NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
Note 1 – Summary of Significant Accounting Policies
First Financial Bankshares, Inc. (a Texas corporation) (“Bankshares”, “Company,” “we” or “us”) is a financial holding company which owns all of the capital stock of one bank with 78 locations located in Texas as of June 30, 2021. The Company’s subsidiary bank is First Financial Bank, N.A. The Company’s primary source of revenue is providing loans and banking services to consumers and commercial customers in the market area in which First Financial Bank, N.A. is located. In addition, the Company also owns First Financial Trust & Asset Management Company, N.A., First Financial Insurance Agency, Inc. and First Technology Services, Inc.
A summary of significant accounting policies of the Company and its subsidiaries applied in the preparation of the accompanying consolidated financial statements follows. The accounting principles followed by the Company and the methods of applying them are in conformity with both United States generally accepted accounting principles (“GAAP”) and prevailing practices of the banking industry.
The Company evaluated subsequent events for potential recognition through the date the consolidated financial statements were issued.
Use of Estimates in Preparation of Financial Statements
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. The Company’s significant estimates include its allowance for credit losses and its valuation of financial instruments.
The accompanying consolidated financial statements include the accounts of the Company and its subsidiaries, all of which are wholly-owned. All significant intercompany accounts and transactions have been eliminated.
On March 12, 2020, the Company’s Board of Directors authorized the repurchase of up to 4,000,000 common shares through September 30, 2021. On July 27, 2021, the Company’s Board of Directors renewed the prior authorization and authorized the repurchase of up to 5,000,000 common shares through July 31, 2023. The stock repurchase plan authorizes management to repurchase and retire the stock at such time as repurchases and retirements are considered beneficial to the Company and stockholders. Any repurchase of stock will be made through the open market, block trades or in privately negotiated transactions in accordance with applicable laws and regulations. Under the repurchase plan, there is no minimum number of shares that the Company is required to repurchase. Through June 30, 2021, 324,802 shares were repurchased and retired (all during the months of March and April 2020) totaling $8,008,000 under this repurchase plan.
On January 1, 2020, the Company acquired 100% of the outstanding capital stock of TB&T Bancshares, Inc. through the merger of a wholly-owned subsidiary with and into TB&T Bancshares, Inc. Following such merger, TB&T Bancshares, Inc. and its wholly-owned subsidiary, The Bank & Trust of Bryan/College Station, Texas were merged into the Company and First Financial Bank, N.A., respectively. The results of operations of TB&T Bancshares, Inc. subsequent to the acquisition date, are included in the consolidated earnings of the Company. See Note 10 for additional information.
Adoption of New Accounting Standards
On January 1, 2020, ASU
2016-13,
Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments
, became effective for the Company. Accounting Standards Codification (“ASC” Topic 326 (“ASC 326”) replaced the previous “incurred loss” model for measuring credit losses with an expected loss methodology that is referred to as the current expected credit loss (“CECL”) methodology. The measurement of expected credit losses under the CECL methodology is applicable to financial assets measured at amortized cost, including loan receivables and
debt securities. It also applies to
off-balance-sheet
(“OBS”) credit exposures not accounted for as insurance (loan commitments, standby letters of credit, financial guarantees, and other similar instruments). In addition, ASC 326 made changes to the accounting for
debt securities. One such change is to require credit losses to be presented as an allowance rather than a write-down on
debt securities management does not intend to sell or believes that it is more likely than not they will be required to sell.
On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) was signed by the President of the United States that included an option for entities to delay the implementation of ASC 326 until the earlier of the termination date of the national emergency declaration by the President or December 31, 2020. Under this option, the Company elected to delay its implementation of CECL and calculated and recorded the provision for credit losses through the nine-months ended September 30, 2020 under the incurred loss model. At December 31, 2020, the Company elected to adopt ASC 326, effective as of January 1, 2020, through a transition charge to retained earnings of $589,000 ($466,000 net of applicable income taxes). This transition adjustment was comprised of a decrease of $619,000 in allowance for credit losses and an increase of $1,208,000 in the reserve for unfunded commitments.
With the adoption of ASC 326, we revised certain accounting policies and implemented certain accounting policy elections which are described below. For the 2020 interim reporting periods, the allowance for credit losses were based on the incurred loss methodology in accordance with accounting policies disclosed in Note 1 of the Consolidated Financial Statements included in the Company’s 2019 Form
10-K.
The Company adopted ASC 326 using the modified retrospective method for all financial assets measured at amortized cost, net investment in leases and OBS credit exposures.
The Company adopted ASC 326 using the prospective transition approach for securities for which other-than-temporary impairment had been recognized prior to January 1, 2020. As a result, the amortized cost basis remains the same before and after the effective date of ASC 326. The effective interest rate on these debt securities was not changed.
The Company adopted ASC 326 using the prospective transition approach for financial assets purchased with credit deterioration (“PCD”) that were previously classified as purchased credit impaired (“PCI”) and accounted for under ASC
310-30.
In accordance with the standard, management did not reassess whether PCI assets met the criteria of PCD assets as of the date of adoption. For the periods ended June 30, 2021 and 2020, and December 31, 2020, amounts related to the Company’s PCD and PCI loans were insignificant and disclosures related to these balances have been omitted.
Other Recently Issued and Effective Authoritative Accounting Guidance
ASU
2017-04,
“Intangibles – Goodwill and Other.”
ASU
2017-04
amended and simplified current goodwill impairment testing to eliminate Step 2 from the current provisions. Under the new guidance, an entity should perform the goodwill impairment test by comparing the fair value of a reporting unit with its carrying value and recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value. An entity still has the option to perform the qualitative assessment for a reporting unit to determine if a quantitative impairment test is necessary. ASU
2017-04
became effective for the Company on January 1, 2020 and did not have a significant impact on the Company’s financial statements.
Fair Value Measurement (Topic 820). – Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement.
ASU
2018-13
modified the disclosure requirements on fair value measurements in Topic 820. The amendments in ASU
2018-13
remove disclosures that no longer are considered cost beneficial, modify/clarify the specific requirements of certain disclosures, and add disclosure requirements identified as relevant. ASU
2018-13
became effective on January 1, 2020 and did not have a significant impact on the Company’s financial statements.
ASU
2019-12,
“Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes.”
ASU
2019-12,
simplifies the accounting for income taxes by eliminating certain exceptions related to the approach for intra-period tax aspects of the accounting for franchise taxes and enacted changes in tax laws or rates and clarifies the accounting for transactions that result in a
step-up
in the tax basis of goodwill. ASU
2019-12
was effective for the Company for annual reporting periods after December 15, 2020, and interim periods within. Adoption of ASU
2019-12
did not have a significant impact on the Company’s financial statements and related disclosures.
ASU
2020-04,
“Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting.”
ASU
2020-04
provides optional expedients and exceptions for accounting related to contracts, hedging relationships and other transactions affected by reference rate reform if certain criteria are met. ASU
2020-04
applies only to contracts, hedging relationships, and other transactions that reference the London Interbank Offered Rate (“LIBOR”) or another reference rate expected to be discontinued because of reference rate reform and do not apply to contract modifications made and hedging relationships entered into or evaluated after December 31, 2022, except for hedging relationships existing as of December 31, 2022, that an entity has elected certain optional expedients for and that are retained through the end of the hedging relationship. ASU
2020-04
was effective upon issuance and generally can be applied through December 31, 2022. The adoption of ASU
2020-04
did not have a significant impact on our financial statements.
ASU
2021-01,
“Reference Rate Reform (Topic 848): Scope.”
ASU
2021-01
clarifies that certain optional expedients and exceptions in ASC 848 for contract modifications and hedge accounting apply to derivatives that are affected by the discounting transition. ASU
2021-01
also amends the expedients and exceptions in ASC 848 to capture the incremental consequences of the scope clarification and to tailor the existing guidance to derivative instruments affected by the discounting transition. ASU
2021-01
was effective upon issuance and generally can be applied through December 31, 2022. The adoption of ASU
2021-01
did not have a significant impact on our financial statements.
Management classifies debt securities as
or trading based on its intent. Securities that management has the positive intent and ability to hold to maturity are classified as
and recorded at amortized cost, adjusted for amortization of premiums and accretion of discounts, which are recognized as adjustments to interest income using the interest method. Securities not classified as
or trading are classified as
and recorded at fair value, with unrealized holding gains and losses (those for which no allowance for credit losses are recorded) reported as a component of other comprehensive income, net of tax. Management determines the appropriate classification of securities at the time of purchase.
Interest income includes amortization of purchase premiums and discounts over the period to maturity using a level-yield method, except for premiums on callable securities, which are amortized to their earliest call date. Realized gains and losses are recorded on the sale of securities in noninterest income.
The Company has made a policy election to exclude accrued interest from the amortized cost basis of securities and report accrued interest separately in other assets on the consolidated balance sheets. A security is placed on
non-accrual
status at the time any principal or interest payments become more than 90 days delinquent or if full collection of interest or principal becomes uncertain. Accrued interest for a security placed on
non-accrual
is reversed against interest income. There was no accrued interest related to securities reversed against interest income for the three and
six-months
ended June 30, 2021 and 2020.
The Company records its
securities portfolio at fair value. Fair values of these securities are determined based on methodologies in accordance with current authoritative accounting guidance. Fair values are volatile and may be influenced by a number of factors, including market interest rates, prepayment speeds, discount rates, credit ratings and yield curves. Fair values for securities are based on quoted market prices, where available. If quoted market prices are not available, fair values are based on the quoted prices of similar instruments or an estimate of fair value by using a range of fair value estimates in the marketplace as a result of the illiquid market specific to the type of security.
The Company’s investment portfolio currently consists of obligations of state and political subdivisions, mortgage pass-through securities, corporate bonds and general obligation or revenue based municipal bonds. Pricing for such securities is generally readily available and transparent in the market. The Company utilizes independent third-party pricing services to value its investment securities, which the Company reviews as well as the underlying pricing methodologies for reasonableness and to ensure such prices are aligned with pricing matrices. The Company validates prices supplied by the independent pricing services by comparison to prices obtained from other third-party sources on a quarterly basis.
Allowance for Credit Losses –
Securities
For
securities in an unrealized loss position, we first assess whether we intend to sell, or it is more likely than not that we will be required to sell the security before recovery of its amortized cost basis. If either of the criteria regarding intent or requirement to sell is met, any previously recognized allowances are
charged-off
and the security’s amortized cost basis is written down to fair value through income as a provision for credit losses. For
securities that do not meet the aforementioned criteria, we evaluate whether the decline in fair value has resulted from credit losses or other factors. In making this assessment, management considers the extent to which fair value is less than amortized cost, any changes to the rating of the security by a rating agency, and adverse conditions specifically related to the security, among other factors. If this assessment indicates that a credit loss exists, the present value of cash flows expected to be collected from the security are compared to the amortized cost basis of the security. If the present value of cash flows expected to be collected is less than the amortized cost basis, a credit loss exists and an allowance for credit losses is recorded for the credit loss, limited by the amount that the fair value is less than the amortized cost basis. Any impairment that has not been recorded through an allowance for credit losses is recognized in other comprehensive income.
Management has made the accounting policy election to exclude accrued interest receivable on
securities from the estimate of credit losses. Changes in the allowance for credit losses are recorded as provision for (or reversal of) credit losses.
securities are
charged-off
against the allowance or, in the absence of any allowance, written down through income when deemed uncollectible by management or when either of the aforementioned criteria regarding intent or requirement to sell is met.
Prior to the adoption of ASC 326, declines in the fair value of securities below their cost that were deemed to be other-than-temporary were reflected in earnings as realized losses. In estimating other-than-temporary impairment losses prior to the adoption, management considered, among other things, the length of time and the extent to which the fair value had been less than cost, the financial condition and near-term prospects of the issuer and the intent and our ability to retain our investment in the issuer for a period of time sufficient to allow for any anticipated recovery in fair value.
Allowance
for Credit Losses – Held-to-Maturity
Securities
The allowance for credit losses on
securities is a contra-asset valuation account, calculated in accordance with ASC 326, that is deducted from the amortized cost basis of
securities to present management’s best estimate of the net amount expected to be collected.
securities are
charged-off
against the allowance when deemed uncollectible by management. Adjustments to the allowance are reported in our income statement as a component of credit loss expense. Management measures expected credit losses on
securities on a collective basis by major security type with each type sharing similar risk characteristics and considers historical credit loss information that is adjusted for current conditions and reasonable and supportable forecasts. Management has made the accounting policy election to exclude accrued interest receivable on
securities from the estimate of credit losses.
At June 30, 2021, 2020 and December 31, 2020, the Company held no securities that were classified as
Loans that management has the intent and ability to hold for the foreseeable future or until maturity or payoff are reported at amortized cost, net of the allowance for credit losses. Amortized cost is the principal balance outstanding, net of purchase premiums and discounts, fair value hedge accounting adjustments, deferred loan fees and costs. The Company has made a policy election to exclude accrued interest from the amortized cost basis of loans and report accrued interest separately from the related loan balance in other assets on the condensed consolidated balance sheets.
Interest on loans is calculated by using the simple interest method on daily balances of the principal amounts outstanding. The Company defers and amortizes net loan origination fees and costs as an adjustment to yield.
Loans are considered past due if the required principal and interest payments have not been received as of the date such payments were due. Loans are placed on
non-accrual
status when, in management’s opinion, the borrower may be unable to meet payment obligations as they become due, as well as when required by regulatory provisions. In determining whether or not a borrower may be unable to meet payment obligations for each class of loans, we consider the borrower’s debt service capacity through the analysis of current financial information, if available, and/or current information with regards to our collateral position. Regulatory provisions would typically require the placement of a loan on
non-accrual
status if principal or interest has been in default for a period of 90 days or more unless the loan is both well secured and in the process of collection or full payment of principal and interest is not expected. Loans may be placed on
non-accrual
status regardless of whether or not such loans are considered past due. When interest accrual is discontinued, all unpaid accrued interest is reversed. Interest income on
non-accrual
loans is recognized only to the extent that cash payments are received in excess of principal due. A loan may be returned to accrual status when all the principal and interest amounts contractually due are brought current and future principal and interest amounts contractually due are reasonably assured.
Prior to the adoption of ASC 326, loans were reported as impaired when, based on then current information and events, it was probable we would be unable to collect all amounts due in accordance with the original contractual terms of the loan agreement, including scheduled principal and interest payments. Impairment was evaluated in total for smaller-balance loans of a similar nature and on an individual loan
basis for other loans. If a loan was impaired, a specific valuation allowance was allocated, if necessary, so that the loan was reported net, at the present value of estimated future cash flows using the loan’s existing rate or at the fair value of collateral if repayment was expected solely from the collateral. Interest payments on impaired loans were typically applied to principal unless collectability of the principal amount was reasonably assured, in which case interest was recognized on a cash basis. Impaired loans, or portions thereof, were charged off when deemed uncollectible.
