Loans and Allowance for Loan Losses (Tables)

9 Months Ended

Sep. 30, 2014

Loans Receivable, Net [Abstract]

Past Due Loans

The following table presents an aging analysis of accruing and nonaccruing loans as of September 30, 2014:

(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	$	504	$	—	$	—	$	351	$	855	$	89,524	$	90,379
Real estate - construction	77		144		—		2,878		3,099		63,548		66,647
Real estate - mortgage:
1-4 family residential	502		517		107		8,670		9,796		634,346		644,142
Commercial	327		154		470		15,913		16,864		304,777		321,641
Consumer	82		40		—		94		216		64,427		64,643
Total	1,492		855		577		27,906		30,830		1,156,622		1,187,452
PI loans
Commercial and agricultural	—		—		2,268		—		2,268		5,990		8,258
Real estate - construction	—		—		3,934		—		3,934		5,343		9,277
Real estate - mortgage:
1-4 family residential	93		—		2,352		—		2,445		15,873		18,318
Commercial	898		1,335		11,584		—		13,817		80,013		93,830
Consumer	7		—		11		—		18		964		982
Total	998		1,335		20,149		—		22,482		108,183		130,665
Total Loans	$	2,490	$	2,190	$	20,726	$	27,906	$	53,312	$	1,264,805	$	1,318,117

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

Loan Credit Quality Indicators

The following table presents loans held for investment balances by risk grade as of September 30, 2014:

(dollars in thousands)	Pass		Special Mention		Substandard		Doubtful
	(Ratings 1-5)		(Rating 6)		(Rating 7)		(Rating 8)		Total
Commercial and agricultural	$	94,085	$	1,704	$	2,848	$	—	$	98,637
Real estate - construction	65,298		2,868		7,758		—		75,924
Real estate - mortgage:
1-4 family residential	637,609		8,067		16,784		—		662,460
Commercial	346,857		23,405		44,743		466		415,471
Consumer	65,116		15		105		389		65,625
Total	$	1,208,965	$	36,059	$	72,238	$	855	$	1,318,117

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

Schedule of Impaired Loans Receivables

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

	September 30, 2014				December 31, 2013
(dollars in thousands)	Recorded Investment		Associated Reserves		Recorded Investment		Associated Reserves
Impaired loans, not individually reviewed for impairment	$	4,741	$	—	$	4,612	$	—
Impaired loans, individually reviewed, with no impairment	29,582		—		39,865		—
Impaired loans, individually reviewed, with impairment	7,811		442		2,965		927
Total impaired loans, excluding purchased impaired *	$	42,134	$	442	$	47,442	$	927
Purchased impaired loans with subsequent deterioration	$	111,541	3,923		$	161,307	5,560
Purchased impaired loans with no subsequent deterioration	$	19,124	—		$	345	—
Total Reserves			$	4,365			$	6,487
Average impaired loans calculated using a simple average	$	44,788			$	65,527

* Included at September 30, 2014 and December 31, 2013 were $13.8 million and $12.1 million, respectively, in restructured and performing loans.

Schedule of Loans, Non Accrual Status

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

(dollars in thousands)
	September 30, 2014		December 31, 2013
Loans held for investment:
Commercial and agricultural	$	351	$	516
Real estate - construction	2,878		4,677
Real estate - mortgage:
1-4 family residential	8,670		11,580
Commercial	15,913		18,380
Consumer	94		12
Total nonaccrual loans	27,906		35,165
Loans more than 90 days delinquent, still on accrual	577		—
Total nonperforming loans	$	28,483	$	35,165

Impaired Loans

The following table presents individually reviewed impaired loans and purchased impaired loans with subsequent credit deterioration, segregated by portfolio segment, and the corresponding allowance for loan losses as of September 30, 2014:

			Unpaid
(dollars in thousands)	Recorded		Principal		Related
	Investment		Balance		Allowance
Individually reviewed impaired loans with no related allowance recorded:
Commercial and agricultural	$	222	$	461	$	—
Real estate - construction	2,830		3,371		—
Real estate - mortgage:
1-4 family residential	8,028		9,915		—
Commercial	18,502		24,792		—
Consumer	—		—		—
Total	29,582		38,539		—
Individually reviewed impaired loans with an allowance recorded:
Commercial and agricultural	—		—		—
Real estate - construction	—		—		—
Real estate - mortgage:
1-4 family residential	3,402		3,853		335
Commercial	4,409		4,606		87
Consumer	—		—		—
Total	7,811		8,459		422
Total individually reviewed impaired loans
Commercial and agricultural	222		461		—
Real estate - construction	2,830		3,371		—
Real estate - mortgage:
1-4 family residential	11,430		13,768		335
Commercial	22,911		29,398		87
Consumer	—		—		—
Total	$	37,393	$	46,998	$	422
PI loans with subsequent credit deterioration:
Commercial and agricultural	$	7,774	$	6,392	$	380
Real estate - construction	9,199		10,801		613
Real estate - mortgage:
1-4 family residential	16,892		17,158		375
Commercial	76,695		77,095		2,365
Consumer	981		675		190
Total	$	111,541	$	112,121	$	3,923

