Edgar Filing: Ameris Bancorp

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10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2014

¨	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number: 001-13901

LOGO

AMERIS BANCORP

(Exact name of registrant as specified in its charter)


GEORGIA		58-1456434
(State of incorporation)		(IRS Employer ID No.)

310 FIRST STREET, S.E., MOULTRIE, GA 31768

(Address of principal executive offices)

(229) 890-1111

(Registrant’s telephone number)

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 12 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 90 days. Yes x No ¨

Indicate by check mark whether the Registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for 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, or a smaller reporting company. See definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Securities Exchange Act. (Check one):

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

There were 25,158,183 shares of Common Stock outstanding as of April 30, 2014.

AMERIS BANCORP

TABLE OF CONTENTS


		Page
PART I – FINANCIAL INFORMATION

Item 1.	Financial Statements

	Consolidated Balance Sheets at March 31, 2014, December 31, 2013 and March 31, 2013		3

	Consolidated Statements of Earnings and Comprehensive Income for the Three Months Ended March 31, 2014 and 2013		4

	Consolidated Statements of Changes in Stockholders’ Equity for the Three Months Ended March 31, 2014 and 2013		5

	Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2014 and 2013		6

	Notes to Consolidated Financial Statements		7

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		52

Item 3.	Quantitative and Qualitative Disclosures About Market Risk		64

Item 4.	Controls and Procedures		64

PART II – OTHER INFORMATION

Item 1.	Legal Proceedings		65

Item 1A.	Risk Factors		65

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		65

Item 3.	Defaults Upon Senior Securities		65

Item 4.	Mine Safety Disclosures		65

Item 5.	Other Information		65

Item 6.	Exhibits		65

Signatures			65

Item 1.

Financial Statements

AMERIS BANCORP AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(Dollars in Thousands)


	March 31, 2014			December 31, 2013			March 31, 2013
	(Unaudited)			(Audited)			(Unaudited)
Assets
Cash and due from banks	$	71,387		$	62,955		$	50,487
Federal funds sold and interest-bearing accounts		48,677			204,984			81,205
Investment securities available for sale, at fair value		456,713			486,235			324,029
Other investments		9,322			16,828			5,528
Mortgage loans held for sale		51,693			67,278			42,332
Loans, net of unearned income		1,695,382			1,618,454			1,492,753
Purchased loans not covered by FDIC loss share agreements (“purchased non-covered loans”)		437,269			448,753			—
Purchased loans covered by FDIC loss share agreements (“covered loans”)		372,694			390,237			460,724
Less: allowance for loan losses		22,744			22,377			23,382

Loans, net		2,482,601			2,435,067			1,930,095

Other real estate owned		33,839			33,351			40,434
Purchased, non-covered other real estate owned		3,864			4,276			—
Covered other real estate owned		42,636			45,893			77,915

Total other real estate owned		80,339			83,520			118,349

Premises and equipment, net		87,430			103,188			72,340
FDIC loss-share receivable		53,181			65,441			160,979
Intangible assets		5,477			6,009			2,676
Goodwill		35,049			35,049			956
Cash value of bank owned life insurance		49,738			49,432			45,832
Other assets		56,377			51,663			26,843

Total assets	$	3,487,984		$	3,667,649		$	2,861,651

Liabilities and Stockholders’ Equity
Liabilities
Deposits:
Noninterest-bearing	$	698,866		$	668,531		$	490,961
Interest-bearing		2,311,781			2,330,700			1,999,012

Total deposits		3,010,647			2,999,231			2,489,973
Securities sold under agreements to repurchase		49,974			83,516			22,919
Other borrowings		59,677			194,572			—
Other liabilities		12,028			18,165			22,768
Subordinated deferrable interest debentures		55,628			55,466			42,269

Total liabilities		3,187,954			3,350,950			2,577,929

Commitments and contingencies
Stockholders’ Equity
Preferred stock, stated value $1,000; 5,000,000 shares authorized; 0, 28,000 and 28,000 shares issued and outstanding		—			28,000			27,753
Common stock, par value $1; 100,000,000 shares authorized; 26,535,571, 26,461,769 and 25,238,635 shares issued		26,536			26,462			25,239
Capital surplus		190,513			189,722			165,078
Retained earnings		92,055			83,991			70,554
Accumulated other comprehensive income (loss)		2,374			(294	)		6,274
Treasury stock, at cost, 1,376,498, 1,363,342 and 1,362,955 shares		(11,448	)		(11,182	)		(11,176	)

Total stockholders’ equity		300,030			316,699			283,722

Total liabilities and stockholders’ equity	$	3,487,984		$	3,667,649		$	2,861,651

See notes to unaudited consolidated financial statements

AMERIS BANCORP AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF EARNINGS AND COMPREHENSIVE INCOME

(dollars in thousands, except per share data)

(Unaudited)


	Three Months Ended March 31,
	2014			2013
Interest income
Interest and fees on loans	$	34,469		$	28,716
Interest on taxable securities		2,985			1,697
Interest on nontaxable securities		335			375
Interest on deposits in other banks		79			85
Interest on federal funds sold		5			—

Total interest income		37,873			30,873

Interest expense
Interest on deposits		2,183			2,226
Interest on other borrowings		1,206			309

Total interest expense		3,389			2,535

Net interest income		34,484			28,338
Provision for loan losses		1,726			2,923

Net interest income after provision for loan losses		32,758			25,415

Noninterest income
Service charges on deposit accounts		5,586			4,837
Mortgage origination fees		5,068			4,464
Other service charges, commissions and fees		652			329
Gain on sale of securities		6			172
Other		1,442			1,558

Total noninterest income		12,754			11,360

Noninterest expense
Salaries and employee benefits		17,394			13,806
Occupancy and equipment expense		4,064			2,931
Advertising and marketing expense		710			255
Amortization of intangible assets		533			364
Data processing and communications costs		3,454			2,570
Other operating expenses		7,084			8,958

Total noninterest expense		33,239			28,884

Income before income tax expense		12,273			7,891
Applicable income tax expense		3,923			2,606

Net income		8,350			5,285

Preferred stock dividends		286			441

Net income available to common stockholders		8,064			4,844

Other comprehensive income (loss)
Unrealized holding gains (losses) arising during period on investment securities available for sale, net of tax		2,938			(429	)
Reclassification adjustment for gains included in net income, net of tax		(4	)		(112	)
Unrealized gain (loss) on cash flow hedges arising during period , net of tax		(266	)		209

Other comprehensive income (loss)		2,668			(332	)

Comprehensive income	$	11,018		$	4,953

Basic and diluted earnings per share	$	0.32		$	0.20

Weighted average common shares outstanding
Basic		25,144			23,868
Diluted		25,573			24,246

See notes to unaudited consolidated financial statements

AMERIS BANCORP AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

(dollars in thousands, except per share data)

(Unaudited)


	Three Months Ended						Three Months Ended
	March 31, 2014						March 31, 2013
	Shares			Amount			Shares			Amount
PREFERRED STOCK
Balance at beginning of period		28,000		$	28,000			28,000		$	27,662
Repurchase of preferred stock		(28,000	)		(28,000	)		—			—
Accretion of fair value of warrant		—			—			—			91

*Balance at end of period*		—		$	—			28,000		$	27,753
COMMON STOCK
Balance at beginning of period		26,461,769		$	26,462			25,154,818		$	25,155
Issuance of restricted shares		68,047			68			81,400			81
Proceeds from exercise of stock options		5,755			6			2,417			3

*Balance at end of period*		26,535,571		$	26,536			25,238,635		$	25,239
CAPITAL SURPLUS
Balance at beginning of period				$	189,722					$	164,949
Stock-based compensation					795						197
Issuance of restricted shares					(68	)					(81	)
Proceeds from exercise of stock options					64						13

*Balance at end of period*				$	190,513					$	165,078
RETAINED EARNINGS
Balance at beginning of period				$	83,991					$	65,710
Net income					8,350						5,284
Dividends on preferred shares					(286	)					(349	)
Accretion of fair value warrant					—						(91	)

*Balance at end of period*				$	92,055					$	70,554
ACCUMULATED OTHER COMPREHENSIVE INCOME, NET OF TAX
Unrealized gains on securities and derivatives:
Balance at beginning of period				$	(294	)				$	6,607
Other comprehensive income (loss) during the period					2,668						(333	)

*Balance at end of period*				$	2,374					$	6,274
TREASURY STOCK
Balance at beginning of period		(1,363,342	)	$	(11,182	)		(1,355,050	)	$	(11,066	)
Purchase of treasury shares		(13,156	)		(266	)		(7,905	)		(110	)

*Balance at end of period*		(1,376,498	)	$	(11,448	)		(1,362,955	)	$	(11,176	)

*TOTAL STOCKHOLDERS’ EQUITY*				$	300,030					$	283,722

See notes to unaudited consolidated financial statements.

AMERIS BANCORP AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Dollars in Thousands)

(Unaudited)


	Three Months Ended March 31,
	2014			2013
Cash flows from operating activities:
Net income	$	8,350		$	5,285
Adjustments reconciling net income to net cash provided by operating activities:
Depreciation		1,871			1,246
Stock based compensation expense		795			197
Net (gains) losses on sale or disposal of premises and equipment		(18	)		6
Net gains on securities available for sale		(6	)		(172	)
Net losses or write-downs on sale of other real estate owned		921			3,047
Provision for loan losses		1,726			2,923
Amortization of intangible assets		532			364
Net change in mortgage loans held for sale		15,585			6,454
Other prepaids, deferrals and accruals, net		2,489			11,570

Net cash provided by operating activities		32,245			30,920

Cash flows from investing activities, net of effects of business combinations:
Net decrease (increase) in federal funds sold and interest-bearing deposits		156,307			112,472
Proceeds from maturities of securities available for sale		11,834			20,746
Purchase of securities available for sale		(46,690	)		(25,328	)
Purchase of bank owned life insurance		—			(28,674	)
Decrease in restricted equity securities, net		7,506			1,304
Proceeds from sales of securities available for sale		68,899			26,802
Net change in loans		(56,807	)		(13,805	)
Proceeds from sales of other real estate owned		8,932			10,140
Proceeds from sales of premises and equipment		55			713
(Increase) decrease in FDIC indemnification asset		12,260			(1,255	)
Purchases of premises and equipment		(464	)		(1,470	)

