Loans | LOANS The following table presents loans by class as of the dates indicated: December 31, 2015 2014 Real estate loans: Commercial $ 1,793,258 $ 1,639,422 Construction: Land acquisition & development 224,066 220,443 Residential 111,763 96,580 Commercial 94,890 101,246 Total construction loans 430,719 418,269 Residential 1,032,851 999,903 Agricultural 156,234 167,659 Total real estate loans 3,413,062 3,225,253 Consumer: Indirect consumer 622,529 552,863 Other consumer 153,717 144,141 Credit card 68,107 65,467 Total consumer loans 844,353 762,471 Commercial 792,416 740,073 Agricultural 142,151 124,859 Other, including overdrafts 1,339 3,959 Loans held for investment 5,193,321 4,856,615 Mortgage loans held for sale 52,875 40,828 Total loans $ 5,246,196 $ 4,897,443 The Company has lending policies and procedures in place that are designed to maximize loan income within an acceptable level of risk. Management reviews and approves these policies and procedures on a regular basis. A reporting system supplements the review process by providing management with frequent reports related to loan production, loan quality, concentrations of credit, loan delinquencies and internally risk-classified loans. Real estate loans include construction and permanent financing for both single-family and multi-unit properties, term loans for commercial, agricultural and industrial property and/or buildings and home equity loans and lines of credit secured by real estate. Longer-term residential real estate loans are generally sold in the secondary market. Those residential real estate loans not sold are typically secured by first liens on the financed property and generally mature in less than fifteen years . Home equity loans and lines of credit are typically secured by first or second liens on residential real estate and generally do not exceed a loan to value ratio of 80% . The Company had home equity loans and lines of credit of $ 298,661 and $ 298,692 as of December 31, 2015 and 2014 , respectively. Commercial and agricultural real estate loans are generally secured by first liens on income-producing real estate and generally mature in less than 5 years . Construction loans are primarily to commercial builders for residential lot development and the construction of single-family residences and commercial real estate properties. Construction loans are generally underwritten pursuant to pre-approved permanent financing. During the construction phase the borrower pays interest only. Consumer loans include direct personal loans, credit card loans, lines of credit and indirect dealer loans for the purchase of automobiles, recreational vehicles, boats and other consumer goods. Personal loans and indirect dealer loans are generally secured by automobiles, boats and other types of personal property and are made on an installment basis. Credit cards are offered to individuals in our market areas. Lines of credit are generally floating rate loans that are unsecured or secured by personal property. Commercial loans include a mix of variable and fixed rate loans made to small and medium-sized manufacturing, wholesale, retail and service businesses for working capital needs and business expansions. Commercial loans generally include lines of credit, business credit cards and loans with maturities of five years or less. The loans are generally made with business operations as the primary source of repayment, but also include collateralization by inventory, accounts receivable, equipment and/or personal guarantees. Agricultural loans generally consist of short and medium-term loans and lines of credit that are primarily used for crops, livestock, equipment and general operations. Agricultural loans are ordinarily secured by assets such as livestock or equipment and are repaid from the operations of the farm or ranch. Agricultural loans generally have maturities of five years or less, with operating lines for one production season. Included in the loan table above, are loans acquired in business combinations including certain loans that had evidence of deterioration in credit quality since origination and for which it was probable, at acquisition, that all contractually required payments