Note 6 — Loans and Allowance for Loan Losses

The following is a summary of non-acquired loans:


	June 30,		December 31,		June 30,
(Dollars in thousands)	2018		2017		2017
Non-acquired loans:
Commercial non-owner occupied real estate:
Construction and land development	$	906,890	$	830,875	$	712,242
Commercial non-owner occupied		1,135,235		1,008,893		952,911
Total commercial non-owner occupied real estate		2,042,125		1,839,768		1,665,153
Consumer real estate:
Consumer owner occupied		1,733,924		1,530,260		1,382,922
Home equity loans		456,946		437,642		411,532
Total consumer real estate		2,190,870		1,967,902		1,794,454
Commercial owner occupied real estate		1,372,453		1,262,776		1,204,953
Commercial and industrial		941,067		815,187		762,583
Other income producing property		205,507		193,847		189,326
Consumer		416,650		378,985		357,761
Other loans		28,867		33,690		18,163
Total non-acquired loans		7,197,539		6,492,155		5,992,393
Less allowance for loan losses		(47,874)		(43,448)		(40,149)
Non-acquired loans, net	$	7,149,665	$	6,448,707	$	5,952,244

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


	June 30,		December 31,		June 30,
(Dollars in thousands)	2018		2017		2017
FASB ASC Topic 310-20 acquired loans:
Commercial non-owner occupied real estate:
Construction and land development	$	281,282	$	403,357	$	112,855
Commercial non-owner occupied		752,465		817,166		209,560
Total commercial non-owner occupied real estate		1,033,747		1,220,523		322,415
Consumer real estate:
Consumer owner occupied		676,596		710,611		520,106
Home equity loans		278,906		320,591		177,129
Total consumer real estate		955,502		1,031,202		697,235
Commercial owner occupied real estate		486,254		521,818		221,566
Commercial and industrial		304,864		398,696		117,884
Other income producing property		169,392		196,669		83,403
Consumer		126,665		137,710		143,478
Other		—		1,289		—
Total FASB ASC Topic 310-20 acquired loans	$	3,076,424	$	3,507,907	$	1,585,981

The unamortized discount related to the acquired non-credit impaired loans totaled $43.6 million, $65.2 million, and $22.9 million at June 30, 2018, December 31, 2017, and June 30, 2017, 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:


	June 30,		December 31,		June 30,
(Dollars in thousands)	2018		2017		2017
FASB ASC Topic 310-30 acquired loans:
Commercial real estate	$	227,739	$	234,595	$	214,795
Commercial real estate—construction and development		40,951		49,649		52,977
Residential real estate		229,502		260,787		256,602
Consumer		45,633		51,453		56,362
Commercial and industrial		12,580		26,946		25,486
Total FASB ASC Topic 310-30 acquired loans		556,405		623,430		606,222
Less allowance for loan losses		(4,426)		(4,627)		(3,741)
FASB ASC Topic 310-30 acquired loans, net	$	551,979	$	618,803	$	602,481

The table below reflects refined contractual loan payments (principal and interest), estimates of the amounts not expected to be collected (non-accretable difference), accretable yield (interest income recognized over time), and the resulting fair values at the acquisition date for PSC (November 30, 2017) for loans accounted for using FASB ASC Topic 310-30. During the second quarter of 2018, the initial fair value of loans at acquisition were adjusted to reflect movement of loans between the ASC Topic 310-20 portfolio and the ASC Topic 310-30 portfolio and the movement in interest rates from the initial valuation.


	November 30, 2017
	Loans Impaired
(Dollars in thousands)	at Acquisition
Contractual principal and interest	$	113,584
Non-accretable difference		(27,248)
Cash flows expected to be collected		86,336
Accretable difference		(7,369)
Carrying value	$	78,967

The table above excludes $2.1 billion ($2.2 billion in contractual principal less a $46.5 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.

The table below reflects refined contractual loan payments (principal and interest), estimates of the amounts not expected to be collected (non-accretable difference), accretable yield (interest income recognized over time), and the resulting fair values at the acquisition date for SBFC (January 3, 2017) for loans accounted for using FASB ASC Topic 310-30. During the third quarter of 2017, the initial fair values of the acquired loan portfolios were adjusted to reflect movement of loans between the ASC Topic 310-20 portfolio and the ASC Topic 310-30 portfolio


	January 3, 2017
	Loans Impaired
(Dollars in thousands)	at Acquisition
Contractual principal and interest	$	78,963
Non-accretable difference		(13,072)
Cash flows expected to be collected		65,891
Accretable difference		(4,910)
Carrying value	$	60,981

The table above excludes $986.5 million ($1.0 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 June 30, 2018, December 31, 2017 and June 30, 2017 are as follows:


	June 30,		December 31,		June 30,
(Dollars in thousands)	2018		2017		2017
Contractual principal and interest	$	721,606	$	795,850	$	774,471
Non-accretable difference		(43,397)		(39,324)		(28,966)
Cash flows expected to be collected		678,209		756,526		745,505
Accretable yield		(121,804)		(133,096)		(139,283)
Carrying value	$	556,405	$	623,430	$	606,222
Allowance for acquired loan losses	$	(4,426)	$	(4,627)	$	(3,741)

Income on acquired credit impaired loans that are not impaired at the acquisition date but is accounted for under FASB ASC Topic 310.30 is recognized in the same manner as loans impaired at the acquisition date. 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:


	Six Months Ended June 30,
(Dollars in thousands)	2018		2017
Balance at beginning of period	$	618,803	$	602,546
Fair value of acquired loans		—		55,850
Net reductions for payments, foreclosures, and accretion		(67,025)		(55,569)
Change in the allowance for loan losses on acquired loans		201		(346)
Balance at end of period, net of allowance for loan losses on acquired loans	$	551,979	$	602,481

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


	Six Months Ended June 30,
(Dollars in thousands)	2018		2017
Balance at beginning of period	$	133,096	$	155,379
Addition from the SBFC acquisition		—		4,603
PSC acquisition Day 1 adjustment		(1,460)		—
Accretion		(25,195)		(29,511)
Reclass of nonaccretable difference due to improvement in expected cash flows		15,585		9,016
Other changes, net		(222)		(204)
Balance at end of period	$	121,804	$	139,283

In the second quarter of 2018, the accretable yield balance declined by $8.1 million as loan accretion (income) of $12.8 million was recognized. This was partially offset by improved expected cash flows of $6.4 million during the second quarter of 2018.

Our loan loss policy adheres to GAAP as well as interagency guidance. The ALLL is based upon estimates made by management. We maintain an ALLL 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, as noted above, 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 ALLL 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. 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 ALLL 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 ALLL. 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.

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 June 30, 2018:
Balance at beginning of period	$	45,203	$	—	$	4,084	$	49,287
Loans charged-off		(1,240)		(1,183)		—		(2,423)
Recoveries of loans previously charged off (1)		1,051		87		—		1,138
Net charge-offs		(189)		(1,096)		—		(1,285)
Provision for loan losses charged to operations		2,860		1,096		522		4,478
Reduction due to loan removals		—		—		(180)		(180)
Balance at end of period	$	47,874	$	—	$	4,426	$	52,300
Three Months Ended June 30, 2017:
Balance at beginning of period	$	38,449	$	—	$	4,556	$	43,005
Loans charged-off		(1,292)		(501)		—		(1,793)
Recoveries of loans previously charged off (1)		536		72		—		608
Net charge-offs		(756)		(429)		—		(1,185)
Provision for loan losses charged to operations		2,456		429		(572)		2,313
Reduction due to loan removals		—		—		(243)		(243)
Balance at end of period	$	40,149	$	—	$	3,741	$	43,890


	Non-acquired		Acquired Non-Credit		Acquired Credit
(Dollars in thousands)	Loans		Impaired Loans		Impaired Loans		Total
Six Months Ended June 30, 2018:
Balance at beginning of period	$	43,448	$	—	$	4,627	$	48,075
Loans charged-off		(2,409)		(1,517)		—		(3,926)
Recoveries of loans previously charged off (1)		1,853		252		—		2,105
Net charge-offs		(556)		(1,265)		—		(1,821)
Provision for loan losses charged to operations		4,982		1,265		685		6,932
Reduction due to loan removals		—		—		(886)		(886)
Balance at end of period	$	47,874	$	—	$	4,426	$	52,300
Six Months Ended June 30, 2017:
Balance at beginning of period	$	36,960	$	—	$	3,395	$	40,355
Loans charged-off		(2,589)		(890)		—		(3,479)
Recoveries of loans previously charged off (1)		1,205		135		—		1,340
Net charge-offs		(1,384)		(755)		—		(2,139)
Total provision for loan losses charged to operations		4,573		755		692		6,020
Reduction due to loan removals		—		—		(346)		(346)
Balance at end of period	$	40,149	$	—	$	3,741	$	43,890

(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 ALLL.

