4. LOANS AND ALLOWANCE FOR LOAN LOSSES

The composition of the loan portfolio at period end follows:

December 31, (in thousands)	2013		2012

Residential real estate:
Owner occupied	$	1,097,795	$	1,145,495
Non owner occupied	110,809		74,539
Commercial real estate	773,173		714,642
Commercial real estate - purchased whole loans	34,186		33,531
Construction & land development	44,351		68,214
Commercial & industrial	127,763		130,681
Warehouse lines of credit	149,576		216,576
Home equity	226,782		241,607
Consumer:
Credit cards	9,030		8,716
Overdrafts	944		955
Other consumer	15,383		15,241

Total loans	2,589,792		2,650,197
Less: Allowance for loan losses	23,026		23,729

Total loans, net	$	2,566,766	$	2,626,468

2012 FDIC-Assisted Acquisitions

The contractual amount of the loans associated with the TCB transaction decreased from $79 million as of the acquisition date to $34 million and $42 million as of December 31, 2013 and 2012. The carrying value of these loans was $57 million as of the acquisition date compared to $29 and $31 million as of December 31, 2013 and 2012.

The contractual amount of the loans associated with the FCB transaction decreased from $172 million as of the acquisition date to $85 million and $139 million as of December 31, 2013 and 2012. The carrying value of these loans was $130 million as of the acquisition date compared to $68 million and $108 million as of December 31, 2013 and 2012.

The composition of TCB and FCB loans outstanding at December 31, 2013 and December 31, 2012 follows:

	Tennessee		First		Total
	Commerce		Commercial		Acquired
December 31, 2013 (in thousands)	Bank		Bank		Banks

Residential real estate	$	10,191	$	19,554	$	29,745
Commercial real estate	13,398		43,167		56,565
Construction & land development	295		1,614		1,909
Commercial & industrial	329		2,867		3,196
Home equity	4,270		366		4,636
Consumer:
Credit cards	205		—		205
Overdrafts	4		—		4
Other consumer	73		129		202
Total loans	$	28,765	$	67,697	$	96,462

The above table is inclusive of loans originated subsequent to the respective acquisition dates.

	Tennessee		First		Total
	Commerce		Commercial		Acquired
December 31, 2012 (in thousands)	Bank		Bank		Banks

Residential real estate	$	12,270	$	32,459	$	44,729
Commercial real estate	8,015		61,758		69,773
Construction & land development	4,235		3,301		7,536
Commercial & industrial	1,284		9,405		10,689
Home equity	4,183		385		4,568
Consumer:
Credit cards	321		—		321
Overdrafts	1		11		12
Other consumer	655		333		988
Total loans	$	30,964	$	107,652	$	138,616

The tables below reconcile the contractually-required and carrying amounts of acquired TCB and FCB loans at December 31, 2013 and December 31, 2012:

	Tennessee			First			Total
	Commerce			Commercial			Acquired
December 31, 2013 (in thousands)	Bank			Bank			Banks

Contractually-required principal	$	34,406		$	85,184		$	119,590
Non-accretable difference	(3,884		)	(15,194		)	(19,078		)
Accretable difference	(1,757		)	(2,293		)	(4,050		)
Total carrying value of loans	$	28,765		$	67,697		$	96,462

	Tennessee			First			Total
	Commerce			Commercial			Acquired
December 31, 2012 (in thousands)	Bank			Bank			Banks

Contractually-required principal	$	42,188		$	139,156		$	181,344
Non-accretable difference	(10,393		)	(28,870		)	(39,263		)
Accretable difference	(831		)	(2,634		)	(3,465		)
Total carrying value of loans	$	30,964		$	107,652		$	138,616

See additional discussion regarding the TCB and FCB acquisitions under Footnote 2 “2012 FDIC-Assisted Acquisitions.”

Credit Quality Indicators

Bank procedures for assessing and maintaining credit gradings differs slightly depending on whether a new or renewed loan is being underwritten, or whether an existing loan is being re-evaluated for potential credit quality concerns. The latter usually occurs upon receipt of updated financial information, or other pertinent data, that would potentially cause a change in the loan grade. Specific Bank procedures follow:

· For new and renewed C&I, CRE and construction and land development loans, the Bank’s Credit Administration Department (“CAD”) assigns the credit quality grade to the loan. Loan grades for new C&I, CRE and construction and land development loans with an aggregate credit exposure of $2.0 million or greater are validated by the Senior Loan Committee (“SLC”).

· The SLC is chaired by the Chief Operating Officer of Commercial Banking (“COO”) and includes the Bank’s Chief Credit Officer (“CCO”) and is attended by the Bank’s Chief Risk Management Officer (“CRMO”), among other executives.

· Commercial loan officers are responsible for monitoring their respective loan portfolios and reporting any adverse material changes to the CCO. When circumstances warrant a review and possible change in the credit quality grade, loan officers are required to notify the Bank’s CAD.

· The COO meets monthly with commercial loan officers to discuss the status of past due loans and possible classified loans. These meetings are designed to give loan officers an opportunity to identify an existing loan that should be downgraded.

· Monthly, members of senior management along with managers of Commercial Lending, CAD, Accounting, Special Assets and Retail Collections attend a Special Asset Committee (“SAC”) meeting. The SAC reviews all C&I and CRE, classified, and impaired loans in excess of $100,000 and discusses the relative trends and current status of these assets. In addition, the SAC reviews all retail residential real estate loans exceeding $750,000 and all home equity loans exceeding $100,000 that are 80-days or more past due or that are on non-accrual status. SAC also reviews the actions taken by management regarding foreclosure mitigation, loan extensions, troubled debt restructures and collateral repossessions. Based on the information reviewed in this meeting, the SAC approves all specific loan loss allocations to be recognized by the Bank within the Allowance analysis.

· All new and renewed warehouse lending loans are approved by the SLC and Executive Loan Committee. The CAD assigns the initial credit quality grade to warehouse lending loans. Monthly, members of senior management along with the SLC, review warehouse lending activity and monitor key performance indicators such as average days outstanding, average FICO credit report score, average LTV and other important factors.

On at least an annual basis, the Bank’s internal loan review department analyzes all aggregate lending relationships with outstanding balances greater than $1 million that are internally classified as “Special Mention,” “Substandard,” “Doubtful” or “Loss.” In addition, for all “Pass” rated loans, the Bank analyzes, on at least an annual basis, all aggregate lending relationships with outstanding balances exceeding $4 million.

The Bank categorizes loans into risk categories based on relevant information about the ability of borrowers to service their debt such as: current financial information, historical payment experience, public information, and current economic trends. The Bank also considers the fair value of the underlying collateral and the strength and willingness of the guarantor(s). The Bank analyzes loans individually, and based on this analysis, establishes a credit risk rating. The Bank uses the following definitions for risk ratings:

Risk Grade 1 — Excellent (Pass): Loans fully secured by liquid collateral, such as certificates of deposit, reputable bank letters of credit, or other cash equivalents; loans fully secured by publicly traded marketable securities where there is no impediment to liquidation; or loans to any publicly held company with a current long-term debt rating of A or better.

