Non Purchased Loans | Non Purchased Loans (In Thousands, Except Number of Loans) For purposes of this Note 4, all references to “loans” mean non purchased loans. The following is a summary of non purchased loans and leases as of the dates presented: March 31, December 31, 2018 Commercial, financial, agricultural $ 921,081 $ 875,649 Lease financing 61,539 64,992 Real estate – construction 651,119 635,519 Real estate – 1-4 family mortgage 2,114,908 2,087,890 Real estate – commercial mortgage 2,726,186 2,628,365 Installment loans to individuals 93,654 100,424 Gross loans 6,568,487 6,392,839 Unearned income (2,888 ) (3,127 ) Loans, net of unearned income $ 6,565,599 $ 6,389,712 Past Due and Nonaccrual Loans Loans are considered past due if the required principal and interest payments have not been received as of the date such payments were due. Generally, the recognition of interest on mortgage and commercial loans is discontinued at the time the loan is 90 days past due unless the credit is well-secured and in process of collection. Consumer and other retail loans are typically charged-off no later than the time the loan is 120 days past due. In all cases, loans are placed on nonaccrual status or charged-off at an earlier date if collection of principal or interest is considered doubtful. Loans may be placed on nonaccrual status regardless of whether or not such loans are considered past due. All interest accrued for the current year, but not collected, for loans that are placed on nonaccrual status or charged-off is reversed against interest income. The interest on these loans is accounted for on the cash-basis or cost-recovery method, until qualifying for return 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. The following table provides an aging of past due and nonaccrual loans, segregated by class, as of the dates presented: Accruing Loans Nonaccruing Loans 30-89 Days Past Due 90 Days or More Past Due Current Loans Total Loans 30-89 Days Past Due 90 Days or More Past Due Current Loans Total Loans Total Loans March 31, 2019 Commercial, financial, agricultural $ 3,117 $ 78 $ 913,608 $ 916,803 $ 953 $ 3,145 $ 180 $ 4,278 $ 921,081 Lease financing 440 — 61,009 61,449 — 90 — 90 61,539 Real estate – construction 419 — 650,700 651,119 — — — — 651,119 Real estate – 1-4 family mortgage 16,333 1,044 2,093,721 2,111,098 1,056 1,466 1,288 3,810 2,114,908 Real estate – commercial mortgage 2,394 13 2,719,516 2,721,923 — 2,349 1,914 4,263 2,726,186 Installment loans to individuals 392 57 93,139 93,588 2 64 — 66 93,654 Unearned income — — (2,888 ) (2,888 ) — — — — (2,888 ) Total $ 23,095 $ 1,192 $ 6,528,805 $ 6,553,092 $ 2,011 $ 7,114 $ 3,382 $ 12,507 $ 6,565,599 December 31, 2018 Commercial, financial, agricultural $ 3,397 $ 267 $ 870,457 $ 874,121 $ — $ 1,356 $ 172 $ 1,528 $ 875,649 Lease financing 607 89 64,296 64,992 — — — — 64,992 Real estate – construction 887 — 634,632 635,519 — — — — 635,519 Real estate – 1-4 family mortgage 10,378 2,151 2,071,401 2,083,930 238 2,676 1,046 3,960 2,087,890 Real estate – commercial mortgage 1,880 13 2,621,902 2,623,795 — 2,974 1,596 4,570 2,628,365 Installment loans to individuals 368 165 99,731 100,264 3 157 — 160 100,424 Unearned income — — (3,127 ) (3,127 ) — — — — (3,127 ) Total $ 17,517 $ 2,685 $ 6,359,292 $ 6,379,494 $ 241 $ 7,163 $ 2,814 $ 10,218 $ 6,389,712 Impaired Loans A loan is considered impaired when, based on current information and events, it is probable that the Company will be unable to collect the scheduled payments of principal or interest when due according to the contractual terms of the loan agreement. Impairment is measured on a loan-by-loan basis for commercial, consumer and construction loans of $500 or more by, as applicable, the present value of expected future cash flows discounted at the loan’s effective interest rate, the loan’s obtainable market price or the fair value of the collateral if the loan is collateral dependent. Large groups of smaller balance homogeneous loans are evaluated collectively