The Bank engages in a full complement of lending activities, including real estate-related loans, agriculture-related loans, commercial and financial loans and consumer installment loans within select markets in Georgia, Alabama, Florida and South Carolina. The Bank purchased residential mortgage loan pools during 2015 and 2016 collateralized by properties located outside our Southeast markets, specifically in California, Washington and Illinois. During the third quarter of 2016, the Bank began purchasing from unrelated third parties consumer installment home improvement loans made to borrowers throughout the United States. As of June 30, 2019 and December 31, 2018, the net carrying value of these consumer installment home improvement loans was approximately $394.8 million and $399.9 million, respectively, and such loans are reported in the consumer installment loan category. During the fourth quarter of 2016, the Bank purchased a pool of commercial insurance premium finance loans made to borrowers throughout the United States and began to originate, administer and service these types of loans. As of June 30, 2019 and December 31, 2018, the net carrying value of commercial insurance premium loans was approximately $608.4 million and $413.5 million, respectively, and such loans are reported in the commercial, financial and agricultural loan category.

The Bank concentrates the majority of its lending activities in real estate loans. While risk of loss in the Company’s portfolio is primarily tied to the credit quality of the various borrowers, risk of loss may increase due to factors beyond the Company’s control, such as local, regional and/or national economic downturns. General conditions in the real estate market may also impact the relative risk in the real estate portfolio. A substantial portion of the Bank’s loans are secured by real estate in the Bank’s primary market area. In addition, a substantial portion of the OREO is located in those same markets. Accordingly, the ultimate collectability of a substantial portion of the Bank’s loan portfolio and the recovery of a substantial portion of the carrying amount of OREO are susceptible to changes in real estate conditions in the Bank’s primary market area.

Commercial, financial and agricultural loans include both secured and unsecured loans for working capital, expansion, crop production, commercial insurance premium finance, and other business purposes. Commercial, financial and agricultural loans also include SBA loans and municipal loans. Short-term working capital loans are secured by non-real estate collateral such as accounts receivable, crops, inventory and equipment. The Bank evaluates the financial strength, cash flow, management, credit history of the borrower and the quality of the collateral securing the loan. The Bank often requires personal guarantees and secondary sources of repayment on commercial, financial and agricultural loans.

Real estate loans include construction and development loans, commercial and farmland loans and residential loans. Construction and development loans include loans for the development of residential neighborhoods, one-to-four family home residential construction loans to builders and consumers, and commercial real estate construction loans, primarily for owner-occupied properties. The Company limits its construction lending risk through adherence to established underwriting procedures. Commercial real estate loans include loans secured by owner-occupied commercial buildings for office, storage, retail and warehouse space as well as farmland. They also include non-owner-occupied commercial buildings such as leased retail and office space. Commercial real estate loans may be larger in size and may involve a greater degree of risk than one-to-four family residential mortgage loans. Payments on such loans are often dependent on successful operation or management of the properties. The Company’s residential loans represent permanent mortgage financing and are secured by residential properties located within the Bank's market areas, along with warehouse lines of credit secured by residential mortgages.

Consumer installment loans include home improvement loans, automobile loans, boat and recreational vehicle financing, and secured and unsecured personal loans. Consumer loans carry greater risks than other loans, as the collateral can consist of rapidly depreciating assets such as automobiles and equipment that may not provide an adequate source of repayment of the loan in the case of default.



(dollars in thousands)	June 30, 2019			June 30, 2018
Balance, January 1	$	2,588,832		$	861,595
Charge-offs	(1,079		)	(1,060		)
Additions due to acquisitions	—			2,056,918
Accretion	6,125			4,340
Subsequent fair value adjustments recorded to goodwill	(4,854		)	—
Transfers to loans held for sale	(54,981		)	—
Transfers to purchased other real estate owned	(2,432		)	(556		)
Payments received, net of principal advances	(245,190		)	(108,727		)
Other	4			—
Ending balance	$	2,286,425		$	2,812,510

As part of the due diligence process prior to purchasing an individual mortgage pool, a complete re-underwrite of the individual loan files was conducted. The underwriting process included a review of all income, asset, credit and property related documentation that was used to originate the loan. Underwriters utilized the originating lender’s program guidelines, as well as general prudent mortgage lending standards, to assess each individual loan file. Additional research was conducted to assess the real estate market conditions and market expectations in the geographic areas where a collateral concentration existed. As part of this review, an automated valuation model was employed to provide current collateral valuations and to support individual loan-to-value ratios. Additionally, a sample of site inspections was completed to provide further assurance. The results of the due diligence review were evaluated by officers of the Company in order to determine overall conformance to the Bank’s credit and lending policies.

