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Loans and Asset Quality Information

9 Months Ended

Sep. 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 acquired 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)	September 30, 2017					December 31, 2016					September 30, 2016
	Amount			Percentage		Amount			Percentage		Amount		Percentage
All loans:

Commercial, financial, and agricultural	$	376,940			11%	$	261,813			9%	$	248,877		9%
Real estate – construction, land development & other land loans		450,746			13%		354,667			13%		327,863		12%
Real estate – mortgage – residential (1-4 family) first mortgages		796,222			23%		750,679			28%		756,880		29%
Real estate – mortgage – home equity loans / lines of credit		315,322			9%		239,105			9%		239,049		9%
Real estate – mortgage – commercial and other		1,431,934			42%		1,049,460			39%		1,026,328		39%
Installment loans to individuals		59,028			2%		55,037			2%		52,264		2%
Subtotal		3,430,192			100%		2,710,761			100%		2,651,261		100%
Unamortized net deferred loan costs (fees)		(437	)				(49	)				198
Total loans	$	3,429,755				$	2,710,712				$	2,651,459

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 September 30, 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		(1,326	)		1,326
Change due to payments received		—			(5,585	)
Transfer to foreclosed real estate		—			(69	)
Other		—			(406	)
Balance at September 30, 2017	$	2,291			15,034

During the first nine months of 2017, the Company received $848,000 in payments that exceeded the carrying amount of the related PCI loans, of which $775,000 was recognized as loan discount accretion income and $73,000 was recorded as additional loan interest income. During the first nine months of 2016, the Company received $1,108,000 in payments that exceeded the carrying amount of the related PCI 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)	September 30, 2017		December 31, 2016		September 30, 2016

Nonperforming assets
Nonaccrual loans	$	23,350		27,468		32,796
Restructured loans - accruing		20,330		22,138		27,273
Accruing loans > 90 days past due		—		—		—
Total nonperforming loans		43,680		49,606		60,069
Foreclosed real estate		9,356		9,532		10,103
Total nonperforming assets	$	53,036		59,138		70,172

Purchased credit impaired loans not included above (1)	$	15,034		—		—

(1) 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 September 30, 2017 that are contractually past due 90 days or more.

At September 30, 2017 and December 31, 2016, the Company had $0.9 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)	September 30, 2017		December 31, 2016
Commercial, financial, and agricultural	$	996		1,842
Real estate – construction, land development & other land loans		1,565		2,945
Real estate – mortgage – residential (1-4 family) first mortgages		14,878		16,017
Real estate – mortgage – home equity loans / lines of credit		2,250		2,355
Real estate – mortgage – commercial and other		3,534		4,208
Installment loans to individuals		127		101
Total	$	23,350		27,468

The following table presents an analysis of the payment status of the Company’s loans as of September 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	$	325		—		—		996		375,364		376,685
Real estate – construction, land development & other land loans		432		—		—		1,565		447,873		449,870
Real estate – mortgage – residential (1-4 family) first mortgages		4,911		472		—		14,878		772,651		792,912
Real estate – mortgage – home equity loans / lines of credit		2,455		—		—		2,250		309,906		314,611
Real estate – mortgage – commercial and other		1,094		469		—		3,534		1,417,012		1,422,109
Installment loans to individuals		145		79		—		127		58,620		58,971
Purchased credit impaired		611		—		449		—		13,974		15,034
Total	$	9,973		1,020		449		23,350		3,395,400		3,430,192
Unamortized net deferred loan fees												(437	)
Total loans											$	3,429,755

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 nine months ended September 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 September 30, 2017
Beginning balance	$	3,430			2,676			7,085			2,057			6,153			1,074			1,550		24,025
Charge-offs		(131	)		(43	)		(499	)		(213	)		(159	)		(162	)		—		(1,207	)
Recoveries		330			809			170			120			275			71			—		1,775
Provisions		(314	)		(973	)		(281	)		(49	)		(271	)		45			1,843		—
Ending balance	$	3,315			2,469			6,475			1,915			5,998			1,028			3,393		24,593

As of and for the nine months ended September 30, 2017

Beginning balance	$	3,829			2,691			7,704			2,420			5,098			1,145			894		23,781
Charge-offs		(1,335	)		(312	)		(1,746	)		(791	)		(573	)		(521	)		—		(5,278	)
Recoveries		848			2,280			806			250			973			210			—		5,367
Provisions		(27	)		(2,190	)		(289	)		36			500			194			2,499		723
Ending balance	$	3,315			2,469			6,475			1,915			5,998			1,028			3,393		24,593

Ending balances as of September 30, 2017: Allowance for loan losses
Individually evaluated for impairment	$	144			23			929			—			487			—			—		1,583
Collectively evaluated for impairment	$	3,171			2,446			5,546			1,915			5,511			1,028			3,393		23,010
Purchased credit impaired	$	—			—			—			—			—			—			—		—

Loans receivable as of September 30, 2017:
Ending balance – total	$	376,940			450,746			796,222			315,322			1,431,934			59,028			—		3,430,192
Unamortized net deferred loan fees																						(437	)
Total loans																					$	3,429,755

Ending balances as of September 30, 2017: Loans
Individually evaluated for impairment	$	490			3,072			14,987			52			9,443			—			—		28,044
Collectively evaluated for impairment	$	376,195			446,798			777,925			314,559			1,412,666			58,971			—		3,387,114
Purchased credit impaired	$	255			876			3,310			711			9,825			57			—		15,034

