Edgar Filing: Ameris Bancorp

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Form 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 June 30, 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 26,738,438 shares of Common Stock outstanding as of July 30, 2014.

AMERIS BANCORP

TABLE OF CONTENTS


		Page
PART I – FINANCIAL INFORMATION

Item 1.	Financial Statements.

	Consolidated Balance Sheets at June 30, 2014, December 31, 2013 and June 30, 2013		1

	Consolidated Statements of Earnings and Comprehensive Income for the Three and Six Month Periods Ended June 30, 2014 and 2013		2

	Consolidated Statements of Changes in Stockholders’ Equity for the Six Months Ended June 30, 2014 and 2013		3

	Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2014 and 2013		4

	Notes to Consolidated Financial Statements		6

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations.		48

Item 3.	Quantitative and Qualitative Disclosures About Market Risk.		63

Item 4.	Controls and Procedures.		63

PART II – OTHER INFORMATION

Item 1.	Legal Proceedings.		64

Item 1A.	Risk Factors.		64

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds.		64

Item 3.	Defaults Upon Senior Securities.		64

Item 4.	Mine Safety Disclosures.		64

Item 5.	Other Information.		64

Item 6.	Exhibits.		64

Signatures			64

Item 1. Financial Statements.

AMERIS BANCORP AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(amounts in thousands, except per share data)


	June 30, 2014			December 31, 2013			June 30, 2013
	(Unaudited)			(Audited)			(Unaudited)
Assets
Cash and due from banks	$	80,986		$	62,955		$	50,343
Federal funds sold and interest-bearing accounts		44,800			204,984			43,904
Investment securities available for sale, at fair value		535,630			486,235			316,168
Other investments		10,971			16,828			7,764
Mortgage loans held for sale		81,491			67,278			62,580

Loans, net of unearned income		1,770,059			1,618,454			1,555,827
Purchased loans not covered by FDIC loss share agreements (“purchased non-covered loans”)		702,131			448,753			—
Purchased loans covered by FDIC loss share agreements (“covered loans”)		331,250			390,237			443,517
Less: allowance for loan losses related to non-purchased loans		(22,254	)		(22,377	)		(24,217	)

Loans, net		2,781,186			2,435,067			1,975,127

Other real estate owned, net		35,373			33,351			39,885
Purchased, non-covered other real estate owned, net		16,598			4,276			—
Covered other real estate owned, net		38,426			45,893			62,178

Total other real estate owned, net		90,397			83,520			102,063

Premises and equipment, net		99,495			103,188			70,167
FDIC loss-share receivable		49,180			65,441			105,513
Other intangible assets, net		9,812			6,009			2,318
Goodwill		58,903			35,049			956
Cash value of bank owned life insurance		57,864			49,432			47,495
Other assets		72,420			51,663			24,277

Total assets	$	3,973,135		$	3,667,649		$	2,808,675

Liabilities and Stockholders’ Equity
Liabilities
Deposits:
Noninterest-bearing	$	790,798		$	668,531		$	475,445
Interest-bearing		2,598,237			2,330,700			1,967,658

Total deposits		3,389,035			2,999,231			2,443,103
Securities sold under agreements to repurchase		51,109			83,516			19,142
Other borrowings		100,293			194,572			—
Other liabilities		24,457			18,165			16,384
Subordinated deferrable interest debentures		64,842			55,466			42,269

Total liabilities		3,629,736			3,350,950			2,520,898

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			27,845
Common stock, par value $1; 100,000,000 shares authorized; 28,155,317; 26,461,769 and 25,257,669 issued		28,155			26,462			25,258
Capital surplus		223,888			189,722			165,484
Retained earnings		98,847			83,991			76,790
Accumulated other comprehensive income (loss)		4,123			(294	)		3,582
Treasury stock, at cost, 1,383,496; 1,363,342 and 1,363,342 shares		(11,614	)		(11,182	)		(11,182	)

Total stockholders’ equity		343,399			316,699			287,777

Total liabilities and stockholders’ equity	$	3,973,135		$	3,667,649		$	2,808,675

See notes to unaudited consolidated financial statements.

AMERIS BANCORP AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF EARNINGS AND COMPREHENSIVE INCOME

(amounts in thousands, except per share data)

(Unaudited)


	Three Months Ended June 30,						Six Months Ended June 30,
	2014			2013			2014			2013
Interest income
Interest and fees on loans	$	35,297		$	29,859		$	69,766		$	58,575
Interest on taxable securities		2,953			1,719			5,938			3,416
Interest on nontaxable securities		312			344			647			719
Interest on deposits in other banks and federal funds sold		45			29			129			114

Total interest income		38,607			31,951			76,480			62,824

Interest expense
Interest on deposits		2,205			2,083			4,388			4,309
Interest on other borrowings		1,138			392			2,344			701

Total interest expense		3,343			2,475			6,732			5,010

Net interest income		35,264			29,476			69,748			57,814
Provision for loan losses		1,365			4,165			3,091			7,088

Net interest income after provision for loan losses		33,899			25,311			66,657			50,726

Noninterest income
Service charges on deposit accounts		5,847			4,695			11,433			9,532
Mortgage banking activity		7,002			5,001			12,166			9,465
Other service charges, commissions and fees		662			617			1,314			946
Gain (loss) on sale of securities		—			(1	)		6			171
Other noninterest income		2,308			1,072			3,654			2,630

Total noninterest income		15,819			11,384			28,573			22,744

Noninterest expense
Salaries and employee benefits		16,942			13,381			34,336			27,187
Occupancy and equipment		4,071			2,978			8,135			5,909
Advertising and marketing expenses		718			327			1,428			582
Amortization of intangible assets		437			358			970			722
Data processing and telecommunications expenses		3,940			2,836			7,394			5,406
Other noninterest expenses		11,210			6,808			18,294			15,766