Further information regarding our accounting policies related to past due loans,
non-accrual
loans and troubled-debt restructurings is presented in Note 3.
Loans acquired in connection with acquisitions are recorded at their acquisition-date fair value. The allowance for credit losses related to the acquired loan portfolio is not carried over. Acquired loans are classified into two categories based on the credit risk characteristics of the underlying borrowers as either purchased credit deteriorated (“PCD”) loans, or loans with no evidence of credit deterioration
(“non-PCD”).
PCD loans are defined as a loan or pool of loans that have experienced more-than-insignificant credit deterioration since the origination date. The Company uses a combination of individual and pooled review approaches to determine if acquired loans are PCD. At acquisition, the Company considers a number of factors to determine if an acquired loan or pool of loans has experienced more-than-insignificant credit deterioration.
The initial allowance related to PCD loans that share similar risk characteristics is established using a pooled approach. The Company uses either a discounted cash flow or weighted average remaining life method to determine the required level of the allowance. PCD loans that were classified as
non-accrual
as of the acquisition date and are collateral dependent are assessed for allowance on an individual basis.
For PCD loans, an initial allowance is established on the acquisition date and combined with the fair value of the loan to arrive at acquisition date amortized cost.
Subsequent to the acquisition date, the initial allowance for credit losses on PCD loans will increase or decrease based on future evaluations, with changes recognized in the provision for credit losses.
Non-PCD
loans are pooled into segments together with originated loans that share similar risk characteristics and have an allowance established on the acquisition date, which is recognized in the current period provision for credit losses.
Determining the fair value of the acquired loans involves estimating the principal and interest payment cash flows expected to be collected on the loans and discounting those cash flows at a market rate of interest. Management considers a number of factors in evaluating the acquisition-date fair value including the remaining life, interest rate profile, market interest rate environment, payment schedules, risk ratings, probability of default and loss given default, and estimated prepayment rates. For PCD loans, the
non-credit
discount or premium is allocated to individual loans as determined by the difference between the loan’s unpaid principal balance and amortized cost basis. The
non-credit
premium or discount is recognized into interest income on a level yield basis over the remaining expected life of the loan. For
non-PCD
loans, the fair value discount or premium is allocated to individual loans and recognized into interest income on a level yield basis over the remaining expected life of the loan.
Prior to the adoption of ASC 326, loans acquired in a business combination that had evidence of credit impairment and for which it was probable, at acquisition, that the Company would be unable to collect all contractually required payments receivable were considered PCI. PCI loans were accounted for individually or aggregated into pools of loans based on common risk characteristics such as credit grade, loan type, and date of origination.
Allowance for Credit Losses - Loans
The allowance for credit losses (“allowance” or “ACL”) is a contra-asset valuation account, calculated in accordance with ASC 326, that is deducted from the amortized cost basis of loans. The ACL represents an amount which, in management’s judgement, is adequate to absorb the lifetime expected credit losses that may be experienced on outstanding loans at the balance sheet date based on the evaluation of the size and current risk characteristics of the loan portfolio, past events, current conditions, reasonable and supportable forecasts of future economic conditions and prepayment experience. The allowance for credit losses is measured and recorded upon the initial recognition of a financial asset. Determination of the adequacy of the allowance is inherently complex and requires the use of significant and highly subjective estimates. Loans are
charged-off
against the allowance when deemed uncollectible by management. Expected recoveries do not exceed the aggregate of amounts previously
charged-off
and expected to be
charged-off.
Adjustments to the allowance are reported in our income statement as a component of the provision for credit losses. Management has made the accounting policy election to exclude accrued interest receivable on loans from the estimate of credit losses.
The Company’s methodology for estimating the allowance includes: (1) a collective quantified reserve that reflects the Company’s historical default and loss experience adjusted for expected economic conditions throughout a reasonable and supportable forecast period, including the Company’s expected prepayment and curtailment rates; (2) collective qualitative factors that consider concentrations of the loan portfolio, expected changes to the economic forecasts, notable changes in a loan segments economic environment, large relationships, early delinquencies, and factors related to credit administrations, including, among others,
ratios, borrowers’ risk rating and credit score migrations; and (3) individual allowances on loans where borrowers are experiencing financial difficulty or when the Company determines that the foreclosure is probable.
In calculating the allowance for credit losses, most loans are segmented into pools based upon similar characteristics and risk profiles. Common characteristics and risk profiles include the type/purpose of loan, underlying collateral, geographical similarity and historical/expected credit loss patterns. In developing these loan pools for the purposes of modeling expected credit losses, we also analyzed the degree of correlation in how loans within each portfolio respond when subjected to varying economic conditions and scenarios as well as other portfolio stress factors. For modeling purposes, our loan portfolio segments include Commercial and Industrial (“C&I”), Municipal, Agricultural, Construction and Development, Farm,
Non-Owner
Occupied and Owner Occupied Commercial Real Estate (“CRE”), Residential, Consumer Auto and Consumer
Non-Auto.
We periodically reassess each pool to ensure the loans within the pool continue to share similar characteristics and risk profiles and to determine whether further segmentation is necessary. Refer to Note 3 for more details on the Company’s portfolio segments.
The Company applies two methodologies to estimate the allowance on its pooled portfolio segments; discounted cash flows method and weighted average remaining life method. Allowance estimates on the following portfolio segments are calculated using the discounted cash flows method: C&I, Municipal, Construction and Development, Farm,
Non-Owner
Occupied and Owner Occupied CRE and Residential. Allowance estimates on the following portfolio segments are calculated using the remaining life method: Agriculture, Consumer Auto and Consumer
Non-Auto.
The models related to these methodologies utilize the Company’s historical default and loss experience adjusted for future economic forecasts. The reasonable and supportable forecast period represents a
one-year
economic outlook for the applicable economic variables. Following the end of the reasonable and supportable forecast period, expected losses revert back to the historical mean over the next two years on a straight-line basis. Economic variables that have the most significant impact on the allowance include; Texas unemployment rate, Texas house price index and Texas retail sales index. Contractual loan level cash flows within the discounted cash flows methodology are adjusted for the Company’s historical prepayment and curtailment rate experience.
In some cases, management may determine that an individual loan exhibits unique risk characteristics which differentiate the loan from other loans within our loan pools. In such cases, the loans are evaluated for expected credit losses on an individual basis and excluded from the collective evaluation. Specific
allocations of the allowance for credit losses are determined by analyzing the borrower’s ability to repay amounts owed, collateral deficiencies, the relative risk rating of the loan and economic conditions affecting the borrower’s industry, among other things. A loan is considered to be collateral dependent when, based upon management’s assessment, the borrower is experiencing financial difficulty and repayment is expected to be provided substantially through the sale of the collateral. In such cases, expected credit losses are based on the fair value of the collateral at the measurement date, adjusted for estimated selling costs if satisfaction of the loan depends on the sale of the collateral. We reevaluate the fair value of collateral supporting collateral dependent loans on an ongoing basis.
Management qualitatively adjusts model results for risk factors that are not considered within our modeling processes but are nonetheless relevant in assessing the expected credit losses within our loan pools. These qualitative factor
(“Q-Factor”)
adjustments may increase or decrease management’s estimate of expected credit losses by a calculated percentage or amount based upon the estimated level of risk. The various risks that may be considered in making
Q-Factor
adjustments include, among other things, the impact of (i) changes in lending policies and procedures, including changes in underwriting standards and practices for collections, write-offs, and recoveries, (ii) actual and expected changes in national, regional, and local economic and business conditions and developments that affect the collectability of the loan pools, (iii) changes in the nature, volume and size of a loan or the loan pools and in the terms of the underlying loans, (iv) changes in the experience, ability, and depth of our lending management and staff, (v) changes in volume and severity of past due financial assets, the volume of
non-accrual
assets, and the volume and severity of adversely classified or graded assets, (vi) changes in the quality of our credit review function, (vii) changes in the value of the underlying collateral for loans that are
non-collateral
dependent, (viii) the existence, growth, and effect of any concentrations of credit and (ix) other factors such as the regulatory, legal and technological environments, competition, and events such as natural disasters or health pandemics.
Management believes it uses relevant information available to make determinations about the allowance and that it has established the existing allowance in accordance with GAAP. However, the determination of the allowance requires significant judgment, and estimates of expected lifetime losses in the loan portfolio can vary significantly from the amounts actually observed. While management uses available information to recognize expected losses, future additions to the allowance may be necessary based on changes in the loans comprising the portfolio, changes in the current and forecasted economic conditions, changes to the interest rate environment which may directly impact prepayment and curtailment rate assumptions, and changes in the financial condition of borrowers.
The adoption of the CECL standard did not result in a significant change to any other credit risk management and monitoring processes, including identification of past due or delinquent borrowers,
non-accrual
practices, assessment of troubled debt restructurings or
charge-off
policies.
Allowance for Credit Losses -
Off-Balance-Sheet/Reserve
for Unfunded Commitments
The allowance for credit losses on
off-balance-sheet
credit exposures is a liability account, calculated in accordance with ASC 326, representing expected credit losses over the contractual period for which we are exposed to credit risk resulting from a contractual obligation to extend credit. These obligations include unfunded lines of credit, commitments to extend credit and federal funds sold to correspondent banks and standby letters of credit. No allowance is recognized if we have the unconditional right to cancel the obligation. The allowance is reported as a component of accrued interest payable and other liabilities in our consolidated balance sheets. Adjustments to the allowance are reported in our income statement as a component of the provision for credit losses. At June 30, 2021, 2020 and December 31, 2020, the Company’s reserve for unfunded commitments totaled $6,751,000, $809,000 and $5,486,000, respectively, which is reported in other liabilities.
Other real estate owned is foreclosed property held pending disposition and is initially recorded at fair value, less estimated costs to sell. At foreclosure, if the fair value of the real estate, less estimated costs to sell, is less than the Company’s recorded investment in the related loan, a write-down is recognized through a charge to the allowance for credit losses. Any subsequent reduction in value is recognized by a charge to income. Operating and holding expenses of such properties, net of related income, and gains and losses on their disposition are included in net gain (loss) on sale of foreclosed assets as incurred.
Bank Premises and Equipment
Bank premises and equipment are stated at cost less accumulated depreciation and amortization. Depreciation and amortization are computed principally on a straight-line basis over the estimated useful lives of the related assets. Leasehold improvements are amortized over the life of the respective lease or the estimated useful lives of the improvements, whichever is shorter.
Business Combinations, Goodwill and Other Intangible Assets
The Company accounts for all business combinations under the purchase method of accounting. Tangible and intangible assets and liabilities of the acquired entity are recorded at fair value. Intangible assets with finite useful lives represent the future benefit associated with the acquisition of the core deposits and are amortized over seven years, utilizing a method that approximates the expected attrition of the deposits. Goodwill with an indefinite life is not amortized, but rather tested annually for impairment as of June 30 each year. There was no impairment recorded for the three or
six-months
ended June 30, 2021 or 2020, respectively.
Securities Sold Under Agreements To Repurchase
Securities sold under agreements to repurchase, which are classified as borrowings, generally mature within one to four days from the transaction date. Securities sold under agreements to repurchase are reflected at the amount of the cash received in connection with the transaction. The Company may be required to provide additional collateral based on the estimated fair value of the underlying securities.
The Company has determined that its banking regions meet the aggregation criteria of the current authoritative accounting guidance since each of its banking regions offer similar products and services, operate in a similar manner, have similar customers and report to the same regulatory authority, and therefore operate one line of business (community banking) located in a single geographic area (Texas).
For purposes of reporting cash flows, cash and cash equivalents includes cash on hand, amounts due from banks, including interest-bearing demand deposits in banks with original maturity of 90 days or less, and federal funds sold.
Accumulated Other Comprehensive Earnings (Loss)
Unrealized net gains on the Company’s
securities (after applicable income taxes) totaling $136,486,000, $151,236,000 and $170,395,000 at June 30, 2021 and 2020, and December 31, 2020, respectively, are included in accumulated other comprehensive earnings.
The Company’s provision for income taxes is based on income before income taxes adjusted for permanent differences between financial reporting and taxable income. Deferred tax assets and liabilities are determined using the liability (or balance sheet) method. Under this method, the net deferred tax asset or liability is determined based on the tax effects of the temporary differences between the book and tax bases of the various balance sheet assets and liabilities and gives current recognition to changes in tax rates and laws.
The Company grants stock options for a fixed number of shares to employees with an exercise price equal to the fair value of the shares at the grant date. The grant date fair value is amortized over the shorter of the service period or vesting period which generally is six years. The Company also grants restricted stock for a fixed number of shares. The grant date fair value is amortized over the vesting period which generally is one to three years. See Note 8 for further information.
Advertising costs are expensed as incurred.
