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)	September 30, 2012		December 31, 2011		September 30, 2011
Commercial, financial and agricultural	$	189,374	$	142,960	$	159,020
Real estate – construction and development		125,315		130,270		145,770
Real estate – commercial and farmland		713,240		672,765		677,048
Real estate – residential		343,332		330,727		331,236
Consumer installment		43,441		37,296		38,163
Other		25,160		18,068		17,658

	$	1,439,862	$	1,332,086	$	1,368,895

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 $546.2 million, $571.5 million and $595.4 million at September 30, 2012, December 31, 2011 and September 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)	September 30, 2012		December 31, 2011		September 30, 2011
Commercial, financial and agricultural	$	37,167	$	41,867	$	49,859
Real estate – construction and development		73,356		77,077		82,933
Real estate – commercial and farmland		298,903		321,257		323,760
Real estate – residential		135,154		127,644		135,318
Consumer installment		1,654		3,644		3,558

	$	546,234	$	571,489	$	595,428

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)	September 30, 2012		December 31, 2011		September 30, 2011
Commercial, financial and agricultural	$	4,285	$	3,987	$	4,570
Real estate – construction and development		8,201		15,020		15,789
Real estate – commercial and farmland		11,408		35,385		24,450
Real estate – residential		13,236		15,498		13,529
Consumer installment		1,095		933		729

	$	38,225	$	70,823	$	59,067

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


(Dollars in Thousands)	September 30, 2012		December 31, 2011		September 30, 2011
Commercial, financial and agricultural	$	11,938	$	11,952	$	12,136
Real estate – construction and development		21,971		30,977		32,878
Real estate – commercial and farmland		58,377		75,458		63,940
Real estate – residential		31,189		41,139		34,846
Consumer installment		426		473		451

	$	123,901	$	159,999	$	144,251

The following table presents an analysis of non-covered past due loans as of September 30, 2012, December 31, 2011 and September 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 September 30, 2012:
Commercial, financial & agricultural	$	1,192	$	639	$	3,786	$	5,617	$	183,757	$	189,374	$	—
Real estate – construction & development		518		152		8,180		8,850		116,465		125,315		—
Real estate – commercial & farmland		3,507		812		11,402		15,721		697,519		713,240		—
Real estate – residential		7,200		2,346		12,372		21,918		321,414		343,332		—
Consumer installment loans		687		284		993		1,964		41,477		43,441		—
Other		—		—		—		—		25,160		25,160		—

Total	$	13,104	$	4,233	$	36,733	$	54,070	$	1,385,792	$	1,439,862	$	—


	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 September 30, 2011:
Commercial, financial & agricultural	$	657	$	884	$	4,544	$	6,085	$	152,935	$	159,020	$	—
Real estate – construction & development		1,228		1,759		15,050		18,037		127,733		145,770		—
Real estate – commercial & farmland		6,755		2,594		22,777		32,126		644,922		677,048		—
Real estate – residential		5,581		2,476		12,706		20,763		310,473		331,236		—
Consumer installment loans		475		260		661		1,396		36,767		38,163		20
Other		—		—		—		—		17,658		17,658		—

Total	$	14,696	$	7,973	$	55,738	$	78,407	$	1,290,488	$	1,368,895	$	20

The following table presents an analysis of covered past due loans as of September 30, 2012, December 31, 2011 and September 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 September 30, 2012:
Commercial, financial & agricultural	$	1,384	$	788	$	11,315	$	13,487	$	23,680	$	37,167	$	—
Real estate – construction & development		3,611		1,663		22,194		27,468		45,888		73,356		2,312
Real estate – commercial & farmland		7,072		6,559		51,382		65,013		233,890		298,903		808
Real estate – residential		4,702		3,349		28,559		36,610		98,544		135,154		1,018
Consumer installment loans		56		92		255		403		1,251		1,654		—

