NOTE 3 – LOANS

The Company 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. Ameris 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 Ameris’ 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.

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

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

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

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


(Dollars in Thousands)	June 30, 2012		December 31, 2011		June 30, 2011
Commercial, financial and agricultural	$	174,903	$	142,960	$	150,377
Real estate – construction and development		124,556		130,270		143,684
Real estate – commercial and farmland		675,404		672,765		681,228
Real estate – residential		332,124		330,727		336,485
Consumer installment		41,431		37,296		35,584
Other		17,071		18,068		12,705

	$	1,365,489	$	1,332,086	$	1,360,063

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 $601.7 million, $571.5 million and $486.5 million at June 30, 2012, December 31, 2011 and June 30, 2011, respectively, are not included in the above schedule.

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


(Dollars in Thousands)	June 30, 2012		December 31, 2011		June 30, 2011
Commercial, financial and agricultural	$	41,372	$	41,867	$	42,494
Real estate – construction and development		83,991		77,077		79,540
Real estate – commercial and farmland		322,393		321,257		229,924
Real estate – residential		150,683		127,644		129,721
Consumer installment		3,298		3,644		4,810

	$	601,737	$	571,489	$	486,489

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 to interest income. Interest on loans that are classified as non-accrual is recognized when received. Past due loans are loans whose principal or interest is past due 90 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 non-covered loans accounted for on a nonaccrual basis:


(Dollars in Thousands)	June 30, 2012		December 31, 2011		June 30, 2011
Commercial, financial and agricultural	$	4,968	$	3,987	$	5,439
Real estate – construction and development		8,979		15,020		13,714
Real estate – commercial and farmland		13,728		35,385		24,205
Real estate – residential		15,542		15,498		16,625
Consumer installment		1,204		933		562

	$	44,421	$	70,823	$	60,545

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


(Dollars in Thousands)	June 30, 2012		December 31, 2011		June 30, 2011
Commercial, financial and agricultural	$	13,406	$	11,952	$	11,809
Real estate – construction and development		28,225		30,977		31,131
Real estate – commercial and farmland		71,271		75,458		55,771
Real estate – residential		37,669		41,139		36,129
Consumer installment		654		473		705

	$	151,225	$	159,999	$	135,545

The following table presents an analysis of non-covered past due loans as of June 30, 2012, December 31, 2011 and June 30, 2011.


	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, 2012:
Commercial, financial & agricultural	$	531	$	701	$	4,371	$	5,603	$	169,300	$	174,903	$	—
Real estate – construction & development		1,986		2,119		7,855		11,960		112,596		124,556		—
Real estate – commercial & farmland		5,282		6,930		8,597		20,809		654,595		675,404		—
Real estate – residential		5,665		3,885		14,782		24,332		307,792		332,124		—
Consumer installment loans		545		220		1,117		1,883		39,548		41,431		1
Other		—		—		—		—		17,071		17,071		—

Total	$	14,009	$	13,855	$	36,722	$	64,587	$	1,300,902	$	1,365,489	$	1


	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, 2011:
Commercial, financial & agricultural	$	1,103	$	705	$	3,975	$	5,783	$	137,177	$	142,960	$	—
Real estate – construction & development		2,395		1,507		13,608		17,510		112,760		130,270		—
Real estate – commercial & farmland		6,686		7,071		32,953		46,710		626,055		672,765		—
Real estate – residential		5,229		4,995		12,874		23,098		307,629		330,727		—
Consumer installment loans		963		305		725		1,993		35,303		37,296		—
Other		—		—		—		—		18,068		18,068		—

Total	$	16,376	$	14,583	$	64,135	$	95,094	$	1,236,992	$	1,332,086	$	—


	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, 2011:
Commercial, financial & agricultural	$	653	$	282	$	5,334	$	6,269	$	144,108	$	150,377	$	—
Real estate – construction & development		1,551		1,243		13,194		15,988		127,696		143,684		—
Real estate – commercial & farmland		8,494		807		23,898		33,199		648,029		681,228		—
Real estate – residential		5,086		2,729		14,539		22,354		314,131		336,485		—
Consumer installment loans		525		178		493		1,196		34,388		35,584		—
Other		—		—		—		—		12,705		12,705		—

Total	$	16,309	$	5,239	$	57,458	$	79,006	$	1,281,057	$	1,360,063	$	—

The following table presents an analysis of covered past due loans as of June 30, 2012, December 31, 2011 and June 30, 2011.


