Loans | Loans Classes of loans are as follows: March 31, December 31, (Amounts In Thousands) Agricultural $ 93,573 $ 92,673 Commercial and financial 227,403 229,501 Real estate: Construction, 1 to 4 family residential 73,868 72,279 Construction, land development and commercial 105,466 113,807 Mortgage, farmland 238,109 236,454 Mortgage, 1 to 4 family first liens 916,408 912,059 Mortgage, 1 to 4 family junior liens 152,183 152,625 Mortgage, multi-family 351,090 352,434 Mortgage, commercial 402,073 383,314 Loans to individuals 29,739 30,072 Obligations of state and political subdivisions 53,153 52,725 $ 2,643,065 $ 2,627,943 Net unamortized fees and costs 943 952 $ 2,644,008 $ 2,628,895 Less allowance for loan losses 36,520 37,810 $ 2,607,488 $ 2,591,085 Changes in the allowance for loan losses, the allowance for loan losses applicable to impaired loans and the related loan balance of impaired loans for the three months ended March 31, 2019 were as follows: Three Months Ended March 31, 2019 Agricultural Commercial and Financial Real Estate: Construction and land development Real Estate: Mortgage, farmland Real Estate: Mortgage, 1 to 4 family Real Estate: Mortgage, multi- family and commercial Other Total (Amounts In Thousands) Allowance for loan losses: Beginning balance $ 2,789 $ 5,826 $ 3,292 $ 3,972 $ 12,516 $ 8,165 $ 1,250 $ 37,810 Charge-offs — (180 ) (8 ) — (177 ) (4 ) (108 ) (477 ) Recoveries 10 184 2 5 110 85 37 433 Provision (258 ) 174 (358 ) (106 ) (819 ) (23 ) 144 (1,246 ) Ending balance $ 2,541 $ 6,004 $ 2,928 $ 3,871 $ 11,630 $ 8,223 $ 1,323 $ 36,520 Ending balance, individually evaluated for impairment $ 258 $ 1,375 $ — $ — $ 74 $ 483 $ 59 $ 2,249 Ending balance, collectively evaluated for impairment $ 2,283 $ 4,629 $ 2,928 $ 3,871 $ 11,556 $ 7,740 $ 1,264 $ 34,271 Loans: Ending balance $ 93,573 $ 227,403 $ 179,334 $ 238,109 $ 1,068,591 $ 753,163 $ 82,892 $ 2,643,065 Ending balance, individually evaluated for impairment $ 2,740 $ 4,039 $ 832 $ 4,189 $ 6,879 $ 4,333 $ 59 $ 23,071 Ending balance, collectively evaluated for impairment $ 90,833 $ 223,364 $ 178,502 $ 233,920 $ 1,061,712 $ 748,830 $ 82,833 $ 2,619,994 Changes in the allowance for loan losses for the three months ended March 31, 2018 were as follows: Three Months Ended March 31, 2018 Agricultural Commercial and Financial Real Estate: Construction and land development Real Estate: Mortgage, farmland Real Estate: Mortgage, 1 to 4 family Real Estate: Mortgage, multi- family and commercial Other Total (Amounts In Thousands) Allowance for loan losses: Beginning balance $ 2,294 $ 4,837 $ 2,989 $ 3,669 $ 8,668 $ 5,700 $ 1,243 $ 29,400 Charge-offs — (30 ) — — (121 ) (1 ) (115 ) (267 ) Recoveries 12 248 143 — 98 4 37 542 Provision (53 ) (397 ) (352 ) 40 10 91 (104 ) (765 ) Ending balance $ 2,253 $ 4,658 $ 2,780 $ 3,709 $ 8,655 $ 5,794 $ 1,061 $ 28,910 Ending balance, individually evaluated for impairment $ 199 $ 759 $ 40 $ — $ 75 $ 493 $ 63 $ 1,629 Ending balance, collectively evaluated for impairment $ 2,054 $ 3,899 $ 2,740 $ 3,709 $ 8,580 $ 5,301 $ 998 $ 27,281 Loans: Ending balance $ 83,940 $ 214,004 $ 166,761 $ 218,462 $ 980,150 $ 705,576 $ 83,032 $ 2,451,925 Ending balance, individually evaluated for impairment $ 2,823 $ 2,550 $ 946 $ 3,615 $ 6,564 $ 8,025 $ 63 $ 24,586 Ending balance, collectively evaluated for impairment $ 81,117 $ 211,454 $ 165,815 $ 214,847 $ 973,586 $ 697,551 $ 82,969 $ 2,427,339 The following table presents the credit quality indicators by type of loans in each category as of March 31, 2019 and December 31, 2018 , respectively (amounts in thousands): Agricultural Commercial and Financial Real Estate: Construction, 1 to 4 family residential Real Estate: Construction, land development