Loans and Allowance for Loan Losses (Tables)

12 Months Ended

Dec. 31, 2019

Loans are stated at the principal amount outstanding net of unearned discounts, unearned income and allowance for loan losses. Unearned income includes deferred loan origination fees reduced by loan origination costs and is amortized to interest income over the life of the related loan using methods that approximated the effective interest rate method. Interest on substantially all loans is credited to income based on the principal amount outstanding. A summary of loans at December 31, 2019 and 2018 follows (in thousands):



	2019		2018
Construction and land development	$	94,462	$	51,013
Farm loans	240,481		232,409
1-4 Family residential properties	336,553		374,751
Multifamily residential properties	155,132		186,393
Commercial real estate	997,175		911,656
Loans secured by real estate	1,823,803		1,756,222
Agricultural loans	136,023		136,125
Commercial and industrial loans	528,987		559,120
Consumer loans	83,544		92,744
All other loans	126,807		113,925
Gross loans	2,699,164		2,658,136
Less: Loans held for sale	1,820		1,508
	2,697,344		2,656,628
Less:
Net deferred loan fees, premiums and discounts	3,817		13,617
Allowance for loan losses	26,911		26,189
Net loans	$	2,666,616	$	2,616,822

Allowance for Loan Losses and Recorded Investment in Loans

The following tables present the balance in the allowance for loan losses and the recorded investment in loans based on portfolio segment and impairment method as of December 31, 2019, 2018 and 2017 (in thousands):



	Commercial/ Commercial Real Estate			Agricultural/ Agricultural Real Estate			Residential Real Estate			Consumer			Unallocated		Total
December 31, 2019
Allowance for loan losses:
Balance, beginning of year	$	21,556		$	2,197		$	1,504		$	932		$	—	$	26,189
Provision charged to expense	4,212			318			502			1,401			—		6,433
Losses charged off	(4,322		)	(45		)	(695		)	(1,264		)	—		(6,326		)
Recoveries	172			9			75			359			—		615
Balance, end of period	$	21,618		$	2,479		$	1,386		$	1,428		$	—	$	26,911
Ending balance:
Individually evaluated for impairment	$	548		$	8		$	176		$	1		$	—	$	733
Collectively evaluated for impairment	$	20,711		$	2,471		$	1,204		$	1,427		$	—	$	25,813
Loans acquired with deteriorated credit quality	$	359		$	—		$	6		$	—		$	—	$	365
Loans:
Ending balance	$	1,882,755		$	376,639		$	345,139		$	90,814		$	—	$	2,695,347
Ending Balance:
Individually evaluated for impairment	$	13,487		$	85		$	4,783		$	134		$	—	$	18,489
Collectively evaluated for impairment	$	1,864,688		$	376,554		$	339,985		$	90,680		$	—	$	2,671,907
Loans acquired with deteriorated credit quality	$	4,580		$	—		$	371		$	—		$	—	$	4,951



December 31, 2018
Allowance for loan losses:
Balance, beginning of year	$	16,546		$	1,742		$	886		$	803		$	—	$	19,977
Provision charged to expense	6,070			548			1,447			602			—		8,667
Losses charged off	(1,227		)	(93		)	(886		)	(787		)	—		(2,993		)
Recoveries	167			—			57			314			—		538
Balance, end of period	$	21,556		$	2,197		$	1,504		$	932		$	—	$	26,189
Ending balance:
Individually evaluated for impairment	$	1,816		$	—		$	225		$	3		$	—	$	2,044
Collectively evaluated for impairment	$	18,514		$	2,197		$	1,270		$	929		$	—	$	22,910
Loans acquired with deteriorated credit quality	$	1,226		$	—		$	9		$	—		$	—	$	1,235
Loans:
Ending balance	$	1,784,741		$	367,211		$	392,526		$	100,041		$	—	$	2,644,519
Ending balance:
Individually evaluated for impairment	$	14,422		$	32		$	2,360		$	166		$	—	$	16,980
Collectively evaluated for impairment	$	1,756,908		$	367,175		$	387,961		$	99,872		$	—	$	2,611,916
Loans acquired with deteriorated credit quality	$	13,411		$	4		$	2,205		$	3		$	—	$	15,623



