Loans

The following table presents loans by class as of the dates indicated:



	June 30, 2012		December 31, 2011
Real estate loans:
Commercial	$	1,517,400	$	1,553,155
Construction:
Land acquisition & development	240,550		278,613
Residential	51,193		61,106
Commercial	59,911		61,054
Total construction loans	351,654		400,773
Residential	572,018		571,943
Agricultural	171,087		175,302
Total real estate loans	2,612,159		2,701,173
Consumer:
Indirect consumer	418,604		407,651
Other consumer	144,442		147,487
Credit card	58,166		60,933
Total consumer loans	621,212		616,071
Commercial	720,010		693,261
Agricultural	138,115		119,710
Other, including overdrafts	2,319		2,813
Loans held for investment	4,093,815		4,133,028
Mortgage loans held for sale	76,148		53,521
Total loans	$	4,169,963	$	4,186,549

Loans are considered past due if the required principal and interest payments have not been received as of the date such payments were due. The following tables present the contractual aging of the Company’s recorded investment in past due loans by class as of the period indicated:



							Total Loans
	30 - 59		60 - 89		> 90		30 or More
	Days		Days		Days		Days		Current		Non-accrual		Total
As of June 30, 2012	Past Due		Past Due		Past Due		Past Due		Loans		Loans		Loans
Real estate
Commercial	$	9,570	$	4,391	$	1,295	$	15,256	$	1,450,257	$	51,887	$	1,517,400
Construction:
Land acquisition & development	4,064		1,876		49		5,989		198,950		35,611		240,550
Residential	411		—		—		411		47,609		3,173		51,193
Commercial	—		—		—		—		48,889		11,022		59,911
Total construction loans	4,475		1,876		49		6,400		295,448		49,806		351,654
Residential	5,234		1,264		1,231		7,729		552,998		11,291		572,018
Agricultural	14,072		865		—		14,937		151,399		4,751		171,087
Total real estate loans	33,351		8,396		2,575		44,322		2,450,102		117,735		2,612,159
Consumer:
Indirect consumer	2,035		200		20		2,255		415,878		471		418,604
Other consumer	1,078		102		135		1,315		142,423		704		144,442
Credit card	428		241		686		1,355		56,786		25		58,166
Total consumer loans	3,541		543		841		4,925		615,087		1,200		621,212
Commercial	7,062		1,382		3,835		12,279		697,231		10,500		720,010
Agricultural	654		144		380		1,178		136,449		488		138,115
Other, including overdrafts	—		—		—		—		2,319		—		2,319
Loans held for investment	44,608		10,465		7,631		62,704		3,901,188		129,923		4,093,815
Mortgage loans originated for sale	—		—		—		—		76,148		—		76,148
Total loans	$	44,608	$	10,465	$	7,631	$	62,704	$	3,977,336	$	129,923	$	4,169,963



							Total Loans
	30 - 59		60 - 89		> 90		30 or More
	Days		Days		Days		Days		Current		Non-accrual		Total
As of December 31, 2011	Past Due		Past Due		Past Due		Past Due		Loans		Loans		Loans
Real estate
Commercial	$	22,124	$	7,871	$	630	$	30,625	$	1,455,139	$	67,391	$	1,553,155
Construction:
Land acquisition & development	5,251		2,448		867		8,566		208,134		61,913		278,613
Residential	415		—		—		415		56,219		4,472		61,106
Commercial	1,698		—		—		1,698		34,820		24,536		61,054
Total construction loans	7,364		2,448		867		10,679		299,173		90,921		400,773
Residential	4,669		973		1,798		7,440		546,278		18,225		571,943
Agricultural	4,103		1,831		—		5,934		166,119		3,249		175,302
Total real estate loans	38,260		13,123		3,295		54,678		2,466,709		179,786		2,701,173
Consumer:
Indirect consumer	3,078		370		45		3,493		403,695		463		407,651
Other consumer	1,479		436		60		1,975		144,625		887		147,487
Credit card	604		375		585		1,564		59,343		26		60,933
Total consumer loans	5,161		1,181		690		7,032		607,663		1,376		616,071
Commercial	13,721		3,464		405		17,590		657,609		18,062		693,261
Agricultural	476		215		110		801		118,150		759		119,710
Other, including overdrafts	—		2		—		2		2,811		—		2,813
Loans held for investment	57,618		17,985		4,500		80,103		3,852,942		199,983		4,133,028
Mortgage loans originated for sale	—		—		—		—		53,521		—		53,521
Total loans	$	57,618	$	17,985	$	4,500	$	80,103	$	3,906,463	$	199,983	$	4,186,549

If interest on non-accrual loans had been accrued, such income would have approximated $584 and $769 for the three months ended June 30, 2012 and 2011, respectively, and approximated $1,272 and $1,487 for the six months ended June 30, 2012 and 2011, respectively.

