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Purchased Loans
 3 Months Ended
Mar. 31, 2018
Receivables [Abstract]  
Purchased Loans
Non Purchased Loans
(In Thousands, Except Number of Loans)

For purposes of this Note 4, all references to “loans” mean non purchased loans.

The following is a summary of non purchased loans and leases as of the dates presented:
 
 
March 31,
2018
 
December 31, 2017
Commercial, financial, agricultural
$
803,146

 
$
763,823

Lease financing
55,898

 
57,354

Real estate – construction
582,430

 
547,658

Real estate – 1-4 family mortgage
1,785,271

 
1,729,534

Real estate – commercial mortgage
2,503,680

 
2,390,076

Installment loans to individuals
103,059

 
103,452

Gross loans
5,833,484

 
5,591,897

Unearned income
(3,362
)
 
(3,341
)
Loans, net of unearned income
$
5,830,122

 
$
5,588,556



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 status 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, 2018
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Commercial, financial, agricultural
$
3,078

 
$
1,006

 
$
796,898

 
$
800,982

 
$
508

 
$
1,555

 
$
101

 
$
2,164

 
$
803,146

Lease financing
481

 
43

 
55,215

 
55,739

 
—

 
159

 
—

 
159

 
55,898

Real estate – construction
3,564

 
50

 
578,816

 
582,430

 
—

 
—

 
—

 
—

 
582,430

Real estate – 1-4 family mortgage
8,812

 
2,176

 
1,771,834

 
1,782,822

 
54

 
1,581

 
814

 
2,449

 
1,785,271

Real estate – commercial mortgage
3,016

 
289

 
2,495,780

 
2,499,085

 
564

 
2,253

 
1,778

 
4,595

 
2,503,680

Installment loans to individuals
477

 
41

 
102,505

 
103,023

 
—

 
17

 
19

 
36

 
103,059

Unearned income
—

 
—

 
(3,362
)
 
(3,362
)
 
—

 
—

 
—

 
—

 
(3,362
)
Total
$
19,428

 
$
3,605

 
$
5,797,686

 
$
5,820,719

 
$
1,126

 
$
5,565

 
$
2,712

 
$
9,403

 
$
5,830,122

December 31, 2017
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Commercial, financial, agricultural
$
2,722

 
$
22

 
$
759,143

 
$
761,887

 
$
205

 
$
1,033

 
$
698

 
$
1,936

 
$
763,823

Lease financing
47

 
—

 
57,148

 
57,195

 
—

 
159

 
—

 
159

 
57,354

Real estate – construction
50

 
—

 
547,608

 
547,658

 
—

 
—

 
—

 
—

 
547,658

Real estate – 1-4 family mortgage
11,810

 
2,194

 
1,712,982

 
1,726,986

 
—

 
1,818

 
730

 
2,548

 
1,729,534

Real estate – commercial mortgage
1,921

 
727

 
2,381,871

 
2,384,519

 
—

 
2,877

 
2,680

 
5,557

 
2,390,076

Installment loans to individuals
429

 
72

 
102,901

 
103,402

 
1

 
28

 
21

 
50

 
103,452

Unearned income
—

 
—

 
(3,341
)
 
(3,341
)
 
—

 
—

 
—

 
—

 
(3,341
)
Total
$
16,979

 
$
3,015

 
$
5,558,312

 
$
5,578,306

 
$
206

 
$
5,915

 
$
4,129

 
$
10,250

 
$
5,588,556


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, as applicable, 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 FASB ASC 310-20, “Nonrefundable Fees and Other Cost” (“ASC 310-20”), and which 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, 2018
 
 
 
 
 
 
 
 
 
Commercial, financial, agricultural
$
2,612

 
$
2,491

 
$
—

 
$
2,491

 
$
223

Lease financing
159

 
159

 
—

 
159

 
2

Real estate – construction
150

 
150

 
—

 
150

 
1

Real estate – 1-4 family mortgage
9,106

 
8,111

 
—

 
8,111

 
121

Real estate – commercial mortgage
9,373

 
4,817

 
1,356

 
6,173

 
956

Installment loans to individuals
106

 
102

 
—

 
102

 
1

Total
$
21,506

 
$
15,830

 
$
1,356

 
$
17,186

 
$
1,304

December 31, 2017
 
 
 
