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Loans and Allowance for Probable Loan Losses (Tables)

3 Months Ended

Mar. 31, 2015

Classification of loans in the consolidated balance sheets

Loans in the accompanying consolidated balance sheets are classified as follows (in thousands):



	March 31, 2015		December 31, 2014
Real Estate Loans:
Construction	$	237,236	$	243,486
1-4 Family Residential	691,955		689,288
Other	502,476		485,226
Commercial Loans	249,407		235,356
Municipal Loans	252,756		257,492
Loans to Individuals	240,784		270,285
Total Loans⁽¹⁾	2,174,614		2,181,133
Less: Allowance for Loan Losses	16,926		13,292
Net Loans	$	2,157,688	$	2,167,841

(1) Includes approximately $727.7 million and $763.3 million of loans acquired with the Omni acquisition as of March 31, 2015 and December 31, 2014, respectively. These loans were measured at fair value at the acquisition date with no carryover of allowance for loan loss. The allowance for loan loss recorded on acquired loans for the three months ended March 31, 2015 was not significant.

Activity in the allowance for loan losses by portfolio segment

The following table details activity in the allowance for loan losses by portfolio segment for the periods presented (in thousands):



	Three Months Ended March 31, 2015
	Real Estate
	Construction		1-4 Family Residential			Other		Commercial Loans			Municipal Loans		Loans to Individuals			Total
Balance at beginning of period⁽¹⁾	$	2,456	$	2,822		$	3,025	$	3,279		$	716	$	994		$	13,292
Provision (reversal) for loan losses	275		573			269		2,065			108		558			3,848
Loans charged off	—		(6		)	—		(57		)	—		(1,023		)	(1,086		)
Recoveries of loans charged off	43		11			66		29			—		723			872
Balance at end of period	$	2,774	$	3,400		$	3,360	$	5,316		$	824	$	1,252		$	16,926

(1) Loans acquired with the Omni acquisition were measured at fair value on December 17, 2014 with no carryover of allowance for loan loss.



	Three Months Ended March 31, 2014
	Real Estate
	Construction			1-4 Family Residential			Other			Commercial Loans		Municipal Loans		Loans to Individuals			Total
Balance at beginning of period	$	2,142		$	3,277		$	2,572		$	1,970	$	668	$	8,248		$	18,877
Provision (reversal) for loan losses	(10		)	536			(164		)	3		109		3,659			4,133
Loans charged off	(14		)	(22		)	—			—		—		(4,732		)	(4,768		)
Recoveries of loans charged off	12			6			3			58		—		466			545
Balance at end of period	$	2,130		$	3,797		$	2,411		$	2,031	$	777	$	7,641		$	18,787

Balance in the allowance for loan losses by portfolio segment based on impairment method

The following tables present the balance in the allowance for loan losses by portfolio segment based on impairment method (in thousands):



	As of March 31, 2015
	Real Estate
	Construction ⁽¹⁾		1-4 Family Residential		Other		Commercial Loans		Municipal Loans		Loans to Individuals		Total
Ending balance – individually evaluated for impairment	$	123	$	47	$	35	$	3,601	$	201	$	36	$	4,043
Ending balance – collectively evaluated for impairment	2,651		3,353		3,325		1,715		623		1,216		12,883
Balance at end of period	$	2,774	$	3,400	$	3,360	$	5,316	$	824	$	1,252	$	16,926

(1) Included in individually evaluated for impairment is $78,000 in allowance for loan loss for purchased credit impaired ("PCI") loans as of March 31, 2015.



	As of December 31, 2014
	Real Estate
	Construction		1-4 Family Residential		Other		Commercial Loans		Municipal Loans		Loans to Individuals		Total
Ending balance – individually evaluated for impairment	$	43	$	102	$	26	$	242	$	14	$	103	$	530
Ending balance – collectively evaluated for impairment	2,413		2,720		2,999		3,037		702		891		12,762
Balance at end of period	$	2,456	$	2,822	$	3,025	$	3,279	$	716	$	994	$	13,292

Balance in recorded investments in loans by portfolio segment based on impairment method

The following tables present the recorded investment in loans by portfolio segment based on impairment method (in thousands):



	March 31, 2015
	Real Estate
	Construction		1-4 Family Residential		Other		Commercial Loans		Municipal Loans		Loans to Individuals		Total
Loans individually evaluated for impairment	$	2,375	$	2,069	$	3,006	$	15,278	$	949	$	126	$	23,803
Loans collectively evaluated for impairment	234,088		682,659		496,464		224,723		251,807		239,773		2,129,514
Purchased credit impaired loans	773		7,227		3,006		9,406		—		885		21,297
Total ending loan balance	$	237,236	$	691,955	$	502,476	$	249,407	$	252,756	$	240,784	$	2,174,614