The Company considers impaired loans to include all loans risk rated doubtful, loans placed on non-accrual status and loans renegotiated in troubled debt restructurings with the exception of consumer loans. The following tables present information on the Company’s recorded investment in impaired loans as of dates indicated:



As of June 30, 2012	Unpaid Total Principal Balance		Recorded Investment With No Allowance		Recorded Investment With Allowance		Total Recorded Investment		Related Allowance
Real estate:
Commercial	$	88,616	$	60,518	$	19,509	$	80,027	$	5,388
Construction:
Land acquisition & development	50,837		21,910		16,667		38,577		6,776
Residential	3,505		1,541		1,632		3,173		276
Commercial	13,743		1,558		9,463		11,021		572
Total construction loans	68,085		25,009		27,762		52,771		7,624
Residential	12,176		4,332		7,661		11,993		2,111
Agricultural	5,733		3,302		1,933		5,235		76
Total real estate loans	174,610		93,161		56,865		150,026		15,199
Commercial	12,526		7,748		4,226		11,974		2,339
Agricultural	552		95		405		500		405
Total	$	187,688	$	101,004	$	61,496	$	162,500	$	17,943



As of December 31, 2011	Unpaid Total Principal Balance		Recorded Investment With No Allowance		Recorded Investment With Allowance		Total Recorded Investment		Related Allowance
Real estate:
Commercial	$	97,745	$	62,769	$	23,218	$	85,987	$	6,741
Construction:
Land acquisition & development	73,258		22,300		39,131		61,431		12,084
Residential	13,721		10,427		2,044		12,471		312
Commercial	26,647		3,510		21,026		24,536		5,042
Total construction loans	113,626		36,237		62,201		98,438		17,438
Residential	18,305		2,678		15,626		18,304		3,844
Agricultural	8,018		7,470		—		7,470		—
Total real estate loans	237,694		109,154		101,045		210,199		28,023
Commercial	26,348		7,354		12,284		19,638		4,664
Agricultural	759		496		263		759		151
Total	$	264,801	$	117,004	$	113,592	$	230,596	$	32,838

The following tables present the average recorded investment in and income recognized on impaired loans for the periods indicated:



	Three Months Ended June 30,
	2012				2011
	Average Recorded Investment		Income Recognized		Average Recorded Investment	Income Recognized


Real estate:
Commercial	$	87,135	$	320	90,625	$	110
Construction:
Land acquisition & development	51,949		30		54,500	42
Residential	3,637		—		18,841	18
Commercial	20,807		—		18,306	—
Total construction loans	76,393		30		91,647	60
Residential	14,726		12		23,085	97
Agricultural	6,816		—		6,086	40
Total real estate loans	185,070		362		211,443	307
Commercial	14,355		22		29,626	23
Agricultural	1,378		11		1,003	—
Total	$	200,803	$	395	242,072	$	330



	Six Months Ended June 30,
	2012				2011
	Average Recorded Investment		Income Recognized		Average Recorded Investment		Income Recognized


Real estate:
Commercial	$	85,701	$	671	$	81,429	$	202
Construction:
Land acquisition & development	56,924		46		49,444		87
Residential	8,810		—		17,697		37
Commercial	22,536		—		18,811		—
Total construction loans	88,270		46		85,952		124
Residential	16,251		21		19,415		97
Agricultural	10,039		32		5,094		42
Total real estate loans	200,261		770		191,890		465
Commercial	16,195		44		31,505		65
Agricultural	1,246		15		945		—
Total	$	217,702	$	829	$	224,340	$	530

The amount of interest income recognized by the Company within the period that the loans were impaired was primarily related to loans modified in a troubled debt restructuring that remained on accrual status. Interest payments received on non-accrual impaired loans are applied to principal. Interest income is subsequently recognized only to the extent cash payments are received in excess of principal due. If interest on impaired loans had been accrued, interest income on impaired loans would have been approximately $580 and $762 for the three months ended June 30, 2012 and 2011, respectively, and approximately $1,263 and $1,454 for the six months ended June 30, 2012 and 2011, respectively.

