LOANS

The loan portfolio consisted of the following (in thousands):



	December 31,
	2015			2014
Commercial, financial and agricultural	$	454,028		$	467,147
Real estate – construction	74,952			68,577
Real estate – commercial	471,141			467,172
Real estate – residential	149,064			154,602
Installment loans to individuals	111,009			119,328
Lease financing receivable	1,968			4,857
Other	1,483			2,748
	1,263,645			1,284,431
Less allowance for loan losses	(19,011		)	(11,226		)
	$	1,244,634		$	1,273,205

The amounts reported in other loans at December 31, 2015 and 2014 includes the overdrawn demand deposit accounts and loans primarily made to non-profit entities reported for each period.

An analysis of the activity in the allowance for loan losses is as follows (in thousands):



	December 31,
	2015			2014			2013
Balance, beginning of year	$	11,226		$	8,779		$	7,370
Provision for loan losses	13,900			5,625			3,050
Recoveries	459			738			265
Loans charged-off	(6,574		)	(3,916		)	(1,906		)
Balance, end of year	$	19,011		$	11,226		$	8,779

The Company monitors loan concentrations and evaluates individual customer and aggregate industry leverage, profitability, risk rating distributions, and liquidity for each major standard industry classification segment. At December 31, 2015, one industry segment concentration, the oil and gas industry, aggregates more than 10% of the loan portfolio. The Company’s exposure in the oil and gas industry, including related service and manufacturing industries, totaled approximately $264.7 million, or 20.9% of total loans. Of the $264.7 million loans to borrowers in the oil and gas industry, $27.4 million or 10.4% were on nonaccrual status at December 31, 2015. Additionally, the Company’s exposure to loans secured by commercial real estate is monitored. At December 31, 2015, loans secured by commercial real estate (including commercial construction and multifamily loans) totaled approximately $528.0 million. Of the $528.0 million, $471.1 million represent CRE loans, 54% of which are secured by owner-occupied commercial properties. Of the $528.0 million in loans secured by commercial real estate, $19.9 million or 3.8% were on nonaccrual status at December 31, 2015.

A rollforward of the activity within the allowance for loan losses by loan type and recorded investment in loans for the years ended December 31, 2015 and 2014 is as follows (in thousands):



	December 31, 2015
				Real Estate
	Coml, fin, and agric			Construction			Commercial			Residential			Installment loans to individuals			Lease financing receivable			Other		Total
Allowance for loan losses:
Beginning balance	$	5,729		$	954		$	2,402		$	810		$	1,311		$	16		$	4	$	11,226
Charge-offs	(4,936		)	(105		)	(183		)	(87		)	(1,263		)	—			—		(6,574		)
Recoveries	235			3			26			12			183			—			—		459
Provision	10,240			(33		)	2,369			81			1,237			(2		)	8		13,900
Ending balance	$	11,268		$	819		$	4,614		$	816		$	1,468		$	14		$	12	$	19,011
Ending balance: individually evaluated for impairment	$	961		$	—		$	1,585		$	160		$	221		$	—		$	—	$	2,927
Ending balance: collectively evaluated for impairment	$	10,307		$	819		$	3,029		$	656		$	1,247		$	14		$	12	$	16,084

Loans:
Ending balance	$	454,028		$	74,952		$	471,141		$	149,064		$	111,009		$	1,968		$	1,483	$	1,263,645
Ending balance: individually evaluated for impairment	$	27,718		$	37		$	19,890		$	1,903		$	404		$	—		$	—	$	49,952
Ending balance: collectively evaluated for impairment	$	426,310		$	74,915		$	450,631		$	147,080		$	110,605		$	1,968		$	1,483	$	1,212,992
Ending balance: loans acquired with deteriorated credit quality	$	—		$	—		$	620		$	81		$	—		$	—		$	—	$	701



