UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

____________________________________________________

FORM 10-Q

____________________________________________________

xQuarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended March 31, 2019

or

¨Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Commission File Number: 001-16715

____________________________________________________

First Citizens BancShares, Inc.

(Exact name of Registrant as specified in its charter)

____________________________________________________

Delaware	56-1528994
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification Number)
4300 Six Forks Road, Raleigh, North Carolina	27609
(Address of principle executive offices)	(Zip code)

(919) 716-7000

(Registrant’s telephone number, including area code)

____________________________________________________

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding twelve months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past ninety days.    Yes  x   No  ¨

Indicate by check mark whether the Registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or such shorter period that the Registrant was required to submit and post such files)    Yes  x    No  ¨

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “larger accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act:

Large accelerated filer	x	Accelerated filer	¨
Non-accelerated filer	¨	Smaller reporting company	¨
		Emerging growth company	¨

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ¨    No  x

Securities registered pursuant to Section 12(b) of the Exchange Act:

Title of each class	Trade symbol	Name of each exchange on which registered	Shares Outstanding
Class A Common Stock, $1 Par Value	FCNCA	The NASDAQ Stock Market LLC	10,373,120
Class B Common Stock, $1 Par Value	FCNCB	OTC US	1,005,185
(Number of shares outstanding as of 5/6/2019)

INDEX

		Page No.
PART I.	FINANCIAL INFORMATION
Item 1.	Financial Statements
	Consolidated Balance Sheets (Unaudited)	3
	Consolidated Statements of Income (Unaudited)	4
	Consolidated Statements of Comprehensive Income (Unaudited)	5
	Consolidated Statements of Changes in Shareholders’ Equity (Unaudited)	6
	Consolidated Statements of Cash Flows (Unaudited)	7
	Notes to Consolidated Financial Statements (Unaudited)	8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	35
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	52
Item 4.	Controls and Procedures	52
PART II.	OTHER INFORMATION
Item 1.	Legal Proceedings	52
Item 1A.	Risk Factors	52
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	52
Item 6.	Exhibits	53

2

PART I

Item 1. Financial Statements

First Citizens BancShares, Inc. and Subsidiaries

Consolidated Balance Sheets

(Dollars in thousands, unaudited)	March 31, 2019			December 31, 2018
Assets
Cash and due from banks	$	268,599		$	327,440
Overnight investments	1,386,525			797,406
Investment in marketable equity securities (cost of $79,809 at March 31, 2019 and $73,809 at December 31, 2018)	109,884			92,599
Investment securities available for sale (cost of $4,611,736 at March 31, 2019 and $4,607,117 at December 31, 2018)	4,589,800			4,557,110
Investment securities held to maturity (fair value of $2,254,924 at March 31, 2019 and $2,201,502 at December 31, 2018)	2,214,829			2,184,653
Loans held for sale	53,232			45,505
Loans and leases	25,463,785			25,523,276
Allowance for loan and lease losses	(228,775		)	(223,712		)
Net loans and leases	25,235,010			25,299,564
Premises and equipment	1,203,674			1,204,179
Other real estate owned	43,306			48,030
Income earned not collected	113,812			109,903
Goodwill	236,347			236,347
Other intangible assets	67,053			72,298
Other assets	439,599			433,595
Total assets	$	35,961,670		$	35,408,629
Liabilities
Deposits:
Noninterest-bearing	$	12,376,913		$	11,882,670
Interest-bearing	18,821,180			18,789,790
Total deposits	31,198,093			30,672,460
Securities sold under customer repurchase agreements	508,508			543,936
Federal home loan bank borrowings	189,594			193,556
Subordinated debentures	136,544			140,741
Other borrowings	14,970			13,921
FDIC shared-loss payable	107,256			105,618
Other liabilities	283,396			249,443
Total liabilities	32,438,361			31,919,675
Shareholders’ equity
Common stock:
Class A - $1 par value (16,000,000 shares authorized; 10,380,220 and 10,623,220 shares issued and outstanding at March 31, 2019 and December 31, 2018, respectively)	10,380			10,623
Class B - $1 par value (2,000,000 shares authorized; 1,005,185 shares issued and outstanding at March 31, 2019 and December 31, 2018)	1,005			1,005
Preferred stock - $0.01 par value (10,000,000 shares authorized; no shares issued and outstanding at March 31, 2019 and December 31, 2018)	—			—
Surplus	393,449			493,962
Retained earnings	3,325,335			3,218,551
Accumulated other comprehensive loss	(206,860		)	(235,187		)
Total shareholders’ equity	3,523,309			3,488,954
Total liabilities and shareholders’ equity	$	35,961,670		$	35,408,629

See accompanying Notes to Consolidated Financial Statements.

3

First Citizens BancShares, Inc. and Subsidiaries

Consolidated Statements of Income

	Three months ended March 31
(Dollars in thousands, except per share data, unaudited)	2019		2018
Interest income
Loans and leases	$	290,922	$	251,982
Investment securities interest and dividend income	39,605		35,020
Overnight investments	6,397		5,599
Total interest income	336,924		292,601
Interest expense
Deposits	12,926		3,756
Securities sold under customer repurchase agreements	459		404
Federal home loan bank borrowings	1,285		2,384
Subordinated debentures	1,672		1,441
Other borrowings	110		179
Total interest expense	16,452		8,164
Net interest income	320,472		284,437
Provision for loan and lease losses	11,750		7,605
Net interest income after provision for loan and lease losses	308,722		276,832
Noninterest income
Cardholder services, net	16,633		14,782
Merchant services, net	5,835		6,177
Service charges on deposit accounts	25,065		26,543
Wealth management services	25,001		23,569
Marketable equity securities gains, net	11,328		971
Other service charges and fees	7,422		7,480
Mortgage income	3,658		4,237
Insurance commissions	3,291		3,776
ATM income	1,511		2,171
Gain on extinguishment of debt	—		25,814
Other	3,919		7,164
Total noninterest income	103,663		122,684
Noninterest expense
Salaries and wages	132,421		129,203
Employee benefits	32,535		32,091
Occupancy expense	27,761		27,954
Equipment expense	26,740		24,974
FDIC insurance expense	2,660		5,733
Collection and foreclosure-related expenses	3,022		4,146
Merger-related expenses	1,719		598
Processing fees paid to third parties	7,089		8,196
Other	33,710		35,168
Total noninterest expense	267,657		268,063
Income before income taxes	144,728		131,453
Income taxes	33,369		31,222
Net income	$	111,359	$	100,231
Weighted average shares outstanding	11,519,008		12,010,405
Net income per share	$	9.67	$	8.35

See accompanying Notes to Consolidated Financial Statements.

