Edgar Filing: Ameris Bancorp

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Form 10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended June 30, 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 32,195,089 shares of Common Stock outstanding as of July 31, 2015.

AMERIS BANCORP

TABLE OF CONTENTS


		Page
PART I – FINANCIAL INFORMATION

Item 1.	Financial Statements.

	Consolidated Balance Sheets at June 30, 2015, December 31, 2014 and June 30, 2014		1

	Consolidated Statements of Earnings and Comprehensive Income/(Loss) for the Three and Six Month Periods Ended June 30, 2015 and 2014		2

	Consolidated Statements of Changes in Stockholders’ Equity for the Six Months Ended June 30, 2015 and 2014		3

	Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2015 and 2014		4

	Notes to Consolidated Financial Statements		6

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations.		54

Item 3.	Quantitative and Qualitative Disclosures About Market Risk.		80

Item 4.	Controls and Procedures.		80

PART II – OTHER INFORMATION

Item 1.	Legal Proceedings.		81

Item 1A.	Risk Factors.		81

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds.		81

Item 3.	Defaults Upon Senior Securities.		81

Item 4.	Mine Safety Disclosures.		81

Item 5.	Other Information.		81

Item 6.	Exhibits.		81

Signatures			81

Item 1. Financial Statements.

AMERIS BANCORP AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(dollars in thousands, except per share data)


	June 30, 2015			December 31, 2014			June 30, 2014
	(Unaudited)			(Audited)			(Unaudited)
Assets
Cash and due from banks	$	115,413		$	78,036		$	80,986
Federal funds sold and interest-bearing accounts		239,804			92,323			44,800
Investment securities available for sale, at fair value		862,154			541,805			535,630
Other investments		9,322			10,275			10,971
Mortgage loans held for sale, at fair value		108,829			94,759			81,491
Loans, net of unearned income		2,171,600			1,889,881			1,770,059
Purchased loans not covered by FDIC loss share agreements (“purchased non-covered loans”)		808,313			674,239			702,131
Purchased loan pools not covered by FDIC loss share agreements (“purchased loan pools”)		268,984			—			—
Purchased loans covered by FDIC loss share agreements (“covered loans”)		209,598			271,279			331,250
Less: allowance for loan losses related to non-purchased loans		(21,658	)		(21,157	)		(22,254	)

Loans, net		3,436,837			2,814,242			2,781,186

Other real estate owned, net		22,567			33,160			35,373
Purchased, non-covered other real estate owned, net		13,112			15,585			16,598
Covered other real estate owned, net		12,626			19,907			38,426

Total other real estate owned, net		48,305			68,652			90,397

Premises and equipment, net		124,916			97,251			99,495
FDIC loss-share receivable		14,957			31,351			49,180
Other intangible assets, net		19,189			8,221			9,812
Goodwill		87,367			63,547			58,903
Cash value of bank owned life insurance		59,552			58,867			57,864
Other assets		79,089			77,748			72,420

Total assets	$	5,205,734		$	4,037,077		$	3,973,135

Liabilities and Stockholders’ Equity
Liabilities
Deposits:
Noninterest-bearing	$	1,280,174		$	839,377		$	790,798
Interest-bearing		3,231,373			2,591,772			2,598,237

Total deposits		4,511,547			3,431,149			3,389,035
Securities sold under agreements to repurchase		75,066			73,310			51,109
Other borrowings		39,000			78,881			100,293
Other liabilities		24,026			22,384			24,457
Subordinated deferrable interest debentures		69,325			65,325			64,842

Total liabilities		4,718,964			3,671,049			3,629,736

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; 33,608,866; 28,159,027 and 28,155,317 issued		33,609			28,159			28,155
Capital surplus		336,212			225,015			223,888
Retained earnings		126,265			118,412			98,847
Accumulated other comprehensive income		3,072			6,098			4,123
Treasury stock, at cost, 1,413,777; 1,385,164 and 1,383,496 shares		(12,388	)		(11,656	)		(11,614	)

Total stockholders’ equity		486,770			366,028			343,399

Total liabilities and stockholders’ equity	$	5,205,734		$	4,037,077		$	3,973,135

See notes to unaudited consolidated financial statements.

AMERIS BANCORP AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF EARNINGS AND COMPREHENSIVE INCOME/(LOSS)

(dollars in thousands, except per share data)

(Unaudited)


	Three Months Ended June 30,						Six Months Ended June 30,
	2015			2014			2015			2014
Interest income
Interest and fees on loans	$	39,838		$	35,297		$	78,456		$	69,766
Interest on taxable securities		3,747			2,953			6,900			5,938
Interest on nontaxable securities		462			312			931			647
Interest on deposits in other banks and federal funds sold		182			45			310			129

Total interest income		44,229			38,607			86,597			76,480

Interest expense
Interest on deposits		2,264			2,205			4,544			4,388
Interest on other borrowings		1,277			1,138			2,533			2,344

Total interest expense		3,541			3,343			7,077			6,732

Net interest income		40,688			35,264			79,520			69,748
Provision for loan losses		2,656			1,365			3,725			3,091

Net interest income after provision for loan losses		38,032			33,899			75,795			66,657

Noninterest income
Service charges on deposit accounts		7,151			5,847			13,580			11,433
Mortgage banking activity		9,727			7,002			17,810			12,166
Other service charges, commissions and fees		829			662			1,497			1,314
Gain on sale of securities		10			—			22			6
Other noninterest income		2,909			2,308			5,292			3,654

Total noninterest income		20,626			15,819			38,201			28,573

Noninterest expense
Salaries and employee benefits		22,465			16,942			43,097			34,336
Occupancy and equipment		4,809			4,071			9,363			8,135
Advertising and marketing expenses		833			718			1,474			1,428
Amortization of intangible assets		630			437			1,260			970
Data processing and communications costs		4,214			3,940			8,474			7,394
Credit resolution-related expenses		11,240			2,840			14,401			5,030
Merger and conversion charges		5,712			2,872			5,727			3,322
Other noninterest expenses		6,961			5,498			13,895			9,942

Total noninterest expense		56,864			37,318			97,691			70,557

Income before income tax expense		1,794			12,400			16,305			24,673
Income tax expense		486			4,270			5,233			8,193

Net income		1,308			8,130			11,072			16,480
Less preferred stock dividends and discount accretion		—			—			—			286

Net income available to common shareholders	$	1,308		$	8,130		$	11,072		$	16,194

Other comprehensive income (loss)
Unrealized holding gains (losses) arising during period on investment securities available for sale, net of tax of $1,901, $1,142, $1,561 and $2,724		(3,531	)		2,121			(2,881	)		5,059
Reclassification adjustment for gains included in earnings, net of tax of $3, $0, $8 and $2		(6	)		—			(14	)		(4	)
Unrealized gains (losses) on cash flow hedges arising during period, net of tax of $138, $200, $70 and $344		256			(372	)		(131	)		(638	)

