Acquired Loans (Tables)

6 Months Ended

Jun. 30, 2014

Schedule of covered and noncovered acquired loans by type

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

	June 30, 2014				December 31, 2013
	Noncovered		Covered		Noncovered		Covered
Loans secured by real estate:
Construction, land development and other land loans	$	75,353	$	2,130	$	98,928	$	2,363
Secured by 1-4 family residential properties		133,191		14,565		157,914		16,416
Secured by nonfarm, nonresidential properties		226,967		8,831		287,136		10,945
Other		30,918		2,376		33,948		2,644
Commercial and industrial loans		114,212		336		149,495		394
Consumer loans		14,733		-		18,428		119
Other loans		21,537		1,390		24,141		1,335
Acquired loans		616,911		29,628		769,990		34,216
Less allowance for loan losses, acquired loans		9,770		1,409		7,249		2,387
Net acquired loans	$	607,141	$	28,219	$	762,741	$	31,829

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):

	Noncovered						Covered
	Acquired			Acquired			Acquired			Acquired
	Impaired			Not ASC 310-30 (1)			Impaired			Not ASC 310-30 (1)
Carrying value, net at January 1, 2013	$	72,942		$	6,696		$	45,391		$	2,460
Loans acquired (2)		790,335			153,900			-			-
Accretion to interest income		35,538			2,628			5,150			159
Payments received, net		(229,618	)		(39,281	)		(18,976	)		(819	)
Other		(24,177	)		(858	)		(3,202	)		(137	)
Less change in allowance for loan losses, acquired loans		(5,364	)		-			1,803			-
Carrying value, net at December 31, 2013		639,656			123,085			30,166			1,663
Accretion to interest income		23,471			1,059			2,047			1
Payments received, net		(132,343	)		(28,529	)		(5,032	)		162
Other		(16,385	)		(352	)		(1,282	)		(484	)
Less change in allowance for loan losses, acquired loans		(2,141	)		(380	)		978			-
Carrying value, net at June 30, 2014	$	512,258		$	94,883		$	26,877		$	1,342

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

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

Changes in accretable yield of acquired loans

Under FASB ASC Topic 310-30, the accretable yield is the excess of expected cash flows at acquisition over the initial fair value of acquired impaired loans and is recorded as interest income over the estimated life of the loans using the effective yield method if the timing and amount of the future cash flows is reasonably estimable. The following table presents changes in the accretable yield for the six months ended June 30, 2014 and 2013 ($ in thousands):

	Six Months Ended June 30,
	2014			2013
Accretable yield at January 1,	$	(109,006	)	$	(26,383	)
Additions due to acquisition (1)		-			(98,394	)
Accretion to interest income		25,518			16,639
Disposals		10,791			7,196
Reclassification to / (from) nonaccretable difference (2)		(20,094	)		(5,180	)
Accretable yield at June 30,	$	(92,791	)	$	(106,122	)

(1)	Accretable yield on loans acquired from BancTrust on February 15, 2013, adjusted for measurement period adjustments.

(2)	Reclassifications from nonaccretable difference are due to lower loss expectations and improvements in expected cash flows.

Components of the allowance for loan losses on acquired loans

The following tables present the components of the allowance for loan losses on acquired loans for the six months ended June 30, 2014 and 2013 ($ in thousands):

	Noncovered			Covered			Total
Balance at January 1, 2014	$	7,249		$	2,387		$	9,636
Provision for loan losses, acquired loans		3,899			(52	)		3,847
Loans charged-off		(2,152	)		(865	)		(3,017	)
Recoveries		774			(61	)		713
Net charge-offs		(1,378	)		(926	)		(2,304	)
Balance at June 30, 2014	$	9,770		$	1,409		$	11,179

	Noncovered			Covered			Total
Balance at January 1, 2013	$	1,885		$	4,190		$	6,075
Provision for loan losses, acquired loans		(94	)		(1,328	)		(1,422	)
Loans charged-off		(2,142	)		(302	)		(2,444	)
Recoveries		463			18			481
Net charge-offs		(1,679	)		(284	)		(1,963	)
Balance at June 30, 2013	$	112		$	2,578		$	2,690

Carrying amount of acquired loans by credit quality indicator

The tables below illustrate the carrying amount of acquired loans by credit quality indicator at June 30, 2014 and December 31, 2013 ($ in thousands):

