Notes to Unaudited Consolidated Financial
Statements
June 30, 2017
NOTE 1 – BASIS OF PRESENTATION AND ACCOUNTING
POLICIES
Nature of Business
Ameris Bancorp (the “Company”
or “Ameris”) is a financial holding company headquartered in Moultrie, Georgia. Ameris conducts substantially
all of its operations through its wholly owned banking subsidiary, Ameris Bank (the “Bank”). At June 30, 2017, the
Bank operated 97 branches in select markets in Georgia, Alabama, Florida and South Carolina. Our business model capitalizes
on the efficiencies of a large financial services company while still providing the community with the personalized banking service
expected by our customers. We manage our Bank through a balance of decentralized management responsibilities and efficient
centralized operating systems, products and loan underwriting standards. The Company’s Board of Directors and senior
managers establish corporate policy, strategy and administrative policies. Within our established guidelines and policies,
the banker closest to the customer responds to the differing needs and demands of his or her unique market.
Basis of Presentation
The accompanying unaudited consolidated
financial statements for Ameris have been prepared in accordance with accounting principles generally accepted in the United States
of America for interim financial information and Regulation S-X. Accordingly, the financial statements do not include all
of the information and footnotes required by accounting principles generally accepted in the United States of America for complete
financial statement presentation. The interim consolidated financial statements included herein are unaudited but reflect
all adjustments (consisting of normal recurring accruals) which, in the opinion of management, are necessary for a fair presentation
of the consolidated financial position and results of operations for the interim periods presented. All significant intercompany
accounts and transactions have been eliminated in consolidation. The results of operations for the period ended June 30, 2017
are not necessarily indicative of the results to be expected for the full year. These financial statements should be read
in conjunction with the financial statements and notes thereto and the report of our registered independent public accounting firm
included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016.
Accounting Policy Update
Other Investments
–
Other
investments include Federal Home Loan Bank (“FHLB”) stock, Federal Reserve Bank stock and a minority equity investment
in US Premium Finance Holding Company, a Florida corporation (“USPF”). These investments do not have readily determinable
fair values and are carried at cost. They are periodically reviewed for impairment based on ultimate recovery of par value or cost
basis. Both stock and cash dividends are reported as income. For additional information regarding the Company’s minority
equity investment in USPF, see Note 2.
Reclassifications
Certain reclassifications of prior year
amounts have been made to conform with the current year presentations.
Accounting Standards Adopted in 2017
ASU 2016-09 –
Improvements to
Employee Share-Based Payment Accounting (“ASU 2016-09”)
. ASU 2016-09 simplifies various aspects of how share-based
payments are accounted for and presented in the financial statements. Under ASU 2016-09, companies will record all excess tax benefits
and tax deficiencies as income tax expense or benefit in the income statement and will no longer record excess tax benefits and
certain tax deficiencies in additional paid-in capital. The standard eliminates the requirement that excess tax benefits be realized
before companies can recognize them. The excess tax benefits will be reported as an operating activity on the statement of cash
flows, and the cash paid to a tax authority when shares are withheld to satisfy a company’s statutory income tax withholding
obligation will be reported as a financing activity on its statement of cash. In addition, the standard increases the amount an
employer can withhold to cover income taxes on awards and still qualify for the exception to liability classification for shares
used to satisfy the employer’s statutory income tax withholding obligation. ASU 2016-09 permits companies to make an accounting
policy election for the impact of forfeitures on the recognition of expense for share-based payment awards. Forfeitures can be
estimated, as required today, or recognized when they occur. The Company has elected to recognize forfeitures as they occur. ASU
2016-09 became effective on January 1, 2017 and did not have a material impact on the consolidated financial statements.
Accounting Standards Pending Adoption
ASU 2017-09 –
“Compensation
– Stock Compensation (Topic 718): Scope of Modification Accounting (“ASU 2017-09”)
. ASU 2017-09 clarifies
when changes to the terms of a share-based award must be accounted for as a modification. Companies must apply the modification
accounting guidance if any of the following change: the shard-based award’s fair value, vesting provisions or classification
as an equity instrument or a liability instrument. The new guidance should reduce diversity in practice and result in fewer changes
to the terms of share-based awards being accounted for as modifications, as the guidance will allow companies to make certain non-substantive
changes to share-based awards without accounting for them as modifications. ASU 2017-09 is effective for interim and annual reporting
periods beginning after December 15, 2017 with early adoption permitted. ASU 2017-09 is not expected to have a material impact
on the Company’s results of operations, financial position or disclosures.
ASU 2017-08 –
“Receivables
– Nonrefundable Fees and Other Costs (Subtopic 310-20): Premium Amortization on Purchased Callable Debt Securities
(“ASU
2017-08”). ASU 2017-08 shortens the amortization period for certain purchased callable debt securities held at a premium,
shortening such period to the earliest call date. Under the current guidance, entities generally amortize the premium on a callable
debt security as an adjustment of yield over the contractual life (to maturity date) of the instrument. This ASU does not require
any accounting change in the accounting for debt securities held at a discount; the discount continues to be amortized as an adjustment
of yield over the contractual life (to maturity) of the instrument. ASU 2017-08 is effective for interim and annual reporting
periods beginning after December 15, 2018. Early adoption is permitted. Upon adoption, ASU 2017-08 provides for a modified retrospective
transition by means of a cumulative-effect adjustment to equity as of the beginning of the period in which the guidance is adopted.
The Company is currently evaluating the provisions of ASU 2017-08 to determine the potential impact the new standard
will
have on the Company’s results of operations, financial position and disclosures, but it is not expected to have a material
impact.
ASU
2017-04 –
Intangibles: Goodwill and Other: Simplifying the Test for Goodwill Impairment
(“ASU 2017-04”).
ASU 2017-04 eliminates Step 2 from the goodwill impairment test to simplify the subsequent measurement of goodwill. The annual,
or interim, goodwill impairment test is performed by comparing the fair value of a reporting unit with its carrying amount. An
impairment charge should be recognized for the amount by which the carrying amount exceeds the reporting unit’s fair value;
however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. In addition, the
income tax effects of tax deductible goodwill on the carrying amount of the reporting unit should be considered when measuring
the goodwill impairment loss, if applicable. ASU 2017-04 also eliminates the requirements for any reporting unit with a zero or
negative carrying amount to perform Step 2 of the goodwill impairment test. An entity still has the option to perform the qualitative
assessment for a reporting unit to determine if the qualitative impairment test is necessary. The standard must be adopted using
a prospective basis and the nature and reason for the change in accounting principle should be disclosed upon transition. ASU
2017-04 is effective for annual or any interim goodwill impairment tests in reporting periods beginning after December 15, 2019.
Early adoption is permitted on testing dates after January 1, 2017. The Company is currently evaluating the impact this standard
will have on the Company’s results of operations, financial position and disclosures, but it is not expected to have a material
impact.
ASU
2017-01 –
Business Combinations (Topic 805): Clarifying the Definition of a Business
(“ASU 2017-01”).
ASU 2017-01 provides a framework to use in determining when a set of assets and activities is a business. The standard provides
more consistency in applying the business combination guidance, reduces the costs of application, and makes the definition of
a business more operable. ASU 2017-01 is effective for interim and annual periods within those annual periods beginning after
December 15, 2017. The Company is currently evaluating the impact this standard will have on the Company’s results
of operations, financial position and disclosures, but it is not expected to have a material impact.
ASU
2016-13
- Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments
(“ASU 2016-13”). ASU 2016-13 significantly changes how entities will measure credit losses for most financial assets
and certain other instruments that are not measured at fair value through net income. The standard will replace the current incurred
loss approach with an expected loss model, referred to as the current expected credit loss (“CECL”) model. The new
standard will apply to financial assets subject to credit losses and measured at amortized cost and certain off-balance-sheet
credit exposures, which include, but are not limited to, loans, leases, held-to-maturity securities, loan commitments and financial
guarantees. ASU 2016-13 simplifies the accounting for purchased credit-impaired debt securities and loans and expands the disclosure
requirements regarding an entity’s assumptions, models and methods for estimating the allowance for loan and lease losses.
In addition, entities will need to disclose the amortized cost balance for each class of financial asset by credit quality indicator,
disaggregated by the year of origination. ASU 2016-13 is effective for interim and annual reporting periods beginning after December
15, 2019. Early adoption is permitted for interim and annual reporting periods beginning after December 15, 2018. Upon adoption,
ASU 2016-13 provides for a modified retrospective transition by means of a cumulative-effect adjustment to equity as of the beginning
of the period in which the guidance is effective. While the Company is currently evaluating the impact this standard will have
on the results of operations, financial position and disclosures, the Company expects to recognize a one-time cumulative effect
adjustment to the allowance for loan losses as of the beginning of the first reporting period in which the new standard is effective.
The Company has established a steering committee which includes the appropriate members of management to evaluate the impact this
ASU will have on Company’s financial position, results of operations and financial statement disclosures and determine the
most appropriate method of implementing the amendments in this ASU as well as any resources needed to implement the amendments.
This committee has identified the software vendor of choice for implementation, established an implementation timeline and continues
to stay current on implementation issues and concerns.
ASU
2016-02 –
Leases (Topic 842)
(“ASU 2016-02”). ASU 2016-02 amends the existing standards for lease accounting
effectively requiring most leases be carried on the balance sheets of the related lessees by requiring them to recognize a right-of-use
asset and a corresponding lease liability. ASU 2016-02 includes qualitative and quantitative disclosure requirements intended
to provide greater insight into the nature of an entity’s leasing activities. The standard must be adopted using a modified
retrospective transition with a cumulative-effect adjustment to equity as of the beginning of the period in which it is adopted.
ASU 2016-02 is effective for annual reporting periods beginning after December 15, 2018, and interim periods within those annual
periods with early adoption permitted. The Company has several leased facilities, which are currently treated as operating leases,
and are not currently shown on the Company’s consolidated balance sheet. After ASU 2016-02 is implemented, the Company expects
to begin reporting these lease agreements on the balance sheet as a right-of-use asset and a corresponding liability. The Company
is currently evaluating the impact this standard will have on the Company’s consolidated statement of income and comprehensive
income, consolidated statement of stockholders’ equity and consolidated statement of cash flows, but it is not expected
to have a material impact.
ASU
2014-09 –
Revenue from Contracts with Customers
(“ASU 2014-09”). ASU 2014-09 provides guidance that an
entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the
consideration to which the entity expects to be entitled in exchange for those goods or services. ASU 2014-09 is effective prospectively,
for annual and interim periods, beginning after December 15, 2017. The Company is currently evaluating the impact this standard
will have on the Company’s results of operations, financial position and disclosures, but it is not expected to have a material
impact.
NOTE 2 – INVESTMENT IN US PREMIUM FINANCE HOLDING COMPANY
On December 15, 2016, the Bank entered
into a Management and License Agreement with William J. Villari and USPF pursuant to which Mr. Villari will manage a division of
the Bank to be operated under the name “US Premium Finance” and which is to be engaged in the business of soliciting,
originating, servicing, administering and collecting loans made for purposes of funding insurance premiums and other loans made
to persons engaged in the insurance business.
Also on December 15, 2016, the Company
entered into a Stock Purchase Agreement with Mr. Villari pursuant to which the Company agreed to purchase from Mr. Villari 4.99%
of the outstanding shares of common stock of USPF. As consideration for such shares, the Company agreed to issue to Mr. Villari
128,572 unregistered shares of its common stock in a private placement transaction pursuant to the exemptions from registration
provided in Section 4(a)(2) of the Securities Act of 1933, as amended, and Rule 506 of Regulation D promulgated thereunder. Those
transactions closed on January 18, 2017, and a registration statement was filed with the Securities and Exchange Commission on
February 13, 2017 to register the resale or other disposition of the shares of common stock that were issued to Mr. Villari.
The Company’s 4.99% investment in USPF was valued at $5.8
million, based upon the closing price of the Company’s common stock immediately prior to the parties’ execution of
the Stock Purchase Agreement, as follows:
(dollars in thousands, except per share amount)
|
|
|
|
Ameris common shares issued
|
|
|
128,572
|
|
Price per share of the Company's common stock
|
|
$
|
45.45
|
|
Fair value of consideration transferred
|
|
$
|
5,844
|
|
Because USPF does not have a readily determinable fair value
and Ameris does not exercise significant influence over USPF, the investment is carried at cost and is included in other investments
in the Company’s consolidated balance sheet. The net carrying value of the Company’s investment in USPF was $5.8 million
as of June 30, 2017.
NOTE 3 – INVESTMENT SECURITIES
The Company’s investment policy blends
the Company’s liquidity needs and interest rate risk management with its desire to increase income and provide funds
for expected growth in loans. The investment securities portfolio consists primarily of U.S. government-sponsored mortgage-backed
securities and state, county and municipal securities. The Company’s portfolio and investing philosophy concentrate
activities in obligations where the credit risk is limited. For the small portion of the Company’s portfolio found
to present credit risk, the Company has reviewed the investments and financial performance of the obligors and believes
the credit risk to be acceptable.
The amortized cost and estimated fair value
of investment securities available for sale, along with unrealized gains and losses, are summarized as follows:
(dollars in thousands)
|
|
Amortized
Cost
|
|
|
Gross
Unrealized
Gains
|
|
|
Gross
Unrealized
Losses
|
|
|
Estimated
Fair
Value
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. government sponsored agencies
|
|
$
|
1,000
|
|
|
$
|
9
|
|
|
$
|
-
|
|
|
$
|
1,009
|
|
State, county and municipal securities
|
|
|
142,028
|
|
|
|
3,166
|
|
|
|
(86
|
)
|
|
|
145,108
|
|
Corporate debt securities
|
|
|
47,252
|
|
|
|
552
|
|
|
|
(192
|
)
|
|
|
47,612
|
|
Mortgage-backed securities
|
|
|
626,400
|
|
|
|
2,828
|
|
|
|
(4,264
|
)
|
|
|
624,964
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total debt securities
|
|
$
|
816,680
|
|
|
$
|
6,555
|
|
|
$
|
(4,542
|
)
|
|
$
|
818,693
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. government sponsored agencies
|
|
$
|
999
|
|
|
$
|
21
|
|
|
$
|
-
|
|
|
$
|
1,020
|
|
State, county and municipal securities
|
|
|
149,899
|
|
|
|
2,605
|
|
|
|
(469
|
)
|
|
|
152,035
|
|
Corporate debt securities
|
|
|
32,375
|
|
|
|
167
|
|
|
|
(370
|
)
|
|
|
32,172
|
|
Mortgage-backed securities
|
|
|
641,362
|
|
|
|
2,700
|
|
|
|
(6,554
|
)
|
|
|
637,508
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total debt securities
|
|
$
|
824,635
|
|
|
$
|
5,493
|
|
|
$
|
(7,393
|
)
|
|
$
|
822,735
|
|
The amortized cost and fair value of available-for-sale
securities at June 30, 2017 by contractual maturity are summarized in the table below. Expected maturities for mortgage-backed
securities may differ from contractual maturities because in certain cases borrowers can prepay obligations without prepayment
penalties. Therefore, these securities are not included in the following maturity summary.
(
dollars in thousands)
|
|
Amortized
Cost
|
|
|
Estimated
Fair
Value
|
|
Due in one year or less
|
|
$
|
15,505
|
|
|
$
|
15,660
|
|
Due from one year to five years
|
|
|
56,978
|
|
|
|
57,730
|
|
Due from five to ten years
|
|
|
73,838
|
|
|
|
75,578
|
|
Due after ten years
|
|
|
43,959
|
|
|
|
44,761
|
|
Mortgage-backed securities
|
|
|
626,400
|
|
|
|
624,964
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
816,680
|
|
|
$
|
818,693
|
|
Securities with a carrying value of approximately
$531.8 million serve as collateral to secure public deposits, securities sold under agreements to repurchase and for other
purposes required or permitted by law at June 30, 2017, compared with $618.2 million at December 31, 2016.
The following table details the gross unrealized
losses and fair value of securities aggregated by category and duration of continuous unrealized loss position at June 30, 2017
and December 31, 2016.
|
|
Less Than 12 Months
|
|
|
12 Months or More
|
|
|
Total
|
|
(dollars in thousands)
|
|
Estimated
Fair
Value
|
|
|
Unrealized
Losses
|
|
|
Estimated
Fair
Value
|
|
|
Unrealized
Losses
|
|
|
Estimated
Fair
Value
|
|
|
Unrealized
Losses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. government sponsored agencies
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
State, county and municipal securities
|
|
|
13,920
|
|
|
|
(86
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
13,920
|
|
|
|
(86
|
)
|
Corporate debt securities
|
|
|
18,966
|
|
|
|
(182
|
)
|
|
|
490
|
|
|
|
(10
|
)
|
|
|
19,456
|
|
|
|
(192
|
)
|
Mortgage-backed securities
|
|
|
356,690
|
|
|
|
(3,696
|
)
|
|
|
26,082
|
|
|
|
(568
|
)
|
|
|
382,772
|
|
|
|
(4,264
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total debt securities
|
|
$
|
389,576
|
|
|
$
|
(3,964
|
)
|
|
$
|
26,572
|
|
|
$
|
(578
|
)
|
|
$
|
416,148
|
|
|
$
|
(4,542
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. government sponsored agencies
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
State, county and municipal securities
|
|
|
47,647
|
|
|
|
(469
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
47,647
|
|
|
|
(469
|
)
|
Corporate debt securities
|
|
|
18,377
|
|
|
|
(363
|
)
|
|
|
493
|
|
|
|
(7
|
)
|
|
|
18,870
|
|
|
|
(370
|
)
|
Mortgage-backed securities
|
|
|
414,300
|
|
|
|
(6,177
|
)
|
|
|
11,791
|
|
|
|
(377
|
)
|
|
|
426,091
|
|
|
|
(6,554
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total debt securities
|
|
$
|
480,324
|
|
|
$
|
(7,009
|
)
|
|
$
|
12,284
|
|
|
$
|
(384
|
)
|
|
$
|
492,608
|
|
|
$
|
(7,393
|
)
|
As of June 30, 2017, the Company’s
securities portfolio consisted of 418 securities, 160 of which were in an unrealized loss position. The majority of unrealized
losses are related to the Company’s mortgage-backed securities, as discussed below.
At June 30, 2017, the Company held 139
mortgage-backed securities that were in an unrealized loss position, all of which were issued by U.S. government-sponsored entities
and agencies. Because the decline in fair value is attributable to changes in interest rates and illiquidity, and not credit quality,
and because the Company does not have the intent to sell these mortgage-backed securities and it is likely that it will not be
required to sell the securities before their anticipated recovery, the Company does not consider these securities to be other-than-temporarily
impaired at June 30, 2017.
At June 30, 2017, the Company held 11 state,
county and municipal securities and 10 corporate debt securities that were in an unrealized loss position. Because the decline
in fair value is attributable to changes in interest rates and illiquidity, and not credit quality, and because the Company does
not have the intent to sell these securities and it is likely that it will not be required to sell the securities before their
anticipated recovery, the Company does not consider these securities to be other-than-temporarily impaired at June 30, 2017.
The Company’s investments in subordinated
debt include investments in regional and super-regional banks on which the Company prepares regular analysis through review of
financial information and credit ratings. Investments in preferred securities are also concentrated in the preferred obligations
of regional and super-regional banks through non-pooled investment structures. The Company did not have investments in “pooled”
trust preferred securities at June 30, 2017 or December 31, 2016.