Risk Grade 2 — Good (Pass): Loans to businesses that have strong financial statements containing an unqualified opinion from a Certified Public Accounting firm and at least three consecutive years of profits; loans supported by unaudited financial statements containing strong balance sheets, five consecutive years of profits, a five-year satisfactory relationship with the Bank, and key balance sheet and income statement trends that are either stable or positive; loans that are guaranteed or otherwise backed by the full faith and credit of the U.S. government or an agency thereof, such as the Small Business Administration; or loans to publicly held companies with current long-term debt ratings of Baa or better.

Risk Grade 3 — Satisfactory (Pass): Loans supported by financial statements (audited or unaudited) that indicate average or slightly below average risk and having some deficiency or vulnerability to changing economic conditions; loans with some weakness but offsetting features of other support are readily available; loans that are meeting the terms of repayment, but which may be susceptible to deterioration if adverse factors are encountered.

Risk Grade 4 — Satisfactory/Monitored (Pass): Loans in this category are considered to be of acceptable credit quality, but contain greater credit risk than Satisfactory loans due to weak balance sheets, marginal earnings or cash flow, or other uncertainties. These loans warrant a higher than average level of monitoring to ensure that weaknesses do not advance. The level of risk in a Satisfactory/Monitored loan is within acceptable underwriting guidelines so long as the loan is given the proper level of management supervision.

Risk Grade 5 — Special Mention: Loans that possess some credit deficiency or potential weakness that deserves close attention. Such loans pose an unwarranted financial risk that, if not corrected, could weaken the loan by adversely impacting the future repayment ability of the borrower. The key distinctions of a Special Mention classification are that (1) it is indicative of an unwarranted level of risk and (2) credit weaknesses are considered potential and are not defined impairments to the primary source of repayment.

Purchased Credit Impaired Loans Group 1 (“PCI-1”): To the extent that a PCI loan’s performance does not reflect an increased risk of loss of contractual principal beyond the non-accretable yield established as part of its initial day-one evaluation, such loan would be classified in the Purchased Credit Impaired - Group 1 (“PCI-1”) category; whose credit risk is considered equivalent to a non-PCI “Special Mention” loan within the Bank’s credit rating matrix. PCI-1 loans are considered impaired if, based on current information and events, it is probable that the future estimated cash flows of the loan have deteriorated from management’s initial estimate. Provisions for loan losses are made for impaired PCI-1 loans to further discount the loan and allow its yield to conform to at least management’s initial expectations. Any improvement in the expected performance of a PCI-1 loan would result in a reversal of the provision for loan losses to the extent of prior charges and then an adjustment to accretable yield, which would have a positive impact on interest income.

Purchased Credit Impaired Loans — Substandard (“PCI-Sub”): If during the Bank’s periodic evaluations of its PCI loan portfolio, management deems a PCI-1 loan to have an increased risk of loss of contractual principal beyond the non-accretable yield established as part of its initial day-one evaluation, such loan would be classified PCI-Substandard (“PCI-Sub”) within the Bank’s credit risk matrix. Management deems the risk of default and overall credit risk of a PCI-Sub loan to be greater than a PCI-1 loan and more analogous to a non-PCI “Substandard” loan within the Bank’s credit rating matrix. PCI-Sub loans are considered to be impaired. Any improvement in the expected performance of a PCI-Sub loan would result in a reversal of the provision for loan losses to the extent of prior charges and then an adjustment to accretable yield, which would have a positive impact on interest income.

See additional discussion regarding purchased credit impaired loans in this section of the filing under Footnote 2 “2012 FDIC-Assisted Acquisitions.”

Risk Grade 6 — Substandard: One or more of the following characteristics may be exhibited in loans classified as Substandard:

· Loans that possess a defined credit weakness. The likelihood that a loan will be paid from the primary source of repayment is uncertain. Financial deterioration is under way and very close attention is warranted to ensure that the loan is collected without loss.

· Loans are inadequately protected by the current net worth and paying capacity of the obligor.

· The primary source of repayment is gone, and the Bank is forced to rely on a secondary source of repayment, such as collateral liquidation or guarantees.

· Loans have a distinct possibility that the Bank will sustain some loss if deficiencies are not corrected.

· Unusual courses of action are needed to maintain a high probability of repayment.

· The borrower is not generating enough cash flow to repay loan principal, however, it continues to make interest payments.

· The Bank is forced into a subordinated or unsecured position due to flaws in documentation.

· The Bank is seriously contemplating foreclosure or legal action due to the apparent deterioration in the loan.

· There is significant deterioration in market conditions to which the borrower is highly vulnerable.

Risk Grade 7 — Doubtful: One or more of the following characteristics may be present in loans classified as Doubtful:

· Loans have all of the weaknesses of those classified as Substandard. However, based on existing conditions, these weaknesses make full collection of principal highly improbable.

· The primary source of repayment is gone, and there is considerable doubt as to the quality of the secondary source of repayment.

· The possibility of loss is high but because of certain important pending factors which may strengthen the loan, loss classification is deferred until the exact status of repayment is known.

Risk Grade 8 — Loss: Loans are considered uncollectible and of such little value that continuing to carry them as assets is not feasible. Loans will be classified “Loss” when it is neither practical nor desirable to defer writing off or reserving all or a portion of a basically worthless asset, even though partial recovery may be possible at some time in the future.

For all real estate and consumer loans that do not meet the scope above, the Bank uses a grading system based on delinquency. Loans that are 80 days or more past due, on non-accrual, or are troubled debt restructurings are graded “Substandard.” Occasionally, a real estate loan below scope may be graded as “Special Mention” or “Substandard” if the loan is cross-collateralized with a classified C&I or CRE loan.

Purchased loans accounted for under ASC Topic 310-20 are accounted for as any other Bank-originated loan, potentially becoming nonaccrual or impaired, as well as being risk rated under the Bank’s standard practices and procedures. In addition, these loans are considered in the determination of the Allowance once day-one fair values are final.

Management separately monitors PCI loans, and on at least a quarterly basis, reviews them against the factors and assumptions used in determining their day-one fair values. In addition to its quarterly evaluation, a PCI loan is typically reviewed when it is modified or extended, or when material information becomes available to the Bank that provides additional insight regarding the loan’s performance, the status of the borrower, or the quality or value of the underlying collateral.

If a troubled debt restructuring is performed on a PCI loan, the loan is considered impaired under the applicable TDR accounting standards and transferred out of the PCI population. The loan may require an additional provision for loan losses if its restructured cash flows are less than management’s initial day-one expectations. PCI loans for which the Bank simply chooses to extend the maturity date are generally not considered TDRs and remain in the PCI population.

