Loans, Notes, Trade and Other Receivables Disclosure [Text Block] | NOTE 4: LOANS AND ALLOWANCE FOR LOAN LOSSES At December 31, 2015, the Company’s gross loan portfolio was $4.92 billion, compared to $2.74 billion at December 31, 2014. The various categories of loans are summarized as follows: (In thousands) 2015 2014 Consumer: Credit cards $ 177,288 $ 185,380 Other consumer 208,380 103,402 Total consumer 385,668 288,782 Real estate: Construction 279,740 181,968 Single family residential 696,180 455,563 Other commercial 1,229,072 714,797 Total real estate 2,204,992 1,352,328 Commercial: Commercial 500,116 291,820 Agricultural 148,563 115,658 Total commercial 648,679 407,478 Other 7,115 5,133 Loans 3,246,454 2,053,721 Loans acquired, not covered by FDIC loss share (net of discount and allowance) (1) 1,672,901 575,980 Loans acquired, covered by FDIC loss share (net of discount and allowance) (1) -- 106,933 Total loans $ 4,919,355 $ 2,736,634 (1) See Note 5, Loans Acquired, for segregation of loans acquired by loan class. In September 2015 the Company entered into an agreement with the FDIC to terminate all loss sharing agreements. Loan Origination/Risk Management Consumer Real estate Commercial Nonaccrual and Past Due Loans Nonaccrual loans, excluding loans acquired, at December 31, 2015 and 2014, segregated by class of loans, are as follows: (In thousands) 2015 2014 Consumer: Credit cards $ 212 $ 197 Other consumer 442 405 Total consumer 654 602 Real estate: Construction 4,955 4,863 Single family residential 5,453 4,010 Other commercial 4,420 1,522 Total real estate 14,828 10,395 Commercial: Commercial 1,968 585 Agricultural 264 456 Total commercial 2,232 1,041 Total $ 17,714 $ 12,038 An age analysis of past due loans, excluding loans acquired, segregated by class of loans, is as follows: (In thousands) Gross 90 Days Total Current Total 90 Days December 31, 2015 Consumer: Credit cards $ 639 $ 479 $ 1,118 $ 176,170 $ 177,288 $ 267 Other consumer 1,879 648 2,527 205,853 208,380 374 Total consumer 2,518 1,127 3,645 382,023 385,668 641 Real estate: Construction 1,328 4,511 5,839 273,901 279,740 -- Single family residential 4,856 3,342 8,198 687,982 696,180 364 Other commercial 869 3,302 4,171 1,224,901 1,229,072 25 Total real estate 7,053 11,155 18,208 2,186,784 2,204,992 389 Commercial: Commercial 3,427 637 4,064 496,052 500,116 90 Agricultural 285 243 528 148,035 148,563 56 Total commercial 3,712 880 4,592 644,087 648,679 146 Other 108 93 -- 7,115 7,115 15 Total $ 13,391 $ 13,255 $ 26,445 $ 3,220,009 $ 3,246,454 $ 1,191 December 31, 2014 Consumer: Credit cards $ 687 $ 457 $ 1,144 $ 184,236 $ 185,380 $ -- Other consumer 1,349 447 1,796 101,606 103,402 223 Total consumer 2,036 904 2,940 285,842 288,782 223 Real estate: Construction 760 570 1,330 180,638 181,968 177 Single family residential 4,913 2,213 7,126 448,437 455,563 248 Other commercial 1,987 847 2,834 711,963 714,797 -- Total real estate 7,660 3,630 11,290 1,341,038 1,352,328 425 Commercial: Commercial 381 354 735 291,085 291,820 -- Agricultural 119 109 228 115,430 115,658 40 Total commercial 500 463 963 406,515 407,478 40 Other -- -- -- 5,133 5,133 -- Total $ 10,196 $ 4,997 $ 15,193 $ 2,038,528 $ 2,053,721 $ 688 Impaired Loans Impairment is evaluated in total for smaller-balance loans of a similar nature and on an individual loan basis for other loans. Impaired loans, or portions thereof, are charged-off when deemed uncollectible. Impaired loans, net of government guarantees and excluding loans acquired, segregated by class of loans, are as follows: (In thousands) Unpaid Recorded Recorded Total Related Average Interest December 31, 2015 Consumer: Credit cards $ 479 $ 479 $ -- $ 479 $ 7 $ 411 $ 30 Other consumer 459 423 19 442 85 562 40 Total consumer 938 902 19 921 92 973 70 Real