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Loans and Allowance for Loan Losses (Tables)

12 Months Ended

Dec. 31, 2018

At December 31, 2018, the Company’s loan portfolio was $11.72 billion, compared to $10.78 billion at December 31, 2017. The various categories of loans are summarized as follows:



(In thousands)	2018		2017
Consumer:
Credit cards	$	204,173	$	185,422
Other consumer	201,297		280,094
Total consumer	405,470		465,516
Real estate:
Construction	1,300,723		614,155
Single family residential	1,440,443		1,094,633
Other commercial	3,225,287		2,530,824
Total real estate	5,966,453		4,239,612
Commercial:
Commercial	1,774,909		825,217
Agricultural	164,514		148,302
Total commercial	1,939,423		973,519
Other	119,042		26,962
Loans	8,430,388		5,705,609
Loans acquired, net of discount and allowance⁽¹⁾	3,292,783		5,074,076
Total loans	$	11,723,171	$	10,779,685

_________________________

(1) See Note 6, Loans Acquired, for segregation of loans acquired by loan class.

The following table reflects the carrying value of all loans acquired as of December 31, 2018 and 2017:



	Loans Acquired At December 31,
(In thousands)	2018		2017
Consumer:
Other consumer	$	15,658	$	51,467
Real estate:
Construction	429,605		637,032
Single family residential	566,188		793,228
Other commercial	1,848,679		2,387,777
Total real estate	2,844,472		3,818,037
Commercial:
Commercial	430,914		995,587
Agricultural	1,739		66,576
Total commercial	432,653		1,062,163
Other	—		142,409
Total loans acquired⁽¹⁾	$	3,292,783	$	5,074,076

_________________________

(1) Loans acquired are reported net of a $95,000 and $418,000 allowance as of December 31, 2018 and 2017, respectively.

Schedule of Nonaccrual Loans, Excluding Loans Acquired

Nonaccrual loans, excluding loans acquired, at December 31, 2018 and 2017, segregated by class of loans, are as follows:



(In thousands)	2018		2017
Consumer:
Credit cards	$	296	$	170
Other consumer	2,159		4,605
Total consumer	2,455		4,775
Real estate:
Construction	1,269		2,242
Single family residential	11,939		13,431
Other commercial	7,205		16,054
Total real estate	20,413		31,727
Commercial:
Commercial	10,049		6,980
Agricultural	1,284		2,160
Total commercial	11,333		9,140
Total	$	34,201	$	45,642

Nonaccrual loans acquired, excluding purchased credit impaired loans accounted for under ASC Topic 310-30, segregated by class of loans, are as follows (see Note 5, Loans and Allowance for Loan Losses, for discussion of nonaccrual loans):



(In thousands)	December 31, 2018		December 31, 2017
Consumer:
Other consumer	$	140	$	334
Real estate:
Construction	114		1,767
Single family residential	6,603		12,151
Other commercial	1,167		7,401
Total real estate	7,884		21,319
Commercial:
Commercial	13,578		1,748
Agricultural	38		84
Total commercial	13,616		1,832
Total	$	21,640	$	23,485

Schedule of Aging Analysis of Past Due Loans, Excluding Loans Acquired

An age analysis of past due loans, excluding loans acquired, segregated by class of loans, is as follows:



(In thousands)	Gross 30-89 Days Past Due		90 Days or More Past Due		Total Past Due		Current		Total Loans		90 Days Past Due & Accruing
December 31, 2018
Consumer:
Credit cards	$	1,033	$	506	$	1,539	$	202,634	$	204,173	$	209
Other consumer	4,264		896		5,160		196,137		201,297		4
Total consumer	5,297		1,402		6,699		398,771		405,470		213
Real estate:
Construction	533		308		841		1,299,882		1,300,723		—
Single family residential	7,769		4,127		11,896		1,428,547		1,440,443		—
Other commercial	3,379		2,773		6,152		3,219,135		3,225,287		—
Total real estate	11,681		7,208		18,889		5,947,564		5,966,453		—
Commercial:
Commercial	4,472		5,105		9,577		1,765,332		1,774,909		11
Agricultural	467		1,055		1,522		162,992		164,514		—
Total commercial	4,939		6,160		11,099		1,928,324		1,939,423		11
Other	—		—		—		119,042		119,042		—
Total	$	21,917	$	14,770	$	36,687	$	8,393,701	$	8,430,388	$	224

