Note 6 — Loans and Allowance for Loan Losses

The following is a summary of non-acquired loans:


	March 31,		December 31,		March 31,
(Dollars in thousands)	2017		2016		2016
Non-acquired loans:
Commercial non-owner occupied real estate:
Construction and land development	$	646,544	$	580,464	$	447,197
Commercial non-owner occupied		803,998		714,715		525,637
Total commercial non-owner occupied real estate		1,450,542		1,295,179		972,834
Consumer real estate:
Consumer owner occupied		1,252,650		1,197,621		1,060,554
Home equity loans		396,806		383,218		325,962
Total consumer real estate		1,649,456		1,580,839		1,386,516
Commercial owner occupied real estate		1,200,004		1,177,745		1,060,513
Commercial and industrial		725,974		671,398		553,527
Other income producing property		182,416		178,238		175,217
Consumer		340,292		324,238		247,502
Other loans		15,623		13,404		76,559
Total non-acquired loans		5,564,307		5,241,041		4,472,668
Less allowance for loan losses		(38,449)		(36,960)		(35,115)
Non-acquired loans, net	$	5,525,858	$	5,204,081	$	4,437,553

The following is a summary of acquired non-credit impaired loans accounted for under FASB ASC Topic 310-20, net of related discount:


	March 31,		December 31,		March 31,
(Dollars in thousands)	2017		2016		2016
FASB ASC Topic 310-20 acquired loans:
Commercial non-owner occupied real estate:
Construction and land development	$	141,897	$	10,090	$	13,024
Commercial non-owner occupied		217,850		34,628		36,530
Total commercial non-owner occupied real estate		359,747		44,718		49,554
Consumer real estate:
Consumer owner occupied		550,578		408,270		494,472
Home equity loans		186,411		160,879		184,388
Total consumer real estate		736,989		569,149		678,860
Commercial owner occupied real estate		238,612		27,195		37,356
Commercial and industrial		136,309		13,641		21,109
Other income producing property		92,044		39,342		49,123
Consumer		151,941		142,654		163,236
Total FASB ASC Topic 310-20 acquired loans	$	1,715,642	$	836,699	$	999,238

The unamortized discount related to the acquired non-credit impaired loans totaled $26.2 million, $11.6 million, and $15.2 million at March 31, 2017, December 31, 2016, and March 31, 2016, respectively.

In accordance with FASB ASC Topic 310-30, the Company aggregated acquired loans that have common risk characteristics into pools of loan categories as described in the table below. The following is a summary of acquired credit impaired loans accounted for under FASB ASC Topic 310-30 (identified as credit impaired at the time of acquisition), net of related discount:


	March 31,		December 31,		March 31,
(Dollars in thousands)	2017		2016		2016
FASB ASC Topic 310-30 acquired loans:
Commercial loans greater than or equal to $1 million-CBT	$	8,594	$	8,617	$	12,445
Commercial real estate		214,562		210,204		237,393
Commercial real estate—construction and development		57,343		44,373		51,379
Residential real estate		266,484		258,100		298,537
Consumer		58,688		59,300		67,612
Commercial and industrial		26,225		25,347		28,948
Total FASB ASC Topic 310-30 acquired loans		631,896		605,941		696,314
Less allowance for loan losses		(4,556)		(3,395)		(3,877)
FASB ASC Topic 310-30 acquired loans, net	$	627,340	$	602,546	$	692,437

Contractual loan payments receivable, estimates of amounts not expected to be collected, other fair value adjustments and the resulting fair values of FASB ASC Topic 310-30 acquired loans impaired and non-impaired at the acquisition date for Southeastern Financial (January 3, 2017) are as follows:


	January 3, 2017
			Loans
	Loans Impaired		Not Impaired
(Dollars in thousands)	at Acquisition		at Acquisition		Total
Contractual principal and interest	$	73,365	$	—	$	73,365
Non-accretable difference		(12,912)		—		(12,912)
Cash flows expected to be collected		60,453		—		60,453
Accretable difference		(4,603)		—		(4,603)
Carrying value	$	55,850	$	—	$	55,850

The table above excludes $991.5 million ($1.01 billion in contractual principal less a $18.8 million fair value adjustment) in acquired loans at fair value that were identified as either performing with no discount related to the credit or as revolving lines of credit (commercial or consumer) as of the acquisition date and will be accounted for under FASB ASC Topic 310-20.

Contractual loan payments receivable, estimates of amounts not expected to be collected, other fair value adjustments and the resulting carrying values of acquired credit impaired loans as of March 31, 2017, December 31, 2016 and March 31, 2016 are as follows:


	March 31,		December 31,		March 31,
(Dollars in thousands)	2017		2016		2016
Contractual principal and interest	$	812,892	$	778,822	$	912,010
Non-accretable difference		(31,273)		(17,502)		(26,833)
Cash flows expected to be collected		781,619		761,320		885,177
Accretable yield		(149,723)		(155,379)		(188,863)
Carrying value	$	631,896	$	605,941	$	696,314
Allowance for acquired loan losses	$	(4,556)	$	(3,395)	$	(3,877)

Income on acquired credit impaired loans that are not impaired at the acquisition date is recognized in the same manner as loans impaired at the acquisition date. A portion of the fair value discount on acquired non-impaired loans has been ascribed as an accretable difference that is accreted into interest income over the estimated remaining life of the loans. The remaining nonaccretable difference represents cash flows not expected to be collected.