4

First Citizens BancShares, Inc. and Subsidiaries

Consolidated Statements of Comprehensive Income

	Three months ended March 31
(Dollars in thousands, unaudited)	2019			2018
Net income	$	111,359		$	100,231
Other comprehensive income (loss)
Unrealized gains (losses) on securities available for sale:
Change in unrealized gains (losses) on securities available for sale arising during period	28,071			(78,635		)
Tax effect	(6,456		)	18,088
Total change in unrealized gains (losses) on securities available for sale, net of tax	21,615			(60,547		)
Unrealized losses on securities available for sale transferred to held to maturity:
Reclassification adjustment for accretion of unrealized losses on securities available for sale transferred to held to maturity	5,962			—
Tax effect	(1,371		)	—
Total change in unrealized losses on securities available for sale transferred to held to maturity, net of tax	4,591			—
Change in pension obligation:
Amortization of actuarial losses and prior service cost	2,755			3,337
Tax effect	(634		)	(768		)
Total change in pension obligation, net of tax	2,121			2,569
Other comprehensive income (loss)	28,327			(57,978		)
Total comprehensive income	$	139,686		$	42,253

See accompanying Notes to Consolidated Financial Statements.

5

First Citizens BancShares, Inc. and Subsidiaries

Consolidated Statements of Changes in Shareholders’ Equity

(Dollars in thousands, unaudited)	Class A Common Stock			Class B Common Stock		Surplus			Retained Earnings			Accumulated Other Comprehensive Loss			Total Shareholders’ Equity
Balance at December 31, 2017	$	11,005		$	1,005	$	658,918		$	2,785,430		$	(122,294	)	$	3,334,064
Cumulative effect of adoption of ASU 2016-01	—			—		—			18,715			(18,715		)	—
Cumulative effect of adoption of ASU 2018-02	—			—		—			31,336			(31,336		)	—
Net income	—			—		—			100,231			—			100,231
Other comprehensive loss, net of tax	—			—		—			—			(57,978		)	(57,978		)
Cash dividends declared ($0.35 per share)
Class A common stock	—			—		—			(3,851		)	—			(3,851		)
Class B common stock	—			—		—			(352		)	—			(352		)
Balance at March 31, 2018	$	11,005		$	1,005	$	658,918		$	2,931,509		$	(230,323	)	$	3,372,114
Balance at December 31, 2018	$	10,623		$	1,005	$	493,962		$	3,218,551		$	(235,187	)	$	3,488,954
Net income	—			—		—			111,359			—			111,359
Other comprehensive income, net of tax	—			—		—			—			28,327			28,327
Repurchase of 243,000 shares of Class A common stock	(243		)	—		(100,513		)	—			—			(100,756		)
Cash dividends declared ($0.40 per share)
Class A common stock	—			—		—			(4,173		)	—			(4,173		)
Class B common stock	—			—		—			(402		)	—			(402		)
Balance at March 31, 2019	$	10,380		$	1,005	$	393,449		$	3,325,335		$	(206,860	)	$	3,523,309

See accompanying Notes to Consolidated Financial Statements.

6

First Citizens BancShares, Inc. and Subsidiaries

Consolidated Statements of Cash Flows

	Three months ended March 31
(Dollars in thousands, unaudited)	2019			2018
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	111,359		$	100,231
Adjustments to reconcile net income to cash provided by operating activities:
Provision for loan and lease losses	11,750			7,605
Deferred tax benefit	(7,316		)	(5,573		)
Net change in current taxes	37,898			33,128
Depreciation	28,195			23,179
Net increase (decrease) in accrued interest payable	3,457			(2,454		)
Net increase in income earned not collected	(3,909		)	(1,358		)
Marketable equity securities gains, net	(11,328		)	(971		)
Gain on extinguishment of debt	—			(25,814		)
Origination of loans held for sale	(128,949		)	(131,353		)
Proceeds from sale of loans held for sale	123,047			138,538
Gain on sale of loans held for sale	(2,181		)	(2,666		)
Net write-downs/losses on other real estate	427			1,210
Losses on premises and equipment	358			—
Net accretion of premiums and discounts	(8,737		)	(10,323		)
Amortization of intangible assets	5,943			6,049
Net change in FDIC payable for shared-loss agreements	1,638			1,124
Net change in mortgage servicing rights	(698		)	(1,200		)
Net change in other assets	31,072			341,678
Net change in other liabilities	(51,985		)	(12,642		)
Net cash provided by operating activities	140,041			458,388
CASH FLOWS FROM INVESTING ACTIVITIES
Net decrease (increase) in loans outstanding	68,052			(7,283		)
Purchases of investment securities available for sale	(593,952		)	(374,850		)
Purchases of investment securities held to maturity	(116,028		)	—
Purchases of marketable equity securities	(6,076		)	(2,272		)
Proceeds from maturities/calls of investment securities held to maturity	88,400			2
Proceeds from maturities/calls of investment securities available for sale	587,023			503,717
Proceeds from sales of marketable equity securities	119			664
Net increase in overnight investments	(589,119		)	(558,955		)
Cash paid to the FDIC for shared-loss agreements	(8		)	—
Proceeds from sales of other real estate	7,430			8,380
Proceeds from sales of premises and equipment	54			13
Purchases of premises and equipment	(23,875		)	(24,081		)
Net cash used in investing activities	(577,980		)	(454,665		)
CASH FLOWS FROM FINANCING ACTIVITIES
Net increase (decrease) in time deposits	138,640			(92,064		)
Net increase in demand and other interest-bearing deposits	387,319			795,034
Net decrease in short-term borrowings	(35,428		)	(139,049		)
Repayment of long-term obligations	(8,688		)	(651,451		)
Repurchase of common stock	(98,077		)	—
Cash dividends paid	(4,668		)	(4,204		)
Net cash provided by (used in) financing activities	379,098			(91,734		)
Change in cash and due from banks	(58,841		)	(88,011		)
Cash and due from banks at beginning of period	327,440			336,150
Cash and due from banks at end of period	$	268,599		$	248,139
SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING AND FINANCING ACTIVITIES:
Transfers of loans to other real estate	$	2,613		$	6,582
Dividends declared but not paid	4,575			4,204
Reclassification of portfolio loans from loans held for sale	(605		)	—
Transfers of premises and equipment to other real estate	520			—
Unsettled common stock repurchases	(2,679		)	—
Initial recognition of operating lease assets	70,652			—
Initial recognition of operating lease liabilities	71,793			—