December 31, 2017
Consumer:
Credit cards	$	707	$	672	$	1,379	$	184,043	$	185,422	$	332
Other consumer	5,009		3,298		8,307		271,787		280,094		10
Total consumer	5,716		3,970		9,686		455,830		465,516		342
Real estate:
Construction	411		1,210		1,621		612,534		614,155		—
Single family residential	8,071		6,460		14,531		1,080,102		1,094,633		1
Other commercial	2,388		8,031		10,419		2,520,405		2,530,824		—
Total real estate	10,870		15,701		26,571		4,213,041		4,239,612		1
Commercial:
Commercial	1,523		6,125		7,648		817,569		825,217		—
Agricultural	50		2,120		2,170		146,132		148,302		—
Total commercial	1,573		8,245		9,818		963,701		973,519		—
Other	—		—		—		26,962		26,962		—
Total	$	18,159	$	27,916	$	46,075	$	5,659,534	$	5,705,609	$	343

An age analysis of past due loans acquired segregated by class of loans, is as follows (see Note 5, Loans and Allowance for Loan Losses, for discussion of past due loans):



(In thousands)	Gross 30-89 Days Past Due		90 Days or More Past Due		Total Past Due		Current		Total Loans		90 Days Past Due & Accruing
December 31, 2018
Consumer:
Other consumer	$	337	$	49	$	386	$	15,272	$	15,658	$	2
Real estate:
Construction	8,283		27		8,310		421,295		429,605		—
Single family residential	4,706		3,049		7,755		558,433		566,188		—
Other commercial	168		577		745		1,847,934		1,848,679		—
Total real estate	13,157		3,653		16,810		2,827,662		2,844,472		—
Commercial:
Commercial	1,302		9,542		10,844		420,070		430,914		—
Agricultural	31		5		36		1,703		1,739		—
Total commercial	1,333		9,547		10,880		421,773		432,653		—

Total	$	14,827	$	13,249	$	28,076	$	3,264,707	$	3,292,783	$	2



December 31, 2017
Consumer:
Other consumer	$	889	$	260	$	1,149	$	50,318	$	51,467	$	108
Real estate:
Construction	2,577		1,448		4,025		633,007		637,032		279
Single family residential	12,936		3,302		16,238		776,990		793,228		126
Other commercial	17,176		5,647		22,823		2,364,954		2,387,777		2,565
Total real estate	32,689		10,397		43,086		3,774,951		3,818,037		2,970
Commercial:
Commercial	2,344		1,039		3,383		992,204		995,587		67
Agricultural	51		—		51		66,525		66,576		—
Total commercial	2,395		1,039		3,434		1,058,729		1,062,163		67
Other	15		—		15		142,394		142,409		—

Total	$	35,988	$	11,696	$	47,684	$	5,026,392	$	5,074,076	$	3,145

Schedule of Impaired Loans

Impaired loans, net of government guarantees and excluding loans acquired, segregated by class of loans, are as follows:



(In thousands)	Unpaid Contractual Principal Balance		Recorded Investment With No Allowance		Recorded Investment With Allowance		Total Recorded Investment		Related Allowance		Average Investment in Impaired Loans		Interest Income Recognized
December 31, 2018
Consumer:
Credit cards	$	296	$	296	$	—	$	296	$	—	$	266	$	85
Other consumer	2,311		2,159		—		2,159		—		3,719		112
Total consumer	2,607		2,455		—		2,455		—		3,985		197
Real estate:
Construction	1,344		784		485		1,269		211		1,651		50
Single family residential	12,906		11,468		616		12,084		36		13,257		399
Other commercial	8,434		5,442		5,458		10,900		—		13,608		410
Total real estate	22,684		17,694		6,559		24,253		247		28,516		859
Commercial:
Commercial	10,361		7,254		4,628		11,882		437		10,003		301
Agricultural	2,419		1,180		—		1,180		—		1,412		43
Total commercial	12,780		8,434		4,628		13,062		437		11,415		344
Total	$	38,071	$	28,583	$	11,187	$	39,770	$	684	$	43,916	$	1,400

