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Loans and Asset Quality Information

6 Months Ended

Jun. 30, 2017

Loans and Asset Quality Information [Abstract]

Note 8 – 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 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.

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.

On March 3, 2017, the Company acquired Carolina Bank (see Note 4 for more information). As a result of this acquisition, the Company recorded loans with a fair value of $497.5 million. Of those loans, $19.3 million were considered to be purchased credit impaired (“PCI”) loans, which are loans for which it is probable at acquisition date that all contractually required payments will not be collected. The remaining loans are considered to be purchased non-impaired loans and their related fair value discount or premium is recognized as an adjustment to yield over the remaining life of each loan.

The following table relates to Carolina Bank PCI loans and summarizes the contractually required payments, which includes principal and interest, expected cash flows to be collected, and the fair value of acquired PCI loans at the acquisition date.

($ in thousands)	Carolina Bank Acquisition on March 3, 2017
Contractually required payments	$	27,108
Nonaccretable difference		(4,237	)
Cash flows expected to be collected at acquisition		22,871
Accretable yield		(3,617	)
Fair value of PCI loans at acquisition date	$	19,254

The following table relates to acquired Carolina Bank purchased non-impaired loans and provides the contractually required payments, fair value, and estimate of contractual cash flows not expected to be collected at the acquisition date.

($ in thousands)	Carolina Bank Acquisition on March 3, 2017
Contractually required payments	$	569,980
Fair value of acquired loans at acquisition date		478,515
Contractual cash flows not expected to be collected		3,650

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

($ in thousands)	June 30, 2017						December 31, 2016						June 30, 2016
	Amount			Percentage			Amount			Percentage			Amount		Percentage
All loans (non-covered and covered):

Commercial, financial, and agricultural	$	383,834			11	%	$	261,813			9	%	$	244,862		9	%
Real estate – construction, land development & other land loans		446,661			13	%		354,667			13	%		310,993		12	%
Real estate – mortgage – residential (1-4 family) first mortgages		783,759			23	%		750,679			28	%		751,446		29	%
Real estate – mortgage – home equity loans / lines of credit		320,953			10	%		239,105			9	%		238,794		9	%
Real estate – mortgage – commercial and other		1,384,569			41	%		1,049,460			39	%		1,000,578		39	%
Installment loans to individuals		57,008			2	%		55,037			2	%		50,387		2	%
Subtotal		3,376,784			100	%		2,710,761			100	%		2,597,060		100	%
Unamortized net deferred loan costs (fees)		(808	)					(49	)					1,074
Total loans	$	3,375,976					$	2,710,712					$	2,598,134

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 June 30, 2016. There were no covered loans at June 30, 2017 or December 31, 2016.

($ in thousands)	June 30, 2016
	Non-covered		Covered		Total

Commercial, financial, and agricultural	$	244,862		—	$	244,862
Real estate – construction, land development & other land loans		310,832		161		310,993
Real estate – mortgage – residential (1-4 family) first mortgages		683,367		68,079		751,446
Real estate – mortgage – home equity loans / lines of credit		228,906		9,888		238,794
Real estate – mortgage – commercial and other		1,000,319		259		1,000,578
Installment loans to individuals		50,387		—		50,387
Subtotal		2,518,673		78,387		2,597,060
Unamortized net deferred loan costs		1,074		—		1,074
Total	$	2,519,747		78,387	$	2,598,134

The following presents the carrying amount of the covered loans at June 30, 2016 detailed by purchased credit impaired and purchased non-impaired loans (as determined on the date of the acquisition). There were no covered loans at June 30, 2017 or December 31, 2016.

($ 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	$	—		—		—		—		—		—
Real estate – construction, land development & other land loans		—		—		161		162		161		162
Real estate – mortgage – residential (1-4 family) first mortgages		—		33		68,079		78,940		68,079		78,973
Real estate – mortgage – home equity loans / lines of credit		6		14		9,882		11,140		9,888		11,154
Real estate – mortgage – commercial and other		—		—		259		294		259		294
Installment loans to individuals		—		—		—		—		—		—
Total	$	6		47		78,381		90,536		78,387		90,583

The following table presents information regarding covered purchased non-impaired loans since January 1, 2016. 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 January 1, 2016	$	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	$	—

The following table presents information regarding all PCI loans since January 1, 2016.

