Loans

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



	March 31, 2013		December 31, 2012
Real estate loans:
Commercial	$	1,469,302	$	1,497,272
Construction:
Land acquisition & development	215,505		220,196
Residential	50,153		49,274
Commercial	65,228		65,059
Total construction loans	330,886		334,529
Residential	758,480		708,339
Agricultural	172,522		177,244
Total real estate loans	2,731,190		2,717,384
Consumer:
Indirect consumer	444,257		438,245
Other consumer	135,474		137,743
Credit card	56,633		60,806
Total consumer loans	636,364		636,794
Commercial	688,844		688,753
Agricultural	111,411		113,627
Other, including overdrafts	1,307		912
Loans held for investment	4,169,116		4,157,470
Mortgage loans held for sale	55,443		66,442
Total loans	$	4,224,559	$	4,223,912

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 March 31, 2013	Past Due		Past Due		Past Due		Past Due		Loans		Loans		Loans
Real estate
Commercial	$	12,846	$	865	$	—	$	13,711	$	1,410,640	$	44,951	$	1,469,302
Construction:
Land acquisition & development	6,294		62		—		6,356		192,376		16,773		215,505
Residential	92		—		—		92		48,726		1,335		50,153
Commercial	2,173		—		—		2,173		56,572		6,483		65,228
Total construction loans	8,559		62		—		8,621		297,674		24,591		330,886
Residential	4,269		502		1,044		5,815		744,108		8,557		758,480
Agricultural	1,464		349		2		1,815		166,116		4,591		172,522
Total real estate loans	27,138		1,778		1,046		29,962		2,618,538		82,690		2,731,190
Consumer:
Indirect consumer	2,166		326		3		2,495		441,477		285		444,257
Other consumer	642		157		1		800		133,786		888		135,474
Credit card	308		222		467		997		55,614		22		56,633
Total consumer loans	3,116		705		471		4,292		630,877		1,195		636,364
Commercial	4,097		3,966		329		8,392		665,884		14,568		688,844
Agricultural	813		311		95		1,219		110,051		141		111,411
Other, including overdrafts			—		—		—		1,307		—		1,307
Loans held for investment	35,164		6,760		1,941		43,865		4,026,657		98,594		4,169,116
Mortgage loans originated for sale	—		—		—		—		55,443		—		55,443
Total loans	$	35,164	$	6,760	$	1,941	$	43,865	$	4,082,100	$	98,594	$	4,224,559



							Total Loans
	30 - 59		60 - 89		> 90		30 or More
	Days		Days		Days		Days		Current		Non-accrual		Total
As of December 31, 2012	Past Due		Past Due		Past Due		Past Due		Loans		Loans		Loans
Real estate
Commercial	$	5,449	$	3,163	$	2	$	8,614	$	1,438,142	$	50,516	$	1,497,272
Construction:
Land acquisition & development	3,371		2,121		318		5,810		195,077		19,309		220,196
Residential	283		—		—		283		46,816		2,175		49,274
Commercial	—		—		—		—		56,933		8,126		65,059
Total construction loans	3,654		2,121		318		6,093		298,826		29,610		334,529
Residential	3,896		969		1,085		5,950		691,963		10,426		708,339
Agricultural	1,187		—		218		1,405		171,009		4,830		177,244
Total real estate loans	14,186		6,253		1,623		22,062		2,599,940		95,382		2,717,384
Consumer:
Indirect consumer	3,218		512		32		3,762		434,200		283		438,245
Other consumer	1,044		104		31		1,179		135,574		990		137,743
Credit card	409		278		392		1,079		59,704		23		60,806
Total consumer loans	4,671		894		455		6,020		629,478		1,296		636,794
Commercial	5,463		1,064		216		6,743		671,414		10,596		688,753
Agricultural	1,710		361		—		2,071		111,031		525		113,627
Other, including overdrafts	—		—		—		—		912		—		912
Loans held for investment	26,030		8,572		2,294		36,896		4,012,775		107,799		4,157,470
Mortgage loans originated for sale	—		—		—		—		66,442		—		66,442
Total loans	$	26,030	$	8,572	$	2,294	$	36,896	$	4,079,217	$	107,799	$	4,223,912

If interest on non-accrual loans had been accrued, such income would have approximated $1,352 and $2,702 for the three months ended March 31, 2013 and 2012, 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 March 31, 2013	Unpaid Total Principal Balance		Recorded Investment With No Allowance		Recorded Investment With Allowance		Total Recorded Investment		Related Allowance
Real estate:
Commercial	$	82,456	$	34,042	$	38,695	$	72,737	$	4,429
Construction:
Land acquisition & development	25,929		13,976		6,560		20,536		1,703
Residential	1,925		1,335		—		1,335		—
Commercial	9,422		6,227		256		6,483		68
Total construction loans	37,276		21,538		6,816		28,354		1,771
Residential	11,649		6,181		2,595		8,776		1,132
Agricultural	5,415		1,724		3,098		4,822		1,035
Total real estate loans	136,796		63,485		51,204		114,689		8,367
Commercial	16,521		7,969		7,863		15,832		3,725
Agricultural	205		127		25		152		25
Total	$	153,522	$	71,581	$	59,092	$	130,673	$	12,117