See accompanying Notes to Consolidated Financial Statements.

7

First Citizens BancShares, Inc. and Subsidiaries

Notes to Unaudited Consolidated Financial Statements

NOTE A - ACCOUNTING POLICIES AND BASIS OF PRESENTATION

First Citizens BancShares, Inc. (BancShares) is a financial holding company organized under the laws of Delaware and conducts operations through its banking subsidiary, First-Citizens Bank & Trust Company (FCB), which is headquartered in Raleigh, North Carolina.

General

These consolidated financial statements and notes thereto are presented in accordance with instructions for Form 10-Q and Article 10 of Regulation S-X and, therefore, do not include all information and notes necessary for a complete presentation of financial position, results of operations and cash flow activity required in accordance with accounting principles generally accepted in the United States of America (GAAP). In the opinion of management, all normal recurring adjustments necessary for a fair presentation of the consolidated financial position and consolidated results of operations have been made. The unaudited interim consolidated financial statements included in this Form 10-Q should be read in conjunction with the consolidated financial statements and notes to consolidated financial statements included in BancShares' Annual Report on Form 10-K for the year ended December 31, 2018.

Reclassifications

In certain instances, amounts reported in prior years' consolidated financial statements have been reclassified to conform to the current financial statement presentation. Such reclassifications had no effect on previously reported cash flows, shareholders' equity or net income.

Use of Estimates in the Preparation of Financial Statements

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported. Actual results could differ from those estimates. The estimates that BancShares considers significant are the allowance for loan and lease losses, fair value measurements, Federal Deposit Insurance Corporation (FDIC) shared-loss payable, pension plan assumptions, goodwill and other intangible assets and income taxes.

Share Repurchases

In October 2018, BancShares' Board of Directors (Board) authorized the purchase of up to 800,000 of BancShares' Class A common stock for the period November 1, 2018 through October 31, 2019. The authorization does not obligate Bancshares to purchase any particular amount of shares, and purchases may be suspended or discontinued at any time. During the first quarter of 2019, BancShares repurchased 243,000 shares of Class A common stock for approximately $100.7 million at an average cost per share of $414.58. There were no share repurchases made during the first quarter of 2018. As of March 31, 2019, a total of 425,000 shares have been repurchased under the current Board authority.

Subsequent to quarter-end and through May 6, 2019, BancShares repurchased an additional 63,400 shares of Class A common stock for approximately $27.4 million at an average cost per share of $432.78.

Recently Adopted Accounting Pronouncements

Financial Accounting Standards Board (FASB) Accounting Standards Update (ASU) 2016-02, Leases (Topic 842)

This ASU increases transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. The key difference between prior standards and this ASU is the requirement for lessees to recognize all lease contracts on their balance sheet. This ASU requires lessees to classify leases as either operating or finance leases, which are substantially similar to the previous operating and capital leases classifications. The distinction between these two classifications under the new standard does not relate to balance sheet treatment, but relates to treatment in the statements of income and cash flows. Lessor guidance remains largely unchanged with the exception of how a lessor determines the appropriate lease classification for each lease to better align the lessor guidance with revised lessee classification guidance.

We adopted this standard, as of January 1, 2019, using the effective date method that allows for entities to initially apply the new leases standard at the adoption date. In addition, we made several policy elections permitted under the transition guidance, which among other things, allowed us to carry forward the historical lease classification. We determined that most renewal options would not be reasonably determinable in estimating the expected lease term.

We made the policy election available under Topic 842 to combine lease and non-lease components and applied this practical expedient to leases in effect prior to the date of adoption. We will continue to apply the practical expedient to all leases entered into going forward.

8

The adoption of the new standard had an impact on our Consolidated Balance Sheet, with the recording of operating Right-of-Use (ROU) assets and operating lease liabilities of $70.7 million and $71.8 million, respectively. The operating lease liability includes a $1.1 million fair value adjustment for leases assumed in the acquisition of HomeBancorp, Inc. (HomeBancorp). In addition, at the adoption date we had finance lease ROU assets and finance lease liabilities, previously classified as capital leases, of $9.1 million and $8.3 million, respectively.  The Company did not have a cumulative-effect adjustment to the opening balance of retained earnings at commencement. The Company has no related party lease agreements.  This ASU did not have a material impact on our Consolidated Statements of Income. See Note N in the Consolidated Financial Statements for additional disclosures.

FASB ASU 2019-01, Leases (Topic 842): Codification Improvements

This ASU reinstated the exception in Topic 842 for lessors that are not manufacturers or dealers for determining the fair value of leased property as the underlying asset's cost, reflecting any volume or trade discounts that may apply, allows lessors that are depository and lending institutions within the scope of ASU Topic 942 to present "principal payments received under leases" within investing activities on the Statement of Cash Flows, and provides an exemption to the ASC 250-10-50-3 interim disclosure requirements in the Topic 842 transition disclosure requirements. We early adopted this standard with ASU 2016-02 as of January 1, 2019 and the impact was not material to our Consolidated Financial Statements.

