Loans

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



	September 30, 2018		December 31, 2017
Real estate loans:
Commercial	$	3,213.1	$	2,822.9
Construction:
Land acquisition & development	314.5		348.7
Residential	250.6		240.2
Commercial	219.6		119.4
Total construction loans	784.7		708.3
Residential	1,581.2		1,487.4
Agricultural	217.8		158.2
Total real estate loans	5,796.8		5,176.8
Consumer:
Indirect consumer	800.8		784.7
Other consumer	198.1		175.1
Credit card	79.4		74.6
Total consumer loans	1,078.3		1,034.4
Commercial	1,337.2		1,215.4
Agricultural	264.8		136.2
Other, including overdrafts	3.2		4.9
Loans held for investment	8,480.3		7,567.7
Mortgage loans held for sale	37.7		46.6
Total loans	$	8,518.0	$	7,614.3

The following tables present the Company’s recorded investment and contractual aging of the Company’s recorded investment in loans by class as of the dates indicated. Loans are considered past due if the required principal and interest payments have not been received as of the date such payments were due.



							Total Loans
	30 - 59		60 - 89		> 90		30 or More
	Days		Days		Days		Days		Current		Non-accrual		Total
As of September 30, 2018	Past Due		Past Due		Past Due		Past Due		Loans		Loans		Loans
Real estate
Commercial	$	9.6	$	3.0	$	0.5	$	13.1	$	3,185.0	$	15.0	$	3,213.1
Construction:
Land acquisition & development	0.7		0.7		0.4		1.8		309.0		3.7		314.5
Residential	3.4		0.4		—		3.8		246.2		0.6		250.6
Commercial	5.3		—		—		5.3		210.7		3.6		219.6
Total construction loans	9.4		1.1		0.4		10.9		765.9		7.9		784.7
Residential	3.2		7.3		1.8		12.3		1,562.5		6.4		1,581.2
Agricultural	1.3		—		0.3		1.6		203.6		12.6		217.8
Total real estate loans	23.5		11.4		3.0		37.9		5,717.0		41.9		5,796.8
Consumer:
Indirect consumer	5.0		1.2		0.2		6.4		792.6		1.8		800.8
Other consumer	1.1		0.4		0.2		1.7		196.0		0.4		198.1
Credit card	0.6		0.4		0.8		1.8		77.6		—		79.4
Total consumer loans	6.7		2.0		1.2		9.9		1,066.2		2.2		1,078.3
Commercial	4.1		2.0		0.8		6.9		1,315.3		15.0		1,337.2
Agricultural	2.7		0.7		0.2		3.6		259.1		2.1		264.8
Other, including overdrafts	—		—		—		—		3.2		—		3.2
Loans held for investment	37.0		16.1		5.2		58.3		8,360.8		61.2		8,480.3
Mortgage loans originated for sale	—		—		—		—		37.7		—		37.7
Total loans	$	37.0	$	16.1	$	5.2	$	58.3	$	8,398.5	$	61.2	$	8,518.0



							Total Loans
	30 - 59		60 - 89		> 90		30 or More
	Days		Days		Days		Days		Current		Non-accrual		Total
As of December 31, 2017	Past Due		Past Due		Past Due		Past Due		Loans		Loans		Loans
Real estate
Commercial	$	2.9	$	0.5	$	0.3	$	3.7	$	2,792.4	$	26.8	$	2,822.9
Construction:
Land acquisition & development	7.3		0.3		0.3		7.9		337.8		3.0		348.7
Residential	2.1		—		—		2.1		236.4		1.7		240.2
Commercial	—		—		—		—		115.6		3.8		119.4
Total construction loans	9.4		0.3		0.3		10.0		689.8		8.5		708.3
Residential	13.3		1.4		0.4		15.1		1,464.1		8.2		1,487.4
Agricultural	0.3		—		0.2		0.5		154.3		3.4		158.2
Total real estate loans	25.9		2.2		1.2		29.3		5,100.6		46.9		5,176.8
Consumer:
Indirect consumer	7.8		2.1		0.4		10.3		772.6		1.8		784.7
Other consumer	1.6		0.5		0.1		2.2		172.6		0.3		175.1
Credit card	0.9		0.6		0.7		2.2		72.4		—		74.6
Total consumer loans	10.3		3.2		1.2		14.7		1,017.6		2.1		1,034.4
Commercial	3.9		1.7		0.7		6.3		1,189.5		19.6		1,215.4
Agricultural	1.8		0.1		—		1.9		133.5		0.8		136.2
Other, including overdrafts	—		—		—		—		4.9		—		4.9
Loans held for investment	41.9		7.2		3.1		52.2		7,446.1		69.4		7,567.7
Mortgage loans originated for sale	—		—		—		—		46.6		—		46.6
Total loans	$	41.9	$	7.2	$	3.1	$	52.2	$	7,492.7	$	69.4	$	7,614.3

