NOTE 4 – 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 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 loans receivable categories are presented in the following table, excluding purchased non-covered and covered loans:


(Dollars in Thousands)	June 30, 2015		December 31, 2014		June 30, 2014
Commercial, financial and agricultural	$	373,202	$	319,654	$	304,588
Real estate – construction and development		205,019		161,507		149,346
Real estate – commercial and farmland		1,010,195		907,524		850,000
Real estate – residential		537,201		456,106		422,731
Consumer installment		30,080		30,782		31,902
Other		15,903		14,308		11,492

	$	2,171,600	$	1,889,881	$	1,770,059

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 $808.3 million, $674.2 million and $702.1 million at June 30, 2015, December 31, 2014 and June 30, 2014, 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)	June 30, 2015		December 31, 2014		June 30, 2014
Commercial, financial and agricultural	$	45,337	$	38,041	$	41,583
Real estate – construction and development		75,302		58,362		64,084
Real estate – commercial and farmland		404,588		306,706		311,748
Real estate – residential		276,798		266,342		278,451
Consumer installment		6,288		4,788		6,265

	$	808,313	$	674,239	$	702,131

Purchased loan pools are defined as groups of loans that were not acquired in bank acquisitions or FDIC-assisted transactions. As of June 30, 2015, purchased loan pools totaled $269.0 million and consisted of whole-loan, adjustable rate residential mortgages on properties outside the Company’s markets, with principal balances totaling $263.8 million and $5.2 million of purchase premium paid at acquisition. At June 30, 2015, all loans included in the purchased loan pools were performing current loans, all risk-rated grade 20. The Company did not have any purchased loan pools at December 31, 2014 or June 30, 2014.

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 $209.6 million, $271.3 million and $331.3 million at June 30, 2015, December 31, 2014 and June 30, 2014, 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)	June 30, 2015		December 31, 2014		June 30, 2014
Commercial, financial and agricultural	$	17,666	$	21,467	$	25,209
Real estate – construction and development		15,002		23,447		31,600
Real estate – commercial and farmland		111,772		147,627		188,643
Real estate – residential		64,982		78,520		85,518
Consumer installment		176		218		280

	$	209,598	$	271,279	$	331,250

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)	June 30, 2015		December 31, 2014		June 30, 2014
Commercial, financial and agricultural	$	4,067	$	1,672	$	1,596
Real estate – construction and development		1,594		3,774		3,452
Real estate – commercial and farmland		8,938		8,141		8,831
Real estate – residential		5,650		7,663		7,795
Consumer installment		491		478		437

	$	20,740	$	21,728	$	22,111

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


(Dollars in Thousands)	June 30, 2015		December 31, 2014		June 30, 2014
Commercial, financial and agricultural	$	309	$	175	$	143
Real estate – construction and development		1,483		1,119		2,273
Real estate – commercial and farmland		9,634		10,242		6,647
Real estate – residential		5,930		6,644		6,658
Consumer installment		88		69		49

	$	17,444	$	18,249	$	15,770

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


(Dollars in Thousands)	June 30, 2015		December 31, 2014		June 30, 2014
Commercial, financial and agricultural	$	7,948	$	8,541	$	12,254
Real estate – construction and development		3,120		7,601		8,028
Real estate – commercial and farmland		13,997		12,584		17,027
Real estate – residential		3,712		6,595		8,702
Consumer installment		94		91		127

	$	28,871	$	35,412	$	46,138

The following table presents an aging analysis of loans, excluding purchased non-covered and covered past due loans as of June 30, 2015, December 31, 2014 and June 30, 2014:


	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 June 30, 2015:
Commercial, financial & agricultural	$	840	$	888	$	3,891	$	5,619	$	367,583	$	373,202	$	—
Real estate – construction & development		1,201		374		1,536		3,111		201,908		205,019		—
Real estate – commercial & farmland		1,958		2,823		7,014		11,795		998,400		1,010,195		—
Real estate – residential		5,135		1,949		4,727		11,811		525,390		537,201		—
Consumer installment loans		293		77		315		685		29,395		30,080		—
Other		—		—		—		—		15,903		15,903		—

Total	$	9,427	$	6,111	$	17,483	$	33,021	$	2,138,579	$	2,171,600	$	—


	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 31, 2014:
Commercial, financial & agricultural	$	900	$	233	$	1,577	$	2,710	$	316,944	$	319,654	$	—
Real estate – construction & development		1,382		286		3,367		5,035		156,472		161,507		—
Real estate – commercial & farmland		2,859		635		7,668		11,162		896,362		907,524		—
Real estate – residential		3,953		2,334		6,755		13,042		443,064		456,106		—
Consumer installment loans		634		158		366		1,158		29,624		30,782		1
Other		—		—		—		—		14,308		14,308		—

Total	$	9,728	$	3,646	$	19,733	$	33,107	$	1,856,774	$	1,889,881	$	1


	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 June 30, 2014:
Commercial, financial & agricultural	$	1,180	$	966	$	1,077	$	3,223	$	301,365	$	304,588	$	—
Real estate – construction & development		3,942		296		3,449		7,687		141,659		149,346		—
Real estate – commercial & farmland		4,622		1,860		7,404		13,886		836,114		850,000		—
Real estate – residential		5,806		3,829		7,197		16,832		405,899		422,731		—
Consumer installment loans		345		176		310		831		31,071		31,902		—
Other		—		—		—		—		11,492		11,492		—

