LOANS

9 Months Ended

Sep. 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. During the third quarter of 2016, the Bank began purchasing from an unrelated third party consumer installment home improvement loans made to borrowers throughout the United States. The Bank also purchased residential mortgage 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 and municipal loans. Short-term working capital loans are secured by non-real estate collateral such as accounts receivable, crops, inventory and equipment. The Bank evaluates the financial strength, cash flow, management, credit history of the borrower and the quality of the collateral securing the loan. The Bank often requires personal guarantees and secondary sources of repayment on commercial, financial and agricultural loans.

Real estate loans include construction and development loans, commercial and farmland loans and residential loans. Construction and development loans include loans for the development of residential neighborhoods, one-to-four family home residential construction loans to builders and consumers, and commercial real estate construction loans, primarily for owner-occupied properties. The Company limits its construction lending risk through adherence to established underwriting procedures. Commercial real estate loans include loans secured by owner-occupied commercial buildings for office, storage, retail, 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 home improvement loans, automobile loans, boat and recreational vehicle financing, and secured and unsecured personal loans. Consumer loans carry greater risks than other loans, as the collateral can consist of rapidly depreciating assets such as automobiles and equipment that may not provide an adequate source of repayment of the loan in the case of default.

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)	September 30, 2016		December 31, 2015		September 30, 2015
Commercial, financial and agricultural	$	625,947	$	449,623	$	427,747
Real estate – construction and development		328,308		244,693		220,798
Real estate – commercial and farmland		1,297,582		1,104,991		1,067,828
Real estate – residential		766,933		570,430		532,285
Consumer installment		68,305		31,125		31,299
Other		3,964		6,015		10,692
	$	3,091,039	$	2,406,877	$	2,290,649

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 $1.07 billion, $771.6 million and $767.5 million at September 30, 2016, December 31, 2015 and September 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)	September 30, 2016		December 31, 2015		September 30, 2015
Commercial, financial and agricultural	$	99,596	$	45,462	$	42,350
Real estate – construction and development		86,099		72,080		71,109
Real estate – commercial and farmland		590,388		390,755		385,032
Real estate – residential		286,169		258,153		263,312
Consumer installment		4,838		5,104		5,691
	$	1,067,090	$	771,554	$	767,494

Purchased loan pools are defined as groups of residential mortgage loans that were not acquired in bank acquisitions or FDIC-assisted transactions. As of September 30, 2016, purchased loan pools totaled $624.9 million and consisted of whole-loan, adjustable rate residential mortgages on properties outside the Company’s markets, with principal balances totaling $614.4 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 September 30, 2015, purchased loan pools totaled $410.1 million and consisted of whole-loan, adjustable rate residential mortgages on properties outside the Company’s markets, with principal balances totaling $402.1 million and $8.0 million of purchase premium paid at acquisition. At September 30, 2016, one loan in the purchased loan pools with a principal balance of $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 September 30, 2015, all loans included in the purchased loan pools were performing current loans, all risk-rated grade 20. At September 30, 2016, December 31, 2015 and September 30, 2015, the Company had allocated $2.0 million, $581,000 and $402,000, 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 $62.3 million, $137.5 million and $191.0 million at September 30, 2016, December 31, 2015 and September 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)	September 30, 2016		December 31, 2015		September 30, 2015
Commercial, financial and agricultural	$	830	$	5,546	$	13,349
Real estate – construction and development		3,220		7,612		14,266
Real estate – commercial and farmland		13,688		71,226		103,399
Real estate – residential		44,457		53,038		59,835
Consumer installment		96		107		172
	$	62,291	$	137,529	$	191,021

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)	September 30, 2016		December 31, 2015		September 30, 2015
Commercial, financial and agricultural	$	1,313	$	1,302	$	1,995
Real estate – construction and development		1,255		1,812		1,753
Real estate – commercial and farmland		7,485		7,019		11,645
Real estate – residential		5,999		6,278		4,810
Consumer installment		518		449		355
	$	16,570	$	16,860	$	20,558

