Loans | Loans The following table presents the composition of net loans as of September 30, 2019 and 2018. September 30, 2019 2018 (dollars in thousands) Commercial real estate $ 5,092,410 $ 4,629,330 Agriculture 2,008,644 2,182,688 Commercial non-real estate 1,719,956 1,699,987 Residential real estate 812,208 837,569 Consumer 51,925 49,689 Other 47,541 46,487 Ending balance 9,732,684 9,445,750 Less: Unamortized discount on acquired loans (13,655) (18,283) Unearned net deferred fees and costs and loans in process (12,266) (11,543) Total $ 9,706,763 $ 9,415,924 The loan segments above include loans covered by a FDIC loss sharing agreement totaling $31.9 million and $42.6 million as of September 30, 2019 and 2018, respectively, residential real estate loans held for sale totaling $7.4 million and $5.5 million at September 30, 2019 and 2018, respectively, and $813.0 million and $865.4 million of loans accounted for at fair value as of September 30, 2019 and 2018, respectively. Unearned net deferred fees and costs totaled $13.9 million and $13.0 million as of September 30, 2019 and 2018, respectively. Loans in process represent loans that have been funded as of the balance sheet dates but not classified into a loan category and loan payments received as of the balance sheet dates that have not been applied to individual loan accounts. Loans in process totaled $(1.6) million and $(1.5) million as of September 30, 2019 and 2018, respectively. Loans guaranteed by agencies of the U.S. government totaled $154.2 million and $168.6 million at September 30, 2019 and 2018, respectively. Principal balances of residential real estate loans sold totaled $288.1 million and $266.5 million for the fiscal years ended September 30, 2019 and 2018, respectively. Nonaccrual The following table presents the Company’s nonaccrual loans at September 30, 2019 and 2018, excluding ASC 310-30 loans. Loans greater than 90 days past due and still accruing interest as of September 30, 2019 and 2018 were $11.2 million and $0.2 million, respectively. September 30, 2019 2018 Nonaccrual loans (dollars in thousands) Commercial real estate $ 14,973 $ 22,871 Agriculture 77,880 107,198 Commercial non-real estate 9,502 6,887 Residential real estate 2,661 3,549 Consumer 74 61 Total $ 105,090 $ 140,566 Credit Quality Information The following table presents the composition of the loan portfolio by internally assigned grade as of September 30, 2019 and 2018. This table is presented net of unamortized discount on acquired loans and excludes loans measured at fair value with changes in fair value reported in earnings of $813.0 million for September 30, 2019 and $865.4 million for September 30, 2018. As of September 30, 2019 Commercial Real Estate Agriculture Commercial Residential Real Estate ¹ Consumer ¹ Other Total Credit Risk Profile by Internally Assigned Grade (dollars in thousands) Grade: Pass $ 4,433,530 $ 1,346,436 $ 1,424,357 $ 763,797 $ 50,796 $ 47,541 $ 8,066,457 Watchlist 85,256 179,965 103,514 6,297 755 — 375,787 Substandard 54,242 322,327 42,048 6,863 205 — 425,685 Doubtful 56 5,811 296 55 2 — 6,220 Loss — — — — — — — Ending balance 4,573,084 1,854,539 1,570,215 777,012 51,758 47,541 8,874,149 Loans covered by a FDIC loss sharing agreement — — — 31,891 — — 31,891 Total $ 4,573,084 $ 1,854,539 $ 1,570,215 $ 808,903 $ 51,758 $ 47,541 $ 8,906,040 1 The Company generally does not risk rate residential real estate or consumer loans unless a default event such as a bankruptcy or extended nonperformance takes place. Alternatively, standard credit scoring systems are used to assess credit risks of residential real estate and consumer loans. As of September 30, 2018 Commercial Real Estate Agriculture Commercial Residential Real Estate ¹ Consumer ¹ Other Total Credit Risk Profile by Internally Assigned Grade (dollars in thousands) Grade: Pass $ 4,108,314 $ 1,610,291 $ 1,401,418 $ 779,610 $ 48,979 $ 46,487 $ 7,995,099 Watchlist 53,150 239,392 19,503 4,548 322 — 316,915 Substandard 41,184 137,205 20,117 6,366 159 — 205,031 Doubtful 93 2 2,277 37 — — 2,409 Loss — — — — — — — Ending balance 4,202,741 1,986,890 1,443,315 790,561 49,460 46,487 8,519,454 Loans covered by a FDIC loss sharing agreement — — — 42,627 — — 42,627 Total $ 4,202,741 $ 1,986,890 $ 1,443,315 $ 833,188 $ 49,460 $ 46,487 $ 8,562,081 1 The Company generally does not risk rate residential real estate or consumer loans unless a default event such as a bankruptcy or extended nonperformance takes place. Alternatively, standard credit scoring systems are used to assess credit risks of residential real estate and consumer loans. Past Due Loans The following table presents the Company’s past due loans at September 30, 2019 and 2018. This table is presented net of unamortized discount on acquired loans and excludes loans measured at fair value with changes in fair value reported in earnings of $813.0 million for September 30, 2019 and $865.4 million for September 30, 2018. 