Total	$	15,895	$	7,127	$	19,437	$	42,459	$	1,727,600	$	1,770,059	$	—

The following table presents an analysis of purchased non-covered past due loans as of June 30, 2015, December 31, 2014 and June 30, 2014:


	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 June 30, 2015:
Commercial, financial & agricultural	$	—	$	1,101	$	202	$	1,303	$	44,034	$	45,337	$	—
Real estate – construction & development		245		—		1,026		1,271		74,031		75,302		—
Real estate – commercial & farmland		2,115		724		9,062		11,901		392,687		404,588		—
Real estate – residential		3,848		1,400		5,369		10,617		266,181		276,798		—
Consumer installment loans		6		—		84		90		6,198		6,288		—

Total	$	6,214	$	3,225	$	15,743	$	25,182	$	783,131	$	808,313	$	—


	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, 2014:
Commercial, financial & agricultural	$	461	$	90	$	175	$	726	$	37,315	$	38,041	$	—
Real estate – construction & development		790		1,735		1,117		3,642		54,720		58,362		—
Real estate – commercial & farmland		2,107		1,194		9,529		12,830		293,876		306,706		—
Real estate – residential		6,907		1,401		6,369		14,677		251,665		266,342		—
Consumer installment loans		82		—		65		147		4,641		4,788		—

Total	$	10,347	$	4,420	$	17,255	$	32,022	$	642,217	$	674,239	$	—


	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 June 30, 2014:
Commercial, financial & agricultural	$	137	$	26	$	143	$	306	$	41,277	$	41,583	$	—
Real estate – construction & development		712		168		2,165		3,045		61,039		64,084		—
Real estate – commercial & farmland		1,263		1,605		6,647		9,515		302,233		311,748		—
Real estate – residential		6,952		983		6,144		14,079		264,372		278,451		—
Consumer installment loans		23		29		47		99		6,166		6,265		—

Total	$	9,087	$	2,811	$	15,146	$	27,044	$	675,087	$	702,131	$	—

The following table presents an aging analysis of covered loans as of June 30, 2015, December 31, 2014 and June 30, 2014:


	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 June 30, 2015:
Commercial, financial & agricultural	$	237	$	240	$	1,670	$	2,147	$	15,519	$	17,666	$	—
Real estate – construction & development		292		31		3,045		3,368		11,634		15,002		143
Real estate – commercial & farmland		699		81		9,396		10,176		101,596		111,772		—
Real estate – residential		2,690		927		2,122		5,739		59,243		64,982		—
Consumer installment loans		—		—		50		50		126		176		—

Total	$	3,918	$	1,279	$	16,283	$	21,480	$	188,118	$	209,598	$	143


	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 31, 2014:
Commercial, financial & agricultural	$	451	$	136	$	1,878	$	2,465	$	19,002	$	21,467	$	—
Real estate – construction & development		238		226		6,703		7,167		16,280		23,447		—
Real estate – commercial & farmland		4,371		1,486		7,711		13,568		134,059		147,627		714
Real estate – residential		3,464		962		5,656		10,082		68,438		78,520		—
Consumer installment loans		10		—		91		101		117		218		—

Total	$	8,534	$	2,810	$	22,039	$	33,383	$	237,896	$	271,279	$	714


	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 June 30, 2014:
Commercial, financial & agricultural	$	16	$	467	$	6,909	$	7,392	$	17,817	$	25,209	$	—
Real estate – construction & development		551		459		7,708		8,718		22,882		31,600		—
Real estate – commercial & farmland		6,399		139		10,443		16,981		171,662		188,643		—
Real estate – residential		2,490		690		5,939		9,119		76,399		85,518		—
Consumer installment loans		—		49		56		105		175		280		—

Total	$	9,456	$	1,804	$	31,055	$	42,315	$	288,935	$	331,250	$	—

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
	June 30, 2015		December 31, 2014		June 30, 2014
	(Dollars in Thousands)
Nonaccrual loans	$	20,740	$	21,728	$	22,111
Troubled debt restructurings not included above		12,467		12,759		17,337

Total impaired loans	$	33,207	$	34,487	$	39,448

Quarter-to-date interest income recognized on impaired loans	$	192	$	237	$	1,133

Year-to-date interest income recognized on impaired loans	$	344	$	1,991	$	1,423

Quarter-to-date foregone interest income on impaired loans	$	311	$	323	$	375

Year-to-date foregone interest income on impaired loans	$	629	$	1,491	$	815

The following table presents an analysis of information pertaining to impaired loans, excluding purchased non-covered and covered loans as of June 30, 2015, December 31, 2014 and June 30, 2014:


	Unpaid Contractual Principal Balance		Recorded Investment With No Allowance		Recorded Investment With Allowance		Total Recorded Investment		Related Allowance		Three Month Average Recorded Investment		Six Month Average Recorded Investment
	(Dollars in Thousands)
As of June 30, 2015:
Commercial, financial & agricultural	$	6,004	$	442	$	3,903	$	4,345	$	458	$	2,819	$	2,533
Real estate – construction & development		3,765		—		2,416		2,416		445		3,245		3,648
Real estate – commercial & farmland		18,117		5,960		9,595		15,555		1,243		15,378		15,125
Real estate – residential		11,743		1,153		9,199		10,352		1,825		11,555		12,006
Consumer installment loans		633		—		539		539		8		494		507