for impairment. When the ultimate collectability of an impaired loan’s principal is in doubt, wholly or partially, the loan is placed on nonaccrual status and all cash receipts are applied to principal. Once the recorded balance has been reduced to zero, future cash receipts are applied to interest income, to the extent any interest has been foregone, and then they are recorded as recoveries of any amounts previously charged-off. For impaired loans, a specific reserve is established to adjust the carrying value of the loan to its estimated net realizable value. Loans accounted for under FASB ASC 310-20, “Nonrefundable Fees and Other Cost” (“ASC 310-20”), and which are impaired loans recognized in conformity with ASC 310, “Receivables” (“ASC 310”), segregated by class, were as follows as of the dates presented: Unpaid Contractual Principal Balance Recorded Investment With Allowance Recorded Investment With No Allowance Total Recorded Investment Related Allowance March 31, 2019 Commercial, financial, agricultural $ 4,886 $ 4,581 $ — $ 4,581 $ 983 Lease financing 90 90 — 90 1 Real estate – construction 8,485 6,320 2,165 8,485 56 Real estate – 1-4 family mortgage 8,739 8,415 — 8,415 113 Real estate – commercial mortgage 9,800 5,819 1,198 7,017 723 Installment loans to individuals 136 129 — 129 1 Total $ 32,136 $ 25,354 $ 3,363 $ 28,717 $ 1,877 December 31, 2018 Commercial, financial, agricultural $ 2,280 $ 1,834 $ — $ 1,834 $ 163 Lease financing — — — — — Real estate – construction 9,467 7,302 2,165 9,467 63 Real estate – 1-4 family mortgage 9,767 9,077 — 9,077 61 Real estate – commercial mortgage 8,625 4,609 1,238 5,847 689 Installment loans to individuals 232 223 — 223 1 Totals $ 30,371 $ 23,045 $ 3,403 $ 26,448 $ 977 The following table presents the average recorded investment and interest income recognized on loans accounted for under ASC 310-20 and which are impaired loans for the periods presented: Three Months Ended Three Months Ended March 31, 2019 March 31, 2018 Average Recorded Investment Interest Income Recognized Average Recorded Investment Interest Income Recognized Commercial, financial, agricultural $ 4,634 $ 10 $ 2,338 $ 11 Lease financing 87 — 159 — Real estate – construction 8,485 102 150 18 Real estate – 1-4 family mortgage 8,490 51 8,197 67 Real estate – commercial mortgage 7,030 28 6,670 92 Installment loans to individuals 149 1 104 1 Total $ 28,875 $ 192 $ 17,618 $ 189 Restructured Loans Restructured loans are those for which concessions have been granted to the borrower due to a deterioration of the borrower’s financial condition and which are performing in accordance with the new terms. Such concessions may include reduction in interest rates or deferral of interest or principal payments. In evaluating whether to restructure a loan, management analyzes the long-term financial condition of the borrower, including guarantor and collateral support, to determine whether the proposed concessions will increase the likelihood of repayment of principal and interest. The tables below illustrate the impact of modifications classified as restructured loans which were made during the periods presented and held on the Consolidated Balance Sheets at the respective period end. There were no newly restructured loans during the three months ended March 31, 2019. Number of Loans Pre- Modification Outstanding Recorded Investment Post- Modification Outstanding Recorded Investment Three months ended March 31, 2018 Real estate – 1-4 family mortgage 3 $ 576 $ 576 Real estate – commercial mortgage 1 83 78 Total 4 $ 659 $ 654 With respect to loans that were restructured during the three months ended March 31, 2018 , none have subsequently defaulted within twelve months of the restructuring. Restructured loans not performing in accordance with their restructured terms that are either contractually 90 days or more past due or placed on nonaccrual status are reported as nonperforming loans. There were no restructured loans contractually 90 days past due or more and still