NOTE 4 – 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 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.

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, excluding purchased non-covered and covered loans:


(Dollars in Thousands)	September 30, 2014		December 31, 2013		September 30, 2013
Commercial, financial and agricultural	$	334,783	$	244,373	$	244,991
Real estate – construction and development		154,315		146,371		132,277
Real estate – commercial and farmland		882,160		808,323		799,149
Real estate – residential		436,515		366,882		355,920
Consumer installment		31,403		34,249		36,303
Other		9,583		18,256		20,627

	$	1,848,759	$	1,618,454	$	1,589,267

Purchased non-covered loans are defined as loans that were acquired in bank acquisitions that are not covered by a loss-sharing agreement with the FDIC. Purchased non-covered loans totaling $673.7 million and $448.8 million at September 30, 2014 and December 31, 2013, respectively, are not included in the above schedule. There were no purchased non-covered loans at September 30, 2013.

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, 2014		December 31, 2013		September 30, 2013
Commercial, financial and agricultural	$	38,077	$	32,141	$	—
Real estate – construction and development		60,262		31,176		—
Real estate – commercial and farmland		296,790		179,898		—
Real estate – residential		273,347		200,851		—
Consumer installment		5,248		4,687		—

	$	673,724	$	448,753	$	—

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 $313.6 million, $390.2 million and $417.6 million at September 30, 2014, December 31, 2013 and September 30, 2013, 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, 2014		December 31, 2013		September 30, 2013
Commercial, financial and agricultural	$	22,545	$	26,550	$	27,768
Real estate – construction and development		27,756		43,179		50,702
Real estate – commercial and farmland		180,566		224,451		237,086
Real estate – residential		82,445		95,173		101,146
Consumer installment		277		884		947

	$	313,589	$	390,237	$	417,649

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 payments on nonaccrual 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. Loans are returned to accrual status when all the principal and interest amounts contractually due are brought current and future payments are reasonably assured. Nonaccrual 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 loans accounted for on a nonaccrual basis, excluding purchased non-covered and covered loans:


(Dollars in Thousands)	September 30, 2014		December 31, 2013		September 30, 2013
Commercial, financial and agricultural	$	2,695	$	4,103	$	4,198
Real estate – construction and development		3,037		3,971		4,229
Real estate – commercial and farmland		8,983		8,566		9,548
Real estate – residential		7,608		12,152		13,303
Consumer installment		487		411		442

	$	22,810	$	29,203	$	31,720

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


(Dollars in Thousands)	September 30, 2014		December 31, 2013		September 30, 2013
Commercial, financial and agricultural	$	54	$	11	$	—
Real estate – construction and development		1,969		325		—
Real estate – commercial and farmland		8,776		1,653		—
Real estate – residential		6,132		4,658		—
Consumer installment		76		12		—

	$	17,007	$	6,659	$	—

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


(Dollars in Thousands)	September 30, 2014		December 31, 2013		September 30, 2013
Commercial, financial and agricultural	$	8,441	$	7,257	$	7,872
Real estate – construction and development		8,896		14,781		16,582
Real estate – commercial and farmland		14,617		33,495		37,079
Real estate – residential		7,227		13,278		13,028
Consumer installment		102		341		350

	$	39,283	$	69,152	$	74,911

The following table presents an aging analysis of loans, excluding purchased non-covered and covered past due loans as of September 30, 2014, December 31, 2013 and September 30, 2013:


	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, 2014:
Commercial, financial & agricultural	$	271	$	400	$	2,483	$	3,154	$	331,629	$	334,783	$	—
Real estate – construction & development		1,232		285		2,899		4,416		149,899		154,315		—
Real estate – commercial & farmland		3,025		484		8,918		12,427		869,733		882,160		—
Real estate – residential		4,416		2,085		7,303		13,804		422,711		436,515		—
Consumer installment loans		333		113		396		842		30,561		31,403		—
Other		—		—		—		—		9,583		9,583		—

Total	$	9,277	$	3,367	$	21,999	$	34,643	$	1,814,116	$	1,848,759	$	—


	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, 2013:
Commercial, financial & agricultural	$	10,893	$	272	$	4,081	$	15,246	$	229,127	$	244,373	$	—
Real estate – construction & development		1,026		69		3,935		5,030		141,341		146,371		—
Real estate – commercial & farmland		3,981		1,388		7,751		13,120		795,203		808,323		—
Real estate – residential		5,422		1,735		11,587		18,744		348,138		366,882		—
Consumer installment loans		568		197		305		1,070		33,179		34,249		—
Other		—		—		—		—		18,256		18,256		—