Total	$	40,262	$	7,555	$	25,652	$	33,207	$	3,979	$	33,491	$	33,819


	Unpaid Contractual Principal Balance		Recorded Investment With No Allowance		Recorded Investment With Allowance		Total Recorded Investment		Related Allowance		Three Month Average Recorded Investment		Twelve Month Average Recorded Investment
	(Dollars in Thousands)
As of December 31, 2014:
Commercial, financial & agricultural	$	3,387	$	6	$	1,956	$	1,962	$	395	$	2,457	$	3,021
Real estate – construction & development		8,325		448		4,005		4,453		771		4,703		5,368
Real estate – commercial & farmland		17,514		4,967		9,651		14,618		1,859		15,341		15,972
Real estate – residential		15,571		3,514		9,407		12,921		974		14,244		16,317
Consumer installment loans		618		—		533		533		9		527		519

Total	$	45,415	$	8,935	$	25,552	$	34,487	$	4,008	$	37,272	$	41,197


	Unpaid Contractual Principal Balance		Recorded Investment With No Allowance		Recorded Investment With Allowance		Total Recorded Investment		Related Allowance		Three Month Average Recorded Investment		Six Month Average Recorded Investment
	(Dollars in Thousands)
As of June 30, 2014:
Commercial, financial & agricultural	$	3,398	$	—	$	1,852	$	1,852	$	298	$	2,786	$	3,397
Real estate – construction & development		9,336		—		5,532		5,532		798		5,783		5,811
Real estate – commercial & farmland		19,215		—		16,421		16,421		1,629		16,851		16,394
Real estate – residential		18,313		—		15,131		15,131		884		16,563		17,698
Consumer installment loans		638		—		512		512		10		530		514

Total	$	50,900	$	—	$	39,448	$	39,448	$	3,619	$	42,513	$	43,814

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


	As of and For the Period Ended
	June 30, 2015		December 31, 2014		June 30, 2014
	(Dollars in Thousands)
Nonaccrual loans	$	17,444	$	18,249	$	15,770
Troubled debt restructurings not included above		6,792		1,212		—

Total impaired loans	$	24,236	$	19,461	$	15,770

Quarter-to-date interest income recognized on impaired loans	$	143	$	64	$	41

Year-to-date interest income recognized on impaired loans	$	161	$	132	$	41

Quarter-to-date foregone interest income on impaired loans	$	451	$	521	$	426

Year-to-date foregone interest income on impaired loans	$	923	$	1,759	$	652

The following table presents an analysis of information pertaining to purchased non-covered impaired loans as of June 30, 2015, December 31, 2014 and June 30, 2014:


	Unpaid Contractual Principal Balance		Recorded Investment With No Allowance		Recorded Investment With Allowance		Total Recorded Investment		Related Allowance		Three Month Average Recorded Investment		Six Month Average Recorded Investment
	(Dollars in Thousands)
As of June 30, 2015:
Commercial, financial & agricultural	$	1,476	$	309	$	—	$	309	$	—	$	254	$	227
Real estate – construction & development		9,656		1,857		—		1,857		—		1,485		1,469
Real estate – commercial & farmland		17,043		13,691		—		13,691		—		11,753		11,366
Real estate – residential		12,992		8,285		—		8,285		—		7,982		7,718
Consumer installment loans		111		94		—		94		—		61		64

Total	$	41,278	$	24,236	$	—	$	24,236	$	—	$	21,535	$	20,844


	Unpaid Contractual Principal Balance		Recorded Investment With No Allowance		Recorded Investment With Allowance		Total Recorded Investment		Related Allowance		Three Month Average Recorded Investment		Twelve Month Average Recorded Investment
	(Dollars in Thousands)
As of December 31, 2014:
Commercial, financial & agricultural	$	1,366	$	175	$	—	$	175	$	—	$	277	$	165
Real estate – construction & development		5,161		1,436		—		1,436		—		2,242		1,643
Real estate – commercial & farmland		15,007		10,588		—		10,588		—		11,148		7,484
Real estate – residential		12,283		7,191		—		7,191		—		8,447		7,084
Consumer installment loans		172		71		—		71		—		124		68

Total	$	33,989	$	19,461	$	—	$	19,461	$	—	$	22,238	$	16,444


	Unpaid Contractual Principal Balance		Recorded Investment With No Allowance		Recorded Investment With Allowance		Total Recorded Investment		Related Allowance		Three Month Average Recorded Investment		Six Month Average Recorded Investment
	(Dollars in Thousands)
As of June 30, 2014:
Commercial, financial & agricultural	$	550	$	143	$	—	$	143	$	—	$	130	$	90
Real estate – construction & development		4,649		2,273		—		2,273		—		1,702		1,243
Real estate – commercial & farmland		9,848		6,647		—		6,647		—		6,738		5,043
Real estate – residential		10,598		6,658		—		6,658		—		6,933		6,175
Consumer installment loans		65		49		—		49		—		41		31

Total	$	25,710	$	15,770	$	—	$	15,770	$	—	$	15,544	$	12,582

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


	As of and For the Period Ended
	June 30, 2015		December 31, 2014		June 30, 2014
	(Dollars in Thousands)
Nonaccrual loans	$	28,871	$	35,412	$	46,138
Troubled debt restructurings not included above		17,500		22,619		9,221

