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LOANS

6 Months Ended

Jun. 30, 2020

NOTE 4 – LOANS

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. The Bank also offers certain SBA and commercial insurance premium finance loans nationally. Loans oustanding under the SBA's Paycheck Protection Program ("PPP") 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. Accordingly, the ultimate collectability of a substantial portion of the Bank’s loan portfolio is susceptible to changes in real estate conditions in the Bank’s primary market area.

Loans are stated at amortized cost. Balances within the major loans receivable categories are presented in the following table:


(dollars in thousands)	June 30, 2020		December 31, 2019
Commercial, financial and agricultural	$	1,839,921	$	802,171
Consumer installment	575,782		498,577
Indirect automobile	739,543		1,061,824
Mortgage warehouse	748,853		526,369
Municipal	731,508		564,304
Premium finance	690,584		654,669
Real estate – construction and development	1,641,744		1,549,062
Real estate – commercial and farmland	4,804,420		4,353,039
Real estate – residential	2,730,802		2,808,461
	$	14,503,157	$	12,818,476

The following is a summary of changes in the accretable discounts of purchased loans during the six months ended June 30, 2019:


(dollars in thousands)	June 30, 2019
Balance, January 1	$	40,496
Additions due to acquisitions	—
Accretion	(6,125)
Accretable discounts removed due to charge-offs	—
Transfers between non-accretable and accretable discounts, net	(2,291)
Ending balance	$	32,080

Nonaccrual and Past-Due Loans

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 loans accounted for on a nonaccrual basis:


(dollars in thousands)	June 30, 2020		December 31, 2019
Commercial, financial and agricultural	$	11,032	$	9,236
Consumer installment	1,186		831
Indirect automobile	1,643		1,746


Premium finance	—		600
Real estate – construction and development	1,913		1,988
Real estate – commercial and farmland	21,874		23,797
Real estate – residential	40,097		36,926
	$	77,745	$	75,124

There was no interest income recognized on nonaccrual loans during the six months ended June 30, 2020.

The following table presents an analysis of nonaccrual loans with no related allowance for credit losses:


(dollars in thousands)	June 30, 2020
Commercial, financial and agricultural	$	1,081






Real estate – commercial and farmland	9,632
Real estate – residential	10,367
	$	21,080

The following table presents an analysis of past-due loans as of June 30, 2020 and December 31, 2019:


(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, 2020
Commercial, financial and agricultural	$	802	$	1,917	$	6,246	$	8,965	$	1,830,956	$	1,839,921	$	—
Consumer installment	1,699		1,691		2,173		5,563		570,219		575,782		1,377
Indirect automobile	1,458		597		1,528		3,583		735,960		739,543		24
Mortgage warehouse	—		—		—		—		748,853		748,853		—
Municipal	—		—		—		—		731,508		731,508		—
Premium finance	5,141		6,767		11,928		23,836		666,748		690,584		11,928
Real estate – construction and development	8,064		1,359		3,523		12,946		1,628,798		1,641,744		1,795
Real estate – commercial and farmland	890		1,910		15,517		18,317		4,786,103		4,804,420		—
Real estate – residential	20,601		6,507		34,637		61,745		2,669,057		2,730,802		2
Total	$	38,655	$	20,748	$	75,552	$	134,955	$	14,368,202	$	14,503,157	$	15,126

December 31, 2019
Commercial, financial and agricultural	$	3,609	$	2,251	$	6,484	$	12,344	$	789,827	$	802,171	$	—
Consumer installment	3,488		1,336		1,452		6,276		492,301		498,577		922
Indirect automobile	5,978		1,067		1,522		8,567		1,053,257		1,061,824		21
Mortgage warehouse	—		—		—		—		526,369		526,369		—
Municipal	—		—		—		—		564,304		564,304		—
Premium finance	13,801		8,022		5,411		27,234		627,435		654,669		4,811
Real estate – construction and development	7,785		1,224		1,583		10,592		1,538,470		1,549,062		—
Real estate – commercial and farmland	7,404		3,405		15,598		26,407		4,326,632		4,353,039		—
Real estate – residential	46,226		15,277		31,083		92,586		2,715,875		2,808,461		—
Total	$	88,291	$	32,582	$	63,133	$	184,006	$	12,634,470	$	12,818,476	$	5,754

Collateral-Dependent Loans

Collateral-dependent loans are loans where repayment is expected to be provided solely by the underlying collateral and there are no other available and reliable sources of repayment. These loans are written down to the lower of cost or collateral value less estimated selling costs. As of June 30, 2020, there were $102.1 million of collateral-dependent loans which are primarily secured by real estate, equipment and receivables.

