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, 2015

¨	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 32,184,976 shares of Common Stock outstanding as of April 30, 2015.

AMERIS BANCORP

TABLE OF CONTENTS


		Page
PART I - FINANCIAL INFORMATION

Item 1.	Financial Statements

	Consolidated Balance Sheets at March 31, 2015, December 31, 2014 and March 31, 2014		3

	Consolidated Statements of Earnings and Comprehensive Income for the Three Months Ended March 31, 2015 and 2014		4

	Consolidated Statements of Changes in Stockholders’ Equity for the Three Months Ended March 31, 2015 and 2014		5

	Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2015 and 2014		6

	Notes to Consolidated Financial Statements		8

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		50

Item 3.	Quantitative and Qualitative Disclosures About Market Risk		75

Item 4.	Controls and Procedures		75

PART II – OTHER INFORMATION

Item 1.	Legal Proceedings		76

Item 1A.	Risk Factors		76

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		76

Item 3.	Defaults Upon Senior Securities		76

Item 4.	Mine Safety Disclosures		76

Item 5.	Other Information		76

Item 6.	Exhibits		76

Signatures			76

Item 1.

Financial Statements

AMERIS BANCORP AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(dollars in thousands, except per share data)


	March 31, 2015			December 31, 2014			March 31, 2014
	(Unaudited)			(Audited)			(Unaudited)
Assets
Cash and due from banks	$	80,142		$	78,036		$	71,387
Federal funds sold and interest-bearing accounts		126,157			92,323			48,677
Investment securities available for sale, at fair value		610,330			541,805			456,713
Other investments		8,636			10,275			9,322
Mortgage loans held for sale, at fair value		73,796			94,759			51,693

Loans, net of unearned income		1,999,420			1,889,881			1,695,382
Purchased loans not covered by FDIC loss-share agreements (“purchased non-covered loans”)		643,092			674,239			437,269
Purchased loans covered by FDIC loss-share agreements (“covered loans”)		245,745			271,279			372,694
Less: allowance for loan losses		(21,852	)		(21,157	)		(22,744	)

Loans, net		2,866,405			2,814,242			2,482,601

Other real estate owned		32,339			33,160			33,839
Purchased, non-covered other real estate owned, net		13,818			15,585			3,864
Covered other real estate owned, net		16,089			19,907			42,636

Total other real estate owned, net		62,246			68,652			80,339

Premises and equipment, net		98,292			97,251			87,430
FDIC loss-share receivable		23,312			31,351			53,181
Other intangible assets, net		7,591			8,221			5,477
Goodwill		63,547			63,547			35,049
Cash value of bank owned life insurance		59,212			58,867			49,738
Other assets		73,238			77,748			56,377

Total assets	$	4,152,904		$	4,037,077		$	3,487,984

Liabilities and Stockholders’ Equity
Liabilities
Deposits:
Noninterest-bearing	$	967,015		$	839,377		$	698,866
Interest-bearing		2,513,216			2,591,772			2,311,781

Total deposits		3,480,231			3,431,149			3,010,647
Securities sold under agreements to repurchase		55,520			73,310			49,974
Other borrowings		43,851			78,881			59,677
Other liabilities		17,952			22,384			12,028
Subordinated deferrable interest debentures		65,567			65,325			55,628

Total liabilities		3,663,121			3,671,049			3,187,954

Stockholders’ Equity
Preferred stock, stated value $1,000; 5,000,000 shares authorized; 0 shares issued and outstanding		—			—			—
Common stock, par value $1; 100,000,000 shares authorized; 33,592,585; 28,159,027 and 26,535,571 shares issued		33,593			28,159			26,536
Capital surplus		335,578			225,015			190,513
Retained earnings		126,566			118,412			92,055
Accumulated other comprehensive income		6,353			6,098			2,374
Treasury stock, at cost, 1,410,442; 1,385,164 and 1,376,498 shares		(12,307	)		(11,656	)		(11,448	)

Total stockholders’ equity		489,783			366,028			300,030

Total liabilities and stockholders’ equity	$	4,152,904		$	4,037,077		$	3,487,984

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,
	2015			2014
Interest income
Interest and fees on loans	$	38,618		$	34,469
Interest on taxable securities		3,153			2,985
Interest on nontaxable securities		469			335
Interest on deposits in other banks and federal funds sold		128			84

Total interest income		42,368			37,873

Interest expense
Interest on deposits		2,280			2,183
Interest on other borrowings		1,256			1,206

Total interest expense		3,536			3,389

Net interest income		38,832			34,484
Provision for loan losses		1,069			1,726

Net interest income after provision for loan losses		37,763			32,758

Noninterest income
Service charges on deposit accounts		6,429			5,586
Mortgage banking activity		8,083			5,068
Other service charges, commissions and fees		668			652
Gain on sale of securities		12			6
Other noninterest income		2,383			1,442

Total noninterest income		17,575			12,754

Noninterest expense
Salaries and employee benefits		20,632			17,394
Occupancy and equipment expense		4,554			4,064
Advertising and marketing expense		641			710
Amortization of intangible assets		630			533
Data processing and communications costs		4,260			3,454
Credit resolution related expenses		3,161			2,190
Merger and conversion charges		15			450
Other noninterest expenses		6,934			4,444

Total noninterest expense		40,827			33,239

Income before income tax expense		14,511			12,273
Income tax expense		4,747			3,923

Net income		9,764			8,350

Less preferred stock dividends and discount accretion		—			286

Net income available to common stockholders		9,764			8,064

Other comprehensive income (loss)
Unrealized holding gains arising during period on investment securities available for sale, net of tax of $350 and $1,582		650			2,938
Reclassification adjustment for gains included in earnings, net of tax of $4 and $2		(8	)		(4	)
Unrealized loss on cash flow hedges arising during period , net of tax of $208 and $143		(387	)		(266	)

Other comprehensive income		255			2,668

Total comprehensive income		10,019			11,018

Basic and diluted earnings per common share	$	0.32		$	0.32

Dividends declared per common share	$	0.05		$	—

Weighted average common shares outstanding
Basic		30,443			25,144
Diluted		30,796			25,573

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, 2015						March 31, 2014
	Shares			Amount			Shares			Amount
PREFERRED STOCK
Balance at beginning of period		—		$	—			28,000		$	28,000
Repurchase of preferred stock		—			—			(28,000	)		(28,000	)

*Balance at end of period*		—		$	—			—		$	—

COMMON STOCK
Balance at beginning of period		28,159,027		$	28,159			26,461,769		$	26,462
Issuance of common shares		5,320,000			5,320			—			—
Issuance of restricted shares		71,000			71			68,047			68
Proceeds from exercise of stock options		42,558			43			5,755			6

*Balance at end of period*		33,592,585		$	33,593			26,535,571		$	26,536

CAPITAL SURPLUS
Balance at beginning of period				$	225,015					$	189,722
Stock-based compensation					380						795
Issuance of common shares, net of issuance costs of $4,811					109,569						(68	)
Issuance of restricted shares					(71	)					(68	)
Proceeds from exercise of stock options					685						64

