LOANS

6 Months Ended

Jun. 30, 2016

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 also purchased loan pools during 2015 and 2016 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, including SBA guaranteed 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, 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. 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 and other loans include 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.

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, excluding purchased non-covered and covered loans:

(Dollars in Thousands)	June 30, 2016		December 31, 2015		June 30, 2015
Commercial, financial and agricultural	$	564,343	$	449,623	$	373,202
Real estate – construction and development		274,717		244,693		205,019
Real estate – commercial and farmland		1,248,580		1,104,991		1,010,195
Real estate – residential		680,233		570,430		537,201
Consumer installment		33,245		31,125		30,080
Other		17,953		6,015		15,903
	$	2,819,071	$	2,406,877	$	2,171,600

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 Federal Deposit Insurance Corporation (the “FDIC”). Purchased non-covered loans totaling $1.1 billion, $771.6 million and $808.3 million at June 30, 2016, December 31, 2015 and June 30, 2015, respectively, are not included in the above schedule.

Purchased non-covered loans are shown below according to major loan type as of the end of the periods shown:

(Dollars in Thousands)	June 30, 2016		December 31, 2015		June 30, 2015
Commercial, financial and agricultural	$	101,803	$	45,462	$	45,337
Real estate – construction and development		89,096		72,080		75,302
Real estate – commercial and farmland		574,830		390,755		404,588
Real estate – residential		300,898		258,153		276,798
Consumer installment		5,590		5,104		6,288
	$	1,072,217	$	771,554	$	808,313

Purchased loan pools are defined as groups of loans that were not acquired in bank acquisitions or FDIC-assisted transactions. As of June 30, 2016, purchased loan pools totaled $610.4 million and consisted of whole-loan, adjustable rate residential mortgages on properties outside the Company’s markets, with principal balances totaling $599.9 million and $10.5 million of remaining purchase premium paid at acquisition. 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. As of June 30, 2015, purchased loan pools totaled $269.0 million and consisted of whole-loan, adjustable rate residential mortgages on properties outside the Company’s markets, with principal balances totaling $263.8 million and $5.2 million of purchase premium paid at acquisition. At June 30, 2016, one loan in the purchased loan pools totaling $864,000 was past due and risk-rated grade 40, while all other loans included in the purchased loan pools were performing current loans, risk-rated grade 20. At December 31, 2015 and June 30, 2015, all loans included in the purchased loan pools were performing current loans, all risk-rated grade 20. At June 30, 2016 and December 31, 2015, the Company had allocated $1.2 million and $581,000, respectively, of allowance for loan losses for the purchased loan pools. 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.

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 $121.4 million, $137.5 million and $209.6 million at June 30, 2016, December 31, 2015 and June 30, 2015, respectively, are not included in the above schedules.

Covered loans are shown below according to loan type as of the end of the periods shown:

(Dollars in Thousands)	June 30, 2016		December 31, 2015		June 30, 2015
Commercial, financial and agricultural	$	1,604	$	5,546	$	17,666
Real estate – construction and development		7,168		7,612		15,002
Real estate – commercial and farmland		65,091		71,226		111,772
Real estate – residential		47,455		53,038		64,982
Consumer installment		100		107		176
	$	121,418	$	137,529	$	209,598

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, excluding purchased non-covered and covered loans:

(Dollars in Thousands)	June 30, 2016		December 31, 2015		June 30, 2015
Commercial, financial and agricultural	$	1,829	$	1,302	$	4,067
Real estate – construction and development		1,588		1,812		1,594
Real estate – commercial and farmland		6,732		7,019		8,938
Real estate – residential		5,434		6,278		5,650
Consumer installment		420		449		491
	$	16,003	$	16,860	$	20,740

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

(Dollars in Thousands)	June 30, 2016		December 31, 2015		June 30, 2015
Commercial, financial and agricultural	$	673	$	1,064	$	309
Real estate – construction and development		1,160		1,106		1,483
Real estate – commercial and farmland		7,065		4,920		9,634
Real estate – residential		6,830		6,168		5,930
Consumer installment		39		72		88
	$	15,767	$	13,330	$	17,444

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

(Dollars in Thousands)	June 30, 2016		December 31, 2015		June 30, 2015
Commercial, financial and agricultural	$	127	$	2,803	$	7,948
Real estate – construction and development		1,600		1,701		3,120
Real estate – commercial and farmland		5,110		5,034		13,997
Real estate – residential		4,100		3,663		3,712
Consumer installment		32		37		94
	$	10,969	$	13,238	$	28,871