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

(Dollars in Thousands)	September 30, 2016		December 31, 2015		September 30, 2015
Commercial, financial and agricultural	$	744	$	1,064	$	214
Real estate – construction and development		2,403		1,106		916
Real estate – commercial and farmland		7,796		4,920		4,728
Real estate – residential		7,012		6,168		5,464
Consumer installment		38		72		52
	$	17,993	$	13,330	$	11,374

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

(Dollars in Thousands)	September 30, 2016		December 31, 2015		September 30, 2015
Commercial, financial and agricultural	$	128	$	2,803	$	7,916
Real estate – construction and development		60		1,701		2,934
Real estate – commercial and farmland		1,540		5,034		18,164
Real estate – residential		4,078		3,663		3,979
Consumer installment		28		37		91
	$	5,834	$	13,238	$	33,084

The following table presents an analysis of past-due loans, excluding purchased non-covered and covered past-due loans as of September 30, 2016, December 31, 2015 and September 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 September 30, 2016:
Commercial, financial & agricultural	$	798	$	336	$	1,134	$	2,268	$	623,679	$	625,947	$	-
Real estate – construction & development		5,320		177		1,136		6,633		321,675		328,308		-
Real estate – commercial & farmland		2,726		199		5,788		8,713		1,288,869		1,297,582		-
Real estate – residential		2,890		802		5,035		8,727		758,206		766,933		-
Consumer installment loans		513		174		309		996		67,309		68,305		-
Other		-		-		-		-		3,964		3,964		-
Total	$	12,247	$	1,688	$	13,402	$	27,337	$	3,063,702	$	3,091,039	$	-

	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 September 30, 2015:
Commercial, financial & agricultural	$	781	$	714	$	1,799	$	3,294	$	424,453	$	427,747	$	-
Real estate – construction & development		1,184		417		1,753		3,354		217,444		220,798		-
Real estate – commercial & farmland		4,275		399		8,082		12,756		1,055,072		1,067,828		-
Real estate – residential		6,424		1,558		4,247		12,229		520,056		532,285		-
Consumer installment loans		326		82		227		635		30,664		31,299		-
Other		-		-		-		-		10,692		10,692		-
Total	$	12,990	$	3,170	$	16,108	$	32,268	$	2,258,381	$	2,290,649	$	-

The following table presents an analysis of purchased non-covered past-due loans as of September 30, 2016, December 31, 2015 and September 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 September 30, 2016:
Commercial, financial & agricultural	$	244	$	-	$	624	$	868	$	98,728	$	99,596	$	-
Real estate – construction & development		1,082		233		2,070		3,385		82,714		86,099		-
Real estate – commercial & farmland		1,806		599		6,369		8,774		581,614		590,388		-
Real estate – residential		1,481		2,144		5,379		9,004		277,165		286,169		-
Consumer installment loans		33		267		38		338		4,500		4,838		-
Total	$	4,646	$	3,243	$	14,480	$	22,369	$	1,044,721	$	1,067,090	$	-

	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	$	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 September 30, 2015:
Commercial, financial & agricultural	$	140	$	11	$	112	$	263	$	42,087	$	42,350	$	-
Real estate – construction & development		322		-		459		781		70,328		71,109		-
Real estate – commercial & farmland		2,681		613		3,391		6,685		378,347		385,032		-
Real estate – residential		3,822		1,672		4,901		10,395		252,917		263,312		-
Consumer installment loans		5		-		49		54		5,637		5,691		-
Total	$	6,970	$	2,296	$	8,912	$	18,178	$	749,316	$	767,494	$	-

The following table presents an analysis of covered past-due loans as of September 30, 2016, December 31, 2015 and September 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 September 30, 2016:
Commercial, financial & agricultural	$	-	$	-	$	128	$	128	$	702	$	830	$	-
Real estate – construction & development		114		4		-		118		3,102		3,220		-
Real estate – commercial & farmland		906		-		1		907		12,781		13,688		-
Real estate – residential		1,047		943		2,589		4,579		39,878		44,457		-
Consumer installment loans		-		-		-		-		96		96		-
Total	$	2,067	$	947	$	2,718	$	5,732	$	56,559	$	62,291	$	-