	December 31, 2014
				Real Estate
	Coml, fin, and agric			Construction			Commercial			Residential			Installment loans to individuals			Lease financing receivable			Other		Total
Allowance for loan losses:
Beginning balance	$	3,906		$	1,046		$	1,389		$	1,141		$	1,273		$	21		$	3	$	8,779
Charge-offs	(2,843		)	(1		)	(93		)	(273		)	(706		)	—			—		(3,916		)
Recoveries	164			—			407			47			120			—			—		738
Provision	4,502			(91		)	699			(105		)	624			(5		)	1		5,625
Ending balance	$	5,729		$	954		$	2,402		$	810		$	1,311		$	16		$	4	$	11,226
Ending balance: individually evaluated for impairment	$	1,010		$	—		$	907		$	68		$	179		$	—		$	—	$	2,164
Ending balance: collectively evaluated for impairment	$	4,719		$	954		$	1,495		$	742		$	1,132		$	16		$	4	$	9,062

Loans:
Ending balance	$	467,147		$	68,577		$	467,172		$	154,602		$	119,328		$	4,857		$	2,748	$	1,284,431
Ending balance: individually evaluated for impairment	$	2,656		$	54		$	6,388		$	1,072		$	377		$	—		$	—	$	10,547
Ending balance: collectively evaluated for impairment	$	464,491		$	68,523		$	460,118		$	153,436		$	118,951		$	4,857		$	2,748	$	1,273,124
Ending balance: loans acquired with deteriorated credit quality	$	—		$	—		$	666		$	94		$	—		$	—		$	—	$	760

An age analysis of past due loans (including both accruing and non-accruing loans) is as follows (in thousands):



	December 31, 2015
	30-59 Days Past Due		60-89 Days Past Due		Greater than 90 Days Past Due		Total Past Due		Current		Total Loans		Recorded Investment > 90 days and Accruing
Commercial, financial, and agricultural	$	1,362	$	2,317	$	25,696	$	29,375	$	424,653	$	454,028	$	59
Commercial real estate - construction	1,047		—		12		1,059		55,839		56,898		—
Commercial real estate - other	1,164		514		19,512		21,190		449,951		471,141		—
Residential - construction	—		—		—		—		18,054		18,054		—
Residential - prime	1,703		367		1,563		3,633		145,431		149,064		19
Consumer - credit card	38		25		22		85		5,970		6,055		22
Consumer - other	984		219		387		1,590		103,364		104,954		47
Lease financing receivable	—		—		—		—		1,968		1,968		—
Other loans	101		4		—		105		1,378		1,483		—
	$	6,399	$	3,446	$	47,192	$	57,037	$	1,206,608	$	1,263,645	$	147



	December 31, 2014
	30-59 Days Past Due		60-89 Days Past Due		Greater than 90 Days Past Due		Total Past Due		Current		Total Loans		Recorded Investment > 90 days and Accruing
Commercial, financial, and agricultural	$	2,179	$	654	$	2,556	$	5,389	$	461,758	$	467,147	$	26
Commercial real estate - construction	15		—		105		120		43,390		43,510		97
Commercial real estate - other	4,989		270		2,464		7,723		459,449		467,172		—
Residential - construction	431		—		—		431		24,636		25,067		—
Residential - prime	1,843		523		704		3,070		151,532		154,602		—
Consumer - credit card	5		19		18		42		5,970		6,012		18
Consumer - other	671		392		107		1,170		112,146		113,316		46
Lease financing receivable	—		—		—		—		4,857		4,857		—
Other loans	134		—		—		134		2,614		2,748		—
	$	10,267	$	1,858	$	5,954	$	18,079	$	1,266,352	$	1,284,431	$	187

Non-accrual loans are as follows (in thousands):



	December 31,
	2015		2014
Commercial, financial and agricultural	$	27,705	$	2,642
Commercial real estate – construction	37		54
Commercial real estate – other	19,907		6,429
Residential - construction	—		—
Residential - prime	1,998		1,194
Consumer – credit card	—		—
Consumer - other	404		382
Lease financing receivable	—		—
Other	—		—
	$	50,051	$	10,701

The amount of interest that would have been recorded on nonaccrual loans, had the loans not been classified as nonaccrual, totaled approximately $2.0 million, $594,000, and $518,000 for the years ended December 31, 2015, 2014, and 2013. Interest actually received on nonaccrual loans at December 31, 2015, 2014, and 2013 was $47,000, $105,000, and $312,000, respectively.

