Loans, Notes, Trade and Other Receivables Disclosure [Text Block] | NOTE 4: LOANS AND ALLOWANCE FOR LOAN LOSSES At March 31, 2016, the Company’s loan portfolio was $4.930 billion, compared to $4.919 billion at December 31, 2015. The various categories of loans are summarized as follows: (In thousands) March 31, December 31, Consumer: Credit cards $ 167,803 $ 177,288 Other consumer 227,480 208,380 Total consumer 395,283 385,668 Real Estate: Construction 300,042 279,740 Single family residential 746,754 696,180 Other commercial 1,327,372 1,229,072 Total real estate 2,374,168 2,204,992 Commercial: Commercial 551,695 500,116 Agricultural 143,033 148,563 Total commercial 694,728 648,679 Other 8,512 7,115 Loans 3,472,691 3,246,454 Loans acquired, net of discount and allowance (1) 1,457,370 1,672,901 Total loans $ 4,930,061 $ 4,919,355 ______________________ (1) See Note 5, Loans Acquired, for segregation of loans acquired by loan class. Loan Origination/Risk Management – The Company seeks to manage its credit risk by diversifying its loan portfolio, determining that borrowers have adequate sources of cash flow for loan repayment without liquidation of collateral; obtaining and monitoring collateral; providing an adequate allowance for loans losses by regularly reviewing loans through the internal loan review process. The loan portfolio is diversified by borrower, purpose and industry. The Company seeks to use diversification within the loan portfolio to reduce its credit risk, thereby minimizing the adverse impact on the portfolio, if weaknesses develop in either the economy or a particular segment of borrowers. Collateral requirements are based on credit assessments of borrowers and may be used to recover the debt in case of default. Furthermore, a factor that influenced the Company’s judgment regarding the allowance for loan losses consists of a five-year historical loss average segregated by each primary loan sector. On an annual basis, historical loss rates are calculated for each sector. Consumer Real estate Commercial Nonaccrual and Past Due Loans Nonaccrual loans, excluding loans acquired, segregated by class of loans, are as follows: (In thousands) March 31, December 31, Consumer: Credit cards $ 234 $ 212 Other consumer 439 442 Total consumer 673 654 Real estate: Construction 4,866 4,955 Single family residential 7,744 5,453 Other commercial 18,082 4,420 Total real estate 30,692 14,828 Commercial: Commercial 2,337 1,968 Agricultural 542 264 Total commercial 2,879 2,232 Total $ 34,244 $ 17,714 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 March 31, 2016 Consumer: Credit cards $ 570 $ 356 $ 926 $ 166,877 $ 167,803 $ 122 Other consumer 1,500 573 2,073 225,407 227,480 313 Total consumer 2,070 929 2,999 392,284 395,283 435 Real estate: Construction 681 4,403 5,084 294,958 300,042 243 Single family residential 5,249 3,403 8,652 738,102 746,754 91 Other commercial 1,511 3,336 4,847 1,322,525 1,327,372 -- Total real estate 7,441 11,142 18,583 2,355,585 2,374,168 334 Commercial: Commercial 1,433 789 2,222 549,473 551,695 112 Agricultural 466 467 933 142,100 143,033 -- Total commercial 1,899 1,256 3,155 691,573 694,728 112 Other -- -- -- 8,512 8,512 -- Total $ 11,410 $ 13,327 $ 24,737 $ 3,447,954 $ 3,472,691 $ 881 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 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 March 31, 2016 Three Months Ended Consumer: Credit cards $ 234 $ -- $ -- $ -- $ -- $ 240 $ 10 Other consumer 443 421 18 439 11 441 6 Total consumer 677 421 18 439 11 681 16 Real estate: Construction 5,665 1,999 2,867 4,866 160 4,910 65 Single family residential 8,140 6,937 671 7,608 210 6,628 88 Other commercial 19,174 4,813 13,261 18,074 2,441 11,245 149 Total real estate 32,979 13,749 16,799 30,548 2,811 22,783 302 Commercial: Commercial 3,324 1,928 304 2,232 101 2,110 28 Agricultural 543 542 -- 542 -- 403 5 Total commercial 3,867 2,470 304 2,774 101 2,513 33 Total $ 37,523 $ 16,640 $ 17,121 $ 33,761 $ 2,923 $ 25,977 $ 351 December 31, 