Loans

6 Months Ended

Jun. 30, 2016

Receivables [Abstract]

Loans

Note 4 Loans

The loan portfolio is comprised of loans originated by the Company and loans that were acquired in connection with the Company’s acquisitions.

The table below shows the loan portfolio composition including carrying value by segment of loans accounted for under ASC Topic 310-30, Receivables—Loans and Debt Securities Acquired with Deteriorated Credit Quality, and loans not accounted for under this guidance, which includes our originated loans. The carrying value of loans is net of discounts, fees and costs on loans excluded from ASC 310-30 of $7.6 million and $8.1 million as of June 30, 2016 and December 31, 2015, respectively:

	June 30, 2016
	ASC 310-30 loans		Non 310-30 loans		Total loans		% of total
Commercial	$	46,875	$	1,443,874	$	1,490,749	54.4%
Commercial real estate non-owner occupied		101,719		424,020		525,739	19.2%
Residential real estate		19,341		674,830		694,171	25.4%
Consumer		1,347		26,498		27,845	1.0%
Total	$	169,282	$	2,569,222	$	2,738,504	100.0%

	December 31, 2015
	ASC 310-30 loans		Non 310-30 loans		Total loans		% of total
Commercial	$	57,474	$	1,369,946	$	1,427,420	55.2%
Commercial real estate non-owner occupied		121,173		321,712		442,885	17.1%
Residential real estate		21,452		662,550		684,002	26.4%
Consumer		2,731		30,635		33,366	1.3%
Total	$	202,830	$	2,384,843	$	2,587,673	100.0%

Delinquency for loans excluded from ASC 310-30 is shown in the following tables at June 30, 2016 and December 31, 2015, respectively:

	Total Loans June 30, 2016
					Greater						Total		Loans > 90
	30-59		60-89		than 90						Non		days past
	days  past		days past		days past		Total  past				310-30		due and		Non-
	due		due		due		due		Current		loans		still accruing		accrual
Loans excluded from ASC 310-30:
Commercial:
Commercial and industrial	$	168	$	18	$	3,118	$	3,304	$	1,012,554	$	1,015,858	$	—	$	4,289
Owner occupied commercial real estate		859		—		427		1,286		190,382		191,668		—		906
Agriculture		19		—		1,238		1,257		130,428		131,685		—		1,852
Energy		94		—		12,128		12,222		92,441		104,663		—		25,850
Total Commercial		1,140		18		16,911		18,069		1,425,805		1,443,874		—		32,897
Commercial real estate non owner-occupied:
Construction		277		—		37		314		82,822		83,136		38		—
Acquisition/development		—		739		—		739		8,024		8,763		—		—
Multifamily		—		—		—		—		10,811		10,811		—		—
Non owner-occupied		718		—		29		747		320,563		321,310		—		71
Total commercial real estate		995		739		66		1,800		422,220		424,020		38		71
Residential real estate:
Senior lien		1,780		623		583		2,986		617,771		620,757		—		3,449
Junior lien		345		47		143		535		53,538		54,073		5		781
Total residential real estate		2,125		670		726		3,521		671,309		674,830		5		4,230
Consumer		14		40		—		54		26,444		26,498		—		230
Total loans excluded from ASC 310-30	$	4,274	$	1,467	$	17,703	$	23,444	$	2,545,778	$	2,569,222	$	43	$	37,428

	Total Loans December 31, 2015
					Greater						Total		Loans > 90
	30-59		60-89		than 90						Non		days past
	days past		days past		days past		Total  past				310-30		due and		Non-
	due		due		due		due		Current		loans		still accruing		accrual
Loans excluded from ASC 310-30:
Commercial:
Commercial and industrial	$	2,252	$	238	$	49	$	2,539	$	890,350	$	892,889	$	—	$	4,830
Owner occupied commercial real estate		370		111		66		547		184,072		184,619		—		1,273
Agriculture		441		58		1,222		1,721		143,837		145,558		—		1,984
Energy		23		5,781		—		5,804		141,076		146,880		—		12,008
Total Commercial		3,086		6,188		1,337		10,611		1,359,335		1,369,946		—		20,095
Commercial real estate non owner-occupied:
Construction		359		188		—		547		29,596		30,143		—		188
Acquisition/development		—		—		—		—		5,575		5,575		—		—
Multifamily		—		38		22		60		9,813		9,873		—		22
Non owner-occupied		2,340		182		968		3,490		272,631		276,121		—		1,013
Total commercial real estate		2,699		408		990		4,097		317,615		321,712		—		1,223
Residential real estate:
Senior lien		1,909		911		1,481		4,301		610,192		614,493		124		3,713
Junior lien		299		237		194		730		47,327		48,057		6		584
Total residential real estate		2,208		1,148		1,675		5,031		657,519		662,550		130		4,297
Consumer		239		26		38		303		30,332		30,635		36		32
Total loans excluded from ASC 310-30	$	8,232	$	7,770	$	4,040	$	20,042	$	2,364,801	$	2,384,843	$	166	$	25,647