Total impaired loans	$	46,371	$	58,031	$	55,359

Quarter-to-date interest income recognized on impaired loans	$	219	$	443	$	796

Year-to-date interest income recognized on impaired loans	$	431	$	2,057	$	1,193

Quarter-to-date foregone interest income on impaired loans	$	409	$	571	$	843

Year-to-date foregone interest income on impaired loans	$	947	$	3,123	$	1,892

The following table presents an analysis of information pertaining to covered impaired loans as of June 30, 2015, December 31, 2014 and June 30, 2014:


	Unpaid Contractual Principal Balance		Recorded Investment With No Allowance		Recorded Investment With Allowance		Total Recorded Investment		Related Allowance		Three Month Average Recorded Investment		Six Month Average Recorded Investment
	(Dollars in Thousands)
As of June 30, 2015:
Commercial, financial & agricultural	$	14,260	$	7,951	$	—	$	7,951	$	—	$	8,869	$	8,773
Real estate – construction & development		29,895		5,953		—		5,953		—		7,819		8,757
Real estate – commercial & farmland		37,426		17,970		—		17,970		—		21,795		21,418
Real estate – residential		18,226		14,402		—		14,402		—		16,600		17,084
Consumer installment loans		125		95		—		95		—		99		97

Total	$	99,932	$	46,371	$	—	$	46,371	$	—	$	55,179	$	56,129


	Unpaid Contractual Principal Balance		Recorded Investment With No Allowance		Recorded Investment With Allowance		Total Recorded Investment		Related Allowance		Three Month Average Recorded Investment		Twelve Month Average Recorded Investment
	(Dollars in Thousands)
As of December 31, 2014:
Commercial, financial & agricultural	$	14,385	$	8,582	$	—	$	8,582	$	—	$	8,525	$	9,325
Real estate – construction & development		27,289		10,638		—		10,638		—		11,279		13,935
Real estate – commercial & farmland		31,309		20,663		—		20,663		—		21,890		28,057
Real estate – residential		22,860		18,054		—		18,054		—		18,242		20,776
Consumer installment loans		124		94		—		94		—		100		160

Total	$	95,967	$	58,031	$	—	$	58,031	$	—	$	60,036	$	72,253


	Unpaid Contractual Principal Balance		Recorded Investment With No Allowance		Recorded Investment With Allowance		Total Recorded Investment		Related Allowance		Three Month Average Recorded Investment		Six Month Average Recorded Investment
	(Dollars in Thousands)
As of June 30, 2014:
Commercial, financial & agricultural	$	14,694	$	12,266	$	—	$	12,266	$	—	$	11,153	$	9,858
Real estate – construction & development		12,921		11,048		—		11,048		—		14,541		15,706
Real estate – commercial & farmland		27,742		24,007		—		24,007		—		27,877		32,167
Real estate – residential		21,874		19,793		—		19,793		—		21,199		22,465
Consumer installment loans		161		127		—		127		—		130		200

Total	$	77,392	$	67,241	$	—	$	67,241	$	—	$	74,899	$	80,397

Credit Quality Indicators

The Company uses a nine category risk grading system to assign a risk grade to each loan in the portfolio. Every loan is assigned a risk rating, with the exception of credit card receivables and overdraft protection loans, which are treated as pools for risk-rating purposes. 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 or an independent third party loan review firm. 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, the 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 exhibit 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 quality 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 June 30, 2015:


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	$	173,795	$	268	$	150	$	1,606	$	6,114	$	—	$	181,933
15		25,447		3,402		127,090		85,812		1,319		—		243,070
20		96,169		47,207		592,636		334,999		17,833		15,903		1,104,747
23		635		8,071		11,984		6,655		55		—		27,400
25		69,304		140,119		248,227		83,207		3,807		—		544,664
30		2,566		2,510		11,088		8,612		244		—		25,020
40		5,286		3,442		19,020		16,310		708		—		44,766
50		—		—		—		—		—		—		—
60		—		—		—		—		—		—		—

Total	$	373,202	$	205,019	$	1,010,195	$	537,201	$	30,080	$	15,903	$	2,171,600

The following table presents the loan portfolio, excluding purchased non-covered and covered loans, by risk grade as of December 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	$	121,355	$	268	$	155	$	226	$	6,573	$	—	$	128,577
15		25,318		4,010		128,170		59,301		1,005		—		217,804
20		100,599		47,541		511,198		256,758		17,544		14,308		947,948
23		56		8,933		10,507		9,672		37		—		29,205
25		62,519		93,514		224,464		102,998		4,692		—		488,187
30		3,758		1,474		13,035		7,459		257		—		25,983
40		6,049		5,767		19,995		19,692		673		—		52,176
50		—		—		—		—		1		—		1
60		—		—		—		—		—		—		—

