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Loans and Asset Quality Information | 9 Months Ended
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Sep. 30, 2011
Loans And Asset Quality Information [Abstract] |
Loans and Asset Quality Information | Note 8 – Loans and Asset Quality Information The loans and foreclosed real estate that were acquired in FDIC-assisted transactions are covered by loss share agreements between the FDIC and First Bank, which afford First Bank significant loss protection. (See the Company's 2010 Annual Report on Form 10-K for more information regarding the Cooperative Bank transaction and Note 4 above for the more information regarding The Bank of Asheville transaction.) Because of the loss protection provided by the FDIC, the risk of the Cooperative Bank and The Bank of Asheville loans and foreclosed real estate are significantly different from those assets not covered under the loss share agreements. Accordingly, the Company presents separately loans subject to the loss share agreements as “covered loans” in the information below and loans that are not subject to the loss share agreements as “non-covered loans.” The following is a summary of the major categories of total loans outstanding:
($ in thousands) |  | September 30, 2011 |  |  | December 31, 2010 |  |  | September 30, 2010 |
|  | Amount |  |  | Percentage |  |  | Amount |  |  | Percentage |  |  | Amount |  |  | Percentage |
All loans (non-covered and covered): |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial, financial, and agricultural |  | $ | 161,300 |  |  |  | 7 | % |  |  | 155,016 |  |  |  | 6 | % |  |  | 160,824 |  |  |  | 7 | %
Real estate – construction, land development & other land loans |  |  | 370,735 |  |  |  | 15 | % |  |  | 437,700 |  |  |  | 18 | % |  |  | 473,446 |  |  |  | 19 | %
Real estate – mortgage – residential (1-4 family) first mortgages |  |  | 803,688 |  |  |  | 33 | % |  |  | 802,658 |  |  |  | 33 | % |  |  | 810,794 |  |  |  | 32 | %
Real estate – mortgage – home equity loans / lines of credit |  |  | 258,653 |  |  |  | 11 | % |  |  | 263,529 |  |  |  | 11 | % |  |  | 266,608 |  |  |  | 11 | %
Real estate – mortgage – commercial and other |  |  | 756,568 |  |  |  | 31 | % |  |  | 710,337 |  |  |  | 29 | % |  |  | 713,794 |  |  |  | 28 | %
Installment loans to individuals |  |  | 80,309 |  |  |  | 3 | % |  |  | 83,919 |  |  |  | 3 | % |  |  | 83,846 |  |  |  | 3 | %
Subtotal |  |  | 2,431,253 |  |  |  | 100 | % |  |  | 2,453,159 |  |  |  | 100 | % |  |  | 2,509,312 |  |  |  | 100 | %
Unamortized net deferred loan costs |  |  | 1,295 |  |  |  |  |  |  |  | 973 |  |  |  |  |  |  |  | 862 |  |  |  |  |
Total loans |  | $ | 2,432,548 |  |  |  |  |  |  |  | 2,454,132 |  |  |  |  |  |  |  | 2,510,174 |  |  |  |  |
As of September 30, 2011, December 31, 2010 and September 30, 2010, net loans include unamortized premiums of $1,065,000, $687,000, and $736,000, respectively, related to acquired loans. The following is a summary of the major categories of non-covered loans outstanding:
($ in thousands) |  | September 30, 2011 |  |  | December 31, 2010 |  |  | September 30, 2010 |
|  | Amount |  |  | Percentage |  |  | Amount |  |  | Percentage |  |  | Amount |  |  | Percentage |
Non-covered loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial, financial, and agricultural |  | $ | 150,252 |  |  |  | 7 | % |  |  | 150,545 |  |  |  | 7 | % |  |  | 155,498 |  |  |  | 7 | %
Real estate – construction, land development & other land loans |  |  | 298,650 |  |  |  | 14 | % |  |  | 344,939 |  |  |  | 17 | % |  |  | 370,805 |  |  |  | 18 | %
Real estate – mortgage – residential (1-4 family) first mortgages |  |  | 637,129 |  |  |  | 31 | % |  |  | 622,353 |  |  |  | 30 | % |  |  | 615,681 |  |  |  | 29 | %
Real estate – mortgage – home equity loans / lines of credit |  |  | 236,578 |  |  |  | 12 | % |  |  | 246,418 |  |  |  | 12 | % |  |  | 243,092 |  |  |  | 12 | %
Real estate – mortgage – commercial and other |  |  | 656,035 |  |  |  | 32 | % |  |  | 636,197 |  |  |  | 30 | % |  |  | 629,316 |  |  |  | 30 | %
Installment loans to individuals |  |  | 78,785 |  |  |  | 4 | % |  |  | 81,579 |  |  |  | 4 | % |  |  | 81,185 |  |  |  | 4 | %
Subtotal |  |  | 2,057,429 |  |  |  | 100 | % |  |  | 2,082,031 |  |  |  | 100 | % |  |  | 2,095,577 |  |  |  | 100 | %
Unamortized net deferred loan costs |  |  | 1,295 |  |  |  |  |  |  |  | 973 |  |  |  |  |  |  |  | 862 |  |  |  |  |
Total non-covered loans |  | $ | 2,058,724 |  |  |  |  |  |  |  | 2,083,004 |  |  |  |  |  |  |  | 2,096,439 |  |  |  |  |
The carrying amount of the covered loans at September 30, 2011 consisted of impaired and nonimpaired purchased loans, as follows:
($ in thousands) |  | Impaired Purchased Loans – Carrying Value |  |  | Impaired Purchased Loans – Unpaid Principal Balance |  |  | Nonimpaired Purchased Loans – Carrying Value |  |  | Nonimpaired Purchased Loans – Unpaid Principal Balance |  |  | Total Covered Loans – Carrying Value |  |  | Total Covered Loans – Unpaid Principal Balance |
Covered loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial, financial, and agricultural |  | $ | 101 |  |  |  | 637 |  |  |  | 10,947 |  |  |  | 22,348 |  |  |  | 11,048 |  |  |  | 22,985 |
Real estate – construction, land development & other land loans |  |  | 3,866 |  |  |  | 11,196 |  |  |  | 68,219 |  |  |  | 115,021 |  |  |  | 72,085 |  |  |  | 126,217 |
Real estate – mortgage – residential (1-4 family) first mortgages |  |  | 1,227 |  |  |  | 2,695 |  |  |  | 165,332 |  |  |  | 201,303 |  |  |  | 166,559 |  |  |  | 203,998 |
Real estate – mortgage – home equity loans / lines of credit |  |  | 130 |  |  |  | 578 |  |  |  | 21,945 |  |  |  | 29,603 |  |  |  | 22,075 |  |  |  | 30,181 |
Real estate – mortgage – commercial and other |  |  | 3,708 |  |  |  | 5,539 |  |  |  | 96,825 |  |  |  | 123,981 |  |  |  | 100,533 |  |  |  | 129,520 |
Installment loans to individuals |  |  | 5 |  |  |  | 7 |  |  |  | 1,519 |  |  |  | 1,733 |  |  |  | 1,524 |  |  |  | 1,740 |
Total |  | $ | 9,037 |  |  |  | 20,652 |  |  |  | 364,787 |  |  |  | 493,989 |  |  |  | 373,824 |  |  |  | 514,641 |
The carrying amount of the covered loans at December 31, 2010 consisted of impaired and nonimpaired purchased loans, as follows:
($ in thousands) |  | Impaired Purchased Loans – Carrying Value |  |  | Impaired Purchased Loans – Unpaid Principal Balance |  |  | Nonimpaired Purchased Loans – Carrying Value |  |  | Nonimpaired Purchased Loans – Unpaid Principal Balance |  |  | Total Covered Loans – Carrying Value |  |  | Total Covered Loans – Unpaid Principal Balance |
Covered loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial, financial, and agricultural |  | $ | − |  |  |  | − |  |  |  | 4,471 |  |  |  | 5,272 |  |  |  | 4,471 |  |  |  | 5,272 |
Real estate – construction, land development & other land loans |  |  | 1,898 |  |  |  | 3,328 |  |  |  | 90,863 |  |  |  | 147,615 |  |  |  | 92,761 |  |  |  | 150,943 |
Real estate – mortgage – residential (1-4 family) first mortgages |  |  | − |  |  |  | − |  |  |  | 180,305 |  |  |  | 212,826 |  |  |  | 180,305 |  |  |  | 212,826 |
Real estate – mortgage – home equity loans / lines of credit |  |  | − |  |  |  | − |  |  |  | 17,111 |  |  |  | 20,332 |  |  |  | 17,111 |  |  |  | 20,332 |
Real estate – mortgage – commercial and other |  |  | 2,709 |  |  |  | 3,594 |  |  |  | 71,431 |  |  |  | 93,490 |  |  |  | 74,140 |  |  |  | 97,084 |
Installment loans to individuals |  |  | − |  |  |  | − |  |  |  | 2,340 |  |  |  | 2,595 |  |  |  | 2,340 |  |  |  | 2,595 |
Total |  | $ | 4,607 |  |  |  | 6,922 |  |  |  | 366,521 |  |  |  | 482,130 |  |  |  | 371,128 |  |  |  | 489,052 |
The following table presents information regarding covered purchased nonimpaired loans since December 31, 2009. The amounts include principal only and do not reflect accrued interest as of the date of the acquisition or beyond. ($ in thousands)
Carrying amount of nonimpaired covered loans at December 31, 2009 |  | $ | 485,572 |
Principal repayments |  |  | (43,801 | )
Transfers to foreclosed real estate |  |  | (75,121 | )
Loan charge-offs |  |  | (7,736 | )
Accretion of loan discount |  |  | 7,607 |
Carrying amount of nonimpaired covered loans at December 31, 2010 |  |  | 366,521 |
Additions due to acquisition of The Bank of Asheville (at fair value) |  |  | 84,623 |
Principal repayments |  |  | (33,385 | )
Transfers to foreclosed real estate |  |  | (47,795 | )
Loan charge-offs |  |  | (15,045 | )
Accretion of loan discount |  |  | 9,868 |
Carrying amount of nonimpaired covered loans at September 30, 2011 |  | $ | 364,787 |
As reflected in the table above, the Company accreted $9,868,000 of the loan discount on purchased nonimpaired loans into interest income during the first nine months of 2011. The following table presents information regarding all purchased impaired loans since December 31, 2009, substantially all of which are covered loans. The Company has applied the cost recovery method to all purchased impaired loans at their respective acquisition dates due to the uncertainty as to the timing of expected cash flows, as reflected in the following table.
($ in thousands) Purchased Impaired Loans |  | Contractual Principal Receivable |  |  | Fair Market Value Adjustment – Write Down (Nonaccretable Difference) |  |  | Carrying Amount |
Balance at December 31, 2009 |  | $ | 39,293 |  |  |  | 3,242 |  |  |  | 36,051 |
Change due to payments received |  |  | (685 | ) |  |  | 2 |  |  |  | (687 | )
Transfer to foreclosed real estate |  |  | (27,569 | ) |  |  | (225 | ) |  |  | (27,344 | )
Change due to loan charge-off |  |  | (3,149 | ) |  |  | (625 | ) |  |  | (2,524 | )
Other |  |  | 190 |  |  |  | (65 | ) |  |  | 255 |
Balance at December 31, 2010 |  | $ | 8,080 |  |  |  | 2,329 |  |  |  | 5,751 |
Additions due to acquisition of The Bank of Asheville |  |  | 38,452 |  |  |  | 20,807 |  |  |  | 17,645 |
Change due to payments received |  |  | (1,049 | ) |  |  | (358 | ) |  |  | (691 | )
Transfer to foreclosed real estate |  |  | (19,881 | ) |  |  | (9,308 | ) |  |  | (10,573 | )
Change due to loan charge-off |  |  | (4,367 | ) |  |  | (1,709 | ) |  |  | (2,658 | )
Other |  |  | 709 |  |  |  | 224 |  |  |  | 485 |
Balance at September 30, 2011 |  | $ | 21,944 |  |  |  | 11,985 |  |  |  | 9,959 |
Each of the purchased impaired loans is on nonaccrual status and considered to be impaired. Because of the uncertainty of the expected cash flows, the Company is accounting for each purchased impaired loan under the cost recovery method, in which all cash payments are applied to principal. Thus, there is no accretable yield associated with the above loans. During the nine months ended September 30, 2011 and 2010, the Company received $717,000 and $67,000 in payments that exceeded the initial carrying amount of the purchased impaired loans, which is included in the loan discount accretion amount discussed previously. Nonperforming assets are defined as nonaccrual loans, restructured loans, loans past due 90 or more days and still accruing interest, and other real estate. Nonperforming assets are summarized as follows:
ASSET QUALITY DATA ($ in thousands) |  | September 30, 2011 |  |  | December 31, 2010 |  |  | September 30, 2010 |
Non-covered nonperforming assets |  |  |  |  |  |  |  |  |
Nonaccrual loans |  | $ | 75,013 |  |  |  | 62,326 |  |  |  | 80,318 |
Restructured loans – accruing |  |  | 11,257 |  |  |  | 33,677 |  |  |  | 20,447 |
Accruing loans > 90 days past due |  |  | - |  |  |  | - |  |  |  | – |
Total non-covered nonperforming loans |  |  | 86,270 |  |  |  | 96,003 |  |  |  | 100,765 |
Other real estate |  |  | 32,673 |  |  |  | 21,081 |  |  |  | 17,475 |
Total non-covered nonperforming assets |  | $ | 118,943 |  |  |  | 117,084 |  |  |  | 118,240 |
Covered nonperforming assets |  |  |  |  |  |  |  |  |  |  |  |
Nonaccrual loans (1) |  | $ | 36,536 |  |  |  | 58,466 |  |  |  | 75,116 |
Restructured loans – accruing |  |  | 16,912 |  |  |  | 14,359 |  |  |  | 4,160 |
Accruing loans > 90 days past due |  |  | - |  |  |  | - |  |  |  | – |
Total covered nonperforming loans |  |  | 53,448 |  |  |  | 72,825 |  |  |  | 79,276 |
Other real estate |  |  | 104,785 |  |  |  | 94,891 |  |  |  | 101,389 |
Total covered nonperforming assets |  | $ | 158,233 |  |  |  | 167,716 |  |  |  | 180,665 |
Total nonperforming assets |  | $ | 277,176 |  |  |  | 284,800 |  |  |  | 298,905 |
(1) At September 30, 2011, December 31, 2010, and September 30, 2010, the contractual balance of the nonaccrual loans covered by FDIC loss share agreements was $65.0 million, $86.2 million, and $103.9 million, respectively. The following table presents information related to the Company's impaired loans.