Recently Issued Accounting Pronouncements

FASB ASU 2018-15 - Intangibles - Goodwill and Other - Internal Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That is a Service Contract

This ASU aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include internal-use software license). This ASU requires entities to use the guidance in FASB ASC 350-40, Intangibles - Goodwill and Other - Internal Use Software, to determine whether to capitalize or expense implementation costs related to the service contract. This ASU also requires entities to (1) expense capitalized implementation costs of a hosting arrangement that is a service contract over the term of the hosting arrangement (2) present the expense related to the capitalized implementation costs in the same line item on the income statement as fees associated with the hosting element of the arrangement (3) classify payments for capitalized implementation costs in the statement of cash flows in the same manner as payments made for fees associated with the hosting element (4) present the capitalized implementation costs in the same balance sheet line item that a prepayment for the fees associated with the hosting arrangement would be presented.

The amendments in this ASU are effective for fiscal years beginning after December 15, 2019 and interim periods within those fiscal years. Early adoption is permitted. BancShares is currently evaluating the impact this new standard will have on its Consolidated Financial Statements and whether we will early adopt prior to the first quarter of 2020.

FASB ASU 2018-14 - Compensation - Retirement Benefits - Defined Benefit Plans - General (Subtopic 715-20): Disclosure Framework - Changes to the Disclosure Requirements for Defined Benefit Plans

This ASU modifies the disclosure requirements for employers that sponsor defined benefit pension or other postretirement plans by eliminating the requirement to disclose the amounts in accumulated other comprehensive income expected to be recognized as components of net periodic benefit cost over the next fiscal year and adding a requirement to disclose an explanation of the reasons for significant gains and losses related to changes in the benefit obligation for the period.

The amendments in this ASU are effective for public entities for fiscal years ending after December 15, 2020. Early adoption is permitted for all entities. BancShares will adopt all applicable amendments and update the disclosures as appropriate during the first quarter of 2021.

FASB ASU 2018-13 - Fair Value Measurement (Topic 820): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement

This ASU modifies the disclosure requirements on fair value measurements by eliminating the requirements to disclose (1) the amount of and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy (2) the policy for timing of transfers between levels and (3) the valuation processes for Level 3 fair value measurements. This ASU also added specific disclosure requirements for fair value measurements for public business entities including the requirement to disclose the changes in unrealized gains and losses for the period included in other comprehensive income for recurring Level 3 fair value measurements and the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements.

The amendments in this ASU are effective for all entities for fiscal years beginning after December 15, 2019, and all interim periods within those fiscal years. Early adoption is permitted upon issuance of the ASU. Entities are permitted to early adopt amendments that remove or modify disclosures and delay the adoption of the additional disclosures until their effective date. BancShares will adopt all applicable amendments and update the disclosures as appropriate during the first quarter of 2020.

9

FASB ASU 2017-04, Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment

This ASU eliminates Step 2 from the goodwill impairment test. Under Step 2, an entity had to perform procedures to determine the fair value at the impairment testing date of its assets and liabilities (including unrecognized assets and liabilities) following the procedure that would be required in determining the fair value of assets acquired and liabilities assumed in a business combination. Instead, under the amendments in this ASU, an entity should perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. An entity should recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. Additionally, an entity should consider income tax effects from any tax deductible goodwill on the carrying amount of the reporting unit when measuring the goodwill impairment loss, if applicable. An entity still has the option to perform the qualitative assessment for a reporting unit to determine if the quantitative impairment test is necessary. This ASU eliminates the requirements for any reporting unit with a zero or negative carrying amount to perform a qualitative test.

This ASU will be effective for BancShares' annual or interim goodwill impairment tests for fiscal years beginning after December 15, 2019. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. We expect to adopt the guidance for our annual impairment test in fiscal year 2020. BancShares does not anticipate any impact to our consolidated financial position or consolidated results of operations as a result of the adoption.

FASB ASU 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments

This ASU introduces a new credit loss methodology which requires earlier recognition of credit losses, replacing multiple existing impairment methods in current GAAP, which generally require that a loss be incurred before it is recognized. The amendments in this ASU require loss estimates be determined over the lifetime of the asset and broaden the information that an entity must consider in developing its expected credit losses. The ASU does not specify a method for measuring expected credit losses and allows an entity to apply methods that reasonably reflect its expectations of the credit loss estimate based on the entity's size, complexity and risk profile. In addition, the disclosures of credit quality indicators in relation to the amortized cost of financing receivables, a current disclosure requirement, are further disaggregated by year of origination.

The amendments in this ASU are effective for public business entities for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. Early adoption is permitted for fiscal years beginning after December 15, 2018. BancShares will adopt the guidance in the first quarter of 2020 with a cumulative-effect adjustment to retained earnings as of the beginning of the year of adoption. For BancShares, the standard will apply to loans, unfunded loan commitments and debt securities. A cross-functional team co-led by Corporate Finance and Risk Management is in place to implement the new standard. We have completed preliminary current expected credit losses (CECL) accounting interpretations, and continue to refine and test our models, estimation techniques, data, operational processes and controls to be used in preparing CECL loss estimates. During 2019, we expect to address any gaps in our interpretations, methodology, data and operational processes based upon our reviews and tests. BancShares continues to evaluate the impact of this standard on its consolidated financial statements but the magnitude of this impact has not been determined. The final impact will be dependent on, among other items, loan portfolio composition and credit quality at the adoption date, as well as economic conditions, financial models used and forecasts in place at that time.

NOTE B - BUSINESS COMBINATIONS

First South Bancorp, Inc.

On May 1, 2019, FCB completed the merger of Spartanburg, South Carolina-based First South Bancorp and its bank subsidiary, First South Bank. Under the terms of the agreement, cash consideration of $1.15 per share was paid to the shareholders of First South Bancorp for each share of common stock totaling approximately $37.5 million. The total consideration assumes the conversion of all First South Bancorp's Series A preferred shares into common stock. The merger will allow FCB to expand its presence and enhance banking efforts in South Carolina. As of March 31, 2019, First South Bancorp reported $236.0 million in consolidated assets, $206.1 million in deposits and $183.3 million in loans.

Entegra Financial Corp.