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 June 30, 2018
Allowance for loan losses:
Balance, March 31, 2018	$	5,847	$	6,798	$	8,346	$	10,193	$	3,237	$	6,333	$	1,393	$	2,899	$	157	$	45,203
Charge-offs		—		—		(81)		—		(5)		(59)		—		(1,095)		—		(1,240)
Recoveries		547		2		25		41		27		199		3		207		—		1,051
Provision (benefit)		(207)		409		317		711		109		238		17		1,060		206		2,860
Balance, June 30, 2018	$	6,187	$	7,209	$	8,607	$	10,945	$	3,368	$	6,711	$	1,413	$	3,071	$	363	$	47,874
Loans individually evaluated for impairment	$	846	$	93	$	44	$	30	$	180	$	485	$	144	$	7	$	—	$	1,829
Loans collectively evaluated for impairment	$	5,341	$	7,116	$	8,563	$	10,915	$	3,188	$	6,226	$	1,269	$	3,064	$	363	$	46,045
Loans:
Loans individually evaluated for impairment	$	42,392	$	1,348	$	4,750	$	5,628	$	3,144	$	1,834	$	3,240	$	257	$	—	$	62,593
Loans collectively evaluated for impairment		864,498		1,133,887		1,367,703		1,728,296		453,802		939,233		202,267		416,393		28,867		7,134,946
Total non-acquired loans	$	906,890	$	1,135,235	$	1,372,453	$	1,733,924	$	456,946	$	941,067	$	205,507	$	416,650	$	28,867	$	7,197,539
Three Months Ended June 30, 2017
Allowance for loan losses:
Balance, March 31, 2017	$	4,649	$	5,464	$	7,894	$	8,108	$	3,456	$	5,124	$	1,345	$	2,443	$	(34)	$	38,449
Charge-offs		(69)		—		—		(62)		(190)		(167)		(7)		(797)		—		(1,292)
Recoveries		68		7		98		27		21		143		5		167		—		536
Provision (benefit)		1,098		693		(453)		496		(40)		43		36		719		(136)		2,456
Balance, June 30, 2017	$	5,746	$	6,164	$	7,539	$	8,569	$	3,247	$	5,143	$	1,379	$	2,532	$	(170)	$	40,149
Loans individually evaluated for impairment	$	1,310	$	146	$	62	$	57	$	119	$	362	$	238	$	6	$	—	$	2,300
Loans collectively evaluated for impairment	$	4,436	$	6,018	$	7,477	$	8,512	$	3,128	$	4,781	$	1,141	$	2,526	$	(170)	$	37,849
Loans:
Loans individually evaluated for impairment	$	30,037	$	754	$	6,054	$	4,575	$	2,626	$	1,198	$	3,641	$	235	$	—	$	49,120
Loans collectively evaluated for impairment		682,205		952,157		1,198,899		1,378,347		408,906		761,385		185,685		357,526		18,163		5,943,273
Total non-acquired loans	$	712,242	$	952,911	$	1,204,953	$	1,382,922	$	411,532	$	762,583	$	189,326	$	357,761	$	18,163	$	5,992,393


	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
Six Months Ended June 30, 2018
Allowance for loan losses:
Balance, December 31, 2017	$	5,921	$	6,525	$	8,128	$	9,668	$	3,250	$	5,488	$	1,375	$	2,788	$	305	$	43,448
Charge-offs		(35)		—		(81)		(4)		(71)		(144)		—		(2,074)		—		(2,409)
Recoveries		989		4		33		64		128		214		11		410		—		1,853
Provision (benefit)		(688)		680		527		1,217		61		1,153		27		1,947		58		4,982
Balance, June 30, 2018	$	6,187	$	7,209	$	8,607	$	10,945	$	3,368	$	6,711	$	1,413	$	3,071	$	363	$	47,874
Six Months Ended June 30, 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		(474)		—		—		(185)		(224)		(189)		(7)		(1,510)		—		(2,589)
Recoveries		222		48		105		76		95		233		48		378		—		1,205
Provision (benefit)		1,907		1,136		(588)		858		165		257		(204)		1,314		(272)		4,573
Balance, June 30, 2017	$	5,746	$	6,164	$	7,539	$	8,569	$	3,247	$	5,143	$	1,379	$	2,532	$	(170)	$	40,149

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 June 30, 2018
Allowance for loan losses:
Balance at beginning of period	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Charge-offs		(106)		—		(28)		—		(158)		(764)		—		(127)		(1,183)
Recoveries		6		—		—		5		28		2		—		46		87
Provision (benefit)		100		—		28		(5)		130		762		—		81		1,096
Balance, June 30, 2018	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—

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

Loans:
Loans individually evaluated for impairment	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Loans collectively evaluated for impairment		281,282		752,465		486,254		676,596		278,906		304,864		169,392		126,665		3,076,424
Total acquired non-credit impaired loans	$	281,282	$	752,465	$	486,254	$	676,596	$	278,906	$	304,864	$	169,392	$	126,665	$	3,076,424

Three Months Ended June 30, 2017
Allowance for loan losses:
Balance at beginning of period	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Charge-offs		—		—		—		303		(664)		—		—		(140)		(501)
Recoveries		1		—		—		2		60		1		1		7		72
Provision (benefit)		(1)		—		—		(305)		604		(1)		(1)		133		429
Balance, June 30, 2017	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—