	June 30, 2014
		Commercial Loans
		Pass -		Special Mention -		Substandard -		Doubtful -
		Categories 1-6		Category 7		Category 8		Category 9		Subtotal
Noncovered Loans:
Loans secured by real estate:
Construction, land development and other land loans		$	31,679	$	1,222	$	30,426	$	7,246	$	70,573
Secured by 1-4 family residential properties			31,824		1,313		14,936		210		48,283
Secured by nonfarm, nonresidential properties			170,322		5,941		48,999		1,705		226,967
Other			26,584		885		3,143		284		30,896
Commercial and industrial loans			90,148		510		19,476		4,078		114,212
Consumer loans			-		-		-		-		-
Other loans			19,201		-		939		1,352		21,492
Total noncovered loans			369,758		9,871		117,919		14,875		512,423

Covered Loans: (1)
Loans secured by real estate:
Construction, land development and other land loans			252		-		1,320		401		1,973
Secured by 1-4 family residential properties			1,384		260		1,263		-		2,907
Secured by nonfarm, nonresidential properties			4,737		99		3,347		-		8,183
Other			832		121		713		2		1,668
Commercial and industrial loans			164		26		146		-		336
Consumer loans			-		-		-		-		-
Other loans			250		-		455		685		1,390
Total covered loans			7,619		506		7,244		1,088		16,457
Total acquired loans		$	377,377	$	10,377	$	125,163	$	15,963	$	528,880

	Consumer Loans
			Past Due		Past Due						Total
	Current		30-89 Days		90 Days or More		Nonaccrual		Subtotal		Acquired Loans
Noncovered Loans:
Loans secured by real estate:
Construction, land development and other land loans	$	4,409	$	58	$	313	$	-	$	4,780	$	75,353
Secured by 1-4 family residential properties		79,241		2,706		2,882		79		84,908		133,191
Secured by nonfarm, nonresidential properties		-		-		-		-		-		226,967
Other		22		-		-		-		22		30,918
Commercial and industrial loans		-		-		-		-		-		114,212
Consumer loans		14,385		341		7		-		14,733		14,733
Other loans		45		-		-		-		45		21,537
Total noncovered loans		98,102		3,105		3,202		79		104,488		616,911

Covered Loans: (1)
Loans secured by real estate:
Construction, land development and other land loans		143		14		-		-		157		2,130
Secured by 1-4 family residential properties		10,881		527		245		5		11,658		14,565
Secured by nonfarm, nonresidential properties		473		-		175		-		648		8,831
Other		675		33		-		-		708		2,376
Commercial and industrial loans		-		-		-		-		-		336
Consumer loans		-		-		-		-		-		-
Other loans		-		-		-		-		-		1,390
Total covered loans		12,172		574		420		5		13,171		29,628
Total acquired loans	$	110,274	$	3,679	$	3,622	$	84	$	117,659	$	646,539

(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, 2013
		Commercial Loans
			Pass -		Special Mention -		Substandard -		Doubtful -
			Categories 1-6		Category 7		Category 8		Category 9		Subtotal
Noncovered Loans:
Loans secured by real estate:
Construction, land development and other land loans			$	39,075	$	2,506	$	42,486	$	8,445	$	92,512
Secured by 1-4 family residential properties				33,810		2,983		17,422		538		54,753
Secured by nonfarm, nonresidential properties				184,594		9,027		88,952		4,563		287,136
Other				28,156		1,437		4,071		184		33,848
Commercial and industrial loans				116,818		2,248		24,084		6,039		149,189
Consumer loans				21		-		-		-		21
Other loans				21,881		-		882		1,306		24,069
Total noncovered loans				424,355		18,201		177,897		21,075		641,528

Covered Loans: (1)
Loans secured by real estate:
Construction, land development and other land loans				228		-		1,126		771		2,125
Secured by 1-4 family residential properties				1,629		430		1,798		-		3,857
Secured by nonfarm, nonresidential properties				5,446		109		4,723		-		10,278
Other				832		134		717		2		1,685
Commercial and industrial loans				254		28		112		-		394
Consumer loans				-		-		-		-		-
Other loans				271		-		414		646		1,331
Total covered loans				8,660		701		8,890		1,419		19,670
Total acquired loans			$	433,015	$	18,902	$	186,787	$	22,494	$	661,198