estate: Construction 5,678 1,636 3,318 4,954 441 5,417 390 Single family residential 5,938 4,702 945 5,647 1,034 5,148 370 Other commercial 5,688 4,328 88 4,416 832 3,147 227 Total real estate 17,304 10,666 4,351 15,017 2,307 13,712 987 Commercial: Commercial 2,656 1,654 334 1,988 387 1,736 125 Agricultural 264 264 -- 264 45 254 18 Total commercial 2,920 1,918 334 2,252 432 1,990 143 Total $ 21,162 $ 13,486 $ 4,704 $ 18,190 $ 2,831 $ 16,675 $ 1,200 December 31, 2014 Consumer: Credit cards $ 197 $ 197 $ -- $ 197 $ 6 $ 425 $ 20 Other consumer 604 610 9 619 118 780 34 Total consumer 801 807 9 816 124 1,205 54 Real estate: Construction 7,400 7,020 -- 7,020 599 4,334 189 Single family residential 4,442 3,948 377 4,325 899 4,291 187 Other commercial 1,955 1,446 36 1,482 268 6,788 296 Total real estate 13,797 12,414 413 12,827 1,766 15,413 672 Commercial: Commercial 1,227 566 -- 566 102 630 27 Agricultural 501 460 -- 460 83 234 10 Total commercial 1,728 1,026 -- 1,026 185 864 38 Total $ 16,236 $ 14,247 $ 422 $ 14,669 $ 2,075 $ 17,482 $ 764 At December 31, 2015, and December 31, 2014, impaired loans, net of government guarantees and excluding loans acquired, totaled $18.2 million and $14.7 million, respectively. Allocations of the allowance for loan losses relative to impaired loans were $2.8 million and $2.1 million at December 31, 2015 and 2014, respectively. Approximately $1.2 million, $0.8 million and $0.9 million of interest income was recognized on average impaired loans of $16.7 million, $17.5 million and $21.6 million for 2015, 2014 and 2013, respectively. Interest recognized on impaired loans on a cash basis during 2015, 2014 and 2013 was not material. Included in certain impaired loan categories are troubled debt restructurings (“TDRs”). When the Company restructures a loan to a borrower that is experiencing financial difficulty and grants a concession that it would not otherwise consider, a “troubled debt restructuring” results and the Company classifies the loan as a TDR. The Company grants various types of concessions, primarily interest rate reduction and/or payment modifications or extensions, with an occasional forgiveness of principal. Under ASC Topic 310-10-35 – Subsequent Measurement Once an obligation has been restructured because of such credit problems, it continues to be considered a TDR until paid in full; or, if an obligation yields a market interest rate and no longer has any concession regarding payment amount or amortization, then it is not considered a TDR at the beginning of the calendar year after the year in which the improvement takes place. The Company returns TDRs to accrual status only if (1) all contractual amounts due can reasonably be expected to be repaid within a prudent period, and (2) repayment has been in accordance with the contract for a sustained period, typically at least six months. The following table presents a summary of troubled debt restructurings, excluding loans acquired, segregated by class of loans. Accruing TDR Loans Nonaccrual TDR Loans Total TDR Loans (Dollars in thousands) Number Balance Number Balance Number Balance December 31, 2015 Consumer: Other consumer -- $ -- 1 $ 13 1 13 Total consumer -- -- 1 13 1 13 Real estate: Construction -- -- 1 253 1 $ 253 Single-family residential 2 137 11 1,335 13 1,472 Other commercial 4 2,894 1 597 5 3,491 Total real estate 6 3,031 13 2,185 19 5,216 Commercial: Commercial -- -- 5 332 5 332 Total commercial -- -- 5 332 5 332 Total 6 $ 3,031 19 $ 2,530 25 $ 5,561 December 31, 2014 Real estate: Construction -- $ -- 1 $ 391 1 $ 391 Single-family residential 2 393 1 3 3 396 Other commercial 3 1,840 1 614 4 2,454 Total real estate 5 2,233 3 1,008 8 3,241 Total 5 $ 2,233 3 $ 1,008 8 $ 3,241 The following table presents loans that were restructured as TDRs during