Management and the Company’s Asset
and Liability Committee (the “ALCO Committee”) evaluate securities for other-than-temporary impairment at least on
a quarterly basis, and more frequently when economic or market conditions warrant such evaluation. While the majority of the
unrealized losses on debt securities relate to changes in interest rates, corporate debt securities have also been affected by
reduced levels of liquidity and higher risk premiums. Occasionally, management engages independent third parties to evaluate the
Company’s position in certain corporate debt securities to aid management and the ALCO Committee in its determination regarding
the status of impairment. The Company believes that each investment poses minimal credit risk and further, that the Company does
not intend to sell these investment securities at an unrealized loss position at June 30, 2017, and it is more likely than not
that the Company will not be required to sell these securities prior to recovery or maturity. Therefore, at June 30, 2017, these
investments are not considered impaired on an other-than-temporary basis.
At June 30, 2017 and December 31,
2016, all of the Company’s mortgage-backed securities were obligations of government-sponsored agencies.
The following table is a summary of sales
activities in the Company’s investment securities available for sale for the six months ended June 30, 2017 and 2016:
(dollars in thousands)
|
|
June 30,
2017
|
|
|
June 30,
2016
|
|
Gross gains on sales of securities
|
|
$
|
38
|
|
|
$
|
313
|
|
Gross losses on sales of securities
|
|
|
(1
|
)
|
|
|
(219
|
)
|
Net realized gains on sales of securities available for sale
|
|
$
|
37
|
|
|
$
|
94
|
|
|
|
|
|
|
|
|
|
|
Sales proceeds
|
|
$
|
3,090
|
|
|
$
|
46,731
|
|
NOTE 4 – LOANS
The Bank engages in a full complement of
lending activities, including real estate-related loans, agriculture-related loans, commercial and financial loans and consumer
installment loans within select markets in Georgia, Alabama, Florida and South Carolina. The Bank purchased residential mortgage
loan pools during 2015 and 2016 collateralized by properties located outside our Southeast markets, specifically in California,
Washington and Illinois. During the third quarter of 2016, the Bank began purchasing from an unrelated third party consumer installment
home improvement loans made to borrowers throughout the United States. As of June 30, 2017 and December 31, 2016, the net carrying
value of these consumer installment home improvement loans was approximately $112.1 million and $60.8 million, respectively. During
the fourth quarter of 2016, the Bank purchased a pool of commercial insurance premium finance loans made to borrowers throughout
the United States and began to originate, administer and service these types of loans. As of June 30, 2017 and December 31, 2016,
the net carrying value of commercial insurance premium loans was approximately $476.6 million and $353.9 million, respectively,
and such loans are reported in the commercial, financial and agricultural loan category.
The Bank concentrates the majority of its
lending activities in real estate loans. While risk of loss in the Company’s portfolio is primarily tied to the credit
quality of the various borrowers, risk of loss may increase due to factors beyond the Company’s control, such as local, regional
and/or national economic downturns. General conditions in the real estate market may also impact the relative risk in the
real estate portfolio. A substantial portion of the Bank’s loans are secured by real estate in the Bank’s primary market
area. In addition, a substantial portion of the OREO is located in those same markets. Accordingly, the ultimate collectability
of a substantial portion of the Bank’s loan portfolio and the recovery of a substantial portion of the carrying amount of
OREO are susceptible to changes in real estate conditions in the Bank’s primary market area.
Commercial, financial and agricultural
loans include both secured and unsecured loans for working capital, expansion, crop production, commercial insurance premium finance,
and other business purposes. Commercial, financial and agricultural loans also include SBA loans and municipal loans. Short-term
working capital loans are secured by non-real estate collateral such as accounts receivable, crops, inventory and equipment. The
Bank evaluates the financial strength, cash flow, management, credit history of the borrower and the quality of the collateral
securing the loan. The Bank often requires personal guarantees and secondary sources of repayment on commercial, financial and
agricultural loans.
Real estate loans include construction
and development loans, commercial and farmland loans and residential loans. Construction and development loans include loans for
the development of residential neighborhoods, one-to-four family home residential construction loans to builders and consumers,
and commercial real estate construction loans, primarily for owner-occupied properties. The Company limits its construction lending
risk through adherence to established underwriting procedures. Commercial real estate loans include loans secured by owner-occupied
commercial buildings for office, storage, retail, farmland and warehouse space. They also include non-owner occupied commercial
buildings such as leased retail and office space. Commercial real estate loans may be larger in size and may involve a greater
degree of risk than one-to-four family residential mortgage loans. Payments on such loans are often dependent on successful operation
or management of the properties. The Company’s residential loans represent permanent mortgage financing and are secured by
residential properties located within the Bank's market areas, along with warehouse lines of credit secured by residential mortgages.
Consumer installment loans and other loans
include home improvement loans, automobile loans, boat and recreational vehicle financing, and secured and unsecured personal loans.
Consumer loans carry greater risks than other loans, as the collateral can consist of rapidly depreciating assets such as automobiles
and equipment that may not provide an adequate source of repayment of the loan in the case of default.
Loans are stated at unpaid balances, net
of unearned income and deferred loan fees. Balances within the major loans receivable categories are presented in the following
table, excluding purchased loans:
(dollars in thousands)
|
|
June 30,
2017
|
|
|
December 31,
2016
|
|
Commercial, financial and agricultural
|
|
$
|
1,218,633
|
|
|
$
|
967,138
|
|
Real estate – construction and development
|
|
|
486,858
|
|
|
|
363,045
|
|
Real estate – commercial and farmland
|
|
|
1,519,002
|
|
|
|
1,406,219
|
|
Real estate – residential
|
|
|
857,069
|
|
|
|
781,018
|
|
Consumer installment
|
|
|
147,505
|
|
|
|
96,915
|
|
Other
|
|
|
1,161
|
|
|
|
12,486
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
4,230,228
|
|
|
$
|
3,626,821
|
|
Purchased loans are defined as loans that
were acquired in bank acquisitions including those that are covered by a loss-sharing agreement with the Federal Deposit Insurance
Corporation (the “FDIC”). Purchased loans totaling $950.5 million and $1.07 billion at June 30, 2017 and December 31,
2016, respectively, are not included in the above schedule.
Purchased loans are shown below according to major loan type
as of the end of the periods shown:
(dollars in thousands)
|
|
June 30,
2017
|
|
|
December 31,
2016
|
|
Commercial, financial and agricultural
|
|
$
|
87,612
|
|
|
$
|
96,537
|
|
Real estate – construction and development
|
|
|
73,567
|
|
|
|
81,368
|
|
Real estate – commercial and farmland
|
|
|
510,312
|
|
|
|
576,355
|
|
Real estate – residential
|
|
|
275,504
|
|
|
|
310,277
|
|
Consumer installment
|
|
|
3,504
|
|
|
|
4,654
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
950,499
|
|
|
$
|
1,069,191
|
|
A rollforward of purchased loans for the six months ended
June 30, 2017 and 2016 is shown below:
(dollars in thousands)
|
|
June 30,
2017
|
|
|
June 30,
2016
|
|
Balance, January 1
|
|
$
|
1,069,191
|
|
|
$
|
909,083
|
|
Charge-offs, net of recoveries
|
|
|
(1,860
|
)
|
|
|
(1,181
|
)
|
Additions due to acquisitions
|
|
|
-
|
|
|
|
401,085
|
|
Accretion
|
|
|
6,165
|
|
|
|
8,844
|
|
Transfers to purchased other real estate owned
|
|
|
(3,281
|
)
|
|
|
(3,420
|
)
|
Payments received
|
|
|
(119,716
|
)
|
|
|
(120,866
|
)
|
Other
|
|
|
-
|
|
|
|
90
|
|
|
|
|
|
|
|
|
|
|
Ending balance
|
|
$
|
950,499
|
|
|
$
|
1,193,635
|
|
The following is a summary of changes in the accretable discounts
of purchased loans during the six months ended June 30, 2017 and 2016:
(dollars in thousands)
|
|
June 30,
2017
|
|
|
June 30,
2016
|
|
Balance, January 1
|
|
$
|
30,624
|
|
|
$
|
33,848
|
|
Additions due to acquisitions
|
|
|
-
|
|
|
|
9,991
|
|
Accretion
|
|
|
(6,165
|
)
|
|
|
(8,844
|
)
|
Accretable discounts removed due to charge-offs
|
|
|
(13
|
)
|
|
|
(11
|
)
|
Transfers between non-accretable and accretable discounts, net
|
|
|
807
|
|
|
|
1,461
|
|
|
|
|
|
|
|
|
|
|
Ending balance
|
|
$
|
25,253
|
|
|
$
|
36,445
|
|
Purchased loan pools are defined as groups of residential mortgage
loans that were not acquired in bank acquisitions or FDIC-assisted transactions. As of June 30, 2017, purchased loan pools totaled
$490.1 million and consisted of whole-loan, adjustable rate residential mortgages on properties outside the Company’s markets,
with principal balances totaling $483.2 million and $6.9 million of remaining purchase premium paid at acquisition. As of December
31, 2016, purchased loan pools totaled $568.3 million with principal balances totaling $559.4 million and $8.9 million of remaining
purchase premium paid at acquisition. At June 30, 2017 and December 31, 2016, one loan in the purchased loan pools with a principal
balance of $918,000 and $925,000, respectively, was classified as a troubled debt restructuring and risk-rated grade 40, while
all other loans included in the purchased loan pools were performing current loans risk-rated grade 20. During the second quarter
of 2017, this troubled debt restructuring defaulted on its restructured terms and was placed on nonaccrual status. At June 30,
2017 and December 31, 2016, the Company had allocated $1.6 million and $1.8 million, respectively, of allowance for loan losses
for the purchased loan pools. As part of the due diligence process prior to purchasing an individual mortgage pool, a complete
re-underwrite of the individual loan files was conducted. The underwriting process included a review of all income, asset, credit
and property related documentation that was used to originate the loan. Underwriters utilized the originating lender’s program
guidelines, as well as general prudent mortgage lending standards, to assess each individual loan file. Additional research
was conducted to assess the real estate market conditions and market expectations in the geographic areas where a collateral concentration
existed. As part of this review, an automated valuation model was employed to provide current collateral valuations and to support
individual loan-to-value ratios. Additionally, a sample of site inspections was completed to provide further assurance. The
results of the due diligence review were evaluated by officers of the Company in order to determine overall conformance to the
Bank’s credit and lending policies.
Nonaccrual and Past-Due Loans
A loan is placed on nonaccrual status when,
in management’s judgment, the collection of the interest income appears doubtful. Interest receivable that has been accrued
and is subsequently determined to have doubtful collectability is charged against interest income. Interest on loans that
are classified as nonaccrual is subsequently applied to principal until the loans are returned to accrual status. Loans are returned
to accrual status when all the principal and interest amounts contractually due are brought current and future payments are reasonably
assured. Past-due loans are loans whose principal or interest is past due 30 days or more. In some cases, where borrowers
are experiencing financial difficulties, loans may be restructured to provide terms significantly different from the original contractual
terms.
The following table presents an analysis
of loans accounted for on a nonaccrual basis, excluding purchased loans:
(dollars in thousands)
|
|
June 30,
2017
|
|
|
December 31,
2016
|
|
Commercial, financial and agricultural
|
|
$
|
2,463
|
|
|
$
|
1,814
|
|
Real estate – construction and development
|
|
|
770
|
|
|
|
547
|
|
Real estate – commercial and farmland
|
|
|
6,004
|
|
|
|
8,757
|
|
Real estate – residential
|
|
|
7,342
|
|
|
|
6,401
|
|
Consumer installment
|
|
|
504
|
|
|
|
595
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
17,083
|
|
|
$
|
18,114
|
|
The following table presents an analysis of purchased loans
accounted for on a nonaccrual basis:
(dollars in thousands)
|
|
June 30,
2017
|
|
|
December 31,
2016
|
|
Commercial, financial and agricultural
|
|
$
|
169
|
|
|
$
|
692
|
|
Real estate – construction and development
|
|
|
2,463
|
|
|
|
2,611
|
|
Real estate – commercial and farmland
|
|
|
6,624
|
|
|
|
10,174
|
|
Real estate – residential
|
|
|
8,074
|
|
|
|
9,476
|
|
Consumer installment
|
|
|
27
|
|
|
|
13
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
17,357
|
|
|
$
|
22,966
|
|
The following table presents an analysis of past-due loans,
excluding purchased past-due loans as of June 30, 2017 and December 31, 2016:
(dollars in thousands)
|
|
Loans
30-59
Days Past
Due
|
|
|
Loans
60-89
Days
Past Due
|
|
|
Loans 90
or More
Days Past
Due
|
|
|
Total
Loans
Past Due
|
|
|
Current
Loans
|
|
|
Total
Loans
|
|
|
Loans 90
Days or
More Past
Due and
Still
Accruing
|
|
|
|
|
|
June 30, 2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial, financial & agricultural
|
|
$
|
6,343
|
|
|
$
|
2,298
|
|
|
$
|
3,919
|
|
|
$
|
12,560
|
|
|
$
|
1,206,073
|
|
|
$
|
1,218,633
|
|
|
$
|
1,784
|
|
Real estate – construction & development
|
|
|
205
|
|
|
|
12
|
|
|
|
751
|
|
|
|
968
|
|
|
|
485,890
|
|
|
|
486,858
|
|
|
|
-
|
|
Real estate – commercial & farmland
|
|
|
1,311
|
|
|
|
366
|
|
|
|
5,602
|
|
|
|
7,279
|
|
|
|
1,511,723
|
|
|
|
1,519,002
|
|
|
|
-
|
|
Real estate – residential
|
|
|
2,833
|
|
|
|
1,174
|
|
|
|
5,432
|
|
|
|
9,439
|
|
|
|
847,630
|
|
|
|
857,069
|
|
|
|
-
|
|
Consumer installment loans
|
|
|
575
|
|
|
|
188
|
|
|
|
294
|
|
|
|
1,057
|
|
|
|
146,448
|
|
|
|
147,505
|
|
|
|
-
|
|
Other
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,161
|
|
|
|
1,161
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
11,267
|
|
|
$
|
4,038
|
|
|
$
|
15,998
|
|
|
$
|
31,303
|
|
|
$
|
4,198,925
|
|
|
$
|
4,230,228
|
|
|
$
|
1,784
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial, financial & agricultural
|
|
$
|
565
|
|
|
$
|
82
|
|
|
$
|
1,293
|
|
|
$
|
1,940
|
|
|
$
|
965,198
|
|
|
$
|
967,138
|
|
|
$
|
-
|
|
Real estate – construction & development
|
|
|
908
|
|
|
|
446
|
|
|
|
439
|
|
|
|
1,793
|
|
|
|
361,252
|
|
|
|
363,045
|
|
|
|
-
|
|
Real estate – commercial & farmland
|
|
|
6,329
|
|
|
|
1,711
|
|
|
|
6,945
|
|
|
|
14,985
|
|
|
|
1,391,234
|
|
|
|
1,406,219
|
|
|
|
-
|
|
Real estate – residential
|
|
|
6,354
|
|
|
|
1,282
|
|
|
|
5,302
|
|
|
|
12,938
|
|
|
|
768,080
|
|
|
|
781,018
|
|
|
|
-
|
|
Consumer installment loans
|
|
|
624
|
|
|
|
263
|
|
|
|
350
|
|
|
|
1,237
|
|
|
|
95,678
|
|
|
|
96,915
|
|
|
|
-
|
|
Other
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
12,486
|
|
|
|
12,486
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
14,780
|
|
|
$
|
3,784
|
|
|
$
|
14,329
|
|
|
$
|
32,893
|
|
|
$
|
3,593,928
|
|
|
$
|
3,626,821
|
|
|
$
|
-
|
|
The following table presents an analysis of purchased past-due
loans as of June 30, 2017 and December 31, 2016:
(dollars in thousands)
|
|
Loans
30-59
Days Past
Due
|
|
|
Loans
60-89
Days
Past Due
|
|
|
Loans 90
or More
Days Past
Due
|
|
|
Total
Loans
Past Due
|
|
|
Current
Loans
|
|
|
Total
Loans
|
|
|
Loans 90
Days or
More Past
Due and
Still
Accruing
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial, financial & agricultural
|
|
$
|
171
|
|
|
$
|
-
|
|
|
$
|
152
|
|
|
$
|
323
|
|
|
$
|
87,289
|
|
|
$
|
87,612
|
|
|
$
|
-
|
|
Real estate – construction & development
|
|
|
322
|
|
|
|
81
|
|
|
|
1,830
|
|
|
|
2,233
|
|
|
|
71,334
|
|
|
|
73,567
|
|
|
|
-
|
|
Real estate – commercial & farmland
|
|
|
1,084
|
|
|
|
46
|
|
|
|
2,260
|
|
|
|
3,390
|
|
|
|
506,922
|
|
|
|
510,312
|
|
|
|
-
|
|
Real estate – residential
|
|
|
985
|
|
|
|
1,353
|
|
|
|
5,256
|
|
|
|
7,594
|
|
|
|
267,910
|
|
|
|
275,504
|
|
|
|
147
|
|
Consumer installment loans
|
|
|
28
|
|
|
|
-
|
|
|
|
16
|
|
|
|
44
|
|
|
|
3,460
|
|
|
|
3,504
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
2,590
|
|
|
$
|
1,480
|
|
|
$
|
9,514
|
|
|
$
|
13,584
|
|
|
$
|
936,915
|
|
|
$
|
950,499
|
|
|
$
|
147
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial, financial & agricultural
|
|
$
|
113
|
|
|
$
|
18
|
|
|
$
|
593
|
|
|
$
|
724
|
|
|
$
|
95,813
|
|
|
$
|
96,537
|
|
|
$
|
-
|
|
Real estate – construction & development
|
|
|
161
|
|
|
|
11
|
|
|
|
2,518
|
|
|
|
2,690
|
|
|
|
78,678
|
|
|
|
81,368
|
|
|
|
-
|
|
Real estate – commercial & farmland
|
|
|
2,034
|
|
|
|
326
|
|
|
|
7,152
|
|
|
|
9,512
|
|
|
|
566,843
|
|
|
|
576,355
|
|
|
|
-
|
|
Real estate – residential
|
|
|
4,566
|
|
|
|
698
|
|
|
|
6,835
|
|
|
|
12,099
|
|
|
|
298,178
|
|
|
|
310,277
|
|
|
|
-
|
|
Consumer installment loans
|
|
|
22
|
|
|
|
-
|
|
|
|
13
|
|
|
|
35
|
|
|
|
4,619
|
|
|
|
4,654
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
6,896
|
|
|
$
|
1,053
|
|
|
$
|
17,111
|
|
|
$
|
25,060
|
|
|
$
|
1,044,131
|
|
|
$
|
1,069,191
|
|
|
$
|
-
|
|
Impaired Loans
Loans are considered impaired when, based
on current information and events, it is probable the Company will be unable to collect all amounts due in accordance with the
original contractual terms of the loan agreements. Impaired loans include loans on nonaccrual status and accruing troubled debt
restructurings. When determining if the Company will be unable to collect all principal and interest payments due in accordance
with the contractual terms of the loan agreement, the Company considers the borrower’s capacity to pay, which includes such
factors as the borrower’s current financial statements, an analysis of global cash flow sufficient to pay all debt obligations
and an evaluation of secondary sources of repayment, such as guarantor support and collateral value. The Company individually assesses
for impairment all nonaccrual loans greater than $100,000 and all troubled debt restructurings greater than $100,000 (including
all troubled debt restructurings, whether or not currently classified as such). The tables below include all loans deemed impaired,
whether or not individually assessed for impairment. If a loan is deemed impaired, a specific valuation allowance is allocated,
if necessary, so that the loan is reported net, at the present value of estimated future cash flows using the loan’s existing
rate or at the fair value of collateral if repayment is expected solely from the collateral. Interest payments on impaired loans
are typically applied to principal unless collectability of the principal amount is reasonably assured, in which case interest
is recognized on a cash basis.
