LOANS

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



December 31,	2013		2012
Real estate loans:
Commercial	$	1,449,174	$	1,497,272
Construction:
Land acquisition & development	205,911		220,196
Residential	76,488		49,274
Commercial	69,236		65,059
Total construction loans	351,635		334,529
Residential	867,912		708,339
Agricultural	173,534		177,244
Total real estate loans	2,842,255		2,717,384
Consumer:
Indirect consumer	476,012		438,245
Other consumer	133,039		137,743
Credit card	62,536		60,806
Total consumer loans	671,587		636,794
Commercial	676,544		688,753
Agricultural	111,872		113,627
Other, including overdrafts	1,734		912
Loans held for investment	4,303,992		4,157,470
Mortgage loans held for sale	40,861		66,442
Total loans	$	4,344,853	$	4,223,912

The Company has lending policies and procedures in place that are designed to maximize loan income within an acceptable level of risk. Management reviews and approves these policies and procedures on a regular basis. A reporting system supplements the review process by providing management with frequent reports related to loan production, loan quality, concentrations of credit, loan delinquencies and internally risk-classified loans.

Real estate loans include construction and permanent financing for both single-family and multi-unit properties, term loans for commercial, agricultural and industrial property and/or buildings and home equity loans and lines of credit secured by real estate. Longer-term residential real estate loans are generally sold in the secondary market. Those residential real estate loans not sold are typically secured by first liens on the financed property and generally mature in less than fifteen years. Home equity loans and lines of credit are typically secured by first or second liens on residential real estate and generally do not exceed a loan to value ratio of 80%. The Company had home equity loans and lines of credit of $272,415 and $273,739 as of December 31, 2013 and 2012, respectively. Commercial and agricultural real estate loans are generally secured by first liens on income-producing real estate and generally mature in less than 5 years.

Construction loans are primarily to commercial builders for residential lot development and the construction of single-family residences and commercial real estate properties. Construction loans are generally underwritten pursuant to pre-approved permanent financing. During the construction phase the borrower pays interest only.

Consumer loans include direct personal loans, credit card loans and lines of credit; and indirect dealer loans for the purchase of automobiles, recreational vehicles, boats and other consumer goods. Personal loans and indirect dealer loans are generally secured by automobiles, boats and other types of personal property and are made on an installment basis. Credit cards are offered to individuals in our market areas. Lines of credit are generally floating rate loans that are unsecured or secured by personal property.

Commercial loans include a mix of variable and fixed rate loans made to small and medium-sized manufacturing, wholesale, retail and service businesses for working capital needs and business expansions. Commercial loans generally include lines of credit, business credit cards and loans with maturities of five years or less. The loans are generally made with business operations as the primary source of repayment, but also include collateralization by inventory, accounts receivable, equipment and/or personal guarantees.

Agricultural loans generally consist of short and medium-term loans and lines of credit that are primarily used for crops, livestock, equipment and general operations. Agricultural loans are ordinarily secured by assets such as livestock or equipment and are repaid from the operations of the farm or ranch. Agricultural loans generally have maturities of five years or less, with operating lines for one production season.

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 December 31, 2013	Past Due		Past Due		Past Due		Past Due		Loans		Loans		Loans
Real estate
Commercial	$	5,924	$	2,472	$	22	$	8,418	$	1,391,823	$	48,933	$	1,449,174
Construction:
Land acquisition & development	1,062		468		38		1,568		188,074		16,269		205,911
Residential	933		250		—		1,183		73,933		1,372		76,488
Commercial	584		—		—		584		68,427		225		69,236
Total construction loans	2,579		718		38		3,335		330,434		17,866		351,635
Residential	3,630		206		1,162		4,998		856,800		6,114		867,912
Agricultural	328		646		—		974		163,986		8,574		173,534
Total real estate loans	12,461		4,042		1,222		17,725		2,743,043		81,487		2,842,255
Consumer:
Indirect consumer	3,303		430		9		3,742		471,906		364		476,012
Other consumer	925		130		1		1,056		131,508		475		133,039
Credit card	364		187		515		1,066		61,451		19		62,536
Total consumer loans	4,592		747		525		5,864		664,865		858		671,587
Commercial	2,791		1,186		563		4,540		660,035		11,969		676,544
Agricultural	453		672		—		1,125		110,622		125		111,872
Other, including overdrafts	—		—		—		—		1,734		—		1,734
Loans held for investment	20,297		6,647		2,310		29,254		4,180,299		94,439		4,303,992
Mortgage loans originated for sale	—		—		—		—		40,861		—		40,861
Total loans	$	20,297	$	6,647	$	2,310	$	29,254	$	4,221,160	$	94,439	$	4,344,853