	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	$	-	$	-	$	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 September 30, 2015:
Commercial, financial & agricultural	$	40	$	48	$	7,886	$	7,974	$	5,375	$	13,349	$	-
Real estate – construction & development		1,548		68		2,408		4,024		10,242		14,266		-
Real estate – commercial & farmland		1,003		550		6,573		8,126		95,273		103,399		-
Real estate – residential		2,612		783		2,140		5,535		54,300		59,835		-
Consumer installment loans		-		-		49		49		123		172		-
Total	$	5,203	$	1,449	$	19,056	$	25,708	$	165,313	$	191,021	$	-

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
	September 30, 2016		December 31, 2015		September 30, 2015
	(Dollars in Thousands)
Nonaccrual loans	$	16,570	$	16,860	$	20,558
Troubled debt restructurings not included above		14,013		14,418		12,075
Total impaired loans	$	30,583	$	31,278	$	32,633
Quarter-to-date interest income recognized on impaired loans	$	252	$	274	$	241
Year-to-date interest income recognized on impaired loans	$	808	$	909	$	635
Quarter-to-date foregone interest income on impaired loans	$	239	$	265	$	309
Year-to-date foregone interest income on impaired loans	$	710	$	1,204	$	939

The following table presents an analysis of information pertaining to impaired loans, excluding purchased non-covered and covered loans as of September 30, 2016, December 31, 2015 and September 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		Nine Month Average Recorded Investment
	(Dollars in Thousands)

As of September 30, 2016:
Commercial, financial & agricultural	$	2,568	$	252	$	1,114	$	1,366	$	118	$	1,736	$	1,640
Real estate – construction & development		2,972		-		1,946		1,946		537		2,001		2,214
Real estate – commercial & farmland		14,015		5,499		7,520		13,019		873		12,776		12,837
Real estate – residential		14,350		2,046		11,667		13,713		2,648		13,686		13,516
Consumer installment loans		586		-		539		539		6		492		479
Total	$	34,491	$	7,797	$	22,786	$	30,583	$	4,182	$	30,691	$	30,686

	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		Nine Month Average Recorded Investment
	(Dollars in Thousands)

As of September 30, 2015:
Commercial, financial & agricultural	$	3,761	$	471	$	1,762	$	2,233	$	528	$	3,289	$	2,458
Real estate – construction & development		3,757		230		2,361		2,591		731		2,503		3,384
Real estate – commercial & farmland		18,652		5,870		11,494		17,364		1,635		16,459		15,684
Real estate – residential		11,549		1,752		8,266		10,018		1,872		10,185		11,509
Consumer installment loans		524		-		426		426		7		483		487
Total	$	38,243	$	8,323	$	24,309	$	32,632	$	4,773	$	32,919	$	33,522

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

	As of and For the Period Ended
	September 30, 2016		December 31, 2015		September 30, 2015
	(Dollars in Thousands)
Nonaccrual loans	$	17,993	$	13,330	$	11,374
Troubled debt restructurings not included above		9,294		9,373		7,188
Total impaired loans	$	27,287	$	22,703	$	18,562
Quarter-to-date interest income recognized on impaired loans	$	1,339	$	442	$	158
Year-to-date interest income recognized on impaired loans	$	1,885	$	785	$	342
Quarter-to-date foregone interest income on impaired loans	$	264	$	245	$	198
Year-to-date foregone interest income on impaired loans	$	883	$	1,365	$	1,121

The following table presents an analysis of information pertaining to purchased non-covered impaired loans as of September 30, 2016, December 31, 2015 and September 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		Nine Month Average Recorded Investment
	(Dollars in Thousands)

