Acquired Loans (Tables)

9 Months Ended

Sep. 30, 2018

Certain Loans Acquired In Transfer Not Accounted For As Debt Securities [Abstract]

At September 30, 2018 and December 31, 2017, acquired loans consisted of the following ($ in thousands):

	September 30, 2018			December 31, 2017
Loans secured by real estate:
Construction, land development and other land	$	6,657		$	23,586
Secured by 1-4 family residential properties		25,274			61,751
Secured by nonfarm, nonresidential properties		66,865			114,694
Other real estate secured		8,507			16,746
Commercial and industrial loans		16,610			31,506
Consumer loans		1,514			2,600
Other loans		7,188			10,634
Acquired loans		132,615			261,517
Allowance for loan losses, acquired loans		(1,714	)		(4,079	)
Net acquired loans	$	130,901		$	257,438

Changes in the Carrying Value of Acquired Loans

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

	Acquired Impaired			Acquired Not ASC 310-30 (1)
Carrying value, net at January 1, 2017	$	218,107		$	42,743
Transfers (2)		—			(36,719	)
Additions (3)		7,899			109,548
Accretion to interest income		14,924			1,578
Payments received, net		(68,317	)		(39,208	)
Other (4)		(361	)		(74	)
Change in allowance for loan losses, acquired loans		7,318			—
Carrying value, net at December 31, 2017		179,570			77,868
Transfers (5)(2)		(26,497	)		(43,922	)
Accretion to interest income		7,870			782
Payments received, net		(50,940	)		(16,096	)
Other (4)		(173	)		74
Change in allowance for loan losses, acquired loans		2,365			—
Carrying value, net at September 30, 2018	$	112,195		$	18,706

(1)	“Acquired Not ASC 310-30” loans consist of loans that are not in scope for FASB ASC Topic 310-30.

(2)	“Acquired Not ASC 310-30” loans transferred to LHFI due to the discount on these loans being fully amortized.

(3)	Loans acquired in the Reliance merger on April 7, 2017.

(4)	Includes miscellaneous timing adjustments as well as acquired loan terminations through foreclosure, charge-off and other terminations.

(5)

During the second quarter of 2018, Trustmark transferred the remaining loans acquired in the Bay Bank merger on March 16, 2012 from acquired impaired loans to LHFI. During the third quarter of 2018, Trustmark transferred the remaining loans acquired in the Heritage acquisition on April 15, 2011 and the Reliance merger on April 7, 2017 from acquired impaired loans to LHFI.

Changes in Accretable Yield of Acquired Loans

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

	Nine Months Ended September 30,
	2018			2017
Accretable yield at beginning of period	$	(31,426	)	$	(38,918	)
Accretion to interest income		7,870			11,021
Additions due to acquisitions (1)		—			(784	)
Disposals, net		3,452			1,759
Transfers (2)		5,874			—
Reclassification from nonaccretable difference (3)		(4,204	)		(7,204	)
Accretable yield at end of period	$	(18,434	)	$	(34,126	)

(1)	Accretable yield on loans acquired from Reliance on April 7, 2017.

(2)

(3)	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 periods presented ($ in thousands):

	Three Months Ended September 30,						Nine Months Ended September 30,
	2018			2017			2018			2017
Balance at beginning of period	$	3,046		$	7,423		$	4,079		$	11,397
Transfers (1)		(772	)		—			(1,554	)		—
Net (charge-offs) recoveries		(93	)		(2	)		(53	)		193
Provision for loan losses, acquired loans		(467	)		(1,653	)		(758	)		(5,822	)
Balance at end of period	$	1,714		$	5,768		$	1,714		$	5,768

(1)

The allowance for loan losses balance related to the remaining loans acquired in the Bay Bank merger, which were transferred from acquired impaired loans to LHFI during the second quarter of 2018, and the remaining loans acquired in the Heritage acquisition and the Reliance merger, which were transferred from acquired impaired loans to LHFI during the third quarter of 2018.