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

			Unpaid
(dollars in thousands)	Recorded		Principal		Related
	Investment		Balance		Allowance
Individually reviewed impaired loans 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		—
Individually reviewed impaired loans 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 reviewed 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

Impaired Loans, Average Recorded Investment and Interest Income

The following summary presents individually reviewed impaired loans. Average recorded investment and interest income recognized on impaired loans, segregated by portfolio segment, is shown in the following tables as of September 30, 2014 and September 30, 2013:

	For Three Months Ended				For Three Months Ended
	September 30, 2014				September 30, 2013
	Average		Interest		Average		Interest
(dollars in thousands)	Recorded		Income		Recorded		Income
	Investment		Recognized		Investment		Recognized
Individually reviewed impaired loans with no related allowance recorded:
Commercial and agricultural	$	222	$	—	$	434	$	—
Real estate - construction	2,865		8		10,006		3
Real estate - mortgage:
1-4 family residential	8,253		23		10,516		—
Commercial	19,042		28		27,844		4
Consumer	—		—		—		—
Total	30,382		59		48,800		7
Individually reviewed impaired loans with an allowance recorded:
Commercial and agricultural	—		—		—		—
Real estate - construction	—		—		97		—
Real estate - mortgage:
1-4 family residential	3,413		12		2,605		—
Commercial	4,427		38		273		—
Consumer	—		—		—		—
Total	7,840		50		2,975		—
Total individually reviewed impaired loans:
Commercial and agricultural	222		—		434		—
Real estate - construction	2,865		8		10,103		3
Real estate - mortgage:
1-4 family residential	11,666		35		13,121		—
Commercial	23,469		66		28,117		4
Consumer	—		—		—		—
Total	$	38,222	$	109	$	51,775	$	7

	For Nine Months Ended				For Nine Months Ended
	September 30, 2014				September 30, 2013
	Average		Interest		Average		Interest
(dollars in thousands)	Recorded		Income		Recorded		Income
	Investment		Recognized		Investment		Recognized
Individually reviewed impaired loans with no related allowance recorded:
Commercial and agricultural	$	222	$	—	$	455	$	7
Real estate - construction	2,936		29		10,300		23
Real estate - mortgage:
1-4 family residential	8,400		87		10,442		14
Commercial	19,814		237		29,288		58
Consumer	—		—		—		—
Total	31,372		353		50,485		102
Individually reviewed impaired loans with an allowance recorded:
Commercial and agricultural	$	—	$	—	$	107	$	—
Real estate - construction	—		—		220		6
Real estate - mortgage:
1-4 family residential	3,440		45		1,682		4
Commercial	4,479		153		3,933		—
Consumer	—		—		167		1
Total	7,919		198		6,109		11
Total individually reviewed impaired loans:
Commercial and agricultural	222		—		562		7
Real estate - construction	2,936		29		10,520		29
Real estate - mortgage:
1-4 family residential	11,840		132		12,124		18
Commercial	24,293		390		33,221		58
Consumer	—		—		167		1
Total	$	39,291	$	551	$	56,594	$	113

Schedule of Loans Receivable, Acquired Loans

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

	At September 30, 2014
(dollars in thousands)	Purchased Impaired		Purchased Contractual		Total Purchased Loans		Unpaid Principal Balance
Commercial and agricultural	$	8,258	$	3,786	$	12,044	$	10,840
Real estate - construction	9,277		—		9,277		10,886
Real estate - mortgage:
1-4 family residential	18,318		23,141		41,459		43,659
Commercial	93,830		—		93,830		100,567
Consumer	982		—		982		687
Total	$	130,665	$	26,927	$	157,592	$	166,639

	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	26,853		22,127		48,980		51,359
Commercial	113,178		373		113,551		122,197
Consumer	999		—		999		798
Total	$	161,652	$	28,448	$	190,100	$	202,174

Deteriorated Loans Acquired, Accretable Yield Movement Schedule

The tables below include 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 PC loans or purchased residential mortgage loan pools.