A loan is placed on nonaccrual status when, in management’s judgment, the collection of the interest income appears doubtful. Interest receivable that has been accrued and is subsequently determined to have doubtful collectability is charged against interest income. Interest on loans that are classified as nonaccrual is subsequently applied to principal until the loans are returned to accrual status. Loans are returned to accrual status when all the principal and interest amounts contractually due are brought current and future payments are reasonably assured. Past-due loans are loans whose principal or interest is past due 30 days or more. In some cases, where borrowers are experiencing financial difficulties, loans may be restructured to provide terms significantly different from the original contractual terms.

The following table presents an analysis of purchased loans accounted for on a nonaccrual basis:



(dollars in thousands)	June 30, 2019		December 31, 2018
Commercial, financial and agricultural	$	2,415	$	1,199
Real estate – construction and development	7,078		6,119
Real estate – commercial and farmland	6,100		5,534
Real estate – residential	7,252		10,769
Consumer installment	505		486
	$	23,350	$	24,107



(dollars in thousands)	Loans 30-59 Days Past Due		Loans 60-89 Days Past Due		Loans 90 or More Days Past Due		Total Loans Past Due		Current Loans		Total Loans		Loans 90 Days or More Past Due and Still Accruing
June 30, 2019
Commercial, financial and agricultural	$	5,645	$	8,033	$	6,981	$	20,659	$	1,627,531	$	1,648,190	$	4,180
Real estate – construction and development	6,177		418		920		7,515		780,894		788,409		—
Real estate – commercial and farmland	865		1,032		2,172		4,069		2,042,278		2,046,347		—
Real estate – residential	14,194		2,370		8,721		25,285		1,564,361		1,589,646		—
Consumer installment	1,842		972		527		3,341		446,515		449,856		259
Total	$	28,723	$	12,825	$	19,321	$	60,869	$	6,461,579	$	6,522,448	$	4,439

December 31, 2018
Commercial, financial and agricultural	$	6,479	$	5,295	$	4,763	$	16,537	$	1,299,822	$	1,316,359	$	3,808
Real estate – construction and development	1,218		481		725		2,424		668,774		671,198		—
Real estate – commercial and farmland	1,625		530		3,645		5,800		1,808,729		1,814,529		—
Real estate – residential	11,423		4,631		8,923		24,977		1,378,023		1,403,000		—
Consumer installment	2,344		1,167		735		4,246		451,125		455,371		414
Total	$	23,089	$	12,104	$	18,791	$	53,984	$	5,606,473	$	5,660,457	$	4,222



(dollars in thousands)	Loans 30-59 Days Past Due		Loans 60-89 Days Past Due		Loans 90 or More Days Past Due		Total Loans Past Due		Current Loans		Total Loans		Loans 90 Days or More Past Due and Still Accruing
June 30, 2019
Commercial, financial and agricultural	$	27	$	1,670	$	495	$	2,192	$	250,429	$	252,621	$	—
Real estate – construction and development	40		2		6,665		6,707		308,434		315,141		—
Real estate – commercial and farmland	2,494		921		3,448		6,863		1,129,003		1,135,866		1
Real estate – residential	7,327		2,093		4,186		13,606		544,852		558,458		173
Consumer installment	420		58		244		722		23,617		24,339		—
Total	$	10,308	$	4,744	$	15,038	$	30,090	$	2,256,335	$	2,286,425	$	174

December 31, 2018
Commercial, financial and agricultural	$	421	$	416	$	1,015	$	1,852	$	370,834	$	372,686	$	—
Real estate – construction and development	627		370		5,273		6,270		221,630		227,900		—
Real estate – commercial and farmland	1,935		736		1,698		4,369		1,333,490		1,337,859		—
Real estate – residential	12,531		2,407		7,005		21,943		601,256		623,199		—
Consumer installment	679		237		249		1,165		26,023		27,188		—
Total	$	16,193	$	4,166	$	15,240	$	35,599	$	2,553,233	$	2,588,832	$	—

Loans are considered impaired when, based on current information and events, it is probable the Company will be unable to collect all amounts due in accordance with the original contractual terms of the loan agreements. Impaired loans include loans on nonaccrual status and accruing troubled debt restructurings. When determining if the Company will be unable to collect all principal and interest payments due in accordance with the contractual terms of the loan agreement, the Company considers the borrower’s capacity to pay, which includes such factors as the borrower’s current financial statements, an analysis of global cash flow sufficient to pay all debt obligations and an evaluation of secondary sources of repayment, such as guarantor support and collateral value. The Company individually assesses for impairment all nonaccrual loans greater than $100,000 and all troubled debt restructurings greater than $100,000 (including all troubled debt restructurings, whether or not currently classified as such). The tables below include all loans deemed impaired, whether or not individually assessed for impairment. If a loan is deemed impaired, a specific valuation allowance is allocated, if necessary, so that the loan is reported net, at the present value of estimated future cash flows using the loan’s existing rate or at the fair value of collateral if repayment is expected solely from the collateral. Interest payments on impaired loans are typically applied to principal unless collectability of the principal amount is reasonably assured, in which case interest is recognized on a cash basis.