Total	$	21,890	$	3,661	$	27,659	$	53,210	$	1,565,244	$	1,618,454	$	—


	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, 2013:
Commercial, financial & agricultural	$	623	$	297	$	4,107	$	5,027	$	239,964	$	244,991	$	—
Real estate – construction & development		1,200		794		4,229		6,223		126,054		132,277		—
Real estate – commercial & farmland		3,883		2,458		9,523		15,864		783,285		799,149		—
Real estate – residential		5,515		3,531		11,818		20,864		335,056		355,920		—
Consumer installment loans		497		255		327		1,079		35,224		36,303		—
Other		—		—		—		—		20,627		20,627		—

Total	$	11,718	$	7,335	$	30,004	$	49,057	$	1,540,210	$	1,589,267	$	—

The following table presents an aging analysis of purchased non-covered past due loans based on the recorded basis as of September 30, 2014 and December 31, 2013. There were no purchased non-covered loans as of September 30, 2013:


	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, 2014:
Commercial, financial & agricultural	$	33	$	46	$	55	$	134	$	37,943	$	38,077	$	—
Real estate – construction & development		520		135		3,069		3,724		56,538		60,262		1,100
Real estate – commercial & farmland		3,497		1,227		8,266		12,990		283,800		296,790		258
Real estate – residential		3,915		1,440		5,929		11,284		262,063		273,347		—
Consumer installment loans		36		5		76		117		5,131		5,248		—

Total	$	8,001	$	2,853	$	17,395	$	28,249	$	645,475	$	673,724	$	1,358


	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, 2013:
Commercial, financial & agricultural	$	370	$	70	$	11	$	451	$	31,690	$	32,141	$	—
Real estate – construction & development		1,008		89		325		1,422		29,754		31,176		—
Real estate – commercial & farmland		6,851		2,064		1,516		10,431		169,467		179,898		—
Real estate – residential		4,667		1,074		3,428		9,169		191,682		200,851		—
Consumer installment loans		7		17		9		33		4,654		4,687		—

Total	$	12,903	$	3,314	$	5,289	$	21,506	$	427,247	$	448,753	$	—

The following table presents an aging analysis of covered loans as of September 30, 2014, December 31, 2013 and September 30, 2013:


	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, 2014:
Commercial, financial & agricultural	$	568	$	188	$	1,978	$	2,734	$	19,811	$	22,545	$	—
Real estate – construction & development		632		72		8,659		9,363		18,393		27,756		—
Real estate – commercial & farmland		7,100		322		8,930		16,352		164,214		180,566		305
Real estate – residential		2,694		1,473		5,563		9,730		72,715		82,445		65
Consumer installment loans		2		7		101		110		167		277		—

Total	$	10,996	$	2,062	$	25,231	$	38,289	$	275,300	$	313,589	$	370


	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, 2013:
Commercial, financial & agricultural	$	3,966	$	12	$	6,165	$	10,143	$	16,407	$	26,550	$	—
Real estate – construction & development		843		144		14,055		15,042		28,137		43,179		—
Real estate – commercial & farmland		8,482		4,350		26,428		39,260		185,191		224,451		346
Real estate – residential		7,648		1,914		10,244		19,806		75,367		95,173		—
Consumer installment loans		51		14		305		370		514		884		—

Total	$	20,990	$	6,434	$	57,197	$	84,621	$	305,616	$	390,237	$	346


	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, 2013:
Commercial, financial & agricultural	$	319	$	50	$	6,695	$	7,064	$	20,704	$	27,768	$	—
Real estate – construction & development		2,831		658		15,781		19,270		31,432		50,702		266
Real estate – commercial & farmland		7,365		5,350		30,503		43,218		193,868		237,086		568
Real estate – residential		2,980		1,727		11,078		15,785		85,361		101,146		823
Consumer installment loans		49		—		311		360		587		947		—

Total	$	13,544	$	7,785	$	64,368	$	85,697	$	331,952	$	417,649	$	1,657

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 impaired loans, excluding purchased non-covered and covered loans:


	As of and For the Period Ended
	September 30, 2014		December 31, 2013		September 30, 2013
	(Dollars in Thousands)
Nonaccrual loans	$	22,810	$	29,203	$	31,720
Troubled debt restructurings not included above		17,261		17,214		17,024

Total impaired loans	$	40,071	$	46,417	$	48,744

Quarter-to-date interest income recognized on impaired loans	$	117	$	54	$	17

Year-to-date interest income recognized on impaired loans	$	799	$	522	$	468

Quarter-to-date foregone interest income on impaired loans	$	138	$	30	$	216

Year-to-date foregone interest income on impaired loans	$	161	$	418	$	388

The following table presents an analysis of information pertaining to impaired loans, excluding purchased non-covered and covered loans as of September 30, 2014, December 31, 2013 and September 30, 2013.