	December 31, 2014
	Real Estate
	Construction		1-4 Family Residential		Other		Commercial Loans		Municipal Loans		Loans to Individuals		Total
Loans individually evaluated for impairment	$	2,461	$	2,936	$	1,605	$	1,011	$	699	$	310	$	9,022
Loans collectively evaluated for impairment ⁽¹⁾	240,240		679,051		480,619		225,168		256,793		268,894		2,150,765
Purchased credit impaired loans ⁽²⁾	785		7,301		3,002		9,177		—		1,081		21,346
Total ending loan balance	$	243,486	$	689,288	$	485,226	$	235,356	$	257,492	$	270,285	$	2,181,133

(1) Includes purchased non impaired loans which were measured at fair value at acquisition and did not have an associated allowance for loan loss as of December 31, 2014.

(2) PCI loans were measured at fair value at acquisition and did not have an associated allowance for loan loss as of December 31, 2014.

Summary of loans by credit quality indicators

The following table sets forth loans by credit quality indicator for the periods presented (in thousands):



	March 31, 2015
	Pass		Pass Watch		Special Mention ⁽¹⁾		Substandard ⁽¹⁾		Doubtful ⁽¹⁾		Total
Real Estate Loans:
Construction	$	229,338	$	861	$	1,340	$	5,670	$	27	$	237,236
1-4 Family Residential	682,231		1,439		1,692		5,534		1,059		691,955
Other	491,551		—		2,544		8,381		—		502,476
Commercial Loans	217,861		768		2,073		18,397		10,308		249,407
Municipal Loans	251,807		—		—		699		250		252,756
Loans to Individuals	239,716		13		—		621		434		240,784
Total	$	2,112,504	$	3,081	$	7,649	$	39,302	$	12,078	$	2,174,614

(1) Includes $1.5 million special mention, $4.6 million substandard, and $8.3 million doubtful of PCI loans as of March 31, 2015.



	December 31, 2014
	Pass		Pass Watch		Special Mention ⁽¹⁾		Substandard⁽¹⁾		Doubtful		Total
Real Estate Loans:
Construction	$	235,839	$	862	$	1,394	$	5,363	$	28	$	243,486
1-4 Family Residential	675,952		1,453		1,706		9,167		1,010		689,288
Other	472,449		2,416		2,569		7,792		—		485,226
Commercial Loans	208,202		781		1,044		25,102		227		235,356
Municipal Loans	256,543		—		—		949		—		257,492
Loans to Individuals	269,204		16		—		871		194		270,285
Total	$	2,118,189	$	5,528	$	6,713	$	49,244	$	1,459	$	2,181,133

(1) Includes $0.7 million special mention and $17.8 million substandard of PCI loans as of December 31, 2014.

Summary of nonperforming assets for the period

The following table sets forth nonperforming assets for the periods presented (in thousands):



	At March 31, 2015		At December 31, 2014
Nonaccrual loans⁽¹⁾	$	20,321	$	4,096
Accruing loans past due more than 90 days ⁽¹⁾	1		4
Restructured loans ⁽¹⁾	5,782		5,874
Other real estate owned	985		1,738
Repossessed assets	173		565
Total Nonperforming Assets	$	27,262	$	12,277

(1) Excludes PCI loans measured at fair value at acquisition.

Recorded investment in nonaccrual and accruing loans past due more than 90 days by class of loans

The following table sets forth the recorded investment in nonaccrual loans by class of loans for the periods presented (in thousands):



	Nonaccrual Loans ⁽¹⁾
	March 31, 2015		December 31, 2014
Real Estate Loans:
Construction	$	631	$	716
1-4 Family Residential	1,982		2,017
Other	2,096		675
Commercial Loans	14,717		416
Municipal Loans	249		—
Loans to Individuals	646		272
Total	$	20,321	$	4,096

(1) Excludes PCI loans measured at fair value at acquisition.

Summary of impaired loans by class of loans for the period

The following tables set forth impaired loans by class of loans for the periods presented (in thousands):



	March 31, 2015
	Unpaid Contractual Principal Balance		Recorded Investment With Allowance		Total Recorded Investment		Related Allowance for Loan Losses
Real Estate Loans:
Construction	$	3,113	$	2,375	$	2,375	$	45
1-4 Family Residential	2,150		2,069		2,069		47
Other	3,031		3,006		3,006		35
Commercial Loans	16,758		15,278		15,278		3,601
Municipal Loans	949		949		949		201
Loans to Individuals	136		126		126		36
Total	$	26,137	$	23,803	$	23,803	$	3,965



	December 31, 2014
	Unpaid Contractual Principal Balance		Recorded Investment With Allowance		Total Recorded Investment		Related Allowance for Loan Losses
Real Estate Loans:
Construction	$	3,183	$	2,461	$	2,461	$	43
1-4 Family Residential	4,023		3,854		3,854		108
Other	1,622		1,605		1,605		26
Commercial Loans	1,162		1,011		1,011		242
Municipal Loans	699		699		699		14
Loans to Individuals	321		310		310		103
Total ⁽¹⁾	$	11,010	$	9,940	$	9,940	$	536

(1) PCI loans are excluded from this table as there was no evidence of further deterioration in credit quality subsequent to the acquisition date that would indicate it is probable that our recorded investment in these loans would not be recoverable.

