Acquired Loans (Tables)

9 Months Ended

Sep. 30, 2013

Schedule of covered and noncovered acquired loans by type

For the periods presented, acquired loans consisted of the following ($ in thousands):

	September 30, 2013				December 31, 2012
	Covered		Noncovered		Covered		Noncovered
Loans secured by real estate:
Construction, land development and other land loans	$	2,585	$	106,655	$	3,924	$	10,056
Secured by 1-4 family residential properties		17,785		168,573		23,990		19,404
Secured by nonfarm, nonresidential properties		12,120		301,686		18,407		45,649
Other		2,817		35,051		3,567		669
Commercial and industrial loans		478		186,649		747		3,035
Consumer loans		151		22,251		177		2,610
Other loans		1,314		17,010		1,229		100
Acquired loans		37,250		837,875		52,041		81,523
Less allowance for loan losses, acquired loans		2,326		3,007		4,190		1,885
Net acquired loans	$	34,924	$	834,868	$	47,851	$	79,638

Fair value of acquired loans

The following table presents the adjusted fair value of loans acquired as of the date of the BancTrust acquisition ($ in thousands):

At acquisition date:	February 15, 2013
Contractually required principal and interest	$	1,256,669
Nonaccretable difference		201,324
Cash flows expected to be collected		1,055,345
Accretable yield		98,394
FASB ASC Topic 310-20 discount		12,716
Fair value of loans at acquisition	$	944,235

Changes in the carrying value of acquired loans

The following tables present changes in the net carrying value of the acquired loans for the periods presented ($ in thousands):

	Covered						Noncovered
	Acquired			Acquired			Acquired			Acquired
	Impaired			Not ASC 310-30 (1)			Impaired			Not ASC 310-30 (1)
Carrying value, net at January 1, 2012	$	72,131		$	4,171		$	4,350		$	13
Loans acquired (2)		-			-			91,987			5,927
Accretion to interest income		8,031			367			4,138			161
Payments received, net		(27,496	)		(2,107	)		(24,330	)		868
Other		(3,085	)		29			(1,318	)		(273	)
Less allowance for loan losses, acquired loans		(4,190	)		-			(1,885	)		-
Carrying value, net at December 31, 2012		45,391			2,460			72,942			6,696
Loans acquired (3)		-			-			790,335			153,900
Accretion to interest income		3,934			157			24,993			2,143
Payments received, net		(16,136	)		(743	)		(174,776	)		(22,804	)
Other		(1,866	)		(137	)		(17,243	)		(196	)
Less allowance for loan losses, acquired loans		1,864			-			(1,122	)		-
Carrying value, net at September 30, 2013	$	33,187		$	1,737		$	695,129		$	139,739

(1) Acquired nonimpaired loans consist of revolving credit agreements and commercial leases that are not in scope for FASB ASC Topic 310-30.

(2) Fair value of loans acquired from Bay Bank on March 16, 2012.

(3) Adjusted fair value of loans acquired from BancTrust on February 15, 2013.

Changes in accretable yield of acquired loans

The following table presents changes in the accretable yield ($ in thousands):

	Nine Months Ended September 30,
	2013			2012
Accretable yield at January 1,	$	(26,383	)	$	(17,653	)
Additions due to acquisition (1)		(98,394	)		(15,538	)
Accretion to interest income		28,927			9,045
Disposals		11,167			2,687
Reclassification to / (from) nonaccretable difference		(25,772	)		(6,429	)
Accretable yield at September 30,	$	(110,455	)	$	(27,888	)

(1) Accretable yield on loans acquired from BancTrust on February 15, 2013, and Bay Bank on March 16, 2012.

Components of the allowance for loan losses on acquired impaired loans

The following table presents the components of the allowance for loan losses on acquired impaired loans for the nine months ended September 30, 2013 and 2012 ($ in thousands):

	Covered			Noncovered			Total
Balance at January 1, 2013	$	4,190		$	1,885		$	6,075
Provision for loan losses, acquired loans		(1,168	)		3,038			1,870
Loans charged-off		(663	)		(3,028	)		(3,691	)
Recoveries		(33	)		1,112			1,079
Net charge-offs		(696	)		(1,916	)		(2,612	)
Balance at September 30, 2013	$	2,326		$	3,007		$	5,333

	Covered		Noncovered			Total
Balance at January 1, 2012	$	502	$	-		$	502
Provision for loan losses, acquired loans		2,655		928			3,583
Loans charged-off		174		(278	)		(104	)
Recoveries		195		167			362
Net recoveries (charge-offs)		369		(111	)		258
Balance at September 30, 2012	$	3,526	$	817		$	4,343

Carrying amount of acquired loans by credit quality indicator

The tables below illustrate the carrying amount of acquired loans by credit quality indicator at September 30, 2013 and December 31, 2012 ($ in thousands):

