Loans

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



	September 30, 2014		December 31, 2013
Real estate loans:
Commercial	$	1,686,509	$	1,449,174
Construction:
Land acquisition & development	194,138		205,911
Residential	88,179		76,488
Commercial	85,103		69,236
Total construction loans	367,420		351,635
Residential	957,282		867,912
Agricultural	158,940		173,534
Total real estate loans	3,170,151		2,842,255
Consumer:
Indirect consumer	537,765		476,012
Other consumer	145,076		133,039
Credit card	62,641		62,536
Total consumer loans	745,482		671,587
Commercial	736,908		676,544
Agricultural	136,587		111,872
Other, including overdrafts	2,316		1,734
Loans held for investment	4,791,444		4,303,992
Mortgage loans held for sale	62,938		40,861
Total loans	$	4,854,382	$	4,344,853

Loans from business combinations included in the table above include certain loans that had evidence of deterioration in credit quality since origination and for which it was probable, at acquisition, that all contractually required payments would not be collected.

The following table displays the outstanding unpaid principal balance, accrued interest receivable and accrual status of loans acquired with credit impairment as of September 30, 2014.



As of September 30, 2014

Outstanding balance	$	42,627

Carrying value
Loans on accrual status	32,350
Loans on non-accrual status	—
Total carrying value	$	32,350

The following table summarizes changes in the accretable yield for loans acquired credit impaired for the three and nine months ended September 30, 2014:



	Three Months Ended September 30, 2014			Nine Months Ended September 30, 2014

Beginning balance	$	—		$	—
Acquisition	5,233			5,233
Accretion income	(289		)	(289		)
Reductions due to exit events	(16		)	(16		)
Ending balance	$	4,928		$	4,928

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 September 30, 2014	Past Due		Past Due		Past Due		Past Due		Loans		Loans		Loans
Real estate
Commercial	$	4,290	$	3,173	$	199	$	7,662	$	1,643,243	$	35,604	$	1,686,509
Construction:
Land acquisition & development	4,674		941		—		5,615		178,608		9,915		194,138
Residential	1,798		311		—		2,109		85,832		238		88,179
Commercial	—		—		—		—		82,534		2,569		85,103
Total construction loans	6,472		1,252		—		7,724		346,974		12,722		367,420
Residential	5,054		542		766		6,362		948,412		2,508		957,282
Agricultural	909		154		—		1,063		151,028		6,849		158,940
Total real estate loans	16,725		5,121		965		22,811		3,089,657		57,683		3,170,151
Consumer:
Indirect consumer	2,728		278		2		3,008		534,344		413		537,765
Other consumer	976		154		39		1,169		143,320		587		145,076
Credit card	340		261		235		836		61,789		16		62,641
Total consumer loans	4,044		693		276		5,013		739,453		1,016		745,482
Commercial	10,716		1,077		113		11,906		712,261		12,741		736,908
Agricultural	23		—		—		23		136,089		475		136,587
Other, including overdrafts	—		—		—		—		2,316		—		2,316
Loans held for investment	31,508		6,891		1,354		39,753		4,679,776		71,915		4,791,444
Mortgage loans originated for sale	—		—		—		—		62,938		—		62,938
Total loans	$	31,508	$	6,891	$	1,354	$	39,753	$	4,742,714	$	71,915	$	4,854,382



							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

Acquired loans that met the criteria for nonaccrual of interest prior to the acquisition were considered performing upon acquisition. If interest on non-accrual loans had been accrued, such income would have been approximately $992 and $1,216 for the three months ended September 30, 2014 and 2013, respectively, and approximately $3,176 and $3,877 for the nine months ended September 30, 2014 and 2013, respectively.

