LOANS AND ALLOWANCE FOR LOAN LOSSES

12 Months Ended

Dec. 31, 2015

NOTE 6. LOANS AND ALLOWANCE FOR LOAN LOSSES

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 also purchased loan pools during 2015 collateralized by properties located outside our Southeast markets, specifically in California, Washington and Illinois. 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, and other business purposes. Short-term working capital loans are secured by non-real estate collateral such as accounts receivable, crops, inventory and equipment. The Company 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, construction of 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, farmland and warehouse space. 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.

Consumer installment loans and other loans include automobile loans, boat and recreational vehicle financing, and both 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.

Loans are stated at unpaid balances, net of unearned income and deferred loan fees. Balances within the major loans receivable categories are presented in the following table:

	December 31,
	2015		2014
	(Dollars in Thousands)
Commercial, financial & agricultural	$	449,623	$	319,654
Real estate – construction & development		244,693		161,507
Real estate – commercial & farmland		1,104,991		907,524
Real estate – residential		570,430		456,106
Consumer installment		31,125		30,782
Other		6,015		14,308
		2,406,877		1,889,881
Allowance for loan losses		20,481		21,157
Loans, net	$	2,386,396	$	1,868,724

Purchased non-covered loans are defined as loans that were acquired in bank acquisitions that are not covered by a loss-sharing agreement with the FDIC. Loans that were previously classified as covered loans where the loss-sharing agreements have expired are also included in purchased non-covered loans. Purchased non-covered loans totaling $771.6 million and $674.2 million at December 31, 2015 and 2014, respectively, are not included in the above schedule.

The carrying value of purchased non-covered loans are shown below according to loan type as of the end of the years shown:

	2015		2014
	(Dollars in Thousands)
Commercial, financial & agricultural	$	45,462	$	38,041
Real estate – construction & development		72,080		58,362
Real estate – commercial & farmland		390,755		306,706
Real estate – residential		258,153		266,342
Consumer installment loans		5,104		4,788
	$	771,554	$	674,239

Purchased loan pools are defined as groups of loans that were not acquired in bank acquisitions or FDIC-assisted transactions. As of December 31, 2015, purchased loan pools totaled $593.0 million and consisted of whole-loan, adjustable rate residential mortgages on properties outside the Company’s markets, with principal balances totaling $580.7 million and $12.3 million of purchase premium paid at acquisition. At December 31, 2015, all loans included in the purchased loan pools were performing current loans, all risk-rated grade 20, and the Company had allocated $581,000 of allowance for loan losses for the purchased loan pools. The Company did not have any purchased loan pools at December 31, 2014. 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 in order 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 were 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.

Covered loans are defined as loans that were acquired in FDIC-assisted transactions that are covered by a loss-sharing agreement with the FDIC. Covered loans totaling $137.5 million and $271.3 million at December 31, 2015 and 2014, respectively, are not included in the above schedules.

The carrying value of covered loans are shown below according to loan type as of the end of the years shown:

	2015		2014
	(Dollars in Thousands)
Commercial, financial & agricultural	$	5,546	$	21,467
Real estate – construction & development		7,612		23,447
Real estate – commercial & farmland		71,226		147,627
Real estate – residential		53,038		78,520
Consumer installment loans		107		218
	$	137,529	$	271,279

Nonaccrual and Past Due Loans

A loan is placed on non-accrual 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 to interest income. Interest on loans that are classified as non-accrual 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, excluding purchased non-covered and covered loans:

	2015		2014
	(Dollars in Thousands)
Commercial, financial & agricultural	$	1,302	$	1,672
Real estate – construction & development		1,812		3,774
Real estate – commercial & farmland		7,019		8,141
Real estate – residential		6,278		7,663
Consumer installment loans		449		478
	$	16,860	$	21,728

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

	2015		2014
	(Dollars in Thousands)
Commercial, financial & agricultural	$	1,064	$	175
Real estate – construction & development		1,106		1,119
Real estate – commercial & farmland		4,920		10,242
Real estate – residential		6,168		6,644
Consumer installment loans		72		69
	$	13,330	$	18,249

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

	2015		2014
	(Dollars in Thousands)
Commercial, financial & agricultural	$	2,803	$	8,541
Real estate – construction & development		1,701		7,601
Real estate – commercial & farmland		5,034		12,584
Real estate – residential		3,663		6,595
Consumer installment loans		37		91
	$	13,238	$	35,412

The following table presents an analysis of loans, excluding purchased non-covered and covered past due loans as of December 31, 2015 and 2014.