*Balance at end of period*				$	335,578					$	190,513

RETAINED EARNINGS
Balance at beginning of period				$	118,412					$	83,991
Net income					9,764						8,350
Dividends on preferred shares					—						(286	)
Dividends on common shares					(1,610	)					—

*Balance at end of period*				$	126,566					$	92,055

ACCUMULATED OTHER COMPREHENSIVE INCOME, NET OF TAX
Unrealized gains on securities and derivatives:
Balance at beginning of period				$	6,098					$	(294	)
Other comprehensive income during the period					255						2,668

*Balance at end of period*				$	6,353					$	2,374

TREASURY STOCK
Balance at beginning of period		(1,385,164	)	$	(11,656	)		(1,363,342	)	$	(11,182	)
Purchase of treasury shares		(25,278	)		(651	)		(13,156	)		(266	)

*Balance at end of period*		(1,410,442	)	$	(12,307	)		(1,376,498	)	$	(11,448	)

*TOTAL STOCKHOLDERS’ EQUITY*				$	489,783					$	300,030

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,
	2015			2014
Cash flows from operating activities:
Net income	$	9,764		$	8,350
Adjustments reconciling net income to net cash provided by operating activities:
Depreciation		1,938			1,871
Amortization of intangible assets		630			532
Net amortization of investment securities available for sale		1,158			808
Net gains on securities available for sale		(12	)		(6	)
Stock based compensation expense		380			795
Net (gains) losses on sale or disposal of premises and equipment		89			(18	)
Net write-downs and losses on sale of other real estate owned		1,834			921
Provision for loan losses		1,069			1,726
Accretion of discount on covered loans		(4,466	)		(9,767	)
Accretion of discount on purchased non-covered loans		(3,111	)		(1,023	)
Changes in FDIC loss-share receivable, net of cash payments received		3,899			5,487
Increase in cash surrender value of BOLI		(345	)		(306	)
Originations of mortgage loans held for sale		(186,332	)		(131,959	)
Proceeds from sales of mortgage loans held for sale		195,554			139,503
Originations of SBA loans		(17,185	)		(8,039	)
Proceeds from sales of SBA loans		8,163			1,057
Net gains on sale of SBA loans		(909	)		(134	)
Change attributable to other operating activities		170			2,795

Net cash provided by operating activities		12,288			12,593

Cash flows from investing activities:
Net decrease (increase) in federal funds sold and interest-bearing deposits		(33,834	)		156,307
Purchase of securities available for sale		(89,811	)		(46,690	)
Proceeds from maturities of securities available for sale		16,022			11,026
Proceeds from sales of securities available for sale		5,118			68,899
Decrease in restricted equity securities, net		1,639			7,506
Net increase in loans, excluding purchased non-covered and covered loans		(90,716	)		(61,369	)
Payments received on purchased non-covered loans		32,920			12,439
Payments received on covered loans		25,958			18,070
Purchases of premises and equipment		(2,999	)		(464	)
Proceeds from sales of premises and equipment		173			55
Proceeds from sales of other real estate owned		9,340			8,932
Payments received from FDIC under loss-share agreements		6,390			6,773

Net cash provided by (used in) investing activities		(119,800	)		181,484

Cash flows from financing activities:
Net increase in deposits		49,082			11,416
Net decrease in securities sold under agreements to repurchase		(17,790	)		(33,542	)
Proceeds from other borrowings		—			29,963
Repayment of other borrowings		(35,030	)		(165,000	)
Redemption of preferred stock		—			(28,000	)
Dividends paid - preferred stock		—			(286	)
Dividends paid - common		(1,610	)		—
Purchase of treasury shares		(651	)		(266	)
Issuance of common stock		114,889			—
Proceeds from exercise of stock options		728			70

Net cash provided by (used in) financing activities		109,618			(185,645	)


	Three Months Ended March 31,
	2015			2014
Net increase in cash and due from banks		2,106			8,432
Cash and due from banks at beginning of period		78,036			62,955

Cash and due from banks at end of period	$	80,142		$	71,387

SUPPLEMENTAL DISCLOSURES OF NON-CASH INFORMATION
Cash paid during the period for:
Interest	$	3,741		$	3,463
Income taxes	$	215		$	—
Loans (excluding purchased non-covered and covered loans) transferred to other real estate owned	$	2,444		$	2,554
Purchased non-covered loans transferred to other real estate owned	$	1,094		$	68
Covered loans transferred to other real estate owned	$	1,230		$	4,925
Loans provided for the sales of other real estate owned	$	1,573		$	333
Change in unrealized gain on securities available for sale	$	642		$	2,934
Change in unrealized loss on cash flow hedge (interest rate swap)	$	(387	)	$	(266	)

See notes to unaudited consolidated financial statements

AMERIS BANCORP AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2015

(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, 2015 the Bank operated 73 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 (consisting of normal recurring accruals) 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, 2015 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, 2014.

Newly Adopted Accounting Pronouncements

ASU 2015-03 – Interest – Imputation of Interest (“ASU 2015-03”). ASU 2015-03 simplifies presentation of debt issuance costs by requiring that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of the debt liability, consistent with debt discounts. ASU 2015-03 is effective for annual periods and interim periods within those annual periods beginning after December 15, 2015, and early adoption is permitted. It should be applied on a retrospective basis. The Company is currently evaluating the impact this standard will have on the Company’s results of operations, financial position or disclosures.

ASU 2015-02 “Consolidation (Topic 810) - Amendments to the Consolidation Analysis.” ASU 2015-02 includes amendments that are intended to improve targeted areas of consolidation for legal entities including reducing the number of consolidation models from four to two and simplifying the FASB Accounting Standards Codification. ASU 2015-02 is effective for annual and interim periods within those annual periods, beginning after December 15, 2015. The amendments may be applied retrospectively in previously issued financial statements for one or more years with a cumulative effect adjustment to retained earnings as of the beginning of the first year restated. Early adoption is permitted, including adoption in an interim period. The Company is currently evaluating the impact this standard will have on the Company’s results of operations, financial position or disclosures.

ASU 2015-01- Income Statement – Extraordinary and Unusual Items (“ASU 2015-01”). ASU 2015-01 eliminates the concept of extraordinary items by no longer allowing companies to segregate an extraordinary item from the results of operations, separately present an extraordinary item on the income statement, or disclose income taxes or earnings-per-share data applicable to an extraordinary item. ASU 2015-01 is effective for annual periods and interim periods within those annual periods beginning after December 15, 2015, and early adoption is permitted. The adoption of this standard is not expected to have a material effect on the Company’s results of operations, financial position or disclosures.

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.