($ in thousands) |  | As of /for the nine months ended September 30, 2011 |  |  | As of /for the year ended December 31, 2010 |  |  | As of /for the nine months ended September 30, 2010 |
Impaired loans at period end |  |  |  |  |  |  |  |  |
Non-covered |  | $ | 86,270 |  |  |  | 96,003 |  |  |  | 100,765 |
Covered |  |  | 53,448 |  |  |  | 72,825 |  |  |  | 79,276 |
Total impaired loans at period end |  | $ | 139,718 |  |  |  | 168,828 |  |  |  | 180,041 |
Average amount of impaired loans for period |  |  |  |  |  |  |  |  |  |  |  |
Non-covered |  | $ | 89,957 |  |  |  | 89,751 |  |  |  | 85,126 |
Covered |  |  | 65,189 |  |  |  | 95,373 |  |  |  | 99,391 |
Average amount of impaired loans for period – total |  | $ | 155,146 |  |  |  | 185,124 |  |  |  | 184,517 |
Allowance for loan losses related to impaired loans at period end |  |  |  |  |  |  |  |  |  |  |  |
Non-covered |  | $ | 5,429 |  |  |  | 7,613 |  |  |  | 15,767 |
Covered |  |  | 2,287 |  |  |  | 11,155 |  |  |  | − |
Allowance for loan losses related to impaired loans - total |  | $ | 7,716 |  |  |  | 18,768 |  |  |  | 15,767 |
Amount of impaired loans with no related allowance at period end |  |  |  |  |  |  |  |  |  |  |  |
Non-covered |  | $ | 35,897 |  |  |  | 42,874 |  |  |  | 24,473 |
Covered |  |  | 43,918 |  |  |  | 49,991 |  |  |  | 79,276 |
Total impaired loans with no related allowance at period end |  | $ | 79,815 |  |  |  | 92,865 |  |  |  | 103,749 |
All of the impaired loans noted in the table above were on nonaccrual status at each respective period end except for those classified as restructured loans (see table above for balances). The remaining tables in this note present information derived from the Company's allowance for loan loss model. Relevant accounting guidance requires certain disclosures to be disaggregated based on how the Company develops its allowance for loan losses and manages its credit exposure. This model combines loan types in a different manner than the tables previously presented. The following table presents the Company's nonaccrual loans as of September 30, 2011.
($ in thousands) |  | Non-covered |  |  | Covered |  |  | Total |
Commercial, financial, and agricultural: |  |  |  |  |  |  |  |  |
Commercial – unsecured |  | $ | 88 |  |  |  | 22 |  |  |  | 110 |
Commercial – secured |  |  | 2,216 |  |  |  | − |  |  |  | 2,216 |
Secured by inventory and accounts receivable |  |  | 350 |  |  |  | 147 |  |  |  | 497 |
Real estate – construction, land development & other land loans |  |  | 26,710 |  |  |  | 19,091 |  |  |  | 45,801 |
Real estate – residential, farmland and multi-family |  |  | 25,656 |  |  |  | 11,421 |  |  |  | 37,077 |
Real estate – home equity lines of credit |  |  | 2,825 |  |  |  | 1,182 |  |  |  | 4,007 |
Real estate – commercial |  |  | 14,563 |  |  |  | 4,447 |  |  |  | 19,010 |
Consumer |  |  | 2,605 |  |  |  | 226 |  |  |  | 2,831 |
Total |  | $ | 75,013 |  |  |  | 36,536 |  |  |  | 111,549 |
The following table presents the Company's nonaccrual loans as of December 31, 2010.
($ in thousands) |  | Non-covered |  |  | Covered |  |  | Total |
Commercial, financial, and agricultural: |  |  |  |  |  |  |  |  |
Commercial – unsecured |  | $ | 64 |  |  |  | 160 |  |  |  | 224 |
Commercial – secured |  |  | 1,566 |  |  |  | 3 |  |  |  | 1,569 |
Secured by inventory and accounts receivable |  |  | 802 |  |  |  | − |  |  |  | 802 |
Real estate – construction, land development & other land loans |  |  | 22,654 |  |  |  | 30,847 |  |  |  | 53,501 |
Real estate – residential, farmland and multi-family |  |  | 27,055 |  |  |  | 19,716 |  |  |  | 46,771 |
Real estate – home equity lines of credit |  |  | 2,201 |  |  |  | 685 |  |  |  | 2,886 |
Real estate – commercial |  |  | 7,461 |  |  |  | 7,039 |  |  |  | 14,500 |
Consumer |  |  | 523 |  |  |  | 16 |  |  |  | 539 |
Total |  | $ | 62,326 |  |  |  | 58,466 |  |  |  | 120,792 |
The following table presents an analysis of the payment status of the Company's loans as of September 30, 2011.