Loans are considered past due or delinquent when the contractual principal or interest due in accordance with the terms of the loan agreement remains unpaid after the due date of the scheduled payment. Pooled loans accounted for under ASC 310-30 that are 90 days or more past due and still accreting are generally considered to be performing and are included in loans 90 days or more past due and still accruing. Non-accrual loans include troubled debt restructurings on non-accrual status.

Total non-accrual loans excluded from the scope of ASC 310-30 totaled $37.4 million at June 30, 2016, increasing $11.8 million, or 45.9% from $25.6 million at December 31, 2015. The increase was primarily due to two loan relationships in the energy sector totaling $20.1 million at June 30, 2016, that were placed on non-accrual status during the first quarter of 2016, offset by one energy loan of $6.2 million that was resolved and charged-off during the second quarter of 2016, coupled with other net decreases of $2.1 million at June 30, 2016.

Credit exposure for all loans as determined by the Company’s internal risk rating system was as follows as of June 30, 2016 and December 31, 2015, respectively:

	Total Loans June 30, 2016
			Special
	Pass		mention		Substandard		Doubtful		Total
Loans excluded from ASC 310-30:
Commercial:
Commercial and industrial	$	980,188	$	23,574	$	9,893	$	2,203	$	1,015,858
Owner occupied commercial real estate		172,300		14,531		4,837		—		191,668
Agriculture		128,721		811		2,153		—		131,685
Energy		59,603		15,746		16,588		12,726		104,663
Total Commercial		1,340,812		54,662		33,471		14,929		1,443,874
Commercial real estate non owner-occupied:
Construction		80,024		2,731		381		—		83,136
Acquisition/development		6,426		2,337		—		—		8,763
Multifamily		10,811		—		—		—		10,811
Non-owner occupied		309,120		7,507		4,683		—		321,310
Total commercial real estate		406,381		12,575		5,064		—		424,020
Residential real estate:
Senior lien		615,657		263		4,837		—		620,757
Junior lien		52,329		221		1,523		—		54,073
Total residential real estate		667,986		484		6,360		—		674,830
Consumer		26,197		62		239		—		26,498
Total loans excluded from ASC 310-30	$	2,441,376	$	67,783	$	45,134	$	14,929	$	2,569,222
Loans accounted for under ASC 310-30:
Commercial	$	31,233	$	462	$	15,180	$	—	$	46,875
Commercial real estate non-owner occupied		42,927		343		54,680		3,769		101,719
Residential real estate		15,396		1,574		2,371		—		19,341
Consumer		1,140		23		184		—		1,347
Total loans accounted for under ASC 310-30	$	90,696	$	2,402	$	72,415	$	3,769	$	169,282
Total loans	$	2,532,072	$	70,185	$	117,549	$	18,698	$	2,738,504