Net cash provided by investing activities		161,832			101,645

Cash flows from financing activities, net of effects of business combinations:
Net (decrease) increase in deposits		11,416			(134,690	)
Net decrease in securities sold under agreements to repurchase		(33,542	)		(27,201	)
Proceeds from other borrowings		29,963			—
Repayment of other borrowings		(165,000	)		—
Redemption of preferred stock		(28,000	)		—
Dividends paid—preferred stock		(286	)		(349	)
Purchase of treasury shares		(266	)		(110	)
Proceeds from exercise of stock options		70			16

Net cash used in financing activities		(185,645	)		(162,334	)

Net decrease in cash and due from banks		8,432			(29,769	)
Cash and due from banks at beginning of period		62,955			80,256

Cash and due from banks at end of period	$	71,387		$	50,487

SUPPLEMNTAL DISCLOSURES OF NON-CASH INFORMATION
Cash paid during the period for:
Interest	$	3,463		$	2,805
Income taxes	$	—		$	780
Loans transferred to other real estate owned	$	7,547		$	15,541

See notes to unaudited consolidated financial statements

AMERIS BANCORP AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2014

(Unaudited)

NOTE 1 – BASIS OF PRESENTATION AND ACCOUNTING POLICIES

Ameris Bancorp (the “Company” or “Ameris”) is a financial holding company headquartered in Moultrie, Georgia. Ameris conducts substantially all of its operations through its wholly owned banking subsidiary, Ameris Bank (the “Bank”). At March 31, 2014 the Bank operated 68 branches in select markets in Georgia, Alabama, Florida and South Carolina. Our business model capitalizes on the efficiencies of a large financial services company while still providing the community with the personalized banking service expected by our customers. We manage our Bank through a balance of decentralized management responsibilities and efficient centralized operating systems, products and loan underwriting standards. The Company’s Board of Directors and senior managers establish corporate policy, strategy and administrative policies. Within our established guidelines and policies, the banker closest to the customer responds to the differing needs and demands of his or her unique market.

The accompanying unaudited consolidated financial statements for Ameris have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and Regulation S-X. Accordingly, the financial statements do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statement presentation. The interim consolidated financial statements included herein are unaudited but reflect all adjustments which, in the opinion of management, are necessary for a fair presentation of the consolidated financial position and results of operations for the interim periods presented. All significant intercompany accounts and transactions have been eliminated in consolidation. The results of operations for the period ended March 31, 2014 are not necessarily indicative of the results to be expected for the full year. These financial statements should be read in conjunction with the financial statements and notes thereto and the report of our registered independent public accounting firm included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2013.

Newly Adopted Accounting Pronouncements

ASU 2014-04 – Receivables – Troubled Debt Restructurings by Creditors (“ASU 2014-04”). ASU 2014-04 clarifies when a creditor should reclassify mortgage loans collateralized by residential real estate from loans to other real estate owned. It defines when an in-substance repossession or foreclosure has occurred and when a creditor is considered to have received physical possession of residential real estate collateralizing a mortgage loan. ASU 2014-04 is effective for fiscal years beginning after December 31, 2014, and early adoption is permitted. It can be applied either prospectively or using a modified retrospective transition method. The Company is evaluating the impact this standard may have on the Company’s results of operations, financial position or disclosures.

ASU 2013-11 – Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists (“ASU 2013-11”). ASU 2013-11 requires that an unrecognized tax benefit, or a portion of an unrecognized tax benefit, be presented in the financial statements as a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss or a tax credit carryforward. However, if a net operating loss carryforward, a similar tax loss or a tax credit carryforward is not available at the reporting date under the tax law of the applicable jurisdiction to settle any additional income taxes that would result from the disallowance of a tax position or the tax law of the applicable jurisdiction does not require the entity to use, and the entity does not intend to use, the deferred tax asset for such purpose, the unrecognized tax benefit should be presented in the financial statements as a liability and should not be combined with deferred tax assets. ASU 2013-11 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2013. The adoption of these revisions did not have a material impact on the Company’s results of operations, financial position or disclosures.

Fair Value of Financial Instruments

The fair value of a financial instrument is the current amount that would be exchanged between willing parties, other than in a forced liquidation. Fair value is best determined based upon quoted market prices. However, in many instances, there are no quoted market prices for the Company’s various financial instruments. In cases where quoted market prices are not available, fair value is based on discounted cash flows or other valuation techniques. These techniques are significantly affected by the assumptions used, including the discount rate and estimates of future cash flows. Accordingly, the fair value estimates may not be realized in an immediate settlement of the instrument. The accounting standard for disclosures about the fair value of financial instruments excludes certain financial instruments and all nonfinancial instruments from its disclosure requirements. Accordingly, the aggregate fair value amounts presented may not necessarily represent the underlying fair value of the Company.

The fair value hierarchy describes three levels of inputs that may be used to measure fair value:

Level 1—Quoted prices in active markets for identical assets or liabilities.

Level 2—Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

Level 3—Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

The following methods and assumptions were used by the Company in estimating the fair value of its financial instruments and other accounts recorded based on their fair value:

Cash, Due From Banks, Interest-Bearing Deposits in Banks and Federal Funds Sold: The carrying amount of cash, due from banks and interest-bearing deposits in banks and federal funds sold approximates fair value.

Investment Securities Available for Sale: The fair value of securities available for sale is determined by various valuation methodologies. Where quoted market prices are available in an active market, securities are classified within Level 1 of the valuation hierarchy. If quoted market prices are not available, then fair values are estimated by using pricing models, quoted prices of securities with similar characteristics, or discounted cash flows. Level 2 securities include mortgage-backed securities issued by government sponsored enterprises and municipal bonds. The Level 2 fair value pricing is provided by an independent third-party and is based upon similar securities in an active market. In certain cases where Level 1 or Level 2 inputs are not available, securities are classified within Level 3 of the hierarchy and include certain residual municipal securities and other less liquid securities.

Other Investments: Federal Home Loan Bank (“FHLB”) stock is included in other investment securities at its original cost basis, as cost approximates fair value and there is no ready market for such investments.

Mortgage Loans Held for Sale: The fair value of mortgage loans held for sale is determined on outstanding commitments from third party investors in the secondary markets and are classified within Level 2 of the valuation hierarchy.

Loans: The carrying amount of variable-rate loans that reprice frequently and have no significant change in credit risk approximates fair value. The fair value of fixed-rate loans is estimated based on discounted contractual cash flows, using interest rates currently being offered for loans with similar terms to borrowers with similar credit quality. The fair value of impaired loans is estimated based on discounted contractual cash flows or underlying collateral values, where applicable. A loan is determined to be impaired if the Company believes it is probable that all principal and interest amounts due according to the terms of the note will not be collected as scheduled. The fair value of impaired loans is determined in accordance with ASC 310-10, Accounting by Creditors for Impairment of a Loan, and generally results in a specific reserve established through a charge to the provision for loan losses. Losses on impaired loans are charged to the allowance when management believes the uncollectability of a loan is confirmed. Management has determined that the majority of impaired loans are Level 3 assets due to the extensive use of market appraisals. To the extent that market appraisals or other methods do not produce reliable determinations of fair value, these assets are deemed to be Level 3.

Other Real Estate Owned: The fair value of other real estate owned (“OREO”) is determined using certified appraisals that value the property at its highest and best uses by applying traditional valuation methods common to the industry. The Company does not hold any OREO for profit purposes and all other real estate is actively marketed for sale. In most cases, management has determined that additional write-downs are required beyond what is calculable from the appraisal to carry the property at levels that would attract buyers. Because this additional write-down is not based on observable inputs, management has determined that other real estate owned should be classified as Level 3.

Covered Assets: Covered assets include loans and other real estate owned on which the majority of losses would be covered by loss-sharing agreements with the Federal Deposit Insurance Corporation (the “FDIC”). Management initially valued these assets at fair value using mostly unobservable inputs and, as such, has classified these assets as Level 3.

Intangible Assets and Goodwill: Intangible assets consist of core deposit premiums acquired in connection with business combinations and are based on the established value of acquired customer deposits. The core deposit premium is initially recognized based on a valuation performed as of the consummation date and is amortized over an estimated useful life of three to ten years. Goodwill represents the excess of the purchase price over the fair value of the net identifiable assets acquired in a business combination. Goodwill and other intangible assets deemed to have an indefinite useful life are not amortized but instead are subject to an annual review for impairment.

FDIC Loss-Share Receivable: Because the FDIC will reimburse the Company for certain acquired loans should the Company experience a loss, an indemnification asset is recorded at fair value at the acquisition date. The indemnification asset is recognized at the same time as the indemnified loans, and measured on the same basis, subject to collectability or contractual limitations. The shared-loss agreements on the acquisition date reflect the reimbursements expected to be received from the FDIC, using an appropriate discount rate, which reflects counterparty credit risk and other uncertainties. The shared-loss agreements continue to be measured on the same basis as the related indemnified loans, and the loss-share receivable is impacted by changes in estimated cash flows associated with these loans.

Deposits: The carrying amount of demand deposits, savings deposits and variable-rate certificates of deposit approximates fair value. The fair value of fixed-rate certificates of deposit is estimated based on discounted contractual cash flows using interest rates currently offered for certificates with similar maturities.

Securities Sold under Agreements to Repurchase and Other Borrowings: The carrying amount of variable rate borrowings and securities sold under repurchase agreements approximates fair value. The fair value of fixed rate other borrowings is estimated based on discounted contractual cash flows using the current incremental borrowing rates for similar type borrowing arrangements.

Subordinated Deferrable Interest Debentures: The carrying amount of the Company’s variable rate trust preferred securities approximates fair value.

Off-Balance-Sheet Instruments: Because commitments to extend credit and standby letters of credit are typically made using variable rates and have short maturities, the carrying value and fair value are immaterial for disclosure.

Derivatives: The Company has entered into derivative financial instruments to manage interest rate risk. The valuation of these instruments is determined using widely accepted valuation techniques including discounted cash flow analysis on the expected cash flows of the derivatives. This analysis reflects the contractual terms of the derivative, including the period to maturity, and uses observable market-based inputs, including interest rate curves and implied volatilities. The fair value of the derivatives are determined using the market standard methodology of netting the discounted future fixed cash receipts and the discounted expected variable cash payments. The variable cash payments are based on an expectation of future interest rates (forward curves derived from observable market interest rate curves).

The Company incorporates credit valuation adjustments to appropriately reflect both its own nonperformance risk and the respective counterparty’s nonperformance risk in the fair value measurements. In adjusting the fair value of its derivative contracts for the effect of nonperformance risk, the Company has considered the impact of netting any applicable credit enhancements such as collateral postings, thresholds, mutual puts and guarantees.

