Loans and the Allowance for Loan Losses

3 Months Ended

Mar. 31, 2016

Receivables [Abstract]

Loans and the Allowance for Loan Losses

Loans and the Allowance for Loan Losses

(In Thousands, Except Number of Loans)

The following is a summary of loans as of the dates presented:

	March 31, 2016			December 31, 2015
Commercial, financial, agricultural	$	654,934		$	636,837
Lease financing	43,605			35,978
Real estate – construction	377,574			357,665
Real estate – 1-4 family mortgage	1,777,495			1,735,323
Real estate – commercial mortgage	2,607,510			2,533,729
Installment loans to individuals	113,280			115,093
Gross loans	5,574,398			5,414,625
Unearned income	(1,668		)	(1,163		)
Loans, net of unearned income	5,572,730			5,413,462
Allowance for loan losses	(42,859		)	(42,437		)
Net loans	$	5,529,871		$	5,371,025

Past Due and Nonaccrual Loans

Loans are considered past due if the required principal and interest payments have not been received as of the date such payments were due. Generally, the recognition of interest on mortgage and commercial loans is discontinued at the time the loan is 90 days past due unless the credit is well-secured and in process of collection. Consumer and other retail loans are typically charged-off no later than the time the loan is 120 days past due. In all cases, loans are placed on nonaccrual status or charged-off at an earlier date if collection of principal or interest is considered doubtful. Loans may be placed on nonaccrual regardless of whether or not such loans are considered past due. All interest accrued for the current year, but not collected, for loans that are placed on nonaccrual status or charged-off is reversed against interest income. The interest on these loans is accounted for on the cash-basis or cost-recovery method, until qualifying for return to accrual status. Loans are returned to accrual status when all the principal and interest amounts contractually due are brought current and future payments are reasonably assured.

The following table provides an aging of past due and nonaccrual loans, segregated by class, as of the dates presented:

	Accruing Loans										Nonaccruing Loans
	30-89 Days Past Due		90 Days or More Past Due		Current Loans			Total Loans			30-89 Days Past Due		90 Days or More Past Due		Current Loans		Total Loans		Total Loans
March 31, 2016
Commercial, financial, agricultural	$	1,297	$	1,404	$	651,749		$	654,450		$	—	$	236	$	248	$	484	$	654,934
Lease financing	—		—		43,605			43,605			—		—		—		—		43,605
Real estate – construction	898		242		376,434			377,574			—		—		—		—		377,574
Real estate – 1-4 family mortgage	8,785		6,783		1,751,451			1,767,019			254		2,256		7,966		10,476		1,777,495
Real estate – commercial mortgage	6,962		9,057		2,575,720			2,591,739			10		1,318		14,443		15,771		2,607,510
Installment loans to individuals	406		157		112,682			113,245			—		28		7		35		113,280
Unearned income	—		—		(1,668		)	(1,668		)	—		—		—		—		(1,668		)
Total	$	18,348	$	17,643	$	5,509,973		$	5,545,964		$	264	$	3,838	$	22,664	$	26,766	$	5,572,730
December 31, 2015
Commercial, financial, agricultural	$	1,296	$	1,077	$	634,037		$	636,410		$	30	$	133	$	264	$	427	$	636,837
Lease financing	—		—		35,978			35,978			—		—		—		—		35,978
Real estate – construction	69		176		357,420			357,665			—		—		—		—		357,665
Real estate – 1-4 family mortgage	9,196		6,457		1,707,230			1,722,883			528		3,663		8,249		12,440		1,735,323
Real estate – commercial mortgage	4,849		8,581		2,504,192			2,517,622			568		2,263		13,276		16,107		2,533,729
Installment loans to individuals	260		102		114,671			115,033			—		53		7		60		115,093
Unearned income	—		—		(1,163		)	(1,163		)	—		—		—		—		(1,163		)
Total	$	15,670	$	16,393	$	5,352,365		$	5,384,428		$	1,126	$	6,112	$	21,796	$	29,034	$	5,413,462