Credit Quality Indicators

Based on the Bank’s internal analysis performed, the risk category of loans by class follows:

									Purchased		Purchased
									Credit		Credit
									Impaired		Impaired		Total
December 31, 2013			Special				Doubtful /		Loans -		Loans -		Rated
(in thousands)	Pass		Mention *		Substandard *		Loss		Group 1		Substandard		Loans**

Residential real estate:
Owner occupied	$	—	$	27,431	$	10,994	$	—	$	2,810	$	—	$	41,235
Non owner occupied	—		919		1,292		—		7,936		—		10,147
Commercial real estate	709,610		11,125		25,296		—		27,142		—		773,173
Commercial real estate - Purchased whole loans	34,186		—		—		—		—		—		34,186
Construction & land development	40,591		128		2,386		—		1,246		—		44,351
Commercial & industrial	123,646		296		2,035		—		1,564		222		127,763
Warehouse lines of credit	149,576		—		—		—		—		—		149,576
Home equity	—		250		2,014		—		—		—		2,264
Consumer:
Credit cards	—		—		—		—		—		—		—
Overdrafts	—		—		—		—		—		—		—
Other consumer	—		18		66		—		33		—		117

Total rated loans	$	1,057,609	$	40,167	$	44,083	$	—	$	40,731	$	222	$	1,182,812

									Purchased		Purchased
									Credit		Credit
									Impaired		Impaired		Total
December 31, 2012			Special				Doubtful /		Loans -		Loans -		Rated
(in thousands)	Pass		Mention*		Substandard*		Loss		Group 1		Substandard		Loans**

Residential real estate:
Owner occupied	$	—	$	26,031	$	8,700	$	—	$	2,413	$	—	$	37,144
Non owner occupied	—		2,616		3,350		—		20,190		—		26,156
Commercial real estate	624,631		17,216		28,433		—		44,362		—		714,642
Commercial real estate - Purchased whole loans	33,531		—		—		—		—		—		33,531
Construction & land development	61,556		1,088		3,878		—		1,692		—		68,214
Commercial & industrial	121,170		2,639		2,592		—		4,280		—		130,681
Warehouse lines of credit	216,576		—		—		—		—		—		216,576
Home equity	—		648		2,346		—		—		—		2,994
Consumer:
Credit cards	—		—		—		—		—		—		—
Overdrafts	—		—		—		—		—		—		—
Other consumer	—		387		53		—		41		—		481

Total rated loans	$	1,057,464	$	50,625	$	49,352	$	—	$	72,978	$	—	$	1,230,419

* - Special Mention and Substandard loans include $1 million and $6 million at December 31, 2013 and $4 million and $11 million at December 31, 2012, respectively, which were removed from the Purchased Credit Impaired population due to a post-acquisition troubled debt restructuring of the loan.

** - The above tables exclude all non-classified residential real estate and consumer loans at the respective period ends. The tables also exclude most non classified small C&I and CRE relationships totaling $100,000 or less. These loans are not rated since they are accruing interest and are not past due 80-days-or-more.

Allowance for Loan Losses

Activity in the Allowance follows:

December 31, (in thousands)	2013			2012			2011

Allowance for loan losses at beginning year	$	23,729		$	24,063		$	23,079

Charge offs - Traditional Banking	(6,185		)	(9,888		)	(7,309		)
Charge offs - Refund Anticipation Loans	—			(11,097		)	(15,484		)
Total charge offs	(6,185		)	(20,985		)	(22,793		)

Recoveries - Traditional Banking	1,654			1,387			1,887
Recoveries - Refund Anticipation Loans	845			4,221			3,924
Total recoveries	2,499			5,608			5,811

Net loan charge offs - Traditional Banking	(4,531		)	(8,501		)	(5,422		)
Net loan charge offs - Refund Anticipation Loans	845			(6,876		)	(11,560		)
Net loan charge offs	(3,686		)	(15,377		)	(16,982		)

Provision for loan losses - Traditional Banking	3,828			8,167			6,406
Provision for loan losses - Refund Anticipation Loans	(845		)	6,876			11,560
Total provision for loan losses	2,983			15,043			17,966

Allowance for loan losses at end of year	$	23,026		$	23,729		$	24,063

The Allowance calculation includes the following qualitative factors, which are considered in combination with the Bank’s historical loss rates in determining the general loss reserve within the Allowance:

· Changes in nature, volume and seasoning of the loan portfolio;

· Changes in experience, ability and depth of lending management and other relevant staff;

· Changes in the quality of the Bank’s loan review system;

· Changes in lending policies and procedures, including changes in underwriting standards and collection, charge-off, and recovery practices not considered elsewhere in estimating credit losses;

· Changes in the volume and severity of past due, non-accrual and classified loans;

· Changes in the value of underlying collateral for collateral-dependent loans;

· Changes in international, national, regional, and local economic and business conditions and developments that affect the collectibility of the loan portfolio, including the condition of various market segments;

· The existence and effect of any concentrations of credit, and changes in the level of such concentrations; and

· The effect of other external factors such as competition and legal and regulatory requirements on the level of estimated credit losses in the institution’s existing portfolio.

Prior to January 1, 2012, the Bank’s Allowance calculation was supported with qualitative factors which included a nominal “unallocated” Allowance component totaling $2.0 million as of December 31, 2011. The Bank believed that historically the “unallocated” allowance properly reflected estimated credit losses determined in accordance with GAAP. The unallocated allowance was primarily related to RB&T’s loan portfolio, which is highly concentrated in the Kentucky and Southern Indiana real estate markets. These markets have remained relatively stable during the recent economic downturn, as compared to other parts of the U.S. With the Bank’s 2012 expansion, its plans to pursue future acquisitions into potentially new markets through FDIC-assisted transactions, and its offering of new loan products, such as mortgage warehouse lines of credit, the Bank revised its methodology to provide a more detailed calculation when estimating the impact of qualitative factors over the Bank’s various loan categories. This methodology change did not have a material impact on the Bank’s provision for loan losses for the year ended December 31, 2012.

In executing this methodology change, the Bank primarily focused on large groups of smaller-balance homogeneous loans that are collectively evaluated for impairment and are generally not included in the scope of ASC Topic 310-10-35, Accounting by Creditors for Impairment of a Loan.