Although the Company has determined that the majority of the inputs used to value its derivatives fall within Level 2 of the fair value hierarchy, the credit valuation adjustments associated with its derivatives utilize Level 3 inputs, such as estimates of current credit spreads to evaluate the likelihood of default by itself or the counterparties. However, as of March 31, 2014 and 2013, the Company has assessed the significance of the impact of the credit valuation adjustments on the overall valuation of its derivative positions and has determined that the credit valuation adjustments are not significant to the overall valuation of its derivatives. As a result, the Company has determined that its derivative valuation in its entirety is classified in Level 2 of the fair value hierarchy.

The carrying amount and estimated fair value of the Company’s financial instruments, not shown elsewhere in these financial statements, were as follows:


			Fair Value Measurements at March 31, 2014 Using:
	Carrying Amount		Level 1		Level 2		Level 3		Total
	(Dollars in Thousands)
Financial assets:
Loans, net	$	2,482,601	$	—	$	1,651,409	$	851,216	$	2,502,625
Financial liabilities:
Deposits		3,010,647		—		3,011,383		—		3,011,383
Other borrowings		59,677		—		59,677		—		59,677

			Fair Value Measurements at December 31, 2013 Using:
	Carrying Amount		Level 1		Level 2		Level 3		Total
	(Dollars in Thousands)
Financial assets:
Loans, net	$	2,435,067	$	—	$	1,565,919	$	881,536	$	2,447,455
Financial liabilities:
Deposits		2,999,231		—		3,000,061		—		3,000,061
Other borrowings		194,572		—		194,572		—		194,572

			Fair Value Measurements at March 31, 2013 Using:
	Carrying Amount		Level 1		Level 2		Level 3		Total
	(Dollars in Thousands)
Financial assets:
Loans, net	$	1,930,095	$	—	$	1,458,604	$	501,874	$	1,960,478
Financial liabilities:
Deposits		2,489,973		—		2,491,282		—		2,491,282

The following table presents the fair value measurements of assets and liabilities measured at fair value on a recurring basis and the level within the fair value hierarchy in which the fair value measurements fall as of March 31, 2014, December 31, 2013 and March 31, 2013 (dollars in thousands):


	Fair Value Measurements on a Recurring Basis As of March 31, 2014
	Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
U.S. government agencies	$	14,145	$	—	$	14,145	$	—
State, county and municipal securities		111,574		—		111,574		—
Corporate debt securities		10,383		—		8,383		2,000
Mortgage-backed securities		320,611		—		320,611		—
Mortgage loans held for sale		51,693		—		51,693		—

Total recurring assets at fair value	$	508,406	$	—	$	506,406	$	2,000

Derivative financial instruments	$	675	$	—	$	675	$	—

Total recurring liabilities at fair value	$	675	$	—	$	675	$	—


	Fair Value Measurements on a Recurring Basis As of December 31, 2013
	Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
U.S. government agencies	$	13,926	$	—	$	13,926	$	—
State, county and municipal securities		112,754		—		112,754		—
Collateralized debt obligations		1,480		1,480		—		—
Corporate debt securities		10,325		—		8,325		2,000
Mortgage-backed securities		347,750		182,461		165,289		—
Mortgage loans held for sale		67,278		—		67,278		—

Total recurring assets at fair value	$	553,513	$	183,941	$	367,572	$	2,000

Derivative financial instruments	$	370	$	—	$	370	$	—

Total recurring liabilities at fair value	$	370	$	—	$	370	$	—


	Fair Value Measurements on a Recurring Basis As of March 31, 2013
	Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
U.S. government agencies	$	5,015	$	—	$	5,015	$	—
State, county and municipal securities		115,532		—		115,532		—
Corporate debt securities		10,297		—		8,297		2,000
Mortgage-backed securities		193,185		4,054		189,131		—
Mortgage loans held for sale		42,332		—		42,332		—

Total recurring assets at fair value	$	366,361	$	4,054	$	360,307	$	2,000

Derivative financial instruments	$	2,553	$	—	$	2,553	$	—

Total recurring liabilities at fair value	$	2,553	$	—	$	2,553	$	—

The following table is a presentation of the valuation methodologies used for instruments measured at fair value on a nonrecurring basis, as well as the general classification of such instruments pursuant to the valuation hierarchy as of March 31, 2014, December 31, 2013 and March 31, 2013 (dollars in thousands):


	Fair Value Measurements on a Nonrecurring Basis As of March 31, 2014
	Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Impaired loans carried at fair value	$	41,253	$	—	$	—	$	41,253
Other real estate owned		33,839		—		—		33,839
Purchased, non-covered loans		437,269		—		—		437,269
Purchased, non-covered other real estate owned		3,864		—		—		3,864
Covered loans		372,694		—		—		372,694
Covered other real estate owned		42,636		—		—		42,636

Total nonrecurring assets at fair value	$	931,555	$	—	$	—	$	931,555


	Fair Value Measurements on a Nonrecurring Basis As of December 31, 2013
	Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Impaired loans carried at fair value	$	42,546	$	—	$	—	$	42,546
Other real estate owned		33,351		—		—		33,351
Purchased, non-covered loans		448,753		—		—		448,753
Purchased, non-covered other real estate owned		4,276		—		—		4,276
Covered loans		390,237		—		—		390,237
Covered other real estate owned		45,893		—		—		45,893

Total nonrecurring assets at fair value	$	965,056	$	—	$	—	$	965,056


	Fair Value Measurements on a Nonrecurring Basis As of March 31, 2013
	Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Impaired loans carried at fair value	$	51,150	$	—	$	—	$	51,150
Other real estate owned		40,434		—		—		40,434
Covered loans		460,724		—		—		460,724
Covered other real estate owned		77,915		—		—		77,915

Total nonrecurring assets at fair value	$	630,223	$	—	$	—	$	630,223

The inputs used to determine estimated fair value of impaired loans and covered loans include market conditions, loan terms, underlying collateral characteristics and discount rates. The inputs used to determine fair value of other real estate owned and covered other real estate owned include market conditions, estimated marketing period or holding period, underlying collateral characteristics and discount rates.

For the three months ended March 31, 2014 and 2013, there was not a change in the methods and significant assumptions used to estimate fair value.

The following table shows significant unobservable inputs used in the fair value measurement of Level 3 assets and liabilities.


Measurements	Fair Value at March 31, 2014		Valuation Technique	Unobservable Inputs	Range
	(Dollars in Thousands)
Nonrecurring:
Impaired loans	$	41,253	Third party appraisals and discounted cash flows	Collateral discounts and discount rates	4.00% - 60.00%
Other real estate owned	$	33,839	Third party appraisals	Collateral discounts and estimated costs to sell	10.00% - 74.00%
Purchased, non-covered loans	$	437,269	Third party appraisals and discounted cash flows	Collateral discounts and discount rates	1.00% - 40.00%
Purchased non-covered other real estate owned	$	3,864	Third party appraisals	Collateral discounts and estimated costs to sell	15.00% - 57.00%
Covered loans	$	372,694	Third party appraisals and discounted cash flows	Collateral discounts and discount rate	1.75% - 75.00%
Covered real estate owned	$	42,636	Third party appraisals	Collateral discounts and estimated costs to sell	10.00% - 87.00%
Recurring:
Investment securities available for sale	$	2,000	Discounted par values	Credit quality of underlying issuer	0.00%

The transfers between the fair value hierarchy levels during the three months ended March 31, 2014 and 2013 involved the transferring of loans to impaired loans, impaired loans to other real estate owned and covered loans to covered other real estate owned. These transfers are reflected in the Company’s reconciliation of Level 3 assets below.


	Investment securities available for sale		Impaired loans carried at fair value			Other real estate owned			Purchased, non-covered loans			Purchased, non-covered other real estate owned			Covered loans			Covered other real estate owned
									(Dollars in Thousands)
Beginning balance, January 1, 2014	$	2,000	$	42,546		$	33,351		$	448,753		$	4,276		$	390,237		$	45,893
Total gains (losses) included in net income		—		—			(750	)		—			(46	)		—			(219	)
Purchases, sales, issuances, and settlements, net		—		—			(1,316	)		(11,416	)		(529	)		(12,617	)		(7,964	)
Transfers in or out of Level 3		—		—			1,261			—			95			—			—
Asset reclassification, within Level 3		—		(1,293	)		1,293			(68	)		68			(4,926	)		4,926

Ending balance, March 31, 2014	$	2,000	$	41,253		$	33,839		$	437,269		$	3,864		$	372,694		$	42,636


	Investment Securities Available for Sale		Impaired Loans Carried at Fair Value			Other Real Estate Owned			Covered Loans			Covered Other Real Estate Owned
	(Dollars in Thousands)
Beginning balance, January 1, 2013	$	2,000	$	52,514		$	39,850		$	507,712		$	88,273
Total gains/(losses) included in net income		—		—			(15	)		—			(3,032	)
Purchases, sales, issuances, and settlements, net		—		—			(2,027	)		(31,449	)		(22,865	)
Transfers in to Level 3		—		1,262			—			—			—
Asset reclassification, within Level 3		—		(2,626	)		2,626			(15,539	)		15,539

Ending balance March 31, 2013	$	2,000	$	51,150		$	40,434		$	460,724		$	77,915

NOTE 2 – PENDING MERGER AND ACQUISITION

On March 10, 2014, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Coastal Bankshares, Inc. (“Coastal”), a bank holding company headquartered in Savannah, Georgia. The Coastal Bank is a wholly owned banking subsidiary of Coastal that has a total of six banking locations in Chatham, Liberty and Effingham Counties, Georgia. As of December 31, 2013, Coastal reported assets of $433 million, loans of $295 million and deposits of $364 million. Under the terms of the Merger Agreement, Coastal will merge with and into Ameris, with Ameris as the surviving entity in the merger. In addition, The Coastal Bank will be merged with and into the Bank, with the Bank as the surviving entity.

Pursuant to the terms of the Merger Agreement, Coastal shareholders will receive 0.4671 shares of the Company’s common stock in exchange for each share of Coastal common stock they hold. Based on the closing price of the Company’s common stock on February 28, 2014, the transaction would be valued at approximately $37.3 million, which represents 169% of Coastal’s tangible book value as of December 31, 2013. The purchase price will be allocated among the assets of Coastal acquired as appropriate, with the remaining balance being reported as goodwill.