The following are changes in the carrying value of acquired credit impaired loans:


	Three Months Ended March 31,
(Dollars in thousands)	2017		2016
Balance at beginning of period	$	602,546	$	733,870
Fair value of acquired loans		55,850		—
Net reductions for payments, foreclosures, and accretion		(29,895)		(41,262)
Change in the allowance for loan losses on acquired loans		(1,161)		(171)
Balance at end of period, net of allowance for loan losses on acquired loans	$	627,340	$	692,437

The table below reflects refined accretable yield balance for acquired credit impaired loans:


	Three Months Ended March 31,
(Dollars in thousands)	2017		2016
Balance at beginning of period	$	155,379	$	201,538
Addition from the Southeastern acquisition		4,603		—
Accretion		(15,214)		(20,310)
Reclass of nonaccretable difference due to improvement in expected cash flows		5,062		7,270
Other changes, net		(107)		365
Balance at end of period	$	149,723	$	188,863

In the first quarter of 2017, the accretable yield balance declined by $15.2 million as loan accretion (income) was recognized. This was partially offset by improved expected cash flows of $5.1 million.

Our loan loss policy adheres to generally accepted accounting principles in the United States as well as interagency guidance. The allowance for loan losses is based upon estimates made by management. We maintain an allowance for loan losses at a level that we believe is appropriate to cover estimated credit losses on individually evaluated loans that are determined to be impaired as well as estimated credit losses inherent in the remainder of our loan portfolio. Arriving at the allowance involves a high degree of management judgment and results in a range of estimated losses. We regularly evaluate the adequacy of the allowance through our internal risk rating system, outside credit review, and regulatory agency examinations to assess the quality of the loan portfolio and identify problem loans. The evaluation process also includes our analysis of current economic conditions, composition of the loan portfolio, past due and nonaccrual loans, concentrations of credit, lending policies and procedures, and historical loan loss experience. While management uses available information to recognize losses on loans, future additions to the allowance may be necessary based on, among other factors, changes in economic conditions in our markets. In addition, regulatory agencies, as an integral part of their examination process, periodically review our allowances for losses on loans. These agencies may require management to recognize additions to the allowances based on their judgments about information available to them at the time of their examination. Because of these and other factors, it is possible that the allowances for losses on loans may change. The provision for loan losses is charged to expense in an amount necessary to maintain the allowance at an appropriate level.

The allowance for loan losses on non‑acquired loans consists of general and specific reserves. The general reserves are determined by applying loss percentages to the portfolio that are based on historical loss experience for each class of loans and management’s evaluation and “risk grading” of the loan portfolio. Additionally, the general economic and business conditions affecting key lending areas, credit quality trends, collateral values, loan volumes and concentrations, seasoning of the loan portfolio, the findings of internal and external credit reviews and results from external bank regulatory examinations are included in this evaluation. Currently, these adjustments are applied to the non‑acquired loan portfolio when estimating the level of reserve required. The specific reserves are determined on a loan‑by‑loan basis based on management’s evaluation of our exposure for each credit, given the current payment status of the loan and the value of any underlying collateral. These are loans classified by management as doubtful or substandard. For such loans that are also classified as impaired, an allowance is established when the discounted cash flows (or collateral value or observable market price) of the impaired loan is lower than the carrying value of that loan. Generally, the need for specific reserve is evaluated on impaired loans, and once a specific reserve is established for a loan, a charge off of that amount occurs in the quarter subsequent to the establishment of the specific reserve. Loans that are determined to be impaired are provided a specific reserve, if necessary, and are excluded from the calculation of the general reserves.

Beginning with the First Financial Holdings, Inc. (“FFHI”) acquisition in 2013, the Company segregates the acquired loan portfolio into performing loans (“non‑credit impaired) and purchased credit impaired loans. The performing loans and revolving type loans are accounted for under FASB ASC 310‑20, with each loan being accounted for individually. The allowance for loan losses on these loans will be measured and recorded consistent with non‑acquired loans. The acquired credit impaired loans will follow the description in the next paragraph.

In determining the acquisition date fair value of purchased loans, and in subsequent accounting, the Company generally aggregates purchased loans into pools of loans with common risk characteristics. Expected cash flows at the acquisition date in excess of the fair value of loans are recorded as interest income over the life of the loans using a level yield method if the timing and amount of the future cash flows of the pool is reasonably estimable. Subsequent to the acquisition date, increases in cash flows over those expected at the acquisition date are reclassified from the non‑accretable difference to accretable yield and recognized as interest income prospectively. Decreases in expected cash flows after the acquisition date are recognized by recording an allowance for loan losses. Management analyzes the acquired loan pools using various assessments of risk to determine an expected loss. The expected loss is derived based upon a loss given default based upon the collateral type and/or detailed review by loan officers and the probability of default that is determined based upon historical data at the loan level. All acquired loans managed by Special Asset Management are reviewed quarterly and assigned a loss given default. Acquired loans not managed by Special Asset Management are reviewed twice a year in a similar method to the Company’s originated portfolio of loans which follow review thresholds based on risk rating categories. In the fourth quarter of 2015, the Company modified its methodology to a more granular approach in determining loss given default on substandard loans with a net book balance between $100,000 and $500,000 by adjusting the loss given default to 90% of the most current collateral valuation based on appraised value. Substandard loans greater than $500,000 were individually assigned loss given defaults each quarter. Trends are reviewed in terms of accrual status, past due status, and weighted‑average grade of the loans within each of the accounting pools. In addition, the relationship between the change in the unpaid principal balance and change in the mark is assessed to correlate the directional consistency of the expected loss for each pool. Prior to the termination of our loss share agreements in June 2016, offsetting the impact of the provision established for acquired loans covered under FDIC loss share agreements, the receivable from the FDIC was adjusted to reflect the indemnified portion of the post‑acquisition exposure with a corresponding credit to the provision for loan losses.

