Loans | Loans Major classifications of loans, including loans held for sale, are as follows: (Dollars in thousands) June 30, 2017 December 31, 2016 Non-owner occupied commercial real estate $ 1,265,576 $ 1,130,883 Other commercial construction and land 384,581 327,622 Multifamily commercial real estate 147,365 117,515 1-4 family residential construction and land 153,761 140,030 Total commercial real estate 1,951,283 1,716,050 Owner occupied commercial real estate 1,287,811 1,321,405 Commercial and industrial 1,424,862 1,468,874 Total commercial 2,712,673 2,790,279 1-4 family residential 1,782,799 1,714,702 Home equity loans 489,497 507,759 Other consumer loans 395,807 448,972 Total consumer 2,668,103 2,671,433 Other 238,055 228,430 Total loans $ 7,570,114 $ 7,406,192 Total loans include $3.5 million and $12.9 million of loans held for sale and $15.0 million and $15.5 million of net deferred loan origination costs and fees as of June 30, 2017 and December 31, 2016 , respectively. As of June 30, 2017 , other loans include $42.9 million , $155.3 million and $1.3 million of farm land, state and political subdivision obligations and deposit customer overdrafts, respectively. As of December 31, 2016 , other loans include $41.9 million , $149.0 million and $1.6 million of farm land, state and political subdivision obligations and deposit customer overdrafts, respectively. The Company designates purchased credit impaired loans as "PCI" by evaluating both qualitative and quantitative factors. At the time of acquisition, the Company accounted for the PCI loans by segregating each portfolio into loan pools with similar risk characteristics. Over the lives of the acquired PCI loans, the Company continues to estimate cash flows expected to be collected on each loan pool. The Company evaluates, at each balance sheet date, whether its estimates of the present value of the cash flows from the loan pools, determined using the effective interest rates, has decreased, such that the present value of such cash flows is less than the recorded investment of the pool, and if so, recognizes a provision for loan loss in its Consolidated Statements of Income, unless related to non-credit events. Additionally, if the Company has favorable changes in estimates of cash flows expected to be collected for a loan pool such that the then-present value exceeds the recorded investment of that pool, the Company will first reverse any previously established allowance for loan and lease losses for the pool. If such estimate exceeds the amount of any previously established allowance, the Company will accrete future interest income over the remaining life of the pool at a rate which, when used to discount the expected cash flows, results in the then-present value of such cash flows equaling the recorded investment of the pool at the time of the revised estimate. The table below presents a roll forward of accretable yield and income expected to be earned related to PCI loans. The accretable yield represents the excess of estimated cash flows expected to be collected over the carrying amount of the PCI loans. Nonaccretable difference represents estimated contractually required payments in excess of estimated cash flows expected to be collected. Other represents reductions of accretable yield due to non-credit events such as prepayment activity on PCI loans. (Dollars in thousands) Three Months Ended Six Months Ended June 30, 2017 June 30, 2016 June 30, 2017 June 30, 2016 Accretable Yield Balance at beginning of period $ 152,654 $ 195,065 $ 161,639 $ 208,844 Accretion of income (18,616 ) (19,923 ) (37,399 ) (40,766 ) Reclassification from nonaccretable difference 15,941 6,686 32,298 21,623 Other (4,560 ) (10,893 ) (11,119 ) (18,766 ) Balance at end of period $ 145,419 $ 170,935 $ 145,419 $ 170,935 The accretable yield is accreted into interest income over the estimated life of the PCI loans using the level yield method. The accretable yield will change due to changes in: • The estimate of the remaining life of PCI loans which may change the amount of future interest income, and possibly principal, expected to be collected; • The estimate of the amount of contractually required principal and interest payments over the estimated life that will not be collected (the nonaccretable difference); and • Indices for PCI loans with variable rates of interest. For PCI loans, the impact of loan modifications is included in the evaluation of expected cash flows for subsequent decreases or increases of cash flows. For variable rate PCI loans, expected future cash flows will be recalculated as the rates adjust over the lives of the loans. At