Impaired Loans

Prior to the adoption of ASU 2016-13, loans were considered impaired when, based on current information and events, it was probable the Company would 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 would be unable to collect all principal and interest payments due in accordance with the contractual terms of the loan agreement, the Company considered the borrower’s capacity to pay, which included 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 assessed 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 was deemed impaired, a specific valuation allowance was allocated, if necessary, so that the loan was 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 was expected solely from the collateral. Interest payments on impaired loans were typically applied to principal unless collectability of the principal amount was reasonably assured, in which case interest was recognized on a cash basis.

The following is a summary of information pertaining to impaired loans:


	As of and for the Period Ended
(dollars in thousands)	December 31, 2019		June 30, 2019
Nonaccrual loans	$	75,124	$	41,479
Troubled debt restructurings not included above	29,609		31,383
Total impaired loans	$	104,733	$	72,862

Quarter-to-date interest income recognized on impaired loans	$	1,201	$	1,171
Year-to-date interest income recognized on impaired loans	$	4,131	$	2,025
Quarter-to-date foregone interest income on impaired loans	$	1,044	$	750
Year-to-date foregone interest income on impaired loans	$	4,100	$	1,478

The following table presents an analysis of information pertaining to impaired loans as of December 31, 2019 and June 30, 2019:


(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, 2019
Commercial, financial and agricultural	$	18,438	$	1,911	$	7,840	$	9,751	$	1,542	$	9,073	$	6,287
Consumer installment	2,179		839		—		839		—		420		767
Indirect automobile	1,845		1,746		—		1,746		—		1,481		592


Premium finance	757		—		757		757		156		758		524
Real estate – construction and development	4,893		1,319		1,605		2,924		204		5,277		7,278
Real estate – commercial and farmland	42,515		12,147		18,381		30,528		953		30,749		23,280
Real estate – residential	62,675		13,413		44,775		58,188		3,592		70,723		51,817
Total	$	133,302	$	31,375	$	73,358	$	104,733	$	6,447	$	118,481	$	90,545


(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	$	13,097	$	1,632	$	3,407	$	5,039	$	634	$	5,196	$	4,430
Consumer installment	1,034		932		—		932		—		982		998



Premium finance	1,104		913		191		1,104		10		552		368
Real estate – construction and development	16,219		2,059		7,279		9,338		498		8,834		8,612
Real estate – commercial and farmland	20,075		1,951		16,125		18,076		1,984		17,846		18,301
Real estate – residential	41,025		12,221		26,152		38,373		1,880		39,416		39,213
Total	$	92,554	$	19,708	$	53,154	$	72,862	$	5,006	$	72,826	$	71,922

Credit Quality Indicators

The Company uses a nine category risk grading system to assign a risk grade to each loan in the portfolio. The following is a description of the general characteristics of the grades:

Grade 1 – Prime Credit – This grade represents loans to the Company’s most creditworthy borrowers or loans that are secured by cash or cash equivalents.

Grade 2 – Strong Credit – This grade includes loans that exhibit one or more characteristics better than that of a Good Credit. Generally, the debt service coverage and borrower’s liquidity is materially better than required by the Company’s loan policy.

Grade 3 – Good Credit – This grade is assigned to loans to borrowers who exhibit satisfactory credit histories, contain acceptable loan structures and demonstrate ability to repay.

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 5 – Fair Credit – This grade is assigned to loans that are currently performing and supported by adequate financial information that reflects repayment capacity but exhibits a loan-to-value ratio greater than 110%, based on a documented collateral valuation.

Grade 6 – Other Assets Especially Mentioned – This grade includes loans that exhibit potential weaknesses that deserve management’s close attention. If left uncorrected, these weaknesses may result in deterioration of the repayment prospects for the asset or in the Company’s credit position at some future date.

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.

Grade 8 – Doubtful – This grade includes loans which exhibit all of the characteristics of a substandard loan with the added provision that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions and values, highly questionable or improbable.