	For Three Months Ended						For Three Months Ended
	September 30, 2014						September 30, 2013
	Purchased Impaired						Purchased Impaired
(dollars in thousands)	Carrying Amount			Future Accretion			Carrying Amount			Future Accretion
Balance, beginning of period	$	141,924		$	27,764		$	189,159		$	28,706
Accretion	2,323			(2,323		)	4,283			(4,283		)
Increase in future accretion	—			1,495			—			—
Payments received	(13,253		)	—			(16,225		)	—
Foreclosed and transferred to OREO	(329		)	—			(624		)	—
Subtotal before allowance	130,665			26,936			176,593			24,423
Allowance for loan losses	(3,923		)	—			(4,066		)	—
Net carrying amount, end of period	$	126,742		$	26,936		$	172,527		$	24,423

	For Nine Months Ended						For Nine Months Ended
	September 30, 2014						September 30, 2013
	Purchased Impaired						Purchased Impaired
(dollars in thousands)	Carrying Amount			Future Accretion			Carrying Amount			Future Accretion
Balance, beginning of period	$	161,652		$	29,987		$	228,392		$	30,299
Accretion	7,402			(7,402		)	12,677			(12,677		)
Increase in future accretion	—			4,351			—			6,801
Reclassification of loans and adjustments	(4,180		)	—			—			—
Payments received	(33,858		)	—			(62,556		)	—
Foreclosed and transferred to OREO	(351		)	—			(1,920		)	—
Subtotal before allowance	130,665			26,936			176,593			24,423
Allowance for credit losses	(3,923		)	—			(4,066		)	—
Net carrying amount, end of period	$	126,742		$	26,936		$	172,527		$	24,423

Allowance for Loan Losses

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

	For Three Months Ended						For Nine Months Ended
(dollars in thousands)	September 30, 2014			September 30, 2013			September 30, 2014			September 30, 2013
Balance, beginning of period	$	23,975		$	25,085		$	26,785		$	29,314
Recovery of losses charged to continuing operations	(1,679		)	(350		)	(4,048		)	(1,297		)
Net recoveries (charge-offs):
Charge-offs	(1,970		)	(1,724		)	(5,980		)	(10,836		)
Recoveries	1,199			2,376			4,768			8,206
Net (charge-offs) recoveries	(771		)	652			(1,212		)	(2,630		)
Balance, end of period	$	21,525		$	25,387		$	21,525		$	25,387
Annualized net charge-offs (recoveries) during the period to average loans held for investment	0.24		%	(0.22		)%	0.13		%	0.31		%
Annualized net charge-offs (recoveries) during the period to ALL	14.21		%	(10.19		)%	7.53		%	13.85		%
Allowance for loan losses to loans held for investment	1.63		%	2.12		%	1.63		%	2.12		%

Allowance for Loan Losses by Portfolio Segment

The following table presents ALL activity by portfolio segment for the three months ended September 30, 2014:

							Real Estate - Mortgage
(dollars in thousands)	Commercial and Agricultural			Real Estate - Construction			1-4 Family Residential			Commercial			Consumer			Total
ALL:
Beginning balance July 1, 2014	$	3,508		$	4,778		$	7,410		$	5,666		$	2,613		$	23,975
Charge-offs	(301		)	(52		)	(234		)	(511		)	(872		)	(1,970		)
Recoveries	171			131			396			123			378			1,199
Provision (recovery of provision)	(58		)	(1,089		)	(1,217		)	(150		)	835			(1,679		)
Ending balance September 30, 2014	$	3,320		$	3,768		$	6,355		$	5,128		$	2,954		$	21,525

The following table presents ALL activity by portfolio segment for the three months ended September 30, 2013:

							Real Estate - Mortgage
(dollars in thousands)	Commercial and Agricultural			Real Estate - Construction			1-4 Family Residential			Commercial			Consumer			Total
ALL:
Beginning balance July 1, 2013	$	2,192		$	5,652		$	7,400		$	7,387		$	2,454		$	25,085
Charge-offs	(2		)	(36		)	(394		)	(592		)	(700		)	(1,724		)
Recoveries	465			1,039			285			357			230			2,376
Provision (recovery of provision)	(45		)	(1,560		)	1,493			(677		)	439			(350		)
Ending balance September 30, 2013	$	2,610		$	5,095		$	8,784		$	6,475		$	2,423		$	25,387

The following table presents ALL activity by portfolio segment for the nine months ended September 30, 2014:

							Real Estate - Mortgage
(dollars in thousands)	Commercial and Agricultural			Real Estate - Construction			1-4 Family Residential			Commercial			Consumer			Total
ALL:
Beginning balance January 1, 2014	$	2,931		$	5,233		$	8,869		$	7,195		$	2,557		$	26,785
Charge-offs	(1,311		)	(676		)	(869		)	(1,307		)	(1,817		)	(5,980		)
Recoveries	825			1,458			894			716			875			4,768
Provision (recovery of provision)	875			(2,247		)	(2,539		)	(1,476		)	1,339			(4,048		)
Ending balance September 30, 2014	$	3,320		$	3,768		$	6,355		$	5,128		$	2,954		$	21,525