accruing at March 31, 2019 and four restructured loans in the amount of $571 contractually 90 days past due or more and still accruing at March 31, 2018 . The outstanding balance of restructured loans on nonaccrual status was $2,976 and $2,570 at March 31, 2019 and March 31, 2018 , respectively. Changes in the Company’s restructured loans are set forth in the table below: Number of Loans Recorded Investment Totals at January 1, 2019 51 $ 5,325 Additional advances or loans with concessions — 2 Reclassified as performing restructured loan 1 40 Reductions due to: Paid in full (1 ) (160 ) Principal paydowns — (45 ) Totals at March 31, 2019 51 $ 5,162 The allocated allowance for loan losses attributable to restructured loans was $32 and $92 at March 31, 2019 and March 31, 2018 , respectively. The Company had $44 and $20 in remaining availability under commitments to lend additional funds on these restructured loans at March 31, 2019 and March 31, 2018 , respectively. Credit Quality For commercial and commercial real estate loans, internal risk-rating grades are assigned by lending, credit administration or loan review personnel, based on an analysis of the financial and collateral strength and other credit attributes underlying each loan. Management analyzes the resulting ratings, as well as other external statistics and factors such as delinquency, to track the migration performance of the portfolio balances of these loans. Loan grades range between 1 and 9 , with 1 being loans with the least credit risk. Loans within the “Pass” grade (historically, those with a risk rating between 1 and 4) generally have a lower risk of loss and therefore a lower risk factor applied to the loan balances. Management has established more granular risk rating categories to better identify heightened credit risk as loans migrate downward in the risk rating system. The “Pass” grade is now reserved for loans with a risk rating between 1 and 4A , and the “Watch” grade (those with a risk rating of 4B and 4E ) is utilized on a temporary basis for “Pass” grade loans where a significant adverse risk-modifying action is anticipated in the near term. Loans that migrate toward the “Substandard” grade (those with a risk rating between 5 and 9 ) generally have a higher risk of loss and therefore a higher risk factor applied to the related loan balances. The following table presents the Company’s loan portfolio by risk-rating grades as of the dates presented: Pass Watch Substandard Total March 31, 2019 Commercial, financial, agricultural $ 675,107 $ 15,523 $ 11,533 $ 702,163 Real estate – construction 570,637 5,469 8,157 584,263 Real estate – 1-4 family mortgage 319,715 4,619 3,585 327,919 Real estate – commercial mortgage 2,308,236 50,355 24,550 2,383,141 Installment loans to individuals — — — — Total $ 3,873,695 $ 75,966 $ 47,825 $ 3,997,486 December 31, 2018 Commercial, financial, agricultural $ 615,803 $ 18,326 $ 6,973 $ 641,102 Real estate – construction 558,494 2,317 8,157 568,968 Real estate – 1-4 family mortgage 321,564 4,660 4,260 330,484 Real estate – commercial mortgage 2,210,100 54,579 24,144 2,288,823 Installment loans to individuals — — — — Total $ 3,705,961 $ 79,882 $ 43,534 $ 3,829,377 For portfolio balances of consumer, small balance consumer mortgage loans, such as 1-4 family mortgage loans, and certain other loans originated for other than commercial purposes, allowance factors are determined based on historical loss ratios by portfolio for the preceding eight quarters and may be adjusted by other qualitative criteria. The following table presents the performing status of the Company’s loan portfolio not subject to risk rating as of the dates presented: Performing Non- Performing Total March 31, 2019 Commercial, financial, agricultural $ 217,572 $ 1,346 $ 218,918 Lease financing 58,562 89 58,651 Real estate – construction 66,856 — 66,856 Real estate – 1-4 family mortgage 1,782,390 4,599 1,786,989 Real estate – commercial mortgage 342,170 875 343,045 Installment loans to individuals 