($ in thousands) |  | 30-59 Days Past Due |  |  | 60-89 Days Past Due |  |  | Nonaccrual Loans |  |  | Current |  |  | Total Loans Receivable |
Non-covered loans |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial, financial, and agricultural: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial - unsecured |  | $ | 72 |  |  |  | 488 |  |  |  | 88 |  |  |  | 40,360 |  |  |  | 41,008 |
Commercial - secured |  |  | 1,159 |  |  |  | 542 |  |  |  | 2,216 |  |  |  | 102,414 |  |  |  | 106,331 |
Secured by inventory and accounts receivable |  |  | 69 |  |  |  | 5 |  |  |  | 350 |  |  |  | 21,782 |  |  |  | 22,206 |
Real estate – construction, land development & other land loans |  |  | 988 |  |  |  | 906 |  |  |  | 26,710 |  |  |  | 225,757 |  |  |  | 254,361 |
Real estate – residential, farmland, and multi-family |  |  | 7,410 |  |  |  | 2,881 |  |  |  | 25,656 |  |  |  | 749,465 |  |  |  | 785,412 |
Real estate – home equity lines of credit |  |  | 2,257 |  |  |  | 466 |  |  |  | 2,825 |  |  |  | 206,451 |  |  |  | 211,999 |
Real estate - commercial |  |  | 1,183 |  |  |  | 735 |  |  |  | 14,563 |  |  |  | 559,978 |  |  |  | 576,459 |
Consumer |  |  | 614 |  |  |  | 171 |  |  |  | 2,605 |  |  |  | 56,263 |  |  |  | 59,653 |
Total non-covered |  | $ | 13,752 |  |  |  | 6,194 |  |  |  | 75,013 |  |  |  | 1,962,470 |  |  |  | 2,057,429 |
Unamortized net deferred loan costs |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 1,295 |
Total non-covered loans |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | $ | 2,058,724 |
Covered loans |  | $ | 7,191 |  |  |  | 3,242 |  |  |  | 36,536 |  |  |  | 326,855 |  |  |  | 373,824 |
Total loans |  | $ | 20,943 |  |  |  | 9,436 |  |  |  | 111,549 |  |  |  | 2,289,325 |  |  |  | 2,432,548 |
The Company had no non-covered or covered loans that were past due greater than 90 days and accruing interest at September 30, 2011. The following table presents an analysis of the payment status of the Company's loans as of December 31, 2010.
($ in thousands) |  | 30-59 Days Past Due |  |  | 60-89 Days Past Due |  |  | Nonaccrual Loans |  |  | Current |  |  | Total Loans Receivable |
Non-covered loans |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial, financial, and agricultural: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial - unsecured |  | $ | 225 |  |  |  | 92 |  |  |  | 64 |  |  |  | 41,564 |  |  |  | 41,945 |
Commercial - secured |  |  | 1,165 |  |  |  | 195 |  |  |  | 1,566 |  |  |  | 102,657 |  |  |  | 105,583 |
Secured by inventory and accounts receivable |  |  | 100 |  |  |  | − |  |  |  | 802 |  |  |  | 21,369 |  |  |  | 22,271 |
Real estate – construction, land development & other land loans |  |  | 2,951 |  |  |  | 7,022 |  |  |  | 22,654 |  |  |  | 270,892 |  |  |  | 303,519 |
Real estate – residential, farmland, and multi-family |  |  | 10,290 |  |  |  | 2,942 |  |  |  | 27,055 |  |  |  | 726,456 |  |  |  | 766,743 |
Real estate – home equity lines of credit |  |  | 496 |  |  |  | 253 |  |  |  | 2,201 |  |  |  | 213,984 |  |  |  | 216,934 |
Real estate - commercial |  |  | 2,581 |  |  |  | 1,193 |  |  |  | 7,461 |  |  |  | 552,020 |  |  |  | 563,255 |
Consumer |  |  | 595 |  |  |  | 297 |  |  |  | 523 |  |  |  | 60,366 |  |  |  | 61,781 |
Total non-covered |  | $ | 18,403 |  |  |  | 11,994 |  |  |  | 62,326 |  |  |  | 1,989,308 |  |  |  | 2,082,031 |
Unamortized net deferred loan costs |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 973 |
Total non-covered loans |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | $ | 2,083,004 |
Total covered loans |  | $ | 6,713 |  |  |  | 4,127 |  |  |  | 58,466 |  |  |  | 301,822 |  |  |  | 371,128 |
Total loans |  | $ | 25,116 |  |  |  | 16,121 |  |  |  | 120,792 |  |  |  | 2,291,130 |  |  |  | 2,454,132 |
The Company had no non-covered or covered loans that were past due greater than 90 days and accruing interest at December 31, 2010. The following table presents the activity in the allowance for loan losses for non-covered loans for the three and nine months ended September 30, 2011.
($ in thousands) |  | Commercial, Financial, and Agricultural |  |  | Real Estate – Construction, Land Development, & Other Land Loans |  |  | Real Estate – Residential, Farmland, and Multi- family |  |  | Real Estate – Home Equity Lines of Credit |  |  | Real Estate – Commercial and Other |  |  | Consumer |  |  | Unallo- cated |  |  | Total |
As of and for the three months ended September 30, 2011 |
Beginning balance |  | $ | 3,905 |  |  |  | 11,790 |  |  |  | 12,084 |  |  |  | 1,849 |  |  |  | 2,859 |  |  |  | 1,960 |  |  |  | 18 |  |  |  | 34,465 |
Charge-offs |  |  | (102 | ) |  |  | (3,937 | ) |  |  | (1,349 | ) |  |  | (189 | ) |  |  | (1,149 | ) |  |  | (173 | ) |  |  | (179 | ) |  |  | (7,078 | )
Recoveries |  |  | 15 |  |  |  | 220 |  |  |  | 286 |  |  |  | 10 |  |  |  | 5 |  |  |  | 9 |  |  |  | 24 |  |  |  | 569 |
Provisions |  |  | 161 |  |  |  | 3,215 |  |  |  | 1,456 |  |  |  | 97 |  |  |  | 1,303 |  |  |  | 78 |  |  |  | 131 |  |  |  | 6,441 |
Ending balance |  | $ | 3,979 |  |  |  | 11,288 |  |  |  | 12,477 |  |  |  | 1,767 |  |  |  | 3,018 |  |  |  | 1,874 |  |  |  | (6 | ) |  |  | 34,397 |
As of and for the nine months ended September 30, 2011 |
Beginning balance |  | $ | 4,731 |  |  |  | 12,520 |  |  |  | 11,283 |  |  |  | 3,634 |  |  |  | 3,972 |  |  |  | 1,961 |  |  |  | 174 |  |  |  | 38,275 |
Charge-offs |  |  | (1,998 | ) |  |  | (13,519 | ) |  |  | (6,945 | ) |  |  | (953 | ) |  |  | (2,529 | ) |  |  | (533 | ) |  |  | (415 | ) |  |  | (26,892 | )
Recoveries |  |  | 51 |  |  |  | 471 |  |  |  | 579 |  |  |  | 53 |  |  |  | 33 |  |  |  | 112 |  |  |  | 97 |  |  |  | 1,396 |