would not be collected. The following table displays the outstanding unpaid principal balance, accrued interest receivable and accrual status of loans acquired with credit impairment as of December 31, 2015 and 2014 . December 31, 2015 2014 Outstanding balance $ 33,755 $ 41,910 Carrying value: Loans on accrual status 21,507 31,870 Loans on non-accrual status — — Total carrying value $ 21,507 $ 31,870 The following table summarizes changes in the accretable yield for loans acquired credit impaired for year ended December 31, 2015 and 2014 : Year Ended December 31, 2015 2014 Beginning balance $ 5,781 $ — Acquisitions 432 5,233 Accretion income (2,884 ) (735 ) Additions 594 — Reductions due to exit events (517 ) (201 ) Reclassifications from nonaccretable differences 3,307 1,484 Ending balance $ 6,713 $ 5,781 Loans are considered past due if the required principal and interest payments have not been received as of the date such payments were due. The following tables present the contractual aging of the Company’s recorded investment in past due loans by class as of the period indicated: Total Loans 30 - 59 60 - 89 > 90 30 or More Days Days Days Days Current Non-accrual Total As of December 31, 2015 Past Due Past Due Past Due Past Due Loans Loans Loans Real estate Commercial $ 6,051 $ 724 $ 418 $ 7,193 $ 1,762,294 $ 23,771 $ 1,793,258 Construction: Land acquisition & development 3,190 163 1,325 4,678 212,757 6,631 224,066 Residential 1,288 — — 1,288 110,182 293 111,763 Commercial 3,232 — — 3,232 90,703 955 94,890 Total construction loans 7,710 163 1,325 9,198 413,642 7,879 430,719 Residential 5,991 1,196 2,063 9,250 1,018,359 5,242 1,032,851 Agricultural 176 17 — 193 150,686 5,355 156,234 Total real estate loans 19,928 2,100 3,806 25,834 3,344,981 42,247 3,413,062 Consumer: Indirect consumer 6,675 1,089 210 7,974 614,029 526 622,529 Other consumer 1,312 331 34 1,677 151,381 659 153,717 Credit card 533 317 477 1,327 66,768 12 68,107 Total consumer loans 8,520 1,737 721 10,978 832,178 1,197 844,353 Commercial 8,493 1,060 699 10,252 759,851 22,313 792,416 Agricultural 879 152 62 1,093 140,430 628 142,151 Other, including overdrafts — — 314 314 1,025 — 1,339 Loans held for investment 37,820 5,049 5,602 48,471 5,078,465 66,385 5,193,321 Mortgage loans originated for sale — — — — 52,875 — 52,875 Total loans $ 37,820 $ 5,049 $ 5,602 $ 48,471 $ 5,131,340 $ 66,385 $ 5,246,196 Total Loans 30 - 59 60 - 89 > 90 30 or More Days Days Days Days Current Non-accrual Total As of December 31, 2014 Past Due Past Due Past Due Past Due Loans Loans Loans Real estate Commercial $ 4,692 $ 1,609 $ 331 $ 6,632 $ 1,605,421 $ 27,369 $ 1,639,422 Construction: Land acquisition & development 839 383 — 1,222 210,969 8,252 220,443 Residential — 475 — 475 95,833 272 96,580 Commercial 100 — — 100 98,582 2,564 101,246 Total construction loans 939 858 — 1,797 405,384 11,088 418,269 Residential 6,969 645 1,762 9,376 987,735 2,792 999,903 Agricultural 1,624 236 — 1,860 158,957 6,842 167,659 Total real estate loans 14,224 3,348 2,093 19,665 3,157,497 48,091 3,225,253 Consumer: Indirect consumer 3,235 482 6 3,723 548,757 383 552,863 Other consumer 988 140 32 1,160 142,432 549 144,141 Credit card 369 284 315 968 64,484 15 65,467 Total consumer loans 4,592 906 353 5,851 755,673 947 762,471 Commercial 3,659 994 147 4,800 722,575 12,698 740,073 Agricultural 1,125 — — 1,125 123,288 446 124,859 Other, including overdrafts — — — — 3,959 — 3,959 Loans held for investment 23,600 5,248 2,593 31,441 4,762,992 62,182 4,856,615 Mortgage loans originated for sale — — — — 40,828 — 40,828 Total loans $ 23,600 $ 5,248 $ 2,593 $ 31,441 $ 4,803,820 $ 62,182 $ 4,897,443 Acquired loans that meet the criteria for non-accrual of interest prior to the acquisition were considered performing upon acquisition. If interest on non-accrual loans had been accrued, such income would have approximated $3,150 , $3,970 and $4,630 during the years ended December 31, 2015 , 2014 and 2013 , respectively. The Company considers impaired loans to include all loans, except consumer loans, that are risk rated as doubtful, or have been placed on non-accrual status or renegotiated in troubled debt restructurings. The following tables present