acquisition, the expected future cash flows were based on the variable rates that were in effect at that time. The following is a summary of the major categories of loans outstanding as of June 30, 2017 and December 31, 2016 : (Dollars in thousands) Non-PCI Loans June 30, 2017 New Acquired PCI Loans Total Non-owner occupied commercial real estate $ 837,572 $ 211,400 $ 216,604 $ 1,265,576 Other commercial construction and land 252,458 76,439 55,684 384,581 Multifamily commercial real estate 115,308 15,749 16,308 147,365 1-4 family residential construction and land 136,776 16,555 430 153,761 Total commercial real estate 1,342,114 320,143 289,026 1,951,283 Owner occupied commercial real estate 907,374 222,145 158,292 1,287,811 Commercial and industrial loans 1,274,742 76,769 73,351 1,424,862 Total commercial 2,182,116 298,914 231,643 2,712,673 1-4 family residential 1,108,685 484,161 189,953 1,782,799 Home equity loans 181,931 247,238 60,328 489,497 Other consumer loans 297,963 72,688 25,156 395,807 Total consumer 1,588,579 804,087 275,437 2,668,103 Other 203,175 7,387 27,493 238,055 Total loans $ 5,315,984 $ 1,430,531 $ 823,599 $ 7,570,114 (Dollars in thousands) Non-PCI Loans December 31, 2016 New Acquired PCI Loans Total Loans Non-owner occupied commercial real estate $ 680,044 $ 221,304 $ 229,535 $ 1,130,883 Other commercial construction and land 182,486 73,248 71,888 327,622 Multifamily commercial real estate 77,694 19,108 20,713 117,515 1-4 family residential construction and land 105,816 33,831 383 140,030 Total commercial real estate 1,046,040 347,491 322,519 1,716,050 Owner occupied commercial real estate 901,957 239,982 179,466 1,321,405 Commercial and industrial loans 1,283,012 96,494 89,368 1,468,874 Total commercial 2,184,969 336,476 268,834 2,790,279 1-4 family residential 994,323 505,420 214,959 1,714,702 Home equity loans 172,883 268,093 66,783 507,759 Other consumer loans 330,423 88,134 30,415 448,972 Total consumer 1,497,629 861,647 312,157 2,671,433 Other 185,839 9,776 32,815 228,430 Total loans $ 4,914,477 $ 1,555,390 $ 936,325 $ 7,406,192 The following tables present the aging of the recorded investment in past due loans, based on contractual terms, as of June 30, 2017 : (Dollars in thousands) 30-89 Days Past Due Greater than 90 Days Past Due Non-accrual Total Non-purchased credit impaired loans Non-owner occupied commercial real estate $ — $ — $ 2,255 $ 2,255 Other commercial construction and land 55 — 53 108 Multifamily commercial real estate — — — — 1-4 family residential construction and land — — — — Total commercial real estate 55 — 2,308 2,363 Owner occupied commercial real estate 40 — 4,367 4,407 Commercial and industrial loans 101 — 784 885 Total commercial 141 — 5,151 5,292 1-4 family residential 762 — 1,557 2,319 Home equity loans 2,089 — 2,186 4,275 Other consumer loans 5,915 — 2,619 8,534 Total consumer 8,766 — 6,362 15,128 Other — — — — Total loans $ 8,962 $ — $ 13,821 $ 22,783 (Dollars in thousands) 30-89 Days Past Due Greater than 90 Days Past Due Non-accrual Total Purchased credit impaired loans (1) Non-owner occupied commercial real estate $ 2,360 $ 333 $ — $ 2,693 Other commercial construction and land 348 880 — 1,228 Multifamily commercial real estate — 139 — 139 1-4 family residential construction and land — — — — Total commercial real estate 2,708 1,352 — 4,060 Owner occupied commercial real estate 1,250 3,150 — 4,400 Commercial and industrial loans 2 555 — 557 Total commercial 1,252 3,705 — 4,957 1-4 family residential 1,878 2,233 — 4,111 Home equity loans 993 786 — 1,779 Other consumer loans 2,521 1,489 — 4,010 Total consumer 5,392 4,508 — 9,900 Other — 724 — 724 Total loans $ 9,352 $ 10,289 $ — $ 19,641 The following tables present the aging of the recorded investment in past due loans, based on contractual terms, as of December 31, 2016 : (Dollars in thousands) 30-89 Days Past Due Greater than 90 Days Past Due and Still Accruing/Accreting Non-accrual Total Non-purchased credit impaired loans Non-owner occupied commercial real estate $ — $ — $ 2,584 $ 2,584 Other commercial construction and land 23 — 204 227 Multifamily commercial real estate — — — — 1-4 family residential construction and land 148 — — 148 Total commercial real estate 171 — 2,788 2,959 Owner occupied commercial real estate 2,633 — 2,950 5,583 Commercial and industrial loans 169 — 698 867 Total commercial 2,802 — 3,648 6,450 1-4 family residential 493 — 1,048 1,541 Home equity loans 1,336 — 1,568 2,904 Other consumer loans 8,143 — 2,397 10,540 Total consumer 9,972 — 5,013 14,985 Other — — — — Total loans $ 12,945 $ — $ 11,449 $ 24,394 (Dollars in thousands) 30-89 Days Past Due Greater than 