	As of and for the Period Ended
(dollars in thousands)	June 30, 2019		December 31, 2018		June 30, 2018
Nonaccrual loans	$	18,129	$	17,952	$	16,813
Troubled debt restructurings not included above	12,952		9,323		11,023
Total impaired loans	$	31,081	$	27,275	$	27,836

Quarter-to-date interest income recognized on impaired loans	$	282	$	202	$	185
Year-to-date interest income recognized on impaired loans	$	464	$	827	$	424
Quarter-to-date foregone interest income on impaired loans	$	199	$	217	$	221
Year-to-date foregone interest income on impaired loans	$	407	$	853	$	411



(dollars in thousands)	Unpaid Contractual Principal Balance		Recorded Investment With No Allowance		Recorded Investment With Allowance		Total Recorded Investment		Related Allowance		Three Month Average Recorded Investment		Six Month Average Recorded Investment
June 30, 2019
Commercial, financial and agricultural	$	3,992	$	1,881	$	1,815	$	3,696	$	644	$	2,580	$	2,276
Real estate – construction and development	1,866		700		573		1,273		4		1,330		1,232
Real estate – commercial and farmland	6,710		662		5,433		6,095		577		6,273		6,688
Real estate – residential	19,924		5,305		14,285		19,590		1,339		19,474		17,621
Consumer installment	435		427		—		427		—		432		470
Total	$	32,927	$	8,975	$	22,106	$	31,081	$	2,564	$	30,089	$	28,287



(dollars in thousands)	Unpaid Contractual Principal Balance		Recorded Investment With No Allowance		Recorded Investment With Allowance		Total Recorded Investment		Related Allowance		Three Month Average Recorded Investment		Twelve Month Average Recorded Investment
December 31, 2018
Commercial, financial and agricultural	$	1,902	$	1,155	$	513	$	1,668	$	4	$	1,736	$	1,637
Real estate – construction and development	1,378		613		424		1,037		3		1,229		984
Real estate – commercial and farmland	8,950		867		6,649		7,516		1,591		7,537		7,879
Real estate – residential	16,885		5,144		11,365		16,509		867		14,719		15,029
Consumer installment	561		545		—		545		—		584		534
Total	$	29,676	$	8,324	$	18,951	$	27,275	$	2,465	$	25,805	$	26,063



(dollars in thousands)	Unpaid Contractual Principal Balance		Recorded Investment With No Allowance		Recorded Investment With Allowance		Total Recorded Investment		Related Allowance		Three Month Average Recorded Investment		Six Month Average Recorded Investment
June 30, 2018
Commercial, financial and agricultural	$	2,297	$	1,210	$	568	$	1,778	$	87	$	1,683	$	1,571
Real estate – construction and development	850		679		119		798		1		746		821
Real estate – commercial and farmland	10,168		665		8,149		8,814		1,526		8,488		8,107
Real estate – residential	16,340		5,088		10,840		15,928		1,056		15,158		15,236
Consumer installment	548		518		—		518		—		507		500
Total	$	30,203	$	8,160	$	19,676	$	27,836	$	2,670	$	26,582	$	26,235



	As of and for the Period Ended
(dollars in thousands)	June 30, 2019		December 31, 2018		June 30, 2018
Nonaccrual loans	$	23,350	$	24,107	$	33,557
Troubled debt restructurings not included above	18,430		18,740		20,607
Total impaired loans	$	41,780	$	42,847	$	54,164

Quarter-to-date interest income recognized on impaired loans	$	889	$	918	$	280
Year-to-date interest income recognized on impaired loans	$	1,561	$	2,203	$	976
Quarter-to-date foregone interest income on impaired loans	$	551	$	451	$	280
Year-to-date foregone interest income on impaired loans	$	1,071	$	1,483	$	525



