Loans and Allowance for Loan Losses

The following table presents an aging analysis of accruing and nonaccruing loans as of December 31, 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	$	—	$	1	$	—	$	1,053	$	1,054	$	146,257	$	147,311
Real estate - construction	761		140		—		110		1,011		98,247		99,258
Real estate - mortgage:
1-4 family residential	2,710		574		817		9,106		13,207		660,430		673,637
Commercial	661		34		—		7,209		7,904		421,220		429,124
Consumer	1,227		250		1		538		2,016		104,885		106,901
Total	$	5,359	$	999	$	818	$	18,016	$	25,192	$	1,431,039	$	1,456,231
PI loans
Commercial and agricultural	$	102	$	—	$	1,618	$	—	$	1,720	$	3,275	$	4,995
Real estate - construction	—		—		1,455		—		1,455		6,289		7,744
Real estate - mortgage:
1-4 family residential	602		15		1,127		—		1,744		12,173		13,917
Commercial	517		123		8,819		—		9,459		50,530		59,989
Consumer	8		—		6		—		14		905		919
Total	$	1,229	$	138	$	13,025	$	—	$	14,392	$	73,172	$	87,564
Total Loans	$	6,588	$	1,137	$	13,843	$	18,016	$	39,584	$	1,504,211	$	1,543,795

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

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, 2014, we purchased $19.7 million of performing residential mortgage loans, including premiums of $0.3 million. During the twelve months ended December 31, 2013, we purchased $157.6 million of performing residential mortgage loans, including premiums of $1.3 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 $27.0 million and $40.5 million in Granite Purchased Loans categorized as Substandard or Doubtful at December 31, 2015 and December 31, 2014, respectively.

The following table presents loans held for investment balances by risk grade as of December 31, 2015:



(dollars in thousands)	Pass		Special Mention		Substandard		Doubtful
	(Ratings 1-5)		(Rating 6)		(Rating 7)		(Rating 8)		Total
Commercial and agricultural	$	148,844	$	672	$	2,790	$	—	$	152,306
Real estate - construction	100,252		2,122		4,628		—		107,002
Real estate - mortgage:
1-4 family residential	669,695		3,508		14,351		—		687,554
Commercial	450,587		12,765		25,761		—		489,113
Consumer	107,008		4		553		255		107,820
Total	$	1,476,386	$	19,071	$	48,083	$	255	$	1,543,795

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

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 $3.7 million at December 31, 2015 and $3.2 million at December 31, 2014.

At December 31, 2015, loans held for sale consisted of residential mortgage loans held for sale in the secondary market, as well as commercial loans similarly held for sale in the secondary market. At December 31, 2014, loans held for sale consisted of originated residential mortgage loans held for sale. In each case, the loans are valued 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 $304.6 million at December 31, 2015 and $235.0 million at December 31, 2014.

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 $113.0 million and $124.6 million and gross loans of $102.9 million and $127.2 million were pledged to collateralize FHLB advances and letters of credit at December 31, 2015 and December 31, 2014, respectively, of which there was $80.8 million and $130.8 million of credit availability for borrowing, respectively. At December 31, 2015, $44.7 million of securities and $4.1 million of loans were pledged to collateralize potential borrowings from the Federal Reserve Discount Window, of which $46.6 million was available as borrowing capacity. We could also access $294.1 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 $1.4 million, $3.7 million and $4.7 million for the twelve months ended December 31, 2015, December 31, 2014, and December 31, 2013, respectively. At December 31, 2015 and December 31, 2014, COB had certain impaired loans of $18.0 million and $25.3 million, respectively, which were on nonaccruing interest status.

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



	December 31, 2015				December 31, 2014
(dollars in thousands)	Balance		Associated Reserves		Balance		Associated Reserves
Impaired loans, not individually reviewed for impairment	$	4,903	$	—	$	4,967	$	—
Impaired loans, individually reviewed, with no reserves	22,411		—		26,631		—
Impaired loans, individually reviewed, with reserves	3,817		399		7,851		418
Total impaired loans, excluding purchased impaired *	$	31,131	399		$	39,449	418

Purchased impaired loans with subsequent deterioration	$	84,329	2,754		$	118,701	3,237
Purchased impaired loans with no subsequent deterioration	3,235		—		4,141		—
Total Reserves			$	3,153			$	3,655

Average impaired loans, excluding purchased impaired, calculated using a simple average	$	35,290			$	43,446
* Included at December 31, 2015 and December 31, 2014 were $13.1 million and $14.1 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, 2015		December 31, 2014
Loans held for investment:
Commercial and agricultural	$	1,053	$	608
Real estate - construction	110		2,307
Real estate - mortgage:
1-4 family residential	9,106		8,637
Commercial	7,209		13,381
Consumer	538		355
Total nonaccrual loans	18,016		25,288
Loans more than 90 days delinquent, still on accrual	817		5
Total nonperforming loans	$	18,833	$	25,293

There were no loans held for sale on nonaccrual status as of December 31, 2015 or December 31, 2014.

