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Allowance for Loan Losses | 12 Months Ended
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Dec. 31, 2015
Allowance for Loan Losses |
Note 6. | Allowance for Loan Losses
The allowance for loan losses is maintained at a level management deems adequate to absorb probable loan losses inherent in the loan portfolio. The allowance is increased by provisions charged to operations and reduced by net charge-offs. While management uses its best judgment and information available, the ultimate adequacy of the allowance is dependent on a variety of factors that may be beyond the Company’s control: the performance of the Company’s loan portfolio, the economy, changes in interest rates, the view of regulatory authorities towards loan classifications, and other factors. These uncertainties may result in a material change to the allowance for loan losses in the near term; however, the amount of the change cannot reasonably be estimated. The Company’s allowance is comprised of specific reserves related to loans individually evaluated, including credit relationships, and general reserves related to loans not individually evaluated that are segmented into groups with similar risk characteristics, based on an internal risk grading matrix. General reserve allocations are based on management’s judgments of qualitative and quantitative factors about macro and micro economic conditions reflected within the loan portfolio and the economy. For loans acquired in a business combination, loans identified as credit impaired at the acquisition date are grouped into pools and evaluated separately from the non-PCI portfolio. The Company aggregates PCI loans into the following pools: Waccamaw commercial, Waccamaw lines of credit, Waccamaw serviced home equity lines, Waccamaw residential, Waccamaw consumer, Peoples commercial, and Peoples residential. The Company closed the Waccamaw consumer loan pool during the first quarter of 2015 due to an insignificant remaining balance. Provisions calculated for PCI loans are offset by an adjustment to the FDIC indemnification asset to reflect the indemnified portion, 80%, of the post-acquisition exposure. While allocations are made to various portfolio segments, the allowance for loan losses, excluding reserves allocated to specific loans and PCI loan pools, is available for use against any loan loss management deems appropriate. As of December 31, 2015, management believed the allowance was adequate to absorb probable loan losses inherent in the loan portfolio. The following tables present the aggregate activity in the allowance for loan losses in the periods indicated:
|  | Year Ended December 31, 2015 |
(Amounts in thousands) |  | Allowance Excluding PCI Loans |  |  | Allowance for PCI Loans |  |  | Total Allowance |
Beginning balance |  | $ | 20,169 |  |  | $ | 58 |  |  | $ | 20,227 |
Provision for (recovery of) loan losses |  |  | 2,166 |  |  |  | (4 | ) |  |  | 2,162 |
Benefit attributable to the FDIC indemnification asset |  |  | — |  |  |  | 29 |  |  |  | 29 |
Provision for loan losses charged to operations |  |  | 2,166 |  |  |  | 25 |  |  |  | 2,191 |
Recovery of loan losses recorded through the FDIC indemnification asset |  |  | — |  |  |  | (29 | ) |  |  | (29 | )
Charge-offs |  |  | (3,745 | ) |  |  | — |  |  |  | (3,745 | )
Recoveries |  |  | 1,589 |  |  |  | — |  |  |  | 1,589 |
Net charge-offs |  |  | (2,156 | ) |  |  | — |  |  |  | (2,156 | )
Ending balance |  | $ | 20,179 |  |  | $ | 54 |  |  | $ | 20,233 |
|  | Year Ended December 31, 2014 |
(Amounts in thousands) |  | Allowance Excluding PCI Loans |  |  | Allowance for PCI Loans |  |  | Total Allowance |
Beginning balance |  | $ | 23,322 |  |  | $ | 755 |  |  | $ | 24,077 |
Removal of loans transferred |  |  | (682 | ) |  |  | — |  |  |  | (682 | )
Provision for (recovery of) loan losses |  |  | 420 |  |  |  | (697 | ) |  |  | (277 | )