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

Loans:
Loans individually evaluated for impairment	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Loans collectively evaluated for impairment		112,855		209,560		221,566		520,106		177,129		117,884		83,403		143,478		1,585,981
Total acquired non-credit impaired loans	$	112,855	$	209,560	$	221,566	$	520,106	$	177,129	$	117,884	$	83,403	$	143,478	$	1,585,981


	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
Six Months Ended June 30, 2018
Allowance for loan losses:
Balance, December 31, 2017	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Charge-offs		(107)		—		(28)		(70)		(240)		(807)		—		(265)		(1,517)
Recoveries		7		—		—		62		79		55		—		49		252
Provision (benefit)		100		—		28		8		161		752		—		216		1,265
Balance, June 30, 2018	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Six Months Ended June 30, 2017
Allowance for loan losses:
Balance, December 31, 2016	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Charge-offs		—		—		—		(10)		(664)		(2)		—		(214)		(890)
Recoveries		2		—		—		42		69		2		1		19		135
Provision (benefit)		(2)		—		—		(32)		595		—		(1)		195		755
Balance, June 30, 2017	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—

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


			Commercial
			Real Estate-
	Commercial		Construction and		Residential				Commercial
(Dollars in thousands)	Real Estate		Development		Real Estate		Consumer		and Industrial		Total
Three Months Ended June 30, 2018
Allowance for loan losses:
Balance, March 31, 2018	$	261	$	215	$	2,509	$	594	$	505	$	4,084
Provision (benefit) for loan losses		375		390		137		(19)		(361)		522
Reduction due to loan removals		—		(29)		(132)		(3)		(16)		(180)
Balance, June 30, 2018	$	636	$	576	$	2,514	$	572	$	128	$	4,426
Loans individually evaluated for impairment	$	—	$	—	$	—	$	—	$	—	$	—
Loans collectively evaluated for impairment	$	636	$	576	$	2,514	$	572	$	128	$	4,426
Loans:*
Loans individually evaluated for impairment	$	—	$	—	$	—	$	—	$	—	$	—
Loans collectively evaluated for impairment		227,739		40,951		229,502		45,633		12,580		556,405
Total acquired credit impaired loans	$	227,739	$	40,951	$	229,502	$	45,633	$	12,580	$	556,405

Three Months Ended June 30, 2017
Allowance for loan losses:
Balance , March 31, 2017	$	335	$	130	$	3,108	$	589	$	394	$	4,556
Provision (benefit) for loan losses		(292)		—		(192)		(37)		(51)		(572)
Reduction due to loan removals		(3)		(38)		(175)		(4)		(23)		(243)
Balance, June 30, 2017	$	40	$	92	$	2,741	$	548	$	320	$	3,741
Loans individually evaluated for impairment	$	—	$	—	$	—	$	—	$	—	$	—
Loans collectively evaluated for impairment	$	40	$	92	$	2,741	$	548	$	320	$	3,741
Loans:*
Loans individually evaluated for impairment	$	—	$	—	$	—	$	—	$	—	$	—
Loans collectively evaluated for impairment		214,795		52,977		256,602		56,362		25,486		606,222
Total acquired credit impaired loans	$	214,795	$	52,977	$	256,602	$	56,362	$	25,486	$	606,222


			Commercial
			Real Estate-
	Commercial		Construction and		Residential				Commercial
(Dollars in thousands)	Real Estate		Development		Real Estate		Consumer		and Industrial		Total
Six Months Ended June 30, 2018
Allowance for loan losses:
Balance, December 31, 2017	$	288	$	180	$	3,553	$	461	$	145	$	4,627
Provision (benefit) for loan losses		361		478		(807)		114		539		685
Reduction due to loan removals		(13)		(82)		(232)		(3)		(556)		(886)
Balance, June 30, 2018	$	636	$	576	$	2,514	$	572	$	128	$	4,426
Six Months Ended June 30, 2017
Allowance for loan losses:
Balance, December 31, 2016	$	41	$	139	$	2,419	$	558	$	238	$	3,395
Provision (benefit) for loan losses		—		(3)		559		—		136		692
Reduction due to loan removals		(1)		(44)		(237)		(10)		(54)		(346)
Balance, June 30, 2017	$	40	$	92	$	2,741	$	548	$	320	$	3,741

