Loans and Allowance for Loan Losses

The following table presents an aging analysis of accruing and nonaccruing loans as of December 31, 2013:



(dollars in thousands)	Accruing
	30-59 days past due		60-89 days past due		More than 90 days past due		Nonaccrual		Total past due and nonaccrual		Current and accruing		Total Loans
PC and Originated Loans
Commercial and agricultural	$	18	$	43	$	—	$	516	$	577	$	60,946	$	61,523
Real estate - construction	168		634		—		4,677		5,479		48,711		54,190
Real estate - mortgage:
1-4 family residential	3,454		522		—		11,580		15,556		593,698		609,254
Commercial	1,765		77		—		18,380		20,222		261,524		281,746
Consumer	56		17		—		12		85		43,798		43,883
Total	$	5,461	$	1,293	$	—	$	35,165	$	41,919	$	1,008,677	$	1,050,596
PI loans
Commercial and agricultural	$	35	$	16	$	1,977	$	—	$	2,028	$	8,701	$	10,729
Real estate - construction	48		—		2,758		—		2,806		7,087		9,893
Real estate - mortgage:
1-4 family residential	135		9		2,907		—		3,051		23,802		26,853
Commercial	903		—		17,479		—		18,382		94,796		113,178
Consumer	6		—		12		—		18		981		999
Total	$	1,127	$	25	$	25,133	$	—	$	26,285	$	135,367	$	161,652
Total Loans	$	6,588	$	1,318	$	25,133	$	35,165	$	68,204	$	1,144,044	$	1,212,248

The following table presents an aging analysis of accruing and nonaccruing loans as of December 31, 2012:



(dollars in thousands)	Accruing
	30-59 days past due		60-89 days past due		More than 90 days past due		Nonaccrual		Total past due and nonaccrual		Current and accruing		Total Loans
PC and Originated Loans
Commercial and agricultural	$	515	$	—	$	50	$	2,746	$	3,311	$	61,727	$	65,038
Real estate - construction	26		119		—		14,297		14,442		41,290		55,732
Real estate - mortgage:
1-4 family residential	6,173		880		—		18,372		25,425		488,898		514,323
Commercial	617		—		177		43,621		44,415		226,948		271,363
Consumer	24		—		—		206		230		41,957		42,187
Total	$	7,355	$	999	$	227	$	79,242	$	87,823	$	860,820	$	948,643
PI loans
Commercial and agricultural	$	100	$	1	$	1,103	$	—	$	1,204	$	13,462	$	14,666
Real estate - construction	117		—		655		—		772		1,910		2,682
Real estate - mortgage:
1-4 family residential	1,308		495		4,678		—		6,481		32,734		39,215
Commercial	2,559		4,300		17,384		—		24,243		146,230		170,473
Consumer	4		—		13		—		17		1,339		1,356
Total	$	4,088	$	4,796	$	23,833	$	—	$	32,717	$	195,675	$	228,392
Total Loans	$	11,443	$	5,795	$	24,060	$	79,242	$	120,540	$	1,056,495	$	1,177,035

All PI loans are considered to be accruing for all periods presented, in accordance with ASC 310-30.

During the twelve months ended December 31, 2013, we purchased $157.6 million of performing residential mortgage loans, including premiums of $1.3 million. During the twelve months ended December 31, 2012, we purchased $173.2 million of performing residential mortgage loans, including premiums of $4.0 million. These loan purchases are accounted for as PC loans.

Risk Grades

The risk-grade categories presented in the following table, which are standard categories used by the bank regulators, are:

Pass - Loans categorized as Pass are higher quality loans that have adequate sources of repayment and little risk of collection.

Special Mention - A Special Mention loan has potential weaknesses that deserve management's close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the asset or in the institution's credit position at some future date. Special Mention loans are not adversely classified and do not expose an institution to sufficient risk to warrant adverse classification.

Substandard - A Substandard loan is inadequately protected by the current sound worth and paying capacity of the obligor or of the collateral pledged, if any. Loans so classified have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that we will sustain some loss if the deficiencies are not corrected. Loss potential, while existing in the aggregate amount of Substandard loans, does not have to exist in individual assets classified Substandard.