(dollars in thousands)	Unpaid Contractual Principal Balance		Recorded Investment With No Allowance		Recorded Investment With Allowance		Total Recorded Investment		Related Allowance		Three Month Average Recorded Investment		Six Month Average Recorded Investment
June 30, 2019
Commercial, financial and agricultural	$	10,209	$	663	$	1,783	$	2,446	$	—	$	3,168	$	2,522
Real estate – construction and development	14,353		1,359		6,706		8,065		494		7,504		7,381
Real estate – commercial and farmland	13,365		1,289		10,692		11,981		1,407		11,573		11,614
Real estate – residential	21,100		6,916		11,867		18,783		541		19,741		20,594
Consumer installment	599		505		—		505		—		549		528
Total	$	59,626	$	10,732	$	31,048	$	41,780	$	2,442	$	42,535	$	42,639



(dollars in thousands)	Unpaid Contractual Principal Balance		Recorded Investment With No Allowance		Recorded Investment With Allowance		Total Recorded Investment		Related Allowance		Three Month Average Recorded Investment		Twelve Month Average Recorded Investment
December 31, 2018
Commercial, financial and agricultural	$	5,717	$	473	$	757	$	1,230	$	—	$	1,101	$	836
Real estate – construction and development	13,714		623		6,511		7,134		476		7,240		5,712
Real estate – commercial and farmland	14,766		1,115		10,581		11,696		684		13,514		12,349
Real estate – residential	24,839		8,185		14,116		22,301		773		23,146		21,433
Consumer installment	526		486		—		486		—		487		229
Total	$	59,562	$	10,882	$	31,965	$	42,847	$	1,933	$	45,488	$	40,559



(dollars in thousands)	Unpaid Contractual Principal Balance		Recorded Investment With No Allowance		Recorded Investment With Allowance		Total Recorded Investment		Related Allowance		Three Month Average Recorded Investment		Six Month Average Recorded Investment
June 30, 2018
Commercial, financial and agricultural	$	5,945	$	1,522	$	80	$	1,602	$	1	$	582	$	659
Real estate – construction and development	16,715		7,210		3,359		10,569		521		4,962		4,693
Real estate – commercial and farmland	17,039		4,298		10,705		15,003		1,088		11,161		11,573
Real estate – residential	29,145		12,017		14,789		26,806		728		21,196		20,292
Consumer installment	232		184		—		184		—		62		57
Total	$	69,076	$	25,231	$	28,933	$	54,164	$	2,338	$	37,963	$	37,274

Grade 4 – Satisfactory Credit – This grade includes loans which exhibit all the characteristics of a Good Credit, but warrant more than normal level of banker supervision due to (i) circumstances which elevate the risks of performance (such as start-up operations, untested management, heavy leverage and interim losses); (ii) adverse, extraordinary events that have affected, or could affect, the borrower’s cash flow, financial condition, ability to continue operating profitability or refinancing (such as death of principal, fire and divorce); (iii) loans that require more than the normal servicing requirements (such as any type of construction financing, acquisition and development loans, accounts receivable or inventory loans and floor plan loans); (iv) existing technical exceptions which raise some doubts about the Bank’s perfection in its collateral position or the continued financial capacity of the borrower; or (v) improvements in formerly criticized borrowers, which may warrant banker supervision.

Grade 7 – Substandard – This grade represents loans which are inadequately protected by the current credit worthiness and paying capacity of the borrower or of the collateral pledged, if any. These assets exhibit a well-defined weakness or are characterized by the distinct possibility that the Bank will sustain some loss if the deficiencies are not corrected. These weaknesses may be characterized by past due performance, operating losses or questionable collateral values.



Risk Grade	Commercial, Financial and Agricultural		Real Estate - Construction and Development		Real Estate - Commercial and Farmland		Real Estate - Residential		Consumer Installment		Total
June 30, 2019
1	$	522,356	$	—	$	9,179	$	671	$	11,580	$	543,786
2	642,419		18,169		34,661		35,354		18		730,621
3	153,181		92,379		1,104,632		1,426,987		24,194		2,801,373
4	305,158		639,722		766,726		100,068		413,409		2,225,083
5	18,592		33,688		80,389		7,218		49		139,936
6	971		1,416		28,510		3,456		61		34,414
7	5,513		3,035		22,250		15,892		542		47,232
8	—		—		—		—		—		—
9	—		—		—		—		3		3
Total	$	1,648,190	$	788,409	$	2,046,347	$	1,589,646	$	449,856	$	6,522,448

December 31, 2018
1	$	530,864	$	40	$	500	$	16	$	10,744	$	542,164
2	452,250		681		37,079		33,043		48		523,101
3	174,811		74,657		888,433		1,246,383		23,844		2,408,128
4	137,038		582,456		814,068		94,143		419,983		2,047,688
5	13,714		6,264		30,364		8,634		78		59,054
6	5,130		4,091		20,959		4,881		57		35,118
7	2,552		3,009		23,126		15,900		617		45,204
8	—		—		—		—		—		—
9	—		—		—		—		—		—
Total	$	1,316,359	$	671,198	$	1,814,529	$	1,403,000	$	455,371	$	5,660,457