The following table presents ALL activity by portfolio segment for the nine months ended September 30, 2013:

							Real Estate - Mortgage
(dollars in thousands)	Commercial and Agricultural			Real Estate - Construction			1-4 Family Residential			Commercial			Consumer			Total
ALL:
Beginning balance January 1, 2013	$	3,238		$	4,987		$	8,701		$	9,627		$	2,761		$	29,314
Charge-offs	(1,196		)	(964		)	(3,563		)	(2,853		)	(2,260		)	(10,836		)
Recoveries	1,376			2,106			962			2,363			1,399			8,206
Provision (recovery of provision)	(808		)	(1,034		)	2,684			(2,662		)	523			(1,297		)
Ending balance September 30, 2013	$	2,610		$	5,095		$	8,784		$	6,475		$	2,423		$	25,387

Allowance for Loan Losses, Impairment Methodology

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 September 30, 2014:

					Real Estate - Mortgage
(dollars in thousands)	Commercial and Agricultural		Real Estate - Construction		1-4 Family Residential		Commercial		Consumer		Total
ALL:
Individually reviewed for impairment	$	—	$	—	$	355	$	87	$	—	$	442
Collectively reviewed for impairment	2,940		3,155		5,625		2,676		2,764		17,160
PI loans reviewed for credit impairment	380		613		375		2,365		190		3,923
PI loans with no credit deterioration	—		—		—		—		—		—
Total ALL	$	3,320	$	3,768	$	6,355	$	5,128	$	2,954	$	21,525
Loans held for investment
Individually reviewed for impairment	$	222	$	2,830	$	11,430	$	22,911	$	—	$	37,393
Collectively reviewed for impairment	90,157		63,817		632,712		298,730		64,643		1,150,059
PI loans with subsequent credit deterioration	7,774		9,199		16,892		76,695		981		111,541
PI loans with no credit deterioration	484		78		1,426		17,135		1		19,124
Total loans	$	98,637	$	75,924	$	662,460	$	415,471	$	65,625	$	1,318,117

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 reviewed for impairment	$	—	$	—	$	927	$	—	$	—	$	927
Collectively reviewed for impairment	2,549		4,218		7,218		3,944		2,369		20,298
PI loans reviewed 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 reviewed for impairment	$	398	$	4,734	$	14,119	$	23,579	$	—	$	42,830
Collectively reviewed for impairment	61,125		49,456		595,135		258,167		43,883		1,007,766
PI loans with subsequent credit deterioration	10,729		9,792		26,628		113,178		980		161,307
PI loans with no credit deterioration	—		101		225		—		19		345
Total loans	$	72,252	$	64,083	$	636,107	$	394,924	$	44,882	$	1,212,248

Troubled Debt Restructurings on Loans

The following tables present a breakdown of troubled debt restructurings that were restructured during the three months and nine months ended September 30, 2014 and September 30, 2013, respectively, segregated by portfolio segment:

	For Three Months Ended September 30, 2014					For Three Months Ended September 30, 2013
		Pre-Modification		Post-Modification			Pre-Modification		Post-Modification
		Outstanding		Outstanding			Outstanding		Outstanding
(dollars in thousands)	Number	Recorded		Recorded		Number	Recorded		Recorded
	of Loans	Investment		Investment		of Loans	Investment		Investment
Commercial and agricultural	—	$	—	$	—	—	$	—	$	—
Real estate - construction	1	37		37		—	—		—
Real estate - mortgage:
1-4 family residential	1	260		260		—	—		—
Commercial	—	—		—		—	—		—
Consumer	—	—		—		—	—		—
Total	2	$	297	$	297	—	$	—	$	—

	For Nine Months Ended September 30, 2014					For Nine Months Ended September 30, 2013
		Pre-Modification		Post-Modification			Pre-Modification		Post-Modification
		Outstanding		Outstanding			Outstanding		Outstanding
(dollars in thousands)	Number	Recorded		Recorded		Number	Recorded		Recorded
	of Loans	Investment		Investment		of Loans	Investment		Investment
Commercial and agricultural	2	$	94	$	94	—	$	—	$	—
Real estate - construction	2	523		523		—	—		—
Real estate - mortgage:
1-4 family residential	8	1,012		1,088		9	2,733		2,630
Commercial	7	3,052		3,052		2	1,611		1,195
Consumer	—	—		—		—	—		—
Total	19	$	4,681	$	4,757	11	$	4,344	$	3,825