Loans

The composition of net loans as of September 30, 2016 and 2015, is as follows:



	September 30,
	2016			2015
	(dollars in thousands)
Residential real estate	$	1,020,958		$	923,145
Commercial real estate	3,754,107			2,845,748
Commercial non real estate	1,673,166			1,609,510
Agriculture	2,168,937			1,861,465
Consumer	76,273			73,049
Other	42,477			38,371
Ending balance	8,735,918			7,351,288

Less: Unamortized discount on acquired loans	(39,947		)	(19,264		)
Unearned net deferred fees and costs and loans in process	(13,327		)	(6,826		)
Total	$	8,682,644		$	7,325,198

The loan breakouts above include loans covered by FDIC loss sharing agreements totaling $73.3 million and $97.0 million as of September 30, 2016 and 2015, respectively, residential real estate loans held for sale totaling $12.9 million and $9.9 million at September 30, 2016 and 2015, respectively, and $1.13 billion and $1.12 billion of loans and written loan commitments accounted for at fair value as of September 30, 2016 and 2015, respectively.

Unearned net deferred fees and costs totaled $8.6 million and $7.5 million as of September 30, 2016 and 2015, respectively.

Loans in process represent loans that have been funded as of the balance sheet dates but not classified into a loan category and loan payments received as of the balance sheet dates that have not been applied to individual loan accounts. Loans in process totaled $4.7 million and $(0.7) million as of September 30, 2016 and 2015, respectively.

Loans guaranteed by agencies of the U.S. government totaled $120.0 million and $105.0 million at September 30, 2016 and 2015, respectively.

Principal balances of residential real estate loans sold totaled $291.2 million and $281.6 million for the years ended September 30, 2016 and 2015, respectively.

Nonaccrual

The following table presents the Company’s nonaccrual loans at September 30, 2016 and 2015, excluding ASC 310-30 loans. Loans greater than 90 days past due and still accruing interest as of September 30, 2016 and 2015, were $2.0 million and $0.1 million, respectively.



	September 30,
	2016		2015
Nonaccrual loans	(dollars in thousands)
Residential real estate	$	5,962	$	7,642
Commercial real estate	13,870		9,556
Commercial non real estate	27,280		14,281
Agriculture	66,301		24,569
Consumer	223		107
Total	$	113,636	$	56,155

Credit Quality Information

The composition of the loan portfolio by internally assigned grade is as follows as of September 30, 2016 and 2015. This table is presented net of unamortized discount on acquired loans and excludes loans measured at fair value with changes in fair value reported in earnings of $1.13 billion for 2016 and $1.12 billion for 2015:



As of September 30, 2016	Residential Real Estate		Commercial Real Estate		Commercial Non Real Estate		Agriculture		Consumer		Other		Total
Credit Risk Profile by Internally Assigned Grade	(dollars in thousands)
Grade:
Pass	$	919,224	$	3,276,048	$	1,093,913	$	1,514,344	$	75,065	$	42,477	$	6,921,071
Watchlist	4,741		81,148		37,283		204,326		110		—		327,608
Substandard	10,885		57,415		42,319		130,569		417		—		241,605
Doubtful	130		147		395		630		—		—		1,302
Loss	—		—		—		—		—		—		—
Ending balance	934,980		3,414,758		1,173,910		1,849,869		75,592		42,477		7,491,586
Loans covered by FDIC loss sharing agreements	73,272		—		—		—		—		—		73,272
Total	$	1,008,252	$	3,414,758	$	1,173,910	$	1,849,869	$	75,592	$	42,477	$	7,564,858



As of September 30, 2015	Residential Real Estate		Commercial Real Estate		Commercial Non Real Estate		Agriculture		Consumer		Other		Total
Credit Risk Profile by Internally Assigned Grade	(dollars in thousands)
Grade:
Pass	$	800,677	$	2,384,980	$	1,051,772	$	1,272,312	$	72,705	$	38,371	$	5,620,817
Watchlist	4,890		66,024		50,242		189,144		78		—		310,378
Substandard	11,877		56,905		60,801		53,837		223		—		183,643
Doubtful	323		200		682		256		7		—		1,468
Loss	—		—		—		—		—		—		—
Ending balance	817,767		2,508,109		1,163,497		1,515,549		73,013		38,371		6,116,306
Loans covered by FDIC loss sharing agreements	97,030		—		—		—		—		—		97,030
Total	$	914,797	$	2,508,109	$	1,163,497	$	1,515,549	$	73,013	$	38,371	$	6,213,336

Past Due Loans

The following table presents the Company’s past due loans at September 30, 2016 and 2015. This table is presented net of unamortized discount on acquired loans and excludes loans measured at fair value with changes in fair value reported in earnings of $1.13 billion for 2016 and $1.12 billion for 2015.



