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Loans and Asset Quality Information | 12 Months Ended
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Dec. 31, 2016
Loans and Asset Quality Information [Abstract] |
Loans and Asset Quality Information | Note 4. Loans and Asset Quality Information Prior to September 22, 2016, the Company’s banking subsidiary, First Bank, had certain loans and foreclosed real estate that were covered by loss share agreements between the FDIC and First Bank which afforded First Bank significant loss protection - see Note 2 to the financial statements included in the Company’s 2011 Annual Report on Form 10-K for detailed information regarding FDIC-assisted purchase transactions. On July 1, 2014, the loss share provisions associated with non-single family assets related to the 2009 failed bank acquisition of Cooperative Bank expired. On April 1, 2016, the loss share provisions associated with non-single family assets related to the 2011 failed bank acquisition of The Bank of Asheville expired. On September 22, 2016, the Company terminated all of the loss share agreements with the FDIC, such that all future losses and recoveries on loans and foreclosed real estate associated with the failed banks acquired through FDIC-assisted transactions will be borne solely by First Bank. As a result of the termination of the agreements, the Company recorded a charge of $5.7 million, which primarily related to the write-off of the remaining indemnification asset associated with the agreements, and is included in the indemnification asset expense amount of $10.3 million in the Consolidated Statement of Income for the year ended December 31, 2016. In the information presented below, the term “covered” is used to describe assets that were subject to FDIC loss share agreements, while the term “non-covered” refers to the Company’s legacy assets, which were not included in any type of loss share arrangement. As discussed previously, all loss share agreements were terminated during 2016 and thus the entire loan portfolio is now classified as non-covered. Certain prior period disclosures will continue to present the breakout of the loan portfolio between covered and non-covered. As a result of the termination of all loss share agreements, the remaining balances associated with those loans and foreclosed real estate were reclassified from the covered portfolio to the non-covered portfolio. Balances related to the expired agreements and the termination of all remaining agreements as of the respective dates is as follows:
|  | Cooperative Bank non-single family agreement termination July 1, 2014 |  |  | Bank of Asheville non- single family agreement termination April 1, 2016 |  |  | Remaining loss share agreement terminations September 22, 2016 |
Carrying value of total covered loans transferred to non-covered |  | $ | 39,700 |  |  |  | 17,737 |  |  |  | 78,387 |
Covered nonaccrual loans transferred to non-covered |  |  | 9,700 |  |  |  | 2,785 |  |  |  | 4,194 |
Covered foreclosed real estate transferred to non-covered |  |  | 3,000 |  |  |  | 1,165 |  |  |  | 385 |
Allowance for loan losses associated with covered loans transferred to allowance for non-covered loans |  |  | 1,700 |  |  |  | 307 |  |  |  | 1,074 |
The following is a summary of the major categories of total loans outstanding:
($ in thousands) |  | December 31, 2016 |  |  | December 31, 2015 |
|  | Amount |  |  | Percentage |  |  | Amount |  |  | Percentage |
All loans (non-covered and covered): |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial, financial, and agricultural |  | $ | 261,813 |  |  |  | 9% |  |  | $ | 202,671 |  |  |  | 8% |
Real estate – construction, land development & other land loans |  |  | 354,667 |  |  |  | 13% |  |  |  | 308,969 |  |  |  | 12% |
Real estate – mortgage – residential (1-4 family) first mortgages |  |  | 750,679 |  |  |  | 28% |  |  |  | 768,559 |  |  |  | 31% |
Real estate – mortgage – home equity loans / lines of credit |  |  | 239,105 |  |  |  | 9% |  |  |  | 232,601 |  |  |  | 9% |
Real estate – mortgage – commercial and other |  |  | 1,049,460 |  |  |  | 39% |  |  |  | 957,587 |  |  |  | 38% |
Installment loans to individuals |  |  | 55,037 |  |  |  | 2% |  |  |  | 47,666 |  |  |  | 2% |
Subtotal |  |  | 2,710,761 |  |  |  | 100% |  |  |  | 2,518,053 |  |  |  | 100% |
Unamortized net deferred loan costs (fees) |  |  | (49 | ) |  |  |  |  |  |  | 873 |  |  |  |  |
Total loans |  | $ | 2,710,712 |  |  |  |  |  |  | $ | 2,518,926 |  |  |  |  |
Loans in the amount of $2.4 billion and $2.0 billion were pledged as collateral for certain borrowings as of December 31, 2016 and December 31, 2015, respectively (see Note 10). The loans above also include loans to executive officers and directors serving the Company at December 31, 2016 and to their associates, totaling approximately $2.6 million and $3.6 million at December 31, 2016 and 2015, respectively. During 2016 additions to such loans were approximately $0.3 million and repayments totaled approximately $1.3 million. These loans were made on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable transactions with other non-related borrowers. Management does not believe these loans involve more than the normal risk of collectability or present other unfavorable features. The following is a summary of the major categories of loans outstanding allocated to the non-covered and covered loan portfolios for periods when the FDIC loss share agreements were in effect at December 31, 2015. There were no covered loans at December 31, 2016.