As of September 30, 2016:
Commercial, financial & agricultural	$	4,801	$	520	$	225	$	745	$	-	$	710	$	787
Real estate – construction & development		23,284		233		2,699		2,932		183		2,306		2,053
Real estate – commercial & farmland		34,021		1,778		11,858		13,636		380		13,310		13,732
Real estate – residential		12,458		2,705		7,227		9,932		722		9,685		9,163
Consumer installment loans		55		42		-		42		-		43		64
Total	$	74,619	$	5,278	$	22,009	$	27,287	$	1,285	$	26,054	$	25,799

	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		Nine Month Average Recorded Investment
	(Dollars in Thousands)

As of September 30, 2015:
Commercial, financial & agricultural	$	1,137	$	214	$	-	$	214	$	-	$	262	$	224
Real estate – construction & development		9,211		1,268		-		1,268		-		1,563		1,419
Real estate – commercial & farmland		13,399		8,799		-		8,799		-		11,245		10,724
Real estate – residential		12,443		8,224		-		8,224		-		8,255		7,845
Consumer installment loans		74		57		-		57		-		76		63
Total	$	36,264	$	18,562	$	-	$	18,562	$	-	$	21,402	$	20,275

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

	As of and For the Period Ended
	September 30, 2016		December 31, 2015		September 30, 2015
	(Dollars in Thousands)
Nonaccrual loans	$	5,834	$	13,238	$	33,084
Troubled debt restructurings not included above		11,823		13,283		16,576
Total impaired loans	$	17,657	$	26,521	$	49,660
Quarter-to-date interest income recognized on impaired loans	$	154	$	154	$	268
Year-to-date interest income recognized on impaired loans	$	493	$	886	$	732
Quarter-to-date foregone interest income on impaired loans	$	82	$	181	$	468
Year-to-date foregone interest income on impaired loans	$	400	$	1,596	$	1,416

The following table presents an analysis of information pertaining to covered impaired loans as of September 30, 2016, December 31, 2015 and September 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		Nine Month Average Recorded Investment
	(Dollars in Thousands)

As of September 30, 2016:
Commercial, financial & agricultural	$	296	$	128	$	-	$	128	$	-	$	128	$	1,464
Real estate – construction & development		969		63		810		873		1		1,640		2,022
Real estate – commercial & farmland		7,077		83		3,258		3,341		22		4,886		5,837
Real estate – residential		14,450		4,768		8,513		13,281		213		13,418		13,730
Consumer installment loans		43		34		-		34		-		37		41
Total	$	22,835	$	5,076	$	12,581	$	17,657	$	236	$	20,109	$	23,094

	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		Nine Month Average Recorded Investment
	(Dollars in Thousands)

As of September 30, 2015:
Commercial, financial & agricultural	$	11,794	$	7,918	$	-	$	7,918	$	-	$	8,625	$	8,560
Real estate – construction & development		29,596		5,780		-		5,780		-		6,166		8,013
Real estate – commercial & farmland		41,724		21,265		-		21,265		-		20,697		21,380
Real estate – residential		18,097		14,605		-		14,605		-		14,881		16,465
Consumer installment loans		126		92		-		92		-		101		96
Total	$	101,337	$	49,660	$	-	$	49,660	$	-	$	50,470	$	54,514

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 September 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	$	381,814	$	-	$	9,053	$	127	$	7,787	$	-	$	398,781
15		23,627		6,732		105,298		54,346		386		-		190,389
20		105,573		41,759		835,021		596,886		24,870		3,964		1,608,073
23		372		7,126		8,719		6,530		16		-		22,763
25		108,887		266,728		299,714		87,480		34,339		-		797,148
30		967		3,087		23,457		4,165		88		-		31,764
40		4,707		2,876		16,320		17,399		819		-		42,121
50		-		-		-		-		-		-		-
60		-		-		-		-		-		-		-
Total	$	625,947	$	328,308	$	1,297,582	$	766,933	$	68,305	$	3,964	$	3,091,039