	30-59 Days Past Due			60-89 Days Past Due		90 Days or Greater Past Due		Total Past Due		Current		Total Financing Receivables
As of September 30, 2016	(dollars in thousands)
Residential real estate	$	828		$	548	$	2,063	$	3,439	$	931,541	$	934,980
Commercial real estate	1,765			1,959		3,745		7,469		3,407,289		3,414,758
Commercial non real estate	1,588			5,515		9,594		16,697		1,157,213		1,173,910
Agriculture	(26		)	709		11,549		12,232		1,837,637		1,849,869
Consumer	209			20		28		257		75,335		75,592
Other	—			—		—		—		42,477		42,477
Ending balance	4,364			8,751		26,979		40,094		7,451,492		7,491,586
Loans covered by FDIC loss sharing agreements	1,404			1,173		367		2,944		70,328		73,272
Total	$	5,768		$	9,924	$	27,346	$	43,038	$	7,521,820	$	7,564,858



	30-59 Days Past Due		60-89 Days Past Due		90 Days or Greater Past Due		Total Past Due		Current		Total Financing Receivables
As of September 30, 2015	(dollars in thousands)
Residential real estate	$	486	$	858	$	2,776	$	4,120	$	813,647	$	817,767
Commercial real estate	1,708		1,204		4,247		7,159		2,500,950		2,508,109
Commercial non real estate	697		7,944		4,072		12,713		1,150,784		1,163,497
Agriculture	2,161		175		6,264		8,600		1,506,949		1,515,549
Consumer	232		8		37		277		72,736		73,013
Other	—		—		—		—		38,371		38,371
Ending balance	5,284		10,189		17,396		32,869		6,083,437		6,116,306
Loans covered by FDIC loss sharing agreements	2,455		594		873		3,922		93,108		97,030
Total	$	7,739	$	10,783	$	18,269	$	36,791	$	6,176,545	$	6,213,336

Impaired Loans

The following table presents the Company’s impaired loans. This table excludes loans covered by FDIC loss sharing agreements:



	As of September 30, 2016						As of September 30, 2015
	Recorded Investment		Unpaid Principal Balance		Related Allowance		Recorded Investment		Unpaid Principal Balance		Related Allowance
Impaired loans:	(dollars in thousands)
With an allowance recorded:
Residential real estate	$	6,244	$	6,886	$	3,000	$	8,779	$	9,386	$	4,118
Commercial real estate	29,965		32,349		3,846		28,683		29,839		2,932
Commercial non real estate	34,526		35,283		6,475		42,446		46,936		5,443
Agriculture	71,501		80,842		12,278		34,130		38,966		3,780
Consumer	383		393		87		184		202		52
Total impaired loans with an allowance recorded	142,619		155,753		25,686		114,222		125,329		16,325

With no allowance recorded:
Residential real estate	4,120		5,807		—		4,490		6,181		—
Commercial real estate	24,040		24,660		—		31,757		33,131		—
Commercial non real estate	15,299		16,469		—		23,724		24,970		—
Agriculture	30,339		31,907		—		10,123		11,396		—
Consumer	12		12		—		26		27		—
Total impaired loans with no allowance recorded	73,810		78,855		—		70,120		75,705		—
Total impaired loans	$	216,429	$	234,608	$	25,686	$	184,342	$	201,034	$	16,325

There are no impaired loans without a valuation allowance, other than those loans for which the Company has claim to collateral with value(s) in excess of the outstanding loan amount, after allowing for the cost of liquidating the collateral as of September 30, 2016 or 2015.

