ALLOWANCE FOR LOAN AND LEASE LOSSES

The following tables present the activity in the allowance for originated loan and lease losses by loan class for the three and nine months ended September 30, 2014 and September 30, 2013:



	Three months ended September 30, 2014
(Dollars in thousands)	Construction and land development - commercial			Commercial mortgage			Other commercial real estate			Commercial and industrial			Lease financing			Other			Residential mortgage			Revolving mortgage			Construction and land development - non- commercial			Consumer			Non- specific			Total
Originated Loans
Allowance for loan and lease losses:
Balance at July 1	$	11,116		$	92,129		$	806		$	26,909		$	4,365		$	612		$	9,301		$	16,797		$	905		$	13,975		$	—		$	176,915
Provision	1,469			(8,082		)	61			4,361			(71		)	127			15			2,075			21			1,758			—			1,734
Charge-offs	—			(277		)	—			(1,414		)	(28		)	—			(231		)	(925		)	(45		)	(2,467		)	—			(5,387		)
Recoveries	15			476			8			227			34			—			28			174			14			867			—			1,843
Balance at September 30	$	12,600		$	84,246		$	875		$	30,083		$	4,300		$	739		$	9,113		$	18,121		$	895		$	14,133		$	—		$	175,105

	Three months ended September 30, 2013
	Construction and land development - commercial			Commercial mortgage			Other commercial real estate			Commercial and industrial			Lease financing			Other			Residential mortgage			Revolving mortgage			Construction and land development - non- commercial			Consumer			Non- specific			Total
Balance at July 1	$	11,732		$	104,842		$	1,057		$	19,309		$	4,992		$	360		$	9,996		$	14,997		$	720		$	13,777		$	—		$	181,782
Provision	1,797			(5,256		)	(56		)	4,656			(439		)	(171		)	515			2,206			(214		)	1,894			—			4,932
Charge-offs	(3,030		)	(794		)	(5		)	(1,671		)	(31		)	—			(719		)	(1,472		)	(59		)	(2,445		)	—			(10,226		)
Recoveries	84			241			39			344			71			—			253			84			101			577			—			1,794
Balance at September 30	$	10,583		$	99,033		$	1,035		$	22,638		$	4,593		$	189		$	10,045		$	15,815		$	548		$	13,803		$	—		$	178,282

	Nine months ended September 30, 2014
	Construction and land development - commercial			Commercial mortgage			Other commercial real estate			Commercial and industrial			Lease financing			Other			Residential mortgage			Revolving mortgage			Construction and land development - non- commercial			Consumer			Non- specific			Total
Balance at January 1	$	10,335		$	100,257		$	1,009		$	22,362		$	4,749		$	190		$	10,511		$	16,239		$	681		$	13,541		$	—		$	179,874
Provision	2,219			(17,021		)	(167		)	9,369			(420		)	562			(933		)	4,681			274			5,770			—			4,334
Charge-offs	—			(718		)	—			(2,440		)	(100		)	(13		)	(649		)	(3,249		)	(138		)	(7,271		)	—			(14,578		)
Recoveries	46			1,728			33			792			71			—			184			450			78			2,093			—			5,475
Balance at September 30	$	12,600		$	84,246		$	875		$	30,083		$	4,300		$	739		$	9,113		$	18,121		$	895		$	14,133		$	—		$	175,105

	Nine months ended September 30, 2013
	Construction and land development - commercial			Commercial mortgage			Other commercial real estate			Commercial and industrial			Lease financing			Other			Residential mortgage			Revolving mortgage			Construction and land development - non- commercial			Consumer			Non- specific			Total
Balance at January 1	$	6,031		$	80,229		$	2,059		$	14,050		$	3,521		$	1,175		$	3,836		$	25,185		$	1,721		$	25,389		$	15,850		$	179,046
Provision	3,259			(7,695		)	(207		)	3,951			1,358			307			2,126			4,546			(571		)	4,183			(78		)	11,179
Charge-offs	(4,570		)	(1,662		)	(77		)	(3,917		)	(123		)	(6		)	(1,987		)	(4,540		)	(304		)	(7,601		)	—			(24,787		)
Recoveries	722			740			75			1,003			90			1			353			462			180			1,850			—			5,476
Reclassification⁽¹⁾	5,141			27,421			(815		)	7,551			(253		)	(1,288		)	5,717			(9,838		)	(478		)	(10,018		)	(15,772		)	7,368
Balance at September 30	$	10,583		$	99,033		$	1,035		$	22,638		$	4,593		$	189		$	10,045		$	15,815		$	548		$	13,803		$	—		$	178,282

⁽¹⁾ Reclassification results from enhancements to the ALLL calculation during the second quarter of 2013 that resulted in the allocation of $15.8 million previously designated as 'non-specific' to other loan classes and the absorption of $7.4 million of the reserve for unfunded commitments related to unfunded, revocable loan commitments into the ALLL.