	Total Loans December 31, 2015
			Special
	Pass		mention		Substandard		Doubtful		Total
Loans excluded from ASC 310-30:
Commercial:
Commercial and industrial	$	865,840	$	8,363	$	16,769	$	1,917	$	892,889
Owner occupied commercial real estate		174,108		5,595		4,916		—		184,619
Agriculture		132,450		2,440		10,668		—		145,558
Energy		92,152		36,503		16,098		2,127		146,880
Total Commercial		1,264,550		52,901		48,451		4,044		1,369,946
Commercial real estate non owner-occupied:
Construction		24,686		4,882		575		—		30,143
Acquisition/development		5,066		509		—		—		5,575
Multifamily		9,851		—		22		—		9,873
Non-owner occupied		262,035		8,091		5,722		273		276,121
Total commercial real estate		301,638		13,482		6,319		273		321,712
Residential real estate:
Senior lien		609,196		349		4,921		27		614,493
Junior lien		46,437		252		1,368		—		48,057
Total residential real estate		655,633		601		6,289		27		662,550
Consumer		30,483		67		85		—		30,635
Total loans excluded from ASC 310-30	$	2,252,304	$	67,051	$	61,144	$	4,344	$	2,384,843
Loans accounted for under ASC 310-30:
Commercial	$	35,384	$	787	$	21,303	$	—	$	57,474
Commercial real estate non-owner occupied		49,817		352		67,235		3,769		121,173
Residential real estate		16,960		1,604		2,888		—		21,452
Consumer		2,296		94		341		—		2,731
Total loans accounted for under ASC 310-30	$	104,457	$	2,837	$	91,767	$	3,769	$	202,830
Total loans	$	2,356,761	$	69,888	$	152,911	$	8,113	$	2,587,673

The Company's energy sector substandard and doubtful loans excluded from ASC 310-30 totaled $29.3 million and $18.2 million at June 30, 2016 and December 31, 2015, respectively. The increase of $11.1 million was driven primarily by 2 loan relationships downgraded and placed on non-accrual during the first quarter of 2016. Non 310-30 special mention loans within the commercial and industrial, and owner occupied commercial real estate loan classes increased from December 31, 2015, largely due to downgrades of $15.9 million from 3  loan relationships, partially offset by an upgrade from substandard to special mention for 1 loan relationship totaling $7.2 million, during the six months ended June 30, 2016.

Impaired Loans

Loans are considered to be impaired when it is probable that the Company will not be able to collect all amounts due in accordance with the contractual terms of the loan agreement. Impaired loans are comprised of loans excluded from ASC 310-30 on non-accrual status, loans in bankruptcy, and troubled debt restructurings (“TDRs”) described below. If a specific allowance is warranted based on the borrower’s overall financial condition, the specific allowance is calculated based on discounted cash flows using the loan’s initial contractual effective interest rate or the fair value of the collateral less selling costs for collateral dependent loans. At June 30, 2016, the Company measured $35.1 million of impaired loans based on the fair value of the collateral less selling costs and $2.3 million of impaired loans using discounted cash flows and the loan’s initial contractual effective interest rate. Impaired loans totaling $9.1 million that individually were less than $250 thousand each, were measured through the general ALL reserves due to their relatively small size.

At June 30, 2016 and December 31, 2015, the Company’s recorded investments in impaired loans were $46.8 million and $37.4 million, respectively. Impaired loans at June 30, 2016, were primarily comprised of five relationships totaling $30.5 million. Three of the relationships were in the energy sector, one of the relationships was in the agriculture sector, and one of the relationships was in the commercial and industrial sector. All five relationships were on non-accrual status at June 30, 2016. Impaired loans had a collective related allowance for loan losses allocated to them of $15.0 million and $4.4 million at June 30, 2016 and December 31, 2015, respectively.

Additional information regarding impaired loans at June 30, 2016 and December 31, 2015 is set forth in the table below:

	Impaired Loans
	June 30, 2016						December 31, 2015
					Allowance						Allowance
	Unpaid				for loan		Unpaid				for loan
	principal		Recorded		losses		principal		Recorded		losses
	balance		investment		allocated		balance		investment		allocated
With no related allowance recorded:
Commercial:
Commercial and industrial	$	3,268	$	3,106	$	—	$	4,997	$	4,995	$	—
Owner occupied commercial real estate		2,066		1,817		—		2,218		2,150		—
Agriculture		1,772		1,758		—		1,877		1,878		—
Energy		—		—		—		5,815		5,749		—
Total commercial		7,106		6,681		—		14,906		14,772		—
Commercial real estate non-owner occupied:
Construction		—		—		—		190		188		—
Acquisition/development		—		—		—		—		—		—
Multifamily		—		—		—		—		—		—
Non-owner occupied		—		—		—		154		153		—
Total commercial real estate		—		—		—		344		341		—
Residential real estate:
Senior lien		1,408		1,293		—		947		941		—
Junior lien		138		133		—		113		112		—
Total residential real estate		1,546		1,426		—		1,060		1,052		—
Consumer		—		—		—		—		—		—
Total impaired loans with no related allowance recorded	$	8,652	$	8,107	$	—	$	16,311	$	16,165	$	—
With a related allowance recorded:
Commercial:
Commercial and industrial	$	5,483	$	3,983	$	2,203	$	4,537	$	4,503	$	1,918
Owner occupied commercial real estate		1,255		828		3		1,272		1,117		2
Agriculture		223		177		—		254		248		1
Energy		26,161		25,913		12,726		6,279		6,260		2,127
Total commercial		33,122		30,901		14,932		12,342		12,128		4,048
Commercial real estate non-owner occupied:
Construction		—		—		—		—		—		—
Acquisition/development		—		—		—		—		—		—
Multifamily		35		35		—		61		59		—
Non-owner occupied		863		808		3		1,642		1,630		274
Total commercial real estate		898		843		3		1,703		1,689		274
Residential real estate:
Senior lien		5,676		5,086		25		5,827		5,701		54
Junior lien		1,942		1,638		13		1,800		1,593		11
Total residential real estate		7,618		6,724		38		7,627		7,294		65
Consumer		243		240		2		86		86		1
Total impaired loans with a related allowance recorded	$	41,881	$	38,708	$	14,975	$	21,758	$	21,198	$	4,388
Total impaired loans	$	50,533	$	46,815	$	14,975	$	38,069	$	37,363	$	4,388

The table below shows additional information regarding the average recorded investment and interest income recognized on impaired loans for the periods presented:

	For six months ended
	June 30, 2016				June 30, 2015
	Average recorded investment		Interest income recognized		Average recorded investment		Interest income recognized
With no related allowance recorded:
Commercial:
Commercial and industrial	$	4,564	$	138	$	16,138	$	357
Owner occupied commercial real estate		1,869		49		1,910		35
Agriculture		1,758		—		—		—
Energy		—		—		12,532		—
Total Commercial		8,191		187		30,580		392
Commercial real estate non-owner occupied:
Construction		—		—		—		—
Acquisition/development		—		—		—		—
Multifamily		—		—		—		—
Non-owner occupied		—		—		—		—
Total commercial real estate		—		—		—		—
Residential real estate:
Senior lien		1,312		14		315		9
Junior lien		136		1		—		—
Total residential real estate		1,448		15		315		9
Consumer		—		—		—		—
Total impaired loans with no related allowance recorded	$	9,639	$	202	$	30,895	$	401
With a related allowance recorded:
Commercial:
Commercial and industrial	$	4,312	$	—	$	1,549	$	1
Owner occupied commercial real estate		865		7		960		13
Agriculture		179		3		407		2
Energy		26,005		—		—		—
Total Commercial		31,361		10		2,916		16
Commercial real estate non-owner occupied:
Construction		—		—		—		—
Acquisition/development		—		—		—		—
Multifamily		36		1		39		—
Non-owner occupied		823		24		863		26
Total commercial real estate		859		25		902		26
Residential real estate:
Senior lien		5,212		53		5,880		59
Junior lien		1,670		27		1,326		26
Total residential real estate		6,882		80		7,206		85
Consumer		242		—		49		—
Total impaired loans with a related allowance recorded	$	39,344	$	115	$	11,073	$	127
Total impaired loans	$	48,983	$	317	$	41,968	$	528

Interest income recognized on impaired loans noted in the table above, primarily represents interest earned on accruing troubled debt restructurings. Interest income recognized on impaired loans using the cash-basis method of accounting during the three months ended June 30, 2016 and 2015 was immaterial. 

Troubled debt restructurings

It is the Company’s policy to review each prospective credit in order to determine the appropriateness and the adequacy of security or collateral prior to making a loan. In the event of borrower default, the Company seeks recovery in compliance with lending laws, the respective loan agreements, and credit monitoring and remediation procedures that may include restructuring a loan to provide a concession by the Company to the borrower from their original terms due to borrower financial difficulties in order to facilitate repayment. Additionally, if a borrower’s repayment obligation has been discharged by a court, and that debt has not been reaffirmed by the borrower, regardless of past due status, the loan is considered to be a TDR. At June 30, 2016 and December 31, 2015, the Company had $5.7 million and $8.4 million, respectively, of accruing TDRs that had been restructured from the original terms in order to facilitate repayment.