2015 Three Months Ended Consumer: Credit cards $ 479 $ 479 $ -- $ 479 $ 7 $ 318 $ 5 Other consumer 459 423 19 442 85 586 9 Total consumer 938 902 19 921 92 904 14 Real estate: Construction 5,678 1,636 3,318 4,954 441 7,251 115 Single family residential 5,938 4,702 945 5,647 1,034 4,475 71 Other commercial 5,688 4,328 88 4,416 832 2,100 33 Total real estate 17,304 10,666 4,351 15,017 2,307 13,826 219 Commercial: Commercial 2,656 1,654 334 1,988 387 762 12 Agricultural 264 264 -- 264 45 301 5 Total commercial 2,920 1,918 334 2,252 432 1,063 17 Total $ 21,162 $ 13,486 $ 4,704 $ 18,190 $ 2,831 $ 15,793 $ 250 At March 31, 2016, and December 31, 2015, impaired loans, net of government guarantees and excluding loans acquired, totaled $33.8 million and $18.2 million, respectively. Allocations of the allowance for loan losses relative to impaired loans were $2.9 million and $2.8 million at March 31, 2016 and December 31, 2015, respectively. Approximately $351,000 of interest income was recognized on average impaired loans of $26.0 million for the three months ended March 31, 2016. Interest income recognized on impaired loans on a cash basis during the three months ended March 31, 2016 and 2015 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 March 31, 2016 Consumer: Other consumer -- $ -- 1 $ 13 1 $ 13 Total consumer -- -- 1 13 1 13 Real estate: Construction -- -- 1 190 1 190 Single-family residential 4 314 11 1,279 15 1,593 Other commercial 27 10,273 2 1,770 29 12,043 Total real estate 31 10,587 14 3,239 45 13,826 Commercial: Commercial 2 172 5 321 7 493 Total commercial 2 172 5 321 7 493 Total 33 $ 10,759 20 $ 3,573 53 $ 14,332 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 The following table presents loans that were restructured as TDRs during the three months ended March 31, 2016 and 2015, 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 Three Months Ended March 31, 2016 Real estate: Single-family residential 2 $ 178 $ 178 $ 178 $ -- $ -- Other commercial 24 8,614 8,567 8,567 -- -- Total real estate 26 8,792 8,745 8,745 -- -- Commercial: Commercial 2 $ 173 $ 172 $ 172 $ -- $ -- Total commercial 2 173 172 172 -- -- Total 28 $ 8,965 $ 8,917 $ 8,917 $ -- $ -- Three Months Ended March 31, 2015 Real estate: Single-family residential 2 $ 348 $ 348 $ 348 $ -- $ -- Total real estate 2 348 348 348 -- -- Total 2 $ 348 $ 348 $ 348 $ -- $ -- During the three months ended March 31, 2016, the Company modified 28 loans with a recorded investment of $9.0 million prior to modification which were deemed troubled debt restructuring. The restructured loans were modified by 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 $293,000 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 the three months ended March 31, 2015, the Company modified two loans with a recorded investment of $348,000 prior to modification which was deemed troubled debt restructuring. The restructured loans were modified by deferring amortized principal payments and requiring interest only payments for a period of 12 months. Based on the fair value of the collateral, no specific reserve was determined necessary for this loan. Also, there was no immediate financial impact from the restructuring of this loan, as it was not considered necessary to charge-off interest or principal on the date of restructure. There were no loans for which a payment default occurred during the three months ended March 31, 2016 and 2015, 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 $166,500 and $4.8 million at March 31, 2016 and 2015, 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 March 31, 2016, the Company had $2,908,000 of consumer mortgage loans secured by residential real estate properties for which formal foreclosure proceedings are in process. At March 31, 2016, the Company had $5,674,000 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 $21.3 million and $23.5 million that are accounted for under ASC Topic 310-30 and are classified as substandard (Risk Rating 6) as of March 31, 2016 