NOTE 2 – PENDING MERGER AND ACQUISITIONS

On January 28, 2015, the Company entered into a Stock Purchase Agreement (the “Purchase Agreement”) with Merchants & Southern Banks of Florida, Incorporated, a Florida corporation (“Merchants”), and Dennis R. O’Neil, the sole shareholder of Merchants. Merchants and Southern Bank is a wholly owned banking subsidiary of Merchants that has a total of thirteen banking locations in Alachua, Marion and Clay Counties, Florida. Pursuant to the terms of the Purchase Agreement, the Company will purchase all of the issued and outstanding shares of common stock of Merchants for a total purchase price of $50,000,000. As of December 31, 2014, Merchants reported assets of $473 million, gross loans of $214 million and deposits of $336 million. The purchase price will be allocated among the net assets of Merchants acquired as appropriate, with the remaining balance being reported as goodwill. Consummation of the acquisition is subject to customary conditions. The Company has received regulatory approval and expects to close the transaction on May 22, 2015.

On January 28, 2015, the Bank entered into a Purchase and Assumption Agreement (the “P&A Agreement”) with Bank of America, National Association pursuant to which the Bank has agreed to purchase, subject to the terms and conditions set forth in the P&A Agreement, eighteen branches of Bank of America, National Association located in Calhoun, Columbia, Dixie, Hamilton, Suwanee and Walton Counties, Florida and Ben Hill, Colquitt, Dougherty, Laurens, Liberty, Thomas, Tift and Ware Counties, Georgia. The Bank will assume an estimated $864 million of deposits at a deposit premium of 3.00 percent based on deposit balances near the time the transaction closes and is expected to record a core deposit intangible asset related to the deposits. The Bank will also acquire an immaterial amount of performing loans and premise and equipment as part of the transaction. Consummation of the acquisition is subject to customary conditions. The Company has received regulatory approvals and expects to close the transaction on June 12, 2015.

NOTE 3 – 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 (“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 1,598,998 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. During the third quarter of 2014, management revised its initial estimates regarding the valuation of other real estate owned. In addition, during the third and fourth quarters of 2014, management continued its assessment and recorded 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 also reflects 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 applicable limitations under Sections 382 of the Internal Revenue Code of 1986, as amended. Management continues to evaluate fair value adjustments related to deferred tax assets, pending the filing of the final tax return for Coastal.

The following table presents the assets acquired and liabilities of Coastal assumed as of June 30, 2014 and their fair value estimates:


(Dollars in Thousands)	As Recorded by Coastal			Initial Fair Value Adjustments			Subsequent 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)		(2,600	)(g)		8,864
Premises and equipment		11,882			—			—			11,882
Intangible assets		507			4,266	(e)		(231	)(h)		4,542
Cash value of bank owned life insurance		7,812			—			—			7,812
Other assets		14,898			—			(752	)(i)		14,146

Total assets	$	438,361		$	(13,244	)	$	(3,583	)	$	421,534

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	)		(3,583	)		9,833
Goodwill		—			23,854			3,583			27,437

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

Consideration:
Ameris Bancorp common shares issued		1,598,998
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.

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

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

(i)	Adjustment reflects the deferred taxes on the difference in the carrying values of acquired assets and assumed liabilities for financial reporting purposes and their basis for federal income tax purposes.

Goodwill of $27.4 million, which is the excess of the merger consideration over the fair value of net assets acquired, was recorded in the Coastal acquisition and is the result of expected operational synergies and other factors. This goodwill is not expected to be deductible for tax purposes.

The results of operations of Coastal subsequent to the acquisition date are included in the Company’s consolidated statements of operations. The following unaudited pro forma information reflects the Company’s estimated consolidated results of operations as if the acquisition had occurred on January 1, 2014, unadjusted for potential cost savings (in thousands).


	Three Months Ended March 31, 2014
Net interest income and noninterest income	$	52,590
Net income	$	9,052
Net income available to common stockholders	$	8,766
Income per common share available to common stockholders – basic	$	0.33
Income per common share available to common stockholders – diluted	$	0.32
Average number of shares outstanding, basic		26,743
Average number of shares outstanding, diluted		27,172

In the acquisition, the Company purchased $279.4 million of loans at fair value, net of $16.7 million, or 5.64%, estimated discount to the outstanding principal balance. Of the total loans acquired, management identified $29.3 million that were considered to be credit impaired and are accounted for under ASC Topic 310-30. The table below summarizes the total contractually required principal and interest cash payment, management’s estimate of expected total cash payments and fair value of the loans as of acquisition date for purchased credit impaired loans. Contractually required principal and interest payment have been adjusted for estimated prepayments.


Contractually required principal and interest	$	38,194
Non-accretable difference		(5,632	)

Cash flows expected to be collected		32,562
Accretable yield		(3,282	)

Total purchased credit-impaired loans acquired	$	29,280

A rollforward of purchased non-covered loans for the three months ended March 31, 2015, the year ended December 31, 2014 and the three months ended March 31, 2014 is shown below:


(Dollars in Thousands)	March 31, 2015			December 31, 2014			March 31, 2014
Balance, January 1	$	674,239		$	448,753		$	448,753
Charge-offs, net of recoveries		(244	)		(84	)		—
Additions due to acquisitions		—			279,441			—
Accretion		3,111			9,745			1,023
Transfers to purchased non-covered other real estate owned		(1,094	)		(4,160	)		(68	)
Transfer from covered loans due to loss-share expiration		—			15,475			—
Payments received		(32,920	)		(74,931	)		(12,439	)

Ending balance	$	643,092		$	674,239		$	437,269

The following is a summary of changes in the accretable discounts of purchased non-covered loans during the three months ended March 31, 2015, the year ended December 31, 2014 and the three months ended March 31, 2014:


(Dollars in Thousands)	March 31, 2015			December 31, 2014			March 31, 2014
Balance, January 1	$	25,716		$	26,189		$	26,189
Additions due to acquisitions		—			7,799			—
Accretion		(3,111	)		(9,745	)		(1,023	)
Transfers between non-accretable and accretable discounts, net		(2,376	)		1,473			2,680

Ending balance	$	20,229		$	25,716		$	27,846

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, 2015, December 31, 2014 and March 31, 2014 are presented below:


	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
	(Dollars in Thousands)
March 31, 2015:
U.S. government agencies	$	14,954	$	72	$	(42	)	$	14,984
State, county and municipal securities		154,499		4,800		(235	)		159,064
Corporate debt securities		10,794		193		(52	)		10,935
Mortgage-backed securities		420,497		6,185		(1,335	)		425,347

Total debt securities	$	600,744	$	11,250	$	(1,664	)	$	610,330

December 31, 2014:
U.S. government agencies	$	14,953	$	—	$	(275	)	$	14,678
State, county and municipal securities		137,873		3,935		(433	)		141,375
Corporate debt securities		10,812		228		—			11,040
Mortgage-backed securities		369,581		6,534		(1,403	)		374,712

Total debt securities	$	533,219	$	10,697	$	(2,111	)	$	541,805

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

The amortized cost and fair value of available-for-sale securities at March 31, 2015 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 shown separately in the following maturity summary.


	Amortized Cost		Fair Value
	(Dollars in Thousands)
Due in one year or less	$	8,588	$	8,667
Due from one year to five years		42,345		43,706
Due from five to ten years		60,795		62,690
Due after ten years		68,519		69,920
Mortgage-backed securities		420,497		425,347

	$	600,744	$	610,330

Securities with a carrying value of approximately $426.6 million serve as collateral to secure public deposits and for other purposes required or permitted by law at March 31, 2015, compared to $286.6 million and $295.7 million at December 31, 2014 and March 31, 2014, respectively.