Doubtful - A loan classified as Doubtful has all the weaknesses inherent in one classified Substandard with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable. The possibility of loss is extremely high, but because of certain important and reasonable specific pending factors, which may work to the advantage of strengthening of the asset, its classification as an estimated loss is deferred until its more exact status may be determined. Pending factors include proposed merger, acquisition, or liquidation procedures, capital injection, perfecting liens on additional collateral and refinancing plans.

Loans categorized as Special Mention or worse are considered Criticized. Loans categorized as Substandard or Doubtful are considered Classified. Purchased loans acquired in the Merger are recorded at estimated fair value on the date of acquisition without the carryover of related ALL. The table below includes $40.5 million and $60.6 million in Granite Purchased Loans categorized as Substandard or Doubtful at December 31, 2013 and December 31, 2012, respectively.

The following table presents loans held for investment balances by risk grade as of December 31, 2013:



(dollars in thousands)	Pass		Special Mention		Substandard		Doubtful
	(Ratings 1-5)		(Rating 6)		(Rating 7)		(Rating 8)		Total
Commercial and agricultural	$	67,277	$	1,262	$	3,713	$	—	$	72,252
Real estate - construction	50,138		3,984		9,961		—		64,083
Real estate - mortgage:
1-4 family residential	601,304		10,887		23,916		—		636,107
Commercial	307,661		29,711		57,552		—		394,924
Consumer	44,450		40		47		345		44,882
Total	$	1,070,830	$	45,884	$	95,189	$	345	$	1,212,248

The following table presents loans held for investment balances by risk grade as of December 31, 2012:



(dollars in thousands)	Pass		Special Mention		Substandard		Doubtful
	(Ratings 1-5)		(Rating 6)		(Rating 7)		(Rating 8)		Total
Commercial and agricultural	$	69,003	$	3,447	$	6,953	$	301	$	79,704
Real estate - construction	40,117		2,031		16,266		—		58,414
Real estate - mortgage:
1-4 family residential	504,819		15,855		32,625		239		553,538
Commercial	296,271		50,275		95,126		164		441,836
Consumer	42,495		178		426		444		43,543
Total	$	952,705	$	71,786	$	151,396	$	1,148	$	1,177,035

Loans included in the preceding loan composition table are net of participations sold. Loans are increased by net loan premiums and deferred loan costs of $3.6 million at December 31, 2013. Loans are increased by net deferred loan costs of $3.6 million at December 31, 2012.

At December 31, 2013 and 2012, loans held for sale consisted of originated residential mortgage loans held for sale at the lower of cost or fair market value.

Loans serviced for others are not included in the consolidated balance sheet. The unpaid principal balance of loans serviced for others amounted to $190.2 million at December 31, 2013 and $65.1 million at December 31, 2012.

Loans Pledged

To borrow from the FHLB, members must pledge collateral to secure advances and letters of credit. Acceptable collateral includes, among other types of collateral, a variety of residential, multifamily, home equity lines and second mortgages, and commercial loans. Investment securities of $24.1 million and $0 million and gross loans of $169.5 million and $270.2 million were pledged to collateralize FHLB advances and letters of credit at December 31, 2013 and December 31, 2012, respectively, of which there was $31.8 million and $19.1 million of credit availability for borrowing, respectively. At December 31, 2013, $9.6 million of loans and $51.2 million of securities were pledged to collateralize potential borrowings from the Federal Reserve Discount Window, of which $54.7 million was available as borrowing capacity. We could also access $301.8 million of additional borrowings from the FHLB under credit lines by pledging additional collateral.

Nonaccruing and Impaired Loans

Interest income on loans is calculated by using the interest method based on the daily outstanding balance. The recognition of interest income is discontinued when, in management's opinion, the collection of all or a portion of interest becomes doubtful. Loans are returned to accrual status when the factors indicating doubtful collectability cease to exist and the loan has performed in accordance with its terms for a demonstrated period of time. The past due status of loans is based on the contractual payment terms. Had nonaccruing loans been on accruing status, interest income would have been higher by $4.7 million and $5.4 million for the twelve months ended December 31, 2013 and December 31, 2012, respectively. At December 31, 2013 and December 31, 2012, COB had certain impaired loans of $35.2 million and $79.2 million, respectively, which were on nonaccruing interest status.