The following is a summary of information pertaining to impaired
loans, excluding purchased loans:
|
|
As of and for the Period Ended
|
|
(dollars in thousands)
|
|
June 30,
2017
|
|
|
December 31,
2016
|
|
|
June 30,
2016
|
|
Nonaccrual loans
|
|
$
|
17,083
|
|
|
$
|
18,114
|
|
|
$
|
16,003
|
|
Troubled debt restructurings not included above
|
|
|
12,169
|
|
|
|
14,209
|
|
|
|
14,795
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total impaired loans
|
|
$
|
29,252
|
|
|
$
|
32,323
|
|
|
$
|
30,798
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter-to-date interest income recognized on impaired loans
|
|
$
|
320
|
|
|
$
|
225
|
|
|
$
|
238
|
|
Year-to-date interest income recognized on impaired loans
|
|
$
|
560
|
|
|
$
|
1,033
|
|
|
$
|
556
|
|
Quarter-to-date foregone interest income on impaired loans
|
|
$
|
247
|
|
|
$
|
267
|
|
|
$
|
230
|
|
Year-to-date foregone interest income on impaired loans
|
|
$
|
521
|
|
|
$
|
977
|
|
|
$
|
471
|
|
The following table presents an analysis of information pertaining
to impaired loans, excluding purchased loans as of June 30, 2017, December 31, 2016 and June 30, 2016:
(dollars in thousands)
|
|
Unpaid
Contractual
Principal
Balance
|
|
|
Recorded
Investment
With No
Allowance
|
|
|
Recorded
Investment
With
Allowance
|
|
|
Total
Recorded
Investment
|
|
|
Related
Allowance
|
|
|
Three
Month
Average
Recorded
Investment
|
|
|
Six
Month
Average
Recorded
Investment
|
|
June 30, 2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial, financial & agricultural
|
|
$
|
4,166
|
|
|
$
|
596
|
|
|
$
|
1,907
|
|
|
$
|
2,503
|
|
|
$
|
704
|
|
|
$
|
3,113
|
|
|
$
|
2,695
|
|
Real estate – construction & development
|
|
|
1,733
|
|
|
|
119
|
|
|
|
1,080
|
|
|
|
1,199
|
|
|
|
179
|
|
|
|
1,123
|
|
|
|
1,160
|
|
Real estate – commercial & farmland
|
|
|
11,885
|
|
|
|
5,940
|
|
|
|
4,923
|
|
|
|
10,863
|
|
|
|
1,436
|
|
|
|
11,156
|
|
|
|
11,730
|
|
Real estate – residential
|
|
|
13,569
|
|
|
|
2,154
|
|
|
|
12,017
|
|
|
|
14,171
|
|
|
|
1,994
|
|
|
|
15,946
|
|
|
|
16,186
|
|
Consumer installment loans
|
|
|
583
|
|
|
|
-
|
|
|
|
516
|
|
|
|
516
|
|
|
|
5
|
|
|
|
553
|
|
|
|
572
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
31,936
|
|
|
$
|
8,809
|
|
|
$
|
20,443
|
|
|
$
|
29,252
|
|
|
$
|
4,318
|
|
|
$
|
31,891
|
|
|
$
|
32,343
|
|
(dollars in thousands)
|
|
Unpaid
Contractual
Principal
Balance
|
|
|
Recorded
Investment
With No
Allowance
|
|
|
Recorded
Investment
With
Allowance
|
|
|
Total
Recorded
Investment
|
|
|
Related
Allowance
|
|
|
Three
Month
Average
Recorded
Investment
|
|
|
Twelve
Month
Average
Recorded
Investment
|
|
December 31, 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial, financial & agricultural
|
|
$
|
3,068
|
|
|
$
|
204
|
|
|
$
|
1,656
|
|
|
$
|
1,860
|
|
|
$
|
134
|
|
|
$
|
1,613
|
|
|
$
|
1,684
|
|
Real estate – construction & development
|
|
|
2,047
|
|
|
|
-
|
|
|
|
1,233
|
|
|
|
1,233
|
|
|
|
273
|
|
|
|
1,590
|
|
|
|
2,018
|
|
Real estate – commercial & farmland
|
|
|
13,906
|
|
|
|
6,811
|
|
|
|
6,065
|
|
|
|
12,876
|
|
|
|
1,503
|
|
|
|
12,948
|
|
|
|
12,845
|
|
Real estate – residential
|
|
|
15,482
|
|
|
|
2,238
|
|
|
|
13,503
|
|
|
|
15,741
|
|
|
|
3,080
|
|
|
|
15,525
|
|
|
|
14,453
|
|
Consumer installment loans
|
|
|
671
|
|
|
|
-
|
|
|
|
613
|
|
|
|
613
|
|
|
|
5
|
|
|
|
576
|
|
|
|
506
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
35,174
|
|
|
$
|
9,253
|
|
|
$
|
23,070
|
|
|
$
|
32,323
|
|
|
$
|
4,995
|
|
|
$
|
32,252
|
|
|
$
|
31,506
|
|
(dollars in thousands)
|
|
Unpaid
Contractual
Principal
Balance
|
|
|
Recorded
Investment
With No
Allowance
|
|
|
Recorded
Investment
With
Allowance
|
|
|
Total
Recorded
Investment
|
|
|
Related
Allowance
|
|
|
Three
Month
Average
Recorded
Investment
|
|
|
Six
Month
Average
Recorded
Investment
|
|
June 30, 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial, financial & agricultural
|
|
$
|
3,786
|
|
|
$
|
652
|
|
|
$
|
1,453
|
|
|
$
|
2,105
|
|
|
$
|
150
|
|
|
$
|
1,825
|
|
|
$
|
1,731
|
|
Real estate – construction & development
|
|
|
3,141
|
|
|
|
230
|
|
|
|
1,826
|
|
|
|
2,056
|
|
|
|
697
|
|
|
|
2,154
|
|
|
|
2,304
|
|
Real estate – commercial & farmland
|
|
|
13,592
|
|
|
|
5,312
|
|
|
|
7,221
|
|
|
|
12,533
|
|
|
|
1,000
|
|
|
|
12,772
|
|
|
|
12,777
|
|
Real estate – residential
|
|
|
14,460
|
|
|
|
1,329
|
|
|
|
12,331
|
|
|
|
13,660
|
|
|
|
2,369
|
|
|
|
13,249
|
|
|
|
13,450
|
|
Consumer installment loans
|
|
|
531
|
|
|
|
-
|
|
|
|
444
|
|
|
|
444
|
|
|
|
8
|
|
|
|
441
|
|
|
|
458
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
35,510
|
|
|
$
|
7,523
|
|
|
$
|
23,275
|
|
|
$
|
30,798
|
|
|
$
|
4,224
|
|
|
$
|
30,441
|
|
|
$
|
30,720
|
|
The following is a summary of information pertaining to purchased
impaired loans:
|
|
As of and for the Period Ended
|
|
(dollars in thousands)
|
|
June 30,
2017
|
|
|
December 31,
2016
|
|
|
June 30,
2016
|
|
Nonaccrual loans
|
|
$
|
17,357
|
|
|
$
|
22,966
|
|
|
$
|
26,736
|
|
Troubled debt restructurings not included above
|
|
|
21,020
|
|
|
|
23,543
|
|
|
|
20,642
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total impaired loans
|
|
$
|
38,377
|
|
|
$
|
46,509
|
|
|
$
|
47,378
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter-to-date interest income recognized on impaired loans
|
|
$
|
374
|
|
|
$
|
377
|
|
|
$
|
343
|
|
Year-to-date interest income recognized on impaired loans
|
|
$
|
753
|
|
|
$
|
2,755
|
|
|
$
|
885
|
|
Quarter-to-date foregone interest income on impaired loans
|
|
$
|
265
|
|
|
$
|
354
|
|
|
$
|
412
|
|
Year-to-date foregone interest income on impaired loans
|
|
$
|
601
|
|
|
$
|
1,637
|
|
|
$
|
938
|
|
The following table presents an analysis of information pertaining
to purchased impaired loans as of June 30, 2017, December 31, 2016 and June 30, 2016:
(dollars in thousands)
|
|
Unpaid
Contractual
Principal
Balance
|
|
|
Recorded
Investment
With No
Allowance
|
|
|
Recorded
Investment
With
Allowance
|
|
|
Total
Recorded
Investment
|
|
|
Related
Allowance
|
|
|
Three
Month
Average
Recorded
Investment
|
|
|
Six
Month
Average
Recorded
Investment
|
|
June 30, 2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial, financial & agricultural
|
|
$
|
1,679
|
|
|
$
|
163
|
|
|
$
|
6
|
|
|
$
|
169
|
|
|
$
|
-
|
|
|
$
|
273
|
|
|
$
|
412
|
|
Real estate – construction & development
|
|
|
8,296
|
|
|
|
524
|
|
|
|
2,967
|
|
|
|
3,491
|
|
|
|
257
|
|
|
|
3,491
|
|
|
|
3,650
|
|
Real estate – commercial & farmland
|
|
|
16,987
|
|
|
|
2,418
|
|
|
|
11,616
|
|
|
|
14,034
|
|
|
|
771
|
|
|
|
16,167
|
|
|
|
16,989
|
|
Real estate – residential
|
|
|
24,219
|
|
|
|
7,647
|
|
|
|
13,009
|
|
|
|
20,656
|
|
|
|
763
|
|
|
|
21,262
|
|
|
|
21,904
|
|
Consumer installment loans
|
|
|
36
|
|
|
|
27
|
|
|
|
-
|
|
|
|
27
|
|
|
|
-
|
|
|
|
24
|
|
|
|
24
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
51,217
|
|
|
$
|
10,779
|
|
|
$
|
27,598
|
|
|
$
|
38,377
|
|
|
$
|
1,791
|
|
|
$
|
41,217
|
|
|
$
|
42,979
|
|
(dollars in thousands)
|
|
Unpaid
Contractual
Principal
Balance
|
|
|
Recorded
Investment
With No
Allowance
|
|
|
Recorded
Investment
With
Allowance
|
|
|
Total
Recorded
Investment
|
|
|
Related
Allowance
|
|
|
Three
Month
Average
Recorded
Investment
|
|
|
Twelve
Month
Average
Recorded
Investment
|
|
December 31, 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial, financial & agricultural
|
|
$
|
5,031
|
|
|
$
|
370
|
|
|
$
|
322
|
|
|
$
|
692
|
|
|
$
|
-
|
|
|
$
|
783
|
|
|
$
|
2,206
|
|
Real estate – construction & development
|
|
|
24,566
|
|
|
|
493
|
|
|
|
3,477
|
|
|
|
3,970
|
|
|
|
153
|
|
|
|
3,888
|
|
|
|
4,279
|
|
Real estate – commercial & farmland
|
|
|
36,174
|
|
|
|
3,598
|
|
|
|
15,036
|
|
|
|
18,634
|
|
|
|
385
|
|
|
|
17,806
|
|
|
|
19,872
|
|
Real estate – residential
|
|
|
27,022
|
|
|
|
7,883
|
|
|
|
15,306
|
|
|
|
23,189
|
|
|
|
1,088
|
|
|
|
23,201
|
|
|
|
23,163
|
|
Consumer installment loans
|
|
|
37
|
|
|
|
24
|
|
|
|
-
|
|
|
|
24
|
|
|
|
-
|
|
|
|
51
|
|
|
|
96
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
92,830
|
|
|
$
|
12,368
|
|
|
$
|
34,141
|
|
|
$
|
46,509
|
|
|
$
|
1,626
|
|
|
$
|
45,729
|
|
|
$
|
49,616
|
|
(dollars in thousands)
|
|
Unpaid
Contractual
Principal
Balance
|
|
|
Recorded
Investment
With No
Allowance
|
|
|
Recorded
Investment
With
Allowance
|
|
|
Total
Recorded
Investment
|
|
|
Related
Allowance
|
|
|
Three
Month
Average
Recorded
Investment
|
|
|
Six
Month
Average
Recorded
Investment
|
|
June 30, 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial, financial & agricultural
|
|
$
|
2,976
|
|
|
$
|
802
|
|
|
$
|
-
|
|
|
$
|
802
|
|
|
$
|
-
|
|
|
$
|
2,132
|
|
|
$
|
2,710
|
|
Real estate – construction & development
|
|
|
10,082
|
|
|
|
1,538
|
|
|
|
2,550
|
|
|
|
4,088
|
|
|
|
223
|
|
|
|
4,273
|
|
|
|
4,164
|
|
Real estate – commercial & farmland
|
|
|
27,234
|
|
|
|
4,202
|
|
|
|
15,211
|
|
|
|
19,413
|
|
|
|
690
|
|
|
|
21,581
|
|
|
|
20,433
|
|
Real estate – residential
|
|
|
26,781
|
|
|
|
12,099
|
|
|
|
10,894
|
|
|
|
22,993
|
|
|
|
474
|
|
|
|
22,604
|
|
|
|
22,786
|
|
Consumer installment loans
|
|
|
103
|
|
|
|
82
|
|
|
|
-
|
|
|
|
82
|
|
|
|
-
|
|
|
|
109
|
|
|
|
114
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
67,176
|
|
|
$
|
18,723
|
|
|
$
|
28,655
|
|
|
$
|
47,378
|
|
|
$
|
1,387
|
|
|
$
|
50,699
|
|
|
$
|
50,207
|
|
Credit Quality Indicators
The Company uses a nine category risk grading system to assign
a risk grade to each loan in the portfolio. The following is a description of the general characteristics of the grades:
Grade 10 – Prime Credit –
This grade represents loans to the Company’s most creditworthy borrowers or loans that are secured by cash or cash equivalents.
Grade 15 – Good Credit –
This grade includes loans that exhibit one or more characteristics better than that of a
Satisfactory Credit
. Generally,
the debt service coverage and borrower’s liquidity is materially better than required by the Company’s loan policy.
Grade 20 – Satisfactory Credit
– This grade is assigned to loans to borrowers who exhibit satisfactory credit histories, contain acceptable loan structures
and demonstrate ability to repay.
Grade 23 – Performing, Under-Collateralized
Credit –
This grade is assigned to loans that are currently performing and supported by adequate financial information
that reflects repayment capacity but exhibits a loan-to-value ratio greater than 110%, based on a documented collateral valuation.
Grade 25 – Minimum Acceptable
Credit –
This grade includes loans which exhibit all the characteristics of a
Satisfactory Credit
, but warrant
more than normal level of banker supervision due to (i) circumstances which elevate the risks of performance (such as start-up
operations, untested management, heavy leverage and interim losses); (ii) adverse, extraordinary events that have affected, or
could affect, the borrower’s cash flow, financial condition, ability to continue operating profitability or refinancing (such
as death of principal, fire and divorce); (iii) loans that require more than the normal servicing requirements (such as any
type of construction financing, acquisition and development loans, accounts receivable or inventory loans and floor plan loans);
(iv) existing technical exceptions which raise some doubts about the Bank’s perfection in its collateral position or
the continued financial capacity of the borrower; or (v) improvements in formerly criticized borrowers, which may warrant
banker supervision.
Grade 30 – Other Asset Especially
Mentioned –
This grade includes loans that exhibit potential weaknesses that deserve management’s close attention.
If left uncorrected, these weaknesses may result in deterioration of the repayment prospects for the asset or in the Company’s
credit position at some future date.
Grade 40 – Substandard –
This grade represents loans which are inadequately protected by the current credit worthiness and paying capacity of the borrower
or of the collateral pledged, if any. These assets exhibit a well-defined weakness or are characterized by the distinct possibility
that the Bank will sustain some loss if the deficiencies are not corrected. These weaknesses may be characterized by past due performance,
operating losses or questionable collateral values.
Grade 50 – Doubtful –
This
grade includes loans which exhibit all of the characteristics of a substandard loan with the added provision that the weaknesses
make collection or liquidation in full, on the basis of currently existing facts, conditions and values, highly questionable or
improbable.
Grade 60 – Loss –
This
grade is assigned to loans which are considered uncollectible and of such little value that their continuance as active assets
of the Bank is not warranted. This classification does not mean that the loan has absolutely no recovery or salvage value, but
rather it is not practical or desirable to defer writing it off.