On June 23, 2016, the Bank entered into an early termination agreement with the FDIC with respect to all of its outstanding loss share agreements. The loss share agreements were entered into with the FDIC in 2009, 2010, 2011 and 2012 either by the Bank or by First Federal Bank, acquired by the Bank in July of 2013. As a result of the termination agreement, all assets previously classified as covered became uncovered effective June 23, 2016, and as a result the Bank will now recognize the full amount of future charge-offs, recoveries, gains, losses, and expenses related to these previously covered assets, as the FDIC will no longer share in these amounts.

An aggregated analysis of the changes in allowance for loan losses is as follows:


	Non-acquired		Acquired Non-Credit		Acquired Credit
(Dollars in thousands)	Loans		Impaired Loans		Impaired Loans		Total
Three Months Ended March 31, 2017:
Balance at beginning of period	$	36,960	$	—	$	3,395	$	40,355
Loans charged-off		(1,297)		(389)		—		(1,686)
Recoveries of loans previously charged off (1)		669		63		—		732
Net charge-offs		(628)		(326)		—		(954)
Provision for loan losses charged to operations		2,117		326		1,264		3,707
Provision for loan losses recorded through the FDIC loss share receivable		—		—		—		—
Reduction due to loan removals		—		—		(103)		(103)
Balance at end of period	$	38,449	$	—	$	4,556	$	43,005
Three Months Ended March 31, 2016:
Balance at beginning of period	$	34,090	$	—	$	3,706	$	37,796
Loans charged-off		(1,719)		(297)		—		(2,016)
Recoveries of loans previously charged off (1)		764		91		—		855
Net charge-offs		(955)		(206)		—		(1,161)
Provision for loan losses charged to operations		1,980		206		371		2,557
Provision for loan losses recorded through the FDIC loss share receivable		—		—		(23)		(23)
Reduction due to loan removals		—		—		(177)		(177)
Balance at end of period	$	35,115	$	—	$	3,877	$	38,992

(1)

– Recoveries related to acquired credit impaired loans are recorded through other noninterest income on the consolidated statement of income and do not run through the allowance for loan losses.

The following tables present a disaggregated analysis of activity in the allowance for loan losses and loan balances for non-acquired loans:


	Construction		Commercial		Commercial		Consumer						Other Income
	& Land		Non-owner		Owner		Owner		Home		Commercial		Producing				Other
(Dollars in thousands)	Development		Occupied		Occupied		Occupied		Equity		& Industrial		Property		Consumer		Loans		Total
Three Months Ended March 31, 2017
Allowance for loan losses:
Balance, December 31, 2016	$	4,091	$	4,980	$	8,022	$	7,820	$	3,211	$	4,842	$	1,542	$	2,350	$	102	$	36,960
Charge-offs		(405)		—		—		(123)		(34)		(22)		—		(713)		—		(1,297)
Recoveries		154		41		7		49		74		90		43		211		—		669
Provision (benefit)		809		443		(135)		362		205		214		(240)		595		(136)		2,117
Balance, March 31, 2017	$	4,649	$	5,464	$	7,894	$	8,108	$	3,456	$	5,124	$	1,345	$	2,443	$	(34)	$	38,449
Loans individually evaluated for impairment	$	459	$	158	$	60	$	68	$	297	$	387	$	224	$	5	$	—	$	1,658
Loans collectively evaluated for impairment	$	4,190	$	5,306	$	7,834	$	8,040	$	3,159	$	4,737	$	1,121	$	2,438	$	(34)	$	36,791
Loans:
Loans individually evaluated for impairment	$	9,286	$	775	$	6,251	$	4,712	$	2,432	$	1,270	$	2,408	$	189	$	—	$	27,323
Loans collectively evaluated for impairment		637,258		803,223		1,193,753		1,247,938		394,374		724,704		180,008		340,103		15,623		5,536,984
Total non-acquired loans	$	646,544	$	803,998	$	1,200,004	$	1,252,650	$	396,806	$	725,974	$	182,416	$	340,292	$	15,623	$	5,564,307
Three Months Ended March 31, 2016
Allowance for loan losses:
Balance , December 31, 2015	$	4,116	$	3,568	$	8,341	$	7,212	$	2,929	$	3,974	$	1,963	$	1,694	$	293	$	34,090
Charge-offs		—		—		(42)		—		(443)		(307)		—		(927)		—		(1,719)
Recoveries		165		16		7		81		88		48		4		355		—		764
Provision (benefit)		201		339		(127)		52		523		236		(165)		663		258		1,980
Balance, March 31, 2016	$	4,482	$	3,923	$	8,179	$	7,345	$	3,097	$	3,951	$	1,802	$	1,785	$	551	$	35,115
Loans individually evaluated for impairment	$	843	$	22	$	148	$	148	$	79	$	17	$	414	$	4	$	24	$	1,699
Loans collectively evaluated for impairment	$	3,639	$	3,901	$	8,031	$	7,197	$	3,018	$	3,934	$	1,388	$	1,781	$	527	$	33,416
Loans:
Loans individually evaluated for impairment	$	6,271	$	1,135	$	7,701	$	7,643	$	3,182	$	877	$	5,394	$	142	$	846	$	33,191
Loans collectively evaluated for impairment		440,926		524,502		1,052,812		1,052,911		322,780		552,650		169,823		247,360		75,713		4,439,477
Total non-acquired loans	$	447,197	$	525,637	$	1,060,513	$	1,060,554	$	325,962	$	553,527	$	175,217	$	247,502	$	76,559	$	4,472,668

The following tables present a disaggregated analysis of activity in the allowance for loan losses and loan balances for acquired non-credit impaired loans:


	Construction		Commercial		Commercial		Consumer						Other Income
	& Land		Non-owner		Owner		Owner		Home		Commercial		Producing
(Dollars in thousands)	Development		Occupied		Occupied		Occupied		Equity		& Industrial		Property		Consumer		Total
Three Months Ended March 31, 2017
Allowance for loan losses:
Balance at beginning of period	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Charge-offs		—		—		—		(313)		—		(2)		—		(74)		(389)
Recoveries		1		—		—		39		9		1		1		12		63
Provision (benefit)		(1)		—		—		274		(9)		1		(1)		62		326
Balance, March 31, 2017	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—