Provisions |  |  | 1,195 |  |  |  | 11,816 |  |  |  | 7,560 |  |  |  | (967 | ) |  |  | 1,542 |  |  |  | 334 |  |  |  | 138 |  |  |  | 21,618 |
Ending balance |  | $ | 3,979 |  |  |  | 11,288 |  |  |  | 12,477 |  |  |  | 1,767 |  |  |  | 3,018 |  |  |  | 1,874 |  |  |  | (6 | ) |  |  | 34,397 |
Ending balances as of September 30, 2011: Allowance for loan losses |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Individually evaluated for impairment |  | $ | 145 |  |  |  | 655 |  |  |  | 49 |  |  |  | − |  |  |  | 25 |  |  |  | − |  |  |  | − |  |  |  | 874 |
Collectively evaluated for impairment |  | $ | 3,834 |  |  |  | 10,633 |  |  |  | 12,428 |  |  |  | 1,767 |  |  |  | 2,993 |  |  |  | 1,874 |  |  |  | (6 | ) |  |  | 33,523 |
Loans acquired with deteriorated credit quality |  | $ | − |  |  |  | − |  |  |  | − |  |  |  | − |  |  |  | − |  |  |  | − |  |  |  | − |  |  |  | − |
Loans receivable as of September 30, 2011: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Ending balance – total |  | $ | 169,545 |  |  |  | 254,361 |  |  |  | 785,412 |  |  |  | 211,999 |  |  |  | 576,459 |  |  |  | 59,653 |  |  |  | − |  |  |  | 2,057,429 |
Ending balances as of September 30, 2011: Loans |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Individually evaluated for impairment |  | $ | 2,377 |  |  |  | 39,651 |  |  |  | 12,940 |  |  |  | 528 |  |  |  | 30,833 |  |  |  | 17 |  |  |  | − |  |  |  | 86,346 |
Collectively evaluated for impairment |  | $ | 167,168 |  |  |  | 214,710 |  |  |  | 772,472 |  |  |  | 211,471 |  |  |  | 545,626 |  |  |  | 59,636 |  |  |  | − |  |  |  | 1,971,083 |
Loans acquired with deteriorated credit quality |  | $ | − |  |  |  | 922 |  |  |  | − |  |  |  | − |  |  |  | − |  |  |  | − |  |  |  | − |  |  |  | 922 |
The following table presents the activity in the allowance for loan losses for non-covered loans for the year ended December 31, 2010.
($ in thousands) |  | Commercial, Financial, and Agricultural |  |  | Real Estate – Construction, Land Development, & Other Land Loans |  |  | Real Estate – Residential, Farmland, and Multi- family |  |  | Real Estate – Home Equity Lines of Credit |  |  | Real Estate – Commercial and Other |  |  | Consumer |  |  | Unallo -cated |  |  | Total |
As of and for the year ended December 31, 2010 |
Beginning balance |  | $ | 4,992 |  |  |  | 9,286 |  |  |  | 10,779 |  |  |  | 3,228 |  |  |  | 6,839 |  |  |  | 1,610 |  |  |  | 609 |  |  |  | 37,343 |
Charge-offs |  |  | (4,691 | ) |  |  | (15,721 | ) |  |  | (6,962 | ) |  |  | (2,490 | ) |  |  | (2,354 | ) |  |  | (1,587 | ) |  |  | − |  |  |  | (33,805 | )
Recoveries |  |  | 145 |  |  |  | 130 |  |  |  | 548 |  |  |  | 59 |  |  |  | 38 |  |  |  | 171 |  |  |  | − |  |  |  | 1,091 |
Provisions |  |  | 4,285 |  |  |  | 18,825 |  |  |  | 6,918 |  |  |  | 2,837 |  |  |  | (551 | ) |  |  | 1,767 |  |  |  | (435 | ) |  |  | 33,646 |
Ending balance |  | $ | 4,731 |  |  |  | 12,520 |  |  |  | 11,283 |  |  |  | 3,634 |  |  |  | 3,972 |  |  |  | 1,961 |  |  |  | 174 |  |  |  | 38,275 |
Ending balances as of December 31, 2010: Allowance for loan losses |
Individually evaluated for impairment |  | $ | 867 |  |  |  | 3,740 |  |  |  | 1,070 |  |  |  | 269 |  |  |  | 611 |  |  |  | − |  |  |  | − |  |  |  | 6,557 |
Collectively evaluated for impairment |  | $ | 3,864 |  |  |  | 8,780 |  |  |  | 10,213 |  |  |  | 3,365 |  |  |  | 3,361 |  |  |  | 1,961 |  |  |  | 174 |  |  |  | 31,718 |
Loans acquired with deteriorated credit quality |  | $ | − |  |  |  | − |  |  |  | − |  |  |  | − |  |  |  | − |  |  |  | − |  |  |  | − |  |  |  | − |
Loans receivable as of December 31, 2010: |
Ending balance – total |  | $ | 169,799 |  |  |  | 303,519 |  |  |  | 766,743 |  |  |  | 216,934 |  |  |  | 563,255 |  |  |  | 61,781 |  |  |  | − |  |  |  | 2,082,031 |
Ending balances as of December 31, 2010: Loans |
Individually evaluated for impairment |  | $ | 3,487 |  |  |  | 64,549 |  |  |  | 15,786 |  |  |  | 1,223 |  |  |  | 25,213 |  |  |  | 28 |  |  |  | − |  |  |  | 110,286 |
Collectively evaluated for impairment |  | $ | 166,312 |  |  |  | 238,970 |  |  |  | 750,957 |  |  |  | 215,711 |  |  |  | 538,042 |  |  |  | 61,753 |  |  |  | − |  |  |  | 1,971,745 |
Loans acquired with deteriorated credit quality |  | $ | − |  |  |  | 1,144 |  |  |  | − |  |  |  | − |  |  |  | − |  |  |  | − |  |  |  | − |  |  |  | 1,144 |
The following table presents the activity in the allowance for loan losses for covered loans for the three and nine months ended September 30, 2011.
($ in thousands) |  | Covered Loans |
As of and for the three months ended September 30, 2011 |
Beginning balance |  | $ | 5,540 |
Charge-offs |  |  | (4,988 | )
Recoveries |  |  | − |
Provisions |  |  | 2,705 |
Ending balance |  | $ | 3,257 |
As of and for the nine months ended September 30, 2011 |
Beginning balance |  | $ | 11,155 |
Charge-offs |  |  | (17,703 | )
Recoveries |  |  | − |
Provisions |  |  | 9,805 |
Ending balance |  | $ | 3,257 |
Ending balances as of September 30, 2011: Allowance for loan losses |
Individually evaluated for impairment |  | $ | 3,257 |
Collectively evaluated for impairment |  |  | − |
Loans acquired with deteriorated credit quality |  |  | − |
Loans receivable as of September 30, 2011: |
Ending balance – total |  | $ | 373,824 |
Ending balances as of September 30, 2011: Loans |
Individually evaluated for impairment |  | $ | 33,163 |
Collectively evaluated for impairment |  |  | 340,661 |
Loans acquired with deteriorated credit quality |  |  | 9,037 |
The following table presents the activity in the allowance for loan losses for covered loans for the year ended December 31, 2010.