Collateralized impaired loans are generally recorded at the fair value of the underlying collateral using discounted cash flows, independent appraisals and management estimates based upon current market conditions. For loans measured under the present value of cash flows method, the change in present value attributable to the passage of time, if applicable, is recognized in the provision for loan losses and thus no interest income is recognized.

Modifications of performing loans are made in the ordinary course of business and are completed on a case-by-case basis as negotiated with the borrower. Loan modifications typically include interest rate concessions, interest only periods of less than twelve months, short-term payment deferrals and extension of amortization periods to provide payment relief. A loan modification is considered a troubled debt restructuring if the borrower is experiencing financial difficulties and the Company, for economic or legal reasons, grants a concession to the borrower that it would not otherwise consider. Certain troubled debt restructurings are on non-accrual status at the time of restructuring and are typically returned to accrual status after considering the borrower's sustained repayment performance in accordance with the restructuring agreement for a period of at least six months and management is reasonably assured of future performance. If the troubled debt restructuring meets these performance criteria and the interest rate granted at the modification is equal to or greater than the rate that the Company was willing to accept at the time of the restructuring for a new loan with comparable risk, then the loan will return to performing status and the accrual of interest will resume.

The Company had loans renegotiated in troubled debt restructurings of $90,663 as of June 30, 2012, of which $54,704 were included in non-accrual loans and $35,959 were on accrual status. The Company had loans renegotiated in troubled debt restructurings of $94,827 as of December 31, 2011, of which $57,451 were included in non-accrual loans and $37,376 were on accrual status.

The following tables present information on the Company's troubled debt restructurings that occurred during the three and six months ended June 30, 2012:



		Type of Concession
Three Months Ended June 30, 2012	Number of Notes	Interest only period		Extension of terms or maturity		Interest rate adjustment		Other (1)		Principal Balance at Restructure Date
Real estate:
Commercial	3	$	—	$	—	$	2,787	$	149	$	2,936
Construction:
Land acquisition & development	1	—		229		—		—		229
Total construction loans	1	—		229		—		—		229
Total real estate loans	4	—		229		2,787		149		3,165
Consumer:
Other	1	—		69		—		—		69
Total consumer loans	1	—		69		—		—		69
Total loans restructured during period	5	$	—	$	298	$	2,787	$	149	$	3,234



	Number of Notes	Type of Concession								Principal Balance at Restructure Date
Six Months Ended June 30, 2012		Interest only period		Extension of terms or maturity		Interest rate adjustment		Other (1)
Real estate:
Commercial	12	$	—	$	—	$	3,876	$	8,612	$	12,488
Construction:
Land acquisition & development	3	—		229		—		623		852
Commercial	1	—		—		—		3,155		3,155
Total construction loans	4	—		229		—		3,778		4,007
Residential	2	568		25		—		—		593
Total real estate loans	18	568		254		3,876		12,390		17,088
Consumer:
Other	1	—		69		—		—		69
Total consumer loans	1	—		69		—		—		69
Commercial	5	13		98		—		80		191
Total loans restructured during period	24	$	581	$	421	$	3,876	$	12,470	$	17,348


(1)	Other includes concessions that reduce or defer payments for a specified period of time and/or extend amortization schedules.

For troubled debt restructurings that were on non-accrual status or otherwise deemed impaired before the modification, a specific reserve may already be recorded. In periods subsequent to modification, the Company continues to evaluate all troubled debt restructurings for possible impairment and recognizes impairment through the allowance. Additionally these loans continue to work their way through the credit cycle through charge-off, pay-off or foreclosure. Financial effects of modifications of troubled debt restructurings may include principal loan forgiveness or other charge-offs directly related to the restructuring. The Company had no charge-offs directly related to modifying troubled debt restructurings during the three and six months ended June 30, 2012 or 2011.