Net earnings per share (“EPS”) are computed by dividing net earnings by the weighted average number of common shares outstanding during the period. The Company calculates dilutive EPS assuming all outstanding stock options to purchase common shares and unvested restricted stock shares have been exercised and/or vested at the beginning of the year (or the time of issuance, if later.) The dilutive effect of the outstanding options and restricted stock is reflected by application of the treasury stock method, whereby the proceeds from the exercised options and unearned compensation for both restricted stock and stock options are assumed to be used to purchase common shares at the average market price during the respective period. There were no anti-dilutive shares for the three or
six-months
ended June 30, 2021. There were 448,000 and 35,000 anti-dilutive shares for the three and
six-months
ended June 30, 2020, respectively. The following table reconciles the computation of basic EPS to diluted EPS:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
|
|
|
Weighted
|
|
|
|
|
|
|
Earnings
|
|
|
Average
|
|
|
Per Share
|
|
|
|
(in thousands)
|
|
|
Shares
|
|
|
Amount
|
|
For the three-months ended June 30, 2021:
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings per share, basic
|
|
$
|
56,379
|
|
|
|
142,245,555
|
|
|
$
|
0.40
|
|
Effect of stock options and stock grants
|
|
|
—
|
|
|
|
919,056
|
|
|
|
(0.01
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings per share, diluted
|
|
$
|
56,379
|
|
|
|
143,164,611
|
|
|
$
|
0.39
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
|
|
|
Weighted
|
|
|
|
|
|
|
Earnings
|
|
|
Average
|
|
|
Per Share
|
|
|
|
(in thousands)
|
|
|
Shares
|
|
|
Amount
|
|
For the
six-months
ended June 30, 2021:
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings per share, basic
|
|
$
|
113,297
|
|
|
|
142,196,190
|
|
|
$
|
0.80
|
|
Effect of stock options and stock grants
|
|
|
—
|
|
|
|
906,418
|
|
|
|
(0.01
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings per share, diluted
|
|
$
|
113,297
|
|
|
|
143,102,608
|
|
|
$
|
0.79
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
|
|
|
Weighted
|
|
|
|
|
|
|
Earnings
|
|
|
Average
|
|
|
Per Share
|
|
|
|
(in thousands)
|
|
|
Shares
|
|
|
Amount
|
|
For the three-months ended June 30, 2020:
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings per share, basic
|
|
$
|
53,470
|
|
|
|
141,973,522
|
|
|
$
|
0.38
|
|
Effect of stock options and stock grants
|
|
|
—
|
|
|
|
480,561
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings per share, diluted
|
|
$
|
53,470
|
|
|
|
142,454,083
|
|
|
$
|
0.38
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
|
|
|
Weighted
|
|
|
|
|
|
|
Earnings
|
|
|
Average
|
|
|
Per Share
|
|
|
|
(in thousands)
|
|
|
Shares
|
|
|
Amount
|
|
For the
six-months
ended June 30, 2020:
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings per share, basic
|
|
$
|
90,701
|
|
|
|
142,045,779
|
|
|
$
|
0.64
|
|
Effect of stock options and stock grants
|
|
|
—
|
|
|
|
473,529
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings per share, diluted
|
|
$
|
90,701
|
|
|
|
142,519,308
|
|
|
$
|
0.64
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Debt securities have been classified in the consolidated balance sheets according to management’s intent. The amortized cost, related gross unrealized gains and losses, allowance for credit losses and the fair value of
securities are as follows (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2021
|
|
|
|
|
|
|
Gross
|
|
|
Gross
|
|
|
|
|
|
|
Amortized
|
|
|
Unrealized
|
|
|
Unrealized
|
|
|
Estimated
|
|
|
|
Cost Basis
|
|
|
Holding Gains
|
|
|
Holding Losses
|
|
|
Fair Value
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Obligations of states and political subdivisions
|
|
$
|
2,490,468
|
|
|
$
|
125,612
|
|
|
$
|
(993
|
)
|
|
$
|
2,615,087
|
|
Residential mortgage-backed securities
|
|
|
2,471,278
|
|
|
|
38,619
|
|
|
|
(5,711
|
)
|
|
|
2,504,186
|
|
Commercial mortgage-backed securities
|
|
|
405,146
|
|
|
|
15,822
|
|
|
|
—
|
|
|
|
420,968
|
|
Corporate bonds and other
|
|
|
38,297
|
|
|
|
91
|
|
|
|
(581
|
)
|
|
|
37,807
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
5,405,189
|
|
|
$
|
180,144
|
|
|
$
|
(7,285
|
)
|
|
$
|
5,578,048
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2020
|
|
|
|
|
|
|
Gross
|
|
|
Gross
|
|
|
|
|
|
|
Amortized
|
|
|
Unrealized
|
|
|
Unrealized
|
|
|
Estimated
|
|
|
|
Cost Basis
|
|
|
Holding Gains
|
|
|
Holding Losses
|
|
|
Fair Value
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
10,083
|
|
|
$
|
40
|
|
|
$
|
(1
|
)
|
|
$
|
10,122
|
|
Obligations of states and political subdivisions
|
|
|
1,836,572
|
|
|
|
113,757
|
|
|
|
(50
|
)
|
|
|
1,950,279
|
|
Residential mortgage-backed securities
|
|
|
1,517,139
|
|
|
|
54,652
|
|
|
|
(118
|
)
|
|
|
1,571,673
|
|
Commercial mortgage-backed securities
|
|
|
559,062
|
|
|
|
23,159
|
|
|
|
(1
|
)
|
|
|
582,220
|
|
Corporate bonds and other
|
|
|
4,398
|
|
|
|
171
|
|
|
|
—
|
|
|
|
4,569
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
3,927,254
|
|
|
$
|
191,779
|
|
|
$
|
(170
|
)
|
|
$
|
4,118,863
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2020
|
|
|
|
|
|
|
Gross
|
|
|
Gross
|
|
|
|
|
|
|
Amortized
|
|
|
Unrealized
|
|
|
Unrealized
|
|
|
Estimated
|
|
|
|
Cost Basis
|
|
|
Holding Gains
|
|
|
Holding Losses
|
|
|
Fair Value
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Obligations of states and political subdivisions
|
|
$
|
2,283,616
|
|
|
$
|
143,339
|
|
|
$
|
(79
|
)
|
|
$
|
2,426,876
|
|
Residential mortgage-backed securities
|
|
|
1,421,922
|
|
|
|
50,473
|
|
|
|
(115
|
)
|
|
|
1,472,280
|
|
Commercial mortgage-backed securities
|
|
|
467,243
|
|
|
|
22,077
|
|
|
|
(4
|
)
|
|
|
489,316
|
|
Corporate bonds and other
|
|
|
4,398
|
|
|
|
159
|
|
|
|
—
|
|
|
|
4,557
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
4,177,179
|
|
|
$
|
216,048
|
|
|
$
|
(198
|
)
|
|
$
|
4,393,029
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Company did not hold any securities classified as
at June 30, 2021, June 30, 2020, or December 31, 2020.
The Company invests in mortgage-backed securities that have expected maturities that differ from their contractual maturities. These differences arise because borrowers may have the right to call or prepay obligations with or without a prepayment penalty. These securities include collateralized mortgage obligations (CMOs) and other asset backed securities. The expected maturities of these securities at June 30, 2021 and 2020, and December 31, 2020, were computed by using scheduled amortization of balances and historical prepayment rates.
The amortized cost and estimated fair value of
securities at June 30, 2021, by contractual and expected maturity, are shown below (in thousands):
|
|
|
|
|
|
|
|
|
|
|
Amortized
|
|
|
Estimated
|
|
|
|
Cost Basis
|
|
|
Fair Value
|
|
Due within one year
|
|
$
|
297,211
|
|
|
$
|
301,535
|
|
Due after one year through five years
|
|
|
2,493,104
|
|
|
|
2,586,178
|
|
Due after five years through ten years
|
|
|
2,506,074
|
|
|
|
2,581,554
|
|
Due after ten years
|
|
|
108,800
|
|
|
|
108,781
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
5,405,189
|
|
|
$
|
5,578,048
|
|
|
|
|
|
|
|
|
|
|
The following tables disclose the Company’s investment securities that have been in a continuous
unrealized-loss
position for less than 12 months and for 12 or more months (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair Value
|
|
|
Unrealized
Loss
|
|
|
Fair Value
|
|
|
Unrealized
Loss
|
|
|
Fair Value
|
|
|
Unrealized
Loss
|
|
Obligations of states and political subdivisions
|
|
$
|
170,483
|
|
|
$
|
992
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
170,483
|
|
|
$
|
992
|
|
Residential mortgage-backed securities
|
|
|
712,100
|
|
|
|
5,706
|
|
|
|
2,478
|
|
|
|
6
|
|
|
|
714,578
|
|
|
|
5,712
|
|
Commercial mortgage-backed securities
|
|
|
866
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
866
|
|
|
|
—
|
|
Corporate bonds and other
|
|
|
33,318
|
|
|
|
581
|
|
|
|
—
|
|
|
|
—
|
|
|
|
33,318
|
|
|
|
581
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
916,767
|
|
|
$
|
7,279
|
|
|
$
|
2,478
|
|
|
$
|
6
|
|
|
$
|
919,245
|
|
|
$
|
7,285
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair Value
|
|
|
Unrealized
Loss
|
|
|
Fair Value
|
|
|
Unrealized
Loss
|
|
|
Fair Value
|
|
|
Unrealized
Loss
|
|
|
|
$
|
5,055
|
|
|
$
|
1
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
5,055
|
|
|
$
|
1
|
|
Obligations of states and political subdivisions
|
|
|
18,249
|
|
|
|
50
|
|
|
|
—
|
|
|
|
—
|
|
|
|
18,249
|
|
|
|
50
|
|
Residential mortgage-backed securities
|
|
|
12,590
|
|
|
|
45
|
|
|
|
6,454
|
|
|
|
73
|
|
|
|
19,044
|
|
|
|
118
|
|
Commercial mortgage-backed securities
|
|
|
4,936
|
|
|
|
1
|
|
|
|
—
|
|
|
|
—
|
|
|
|
4,936
|
|
|
|
1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
40,830
|
|
|
$
|
97
|
|
|
$
|
6,454
|
|
|
$
|
73
|
|
|
$
|
47,284
|
|
|
$
|
170
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less than 12 Months
|
|
|
12 Months or Longer
|
|
|
Total
|
|
|
|
Fair Value
|
|
|
Unrealized
Loss
|
|
|
Fair Value
|
|
|
Unrealized
Loss
|
|
|
Fair Value
|
|
|
Unrealized
Loss
|
|
Obligations of state and political subdivisions
|
|
$
|
25,214
|
|
|
$
|
79
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
25,214
|
|
|
$
|
79
|
|
Residential mortgage-backed securities
|
|
|
36,017
|
|
|
|
96
|
|
|
|
3,156
|
|
|
|
19
|
|
|
|
39,173
|
|
|
|
115
|
|
Commercial mortgage-backed securities
|
|
|
16,218
|
|
|
|
4
|
|
|
|
—
|
|
|
|
—
|
|
|
|
16,218
|
|
|
|
4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
77,449
|
|
|
$
|
179
|
|
|
$
|
3,156
|
|
|
$
|
19
|
|
|
$
|
80,605
|
|
|
$
|
198
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The number of investments in an unrealized loss position totaled 77 at June 30, 2021. Any unrealized losses in the obligations of state and political subdivisions, residential and commercial mortgage-backed and asset-backed investment securities at June 30, 2021 and 2020, and December 31, 2020, are due to changes in interest rates and not credit-related events. As such, no allowance for credit losses is required on these securities at June 30, 2021 and 2020, and December 31, 2020. Unrealized losses on investment securities are expected to recover over time as these securities approach maturity. Our mortgage related securities are backed by GNMA, FNMA and FHLMC or are collateralized by securities backed by these agencies. At June 30, 2021, 76.39% of our
securities that are obligations of states and political subdivisions were issued within the State of Texas, of which 53.09% are guaranteed by the Texas Permanent School Fund.
At June 30, 2021, $3,222,472,000 of the Company’s securities were pledged as collateral for public or trust fund deposits, repurchase agreements, a borrowing line with the Federal Reserve Bank of Dallas and for other purposes required or permitted by law.
During the three-months ended June 30, 2021, there were calls of investment securities that were classified as
During the three-months ended June 30, 2020, sales of investment securities that were classified as
totaled $157,521,000. Gross realized gains from security calls and sales during the second quarters of 2021 and 2020 totaled $5,000 and $1,516,000, respectively. There were no gross realized losses from security calls and sales during the second quarter of 2021. Gross realized losses from security calls and sales during the second quarter of 2020 totaled $4,000.
During the
six-months
ended June 30, 2021 and 2020, sales of investment securities that were classified as
totaled $10,631,000 and $252,958,000, respectively. Gross realized gains from security calls and sales during the
six-month
periods ended June 30, 2021 and 2020 totaled $813,000 and $3,578,000, respectively. There were no gross realized losses from security calls and sales during the
six-month
period ended June 30, 2021. Gross realized losses from security calls and sales during the
six-month
period ended June 30, 2020 totaled $4,000.
The specific identification method was used to determine cost in order to compute the realized gains and losses.
Note 3 – Loans
and Allowance for Loan Losses
In conjunction with the adoption of ASC 326, the Company expanded its four loan portfolios into ten portfolio segments.
For the periods ended June 30, 2021 and December 31, 2020, the following tables outline the Company’s loan portfolio by the ten portfolio segments where applicable. For disclosures related to the period ended June 30, 2020, management has elected to maintain its previously disclosed loan segments.
Loans
by portfolio segment are as follows (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30,
|
|
|
December 31,
|
|
|
|
2021
|
|
|
2020
|
|
|
2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
983,103
|
|
|
$
|
N/A
|
|
|
$
|
1,131,382
|
|
|
|
|
179,356
|
|
|
|
N/A
|
|
|
|
181,325
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,162,459
|
|
|
|
1,509,454
|
|
|
|
1,312,707
|
|
|
|
|
95,212
|
|
|
|
97,448
|
|
|
|
94,864
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Construction & Development
|
|
|
550,928
|
|
|
|
N/A
|
|
|
|
553,959
|
|
|
|
|
185,288
|
|
|
|
N/A
|
|
|
|
152,237
|
|
|
|
|
673,608
|
|
|
|
N/A
|
|
|
|
617,686
|
|
|
|
|
820,055
|
|
|
|
N/A
|
|
|
|
746,974
|
|
|
|
|
1,328,474
|
|
|
|
N/A
|
|
|
|
1,248,409
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,558,353
|
|
|
|
3,235,208
|
|
|
|
3,319,265
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
383,764
|
|
|
|
N/A
|
|
|
|
353,595
|
|
|
|
|
104,814
|
|
|
|
N/A
|
|
|
|
90,602
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
488,578
|
|
|
|
410,957
|
|
|
|
444,197
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,304,602
|
|
|
|
5,253,067
|
|
|
|
5,171,033
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: Allowance for credit losses
|
|
|
(62,138
|
)
|
|
|
(68,947
|
)
|
|
|
(66,534
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
5,242,464
|
|
|
$
|
5,184,120
|
|
|
$
|
5,104,499
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
*
|
All disclosures for the C&I loan segment include PPP loan balances, net of deferred loan fees, as disclosed on the face of the balance sheet on page 4.
|
Outstanding loan balances at June 30, 2021 and 2020, and December 31, 2020, are net of unearned income, including net deferred loan fees.
Our subsidiary bank has established a line of credit with the Federal Home Loan Bank of Dallas (“FHLB”) to provide liquidity and meet pledging requirements for those customers eligible to have securities pledged to secure certain uninsured deposits. At June 30, 2021, $3,311,924,000 in loans held by our bank subsidiary were subject to blanket liens as security for this line of credit. At June 30, 2021, there was no balance outstanding under this line of credit.
The Company’s
non-accrual
loans, loans still accruing and past due 90 days or more and restructured loans are as follows (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30,
|
|
|
December 31,
|
|
|
|
2021
|
|
|
2020
|
|
|
2020
|
|
|
|
$
|
29,786
|
|
|
$
|
39,320
|
|
|
$
|
42,619
|
|
Loans still accruing and past due 90 days or more
|
|
|
—
|
|
|
|
92
|
|
|
|
113
|
|
Troubled debt restructured loans still accruing*
|
|
|
23
|
|
|
|
25
|
|
|
|
24
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
29,809
|
|
|
$
|
39,437
|
|
|
$
|
42,756
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
*
|
Troubled debt restructured loans of $7,305,000, $7,275,000 and $7,407,000, whose interest collection, after considering economic and business conditions and collection efforts, is doubtful are included in
non-accrual
loans at June 30, 2021 and 2020, and December 31, 2020, respectively.
|
The Company had $30,114,000, $39,724,000 and $42,898,000 in
non-accrual,
past due 90 days or more and still accruing, restructured loans and foreclosed assets at June 30, 2021 and 2020, and December 31, 2020, respectively.