information on the Company’s recorded investment in impaired loans as of dates indicated: December 31, 2015 Unpaid Total Principal Balance Recorded Investment With No Allowance Recorded Investment With Allowance Total Recorded Investment Related Allowance Real estate: Commercial $ 58,179 $ 27,882 $ 17,614 $ 45,496 $ 3,401 Construction: Land acquisition & development 15,503 7,245 778 8,023 282 Residential 992 293 — 293 — Commercial 1,264 340 739 1,079 739 Total construction loans 17,759 7,878 1,517 9,395 1,021 Residential 7,073 3,547 2,317 5,864 367 Agricultural 6,434 5,563 198 5,761 5 Total real estate loans 89,445 44,870 21,646 66,516 4,794 Commercial 29,593 10,744 13,727 24,471 6,487 Agricultural 1,349 622 356 978 294 Total $ 120,387 $ 56,236 $ 35,729 $ 91,965 $ 11,575 December 31, 2014 Unpaid Total Principal Balance Recorded Investment With No Allowance Recorded Investment With Allowance Total Recorded Investment Related Allowance Real estate: Commercial $ 41,603 $ 28,143 $ 11,246 $ 39,389 $ 1,608 Construction: Land acquisition & development 12,511 7,262 1,615 8,877 574 Residential 459 272 — 272 — Commercial 2,729 253 2,442 2,695 904 Total construction loans 15,699 7,787 4,057 11,844 1,478 Residential 2,959 2,452 341 2,793 143 Agricultural 8,844 6,444 2,305 8,749 732 Total real estate loans 69,105 44,826 17,949 62,775 3,961 Commercial 16,904 11,882 2,644 14,526 1,190 Agricultural 1,231 342 837 1,179 641 Total $ 87,240 $ 57,050 $ 21,430 $ 78,480 $ 5,792 December 31, 2013 Unpaid Total Principal Balance Recorded Investment With No Allowance Recorded Investment With Allowance Total Recorded Investment Related Allowance Real estate: Commercial $ 64,780 $ 29,216 $ 33,937 $ 63,153 $ 5,210 Construction: Land acquisition & development 23,906 9,901 7,226 17,127 1,434 Residential 1,816 1,095 277 1,372 26 Commercial 397 279 84 363 85 Total construction loans 26,119 11,275 7,587 18,862 1,545 Residential 9,448 5,081 967 6,048 249 Agricultural 8,895 6,429 2,370 8,799 335 Total real estate loans 109,242 52,001 44,861 96,862 7,339 Commercial 15,448 10,684 2,901 13,585 1,504 Agricultural 177 39 86 125 86 Total $ 124,867 $ 62,724 $ 47,848 $ 110,572 $ 8,929 The following tables present the average recorded investment in and income recognized on impaired loans for the periods indicated: Year Ended December 31, 2015 2014 2013 Average Recorded Investment Income Recognized Average Recorded Investment Income Recognized Average Recorded Investment Income Recognized Real estate: Commercial $ 39,233 $ 784 $ 54,701 $ 876 $ 66,330 $ 1,092 Construction: Land acquisition & development 8,337 54 13,056 43 19,523 487 Residential 282 — 822 — 1,893 — Commercial 1,887 7 1,529 8 3,936 4 Total construction loans 10,506 61 15,407 51 25,352 491 Residential 4,055 1 4,537 5 8,104 17 Agricultural 7,156 39 8,774 78 8,230 8 Total real estate loans 60,950 885 83,419 1,010 108,016 1,608 Commercial 18,502 123 13,789 50 15,047 68 Agricultural 858 26 447 23 313 16 Total $ 80,310 $ 1,034 $ 97,655 $ 1,083 $ 123,376 $ 1,692 The amount of interest income recognized by the Company within the period that the loans were impaired was primarily related to loans modified in troubled debt restructurings that remained on accrual status. Interest payments received on non-accrual impaired loans are applied to principal. Interest income is subsequently recognized only to the extent cash payments are received in excess of principal due. If interest on impaired loans had been accrued, interest income on impaired loans during 2015 , 2014 and 2013 would have been approximately $ 3,935 , $ 4,951 and $ 5,786 , respectively. Collateral dependent impaired loans are recorded at the fair value less selling costs of the underlying collateral determined using discounted cash flows, independent appraisals and management estimates based upon current market conditions. For loans measured under the present value of cash flows method, the change in present value attributable to the passage of time, if applicable, is recognized in the provision for loan losses and thus no interest income is recognized. Modifications of performing loans are made in the ordinary course of business and are completed on a case-by-case basis as negotiated with the