Loans and Asset Quality Information (Tables)

9 Months Ended

Sep. 30, 2014

Loans And Asset Quality Information Tables

Summary of the major categories of total loans outstanding

The following is a summary of the major categories of total loans outstanding:

($ in thousands)	September 30, 2014					December 31, 2013					September 30, 2013
	Amount		Percentage			Amount		Percentage			Amount		Percentage
All loans (non-covered and covered):

Commercial, financial, and agricultural	$	165,215		7	%	$	168,469		7	%	$	166,044		7	%
Real estate – construction, land development & other land loans		298,091		13	%		305,246		12	%		296,731		12	%
Real estate – mortgage – residential (1-4 family) first mortgages		806,954		33	%		838,862		34	%		839,273		34	%
Real estate – mortgage – home equity loans / lines of credit		224,553		9	%		227,907		9	%		229,559		9	%
Real estate – mortgage – commercial and other		879,122		36	%		855,249		35	%		841,674		35	%
Installment loans to individuals		51,425		2	%		66,533		3	%		67,777		3	%
Subtotal		2,425,360		100	%		2,462,266		100	%		2,441,058		100	%
Unamortized net deferred loan costs		730					928					1,024
Total loans	$	2,426,090				$	2,463,194				$	2,442,082

Summary of the major categories of non-covered loans outstanding

The following is a summary of the major categories of non-covered loans outstanding:

($ in thousands)	September 30, 2014					December 31, 2013					September 30, 2013
	Amount		Percentage			Amount		Percentage			Amount		Percentage
Non-covered loans:

Commercial, financial, and agricultural	$	162,994		7	%	$	164,195		7	%	$	161,552		7	%
Real estate – construction, land development & other land loans		292,401		13	%		273,412		12	%		261,457		12	%
Real estate – mortgage – residential (1-4 family) first mortgages		714,879		31	%		730,712		32	%		722,716		33	%
Real estate – mortgage – home equity loans / lines of credit		211,477		9	%		213,016		10	%		213,026		10	%
Real estate – mortgage – commercial and other		858,935		38	%		804,621		36	%		788,240		35	%
Installment loans to individuals		51,425		2	%		66,001		3	%		67,158		3	%
Subtotal		2,292,111		100	%		2,251,957		100	%		2,214,149		100	%
Unamortized net deferred loan costs		730					928					1,024
Total non-covered loans	$	2,292,841				$	2,252,885				$	2,215,173

Schedule of the carrying amount of the covered loans

The carrying amount of the covered loans at September 30, 2014 consisted of impaired and nonimpaired purchased loans (as determined on the date of acquisition), 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	$	68	125	2,153	2,243	2,221	2,368
Real estate – construction, land development & other land loans		316	540	5,374	6,970	5,690	7,510
Real estate – mortgage – residential (1-4 family) first mortgages		387	1,310	91,688	107,669	92,075	108,979
Real estate – mortgage – home equity loans / lines of credit		12	19	13,064	15,485	13,076	15,504
Real estate – mortgage – commercial and other		1,255	3,231	18,932	21,362	20,187	24,593
Total	$	2,038	5,225	131,211	153,729	133,249	158,954

The carrying amount of the covered loans at December 31, 2013 consisted of impaired and nonimpaired purchased loans (as determined on the date of the acquisition), 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	$	75	136	4,199	5,268	4,274	5,404
Real estate – construction, land development & other land loans		325	564	31,509	47,792	31,834	48,356
Real estate – mortgage – residential (1-4 family) first mortgages		575	1,500	107,575	126,882	108,150	128,382
Real estate – mortgage – home equity loans / lines of credit		14	21	14,877	18,318	14,891	18,339
Real estate – mortgage – commercial and other		2,153	4,042	48,475	62,630	50,628	66,672
Installment loans to individuals				532	607	532	607
Total	$	3,142	6,263	207,167	261,497	210,309	267,760