($ in thousands) |  | Covered Loans |
As of and for the year ended December 31, 2010 |
Beginning balance |  | $ | − |
Charge-offs |  |  | (9,761 | )
Recoveries |  |  | − |
Provisions |  |  | 20,916 |
Ending balance |  | $ | 11,155 |
Ending balances as of December 31, 2010: Allowance for loan losses |
Individually evaluated for impairment |  | $ | 11,155 |
Collectively evaluated for impairment |  |  | − |
Loans acquired with deteriorated credit quality |  |  | − |
Loans receivable as of December 31, 2010: |
Ending balance – total |  | $ | 371,128 |
Ending balances as of December 31, 2010: Loans |
Individually evaluated for impairment |  | $ | 72,690 |
Collectively evaluated for impairment |  |  | 298,438 |
Loans acquired with deteriorated credit quality |  |  | 4,607 |
The following table presents the Company's impaired loans as of September 30, 2011.
($ in thousands) |  | Recorded Investment |  |  | Unpaid Principal Balance |  |  | Related Allowance |  |  | Average Recorded Investment |
Non-covered loans: |  |  |  |  |  |  |  |  |  |
With no related allowance recorded: |  |  |  |  |  |  |  |  |  |
Commercial, financial, and agricultural: |  |  |  |  |  |  |  |  |  |  |  |
Commercial - unsecured |  | $ | − |  |  |  | − |  |  |  | − |  |  |  | − |
Commercial - secured |  |  | 266 |  |  |  | 333 |  |  |  | − |  |  |  | 556 |
Secured by inventory and accounts receivable |  |  | 62 |  |  |  | 538 |  |  |  | − |  |  |  | 149 |
Real estate – construction, land development & other land loans |  |  | 14,037 |  |  |  | 20,423 |  |  |  | − |  |  |  | 18,569 |
Real estate – residential, farmland, and multi-family |  |  | 6,787 |  |  |  | 9,090 |  |  |  | − |  |  |  | 5,737 |
Real estate – home equity lines of credit |  |  | 47 |  |  |  | 300 |  |  |  | − |  |  |  | 87 |
Real estate – commercial |  |  | 14,686 |  |  |  | 16,513 |  |  |  | − |  |  |  | 12,500 |
Consumer |  |  | 12 |  |  |  | 39 |  |  |  | − |  |  |  | 16 |
Total non-covered impaired loans with no allowance |  | $ | 35,897 |  |  |  | 47,236 |  |  |  | − |  |  |  | 37,614 |
Total covered impaired loans with no allowance |  | $ | 43,918 |  |  |  | 75,366 |  |  |  | − |  |  |  | 50,362 |
Total impaired loans with no allowance recorded |  | $ | 79,815 |  |  |  | 122,602 |  |  |  | − |  |  |  | 87,976 |
Non-covered loans: |  |  |  |  |  |  |  |  |  |  |  |  |
With an allowance recorded: |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial, financial, and agricultural: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial - unsecured |  | $ | 88 |  |  |  | 88 |  |  |  | 15 |  |  |  | 170 |
Commercial - secured |  |  | 1,950 |  |  |  | 1,952 |  |  |  | 413 |  |  |  | 1,311 |
Secured by inventory and accounts receivable |  |  | 288 |  |  |  | 288 |  |  |  | 87 |  |  |  | 349 |
Real estate – construction, land development & other land loans |  |  | 15,462 |  |  |  | 18,597 |  |  |  | 2,345 |  |  |  | 17,138 |
Real estate – residential, farmland, and multi-family |  |  | 21,351 |  |  |  | 22,226 |  |  |  | 1,883 |  |  |  | 21,993 |
Real estate – home equity lines of credit |  |  | 2,778 |  |  |  | 2,799 |  |  |  | 106 |  |  |  | 2,401 |
Real estate – commercial |  |  | 5,861 |  |  |  | 6,159 |  |  |  | 132 |  |  |  | 6,760 |
Consumer |  |  | 2,595 |  |  |  | 2,596 |  |  |  | 448 |  |  |  | 2,222 |
Total non-covered impaired loans with allowance |  | $ | 50,373 |  |  |  | 54,705 |  |  |  | 5,429 |  |  |  | 52,344 |
Total covered impaired loans with allowance |  | $ | 9,530 |  |  |  | 15,129 |  |  |  | 2,287 |  |  |  | 14,827 |
Total impaired loans with an allowance recorded |  | $ | 59,903 |  |  |  | 69,834 |  |  |  | 7,716 |  |  |  | 67,171 |
Interest income recorded on non-covered and covered impaired loans during the three and nine months ended September 30, 2011 is considered insignificant. The related allowance listed above includes both reserves on loans specifically reviewed for impairment and general reserves on impaired loans that were not specifically reviewed for impairment. The following table presents the Company's impaired loans as of December 31, 2010.