	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
	(Dollars in Thousands)
As of December 31, 2015:
Commercial, financial & agricultural	$	568	$	271	$	835	$	1,674	$	447,949	$	449,623	$	-
Real estate – construction & development		1,413		261		1,739		3,413		241,280		244,693		-
Real estate – commercial & farmland		1,781		641		6,912		9,334		1,095,657		1,104,991		-
Real estate – residential		3,806		2,120		5,121		11,047		559,383		570,430		-
Consumer installment loans		374		188		238		800		30,325		31,125		-
Other		-		-		-		-		6,015		6,015		-
Total	$	7,942	$	3,481	$	14,845	$	26,268	$	2,380,609	$	2,406,877	$	-

	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
	(Dollars in Thousands)
As of December 31, 2014:
Commercial, financial & agricultural	$	900	$	233	$	1,577	$	2,710	$	316,944	$	319,654	$	-
Real estate – construction & development		1,382		286		3,367		5,035		156,472		161,507		-
Real estate – commercial & farmland		2,859		635		7,668		11,162		896,362		907,524		-
Real estate – residential		3,953		2,334		6,755		13,042		443,064		456,106		-
Consumer installment loans		634		158		366		1,158		29,624		30,782		1
Other		-		-		-		-		14,308		14,308		-
Total	$	9,728	$	3,646	$	19,733	$	33,107	$	1,856,774	$	1,889,881	$	1

The following table presents an analysis of purchased non-covered past due loans as of December 31, 2015 and 2014.

	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
	(Dollars in Thousands)
As of December 30, 2015:
Commercial, financial & agricultural	$	248	$	13	$	846	$	1,107	$	44,355	$	45,462	$	-
Real estate – construction & development		416		687		420		1,523		70,557		72,080		-
Real estate – commercial & farmland		2,479		1,629		3,347		7,455		383,300		390,755		-
Real estate – residential		4,965		2,176		4,928		12,069		246,084		258,153		-
Consumer installment loans		31		9		70		110		4,994		5,104		-
Total	$	8,139	$	4,514	$	9,611	$	22,264	$	749,290	$	771,554	$	-

	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
	(Dollars in Thousands)
As of December 30, 2014:
Commercial, financial & agricultural	$	461	$	90	$	175	$	726	$	37,315	$	38,041	$	-
Real estate – construction & development		790		1,735		1,117		3,642		54,720		58,362		-
Real estate – commercial & farmland		2,107		1,194		9,529		12,830		293,876		306,706		-
Real estate – residential		6,907		1,401		6,369		14,677		251,665		266,342		-
Consumer installment loans		82		-		65		147		4,641		4,788		-
Total	$	10,347	$	4,420	$	17,255	$	32,022	$	642,217	$	674,239	$	-

The following table presents an analysis of covered past due loans as of December 31, 2015 and 2014:

	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
	(Dollars in Thousands)
As of December 30, 2015:
Commercial, financial & agricultural	$	-	$	-	$	2,802	$	2,802	$	2,744	$	5,546	$	-
Real estate – construction & development		96		-		1,633		1,729		5,883		7,612		-
Real estate – commercial & farmland		170		205		3,064		3,439		67,787		71,226		-
Real estate – residential		2,155		1,001		2,658		5,814		47,224		53,038		-
Consumer installment loans		-		-		37		37		70		107		-
Total	$	2,421	$	1,206	$	10,194	$	13,821	$	123,708	$	137,529	$	-

	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
	(Dollars in Thousands)
As of December 31, 2014:
Commercial, financial & agricultural	$	451	$	136	$	1,878	$	2,465	$	19,002	$	21,467	$	-
Real estate – construction & development		238		226		6,703		7,167		16,280		23,447		-
Real estate – commercial & farmland		4,371		1,486		7,711		13,568		134,059		147,627		714
Real estate – residential		3,464		962		5,656		10,082		68,438		78,520		-
Consumer installment loans		10		-		91		101		117		218		-
Total	$	8,534	$	2,810	$	22,039	$	33,383	$	237,896	$	271,279	$	714

Impaired Loans

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 $200,000 and all troubled debt restructurings greater than $100,000. 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.

The following is a summary of information pertaining to impaired loans, excluding purchased non-covered and covered loans:

	As of and For the Years Ended December 31,
	2015		2014		2013
	(Dollars in Thousands)
Nonaccrual loans	$	16,860	$	21,728	$	29,203
Troubled debt restructurings not included above		14,418		12,759		17,214
Total impaired loans	$	31,278	$	34,487	$	46,417

Interest income recognized on impaired loans	$	909	$	1,991	$	1,938
Foregone interest income on impaired loans	$	1,204	$	1,491	$	1,784

The following table presents an analysis of information pertaining to impaired loans, excluding purchased non-covered and covered loans as of December 31, 2015 and 2014.