Non-accruing TDRs at June 30, 2016 and December 31, 2015 totaled $13.1 million and $17.8 million, respectively.

During the six months ended June 30, 2016, the Company restructured twelve loans with a recorded investment of $2.7 million to facilitate repayment. Substantially all of the loan modifications were a reduction of the principal payment, a reduction in interest rate, or an extension of term. Loan modifications to loans accounted for under ASC 310-30 are not considered TDRs. The table below provides additional information related to accruing TDRs at June 30, 2016 and December 31, 2015:

	Accruing TDRs
	June 30, 2016
	Recorded		Average year-to-date		Unpaid		Unfunded commitments
	investment		recorded investments		principal balance		to fund TDRs
Commercial	$	2,576	$	2,610	$	2,631	$	—
Commercial real estate non-owner occupied		743		758		795		—
Residential real estate		2,401		2,435		2,449		2
Consumer		9		10		9		—
Total	$	5,729	$	5,813	$	5,884	$	2

	Accruing TDRs
	December 31, 2015
	Recorded		Average year-to-date		Unpaid		Unfunded commitments
	investment		recorded investments		principal balance		to fund TDRs
Commercial	$	5,874	$	5,951	$	5,918	$	163
Commercial real estate non-owner occupied		388		394		389		—
Residential real estate		2,162		2,234		2,166		2
Consumer		12		15		12		—
Total	$	8,436	$	8,594	$	8,485	$	165

The following table summarizes the Company’s carrying value of non-accrual TDRs as of June 30, 2016 and December 31, 2015:

	Non - Accruing TDRs
	June 30, 2016		December 31, 2015
Commercial	$	12,069	$	16,297
Commercial real estate non-owner occupied		—		816
Residential real estate		775		678
Consumer		207		2
Total	$	13,051	$	17,793

Accrual of interest is resumed on loans that were on non-accrual only after the loan has performed sufficiently. The Company had 1 TDRthat was modified within the past 12 months and had defaulted on its restructured terms during the three months ended June 30, 2016, and 5 TDRs that were modified within the past 12 months and had defaulted on their restructured terms during the six months ended June 30, 2016. The defaulted TDRs consisted of 1 energy sector loans totaling $5.8 million, 2 commercial and industrial loans totaling $3.9 million, 1 residential loan totaling $0.1 million, and 1 commercial real estate loan totaling $0.2 million. The allowance for loan losses related to troubled debt restructurings on non-accrual status is determined by individual evaluation, including collateral adequacy, using the same process as loans on non-accrual status which are not classified as troubled debt restructurings.

During the three and six months ended June 30, 2015, the Company had no TDRs that had been modified within the past 12 months that defaulted on their restructured terms.

Loans accounted for under ASC Topic 310-30

Loan pools accounted for under ASC Topic 310-30 are periodically remeasured to determine expected future cash flows. In determining the expected cash flows, the timing of cash flows and prepayment assumptions for smaller homogeneous loans are based on statistical models that take into account factors such as the loan interest rate, credit profile of the borrowers, the years in which the loans were originated, and whether the loans are fixed or variable rate loans. Prepayments may be assumed on loans if circumstances specific to that loan warrant a prepayment assumption. The re-measurement of loans accounted for under ASC 310-30 resulted in the following changes in the carrying amount of accretable yield during the six months ended June 30, 2016 and 2015:

	June 30, 2016		June 30, 2015
Accretable yield beginning balance	$	84,194	$	113,463
Reclassification from non-accretable difference		5,646		15,823
Reclassification to non-accretable difference		(4,019)		(1,390)
Accretion		(18,056)		(24,466)
Accretable yield ending balance	$	67,765	$	103,430

Below is the composition of the net book value for loans accounted for under ASC 310-30 at June 30, 2016 and December 31, 2015:

	June 30, 2016		December 31, 2015
Contractual cash flows	$	576,242	$	627,843
Non-accretable difference		(339,195)		(340,819)
Accretable yield		(67,765)		(84,194)
Loans accounted for under ASC 310-30	$	169,282	$	202,830