and commercial March 31, 2019 Grade: Excellent $ 4,091 $ 2,718 $ — $ 203 Good 15,703 47,718 12,376 17,416 Satisfactory 39,421 123,709 44,934 57,452 Monitor 27,703 38,547 14,185 21,312 Special Mention 836 8,566 1,978 7,576 Substandard 5,819 6,145 395 1,507 Total $ 93,573 $ 227,403 $ 73,868 $ 105,466 Real Estate: Mortgage, farmland Real Estate: Mortgage, 1 to 4 family first liens Real Estate: Mortgage, 1 to 4 family junior liens Real Estate: Mortgage, multi- family March 31, 2019 Grade: Excellent $ 5,469 $ 2,307 $ 526 $ 22,051 Good 50,050 31,571 4,071 59,203 Satisfactory 126,988 756,430 138,533 189,192 Monitor 45,440 97,980 6,241 58,506 Special Mention 1,117 9,414 1,141 15,947 Substandard 9,045 18,706 1,671 6,191 Total $ 238,109 $ 916,408 $ 152,183 $ 351,090 Real Estate: Mortgage, commercial Loans to individuals Obligations of state and political subdivisions Total March 31, 2019 Grade: Excellent $ 35,391 $ — $ 7,985 $ 80,741 Good 86,117 193 15,414 339,832 Satisfactory 195,035 28,663 21,563 1,721,920 Monitor 74,094 588 8,191 392,787 Special Mention 2,901 229 — 49,705 Substandard 8,535 66 — 58,080 Total $ 402,073 $ 29,739 $ 53,153 $ 2,643,065 Agricultural Commercial and Financial Real Estate: Construction, 1 to 4 family residential Real Estate: Construction, land development and commercial December 31, 2018 Grade: Excellent $ 3,667 $ 3,322 $ — $ 209 Good 15,342 51,562 13,029 16,667 Satisfactory 39,897 121,759 42,043 68,123 Monitor 27,510 35,897 15,045 19,888 Special Mention 647 11,418 1,767 7,635 Substandard 5,610 5,543 395 1,285 Total $ 92,673 $ 229,501 $ 72,279 $ 113,807 Real Estate: Mortgage, farmland Real Estate: Mortgage, 1 to 4 family first liens Real Estate: Mortgage, 1 to 4 family junior liens Real Estate: Mortgage, multi- family December 31, 2018 Grade: Excellent $ 5,619 $ 2,715 $ 520 $ 22,058 Good 52,364 33,134 4,569 60,047 Satisfactory 126,706 752,473 138,533 187,641 Monitor 41,486 96,187 6,242 60,398 Special Mention 1,055 10,439 1,130 16,065 Substandard 9,224 17,111 1,631 6,225 Total $ 236,454 $ 912,059 $ 152,625 $ 352,434 Real Estate: Mortgage, commercial Loans to individuals Obligations of state and political subdivisions Total December 31, 2018 Grade: Excellent $ 34,096 $ — $ 8,117 $ 80,323 Good 86,453 315 15,652 349,134 Satisfactory 177,271 28,797 20,685 1,703,928 Monitor 74,990 647 8,271 386,561 Special Mention 3,228 217 — 53,601 Substandard 7,276 96 — 54,396 Total $ 383,314 $ 30,072 $ 52,725 $ 2,627,943 The below are descriptions of the credit quality indicators: Excellent – Excellent rated loans are prime quality loans covered by highly liquid collateral with generous margins or supported by superior current financial conditions reflecting substantial net worth, relative to total credit extended, and based on assets of a stable and non-speculative nature whose values can be readily verified. Identified repayment source or cash flow is abundant and assured. Good – Good rated loans are adequately secured by readily marketable collateral or good financial condition characterized by liquidity, flexibility and sound net worth. Loans are supported by sound primary and secondary payment sources and timely and accurate financial information. Satisfactory – Satisfactory rated loans are loans to borrowers of average financial means not especially vulnerable to changes in economic or other circumstances, where the major support for the extension is sufficient collateral of a marketable nature, and the primary source of repayment is seen to be clear and adequate. Monitor – Monitor rated loans are identified by management as warranting special attention for a variety of reasons that may bear on ultimate collectability. This may be due to adverse trends, a particular