Impaired Loans

A loan is considered impaired when, based on current information and events, it is probable that the Company will be unable to collect the scheduled payments of principal or interest when due according to the contractual terms of the loan agreement. Impairment is measured on a loan-by-loan basis for commercial, consumer and construction loans above a minimum dollar amount threshold by either the present value of expected future cash flows discounted at the loan’s effective interest rate, the loan’s obtainable market price or the fair value of the collateral if the loan is collateral dependent. Large groups of smaller balance homogeneous loans are evaluated collectively for impairment. When the ultimate collectability of an impaired loan’s principal is in doubt, wholly or partially, all cash receipts are applied to principal. Once the recorded balance has been reduced to zero, future cash receipts are applied to interest income, to the extent any interest has been foregone, and then they are recorded as recoveries of any amounts previously charged-off. For impaired loans, a specific reserve is established to adjust the carrying value of the loan to its estimated net realizable value.

Loans accounted for under Financial Accounting Standards Board Accounting Standards Codification Topic (“ASC”) 310-20 “Nonrefundable Fees and Other Cost” (“ASC 310-20”) and are impaired loans recognized in conformity with ASC 310, “Receivables” (“ASC 310”), segregated by class, were as follows as of the dates presented:

	Unpaid Contractual Principal Balance		Recorded Investment With Allowance		Recorded Investment With No Allowance		Total Recorded Investment		Related Allowance
March 31, 2016
Commercial, financial, agricultural	$	328	$	321	$	—	$	321	$	6
Lease financing	—		—		—		—		—
Real estate – construction	—		—		—		—		—
Real estate – 1-4 family mortgage	16,052		14,786		—		14,786		4,311
Real estate – commercial mortgage	20,067		16,450		—		16,450		3,082
Installment loans to individuals	67		67		—		67		—
Total	$	36,514	$	31,624	$	—	$	31,624	$	7,399
December 31, 2015
Commercial, financial, agricultural	$	1,308	$	358	$	12	$	370	$	6
Lease financing	—		—		—		—		—
Real estate – construction	2,710		2,698		—		2,698		20
Real estate – 1-4 family mortgage	18,193		16,650		—		16,650		4,475
Real estate – commercial mortgage	20,169		16,819		—		16,819		3,099
Installment loans to individuals	90		90		—		90		—
Totals	$	42,470	$	36,615	$	12	$	36,627	$	7,600

The following table presents the average recorded investment and interest income recognized on loans accounted for under ASC 310-20 and are impaired loans for the periods presented:

	Three Months Ended				Three Months Ended
	March 31, 2016				March 31, 2015
	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
Commercial, financial, agricultural	$	326	$	2	$	950	$	7
Lease financing	—		—		—		—
Real estate – construction	—		—		104		—
Real estate – 1-4 family mortgage	15,252		90		13,886		67
Real estate – commercial mortgage	16,547		132		25,618		177
Installment loans to individuals	67		1		—		—
Total	$	32,192	$	225	$	40,558	$	251

Loans accounted for under ASC 310-30 “Loans and Debt Securities Acquired with Deteriorated Credit Quality” (“ASC 310-30”) and are impaired loans recognized in conformity with ASC 310, segregated by class, were as follows as of the dates presented:

	Unpaid Contractual Principal Balance		Recorded Investment With Allowance		Recorded Investment With No Allowance		Total Recorded Investment		Related Allowance
March 31, 2016
Commercial, financial, agricultural	$	24,323	$	4,807	$	9,643	$	14,450	$	422
Lease financing	—		—		—		—		—
Real estate – construction	2,635		—		2,504		2,504		—
Real estate – 1-4 family mortgage	107,167		16,573		72,391		88,964		335
Real estate – commercial mortgage	279,548		56,555		160,034		216,589		1,264
Installment loans to individuals	3,239		393		2,109		2,502		1
Total	$	416,912	$	78,328	$	246,681	$	325,009	$	2,022
December 31, 2015
Commercial, financial, agricultural	$	27,049	$	5,197	$	11,292	$	16,489	$	353
Lease financing	—		—		—		—		—
Real estate – construction	2,916		—		2,749		2,749		—
Real estate – 1-4 family mortgage	109,293		15,702		75,947		91,649		256
Real estate – commercial mortgage	287,821		53,762		168,848		222,610		1,096
Installment loans to individuals	3,432		400		2,268		2,668		1
Totals	$	430,511	$	75,061	$	261,104	$	336,165	$	1,706

The following table presents the average recorded investment and interest income recognized on loans accounted for under ASC 310-30 and are impaired loans for the periods presented:

	Three Months Ended				Three Months Ended
	March 31, 2016				March 31, 2015
	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
Commercial, financial, agricultural	$	18,024	$	327	$	25,978	$	233
Lease financing	—		—		—		—
Real estate – construction	2,608		25		—		—
Real estate – 1-4 family mortgage	101,089		953		86,713		1,043
Real estate – commercial mortgage	250,041		2,831		242,712		2,871
Installment loans to individuals	2,954		29		4,215		46
Total	$	374,716	$	4,165	$	359,618	$	4,193

Restructured Loans

Restructured loans are those for which concessions have been granted to the borrower due to a deterioration of the borrower’s financial condition and which are performing in accordance with the new terms. Such concessions may include reduction in interest rates or deferral of interest or principal payments. In evaluating whether to restructure a loan, management analyzes the long-term financial condition of the borrower, including guarantor and collateral support, to determine whether the proposed concessions will increase the likelihood of repayment of principal and interest.

The following tables illustrate the impact of modifications classified as restructured loans and are segregated by class for the periods presented:

	Number of Loans	Pre- Modification Outstanding Recorded Investment		Post- Modification Outstanding Recorded Investment
March 31, 2016
Commercial, financial, agricultural	—	$	—	$	—
Real estate – construction	—	—		—
Real estate – 1-4 family mortgage	10	780		662
Real estate – commercial mortgage	2	612		605
Installment loans to individuals	—	—		—
Total	12	$	1,392	$	1,267
March 31, 2015
Commercial, financial, agricultural	—	$	—	$	—
Real estate – construction	—	—		—
Real estate – 1-4 family mortgage	17	1,198		1,037
Real estate – commercial mortgage	8	6,899		6,463
Installment loans to individuals	—	—		—
Total	25	$	8,097	$	7,500

Restructured loans that are not performing in accordance with their restructured terms that are either contractually 90 days or more past due or placed on nonaccrual status are reported as nonperforming loans. There were two restructured loans totaling $136 that were contractually 90 days past due or more and still accruing at March 31, 2016 and two restructured loans totaling $314 that were contractually 90 days past due or more and still accruing at December 31, 2015. The outstanding balance of restructured loans on nonaccrual status was $12,531 and $13,517 at March 31, 2016 and December 31, 2015, respectively.

Changes in the Company’s restructured loans are set forth in the table below:

	Number of Loans		Recorded Investment
Totals at January 1, 2016	86		$	13,453
Additional loans with concessions	12		1,267
Reductions due to:
Reclassified as nonperforming	(2	)	(134		)
Paid in full	(4	)	(398		)
Charge-offs	—		—
Transfer to other real estate owned	—		—
Principal paydowns	—		(142		)
Lapse of concession period	—		—
Reclassified as performing	—		—
Totals at March 31, 2016	92		$	14,046

The allocated allowance for loan losses attributable to restructured loans was $1,010 and $979 at March 31, 2016 and December 31, 2015, respectively. The Company had no remaining availability under commitments to lend additional funds on these restructured loans at March 31, 2016 or December 31, 2015.