Other comprehensive income (loss)		(3,281	)		1,749			(3,026	)		4,417

Total comprehensive income (loss)	$	(1,973	)	$	9,879		$	8,046		$	20,897

Basic earnings per common share	$	0.04		$	0.32		$	0.35		$	0.64

Diluted earnings per common share	$	0.04		$	0.32		$	0.35		$	0.63

Dividends declared per common share	$	0.05		$	0.05		$	0.10		$	0.05

Weighted average common shares outstanding
Basic		32,184			25,181			31,318			25,163
Diluted		32,520			25,572			31,653			25,552

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)


	Six Months Ended						Six Months Ended
	June 30, 2015						June 30, 2014
	Shares			Amount			Shares			Amount
PREFERRED STOCK
Balance at beginning of period		—		$	—			28,000		$	28,000
Repurchase of preferred stock		—			—			(28,000	)		(28,000	)

*Issued at end of period*		—		$	—			—		$	—
COMMON STOCK
Balance at beginning of period		28,159,027		$	28,159			26,461,769		$	26,462
Issuance of common stock		5,320,000			5,320			1,598,987			1,599
Proceeds from exercise of stock options		58,839			59			26,514			26
Issuance of restricted shares		71,000			71			68,047			68

*Issued at end of period*		33,608,866		$	33,609			28,155,317		$	28,155
CAPITAL SURPLUS
Balance at beginning of period				$	225,015					$	189,722
Stock-based compensation					760						1,012
Issuance of common shares, net of issuance costs of $4,811 and $0					109,569						32,875
Proceeds from exercise of stock options					939						347
Issuance of restricted shares					(71	)					(68	)

*Balance at end of period*				$	336,212					$	223,888
RETAINED EARNINGS
Balance at beginning of period				$	118,412					$	83,991
Net income					11,072						16,480
Dividends on preferred shares					—						(286	)
Dividends on common shares					(3,219	)					(1,338	)

*Balance at end of period*				$	126,265					$	98,847
ACCUMULATED OTHER COMPREHENSIVE INCOME, NET OF TAX
Unrealized gains on securities and derivatives:
Balance at beginning of period				$	6,098					$	(294	)
Other comprehensive income (loss) during the period					(3,026	)					4,417

*Balance at end of period*				$	3,072					$	4,123
TREASURY STOCK
Balance at beginning of period		(1,385,164	)	$	(11,656	)		(1,363,342	)	$	(11,182	)
Purchase of treasury shares		(28,613	)		(732	)		(20,154	)		(432	)

*Balance at end of period*		(1,413,777	)	$	(12,388	)		(1,383,496	)	$	(11,614	)

*TOTAL STOCKHOLDERS’ EQUITY*				$	486,770					$	343,399

See notes to unaudited consolidated financial statements.

AMERIS BANCORP AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(dollars in thousands)

(Unaudited)


	Six Months Ended June 30,
	2015			2014
Cash flows from operating activities:
Net income	$	11,072		$	16,480
Adjustments reconciling net income to net cash provided by operating activities:
Depreciation		3,950			3,709
Amortization of intangible assets		1,260			970
Net amortization of investment securities available for sale		2,669			1,525
Net gains on securities available for sale		(22	)		(6	)
Stock based compensation expense		760			1,012
Net losses on sale or disposal of premises and equipment		98			1
Net write-downs and losses on sale of other real estate owned		9,779			1,985
Provision for loan losses		3,725			3,091
Accretion of discount on covered loans		(6,251	)		(15,432	)
Accretion of discount on purchased non-covered loans		(5,388	)		(3,153	)
Changes in FDIC loss-share receivable, net of cash payments received		3,855			5,685
Increase in cash surrender value of BOLI		(685	)		(620	)
Originations of mortgage loans held for sale		(472,660	)		(316,767	)
Proceeds from sales of mortgage loans held for sale		449,570			305,546
Net gains on sale of mortgage loans held for sale		(18,244	)		(11,935	)
Originations of SBA loans		(26,684	)		(24,586	)
Proceeds from sales of SBA loans		20,539			11,418
Net gains on sale of SBA loans		(2,290	)		(1,250	)
Change attributable to other operating activities		7,683			7,585

Net cash used in operating activities		(17,264	)		(14,742	)

Cash flows from investing activities, net of effect of business combinations:
Net (increase) decrease in federal funds sold and interest-bearing deposits		(41,293	)		176,107
Purchase of securities available for sale		(230,226	)		(68,632	)
Proceeds from maturities of securities available for sale		36,544			22,493
Proceeds from sales of securities available for sale		30,113			69,768
Decrease in restricted equity securities, net		1,825			6,832
Net increase in loans, excluding purchased non-covered and covered loans		(257,665	)		(129,977	)
Purchases of loan pools		(268,984	)		—
Payments received on purchased non-covered loans		80,668			27,791
Payments received on covered loans		42,103			64,743
Purchases of premises and equipment		(6,595	)		(2,223	)
Proceeds from sales of premises and equipment		217			56
Proceeds from sales of other real estate owned		27,691			17,420
Payments received from FDIC under loss-share agreements		12,539			10,576
Net cash proceeds received from acquisitions		567,652			1,099

Net cash provided by (used in) investing activities		(5,411	)		196,053


Cash flows from financing activities, net of effect of business combinations:
Net increase in deposits		27,829			20,780
Net decrease in securities sold under agreements to repurchase		(39,832	)		(37,835	)
Proceeds from other borrowings		—			57,463
Repayment of other borrowings		(39,881	)		(174,005	)
Redemption of preferred stock		—			(28,000	)
Dividends paid—preferred stock		—			(286	)
Dividends paid—common stock		(3,220	)		(1,338	)
Purchase of treasury shares		(731	)		(432	)
Issuance of common stock		114,889			—
Proceeds from exercise of stock options		998			373

Net cash provided by (used in) financing activities		60,052			(163,280	)

Net increase in cash and due from banks		37,377			18,031
Cash and due from banks at beginning of period		78,036			62,955

Cash and due from banks at end of period	$	115,413		$	80,986

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid/(received) during the period for:
Interest	$	7,220		$	6,740
Income taxes	$	2,659		$	5,583
Loans (excluding purchased non-covered and covered loans) transferred to other real estate owned	$	8,636		$	6,400
Purchased non-covered loans transferred to other real estate owned	$	2,039		$	1,425
Covered loans transferred to other real estate owned	$	6,534		$	9,083
Loans provided for the sales of other real estate owned	$	1,948		$	578
Change in unrealized gain on securities available for sale, net of tax	$	(2,895	)	$	5,055
Change in unrealized loss on cash flow hedge (interest rate swap), net of tax	$	(131	)	$	(638	)
Issuance of common stock in acquisitions	$	—		$	34,474

See notes to unaudited consolidated financial statements.