December 31, 2017
Consumer:
Credit cards	$	170	$	170	$	—	$	170	$	—	$	268	$	47
Other consumer	4,755		4,605		—		4,605		—		3,089		106
Total consumer	4,925		4,775		—		4,775		—		3,357		153
Real estate:
Construction	2,522		1,347		895		2,242		249		2,711		93
Single family residential	14,347		12,725		706		13,431		53		12,904		443
Other commercial	22,308		6,732		9,133		15,865		36		18,624		639
Total real estate	39,177		20,804		10,734		31,538		338		34,239		1,175
Commercial:
Commercial	9,954		4,306		2,269		6,575		—		11,670		400
Agricultural	3,278		1,035		—		1,035		—		1,522		52
Total commercial	13,232		5,341		2,269		7,610		—		13,192		452
Total	$	57,334	$	30,920	$	13,003	$	43,923	$	338	$	50,788	$	1,780

Schedule of Troubled Debt Restructuring

The following table presents a summary of troubled debt restructurings, excluding loans acquired, segregated by class of loans.



	Accruing TDR Loans			Nonaccrual TDR Loans			Total TDR Loans
(Dollars in thousands)	Number	Balance		Number	Balance		Number	Balance
December 31, 2018
Real estate:
Construction	—	$	—	3	$	485	3	$	485
Single-family residential	6	230		10	616		16	846
Other commercial	2	3,306		2	1,027		4	4,333
Total real estate	8	3,536		15	2,128		23	5,664
Commercial:
Commercial	4	2,833		6	718		10	3,551
Total commercial	4	2,833		6	718		10	3,551
Total	12	$	6,369	21	$	2,846	33	$	9,215

December 31, 2017
Real estate:
Construction	—	$	—	1	$	420	1	$	420
Single-family residential	4	141		15	954		19	1,095
Other commercial	4	4,322		5	3,712		9	8,034
Total real estate	8	4,463		21	5,086		29	9,549
Commercial:
Commercial	5	2,644		6	745		11	3,389
Total commercial	5	2,644		6	745		11	3,389
Total	13	$	7,107	27	$	5,831	40	$	12,938

The following table presents loans that were restructured as TDRs during the years ended December 31, 2018 and 2017, excluding loans acquired, segregated by class of loans.



						Modification Type
(Dollars in thousands)	Number of Loans	Balance Prior to TDR		Balance at December 31,		Change in Maturity Date		Change in Rate		Financial Impact on Date of Restructure
Year Ended December 31, 2018
Consumer:
Other consumer	1	$	91	$	91	$	91	$	—	$	—
Total consumer	1	91		91		91		—		—
Real estate:
Construction	1	99		98		98		—		—
Single-family residential	1	61		62		62		—		—
Other commercial	2	392		390		390		—		212
Total real estate	4	552		550		550		—		212
Commercial:
Commercial	3	2,363		2,358		2,358		—		190
Total commercial	3	2,363		2,358		2,358		—		190
Total	8	$	3,006	$	2,999	$	2,999	$	—	$	402

Year Ended December 31, 2017
Real estate:
Construction	1	$	456	$	456	$	456	$	—	$	—
Single-family residential	1	139		130		130		—		—
Other commercial	3	7,715		7,715		7,715		—		33
Total real estate	5	8,310		8,301		8,301		—		33
Commercial:
Commercial	11	2,691		2,604		2,565		39		—
Total commercial	11	2,691		2,604		2,565		39		—
Total	16	$	11,001	$	10,905	$	10,866	$	39	$	33

Summary of Loans by Credit Risk Rating

The following table presents a summary of loans by credit risk rating, segregated by class of loans.



(In thousands)	Risk Rate 1-4		Risk Rate 5		Risk Rate 6		Risk Rate 7		Risk Rate 8		Total
December 31, 2018
Consumer:
Credit cards	$	203,667	$	—	$	506	$	—	$	—	$	204,173
Other consumer	198,840		—		2,457		—		—		201,297
Total consumer	402,507		—		2,963		—		—		405,470
Real estate:
Construction	1,296,988		1,910		1,825		—		—		1,300,723
Single family residential	1,420,052		1,628		18,528		235		—		1,440,443
Other commercial	3,193,289		17,169		14,829		—		—		3,225,287
Total real estate	5,910,329		20,707		35,182		235		—		5,966,453
Commercial:
Commercial	1,742,002		8,357		24,550		—		—		1,774,909
Agricultural	162,824		75		1,615		—		—		164,514
Total commercial	1,904,826		8,432		26,165		—		—		1,939,423
Other	119,042		—		—		—		—		119,042
Loans acquired	3,187,083		51,255		54,097		348		—		3,292,783
Total	$	11,523,787	$	80,394	$	118,407	$	583	$	—	$	11,723,171