As of December 31, 2012	Unpaid Total Principal Balance		Recorded Investment With No Allowance		Recorded Investment With Allowance		Total Recorded Investment		Related Allowance
Real estate:
Commercial	$	84,300	$	39,049	$	34,774	$	73,823	$	4,112
Construction:
Land acquisition & development	28,558		15,891		7,173		23,064		1,457
Residential	3,018		1,976		710		2,686		251
Commercial	10,447		7,785		340		8,125		69
Total construction loans	42,023		25,652		8,223		33,875		1,777
Residential	13,271		6,152		4,495		10,647		1,677
Agricultural	5,559		1,834		3,227		5,061		784
Total real estate loans	145,153		72,687		50,719		123,406		8,350
Commercial	12,770		9,036		3,206		12,242		1,919
Agricultural	589		509		28		537		28
Total	$	158,512	$	82,232	$	53,953	$	136,185	$	10,297

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



	Three Months Ended March 31,
	2013				2012
	Average Recorded Investment		Income Recognized		Average Recorded Investment		Income Recognized


Real estate:
Commercial	$	73,936	$	338	$	88,657	$	188
Construction:
Land acquisition & development	22,641		441		62,227		3
Residential	2,259		—		9,208		18
Commercial	7,898		—		24,265		—
Total construction loans	32,798		441		95,700		21
Residential	10,519		4		18,072		160
Agricultural	4,948		4		7,268		56
Total real estate loans	122,201		787		209,697		425
Commercial	12,746		18		17,885		31
Agricultural	632		4		1,234		—
Total	$	135,579	$	809	$	228,816	$	456

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 $1,335 and $2,683 for the three months ended March 31, 2013 and 2012, 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 $75,229 as of March 31, 2013, of which $39,442 were included in non-accrual loans and $35,787 were on accrual status. The Company had loans renegotiated in troubled debt restructurings of $76,597 as of December 31, 2012, of which $44,665 were included in non-accrual loans and $31,932 were on accrual status.

The following table presents information on the Company's troubled debt restructurings that occurred during the three months ended March 31, 2013:



	Number of Notes	Type of Concession								Principal Balance at Restructure Date
Three Months Ended March 31, 2013	Number of Notes	Interest only period		Extension of terms or maturity		Interest rate adjustment		Other (1)		Principal Balance at Restructure Date
Real estate:
Commercial	11	$	120	$	389	$	5,345	$	183	$	6,037
Total real estate loans	11	120		389		5,345		183		6,037
Commercial	4	50		178		265		87		580
Total loans restructured during period	15	$	170	$	567	$	5,610	$	270	$	6,617



(1) Other includes concessions that reduce or defer payments for a specified period of time and/or do not fit into other designated categories.

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 months ended March 31, 2013 or 2012.

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 March 31,
	Number of Notes	Balance
Residential real estate	1	$	278
Commercial	1	372
Total	2	$	650

At March 31, 2013, 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 March 31, 2013	Other Assets Especially Mentioned		Substandard		Doubtful		Total Criticized Loans
Real estate:
Commercial	$	89,207	$	127,083	$	16,110	$	232,400
Construction:
Land acquisition & development	29,171		22,977		4,231		56,379
Residential	2,132		1,728		801		4,661
Commercial	3,000		695		5,788		9,483
Total construction loans	34,303		25,400		10,820		70,523
Residential	9,890		11,185		2,981		24,056
Agricultural	19,062		6,705		3,097		28,864
Total real estate loans	152,462		170,373		33,008		355,843
Consumer:
Indirect consumer	704		1,660		79		2,443
Other consumer	587		1,120		436		2,143
Credit card	—		447		2,281		2,728
Total consumer loans	1,291		3,227		2,796		7,314
Commercial	41,399		22,072		7,996		71,467
Agricultural	2,493		1,423		25		3,941
Total	$	197,645	$	197,095	$	43,825	$	438,565



As of December 31, 2012	Other Assets Especially Mentioned		Substandard		Doubtful		Total Criticized Loans
Real estate:
Commercial	$	101,936	$	135,282	$	15,173	$	252,391
Construction:
Land acquisition & development	28,137		25,884		4,739		58,760
Residential	2,531		2,427		1,143		6,101
Commercial	3,000		795		7,383		11,178
Total construction loans	33,668		29,106		13,265		76,039
Residential	9,542		11,680		4,511		25,733
Agricultural	18,490		6,737		3,228		28,455
Total real estate loans	163,636		182,805		36,177		382,618
Consumer:
Indirect consumer	793		1,764		114		2,671
Other consumer	684		1,395		628		2,707
Credit card	—		415		2,085		2,500
Total consumer loans	1,477		3,574		2,827		7,878
Commercial	42,223		27,184		3,428		72,835
Agricultural	2,596		1,625		28		4,249
Total	$	209,932	$	215,188	$	42,460	$	467,580

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.