	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, 2014:
Commercial, financial & agricultural	$	4,445	$	8	$	2,943	$	2,951	$	631	$	2,402	$	3,285
Real estate – construction & development		8,824		211		4,743		4,954		612		5,243		5,596
Real estate – commercial & farmland		18,955		7,311		8,753		16,064		1,698		16,242		16,312
Real estate – residential		18,251		5,635		9,946		15,581		1,286		15,356		17,169
Consumer installment loans		606		—		521		521		10		517		516

Total	$	51,081	$	13,165	$	26,906	$	40,071	$	4,237	$	39,760	$	42,878


	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, 2013:
Commercial, financial & agricultural	$	6,240	$	—	$	4,618	$	4,618	$	435	$	4,669	$	4,844
Real estate – construction & development		11,363		—		5,867		5,867		512		6,011		8,341
Real estate – commercial & farmland		18,456		—		15,479		15,479		1,443		15,860		17,559
Real estate – residential		24,342		—		19,970		19,970		1,472		20,571		20,335
Consumer installment loans		623		—		483		483		9		469		642

Total	$	61,024	$	—	$	46,417	$	46,417	$	3,871	$	47,580	$	51,721


	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 September 30, 2013:
Commercial, financial & agricultural	$	7,401	$	—	$	4,719	$	4,719	$	820	$	5,052	$	4,900
Real estate – construction & development		14,299		—		6,155		6,155		821		6,775		8,960
Real estate – commercial & farmland		18,628		—		16,241		16,241		1,999		16,366		18,079
Real estate – residential		24,701		—		21,174		21,174		1,530		20,533		20,427
Consumer installment loans		565		—		455		455		10		559		681

Total	$	65,594	$	—	$	48,744	$	48,744	$	5,180	$	49,285	$	53,047

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


	As of and For the Period Ended
	September 30, 2014		December 31, 2013		September 30, 2013
	(Dollars in Thousands)
Nonaccrual loans	$	17,007	$	6,659	$	—
Troubled debt restructurings not included above		583		—		—

Total impaired loans	$	17,590	$	6,659	$	—

Quarter-to-date interest income recognized on impaired loans	$	19	$	—	$	—

Year-to-date interest income recognized on impaired loans	$	35	$	—	$	—

Quarter-to-date foregone interest income on impaired loans	$	18	$	—	$	—

Year-to-date foregone interest income on impaired loans	$	176	$	—	$	—

The following table presents an analysis of information pertaining to impaired purchased non-covered loans as of September 30, 2014 and December 31, 2013. There were no purchased non-covered loans as of September 30, 2013:


	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, 2014:
Commercial, financial & agricultural	$	438	$	54	$	—	$	54	$	—	$	98	$	81
Real estate – construction & development		3,794		2,274		—		2,274		—		2,273		1,501
Real estate – commercial & farmland		12,354		8,776		—		8,776		—		7,712		5,976
Real estate – residential		9,610		6,407		—		6,407		—		6,533		6,233
Consumer installment loans		184		79		—		79		—		64		43

Total	$	26,380	$	17,590	$	—	$	17,590	$	—	$	16,680	$	13,834


	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, 2013:
Commercial, financial & agricultural	$	19	$	11	$	—	$	11	$	—	$	1	$	—
Real estate – construction & development		542		325		—		325		—		25		6
Real estate – commercial & farmland		2,673		1,653		—		1,653		—		126		32
Real estate – residential		7,712		4,658		—		4,658		—		354		90
Consumer installment loans		20		12		—		12		—		1		—

Total	$	10,996	$	6,659	$	—	$	6,659	$	—	$	507	$	128

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


	As of and For the Period Ended
	September 30, 2014		December 31, 2013		September 30, 2013
	(Dollars in Thousands)
Nonaccrual loans	$	39,283	$	69,152	$	74,911
Troubled debt restructurings not included above		22,757		22,243		21,184