Total noninterest expense		37,318			26,688			70,557			55,572

Income before income tax expense		12,400			10,007			24,673			17,898
Income tax expense		4,270			3,329			8,193			5,935

Net income		8,130			6,678			16,480			11,963
Less preferred stock dividends and discount accretion		—			442			286			883

Net income available to common shareholders	$	8,130		$	6,236		$	16,194		$	11,080

Other comprehensive income (loss)
Unrealized holding gain (loss) arising during period on investment securities available for sale, net of tax		2,121			(3,689	)		5,059			(4,118	)
Reclassification adjustment for losses (gains) included in earnings, net of tax		—			1			(4	)		(111	)
Unrealized gain (loss) on cash flow hedges arising during period, net of tax		(372	)		995			(638	)		1,204

Other comprehensive income (loss)		1,749			(2,693	)		4,417			(3,025	)

Total comprehensive income	$	9,879		$	3,985		$	20,897		$	8,938

Basic earnings per common share	$	0.32		$	0.26		$	0.64		$	0.46

Diluted earnings per common share	$	0.32		$	0.26		$	0.63		$	0.46

Dividends declared per common share	$	0.05		$	—		$	0.05		$	—

Weighted average common shares outstanding
Basic		25,181			23,879			25,163			23,873
Diluted		25,572			24,288			25,552			24,282

See notes to unaudited consolidated financial statements.

AMERIS BANCORP AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

(amounts in thousands, except per share data)

(Unaudited)


	Six Months Ended						Six Months Ended
	June 30, 2014						June 30, 2013
	Shares			Amount			Shares			Amount
PREFERRED STOCK
Issued at beginning of period		28,000		$	28,000			28,000		$	27,662
Repurchase of preferred stock		(28,000	)		(28,000	)		—			183
Accretion of fair value of warrant		—			—			—			183

*Issued at end of period*		—		$	—			28,000		$	27,845

COMMON STOCK
Issued at beginning of period		26,461,769		$	26,462			25,154,818		$	25,155
Issuance of restricted shares		68,047			68			83,400			83
Issuance of common stock		1,598,987			1,599			—			—
Cancellation of restricted shares		—			—			(1,000	)		(1	)
Proceeds from exercise of stock options		26,514			26			20,451			21

*Issued at end of period*		28,155,317		$	28,155			25,257,669		$	25,258

CAPITAL SURPLUS
Balance at beginning of period				$	189,722					$	164,949
Stock-based compensation					1,012						395
Issuance of common stock					32,875						—
Proceeds from exercise of stock options					347						222
Issuance of restricted shares					(68	)					(83	)
Cancellation of restricted shares					—						1

*Balance at end of period*				$	223,888					$	165,484

RETAINED EARNINGS
Balance at beginning of period				$	83,991					$	65,710
Net income					16,480						11,963
Cash dividends declared, $0.05 per share					(1,338	)					—
Dividends on preferred shares					(286	)					(700	)
Accretion of fair value of warrant					—						(183	)

*Balance at end of period*				$	98,847					$	76,790

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)					4,417						(3,025	)

*Balance at end of period*				$	4,123					$	3,582

TREASURY STOCK
Balance at beginning of period		(1,363,342	)	$	(11,182	)		(1,355,050	)	$	(11,066	)
Purchase of treasury shares		(20,154	)		(432	)		(8,292	)		(116	)

*Balance at end of period*		(1,383,496	)	$	(11,614	)		(1,363,342	)	$	(11,182	)

*TOTAL STOCKHOLDERS’ EQUITY*				$	343,399					$	287,777

See notes to unaudited consolidated financial statements.

AMERIS BANCORP AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(dollars in thousands)

(Unaudited)


	Six Months Ended June 30,
	2014			2013
Cash flows from operating activities:
Net income	$	16,480		$	11,963
Adjustments reconciling net income to net cash provided by operating activities:
Depreciation		3,709			2,468
Stock based compensation expense		1,012			395
Net (gains)/losses on sale or disposal of premises and equipment		1			(221	)
Net losses or write-downs on sale of other real estate owned		1,985			3,599
Provision for loan losses		3,091			7,088
Accretion of covered loans		(15,432	)		(25,841	)
Accretion of purchased non-covered loans		(3,153	)		—
Accretion of FDIC loss-share receivable, net of amortization of FDIC clawback payable		5,685			8,607
Increase in cash surrender value of BOLI		(620	)		(565	)
Amortization of intangible assets		970			722
Net amortization of investment securities available for sale		1,525			1,785
Net change in mortgage loans held for sale		(6,925	)		(13,794	)
Net gains on securities available for sale		(6	)		(171	)
Change attributable to other operating activities		7,585			12,210

Net cash provided by operating activities		15,907			8,245

Cash flows from investing activities, net of effect of business combinations:
Net increase in federal funds sold and interest-bearing deposits		176,107			149,773
Proceeds from maturities of s ecurities available for sale		22,493			32,072
Purchase of securities available for sale		(68,632	)		(41,722	)
Proceeds from sales of securities available for sale		69,768			31,340
Purchase of bank owned life insurance		—			(30,000	)
Net increase in loans, excluding purchased non-covered and covered loans		(160,626	)		(116,430	)
Payments received on purchased non-covered loans		27,791			—
Payments received on covered loans		64,743			65,971
Payments received from FDIC under loss share agreements		10,576			45,604
Proceeds from sales of other real estate owned		17,420			38,534
Decrease in restricted equity securities, net		6,832			—
Proceeds from sales of premises and equipment		56			1,928
Purchases of premises and equipment		(2,223	)		(2,117	)
Net cash proceeds received from acquisitions		1,099			—