Schedule of covered purchased nonimpaired loans

The following table presents information regarding covered purchased nonimpaired loans since December 31, 2012. 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, 2012	$	277,489
Principal repayments		(63,588	)
Transfers to foreclosed real estate		(13,977	)
Loan charge-offs		(12,957	)
Accretion of loan discount		20,200
Carrying amount of nonimpaired covered loans at December 31, 2013		207,167
Principal repayments		(43,323	)
Transfers to foreclosed real estate		(4,658	)
Transfers to non-covered loans due to expiration of loss-share agreement		(38,987	)
Loan charge-offs		(2,824	)
Accretion of loan discount		13,836
Carrying amount of nonimpaired covered loans at September 30, 2014	$	131,211

Schedule of purchased impaired loans

The following table presents information regarding all purchased impaired loans since December 31, 2012, the majority 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, 2012	$	8,815			3,990			4,825
Change due to payments received		(301	)		(31	)		(270	)
Transfer to foreclosed real estate		(2,100	)		(784	)		(1,316	)
Change due to loan charge-off		(150	)		(54	)		(96	)
Other		(1	)					(1	)
Balance at December 31, 2013	$	6,263			3,121			3,142
Change due to payments received		(548	)		173			(721	)
Change due to loan charge-off		(2	)		29			(31	)
Other		197			(115	)		312
Balance at September 30, 2014	$	5,910			3,208			2,702

Summary of nonperforming assets

Nonperforming assets are defined as nonaccrual loans, restructured loans, loans past due 90 or more days and still accruing interest, nonperforming loans held for sale, and foreclosed real estate. Nonperforming assets are summarized as follows:

ASSET QUALITY DATA ($ in thousands)	September 30, 2014		December 31, 2013		September 30, 2013

Non-covered nonperforming assets
Nonaccrual loans	$	53,620	$	41,938	$	40,711
Restructured loans - accruing		31,501		27,776		27,656
Accruing loans > 90 days past due						
Total non-covered nonperforming loans		85,121		69,714		68,367
Foreclosed real estate		11,705		12,251		15,098
Total non-covered nonperforming assets	$	96,826	$	81,965	$	83,465

Covered nonperforming assets
Nonaccrual loans (1)	$	10,478	$	37,217	$	47,233
Restructured loans - accruing		6,273		8,909		6,537
Accruing loans > 90 days past due						
Total covered nonperforming loans		16,751		46,126		53,770
Foreclosed real estate		3,237		24,497		29,193
Total covered nonperforming assets	$	19,988	$	70,623	$	82,963

Total nonperforming assets	$	116,814	$	152,588	$	166,428

Schedule of nonaccrual loans

The following table presents the Company's nonaccrual loans as of September 30, 2014.

($ in thousands)		Non-covered	Covered	Total
Commercial, financial, and agricultural:
Commercial – unsecured	$	249	3	252
Commercial – secured		3,498	273	3,771
Secured by inventory and accounts receivable		391	6	397

Real estate – construction, land development & other land loans		10,364	1,492	11,856

Real estate – residential, farmland and multi-family		25,118	6,054	31,172

Real estate – home equity lines of credit		2,317	237	2,554

Real estate – commercial		11,132	2,413	13,545

Consumer		551		551
Total	$	53,620	10,478	64,098

The following table presents the Company's nonaccrual loans as of December 31, 2013.

($ in thousands)		Non-covered	Covered	Total
Commercial, financial, and agricultural:
Commercial – unsecured	$	222	38	260
Commercial – secured		2,662	114	2,776
Secured by inventory and accounts receivable		545	782	1,327

Real estate – construction, land development & other land loans		8,055	13,502	21,557

Real estate – residential, farmland and multi-family		17,814	12,344	30,158

Real estate – home equity lines of credit		2,200	335	2,535

Real estate – commercial		10,115	10,099	20,214

Consumer		325	3	328
Total	$	41,938	37,217	79,155

Schedule of analysis of the payment status of loans

The following table presents an analysis of the payment status of the Company's loans as of September 30, 2014.