Total	$	16,825	$	12,451	$	113,705	$	142,981	$	403,253	$	546,234	$	4,138


	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 September 30, 2011:
Commercial, financial & agricultural	$	290	$	411	$	11,406	$	12,107	$	37,752	$	49,859	$	5
Real estate – construction & development		1,175		2,610		30,220		34,005		48,928		82,933		347
Real estate – commercial & farmland		16,316		7,790		54,009		78,115		245,645		323,760		339
Real estate – residential		8,180		2,717		32,570		43,467		91,851		135,318		2,039
Consumer installment loans		72		73		422		567		2,991		3,558		—

Total	$	26,033	$	13,601	$	128,627	$	168,261	$	427,167	$	595,428	$	2,730

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
	September 30, 2012		December 31, 2011		September 30, 2011
	(Dollars in Thousands)
Nonaccrual loans	$	38,225	$	70,823	$	59,067
Troubled debt restructurings not included above		19,893		17,951		16,591

Total impaired loans	$	58,118	$	88,774	$	75,658

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

Impaired loans requiring a related allowance	$	58,118	$	88,774	$	75,658

Allowance related to impaired loans	$	7,681	$	18,478	$	17,010

Average investment in impaired loans	$	73,353	$	88,320	$	88,207

Interest income recognized on impaired loans	$	376	$	637	$	847

Foregone interest income on impaired loans	$	491	$	613	$	202

The following table presents an analysis of information pertaining to non-covered impaired loans as of September 30, 2012, December 31, 2011 and September 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 September 30, 2012:
Commercial, financial & agricultural	$	8,261	$	—	$	5,089	$	5,089	$	876	$	4,974
Real estate – construction & development		19,583		—		9,682		9,682		1,253		11,879
Real estate – commercial & farmland		25,346		—		20,948		20,948		2,907		33,070
Real estate – residential		24,993		—		21,304		21,304		2,616		22,303
Consumer installment loans		1,220		—		1,095		1,095		29		1,127

Total	$	79,403	$	—	$	58,118	$	58,118	$	7,681	$	73,353


	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 September 30, 2011:
Commercial, financial & agricultural	$	8,895	$	—	$	4,571	$	4,571	$	1,277	$	5,848
Real estate – construction & development		26,450		—		17,486		17,486		6,164		19,417
Real estate – commercial & farmland		35,835		—		31,455		31,455		4,470		41,488
Real estate – residential		23,871		—		21,436		21,436		4,933		20,837
Consumer installment loans		875		—		710		710		166		617

Total	$	95,926	$	—	$	75,658	$	75,658	$	17,010	$	88,207

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


	As of and For the Period Ended
	September 30, 2012		December 31, 2011		September 30, 2011
	(Dollars in Thousands)
Nonaccrual loans	$	123,901	$	159,999	$	144,251
Troubled debt restructurings not included above		25,926		19,884		10,768

Total impaired loans	$	149,827	$	179,883	$	155,019

Impaired loans not requiring a related allowance	$	149,827	$	179,883	$	155,019

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

Allowance related to impaired loans	$	—	$	—	$	—

Average investment in impaired loans	$	171,055	$	138,950	$	128,717

Interest income recognized on impaired loans	$	1,319	$	526	$	462

Foregone interest income on impaired loans	$	554	$	202	$	1,515

The following table presents an analysis of information pertaining to impaired covered loans as of September 30, 2012, December 31, 2011 and September 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 September 30, 2012:
Commercial, financial & agricultural	$	17,833	$	11,976	$	—	$	11,976	$	—	$	12,932
Real estate – construction & development		34,787		23,833		—		23,833		—		31,653
Real estate – commercial & farmland		98,909		72,802		—		72,802		—		82,430
Real estate – residential		54,020		40,790		—		40,790		—		43,492
Consumer installment loans		890		426		—		426		—		548

Total	$	206,439	$	149,827	$	—	$	149,827	$	—	$	171,055


	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 September 30, 2011:
Commercial, financial & agricultural	$	19,904	$	12,194	$	—	$	12,194	$	—	$	9,756
Real estate – construction & development		111,148		33,380		—		33,380		—		29,672
Real estate – commercial & farmland		135,514		65,592		—		65,592		—		49,573
Real estate – residential		72,962		43,402		—		43,402		—		38,775
Consumer installment loans		581		451		—		451		—		941