The following table presents an analysis of past-due loans, excluding purchased non-covered and covered past-due loans as of June 30, 2016, December 31, 2015 and June 30, 2015:

	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 June 30, 2016:
Commercial, financial & agricultural	$	845	$	297	$	1,700	$	2,842	$	561,501	$	564,343	$	-
Real estate – construction & development		355		153		1,527		2,035		272,682		274,717		-
Real estate – commercial & farmland		2,675		724		5,257		8,656		1,239,924		1,248,580		-
Real estate – residential		3,430		1,776		4,243		9,449		670,784		680,233		-
Consumer installment loans		325		123		246		694		32,551		33,245		-
Other		-		-		-		-		17,953		17,953		-

Total	$	7,630	$	3,073	$	12,973	$	23,676	$	2,795,395	$	2,819,071	$	-

	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	$	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 June 30, 2015:
Commercial, financial & agricultural	$	840	$	888	$	3,891	$	5,619	$	367,583	$	373,202	$	-
Real estate – construction & development		1,201		374		1,536		3,111		201,908		205,019		-
Real estate – commercial & farmland		1,958		2,823		7,014		11,795		998,400		1,010,195		-
Real estate – residential		5,135		1,949		4,727		11,811		525,390		537,201		-
Consumer installment loans		293		77		315		685		29,395		30,080		-
Other		-		-		-		-		15,903		15,903		-
Total	$	9,427	$	6,111	$	17,483	$	33,021	$	2,138,579	$	2,171,600	$	-

The following table presents an analysis of purchased non-covered past-due loans as of June 30, 2016, December 31, 2015 and June 30, 2015:

	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 June 30, 2016:
Commercial, financial & agricultural	$	106	$	134	$	501	$	741	$	101,062	$	101,803	$	-
Real estate – construction & development		764		41		789		1,594		87,502		89,096		-
Real estate – commercial & farmland		2,177		1,799		6,929		10,905		563,925		574,830		-
Real estate – residential		4,307		1,487		5,433		11,227		289,671		300,898		-
Consumer installment loans		9		-		38		47		5,543		5,590		-
Total	$	7,363	$	3,461	$	13,690	$	24,514	$	1,047,703	$	1,072,217	$	-

	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 June 30, 2015:
Commercial, financial & agricultural	$	-	$	1,101	$	202	$	1,303	$	44,034	$	45,337	$	-
Real estate – construction & development		245		-		1,026		1,271		74,031		75,302		-
Real estate – commercial & farmland		2,115		724		9,062		11,901		392,687		404,588		-
Real estate – residential		3,848		1,400		5,369		10,617		266,181		276,798		-
Consumer installment loans		6		-		84		90		6,198		6,288		-
Total	$	6,214	$	3,225	$	15,743	$	25,182	$	783,131	$	808,313	$	-

The following table presents an analysis of covered past-due loans as of June 30, 2016, December 31, 2015 and June 30, 2015:

	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 June 30, 2016:
Commercial, financial & agricultural	$	1	$	76	$	51	$	128	$	1,476	$	1,604	$	-
Real estate – construction & development		108		3		1,537		1,648		5,520		7,168		-
Real estate – commercial & farmland		157		-		2,066		2,223		62,868		65,091		-
Real estate – residential		1,773		836		2,672		5,281		42,174		47,455		-
Consumer installment loans		-		-		32		32		68		100		-
Total	$	2,039	$	915	$	6,358	$	9,312	$	112,106	$	121,418	$	-

	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 June 30, 2015:
Commercial, financial & agricultural	$	237	$	240	$	1,670	$	2,147	$	15,519	$	17,666	$	-
Real estate – construction & development		292		31		3,045		3,368		11,634		15,002		143
Real estate – commercial & farmland		699		81		9,396		10,176		101,596		111,772		-
Real estate – residential		2,690		927		2,122		5,739		59,243		64,982		-
Consumer installment loans		-		-		50		50		126		176		-
Total	$	3,918	$	1,279	$	16,283	$	21,480	$	188,118	$	209,598	$	143

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 $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.