	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, 2012:
Commercial, financial & agricultural	$	851	$	754	$	12,703	$	14,308	$	27,064	$	41,372	$	298
Real estate – construction & development		2,688		3,007		25,021		30,716		53,275		83,991		—
Real estate – commercial & farmland		12,452		7,656		60,879		80,987		241,406		322,393		891
Real estate – residential		5,366		3,180		31,607		40,153		110,530		150,683		78
Consumer installment loans		70		40		430		540		2,758		3,298		—

Total	$	21,427	$	14,637	$	130,640	$	166,704	$	435,033	$	601,737	$	1,267


	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, 2011:
Commercial, financial & agricultural	$	968	$	4,297	$	11,253	$	16,518	$	25,349	$	41,867	$	—
Real estate – construction & development		2,444		1,318		27,867		31,629		45,448		77,077		—
Real estate – commercial & farmland		18,282		8,544		64,091		90,917		230,340		321,257		165
Real estate – residential		3,485		1,493		35,950		40,928		86,716		127,644		290
Consumer installment loans		127		270		440		837		2,807		3,644		—

Total	$	25,306	$	15,922	$	139,601	$	180,829	$	390,660	$	571,489	$	455


	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, 2011:
Commercial, financial & agricultural	$	1,201	$	635	$	11,047	$	12,883	$	29,611	$	42,494	$	313
Real estate – construction & development		1,424		1,068		28,531		31,023		48,517		79,540		75
Real estate – commercial & farmland		3,941		6,075		52,287		62,303		167,621		229,924		2,223
Real estate – residential		2,445		3,403		33,354		39,202		90,519		129,721		444
Consumer installment loans		76		47		645		768		4,042		4,810		—

Total	$	9,087	$	11,228	$	125,864	$	146,179	$	340,310	$	486,489	$	3,055

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. 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. Impaired loans include loans on nonaccrual status and troubled debt restructurings. The Company individually assesses for impairment all nonaccrual loans greater than $200,000 and rated substandard or worse and all troubled debt restructurings greater than $100,000. 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 non-covered impaired loans:


	As of and For the Period Ended
	June 30, 2012		December 31, 2011		June 30, 2011
	(Dollars in Thousands)
Nonaccrual loans	$	44,421	$	70,823	$	60,545
Troubled debt restructurings not included above		22,970		17,951		21,756

Total impaired loans	$	67,391	$	88,774	$	82,301

Impaired loans not requiring a related allowance	$	—	$	—	$	—

Impaired loans requiring a related allowance	$	67,391	$	88,774	$	82,301

Allowance related to impaired loans	$	7,136	$	18,478	$	15,328

Average investment in impaired loans	$	78,432	$	88,320	$	76,136

Interest income recognized on impaired loans	$	153	$	637	$	150

Foregone interest income on impaired loans	$	332	$	613	$	249

The following table presents an analysis of information pertaining to non-covered impaired loans as of June 30, 2012, December 31, 2011 and June 30, 2011.


	Unpaid Contractual Principal Balance		Recorded Investment With No Allowance		Recorded Investment With Allowance		Total Recorded Investment		Related Allowance		Average Recorded Investment
	(Dollars in Thousands)
As of June 30, 2012:
Commercial, financial & agricultural	$	8,116	$	—	$	4,968	$	4,968	$	692	$	4,936
Real estate – construction & development		18,805		—		10,184		10,184		1,070		12,611
Real estate – commercial & farmland		32,265		—		27,021		27,021		2,081		37,111
Real estate – residential		27,069		—		24,014		24,014		3,254		22,637
Consumer installment loans		1,331		—		1,204		1,204		39		1,137

Total	$	87,586	$	—	$	67,391	$	67,391	$	7,136	$	78,432


	Unpaid Contractual Principal Balance		Recorded Investment With No Allowance		Recorded Investment With Allowance		Total Recorded Investment		Related Allowance		Average Recorded Investment
	(Dollars in Thousands)
As of December 31, 2011:
Commercial, financial & agricultural	$	9,592	$	—	$	5,110	$	5,110	$	1,366	$	5,700
Real estate – construction & development		21,893		—		15,672		15,672		4,053		18,667
Real estate – commercial & farmland		48,688		—		45,006		45,006		8,331		42,192
Real estate – residential		25,309		—		22,053		22,053		4,499		21,081
Consumer installment loans		1,056		—		933		933		229		680