Grade 9 – Loss – This grade is assigned to loans which are considered uncollectible and of such little value that their continuance as active assets of the Bank is not warranted. This classification does not mean that the loan has absolutely no recovery or salvage value, but rather it is not practical or desirable to defer writing it off.

The following table presents the loan portfolio's amortized cost by class of financing receivable, risk grade and year of origination (in thousands). Generally, current period renewals of credit are underwritten again at the point of renewal and considered current period originations for purposes of the table below. There were no loans risk graded 9 at June 30, 2020.


	Term Loans
As of June 30, 2020	2020		2019		2018		2017		2016		Prior		Revolving Loans Amortized Cost Basis		Revolving Loans Converted to Term Loans Amortized Cost Basis		Total
Commercial, Financial and Agricultural
Risk Grade:
1	$	1,040,825	$	3,753	$	1,793	$	690	$	688	$	5,800	$	10,509	$	—	$	1,064,058
2	36		1,354		935		3,782		108		2,109		6,043		—		14,367
3	52,010		62,009		18,813		19,721		9,505		6,450		73,670		—		242,178
4	50,333		102,834		103,960		60,081		24,471		35,983		95,792		—		473,454
5	1,020		2,961		2,999		5,944		1,482		3,718		2,784		—		20,908
6	—		356		1,860		561		248		1,306		1,482		—		5,813
7	—		744		1,692		2,098		694		4,531		9,384		—		19,143


Total commercial, financial and agricultural	$	1,144,224	$	174,011	$	132,052	$	92,877	$	37,196	$	59,897	$	199,664	$	—	$	1,839,921
Consumer Installment
Risk Grade:
1	$	3,941	$	4,734	$	2,374	$	845	$	145	$	67	$	1,181	$	—	$	13,287
2	—		—		77		3		2,862		1,187		50		—		4,179
3	8,284		10,517		4,510		5,298		39,040		25,378		3,222		—		96,249
4	98,445		120,187		133,148		73,783		18,923		10,625		3,810		—		458,921
5	50		136		37		38		27		243		9		—		540
6	—		14		14		4		50		78		—		—		160
7	—		192		150		196		816		965		127		—		2,446


Total consumer installment	$	110,720	$	135,780	$	140,310	$	80,167	$	61,863	$	38,543	$	8,399	$	—	$	575,782
Indirect Automobile
Risk Grade:

2	$	—	$	—	$	112	$	38	$	5,047	$	3,908	$	—	$	—	$	9,105
3	—		47,286		241,703		252,508		112,068		74,214		—		—		727,779



7	—		93		388		579		638		961		—		—		2,659


Total indirect automobile	$	—	$	47,379	$	242,203	$	253,125	$	117,753	$	79,083	$	—	$	—	$	739,543
Mortgage Warehouse
Risk Grade:


3	$	—	$	—	$	—	$	—	$	—	$	—	$	748,853	$	—	$	748,853






Total mortgage warehouse	$	—	$	—	$	—	$	—	$	—	$	—	$	748,853	$	—	$	748,853


	Term Loans
As of June 30, 2020	2020		2019		2018		2017		2016		Prior		Revolving Loans Amortized Cost Basis		Revolving Loans Converted to Term Loans Amortized Cost Basis		Total
Municipal
Risk Grade:
1	$	198,131	$	12,763	$	37,851	$	175,644	$	172,620	$	115,134	$	—	$	—	$	712,143
2	—		—		—		—		—		2,587		—		—		2,587
3	—		775		—		6,300		—		9,107		—		—		16,182
4	—		—		—		—		—		596		—		—		596





Total municipal	$	198,131	$	13,538	$	37,851	$	181,944	$	172,620	$	127,424	$	—	$	—	$	731,508
Premium Finance
Risk Grade:

2	$	563,735	$	111,749	$	1,203	$	1,112	$	262	$	594	$	—	$	—	$	678,655




7	2,781		6,297		10		—		2,841		—		—		—		11,929


Total premium finance	$	566,516	$	118,046	$	1,213	$	1,112	$	3,103	$	594	$	—	$	—	$	690,584
Real Estate – Construction and Development
Risk Grade:


3	$	16,000	$	18,405	$	17,828	$	9,991	$	4,005	$	8,759	$	685	$	—	$	75,673
4	288,761		661,716		280,311		120,430		21,001		37,348		92,226		—		1,501,793
5	171		5,100		2,420		607		17,806		9,447		111		—		35,662
6	339		2,652		12,421		2,488		527		4,562		—		—		22,989
7	—		9		1,190		889		46		3,493		—		—		5,627


Total real estate – construction and development	$	305,271	$	687,882	$	314,170	$	134,405	$	43,385	$	63,609	$	93,022	$	—	$	1,641,744
Real Estate – Commercial and Farmland
Risk Grade:
1	$	—	$	—	$	198	$	—	$	—	$	—	$	—	$	—	$	198
2	1,449		547		578		2,289		4,543		15,895		1,946		—		27,247
3	275,436		387,436		172,702		219,630		204,796		325,464		73,997		—		1,659,461
4	220,881		602,402		532,184		418,685		356,739		686,276		33,349		—		2,850,516
5	5,846		4,685		2,798		26,617		15,162		74,695		566		—		130,369
6	—		8,254		9,905		13,851		14,933		24,053		730		—		71,726
7	170		6,096		5,048		8,944		11,173		32,535		937		—		64,903


Total real estate – commercial and farmland	$	503,782	$	1,009,420	$	723,413	$	690,016	$	607,346	$	1,158,918	$	111,525	$	—	$	4,804,420
Real Estate - Residential
Risk Grade:
1	$	—	$	—	$	—	$	—	$	—	$	23	$	—	$	—	$	23
2	—		418		14		126		1,525		61,280		1,768		—		65,131
3	284,058		541,802		303,447		220,661		177,896		462,308		225,353		2,313		2,217,838
4	16,675		74,152		43,926		32,278		34,830		105,288		51,186		59		358,394
5	310		1,453		2,366		3,268		1,499		12,330		3,963		—		25,189
6	172		1,736		939		62		331		4,180		597		—		8,017
7	2,836		8,179		11,568		5,120		2,091		19,355		7,061		—		56,210


Total real estate - residential	$	304,051	$	627,740	$	362,260	$	261,515	$	218,172	$	664,764	$	289,928	$	2,372	$	2,730,802

The following table presents the loan portfolio by risk grade as of December 31, 2019 (in thousands):


Risk Grade	Commercial, Financial and Agricultural		Consumer Installment		Indirect Automobile		Mortgage Warehouse		Municipal		Premium Finance		Real Estate - Construction and Development		Real Estate - Commercial and Farmland		Real Estate - Residential		Total
1	$	22,396	$	13,184	$	—	$	—	$	552,062	$	—	$	—	$	208	$	27	$	587,877
2	18,937		1,233		18,354		—		2,690		654,069		17,535		35,299		92,255		840,372
3	215,180		33,314		1,033,861		526,369		8,925		—		90,124		1,720,039		2,406,587		6,034,399
4	482,146		449,224		4,009		—		627		—		1,377,674		2,348,083		222,779		4,884,542
5	33,317		208		—		—		—		—		41,759		133,119		24,618		233,021
6	4,901		213		—		—		—		—		17,223		53,941		10,132		86,410
7	25,294		1,191		5,600		—		—		600		4,747		62,350		52,063		151,845
8	—		8		—		—		—		—		—		—		—		8
9	—		2		—		—		—		—		—		—		—		2
Total	$	802,171	$	498,577	$	1,061,824	$	526,369	$	564,304	$	654,669	$	1,549,062	$	4,353,039	$	2,808,461	$	12,818,476

Troubled Debt Restructurings

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.

In the normal course of business, the Company renews loans with a modification of the interest rate or terms that are not deemed to be troubled debt restructurings because the borrower is not experiencing financial difficulty. The Company modified loans in the first six months of 2020 and 2019 totaling $139.6 million and $107.7 million, respectively, under such parameters.