Acquired Loans by Loan Type and Credit Quality Indicator

The tables below present the acquired loans by loan type and credit quality indicator at September 30, 2018 and December 31, 2017 ($ in thousands):

	September 30, 2018
			Commercial Loans
			Pass - Categories 1-6		Special Mention - Category 7		Substandard - Category 8		Doubtful - Category 9		Subtotal
Loans secured by real estate:
Construction, land development and other land			$	5,541	$	25	$	296	$	68	$	5,930
Secured by 1-4 family residential properties				5,594		47		645		—		6,286
Secured by nonfarm, nonresidential properties				51,123		—		15,223		519		66,865
Other real estate secured				7,906		—		177		424		8,507
Commercial and industrial loans				7,366		—		6,832		2,412		16,610
Consumer loans				—		—		—		—		—
Other loans				4,536		—		2,652		—		7,188
Total acquired loans			$	82,066	$	72	$	25,825	$	3,423	$	111,386

	Consumer Loans
	Current		Past Due 30-89 Days		Past Due 90 Days or More		Nonaccrual (1)		Subtotal		Total Acquired Loans
Loans secured by real estate:
Construction, land development and other land	$	652	$	75	$	—	$	—	$	727	$	6,657
Secured by 1-4 family residential properties		17,676		1,044		268		—		18,988		25,274
Secured by nonfarm, nonresidential properties		—		—		—		—		—		66,865
Other real estate secured		—		—		—		—		—		8,507
Commercial and industrial loans		—		—		—		—		—		16,610
Consumer loans		1,473		41		—		—		1,514		1,514
Other loans		—		—		—		—		—		7,188
Total acquired loans	$	19,801	$	1,160	$	268	$	—	$	21,229	$	132,615

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

	December 31, 2017
			Commercial Loans
			Pass - Categories 1-6		Special Mention - Category 7		Substandard - Category 8		Doubtful - Category 9		Subtotal
Loans secured by real estate:
Construction, land development and other land			$	17,150	$	234	$	4,690	$	264	$	22,338
Secured by 1-4 family residential properties				14,021		298		3,029		—		17,348
Secured by nonfarm, nonresidential properties				95,147		1,400		17,583		530		114,660
Other real estate secured				12,730		102		3,031		477		16,340
Commercial and industrial loans				22,157		15		7,585		1,749		31,506
Consumer loans				—		—		—		—		—
Other loans				5,874		18		4,742		—		10,634
Total acquired loans			$	167,079	$	2,067	$	40,660	$	3,020	$	212,826

	Consumer Loans
	Current		Past Due 30-89 Days		Past Due 90 Days or More		Nonaccrual (1)		Subtotal		Total Acquired Loans
Loans secured by real estate:
Construction, land development and other land	$	1,188	$	46	$	14	$	—	$	1,248	$	23,586
Secured by 1-4 family residential properties		42,008		1,687		584		124		44,403		61,751
Secured by nonfarm, nonresidential properties		34		—		—		—		34		114,694
Other real estate secured		406		—		—		—		406		16,746
Commercial and industrial loans		—		—		—		—		—		31,506
Consumer loans		2,428		172		—		—		2,600		2,600
Other loans		—		—		—		—		—		10,634
Total acquired loans	$	46,064	$	1,905	$	598	$	124	$	48,691	$	261,517

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

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 loan type at September 30, 2018 and December 31, 2017 ($ in thousands):

	September 30, 2018
	Past Due
	30-59 Days		60-89 Days		90 Days or More (1)		Total		Nonaccrual (2)		Current Loans		Total Acquired Loans
Loans secured by real estate:
Construction, land development and other land	$	103	$	—	$	25	$	128	$	—	$	6,529	$	6,657
Secured by 1-4 family residential properties		703		341		288		1,332		—		23,942		25,274
Secured by nonfarm, nonresidential properties		297		—		1,475		1,772		—		65,093		66,865
Other real estate secured		15		—		—		15		—		8,492		8,507
Commercial and industrial loans		—		—		607		607		—		16,003		16,610
Consumer loans		39		2		—		41		—		1,473		1,514
Other loans		—		—		—		—		—		7,188		7,188
Total acquired loans	$	1,157	$	343	$	2,395	$	3,895	$	—	$	128,720	$	132,615

(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, 2017
	Past Due
	30-59 Days		60-89 Days		90 Days or More (1)		Total		Nonaccrual (2)		Current Loans		Total Acquired Loans
Loans secured by real estate:
Construction, land development and other land	$	34	$	90	$	861	$	985	$	—	$	22,601	$	23,586
Secured by 1-4 family residential properties		1,691		614		654		2,959		302		58,490		61,751
Secured by nonfarm, nonresidential properties		467		73		898		1,438		—		113,256		114,694
Other real estate secured		132		—		—		132		—		16,614		16,746
Commercial and industrial loans		—		—		—		—		2		31,504		31,506
Consumer loans		16		156		—		172		—		2,428		2,600
Other loans		—		—		21		21		—		10,613		10,634
Total acquired loans	$	2,340	$	933	$	2,434	$	5,707	$	304	$	255,506	$	261,517

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

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