Aging of recorded investment in past due loans by class of loans

The following tables present the aging of the recorded investment in past due loans by class of loans (in thousands):



	March 31, 2015
	30-59 Days Past Due		60-89 Days Past Due		Greater than 90 Days Past Due		Total Past Due		Current ⁽¹⁾		Total
Real Estate Loans:
Construction	$	1,777	$	—	$	118	$	1,895	$	235,341	$	237,236
1-4 Family Residential	6,329		589		306		7,224		684,731		691,955
Other	1,793		54		179		2,026		500,450		502,476
Commercial Loans	132		254		72		458		248,949		249,407
Municipal Loans	2,763		—		—		2,763		249,993		252,756
Loans to Individuals	2,974		423		415		3,812		236,972		240,784
Total	$	15,768	$	1,320	$	1,090	$	18,178	$	2,156,436	$	2,174,614



	December 31, 2014
	30-59 Days Past Due		60-89 Days Past Due		Greater than 90 Days Past Due		Total Past Due		Current ⁽¹⁾		Total
Real Estate Loans:
Construction	$	376	$	42	$	716	$	1,134	$	242,352	$	243,486
1-4 Family Residential	3,511		509		2,017		6,037		683,251		689,288
Other	1,203		—		675		1,878		483,348		485,226
Commercial Loans	397		3		416		816		234,540		235,356
Municipal Loans	—		—		—		—		257,492		257,492
Loans to Individuals	362		66		276		704		269,581		270,285
Total	$	5,849	$	620	$	4,100	$	10,569	$	2,170,564	$	2,181,133

(1) Includes PCI loans measured at fair value at acquisition.

Average recorded investment and interest income on impaired loans

The following table sets forth interest income recognized on impaired loans by class of loans for the periods presented. Average recorded investment of impaired loans is reported on a year-to-date basis (in thousands):



	Three Months Ended
	March 31, 2015				March 31, 2014
	Average Recorded Investment ⁽¹⁾		Interest Income Recognized ⁽¹⁾		Average Recorded Investment		Interest Income Recognized
Real Estate Loans:
Construction	$	2,401	$	23	$	1,371	$	—
1-4 Family Residential	4,000		17		2,471		12
Other	1,945		13		1,717		12
Commercial Loans	4,530		8		1,480		4
Municipal Loans	761		10		759		—
Loans to Individuals	462		—		3,099		32
Total	$	14,099	$	71	$	10,897	$	60

(1) Excludes PCI loans measured at fair value at acquisition.

Schedule of recorded investment in loans modified

The following tables set forth the recorded balance at March 31, 2015 and 2014 of loans considered to be TDRs that were restructured during the periods presented (dollars in thousands):



	Three Months Ended March 31, 2015
	Extend Amortization Period		Interest Rate Reductions		Combination ₍₁₎		Total Modifications		Number of Loans
Real Estate Loans:
1-4 Family Residential	$	—	$	—	$	266	$	266	2
Other	31		—		—		31		1
Commercial Loans	—		—		762		762		1
Loans to Individuals	—		—		27		27		2
Total	$	31	$	—	$	1,055	$	1,086	6



	Three Months Ended March 31, 2014
	Extend Amortization Period		Interest Rate Reductions		Combination ₍₁₎		Total Modifications		Number of Loans
Real Estate Loans:
1-4 Family Residential	—		286		—		286		1
Other	338		—		25		363		2
Commercial Loans	261		—		57		318		3
Loans to Individuals	—		17		47		64		4
Total	$	599	$	303	$	129	$	1,031	10

(1) These modifications include an extension of the amortization period and interest rate reduction.

Schedule of Acquired PCI Loans

The following table presents the outstanding principal balance and carrying value for PCI loans for the periods presented (in thousands):



	March 31, 2015		December 31, 2014
Outstanding principal balance	$	31,584	$	32,572
Carrying amount	$	21,297	$	21,346

Schedule of Changes in Accretable Yield for PCI Loans

The following table presents the changes of the accretable yield during the periods for PCI loans (in thousands):



	March 31, 2015			December 31, 2014
Balance at beginning of period	$	1,820		$	—
Additions	—			—
Additions due to acquisition	—			1,898
Accretion	(524		)	(78		)
Balance at end of period	$	1,296		$	1,820