($ in thousands) Purchased Credit Impaired Loans	Accretable Yield			Carrying Amount
Balance at January 1, 2016	$	—			1,970
Change due to payments received		—			(1,386	)
Change due to loan charge-off		—			(70	)
Balance at December 31, 2016	$	—			514
Additions due to acquisition of Carolina Bank		3,617			19,254
Accretion		(871	)		871
Change due to payments received		—			(3,317	)
Transfer to foreclosed real estate		—			(69	)
Other		—			(407	)
Balance at June 30, 2017	$	2,746			16,846

During the first six months of 2017, the Company received $564,000 in payments that exceeded the carrying amount of the related purchased credit impaired loans, of which $558,000 was recognized as loan discount accretion income and $6,000 was recorded as additional loan interest income. During the first six months of 2016, the Company received $1,108,000 in payments that exceeded the carrying amount of the related purchased credit impaired loans, of which $780,000 was recognized as loan discount accretion income, $295,000 was recorded as additional loan interest income, and $33,000 was recorded as a recovery.

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)	June 30, 2017		December 31, 2016		June 30, 2016

Nonperforming assets
Nonaccrual loans	$	22,795		27,468		37,975
Restructured loans - accruing		21,019		22,138		29,271
Accruing loans > 90 days past due		—		—		—
Total nonperforming loans		43,814		49,606		67,246
Foreclosed real estate		11,196		9,532		10,606
Total nonperforming assets	$	55,010		59,138		77,852

Total covered nonperforming assets included above (1)	$	—		—		8,024
Purchased credit impaired loans not included above (2)	$	16,846		—		—

(1) All FDIC loss share agreements were terminated effective September 22, 2016 and, accordingly, assets previously covered under those agreements become non-covered on that date.

(2) In the March 3, 2017 acquisition of Carolina Bank Holdings, Inc., the Company acquired $19.3 million in purchased credit impaired loans in accordance with ASC 310-30 accounting guidance. These loans are excluded from nonperforming loans, including $0.4 million in purchased credit impaired loans at June 30, 2017 that are contractually past due 90 days or more.

At June 30, 2017 and December 31, 2016, the Company had $1.1 million and $1.7 million in residential mortgage loans in process of foreclosure, respectively.

The following is a summary of the Company’s nonaccrual loans by major categories.

($ in thousands)	June 30, 2017		December 31, 2016
Commercial, financial, and agricultural	$	1,027		1,842
Real estate – construction, land development & other land loans		1,007		2,945
Real estate – mortgage – residential (1-4 family) first mortgages		15,262		16,017
Real estate – mortgage – home equity loans / lines of credit		1,942		2,355
Real estate – mortgage – commercial and other		3,451		4,208
Installment loans to individuals		106		101
Total	$	22,795		27,468

The following table presents an analysis of the payment status of the Company’s loans as of June 30, 2017.

($ in thousands)	Accruing 30-59 Days Past Due		Accruing 60-89 Days Past Due		Accruing 90 Days or More Past Due		Nonaccrual Loans		Accruing Current		Total Loans Receivable

Commercial, financial, and agricultural	$	236		20		—		1,027		382,282		383,565
Real estate – construction, land development & other land loans		1,040		174		—		1,007		443,985		446,206
Real estate – mortgage – residential (1-4 family) first mortgages		2,847		2,784		—		15,262		759,414		780,307
Real estate – mortgage – home equity loans / lines of credit		1,018		54		—		1,942		317,214		320,228
Real estate – mortgage – commercial and other		1,094		72		—		3,451		1,368,065		1,372,682
Installment loans to individuals		115		85		—		106		56,644		56,950
Purchased credit impaired		132		5		430		—		16,279		16,846
Total	$	6,482		3,194		430		22,795		3,343,883		3,376,784
Unamortized net deferred loan fees												(808	)
Total loans											$	3,375,976

The following table presents an analysis of the payment status of the Company’s loans as of December 31, 2016.