Risk Grade	Commercial, Financial and Agricultural		Real Estate - Construction and Development		Real Estate - Commercial and Farmland		Real Estate - Residential		Consumer Installment		Total
June 30, 2019
1	$	77,725	$	—	$	—	$	—	$	523	$	78,248
2	5,113		—		9,254		66,593		109		81,069
3	18,275		21,211		397,977		347,811		1,778		787,052
4	119,108		273,958		654,571		107,495		21,050		1,176,182
5	11,124		6,248		40,127		13,760		34		71,293
6	3,974		6,309		12,607		6,644		127		29,661
7	17,302		7,415		21,330		16,155		718		62,920
8	—		—		—		—		—		—
9	—		—		—		—		—		—
Total	$	252,621	$	315,141	$	1,135,866	$	558,458	$	24,339	$	2,286,425

December 31, 2018
1	$	90,205	$	—	$	—	$	—	$	570	$	90,775
2	2,648		—		7,407		74,398		164		84,617
3	20,489		18,022		230,089		385,279		2,410		656,289
4	215,096		195,079		1,034,943		118,082		23,177		1,586,377
5	14,445		2,728		29,468		16,937		35		63,613
6	11,601		1,459		10,063		7,231		94		30,448
7	18,202		10,612		25,889		21,272		738		76,713
8	—		—		—		—		—		—
9	—		—		—		—		—		—
Total	$	372,686	$	227,900	$	1,337,859	$	623,199	$	27,188	$	2,588,832

The restructuring of a loan is considered a “troubled debt restructuring” if both (i) the borrower is experiencing financial difficulties and (ii) the Company has granted a concession. Concessions may include interest rate reductions to below market interest rates, principal forgiveness, restructuring amortization schedules and other actions intended to minimize potential losses. The Company has exhibited the greatest success for rehabilitation of the loan by a reduction in the rate alone (maintaining the amortization of the debt) or a combination of a rate reduction and the forbearance of previously past due interest or principal. This has most typically been evidenced in certain commercial real estate loans whereby a disruption in the borrower’s cash flow resulted in an extended past due status, of which the borrower was unable to catch up completely as the cash flow of the property ultimately stabilized at a level lower than its original level. A reduction in rate, coupled with a forbearance of unpaid principal and/or interest, allowed the net cash flows to service the debt under the modified terms.

The Company’s policy requires a restructure request to be supported by a current, well-documented credit evaluation of the borrower’s financial condition and a collateral evaluation that is no older than six months from the date of the restructure. Key factors of that evaluation include the documentation of current, recurring cash flows, support provided by the guarantor(s) and the current valuation of the collateral. If the appraisal in the file is older than six months, an evaluation must be made as to the continued reasonableness of the valuation. For certain income-producing properties, current rent rolls and/or other income information can be utilized to support the appraisal valuation, when coupled with documented cap rates within our markets and a physical inspection of the collateral to validate the current condition.

The Company’s policy states that in the event a loan has been identified as a troubled debt restructuring, it should be assigned a grade of substandard and placed on nonaccrual status until such time the borrower has demonstrated the ability to service the loan payments based on the restructured terms – generally defined as six months of satisfactory payment history. Missed payments under the original loan terms are not considered under the new structure; however, subsequent missed payments are considered non-performance and are not considered toward the six month required term of satisfactory payment history. The Company’s loan policy states that a nonaccrual loan may be returned to accrual status when (i) none of its principal and interest is due and unpaid, and the Company expects repayment of the remaining contractual principal and interest or (ii) it otherwise becomes well secured and in the process of collection. Restoration to accrual status on any given loan must be supported by a well-documented credit evaluation of the borrower’s financial condition and the prospects for full repayment and approved by the Company’s Chief Credit Officer.

As of June 30, 2019 and December 31, 2018, the Company had a balance of $14.5 million and $11.0 million, respectively, in troubled debt restructurings, excluding purchased loans. The Company has recorded $887,000 and $890,000 in previous charge-offs on such loans at June 30, 2019 and December 31, 2018, respectively. The Company’s balance in the allowance for loan losses allocated to such troubled debt restructurings was $1.4 million and $820,000 at June 30, 2019 and December 31, 2018, respectively. At June 30, 2019, the Company did not have any commitments to lend additional funds to debtors whose terms have been modified in troubled restructurings.