							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 $4,630, $8,537 and $12,508 during the years ended December 31, 2013, 2012 and 2011, respectively.

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



	December 31, 2013
	Unpaid Total Principal Balance		Recorded Investment With No Allowance		Recorded Investment With Allowance		Total Recorded Investment		Related Allowance
Real estate:
Commercial	$	64,780	$	29,216	$	33,937	$	63,153	$	5,210
Construction:
Land acquisition & development	23,906		9,901		7,226		17,127		1,434
Residential	1,816		1,095		277		1,372		26
Commercial	397		279		84		363		85
Total construction loans	26,119		11,275		7,587		18,862		1,545
Residential	9,448		5,081		967		6,048		249
Agricultural	8,895		6,429		2,370		8,799		335
Total real estate loans	109,242		52,001		44,861		96,862		7,339
Commercial	15,448		10,684		2,901		13,585		1,504
Agricultural	177		39		86		125		86
Total	$	124,867	$	62,724	$	47,848	$	110,572	$	8,929



	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



	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:



	Year Ended December 31,
	2013				2012				2011
	Average Recorded Investment		Income Recognized		Average Recorded Investment		Income Recognized		Average Recorded Investment		Income Recognized
Real estate:
Commercial	$	66,330	$	1,092	$	78,670	$	1,339	$	85,702	$	633
Construction:
Land acquisition & development	19,523		487		44,457		110		57,675		96
Residential	1,893		—		8,431		4		19,769		384
Commercial	3,936		4		16,401		—		20,676		—
Total construction loans	25,352		491		69,289		114		98,120		480
Residential	8,104		17		13,703		26		15,768		258
Agricultural	8,230		8		6,936		41		6,188		167
Total real estate loans	108,016		1,608		168,598		1,520		205,778		1,538
Commercial	15,047		68		15,741		84		31,490		121
Agricultural	313		16		942		27		907		—
Total	$	123,376	$	1,692	$	185,281	$	1,631	$	238,175	$	1,659

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 during 2013, 2012 and 2011 would have been approximately $5,786, $8,463 and $12,358, respectively.

Collateral dependent impaired loans are recorded at the fair value of the underlying collateral determined 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 changes, 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 may be 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, although they continue to be individually evaluated for impairment and disclosed as impaired loans.

The Company had loans renegotiated in troubled debt restructurings of $59,792 as of December 31, 2013, of which $38,011 were included in non-accrual loans and $21,781 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 periods indicated:



	Number of Notes	Type of Concession								Principal Balance at Restructure Date
Year Ended December 31, 2013	Number of Notes	Interest only period		Extension of terms or maturity		Interest rate adjustment		Other		Principal Balance at Restructure Date
Real estate:
Commercial	19	$	543	$	1,378	$	11,420	$	2,310	$	15,651
Construction:
Land acquisition & development	8	528		7,308		1,952		—		9,788
Residential	3	—		408		411		—		819
Total construction loans	11	528		7,716		2,363		—		10,607
Residential	5	—		708		—		79		787
Agriculture	1	—		—		188		—		188
Total real estate loans	36	1,071		9,802		13,971		2,389		27,233
Other consumer	1	—		—		27		—		27
Commercial	6	613		178		265		87		1,143
Total	43	$	1,684	$	9,980	$	14,263	$	2,476	$	28,403