The following table summarizes information relative to impaired loans for the dates indicated:



	December 31, 2013				December 31, 2012
(dollars in thousands)	Balance		Associated Reserves		Balance		Associated Reserves
Impaired loans, not individually reviewed for impairment	$	4,612	$	—	$	6,017	$	—
Impaired loans, individually reviewed, with no reserves	39,865		—		62,282		—
Impaired loans, individually reviewed, with reserves	2,965		927		15,312		1,737
Total impaired loans, excluding purchased impaired *	$	47,442	$	927	$	83,611	$	1,737

Purchased impaired loans with subsequent deterioration	$	161,307	5,560		$	192,115	5,373
Purchased impaired loans with no subsequent deterioration	$	344	—		$	36,277	—
Total Reserves			$	6,487			$	7,110

Average impaired loans, excluding purchased impaired, calculated using a simple average	$	65,527			$	94,754



* Included at December 31, 2013 and December 31, 2012 were $12.1 million and $4.5 million, respectively, in restructured and performing loans.

The following table presents loans held for investment on nonaccrual status by loan class for the dates indicated:



(dollars in thousands)
	December 31, 2013		December 31, 2012
Loans held for investment:
Commercial and agricultural	$	516	$	2,746
Real estate - construction	4,677		14,297
Real estate - mortgage:
1-4 family residential	11,580		18,372
Commercial	18,380		43,621
Consumer	12		206
Total nonaccrual loans	$	35,165	$	79,242
Loans more than 90 days delinquent, still on accrual	—		227
Total nonperforming loans	$	35,165	$	79,469

There were no loans held for sale on nonaccrual status as of December 31, 2013 or December 31, 2012.

The following table presents individually reviewed impaired loans and purchased impaired loans with subsequent credit deterioration, segregated by portfolio segment, and the corresponding reserve for impaired loan losses as of December 31, 2013:



			Unpaid
(dollars in thousands)	Recorded		Principal		Related
	Investment		Balance		Allowance
With no related allowance recorded:
Commercial and agricultural	$	398	$	643	$	—
Real estate - construction	4,734		8,893		—
Real estate - mortgage:
1-4 family residential	11,154		14,431		—
Commercial	23,579		28,905		—
Consumer	—		—		—
Total	$	39,865	$	52,872	$	—
With an allowance recorded:
Commercial and agricultural	$	—	$	—	$	—
Real estate - construction	—		—		—
Real estate - mortgage:
1-4 family residential	2,965		3,032		927
Commercial	—		—		—
Consumer	—		—		—
Total	$	2,965	$	3,032	$	927
Total individually evaluated impaired loans
Commercial and agricultural	$	398	$	643	$	—
Real estate - construction	4,734		8,893		—
Real estate - mortgage:
1-4 family residential	14,119		17,463		927
Commercial	23,579		28,905		—
Consumer	—		—		—
Total	$	42,830	$	55,904	$	927

PI loans with subsequent credit deterioration:
Commercial and agricultural	$	10,729	$	10,344	$	382
Real estate - construction	9,792		11,216		1,015
Real estate - mortgage:
1-4 family residential	26,628		28,143		724
Commercial	113,178		121,813		3,251
Consumer	980		785		188
Total	$	161,307	$	172,301	$	5,560

The following table presents individually reviewed impaired loans, and purchased impaired loans with subsequent credit deterioration, segregated by portfolio segment, and the corresponding reserve for impaired loan losses as of December 31, 2012:



			Unpaid
(dollars in thousands)	Recorded		Principal		Related
	Investment		Balance		Allowance
With no related allowance recorded:
Commercial and agricultural	$	1,755	$	2,608	$	—
Real estate - construction	11,875		18,553		—
Real estate - mortgage:
1-4 family residential	16,437		20,764		—
Commercial	32,215		38,585		—
Consumer	—		—		—
Total	$	62,282	$	80,510	$	—
With an allowance recorded:
Commercial and agricultural	$	579	$	602	$	282
Real estate - construction	1,658		1,843		82
Real estate - mortgage:
1-4 family residential	1,681		1,745		607
Commercial	11,394		14,714		766
Consumer	—		—		—
Total	$	15,312	$	18,904	$	1,737
Total individually evaluated impaired loans
Commercial and agricultural	$	2,334	$	3,210	$	282
Real estate - construction	13,533		20,396		82
Real estate - mortgage:
1-4 family residential	18,118		22,509		607
Commercial	43,609		53,299		766
Consumer	—		—		—
Total	$	77,594	$	99,414	$	1,737
PI loans with subsequent credit deterioration:
Commercial and agricultural	$	11,533	$	11,728	$	524
Real estate - construction	2,285		2,236		200
Real estate - mortgage:
1-4 family residential	34,961		35,802		711
Commercial	141,974		145,704		3,388
Consumer	1,362		1,147		550
Total	$	192,115	$	196,617	$	5,373