On April 23, 2019, FCB and Entegra Financial Corp. (Entegra) entered into a definitive merger agreement for the acquisition by FCB of Franklin, North Carolina-based Entegra and its bank subsidiary, Entegra Bank. Under the terms of the agreement, cash consideration of $30.18 per share will be paid to the shareholders of Entegra for each share of common stock and for each restricted stock unit after conversion to common stock, and each option to purchase Entegra common stock will be canceled and each option holder will receive a cash payment equal to $30.18 for each share underlying the option minus the applicable exercise price of the option. The total transaction value, including termination fee, is anticipated to be approximately $219.8 million. The transaction is anticipated to close during the second half of 2019, subject to the receipt of regulatory approvals and the approval of Entegra's shareholders. As of March 31, 2019, Entegra reported $1.67 billion in consolidated assets, $1.25 billion in deposits and $1.08 billion in loans.

10

Biscayne Bancshares, Inc.

On April 2, 2019, FCB completed the merger of Coconut Grove, Florida-based Biscayne Bancshares, Inc. (Biscayne Bancshares) and its bank subsidiary, Biscayne Bank. Under the terms of the agreement, cash consideration of $25.05 per share was paid to the shareholders of Biscayne Bancshares for each share of common stock, totaling approximately $118.9 million. The merger will allow FCB to expand its presence in Florida and enhance banking efforts in South Florida. As of March 31, 2019, Biscayne Bancshares reported $1.02 billion in consolidated assets, $879.9 million in loans and $788.2 million in deposits.

NOTE C - INVESTMENTS

The amortized cost and fair value of investment securities at March 31, 2019 and December 31, 2018, were as follows:

	March 31, 2019
(Dollars in thousands)	Cost		Gross unrealized gains		Gross unrealized losses		Fair value
Investment securities available for sale
U.S. Treasury	$	1,196,584	$	1,305	$	847	$	1,197,042
Government agency	351,284		330		1,087		350,527
Mortgage-backed securities	2,917,000		7,373		28,429		2,895,944
Corporate bonds	142,939		183		960		142,162
Other	3,929		196		—		4,125
Total investment securities available for sale	4,611,736		9,387		31,323		4,589,800
Investment in marketable equity securities	79,809		30,252		177		109,884
Investment securities held to maturity
Mortgage-backed securities	2,214,829		40,545		450		2,254,924
Total investment securities	$	6,906,374	$	80,184	$	31,950	$	6,954,608
	December 31, 2018
(Dollars in thousands)	Cost		Gross unrealized gains		Gross unrealized losses		Fair value
Investment securities available for sale
U.S. Treasury	$	1,249,243	$	633	$	2,166	$	1,247,710
Government agency	257,252		222		639		256,835
Mortgage-backed securities	2,956,793		5,309		52,763		2,909,339
Corporate bonds	139,906		59		864		139,101
Other	3,923		202		—		4,125
Total investment securities available for sale	4,607,117		6,425		56,432		4,557,110
Investment in marketable equity securities	73,809		19,010		220		92,599
Investment securities held to maturity
Mortgage-backed securities	2,184,653		17,339		490		2,201,502
Total investment securities	$	6,865,579	$	42,774	$	57,142	$	6,851,211

Investments in mortgage-backed securities represent securities issued by the Government National Mortgage Association, Federal National Mortgage Association and Federal Home Loan Mortgage Corporation. Investments in government agency securities represent securities issued by the United States Small Business Administration. Investments in corporate bonds and marketable equity securities represent positions in securities of other financial institutions. Other investments include trust preferred securities of financial institutions. BancShares holds approximately 298,000 shares of Visa Class B common stock. BancShares' Visa Class B shares are not considered to have a readily determinable fair value and are included in the Consolidated Balance Sheet with no fair value.

11

The following table provides the amortized cost and fair value by contractual maturity for investment securities available for sale and held to maturity. Expected maturities will differ from contractual maturities on certain securities because borrowers and issuers may have the right to call or prepay obligations with or without prepayment penalties. Repayments of mortgage-backed securities are dependent on the repayments of the underlying loan balances, while repayments of certain corporate bonds are subject to call provisions that can be exercised by the issuer at their discretion.

	March 31, 2019				December 31, 2018
(Dollars in thousands)	Cost		Fair value		Cost		Fair value
Investment securities available for sale
Non-amortizing securities maturing in:
One year or less	$	1,046,796	$	1,046,362	$	1,049,253	$	1,047,380
One through five years	155,297		155,680		205,526		205,805
Five through 10 years	137,430		137,162		134,370		133,626
Over 10 years	3,929		4,125		3,923		4,125
Government agency	351,284		350,527		257,252		256,835
Mortgage-backed securities	2,917,000		2,895,944		2,956,793		2,909,339
Total investment securities available for sale	$	4,611,736	$	4,589,800	$	4,607,117	$	4,557,110
Investment securities held to maturity
Total investment securities held to maturity	$	2,214,829	$	2,254,924	$	2,184,653	$	2,201,502

There were no gross gains or losses on sales of investment securities available for sale for the three months ended March 31, 2019 and March 31, 2018.

The following table provides the realized and unrealized gains on marketable equity securities for the three months ended March 31, 2019.

	Three months ended March 31
(Dollars in thousands)	2019		2018
Marketable equity securities gains, net	$	11,328	$	971
Less net gains recognized on marketable equity securities sold	44		96
Unrealized gains recognized on marketable equity securities held	$	11,284	$	875

12

The following table provides information regarding securities with unrealized losses as of March 31, 2019 and December 31, 2018.

