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Allowance for Loan Losses | 3 Months Ended
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Mar. 31, 2016
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, which 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. Loans acquired in business combinations that are deemed impaired at acquisition are grouped into pools and evaluated separately from the non-PCI portfolio. The PCI loan provision is 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 is available for use against any loan loss management deems appropriate, excluding reserves allocated to specific loans and PCI loan pools. As of March 31, 2016, management believed the allowance was adequate to absorb probable loan losses inherent in the loan portfolio. The following tables present the activity in the allowance for loan losses, by loan segment, in the periods indicated:
|  | Three Months Ended March 31, 2016 |
(Amounts in thousands) |  | Commercial |  |  | Consumer Real Estate |  |  | Consumer and Other |  |  | Total Allowance |
Allowance, excluding PCI |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Beginning balance |  | $ | 13,133 |  |  | $ | 6,356 |  |  | $ | 690 |  |  | $ | 20,179 |
Provision for loan losses charged to operations |  |  | 308 |  |  |  | 774 |  |  |  | 144 |  |  |  | 1,226 |
Charge-offs |  |  | (284 | ) |  |  | (690 | ) |  |  | (254 | ) |  |  | (1,141 | )
Recoveries |  |  | 113 |  |  |  | 30 |  |  |  | 123 |  |  |  | 179 |
Net charge-offs |  |  | (171 | ) |  |  | (660 | ) |  |  | (131 | ) |  |  | (962 | )
Ending balance |  | $ | 13,270 |  |  | $ | 6,470 |  |  | $ | 703 |  |  | $ | 20,443 |
PCI allowance |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Beginning balance |  | $ | — |  |  | $ | 54 |  |  | $ | — |  |  | $ | 54 |
Recovery of loan losses |  |  | — |  |  |  | (30 | ) |  |  | — |  |  |  | (30 | )
Benefit attributable to the FDIC indemnification asset |  |  | — |  |  |  | (9 | ) |  |  | — |  |  |  | (9 | )
Recovery of loan losses charged to operations |  |  | — |  |  |  | (39 | ) |  |  | — |  |  |  | (39 | )
Provision for loan losses recorded through the FDIC indemnification asset |  |  | — |  |  |  | 9 |  |  |  | — |  |  |  | 9 |
Ending balance |  | $ | — |  |  | $ | 24 |  |  | $ | — |  |  | $ | 24 |
Total allowance |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Beginning balance |  | $ | 13,133 |  |  | $ | 6,410 |  |  | $ | 690 |  |  | $ | 20,233 |
Provision for loan losses |  |  | 308 |  |  |  | 744 |  |  |  | 144 |  |  |  | 1,196 |
Benefit attributable to the FDIC indemnification asset |  |  | — |  |  |  | (9 | ) |  |  | — |  |  |  | (9 | )
Provision for loan losses charged to operations |  |  | 308 |  |  |  | 735 |  |  |  | 144 |  |  |  | 1,187 |
Provision for loan losses recorded through the FDIC indemnification asset |  |  | — |  |  |  | 9 |  |  |  | — |  |  |  | 9 |
Charge-offs |  |  | (284 | ) |  |  | (690 | ) |  |  | (254 | ) |  |  | (1,141 | )
Recoveries |  |  | 113 |  |  |  | 30 |  |  |  | 123 |  |  |  | 179 |
Net charge-offs |  |  | (171 | ) |  |  | (660 | ) |  |  | (131 | ) |  |  | (962 | )
Ending balance |  | $ | 13,270 |  |  | $ | 6,494 |  |  | $ | 703 |  |  | $ | 20,467 |
|  | Three Months Ended March 31, 2015 |
(Amounts in thousands) |  | Commercial |  |  | Consumer Real Estate |  |  | Consumer and Other |  |  | Total Allowance |
Allowance, excluding PCI |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Beginning balance |  | $ | 13,010 |  |  | $ | 6,489 |  |  | $ | 670 |  |  | $ | 20,169 |
Provision for loan losses charged to operations |  |  | 650 |  |  |  | 215 |  |  |  | 225 |  |  |  | 1,090 |
Charge-offs |  |  | (681 | ) |  |  | (402 | ) |  |  | (495 | ) |  |  | (1,578 | )
Recoveries |  |  | 75 |  |  |  | 144 |  |  |  | 238 |  |  |  | 457 |
Net charge-offs |  |  | (606 | ) |  |  | (258 | ) |  |  | (257 | ) |  |  | (1,121 | )
Ending balance |  | $ | 13,054 |  |  | $ | 6,446 |  |  | $ | 638 |  |  | $ | 20,138 |
PCI allowance |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Beginning balance |  | $ | 37 |  |  | $ | 21 |  |  | $ | — |  |  | $ | 58 |
(Recovery of) provision for loan losses |  |  | (37 | ) |  |  | 93 |  |  |  | — |  |  |  | 56 |
