Loans

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



	June 30, 2013		December 31, 2012
Real estate loans:
Commercial	$	1,447,145	$	1,497,272
Construction:
Land acquisition & development	210,761		220,196
Residential	60,883		49,274
Commercial	65,567		65,059
Total construction loans	337,211		334,529
Residential	804,200		708,339
Agricultural	176,799		177,244
Total real estate loans	2,765,355		2,717,384
Consumer:
Indirect consumer	457,151		438,245
Other consumer	136,459		137,743
Credit card	59,334		60,806
Total consumer loans	652,944		636,794
Commercial	680,751		688,753
Agricultural	121,530		113,627
Other, including overdrafts	2,498		912
Loans held for investment	4,223,078		4,157,470
Mortgage loans held for sale	74,286		66,442
Total loans	$	4,297,364	$	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 dates indicated:



							Total Loans
	30 - 59		60 - 89		> 90		30 or More
	Days		Days		Days		Days		Current		Non-accrual		Total
As of June 30, 2013	Past Due		Past Due		Past Due		Past Due		Loans		Loans		Loans
Real estate
Commercial	$	11,794	$	1,766	$	—	$	13,560	$	1,387,523	$	46,062	$	1,447,145
Construction:
Land acquisition & development	4,265		974		61		5,300		189,173		16,288		210,761
Residential	1,112		—		—		1,112		58,245		1,526		60,883
Commercial	—		—		—		—		59,375		6,192		65,567
Total construction loans	5,377		974		61		6,412		306,793		24,006		337,211
Residential	2,139		1,033		701		3,873		792,782		7,545		804,200
Agricultural	350		—		83		433		166,677		9,689		176,799
Total real estate loans	19,660		3,773		845		24,278		2,653,775		87,302		2,765,355
Consumer:
Indirect consumer	2,006		416		38		2,460		454,395		296		457,151
Other consumer	867		63		14		944		134,975		540		136,459
Credit card	301		275		487		1,063		58,250		21		59,334
Total consumer loans	3,174		754		539		4,467		647,620		857		652,944
Commercial	8,235		1,523		361		10,119		655,189		15,443		680,751
Agricultural	1,264		1,025		—		2,289		119,114		127		121,530
Other, including overdrafts			—		—		—		2,498		—		2,498
Loans held for investment	32,333		7,075		1,745		41,153		4,078,196		103,729		4,223,078
Mortgage loans originated for sale	—		—		—		—		74,286		—		74,286
Total loans	$	32,333	$	7,075	$	1,745	$	41,153	$	4,152,482	$	103,729	$	4,297,364



							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 been approximately $318 and $584 for the three months ended June 30, 2013 and 2012, respectively and approximately $655 and $1,272 for the six months ended June 30, 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 June 30, 2013	Unpaid Total Principal Balance		Recorded Investment With No Allowance		Recorded Investment With Allowance		Total Recorded Investment		Related Allowance
Real estate:
Commercial	$	65,957	$	32,854	$	31,688	$	64,542	$	5,498
Construction:
Land acquisition & development	21,554		10,526		6,755		17,281		2,549
Residential	2,227		1,526		—		1,526		—
Commercial	8,374		5,944		248		6,192		63
Total construction loans	32,155		17,996		7,003		24,999		2,612
Residential	10,554		2,448		5,331		7,779		1,253
Agricultural	10,017		7,363		2,558		9,921		904
Total real estate loans	118,683		60,661		46,580		107,241		10,267
Commercial	17,776		6,792		9,918		16,710		5,205
Agricultural	191		117		22		139		22
Total	$	136,650	$	67,570	$	56,520	$	124,090	$	15,494



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



	Three Months Ended June 30,
	2013				2012
	Average Recorded Investment		Income Recognized		Average Recorded Investment		Income Recognized