As of June 30, 2020 and December 31, 2019, the Company had a balance of $42.3 million and $35.2 million, respectively, in troubled debt restructurings. The Company has recorded $1.7 million and $1.9 million in previous charge-offs on such loans at June 30, 2020 and December 31, 2019, respectively. The Company’s balance in the allowance for credit losses allocated to such troubled debt restructurings was $2.9 million and $3.7 million at June 30, 2020 and December 31, 2019, respectively. At June 30, 2020, 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, 2020 and 2019, the Company modified loans as troubled debt restructurings with principal balances of $11.3 million and $5.3 million, respectively, and these modifications did not have a material impact on the Company’s allowance for credit losses. The following table presents the loans by class modified as troubled debt restructurings which occurred during the six months ended June 30, 2020 and 2019:


	June 30, 2020				June 30, 2019
Loan Class	#	Balance (in thousands)		#	Balance (in thousands)
Commercial, financial and agricultural	1	$	731	1	$	7
Consumer installment	4	15		9	62



Premium finance	—	—		1	191
Real estate – construction and development	1	20		—	—
Real estate – commercial and farmland	1	16		2	214
Real estate – residential	76	10,496		34	4,794
Total	83	$	11,278	47	$	5,268

Troubled debt restructurings with an outstanding balance of $1.7 million and $1.9 million defaulted during the six months ended June 30, 2020 and 2019, respectively, and these defaults did not have a material impact on the Company’s allowance for credit losses. The following table presents for loans the troubled debt restructurings by class that defaulted (defined as 30 days past due) during the six months ended June 30, 2020 and 2019:


	June 30, 2020				June 30, 2019
Loan Class	#	Balance (in thousands)		#	Balance (in thousands)
Commercial, financial and agricultural	1	$	200	2	$	4
Consumer installment	3	4		4	24




Real estate – construction and development	2	285		—	—
Real estate – commercial and farmland	2	676		—	—
Real estate – residential	8	567		19	1,832
Total	16	$	1,732	25	$	1,860

The following table presents the amount of troubled debt restructurings by loan class classified separately as accrual and nonaccrual at June 30, 2020 and December 31, 2019:


June 30, 2020	Accruing Loans				Non-Accruing Loans
Loan Class	#	Balance (in thousands)		#	Balance (in thousands)
Commercial, financial and agricultural	7	$	592	13	$	1,034
Consumer installment	13	42		20	67




Real estate – construction and development	5	919		4	308
Real estate – commercial and farmland	18	5,252		8	1,877
Real estate – residential	250	29,935		37	2,231
Total	293	$	36,740	82	$	5,517


December 31, 2019	Accruing Loans				Non-Accruing Loans
Loan Class	#	Balance (in thousands)		#	Balance (in thousands)
Commercial, financial and agricultural	5	$	516	17	$	335
Consumer installment	4	8		27	107



Premium finance	1	156		—	—
Real estate – construction and development	6	936		3	253
Real estate – commercial and farmland	21	6,732		8	2,071
Real estate – residential	197	21,261		40	2,857
Total	234	$	29,609	95	$	5,623

COVID-19 Deferrals

As of June 30, 2020, the Company modified $2.76 billion in loans for borrowers impacted by the COVID-19 pandemic. These modifications primarily consisted of short-term payment deferrals or interest-only periods to assist customers. Modifications related to the COVID-19 pandemic and qualifying under the provisions of Section 4013 of the CARES Act are not deemed to be troubled debt restructurings.

The table below presents short-term deferrals related to the COVID-19 pandemic that were not considered TDRs.


(dollars in thousands)	COVID-19 Deferrals		Deferrals as a % of total loans
Commercial, financial and agricultural	$	155,310	8.4	%
Consumer installment	15,502		2.7	%
Indirect automobile	65,064		8.8	%

Municipal	2,461		0.3	%
Premium finance	46,496		6.7	%
Real estate – construction and development	192,474		11.7	%
Real estate – commercial and farmland	1,961,513		40.8	%
Real estate – residential	318,881		11.7	%
	$	2,757,701	19.0	%

Allowance for Credit Losses

The allowance for credit losses represents an allowance for expected losses over the remaining contractual life of the assets. The contractual term does not consider extensions, renewals or modifications unless the Company reasonably expects to execute a troubled debt restructuring with a borrower. The Company segregates the loan portfolio by type of loan and utilizes this segregation in evaluating exposure to risks within the portfolio.

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.

During the three and six months ended June 30, 2020, the allowance for credit losses increased primarily due to deterioration in forecasted macroeconomic factors resulting from the COVID-19 pandemic. The current forecast reflects, among other things, a decline in GDP and elevated unemployment levels compared to the forecast at both the time of adoption of ASC 326 on January 1, 2020 and the most recent quarter end of March 31, 2020. In addition, the Company also uses certain qualitative adjustments for specific portfolios as well as model uncertainty.