Credit Quality

For loans originated for commercial purposes, internal risk-rating grades are assigned by lending, credit administration or loan review personnel, based on an analysis of the financial and collateral strength and other credit attributes underlying each loan. Management analyzes the resulting ratings, as well as other external statistics and factors such as delinquency, to track the migration performance of the portfolio balances of these loans. Loan grades range between 1 and 9, with 1 being loans with the least credit risk. Loans that migrate toward the “Pass” grade (those with a risk rating between 1 and 4) or within the “Pass” grade generally have a lower risk of loss and therefore a lower risk factor applied to the loan balances. The “Watch” grade (those with a risk rating of 5) is utilized on a temporary basis for “Pass” grade loans where a significant adverse risk-modifying action is anticipated in the near term. Loans that migrate toward the “Substandard” grade (those with a risk rating between 6 and 9) generally have a higher risk of loss and therefore a higher risk factor applied to the related loan balances. The following table presents the Company’s loan portfolio by risk-rating grades as of the dates presented:

	Pass		Watch		Substandard		Total
March 31, 2016
Commercial, financial, agricultural	$	463,922	$	9,302	$	1,988	$	475,212
Lease financing	—		—		—		—
Real estate – construction	289,169		679		—		289,848
Real estate – 1-4 family mortgage	287,219		8,102		12,112		307,433
Real estate – commercial mortgage	2,029,759		21,322		22,509		2,073,590
Installment loans to individuals	75		—		116		191
Total	$	3,070,144	$	39,405	$	36,725	$	3,146,274
December 31, 2015
Commercial, financial, agricultural	$	465,185	$	8,498	$	1,734	$	475,417
Lease financing	—		—		—		—
Real estate – construction	273,398		483		—		273,881
Real estate – 1-4 family mortgage	275,269		9,712		15,460		300,441
Real estate – commercial mortgage	1,968,352		27,175		20,683		2,016,210
Installment loans to individuals	51		—		5		56
Total	$	2,982,255	$	45,868	$	37,882	$	3,066,005

For portfolio balances of consumer, consumer mortgage and certain other loans originated for other than commercial purposes, allowance factors are determined based on historical loss ratios by portfolio for the preceding eight quarters and may be adjusted by other qualitative criteria. The following table presents the performing status of the Company’s loan portfolio not subject to risk rating as of the dates presented:

	Performing		Non- Performing		Total
March 31, 2016
Commercial, financial, agricultural	$	165,137	$	135	$	165,272
Lease financing	41,937		—		41,937
Real estate – construction	85,153		69		85,222
Real estate – 1-4 family mortgage	1,377,078		4,020		1,381,098
Real estate – commercial mortgage	316,594		737		317,331
Installment loans to individuals	110,467		120		110,587
Total	$	2,096,366	$	5,081	$	2,101,447
December 31, 2015
Commercial, financial, agricultural	$	144,838	$	93	$	144,931
Lease financing	34,815		—		34,815
Real estate – construction	81,035		—		81,035
Real estate – 1-4 family mortgage	1,340,356		2,877		1,343,233
Real estate – commercial mortgage	294,042		867		294,909
Installment loans to individuals	112,275		94		112,369
Total	$	2,007,361	$	3,931	$	2,011,292

Loans Acquired with Deteriorated Credit Quality

Loans acquired in business combinations that exhibited, at the date of acquisition, evidence of deterioration of the credit quality since origination, such that it was probable that all contractually required payments would not be collected, were as follows as of the dates presented:

	Covered Loans		Not Covered Loans		Total
March 31, 2016
Commercial, financial, agricultural	$	232	$	14,218	$	14,450
Lease financing	—		—		—
Real estate – construction	85		2,419		2,504
Real estate – 1-4 family mortgage	26,612		62,352		88,964
Real estate – commercial mortgage	3,679		212,910		216,589
Installment loans to individuals	36		2,466		2,502
Total	$	30,644	$	294,365	$	325,009
December 31, 2015
Commercial, financial, agricultural	$	1,759	$	14,730	$	16,489
Lease financing	—		—		—
Real estate – construction	91		2,658		2,749
Real estate – 1-4 family mortgage	31,354		60,295		91,649
Real estate – commercial mortgage	33,726		188,884		222,610
Installment loans to individuals	43		2,625		2,668
Total	$	66,973	$	269,192	$	336,165

