NOTE 5 – LOANS

The Company 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. Ameris concentrates the majority of its lending activities in real estate loans. While the 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.

Commercial, financial and agricultural loans include both secured and unsecured loans for working capital, expansion, crop production and other business purposes. Short-term working capital loans are secured by non-real estate collateral such as accounts receivable, crops, inventory and equipment. The Company evaluates the financial strength, cash flow, management, credit history of the borrower and the quality of the collateral securing the loan. The Bank often requires personal guarantees and secondary sources of repayment on commercial, financial and agricultural loans.

Real estate loans include construction and development loans, commercial and farmland loans and residential loans. Construction and development loans include loans for the development of residential neighborhoods, one-to-four family residential construction loans to builders and consumers, and commercial real estate construction loans, primarily for owner-occupied properties. The Company limits its construction lending risk through adherence to established underwriting procedures. Commercial real estate loans include loans secured by owner-occupied commercial buildings for office, storage, retail, farmland and warehouse space. They also include non-owner occupied commercial buildings such as leased retail and office space. Commercial real estate loans may be larger in size and may involve a greater degree of risk than one-to-four family residential mortgage loans. Payments on such loans are often dependent on successful operation or management of the properties. The Company’s residential loans represent permanent mortgage financing and are secured by residential properties located within the Bank’s market areas.

Consumer installment loans and other loans include automobile loans, boat and recreational vehicle financing, and 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:


(Dollars in Thousands)	March 31, 2014		December 31, 2013		March 31, 2013
Commercial, financial and agricultural	$	270,571	$	244,373	$	180,888
Real estate – construction and development		149,543		146,371		130,161
Real estate – commercial and farmland		836,230		808,323		766,227
Real estate – residential		393,001		366,882		367,056
Consumer installment		32,345		34,249		37,335
Other		13,692		18,256		11,086

	$	1,695,382	$	1,618,454	$	1,492,753

Purchased non-covered loans are defined as loans that were acquired in bank acquisitions that are not covered by a loss-sharing agreement with the FDIC. Purchased non-covered loans totaling $437.3 million and $448.8 million at March 31, 2014 and December 31, 2013, 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:


(Dollars in Thousands)	March 31, 2014		December 31, 2013		March 31, 2013
Commercial, financial and agricultural	$	30,810	$	32,141	$	—
Real estate – construction and development		31,820		31,176		—
Real estate – commercial and farmland		174,281		179,898		—
Real estate – residential		196,078		200,851		—
Consumer installment		4,280		4,687		—

	$	437,269	$	448,753	$	—

Covered loans are defined as loans that were acquired in FDIC-assisted transactions that are covered by a loss-sharing agreement with the FDIC. Covered loans totaling $372.7 million, $390.2 million and $460.7 million at March 31, 2014, December 31, 2013 and March 31, 2013, 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:


(Dollars in Thousands)	March 31, 2014		December 31, 2013		March 31, 2013
Commercial, financial and agricultural	$	24,813	$	26,550	$	28,568
Real estate – construction and development		41,434		43,179		57,114
Real estate – commercial and farmland		214,649		224,451		260,159
Real estate – residential		91,372		95,173		113,668
Consumer installment		426		884		1,215

	$	372,694	$	390,237	$	460,724

Nonaccrual and Past Due Loans

A loan is placed on nonaccrual status when, in management’s judgment, the collection of the interest income appears doubtful. Interest receivable that has been accrued and is subsequently determined to have doubtful collectability is charged against interest income. Interest payments on nonaccrual loans are typically applied to principal unless collectability of the principal amount is reasonably assured, in which case interest is recognized on a cash basis. Loans are returned to accrual status when all the principal and interest amounts contractually due are brought current and future payments are reasonably assured. Past due loans are loans whose principal or interest is past due 90 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:


(Dollars in Thousands)	March 31, 2014		December 31, 2013		March 31, 2013
Commercial, financial and agricultural	$	3,008	$	4,103	$	3,756
Real estate – construction and development		4,080		3,971		9,390
Real estate – commercial and farmland		8,550		8,566		9,798
Real estate – residential		10,631		12,152		13,840
Consumer installment		460		411		692

	$	26,729	$	29,203	$	37,476

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


(Dollars in Thousands)	March 31, 2014		December 31, 2013		March 31, 2013
Commercial, financial and agricultural	$	117	$	11	$	—
Real estate – construction and development		1,131		325		—
Real estate – commercial and farmland		6,829		1,653		—
Real estate – residential		7,208		4,658		—
Consumer installment		33		12		—

	$	15,318	$	6,659	$	—

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


(Dollars in Thousands)	March 31, 2014		December 31, 2013		March 31, 2013
Commercial, financial and agricultural	$	10,025	$	7,257	$	8,718
Real estate – construction and development		14,780		14,781		18,956
Real estate – commercial and farmland		24,285		33,495		47,580
Real estate – residential		10,558		13,278		23,018
Consumer installment		133		341		243

	$	59,781	$	69,152	$	98,515

The following table presents an analysis of loans, excluding purchased non-covered and covered past due loans as of March 31, 2014, December 31, 2013 and March 31, 2013:


	Loans 30-59 Days Past Due		Loans 60-89 Days Past Due		Loans 90 or More Days Past Due		Total Loans Past Due		Current Loans		Total Loans		Loans 90 Days or More Past Due and Still Accruing
	(Dollars in Thousands)
As of March 31, 2014:
Commercial, financial & agricultural	$	1,083	$	386	$	2,956	$	4,425	$	266,146	$	270,571	$	—
Real estate – construction & development		1,304		249		3,919		5,472		144,071		149,543		—
Real estate – commercial & farmland		2,255		1,650		7,622		11,527		824,703		836,230		—
Real estate – residential		3,657		1,541		10,298		15,496		377,505		393,001		—
Consumer installment loans		474		68		345		887		31,458		32,345		—
Other		—		—		—		—		13,692		13,692		—

Total	$	8,773	$	3,894	$	25,140	$	37,807	$	1,657,575	$	1,695,382	$	—


	Loans 30-59 Days Past Due		Loans 60-89 Days Past Due		Loans 90 or More Days Past Due		Total Loans Past Due		Current Loans		Total Loans		Loans 90 Days or More Past Due and Still Accruing
	(Dollars in Thousands)
As of December 30, 2013:
Commercial, financial & agricultural	$	10,893	$	272	$	4,081	$	15,246	$	229,127	$	244,373	$	—
Real estate – construction & development		1,026		69		3,935		5,030		141,341		146,371		—
Real estate – commercial & farmland		3,981		1,388		7,751		13,120		795,203		808,323		—
Real estate – residential		5,422		1,735		11,587		18,744		348,138		366,882		—
Consumer installment loans		568		197		305		1,070		33,179		34,249		—
Other		—		—		—		—		18,256		18,256		—