($ in thousands) |  | December 31, 2015 |
|  | Non-covered |  |  | Covered |  |  | Total |
Commercial, financial, and agricultural |  | $ | 201,798 |  |  |  | 873 |  |  |  | 202,671 |
Real estate – construction, land development & other land loans |  |  | 305,228 |  |  |  | 3,741 |  |  |  | 308,969 |
Real estate – mortgage – residential (1-4 family) first mortgages |  |  | 692,902 |  |  |  | 75,657 |  |  |  | 768,559 |
Real estate – mortgage – home equity loans / lines of credit |  |  | 221,995 |  |  |  | 10,606 |  |  |  | 232,601 |
Real estate – mortgage – commercial and other |  |  | 945,823 |  |  |  | 11,764 |  |  |  | 957,587 |
Installment loans to individuals |  |  | 47,666 |  |  |  | — |  |  |  | 47,666 |
Subtotal |  |  | 2,415,412 |  |  |  | 102,641 |  |  |  | 2,518,053 |
Unamortized net deferred loan costs |  |  | 873 |  |  |  | — |  |  |  | 873 |
Total |  | $ | 2,416,285 |  |  |  | 102,641 |  |  |  | 2,518,926 |
As a result of the termination of the FDIC loss share agreements during the third quarter of 2016, there were no covered loans at December 31, 2016. The follow presents the carrying amount of the covered loans at December 31, 2015 detailed by impaired and nonimpaired purchased loans (as determined on the date of the acquisition):
($ 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 |  | $ | — |  |  |  | — |  |  |  | 873 |  |  |  | 886 |  |  |  | 873 |  |  |  | 886 |
Real estate – construction, land development & other land loans |  |  | 277 |  |  |  | 365 |  |  |  | 3,464 |  |  |  | 3,457 |  |  |  | 3,741 |  |  |  | 3,822 |
Real estate – mortgage – residential (1-4 family) first mortgages |  |  | 102 |  |  |  | 633 |  |  |  | 75,555 |  |  |  | 88,434 |  |  |  | 75,657 |  |  |  | 89,067 |
Real estate – mortgage – home equity loans / lines of credit |  |  | 7 |  |  |  | 14 |  |  |  | 10,599 |  |  |  | 12,099 |  |  |  | 10,606 |  |  |  | 12,113 |
Real estate – mortgage – commercial and other |  |  | 1,003 |  |  |  | 3,136 |  |  |  | 10,761 |  |  |  | 11,458 |  |  |  | 11,764 |  |  |  | 14,594 |
Total |  | $ | 1,389 |  |  |  | 4,148 |  |  |  | 101,252 |  |  |  | 116,334 |  |  |  | 102,641 |  |  |  | 120,482 |
The following table presents information regarding covered purchased nonimpaired loans since December 31, 2014. The amounts include principal only and do not reflect accrued interest as of the date of the acquisition or beyond. All balances of covered loans were transferred to non-covered as of the termination of the loss share agreements.
($ in thousands) |  |  |
Carrying amount of nonimpaired covered loans at December 31, 2014 |  | $ | 125,644 |
Principal repayments |  |  | (30,238 | )
Transfers to foreclosed real estate |  |  | (1,211 | )
Net loan recoveries |  |  | 2,306 |
Accretion of loan discount |  |  | 4,751 |
Carrying amount of nonimpaired covered loans at December 31, 2015 |  |  | 101,252 |
Principal repayments |  |  | (7,997 | )
Transfers to foreclosed real estate |  |  | (1,036 | )
Net loan recoveries |  |  | 1,784 |
Accretion of loan discount |  |  | 1,908 |
Transfer to non-covered loans due to expiration of loss-share agreement, April 1, 2016 |  |  | (17,530 | )
Transfer to non-covered loans due to termination of loss-share agreements, September 22, 2016 |  |  | (78,381 | )
Carrying amount of nonimpaired covered loans at December 31, 2016 |  | $ | — |
As reflected in the table above, the Company accreted $1,908,000 of the loan discount on covered purchased nonimpaired loans into interest income during 2016 prior to the termination of the loss share agreements. Total loan discount accretion for all loans amounted to $4,451,000, $4,751,000 and $16,009,000 for the years ended December 31, 2016, 2015 and 2014, respectively. As of December 31, 2016, there was a remaining loan discount of $11,258,000 related to purchased accruing loans, which is expected to be accreted into interest income over the lives of the respective loans. At December 31, 2016, the Company also had $795,000 of loan discount related to purchased nonaccruing loans, which the Company does not expect will be accreted into income. The following table presents information regarding all purchased impaired loans since December 31, 2014. The Company has applied the cost recovery method to all purchased impaired loans at their respective acquisition dates due to the uncertainty as to the timing of expected cash flows, as reflected in the following table.