Total	$	106,538	$	—	$	88,774	$	88,774	$	18,478	$	88,320


	Unpaid Contractual Principal Balance		Recorded Investment With No Allowance		Recorded Investment With Allowance		Total Recorded Investment		Related Allowance		Average Recorded Investment
	(Dollars in Thousands)
As of June 30, 2011:
Commercial, financial & agricultural	$	9,229	$	—	$	3,853	$	3,853	$	1,586	$	4,391
Real estate – construction & development		26,562		—		12,198		12,198		3,695		16,113
Real estate – commercial & farmland		42,445		—		33,045		33,045		5,096		38,738
Real estate – residential		24,118		—		17,456		17,456		4,810		16,451
Consumer installment loans		732		—		421		421		141		443

Total	$	103,086	$	—	$	66,973	$	66,973	$	15,328	$	76,136

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


	As of and For the Period Ended
	June 30, 2012		December 31, 2011		June 30, 2011
	(Dollars in Thousands)
Nonaccrual loans	$	151,225	$	159,999	$	135,545
Troubled debt restructurings not included above		14,842		19,884		9,312

Total impaired loans	$	166,067	$	179,883	$	144,857

Impaired loans not requiring a related allowance	$	166,067	$	179,883	$	144,857

Impaired loans requiring a related allowance	$	—	$	—	$	—

Allowance related to impaired loans	$	—	$	—	$	—

Average investment in impaired loans	$	178,130	$	138,950	$	119,950

Interest income recognized on impaired loans	$	628	$	526	$	287

Foregone interest income on impaired loans	$	482	$	202	$	122

The following table presents an analysis of information pertaining to impaired covered loans as of June 30, 2012, December 31, 2011 and June 30, 2011.


	Unpaid Contractual Principal Balance		Recorded Investment With No Allowance		Recorded Investment With Allowance		Total Recorded Investment		Related Allowance		Average Recorded Investment
	(Dollars in Thousands)
As of June 30, 2012:
Commercial, financial & agricultural	$	22,616	$	13,464	$	—	$	13,464	$	—	$	13,250
Real estate – construction & development		46,439		30,586		—		30,586		—		34,260
Real estate – commercial & farmland		110,388		81,330		—		81,330		—		85,639
Real estate – residential		58,645		40,033		—		40,033		—		44,393
Consumer installment loans		1,034		654		—		654		—		588

Total	$	239,122	$	166,067	$	—	$	166,067	$	—	$	178,130


	Unpaid Contractual Principal Balance		Recorded Investment With No Allowance		Recorded Investment With Allowance		Total Recorded Investment		Related Allowance		Average Recorded Investment
	(Dollars in Thousands)
As of December 31, 2011:
Commercial, financial & agricultural	$	21,352	$	12,027	$	—	$	12,027	$	—	$	10,210
Real estate – construction & development		47,005		34,363		—		34,363		—		30,610
Real estate – commercial & farmland		106,953		84,740		—		84,740		—		56,607
Real estate – residential		68,411		48,280		—		48,280		—		40,675
Consumer installment loans		623		473		—		473		—		848

Total	$	244,344	$	179,883	$	—	$	179,883	$	—	$	138,950


	Unpaid Contractual Principal Balance		Recorded Investment With No Allowance		Recorded Investment With Allowance		Total Recorded Investment		Related Allowance		Average Recorded Investment
	(Dollars in Thousands)
As of June 30, 2011:
Commercial, financial & agricultural	$	23,421	$	11,866	$	—	$	11,866	$	—	$	8,943
Real estate – construction & development		75,282		31,131		—		31,131		—		28,435
Real estate – commercial & farmland		101,453		57,422		—		57,422		—		44,234
Real estate – residential		71,421		43,733		—		43,733		—		37,233
Consumer installment loans		807		705		—		705		—		1,105

Total	$	272,384	$	144,857	$	—	$	144,857	$	—	$	119,950

Credit Quality Indicators

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

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

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

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

Grade 23 – Performing, Under-Collateralized Credit – This grade is assigned to loans that are currently performing and supported by adequate financial information that reflects repayment capacity but exhibits a loan-to-value ratio greater than 110%, based on a documented collateral valuation.