(In thousands)	Risk Rate 1-4		Risk Rate 5		Risk Rate 6		Risk Rate 7		Risk Rate 8		Total
December 31, 2017
Consumer:
Credit cards	$	184,920	$	—	$	502	$	—	$	—	$	185,422
Other consumer	275,160		—		4,934		—		—		280,094
Total consumer	460,080		—		5,436		—		—		465,516
Real estate:
Construction	603,126		5,795		5,218		16		—		614,155
Single family residential	1,066,902		3,954		23,490		287		—		1,094,633
Other commercial	2,480,293		19,581		30,950		—		—		2,530,824
Total real estate	4,150,321		29,330		59,658		303		—		4,239,612
Commercial:
Commercial	736,377		74,254		14,402		50		134		825,217
Agricultural	146,065		24		2,190		23		—		148,302
Total commercial	882,442		74,278		16,592		73		134		973,519
Other	26,962		—		—		—		—		26,962
Loans acquired	4,918,570		62,128		93,378		—		—		5,074,076
Total	$	10,438,375	$	165,736	$	175,064	$	376	$	134	$	10,779,685

The following table presents a summary of loans acquired by credit risk rating, segregated by class of loans (see Note 5, Loans and Allowance for Loan Losses, for discussion of loan risk rating). Loans accounted for under ASC Topic 310-30 are all included in Risk Rate 1-4 in this table.



(In thousands)	Risk Rate 1-4		Risk Rate 5		Risk Rate 6		Risk Rate 7		Risk Rate 8		Total
December 31, 2018
Consumer:
Other consumer	$	15,380	$	—	$	278	$	—	$	—	$	15,658
Real estate:
Construction	393,122		27,621		8,862		—		—		429,605
Single family residential	553,460		2,081		10,299		348		—		566,188
Other commercial	1,822,179		9,137		17,363		—		—		1,848,679
Total real estate	2,768,761		38,839		36,524		348		—		2,844,472
Commercial:
Commercial	401,300		12,416		17,198		—		—		430,914
Agricultural	1,642		—		97		—		—		1,739
Total commercial	402,942		12,416		17,295		—		—		432,653

Total	$	3,187,083	$	51,255	$	54,097	$	348	$	—	$	3,292,783

December 31, 2017
Consumer:
Other consumer	$	50,625	$	21	$	821	$	—	$	—	$	51,467
Real estate:
Construction	604,796		30,524		1,712		—		—		637,032
Single family residential	770,954		2,618		19,656		—		—		793,228
Other commercial	2,337,097		15,064		35,616		—		—		2,387,777
Total real estate	3,712,847		48,206		56,984		—		—		3,818,037
Commercial:
Commercial	946,322		13,901		35,364		—		—		995,587
Agricultural	66,367		—		209		—		—		66,576
Total commercial	1,012,689		13,901		35,573		—		—		1,062,163
Other	142,409		—		—		—		—		142,409

Total	$	4,918,570	$	62,128	$	93,378	$	—	$	—	$	5,074,076

Schedule of the Activity in the Allowance for Loan Losses

Activity in the allowance for loan losses for the year ended December 31, 2016 was as follows:



(In thousands)	Commercial			Real Estate			Credit Card			Other Consumer and Other			Total
December 31, 2016
Balance, beginning of year ⁽²⁾	$	5,985		$	19,522		$	3,893		$	1,951		$	31,351
Provision for loan losses ⁽¹⁾	5,345			9,461			2,174			2,459			19,439
Charge-offs	(3,956		)	(7,517		)	(3,195		)	(1,975		)	(16,643		)
Recoveries	365			351			907			516			2,139
Net charge-offs	(3,591		)	(7,166		)	(2,288		)	(1,459		)	(14,504		)
Balance, end of year⁽²⁾	$	7,739		$	21,817		$	3,779		$	2,951		$	36,286

_________________________

(1) Provision for loan losses of $626,000 attributable to loans acquired was excluded from this table for the year ended December 31, 2016 (total provision for loan losses for the year ended December 31, 2016 was $20,065,000). The $626,000 was subsequently charged-off, resulting in no increase to the ending balance in the allowance related to loans acquired.