The commercial mortgage loan class had a net credit provision of $8.1 million and $17.0 million for the three and nine months ended September 30, 2014, respectively. The net credit provision for the three and nine months ended September 30, 2013 was $5.3 million and $7.7 million, respectively. The net credit provision for all periods was primarily the result of improvements in the credit risk rating mix and lower credit default trends within this loan class.

The provision for commercial and industrial loans totaled $4.4 million and $4.7 million for the three months ended September 30, 2014 and September 30, 2013, respectively. The quarter-to-date change is primarily due to lower credit default trends. The provision for the nine months ended September 30, 2014 and September 30, 2013 totaled $9.4 million and $4.0 million, respectively. The year-to-date change was a result of increased loans during the respective period.

The following tables present the allowance for originated loan losses and the recorded investment in originated loans, by loan class, based on impairment method as of September 30, 2014 and December 31, 2013:



	September 30, 2014
(Dollars in thousands)	Construction and land development - commercial		Commercial mortgage		Other commercial real estate		Commercial and industrial		Lease financing		Other		Residential mortgage		Revolving mortgage		Construction and land development - non-commercial		Consumer		Total
Allowance for loan and lease losses:
ALLL for loans and leases individually evaluated for impairment	$	382	$	5,811	$	173	$	3,042	$	151	$	6	$	1,416	$	1,060	$	103	$	594	$	12,738
ALLL for loans and leases collectively evaluated for impairment	12,218		78,435		702		27,041		4,149		733		7,697		17,061		792		13,539		162,367
Total allowance for loan and lease losses	$	12,600	$	84,246	$	875	$	30,083	$	4,300	$	739	$	9,113	$	18,121	$	895	$	14,133	$	175,105

Loans and leases:
Loans and leases individually evaluated for impairment	$	2,068	$	88,735	$	1,966	$	11,484	$	281	$	40	$	14,800	$	3,497	$	1,498	$	1,042	$	125,411
Loans and leases collectively evaluated for impairment	380,707		6,386,631		175,715		1,348,461		443,037		213,184		1,126,249		2,116,670		115,711		374,735		12,681,100
Total loan and leases	$	382,775	$	6,475,366	$	177,681	$	1,359,945	$	443,318	$	213,224	$	1,141,049	$	2,120,167	$	117,209	$	375,777	$	12,806,511

	December 31, 2013
(Dollars in thousands)	Construction and land development - commercial		Commercial mortgage		Other commercial real estate		Commercial and industrial		Lease financing		Other		Residential mortgage		Revolving mortgage		Construction and land development - non-commercial		Consumer		Total
Allowance for loan and lease losses:
ALLL for loans and leases individually evaluated for impairment	$	103	$	6,873	$	209	$	771	$	54	$	—	$	1,586	$	372	$	72	$	121	$	10,161
ALLL for loans and leases collectively evaluated for impairment	10,232		93,384		800		21,591		4,695		190		8,925		15,867		609		13,420		169,713
Total allowance for loan and lease losses	$	10,335	$	100,257	$	1,009	$	22,362	$	4,749	$	190	$	10,511	$	16,239	$	681	$	13,541	$	179,874

Loans and leases:
Loans and leases individually evaluated for impairment	$	2,272	$	97,111	$	1,878	$	9,300	$	188	$	—	$	15,539	$	3,596	$	1,108	$	1,154	$	132,146
Loans and leases collectively evaluated for impairment	317,575		6,265,379		176,876		1,071,858		381,575		175,336		966,882		2,109,689		121,684		385,298		11,972,152
Total loan and leases	$	319,847	$	6,362,490	$	178,754	$	1,081,158	$	381,763	$	175,336	$	982,421	$	2,113,285	$	122,792	$	386,452	$	12,104,298

The total reserves for individually impaired loans increased due to enhancements in the TDR impairment calculation made in the second quarter of 2014. TDR impairment evaluation, for performing TDRs, has historically been calculated on pools of homogeneous loan groups, as determined by loan type with similar risk characteristics and performance trends, using a discounted cash flow analysis. Management enhanced this process during the second quarter to include individual loan level impairment analysis for performing TDRs which resulted in higher impairment estimates for some TDR loans.

