NOTE E — LOANS

Information relating to portfolio loans, purchased credit impaired (“PCI”) loans, and purchased unimpaired loans (“PUL”) is summarized as follows:

March 31, 2016	Portfolio Loans		PCI Loans		PUL's		Total
	(Dollars in thousands)
Construction and land development	$	117,024	$	114	$	30,456	$	147,594
Commercial real estate		787,361		14,674		369,321		1,171,356
Residential real estate		683,877		695		78,266		762,838
Commercial and financial		200,965		1,048		75,762		277,775
Consumer		90,853		0		4,330		95,183
Other loans		468		0		0		468
NET LOAN BALANCES (1)	$	1,880,548	$	16,531	$	558,135	$	2,455,214

December 31, 2015	Portfolio Loans		PCI Loans		PUL's		Total
	(Dollars in thousands)
Construction and land development	$	97,629	$	114	$	11,044	$	108,787
Commercial real estate		776,875		9,990		222,513		1,009,378
Residential real estate		678,131		922		44,732		723,785
Commercial and financial		188,013		1,083		39,421		228,517
Consumer		82,717		0		2,639		85,356
Other loans		507		0		0		507
NET LOAN BALANCES (1)	$	1,823,872	$	12,109	$	320,349	$	2,156,330

(1) Net loan balances as of March 31, 2016 and December 31, 2015 are net of deferred costs and purchase fair value marks of $16.0 million and $7.7 million for each period, respectively.

Purchased Loans - PCI loans are accounted for pursuant to ASC Topic 310-30. The excess of cash flows expected to be collected over the estimated fair value is referred to as the accretable yield and is recognized in interest income over the remaining life of the loan in situations where there is a reasonable expectation about the timing and amount of cash flows expected to be collected. The difference between the contractually required payments and the cash flows expected to be collected, considering the impact of prepayments, is referred to as the nonaccretable difference.

We have applied ASC Topic 310-20 accounting treatment to PULs. The unamortized fair value mark established at acquisition on the loans has been ascribed as an accretable yield that is accreted into interest income over the estimated remaining life of the loans.

We adjusted our estimates of future expected losses, cash flows and renewal assumptions during the current quarter for PCI loans. The table below summarizes the changes in total contractually required principal and interest cash payments, management’s estimate of expected total cash payments and carrying value of PCI loans during the three months ended March 31, 2016 and 2015. Contractually required principal and interest payments have been adjusted for estimated prepayments.

Three Months Ended March 31, 2016

									Reclassifications
									from
	December 31,								nonaccretable		March 31,
	2015		Additions		Deletions		Accretion		difference		2016
	(In thousands)
Contractually required principal and interest	$	19,966	$	6,870	$	(869)	$	0	$	0	$	25,967
Nonaccretable difference		(5,247)		(1,476)		430		0		0		(6,293)
Cash flows expected to be collected		14,719		5,394		(439)		0		0		19,674
Accretable yield		(2,610)		(616)		(184)		267		0		(3,143)
Carrying value of acquired loans		12,109	$	4,778	$	(623)	$	267	$	0		16,531
Allowance for loan losses		0										0
Carrying value less allowance for loan losses	$	12,109									$	16,531

Three Months Ended March 31, 2015

									Reclassifications
									from
	December 31,								nonaccretable		March 31,
	2014		Additions		Deletions		Accretion		difference		2015
	(In thousands)
Contractually required principal and interest	$	14,831	$	0	$	(1,547)	$	0	$	0	$	13,284
Nonaccretable difference		(5,825)		0		664		0		85		(5,076)
Cash flows expected to be collected		9,006		0		(883)		0		85		8,208
Accretable yield		(1,192)		0		85		103		(85)		(1,089)
Carrying value of acquired loans		7,814	$	0	$	(798)	$	103	$	0		7,119
Allowance for loan losses		(64)										(93)
Carrying value less allowance for loan losses	$	7,750									$	7,026

The following tables present the contractual delinquency of the recorded investment in past due loans by class of loans as of March 31, 2016 and December 31, 2015:

					Accruing
	Accruing		Accruing		Greater						Total
March 31, 2016	30-59 Days		60-89 Days		Than						Financing
(Dollars in thousands)	Past Due		Past Due		90 Days		Nonaccrual		Current		Receivables

Portfolio Loans
Construction and land development	$	0	$	13	$	0	$	257	$	116,754	$	117,024
Commercial real estate		43		0		0		2,067		785,251		787,361
Residential real estate		111		314		0		9,525		673,927		683,877
Commerical and financial		0		57		0		0		200,908		200,965
Consumer		22		42		0		177		90,612		90,853
Other		0		0		0		0		468		468
Total		176		426		0		12,026		1,867,920	$	1,880,548

Purchased Unimpaired Loans
Construction and land development		51		0		0		38		30,367	$	30,456
Commercial real estate		945		0		0		967		367,409		369,321
Residential real estate		285		0		0		475		77,506		78,266
Commerical and financial		176		74		100		130		75,282		75,762
Consumer		0		0		0		0		4,330		4,330
Other		0		0		0		0		0		0
Total		1,457		74		100		1,610		554,894	$	558,135