Grade 25 – Minimum Acceptable Credit – This grade includes loans which exhibit all the characteristics of a Satisfactory Credit, but warrant more than normal level of banker supervision due to (i) circumstances which elevate the risks of performance (such as start-up operations, untested management, heavy leverage, interim losses); (ii)adverse, extraordinary events that have affected, or could affect, the borrower’s cash flow, financial condition, ability to continue operating profitability or refinancing (such as death of principal, fire, divorce); (iii) loans that require more than the normal servicing requirements (such as any type of construction financing, acquisition and development loans, accounts receivable or inventory loans and floor plan loans); (iv) existing technical exceptions which raise some doubts about the Bank’s perfection in its collateral position or the continued financial capacity of the borrower; or (v) improvements in formerly criticized borrowers, which may warrant banker supervision.

Grade 30 – Other Asset Especially Mentioned – This grade includes loans that exhibit potential weaknesses that deserve management’s close attention. If left uncorrected, these weaknesses may result in deterioration of the repayment prospects for the asset or in the Company’s credit position at some future date.

Grade 40 – Substandard – This grade represents loans which are inadequately protected by the current sound worth and paying capacity of the borrower or of the collateral pledged, if any. These assets exhibit a well-defined weakness or are characterized by the distinct possibility that the Bank will sustain some loss if the deficiencies are not corrected. These weaknesses may be characterized by past due performance, operating losses or questionable collateral values.

Grade 50 – Doubtful – This grade includes loans which exhibit all of the characteristics of a substandard loan with the added provision that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions and values, highly questionable or improbable.

Grade 60 – Loss – This grade is assigned to loans which are considered uncollectible and of such little value that their continuance as active assets of the Bank is not warranted. This classification does not mean that the loss has absolutely no recovery or salvage value, but rather it is not practical or desirable to defer writing it off.

The following table presents the non-covered loan portfolio by risk grade as of June 30, 2012.


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	$	20,395	$	17	$	230	$	414	$	7,226	$	—	$	28,282
15		11,909		3,628		158,608		75,752		1,260		—		251,157
20		79,985		39,077		287,874		93,018		23,537		17,071		540,562
23		—		6,691		9,578		13,839		23		—		30,131
25		54,072		57,266		170,342		109,269		7,035		—		397,984
30		1,404		4,018		17,870		12,461		554		—		36,307
40		7,137		13,703		30,902		27,306		1,776		—		80,824
50		1		156		—		65		20		—		242
60		—		—		—		—		—		—		—

Total	$	174,903	$	124,556	$	675,404	$	332,124	$	41,431	$	17,071	$	1,365,489

The following table presents the non-covered loan portfolio by risk grade as of December 31, 2011.


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	$	17,213	$	20	$	235	$	252	$	6,210	$	—	$	23,930
15		15,379		5,391		151,068		88,586		1,065		—		261,489
20		60,631		32,654		272,241		80,989		20,781		18,068		485,364
23		32		7,994		10,679		10,997		28		—		29,730
25		42,815		62,029		163,554		110,786		7,181		—		386,365
30		2,509		2,027		21,490		15,001		557		—		41,584
40		4,258		19,864		53,498		23,867		1,460		—		102,947
50		123		291		—		249		14		—		677
60		—		—		—		—		—		—		—

Total	$	142,960	$	130,270	$	672,765	$	330,727	$	37,296	$	18,068	$	1,332,086

The following table presents the non-covered loan portfolio by risk grade as of June 30, 2011.


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	$	13,799	$	213	$	329	$	109	$	5,926	$	—	$	20,376
15		11,307		3,483		151,047		35,416		899		—		202,152
20		61,543		36,007		274,185		128,581		21,477		12,705		534,498
23		1,614		7,360		8,484		12,346		29		—		29,833
25		54,635		67,615		157,862		121,094		5,927		—		407,133
30		1,477		6,071		44,388		13,028		564		—		65,528
40		5,362		22,659		44,933		25,911		747		—		99,612
50		640		276		—		—		6		—		922
60		—		—		—		—		9		—		9

Total	$	150,377	$	143,684	$	681,228	$	336,485	$	35,584	$	12,705	$	1,360,063

The following table presents the covered loan portfolio by risk grade as of June 30, 2012.


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	$	172	$	9	$	—	$	857	$	412	$	—	$	1,450
15		115		47		1,717		560		10		—		2,449
20		5,963		15,440		37,729		38,108		745		—		97,985
23		11		1,602		3,784		1,840		—		—		7,237
25		13,545		19,814		139,886		49,254		1,254		—		223,753
30		4,544		9,843		38,306		10,873		89		—		63,655
40		17,017		37,236		100,971		49,080		788		—		205,092
50		5		—		—		111		—		—		116
60		—		—		—		—		—		—		—

Total	$	41,372	$	83,991	$	322,393	$	150,683	$	3,298	$	—	$	601,737

The following table presents the covered loan portfolio by risk grade as of December 31, 2011.