AMERIS BANCORP AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 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 June 30, 2015 the Bank operated 103 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 June 30, 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 Issued 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”). 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 2014-11 – Repurchase-to-Maturity Transactions, Repurchase Financings, and Disclosures (“ASU 2014-11”). ASU 2014-11 impacted FASB ASC 860 Transfers and Servicing by changing the accounting for repurchase-to-maturity transactions and linked repurchase financings to secured borrowing accounting, which is consistent with the accounting for other repurchase agreements. The amendments also require new disclosures. An entity is required to disclose information on transfers accounted for as sales in transactions that are economically similar to repurchase agreements. An entity must also provide additional information about the types of collateral pledged in repurchase agreements and similar transactions accounted for as secured borrowings. An entity is required to present changes in accounting for transactions outstanding on the effective date as a cumulative-effect adjustment to retained earnings as of the beginning of the period of adoption. The amendments in this update became effective for interim and annual periods beginning after December 15, 2014 and did not have a material impact on the consolidated financial statements although the required disclosures have been included in Note 7.

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, 2017. The Company is currently evaluating the impact this standard will have on the Company’s results of operations, financial position or disclosures.

NOTE 2 – BUSINESS COMBINATIONS

Branch Acquisition

On June 12, 2015, the Company completed its acquisition of 18 branches from 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. Under the terms of the Purchase and Assumption Agreement dated January 28, 2015, the Company paid a deposit premium of $20.0 million, equal to 3.00% of the average daily deposits for the 15 calendar day period immediately prior to the acquisition date. In addition, the Company acquired approximately $4.4 million in loans and $11.4 million in premises and equipment.

The acquisition of the 18 branches was accounted for using the purchase method of accounting in accordance with FASB ASC 805, Business Combinations. Assets acquired, liabilities assumed and consideration exchanged were recorded at their respective acquisition date fair values. Determining the fair value of assets and liabilities is a complicated process involving significant judgment regarding methods and assumptions used to calculate estimated fair values. Fair values are preliminary and subject to refinement for up to one year after the closing date of the acquisition as additional information regarding the closing date fair values becomes available. Management continues to evaluate fair value adjustments related to premises and core deposit intangible assets acquired.

The following table presents the assets acquired and liabilities assumed as of June 12, 2015 and their initial fair value estimates. The fair value adjustments shown in the following table continue to be evaluated by management and may be subject to further adjustment:


(Dollars in Thousands)	As Recorded by Bank of America		Fair Value Adjustments			As Recorded by Ameris
Assets
Cash and cash equivalents	$	630,220	$	—		$	630,220
Loans		4,363		—			4,363
Premises and equipment		10,348		1,060	(a)		11,408
Intangible assets		—		7,651	(b)		7,651
Other assets		126					126

Total assets	$	645,057	$	8,711		$	653,768

Liabilities
Deposits:
Noninterest-bearing	$	149,854	$	—		$	149,854
Interest-bearing		495,110		(215	)(c)		494,895

Total deposits		644,964		(215	)		644,749
Other liabilities		93		—			93

Total liabilities		645,057		(215	)		644,842

Net identifiable assets acquired over (under) liabilities assumed		—		8,926			8,926
Goodwill		—		11,076			11,076

Net assets acquired over (under) liabilities assumed	$	—	$	20,002		$	20,002

Consideration:
Cash paid as deposit premium	$	20,002

Fair value of total consideration transferred	$	20,002

Explanation of fair value adjustments

(a)	Adjustment reflects the fair value adjustments of the premise and equipment as of the acquisition date.

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

(c)	Adjustment reflects the fair value adjustments based on the Company’s evaluation of the acquired deposits.

Goodwill of $11.1 million, which is the excess of the merger consideration over the fair value of net assets acquired, was recorded in the branch acquisition and is the result of expected operational synergies and other factors.

In the acquisition, the Company purchased $4.4 million of loans at fair value. Management did not identify any loans that were considered to be credit impaired and are accounted for under ASC Topic 310-30.

Merchants & Southern Banks of Florida, Incorporated

On May 22, 2015, the Company completed its acquisition of all shares of the outstanding common stock of Merchants & Southern Banks of Florida, Incorporated (“Merchants”), a bank holding company headquartered in Gainesville, Florida, for a total purchase price of $50,000,000. Upon consummation of the stock purchase, Merchants was merged with and into the Company, with Ameris as the surviving entity in the merger. At that time, Merchant’s wholly owned banking subsidiary, Merchants and Southern Bank, was also merged with and into the Bank. The acquisition grew the Company’s existing market presence, as Merchants and Southern Bank had a total of 13 banking locations in Alachua, Marion and Clay Counties, Florida.

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

The following table presents the assets acquired and liabilities of Merchants assumed as of May 22, 2015 and their initial fair value estimates. The fair value adjustments shown in the following table continue to be evaluated by management and may be subject to further adjustment:


(Dollars in Thousands)	As Recorded by Merchants			Fair Value Adjustments			As Recorded by Ameris
Assets
Cash and cash equivalents	$	7,527		$	—		$	7,527
Federal funds sold and interest-bearing balances		106,188			—			106,188
Investment securities		164,421			(553	)(a)		163,868
Other investments		872			—			872
Loans		199,955			(8,500	)(b)		191,455
Less allowance for loan losses		(3,354	)		3,354	(c)		—

Loans, net		196,601			(5,146	)		191,455
Other real estate owned		4,082			(1,115	)(d)		2,967
Premises and equipment		14,614			(3,680	)(e)		10,934
Intangible assets		—			4,577	(f)		4,577
Other assets		2,333			2,335	(g)		4,668

Total assets	$	496,638		$	(3,582	)	$	493,056

Liabilities
Deposits:
Noninterest-bearing	$	121,708		$	—		$	121,708
Interest-bearing		286,112			—			286,112

Total deposits		407,820			—			407,820
Federal funds purchased and securities sold under agreements to repurchase		41,588			—			41,588
Other liabilities		2,151			81	(h)		2,232
Subordinated deferrable interest debentures		6,186			(2,680	)(i)		3,506

Total liabilities		457,745			(2,599	)		455,146

Net identifiable assets acquired over (under) liabilities assumed		38,893			(983	)		37,910
Goodwill		—			12,090			12,090

Net assets acquired over (under) liabilities assumed	$	38,893		$	11,107		$	50,000

Consideration:
Cash exchanged for shares	$	50,000

Fair value of total consideration transferred	$	50,000

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 Merchant’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 fair value adjustment based on the Company’s evaluation of the acquired premises.

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

(g)	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.

(h)	Adjustment reflects the fair value adjustments based on the Company’s evaluation of interest rate swap liabilities.

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

Goodwill of $12.1 million, which is the excess of the merger consideration over the fair value of net assets acquired, was recorded in the Merchants acquisition and is the result of expected operational synergies and other factors. This goodwill is not expected to be deductible for tax purposes.

In the acquisition, the Company purchased $191.5 million of loans at fair value, net of $8.5 million, or 4.25%, estimated discount to the outstanding principal balance. Of the total loans acquired, management identified $17.4 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	$	24,446
Non-accretable difference		(3,814	)

Cash flows expected to be collected		20,632
Accretable yield		(3,254	)

Total purchased credit-impaired loans acquired	$	17,378

The following table presents the acquired loan data for the Merchants acquisition.