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

	As of and For the Period Ended
	June 30, 2016		December 31, 2015		June 30, 2015
	(Dollars in Thousands)
Nonaccrual loans	$	16,003	$	16,860	$	20,740
Troubled debt restructurings not included above		14,795		14,418		12,467

Total impaired loans	$	30,798	$	31,278	$	33,207

Quarter-to-date interest income recognized on impaired loans	$	238	$	274	$	192

Year-to-date interest income recognized on impaired loans	$	556	$	909	$	344

Quarter-to-date foregone interest income on impaired loans	$	230	$	265	$	311

Year-to-date foregone interest income on impaired loans	$	471	$	1,204	$	629

The following table presents an analysis of information pertaining to impaired loans, excluding purchased non-covered and covered loans as of June 30, 2016, December 31, 2015 and June 30, 2015:

	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

	(Dollars in Thousands)
As of June 30, 2016:
Commercial, financial & agricultural	$	3,786	$	652	$	1,453	$	2,105	$	150	$	1,825	$	1,731
Real estate – construction & development		3,141		230		1,826		2,056		697		2,154		2,304
Real estate – commercial & farmland		13,592		5,312		7,221		12,533		1,000		12,772		12,777
Real estate – residential		14,460		1,329		12,331		13,660		2,369		13,249		13,450
Consumer installment loans		531		-		444		444		8		441		458
Total	$	35,510	$	7,523	$	23,275	$	30,798	$	4,224	$	30,441	$	30,720

	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

	(Dollars in Thousands)
As of December 31, 2015:
Commercial, financial & agricultural	$	3,062	$	158	$	1,385	$	1,543	$	135	$	1,887	$	2,275
Real estate – construction & development		3,581		230		2,374		2,604		774		2,598		3,228
Real estate – commercial & farmland		14,385		6,702		6,083		12,785		1,067		15,074		15,105
Real estate – residential		15,809		1,621		12,230		13,851		2,224		11,935		11,977
Consumer installment loans		592		-		495		495		9		461		488
Total	$	37,429	$	8,711	$	22,567	$	31,278	$	4,209	$	31,955	$	33,073

	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

	(Dollars in Thousands)
As of June 30, 2015:
Commercial, financial & agricultural	$	6,004	$	442	$	3,903	$	4,345	$	458	$	2,819	$	2,533
Real estate – construction & development		3,765		-		2,416		2,416		445		3,245		3,648
Real estate – commercial & farmland		18,117		5,960		9,595		15,555		1,243		15,378		15,125
Real estate – residential		11,743		1,153		9,199		10,352		1,825		11,555		12,006
Consumer installment loans		633		-		539		539		8		494		507
Total	$	40,262	$	7,555	$	25,652	$	33,207	$	3,979	$	33,491	$	33,819

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

	As of and For the Period Ended
	June 30, 2016		December 31, 2015		June 30, 2015
	(Dollars in Thousands)
Nonaccrual loans	$	15,767	$	13,330	$	17,444
Troubled debt restructurings not included above		9,053		9,373		6,792

Total impaired loans	$	24,820	$	22,703	$	24,236

Quarter-to-date interest income recognized on impaired loans	$	189	$	442	$	143

Year-to-date interest income recognized on impaired loans	$	546	$	785	$	161

Quarter-to-date foregone interest income on impaired loans	$	264	$	245	$	451

Year-to-date foregone interest income on impaired loans	$	620	$	1,365	$	923

The following table presents an analysis of information pertaining to purchased non-covered impaired loans as of June 30, 2016, December 31, 2015 and June 30, 2015:

	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
	(Dollars in Thousands)
As of June 30, 2016:
Commercial, financial & agricultural	$	2,662	$	675	$	-	$	675	$	-	$	669	$	801
Real estate – construction & development		3,241		340		1,340		1,680		142		1,905		1,759
Real estate – commercial & farmland		16,678		2,075		10,908		12,983		492		15,078		13,764
Real estate – residential		11,891		7,269		2,170		9,439		223		8,880		8,906
Consumer installment loans		56		43		-		43		-		68		71
Total	$	34,528	$	10,402	$	14,418	$	24,820	$	857	$	26,600	$	25,301

	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
	(Dollars in Thousands)
As of December 31, 2015:
Commercial, financial & agricultural	$	3,103	$	1,066	$	-	$	1,066	$	-	$	640	$	392
Real estate – construction & development		8,987		1,469		-		1,469		-		1,369		1,429
Real estate – commercial & farmland		14,999		11,134		-		11,134		-		9,966		10,806
Real estate – residential		14,946		8,957		-		8,957		-		8,591		8,067
Consumer installment loans		94		77		-		77		-		67		65
Total	$	42,129	$	22,703	$	-	$	22,703	$	-	$	20,633	$	20,759