Net cash provided by investing activities		165,404			174,953

Cash flows from financing activities, net of effect of business combinations:
Net increase/(decrease) in deposits		20,780			(181,560	)
Net decrease in securities sold under agreements to repurchase		(37,835	)		(30,978	)
Repayment of other borrowings		(174,005	)		—
Proceeds from other borrowings		57,463			—
Redemption of preferred stock		(28,000	)		—
Dividends paid - preferred stock		(286	)		(700	)
Dividends paid - common stock		(1,338	)		—
Purchase of treasury shares		(432	)		(116	)
Proceeds from exercise of stock options		373			243

Net cash used in financing activities		(163,280	)		(213,111	)

Net increase (decrease) in cash and due from banks		18,031			(29,913	)
Cash and due from banks at beginning of period		62,955			80,256

Cash and due from banks at end of period	$	80,986		$	50,343


	Six Months Ended June 30,
	2014		2013
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid/(received) during the period for:
Interest	$	6,740	$	5,371
Income taxes	$	5,583	$	8,356
Loans (excluding purchased non-covered and covered loans) transferred to other real estate owned	$	6,400	$	5,564
Purchased non-covered loans transferred to other real estate owned	$	1,425	$	—
Covered loans transferred to other real estate owned	$	9,083	$	23,275
Issuance of common stock in acquisitions	$	34,474	$	—

See notes to unaudited consolidated financial statements.

AMERIS BANCORP AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 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 June 30, 2014, the Bank operated 74 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 the Company’s established guidelines and policies, the banker closest to the customer responds to the differing needs and demands of their his or her 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 June 30, 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 Issued Accounting Pronouncements

ASU 2014-09 – Revenue from Contracts with Customers (“ASU 2014-09”). ASU 2014-09 provides guidance that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. ASU 2014-09 is effective prospectively, for annual and interim periods, beginning after December 15, 2016. The Company is currently evaluating the impact this standard will have on the Company’s results of operations, financial position or disclosures.

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.

NOTE 2 – BUSINESS COMBINATIONS

On June 30, 2014, the Company completed its acquisition of The Coastal Bankshares, Inc. (“Coastal”), a bank holding company headquartered in Savannah, Georgia. Upon consummation of the acquisition, Coastal was merged with and into the Company, with Ameris as the surviving entity in the merger. At that time, Coastal’s wholly owned banking subsidiary, The Coastal Bank, was also merged with and into the Bank. The acquisition grew the Company’s existing market presence, as Coastal Bank had a total of six banking locations in Chatham, Liberty and Effingham Counties, Georgia. Coastal’s common shareholders received 0.4671 of a share of the Company’s common stock in exchange for each share of Coastal’s common stock. As a result, the Company issued 1,598,987 common shares at a fair value of $34.5 million and paid $2.8 million cash in exchange for outstanding warrants.

The acquisition of Coastal 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. Management continues to evaluate fair value adjustments related to loans, other real estate owned and deferred tax assets. Management is in the process of estimating the deferred tax assets resulting from differences in the carrying values of acquired assets and assumed liabilities for financial reporting purposes and their basis for income tax purposes. This estimate will also reflect acquired net operating loss carryforwards and other acquired assets with built-in losses that are expected to be settled or otherwise recovered in future periods where the realization of such benefits would be subject to section 382 limitations. Accordingly, as of the date of acquisition, the Company has not established a deferred tax asset, as management is still performing its assessment of the realization of the benefits from the settlement or recovery of certain of these acquired assets and net operating losses are expected to be subject to section 382 limitations.

The following table presents the assets acquired and liabilities of Coastal assumed as of June 30, 2014 and their initial fair value estimates. The fair value adjustments shown in the following table continue to be evaluated by management and may be subject to further adjustment:


(Dollars in Thousands)	As Recorded by Coastal			Fair Value Adjustments			As Recorded by Ameris
Assets
Cash and cash equivalents	$	3,895		$	—		$	3,895
Federal funds sold and interest-bearing balances		15,923			—			15,923
Investment securities		67,266			(500	)(a)		66,766
Other investments		975			—			975
Mortgage loans held for sale		7,288			—			7,288
Loans		296,141			(16,700	)(b)		279,441
Less allowance for loan losses		(3,218	)		3,218	(c)		—

Loans, net		292,923			(13,482	)		279,441
Other real estate owned		14,992			(3,528	)(d)		11,464
Premises and equipment		11,882			—			11,882
Intangible assets		507			4,266	(e)		4,773
Other assets		22,710			—			22,710

Total assets	$	438,361		$	(13,244	)	$	425,117

Liabilities
Deposits:
Noninterest-bearing	$	80,012		$	—		$	80,012
Interest-bearing		289,012			—			289,012

Total deposits		369,024			—			369,024
Federal funds purchased and securities sold under agreements to repurchase		5,428			—			5,428
Other borrowings		22,005			—			22,005
Other liabilities		6,192			—			6,192
Subordinated deferrable interest debentures		15,465			(6,413	)(f)		9,052

Total liabilities		418,114			(6,413	)		411,701

Net identifiable assets acquired over (under) liabilities assumed		20,247			(6,831	)		13,416
Goodwill		—			23,854			23,854

Net assets acquired over (under) liabilities assumed	$	20,247		$	17,023		$	37,270

Consideration:
Ameris Bancorp common shares issued		1,598,987
Purchase price per share of the Company’s common stock	$	21.56

Company common stock issued		34,474
Cash exchanged for shares		2,796

Fair value of total consideration transferred	$	37,270

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 Coastal’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 fair value adjustment to the subordinated deferrable interest debentures at the acquisition date.

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		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.