($ in thousands) Purchased Impaired Loans |  | Contractual Principal Receivable |  |  | Fair Market Value Adjustment – Write Down (Nonaccretable Difference) |  |  | Carrying Amount |
Balance at December 31, 2014 |  | $ | 5,859 |  |  |  | 3,262 |  |  |  | 2,597 |
Change due to payments received |  |  | (634 | ) |  |  | (102 | ) |  |  | (532 | )
Transfer to foreclosed real estate |  |  | (431 | ) |  |  | (336 | ) |  |  | (95 | )
Other |  |  | (3 | ) |  |  | (3 | ) |  |  | — |
Balance at December 31, 2015 |  | $ | 4,791 |  |  |  | 2,821 |  |  |  | 1,970 |
Change due to payments received |  |  | (3,753 | ) |  |  | (2,367 | ) |  |  | (1,386 | )
Change due to loan charge-off |  |  | (428 | ) |  |  | (358 | ) |  |  | (70 | )
Balance at December 31, 2016 |  | $ | 610 |  |  |  | 96 |  |  |  | 514 |
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 2016, the Company received $1,160,000 in payments that exceeded the carrying amount of the related purchased impaired loans, of which $786,000 was recognized as discount accretion loan interest income and $374,000 was recorded as additional loan interest income. During 2015, the Company received $332,000 in payments that exceeded the carrying amount of the related purchased impaired loans, of which $275,000 was recognized as discount accretion loan interest income and $57,000 was recorded as additional loan interest income. Nonperforming assets are defined as nonaccrual loans, restructured loans, loans past due 90 or more days and still accruing interest, nonperforming loans held for sale, and foreclosed real estate. Nonperforming assets are summarized as follows:
ASSET QUALITY DATA ($ in thousands) |  | December 31, 2016 |  |  | December 31, 2015 |
Nonperforming assets |  |  |  |  |  |  |  |
Nonaccrual loans |  | $ | 27,468 |  |  |  | 47,810 |
Restructured loans - accruing |  |  | 22,138 |  |  |  | 31,489 |
Accruing loans > 90 days past due |  |  | — |  |  |  | — |
Total nonperforming loans |  |  | 49,606 |  |  |  | 79,299 |
Foreclosed real estate |  |  | 9,532 |  |  |  | 9,994 |
Total nonperforming assets |  | $ | 59,138 |  |  |  | 89,293 |
Total covered nonperforming assets included above (1) |  | $ | — |  |  |  | 12,100 |
(1) All FDIC loss share agreements were terminated effective September 22, 2016 and, accordingly, assets previously covered under those agreements became non-covered on that date. At December 31, 2016 and 2015, the Company had $1.7 million and $2.5 million in residential mortgage loans in process of foreclosure, respectively. If the nonaccrual and restructured loans as of December 31, 2016, 2015 and 2014 had been current in accordance with their original terms and had been outstanding throughout the period (or since origination if held for part of the period), gross interest income in the amounts of approximately $1,893,000, $3,213,000, and $4,115,000 for nonaccrual loans and $1,417,000, $2,044,000, and $3,045,000, for restructured loans would have been recorded for 2016, 2015, and 2014, respectively. Interest income on such loans that was actually collected and included in net income in 2016, 2015 and 2014 amounted to approximately $266,000, $575,000, and $1,176,000 for nonaccrual loans (prior to their being placed on nonaccrual status), and $423,000, $1,392,000, and $2,003,000 for restructured loans, respectively. At December 31, 2016 and 2015, there were no commitments to lend additional funds to debtors whose loans were nonperforming. The following is a summary the Company’s nonaccrual loans by major categories.
($ in thousands) |  | December 31, 2016 |  |  | December 31, 2015 |
Commercial, financial, and agricultural |  | $ | 1,842 |  |  |  | 2,964 |
Real estate – construction, land development & other land loans |  |  | 2,945 |  |  |  | 4,704 |
Real estate – mortgage – residential (1-4 family) first mortgages |  |  | 16,017 |  |  |  | 23,829 |
Real estate – mortgage – home equity loans / lines of credit |  |  | 2,355 |  |  |  | 3,525 |
Real estate – mortgage – commercial and other |  |  | 4,208 |  |  |  | 12,571 |
Installment loans to individuals |  |  | 101 |  |  |  | 217 |
Total |  | $ | 27,468 |  |  |  | 47,810 |
Total covered nonaccrual loans included above |  | $ | — |  |  |  | 7,816 |
The following table presents an analysis of the payment status of the Company’s loans as of December 31, 2016.
($ in thousands) |  | 30-59 Days Past Due |  |  | 60-89 Days Past Due |  |  | Nonaccrual Loans |  |  | Current |  |  | Total Loans Receivable |
Commercial, financial, and agricultural |  | $ | 92 |  |  |  | — |  |  |  | 1,842 |  |  |  | 259,879 |  |  |  | 261,813 |
Real estate – construction, land development & other land loans |  |  | 473 |  |  |  | 168 |  |  |  | 2,945 |  |  |  | 351,081 |  |  |  | 354,667 |
Real estate – mortgage – residential (1-4 family) first mortgages |  |  | 4,487 |  |  |  | 443 |  |  |  | 16,017 |  |  |  | 729,732 |  |  |  | 750,679 |
Real estate – mortgage – home equity loans / lines of credit |  |  | 1,751 |  |  |  | 178 |  |  |  | 2,355 |  |  |  | 234,821 |  |  |  | 239,105 |
Real estate – mortgage – commercial and other |  |  | 1,482 |  |  |  | 449 |  |  |  | 4,208 |  |  |  | 1,043,321 |  |  |  | 1,049,460 |
Installment loans to individuals |  |  | 186 |  |  |  | 193 |  |  |  | 101 |  |  |  | 54,557 |  |  |  | 55,037 |
Total |  | $ | 8,471 |  |  |  | 1,431 |  |  |  | 27,468 |  |  |  | 2,673,391 |  |  |  | 2,710,761 |
Unamortized net deferred loan fees |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | (49 | )
Total loans |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | $ | 2,710,712 |
The Company had no covered loans and no loans that were past due greater than 90 days and accruing interest at December 31, 2016. The following table presents an analysis of the payment status of the Company’s loans as of December 31, 2015.