The following tables show the activity in the allowance for acquired loan and lease losses by loan class for the three and nine months ended September 30, 2014 and September 30, 2013.



	Three months ended September 30, 2014
(Dollars in thousands)	Construction and land development - commercial			Commercial mortgage			Other commercial real estate			Commercial and industrial			Residential mortgage			Revolving mortgage			Construction and land development - noncommercial			Consumer and other			Total
Acquired Loans
Allowance for loan and lease losses:
Balance at July 1	$	3,803		$	17,315		$	407		$	375		$	7,093		$	81		$	—		$	257		$	29,331
Provision	(1,815		)	(2,374		)	(435		)	182			187			3,899			239			(80		)	(197		)
Charge-offs	(1,633		)	(2,357		)	106			839			(188		)	(1		)	(83		)	(17		)	(3,334		)
Recoveries	—			—			—			—			—			—			—			—			—
Balance at September 30	$	355		$	12,584		$	78		$	1,396		$	7,092		$	3,979		$	156		$	160		$	25,800

	Three months ended September 30, 2013
(Dollars in thousands)	Construction and land development - commercial			Commercial mortgage			Other commercial real estate			Commercial and industrial			Residential mortgage			Revolving mortgage			Construction and land development - noncommercial			Consumer and other			Total
Balance at July 1	$	7,589		$	33,588		$	4,596		$	5,936		$	17,272		$	6,031		$	1,232		$	290		$	76,534
Provision	(3,707		)	(1,944		)	(2,673		)	(73		)	(2,445		)	(1,195		)	(467		)	(111		)	(12,615		)
Charge-offs	(1,263		)	(2,324		)	—			(89		)	(509		)	—			(217		)	—			(4,402		)
Recoveries	—			—			—			—			—			—			—			—			—
Balance at September 30	$	2,619		$	29,320		$	1,923		$	5,774		$	14,318		$	4,836		$	548		$	179		$	59,517

	Nine months ended September 30, 2014
(Dollars in thousands)	Construction and land development - commercial			Commercial mortgage			Other commercial real estate			Commercial and industrial			Residential mortgage			Revolving mortgage			Construction and land development - noncommercial			Consumer and other			Total
Balance at January 1	$	1,320		$	29,906		$	1,354		$	5,275		$	11,802		$	2,959		$	682		$	222		$	53,520
Provision	1,463			(6,946		)	(1,382		)	(1,883		)	(4,289		)	1,502			(443		)	(21		)	(11,999		)
Charge-offs	(2,428		)	(10,376		)	106			(1,996		)	(421		)	(482		)	(83		)	(41		)	(15,721		)
Recoveries	—			—			—			—			—			—			—			—			—
Balance at September 30	$	355		$	12,584		$	78		$	1,396		$	7,092		$	3,979		$	156		$	160		$	25,800

	Nine months ended September 30, 2013
(Dollars in thousands)	Construction and land development - commercial			Commercial mortgage			Other commercial real estate			Commercial and industrial			Residential mortgage			Revolving mortgage			Construction and land development - noncommercial			Consumer and other			Total
Balance at January 1	$	31,186		$	50,275		$	11,234		$	8,897		$	19,837		$	9,754		$	8,287		$	502		$	139,972
Provision	(25,132		)	(10,809		)	(2,689		)	2,067			(3,546		)	(4,918		)	(7,739		)	2,056			(50,710		)
Charge-offs	(3,435		)	(10,146		)	(6,622		)	(5,190		)	(1,973		)	—			—			(2,379		)	(29,745		)
Recoveries	—			—			—			—			—			—			—			—			—
Balance at September 30	$	2,619		$	29,320		$	1,923		$	5,774		$	14,318		$	4,836		$	548		$	179		$	59,517

The following tables show the ending balances of acquired loans and leases and related allowance by class of loans as of September 30, 2014 and December 31, 2013:



	September 30, 2014
(Dollars in thousands)	Construction and land development - commercial		Commercial mortgage		Other commercial real estate		Commercial and industrial		Residential mortgage		Revolving mortgage		Construction and land development - noncommercial		Consumer and other		Total
ALLL for loans and leases acquired with deteriorated credit quality	$	355	$	12,584	$	78	$	1,396	$	7,092	$	3,979	$	156	$	160	$	25,800

Loans and leases acquired with deteriorated credit quality	59,808		579,435		36,043		25,797		240,681		50,048		1,144		3,324		996,280

	December 31, 2013
(Dollars in thousands)	Construction and land development - commercial		Commercial mortgage		Other commercial real estate		Commercial and industrial		Residential mortgage		Revolving mortgage		Construction and land development - noncommercial		Consumer and other		Total
ALLL for loans and leases acquired with deteriorated credit quality	$	1,320	$	29,906	$	1,354	$	5,275	$	11,802	$	2,959	$	682	$	222	$	53,520

Loans and leases acquired with deteriorated credit quality	78,915		642,891		41,381		17,254		213,851		30,834		2,583		1,717		1,029,426

As of September 30, 2014 and December 31, 2013, $532.0 million and $459.9 million, respectively, in acquired loans experienced an adverse change in expected cash flows since the date of acquisition.

The following tables provide information on originated loans and leases that are individually evaluated for impairment as of September 30, 2014 and December 31, 2013.



	September 30, 2014
(Dollars in thousands)	With a recorded allowance		With no recorded allowance		Total		Unpaid principal balance		Related allowance recorded
Impaired originated loans and leases
Construction and land development - commercial	$	1,379	$	689	$	2,068	$	7,090	$	382
Commercial mortgage	56,845		31,890		88,735		94,021		5,811
Other commercial real estate	720		1,246		1,966		2,365		173
Commercial and industrial	10,272		1,212		11,484		12,563		3,042
Lease financing	281		—		281		281		151
Other	40		—		40		40		6
Residential mortgage	9,556		5,244		14,800		15,260		1,416
Revolving mortgage	3,497		—		3,497		4,719		1,060
Construction and land development - noncommercial	1,323		175		1,498		1,498		103
Consumer	1,023		19		1,042		1,092		594
Total impaired originated loans and leases	$	84,936	$	40,475	$	125,411	$	138,929	$	12,738

	December 31, 2013
(Dollars in thousands)	With a recorded allowance		With no recorded allowance		Total		Unpaid principal balance		Related allowance recorded
Impaired originated loans and leases
Construction and land development - commercial	$	1,025	$	1,247	$	2,272	$	7,306	$	103
Commercial mortgage	57,819		39,292		97,111		103,522		6,873
Other commercial real estate	783		1,095		1,878		2,279		209
Commercial and industrial	7,197		2,103		9,300		10,393		771
Lease financing	133		55		188		188		54
Residential mortgage	11,534		4,005		15,539		15,939		1,586
Revolving mortgage	3,382		214		3,596		3,596		372
Construction and land development - noncommercial	651		457		1,108		1,108		72
Consumer	1,154		—		1,154		1,154		121
Total impaired originated loans and leases	$	83,678	$	48,468	$	132,146	$	145,485	$	10,161

The following tables show the average impaired originated loan balance and the interest income recognized by loan class for the three and nine months ended September 30, 2014 and September 30, 2013:



	Three months ended September 30, 2014				Three months ended September 30, 2013
(Dollars in thousands)	Average balance		Interest income recognized		Average balance		Interest income recognized
Impaired originated loans and leases:
Construction and land development - commercial	$	2,296	$	26	$	5,553	$	29
Commercial mortgage	90,318		806		117,584		1,575
Other commercial real estate	1,980		7		2,852		39
Commercial and industrial	11,699		108		12,136		127
Lease financing	312		5		312		5
Other	42		1		—		—
Residential mortgage	15,071		111		15,137		181
Revolving mortgage	3,708		29		6,564		47
Construction and land development - noncommercial	1,942		27		943		14
Consumer	1,063		19		1,253		4
Average impaired originated loans and leases	$	128,431	$	1,139	$	162,334	$	2,021