the years ended December 31, 2015 and 2014, excluding loans acquired, segregated by class of loans. Modification Type (Dollars in thousands) Number of Balance Prior Balance at Change in Change in Financial Impact Year Ended December 31, 2015 Consumer: Other consumer 1 $ 13 $ 13 $ 13 $ -- $ -- Total consumer 1 13 13 13 -- -- Real estate: Single-family residential 11 1,179 1,103 1,103 Other commercial 1 1,097 1,097 1,097 -- $ -- Total real estate 12 2,276 2,200 2,200 -- -- Commercial: Commercial 5 347 332 332 -- -- Total commercial 5 347 332 332 -- -- Total 18 $ 2,636 $ 2,545 $ 2,545 $ -- $ -- Year Ended December 31, 2014 Real estate: Other commercial 2 $ 1,427 $ 1,427 $ 396 $ 1,031 $ -- Total real estate 2 1,427 1,427 396 1,031 -- Commercial: Commercial 1 $ 598 $ -- $ -- $ -- $ -- Total commercial 1 598 -- -- -- -- Total 3 $ 2,025 $ 1,427 $ 396 $ 1,031 $ -- During year ended December 31, 2015, the Company modified eighteen loans with a total recorded investment of $2,636,000 prior to modification which were deemed troubled debt restructuring. The restructured loans were modified by various terms, including changing the maturity date, deferring amortized principal payments and requiring interest only payments for a period of 12 months. Based on the fair value of the collateral, a specific reserve of $113,000 was determined necessary for these loans. Also, there was no immediate financial impact from the restructuring of these loans, as it was not considered necessary to charge-off interest or principal on the date of restructure. During year ended December 31, 2014, the Company modified three loans with a total recorded investment of $2,025,000 prior to modification which were deemed troubled debt restructuring. The restructured loans were modified by various terms, including changing the maturity date and deferring amortized principal payments. Based on the fair value of the collateral, no specific reserve was determined necessary for these loans. Also, there was no immediate financial impact from the restructuring of these loans, as it was not considered necessary to charge-off interest or principal on the date of restructure. During the year ended December 31, 2014, one of the restructured loans with a prior balance of $598,000 was paid off. There were no loans for which a payment default occurred during the years ended December 31, 2015 and 2014, and that had been modified as a TDR within 12 months or less of the payment default, excluding loans acquired. We define a payment default as a payment received more than 90 days after its due date. In addition to the TDRs that occurred during the period provided in the preceding tables, the Company had TDRs with pre-modification loan balances of $167,000 and $4,757,000 at December 31, 2015 and 2014, respectively, for which other real estate owned (“OREO”) was received in full or partial satisfaction of the loans. The majority of such TDRs were in commercial real estate and residential real estate. At December 31, 2015, the Company had $1,064,000 of consumer mortgage loans secured by residential real estate properties for which formal foreclosure proceedings are in process. At December 31, 2015, the Company had $5,916,000 of OREO secured by residential real estate properties. Credit Quality Indicators The Company utilizes a risk rating matrix to assign a risk rate to each of its commercial and real estate loans. Loans are rated on a scale of 1 to 8. A description of the general characteristics of the 8 risk ratings is as follows: · Risk Rate 1 – Pass (Excellent) · Risk Rate 2 – Pass (Good) · Risk Rate 3 – Pass (Acceptable – Average) · Risk Rate 4 – Pass (Monitor) · Risk Rate 5 – Special Mention · Risk Rate 6 – Substandard · Risk Rate 7 – Doubtful · Risk Rate 8 – Loss Loans acquired are evaluated