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 September 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	$	222,693	$	294	$	116	$	1,490	$	6,688	$	-	$	231,281
15		23,807		2,150		123,515		83,361		1,352		-		234,185
20		99,414		45,091		645,949		327,576		19,302		10,692		1,148,024
23		645		7,754		11,792		6,240		46		-		26,477
25		75,635		159,944		250,575		90,320		3,168		-		579,642
30		2,378		2,035		9,762		7,811		204		-		22,190
40		3,175		3,530		26,119		15,487		537		-		48,848
50		-		-		-		-		2		-		2
60		-		-		-		-		-		-		-
Total	$	427,747	$	220,798	$	1,067,828	$	532,285	$	31,299	$	10,692	$	2,290,649

The following table presents the purchased non-covered loan portfolio by risk grade as of September 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	$	5,676	$	-	$	-	$	-	$	867	$	-	$	6,543
15		1,055		-		7,842		32,763		597		-		42,257
20		16,726		7,741		196,901		108,007		1,934		-		331,309
23		-		3,677		11,925		11,902		-		-		27,504
25		70,241		63,343		328,657		111,720		1,319		-		575,280
30		4,716		7,609		26,782		5,731		-		-		44,838
40		1,182		3,729		18,281		16,046		121		-		39,359
50		-		-		-		-		-		-		-
60		-		-		-		-		-		-		-
Total	$	99,596	$	86,099	$	590,388	$	286,169	$	4,838	$	-	$	1,067,090

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 September 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	$	8,741	$	-	$	-	$	-	$	1,060	$	-	$	9,801
15		1,229		1,805		8,440		38,643		789		-		50,906
20		10,982		13,518		187,329		133,914		2,291		-		348,034
23		-		230		4,079		6,303		-		-		10,612
25		17,873		48,137		159,816		63,049		1,397		-		290,272
30		2,379		3,418		12,997		7,609		55		-		26,458
40		1,116		4,001		12,371		13,794		99		-		31,381
50		30		-		-		-		-		-		30
60		-		-		-		-		-		-		-
Total	$	42,350	$	71,109	$	385,032	$	263,312	$	5,691	$	-	$	767,494

The following table presents the covered loan portfolio by risk grade as of September 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		23		551		2,203		7,458		-		-		10,235
23		23		-		298		4,016		-		-		4,337
25		657		2,214		5,757		20,349		15		-		28,992
30		-		357		1,825		3,625		46		-		5,853
40		127		98		3,605		9,009		35		-		12,874
50		-		-		-		-		-		-		-
60		-		-		-		-		-		-		-
Total	$	830	$	3,220	$	13,688	$	44,457	$	96	$	-	$	62,291

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 September 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		-		-		478		115		-		-		593
20		327		1,147		16,211		12,304		42		-		30,031
23		53		-		4,783		6,396		-		-		11,232
25		4,476		8,241		53,126		27,795		37		-		93,675
30		4,060		1,965		5,539		5,481		-		-		17,045
40		4,431		2,913		23,262		7,744		93		-		38,443
50		-		-		-		-		-		-		-
60		2		-		-		-		-		-		2
Total	$	13,349	$	14,266	$	103,399	$	59,835	$	172	$	-	$	191,021

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 nine months of 2016 and 2015 totaling $58.2 million and $77.4 million, respectively, under such parameters.

As of September 30, 2016, December 31, 2015 and September 30, 2015, the Company had a balance of $17.1 million, $16.4 million and $13.9 million, respectively, in troubled debt restructurings, excluding purchased non-covered and covered loans. The Company has recorded $1.2 million, $1.3 million and $1.3 million in previous charge-offs on such loans at September 30, 2016, December 31, 2015 and September 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 $183,000 at September 30, 2016, December 31, 2015 and September 30, 2015, respectively. At September 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 nine months ending September 30, 2016 and 2015, the Company modified loans as troubled debt restructurings, excluding purchased non-covered and covered loans, with principal balances of $2.9 million and $4.3 million, respectively, and these modifications did not have a material impact on the Company’s allowance for loan loss. The following table presents the loans by class modified as troubled debt restructurings, excluding purchased non-covered and covered loans, which occurred during the nine months ending September 30, 2016 and 2015:

	September 30, 2016			September 30, 2015
		Balance			Balance
Loan class:	#	(in thousands)		#	(in thousands)
Commercial, financial & agricultural	5	$	59	4	$	26
Real estate – construction & development	2		251	2		15
Real estate – commercial & farmland	4		1,658	2		2,125
Real estate – residential	7		887	28		2,089
Consumer installment	9		44	13		47
Total	27	$	2,899	49	$	4,302

Troubled debt restructurings, excluding purchased non-covered and covered loans, with an outstanding balance of $793,000 and $2.6 million defaulted during the nine months ended September 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 nine months ending September 30, 2016 and 2015:

	September 30, 2016			September 30, 2015
		Balance			Balance
Loan class:	#	(in thousands)		#	(in thousands)
Commercial, financial & agricultural	5	$	51	4	$	18
Real estate – construction & development	-		-	2		34
Real estate – commercial & farmland	5		517	5		1,011
Real estate – residential	3		219	18		1,473
Consumer installment	2		6	9		32
Total	15	$	793	38	$	2,568

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 September 30, 2016, December 31, 2015 and September 30, 2015:

As of September 30, 2016	Accruing Loans			Non-Accruing Loans
		Balance			Balance
Loan class:	#	(in thousands)		#	(in thousands)
Commercial, financial & agricultural	4	$	53	14	$	112
Real estate – construction & development	8		691	2		35
Real estate – commercial & farmland	17		5,535	5		2,015
Real estate – residential	53		7,713	19		849
Consumer installment	7		21	29		120
Total	89	$	14,013	69	$	3,131

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 September 30, 2015	Accruing Loans			Non-Accruing Loans
		Balance			Balance
Loan class:	#	(in thousands)		#	(in thousands)
Commercial, financial & agricultural	4	$	238	8	$	68
Real estate – construction & development	12		838	2		30
Real estate – commercial & farmland	15		5,719	4		943
Real estate – residential	51		5,209	16		759
Consumer installment	15		71	18		64
Total	97	$	12,075	48	$	1,864

As of September 30, 2016, December 31, 2015 and September 30, 2015, the Company had a balance of $10.4 million, $10.0 million and $7.7 million, respectively, in troubled debt restructurings included in purchased non-covered loans. The Company has recorded $752,000, $377,000 and $60,000 in previous charge-offs on such loans at September 30, 2016, December 31, 2015 and September 30, 2015, respectively. At September 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 nine months ending September 30, 2016 and 2015, the Company modified purchased non-covered loans as troubled debt restructurings, with principal balances of $1.3 million and $2.4 million, respectively, and these modifications did not have a material impact on the Company’s allowance for loan loss. During the nine months ending September 30, 2016, the Company did not transfer any troubled debt restructurings from the covered loan category to the purchased non-covered loan category due to the expiration of the loss-sharing portion of the agreements. During the nine months ending September 30, 2015, the Company transferred troubled debt restructurings with principal balances $4.1 million from the covered loan category to the purchased non-covered loan category 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 nine months ending September 30, 2016 and 2015:

	September 30, 2016			September 30, 2015
		Balance			Balance
Loan class:	#	(in thousands)		#	(in thousands)
Commercial, financial & agricultural	-	$	-	1	$	1
Real estate – construction & development	-		-	2		30
Real estate – commercial & farmland	2		235	3		622
Real estate – residential	6		1,076	7		1,730
Consumer installment	-		-	3		8
Total	8	$	1,311	16	$	2,391

Troubled debt restructurings included in purchased non-covered loans with an outstanding balance of $217,000 and $618,000 defaulted during the nine months ended September 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 nine months ending September 30, 2016 and 2015:

	September 30, 2016			September 30, 2015
		Balance			Balance
Loan class:	#	(in thousands)		#	(in thousands)
Commercial, financial & agricultural	-	$	-	-	$	-
Real estate – construction & development	1		10	-		-
Real estate – commercial & farmland	1		207	-		-
Real estate – residential	-		-	2		618
Consumer installment	-		-	-		-
Total	2	$	217	2	$	618

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 September 30, 2016, December 31, 2015 and September 30, 2015:

As of September 30, 2016	Accruing Loans			Non-Accruing Loans
		Balance			Balance
Loan class:	#	(in thousands)		#	(in thousands)
Commercial, financial & agricultural	1	$	1	1	$	16
Real estate – construction & development	2		529	3		33
Real estate – commercial & farmland	13		5,840	3		566
Real estate – residential	16		2,919	5		486
Consumer installment	1		4	2		1
Total	33	$	9,293	14	$	1,102

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 September 30, 2015	Accruing Loans			Non-Accruing Loans
		Balance			Balance
Loan class:	#	(in thousands)		#	(in thousands)
Commercial, financial & agricultural	-	$	-	1	$	1
Real estate – construction & development	1		351	2		30
Real estate – commercial & farmland	6		4,071	1		36
Real estate – residential	13		2,761	3		397
Consumer installment	2		5	2		3
Total	22	$	7,188	9	$	467

As of September 30, 2016, December 31, 2015 and September 30, 2015, the Company had a balance of $13.9 million, $15.5 million and $20.5 million, respectively, in troubled debt restructurings included in covered loans. The Company has recorded $791,000, $1.2 million and $1.4 million in previous charge-offs on such loans at September 30, 2016, December 31, 2015 and September 30, 2015, respectively. At September 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 nine months ending September 30, 2016 and 2015, the Company modified covered loans as troubled debt restructurings with principal balances of $603,000 and $2.5 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 nine months ending September 30, 2016 and 2015:

	September 30, 2016			September 30, 2015
		Balance			Balance
Loan class:	#	(in thousands)		#	(in thousands)
Commercial, financial & agricultural	1	$	76	1	$	-
Real estate – construction & development	-		-	2		312
Real estate – commercial & farmland	1		473	5		1,492
Real estate – residential	2		54	12		679
Consumer installment	-		-	-		-
Total	4	$	603	20	$	2,483

Troubled debt restructurings of covered loans with an outstanding balance of $516,000 and $1.3 million defaulted during the nine months ended September 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 nine months ending September 30, 2016 and 2015:

	September 30, 2016			September 30, 2015
		Balance			Balance
Loan class:	#	(in thousands)		#	(in thousands)
Commercial, financial & agricultural	2	$	76	-	$	-
Real estate – construction & development	-		-	-		-
Real estate – commercial & farmland	-		-	3		177
Real estate – residential	11		440	9		1,088
Consumer installment	-		-	-		-
Total	13	$	516	12	$	1,265

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

As of September 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		813	-		-
Real estate – commercial & farmland	4		1,801	2		680
Real estate – residential	88		9,203	27		1,287
Consumer installment	1		6	-		-
Total	97	$	11,823	32	$	2,043

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 September 30, 2015	Accruing Loans			Non-Accruing Loans
		Balance			Balance
Loan class:	#	(in thousands)		#	(in thousands)
Commercial, financial & agricultural	1	$	2	2	$	-
Real estate – construction & development	3		2,847	3		325
Real estate – commercial & farmland	9		3,101	8		2,449
Real estate – residential	96		10,625	17		1,167
Consumer installment	1		1	-		-
Total	110	$	16,576	30	$	3,941

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 nine months ended September 30, 2016, the year ended December 31, 2015 and the nine months ended September 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 September 30, 2016:
Balance, June 30, 2016	$	1,667	$	3,599	$	7,459	$	4,263	$	2,160	$	2,056	$	530	$	21,734
Provision for loan losses		677		(521)		(554)		2,649		(1,595)		1,247		(1,092)		811
Loans charged off		(326)		(60)		-		(292)		(74)		(408)		(291)		(1,451)
Recoveries of loans previously charged off		119		131		13		40		78		399		1,089		1,869
Balance, September 30, 2016	$	2,137	$	3,149	$	6,918	$	6,660	$	569	$	3,294	$	236	$	22,963