Non-accrual
loans at June 30, 2021 and 2020, and December 31, 2020, consisted of the following (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30,
|
|
|
December 31,
|
|
|
|
2021
|
|
|
2020
|
|
|
2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
3,587
|
|
|
$
|
N/A
|
|
|
$
|
5,015
|
|
|
|
|
—
|
|
|
|
N/A
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,587
|
|
|
|
4,618
|
|
|
|
5,015
|
|
|
|
|
1,055
|
|
|
|
1,056
|
|
|
|
1,076
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Construction & Development
|
|
|
1,520
|
|
|
|
N/A
|
|
|
|
3,838
|
|
|
|
|
1,791
|
|
|
|
N/A
|
|
|
|
7,299
|
|
|
|
|
6,584
|
|
|
|
N/A
|
|
|
|
5,243
|
|
|
|
|
8,976
|
|
|
|
N/A
|
|
|
|
10,797
|
|
|
|
|
5,901
|
|
|
|
N/A
|
|
|
|
8,851
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
24,772
|
|
|
|
33,170
|
|
|
|
36,028
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
329
|
|
|
|
N/A
|
|
|
|
407
|
|
|
|
|
43
|
|
|
|
N/A
|
|
|
|
93
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
372
|
|
|
|
476
|
|
|
|
500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
29,786
|
|
|
$
|
39,320
|
|
|
$
|
42,619
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
No significant additional funds are committed to be advanced in connection with
non-accrual
loans as of June 30, 2021.
Summary information on the allowance for credit losses for the three and
six-months
ended June 30, 2021 and 2020, are outlined by portfolio segment in the following tables (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three-months ended June 30, 2021
|
|
C&I
|
|
|
Municipal
|
|
|
Agricultural
|
|
|
Construction
&
Development
|
|
|
Farm
|
|
|
|
$
|
12,323
|
|
|
$
|
2,191
|
|
|
$
|
1,985
|
|
|
$
|
13,246
|
|
|
$
|
1,223
|
|
Provision for loan losses
|
|
|
(2,327
|
)
|
|
|
(1,603
|
)
|
|
|
(667
|
)
|
|
|
2,386
|
|
|
|
(617
|
)
|
|
|
|
308
|
|
|
|
—
|
|
|
|
15
|
|
|
|
—
|
|
|
|
1
|
|
|
|
|
(118
|
)
|
|
|
—
|
|
|
|
(21
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
10,186
|
|
|
$
|
588
|
|
|
$
|
1,312
|
|
|
$
|
15,632
|
|
|
$
|
607
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three-months ended June 30, 2021 (continued)
|
|
Non-Owner
Occupied
CRE
|
|
|
Owner
Occupied
CRE
|
|
|
Residential
|
|
|
Auto
|
|
|
Non-Auto
|
|
|
Total
|
|
|
|
$
|
9,492
|
|
|
$
|
9,878
|
|
|
$
|
11,189
|
|
|
$
|
1,068
|
|
|
$
|
379
|
|
|
$
|
62,974
|
|
Provision for loan losses
|
|
|
901
|
|
|
|
517
|
|
|
|
26
|
|
|
|
257
|
|
|
|
88
|
|
|
|
(1,039
|
)
|
|
|
|
39
|
|
|
|
4
|
|
|
|
64
|
|
|
|
103
|
|
|
|
61
|
|
|
|
595
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(45
|
)
|
|
|
(162
|
)
|
|
|
(46
|
)
|
|
|
(392
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
10,432
|
|
|
$
|
10,399
|
|
|
$
|
11,234
|
|
|
$
|
1,266
|
|
|
$
|
482
|
|
|
$
|
62,138
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six-months
ended June 30, 2021
|
|
C&I
|
|
|
Municipal
|
|
|
Agricultural
|
|
|
Construction
&
Development
|
|
|
Farm
|
|
|
|
$
|
13,609
|
|
|
$
|
1,552
|
|
|
$
|
1,255
|
|
|
$
|
13,512
|
|
|
$
|
1,876
|
|
Provision for loan losses
|
|
|
(3,566
|
)
|
|
|
(964
|
)
|
|
|
54
|
|
|
|
2,118
|
|
|
|
(1,279
|
)
|
|
|
|
531
|
|
|
|
—
|
|
|
|
24
|
|
|
|
2
|
|
|
|
10
|
|
|
|
|
(388
|
)
|
|
|
—
|
|
|
|
(21
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
10,186
|
|
|
$
|
588
|
|
|
$
|
1,312
|
|
|
$
|
15,632
|
|
|
$
|
607
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six-months
ended June 30, 2021 (continued)
|
|
Non-Owner
Occupied
CRE
|
|
|
Owner
Occupied
CRE
|
|
|
Residential
|
|
|
Auto
|
|
|
Non-
Auto
|
|
|
Total
|
|
|
|
$
|
8,391
|
|
|
$
|
12,347
|
|
|
$
|
12,601
|
|
|
$
|
1,020
|
|
|
$
|
371
|
|
|
$
|
66,534
|
|
Provision for loan losses
|
|
|
1,953
|
|
|
|
(1,950
|
)
|
|
|
(1,358
|
)
|
|
|
398
|
|
|
|
126
|
|
|
|
(4,468
|
)
|
|
|
|
94
|
|
|
|
10
|
|
|
|
83
|
|
|
|
176
|
|
|
|
108
|
|
|
|
1,038
|
|
|
|
|
(6
|
)
|
|
|
(8
|
)
|
|
|
(92
|
)
|
|
|
(328
|
)
|
|
|
(123
|
)
|
|
|
(966
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
10,432
|
|
|
$
|
10,399
|
|
|
$
|
11,234
|
|
|
$
|
1,266
|
|
|
$
|
482
|
|
|
$
|
62,138
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three-months ended June 30, 2020
|
|
Commercial
|
|
|
Agricultural
|
|
|
Real Estate
|
|
|
Consumer
|
|
|
Total
|
|
|
|
$
|
11,773
|
|
|
$
|
2,154
|
|
|
$
|
41,256
|
|
|
$
|
5,257
|
|
|
$
|
60,440
|
|
Provision for loan losses
|
|
|
6,820
|
|
|
|
361
|
|
|
|
1,469
|
|
|
|
50
|
|
|
|
8,700
|
|
|
|
|
540
|
|
|
|
29
|
|
|
|
59
|
|
|
|
73
|
|
|
|
701
|
|
|
|
|
(561
|
)
|
|
|
—
|
|
|
|
(161
|
)
|
|
|
(172
|
)
|
|
|
(894
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
18,572
|
|
|
$
|
2,544
|
|
|
$
|
42,623
|
|
|
$
|
5,208
|
|
|
$
|
68,947
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six-months
ended June 30, 2020
|
|
Commercial
|
|
|
Agricultural
|
|
|
Real Estate
|
|
|
Consumer
|
|
|
Total
|
|
|
|
$
|
12,122
|
|
|
$
|
1,206
|
|
|
$
|
33,974
|
|
|
$
|
5,197
|
|
|
$
|
52,499
|
|
Provision for loan losses
|
|
|
7,615
|
|
|
|
1,310
|
|
|
|
9,390
|
|
|
|
235
|
|
|
|
18,550
|
|
|
|
|
690
|
|
|
|
30
|
|
|
|
135
|
|
|
|
164
|
|
|
|
1,019
|
|
|
|
|
(1,855
|
)
|
|
|
(2
|
)
|
|
|
(876
|
)
|
|
|
(388
|
)
|
|
|
(3,121
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
18,572
|
|
|
$
|
2,544
|
|
|
$
|
42,623
|
|
|
$
|
5,208
|
|
|
$
|
68,947
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additionally, the Company records a reserve for unfunded commitments in other liabilities which totaled $6,751,000, $809,000 and $5,486,000 at June 30, 2021 and 2020, and December 31, 2020, respectively. The reversal of provision for credit losses of $1,206,000 reported in the consolidated statement of earnings for the three-months ended June 30, 2021 is the aggregate reversal of provision of loan losses of $1,039,000 and the reversal of provision for unfunded commitments of $167,000. The reversal of provision for credit losses of $3,203,000 reported in the consolidated statement of earnings for the
six-months
ended June 30, 2021 is the aggregate reversal of provision of loan losses of $4,468,000 net of the provision for unfunded commitments of $1,265,000.
The Company’s loans that are individually evaluated for credit losses (both collateral and
non-collateral
dependent) and their related allowances as of June 30, 2021 and December 31, 2020, are summarized in the following table by loan segment (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Collateral
Dependent Loans
Individually
Evaluated for
Credit Losses
Without an
Allowance
|
|
|
Collateral
Dependent Loans
Individually
Evaluated for
Credit Losses
With an
Allowance
|
|
|
Non-Collateral
Dependent
Loans
Individually
Evaluated for
Credit Losses
|
|
|
Total Loans
Individually
Evaluated
for Credit
Losses
|
|
|
Related
Allowance
on Collateral
Dependent
Loans
|
|
|
Related
Allowance on
Non-Collateral
Dependent
Loans
|
|
|
Total
Allowance for
Credit Losses
on Loans
Individually
Evaluated for
Credit Losses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
1,091
|
|
|
$
|
2,496
|
|
|
$
|
20,838
|
|
|
$
|
24,425
|
|
|
$
|
723
|
|
|
$
|
3,865
|
|
|
$
|
4,588
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
885
|
|
|
|
885
|
|
|
|
—
|
|
|
|
275
|
|
|
|
275
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,091
|
|
|
|
2,496
|
|
|
|
21,723
|
|
|
|
25,310
|
|
|
|
723
|
|
|
|
4,140
|
|
|
|
4,863
|
|
|
|
|
328
|
|
|
|
727
|
|
|
|
5,195
|
|
|
|
6,250
|
|
|
|
171
|
|
|
|
1,084
|
|
|
|
1,255
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Construction & Development
|
|
|
1,282
|
|
|
|
238
|
|
|
|
9,201
|
|
|
|
10,721
|
|
|
|
24
|
|
|
|
1,075
|
|
|
|
1,099
|
|
|
|
|
1,697
|
|
|
|
94
|
|
|
|
2,745
|
|
|
|
4,536
|
|
|
|
—
|
|
|
|
9
|
|
|
|
9
|
|
|
|
|
6,444
|
|
|
|
140
|
|
|
|
33,707
|
|
|
|
40,291
|
|
|
|
15
|
|
|
|
4,185
|
|
|
|
4,200
|
|
|
|
|
5,605
|
|
|
|
3,371
|
|
|
|
42,832
|
|
|
|
51,808
|
|
|
|
544
|
|
|
|
2,600
|
|
|
|
3,144
|
|
|
|
|
3,762
|
|
|
|
2,139
|
|
|
|
28,110
|
|
|
|
34,011
|
|
|
|
191
|
|
|
|
2,418
|
|
|
|
2,609
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
18,790
|
|
|
|
5,982
|
|
|
|
116,595
|
|
|
|
141,367
|
|
|
|
774
|
|
|
|
10,287
|
|
|
|
11,061
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
—
|
|
|
|
329
|
|
|
|
1,342
|
|
|
|
1,671
|
|
|
|
1
|
|
|
|
4
|
|
|
|
5
|
|
|
|
|
—
|
|
|
|
43
|
|
|
|
353
|
|
|
|
396
|
|
|
|
—
|
|
|
|
2
|
|
|
|
2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
—
|
|
|
|
372
|
|
|
|
1,695
|
|
|
|
2,067
|
|
|
|
1
|
|
|
|
6
|
|
|
|
7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
20,209
|
|
|
$
|
9,577
|
|
|
$
|
145,208
|
|
|
$
|
174,994
|
|
|
$
|
1,669
|
|
|
$
|
15,517
|
|
|
$
|
17,186
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Collateral
Dependent Loans
Individually
Evaluated for
Credit Losses
Without an
Allowance
|
|
|
Collateral
Dependent Loans
Individually
Evaluated for
Credit Losses
With an
Allowance
|
|
|
Non-Collateral
Dependent
Loans
Individually
Evaluated for
Credit Losses
|
|
|
Total Loans
Individually
Evaluated
for Credit
Losses
|
|
|
Related
Allowance
on Collateral
Dependent
Loans
|
|
|
Related
Allowance on
Non-Collateral
Dependent
Loans
|
|
|
Total
Allowance for
Credit Losses
on Loans
Individually
Evaluated for
Credit Losses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
1,544
|
|
|
$
|
3,471
|
|
|
$
|
25,629
|
|
|
$
|
30,644
|
|
|
$
|
799
|
|
|
$
|
4,592
|
|
|
$
|
5,391
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
9,439
|
|
|
|
9,439
|
|
|
|
—
|
|
|
|
1,435
|
|
|
|
1,435
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,544
|
|
|
|
3,471
|
|
|
|
35,068
|
|
|
|
40,083
|
|
|
|
799
|
|
|
|
6,027
|
|
|
|
6,826
|
|
|
|
|
470
|
|
|
|
606
|
|
|
|
5,572
|
|
|
|
6,648
|
|
|
|
96
|
|
|
|
886
|
|
|
|
982
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Construction & Development
|
|
|
1,176
|
|
|
|
2,661
|
|
|
|
11,368
|
|
|
|
15,205
|
|
|
|
35
|
|
|
|
617
|
|
|
|
652
|
|
|
|
|
2,614
|
|
|
|
4,685
|
|
|
|
3,349
|
|
|
|
10,648
|
|
|
|
654
|
|
|
|
658
|
|
|
|
1,312
|
|
|
|
|
4,009
|
|
|
|
1,234
|
|
|
|
17,383
|
|
|
|
22,626
|
|
|
|
500
|
|
|
|
1,421
|
|
|
|
1,921
|
|
|
|
|
7,279
|
|
|
|
3,518
|
|
|
|
51,933
|
|
|
|
62,730
|
|
|
|
657
|
|
|
|
5,172
|
|
|
|
5,829
|
|
|
|
|
4,347
|
|
|
|
4,504
|
|
|
|
28,196
|
|
|
|
37,047
|
|
|
|
676
|
|
|
|
2,431
|
|
|
|
3,107
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
19,425
|
|
|
|
16,602
|
|
|
|
112,229
|
|
|
|
148,256
|
|
|
|
2,522
|
|
|
|
10,299
|
|
|
|
12,821
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
—
|
|
|
|
407
|
|
|
|
1,523
|
|
|
|
1,930
|
|
|
|
1
|
|
|
|
5
|
|
|
|
6
|
|
|
|
|
—
|
|
|
|
94
|
|
|
|
440
|
|
|
|
534
|
|
|
|
1
|
|
|
|
1
|
|
|
|
2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