90 Days Past Due and Still Accruing/Accreting Non-accrual Total Purchased credit impaired loans (1) Non-owner occupied commercial real estate $ — $ 1,130 $ — $ 1,130 Other commercial construction and land 550 777 — 1,327 Multifamily commercial real estate — 420 — 420 1-4 family residential construction and land — — — — Total commercial real estate 550 2,327 — 2,877 Owner occupied commercial real estate 1,844 3,776 — 5,620 Commercial and industrial loans 592 509 — 1,101 Total commercial 2,436 4,285 — 6,721 1-4 family residential 4,288 6,060 — 10,348 Home equity loans 1,128 1,470 — 2,598 Other consumer loans 2,558 1,048 — 3,606 Total consumer 7,974 8,578 — 16,552 Other 87 716 — 803 Total loans $ 11,047 $ 15,906 $ — $ 26,953 (1) Pooled PCI loans are not classified as nonaccrual as they are considered to be accruing because their interest income relates to the accretable yield recognized under accounting for purchased credit-impaired loans and not to contractual interest payments. Credit Quality Indicators The Company categorizes loans into risk categories based on relevant information about the ability of borrowers to service their debt such as: current financial information, historical payment experience, credit documentation, public information, and current economic trends, among other factors. The Company analyzes loans individually by classifying the loans as to credit risk. This analysis is performed at origination and upon identification of a material change for all loans, on an annual basis for commercial loans exceeding $0.5 million , and at least quarterly for commercial loans not rated pass. The Company uses the following definitions for risk ratings: • Pass —These loans range from superior quality with minimal credit risk to loans requiring heightened management attention but that are still an acceptable risk and continue to perform as contracted. • Special Mention —Loans classified as special mention have a potential weakness that deserves management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or of the institution’s credit position at some future date. • Substandard —Loans classified as substandard are inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. Loans so classified have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the institution will sustain some loss if the deficiencies are not corrected. • Doubtful —Loans classified as doubtful have all the weaknesses inherent in those classified as substandard, with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable. The following table summarizes loans, excluding PCI loans, by internal rating at June 30, 2017 : Substandard (Dollars in thousands) Pass Special Mention Accruing Non-accrual Doubtful Total Non-owner occupied commercial real estate $ 1,044,423 $ 2,294 $ — $ 2,255 $ — $ 1,048,972 Other commercial construction and land 328,844 — — 53 — 328,897 Multifamily commercial real estate 130,861 — 196 — — 131,057 1-4 family residential construction and land 153,331 — — — — 153,331 Total commercial real estate 1,657,459 2,294 196 2,308 — 1,662,257 Owner occupied commercial real estate 1,094,739 27,128 3,285 4,367 — 1,129,519 Commercial and industrial loans 1,334,082 1,447 15,198 784 — 1,351,511 Total commercial 2,428,821 28,575 18,483 5,151 — 2,481,030 1-4 family residential 1,587,587 1,586 2,116 1,557 — 1,592,846 Home equity loans 425,468 256 1,259 2,186 — 429,169 Other consumer loans 367,971 — 61 2,619 — 370,651 Total consumer 2,381,026 1,842 3,436 6,362 — 2,392,666 Other 210,562 — — — — 210,562 Total loans $ 6,677,868 $ 32,711 $ 22,115 $ 13,821 $ — $ 6,746,515 The following table summarizes loans, excluding PCI loans, by internal rating at December 31, 2016 : Substandard (Dollars in thousands) Pass Special Mention Accruing Non-accrual Doubtful Total Non-owner occupied commercial real estate $ 896,394 $ 1,251 $ 1,119 $ 2,584 $ — $ 901,348 Other commercial construction and land 255,530 — — 204 — 255,734 Multifamily commercial real estate 96,802 — — — — 96,802 1-4 family residential construction and land 139,647 — — — — 139,647 Total commercial real estate 1,388,373 1,251 1,119 2,788 — 1,393,531 Owner occupied commercial real estate 1,124,285 10,210 4,494 2,950 — 1,141,939 Commercial and industrial loans 1,351,581 16,709 10,518 698 — 1,379,506 Total commercial 2,475,866 26,919 15,012 3,648 — 2,521,445 1-4 family residential 1,495,653 899 2,143 1,048 — 1,499,743 Home equity loans 437,880 62 1,466 1,568 — 440,976 Other consumer loans 416,117 — 43 2,397 — 418,557 Total consumer 2,349,650 961 3,652 5,013 — 2,359,276 Other 195,615 — — — — 195,615 Total loans $ 6,409,504 $ 29,131 $ 19,783 $ 11,449 $ — $ 6,469,867 |