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	$	442	$	—	$	—	$	1,329	$	768	$	—	$	2,539
15		29		52		1,755		586		14		—		2,436
20		4,807		5,751		26,211		19,216		687		—		56,672
23		—		1,177		3,262		1,038		—		—		5,477
25		15,531		21,142		137,981		43,606		1,308		—		219,568
30		5,882		10,654		49,642		12,374		172		—		78,724
40		15,176		38,273		102,406		49,495		695		—		206,045
50		—		28		—		—		—		—		28
60		—		—		—		—		—		—		—

Total	$	41,867	$	77,077	$	321,257	$	127,644	$	3,644	$	—	$	571,489

The following table presents the covered loan portfolio by risk grade as of June 30, 2011.


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	$	614	$	—	$	—	$	—	$	543	$	—	$	1,157
15		63		53		650		476		20		—		1,262
20		7,872		6,240		28,951		19,630		1,182		—		63,875
23		280		105		1,047		855		—		—		2,287
25		13,860		20,458		83,901		48,744		1,719		—		168,682
30		4,351		11,425		29,231		9,540		257		—		54,804
40		15,250		41,259		86,144		50,112		1,089		—		193,854
50		204		—		—		364		—		—		568
60		—		—		—		—		—		—		—

Total	$	42,494	$	79,540	$	229,924	$	129,721	$	4,810	$	—	$	486,489

Troubled Debt Restructurings

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

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

The Company’s policy states in the event a loan has been identified as a troubled debt restructuring, it should be assigned a grade of substandard and placed on nonaccrual status until such time that the borrower has demonstrated the ability to service the loan payments based on the restructured terms – generally defined as six months of satisfactory payment history. Missed payments under the original loan terms are not considered under the new structure; however, subsequent missed payments are considered non-performance and are not considered toward the six month required term of satisfactory payment history. The Company’s loan policy states that a nonaccrual loan may be returned to accrual status when (i) none of its principal and interest is due and unpaid, and the Company expects repayment of the remaining contractual principal and interest, or (ii) when it otherwise becomes well secured and in the process of collection. Restoration to accrual status on any given loan must be supported by a well-documented credit evaluation of the borrower’s financial condition and the prospects for full repayment, approved by the Company’s Senior 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 2012 totaling $14.3 million and loans in 2011 totaling $37.2 million under such parameters. In addition, the Company offers consumer loan customers an annual skip-a-pay program that is based on certain qualifying parameters and not based on financial difficulties. The Company does not treat these as troubled debt restructurings.

The following table presents the amount of troubled debt restructurings by loan class, classified separately as accrual and non-accrual at June 30, 2012 and December 31, 2011.


As of June 30, 2012	Accruing Loans				Non-Accruing Loans
Loan class:	#		Balance (in thousands)		#		Balance (in thousands)
Commercial, financial & agricultural		—	$	—		1	$	18
Real estate – construction & development		5		1,205		2		1,124
Real estate – commercial & farmland		16		13,293		2		2,815
Real estate – residential		24		8,472		5		1,213

Total		45	$	22,970		10	$	5,170


As of December 31, 2011	Accruing Loans				Non-Accruing Loans
Loan class:	#		Balance (in thousands)		#		Balance (in thousands)
Real estate – construction & development		6	$	1,774		5	$	2,122
Real estate – commercial & farmland		14		9,622		2		4,737
Real estate – residential		19		6,555		4		1,296

Total		39	$	17,951		11	$	8,155

The following table presents the amount of troubled debt restructurings by loan class, classified separately as those currently paying under restructured terms and those that have defaulted under restructured terms at June 30, 2012 and December 31, 2011.