The following tables present the activity in the Allowance by portfolio class for the years ended December 31, 2013 and 2012:

Commercial

Residential Real Estate

Real Estate -

Warehouse

Year Ended

Owner

Non Owner

Commercial

Purchased

Construction &

Commercial &

Lines of

December 31, 2013 (in thousands)

Occupied

Real Estate

Whole Loans

Land Development

Industrial

Credit

Beginning balance

7,006

1,049

8,843

2,769

580

541

Provision for loan losses

2,411

539

—

(902

)

876

(92

)

Loans charged off

(1,886

)

(241

)

(1,190

)

—

(619

)

(466

)

—

Recoveries

285

172

117

—

Ending balance

7,816

1,023

8,309

1,296

1,089

449

(continued)

Refund

Consumer

Home

Anticipation

Credit

Other

Equity

Loans

Cards

Overdrafts

Consumer

Total

Beginning balance

2,348

—

210

198

151

23,729

Provision for loan losses

515

(845

)

202

191

2,983

Loans charged off

(632

)

—

(142

)

(601

)

(408

)

(6,185

)

Recoveries

165

845

411

338

2,499

Ending balance

2,396

—

289

199

126

23,026

										Commercial
	Residential Real Estate									Real Estate -								Warehouse
Year Ended	Owner			Non Owner			Commercial			Purchased		Construction &			Commercial &			Lines of
December 31, 2012 (in thousands)	Occupied			Occupied			Real Estate			Whole Loans		Land Development			Industrial			Credit

Beginning balance	$	5,212		$	1,142		$	7,724		$	—	$	3,042		$	1,025		$	104
Allocation of previously unallocated allowance	1,117			146			47			—		—			—			—
Provision for loan losses	3,549			144			2,015			34		1,545			(294		)	437
Loans charged off	(3,128		)	(520		)	(1,033		)	—		(1,922		)	(176		)	—
Recoveries	256			137			90			—		104			25			—

Ending balance	$	7,006		$	1,049		$	8,843		$	34	$	2,769		$	580		$	541

(continued)

				Refund			Consumer
	Home			Anticipation			Credit						Other
	Equity			Loans			Cards			Overdrafts			Consumer			Unallocated*			Total

Beginning balance	$	2,984		$	—		$	503		$	135		$	227		$	1,965		$	24,063
Allocation of previously unallocated allowance*	536			—			47			17			55			(1,965		)	—
Provision for loan losses	988			6,876			(253		)	92			(90		)	—			15,043
Loans charged off	(2,252		)	(11,097		)	(123		)	(468		)	(266		)	—			(20,985		)
Recoveries	92			4,221			36			422			225			—			5,608

Ending balance	$	2,348		$	—		$	210		$	198		$	151		$	—		$	23,729

* Allocation was made January 1, 2012 based on a methodology change to the Company’s Allowance .

Subprime Lending

The Bank has certain classes of loans that are considered to be “subprime” strictly due to the credit score of the borrower at the time of origination. These loans totaled approximately $58 million and $66 million at December 31, 2013 and 2012. Approximately $17 million and $19 million of the outstanding subprime loans at December 31 2013 and 2012 were originated for CRA purposes. Management does not consider these loans to possess significantly higher credit risk due to other stringent underwriting qualifications such as higher debt to income and loan-to-value requirements.

Non-performing Loans and Non-performing Assets

Detail of non-performing loans and non-performing assets and select credit quality ratios follows:

December 31, (dollars in thousands)	2013			2012			2011

Loans on non-accrual status(1)	$	19,104		$	18,506		$	23,306
Loans past due 90-days-or-more and still on accrual(2)	1,974			3,173			—

Total non-performing loans	21,078			21,679			23,306
Other real estate owned	17,102			26,203			10,956
Total non-performing assets	$	38,180		$	47,882		$	34,262
Credit Quality Ratios
Non-performing loans to total loans	0.81		%	0.82		%	1.02		%
Non-performing assets to total loans (including OREO)	1.46		%	1.79		%	1.49		%
Non-performing assets to total assets	1.13		%	1.41		%	1.00		%

(1) Loans on non-accrual status include impaired loans.

(2) All loans past due 90-days-or-more and still accruing were PCI loans accounted for under ASC 310-30.

Non-performing loans and non-performing asset balances related to the 2012 FDIC-assisted acquisitions, and included in the tables above at December 31, 2013 and December 31, 2012, are presented in the tables below:

	Tennessee			First		Total
	Commerce			Commercial		Acquired
December 31, 2013 (dollars in thousands)	Bank			Bank		Banks

Loans on non-accrual status(1)	$	290		$	—	$	290
Loans past due 90 days-or-more and still on accrual(2)	334			1,640		1,974

Total non-performing loans	624			1,640		2,264
Other real estate owned	371			9,092		9,463
Total non-performing assets	$	995		$	10,732	$	11,727
Credit Quality Ratios - Acquired Banks:
Non-performing loans to total loans	2.35		%
Non-performing assets to total loans (including OREO)	11.07		%

(1) Loans on non-accrual status include impaired loans.

(2) All loans past due 90 days-or-more and still accruing were PCI loans accounted for under ASC 310-30.

	Tennessee		First		Total
	Commerce		Commercial		Acquired
December 31, 2012 (dollars in thousands)	Bank		Bank		Banks

Loans on non-accrual status (1)	$	—	$	—	$	—
Loans past due 90-days-or-more and still on accrual (2)	801		2,372		3,173

Total non-performing loans	801		2,372		3,173
Other real estate owned	2,100		12,398		14,498
Total non-performing assets	$	2,901	$	14,770	$	17,671

Credit Quality Ratios - Acquired Banks:
Non-performing loans to total loans	2.29	%
Non-performing assets to total loans (including OREO)	11.54	%

(1) Loans on non-accrual status include impaired loans.

(2) All loans past due 90 days-or-more and still accruing were PCI loans accounted for under ASC 310-30.

See additional discussion regarding the TCB and FCB acquisitions under Footnote 2 “2012 FDIC-Assisted Acquisitions” in this section of the filing.

The following table presents the recorded investment in non-accrual loans and loans past due 90-days-or-more and still on accrual by class of loans:

							Loans Past Due 90-Days-or-More
	Non-Accrual Loans						and Still Accruing Interest
December 31, (in thousands)	2013		2012		2011		2013		2012		2011

Residential real estate:
Owner occupied	$	8,538	$	9,298	$	12,183	$	673	$	730	$	—
Non owner occupied	1,279		1,376		1,565		—		—		—
Commercial real estate	7,643		3,756		3,032		—		712		—
Commercial real estate - purchased whole loans	—		—		—		—		—		—
Construction & land dev.	97		1,777		2,521		70		531		—
Commercial & industrial	327		334		373		1,231		1,200		—
Warehouse lines of credit	—		—		—		—		—		—
Home equity	1,128		1,868		3,603		—		—		—
Consumer:
Credit cards	—		—		—		—		—		—
Overdrafts	—		—		—		—		—		—
Other consumer	92		97		29		—		—		—

Total	$	19,104	$	18,506	$	23,306	$	1,974	$	3,173	$	—

Non-accrual loans and loans past due 90-days-or-more and still on accrual include both smaller balance homogeneous loans that are collectively evaluated for impairment and individually classified impaired loans. Non-accrual loans are returned to accrual status when all the principal and interest amounts contractually due are brought current and held current for six consecutive months and future payments are reasonably assured. TDRs on non-accrual status are reviewed for return to accrual status on an individual basis, with additional consideration given to performance under the modified terms. Loans past due 90-days-or-more and still on accrual currently only represent PCI loans accounted for under ASC Topic 310-30, Loans and Debt Securities Acquired with Deteriorated Credit Quality.