Total impaired loans	$	62,040	$	91,395	$	96,095

Quarter-to-date interest income recognized on impaired loans	$	176	$	175	$	9

Year-to-date interest income recognized on impaired loans	$	1,115	$	968	$	793

Quarter-to-date foregone interest income on impaired loans	$	—	$	44	$	44

Year-to-date foregone interest income on impaired loans	$	94	$	330	$	286

The following table presents an analysis of information pertaining to impaired covered loans as of September 30, 2014, December 31, 2013 and September 30, 2013:


	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, 2014:
Commercial, financial & agricultural	$	11,356	$	8,467	$	—	$	8,467	$	—	$	10,367	$	9,511
Real estate – construction & development		13,268		11,920		—		11,920		—		11,484		14,760
Real estate – commercial & farmland		26,624		23,118		—		23,118		—		23,562		29,904
Real estate – residential		20,331		18,430		—		18,430		—		19,112		21,456
Consumer installment loans		134		105		—		105		—		116		177

Total	$	71,713	$	62,040	$	—	$	62,040	$	—	$	64,641	$	75,808


	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, 2013:
Commercial, financial & agricultural	$	9,680	$	7,270	$	—	$	7,270	$	—	$	7,577	$	8,696
Real estate – construction & development		20,915		18,037		—		18,037		—		19,464		21,794
Real estate – commercial & farmland		46,612		40,749		—		40,749		—		42,014		51,584
Real estate – residential		29,089		24,998		—		24,998		—		24,345		28,452
Consumer installment loans		394		341		—		341		—		346		304

Total	$	106,690	$	91,395	$	—	$	91,395	$	—	$	93,745	$	110,830


	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, 2013:
Commercial, financial & agricultural	$	10,645	$	7,884	$	—	$	7,884	$	—	$	8,327	$	9,052
Real estate – construction & development		25,401		20,890		—		20,890		—		21,860		22,734
Real estate – commercial & farmland		51,105		43,279		—		43,279		—		48,558		54,292
Real estate – residential		28,078		23,692		—		23,692		—		24,810		29,316
Consumer installment loans		404		350		—		350		—		318		295

Total	$	115,633	$	96,095	$	—	$	96,095	$	—	$	103,872	$	115,689

Credit Quality Indicators

The Company uses a nine category risk grading system to assign a risk grade to each loan in the portfolio. Every loan is assigned a risk rating, with the exception of credit card receivables and overdraft protection loans which are treated as pools and assigned a risk rating. All relationships greater than $1.0 million and the majority of relationships greater than $250,000 are reviewed annually by the Bank’s independent internal loan review department or an independent third party loan review. 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 of borrowers who exhibit satisfactory credit histories, contain acceptable loan structures and demonstrate the 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 exhibit 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 a 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 sound worth and paying capacity of the borrower or of the collateral pledged, if any. These assets exhibit a well-defined weakness or are characterized by the distinct possibility that the Bank will sustain some loss if the deficiencies are not corrected. These weaknesses may be characterized by past due performance, operating losses or questionable collateral values.

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

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

The following table presents the loan portfolio, excluding purchased non-covered and covered loans, by risk grade as of September 30, 2014.


Risk Grade	Commercial, financial & agricultural		Real estate - construction & development		Real estate - commercial & farmland		Real estate - residential		Consumer installment loans		Other		Total
	(Dollars in Thousands)
10	$	114,298	$	171	$	251	$	479	$	6,287	$	—	$	121,486
15		29,665		4,114		136,303		51,508		1,124		—		222,714
20		110,337		50,427		478,551		241,457		17,700		9,583		908,055
23		186		9,292		9,574		9,469		305		—		28,826
25		73,251		83,245		217,226		105,635		4,842		—		484,199
30		3,438		1,781		16,217		10,060		254		—		31,750
40		3,608		5,285		23,950		17,907		890		—		51,640
50		—		—		88		—		—		—		88
60		—		—		—		—		1		—		1

Total	$	334,783	$	154,315	$	882,160	$	436,515	$	31,403	$	9,583	$	1,848,759

The following table presents the loan portfolio, excluding purchased non-covered and covered loans, by risk grade as of December 31, 2013.