Consummation of the merger is subject to customary conditions, including, among others, approval of the Merger Agreement by Coastal’s shareholders and the receipt of required regulatory approvals. The transaction is expected to close during the third quarter of 2014.

NOTE 3 – BUSINESS COMBINATIONS

On December 23, 2013, the Company completed its acquisition of The Prosperity Banking Company (“Prosperity”), a bank holding company headquartered in Saint Augustine, Florida. Upon consummation of the acquisition, Prosperity was merged with and into the Company, with Ameris as the surviving entity in the merger. At that time, Prosperity’s wholly owned banking subsidiary, Prosperity Bank, was also merged with and into the Bank. Prosperity Bank had a total of 12 banking locations, with the majority of the franchise concentrated in northeast Florida. Prosperity’s common shareholders were entitled to elect to receive either 3.125 shares of the Company’s common stock or $41.50 in cash in exchange for each share of Prosperity’s voting common stock. As a result of Prosperity shareholders’ elections, the Company issued 1,168,918 common shares at a fair value of $24.6 million.

The acquisition of Prosperity was accounted for using the purchase method of accounting in accordance with FASB ASC 805, Business Combinations. Assets acquired, liabilities assumed and consideration exchanged were recorded at their respective acquisition date fair values. Determining the fair value of assets and liabilities is a complicated process involving significant judgment regarding methods and assumptions used to calculate estimated fair values. Fair values are preliminary and subject to refinement for up to one year after the closing date of the acquisition as additional information regarding the closing date fair values becomes available.

The following table presents the assets acquired and liabilities of Prosperity assumed as of December 23, 2013 and their initial fair value estimates:


(Dollars in Thousands)	As Recorded by Prosperity			Fair Value Adjustments			As Recorded by Ameris
Assets
Cash and cash equivalents	$	4,285		$	—		$	4,285
Federal funds sold and interest-bearing balances		21,687			—			21,687
Investment securities		151,863			411	(a)		152,274
Other investments		8,727			—			8,727
Loans		487,358			(37,662	)(b)		449,696
Less allowance for loan losses		(6,811	)		6,811	(c)		—

Loans, net		480,547			(30,851	)		449,696
Other real estate owned and repossessed assets		6,883			(1,260	)(d)		5,623
Premises and equipment		36,293			—			36,293
Intangible assets		174			4,383	(e)		4,557
Other assets		26,600			1,192	(f)		27,792

Total assets	$	737,059		$	(26,125	)	$	710,934

Liabilities
Deposits:
Noninterest-bearing	$	149,242		$	—		$	149,242
Interest-bearing		324,441			—			324,441

Total deposits		473,683			—			473,683
Federal funds purchased and securities sold under agreements to repurchase		21,530			—			21,530
Other borrowings		185,000			12,313	(g)		197,313
Other liabilities		14,058			455	(h)		14,513
Subordinated deferrable interest debentures		29,500			(16,303	)(i)		13,197

Total liabilities		723,771			(3,535	)		720,236

Net identifiable assets acquired over (under) liabilities assumed		13,288			(22,590	)		(9,302	)
Goodwill		—			34,093			34,093

Net assets acquired over (under) liabilities assumed	$	13,288		$	11,503		$	24,791

Consideration:
Ameris Bancorp common shares issued		1,168,918
Purchase price per share of the Company’s common stock	$	21.07

Company common stock issued		24,629
Cash exchanged for shares		162

Fair value of total consideration transferred	$	24,791

Explanation of fair value adjustments

(a)	Adjustment reflects the fair value adjustments of the available for sale portfolio as of the acquisition date.

(b)	Adjustment reflects the fair value adjustments based on the Company’s evaluation of the acquired loan portfolio.

(c)	Adjustment reflects the elimination of Prosperity’s allowance for loan losses.

(d)	Adjustment reflects the fair value adjustment based on the Company’s evaluation of the acquired OREO portfolio.

(e)	Adjustment reflects the recording of core deposit intangible on the acquired core deposit accounts.

(f)

Adjustment reflects the adjustment to write-off the non-realizable portion of Prosperity’s deferred tax asset of ($6.644 million), to record the deferred tax asset generated by purchase accounting adjustments of $8.435 million and to record the fair value adjustment of other assets of ($0.599 million) at the acquisition date.

(g)	Adjustment reflects the fair value adjustment (premium) to the FHLB borrowings of $12.741 million and the fair value adjustment to the subordinated debt of $0.428 million.

(h)	Adjustment reflects the fair value adjustment of other liabilities at the acquisition date.

(i)	Adjustment reflects the fair value adjustment to the subordinated deferrable interest debentures at the acquisition date.

NOTE 4 – INVESTMENT SECURITIES

The Company’s investment policy blends the Company’s liquidity needs and interest rate risk management with its desire to increase income and provide funds for expected growth in loans. The investment securities portfolio consists primarily of U.S. government sponsored mortgage-backed securities and agencies, state, county and municipal securities and corporate debt securities. The Company’s portfolio and investing philosophy concentrate activities in obligations where the credit risk is limited. For the small portion of the Company’s portfolio found to present credit risk, the Company has reviewed the investments and financial performance of the obligors and believes the credit risk to be acceptable.

The amortized cost and estimated fair value of investment securities available for sale at March 31, 2014, December 31, 2013 and March 31, 2013 are presented below:


	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
	(Dollars in Thousands)
March 31, 2014:
U. S. government agencies	$	14,948	$	—	$	(803	)	$	14,145
State, county and municipal securities		110,331		2,724		(1,481	)		111,574
Corporate debt securities		10,307		285		(209	)		10,383
Mortgage-backed securities		319,216		4,244		(2,849	)		320,611

Total debt securities	$	454,802	$	7,253	$	(5,342	)	$	456,713

December 31, 2013:
U. S. government agencies	$	14,947	$	—	$	(1,021	)	$	13,926
State, county and municipal securities		112,659		2,269		(2,174	)		112,754
Corporate debt securities		10,311		275		(261	)		10,325
Collateralized debt obligations		1,480		—		—			1,480
Mortgage-backed securities		349,441		2,347		(4,038	)		347,750

Total debt securities	$	488,838	$	4,891	$	(7,494	)	$	486,235

March 31, 2013:
U. S. government agencies	$	5,000	$	15	$	—		$	5,015
State, county and municipal securities		110,628		5,051		(147	)		115,532
Corporate debt securities		10,542		355		(600	)		10,297
Mortgage-backed securities		188,492		5,342		(649	)		193,185

Total debt securities	$	314,662	$	10,763	$	(1,396	)	$	324,029

The amortized cost and fair value of available-for-sale securities at March 31, 2014 by contractual maturity are summarized in the table below. Expected maturities for mortgage-backed securities may differ from contractual maturities because in certain cases borrowers can prepay obligations without prepayment penalties. Therefore, these securities are not included in the following maturity summary.


	Amortized Cost		Fair Value
	(Dollars in Thousands)
Due in one year or less	$	3,088	$	3,110
Due from one year to five years		41,430		43,038
Due from five to ten years		65,798		65,210
Due after ten years		25,270		24,744
Mortgage-backed securities		319,216		320,611

	$	454,802	$	456,713

Securities with a carrying value of approximately $295.7 million serve as collateral to secure public deposits and for other purposes required or permitted by law at March 31, 2014.

The following table details the gross unrealized losses and fair value of securities aggregated by category and duration of the continuous unrealized loss position at March 31, 2014, December 31, 2013 and March 31, 2013.


	Less Than 12 Months					12 Months or More					Total
Description of Securities	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
	(Dollars in Thousands)
March 31, 2014:
U. S. government agencies	$	9,353	$	(595	)	$	4,792	$	(208	)	$	14,145	$	(803	)
State, county and municipal securities		38,937		(1,238	)		3,612		(243	)		42,549		(1,481	)
Corporate debt securities		—		—			4,871		(209	)		4,871		(209	)
Mortgage-backed securities		55,103		(1,219	)		31,184		(1,630	)		86,287		(2,849	)

Total debt securities	$	103,393	$	(3,052	)	$	44,459	$	(2,290	)	$	147,852	$	(5,342	)

December 31, 2013:
U. S. government agencies	$	13,926	$	(1,021	)	$	—	$	—		$	13,926	$	(1,021	)
State, county and municipal securities		47,401		(1,882	)		3,794		(292	)		51,195		(2,174	)
Corporate debt securities		—		—			4,826		(261	)		4,826		(261	)
Collateralized debt obligations		—		—			—		—			—		—
Mortgage-backed securities		94,989		(2,493	)		23,388		(1,545	)		118,377		(4,038	)

Total debt securities	$	156,316	$	(5,396	)	$	32,008	$	(2,098	)	$	188,324	$	(7,494	)

March 31, 2013:
U. S. government agencies	$	—	$	—		$	—	$	—		$	—	$	—
State, county and municipal securities		19,159		(138	)		505		(9	)		19,664		(147	)
Corporate debt securities		244		(6	)		4,506		(594	)		4,750		(600	)
Mortgage-backed securities		55,189		(648	)		1,120		(1	)		56,309		(649	)

Total debt securities	$	74,592	$	(792	)	$	6,131	$	(604	)	$	80,723	$	(1,396	)

NOTE 5 – LOANS

The Company engages in a full complement of lending activities, including real estate-related loans, agriculture-related loans, commercial and financial loans and consumer installment loans within select markets in Georgia, Alabama, Florida and South Carolina. Ameris concentrates the majority of its lending activities in real estate loans. While the risk of loss in the Company’s portfolio is primarily tied to the credit quality of the various borrowers, risk of loss may increase due to factors beyond the Company’s control, such as local, regional and/or national economic downturns. General conditions in the real estate market may also impact the relative risk in the real estate portfolio.

Commercial, financial and agricultural loans include both secured and unsecured loans for working capital, expansion, crop production and other business purposes. Short-term working capital loans are secured by non-real estate collateral such as accounts receivable, crops, inventory and equipment. The Company evaluates the financial strength, cash flow, management, credit history of the borrower and the quality of the collateral securing the loan. The Bank often requires personal guarantees and secondary sources of repayment on commercial, financial and agricultural loans.

Real estate loans include construction and development loans, commercial and farmland loans and residential loans. Construction and development loans include loans for the development of residential neighborhoods, one-to-four family residential construction loans to builders and consumers, and commercial real estate construction loans, primarily for owner-occupied properties. The Company limits its construction lending risk through adherence to established underwriting procedures. Commercial real estate loans include loans secured by owner-occupied commercial buildings for office, storage, retail, farmland and warehouse space. They also include non-owner occupied commercial buildings such as leased retail and office space. Commercial real estate loans may be larger in size and may involve a greater degree of risk than one-to-four family residential mortgage loans. Payments on such loans are often dependent on successful operation or management of the properties. The Company’s residential loans represent permanent mortgage financing and are secured by residential properties located within the Bank’s market areas.