using this internal grading system. Loans acquired are evaluated individually and include purchased credit impaired loans of $23.5 million and $22.3 million that are accounted for under ASC Topic 310-30 and are classified as substandard (Risk Rating 6) as of December 31, 2015 and 2014, respectively. Of the remaining loans acquired and accounted for under ASC Topic 310-20, $49.9 million and $16.6 million were classified (Risk Ratings 6, 7 and 8 – see classified loans discussion below) at December 31, 2015 and 2014, respectively. Loans acquired, covered by loss share agreements, had additional protection provided by the FDIC prior to the termination of the loss share agreements. During the 2014 quarterly impairment testing on the estimated cash flows of the credit impaired loans, the Company established that some of the loans covered by loss share from our FDIC-assisted transactions had experienced material projected credit deterioration. As a result, the Company established a $954,000 allowance for loan losses on covered loans by recording a provision for loan losses of $0.4 million (net of FDIC-loss share adjustments) during the period ended December 31, 2014. There was no further projected credit deterioration and no addition to the allowance for covered loans in 2015. The $954,000 allowance was reclassified to allowance on acquired non-covered loans subsequent to the agreement with the FDIC to terminate the loss share agreements. See Note 5, Loans Acquired, for further discussion of the acquired loans, loan pools and loss sharing agreements. Purchased credit impaired loans are loans that showed evidence of deterioration of credit quality since origination and for which it is probable, at acquisition, that the Company will be unable to collect all amounts contractually owed. Their fair value was initially based on the estimate of cash flows, both principal and interest, expected to be collected or estimated collateral values if cash flows are not estimable, discounted at prevailing market rates of interest. The difference between the undiscounted cash flows expected at acquisition and the fair value at acquisition is recognized as interest income on a level-yield method over the life of the loan. Contractually required payments for interest and principal that exceed the undiscounted cash flows expected at acquisition are not recognized as a yield adjustment. Increases in expected cash flows subsequent to the initial investment are recognized prospectively through adjustment of the yield on the loan over its remaining life. Decreases in expected cash flows are recognized as impairment. Classified loans for the Company include loans in Risk Ratings 6, 7 and 8. Loans may be classified, but not considered impaired, due to one of the following reasons: (1) The Company has established minimum dollar amount thresholds for loan impairment testing. Loans rated 6 – 8 that fall under the threshold amount are not tested for impairment and therefore are not included in impaired loans. (2) Of the loans that are above the threshold amount and tested for impairment, after testing, some are considered to not be impaired and are not included in impaired loans. Total classified loans, excluding loans accounted for under ASC Topic 310-30, were $153.7 million and $82.1 million as of December 31, 2015 and December 31, 2014, respectively. The following table presents a summary of loans by credit risk rating, segregated by class of loans. Loans accounted for under ASC Topic 310-30 are all included in Risk Rate 1-4 in this table. (In thousands) Risk Rate Risk Rate Risk Rate Risk Rate Risk Rate Total December 31, 2015 Consumer: Credit cards $ 176,809 $ -- $ 479 $ -- $ -- $ 177,288 Other consumer 207,069 -- 1,262 49 -- 208,380 Total consumer 383,878 -- 1,741 