	March 31, 2019
	Less than 12 months				12 months or more				Total
(Dollars in thousands)	Fair value		Unrealized losses		Fair value		Unrealized losses		Fair value		Unrealized losses
Investment securities available for sale
U.S. Treasury	$	—	$	—	$	599,883	$	847	$	599,883	$	847
Government agency	219,395		901		12,590		186		231,985		1,087
Mortgage-backed securities	114,863		314		1,956,003		28,115		2,070,866		28,429
Corporate bonds	56,393		891		9,950		69		66,343		960
Total	$	390,651	$	2,106	$	2,578,426	$	29,217	$	2,969,077	$	31,323
Investment securities held to maturity
Mortgage-backed securities	$	40,142	$	291	$	9,988	$	159	$	50,130	$	450
	December 31, 2018
	Less than 12 months				12 months or more				Total
(Dollars in thousands)	Fair value		Unrealized losses		Fair value		Unrealized losses		Fair value		Unrealized losses
Investment securities available for sale
U.S. Treasury	$	248,983	$	113	$	848,622	$	2,053	$	1,097,605	$	2,166
Government agency	115,273		601		2,310		38		117,583		639
Mortgage-backed securities	262,204		2,387		1,940,695		50,376		2,202,899		52,763
Corporate bonds	79,066		842		5,000		22		84,066		864
Total	$	705,526	$	3,943	$	2,796,627	$	52,489	$	3,502,153	$	56,432
Investment securities held to maturity
Mortgage-backed securities	$	5,111	$	181	$	10,131	$	309	$	15,242	$	490

As of March 31, 2019, there were 230 investment securities available for sale that had continuous losses for more than 12 months of which 223 were government sponsored enterprise-issued mortgage-backed securities or government agency securities, five were U.S. Treasury securities and two were corporate bonds. There were two investment securities held to maturity, which were government sponsored enterprise-issued mortgage-backed securities, which had continuous losses for more than 12 months at March 31, 2019.

None of the unrealized losses identified as of March 31, 2019 or December 31, 2018 relate to the marketability of the securities or the issuers' ability to honor redemption obligations. Rather, the unrealized losses relate to changes in interest rates relative to when the debt securities were purchased. BancShares has the ability and intent to retain these securities for a period of time sufficient to recover all unrealized losses. Therefore, none of the securities were deemed to be other than temporarily impaired.

Debt securities having an aggregate carrying value of $3.68 billion at March 31, 2019 and $4.03 billion at December 31, 2018 were pledged as collateral to secure public funds on deposit and certain short-term borrowings, and for other purposes as required by law.

NOTE D - LOANS AND LEASES

BancShares' accounting methods for loans and leases differ depending on whether they are non-purchased credit impaired (Non-PCI) or purchased credit impaired (PCI). Loans that are originated by FCB, as well as loans that are performing under their contractual obligations at acquisition, are classified as Non-PCI. Loans that reflect credit deterioration since origination, such that it is probable at acquisition that FCB will be unable to collect all contractually required payments, are classified as PCI. Additionally, at the date of acquisition, all acquired loans are recorded at fair value with no corresponding allowance for loan and lease losses.

13

Loans and leases outstanding included the following at March 31, 2019 and December 31, 2018:

(Dollars in thousands)	March 31, 2019		December 31, 2018
Non-PCI loans and leases:
Commercial:
Construction and land development	$	804,463	$	757,854
Commercial mortgage	10,747,715		10,717,234
Other commercial real estate	427,419		426,985
Commercial and industrial and leases	3,879,575		3,938,730
Other	280,848		296,424
Total commercial loans	16,140,020		16,137,227
Noncommercial:
Residential mortgage	4,303,137		4,265,687
Revolving mortgage	2,469,898		2,542,975
Construction and land development	258,959		257,030
Consumer	1,734,415		1,713,781
Total noncommercial loans	8,766,409		8,779,473
Total non-PCI loans and leases	24,906,429		24,916,700
PCI loans:
Total PCI loans	557,356		606,576
Total loans and leases	$	25,463,785	$	25,523,276

At March 31, 2019, $9.08 billion in non-PCI loans with a lendable collateral value of $6.36 billion were used to secure $175.2 million in Federal Home Loan Bank (FHLB) of Atlanta advances and $14.5 million in FHLB of Chicago advances, resulting in additional borrowing capacity of $6.17 billion. At December 31, 2018, $9.12 billion in non-PCI loans with a lendable collateral value of $6.36 billion were used to secure $175.2 million in FHLB of Atlanta advances, resulting in additional borrowing capacity of $6.18 billion.

At March 31, 2019, $2.93 billion in non-PCI loans with a lendable collateral value of $2.23 billion were used to secure additional borrowing capacity at the Federal Reserve Bank (FRB). At December 31, 2018, $2.94 billion in non-PCI loans with a lendable collateral value of $2.19 billion were used to secure additional borrowing capacity at the FRB.

Certain residential real estate loans are originated to be sold to investors and are recorded in loans held for sale at fair value. In addition, we may change our strategy for certain portfolio loans and decide to sell them in the secondary market. At that time, portfolio loans are transferred to loans held for sale at fair value. Loans held for sale totaled $53.2 million and $45.5 million at March 31, 2019 and December 31, 2018, respectively.

During the three months ended March 31, 2019, total proceeds from sales of loans held for sale were $123.0 million and there were no transfers to loans held for sale from the residential mortgage portfolio. For the three months ended March 31, 2018, total proceeds from sales of loans held for sale were $138.5 million and there were no transfers to loans held for sale from the residential mortgage portfolio.

Net deferred fees on non-PCI loans and leases, including unearned income as well as unamortized costs and fees, were $130 thousand and $79 thousand at March 31, 2019 and December 31, 2018, respectively. The net unamortized discount related to purchased non-PCI loans and leases was $30.1 million at March 31, 2019 and $33.3 million at December 31, 2018. During the three months ended March 31, 2019 and March 31, 2018, accretion income on purchased non-PCI loans and leases was $3.2 million and $2.9 million, respectively.

14

Credit quality indicators

Loans and leases are monitored for credit quality on a recurring basis. Commercial and noncommercial loans and leases have different credit quality indicators as a result of the unique characteristics of the loan segments being evaluated. The credit quality indicators for non-PCI and PCI commercial loans and leases are developed through a review of individual borrowers on an ongoing basis. Commercial loans are evaluated periodically with more frequent evaluations done on criticized loans. Commercial credit cards are included in the Commercial and industrial and leases segment, but are not specifically graded as with other commercial loans. The indicators as of the date presented are based on the most recent assessment performed and are defined below:

Pass – A pass rated asset is not adversely classified because it does not display any of the characteristics for adverse classification.

Special mention – A special mention asset has potential weaknesses that deserve management’s close attention. If left uncorrected, such potential weaknesses may result in deterioration of the repayment prospects or collateral position at some future date. Special mention assets are not adversely classified and do not warrant adverse classification.