	Commercial/ Commercial Real Estate			Agricultural/ Agricultural Real Estate			Residential Real Estate			Consumer			Unallocated			Total
December 31, 2017
Allowance for loan losses:
Balance, beginning of year	$	12,901		$	2,249		$	874		$	693		$	36		$	16,753
Provision charged to expense	6,884			153			100			361			(36		)	7,462
Losses charged off	(3,795		)	(662		)	(217		)	(521		)	—			(5,195		)
Recoveries	556			2			129			270			—			957
Balance, end of year	$	16,546		$	1,742		$	886		$	803		$	—		$	19,977
Ending balance:
Individually evaluated for impairment	$	586		$	2		$	25		$	1		$	—		$	614
Collectively evaluated for impairment	$	15,951		$	1,740		$	861		$	802		$	—		$	19,354
Loans acquired with deteriorated credit quality	$	9		$	—		$	—		$	—		$	—		$	9
Loans:
Ending balance	$	1,371,787		$	213,521		$	315,123		$	39,070		$	—		$	1,939,501
Ending balance:
Individually evaluated for impairment	$	11,372		$	488		$	1,026		$	200		$	—		$	13,086
Collectively evaluated for impairment	$	1,360,156		$	213,033		$	314,097		$	38,870		$	—		$	1,926,156
Loans acquired with deteriorated credit quality	$	259		$	—		$	—		$	—		$	—		$	259

Credit Risk Profile of the Company's Loan Portfolio

Loans not meeting the criteria above that are analyzed individually as part of the above described process are considered pass rated loans. The following tables present the credit risk profile of the Company’s loan portfolio based on rating category and payment activity as of December 31, 2019 and 2018 (in thousands):



	Construction & Land Development				Farm Loans				1-4 Family Residential Properties				Multifamily Residential Properties
	2019		2018		2019		2018		2019		2018		2019		2018
Pass	$	93,413	$	49,794	$	231,227	$	221,047	$	314,999	$	352,583	$	136,958	$	163,845
Special Mention	413		471		6,902		7,805		5,743		5,526		5,588		8,144
Substandard	316		354		2,112		2,848		15,685		15,409		11,402		12,062
Doubtful	—		—		—		—		—		—		—		—
Total	$	94,142	$	50,619	$	240,241	$	231,700	$	336,427	$	373,518	$	153,948	$	184,051



	Commercial Real Estate (Nonfarm/Nonresidential)				Agricultural Loans				Commercial & Industrial Loans				Consumer Loans
	2019		2018		2019		2018		2019		2018		2019		2018
Pass	$	966,585	$	861,086	$	129,811	$	127,863	$	479,233	$	535,186	$	82,117	$	90,133
Special Mention	8,568		16,035		3,862		7,581		37,602		9,967		140		177
Substandard	20,549		29,729		2,451		433		12,138		11,858		926		1,206
Doubtful	—		—		—		—		—		—		—		—
Total	$	995,702	$	906,850	$	136,124	$	135,877	$	528,973	$	557,011	$	83,183	$	91,516



	All Other Loans				Total Loans
	2019		2018		2019		2018
Pass	$	123,814	$	110,352	$	2,558,157	$	2,511,889
Special Mention	2,793		3,010		71,611		58,716
Substandard	—		15		65,579		73,914
Doubtful	—		—		—		—
Total	$	126,607	$	113,377	$	2,695,347	$	2,644,519

Loan Portfolio Aging Analysis

The following table presents the Company’s loan portfolio aging analysis at December 31, 2019 and 2018 (in thousands):



