Loans and Allowance for Loan Losses (Tables)

9 Months Ended

Sep. 30, 2015

The following table presents an aging analysis of accruing and nonaccruing loans as of September 30, 2015:



(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	$	—	$	7	$	—	$	429	$	436	$	148,669	$	149,105
Real estate - construction	17		—		—		488		505		77,807		78,312
Real estate - mortgage:
1-4 family residential	874		442		18		9,370		10,704		662,028		672,732
Commercial	—		—		—		7,556		7,556		422,452		430,008
Consumer	935		152		—		535		1,622		97,999		99,621
Total	1,826		601		18		18,378		20,823		1,408,955		1,429,778
PI loans
Commercial and agricultural	49		—		1,739		—		1,788		4,060		5,848
Real estate - construction	—		—		1,481		—		1,481		6,514		7,995
Real estate - mortgage:
1-4 family residential	325		—		1,542		—		1,867		12,924		14,791
Commercial	316		315		8,715		—		9,346		53,739		63,085
Consumer	2		1		7		—		10		948		958
Total	692		316		13,484		—		14,492		78,185		92,677
Total Loans	$	2,518	$	917	$	13,502	$	18,378	$	35,315	$	1,487,140	$	1,522,455

The following table presents an aging analysis of accruing and nonaccruing loans as of December 31, 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	$	—	$	—	$	—	$	608	$	608	$	105,269	$	105,877
Real estate - construction	100		—		—		2,307		2,407		66,723		69,130
Real estate - mortgage:
1-4 family residential	2,719		147		—		8,637		11,503		638,364		649,867
Commercial	105		141		—		13,381		13,627		325,356		338,983
Consumer	744		225		5		355		1,329		69,760		71,089
Total	3,668		513		5		25,288		29,474		1,205,472		1,234,946
PI loans
Commercial and agricultural	—		—		2,232		—		2,232		5,303		7,535
Real estate - construction	—		—		3,737		—		3,737		5,460		9,197
Real estate - mortgage:
1-4 family residential	579		15		2,209		—		2,803		14,934		17,737
Commercial	287		119		12,964		—		13,370		73,975		87,345
Consumer	2		—		10		—		12		1,016		1,028
Total	868		134		21,152		—		22,154		100,688		122,842
Total Loans	$	4,536	$	647	$	21,157	$	25,288	$	51,628	$	1,306,160	$	1,357,788

Loan Credit Quality Indicators

The following table presents loans held for investment balances by risk grade as of September 30, 2015:



(dollars in thousands)	Pass		Special Mention		Substandard		Doubtful
	(Ratings 1-5)		(Rating 6)		(Rating 7)		(Rating 8)		Total
Commercial and agricultural	$	152,019	$	712	$	2,222	$	—	$	154,953
Real estate - construction	79,145		2,204		4,958		—		86,307
Real estate - mortgage:
1-4 family residential	667,255		4,911		15,357		—		687,523
Commercial	449,359		17,210		26,209		315		493,093
Consumer	99,545		6		553		475		100,579
Total	$	1,447,323	$	25,043	$	49,299	$	790	$	1,522,455

The following table presents loans held for investment balances by risk grade as of December 31, 2014:



(dollars in thousands)	Pass		Special Mention		Substandard		Doubtful
	(Ratings 1-5)		(Rating 6)		(Rating 7)		(Rating 8)		Total
Commercial and agricultural	$	104,165	$	6,318	$	2,930	$	—	$	113,413
Real estate - construction	68,995		2,411		6,921		—		78,327
Real estate - mortgage:
1-4 family residential	646,897		5,363		15,342		—		667,602
Commercial	363,267		25,715		36,984		362		426,328
Consumer	71,350		11		376		381		72,118
Total	$	1,254,674	$	39,818	$	62,553	$	743	$	1,357,788

Schedule of Impaired Loans Receivables

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



	September 30, 2015				December 31, 2014
(dollars in thousands)	Recorded Investment		Associated Reserves		Recorded Investment		Associated Reserves
Impaired loans, not individually reviewed for impairment	$	4,124	$	—	$	4,967	$	—
Impaired loans, individually reviewed, with no impairment	24,013		—		26,631		—
Impaired loans, individually reviewed, with impairment	3,448		344		7,851		418
Total impaired loans, excluding purchased impaired *	$	31,585	344		$	39,449	418

Purchased impaired loans with subsequent deterioration	$	89,292	3,190		$	118,701	3,237
Purchased impaired loans with no subsequent deterioration	3,385		—		4,141		—
Total Reserves			$	3,534			$	3,655