The following summary includes impaired loans individually reviewed as well as impaired loans held for sale. Average recorded investment and interest income recognized on impaired loans, segregated by portfolio segment, is shown in the following tables as of December 31, 2013 and December 31, 2012:



	For Twelve Months Ended				For Twelve Months Ended				For Twelve Months Ended
	December 31, 2013				December 31, 2012				December 31, 2011
	Average		Interest		Average		Interest		Average		Interest
(dollars in thousands)	Recorded		Income		Recorded		Income		Recorded		Income
	Investment		Recognized		Investment		Recognized		Investment		Recognized
With no related allowance recorded:
Commercial and agricultural	$	784	$	8	$	1,989	$	42	$	3,202	$	—
Real estate - construction	9,075		35		15,130		92		41,164		1
Real estate - mortgage:
1-4 family residential	11,920		100		18,237		204		17,077		1
Commercial	29,384		254		35,765		286		38,688		25
Consumer	—		—		—		—		175		—
Total	$	51,163	$	397	$	71,121	$	624	$	100,306	$	27
With an allowance recorded:
Commercial and agricultural	$	283	$	5	$	706	$	16	$	4,458	$	—
Real estate - construction	638		9		1,762		—		51,354		—
Real estate - mortgage:
1-4 family residential	2,713		20		1,764		61		15,740		7
Commercial	4,127		4		13,069		445		40,777		—
Consumer	83		1		—		—		214		—
Total	$	7,844	$	39	$	17,301	$	522	$	112,543	$	7
Total:
Commercial and agricultural	$	1,067	$	13	$	2,695	$	58	$	7,660	$	—
Real estate - construction	9,713		44		16,892		92		92,518		1
Real estate - mortgage:
1-4 family residential	14,633		120		20,001		265		32,817		8
Commercial	33,511		258		48,834		731		79,465		25
Consumer	83		1		—		—		389		—
Total	$	59,007	$	436	$	88,422	$	1,146	$	212,849	$	34

Impaired loans also include loans for which we may elect to grant a concession, providing terms more favorable than those prevalent in the market (e.g., rate, amortization term), and formally restructure due to the weakening credit status of a borrower. Restructuring is designed to facilitate a repayment plan that minimizes the potential losses that we otherwise may have to incur. If these impaired loans are on nonaccruing status as of the date of restructuring, the loans are included in nonperforming loans. Nonaccruing restructured loans will remain as nonaccruing until the borrower can demonstrate adherence to the restructured terms for a period of no less than six months and when it is otherwise determined that continued adherence is reasonably assured. Some restructured loans continue as accruing loans after restructuring if the borrower is not past due at the time of restructuring, adequate collateral valuations support the restructured loans, and the cash flows of the underlying business appear adequate to support the restructured debt service. Not included in nonaccruing loans are loans that have been restructured that were performing as of the restructure date. At December 31, 2013, there was $18.1 million in restructured loans, of which $12.1 million were accruing and in a performing status. At December 31, 2012, there was $20.8 million in restructured loans, of which $4.5 million were accruing and in a performing status.

Sale of Problem Loans

During 2012, we sold loans to third party buyers in order to reduce our problem loan exposure. These loans were transferred to loans held for sale at the time we received a signed contract for the purchase of the loans. Prior to transferring these loans to loans held for sale, the loans were marked down to the contract price less associated selling costs. All transactions were conducted at arm's length and loans were sold without recourse.

The following table presents sold loans by portfolio segment for the periods indicated below:



	For the Twelve Months Ended					For the Twelve Months Ended
	December 31, 2013					December 31, 2012
(dollars in thousands)	Number	Recorded		Contract		Number	Recorded		Contract
	of Loans	Investment		Pricing		of Loans	Investment		Pricing
Commercial and agricultural	—	$	—	$	—	—	$	—	$	—
Real estate - construction	—	—		—		—	—		—
Real estate - mortgage:
1-4 family residential	—	—		—		—	—		—
Commercial	3	1,747		1,244		2	3,950		4,200
Consumer	—	—		—		—	—		—
Total	3	$	1,747	$	1,244	2	$	3,950	$	4,200

Granite Purchased Loans

Granite Purchased Loans include PI loans and PC loans. PC loans include performing revolving consumer and commercial loans on October 21, 2011, the acquisition date.