industry, loan structure, or repayment that is dependent on projections, or a one-time occurrence. Special Mention – Special mention rated loans are supported by a marginal payment capacity and are marginally protected by collateral. There are identified weaknesses that if not monitored and corrected may adversely affect the Company’s credit position. A special mention credit would typically have a weakness in one of the general categories (cash flow, collateral position or payment history) but not in all categories. Substandard – Substandard loans are not adequately supported by the paying capacity of the borrower and may be inadequately collateralized. These loans have a well-defined weakness or weaknesses. For these loans, it is more probable than not that the Company could sustain some loss if the deficiency(ies) is not corrected. Past due loans as of March 31, 2019 and December 31, 2018 were as follows: 30 - 59 Days Past Due 60 - 89 Days Past Due 90 Days or More Past Due Total Past Due Current Total Loans Receivable Accruing Loans Past Due 90 Days or More (Amounts In Thousands) March 31, 2019 Agricultural $ 2,057 $ 445 $ 1,616 $ 4,118 $ 89,455 $ 93,573 $ 583 Commercial and financial 1,158 371 242 1,771 225,632 227,403 — Real estate: Construction, 1 to 4 family residential 692 — — 692 73,176 73,868 — Construction, land development and commercial 1,036 32 — 1,068 104,398 105,466 — Mortgage, farmland 6,954 — 630 7,584 230,525 238,109 — Mortgage, 1 to 4 family first liens 9,145 666 2,790 12,601 903,807 916,408 — Mortgage, 1 to 4 family junior liens 190 395 — 585 151,598 152,183 — Mortgage, multi-family 143 — — 143 350,947 351,090 — Mortgage, commercial 1,633 — 281 1,914 400,159 402,073 — Loans to individuals 124 46 — 170 29,569 29,739 — Obligations of state and political subdivisions — — — — 53,153 53,153 — $ 23,132 $ 1,955 $ 5,559 $ 30,646 $ 2,612,419 $ 2,643,065 $ 583 December 31, 2018 Agricultural $ 1,026 $ — $ 135 $ 1,161 $ 91,512 $ 92,673 $ — Commercial and financial 988 459 225 1,672 227,829 229,501 — Real estate: Construction, 1 to 4 family residential — — 212 212 72,067 72,279 212 Construction, land development and commercial 233 202 — 435 113,372 113,807 — Mortgage, farmland 193 388 — 581 235,873 236,454 — Mortgage, 1 to 4 family first liens 3,972 833 3,234 8,039 904,020 912,059 158 Mortgage, 1 to 4 family junior liens 199 36 — 235 152,390 152,625 — Mortgage, multi-family — — — — 352,434 352,434 — Mortgage, commercial 733 344 — 1,077 382,237 383,314 — Loans to individuals 195 — 22 217 29,855 30,072 — Obligations of state and political subdivisions — — — — 52,725 52,725 — $ 7,539 $ 2,262 $ 3,828 $ 13,629 $ 2,614,314 $ 2,627,943 $ 370 The Company does not have a material amount of loans that are past due less than 90 days where there are serious doubts as to the ability of the borrowers to comply with the loan repayment terms. Certain impaired loan information by loan type at March 31, 2019 and December 31, 2018 , was as follows: March 31, 2019 December 31, 2018 Non-accrual loans (1) Accruing loans past due 90 days or more TDR loans Non- accrual loans (1) Accruing loans past due 90 days or more TDR loans (Amounts In Thousands) (Amounts In Thousands) Agricultural $ 1,308 $ 583 $ 97 $ 1,338 $ — $ 120 Commercial and financial 1,857 — 2,143 1,476 — 2,686 Real estate: Construction, 1 to 4 family residential 395 — — — 212 — Construction, land development and commercial — — 326 — — 328 Mortgage, farmland 1,037 — 3,903 1,062 — 3,301 Mortgage, 1 to 4 family first liens 5,833 — 1,132 5,799 158 1,143 Mortgage, 1 to 4 family junior liens — — 24 — — 24 Mortgage, multi-family 143 — — 145 — — Mortgage, commercial 1,196 — 925 1,009 — 937 $ 11,769 $ 583 $ 8,550 $ 10,829 $ 370 $ 8,539 (1) There were $5.07 million and $4.84 million of TDR loans included within nonaccrual loans as of March 31, 2019 and December 31, 2018 , respectively. Loans 90 days or more past due that are still accruing interest increased $0.21 million from December 31, 2018 to March 31, 2019 due to an increase in the number of accruing loans past due 90 days or more. As of March 31, 2019 there were 3 accruing loans past due 90 days or more. The average accruing loans past due as of March 31, 2019 are $0.19 million . There were 2 accruing loans past due 90 days or more as of December 31, 2018 and the average loan balance was $0.19 million . The accruing loans past due 90 days or more balances are believed to be adequately collateralized and the Company expects to collect all principal and interest as contractually due under these loans. The Company may modify the terms of a loan to maximize the collection of amounts due. Such a modification is considered a troubled debt restructuring (“TDR”). In most cases, the modification is either a reduction in interest rate, conversion to interest only payments or an extension of the maturity date. The borrower is experiencing financial difficulties or is expected to experience difficulties in the near-term, so a concessionary modification is granted to the borrower that would otherwise not be considered. TDR loans accrue interest as long as the borrower complies with the revised terms and conditions and has demonstrated repayment performance at a level commensurate with the modified terms over several payment cycles. Below is a summary of information for TDR loans as of March 31, 2019 and December 31, 2018 : March 31, 2019 December 31, 2018 Number of contracts Recorded investment Commitments outstanding Number of contracts Recorded investment Commitments outstanding (Amounts In Thousands) (Amounts In Thousands) Agricultural 6 $ 1,512 $ 12 5 $ 1,316 $ 91 Commercial and financial 13 3,646 135 13 3,867 75 Real estate: Construction, 1 to 4 family residential — — — — — — Construction, land development and commercial 2 326 — 2 328 — Mortgage, farmland 9 4,873 — 8 4,291 — Mortgage, 1 to 4 family first liens 15 1,695 — 16 1,710 — Mortgage, 1 to 4 family junior liens 1 24 — 1 24 — Mortgage, multi-family — — — — — — Mortgage, commercial 9 1,798 — 9 1,839 — Loans to individuals — — — — — — 55 $ 13,874 $ 147 54 $ 13,375 $ 166 The following is a summary of TDR loans that were modified during the three months ended March 31, 2019 : Three Months Ended March 31, 2019 Number of contracts Pre-modification recorded investment Post-modification recorded investment (Amounts In Thousands) Agricultural 1 $ 250 $ 250 Commercial and financial — — — Real estate: Construction, 1 to 4 family residential — — — Construction, land development and commercial — — — Mortgage, farmland 1 620 620 Mortgage, 1 to 4 family first lien — — — Mortgage, 1 to 4 family junior liens — — — Mortgage, multi-family — — — Mortgage, commercial — — — 2 $ 870 $ 870 The Company had commitments to lend $0.15 million in additional borrowings to restructured loan customers as of March 31, 2019 . The Company had commitments to lend $0.17 million in additional borrowings to restructured loan customers as of December 31, 2018 . These commitments were in the normal course of business. The additional borrowings were not used to facilitate payments on these loans. There was one TDR loan that was in payment default (defined as past due 90 days or more) totaling $0.25 million during the period ended March 31, 2019 and none for the year ended December 31, 2018 . Information regarding impaired loans as of and for the three months ended March 31, 2019 is as follows: March 31, 2019 Three Months Ended Recorded Investment