The following table presents the loan portfolio, excluding purchased
loans, by risk grade as of June 30, 2017 and December 31, 2016 (in thousands):
Risk
Grade
|
|
Commercial,
Financial &
Agricultural
|
|
|
Real Estate -
Construction &
Development
|
|
|
Real Estate -
Commercial &
Farmland
|
|
|
Real Estate -
Residential
|
|
|
Consumer
Installment
Loans
|
|
|
Other
|
|
|
Total
|
|
June 30, 2017
|
10
|
|
$
|
475,310
|
|
|
$
|
-
|
|
|
$
|
6,384
|
|
|
$
|
51
|
|
|
$
|
8,769
|
|
|
$
|
-
|
|
|
$
|
490,514
|
|
15
|
|
|
502,635
|
|
|
|
1,306
|
|
|
|
81,494
|
|
|
|
45,429
|
|
|
|
277
|
|
|
|
-
|
|
|
|
631,141
|
|
20
|
|
|
108,940
|
|
|
|
47,672
|
|
|
|
996,883
|
|
|
|
696,382
|
|
|
|
24,270
|
|
|
|
1,161
|
|
|
|
1,875,308
|
|
23
|
|
|
349
|
|
|
|
6,072
|
|
|
|
3,055
|
|
|
|
5,906
|
|
|
|
4
|
|
|
|
-
|
|
|
|
15,386
|
|
25
|
|
|
120,987
|
|
|
|
424,915
|
|
|
|
399,354
|
|
|
|
89,100
|
|
|
|
113,430
|
|
|
|
-
|
|
|
|
1,147,786
|
|
30
|
|
|
5,720
|
|
|
|
5,217
|
|
|
|
16,817
|
|
|
|
4,998
|
|
|
|
119
|
|
|
|
-
|
|
|
|
32,871
|
|
40
|
|
|
4,685
|
|
|
|
1,676
|
|
|
|
15,015
|
|
|
|
15,104
|
|
|
|
636
|
|
|
|
-
|
|
|
|
37,116
|
|
50
|
|
|
7
|
|
|
|
-
|
|
|
|
-
|
|
|
|
99
|
|
|
|
-
|
|
|
|
-
|
|
|
|
106
|
|
60
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
1,218,633
|
|
|
$
|
486,858
|
|
|
$
|
1,519,002
|
|
|
$
|
857,069
|
|
|
$
|
147,505
|
|
|
$
|
1,161
|
|
|
$
|
4,230,228
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2016
|
10
|
|
$
|
397,093
|
|
|
$
|
-
|
|
|
$
|
8,814
|
|
|
$
|
125
|
|
|
$
|
8,532
|
|
|
$
|
-
|
|
|
$
|
414,564
|
|
15
|
|
|
376,323
|
|
|
|
5,390
|
|
|
|
102,893
|
|
|
|
54,136
|
|
|
|
405
|
|
|
|
-
|
|
|
|
539,147
|
|
20
|
|
|
97,057
|
|
|
|
36,307
|
|
|
|
889,539
|
|
|
|
609,583
|
|
|
|
25,026
|
|
|
|
12,486
|
|
|
|
1,669,998
|
|
23
|
|
|
366
|
|
|
|
6,803
|
|
|
|
8,533
|
|
|
|
7,470
|
|
|
|
14
|
|
|
|
-
|
|
|
|
23,186
|
|
25
|
|
|
92,066
|
|
|
|
307,903
|
|
|
|
357,151
|
|
|
|
88,370
|
|
|
|
62,098
|
|
|
|
-
|
|
|
|
907,588
|
|
30
|
|
|
144
|
|
|
|
719
|
|
|
|
22,986
|
|
|
|
5,197
|
|
|
|
126
|
|
|
|
-
|
|
|
|
29,172
|
|
40
|
|
|
4,089
|
|
|
|
5,923
|
|
|
|
16,303
|
|
|
|
16,038
|
|
|
|
714
|
|
|
|
-
|
|
|
|
43,067
|
|
50
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
99
|
|
|
|
-
|
|
|
|
-
|
|
|
|
99
|
|
60
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
967,138
|
|
|
$
|
363,045
|
|
|
$
|
1,406,219
|
|
|
$
|
781,018
|
|
|
$
|
96,915
|
|
|
$
|
12,486
|
|
|
$
|
3,626,821
|
|
The following table presents the purchased loan portfolio by
risk grade as of June 30, 2017 and December 31, 2016 (in thousands):
Risk
Grade
|
|
Commercial,
Financial &
Agricultural
|
|
|
Real Estate -
Construction &
Development
|
|
|
Real Estate -
Commercial &
Farmland
|
|
|
Real Estate -
Residential
|
|
|
Consumer
Installment
Loans
|
|
|
Other
|
|
|
Total
|
|
June 30, 2017
|
10
|
|
$
|
5,202
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
757
|
|
|
$
|
-
|
|
|
$
|
5,959
|
|
15
|
|
|
4,890
|
|
|
|
-
|
|
|
|
6,210
|
|
|
|
27,943
|
|
|
|
348
|
|
|
|
-
|
|
|
|
39,391
|
|
20
|
|
|
12,311
|
|
|
|
12,289
|
|
|
|
190,506
|
|
|
|
111,033
|
|
|
|
1,310
|
|
|
|
-
|
|
|
|
327,449
|
|
23
|
|
|
22
|
|
|
|
2,553
|
|
|
|
8,139
|
|
|
|
11,344
|
|
|
|
-
|
|
|
|
-
|
|
|
|
22,058
|
|
25
|
|
|
51,611
|
|
|
|
46,179
|
|
|
|
261,911
|
|
|
|
99,248
|
|
|
|
954
|
|
|
|
-
|
|
|
|
459,903
|
|
30
|
|
|
11,359
|
|
|
|
9,215
|
|
|
|
14,545
|
|
|
|
6,693
|
|
|
|
57
|
|
|
|
-
|
|
|
|
41,869
|
|
40
|
|
|
2,217
|
|
|
|
3,331
|
|
|
|
29,001
|
|
|
|
19,243
|
|
|
|
78
|
|
|
|
-
|
|
|
|
53,870
|
|
50
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
60
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
87,612
|
|
|
$
|
73,567
|
|
|
$
|
510,312
|
|
|
$
|
275,504
|
|
|
$
|
3,504
|
|
|
$
|
-
|
|
|
$
|
950,499
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2016
|
10
|
|
$
|
5,722
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
814
|
|
|
$
|
-
|
|
|
$
|
6,536
|
|
15
|
|
|
1,266
|
|
|
|
-
|
|
|
|
7,619
|
|
|
|
31,331
|
|
|
|
570
|
|
|
|
-
|
|
|
|
40,786
|
|
20
|
|
|
16,204
|
|
|
|
10,686
|
|
|
|
194,168
|
|
|
|
111,712
|
|
|
|
1,583
|
|
|
|
-
|
|
|
|
334,353
|
|
23
|
|
|
22
|
|
|
|
3,643
|
|
|
|
9,019
|
|
|
|
14,791
|
|
|
|
-
|
|
|
|
-
|
|
|
|
27,475
|
|
25
|
|
|
67,123
|
|
|
|
56,006
|
|
|
|
323,242
|
|
|
|
121,379
|
|
|
|
1,276
|
|
|
|
-
|
|
|
|
569,026
|
|
30
|
|
|
5,072
|
|
|
|
7,271
|
|
|
|
15,039
|
|
|
|
7,605
|
|
|
|
45
|
|
|
|
-
|
|
|
|
35,032
|
|
40
|
|
|
1,128
|
|
|
|
3,762
|
|
|
|
27,268
|
|
|
|
23,459
|
|
|
|
366
|
|
|
|
-
|
|
|
|
55,983
|
|
50
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
60
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
96,537
|
|
|
$
|
81,368
|
|
|
$
|
576,355
|
|
|
$
|
310,277
|
|
|
$
|
4,654
|
|
|
$
|
-
|
|
|
$
|
1,069,191
|
|
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
Company has granted a concession. Concessions may include interest rate reductions to below market interest rates, principal forgiveness,
restructuring amortization schedules and other actions intended to minimize potential losses. The Company has exhibited the greatest
success for rehabilitation of the loan by a reduction in the rate alone (maintaining the amortization of the debt) or a combination
of a rate reduction and the forbearance of previously past due interest or principal. This has most typically been evidenced in
certain commercial real estate loans whereby a disruption in the borrower’s cash flow resulted in an extended past due status,
of which the borrower was unable to catch up completely as the cash flow of the property ultimately stabilized at a level lower
than its original level. A reduction in rate, coupled with a forbearance of unpaid principal and/or interest, allowed the net cash
flows to service the debt under the modified terms.
The Company’s policy requires a restructure
request to be supported by a current, well-documented credit evaluation of the borrower’s financial condition and a collateral
evaluation that is no older than six months from the date of the restructure. Key factors of that evaluation include the documentation
of current, recurring cash flows, support provided by the guarantor(s) and the current valuation of the collateral. If the appraisal
in the file is older than six months, an evaluation must be made as to the continued reasonableness of the valuation. For certain
income-producing properties, current rent rolls and/or other income information can be utilized to support the appraisal valuation,
when coupled with documented cap rates within our markets and a physical inspection of the collateral to validate the current condition.
The Company’s policy states that
in the event a loan has been identified as a troubled debt restructuring, it should be assigned a grade of substandard and placed
on nonaccrual status until such time the borrower has demonstrated the ability to service the loan payments based on the restructured
terms – generally defined as six months of satisfactory payment history. Missed payments under the original loan terms are
not considered under the new structure; however, subsequent missed payments are considered non-performance and are not considered
toward the six month required term of satisfactory payment history. The Company’s loan policy states that a nonaccrual loan
may be returned to accrual status when (i) none of its principal and interest is due and unpaid, and the Company expects repayment
of the remaining contractual principal and interest or (ii) it otherwise becomes well secured and in the process of collection.
Restoration to accrual status on any given loan must be supported by a well-documented credit evaluation of the borrower’s
financial condition and the prospects for full repayment and approved by the Company’s Chief Credit Officer.
In the normal course of business, the Company
renews loans with a modification of the interest rate or terms that are not deemed as troubled debt restructurings because the
borrower is not experiencing financial difficulty. The Company modified loans in the first six months of 2017 and 2016 totaling
$16.2 million and $36.8 million, respectively, under such parameters.
As of June 30, 2017 and December 31, 2016,
the Company had a balance of $14.6 million and $18.2 million, respectively, in troubled debt restructurings, excluding purchased
loans. The Company has recorded $2.0 million and $1.2 million in previous charge-offs on such loans at June 30, 2017 and December
31, 2016, respectively. The Company’s balance in the allowance for loan losses allocated to such troubled debt restructurings
was $1.7 million and $3.1 million at June 30, 2017 and December 31, 2016, respectively. At June 30, 2017, the Company did not have
any commitments to lend additional funds to debtors whose terms have been modified in troubled restructurings.
During the six months ending June 30, 2017
and 2016, the Company modified loans as troubled debt restructurings, excluding purchased loans, with principal balances of $1.2
million and $2.5 million, respectively, and these modifications did not have a material impact on the Company’s allowance
for loan loss. The following table presents the loans by class modified as troubled debt restructurings, excluding purchased loans,
which occurred during the six months ending June 30, 2017 and 2016:
|
|
June 30, 2017
|
|
June 30, 2016
|
Loan Class
|
|
#
|
|
Balance
(in
thousands)
|
|
|
#
|
|
Balance
(in
thousands)
|
|
Commercial, financial & agricultural
|
|
-
|
|
$
|
-
|
|
|
2
|
|
$
|
28
|
|
Real estate – construction & development
|
|
-
|
|
|
-
|
|
|
1
|
|
|
6
|
|
Real estate – commercial & farmland
|
|
4
|
|
|
1,062
|
|
|
4
|
|
|
1,666
|
|
Real estate – residential
|
|
1
|
|
|
77
|
|
|
6
|
|
|
739
|
|
Consumer installment
|
|
6
|
|
|
31
|
|
|
6
|
|
|
26
|
|
Total
|
|
11
|
|
$
|
1,170
|
|
|
19
|
|
$
|
2,465
|
|
Troubled debt restructurings, excluding
purchased loans, with an outstanding balance of $992,000 and $494,000 defaulted during the six months ended June 30, 2017 and 2016,
respectively, and these defaults did not have a material impact on the Company’s allowance for loan loss. The following table
presents for loans, excluding purchased loans, the troubled debt restructurings by class that defaulted (defined as 30 days past
due) during the six months ending June 30, 2017 and 2016:
|
|
June 30, 2017
|
|
June 30, 2016
|
Loan Class
|
|
#
|
|
Balance
(in
thousands)
|
|
|
#
|
|
Balance
(in
thousands)
|
|
Commercial, financial & agricultural
|
|
2
|
|
$
|
49
|
|
|
2
|
|
$
|
7
|
|
Real estate – construction & development
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
Real estate – commercial & farmland
|
|
4
|
|
|
362
|
|
|
2
|
|
|
191
|
|
Real estate – residential
|
|
9
|
|
|
554
|
|
|
6
|
|
|
292
|
|
Consumer installment
|
|
7
|
|
|
27
|
|
|
1
|
|
|
4
|
|
Total
|
|
22
|
|
$
|
992
|
|
|
11
|
|
$
|
494
|
|
The following table presents the amount
of troubled debt restructurings by loan class, excluding purchased loans, classified separately as accrual and nonaccrual at June
30, 2017 and December 31, 2016:
June 30, 2017
|
|
Accruing Loans
|
|
Non-Accruing Loans
|
Loan Class
|
|
#
|
|
Balance
(in
thousands)
|
|
|
#
|
|
Balance
(in
thousands)
|
|
Commercial, financial & agricultural
|
|
3
|
|
$
|
40
|
|
|
15
|
|
$
|
136
|
|
Real estate – construction & development
|
|
7
|
|
|
429
|
|
|
2
|
|
|
34
|
|
Real estate – commercial & farmland
|
|
16
|
|
|
4,859
|
|
|
4
|
|
|
192
|
|
Real estate – residential
|
|
74
|
|
|
6,829
|
|
|
17
|
|
|
1,975
|
|
Consumer installment
|
|
7
|
|
|
12
|
|
|
34
|
|
|
133
|
|
Total
|
|
107
|
|
$
|
12,169
|
|
|
72
|
|
$
|
2,470
|
|
December 31, 2016
|
|
Accruing Loans
|
|
Non-Accruing Loans
|
Loan Class
|
|
#
|
|
Balance
(in
thousands)
|
|
|
#
|
|
Balance
(in
thousands)
|
|
Commercial, financial & agricultural
|
|
4
|
|
$
|
47
|
|
|
15
|
|
$
|
114
|
|
Real estate – construction & development
|
|
8
|
|
|
686
|
|
|
2
|
|
|
34
|
|
Real estate – commercial & farmland
|
|
16
|
|
|
4,119
|
|
|
5
|
|
|
2,970
|
|
Real estate – residential
|
|
82
|
|
|
9,340
|
|
|
15
|
|
|
739
|
|
Consumer installment
|
|
7
|
|
|
17
|
|
|
32
|
|
|
130
|
|
Total
|
|
117
|
|
$
|
14,209
|
|
|
69
|
|
$
|
3,987
|
|
As of June 30, 2017 and December 31, 2016,
the Company had a balance of $27.3 million and $28.1 million, respectively, in troubled debt restructurings included in purchased
loans. The Company has recorded $1.5 million in previous charge-offs on such loans at both June 30, 2017 and December 31, 2016.
At June 30, 2017, the Company did not have any commitments to lend additional funds to debtors whose terms have been modified in
troubled restructurings.
During the six months ending June 30, 2017
and 2016, the Company modified purchased loans as troubled debt restructurings, with principal balances of $1.9 million and $1.2
million, respectively, and these modifications did not have a material impact on the Company’s allowance for loan loss. The
following table presents the purchased loans by class modified as troubled debt restructurings, which occurred during the six months
ending June 30, 2017 and 2016:
|
|
June 30, 2017
|
|
June 30, 2016
|
Loan Class
|
|
#
|
|
Balance
(in
thousands)
|
|
|
#
|
|
Balance
(in
thousands)
|
|
Commercial, financial & agricultural
|
|
1
|
|
$
|
6
|
|
|
1
|
|
$
|
76
|
|
Real estate – construction & development
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
Real estate – commercial & farmland
|
|
4
|
|
|
1,323
|
|
|
2
|
|
|
492
|
|
Real estate – residential
|
|
4
|
|
|
578
|
|
|
3
|
|
|
662
|
|
Consumer installment
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
Total
|
|
9
|
|
$
|
1,907
|
|
|
6
|
|
$
|
1,230
|
|
Troubled debt restructurings included in
purchased loans with an outstanding balance of $373,000 and $1.4 million defaulted during the six months ended June 30, 2017 and
2016, respectively, and these defaults did not have a material impact on the Company’s allowance for loan loss. The following
table presents purchased loan troubled debt restructurings by class that defaulted (defined as 30 days past due) during the six
months ending June 30, 2017 and 2016:
|
|
June 30, 2017
|
|
June 30, 2016
|
Loan Class
|
|
#
|
|
Balance
(in
thousands)
|
|
|
#
|
|
Balance
(in
thousands)
|
|
Commercial, financial & agricultural
|
|
1
|
|
$
|
6
|
|
|
2
|
|
$
|
76
|
|
Real estate – construction & development
|
|
-
|
|
|
-
|
|
|
2
|
|
|
402
|
|
Real estate – commercial & farmland
|
|
1
|
|
|
226
|
|
|
-
|
|
|
-
|
|
Real estate – residential
|
|
4
|
|
|
138
|
|
|
6
|
|
|
919
|
|
Consumer installment
|
|
1
|
|
|
3
|
|
|
-
|
|
|
-
|
|
Total
|
|
7
|
|
$
|
373
|
|
|
10
|
|
$
|
1,397
|
|
The following table presents the amount
of troubled debt restructurings by loan class of purchased loans, classified separately as accrual and nonaccrual at June 30, 2017
and December 31, 2016.
June 30, 2017
|
|
Accruing Loans
|
|
Non-Accruing Loans
|
Loan Class
|
|
#
|
|
Balance
(in
thousands)
|
|
|
#
|
|
Balance
(in
thousands)
|
|
Commercial, financial & agricultural
|
|
-
|
|
$
|
-
|
|
|
4
|
|
$
|
21
|
|
Real estate – construction & development
|
|
3
|
|
|
1,028
|
|
|
6
|
|
|
356
|
|
Real estate – commercial & farmland
|
|
17
|
|
|
7,410
|
|
|
11
|
|
|
3,935
|
|
Real estate – residential
|
|
120
|
|
|
12,582
|
|
|
32
|
|
|
1,965
|
|
Consumer installment
|
|
-
|
|
|
-
|
|
|
2
|
|
|
7
|
|
Total
|
|
140
|
|
$
|
21,020
|
|
|
55
|
|
$
|
6,284
|
|
December 31, 2016
|
|
Accruing Loans
|
|
Non-Accruing Loans
|
Loan Class
|
|
#
|
|
Balance
(in
thousands)
|
|
|
#
|
|
Balance
(in
thousands)
|
|
Commercial, financial & agricultural
|
|
1
|
|
$
|
1
|
|
|
4
|
|
$
|
91
|
|
Real estate – construction & development
|
|
6
|
|
|
1,358
|
|
|
3
|
|
|
30
|
|
Real estate – commercial & farmland
|
|
20
|
|
|
8,460
|
|
|
5
|
|
|
2,402
|
|
Real estate – residential
|
|
123
|
|
|
13,713
|
|
|
33
|
|
|
2,077
|
|
Consumer installment
|
|
3
|
|
|
11
|
|
|
1
|
|
|
-
|
|
Total
|
|
153
|
|
$
|
23,543
|
|
|
46
|
|
$
|
4,600
|
|
Allowance for Loan Losses
The allowance for loan losses represents
an allowance for probable incurred losses in the loan portfolio. The adequacy of the allowance for loan losses is evaluated periodically
based on a review of all significant loans, with a particular emphasis on non-accruing, past-due and other loans that management
believes might be potentially impaired or warrant additional attention. The Company segregates the loan portfolio by type of loan
and utilizes this segregation in evaluating exposure to risks within the portfolio. In addition, based on internal reviews and
external reviews performed by regulatory authorities, the Company further segregates the loan portfolio by loan grades based on
an assessment of risk for a particular loan or group of loans. Certain reviewed loans are assigned specific allowances when a review
of relevant data determines that a general allocation is not sufficient or when the review affords management the opportunity to
adjust the amount of exposure in a given credit. In establishing allowances, management considers historical loan loss experience
but adjusts this data with a significant emphasis on current loan quality trends, current economic conditions and other factors
in the markets where the Company operates. Factors considered include, among others, current valuations of real estate in the Company’s
markets, unemployment rates, the effect of weather conditions on agricultural related entities and other significant local economic
events, such as major plant closings.
The Company has developed a methodology
for determining the adequacy of the allowance for loan losses which is monitored by the Company’s Chief Credit Officer. Procedures
provide for the assignment of a risk rating for every loan included in the total loan portfolio. Mortgage warehouse lines of credit,
overdraft protection loans, commercial insurance premium finance loans, and certain consumer and mortgage loans serviced by outside
processors are treated as pools for risk rating purposes. The risk rating schedule provides nine ratings of which five ratings
are classified as pass ratings and four ratings are classified as criticized ratings. Each risk rating is assigned a percentage
factor to be applied to the loan balance to determine the adequate amount of reserve. The Bank’s independent internal loan
review department reviews on an annual basis a sample of relationships in excess of $500,000. Sampling is based on a number of
factors unique to the Bank’s portfolio risks, including, but not limited to, lending divisions, industry, risk grades, and
new originations. As a result of these loan reviews, certain loans may be identified as having deteriorating credit quality. Other
loans that surface as problem loans may also be assigned specific reserves. Past-due loans are assigned risk ratings based on the
number of days past due. The calculation of the allowance for loan losses, including underlying data and assumptions, is reviewed
regularly by the Company’s Chief Financial Officer and the independent internal loan review department.