Average impaired loans calculated using a simple average	35,517				43,446



* Included at September 30, 2015 and December 31, 2014 were $13.2 million and $14.1 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, 2015		December 31, 2014
Loans held for investment:
Commercial and agricultural	$	429	$	608
Real estate - construction	488		2,307
Real estate - mortgage:
1-4 family residential	9,370		8,637
Commercial	7,556		13,381
Consumer	535		355
Total nonaccrual loans	18,378		25,288
Loans more than 90 days delinquent, still on accrual	18		5
Total nonperforming loans	$	18,396	$	25,293

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, 2015:



			Unpaid
(dollars in thousands)	Recorded		Principal		Related
	Investment		Balance		Allowance
Individually reviewed impaired loans with no related allowance recorded:
Commercial and agricultural	$	399	$	479	$	—
Real estate - construction	840		1,060		—
Real estate - mortgage:
1-4 family residential	8,640		10,649		—
Commercial	14,133		19,275		—
Consumer	—		—		—
Total	24,012		31,463		—
Individually reviewed impaired loans with an allowance recorded:
Commercial and agricultural	—		—		—
Real estate - construction	—		—		—
Real estate - mortgage:
1-4 family residential	3,448		4,138		344
Commercial	—		—		—
Consumer	—		—		—
Total	3,448		4,138		344
Total individually reviewed impaired loans:
Commercial and agricultural	399		479		—
Real estate - construction	840		1,060		—
Real estate - mortgage:
1-4 family residential	12,088		14,787		344
Commercial	14,133		19,275		—
Consumer	—		—		—
Total	$	27,460	$	35,601	$	344

PI loans with subsequent credit deterioration:
Commercial and agricultural	$	5,848	$	4,721	$	218
Real estate - construction	7,547		8,336		665
Real estate - mortgage:
1-4 family residential	11,854		12,317		256
Commercial	63,085		63,890		1,906
Consumer	958		621		145
Total	$	89,292	$	89,885	$	3,190

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, 2014:



			Unpaid
(dollars in thousands)	Recorded		Principal		Related
	Investment		Balance		Allowance
Individually reviewed impaired loans with no related allowance recorded:
Commercial and agricultural	$	—	$	—	$	—
Real estate - construction	2,344		2,898		—
Real estate - mortgage:
1-4 family residential	8,115		10,238		—
Commercial	16,172		22,060		—
Consumer	—		—		—
Total	26,631		35,196		—
Individually reviewed impaired loans with an allowance recorded:
Commercial and agricultural	498		498		58
Real estate - construction	—		—		—
Real estate - mortgage:
1-4 family residential	3,294		3,676		331
Commercial	4,059		4,228		29
Consumer	—		—		—
Total	7,851		8,402		418
Total individually reviewed impaired loans:
Commercial and agricultural	498		498		58
Real estate - construction	2,344		2,898		—
Real estate - mortgage:
1-4 family residential	11,409		13,914		331
Commercial	20,231		26,288		29
Consumer	—		—		—
Total	$	34,482	$	43,598	$	418

PI loans with subsequent credit deterioration:
Commercial and agricultural	$	7,535	$	6,149	$	257
Real estate - construction	8,619		9,855		507
Real estate - mortgage:
1-4 family residential	14,174		15,278		199
Commercial	87,345		90,830		2,085
Consumer	1,028		667		189
Total	$	118,701	$	122,779	$	3,237

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, 2015 and September 30, 2014:



	For Three Months Ended				For Three Months Ended
	September 30, 2015				September 30, 2014
	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	$	404	$	—	$	222	$	—
Real estate - construction	878		8		2,865		8
Real estate - mortgage:
1-4 family residential	8,786		31		8,253		23
Commercial	14,329		50		19,042		28
Consumer	—		—		—		—
Total	24,397		89		30,382		59
Individually reviewed impaired loans with an allowance recorded:
Commercial and agricultural	—		—		—		—
Real estate - construction	—		—		—		—
Real estate - mortgage:
1-4 family residential	3,509		10		3,413		12
Commercial	—		—		4,427		38
Consumer	—		—		—		—
Total	3,509		10		7,840		50
Total individually reviewed impaired loans:
Commercial and agricultural	404		—		222		—
Real estate - construction	878		8		2,865		8
Real estate - mortgage:
1-4 family residential	12,295		41		11,666		35
Commercial	14,329		50		23,469		66
Consumer	—		—		—		—
Total	$	27,906	$	99	$	38,222	$	109