($ in thousands) |  | 30-59 Days Past Due |  |  | 60-89 Days Past Due |  |  | Nonaccrual Loans |  |  | Current |  |  | Total Loans Receivable |
Commercial, financial, and agricultural |  | $ | 999 |  |  |  | 127 |  |  |  | 2,964 |  |  |  | 198,581 |  |  |  | 202,671 |
Real estate – construction, land development & other land loans |  |  | 1,512 |  |  |  | 429 |  |  |  | 4,704 |  |  |  | 302,324 |  |  |  | 308,969 |
Real estate – mortgage – residential (1-4 family) first mortgages |  |  | 15,443 |  |  |  | 3,614 |  |  |  | 23,829 |  |  |  | 725,673 |  |  |  | 768,559 |
Real estate – mortgage – home equity loans / lines of credit |  |  | 1,276 |  |  |  | 105 |  |  |  | 3,525 |  |  |  | 227,695 |  |  |  | 232,601 |
Real estate – mortgage – commercial and other |  |  | 5,591 |  |  |  | 864 |  |  |  | 12,571 |  |  |  | 938,561 |  |  |  | 957,587 |
Installment loans to individuals |  |  | 278 |  |  |  | 255 |  |  |  | 217 |  |  |  | 46,916 |  |  |  | 47,666 |
Total loans |  | $ | 25,099 |  |  |  | 5,394 |  |  |  | 47,810 |  |  |  | 2,439,750 |  |  |  | 2,518,053 |
Unamortized net deferred loan costs |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 873 |
Total loans |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | $ | 2,518,926 |
Covered loans included above |  | $ | 3,313 |  |  |  | 402 |  |  |  | 7,816 |  |  |  | 91,110 |  |  |  | 102,641 |
The Company had no non-covered or covered loans that were past due greater than 90 days and accruing interest at December 31, 2015. The following table presents the activity in the allowance for loan losses for the year ended December 31, 2016. There were no covered loans at December 31, 2016 and all reserves associated with previously covered loans were transferred to the non-covered allowance.
($ in thousands) |  | Commercial, Financial, and Agricultural |  |  | Real Estate – Construction, Land Development, & Other Land Loans |  |  | Real Estate – Residential (1-4 Family) First Mortgages |  |  | Real Estate – Mortgage – Home Equity Lines of Credit |  |  | Real Estate – Mortgage – Commercial and Other |  |  | Installment Loans to Individuals |  |  | Unallo- cated |  |  | Covered |  |  | Total |
As of and for the year ended December 31, 2016 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Beginning balance |  | $ | 4,742 |  |  |  | 3,754 |  |  |  | 7,832 |  |  |  | 2,893 |  |  |  | 5,816 |  |  |  | 1,051 |  |  |  | 696 |  |  |  | 1,799 |  |  |  | 28,583 |
Charge-offs |  |  | (2,271 | ) |  |  | (1,101 | ) |  |  | (3,815 | ) |  |  | (969 | ) |  |  | (1,005 | ) |  |  | (1,008 | ) |  |  | (1 | ) |  |  | (244 | ) |  |  | (10,414 | )
Recoveries |  |  | 805 |  |  |  | 1,422 |  |  |  | 1,060 |  |  |  | 250 |  |  |  | 836 |  |  |  | 354 |  |  |  | — |  |  |  | 1,958 |  |  |  | 6,685 |
Transfer from covered status |  |  | 56 |  |  |  | 65 |  |  |  | 839 |  |  |  | 293 |  |  |  | 127 |  |  |  | — |  |  |  | 1 |  |  |  | (1,381 | ) |  |  | — |
Removed due to branch loan sale |  |  | (263 | ) |  |  | (39 | ) |  |  | (347 | ) |  |  | (110 | ) |  |  | (228 | ) |  |  | (63 | ) |  |  | — |  |  |  | — |  |  |  | (1,050 | )
Provisions |  |  | 760 |  |  |  | (1,410 | ) |  |  | 2,135 |  |  |  | 63 |  |  |  | (448 | ) |  |  | 811 |  |  |  | 198 |  |  |  | (2,132 | ) |  |  | (23 | )
Ending balance |  | $ | 3,829 |  |  |  | 2,691 |  |  |  | 7,704 |  |  |  | 2,420 |  |  |  | 5,098 |  |  |  | 1,145 |  |  |  | 894 |  |  |  | — |  |  |  | 23,781 |
Ending balances as of December 31, 2016: Allowance for loan losses |  |  |  |  |  |  |  |  |  |  |  |  |  |
Individually evaluated for impairment |  | $ | 7 |  |  |  | 184 |  |  |  | 1,339 |  |  |  | 5 |  |  |  | 105 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 1,640 |
Collectively evaluated for impairment |  | $ | 3,822 |  |  |  | 2,507 |  |  |  | 6,365 |  |  |  | 2,415 |  |  |  | 4,993 |  |  |  | 1,145 |  |  |  | 894 |  |  |  | — |  |  |  | 22,141 |
Loans acquired with deteriorated credit quality |  | $ | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Loans receivable as of December 31, 2016: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Ending balance – total |  | $ | 261,813 |  |  |  | 354,667 |  |  |  | 750,679 |  |  |  | 239,105 |  |  |  | 1,049,460 |  |  |  | 55,037 |  |  |  | — |  |  |  | — |  |  |  | 2,710,761 |
Unamortized net deferred loan fees |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | (49 | )
Total loans |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | $ | 2,710,712 |
Ending balances as of December 31, 2016: Loans |  |  |  |  |  |
Individually evaluated for impairment |  | $ | 644 |  |  |  | 4,001 |  |  |  | 20,807 |  |  |  | 280 |  |  |  | 6,494 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 32,226 |
Collectively evaluated for impairment |  | $ | 261,169 |  |  |  | 350,666 |  |  |  | 729,872 |  |  |  | 238,825 |  |  |  | 1,042,452 |  |  |  | 55,037 |  |  |  | — |  |  |  | — |  |  |  | 2,678,021 |
Loans acquired with deteriorated credit quality |  | $ | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 514 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 514 |
The following table presents the activity in the allowance for loan losses for non-covered and covered loans for the year ended December 31, 2015.