Benefit attributable to the FDIC indemnification asset |  |  | — |  |  |  | 422 |  |  |  | 422 |
Provision (recovery) of loan losses charged to operations |  |  | 420 |  |  |  | (275 | ) |  |  | 145 |
Recovery of loan losses recorded through the FDIC indemnification asset |  |  | — |  |  |  | (422 | ) |  |  | (422 | )
Charge-offs |  |  | (6,481 | ) |  |  | — |  |  |  | (6,481 | )
Recoveries |  |  | 3,590 |  |  |  | — |  |  |  | 3,590 |
Net charge-offs |  |  | (2,891 | ) |  |  | — |  |  |  | (2,891 | )
Ending balance |  | $ | 20,169 |  |  | $ | 58 |  |  | $ | 20,227 |
|  | Year Ended December 31, 2013 |
(Amounts in thousands) |  | Allowance Excluding PCI Loans |  |  | Allowance for PCI Loans |  |  | Total Allowance |
Beginning balance |  | $ | 25,762 |  |  | $ | 8 |  |  | $ | 25,770 |
Provision for loan losses |  |  | 7,912 |  |  |  | 747 |  |  |  | 8,659 |
Benefit attributable to the FDIC indemnification asset |  |  | — |  |  |  | (451 | ) |  |  | (451 | )
Provision for loan losses charged to operations |  |  | 7,912 |  |  |  | 296 |  |  |  | 8,208 |
Provision for loan losses recorded through the FDIC indemnification asset |  |  | — |  |  |  | 451 |  |  |  | 451 |
Charge-offs |  |  | (12,527 | ) |  |  | — |  |  |  | (12,527 | )
Recoveries |  |  | 2,175 |  |  |  | — |  |  |  | 2,175 |
Net charge-offs |  |  | (10,352 | ) |  |  | — |  |  |  | (10,352 | )
Ending balance |  | $ | 23,322 |  |  | $ | 755 |  |  | $ | 24,077 |
The following tables present the components of the activity in the allowance for loan losses, excluding PCI loans, by loan segment, in the periods indicated:
|  | Year Ended December 31, 2015 |
(Amounts in thousands) |  | Commercial |  |  | Consumer Real Estate |  |  | Consumer and Other |  |  | Total |
Beginning balance |  | $ | 13,010 |  |  | $ | 6,489 |  |  | $ | 670 |  |  | $ | 20,169 |
Provision for loan losses charged to operations |  |  | 931 |  |  |  | 95 |  |  |  | 1,140 |  |  |  | 2,166 |
Loans charged off |  |  | (1,282 | ) |  |  | (906 | ) |  |  | (1,557 | ) |  |  | (3,745 | )
Recoveries credited to allowance |  |  | 474 |  |  |  | 678 |  |  |  | 437 |  |  |  | 1,589 |
Net charge-offs |  |  | (808 | ) |  |  | (228 | ) |  |  | (1,120 | ) |  |  | (2,156 | )
Ending balance |  | $ | 13,133 |  |  | $ | 6,356 |  |  | $ | 690 |  |  | $ | 20,179 |
|  | Year Ended December 31, 2014 |
(Amounts in thousands) |  | Commercial |  |  | Consumer Real Estate |  |  | Consumer and Other |  |  | Total |
Beginning balance |  | $ | 16,090 |  |  | $ | 6,597 |  |  | $ | 635 |  |  | $ | 23,322 |
Removal of loans transferred |  |  | (418 | ) |  |  | (244 | ) |  |  | (20 | ) |  |  | (682 | )
(Recovery of) provision for loan losses charged to operations |  |  | (1,988 | ) |  |  | 1,273 |  |  |  | 1,135 |  |  |  | 420 |
Loans charged off |  |  | (2,928 | ) |  |  | (1,873 | ) |  |  | (1,680 | ) |  |  | (6,481 | )
Recoveries credited to allowance |  |  | 2,254 |  |  |  | 736 |  |  |  | 600 |  |  |  | 3,590 |
Net charge-offs |  |  | (674 | ) |  |  | (1,137 | ) |  |  | (1,080 | ) |  |  | (2,891 | )
Ending balance |  | $ | 13,010 |  |  | $ | 6,489 |  |  | $ | 670 |  |  | $ | 20,169 |
|  | Year Ended December 31, 2013 |
(Amounts in thousands) |  | Commercial |  |  | Consumer Real Estate |  |  | Consumer and Other |  |  | Total |
Beginning balance |  | $ | 17,259 |  |  | $ | 7,906 |  |  | $ | 597 |  |  | $ | 25,762 |
Provision for loan losses charged to operations |  |  | 5,643 |  |  |  | 1,364 |  |  |  | 905 |  |  |  | 7,912 |
Loans charged off |  |  | (7,743 | ) |  |  | (3,115 | ) |  |  | (1,669 | ) |  |  | (12,527 | )
Recoveries credited to allowance |  |  | 931 |  |  |  | 442 |  |  |  | 802 |  |  |  | 2,175 |
Net charge-offs |  |  | (6,812 | ) |  |  | (2,673 | ) |  |  | (867 | ) |  |  | (10,352 | )
Ending balance |  | $ | 16,090 |  |  | $ | 6,597 |  |  | $ | 635 |  |  | $ | 23,322 |
The following tables present the components of the activity in the allowance for loan losses for PCI loans, by loan segment, in the periods indicated:
|  | Year Ended December 31, 2015 |
(Amounts in thousands) |  | Commercial |  |  | Consumer Real Estate |  |  | Consumer and Other |  |  | Total |
Beginning balance |  | $ | 37 |  |  | $ | 21 |  |  | $ | — |  |  | $ | 58 |
(Recovery of) provision for PCI loan losses |  |  | (37 | ) |  |  | 33 |  |  |  | — |  |  |  | (4 | )
Benefit attributable to FDIC indemnification asset |  |  | 29 |  |  |  | — |  |  |  | — |  |  |  | 29 |
(Recovery of) provision for loan losses charged to operations |  |  | (8 | ) |  |  | 33 |  |  |  | — |  |  |  | 25 |
Recovery of loan losses recorded through the FDIC indemnification asset |  |  | (29 | ) |  |  | — |  |  |  | — |  |  |  | (29 | )
Ending balance |  | $ | — |  |  | $ | 54 |  |  | $ | — |  |  | $ | 54 |
|  | Year Ended December 31, 2014 |
(Amounts in thousands) |  | Commercial |  |  | Consumer Real Estate |  |  | Consumer and Other |  |  | Total |
Beginning balance |  | $ | 77 |  |  | $ | 678 |  |  | $ | — |  |  | $ | 755 |
Recovery of PCI loan losses |  |  | (40 | ) |  |  | (657 | ) |  |  | — |  |  |  | (697 | )
Benefit attributable to FDIC indemnification asset |  |  | 26 |  |  |  | 396 |  |  |  | — |  |  |  | 422 |
Recovery of loan losses charged to operations |  |  | (14 | ) |  |  | (261 | ) |  |  | — |  |  |  | (275 | )
Recovery of loan losses recorded through the FDIC indemnification asset |  |  | (26 | ) |  |  | (396 | ) |  |  | — |  |  |  | (422 | )
Ending balance |  | $ | 37 |  |  | $ | 21 |  |  | $ | — |  |  | $ | 58 |
|  | Year Ended December 31, 2013 |
(Amounts in thousands) |  | Commercial |  |  | Consumer Real Estate |  |  | Consumer and Other |  |  | Total |
Beginning balance |  | $ | 8 |  |  | $ | — |  |  | $ | — |  |  | $ | 8 |
Provision for PCI loan losses |  |  | 69 |  |  |  | 678 |  |  |  | — |  |  |  | 747 |
Benefit attributable to FDIC indemnification asset |  |  | (55 | ) |  |  | (396 | ) |  |  | — |  |  |  | (451 | )
Recovery of loan losses charged to operations |  |  | 14 |  |  |  | 282 |  |  |  | — |  |  |  | 296 |
Provision for loan losses recorded through the FDIC indemnification asset |  |  | 55 |  |  |  | 396 |  |  |  | — |  |  |  | 451 |
Ending balance |  | $ | 77 |  |  | $ | 678 |  |  | $ | — |  |  | $ | 755 |
The following tables present the Company’s allowance for loan losses and recorded investment in loans evaluated for impairment, excluding PCI loans, by loan class, as of the dates indicated:
|  | December 31, 2015 |
(Amounts in thousands) |  | Loans Individually Evaluated for Impairment |  |  | Allowance for Loans Individually Evaluated |  |  | Loans Collectively Evaluated for Impairment |  |  | Allowance for Loans Collectively Evaluated |
Commercial loans |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Construction, development, and other land |  | $ | — |  |  | $ | — |  |  | $ | 53,437 |  |  | $ | 1,119 |
Commercial and industrial |  |  | — |  |  |  | — |  |  |  | 89,885 |  |  |  | 504 |
Multi-family residential |  |  | — |  |  |  | — |  |  |  | 95,486 |  |  |  | 1,535 |
Single family non-owner occupied |  |  | 1,401 |  |  |  | 124 |  |  |  | 147,209 |  |  |  | 3,245 |
Non-farm, non-residential |  |  | 14,094 |  |  |  | 1,568 |  |  |  | 478,839 |  |  |  | 4,825 |
Agricultural |  |  | — |  |  |  | — |  |  |  | 2,945 |  |  |  | 22 |
Farmland |  |  | — |  |  |  | — |  |  |  | 28,183 |  |  |  | 190 |
Total commercial loans |  |  | 15,495 |  |  |  | 1,692 |  |  |  | 895,984 |  |  |  | 11,440 |
Consumer real estate loans |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Home equity lines |  |  | — |  |  |  | — |  |  |  | 126,691 |  |  |  | 1,091 |
Single family owner occupied |  |  | 6,874 |  |  |  | 672 |  |  |  | 495,761 |  |  |  | 4,297 |
Owner occupied construction |  |  | 349 |  |  |  | 7 |  |  |  | 43,323 |  |  |  | 290 |
Total consumer real estate loans |  |  | 7,223 |  |  |  | 679 |  |  |  | 665,775 |  |  |  | 5,678 |
Consumer and other loans |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Consumer loans |  |  | — |  |  |  | — |  |  |  | 72,084 |  |  |  | 690 |