—
|
|
|
|
501
|
|
|
|
1,963
|
|
|
|
2,464
|
|
|
|
2
|
|
|
|
6
|
|
|
|
8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
21,439
|
|
|
$
|
21,180
|
|
|
$
|
154,832
|
|
|
$
|
197,451
|
|
|
$
|
3,419
|
|
|
$
|
17,218
|
|
|
$
|
20,637
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The following table presents the recorded investment with respect to impaired loans, the associated allowance by the applicable portfolio segment and the unpaid contractual principal balance of the impaired loans at June 30, 2020, in accordance with the legacy “incurred loss” methodology disclosure requirements (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unpaid
Contractual
Principal
Balance
|
|
|
Recorded
Investment
With No
Allowance
|
|
|
Recorded
Investment
With
Allowance
|
|
|
Total
Recorded
Investment
|
|
|
Related
Allowance
|
|
|
date
Average
Recorded
Investment
|
|
|
Three-
Month
Average
Recorded
Investment
|
|
|
|
$
|
6,013
|
|
|
$
|
739
|
|
|
$
|
3,879
|
|
|
$
|
4,618
|
|
|
$
|
1,250
|
|
|
$
|
24,270
|
|
|
$
|
23,572
|
|
|
|
|
1,287
|
|
|
|
529
|
|
|
|
527
|
|
|
|
1,056
|
|
|
|
83
|
|
|
|
219
|
|
|
|
179
|
|
|
|
|
45,703
|
|
|
|
20,370
|
|
|
|
12,800
|
|
|
|
33,170
|
|
|
|
1,711
|
|
|
|
17,586
|
|
|
|
17,107
|
|
|
|
|
585
|
|
|
|
—
|
|
|
|
476
|
|
|
|
476
|
|
|
|
2
|
|
|
|
606
|
|
|
|
552
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
53,588
|
|
|
$
|
21,638
|
|
|
$
|
17,682
|
|
|
$
|
39,320
|
|
|
$
|
3,046
|
|
|
$
|
42,681
|
|
|
$
|
41,410
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Company’s allowance for loans that are individually evaluated for credit losses and collectively evaluated for credit losses as of June 30, 2021 and December 31, 2020, are summarized in the following table by loan segment (in thousands). Allocation of a portion of the allowance to one category of loans does not preclude its availability to absorb losses in other categories.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
C&I
|
|
|
Municipal
|
|
|
Agricultural
|
|
|
Construction
&
Development
|
|
|
Farm
|
|
Loans individually evaluated for credit losses
|
|
$
|
4,588
|
|
|
$
|
275
|
|
|
$
|
1,255
|
|
|
$
|
1,099
|
|
|
$
|
9
|
|
Loans collectively evaluated for credit losses
|
|
|
5,598
|
|
|
|
313
|
|
|
|
57
|
|
|
|
14,533
|
|
|
|
598
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
10,186
|
|
|
$
|
588
|
|
|
$
|
1,312
|
|
|
$
|
15,632
|
|
|
$
|
607
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2021 (continued)
|
|
Non-Owner
Occupied
CRE
|
|
|
Owner
Occupied
CRE
|
|
|
Residential
|
|
|
Auto
|
|
|
Non-Auto
|
|
|
Total
|
|
Loans individually evaluated for credit losses
|
|
$
|
4,200
|
|
|
$
|
3,144
|
|
|
$
|
2,609
|
|
|
$
|
5
|
|
|
$
|
2
|
|
|
$
|
17,186
|
|
Loans collectively evaluated for credit losses
|
|
|
6,232
|
|
|
|
7,255
|
|
|
|
8,625
|
|
|
|
1,261
|
|
|
|
480
|
|
|
|
44,952
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
10,432
|
|
|
$
|
10,399
|
|
|
$
|
11,234
|
|
|
$
|
1,266
|
|
|
$
|
482
|
|
|
$
|
62,138
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
C&I
|
|
|
Municipal
|
|
|
Agricultural
|
|
|
Construction
&
Development
|
|
|
Farm
|
|
Loans individually evaluated for credit losses
|
|
$
|
5,391
|
|
|
$
|
1,435
|
|
|
$
|
982
|
|
|
$
|
652
|
|
|
$
|
1,312
|
|
Loans collectively evaluated for credit losses
|
|
|
8,218
|
|
|
|
117
|
|
|
|
273
|
|
|
|
12,860
|
|
|
|
564
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
13,609
|
|
|
$
|
1,552
|
|
|
$
|
1,255
|
|
|
$
|
13,512
|
|
|
$
|
1,876
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2020 (continued)
|
|
Non-Owner
Occupied
CRE
|
|
|
Owner
Occupied
CRE
|
|
|
Residential
|
|
|
Auto
|
|
|
Non-Auto
|
|
|
Total
|
|
Loans individually evaluated for credit losses
|
|
$
|
1,921
|
|
|
$
|
5,829
|
|
|
$
|
3,107
|
|
|
$
|
6
|
|
|
$
|
2
|
|
|
$
|
20,637
|
|
Loans collectively evaluated for credit losses
|
|
|
6,470
|
|
|
|
6,518
|
|
|
|
9,494
|
|
|
|
1,014
|
|
|
|
369
|
|
|
|
45,897
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
8,391
|
|
|
$
|
12,347
|
|
|
$
|
12,601
|
|
|
$
|
1,020
|
|
|
$
|
371
|
|
|
$
|
66,534
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Company’s allowance for loans that are individually evaluated for credit losses and collectively evaluated for credit losses as of June 30, 2020, are summarized in the following table by loan segment in accordance with the legacy “incurred loss” methodology disclosure requirements (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial
|
|
|
Agricultural
|
|
|
Real Estate
|
|
|
Consumer
|
|
|
Total
|
|
Loans individually evaluated for impairment
|
|
$
|
1,250
|
|
|
$
|
83
|
|
|
$
|
1,711
|
|
|
$
|
2
|
|
|
$
|
3,046
|
|
Loan collectively evaluated for impairment
|
|
|
17,322
|
|
|
|
2,461
|
|
|
|
40,912
|
|
|
|
5,206
|
|
|
|
65,901
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
18,572
|
|
|
$
|
2,544
|
|
|
$
|
42,623
|
|
|
$
|
5,208
|
|
|
$
|
68,947
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Company’s recorded investment in loans as of June 30, 2021 and December 31, 2020, related to the balance in the allowance for credit losses on the basis of the Company’s adopted ASC 326 evaluation methodology follows below (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
C&I
|
|
|
Municipal
|
|
|
Agricultural
|
|
|
Construction
&
Development
|
|
|
Farm
|
|
Loans individually evaluated for credit losses
|
|
$
|
24,425
|
|
|
$
|
885
|
|
|
$
|
6,250
|
|
|
$
|
10,721
|
|
|
$
|
4,536
|
|
Loans collectively evaluated for credit losses
|
|
|
958,678
|
|
|
|
178,471
|
|
|
|
88,962
|
|
|
|
540,207
|
|
|
|
180,752
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
983,103
|
|
|
$
|
179,356
|
|
|
$
|
95,212
|
|
|
$
|
550,928
|
|
|
$
|
185,288
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2021 (continued)
|
|
Non-Owner
Occupied
CRE
|
|
|
Owner
Occupied
CRE
|
|
|
Residential
|
|
|
Auto
|
|
|
Non-Auto
|
|
|
Total
|
|
Loans individually evaluated for credit losses
|
|
$
|
40,291
|
|
|
$
|
51,808
|
|
|
$
|
34,011
|
|
|
$
|
1,671
|
|
|
$
|
396
|
|
|
$
|
174,994
|
|
Loans collectively evaluated for credit losses
|
|
|
633,317
|
|
|
|
768,247
|
|
|
|
1,294,463
|
|
|
|
382,093
|
|
|
|
104,418
|
|
|
|
5,129,608
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
673,608
|
|
|
$
|
820,055
|
|
|
$
|
1,328,474
|
|
|
$
|
383,764
|
|
|
$
|
104,814
|
|
|
$
|
5,304,602
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
C&I
|
|
|
Municipal
|
|
|
Agricultural
|
|
|
Construction
&
Development
|
|
|
Farm
|
|
Loans individually evaluated for credit losses
|
|
$
|
30,644
|
|
|
$
|
9,439
|
|
|
$
|
6,648
|
|
|
$
|
15,205
|
|
|
$
|
10,648
|
|
Loans collectively evaluated for credit losses
|
|
|
1,100,738
|
|
|
|
171,886
|
|
|
|
88,216
|
|
|
|
538,754
|
|
|
|
141,589
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
1,131,382
|
|
|
$
|
181,325
|
|
|
$
|
94,864
|
|
|
$
|
553,959
|
|
|
$
|
152,237
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2020 (continued)
|
|
Non-Owner
Occupied
CRE
|
|
|
Owner
Occupied
CRE
|
|
|
Residential
|
|
|
Auto
|
|
|
Non-Auto
|
|
|
Total
|
|
Loans individually evaluated for credit losses
|
|
$
|
22,626
|
|
|
$
|
62,730
|
|
|
$
|
37,047
|
|
|
$
|
1,930
|
|
|
$
|
534
|
|
|
$
|
197,451
|
|
Loans collectively evaluated for credit losses
|
|
|
595,060
|
|
|
|
684,244
|
|
|
|
1,211,362
|
|
|
|
351,665
|
|
|
|
90,068
|
|
|
|
4,973,582
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
617,686
|
|
|
$
|
746,974
|
|
|
$
|
1,248,409
|
|
|
$
|
353,595
|
|
|
$
|
90,602
|
|
|
$
|
5,171,033
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Company’s recorded investment in loans as of June 30, 2020, related to the balance in the allowance for loan losses on the basis of the Company’s legacy “incurred loss” impairment methodology follows below (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial
|
|
|
Agricultural
|
|
|
Real Estate
|
|
|
Consumer
|
|
|
Total
|
|
Loans individually evaluated for impairment
|
|
$
|
4,618
|
|
|
$
|
1,056
|
|
|
$
|
33,170
|
|
|
$
|
476
|
|
|
$
|
39,320
|
|
Loan collectively evaluated for impairment
|
|
|
1,504,836
|
|
|
|
96,392
|
|
|
|
3,202,038
|
|
|
|
410,481
|
|
|
|
5,213,747
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
1,509,454
|
|
|
$
|
97,448
|
|
|
$
|
3,235,208
|
|
|
$
|
410,957
|
|
|
$
|
5,253,067
|
|
From a credit risk standpoint, the Company rates its loans in one of five categories: (i) pass, (ii) special mention, (iii) substandard, (iv) doubtful or (v) loss (which are
charged-off).
The ratings of loans reflect a judgment about the risks of default and loss associated with the loan. The Company reviews the ratings on our credits as part of our
on-going
monitoring of the credit quality of our loan portfolio. Ratings are adjusted to reflect the degree of risk and loss that are felt to be inherent in each credit as of each reporting period. Our methodology is structured so that specific allocations are increased in accordance with deterioration in credit quality (and a corresponding increase in risk and loss) or decreased in accordance with improvement in credit quality (and a corresponding decrease in risk and loss).
Credits rated special mention show clear signs of financial weaknesses or deterioration in credit worthiness, however, such concerns are not so pronounced that the Company generally expects to experience significant loss within the short-term. Such credits typically maintain the ability to perform within standard credit terms and credit exposure is not as prominent as credits rated more harshly.
Credits rated substandard are those in which the normal repayment of principal and interest may be, or has been, jeopardized by reason of adverse trends or developments of a financial, managerial, economic or political nature, or important weaknesses exist in collateral. A protracted workout on these credits is a distinct possibility. Prompt corrective action is therefore required to strengthen the Company’s position, and/or to reduce exposure and to assure that adequate remedial measures are taken by the borrower. Credit exposure becomes more likely in such credits and a serious evaluation of the secondary support to the credit is performed.
Credits rated doubtful are those in which full collection of principal appears highly questionable, and which some degree of loss is anticipated, even though the ultimate amount of loss may not yet be certain and/or other factors exist which could affect collection of debt. Based upon available information, positive action by the Company is required to avert or minimize loss. Credits rated doubtful are generally also placed on
non-accrual.