	Nine months ended September 30, 2014				Nine months ended September 30, 2013
(Dollars in thousands)	Average balance		Interest income recognized		Average balance		Interest income recognized
Impaired originated loans and leases:
Construction and land development - commercial	$	1,701	$	57	$	7,793	$	242
Commercial mortgage	86,131		2,522		107,929		4,413
Other commercial real estate	2,474		67		2,893		121
Commercial and industrial	14,227		461		13,811		533
Lease financing	589		26		399		19
Other	29		2		—		—
Residential mortgage	15,525		395		15,441		253
Revolving mortgage	4,069		105		6,337		459
Construction and land development - noncommercial	1,902		77		907		39
Consumer	1,710		70		1,508		33
Average impaired originated loans and leases	$	128,357	$	3,782	$	157,018	$	6,112

Troubled Debt Restructurings

BancShares accounts for certain loan modifications or restructurings as troubled debt restructurings (TDRs). In general, the modification or restructuring of a loan is considered a TDR if, for economic reasons or legal reasons related to a borrower's financial difficulties, a concession is granted to the borrower that creditors would not otherwise grant. Concessions may relate to the contractual interest rate, maturity date, payment structure or other actions. In accordance with GAAP, loans acquired under ASC 310-30, Loans and Debt Securities Acquired with Deteriorated Credit Quality, are not initially considered to be TDRs, but can be classified as such if a modification is made subsequent to acquisition. Modifications of acquired loans that are part of a pool are not designated as TDRs unless the entire pool qualifies as a TDR. The following table provides a summary of total TDRs by accrual status.



	September 30, 2014						December 31, 2013
(Dollars in thousands)	Accruing		Nonaccruing		Total		Accruing		Nonaccruing		Total
Commercial loans
Construction and land development - commercial	$	3,518	$	213	$	3,731	$	21,032	$	1,002	$	22,034
Commercial mortgage	100,114		17,866		117,980		113,323		23,387		136,710
Other commercial real estate	3,085		1,229		4,314		3,470		1,150		4,620
Commercial and industrial	10,079		696		10,775		9,838		1,142		10,980
Lease	281		—		281		49		—		49
Other	40		—		40		—		—		—
Total commercial TDRs	117,117		20,004		137,121		147,712		26,681		174,393
Noncommercial
Residential	24,444		2,886		27,330		23,343		3,663		27,006
Revolving mortgage	3,497		—		3,497		3,095		—		3,095
Construction and land development - noncommercial	1,498		—		1,498		651		457		1,108
Consumer and other	1,042		—		1,042		1,154		—		1,154
Total noncommercial TDRs	30,481		2,886		33,367		28,243		4,120		32,363
Total TDRs	$	147,598	$	22,890	$	170,488	$	175,955	$	30,801	$	206,756

The following table shows the accrual status of acquired and originated TDRs.



(Dollars in thousands)	September 30, 2014		December 31, 2013
Accruing TDRs:
Acquired	$	54,670	$	90,829
Originated	92,928		85,126
Total accruing TDRs	147,598		175,955
Nonaccruing TDRs:
Acquired	5,073		11,479
Originated	17,817		19,322
Total nonaccruing TDRs	22,890		30,801
All TDRs:
Acquired	59,743		102,308
Originated	110,745		104,448
Total TDRs	$	170,488	$	206,756

At September 30, 2014, $38.5 million acquired TDRs were covered under loss share agreements, compared to $102.3 million at December 31, 2013.

All TDRs are impaired loans; therefore, TDRs are evaluated for impairment on a quarterly basis or more frequently as needed. The impairment evaluations for performing TDRs has historically been performed by pools of homogeneous loan groups, as determined by loan type with similar risk characteristics and performance trends, using a discounted cash flow analysis. Management enhanced this process during the second quarter to include individual loan level impairment analyses for all performing TDRs.

Impairment is evaluated using one of three approved valuation methodologies: discounted cash flows, market prices or collateral values. Based on the accrual status and credit grade, management determines the most appropriate method to reasonably assess expectations for recovery of the investment. Expected cash flows are discounted at the loan’s original effective interest rate. Specific valuation allowances are established for discounted cash flows or partial charge-offs and are recorded for TDRs in the amount equal to the calculated impairment.

The majority of TDRs are included in the special mention, substandard or doubtful grading categories. When a restructured loan subsequently defaults, it is evaluated and downgraded if appropriate. The more severely graded the loan, the lower the estimated expected cash flows and the greater the allowance recorded.