	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
	(Dollars in Thousands)
As of June 30, 2015:
Commercial, financial & agricultural	$	1,476	$	309	$	-	$	309	$	-	$	254	$	227
Real estate – construction & development		9,656		1,857		-		1,857		-		1,485		1,469
Real estate – commercial & farmland		17,043		13,691		-		13,691		-		11,753		11,366
Real estate – residential		12,992		8,285		-		8,285		-		7,982		7,718
Consumer installment loans		111		94		-		94		-		61		64
Total	$	41,278	$	24,236	$	-	$	24,236	$	-	$	21,535	$	20,844

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

	As of and For the Period Ended
	June 30, 2016		December 31, 2015		June 30, 2015
	(Dollars in Thousands)
Nonaccrual loans	$	10,969	$	13,238	$	28,871
Troubled debt restructurings not included above		11,589		13,283		17,500

Total impaired loans	$	22,558	$	26,521	$	46,371

Quarter-to-date interest income recognized on impaired loans	$	154	$	154	$	219

Year-to-date interest income recognized on impaired loans	$	339	$	886	$	431

Quarter-to-date foregone interest income on impaired loans	$	148	$	181	$	409

Year-to-date foregone interest income on impaired loans	$	318	$	1,596	$	947

The following table presents an analysis of information pertaining to covered impaired loans as of June 30, 2016, December 31, 2015 and June 30, 2015:

	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
	(Dollars in Thousands)
As of June 30, 2016:
Commercial, financial & agricultural	$	314	$	127	$	-	$	127	$	-	$	1,463	$	1,909
Real estate – construction & development		6,841		1,198		1,210		2,408		81		2,368		2,405
Real estate – commercial & farmland		10,556		2,127		4,303		6,430		198		6,503		6,669
Real estate – residential		14,890		4,830		8,724		13,554		251		13,724		13,880
Consumer installment loans		47		39		-		39		-		41		43
Total	$	32,648	$	8,321	$	14,237	$	22,558	$	530	$	24,099	$	24,906

	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
	(Dollars in Thousands)
As of December 31, 2015:
Commercial, financial & agricultural	$	5,188	$	2,802	$	-	$	2,802	$	-	$	5,360	$	7,408
Real estate – construction & development		15,119		2,480		-		2,480		-		4,130		6,906
Real estate – commercial & farmland		20,508		7,001		-		7,001		-		14,133		18,504
Real estate – residential		15,830		14,192		-		14,192		-		14,399		16,010
Consumer installment loans		60		46		-		46		-		69		86
Total	$	56,705	$	26,521	$	-	$	26,521	$	-	$	38,091	$	48,914

	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
	(Dollars in Thousands)
As of June 30, 2015:
Commercial, financial & agricultural	$	14,260	$	7,951	$	-	$	7,951	$	-	$	8,869	$	8,773
Real estate – construction & development		29,895		5,953		-		5,953		-		7,819		8,757
Real estate – commercial & farmland		37,426		17,970		-		17,970		-		21,795		21,418
Real estate – residential		18,226		14,402		-		14,402		-		16,600		17,084
Consumer installment loans		125		95		-		95		-		99		97
Total	$	99,932	$	46,371	$	-	$	46,371	$	-	$	55,179	$	56,129

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 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, the 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 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 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 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 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 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, excluding purchased non-covered and covered loans, by risk grade as of June 30, 2016:

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	$	339,903	$	-	$	2,313	$	99	$	7,410	$	-	$	349,725
15		22,049		3,741		106,801		58,283		700		-		191,574
20		100,406		46,224		804,685		501,795		22,498		17,953		1,493,561
23		484		7,245		9,084		6,664		188		-		23,665
25		94,022		211,322		290,528		90,191		1,754		-		687,817
30		2,545		3,297		20,775		5,689		162		-		32,468
40		4,934		2,888		14,394		17,512		533		-		40,261
50		-		-		-		-		-		-		-
60		-		-		-		-		-		-		-
Total	$	564,343	$	274,717	$	1,248,580	$	680,233	$	33,245	$	17,953	$	2,819,071

The following table presents the loan portfolio, excluding purchased non-covered and covered loans, by risk grade 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

The following table presents the loan portfolio, excluding purchased non-covered and covered loans, by risk grade as of June 30, 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	$	173,795	$	268	$	150	$	1,606	$	6,114	$	-	$	181,933
15		25,447		3,402		127,090		85,812		1,319		-		243,070
20		96,169		47,207		592,636		334,999		17,833		15,903		1,104,747
23		635		8,071		11,984		6,655		55		-		27,400
25		69,304		140,119		248,227		83,207		3,807		-		544,664
30		2,566		2,510		11,088		8,612		244		-		25,020
40		5,286		3,442		19,020		16,310		708		-		44,766
50		-		-		-		-		-		-		-
60		-		-		-		-		-		-		-
Total	$	373,202	$	205,019	$	1,010,195	$	537,201	$	30,080	$	15,903	$	2,171,600