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, 2015:



			Unpaid
(dollars in thousands)	Recorded		Principal		Related
	Investment		Balance		Allowance
With no related allowance recorded:
Commercial and agricultural	$	399	$	479	$	—
Real estate - construction	775		939		—
Real estate - mortgage:
1-4 family residential	7,418		9,406		—
Commercial	13,820		19,116		—
Consumer	—		—		—
Total	$	22,412	$	29,940	$	—
With an allowance recorded:
Commercial and agricultural	$	—	$	—	$	—
Real estate - construction	—		—		—
Real estate - mortgage:
1-4 family residential	3,817		4,691		399
Commercial	—		—		—
Consumer	—		—		—
Total	$	3,817	$	4,691	$	399
Total individually evaluated impaired loans:
Commercial and agricultural	$	399	$	479	$	—
Real estate - construction	775		939		—
Real estate - mortgage:
1-4 family residential	11,235		14,097		399
Commercial	13,820		19,116		—
Consumer	—		—		—
Total	$	26,229	$	34,631	$	399
PI loans with subsequent credit deterioration:
Commercial and agricultural	$	4,995	$	3,908	$	311
Real estate - construction	7,323		8,121		579
Real estate - mortgage:
1-4 family residential	11,103		11,327		384
Commercial	59,989		60,582		1,356
Consumer	919		598		124
Total	$	84,329	$	84,536	$	2,754

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, 2014:



			Unpaid
(dollars in thousands)	Recorded		Principal		Related
	Investment		Balance		Allowance
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	$	—
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 evaluated 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

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 table for the years indicated:



	For Twelve Months Ended				For Twelve Months Ended				For Twelve Months Ended
	December 31, 2015				December 31, 2014				December 31, 2013
	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	$	429	$	—	$	—	$	—	$	784	$	8
Real estate - construction	1,015		34		2,867		40		9,075		35
Real estate - mortgage:
1-4 family residential	7,828		106		8,797		131		11,920		100
Commercial	14,276		226		17,574		354		29,384		254
Consumer	—		—		—		—		—		—
Total	$	23,548	$	366	$	29,238	$	525	$	51,163	$	397
With an allowance recorded:
Commercial and agricultural	$	—	$	—	$	535	$	20	$	283	$	5
Real estate - construction	—		—		—		—		638		9
Real estate - mortgage:
1-4 family residential	3,953		60		3,148		75		2,713		20
Commercial	958		52		4,149		196		4,127		4
Consumer	—		—		—		—		83		1
Total	$	4,911	$	112	$	7,832	$	291	$	7,844	$	39
Total:
Commercial and agricultural	$	429	$	—	$	535	$	20	$	1,067	$	13
Real estate - construction	1,015		34		2,867		40		9,713		44
Real estate - mortgage:
1-4 family residential	11,781		166		11,945		206		14,633		120
Commercial	15,234		278		21,723		550		33,511		258
Consumer	—		—		—		—		83		1
Total	$	28,459	$	478	$	37,070	$	816	$	59,007	$	436

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, 2015, there was $17.9 million in restructured loans, of which $13.1 million were accruing and in a performing status. At December 31, 2014, there was $19.4 million in restructured loans, of which $14.1 million were accruing and in a performing status.

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, 2015, and December 31, 2014, our financial statements reflected a PI loan ALL of $2.8 million and $3.2 million, respectively, and an ALL for PC loans of $0.3 million and $0.3 million, respectively.

The following tables present the balance of all Granite Purchased Loans:



	At December 31, 2015
(dollars in thousands)	Purchased Impaired		Purchased Contractual		Total Purchased Loans		Unpaid Principal Balance
Commercial and agricultural	$	4,995	$	238	$	5,233	$	4,149
Real estate - construction	7,744		—		7,744		8,579
Real estate - mortgage:
1-4 family residential	13,917		17,915		31,832		32,558
Commercial	59,989		—		59,989		60,582
Consumer	919		—		919		598
Total	$	87,564	$	18,153	$	105,717	$	106,466



	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

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, 2015						December 31, 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		$	29,989
Accretion	6,979			(6,979		)	9,563			(9,563		)
Increase (Decrease) in future accretion	—			(2,296		)	—			4,472
Reclassification of loans and adjustments	—			—			(4,180		)	—
Payments received	(41,002		)	—			(43,314		)	—
Foreclosed and transferred to OREO	(1,255		)	—			(879		)	—
Subtotal before allowance	87,564			15,623			122,842			24,898
Allowance for credit losses	(2,754		)	—			(3,237		)	—
Net carrying amount, end of period	$	84,810		$	15,623		$	119,605		$	24,898

Allowance for Loan Losses

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



(dollars in thousands)	2015			2014			2013
Balance, beginning of period	$	20,345		$	26,785		29,314
Provision for (recovery of) losses	(2,981		)	(5,371		)	523
Net charge-offs:
Charge-offs	(5,604		)	(7,703		)	(13,344	)
Recoveries	3,435			6,634			10,292
Net charge-offs	(2,169		)	(1,069		)	(3,052	)
Balance, end of period	$	15,195		$	20,345		26,785
Annualized net charge-offs during the period to average loans held for investment	0.15		%	0.08		%	0.26	%
Annualized net charge-offs during the period to ALL	14.27			5.25			11.39
Allowance for loan losses to loans held for investment	0.98			1.50			2.21

During the year ended December 31, 2015, we charged off $5.6 million in loans and realized $3.4 million in recoveries, for $2.2 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 0.98% at December 31, 2015, compared to 1.50% at December 31, 2014.