Loan losses are charged against the allowance
when management believes the collection of a loan’s principal is unlikely. Subsequent recoveries are credited to the
allowance. Consumer loans are charged-off in accordance with the Federal Financial Institutions Examination Council’s (“FFIEC”)
Uniform Retail Credit Classification and Account Management Policy. Commercial loans are charged-off when they are deemed uncollectible,
which usually involves a triggering event within the collection effort. If the loan is collateral dependent, the loss is more easily
identified and is charged-off when it is identified, usually based upon receipt of an appraisal. However, when a loan has guarantor
support, the Company may carry the estimated loss as a reserve against the loan while collection efforts with the guarantor are
pursued. If, after collection efforts with the guarantor are complete, the deficiency is still considered uncollectible, the loss
is charged-off and any further collections are treated as recoveries. In all situations, when a loan is downgraded to an Asset
Quality Rating of 60 (Loss per the regulatory guidance), the uncollectible portion is charged-off.
The following tables detail activity in
the allowance for loan losses by portfolio segment for the three and six-month periods ended June 30, 2017, the year ended December 31,
2016 and the three and six-month periods ended June 30, 2016. Allocation of a portion of the allowance to one category of loans
does not preclude its availability to absorb losses in other categories.
(dollars in thousands)
|
|
Commercial,
Financial &
Agricultural
|
|
|
Real Estate –
Construction &
Development
|
|
|
Real Estate –
Commercial &
Farmland
|
|
|
Real Estate –
Residential
|
|
|
Consumer
Installment
Loans and
Other
|
|
|
Purchased
Loans
|
|
|
Purchased
Loan
Pools
|
|
|
Total
|
|
Three months ended June 30, 2017:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, March
31, 2017
|
|
$
|
2,798
|
|
|
$
|
3,597
|
|
|
$
|
7,879
|
|
|
$
|
5,840
|
|
|
$
|
854
|
|
|
$
|
2,196
|
|
|
$
|
2,086
|
|
|
$
|
25,250
|
|
Provision for loan losses
|
|
|
984
|
|
|
|
102
|
|
|
|
255
|
|
|
|
655
|
|
|
|
695
|
|
|
|
(23
|
)
|
|
|
(463
|
)
|
|
|
2,205
|
|
Loans charged off
|
|
|
(701
|
)
|
|
|
(41
|
)
|
|
|
(386
|
)
|
|
|
(963
|
)
|
|
|
(438
|
)
|
|
|
(755
|
)
|
|
|
-
|
|
|
|
(3,284
|
)
|
Recoveries
of loans previously charged off
|
|
|
221
|
|
|
|
98
|
|
|
|
121
|
|
|
|
73
|
|
|
|
44
|
|
|
|
373
|
|
|
|
-
|
|
|
|
930
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance,
June 30, 2017
|
|
$
|
3,302
|
|
|
$
|
3,756
|
|
|
$
|
7,869
|
|
|
$
|
5,605
|
|
|
$
|
1,155
|
|
|
$
|
1,791
|
|
|
$
|
1,623
|
|
|
$
|
25,101
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six months ended June 30, 2017:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, December 31,
2016
|
|
$
|
2,192
|
|
|
$
|
2,990
|
|
|
$
|
7,662
|
|
|
$
|
6,786
|
|
|
$
|
827
|
|
|
$
|
1,626
|
|
|
$
|
1,837
|
|
|
$
|
23,920
|
|
Provision for loan losses
|
|
|
1,625
|
|
|
|
742
|
|
|
|
472
|
|
|
|
(136
|
)
|
|
|
869
|
|
|
|
683
|
|
|
|
(214
|
)
|
|
|
4,041
|
|
Loans charged off
|
|
|
(805
|
)
|
|
|
(94
|
)
|
|
|
(395
|
)
|
|
|
(1,179
|
)
|
|
|
(602
|
)
|
|
|
(1,311
|
)
|
|
|
-
|
|
|
|
(4,386
|
)
|
Recoveries
of loans previously charged off
|
|
|
290
|
|
|
|
118
|
|
|
|
130
|
|
|
|
134
|
|
|
|
61
|
|
|
|
793
|
|
|
|
-
|
|
|
|
1,526
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance,
June 30, 2017
|
|
$
|
3,302
|
|
|
$
|
3,756
|
|
|
$
|
7,869
|
|
|
$
|
5,605
|
|
|
$
|
1,155
|
|
|
$
|
1,791
|
|
|
$
|
1,623
|
|
|
$
|
25,101
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Period-end
allocation:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans individually evaluated
for impairment
(1)
|
|
$
|
691
|
|
|
$
|
174
|
|
|
$
|
1,437
|
|
|
$
|
1,748
|
|
|
$
|
-
|
|
|
$
|
1,791
|
|
|
$
|
180
|
|
|
$
|
6,021
|
|
Loans
collectively evaluated for impairment
|
|
|
2,611
|
|
|
|
3,582
|
|
|
|
6,432
|
|
|
|
3,857
|
|
|
|
1,155
|
|
|
|
-
|
|
|
|
1,443
|
|
|
|
19,080
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending
balance
|
|
$
|
3,302
|
|
|
$
|
3,756
|
|
|
$
|
7,869
|
|
|
$
|
5,605
|
|
|
$
|
1,155
|
|
|
$
|
1,791
|
|
|
$
|
1,623
|
|
|
$
|
25,101
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Individually evaluated
for impairment
(1)
|
|
$
|
2,418
|
|
|
$
|
636
|
|
|
$
|
10,814
|
|
|
$
|
8,282
|
|
|
$
|
-
|
|
|
$
|
27,598
|
|
|
$
|
918
|
|
|
$
|
50,666
|
|
Collectively evaluated
for impairment
|
|
|
1,216,215
|
|
|
|
486,222
|
|
|
|
1,508,188
|
|
|
|
848,787
|
|
|
|
148,666
|
|
|
|
794,706
|
|
|
|
489,196
|
|
|
|
5,491,980
|
|
Acquired
with deteriorated credit quality
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
128,195
|
|
|
|
-
|
|
|
|
128,195
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending
balance
|
|
$
|
1,218,633
|
|
|
$
|
486,858
|
|
|
$
|
1,519,002
|
|
|
$
|
857,069
|
|
|
$
|
148,666
|
|
|
$
|
950,499
|
|
|
$
|
490,114
|
|
|
$
|
5,670,841
|
|
|
(1)
|
At June 30, 2017, loans individually evaluated for impairment includes all nonaccrual loans greater than $100,000 and all troubled
debt restructurings greater than $100,000, including all troubled debt restructurings and not only those currently classified as
troubled debt restructurings.
|
(dollars in thousands)
|
|
Commercial,
Financial &
Agricultural
|
|
|
Real Estate –
Construction &
Development
|
|
|
Real Estate –
Commercial &
Farmland
|
|
|
Real Estate -
Residential
|
|
|
Consumer
Installment
Loans and
Other
|
|
|
Purchased
Loans
|
|
|
Purchased
Loan
Pools
|
|
|
Total
|
|
Twelve months ended
December 31, 2016:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance,
January 1, 2016
|
|
$
|
1,144
|
|
|
$
|
5,009
|
|
|
$
|
7,994
|
|
|
$
|
4,760
|
|
|
$
|
1,574
|
|
|
$
|
-
|
|
|
$
|
581
|
|
|
$
|
21,062
|
|
Provision for loan losses
|
|
|
2,647
|
|
|
|
(1,921
|
)
|
|
|
107
|
|
|
|
2,757
|
|
|
|
(523
|
)
|
|
|
(232
|
)
|
|
|
1,256
|
|
|
|
4,091
|
|
Loans charged off
|
|
|
(1,999
|
)
|
|
|
(588
|
)
|
|
|
(708
|
)
|
|
|
(1,122
|
)
|
|
|
(351
|
)
|
|
|
(1,559
|
)
|
|
|
-
|
|
|
|
(6,327
|
)
|
Recoveries
of loans previously charged off
|
|
|
400
|
|
|
|
490
|
|
|
|
269
|
|
|
|
391
|
|
|
|
127
|
|
|
|
3,417
|
|
|
|
-
|
|
|
|
5,094
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance,
December 31, 2016
|
|
$
|
2,192
|
|
|
$
|
2,990
|
|
|
$
|
7,662
|
|
|
$
|
6,786
|
|
|
$
|
827
|
|
|
$
|
1,626
|
|
|
$
|
1,837
|
|
|
$
|
23,920
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Period-end
allocation:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans individually evaluated
for impairment
(1)
|
|
$
|
120
|
|
|
$
|
266
|
|
|
$
|
1,502
|
|
|
$
|
2,893
|
|
|
$
|
-
|
|
|
$
|
1,626
|
|
|
$
|
-
|
|
|
$
|
6,407
|
|
Loans
collectively evaluated for impairment
|
|
|
2,072
|
|
|
|
2,724
|
|
|
|
6,160
|
|
|
|
3,893
|
|
|
|
827
|
|
|
|
-
|
|
|
|
1,837
|
|
|
|
17,513
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending
balance
|
|
$
|
2,192
|
|
|
$
|
2,990
|
|
|
$
|
7,662
|
|
|
$
|
6,786
|
|
|
$
|
827
|
|
|
$
|
1,626
|
|
|
$
|
1,837
|
|
|
$
|
23,920
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Individually evaluated
for impairment
(1)
|
|
$
|
501
|
|
|
$
|
659
|
|
|
$
|
12,423
|
|
|
$
|
12,697
|
|
|
$
|
-
|
|
|
$
|
34,141
|
|
|
$
|
-
|
|
|
$
|
60,421
|
|
Collectively evaluated
for impairment
|
|
|
966,637
|
|
|
|
362,386
|
|
|
|
1,393,796
|
|
|
|
768,321
|
|
|
|
109,401
|
|
|
|
886,516
|
|
|
|
568,314
|
|
|
|
5,055,371
|
|
Acquired
with deteriorated credit quality
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
148,534
|
|
|
|
-
|
|
|
|
148,534
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending
balance
|
|
$
|
967,138
|
|
|
$
|
363,045
|
|
|
$
|
1,406,219
|
|
|
$
|
781,018
|
|
|
$
|
109,401
|
|
|
$
|
1,069,191
|
|
|
$
|
568,314
|
|
|
$
|
5,264,326
|
|
|
(1)
|
At December 31, 2016, loans individually evaluated for impairment includes all nonaccrual loans greater than $100,000 and all
troubled debt restructurings greater than $100,000, including all troubled debt restructurings and not only those currently classified
as troubled debt restructurings.
|
(dollars in thousands)
|
|
Commercial,
Financial &
Agricultural
|
|
|
Real
Estate –
Construction &
Development
|
|
|
Real
Estate –
Commercial &
Farmland
|
|
|
Real
Estate -
Residential
|
|
|
Consumer
Installment
Loans and
Other
|
|
|
Purchased
Loans
|
|
|
Purchased
Loan
Pools
|
|
|
Total
|
|
Three months ended June 30, 2016:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance,
March 31, 2016
|
|
$
|
1,599
|
|
|
$
|
3,925
|
|
|
$
|
7,099
|
|
|
$
|
4,631
|
|
|
$
|
1,939
|
|
|
$
|
983
|
|
|
$
|
1,306
|
|
|
$
|
21,482
|
|
Provision for loan losses
|
|
|
522
|
|
|
|
(438
|
)
|
|
|
664
|
|
|
|
(259
|
)
|
|
|
264
|
|
|
|
243
|
|
|
|
(107
|
)
|
|
|
889
|
|
Loans charged off
|
|
|
(541
|
)
|
|
|
(109
|
)
|
|
|
(361
|
)
|
|
|
(123
|
)
|
|
|
(59
|
)
|
|
|
(183
|
)
|
|
|
-
|
|
|
|
(1,376
|
)
|
Recoveries
of loans previously charged off
|
|
|
87
|
|
|
|
221
|
|
|
|
57
|
|
|
|
14
|
|
|
|
16
|
|
|
|
344
|
|
|
|
-
|
|
|
|
739
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance,
June 30, 2016
|
|
$
|
1,667
|
|
|
$
|
3,599
|
|
|
$
|
7,459
|
|
|
$
|
4,263
|
|
|
$
|
2,160
|
|
|
$
|
1,387
|
|
|
$
|
1,199
|
|
|
$
|
21,734
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six months ended June 30, 2016:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, December 31,
2015
|
|
$
|
1,144
|
|
|
$
|
5,009
|
|
|
$
|
7,994
|
|
|
$
|
4,760
|
|
|
$
|
1,574
|
|
|
$
|
-
|
|
|
$
|
581
|
|
|
$
|
21,062
|
|
Provision for loan losses
|
|
|
1,310
|
|
|
|
(1,489
|
)
|
|
|
(5
|
)
|
|
|
(234
|
)
|
|
|
663
|
|
|
|
707
|
|
|
|
618
|
|
|
|
1,570
|
|
Loans charged off
|
|
|
(947
|
)
|
|
|
(264
|
)
|
|
|
(708
|
)
|
|
|
(591
|
)
|
|
|
(118
|
)
|
|
|
(562
|
)
|
|
|
-
|
|
|
|
(3,190
|
)
|
Recoveries
of loans previously charged off
|
|
|
160
|
|
|
|
343
|
|
|
|
178
|
|
|
|
328
|
|
|
|
41
|
|
|
|
1,242
|
|
|
|
-
|
|
|
|
2,292
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, June 30, 2016
|
|
$
|
1,667
|
|
|
$
|
3,599
|
|
|
$
|
7,459
|
|
|
$
|
4,263
|
|
|
$
|
2,160
|
|
|
$
|
1,387
|
|
|
$
|
1,199
|
|
|
$
|
21,734
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Period-end
allocation:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans individually evaluated
for impairment
(1)
|
|
$
|
137
|
|
|
$
|
690
|
|
|
$
|
997
|
|
|
$
|
2,339
|
|
|
$
|
-
|
|
|
$
|
1,387
|
|
|
$
|
-
|
|
|
$
|
5,550
|
|
Loans
collectively evaluated for impairment
|
|
|
1,530
|
|
|
|
2,909
|
|
|
|
6,462
|
|
|
|
1,924
|
|
|
|
2,160
|
|
|
|
-
|
|
|
|
1,199
|
|
|
|
16,184
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending
balance
|
|
$
|
1,667
|
|
|
$
|
3,599
|
|
|
$
|
7,459
|
|
|
$
|
4,263
|
|
|
$
|
2,160
|
|
|
$
|
1,387
|
|
|
$
|
1,199
|
|
|
$
|
21,734
|
|
Loans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Individually evaluated
for impairment
(1)
|
|
$
|
819
|
|
|
$
|
1,465
|
|
|
$
|
11,870
|
|
|
$
|
10,345
|
|
|
$
|
-
|
|
|
$
|
41,751
|
|
|
$
|
-
|
|
|
$
|
66,250
|
|
Collectively evaluated
for impairment
|
|
|
563,524
|
|
|
|
273,252
|
|
|
|
1,236,710
|
|
|
|
669,888
|
|
|
|
51,198
|
|
|
|
978,135
|
|
|
|
610,425
|
|
|
|
4,383,132
|
|
Acquired
with deteriorated credit quality
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
173,749
|
|
|
|
-
|
|
|
|
173,749
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending
balance
|
|
$
|
564,343
|
|
|
$
|
274,717
|
|
|
$
|
1,248,580
|
|
|
$
|
680,233
|
|
|
$
|
51,198
|
|
|
$
|
1,193,635
|
|
|
$
|
610,425
|
|
|
$
|
4,623,131
|
|
|
(1)
|
At June 30, 2016, loans individually evaluated for impairment includes all nonaccrual loans greater than $100,000 and all troubled
debt restructurings greater than $100,000, including all troubled debt restructurings and not only those currently classified as
troubled debt restructurings.
|
NOTE 5 – ASSETS ACQUIRED IN FDIC-ASSISTED ACQUISITIONS
From October 2009 through July 2012, the
Company participated in ten FDIC-assisted acquisitions whereby the Company purchased certain failed institutions out of the FDIC’s
receivership. These institutions include the following:
Bank Acquired
|
|
Location
|
|
Branches
|
|
Date Acquired
|
American United Bank (“AUB”)
|
|
Lawrenceville, Ga.
|
|
1
|
|
October 23, 2009
|
United Security Bank (“USB”)
|
|
Sparta, Ga.
|
|
2
|
|
November 6, 2009
|
Satilla Community Bank (“SCB”)
|
|
St. Marys, Ga.
|
|
1
|
|
May 14, 2010
|
First Bank of Jacksonville (“FBJ”)
|
|
Jacksonville, Fl.
|
|
2
|
|
October 22, 2010
|
Tifton Banking Company (“TBC”)
|
|
Tifton, Ga.
|
|
1
|
|
November 12, 2010
|
Darby Bank & Trust (“DBT”)
|
|
Vidalia, Ga.
|
|
7
|
|
November 12, 2010
|
High Trust Bank (“HTB”)
|
|
Stockbridge, Ga.
|
|
2
|
|
July 15, 2011
|
One Georgia Bank (“OGB”)
|
|
Midtown Atlanta, Ga.
|
|
1
|
|
July 15, 2011
|
Central Bank of Georgia (“CBG”)
|
|
Ellaville, Ga.
|
|
5
|
|
February 24, 2012
|
Montgomery Bank & Trust (“MBT”)
|
|
Ailey, Ga.
|
|
2
|
|
July 6, 2012
|
The determination of the initial fair values
of loans at the acquisition date and the initial fair values of the related FDIC indemnification assets involves a high degree
of judgment and complexity. The carrying values of the acquired loans and the FDIC indemnification assets reflect management’s
best estimate of the fair value of each of these assets as of the date of acquisition. However, the amount that the Company realizes
on these assets could differ materially from the carrying values reflected in the financial statements included in this report,
based upon the timing and amount of collections on the acquired loans in future periods. Because of the loss-sharing agreements
with the FDIC on these assets, the Company does not expect to incur any significant losses. To the extent the actual values
realized for the acquired loans are different from the estimates, the indemnification assets will generally be affected in an offsetting
manner due to the loss-sharing support from the FDIC.
FASB ASC 310-30,
Loans and Debt Securities
Acquired with Deteriorated Credit Quality
(“ASC 310-30”), applies to a loan with evidence of deterioration of credit
quality since origination, acquired by completion of a transfer for which it is probable, at acquisition, that the investor will
be unable to collect all contractually required payments receivable. ASC 310-30 prohibits carrying over or creating an allowance
for loan losses upon initial recognition for loans which fall under the scope of this statement. At the acquisition dates, a majority
of these loans were valued based on the liquidation value of the underlying collateral because the future cash flows are primarily
based on the liquidation of underlying collateral. There was no allowance for credit losses established related to these ASC
310-30 loans at the acquisition dates, based on the provisions of this statement. Over the life of the acquired loans, the Company
continues to estimate cash flows expected to be collected. If the expected cash flows expected to be collected increases, then
the Company adjusts the amount of accretable discount recognized on a prospective basis over the loan’s remaining life. If
the expected cash flows expected to be collected decreases, then the Company records a provision for loan loss in its consolidated
statements of income and comprehensive income.
Each acquisition with loss-sharing agreements
has separate agreements for the single family residential assets (“SFR”) and the non-single family assets (“NSF”).