On the dates of acquisition, the Company estimated the future cash flows on each individual loan and made the necessary adjustments to reflect the asset at fair value. At each quarter end subsequent to the acquisition dates, the Company revises the estimates of future cash flows based on current information and makes the necessary adjustments to carrying value. The adjustments are performed on a loan-by-loan basis. No adjustments have been made for the six months ended June 30, 2014, the year ended December 31, 2013 and the six months ended June 30, 2013.

A rollforward of purchased non-covered loans with deterioration of credit quality for the six months ended June 30, 2014, the year ended December 31, 2013 and the six months ended June 30, 2013 is shown below:


(Dollars in Thousands)	June 30, 2014			December 31, 2013		June 30, 2013
Balance, January 1	$	67,165		$	—	$	—
Charge-offs, net of recoveries		(2,218	)		—		—
Additions due to acquisitions		29,280			67,165		—
Other (loan payments, transfers, etc.)		(970	)		—		—

Ending balance	$	93,257		$	67,165	$	—

A rollforward of purchased non-covered loans without deterioration of credit quality for the six months ended June 30, 2014, the year ended December 31, 2013 and the six months ended June 30, 2013 is shown below:


(Dollars in Thousands)	June 30, 2014			December 31, 2013			June 30, 2013
Balance, January 1	$	381,588		$	—		$	—
Additions due to acquisitions		249,520			382,531			—
Loan payments, transfers, etc.		(22,234	)		(943	)		—

Ending balance	$	608,874		$	381,588		$	—

The following is a summary of changes in the accretable discounts of purchased non-covered loans during the six months ended June 30, 2014, the year ended December 31, 2013 and the six months ended June 30, 2013:


(Dollars in Thousands)	June 30, 2014			December 31, 2013		June 30, 2013
Balance, January 1	$	26,189		$	—	$	—
Additions due to acquisitions		7,799			26,189		—
Accretion		(3,153	)		—		—
Other activity, net		1,486			—		—

Ending balance	$	32,321		$	26,189	$	—

NOTE 3 – 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 June 30, 2014, December 31, 2013 and June 30, 2013 are presented below:


	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
	(Dollars in Thousands)
June 30, 2014:
U. S. government agencies	$	14,950	$	—	$	(505	)	$	14,445
State, county and municipal securities		143,507		3,136		(863	)		145,780
Corporate debt securities		10,805		284		(131	)		10,958
Mortgage-backed securities		361,194		5,435		(2,182	)		364,447

Total securities	$	530,456	$	8,855	$	(3,681	)	$	535,630

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

June 30, 2013:
U. S. government agencies	$	14,944	$	—	$	(609	)	$	14,335
State, county and municipal securities		109,793		3,708		(742	)		112,759
Corporate debt securities		10,543		311		(764	)		10,090
Mortgage-backed securities		177,196		3,824		(2,036	)		178,984

Total securities	$	312,476	$	7,843	$	(4,151	)	$	316,168

The amortized cost and fair value of available-for-sale securities at June 30, 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	$	5,055	$	5,123
Due from one year to five years		41,290		42,911
Due from five to ten years		66,456		66,794
Due after ten years		56,461		56,355
Mortgage-backed securities		361,194		364,447

	$	530,456	$	535,630

Securities with a carrying value of approximately $228.3 million serve as collateral to secure public deposits and for other purposes required or permitted by law at June 30, 2014, compared to $399.0 million and $224.5 million at December 31, 2013 and June 30, 2013, respectively.

The following table details the gross unrealized losses and fair value of securities aggregated by category and duration of continuous unrealized loss position at June 30, 2014, December 31, 2013 and June 30, 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)
June 30, 2014:
U. S. government agencies	$	—	$	—		$	14,445	$	(505	)	$	14,445	$	(505	)
State, county and municipal securities		4,088		(35	)		29,203		(828	)		33,291		(863	)
Corporate debt securities		—		—			4,945		(131	)		4,945		(131	)
Mortgage-backed securities		25,107		(65	)		51,039		(2,117	)		76,146		(2,182	)

Total temporarily impaired securities	$	29,195	$	(100	)	$	99,632	$	(3,581	)	$	128,827	$	(3,681	)

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

June 30, 2013:
U. S. government agencies	$	14,335	$	(609	)	$	—	$	—		$	14,335	$	(609	)
State, county and municipal securities		36,268		(726	)		497		(16	)		36,765		(742	)
Corporate debt securities		—		—			4,333		(764	)		4,333		(764	)
Mortgage-backed securities		68,031		(2,036	)		925		—			68,956		(2,036	)

Total temporarily impaired securities	$	118,634	$	(3,371	)	$	5,755	$	(780	)	$	124,389	$	(4,151	)

Management and the Company’s Asset and Liability Committee (the “ALCO Committee”) evaluate securities for other-than-temporary impairment at least on a quarterly basis, and more frequently when economic or market concerns warrant such evaluation. While the majority of the unrealized losses on debt securities relate to changes in interest rates, corporate debt securities have also been affected by reduced levels of liquidity and higher risk premiums. Occasionally, management engages independent third parties to evaluate the Company’s position in certain corporate debt securities to aid management and the ALCO Committee in its determination regarding the status of impairment. The Company believes that each investment poses minimal credit risk and further, that the Company does not intend to sell these investment securities at an unrealized loss position at June 30, 2014, and it is more likely than not that the Company will not be required to sell these securities prior to recovery or maturity. Therefore, at June 30, 2014, these investments are not considered impaired on an other-than-temporary basis.

At December 31, 2013 and 2012, all of the Company’s mortgage-backed securities were obligations of government-sponsored agencies.