During the six months ended June 30, 2019 and 2018, the Company modified loans as troubled debt restructurings, excluding purchased loans, with principal balances of $4.0 million and $1.8 million, respectively, and these modifications did not have a material impact on the Company’s allowance for loan loss. The following table presents the loans by class modified as troubled debt restructurings, excluding purchased loans, which occurred during the six months ended June 30, 2019 and 2018:

Troubled debt restructurings, excluding purchased loans, with an outstanding balance of $869,000 and $1.1 million defaulted during the six months ended June 30, 2019 and 2018, respectively, and these defaults did not have a material impact on the Company’s allowance for loan loss. The following table presents for loans, excluding purchased loans, the troubled debt restructurings by class that defaulted (defined as 30 days past due) during the six months ended June 30, 2019 and 2018:



June 30, 2019	Accruing Loans			Non-Accruing Loans
Loan Class	#	Balance (in thousands)		#	Balance (in thousands)
Commercial, financial and agricultural	4	$	300	14	$	136
Real estate – construction and development	4	138		1	2
Real estate – commercial and farmland	13	2,911		4	576
Real estate – residential	85	9,593		20	791
Consumer installment	5	10		22	65
Total	111	$	12,952	61	$	1,570



December 31, 2018	Accruing Loans			Non-Accruing Loans
Loan Class	#	Balance (in thousands)		#	Balance (in thousands)
Commercial, financial and agricultural	5	$	256	14	$	138
Real estate – construction and development	5	145		1	2
Real estate – commercial and farmland	12	2,863		3	426
Real estate – residential	71	6,043		20	1,119
Consumer installment	6	16		24	69
Total	99	$	9,323	62	$	1,754

As of June 30, 2019 and December 31, 2018, the Company had a balance of $21.3 million and $22.2 million, respectively, in troubled debt restructurings included in purchased loans. The Company has recorded $1.1 million and $940,000 in previous charge-offs on such loans at June 30, 2019 and December 31, 2018, respectively. At June 30, 2019, the Company did not have any commitments to lend additional funds to debtors whose terms have been modified in troubled restructurings.

During the six months ended June 30, 2019 and 2018, the Company modified purchased loans as troubled debt restructurings, with principal balances of $1.3 million and $991,000, respectively, and these modifications did not have a material impact on the Company’s allowance for loan loss. The following table presents the purchased loans by class modified as troubled debt restructurings, which occurred during the six months ended June 30, 2019 and 2018:



	June 30, 2019			June 30, 2018
Loan Class	#	Balance (in thousands)		#	Balance (in thousands)
Commercial, financial and agricultural	—	$	—	1	$	6
Real estate – construction and development	—	—		—	—
Real estate – commercial and farmland	—	—		—	—
Real estate – residential	18	1,234		11	985
Consumer installment	4	43		—	—
Total	22	$	1,277	12	$	991



	June 30, 2019			June 30, 2018
Loan Class	#	Balance (in thousands)		#	Balance (in thousands)
Commercial, financial and agricultural	1	$	1	—	$	—
Real estate – construction and development	—	—		—	—
Real estate – commercial and farmland	—	—		—	—
Real estate – residential	15	976		21	1,580
Consumer installment	1	15		—	—
Total	17	$	992	21	$	1,580



June 30, 2019	Accruing Loans			Non-Accruing Loans
Loan Class	#	Balance (in thousands)		#	Balance (in thousands)
Commercial, financial and agricultural	1	$	31	3	$	26
Real estate – construction and development	4	986		3	263
Real estate – commercial and farmland	11	5,882		6	1,533
Real estate – residential	115	11,531		19	969
Consumer installment	—	—		7	58
Total	131	$	18,430	38	$	2,849



December 31, 2018	Accruing Loans			Non-Accruing Loans
Loan Class	#	Balance (in thousands)		#	Balance (in thousands)
Commercial, financial and agricultural	1	$	31	3	$	32
Real estate – construction and development	4	1,015		5	293
Real estate – commercial and farmland	12	6,162		7	1,685
Real estate – residential	115	11,532		24	1,424
Consumer installment	—	—		4	17
Total	132	$	18,740	43	$	3,451

The allowance for loan losses represents an allowance for probable incurred losses in the loan portfolio. The adequacy of the allowance for loan losses is evaluated periodically based on a review of all significant loans, with a particular emphasis on non-accruing, past-due and other loans that management believes might be potentially impaired or warrant additional attention. The Company segregates the loan portfolio by type of loan and utilizes this segregation in evaluating exposure to risks within the portfolio. In addition, based on internal reviews and external reviews performed by regulatory authorities, the Company further segregates the loan portfolio by loan grades based on an assessment of risk for a particular loan or group of loans. Certain reviewed loans are assigned specific allowances when a review of relevant data determines that a general allocation is not sufficient or when the review affords management the opportunity to adjust the amount of exposure in a given credit. In establishing allowances, management considers historical loan loss experience but adjusts this data with a significant emphasis on current loan quality trends, current economic conditions and other factors in the markets where the Company operates. Factors considered include, among others, current valuations of real estate in the Company’s markets, unemployment rates, the effect of weather conditions on agricultural related entities and other significant local economic events, such as major plant closings.

