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Accounting for Certain Loans Acquired in a Purchase
 3 Months Ended
Mar. 31, 2017
Receivables [Abstract]  
Accounting for Certain Loans Acquired in a Purchase
ACCOUNTING FOR CERTAIN LOANS ACQUIRED IN A PURCHASE

The acquired loans detailed in the tables below are included in NOTE 4. LOANS AND ALLOWANCE, in the Notes to Consolidated Condensed Financial Statements of this Quarterly Report on Form 10-Q. As described in NOTE 4, loans purchased after December 31, 2008 are recorded at the acquisition date fair value, which could result in a fair value discount or premium. Purchased loans with evidence of credit deterioration since origination and for which it is probable at the date of acquisition that the acquirer will not collect all contractually required principal and interest payments are accounted for under ASC 310-30, Loans Acquired with Deteriorated Credit Quality. The difference between contractually required payments and the cash flows expected to be collected at acquisition is referred to as the nonaccretable portion of the fair value discount or premium. The accretable portion of the fair value discount or premium is the difference between the expected cash flows and the net present value of expected cash flows, with such difference accreted into earnings over the term of the loans. All other loans not accounted for under ASC 310-30 are accounted for under ASC 310-20, which allows the fair value adjustment to be accreted into income over the remaining life of the loans.


The Corporation's most recent acquisition is detailed in NOTE 2, ACQUISITIONS AND DIVESTITURES, in the Notes to Consolidated Condensed Financial Statements of this Quarterly Report on Form 10-Q. In addition, the Corporation acquired C Financial in April 2015, Community in November 2014 and CFS in November 2013. The Corporation also acquired certain loans from SCB in February 2012. The following tables include the outstanding balance and carrying amount of all acquired loans which were included in the Corporation's balance sheet at March 31, 2017, and December 31, 2016.
 
March 31, 2017
 
Ameriana
 
C Financial
 
Community
 
CFS
 
SCB
 
Total
Outstanding Balance:
 
 
 
 
 
 
 
 
 
 
 
     Commercial and industrial loans
$
6,888

 
$
80

 
$
2,100

 
$
16,181

 
$
3,267

 
$
28,516

      Agricultural production financing and other loans to farmers
 
 
 
 
1,551

 
50

 
1,134

 
2,735

     Real estate loans:
 
 
 
 
 
 
 
 
 
 
 
     Construction
10,953

 
2,376

 
2,844

 
128

 
 
 
16,301

     Commercial and farmland
104,227

 
21,913

 
34,218

 
111,601

 
8,374

 
280,333

     Residential
98,987

 
41,744

 
8,985

 
91,291

 
3,820

 
244,827

            Home Equity
10,747

 
7,669

 
5,745

 
25,562

 
11,797

 
61,520

     Individuals' loans for household and other personal expenditures
650

 
1

 
127

 
181

 
27

 
986

     Other commercial loans
1,808

 
 
 
 
 
64

 
 
 
1,872

     Total
$
234,260

 
$
73,783

 
$
55,570

 
$
245,058

 
$
28,419

 
$
637,090

 
 
 
 
 
 
 
 
 
 
 
 
Carrying Amount
$
226,292

 
$
71,983

 
$
51,632

 
$
233,356

 
$
25,461

 
$
608,724

Allowance
412

 
 
 
77

 
102

 
 
 
591

Carrying Amount Net of Allowance
$
225,880

 
$
71,983

 
$
51,555

 
$
233,254

 
$
25,461

 
$
608,133




December 31, 2016

Ameriana
 
C Financial
 
Community

CFS

SCB

Total
Outstanding Balance:
 
 
 
 
 
 
 
 
 
 
 
     Commercial and industrial loans
$
8,003

 
$
85

 
$
2,269


$
23,327


$
3,552


$
37,236

      Agricultural production financing and other loans to farmers


 
 
 
1,030


50


1,630


2,710

     Real estate loans:

 
 
 






 
     Construction
22,017

 
2,835

 
4,026


420





29,298

     Commercial and farmland
103,075

 
22,130

 
36,947


131,895


9,315


303,362

     Residential
103,414

 
44,101

 
9,363


96,627


4,135


257,640

            Home Equity
11,728

 
7,947

 
6,326


26,894


11,924


64,819

     Individuals' loans for household and other personal expenditures
762

 
2

 
147


201


30


1,142

     Other commercial loans
1,825

 
 
 



65





1,890

     Total
$
250,824

 
$
77,100

 
$
60,108


$
279,479


$
30,586


$
698,097

 

 
 
 







Carrying Amount
$
240,053

 
$
75,194

 
$
56,007


$
266,845


$
27,318


$
665,417

Allowance
265

 
 
 
23


92





380

Carrying Amount Net of Allowance
$
239,788

 
$
75,194

 
$
55,984


$
266,753


$
27,318


$
665,037




The outstanding balance and related carrying amount of loans acquired and accounted for under ASC 310-30 as of March 31, 2017 were $46.4 million and $32.4 million, respectively. The outstanding balance and related carrying amount of those loans as of December 31, 2016 were $60.5 million and $43.2 million, respectively.


As customer cash flow expectations improve, nonaccretable yield can be reclassified to accretable yield. The accretable yield, or income expected to be collected, and reclassifications from nonaccretable yield, are identified in the tables below.  The tables reflect only purchased loans accounted for under ASC 310-30 and not the entire portfolio of purchased loans.

Three Months Ended March 31, 2017

Ameriana
 
C Financial

Community

CFS

SCB

Total
Beginning balance
$
1,630

 
$
73


$
1,233


$
736


$
279


$
3,951

Additions


 














Accretion
(2,502
)
 
(40
)

(62
)

(470
)

(164
)

(3,238
)
Reclassification from nonaccretable
1,696

 
35


31


466


142


2,370

Disposals


 














Ending balance
$
824

 
$
68


$
1,202


$
732


$
257


$
3,083


 
Three Months Ended March 31, 2016

Ameriana
 
C Financial

Community

CFS

SCB

Total
Beginning balance
$
2,160

 
$
114


$
1,508


$
1,188


$
642


$
5,612

Additions
 
 














Accretion
(40
)
 
(15
)

(63
)

(1,290
)

(88
)

(1,496
)
Reclassification from nonaccretable


 
1


11


1,135


36


1,183

Disposals


 














Ending balance
$
2,120

 
$
100


$
1,456


$
1,033


$
590


$
5,299