Total	$	319,654	$	161,507	$	907,524	$	456,106	$	30,782	$	14,308	$	1,889,881

The following table presents the loan portfolio, excluding purchased non-covered and covered loans, by risk grade as of June 30, 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	$	103,726	$	—	$	255	$	505	$	6,356	$	—	$	110,842
15		24,620		4,678		141,846		54,388		1,120		—		226,652
20		102,278		48,008		460,715		226,149		17,714		11,492		866,356
23		123		9,215		9,318		9,479		294		—		28,429
25		65,882		77,973		197,381		103,846		5,281		—		450,363
30		4,004		2,680		12,914		13,568		194		—		33,360
40		3,955		6,792		27,571		14,786		943		—		54,047
50		—		—		—		10		—		—		10
60		—		—		—		—		—		—		—

Total	$	304,588	$	149,346	$	850,000	$	422,731	$	31,902	$	11,492	$	1,770,059

The following table presents the purchased non-covered loan portfolio by risk grade as of June 30, 2015:


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	$	9,091	$	—	$	80	$	—	$	952	$	—	$	10,123
15		1,377		866		8,710		41,641		626		—		53,220
20		12,545		16,979		190,219		139,792		2,769		—		362,304
23		—		240		3,792		6,505		—		—		10,537
25		18,556		49,070		165,267		65,818		1,700		—		300,411
30		2,462		3,409		19,042		9,803		63		—		34,779
40		1,276		4,738		17,478		13,217		178		—		36,887
50		30		—		—		22		—		—		52
60		—		—		—		—		—		—		—

Total	$	45,337	$	75,302	$	404,588	$	276,798	$	6,288	$	—	$	808,313

The following table presents the purchased non-covered loan portfolio by risk grade as of December 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	$	6,624	$	—	$	—	$	290	$	480	$	—	$	7,394
15		1,376		552		13,277		14,051		501		—		29,727
20		13,657		12,991		116,308		64,083		1,647		—		208,686
23		73		—		3,207		3,298		—		—		6,578
25		13,753		36,230		144,293		164,959		1,920		—		361,155
30		1,618		4,365		12,279		7,444		41		—		25,747
40		910		4,254		17,342		12,184		199		—		34,889
50		30		—		—		33		—		—		63
60		—		—		—		—		—		—		—

Total	$	38,041	$	58,362	$	306,706	$	266,342	$	4,788	$	—	$	674,239

The following table presents the purchased non-covered loan portfolio by risk grade as of June 30, 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	$	3,494	$	—	$	—	$	293	$	557	$	—	$	4,344
15		4,728		245		14,191		15,839		537		—		35,540
20		11,567		12,905		94,598		64,937		2,683		—		186,690
23		—		—		—		165		—		—		165
25		18,251		42,127		175,427		178,523		2,343		—		416,671
30		3,162		4,722		16,078		8,326		21		—		32,309
40		381		4,085		11,454		10,368		124		—		26,412
50		—		—		—		—		—		—		—
60		—		—		—		—		—		—		—

Total	$	41,583	$	64,084	$	311,748	$	278,451	$	6,265	$	—	$	702,131

The following table presents the covered loan portfolio by risk grade as of June 30, 2015:


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		—		—		488		125		—		—		613
20		580		1,218		17,382		12,571		43		—		31,794
23		68		—		5,255		6,083		—		—		11,406
25		4,089		8,142		60,682		30,870		37		—		103,820
30		4,923		2,409		4,165		5,730		—		—		17,227
40		8,006		3,233		23,800		9,603		96		—		44,738
50		—		—		—		—		—		—		—
60		—		—		—		—		—		—		—

Total	$	17,666	$	15,002	$	111,772	$	64,982	$	176	$	—	$	209,598

The following table presents the covered loan portfolio by risk grade as of December 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		—		1		761		525		—		—		1,287
20		917		3,184		23,167		14,089		77		—		41,434
23		164		537		11,404		6,642		—		—		18,747
25		5,181		9,406		80,334		33,124		37		—		128,082
30		4,808		2,753		5,302		8,050		—		—		20,913
40		10,397		7,566		26,659		16,090		104		—		60,816
50		—		—		—		—		—		—		—
60		—		—		—		—		—		—		—

Total	$	21,467	$	23,447	$	147,627	$	78,520	$	218	$	—	$	271,279

The following table presents the covered loan portfolio by risk grade as of June 30, 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		—		2		822		629		—		—		1,453
20		1,133		5,524		33,050		17,143		68		—		56,918
23		124		555		15,528		5,557		—		—		21,764
25		6,569		9,251		94,504		36,507		40		—		146,871
30		4,398		4,802		9,959		8,326		2		—		27,487
40		12,985		11,466		34,780		17,356		170		—		76,757
50		—		—		—		—		—		—		—
60		—		—		—		—		—		—		—

Total	$	25,209	$	31,600	$	188,643	$	85,518	$	280	$	—	$	331,250

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 six months of 2015 and 2014 totaling $54.8 million and $8.4 million, respectively, under such parameters.

As of June 30, 2015, December 31, 2014 and June 30, 2014, the Company had a balance of $14.0 million, $15.3 million and $21.1 million, respectively, in troubled debt restructurings, excluding purchased non-covered and covered loans. The Company has recorded $1.6 million, $2.2 million and $3.0 million in previous charge-offs on such loans at June 30, 2015, December 31, 2014 and June 30, 2014, respectively. The Company’s balance in the allowance for loan losses allocated to such troubled debt restructurings was $210,000, $231,000 and $398,000 at June 30, 2015, December 31, 2014 and June 30, 2014, respectively. At June 30, 2015, the Company did not have any commitments to lend additional funds to debtors whose terms have been modified in troubled restructurings.