The SFR agreements cover losses and recoveries for ten years. The NSF agreements are for eight years. During the first five years,
losses and recoveries are covered. During the final three years, only recoveries, net of expenses, are covered. The AUB SFR agreement
was terminated during 2012 and Ameris received a payment of $87,000. The AUB and USB NSF agreements passed their five-year anniversaries
during the fourth quarter of 2014, the SCB NSF agreement passed its five-year anniversary during the second quarter of 2015, the
FBJ, TBC and DBT NSF agreements passed their five-year anniversaries during the fourth quarter of 2015, the HTB and OGB NSF agreements
passed their five-year anniversaries during the third quarter of 2016, and the CBG NSF passed its five-year anniversary during
the first quarter of 2017. Losses will no longer be reimbursed on these agreements. MBT did not have a loss-sharing agreement.
At June 30, 2017, the Company’s FDIC
loss-sharing payable totaled $8.0 million, which is comprised of an accrued clawback liability of $9.7 million, less $537,000 in
current activity incurred but not yet received from the FDIC (net charge-offs offset by reimbursable expenses) and remaining indemnification
of $1.2 million (for reimbursements associated with anticipated losses in future quarters).
The following table summarizes components
of all covered assets at June 30, 2017 and December 31, 2016 and their origin:
(dollars in thousands)
|
|
Covered
Loans
|
|
|
Less: Fair
Value
Adjustments
|
|
|
Total
Covered
Loans
|
|
|
OREO
|
|
|
Less: Fair
Value
Adjustments
|
|
|
Total
Covered
OREO
|
|
|
Total
Covered
Assets
|
|
|
FDIC Loss-
Share
Receivable
(Payable)
|
|
June 30, 2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AUB
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
USB
|
|
|
2,933
|
|
|
|
12
|
|
|
|
2,921
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
2,921
|
|
|
|
(1,726
|
)
|
SCB
|
|
|
3,230
|
|
|
|
30
|
|
|
|
3,200
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
3,200
|
|
|
|
69
|
|
FBJ
|
|
|
3,682
|
|
|
|
414
|
|
|
|
3,268
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
3,268
|
|
|
|
(302
|
)
|
DBT
|
|
|
10,360
|
|
|
|
406
|
|
|
|
9,954
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
9,954
|
|
|
|
(4,299
|
)
|
TBC
|
|
|
1,708
|
|
|
|
-
|
|
|
|
1,708
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,708
|
|
|
|
(50
|
)
|
HTB
|
|
|
1,885
|
|
|
|
28
|
|
|
|
1,857
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,857
|
|
|
|
(59
|
)
|
OGB
|
|
|
939
|
|
|
|
31
|
|
|
|
908
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
908
|
|
|
|
(1,103
|
)
|
CBG
|
|
|
10,654
|
|
|
|
773
|
|
|
|
9,881
|
|
|
|
215
|
|
|
|
-
|
|
|
|
215
|
|
|
|
10,096
|
|
|
|
(522
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
35,391
|
|
|
$
|
1,694
|
|
|
$
|
33,697
|
|
|
$
|
215
|
|
|
$
|
-
|
|
|
$
|
215
|
|
|
$
|
33,912
|
|
|
$
|
(7,992
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AUB
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
(27
|
)
|
USB
|
|
|
3,199
|
|
|
|
13
|
|
|
|
3,186
|
|
|
|
51
|
|
|
|
-
|
|
|
|
51
|
|
|
|
3,237
|
|
|
|
(1,642
|
)
|
SCB
|
|
|
4,019
|
|
|
|
51
|
|
|
|
3,968
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
3,968
|
|
|
|
(32
|
)
|
FBJ
|
|
|
3,767
|
|
|
|
452
|
|
|
|
3,315
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
3,315
|
|
|
|
(234
|
)
|
DBT
|
|
|
12,166
|
|
|
|
565
|
|
|
|
11,601
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
11,601
|
|
|
|
(4,591
|
)
|
TBC
|
|
|
1,679
|
|
|
|
-
|
|
|
|
1,679
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,679
|
|
|
|
(33
|
)
|
HTB
|
|
|
1,913
|
|
|
|
33
|
|
|
|
1,880
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,880
|
|
|
|
734
|
|
OGB
|
|
|
1,077
|
|
|
|
32
|
|
|
|
1,045
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,045
|
|
|
|
(993
|
)
|
CBG
|
|
|
33,449
|
|
|
|
1,963
|
|
|
|
31,486
|
|
|
|
1,161
|
|
|
|
4
|
|
|
|
1,157
|
|
|
|
32,643
|
|
|
|
505
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
61,269
|
|
|
$
|
3,109
|
|
|
$
|
58,160
|
|
|
$
|
1,212
|
|
|
$
|
4
|
|
|
$
|
1,208
|
|
|
$
|
59,368
|
|
|
$
|
(6,313
|
)
|
The shared-loss agreements are subject
to the servicing procedures as specified in the agreement with the FDIC. The expected reimbursements under the shared-loss agreements
were recorded as an indemnification asset at their estimated fair values on the acquisition dates. As of June 30, 2017 and December
31, 2016, the Company has recorded a clawback liability of $9.7 million and $9.3 million, respectively, which represents the obligation
of the Company to reimburse the FDIC should actual losses be less than certain thresholds established in each loss-share agreement.
Changes in the FDIC shared-loss payable
for the six months ended June 30, 2017 and 2016 are as follows:
(dollars in thousands)
|
|
June 30,
2017
|
|
|
June 30,
2016
|
|
Beginning balance, January 1
|
|
$
|
(6,313
|
)
|
|
$
|
6,301
|
|
Payments received from FDIC
|
|
|
(230
|
)
|
|
|
(4,165
|
)
|
Amortization
|
|
|
(595
|
)
|
|
|
(2,737
|
)
|
Changes in clawback liability
|
|
|
(398
|
)
|
|
|
(345
|
)
|
Increase in receivable due to:
|
|
|
|
|
|
|
|
|
Net recoveries on covered loans
|
|
|
(648
|
)
|
|
|
(929
|
)
|
Loss (gain) on covered other real estate owned
|
|
|
(40
|
)
|
|
|
774
|
|
Reimbursable expenses on covered assets
|
|
|
242
|
|
|
|
429
|
|
Other activity, net
|
|
|
(10
|
)
|
|
|
(1,225
|
)
|
|
|
|
|
|
|
|
|
|
Ending balance
|
|
$
|
(7,992
|
)
|
|
$
|
(1,897
|
)
|
The FDIC loss-sharing payable is included
in other liabilities in the consolidated balance sheets. The FDIC loss-sharing receivable is included in other assets in the consolidated
balance sheets.
NOTE 6. OTHER REAL ESTATE OWNED
The following is a summary of the activity
in other real estate owned during the six months ended June 30, 2017 and 2016:
(dollars in thousands)
|
|
June 30,
2017
|
|
|
June 30,
2016
|
|
Beginning balance, January 1
|
|
$
|
10,874
|
|
|
$
|
16,147
|
|
Loans transferred to other real estate owned
|
|
|
3,347
|
|
|
|
1,499
|
|
Net gains (losses) on sale and write-downs recorded in statement of income
|
|
|
(553
|
)
|
|
|
(1,057
|
)
|
Sales proceeds
|
|
|
(2,185
|
)
|
|
|
(2,824
|
)
|
|
|
|
|
|
|
|
|
|
Ending balance
|
|
$
|
11,483
|
|
|
$
|
13,765
|
|
The following is a summary of the activity
in purchased other real estate owned during the six months ended June 30, 2017 and 2016:
(dollars in thousands)
|
|
June 30,
2017
|
|
|
June 30,
2016
|
|
Beginning balance, January 1
|
|
$
|
12,540
|
|
|
$
|
19,344
|
|
Loans transferred to other real estate owned
|
|
|
3,281
|
|
|
|
3,420
|
|
Acquired in acquisitions
|
|
|
-
|
|
|
|
1,838
|
|
Portion of gains (losses) on sale and write-downs payable to (receivable from) the FDIC under loss-sharing agreements
|
|
|
40
|
|
|
|
-
|
|
Net gains (losses) on sale and write-downs recorded in statement of income
|
|
|
819
|
|
|
|
(938
|
)
|
Sales proceeds
|
|
|
(5,350
|
)
|
|
|
(6,994
|
)
|
|
|
|
|
|
|
|
|
|
Ending balance
|
|
$
|
11,330
|
|
|
$
|
16,670
|
|
NOTE 7 – SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE
The Company classifies the sales of securities under agreements
to repurchase as short-term borrowings. The amounts received under these agreements are reflected as a liability in the Company’s
consolidated balance sheets and the securities underlying these agreements are included in investment securities in the Company’s
consolidated balance sheets. At June 30, 2017 and December 31, 2016, all securities sold under agreements to repurchase mature
on a daily basis. The market value of the securities fluctuate on a daily basis due to market conditions. The Company monitors
the market value of the securities underlying these agreements on a daily basis and is required to transfer additional securities
if the market value of the securities fall below the repurchase agreement price. The Company maintains an unpledged securities
portfolio that it believes is sufficient to protect against a decline in the market value of the securities sold under agreements
to repurchase.
The following is a summary of the Company’s securities
sold under agreements to repurchase at June 30, 2017 and December 31, 2016:
(dollars
in thousands)
|
|
June 30,
2017
|
|
|
December 31,
2016
|
|
Securities sold under agreements to repurchase
|
|
$
|
18,400
|
|
|
$
|
53,505
|
|
At June 30, 2017 and December 31, 2016,
the investment securities underlying these agreements were comprised of state, county and municipal securities and mortgage-backed
securities.
NOTE 8 – OTHER BORROWINGS
The Company has, from time to time, utilized
certain borrowing arrangements to fund growth in earning assets or provide additional liquidity when appropriate spreads can be
realized. At June 30, 2017 and December 31, 2016, there were $679.6 million and $492.3 million, respectively, in outstanding
other borrowings.
Other borrowings consist of the following:
(dollars in thousands)
|
|
June 30,
2017
|
|
|
December 31,
2016
|
|
FHLB borrowings:
|
|
|
|
|
|
|
|
|
Daily Rate Credit from FHLB with a variable interest rate (1.32% at June 30, 2017 and 0.80% at December 31, 2016)
|
|
$
|
254,000
|
|
|
$
|
150,000
|
|
Advance from FHLB due July 7, 2017; fixed interest rate of 1.07%
|
|
|
350,000
|
|
|
|
-
|
|
Advance from FHLB due January 6, 2017; fixed interest rate of 0.56%
|
|
|
-
|
|
|
|
292,500
|
|
Advance from FHLB due January 9, 2017; fixed interest rate of 1.40%
|
|
|
-
|
|
|
|
4,002
|
|
Advance from FHLB due May 30, 2017; fixed interest rate of 1.23%
|
|
|
-
|
|
|
|
5,006
|
|
Subordinated notes payable:
|
|
|
|
|
|
|
|
|
Subordinated notes payable due March 15, 2027 net of unamortized debt issuance cost of $1,270; fixed interest rate of 5.75% through March 14, 2022; variable interest rate thereafter at three-month LIBOR plus 3.616%
|
|
|
73,730
|
|
|
|
-
|
|
Other debt:
|
|
|
|
|
|
|
|
|
Advance from correspondent bank due October 5, 2019; secured by a loan receivable; fixed interest rate of 4.25%
|
|
|
63
|
|
|
|
77
|
|
Advance from correspondent bank due September 5, 2026; secured by a loan receivable; fixed interest rate of 2.09%
|
|
|
1,798
|
|
|
|
1,886
|
|
Advances under revolving credit agreement with a regional bank due September 26, 2017; secured by subsidiary bank stock; variable interest rate at 90-day LIBOR plus 3.50% (4.43% at December 31, 2016)
|
|
|
-
|
|
|
|
38,000
|
|
Advances under revolving credit agreement with a regional bank due January 7, 2017; fixed interest rate of 8.00%
|
|
|
-
|
|
|
|
850
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
679,591
|
|
|
$
|
492,321
|
|
The advances from the FHLB are collateralized
by a blanket lien on all first mortgage loans and other specific loans in addition to FHLB stock. At June 30, 2017, $560.3 million
was available for borrowing on lines with the FHLB.
At June 30, 2017, $60.0 million was available
for borrowing under the revolving credit agreement with a regional bank, secured by subsidiary bank stock.
As of June 30, 2017, the Company maintained
credit arrangements with various financial institutions to purchase federal funds up to $82.0 million.
The Company also participates in the Federal
Reserve discount window borrowings program. At June 30, 2017, the Company had $989.9 million of loans pledged at the Federal Reserve
discount window and had $644.3 million available for borrowing.
Subordinated Notes Payable
On March 13, 2017, the Company
completed
the public offering and sale of $75.0 million in aggregate principal amount of its 5.75% Fixed-To-Floating Rate Subordinated Notes
due 2027 (the “subordinated notes”). The subordinated notes were sold to the public at par pursuant to an underwriting
agreement and were issued pursuant to an indenture and a supplemental indenture. The subordinated notes will mature on March 15,
2027 and through March 14, 2022 will bear a fixed rate of interest of 5.75% per annum, payable semi-annually in arrears on September
15 and March 15 of each year. Beginning
March 15, 2022, the interest rate on the subordinated notes resets quarterly to
a floating rate per annum equal to the then-current three-month LIBOR plus 3.616%, payable quarterly in arrears on June 15, September
15, December 15, and March 15 of each year to the maturity date or earlier redemption.
On any scheduled interest payment date
beginning March 15, 2022, the Company may, at its option, redeem the subordinated notes, in whole or in part, at a redemption price
equal to 100% of the principal amount plus accrued and unpaid interest.
The subordinated notes are unsecured and
rank equally with all other unsecured subordinated indebtedness of the Company, including any subordinated indebtedness issued
in the future under the indenture governing the subordinated notes. The subordinated notes are subordinated in right of payment
to all senior indebtedness of the Company. The subordinated notes are obligations of the Company only and are not guaranteed by
any subsidiaries, including the Bank. Additionally, the subordinated notes are structurally subordinated to all existing and future
indebtedness and other liabilities of the Company’s subsidiaries, meaning that creditors of the Company’s subsidiaries
(including, in the case of the Bank, its depositors) generally will be paid from those subsidiaries’ assets before holders
of the subordinated notes have any claim to those assets.
For regulatory capital adequacy purposes,
the subordinated notes qualify as Tier 2 capital for the Company. If in the future the subordinated notes no longer qualify as
Tier 2 capital, the subordinated notes may be redeemed by the Company at a redemption price equal to 100% of the principal amount
plus accrued and unpaid interest, subject to prior approval by the Board of Governors of the Federal Reserve System.
NOTE 9 – COMMITMENTS AND CONTINGENCIES
Loan Commitments
The Company is a party to financial instruments
with off-balance-sheet risk in the normal course of business to meet the financing needs of its customers. These financial
instruments include commitments to extend credit and standby letters of credit. They involve, to varying degrees, elements
of credit risk and interest rate risk in excess of the amount recognized in the Company’s balance sheets.
The Company’s exposure to credit
loss is represented by the contractual amount of those instruments. The Company uses the same credit policies in making commitments
and conditional obligations as it does for on-balance-sheet instruments.
A summary of the Company’s commitments
is as follows:
(dollars in thousands)
|
|
June 30,
2017
|
|
|
December 31,
2016
|
|
Commitments to extend credit
|
|
$
|
1,042,343
|
|
|
$
|
1,101,257
|
|
Unused home equity lines of credit
|
|
|
64,561
|
|
|
|
62,586
|
|
Financial standby letters of credit
|
|
|
12,928
|
|
|
|
14,257
|
|
Mortgage interest rate lock commitments
|
|
|
138,325
|
|
|
|
91,426
|
|
Mortgage forward contracts with positive fair value
|
|
|
149,250
|
|
|
|
150,000
|
|
Commitments to extend credit are agreements
to lend to a customer as long as there is no violation of any condition established in the contract. These commitments, predominantly
at variable interest rates, generally have fixed expiration dates of one year or less or other termination clauses and may require
payment of a fee. Since many of the commitments are expected to expire without being drawn upon, the total commitment amounts
do not necessarily represent future cash requirements. The amount of collateral obtained, if deemed necessary by the Company
upon extension of credit, is based on management’s credit evaluation of the customer.
Standby letters of credit are conditional
commitments issued by the Company to guarantee the performance of a customer to a third party. Those guarantees are primarily
issued to support public and private borrowing arrangements. The credit risk involved in issuing letters of credit is essentially
the same as that involved in extending loans to customers. Collateral is required in instances which the Company deems necessary.
Other Commitments
As of June 30, 2017, a $75.0 million letter
of credit issued by the FHLB was used to guarantee the Bank’s performance related to public fund deposit balances.
Contingencies
Certain conditions may exist as of the
date the financial statements are issued, which may result in a loss to the Company but which will only be resolved when one or
more future events occur or fail to occur. The Company’s management and its legal counsel assess such contingent liabilities,
and such assessment inherently involves an exercise of judgment. In assessing loss contingencies related to legal proceedings that
are pending against the Company or unasserted claims that may result in such proceedings, the Company’s legal counsel evaluates
the perceived merits of any legal proceedings or unasserted claims as well as the perceived merits of the amount of relief sought
or expected to be sought therein.
If the assessment of a contingency indicates
that it is probable that a material loss has been incurred and the amount of the liability can be estimated, then the estimated
liability would be accrued in the Company’s financial statements. If the assessment indicates that a potentially material
loss contingency is not probable, but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent
liability, together with an estimate of the range of possible loss if determinable and material, would be disclosed.
Loss contingencies considered remote are
generally not disclosed unless they involve guarantees, in which case the nature of the guarantee would be disclosed.
A former borrower of the Company has filed a claim related to
a loan previously made by the Company asserting lender liability. The case was tried without a jury and a judgment was issued
by the court against the Company awarding the borrower approximately $2.9 million on August 8, 2013. The judgment was appealed
to the South Carolina Court of Appeals. On May 24, 2017, the Court of Appeals filed its decision and unanimously found in
favor of the Company and reversed the trial court judgment. The plaintiff has a filed a petition for rehearing with the Court of
Appeals. The Company believes the likelihood the Court of Appeals will rehear the case is not probable, and, accordingly
the Company does not expect to incur any loss as a result of this case. Accordingly, the Company has not established any
reserves related to this legal matter. In the event that the Company's assumptions used to evaluate this matter as neither probable
nor estimable change in future periods, it may be required to record a liability for an adverse outcome.
NOTE 10 – SHAREHOLDERS’ EQUITY
On January 18, 2017, the Company issued
128,572 unregistered shares of its common stock to William J. Villari in exchange for 4.99% of the outstanding shares of common
stock of USPF. A registration statement was filed with the Securities and Exchange Commission on February 13, 2017 to register
the resale or other disposition of these shares. The issuance of the 128,572 common shares was valued at $45.45 per share, resulting
in an increase in shareholders’ equity of $5.8 million. For additional information regarding the investment in USPF, see
Note 2.
On March 6, 2017, the Company completed
an underwritten public offering of 2,012,500 shares of the Company’s common stock at a price to the public of $46.50 per
share. The Company received net proceeds from the issuance of approximately $88.7 million, after deducting $4.9 million in underwriting
discounts and commissions and other issuance costs.
In March 2017, the Company made a capital
contribution to the Bank in the amount of $110.0 million, using the net proceeds of the March 6, 2017 issuance of common stock
as well as a portion of the net proceeds of the March 13, 2017 issuance of the Company’s 5.75% Fixed-To-Floating Rate Subordinated
Notes due 2027 discussed in Note 8.