	Unpaid Contractual Principal Balance		Recorded Investment With No Allowance		Recorded Investment With Allowance		Total Recorded Investment		Related Allowance		Average Recorded Investment
	(Dollars in Thousands)
As of December 31, 2015:
Commercial, financial & agricultural	$	3,062	$	158	$	1,385	$	1,543	$	135	$	2,275
Real estate – construction & development		3,581		230		2,374		2,604		774		3,228
Real estate – commercial & farmland		14,385		6,702		6,083		12,785		1,067		15,105
Real estate – residential		15,809		1,621		12,230		13,851		2,224		11,977
Consumer installment loans		592		-		495		495		9		488
Total	$	37,429	$	8,711	$	22,567	$	31,278	$	4,209	$	33,073

	Unpaid Contractual Principal Balance		Recorded Investment With No Allowance		Recorded Investment With Allowance		Total Recorded Investment		Related Allowance		Average Recorded Investment
	(Dollars in Thousands)
As of December 31, 2014:
Commercial, financial & agricultural	$	3,387	$	6	$	1,956	$	1,962	$	395	$	3,021
Real estate – construction & development		8,325		448		4,005		4,453		771		5,368
Real estate – commercial & farmland		17,514		4,967		9,651		14,618		1,859		15,972
Real estate – residential		15,571		3,514		9,407		12,921		974		16,317
Consumer installment loans		618		-		533		533		9		519
Total	$	45,415	$	8,935	$	25,552	$	34,487	$	4,008	$	41,197

During 2015, 2014 and 2013, the Company recorded provision for loan loss expense of $751,000, $843,000 and $1.5 million, respectively, to account for losses where there was a decrease in cash flows from the initial estimates on loans acquired in FDIC-assisted transactions. During 2015, the Company recorded a net recovery of $237,000 to account for loans where there was an increase in cash flows from the initial estimates on purchased, non-covered loans. During 2014, the Company recorded provision for loan loss expense of $84,000 to account for losses where there was a decrease in cash flows from the initial estimates on purchased, non-covered loans. The Company did not record a provision for loan loss expense to account for losses where the initial estimate of cash flows was revised downward based on new information on purchased, non-covered loans during 2013. The allowance for loan losses recorded on purchased non-covered loans and covered loans that is immediately charged off is related to the purchased credit-impaired loans. Charge-offs on purchased loans, both covered and non-covered, are recorded when impairment is recorded. Provision expense for covered loans is recorded net of the indemnification by the FDIC loss-sharing agreements.

The following is a summary of information pertaining to purchased non-covered impaired loans:

	As of and For the Years Ended December 31,
	2015		2014		2013

	(Dollars in Thousands)
Nonaccrual loans	$	13,330	$	18,249	$	6,659
Troubled debt restructurings not included above		9,373		1,212		5,938
Total impaired loans	$	22,703	$	19,461	$	12,597

Interest income recognized on impaired loans	$	785	$	109	$	-
Foregone interest income on impaired loans	$	1,365	$	1,759	$	-

The following table presents an analysis of information pertaining to purchased non-covered impaired loans as of December 31, 2015 and 2014.

	Unpaid Contractual Principal Balance		Recorded Investment With No Allowance		Recorded Investment With Allowance		Total Recorded Investment		Related Allowance		Average Recorded Investment

	(Dollars in Thousands)
As of December 31, 2015:
Commercial, financial & agricultural	$	3,103	$	1,066	$	-	$	1,066	$	-	$	392
Real estate – construction & development		8,987		1,469		-		1,469		-		1,429
Real estate – commercial & farmland		14,999		11,134		-		11,134		-		10,806
Real estate – residential		14,946		8,957		-		8,957		-		8,067
Consumer installment loans		94		77		-		77		-		65
Total	$	42,129	$	22,703	$	-	$	22,703	$	-	$	20,759

	Unpaid Contractual Principal Balance		Recorded Investment With No Allowance		Recorded Investment With Allowance		Total Recorded Investment		Related Allowance		Average Recorded Investment

	(Dollars in Thousands)
As of December 31, 2014:
Commercial, financial & agricultural	$	499	$	175	$	-	$	175	$	-	$	165
Real estate – construction & development		2,210		1,436		-		1,436		-		1,643
Real estate – commercial & farmland		13,520		10,588		-		10,588		-		7,484
Real estate – residential		10,487		7,191		-		7,191		-		7,084
Consumer installment loans		169		71		-		71		-		68
Total	$	26,885	$	19,461	$	-	$	19,461	$	-	$	16,444

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

	As of and For the Years Ended December 31,
	2015		2014		2013
	(Dollars in Thousands)
Nonaccrual loans	$	13,238	$	35,412	$	69,152
Troubled debt restructurings not included above		13,283		22,619		22,243
Total impaired loans	$	26,521	$	58,031	$	91,395

Interest income recognized on impaired loans	$	886	$	1,134	$	968
Foregone interest income on impaired loans	$	1,596	$	3,123	$	4,674

The following table presents an analysis of information pertaining to covered impaired loans as of December 31, 2015 and 2014.