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	$	66,983	$	—	$	265	$	419	$	6,714	$	—	$	74,381
15		24,789		4,655		147,157		52,335		1,276		—		230,212
20		93,852		45,195		431,790		165,339		18,619		18,256		773,051
23		127		8,343		10,219		12,641		274		—		31,604
25		50,373		78,736		181,645		103,427		6,310		—		420,491
30		2,111		2,876		11,849		13,558		197		—		30,591
40		6,011		6,566		25,398		19,153		859		—		57,987
50		127		—		—		10		—		—		137
60		—		—		—		—		—		—		—

Total	$	244,373	$	146,371	$	808,323	$	366,882	$	34,249	$	18,256	$	1,618,454

The following table presents the loan portfolio, excluding purchased non-covered and covered loans, by risk grade as of September 30, 2013:


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	$	65,033	$	—	$	278	$	420	$	7,028	$	—	$	72,759
15		20,668		5,080		147,355		56,464		1,243		—		230,810
20		89,216		37,765		421,669		142,186		19,691		20,627		731,154
23		97		7,085		10,054		13,275		218		—		30,729
25		60,407		72,942		183,371		109,604		7,034		—		433,358
30		3,019		2,264		12,089		11,427		153		—		28,952
40		6,326		7,141		24,333		22,534		936		—		61,270
50		225		—		—		10		—		—		235
60		—		—		—		—		—		—		—

Total	$	244,991	$	132,277	$	799,149	$	355,920	$	36,303	$	20,627	$	1,589,267

The following table presents the purchased non-covered loan portfolio by risk grade as of September 30, 2014:


Risk Grade	Commercial, financial & agricultural		Real estate - construction & development		Real estate - commercial & farmland		Real estate - residential		Consumer installment loans		Other		Total
	(Dollars in Thousands)
10	$	3,187	$	—	$	—	$	292	$	486	$	—	$	3,965
15		5,023		447		14,136		15,336		519		—		35,461
20		11,230		12,345		90,915		64,178		2,034		—		180,702
23		8		—		—		1,208		—		—		1,216
25		16,467		38,426		167,458		175,313		2,065		—		399,729
30		1,494		2,164		9,300		7,071		19		—		20,048
40		668		6,880		14,981		9,915		121		—		32,565
50		—		—		—		34		4		—		38
60		—		—		—		—		—		—		—

Total	$	38,077	$	60,262	$	296,790	$	273,347	$	5,248	$	—	$	673,724

The following table presents the purchased non-covered loan portfolio by risk grade as of December 31, 2013:


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	$	1,865	$	—	$	—	$	289	$	451	$	—	$	2,605
15		4,606		7		12,998		16,160		703		—		34,474
20		5,172		3,960		43,802		34,576		1,383		—		88,893
23		—		—		—		—		—		—		—
25		19,638		20,733		102,260		129,923		1,888		—		274,442
30		576		1,760		9,554		10,878		194		—		22,962
40		284		4,716		11,284		9,025		68		—		25,377
50		—		—		—		—		—		—		—
60		—		—		—		—		—		—		—

Total	$	32,141	$	31,176	$	179,898	$	200,851	$	4,687	$	—	$	448,753

There were no purchased non-covered loans as of September 30, 2013.

The following table presents the covered loan portfolio by risk grade as of September 30, 2014:


Risk Grade	Commercial, financial & agricultural		Real estate - construction & development		Real estate - commercial & farmland		Real estate - residential		Consumer installment loans		Other		Total
	(Dollars in Thousands)
10	$	—	$	—	$	—	$	—	$	—	$	—	$	—
15		—		2		795		531		—		—		1,328
20		1,302		3,380		33,200		15,957		71		—		53,910
23		145		547		14,640		5,815		—		—		21,147
25		5,687		11,725		89,201		35,344		41		—		141,998
30		4,827		3,006		8,808		8,649		43		—		25,333
40		10,584		9,096		33,922		16,149		122		—		69,873
50		—		—		—		—		—		—		—
60		—		—		—		—		—		—		—

Total	$	22,545	$	27,756	$	180,566	$	82,445	$	277	$	—	$	313,589

The following table presents the covered loan portfolio by risk grade as of December 31, 2013:


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		—		16		1,048		638		—		—		1,702
20		2,184		8,549		34,674		21,363		193		—		66,963
23		134		1,085		17,037		4,748		51		—		23,055
25		7,508		9,611		101,657		38,427		235		—		157,438
30		5,125		2,006		21,297		6,979		17		—		35,424
40		11,599		21,912		48,738		23,018		388		—		105,655
50		—		—		—		—		—		—		—
60		—		—		—		—		—		—		—