 
 
 
 
 
 
Commercial, financial, agricultural
$
3,043

 
$
2,365

 
$
—

 
$
2,365

 
$
138

Lease financing
159

 
159

 
—

 
159

 
2

Real estate – construction
578

 
578

 
—

 
578

 
4

Real estate – 1-4 family mortgage
10,018

 
8,169

 
703

 
8,872

 
561

Real estate – commercial mortgage
12,463

 
9,652

 
—

 
9,652

 
1,861

Installment loans to individuals
121

 
117

 
—

 
117

 
1

Totals
$
26,382

 
$
21,040

 
$
703

 
$
21,743

 
$
2,567



The following table presents the average recorded investment and interest income recognized on loans accounted for under ASC 310-20 and which are impaired loans for the periods presented:
 
Three Months Ended
 
Three Months Ended
 
March 31, 2018
 
March 31, 2017
 
Average
Recorded
Investment
 
Interest
Income
Recognized
 
Average
Recorded
Investment
 
Interest
Income
Recognized
Commercial, financial, agricultural
$
2,338

 
$
11

 
$
2,714

 
$
39

Lease financing
159

 
—

 
—

 
—

Real estate – construction
150

 
18

 
—

 
—

Real estate – 1-4 family mortgage
8,197

 
67

 
11,088

 
26

Real estate – commercial mortgage
6,670

 
92

 
15,314

 
106

Installment loans to individuals
104

 
1

 
118

 
—

Total
$
17,618

 
$
189

 
$
29,234

 
$
171

 
 
 
 
 
 
 
 


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 which were made during the periods presented and held on the Consolidated Balance Sheets at the respective period end:
 
 
Number of
Loans
 
Pre-
Modification
Outstanding
Recorded
Investment
 
Post-
Modification
Outstanding
Recorded
Investment
Three months ended March 31, 2018
 
 
 
 
 
Real estate – 1-4 family mortgage
3

 
$
576

 
$
576

Real estate – commercial mortgage
1

 
83

 
78

Total
4

 
$
659

 
$
654

Three months ended March 31, 2017
 
 
 
 
 
Real estate – 1-4 family mortgage
2

 
$
177

 
$
174

Real estate – commercial mortgage
2

 
146

 
156

Total
4

 
$
323

 
$
330


 
 
 
 
 
 


With respect to loans that were restructured during the three months ended March 31, 2017, $156 subsequently defaulted within twelve months of the restructuring. With respect to loans that were restructured during the three months ended March 31, 2018, none have subsequently defaulted as of the date of this report.

Restructured loans 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 four restructured loans in the amount of $571 contractually 90 days past due or more and still accruing at March 31, 2018 and one restructured loan in the amount of $57 contractually 90 days past due or more and still accruing at March 31, 2017. The outstanding balance of restructured loans on nonaccrual status was $2,570 and $6,086 at March 31, 2018 and March 31, 2017, respectively.

Changes in the Company’s restructured loans are set forth in the table below:
 
 
Number of
Loans
 
Recorded
Investment
Totals at January 1, 2018
54

 
$
5,588

Additional loans with concessions
4

 
657

Reductions due to:
 
 
 
Reclassified as nonperforming
(3
)
 
(192
)
Paid in full
(2
)
 
(773
)
Principal paydowns
—

 
(64
)
Totals at March 31, 2018
53

 
$
5,216



The allocated allowance for loan losses attributable to restructured loans was $92 and $241 at March 31, 2018 and March 31, 2017, respectively. The Company had $20 and $142 in remaining availability under commitments to lend additional funds on these restructured loans at March 31, 2018 and March 31, 2017, respectively.
Credit Quality
For commercial and commercial real estate loans, 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 within the “Pass” grade (historically, those with a risk rating between 1 and 4) generally have a lower risk of loss and therefore a lower risk factor applied to the loan balances. Management has established more granular risk rating categories to better identify heightened credit risk as loans migrate downward in the risk rating system. The “Pass” grade is now reserved for loans with a risk rating between 1 and 4A, and the “Watch” grade (those with a risk rating of 4B and 4E) 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 5 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, 2018
 