Loans individually evaluated for impairment	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Loans collectively evaluated for impairment	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—

Loans:
Loans individually evaluated for impairment	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Loans collectively evaluated for impairment		141,897		217,850		238,612		550,578		186,411		136,309		92,044		151,941		1,715,642
Total acquired non-credit impaired loans	$	141,897	$	217,850	$	238,612	$	550,578	$	186,411	$	136,309	$	92,044	$	151,941	$	1,715,642

Three Months Ended March 31, 2016
Allowance for loan losses:
Balance at beginning of period	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Charge-offs		—		—		—		—		(144)		(3)		—		(150)		(297)
Recoveries		1		—		—		3		85		1		—		1		91
Provision (benefit)		(1)		—		—		(3)		59		2		—		149		206
Balance, March 31, 2016	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—

Loans individually evaluated for impairment	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Loans collectively evaluated for impairment	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—

Loans:
Loans individually evaluated for impairment	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Loans collectively evaluated for impairment		13,024		36,530		37,356		494,472		184,388		21,109		49,123		163,236		999,238
Total acquired non-credit impaired loans	$	13,024	$	36,530	$	37,356	$	494,472	$	184,388	$	21,109	$	49,123	$	163,236	$	999,238

The following tables present a disaggregated analysis of activity in the allowance for loan losses and loan balances for acquired credit impaired loans:


	Commercial				Commercial
	Loans Greater				Real Estate-
	Than or Equal		Commercial		Construction and		Residential				Commercial
(Dollars in thousands)	to $1 Million-CBT		Real Estate		Development		Real Estate		Consumer		and Industrial		Single Pay		Total
Three Months Ended March 31, 2017
Allowance for loan losses:
Balance, December 31, 2016	$	—	$	41	$	139	$	2,419	$	558	$	238	$	—	$	3,395
Provision (benefit) for loan losses before benefit attributable to FDIC loss share agreements		—		291		(3)		752		37		187		—		1,264
Benefit attributable to FDIC loss share agreements		—		—		—		—		—		—		—		—
Total provision (benefit) for loan losses charged to operations		—		291		(3)		752		37		187		—		1,264
Provision for loan losses recorded through the FDIC loss share receivable		—		—		—		—		—		—		—		—
Reduction due to loan removals		—		2		(6)		(63)		(6)		(30)		—		(103)
Balance, March 31, 2017	$	—	$	334	$	130	$	3,108	$	589	$	395	$	—	$	4,556
Loans individually evaluated for impairment	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Loans collectively evaluated for impairment	$	—	$	334	$	130	$	3,108	$	589	$	395	$	—	$	4,556
Loans:*
Loans individually evaluated for impairment	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Loans collectively evaluated for impairment		8,594		214,562		57,343		266,484		58,688		26,225		—		631,896
Total acquired credit impaired loans	$	8,594	$	214,562	$	57,343	$	266,484	$	58,688	$	26,225	$	—	$	631,896

Three Months Ended March 31, 2016
Allowance for loan losses:
Balance , December 31, 2015	$	—	$	56	$	177	$	2,986	$	313	$	174	$	—	$	3,706
Provision (benefit) for loan losses before benefit attributable to FDIC loss share agreements		—		1		—		(15)		317		45		—		348
Benefit attributable to FDIC loss share agreements		—		—		—		23		—		—		—		23
Total provision (benefit) for loan losses charged to operations		—		1		—		8		317		45		—		371
Provision for loan losses recorded through the FDIC loss share receivable		—		—		—		(23)		—		—		—		(23)
Reduction due to loan removals		—		(11)		(23)		(108)		(24)		(11)		—		(177)
Balance, March 31, 2016	$	—	$	46	$	154	$	2,863	$	606	$	208	$	—	$	3,877
Loans individually evaluated for impairment	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Loans collectively evaluated for impairment	$	—	$	46	$	154	$	2,863	$	606	$	208	$	—	$	3,877
Loans:*
Loans individually evaluated for impairment	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Loans collectively evaluated for impairment		12,445		237,393		51,379		298,537		67,612		28,948		—		696,314
Total acquired credit impaired loans	$	12,445	$	237,393	$	51,379	$	298,537	$	67,612	$	28,948	$	—	$	696,314

*— The carrying value of acquired credit impaired loans includes a non accretable difference which is primarily associated with the assessment of credit quality of acquired loans.

As part of the ongoing monitoring of the credit quality of the Company’s loan portfolio, management tracks certain credit quality indicators, including trends related to (i) the level of classified loans, (ii) net charge-offs, (iii) non-performing loans (see details below), and (iv) the general economic conditions of the markets that we serve.

The Company utilizes a risk grading matrix to assign a risk grade to each of its loans. A description of the general characteristics of the risk grades is as follows:

Pass—These loans range from minimal credit risk to average, however, still acceptable credit risk.

Special mention—A special mention loan has potential weaknesses that deserve management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or the institution’s credit position at some future date.

Substandard—A substandard loan is inadequately protected by the current sound worth and paying capacity of the obligor or of the collateral pledged, if any. Loans so classified must have a well-defined weakness, or weaknesses, that may jeopardize the liquidation of the debt. A substandard loan is characterized by the distinct possibility that the Bank will sustain some loss if the deficiencies are not corrected.

Doubtful—A doubtful loan has all of the weaknesses inherent in one classified as substandard with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of the currently existing facts, conditions and values, highly questionable and improbable.