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, 2015, December 31, 2014 and March 31, 2014.


	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, 2015:
U.S. government agencies	$	—	$	—		$	4,958	$	(42	)	$	4,958	$	(42	)
State, county and municipal securities		4,675		(34	)		10,579		(201	)		15,254		(235	)
Corporate debt securities		5,007		(52	)		—		—			5,007		(52	)
Mortgage-backed securities		46,361		(378	)		31,483		(957	)		77,844		(1,335	)

Total debt securities	$	56,043	$	(464	)	$	47,020	$	(1,200	)	$	103,063	$	(1,664	)

December 31, 2014:
U.S. government agencies	$	—	$	—		$	14,678	$	(275	)	$	14,678	$	(275	)
State, county and municipal securities		15,038		(70	)		19,665		(363	)		34,703		(433	)
Corporate debt securities		—		—			—		—			—		—
Mortgage-backed securities		36,760		(221	)		46,812		(1,182	)		83,572		(1,403	)

Total debt securities	$	51,798	$	(291	)	$	81,155	$	(1,820	)	$	132,953	$	(2,111	)

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	)

As of March 31, 2015, the Company’s security portfolio consisted of 346 securities, 48 of which were in an unrealized loss position. The majority of unrealized losses are related to the Company’s mortgage-backed and state, county and municipal securities, as discussed below.

At March 31, 2015, the Company held 35 mortgage-backed securities that were in an unrealized loss position, all of which were issued by U.S. government-sponsored entities and agencies. Because the decline in fair value is attributable to changes in interest rates and illiquidity, and not credit quality, and because the Company does not have the intent to sell these mortgage-backed securities and it is likely that it will not be required to sell the securities before their anticipated recovery, the Company does not consider these securities to be other-than-temporarily impaired at March 31, 2015.

At March 31, 2015, the Company held 11 state, county and municipal securities, one U.S. government-sponsored agency security, and one corporate security that were in an unrealized loss position. Because the decline in fair value is attributable to changes in interest rates, and not credit quality, and because the Company does not have the intent to sell these securities and it is likely that it will not be required to sell the securities before their anticipated recovery, the Company does not consider these securities to be other-than-temporarily impaired at March 31, 2015.

During the first three months of 2015 and 2014, the Company received timely and current interest and principal payments on all of the securities classified as corporate debt securities, except for one security that began deferring interest during the fourth quarter of 2010. The Company’s investments in subordinated debt include investments in regional and super-regional banks on which the Company prepares regular analysis through review of financial information and credit ratings. Investments in preferred securities are also concentrated in the preferred obligations of regional and super-regional banks through non-pooled investment structures. The Company did not have investments in “pooled” trust preferred securities at March 31, 2015, December 31, 2014 or March 31, 2014.

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 conditions 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 March 31, 2015, 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 March 31, 2015, these investments are not considered impaired on an other-than-temporary basis.

At March 31, 2015, December 31, 2014 and March 31, 2014, 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 three months ended March 31, 2015, year ended December 31, 2014 and three months ended March 31, 2014:


	March 31, 2015			December 31, 2014			March 31, 2014
	(Dollars in Thousands)
Gross gains on sales of securities	$	31		$	141		$	8
Gross losses on sales of securities		(19	)		(3	)		(2	)

Net realized gains on sales of securities available for sale	$	12		$	138		$	6

Sales proceeds	$	5,118		$	94,051		$	68,899

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 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, 2015		December 31, 2014		March 31, 2014
Commercial, financial and agricultural	$	334,917	$	319,654	$	270,571
Real estate – construction and development		178,568		161,507		149,543
Real estate – commercial and farmland		947,274		907,524		836,230
Real estate – residential		496,043		456,106		393,001
Consumer installment		29,113		30,782		32,345
Other		13,505		14,308		13,692

	$	1,999,420	$	1,889,881	$	1,695,382

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 Federal Deposit Insurance Corporation (“FDIC”). Purchased non-covered loans totaling $643.1 million, $674.2 million and $437.3 million at March 31, 2015, December 31, 2014 and March 31, 2014, 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, 2015		December 31, 2014		March 31, 2014
Commercial, financial and agricultural	$	36,258	$	38,041	$	30,810
Real estate – construction and development		53,668		58,362		31,820
Real estate – commercial and farmland		291,760		306,706		174,281
Real estate – residential		257,216		266,342		196,078
Consumer installment		4,190		4,788		4,280

	$	643,092	$	674,239	$	437,269

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 $245.7 million, $271.3 million and $372.7 million at March 31, 2015, December 31, 2014 and March 31, 2014, 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, 2015		December 31, 2014		March 31, 2014
Commercial, financial and agricultural	$	20,905	$	21,467	$	24,813
Real estate – construction and development		19,519		23,447		41,434
Real estate – commercial and farmland		130,290		147,627		214,649
Real estate – residential		74,847		78,520		91,372
Consumer installment		184		218		426

	$	245,745	$	271,279	$	372,694

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, 2015		December 31, 2014		March 31, 2014
Commercial, financial and agricultural	$	1,015	$	1,672	$	3,008
Real estate – construction and development		3,286		3,774		4,080
Real estate – commercial and farmland		7,893		8,141		8,550
Real estate – residential		8,246		7,663		10,631
Consumer installment		401		478		460

	$	20,841	$	21,728	$	26,729

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


(Dollars in Thousands)	March 31, 2015		December 31, 2014		March 31, 2014
Commercial, financial and agricultural	$	198	$	175	$	117
Real estate – construction and development		785		1,119		1,131
Real estate – commercial and farmland		9,096		10,242		6,829
Real estate – residential		7,202		6,644		7,208
Consumer installment		27		69		33

	$	17,308	$	18,249	$	15,318

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


(Dollars in Thousands)	March 31, 2015		December 31, 2014		March 31, 2014
Commercial, financial and agricultural	$	8,404	$	8,541	$	10,025
Real estate – construction and development		6,262		7,601		14,780
Real estate – commercial and farmland		17,000		12,584		24,285
Real estate – residential		6,606		6,595		10,558
Consumer installment		87		91		133

	$	38,359	$	35,412	$	59,781

The following table presents an analysis of loans, excluding purchased non-covered and covered past due loans as of March 31, 2015, December 31, 2014 and March 31, 2014:


	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, 2015:
Commercial, financial & agricultural	$	1,258	$	2,821	$	984	$	5,063	$	329,854	$	334,917	$	—
Real estate – construction & development		404		240		3,205		3,849		174,719		178,568		—
Real estate – commercial & farmland		6,398		1,285		7,732		15,415		931,859		947,274		—
Real estate – residential		4,430		1,879		7,569		13,878		482,165		496,043		—
Consumer installment loans		367		136		256		759		28,354		29,113		—
Other		—		—		—		—		13,505		13,505		—