($ in thousands)	Accruing 30-59 Days Past Due		Accruing 60-89 Days Past Due		Accruing 90 Days or More Past Due		Nonaccrual Loans		Accruing 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		1,042,807		1,048,946
Installment loans to individuals		186		193		—		101		54,557		55,037
Purchased credit impaired		—		—		—		—		514		514
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 following table presents the activity in the allowance for loan losses for all loans for the three and six months ended June 30, 2017.

($ 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

As of and for the three months ended June 30, 2017
Beginning balance	$	3,792			2,764			7,376			2,138			5,979			1,067			430		23,546
Charge-offs		(814	)		(92	)		(353	)		(347	)		(88	)		(172	)		—		(1,866	)
Recoveries		220			981			440			65			555			84			—		2,345
Provisions		232			(977	)		(378	)		201			(293	)		95			1,120		—
Ending balance	$	3,430			2,676			7,085			2,057			6,153			1,074			1,550		24,025

As of and for the six months ended June 30, 2017

Beginning balance	$	3,829			2,691			7,704			2,420			5,098			1,145			894		23,781
Charge-offs		(1,204	)		(269	)		(1,247	)		(578	)		(414	)		(359	)		—		(4,071	)
Recoveries		518			1,471			636			130			698			139			—		3,592
Provisions		287			(1,217	)		(8	)		85			771			149			656		723
Ending balance	$	3,430			2,676			7,085			2,057			6,153			1,074			1,550		24,025

Ending balances as of June 30, 2017: Allowance for loan losses
Individually evaluated for impairment	$	8			182			1,304			—			424			—			—		1,918
Collectively evaluated for impairment	$	3,422			2,494			5,781			2,057			5,729			1,074			1,550		22,107
Purchased credit impaired	$	—			—			—			—			—			—			—		—

Loans receivable as of June 30, 2017:
Ending balance – total	$	383,834			446,661			783,759			320,953			1,384,569			57,008			—		3,376,784
Unamortized net deferred loan fees																						(808	)
Total loans																					$	3,375,976

Ending balances as of June 30, 2017: Loans
Individually evaluated for impairment	$	235			3,250			17,083			54			9,053			—			—		29,675
Collectively evaluated for impairment	$	383,330			442,956			763,224			320,174			1,363,629			56,950			—		3,330,263
Purchased credit impaired	$	269			455			3,452			725			11,887			58			—		16,846

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 have been 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
Purchased credit impaired	$	—			—			—			—			—			—			—			—			—

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
Purchased credit impaired	$	—			—			—			—			514			—			—			—			514

The following table presents the activity in the allowance for loan losses for all loans for the three and six months ended June 30, 2016.

($ 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 three month ended June 30, 2016
Beginning balance	$	4,679			3,345			7,374			2,267			5,940			1,202			442			1,399			26,648
Charge-offs		(57	)		(137	)		(740	)		(285	)		(396	)		(238	)		—			(4	)		(1,857	)
Recoveries		216			121			61			64			155			140			—			756			1,513
Transfer from covered category		56			62			51			12			126			—			—			(307	)		—
Provisions		(612	)		(492	)		1,114			227			(254	)		376			130			(770	)		(281	)
Ending balance	$	4,282			2,899			7,860			2,285			5,571			1,480			572			1,074			26,023

As of and for the six month ended June 30, 2016
Beginning balance	$	4,742			3,754			7,832			2,893			5,816			1,051			696			1,799			28,583
Charge-offs		(734	)		(477	)		(2,691	)		(734	)		(562	)		(518	)		—			(245	)		(5,961	)
Recoveries		302			211			295			119			285			253			—			1,959			3,424
Transfer from covered category		56			62			51			12			126			—			—			(307	)		—
Provisions		(84	)		(651	)		2,373			(5	)		(94	)		694			(124	)		(2,132	)		(23	)
Ending balance	$	4,282			2,899			7,860			2,285			5,571			1,480			572			1,074			26,023