93,532 122 93,654 Total $ 2,561,082 $ 7,031 $ 2,568,113 December 31, 2018 Commercial, financial, agricultural $ 233,046 $ 1,501 $ 234,547 Lease financing 61,776 89 61,865 Real estate – construction 66,551 — 66,551 Real estate – 1-4 family mortgage 1,751,994 5,412 1,757,406 Real estate – commercial mortgage 338,367 1,175 339,542 Installment loans to individuals 100,099 325 100,424 Total $ 2,551,833 $ 8,502 $ 2,560,335 Purchased Loans (In Thousands, Except Number of Loans) For purposes of this Note 5, all references to “loans” mean purchased loans. The following is a summary of purchased loans as of the dates presented: March 31, December 31, 2018 Commercial, financial, agricultural $ 387,376 $ 420,263 Real estate – construction 89,954 105,149 Real estate – 1-4 family mortgage 654,265 707,453 Real estate – commercial mortgage 1,357,446 1,423,144 Installment loans to individuals 33,653 37,408 Gross loans 2,522,694 2,693,417 Unearned income — — Loans, net of unearned income $ 2,522,694 $ 2,693,417 Past Due and Nonaccrual Loans The Company’s policies with respect to placing loans on nonaccrual status or charging off loans, and its accounting for interest on any such loans, are described above in Note 4, “Non Purchased Loans.” The following table provides an aging of past due and nonaccrual loans, segregated by class, as of the dates presented: Accruing Loans Nonaccruing Loans 30-89 Days Past Due 90 Days or More Past Due Current Loans Total Loans 30-89 Days Past Due 90 Days or More Past Due Current Loans Total Loans Total Loans March 31, 2019 Commercial, financial, agricultural $ 5,596 $ 607 $ 379,993 $ 386,196 $ 311 $ 523 $ 346 $ 1,180 $ 387,376 Real estate – construction 2,258 — 87,696 89,954 — — — — 89,954 Real estate – 1-4 family mortgage 9,631 2,653 637,630 649,914 299 2,079 1,973 4,351 654,265 Real estate – commercial mortgage 2,605 1,903 1,351,020 1,355,528 — 1,460 458 1,918 1,357,446 Installment loans to individuals 956 273 32,045 33,274 1 128 250 379 33,653 Total $ 21,046 $ 5,436 $ 2,488,384 $ 2,514,866 $ 611 $ 4,190 $ 3,027 $ 7,828 $ 2,522,694 December 31, 2018 Commercial, financial, agricultural $ 1,811 $ 97 $ 417,786 $ 419,694 $ — $ 477 $ 92 $ 569 $ 420,263 Real estate – construction 1,235 68 103,846 105,149 — — — — 105,149 Real estate – 1-4 family mortgage 8,981 4,455 690,697 704,133 202 1,881 1,237 3,320 707,453 Real estate – commercial mortgage 5,711 2,410 1,413,346 1,421,467 — 1,401 276 1,677 1,423,144 Installment loans to individuals 1,342 202 35,594 37,138 2 24 244 270 37,408 Total $ 19,080 $ 7,232 $ 2,661,269 $ 2,687,581 $ 204 $ 3,783 $ 1,849 $ 5,836 $ 2,693,417 Impaired Loans The Company’s policies with respect to the determination of whether a loan is impaired and the treatment of such loans are described above in Note 4, “Non Purchased Loans.” Loans accounted for under ASC 310-20, and which are impaired loans recognized in conformity with ASC 310, segregated by class, were as follows as of the dates presented: Unpaid Contractual Principal Balance Recorded Investment With Allowance Recorded Investment With No Allowance Total Recorded Investment Related Allowance March 31, 2019 Commercial, financial, agricultural $ 1,287 $ 914 $ 314 $ 1,228 $ 198 Real estate – construction 320 320 — 320 2 Real estate – 1-4 family mortgage 6,177 896 4,641 5,537 14 Real estate – commercial mortgage 2,718 1,858 567 2,425 119 Installment loans to individuals 409 322 57 379 3 Total $ 10,911 $ 4,310 $ 5,579 $ 9,889 $ 336 December 31, 2018 Commercial, financial, agricultural $ 671 $ 600 $ 11 $ 611 $ 173 Real estate – construction 576 576 — 576 5 Real estate – 1-4 family mortgage 5,787 1,381 3,780 5,161 18 Real estate – commercial mortgage 2,266 2,066 146 2,212 338 Installment loans to individuals 280 246 24 270 3 Totals $ 9,580 $ 4,869 $ 3,961 $ 8,830 $ 537 The following table presents the average recorded investment and interest income recognized on loans accounted for under ASC 310-20 and which are impaired loans for the periods presented: Three Months Ended Three