*— 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
	June 30,		December 31,		June 30,		June 30,		December 31,		June 30,		June 30,		December 31,		June 30,
(Dollars in thousands)	2018		2017		2017		2018		2017		2017		2018		2017		2017
Pass	$	895,887	$	818,240	$	700,200	$	1,126,099	$	999,049	$	939,254	$	1,343,624	$	1,232,927	$	1,177,687
Special mention		7,858		8,758		8,133		7,378		7,864		11,437		18,808		23,575		15,004
Substandard		3,145		3,877		3,909		1,758		1,980		2,220		10,021		6,274		12,262
Doubtful		—		—		—		—		—		—		—		—		—
	$	906,890	$	830,875	$	712,242	$	1,135,235	$	1,008,893	$	952,911	$	1,372,453	$	1,262,776	$	1,204,953


	Commercial & Industrial						Other Income Producing Property						Commercial Total
	June 30,		December 31,		June 30,		June 30,		December 31,		June 30,		June 30,		December 31,		June 30,
	2018		2017		2017		2018		2017		2017		2018		2017		2017
Pass	$	923,995	$	801,885	$	741,605	$	198,899	$	186,158	$	180,830	$	4,488,504	$	4,038,259	$	3,739,576
Special mention		8,522		11,130		15,916		4,828		6,034		6,636		47,394		57,361		57,126
Substandard		8,550		2,172		5,062		1,780		1,655		1,860		25,254		15,958		25,313
Doubtful		—		—		—		—		—		—		—		—		—
	$	941,067	$	815,187	$	762,583	$	205,507	$	193,847	$	189,326	$	4,561,152	$	4,111,578	$	3,822,015

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


	Consumer Owner Occupied						Home Equity						Consumer
	June 30,		December 31,		June 30,		June 30,		December 31,		June 30,		June 30,		December 31,		June 30,
(Dollars in thousands)	2018		2017		2017		2018		2017		2017		2018		2017		2017
Pass	$	1,706,574	$	1,502,016	$	1,356,469	$	443,953	$	424,369	$	397,857	$	415,053	$	377,425	$	356,244
Special mention		12,566		13,902		13,653		6,805		6,749		7,207		623		313		348
Substandard		14,784		14,342		12,800		6,188		6,524		6,468		974		1,247		1,169
Doubtful		—		—		—		—		—		—		—		—		—
	$	1,733,924	$	1,530,260	$	1,382,922	$	456,946	$	437,642	$	411,532	$	416,650	$	378,985	$	357,761


	Other						Consumer Total
	June 30, 2018		December 31, 2017		June 30, 2017		June 30, 2018		December 31, 2017		June 30, 2017
Pass	$	28,867	$	33,690	$	18,163	$	2,594,447	$	2,337,500	$	2,128,733
Special mention		—		—		—		19,994		20,964		21,208
Substandard		—		—		—		21,946		22,113		20,437
Doubtful		—		—		—		—		—		—
	$	28,867	$	33,690	$	18,163	$	2,636,387	$	2,380,577	$	2,170,378

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


	Total Non-acquired Loans
	June 30,		December 31,		June 30,
(Dollars in thousands)	2018		2017		2017
Pass	$	7,082,951	$	6,375,759	$	5,868,309
Special mention		67,388		78,325		78,334
Substandard		47,200		38,071		45,750
Doubtful		—		—		—
	$	7,197,539	$	6,492,155	$	5,992,393

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
	June 30,		December 31,		June 30,		June 30,		December 31,		June 30,		June 30,		December 31,		June 30,
(Dollars in thousands)	2018		2017		2017		2018		2017		2017		2018		2017		2017
Pass	$	279,239	$	394,139	$	110,776	$	738,293	$	809,241	$	205,623	$	479,399	$	513,861	$	217,392
Special mention		1,449		4,602		1,290		14,164		7,913		3,856		5,871		7,740		4,130
Substandard		594		4,616		789		8		12		81		984		217		44
Doubtful		—		—		—		—		—		—		—		—		—
	$	281,282	$	403,357	$	112,855	$	752,465	$	817,166	$	209,560	$	486,254	$	521,818	$	221,566


							Other Income Producing
	Commercial & Industrial						Property						Commercial Total
	June 30,		December 31,		June 30,		June 30,		December 31,		June 30,		June 30,		December 31,		June 30,
	2018		2017		2017		2018		2017		2017		2018		2017		2017
Pass	$	291,755	$	388,342	$	112,046	$	165,188	$	191,229	$	81,161	$	1,953,874	$	2,296,812	$	726,998
Special mention		5,248		9,883		4,642		3,381		4,547		1,542		30,113		34,685		15,460
Substandard		7,861		471		1,196		823		893		700		10,270		6,209		2,810
Doubtful		—		—		—		—		—		—		—		—		—
	$	304,864	$	398,696	$	117,884	$	169,392	$	196,669	$	83,403	$	1,994,257	$	2,337,706	$	745,268