The following table is a summary of sales activities in the Company’s investment securities available for sale for the six months ended June 30, 2014, year ended December 31, 2013 and six months ended June 30, 2013:


	June 30, 2014			December 31, 2013			June 30, 2013
	(Dollars in Thousands)
Gross gains on sales of securities	$	8		$	353		$	353
Gross losses on sales of securities		(2	)		(182	)		(182	)

Net realized gains on sales of securities available for sale	$	6		$	171		$	171

Sales proceeds	$	69,768		$	36,669		$	31,340

NOTE 4 – 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 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, construction of 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 loans receivable categories are presented in the following table, excluding purchased non-covered and covered loans:


(Dollars in Thousands)	June 30, 2014		December 31, 2013		June 30, 2013
Commercial, financial and agricultural	$	304,588	$	244,373	$	208,424
Real estate – construction and development		149,346		146,371		134,607
Real estate – commercial and farmland		850,000		808,323		788,654
Real estate – residential		422,731		366,882		357,685
Consumer installment		31,902		34,249		36,923
Other		11,492		18,256		29,534

	$	1,770,059	$	1,618,454	$	1,555,827

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 $702.1 million and $448.8 million at June 30, 2014 and December 31, 2013, respectively, are not included in the above schedule. There were no purchased non-covered loans at June 30, 2013.

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


(Dollars in Thousands)	June 30, 2014		December 31, 2013		June 30, 2013
Commercial, financial and agricultural	$	41,583	$	32,141	$	—
Real estate – construction and development		64,084		31,176		—
Real estate – commercial and farmland		311,748		179,898		—
Real estate – residential		278,451		200,851		—
Consumer installment		6,265		4,687		—

	$	702,131	$	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 $331.3 million, $390.2 million and $443.5 million at June 30, 2014, December 31, 2013 and June 30, 2013, respectively, are not included in the above schedule.

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


(Dollars in Thousands)	June 30, 2014		December 31, 2013		June 30, 2013
Commercial, financial and agricultural	$	25,209	$	26,550	$	27,371
Real estate – construction and development		31,600		43,179		52,972
Real estate – commercial and farmland		188,643		224,451		255,102
Real estate – residential		85,518		95,173		107,107
Consumer installment		280		884		965

	$	331,250	$	390,237	$	443,517

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. Nonaccrual 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)	June 30, 2014		December 31, 2013		June 30, 2013
Commercial, financial and agricultural	$	1,596	$	4,103	$	4,326
Real estate – construction and development		3,452		3,971		5,448
Real estate – commercial and farmland		8,831		8,566		8,963
Real estate – residential		7,795		12,152		12,423
Consumer installment		437		411		651

	$	22,111	$	29,203	$	31,811

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


(Dollars in Thousands)	June 30, 2014		December 31, 2013		June 30, 2013
Commercial, financial and agricultural	$	143	$	11	$	—
Real estate – construction and development		2,273		325		—
Real estate – commercial and farmland		6,647		1,653		—
Real estate – residential		6,658		4,658		—
Consumer installment		49		12		—

	$	15,770	$	6,659	$	—

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


(Dollars in Thousands)	June 30, 2014		December 31, 2013		June 30, 2013
Commercial, financial and agricultural	$	12,254	$	7,257	$	8,729
Real estate – construction and development		8,028		14,781		17,039
Real estate – commercial and farmland		17,027		33,495		47,427
Real estate – residential		8,702		13,278		15,459
Consumer installment		127		341		285

	$	46,138	$	69,152	$	88,939

The following table presents an aging analysis of loans, excluding purchased non-covered and covered past due loans as of June 30, 2014, December 31, 2013 and June 30, 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 June 30, 2014:
Commercial, financial & agricultural	$	1,180	$	966	$	1,077	$	3,223	$	301,365	$	304,588	$	—
Real estate – construction & development		3,942		296		3,449		7,687		141,659		149,346		—
Real estate – commercial & farmland		4,622		1,860		7,404		13,886		836,114		850,000		—
Real estate – residential		5,806		3,829		7,197		16,832		405,899		422,731		—
Consumer installment loans		345		176		310		831		31,071		31,902		—
Other		—		—		—		—		11,492		11,492		—

Total	$	15,895	$	7,127	$	19,437	$	42,459	$	1,727,600	$	1,770,059	$	—


	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 31, 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 June 30, 2013:
Commercial, financial & agricultural	$	1,449	$	502	$	4,013	$	5,964	$	202,460	$	208,424	$	—
Real estate – construction & development		1,638		104		5,418		7,160		127,447		134,607		—
Real estate – commercial & farmland		5,392		1,580		5,333		12,305		776,349		788,654		—
Real estate – residential		4,735		5,256		11,745		21,736		335,949		357,685		—
Consumer installment loans		432		175		548		1,155		35,768		36,923		—
Other		—		—		—		—		29,534		29,534		—

Total	$	13,646	$	7,617	$	27,057	$	48,320	$	1,507,507	$	1,555,827	$	—

The following table presents an aging analysis of purchased non-covered past due loans based on the recorded basis as of June 30, 2014 and December 31, 2013. There were no purchased non-covered loans as of June 30, 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 June 30, 2014:
Commercial, financial & agricultural	$	137	$	26	$	143	$	306	$	41,277	$	41,583	$	—
Real estate – construction & development		712		168		2,165		3,045		61,039		64,084		—
Real estate – commercial & farmland		1,263		1,605		6,647		9,515		302,233		311,748		—
Real estate – residential		6,952		983		6,144		14,079		264,372		278,451		—
Consumer installment loans		23		29		47		99		6,166		6,265		—

Total	$	9,087	$	2,811	$	15,146	$	27,044	$	675,087	$	702,131	$	—


	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 31, 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 aging analysis of covered loans as of June 30, 2014, December 31, 2013 and June 30, 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 June 30, 2014:
Commercial, financial & agricultural	$	16	$	467	$	6,909	$	7,392	$	17,817	$	25,209	$	—
Real estate – construction & development		551		459		7,708		8,718		22,882		31,600		—
Real estate – commercial & farmland		6,399		139		10,443		16,981		171,662		188,643		—
Real estate – residential		2,490		690		5,939		9,119		76,399		85,518		—
Consumer installment loans		—		49		56		105		175		280		—