Total	$	12,857	$	6,361	$	19,746	$	38,964	$	1,960,456	$	1,999,420	$	—


	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, 2014:
Commercial, financial & agricultural	$	900	$	233	$	1,577	$	2,710	$	316,944	$	319,654	$	—
Real estate – construction & development		1,382		286		3,367		5,035		156,472		161,507		—
Real estate – commercial & farmland		2,859		635		7,668		11,162		896,362		907,524		—
Real estate – residential		3,953		2,334		6,755		13,042		443,064		456,106		—
Consumer installment loans		634		158		366		1,158		29,624		30,782		1
Other		—		—		—		—		14,308		14,308		—

Total	$	9,728	$	3,646	$	19,733	$	33,107	$	1,856,774	$	1,889,881	$	1


	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	$	—

The following table presents an analysis of purchased non-covered past due loans as of March 31, 2015, December 31, 2014 and March 31, 2014:


	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, 2015:
Commercial, financial & agricultural	$	216	$	—	$	85	$	301	$	35,957	$	36,258	$	—
Real estate – construction & development		393		17		766		1,176		52,492		53,668		—
Real estate – commercial & farmland		1,611		831		8,495		10,937		280,823		291,760		—
Real estate – residential		3,113		2,454		6,490		12,057		245,159		257,216		—
Consumer installment loans		100		—		19		119		4,071		4,190		—

Total	$	5,433	$	3,302	$	15,855	$	24,590	$	618,502	$	643,092	$	—


	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, 2014:
Commercial, financial & agricultural	$	461	$	90	$	175	$	726	$	37,315	$	38,041	$	—
Real estate – construction & development		790		1,735		1,117		3,642		54,720		58,362		—
Real estate – commercial & farmland		2,107		1,194		9,529		12,830		293,876		306,706		—
Real estate – residential		6,907		1,401		6,369		14,677		251,665		266,342		—
Consumer installment loans		82		—		65		147		4,641		4,788		—

Total	$	10,347	$	4,420	$	17,255	$	32,022	$	642,217	$	674,239	$	—


	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	$	—

The following table presents an analysis of covered past due loans as of March 31, 2015, December 31, 2014 and March 31, 2014:


	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, 2015:
Commercial, financial & agricultural	$	165	$	225	$	1,776	$	2,166	$	18,739	$	20,905	$	—
Real estate – construction & development		455		—		5,605		6,060		13,459		19,519		—
Real estate – commercial & farmland		2,364		1,150		11,063		14,577		115,713		130,290		—
Real estate – residential		2,293		1,019		4,999		8,310		66,536		74,847		—
Consumer installment loans		—		—		87		87		97		184		—

Total	$	5,277	$	2,394	$	23,530	$	31,201	$	214,544	$	245,745	$	—


	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, 2014:
Commercial, financial & agricultural	$	451	$	136	$	1,878	$	2,465	$	19,002	$	21,467	$	—
Real estate – construction & development		238		226		6,703		7,167		16,280		23,447		—
Real estate – commercial & farmland		4,371		1,486		7,711		13,568		134,059		147,627		714
Real estate – residential		3,464		962		5,656		10,082		68,438		78,520		—
Consumer installment loans		10		—		91		101		117		218		—

Total	$	8,534	$	2,810	$	22,039	$	33,383	$	237,896	$	271,279	$	714


	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

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, 2015		December 31, 2014		March 31, 2014
	(Dollars in Thousands)
Nonaccrual loans	$	20,841	$	21,728	$	26,729
Troubled debt restructurings not included above		12,935		12,759		18,848

Total impaired loans	$	33,776	$	34,487	$	45,577

Interest income recognized on impaired loans	$	168	$	1,991	$	246

Foregone interest income on impaired loans	$	109	$	155	$	246

The following table presents an analysis of information pertaining to impaired loans, excluding purchased non-covered and covered loans as of March 31, 2015, December 31, 2014 and March 31, 2014:


	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, 2015:
Commercial, financial & agricultural	$	2,378	$	5	$	1,287	$	1,292	$	240	$	1,627
Real estate – construction & development		7,397		274		3,801		4,075		667		4,264
Real estate – commercial & farmland		16,980		3,280		11,922		15,202		2,127		14,909
Real estate – residential		14,181		1,592		11,166		12,758		1,869		12,833
Consumer installment loans		548		—		449		449		6		491

Total	$	41,484	$	5,151	$	28,625	$	33,776	$	4,909	$	34,124


	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, 2014:
Commercial, financial & agricultural	$	3,387	$	6	$	1,956	$	1,962	$	395	$	3,021
Real estate – construction & development		8,325		448		4,005		4,453		771		5,368
Real estate – commercial & farmland		17,514		4,967		9,651		14,618		1,859		15,972
Real estate – residential		15,571		3,514		9,407		12,921		974		16,317
Consumer installment loans		618		—		533		533		9		519

Total	$	45,415	$	8,935	$	25,552	$	34,487	$	4,008	$	41,197


	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

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


	As of and For the Period Ended
	March 31, 2015		December 31, 2014		March 31, 2014
	(Dollars in Thousands)
Nonaccrual loans	$	17,308	$	18,249	$	15,318
Troubled debt restructurings not included above		1,526		1,212		5,191

Total impaired loans	$	18,834	$	19,461	$	20,509

Interest income recognized on impaired loans	$	18	$	360	$	74

Foregone interest income on impaired loans	$	21	$	237	$	563

The following table presents an analysis of information pertaining to impaired purchased non-covered loans as of March 31, 2015, December 31, 2014 and March 31, 2014:


	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, 2015:
Commercial, financial & agricultural	$	1,331	$	198	$	—	$	198	$	—	$	187
Real estate – construction & development		2,153		1,113		—		1,113		—		1,275
Real estate – commercial & farmland		13,911		9,816		—		9,816		—		10,202
Real estate – residential		12,183		7,679		—		7,679		—		7,435
Consumer installment loans		38		28		—		28		—		50

Total	$	29,616	$	18,834	$	—	$	18,834	$	—	$	19,148


	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, 2014:
Commercial, financial & agricultural	$	1,366	$	175	$	—	$	175	$	—	$	165
Real estate – construction & development		5,161		1,436		—		1,436		—		1,643
Real estate – commercial & farmland		15,007		10,588		—		10,588		—		7,484
Real estate – residential		12,283		7,191		—		7,191		—		7,084
Consumer installment loans		172		71		—		71		—		68

Total	$	33,989	$	19,461	$	—	$	19,461	$	—	$	16,444


	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

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


	As of and For the Period Ended
	March 31, 2015		December 31, 2014		March 31, 2014
	(Dollars in Thousands)
Nonaccrual loans	$	38,359	$	35,412	$	59,781
Troubled debt restructurings not included above		20,721		22,619		22,775

Total impaired loans	$	59,080	$	58,031	$	82,556

Interest income recognized on impaired loans	$	220	$	2,057	$	387

Foregone interest income on impaired loans	$	130	$	109	$	10

The following table presents an analysis of information pertaining to impaired covered loans as of March 31, 2015, December 31, 2014 and March 31, 2014:


	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, 2015:
Commercial, financial & agricultural	$	13,512	$	8,407	$	—	$	8,407	$	—	$	8,495
Real estate – construction & development		24,503		9,080		—		9,080		—		9,859
Real estate – commercial & farmland		35,493		23,462		—		23,462		—		22,062
Real estate – residential		23,585		18,042		—		18,042		—		18,048
Consumer installment loans		119		89		—		89		—		92

Total	$	97,212	$	59,080	$	—	$	59,080	$	—	$	58,556


	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, 2014:
Commercial, financial & agricultural	$	14,385	$	8,582	$	—	$	8,582	$	—	$	9,777
Real estate – construction & development		27,289		10,638		—		10,638		—		14,132
Real estate – commercial & farmland		31,309		20,663		—		20,663		—		28,594
Real estate – residential		22,860		18,054		—		18,054		—		21,091
Consumer installment loans		124		94		—		94		—		163

Total	$	95,967	$	58,031	$	—	$	58,031	$	—	$	73,757


	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	$	16,020	$	10,039	$	—	$	10,039	$	—	$	8,655
Real estate – construction & development		50,876		18,034		—		18,034		—		18,036
Real estate – commercial & farmland		66,557		31,746		—		31,746		—		36,247
Real estate – residential		30,824		22,604		—		22,604		—		23,801
Consumer installment loans		190		133		—		133		—		237

Total	$	164,467	$	82,556	$	—	$	82,556	$	—	$	86,976

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, 2015:


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	$	147,820	$	1,751	$	152	$	1,727	$	6,011	$	—	$	157,461
15		24,619		3,504		119,032		57,583		1,191		—		205,929
20		90,407		47,148		541,490		303,463		16,720		13,505		1,012,733
23		981		8,521		11,934		7,141		66		—		28,643
25		60,018		110,570		238,026		100,175		4,222		—		513,011
30		3,911		1,890		11,364		8,007		289		—		25,461
40		7,161		5,184		25,276		17,947		610		—		56,178
50		—		—		—		—		4		—		4
60		—		—		—		—		—		—		—

Total	$	334,917	$	178,568	$	947,274	$	496,043	$	29,113	$	13,505	$	1,999,420

The following table presents the loan portfolio, excluding purchased non-covered and covered loans, by risk grade as of December 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	$	121,355	$	268	$	155	$	226	$	6,573	$	—	$	128,577
15		25,318		4,010		128,170		59,301		1,005		—		217,804
20		100,599		47,541		511,198		256,758		17,544		14,308		947,948
23		56		8,933		10,507		9,672		37		—		29,205
25		62,519		93,514		224,464		102,998		4,692		—		488,187
30		3,758		1,474		13,035		7,459		257		—		25,983
40		6,049		5,767		19,995		19,692		673		—		52,176
50		—		—		—		—		1		—		1
60		—		—		—		—		—		—		—

Total	$	319,654	$	161,507	$	907,524	$	456,106	$	30,782	$	14,308	$	1,889,881

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 purchased non-covered loan portfolio by risk grade as of March 31, 2015:


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	$	6,696	$	—	$	—	$	289	$	459	$	—	$	7,444
15		995		641		9,396		12,136		472		—		23,640
20		13,751		13,746		115,359		62,056		1,568		—		206,480
23		73		—		3,174		6,777		—		—		10,024
25		12,585		31,512		136,581		155,187		1,521		—		337,386
30		958		3,564		9,404		8,332		65		—		22,323
40		1,170		4,205		17,846		12,417		105		—		35,743
50		30		—		—		22		—		—		52
60		—		—		—		—		—		—		—

Total	$	36,258	$	53,668	$	291,760	$	257,216	$	4,190	$	—	$	643,092

The following table presents the purchased non-covered loan portfolio by risk grade as of December 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	$	6,624	$	—	$	—	$	290	$	480	$	—	$	7,394
15		1,376		552		13,277		14,051		501		—		29,727
20		13,657		12,991		116,308		64,083		1,647		—		208,686
23		73		—		3,207		3,298		—		—		6,578
25		13,753		36,230		144,293		164,959		1,920		—		361,155
30		1,618		4,365		12,279		7,444		41		—		25,747
40		910		4,254		17,342		12,184		199		—		34,889
50		30		—		—		33		—		—		63
60		—		—		—		—		—		—		—

Total	$	38,041	$	58,362	$	306,706	$	266,342	$	4,788	$	—	$	674,239

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 covered loan portfolio by risk grade as of March 31, 2015:


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		667		1,847		734		522		—		—		3,770
20		75		458		21,010		13,353		51		—		34,947
23		4,481		8,567		6,382		6,130		—		—		25,560
25		5,094		2,594		69,536		36,510		37		—		113,771
30		10,588		6,053		4,053		5,893		9		—		26,596
40		—		—		28,575		12,439		87		—		41,101
50		—		—		—		—		—		—		—
60		—		—		—		—		—		—		—

Total	$	20,905	$	19,519	$	130,290	$	74,847	$	184	$	—	$	245,745

The following table presents the covered loan portfolio by risk grade as of December 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		—		1		761		525		—		—		1,287
20		917		3,184		23,167		14,089		77		—		41,434
23		164		537		11,404		6,642		—		—		18,747
25		5,181		9,406		80,334		33,124		37		—		128,082
30		4,808		2,753		5,302		8,050		—		—		20,913
40		10,397		7,566		26,659		16,090		104		—		60,816
50		—		—		—		—		—		—		—
60		—		—		—		—		—		—		—

Total	$	21,467	$	23,447	$	147,627	$	78,520	$	218	$	—	$	271,279

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

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 Chief 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 2015 and 2014 totaling $32.0 million and $6.3 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, 2015, December 31, 2014 and March 31, 2014, the Company had a balance of $13.9 million, $15.3 million and $21.2 million, respectively, in troubled debt restructurings, excluding purchased non-covered and covered loans. The Company has recorded $1.6 million, $2.2 million and $2.3 million in previous charge-offs on such loans at March 31, 2015, December 31, 2014 and March 31, 2014, respectively. The Company’s balance in the allowance for loan losses allocated to such troubled debt restructurings was $1.6 million, $231,000 and $422,000 at March 31, 2015, December 31, 2014 and March 31, 2014, respectively. At March 31, 2015, the Company did not have any commitments to lend additional funds to debtors whose terms have been modified in troubled restructurings.