Total	$	21,890	$	3,661	$	27,659	$	53,210	$	1,565,244	$	1,618,454	$	—


	Loans 30-59 Days Past Due		Loans 60-89 Days Past Due		Loans 90 or More Days Past Due		Total Loans Past Due		Current Loans		Total Loans		Loans 90 Days or More Past Due and Still Accruing
	(Dollars in Thousands)
As of March 31, 2013:
Commercial, financial & agricultural	$	1,797	$	149	$	3,729	$	5,675	$	175,213	$	180,888	$	—
Real estate – construction & development		1,538		1,538		8,312		11,388		118,773		130,161		—
Real estate – commercial & farmland		11,115		3,220		9,352		23,687		742,540		766,227		—
Real estate – residential		7,686		1,719		11,699		21,104		345,952		367,056		—
Consumer installment loans		745		169		563		1,477		35,858		37,335		—
Other		—		—		—		—		11,086		11,086		—

Total	$	22,881	$	6,795	$	33,655	$	63,331	$	1,429,422	$	1,492,753	$	—

The following table presents an analysis of purchased non-covered past due loans as of March 31, 2014 and December 31, 2013:


	Loans 30-59 Days Past Due		Loans 60-89 Days Past Due		Loans 90 or More Days Past Due		Total Loans Past Due		Current Loans		Total Loans		Loans 90 Days or More Past Due and Still Accruing
	(Dollars in Thousands)
As of March 31, 2014:
Commercial, financial & agricultural	$	291	$	—	$	117	$	408	$	30,402	$	30,810	$	—
Real estate – construction & development		680		661		867		2,208		29,612		31,820		—
Real estate – commercial & farmland		3,956		5,126		2,550		11,632		162,649		174,281		—
Real estate – residential		5,187		1,816		6,503		13,506		182,572		196,078		—
Consumer installment loans		12		11		30		53		4,227		4,280		—

Total	$	10,126	$	7,614	$	10,067	$	27,807	$	409,462	$	437,269	$	—


	Loans 30-59 Days Past Due		Loans 60-89 Days Past Due		Loans 90 or More Days Past Due		Total Loans Past Due		Current Loans		Total Loans		Loans 90 Days or More Past Due and Still Accruing
	(Dollars in Thousands)
As of December 30, 2013:
Commercial, financial & agricultural	$	370	$	70	$	11	$	451	$	31,690	$	32,141	$	—
Real estate – construction & development		1,008		89		325		1,422		29,754		31,176		—
Real estate – commercial & farmland		6,851		2,064		1,516		10,431		169,467		179,898		—
Real estate – residential		4,667		1,074		3,428		9,169		191,682		200,851		—
Consumer installment loans		7		17		9		33		4,654		4,687		—

Total	$	12,903	$	3,314	$	5,289	$	21,506	$	427,247	$	448,753	$	—

The following table presents an analysis of covered past due loans as of March 31, 2014, December 31, 2013 and March 31, 2013:


	Loans 30-59 Days Past Due		Loans 60-89 Days Past Due		Loans 90 or More Days Past Due		Total Loans Past Due		Current Loans		Total Loans		Loans 90 Days or More Past Due and Still Accruing
	(Dollars in Thousands)
As of March 31, 2014:
Commercial, financial & agricultural	$	688	$	55	$	8,976	$	9,719	$	15,094	$	24,813	$	—
Real estate – construction & development		4,248		302		14,472		19,022		22,412		41,434		—
Real estate – commercial & farmland		15,732		3,722		17,680		37,134		177,515		214,649		—
Real estate – residential		3,579		1,585		9,752		14,916		76,456		91,372		1,396
Consumer installment loans		2		50		103		155		271		426		—

Total	$	24,249	$	5,714	$	50,983	$	80,946	$	291,748	$	372,694	$	1,396


	Loans 30-59 Days Past Due		Loans 60-89 Days Past Due		Loans 90 or More Days Past Due		Total Loans Past Due		Current Loans		Total Loans		Loans 90 Days or More Past Due and Still Accruing
	(Dollars in Thousands)
As of December 30, 2013:
Commercial, financial & agricultural	$	3,966	$	12	$	6,165	$	10,143	$	16,407	$	26,550	$	—
Real estate – construction & development		843		144		14,055		15,042		28,137		43,179		—
Real estate – commercial & farmland		8,482		4,350		26,428		39,260		185,191		224,451		346
Real estate – residential		7,648		1,914		10,244		19,806		75,367		95,173		—
Consumer installment loans		51		14		305		370		514		884		—

Total	$	20,990	$	6,434	$	57,197	$	84,621	$	305,616	$	390,237	$	346


	Loans 30-59 Days Past Due		Loans 60-89 Days Past Due		Loans 90 or More Days Past Due		Total Loans Past Due		Current Loans		Total Loans		Loans 90 Days or More Past Due and Still Accruing
	(Dollars in Thousands)
As of March 31, 2013:
Commercial, financial & agricultural	$	756	$	314	$	7,270	$	8,340	$	20,228	$	28,568	$	98
Real estate – construction & development		3,971		876		17,415		22,262		34,852		57,114		—
Real estate – commercial & farmland		10,227		2,837		42,464		55,528		204,631		260,159		—
Real estate – residential		5,608		345		18,895		24,848		88,820		113,668		48
Consumer installment loans		41		11		205		257		958		1,215		—

Total	$	20,603	$	4,383	$	86,249	$	111,235	$	349,489	$	460,724	$	146

Impaired Loans

Loans are considered impaired when, based on current information and events, it is probable the Company will be unable to collect all amounts due in accordance with the original contractual terms of the loan agreements. When determining if the Company will be unable to collect all principal and interest payments due in accordance with the contractual terms of the loan agreement, the Company considers the borrower’s capacity to pay, which includes such factors as the borrower’s current financial statements, an analysis of global cash flow sufficient to pay all debt obligations and an evaluation of secondary sources of repayment, such as guarantor support and collateral value. Impaired loans include loans on nonaccrual status and troubled debt restructurings. The Company individually assesses for impairment all nonaccrual loans greater than $200,000 and rated substandard or worse and all troubled debt restructurings greater than $100,000. If a loan is deemed impaired, a specific valuation allowance is allocated, if necessary, so that the loan is reported net, at the present value of estimated future cash flows using the loan’s existing rate or at the fair value of collateral if repayment is expected solely from the collateral. Interest payments on impaired loans are typically applied to principal unless collectability of the principal amount is reasonably assured, in which case interest is recognized on a cash basis.