The following table presents the credit risk profile by risk grade of commercial loans for non-acquired loans:


	Construction & Development						Commercial Non-owner Occupied						Commercial Owner Occupied
	March 31,		December 31,		March 31,		March 31,		December 31,		March 31,		March 31,		December 31,		March 31,
(Dollars in thousands)	2017		2016		2016		2017		2016		2016		2017		2016		2016
Pass	$	633,953	$	567,398	$	430,533	$	790,687	$	701,150	$	507,432	$	1,167,531	$	1,149,417	$	1,022,325
Special mention		8,868		8,421		10,496		11,233		11,434		16,013		20,277		22,133		27,310
Substandard		3,723		4,645		6,168		2,078		2,131		2,192		12,196		6,195		10,878
Doubtful		—		—		—		—		—		—		—		—		—
	$	646,544	$	580,464	$	447,197	$	803,998	$	714,715	$	525,637	$	1,200,004	$	1,177,745	$	1,060,513


	Commercial & Industrial						Other Income Producing Property						Commercial Total
	March 31,		December 31,		March 31,		March 31,		December 31,		March 31,		March 31,		December 31,		March 31,
	2017		2016		2016		2017		2016		2016		2017		2016		2016
Pass	$	703,747	$	655,157	$	545,628	$	174,321	$	167,025	$	159,766	$	3,470,239	$	3,240,147	$	2,665,684
Special mention		16,746		14,325		6,285		6,176		9,280		10,729		63,300		65,593		70,833
Substandard		5,481		1,916		1,614		1,919		1,933		4,722		25,397		16,820		25,574
Doubtful		—		—		—		—		—		—		—		—		—
	$	725,974	$	671,398	$	553,527	$	182,416	$	178,238	$	175,217	$	3,558,936	$	3,322,560	$	2,762,091

The following table presents the credit risk profile by risk grade of consumer loans for non-acquired loans:


	Consumer Owner Occupied						Home Equity						Consumer
	March 31,		December 31,		March 31,		March 31,		December 31,		March 31,		March 31,		December 31,		March 31,
(Dollars in thousands)	2017		2016		2016		2017		2016		2016		2017		2016		2016
Pass	$	1,225,556	$	1,167,768	$	1,028,864	$	382,387	$	368,655	$	311,541	$	338,473	$	322,654	$	245,775
Special mention		13,903		15,283		17,489		7,597		8,145		7,908		625		468		744
Substandard		13,191		14,570		14,201		6,822		6,418		6,513		1,194		1,116		983
Doubtful		—		—		—		—		—		—		—		—		—
	$	1,252,650	$	1,197,621	$	1,060,554	$	396,806	$	383,218	$	325,962	$	340,292	$	324,238	$	247,502


	Other						Consumer Total
	March 31, 2017		December 31, 2016		March 31, 2016		March 31, 2017		December 31, 2016		March 31, 2016
Pass	$	15,623	$	13,404	$	76,559	$	1,962,039	$	1,872,481	$	1,662,739
Special mention		—		—		—		22,125		23,896		26,141
Substandard		—		—		—		21,207		22,104		21,697
Doubtful		—		—		—		—		—		—
	$	15,623	$	13,404	$	76,559	$	2,005,371	$	1,918,481	$	1,710,577

The following table presents the credit risk profile by risk grade of total non-acquired loans:


	Total Non-acquired Loans
	March 31,		December 31,		March 31,
(Dollars in thousands)	2017		2016		2016
Pass	$	5,432,278	$	5,112,628	$	4,328,423
Special mention		85,425		89,489		96,974
Substandard		46,604		38,924		47,271
Doubtful		—		—		—
	$	5,564,307	$	5,241,041	$	4,472,668

The following table presents the credit risk profile by risk grade of commercial loans for acquired non-credit impaired loans:


							Commercial Non-owner
	Construction & Development						Occupied						Commercial Owner Occupied
	March 31,		December 31,		March 31,		March 31,		December 31,		March 31,		March 31,		December 31,		March 31,
(Dollars in thousands)	2017		2016		2016		2017		2016		2016		2017		2016		2016
Pass	$	139,748	$	8,997	$	11,954	$	213,827	$	28,368	$	30,212	$	233,397	$	26,920	$	36,817
Special mention		1,316		253		208		3,937		6,171		381		5,057		—		320
Substandard		833		840		862		86		89		5,937		158		275		219
Doubtful		—		—		—		—		—		—		—		—		—
	$	141,897	$	10,090	$	13,024	$	217,850	$	34,628	$	36,530	$	238,612	$	27,195	$	37,356


							Other Income Producing
	Commercial & Industrial						Property						Commercial Total
	March 31,		December 31,		March 31,		March 31,		December 31,		March 31,		March 31,		December 31,		March 31,
	2017		2016		2016		2017		2016		2016		2017		2016		2016
Pass	$	132,474	$	13,475	$	20,203	$	89,596	$	38,361	$	47,938	$	809,042	$	116,121	$	147,124
Special mention		3,787		117		151		1,741		273		426		15,838		6,814		1,486
Substandard		48		49		755		707		708		759		1,832		1,961		8,532
Doubtful		—		—		—		—		—		—		—		—		—
	$	136,309	$	13,641	$	21,109	$	92,044	$	39,342	$	49,123	$	826,712	$	124,896	$	157,142

The following table presents the credit risk profile by risk grade of consumer loans for acquired non-credit impaired loans:


	Consumer Owner Occupied						Home Equity						Consumer
	March 31,		December 31,		March 31,		March 31,		December 31,		March 31,		March 31,		December 31,		March 31,
(Dollars in thousands)	2017		2016		2016		2017		2016		2016		2017		2016		2016
Pass	$	546,049	$	404,761	$	491,423	$	176,678	$	151,752	$	173,764	$	148,798	$	139,686	$	160,247
Special mention		2,623		1,326		418		4,700		4,113		4,010		1,243		1,102		609
Substandard		1,906		2,183		2,631		5,033		5,014		6,614		1,900		1,866		2,380
Doubtful		—		—		—		—		—		—		—		—		—
	$	550,578	$	408,270	$	494,472	$	186,411	$	160,879	$	184,388	$	151,941	$	142,654	$	163,236


	Consumer Total
	March 31,		December 31,		March 31,
	2017		2016		2016
Pass	$	871,525	$	696,199	$	825,434
Special mention		8,566		6,541		5,037
Substandard		8,839		9,063		11,625
Doubtful		—		—		—
	$	888,930	$	711,803	$	842,096

The following table presents the credit risk profile by risk grade of total acquired non-credit impaired loans:


	Total Acquired
	Non-credit Impaired Loans
	March 31,		December 31,		March 31,
(Dollars in thousands)	2017		2016		2016
Pass	$	1,680,567	$	812,320	$	972,558
Special mention		24,404		13,355		6,523
Substandard		10,671		11,024		20,157
Doubtful		—		—		—
	$	1,715,642	$	836,699	$	999,238

The following table presents the credit risk profile by risk grade of acquired credit impaired loans (identified as credit-impaired at the time of acquisition), net of the related discount (this table should be read in conjunction with the allowance for acquired credit impaired loan losses table found on page 24):


	Commercial Loans Greater												Commercial Real Estate—
	Than or Equal to												Construction and
	$1 million-CBT						Commercial Real Estate						Development
	March 31,		December 31,		March 31,		March 31,		December 31,		March 31,		March 31,		December 31,		March 31,
(Dollars in thousands)	2017		2016		2016		2017		2016		2016		2017		2016		2016
Pass	$	8,274	$	8,297	$	11,065	$	162,349	$	162,870	$	169,991	$	28,157	$	21,150	$	24,856
Special mention		—		—		1,016		24,412		26,238		32,536		15,117		12,643		13,856
Substandard		320		320		364		27,801		21,096		34,866		14,069		10,580		12,580
Doubtful		—		—		—		—		—		—		—		—		87
	$	8,594	$	8,617	$	12,445	$	214,562	$	210,204	$	237,393	$	57,343	$	44,373	$	51,379


	Residential Real Estate						Consumer						Commercial & Industrial
	March 31,		December 31,		March 31,		March 31,		December 31,		March 31,		March 31,		December 31,		March 31,
	2017		2016		2016		2017		2016		2016		2017		2016		2016
Pass	$	142,847	$	138,343	$	157,534	$	9,704	$	8,513	$	10,228	$	16,869	$	17,371	$	20,422
Special mention		53,539		52,546		60,922		19,124		19,685		22,417		4,645		4,614		2,561
Substandard		70,098		67,211		80,081		29,860		31,102		34,967		4,711		3,362		5,965
Doubtful		—		—		—		—		—		—		—		—		—
	$	266,484	$	258,100	$	298,537	$	58,688	$	59,300	$	67,612	$	26,225	$	25,347	$	28,948


	Total Acquired
	Credit Impaired Loans
	March 31,		December 31,		March 31,
	2017		2016		2016
Pass	$	368,200	$	356,544	$	394,096
Special mention		116,837		115,726		133,308
Substandard		146,859		133,671		168,823
Doubtful		—		—		87
	$	631,896	$	605,941	$	696,314

The risk grading of acquired credit impaired loans is determined utilizing a loan’s contractual balance, while the amount recorded in the financial statements and reflected above is the carrying value. In an FDIC-assisted acquisition, covered acquired loans are initially recorded at their fair value, including a credit discount due to the high concentration of substandard and doubtful loans. Note that all covered acquired loans are now uncovered due to the early termination agreement with the FDIC on June 23, 2016.

The following table presents an aging analysis of past due loans, segregated by class for non-acquired loans:


	30 - 59 Days		60 - 89 Days		90+ Days		Total				Total
(Dollars in thousands)	Past Due		Past Due		Past Due		Past Due		Current		Loans
March 31, 2017
Commercial real estate:
Construction and land development	$	345	$	100	$	471	$	916	$	645,628	$	646,544
Commercial non-owner occupied		759		664		304		1,727		802,271		803,998
Commercial owner occupied		1,811		1,988		1,375		5,174		1,194,830		1,200,004
Consumer real estate:
Consumer owner occupied		1,076		31		993		2,100		1,250,550		1,252,650
Home equity loans		434		341		1,404		2,179		394,627		396,806
Commercial and industrial		366		159		174		699		725,275		725,974
Other income producing property		310		104		190		604		181,812		182,416
Consumer		273		114		527		914		339,378		340,292
Other loans		—		—		—		—		15,623		15,623
	$	5,374	$	3,501	$	5,438	$	14,313	$	5,549,994	$	5,564,307
December 31, 2016
Commercial real estate:
Construction and land development	$	256	$	313	$	1,026	$	1,595	$	578,869	$	580,464
Commercial non-owner occupied		647		232		137		1,016		713,699		714,715
Commercial owner occupied		1,272		957		1,478		3,707		1,174,038		1,177,745
Consumer real estate:
Consumer owner occupied		1,473		246		1,454		3,173		1,194,448		1,197,621
Home equity loans		566		889		838		2,293		380,925		383,218
Commercial and industrial		1,033		216		345		1,594		669,804		671,398
Other income producing property		310		94		147		551		177,687		178,238
Consumer		666		355		395		1,416		322,822		324,238
Other loans		—		—		—		—		13,404		13,404
	$	6,223	$	3,302	$	5,820	$	15,345	$	5,225,696	$	5,241,041
March 31, 2016
Commercial real estate:
Construction and land development	$	476	$	213	$	995	$	1,684	$	445,513	$	447,197
Commercial non-owner occupied		45		27		137		209		525,428		525,637
Commercial owner occupied		1,153		738		1,255		3,146		1,057,367		1,060,513
Consumer real estate:
Consumer owner occupied		1,649		677		2,978		5,304		1,055,250		1,060,554
Home equity loans		943		77		939		1,959		324,003		325,962
Commercial and industrial		618		149		562		1,329		552,198		553,527
Other income producing property		95		348		276		719		174,498		175,217
Consumer		328		94		249		671		246,831		247,502
Other loans		—		—		—		—		76,559		76,559
	$	5,307	$	2,323	$	7,391	$	15,021	$	4,457,647	$	4,472,668