The following table presents the purchased non-covered loan portfolio by risk grade as of June 30, 2016:

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	$	5,818	$	-	$	-	$	-	$	1,081	$	-	$	6,899
15		1,085		-		8,637		34,848		675		-		45,245
20		16,503		10,427		202,853		113,691		2,006		-		345,480
23		-		4,072		10,627		12,688		-		-		27,387
25		71,603		64,200		305,654		114,097		1,667		-		557,221
30		4,779		7,910		28,761		11,054		32		-		52,536
40		1,983		2,487		18,298		14,520		129		-		37,417
50		30		-		-		-		-		-		30
60		2		-		-		-		-		-		2
Total	$	101,803	$	89,096	$	574,830	$	300,898	$	5,590	$	-	$	1,072,217

The following table presents the purchased non-covered loan portfolio by risk grade 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

The following table presents the purchased non-covered loan portfolio by risk grade as of June 30, 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	$	9,091	$	-	$	80	$	-	$	952	$	-	$	10,123
15		1,377		866		8,710		41,641		626		-		53,220
20		12,545		16,979		190,219		139,792		2,769		-		362,304
23		-		240		3,792		6,505		-		-		10,537
25		18,556		49,070		165,267		65,818		1,700		-		300,411
30		2,462		3,409		19,042		9,803		63		-		34,779
40		1,276		4,738		17,478		13,217		178		-		36,887
50		30		-		-		22		-		-		52
60		-		-		-		-		-		-		-
Total	$	45,337	$	75,302	$	404,588	$	276,798	$	6,288	$	-	$	808,313

The following table presents the covered loan portfolio by risk grade as of June 30, 2016:

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		32		738		10,278		8,096		-		-		19,144
23		24		-		1,769		4,637		-		-		6,430
25		1,417		4,436		35,031		22,371		13		-		63,268
30		3		418		4,659		3,564		47		-		8,691
40		128		1,576		13,354		8,787		40		-		23,885
50		-		-		-		-		-		-		-
60		-		-		-		-		-		-		-
Total	$	1,604	$	7,168	$	65,091	$	47,455	$	100	$	-	$	121,418

The following table presents the covered loan portfolio by risk grade 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		-		-		22,631
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

The following table presents the covered loan portfolio by risk grade as of June 30, 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		-		-		488		125		-		-		613
20		580		1,218		17,382		12,571		43		-		31,794
23		68		-		5,255		6,083		-		-		11,406
25		4,089		8,142		60,682		30,870		37		-		103,820
30		4,923		2,409		4,165		5,730		-		-		17,227
40		8,006		3,233		23,800		9,603		96		-		44,738
50		-		-		-		-		-		-		-
60		-		-		-		-		-		-		-
Total	$	17,666	$	15,002	$	111,772	$	64,982	$	176	$	-	$	209,598

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, 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 the first six months of 2016 and 2015 totaling $9.7 million and $54.8 million, respectively, under such parameters.

As of June 30, 2016, December 31, 2015 and June 30, 2015, the Company had a balance of $17.8 million, $16.4 million and $14.0 million, respectively, in troubled debt restructurings, excluding purchased non-covered and covered loans. The Company has recorded $1.4 million, $1.3 million and $1.6 million in previous charge-offs on such loans at June 30, 2016, December 31, 2015 and June 30, 2015, respectively. The Company’s balance in the allowance for loan losses allocated to such troubled debt restructurings was $2.8 million, $2.7 million and $210,000 at June 30, 2016, December 31, 2015 and June 30, 2015, respectively. At June 30, 2016, 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 ending June 30, 2016 and 2015, the Company modified loans as troubled debt restructurings, excluding purchased non-covered and covered loans, with principal balances of $2.5 million and $782,000, 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 non-covered and covered loans, which occurred during the six months ending June 30, 2016 and 2015:

	June 30, 2016				June 30, 2015
			Balance				Balance
Loan class:	#		(in thousands)		#		(in thousands)
Commercial, financial & agricultural		2	$	28		3	$	18
Real estate – construction & development		1		6		2		16
Real estate – commercial & farmland		4		1,666		-		-
Real estate – residential		6		739		15		729
Consumer installment		6		26		5		19
Total		19	$	2,465		25	$	782