The references in the table above and elsewhere in these Notes to "covered loans" and "not covered loans" (as well as to "covered OREO" and "not covered OREO") refer to loans (or OREO, as applicable) covered and not covered, respectively, by loss-share agreements with the FDIC. See Note E, "FDIC Loss-Share Indemnification Asset," below for more information.

The following table presents the fair value of loans determined to be impaired at the time of acquisition and determined not to be impaired at the time of acquisition at March 31, 2016:

	Covered Loans			Not Covered Loans			Total
Contractually-required principal and interest	$	38,534		$	415,174		$	453,708
Nonaccretable difference(1)	(5,121		)	(77,697		)	(82,818		)
Cash flows expected to be collected	33,413			337,477			370,890
Accretable yield(2)	(2,769		)	(43,112		)	(45,881		)
Fair value	$	30,644		$	294,365		$	325,009

(1) Represents contractual principal and interest cash flows of $82,618 and $201, respectively, not expected to be collected.

(2) Represents contractual interest payments of $2,278 expected to be collected and purchase discount of $43,603.

Changes in the accretable yield of loans acquired with deteriorated credit quality were as follows:

	Covered Loans			Not Covered Loans			Total
Balance at January 1, 2016	$	(3,700	)	$	(44,592	)	$	(48,292	)
Additions due to acquisition	725			(725		)	—
Reclasses from nonaccretable difference	(213		)	(1,134		)	(1,347		)
Accretion	391			3,339			3,730
Charge-offs	28			—			28
Balance at March 31, 2016	$	(2,769	)	$	(43,112	)	$	(45,881	)

The following table presents the fair value of loans acquired from Heritage Financial Group, Inc. (“Heritage”) as of the July 1, 2015 acquisition date.

At acquisition date:	July 1, 2015
Contractually-required principal and interest	$	1,212,372
Nonaccretable difference	14,260
Cash flows expected to be collected	1,198,112
Accretable yield	69,465
Fair value	$	1,128,647

Allowance for Loan Losses

The allowance for loan losses is maintained at a level believed adequate by management based on its ongoing analysis of the loan portfolio to absorb probable credit losses inherent in the entire loan portfolio, including collective impairment as recognized under ASC 450, “Contingencies”. Collective impairment is calculated based on loans grouped by grade. Another component of the allowance is losses on loans assessed as impaired under ASC 310. The balance of these loans and their related allowance is included in management’s estimation and analysis of the allowance for loan losses. Management and the internal loan review staff evaluate the adequacy of the allowance for loan losses quarterly. The allowance for loan losses is evaluated based on a continuing assessment of problem loans, the types of loans, historical loss experience, new lending products, emerging credit trends, changes in the size and character of loan categories and other factors, including its risk rating system, regulatory guidance and economic conditions. This evaluation is inherently subjective, as it requires estimates that are susceptible to significant revision as more information becomes available. The allowance for loan losses is established through a provision for loan losses charged to earnings resulting from measurements of inherent credit risk in the loan portfolio and estimates of probable losses or impairments of individual loans. Loan losses are charged against the allowance when management believes the uncollectability of a loan balance is confirmed. Subsequent recoveries, if any, are credited to the allowance.