The average recorded investment on impaired loans and interest income recognized on impaired loans for the years ended September 30, 2016, 2015 and 2014, respectively, are as follows:



	For the year ended September 30, 2016				For the year ended September 30, 2015				For the year ended September 30, 2014
	Average Recorded Investment		Interest Income Recognized while on Impaired Status		Average Recorded Investment		Interest Income Recognized while on Impaired Status		Average Recorded Investment		Interest Income Recognized while on Impaired Status
	(dollars in thousands)
Residential real estate	$	11,773	$	576	$	12,523	$	588	$	13,572	$	661
Commercial real estate	70,266		3,876		69,918		3,936		84,490		2,191
Commercial non real estate	45,592		1,971		49,561		3,092		31,827		1,980
Agriculture	100,052		6,502		42,599		1,953		30,546		984
Consumer	309		55		241		35		346		53
Total	$	227,992	$	12,980	$	174,842	$	9,604	$	160,781	$	5,869

Valuation adjustments made to repossessed properties for the years ended September 30, 2016 and 2015, totaled $1.8 million and $5.9 million, respectively, and are included in noninterest expense.

Troubled Debt Restructurings

Included in certain loan categories in the impaired loans are troubled debt restructurings (“TDRs”) that were classified as impaired. These TDRs do not include purchased impaired loans. When the Company grants concessions to borrowers such as reduced interest rates or extensions of loan periods that would not be considered other than because of borrowers’ financial difficulties, the modification is considered a TDR. Specific reserves included in the allowance for loan and lease losses for TDRs were $9.3 million and $3.6 million at September 30, 2016 and 2015, respectively. Commitments to lend additional funds to borrowers whose loans were modified in a TDR were $0.9 million and $2.3 million as of September 30, 2016 and 2015, respectively.

The following table presents the recorded value of the Company’s TDR balances as of September 30, 2016 and 2015:



	September 30, 2016				September 30, 2015
	Accruing		Nonaccrual		Accruing		Nonaccrual
	(dollars in thousands)
Residential real estate	$	370	$	937	$	452	$	1,547
Commercial real estate	18,250		2,356		30,917		4,725
Commercial non real estate	8,102		4,789		8,928		833
Agriculture	19,823		28,688		20,041		6,857
Consumer	23		8		33		4
Total	$	46,568	$	36,778	$	60,371	$	13,966

The following table presents a summary of all accruing loans restructured in TDRs during the years ended September 30, 2016, 2015 and 2014, respectively:



	September 30,					September 30,					September 30,
	2016					2015					2014
		Recorded Investment					Recorded Investment					Recorded Investment
	Number	Pre- Modification		Post- Modification		Number	Pre- Modification		Post- Modification		Number	Pre- Modification		Post- Modification
	(dollars in thousands)
Residential real estate
Rate modification	—	$	—	$	—	1	$	13	$	13	—	$	—	$	—
Term extension	1	42		42		2	53		53		6	206		206
Payment modification	—	—		—		—	—		—		6	474		474
Bankruptcy	—	—		—		1	19		19		9	338		338
Other	—	—		—		—	—		—		2	49		49
Total residential real estate	1	42		42		4	85		85		23	1,067		1,067
Commercial real estate
Rate modification	—	—		—		—	—		—		—	—		—
Term extension	2	1,897		1,897		—	—		—		3	109		109
Payment modification	—	—		—		6	22,232		22,232		2	2,911		2,911
Bankruptcy	—	—		—		1	477		477		—	—		—
Other	3	6,714		6,714		—	—		—		—	—		—
Total commercial real estate	5	8,611		8,611		7	22,709		22,709		5	3,020		3,020
Commercial non real estate
Rate modification	1	49		49		—	—		—		—	—		—
Term extension	5	120		120		2	2,296		2,296		7	2,183		2,183
Payment modification	2	948		948		4	1,709		1,709		10	3,593		3,593
Bankruptcy	—	—		—		—	—		—		—	—		—
Other	4	8,500		8,500		—	—		—		5	945		945
Total commercial non real estate	12	9,617		9,617		6	4,005		4,005		22	6,721		6,721
Agriculture
Rate modification	—	—		—		—	—		—		—	—		—
Term extension	16	27,134		27,134		2	1,410		1,410		5	2,755		2,755
Payment modification	4	989		989		7	18,551		18,551		—	—		—
Bankruptcy	—	—		—		—	—		—		—	—		—
Other	—	—		—		—	—		—		—	—		—
Total agriculture	20	28,123		28,123		9	19,961		19,961		5	2,755		2,755
Consumer
Rate modification	—	—		—		—	—		—		—	—		—
Term extension	—	—		—		—	—		—		—	—		—
Payment modification	—	—		—		1	17		17		4	21		21
Bankruptcy	—	—		—		1	6		6		—	—		—
Other	—	—		—		—	—		—		2	28		28
Total consumer	—	—		—		2	23		23		6	49		49
Total accruing	38	$	46,393	$	46,393	28	$	46,783	$	46,783	61	$	13,612	$	13,612
Change in recorded investment due to principal paydown at time of modification	—	$	—	$	—	—	$	—	$	—	—	$	—	$	—
Change in recorded investment due to chargeoffs at time of modification	—	$	—	$	—	—	$	—	$	—	—	$	—	$	—