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, 2014		December 31, 2013		March 31, 2013
	(Dollars in Thousands)
Nonaccrual loans	$	26,729	$	29,203	$	37,476
Troubled debt restructurings not included above		18,848		17,214		18,513

Total impaired loans	$	45,577	$	46,417	$	55,989

Impaired loans not requiring a related allowance	$	—	$	—	$	—

Impaired loans requiring a related allowance	$	45,577	$	46,417	$	55,989

Allowance related to impaired loans	$	4,324	$	3,871	$	4,839

Average investment in impaired loans	$	45,997	$	51,721	$	56,808

Interest income recognized on impaired loans	$	20	$	522	$	78

Foregone interest income on impaired loans	$	246	$	418	$	54

The following table presents an analysis of information pertaining to impaired loans, excluding purchased non-covered and covered loans as of March 31, 2014, December 31, 2013 and March 31, 2013:


	Unpaid Contractual Principal Balance		Recorded Investment With No Allowance		Recorded Investment With Allowance		Total Recorded Investment		Related Allowance		Average Recorded Investment
	(Dollars in Thousands)
As of March 31, 2014:
Commercial, financial & agricultural	$	5,421	$	—	$	3,719	$	3,719	$	394	$	4,169
Real estate – construction & development		10,636		—		6,033		6,033		736		5,950
Real estate – commercial & farmland		19,983		—		17,282		17,282		1,972		16,380
Real estate – residential		21,307		—		17,996		17,996		1,211		18,983
Consumer installment loans		688		—		547		547		11		515

Total	$	58,035	$	—	$	45,577	$	45,577	$	4,324	$	45,997


	Unpaid Contractual Principal Balance		Recorded Investment With No Allowance		Recorded Investment With Allowance		Total Recorded Investment		Related Allowance		Average Recorded Investment
	(Dollars in Thousands)
As of December 31, 2013:
Commercial, financial & agricultural	$	6,240	$	—	$	4,618	$	4,618	$	435	$	4,844
Real estate – construction & development		11,363		—		5,867		5,867		512		8,341
Real estate – commercial & farmland		18,456		—		15,479		15,479		1,443		17,559
Real estate – residential		24,342		—		19,970		19,970		1,472		20,335
Consumer installment loans		623		—		483		483		9		642

Total	$	61,024	$	—	$	46,417	$	46,417	$	3,871	$	51,721


	Unpaid Contractual Principal Balance		Recorded Investment With No Allowance		Recorded Investment With Allowance		Total Recorded Investment		Related Allowance		Average Recorded Investment
	(Dollars in Thousands)
As of March 31, 2013:
Commercial, financial & agricultural	$	7,818	$	—	$	4,555	$	4,555	$	740	$	4,747
Real estate – construction & development		20,633		—		11,273		11,273		922		11,144
Real estate – commercial & farmland		22,996		—		18,676		18,676		1,816		19,793
Real estate – residential		24,777		—		20,792		20,792		1,344		20,320
Consumer installment loans		920		—		693		693		17		804

Total	$	77,144	$	—	$	55,989	$	55,989	$	4,839	$	56,808

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


	As of and For the Period Ended
	March 31, 2014		December 31, 2013		March 31, 2013
	(Dollars in Thousands)
Nonaccrual loans	$	15,318	$	6,659	$	—
Troubled debt restructurings not included above		5,191		5,938		—

Total impaired loans	$	20,509	$	12,597	$	—

Impaired loans not requiring a related allowance	$	20,509	$	12,597	$	—

Impaired loans requiring a related allowance	$	—	$	—	$	—

Allowance related to impaired loans	$	—	$	—	$	—

Average investment in impaired loans	$	16,553	$	242	$	—

Interest income recognized on impaired loans	$	—	$	—	$	—

Foregone interest income on impaired loans	$	563	$	—	$	—

The following table presents an analysis of information pertaining to impaired purchased non-covered loans as of March 31, 2014 and December 31, 2013:


	Unpaid Contractual Principal Balance		Recorded Investment With No Allowance		Recorded Investment With Allowance		Total Recorded Investment		Related Allowance		Average Recorded Investment
	(Dollars in Thousands)
As of March 31, 2014:
Commercial, financial & agricultural	$	233	$	117	$	—	$	117	$	—	$	64
Real estate – construction & development		6,173		3,574		—		3,574		—		3,631
Real estate – commercial & farmland		12,966		7,790		—		7,790		—		5,336
Real estate – residential		15,524		8,987		—		8,987		—		7,483
Consumer installment loans		240		41		—		41		—		39

Total	$	35,136	$	20,509	$	—	$	20,509	$	—	$	16,553


	Unpaid Contractual Principal Balance		Recorded Investment With No Allowance		Recorded Investment With Allowance		Total Recorded Investment		Related Allowance		Average Recorded Investment
	(Dollars in Thousands)
As of December 31, 2013:
Commercial, financial & agricultural	$	19	$	11	$	—	$	11	$	—	$	—
Real estate – construction & development		5,719		3,690		—		3,690		—		71
Real estate – commercial & farmland		4,563		2,881		—		2,881		—		55
Real estate – residential		9,612		5,978		—		5,978		—		115
Consumer installment loans		57		37		—		37		—		1

Total	$	19,970	$	12,597	$	—	$	12,597	$	—	$	242

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


	As of and For the Period Ended
	March 31, 2014		December 31, 2013		March 31, 2013
	(Dollars in Thousands)
Nonaccrual loans	$	59,781	$	69,152	$	98,515
Troubled debt restructurings not included above		22,775		22,243		21,592

Total impaired loans	$	82,556	$	91,395	$	120,107

Impaired loans not requiring a related allowance	$	82,556	$	91,395	$	120,107

Impaired loans requiring a related allowance	$	—	$	—	$	—

Allowance related to impaired loans	$	—	$	—	$	—

Average investment in impaired loans	$	86,976	$	110,830	$	127,507

Interest income recognized on impaired loans	$	155	$	968	$	169

Foregone interest income on impaired loans	$	10	$	330	$	147

The following table presents an analysis of information pertaining to impaired covered loans as of March 31, 2014, December 31, 2013 and March 31, 2013:


	Unpaid Contractual Principal Balance		Recorded Investment With No Allowance		Recorded Investment With Allowance		Total Recorded Investment		Related Allowance		Average Recorded Investment
	(Dollars in Thousands)
As of March 31, 2014:
Commercial, financial & agricultural	$	12,143	$	10,039	$	—	$	10,039	$	—	$	8,655
Real estate – construction & development		20,704		18,034		—		18,034		—		18,036
Real estate – commercial & farmland		36,664		31,746		—		31,746		—		36,247
Real estate – residential		25,230		22,604		—		22,604		—		23,801
Consumer installment loans		167		133		—		133		—		237

Total	$	94,908	$	82,556	$	—	$	82,556	$	—	$	86,976


	Unpaid Contractual Principal Balance		Recorded Investment With No Allowance		Recorded Investment With Allowance		Total Recorded Investment		Related Allowance		Average Recorded Investment
	(Dollars in Thousands)
As of December 31, 2013:
Commercial, financial & agricultural	$	9,680	$	7,270	$	—	$	7,270	$	—	$	8,696
Real estate – construction & development		20,915		18,037		—		18,037		—		21,794
Real estate – commercial & farmland		46,612		40,749		—		40,749		—		51,584
Real estate – residential		29,089		24,998		—		24,998		—		28,452
Consumer installment loans		394		341		—		341		—		304