30-59 Days Past Due 60-89 Days Past Due 90 Days or Greater Past Due Total Current Total Financing Receivables As of September 30, 2019 (dollars in thousands) Commercial real estate $ 3,587 $ 570 $ 2,475 $ 6,632 $ 4,566,452 $ 4,573,084 Agriculture 13,411 1,267 33,089 47,767 1,806,772 1,854,539 Commercial non-real estate 3,932 120 4,424 8,476 1,561,739 1,570,215 Residential real estate 311 676 939 1,926 775,086 777,012 Consumer 61 110 7 178 51,580 51,758 Other — — — — 47,541 47,541 Ending balance 21,302 2,743 40,934 64,979 8,809,170 8,874,149 Loans covered by a FDIC loss sharing agreement 536 410 331 1,277 30,614 31,891 Total $ 21,838 $ 3,153 $ 41,265 $ 66,256 $ 8,839,784 $ 8,906,040 30-59 Days Past Due 60-89 Days Past Due 90 Days or Greater Past Due Total Current Total Financing Receivables As of September 30, 2018 (dollars in thousands) Commercial real estate $ 920 $ 551 $ 9,135 $ 10,606 $ 4,192,135 $ 4,202,741 Agriculture 1,243 2,042 51,579 54,864 1,932,026 1,986,890 Commercial non-real estate 551 16 4,068 4,635 1,438,680 1,443,315 Residential real estate 913 200 1,747 2,860 787,701 790,561 Consumer 83 47 1 131 49,329 49,460 Other — — — — 46,487 46,487 Ending balance 3,710 2,856 66,530 73,096 8,446,358 8,519,454 Loans covered by a FDIC loss sharing agreement 30 233 471 734 41,893 42,627 Total $ 3,740 $ 3,089 $ 67,001 $ 73,830 $ 8,488,251 $ 8,562,081 Impaired Loans The following table presents the Company’s impaired loans. This table excludes purchased credit impaired loans and loans measured at fair value with changes in fair value reported in earnings of $813.0 million for September 30, 2019 and $865.4 million for September 30, 2018. September 30, 2019 September 30, 2018 Recorded Investment Unpaid Principal Balance Related Allowance Recorded Investment Unpaid Principal Balance Related Allowance Impaired loans: (dollars in thousands) With an allowance recorded: Commercial real estate $ 26,003 $ 26,297 $ 4,159 $ 25,136 $ 25,223 $ 3,668 Agriculture 98,392 104,350 8,234 60,053 76,874 9,590 Commercial non-real estate 21,331 21,777 6,062 14,177 17,241 4,508 Residential real estate 3,829 4,311 1,795 4,509 5,153 2,210 Consumer 207 214 97 160 165 61 Total impaired loans with an allowance recorded 149,762 156,949 20,347 104,035 124,656 20,037 With no allowance recorded: Commercial real estate 28,272 66,631 — 15,764 58,141 — Agriculture 231,087 255,308 — 77,172 80,355 — Commercial non-real estate 21,579 31,414 — 8,905 18,047 — Residential real estate 3,290 5,454 — 2,177 4,574 — Consumer 1 108 — 1 118 — Total impaired loans with no allowance recorded 284,229 358,915 — 104,019 161,235 — Total impaired loans $ 433,991 $ 515,864 $ 20,347 $ 208,054 $ 285,891 $ 20,037 The following table presents the average recorded investment on impaired loans and interest income recognized on impaired loans for the fiscal years ended September 30, 2019, 2018 and 2017. Fiscal Years Ended September 30, 2019 2018 2017 Average Recorded Investment Interest Income Recognized While on Impaired Status Average Recorded Investment Interest Income Recognized While on Impaired Status Average Recorded Investment Interest Income Recognized While on Impaired Status (dollars in thousands) Commercial real estate $ 42,374 $ 2,339 $ 54,434 $ 2,815 $ 42,347 $ 2,163 Agriculture 223,146 13,093 127,483 4,767 131,026 5,503 Commercial non-real estate 28,196 1,791 28,938 1,405 41,489 1,485 Residential real estate 6,889 410 7,156 452 8,900 453 Consumer 231 20 219 14 369 47 Total $ 300,836 $ 17,653 $ 218,230 $ 9,453 $ 224,131 $ 9,651 Valuation adjustments made to repossessed properties for the fiscal years ended September 30, 2019 and 2018, totaled $2.3 million and $1.6 million, respectively. The adjustments are included in net loss on repossessed property and other related expenses in noninterest expense. Troubled Debt Restructurings