NOTE 11 – ACCUMULATED OTHER
COMPREHENSIVE INCOME
Accumulated other comprehensive income
for the Company consists of changes in net unrealized gains and losses on investment securities available for sale and an interest
rate swap derivative designated as a cash flow hedge. The following tables present a summary of the accumulated other comprehensive
income balances, net of tax, as of June 30, 2017 and 2016:
(dollars in thousands)
|
|
Unrealized
Gain (Loss)
on Derivatives
|
|
|
Unrealized
Gain (Loss)
on Securities
|
|
|
Accumulated
Other Comprehensive
Income (Loss)
|
|
Balance, January 1, 2017
|
|
$
|
176
|
|
|
$
|
(1,234
|
)
|
|
$
|
(1,058
|
)
|
Reclassification for gains included in net income, net of tax
|
|
|
-
|
|
|
|
(24
|
)
|
|
|
(24
|
)
|
Current year changes, net of tax
|
|
|
(63
|
)
|
|
|
2,566
|
|
|
|
2,503
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, June 30, 2017
|
|
$
|
113
|
|
|
$
|
1,308
|
|
|
$
|
1,421
|
|
(dollars
in thousands)
|
|
Unrealized
Gain (Loss)
on Derivatives
|
|
|
Unrealized
Gain (Loss)
on Securities
|
|
|
Accumulated
Other Comprehensive
Income (Loss)
|
|
Balance, January 1, 2016
|
|
$
|
152
|
|
|
$
|
3,201
|
|
|
$
|
3,353
|
|
Reclassification for gains included in net income, net of tax
|
|
|
-
|
|
|
|
(61
|
)
|
|
|
(61
|
)
|
Current year changes, net of tax
|
|
|
(808
|
)
|
|
|
10,476
|
|
|
|
9,668
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, June 30, 2016
|
|
$
|
(656
|
)
|
|
$
|
13,616
|
|
|
$
|
12,960
|
|
NOTE 12 – WEIGHTED AVERAGE SHARES OUTSTANDING
Earnings per share have been computed based on the following
weighted average number of common shares outstanding:
|
|
For the Three Months
Ended June 30,
|
|
|
For the Six Months
Ended June 30,
|
|
(share data in thousands)
|
|
2017
|
|
|
2016
|
|
|
2017
|
|
|
2016
|
|
Average common shares outstanding
|
|
|
37,163
|
|
|
|
34,833
|
|
|
|
36,418
|
|
|
|
33,792
|
|
Common share equivalents:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock options
|
|
|
73
|
|
|
|
117
|
|
|
|
73
|
|
|
|
113
|
|
Nonvested restricted share grants
|
|
|
253
|
|
|
|
203
|
|
|
|
253
|
|
|
|
202
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average common shares outstanding, assuming dilution
|
|
|
37,489
|
|
|
|
35,153
|
|
|
|
36,744
|
|
|
|
34,107
|
|
For the three and six-month periods ended
June 30, 2017 and 2016, there were no potential common shares with strike prices that would cause them to be anti-dilutive.
NOTE 13 – FAIR VALUE MEASURES
The fair value of an asset or liability
is the current amount that would be exchanged between willing parties, other than in a forced liquidation. Fair value is best
determined based upon quoted market prices. However, in many instances, there are no quoted market prices for the Company’s
various assets and liabilities. In cases where quoted market prices are not available, fair value is based on discounted cash
flows or other valuation techniques. These techniques are significantly affected by the assumptions used, including the discount
rate and estimates of future cash flows. Accordingly, the fair value estimates may not be realized in an immediate settlement
of the asset or liability. The accounting standard for disclosures about the fair value measures excludes certain financial
instruments and all nonfinancial instruments from its disclosure requirements. Accordingly, the aggregate fair value amounts
presented may not necessarily represent the underlying fair value of the Company.
The Company’s loans held for sale
are carried at fair value and are comprised of the following:
(dollars in thousands)
|
|
June 30,
2017
|
|
|
December 31,
2016
|
|
Mortgage loans held for sale
|
|
$
|
123,119
|
|
|
$
|
105,924
|
|
SBA loans held for sale
|
|
|
23,647
|
|
|
|
-
|
|
Total loans held for sale
|
|
$
|
146,766
|
|
|
$
|
105,924
|
|
The Company has elected to record mortgage
loans held for sale at fair value in order to eliminate the complexities and inherent difficulties of achieving hedge accounting
and to better align reported results with the underlying economic changes in value of the loans and related hedge instruments.
This election impacts the timing and recognition of origination fees and costs, as well as servicing value, which are now recognized
in earnings at the time of origination. Interest income on mortgage loans held for sale is recorded on an accrual basis in the
consolidated statements of income and comprehensive income under the heading interest income – interest and fees on loans.
The servicing value is included in the fair value of the interest rate lock commitments (“IRLCs”) with borrowers. The
mark to market adjustments related to mortgage loans held for sale and the associated economic hedges are captured in mortgage
banking activities. Net gains of $4.2 million and $3.9 million resulting from fair value changes of these mortgage loans were recorded
in income during the six months ended June 30, 2017 and 2016, respectively. The amount does not reflect changes in fair values
of related derivative instruments used to hedge exposure to market-related risks associated with these mortgage loans. The change
in fair value of both mortgage loans held for sale and the related derivative instruments are recorded in mortgage banking activity
in the consolidated statements of income and comprehensive income. The Company’s valuation of mortgage loans held for sale
incorporates an assumption for credit risk; however, given the short-term period that the Company holds these loans, valuation
adjustments attributable to instrument-specific credit risk is nominal.
The following table summarizes the difference
between the fair value and the principal balance for mortgage loans held for sale measured at fair value as of June 30, 2017 and
December 31, 2016:
(dollars
in thousands)
|
|
June 30,
2017
|
|
|
December 31,
2016
|
|
Aggregate fair value of mortgage loans held for sale
|
|
$
|
123,119
|
|
|
$
|
105,924
|
|
Aggregate unpaid principal balance
|
|
|
118,900
|
|
|
|
103,691
|
|
Past-due loans of 90 days or more
|
|
|
-
|
|
|
|
-
|
|
Nonaccrual loans
|
|
|
-
|
|
|
|
-
|
|
The Company utilizes fair value measurements
to record fair value adjustments to certain assets and liabilities and to determine fair value disclosures. Securities available
for sale, mortgage loans held for sale and derivatives are recorded at fair value on a recurring basis. From time to time, the
Company may be required to record at fair value other assets on a nonrecurring basis, such as impaired loans and OREO. Additionally,
the Company is required to disclose, but not record, the fair value of other financial instruments.
Fair Value Hierarchy
The Company groups assets and liabilities
at fair value in three levels, based on the markets in which the assets and liabilities are traded and the reliability of the assumptions
used to determine fair value. These levels are:
Level 1
–
Quoted prices
in active markets for identical assets or liabilities.
Level 2
–
Observable
inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not
active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of
the assets or liabilities.
Level 3
–
Unobservable
inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.
The following methods and assumptions were
used by the Company in estimating the fair value of its assets and liabilities recorded at fair value and for estimating the fair
value of its financial instruments:
Cash, Due From Banks, Federal Funds
Sold and Interest-Bearing Accounts:
The carrying amount of cash, due from banks, federal funds sold and interest-bearing deposits
in banks approximates fair value.
Investment Securities Available for
Sale:
The fair value of securities available for sale is determined by various valuation methodologies. Where quoted market
prices are available in an active market, securities are classified within Level 1 of the valuation hierarchy. If quoted market
prices are not available, then fair values are estimated by using pricing models, quoted prices of securities with similar characteristics,
or discounted cash flows. Level 2 securities include certain U.S. agency bonds, mortgage-backed securities, collateralized
mortgage and debt obligations, and municipal securities. The Level 2 fair value pricing is provided by an independent third
party and is based upon similar securities in an active market. In certain cases where Level 1 or Level 2 inputs are not available,
securities are classified within Level 3 of the hierarchy and include certain residual municipal securities and other less liquid
securities.
Other Investments:
FHLB stock, Federal
Reserve Bank stock and the Company’s minority equity investment in USPF are included in other investment securities at original
cost basis. These investments do not have readily determinable fair values and are carried at original cost basis. It is not practical
to determine the fair value of these investments due to restrictions placed on transferability. These investments are periodically
evaluated for impairment based on ultimate recovery of par value or cost basis. Cost basis approximates fair value for these investments.
Loans Held for Sale:
The Company
records loans held for sale at fair value. The fair value of loans held for sale is determined on outstanding commitments from
third party investors in the secondary markets and is classified within Level 2 of the valuation hierarchy.
Loans:
The carrying amount of variable-rate
loans that reprice frequently and have no significant change in credit risk approximates fair value. The fair value of fixed-rate
loans is estimated based on discounted contractual cash flows, using interest rates currently being offered for loans with similar
terms to borrowers with similar credit quality. The fair value of impaired loans is estimated based on discounted contractual
cash flows or underlying collateral values, where applicable. A loan is determined to be impaired if the Company believes it is
probable that all principal and interest amounts due according to the terms of the note will not be collected as scheduled. The
fair value of impaired loans is determined in accordance with ASC 310-10,
Accounting by Creditors for Impairment of a Loan
,
and generally results in a specific reserve established through a charge to the provision for loan losses. Losses on impaired loans
are charged to the allowance when management believes the uncollectability of a loan is confirmed. Management has determined
that the majority of impaired loans are Level 3 assets due to the extensive use of market appraisals.
Other Real Estate Owned:
The fair
value of other real estate owned (“OREO”) is determined using certified appraisals, internal evaluations and broker
price opinions that value the property at its highest and best uses by applying traditional valuation methods common to the
industry. The Company does not hold any OREO for profit purposes and all other real estate is actively marketed for sale. In
most cases, management has determined that additional write-downs are required beyond what is calculable from the appraisal to
carry the property at levels that would attract buyers. Because this additional write-down is not based on observable inputs, management
has determined that other real estate owned should be classified as Level 3.
Intangible Assets:
Intangible assets
consist of core deposit premiums acquired in connection with business combinations and are based on the established value of acquired
customer deposits. The core deposit premium is initially recognized based on a valuation performed as of the consummation
date and is amortized over an estimated useful life of seven to ten years.
FDIC Loss-Share Receivable/Payable:
Because the FDIC will reimburse the Company for certain acquired loans should the Company experience a loss, an indemnification
asset is recorded at fair value at the acquisition date. The indemnification asset is recognized at the same time as the indemnified
loans, and measured on the same basis, subject to collectability or contractual limitations. The shared loss agreements on the
acquisition date reflect the reimbursements expected to be received from the FDIC, using an appropriate discount rate, which reflects
counterparty credit risk and other uncertainties. The shared loss agreements continue to be measured on the same basis as the related
indemnified loans, and the loss-share receivable/payable is impacted by changes in estimated cash flows associated with these loans.
Accrued Interest Receivable/Payable:
The
carrying amount of accrued interest receivable and accrued interest payable approximates fair value.
Cash Value of Bank Owned Life Insurance:
The carrying value of cash value of bank owned life insurance approximates fair value.
Deposits:
The carrying amount of
demand deposits, savings deposits and variable-rate certificates of deposit approximates fair value. The fair value of fixed-rate
certificates of deposit is estimated based on discounted contractual cash flows using interest rates currently being offered for
certificates of similar maturities.
Securities Sold under Agreements to
Repurchase and Other Borrowings:
The carrying amount of variable rate borrowings and securities sold under repurchase
agreements approximates fair value and are classified as Level 1. The fair value of fixed rate other borrowings is estimated
based on discounted contractual cash flows using the current incremental borrowing rates for similar borrowing arrangements and
are classified as Level 2.
Subordinated Deferrable Interest Debentures:
The fair value of the Company’s trust preferred securities is based primarily upon discounted cash flows using rates
for securities with similar terms and remaining maturities and are classified as Level 2.
Off-Balance-Sheet Instruments:
Because
commitments to extend credit and standby letters of credit are typically made using variable rates and have short maturities, the
carrying value and fair value are immaterial for disclosure.
Derivatives:
The Company has entered
into derivative financial instruments to manage interest rate risk. The valuation of these instruments is determined using widely
accepted valuation techniques including discounted cash flow analysis on the expected cash flows of the derivatives. This analysis
reflects the contractual terms of the derivative, including the period to maturity, and uses observable market-based inputs, including
interest rate curves and implied volatilities. The fair value of the derivatives is determined using the market standard methodology
of netting the discounted future fixed cash receipts and the discounted expected variable cash payments. The variable cash payments
are based on an expectation of future interest rates (forward curves derived from observable market interest rate curves).
The Company incorporates credit valuation
adjustments to appropriately reflect both its own nonperformance risk and the respective counterparty’s nonperformance risk
in the fair value measurements. In adjusting the fair value of its derivative contracts for the effect of nonperformance risk,
the Company has considered the impact of netting any applicable credit enhancements such as collateral postings, thresholds, mutual
puts and guarantees.
Although the Company has determined that
the majority of the inputs used to value its derivative fall within Level 2 of the fair value hierarchy, the credit valuation adjustments
associated with its derivatives utilize Level 3 inputs, such as estimates of current credit spreads to evaluate the likelihood
of default by itself or the counterparty. However, as of June 30, 2017 and December 31, 2016, the Company has assessed the
significance of the impact of the credit valuation adjustments on the overall valuation of its derivative positions and has determined
that the credit valuation adjustment is not significant to the overall valuation of its derivatives. As a result, the Company has
determined that its derivative valuation in its entirety is classified in Level 2 of the fair value hierarchy.
The following table presents the fair value measurements of
assets and liabilities measured at fair value on a recurring basis and the level within the fair value hierarchy in which the fair
value measurements fall as of June 30, 2017 and December 31, 2016:
|
|
Fair Value Measurements on a Recurring Basis
As of June 30, 2017
|
|
(dollars in thousands)
|
|
Fair Value
|
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
Financial assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. government sponsored agencies
|
|
$
|
1,009
|
|
|
$
|
-
|
|
|
$
|
1,009
|
|
|
$
|
-
|
|
State, county and municipal securities
|
|
|
145,108
|
|
|
|
-
|
|
|
|
145,108
|
|
|
|
-
|
|
Corporate debt securities
|
|
|
47,612
|
|
|
|
-
|
|
|
|
46,112
|
|
|
|
1,500
|
|
Mortgage-backed securities
|
|
|
624,964
|
|
|
|
-
|
|
|
|
624,964
|
|
|
|
-
|
|
Loans held for sale
|
|
|
146,766
|
|
|
|
-
|
|
|
|
146,766
|
|
|
|
-
|
|
Mortgage banking derivative instruments
|
|
|
4,899
|
|
|
|
-
|
|
|
|
4,899
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total recurring assets at fair value
|
|
$
|
970,358
|
|
|
$
|
-
|
|
|
$
|
968,858
|
|
|
$
|
1,500
|
|
Financial liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative financial instruments
|
|
$
|
867
|
|
|
$
|
-
|
|
|
$
|
867
|
|
|
$
|
-
|
|
Mortgage banking derivative instruments
|
|
|
306
|
|
|
|
-
|
|
|
|
306
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total recurring liabilities at fair value
|
|
$
|
1,173
|
|
|
$
|
-
|
|
|
$
|
1,173
|
|
|
$
|
-
|
|
|
|
Fair Value Measurements on a Recurring Basis
As of December 31, 2016
|
|
(dollars in thousands)
|
|
Fair Value
|
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
Financial assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. government sponsored agencies
|
|
$
|
1,020
|
|
|
$
|
-
|
|
|
$
|
1,020
|
|
|
$
|
-
|
|
State, county and municipal securities
|
|
|
152,035
|
|
|
|
-
|
|
|
|
152,035
|
|
|
|
-
|
|
Corporate debt securities
|
|
|
32,172
|
|
|
|
-
|
|
|
|
30,672
|
|
|
|
1,500
|
|
Mortgage-backed securities
|
|
|
637,508
|
|
|
|
-
|
|
|
|
637,508
|
|
|
|
-
|
|
Loans held for sale
|
|
|
105,924
|
|
|
|
-
|
|
|
|
105,924
|
|
|
|
-
|
|
Mortgage banking derivative instruments
|
|
|
4,314
|
|
|
|
-
|
|
|
|
4,314
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total recurring assets at fair value
|
|
$
|
932,973
|
|
|
$
|
-
|
|
|
$
|
931,473
|
|
|
$
|
1,500
|
|
Financial liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative financial instruments
|
|
$
|
978
|
|
|
$
|
-
|
|
|
$
|
978
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total recurring liabilities at fair value
|
|
$
|
978
|
|
|
$
|
-
|
|
|
$
|
978
|
|
|
$
|
-
|
|
The following table presents the fair value
measurements of assets measured at fair value on a non-recurring basis, as well as the general classification of such instruments
pursuant to the valuation hierarchy as of June 30, 2017 and December 31, 2016:
|
|
Fair Value Measurements on a Nonrecurring Basis
|
|
(dollars in thousands)
|
|
Fair Value
|
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
June 30, 2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Impaired loans carried at fair value
|
|
$
|
26,605
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
26,605
|
|
Other real estate owned
|
|
|
453
|
|
|
|
-
|
|
|
|
-
|
|
|
|
453
|
|
Purchased other real estate owned
|
|
|
11,330
|
|
|
|
-
|
|
|
|
-
|
|
|
|
11,330
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total nonrecurring assets at fair value
|
|
$
|
38,388
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
38,388
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Impaired loans carried at fair value
|
|
$
|
28,253
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
28,253
|
|
Other real estate owned
|
|
|
1,172
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,172
|
|
Purchased other real estate owned
|
|
|
12,540
|
|
|
|
-
|
|
|
|
-
|
|
|
|
12,540
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total nonrecurring assets at fair value
|
|
$
|
41,965
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
41,965
|
|
The inputs used to determine estimated
fair value of impaired loans include market conditions, loan terms, underlying collateral characteristics and discount rates. The
inputs used to determine fair value of other real estate owned include market conditions, estimated marketing period or holding
period, underlying collateral characteristics and discount rates.
For the six months ended June 30, 2017
and the year ended December 31, 2016, there was not a change in the methods and significant assumptions used to estimate fair value.