Total	$	9,456	$	1,804	$	31,055	$	42,315	$	288,935	$	331,250	$	—


	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 31, 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 June 30, 2013:
Commercial, financial & agricultural	$	529	$	441	$	7,333	$	8,303	$	19,068	$	27,371	$	63
Real estate – construction & development		2,672		743		15,911		19,326		33,646		52,972		348
Real estate – commercial & farmland		4,020		3,929		41,250		49,199		205,903		255,102		636
Real estate – residential		6,283		772		12,155		19,210		87,897		107,107		60
Consumer installment loans		68		6		255		329		636		965		—

Total	$	13,572	$	5,891	$	76,904	$	96,367	$	347,150	$	443,517	$	1,107

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
	June 30, 2014		December 31, 2013		June 30, 2013
	(Dollars in Thousands)
Nonaccrual loans	$	22,111	$	29,203	$	31,811
Troubled debt restructurings not included above		17,337		17,214		18,015

Total impaired loans	$	39,448	$	46,417	$	49,826

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

Impaired loans requiring a related allowance	$	39,448	$	46,417	$	49,826

Allowance related to impaired loans	$	3,619	$	3,871	$	5,072

Average investment in impaired loans	$	43,814	$	51,721	$	54,481

Interest income recognized on impaired loans	$	42	$	522	$	451

Foregone interest income on impaired loans	$	23	$	418	$	172

The following table presents an analysis of information pertaining to impaired loans, excluding purchased non-covered and covered loans as of June 30, 2014, December 31, 2013 and June 30, 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 June 30, 2014:
Commercial, financial & agricultural	$	3,398	$	—	$	1,852	$	1,852	$	298	$	3,397
Real estate – construction & development		9,336		—		5,532		5,532		798		5,811
Real estate – commercial & farmland		19,215		—		16,421		16,421		1,629		16,394
Real estate – residential		18,313		—		15,131		15,131		884		17,698
Consumer installment loans		638		—		512		512		10		514

Total	$	50,900	$	—	$	39,448	$	39,448	$	3,619	$	43,814


	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 June 30, 2013:
Commercial, financial & agricultural	$	7,723	$	—	$	5,384	$	5,384	$	1,018	$	4,960
Real estate – construction & development		15,324		—		7,394		7,394		687		9,894
Real estate – commercial & farmland		19,759		—		16,491		16,491		1,657		18,692
Real estate – residential		23,373		—		19,893		19,893		1,692		20,178
Consumer installment loans		808		—		664		664		18		757

Total	$	66,987	$	—	$	49,826	$	49,826	$	5,072	$	54,481

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


	As of and For the Period Ended
	June 30, 2014		December 31, 2013		June 30, 2013
	(Dollars in Thousands)
Nonaccrual loans	$	15,770	$	6,659	$	—
Troubled debt restructurings not included above		—		—		—

Total impaired loans	$	15,770	$	6,659	$	—

Impaired loans not requiring a related allowance	$	15,770	$	6,659	$	—

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

Allowance related to impaired loans	$	—	$	—	$	—

Average investment in impaired loans	$	12,582	$	128	$	—

Interest income recognized on impaired loans	$	16	$	—	$	—

Foregone interest income on impaired loans	$	158	$	—	$	—

The following table presents an analysis of information pertaining to impaired purchased non-covered loans as of June 30, 2014 and December 31, 2013. There were no purchased non-covered loans as of June 30, 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 June 30, 2014:
Commercial, financial & agricultural	$	550	$	143	$	—	$	143	$	—	$	90
Real estate – construction & development		4,649		2,273		—		2,273		—		1,243
Real estate – commercial & farmland		9,848		6,647		—		6,647		—		5,043
Real estate – residential		10,598		6,658		—		6,658		—		6,175
Consumer installment loans		65		49		—		49		—		31

Total	$	25,710	$	15,770	$	—	$	15,770	$	—	$	12,582


	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		542		325		—		325		—		6
Real estate – commercial & farmland		2,673		1,653		—		1,653		—		32
Real estate – residential		7,712		4,658		—		4,658		—		90
Consumer installment loans		20		12		—		12		—		—

Total	$	10,996	$	6,659	$	—	$	6,659	$	—	$	128

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


	As of and For the Period Ended
	June 30, 2014		December 31, 2013		June 30, 2013
	(Dollars in Thousands)
Nonaccrual loans	$	46,138	$	69,152	$	88,939
Troubled debt restructurings not included above		9,221		8,409		10,253

Total impaired loans	$	55,359	$	77,561	$	99,192

Impaired loans not requiring a related allowance	$	55,359	$	77,561	$	99,192

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

Allowance related to impaired loans	$	—	$	—	$	—

Average investment in impaired loans	$	70,932	$	94,873	$	104,473

Interest income recognized on impaired loans	$	214	$	968	$	784

Foregone interest income on impaired loans	$	94	$	330	$	242

The following table presents an analysis of information pertaining to impaired covered loans as of June 30, 2014, December 31, 2013 and June 30, 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 June 30, 2014:
Commercial, financial & agricultural	$	14,617	$	12,254	$	—	$	12,254	$	—	$	10,525
Real estate – construction & development		9,780		8,028		—		8,028		—		13,380
Real estate – commercial & farmland		21,236		18,093		—		18,093		—		27,174
Real estate – residential		18,662		16,857		—		16,857		—		19,641
Consumer installment loans		161		127		—		127		—		212