During the three months ending March 31, 2015 and 2014, the Company modified loans as troubled debt restructurings with principal balances of $2.7 million and $1.2 million, respectively, and these modifications did not have a material impact on the Company’s allowance for loan loss. The following table presents the loans by class modified as troubled debt restructurings that occurred during the three months ending March 31, 2015 and 2014:


	March 31, 2015				March 31, 2014
Loan class:	#		Balance (in thousands)		#		Balance (in thousands)
Commercial, financial & agricultural		—	$	—		1	$	7
Real estate – construction & development		—		—		2		79
Real estate – commercial & farmland		2		2,015		3		1,052
Real estate – residential		7		666		1		21
Consumer installment		3		17		5		21

Total		12	$	2,698		12	$	1,180

Troubled debt restructurings with an outstanding balance of $1.5 million and $2.2 million defaulted during the three months ended March 31, 2015 and 2014, respectively, and these defaults did not have a material impact on the Company’s allowance for loan loss. The following table presents the troubled debt restructurings by class that defaulted during the three months ending March 31, 2015 and 2014:


	March 31, 2015				March 31, 2014
Loan class:	#		Balance (in thousands)		#		Balance (in thousands)
Commercial, financial & agricultural		1	$	5		—	$	—
Real estate – construction & development		—		—		2		40
Real estate – commercial & farmland		3		746		4		1,897
Real estate – residential		6		748		3		280
Consumer installment		4		20		1		24

Total		14	$	1,519		10	$	2,241

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, 2015, December 31, 2014 and March 31, 2014:


As of March 31, 2015	Accruing Loans				Non-Accruing Loans
Loan class:	#		Balance *(in thousands)*		#		Balance *(in thousands)*
Commercial, financial & agricultural		5	$	277		3	$	17
Real estate – construction & development		9		789		4		90
Real estate – commercial & farmland		20		7,309		1		64
Real estate – residential		42		4,513		11		736
Consumer installment		10		47		15		90

Total		86	$	12,935		34	$	997


As of December 31, 2014	Accruing Loans				Non-Accruing Loans
Loan class:	#		Balance *(in thousands)*		#		Balance *(in thousands)*
Commercial, financial & agricultural		6	$	290		2	$	13
Real estate – construction & development		9		679		5		228
Real estate – commercial & farmland		19		6,477		3		724
Real estate – residential		47		5,258		11		1,485
Consumer installment		11		55		11		73

Total		92	$	12,759		32	$	2,523


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 March 31, 2015, December 31, 2014 and March 31, 2014, the Company had a balance of $1.7 million, $1.2 million and $6.5 million, respectively, in troubled debt restructurings included in purchased non-covered loans. The Company has not recorded any previous charge-offs on such loans at March 31, 2015 and 2014. The Company had recorded $29,000 in previous charge-offs on such loans at December 31, 2014. At March 31, 2015, 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 purchased non-covered loans, classified separately as accrual and non-accrual at March 31, 2015, December 31, 2014 and March 31, 2014:


As of March 31, 2015	Accruing Loans				Non-Accruing Loans
Loan class:	#		Balance (in thousands)		#		Balance (in thousands)
Commercial, financial & agricultural		—	$	—		1	$	1
Real estate – construction & development		1		328		—		—
Real estate – commercial & farmland		3		720		1		69
Real estate – residential		5		477		2		93
Consumer installment		1		1		1		4

Total		10	$	1,526		5	$	167


As of December 31, 2014	Accruing Loans				Non-Accruing Loans
Loan class:	#		Balance (in thousands)		#		Balance (in thousands)
Commercial, financial & agricultural		—	$	—		—	$	—
Real estate – construction & development		1		317		—		—
Real estate – commercial & farmland		1		346		—		—
Real estate – residential		6		547		1		25
Consumer installment		1		2		—		—

Total		9	$	1,212		1	$	25


As of March 31, 2014	Accruing Loans				Non-Accruing Loans
Loan class:	#		Balance (in thousands)		#		Balance (in thousands)
Commercial, financial & agricultural		—	$	—		1	$	6
Real estate – construction & development		7		2,443		2		264
Real estate – commercial & farmland		2		961		2		726
Real estate – residential		12		1,779		4		255
Consumer installment		1		8		2		17

Total		22	$	5,191		11	$	1,268

As of March 31, 2015, December 31, 2014 and March 31, 2014, the Company had a balance of $23.3 million, $24.6 million and $27.8 million, respectively, in troubled debt restructurings included in covered loans. The Company has recorded $1.1 million, $1.8 million and $3.2 million in previous charge-offs on such loans at March 31, 2015, December 31, 2014 and March 31, 2014, respectively. At March 31, 2015, 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 March 31, 2015, December 31, 2014 and March 31, 2014:


As of March 31, 2015	Accruing Loans				Non-Accruing Loans
Loan class:	#		Balance (in thousands)		#		Balance (in thousands)
Commercial, financial & agricultural		1	$	3		2	$	—
Real estate – construction & development		3		2,819		1		13
Real estate – commercial & farmland		13		6,461		2		1,736
Real estate – residential		97		11,436		10		821
Consumer installment		1		2		—		—

Total		115	$	20,721		15	$	2,570


As of December 31, 2014	Accruing Loans				Non-Accruing Loans
Loan class:	#		Balance (in thousands)		#		Balance (in thousands)
Commercial, financial & agricultural		2	$	40		2	$	—
Real estate – construction & development		4		3,037		2		29
Real estate – commercial & farmland		14		8,079		5		1,082
Real estate – residential		96		11,460		8		831
Consumer installment		1		3		—		—

Total		117	$	22,619		17	$	1,942


As of March 31, 2014	Accruing Loans				Non-Accruing Loans
Loan class:	#		Balance (in thousands)		#		Balance (in thousands)
Commercial, financial & agricultural		1	$	14		5	$	68
Real estate – construction & development		3		3,254		5		49
Real estate – commercial & farmland		14		7,461		7		3,872
Real estate – residential		85		12,046		9		1,031
Consumer installment		—		—		1		5

Total		103	$	22,775		27	$	5,025

Allowance for Loan Losses

The allowance for loan losses represents an allowance for probable incurred losses in the loan portfolio. The adequacy of the allowance for loan losses is evaluated periodically based on a review of all significant loans, with a particular emphasis on non-accruing, past due and other loans that management believes might be potentially impaired or warrant additional attention. The Company segregates the loan portfolio by type of loan and utilizes this segregation in evaluating exposure to risks within the portfolio. In addition, based on internal reviews and external reviews performed by independent auditors and regulatory authorities, the Company further segregates the loan portfolio by loan grades based on an assessment of risk for a particular loan or group of loans. Certain reviewed loans are assigned specific allowances when a review of relevant data determines that a general allocation is not sufficient or when the review affords management the opportunity to adjust the amount of exposure in a given credit. In establishing allowances, management considers historical loan loss experience but adjusts this data with a significant emphasis on current loan quality trends, current economic conditions and other factors in the markets where the Company operates. Factors considered include, among others, current valuations of real estate in the Company’s markets, unemployment rates, the effect of weather conditions on agricultural related entities and other significant local economic events.

The Company has developed a methodology for determining the adequacy of the allowance for loan losses which is monitored by the Company’s Chief Credit Officer. Procedures provide for the assignment of a risk rating for every loan included in the total loan portfolio, with the exception of certain mortgage loans serviced at a third party, mortgage warehouse lines and overdraft protection loans which are treated as pools for risk rating purposes. The risk rating schedule provides nine ratings of which five ratings are classified as pass ratings and four ratings are classified as criticized ratings. Each risk rating is assigned a percentage factor to be applied to the loan balance to determine the adequate amount of reserve. All relationships greater than $1.0 million and the majority of 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. As a result of these loan reviews, certain loans may be identified as having deteriorating credit quality. Other loans that surface as problem loans may also be assigned specific reserves. Past due loans are assigned risk ratings based on the number of days past due. The calculation of the allowance for loan losses, including underlying data and assumptions, is reviewed regularly by the Company’s Chief Financial Officer and the independent internal loan review department.