 
 
 
 
 
 
Commercial, financial, agricultural
$
585,850

 
$
11,380

 
$
5,758

 
$
602,988

Real estate – construction
512,603

 
8,690

 
440

 
521,733

Real estate – 1-4 family mortgage
262,107

 
669

 
7,609

 
270,385

Real estate – commercial mortgage
2,094,811

 
52,407

 
18,988

 
2,166,206

Installment loans to individuals
852

 
—

 
—

 
852

Total
$
3,456,223

 
$
73,146

 
$
32,795

 
$
3,562,164

December 31, 2017
 
 
 
 
 
 
 
Commercial, financial, agricultural
$
554,943

 
$
11,496

 
$
4,402

 
$
570,841

Real estate – construction
483,498

 
662

 
81

 
484,241

Real estate – 1-4 family mortgage
254,643

 
505

 
8,697

 
263,845

Real estate – commercial mortgage
1,983,750

 
50,428

 
24,241

 
2,058,419

Installment loans to individuals
921

 
—

 
—

 
921

Total
$
3,277,755

 
$
63,091

 
$
37,421

 
$
3,378,267



For portfolio balances of consumer, small balance consumer mortgage loans, such as 1-4 family mortgage loans 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, 2018
 
 
 
 
 
Commercial, financial, agricultural
$
198,111

 
$
2,047

 
$
200,158

Lease financing
52,334

 
202

 
52,536

Real estate – construction
60,648

 
49

 
60,697

Real estate – 1-4 family mortgage
1,511,105

 
3,781

 
1,514,886

Real estate – commercial mortgage
336,584

 
890

 
337,474

Installment loans to individuals
102,130

 
77

 
102,207

Total
$
2,260,912

 
$
7,046

 
$
2,267,958

December 31, 2017
 
 
 
 
 
Commercial, financial, agricultural
$
191,473

 
$
1,509

 
$
192,982

Lease financing
53,854

 
159

 
54,013

Real estate – construction
63,417

 
—

 
63,417

Real estate – 1-4 family mortgage
1,462,347

 
3,342

 
1,465,689

Real estate – commercial mortgage
330,441

 
1,216

 
331,657

Installment loans to individuals
102,409

 
122

 
102,531

Total
$
2,203,941

 
$
6,348

 
$
2,210,289

Purchased Loans
(In Thousands, Except Number of Loans)

For purposes of this Note 5, all references to “loans” mean purchased loans.

The following is a summary of purchased loans as of the dates presented:
 
 
March 31,
2018
 
December 31, 2017
Commercial, financial, agricultural
$
243,672

 
$
275,570

Real estate – construction
75,061

 
85,731

Real estate – 1-4 family mortgage
572,830

 
614,187

Real estate – commercial mortgage
960,273

 
1,037,454

Installment loans to individuals
16,112

 
18,824

Gross loans
1,867,948

 
2,031,766

Unearned income
—

 
—

Loans, net of unearned income
$
1,867,948

 
$
2,031,766



Past Due and Nonaccrual Loans
The Company’s policies with respect to placing loans on nonaccrual status or charging off loans, and its accounting for interest on any such loans, are described above in Note 4, “Non Purchased Loans.”
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, 2018
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Commercial, financial, agricultural
$
388

 
$
552

 
$
242,313

 
$
243,253

 
$
—

 
$
314

 
$
105

 
$
419

 
$
243,672

Real estate – construction
—

 
—

 
75,061

 
75,061

 
—

 
—

 
—

 
—

 
75,061

Real estate – 1-4 family mortgage
5,491

 
2,116

 
561,608

 
569,215

 
1,265

 
1,046

 
1,304

 
3,615

 
572,830

Real estate – commercial mortgage
3,142

 
1,856

 
954,128

 
959,126

 
—

 
830

 
317

 
1,147

 
960,273

Installment loans to individuals
124

 
40

 
15,789

 
15,953

 
6

 
52

 
101

 
159

 
16,112

Total
$
9,145

 
$
4,564

 
$
1,848,899

 
$
1,862,608

 
$
1,271

 
$
2,242

 
$
1,827

 
$
5,340

 
$
1,867,948

December 31, 2017
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Commercial, financial, agricultural
$
1,119