Total	$	26,550	$	43,179	$	224,451	$	95,173	$	884	$	—	$	390,237

The following table presents the covered loan portfolio by risk grade as of September 30, 2013:


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		—		22		1,098		641		—		—		1,761
20		2,697		11,347		34,252		22,545		208		—		71,049
23		135		1,080		16,708		2,902		51		—		20,876
25		7,609		7,360		108,886		39,632		250		—		163,737
30		1,485		5,505		24,790		9,196		14		—		40,990
40		15,842		25,388		51,352		26,230		424		—		119,236
50		—		—		—		—		—		—		—
60		—		—		—		—		—		—		—

Total	$	27,768	$	50,702	$	237,086	$	101,146	$	947	$	—	$	417,649

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 a 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 on 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) 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 2014 and 2013 totaling $8.0 million and $17.0 million, respectively, 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.

As of September 30, 2014, December 31, 2013 and September 30, 2013, the Company had a balance of $20.5 million, $20.9 million and $20.2 million, respectively, in troubled debt restructurings, excluding purchased non-covered and covered loans. The Company has recorded $4.4 million, $2.1 million and $2.1 million in previous charge-offs on such loans at September 30, 2014, December 31, 2013 and September 30, 2013, respectively. The Company’s balance in the allowance for loan losses allocated to such troubled debt restructurings was $2.2 million, $2.1 million and $1.7 million at September 30, 2014, December 31, 2013 and September 30, 2013, respectively. At September 30, 2014, the Company did not have any commitments to lend additional funds to debtors whose terms have been modified in troubled restructurings.

During the three and nine month periods ending September 30, 2014, the Company modified loans as troubled debt restructurings with principal balances of $763,000 and $2.4 million, respectively. These modifications impacted the Company’s allowance for loan losses by $49,000 and $203,000, respectively, for the three and nine month periods ended September 30, 2014. Troubled debt restructurings with an outstanding balance of $528,000 at June 30, 2014 defaulted during the three months ended September 30, 2014 and these defaults did not have a material impact on the Company’s allowance for loan loss. Troubled debt restructurings with an outstanding balance of $1.3 million at December 31, 2013 defaulted during the first nine months of 2014 and these defaults did not have a material impact on the Company’s allowance for loan loss.

The following table presents the amount of troubled debt restructurings by loan class, excluding purchased non-covered and covered loans, classified separately as accrual and non-accrual at September 30, 2014, December 31, 2013 and September 30, 2013:


As of September 30, 2014	Accruing Loans				Non-Accruing Loans
Loan class:	#		Balance *(in thousands)*		#		Balance *(in thousands)*
Commercial, financial & agricultural		4	$	257		4	$	507
Real estate – construction & development		11		1,917		4		196
Real estate – commercial & farmland		21		7,080		2		1,672
Real estate – residential		43		7,973		10		759
Consumer installment		9		34		12		93

Total		88	$	17,261		32	$	3,227


As of December 31, 2013	Accruing Loans				Non-Accruing Loans
Loan class:	#		Balance *(in thousands)*		#		Balance *(in thousands)*
Commercial, financial & agricultural		4	$	515		3	$	525
Real estate – construction & development		8		1,896		2		32
Real estate – commercial & farmland		17		6,913		4		2,273
Real estate – residential		37		7,818		8		834
Consumer installment		6		72		3		19

Total		72	$	17,214		20	$	3,683


As of September 30, 2013	Accruing Loans				Non-Accruing Loans
Loan class:	#		Balance *(in thousands)*		#		Balance *(in thousands)*
Commercial, financial & agricultural		4	$	521		3	$	533
Real estate – construction & development		8		1,926		1		29
Real estate – commercial & farmland		16		6,693		3		1,858
Real estate – residential		35		7,871		7		704
Consumer installment		1		13		2		26

Total		64	$	17,024		16	$	3,150

As of September 30, 2014, the Company had a balance of $583,000 in troubled debt restructurings included in purchased non-covered loans. The Company did not have any troubled debt restructurings included in purchased non-covered loans as of December 31, 2013 and September 30, 2013. The Company has not recorded any previous charge-offs on such loans at September 30, 2014. At September 30, 2014, the Company did not have any commitments to lend additional funds to debtors whose terms have been modified in troubled restructurings.