Consumer installment loans and other loans include automobile loans, boat and recreational vehicle financing, and both secured and unsecured personal loans. Consumer loans carry greater risks than other loans, as the collateral can consist of rapidly depreciating assets such as automobiles and equipment that may not provide an adequate source of repayment of the loan in the case of default.

Loans are stated at unpaid balances, net of unearned income and deferred loan fees. Balances within the major loan categories are presented in the following table:


(Dollars in Thousands)	March 31, 2014		December 31, 2013		March 31, 2013
Commercial, financial and agricultural	$	270,571	$	244,373	$	180,888
Real estate – construction and development		149,543		146,371		130,161
Real estate – commercial and farmland		836,230		808,323		766,227
Real estate – residential		393,001		366,882		367,056
Consumer installment		32,345		34,249		37,335
Other		13,692		18,256		11,086

	$	1,695,382	$	1,618,454	$	1,492,753

Purchased non-covered loans are defined as loans that were acquired in bank acquisitions that are not covered by a loss-sharing agreement with the FDIC. Purchased non-covered loans totaling $437.3 million and $448.8 million at March 31, 2014 and December 31, 2013, respectively, are not included in the above schedule.

Purchased non-covered loans are shown below according to major loan type as of the end of the periods shown:


(Dollars in Thousands)	March 31, 2014		December 31, 2013		March 31, 2013
Commercial, financial and agricultural	$	30,810	$	32,141	$	—
Real estate – construction and development		31,820		31,176		—
Real estate – commercial and farmland		174,281		179,898		—
Real estate – residential		196,078		200,851		—
Consumer installment		4,280		4,687		—

	$	437,269	$	448,753	$	—

Covered loans are defined as loans that were acquired in FDIC-assisted transactions that are covered by a loss-sharing agreement with the FDIC. Covered loans totaling $372.7 million, $390.2 million and $460.7 million at March 31, 2014, December 31, 2013 and March 31, 2013, respectively, are not included in the above schedules.

Covered loans are shown below according to loan type as of the end of the periods shown:


(Dollars in Thousands)	March 31, 2014		December 31, 2013		March 31, 2013
Commercial, financial and agricultural	$	24,813	$	26,550	$	28,568
Real estate – construction and development		41,434		43,179		57,114
Real estate – commercial and farmland		214,649		224,451		260,159
Real estate – residential		91,372		95,173		113,668
Consumer installment		426		884		1,215

	$	372,694	$	390,237	$	460,724

Nonaccrual and Past Due Loans

A loan is placed on nonaccrual status when, in management’s judgment, the collection of the interest income appears doubtful. Interest receivable that has been accrued and is subsequently determined to have doubtful collectability is charged against interest income. Interest payments on nonaccrual loans are typically applied to principal unless collectability of the principal amount is reasonably assured, in which case interest is recognized on a cash basis. Loans are returned to accrual status when all the principal and interest amounts contractually due are brought current and future payments are reasonably assured. Past due loans are loans whose principal or interest is past due 90 days or more. In some cases, where borrowers are experiencing financial difficulties, loans may be restructured to provide terms significantly different from the original contractual terms.

The following table presents an analysis of loans accounted for on a nonaccrual basis, excluding purchased non-covered and covered loans:


(Dollars in Thousands)	March 31, 2014		December 31, 2013		March 31, 2013
Commercial, financial and agricultural	$	3,008	$	4,103	$	3,756
Real estate – construction and development		4,080		3,971		9,390
Real estate – commercial and farmland		8,550		8,566		9,798
Real estate – residential		10,631		12,152		13,840
Consumer installment		460		411		692

	$	26,729	$	29,203	$	37,476

The following table presents an analysis of purchased non-covered loans accounted for on a nonaccrual basis:


(Dollars in Thousands)	March 31, 2014		December 31, 2013		March 31, 2013
Commercial, financial and agricultural	$	117	$	11	$	—
Real estate – construction and development		1,131		325		—
Real estate – commercial and farmland		6,829		1,653		—
Real estate – residential		7,208		4,658		—
Consumer installment		33		12		—

	$	15,318	$	6,659	$	—

The following table presents an analysis of covered loans accounted for on a nonaccrual basis:


(Dollars in Thousands)	March 31, 2014		December 31, 2013		March 31, 2013
Commercial, financial and agricultural	$	10,025	$	7,257	$	8,718
Real estate – construction and development		14,780		14,781		18,956
Real estate – commercial and farmland		24,285		33,495		47,580
Real estate – residential		10,558		13,278		23,018
Consumer installment		133		341		243

	$	59,781	$	69,152	$	98,515

The following table presents an analysis of loans, excluding purchased non-covered and covered past due loans as of March 31, 2014, December 31, 2013 and March 31, 2013:


	Loans 30-59 Days Past Due		Loans 60-89 Days Past Due		Loans 90 or More Days Past Due		Total Loans Past Due		Current Loans		Total Loans		Loans 90 Days or More Past Due and Still Accruing
	(Dollars in Thousands)
As of March 31, 2014:
Commercial, financial & agricultural	$	1,083	$	386	$	2,956	$	4,425	$	266,146	$	270,571	$	—
Real estate – construction & development		1,304		249		3,919		5,472		144,071		149,543		—
Real estate – commercial & farmland		2,255		1,650		7,622		11,527		824,703		836,230		—
Real estate – residential		3,657		1,541		10,298		15,496		377,505		393,001		—
Consumer installment loans		474		68		345		887		31,458		32,345		—
Other		—		—		—		—		13,692		13,692		—

Total	$	8,773	$	3,894	$	25,140	$	37,807	$	1,657,575	$	1,695,382	$	—


	Loans 30-59 Days Past Due		Loans 60-89 Days Past Due		Loans 90 or More Days Past Due		Total Loans Past Due		Current Loans		Total Loans		Loans 90 Days or More Past Due and Still Accruing
	(Dollars in Thousands)
As of December 30, 2013:
Commercial, financial & agricultural	$	10,893	$	272	$	4,081	$	15,246	$	229,127	$	244,373	$	—
Real estate – construction & development		1,026		69		3,935		5,030		141,341		146,371		—
Real estate – commercial & farmland		3,981		1,388		7,751		13,120		795,203		808,323		—
Real estate – residential		5,422		1,735		11,587		18,744		348,138		366,882		—
Consumer installment loans		568		197		305		1,070		33,179		34,249		—
Other		—		—		—		—		18,256		18,256		—

Total	$	21,890	$	3,661	$	27,659	$	53,210	$	1,565,244	$	1,618,454	$	—


	Loans 30-59 Days Past Due		Loans 60-89 Days Past Due		Loans 90 or More Days Past Due		Total Loans Past Due		Current Loans		Total Loans		Loans 90 Days or More Past Due and Still Accruing
	(Dollars in Thousands)
As of March 31, 2013:
Commercial, financial & agricultural	$	1,797	$	149	$	3,729	$	5,675	$	175,213	$	180,888	$	—
Real estate – construction & development		1,538		1,538		8,312		11,388		118,773		130,161		—
Real estate – commercial & farmland		11,115		3,220		9,352		23,687		742,540		766,227		—
Real estate – residential		7,686		1,719		11,699		21,104		345,952		367,056		—
Consumer installment loans		745		169		563		1,477		35,858		37,335		—
Other		—		—		—		—		11,086		11,086		—

Total	$	22,881	$	6,795	$	33,655	$	63,331	$	1,429,422	$	1,492,753	$	—

The following table presents an analysis of purchased non-covered past due loans as of March 31, 2014 and December 31, 2013:


	Loans 30-59 Days Past Due		Loans 60-89 Days Past Due		Loans 90 or More Days Past Due		Total Loans Past Due		Current Loans		Total Loans		Loans 90 Days or More Past Due and Still Accruing
	(Dollars in Thousands)
As of March 31, 2014:
Commercial, financial & agricultural	$	291	$	—	$	117	$	408	$	30,402	$	30,810	$	—
Real estate – construction & development		680		661		867		2,208		29,612		31,820		—
Real estate – commercial & farmland		3,956		5,126		2,550		11,632		162,649		174,281		—
Real estate – residential		5,187		1,816		6,503		13,506		182,572		196,078		—
Consumer installment loans		12		11		30		53		4,227		4,280		—

Total	$	10,126	$	7,614	$	10,067	$	27,807	$	409,462	$	437,269	$	—


	Loans 30-59 Days Past Due		Loans 60-89 Days Past Due		Loans 90 or More Days Past Due		Total Loans Past Due		Current Loans		Total Loans		Loans 90 Days or More Past Due and Still Accruing
	(Dollars in Thousands)
As of December 30, 2013:
Commercial, financial & agricultural	$	370	$	70	$	11	$	451	$	31,690	$	32,141	$	—
Real estate – construction & development		1,008		89		325		1,422		29,754		31,176		—
Real estate – commercial & farmland		6,851		2,064		1,516		10,431		169,467		179,898		—
Real estate – residential		4,667		1,074		3,428		9,169		191,682		200,851		—
Consumer installment loans		7		17		9		33		4,654		4,687		—

Total	$	12,903	$	3,314	$	5,289	$	21,506	$	427,247	$	448,753	$	—

The following table presents an analysis of covered past due loans as of March 31, 2014, December 31, 2013 and March 31, 2013:


	Loans 30-59 Days Past Due		Loans 60-89 Days Past Due		Loans 90 or More Days Past Due		Total Loans Past Due		Current Loans		Total Loans		Loans 90 Days or More Past Due and Still Accruing
	(Dollars in Thousands)
As of March 31, 2014:
Commercial, financial & agricultural	$	688	$	55	$	8,976	$	9,719	$	15,094	$	24,813	$	—
Real estate – construction & development		4,248		302		14,472		19,022		22,412		41,434		—
Real estate – commercial & farmland		15,732		3,722		17,680		37,134		177,515		214,649		—
Real estate – residential		3,579		1,585		9,752		14,916		76,456		91,372		1,396
Consumer installment loans		2		50		103		155		271		426		—