PI loans are segregated into pools and recorded at estimated fair value on the date of acquisition without the carryover of the related ALL. PI loans are accounted for under ASC 310-30 when the loans have evidence of credit deterioration since origination and it is probable at the date of acquisition we will not collect all contractually required principal and interest payments. Evidence of credit quality deterioration as of the date of acquisition may include statistics such as past due status, nonaccrual status and risk grade. PI loans generally meet our definition for nonaccrual status; however, even if the borrower is not currently making payments, we will classify loans as accruing if we can reasonably estimate the amount and timing of future cash flows. All Granite Purchased PI loans are presented on an accruing basis. The difference between contractually required payments at acquisition and the cash flows expected to be collected at acquisition is referred to as the nonaccretable difference.

Periodically, we estimate the expected cash flows for each pool of the PI loans and evaluate whether the expected cash flows for each pool have changed from prior estimates. Decreases to the expected cash flows will generally result in a provision for loan losses. Subsequent increases in cash flows result in a reversal of the provision for loan losses to the extent of prior charges, or reclassification from nonaccretable difference to accretable yield with a positive impact on future interest income. Excess of cash flows expected at acquisition over the estimated fair value is referred to as the accretable yield and is recognized into interest income over the remaining life of the loan when there is a reasonable expectation about the amount and timing of such cash flows.

We have elected to account for the Granite Purchased PI loans under ASC 310-30 and the Granite Purchased PC loans under ASC 310-20.

At December 31, 2013, and December 31, 2012, our financial statements reflected a PI loan ALL of $5.6 million and $5.4 million, respectively, and an ALL for PC loans of $0.3 million and $0.7 million, respectively.

The following table presents the balance of all Granite Purchased Loans:



	At December 31, 2013
(dollars in thousands)	Purchased Impaired		Purchased Contractual		Total Purchased Loans		Unpaid Principal Balance
Commercial and agricultural	$	10,729	$	5,948	$	16,677	$	16,452
Real estate - construction	9,893		—		9,893		11,368
Real estate - mortgage:
1-4 family residential	26,854		22,127		48,981		51,359
Commercial	113,178		373		113,551		122,197
Consumer	998		—		998		798
Total	$	161,652	$	28,448	$	190,100	$	202,174



	At December 31, 2012
(dollars in thousands)	Purchased Impaired		Purchased Contractual		Total Purchased Loans		Unpaid Principal Balance
Commercial and agricultural	$	14,666	$	7,311	$	21,977	$	22,212
Real estate - construction	2,682		—		2,682		2,974
Real estate - mortgage:
1-4 family residential	39,215		27,484		66,699		70,657
Commercial	170,467		49		170,516		187,646
Consumer	1,362		—		1,362		1,147
Total	$	228,392	$	34,844	$	263,236	$	284,636

The table below includes only those Granite Purchased Loans accounted for under the expected cash flow method (PI loans) for the periods indicated. These tables do not include PC loans, including Granite Purchased PC loans or purchased performing residential mortgage loans.



	For Twelve Months Ended						For Twelve Months Ended
	December 31, 2013						December 31, 2012
	Purchased Impaired						Purchased Impaired
(dollars in thousands)	Carrying Amount			Future Accretion			Carrying Amount			Future Accretion
Balance, beginning of period	$	228,392		$	30,300		$	330,836		$	47,804
Accretion	16,032			(16,032		)	20,549			(20,549		)
Increase in future accretion	—			15,721			—			3,045
Payments received	(80,258		)	—			(111,875		)	—
Foreclosed and transferred to OREO	(2,514		)	—			(11,118		)	—
Subtotal before allowance	161,652			29,989			228,392			30,300
Allowance for credit losses	(5,560		)	—			(5,373		)	—
Net carrying amount, end of period	$	156,092		$	29,989		$	223,019		$	30,300

Allowance for Loan Losses

An analysis of the changes in the ALL is as follows:



(dollars in thousands)	2013			2012			2011
Balance, beginning of period	$	29,314		$	39,360		93,687
Provision for losses	523			14,049			67,362
Net charge-offs:
Charge-offs	(13,344		)	(30,968		)	(128,424	)
Recoveries	10,292			6,873			6,735
Net charge-offs	(3,052		)	(24,095		)	(121,689	)
Balance, end of period	$	26,785		$	29,314		39,360
Annualized net charge-offs during the period to average loans held for investment	0.26		%	1.94		%	10.75	%
Annualized net charge-offs during the period to ALL	11.39		%	82.20		%	309.17	%
Allowance for loan losses to loans held for investment (1)	2.21		%	2.49		%	3.23	%
(1) Excludes discontinued operations

During the year ended December 31, 2013, we charged off $13.3 million in loans and realized $10.3 million in recoveries, for $3.1 million of net charge-offs. The majority of the loans charged off were loans that were previously impaired and had specific reserves assigned in prior periods.

The ALL, as a percentage of loans held for investment, was 2.21% at December 31, 2013, compared to 2.49% at December 31, 2012.

The following table presents ALL activity by portfolio segment for the year ended December 31, 2013:



							Real Estate - Mortgage
(dollars in thousands)	Commercial and Agricultural			Real Estate - Construction			1-4 Family Residential			Commercial			Consumer			Total

ALL:
Beginning balance at January 1, 2013	$	3,238		$	4,987		$	8,701		$	9,627		$	2,761		$	29,314
Charge-offs	(1,277		)	(1,080		)	(4,032		)	(2,808		)	(4,147		)	(13,344		)
Recoveries	1,623			2,681			1,266			3,048			1,674			10,292
Provision (Recovery)	(653		)	(1,355		)	2,934			(2,672		)	2,269			523
Ending balance at December 31, 2013	$	2,931		$	5,233		$	8,869		$	7,195		$	2,557		$	26,785

The following table presents ALL activity by portfolio segment for the year ended December 31, 2012:



							Real Estate - Mortgage
(dollars in thousands)	Commercial and Agricultural			Real Estate - Construction			1-4 Family Residential			Commercial			Consumer			Total
ALL:
Beginning balance at January 1, 2012	$	5,776		$	11,995		$	8,885		$	11,063		$	1,641		$	39,360
Charge-offs	(3,494		)	(11,084		)	(6,422		)	(5,510		)	(4,458		)	(30,968		)
Recoveries	991			3,237			573			852			1,220			6,873
Provision (Recovery)	(35		)	839			5,665			3,222			4,358			14,049
Ending balance at December 31, 2012	$	3,238		$	4,987		$	8,701		$	9,627		$	2,761		$	29,314

The following table presents ALL activity by portfolio segment for the year ended December 31, 2011:



							Real Estate - Mortgage
(dollars in thousands)	Commercial and Agricultural			Real Estate - Construction			1-4 Family Residential			Commercial			Consumer			Total
ALL:
Beginning balance at January 1, 2011	$	11,144		$	46,792		$	7,742		$	26,851		$	1,158		$	93,687
Charge-offs	(10,832		)	(65,526		)	(11,384		)	(36,998		)	(3,684		)	(128,424		)
Recoveries	855			2,637			831			891			1,521			6,735
Provision (Recovery)	4,609			28,092			11,696			20,319			2,646			67,362
Ending balance at December 31, 2011	$	5,776		$	11,995		$	8,885		$	11,063		$	1,641		$	39,360

The following table details the recorded investment in loans related to each segment in the allowance for loan losses by portfolio segment and disaggregated on the basis of impairment evaluation methodology at December 31, 2013:



					Real Estate - Mortgage
(dollars in thousands)	Commercial and Agricultural		Real Estate - Construction		1-4 Family Residential		Commercial		Consumer		Total
ALL:
Individually evaluated for impairment	$	—	$	—	$	927	$	—	$	—	$	927
Collectively evaluated for impairment	2,549		4,218		7,218		3,944		2,369		20,298
PI loans evaluated for credit impairment	382		1,015		724		3,251		188		5,560
PI loans with no credit deterioration	—		—		—		—		—		—
Total ALL	$	2,931	$	5,233	$	8,869	$	7,195	$	2,557	$	26,785
Loans held for investment
Individually evaluated for impairment	$	398	$	4,734	$	14,119	$	23,579	$	—	$	42,830
Collectively evaluated for impairment	61,125		49,457		595,135		258,167		43,883		1,007,767
PI loans with subsequent credit deterioration	10,729		9,792		26,628		113,178		980		161,307
PI loans with no credit deterioration	—		100		225		—		19		344
Total loans	$	72,252	$	64,083	$	636,107	$	394,924	$	44,882	$	1,212,248