	Fair Value of Acquired Loans at Acquisition Date		Gross Contractual Amounts Receivable at Acquisition Date		Best Estimate at Acquisition Date of Contractual Cash Flows Not Expected to be Collected
	(Dollars in Thousands)
Acquired receivables subject to ASC 310-30	$	17,378	$	24,446	$	3,814
Acquired receivables not subject to ASC 310-30	$	174,077	$	178,763	$	—

Coastal Bankshares, Inc.

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 and the second quarter of 2015, management revised its initial estimates regarding the valuation of other real estate owned. In addition, during the third and fourth quarters of 2014 and second quarter of 2015, 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.

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)		(3,407	)(g)		8,057
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			—			(601	)(i)		14,297

Total assets	$	438,361		$	(13,244	)	$	(4,239	)	$	420,878

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	)		(4,239	)		9,177
Goodwill		—			23,854			4,239			28,093

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 $28.1 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.

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

The results of operations of Merchants and Coastal subsequent to the respective acquisition dates 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 acquisitions had occurred on January 1, 2014, unadjusted for potential cost savings (in thousands).


	Three Months Ended June 30,					Six Months Ended June 30,
	2015			2014		2015		2014
Net interest income and noninterest income	$	63,259		$	60,212	$	123,308	$	116,454
Net income (loss)	$	(128	)	$	6,963	$	10,739	$	17,163
Net income (loss) available to common stockholders	$	(128	)	$	6,963	$	10,739	$	16,877
Income (loss) per common share available to common stockholders – basic	$	0.00		$	0.26	$	0.34	$	0.63
Income (loss) per common share available to common stockholders – diluted	$	0.00		$	0.26	$	0.34	$	0.62
Average number of shares outstanding, basic		32,184			26,780		31,318		26,762
Average number of shares outstanding, diluted		32,520			27,232		31,653		27,214

A rollforward of purchased non-covered loans for the six months ended June 30, 2015, the year ended December 31, 2014 and the six months ended June 30, 2014 is shown below:


(Dollars in Thousands)	June 30, 2015			December 31, 2014			June 30, 2014
Balance, January 1	$	674,239		$	448,753		$	448,753
Charge-offs, net of recoveries		(470	)		(84	)		—
Additions due to acquisitions		195,818			279,441			279,441
Accretion		5,388			9,745			3,635
Transfers to purchased non-covered other real estate owned		(2,039	)		(4,160	)		(1,425	)
Transfer from covered loans due to loss-share expiration		15,462			15,475			—
Payments received		(80,085	)		(74,931	)		(28,273	)

Ending balance	$	808,313		$	674,239		$	702,131

The following is a summary of changes in the accretable discounts of purchased non-covered loans during the six months ended June 30, 2015, the year ended December 31, 2014 and the six months ended June 30, 2014:


(Dollars in Thousands)	June 30, 2015			December 31, 2014			June 30, 2014
Balance, January 1	$	25,716		$	26,189		$	26,189
Additions due to acquisitions		4,686			7,799			7,799
Accretion		(5,388	)		(9,745	)		(3,635	)
Accretable discounts removed due to charge-offs		(1,685	)		—			—
Transfers between non-accretable and accretable discounts, net		(1,007	)		1,473			1,968

Ending balance	$	22,322		$	25,716		$	32,321

NOTE 3 – INVESTMENT SECURITIES

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

The amortized cost and estimated fair value of investment securities available for sale at June 30, 2015, December 31, 2014 and June 30, 2014 are presented below:


	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
	(Dollars in Thousands)
June 30, 2015:
U. S. government agencies	$	14,956	$	—	$	(210	)	$	14,746
State, county and municipal securities		165,070		3,305		(1,003	)		167,372
Corporate debt securities		12,710		184		(58	)		12,836
Mortgage-backed securities		665,274		4,948		(3,022	)		667,200

Total securities	$	858,010	$	8,437	$	(4,293	)	$	862,154

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

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

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

The amortized cost and fair value of available-for-sale securities at June 30, 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 not included in the following maturity summary.


	Amortized Cost		Fair Value
	(Dollars in Thousands)
Due in one year or less	$	7,960	$	7,999
Due from one year to five years		47,037		48,246
Due from five to ten years		66,573		67,686
Due after ten years		71,166		71,023
Mortgage-backed securities		665,274		667,200

	$	858,010	$	862,154

Securities with a carrying value of approximately $323.9 million serve as collateral to secure public deposits and for other purposes required or permitted by law at June 30, 2015, compared with $286.6 million and $228.3 million at December 31, 2014 and June 30, 2014, respectively.

The following table details the gross unrealized losses and fair value of securities aggregated by category and duration of continuous unrealized loss position at June 30, 2015, December 31, 2014 and June 30, 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)
June 30, 2015:
U. S. government agencies	$	9,818	$	(138	)	$	4,928	$	(72	)	$	14,746	$	(210	)
State, county and municipal securities		50,294		(680	)		10,404		(323	)		60,698		(1,003	)
Corporate debt securities		7,149		(58	)		—		—			7,149		(58	)
Mortgage-backed securities		238,174		(2,046	)		30,672		(976	)		268,846		(3,022	)

Total temporarily impaired securities	$	305,435	$	(2,922	)	$	46,004	$	(1,371	)	$	351,439	$	(4,293	)

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

June 30, 2014:
U. S. government agencies	$	—	$	—		$	14,445	$	(505	)	$	14,445	$	(505	)
State, county and municipal securities		4,088		(35	)		29,203		(828	)		33,291		(863	)
Corporate debt securities		—		—			4,945		(131	)		4,945		(131	)
Mortgage-backed securities		25,107		(65	)		51,039		(2,117	)		76,146		(2,182	)

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

As of June 30, 2015, the Company’s security portfolio consisted of 443 securities, 163 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 June 30, 2015, the Company held 114 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 June 30, 2015.

At June 30, 2015, the Company held 40 state, county and municipal securities, three U.S. government-sponsored agency security, and six 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 June 30, 2015.

During the first six 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 June 30, 2015, December 31, 2014 or June 30, 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 June 30, 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 June 30, 2015, these investments are not considered impaired on an other-than-temporary basis.

