		(1,814)
Recoveries of loans previously charged off		73		122		121		314		25		658		240		1,553
Balance, March 31, 2016	$	1,599	$	3,925	$	7,099	$	4,631	$	1,939	$	1,760	$	529	$	21,482

Period-end amount allocated to:
Loans individually evaluated for impairment	$	400	$	733	$	873	$	2,153	$	-	$	454	$	529	$	5,142
Loans collectively evaluated for impairment		1,199		3,192		6,226		2,478		1,939		1,306		-		16,340
Ending balance	$	1,599	$	3,925	$	7,099	$	4,631	$	1,939	$	1,760	$	529	$	21,482

Loans:
Individually evaluated for impairment	$	799	$	1,604	$	12,050	$	9,540	$	-	$	17,032	$	21,429	$	62,454
Collectively evaluated for impairment		433,274		263,216		1,142,837		619,598		45,089		1,635,551		28,937		4,168,502
Acquired with deteriorated credit quality		-		-		-		-		-		134,070		79,913		213,983
Ending balance	$	434,073	$	264,820	$	1,154,887	$	629,138	$	45,089	$	1,786,653	$	130,279	$	4,444,939

	Commercial, financial & agricultural		Real estate – construction & development		Real estate – commercial & farmland		Real estate – residential		Consumer installment loans and Other		Purchased non-covered loans, including pools		Covered loans		Total
	(Dollars in Thousands)
Twelve months ended December 31, 2015:
Balance, January 1, 2015	$	2,004	$	5,030	$	8,823	$	4,129	$	1,171	$	-	$	-	$	21,157
Provision for loan losses		(73)		278		1,221		2,067		676		344		751		5,264
Loans charged off		(1,438)		(622)		(2,367)		(1,587)		(410)		(950)		(1,759)		(9,133)
Recoveries of loans previously charged off		651		323		317		151		137		1,187		1,008		3,774
Balance, December 31, 2015	$	1,144	$	5,009	$	7,994	$	4,760	$	1,574	$	581	$	-	$	21,062

Period-end amount allocated to:
Loans individually evaluated for impairment	$	126	$	759	$	1,074	$	2,172	$	-	$	-	$	-	$	4,131
Loans collectively evaluated for impairment		1,018		4,250		6,920		2,588		1,574		581		-		16,931
Ending balance	$	1,144	$	5,009	$	7,994	$	4,760	$	1,574	$	581	$	-	$	21,062

Loans:
Individually evaluated for impairment	$	323	$	1,958	$	11,877	$	9,554	$	-	$	-	$	-	$	23,712
Collectively evaluated for impairment		449,300		242,735		1,093,114		560,876		37,140		1,261,821		52,451		3,697,437
Acquired with deteriorated credit quality		-		-		-		-		-		102,696		85,078		187,774
Ending balance	$	449,623	$	244,693	$	1,104,991	$	570,430	$	37,140	$	1,364,517	$	137,529	$	3,908,923

	Commercial, financial & agricultural		Real estate – construction & development		Real estate – commercial & farmland		Real estate - residential		Consumer installment loans and Other		Purchased non-covered loans		Covered loans		Total
	(Dollars in Thousands)
Three months ended March 31, 2015:
Balance, January 1, 2015	$	2,004	$	5,030	$	8,823	$	4,129	$	1,171	$	-	$	-	$	21,157
Provision for loan losses		(498)		347		(56)		1,090		217		(432)		401		1,069
Loans charged off		(392)		(97)		(12)		(268)		(86)		(230)		(563)		(1,648)
Recoveries of loans previously charged off		285		31		15		57		62		662		162		1,274
Balance, March 31, 2015	$	1,399	$	5,311	$	8,770	$	5,008	$	1,364	$	-	$	-	$	21,852

Period-end amount allocated to:
Loans individually evaluated for impairment	$	230	$	627	$	2,123	$	1,837	$	-	$	-	$	-	$	4,817
Loans collectively evaluated for impairment		1,169		4,684		6,647		3,171		1,364		-		-		17,035
Ending balance	$	1,399	$	5,311	$	8,770	$	5,008	$	1,364	$	-	$	-	$	21,852

Loans:
Individually evaluated for impairment	$	324	$	2,982	$	14,557	$	11,124	$	-	$	-	$	-	$	28,987
Collectively evaluated for impairment		334,593		175,586		932,717		484,919		42,618		552,837		108,113		2,631,383
Acquired with deteriorated credit quality		-		-		-		-		-		90,255		137,632		227,887
Ending balance	$	334,917	$	178,568	$	947,274	$	496,043	$	42,618	$	643,092	$	245,745	$	2,888,257