The following tables provide the types of TDRs made during the three and nine months ended September 30, 2014 and September 30, 2013 for originated loans, as well as a summary of originated loans that were modified as a TDR during the twelve months ended September 30, 2014 and September 30, 2013 that subsequently defaulted during the three and nine months ended September 30, 2014 and September 30, 2013. BancShares defines payment default as movement of the TDR to nonaccrual status, which is generally 90 days past due for TDRs, foreclosure or charge-off, whichever occurs first.



	Three months ended September 30, 2014						Three months ended September 30, 2013
	All restructurings			Restructurings with payment default			All restructurings			Restructurings with payment default
(Dollars in thousands)	Number of Loans	Recorded investment at period end		Number of Loans	Recorded investment at period end		Number of Loans	Recorded investment at period end		Number of Loans	Recorded investment at period end
Originated loans
Interest only period provided
Commercial and industrial	—	$	—	—	$	—	1	$	203	—	$	—
Total interest only	—	—		—	—		1	203		—	—

Loan term extension
Commercial mortgage	1	462		—	—		5	2,372		4	1,303
Residential mortgage	3	80		—	—		2	590		—	—
Construction and land development - noncommercial	2	141		—	—		—	—		—	—
Consumer	2	81		—	—		1	21		—	—
Total loan term extension	8	764		—	—		8	2,983		4	1,303

Below market interest rate
Construction and land development - commercial	—	—		—	—		1	45		—	—
Commercial mortgage	6	3,062		1	176		4	859		5	5,125
Commercial and industrial	3	462		—	—		—	—		1	173
Residential mortgage	11	609		1	45		1	319		—	—
Revolving mortgage	—	—		—	—		3	43		1	73
Construction and land development - noncommercial	3	173		—	—		2	42		—	—
Consumer	5	162		—	—		—	—		—	—
Total below market interest rate	28	4,468		2	221		11	1,308		7	5,371

Discharged from bankruptcy
Commercial mortgage	1	—		1	—		—	—		—	—
Residential mortgage	—	—		—	—		—	—		2	44
Revolving mortgage	2	99		1	—		3	125		2	47
Construction and land development-noncommercial	—	—		1	62		—	—		—	—
Consumer	1	13		—	—		—	—		—	—
Total discharged from bankruptcy	4	112		3	62		3	125		4	91

Total originated restructurings	40	$	5,344	5	$	283	23	$	4,619	15	$	6,765



	Nine months ended September 30, 2014						Nine months ended September 30, 2013
	All restructurings			Restructurings with payment default			All restructurings			Restructurings with payment default
(Dollars in thousands)	Number of Loans	Recorded investment at period end		Number of Loans	Recorded investment at period end		Number of Loans	Recorded investment at period end		Number of Loans	Recorded investment at period end
Originated loans
Interest only period provided
Commercial mortgage	6	$	2,449	2	$	592	9	$	3,242	—	$	—
Commercial and industrial	2	375		—	—		2	403		—	—
Other commercial real estate	—	—		—	—		1	98		—	—
Residential mortgage	—	—		—	—		1	630		—	—
Lease financing	2	131		—	—		—	—		—	—
Other	1	40		—	—		—	—		—	—
Total interest only	11	2,995		2	592		13	4,373		—	—

Loan term extension
Construction and land development - commercial	2	189		—	—		—	—		—	—
Commercial mortgage	11	4,072		—	—		12	4,935		5	1,524
Commercial and industrial	4	2,040		—	—		2	623		—	—
Lease financing	2	144		—	—		—	—		—	—
Residential mortgage	15	532		—	—		9	879		1	570
Construction and land development - noncommercial	3	175		—	—		—	—		—	—
Consumer	5	122		—	—		2	64		—	—
Total loan term extension	42	7,274		—	—		25	6,501		6	2,094

Below market interest rate
Construction and land development - commercial	10	371		—	—		2	265		—	—
Commercial mortgage	29	11,399		3	1,276		29	10,248		5	5,125
Commercial and industrial	11	772		—	—		4	829		1	173
Other commercial real estate	1	347		—	—		3	738		—	—
Residential mortgage	29	1,402		2	95		14	826		—	—
Revolving mortgage	5	270		—	—		6	215		1	73
Construction & land development - noncommercial	11	590		—	—		4	555		—	—
Consumer	5	162		—	—		3	227		—	—
Total below market interest rate	101	15,313		5	1,371		65	13,903		7	5,371