	Unpaid Contractual Principal Balance		Recorded Investment With No Allowance		Recorded Investment With Allowance		Total Recorded Investment		Related Allowance		Average Recorded Investment

	(Dollars in Thousands)
As of December 31, 2015:
Commercial, financial & agricultural	$	5,188	$	2,802	$	-	$	2,802	$	-	$	7,408
Real estate – construction & development		15,119		2,480		-		2,480		-		6,906
Real estate – commercial & farmland		20,508		7,001		-		7,001		-		18,504
Real estate – residential		15,830		14,192		-		14,192		-		16,010
Consumer installment loans		60		46		-		46		-		86
Total	$	56,705	$	26,521	$	-	$	26,521	$	-	$	48,914

	Unpaid Contractual Principal Balance		Recorded Investment With No Allowance		Recorded Investment With Allowance		Total Recorded Investment		Related Allowance		Average Recorded Investment

	(Dollars in Thousands)
As of December 31, 2014:
Commercial, financial & agricultural	$	10,845	$	8,582	$	-	$	8,582	$	-	$	9,777
Real estate – construction & development		11,621		10,638		-		10,638		-		14,132
Real estate – commercial & farmland		23,349		20,663		-		20,663		-		28,594
Real estate – residential		19,629		18,054		-		18,054		-		21,091
Consumer installment loans		111		94		-		94		-		163
Total	$	65,555	$	58,031	$	-	$	58,031	$	-	$	73,757

Credit Quality Indicators

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

Grade 10 – Prime Credit – This grade represents loans to the Company’s most creditworthy borrowers or loans that are secured by cash or cash equivalents.

Grade 15 – Good Credit – This grade includes loans that exhibit one or more characteristics better than that of a Satisfactory Credit. Generally, debt service coverage and borrower’s liquidity is materially better than required by the Company’s loan policy.

Grade 20 – Satisfactory Credit – This grade is assigned to loans to borrowers who exhibit satisfactory credit histories, contain acceptable loan structures and demonstrate ability to repay.

Grade 23 – Performing, Under-Collateralized 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 25 – Minimum Acceptable Credit – This grade includes loans which exhibit all the characteristics of a Satisfactory 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, 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, 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 30 – Other Asset 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 40 – Substandard – This grade represents loans which are inadequately protected by the current sound worth 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 50 – 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 60 – 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 loss 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, excluding purchased non-covered and covered loans, by risk grade as of December 31, 2015 and 2014.

As of December 31, 2015:

Risk Grade	Commercial, financial & agricultural		Real estate - construction & development		Real estate - commercial & farmland		Real estate - residential		Consumer installment loans		Other		Total
	(Dollars in Thousands)
10	$	241,721	$	294	$	116	$	1,606	$	6,872	$	-	$	250,609
15		28,420		2,074		117,880		78,165		1,191		-		227,730
20		97,142		46,221		685,538		369,624		19,780		6,015		1,224,320
23		559		7,827		13,073		6,112		36		-		27,607
25		77,829		183,512		254,012		91,465		2,595		-		609,413
30		1,492		1,620		13,821		7,347		143		-		24,423
40		2,460		3,145		20,551		16,111		506		-		42,773
50		-		-		-		-		-		-		-
60		-		-		-		-		2		-		2
Total	$	449,623	$	244,693	$	1,104,991	$	570,430	$	31,125	$	6,015	$	2,406,877

As of December 31, 2014:

Risk Grade	Commercial, financial & agricultural		Real estate - construction & development		Real estate - commercial & farmland		Real estate - residential		Consumer installment loans		Other		Total
	(Dollars in Thousands)
10	$	121,355	$	268	$	155	$	226	$	6,573	$	-	$	128,577
15		25,318		4,010		128,170		59,301		1,005		-		217,804
20		100,599		47,541		511,198		256,758		17,544		14,308		947,948
23		56		8,933		10,507		9,672		37		-		29,205
25		62,519		93,514		224,464		102,998		4,692		-		488,187
30		3,758		1,474		13,035		7,459		257		-		25,983
40		6,049		5,767		19,995		19,692		673		-		52,176
50		-		-		-		-		1		-		1
60		-		-		-		-		-		-		-
Total	$	319,654	$	161,507	$	907,524	$	456,106	$	30,782	$	14,308	$	1,889,881

The following table presents the purchased non-covered loan portfolio by risk grade as of December 31, 2015 and 2014.