					Real Estate - Mortgage
(dollars in thousands)	Commercial and Agricultural		Real Estate - Construction		1-4 Family Residential		Commercial		Consumer		Total
ALL:
Individually evaluated for impairment	$	282	$	82	$	607	$	766	$	—	$	1,737
Collectively evaluated for impairment	2,432		4,705		7,383		5,473		2,211		22,204
PI loans evaluated for credit impairment	524		200		711		3,388		550		5,373
PI loans with no credit deterioration	—		—		—		—		—		—
Total ALL	$	3,238	$	4,987	$	8,701	$	9,627	$	2,761	$	29,314
Loans held for investment
Individually evaluated for impairment	$	2,334	$	13,533	$	18,118	$	43,609	$	—	$	77,594
Collectively evaluated for impairment	62,704		42,199		496,205		227,760		42,181		871,049
PI loans with subsequent credit deterioration	11,533		2,285		34,961		141,974		1,362		192,115
PI loans with no credit deterioration	3,133		397		4,254		28,493		—		36,277
Total loans	$	79,704	$	58,414	$	553,538	$	441,836	$	43,543	$	1,177,035

Troubled Debt Restructuring

The following tables presents a breakdown of troubled debt restructurings that were restructured during the periods presented, segregated by portfolio segment:



	For Twelve Months Ended December 31, 2013					For Twelve Months Ended December 31, 2012					For Twelve Months Ended December 31, 2011
		Pre-Modified		Post-Modified			Pre-Modified		Post-Modified			Pre-Modified		Post-Modified
		Outstanding		Outstanding			Outstanding		Outstanding			Outstanding		Outstanding
(dollars in thousands)	Number	Recorded		Recorded		Number	Recorded		Recorded		Number	Recorded		Recorded
	of Loans	Investment		Investment		of Loans	Investment		Investment		of Loans	Investment		Investment
Commercial and agricultural	—	$	—	$	—	1	$	312	$	127	8	$	806	$	806
Real estate - construction	2	125		125		8	1,994		1,335		8	5,162		5,162
Real estate - mortgage:
1-4 family residential	12	3,387		3,451		3	566		565		9	406		406
Commercial	5	5,531		5,238		5	690		667		15	9,740		9,740
Consumer	—	—		—		—	—		—		—	—		—
Total	19	$	9,043	$	8,814	17	$	3,562	$	2,694	40	$	16,114	$	16,114

During the twelve months ended December 31, 2013, we modified 19 loans that were considered to be troubled debt restructurings. We extended the terms for 3 of these loans, modified the interest rate for 2 of these loans, and modified the remaining 14 loans in both ways. During the twelve months ended December 31, 2012, we modified 17 loans that were considered to be troubled debt restructurings. We extended the terms and lowered the interest rate for seven of these loans, and only extended the terms for the remaining ten loans.

There were no loans restructured in the twelve months prior to December 31, 2013 that went into default during the year ended December 31, 2013. There were also no loans restructured in the twelve months prior to December 31, 2012 that went into default during the year ended December 31, 2012.

In the determination of the ALL, management considers troubled debt restructurings and any subsequent defaults in these restructurings as impaired loans. The amount of the impairment is measured using the present value of expected future cash flows discounted at the loan's initial effective interest rate, the observable market price of the loan, or the fair value of the collateral if the loan is collateral dependent.

Unfunded Commitments

The reserve for unfunded commitments, which is included in other liabilities, is calculated by estimating the amount of additional funding on the commitment and multiplying that amount by the historical loss rate (including Q&E factors). The following describes our method for determining the estimated additional funding by commitment type:


•	Straight Lines of Credit - Unfunded balance of line of credit (100% utilization)


•	Revolving Lines of Credit - Average Utilization (for the last 12 months) less Current Utilization


•	Letters of Credit - 10% utilization

The reserve for unfunded commitments was $0.5 million as of December 31, 2013 and $0.6 million at December 31, 2012.