and December 31, 2015, respectively. Of the remaining loans acquired and accounted for under ASC Topic 310-20, $47.9 million and $49.9 million were classified (Risk Ratings 6, 7 and 8 – see classified loans discussion below) at March 31, 2016 and December 31, 2015, 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 during 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 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 $164.5 million and $153.7 million, as of March 31, 2016 and December 31, 2015, respectively. The following table presents a summary of loans by credit risk rating as of March 31, 2016 and December 31, 2015, 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 March 31, 2016 Consumer: Credit cards $ 167,447 $ -- $ 356 $ -- $ -- $ 167,803 Other consumer 226,038 -- 1,418 24 -- 227,480 Total consumer 393,485 -- 1,774 24 -- 395,283 Real estate: Construction 290,646 135 9,245 16 -- 300,042 Single family residential 722,949 4,165 19,473 167 -- 746,754 Other commercial 1,274,015 5,190 47,575 592 -- 1,327,372 Total real estate 2,287,610 9,490 76,293 775 -- 2,374,168 Commercial: Commercial 534,083 2,669 14,933 10 -- 551,695 Agricultural 141,186 414 1,433 -- -- 143,033 Total commercial 675,269 3,083 16,366 10 -- 694,728 Other 8,512 -- -- -- -- 8,512 Loans acquired 1,369,094 19,029 65,032 3,756 459 1,457,370 Total $ 4,733,970 $ 31,602 $ 159,465 $ 4,565 $ 459 $ 4,930,061 (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 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 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 by portfolio segment for the three months ended March 31, 2016. 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 Three Months Ended March 31, 2016 Balance, beginning of period $ 5,985 $ 19,522 $ 3,893 $ 1,951 $ 31,351 Provision for loan losses 1,567 520 481 255 2,823 Charge-offs (476 ) (229 ) (859 ) (393 ) (1,957 ) Recoveries 7 112 242 103 464 Net charge-offs (469 ) (117 ) (617 ) (290 ) (1,493 ) Balance, March 31, 2016 (1) $ 7,083 $ 19,925 $ 3,757 $ 1,916 $ 32,681 Period-end amount allocated to: Loans individually evaluated for impairment $ 101 $ 2,811 $ -- $ 11 $ 2,923 Loans collectively evaluated for impairment 6,982 17,114 3,757 1,905 29,758 Balance, March 31, 2016 (1) $ 7,083 $ 19,925 $ 3,757 $ 1,916 $ 32,681 Activity in the allowance for loan losses for the three months ended March 31, 2015 was as follows: (In thousands) Commercial Real Credit Other Total Three Months Ended March 31, 2015 Balance, beginning of period $ 6,962 $ 15,161 $ 5,445 $ 1,460 $ 29,028 Provision for loan losses (16 ) 673 654 (140 ) 1,171 Charge-offs (245 ) (293 ) (785 ) (220 ) (1,543 ) Recoveries 169 12 213 133 527 Net charge-offs (76 ) (281 ) (572 ) (87 ) (1,016 ) Balance, March 31, 2015 $ 6,870 $ 15,553 $ 5,527 $ 1,233 $ 29,183 Period-end amount allocated to: Loans individually evaluated for impairment $ 197 $ 1,809 $ 13 $ 91 $ 2,110 Loans collectively evaluated for impairment 6,673 13,744 5,514 1,142 27,073 Balance, March 31, 2015 $ 6,870 $ 15,553 $ 5,527 $ 1,233 $ 29,183 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, December 31, 2015 (1) $ 5,985 $ 19,522 $ 3,893 $ 1,951 $ 31,351 (1) Allowance for loan losses at March 31, 2016 and December 31, 2015 includes $954,000 allowance for loans acquired (not shown in the table above). The total allowance for loan losses at March 31, 2016 and December 31, 2015 was $33,635,000 and $32,305,000, respectively. The Company’s recorded investment in loans, excluding loans acquired, related to each balance in the allowance for loan losses by portfolio segment on the basis of the Company’s impairment methodology was as follows: (In thousands) Commercial Real Credit Other Total March 31, 2016 Loans individually evaluated for impairment $ 2,774 $ 30,548 $ -- $ 439 $ 33,761 Loans collectively evaluated for impairment 691,954 2,343,620 167,803 235,553 3,438,930 Balance, end of period $ 694,728 $ 2,374,168 $ 167,803 $ 235,992 $ 3,472,691 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 |