As of December 31, 2015:

Risk Grade	Commercial, financial & agricultural		Real estate - construction & development		Real estate - commercial & farmland		Real estate - residential		Consumer installment loans		Other		Total
	(Dollars in Thousands)
10	$	8,592	$	-	$	-	$	-	$	1,010	$	-	$	9,602
15		1,186		1,143		10,490		37,808		541		-		51,168
20		10,057		13,678		183,219		128,005		2,031		-		336,990
23		-		438		5,177		6,414		-		-		12,029
25		17,565		47,517		162,253		66,166		1,328		-		294,829
30		6,657		4,185		14,297		5,503		51		-		30,693
40		1,373		5,119		15,319		14,257		143		-		36,211
50		30		-		-		-		-		-		30
60		2		-		-		-		-		-		2
Total	$	45,462	$	72,080	$	390,755	$	258,153	$	5,104	$	-	$	771,554

As of December 31, 2014:

Risk Grade	Commercial, financial & agricultural		Real estate - construction & development		Real estate - commercial & farmland		Real estate - residential		Consumer installment loans		Other		Total
	(Dollars in Thousands)
10	$	6,624	$	-	$	-	$	290	$	480	$	-	$	7,394
15		1,376		522		13,277		14,051		501		-		29,727
20		13,657		12,991		116,308		64,083		1,647		-		208,686
23		73		-		3,207		3,298		-		-		6,578
25		13,753		36,230		144,293		164,959		1,920		-		361,155
30		1,618		4,365		12,279		7,444		41		-		25,747
40		910		4,254		17,342		12,184		199		-		34,889
50		30		-		-		33		-		-		63
60		-		-		-		-		-		-		-
Total	$	38,041	$	58,362	$	306,706	$	266,342	$	4,788	$	-	$	674,239

The following table presents the covered loan portfolio by risk grade as of December 31, 2015 and 2014.

As of December 31, 2015:

Risk Grade	Commercial, financial & agricultural		Real estate - construction & development		Real estate - commercial & farmland		Real estate - residential		Consumer installment loans		Other		Total
	(Dollars in Thousands)
10	$	-	$	-	$	-	$	-	$	-	$	-	$	-
15		-		-		-		-		-		-		-
20		93		800		11,698		10,040		-		-		23,631
23		52		-		2,957		5,723		-		-		8,732
25		2,594		3,907		38,741		24,345		11		-		69,598
30		5		828		2,857		4,552		-		-		8,242
40		2,802		2,077		14,973		8,378		96		-		28,326
50		-		-		-		-		-		-		-
60		-		-		-		-		-		-		-
Total	$	5,546	$	7,612	$	71,226	$	53,038	$	107	$	-	$	137,529

As of December 31, 2014:

Risk Grade	Commercial, financial & agricultural		Real estate - construction & development		Real estate - commercial & farmland		Real estate - residential		Consumer installment loans		Other		Total
	(Dollars in Thousands)
10	$	-	$	-	$	-	$	-	$	-	$	-	$
15		-		1		761		525		-		-		1,287
20		917		3,184		23,167		14,089		77		-		41,434
23		164		537		11,404		6,642		-		-		18,747
25		5,181		9,406		80,334		33,124		37		-		128,082
30		4,808		2,753		5,302		8,050		-		-		20,913
40		10,397		7,566		26,659		16,090		104		-		60,816
50		-		-		-		-		-		-		-
60		-		-		-		-		-		-		-
Total	$	21,467	$	23,447	$	147,627	$	78,520	$	218	$	-	$	271,279

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 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 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 that 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) when 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, 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 as troubled debt restructurings because the borrower is not experiencing financial difficulty. The Company modified loans in 2015 and 2014 totaling $96.5 million and $29.1 million, respectively, under such parameters.

As of December 31, 2015 and 2014, the Company had a balance of $16.4 million and $15.3 million, respectively, in troubled debt restructurings, excluding purchased non-covered and covered loans. The Company has recorded $1.3 million and $2.2 million in previous charge-offs on such loans at December 31, 2015 and 2014, respectively. The Company’s balance in the allowance for loan losses allocated to such troubled debt restructurings was $2.7 million and $231,000 at December 31, 2015 and 2014, respectively. At December 31, 2015, the Company did not have any commitments to lend additional funds to debtors whose terms have been modified in troubled restructurings.

During the year ending December 31, 2015 and 2014, the Company modified loans as troubled debt restructurings, excluding purchased non-covered and covered loans, with principal balances of $7.3 million and $2.8 million, respectively. These modifications impacted the Company’s allowance for loan losses by $1.4 million and $232,000 for the year ended December 31, 2015 and 2014, respectively. The following table presents the loans by class modified as troubled debt restructurings, excluding purchased non-covered and covered loans, which occurred during the year ending December 31, 2015 and 2014.