Loans from business combinations included in the tables 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 balances and accrual status of loans acquired with credit impairment as of September 30, 2018 and 2017:



	As of September 30,
	2018		2017
Outstanding balance	$	49.3	$	46.2
Carrying value
Loans on accrual status	35.5		30.8
Total carrying value	$	35.5	$	30.8

The following table summarizes changes in the accretable yield for loans acquired deemed credit impaired for the three and nine months ended September 30, 2018 and 2017:



	Three Months Ended September 30,						Nine Months Ended September 30,
	2018			2017			2018			2017
Beginning balance	$	6.5		$	7.7		$	7.3		$	6.8
Acquisitions	3.2			—			3.2			—
Additions	—			0.2			0.4			2.1
Accretion income	(0.7		)	(0.9		)	(2.4		)	(2.1		)
Reductions due to exit events	(0.1		)	(0.1		)	(0.6		)	(1.1		)
Reclassifications from nonaccretable differences	0.6			0.5			1.6			1.7
Ending balance	$	9.5		$	7.4		$	9.5		$	7.4

Acquired loans that met the criteria for nonaccrual of interest prior to acquisition were considered performing upon acquisition. If interest on non-accrual loans had been accrued, such income would have been approximately $0.8 million and $0.9 million for the three months ended September 30, 2018 and 2017, respectively, and approximately $1.6 million and $1.8 million for the nine months ended September 30, 2018 and 2017, respectively.

The Company considers impaired loans to include all originated loans, except consumer loans, that are risk rated as doubtful, or have been placed on non-accrual status or renegotiated in troubled debt restructurings, and all loans acquired with evidence of deterioration in credit quality and for which it was probable, at acquisition, that the Company would be unable to collect all contractual amounts owed. The following tables present information on the Company’s recorded investment in impaired loans as of dates indicated:



As of September 30, 2018	Unpaid Total Principal Balance		Recorded Investment With No Allowance		Recorded Investment With Allowance		Total Recorded Investment		Related Allowance
Real estate:
Commercial	$	29.1	$	12.5	$	8.7	$	21.2	$	1.7
Construction:
Land acquisition & development	10.4		0.7		3.5		4.2		0.2
Residential	0.7		0.2		0.4		0.6		0.1
Commercial	4.4		0.2		3.3		3.5		1.2
Total construction loans	15.5		1.1		7.2		8.3		1.5
Residential	8.8		5.6		2.1		7.7		0.4
Agricultural	12.8		12.6		—		12.6		—
Total real estate loans	66.2		31.8		18.0		49.8		3.6
Commercial	24.1		5.2		15.2		20.4		4.4
Agricultural	2.2		1.7		0.5		2.2		0.2
Total	$	92.5	$	38.7	$	33.7	$	72.4	$	8.2



As of December 31, 2017	Unpaid Total Principal Balance		Recorded Investment With No Allowance		Recorded Investment With Allowance		Total Recorded Investment		Related Allowance
Real estate:
Commercial	$	45.6	$	20.9	$	14.1	$	35.0	$	3.9
Construction:
Land acquisition & development	10.0		3.4		0.5		3.9		—
Residential	1.8		1.7		—		1.7		—
Commercial	4.7		0.4		3.5		3.9		2.2
Total construction loans	16.5		5.5		4.0		9.5		2.2
Residential	11.5		8.2		2.0		10.2		0.1
Agricultural	3.7		3.6		—		3.6		—
Total real estate loans	77.3		38.2		20.1		58.3		6.2
Commercial	29.5		12.4		11.4		23.8		4.4
Agricultural	1.1		0.8		0.3		1.1		0.2
Total	$	107.9	$	51.4	$	31.8	$	83.2	$	10.8