	Number of Notes	Type of Concession								Principal Balance at Restructure Date
Year ended December 31, 2012	Number of Notes	Interest only period		Extension of terms or maturity		Interest rate adjustment		Other		Principal Balance at Restructure Date
Real estate:
Commercial	16	$	—	$	959	$	4,504	$	8,611	$	14,074
Construction:
Commercial	1	—		—		—		3,155		3,155
Land acquisition & development	5	—		1,000		1,757		623		3,380
Residential	2	—		280		233		—		513
Total construction loans	8	—		1,280		1,990		3,778		7,048
Residential	2	568		25		—		—		593
Agriculture	1	—		154		—		—		154
Total real estate loans	27	568		2,418		6,494		12,389		21,869
Other consumer	1	—		69		—		—		69
Commercial	10	387		217		—		218		822
Total	38	$	955	$	2,704	$	6,494	$	12,607	$	22,760



	Number of Notes	Type of Concession								Principal Balance at Restructure Date
Year ended December 31, 2011		Interest only period		Extension of terms or maturity		Interest rate adjustment		Other
Real estate:
Commercial	60	$	23,982	$	4,444	$	3,131	$	7,364	$	38,921
Construction:
Land acquisition & development	9	995		4,124		680		408		6,207
Residential	5	7,749		878		234		—		8,861
Total construction loans	14	8,744		5,002		914		408		15,068
Residential	6	9,771		364		223		590		10,948
Agriculture	7	3,594		517		189		240		4,540
Total real estate loans	87	46,091		10,327		4,457		8,602		69,477
Consumer:
Indirect consumer	2	—		—		—		29		29
Other consumer	3	17		11		—		50		78
Total consumer loans	5	17		11		—		79		107
Commercial	40	11,727		428		662		2,555		15,372
Agriculture	5	—		24		—		163		187
Total	137	$	57,835	$	10,790	$	5,119	$	11,399	$	85,143

Other concessions include payment reductions or deferrals for a specified period of time or the extension of amortization schedules. A specific reserve may have been previously recorded for loans modified in troubled debt restructurings that were on non-accrual status or otherwise deemed impaired before the modification. In periods subsequent to modification, the Company continues to evaluate all loans modified in troubled debt restructurings for possible impairment, which is recognized through the allowance for loan losses. Financial effects of modifications may include principal loan forgiveness or other charge-offs directly related to the restructuring.

The Company had no charge-offs directly related to loans modified in troubled debt restructurings taken at the time of restructuring during 2013, 2012 or 2011.

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



	2013			2012			2011
As of December 31,	Number of Notes	Balance		Number of Notes	Balance		Number of Notes	Balance
Real estate:
Commercial	1	$	135	—	$	—	9	$	2,747
Construction:
Land acquisition & development	—	—		1	468		1	1,135
Residential	—	—		—	—		1	170
Total construction loans	—	—		1	468		2	1,305
Residential	—	—		2	635		—	—
Agriculture	—	—		—	—		1	33
Total real estate loans	1	135		3	1,103		12	4,085
Commercial	—	—		—	—		6	213
Agricultural	—	—		—	—		2	24
Total	1	$	135	3	$	1,103	20	$	4,322

As of December 31, 2013, and 2012, all of the loans modified in troubled debt restructurings with payment defaults during the previous twelve months were on non-accrual status.

At December 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 December 31, 2013	Other Assets Especially Mentioned		Substandard		Doubtful		Total Criticized Loans
Real estate:
Commercial	$	79,747	$	86,426	$	24,840	$	191,013
Construction:
Land acquisition & development	13,211		19,677		7,329		40,217
Residential	1,859		1,649		277		3,785
Commercial	—		409		84		493
Total construction loans	15,070		21,735		7,690		44,495
Residential	7,500		7,188		4,184		18,872
Agricultural	13,597		10,245		2,370		26,212
Total real estate loans	115,914		125,594		39,084		280,592
Consumer:
Indirect consumer	875		1,524		115		2,514
Other consumer	573		969		268		1,810
Credit card	—		392		2,010		2,402
Total consumer loans	1,448		2,885		2,393		6,726
Commercial	33,318		23,833		3,745		60,896
Agricultural	8,401		1,788		86		10,275
Total	$	159,081	$	154,100	$	45,308	$	358,489



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.