The following table is a summary of sales activities in the Company’s investment securities available for sale for the six months ended June 30, 2015, year ended December 31, 2014 and six months ended June 30, 2014:


	June 30, 2015			December 31, 2014			June 30, 2014
	(Dollars in Thousands)
Gross gains on sales of securities	$	41		$	141		$	8
Gross losses on sales of securities		(19	)		(3	)		(2	)

Net realized gains on sales of securities available for sale	$	22		$	138		$	6

Sales proceeds	$	30,113		$	94,051		$	69,768

NOTE 4 – LOANS

The Company engages in a full complement of lending activities, including real estate-related loans, agriculture-related loans, commercial and financial loans and consumer installment loans within select markets in Georgia, Alabama, Florida and South Carolina. Ameris concentrates the majority of its lending activities in real estate loans. While 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 loans receivable categories are presented in the following table, excluding purchased non-covered and covered loans:


(Dollars in Thousands)	June 30, 2015		December 31, 2014		June 30, 2014
Commercial, financial and agricultural	$	373,202	$	319,654	$	304,588
Real estate – construction and development		205,019		161,507		149,346
Real estate – commercial and farmland		1,010,195		907,524		850,000
Real estate – residential		537,201		456,106		422,731
Consumer installment		30,080		30,782		31,902
Other		15,903		14,308		11,492

	$	2,171,600	$	1,889,881	$	1,770,059

Purchased non-covered loans are defined as loans that were acquired in bank acquisitions that are not covered by a loss-sharing agreement with the FDIC. Purchased non-covered loans totaling $808.3 million, $674.2 million and $702.1 million at June 30, 2015, December 31, 2014 and June 30, 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)	June 30, 2015		December 31, 2014		June 30, 2014
Commercial, financial and agricultural	$	45,337	$	38,041	$	41,583
Real estate – construction and development		75,302		58,362		64,084
Real estate – commercial and farmland		404,588		306,706		311,748
Real estate – residential		276,798		266,342		278,451
Consumer installment		6,288		4,788		6,265

	$	808,313	$	674,239	$	702,131

Purchased loan pools are defined as groups of loans that were not acquired in bank acquisitions or FDIC-assisted transactions. As of June 30, 2015, purchased loan pools totaled $269.0 million and consisted of whole-loan, adjustable rate residential mortgages on properties outside the Company’s markets, with principal balances totaling $263.8 million and $5.2 million of purchase premium paid at acquisition. At June 30, 2015, all loans included in the purchased loan pools were performing current loans, all risk-rated grade 20. The Company did not have any purchased loan pools at December 31, 2014 or June 30, 2014.

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 $209.6 million, $271.3 million and $331.3 million at June 30, 2015, December 31, 2014 and June 30, 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)	June 30, 2015		December 31, 2014		June 30, 2014
Commercial, financial and agricultural	$	17,666	$	21,467	$	25,209
Real estate – construction and development		15,002		23,447		31,600
Real estate – commercial and farmland		111,772		147,627		188,643
Real estate – residential		64,982		78,520		85,518
Consumer installment		176		218		280

	$	209,598	$	271,279	$	331,250

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)	June 30, 2015		December 31, 2014		June 30, 2014
Commercial, financial and agricultural	$	4,067	$	1,672	$	1,596
Real estate – construction and development		1,594		3,774		3,452
Real estate – commercial and farmland		8,938		8,141		8,831
Real estate – residential		5,650		7,663		7,795
Consumer installment		491		478		437

	$	20,740	$	21,728	$	22,111

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


(Dollars in Thousands)	June 30, 2015		December 31, 2014		June 30, 2014
Commercial, financial and agricultural	$	309	$	175	$	143
Real estate – construction and development		1,483		1,119		2,273
Real estate – commercial and farmland		9,634		10,242		6,647
Real estate – residential		5,930		6,644		6,658
Consumer installment		88		69		49

	$	17,444	$	18,249	$	15,770

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


(Dollars in Thousands)	June 30, 2015		December 31, 2014		June 30, 2014
Commercial, financial and agricultural	$	7,948	$	8,541	$	12,254
Real estate – construction and development		3,120		7,601		8,028
Real estate – commercial and farmland		13,997		12,584		17,027
Real estate – residential		3,712		6,595		8,702
Consumer installment		94		91		127

	$	28,871	$	35,412	$	46,138

The following table presents an aging analysis of loans, excluding purchased non-covered and covered past due loans as of June 30, 2015, December 31, 2014 and June 30, 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 June 30, 2015:
Commercial, financial & agricultural	$	840	$	888	$	3,891	$	5,619	$	367,583	$	373,202	$	—
Real estate – construction & development		1,201		374		1,536		3,111		201,908		205,019		—
Real estate – commercial & farmland		1,958		2,823		7,014		11,795		998,400		1,010,195		—
Real estate – residential		5,135		1,949		4,727		11,811		525,390		537,201		—
Consumer installment loans		293		77		315		685		29,395		30,080		—
Other		—		—		—		—		15,903		15,903		—

Total	$	9,427	$	6,111	$	17,483	$	33,021	$	2,138,579	$	2,171,600	$	—


	Loans 30-59 Days Past Due		Loans 60-89 Days Past Due		Loans 90 or More Days Past Due		Total Loans Past Due		Current Loans		Total Loans		Loans 90 Days or More Past Due and Still Accruing
	(Dollars in Thousands)
As of December 31, 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 June 30, 2014:
Commercial, financial & agricultural	$	1,180	$	966	$	1,077	$	3,223	$	301,365	$	304,588	$	—
Real estate – construction & development		3,942		296		3,449		7,687		141,659		149,346		—
Real estate – commercial & farmland		4,622		1,860		7,404		13,886		836,114		850,000		—
Real estate – residential		5,806		3,829		7,197		16,832		405,899		422,731		—
Consumer installment loans		345		176		310		831		31,071		31,902		—
Other		—		—		—		—		11,492		11,492		—

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

The following table presents an analysis of purchased non-covered past due loans as of June 30, 2015, December 31, 2014 and June 30, 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 June 30, 2015:
Commercial, financial & agricultural	$	—	$	1,101	$	202	$	1,303	$	44,034	$	45,337	$	—
Real estate – construction & development		245		—		1,026		1,271		74,031		75,302		—
Real estate – commercial & farmland		2,115		724		9,062		11,901		392,687		404,588		—
Real estate – residential		3,848		1,400		5,369		10,617		266,181		276,798		—
Consumer installment loans		6		—		84		90		6,198		6,288		—

Total	$	6,214	$	3,225	$	15,743	$	25,182	$	783,131	$	808,313	$	—


	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 June 30, 2014:
Commercial, financial & agricultural	$	137	$	26	$	143	$	306	$	41,277	$	41,583	$	—
Real estate – construction & development		712		168		2,165		3,045		61,039		64,084		—
Real estate – commercial & farmland		1,263		1,605		6,647		9,515		302,233		311,748		—
Real estate – residential		6,952		983		6,144		14,079		264,372		278,451		—
Consumer installment loans		23		29		47		99		6,166		6,265		—

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

The following table presents an aging analysis of covered loans as of June 30, 2015, December 31, 2014 and June 30, 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 June 30, 2015:
Commercial, financial & agricultural	$	237	$	240	$	1,670	$	2,147	$	15,519	$	17,666	$	—
Real estate – construction & development		292		31		3,045		3,368		11,634		15,002		143
Real estate – commercial & farmland		699		81		9,396		10,176		101,596		111,772		—
Real estate – residential		2,690		927		2,122		5,739		59,243		64,982		—
Consumer installment loans		—		—		50		50		126		176		—