($ 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	$	54		67		249		33,353		33,723
Commercial - secured		1,079		21		3,498		110,806		115,404
Secured by inventory and accounts receivable		176		−		391		20,954		21,521

Real estate – construction, land development & other land loans		1,312		105		10,364		254,638		266,419

Real estate – residential, farmland, and multi-family		8,883		2,119		25,118		824,098		860,218

Real estate – home equity lines of credit		1,624		61		2,317		194,975		198,977

Real estate - commercial		2,454		1,658		11,132		736,864		752,108

Consumer		281		242		551		42,667		43,741
Total non-covered	$	15,863		4,273		53,620		2,218,355		2,292,111
Unamortized net deferred loan costs										730
Total non-covered loans									$	2,292,841

Covered loans	$	789		528		10,478		121,454		133,249

Total loans	$	16,652		4,801		64,098		2,339,809		2,426,090

The following table presents an analysis of the payment status of the Company's loans as of December 31, 2013.

($ 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	$	347		94		222		36,352		37,015
Commercial - secured		1,233		462		2,662		117,923		122,280
Secured by inventory and accounts receivable		438		767		545		19,426		21,176

Real estate – construction, land development & other land loans		2,304		1,391		8,055		232,920		244,670

Real estate – residential, farmland, and multi-family		11,682		2,631		17,814		837,260		869,387

Real estate – home equity lines of credit		1,465		305		2,200		194,157		198,127

Real estate - commercial		3,196		214		10,115		696,081		709,606

Consumer		494		187		325		48,690		49,696
Total non-covered	$	21,159		6,051		41,938		2,182,809		2,251,957
Unamortized net deferred loan costs										928
Total non-covered loans									$	2,252,885

Covered loans	$	5,179		768		37,217		167,145		210,309

Total loans	$	26,338		6,819		79,155		2,349,954		2,463,194

Schedule of activity in the allowance for loan losses for non-covered loans

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, 2014.

($ 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, 2014

Beginning balance	$	8,948		7,414		11,132		3,755		9,212		906		599		41,966
Charge-offs		(840)		(470)		(874)		(116)		(987)		(463)		−		(3,750)
Recoveries		32		40		111		7		14		128		−		332
Transfer from covered category		36		813		51		−		833		4		−		1,737
Provisions		1,185		(574)		(194)		49		971		343		(501)		1,279
Ending balance	$	9,361		7,223		10,226		3,695		10,043		918		98		41,564

As of and for the nine months ended September 30, 2014

Beginning balance	$	7,432		12,966		15,142		1,838		5,524		1,513		(152)		44,263
Charge-offs		(3,506)		(1,704)		(2,505)		(619)		(1,876)		(1,262)		−		(11,472)
Recoveries		81		349		290		18		135		361		−		1,234
Transfer from covered category		36		813		51		−		833		4		−		1,737
Provisions		5,318		(5,201)		(2,752)		2,458		5,427		302		250		5,802
Ending balance	$	9,361		7,223		10,226		3,695		10,043		918		98		41,564

Ending balances as of September 30, 2014: Allowance for loan losses

Individually evaluated for impairment	$	381		513		1,771		−		229		20		−		2,914

Collectively evaluated for impairment	$	8,980		6,710		8,455		3,695		9,814		898		98		38,650

Loans acquired with deteriorated credit quality	$	−		−		−		−		−		−		−		−

Loans receivable as of September 30, 2014:

Ending balance – total	$	170,648		266,419		860,218		198,977		752,108		43,741		−		2,292,111

Ending balances as of September 30, 2014: Loans

Individually evaluated for impairment	$	972		8,613		24,233		481		20,128		34		−		54,461

Collectively evaluated for impairment	$	169,676		257,806		835,985		198,496		731,316		43,707		−		2,236,986

Loans acquired with deteriorated credit quality	$	−		−		−		−		664		−		−		664

The following table presents the activity in the allowance for loan losses for non-covered loans for the year ended December 31, 2013.

