NOTE E — LOANS

Information relating to portfolio loans, purchased credit impaired (PCI), and purchased unimpaired loans (PUL) is summarized as follows:

September 30, 2015	Portfolio Loans		PCI Loans		PUL's		Total
	(Dollars in thousands)
Construction and land development	$	80,406	$	462	$	15,168	$	96,036
Commercial real estate		737,506		10,071		243,610		991,187
Residential real estate		671,530		1,008		50,395		722,933
Commercial and financial		166,059		1,132		43,144		210,335
Consumer		75,050		0		3,422		78,472
Other loans		484		0		0		484
NET LOAN BALANCES (1)	$	1,731,035	$	12,673	$	355,739	$	2,099,447

December 31, 2014	Portfolio Loans		PCI Loans		PUL's		Total
	(Dollars in thousands)
Construction and land development	$	65,896	$	1,557	$	19,583	$	87,036
Commercial real estate		610,863		4,092		222,192		837,147
Residential real estate		639,428		851		46,618		686,897
Commercial and financial		120,763		1,312		35,321		157,396
Consumer		50,543		2		2,352		52,897
Other loans		512		0		0		512
NET LOAN BALANCES (1)	$	1,488,005	$	7,814	$	326,066	$	1,821,885

(1) Net loan balances as of September 30, 2015 and December 31, 2014 are net of deferred costs of $ 6.6 million and $3.6 million for each period, respectively.

Purchased Loans - PCI loans are accounted for pursuant to ASC Topic 310-30. The excess of cash flows expected to be collected over the estimated fair value is referred to as the accretable yield and is recognized in interest income over the remaining life of the loan in situations where there is a reasonable expectation about the timing and amount of cash flows expected to be collected. The difference between the contractually required payments and the cash flows expected to be collected, considering the impact of prepayments, is referred to as the nonaccretable difference.

We have applied ASC Topic 310-20 accounting treatment to PULs. The unamortized fair value mark established at acquisition on the loans has been ascribed as an accretable yield that is accreted into interest income over the estimated remaining life of the loans.

The table below summarizes the changes in total contractually required principal and interest cash payments, management’s estimate of expected total cash payments and carrying value of PCI loans during the three and nine month periods ending September 30, 2015. Contractually required principal and interest payments have been adjusted for estimated prepayments.

Three Months Ended September 30, 2015									Reclassifications
									from
									nonaccretable		September 30,
	June 30, 2015		Additions		Deletions		Accretion		difference		2015
	(In thousands)
Contractually required principal and interest	$	11,564	$	12,552	$	(609)	$	0	$	0	$	23,507
Nonaccretable difference		(3,901)		(4,249)		(1,656)		0		152		(9,654)
Cash flows expected to be collected		7,663		8,303		(2,265)		0		152		13,853
Accretable yield		(1,101)		(702)		610		165		(152)		(1,180)
Carrying value of acquired loans		6,562	$	7,601	$	(1,655)	$	165	$	0		12,673
Allowance for loan losses		(212)										(49)
Carrying value less allowance for loan losses	$	6,350									$	12,624

Nine Months Ended September 30, 2015									Reclassifications
									from
	December 31,								nonaccretable		September 30,
	2014		Additions		Deletions		Accretion		difference		2015
	(In thousands)
Contractually required principal and interest	$	14,831	$	12,552	$	(3,876)	$	0	$	0	$	23,507
Nonaccretable difference		(5,825)		(4,249)		7		0		413		(9,654)
Cash flows expected to be collected		9,006		8,303		(3,869)		0		413		13,853
Accretable yield		(1,192)		(702)		758		369		(413)		(1,180)
Carrying value of acquired loans		7,814	$	7,601	$	(3,111)	$	369	$	0		12,673
Allowance for loan losses		(64)										(49)
Carrying value less allowance for loan losses	$	7,750									$	12,624

The following tables present the contractual delinquency of the recorded investment in past due loans by class of loans as of September 30, 2015 and December 31, 2014:

					Accruing
	Accruing		Accruing		Greater						Total
September 30, 2015	30-59 Days		60-89 Days		Than						Financing
(Dollars in thousands)	Past Due		Past Due		90 Days		Nonaccrual		Current		Receivables

Portfolio Loans
Construction and land development	$	16	$	0	$	0	$	809	$	79,581	$	80,406
Commercial real estate		165		0		0		2,557		734,784		737,506
Residential real estate		466		753		0		10,498		659,813		671,530
Commerical and financial		0		5		0		0		166,054		166,059
Consumer		0		0		0		267		74,783		75,050
Other		0		0		0		0		484		484
Total		647		758		0		14,131		1,715,499	$	1,731,035

Purchased Unimpaired Loans
Construction and land development		0		0		0		42		15,126	$	15,168
Commercial real estate		522		0		0		1,716		241,372		243,610
Residential real estate		57		0		50		0		50,288		50,395
Commerical and financial		244		133		0		0		42,767		43,144
Consumer		0		0		0		0		3,422		3,422
Other		0		0		0		0		0		0
Total		823		133		50		1,758		352,975	$	355,739