Total	$	64,456	$	55,359	$	—	$	55,359	$	—	$	70,932


	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	$	9,598	$	7,257	$	—	$	7,257	$	—	$	8,676
Real estate – construction & development		17,540		14,781		—		14,781		—		17,909
Real estate – commercial & farmland		39,056		34,074		—		34,074		—		44,652
Real estate – residential		24,819		21,108		—		21,108		—		23,332
Consumer installment loans		394		341		—		341		—		304

Total	$	91,407	$	77,561	$	—	$	77,561	$	—	$	94,873


	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 June 30, 2013:
Commercial, financial & agricultural	$	12,151	$	8,769	$	—	$	8,769	$	—	$	9,417
Real estate – construction & development		24,044		19,198		—		19,198		—		19,394
Real estate – commercial & farmland		58,538		48,000		—		48,000		—		50,508
Real estate – residential		27,794		22,940		—		22,940		—		24,877
Consumer installment loans		340		285		—		285		—		277

Total	$	122,867	$	99,192	$	—	$	99,192	$	—	$	104,473

Credit Quality Indicators

The Company uses a nine category risk grading system to assign a risk grade to each loan in the portfolio. Every loan is assigned a risk rating, with the exception of credit card receivables and overdraft protection loans which are treated as pools for risk rating purposes. Relationships greater than $250,000 are reviewed annually by the Bank’s independent internal loan review department or an independent third party loan review firm. 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, the 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 exhibit 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 sound worth 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 June 30, 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	$	103,726	$	—	$	255	$	505	$	6,356	$	—	$	110,842
15		24,620		4,678		141,846		54,388		1,120		—		226,652
20		102,278		48,008		460,715		226,149		17,714		11,492		866,356
23		123		9,215		9,318		9,479		294		—		28,429
25		65,882		77,973		197,381		103,846		5,281		—		450,363
30		4,004		2,680		12,914		13,568		194		—		33,360
40		3,955		6,792		27,571		14,786		943		—		54,047
50		—		—		—		10		—		—		10
60		—		—		—		—		—		—		—

Total	$	304,588	$	149,346	$	850,000	$	422,731	$	31,902	$	11,492	$	1,770,059

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 June 30, 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	$	37,173	$	—	$	298	$	498	$	6,883	$	—	$	44,852
15		17,783		4,934		154,369		63,078		1,527		—		241,691
20		82,636		36,654		402,677		137,518		19,586		29,534		708,605
23		108		6,878		9,575		13,104		165		—		29,830
25		60,981		75,273		189,109		110,244		7,497		—		443,104
30		3,154		3,183		12,104		10,666		159		—		29,266
40		5,991		7,685		20,522		22,577		1,104		—		57,879
50		598		—		—		—		—		—		598
60		—		—		—		—		2		—		2

Total	$	208,424	$	134,607	$	788,654	$	357,685	$	36,923	$	29,534	$	1,555,827

The following table presents the purchased non-covered loan portfolio by risk grade as of June 30, 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	$	3,494	$	—	$	—	$	293	$	557	$	—	$	4,344
15		4,728		245		14,191		15,839		537		—		35,540
20		11,567		12,905		94,598		64,937		2,683		—		186,690
23		—		—		—		165		—		—		165
25		18,251		42,127		175,427		178,523		2,343		—		416,671
30		3,162		4,722		16,078		8,326		21		—		32,309
40		381		4,085		11,454		10,368		124		—		26,412
50		—		—		—		—		—		—		—
60		—		—		—		—		—		—		—

Total	$	41,583	$	64,084	$	311,748	$	278,451	$	6,265	$	—	$	702,131

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

There were no purchased non-covered loans as of June 30, 2013.

The following table presents the covered loan portfolio by risk grade as of June 30, 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		—		2		822		629		—		—		1,453
20		1,133		5,524		33,050		17,143		68		—		56,918
23		124		555		15,528		5,557		—		—		21,764
25		6,569		9,251		94,504		36,507		40		—		146,871
30		4,398		4,802		9,959		8,326		2		—		27,487
40		12,985		11,466		34,780		17,356		170		—		76,757
50		—		—		—		—		—		—		—
60		—		—		—		—		—		—		—

Total	$	25,209	$	31,600	$	188,643	$	85,518	$	280	$	—	$	331,250

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 June 30, 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		—		27		1,571		634		—		—		2,232
20		2,815		10,533		36,360		25,277		231		—		75,216
23		69		1,666		11,323		2,671		—		—		15,729
25		8,469		11,574		118,867		41,408		348		—		180,666
30		1,999		3,505		26,144		9,175		25		—		40,848
40		14,019		25,667		60,837		27,942		361		—		128,826
50		—		—		—		—		—		—		—
60		—		—		—		—		—		—		—

Total	$	27,371	$	52,972	$	255,102	$	107,107	$	965	$	—	$	443,517

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 a 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 on 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 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 that 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 six months of 2014 and 2013 totaling $8.4 million and $20.7 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 June 30, 2014, December 31, 2013 and June 30, 2013, the Company had a balance of $21.1 million, $20.9 million and $20.6 million, respectively, in troubled debt restructurings, excluding purchased non-covered and covered loans. The Company has recorded $3.0 million, $2.1 million and $2.0 million in previous charge-offs on such loans at June 30, 2014, December 31, 2013 and June 30, 2013, respectively. The Company’s balance in the allowance for loan losses allocated to such troubled debt restructurings was $398,000, $432,000 and $482,000 at June 30, 2014, December 31, 2013 and June 30, 2013, respectively. At June 30, 2014, the Company did not have any commitments to lend additional funds to debtors whose terms have been modified in troubled restructurings. Troubled debt restructurings with an outstanding balance of $130,218 at December 31, 2013 defaulted during the first six months of 2014 and these defaults did not have a material impact on the Company’s allowance for loan loss.