	December 31, 2015				December 31, 2014
			Balance				Balance
Loan class:	#		(in thousands)		#		(in thousands)
Commercial, financial & agricultural		7	$	80		6	$	100
Real estate – construction & development		2		15		5		264
Real estate – commercial & farmland		2		2,121		5		1,082
Real estate – residential		33		4,992		20		1,309
Consumer installment		16		61		16		67
Total		60	$	7,269		52	$	2,822

Troubled debt restructurings, excluding purchased non-covered and covered loans, with an outstanding balance of $2.2 million and $1.2 million at December 31, 2014 and 2013 defaulted during the year ended December 31, 2015 and 2014, respectively, and these defaults did not have a material impact on the Company’s allowance for loan loss. The following table presents the troubled debt restructurings by class that defaulted (defined as 30 days past due) during the year ending December 31, 2015 and 2014.

	December 31, 2015				December 31, 2014
			Balance				Balance
Loan class:	#		(in thousands)		#		(in thousands)
Commercial, financial & agricultural		3	$	37		1	$	236
Real estate – construction & development		2		33		1		33
Real estate – commercial & farmland		3		624		2		570
Real estate – residential		20		1,493		6		314
Consumer installment		9		45		4		61
Total		37	$	2,232		14	$	1,214

The following table presents the amount of troubled debt restructurings by loan class, excluding purchased non-covered and covered loans, classified separately as accrual and non-accrual at December 31, 2015 and 2014.

As of December 31, 2015	Accruing Loans				Non-Accruing Loans
			Balance				Balance
Loan class:	#		(in thousands)		#		(in thousands)
Commercial, financial & agricultural		4	$	240		10	$	110
Real estate – construction & development		11		792		3		63
Real estate – commercial & farmland		16		5,766		3		596
Real estate – residential		51		7,574		20		1,123
Consumer installment		12		46		23		94
Total		94	$	14,418		59	$	1,986

As of December 31, 2014	Accruing Loans				Non-Accruing Loans
			Balance				Balance
Loan class:	#		(in thousands)		#		(in thousands)
Commercial, financial & agricultural		6	$	290		2	$	13
Real estate – construction & development		9		679		5		228
Real estate – commercial & farmland		19		6,477		3		724
Real estate – residential		47		5,258		11		1,485
Consumer installment		11		55		11		73
Total		92	$	12,759		32	$	2,523

As of December 31, 2015 and 2014, the Company had a balance of $10.0 million and $1.2 million, respectively, in troubled debt restructurings included in purchased non-covered loans. The Company has recorded $377,000 and $29,000, respectively, in charge-offs on such loans at December 31, 2015 and 2014. At December 31, 2015, the Company did not have any commitments to lend additional funds to debtors whose terms have been modified in troubled restructurings.

During the year ending December 31, 2015 and 2014, the Company modified purchased non-covered loans as troubled debt restructurings, with principal balances of $2.7 million and $1.2 million, respectively, and these modifications did not have a material impact on the Company’s allowance for loan losses. The Company transferred troubled debt restructurings with principal balances of $6.7 million from the covered loan category to the purchased non-covered loan category during the year ended December 31, 2015 due to the expiration of the loss-sharing agreements. The following table presents the purchased non-covered loans by class modified as troubled debt restructurings, which occurred during the year ending December 31, 2015 and 2014.

	December 31, 2015				December 31, 2014
			Balance				Balance
Loan class:	#		(in thousands)		#		(in thousands)
Commercial, financial & agricultural		2	$	21		-	$	-
Real estate – construction & development		2		30		1		317
Real estate – commercial & farmland		5		1,051		1		346
Real estate – residential		8		1,541		7		571
Consumer installment		3		8		1		2
Total		20	$	2,651		10	$	1,236

Troubled debt restructurings included in purchased non-covered loans with an outstanding balance of $883,000 and $411,000 defaulted during the years ended December 31, 2015 and 2014, respectively, and these defaults did not have a material impact on the Company’s allowance for loan loss. The following table presents the troubled debt restructurings by class that defaulted (defined as 30 days past due) during the year ending December 31, 2015 and 2014.

	December 31, 2015				December 31, 2014
			Balance				Balance
Loan class:	#		(in thousands)		#		(in thousands)
Commercial, financial & agricultural		-	$	-		-	$	-
Real estate – construction & development		2		30		1		317
Real estate – commercial & farmland		2		57		-		-
Real estate – residential		6		795		2		91
Consumer installment		1		1		1		2
Total		11	$	883		4	$	411

The following table presents the amount of troubled debt restructurings by loan class of purchased non-covered loans, classified separately as accrual and non-accrual at December 31, 2015 and 2014.