($ in thousands) |  | Commercial Financial, and Agricultural |  |  | Real Estate – Construction, Land Development, & Other Land Loans |  |  | Real Estate – Residential (1-4 Family) First Mortgages |  |  | Real Estate– Mortgage – Home Equity Lines of Credit |  |  | Real Estate– Mortgage– Commercial and Other |  |  | Installment Loans to Individuals |  |  | Unallo- cated |  |  | Total Non- Covered |  |  | Total Covered |
As of and for the year ended December 31, 2015 |  |  |  |  |  |  |  |  |  |  |
Beginning balance |  | $ | 6,769 |  |  |  | 8,158 |  |  |  | 10,136 |  |  |  | 4,753 |  |  |  | 6,466 |  |  |  | 1,916 |  |  |  | 147 |  |  |  | 38,345 |  |  |  | 2,281 |
Charge-offs |  |  | (2,908 | ) |  |  | (3,034 | ) |  |  | (4,904 | ) |  |  | (1,054 | ) |  |  | (2,804 | ) |  |  | (2,411 | ) |  |  | — |  |  |  | (17,115 | ) |  |  | (1,316 | )
Recoveries |  |  | 831 |  |  |  | 998 |  |  |  | 279 |  |  |  | 121 |  |  |  | 904 |  |  |  | 413 |  |  |  | — |  |  |  | 3,546 |  |  |  | 3,622 |
Provisions |  |  | 50 |  |  |  | (2,368 | ) |  |  | 2,321 |  |  |  | (927 | ) |  |  | 1,250 |  |  |  | 1,133 |  |  |  | 549 |  |  |  | 2,008 |  |  |  | (2,788 | )
Ending balance |  | $ | 4,742 |  |  |  | 3,754 |  |  |  | 7,832 |  |  |  | 2,893 |  |  |  | 5,816 |  |  |  | 1,051 |  |  |  | 696 |  |  |  | 26,784 |  |  |  | 1,799 |
Ending balances as of December 31, 2015: Allowance for loan losses |  |  |  |  |  |  |  |  |  |  |
Individually evaluated for impairment |  | $ | 304 |  |  |  | 241 |  |  |  | 1,440 |  |  |  | 321 |  |  |  | 336 |  |  |  | 45 |  |  |  | — |  |  |  | 2,687 |  |  |  | 554 |
Collectively evaluated for impairment |  | $ | 4,438 |  |  |  | 3,513 |  |  |  | 6,392 |  |  |  | 2,572 |  |  |  | 5,480 |  |  |  | 1,006 |  |  |  | 696 |  |  |  | 24,097 |  |  |  | 1,175 |
Loans acquired with deteriorated credit quality |  | $ | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 70 |
Loans receivable as of December 31, 2015: |  |  |  |  |  |  |  |  |  |  |
Ending balance – total |  | $ | 201,798 |  |  |  | 305,228 |  |  |  | 692,902 |  |  |  | 221,995 |  |  |  | 945,823 |  |  |  | 47,666 |  |  |  | — |  |  |  | 2,415,412 |  |  |  | 102,641 |
Unamortized net deferred loan costs |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 873 |  |  |  | — |
Total non-covered loans |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 2,416,285 |  |  |  | 102,641 |
Ending balances as of December 31, 2015: Loans |  |  |  |  |  |  |  |  |  |  |
Individually evaluated for impairment |  | $ | 992 |  |  |  | 4,898 |  |  |  | 21,325 |  |  |  | 758 |  |  |  | 16,605 |  |  |  | 76 |  |  |  | — |  |  |  | 44,654 |  |  |  | 7,055 |
Collectively evaluated for impairment |  | $ | 200,806 |  |  |  | 300,330 |  |  |  | 671,577 |  |  |  | 221,237 |  |  |  | 928,637 |  |  |  | 47,590 |  |  |  | — |  |  |  | 2,370,177 |  |  |  | 94,197 |
Loans acquired with deteriorated credit quality |  | $ | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 581 |  |  |  | — |  |  |  | — |  |  |  | 581 |  |  |  | 1,389 |
The following table presents loans individually evaluated for impairment as of December 31, 2016.