The following tables detail activity in the allowance for credit losses by portfolio segment for the three and six-month periods ended June 30, 2020 and June 30, 2019 and end of period balances by portfolio segment as of June 30, 2020, December 31, 2019 and June 30, 2019. Allocation of a portion of the allowance to one category of loans does not preclude its availability to absorb losses in other categories.


Three Months Ended June 30, 2020

(dollars in thousands)	Commercial, Financial and Agricultural		Consumer Installment		Indirect Automobile		Mortgage Warehouse		Municipal		Premium Finance
Balance, March 31, 2020	$	8,110	$	15,446	$	3,464	$	1,102	$	522	$	11,508


Provision for loan losses	11		4,824		915		396		(15)		(2,083)
Loans charged off	(486)		(962)		(1,016)		—		—		(1,903)
Recoveries of loans previously charged off	303		777		18		—		—		676
Balance, June 30, 2020	$	7,938	$	20,085	$	3,381	$	1,498	$	507	$	8,198

	Real Estate – Construction and Development		Real Estate – Commercial and Farmland		Real Estate – Residential		Total
Balance, March 31, 2020	$	25,319	$	51,754	$	32,299	$	149,524


Provision for loan losses	28,853		38,133		(2,585)		68,449
Loans charged off	(74)		(6,315)		(525)		(11,281)
Recoveries of loans previously charged off	168		21		138		2,101
Balance, June 30, 2020	$	54,266	$	83,593	$	29,327	$	208,793

Six Months Ended June 30, 2020

(dollars in thousands)	Commercial, Financial and Agricultural		Consumer Installment		Indirect Automobile		Mortgage Warehouse		Municipal		Premium Finance
Balance, December 31, 2019	$	4,567	$	3,784	$	—	$	640	$	484	$	2,550
Adjustment to allowance for adoption of ASU 2016-13	2,587		8,012		4,109		463		(92)		4,471

Provision for loan losses	3,091		8,973		1,479		395		115		2,551
Loans charged off	(2,972)		(2,104)		(2,247)		—		—		(2,734)
Recoveries of loans previously charged off	665		1,420		40		—		—		1,360
Balance, June 30, 2020	$	7,938	$	20,085	$	3,381	$	1,498	$	507	$	8,198

	Real Estate – Construction and Development		Real Estate – Commercial and Farmland		Real Estate – Residential		Total
Balance, December 31, 2019	$	5,995	$	9,666	$	10,503	$	38,189
Adjustment to allowance for adoption of ASU 2016-13	12,248		27,073		19,790		78,661

Provision for loan losses	35,587		53,991		(686)		105,496
Loans charged off	(74)		(7,243)		(625)		(17,999)
Recoveries of loans previously charged off	510		106		345		4,446
Balance, June 30, 2020	$	54,266	$	83,593	$	29,327	$	208,793

Prior to the adoption of ASC 326 on January 1, 2020, the Company calculated the allowance for loan losses under the incurred loss methodology. The following tables are disclosures related to the allowance for loan losses in prior periods.


(dollars in thousands)	Commercial, Financial and Agricultural		Consumer Installment		Indirect Automobile		Mortgage Warehouse		Municipal		Premium Finance






December 31, 2019
Period-end allocation:
Loans individually evaluated for impairment⁽¹⁾	$	1,543	$	—	$	—	$	—	$	—	$	758
Loans collectively evaluated for impairment	3,024		3,784		—		640		484		1,792
Ending balance	$	4,567	$	3,784	$	—	$	640	$	484	$	2,550

Loans:
Individually evaluated for impairment ⁽¹⁾	$	8,032	$	—	$	—	$	—	$	—	$	6,768
Collectively evaluated for impairment	789,252		498,363		1,056,811		526,369		564,304		647,901
Acquired with deteriorated credit quality	4,887		214		5,013		—		—		—
Ending balance	$	802,171	$	498,577	$	1,061,824	$	526,369	$	564,304	$	654,669

	Real Estate – Construction and Development		Real Estate – Commercial and Farmland		Real Estate – Residential		Total






December 31, 2019
Period-end allocation:
Loans individually evaluated for impairment⁽¹⁾	$	204	$	953	$	3,704	$	7,162
Loans collectively evaluated for impairment	5,791		8,713		6,799		31,027
Ending balance	$	5,995	$	9,666	$	10,503	$	38,189