	For Nine Months Ended				For Nine Months Ended
	September 30, 2015				September 30, 2014
	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	$	439	$	—	$	222	$	—
Real estate - construction	1,093		26		2,936		29
Real estate - mortgage:
1-4 family residential	7,937		85		8,400		87
Commercial	14,393		180		19,814		237
Consumer	—		—		—		—
Total	23,862		291		31,372		353
Individually reviewed impaired loans with an allowance recorded:
Commercial and agricultural	—		—		—		—
Real estate - construction	—		—		—		—
Real estate - mortgage:
1-4 family residential	3,966		43		3,440		45
Commercial	1,277		52		4,479		153
Consumer	—		—		—		—
Total	5,243		95		7,919		198
Total individually reviewed impaired loans:
Commercial and agricultural	439		—		222		—
Real estate - construction	1,093		26		2,936		29
Real estate - mortgage:
1-4 family residential	11,903		128		11,840		132
Commercial	15,670		232		24,293		390
Consumer	—		—		—		—
Total	$	29,105	$	386	$	39,291	$	551

Schedule of Loans Receivable, Acquired Loans

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



	At September 30, 2015
(dollars in thousands)	Purchased Impaired		Purchased Contractual		Total Purchased Loans		Unpaid Principal Balance
Commercial and agricultural	$	5,848	$	1,228	$	7,076	$	5,964
Real estate - construction	7,995		—		7,995		8,821
Real estate - mortgage:
1-4 family residential	14,791		19,520		34,311		35,303
Commercial	63,085		—		63,085		63,890
Consumer	958		—		958		621
Total	$	92,677	$	20,748	$	113,425	$	114,599



	At December 31, 2014
(dollars in thousands)	Purchased Impaired		Purchased Contractual		Total Purchased Loans		Unpaid Principal Balance
Commercial and agricultural	$	7,535	$	4,288	$	11,823	$	10,508
Real estate - construction	9,197		—		9,197		10,463
Real estate - mortgage:
1-4 family residential	17,737		21,660		39,397		41,295
Commercial	87,345		—		87,345		90,830
Consumer	1,028		—		1,028		678
Total	$	122,842	$	25,948	$	148,790	$	153,774

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, 2015						September 30, 2014
	Purchased Impaired						Purchased Impaired
(dollars in thousands)	Carrying Amount			Future Accretion			Carrying Amount			Future Accretion
Balance, beginning of period	$	102,115		$	20,800		$	141,924		$	27,764
Accretion	1,634			(1,634		)	2,323			(2,323		)
Increase (Decrease) in future accretion	—			(393		)	—			1,495
Reclassification of loans and adjustments	—			—			—			—
Payments received	(11,072		)	—			(13,253		)	—
Foreclosed and transferred to OREO	—			—			(329		)	—
Subtotal before allowance	92,677			18,773			130,665			26,936
Allowance for loan losses	(3,190		)	—			(3,923		)	—
Net carrying amount, end of period	$	89,487		$	18,773		$	126,742		$	26,936



	For Nine Months Ended						For Nine Months Ended
	September 30, 2015						September 30, 2014
	Purchased Impaired						Purchased Impaired
(dollars in thousands)	Carrying Amount			Future Accretion			Carrying Amount			Future Accretion
Balance, beginning of period	$	122,842		$	24,898		$	161,652		$	29,987
Accretion	5,523			(5,523		)	7,402			(7,402		)
Increase (Decrease) in future accretion	—			(602		)	—			4,351
Reclassification of loans and adjustments	—			—			(4,180		)	—
Payments received	(34,448		)	—			(33,858		)	—
Foreclosed and transferred to OREO	(1,240		)	—			(351		)	—
Subtotal before allowance	92,677			18,773			130,665			26,936
Allowance for credit losses	(3,190		)	—			(3,923		)	—
Net carrying amount, end of period	$	89,487		$	18,773		$	126,742		$	26,936

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, 2015			September 30, 2014			September 30, 2015			September 30, 2014
Balance, beginning of period	$	17,989		$	23,975		$	20,345		$	26,785
Recovery of losses charged to continuing operations	(64		)	(1,679		)	(1,990		)	(4,048		)
Net charge-offs:
Charge-offs	(1,293		)	(1,970		)	(3,855		)	(5,980		)
Recoveries	556			1,199			2,688			4,768
Net charge-offs	(737		)	(771		)	(1,167		)	(1,212		)
Balance, end of period	$	17,188		$	21,525		$	17,188		$	21,525
Annualized net charge-offs during the period to average loans held for investment	0.20		%	0.24		%	0.11		%	0.13		%
Annualized net charge-offs during the period to ALL	17.01		%	14.21		%	9.08		%	7.53		%
Allowance for loan losses to loans held for investment	1.13		%	1.63		%	1.13		%	1.63		%

Allowance for Loan Losses by Portfolio Segment

The following table presents ALL activity by portfolio segment for the three months ended September 30, 2015:



							Real Estate - Mortgage
(dollars in thousands)	Commercial and Agricultural			Real Estate - Construction			1-4 Family Residential			Commercial			Consumer			Total
ALL:
Beginning balance July 1, 2015	$	2,712		$	2,207		$	5,517		$	3,306		$	4,247		$	17,989
Charge-offs	—			(51		)	(393		)	(33		)	(816		)	(1,293		)
Recoveries	203			120			103			56			74			556
Provision (recovery of provision)	(251		)	(245		)	(46		)	(194		)	672			(64		)
Ending balance September 30, 2015	$	2,664		$	2,031		$	5,181		$	3,135		$	4,177		$	17,188

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 nine months ended September 30, 2015:



							Real Estate - Mortgage
(dollars in thousands)	Commercial and Agricultural			Real Estate - Construction			1-4 Family Residential			Commercial			Consumer			Total
ALL:
Beginning balance January 1, 2015	$	3,915		$	3,163		$	5,847		$	4,179		$	3,241		$	20,345
Charge-offs	(306		)	(136		)	(769		)	(301		)	(2,343		)	(3,855		)
Recoveries	852			495			412			442			487			2,688
Provision (recovery of provision)	(1,797		)	(1,491		)	(309		)	(1,185		)	2,792			(1,990		)
Ending balance September 30, 2015	$	2,664		$	2,031		$	5,181		$	3,135		$	4,177		$	17,188

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

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, 2015:



					Real Estate - Mortgage
(dollars in thousands)	Commercial and Agricultural		Real Estate - Construction		1-4 Family Residential		Commercial		Consumer		Total
ALL:
Individually reviewed for impairment	$	—	$	—	$	344	$	—	$	—	$	344
Collectively reviewed for impairment	2,446		1,366		4,581		1,229		4,032		13,654
PI loans reviewed for credit impairment	218		665		256		1,906		145		3,190
PI loans with no credit deterioration	—		—		—		—		—		—
Total ALL	$	2,664	$	2,031	$	5,181	$	3,135	$	4,177	$	17,188
Loans held for investment:
Individually reviewed for impairment	$	399	$	840	$	12,093	$	14,133	$	—	$	27,465
Collectively reviewed for impairment	148,706		77,472		660,639		415,875		99,621		1,402,313
PI loans with subsequent credit deterioration	5,848		7,547		11,854		63,085		958		89,292
PI loans with no credit deterioration	—		448		2,937		—		—		3,385
Total loans	$	154,953	$	86,307	$	687,523	$	493,093	$	100,579	$	1,522,455



					Real Estate - Mortgage
(dollars in thousands)	Commercial and Agricultural		Real Estate - Construction		1-4 Family Residential		Commercial		Consumer		Total
ALL:
Individually reviewed for impairment	$	58	$	—	$	331	$	29	$	—	$	418
Collectively reviewed for impairment	3,600		2,656		5,317		2,065		3,052		16,690
PI loans reviewed for credit impairment	257		507		199		2,085		189		3,237
PI loans with no credit deterioration	—		—		—		—		—		—
Total ALL	$	3,915	$	3,163	$	5,847	$	4,179	$	3,241	$	20,345
Loans held for investment:
Individually reviewed for impairment	$	498	$	2,344	$	11,409	$	20,231	$	—	$	34,482
Collectively reviewed for impairment	105,380		66,786		638,456		318,752		71,090		1,200,464
PI loans with subsequent credit deterioration	7,535		8,619		14,174		87,345		1,028		118,701
PI loans with no credit deterioration	—		578		3,563		—		—		4,141
Total loans	$	113,413	$	78,327	$	667,602	$	426,328	$	72,118	$	1,357,788

Troubled Debt Restructurings on Loans

The following tables present a breakdown of troubled debt restructurings that were restructured during the three and nine months ended September 30, 2015 and September 30, 2014, respectively, segregated by portfolio segment:



	For Three Months Ended September 30, 2015					For Three Months Ended September 30, 2014
		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	2	280		280		1	37		37
Real estate - mortgage:
1-4 family residential	2	61		61		1	260		260
Commercial	1	627		627		—	—		—
Consumer	—	—		—		—	—		—
Total	5	$	968	$	968	2	$	297	$	297



	For Nine Months Ended September 30, 2015					For Nine Months Ended September 30, 2014
		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	3	649		649		2	523		523
Real estate - mortgage:
1-4 family residential	3	507		507		8	1,012		1,088
Commercial	1	627		627		7	3,052		3,052
Consumer	—	—		—		—	—		—
Total	7	$	1,783	$	1,783	19	$	4,681	$	4,757