($ 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, 2013

Beginning balance	$	4,687		12,856		14,082		1,884		5,247		1,939		948		41,643
Charge-offs		(4,418)		(2,739)		(3,732)		(1,314)		(4,346)		(2,174)		(660)		(19,383)
Recoveries		299		743		753		87		1,381		474		−		3,737
Provisions		6,864		2,106		4,039		1,181		3,242		1,274		(440)		18,266
Ending balance	$	7,432		12,966		15,142		1,838		5,524		1,513		(152)		44,263

Ending balances as of December 31, 2013: Allowance for loan losses

Individually evaluated for impairment	$	202		544		1,162		1		649		1		−		2,559

Collectively evaluated for impairment	$	7,230		12,422		13,980		1,837		4,875		1,512		(152)		41,704

Loans acquired with deteriorated credit quality	$	−		−		−		−		−		−		−		−

Loans receivable as of December 31, 2013:

Ending balance – total	$	180,471		244,670		869,387		198,127		709,606		49,696		−		2,251,957

Ending balances as of December 31, 2013: Loans

Individually evaluated for impairment	$	582		8,027		19,111		22		16,894		13		−		44,649

Collectively evaluated for impairment	$	179,889		236,643		850,276		198,105		692,712		49,683		−		2,207,308

Loans acquired with deteriorated credit quality	$	−		−		−		−		−		−		−		−

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, 2013.

($ 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, 2013

Beginning balance	$	5,960			14,593			14,961			2,061			5,239			1,703			299			44,816
Charge-offs		(1,205	)		(800	)		(893	)		(200	)		(1,473	)		(593	)		−			(5,164	)
Recoveries		28			91			60			6			27			124			−			336
Provisions		1,618			(1,224	)		671			193			1,517			377			335			3,487
Ending balance	$	6,401			12,660			14,799			2,060			5,310			1,611			634			43,475

As of and for the nine months ended September 30, 2013

Beginning balance	$	4,687			12,856			14,082			1,884			5,247			1,939			948			41,643
Charge-offs		(2,589	)		(2,017	)		(2,548	)		(1,089	)		(3,920	)		(1,683	)		(659	)		(14,505	)
Recoveries		261			708			723			68			909			367			−			3,036
Provisions		4,042			1,113			2,542			1,197			3,074			988			345			13,301
Ending balance	$	6,401			12,660			14,799			2,060			5,310			1,611			634			43,475

Ending balances as of September 30, 2013: Allowance for loan losses

Individually evaluated for impairment	$	140			329			1,298			1			700			2			−			2,470

Collectively evaluated for impairment	$	6,261			12,331			13,501			2,059			4,610			1,609			634			41,005

Loans acquired with deteriorated credit quality	$	−			−			−			−			−			−			−			−

Loans receivable as of September 30, 2013:

Ending balance – total	$	178,396			232,670			859,330			197,697			695,734			50,322			−			2,214,149

Ending balances as of September 30, 2013: Loans

Individually evaluated for impairment	$	1,295			8,069			19,903			22			21,543			14			−			50,846

Collectively evaluated for impairment	$	177,101			224,601			839,427			197,675			674,191			50,308			−			2,163,303

Loans acquired with deteriorated credit quality	$	−			−			−			−			−			−			−			−

Schedule of activity in the allowance for loan losses for covered loans

The following table presents the activity in the allowance for loan losses for covered loans for the three and nine months ended September 30, 2014.

($ in thousands)	Covered Loans

As of and for the three months ended September 30, 2014
Beginning balance	$	3,830
Charge-offs		(195)
Recoveries		463
Transferred to non-covered		(1,737)
Provisions		206
Ending balance	$	2,567

As of and for the nine months ended September 30, 2014
Beginning balance	$	4,242
Charge-offs		(5,865)
Recoveries		3,010
Transferred to non-covered		(1,737)
Provisions		2,917
Ending balance	$	2,567
Ending balances as of September 30, 2014: Allowance for loan losses

Individually evaluated for impairment	$	1,537
Collectively evaluated for impairment		1,003
Loans acquired with deteriorated credit quality		27

Loans receivable as of September 30, 2014:

Ending balance – total	$	133,249

Ending balances as of September 30, 2014: Loans

Individually evaluated for impairment	$	11,258
Collectively evaluated for impairment		119,953
Loans acquired with deteriorated credit quality		2,038

The following table presents the activity in the allowance for loan losses for covered loans for the year ended December 31, 2013.