Delinquent Loans

The following tables present the aging of the recorded investment in loans by class of loans:

30 - 59

60 - 89

Greater than

Total

December 31, 2013

Days

90 Days

Loans

Loans Not

Total

(dollars in thousands)

Delinquent

Delinquent*

Delinquent

Loans

Residential real estate:

Owner occupied

1,956

733

3,668

6,357

1,091,438

1,097,795

Non owner occupied

195

967

131

1,293

109,516

110,809

Commercial real estate

874

384

3,940

5,198

767,975

773,173

Commercial real estate - purchased whole loans

—

34,186

Construction & land development

332

—

167

499

43,852

44,351

Commercial & industrial

—

1,415

126,348

127,763

Warehouse lines of credit

—

149,576

Home equity

665

397

1,110

225,672

226,782

Consumer:

Credit cards

8,932

9,030

Overdrafts

159

—

159

785

944

Other consumer

—

15,289

15,383

Total

4,335

2,165

9,723

16,223

2,573,569

2,589,792

Delinquent loans to total loans

0.17

0.08

0.38

0.63

	30 - 59			60 - 89			Greater than			Total			Total
December 31, 2012	Days			Days			90 Days			Loans			Loans Not		Total
(dollars in thousands)	Delinquent			Delinquent			Delinquent *			Delinquent			Delinquent		Loans

Residential real estate:
Owner occupied	$	2,210		$	1,978		$	4,712		$	8,900		$	1,136,595	$	1,145,495
Non owner occupied	907			1,128			864			2,899			71,640		74,539
Commercial real estate	103			486			2,051			2,640			712,002		714,642
Commercial real estate - purchased whole loans	—			—			—			—			33,531		33,531
Construction & land development	—			194			1,930			2,124			66,090		68,214
Commercial & industrial	222			733			1,307			2,262			128,419		130,681
Warehouse lines of credit	—			—			—			—			216,576		216,576
Home equity	521			251			882			1,654			239,953		241,607
Consumer:
Credit cards	60			5			—			65			8,651		8,716
Overdrafts	167			1			—			168			787		955
Other consumer	102			28			2			132			15,109		15,241

Total	$	4,292		$	4,804		$	11,748		$	20,844		$	2,629,353	$	2,650,197
Delinquent loans to total loans	0.16		%	0.18		%	0.44		%	0.78		%

* - All loans past due 90 days-or-more, excluding PCI loans, as of December 31, 2013 and 2012 were on non-accrual status.

An aging of the recorded investment in past due loans related to the 2012 FDIC-assisted acquisitions and included in the preceding tables at December 31, 2013 and December 31, 2012, are presented below:

30 - 59

60 - 89

Greater than

Total

December 31, 2013

Days

90 Days

Loans

Loans Not

Acquired Bank

(dollars in thousands)

Delinquent

Delinquent *

Delinquent

Loans

Residential real estate

213

178

673

1,064

28,681

29,745

Commercial real estate

241

384

—

625

55,940

56,565

Construction & land development

334

—

404

1,505

1,909

Commercial & industrial

—

1,231

1,965

3,196

Home equity

178

—

178

4,458

4,636

Consumer:

Credit cards

—

205

Overdrafts

—

Other consumer

—

201

202

Total

968

562

1,974

3,504

92,958

96,462

Delinquent acquired bank loans to total acquired bank loans

1.00

0.58

2.05

3.63

	30 - 59			60 - 89			Greater than			Total			Total		Total
December 31, 2012	Days			Days			90 Days			Loans			Loans Not		Acquired Bank
(dollars in thousands)	Delinquent			Delinquent			Delinquent *			Delinquent			Delinquent		Loans

Residential real estate	$	159		$	1,430		$	729		$	2,318		$	42,411	$	44,729
Commercial real estate	—			165			698			863			68,910		69,773
Construction & land development	—			194			531			725			6,811		7,536
Commercial & industrial	—			732			1,215			1,947			8,742		10,689
Home equity	83			—			—			83			4,485		4,568
Consumer:
Credit cards	—			—			—			—			321		321
Overdrafts	—			—			—			—			12		12
Other consumer	4			27			—			31			957		988

Total	$	246		$	2,548		$	3,173		$	5,967		$	132,649	$	138,616
Delinquent acquired bank loans to total acquired bank loans	0.18		%	1.84		%	2.29		%	4.31		%

* - All loans past due 90 days-or-more, excluding PCI loans, as of December 31, 2013 and 2012 were on non-accrual status.

See additional discussion regarding the TCB and FCB acquisitions under Footnote 2 “2012 FDIC-Assisted Acquisitions” in this section of the filing.

The Bank considers the performance of the loan portfolio and its impact on the Allowance. For residential and consumer loan classes, the Bank also evaluates credit quality based on the aging status of the loan (which was previously presented) and by payment activity. The following tables present the recorded investment in residential and consumer loans based on payment activity as of December 31, 2013 and 2012:

Residential Real Estate

Consumer

Owner

Non Owner

Home

Credit

Other

December 31, 2013 (in thousands)

Occupied

Equity

Cards

Overdrafts

Consumer

Performing

1,088,584

109,530

225,654

9,030

944

15,291

Non performing

9,211

1,279

1,128

—

Total

1,097,795

110,809

226,782

9,030

944

15,383

	Residential Real Estate						Consumer
	Owner		Non Owner		Home		Credit				Other
December 31, 2012 (in thousands)	Occupied		Occupied		Equity		Cards		Overdrafts		Consumer

Performing	$	1,138,326	$	73,163	$	239,985	$	8,716	$	955	$	16,104
Non performing	10,028		1,376		1,868		—		—		97

Total	$	1,148,354	$	74,539	$	241,853	$	8,716	$	955	$	16,201

Impaired Loans

The Bank defines impaired loans as follows:

· All loans internally rated as “Substandard,” “PCI-Sub,” “Doubtful” or “Loss;”

· All loans on non-accrual status and non-PCI loans past due 90 days-or-more still on accrual;

· All retail and commercial TDRs; and

· Any other situation where the full collection of the total amount due for a loan is improbable or otherwise meets the definition of impaired.

See the section titled “Credit Quality Indicators” in this section of the filing for additional discussion regarding the Bank’s loan classification structure.