(2) Allowance for loan losses at December 31, 2016 includes $954,000 allowance for loans acquired (not shown in the table above). The total allowance for loan losses at December 31, 2016 was $37,240,000.



(In thousands)	Commercial			Real Estate			Credit Card			Other Consumer and Other			Total
December 31, 2018
Balance, beginning of year⁽²⁾	$	7,007		$	27,281		$	3,784		$	3,596		$	41,668
Provision for loan losses ⁽¹⁾	19,385			7,376			3,185			4,903			34,849
Charge-offs	(6,623		)	(5,905		)	(4,051		)	(6,637		)	(23,216		)
Recoveries	745			991			1,005			557			3,298
Net charge-offs	(5,878		)	(4,914		)	(3,046		)	(6,080		)	(19,918		)
Balance, end of year⁽²⁾	$	20,514		$	29,743		$	3,923		$	2,419		$	56,599

Period-end amount allocated to:
Loans individually evaluated for impairment	$	437		$	247		$	—		$	—		$	684
Loans collectively evaluated for impairment	20,077			29,496			3,923			2,419			55,915
Balance, end of year ⁽²⁾	$	20,514		$	29,743		$	3,923		$	2,419		$	56,599

December 31, 2017
Balance, beginning of year ⁽²⁾	$	7,739		$	21,817		$	3,779		$	2,951		$	36,286
Provision for loan losses ⁽¹⁾	7,002			12,463			2,889			2,173			24,527
Charge-offs	(7,837		)	(7,989		)	(3,905		)	(3,767		)	(23,498		)
Recoveries	103			990			1,021			2,239			4,353
Net charge-offs	(7,734		)	(6,999		)	(2,884		)	(1,528		)	(19,145		)
Balance, end of year⁽²⁾	$	7,007		$	27,281		$	3,784		$	3,596		$	41,668

Period-end amount allocated to:
Loans individually evaluated for impairment	$	—		$	338		$	—		$	—		$	338
Loans collectively evaluated for impairment	7,007			26,943			3,784			3,596			41,330
Balance, end of year⁽²⁾	$	7,007		$	27,281		$	3,784		$	3,596		$	41,668

The Company’s recorded investment in loans, excluding loans acquired, as of December 31, 2018 and 2017 related to each balance in the allowance for loan losses by portfolio segment on the basis of the Company’s impairment methodology was as follows:



(In thousands)	Commercial		Real Estate		Credit Card		Other Consumer and Other		Total
December 31, 2018
Loans individually evaluated for impairment	$	13,062	$	24,253	$	296	$	2,159	$	39,770
Loans collectively evaluated for impairment	1,926,361		5,942,200		203,877		318,180		8,390,618
Balance, end of period	$	1,939,423	$	5,966,453	$	204,173	$	320,339	$	8,430,388

December 31, 2017
Loans individually evaluated for impairment	$	7,610	$	31,538	$	170	$	4,605	$	43,923
Loans collectively evaluated for impairment	965,909		4,208,074		185,252		302,451		5,661,686
Balance, end of period	$	973,519	$	4,239,612	$	185,422	$	307,056	$	5,705,609

Net (charge-offs)/recoveries for the years ended December 31, 2018 and 2017, excluding loans acquired, segregated by class of loans, were as follows:



(In thousands)	2018			2017
Consumer:
Credit cards	$	(3,046	)	$	(2,884	)
Other consumer	(6,080		)	(1,528		)
Total consumer	(9,126		)	(4,412		)
Real estate:
Construction	(1,775		)	100
Single family residential	(494		)	(1,045		)
Other commercial	(2,645		)	(6,054		)
Total real estate	(4,914		)	(6,999		)
Commercial:
Commercial	(5,878		)	(7,734		)
Agricultural	—			—
Total commercial	(5,878		)	(7,734		)
Total	$	(19,918	)	$	(19,145	)