Total	$	24,249	$	5,714	$	50,983	$	80,946	$	291,748	$	372,694	$	1,396


	Loans 30-59 Days Past Due		Loans 60-89 Days Past Due		Loans 90 or More Days Past Due		Total Loans Past Due		Current Loans		Total Loans		Loans 90 Days or More Past Due and Still Accruing
	(Dollars in Thousands)
As of December 30, 2013:
Commercial, financial & agricultural	$	3,966	$	12	$	6,165	$	10,143	$	16,407	$	26,550	$	—
Real estate – construction & development		843		144		14,055		15,042		28,137		43,179		—
Real estate – commercial & farmland		8,482		4,350		26,428		39,260		185,191		224,451		346
Real estate – residential		7,648		1,914		10,244		19,806		75,367		95,173		—
Consumer installment loans		51		14		305		370		514		884		—

Total	$	20,990	$	6,434	$	57,197	$	84,621	$	305,616	$	390,237	$	346


	Loans 30-59 Days Past Due		Loans 60-89 Days Past Due		Loans 90 or More Days Past Due		Total Loans Past Due		Current Loans		Total Loans		Loans 90 Days or More Past Due and Still Accruing
	(Dollars in Thousands)
As of March 31, 2013:
Commercial, financial & agricultural	$	756	$	314	$	7,270	$	8,340	$	20,228	$	28,568	$	98
Real estate – construction & development		3,971		876		17,415		22,262		34,852		57,114		—
Real estate – commercial & farmland		10,227		2,837		42,464		55,528		204,631		260,159		—
Real estate – residential		5,608		345		18,895		24,848		88,820		113,668		48
Consumer installment loans		41		11		205		257		958		1,215		—

Total	$	20,603	$	4,383	$	86,249	$	111,235	$	349,489	$	460,724	$	146

Impaired Loans

Loans are considered impaired when, based on current information and events, it is probable the Company will be unable to collect all amounts due in accordance with the original contractual terms of the loan agreements. When determining if the Company will be unable to collect all principal and interest payments due in accordance with the contractual terms of the loan agreement, the Company considers the borrower’s capacity to pay, which includes such factors as the borrower’s current financial statements, an analysis of global cash flow sufficient to pay all debt obligations and an evaluation of secondary sources of repayment, such as guarantor support and collateral value. Impaired loans include loans on nonaccrual status and troubled debt restructurings. The Company individually assesses for impairment all nonaccrual loans greater than $200,000 and rated substandard or worse and all troubled debt restructurings greater than $100,000. If a loan is deemed impaired, a specific valuation allowance is allocated, if necessary, so that the loan is reported net, at the present value of estimated future cash flows using the loan’s existing rate or at the fair value of collateral if repayment is expected solely from the collateral. Interest payments on impaired loans are typically applied to principal unless collectability of the principal amount is reasonably assured, in which case interest is recognized on a cash basis.

The following is a summary of information pertaining to impaired loans, excluding purchased non-covered and covered loans:


	As of and For the Period Ended
	March 31, 2014		December 31, 2013		March 31, 2013
	(Dollars in Thousands)
Nonaccrual loans	$	26,729	$	29,203	$	37,476
Troubled debt restructurings not included above		18,848		17,214		18,513

Total impaired loans	$	45,577	$	46,417	$	55,989

Impaired loans not requiring a related allowance	$	—	$	—	$	—

Impaired loans requiring a related allowance	$	45,577	$	46,417	$	55,989

Allowance related to impaired loans	$	4,324	$	3,871	$	4,839

Average investment in impaired loans	$	45,997	$	51,721	$	56,808

Interest income recognized on impaired loans	$	20	$	522	$	78

Foregone interest income on impaired loans	$	246	$	418	$	54

The following table presents an analysis of information pertaining to impaired loans, excluding purchased non-covered and covered loans as of March 31, 2014, December 31, 2013 and March 31, 2013:


	Unpaid Contractual Principal Balance		Recorded Investment With No Allowance		Recorded Investment With Allowance		Total Recorded Investment		Related Allowance		Average Recorded Investment
	(Dollars in Thousands)
As of March 31, 2014:
Commercial, financial & agricultural	$	5,421	$	—	$	3,719	$	3,719	$	394	$	4,169
Real estate – construction & development		10,636		—		6,033		6,033		736		5,950
Real estate – commercial & farmland		19,983		—		17,282		17,282		1,972		16,380
Real estate – residential		21,307		—		17,996		17,996		1,211		18,983
Consumer installment loans		688		—		547		547		11		515

Total	$	58,035	$	—	$	45,577	$	45,577	$	4,324	$	45,997


	Unpaid Contractual Principal Balance		Recorded Investment With No Allowance		Recorded Investment With Allowance		Total Recorded Investment		Related Allowance		Average Recorded Investment
	(Dollars in Thousands)
As of December 31, 2013:
Commercial, financial & agricultural	$	6,240	$	—	$	4,618	$	4,618	$	435	$	4,844
Real estate – construction & development		11,363		—		5,867		5,867		512		8,341
Real estate – commercial & farmland		18,456		—		15,479		15,479		1,443		17,559
Real estate – residential		24,342		—		19,970		19,970		1,472		20,335
Consumer installment loans		623		—		483		483		9		642

Total	$	61,024	$	—	$	46,417	$	46,417	$	3,871	$	51,721


	Unpaid Contractual Principal Balance		Recorded Investment With No Allowance		Recorded Investment With Allowance		Total Recorded Investment		Related Allowance		Average Recorded Investment
	(Dollars in Thousands)
As of March 31, 2013:
Commercial, financial & agricultural	$	7,818	$	—	$	4,555	$	4,555	$	740	$	4,747
Real estate – construction & development		20,633		—		11,273		11,273		922		11,144
Real estate – commercial & farmland		22,996		—		18,676		18,676		1,816		19,793
Real estate – residential		24,777		—		20,792		20,792		1,344		20,320
Consumer installment loans		920		—		693		693		17		804

Total	$	77,144	$	—	$	55,989	$	55,989	$	4,839	$	56,808

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


	As of and For the Period Ended
	March 31, 2014		December 31, 2013		March 31, 2013
	(Dollars in Thousands)
Nonaccrual loans	$	15,318	$	6,659	$	—
Troubled debt restructurings not included above		5,191		5,938		—

Total impaired loans	$	20,509	$	12,597	$	—

Impaired loans not requiring a related allowance	$	20,509	$	12,597	$	—

Impaired loans requiring a related allowance	$	—	$	—	$	—

Allowance related to impaired loans	$	—	$	—	$	—

Average investment in impaired loans	$	16,553	$	242	$	—

Interest income recognized on impaired loans	$	—	$	—	$	—

Foregone interest income on impaired loans	$	563	$	—	$	—

The following table presents an analysis of information pertaining to impaired purchased non-covered loans as of March 31, 2014 and December 31, 2013:


	Unpaid Contractual Principal Balance		Recorded Investment With No Allowance		Recorded Investment With Allowance		Total Recorded Investment		Related Allowance		Average Recorded Investment
	(Dollars in Thousands)
As of March 31, 2014:
Commercial, financial & agricultural	$	233	$	117	$	—	$	117	$	—	$	64
Real estate – construction & development		6,173		3,574		—		3,574		—		3,631
Real estate – commercial & farmland		12,966		7,790		—		7,790		—		5,336
Real estate – residential		15,524		8,987		—		8,987		—		7,483
Consumer installment loans		240		41		—		41		—		39

Total	$	35,136	$	20,509	$	—	$	20,509	$	—	$	16,553


	Unpaid Contractual Principal Balance		Recorded Investment With No Allowance		Recorded Investment With Allowance		Total Recorded Investment		Related Allowance		Average Recorded Investment
	(Dollars in Thousands)
As of December 31, 2013:
Commercial, financial & agricultural	$	19	$	11	$	—	$	11	$	—	$	—
Real estate – construction & development		5,719		3,690		—		3,690		—		71
Real estate – commercial & farmland		4,563		2,881		—		2,881		—		55
Real estate – residential		9,612		5,978		—		5,978		—		115
Consumer installment loans		57		37		—		37		—		1

Total	$	19,970	$	12,597	$	—	$	12,597	$	—	$	242

The following is a summary of information pertaining to covered impaired loans:


	As of and For the Period Ended
	March 31, 2014		December 31, 2013		March 31, 2013
	(Dollars in Thousands)
Nonaccrual loans	$	59,781	$	69,152	$	98,515
Troubled debt restructurings not included above		22,775		22,243		21,592

Total impaired loans	$	82,556	$	91,395	$	120,107

Impaired loans not requiring a related allowance	$	82,556	$	91,395	$	120,107

Impaired loans requiring a related allowance	$	—	$	—	$	—

Allowance related to impaired loans	$	—	$	—	$	—

Average investment in impaired loans	$	86,976	$	110,830	$	127,507

Interest income recognized on impaired loans	$	155	$	968	$	169

Foregone interest income on impaired loans	$	10	$	330	$	147

The following table presents an analysis of information pertaining to impaired covered loans as of March 31, 2014, December 31, 2013 and March 31, 2013:


	Unpaid Contractual Principal Balance		Recorded Investment With No Allowance		Recorded Investment With Allowance		Total Recorded Investment		Related Allowance		Average Recorded Investment
	(Dollars in Thousands)
As of March 31, 2014:
Commercial, financial & agricultural	$	12,143	$	10,039	$	—	$	10,039	$	—	$	8,655
Real estate – construction & development		20,704		18,034		—		18,034		—		18,036
Real estate – commercial & farmland		36,664		31,746		—		31,746		—		36,247
Real estate – residential		25,230		22,604		—		22,604		—		23,801
Consumer installment loans		167		133		—		133		—		237

Total	$	94,908	$	82,556	$	—	$	82,556	$	—	$	86,976


	Unpaid Contractual Principal Balance		Recorded Investment With No Allowance		Recorded Investment With Allowance		Total Recorded Investment		Related Allowance		Average Recorded Investment
	(Dollars in Thousands)
As of December 31, 2013:
Commercial, financial & agricultural	$	9,680	$	7,270	$	—	$	7,270	$	—	$	8,696
Real estate – construction & development		20,915		18,037		—		18,037		—		21,794
Real estate – commercial & farmland		46,612		40,749		—		40,749		—		51,584
Real estate – residential		29,089		24,998		—		24,998		—		28,452
Consumer installment loans		394		341		—		341		—		304

Total	$	106,690	$	91,395	$	—	$	91,395	$	—	$	110,830


	Unpaid Contractual Principal Balance		Recorded Investment With No Allowance		Recorded Investment With Allowance		Total Recorded Investment		Related Allowance		Average Recorded Investment
	(Dollars in Thousands)
As of March 31, 2013:
Commercial, financial & agricultural	$	24,301	$	8,754	$	—	$	8,754	$	—	$	9,778
Real estate – construction & development		78,421		23,978		—		23,978		—		23,607
Real estate – commercial & farmland		139,197		55,822		—		55,822		—		60,026
Real estate – residential		54,422		31,310		—		31,310		—		33,823
Consumer installment loans		324		243		—		243		—		273

Total	$	296,665	$	120,107	$	—	$	120,107	$	—	$	127,507

Credit Quality Indicators

The Company uses a nine category risk grading system to assign a risk grade to each loan in the portfolio. The following is a description of the general characteristics of the grades:

Grade 10 – Prime Credit – This grade represents loans to the Company’s most creditworthy borrowers or loans that are secured by cash or cash equivalents.

