Loans

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



	June 30, 2014		December 31, 2013
Real estate loans:
Commercial	$	1,464,947	$	1,449,174
Construction:
Land acquisition & development	192,289		205,911
Residential	82,121		76,488
Commercial	86,599		69,236
Total construction loans	361,009		351,635
Residential	894,502		867,912
Agricultural	162,428		173,534
Total real estate loans	2,882,886		2,842,255
Consumer:
Indirect consumer	512,063		476,012
Other consumer	133,604		133,039
Credit card	61,368		62,536
Total consumer loans	707,035		671,587
Commercial	727,482		676,544
Agricultural	130,280		111,872
Other, including overdrafts	2,016		1,734
Loans held for investment	4,449,699		4,303,992
Mortgage loans held for sale	56,663		40,861
Total loans	$	4,506,362	$	4,344,853

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, 2014	Past Due		Past Due		Past Due		Past Due		Loans		Loans		Loans
Real estate
Commercial	$	5,343	$	2,540	$	40	$	7,923	$	1,418,602	$	38,422	$	1,464,947
Construction:
Land acquisition & development	782		123		—		905		180,094		11,290		192,289
Residential	90		1,226		—		1,316		80,152		653		82,121
Commercial	—		—		—		—		84,019		2,580		86,599
Total construction loans	872		1,349		—		2,221		344,265		14,523		361,009
Residential	3,493		823		665		4,981		884,261		5,260		894,502
Agricultural	29		72		—		101		155,228		7,099		162,428
Total real estate loans	9,737		4,784		705		15,226		2,802,356		65,304		2,882,886
Consumer:
Indirect consumer	2,467		404		15		2,886		508,777		400		512,063
Other consumer	780		210		16		1,006		131,864		734		133,604
Credit card	281		239		335		855		60,496		17		61,368
Total consumer loans	3,528		853		366		4,747		701,137		1,151		707,035
Commercial	3,223		718		325		4,266		710,886		12,330		727,482
Agricultural	1,390		17		125		1,532		128,367		381		130,280
Other, including overdrafts	—		—		1		1		2,015		—		2,016
Loans held for investment	17,878		6,372		1,522		25,772		4,344,761		79,166		4,449,699
Mortgage loans originated for sale	—		—		—		—		56,663		—		56,663
Total loans	$	17,878	$	6,372	$	1,522	$	25,772	$	4,401,424	$	79,166	$	4,506,362



							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

If interest on non-accrual loans had been accrued, such income would have been approximately $1,061 and $1,299 for the three months ended June 30, 2014 and 2013, respectively, and approximately $2,182 and $2,651 for the six months ended June 30, 2014 and 2013, 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, 2014	Unpaid Total Principal Balance		Recorded Investment With No Allowance		Recorded Investment With Allowance		Total Recorded Investment		Related Allowance
Real estate:
Commercial	$	52,690	$	24,961	$	25,622	$	50,583	$	3,566
Construction:
Land acquisition & development	15,601		8,098		3,869		11,967		647
Residential	1,096		653		—		653		—
Commercial	2,749		269		2,446		2,715		908
Total construction loans	19,446		9,020		6,315		15,335		1,555
Residential	7,222		4,885		375		5,260		301
Agricultural	9,191		6,656		2,439		9,095		133
Total real estate loans	88,549		45,522		34,751		80,273		5,555
Commercial	14,752		10,709		2,679		13,388		1,176
Agricultural	792		419		322		741		221
Total	$	104,093	$	56,650	$	37,752	$	94,402	$	6,952



As of 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

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



	Three Months Ended June 30,
	2014				2013
	Average Recorded Investment		Income Recognized		Average Recorded Investment		Income Recognized


Real estate:
Commercial	$	57,588	$	241	$	67,605	$	272
Construction:
Land acquisition & development	13,563		11		19,007		15
Residential	785		—		1,569		—
Commercial	1,471		2		6,346		—
Total construction loans	15,819		13		26,922		15
Residential	5,852		1		8,311		5
Agricultural	9,747		25		8,255		4
Total real estate loans	89,006		280		111,093		296
Commercial	14,162		14		16,087		18
Agricultural	742		6		373		4
Total	$	103,910	$	300	$	127,553	$	318



	Six Months Ended June 30,
	2014				2013
	Average Recorded Investment		Income Recognized		Average Recorded Investment		Income Recognized


Real estate:
Commercial	$	60,870	$	457	$	67,192	$	610
Construction:
Land acquisition & development	14,554		22		20,123		456
Residential	1,051		—		2,040		—
Commercial	918		4		7,118		—
Total construction loans	16,523		26		29,281		456
Residential	5,969		3		9,429		9
Agricultural	9,830		29		6,611		8
Total real estate loans	93,192		515		112,513		1,083
Commercial	14,231		28		14,484		36
Agricultural	538		12		502		8
Total	$	107,961	$	555	$	127,499	$	1,127

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 $1,301 and $1,577 for the three months ended June 30, 2014 and 2013, respectively and approximately $2,412 and $2,912 for the six months ended June 30, 2014 and 2013, 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 $57,835 as of June 30, 2014, of which $34,304 were included in non-accrual loans and $23,531 were on accrual status. 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 following tables present information on the Company's troubled debt restructurings that occurred during the three months ended June 30, 2014:



	Number of Notes	Type of Concession								Principal Balance at Restructure Date
Three Months Ended June 30, 2014	Number of Notes	Interest only period		Extension of terms or maturity		Interest rate adjustment		Other (1)		Principal Balance at Restructure Date
Commercial real estate	4	$	458	$	226	$	—	$	679	$	1,363
Commercial	2	72		—		—		—		72
Total loans restructured during period	6	$	530	$	226	$	—	$	679	$	1,435
(1) Other includes concessions that reduce or defer payments for a specified period of time and/or do not fit into other designated categories.



	Number of Notes	Type of Concession								Principal Balance at Restructure Date
Six Months Ended June 30, 2014	Number of Notes	Interest only period		Extension of terms or maturity		Interest rate adjustment		Other (1)		Principal Balance at Restructure Date
Commercial real estate	8	$	—	$	226	$	—	$	921	$	1,147
Commercial	4	299		2,931		—		30		3,260
Total loans restructured during period	12	$	299	$	3,157	$	—	$	951	$	4,407
(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 or six months ended June 30, 2014 or 2013.

The following table presents information on the Company's trouble 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, 2014		Six Months Ended June 30, 2014
	Number of Notes	Balance	Number of Notes	Balance
Commercial	2	72	2	72
Total	2	72	2	72

At June 30, 2014, 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 loan 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, 2014	Other Assets Especially Mentioned		Substandard		Doubtful		Total Criticized Loans
Real estate:
Commercial	$	81,539	$	82,558	$	15,371	$	179,468
Construction:
Land acquisition & development	12,580		13,053		2,626		28,259
Residential	2,190		1,788		—		3,978
Commercial	186		269		2,446		2,901
Total construction loans	14,956		15,110		5,072		35,138
Residential	11,028		9,017		588		20,633
Agricultural	9,638		15,755		2,439		27,832
Total real estate loans	117,161		122,440		23,470		263,071
Consumer:
Indirect consumer	769		1,575		133		2,477
Other consumer	529		927		398		1,854
Credit card	—		390		1,219		1,609
Total consumer loans	1,298		2,892		1,750		5,940
Commercial	30,522		26,203		3,573		60,298
Agricultural	11,290		4,209		322		15,821
Total	$	160,271	$	155,744	$	29,115	$	345,130



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

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.