Total	$	106,690	$	91,395	$	—	$	91,395	$	—	$	110,830


	Unpaid Contractual Principal Balance		Recorded Investment With No Allowance		Recorded Investment With Allowance		Total Recorded Investment		Related Allowance		Average Recorded Investment
	(Dollars in Thousands)
As of March 31, 2013:
Commercial, financial & agricultural	$	24,301	$	8,754	$	—	$	8,754	$	—	$	9,778
Real estate – construction & development		78,421		23,978		—		23,978		—		23,607
Real estate – commercial & farmland		139,197		55,822		—		55,822		—		60,026
Real estate – residential		54,422		31,310		—		31,310		—		33,823
Consumer installment loans		324		243		—		243		—		273

Total	$	296,665	$	120,107	$	—	$	120,107	$	—	$	127,507

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, 2014:


Risk Grade	Commercial, financial & agricultural		Real estate - construction & development		Real estate - commercial & farmland		Real estate - residential		Consumer installment loans		Other		Total
	(Dollars in Thousands)
10	$	86,688	$	—	$	259	$	478	$	6,380	$	—	$	93,805
15		26,730		5,483		153,285		57,119		1,346		—		243,963
20		90,692		48,872		454,292		192,492		17,678		13,692		817,718
23		120		9,111		9,784		11,765		276		—		31,056
25		55,827		76,962		178,174		100,634		5,580		—		417,177
30		5,386		2,889		15,324		14,440		201		—		38,240
40		5,001		6,226		25,112		16,063		884		—		53,286
50		127		—		—		10		—		—		137
60		—		—		—		—		—		—		—

Total	$	270,571	$	149,543	$	836,230	$	393,001	$	32,345	$	13,692	$	1,695,382

The following table presents the loan portfolio, excluding purchased non-covered and covered loans, by risk grade as of December 31, 2013:


Risk Grade	Commercial, financial & agricultural		Real estate - construction & development		Real estate - commercial & farmland		Real estate - residential		Consumer installment loans		Other		Total
	(Dollars in Thousands)
10	$	66,983	$	—	$	265	$	419	$	6,714	$	—	$	74,381
15		24,789		4,655		147,157		52,335		1,276		—		230,212
20		93,852		45,195		431,790		165,339		18,619		18,256		773,051
23		127		8,343		10,219		12,641		274		—		31,604
25		50,373		78,736		181,645		103,427		6,310		—		420,491
30		2,111		2,876		11,849		13,558		197		—		30,591
40		6,011		6,566		25,398		19,153		859		—		57,987
50		127		—		—		10		—		—		137
60		—		—		—		—		—		—		—

Total	$	244,373	$	146,371	$	808,323	$	366,882	$	34,249	$	18,256	$	1,618,454

The following table presents the loan portfolio, excluding purchased non-covered and covered loans, by risk grade as of March 31, 2013:


Risk Grade	Commercial, financial & agricultural		Real estate - construction & development		Real estate - commercial & farmland		Real estate - residential		Consumer installment loans		Other		Total
	(Dollars in Thousands)
10	$	32,223	$	—	$	304	$	500	$	7,241	$	—	$	40,268
15		11,569		4,794		146,563		68,212		1,635		—		232,773
20		75,503		34,947		385,984		138,634		19,623		11,086		665,777
23		45		6,606		8,970		13,662		120		—		29,403
25		52,631		66,012		187,567		112,096		7,340		—		425,646
30		3,324		6,004		12,334		10,573		250		—		32,485
40		5,494		11,643		24,505		23,379		1,126		—		66,147
50		99		155		—		—		—		—		254
60		—		—		—		—		—		—		—

Total	$	180,888	$	130,161	$	766,227	$	367,056	$	37,335	$	11,086	$	1,492,753

The following table presents the purchased non-covered loan portfolio by risk grade as of March 31, 2014:


Risk Grade	Commercial, financial & agricultural		Real estate - construction & development		Real estate - commercial & farmland		Real estate - residential		Consumer installment loans		Other		Total
	(Dollars in Thousands)
10	$	1,932	$	—	$	—	$	287	$	328	$	—	$	2,547
15		4,408		52		12,422		14,231		679		—		31,792
20		4,596		3,907		43,132		33,553		1,218		—		86,406
23		—		—		—		—		—		—		—
25		19,213		22,780		102,918		134,653		1,965		—		281,529
30		235		697		3,387		2,660		20		—		6,999
40		426		4,384		12,422		10,694		70		—		27,996
50		—		—		—		—		—		—		—
60		—		—		—		—		—		—		—

Total	$	30,810	$	31,820	$	174,281	$	196,078	$	4,280	$	—	$	437,269

The following table presents the purchased non-covered loan portfolio by risk grade as of December 31, 2013:


Risk Grade	Commercial, financial & agricultural		Real estate - construction & development		Real estate - commercial & farmland		Real estate - residential		Consumer installment loans		Other		Total
	(Dollars in Thousands)
10	$	1,865	$	—	$	—	$	289	$	451	$	—	$	2,605
15		4,606		7		12,998		16,160		703		—		34,474
20		5,172		3,960		43,802		34,576		1,383		—		88,893
23		—		—		—		—		—		—		—
25		19,638		20,733		102,260		129,923		1,888		—		274,442
30		576		1,760		9,554		10,878		194		—		22,962
40		284		4,716		11,284		9,025		68		—		25,377
50		—		—		—		—		—		—		—
60		—		—		—		—		—		—		—

Total	$	32,141	$	31,176	$	179,898	$	200,851	$	4,687	$	—	$	448,753

The following table presents the covered loan portfolio by risk grade as of March 31, 2014:


Risk Grade	Commercial, financial & agricultural		Real estate - construction & development		Real estate - commercial & farmland		Real estate - residential		Consumer installment loans		Other		Total
	(Dollars in Thousands)
10	$	—	$	—	$	—	$	—	$	—	$	—	$	—
15		—		10		1,024		650		—		—		1,684
20		1,769		7,760		35,625		19,613		151		—		64,918
23		139		978		17,416		4,870		51		—		23,454
25		6,921		9,182		101,948		38,140		42		—		156,233
30		5,106		1,185		17,625		7,025		3		—		30,944
40		10,878		22,319		41,011		21,074		179		—		95,461
50		—		—		—		—		—		—		—
60		—		—		—		—		—		—		—

Total	$	24,813	$	41,434	$	214,649	$	91,372	$	426	$	—	$	372,694

The following table presents the covered loan portfolio by risk grade as of December 31, 2013:


Risk Grade	Commercial, financial & agricultural		Real estate - construction & development		Real estate - commercial & farmland		Real estate - residential		Consumer installment loans		Other		Total
	(Dollars in Thousands)
10	$	—	$	—	$	—	$	—	$	—	$	—	$	—
15		—		16		1,048		638		—		—		1,702
20		2,184		8,549		34,674		21,363		193		—		66,963
23		134		1,085		17,037		4,748		51		—		23,055
25		7,508		9,611		101,657		38,427		235		—		157,438
30		5,125		2,006		21,297		6,979		17		—		35,424
40		11,599		21,912		48,738		23,018		388		—		105,655
50		—		—		—		—		—		—		—
60		—		—		—		—		—		—		—

Total	$	26,550	$	43,179	$	224,451	$	95,173	$	884	$	—	$	390,237

The following table presents the covered loan portfolio by risk grade as of March 31, 2013:


Risk Grade	Commercial, financial & agricultural		Real estate - construction & development		Real estate - commercial & farmland		Real estate - residential		Consumer installment loans		Other		Total
	(Dollars in Thousands)
10	$	—	$	—	$	—	$	—	$	—	$	—	$	—
15		—		34		1,598		638		—		—		2,270
20		3,117		11,106		36,020		27,547		266		—		78,056
23		75		1,248		9,153		1,946		—		—		12,422
25		8,135		10,184		110,985		40,863		508		—		170,675
30		2,979		4,457		35,601		8,784		50		—		51,871
40		14,262		30,085		66,802		33,890		391		—		145,430
50		—		—		—		—		—		—		—
60		—		—		—		—		—		—		—

Total	$	28,568	$	57,114	$	260,159	$	113,668	$	1,215	$	—	$	460,724

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 Senior 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 2014 and 2013 totaling $6.3 million and $27.4 million, respectively, under such parameters. In addition, the Company offers consumer loan customers an annual skip-a-pay program that is based on certain qualifying parameters and not based on financial difficulties. The Company does not treat these as troubled debt restructurings.

As of March 31, 2014, December 31, 2013 and March 31, 2013, the Company had a balance of $21.2 million, $20.9 million and $23.3 million, respectively, in troubled debt restructurings, excluding purchased non-covered and covered loans. The Company has recorded $2.3 million, $2.1 million and $2.6 million in previous charge-offs on such loans at March 31, 2014, December 31, 2013 and March 31, 2013, respectively. The Company’s balance in the allowance for loan losses allocated to such troubled debt restructurings was $422,000, $432,000 and $591,000 at March 31, 2014, December 31, 2013 and March 31, 2013, respectively. At March 31, 2014, the Company did not have any commitments to lend additional funds to debtors whose terms have been modified in troubled restructurings

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 non-accrual at March 31, 2014, December 31, 2013 and March 31, 2013:


As of March 31, 2014	Accruing Loans				Non-Accruing Loans
Loan class:	#		Balance *(in thousands)*		#		Balance *(in thousands)*
Commercial, financial & agricultural		4	$	711		2	$	40
Real estate – construction & development		11		1,953		1		29
Real estate – commercial & farmland		19		8,733		5		1,316
Real estate – residential		35		7,364		8		961
Consumer installment		11		87		2		19

Total		80	$	18,848		18	$	2,365


As of December 31, 2013	Accruing Loans				Non-Accruing Loans
Loan class:	#		Balance *(in thousands)*		#		Balance *(in thousands)*
Commercial, financial & agricultural		4	$	515		3	$	525
Real estate – construction & development		8		1,896		2		32
Real estate – commercial & farmland		17		6,913		4		2,273
Real estate – residential		37		7,818		8		834
Consumer installment		6		72		3		19

Total		72	$	17,214		20	$	3,683


As of March 31, 2013	Accruing Loans				Non-Accruing Loans
Loan class:	#		Balance *(in thousands)*		#		Balance *(in thousands)*
Commercial, financial & agricultural		5	$	799		—	$	—
Real estate – construction & development		5		1,883		1		43
Real estate – commercial & farmland		16		8,878		3		3,595
Real estate – residential		26		6,953		3		1,111
Consumer installment		—		—		1		6

Total		52	$	18,513		8	$	4,755

The following table presents the amount of troubled debt restructurings by loan class, excluding purchased non-covered and covered loans, classified separately as those currently paying under restructured terms and those that have defaulted under restructured terms at March 31, 2014, December 31, 2013 and March 31, 2013:


As of March 31, 2014	Loans Currently Paying Under Restructured Terms				Loans that have Defaulted Under Restructured Terms
Loan class:	#		Balance *(in thousands)*		#		Balance *(in thousands)*
Commercial, financial & agricultural		4	$	268		2	$	482
Real estate – construction & development		10		1,916		2		66
Real estate – commercial & farmland		19		8,733		5		1,316
Real estate – residential		30		6,365		13		1,961
Consumer installment		11		80		2		26

Total		74	$	17,362		24	$	3,851


As of December 31, 2013	Loans Currently Paying Under Restructured Terms				Loans that have Defaulted Under Restructured Terms
Loan class:	#		Balance *(in thousands)*		#		Balance *(in thousands)*
Commercial, financial & agricultural		4	$	515		3	$	525
Real estate – construction & development		8		1,896		2		32
Real estate – commercial & farmland		16		6,396		5		2,789
Real estate – residential		32		6,699		13		1,953
Consumer installment		7		90		2		2

Total		67	$	15,596		25	$	5,301


As of March 31, 2013	Loans Currently Paying Under Restructured Terms				Loans that have Defaulted Under Restructured Terms
Loan class:	#		Balance *(in thousands)*		#		Balance *(in thousands)*
Commercial, financial & agricultural		5	$	799		—	$	—
Real estate – construction & development		5		1,883		1		43
Real estate – commercial & farmland		16		8,878		3		3,595
Real estate – residential		26		6,953		3		1,111
Consumer installment		—		—		1		6

Total		52	$	18,513		8	$	4,755

The following table presents the amount of troubled debt restructurings, excluding purchased non-covered and covered loans, by types of concessions made, classified separately as accrual and non-accrual at March 31, 2014, December 31, 2013 and March 31, 2013:


As of March 31, 2014	Accruing Loans				Non-Accruing Loans
Type of Concession:	#		Balance *(in thousands)*		#		Balance *(in thousands)*
Forbearance of Interest		8	$	1,933		4	$	300
Forgiveness of Principal		4		1,957		1		516
Payment Modification Only		—		—		1		149
Rate Reduction Only		13		6,782		4		1,134
Rate Reduction, Forbearance of Interest		38		5,489		6		230
Rate Reduction, Forbearance of Principal		17		2,687		1		7
Rate Reduction, Payment Modification		—		—		1		29