($ in thousands) |  | Recorded Investment |  |  | Unpaid Principal Balance |  |  | Related Allowance |  |  | Average Recorded Investment |
Non-covered loans: |  |  |  |  |  |  |  |  |  |
With no related allowance recorded: |  |  |  |  |  |  |  |  |  |
Commercial, financial, and agricultural: |  |  |  |  |  |  |  |  |  |  |  |
Commercial - unsecured |  | $ | − |  |  |  | − |  |  |  | − |  |  |  | 138 |
Commercial - secured |  |  | 902 |  |  |  | 967 |  |  |  | − |  |  |  | 758 |
Secured by inventory and accounts receivable |  |  | 240 |  |  |  | 650 |  |  |  | − |  |  |  | 186 |
Real estate – construction, land development & other land loans |  |  | 22,026 |  |  |  | 26,012 |  |  |  | − |  |  |  | 15,639 |
Real estate – residential, farmland, and multi-family |  |  | 8,269 |  |  |  | 9,447 |  |  |  | − |  |  |  | 7,437 |
Real estate – home equity lines of credit |  |  | 302 |  |  |  | 502 |  |  |  | − |  |  |  | 381 |
Real estate – commercial |  |  | 11,115 |  |  |  | 11,321 |  |  |  | − |  |  |  | 7,284 |
Consumer |  |  | 20 |  |  |  | 40 |  |  |  | − |  |  |  | 46 |
Total non-covered impaired loans with no allowance |  | $ | 42,874 |  |  |  | 48,939 |  |  |  | − |  |  |  | 31,869 |
Total covered impaired loans with no allowance |  | $ | 49,991 |  |  |  | 77,321 |  |  |  | − |  |  |  | 83,955 |
Total impaired loans with no allowance recorded |  | $ | 92,865 |  |  |  | 126,260 |  |  |  | − |  |  |  | 115,824 |
Non-covered loans: |  |  |  |  |  |  |  |  |  |  |  |  |
With an allowance recorded: |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial, financial, and agricultural: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial - unsecured |  | $ | 124 |  |  |  | 124 |  |  |  | 24 |  |  |  | 243 |
Commercial - secured |  |  | 579 |  |  |  | 579 |  |  |  | 88 |  |  |  | 1,385 |
Secured by inventory and accounts receivable |  |  | 1,026 |  |  |  | 1,026 |  |  |  | 609 |  |  |  | 613 |
Real estate – construction, land development & other land loans |  |  | 17,540 |  |  |  | 19,926 |  |  |  | 3,932 |  |  |  | 21,362 |
Real estate – residential, farmland, and multi-family |  |  | 23,012 |  |  |  | 23,012 |  |  |  | 1,820 |  |  |  | 22,166 |
Real estate – home equity lines of credit |  |  | 2,148 |  |  |  | 2,223 |  |  |  | 357 |  |  |  | 1,928 |
Real estate – commercial |  |  | 8,013 |  |  |  | 8,088 |  |  |  | 497 |  |  |  | 9,275 |
Consumer |  |  | 687 |  |  |  | 687 |  |  |  | 286 |  |  |  | 910 |
Total non-covered impaired loans with allowance |  | $ | 53,129 |  |  |  | 55,665 |  |  |  | 7,613 |  |  |  | 57,882 |
Total covered impaired loans with allowance |  | $ | 22,834 |  |  |  | 27,105 |  |  |  | 11,155 |  |  |  | 11,418 |
Total impaired loans with an allowance recorded |  | $ | 75,963 |  |  |  | 82,770 |  |  |  | 18,768 |  |  |  | 69,300 |
Interest income recorded on non-covered and covered impaired loans during the year ended December 31, 2010 is considered insignificant. The related allowance listed above includes both reserves on loans specifically reviewed for impairment and general reserves on impaired loans that were not specifically reviewed for impairment. The Company tracks credit quality based on its internal risk ratings. Upon origination a loan is assigned an initial risk grade, which is generally based on several factors such as the borrower's credit score, the loan-to-value ratio, the debt-to-income ratio, etc. Loans that are risk-graded as substandard during the origination process are declined. After loans are initially graded, they are monitored monthly for credit quality based on many factors, such as payment history, the borrower's financial status, and changes in collateral value. Loans can be downgraded or upgraded depending on management's evaluation of these factors. Internal risk-grading policies are consistent throughout each loan type. The following describes the Company's internal risk grades in ascending order of likelihood of loss:
| Numerical Risk Grade | Description
Pass: |
| 1 | Cash secured loans.
| 2 | Non-cash secured loans that have no minor or major exceptions to the lending guidelines.
| 3 | Non-cash secured loans that have no major exceptions to the lending guidelines.
Weak Pass: |
| 4 | Non-cash secured loans that have minor or major exceptions to the lending guidelines, but the exceptions are properly mitigated.
Watch or Standard: |
| 9 | Loans that meet the guidelines for a Risk Graded 5 loan, except the collateral coverage is sufficient to satisfy the debt with no risk of loss under reasonable circumstances. This category also includes all loans to insiders and any other loan that management elects to monitor on the watch list.
Special Mention: |
| 5 | Existing loans with major exceptions that cannot be mitigated.
Classified: |
| 6 | Loans that have a well-defined weakness that may jeopardize the liquidation of the debt if deficiencies are not corrected.
| 7 | Loans that have a well-defined weakness that make the collection or liquidation improbable.
| 8 | Loans that are considered uncollectible and are in the process of being charged-off.
The following table presents the Company's recorded investment in loans by credit quality indicators as of September 30, 2011.
($ in thousands) |  | Credit Quality Indicator (Grouped by Internally Assigned Grade) |
|  | Pass (Grades 1, 2, & 3) |  |  | Weak Pass (Grade 4) |  |  | Watch or Standard Loans (Grade 9) |  |  | Special Mention Loans (Grade 5) |  |  | Classified Loans (Grades 6, 7, & 8) |  |  | Total |
Non-covered loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial, financial, and agricultural: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial - unsecured |  | $ | 12,802 |  |  |  | 26,856 |  |  |  | − |  |  |  | 272 |  |  |  | 1,078 |  |  |  | 41,008 |
Commercial - secured |  |  | 34,569 |  |  |  | 63,620 |  |  |  | 1,402 |  |  |  | 1,966 |  |  |  | 4,774 |  |  |  | 106,331 |
Secured by inventory and accounts receivable |  |  | 4,421 |  |  |  | 15,800 |  |  |  | 96 |  |  |  | 1,280 |  |  |  | 609 |  |  |  | 22,206 |
Real estate – construction, land development & other land loans |  |  | 39,900 |  |  |  | 158,572 |  |  |  | 5,008 |  |  |  | 11,118 |  |  |  | 39,763 |  |  |  | 254,361 |
Real estate – residential, farmland, and multi-family |  |  | 260,911 |  |  |  | 445,393 |  |  |  | 8,769 |  |  |  | 17,314 |  |  |  | 53,025 |  |  |  | 785,412 |
Real estate – home equity lines of credit |  |  | 134,160 |  |  |  | 68,408 |  |  |  | 2,558 |  |  |  | 2,664 |  |  |  | 4,209 |  |  |  | 211,999 |
Real estate - commercial |  |  | 149,336 |  |  |  | 352,647 |  |  |  | 31,627 |  |  |  | 12,997 |  |  |  | 29,852 |  |  |  | 576,459 |
Consumer |  |  | 31,923 |  |  |  | 24,006 |  |  |  | 72 |  |  |  | 91 |  |  |  | 3,561 |  |  |  | 59,653 |
Total |  | $ | 668,022 |  |  |  | 1,155,302 |  |  |  | 49,532 |  |  |  | 47,702 |  |  |  | 136,871 |  |  |  | 2,057,429 |
Unamortized net deferred loan costs |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 1,295 |
Total non-covered loans |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | $ | 2,058,724 |
Total covered loans |  | $ | 71,351 |  |  |  | 163,177 |  |  |  | − |  |  |  | 15,770 |  |  |  | 123,526 |  |  |  | 373,824 |
Total loans |  | $ | 739,373 |  |  |  | 1,318,479 |  |  |  | 49,532 |  |  |  | 63,472 |  |  |  | 260,397 |  |  |  | 2,432,548 |
The following table presents the Company's recorded investment in loans by credit quality indicators as of December 31, 2010.