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



	Three Months Ended September 30,
	2018				2017
	Average Recorded Investment		Income Recognized		Average Recorded Investment		Income Recognized
Real estate	$	54.5	$	—	$	59.9	$	0.1
Commercial	20.7		—		31.6		—
Agricultural	1.9		—		2.3		—
Total	$	77.1	$	—	$	93.8	$	0.1



	Nine Months Ended September 30,
	2018				2017
	Average Recorded Investment		Income Recognized		Average Recorded Investment		Income Recognized
Real estate	$	54.1	$	0.1	$	63.0	$	0.4
Commercial	22.0		0.1		31.9		0.1
Agricultural	1.6		—		2.6		—
Total	$	77.7	$	0.2	$	97.5	$	0.5

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 $0.8 million and $0.9 million for the three months ended September 30, 2018 and 2017, respectively, and approximately $1.6 million and $1.8 million for the nine months ended September 30, 2018 and 2017, 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 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 $30.3 million as of September 30, 2018, of which $24.4 million were included in non-accrual loans and $5.9 million were on accrual status. The Company had loans renegotiated in troubled debt restructurings of $44.5 million as of December 31, 2017, of which $31.9 million were included in non-accrual loans and $12.6 million were on accrual status.

The following table presents information on the Company’s troubled debt restructurings that occurred during the three and nine months ended September 30, 2018:




	Number of Notes	Type of Concession								Principal Balance at Restructure Date
Three Months Ended September 30, 2018	Number of Notes	Interest only period		Extension of term or amortization schedule		Interest rate adjustment		Other (1)		Principal Balance at Restructure Date
Commercial real estate	3	$	3.4	$	—	$	—	$	0.5	$	3.9
Total loans restructured during period	3	$	3.4	$	—	$	—	$	0.5	$	3.9
(1) Other includes concessions that reduce or defer payments for a specified period of time and/or concessions that do not fit into other designated categories.

	Number of Notes	Type of Concession								Principal Balance at Restructure Date
Nine Months Ended September 30, 2018	Number of Notes	Interest only period		Extension of term or amortization schedule		Interest rate adjustment		Other (1)		Principal Balance at Restructure Date
Commercial real estate	5	$	3.6	$	—	$	—	$	0.5	$	4.1
Total loans restructured during period	5	$	3.6	$	—	$	—	$	0.5	$	4.1
(1) Other includes concessions that reduce or defer payments for a specified period of time and/or concessions that 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 nine months ended September 30, 2018 or 2017.

The Company had no material troubled debt restructurings during the previous 12 months for which there was a payment default during the three and nine months ended September 30, 2018. 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.

At September 30, 2018, 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, 2018	Other Assets Especially Mentioned		Substandard		Doubtful		Total Criticized Loans
Real estate:
Commercial	$	108.1	$	81.4	$	4.8	$	194.3
Construction:
Land acquisition & development	5.4		7.0		3.3		15.7
Residential	4.1		0.3		0.4		4.8
Commercial	1.5		3.7		3.4		8.6
Total construction loans	11.0		11.0		7.1		29.1
Residential	5.5		11.0		1.1		17.6
Agricultural	8.4		24.6		—		33.0
Total real estate loans	133.0		128.0		13.0		274.0
Consumer:
Indirect consumer	0.8		2.2		0.1		3.1
Other consumer	0.4		0.8		0.1		1.3
Total consumer loans	1.2		3.0		0.2		4.4
Commercial	50.6		48.6		11.2		110.4
Agricultural	14.1		21.5		0.5		36.1
Total	$	198.9	$	201.1	$	24.9	$	424.9



As of December 31, 2017	Other Assets Especially Mentioned		Substandard		Doubtful		Total Criticized Loans
Real estate:
Commercial	$	78.0	$	96.4	$	10.3	$	184.7
Construction:
Land acquisition & development	3.2		16.4		—		19.6
Residential	2.3		1.7		0.5		4.5
Commercial	2.4		3.6		3.5		9.5
Total construction loans	7.9		21.7		4.0		33.6
Residential	3.9		12.5		1.9		18.3
Agricultural	4.3		19.1		—		23.4
Total real estate loans	94.1		149.7		16.2		260.0
Consumer:
Indirect consumer	0.8		2.2		0.3		3.3
Other consumer	0.4		0.7		0.2		1.3
Total consumer loans	1.2		2.9		0.5		4.6
Commercial	54.7		56.3		11.1		122.1
Agricultural	5.1		8.3		0.4		13.8
Total	$	155.1	$	217.2	$	28.2	$	400.5

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.