49 -- 385,668 Real estate: Construction 270,386 319 9,019 16 -- 279,740 Single family residential 679,484 2,701 13,824 171 -- 696,180 Other commercial 1,178,817 5,404 44,261 590 -- 1,229,072 Total real estate 2,128,687 8,424 67,104 777 -- 2,204,992 Commercial: Commercial 487,563 2,760 9,787 6 -- 500,116 Agricultural 147,788 -- 775 -- -- 148,563 Total commercial 635,351 2,760 10,562 6 -- 648,679 Other 7,022 -- 93 -- -- 7,115 Loans acquired, not covered by FDIC loss share 1,590,384 9,150 69,219 3,689 459 1,672,901 Total $ 4,745,322 $ 20,334 $ 148,719 $ 4,521 $ 459 $ 4,919,355 (In thousands) Risk Rate Risk Rate Risk Rate Risk Rate Risk Rate Total December 31, 2014 Consumer: Credit cards $ 184,923 $ -- $ 457 $ -- $ -- $ 185,380 Other consumer 102,515 5 839 43 -- 103,402 Total consumer 287,438 5 1,296 43 -- 288,782 Real estate: Construction 176,825 84 5,059 -- -- 181,968 Single family residential 446,040 1,776 7,665 82 -- 455,563 Other commercial 698,329 7,074 9,394 -- -- 714,797 Total real estate 1,321,194 8,934 22,118 82 -- 1,352,328 Commercial: Commercial 271,017 1,544 19,248 11 -- 291,820 Agricultural 115,106 20 532 -- -- 115,658 Total commercial 386,123 1,564 19,780 11 -- 407,478 Other 5,133 -- -- -- -- 5,133 Loans acquired, not covered by FDIC loss share 535,728 1,435 36,958 1,854 5 575,980 Loans acquired, covered by FDIC loss share 106,933 -- -- -- -- 106,933 Total $ 2,642,549 $ 11,938 $ 80,152 $ 1,990 $ 5 $ 2,736,634 Net (charge-offs)/recoveries for the years ended December 31, 2015 and 2014, excluding loans acquired, segregated by class of loans, were as follows: (In thousands) 2015 2014 Consumer: Credit cards $ (2,217 ) $ (2,292 ) Student loans -- (38 ) Other consumer (1,134 ) (1,130 ) Total consumer (3,351 ) (3,460 ) Real estate: Construction (44 ) (356 ) Single family residential (407 ) (595 ) Other commercial (926 ) (167 ) Total real estate (1,377 ) (1,118 ) Commercial: Commercial (1,202 ) (704 ) Agricultural (33 ) (14 ) Total commercial (1,235 ) (718 ) Total $ (5,963 ) $ (5,296 ) Allowance for Loan Losses Allowance for Loan Losses Receivables Loss Contingencies As mentioned above, allocations to the allowance for loan losses are categorized as either specific allocations or general allocations. A loan is considered impaired when it is probable that the Company will not receive all amounts due according to the contractual terms of the loan, including scheduled principal and interest payments. For a collateral dependent loan, the Company’s evaluation process includes a valuation by appraisal or other collateral analysis. This valuation is compared to the remaining outstanding principal balance of the loan. If a loss is determined to be probable, the loss is included in the allowance for loan losses as a specific allocation. If the loan is not collateral dependent, the measurement of loss is based on the difference between the expected and contractual future cash flows of the loan. The general allocation is calculated monthly based on management’s assessment of several factors such as (1) historical loss experience based on volumes and types, (2) volume and trends in delinquencies and nonaccruals, (3) lending policies and procedures including those for loan losses, collections and recoveries, (4) national, state and local economic trends and conditions, (5) concentrations of credit within the loan portfolio, (6) the experience, ability and depth of lending management and staff and (7) other factors and trends that will affect specific loans and categories of loans. The Company establishes general allocations for each major loan category. This category also includes allocations to loans which are collectively evaluated for loss such as credit cards, one-to-four family owner occupied residential real estate loans and other consumer