During the six months ending June 30, 2015 and 2014, the Company modified loans as troubled debt restructurings, excluding purchased non-covered and covered loans, with principal balances of $782,000 and $1.7 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 six months ending June 30, 2015 and 2014:


	June 30, 2015				June 30, 2014
Loan class:	#		Balance (in thousands)		#		Balance (in thousands)
Commercial, financial & agricultural		3	$	18		2	$	16
Real estate – construction & development		2		16		4		235
Real estate – commercial & farmland		—		—		3		1,037
Real estate – residential		15		729		6		328
Consumer installment		5		19		11		46

Total		25	$	782		26	$	1,662

Troubled debt restructurings, excluding purchased non-covered and covered loans, with an outstanding balance of $2.2 million and $130,000 defaulted during the six months ended June 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 six months ending June 30, 2015 and 2014:


	June 30, 2015				June 30, 2014
Loan class:	#		Balance (in thousands)		#		Balance (in thousands)
Commercial, financial & agricultural		2	$	35		—	$	—
Real estate – construction & development		—		—		1		35
Real estate – commercial & farmland		5		1,274		—		—
Real estate – residential		10		884		2		72
Consumer installment		6		32		1		23

Total		23	$	2,225		4	$	130

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 June 30, 2015, December 31, 2014 and June 30, 2014:


As of June 30, 2015	Accruing Loans				Non-Accruing Loans
Loan class:	#		Balance (*in thousands*)		#		Balance (*in thousands*)
Commercial, financial & agricultural		6	$	278		5	$	29
Real estate – construction & development		11		821		3		57
Real estate – commercial & farmland		17		6,617		3		598
Real estate – residential		49		4,702		15		783
Consumer installment		11		49		17		82

Total		94	$	12,467		43	$	1,549


As of December 31, 2014	Accruing Loans				Non-Accruing Loans
Loan class:	#		Balance (*in thousands*)		#		Balance (*in thousands*)
Commercial, financial & agricultural		6	$	290		2	$	13
Real estate – construction & development		9		679		5		228
Real estate – commercial & farmland		19		6,477		3		724
Real estate – residential		47		5,258		11		1,485
Consumer installment		11		55		11		73

Total		92	$	12,759		32	$	2,523


As of June 30, 2014	Accruing Loans				Non-Accruing Loans
Loan class:	#		Balance (*in thousands*)		#		Balance (*in thousands*)
Commercial, financial & agricultural		3	$	257		3	$	465
Real estate – construction & development		12		2,080		2		32
Real estate – commercial & farmland		19		7,590		4		2,151
Real estate – residential		38		7,335		8		1,044
Consumer installment		14		75		5		51

Total		86	$	17,337		22	$	3,743

As of June 30, 2015 and December 31, 2014, the Company had a balance of $7.0 million and $1.2 million, respectively, in troubled debt restructurings included in purchased non-covered loans. The Company did not have any troubled debt restructurings included in purchased non-covered loans at June 30, 2014. The Company has recorded $632,000 and $29,000 in previous charge-offs on such loans at June 30, 2015 and December 31, 2014, respectively. At June 30, 2015, the Company did not have any commitments to lend additional funds to debtors whose terms have been modified in troubled restructurings.

During the six months ending June 30, 2015, the Company modified purchased non-covered loans as troubled debt restructurings, with principal balances of $1.0 million, and these modifications did not have a material impact on the Company’s allowance for loan loss. The Company did not modify any purchased non-covered loans as troubled debt restructurings during the six months ended June 30, 2014. The Company transferred troubled debt restructurings with principal balances of $4.8 million from the covered loan category to the purchased non-covered loan category during the six months ended June 30, 2015 due to the expiration of the loss-sharing agreements. The following table presents the purchased non-covered loans by class modified as troubled debt restructurings, which occurred during the six months ending June 30, 2015 and 2014:


	June 30, 2015				June 30, 2014
Loan class:	#		Balance (in thousands)		#		Balance (in thousands)
Commercial, financial & agricultural		—	$	—		—	$	—
Real estate – construction & development		—		—		—		—
Real estate – commercial & farmland		—		—		—		—
Real estate – residential		5		1,017		—		—
Consumer installment		1		5		—		—

Total		6	$	1,022		—	$	—

Troubled debt restructurings included in purchased non-covered loans with an outstanding balance of $65,000 defaulted during the six months ended June 30, 2015, and these defaults did not have a material impact on the Company’s allowance for loan loss. There were no troubled debt restructurings included in purchased non-covered loans that defaulted during the six months ended June 30, 2014. The following table presents the troubled debt restructurings by class that defaulted (defined as 30 days past due) during the six months ending June 30, 2015 and 2014:


	June 30, 2015				June 30, 2014
Loan class:	#		Balance (in thousands)		#		Balance (in thousands)
Commercial, financial & agricultural		—	$	—		—	$	—
Real estate – construction & development		—		—		—		—
Real estate – commercial & farmland		—		—		—		—
Real estate – residential		1		65		—		—
Consumer installment		—		—		—		—

Total		1	$	65		—	$	—

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 June 30, 2015, December 31, 2014 and June 30, 2014:


As of June 30, 2015	Accruing Loans				Non-Accruing Loans
Loan class:	#		Balance (in thousands)		#		Balance (in thousands)
Commercial, financial & agricultural		—	$	—		1	$	1
Real estate – construction & development		3		374		—		—
Real estate – commercial & farmland		7		4,058		1		69
Real estate – residential		12		2,354		2		91
Consumer installment		2		6		2		5

Total		24	$	6,792		6	$	166


As of December 31, 2014	Accruing Loans				Non-Accruing Loans
Loan class:	#		Balance (in thousands)		#		Balance (in thousands)
Commercial, financial & agricultural		—	$	—		—	$	—
Real estate – construction & development		1		317		—		—
Real estate – commercial & farmland		1		346		—		—
Real estate – residential		6		547		1		25
Consumer installment		1		2		—		—

Total		9	$	1,212		1	$	25

As of June 30, 2015, December 31, 2014 and June 30, 2014, the Company had a balance of $19.6 million, $24.6 million and $23.7 million, respectively, in troubled debt restructurings included in covered loans. The Company has recorded $42,000, $1.8 million and $1.5 million in previous charge-offs on such loans at June 30, 2015, December 31, 2014 and June 30, 2014, respectively. At June 30, 2015, the Company did not have any commitments to lend additional funds to debtors whose terms have been modified in troubled restructurings.

During the six months ending June 30, 2015 and 2014, the Company modified covered loans as troubled debt restructurings with principal balances of $1.2 million and $2.6 million, 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, excluding purchased non-covered and covered loans, which occurred during the six months ending June 30, 2015 and 2014:


	June 30, 2015				June 30, 2014
Loan class:	#		Balance (in thousands)		#		Balance (in thousands)
Commercial, financial & agricultural		1	$	1		—	$	—
Real estate – construction & development		2		34		2		28
Real estate – commercial & farmland		4		796		5		1,024
Real estate – residential		6		376		24		1,525
Consumer installment		2		5		—		—

Total		15	$	1,212		31	$	2,577

Troubled debt restructurings of covered loans with an outstanding balance of $297,000 and $1.1 million defaulted during the six months ended June 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 six months ending June 30, 2015 and 2014:


	June 30, 2015				June 30, 2014
Loan class:	#		Balance (in thousands)		#		Balance (in thousands)
Commercial, financial & agricultural		—	$	—		—	$	—
Real estate – construction & development		—		—		—		—
Real estate – commercial & farmland		1		21		1		71
Real estate – residential		5		276		13		1,010
Consumer installment		—		—		—		—

Total		6	$	297		14	$	1,081

The following table presents the amount of troubled debt restructurings by loan class of covered loans, classified separately as accrual and non-accrual at June 30, 2015, December 31, 2014 and June 30, 2014:


As of June 30, 2015	Accruing Loans				Non-Accruing Loans
Loan class:	#		Balance (in thousands)		#		Balance (in thousands)
Commercial, financial & agricultural		1	$	3		2	$	0
Real estate – construction & development		3		2,832		1		13
Real estate – commercial & farmland		11		3,973		3		1,105
Real estate – residential		95		10,690		14		941
Consumer installment		1		2		—		—

Total		111	$	17,500		20	$	2,059


As of December 31, 2014	Accruing Loans				Non-Accruing Loans
Loan class:	#		Balance (in thousands)		#		Balance (in thousands)
Commercial, financial & agricultural		2	$	40		2	$	—
Real estate – construction & development		4		3,037		2		29
Real estate – commercial & farmland		14		8,079		5		1,082
Real estate – residential		96		11,460		8		831
Consumer installment		1		3		—		—

Total		117	$	22,619		17	$	1,942


As of June 30, 2014	Accruing Loans				Non-Accruing Loans
Loan class:	#		Balance (in thousands)		#		Balance (in thousands)
Commercial, financial & agricultural		1	$	12		4	$	27
Real estate – construction & development		4		3,020		5		74
Real estate – commercial & farmland		13		6,979		7		1,388
Real estate – residential		92		11,091		16		1,070
Consumer installment		—		—		1		4

Total		110	$	21,102		33	$	2,563

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 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 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 or an independent third party loan review firm. 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 six months ended June 30, 2015, the year ended December 31, 2014 and the six months ended June 30, 2014. 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
	(Dollars in Thousands)
Three months ended June 30, 2015:
Balance, March 31, 2015	$	1,399		$	5,311		$	8,770		$	5,008		$	1,364		$	—		$	—		$	21,852
Provision for loan losses		322			40			756			234			448			121			735			2,656
Loans charged off		(410	)		(263	)		(1,162	)		(464	)		(153	)		(240	)		(850	)		(3,542	)
Recoveries of loans previously charged off		115			277			17			27			22			119			115			692

Balance, June 30, 2015	$	1,426		$	5,365		$	8,381		$	4,805		$	1,681		$	—		$	—		$	21,658

Six months ended June 30, 2015:
Balance, January 1, 2015	$	2,004		$	5,030		$	8,823		$	4,129		$	1,171		$	—		$	—		$	21,157
Provision for loan losses		(176	)		387			700			1,324			665			(311	)		1,136			3,725
Loans charged off		(802	)		(360	)		(1,174	)		(732	)		(239	)		(470	)		(1,413	)		(5,190	)
Recoveries of loans previously charged off		400			308			32			84			84			781			277			1,966