($ in thousands) |  | Recorded Investment |  |  | Unpaid Principal Balance |  |  | Related Allowance |  |  | Average Recorded Investment |
Impaired loans with no related allowance recorded: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial, financial, and agricultural |  | $ | 593 |  |  |  | 706 |  |  |  | — |  |  |  | 816 |
Real estate – mortgage – construction, land development & other land loans |  |  | 3,221 |  |  |  | 4,558 |  |  |  | — |  |  |  | 3,641 |
Real estate – mortgage – residential (1-4 family) first mortgages |  |  | 10,035 |  |  |  | 12,220 |  |  |  | — |  |  |  | 11,008 |
Real estate – mortgage –home equity loans / lines of credit |  |  | 114 |  |  |  | 146 |  |  |  | — |  |  |  | 139 |
Real estate – mortgage –commercial and other |  |  | 5,112 |  |  |  | 5,722 |  |  |  | — |  |  |  | 8,713 |
Installment loans to individuals |  |  | — |  |  |  | 2 |  |  |  | — |  |  |  | 1 |
Total impaired loans with no allowance |  | $ | 19,075 |  |  |  | 23,354 |  |  |  | — |  |  |  | 24,318 |
Impaired loans with an allowance recorded: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial, financial, and agricultural |  | $ | 51 |  |  |  | 51 |  |  |  | 7 |  |  |  | 202 |
Real estate – mortgage – construction, land development & other land loans |  |  | 780 |  |  |  | 798 |  |  |  | 184 |  |  |  | 844 |
Real estate – mortgage – residential (1-4 family) first mortgages |  |  | 10,772 |  |  |  | 11,007 |  |  |  | 1,339 |  |  |  | 13,314 |
Real estate – mortgage –home equity loans / lines of credit |  |  | 166 |  |  |  | 166 |  |  |  | 5 |  |  |  | 324 |
Real estate – mortgage –commercial and other |  |  | 1,896 |  |  |  | 1,929 |  |  |  | 105 |  |  |  | 4,912 |
Installment loans to individuals |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 49 |
Total impaired loans with allowance |  | $ | 13,665 |  |  |  | 13,951 |  |  |  | 1,640 |  |  |  | 19,645 |
Interest income recorded on impaired loans during the year ended December 31, 2016 was insignificant. The following table presents loans individually evaluated for impairment as of December 31, 2015.
($ in thousands) |  | Recorded Investment |  |  | Unpaid Principal Balance |  |  | Related Allowance |  |  | Average Recorded Investment |
Impaired loans with no related allowance recorded: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial, financial, and agricultural |  | $ | 360 |  |  |  | 422 |  |  |  | — |  |  |  | 235 |
Real estate – mortgage – construction, land development & other land loans |  |  | 3,944 |  |  |  | 7,421 |  |  |  | — |  |  |  | 4,651 |
Real estate – mortgage – residential (1-4 family) first mortgages |  |  | 12,346 |  |  |  | 14,644 |  |  |  | — |  |  |  | 11,258 |
Real estate – mortgage –home equity loans / lines of credit |  |  | 121 |  |  |  | 175 |  |  |  | — |  |  |  | 505 |
Real estate – mortgage –commercial and other |  |  | 13,156 |  |  |  | 16,818 |  |  |  | — |  |  |  | 18,112 |
Installment loans to individuals |  |  | 3 |  |  |  | 4 |  |  |  | — |  |  |  | 5 |
Total impaired loans with no allowance |  | $ | 29,930 |  |  |  | 39,484 |  |  |  | — |  |  |  | 34,766 |
Total covered impaired loans with no allowance included above |  | $ | 5,231 |  |  |  | 8,529 |  |  |  | — |  |  |  | 5,607 |
Impaired loans with an allowance recorded: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial, financial, and agricultural |  | $ | 676 |  |  |  | 709 |  |  |  | 348 |  |  |  | 616 |
Real estate – mortgage – construction, land development & other land loans |  |  | 954 |  |  |  | 976 |  |  |  | 241 |  |  |  | 1,980 |
Real estate – mortgage – residential (1-4 family) first mortgages |  |  | 15,285 |  |  |  | 15,691 |  |  |  | 1,912 |  |  |  | 15,636 |
Real estate – mortgage –home equity loans / lines of credit |  |  | 667 |  |  |  | 678 |  |  |  | 344 |  |  |  | 430 |
Real estate – mortgage –commercial and other |  |  | 6,094 |  |  |  | 6,279 |  |  |  | 421 |  |  |  | 4,950 |
Installment loans to individuals |  |  | 73 |  |  |  | 80 |  |  |  | 45 |  |  |  | 111 |
Total impaired loans with allowance |  | $ | 23,749 |  |  |  | 24,413 |  |  |  | 3,311 |  |  |  | 23,723 |
Total covered impaired loans with allowance included above |  | $ | 3,213 |  |  |  | 3,476 |  |  |  | 624 |  |  |  | 3,742 |
Interest income recorded on impaired loans during the year ended December 31, 2015 was insignificant. 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 regularly 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:
| Risk Grade | Description
Pass: |
| 1 | Loans with virtually no risk, including cash secured loans.