Total		80	$	18,848		18	$	2,365


As of December 31, 2013	Accruing Loans				Non-Accruing Loans
Type of Concession:	#		Balance *(in thousands)*		#		Balance *(in thousands)*
Forbearance of Interest		10	$	2,170		2	$	97
Forgiveness of Principal		3		1,467		1		145
Payment Modification Only		1		280		1		88
Rate Reduction Only		14		7,069		3		913
Rate Reduction, Forbearance of Interest		26		3,252		12		2,411
Rate Reduction, Forbearance of Principal		18		2,976		—		—
Rate Reduction, Payment Modification		—		—		1		29

Total		72	$	17,214		20	$	3,683


As of March 31, 2013	Accruing Loans				Non-Accruing Loans
Type of Concession:	#		Balance *(in thousands)*		#		Balance *(in thousands)*
Forbearance of Interest		2	$	1,843		—	$	—
Forgiveness of Principal		3		1,504		1		207
Payment Modification Only		2		376		—		—
Rate Reduction Only		10		7,033		2		182
Rate Reduction, Forbearance of Interest		17		4,046		2		3,100
Rate Reduction, Forbearance of Principal		18		3,711		1		255
Rate Reduction, Payment Modification		—		—		2		1,011

Total		52	$	18,513		8	$	4,755

The following table presents the amount of troubled debt restructurings, excluding purchased non-covered and covered loans, by collateral types, classified separately as accrual and non-accrual at March 31, 2014, December 31, 2013 and March 31, 2013:


As of March 31, 2014	Accruing Loans				Non-Accruing Loans
Collateral type:	#		Balance *(in thousands)*		#		Balance *(in thousands)*
Warehouse		4	$	1,345		2	$	586
Raw Land		5		1,298		1		29
Agriculture		1		311		1		66
Hotel & Motel		3		2,154		—		—
Office		4		1,652		1		149
Retail, including Strip Centers		6		2,905		1		516
1-4 Family Residential		42		8,027		9		978
Church		1		365		—		—
Automobile/Equipment/Inventory		13		548		3		41
Unsecured		1		243		—		—

Total		80	$	18,848		18	$	2,365


As of December 31, 2013	Accruing Loans				Non-Accruing Loans
Collateral type:	#		Balance *(in thousands)*		#		Balance *(in thousands)*
Warehouse		4	$	1,346		2	$	592
Raw Land		11		2,345		2		32
Hotel & Motel		3		2,185		—		—
Office		4		1,909		—		—
Retail, including Strip Centers		4		1,095		2		1,680
1-4 Family Residential		36		7,747		9		852
Life Insurance Policy		1		250		—		—
Automobile/Equipment/Inventory		8		92		4		479
Unsecured		1		245		1		48

Total		72	$	17,214		20	$	3,683


As of March 31, 2013	Accruing Loans				Non-Accruing Loans
Collateral type:	#		Balance *(in thousands)*		#		Balance *(in thousands)*
Warehouse		3	$	1,689		1	$	176
Raw Land		1		1,285		1		43
Hotel & Motel		3		2,273		—		—
Office		4		2,095		1		2,450
Retail, including Strip Centers		6		2,821		1		969
1-4 Family Residential		30		7,550		3		1,111
Life Insurance Policy		1		250		—		—
Automobile/Equipment/Inventory		3		500		1		6
Unsecured		1		50		—		—

Total		52	$	18,513		8	$	4,755

As of March 31, 2014 and December 31, 2013, the Company had a balance of $6.5 million and $7.2 million, respectively, in troubled debt restructurings included in purchased non-covered loans. The Company has recorded $345,000 in previous charge-offs on such loans at March 31, 2014. The Company had not recorded any previous charge-offs on such loans at December 31, 2013. At March 31, 2014, the Company did not have any commitments to lend additional funds to debtors whose terms have been modified in troubled restructurings.

The following table presents the amount of troubled debt restructurings by loan class of purchased non-covered loans, classified separately as accrual and non-accrual at March 31, 2014 and December 31, 2013.


As of March 31, 2014	Accruing Loans				Non-Accruing Loans
Loan class:	#		Balance (in thousands)		#		Balance (in thousands)
Commercial, financial & agricultural		—	$	—		1	$	6
Real estate – construction & development		7		2,443		2		264
Real estate – commercial & farmland		2		961		2		726
Real estate – residential		12		1,779		4		255
Consumer installment		1		8		2		17

Total		22	$	5,191		11	$	1,268


As of December 31, 2013	Accruing Loans				Non-Accruing Loans
Loan class:	#		Balance (in thousands)		#		Balance (in thousands)
Commercial, financial & agricultural		—	$	—		1	$	6
Real estate – construction & development		10		3,364		—		—
Real estate – commercial & farmland		3		1,228		1		468
Real estate – residential		8		1,321		8		738
Consumer installment		3		25		—		—

Total		24	$	5,938		10	$	1,212

The following table presents the amount of troubled debt restructurings by loan class of purchased non-covered loans, classified separately as those currently paying under restructured terms and those that have defaulted under restructured terms at March 31, 2014 and December 31, 2013.


As of March 31, 2014	Loans Currently Paying Under Restructured Terms				Loans that have Defaulted Under Restructured Terms
Loan class:	#		Balance (in thousands)		#		Balance (in thousands)
Commercial, financial & agricultural		—	$	—		1	$	6
Real estate – construction & development		6		2,244		3		463
Real estate – commercial & farmland		—		—		4		1,687
Real estate – residential		8		1,187		8		847
Consumer installment		1		8		2		17

Total		15	$	3,439		18	$	3,020


As of December 31, 2013	Loans Currently Paying Under Restructured Terms				Loans that have Defaulted Under Restructured Terms
Loan class:	#		Balance (in thousands)		#		Balance (in thousands)
Commercial, financial & agricultural		—	$	—		1	$	6
Real estate – construction & development		1		8		2		17
Real estate – commercial & farmland		8		3,068		2		296
Real estate – residential		—		—		4		1,696
Consumer installment		7		1,153		9		906

Total		16	$	4,229		18	$	2,921

The following table presents the amount of troubled debt restructurings included in purchased non-covered loans, by types of concessions made, classified separately as accrual and non-accrual at March 31, 2014 and December 31, 2013.


As of March 31, 2014	Accruing Loans				Non-Accruing Loans
Type of Concession:	#		Balance (in thousands)		#		Balance (in thousands)
Forbearance of Principal		1	$	299		—	$	—
Forgiveness of Principal		1		164		1		259
Payment Modification Only		1		61		1		13
Rate Reduction Only		12		2,354		7		491
Rate Reduction, Forbearance of Principal		7		2,313		2		505

Total		22	$	5,191		11	$	1,268


As of December 31, 2013	Accruing Loans				Non-Accruing Loans
Type of Concession:	#		Balance (in thousands)		#		Balance (in thousands)
Forbearance of Interest		1	$	300		—	$	—
Forgiveness of Principal		2		425		—		—
Payment Modification Only		2		75		—		—
Rate Reduction Only		11		2,170		8		707
Rate Reduction, Forbearance of Principal		8		2,968		2		505

Total		24	$	5,938		10	$	1,212

The following table presents the amount of troubled debt restructurings included in purchased non-covered loans, by collateral types, classified separately as accrual and non-accrual at March 31, 2014 and December 31, 2013.