Grade 15 – Good Credit – This grade includes loans that exhibit one or more characteristics better than that of a Satisfactory Credit. Generally, debt service coverage and borrower’s liquidity is materially better than required by the Company’s loan policy.

Grade 20 – Satisfactory Credit – This grade is assigned to loans to borrowers who exhibit satisfactory credit histories, contain acceptable loan structures and demonstrate ability to repay.

Grade 23 – Performing, Under-Collateralized Credit – This grade is assigned to loans that are currently performing and supported by adequate financial information that reflects repayment capacity but exhibits a loan-to-value ratio greater than 110%, based on a documented collateral valuation.

Grade 25 – Minimum Acceptable Credit – This grade includes loans which exhibit all the characteristics of a Satisfactory Credit, but warrant more than normal level of banker supervision due to: (i) circumstances which elevate the risks of performance (such as start-up operations, untested management, heavy leverage and interim losses); (ii) adverse, extraordinary events that have affected, or could affect, the borrower’s cash flow, financial condition, ability to continue operating profitability or refinancing (such as death of principal, fire and divorce); (iii) loans that require more than the normal servicing requirements (such as any type of construction financing, acquisition and development loans, accounts receivable or inventory loans and floor plan loans); (iv) existing technical exceptions which raise some doubts about the Bank’s perfection in its collateral position or the continued financial capacity of the borrower; or (v) improvements in formerly criticized borrowers, which may warrant banker supervision.

Grade 30 – Other Asset Especially Mentioned – This grade includes loans that exhibit potential weaknesses that deserve management’s close attention. If left uncorrected, these weaknesses may result in deterioration of the repayment prospects for the asset or in the Company’s credit position at some future date.

Grade 40 – Substandard – This grade represents loans which are inadequately protected by the current credit worthiness and paying capacity of the borrower or of the collateral pledged, if any. These assets exhibit a well-defined weakness or are characterized by the distinct possibility that the Bank will sustain some loss if the deficiencies are not corrected. These weaknesses may be characterized by past due performance, operating losses or questionable collateral values.

Grade 50 – Doubtful – This grade includes loans which exhibit all of the characteristics of a substandard loan with the added provision that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions and values, highly questionable or improbable.

Grade 60 – Loss – This grade is assigned to loans which are considered uncollectible and of such little value that their continuance as active assets of the Bank is not warranted. This classification does not mean that the loss has absolutely no recovery or salvage value, but rather it is not practical or desirable to defer writing it off.

The following table presents the loan portfolio, excluding purchased non-covered and covered loans, by risk grade as of March 31, 2014:


Risk Grade	Commercial, financial & agricultural		Real estate - construction & development		Real estate - commercial & farmland		Real estate - residential		Consumer installment loans		Other		Total
	(Dollars in Thousands)
10	$	86,688	$	—	$	259	$	478	$	6,380	$	—	$	93,805
15		26,730		5,483		153,285		57,119		1,346		—		243,963
20		90,692		48,872		454,292		192,492		17,678		13,692		817,718
23		120		9,111		9,784		11,765		276		—		31,056
25		55,827		76,962		178,174		100,634		5,580		—		417,177
30		5,386		2,889		15,324		14,440		201		—		38,240
40		5,001		6,226		25,112		16,063		884		—		53,286
50		127		—		—		10		—		—		137
60		—		—		—		—		—		—		—

Total	$	270,571	$	149,543	$	836,230	$	393,001	$	32,345	$	13,692	$	1,695,382

The following table presents the loan portfolio, excluding purchased non-covered and covered loans, by risk grade as of December 31, 2013:


Risk Grade	Commercial, financial & agricultural		Real estate - construction & development		Real estate - commercial & farmland		Real estate - residential		Consumer installment loans		Other		Total
	(Dollars in Thousands)
10	$	66,983	$	—	$	265	$	419	$	6,714	$	—	$	74,381
15		24,789		4,655		147,157		52,335		1,276		—		230,212
20		93,852		45,195		431,790		165,339		18,619		18,256		773,051
23		127		8,343		10,219		12,641		274		—		31,604
25		50,373		78,736		181,645		103,427		6,310		—		420,491
30		2,111		2,876		11,849		13,558		197		—		30,591
40		6,011		6,566		25,398		19,153		859		—		57,987
50		127		—		—		10		—		—		137
60		—		—		—		—		—		—		—

Total	$	244,373	$	146,371	$	808,323	$	366,882	$	34,249	$	18,256	$	1,618,454

The following table presents the loan portfolio, excluding purchased non-covered and covered loans, by risk grade as of March 31, 2013:


Risk Grade	Commercial, financial & agricultural		Real estate - construction & development		Real estate - commercial & farmland		Real estate - residential		Consumer installment loans		Other		Total
	(Dollars in Thousands)
10	$	32,223	$	—	$	304	$	500	$	7,241	$	—	$	40,268
15		11,569		4,794		146,563		68,212		1,635		—		232,773
20		75,503		34,947		385,984		138,634		19,623		11,086		665,777
23		45		6,606		8,970		13,662		120		—		29,403
25		52,631		66,012		187,567		112,096		7,340		—		425,646
30		3,324		6,004		12,334		10,573		250		—		32,485
40		5,494		11,643		24,505		23,379		1,126		—		66,147
50		99		155		—		—		—		—		254
60		—		—		—		—		—		—		—

Total	$	180,888	$	130,161	$	766,227	$	367,056	$	37,335	$	11,086	$	1,492,753

The following table presents the purchased non-covered loan portfolio by risk grade as of March 31, 2014:


Risk Grade	Commercial, financial & agricultural		Real estate - construction & development		Real estate - commercial & farmland		Real estate - residential		Consumer installment loans		Other		Total
	(Dollars in Thousands)
10	$	1,932	$	—	$	—	$	287	$	328	$	—	$	2,547
15		4,408		52		12,422		14,231		679		—		31,792
20		4,596		3,907		43,132		33,553		1,218		—		86,406
23		—		—		—		—		—		—		—
25		19,213		22,780		102,918		134,653		1,965		—		281,529
30		235		697		3,387		2,660		20		—		6,999
40		426		4,384		12,422		10,694		70		—		27,996
50		—		—		—		—		—		—		—
60		—		—		—		—		—		—		—

Total	$	30,810	$	31,820	$	174,281	$	196,078	$	4,280	$	—	$	437,269

The following table presents the purchased non-covered loan portfolio by risk grade as of December 31, 2013:


Risk Grade	Commercial, financial & agricultural		Real estate - construction & development		Real estate - commercial & farmland		Real estate - residential		Consumer installment loans		Other		Total
	(Dollars in Thousands)
10	$	1,865	$	—	$	—	$	289	$	451	$	—	$	2,605
15		4,606		7		12,998		16,160		703		—		34,474
20		5,172		3,960		43,802		34,576		1,383		—		88,893
23		—		—		—		—		—		—		—
25		19,638		20,733		102,260		129,923		1,888		—		274,442
30		576		1,760		9,554		10,878		194		—		22,962
40		284		4,716		11,284		9,025		68		—		25,377
50		—		—		—		—		—		—		—
60		—		—		—		—		—		—		—

Total	$	32,141	$	31,176	$	179,898	$	200,851	$	4,687	$	—	$	448,753

The following table presents the covered loan portfolio by risk grade as of March 31, 2014:


Risk Grade	Commercial, financial & agricultural		Real estate - construction & development		Real estate - commercial & farmland		Real estate - residential		Consumer installment loans		Other		Total
	(Dollars in Thousands)
10	$	—	$	—	$	—	$	—	$	—	$	—	$	—
15		—		10		1,024		650		—		—		1,684
20		1,769		7,760		35,625		19,613		151		—		64,918
23		139		978		17,416		4,870		51		—		23,454
25		6,921		9,182		101,948		38,140		42		—		156,233
30		5,106		1,185		17,625		7,025		3		—		30,944
40		10,878		22,319		41,011		21,074		179		—		95,461
50		—		—		—		—		—		—		—
60		—		—		—		—		—		—		—

Total	$	24,813	$	41,434	$	214,649	$	91,372	$	426	$	—	$	372,694

The following table presents the covered loan portfolio by risk grade as of December 31, 2013:


Risk Grade	Commercial, financial & agricultural		Real estate - construction & development		Real estate - commercial & farmland		Real estate - residential		Consumer installment loans		Other		Total
	(Dollars in Thousands)
10	$	—	$	—	$	—	$	—	$	—	$	—	$	—
15		—		16		1,048		638		—		—		1,702
20		2,184		8,549		34,674		21,363		193		—		66,963
23		134		1,085		17,037		4,748		51		—		23,055
25		7,508		9,611		101,657		38,427		235		—		157,438
30		5,125		2,006		21,297		6,979		17		—		35,424
40		11,599		21,912		48,738		23,018		388		—		105,655
50		—		—		—		—		—		—		—
60		—		—		—		—		—		—		—

Total	$	26,550	$	43,179	$	224,451	$	95,173	$	884	$	—	$	390,237

The following table presents the covered loan portfolio by risk grade as of March 31, 2013:


Risk Grade	Commercial, financial & agricultural		Real estate - construction & development		Real estate - commercial & farmland		Real estate - residential		Consumer installment loans		Other		Total
	(Dollars in Thousands)
10	$	—	$	—	$	—	$	—	$	—	$	—	$	—
15		—		34		1,598		638		—		—		2,270
20		3,117		11,106		36,020		27,547		266		—		78,056
23		75		1,248		9,153		1,946		—		—		12,422
25		8,135		10,184		110,985		40,863		508		—		170,675
30		2,979		4,457		35,601		8,784		50		—		51,871
40		14,262		30,085		66,802		33,890		391		—		145,430
50		—		—		—		—		—		—		—
60		—		—		—		—		—		—		—

Total	$	28,568	$	57,114	$	260,159	$	113,668	$	1,215	$	—	$	460,724

Troubled Debt Restructurings

The restructuring of a loan is considered a “troubled debt restructuring” if both (i) the borrower is experiencing financial difficulties and (ii) the Company has granted a concession. Concessions may include interest rate reductions to below market interest rates, principal forgiveness, restructuring amortization schedules and other actions intended to minimize potential losses. The Company has exhibited the greatest success for rehabilitation of the loan by a reduction in the rate alone (maintaining the amortization of the debt) or a combination of a rate reduction and the forbearance of previously past due interest or principal. This has most typically been evidenced in certain commercial real estate loans whereby a disruption in the borrower’s cash flow resulted in an extended past due status, of which the borrower was unable to catch up completely as the cash flow of the property ultimately stabilized at a level lower than its original level. A reduction in rate, coupled with a forbearance of unpaid principal and/or interest, allowed the net cash flows to service the debt under the modified terms.