| 2 | Loans with documented significant overall financial strength. These loans have minimum chance of loss due to the presence of multiple sources of repayment – each clearly sufficient to satisfy the obligation.
| 3 | Loans with documented satisfactory overall financial strength. These loans have a low loss potential due to presence of at least two clearly identified sources of repayment – each of which is sufficient to satisfy the obligation under the present circumstances.
| 4 | Loans to borrowers with acceptable financial condition. These loans could have signs of minor operational weaknesses, lack of adequate financial information, or loans supported by collateral with questionable value or marketability.
| 5 | Loans that represent above average risk due to minor weaknesses and warrant closer scrutiny by management. Collateral is generally available and felt to provide reasonable coverage with realizable liquidation values in normal circumstances. Repayment performance is satisfactory.
| P (Pass) | Consumer loans (<$500,000) that are of satisfactory credit quality with borrowers who exhibit good personal credit history, average personal financial strength and moderate debt levels. These loans generally conform to Bank policy, but may include approved mitigated exceptions to the guidelines.
Special Mention: |
| 6 | Existing loans with defined weaknesses in primary source of repayment that, if not corrected, could cause a loss to the Bank.
Classified: |
| 7 | An existing loan inadequately protected by the current sound net worth and paying capacity of the obligor or the collateral pledged, if any. These loans have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt.
| 8 | Loans that have a well-defined weakness that make the collection or liquidation in full highly questionable and improbable. Loss appears imminent, but the exact amount and timing is uncertain.
| 9 | Loans that are considered uncollectible and are in the process of being charged-off. This grade is a temporary grade assigned for administrative purposes until the charge-off is completed.
| F (Fail) | Consumer loans (<$500,000) with a well-defined weakness, such as exceptions of any kind with no mitigating factors, history of paying outside the terms of the note, insufficient income to support the current level of debt, etc.
In the second quarter of 2016, the Company made nonsubstantive changes to the numerical scale of risk grades. Previously, the description for grade 5 noted above was assigned a grade of 9. As a result of the change, most grade 9 loans were assigned a grade of 5 and the numerical grade assignments for the previous grades of 5 and below were moved one row lower in the descriptions. In the tables below, prior periods have been adjusted to be consistent with the presentation for December 31, 2016. Also during the second quarter of 2016, the Company introduced a pass/fail grade system for smaller balance consumer loans (balances less than $500,000), primarily residential home loans and installment consumer loans. Accordingly, all such consumer loans are no longer graded on a scale of 1-9, but instead are assigned a rating of “pass” or “fail”, with “fail” loans being considered as classified loans. As of the implementation of the revised grade definitions, there were approximately $29.7 million of consumer loans that had previously been assigned grade of “special mention” and were assigned a rating of “pass”, which impacts the comparability of the December 31, 2016 table below to prior periods. The changes noted above had no significant impact on the Company’s allowance for loan loss calculation. The following table presents the Company’s recorded investment in loans by credit quality indicators as of December 31, 2016.
($ in thousands) |  |  |
|  | Pass |  |  | Special Mention Loans |  |  | Classified Accruing Loans |  |  | Classified Nonaccrual Loans |  |  | Total |
Commercial, financial, and agricultural |  | $ | 247,451 |  |  |  | 10,560 |  |  |  | 1,960 |  |  |  | 1,842 |  |  |  | 261,813 |
Real estate – construction, land development & other land loans |  |  | 335,068 |  |  |  | 8,762 |  |  |  | 7,892 |  |  |  | 2,945 |  |  |  | 354,667 |
Real estate – mortgage – residential (1-4 family) first mortgages |  |  | 678,878 |  |  |  | 16,998 |  |  |  | 38,786 |  |  |  | 16,017 |  |  |  | 750,679 |
Real estate – mortgage – home equity loans / lines of credit |  |  | 226,159 |  |  |  | 1,436 |  |  |  | 9,155 |  |  |  | 2,355 |  |  |  | 239,105 |
Real estate – mortgage – commercial and other |  |  | 1,005,687 |  |  |  | 26,546 |  |  |  | 13,019 |  |  |  | 4,208 |  |  |  | 1,049,460 |
Installment loans to individuals |  |  | 54,421 |  |  |  | 256 |  |  |  | 259 |  |  |  | 101 |  |  |  | 55,037 |
Total |  | $ | 2,547,664 |  |  |  | 64,558 |  |  |  | 71,071 |  |  |  | 27,468 |  |  |  | 2,710,761 |
Unamortized net deferred loan fees |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | (49 | )
Total loans |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 2,710,712 |
The following table presents the Company’s recorded investment in loans by credit quality indicators as of December 31, 2015.