Information regarding the Bank’s impaired loans follows:

As of and for the years ended December 31, (in thousands)	2013		2012		2011

Loans with no allocated allowance for loan losses	$	36,721	$	36,325	$	32,171
Loans with allocated allowance for loan losses	71,273		69,382		45,022

Total impaired loans	$	107,994	$	105,707	$	77,193

Amount of the allowance for loan losses allocated	$	6,674	$	8,531	$	7,086
Average of individually impaired loans during the year	110,272		93,487		59,711
Interest income recognized during impairment	3,489		2,682		1,464
Cash basis interest income recognized	—		—		—

Approximately $32 million and $18 million of impaired loans at December 31, 2013 and December 31, 2012 were loans acquired in the Bank’s 2012 FDIC-assisted acquisitions. Approximately $7 million of the loans acquired during 2012 became classified during 2013 as “impaired” through a troubled debt restructuring. See additional discussion regarding the TCB and FCB acquisitions under Footnote 2 “2012 FDIC-Assisted Acquisitions” in this section of the filing.

The following tables present the balance in the Allowance and the recorded investment in loans by portfolio class based on impairment method as of December 31, 2013 and December 31, 2012:

Commercial

Residential Real Estate

Real Estate -

Warehouse

Owner

Non Owner

Commercial

Purchased

Construction &

Commercial &

Lines of

December 31, 2013 (in thousands)

Occupied

Real Estate

Whole Loans

Land Development

Industrial

Credit

Allowance for loan losses:

Ending allowance balance attributable to loans:

Individually evaluated for impairment, excluding PCI loans

3,606

1,232

—

146

111

—

Collectively evaluated for impairment

4,159

672

6,474

1,140

661

449

PCI loans with post acquisition impairment

290

603

—

317

—

PCI loans without post acquisition impairment

—

Total ending allowance for loan losses

7,816

1,023

8,309

1,296

1,089

449

Loans:

Impaired loans individually evaluated, excluding PCI loans

39,211

2,061

33,519

—

2,494

4,521

—

Loans collectively evaluated for impairment

1,055,774

100,812

712,512

34,186

40,611

121,456

149,576

PCI loans with post acquisition impairment

1,455

5,984

14,512

—

267

1,609

—

PCI loans without post acquisition impairment

1,355

1,952

12,630

—

979

177

—

Total ending loan balance

1,097,795

110,809

773,173

34,186

44,351

127,763

149,576

			Consumer
	Home		Credit				Other
	Equity		Cards		Overdrafts		Consumer		Total

Allowance for loan losses:
Ending allowance balance attributable to loans:
Individually evaluated for impairment, excluding PCI loans	$	203	$	—	$	—	$	43	$	5,402
Collectively evaluated for impairment	2,193		289		199		82		16,352
PCI loans with post acquisition impairment	—		—		—		1		1,272
PCI loans without post acquisition impairment	—		—		—		—		—

Total ending allowance for loan losses	$	2,396	$	289	$	199	$	126	$	23,026

Loans:
Impaired loans individually evaluated, excluding PCI loans	$	2,264	$	—	$	—	$	85	$	84,155
Loans collectively evaluated for impairment	224,518		9,030		944		15,265		2,464,684
PCI loans with post acquisition impairment	—		—		—		12		23,839
PCI loans without post acquisition impairment	—		—		—		21		17,114

Total ending loan balance	$	226,782	$	9,030	$	944	$	15,383	$	2,589,792

							Commercial
	Residential Real Estate						Real Estate -						Warehouse
	Owner		Non Owner		Commercial		Purchased		Construction &		Commercial &		Lines of
December 31, 2012 (in thousands)	Occupied		Occupied		Real Estate		Whole Loans		Land Development		Industrial		Credit

Allowance for loan losses:
Ending allowance balance attributable to loans:
Individually evaluated for impairment, excluding PCI loans	$	3,032	$	521	$	2,919	$	—	$	1,157	$	348	$	—
Collectively evaluated for impairment	3,972		527		5,924		34		1,612		232		541
PCI loans with post acquisition impairment	2		1		—		—		—		—		—
PCI loans without post acquisition impairment	—		—		—		—		—		—		—

Total ending allowance for loan losses	$	7,006	$	1,049	$	8,843	$	34	$	2,769	$	580	$	541

Loans:
Impaired loans individually evaluated, excluding PCI loans	$	44,429	$	4,235	$	40,593	$	—	$	5,268	$	6,972	$	—
Loans collectively evaluated for impairment	1,080,792		67,974		629,687		33,531		61,254		119,429		216,576
PCI loans with post acquisition impairment	136		184		—		—		—		—		—
PCI loans without post acquisition impairment	20,138		2,146		44,362		—		1,692		4,280		—

Total ending loan balance	$	1,145,495	$	74,539	$	714,642	$	33,531	$	68,214	$	130,681	$	216,576

			Consumer
	Home		Credit				Other
	Equity		Cards		Overdrafts		Consumer		Total

Allowance for loan losses:
Ending allowance balance attributable to loans:
Individually evaluated for impairment, excluding PCI loans	$	496	$	—	$	—	$	55	$	8,528
Collectively evaluated for impairment	1,852		210		198		96		15,198
PCI loans with post acquisition impairment	—		—		—		—		3
PCI loans without post acquisition impairment	—		—		—		—		—

Total ending allowance for loan losses	$	2,348	$	210	$	198	$	151	$	23,729

Loans:
Impaired loans individually evaluated, excluding PCI loans	$	3,420	$	—	$	—	$	470	$	105,387
Loans collectively evaluated for impairment	238,187		8,716		955		14,731		2,471,832
PCI loans with post acquisition impairment	—		—		—		—		320
PCI loans without post acquisition impairment	—		—		—		40		72,658

Total ending loan balance	$	241,607	$	8,716	$	955	$	15,241	$	2,650,197

The following tables present loans individually evaluated for impairment by class of loans as of December 31, 2013 and 2012. The difference between the “Unpaid Principal Balance” and “Recorded Investment” columns represents life-to-date partial write downs/charge offs taken on individual impaired credits.

							Twelve Months Ended
							December 31, 2013
	Unpaid				Allowance for		Average		Interest		Cash Basis
	Principal		Recorded		Loan Losses		Recorded		Income		Interest Income
December 31, 2013 (in thousands)	Balance		Investment		Allocated		Investment		Recognized		Recognized

Impaired loans with no related allowance recorded:
Residential real estate:
Owner occupied	$	7,136	$	6,569	$	—	$	8,977	$	120	$	—
Non owner occupied	1,498		1,256		—		1,520		13		—
Commercial real estate	21,886		20,953		—		21,218		693		—
Commercial real estate - purchased whole loans	—		—		—		—		—		—
Construction & land development	2,087		2,087		—		2,150		103		—
Commercial & industrial	4,367		4,258		—		3,577		258		—
Warehouse lines of credit	—		—		—		—		—		—
Home equity	1,695		1,577		—		1,982		43		—
Consumer:
Credit cards	—		—		—		—		—		—
Overdrafts	—		—		—		—		—		—
Other consumer	18		18		—		138		1		—