Discharged from bankruptcy
Commercial mortgage	2	970		1	—		—	—		—	—
Residential mortgage	9	691		2	288		4	130		2	44
Revolving mortgage	10	420		1	—		31	2,520		2	47
Construction & land development - noncommercial	1	62		1	62		—	—		—	—
Consumer	4	18		—	—		—	—		—	—
Total discharged from bankruptcy	26	2,161		5	350		35	2,650		4	91

Total originated restructurings	180	$	27,743	12	$	2,313	138	$	27,427	17	$	7,556

The following tables provide the types of TDRs made during the three and nine months ended September 30, 2014 and September 30, 2013 for acquired loans, as well as a summary of acquired loans that were modified as a TDR during the twelve months ended September 30, 2014 and September 30, 2013 that subsequently defaulted during the three and nine months ended September 30, 2014 and September 30, 2013. BancShares defines payment default as movement of the TDR to nonaccrual status, which is generally 90 days past due for TDRs, foreclosure or charge-off, whichever occurs first.



	Three months ended September 30, 2014						Three months ended September 30, 2013
	All restructurings			Restructurings with payment default			All restructurings			Restructurings with payment default
(Dollars in thousands)	Number of loans	Recorded investment at period end		Number of loans	Recorded investment at period end		Number of loans	Recorded investment at period end		Number of loans	Recorded investment at period end
Acquired loans
Interest only period provided
Construction and land development - commercial	—	$	—	—	$	—	—	$	—	1	$	2,628
Total interest only	—	—		—	—		—	—		1	2,628

Loan term extension
Construction and land development - commercial	1	348		—	—		—	—		—	—
Commercial mortgage	—	—		—	—		1	157		—	—
Commercial and industrial	—	—		—	—		1	121		—	—
Residential mortgage	—	—		3	381		—	—		1	198
Total loan term extension	1	348		3	381		2	278		1	198

Below market interest rate
Construction and land development - commercial	—	—		—	—		—	—		2	1,067
Commercial mortgage	6	3,377		1	67		1	291		2	1,290
Residential mortgage	3	227		—	—		—	—		4	842
Total below market interest rate	9	3,604		1	67		1	291		8	3,199

Discharged from bankruptcy
Residential mortgage	—	—		—	—		—	—		—	—
Total discharged from bankruptcy	—	—		—	—		—	—		—	—

Total acquired restructurings	10	$	3,952	4	$	448	3	$	569	10	$	6,025



	Nine months ended September 30, 2014						Nine months ended September 30, 2013
	All restructurings			Restructurings with payment default			All restructurings			Restructurings with payment default
(Dollars in thousands)	Number of loans	Recorded investment at period end		Number of loans	Recorded investment at period end		Number of loans	Recorded investment at period end		Number of loans	Recorded investment at period end
Acquired loans
Interest only period provided
Construction and land development - commercial	—	$	—	—	$	—	1	$	2,628	1	$	2,628
Commercial mortgage	2	44		2	44		2	1,060		2	1,990
Commercial and industrial	—	—		—	—		1	23		—	—
Residential mortgage	—	—		—	—		2	181		—	—
Total interest only	2	44		2	44		6	3,892		3	4,618

Loan term extension
Construction and land development - commercial	2	348		—	—		5	2,517		—	—
Commercial mortgage	—	—		—	—		1	157		—	—
Commercial and industrial	—	—		—	—		2	1,042		—	—
Residential mortgage	1	322		4	381		1	198		1	198
Total loan term extension	3	670		4	381		9	3,914		1	198

Below market interest rate
Construction and land development - commercial	2	308		—	—		5	3,489		2	1,067
Commercial mortgage	15	5,539		2	94		9	11,428		2	1,290
Commercial and industrial	—	—		—	—		3	510		—	—
Residential mortgage	29	3,994		2	—		10	2,871		6	1,545
Total below market interest rate	46	9,841		4	94		27	18,298		10	3,902

Discharged from bankruptcy
Residential mortgage	26	1,673		2	—		—	—		—	—
Total discharged from bankruptcy	26	1,673		2	—		—	—		—	—

Total acquired restructurings	77	$	12,228	12	$	519	42	$	26,104	14	$	8,718

For the three and nine months ended September 30, 2014 and September 30, 2013, the recorded investment in TDRs subsequent to modification was not materially impacted by the modification since forgiveness of principal is not a restructuring option frequently used by BancShares.