Balance, June 30, 2015	$	1,426		$	5,365		$	8,381		$	4,805		$	1,681		$	—		$	—		$	21,658

Period-end amount allocated to:
Loans individually evaluated for impairment	$	450		$	414		$	1,242		$	1,786		$	—		$	—		$	—		$	3,892
Loans collectively evaluated for impairment		976			4,951			7,139			3,019			1,681			—			—			17,766

Ending balance	$	1,426		$	5,365		$	8,381		$	4,805		$	1,681		$	—		$	—		$	21,658

Loans:
Individually evaluated for impairment	$	3,351		$	1,437		$	15,028		$	8,069		$	—		$	—		$	—		$	27,885
Collectively evaluated for impairment		369,851			203,582			995,167			529,132			45,983			698,068			91,188			2,932,971
Acquired with deteriorated credit quality		—			—			—			—			—			110,245			118,410			228,655
Loan pools collectively evaluated for impairment		—			—			—			—			—			268,984			—			268,984

Ending balance	$	373,202		$	205,019		$	1,010,195		$	537,201		$	45,983		$	1,077,297		$	209,598		$	3,458,495


	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)
Three months ended December 31, 2014:
Balance, September 30, 2014	$	2,581		$	5,294		$	8,632		$	5,407		$	298		$	—		$	—		$	22,212
Provision for loan losses		(200	)		(239	)		1,133			(981	)		937			80			158			888
Loans charged off		(468	)		(74	)		(1,033	)		(368	)		(128	)		(80	)		(337	)		(2,488	)
Recoveries of loans previously charged off		91			49			91			71			64			—			179			545

Balance, December 31, 2014	$	2,004		$	5,030		$	8,823		$	4,129		$	1,171		$	—		$	—		$	21,157

Twelve months ended December 31, 2014:
Balance, January 1, 2014	$	1,823		$	5,538		$	8,393		$	6,034		$	589		$	—		$	—		$	22,377
Provision for loan losses		1,427			(265	)		3,444			(452	)		567			84			843			5,648
Loans charged off		(1,567	)		(592	)		(3,288	)		(1,707	)		(471	)		(84	)		(1,851	)		(9,560	)
Recoveries of loans previously charged off		321			349			274			254			486			—			1,008			2,692

Balance, December 31, 2014	$	2,004		$	5,030		$	8,823		$	4,129		$	1,171		$	—		$	—		$	21,157

Period-end amount allocated to:
Loans individually evaluated for impairment	$	375		$	743		$	1,861		$	911		$	—		$	—		$	—		$	3,890
Loans collectively evaluated for impairment		1,629			4,287			6,962			3,218			1,171			—			—			17,267

Ending balance	$	2,004		$	5,030		$	8,823		$	4,129		$	1,171		$	—		$	—		$	21,157

Loans:
Individually evaluated for impairment	$	490		$	3,709		$	14,546		$	8,904		$	—		$	—		$	—		$	27,649
Collectively evaluated for impairment		319,164			157,798			892,978			447,202			45,090			579,172			122,248			2,563,652
Acquired with deteriorated credit quality		—			—			—			—			—			95,067			149,031			244,098

Ending balance	$	319,654		$	161,507		$	907,524		$	456,106		$	45,090		$	674,239		$	271,279		$	2,835,399


	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)
Three months ended June 30, 2014:
Balance, March 31, 2014	$	2,219		$	5,918		$	8,625		$	5,280		$	702		$	—	$	—		$	22,744
Provision for loan losses		(3	)		(426	)		452			590			384			—		368			1,365
Loans charged off		(165	)		(157	)		(769	)		(752	)		(130	)		—		(641	)		(2,614	)
Recoveries of loans previously charged off		134			96			9			48			199			—		273			759

Balance, June 30, 2014	$	2,185		$	5,431		$	8,317		$	5,166		$	1,155		$	—	$	—		$	22,254

Six months ended June 30, 2014:
Balance, January 1, 2014	$	1,823		$	5,538		$	8,393		$	6,034		$	589		$	—	$	—		$	22,377
Provision for loan losses		1,087			(89	)		1,074			(66	)		492			—		593			3,091
Loans charged off		(908	)		(222	)		(1,302	)		(933	)		(214	)		—		(1,139	)		(4,718	)
Recoveries of loans previously charged off		183			204			152			131			288			—		546			1,504

Balance, June 30, 2014	$	2,185		$	5,431		$	8,317		$	5,166		$	1,155		$	—	$	—		$	22,254

Period-end amount allocated to:
Loans individually evaluated for impairment	$	282		$	710		$	1,652		$	801		$	—		$	—	$	—		$	3,445
Loans collectively evaluated for impairment		1,903			4,721			6,665			4,365			1,155			—		—			18,809

Ending balance	$	2,185		$	5,431		$	8,317		$	5,166		$	1,155		$	—	$	—		$	22,254

Loans:
Individually evaluated for impairment	$	855		$	3,264		$	16,865		$	11,538		$	—		$	—	$	—		$	32,522
Collectively evaluated for impairment		303,733			146,082			833,135			411,193			43,394			608,874		152,620			2,499,031
Acquired with deteriorated credit quality		—			—			—			—			—			93,257		178,630			271,887

Ending balance	$	304,588		$	149,346		$	850,000		$	422,731		$	43,394		$	702,131	$	331,250		$	2,803,440