As of June 30, 2012	Loans Currently Paying Under Restructured Terms				Loans that have Defaulted Under Restructured Terms
Loan class:	#		Balance (in thousands)		#		Balance (in thousands)
Commercial, financial & agricultural		1	$	18		—	$	—
Real estate – construction & development		6		2,305		1		24
Real estate – commercial & farmland		18		16,108		—		—
Real estate – residential		25		8,529		4		1,156

Total		50	$	26,960		5	$	1,180


As of December 31, 2011	Loans Currently Paying Under Restructured Terms				Loans that have Defaulted Under Restructured Terms
Loan class:	#		Balance (in thousands)		#		Balance (in thousands)
Real estate – construction & development		7	$	2,897		4	$	999
Real estate – commercial & farmland		15		11,695		1		2,664
Real estate – residential		20		6,862		3		989

Total		42	$	21,454		8	$	4,652

The following table presents the amount of troubled debt restructurings by types of concessions made, classified separately as accrual and non-accrual at June 30, 2012 and December 31, 2011.


As of June 30, 2012	Accruing Loans				Non-Accruing Loans
Type of Concession:	#		Balance (in thousands)		#		Balance (in thousands)
Forbearance of Interest		3	$	2,092		—	$	—
Forgiveness of Principal		4		1,897		—		—
Payment Modification Only		1		91		1		251
Rate Reduction Only		8		6,141		4		929
Rate Reduction, Forbearance of Interest		12		8,292		4		2,891
Rate Reduction, Forbearance of Principal		16		4,401		1		1,099
Rate Reduction, Payment Modification		1		56		—		—

Total		45	$	22,970		10	$	5,170


As of December 31, 2011	Accruing Loans				Non-Accruing Loans
Type of Concession:	#		Balance (in thousands)		#		Balance (in thousands)
Forbearance of Interest		1	$	311		—	$	—
Forgiveness of Principal		2		902		1		136
Payment Modification Only		1		92		1		307
Rate Reduction Only		7		4,192		4		1,145
Rate Reduction, Forbearance of Interest		14		9,347		—		—
Rate Reduction, Forbearance of Principal		14		3,107		1		1,123
Rate Reduction, Payment Modification		—		—		4		5,444

Total		39	$	17,951		11	$	8,155

The following table presents the amount of troubled debt restructurings by collateral types, classified separately as accrual and non-accrual at June 30, 2012 and December 31, 2011.


As of June 30, 2012	Accruing Loans				Non-Accruing Loans
Collateral type:	#		Balance (in thousands)		#		Balance (in thousands)
Warehouse		1	$	1,341		—	$	—
Raw Land		5		2,878		—		—
Hotel & Motel		3		2,406		—		—
Office		2		1,513		1		2,770
Retail, including Strip Centers		8		6,228		1		45
1-4 Family Residential		26		8,604		8		2,355

Total		45	$	22,970		10	$	5,170


As of December 31, 2011	Accruing Loans				Non-Accruing Loans
Collateral type:	#		Balance (in thousands)		#		Balance (in thousands)
Apartments		1	$	1,347		—	$	—
Raw Land		3		1,549		2		618
Hotel & Motel		1		503		1		2,072
Office		3		1,077		—		—
Retail, including Strip Centers		9		6,694		1		2,665
1-4 Family Residential		22		6,781		7		2,800

Total		39	$	17,951		11	$	8,155

As of June 30, 2012 and December 31, 2011, the Company had a balance of $28.2 million and $26.1 million, respectively, in troubled debt restructurings. The Company has recorded $2.0 million and $1.7 million in previous charge-offs on such loans at June 30, 2012 and December 31, 2011, respectively. The Company’s balance in the allowance for loan losses allocated to such troubled debt restructurings was $868,000 and $2.7 million at June 30, 2012 and December 31, 2011, respectively.

Allowance for Loan Losses

The allowance for loan losses represents a reserve for inherent 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 independent auditors and 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 data such as 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 their 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 credit card receivables 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. Many of the larger loans require an annual review by an independent loan officer or an independent third party loan review firm. As a result of these loan reviews, certain loans may be assigned specific reserve allocations. 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 Director of Internal Audit.

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.

Activity in the allowance for loan losses for the six months ended June 30, 2012, for the year ended December 31, 2011 and for the six months ended June 30, 2011 is as follows:


(Dollars in Thousands)	June 30, 2012			December 31, 2011			June 30, 2011
Balance, January 1	$	35,156		$	34,576		$	34,576
Provision for loan losses charged to expense		18,670			30,341			14,554
Loans charged off		(28,075	)		(31,623	)		(15,626	)
Recoveries of loans previously charged off		447			1,862			1,019

Ending balance	$	26,198		$	35,156		$	34,523

During the six months ended June 30, 2012, the year ended December 31, 2011 and the six months ended June 30, 2011, the Company recorded provision for loan loss expense of $1.4 million, $2.4 million and $1.6 million, respectively, to account for losses where the initial estimate of cash flows was found to be excessive on loans acquired in FDIC-assisted transactions. These amounts are excluded from the rollforwards above and below but are reflected in the Company’s Consolidated Statements of Operations.