As of March 31, 2014	Accruing Loans				Non-Accruing Loans
Collateral type:	#		Balance (in thousands)		#		Balance (in thousands)
Warehouse		—	$	—		1	$	467
Raw Land		5		1,988		—		—
Office		1		798		—		—
Retail, including Strip Centers		1		164		1		259
1-4 Family Residential		15		2,241		6		519
Automobile/Equipment/Inventory		—		—		3		23

Total		22	$	5,191		11	$	1,268


As of December 31, 2013	Accruing Loans				Non-Accruing Loans
Collateral type:	#		Balance (in thousands)		#		Balance (in thousands)
Warehouse		—	$	—		1	$	468
Raw Land		6		2,640		—		—
Office		1		803		—		—
Retail, including Strip Centers		2		425		—		—
1-4 Family Residential		13		2,053		8		738
Automobile/Equipment/Inventory		2		17		1		6

Total		24	$	5,938		10	$	1,212

As of March 31, 2014, December 31, 2013 and March 31, 2013, the Company had a balance of $22.8 million, $27.3 million and $27.6 million, respectively, in troubled debt restructurings included in covered loans. The Company has recorded $3.2 million, $1.6 million and $6.6 million in previous charge-offs on such loans at March 31, 2014, December 31, 2013 and March 31, 2013, respectively. At March 31, 2014, the Company did not have any commitments to lend additional funds to debtors whose terms have been modified in troubled restructurings.

The following table presents the amount of troubled debt restructurings by loan class of covered loans, classified separately as accrual and non-accrual at March 31, 2014, December 31, 2013 and March 31, 2013.


As of March 31, 2014	Accruing Loans				Non-Accruing Loans
Loan class:	#		Balance (in thousands)		#		Balance (in thousands)
Commercial, financial & agricultural		1	$	14		5	$	68
Real estate – construction & development		3		3,254		5		49
Real estate – commercial & farmland		14		7,461		7		3,872
Real estate – residential		85		12,046		9		1,031
Consumer installment		—		—		1		5

Total		103	$	22,775		27	$	5,025


As of December 31, 2013	Accruing Loans				Non-Accruing Loans
Loan class:	#		Balance (in thousands)		#		Balance (in thousands)
Commercial, financial & agricultural		1	$	13		5	$	71
Real estate – construction & development		3		3,256		4		52
Real estate – commercial & farmland		13		7,255		5		3,946
Real estate – residential		83		11,719		8		942
Consumer installment		—		—		2		10

Total		100	$	22,243		24	$	5,021


As of March 31, 2013	Accruing Loans				Non-Accruing Loans
Loan class:	#		Balance (in thousands)		#		Balance (in thousands)
Commercial, financial & agricultural		1	$	36		1	$	—
Real estate – construction & development		8		5,022		3		788
Real estate – commercial & farmland		13		6,438		6		4,984
Real estate – residential		53		8,266		9		2,016
Consumer installment		—		—		1		6

Total		75	$	19,762		20	$	7,794

The following table presents the amount of troubled debt restructurings by loan class of covered loans, classified separately as those currently paying under restructured terms and those that have defaulted under restructured terms at March 31, 2013, December 31, 2013 and March 31, 2013.


As of March 31, 2014	Loans Currently Paying Under Restructured Terms				Loans that have Defaulted Under Restructured Terms
Loan class:	#		Balance (in thousands)		#		Balance (in thousands)
Commercial, financial & agricultural		5	$	43		1	$	40
Real estate – construction & development		2		374		6		2,928
Real estate – commercial & farmland		18		6,962		3		4,370
Real estate – residential		75		9,576		19		3,502
Consumer installment		1		5		—		—

Total		101	$	16,960		29	$	10,840


As of December 31, 2013	Loans Currently Paying Under Restructured Terms				Loans that have Defaulted Under Restructured Terms
Loan class:	#		Balance (in thousands)		#		Balance (in thousands)
Commercial, financial & agricultural		5	$	45		1	$	40
Real estate – construction & development		5		3,273		2		34
Real estate – commercial & farmland		15		7,543		3		3,658
Real estate – residential		68		9,206		23		3,455
Consumer installment		2		10		—		—

Total		95	$	20,077		29	$	7,187


As of March 31, 2013	Loans Currently Paying Under Restructured Terms				Loans that have Defaulted Under Restructured Terms
Loan class:	#		Balance (in thousands)		#		Balance (in thousands)
Commercial, financial & agricultural		1	$	36		1	$	—
Real estate – construction & development		8		5,022		3		788
Real estate – commercial & farmland		14		6,603		5		4,819
Real estate – residential		52		8,373		10		1,909
Consumer installment		1		6		—		—

Total		76	$	20,040		19	$	7,516

The following table presents the amount of troubled debt restructurings included in covered loans, by types of concessions made, classified separately as accrual and non-accrual at March 31, 2014, December 31, 2013 and March 31, 2013.


As of March 31, 2014	Accruing Loans				Non-Accruing Loans
Type of Concession:	#		Balance (in thousands)		#		Balance (in thousands)
Forbearance of Interest		—	$	—		4	$	127
Forgiveness of Principal		—		—		—		—
Payment Modification Only		—		—		—		—
Rate Reduction Only		90		18,578		10		1,043
Rate Reduction, Forbearance of Interest		3		88		8		471
Rate Reduction, Forbearance of Principal		9		3,259		5		3,384
Rate Reduction, Payment Modification		1		850		—		—

Total		103	$	22,775		27	$	5,025


As of December 31, 2013	Accruing Loans				Non-Accruing Loans
Type of Concession:	#		Balance (in thousands)		#		Balance (in thousands)
Forbearance of Interest		—	$	—		3	$	98
Forgiveness of Principal		—		—		—		—
Payment Modification Only		—		—		—		—
Rate Reduction Only		89		18,687		9		953
Rate Reduction, Forbearance of Interest		3		88		8		478
Rate Reduction, Forbearance of Principal		7		2,613		4		3,492
Rate Reduction, Payment Modification		1		855		—		—

Total		100	$	22,243		24	$	5,021


As of March 31, 2013	Accruing Loans				Non-Accruing Loans
Type of Concession:	#		Balance (in thousands)		#		Balance (in thousands)
Forbearance of Interest		3	$	232		6	$	1,077
Forgiveness of Principal		—		—		1		—
Payment Modification Only		—		—		—		—
Rate Reduction Only		61		15,897		8		1,820
Rate Reduction, Forbearance of Interest		4		456		2		1,362
Rate Reduction, Forbearance of Principal		6		2,322		3		3,535
Rate Reduction, Payment Modification		1		855		—		—

Total		75	$	19,762		20	$	7,794

The following table presents the amount of troubled debt restructurings included in covered loans, by collateral types, classified separately as accrual and non-accrual at March 31, 2014, December 31, 2013 and March 31, 2013.