As of December 31, 2015	Accruing Loans				Non-Accruing Loans
			Balance				Balance
Loan class:	#		(in thousands)		#		(in thousands)
Commercial, financial & agricultural		1	$	2		2	$	21
Real estate – construction & development		1		363		3		42
Real estate – commercial & farmland		14		6,214		3		412
Real estate – residential		13		2,789		4		180
Consumer installment		2		5		2		3
Total		31	$	9,373		14	$	658

As of December 31, 2014	Accruing Loans				Non-Accruing Loans
			Balance				Balance
Loan class:	#		(in thousands)		#		(in thousands)
Commercial, financial & agricultural		-	$	-		-	$	-
Real estate – construction & development		1		317		-		-
Real estate – commercial & farmland		1		346		-		-
Real estate – residential		6		547		1		25
Consumer installment		1		2		-		-
Total		9	$	1,212		1	$	25

As of December 31, 2015 and 2014, the Company had a balance of $15.5 million and $24.6 million, respectively, in troubled debt restructurings included in covered loans. The Company has recorded $1.2 million and $1.8 million in previous charge-offs on such loans at December 31, 2015 and 2014, respectively. At December 31, 2015, the Company did not have any commitments to lend additional funds to debtors whose terms have been modified in troubled restructurings.

During the year ending December 31, 2015 and 2014, the Company modified covered loans as troubled debt restructurings, with principal balances of $2.2 million and $4.3 million, respectively, and these modifications did not have a material impact on the Company’s allowance for loan losses. The following table presents the covered loans by class modified as troubled debt restructurings, which occurred during the year ending December 31, 2015 and 2014.

	December 31, 2015				December 31, 2014
			Balance				Balance
Loan class:	#		(in thousands)		#		(in thousands)
Commercial, financial & agricultural		1	$	1		-	$	-
Real estate – construction & development		3		334		1		-
Real estate – commercial & farmland		3		1,099		7		2,489
Real estate – residential		23		745		23		1,838
Consumer installment		1		8		-		-
Total		31	$	2,187		31	$	4,327

Troubled debt restructurings included in covered loans with an outstanding balance of $1.3 million and $1.6 million defaulted during the year ended December 31, 2015 and 2014, respectively, and these defaults did not have a material impact on the Company’s allowance for loan loss. The following table presents the troubled debt restructurings by class that defaulted (defined as 30 days past due) during the year ending December 31, 2015 and 2014.

	December 31, 2015				December 31, 2014
			Balance				Balance
Loan class:	#		(in thousands)		#		(in thousands)
Commercial, financial & agricultural		-	$	-		-	$	-
Real estate – construction & development		-		-		1		14
Real estate – commercial & farmland		2		145		1		79
Real estate – residential		16		1,190		17		1,509
Consumer installment		-		-		-		-
Total		18	$	1,335		19	$	1,602

The following table presents the amount of troubled debt restructurings by loan class of covered loans, classified separately as accrual and non-accrual at December 31, 2015 and 2014.

As of December 31, 2015	Accruing Loans				Non-Accruing Loans
			Balance				Balance
Loan class:	#		(in thousands)		#		(in thousands)
Commercial, financial & agricultural		-	$	-		2	$	1
Real estate – construction & development		4		779		-		-
Real estate – commercial & farmland		4		1,967		3		1,067
Real estate – residential		97		10,529		26		1,116
Consumer installment		2		8		-		-
Total		107	$	13,283		31	$	2,184

As of December 31, 2014	Accruing Loans				Non-Accruing Loans
			Balance				Balance
Loan class:	#		(in thousands)		#		(in thousands)
Commercial, financial & agricultural		2	$	40		2	$	-
Real estate – construction & development		4		3,037		2		29
Real estate – commercial & farmland		14		8,079		5		1,082
Real estate – residential		96		11,460		8		831
Consumer installment		1		3		-		-
Total		117	$	22,619		17	$	1,942

Related Party Loans

In the ordinary course of business, the Company has granted loans to certain directors and their affiliates. Company policy prohibits loans to executive officers. Changes in related party loans are summarized as follows:

	December 31,
	2015		2014
	(Dollars in Thousands)

Balance, beginning of year	$	4,403	$	5,565
Advances		162		78
Repayments		(674)		(1,240)
Transactions due to changes in related parties		(73)		-
Balance, end of year	$	3,818	$	4,403

Allowance for Loan Losses

The following table details activity in the allowance for loan losses by portfolio segment for the periods indicated. Allocation of a portion of the allowance to one category of loans does not preclude its availability to absorb losses in other categories.