The following table details activity in the allowance for loan losses by portfolio segment for the six months ended June 30, 2012, the year ended December 31, 2011 and the six months ended June 30, 2011. 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			Total
	(Dollars in thousands)
Balance, January 1, 2012	$	2,918		$	9,438		$	14,226		$	8,128		$	446		$	35,156
Provision for loan losses		425			1,795			11,153			3,751			1,546			18,670
Loans charged off		(654	)		(5,211	)		(17,484	)		(4,374	)		(352	)		(28,075	)
Recoveries of loans previously charged off		78			19			24			162			164			447

Balance, June 30, 2012	$	2,767		$	6,041		$	7,919		$	7,667		$	1,804		$	26,198

Period-end amount allocated to:
Loans individually evaluated for impairment	$	623		$	898		$	1,999		$	3,109		$	3		$	6,632
Loans collectively evaluated for impairment		2,144			5,143			5,920			4,558			1,801			19,566

Ending balance	$	2,767		$	6,041		$	7,919		$	7,667		$	1,804		$	26,198

Loans:
Individually evaluated for impairment	$	2,776		$	7,173		$	24,838		$	19,088		$	16		$	53,891
Collectively evaluated for impairment		172,127			117,383			650,566			313,036			58,486			1,311,598

Ending balance	$	174,903		$	124,556		$	675,404		$	332,124		$	58,502		$	1,365,489


	Commercial, financial & agricultural			Real estate - construction & development			Real estate - commercial & farmland			Real estate - residential			Consumer installment loans and Other			Total
	(Dollars in thousands)
Balance, January 1, 2011	$	2,779		$	7,705		$	14,971		$	8,664		$	457		$	34,576
Provision for loan losses		5,772			11,354			7,883			4,717			615			30,341
Loans charged off		(5,807	)		(10,988	)		(8,680	)		(5,399	)		(749	)		(31,623	)
Recoveries of loans previously charged off		174			1,367			52			146			123			1,862

Balance, December 31, 2011	$	2,918		$	9,438		$	14,226		$	8,128		$	446		$	35,156

Period-end amount allocated to:
Loans individually evaluated for impairment	$	766		$	3,478		$	8,152		$	3,567		$	3		$	15,966
Loans collectively evaluated for impairment		2,152			5,960			6,074			4,561			443			19,190

Ending balance	$	2,918		$	9,438		$	14,226		$	8,128		$	446		$	35,156

Loans:
Individually evaluated for impairment	$	2,831		$	13,561		$	45,084		$	16,080		$	17		$	77,573
Collectively evaluated for impairment		140,129			116,709			627,681			314,647			55,347			1,254,513

Ending balance	$	142,960		$	130,270		$	672,765		$	330,727		$	55,364		$	1,332,086


	Commercial, financial & agricultural			Real estate - construction & development			Real estate - commercial & farmland			Real estate - residential			Consumer installment loans and Other			Total
	(Dollars in thousands)
Balance, January 1, 2011	$	2,779		$	7,705		$	14,971		$	8,664		$	457		$	34,576
Provision for loan losses		3,234			3,683			4,908			2,466			263			14,554
Loans charged off		(3,241	)		(5,247	)		(4,889	)		(1,944	)		(305	)		(15,626	)
Recoveries of loans previously charged off		68			829			6			59			57			1,019

Balance, June 30, 2011	$	2,840		$	6,970		$	14,996		$	9,245		$	472		$	34,523

Period-end amount allocated to:
Loans individually evaluated for impairment	$	949		$	2,680		$	5,383		$	3,165		$	16		$	12,193
Loans collectively evaluated for impairment		1,891			4,290			9,613			6,080			456			22,330

Ending balance	$	2,840		$	6,970		$	14,996		$	9,245		$	472		$	34,523

Loans:
Individually evaluated for impairment	$	3,509		$	12,110		$	39,289		$	15,199		$	63		$	70,170
Collectively evaluated for impairment		146,868			131,574			641,939			321,286			48,226			1,289,893

Ending balance	$	150,377		$	143,684		$	681,228		$	336,485		$	48,289		$	1,360,063