Total	$	3,918	$	1,279	$	16,283	$	21,480	$	188,118	$	209,598	$	143


	Loans 30-59 Days Past Due		Loans 60-89 Days Past Due		Loans 90 or More Days Past Due		Total Loans Past Due		Current Loans		Total Loans		Loans 90 Days or More Past Due and Still Accruing
	(Dollars in Thousands)
As of December 31, 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 June 30, 2014:
Commercial, financial & agricultural	$	16	$	467	$	6,909	$	7,392	$	17,817	$	25,209	$	—
Real estate – construction & development		551		459		7,708		8,718		22,882		31,600		—
Real estate – commercial & farmland		6,399		139		10,443		16,981		171,662		188,643		—
Real estate – residential		2,490		690		5,939		9,119		76,399		85,518		—
Consumer installment loans		—		49		56		105		175		280		—

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

Impaired Loans

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

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


	As of and For the Period Ended
	June 30, 2015		December 31, 2014		June 30, 2014
	(Dollars in Thousands)
Nonaccrual loans	$	20,740	$	21,728	$	22,111
Troubled debt restructurings not included above		12,467		12,759		17,337

Total impaired loans	$	33,207	$	34,487	$	39,448

Quarter-to-date interest income recognized on impaired loans	$	192	$	237	$	1,133

Year-to-date interest income recognized on impaired loans	$	344	$	1,991	$	1,423

Quarter-to-date foregone interest income on impaired loans	$	311	$	323	$	375

Year-to-date foregone interest income on impaired loans	$	629	$	1,491	$	815

The following table presents an analysis of information pertaining to impaired loans, excluding purchased non-covered and covered loans as of June 30, 2015, December 31, 2014 and June 30, 2014:


	Unpaid Contractual Principal Balance		Recorded Investment With No Allowance		Recorded Investment With Allowance		Total Recorded Investment		Related Allowance		Three Month Average Recorded Investment		Six Month Average Recorded Investment
	(Dollars in Thousands)
As of June 30, 2015:
Commercial, financial & agricultural	$	6,004	$	442	$	3,903	$	4,345	$	458	$	2,819	$	2,533
Real estate – construction & development		3,765		—		2,416		2,416		445		3,245		3,648
Real estate – commercial & farmland		18,117		5,960		9,595		15,555		1,243		15,378		15,125
Real estate – residential		11,743		1,153		9,199		10,352		1,825		11,555		12,006
Consumer installment loans		633		—		539		539		8		494		507

Total	$	40,262	$	7,555	$	25,652	$	33,207	$	3,979	$	33,491	$	33,819


	Unpaid Contractual Principal Balance		Recorded Investment With No Allowance		Recorded Investment With Allowance		Total Recorded Investment		Related Allowance		Three Month Average Recorded Investment		Twelve Month Average Recorded Investment
	(Dollars in Thousands)
As of December 31, 2014:
Commercial, financial & agricultural	$	3,387	$	6	$	1,956	$	1,962	$	395	$	2,457	$	3,021
Real estate – construction & development		8,325		448		4,005		4,453		771		4,703		5,368
Real estate – commercial & farmland		17,514		4,967		9,651		14,618		1,859		15,341		15,972
Real estate – residential		15,571		3,514		9,407		12,921		974		14,244		16,317
Consumer installment loans		618		—		533		533		9		527		519

Total	$	45,415	$	8,935	$	25,552	$	34,487	$	4,008	$	37,272	$	41,197


	Unpaid Contractual Principal Balance		Recorded Investment With No Allowance		Recorded Investment With Allowance		Total Recorded Investment		Related Allowance		Three Month Average Recorded Investment		Six Month Average Recorded Investment
	(Dollars in Thousands)
As of June 30, 2014:
Commercial, financial & agricultural	$	3,398	$	—	$	1,852	$	1,852	$	298	$	2,786	$	3,397
Real estate – construction & development		9,336		—		5,532		5,532		798		5,783		5,811
Real estate – commercial & farmland		19,215		—		16,421		16,421		1,629		16,851		16,394
Real estate – residential		18,313		—		15,131		15,131		884		16,563		17,698
Consumer installment loans		638		—		512		512		10		530		514

Total	$	50,900	$	—	$	39,448	$	39,448	$	3,619	$	42,513	$	43,814

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


	As of and For the Period Ended
	June 30, 2015		December 31, 2014		June 30, 2014
	(Dollars in Thousands)
Nonaccrual loans	$	17,444	$	18,249	$	15,770
Troubled debt restructurings not included above		6,792		1,212		—

Total impaired loans	$	24,236	$	19,461	$	15,770

Quarter-to-date interest income recognized on impaired loans	$	143	$	64	$	41

Year-to-date interest income recognized on impaired loans	$	161	$	132	$	41

Quarter-to-date foregone interest income on impaired loans	$	451	$	521	$	426

Year-to-date foregone interest income on impaired loans	$	923	$	1,759	$	652

The following table presents an analysis of information pertaining to purchased non-covered impaired loans as of June 30, 2015, December 31, 2014 and June 30, 2014:


	Unpaid Contractual Principal Balance		Recorded Investment With No Allowance		Recorded Investment With Allowance		Total Recorded Investment		Related Allowance		Three Month Average Recorded Investment		Six Month Average Recorded Investment
	(Dollars in Thousands)
As of June 30, 2015:
Commercial, financial & agricultural	$	1,476	$	309	$	—	$	309	$	—	$	254	$	227
Real estate – construction & development		9,656		1,857		—		1,857		—		1,485		1,469
Real estate – commercial & farmland		17,043		13,691		—		13,691		—		11,753		11,366
Real estate – residential		12,992		8,285		—		8,285		—		7,982		7,718
Consumer installment loans		111		94		—		94		—		61		64

Total	$	41,278	$	24,236	$	—	$	24,236	$	—	$	21,535	$	20,844


	Unpaid Contractual Principal Balance		Recorded Investment With No Allowance		Recorded Investment With Allowance		Total Recorded Investment		Related Allowance		Three Month Average Recorded Investment		Twelve Month Average Recorded Investment
	(Dollars in Thousands)
As of December 31, 2014:
Commercial, financial & agricultural	$	1,366	$	175	$	—	$	175	$	—	$	277	$	165
Real estate – construction & development		5,161		1,436		—		1,436		—		2,242		1,643
Real estate – commercial & farmland		15,007		10,588		—		10,588		—		11,148		7,484
Real estate – residential		12,283		7,191		—		7,191		—		8,447		7,084
Consumer installment loans		172		71		—		71		—		124		68

Total	$	33,989	$	19,461	$	—	$	19,461	$	—	$	22,238	$	16,444


	Unpaid Contractual Principal Balance		Recorded Investment With No Allowance		Recorded Investment With Allowance		Total Recorded Investment		Related Allowance		Three Month Average Recorded Investment		Six Month Average Recorded Investment
	(Dollars in Thousands)
As of June 30, 2014:
Commercial, financial & agricultural	$	550	$	143	$	—	$	143	$	—	$	130	$	90
Real estate – construction & development		4,649		2,273		—		2,273		—		1,702		1,243
Real estate – commercial & farmland		9,848		6,647		—		6,647		—		6,738		5,043
Real estate – residential		10,598		6,658		—		6,658		—		6,933		6,175
Consumer installment loans		65		49		—		49		—		41		31