As of March 31, 2014	Accruing Loans				Non-Accruing Loans
Collateral type:	#		Balance (in thousands)		#		Balance (in thousands)
Warehouse		—	$	—		2	$	486
Raw Land		1		374		5		59
Hotel & Motel		7		4,867		—		—
Office		2		1,342		1		73
Retail, including Strip Centers		5		3,819		3		3,287
1-4 Family Residential		87		12,359		11		1,052
Automobile/Equipment/Inventory		—		—		5		68
Unsecured		1		14		—		—

Total		103	$	22,775		27	$	5,025


As of December 31, 2013	Accruing Loans				Non-Accruing Loans
Collateral type:	#		Balance (in thousands)		#		Balance (in thousands)
Warehouse		—	$	—		1	$	377
Raw Land		1		375		3		37
Hotel & Motel		6		5,118		1		155
Office		1		855		1		78
Retail, including Strip Centers		6		3,853		2		3,337
1-4 Family Residential		85		12,029		11		966
Automobile/Equipment/Inventory		—		—		5		71
Unsecured		1		13		—		—

Total		100	$	22,243		24	$	5,021


As of March 31, 2013	Accruing Loans				Non-Accruing Loans
Collateral type:	#		Balance (in thousands)		#		Balance (in thousands)
Warehouse		1	$	379		—	$	—
Raw Land		4		2,496		2		772
Hotel & Motel		6		3,650		1		166
Office		1		855		1		87
Retail, including Strip Centers		7		3,769		4		4,732
1-4 Family Residential		54		8,563		11		2,037
Automobile/Equipment/Inventory		1		36		1		—
Unsecured		1		14		—		—

Total		75	$	19,762		20	$	7,794

Allowance for Loan Losses

The allowance for loan losses represents a reserve for inherent 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 non-accruing, 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 independent auditors and 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 data such as 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 their 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 credit card receivables 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. Many of the larger loans require an annual review by an independent loan officer or an independent third party loan review firm. As a result of these loan reviews, certain loans may be assigned specific reserve allocations. 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 Director of Internal Audit.

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 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.

During the three months ended March 31, 2014, the year ended December 31, 2013 and the three months ended March 31, 2013, the Company recorded provision for loan loss expense of $225,000, $1.5 million and $320,000, respectively, to account for losses where the initial estimate of cash flows was found to be excessive on loans acquired in FDIC-assisted transactions. These amounts are excluded from the rollforwards above and below but are reflected in the Company’s Consolidated Statements of Earnings.

The following table details activity in the allowance for loan losses by portfolio segment for the three months ended March 31, 2014, the year ended December 31, 2013 and the three months ended March 31, 2013. 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			Total
	(Dollars in thousands)
Balance, January 1, 2014	$	1,823		$	5,538		$	8,393		$	6,034		$	589		$	22,377
Provision for loan losses		1,090			337			622			(656	)		108			1,501
Loans charged off		(743	)		(65	)		(533	)		(181	)		(84	)		(1,606	)
Recoveries of loans previously charged off		49			108			143			83			89			472

Balance, March 31, 2014	$	2,219		$	5,918		$	8,625		$	5,280		$	702		$	22,744

Period-end amount allocated to:
Loans individually evaluated for impairment	$	318		$	631		$	1,994		$	1,133		$	—		$	4,076
Loans collectively evaluated for impairment		1,901			5,287			6,631			4,147			702			18,668

Ending balance	$	2,219		$	5,918		$	8,625		$	5,280		$	702		$	22,744

Loans:
Individually evaluated for impairment	$	2,837		$	3,817		$	16,832		$	14,602		$	—		$	38,088
Collectively evaluated for impairment		267,734			145,726			819,398			378,399			46,037			1,657,294

Ending balance	$	270,571		$	149,543		$	836,230		$	393,001		$	46,037		$	1,695,382


	Commercial, financial & agricultural			Real estate - construction & development			Real estate - commercial & farmland			Real estate - residential			Consumer installment loans and Other			Total
	(Dollars in thousands)
Balance, January 1, 2013	$	2,439		$	5,343		$	9,157		$	5,898		$	756		$	23,593
Provision for loan losses		711			1,742			2,777			4,463			254			9,947
Loans charged off		(1,759	)		(2,020	)		(3,571	)		(5,215	)		(719	)		(13,284	)
Recoveries of loans previously charged off		432			473			30			888			298			2,121

Balance, December 31, 2013	$	1,823		$	5,538		$	8,393		$	6,034		$	589		$	22,377

Period-end amount allocated to:
Loans individually evaluated for impairment	$	356		$	407		$	1,427		$	1,395		$	—		$	3,585
Loans collectively evaluated for impairment		1,467			5,131			6,966			4,639			589			18,792

Ending balance	$	1,823		$	5,538		$	8,393		$	6,034		$	589		$	22,377

Loans:
Individually evaluated for impairment	$	3,457		$	3,581		$	15,240		$	16,925		$	—		$	39,203
Collectively evaluated for impairment		240,916			142,790			793,083			349,957			52,505			1,579,251

Ending balance	$	244,373		$	146,371		$	808,323		$	366,882		$	52,505		$	1,618,454


	Commercial, financial & agricultural			Real estate - construction & development			Real estate - commercial & farmland			Real estate - residential			Consumer installment loans and Other			Total
	(Dollars in thousands)
Balance, January 1, 2013	$	2,439		$	5,343		$	9,157		$	5,898		$	756		$	23,593
Provision for loan losses		254			1,467			696			339			(153	)		2,603
Loans charged off		(410	)		(655	)		(1,025	)		(779	)		(167	)		(3,036	)
Recoveries of loans previously charged off		84			2			3			85			48			222

Balance, March 31, 2013	$	2,367		$	6,157		$	8,831		$	5,543		$	484		$	23,382

Period-end amount allocated to:
Loans individually evaluated for impairment	$	675		$	641		$	1,890		$	1,203		$	—		$	4,409
Loans collectively evaluated for impairment		1,692			5,516			6,941			4,340			484			18,973

Ending balance	$	2,367		$	6,157		$	8,831		$	5,543		$	484		$	23,382

Loans:
Individually evaluated for impairment	$	3,334		$	8,281		$	19,545		$	14,069		$	—		$	45,229
Collectively evaluated for impairment		177,554			121,880			746,682			352,987			48,421			1,447,524

Ending balance	$	180,888		$	130,161		$	766,227		$	367,056		$	48,421		$	1,492,753