Purchased Credit Impaired Loans
Construction and land development		0		0		0		343		119	$	462
Commercial real estate		0		0		0		529		9,542		10,071
Residential real estate		0		0		0		349		659		1,008
Commerical and financial		0		0		0		0		1,132		1,132
Consumer		0		0		0		0		0		0
Other		0		0		0		0		0		0
Total		0		0		0		1,221		11,452	$	12,673

Total Loans	$	1,470	$	891	$	50	$	17,110	$	2,079,926	$	2,099,447

					Accruing
	Accruing		Accruing		Greater						Total
December 31, 2014	30-59 Days		60-89 Days		Than						Financing
(Dollars in thousands)	Past Due		Past Due		90 Days		Nonaccrual		Current		Receivables

Portfolio Loans
Construction and land development	$	0	$	0	$	0	$	534	$	65,362	$	65,896
Commercial real estate		764		0		0		3,457		606,642		610,863
Residential real estate		259		159		17		14,381		624,612		639,428
Commerical and financial		232		0		0		0		120,531		120,763
Consumer		256		25		0		191		50,071		50,543
Other		0		0		0		0		512		512
Total	$	1,511	$	184	$	17	$	18,563	$	1,467,730	$	1,488,005

Purchased Unimpaired Loans
Construction and land development	$	303	$	0	$	0	$	0	$	19,280	$	19,583
Commercial real estate		2,318		0		41		0		219,833		222,192
Residential real estate		142		0		39		5		46,432		46,618
Commerical and financial		953		0		0		0		34,368		35,321
Consumer		0		0		0		0		2,352		2,352
Other		0		0		0		0		0		0
Total	$	3,716	$	0	$	80	$	5	$	322,265	$	326,066

Purchased Impaired Loans
Construction and land development	$	0	$	0	$	0	$	1,428	$	129	$	1,557
Commercial real estate		7		359		0		733		2,993		4,092
Residential real estate		88		0		116		411		236		851
Commerical and financial		0		0		0		0		1,312		1,312
Consumer		0		0		0		0		2		2
Other		0		0		0		0		0		0
Total	$	95	$	359	$	116	$	2,572	$	4,672	$	7,814

Total Loans	$	5,322	$	543	$	213	$	21,140	$	1,794,667	$	1,821,885

The Company utilizes an internal asset classification system as a means of reporting problem and potential problem loans. Under the Company’s risk rating system, the Company classifies problem and potential problem loans as “Special Mention,” “Substandard,” and “Doubtful” and these loans are monitored on an ongoing basis. Substandard loans include those characterized by the distinct possibility that the Company will sustain some loss if the deficiencies are not corrected. Loans classified as Doubtful, have all the weaknesses inherent in those classified Substandard with the added characteristic that the weaknesses present make collection or liquidation in full, on the basis of currently existing facts, conditions and values, highly questionable and improbable. The principal balance of loans classified as doubtful are generally charged off. Loans that do not currently expose the Company to sufficient risk to warrant classification in one of the aforementioned categories, but possess weaknesses that deserve management’s close attention are deemed to be Special Mention. Risk ratings are updated any time the situation warrants.

Loans not meeting the criteria above are considered to be pass-rated loans and risk grades are recalculated at least annually by the loan relationship manager. The following tables present the risk category of loans by class of loans based on the most recent analysis performed as of September 30, 2015 and December 31, 2014:

September 30, 2015
	Construction						Commercial
	& Land		Commercial		Residential		and		Consumer
(Dollars in thousands)	Development		Real Estate		Real Estate		Financial		Loans		Total
Pass	$	88,273	$	958,777	$	695,872	$	209,087	$	77,407	$	2,029,416
Special mention		3,486		12,377		1,484		498		840		18,685
Substandard		2,368		8,011		2,527		732		55		13,693
Doubtful		0		0		0		0		0		0
Nonaccrual		1,194		4,802		10,847		0		267		17,110
Pass-Troubled debt restructures		347		5,948		24		18		387		6,724
Troubled debt restructures		368		1,272		12,179		0		0		13,819
	$	96,036	$	991,187	$	722,933	$	210,335	$	78,956	$	2,099,447

December 31, 2014
	Construction						Commercial
	& Land		Commercial		Residential		and		Consumer
(Dollars in thousands)	Development		Real Estate		Real Estate		Financial		Loans		Total
Pass	$	79,397	$	797,934	$	655,518	$	155,281	$	51,764	$	1,739,894
Special mention		1,815		11,709		546		993		590		15,653
Substandard		1,685		15,325		1,733		1,002		456		20,201
Doubtful		0		0		0		0		0		0
Nonaccrual		1,963		4,189		14,797		0		191		21,140
Pass-Troubled debt restructures		1,672		2,332		17		0		0		4,021
Troubled debt restructures		504		5,658		14,286		120		408		20,976
	$	87,036	$	837,147	$	686,897	$	157,396	$	53,409	$	1,821,885