The Company’s policy requires a restructure request to be supported by a current, well-documented credit evaluation of the borrower’s financial condition and a collateral evaluation that is no older than six months from the date of the restructure. Key factors of that evaluation include the documentation of current, recurring cash flows, support provided by the guarantor(s) and the current valuation of the collateral. If the appraisal in the file is older than six months, an evaluation must be made as to the continued reasonableness of the valuation. For certain income-producing properties, current rent rolls and/or other income information can be utilized to support the appraisal valuation, when coupled with documented cap rates within our markets and a physical inspection of the collateral to validate the current condition.

The Company’s policy states that in the event a loan has been identified as a troubled debt restructuring, it should be assigned a grade of substandard and placed on nonaccrual status until such time the borrower has demonstrated the ability to service the loan payments based on the restructured terms – generally defined as six months of satisfactory payment history. Missed payments under the original loan terms are not considered under the new structure; however, subsequent missed payments are considered non-performance and are not considered toward the six month required term of satisfactory payment history. The Company’s loan policy states that a nonaccrual loan may be returned to accrual status when (i) none of its principal and interest is due and unpaid, and the Company expects repayment of the remaining contractual principal and interest or (ii) it otherwise becomes well secured and in the process of collection. Restoration to accrual status on any given loan must be supported by a well-documented credit evaluation of the borrower’s financial condition and the prospects for full repayment, approved by the Company’s Senior Credit Officer.

In the normal course of business, the Company renews loans with a modification of the interest rate or terms that are not deemed as troubled debt restructurings because the borrower is not experiencing financial difficulty. The Company modified loans in the first three months of 2014 and 2013 totaling $6.3 million and $27.4 million, respectively, under such parameters. In addition, the Company offers consumer loan customers an annual skip-a-pay program that is based on certain qualifying parameters and not based on financial difficulties. The Company does not treat these as troubled debt restructurings.

As of March 31, 2014, December 31, 2013 and March 31, 2013, the Company had a balance of $21.2 million, $20.9 million and $23.3 million, respectively, in troubled debt restructurings, excluding purchased non-covered and covered loans. The Company has recorded $2.3 million, $2.1 million and $2.6 million in previous charge-offs on such loans at March 31, 2014, December 31, 2013 and March 31, 2013, respectively. The Company’s balance in the allowance for loan losses allocated to such troubled debt restructurings was $422,000, $432,000 and $591,000 at March 31, 2014, December 31, 2013 and March 31, 2013, respectively. At March 31, 2014, the Company did not have any commitments to lend additional funds to debtors whose terms have been modified in troubled restructurings

The following table presents the amount of troubled debt restructurings by loan class, excluding purchased non-covered and covered loans, classified separately as accrual and non-accrual at March 31, 2014, December 31, 2013 and March 31, 2013:


As of March 31, 2014	Accruing Loans				Non-Accruing Loans
Loan class:	#		Balance *(in thousands)*		#		Balance *(in thousands)*
Commercial, financial & agricultural		4	$	711		2	$	40
Real estate – construction & development		11		1,953		1		29
Real estate – commercial & farmland		19		8,733		5		1,316
Real estate – residential		35		7,364		8		961
Consumer installment		11		87		2		19

Total		80	$	18,848		18	$	2,365


As of December 31, 2013	Accruing Loans				Non-Accruing Loans
Loan class:	#		Balance *(in thousands)*		#		Balance *(in thousands)*
Commercial, financial & agricultural		4	$	515		3	$	525
Real estate – construction & development		8		1,896		2		32
Real estate – commercial & farmland		17		6,913		4		2,273
Real estate – residential		37		7,818		8		834
Consumer installment		6		72		3		19

Total		72	$	17,214		20	$	3,683


As of March 31, 2013	Accruing Loans				Non-Accruing Loans
Loan class:	#		Balance *(in thousands)*		#		Balance *(in thousands)*
Commercial, financial & agricultural		5	$	799		—	$	—
Real estate – construction & development		5		1,883		1		43
Real estate – commercial & farmland		16		8,878		3		3,595
Real estate – residential		26		6,953		3		1,111
Consumer installment		—		—		1		6

Total		52	$	18,513		8	$	4,755

The following table presents the amount of troubled debt restructurings by loan class, excluding purchased non-covered and covered loans, classified separately as those currently paying under restructured terms and those that have defaulted under restructured terms at March 31, 2014, December 31, 2013 and March 31, 2013:


As of March 31, 2014	Loans Currently Paying Under Restructured Terms				Loans that have Defaulted Under Restructured Terms
Loan class:	#		Balance *(in thousands)*		#		Balance *(in thousands)*
Commercial, financial & agricultural		4	$	268		2	$	482
Real estate – construction & development		10		1,916		2		66
Real estate – commercial & farmland		19		8,733		5		1,316
Real estate – residential		30		6,365		13		1,961
Consumer installment		11		80		2		26

Total		74	$	17,362		24	$	3,851


As of December 31, 2013	Loans Currently Paying Under Restructured Terms				Loans that have Defaulted Under Restructured Terms
Loan class:	#		Balance *(in thousands)*		#		Balance *(in thousands)*
Commercial, financial & agricultural		4	$	515		3	$	525
Real estate – construction & development		8		1,896		2		32
Real estate – commercial & farmland		16		6,396		5		2,789
Real estate – residential		32		6,699		13		1,953
Consumer installment		7		90		2		2

Total		67	$	15,596		25	$	5,301


As of March 31, 2013	Loans Currently Paying Under Restructured Terms				Loans that have Defaulted Under Restructured Terms
Loan class:	#		Balance *(in thousands)*		#		Balance *(in thousands)*
Commercial, financial & agricultural		5	$	799		—	$	—
Real estate – construction & development		5		1,883		1		43
Real estate – commercial & farmland		16		8,878		3		3,595
Real estate – residential		26		6,953		3		1,111
Consumer installment		—		—		1		6

Total		52	$	18,513		8	$	4,755

The following table presents the amount of troubled debt restructurings, excluding purchased non-covered and covered loans, by types of concessions made, classified separately as accrual and non-accrual at March 31, 2014, December 31, 2013 and March 31, 2013:


As of March 31, 2014	Accruing Loans				Non-Accruing Loans
Type of Concession:	#		Balance *(in thousands)*		#		Balance *(in thousands)*
Forbearance of Interest		8	$	1,933		4	$	300
Forgiveness of Principal		4		1,957		1		516
Payment Modification Only		—		—		1		149
Rate Reduction Only		13		6,782		4		1,134
Rate Reduction, Forbearance of Interest		38		5,489		6		230
Rate Reduction, Forbearance of Principal		17		2,687		1		7
Rate Reduction, Payment Modification		—		—		1		29

Total		80	$	18,848		18	$	2,365


As of December 31, 2013	Accruing Loans				Non-Accruing Loans
Type of Concession:	#		Balance *(in thousands)*		#		Balance *(in thousands)*
Forbearance of Interest		10	$	2,170		2	$	97
Forgiveness of Principal		3		1,467		1		145
Payment Modification Only		1		280		1		88
Rate Reduction Only		14		7,069		3		913
Rate Reduction, Forbearance of Interest		26		3,252		12		2,411
Rate Reduction, Forbearance of Principal		18		2,976		—		—
Rate Reduction, Payment Modification		—		—		1		29

Total		72	$	17,214		20	$	3,683


As of March 31, 2013	Accruing Loans				Non-Accruing Loans
Type of Concession:	#		Balance *(in thousands)*		#		Balance *(in thousands)*
Forbearance of Interest		2	$	1,843		—	$	—
Forgiveness of Principal		3		1,504		1		207
Payment Modification Only		2		376		—		—
Rate Reduction Only		10		7,033		2		182
Rate Reduction, Forbearance of Interest		17		4,046		2		3,100
Rate Reduction, Forbearance of Principal		18		3,711		1		255
Rate Reduction, Payment Modification		—		—		2		1,011

Total		52	$	18,513		8	$	4,755

The following table presents the amount of troubled debt restructurings, excluding purchased non-covered and covered loans, by collateral types, classified separately as accrual and non-accrual at March 31, 2014, December 31, 2013 and March 31, 2013:


As of March 31, 2014	Accruing Loans				Non-Accruing Loans
Collateral type:	#		Balance *(in thousands)*		#		Balance *(in thousands)*
Warehouse		4	$	1,345		2	$	586
Raw Land		5		1,298		1		29
Agriculture		1		311		1		66
Hotel & Motel		3		2,154		—		—
Office		4		1,652		1		149
Retail, including Strip Centers		6		2,905		1		516
1-4 Family Residential		42		8,027		9		978
Church		1		365		—		—
Automobile/Equipment/Inventory		13		548		3		41
Unsecured		1		243		—		—

Total		80	$	18,848		18	$	2,365


As of December 31, 2013	Accruing Loans				Non-Accruing Loans
Collateral type:	#		Balance *(in thousands)*		#		Balance *(in thousands)*
Warehouse		4	$	1,346		2	$	592
Raw Land		11		2,345		2		32
Hotel & Motel		3		2,185		—		—
Office		4		1,909		—		—
Retail, including Strip Centers		4		1,095		2		1,680
1-4 Family Residential		36		7,747		9		852
Life Insurance Policy		1		250		—		—
Automobile/Equipment/Inventory		8		92		4		479
Unsecured		1		245		1		48

Total		72	$	17,214		20	$	3,683

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