Other |  |  | — |  |  |  | — |  |  |  | 7,338 |  |  |  | — |
Total consumer and other loans |  |  | — |  |  |  | — |  |  |  | 79,422 |  |  |  | 690 |
Total loans, excluding PCI loans |  | $ | 22,718 |  |  | $ | 2,371 |  |  | $ | 1,641,181 |  |  | $ | 17,808 |
|  | December 31, 2014 |
(Amounts in thousands) |  | Loans Individually Evaluated for Impairment |  |  | Allowance for Loans Individually Evaluated |  |  | Loans Collectively Evaluated for Impairment |  |  | Allowance for Loans Collectively Evaluated |
Commercial loans |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Construction, development, and other land |  | $ | — |  |  | $ | — |  |  | $ | 51,608 |  |  | $ | 1,151 |
Commercial and industrial |  |  | — |  |  |  | — |  |  |  | 85,353 |  |  |  | 690 |
Multi-family residential |  |  | — |  |  |  | — |  |  |  | 98,880 |  |  |  | 1,917 |
Single family non-owner occupied |  |  | 833 |  |  |  | 45 |  |  |  | 135,223 |  |  |  | 3,183 |
Non-farm, non-residential |  |  | 9,477 |  |  |  | 1,000 |  |  |  | 475,353 |  |  |  | 4,805 |
Agricultural |  |  | — |  |  |  | — |  |  |  | 1,642 |  |  |  | 13 |
Farmland |  |  | — |  |  |  | — |  |  |  | 30,233 |  |  |  | 206 |
Total commercial loans |  |  | 10,310 |  |  |  | 1,045 |  |  |  | 878,292 |  |  |  | 11,965 |
Consumer real estate loans |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Home equity lines |  |  | — |  |  |  | — |  |  |  | 134,006 |  |  |  | 1,330 |
Single family owner occupied |  |  | 5,738 |  |  |  | 437 |  |  |  | 489,820 |  |  |  | 4,498 |
Owner occupied construction |  |  | — |  |  |  | — |  |  |  | 32,983 |  |  |  | 224 |
Total consumer real estate loans |  |  | 5,738 |  |  |  | 437 |  |  |  | 656,809 |  |  |  | 6,052 |
Consumer and other loans |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Consumer loans |  |  | — |  |  |  | — |  |  |  | 69,429 |  |  |  | 670 |
Other |  |  | — |  |  |  | — |  |  |  | 6,555 |  |  |  | — |
Total consumer and other loans |  |  | — |  |  |  | — |  |  |  | 75,984 |  |  |  | 670 |
Total loans, excluding PCI loans |  | $ | 16,048 |  |  | $ | 1,482 |  |  | $ | 1,611,085 |  |  | $ | 18,687 |
The following table presents the Company’s allowance for loan losses related to PCI loans and recorded investment in PCI loans, by loan pool, as of the dates indicated:
|  | December 31, |
|  | 2015 |  |  | 2014 |
(Amounts in thousands) |  | Loan Pools With Impairment |  |  | Allowance for Loans Pools With Impairment |  |  | Loan Pools With Impairment |  |  | Allowance for Loans Pools With Impairment |
Commercial loans |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Waccamaw commercial |  | $ | 3,788 |  |  | $ | — |  |  | $ | 13,392 |  |  | $ | 37 |
Waccamaw lines of credit |  |  | — |  |  |  | — |  |  |  | 461 |  |  |  | — |
Peoples commercial |  |  | 5,525 |  |  |  | — |  |  |  | 5,875 |  |  |  | — |
Other |  |  | 1,254 |  |  |  | — |  |  |  | 1,358 |  |  |  | — |
Total commercial loans |  |  | 10,567 |  |  |  | — |  |  |  | 21,086 |  |  |  | 37 |
Consumer real estate loans |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Waccamaw serviced home equity lines |  |  | 29,241 |  |  |  | — |  |  |  | 37,342 |  |  |  | — |
Waccamaw residential |  |  | 1,678 |  |  |  | 1 |  |  |  | 2,638 |  |  |  | — |
Peoples residential |  |  | 1,156 |  |  |  | 53 |  |  |  | 1,215 |  |  |  | 21 |
Total consumer real estate loans |  |  | 32,075 |  |  |  | 54 |  |  |  | 41,195 |  |  |  | 21 |
Consumer and other loans |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Waccamaw consumer (1) |  |  | — |  |  |  | — |  |  |  | 2 |  |  |  | — |
Total loans |  | $ | 42,642 |  |  | $ | 54 |  |  | $ | 62,283 |  |  | $ | 58 |
(1) | Closed during the first quarter of 2015.

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- Definition The entire disclosure for allowance for credit losses. + References No definition available. + Details
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