Troubled debt restructurings, excluding purchased non-covered and covered loans, with an outstanding balance of $494,000 and $2.2 million defaulted during the six months ended June 30, 2016 and 2015, 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 six months ending June 30, 2016 and 2015:

	June 30, 2016				June 30, 2015
			Balance				Balance
Loan class:	#		(in thousands)		#		(in thousands)
Commercial, financial & agricultural		2	$	7		2	$	35
Real estate – construction & development		-		-		-		-
Real estate – commercial & farmland		2		191		5		1,274
Real estate – residential		6		292		10		884
Consumer installment		1		4		6		32
Total		11	$	494		23	$	2,225

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 nonaccrual at June 30, 2016, December 31, 2015 and June 30, 2015:

As of June 30, 2016	Accruing Loans				Non-Accruing Loans
			Balance				Balance
Loan class:	#		(in thousands)		#		(in thousands)
Commercial, financial & agricultural		5	$	275		11	$	86
Real estate – construction & development		9		468		3		36
Real estate – commercial & farmland		19		5,802		3		1,832
Real estate – residential		54		8,226		20		899
Consumer installment		7		24		27		113
Total		94	$	14,795		64	$	2,966

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 June 30, 2015	Accruing Loans				Non-Accruing Loans
			Balance				Balance
Loan class:	#		(in thousands)		#		(in thousands)
Commercial, financial & agricultural		6	$	278		5	$	29
Real estate – construction & development		11		821		3		57
Real estate – commercial & farmland		17		6,617		3		598
Real estate – residential		49		4,702		15		783
Consumer installment		11		49		17		82
Total		94	$	12,467		43	$	1,549

As of June 30, 2016, December 31, 2015 and June 30, 2015, the Company had a balance of $10.0 million, $10.0 million and $7.0 million, respectively, in troubled debt restructurings included in purchased non-covered loans. The Company has recorded $347,000, $377,000 and $632,000 in previous charge-offs on such loans at June 30, 2016, December 31, 2015 and June 30, 2015, respectively. At June 30, 2016, 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 ending June 30, 2016 and 2015, the Company modified purchased non-covered loans as troubled debt restructurings, with principal balances of $668,000 and $1.0 million, and these modifications did not have a material impact on the Company’s allowance for loan loss. The Company transferred troubled debt restructurings with principal balances of $4.8 million from the covered loan category to the purchased non-covered loan category during the six months ended June 30, 2015, due to the expiration of the loss-sharing portion of the agreements. The following table presents the purchased non-covered loans by class modified as troubled debt restructurings, which occurred during the six months ending June 30, 2016 and 2015:

	June 30, 2016				June 30, 2015
			Balance				Balance
Loan class:	#		(in thousands)		#		(in thousands)
Commercial, financial & agricultural		-	$	-		-	$	-
Real estate – construction & development		-		-		-		-
Real estate – commercial & farmland		1		28		-		-
Real estate – residential		2		640		5		1,017
Consumer installment		-		-		1		5
Total		3	$	668		6	$	1,022

Troubled debt restructurings included in purchased non-covered loans with an outstanding balance of $402,000 and $65,000 defaulted during the six months ended June 30, 2016 and 2015, 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 six months ending June 30, 2016 and 2015:

	June 30, 2016				June 30, 2015
			Balance				Balance
Loan class:	#		(in thousands)		#		(in thousands)
Commercial, financial & agricultural		-	$	-		-	$	-
Real estate – construction & development		2		402		-		-
Real estate – commercial & farmland		-		-		-		-
Real estate – residential		-		-		1		65
Consumer installment		-		-		-		-
Total		2	$	402		1	$	65

The following table presents the amount of troubled debt restructurings by loan class of purchased non-covered loans, classified separately as accrual and nonaccrual at June 30, 2016, December 31, 2015 and June 30, 2015:

As of June 30, 2016	Accruing Loans				Non-Accruing Loans
			Balance				Balance
Loan class:	#		(in thousands)		#		(in thousands)
Commercial, financial & agricultural		1	$	1		1	$	17
Real estate – construction & development		2		521		3		36
Real estate – commercial & farmland		12		5,918		3		398
Real estate – residential		14		2,609		4		448
Consumer installment		1		4		2		2
Total		30	$	9,053		13	$	901