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
	June 30,		December 31,		June 30,		June 30,		December 31,		June 30,		June 30,		December 31,		June 30,
(Dollars in thousands)	2018		2017		2017		2018		2017		2017		2018		2017		2017
Pass	$	664,594	$	703,557	$	514,294	$	263,994	$	301,842	$	167,786	$	123,807	$	134,530	$	140,426
Special mention		7,495		4,165		2,697		8,319		10,477		4,906		723		541		1,172
Substandard		4,507		2,889		3,115		6,593		8,272		4,437		2,135		2,639		1,880
Doubtful		—		—		—		—		—		—		—		—		—
	$	676,596	$	710,611	$	520,106	$	278,906	$	320,591	$	177,129	$	126,665	$	137,710	$	143,478


	Other						Consumer Total
	June 30,		December 31,		March 31,		June 30,		December 31,		June 30,
	2018		2017		2017		2018		2017		2017
Pass	$	—	$	1,289	$	—	$	1,052,395	$	1,141,218	$	822,506
Special mention		—		—		—		16,537		15,183		8,775
Substandard		—		—		—		13,235		13,800		9,432
Doubtful		—		—		—		—		—		—
	$	—	$	1,289	$	—	$	1,082,167	$	1,170,201	$	840,713

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


	Total Acquired
	Non-credit Impaired Loans
	June 30,		December 31,		June 30,
(Dollars in thousands)	2018		2017		2017
Pass	$	3,006,269	$	3,438,030	$	1,549,504
Special mention		46,650		49,868		24,235
Substandard		23,505		20,009		12,242
Doubtful		—		—		—
	$	3,076,424	$	3,507,907	$	1,585,981

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 28):


							Commercial Real Estate—
							Construction and
	Commercial Real Estate						Development
	June 30,		December 31,		June 30,		June 30,		December 31,		June 30,
(Dollars in thousands)	2018		2017		2017		2018		2017		2017
Pass	$	177,996	$	177,231	$	166,961	$	25,243	$	29,620	$	31,656
Special mention		22,568		28,708		23,162		4,884		5,132		7,851
Substandard		27,175		28,656		24,672		10,824		14,897		13,470
Doubtful		—		—		—		—		—		—
	$	227,739	$	234,595	$	214,795	$	40,951	$	49,649	$	52,977


	Residential Real Estate						Consumer						Commercial & Industrial
	June 30,		December 31,		June 30,		June 30,		December 31,		June 30,		June 30,		December 31,		June 30,
	2018		2017		2017		2018		2017		2017		2018		2017		2017
Pass	$	116,461	$	135,974	$	137,735	$	6,144	$	8,001	$	9,178	$	6,161	$	18,522	$	16,534
Special mention		46,089		54,500		52,250		15,613		17,214		18,536		1,139		1,169		4,188
Substandard		66,952		70,313		66,617		23,876		26,238		28,648		5,280		7,255		4,764
Doubtful		—		—		—		—		—		—		—		—		—
	$	229,502	$	260,787	$	256,602	$	45,633	$	51,453	$	56,362	$	12,580	$	26,946	$	25,486


	Total Acquired
	Credit Impaired Loans
	June 30,		December 31,		June 30,
	2018		2017		2017
Pass	$	332,005	$	369,348	$	362,064
Special mention		90,293		106,723		105,987
Substandard		134,107		147,359		138,171
Doubtful		—		—		—
	$	556,405	$	623,430	$	606,222

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.

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
June 30, 2018
Commercial real estate:
Construction and land development	$	1,222	$	—	$	344	$	1,566	$	905,324	$	906,890
Commercial non-owner occupied		354		19		659		1,032		1,134,203		1,135,235
Commercial owner occupied		1,578		1,599		1,314		4,491		1,367,962		1,372,453
Consumer real estate:
Consumer owner occupied		479		387		900		1,766		1,732,158		1,733,924
Home equity loans		913		473		1,114		2,500		454,446		456,946
Commercial and industrial		762		94		815		1,671		939,396		941,067
Other income producing property		157		5		259		421		205,086		205,507
Consumer		475		202		557		1,234		415,416		416,650
Other loans		—		—		—		—		28,867		28,867
	$	5,940	$	2,779	$	5,962	$	14,681	$	7,182,858	$	7,197,539
December 31, 2017
Commercial real estate:
Construction and land development	$	391	$	63	$	401	$	855	$	830,020	$	830,875
Commercial non-owner occupied		297		398		51		746		1,008,147		1,008,893
Commercial owner occupied		2,227		382		1,721		4,330		1,258,446		1,262,776
Consumer real estate:
Consumer owner occupied		1,291		140		1,943		3,374		1,526,886		1,530,260
Home equity loans		1,209		372		1,684		3,265		434,377		437,642
Commercial and industrial		477		57		915		1,449		813,738		815,187
Other income producing property		223		255		198		676		193,171		193,847
Consumer		525		196		623		1,344		377,641		378,985
Other loans		—		—		—		—		33,690		33,690
	$	6,640	$	1,863	$	7,536	$	16,039	$	6,476,116	$	6,492,155
June 30, 2017
Commercial real estate:
Construction and land development	$	102	$	—	$	505	$	607	$	711,635	$	712,242
Commercial non-owner occupied		123		150		255		528		952,383		952,911
Commercial owner occupied		1,041		799		1,562		3,402		1,201,551		1,204,953
Consumer real estate:
Consumer owner occupied		1,168		1,112		766		3,046		1,379,876		1,382,922
Home equity loans		779		311		1,370		2,460		409,072		411,532
Commercial and industrial		608		156		97		861		761,722		762,583
Other income producing property		480		104		257		841		188,485		189,326
Consumer		359		188		347		894		356,867		357,761
Other loans		—		—		—		—		18,163		18,163
	$	4,660	$	2,820	$	5,159	$	12,639	$	5,979,754	$	5,992,393