The following summarizes the Company’s internal ratings of its loans
including the year of origination, by portfolio segments, at June 30, 2021 (in millions):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2021
|
|
|
2020
|
|
|
2019
|
|
|
2018
|
|
|
2017
|
|
|
Prior
|
|
|
Revolving
Loans
Amort
Cost Basis
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
485
|
|
|
$
|
316
|
|
|
$
|
71
|
|
|
$
|
46
|
|
|
$
|
22
|
|
|
$
|
19
|
|
|
$
|
—
|
|
|
$
|
959
|
|
|
|
|
4
|
|
|
|
2
|
|
|
|
1
|
|
|
|
1
|
|
|
|
1
|
|
|
|
—
|
|
|
|
—
|
|
|
|
9
|
|
|
|
|
4
|
|
|
|
6
|
|
|
|
2
|
|
|
|
3
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
15
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
493
|
|
|
$
|
324
|
|
|
$
|
74
|
|
|
$
|
50
|
|
|
$
|
23
|
|
|
$
|
19
|
|
|
$
|
—
|
|
|
$
|
983
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2021
|
|
|
2020
|
|
|
2019
|
|
|
2018
|
|
|
2017
|
|
|
Prior
|
|
|
Revolving
Loans
Amort
Cost Basis
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
23
|
|
|
$
|
23
|
|
|
$
|
8
|
|
|
$
|
22
|
|
|
$
|
18
|
|
|
$
|
84
|
|
|
$
|
—
|
|
|
$
|
178
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
1
|
|
|
|
—
|
|
|
|
1
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
23
|
|
|
$
|
23
|
|
|
$
|
8
|
|
|
$
|
22
|
|
|
$
|
18
|
|
|
$
|
85
|
|
|
$
|
—
|
|
|
$
|
179
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2021
|
|
|
2020
|
|
|
2019
|
|
|
2018
|
|
|
2017
|
|
|
Prior
|
|
|
Revolving
Loans
Amort
Cost Basis
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
30
|
|
|
$
|
34
|
|
|
$
|
15
|
|
|
$
|
7
|
|
|
$
|
3
|
|
|
$
|
1
|
|
|
$
|
—
|
|
|
$
|
90
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
5
|
|
|
|
—
|
|
|
|
—
|
|
|
|
1
|
|
|
|
—
|
|
|
|
—
|
|
|
|
6
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
30
|
|
|
$
|
39
|
|
|
$
|
15
|
|
|
$
|
7
|
|
|
$
|
4
|
|
|
$
|
1
|
|
|
$
|
—
|
|
|
$
|
96
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2021
|
|
|
2020
|
|
|
2019
|
|
|
2018
|
|
|
2017
|
|
|
Prior
|
|
|
Revolving
Loans
Amort
Cost Basis
|
|
|
Total
|
|
Construction & Development
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
220
|
|
|
$
|
237
|
|
|
$
|
39
|
|
|
$
|
18
|
|
|
$
|
9
|
|
|
$
|
17
|
|
|
$
|
—
|
|
|
$
|
540
|
|
|
|
|
1
|
|
|
|
2
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
3
|
|
|
|
|
2
|
|
|
|
2
|
|
|
|
4
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
8
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
223
|
|
|
$
|
241
|
|
|
$
|
43
|
|
|
$
|
18
|
|
|
$
|
9
|
|
|
$
|
17
|
|
|
$
|
—
|
|
|
$
|
551
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2021
|
|
|
2020
|
|
|
2019
|
|
|
2018
|
|
|
2017
|
|
|
Prior
|
|
|
Revolving
Loans
Amort
Cost Basis
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
59
|
|
|
$
|
53
|
|
|
$
|
17
|
|
|
$
|
12
|
|
|
$
|
9
|
|
|
$
|
31
|
|
|
$
|
—
|
|
|
$
|
181
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
2
|
|
|
|
—
|
|
|
|
1
|
|
|
|
—
|
|
|
|
1
|
|
|
|
—
|
|
|
|
4
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
59
|
|
|
$
|
55
|
|
|
$
|
17
|
|
|
$
|
13
|
|
|
$
|
9
|
|
|
$
|
32
|
|
|
$
|
—
|
|
|
$
|
185
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2021
|
|
|
2020
|
|
|
2019
|
|
|
2018
|
|
|
2017
|
|
|
Prior
|
|
|
Revolving
Loans
Amort
Cost Basis
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
101
|
|
|
$
|
171
|
|
|
$
|
104
|
|
|
$
|
80
|
|
|
$
|
40
|
|
|
$
|
138
|
|
|
$
|
—
|
|
|
$
|
634
|
|
|
|
|
—
|
|
|
|
1
|
|
|
|
13
|
|
|
|
1
|
|
|
|
7
|
|
|
|
3
|
|
|
|
—
|
|
|
|
25
|
|
|
|
|
2
|
|
|
|
—
|
|
|
|
3
|
|
|
|
—
|
|
|
|
3
|
|
|
|
7
|
|
|
|
—
|
|
|
|
15
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
103
|
|
|
$
|
172
|
|
|
$
|
120
|
|
|
$
|
81
|
|
|
$
|
50
|
|
|
$
|
148
|
|
|
$
|
—
|
|
|
$
|
674
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2021
|
|
|
2020
|
|
|
2019
|
|
|
2018
|
|
|
2017
|
|
|
Prior
|
|
|
Revolving
Loans
Amort
Cost Basis
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
137
|
|
|
$
|
178
|
|
|
$
|
129
|
|
|
$
|
103
|
|
|
$
|
64
|
|
|
$
|
157
|
|
|
$
|
—
|
|
|
$
|
768
|
|
|
|
|
1
|
|
|
|
2
|
|
|
|
1
|
|
|
|
1
|
|
|
|
4
|
|
|
|
1
|
|
|
|
—
|
|
|
|
10
|
|
|
|
|
8
|
|
|
|
3
|
|
|
|
5
|
|
|
|
14
|
|
|
|
2
|
|
|
|
10
|
|
|
|
—
|
|
|
|
42
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
146
|
|
|
$
|
183
|
|
|
$
|
135
|
|
|
$
|
118
|
|
|
$
|
70
|
|
|
$
|
168
|
|
|
$
|
—
|
|
|
$
|
820
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2021
|
|
|
2020
|
|
|
2019
|
|
|
2018
|
|
|
2017
|
|
|
Prior
|
|
|
Revolving
Loans
Amort
Cost Basis
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
266
|
|
|
$
|
316
|
|
|
$
|
145
|
|
|
$
|
105
|
|
|
$
|
84
|
|
|
$
|
282
|
|
|
$
|
96
|
|
|
$
|
1,294
|
|
|
|
|
—
|
|
|
|
3
|
|
|
|
1
|
|
|
|
1
|
|
|
|
1
|
|
|
|
3
|
|
|
|
—
|
|
|
|
9
|
|
|
|
|
2
|
|
|
|
5
|
|
|
|
3
|
|
|
|
2
|
|
|
|
2
|
|
|
|
10
|
|
|
|
1
|
|
|
|
25
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
268
|
|
|
$
|
324
|
|
|
$
|
149
|
|
|
$
|
108
|
|
|
$
|
87
|
|
|
$
|
295
|
|
|
$
|
97
|
|
|
$
|
1,328
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2021
|
|
|
2020
|
|
|
2019
|
|
|
2018
|
|
|
2017
|
|
|
Prior
|
|
|
Revolving
Loans
Amort
Cost Basis
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
118
|
|
|
$
|
140
|
|
|
$
|
76
|
|
|
$
|
26
|
|
|
$
|
13
|
|
|
$
|
9
|
|
|
$
|
—
|
|
|
$
|
382
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
1
|
|
|
|
1
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
2
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
118
|
|
|
$
|
141
|
|
|
$
|
77
|
|
|
$
|
26
|
|
|
$
|
13
|
|
|
$
|
9
|
|
|
$
|
—
|
|
|
$
|
384
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2021
|
|
|
2020
|
|
|
2019
|
|
|
2018
|
|
|
2017
|
|
|
Prior
|
|
|
Revolving
Loans
Amort
Cost Basis
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
40
|
|
|
$
|
33
|
|
|
$
|
14
|
|
|
$
|
5
|
|
|
$
|
2
|
|
|
$
|
5
|
|
|
$
|
6
|
|
|
$
|
105
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
40
|
|
|
$
|
33
|
|
|
$
|
14
|
|
|
$
|
5
|
|
|
$
|
2
|
|
|
$
|
5
|
|
|
$
|
6
|
|
|
$
|
105
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2021
|
|
|
2020
|
|
|
2019
|
|
|
2018
|
|
|
2017
|
|
|
Prior
|
|
|
Revolving
Loans
Amort
Cost Basis
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
1,479
|
|
|
$
|
1,501
|
|
|
$
|
618
|
|
|
$
|
424
|
|
|
$
|
264
|
|
|
$
|
743
|
|
|
$
|
102
|
|
|
$
|
5,131
|
|
|
|
|
6
|
|
|
|
10
|
|
|
|
16
|
|
|
|
4
|
|
|
|
13
|
|
|
|
7
|
|
|
|
—
|
|
|
|
56
|
|
|
|
|
18
|
|
|
|
24
|
|
|
|
18
|
|
|
|
20
|
|
|
|
8
|
|
|
|
29
|
|
|
|
1
|
|
|
|
118
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
1,503
|
|
|
$
|
1,535
|
|
|
$
|
652
|
|
|
$
|
448
|
|
|
$
|
285
|
|
|
$
|
779
|
|
|
$
|
103
|
|
|
$
|
5,305
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The following summarizes the Company’s internal ratings of its loans
including the year of origination, by portfolio segments, at December 31, 2020 (in millions):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2020
|
|
|
2019
|
|
|
2018
|
|
|
2017
|
|
|
2016
|
|
|
Prior
|
|
|
Revolving
Loans
Amort
Cost Basis
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
874
|
|
|
$
|
101
|
|
|
$
|
70
|
|
|
$
|
28
|
|
|
$
|
10
|
|
|
$
|
16
|
|
|
$
|
—
|
|
|
$
|
1,099
|
|
|
|
|
9
|
|
|
|
2
|
|
|
|
—
|
|
|
|
1
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
12
|
|
|
|
|
12
|
|
|
|
4
|
|
|
|
4
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
20
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
895
|
|
|
$
|
107
|
|
|
$
|
74
|
|
|
$
|
29
|
|
|
$
|
10
|
|
|
$
|
16
|
|
|
$
|
—
|
|
|
$
|
1,131
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2020
|
|
|
2019
|
|
|
2018
|
|
|
2017
|
|
|
2016
|
|
|
Prior
|
|
|
Revolving
Loans
Amort
Cost Basis
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
26
|
|
|
$
|
19
|
|
|
$
|
29
|
|
|
$
|
14
|
|
|
$
|
13
|
|
|
$
|
71
|
|
|
$
|
—
|
|
|
$
|
172
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
2
|
|
|
|
—
|
|
|
|
—
|
|
|
|
5
|
|
|
|
1
|
|
|
|
1
|
|
|
|
—
|
|
|
|
9
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
28
|
|
|
$
|
19
|
|
|
$
|
29
|
|
|
$
|
19
|
|
|
$
|
14
|
|
|
$
|
72
|
|
|
$
|
—
|
|
|
$
|
181
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2020
|
|
|
2019
|
|
|
2018
|
|
|
2017
|
|
|
2016
|
|
|
Prior
|
|
|
Revolving
Loans
Amort
Cost Basis
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
57
|
|
|
$
|
19
|
|
|
$
|
9
|
|
|
$
|
3
|
|
|
$
|
1
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
89
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
6
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
6
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
63
|
|
|
$
|
19
|
|
|
$
|
9
|
|
|
$
|
3
|
|
|
$
|
1
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
95
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2020
|
|
|
2019
|
|
|
2018
|
|
|
2017
|
|
|
2016
|
|
|
Prior
|
|
|
Revolving
Loans
Amort
Cost Basis
|
|
|
Total
|
|
Construction & Development
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
371
|
|
|
$
|
97
|
|
|
$
|
36
|
|
|
$
|
19
|
|
|
$
|
7
|
|
|
$
|
9
|
|
|
$
|
—
|
|
|
$
|
539
|
|
|
|
|
2
|
|
|
|
4
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
6
|
|
|
|
|
4
|
|
|
|
1
|
|
|
|
—
|
|
|
|
3
|
|
|
|
—
|
|
|
|
1
|
|
|
|
—
|
|
|
|
9
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
377
|
|
|
$
|
102
|
|
|
$
|
36
|
|
|
$
|
22
|
|
|
$
|
7
|
|
|
$
|
10
|
|
|
$
|
—
|
|
|
$
|
554
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2020
|
|
|
2019
|
|
|
2018
|
|
|
2017
|
|
|
2016
|
|
|
Prior
|
|
|
Revolving
Loans
Amort
Cost Basis
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
57
|
|
|
$
|
22
|
|
|
$
|
18
|
|
|
$
|
11
|
|
|
$
|
11
|
|
|
$
|
23
|
|
|
$
|
—
|
|
|
$
|
142
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
7
|
|
|
|
1
|
|
|
|
—
|
|
|
|
1
|
|
|
|
—
|
|
|
|
1
|
|
|
|
—
|
|
|
|
10
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
64
|
|
|
$
|
23
|
|
|
$
|
18
|
|
|
$
|
12
|
|
|
$
|
11
|
|
|
$
|
24
|
|
|
$
|
—
|
|
|
$
|
152
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2020
|
|
|
2019
|
|
|
2018
|
|
|
2017
|
|
|
2016
|
|
|
Prior
|
|
|
Revolving
Loans
Amort
Cost Basis
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
197
|
|
|
$
|
117
|
|
|
$
|
93
|
|
|
$
|
44
|
|
|
$
|
55
|
|
|
$
|
88
|
|
|
$
|
—
|
|
|
$
|
594
|
|
|
|
|
1
|
|
|
|
—
|
|
|
|
1
|
|
|
|
8
|
|
|
|
1
|
|
|
|
—
|
|
|
|
—
|
|
|
|
11
|
|
|
|
|
—
|
|
|
|
2
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
11
|
|
|
|
—
|
|
|
|
13
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
198
|
|
|
$
|
119
|
|
|
$
|
94
|
|
|
$
|
52
|
|
|
$
|
56
|
|
|
$
|
99
|
|
|
$
|
—
|
|
|
$
|
618
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2020
|
|
|
2019
|
|
|
2018
|
|
|
2017
|
|
|
2016
|
|
|
Prior
|
|
|
Revolving
Loans
Amort
Cost Basis
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
176
|
|
|
$
|
132
|
|
|
$
|
105
|
|
|
$
|
75
|
|
|
$
|
65
|
|
|
$
|
132
|
|
|
$
|
—
|
|
|
$
|
685
|
|
|
|
|
5
|
|
|
|
5
|
|
|
|
2
|
|
|
|
4
|
|
|
|
1
|
|
|
|
1
|
|
|
|
—
|
|
|
|
18
|
|
|
|
|
5
|
|
|
|
4
|
|
|
|
20
|
|
|
|
4
|
|
|
|
1
|
|
|
|
10
|
|
|
|
—
|
|
|
|
44
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
186
|
|
|
$
|
141
|
|
|
$
|
127
|
|
|
$
|
83
|
|
|
$
|
67
|
|
|
$
|
143
|
|
|
$
|
—
|
|
|
$
|
747
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2020
|
|
|
2019
|
|
|
2018
|
|
|
2017
|
|
|
2016
|
|
|
Prior
|
|
|
Revolving
Loans
Amort
Cost Basis
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
373
|
|
|
$
|
172
|
|
|
$
|
134
|
|
|
$
|
101
|
|
|
$
|
101
|
|
|
$
|
237
|
|
|
$
|
93
|
|
|
$
|
1,211
|
|
|
|
|
3
|
|
|
|
1
|
|
|
|
1
|
|
|
|
1
|
|
|
|
1
|
|
|
|
3
|
|
|
|
—
|
|
|
|
10
|
|
|
|
|
5
|
|
|
|
3
|
|
|
|
3
|
|
|
|
3
|
|
|
|
1
|
|
|
|
10
|
|
|
|
2
|
|
|
|
27
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
381
|
|
|
$
|
176
|
|
|
$
|
138
|
|
|
$
|
105
|
|
|
$
|
103
|
|
|
$
|
250
|
|
|
$
|
95
|
|
|
$
|
1,248
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2020
|
|
|
2019
|
|
|
2018
|
|
|
2017
|
|
|
2016
|
|
|
Prior
|
|
|
Revolving
Loans
Amort
Cost Basis
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
177
|
|
|
$
|
104
|
|
|
$
|
39
|
|
|
$
|
21
|
|
|
$
|
9
|
|
|
$
|
2
|
|
|
$
|
—
|
|
|
$
|
352
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
1
|
|
|
|
1
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
2
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
178
|
|
|
$
|
105
|
|
|
$
|
39
|
|
|
$
|
21
|
|
|
$
|
9
|
|
|
$
|
2
|
|
|
$
|
—
|
|
|
$
|
354