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 June 30, 2015	Accruing Loans				Non-Accruing Loans
			Balance				Balance
Loan class:	#		(in thousands)		#		(in thousands)
Commercial, financial & agricultural		-	$	-		1	$	1
Real estate – construction & development		3		374		-		-
Real estate – commercial & farmland		7		4,058		1		69
Real estate – residential		12		2,354		2		91
Consumer installment		2		6		2		5
Total		24	$	6,792		6	$	166

As of June 30, 2016, December 31, 2015 and June 30, 2015, the Company had a balance of $15.1 million, $15.5 million and $19.6 million, respectively, in troubled debt restructurings included in covered loans. The Company has recorded $1.5 million, $1.2 million and $42,000 in previous charge-offs on such loans at June 30, 2016, December 31, 2015 and June 30, 2015, respectively. At June 30, 2016, 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 ending June 30, 2016 and 2015, the Company modified covered loans as troubled debt restructurings with principal balances of $562,000 and $1.2 million, respectively, and these modifications did not have a material impact on the Company’s allowance for loan loss. The following table presents the covered loans by class modified as troubled debt restructurings during the six months ending June 30, 2016 and 2015:

	June 30, 2016				June 30, 2015
			Balance				Balance
Loan class:	#		(in thousands)		#		(in thousands)
Commercial, financial & agricultural		1	$	76		1	$	1
Real estate – construction & development		-		-		2		34
Real estate – commercial & farmland		1		464		4		796
Real estate – residential		1		22		6		376
Consumer installment		-		-		2		5
Total		3	$	562		15	$	1,212

Troubled debt restructurings of covered loans with an outstanding balance of $995,000 and $297,000 defaulted during the six months ended June 30, 2016 and 2015, 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 six months ending June 30, 2016 and 2015:

	June 30, 2016				June 30, 2015
			Balance				Balance
Loan class:	#		(in thousands)		#		(in thousands)
Commercial, financial & agricultural		2	$	76		-	$	-
Real estate – construction & development		-		-		-		-
Real estate – commercial & farmland		-		-		1		21
Real estate – residential		6		919		5		276
Consumer installment		-		-		-		-
Total		8	$	995		6	$	297

The following table presents the amount of troubled debt restructurings by loan class of covered loans, classified separately as accrual and nonaccrual at June 30, 2016, December 31, 2015 and June 30, 2015:

As of June 30, 2016	Accruing Loans				Non-Accruing Loans
			Balance				Balance
Loan class:	#		(in thousands)		#		(in thousands)
Commercial, financial & agricultural		-	$	-		3	$	76
Real estate – construction & development		4		808		-		-
Real estate – commercial & farmland		3		1,319		5		2,078
Real estate – residential		92		9,455		27		1,342
Consumer installment		1		7		-		-
Total		100	$	11,589		35	$	3,496

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 June 30, 2015	Accruing Loans				Non-Accruing Loans
			Balance				Balance
Loan class:	#		(in thousands)		#		(in thousands)
Commercial, financial & agricultural		1	$	3		2	$	-
Real estate – construction & development		3		2,832		1		13
Real estate – commercial & farmland		11		3,973		3		1,105
Real estate – residential		95		10,690		14		941
Consumer installment		1		2		-		-
Total		111	$	17,500		20	$	2,059

Allowance for Loan Losses

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.

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, with the exception of certain mortgage loans serviced at a third party, mortgage warehouse lines and overdraft protection loans, which 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. All relationships greater than $1.0 million and a sample of relationships greater than $250,000 are reviewed annually by the Bank’s independent internal loan review department. 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 60 (Loss per the regulatory guidance), the uncollectible portion is charged-off.

The following table details activity in the allowance for loan losses by portfolio segment for the six months ended June 30, 2016, the year ended December 31, 2015 and the six months ended June 30, 2015. 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)
Three months ended June 30, 2016:
Balance, March 31, 2016	$	1,599	$	3,925	$	7,099	$	4,631	$	2,922	$	1,306	$	-	$	21,482
Provision for loan losses		522		(438)		664		(259)		(719)		653		466		889
Loans charged off		(541)		(109)		(361)		(123)		(59)		(111)		(72)		(1,376)
Recoveries of loans previously charged off		87		221		57		14		16		208		136		739

Balance, June 30, 2016	$	1,667	$	3,599	$	7,459	$	4,263	$	2,160	$	2,056	$	530	$	21,734

Six months ended June 30, 2016:
Balance, January 1, 2016	$	1,144	$	5,009	$	7,994	$	4,760	$	1,574	$	581	$	-	$	21,062
Provision for loan losses		1,310		(1,489)		(5)		(234)		663		1,027		298		1,570
Loans charged off		(947)		(264)		(708)		(591)		(118)		(418)		(144)		(3,190)
Recoveries of loans previously charged off		160		343		178		328		41		866		376		2,292