	September 30, 2013
	Commercial Loans
	Pass -		Special Mention -		Substandard -		Doubtful -
	Categories 1-6		Category 7		Category 8		Category 9		Subtotal
Covered Loans: (1)
Loans secured by real estate:
Construction, land development and other land loans	$	204	$	-	$	1,354	$	748	$	2,306
Secured by 1-4 family residential properties		1,670		469		1,926		-		4,065
Secured by nonfarm, nonresidential properties		5,309		113		6,031		-		11,453
Other		909		142		737		2		1,790
Commercial and industrial loans		314		29		135		-		478
Consumer loans		-		-		-		-		-
Other loans		289		-		397		628		1,314
Total covered loans		8,695		753		10,580		1,378		21,406

Noncovered loans:
Loans secured by real estate:
Construction, land development and other land loans		33,404		11,028		46,329		8,170		98,931
Secured by 1-4 family residential properties		25,708		15,711		16,763		856		59,038
Secured by nonfarm, nonresidential properties		192,453		22,235		80,844		6,154		301,686
Other		23,298		6,469		5,181		-		34,948
Commercial and industrial loans		138,428		13,677		28,927		5,617		186,649
Consumer loans		82		-		-		-		82
Other loans		15,111		1,613		261		-		16,985
Total noncovered loans		428,484		70,733		178,305		20,797		698,319
Total acquired loans	$	437,179	$	71,486	$	188,885	$	22,175	$	719,725

	Consumer Loans
	Current		Past Due 30-89 Days		Past Due 90 Days or More		Nonaccrual		Subtotal		Total Acquired Loans
Covered Loans: (1)
Loans secured by real estate:
Construction, land development and other land loans	$	251	$	28	$	-	$	-	$	279	$	2,585
Secured by 1-4 family residential properties		11,480		979		1,223		38		13,720		17,785
Secured by nonfarm, nonresidential properties		497		-		170		-		667		12,120
Other		903		124		-		-		1,027		2,817
Commercial and industrial loans		-		-		-		-		-		478
Consumer loans		151		-		-		-		151		151
Other loans		-		-		-		-		-		1,314
Total covered loans		13,282		1,131		1,393		38		15,844		37,250

Noncovered loans:
Loans secured by real estate:
Construction, land development and other land loans		6,810		179		735		-		7,724		106,655
Secured by 1-4 family residential properties		101,895		3,585		3,912		143		109,535		168,573
Secured by nonfarm, nonresidential properties		-		-		-		-		-		301,686
Other		103		-		-		-		103		35,051
Commercial and industrial loans		-		-		-		-		-		186,649
Consumer loans		21,566		494		109		-		22,169		22,251
Other loans		25		-		-		-		25		17,010
Total noncovered loans		130,399		4,258		4,756		143		139,556		837,875
Total acquired loans	$	143,681	$	5,389	$	6,149	$	181	$	155,400	$	875,125

(1)	Total dollar balances are presented in this table; however, these loans are covered by the loss-share agreement with the FDIC.

TNB is at risk for only 20% of the losses incurred on these loans.

	December 31, 2012
	Commercial Loans
	Pass -		Special Mention -		Substandard -		Doubtful -
	Categories 1-6		Category 7		Category 8		Category 9		Subtotal
Covered Loans: (1)
Loans secured by real estate:
Construction, land development and other land loans	$	1,341	$	18	$	1,489	$	744	$	3,592
Secured by 1-4 family residential properties		3,128		810		2,940		85		6,963
Secured by nonfarm, nonresidential properties		5,857		1,052		9,839		798		17,546
Other		443		318		1,231		-		1,992
Commercial and industrial loans		82		458		207		-		747
Consumer loans		-		-		-		-		-
Other loans		245		-		345		535		1,125
Total covered loans		11,096		2,656		16,051		2,162		31,965

Noncovered loans:
Loans secured by real estate:
Construction, land development and other land loans		3,259		119		4,915		921		9,214
Secured by 1-4 family residential properties		7,325		-		3,708		23		11,056
Secured by nonfarm, nonresidential properties		22,453		3,596		18,682		831		45,562
Other		236		-		417		-		653
Commercial and industrial loans		2,853		89		93		-		3,035
Consumer loans		-		-		-		-		-
Other loans		86		-		-		-		86
Total noncovered loans		36,212		3,804		27,815		1,775		69,606
Total acquired loans	$	47,308	$	6,460	$	43,866	$	3,937	$	101,571