	Consumer Loans
			Past Due		Past Due						Total
	Current		30-89 Days		90 Days or More		Nonaccrual		Subtotal		Acquired Loans
Noncovered Loans:
Loans secured by real estate:
Construction, land development and other land loans	$	5,813	$	108	$	495	$	-	$	6,416	$	98,928
Secured by 1-4 family residential properties		95,987		3,599		3,466		109		103,161		157,914
Secured by nonfarm, nonresidential properties		-		-		-		-		-		287,136
Other		100		-		-		-		100		33,948
Commercial and industrial loans		306		-		-		-		306		149,495
Consumer loans		18,076		239		92		-		18,407		18,428
Other loans		72		-		-		-		72		24,141
Total noncovered loans		120,354		3,946		4,053		109		128,462		769,990

Covered Loans: (1)
Loans secured by real estate:
Construction, land development and other land loans		133		77		28		-		238		2,363
Secured by 1-4 family residential properties		11,179		428		952		-		12,559		16,416
Secured by nonfarm, nonresidential properties		495		-		172		-		667		10,945
Other		617		342		-		-		959		2,644
Commercial and industrial loans		-		-		-		-		-		394
Consumer loans		119		-		-		-		119		119
Other loans		4		-		-		-		4		1,335
Total covered loans		12,547		847		1,152		-		14,546		34,216
Total acquired loans	$	132,901	$	4,793	$	5,205	$	109	$	143,008	$	804,206

(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 tables provide an aging analysis of contractually past due and nonaccrual acquired loans, by class at June 30, 2014 and December 31, 2013 ($ in thousands):

	June 30, 2014
	Past Due
			90 Days						Current		Total Acquired
	30-89 Days		or More (1)		Total		Nonaccrual (2)		Loans		Loans
Noncovered loans:
Loans secured by real estate:
Construction, land development and other land loans	$	1,281	$	24,606	$	25,887	$	270	$	49,196	$	75,353
Secured by 1-4 family residential properties		3,754		6,171		9,925		85		123,181		133,191
Secured by nonfarm, nonresidential properties		3,997		12,690		16,687		161		210,119		226,967
Other		870		703		1,573		29		29,316		30,918
Commercial and industrial loans		942		1,461		2,403		527		111,282		114,212
Consumer loans		341		7		348		-		14,385		14,733
Other loans		-		87		87		-		21,450		21,537
Total noncovered loans		11,185		45,725		56,910		1,072		558,929		616,911

Covered loans:
Loans secured by real estate:
Construction, land development and other land loans		284		608		892		-		1,238		2,130
Secured by 1-4 family residential properties		658		371		1,029		5		13,531		14,565
Secured by nonfarm, nonresidential properties		-		431		431		-		8,400		8,831
Other		33		302		335		-		2,041		2,376
Commercial and industrial loans		9		40		49		77		210		336
Consumer loans		-		-		-		-		-		-
Other loans		455		685		1,140		-		250		1,390
Total covered loans		1,439		2,437		3,876		82		25,670		29,628
Total acquired loans	$	12,624	$	48,162	$	60,786	$	1,154	$	584,599	$	646,539

(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, 2013
	Past Due
			90 Days						Current		Total Acquired
	30-89 Days		or More (1)		Total		Nonaccrual (2)		Loans		Loans
Noncovered loans:
Loans secured by real estate:
Construction, land development and other land loans	$	2,116	$	31,744	$	33,860	$	67	$	65,001	$	98,928
Secured by 1-4 family residential properties		5,067		7,589		12,656		116		145,142		157,914
Secured by nonfarm, nonresidential properties		7,978		15,421		23,399		461		263,276		287,136
Other		40		1,922		1,962		33		31,953		33,948
Commercial and industrial loans		743		3,387		4,130		1,170		144,195		149,495
Consumer loans		239		92		331		-		18,097		18,428
Other loans		-		153		153		20		23,968		24,141
Total noncovered loans		16,183		60,308		76,491		1,867		691,632		769,990

Covered loans:
Loans secured by real estate:
Construction, land development and other land loans		87		553		640		445		1,278		2,363
Secured by 1-4 family residential properties		873		1,142		2,015		-		14,401		16,416
Secured by nonfarm, nonresidential properties		1,905		793		2,698		-		8,247		10,945
Other		710		2		712		-		1,932		2,644
Commercial and industrial loans		13		-		13		41		340		394
Consumer loans		-		-		-		-		119		119
Other loans		-		646		646		-		689		1,335
Total covered loans		3,588		3,136		6,724		486		27,006		34,216
Total acquired loans	$	19,771	$	63,444	$	83,215	$	2,353	$	718,638	$	804,206

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

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