($ in thousands) |  |  |
|  | Pass |  |  | Special Mention Loans |  |  | Classified Accruing Loans |  |  | Classified Nonaccrual Loans |  |  | Total |
Commercial, financial, and agricultural |  | $ | 192,454 |  |  |  | 3,733 |  |  |  | 3,520 |  |  |  | 2,964 |  |  |  | 202,671 |
Real estate – construction, land development & other land loans |  |  | 280,647 |  |  |  | 13,489 |  |  |  | 10,129 |  |  |  | 4,704 |  |  |  | 308,969 |
Real estate – mortgage – residential (1-4 family) first mortgages |  |  | 664,618 |  |  |  | 39,895 |  |  |  | 40,217 |  |  |  | 23,829 |  |  |  | 768,559 |
Real estate – mortgage – home equity loans / lines of credit |  |  | 212,391 |  |  |  | 7,374 |  |  |  | 9,311 |  |  |  | 3,525 |  |  |  | 232,601 |
Real estate – mortgage – commercial and other |  |  | 897,579 |  |  |  | 33,155 |  |  |  | 14,282 |  |  |  | 12,571 |  |  |  | 957,587 |
Installment loans to individuals |  |  | 46,209 |  |  |  | 776 |  |  |  | 464 |  |  |  | 217 |  |  |  | 47,666 |
Total |  | $ | 2,293,898 |  |  |  | 98,422 |  |  |  | 77,923 |  |  |  | 47,810 |  |  |  | 2,518,053 |
Unamortized net deferred loan costs |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 873 |
Total loans |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 2,518,926 |
Total covered loans included above |  | $ | 71,398 |  |  |  | 7,423 |  |  |  | 16,004 |  |  |  | 7,816 |  |  |  | 102,641 |
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 year ended December 31, 2016 and 2015 related to interest rate reductions combined with restructured amortization schedules. The Company does not generally 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 nonaccrual or accruing based on the loan’s payment status. The troubled debt restructurings that are nonaccrual are reported within the nonaccrual loan totals presented previously. The following table presents information related to loans modified in a troubled debt restructuring during the years ended December 31, 2016 and 2015.
($ in thousands) |  | For the year ended December 31, 2016 |  |  | For the year ended December 31, 2015 |
|  | Number of Contracts |  |  | Pre- Modification Restructured Balances |  |  | Post- Modification Restructured Balances |  |  | Number of Contracts |  |  | Pre- Modification Restructured Balances |  |  | Post- Modification Restructured Balances |
TDRs – Accruing |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial, financial, and agricultural |  |  | 1 |  |  | $ | 1,071 |  |  | $ | 1,071 |  |  |  | 2 |  |  | $ | 52 |  |  | $ | 52 |
Real estate – construction, land development & other land loans |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 1 |  |  |  | 235 |  |  |  | 235 |
Real estate – mortgage – residential (1-4 family) first mortgages |  |  | 1 |  |  |  | 598 |  |  |  | 626 |  |  |  | 2 |  |  |  | 265 |  |  |  | 265 |
Real estate – mortgage – home equity loans / lines of credit |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Real estate – mortgage – commercial and other |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 4 |  |  |  | 557 |  |  |  | 557 |
Installment loans to individuals |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
TDRs – Nonaccrual |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial, financial, and agricultural |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 1 |  |  |  | 5 |  |  |  | 5 |
Real estate – construction, land development & other land loans |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 3 |  |  |  | 496 |  |  |  | 496 |
Real estate – mortgage – residential (1-4 family) first mortgages |  |  | 1 |  |  |  | 155 |  |  |  | 184 |  |  |  | 4 |  |  |  | 399 |  |  |  | 399 |
Real estate – mortgage – home equity loans / lines of credit |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Real estate – mortgage – commercial and other |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Installment loans to individuals |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Total TDRs arising during period |  |  | 3 |  |  | $ | 1,824 |  |  | $ | 1,881 |  |  |  | 17 |  |  | $ | 2,009 |  |  | $ | 2,009 |
Total covered TDRs arising during period included above |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 2 |  |  | $ | 139 |  |  | $ | 139 |
Accruing restructured loans that were modified in the previous 12 months and that defaulted during the years ended December 31, 2016 and 2015 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 year ended December 31, 2016 |  |  | For the year ended December 31, 2015 |
|  | Number of Contracts |  |  | Recorded Investment |  |  | Number of Contracts |  |  | Recorded Investment |
Accruing TDRs that subsequently defaulted |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial, financial, and agricultural |  |  | 2 |  |  | $ | 744 |  |  |  | 1 |  |  | $ | 7 |
Real estate – mortgage – residential (1-4 family first mortgages) |  |  | — |  |  |  | — |  |  |  | 4 |  |  |  | 352 |
Real estate – mortgage – commercial and other |  |  | 1 |  |  |  | 21 |  |  |  | — |  |  |  | — |
Total accruing TDRs that subsequently defaulted |  |  | 3 |  |  | $ | 765 |  |  |  | 5 |  |  | $ | 359 |
Total covered accruing TDRs that subsequently defaulted included above |  |  | 1 |  |  | $ | 44 |  |  |  | — |  |  | $ | — |

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- Definition The entire disclosure for financing receivables. Examples of financing receivables include, but are not limited to, loans, trade accounts receivables, notes receivable, credit cards, and receivables relating to a lessor's right(s) to payment(s) from a lease other than an operating lease that is recognized as assets. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 310 -SubTopic 10 -Section 55 -Paragraph 14 -URI http://asc.fasb.org/extlink&oid=32702940&loc=SL6953791-111525 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 310 -SubTopic 10 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=66008989&loc=d3e4975-111524 + Details
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