loans. The following table details activity in the allowance for loan losses, excluding loans acquired, by portfolio segment for the year ended December 31, 2015. Allocation of a portion of the allowance to one category of loans does not preclude its availability to absorb losses in other categories. (In thousands) Commercial Real Credit Other Total December 31, 2015 (1) Balance, beginning of year $ 6,962 $ 15,161 $ 5,445 $ 1,460 $ 29,028 Provision for loan losses (1) 258 5,738 665 1,625 8,286 Charge-offs (1,415 ) (1,580 ) (3,107 ) (1,672 ) (7,774 ) Recoveries 180 203 890 538 1,811 Net charge-offs (1,235 ) (1,377 ) (2,217 ) (1,134 ) (5,963 ) Balance, end of year (1) $ 5,985 $ 19,522 $ 3,893 $ 1,951 $ 31,351 Period-end amount allocated to: Loans individually evaluated for impairment $ 432 $ 2,307 $ 7 $ 85 $ 2,831 Loans collectively evaluated for impairment 5,553 17,215 3,886 1,866 28,520 Balance, end of year (1) $ 5,985 $ 19,522 $ 3,893 $ 1,951 $ 31,351 December 31, 2014 (2) Balance, beginning of year $ 3,205 $ 16,885 $ 5,430 $ 1,922 $ 27,442 Provision for loan losses (1) 4,475 (606 ) 2,307 706 6,882 Charge-offs (1,044 ) (2,684 ) (3,188 ) (1,638 ) (8,554 ) Recoveries 326 1,566 896 470 3,258 Net charge-offs (718 ) (1,118 ) (2,292 ) (1,168 ) (5,296 ) Balance, end of year (2) $ 6,962 $ 15,161 $ 5,445 $ 1,460 $ 29,028 Period-end amount allocated to: Loans individually evaluated for impairment $ 185 $ 1,766 $ 6 $ 118 $ 2,075 Loans collectively evaluated for impairment 6,777 13,405 5,439 1,342 26,963 Balance, end of year (2) $ 6,962 $ 15,161 $ 5,445 $ 1,460 $ 29,028 (1) Provision for loan losses of $736,000 attributable to loans acquired was excluded from this table for the year ended December 31, 2015 (total provision for loan losses for the year ended December 31, 2015 was $9,022,000). The $736,000 was subsequently charged-off, resulting in no increase to the ending balance in the allowance related to loans acquired. Provision for loan losses of $363,000 attributable to acquired loans, covered by FDIC loss share, was excluded from this table for the year ended December 31, 2014 (total provision for loan losses for the year ended December 31, 2014 is $7,245,000). (2) Allowance for loan losses at December 31, 2015 and 2014 includes $954,000 allowance for loans acquired (not shown in the table above). The total allowance for loan losses at December 31, 2015 and 2014 was $32,305,000 and $29,982,000, respectively. Activity in the allowance for loan losses, excluding allowance on loans acquired, for the year ended December 31, 2013 was as follows: (In thousands) Commercial Real Credit Other Total December 31, 2013 Balance, beginning of year $ 3,446 $ 15,453 $ 7,211 $ 1,772 $ 27,882 Provision for loan losses (51 ) 2,468 581 1,120 4,118 Charge-offs (382 ) (1,628 ) (3,263 ) (1,561 ) (6,834 ) Recoveries 192 592 901 591 2,276 Net charge-offs (190 ) (1,036 ) (2,362 ) (970 ) (4,558 ) Balance, end of year $ 3,205 $ 16,885 $ 5,430 $ 1,922 $ 27,442 The Company’s recorded investment in loans, excluding loans acquired, as of December 31, 2015 and 2014 related to each balance in the allowance for loan losses by portfolio segment on the basis of the Company’s impairment methodology is as follows: (In thousands) Commercial Real Credit Other Total December 31, 2015 Loans individually evaluated for impairment $ 2,252 $ 15,017 $ 479 $ 442 $ 18,190 Loans collectively evaluated for impairment 646,427 2,189,975 176,809 215,053 3,228,264 Balance, end of period $ 648,679 $ 2,204,992 $ 177,288 $ 215,495 $ 3,246,454 December 31, 2014 Loans individually evaluated for impairment $ 1,026 $ 12,827 $ 197 $ 619 $ 14,669 Loans collectively evaluated for impairment 406,452 1,339,501 185,183 107,916 2,039,052 Balance, end of period $ 407,478 $ 1,352,328 $ 185,380 $ 108,535 $ 2,053,721 |