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Loans Acquired | 9 Months Ended
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Sep. 30, 2019
Receivables [Abstract] |
Loans Acquired | LOANS ACQUIRED The Company accounts for its acquisitions under ASC Topic 805, Business Combinations, which requires the use of the acquisition method of accounting. All identifiable assets acquired, including loans, are recorded at fair value. No allowance for loan losses related to the loans acquired is recorded on the acquisition date as the fair value of the loans acquired incorporates assumptions regarding credit risk. Loans acquired are recorded at fair value in accordance with the fair value methodology prescribed in ASC Topic 820, Fair Value Measurement. The fair value estimates associated with the loans include estimates related to expected prepayments and the amount and timing of undiscounted expected principal, interest and other cash flows. The Company evaluates non-impaired loans acquired in accordance with the provisions of ASC Topic 310-20, Nonrefundable Fees and Other Costs. The fair value discount on these loans is accreted into interest income over the weighted average life of the loans using a constant yield method. The Company evaluates purchased impaired loans in accordance with the provisions of ASC Topic 310-30, Loans and Debt Securities Acquired with Deteriorated Credit Quality. Purchased loans are considered impaired if there is evidence of credit deterioration since origination and if it is probable that not all contractually required payments will be collected. For impaired loans accounted for under ASC Topic 310-30, the Company continues to estimate cash flows expected to be collected on purchased credit impaired loans. The Company evaluates, at each balance sheet date, whether the present value of the purchased credit impaired loans determined using the effective interest rates has decreased significantly and if so, recognize a provision for loan loss in the consolidated statement of income. For any significant increases in cash flows expected to be collected, the Company adjusts the amount of accretable yield recognized on a prospective basis over the remaining life of the purchased credit impaired loan. During the second quarter 2019, the Company evaluated $1.097 billion of net loans ($1.127 billion gross loans less $30.6 million discount) purchased in conjunction with the acquisition of Reliance, described in Note 2, Acquisitions, in accordance with the provisions of ASC Topic 310-20. The Company evaluated the remaining $176,000 of net loans ($385,000 gross loans less $209,000 discount) purchased in conjunction with the acquisition of Reliance for impairment in accordance with the provisions of ASC Topic 310-30. The following table reflects the carrying value of all loans acquired as of September 30, 2019 and December 31, 2018:
| Loans Acquired
(In thousands) | September 30, 2019 |  | December 31, 2018
Consumer: |  |  |  |  |
Other consumer | $ | 7,431 |  |  | $ | 15,658 |
Real estate: |  |  |
Construction | 362,000 |  |  | 429,605 |
Single family residential | 504,490 |  |  | 566,188 |
Other commercial | 2,134,973 |  |  | 1,848,679 |
Total real estate | 3,001,463 |  |  | 2,844,472 |
Commercial: |  |  |
Commercial | 349,821 |  |  | 430,914 |
Agricultural | 872 |  |  | 1,739 |
Total commercial | 350,693 |  |  | 432,653 |
Total loans acquired (1) | $ | 3,359,587 |  |  | $ | 3,292,783 |
________________________ (1) Loans acquired are reported net of a $597,000 and $95,000 allowance at September 30, 2019 and December 31, 2018, respectively. 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 4, Loans and Allowance for Loan Losses, for discussion of nonaccrual loans):
(In thousands) | September 30, 2019 |  | December 31, 2018
Consumer: |  |  |  |  |
Other consumer | $ | 71 |  |  | $ | 140 |
Real estate: |  |  |
Construction | 48 |  |  | 114 |
Single family residential | 4,492 |  |  | 6,603 |
Other commercial | 1,029 |  |  | 1,167 |
Total real estate | 5,569 |  |  | 7,884 |
Commercial: |  |  |
Commercial | 1,636 |  |  | 13,578 |
Agricultural | 23 |  |  | 38 |
Total commercial | 1,659 |  |  | 13,616 |
Total | $ | 7,299 |  |  | $ | 21,640 |
An age analysis of past due loans acquired segregated by class of loans, is as follows (see Note 4, 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
September 30, 2019 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Consumer: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Other consumer | $ | 131 |  |  | $ | 36 |  |  | $ | 167 |  |  | $ | 7,264 |  |  | $ | 7,431 |  |  | $ | 4 |
Real estate: |  |  |  |  |  |  |  |  |  |  |
Construction | 30 |  |  | 12 |  |  | 42 |  |  | 361,958 |  |  | 362,000 |  |  | — |
Single family residential | 3,664 |  |  | 1,790 |  |  | 5,454 |  |  | 499,036 |  |  | 504,490 |  |  | 17 |
Other commercial | 1,888 |  |  | 943 |  |  | 2,831 |  |  | 2,132,142 |  |  | 2,134,973 |  |  | — |
Total real estate | 5,582 |  |  | 2,745 |  |  | 8,327 |  |  | 2,993,136 |  |  | 3,001,463 |  |  | 17 |
Commercial: |  |  |  |  |  |  |  |  |  |  |