The following table presents the amount of troubled debt restructurings by loan class of purchased non-covered loans, classified separately as accrual and non-accrual at September 30, 2014:


As of September 30, 2014	Accruing Loans				Non-Accruing Loans
Loan class:	#		Balance (in thousands)		#		Balance (in thousands)
Commercial, financial & agricultural		—	$	—		—	$	—
Real estate – construction & development		1		305		—		—
Real estate – commercial & farmland		—		—		—		—
Real estate – residential		4		275		2		247
Consumer installment		1		3		—		—

Total		6	$	583		2	$	247

As of September 30, 2014, December 31, 2013 and September 30, 2013, the Company had a balance of $25.0 million, $27.3 million and $28.4 million, respectively, in troubled debt restructurings included in covered loans. The Company has recorded $2.1 million, $1.6 million and $3.7 million in previous charge-offs on such loans at September 30, 2014, December 31, 2013 and September 30, 2013, respectively. At September 30, 2014, the Company did not have any commitments to lend additional funds to debtors whose terms have been modified in troubled restructurings.

The following table presents the amount of troubled debt restructurings by loan class of covered loans, classified separately as accrual and non-accrual at September 30, 2014, December 31, 2013 and September 30, 2013:


As of September 30, 2014	Accruing Loans				Non-Accruing Loans
Loan class:	#		Balance (in thousands)		#		Balance (in thousands)
Commercial, financial & agricultural		1	$	26		1	$	3
Real estate – construction & development		3		3,024		3		56
Real estate – commercial & farmland		15		8,501		6		1,225
Real estate – residential		94		11,202		13		965
Consumer installment		1		4		—		—

Total		114	$	22,757		23	$	2,249


As of December 31, 2013	Accruing Loans				Non-Accruing Loans
Loan class:	#		Balance (in thousands)		#		Balance (in thousands)
Commercial, financial & agricultural		1	$	13		5	$	71
Real estate – construction & development		3		3,256		4		52
Real estate – commercial & farmland		13		7,255		5		3,946
Real estate – residential		83		11,719		8		942
Consumer installment		—		—		2		10

Total		100	$	22,243		24	$	5,021


As of September 30, 2013	Accruing Loans				Non-Accruing Loans
Loan class:	#		Balance (in thousands)		#		Balance (in thousands)
Commercial, financial & agricultural		1	$	12		3	$	40
Real estate – construction & development		5		4,308		4		690
Real estate – commercial & farmland		11		6,200		7		4,805
Real estate – residential		79		10,461		11		1,874
Consumer installment		—		—		1		5

Total		96	$	20,981		26	$	7,414

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 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 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 the majority of relationships greater than $250,000 are reviewed annually by the Bank’s independent internal loan review department or an independent third party loan review firm. 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.

During the nine months ended September 30, 2014, the year ended December 31, 2013 and the nine months ended September 30, 2013, the Company recorded provision for loan loss expense of $685,000, $1.5 million and $1.3 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. During the nine months ended September 30, 2014, the Company recorded provision for loan loss expense of $4,000 to account for losses where the initial estimate of cash flows was found to be excessive on purchased, non-covered loans. Charge-offs on purchased loans, both covered and non-covered, are recorded when impairment is recorded. Provision expense for covered loans is recorded net of the indemnification by the FDIC loss-share agreements.

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


	Commercial, financial & agricultural			Real estate – construction & development			Real estate – commercial & farmland			Real estate–residential			Consumer installment loans and Other			Purchased non-covered loans			Covered loans			Total
	(Dollars in Thousands)
Three months ended September 30, 2014:
Balance, June 30, 2014	$	2,185		$	5,431		$	8,317		$	5,166		$	1,155		$	—		$	—		$	22,254
Provision for loan losses		540			63			1,237			595			(862	)		4			92			1,669
Loans charged off		(191	)		(296	)		(953	)		(406	)		(129	)		(4	)		(376	)		(2,355	)
Recoveries of loans previously charged off		47			96			31			52			134			—			284			644

Balance, September 30, 2014	$	2,581		$	5,294		$	8,632		$	5,407		$	298		$	—		$	—		$	22,212

Nine months ended September 30, 2014:
Balance, January 1, 2014	$	1,823		$	5,538		$	8,393		$	6,034		$	589		$	—		$	—		$	22,377
Provision for loan losses		1,627			(26	)		2,311			529			(370	)		4			685			4,760
Loans charged off		(1,099	)		(518	)		(2,255	)		(1,339	)		(343	)		(4	)		(1,514	)		(7,072	)
Recoveries of loans previously charged off		230			300			183			183			422			—			829			2,147