Benefit attributable to the FDIC indemnification asset |  |  | 29 |  |  |  | (75 | ) |  |  | — |  |  |  | (46 | )
(Recovery of) provision for loan losses charged to operations |  |  | (8 | ) |  |  | 18 |  |  |  | — |  |  |  | 10 |
(Recovery of) provision for loan losses recorded through the FDIC indemnification asset |  |  | (29 | ) |  |  | 75 |  |  |  | — |  |  |  | 46 |
Ending balance |  | $ | — |  |  | $ | 114 |  |  | $ | — |  |  | $ | 114 |
Total allowance |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Beginning balance |  | $ | 13,047 |  |  | $ | 6,510 |  |  | $ | 670 |  |  | $ | 20,227 |
Provision for loan losses |  |  | 613 |  |  |  | 308 |  |  |  | 225 |  |  |  | 1,146 |
Benefit attributable to the FDIC indemnification asset |  |  | 29 |  |  |  | (75 | ) |  |  | — |  |  |  | (46 | )
Provision for loan losses charged to operations |  |  | 642 |  |  |  | 233 |  |  |  | 225 |  |  |  | 1,100 |
(Recovery of) provision for loan losses recorded through the FDIC indemnification asset |  |  | (29 | ) |  |  | 75 |  |  |  | — |  |  |  | 46 |
Charge-offs |  |  | (681 | ) |  |  | (402 | ) |  |  | (495 | ) |  |  | (1,578 | )
Recoveries |  |  | 75 |  |  |  | 144 |  |  |  | 238 |  |  |  | 457 |
Net charge-offs |  |  | (606 | ) |  |  | (258 | ) |  |  | (257 | ) |  |  | (1,121 | )
Ending balance |  | $ | 13,054 |  |  | $ | 6,560 |  |  | $ | 638 |  |  | $ | 20,252 |
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:
|  | March 31, 2016 |
(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 |  | $ | — |  |  | $ | — |  |  | $ | 56,847 |  |  | $ | 1,125 |
Commercial and industrial |  |  | — |  |  |  | — |  |  |  | 93,251 |  |  |  | 510 |
Multi-family residential |  |  | — |  |  |  | — |  |  |  | 111,388 |  |  |  | 1,585 |
Single family non-owner occupied |  |  | 1,137 |  |  |  | 18 |  |  |  | 149,359 |  |  |  | 3,194 |
Non-farm, non-residential |  |  | 13,331 |  |  |  | 1,529 |  |  |  | 513,781 |  |  |  | 5,097 |
Agricultural |  |  | — |  |  |  | — |  |  |  | 3,684 |  |  |  | 28 |
Farmland |  |  | — |  |  |  | — |  |  |  | 27,645 |  |  |  | 184 |
Total commercial loans |  |  | 14,468 |  |  |  | 1,547 |  |  |  | 955,955 |  |  |  | 11,723 |
Consumer real estate loans |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Home equity lines |  |  | — |  |  |  | — |  |  |  | 124,785 |  |  |  | 1,131 |
Single family owner occupied |  |  | 5,559 |  |  |  | 771 |  |  |  | 498,696 |  |  |  | 4,293 |
Owner occupied construction |  |  | 346 |  |  |  | 3 |  |  |  | 40,712 |  |  |  | 272 |
Total consumer real estate loans |  |  | 5,905 |  |  |  | 774 |  |  |  | 664,193 |  |  |  | 5,696 |
Consumer and other loans |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Consumer loans |  |  | — |  |  |  | — |  |  |  | 73,613 |  |  |  | 703 |
Other |  |  | — |  |  |  | — |  |  |  | 7,451 |  |  |  | — |
Total consumer and other loans |  |  | — |  |  |  | — |  |  |  | 81,064 |  |  |  | 703 |
Total loans, excluding PCI loans |  | $ | 20,373 |  |  | $ | 2,321 |  |  | $ | 1,701,212 |  |  | $ | 18,122 |
|  | 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 |
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:
|  | March 31, 2016 |  |  | December 31, 2015 |
(Amounts in thousands) |  | Recorded Investment |  |  | Allowance for Loan Pools With Impairment |  |  | Recorded Investment |  |  | Allowance for Loan Pools With Impairment |
Commercial loans |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Waccamaw commercial |  | $ | 3,732 |  |  | $ | — |  |  | $ | 3,788 |  |  | $ | — |
Peoples commercial |  |  | 5,734 |  |  |  | — |  |  |  | 5,525 |  |  |  | — |
Other |  |  | 1,227 |  |  |  | — |  |  |  | 1,254 |  |  |  | — |
Total commercial loans |  |  | 10,693 |  |  |  | — |  |  |  | 10,567 |  |  |  | — |
Consumer real estate loans |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Waccamaw serviced home equity lines |  |  | 27,404 |  |  |  | — |  |  |  | 29,241 |  |  |  | — |
Waccamaw residential |  |  | 1,609 |  |  |  | 12 |  |  |  | 1,678 |  |  |  | 1 |
Peoples residential |  |  | 1,138 |  |  |  | 12 |  |  |  | 1,156 |  |  |  | 53 |
Total consumer real estate loans |  |  | 30,151 |  |  |  | 24 |  |  |  | 32,075 |  |  |  | 54 |
Total PCI loans |  | $ | 40,844 |  |  | $ | 24 |  |  | $ | 42,642 |  |  | $ | 54 |

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