Balance, June 30, 2016	$	1,667	$	3,599	$	7,459	$	4,263	$	2,160	$	2,056	$	530	$	21,734

Period-end amount allocated to:
Loans individually evaluated for impairment ⁽¹⁾	$	137	$	690	$	997	$	2,339	$	-	$	857	$	530	$	5,550
Loans collectively evaluated for impairment		1,530		2,909		6,462		1,924		2,160		1,199		-		16,184

Ending balance	$	1,667	$	3,599	$	7,459	$	4,263	$	2,160	$	2,056	$	530	$	21,734

Loans:
Individually evaluated for impairment ⁽¹⁾	$	819	$	1,465	$	11,870	$	10,345	$	-	$	24,126	$	17,625	$	66,250
Collectively evaluated for impairment		563,524		273,252		1,236,710		669,888		51,198		1,546,707		41,853		4,383,132
Acquired with deteriorated credit quality		-		-		-		-		-		111,809		61,940		173,749

Ending balance	$	564,343	$	274,717	$	1,248,580	$	680,233	$	51,198	$	1,682,642	$	121,418	$	4,623,131

(1)

At June 30, 2016, 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.

	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 ⁽¹⁾	$	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 ⁽¹⁾	$	323	$	1,958	$	11,877	$	9,554	$	-	$	22,672	$	22,317	$	68,701
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		-		-		-		-		-		80,024		62,761		142,785

Ending balance	$	449,623	$	244,693	$	1,104,991	$	570,430	$	37,140	$	1,364,517	$	137,529	$	3,908,923

(1)

At December 31, 2015, loans individually evaluated for impairment includes all nonaccrual loans greater than $200,000 and all troubled debt restructurings greater than $100,000, including all troubled debt restructurings and not only those currently classified as troubled debt restructurings.

	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)
Three months ended June 30, 2015:
Balance, March 31, 2015	$	1,399	$	5,311	$	8,770	$	5,008	$	1,364	$	-	$	-	$	21,852
Provision for loan losses		322		40		756		234		448		121		735		2,656
Loans charged off		(410)		(263)		(1,162)		(464)		(153)		(240)		(850)		(3,542)
Recoveries of loans previously charged off		115		277		17		27		22		119		115		692

Balance, June 30, 2015	$	1,426	$	5,365	$	8,381	$	4,805	$	1,681	$	-	$	-	$	21,658

Six months ended June 30, 2015:
Balance, January 1, 2015	$	2,004	$	5,030	$	8,823	$	4,129	$	1,171	$	-	$	-	$	21,157
Provision for loan losses		(176)		387		700		1,324		665		(311)		1,136		3,725
Loans charged off		(802)		(360)		(1,174)		(732)		(239)		(470)		(1,413)		(5,190)
Recoveries of loans previously charged off		400		308		32		84		84		781		277		1,966

Balance, June 30, 2015	$	1,426	$	5,365	$	8,381	$	4,805	$	1,681	$	-	$	-	$	21,658

Period-end amount allocated to:
Loans individually evaluated for impairment ⁽¹⁾	$	450	$	414	$	1,242	$	1,786	$	-	$	-	$	-	$	3,892
Loans collectively evaluated for impairment		976		4,951		7,139		3,019		1,681		-		-		17,766

Ending balance	$	1,426	$	5,365	$	8,381	$	4,805	$	1,681	$	-	$	-	$	21,658

Loans:
Individually evaluated for impairment ⁽¹⁾	$	3,351	$	1,437	$	15,028	$	8,069	$	-	$	-	$	-	$	27,885
Collectively evaluated for impairment		369,851		203,582		995,167		529,132		45,983		967,052		91,188		3,201,955
Acquired with deteriorated credit quality		-		-		-		-		-		110,245		118,410		228,655

Ending balance	$	373,202	$	205,019	$	1,010,195	$	537,201	$	45,983	$	1,077,297	$	209,598	$	3,458,495

(1)

At June 30, 2015, loans individually evaluated for impairment includes all nonaccrual loans greater than $200,000 and all troubled debt restructurings greater than $100,000, including all troubled debt restructurings and not only those currently classified as troubled debt restructurings.

- Definition

The entire disclosure for claims held for amounts due a entity, excluding financing receivables. Examples include, but are not limited to, trade accounts receivables, notes receivables, loans receivables. Includes disclosure for allowance for credit losses.

+ References + Details