	Commercial, financial & agricultural		Real estate – construction & development		Real estate – commercial & farmland		Real estate - residential		Consumer installment loans and Other		Purchased non-covered loans, including pools		Covered loans		Total
	(Dollars in Thousands)
Twelve months ended December 31, 2015:
Balance, January 1, 2015	$	2,004	$	5,030	$	8,823	$	4,129	$	1,171	$	-	$	-	$	21,157
Provision for loan losses		(73)		278		1,221		2,067		676		344		751		5,264
Loans charged off		(1,438)		(622)		(2,367)		(1,587)		(410)		(950)		(1,759)		(9,133)
Recoveries of loans previously charged off		651		323		317		151		137		1,187		1,008		3,774
Balance, December 31, 2015	$	1,144	$	5,009	$	7,994	$	4,760	$	1,574	$	581	$	-	$	21,062

Period-end amount allocated to:
Loans individually evaluated for impairment	$	126	$	759	$	1,074	$	2,172	$	-	$	-	$	-	$	4,131
Loans collectively evaluated for impairment		1,018		4,250		6,920		2,588		1,574		581		-		16,931
Ending balance	$	1,144	$	5,009	$	7,994	$	4,760	$	1,574	$	581	$	-	$	21,062

Loans:
Individually evaluated for impairment	$	323	$	1,958	$	11,877	$	9,554	$	-	$	-	$	-	$	23,712
Collectively evaluated for impairment		449,300		242,735		1,093,114		560,876		37,140		1,261,821		52,451		3,697,437
Acquired with deteriorated credit quality		-		-		-		-		-		102,696		85,078		187,774
Ending balance	$	449,623	$	244,693	$	1,104,991	$	570,430	$	37,140	$	1,364,517	$	137,529	$	3,908,923

	Commercial, financial & agricultural		Real estate – construction & development		Real estate – commercial & farmland		Real estate - residential		Consumer installment loans and Other		Purchased non-covered loans, including pools		Covered loans		Total
	(Dollars in Thousands)
Twelve months ended December 31, 2014:
Balance, January 1, 2014	$	1,823	$	5,538	$	8,393	$	6,034	$	589	$	-	$	-	$	22,377
Provision for loan losses		1,427		(265)		3,444		(452)		567		84		843		5,648
Loans charged off		(1,567)		(592)		(3,288)		(1,707)		(471)		(84)		(1,851)		(9,560)
Recoveries of loans previously charged off		321		349		274		254		486		-		1,008		2,692
Balance, December 31, 2014	$	2,004	$	5,030	$	8,823	$	4,129	$	1,171	$	-	$	-	$	21,157

Period-end amount allocated to:
Loans individually evaluated for impairment	$	375	$	743	$	1,861	$	911	$	-	$	-	$	-	$	3,890
Loans collectively evaluated for impairment		1,629		4,287		6,962		3,218		1,171		-		-		17,267
Ending balance	$	2,004	$	5,030	$	8,823	$	4,129	$	1,171	$	-	$	-	$	21,157

Loans:
Individually evaluated for impairment	$	490	$	3,709	$	14,546	$	8,904	$	-	$	-	$	-	$	27,649
Collectively evaluated for impairment		319,164		157,798		892,978		447,202		45,090		579,172		122,248		2,563,652
Acquired with deteriorated credit quality		-		-		-		-		-		95,067		149,031		244,098
Ending balance	$	319,654	$	161,507	$	907,524	$	456,106	$	45,090	$	674,239	$	271,279	$	2,835,399

	Commercial, financial & agricultural		Real estate – construction & development		Real estate – commercial & farmland		Real estate - residential		Consumer installment loans and Other		Purchased non-covered loans, including pools		Covered loans		Total
	(Dollars in Thousands)
Twelve months ended December 31, 2013:
Balance, January 1, 2013	$	2,439	$	5,343	$	9,157	$	5,898	$	756	$	-	$	-	$	23,593
Provision for loan losses		711		1,742		2,777		4,463		254		-		1,539		11,486
Loans charged off		(1,759)		(2,020)		(3,571)		(5,215)		(719)		-		(1,539)		(14,823)
Recoveries of loans previously charged off		432		473		30		888		298		-		-		2,121
Balance, December 31, 2013	$	1,823	$	5,538	$	8,393	$	6,034	$	589	$	-	$	-	$	22,377

Period-end amount allocated to:
Loans individually evaluated for impairment	$	356	$	407	$	1,427	$	1,395	$	-	$	-	$	-	$	3,585
Loans collectively evaluated for impairment		1,467		5,131		6,966		4,639		589		-		-		18,792
Ending balance	$	1,823	$	5,538	$	8,393	$	6,034	$	589	$	-	$	-	$	22,377

Loans:
Individually evaluated for impairment	$	3,457	$	3,581	$	15,240	$	16,925	$	-	$	-	$	-	$	39,203
Collectively evaluated for impairment		240,916		142,790		793,083		349,957		52,505		381,588		173,190		2,134,029
Acquired with deteriorated credit quality		-		-		-		-		-		67,165		217,047		284,212
Ending balance	$	244,373	$	146,371	$	808,323	$	366,882	$	52,505	$	448,753	$	390,237	$	2,457,444