The following table presents information on the Company's troubled debt restructurings during the previous 12 months for which there was a payment default during the periods indicated. The Company considers a payment default to occur on troubled debt restructurings when the loan is 90 days or more past due or was placed on non-accrual status after the modification.



	Three Months Ended June 30, 2012			Six Months Ended June 30, 2012
	Number of Notes	Balance		Number of Notes	Balance
Real estate:
Commercial	13	$	4,363	13	$	4,363
Construction:
Land acquisition & development	2	380		3	$	885
Total construction loans	2	380		3	885
Agriculture	—	—		2	1,624
Total real estate loans	15	4,743		18	6,872
Commercial	1	25		1	25
Agricultural	1	239		3	567
Total	17	$	5,007	22	$	7,464

At June 30, 2012, there were no material commitments to lend additional funds to borrowers whose existing loans have been renegotiated or are classified as non-accrual.

As part of the on-going and continuous monitoring of the credit quality of the Company’s loan portfolio, management tracks internally assigned risk classifications of loans. The Company adheres to a Uniform Classification System developed jointly by the various bank regulatory agencies to internally risk rate loans. The Uniform Classification System defines three broad categories of criticized assets, which the Company uses as credit quality indicators:

Other Assets Especially Mentioned — includes loans that exhibit weaknesses in financial condition, loan structure or documentation, which if not promptly corrected, may lead to the development of abnormal risk elements.

Substandard — includes loans that are inadequately protected by the current sound worth and paying capacity of the borrower. Although the primary source of repayment for a Substandard is not currently sufficient; collateral or other sources of repayment are sufficient to satisfy the debt. Continuance of a Substandard loan is not warranted unless positive steps are taken to improve the worthiness of the credit.

Doubtful — includes loans that exhibit pronounced weaknesses to a point where collection or liquidation in full, on the basis of currently existing facts, conditions and values, is highly questionable and improbable. Doubtful loans are required to be placed on non-accrual status and are assigned specific loss exposure.

The following tables present the Company’s recorded investment in criticized loans by class and credit quality indicator based on the most recent analysis performed as of the dates indicated:



As of June 30, 2012	Other Assets Especially Mentioned		Substandard		Doubtful		Total Criticized Loans
Real estate:
Commercial	$	104,976	$	155,539	$	20,808	$	281,323
Construction:
Land acquisition & development	31,305		17,682		30,776		79,763
Residential	1,211		4,188		1,632		7,031
Commercial	—		530		10,495		11,025
Total construction loans	32,516		22,400		42,903		97,819
Residential	7,851		14,358		7,661		29,870
Agricultural	23,379		11,123		2,328		36,830
Total real estate loans	168,722		203,420		73,700		445,842
Consumer:
Indirect consumer	995		1,875		118		2,988
Other consumer	1,058		1,365		559		2,982
Credit card	—		430		2,458		2,888
Total consumer loans	2,053		3,670		3,135		8,858
Commercial	43,935		35,312		4,233		83,480
Agricultural	5,798		1,514		406		7,718
Total	$	220,508	$	243,916	$	81,474	$	545,898



As of December 31, 2011	Other Assets Especially Mentioned		Substandard		Doubtful		Total Criticized Loans
Real estate:
Commercial	$	129,046	$	153,320	$	25,087	$	307,453
Construction:
Land acquisition & development	37,294		31,873		38,761		107,928
Residential	9,448		5,528		2,044		17,020
Commercial	—		2,620		21,916		24,536
Total construction loans	46,742		40,021		62,721		149,484
Residential	8,149		15,706		15,140		38,995
Agricultural	16,037		18,498		395		34,930
Total real estate loans	199,974		227,545		103,343		530,862
Consumer:
Indirect consumer	1,141		1,729		247		3,117
Other consumer	745		1,361		674		2,780
Credit card	—		486		2,789		3,275
Total consumer loans	1,886		3,576		3,710		9,172
Commercial	34,698		33,478		12,849		81,025
Agricultural	4,345		5,195		263		9,803
Total	$	240,903	$	269,794	$	120,165	$	630,862

The Company maintains a credit review function, which is independent of the credit approval process, to assess assigned internal risk classifications and monitor compliance with internal lending policies and procedures. Written action plans with firm target dates for resolution of identified problems are maintained and reviewed on a quarterly basis for all categories of criticized loans.