($ in thousands)	Covered Loans

As of and for the year ended December 31, 2013
Beginning balance	$	4,759
Charge-offs		(13,053)
Recoveries		186
Provisions		12,350
Ending balance	$	4,242

Ending balances as of December 31, 2013: Allowance for loan losses

Individually evaluated for impairment	$	3,112
Collectively evaluated for impairment		1,105
Loans acquired with deteriorated credit quality		25

Loans receivable as of December 31, 2013:

Ending balance – total	$	210,309

Ending balances as of December 31, 2013: Loans

Individually evaluated for impairment	$	43,107
Collectively evaluated for impairment		164,060
Loans acquired with deteriorated credit quality		3,142

The following table presents the activity in the allowance for loan losses for covered loans for the three and nine months ended September 30, 2013.

($ in thousands)	Covered Loans

As of and for the three months ended September 30, 2013
Beginning balance	$	6,035
Charge-offs		(3,446)
Recoveries		134
Provisions		1,493
Ending balance	$	4,216

As of and for the nine months ended September 30, 2013
Beginning balance	$	4,759
Charge-offs		(9,096)
Recoveries		134
Provisions		8,419
Ending balance	$	4,216
Ending balances as of September 30, 2013: Allowance for loan losses

Individually evaluated for impairment	$	2,444
Collectively evaluated for impairment		1,772
Loans acquired with deteriorated credit quality		−

Loans receivable as of September 30, 2013:

Ending balance – total	$	226,909

Ending balances as of September 30, 2013: Loans

Individually evaluated for impairment	$	50,734
Collectively evaluated for impairment		173,028
Loans acquired with deteriorated credit quality		3,147

Schedule of impaired loans

The following table presents the Company's impaired loans as of September 30, 2014.

($ 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	$	−		−		−		16
Commercial - secured		69		72		−		118
Secured by inventory and accounts receivable		−		−		−		−

Real estate – construction, land development & other land loans		7,410		10,679		−		6,318

Real estate – residential, farmland, and multi-family		10,300		12,547		−		7,428

Real estate – home equity lines of credit		481		498		−		366

Real estate – commercial		15,998		18,831		−		10,537

Consumer		9		11		−		8
Total non-covered impaired loans with no allowance	$	34,267		42,638		−		24,791

Total covered impaired loans with no allowance	$	5,642		8,015		−		19,208

Total impaired loans with no allowance recorded	$	39,909		50,653		−		43,999

Non-covered loans with an allowance recorded:
Commercial, financial, and agricultural:
Commercial - unsecured	$	242		245		202		143
Commercial - secured		661		661		179		536
Secured by inventory and accounts receivable		−		−		−		19

Real estate – construction, land development & other land loans		1,203		1,220		513		1,580

Real estate – residential, farmland, and multi-family		13,933		14,133		1,771		14,312

Real estate – home equity lines of credit		−		−		−		6

Real estate – commercial		4,130		4,223		229		7,150

Consumer		25		25		20		10
Total non-covered impaired loans with allowance	$	20,194		20,507		2,914		23,756

Total covered impaired loans with allowance	$	5,616		6,149		1,537		9,336

Total impaired loans with an allowance recorded	$	25,810		26,656		4,451		33,092

Interest income recorded on non-covered and covered impaired loans during the nine months ended September 30, 2014 is considered insignificant.

The following table presents the Company's impaired loans as of December 31, 2013.

($ 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		−		−		−		334
Secured by inventory and accounts receivable		−		−		−		−

Real estate – construction, land development & other land loans		6,398		6,907		−		5,005

Real estate – residential, farmland, and multi-family		3,883		4,429		−		2,329

Real estate – home equity lines of credit		−		−		−		−

Real estate – commercial		7,324		9,008		−		9,981

Consumer		−		−		−		−
Total non-covered impaired loans with no allowance	$	17,605		20,344		−		17,649

Total covered impaired loans with no allowance	$	26,569		43,582		−		39,215

Total impaired loans with no allowance recorded	$	44,174		63,926		−		56,864

Non-covered loans with an allowance recorded:
Commercial, financial, and agricultural:
Commercial - unsecured	$	115		115		63		72
Commercial - secured		392		394		64		1,081
Secured by inventory and accounts receivable		75		75		75		80

Real estate – construction, land development & other land loans		1,629		2,148		544		2,339

Real estate – residential, farmland, and multi-family		15,228		15,642		1,162		13,417

Real estate – home equity lines of credit		22		22		1		637

Real estate – commercial		9,570		10,873		649		5,914

Consumer		13		35		1		466
Total non-covered impaired loans with allowance	$	27,044		29,304		2,559		24,006

Total covered impaired loans with allowance	$	16,538		21,540		3,112		14,343

Total impaired loans with an allowance recorded	$	43,582		50,844		5,671		38,349

Schedule of recorded investment in loans by credit quality indicators

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, 2014.