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2020
|
|
|
2019
|
|
|
2018
|
|
|
2017
|
|
|
2016
|
|
|
Prior
|
|
|
Revolving
Loans
Amort
Cost Basis
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
48
|
|
|
$
|
21
|
|
|
$
|
7
|
|
|
$
|
4
|
|
|
$
|
1
|
|
|
$
|
2
|
|
|
$
|
7
|
|
|
$
|
90
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
1
|
|
|
|
—
|
|
|
|
1
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
48
|
|
|
$
|
21
|
|
|
$
|
7
|
|
|
$
|
4
|
|
|
$
|
1
|
|
|
$
|
3
|
|
|
$
|
7
|
|
|
$
|
91
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2020
|
|
|
2019
|
|
|
2018
|
|
|
2017
|
|
|
2016
|
|
|
Prior
|
|
|
Revolving
Loans
Amort
Cost Basis
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
2,356
|
|
|
$
|
804
|
|
|
$
|
540
|
|
|
$
|
320
|
|
|
$
|
273
|
|
|
$
|
580
|
|
|
$
|
100
|
|
|
$
|
4,973
|
|
|
|
|
20
|
|
|
|
12
|
|
|
|
4
|
|
|
|
14
|
|
|
|
3
|
|
|
|
4
|
|
|
|
—
|
|
|
|
57
|
|
|
|
|
42
|
|
|
|
16
|
|
|
|
27
|
|
|
|
16
|
|
|
|
3
|
|
|
|
35
|
|
|
|
2
|
|
|
|
141
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
2,418
|
|
|
$
|
832
|
|
|
$
|
571
|
|
|
$
|
350
|
|
|
$
|
279
|
|
|
$
|
619
|
|
|
$
|
102
|
|
|
$
|
5,171
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The following tables summarize the Company’s internal ratings of its loans
at June 30, 2020 (in millions):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pass
|
|
|
Special
Mention
|
|
|
Substandard
|
|
|
Doubtful
|
|
|
Total
|
|
|
|
$
|
1,465
|
|
|
$
|
9
|
|
|
$
|
35
|
|
|
$
|
—
|
|
|
$
|
1,509
|
|
|
|
|
91
|
|
|
|
5
|
|
|
|
2
|
|
|
|
—
|
|
|
|
98
|
|
|
|
|
3,087
|
|
|
|
50
|
|
|
|
98
|
|
|
|
—
|
|
|
|
3,235
|
|
|
|
|
409
|
|
|
|
—
|
|
|
|
2
|
|
|
|
—
|
|
|
|
411
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
5,052
|
|
|
$
|
64
|
|
|
$
|
137
|
|
|
$
|
—
|
|
|
$
|
5,253
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Company’s past due loans are as follows (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15-59
Days
Past
Due*
|
|
|
60-89
Days
Past
Due
|
|
|
Greater
Than 90
Days
|
|
|
Total Past
Due
|
|
|
Current
|
|
|
Total Loans
|
|
|
90 Days
Past Due
Still
Accruing
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
3,432
|
|
|
$
|
707
|
|
|
$
|
230
|
|
|
$
|
4,369
|
|
|
$
|
978,734
|
|
|
$
|
983,103
|
|
|
$
|
—
|
|
|
|
|
1,656
|
|
|
|
—
|
|
|
|
—
|
|
|
|
1,656
|
|
|
|
177,700
|
|
|
|
179,356
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,088
|
|
|
|
707
|
|
|
|
230
|
|
|
|
6,025
|
|
|
|
1,156,434
|
|
|
|
1,162,459
|
|
|
|
—
|
|
|
|
|
193
|
|
|
|
10
|
|
|
|
35
|
|
|
|
238
|
|
|
|
94,974
|
|
|
|
95,212
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Construction & Development
|
|
|
1,973
|
|
|
|
—
|
|
|
|
162
|
|
|
|
2,135
|
|
|
|
548,793
|
|
|
|
550,928
|
|
|
|
—
|
|
|
|
|
1,138
|
|
|
|
—
|
|
|
|
—
|
|
|
|
1,138
|
|
|
|
184,150
|
|
|
|
185,288
|
|
|
|
—
|
|
|
|
|
896
|
|
|
|
161
|
|
|
|
—
|
|
|
|
1,057
|
|
|
|
672,551
|
|
|
|
673,608
|
|
|
|
—
|
|
|
|
|
97
|
|
|
|
821
|
|
|
|
—
|
|
|
|
918
|
|
|
|
819,137
|
|
|
|
820,055
|
|
|
|
—
|
|
|
|
|
5,946
|
|
|
|
373
|
|
|
|
100
|
|
|
|
6,419
|
|
|
|
1,322,055
|
|
|
|
1,328,474
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,050
|
|
|
|
1,355
|
|
|
|
262
|
|
|
|
11,667
|
|
|
|
3,546,686
|
|
|
|
3,558,353
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
330
|
|
|
|
55
|
|
|
|
25
|
|
|
|
410
|
|
|
|
383,354
|
|
|
|
383,764
|
|
|
|
—
|
|
|
|
|
44
|
|
|
|
11
|
|
|
|
—
|
|
|
|
55
|
|
|
|
104,759
|
|
|
|
104,814
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
374
|
|
|
|
66
|
|
|
|
25
|
|
|
|
465
|
|
|
|
488,113
|
|
|
|
488,578
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
15,705
|
|
|
$
|
2,138
|
|
|
$
|
552
|
|
|
$
|
18,395
|
|
|
$
|
5,286,207
|
|
|
$
|
5,304,602
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15-59
Days
Past
Due*
|
|
|
60-89
Days
Past Due
|
|
|
Greater
Than 90
Days
|
|
|
Total Past
Due
|
|
|
Current
|
|
|
Total Loans
|
|
|
90 Days
Past Due
Still
Accruing
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
3,647
|
|
|
$
|
406
|
|
|
$
|
576
|
|
|
$
|
4,629
|
|
|
$
|
1,126,753
|
|
|
$
|
1,131,382
|
|
|
$
|
21
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
181,325
|
|
|
|
181,325
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,647
|
|
|
|
406
|
|
|
|
576
|
|
|
|
4,629
|
|
|
|
1,308,078
|
|
|
|
1,312,707
|
|
|
|
21
|
|
|
|
|
193
|
|
|
|
95
|
|
|
|
—
|
|
|
|
288
|
|
|
|
94,576
|
|
|
|
94,864
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Construction & Development
|
|
|
4,775
|
|
|
|
44
|
|
|
|
—
|
|
|
|
4,819
|
|
|
|
549,140
|
|
|
|
553,959
|
|
|
|
—
|
|
|
|
|
708
|
|
|
|
—
|
|
|
|
—
|
|
|
|
708
|
|
|
|
151,529
|
|
|
|
152,237
|
|
|
|
—
|
|
|
|
|
613
|
|
|
|
—
|
|
|
|
—
|
|
|
|
613
|
|
|
|
617,073
|
|
|
|
617,686
|
|
|
|
—
|
|
|
|
|
1,393
|
|
|
|
322
|
|
|
|
133
|
|
|
|
1,848
|
|
|
|
745,126
|
|
|
|
746,974
|
|
|
|
—
|
|
|
|
|
8,072
|
|
|
|
18
|
|
|
|
275
|
|
|
|
8,365
|
|
|
|
1,240,044
|
|
|
|
1,248,409
|
|
|
|
33
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15,561
|
|
|
|
384
|
|
|
|
408
|
|
|
|
16,353
|
|
|
|
3,302,912
|
|
|
|
3,319,265
|
|
|
|
33
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
551
|
|
|
|
158
|
|
|
|
75
|
|
|
|
784
|
|
|
|
352,811
|
|
|
|
353,595
|
|
|
|
59
|
|
|
|
|
214
|
|
|
|
24
|
|
|
|
—
|
|
|
|
238
|
|
|
|
90,364
|
|
|
|
90,602
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
765
|
|
|
|
182
|
|
|
|
75
|
|
|
|
1,022
|
|
|
|
443,175
|
|
|
|
444,197
|
|
|
|
59
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
20,166
|
|
|
$
|
1,067
|
|
|
$
|
1,059
|
|
|
$
|
22,292
|
|
|
$
|
5,148,741
|
|
|
$
|
5,171,033
|
|
|
$
|
113
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15-59
Days
Past
Due*
|
|
|
60-89
Days
Past
Due
|
|
|
Greater
Than
90
Days
|
|
|
Total
Past
Due
|
|
|
Current
|
|
|
Total Loans
|
|
|
90 Days
Past Due
Still
Accruing
|
|
|
|
$
|
4,563
|
|
|
$
|
474
|
|
|
$
|
129
|
|
|
$
|
5,166
|
|
|
$
|
1,504,288
|
|
|
$
|
1,509,454
|
|
|
$
|
—
|
|
|
|
|
1,080
|
|
|
|
15
|
|
|
|
—
|
|
|
|
1,095
|
|
|
|
96,353
|
|
|
|
97,448
|
|
|
|
—
|
|
|
|
|
13,678
|
|
|
|
110
|
|
|
|
726
|
|
|
|
14,514
|
|
|
|
3,220,694
|
|
|
|
3,235,208
|
|
|
|
—
|
|
|
|
|
410
|
|
|
|
83
|
|
|
|
105
|
|
|
|
598
|
|
|
|
410,359
|
|
|
|
410,957
|
|
|
|
92
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
19,731
|
|
|
$
|
682
|
|
|
$
|
960
|
|
|
$
|
21,373
|
|
|
$
|
5,231,694
|
|
|
$
|
5,253,067
|
|
|
$
|
92
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
*
|
The Company monitors commercial, agricultural and real estate loans after such loans are 15 days past due. Consumer loans are monitored after such loans are 30 days past due.
|
The restructuring of a loan is considered a “troubled debt restructuring” if both the borrower is experiencing financial difficulties and the creditor has granted a concession. Concessions may include interest rate reductions or below market interest rates, principal forgiveness, restructuring amortization schedules, reductions in collateral and other actions intended to minimize potential losses.
The Company’s loans that were modified and considered troubled debt restructurings are as follows (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three-Months Ended June 30, 2021
|
|
|
Six-Months
Ended June 30, 2021
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Recorded
|
|
|
Recorded
|
|
|
|
|
|
Recorded
|
|
|
Recorded
|
|
|
|
Number
|
|
|
Investment
|
|
|
Investment
|
|
|
Number
|
|
|
Investment
|
|
|
Investment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2
|
|
|
$
|
212
|
|
|
$
|
212
|
|
|
|
4
|
|
|
$
|
361
|
|
|
$
|
361
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2
|
|
|
|
212
|
|
|
|
212
|
|
|
|
4
|
|
|
|
361
|
|
|
|
361
|
|
|
|
|
1
|
|
|
|
68
|
|
|
|
68
|
|
|
|
1
|
|
|
|
68
|
|
|
|
68
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Construction & Development
|
|
|
1
|
|
|
|
200
|
|
|
|
200
|
|
|
|
1
|
|
|
|
200
|
|
|
|
200
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
2
|
|
|
|
548
|
|
|
|
548
|
|
|
|
3
|
|
|
|
1,047
|
|
|
|
1,047
|
|
|
|
|
1
|
|
|
|
245
|
|
|
|
245
|
|
|
|
3
|
|
|
|
443
|
|
|
|
443
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4
|
|
|
|
993
|
|
|
|
993
|
|
|
|
7
|
|
|
|
1,690
|
|
|
|
1,690
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1
|
|
|
|
31
|
|
|
|
31
|
|
|
|
1
|
|
|
|
31
|
|
|
|
31
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1
|
|
|
|
31
|
|
|
|
31
|
|
|
|
1
|
|
|
|
31
|
|
|
|
31
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8
|
|
|
$
|
1,304
|
|
|
$
|
1,304
|
|
|
|
13
|
|
|
$
|
2,150
|
|
|
$
|
2,150
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three-Months Ended June 30, 2020
|
|
|
Six-Months
Ended June 30, 2020
|
|
|
|
|
|
|
|
|
|
Post-
Modification
|
|
|
|
|
|
|
|
|
Post-
Modification
|
|
|
|
|
|
|
Recorded
|
|
|
Recorded
|
|
|
|
|
|
Recorded
|
|
|
Recorded
|
|
|
|
Number
|
|
|
Investment
|
|
|
Investment
|
|
|
Number
|
|
|
Investment
|
|
|
Investment
|
|
|
|
|
4
|
|
|
$
|
196
|
|
|
$
|
196
|
|
|
|
9
|
|
|
$
|
484
|
|
|
$
|
484
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
1
|
|
|
|
134
|
|
|
|
134
|
|
|
|
|
1
|
|
|
|
123
|
|
|
|
123
|
|
|
|
1
|
|
|
|
123
|
|
|
|
123
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
1
|
|
|
|
14
|
|
|
|
14
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5
|
|
|
$
|
319
|
|
|
$
|
319
|
|
|
|
12
|
|
|
$
|
755
|
|
|
$
|
755
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The balances below provide information as to how the loans were modified as troubled debt restructured loans (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three-Months Ended June 30, 2021
|
|
|
|
|
|
Six-Months
Ended June 30, 2021
|
|
|
|
Adjusted
|
|
|
|
|
|
Combined
|
|
|
|
|
|
Adjusted
|
|
|
|
|
|
Combined
|
|
|
|
Interest
|
|
|
Maturity
|
|
|
Rate and
|
|
|
|
|
|
Interest
|
|
|
Maturity
|
|
|
Rate and
|
|
|
|
Rate
|
|
|
Extended
|
|
|
Maturity
|
|
|
|
|
|
Rate
|
|
|
Extended
|
|
|
Maturity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
—
|
|
|
$
|
212
|
|
|
$
|
—
|
|
|
|
|
|
|
$
|
—
|
|
|
$
|
212
|
|
|
$
|
149
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
—
|
|
|
|
212
|
|
|
|
—
|
|
|
|
|
|
|
|
—
|
|
|
|
212
|
|
|
|
149
|
|
|
|
|
—
|
|
|
|
68
|
|
|
|
—
|
|
|
|
|
|
|
|
—
|
|
|
|
68
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Construction & Development
|
|
|
—
|
|
|
|
200
|
|
|
|
—
|
|
|
|
|
|
|
|
—
|
|
|
|
200
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
548
|
|
|
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
1,047
|
|
|
|
|
—
|
|
|
|
245
|
|
|
|
—
|
|
|
|
|
|
|
|
—
|
|
|
|
245
|
|
|
|
198
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
—
|
|
|
|
445
|
|
|
|
548
|
|
|
|
|
|
|
|
—
|
|
|
|
445
|
|
|
|
1,245
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
31
|
|
|
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
31
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
31
|
|
|
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
31
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
—
|
|
|
$
|
725
|
|
|
$
|
579
|
|
|
|
|
|
|
$
|
—
|
|
|
$
|
725
|
|
|
$
|
1,425
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three-Months Ended June 30, 2020
|
|
|
|
|
|
Six-Months
Ended June 30, 2020
|
|
|
|
Adjusted
|
|
|
|
|
|
Combined
|
|
|
|
|
|
Adjusted
|
|
|
|
|
|
Combined
|
|
|
|
Interest
|
|
|
Maturity
|
|
|
Rate and
|
|
|
|
|
|
Interest
|
|
|
Maturity
|
|
|
Rate and
|
|
|
|
Rate
|
|
|
Extended
|
|
|
Maturity
|
|
|
|
|
|
Rate
|
|
|
Extended
|
|
|
Maturity
|
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
196
|
|
|
|
|
|
|
$
|
—
|
|
|
$
|
260
|
|
|
$
|
224
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
—
|
|
|
|
134
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
123
|
|
|
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
123
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
—
|
|
|
|
14
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
319
|
|
|
|
|
|
|
$
|
—
|
|
|
$
|
408
|
|
|
$
|
347
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
During the three and
six-months
ended June 30, 2021 and 2020, no loans were modified as a troubled debt restructured loan within the previous 12 months and for which there was a payment default. A default for purposes of this disclosure is a troubled debt restructured loan in which the borrower is 90 days past due or more or results in the foreclosure and repossession of the applicable collateral.