Total	$	25,710	$	15,770	$	—	$	15,770	$	—	$	15,544	$	12,582

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


	As of and For the Period Ended
	June 30, 2015		December 31, 2014		June 30, 2014
	(Dollars in Thousands)
Nonaccrual loans	$	28,871	$	35,412	$	46,138
Troubled debt restructurings not included above		17,500		22,619		9,221

Total impaired loans	$	46,371	$	58,031	$	55,359

Quarter-to-date interest income recognized on impaired loans	$	219	$	443	$	796

Year-to-date interest income recognized on impaired loans	$	431	$	2,057	$	1,193

Quarter-to-date foregone interest income on impaired loans	$	409	$	571	$	843

Year-to-date foregone interest income on impaired loans	$	947	$	3,123	$	1,892

The following table presents an analysis of information pertaining to covered impaired loans as of June 30, 2015, December 31, 2014 and June 30, 2014:


	Unpaid Contractual Principal Balance		Recorded Investment With No Allowance		Recorded Investment With Allowance		Total Recorded Investment		Related Allowance		Three Month Average Recorded Investment		Six Month Average Recorded Investment
	(Dollars in Thousands)
As of June 30, 2015:
Commercial, financial & agricultural	$	14,260	$	7,951	$	—	$	7,951	$	—	$	8,869	$	8,773
Real estate – construction & development		29,895		5,953		—		5,953		—		7,819		8,757
Real estate – commercial & farmland		37,426		17,970		—		17,970		—		21,795		21,418
Real estate – residential		18,226		14,402		—		14,402		—		16,600		17,084
Consumer installment loans		125		95		—		95		—		99		97

Total	$	99,932	$	46,371	$	—	$	46,371	$	—	$	55,179	$	56,129


	Unpaid Contractual Principal Balance		Recorded Investment With No Allowance		Recorded Investment With Allowance		Total Recorded Investment		Related Allowance		Three Month Average Recorded Investment		Twelve Month Average Recorded Investment
	(Dollars in Thousands)
As of December 31, 2014:
Commercial, financial & agricultural	$	14,385	$	8,582	$	—	$	8,582	$	—	$	8,525	$	9,325
Real estate – construction & development		27,289		10,638		—		10,638		—		11,279		13,935
Real estate – commercial & farmland		31,309		20,663		—		20,663		—		21,890		28,057
Real estate – residential		22,860		18,054		—		18,054		—		18,242		20,776
Consumer installment loans		124		94		—		94		—		100		160

Total	$	95,967	$	58,031	$	—	$	58,031	$	—	$	60,036	$	72,253


	Unpaid Contractual Principal Balance		Recorded Investment With No Allowance		Recorded Investment With Allowance		Total Recorded Investment		Related Allowance		Three Month Average Recorded Investment		Six Month Average Recorded Investment
	(Dollars in Thousands)
As of June 30, 2014:
Commercial, financial & agricultural	$	14,694	$	12,266	$	—	$	12,266	$	—	$	11,153	$	9,858
Real estate – construction & development		12,921		11,048		—		11,048		—		14,541		15,706
Real estate – commercial & farmland		27,742		24,007		—		24,007		—		27,877		32,167
Real estate – residential		21,874		19,793		—		19,793		—		21,199		22,465
Consumer installment loans		161		127		—		127		—		130		200

Total	$	77,392	$	67,241	$	—	$	67,241	$	—	$	74,899	$	80,397

Credit Quality Indicators

The Company uses a nine category risk grading system to assign a risk grade to each loan in the portfolio. Every loan is assigned a risk rating, with the exception of credit card receivables and overdraft protection loans, which are treated as pools for risk-rating purposes. Relationships greater than $1.0 million and a sample 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. The following is a description of the general characteristics of the grades:

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

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

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

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

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

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

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

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

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

The following table presents the loan portfolio, excluding purchased non-covered and covered loans, by risk grade as of June 30, 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	$	173,795	$	268	$	150	$	1,606	$	6,114	$	—	$	181,933
15		25,447		3,402		127,090		85,812		1,319		—		243,070
20		96,169		47,207		592,636		334,999		17,833		15,903		1,104,747
23		635		8,071		11,984		6,655		55		—		27,400
25		69,304		140,119		248,227		83,207		3,807		—		544,664
30		2,566		2,510		11,088		8,612		244		—		25,020
40		5,286		3,442		19,020		16,310		708		—		44,766
50		—		—		—		—		—		—		—
60		—		—		—		—		—		—		—

Total	$	373,202	$	205,019	$	1,010,195	$	537,201	$	30,080	$	15,903	$	2,171,600

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 June 30, 2014:


Risk Grade	Commercial, financial & agricultural		Real estate - construction & development		Real estate - commercial & farmland		Real estate - residential		Consumer installment loans		Other		Total
	(Dollars in Thousands)
10	$	103,726	$	—	$	255	$	505	$	6,356	$	—	$	110,842
15		24,620		4,678		141,846		54,388		1,120		—		226,652
20		102,278		48,008		460,715		226,149		17,714		11,492		866,356
23		123		9,215		9,318		9,479		294		—		28,429
25		65,882		77,973		197,381		103,846		5,281		—		450,363
30		4,004		2,680		12,914		13,568		194		—		33,360
40		3,955		6,792		27,571		14,786		943		—		54,047
50		—		—		—		10		—		—		10
60		—		—		—		—		—		—		—

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

The following table presents the purchased non-covered loan portfolio by risk grade as of June 30, 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	$	9,091	$	—	$	80	$	—	$	952	$	—	$	10,123
15		1,377		866		8,710		41,641		626		—		53,220
20		12,545		16,979		190,219		139,792		2,769		—		362,304
23		—		240		3,792		6,505		—		—		10,537
25		18,556		49,070		165,267		65,818		1,700		—		300,411
30		2,462		3,409		19,042		9,803		63		—		34,779
40		1,276		4,738		17,478		13,217		178		—		36,887
50		30		—		—		22		—		—		52
60		—		—		—		—		—		—		—

Total	$	45,337	$	75,302	$	404,588	$	276,798	$	6,288	$	—	$	808,313

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 June 30, 2014:


Risk Grade	Commercial, financial & agricultural		Real estate - construction & development		Real estate - commercial & farmland		Real estate - residential		Consumer installment loans		Other		Total
	(Dollars in Thousands)
10	$	3,494	$	—	$	—	$	293	$	557	$	—	$	4,344
15		4,728		245		14,191		15,839		537		—		35,540
20		11,567		12,905		94,598		64,937		2,683		—		186,690
23		—		—		—		165		—		—		165
25		18,251		42,127		175,427		178,523		2,343		—		416,671
30		3,162		4,722		16,078		8,326		21		—		32,309
40		381		4,085		11,454		10,368		124		—		26,412
50		—		—		—		—		—		—		—
60		—		—		—		—		—		—		—