Loan losses are charged against the allowance when management believes the collection of a loan’s principal is unlikely. Subsequent recoveries are credited to the allowance. Consumer loans are charged-off in accordance with the Federal Financial Institutions Examination Council’s (“FFIEC”) Uniform Retail Credit Classification and Account Management Policy. Commercial loans are charged-off when they are deemed uncollectible, which usually involves a triggering event within the collection effort. If the loan is collateral dependent, the loss is more easily identified and is charged-off when it is identified, usually based upon receipt of an appraisal. However, when a loan has guarantor support, the Company may carry the estimated loss as a reserve against the loan while collection efforts with the guarantor are pursued. If, after collection efforts with the guarantor are complete, the deficiency is still considered uncollectible, the loss is charged-off and any further collections are treated as recoveries. In all situations, when a loan is downgraded to an Asset Quality Rating of 60 (Loss per the regulatory guidance), the uncollectible portion is charged-off.

During the three months ended March 31, 2015, the year ended December 31, 2014 and the three months ended March 31, 2014, the Company recorded provision for loan loss expense of $401,000, $843,000 and $225,000, respectively, net of the FDIC loss-share receivable, to account for losses where there was a decrease in cash flows from the initial estimates on loans acquired in FDIC-assisted transactions. During the three months ended March 31, 2015, the Company recorded a net provision for loan loss credit of $432,000 due to recoveries received on previously charged off purchased non-covered loans. During the year ended December 31, 2014 the Company recorded provision for loan loss expense of $84,000 to account for losses where there was a decrease in cash flows from the initial estimates on purchased non-covered loans. Charge-offs on purchased loans, both covered and non-covered, are recorded when impairment is recorded. Provision expense for covered loans is recorded net of the indemnification by the FDIC loss-share agreements.

The following table details activity in the allowance for loan losses by portfolio segment for the three months ended March 31, 2015, the year ended December 31, 2014 and the three months ended March 31, 2015. Allocation of a portion of the allowance to one category of loans does not preclude its availability to absorb losses in other categories.


	Commercial, financial & agricultural			Real estate – construction & development			Real estate – commercial & farmland			Real estate - residential			Consumer installment loans and Other			Purchased non-covered loans			Covered loans			Total
	(Dollars in Thousands)
Three months ended March 31, 2015:
Balance, January 1, 2015	$	2,004		$	5,030		$	8,823		$	4,129		$	1,171		$	—		$	—		$	21,157
Provision for loan losses		(498	)		347			(56	)		1,090			217			(432	)		401			1,069
Loans charged off		(392	)		(97	)		(12	)		(268	)		(86	)		(230	)		(563	)		(1,648	)
Recoveries of loans previously charged off		285			31			15			57			62			662			162			1,274

Balance, March 31, 2015	$	1,399		$	5,311		$	8,770		$	5,008		$	1,364		$	—		$	—		$	21,852

Period-end amount allocated to:
Loans individually evaluated for impairment	$	230		$	627		$	2,123		$	1,837		$	—		$	—		$	—		$	4,817
Loans collectively evaluated for impairment		1,169			4,684			6,647			3,171			1,364			—			—			17,035

Ending balance	$	1,399		$	5,311		$	8,770		$	5,008		$	1,364		$	—		$	—		$	21,852

Loans:
Individually evaluated for impairment	$	324		$	2,982		$	14,557		$	11,124		$	—		$	—		$	—		$	28,987
Collectively evaluated for impairment		334,593			175,586			932,717			484,919			42,618			552,837			108,113			2,631,383
Acquired with deteriorated credit quality		—			—			—			—			—			90,255			137,632			227,887

Ending balance	$	334,917		$	178,568		$	947,274		$	496,043		$	42,618		$	643,092		$	245,745		$	2,888,257


	Commercial, financial & agricultural			Real estate – construction & development			Real estate – commercial & farmland			Real estate - residential			Consumer installment loans and Other			Purchased non-covered loans			Covered loans			Total
	(Dollars in Thousands)
Twelve months ended December 31, 2014:
Balance, January 1, 2014	$	1,823		$	5,538		$	8,393		$	6,034		$	589		$	—		$	—		$	22,377
Provision for loan losses		1,427			(265	)		3,444			(452	)		567			84			843			5,648
Loans charged off		(1,567	)		(592	)		(3,288	)		(1,707	)		(471	)		(84	)		(1,851	)		(9,560	)
Recoveries of loans previously charged off		321			349			274			254			486			—			1,008			2,692

Balance, December 31, 2014	$	2,004		$	5,030		$	8,823		$	4,129		$	1,171		$	—		$	—		$	21,157

Period-end amount allocated to:
Loans individually evaluated for impairment	$	375		$	743		$	1,861		$	911		$	—		$	—		$	—		$	3,890
Loans collectively evaluated for impairment		1,629			4,287			6,962			3,218			1,171			—			—			17,267

Ending balance	$	2,004		$	5,030		$	8,823		$	4,129		$	1,171		$	—		$	—		$	21,157

Loans:
Individually evaluated for impairment	$	490		$	3,709		$	14,546		$	8,904		$	—		$	—		$	—		$	27,649
Collectively evaluated for impairment		319,164			157,798			892,978			447,202			45,090			579,172			122,248			2,563,652
Acquired with deteriorated credit quality		—			—			—			—			—			95,067			149,031			244,098

Ending balance	$	319,654		$	161,507		$	907,524		$	456,106		$	45,090		$	674,239		$	271,279		$	2,835,399


	Commercial, financial & agricultural			Real estate – construction & development			Real estate – commercial & farmland			Real estate - residential			Consumer installment loans and Other			Purchased non-covered loans		Covered loans			Total
	(Dollars in Thousands)
Three months ended March 31, 2014:
Balance, January 1, 2014	$	1,823		$	5,538		$	8,393		$	6,034		$	589		$	—	$	—		$	22,377
Provision for loan losses		1,090			337			622			(656	)		108			—		225			1,726
Loans charged off		(743	)		(65	)		(533	)		(181	)		(84	)		—		(498	)		(2,104	)
Recoveries of loans previously charged off		49			108			143			83			89			—		273			745

Balance, March 31, 2014	$	2,219		$	5,918		$	8,625		$	5,280		$	702		$	—	$	—		$	22,744

Period-end amount allocated to:
Loans individually evaluated for impairment	$	318		$	631		$	1,994		$	1,133		$	—		$	—	$	—		$	4,076
Loans collectively evaluated for impairment		1,901			5,287			6,631			4,147			702			—		—			18,668

Ending balance	$	2,219		$	5,918		$	8,625		$	5,280		$	702		$	—	$	—		$	22,744

Loans:
Individually evaluated for impairment	$	2,837		$	3,817		$	16,832

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