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
June 30, 2018
Commercial real estate:
Construction and land development	$	666	$	66	$	309	$	1,041	$	280,241	$	281,282
Commercial non-owner occupied		2,936		—		157		3,093		749,372		752,465
Commercial owner occupied		1,121		11		737		1,869		484,385		486,254
Consumer real estate:
Consumer owner occupied		1,434		207		860		2,501		674,095		676,596
Home equity loans		1,656		326		2,197		4,179		274,727		278,906
Commercial and industrial		115		118		21		254		304,610		304,864
Other income producing property		544		14		145		703		168,689		169,392
Consumer		436		717		296		1,449		125,216		126,665
	$	8,908	$	1,459	$	4,722	$	15,089	$	3,061,335	$	3,076,424
December 31, 2017
Commercial real estate:
Construction and land development	$	675	$	113	$	101	$	889	$	402,468	$	403,357
Commercial non-owner occupied		12		321		—		333		816,833		817,166
Commercial owner occupied		642		—		189		831		520,987		521,818
Consumer real estate:
Consumer owner occupied		673		204		867		1,744		708,867		710,611
Home equity loans		3,639		609		1,704		5,952		314,639		320,591
Commercial and industrial		5,996		1,278		143		7,417		391,279		398,696
Other income producing property		327		—		250		577		196,092		196,669
Consumer		400		114		1,351		1,865		135,845		137,710
Other		—		—		—		—		1,289		1,289
	$	12,364	$	2,639	$	4,605	$	19,608	$	3,488,299	$	3,507,907
June 30, 2017
Commercial real estate:
Construction and land development	$	3,784	$	2	$	192	$	3,978	$	108,877	$	112,855
Commercial non-owner occupied		519		—		—		519		209,041		209,560
Commercial owner occupied		1,844		143		236		2,223		219,343		221,566
Consumer real estate:
Consumer owner occupied		499		801		1,282		2,582		517,524		520,106
Home equity loans		1,109		321		722		2,152		174,977		177,129
Commercial and industrial		710		1,508		98		2,316		115,568		117,884
Other income producing property		336		138		56		530		82,873		83,403
Consumer		540		67		570		1,177		142,301		143,478
	$	9,341	$	2,980	$	3,156	$	15,477	$	1,570,504	$	1,585,981

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
June 30, 2018
Commercial real estate	$	621	$	553	$	7,637	$	8,811	$	218,928	$	227,739
Commercial real estate—construction and development		175		—		3,212		3,387		37,564		40,951
Residential real estate		5,279		3,989		6,948		16,216		213,286		229,502
Consumer		767		174		763		1,704		43,929		45,633
Commercial and industrial		125		386		465		976		11,604		12,580
	$	6,967	$	5,102	$	19,025	$	31,094	$	525,311	$	556,405
December 31, 2017
Commercial real estate	$	2,519	$	3,669	$	2,825	$	9,013	$	225,582	$	234,595
Commercial real estate—construction and development		811		427		3,761		4,999		44,650		49,649
Residential real estate		5,895		4,283		8,824		19,002		241,785		260,787
Consumer		989		452		889		2,330		49,123		51,453
Commercial and industrial		596		167		406		1,169		25,777		26,946
	$	10,810	$	8,998	$	16,705	$	36,513	$	586,917	$	623,430
June 30, 2017
Commercial real estate	$	961	$	91	$	2,717	$	3,769	$	211,026	$	214,795
Commercial real estate—construction and development		262		252		4,255		4,769		48,208		52,977
Residential real estate		4,581		1,593		8,138		14,312		242,290		256,602
Consumer		518		178		1,203		1,899		54,463		56,362
Commercial and industrial		426		—		2,693		3,119		22,367		25,486
	$	6,748	$	2,114	$	19,006	$	27,868	$	578,354	$	606,222