	30-59 days Past Due		60-89 days Past Due		90 Days or More Past Due		Total Past Due		Current		Total Loans Receivable		Total Loans > 90 days & Accruing
December 31, 2019
Construction and land development	$	235	$	—	$	—	$	235	$	93,907	$	94,142	$	—
Farm loans	1,595		—		47		1,642		238,599		240,241		—
1-4 Family residential properties	3,834		2,288		4,713		10,835		325,592		336,427		—
Multifamily residential properties	1,348		46		1,131		2,525		151,423		153,948		—
Commercial real estate	602		495		2,241		3,338		992,364		995,702		—
Loans secured by real estate	7,614		2,829		8,132		18,575		1,801,885		1,820,460		—
Agricultural loans	300		—		307		607		135,517		136,124		—
Commercial and industrial loans	767		855		5,989		7,611		521,362		528,973		—
Consumer loans	454		196		150		800		82,383		83,183		—
All other loans	—		—		—		—		126,607		126,607		—
Total loans	$	9,135	$	3,880	$	14,578	$	27,593	$	2,667,754	$	2,695,347	$	—
December 31, 2018
Construction and land development	$	460	$	43	$	—	$	503	$	50,116	$	50,619	$	—
Farm loans	—		804		—		804		230,896		231,700		—
1-4 Family residential properties	3,347		3,051		4,080		10,478		363,040		373,518		—
Multifamily residential properties	1,149		—		1,955		3,104		180,947		184,051		—
Commercial real estate	1,349		89		4,058		5,496		901,354		906,850		—
Loans secured by real estate	6,305		3,987		10,093		20,385		1,726,353		1,746,738		—
Agricultural loans	63		—		20		83		135,794		135,877		—
Commercial and industrial loans	1,417		10		3,902		5,329		551,682		557,011		—
Consumer loans	888		356		299		1,543		89,973		91,516		—
All other loans	697		—		—		697		112,680		113,377		—
Total loans	$	9,370	$	4,353	$	14,314	$	28,037	$	2,616,482	$	2,644,519	$	—

Impaired Loans

The following tables present impaired loans as of December 31, 2019 and 2018 (in thousands):



	2019						2018
	Recorded Balance		Unpaid Principal Balance		Specific Allowance		Recorded Balance		Unpaid Principal Balance		Specific Allowance
Loans with a specific allowance:
Construction and land development	$	256	$	256	$	—	$	2,559	$	2,559	$	14
Farm loans	—		—		—		—		—		—
1-4 Family residential properties	5,154		5,351		182		4,565		4,952		234
Multifamily residential properties	4,254		4,254		19		4,465		4,465		—
Commercial real estate	5,904		6,408		587		12,517		12,804		1,553
Loans secured by real estate	15,568		16,269		788		24,106		24,780		1,801
Agricultural loans	85		669		8		36		504		—
Commercial and industrial loans	7,653		8,789		301		8,292		8,723		1,475
Consumer loans	134		134		1		169		171		3
All other loans	—		—		—		—		—		—
Total loans	$	23,440	$	25,861	$	1,098	$	32,603	$	34,178	$	3,279
Loans without a specific allowance:
Construction and land development	$	41	$	41	$	—	$	48	$	48	$	—
Farm loans	479		479		—		309		309		—
1-4 Family residential properties	3,719		4,263		—		3,680		4,769		—
Multifamily residential properties	—		—		—		7,597		7,597		—
Commercial real estate	1,721		1,724		—		983		1,201		—
Loans secured by real estate	5,960		6,507		—		12,617		13,924		—
Agricultural loans	724		140		—		631		163		—
Commercial and industrial loans	916		3,065		—		1,660		2,027		—
Consumer loans	391		713		—		471		1,006		—
All other loans	—		—		—		6		6		—
Total loans	$	7,991	$	10,425	$	—	$	15,385	$	17,126	$	—
Total loans:
Construction and land development	$	297	$	297	$	—	$	2,607	$	2,607	$	14
Farm loans	479		479		—		309		309		—
1-4 Family residential properties	8,873		9,614		182		8,245		9,721		234
Multifamily residential properties	4,254		4,254		19		12,062		12,062		—
Commercial real estate	7,625		8,132		587		13,500		14,005		1,553
Loans secured by real estate	21,528		22,776		788		36,723		38,704		1,801
Agricultural loans	809		809		8		667		667		—
Commercial and industrial loans	8,569		11,854		301		9,952		10,750		1,475
Consumer loans	525		847		1		640		1,177		3
All other loans	—		—		—		6		6		—
Total loans	$	31,431	$	36,286	$	1,098	$	47,988	$	51,304	$	3,279

Impaired loans by portfolio class

The following tables present average recorded investment and interest income recognized on impaired loans for the years ended December 31, 2019, 2018 and 2017 (in thousands):



	2019				2018				2017
	Average Investment in Impaired Loans		Interest Income Recognized		Average Investment in Impaired Loans		Interest Income Recognized		Average Investment in Impaired Loans		Interest Income Recognized
Construction and land development	$	622	$	32	$	2,558	$	37	$	—	$	—
Farm loans	1,218		—		415		—		293		—
1-4 Family residential properties	9,659		80		6,297		144		3,267		29
Multifamily residential properties	6,490		89		9,666		137		377		1
Commercial real estate	12,189		234		9,818		271		5,457		13
Loans secured by real estate	30,178		435		28,754		589		9,394		43
Agricultural loans	808		3		727		23		878		—
Commercial and industrial loans	10,065		9		9,003		6		6,586		8
Consumer loans	649		1		131		1		325		—
All other loans	—		—		3		—		—		—
Total loans	$	41,700	$	448	$	38,618	$	619	$	17,183	$	51