The Company has developed a methodology for determining the adequacy of the allowance for loan losses which is monitored by the Company’s Chief Credit Officer. Procedures provide for the assignment of a risk rating for every loan included in the total loan portfolio. Commercial insurance premium finance loans, overdraft protection loans, and certain residential mortgage loans and consumer loans serviced by outside processors are treated as pools for risk rating purposes. The risk rating schedule provides nine ratings of which five ratings are classified as pass ratings and four ratings are classified as criticized ratings. Each risk rating is assigned a percentage factor to be applied to the loan balance to determine the adequate amount of reserve. The Bank’s independent internal loan review department reviews on an annual basis a sample of relationships in excess of $1,000,000, as well as selective sampling of loans below this threshold. Sampling is based on a number of factors unique to the Bank’s portfolio risks, including, but not limited to, lending divisions, industry, risk grades, and new originations. As a result of these loan reviews, certain loans

may be identified as having deteriorating credit quality. Other loans that surface as problem loans may also be assigned specific reserves. Past-due loans are assigned risk ratings based on the number of days past due. The calculation of the allowance for loan losses, including underlying data and assumptions, is reviewed regularly by the Company’s Chief Financial Officer and the independent internal loan review department.

Loan losses are charged against the allowance when management believes the collection of a loan’s principal is unlikely. Subsequent recoveries are credited to the allowance. Consumer loans are charged off in accordance with the Federal Financial Institutions Examination Council’s (“FFIEC”) Uniform Retail Credit Classification and Account Management Policy. Commercial loans are charged off when they are deemed uncollectible, which usually involves a triggering event within the collection effort. If the loan is collateral dependent, the loss is more easily identified and is charged off when it is identified, usually based upon receipt of an appraisal. However, when a loan has guarantor support, the Company may carry the estimated loss as a reserve against the loan while collection efforts with the guarantor are pursued. If, after collection efforts with the guarantor are complete, the deficiency is still considered uncollectible, the loss is charged off and any further collections are treated as recoveries. In all situations, when a loan is downgraded to an Asset Quality Rating of 9 (Loss per the regulatory guidance), the uncollectible portion is charged off.



(dollars in thousands)	Commercial, Financial and Agricultural			Real Estate – Construction and Development			Real Estate – Commercial and Farmland			Real Estate – Residential			Consumer Installment			Purchased Loans			Purchased Loan Pools			Total
Three Months Ended June 30, 2019
Balance, March 31, 2019	$	4,528		$	3,928		$	8,567		$	5,207		$	3,936		$	1,796		$	697		$	28,659
Provision for loan losses	2,370			544			(1,202		)	2,151			336			495			(26		)	4,668
Loans charged off	(1,338		)	(222		)	(100		)	(40		)	(1,126		)	(670		)	—			(3,496		)
Recoveries of loans previously charged off	742			19			4			133			242			822			—			1,962
Balance, June 30, 2019	$	6,302		$	4,269		$	7,269		$	7,451		$	3,388		$	2,443		$	671		$	31,793

Six Months Ended June 30, 2019
Balance, December 31, 2018	$	4,287		$	3,734		$	8,975		$	5,363		$	3,795		$	1,933		$	732		$	28,819
Provision for loan losses	3,550			762			(361		)	1,911			2,206			69			(61		)	8,076
Loans charged off	(3,342		)	(247		)	(1,353		)	(60		)	(3,019		)	(854		)	—			(8,875		)
Recoveries of loans previously charged off	1,807			20			8			237			406			1,295			—			3,773
Balance, June 30, 2019	$	6,302		$	4,269		$	7,269		$	7,451		$	3,388		$	2,443		$	671		$	31,793

Period-end allocation:
Loans individually evaluated for impairment ⁽¹⁾	$	2,026		$	4		$	577		$	1,339		$	—		$	2,443		$	—		$	6,389
Loans collectively evaluated for impairment	4,276			4,265			6,692			6,112			3,388			—			671			25,404
Ending balance	$	6,302		$	4,269		$	7,269		$	7,451		$	3,388		$	2,443		$	671		$	31,793