Substandard – A substandard asset is inadequately protected by the current net worth and paying capacity of the borrower or of the collateral pledged, if any. Assets classified as substandard generally have a well-defined weakness, or weaknesses, that jeopardize the liquidation of the debt. These assets are characterized by the distinct possibility of loss if the deficiencies are not corrected.

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

Loss – Assets classified as loss are considered uncollectible and of such little value that it is inappropriate to be carried as an asset. This classification is not necessarily equivalent to any potential for recovery or salvage value, but rather that it is not appropriate to defer a full charge-off even though partial recovery may be affected in the future.

Ungraded – Ungraded loans represent loans that are not included in the individual credit grading process due to their relatively small balances or borrower type. The majority of ungraded loans at March 31, 2019 and December 31, 2018 relate to business credit cards. Business credit card loans are subject to automatic charge-off when they become 120 days past due in the same manner as unsecured consumer lines of credit. The remaining balance is comprised of a small amount of commercial mortgage, lease financing and other commercial real estate loans.

The credit quality indicators for non-PCI and PCI noncommercial loans are based on delinquency status of the borrower as of the date presented. As the borrower becomes more delinquent, the likelihood of loss increases.

15

The composition of the loans and leases outstanding at March 31, 2019 and December 31, 2018 by credit quality indicator are provided below:

	March 31, 2019
(Dollars in thousands)	Non-PCI commercial loans and leases
Grade:	Construction and land development		Commercial mortgage		Other commercial real estate		Commercial and industrial and leases		Other		Total non-PCI commercial loans and leases
Pass	$	800,703	$	10,528,026	$	423,288	$	3,717,237	$	279,899	$	15,749,153
Special mention	1,345		110,413		3,244		46,928		350		162,280
Substandard	2,415		109,276		887		37,443		599		150,620
Doubtful	—		—		—		354		—		354
Ungraded	—		—		—		77,613		—		77,613
Total	$	804,463	$	10,747,715	$	427,419	$	3,879,575	$	280,848	$	16,140,020
	December 31, 2018
(Dollars in thousands)	Non-PCI commercial loans and leases
Grade:	Construction and land development		Commercial mortgage		Other commercial real estate		Commercial and industrial and leases		Other		Total non-PCI commercial loans and leases
Pass	$	753,985	$	10,507,687	$	422,500	$	3,778,797	$	294,700	$	15,757,669
Special mention	1,369		114,219		3,193		54,814		1,105		174,700
Substandard	2,500		92,743		1,292		30,688		619		127,842
Doubtful	—		—		—		354		—		354
Ungraded	—		2,585		—		74,077		—		76,662
Total	$	757,854	$	10,717,234	$	426,985	$	3,938,730	$	296,424	$	16,137,227

	March 31, 2019
	Non-PCI noncommercial loans and leases
(Dollars in thousands)	Residential mortgage		Revolving mortgage		Construction and land development		Consumer		Total non-PCI noncommercial loans and leases
Current	$	4,248,823	$	2,444,150	$	256,801	$	1,720,142	$	8,669,916
30-59 days past due	33,623		10,734		581		7,966		52,904
60-89 days past due	7,760		4,227		28		3,001		15,016
90 days or greater past due	12,931		10,787		1,549		3,306		28,573
Total	$	4,303,137	$	2,469,898	$	258,959	$	1,734,415	$	8,766,409
	December 31, 2018
	Non-PCI noncommercial loans and leases
(Dollars in thousands)	Residential mortgage		Revolving mortgage		Construction and land development		Consumer		Total non-PCI noncommercial loans and leases
Current	$	4,214,783	$	2,514,269	$	254,837	$	1,696,321	$	8,680,210
30-59 days past due	28,239		12,585		581		10,035		51,440
60-89 days past due	7,357		4,490		21		3,904		15,772
90 days or greater past due	15,308		11,631		1,591		3,521		32,051
Total	$	4,265,687	$	2,542,975	$	257,030	$	1,713,781	$	8,779,473

16

PCI loans outstanding at March 31, 2019 and December 31, 2018 by credit quality indicator are provided below:

	March 31, 2019		December 31, 2018
(Dollars in thousands)	PCI commercial loans
Grade:
Pass	$	131,018	$	141,922
Special mention	43,068		48,475
Substandard	91,940		101,447
Doubtful	3,887		4,828
Total	$	269,913	$	296,672

	March 31, 2019		December 31, 2018
(Dollars in thousands)	PCI noncommercial loans
Current	$	255,145	$	268,280
30-59 days past due	8,565		11,155
60-89 days past due	3,449		7,708
90 days or greater past due	20,284		22,761
Total	$	287,443	$	309,904

17

The aging of the outstanding non-PCI loans and leases, by class, at March 31, 2019 and December 31, 2018 are provided in the tables below. Loans and leases 30 days or less past due are considered current as various grace periods allow borrowers to make payments within a stated period after the due date and still remain in compliance with the loan agreement.