The following table provides a roll forward of the allowance for loan losses and a breakdown of the ending balance of the allowance based on the Company’s impairment methodology for the periods presented:

	Commercial			Real Estate - Construction		Real Estate - 1-4 Family Mortgage			Real Estate  - Commercial Mortgage			Installment and  Other(1)			Total
Three Months Ended March 31, 2016
Allowance for loan losses:
Beginning balance	$	4,186		$	1,852	$	13,908		$	21,111		$	1,380		$	42,437
Charge-offs	(657		)	—		(116		)	(1,001		)	(180		)	(1,954		)
Recoveries	53			6		395			92			30			576
Net (charge-offs) recoveries	(604		)	6		279			(909		)	(150		)	(1,378		)
Provision for loan losses	601			85		365			530			198			1,779
Benefit attributable to FDIC loss-share agreements	(15		)	—		(37		)	(118		)	—			(170		)
Recoveries payable to FDIC	3			—		27			161			—			191
Provision for loan losses charged to operations	589			85		355			573			198			1,800
Ending balance	$	4,171		$	1,943	$	14,542		$	20,775		$	1,428		$	42,859
Period-End Amount Allocated to:
Individually evaluated for impairment	$	6		$	—	$	4,311		$	3,082		$	—		$	7,399
Collectively evaluated for impairment	3,743			1,943		9,896			16,429			1,427			33,438
Acquired with deteriorated credit quality	422			—		335			1,264			1			2,022
Ending balance	$	4,171		$	1,943	$	14,542		$	20,775		$	1,428		$	42,859

	Commercial			Real Estate - Construction			Real Estate - 1-4 Family Mortgage			Real Estate  - Commercial Mortgage			Installment and  Other(1)			Total
Three Months Ended March 31, 2015
Allowance for loan losses:
Beginning balance	$	3,305		$	1,415		$	13,549		$	22,759		$	1,261		$	42,289
Charge-offs	(235		)	—			(485		)	(633		)	(50		)	(1,403		)
Recoveries	35			6			155			112			33			341
Net (charge-offs) recoveries	(200		)	6			(330		)	(521		)	(17		)	(1,062		)
Provision for loan losses	1,027			(63		)	618			(887		)	37			732
Benefit attributable to FDIC loss-share agreements	(25		)	—			—			(101		)	—			(126		)
Recoveries payable to FDIC	2			1			208			258			—			469
Provision for loan losses charged to operations	1,004			(62		)	826			(730		)	37			1,075
Ending balance	$	4,109		$	1,359		$	14,045		$	21,508		$	1,281		$	42,302
Period-End Amount Allocated to:
Individually evaluated for impairment	$	—		$	—		$	4,227		$	2,293		$	—		$	6,520
Collectively evaluated for impairment	2,911			1,359			9,541			18,102			1,280			33,193
Acquired with deteriorated credit quality	1,198			—			277			1,113			1			2,589
Ending balance	$	4,109		$	1,359		$	14,045		$	21,508		$	1,281		$	42,302

(1) Includes lease financing receivables.

The following table provides the recorded investment in loans, net of unearned income, based on the Company’s impairment methodology as of the dates presented:

	Commercial		Real Estate  - Construction		Real Estate - 1-4 Family Mortgage		Real Estate  - Commercial Mortgage		Installment and  Other(1)		Total
March 31, 2016
Individually evaluated for impairment	$	321	$	—	$	14,786	$	16,450	$	67	$	31,624
Collectively evaluated for impairment	640,163		375,070		1,673,745		2,374,471		152,648		5,216,097
Acquired with deteriorated credit quality	14,450		2,504		88,964		216,589		2,502		325,009
Ending balance	$	654,934	$	377,574	$	1,777,495	$	2,607,510	$	155,217	$	5,572,730
December 31, 2015
Individually evaluated for impairment	$	370	$	2,698	$	16,650	$	16,819	$	90	$	36,627
Collectively evaluated for impairment	619,978		352,218		1,627,024		2,294,300		147,150		5,040,670
Acquired with deteriorated credit quality	16,489		2,749		91,649		222,610		2,668		336,165
Ending balance	$	636,837	$	357,665	$	1,735,323	$	2,533,729	$	149,908	$	5,413,462

(1) Includes lease financing receivables.