The following table presents an aging analysis of past due loans, segregated by class for acquired non-credit impaired loans:


	30 - 59 Days		60 - 89 Days		90+ Days		Total				Total
(Dollars in thousands)	Past Due		Past Due		Past Due		Past Due		Current		Loans
March 31, 2017
Commercial real estate:
Construction and land development	$	386	$	32	$	160	$	578	$	141,319	$	141,897
Commercial non-owner occupied		26		—		—		26		217,824		217,850
Commercial owner occupied		1,069		143		—		1,212		237,400		238,612
Consumer real estate:
Consumer owner occupied		1,293		482		438		2,213		548,365		550,578
Home equity loans		823		318		1,133		2,274		184,137		186,411
Commercial and industrial		3,484		—		—		3,484		132,825		136,309
Other income producing property		192		—		35		227		91,817		92,044
Consumer		168		74		528		770		151,171		151,941
	$	7,441	$	1,049	$	2,294	$	10,784	$	1,704,858	$	1,715,642
December 31, 2016
Commercial real estate:
Construction and land development	$	4	$	—	$	160	$	164	$	9,926	$	10,090
Commercial non-owner occupied		—		—		—		—		34,628		34,628
Commercial owner occupied		—		—		106		106		27,089		27,195
Consumer real estate:
Consumer owner occupied		330		113		256		699		407,571		408,270
Home equity loans		476		941		741		2,158		158,721		160,879
Commercial and industrial		2		—		—		2		13,639		13,641
Other income producing property		131		1		—		132		39,210		39,342
Consumer		437		210		576		1,223		141,431		142,654
	$	1,380	$	1,265	$	1,839	$	4,484	$	832,215	$	836,699
March 31, 2016
Commercial real estate:
Construction and land development	$	44	$	39	$	21	$	104	$	12,920	$	13,024
Commercial non-owner occupied		30		—		—		30		36,500		36,530
Commercial owner occupied		—		—		219		219		37,137		37,356
Consumer real estate:
Consumer owner occupied		23		234		390		647		493,825		494,472
Home equity loans		1,071		255		635		1,961		182,427		184,388
Commercial and industrial		4		—		—		4		21,105		21,109
Other income producing property		37		—		—		37		49,086		49,123
Consumer		289		85		676		1,050		162,186		163,236
	$	1,498	$	613	$	1,941	$	4,052	$	995,186	$	999,238

The following table presents an aging analysis of past due loans, segregated by class for acquired credit impaired loans:


	30 - 59 Days		60 - 89 Days		90+ Days		Total				Total
(Dollars in thousands)	Past Due		Past Due		Past Due		Past Due		Current		Loans
March 31, 2017
Commercial loans greater than or equal to $1 million-CBT	$	—	$	—	$	—	$	—	$	8,594	$	8,594
Commercial real estate		1,482		1,733		3,984		7,199		207,363		214,562
Commercial real estate—construction and development		877		17		4,305		5,199		52,144		57,343
Residential real estate		4,226		1,809		8,577		14,612		251,872		266,484
Consumer		759		224		1,104		2,087		56,601		58,688
Commercial and industrial		504		—		2,849		3,353		22,872		26,225
	$	7,848	$	3,783	$	20,819	$	32,450	$	599,446	$	631,896
December 31, 2016
Commercial loans greater than or equal to $1 million-CBT	$	—	$	—	$	—	$	—	$	8,617	$	8,617
Commercial real estate		573		357		2,667		3,597		206,607		210,204
Commercial real estate—construction and development		168		489		3,612		4,269		40,104		44,373
Residential real estate		4,688		1,105		6,777		12,570		245,530		258,100
Consumer		1,412		381		1,231		3,024		56,276		59,300
Commercial and industrial		46		24		536		606		24,741		25,347
	$	6,887	$	2,356	$	14,823	$	24,066	$	581,875	$	605,941
March 31, 2016
Commercial loans greater than or equal to $1 million-CBT	$	—	$	—	$	—	$	—	$	12,445	$	12,445
Commercial real estate		2,206		715		4,024		6,945		230,448		237,393
Commercial real estate—construction and development		285		140		1,520		1,945		49,434		51,379
Residential real estate		2,572		956		7,550		11,078		287,459		298,537
Consumer		1,380		170		1,925		3,475		64,137		67,612
Commercial and industrial		244		60		878		1,182		27,766		28,948
	$	6,687	$	2,041	$	15,897	$	24,625	$	671,689	$	696,314

