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Loans and Asset Quality Information (Tables)
9 Months Ended
Sep. 30, 2017
Loans and Asset Quality Information [Abstract]  
Summary of contractually required payments for Carolina Bank expected at acquisition date

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 
Summary of contractually required payments for Carolina Bank not expected at acquisition date

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 
Summary of the major categories of total loans outstanding

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

 

($ in thousands)  September 30, 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      
Schedule of activity in covered purchased nonimpaired loans

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  $ 
Schedule of activity in purchased credit impaired loans

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 
Summary of nonperforming assets

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

 

 

ASSET QUALITY DATA ($ in thousands)

  September 30,
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.

Schedule of nonaccrual loans

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 
           
Schedule of analysis of the payment status of loans

The following table presents an analysis of the payment status of the Company’s loans as of September 30, 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 
Schedule of activity in the allowance for loan losses for non-covered and covered loans

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 
Schedule of impaired loans individually evaluated

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 
Schedule of recorded investment in loans by credit quality indicators

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

The following table presents information related to loans modified in a troubled debt restructuring during the three 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      $   $       $   $
Schedule of accruing restructured loans that defaulted in the period

Accruing restructured loans that were modified in the previous 12 months and that defaulted during the three 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