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 June 30, 2014, December 31, 2013 and June 30, 2013:


As of June 30, 2014	Accruing Loans				Non-Accruing Loans
Loan class:	#		Balance *(in thousands)*		#		Balance *(in thousands)*
Commercial, financial & agricultural		3	$	257		3	$	465
Real estate – construction & development		12		2,080		2		32
Real estate – commercial & farmland		19		7,590		4		2,151
Real estate – residential		38		7,335		8		1,044
Consumer installment		14		75		5		51

Total		86	$	17,337		22	$	3,743


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 June 30, 2013	Accruing Loans				Non-Accruing Loans
Loan class:	#		Balance *(in thousands)*		#		Balance *(in thousands)*
Commercial, financial & agricultural		7	$	1,059		—	$	—
Real estate – construction & development		7		1,946		1		29
Real estate – commercial & farmland		16		7,529		2		1,493
Real estate – residential		30		7,468		6		1,046
Consumer installment		1		13		—		—

Total		61	$	18,015		9	$	2,568

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 (defined as 30 days past due) under restructured terms at June 30, 2014, December 31, 2013 and June 30, 2013:


As of June 30, 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		5	$	272		1	$	449
Real estate – construction & development		10		2,042		4		69
Real estate – commercial & farmland		20		7,895		3		1,846
Real estate – residential		34		6,582		12		1,798
Consumer installment		14		92		5		35

Total		83	$	16,883		25	$	4,197


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 June 30, 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		7	$	1,059		—	$	—
Real estate – construction & development		7		1,946		1		29
Real estate – commercial & farmland		16		7,529		2		1,493
Real estate – residential		31		7,788		5		726
Consumer installment		1		13		—		—

Total		62	$	18,335		8	$	2,248

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 June 30, 2014, December 31, 2013 and June 30, 2013:


As of June 30, 2014	Accruing Loans				Non-Accruing Loans
Type of concession:	#		Balance *(in thousands)*		#		Balance *(in thousands)*
Forbearance of interest		12	$	2,145		—	$	—
Forgiveness of principal		5		2,448		—		—
Rate reduction only		14		6,842		5		1,176
Rate reduction, forbearance of interest		38		3,204		14		2,522
Rate reduction, forbearance of principal		17		2,698		2		16
Rate reduction, payment modification		—		—		1		29

Total		86	$	17,337		22	$	3,743


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 June 30, 2013	Accruing Loans				Non-Accruing Loans
Type of concession:	#		Balance *(in thousands)*		#		Balance *(in thousands)*
Forbearance of interest		9	$	2,168		2	$	105
Forgiveness of principal		3		1,493		1		145
Payment modification only		2		373		—		—
Rate reduction only		12		6,924		2		496
Rate reduction, forbearance of interest		18		4,724		1		222
Rate reduction, forbearance of principal		17		2,333		2		1,571
Rate reduction, payment modification		—		—		1		29

Total		61	$	18,015		9	$	2,568

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 June 30, 2014, December 31, 2013 and June 30, 2013:


As of June 30, 2014	Accruing Loans				Non-Accruing Loans
Collateral type:	#		Balance *(in thousands)*		#		Balance *(in thousands)*
Warehouse		4	$	1,385		2	$	469
Raw land		5		1,279		1		29
Agricultural land		2		374		—		—
Hotel & motel		3		2,101		—		—
Office		4		1,644		—		—
Retail, including strip centers		5		1,722		2		1,682
1-4 family residential		46		8,144		10		1,063
Church		1		364		—		—
Automobile/equipment/inventory		15		84		7		500
Unsecured		1		240		—		—

Total		86	$	17,337		22	$	3,743


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


As of June 30, 2013	Accruing Loans				Non-Accruing Loans
Collateral type:	#		Balance *(in thousands)*		#		Balance *(in thousands)*
Warehouse		2	$	345		2	$	1,493
Raw land		3		1,354		1		29
Agricultural land		1		66		—		—
Hotel & motel		3		2,233		—		—
Office		4		2,085		—		—
Retail, including strip centers		6		2,800		—		—
1-4 family residential		34		8,061		6		1,046
Life insurance policy		1		249		—		—
Automobile/equipment/inventory		5		522		—		—
Unsecured		2		300		—		—

Total		61	$	18,015		9	$	2,568

As of June 30, 2014 and December 31, 2013, the Company did not have any troubled debt restructurings included in purchased non-covered loans.

As of June 30, 2014, December 31, 2013 and June 30, 2013, the Company had a balance of $9.8 million, $9.1 million and $10.4 million, respectively, in troubled debt restructurings included in covered loans. The Company has recorded $42,000, $64,000 and $36,000 in previous charge-offs on such loans at June 30, 2014, December 31, 2013 and June 30, 2013, respectively. At June 30, 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 of covered loans, classified separately as accrual and non-accrual at June 30, 2014, December 31, 2013 and June 30, 2013:


As of June 30, 2014	Accruing Loans				Non-Accruing Loans
Loan class:	#		Balance (in thousands)		#		Balance (in thousands)
Commercial, financial & agricultural		—	$	—		1	$	24
Real estate – construction & development		—		—		1		14
Real estate – commercial & farmland		5		1,066		2		152
Real estate – residential		82		8,155		7		403
Consumer installment		—		—		1		4

Total		87	$	9,221		12	$	597


As of December 31, 2013	Accruing Loans				Non-Accruing Loans
Loan class:	#		Balance (in thousands)		#		Balance (in thousands)
Commercial, financial & agricultural		—	$	—		2	$	67
Real estate – construction & development		—		—		1		16
Real estate – commercial & farmland		4		579		1		134
Real estate – residential		72		7,830		6		464
Consumer installment		—		—		1		5

Total		76	$	8,409		11	$	686

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