	Consumer Loans
	Current		Past Due 30-89 Days		Past Due 90 Days or More		Nonaccrual		Subtotal		Total Acquired Loans
Covered Loans: (1)
Loans secured by real estate:
Construction, land development and other land loans	$	306	$	26	$	-	$	-	$	332	$	3,924
Secured by 1-4 family residential properties		14,311		1,028		1,650		38		17,027		23,990
Secured by nonfarm, nonresidential properties		692		169		-		-		861		18,407
Other		1,468		48		52		7		1,575		3,567
Commercial and industrial loans		-		-		-		-		-		747
Consumer loans		177		-		-		-		177		177
Other loans		104		-		-		-		104		1,229
Total covered loans		17,058		1,271		1,702		45		20,076		52,041

Noncovered loans:
Loans secured by real estate:
Construction, land development and other land loans		802		-		40		-		842		10,056
Secured by 1-4 family residential properties		7,715		357		215		61		8,348		19,404
Secured by nonfarm, nonresidential properties		87		-		-		-		87		45,649
Other		16		-		-		-		16		669
Commercial and industrial loans		-		-		-		-		-		3,035
Consumer loans		2,394		164		52		-		2,610		2,610
Other loans		14		-		-		-		14		100
Total noncovered loans		11,028		521		307		61		11,917		81,523
Total acquired loans	$	28,086	$	1,792	$	2,009	$	106	$	31,993	$	133,564

(1)	Total dollar balances are presented in this table; however, these loans are covered by the loss-share agreement with the FDIC.

TNB is at risk for only 20% of the losses incurred on these loans.

Aging analysis of past due and nonaccrual acquired loans, by class

The following table provides an aging analysis of contractually past due and nonaccrual acquired loans, by class at September 30, 2013 and December 31, 2012 ($ in thousands):

	September 30, 2013
	Past Due
			90 Days						Current		Total Acquired
	30-89 Days		or More (1)		Total		Nonaccrual (2)		Loans		Loans
Covered loans:
Loans secured by real estate:
Construction, land development and other land loans	$	290	$	454	$	744	$	445	$	1,396	$	2,585
Secured by 1-4 family residential properties		1,338		1,355		2,693		38		15,054		17,785
Secured by nonfarm, nonresidential properties		873		542		1,415		-		10,705		12,120
Other		431		2		433		-		2,384		2,817
Commercial and industrial loans		21		49		70		53		355		478
Consumer loans		-		-		-		-		151		151
Other loans		397		628		1,025		-		289		1,314
Total covered loans		3,350		3,030		6,380		536		30,334		37,250

Noncovered loans:
Loans secured by real estate:
Construction, land development and other land loans		4,801		37,844		42,645		71		63,939		106,655
Secured by 1-4 family residential properties		6,273		8,825		15,098		872		152,603		168,573
Secured by nonfarm, nonresidential properties		8,053		14,105		22,158		293		279,235		301,686
Other		344		1,848		2,192		270		32,589		35,051
Commercial and industrial loans		9,531		4,844		14,375		951		171,323		186,649
Consumer loans		508		109		617		-		21,634		22,251
Other loans		91		8		99		-		16,911		17,010
Total noncovered loans		29,601		67,583		97,184		2,457		738,234		837,875
Total acquired loans	$	32,951	$	70,613	$	103,564	$	2,993	$	768,568	$	875,125

(1) - Past due 90 days or more but still accruing interest.

(2) - Acquired loans not accounted for under FASB ASC Topic 310-30.

	December 31, 2012
	Past Due
			90 Days						Current		Total Acquired
	30-89 Days		or More (1)		Total		Nonaccrual (2)		Loans		Loans
Covered loans:
Loans secured by real estate:
Construction, land development and other land loans	$	240	$	246	$	486	$	445	$	2,993	$	3,924
Secured by 1-4 family residential properties		1,705		1,883		3,588		234		20,168		23,990
Secured by nonfarm, nonresidential properties		3,953		1,539		5,492		-		12,915		18,407
Other		221		52		273		9		3,285		3,567
Commercial and industrial loans		94		4		98		39		610		747
Consumer loans		-		-		-		-		177		177
Other loans		-		-		-		-		1,229		1,229
Total covered loans		6,213		3,724		9,937		727		41,377		52,041

Noncovered loans:
Loans secured by real estate:
Construction, land development and other land loans		-		3,622		3,622		-		6,434		10,056
Secured by 1-4 family residential properties		458		1,392		1,850		243		17,311		19,404
Secured by nonfarm, nonresidential properties		3,526		1,217		4,743		133		40,773		45,649
Other		30		44		74		-		595		669
Commercial and industrial loans		217		23		240		-		2,795		3,035
Consumer loans		164		52		216		-		2,394		2,610
Other loans		-		-		-		-		100		100
Total noncovered loans		4,395		6,350		10,745		376		70,402		81,523
Total acquired loans	$	10,608	$	10,074	$	20,682	$	1,103	$	111,779	$	133,564

(1) - Past due 90 days or more but still accruing interest.

(2) - Acquired loans not accounted for under FASB ASC Topic 310-30.