The following is a summary of certain 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
June 30, 2018
Commercial real estate:
Construction and land development	$	42,955	$	600	$	41,792	$	42,392	$	846
Commercial non-owner occupied		1,505		831		517		1,348		93
Commercial owner occupied		5,733		3,031		1,719		4,750		44
Consumer real estate:
Consumer owner occupied		6,085		4,631		997		5,628		30
Home equity loans		3,256		1,146		1,998		3,144		180
Commercial and industrial		1,876		724		1,110		1,834		485
Other income producing property		3,473		234		3,006		3,240		144
Consumer		325		—		257		257		7
Total	$	65,208	$	11,197	$	51,396	$	62,593	$	1,829
December 31, 2017
Commercial real estate:
Construction and land development	$	47,553	$	649	$	42,581	$	43,230	$	1,063
Commercial non-owner occupied		3,106		860		515		1,375		125
Commercial owner occupied		9,212		3,553		2,089		5,642		64
Consumer real estate:
Consumer owner occupied		7,382		4,392		1,240		5,632		37
Home equity loans		3,602		896		2,115		3,011		135
Commercial and industrial		2,246		635		521		1,156		15
Other income producing property		3,893		—		3,138		3,138		178
Consumer		654		—		239		239		7
Total	$	77,648	$	10,985	$	52,438	$	63,423	$	1,624
June 30, 2017
Commercial real estate:
Construction and land development	$	34,757	$	1,289	$	28,748	$	30,037	$	1,310
Commercial non-owner occupied		2,376		212		542		754		146
Commercial owner occupied		9,882		4,075		1,979		6,054		62
Consumer real estate:
Consumer owner occupied		6,093		1,451		3,124		4,575		57
Home equity loans		3,311		688		1,938		2,626		119
Commercial and industrial		2,244		—		1,198		1,198		362
Other income producing property		4,382		95		3,546		3,641		238
Consumer		556		—		235		235		6
Total	$	63,601	$	7,810	$	41,310	$	49,120	$	2,300

Acquired credit impaired loans are accounted for in pools as shown on page 22 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 June 30,
	2018				2017
	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	$	44,295	$	298	$	19,662	$	267
Commercial non-owner occupied		1,265		9		764		6
Commercial owner occupied		5,164		72		6,153		69
Consumer real estate:
Consumer owner occupied		5,561		44		4,644		35
Home equity loans		3,156		36		2,529		26
Commercial and industrial		1,756		19		1,234		4
Other income producing property		3,163		42		3,024		68
Consumer		285		—		211		3
Total Impaired Loans	$	64,645	$	520	$	38,221	$	478


	Six Months Ended June 30,
	2018				2017
	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	$	42,811	$	810	$	16,535	$	314
Commercial non-owner occupied		1,362		15		780		12
Commercial owner occupied		5,196		147		6,150		145
Consumer real estate:
Consumer owner occupied		5,630		87		5,124		74
Home equity loans		3,077		65		2,150		46
Commercial and industrial		1,495		36		1,230		22
Other income producing property		3,189		88		3,007		103
Consumer		248		—		189		3
Other loans		—		—		—		—
Total Impaired Loans	$	63,008	$	1,248	$	35,165	$	719

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


	June 30,		December 31,		June 30,
(Dollars in thousands)	2018		2017		2017
Commercial non-owner occupied real estate:
Construction and land development	$	423	$	251	$	62
Commercial non-owner occupied		1,109		2,635		2,575
Total commercial non-owner occupied real estate		1,532		2,886		2,637
Consumer real estate:
Consumer owner occupied		6,465		4,888		4,156
Home equity loans		2,308		269		10
Total consumer real estate		8,773		5,157		4,166
Commercial owner occupied real estate		1,526		1,144		2,641
Commercial and industrial		811		1,662		596
Other income producing property		323		764		1,162
Consumer		893		1,802		898
Restructured loans		902		925		967
Total loans on nonaccrual status	$	14,760	$	14,340	$	13,067

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


	June 30,		December 31,		June 30,
(Dollars in thousands)	2018		2017		2017
Commercial non-owner occupied real estate:
Construction and land development	$	369	$	108	$	226
Commercial non-owner occupied		—		—		—
Total commercial non-owner occupied real estate		369		108		226
Consumer real estate:
Consumer owner occupied		2,136		2,156		1,927
Home equity loans		4,234		4,589		1,515
Total consumer real estate		6,370		6,745		3,442
Commercial owner occupied real estate		885		189		44
Commercial and industrial		101		133		57
Other income producing property		254		316		159
Consumer		1,394		1,906		1,206
Total loans on nonaccrual status	$	9,373	$	9,397	$	5,134

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 six months ended June 30, 2018 and 2017, the Company’s TDRs were not material.