 
$
532

 
$
273,488

 
$
275,139

 
$
—

 
$
199

 
$
232

 
$
431

 
$
275,570

Real estate – construction
415

 
—

 
85,316

 
85,731

 
—

 
—

 
—

 
—

 
85,731

Real estate – 1-4 family mortgage
6,070

 
2,280

 
602,464

 
610,814

 
385

 
879

 
2,109

 
3,373

 
614,187

Real estate – commercial mortgage
2,947

 
2,910

 
1,031,141

 
1,036,998

 
191

 
99

 
166

 
456

 
1,037,454

Installment loans to individuals
208

 
9

 
18,443

 
18,660

 
59

 
—

 
105

 
164

 
18,824

Total
$
10,759

 
$
5,731

 
$
2,010,852

 
$
2,027,342

 
$
635

 
$
1,177

 
$
2,612

 
$
4,424

 
$
2,031,766


Impaired Loans
The Company’s policies with respect to the determination of whether a loan is impaired and the treatment of such loans are described above in Note 4, “Non Purchased Loans.”
Loans accounted for under ASC 310-20, and which 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, 2018
 
 
 
 
 
 
 
 
 
Commercial, financial, agricultural
$
421

 
$
336

 
$
21

 
$
357

 
$
49

Real estate – construction
252

 
—

 
249

 
249

 
—

Real estate – 1-4 family mortgage
6,195

 
1,493

 
4,133

 
5,626

 
47

Real estate – commercial mortgage
1,647

 
1,384

 
245

 
1,629

 
70

Installment loans to individuals
162

 
153

 
6

 
159

 
4

Total
$
8,677

 
$
3,366

 
$
4,654

 
$
8,020

 
$
170

December 31, 2017
 
 
 
 
 
 
 
 
 
Commercial, financial, agricultural
$
757

 
$
625

 
$
74

 
$
699

 
$
52

Real estate – construction
1,207

 
—

 
1,199

 
1,199

 
—

Real estate – 1-4 family mortgage
6,173

 
1,385

 
4,225

 
5,610

 
45

Real estate – commercial mortgage
901

 
728

 
165

 
893

 
6

Installment loans to individuals
165

 
154

 
9

 
163

 
4

Totals
$
9,203

 
$
2,892

 
$
5,672

 
$
8,564

 
$
107



The following table presents the average recorded investment and interest income recognized on loans accounted for under ASC 310-20 and which are impaired loans for the periods presented:
 
Three Months Ended
 
Three Months Ended
 
March 31, 2018
 
March 31, 2017
 
Average
Recorded
Investment
 
Interest
Income
Recognized
 
Average
Recorded
Investment
 
Interest
Income
Recognized
Commercial, financial, agricultural
$
363

 
$
3

 
$
541

 
$
2

Real estate – construction
252

 
1

 
—

 
—

Real estate – 1-4 family mortgage
6,320

 
40

 
5,481

 
21

Real estate – commercial mortgage
1,642

 
18

 
3,090

 
35

Installment loans to individuals
160

 
—

 
85

 
—

Total
$
8,737

 
$
62

 
$
9,197

 
$
58

 
 
 
 
 
 
 
 


Loans accounted for under ASC 310-30, “Loans and Debt Securities Acquired with Deteriorated Credit Quality” (“ASC 310-30”), and which 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, 2018
 
 
 
 
 
 
 
 
 
Commercial, financial, agricultural
$
21,363

 
$
5,414

 
$
7,519

 
$
12,933

 
$
305

Real estate – 1-4 family mortgage
60,590

 
16,093

 
34,103

 
50,196

 
486

Real estate – commercial mortgage
178,682

 
63,979

 
85,568

 
149,547

 
1,023

Installment loans to individuals
1,744

 
757

 
877

 
1,634

 
3

Total
$
262,379

 
$
86,243

 
$
128,067

 
$
214,310

 
$
1,817

December 31, 2017
 
 
 