The following table presents ALL activity by portfolio segment for the year ended December 31, 2015:



							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, 2015	$	3,915		$	3,163		$	5,847		$	4,179		$	3,241		$	20,345
Charge-offs	(309		)	(138		)	(1,297		)	(410		)	(3,450		)	(5,604		)
Recoveries	1,036			712			555			487			645			3,435
Provision (Recovery)	(2,240		)	(1,968		)	36			(1,928		)	3,119			(2,981		)
Ending balance at December 31, 2015	$	2,402		$	1,769		$	5,141		$	2,328		$	3,555		$	15,195

The following table presents ALL activity by portfolio segment for the year ended December 31, 2014:



							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, 2014	$	2,931		$	5,233		$	8,869		$	7,195		$	2,557		$	26,785
Charge-offs	(1,449		)	(719		)	(1,273		)	(1,746		)	(2,516		)	(7,703		)
Recoveries	951			2,110			1,187			1,165			1,221			6,634
Provision (Recovery)	1,482			(3,461		)	(2,936		)	(2,435		)	1,979			(5,371		)
Ending balance at December 31, 2014	$	3,915		$	3,163		$	5,847		$	4,179		$	3,241		$	20,345

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 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, 2015:



					Real Estate - Mortgage
(dollars in thousands)	Commercial and Agricultural		Real Estate - Construction		1-4 Family Residential		Commercial		Consumer		Total
ALL:
Individually evaluated for impairment	$	—	$	—	$	399	$	—	$	—	$	399
Collectively evaluated for impairment	2,091		1,190		4,358		972		3,431		12,042
PI loans evaluated for credit impairment	311		579		384		1,356		124		2,754
PI loans with no credit deterioration	—		—		—		—		—		—
Total ALL	$	2,402	$	1,769	$	5,141	$	2,328	$	3,555	$	15,195
Loans held for investment:
Individually evaluated for impairment	$	399	$	775	$	11,235	$	13,820	$	—	$	26,229
Collectively evaluated for impairment	146,912		98,483		662,402		415,304		106,901		1,430,002
PI loans with subsequent credit deterioration	4,995		7,323		11,103		59,989		919		84,329
PI loans with no credit deterioration	—		421		2,814		—		—		3,235
Total loans held for investment	$	152,306	$	107,002	$	687,554	$	489,113	$	107,820	$	1,543,795



					Real Estate - Mortgage
(dollars in thousands)	Commercial and Agricultural		Real Estate - Construction		1-4 Family Residential		Commercial		Consumer		Total
ALL:
Individually evaluated for impairment	$	58	$	—	$	331	$	29	$	—	$	418
Collectively evaluated for impairment	3,600		2,656		5,317		2,065		3,052		16,690
PI loans evaluated 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 evaluated for impairment	$	498	$	2,344	$	11,409	$	20,231	$	—	$	34,482
Collectively evaluated 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 held for investment	$	113,413	$	78,327	$	667,602	$	426,328	$	72,118	$	1,357,788

Troubled Debt Restructuring

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



	For Twelve Months Ended December 31, 2015					For Twelve Months Ended December 31, 2014					For Twelve Months Ended December 31, 2013
		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	—	$	—	$	—	2	$	94	$	94	—	$	—	$	—
Real estate - construction	3	649		649		4	1,607		1,607		2	125		125
Real estate - mortgage:
1-4 family residential	5	754		754		11	1,227		1,303		12	3,387		3,451
Commercial	4	728		728		8	3,470		3,386		5	5,531		5,238
Consumer	—	—		—		—	—		—		—	—		—
Total	12	$	2,131	$	2,131	25	$	6,398	$	6,390	19	$	9,043	$	8,814

During the twelve months ended December 31, 2015, we modified 12 loans that were considered to be troubled debt restructurings. We extended the terms for 5 of these loans and modified the remaining 7 loans by both extending the term and modifying the interest rate. During the twelve months ended December 31, 2014, we modified 25 loans that were considered to be troubled debt restructurings. We extended the terms for 8 of these loans and modified the remaining 17 loans in both ways.

There were no loans restructured in the twelve months prior to December 31, 2015 that went into default during the year ended December 31, 2015. There were also no loans restructured in the twelve months prior to December 31, 2014 that went into default during the year ended December 31, 2014.

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 either a 1% Loss Rate for lines originated since recapitalization of the Bank (10/21/2011) or the historical loss rate (including Q&E factors) for loans originated prior to recapitalization. The following describes our method for determining the estimated additional funding by commitment type:


•	Builder Guidance Lines of Credit (Call Report Code 1a1, Risk Graded Pass) - 50% of Unfunded balance


•	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 $0.8 million as of December 31, 2015 and $0.8 million at December 31, 2014.