Balance, September 30, 2014	$	2,581		$	5,294		$	8,632		$	5,407		$	298		$	—		$	—		$	22,212

Period-end amount allocated to:
Loans individually evaluated for impairment	$	611		$	540		$	1,682		$	1,272		$	—		$	—		$	—		$	4,105
Loans collectively evaluated for impairment		1,970			4,754			6,950			4,135			298			—			—			18,107

Ending balance	$	2,581		$	5,294		$	8,632		$	5,407		$	298		$	—		$	—		$	22,212

Loans:
Individually evaluated for impairment	$	1,549		$	3,078		$	17,129		$	11,860		$	—		$	—		$	—		$	33,616
Collectively evaluated for impairment		333,234			151,237			865,031			424,655			40,986			581,723			142,128			2,538,994
Acquired with deteriorated credit quality		—			—			—			—			—			92,001			171,461			263,462

Ending balance	$	334,783		$	154,315		$	882,160		$	436,515		$	40,986		$	673,724		$	313,589		$	2,836,072


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

Balance, December 31, 2013	$	1,823		$	5,538		$	8,393		$	6,034		$	589		$	—	$	—		$	22,377

Period-end amount allocated to:
Loans individually evaluated for impairment	$	356		$	407		$	1,427		$	1,395		$	—		$	—	$	—		$	3,585
Loans collectively evaluated for impairment		1,467			5,131			6,966			4,639			589			—		—			18,792

Ending balance	$	1,823		$	5,538		$	8,393		$	6,034		$	589		$	—	$	—		$	22,377

Loans:
Individually evaluated for impairment	$	3,457		$	3,581		$	15,240		$	16,925		$	—		$	—	$	—		$	39,203
Collectively evaluated for impairment		240,916			142,790			793,083			349,957			52,505			381,588		173,190			2,134,029
Acquired with deteriorated credit quality		—			—			—			—			—			67,165		217,047			284,212

Ending balance	$	244,373		$	146,371		$	808,323		$	366,882		$	52,505		$	448,753	$	390,237		$	2,457,444


	Commercial, financial & agricultural			Real estate – construction & development			Real estate – commercial & farmland			Real estate – residential			Consumer installment loans and Other			Purchased non- covered loans		Covered loans			Total
	(Dollars in Thousands)
Three months ended September 30, 2013:
Balance, June 30, 2013	$	2,951		$	5,642		$	8,797		$	6,360		$	467		$	—	$	—		$	24,217
Provision for loan losses		(107	)		601			1,212			626			117			—		471			2,920
Loans charged off		(482	)		(367	)		(1,080	)		(1,323	)		(205	)		—		(471	)		(3,928	)
Recoveries of loans previously charged off		212			84			5			291			53			—		—			645

Balance, September 30, 2013	$	2,574		$	5,960		$	8,934		$	5,954		$	432		$	—	$	—		$	23,854

Nine months ended September 30, 2013:
Balance, January 1, 2013	$	2,439		$	5,343		$	9,157		$	5,898		$	756		$	—	$	—		$	23,593
Provision for loan losses		1,011			2,127			2,632			2,966			11			—		1,261			10,008
Loans charged off		(1,216	)		(1,598	)		(2,873	)		(3,430	)		(576	)		—		(1,261	)		(10,954	)
Recoveries of loans previously charged off		340			88			18			520			241			—		—			1,207

Balance, September 30, 2013	$	2,574		$	5,960		$	8,934		$	5,954		$	432		$	—	$	—		$	23,854

Period-end amount allocated to:
Loans individually evaluated for impairment	$	741		$	682		$	1,997		$	1,429		$	—		$	—	$	—		$	4,849
Loans collectively evaluated for impairment		1,833			5,278			6,937			4,525			432			—		—			19,005

Ending balance	$	2,574		$	5,960		$	8,934		$	5,954		$	432		$	—	$	—		$	23,854

Loans:
Individually evaluated for impairment	$	3,657		$	3,524		$	14,605		$	16,919		$	—		$	—	$	—		$	38,705
Collectively evaluated for impairment		241,334			128,753			784,544			339,001			56,930			—		186,060			1,736,622
Acquired with deteriorated credit quality		—			—			—			—			—			—		231,589			231,589

Ending balance	$	244,991		$	132,277		$	799,149		$	355,920		$	56,930		$	—	$	417,649		$	2,006,916