 
 
 
 
 
 
Commercial, financial, agricultural
$
24,179

 
$
5,768

 
$
9,547

 
$
15,315

 
$
312

Real estate – 1-4 family mortgage
65,049

 
15,910

 
38,059

 
53,969

 
572

Real estate – commercial mortgage
186,720

 
65,108

 
91,230

 
156,338

 
892

Installment loans to individuals
1,761

 
698

 
940

 
1,638

 
1

Totals
$
277,709

 
$
87,484

 
$
139,776

 
$
227,260

 
$
1,777



The following table presents the average recorded investment and interest income recognized on loans accounted for under ASC 310-30 and which are impaired loans for the periods presented:
 
Three Months Ended
 
Three Months Ended
 
March 31, 2018
 
March 31, 2017
 
Average
Recorded
Investment
 
Interest
Income
Recognized
 
Average
Recorded
Investment
 
Interest
Income
Recognized
Commercial, financial, agricultural
$
16,899

 
$
225

 
$
14,088

 
$
247

Real estate – 1-4 family mortgage
58,749

 
673

 
78,341

 
865

Real estate – commercial mortgage
167,365

 
1,972

 
196,807

 
2,319

Installment loans to individuals
1,687

 
18

 
2,104

 
21

Total
$
244,700

 
$
2,888

 
$
291,340

 
$
3,452


 
 
 
 
 
 
 
 


Restructured Loans
An explanation of what constitutes a “restructured loan,” and management’s analysis in determining whether to restructure a loan, are described above in Note 4, “Non Purchased Loans.”
The following tables illustrate the impact of modifications classified as restructured loans which were made during the periods presented and held on the Consolidated Balance Sheets at the respective period end:

 
 
Number of
Loans
 
Pre-
Modification
Outstanding
Recorded
Investment
 
Post-
Modification
Outstanding
Recorded
Investment
Three months ended March 31, 2018
 
 
 
 
 
Commercial, financial, agricultural
1

 
$
48

 
$
44

Real estate – commercial mortgage
1

 
8

 
7

Total
2

 
$
56

 
$
51

Three months ended March 31, 2017
 
 
 
 
 
Real estate – 1-4 family mortgage
10

 
$
2,221

 
$
1,823

Real estate – commercial mortgage
4

 
2,721

 
1,986

Total
14

 
$
4,942

 
$
3,809



 
 
 
 
 
 


With respect to loans that were restructured during the three months ended March 31, 2017, $210 subsequently defaulted within twelve months of the restructuring. With respect to loans that were restructured during the three months ended March 31, 2018, none have subsequently defaulted as of the date of this report.

There were no restructured loans contractually 90 days past due or more and still accruing at March 31, 2018 and two restructured loans in the amount of $52 contractually 90 days past due or more and still accruing at March 31, 2017. The outstanding balance of restructured loans on nonaccrual status was $616 and $1,201 at March 31, 2018 and March 31, 2017, respectively.

Changes in the Company’s restructured loans are set forth in the table below:
 
 
Number of
Loans
 
Recorded
Investment
Totals at January 1, 2018
68

 
$
8,965

Additional loans with concessions
2

 
86

Reclassified as performing restructured loan
1

 
3

Reductions due to:
 
 
 
Paid in full
(1
)
 
(76
)
Principal paydowns
—

 
(371
)
Totals at March 31, 2018
70

 
$
8,607



The allocated allowance for loan losses attributable to restructured loans was $100 and $31 at March 31, 2018 and March 31, 2017, respectively. The Company had $2 and $1,245 in remaining availability under commitments to lend additional funds on these restructured loans at March 31, 2018 and March 31, 2017, respectively.
Credit Quality
A discussion of the Company’s policies regarding internal risk-rating of loans is discussed above in Note 4, “Non Purchased Loans.” The following table presents the Company’s loan portfolio by risk-rating grades as of the dates presented:

 
Pass
 
Watch
 
Substandard
 
Total
March 31, 2018
 
 
 
 
 
 
 
Commercial, financial, agricultural
$
208,150

 
$
5,116

 
$
5,886

 
$
219,152

Real estate – construction
70,974

 
1,537

 
500

 
73,011

Real estate – 1-4 family mortgage
85,590

 
2,525

 
5,903

 
94,018

Real estate – commercial mortgage
755,454

 
15,789

 
10,048

 
781,291

Installment loans to individuals
662

 
—

 
3

 
665

Total
$
1,120,830

 
$
24,967

 
$
22,340

 
$
1,168,137

December 31, 2017
 
 
 
 
 
 
 
Commercial, financial, agricultural
$
241,195

 
$
4,974

 
$
2,824

 
$
248,993

Real estate – construction
81,220

 
—

 
—

 
81,220

Real estate – 1-4 family mortgage
91,369

 
2,498

 
6,172

 
100,039

Real estate – commercial mortgage
827,372

 
17,123

 
9,003

 
853,498

Installment loans to individuals
678

 
—

 
3

 
681

Total
$
1,241,834

 
$
24,595

 
$
18,002

 
$
1,284,431



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, 2018
 
 
 
 
 
Commercial, financial, agricultural
$
11,548

 
$
39

 
$
11,587

Real estate – construction
2,050

 
—

 
2,050

Real estate – 1-4 family mortgage
427,099

 
1,517

 
428,616

Real estate – commercial mortgage
29,313

 
122

 
29,435

Installment loans to individuals
13,617

 
196

 
13,813

Total
$
483,627

 
$
1,874

 
$
485,501

December 31, 2017
 
 
 
 
 
Commercial, financial, agricultural
$
11,216

 
$
46

 
$
11,262

Real estate – construction
4,511


—

 
4,511

Real estate – 1-4 family mortgage
459,038

 
1,141

 
460,179

Real estate – commercial mortgage
27,495

 
123

 
27,618

Installment loans to individuals
16,344

 
161

 
16,505

Total
$
518,604

 
$
1,471

 
$
520,075



Loans Purchased with Deteriorated Credit Quality
Loans purchased 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:
 
 
Total Purchased Credit Deteriorated Loans
March 31, 2018
 
Commercial, financial, agricultural
$
12,933

Real estate – 1-4 family mortgage
50,196

Real estate – commercial mortgage
149,547

Installment loans to individuals
1,634

Total
$
214,310

December 31, 2017
 
Commercial, financial, agricultural
$
15,315

Real estate – 1-4 family mortgage
53,969

Real estate – commercial mortgage
156,338

Installment loans to individuals
1,638

Total
$
227,260



The following table presents the fair value of loans that exhibited evidence of deteriorated credit quality at the time of acquisition at March 31, 2018:
 
 
Total Purchased Credit Deteriorated Loans
Contractually-required principal and interest
$
300,368

Nonaccretable difference(1)
(55,373
)
Cash flows expected to be collected
244,995

Accretable yield(2)
(30,685
)
Fair value
$
214,310

 
(1)
Represents contractual principal and interest cash flows of $46,019 and $9,354, respectively, not expected to be collected.
(2)
Represents contractual principal and interest cash flows of $1,588 and $29,097, respectively, expected to be collected.
Changes in the accretable yield of loans purchased with deteriorated credit quality were as follows as of March 31, 2018:
 
Total Purchased Credit Deteriorated Loans
Balance at January 1, 2018
$
(32,207
)
Reclasses from nonaccretable difference
(1,499
)
Accretion
2,971

Charge-offs
50

Balance at March 31, 2018
$
(30,685
)


The following table presents the fair value of loans purchased from Metropolitan as of the July 1, 2017 acquisition date.
At acquisition date:
 
July 1, 2017
  Contractually-required principal and interest
 
$
1,198,741

  Nonaccretable difference
 
(79,165
)
  Cash flows expected to be collected
 
1,119,576

  Accretable yield
 
(154,543
)
      Fair value
 
$
965,033