Unpaid Principal Balance Related Allowance Average Recorded Investment Interest Income Recognized With no related allowance recorded: (Amounts In Thousands) Agricultural $ 1,359 $ 1,653 $ — $ 1,377 $ 9 Commercial and financial 1,639 2,493 — 1,682 11 Real estate: Construction, 1 to 4 family residential 110 148 — 111 — Construction, land development and commercial 722 738 — 722 4 Mortgage, farmland 4,189 4,667 — 4,198 39 Mortgage, 1 to 4 family first liens 6,068 7,860 — 6,143 9 Mortgage, 1 to 4 family junior liens — 252 — — — Mortgage, multi-family 143 213 — 144 — Mortgage, commercial 2,047 2,745 — 2,068 10 Loans to individuals — 14 — — — $ 16,277 $ 20,783 $ — $ 16,445 $ 82 With an allowance recorded: Agricultural $ 1,381 $ 1,552 $ 258 $ 1,396 $ 8 Commercial and financial 2,400 2,429 1,375 2,476 23 Real estate: Construction, 1 to 4 family residential — — — — — Construction, land development and commercial — — — — — Mortgage, farmland — — — — — Mortgage, 1 to 4 family first liens 787 794 73 789 4 Mortgage, 1 to 4 family junior liens 24 24 1 24 — Mortgage, multi-family 1,402 1,402 282 1,408 17 Mortgage, commercial 741 741 201 744 8 Loans to individuals 59 59 59 56 2 $ 6,794 $ 7,001 $ 2,249 $ 6,893 $ 62 Total: Agricultural $ 2,740 $ 3,205 $ 258 $ 2,773 $ 17 Commercial and financial 4,039 4,922 1,375 4,158 34 Real estate: Construction, 1 to 4 family residential 110 148 — 111 — Construction, land development and commercial 722 738 — 722 4 Mortgage, farmland 4,189 4,667 — 4,198 39 Mortgage, 1 to 4 family first liens 6,855 8,654 73 6,932 13 Mortgage, 1 to 4 family junior liens 24 276 1 24 — Mortgage, multi-family 1,545 1,615 282 1,552 17 Mortgage, commercial 2,788 3,486 201 2,812 18 Loans to individuals 59 73 59 56 2 $ 23,071 $ 27,784 $ 2,249 $ 23,338 $ 144 Information regarding impaired loans as of December 31, 2018 is as follows: Recorded Investment Unpaid Principal Balance Related Allowance With no related allowance recorded: (Amounts In Thousands) Agricultural $ 1,395 $ 1,663 $ — Commercial and financial 1,650 2,503 — Real estate: Construction, 1 to 4 family residential 111 148 — Construction, land development and commercial 328 344 — Mortgage, farmland 3,612 4,071 — Mortgage, 1 to 4 family first liens 6,089 7,819 — Mortgage, 1 to 4 family junior liens — 254 — Mortgage, multi-family 145 213 — Mortgage, commercial 1,871 2,486 — Loans to individuals — 14 — $ 15,201 $ 19,515 $ — With an allowance recorded: Agricultural $ 1,065 $ 1,229 $ 479 Commercial and financial 2,512 2,512 1,189 Real estate: Construction, 1 to 4 family residential 698 698 4 Construction, land development and commercial — — — Mortgage, farmland — — — Mortgage, 1 to 4 family first liens 899 974 70 Mortgage, 1 to 4 family junior liens 24 24 2 Mortgage, multi-family 7,447 7,447 305 Mortgage, commercial 75 75 1 Loans to individuals 64 64 64 $ 12,784 $ 13,023 $ 2,114 Total: Agricultural $ 2,460 $ 2,892 $ 479 Commercial and financial 4,162 5,015 1,189 Real estate: Construction, 1 to 4 family residential 809 846 4 Construction, land development and commercial 328 344 — Mortgage, farmland 3,612 4,071 — Mortgage, 1 to 4 family first liens 6,988 8,793 70 Mortgage, 1 to 4 family junior liens 24 278 2 Mortgage, multi-family 7,592 7,660 305 Mortgage, commercial 1,946 2,561 1 Loans to individuals 64 78 64 $ 27,985 $ 32,538 $ 2,114 Impaired loans decreased $4.91 million from December 31, 2018 to March 31, 2019 . Impaired loans include any loan that has been placed on nonaccrual status, accruing loans past due 90 days or more and TDR loans. Impaired loans also include loans that, based on management’s evaluation of current information and events, the Company expects to be unable to collect in full according to the contractual