The following table presents a summary of all non-accruing loans restructured in TDRs during the years ended September 30, 2016, 2015 and 2014:



	September 30,					September 30,					September 30,
	2016					2015					2014
		Recorded Investment					Recorded Investment					Recorded Investment
	Number	Pre- Modification		Post- Modification		Number	Pre- Modification		Post- Modification		Number	Pre- Modification		Post- Modification
	(dollars in thousands)
Residential real estate
Rate modification	—	$	—	$	—	1	$	67	$	67	5	$	119	$	119
Term extension	—	—		—		3	169		169		13	351		351
Payment modification	3	254		253		1	19		19		6	219		219
Bankruptcy	—	—		—		1	39		39		7	275		275
Other	—	—		—		1	24		8		11	425		425
Total residential real estate	3	254		253		7	318		302		42	1,389		1,389
Commercial real estate
Rate modification	—	—		—		—	—		—		3	1,618		1,618
Term extension	—	—		—		2	740		740		2	4,031		4,031
Payment modification	—	—		—		2	1,082		1,082		—	—		—
Bankruptcy	—	—		—		—	—		—		—	—		—
Other	—	—		—		—	—		—		1	87		87
Total commercial real estate	—	—		—		4	1,822		1,822		6	5,736		5,736
Commercial Non Real Estate
Rate modification	—	—		—		1	32		—		—	—		—
Term extension	—	—		—		5	257		180		10	438		438
Payment modification	2	760		760		2	22		3		1	36		36
Bankruptcy	—	—		—		—	—		—		1	10		10
Other	—	—		—		—	—		—		—	—		—
Total commercial non real estate	2	760		760		8	311		183		12	484		484
Agriculture
Rate modification	—	—		—		—	—		—		—	—		—
Term extension	1	101		100		—	—		—		3	831		831
Payment modification	4	932		887		1	229		229		—	—		—
Bankruptcy	—	—		—		—	—		—		—	—		—
Other	1	95		95		—	—		—		2	511		511
Total agriculture	6	1,128		1,082		1	229		229		5	1,342		1,342
Consumer
Rate modification	—	—		—		—	—		—		—	—		—
Term extension	—	—		—		2	1		—		2	15		15
Payment modification	—	—		—		—	—		—		1	2		2
Bankruptcy	1	8		8		—	—		—		—	—		—
Other	—	—		—		—	—		—		2	9		9
Total consumer	1	8		8		2	1		—		5	26		26
Total non-accruing	12	$	2,150	$	2,103	22	$	2,681	$	2,536	70	$	8,977	$	8,977
Change in recorded investment due to principal paydown at time of modification	—	$	—	$	—	—	$	—	$	—	—	$	—	$	—
Change in recorded investment due to chargeoffs at time of modification	7	$	47	$	—	5	$	145	$	—	—	$	—	$	—

The table below represents loans that were modified as TDRs within the previous 12 months and for which there was a payment default for the years ended September 30, 2016, 2015 and 2014.



	September 30,			September 30,			September 30,
	2016			2015			2014
	Number of Loans	Recorded Investment		Number of Loans	Recorded Investment		Number of Loans	Recorded Investment
	(dollars in thousands)
Residential real estate	1	$	—	1	$	8	11	$	419
Commercial real estate	—	—		—	—		—	—
Commercial non real estate	2	275		2	—		8	313
Agriculture	2	7,307		—	—		2	935
Consumer	1	8		2	—		1	—
Total	6	$	7,590	5	$	8	22	$	1,667

A loan is considered to be in payment default once it is 90 days or more contractually past due under the modified terms. The table above includes loans that experienced a payment default during the period, but may be performing in accordance with the modified terms as of the balance sheet date. In 2016, 2015 and 2014, $22.3 million, $14.5 million, and $12.9 million respectively, of loans were removed from TDR status as they were restructured at market terms and are performing.