Total	$	340,109	$	155,019	$	—	$	155,019	$	—	$	128,717

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 September 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	$	26,291	$	—	$	220	$	411	$	7,887	$	—	$	34,809
15		11,816		4,532		152,678		74,040		1,400		—		244,466
20		80,681		33,603		324,270		105,531		23,038		25,160		592,283
23		5		7,667		8,773		13,650		81		—		30,176
25		62,377		59,013		184,146		113,560		8,502		—		427,598
30		1,508		7,948		14,742		10,535		745		—		35,478
40		6,436		12,396		28,411		25,583		1,780		—		74,606
50		260		156		—		22		8		—		446
60		—		—		—		—		—		—		—

Total	$	189,374	$	125,315	$	713,240	$	343,332	$	43,441	$	25,160	$	1,439,862

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 September 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	$	16,047	$	211	$	905	$	109	$	6,189	$	—	$	23,461
15		12,135		4,814		146,029		29,930		973		—		193,881
20		67,085		35,764		277,651		130,731		21,859		17,658		550,748
23		1,192		8,043		9,290		11,985		28		—		30,538
25		55,307		69,618		169,887		122,939		7,391		—		425,142
30		1,738		4,291		35,550		10,583		598		—		52,760
40		5,376		22,753		37,736		24,959		1,033		—		91,857
50		140		276		—		—		92		—		508
60		—		—		—		—		—		—		—

Total	$	159,020	$	145,770	$	677,048	$	331,236	$	38,163	$	17,658	$	1,368,895

The following table presents the covered loan portfolio by risk grade as of September 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	$	—	$	8	$	—	$	853	$	—	$	—	$	861
15		91		44		1,673		708		—		—		2,516
20		4,970		13,950		40,912		34,397		319		—		94,548
23		30		1,226		4,638		1,889		—		—		7,783
25		11,986		18,921		130,155		44,999		721		—		206,782
30		4,063		7,494		35,764		9,016		64		—		56,401
40		16,027		31,713		85,761		43,292		550		—		177,343
50		—		—		—		—		—		—		—
60		—		—		—		—		—		—		—

Total	$	37,167	$	73,356	$	298,903	$	135,154	$	1,654	$	—	$	546,234

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 September 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	$	587	$	—	$	—	$	1,376	$	578	$	—	$	2,541
15		31		53		1,799		633		16		—		2,532
20		4,602		5,615		31,938		20,911		557		—		63,623
23		—		54		1,478		690		—		—		2,222
25		22,142		22,664		141,921		51,260		1,386		—		239,373
30		5,810		12,831		41,679		8,705		198		—		69,223
40		16,683		40,571		104,008		51,743		823		—		213,828
50		4		1,145		937		—		—		—		2,086
60		—		—		—		—		—		—		—

Total	$	49,859	$	82,933	$	323,760	$	135,318	$	3,558	$	—	$	595,428

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 nine months of 2012 totaling $23.5 million and loans in 2011 totaling $27.0 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 September 30, 2012 and December 31, 2011.


As of September 30, 2012	Accruing Loans				Non-Accruing Loans
Loan class:	#		Balance (in thousands)		#		Balance (in thousands)
Commercial, financial & agricultural		5	$	804		—	$	—
Real estate – construction & development		4		1,481		—		—
Real estate – commercial & farmland		15		9,540		1		2,770
Real estate – residential		27		8,068		2		620

Total		51	$	19,893		3	$	3,390


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 September 30, 2012 and December 31, 2011.


As of September 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		5	$	804		—	$	—
Real estate – construction & development		4		1,481		—		—
Real estate – commercial & farmland		15		9,540		1		2,770
Real estate – residential		26		8,068		3		620

Total		50	$	19,893		4	$	3,390


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 September 30, 2012 and December 31, 2011.


As of September 30, 2012	Accruing Loans				Non-Accruing Loans
Type of Concession:	#		Balance (in thousands)		#		Balance (in thousands)
Forbearance of Interest		2	$	1,902		—	$	—
Forgiveness of Principal		3		1,516		1		369
Payment Modification Only		2		1,292		1		251
Rate Reduction Only		10		5,889		—		—
Rate Reduction, Forbearance of Interest		15		4,371		1		2,770
Rate Reduction, Forbearance of Principal		18		4,874		—		—
Rate Reduction, Payment Modification		1		49		—		—

Total		51	$	19,893		3	$	3,390


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 September 30, 2012 and December 31, 2011.