Loans:
Individually evaluated for impairment ⁽¹⁾	$	1,605	$	19,759	$	46,311	$	82,475
Collectively evaluated for impairment	1,532,786		4,256,397		2,737,095		12,609,278
Acquired with deteriorated credit quality	14,671		76,883		25,055		126,723
Ending balance	$	1,549,062	$	4,353,039	$	2,808,461	$	12,818,476

(1) At December 31, 2019, loans individually evaluated for impairment includes all nonaccrual loans greater than $100,000 and all troubled debt restructurings greater than $100,000, including all troubled debt restructurings and not only those currently classified as troubled debt restructurings.


(dollars in thousands)	Commercial, Financial and Agricultural		Consumer Installment		Mortgage Warehouse		Municipal		Premium Finance
Three Months Ended June 30, 2019
Balance, March 31, 2019	$	2,190	$	3,936	$	640	$	508	$	1,830
Provision for loan losses	717		334		—		(6)		1,369
Loans charged off	(473)		(1,171)		—		—		(865)
Recoveries of loans previously charged off	382		289		—		—		650
Balance, June 30, 2019	$	2,816	$	3,388	$	640	$	502	$	2,984


(dollars in thousands)	Commercial, Financial and Agricultural			Consumer Installment		Mortgage Warehouse		Municipal		Premium Finance
Six Months Ended June 30, 2019
Balance, December 31, 2018	$	2,352		$	3,795	$	640	$	509	$	1,426
Provision for loan losses	1,017			2,157		—		(7)		2,083
Loans charged off	(1,157)			(3,068)		—		—		(2,185)
Recoveries of loans previously charged off	604			504		—		—		1,660
Balance, June 30, 2019	$	2,816	F	$	3,388	$	640	$	502	$	2,984

Period-end allocation:
Loans individually evaluated for impairment⁽¹⁾	$	634		$	—	$	—	$	—	$	1,391
Loans collectively evaluated for impairment	2,182			3,388		640		502		1,593
Ending balance	$	2,816		$	3,388	$	640	$	502	$	2,984

Loans:
Individually evaluated for impairment ⁽¹⁾	$	3,407		$	—	$	—	$	—	$	2,997
Collectively evaluated for impairment	697,804			474,071		462,481		583,558		610,967
Acquired with deteriorated credit quality	2,079			124		—		—		—
Ending balance	$	703,290		$	474,195	$	462,481	$	583,558	$	613,964

	Real Estate – Construction and Development			Real Estate – Commercial and Farmland		Real Estate – Residential		Total
Three Months Ended June 30, 2019
Balance, March 31, 2019	$	4,424		$	9,237	$	5,894	$	28,659
Provision for loan losses	314			(50)		1,990		4,668
Loans charged off	(243)			(589)		(155)		(3,496)
Recoveries of loans previously charged off	268			78		295		1,962
Balance, June 30, 2019	$	4,763		$	8,676	$	8,024	$	31,793

Six Months Ended June 30, 2019
Balance, December 31, 2018	$	4,210		$	9,659	$	6,228	$	28,819
Provision for loan losses	436			742		1,648		8,076
Loans charged off	(268)			(1,843)		(354)		(8,875)
Recoveries of loans previously charged off	385			118		502		3,773
Balance, June 30, 2019	$	4,763	F	$	8,676	$	8,024	$	31,793

Period-end allocation:
Loans individually evaluated for impairment (1)	$	498		$	1,984	$	1,881	$	6,388
Loans collectively evaluated for impairment	4,265			6,692		6,143		25,405
Ending balance	$	4,763		$	8,676	$	8,024	$	31,793

Loans:
Individually evaluated for impairment (1)	$	7,279		$	17,130	$	26,647	$	57,460
Collectively evaluated for impairment	1,089,546			3,118,126		1,883,519		8,920,072
Acquired with deteriorated credit quality	6,725			46,957		16,453		72,338
Ending balance	$	1,103,550		$	3,182,213	$	1,926,619	$	9,049,870

(1) At June 30, 2019, loans individually evaluated for impairment includes all nonaccrual loans greater than $100,000 and all troubled debt restructurings greater than $100,000, including all troubled debt restructurings and not only those currently classified as troubled debt restructurings.