($ in thousands) |  | Credit Quality Indicator (Grouped by Internally Assigned Grade) |
|  | Pass (Grades 1, 2, & 3) |  |  | Weak Pass (Grade 4) |  |  | Watch or Standard Loans (Grade 9) |  |  | Special Mention Loans (Grade 5) |  |  | Classified Loans (Grades 6, 7, & 8) |  |  | Total |
Non-covered loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial, financial, and agricultural: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial – unsecured |  | $ | 14,850 |  |  |  | 25,992 |  |  |  | − |  |  |  | 332 |  |  |  | 771 |  |  |  | 41,945 |
Commercial – secured |  |  | 40,995 |  |  |  | 55,918 |  |  |  | 2,100 |  |  |  | 2,774 |  |  |  | 3,796 |  |  |  | 105,583 |
Secured by inventory and accounts receivable |  |  | 6,364 |  |  |  | 14,165 |  |  |  | − |  |  |  | 873 |  |  |  | 869 |  |  |  | 22,271 |
Real estate – construction, land development & other land loans |  |  | 66,321 |  |  |  | 162,147 |  |  |  | 7,649 |  |  |  | 14,068 |  |  |  | 53,334 |  |  |  | 303,519 |
Real estate – residential, farmland, and multi-family |  |  | 302,667 |  |  |  | 376,187 |  |  |  | 15,941 |  |  |  | 22,436 |  |  |  | 49,512 |  |  |  | 766,743 |
Real estate – home equity lines of credit |  |  | 137,674 |  |  |  | 68,876 |  |  |  | 3,001 |  |  |  | 3,060 |  |  |  | 4,323 |  |  |  | 216,934 |
Real estate – commercial |  |  | 190,284 |  |  |  | 301,828 |  |  |  | 33,706 |  |  |  | 12,141 |  |  |  | 25,296 |  |  |  | 563,255 |
Consumer |  |  | 34,600 |  |  |  | 24,783 |  |  |  | 140 |  |  |  | 408 |  |  |  | 1,850 |  |  |  | 61,781 |
Total |  | $ | 793,755 |  |  |  | 1,029,896 |  |  |  | 62,537 |  |  |  | 56,092 |  |  |  | 139,751 |  |  |  | 2,082,031 |
Unamortized net deferred loan costs |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 973 |
Total non-covered loans |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | $ | 2,083,004 |
Total covered loans |  | $ | 38,276 |  |  |  | 187,526 |  |  |  | − |  |  |  | 7,579 |  |  |  | 137,747 |  |  |  | 371,128 |
Total loans |  | $ | 832,031 |  |  |  | 1,217,422 |  |  |  | 62,537 |  |  |  | 63,671 |  |  |  | 277,498 |  |  |  | 2,454,132 |
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 creditor has granted a concession. Concessions may include interest rate reductions or below market interest rates, principal forgiveness, restructuring amortization schedules and other actions intended to minimize potential losses. The vast majority of the Company's troubled debt restructurings modified during the three and nine month periods ended September 30, 2011 related to interest rate reductions combined with restructured amortization schedules. The Company does not grant principal forgiveness. All loans classified as troubled debt restructurings are considered to be impaired and are evaluated as such for determination of the allowance for loan losses. The Company's troubled debt restructurings can be classified as either non-accrual or accruing based on the loan's payment status. The troubled debt restructurings that are non-accrual are reported within the non-accrual loan totals presented previously. The following table presents information related to loans modified in a troubled debt restructuring during the three and nine months ended September 30, 2011.
|  | For the three months ended September 30, 2011 |  |  | For the nine months ended September 30, 2011 |
|  | Number of Contracts |  |  | Outstanding Recorded Investment (as of period end) |  |  | Number of Contracts |  |  | Outstanding Recorded Investment (as of period end) |
Non-covered TDRs – Accruing |  |  |  |  |  |  |  |  |  |  |  |
Real estate – construction, land development & other land loans |  |  | 1 |  |  | $ | 42 |  |  |  | 1 |  |  | $ | 42 |
Real estate – residential, farmland, and multi-family |  |  | 1 |  |  |  | 735 |  |  |  | 5 |  |  |  | 1,645 |
Real estate - commercial |  |  | − |  |  |  | − |  |  |  | 2 |  |  |  | 1,259 |
Non-covered TDRs - Nonaccrual |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Real estate – construction, land development & other land loans |  |  | − |  |  |  | − |  |  |  | 1 |  |  |  | 357 |
Real estate – residential, farmland, and multi-family |  |  | 1 |  |  |  | 262 |  |  |  | 2 |  |  |  | 378 |
Real estate - commercial |  |  | − |  |  |  | − |  |  |  | 4 |  |  |  | 1,408 |
Total non-covered TDRs arising during period |  |  | 3 |  |  | $ | 1,039 |  |  |  | 15 |  |  | $ | 5,089 |
Total covered TDRs arising during period– Accruing |  |  | 16 |  |  | $ | 1,229 |  |  |  | 36 |  |  | $ | 4,755 |
Total covered TDRs arising during period – Nonaccrual |  |  | 6 |  |  |  | 635 |  |  |  | 8 |  |  |  | 1,472 |
Total TDRs arising during period |  |  | 25 |  |  | $ | 2,903 |  |  |  | 59 |  |  | $ | 11,316 |
Accruing loans that defaulted during the three and nine months ended September 30, 2011 are presented in the table below. The Company considers a loan to have defaulted when it becomes 90 or more days delinquent under the modified terms, has been transferred to non-accrual status, or has been transferred to other real estate owned.
|  | For the three months ended September 30, 2011 |  |  | For the nine months ended September 30, 2011 |
|  | Number of Contracts |  |  | Recorded Investment |  |  | Number of Contracts |  |  | Recorded Investment |
Non-covered accruing TDRs that subsequently defaulted |  |  |  |  |  |  |  |  |  |  |  |
Real estate – construction, land development & other land loans |  |  | 1 |  |  | $ | 3,320 |  |  |  | 7 |  |  | $ | 13,162 |
Real estate – residential, farmland, and multi-family |  |  | 2 |  |  |  | 124 |  |  |  | 5 |  |  |  | 1,281 |
Real estate - commercial |  |  | 1 |  |  |  | 254 |  |  |  | 10 |  |  |  | 7,005 |
Total non-covered TDRs that subsequently defaulted |  |  | 4 |  |  | $ | 3,698 |  |  |  | 22 |  |  | $ | 21,448 |
Total accruing covered TDRs that subsequently defaulted |  |  | 6 |  |  | $ | 2,650 |  |  |  | 31 |  |  | $ | 13,082 |
Total accruing TDRs that subsequently defaulted |  |  | 10 |  |  | $ | 6,348 |  |  |  | 53 |  |  | $ | 34,530 |

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