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Loans and Asset Quality Information

12 Months Ended

Dec. 31, 2016

Loans and Asset Quality Information [Abstract]

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		—	$	—