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

The following table presents the covered loan portfolio by risk grade as of June 30, 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		—		—		488		125		—		—		613
20		580		1,218		17,382		12,571		43		—		31,794
23		68		—		5,255		6,083		—		—		11,406
25		4,089		8,142		60,682		30,870		37		—		103,820
30		4,923		2,409		4,165		5,730		—		—		17,227
40		8,006		3,233		23,800		9,603		96		—		44,738
50		—		—		—		—		—		—		—
60		—		—		—		—		—		—		—

Total	$	17,666	$	15,002	$	111,772	$	64,982	$	176	$	—	$	209,598

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 June 30, 2014:


Risk Grade	Commercial, financial & agricultural		Real estate - construction & development		Real estate - commercial & farmland		Real estate - residential		Consumer installment loans		Other		Total
	(Dollars in Thousands)
10	$	—	$	—	$	—	$	—	$	—	$	—	$	—
15		—		2		822		629		—		—		1,453
20		1,133		5,524		33,050		17,143		68		—		56,918
23		124		555		15,528		5,557		—		—		21,764
25		6,569		9,251		94,504		36,507		40		—		146,871
30		4,398		4,802		9,959		8,326		2		—		27,487
40		12,985		11,466		34,780		17,356		170		—		76,757
50		—		—		—		—		—		—		—
60		—		—		—		—		—		—		—

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

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 six months of 2015 and 2014 totaling $54.8 million and $8.4 million, respectively, under such parameters.

As of June 30, 2015, December 31, 2014 and June 30, 2014, the Company had a balance of $14.0 million, $15.3 million and $21.1 million, respectively, in troubled debt restructurings, excluding purchased non-covered and covered loans. The Company has recorded $1.6 million, $2.2 million and $3.0 million in previous charge-offs on such loans at June 30, 2015, December 31, 2014 and June 30, 2014, respectively. The Company’s balance in the allowance for loan losses allocated to such troubled debt restructurings was $210,000, $231,000 and $398,000 at June 30, 2015, December 31, 2014 and June 30, 2014, respectively. At June 30, 2015, the Company did not have any commitments to lend additional funds to debtors whose terms have been modified in troubled restructurings.

During the six months ending June 30, 2015 and 2014, the Company modified loans as troubled debt restructurings, excluding purchased non-covered and covered loans, with principal balances of $782,000 and $1.7 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, excluding purchased non-covered and covered loans, which occurred during the six months ending June 30, 2015 and 2014:


	June 30, 2015				June 30, 2014
Loan class:	#		Balance (in thousands)		#		Balance (in thousands)
Commercial, financial & agricultural		3	$	18		2	$	16
Real estate – construction & development		2		16		4		235
Real estate – commercial & farmland		—		—		3		1,037
Real estate – residential		15		729		6		328
Consumer installment		5		19		11		46

Total		25	$	782		26	$	1,662

Troubled debt restructurings, excluding purchased non-covered and covered loans, with an outstanding balance of $2.2 million and $130,000 defaulted during the six months ended June 30, 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 (defined as 30 days past due) during the six months ending June 30, 2015 and 2014:


	June 30, 2015				June 30, 2014
Loan class:	#		Balance (in thousands)		#		Balance (in thousands)
Commercial, financial & agricultural		2	$	35		—	$	—
Real estate – construction & development		—		—		1		35
Real estate – commercial & farmland		5		1,274		—		—
Real estate – residential		10		884		2		72
Consumer installment		6		32		1		23

Total		23	$	2,225		4	$	130

The following table presents the amount of troubled debt restructurings by loan class, excluding purchased non-covered and covered loans, classified separately as accrual and non-accrual at June 30, 2015, December 31, 2014 and June 30, 2014:


As of June 30, 2015	Accruing Loans				Non-Accruing Loans
Loan class:	#		Balance (*in thousands*)		#		Balance (*in thousands*)
Commercial, financial & agricultural		6	$	278		5	$	29
Real estate – construction & development		11		821		3		57
Real estate – commercial & farmland		17		6,617		3		598
Real estate – residential		49		4,702		15		783
Consumer installment		11		49		17		82

Total		94	$	12,467		43	$	1,549


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

Total		86	$	17,337		22	$	3,743

As of June 30, 2015 and December 31, 2014, the Company had a balance of $7.0 million and $1.2 million, respectively, in troubled debt restructurings included in purchased non-covered loans. The Company did not have any troubled debt restructurings included in purchased non-covered loans at June 30, 2014. The Company has recorded $632,000 and $29,000 in previous charge-offs on such loans at June 30, 2015 and December 31, 2014, respectively. At June 30, 2015, the Company did not have any commitments to lend additional funds to debtors whose terms have been modified in troubled restructurings.

During the six months ending June 30, 2015, the Company modified purchased non-covered loans as troubled debt restructurings, with principal balances of $1.0 million, and these modifications did not have a material impact on the Company’s allowance for loan loss. The Company did not modify any purchased non-covered loans as troubled debt restructurings during the six months ended June 30, 2014. The Company transferred troubled debt restructurings with principal balances of $4.8 million from the covered loan category to the purchased non-covered loan category during the six months ended June 30, 2015 due to the expiration of the loss-sharing agreements. The following table presents the purchased non-covered loans by class modified as troubled debt restructurings, which occurred during the six months ending June 30, 2015 and 2014:


	June 30, 2015				June 30, 2014
Loan class:	#		Balance (in thousands)		#		Balance (in thousands)
Commercial, financial & agricultural		—	$	—		—	$	—
Real estate – construction & development		—		—		—		—
Real estate – commercial & farmland		—		—		—		—
Real estate – residential		5		1,017		—		—
Consumer installment		1		5		—		—

Total		6	$	1,022		—	$	—

Troubled debt restructurings included in purchased non-covered loans with an outstanding balance of $65,000 defaulted during the six months ended June 30, 2015, and these defaults did not have a material impact on the Company’s allowance for loan loss. There were no troubled debt restructurings included in purchased non-covered loans that defaulted during the six months ended June 30, 2014. The following table presents the troubled debt restructurings by class that defaulted (defined as 30 days past due) during the six months ending June 30, 2015 and 2014:


	June 30, 2015				June 30, 2014
Loan class:	#		Balance (in thousands)		#		Balance (in thousands)
Commercial, financial & agricultural		—	$	—		—	$	—
Real estate – construction & development		—		—		—		—
Real estate – commercial & farmland		—		—		—		—
Real estate – residential		1		65		—		—
Consumer installment		—		—		—		—

Total		1	$	65		—	$	—

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 June 30, 2015, December 31, 2014 and June 30, 2014:


As of June 30, 2015	Accruing Loans				Non-Accruing Loans
Loan class:	#		Balance (in thousands)		#		Balance (in thousands)
Commercial, financial & agricultural		—	$	—		1	$	1
Real estate – construction & development		3		374		—		—

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