Loans that are individually evaluated for impairment are as follows (in thousands):



	December 31, 2015
	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Recognized
With no related allowance recorded:
Commercial, financial, and agricultural	$	22,529	$	22,793	$	—	$	11,484	$	745
Commercial real estate – construction	37		37		—		45		—
Commercial real estate – other	5,886		5,886		—		3,903		97
Residential – prime	1,365		1,385		—		954		17
Consumer – other	34		34		—		56		—
Subtotal:	29,851		30,135		—		16,442		859
With an allowance recorded:
Commercial, financial, and agricultural	5,189		6,373		961		3,704		138
Commercial real estate – other	14,004		14,004		1,585		9,236		161
Residential – prime	538		538		160		533		7
Consumer – other	370		384		221		334		8
Subtotal:	20,101		21,299		2,927		13,807		314
Totals:
Commercial	47,645		49,093		2,546		28,372		1,141
Residential	1,903		1,923		160		1,487		24
Consumer	404		418		221		390		8
Grand total:	$	49,952	$	51,434	$	2,927	$	30,249	$	1,173



	December 31, 2014
	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Recognized
With no related allowance recorded:
Commercial, financial, and agricultural	$	438	$	521	$	—	$	554	$	—
Commercial real estate – construction	54		54		—		58		—
Commercial real estate – other	1,921		1,921		—		1,885		17
Residential – prime	543		543		—		534		15
Consumer – other	78		78		—		72		—
Subtotal:	3,034		3,117		—		3,103		32
With an allowance recorded:
Commercial, financial, and agricultural	2,218		2,333		1,010		1,394		35
Commercial real estate – construction	—		—		—		19		—
Commercial real estate – other	4,467		4,467		907		2,416		220
Residential – prime	529		548		68		452		3
Consumer – other	299		313		179		252		4
Subtotal:	7,513		7,661		2,164		4,533		262
Totals:
Commercial	9,098		9,296		1,917		6,326		272
Residential	1,072		1,091		68		986		18
Consumer	377		391		179		324		4
Grand total:	$	10,547	$	10,778	$	2,164	$	7,636	$	294

The following tables present the classes of loans by risk rating (in thousands):



	December 31, 2015
Commercial Credit Exposure
Credit Risk Profile by Creditworthiness Category
	Commercial, financial, and agricultural		Commercial real estate –construction		Commercial real estate – other		Percentage of Total
Pass	$	383,897	$	56,740	$	412,141	86.84	%
Special mention	32,506		34		28,217		6.18	%
Substandard	37,353		124		30,783		6.95	%
Doubtful	272		—		—		0.03	%
	$	454,028	$	56,898	$	471,141	100.00	%



Consumer Credit Exposure
Credit Risk Profile by Creditworthiness Category
	Residential – construction		Residential – prime		Residential – subprime		Percentage of Total
Pass	$	18,054	$	144,704	$	—	97.39	%
Special mention	—		1,225		—		0.73	%
Substandard	—		3,135		—		1.88	%
	$	18,054	$	149,064	$	—	100.00	%



Consumer and Commercial Credit Exposure
Credit Risk Profile Based on Payment Activity
	Consumer - credit card		Consumer –other		Lease financing receivable		Other		Percentage of Total
Performing	$	6,033	$	104,503	$	1,968	$	1,483	99.59	%
Nonperforming	22		451		—		—		0.41	%
	$	6,055	$	104,954	$	1,968	$	1,483	100.00	%