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 the three and nine months ended September 30, 2016. There were no covered loans at September 30, 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 three months ended September 30, 2016
Beginning balance	$	4,282			2,899			7,860			2,285			5,571			1,480			572			1,074			26,023
Charge-offs		(495	)		(161	)		(692	)		(196	)		(288	)		(223	)		—			—			(2,055	)
Recoveries		252			588			377			69			317			55			—			—			1,658
Transfer from covered status		—			3			788			281			1			—			1			(1,074	)		—
Removed due to branch loan sale		(263	)		(39	)		(347	)		(110	)		(228	)		(63	)		(1	)		—			(1,051	)
Provisions		755			(612	)		(492	)		54			(165	)		(38	)		498			—			—
Ending balance	$	4,531			2,678			7,494			2,383			5,208			1,211			1,070			—			24,575

As of and for the nine months ended September 30, 2016
Beginning balance	$	4,742			3,754			7,832			2,893			5,816			1,051			696			1,799			28,583
Charge-offs		(1,229	)		(638	)		(3,383	)		(930	)		(850	)		(741	)		—			(244	)		(8,015	)
Recoveries		554			799			672			188			602			308			—			1,958			5,081
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	)		—			(1,051	)
Provisions		671			(1,263	)		1,881			49			(259	)		656			374			(2,132	)		(23	)
Ending balance	$	4,531			2,678			7,494			2,383			5,208			1,211			1,070			—			24,575

Ending balances as of September 30, 2016: Allowance for loan losses
Individually evaluated for impairment	$	9			169			1,306			5			444			—			—			—			1,933
Collectively evaluated for impairment	$	4,522			2,509			6,188			2,372			4,764			1,211			1,070			—			22,636
Loans acquired with deteriorated credit quality	$	—			—			—			6			—			—			—			—			6

Loans receivable as of September 30, 2016:
Ending balance – total	$	248,877			327,863			756,880			239,049			1,026,328			52,264			—			—			2,651,261
Unamortized net deferred loan costs																										198
Total loans																									$	2,651,459

Ending balances as of September 30, 2016: Loans
Individually evaluated for impairment	$	1,732			4,181			21,611			310			11,291			1			—			—			39,126
Collectively evaluated for impairment	$	247,145			323,682			735,062			238,733			1,014,506			52,263			—			—			2,611,391
Loans acquired with deteriorated credit quality	$	—			—			207			6			531			—			—			—			744

The following table presents loans individually evaluated for impairment by class of loans, excluding PCI loans, as of September 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	$	185		425		—		299
Real estate – mortgage – construction, land development & other land loans		2,838		4,023		—		2,871
Real estate – mortgage – residential (1-4 family) first mortgages		6,461		7,029		—		7,533
Real estate – mortgage –home equity loans / lines of credit		52		79		—		70
Real estate – mortgage –commercial and other		2,158		2,394		—		3,162
Installment loans to individuals		—		—		—		1
Total impaired loans with no allowance	$	11,694		13,950		—		13,936


Impaired loans with an allowance recorded:

Commercial, financial, and agricultural	$	305		305		144		169
Real estate – mortgage – construction, land development & other land loans		234		243		23		570
Real estate – mortgage – residential (1-4 family) first mortgages		8,526		8,721		929		10,198
Real estate – mortgage –home equity loans / lines of credit		—		—		—		83
Real estate – mortgage –commercial and other		7,285		7,392		487		5,354
Installment loans to individuals		—		—		—		—
Total impaired loans with allowance	$	16,350		16,661		1,583		16,374

Interest income on impaired loans recognized during the nine months ended September 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 September 30, 2017.

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

Commercial, financial, and agricultural	$	365,505		8,974		1,210		996		376,685
Real estate – construction, land development & other land loans		435,960		6,009		6,336		1,565		449,870
Real estate – mortgage – residential (1-4 family) first mortgages		729,341		15,298		33,395		14,878		792,912
Real estate – mortgage – home equity loans / lines of credit		304,114		1,262		6,985		2,250		314,611
Real estate – mortgage – commercial and other		1,384,255		23,736		10,584		3,534		1,422,109
Installment loans to individuals		58,444		224		176		127		58,971
Purchased credit impaired		6,748		5,002		3,284		—		15,034
Total	$	3,284,367		60,505		61,970		23,350		3,430,192
Unamortized net deferred loan fees										(437	)
Total loans										3,429,755

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 September 30, 2017 and 2016.

($ in thousands)	For three months ended September 30, 2017						For the three months ended September 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		—	$	—	$	—		1	$	1,071	$	1,071
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		—		—		—		—		—		—
Installment loans to individuals		—		—		—		—		—		—

TDRs – Nonaccrual
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		—		—		—		—		—		—
Installment loans to individuals		—		—		—		—		—		—
Total TDRs arising during period		—	$	—	$	—		1	$	1,071	$	1,071

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

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

($ in thousands)	For nine months ended September 30, 2017						For the nine months ended September 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		—	$	—	$	—		1	$	1,071	$	1,071
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		1	$	1,071	$	1,071

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 September 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

September 30, 2017

For the three months ended

September 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

—

Total accruing TDRs that subsequently defaulted

—

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 nine months ended September 30, 2017 and 2016 are presented in the table below.

($ in thousands)	For the nine months ended September 30, 2017				For the nine months ended September 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