($ 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)		Nonaccrual Loans		Total
Non-covered loans:
Commercial, financial, and agricultural:
Commercial - unsecured	$	12,240		17,394		5		1,415		2,420		249		33,723
Commercial - secured		34,385		68,397		63		4,602		4,459		3,498		115,404
Secured by inventory and accounts receivable		7,585		11,510		−		1,186		849		391		21,521

Real estate – construction, land development & other land loans		84,414		144,702		1,571		12,989		12,379		10,364		266,419

Real estate – residential, farmland, and multi-family		221,422		529,203		4,470		44,584		35,421		25,118		860,218

Real estate – home equity lines of credit		123,649		62,223		1,258		4,320		5,210		2,317		198,977

Real estate - commercial		188,845		492,862		7,568		30,705		20,996		11,132		752,108

Consumer		24,679		16,995		53		756		707		551		43,741
Total	$	697,219		1,343,286		14,988		100,557		82,441		53,620		2,292,111
Unamortized net deferred loan costs														730
Total non-covered loans													$	2,292,841

Total covered loans	$	14,615		75,618		34		10,050		22,454		10,478		133,249

Total loans	$	711,834		1,418,904		15,022		110,607		104,895		64,098		2,426,090

At September 30, 2014, there was an insignificant amount of loans that were graded “8” with an accruing status.

As previously discussed, on July 1, 2014 the Company transferred $39.7 million of loans from the covered category to the non-covered category as a result of the expiration of one of the Company's loss-share agreements with the FDIC. Approximately $2.8 million of those loans were “Special Mention Loans”, $5.5 million were “Classified Loans”, and $9.7 million were “Nonaccrual Loans”.

The following table presents the Company's recorded investment in loans by credit quality indicators as of December 31, 2013.

($ 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)		Nonaccrual Loans		Total
Non-covered loans:
Commercial, financial, and agricultural:
Commercial - unsecured	$	8,495		24,415		7		1,509		2,367		222		37,015
Commercial - secured		31,494		77,441		100		5,597		4,986		2,662		122,280
Secured by inventory and accounts receivable		4,098		12,800		−		2,022		1,711		545		21,176

Real estate – construction, land development & other land loans		31,221		181,050		2,365		11,646		10,333		8,055		244,670

Real estate – residential, farmland, and multi-family		227,053		540,349		5,062		41,583		37,526		17,814		869,387

Real estate – home equity lines of credit		120,205		63,400		1,499		5,699		5,124		2,200		198,127

Real estate - commercial		115,397		533,680		10,014		24,557		15,843		10,115		709,606

Consumer		25,703		21,790		54		829		995		325		49,696
Total	$	563,666		1,454,925		19,101		93,442		78,885		41,938		2,251,957
Unamortized net deferred loan costs														928
Total non-covered loans													$	2,252,885

Total covered loans	$	25,078		92,147		−		8,857		47,010		37,217		210,309

Total loans	$	588,744		1,547,072		19,101		102,299		125,895		79,155		2,463,194

Schedule of information related to loans modified in a troubled debt restructuring

The following table presents information related to loans modified in a troubled debt restructuring during the three and nine months ended September 30, 2014.