	December 31, 2014
Commercial Credit Exposure
Credit Risk Profile by Creditworthiness Category
	Commercial, financial, and agricultural		Commercial real estate –construction		Commercial real estate – other		Percentage of Total
Pass	$	456,221	$	43,320	$	440,281	96.11	%
Special mention	4,861		132		7,120		1.24	%
Substandard	5,541		58		19,771		2.60	%
Doubtful	524		—		—		0.05	%
	$	467,147	$	43,510	$	467,172	100.00	%



Consumer Credit Exposure
Credit Risk Profile by Creditworthiness Category
	Residential – construction		Residential – prime		Residential – subprime		Percentage of Total
Pass	$	25,067	$	150,664	$	—	97.81	%
Special mention	—		1,184		—		0.66	%
Substandard	—		2,754		—		1.53	%
	$	25,067	$	154,602	$	—	100.00	%



Consumer and Commercial Credit Exposure
Credit Risk Profile Based on Payment Activity
	Consumer - credit card		Consumer –other		Lease financing receivable		Other		Percentage of Total
Performing	$	5,995	$	112,893	$	4,857	$	2,748	99.65	%
Nonperforming	17		423		—		—		0.35	%
	$	6,012	$	113,316	$	4,857	$	2,748	100.00	%

Troubled Debt Restructurings

A troubled debt restructuring (“TDR”) is a restructuring of a debt made by the Company to a debtor for economic or legal reasons related to the debtor’s financial difficulties that it would not otherwise consider. The Company grants the concession in an attempt to protect as much of its investment as possible.

Information about the Company’s TDRs is as follows (in thousands):



	December 31, 2015
	Current		Past Due Greater Than 30 Days		Nonaccrual TDRs		Total TDRs
Commercial, financial and agricultural	$	16	$	—	$	20,865	$	20,881
Real estate - commercial	—		148		—		148
	$	16	$	148	$	20,865	$	21,029



	December 31, 2014
	Current		Past Due Greater Than 30 Days		Nonaccrual TDRs		Total TDRs
Commercial, financial and agricultural	$	21	$	—	$	234	$	255
Real estate - commercial	155		—		—		155
	$	176	$	—	$	234	$	410

During the year ended December 31, 2015, one loan relationship with a pre-modification balance of $21.4 million was identified as a TDR after conversion of the loans to interest only for a limited amount of time. This one TDR subsequently defaulted on the modified terms and totaled $20.6 million at December 31, 2015. During the year ended December 31, 2014, there was one loan relationship with a pre-modification balance of $1.2 million identified as a TDR through a modification of the original loan terms. The loan was paid off during the second quarter of 2014 and, therefore, was not reflected in the balance of TDRs at December 31, 2014. During the year ended December 31, 2014, there were no defaults on any loans that were modified as TDRs during the preceding twelve months. For purposes of the determination of an allowance for loan losses on these TDRs, as an identified TDR, the Company considers a loss probable on the loan and, as a result, the loan is reviewed for specific impairment in accordance with the Company’s allowance for loan loss methodology. If it is determined losses are probable on such TDRs, either because of delinquency or other credit quality indicator, the Company establishes specific reserves for these loans. As of December 31, 2015, there were no commitments to lend additional funds to debtors owing sums to the Company whose terms have been modified in TDRs.

In the opinion of management, all transactions entered into between the Company and such related parties have been and are made in the ordinary course of business, on substantially the same terms and conditions, including interest rates and collateral, as similar transactions with unaffiliated persons and do not involve more than the normal risk of collection.

An analysis of the 2015 activity with respect to these related party loans and commitments to extend credit is as follows (in thousands):



Balance, beginning of year	$	2,977
New loans	—
Repayments and adjustments	(1,137		)
Balance, end of year	$	1,840