Loans:
Individually evaluated for impairment⁽¹⁾	$	4,620		$	574		$	5,433		$	14,285		$	—		$	32,549		$	—		$	57,461
Collectively evaluated for impairment	1,643,570			787,835			2,040,914			1,575,361			449,856			2,181,538			240,997			8,920,071
Acquired with deteriorated credit quality	—			—			—			—			—			72,338			—			72,338
Ending balance	$	1,648,190		$	788,409		$	2,046,347		$	1,589,646		$	449,856		$	2,286,425		$	240,997		$	9,049,870



(dollars in thousands)	Commercial, Financial and Agricultural			Real Estate – Construction and Development			Real Estate – Commercial and Farmland			Real Estate – Residential			Consumer Installment			Purchased Loans			Purchased Loan Pools			Total
Twelve Months Ended December 31, 2018
Balance, December 31, 2017	$	3,631		$	3,629		$	7,501		$	4,786		$	1,916		$	3,253		$	1,075		$	25,791
Provision for loan losses	10,690			277			1,636			1,002			5,569			(2,164		)	(343		)	16,667
Loans charged off	(13,803		)	(292		)	(338		)	(771		)	(4,189		)	(1,738		)	—			(21,131		)
Recoveries of loans previously charged off	3,769			120			176			346			499			2,582			—			7,492
Balance, December 31, 2018	$	4,287		$	3,734		$	8,975		$	5,363		$	3,795		$	1,933		$	732		$	28,819

Period-end allocation:
Loans individually evaluated for impairment⁽¹⁾	$	570		$	3		$	1,591		$	867		$	—		$	1,933		$	—		$	4,964
Loans collectively evaluated for impairment	3,717			3,731			7,384			4,496			3,795			—			732			23,855
Ending balance	$	4,287		$	3,734		$	8,975		$	5,363		$	3,795		$	1,933		$	732		$	28,819

Loans:
Individually evaluated for impairment ⁽¹⁾	$	3,211		$	424		$	6,649		$	11,364		$	—		$	32,244		$	—		$	53,892
Collectively evaluated for impairment	1,313,148			670,774			1,807,880			1,391,636			455,371			2,468,996			262,625			8,370,430
Acquired with deteriorated credit quality	—			—			—			—			—			87,592			—			87,592
Ending balance	$	1,316,359		$	671,198		$	1,814,529		$	1,403,000		$	455,371		$	2,588,832		$	262,625		$	8,511,914



(dollars in thousands)	Commercial, Financial and Agricultural			Real Estate – Construction and Development			Real Estate – Commercial and Farmland			Real Estate – Residential			Consumer Installment			Purchased Loans			Purchased Loan Pools			Total
Three Months Ended June 30, 2018
Balance, March 31, 2018	$	3,621		$	3,572		$	8,072		$	4,947		$	2,172		$	2,822		$	994		$	26,200
Provision for loan losses	7,276			235			132			364			1,427			(106		)	(218		)	9,110
Loans charged off	(3,744		)	(20		)	—			(204		)	(839		)	(910		)	—			(5,717		)
Recoveries of loans previously charged off	1,247			2			11			29			117			533			—			1,939
Balance, June 30, 2018	$	8,400		$	3,789		$	8,215		$	5,136		$	2,877		$	2,339		$	776		$	31,532

Six Months Ended June 30, 2018
Balance, December 31, 2017	$	3,631		$	3,629		$	7,501		$	4,786		$	1,916		$	3,253		$	1,075		$	25,791
Provision for loan losses	8,059			64			821			541			2,578			(853		)	(299		)	10,911
Loans charged off	(5,193		)	(20		)	(142		)	(402		)	(1,801		)	(1,031		)	—			(8,589		)
Recoveries of loans previously charged off	1,903			116			35			211			184			970			—			3,419
Balance, June 30, 2018	$	8,400		$	3,789		$	8,215		$	5,136		$	2,877		$	2,339		$	776		$	31,532

Period-end allocation:
Loans individually evaluated for impairment⁽¹⁾	$	5,003		$	1		$	1,526		$	1,056		$	—		$	2,339		$	1		$	9,926
Loans collectively evaluated for impairment	3,397			3,788			6,689			4,080			2,877			—			775			21,606
Ending balance	$	8,400		$	3,789		$	8,215		$	5,136		$	2,877		$	2,339		$	776		$	31,532

Loans:
Individually evaluated for impairment ⁽¹⁾	$	10,881		$	119		$	8,149		$	10,840		$	—		$	29,041		$	2,196		$	61,226
Collectively evaluated for impairment	1,435,976			672,036			1,632,262			1,234,530			375,722			2,656,722			295,313			8,302,561
Acquired with deteriorated credit quality	—			—			—			—			—			126,747			—			126,747
Ending balance	$	1,446,857		$	672,155		$	1,640,411		$	1,245,370		$	375,722		$	2,812,510		$	297,509		$	8,490,534