Included in certain loan categories in the impaired loans are TDRs that were classified as impaired. These TDRs do not include purchased credit impaired loans. When the Company grants concessions to borrowers such as reduced interest rates or extensions of loan periods that would not be considered other than because of borrowers’ financial difficulties, the modification is considered a TDR. Specific reserves included in the allowance for loan and lease losses for TDRs were $10.3 million and $9.2 million at September 30, 2019 and 2018, respectively. There were $0.2 million of commitments to lend additional funds to borrowers whose loans were modified in a TDR as of September 30, 2019 and $0.3 million commitments to lend additional funds to borrowers whose loans were modified in a TDR as of September 30, 2018. The following table presents the recorded value of the Company’s TDR balances as of September 30, 2019 and 2018. September 30, 2019 September 30, 2018 Accruing Nonaccrual Accruing Nonaccrual (dollars in thousands) Commercial real estate $ 17,145 $ 904 $ 2,649 $ 2,616 Agriculture 22,929 24,762 13,248 73,741 Commercial non-real estate 4,398 4,257 3,420 656 Residential real estate 263 102 389 143 Consumer 107 48 77 — Total $ 44,842 $ 30,073 $ 19,783 $ 77,156 TDRs are generally restructured through either a rate modification, term extension, payment modification or due to a bankruptcy. The following table presents a summary of all accruing loans restructured in TDRs during the fiscal years ended September 30, 2019, 2018 and 2017. September 30, 2019 September 30, 2018 September 30, 2017 Recorded Investment Recorded Investment Recorded Investment Number Pre-Modification Post-Modification Number Pre-Modification Post-Modification Number Pre-Modification Post-Modification (dollars in thousands) Commercial real estate 2 $ 15,466 $ 15,466 1 $ 2,041 $ 2,041 2 $ 3,726 $ 3,726 Agriculture 16 11,537 11,537 5 10,753 10,753 13 18,902 18,902 Commercial non-real estate 2 1,445 1,445 — — — 9 2,044 2,044 Residential real estate — — — — — — 1 9 9 Consumer 2 188 188 1 73 73 1 8 8 Total accruing 22 $ 28,636 $ 28,636 7 $ 12,867 $ 12,867 26 $ 24,689 $ 24,689 Change in recorded investment due to principal paydown at time of modification — $ — $ — — $ — $ — — $ — $ — Change in recorded investment due to chargeoffs at time of modification — — — — — — — — — The following table presents a summary of all nonaccruing loans restructured in TDRs during the fiscal years ended September 30, 2019, 2018 and 2017. September 30, 2019 September 30, 2018 September 30, 2017 Recorded Investment Recorded Investment Recorded Investment Number Pre-Modification Post-Modification Number Pre-Modification Post-Modification Number Pre-Modification Post-Modification (dollars in thousands) Commercial real estate 1 $ 882 $ 882 — $ — $ — — $ — $ — Agriculture 9 5,802 5,802 9 9,990 9,990 18 20,197 20,197 Commercial non-real estate 2 3,699 3,699 — — — 3 3,788 3,788 Residential real estate — — — — — — 2 133 133 Consumer — — — — — — 3 21 21 Total nonaccruing 12 $ 10,383 $ 10,383 9 $ 9,990 $ 9,990 26 $ 24,139 $ 24,139 Change in recorded investment due to principal paydown at time of modification — $ — $ — — $ — $ — — $ — $ — Change in recorded investment due to chargeoffs at time of modification — — — — — — — — — The following table presents loans that were modified as TDRs within the previous 12 months and for which there was a payment default for the fiscal years ended September 30, 2019, 2018 and 2017. Fiscal Years Ended September 30, 2019 2018 2017 Number of Loans Recorded Investment Number of Loans Recorded Investment Number of Loans Recorded Investment (dollars in thousands) Commercial real estate — $ — — $ — — $ — Agriculture — — 1 366 2 8,383 Commercial non-real estate — — — — 1 — Residential real estate — — — — — — Consumer 1 — — — — — Total 1 $ — 1 $ 366 3 $ 8,383 For purposes of the table above, a loan is considered to be in payment default once it is 90 days or more contractually past due under the modified terms. The table includes loans that experienced a payment default during the period, but may be performing in accordance with the modified terms as of the balance sheet date. There were $0.0 million, $0.8 million and $5.5 million as of September 30, 2019, 2018 and 2017, respectively, of loans removed from TDR status as they were restructured at market terms and are performing. |