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



As of September 30, 2014	Unpaid Total Principal Balance		Recorded Investment With No Allowance		Recorded Investment With Allowance		Total Recorded Investment		Related Allowance
Real estate:
Commercial	$	47,675	$	24,184	$	21,603	$	45,787	$	2,993
Construction:
Land acquisition & development	14,162		7,162		3,366		10,528		590
Residential	382		238		—		238		—
Commercial	2,736		258		2,444		2,702		906
Total construction loans	17,280		7,658		5,810		13,468		1,496
Residential	2,621		2,083		371		2,454		124
Agricultural	8,942		7,074		1,772		8,846		192
Total real estate loans	76,518		40,999		29,556		70,555		4,805
Commercial	16,174		9,560		4,109		13,669		1,445
Agricultural	886		379		455		834		320
Total	$	93,578	$	50,938	$	34,120	$	85,058	$	6,570



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 September 30,
	2014				2013
	Average Recorded Investment		Income Recognized		Average Recorded Investment		Income Recognized


Real estate:
Commercial	$	53,492	$	211	$	62,208	$	239
Construction:
Land acquisition & development	11,611		11		17,614		19
Residential	304		—		1,513		—
Commercial	2,709		2		1,174		2
Total construction loans	14,624		13		20,301		21
Residential	4,773		1		7,770		6
Agricultural	9,031		25		9,995		—
Total real estate loans	81,920		250		100,274		266
Commercial	14,252		14		16,245		16
Agricultural	906		6		240		4
Total	$	97,078	$	270	$	116,759	$	286



	Nine Months Ended September 30,
	2014				2013
	Average Recorded Investment		Income Recognized		Average Recorded Investment		Income Recognized


Real estate:
Commercial	$	57,743	$	668	$	65,726	$	849
Construction:
Land acquisition & development	13,529		33		19,923		475
Residential	799		—		1,949		—
Commercial	1,520		6		5,161		2
Total construction loans	15,848		39		27,033		477
Residential	5,537		4		8,882		15
Agricultural	10,223		54		7,751		8
Total real estate loans	89,351		765		109,392		1,349
Commercial	14,001		42		15,065		52
Agricultural	707		18		335		12
Total	$	104,059	$	825	$	124,792	$	1,413

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 $1,246 and $1,481 for the three months ended September 30, 2014 and 2013, respectively and approximately $3,927 and $4,832 for the nine months ended September 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 $51,562 as of September 30, 2014, of which $30,606 were included in non-accrual loans and $20,956 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 and nine months ended September 30, 2014:



	Number of Notes	Type of Concession								Principal Balance at Restructure Date
Three Months Ended September 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	3	$	—	$	445	$	84	$	—	$	529
Consumer	1	—		114		—		—		114
Total loans restructured during period	4	$	—	$	559	$	84	$	—	$	643
(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
Nine Months Ended September 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	11	$	2,931	$	671	$	84	$	921	$	4,607
Consumer	1	—		114		—		—		114
Commercial	4	299				—		30		329
Total loans restructured during period	16	$	3,230	$	785	$	84	$	951	$	5,050
(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 nine months ended September 30, 2014 or 2013.

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 September 30, 2014			Nine Months Ended September 30, 2014
	Number of Notes	Balance		Number of Notes	Balance
Commercial	—	$	—	2	$	72

At September 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.

Company management undertakes the same process for assigning risk ratings to acquired loans as it does for originated loans. Acquired loans rated as substandard or lower or that were on non-accrual status or designated as troubled debt restructurings at the time of acquisition are deemed to be acquired credit impaired loans accounted for under ASC Topic 310-30, regardless of whether they are classified as performing or non-performing loans.

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 September 30, 2014	Other Assets Especially Mentioned		Substandard		Doubtful		Total Criticized Loans
Real estate:
Commercial	$	86,668	$	86,206	$	20,997	$	193,871
Construction:
Land acquisition & development	12,462		17,470		2,424		32,356
Residential	1,833		1,738		—		3,571
Commercial	169		258		2,444		2,871
Total construction loans	14,464		19,466		4,868		38,798
Residential	10,613		8,387		846		19,846
Agricultural	9,748		11,178		613		21,539
Total real estate loans	121,493		125,237		27,324		274,054
Consumer:
Indirect consumer	810		1,589		173		2,572
Other consumer	593		861		467		1,921
Credit card	—		298		1,537		1,835
Total consumer loans	1,403		2,748		2,177		6,328
Commercial	23,501		23,461		9,494		56,456
Agricultural	10,072		4,677		455		15,204
Total	$	156,469	$	156,123	$	39,450	$	352,042



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.