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


	Unpaid		Recorded		Gross
	Contractual		Investment		Recorded		Total
	Principal		With No		Investment		Recorded		Related
(Dollars in thousands)	Balance		Allowance		With Allowance		Investment		Allowance
March 31, 2017
Commercial real estate:
Construction and land development	$	13,674	$	1,344	$	7,942	$	9,286	$	459
Commercial non-owner occupied		2,393		218		557		775		158
Commercial owner occupied		10,082		4,191		2,060		6,251		60
Consumer real estate:
Consumer owner occupied		6,084		1,483		3,229		4,712		68
Home equity loans		2,962		252		2,180		2,432		297
Commercial and industrial		2,419		—		1,270		1,270		387
Other income producing property		3,153		97		2,311		2,408		224
Consumer		475		—		189		189		5
Other loans		—		—		—		—		—
Total	$	41,242	$	7,585	$	19,738	$	27,323	$	1,658
December 31, 2016
Commercial real estate:
Construction and land development	$	7,394	$	1,074	$	1,959	$	3,033	$	348
Commercial non-owner occupied		2,417		223		583		806		170
Commercial owner occupied		10,118		3,976		2,269		6,245		67
Consumer real estate:
Consumer owner occupied		7,090		2,120		3,553		5,673		80
Home equity loans		2,165		244		1,430		1,674		40
Commercial and industrial		2,335		—		1,263		1,263		386
Other income producing property		3,166		99		2,273		2,372		242
Consumer		394		—		145		145		4
Other loans		—		—		—		—		—
Total	$	35,079	$	7,736	$	13,475	$	21,211	$	1,337
March 31, 2016
Commercial real estate:
Construction and land development	$	11,414	$	988	$	5,283	$	6,271	$	843
Commercial non-owner occupied		2,757		349		786		1,135		22
Commercial owner occupied		11,316		4,004		3,697		7,701		148
Consumer real estate:
Consumer owner occupied		9,463		2,891		4,752		7,643		148
Home equity loans		3,835		344		2,838		3,182		79
Commercial and industrial		2,181		259		618		877		17
Other income producing property		6,270		496		4,898		5,394		414
Consumer		338		—		142		142		4
Other		1,061		—		846		846		24
Total	$	48,635	$	9,331	$	23,860	$	33,191	$	1,699

Acquired credit impaired loans are accounted for in pools as shown on page 19 rather than being individually evaluated for impairment; therefore, the table above excludes acquired credit impaired loans.

The following summarizes the average investment in impaired non-acquired loans, and interest income recognized on these loans:


	Three Months Ended March 31,
	2017				2016
	Average				Average
	Investment in		Interest Income		Investment in		Interest Income
(Dollars in thousands)	Impaired Loans		Recognized		Impaired Loans		Recognized
Commercial real estate:
Construction and land development	$	6,160	$	47	$	6,276	$	49
Commercial non-owner occupied		791		6		1,293		15
Commercial owner occupied		6,248		76		7,713		74
Consumer real estate:
Consumer owner occupied		5,192		39		7,596		46
Home equity loans		2,053		20		1,746		26
Commercial and industrial		1,266		18		1,182		6
Other income producing property		2,390		35		5,143		62
Consumer		167		—		122		1
Other loans		—		—		634		2
Total Impaired Loans	$	24,267	$	241	$	31,705	$	281

The following is a summary of information pertaining to non-acquired nonaccrual loans by class, including restructured loans:


	March 31,		December 31,		March 31,
(Dollars in thousands)	2017		2016		2016
Commercial non-owner occupied real estate:
Construction and land development	$	195	$	672	$	1,297
Commercial non-owner occupied		2,078		578		137
Total commercial non-owner occupied real estate		2,273		1,250		1,434
Consumer real estate:
Consumer owner occupied		3,902		5,711		7,505
Home equity loans		11		1,629		2,086
Total consumer real estate		3,913		7,340		9,591
Commercial owner occupied real estate		2,905		2,189		2,452
Commercial and industrial		473		420		610
Other income producing property		1,316		356		1,116
Consumer		1,029		930		786
Restructured loans		1,049		1,979		3,058
Total loans on nonaccrual status	$	12,958	$	14,464	$	19,047

The following is a summary of information pertaining to acquired non-credit impaired nonaccrual loans by class, including restructured loans:


	March 31,		December 31,		March 31,
(Dollars in thousands)	2017		2016		2016
Commercial non-owner occupied real estate:
Construction and land development	$	229	$	232	$	102
Commercial non-owner occupied		—		—		—
Total commercial non-owner occupied real estate		229		232		102
Consumer real estate:
Consumer owner occupied		1,453		1,405		852
Home equity loans		1,784		1,643		1,279
Total consumer real estate		3,237		3,048		2,131
Commercial owner occupied real estate		158		61		219
Commercial and industrial		0		1		2
Other income producing property		83		145		157
Consumer		1,208		1,241		1,340
Total loans on nonaccrual status	$	4,915	$	4,728	$	3,951

In the course of resolving delinquent loans, the Bank may choose to restructure the contractual terms of certain loans. Any loans that are modified are reviewed by the Bank to determine if a troubled debt restructuring (“TDR” or “restructured loan”) has occurred. The Bank designates loan modifications as TDRs when it grants a concession to a borrower that it would not otherwise consider due to the borrower experiencing financial difficulty (FASB ASC Topic 310-40). The concessions granted on TDRs generally include terms to reduce the interest rate, extend the term of the debt obligation, or modify the payment structure on the debt obligation.

Loans on nonaccrual status at the date of modification are initially classified as nonaccrual TDRs. Loans on accruing status at the date of concession are initially classified as accruing TDRs if the note is reasonably assured of repayment and performance is expected in accordance with its modified terms. Such loans may be designated as nonaccrual loans subsequent to the concession date if reasonable doubt exists as to the collection of interest or principal under the restructuring agreement. Nonaccrual TDRs are returned to accruing status when there is economic substance to the restructuring, there is documented credit evaluation of the borrower’s financial condition, the remaining balance is reasonably assured of repayment in accordance with its modified terms, and the borrower has demonstrated sustained repayment performance in accordance with the modified terms for a reasonable period of time (generally a minimum of six months). For the three months ended March 31, 2017 and 2016, the Company’s TDR’s were not material.