The following table shows significant unobservable
inputs used in the fair value measurement of Level 3 assets and liabilities:
(dollars in thousands)
|
|
Fair Value
|
|
|
Valuation Technique
|
|
Unobservable Inputs
|
|
Range of
Discounts
|
|
|
Weighted
Average
Discount
|
|
|
|
|
|
June 30, 2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Recurring:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment securities available for sale
|
|
$
|
1,500
|
|
|
Discounted par values
|
|
Credit quality of underlying issuer
|
|
|
0%
|
|
|
|
0%
|
|
Nonrecurring:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Impaired loans
|
|
$
|
26,605
|
|
|
Third-party appraisals and discounted cash flows
|
|
Collateral discounts and discount rates
|
|
|
11% - 100%
|
|
|
|
29%
|
|
Other real estate owned
|
|
$
|
453
|
|
|
Third-party appraisals, sales contracts, broker price opinions
|
|
Collateral discounts and estimated costs to sell
|
|
|
15% - 45%
|
|
|
|
17%
|
|
Purchased other real estate owned
|
|
$
|
11,330
|
|
|
Third-party appraisals
|
|
Collateral discounts and estimated costs to sell
|
|
|
10% - 74%
|
|
|
|
14%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Recurring:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment securities available for sale
|
|
$
|
1,500
|
|
|
Discounted par values
|
|
Credit quality of underlying issuer
|
|
|
0%
|
|
|
|
0%
|
|
Nonrecurring:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Impaired loans
|
|
$
|
28,253
|
|
|
Third-party appraisals and discounted cash flows
|
|
Collateral discounts and discount rates
|
|
|
15% - 100%
|
|
|
|
28%
|
|
Other real estate owned
|
|
$
|
1,172
|
|
|
Third-party appraisals, sales contracts, broker price opinions
|
|
Collateral discounts and estimated costs to sell
|
|
|
15% - 74%
|
|
|
|
22%
|
|
Purchased other real estate owned
|
|
$
|
12,540
|
|
|
Third-party appraisals
|
|
Collateral discounts and estimated costs to sell
|
|
|
10% - 74%
|
|
|
|
15%
|
|
The carrying amount and estimated fair
value of the Company’s financial instruments, not shown elsewhere in these financial statements, were as follows:
|
|
|
|
|
Fair Value Measurements at June 30, 2017 Using:
|
|
(dollars in thousands)
|
|
Carrying
Amount
|
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
Total
|
|
Financial assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and due from banks
|
|
$
|
139,500
|
|
|
$
|
139,500
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
139,500
|
|
Federal funds sold and interest-bearing accounts
|
|
|
137,811
|
|
|
|
137,811
|
|
|
|
-
|
|
|
|
-
|
|
|
|
137,811
|
|
Loans, net
|
|
|
5,619,135
|
|
|
|
-
|
|
|
|
-
|
|
|
|
5,609,246
|
|
|
|
5,609,246
|
|
Accrued interest receivable
|
|
|
22,006
|
|
|
|
22,006
|
|
|
|
-
|
|
|
|
-
|
|
|
|
22,006
|
|
Financial liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deposits
|
|
$
|
5,793,397
|
|
|
$
|
-
|
|
|
$
|
5,793,319
|
|
|
$
|
-
|
|
|
$
|
5,793,319
|
|
Securities sold under agreements to repurchase
|
|
|
18,400
|
|
|
|
18,400
|
|
|
|
-
|
|
|
|
-
|
|
|
|
18,400
|
|
Other borrowings
|
|
|
679,591
|
|
|
|
-
|
|
|
|
680,861
|
|
|
|
-
|
|
|
|
680,861
|
|
Subordinated deferrable interest debentures
|
|
|
84,889
|
|
|
|
-
|
|
|
|
69,471
|
|
|
|
-
|
|
|
|
69,471
|
|
FDIC loss-share payable
|
|
|
7,992
|
|
|
|
-
|
|
|
|
-
|
|
|
|
9,014
|
|
|
|
9,014
|
|
Accrued interest payable
|
|
|
3,167
|
|
|
|
3,167
|
|
|
|
-
|
|
|
|
-
|
|
|
|
3,167
|
|
|
|
|
|
|
Fair Value Measurements at December 31, 2016 Using:
|
|
(dollars in thousands)
|
|
Carrying
Amount
|
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
Total
|
|
Financial assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and due from banks
|
|
$
|
127,164
|
|
|
$
|
127,164
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
127,164
|
|
Federal funds sold and interest-bearing accounts
|
|
|
71,221
|
|
|
|
71,221
|
|
|
|
-
|
|
|
|
-
|
|
|
|
71,221
|
|
Loans, net
|
|
|
5,212,153
|
|
|
|
-
|
|
|
|
-
|
|
|
|
5,236,034
|
|
|
|
5,236,034
|
|
Accrued interest receivable
|
|
|
22,278
|
|
|
|
22,278
|
|
|
|
-
|
|
|
|
-
|
|
|
|
22,278
|
|
Financial liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deposits
|
|
$
|
5,575,163
|
|
|
$
|
-
|
|
|
$
|
5,575,288
|
|
|
$
|
-
|
|
|
$
|
5,575,288
|
|
Securities sold under agreements to repurchase
|
|
|
53,505
|
|
|
|
53,505
|
|
|
|
-
|
|
|
|
-
|
|
|
|
53,505
|
|
Other borrowings
|
|
|
492,321
|
|
|
|
-
|
|
|
|
492,321
|
|
|
|
-
|
|
|
|
492,321
|
|
Subordinated deferrable interest debentures
|
|
|
84,228
|
|
|
|
-
|
|
|
|
67,321
|
|
|
|
-
|
|
|
|
67,321
|
|
FDIC loss-share payable
|
|
|
6,313
|
|
|
|
-
|
|
|
|
-
|
|
|
|
8,243
|
|
|
|
8,243
|
|
Accrued interest payable
|
|
|
1,501
|
|
|
|
1,501
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,501
|
|
NOTE 14 – SEGMENT REPORTING
The Company has the following five reportable
segments: Banking Division, Retail Mortgage Division, Warehouse Lending Division, SBA Division and Premium Finance Division. The
Banking Division derives its revenues from the delivery of full-service financial services, including commercial loans, consumer
loans and deposit accounts. The Retail Mortgage Division derives its revenues from the origination, sales and servicing of one-to-four
family residential mortgage loans. The Warehouse Lending Division derives its revenues from the origination and servicing of warehouse
lines to other businesses that are secured by underlying one-to-four family residential mortgage loans. The SBA Division derives
its revenues from the origination, sales and servicing of SBA loans. The Premium Finance Division derives its revenues from the
origination and servicing of commercial insurance premium finance loans.
The Banking, Retail Mortgage, Warehouse
Lending, SBA and Premium Finance Divisions are managed as separate business units because of the different products and services
they provide. The Company evaluates performance and allocates resources based on profit or loss from operations. There are no material
intersegment sales or transfers.
The following tables present selected financial information
with respect to the Company’s reportable business segments for the three months ended June 30, 2017 and 2016:
|
|
Three Months Ended
June 30, 2017
|
|
(dollars in thousands)
|
|
Banking
Division
|
|
|
Retail
Mortgage
Division
|
|
|
Warehouse
Lending
Division
|
|
|
SBA
Division
|
|
|
Premium
Finance
Division
|
|
|
Total
|
|
Interest income
|
|
$
|
56,694
|
|
|
$
|
4,974
|
|
|
$
|
1,613
|
|
|
$
|
1,258
|
|
|
$
|
6,872
|
|
|
$
|
71,411
|
|
Interest expense
|
|
|
4,894
|
|
|
|
1,504
|
|
|
|
359
|
|
|
|
373
|
|
|
|
1,124
|
|
|
|
8,254
|
|
Net interest income
|
|
|
51,800
|
|
|
|
3,470
|
|
|
|
1,254
|
|
|
|
885
|
|
|
|
5,748
|
|
|
|
63,157
|
|
Provision for loan losses
|
|
|
1,491
|
|
|
|
347
|
|
|
|
176
|
|
|
|
51
|
|
|
|
140
|
|
|
|
2,205
|
|
Noninterest income
|
|
|
12,954
|
|
|
|
13,053
|
|
|
|
438
|
|
|
|
1,718
|
|
|
|
26
|
|
|
|
28,189
|
|
Noninterest expense
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Salaries and employee benefits
|
|
|
19,359
|
|
|
|
7,763
|
|
|
|
127
|
|
|
|
890
|
|
|
|
993
|
|
|
|
29,132
|
|
Equipment and occupancy expenses
|
|
|
5,427
|
|
|
|
610
|
|
|
|
1
|
|
|
|
54
|
|
|
|
54
|
|
|
|
6,146
|
|
Data processing and telecommunications expenses
|
|
|
6,378
|
|
|
|
440
|
|
|
|
25
|
|
|
|
2
|
|
|
|
183
|
|
|
|
7,028
|
|
Other expenses
|
|
|
10,209
|
|
|
|
888
|
|
|
|
54
|
|
|
|
259
|
|
|
|
2,023
|
|
|
|
13,433
|
|
Total noninterest expense
|
|
|
41,373
|
|
|
|
9,701
|
|
|
|
207
|
|
|
|
1,205
|
|
|
|
3,253
|
|
|
|
55,739
|
|
Income before income tax expense
|
|
|
21,890
|
|
|
|
6,475
|
|
|
|
1,309
|
|
|
|
1,347
|
|
|
|
2,381
|
|
|
|
33,402
|
|
Income tax expense
|
|
|
6,095
|
|
|
|
2,361
|
|
|
|
472
|
|
|
|
472
|
|
|
|
915
|
|
|
|
10,315
|
|
Net income
|
|
$
|
15,795
|
|
|
$
|
4,114
|
|
|
$
|
837
|
|
|
$
|
875
|
|
|
$
|
1,466
|
|
|
$
|
23,087
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
$
|
6,186,980
|
|
|
$
|
475,599
|
|
|
$
|
174,149
|
|
|
$
|
80,909
|
|
|
$
|
480,221
|
|
|
$
|
7,397,858
|
|
Goodwill
|
|
|
125,532
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
125,532
|
|
Other intangible assets, net
|
|
|
15,378
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
15,378
|
|
|
|
Three Months Ended
June 30, 2016
|
|
(dollars in thousands)
|
|
Banking
Division
|
|
|
Retail
Mortgage
Division
|
|
|
Warehouse
Lending
Division
|
|
|
SBA
Division
|
|
|
Premium
Finance
Division
|
|
|
Total
|
|
Interest income
|
|
$
|
53,534
|
|
|
$
|
3,293
|
|
|
$
|
1,622
|
|
|
$
|
891
|
|
|
$
|
-
|
|
|
$
|
59,340
|
|
Interest expense
|
|
|
3,714
|
|
|
|
739
|
|
|
|
141
|
|
|
|
157
|
|
|
|
-
|
|
|
|
4,751
|
|
Net interest income
|
|
|
49,820
|
|
|
|
2,554
|
|
|
|
1,481
|
|
|
|
734
|
|
|
|
-
|
|
|
|
54,589
|
|
Provision for loan losses
|
|
|
733
|
|
|
|
93
|
|
|
|
-
|
|
|
|
63
|
|
|
|
-
|
|
|
|
889
|
|
Noninterest income
|
|
|
13,018
|
|
|
|
13,304
|
|
|
|
440
|
|
|
|
1,617
|
|
|
|
-
|
|
|
|
28,379
|
|
Noninterest expense
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Salaries and employee benefits
|
|
|
18,428
|
|
|
|
8,304
|
|
|
|
108
|
|
|
|
691
|
|
|
|
-
|
|
|
|
27,531
|
|
Equipment and occupancy expenses
|
|
|
5,901
|
|
|
|
405
|
|
|
|
1
|
|
|
|
64
|
|
|
|
-
|
|
|
|
6,371
|
|
Data processing and telecommunications expenses
|
|
|
5,685
|
|
|
|
338
|
|
|
|
25
|
|
|
|
1
|
|
|
|
-
|
|
|
|
6,049
|
|
Other expenses
|
|
|
11,071
|
|
|
|
1,133
|
|
|
|
26
|
|
|
|
178
|
|
|
|
-
|
|
|
|
12,408
|
|
Total noninterest expense
|
|
|
41,085
|
|
|
|
10,180
|
|
|
|
160
|
|
|
|
934
|
|
|
|
-
|
|
|
|
52,359
|
|
Income before income tax expense
|
|
|
21,020
|
|
|
|
5,585
|
|
|
|
1,761
|
|
|
|
1,354
|
|
|
|
-
|
|
|
|
29,720
|
|
Income tax expense
|
|
|
6,626
|
|
|
|
1,955
|
|
|
|
616
|
|
|
|
474
|
|
|
|
-
|
|
|
|
9,671
|
|
Net income
|
|
$
|
14,394
|
|
|
$
|
3,630
|
|
|
$
|
1,145
|
|
|
$
|
880
|
|
|
$
|
-
|
|
|
$
|
20,049
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
$
|
5,691,976
|
|
|
$
|
306,932
|
|
|
$
|
150,823
|
|
|
$
|
71,563
|
|
|
$
|
-
|
|
|
$
|
6,221,294
|
|
Goodwill
|
|
|
121,422
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
121,422
|
|
Other intangible assets, net
|
|
|
20,574
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
20,574
|
|
The following tables present selected financial information
with respect to the Company’s reportable business segments for the six months ended June 30, 2017 and 2016:
|
|
Six Months Ended
June 30, 2017
|
|
(dollars in thousands)
|
|
Banking
Division
|
|
|
Retail
Mortgage
Division
|
|
|
Warehouse
Lending
Division
|
|
|
SBA
Division
|
|
|
Premium
Finance
Division
|
|
|
Total
|
|
Interest income
|
|
$
|
110,906
|
|
|
$
|
9,028
|
|
|
$
|
2,946
|
|
|
$
|
2,471
|
|
|
$
|
13,110
|
|
|
$
|
138,461
|
|
Interest expense
|
|
|
8,980
|
|
|
|
2,582
|
|
|
|
587
|
|
|
|
679
|
|
|
|
1,886
|
|
|
|
14,714
|
|
Net interest income
|
|
|
101,926
|
|
|
|
6,446
|
|
|
|
2,359
|
|
|
|
1,792
|
|
|
|
11,224
|
|
|
|
123,747
|
|
Provision for loan losses
|
|
|
3,473
|
|
|
|
355
|
|
|
|
(56
|
)
|
|
|
99
|
|
|
|
170
|
|
|
|
4,041
|
|
Noninterest income
|
|
|
25,967
|
|
|
|
23,566
|
|
|
|
757
|
|
|
|
3,533
|
|
|
|
72
|
|
|
|
53,895
|
|
Noninterest expense
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Salaries and employee benefits
|
|
|
38,203
|
|
|
|
14,979
|
|
|
|
274
|
|
|
|
1,481
|
|
|
|
1,989
|
|
|
|
56,926
|
|
Equipment and occupancy expenses
|
|
|
10,684
|
|
|
|
1,129
|
|
|
|
2
|
|
|
|
105
|
|
|
|
103
|
|
|
|
12,023
|
|
Data processing and telecommunications expenses
|
|
|
12,421
|
|
|
|
757
|
|
|
|
52
|
|
|
|
3
|
|
|
|
367
|
|
|
|
13,600
|
|
Other expenses
|
|
|
19,450
|
|
|
|
2,029
|
|
|
|
86
|
|
|
|
470
|
|
|
|
4,248
|
|
|
|
26,283
|
|
Total noninterest expense
|
|
|
80,758
|
|
|
|
18,894
|
|
|
|
414
|
|
|
|
2,059
|
|
|
|
6,707
|
|
|
|
108,832
|
|
Income before income tax expense
|
|
|
43,662
|
|
|
|
10,763
|
|
|
|
2,758
|
|
|
|
3,167
|
|
|
|
4,419
|
|
|
|
64,769
|
|
Income tax expense
|
|
|
12,951
|
|
|
|
3,862
|
|
|
|
979
|
|
|
|
1,109
|
|
|
|
1,628
|
|
|
|
20,529
|
|
Net income
|
|
$
|
30,711
|
|
|
$
|
6,901
|
|
|
$
|
1,779
|
|
|
$
|
2,058
|
|
|
$
|
2,791
|
|
|
$
|
44,240
|
|
|
|
Six Months Ended
June 30, 2016
|
|
(dollars in thousands)
|
|
Banking
Division
|
|
|
Retail
Mortgage
Division
|
|
|
Warehouse
Lending
Division
|
|
|
SBA
Division
|
|
|
Premium
Finance
Division
|
|
|
Total
|
|
Interest income
|
|
$
|
103,313
|
|
|
$
|
6,313
|
|
|
$
|
2,641
|
|
|
$
|
1,632
|
|
|
$
|
-
|
|
|
$
|
113,899
|
|
Interest expense
|
|
|
7,010
|
|
|
|
1,329
|
|
|
|
233
|
|
|
|
302
|
|
|
|
-
|
|
|
|
8,874
|
|
Net interest income
|
|
|
96,303
|
|
|
|
4,984
|
|
|
|
2,408
|
|
|
|
1,330
|
|
|
|
-
|
|
|
|
105,025
|
|
Provision for loan losses
|
|
|
1,414
|
|
|
|
93
|
|
|
|
-
|
|
|
|
63
|
|
|
|
-
|
|
|
|
1,570
|
|
Noninterest income
|
|
|
25,753
|
|
|
|
22,928
|
|
|
|
773
|
|
|
|
3,211
|
|
|
|
-
|
|
|
|
52,665
|
|
Noninterest expense
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Salaries and employee benefits
|
|
|
37,417
|
|
|
|
14,651
|
|
|
|
296
|
|
|
|
1,354
|
|
|
|
-
|
|
|
|
53,718
|
|
Equipment and occupancy expenses
|
|
|
11,051
|
|
|
|
893
|
|
|
|
2
|
|
|
|
125
|
|
|
|
-
|
|
|
|
12,071
|
|
Data processing and telecommunications expenses
|
|
|
11,505
|
|
|
|
610
|
|
|
|
45
|
|
|
|
2
|
|
|
|
-
|
|
|
|
12,162
|
|
Other expenses
|
|
|
27,507
|
|
|
|
2,089
|
|
|
|
51
|
|
|
|
361
|
|
|
|
-
|
|
|
|
30,008
|
|
Total noninterest expense
|
|
|
87,480
|
|
|
|
18,243
|
|
|
|
394
|
|
|
|
1,842
|
|
|
|
-
|
|
|
|
107,959
|
|
Income before income tax expense
|
|
|
33,162
|
|
|
|
9,576
|
|
|
|
2,787
|
|
|
|
2,636
|
|
|
|
-
|
|
|
|
48,161
|
|
Income tax expense
|
|
|
10,545
|
|
|
|
3,352
|
|
|
|
975
|
|
|
|
923
|
|
|
|
-
|
|
|
|
15,795
|
|
Net income
|
|
$
|
22,617
|
|
|
$
|
6,224
|
|
|
$
|
1,812
|
|
|
$
|
1,713
|
|
|
$
|
-
|
|
|
$
|
32,366
|
|
NOTE 15 – REGULATORY MATTERS
On December 16, 2016, the Bank entered
into a Stipulation to the Issuance of a Consent Order with its bank regulatory agencies, the FDIC and the Georgia Department of
Banking and Finance (the “GDBF”), consenting to the issuance of a consent order (the “Order”) relating
to the Bank’s Bank Secrecy Act (together with its implementing regulations, the “BSA”) compliance program. In
consenting to the issuance of the Order, the Bank did not admit or deny any charges of unsafe or unsound banking practices related
to its BSA compliance program.
Under the terms of the Order, the Bank
or its board of directors is required to take certain affirmative actions to comply with the Bank’s obligations under the
BSA. These include, but are not limited to, the following: strengthening the board of directors’ oversight of BSA activities;
enhancing and adopting a revised BSA compliance program; completing a BSA risk assessment; developing a revised system of internal
controls designed to ensure full compliance with the BSA; reviewing and revising customer due diligence and risk assessment processes,
policies and procedures; developing, adopting and implementing effective BSA training programs; assessing BSA staffing needs and
resources and appointing a qualified BSA officer; establishing an independent BSA testing program; ensuring that all reports required
by the BSA are accurately and properly filed; and engaging an independent firm to review past account activity to determine whether
suspicious activity was properly identified and reported.
Prior to implementation, certain of the
actions required by the Order were subject to review by, and approval or non-objection from, the FDIC and the GDBF. The Order will
remain in effect and be enforceable until it is modified, terminated, suspended or set aside by the FDIC and the GDBF. The Bank
expects that it will continue to meet the required actions within the time periods specified in the Order based upon ongoing communications
with its regulators.