terms of the original loan agreement. Impaired loans were 0.87% of loans held for investment as of March 31, 2019 and 1.06% as of December 31, 2018 . The decrease in impaired loans is due mainly to a decrease of $5.99 million in relationships with a specific allowance for losses, and is offset by a $0.21 million increase in 90 days or more accruing loans, an increase in TDR loans of $0.50 million , and an increase in nonaccrual loans of $0.94 million from December 31, 2018 to March 31, 2019 . The Company regularly reviews a substantial portion of the loans in the portfolio and assesses whether the loans are impaired in accordance with ASC 310. If the loans are impaired, the Company determines if a specific allowance is appropriate. In addition, the Company's management also reviews and, where determined necessary, provides allowances for particular loans based upon (1) reviews of specific borrowers and (2) management’s assessment of areas that management considers are of higher credit risk, including loans that have been restructured. Loans that are determined not to be impaired and for which there are no specific allowances are classified into one or more risk categories. Based upon the risk category assigned, the Company allocates a percentage, as determined by management, for a required allowance needed. The determination of the appropriate percentage begins with historical loss experience factors, which are then adjusted for levels and trends in past due loans, levels and trends in charged-off and recovered loans, trends in volume growth, trends in problem and watch loans, trends in restructured loans, local economic trends and conditions, industry and other conditions, and effects of changing interest rates. Specific allowances for losses on impaired loans are established if the loan balances exceed the net present value of the relevant future cash flows or the fair value of the relevant collateral based on updated appraisals and/or updated collateral analysis for the properties if the loan is collateral dependent. The Company may recognize a charge off or record a specific allowance related to an impaired loan if there is a collateral shortfall or it is unlikely the borrower can make all principal and interest payments as contractually due. For loans that are collateral dependent, losses are evaluated based on the portion of a loan that exceeds the fair market value of the collateral. In general, this is the amount that the carrying value of the loan exceeds the related appraised value less estimated costs to sell the collateral. Generally, it is the Company’s policy not to rely on appraisals that are older than one year prior to the date the impairment is being measured. The most recent appraisal values may be adjusted if, in the Company’s judgment, experience and other market data indicate that the property’s value, use, condition, exit market or other variable affecting its value may have changed since the appraisal was performed, consistent with the December 2006 joint interagency guidance on the allowance for loan losses. The charge off or loss adjustment supported by an appraisal is considered the minimum charge off. Any adjustments made to the appraised value are to provide an additional charge off or specific reserve based on the applicable facts and circumstances. In instances where there is an estimated decline in value, a specific reserve may be provided or a charge off taken pending confirmation of the amount of the loss from an updated appraisal. Upon receipt of the new appraisals, an additional specific reserve may be provided or charge off taken based on the appraised value of the collateral. On average, appraisals are obtained within one month of order. |