As of September 30, 2012	Accruing Loans				Non-Accruing Loans
Collateral type:	#		Balance (in thousands)		#		Balance (in thousands)
Warehouse		3	$	1,621		—	$	—
Raw Land		2		1,349		—		—
Hotel & Motel		3		2,362		—		—
Office		2		1,503		1		2,770
Retail, including Strip Centers		7		4,054		—		—
1-4 Family Residential		30		8,216		2		620
Inventory		1		450		—		—
Equipment		1		38		—		—
Unsecured		2		300		—		—

Total		51	$	19,893		3	$	3,390


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 September 30, 2012 and December 31, 2011, the Company had a balance of $23.3 million and $26.1 million, respectively, in troubled debt restructurings. The Company has recorded $2.1 million and $1.7 million in previous charge-offs on such loans at September 30, 2012 and December 31, 2011, respectively. The Company’s balance in the allowance for loan losses allocated to such troubled debt restructurings was $676,000 and $2.7 million at September 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 nine months ended September 30, 2012, for the year ended December 31, 2011 and for the nine months ended September 30, 2011 is as follows:


(Dollars in Thousands)	September 30, 2012			December 31, 2011			September 30, 2011
Balance, January 1	$	35,156		$	34,576		$	34,576
Provision for loan losses charged to expense		24,360			30,341			22,098
Loans charged off		(34,167	)		(31,623	)		(22,714	)
Recoveries of loans previously charged off		552			1,862			1,278

Ending balance	$	25,901		$	35,156		$	35,238

During the nine months ended September 30, 2012, the year ended December 31, 2011 and the nine months ended September 30, 2011, the Company recorded provision for loan loss expense of $2.3 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 nine months ended September 30, 2012, the year ended December 31, 2011 and the nine months ended September 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		677			4,954			13,087			4,936			706			24,360
Loans charged off		(889	)		(7,819	)		(18,199	)		(6,642	)		(618	)		(34,167	)
Recoveries of loans previously charged off		101			23			32			199			197			552

Balance, September 30, 2012	$	2,807		$	6,596		$	9,146		$	6,621		$	731		$	25,901

Period-end amount allocated to:
Loans individually evaluated for impairment	$	610		$	526		$	2,315		$	2,105		$	—		$	5,556
Loans collectively evaluated for impairment		2,197			6,070			6,831			4,516			731			20,345

Ending balance	$	2,807		$	6,596		$	9,146		$	6,621		$	731		$	25,901

Loans:
Individually evaluated for impairment	$	2,748		$	5,510		$	21,552		$	15,178		$	—		$	44,988
Collectively evaluated for impairment		186,626			119,805			691,688			328,154			68,601			1,394,874

Ending balance	$	189,374		$	125,315		$	713,240		$	343,332		$	68,601		$	1,439,862


	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		3,586			7,615			6,447			3,931			519			22,098
Loans charged off		(3,855	))		(6,859	)		(7,851	)		(3,641	)		(508	)		(22,714	)
Recoveries of loans previously charged off		153			873			43			107			102			1,278

Balance, September 30, 2011	$	2,663		$	9,334		$	13,610		$	9,061		$	570		$	35,238

Period-end amount allocated to:
Loans individually evaluated for impairment	$	903		$	5,209		$	4,580		$	3,332		$	1		$	14,025
Loans collectively evaluated for impairment		1,760			4,125			9,030			5,729			569			21,213

Ending balance	$	2,663		$	9,334		$	13,610		$	9,061		$	570		$	35,238

Loans:
Individually evaluated for impairment	$	3,214		$	13,979		$	31,892		$	15,468		$	17		$	64,570
Collectively evaluated for impairment		155,806			131,791			645,156			315,768			55,804			1,304,325

Ending balance	$	159,020		$	145,770		$	677,048		$	331,236		$	55,821		$	1,368,895