Impaired loans with an allowance recorded:
Residential real estate:
Owner occupied	34,393		34,097		3,657		34,154		939		—
Non owner occupied	6,789		6,789		351		5,104		248		—
Commercial real estate	27,080		27,078		1,835		25,724		1,017		—
Commercial real estate - purchased whole loans	—		—		—		—		—		—
Construction & land development	674		674		156		2,048		38		—
Commercial & industrial	1,872		1,872		428		2,593		11		—
Warehouse lines of credit	—		—		—		—		—		—
Home equity	688		687		203		999		5		—
Consumer:											—
Credit cards	—		—		—		—		—		—
Overdrafts	—		—		—		—		—		—
Other consumer	79		79		44		88		—		—
Total impaired loans	$	110,262	$	107,994	$	6,674	$	110,272	$	3,489	$	—

							Twelve Months Ended
							December 31, 2012
	Unpaid				Allowance for		Average		Interest		Cash Basis
	Principal		Recorded		Loan Losses		Recorded		Income		Interest Income
December 31, 2012 (in thousands)	Balance		Investment		Allocated		Investment		Recognized		Recognized

Impaired loans with no related allowance recorded:
Residential real estate:
Owner occupied	$	13,299	$	13,107	$	—	$	23,397	$	224	$	—
Non owner occupied	955		794		—		1,656		6		—
Commercial real estate	14,293		14,293		—		11,130		707		—
Commercial real estate - purchased whole loans	—		—		—		—		—		—
Construction & land development	3,090		2,085		—		2,883		29		—
Commercial & industrial	4,206		4,114		—		2,653		99		—
Warehouse lines of credit	—		—		—		—		—		—
Home equity	1,753		1,546		—		858		23		—
Consumer:											—
Credit cards	—		—		—		—		—		—
Overdrafts	—		—		—		—		—		—
Other consumer	386		386		—		219		8		—

Impaired loans with an allowance recorded:
Residential real estate:
Owner occupied	31,709		31,458		3,034		12,558		258		—
Non owner occupied	3,695		3,625		522		2,543		100		—
Commercial real estate	26,710		26,300		2,919		27,094		909		—
Commercial real estate - purchased whole loans	—		—		—		—		—		—
Construction & land development	3,416		3,183		1,157		4,318		106		—
Commercial & industrial	2,858		2,858		348		2,614		173		—
Warehouse lines of credit	—		—		—		—		—		—
Home equity	1,874		1,874		496		1,543		38		—
Consumer:
Credit cards	—		—		—		—		—		—
Overdrafts	—		—		—		—		—		—
Other consumer	84		84		55		21		2		—
Total impaired loans	$	108,328	$	105,707	$	8,531	$	93,487	$	2,682	$	—

Troubled Debt Restructurings

A TDR is the situation where, due to a borrower’s financial difficulties, the Bank grants a concession to the borrower that the Bank would not otherwise have considered. In order to determine whether a borrower is experiencing financial difficulty, an evaluation is performed of the probability that the borrower will be in payment default on any of its debt in the foreseeable future without the modification. This evaluation is performed under the Bank’s internal underwriting policy.

All TDRs are considered “Impaired” loans, including loans acquired in the Company’s 2012 FDIC-assisted acquisitions and subsequently restructured. The majority of the Bank’s commercial related and construction TDRs involve a restructuring of loan terms such as a reduction in the payment amount to require only interest and escrow (if required) and/or extending the maturity date of the loan. The substantial majority of the Bank’s residential real estate TDRs involve reducing the client’s loan payment through a rate reduction for a set period of time based on the borrower’s ability to service the modified loan payment.

Management determines whether to classify a TDR as non-performing based on its accrual status prior to modification. Non-accrual loans modified as TDRs remain on non-accrual status and continue to be reported as non-performing loans for a minimum of six months. Accruing loans modified as TDRs are evaluated for non-accrual status based on a current evaluation of the borrower’s financial condition and ability and willingness to service the modified debt. At December 31, 2013 and December 31, 2012, $13 million and $14 million of TDRs were also non-accrual loans.

Detail of TDRs differentiated by loan type and accrual status follows:

	Troubled Debt		Troubled Debt		Total
	Restructurings on		Restructurings on		Troubled Debt
December 31, 2013 (in thousands)	Non-Accrual Status		Accrual Status		Restructurings

Residential real estate	$	5,514	$	31,705	$	37,219
Commercial real estate	7,486		22,041		29,527
Construction & land development	97		2,608		2,705
Commercial & industrial	143		4,378		4,521

Total troubled debt restructurings	$	13,240	$	60,732	$	73,972

	Troubled Debt		Troubled Debt		Total
	Restructurings on		Restructurings on		Troubled Debt
December 31, 2012 (in thousands)	Non-Accrual Status		Accrual Status		Restructurings

Residential real estate	$	6,951	$	36,758	$	43,709
Commercial real estate	5,149		26,174		31,323
Construction & land development	1,595		2,167		3,762
Commercial & industrial	269		4,244		4,513

Total troubled debt restructurings	$	13,964	$	69,343	$	83,307

The Bank considers a TDR to be performing to its modified terms if the loan is in accrual status and not past due 30 days or more as of the reporting date. A summary of the categories of TDR loan modifications outstanding and respective performance under modified terms at December 31, 2013 and December 31, 2012 follows:

	Troubled Debt		Troubled Debt
	Restructurings		Restructurings		Total
	Performing to		Not Performing to		Troubled Debt
December 31, 2013 (in thousands)	Modified Terms		Modified Terms		Restructurings

Residential real estate loans (including home equity loans):
Interest only payments	$	430	$	671	$	1,101
Rate reduction	26,004		4,993		30,997
Principal deferral	1,840		632		2,472
Bankruptcies	1,247		1,402		2,649
Total residential TDRs	29,521		7,698		37,219

Commercial related and construction/land development loans:
Interest only payments	6,086		1,321		7,407
Rate reduction	13,958		663		14,621
Principal deferral	8,983		5,351		14,334
Bankruptcies	—		391		391
Total commercial TDRs	29,027		7,726		36,753
Total troubled debt restructurings	$	58,548	$	15,424	$	73,972

	Troubled Debt		Troubled Debt
	Restructurings		Restructurings		Total
	Performing to		Not Performing to		Troubled Debt
December 31, 2012 (in thousands)	Modified Terms		Modified Terms		Restructurings

Residential real estate loans (including home equity loans):
Interest only payments	$	813	$	624	$	1,437
Rate reduction	23,789		3,919		27,708
Principal deferral	9,186		2,092		11,278
Bankruptcies	2,224		1,093		3,317
Total residential TDRs	36,012		7,728		43,740

Commercial related and construction/land development loans:
Interest only payments	5,096		342		5,438
Rate reduction	15,747		895		16,642
Principal deferral	15,640		1,595		17,235
Bankruptcies	—		252		252
Total commercial TDRs	36,483		3,084		39,567
Total troubled debt restructurings	$	72,495	$	10,812	$	83,307

As of December 31, 2013 and December 31, 2012, 79% and 87% of the Bank’s TDRs were performing according to their modified terms. The Bank had provided $5 million and $7 million of specific reserve allocations to customers whose loan terms have been modified in TDRs as of December 31, 2013 and December 31, 2012. Specific reserve allocations are generally assessed prior to loans being modified as a TDR, as most of these loans migrate from the Bank’s internal watch list and have been specifically provided for or reserved for as part of the Bank’s normal loan loss provisioning methodology. The Bank had no commitments to lend any additional material amounts to its existing TDR relationships at December 31, 2013 and December 31, 2012.