borrower. Loan modifications typically include interest rate changes, interest only periods of less than twelve months, short-term payment deferrals and extension of amortization periods to provide payment relief. A loan modification is considered a troubled debt restructuring if the borrower is experiencing financial difficulties and the Company, for economic or legal reasons, grants a concession to the borrower that it would not otherwise consider. Certain troubled debt restructurings are on non-accrual status at the time of restructuring and may be returned to accrual status after considering the borrower's sustained repayment performance in accordance with the restructuring agreement for a period of at least six months and management is reasonably assured of future performance. If the troubled debt restructuring meets these performance criteria and the interest rate granted at the modification is equal to or greater than the rate that the Company was willing to accept at the time of the restructuring for a new loan with comparable risk, then the loan will return to performing status and the accrual of interest will resume, although they continue to be individually evaluated for impairment and disclosed as impaired loans. The Company had loans renegotiated in troubled debt restructurings of $ 40,330 as of December 31, 2015 , of which $ 24,911 were included in non-accrual loans and $ 15,419 were on accrual status. The Company had loans renegotiated in troubled debt restructurings of $ 44,227 as of December 31, 2014 , of which $ 23,275 were included in non-accrual loans and $ 20,952 were on accrual status. The following table presents information on the Company's troubled debt restructurings that occurred during the periods indicated: Number of Notes Type of Concession Principal Balance at Restructure Date Year Ended December 31, 2015 Interest only period Extension of terms or maturity Interest rate adjustment Other Commercial Real Estate 2 $ — $ 628 $ — $ 54 $ 682 Indirect Consumer 1 — — — 4 4 Commercial 12 — 8,689 3,318 455 12,462 Total 15 $ — $ 9,317 $ 3,318 $ 513 $ 13,148 Number of Notes Type of Concession Principal Balance at Restructure Date Year ended December 31, 2014 Interest only period Extension of terms or maturity Interest rate adjustment Other Real estate: Commercial 13 $ 4,753 $ 672 $ 84 $ 1,047 $ 6,556 Residential 1 — — — 15 15 Total real estate loans 14 4,753 672 84 1,062 6,571 Consumer 1 — 113 — — 113 Commercial 5 476 — — 30 506 Total 20 $ 5,229 $ 785 $ 84 $ 1,092 $ 7,190 Number of Notes Type of Concession Principal Balance at Restructure Date Year ended December 31, 2013 Interest only period Extension of terms or maturity Interest rate adjustment Other Real estate: Commercial 19 $ 543 $ 1,378 $ 11,420 $ 2,310 $ 15,651 Construction: Land acquisition & development 8 528 7,308 1,952 — 9,788 Residential 3 — 408 411 — 819 Total construction loans 11 528 7,716 2,363 — 10,607 Residential 5 — 708 — 79 787 Agriculture 1 — — 188 — 188 Total real estate loans 36 1,071 9,802 13,971 2,389 27,233 Consumer 1 — — 27 — 27 Commercial 6 613 178 265 87 1,143 Total 43 $ 1,684 $ 9,980 $ 14,263 $ 2,476 $ 28,403 Other concessions include payment reductions or deferrals for a specified period of time or the extension of amortization schedules. A specific reserve may have been previously recorded for loans modified in troubled debt restructurings that were on non-accrual status or otherwise deemed impaired before the modification. In periods subsequent to modification, the Company continues to evaluate all loans modified in troubled debt restructurings for possible impairment, which is recognized through the allowance for loan losses. Financial effects of modifications may include principal loan forgiveness or other charge-offs directly related to the restructuring. The Company had no charge-offs directly related to loans modified in troubled debt restructurings taken at the time of restructuring during 2015 , 2014 or 2013 . The Company considers a payment default to occur on loans modified in troubled debt restructurings when the loan is 90 days or more past due or was placed on non-accrual status after the modification. The following table presents information on