Purchased Credit Impaired Loans
Construction and land development		0		0		0		0		114	$	114
Commercial real estate		0		0		0		1,764		12,910		14,674
Residential real estate		0		0		0		188		507		695
Commerical and financial		0		0		0		0		1,048		1,048
Consumer		0		0		0		0		0		0
Other		0		0		0		0		0		0
Total		0		0		0		1,952		14,579	$	16,531

Total Loans	$	1,633	$	500	$	100	$	15,588	$	2,437,393	$	2,455,214

					Accruing
	Accruing		Accruing		Greater						Total
December 31, 2015	30-59 Days		60-89 Days		Than						Financing
(Dollars in thousands)	Past Due		Past Due		90 Days		Nonaccrual		Current		Receivables

Portfolio Loans
Construction and land development	$	665	$	0	$	0	$	269	$	96,695	$	97,629
Commercial real estate		810		0		0		2,301		773,764		776,875
Residential real estate		141		0		0		9,941		668,049		678,131
Commerical and financial		59		0		0		0		187,954		188,013
Consumer		430		0		0		247		82,040		82,717
Other		0		0		0		0		507		507
Total	$	2,105	$	0	$	0	$	12,758	$	1,809,009	$	1,823,872

Purchased Unimpaired Loans
Construction and land development	$	0	$	0	$	0	$	40	$	11,004	$	11,044
Commercial real estate		179		0		0		2,294		220,040		222,513
Residential real estate		66		0		0		0		44,666		44,732
Commerical and financial		39		0		0		130		39,252		39,421
Consumer		39		0		0		0		2,600		2,639
Other		0		0		0		0		0		0
Total	$	323	$	0	$	0	$	2,464	$	317,562	$	320,349

Purchased Impaired Loans
Construction and land development	$	0	$	0	$	0	$	0	$	114	$	114
Commercial real estate		132		0		0		1,816		8,042		9,990
Residential real estate		0		0		0		348		574		922
Commerical and financial		0		0		0		0		1,083		1,083
Consumer		0		0		0		0		0		0
Other		0		0		0		0		0		0
Total	$	132	$	0	$	0	$	2,164	$	9,813	$	12,109

Total Loans	$	2,560	$	0	$	0	$	17,386	$	2,136,384	$	2,156,330

The Company utilizes an internal asset classification system as a means of reporting problem and potential problem loans. Under the Company’s risk rating system, the Company classifies problem and potential problem loans as “Special Mention,” “Substandard,” and “Doubtful” and these loans are monitored on an ongoing basis. Substandard loans include those characterized by the distinct possibility that the Company will sustain some loss if the deficiencies are not corrected. Loans classified as Doubtful, have all the weaknesses inherent in those classified Substandard with the added characteristic that the weaknesses present make collection or liquidation in full, on the basis of currently existing facts, conditions and values, highly questionable and improbable. The principal balance of loans classified as doubtful are generally charged off. Loans that do not currently expose the Company to sufficient risk to warrant classification in one of the aforementioned categories, but possess weaknesses that deserve management’s close attention are deemed to be Special Mention. Risk ratings are updated any time the situation warrants.

Loans not meeting the criteria above are considered to be pass-rated loans and risk grades are recalculated at least annually by the loan relationship manager. The following tables present the risk category of loans by class of loans based on the most recent analysis performed as of March 31, 2016 and December 31, 2015:

March 31, 2016
	Construction						Commercial
	& Land		Commercial		Residential		and		Consumer
(Dollars in thousands)	Development		Real Estate		Real Estate		Financial		Loans		Total
Pass	$	135,387	$	1,130,845	$	734,747	$	269,109	$	93,809	$	2,363,897
Special mention		3,997		17,437		1,584		7,929		1,106		32,053
Substandard		7,314		11,349		4,267		590		200		23,720
Doubtful		0		0		0		0		0		0
Nonaccrual		295		4,798		10,188		130		177		15,588
Pass-Troubled debt restructures		174		5,840		0		17		359		6,390
Troubled debt restructures		427		1,087		12,052		0		0		13,566
	$	147,594	$	1,171,356	$	762,838	$	277,775	$	95,651	$	2,455,214

December 31, 2015
	Construction						Commercial
	& Land		Commercial		Residential		and		Consumer
(Dollars in thousands)	Development		Real Estate		Real Estate		Financial		Loans		Total
Pass	$	100,186	$	973,942	$	697,907	$	226,391	$	83,786	$	2,082,212
Special mention		3,377		12,599		629		1,209		1,392		19,206
Substandard		4,242		9,278		3,197		769		70		17,556
Doubtful		0		0		0		0		0		0
Nonaccrual		309		6,410		10,290		130		247		17,386
Pass-Troubled debt restructures		58		5,893		0		18		0		5,969
Troubled debt restructures		615		1,256		11,762		0		368		14,001
	$	108,787	$	1,009,378	$	723,785	$	228,517	$	85,863	$	2,156,330