($ in thousands)	For the three months ended September 30, 2014
	Number of Contracts		Pre-Modification Restructured Balances		Post-Modification Restructured Balances
Non-covered TDRs – Accruing
Real estate – residential, farmland, and multi-family		1	$	36	$	36

Non-covered TDRs - Nonaccrual
Commercial, financial, and agricultural:
Commercial - secured		1		15		15
Real estate – residential, farmland, and multi-family		3		275		275

Total non-covered TDRs arising during period		5		326		326

Total covered TDRs arising during period– Accruing		1	$	680	$	667
Total covered TDRs arising during period – Nonaccrual		2		150		145

Total TDRs arising during period		8	$	1,156	$	1,138

($ in thousands)	For the nine months ended September 30, 2014
	Number of Contracts		Pre-Modification Restructured Balances		Post-Modification Restructured Balances
Non-covered TDRs – Accruing
Real estate – residential, farmland, and multi-family		7	$	713	$	713

Non-covered TDRs - Nonaccrual
Commercial, financial, and agricultural:
Commercial - secured		1		15		15
Real estate – residential, farmland, and multi-family		7		713		713

Total non-covered TDRs arising during period		15		1,441		1,441

Total covered TDRs arising during period– Accruing		3	$	928	$	912
Total covered TDRs arising during period – Nonaccrual		7		860		827

Total TDRs arising during period		25	$	3,229	$	3,180

The following table presents information related to loans modified in a troubled debt restructuring during the three and nine months ended September 30, 2013.

($ in thousands)	For the three months ended September 30, 2013
	Number of Contracts		Pre-Modification Restructured Balances		Post-Modification Restructured Balances
Non-covered TDRs – Accruing
Commercial, financial, and agricultural:
Commercial - unsecured		1	$	66	$	66
Commercial - secured		5		322		322
Real estate – construction, land development & other land loans		2		1,261		1,261
Real estate – residential, farmland, and multi-family		1		174		174
Real estate – commercial		4		4,933		4,933

Non-covered TDRs – Nonaccrual
Real estate – construction, land development & other land loans		3		800		800
Real estate – residential, farmland, and multi-family		3		395		395
Real estate – commercial		1		398		398

Total non-covered TDRs arising during period		20		8,349		8,349

Total covered TDRs arising during period– Accruing		−	$	−	$	−
Total covered TDRs arising during period – Nonaccrual		1		187		167

Total TDRs arising during period		21	$	8,536	$	8,516

($ in thousands)	For the nine months ended September 30, 2013
	Number of Contracts		Pre-Modification Restructured Balances		Post-Modification Restructured Balances
Non-covered TDRs – Accruing
Commercial, financial, and agricultural:
Commercial - unsecured		1	$	66	$	66
Commercial - secured		5		322		322
Real estate – construction, land development & other land loans		2		1,261		1,261
Real estate – residential, farmland, and multi-family		10		1,256		1,258
Real estate – commercial		7		5,567		5,567
Consumer		1		14		14

Non-covered TDRs – Nonaccrual
Real estate – construction, land development & other land loans		3		800		800
Real estate – residential, farmland, and multi-family		6		604		604
Real estate – commercial		1		398		398

Total non-covered TDRs arising during period		36		10,288		10,290

Total covered TDRs arising during period– Accruing		4	$	359	$	351
Total covered TDRs arising during period – Nonaccrual		1		187		167

Total TDRs arising during period		41	$	10,834	$	10,808

Schedule od accruing restructured loans that defaulted in the period

Accruing restructured loans that were modified in the previous 12 months and that defaulted during the three and nine months ended September 30, 2014 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 nonaccrual status, or has been transferred to foreclosed real estate.

($ in thousands)	For the three months ended September 30, 2014				For the nine months ended September 30, 2014
	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	$	5
Real estate – commercial		-		-		1		71

Total non-covered TDRs that subsequently defaulted		-	$	-		2	$	76

Total accruing covered TDRs that subsequently defaulted		-	$	-		-	$	-

Total accruing TDRs that subsequently defaulted		-	$	-		2	$	76

Accruing restructured loans that were modified in the previous 12 months and that defaulted during the three and nine months ended September 30, 2013 are presented in the table below.

($ in thousands)	For the three months ended September 30, 2013				For the nine months ended September 30, 2013
	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	$	342
Real estate – residential, farmland, and multi-family		-		-		1		252

Total non-covered TDRs that subsequently defaulted		-	$	-		2	$	594

Total accruing covered TDRs that subsequently defaulted		-	$	-		1	$	3,501

Total accruing TDRs that subsequently defaulted		-	$	-		3	$	4,095