	March 31, 2019
(Dollars in thousands)	30-59 days past due		60-89 days past due		90 days or greater		Total past due		Current		Total loans and leases
Non-PCI loans and leases:
Commercial:
Construction and land development - commercial	$	617	$	262	$	206	$	1,085	$	803,378	$	804,463
Commercial mortgage	16,120		8,818		2,802		27,740		10,719,975		10,747,715
Other commercial real estate	1,198		517		—		1,715		425,704		427,419
Commercial and industrial and leases	9,706		2,403		3,389		15,498		3,864,077		3,879,575
Other	113		24		—		137		280,711		280,848
Total commercial loans	27,754		12,024		6,397		46,175		16,093,845		16,140,020
Noncommercial:
Residential mortgage	33,623		7,760		12,931		54,314		4,248,823		4,303,137
Revolving mortgage	10,734		4,227		10,787		25,748		2,444,150		2,469,898
Construction and land development - non-commercial	581		28		1,549		2,158		256,801		258,959
Consumer	7,966		3,001		3,306		14,273		1,720,142		1,734,415
Total noncommercial loans	52,904		15,016		28,573		96,493		8,669,916		8,766,409
Total non-PCI loans and leases	$	80,658	$	27,040	$	34,970	$	142,668	$	24,763,761	$	24,906,429
	December 31, 2018
(Dollars in thousands)	30-59 days past due		60-89 days past due		90 days or greater		Total past due		Current		Total loans and leases
Non-PCI loans and leases:
Commercial:
Construction and land development - commercial	$	516	$	9	$	444	$	969	$	756,885	$	757,854
Commercial mortgage	14,200		2,066		3,237		19,503		10,697,731		10,717,234
Other commercial real estate	91		76		300		467		426,518		426,985
Commercial and industrial and leases	9,655		1,759		2,892		14,306		3,924,424		3,938,730
Other	285		—		89		374		296,050		296,424
Total commercial loans	24,747		3,910		6,962		35,619		16,101,608		16,137,227
Noncommercial:
Residential mortgage	28,239		7,357		15,308		50,904		4,214,783		4,265,687
Revolving mortgage	12,585		4,490		11,631		28,706		2,514,269		2,542,975
Construction and land development - non-commercial	581		21		1,591		2,193		254,837		257,030
Consumer	10,035		3,904		3,521		17,460		1,696,321		1,713,781
Total noncommercial loans	51,440		15,772		32,051		99,263		8,680,210		8,779,473
Total non-PCI loans and leases	$	76,187	$	19,682	$	39,013	$	134,882	$	24,781,818	$	24,916,700

18

The recorded investment, by class, in loans and leases on nonaccrual status, and loans and leases greater than 90 days past due and still accruing at March 31, 2019 and December 31, 2018 for non-PCI loans and leases, were as follows:

	March 31, 2019				December 31, 2018
(Dollars in thousands)	Nonaccrual loans and leases		Loans and leases > 90 days and accruing		Nonaccrual loans and leases		Loans and leases > 90 days and accruing
Non-PCI loans and leases:
Construction and land development - commercial	$	407	$	—	$	666	$	—
Commercial mortgage	15,744		—		12,594		—
Other commercial real estate	19		—		366		—
Commercial and industrial and leases	5,482		667		4,624		808
Residential mortgage	36,573		614		35,662		—
Revolving mortgage	25,723		—		25,563		—
Construction and land development - noncommercial	1,699		—		1,823		—
Consumer	3,054		2,212		2,969		2,080
Other	257		—		279		—
Total non-PCI loans and leases	$	88,958	$	3,493	$	84,546	$	2,888

The following table provides changes in the carrying value of all PCI loans during the three months ended March 31, 2019 and March 31, 2018:

(Dollars in thousands)	2019			2018
Balance at January 1	$	606,576		$	762,998
Fair value of acquired loans	—			—
Accretion	17,755			17,973
Payments received and other changes, net	(66,975		)	(77,134		)
Balance at March 31	$	557,356		$	703,837
Unpaid principal balance at March 31	$	810,683		$	1,108,379

The carrying value of PCI loans on the cost recovery method was $3.3 million at both March 31, 2019 and December 31, 2018. The cost recovery method is applied to loans when the timing of future cash flows cannot be reasonably estimated due to borrower nonperformance or uncertainty in the ultimate disposition of the asset. The recorded investment of PCI loans on nonaccrual status was $1.7 million and $1.3 million at March 31, 2019 and December 31, 2018, respectively. The remaining discount on PCI loans was $89.4 million and $95.5 million at March 31, 2019 and December 31, 2018, respectively.

During the three months ended March 31, 2019 and March 31, 2018, accretion income on PCI loans was $17.8 million and $18.0 million, respectively.

For PCI loans, improved credit loss expectations generally result in the reclassification of nonaccretable difference to accretable yield. Changes in expected cash flow not related to credit improvements or deterioration do not affect the nonaccretable difference.

The following table documents changes to the amount of accretable yield for the first three months of 2019 and 2018.

(Dollars in thousands)	2019			2018
Balance at January 1	$	312,894		$	316,679
Additions from acquisitions	—			—
Accretion	(17,755		)	(17,973		)
Reclassifications from (to) nonaccretable difference	600			(929		)
Changes in expected cash flows that do not affect nonaccretable difference	(9,547		)	11,568
Balance at March 31	$	286,192		$	309,345

19

NOTE E - ALLOWANCE FOR LOAN AND LEASE LOSSES (ALLL)

Activity in the allowance for non-PCI loan and lease losses by class of loans is summarized as follows:

	Three months ended March 31, 2019
(Dollars in thousands)	Construction and land development - commercial			Commercial mortgage			Other commercial real estate			Commercial and industrial and leases			Other			Residential mortgage			Revolving mortgage			Construction and land development - non - commercial			Consumer			Total
Non-PCI Loans
Allowance for loan and lease losses:
Balance at January 1	$	35,270		$	43,451		$	2,481		$	55,620		$	2,221		$	15,472		$	21,862		$	2,350		$	35,841		$	214,568
Provision (credits)	2,119			2,371			(83		)	2,725			(498		)	1,508			209			123			3,440			11,914
Charge-offs	(44		)	(761		)	—			(1,858		)	—			(166		)	(963		)	—			(6,362		)	(10,154		)
Recoveries	131			220			1			538			444			173			387			—			1,573			3,467
Balance at March 31	$	37,476		$	45,281		$	2,399		$	57,025		$	2,167		$	16,987		$	21,495		$	2,473		$	34,492		$	219,795
	Three months ended March 31, 2018
(Dollars in thousands)	Construction and land development - commercial			Commercial mortgage			Other commercial real estate			Commercial and industrial and leases			Other			Residential mortgage			Revolving mortgage			Construction and land development - non - commercial			Consumer			Total
Balance at January 1	$	24,470		$	45,005		$	4,571		$	59,824		$	4,689		$	15,706		$	22,436		$	3,962		$	31,204		$	211,867
Provision (credits)	2,225			(1,365		)	(1,293		)	562			114			1,512			466			107			2,923			5,251
Charge-offs	—			(46		)	—			(2,329		)	(3		)	(806		)	(992		)	(182		)