the Company's troubled debt restructurings during the previous 12 months for which there was a payment default. Year ended December 31, 2015 Number of Notes Balance Indirect Consumer 1 $ 4 Commercial 2 240 Total 3 $ 244 As of December 31, 2014 and 2013 , loans modified in troubled debt restructurings within the previous 12 months for which there was a payment default during the period were not significant. As of December 31, 2015 , and 2014 , all of the loans modified in troubled debt restructurings with payment defaults during the previous twelve months were on non-accrual status. At December 31, 2015 , there were no material commitments to lend additional funds to borrowers whose existing loans have been renegotiated or are classified as non-accrual. As part of the on-going and continuous monitoring of the credit quality of the Company’s loan portfolio, management tracks internally assigned risk classifications of loans. The Company adheres to a Uniform Classification System developed jointly by the various bank regulatory agencies to internally risk rate loans. The Uniform Classification System defines three broad categories of criticized assets, which the Company uses as credit quality indicators: Other Assets Especially Mentioned — includes loans that exhibit weaknesses in financial condition, loan structure or documentation, which if not promptly corrected, may lead to the development of abnormal risk elements. Substandard — includes loans that are inadequately protected by the current sound worth and paying capacity of the borrower. Although the primary source of repayment for a Substandard is not currently sufficient; collateral or other sources of repayment are sufficient to satisfy the debt. Continuance of a Substandard loan is not warranted unless positive steps are taken to improve the worthiness of the credit. Doubtful — includes loans that exhibit pronounced weaknesses to a point where collection or liquidation in full, on the basis of currently existing facts, conditions and values, is highly questionable and improbable. Doubtful loans are required to be placed on non-accrual status and are assigned specific loss exposure. The following tables present the Company’s recorded investment in criticized loans by class and credit quality indicator based on the most recent analysis performed as of the dates indicated: As of December 31, 2015 Other Assets Especially Mentioned Substandard Doubtful Total Criticized Loans Real estate: Commercial $ 61,787 $ 84,556 $ 10,609 $ 156,952 Construction: Land acquisition & development 16,593 12,482 591 29,666 Residential 1,640 1,886 — 3,526 Commercial 166 323 756 1,245 Total construction loans 18,399 14,691 1,347 34,437 Residential 4,453 9,661 2,540 16,654 Agricultural 6,114 16,529 — 22,643 Total real estate loans 90,753 125,437 14,496 230,686 Consumer: Indirect consumer 644 1,131 154 1,929 Other consumer 651 1,130 198 1,979 Total consumer loans 1,295 2,261 352 3,908 Commercial 32,975 27,982 15,085 76,042 Agricultural 2,247 7,105 417 9,769 Total $ 127,270 $ 162,785 $ 30,350 $ 320,405 As of December 31, 2014 Other Assets Especially Mentioned Substandard Doubtful Total Criticized Loans Real estate: Commercial $ 84,533 $ 83,448 $ 15,246 $ 183,227 Construction: Land acquisition & development 11,826 15,016 2,507 29,349 Residential 2,029 2,666 — 4,695 Commercial 39 253 2,442 2,734 Total construction loans 13,894 17,935 4,949 36,778 Residential 10,473 10,848 1,121 22,442 Agricultural 10,122 12,328 612 23,062 Total real estate loans 119,022 124,559 21,928 265,509 Consumer: Indirect consumer 916 1,590 121 2,627 Other consumer 553 1,085 432 2,070 Credit card — 348 1,263 1,611 Total consumer loans 1,469 3,023 1,816 6,308 Commercial 25,766 32,433 10,273 68,472 Agricultural 7,827 3,660 837 12,324 Total $ 154,084 $ 163,675 $ 34,854 $ 352,613 The Company maintains a credit review function, which is independent of the credit approval process, to assess assigned internal risk classifications and monitor compliance with internal lending policies and procedures. Written action plans with firm target dates for resolution of identified problems are maintained and reviewed on a quarterly basis for all categories of criticized loans. |