A summary of the categories of TDR loan modifications that occurred during the years ended December 31, 2013 and 2012 follows:

	Troubled Debt		Troubled Debt
	Restructurings		Restructurings		Total
Year Ended	Performing to		Not Performing to		Troubled Debt
December 31, 2013 (in thousands)	Modified Terms		Modified Terms		Restructurings

Residential real estate loans (including home equity loans):
Interest only	$	—	$	164	$	164
Rate reduction	6,605		935		7,540
Principal deferral	95		157		252
Bankruptcies	793		950		1,743
Total residential TDRs	7,493		2,206		9,699

Commercial related and construction/land development loans:
Interest only	3,095		143		3,238
Rate reduction	437		184		621
Principal deferral	3,315		—		3,315
Bankruptcies	—		168		168
Total commercial TDRs	6,847		495		7,342
Total troubled debt restructurings	$	14,340	$	2,701	$	17,041

The table above is inclusive of loans which were TDRs at the end of previous periods and were re-modified, e.g. a maturity date extension, during the current year.

	Troubled Debt		Troubled Debt
	Restructurings		Restructurings		Total
Year Ended	Performing to		Not Performing to		Troubled Debt
December 31, 2012 (in thousands)	Modified Terms		Modified Terms		Restructurings

Residential real estate loans (including home equity loans):
Interest only	$	—	$	624	$	624
Rate reduction	14,011		849		14,860
Principal deferral	6,016		1,452		7,468
Bankruptcies	2,354		962		3,316
Total residential TDRs	22,381		3,887		26,268

Commercial related and construction/land development loans:
Interest only	3,080		342		3,422
Rate reduction	9,638		895		10,533
Principal deferral	1,582		194		1,776
Total commercial TDRs	14,300		1,431		15,731
Total troubled debt restructurings	$	36,681	$	5,318	$	41,999

The table above is inclusive of loans which were TDRs at the end of previous periods and were re-modified, e.g. a maturity date extension, during the current year.

As of December 31, 2013 and 2012, 84% and 87% of the Bank’s TDRs that occurred during the years ended December 31, 2013 and 2012 were performing according to their modified terms. The Bank provided $1 million and $5 million in specific reserve allocations to customers whose loan terms were modified in TDRs during 2013 and 2012. As stated above, specific reserves are generally assessed prior to loans being modified as a TDR, as most of these loans migrate from the Bank’s internal watch list and have been specifically reserved for as part of the Bank’s normal reserving methodology.

There was no significant change between the pre and post modification loan balances at December 31, 2013 and December 31, 2012.

The following tables present loans by class modified as troubled debt restructurings within the previous twelve months of December 31, 2013 and 2012 and for which there was a payment default during 2013 and 2012:

Year Ended	Number of	Recorded
December 31, 2013 (dollars in thousands)	Loans	Investment

Residential real estate:
Owner occupied	29	$	2,252
Non owner occupied	—	—
Commercial real estate	2	352
Commercial real estate - purchased whole loans	—	—
Construction & land development	—	—
Commercial & industrial	1	143
Warehouse lines of credit	—	—
Home equity	1	10
Consumer:
Credit cards	—	—
Overdrafts	—	—
Other consumer	—	—

Total	33	$	2,757

Year Ended	Number of	Recorded
December 31, 2012 (dollars in thousands)	Loans	Investment

Residential real estate:
Owner occupied	31	$	2,355
Non owner occupied	5	1,671
Commercial real estate	4	1,310
Commercial real estate - purchased whole loans	—	—
Construction & land development	2	1,154
Commercial & industrial	—	—
Warehouse lines of credit	—	—
Home equity	—	—
Consumer:
Credit cards	—	—
Overdrafts	—	—
Other consumer	—	—

Total	42	$	6,490

Refund Anticipation Loans

Discontinuance of the RAL Product:

As previously disclosed, effective December 8, 2011, RB&T entered into an agreement with the FDIC resolving its differences regarding the TRS division. RB&T’s resolution with the FDIC was in the form of a Stipulation Agreement and a Consent Order (collectively, the “Agreement”). As part of the Agreement, RB&T and the FDIC settled all matters set out in the FDIC’s Amended Notice of Charges dated May 3, 2011 and the lawsuit filed against the FDIC by RB&T. As required by this settlement, RB&T discontinued offering the RAL product effective April 30, 2012, subsequent to the first quarter 2012 tax season.

For additional discussion regarding the Agreement, see the Company’s Form 8-K filed with the SEC on December 9, 2011, including Exhibits 10.1 and 10.2.

The following table details RAL originations and RAL losses for the years ended December 31, 2012 and 2011:

Year Ended December 31, (in thousands)	2012		2011

RAL Originations:

RALs originated and retained on balance sheet	$	796,015	$	1,038,862

RAL Losses:

Losses for RALs retained, net	$	6,876	$	11,560

RAL Loss Reserves and Provision for Loan Losses:

Substantially all RALs issued by RB&T in 2012 and 2011 were made during the first quarter. RALs were generally repaid by the IRS or applicable taxing authority within two weeks of origination. Losses associated with RALs resulted from the IRS not remitting taxpayer refunds to RB&T associated with a particular tax return. This occurred for a number of reasons, including errors in the tax return and tax return fraud which are identified through IRS audits resulting from revenue protection strategies. In addition, RB&T also incurred losses as a result of tax debts not previously disclosed during its underwriting process.

At March 31st of each applicable year, RB&T reserved for its estimated RAL losses for the year based on funding patterns, information received from the IRS on current year payment processing, projections using RB&T’s internal RAL underwriting criteria applied against prior years’ customer data, and the subjective experience of RB&T management. RALs outstanding 30 days or longer were charged off at the end of each quarter with subsequent collections recorded as recoveries. Since the RAL season was over by the end of April of each year, substantially all uncollected RALs were charged off by June 30th of each year, except for those RALs management deems certain of collection.

As of December 31, 2012 and 2011, $10.5 million and $14.3 million of total RALs originated remained uncollected (outstanding past their expected funding date from the IRS), representing 1.31% and 1.38% of total gross RALs originated during the respective tax years. Substantially all of these RALs were charged off as of June 30, 2012 and 2011.