Ending balances as of June 30, 2016: Allowance for loan losses
Individually evaluated for impairment	$	14			172			1,263			11			478			70			—			443			2,451
Collectively evaluated for impairment	$	4,268			2,727			6,597			2,274			5,093			1,410			572			631			23,572
Purchased credit impaired	$	—			—			—			—			—			—			—			—			—

Loans receivable as of June 30, 2016:
Ending balance – total	$	244,862			310,832			683,367			228,906			1,000,319			50,387			—			78,387			2,597,060
Unamortized net deferred loan costs																										1,074
Total loans																									$	2,598,134

Ending balances as of June 30, 2016: Loans
Individually evaluated for impairment	$	859			4,614			20,201			383			12,845			72			—			5,500			44,474
Collectively evaluated for impairment	$	244,003			306,218			662,959			228,523			986,926			50,315			—			72,881			2,551,825
Purchased credit impaired	$	—			—			207			—			548			—			—			6			761

The following table presents loans individually evaluated for impairment by class of loans, excluding PCI loans, as of June 30, 2017.

($ in thousands)	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment
Impaired loans with no related allowance recorded:

Commercial, financial, and agricultural	$	188		426		—		337
Real estate – mortgage – construction, land development & other land loans		2,711		3,881		—		2,883
Real estate – mortgage – residential (1-4 family) first mortgages		6,682		7,424		—		7,890
Real estate – mortgage –home equity loans / lines of credit		54		80		—		76
Real estate – mortgage –commercial and other		2,302		2,528		—		3,496
Installment loans to individuals		—		—		—		1
Total impaired loans with no allowance	$	11,937		14,339		—		14,683


Impaired loans with an allowance recorded:

Commercial, financial, and agricultural	$	47		47		8		124
Real estate – mortgage – construction, land development & other land loans		539		557		182		682
Real estate – mortgage – residential (1-4 family) first mortgages		10,401		10,622		1,304		10,755
Real estate – mortgage –home equity loans / lines of credit		—		—		—		110
Real estate – mortgage –commercial and other		6,751		6,776		424		4,711
Installment loans to individuals		—		—		—		—
Total impaired loans with allowance	$	17,738		18,002		1,918		16,382

Interest income on impaired loans recognized during the six months ended June 30, 2017 was insignificant.

The following table presents loans individually evaluated for impairment by class of loans, excluding PCI loans, 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		4,598		5,112		—		8,165
Installment loans to individuals		—		2		—		1
Total impaired loans with no allowance	$	18,561		22,744		—		23,770


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 on impaired loans recognized during the year ended December 31, 2016 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 required 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.

The following table presents the Company’s recorded investment in loans by credit quality indicators as of June 30, 2017.

($ in thousands)
	Pass		Special Mention Loans		Classified Accruing Loans		Classified Nonaccrual Loans		Total

Commercial, financial, and agricultural	$	372,670		8,517		1,351		1,027		383,565
Real estate – construction, land development & other land loans		430,501		7,365		7,333		1,007		446,206
Real estate – mortgage – residential (1-4 family) first mortgages		715,645		14,401		34,999		15,262		780,307
Real estate – mortgage – home equity loans / lines of credit		308,378		1,415		8,493		1,942		320,228
Real estate – mortgage – commercial and other		1,333,782		23,728		11,721		3,451		1,372,682
Installment loans to individuals		56,238		227		379		106		56,950
Purchased credit impaired		6,953		5,257		4,636		—		16,846
Total	$	3,224,167		60,910		68,912		22,795		3,376,784
Unamortized net deferred loan fees										(808	)
Total loans										3,375,976

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		26,032		13,019		4,208		1,048,946
Installment loans to individuals		54,421		256		259		101		55,037
Purchased credit impaired		—		514		—		—		514
Total	$	2,547,664		64,558		71,071		27,468		2,710,761
Unamortized net deferred loan fees										(49	)
Total loans										2,710,712

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 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 three months ended June 30, 2017 and 2016.