Commercial | 607 |  |  | 724 |  |  | 1,331 |  |  | 348,490 |  |  | 349,821 |  |  | — |
Agricultural | — |  |  | — |  |  | — |  |  | 872 |  |  | 872 |  |  | — |
Total commercial | 607 |  |  | 724 |  |  | 1,331 |  |  | 349,362 |  |  | 350,693 |  |  | — |
Total | $ | 6,320 |  |  | $ | 3,505 |  |  | $ | 9,825 |  |  | $ | 3,349,762 |  |  | $ | 3,359,587 |  |  | $ | 21 |
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 |
The following table presents a summary of loans acquired by credit risk rating, segregated by class of loans (see Note 4, 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
September 30, 2019 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Consumer: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Other consumer | $ | 7,285 |  |  | $ | — |  |  | $ | 146 |  |  | $ | — |  |  | $ | — |  |  | $ | 7,431 |
Real estate: |  |  |  |  |  |  |  |  |  |  |
Construction | 344,075 |  |  | 17,874 |  |  | 51 |  |  | — |  |  | — |  |  | 362,000 |
Single family residential | 492,826 |  |  | 1,224 |  |  | 10,312 |  |  | 128 |  |  | — |  |  | 504,490 |
Other commercial | 2,085,649 |  |  | 26,207 |  |  | 23,117 |  |  | — |  |  | — |  |  | 2,134,973 |
Total real estate | 2,922,550 |  |  | 45,305 |  |  | 33,480 |  |  | 128 |  |  | — |  |  | 3,001,463 |
Commercial: |  |  |  |  |  |  |  |  |  |  |
Commercial | 341,385 |  |  | 1,491 |  |  | 6,945 |  |  | — |  |  | — |  |  | 349,821 |
Agricultural | 804 |  |  | — |  |  | 68 |  |  | — |  |  | — |  |  | 872 |
Total commercial | 342,189 |  |  | 1,491 |  |  | 7,013 |  |  | — |  |  | — |  |  | 350,693 |
Total | $ | 3,272,024 |  |  | $ | 46,796 |  |  | $ | 40,639 |  |  | $ | 128 |  |  | $ | — |  |  | $ | 3,359,587 |
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 |
Loans acquired were individually evaluated and recorded at estimated fair value, including estimated credit losses, at the time of acquisition. These loans are systematically reviewed by the Company to determine the risk of losses that may exceed those identified at the time of the acquisition. Techniques used in determining risk of loss are similar to the Company’s legacy loan portfolio, with most focus being placed on those loans which include the larger loan relationships and those loans which exhibit higher risk characteristics. In addition to the accretable yield on loans acquired not considered to be impaired, the amount of the estimated cash flows expected to be received from the purchased credit impaired loans in excess of the fair values recorded for the purchased credit impaired loans is referred to as the accretable yield. The accretable yield is recognized as interest income over the estimated lives of the loans. Each quarter, the Company estimates the cash flows expected to be collected from the acquired purchased credit impaired loans, and adjustments may or may not be required. This has resulted in an increase in interest income that is spread on a level-yield basis over the remaining expected lives of the loans. Changes in the carrying amount of the accretable yield for all purchased impaired loans were as follows for the three and nine months ended September 30, 2019 and 2018.
| Three Months Ended September 30, 2019 |  | Nine Months Ended September 30, 2019
(In thousands) | Accretable Yield |  | Carrying Amount of Loans |  | Accretable Yield |  | Carrying Amount of Loans
Beginning balance | $ | 1,461 |  |  | $ | 3,487 |  |  | $ | 1,460 |  |  | $ | 4,050 |
Additions | — |  |  | — |  |  | — |  |  | 175 |
Accretable yield adjustments | 10 |  |  | — |  |  | 38 |  |  | — |
Accretion | (12 | ) |  | 12 |  |  | (39 | ) |  | 39 |
Payments and other reductions, net | — |  |  | (422 | ) |  | — |  |  | (1,187 | )
Balance, ending | $ | 1,459 |  |  | $ | 3,077 |  |  | $ | 1,459 |  |  | $ | 3,077 |
| Three Months Ended September 30, 2018 |  | Nine Months Ended September 30, 2018
(In thousands) | Accretable Yield |  | Carrying Amount of Loans |  | Accretable Yield |  | Carrying Amount of Loans
Beginning balance | $ | 1,382 |  |  | $ | 13,995 |  |  | $ | 620 |  |  | $ | 17,116 |
Additions | — |  |  | — |  |  | — |  |  | — |
Accretable yield adjustments | 717 |  |  | — |  |  | 1,895 |  |  | — |
Accretion | (635 | ) |  | 635 |  |  | (1,051 | ) |  | 1,051 |
Payments and other reductions, net | — |  |  | (9,664 | ) |  | — |  |  | (13,201 | )
Balance, ending | $ | 1,464 |  |  | $ | 4,966 |  |  | $ | 1,464 |  |  | $ | 4,966 |
Purchased impaired loans are evaluated on an individual borrower basis. Because some loans evaluated by the Company were determined to have experienced impairment in the estimated credit quality or cash flows, the Company recorded a provision and established an allowance for loan loss for loans acquired resulting in a total allowance on loans acquired of $597,000 at September 30, 2019 and $95,000 at December 31, 2018. The provision on loans acquired for the three and nine months ended September 30, 2019 was $0 and $2,464,000, respectively. The provision on loans acquired for the three and nine months ended September 30, 2018 was $0 and $1,837,000, respectively.

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