Months Ended March 31, 2019 March 31, 2018 Average Recorded Investment Interest Income Recognized Average Recorded Investment Interest Income Recognized Commercial, financial, agricultural $ 1,242 $ 3 $ 363 $ 3 Real estate – construction 320 — 252 1 Real estate – 1-4 family mortgage 5,577 42 6,320 40 Real estate – commercial mortgage 2,630 12 1,642 18 Installment loans to individuals 397 — 160 — Total $ 10,166 $ 57 $ 8,737 $ 62 Loans accounted for under ASC 310-30, “Loans and Debt Securities Acquired with Deteriorated Credit Quality” (“ASC 310-30”), and which are impaired loans recognized in conformity with ASC 310, segregated by class, were as follows as of the dates presented: Unpaid Contractual Principal Balance Recorded Investment With Allowance Recorded Investment With No Allowance Total Recorded Investment Related Allowance March 31, 2019 Commercial, financial, agricultural $ 39,542 $ 3,292 $ 21,555 $ 24,847 $ 129 Real estate – 1-4 family mortgage 52,787 10,715 33,109 43,824 420 Real estate – commercial mortgage 158,927 59,827 76,455 136,282 1,973 Installment loans to individuals 7,555 665 3,228 3,893 2 Total $ 258,811 $ 74,499 $ 134,347 $ 208,846 $ 2,524 December 31, 2018 Commercial, financial, agricultural $ 44,403 $ 3,779 $ 25,364 $ 29,143 $ 161 Real estate – 1-4 family mortgage 53,823 12,169 36,074 48,243 488 Real estate – commercial mortgage 165,700 62,003 78,435 140,438 1,901 Installment loans to individuals 8,290 660 3,770 4,430 2 Totals $ 272,216 $ 78,611 $ 143,643 $ 222,254 $ 2,552 The following table presents the average recorded investment and interest income recognized on loans accounted for under ASC 310-30 and which are impaired loans for the periods presented: Three Months Ended Three Months Ended March 31, 2019 March 31, 2018 Average Recorded Investment Interest Income Recognized Average Recorded Investment Interest Income Recognized Commercial, financial, agricultural $ 27,403 $ 427 $ 16,899 $ 225 Real estate – 1-4 family mortgage 44,177 572 58,749 673 Real estate – commercial mortgage 137,421 1,796 167,365 1,972 Installment loans to individuals 4,144 106 1,687 18 Total $ 213,145 $ 2,901 $ 244,700 $ 2,888 Restructured Loans An explanation of what constitutes a “restructured loan,” and management’s analysis in determining whether to restructure a loan, are described above in Note 4, “Non Purchased Loans.” The tables below illustrate the impact of modifications classified as restructured loans which were made during the periods presented and held on the Consolidated Balance Sheets at the respective period end. There were no newly restructured loans during the three months ended March 31, 2019. Number of Loans Pre- Modification Outstanding Recorded Investment Post- Modification Outstanding Recorded Investment Three months ended March 31, 2018 Commercial, financial, agricultural 1 $ 48 $ 44 Real estate – commercial mortgage 1 8 7 Total 2 $ 56 $ 51 With respect to loans that were restructured during the three months ended March 31, 2018 , none have subsequently defaulted within twelve months of the restructuring. There were four restructured loans in the amount of $414 contractually 90 days past due or more and still accruing at March 31, 2019 and no restructured loans contractually 90 days past due or more and still accruing at March 31, 2018 . The outstanding balance of restructured loans on nonaccrual status was $1,851 and $616 at March 31, 2019 and March 31, 2018 , respectively. Changes in the Company’s restructured loans are set forth in the table below: Number of Loans Recorded Investment Totals at January 1, 2019 54 $ 7,495 Additional advances or loans with concessions — 174 Reclassified as performing restructured loan 5 212 Reductions due to: Reclassified to nonperforming loans (2 ) (269 ) Paid in full (2 ) (104 ) Principal paydowns — (261 ) Totals at March 31, 2019 55 $ 7,247 The allocated allowance for loan losses attributable to restructured loans was $86 and $100 at March 31, 2019 and March 31, 2018 , respectively. The Company had $3 