Nine months ended September 30, 2016:

Balance, January 1, 2016	$	1,144	$	5,009	$	7,994	$	4,760	$	1,574	$	581	$	-	$	21,062
Provision for loan losses		1,987		(2,010)		(559)		2,415		(932)		2,274		(794)		2,381
Loans charged off		(1,273)		(324)		(708)		(883)		(192)		(826)		(435)		(4,641)
Recoveries of loans previously charged off		279		474		191		368		119		1,265		1,465		4,161
Balance, September 30, 2016	$	2,137	$	3,149	$	6,918	$	6,660	$	569	$	3,294	$	236	$	22,963

Period-end amount allocated to:
Loans individually evaluated for impairment ⁽¹⁾	$	107	$	529	$	883	$	2,629	$	-	$	1,286	$	236	$	5,670
Loans collectively evaluated for impairment		2,030		2,620		6,035		4,031		569		2,008		-		17,293
Ending balance	$	2,137	$	3,149	$	6,918	$	6,660	$	569	$	3,294	$	236	$	22,963

Loans:
Individually evaluated for impairment ⁽¹⁾	$	424	$	1,154	$	11,699	$	11,571	$	-	$	22,173	$	12,818	$	59,839
Collectively evaluated for impairment		625,523		327,154		1,285,883		755,362		72,269		1,536,176		27,953		4,630,320
Acquired with deteriorated credit quality		-		-		-		-		-		133,627		21,520		155,147
Ending balance	$	625,947	$	328,308	$	1,297,582	$	766,933	$	72,269	$	1,691,976	$	62,291	$	4,845,306

(1)

At September 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 September 30, 2015:
Balance, June 30, 2015	$	1,426	$	5,365	$	8,381	$	4,805	$	1,681	$	-	$	-	$	21,658
Provision for loan losses		110		643		43		1,238		(1,386)		531		(193)		986
Loans charged off		(135)		(105)		(184)		(234)		(61)		(302)		(246)		(1,267)
Recoveries of loans previously charged off		117		6		272		54		33		173		439		1,094
Balance, September 30, 2015	$	1,518	$	5,909	$	8,512	$	5,863	$	267	$	402	$	-	$	22,471

Nine months ended September 30, 2015:
Balance, January 1, 2015	$	2,004	$	5,030	$	8,823	$	4,129	$	1,171	$	-	$	-	$	21,157
Provision for loan losses		(66)		1,030		743		2,562		(721)		219		944		4,711
Loans charged off		(937)		(465)		(1,358)		(966)		(300)		(772)		(1,661)		(6,459)
Recoveries of loans previously charged off		517		314		304		138		117		955		717		3,062
Balance, September 30, 2015	$	1,518	$	5,909	$	8,512	$	5,863	$	267	$	402	$	-	$	22,471

Period-end amount allocated to:
Loans individually evaluated for impairment ⁽¹⁾	$	521	$	708	$	1,622	$	1,848	$	-	$	-	$	-	$	4,699
Loans collectively evaluated for impairment		997		5,201		6,890		4,015		267		402		-		17,772
Ending balance	$	1,518	$	5,909	$	8,512	$	5,863	$	267	$	402	$	-	$	22,471

Loans:
Individually evaluated for impairment ⁽¹⁾	$	1,286	$	1,820	$	13,306	$	8,415	$	-	$	-	$	-	$	24,827
Collectively evaluated for impairment		426,461		218,978		1,054,522		523,870		41,991		1,078,686		83,974		3,428,482
Acquired with deteriorated credit quality		-		-		-		-		-		98,880		107,047		205,927
Ending balance	$	427,747	$	220,798	$	1,067,828	$	532,285	$	41,991	$	1,177,566	$	191,021	$	3,659,236

(1)

At September 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