The amount of interest income recognized by the Company within the periods stated above was due to loans modified in a troubled debt restructuring that remained on accrual status. The balance of loans modified in a troubled debt restructuring included in the impaired loans stated above that were still accruing was $1,382,000 of 1-4 Family residential properties, $1,146,000 of commercial real estate, $128,000 of commercial and industrial loans, $40,000 of agricultural loans, and $5,000 of consumer loans at December 31, 2019 and $1,769,000 of 1-4 Family residential properties, $676,000 of commercial real estate loans, and $6,000 of consumer loans at December 31, 2018. For the years ended December 31, 2019, 2018 and 2017, the amount of interest income recognized using a cash-basis method of accounting during the period that the loans were impaired was not material.

Nonaccrual Loans

The following table presents the Company’s recorded balance of nonaccrual loans at December 31, 2019 and December 31, 2018 (in thousands). This table excludes purchased credit-impaired loans and performing troubled debt restructurings.



	2019		2018
Construction and land development	$	41	$	377
Farm loans	479		309
1-4 Family residential properties	7,379		5,762
Multifamily residential properties	3,137		2,105
Commercial real estate	4,351		8,457
Loans secured by real estate	15,387		17,010
Agricultural loans	769		667
Commercial and industrial loans	8,441		8,990
Consumer loans	521		625
All other loans	—		6
Total loans	$	25,118	$	27,298

Schedule of Acquired Receivables With Credit Deterioration [Table Text Block]

The Company acquired certain loans considered to be credit-impaired in its business combination with First Clover Leaf during the third quarter of 2016, First Bank & Trust during the second quarter of 2018 and Soy Capital during the fourth quarter of 2018. At acquisition, these loans evidenced deterioration of credit quality since origination and it was probable, at acquisition, that all contractually required payments would not be collected. The carrying amount of these loans is included in the consolidated balance sheet amounts for Loans. The Company had no PCI loans prior to the First Clover Leaf acquisition. The amount of these loans at December 31, 2019 and 2018 are as follows (in thousands):



	December 31, 2019			December 31, 2018
Construction and land development	$	256		$	872
1-4 Family residential properties	371			206
Multifamily residential properties	2,077			891
Commercial real estate	2,247			946
Loans secured by real estate	4,951			2,915
Agricultural loans	—			4
Commercial and industrial loans	—			15
Consumer loans	—			3
Carrying amount	4,951			2,937
Allowance for loan losses	(365		)	(1,235		)
Carrying amount, net of allowance	$	4,586		$	1,702

Acquired Receivables With Credit Deterioration, Values at Acquisition [Table Text Block]

The PCI loans acquired during the twelve months ended December 31, 2018 for which it was probable that all contractually required payments would not be collected were as follows (in thousands):



	First Bank			Soy Capital
Contractually required payments	$	20,357		$	3,282
Non-accretable difference	(4,231		)	(688		)
Cash flows expected to be collected at acquisition	16,126			2,594
Accretable yield	—			—
Fair value of acquired loans at acquisition	$	16,126		$	2,594

Recorded Balance of Troubled Debt Restructurings

The following table presents the Company’s recorded balance of troubled debt restructurings at December 31, 2019 and 2018 (in thousands).



Troubled debt restructurings:	2019		2018
Construction and land development	$	—	$	—
1-4 Family residential properties	1,905		2,472
Multifamily residential properties	—		—
Commercial real estate	1,746		1,706
Loans secured by real estate	3,651		4,178
Agricultural loans	669		499
Commercial and industrial loans	1,349		5,112
Consumer Loans	134		167
Total	$	5,803	$	9,956
Performing troubled debt restructurings:
Construction and Land Development	$	—	$	—
1-4 Family residential properties	1,382		1769
Multifamily residential properties	—		—
Commercial real estate	1,146		676
Loans secured by real estate	2,528		2,445
Agricultural Loans	40		—
Commercial and industrial loans	128		—
Consumer Loans	5		6
Total	$	2,701	$	2,451