Real estate:
Commercial	$	67,605	$	272	$	87,135	$	320
Construction:
Land acquisition & development	19,007		15		51,949		30
Residential	1,569		—		3,637		—
Commercial	6,346		—		20,807		—
Total construction loans	26,922		15		76,393		30
Residential	8,311		5		14,726		12
Agricultural	8,255		4		6,816		—
Total real estate loans	111,093		296		185,070		362
Commercial	16,087		18		14,355		22
Agricultural	373		4		1,378		11
Total	$	127,553	$	318	$	200,803	$	395



	Six Months Ended June 30,
	2013				2012
	Average Recorded Investment		Income Recognized		Average Recorded Investment		Income Recognized


Real estate:
Commercial	$	67,192	$	610	$	85,701	$	671
Construction:
Land acquisition & development	20,123		456		56,924		46
Residential	2,040		—		8,810		—
Commercial	7,118		—		22,536		—
Total construction loans	29,281		456		88,270		46
Residential	9,429		9		16,251		21
Agricultural	6,611		8		10,039		32
Total real estate loans	112,513		1,083		200,261		770
Commercial	14,484		36		16,195		44
Agricultural	502		8		1,246		15
Total	$	127,499	$	1,127	$	217,702	$	829

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 $406 and $580 for the three months ended June 30, 2013 and 2012, respectively, and approximately $818 and $1,263 for the six months ended June 30, 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 $67,939 as of June 30, 2013, of which $44,533 were included in non-accrual loans and $23,406 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 tables present information on the Company's troubled debt restructurings that occurred during the three and six months ended June 30, 2013:



	Number of Notes	Type of Concession								Principal Balance at Restructure Date
Three Months Ended June 30, 2013	Number of Notes	Interest only period		Extension of terms or maturity		Interest rate adjustment		Other (1)		Principal Balance at Restructure Date
Real estate:
Construction:
Land acquisition & development	1	$	—	$	334	$	—	$	—	$	334
Residential	2	—		408		—		—		408
Total construction loans	3	—		742		—		—		742
Residential	3	—		463		—		—		463
Total real estate loans	6	—		1,205		—		—		1,205
Total loans restructured during period	6	$	—	$	1,205	$	—	$	—	$	1,205



	Number of Notes	Type of Concession								Principal Balance at Restructure Date
Six Months Ended June 30, 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	10	$	—	$	389	$	5,345	$	183	$	5,917
Construction:
Land acquisition & development	2	120		334		—		—		454
Residential	2	—		408		—		—		408
Total construction loans	4	120		742		—		—		862
Residential	3	—		463		—		—		463
Total real estate loans	17	120		1,594		5,345		183		7,242
Commercial	4	50		178		265		87		580
Total loans restructured during period	21	$	170	$	1,772	$	5,610	$	270	$	7,822
(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 and six months ended June 30, 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 June 30, 2013			Six Months Ended June 30, 2013
	Number of Notes	Balance		Number of Notes	Balance
Real estate:
Commercial	1	$	625	1	$	625
Construction:
Residential	—	—		1	278
Total real estate loans	1	625		2	903
Commercial				1	332
Total	1	$	625	3	$	1,235

At June 30, 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 June 30, 2013	Other Assets Especially Mentioned		Substandard		Doubtful		Total Criticized Loans
Real estate:
Commercial	$	102,975	$	101,713	$	18,377	$	223,065
Construction:
Land acquisition & development	25,726		16,687		6,733		49,146
Residential	2,363		1,530		279		4,172
Commercial	—		485		5,707		6,192
Total construction loans	28,089		18,702		12,719		59,510
Residential	6,834		7,439		5,867		20,140
Agricultural	12,397		11,251		2,558		26,206
Total real estate loans	150,295		139,105		39,521		328,921
Consumer:
Indirect consumer	757		1,517		124		2,398
Other consumer	586		782		386		1,754
Credit card	—		450		2,291		2,741
Total consumer loans	1,343		2,749		2,801		6,893
Commercial	37,458		18,437		9,922		65,817
Agricultural	3,294		1,495		22		4,811
Total	$	192,390	$	161,786	$	52,266	$	406,442



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.