($ in thousands)	For three months ended June 30, 2017						For the three months ended June 30, 2016
	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		—	$	—	$	—		—	$	—	$	—
Real estate – construction, land development & other land loans		—		—		—		—		—		—
Real estate – mortgage – residential (1-4 family) first mortgages		—		—		—		—		—		—
Real estate – mortgage – home equity loans / lines of credit		—		—		—		—		—		—
Real estate – mortgage – commercial and other		3		1,000		1,000		—		—		—
Installment loans to individuals		—		—		—		—		—		—

TDRs – Nonaccrual
Commercial, financial, and agricultural		—		—		—		—		—		—
Real estate – construction, land development & other land loans		1		32		32		—		—		—
Real estate – mortgage – residential (1-4 family) first mortgages		1		215		215		—		—		—
Real estate – mortgage – home equity loans / lines of credit		—		—		—		—		—		—
Real estate – mortgage – commercial and other		—		—		—		—		—		—
Installment loans to individuals		—		—		—		—		—		—

Total TDRs arising during period		5	$	1,247	$	1,247		—	$	—	$	—

Total covered TDRs arising during period included above		—	$	—	$	—		—	$	—	$	—

The following table presents information related to loans modified in a troubled debt restructuring during the six months ended June 30, 2017 and 2016.

($ in thousands)	For six months ended June 30, 2017						For the six months ended June 30, 2016
	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		—	$	—	$	—		—	$	—	$	—
Real estate – construction, land development & other land loans		—		—		—		—		—		—
Real estate – mortgage – residential (1-4 family) first mortgages		—		—		—		—		—		—
Real estate – mortgage – home equity loans / lines of credit		—		—		—		—		—		—
Real estate – mortgage – commercial and other		5		3,550		3,525		—		—		—
Installment loans to individuals		—		—		—		—		—		—

TDRs – Nonaccrual
Commercial, financial, and agricultural		—		—		—		—		—		—
Real estate – construction, land development & other land loans		1		32		32		—		—		—
Real estate – mortgage – residential (1-4 family) first mortgages		1		215		215		—		—		—
Real estate – mortgage – home equity loans / lines of credit		—		—		—		—		—		—
Real estate – mortgage – commercial and other		—		—		—		—		—		—
Installment loans to individuals		—		—		—		—		—		—

Total TDRs arising during period		7	$	3,797	$	3,772		—	$	—	$	—

Total covered TDRs arising during period included above		—	$	—	$	—		—	$	—	$	—

Accruing restructured loans that were modified in the previous 12 months and that defaulted during the three months ended June 30, 2017 and 2016 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 June 30, 2017				For the three months ended June 30, 2016
	Number of Contracts		Recorded Investment		Number of Contracts		Recorded Investment

Accruing TDRs that subsequently defaulted
Real estate – mortgage – residential (1-4 family) first mortgages		1	$	254		—	$	—

Total accruing TDRs that subsequently defaulted		1	$	254		—	$	—
Total covered accruing TDRs that subsequently defaulted included above		—	$	—		—	$	—

Accruing restructured loans that were modified in the previous 12 months and that defaulted during the six months ended June 30, 2017 and 2016 are presented in the table below.

($ in thousands)	For the six months ended June 30, 2017				For the six months ended June 30, 2016
	Number of Contracts		Recorded Investment		Number of Contracts		Recorded Investment

Accruing TDRs that subsequently defaulted
Commercial, financial, and agricultural		—	$	—		1	$	44
Real estate – mortgage – residential (1-4 family) first mortgages		2		880		—		—
Real estate – mortgage – commercial and other		—		—		1		21
Total accruing TDRs that subsequently defaulted		2	$	880		2	$	65
Total covered accruing TDRs that subsequently defaulted included above		—	$	—		1	$	44