and $2 in remaining availability under commitments to lend additional funds on these restructured loans at March 31, 2019 and March 31, 2018 , respectively. Credit Quality A discussion of the Company’s policies regarding internal risk-rating of loans is discussed above in Note 4, “Non Purchased Loans.” The following table presents the Company’s loan portfolio by risk-rating grades as of the dates presented: Pass Watch Substandard Total March 31, 2019 Commercial, financial, agricultural $ 304,994 $ 31,682 $ 6,355 $ 343,031 Real estate – construction 85,670 — — 85,670 Real estate – 1-4 family mortgage 99,772 5,741 6,698 112,211 Real estate – commercial mortgage 1,109,980 65,879 13,171 1,189,030 Installment loans to individuals — — 1 1 Total $ 1,600,416 $ 103,302 $ 26,225 $ 1,729,943 December 31, 2018 Commercial, financial, agricultural $ 333,147 $ 33,857 $ 2,744 $ 369,748 Real estate – construction 101,122 — 842 101,964 Real estate – 1-4 family mortgage 113,874 7,347 7,585 128,806 Real estate – commercial mortgage 1,198,540 43,046 9,984 1,251,570 Installment loans to individuals — — 2 2 Total $ 1,746,683 $ 84,250 $ 21,157 $ 1,852,090 The following table presents the performing status of the Company’s loan portfolio not subject to risk rating as of the dates presented: Performing Non- Performing Total March 31, 2019 Commercial, financial, agricultural $ 19,454 $ 44 $ 19,498 Real estate – construction 4,284 — 4,284 Real estate – 1-4 family mortgage 494,730 3,500 498,230 Real estate – commercial mortgage 32,023 111 32,134 Installment loans to individuals 29,324 435 29,759 Total $ 579,815 $ 4,090 $ 583,905 December 31, 2018 Commercial, financial, agricultural $ 21,303 $ 69 $ 21,372 Real estate – construction 3,185 — 3,185 Real estate – 1-4 family mortgage 526,699 3,705 530,404 Real estate – commercial mortgage 30,951 185 31,136 Installment loans to individuals 32,676 300 32,976 Total $ 614,814 $ 4,259 $ 619,073 Loans Purchased with Deteriorated Credit Quality Loans purchased in business combinations that exhibited, at the date of acquisition, evidence of deterioration of the credit quality since origination, such that it was probable that all contractually required payments would not be collected, were as follows as of the dates presented: Total Purchased Credit Deteriorated Loans March 31, 2019 Commercial, financial, agricultural $ 24,847 Real estate – 1-4 family mortgage 43,824 Real estate – commercial mortgage 136,282 Installment loans to individuals 3,893 Total $ 208,846 December 31, 2018 Commercial, financial, agricultural $ 29,143 Real estate – 1-4 family mortgage 48,243 Real estate – commercial mortgage 140,438 Installment loans to individuals 4,430 Total $ 222,254 The following table presents the fair value of loans that exhibited evidence of deteriorated credit quality at the time of acquisition at March 31, 2019 : Total Purchased Credit Deteriorated Loans Contractually-required principal and interest $ 297,164 Nonaccretable difference (1) (57,848 ) Cash flows expected to be collected 239,316 Accretable yield (2) (30,470 ) Fair value $ 208,846 (1) Represents contractual principal and interest cash flows of $47,930 and $9,918 , respectively, not expected to be collected. (2) Represents contractual principal and interest cash flows of $1,606 and $28,864 , respectively, expected to be collected. Changes in the accretable yield of loans purchased with deteriorated credit quality were as follows as of March 31, 2019 : Total Purchased Credit Deteriorated Loans Balance at January 1, 2019 $ (34,265 ) Reclassification from nonaccretable difference (2,657 ) Accretion 5,582 Charge-offs 870 Balance at March 31, 2019 $ (30,470 ) The following table presents the fair value of loans purchased from Brand as of the September 1, 2018 acquisition date. At acquisition date: September 1, 2018 Contractually-required principal and interest $ 1,625,079 Nonaccretable difference (123,399 ) Cash flows expected to be collected 1,501,680 Accretable yield (170,651 ) Fair value $ 1,331,029 |