As of June 30, 2021, the Company has no commitments to lend additional funds to loan customers whose terms have been modified in troubled debt restructurings.
Loans
totaled $61,802,000, $66,370,000 and $83,969,000 at June 30, 2021 and 2020, and December 31, 2020, respectively. At June 30, 2021 and 2020, and December 31, 2020, $5,545,000, $3,077,000 and $4,384,000 are valued at the lower of cost or fair value, and the remaining amounts are valued under the fair value option.
These loans, which are sold on a servicing released basis, are valued using a market approach by utilizing either: (i) the fair value of the securities backed by similar mortgage loans, adjusted for certain factors to approximate the fair value of a whole mortgage loan, including the value attributable to mortgage servicing and credit risk, (ii) current commitments to purchase loans or (iii) recent observable market trades for similar loans, adjusted for credit risk and other individual loan characteristics. As these prices are derived from market observable inputs, the Company classifies these valuations as Level 2 in the fair value disclosures (see Note 9). Interest income on mortgage loans
is recognized based on the contractual rates and reflected in interest income on loans in the consolidated statements of earnings. The Company has no continuing ownership in any residential mortgage loans sold.
The Company originates certain mortgage loans for sale in the secondary market. The mortgage loan sales contracts contain indemnification clauses should the loans default, generally in the first three to six months, or if documentation is determined not to be in compliance with regulations. The Company’s historic losses as a result of these indemnities have been insignificant.
Note 5 - Derivative Financial Instruments
The Company enters into interest rate lock commitments (“IRLCs”) with customers to originate residential mortgage loans at a specific interest rate that are ultimately sold in the secondary market. These commitments, which contain fixed expiration dates, offer the borrower an interest rate guarantee provided the loan meets underwriting guidelines and closes within the timeframe established by the Company.
The Company purchases forward mortgage-backed securities contracts to manage the changes in fair value associated with changes in interest rates related to a portion of the IRLCs. These instruments are typically entered into at the time the IRLC is made in the aggregate.
These financial instruments are not designated as hedging instruments for accounting purposes. All derivatives are carried at fair value in either other assets or other liabilities, through earnings in the statement of earnings.
The fair values of IRLCs are based on current secondary market prices for underlying loans and estimated servicing value with similar coupons, maturity and credit quality, subject to the anticipated loan funding probability (pull-through rate) net of estimated costs to originate the loan. The fair value of IRLCs is subject to change primarily due to changes in interest rates and the estimated pull-through rate. These commitments are classified as Level 2 in the fair value disclosures (see Note 9), as the valuations are based on observable market inputs.
Forward mortgage-backed securities contracts are exchange-traded or traded within highly active dealer markets. In order to determine the fair value of these instruments, the Company utilizes the exchange price or dealer market price for the particular derivative contract and these instruments are therefore classified as Level 2 in the fair value disclosures (see Note 9). The estimated fair values are subject to change primarily due to changes in interest rates. The impact of these forward contracts is included in gain on sale and fees on mortgage loans in the statement of earnings.
The following table provides the outstanding notional balances and fair values of outstanding derivative positions (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding
Notional
Balance
|
|
|
Asset
Derivative
Fair Value
|
|
|
Liability
Derivative
Fair Value
|
|
|
|
$
|
143,879
|
|
|
$
|
2,670
|
|
|
$
|
—
|
|
Forward mortgage-backed securities trades
|
|
|
165,000
|
|
|
|
—
|
|
|
|
376
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding
Notional
Balance
|
|
|
Asset
Derivative
Fair Value
|
|
|
Liability
Derivative
Fair Value
|
|
|
|
$
|
190,431
|
|
|
$
|
5,037
|
|
|
$
|
—
|
|
Forward mortgage-backed securities trades
|
|
|
201,500
|
|
|
|
—
|
|
|
|
1,099
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding
Notional
Balance
|
|
|
Asset
Derivative
Fair
Value
|
|
|
Liability
Derivative
Fair
Value
|
|
|
|
$
|
202,906
|
|
|
$
|
4,618
|
|
|
$
|
—
|
|
Forward mortgage-backed securities trades
|
|
|
198,000
|
|
|
|
—
|
|
|
|
1,560
|
|
Borrowings consisted of the following (dollars in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30,
|
|
|
December 31,
|
|
|
|
2021
|
|
|
2020
|
|
|
2020
|
|
Securities sold under agreements with customers to repurchase
|
|
$
|
531,469
|
|
|
$
|
444,249
|
|
|
$
|
412,743
|
|
|
|
|
18,500
|
|
|
|
4,975
|
|
|
|
17,350
|
|
Advances from Federal Home Loan Bank of Dallas
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
549,969
|
|
|
$
|
449,224
|
|
|
$
|
430,093
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Securities sold under repurchase agreements are generally with significant customers of the Company that require short-term liquidity for their funds for which the Company pledges certain securities that have a fair value equal to at least the amount of the borrowings. The agreements mature daily and therefore the risk arising from a decline in the fair value of the collateral pledged is minimal. The securities pledged are mortgage-backed securities. These agreements do not include “right of
set-off”
provisions and therefore the Company does not offset such agreements for financial reporting purposes.
The Company renewed its loan agreement, effective June 30, 2021, with Frost Bank. Under the loan agreement, as renewed and amended, we are permitted to draw up to $25,000,000 on a revolving line of credit. There was no outstanding balance under the line of credit as of June 30, 2021 and 2020, or December 31, 2020.
Income tax expense was $11,075,000 for the second quarter of 2021 as compared to $10,663,000 for the same period in 2020. The Company’s effective tax rates on pretax income were 16.42% and 16.63% for the second quarters of 2021 and 2020, respectively. Income tax expense was $22,129,000 for the six months ended June 30, 2021 as compared to 17,898,000 for the same period in 2020. The Company’s effective tax rates on pretax income were 16.34% and 16.48% for the
six-months
ended June 30, 2021 and 2020, respectively. The effective tax rates differ from the statutory federal tax rate of 21% primarily due to tax exempt interest income earned on certain investment securities and loans, the deductibility of dividends paid to our employee stock ownership plan and excess tax benefits related to our directors’ deferred compensation plan.
Note 8 - Stock Option Plan and Restricted Stock Plan
Omnibus Stock and Incentive Plan
On April 27, 2021, the Company’s shareholders approved a new 2021 Omnibus Stock and Incentive Plan (“2021 Plan”) and reserved 2,500,000 shares of the Company’s common stock for issuance under this plan. At June 30, 2021, the Company had 2,487,890 shares of stock remaining for issuance under the plan. The 2021 Plan supersedes all prior stock option and restricted stock plans with previously reserved shares cancelled.
Prior to the approval of the 2021 Plan, the 2012 Incentive Stock Option Plan (the “2012 Plan”) provided for the granting of options to employees of the Company at prices not less than market value at the date of grant. On April 27, 2021, the 2012 Plan was superseded by the new 2021 Plan and all previous reserved shares were cancelled and the 2021 Plan reserved 2,500,000 shares for future issuances. The 2012 Plan provided that options granted vest and are exercisable after two years from the date of grant and vest at a rate of 20% each year thereafter and have a
10-year
term. Shares are issued under the 2012 Plan and the 2021 Plan from available authorized shares. An analysis of stock option activity for the
six-months
ended June 30, 2021 is presented in the table and narrative below:
|
|
|
|
|
|
|
|
|
|
|
Shares
|
|
|
Weighted-
Average Ex. Price
|
|
Outstanding, December 31, 2020
|
|
|
1,833,057
|
|
|
$
|
20.85
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
(165,371
|
)
|
|
|
15.89
|
|
|
|
|
(17,600
|
)
|
|
|
25.61
|
|
|
|
|
|
|
|
|
|
|
Outstanding, June 30, 2021
|
|
|
1,650,086
|
|
|
|
21.29
|
|
|
|
|
|
|
|
|
|
|
Exercisable, June 30, 2021
|
|
|
938,436
|
|
|
$
|
19.04
|
|
|
|
|
|
|
|
|
|
|
The options outstanding at June 30, 2021 had exercise prices ranging between $7.87 and $34.55. Stock options have been adjusted retroactively for the effects of stock dividends and splits.
The Company grants incentive stock options for a fixed number of shares with an exercise price equal to the fair value of the shares at the date of grant to employees.
The Company recorded stock option expense totaling $372,000 and $349,000 for the three-month periods ended June 30, 2021 and 2020, respectively. The Company recorded stock option expense totaling $691,000 and $689,000 for the six months ended June 30, 2021 and 2020, respectively.
As of June 30, 2021, there was $3,374,000 of total unrecognized compensation cost related to unvested share-based compensation arrangements related to stock options granted under the Company’s stock option plans. That cost is expected to be recognized over a weighted-average period of 1.69 years. The total fair value of shares vested during the
six-months
ended June 30, 2021 and 2020 was $1,246,000 and $791,000, respectively.
On April 28, 2015, shareholders of the Company approved the 2015 Restricted Stock Plan (the “2015 Plan”) for selected employees, officers,
non-employee
directors and consultants. On April 27, 2021, the 2015 Plan was superseded by the new 2021 Plan and all previous reserved shares were cancelled.
The following table summarizes information about vested and unvested restricted stock.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the
six-months
ended June 30,
|
|
|
|
2021
|
|
|
2020
|
|
|
|
Restricted
Stock
Outstanding
|
|
|
Weighted
Average
Grant Date
Fair Value
|
|
|
Restricted
Stock
Outstanding
|
|
|
Weighted
Average
Grant Date
Fair Value
|
|
Balance at beginning of period
|
|
|
95,888
|
|
|
$
|
29.89
|
|
|
|
105,309
|
|
|
$
|
29.93
|
|
|
|
|
12,110
|
|
|
|
49.58
|
|
|
|
32,149
|
|
|
|
28.55
|
|
|
|
|
(31,081
|
)
|
|
|
28.42
|
|
|
|
(30,276
|
)
|
|
|
30.27
|
|
|
|
|
(1,027
|
)
|
|
|
34.55
|
|
|
|
(239
|
)
|
|
|
29.70
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
75,890
|
|
|
$
|
33.57
|
|
|
|
106,943
|
|
|
$
|
29.42
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The total fair value of restricted stock vested for the
six-months
ended June 30, 2021 and 2020, was $883,000 and $918,000, respectively.
The Company recorded restricted stock expense for employees of $289,000 and $322,000, respectively, for the three-months ended June 30, 2021 and 2020, respectively. The Company recorded restricted stock expense for employees of $579,000 and $597,000 for the
six-month
periods ended June 30, 2021 and 2020, respectively. The Company recorded director expense related to these restricted stock grants of $150,000 and $160,000 for the three-months ended June 30, 2021 and 2020, respectively. The Company recorded director expense related to these restricted stock grants of $300,000 and $335,000 for the
six-months
ended June 30, 2021 and 2020, respectively.
As of June 30, 2021, and 2020, there were $1,845,000 and $2,441,000, respectively, of total unrecognized compensation cost related to unvested restricted stock which is expected to be recognized over a weighted-average period of 1.33 years and 1.76 years, respectively. At June 30, 2021 and 2020, and December 31, 2020, there was $59,000, $55,000 and $49,000, respectively, accrued in other liabilities related to dividends declared to be paid upon vesting.
Note 9 - Fair Value Disclosures
The authoritative accounting guidance for fair value measurements defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. A fair value measurement assumes that the transaction to sell the asset or transfer the liability occurs in the principal market for the asset or liability or, in the absence of a principal market, the most advantageous market for the asset or liability. The price in the principal (or most advantageous) market used to measure the fair value of the asset or liability shall not be adjusted for transaction costs. An orderly transaction is a transaction that assumes exposure to the market for a period prior to the measurement date to allow for marketing activities that are usual and customary for transactions involving such assets and liabilities; it is not a forced transaction. Market participants are buyers and sellers in the principal market that are (i) independent, (ii) knowledgeable, (iii) able to transact, and (iv) willing to transact.
The authoritative accounting guidance requires the use of valuation techniques that are consistent with the market approach, the income approach and/or the cost approach. The market approach uses prices and other relevant information generated by market transactions involving identical or comparable assets and liabilities. The income approach uses valuation techniques to convert future amounts, such as cash flows or earnings, to a single present amount on a discounted basis. The cost approach is based on the amount that currently would be required to replace the service capacity of an asset (replacement costs). Valuation techniques should be consistently applied. Inputs to valuation techniques refer to the assumptions that market participants would use in pricing the asset or liability. Inputs may be observable, meaning those that reflect the assumptions market participants would use in pricing the asset or liability developed based on market data obtained from independent sources, or unobservable, meaning those that reflect the reporting entity’s own assumptions about the assumptions market participants would use in pricing the asset or liability developed based on the best information available in the circumstances. In that regard, the authoritative guidance establishes a fair value hierarchy for valuation inputs that gives the highest priority to quoted prices in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. The fair value hierarchy is as follows:
|
•
|
|
Level 1 Inputs – Unadjusted quoted prices in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date.
|
|
•
|
|
Level 2 Inputs – Inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. These include quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability (for example, interest rates, volatilities, prepayment speeds, loss severities, credit risks and default rates) or inputs that are derived principally from or corroborated by observable market data by correlation or other means.
|
|
•
|
|
Level 3 Inputs – Significant unobservable inputs that reflect an entity’s own assumptions that market participants would use in pricing the assets or liabilities.
|
A description of the valuation methodologies used for assets and liabilities measured at fair value, as well as the general classification of such instruments pursuant to the valuation hierarchy, is set forth below.
In general, fair value is based upon quoted market prices, where available. If such quoted market prices are not available, fair value is based upon internally developed models that primarily use, as inputs, observable market-based parameters. Valuation adjustments may be made to ensure that financial instruments are recorded at fair value. While management believes the Company’s valuation methodologies are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different estimate of fair value at the reporting date.
Securities classified as
and trading are reported at fair value utilizing Level 1 and Level 2 inputs. For these securities, the Company obtains fair value measurements from an independent pricing service. The fair value measurements consider observable data that may include market spreads, cash flows, the United States Treasury yield curve, live trading levels, trade execution data, dealer quotes, market consensus prepayments speeds, credit information and the security’s terms and conditions, among other items.
See Notes 4 and 5 related to the determination of fair value for loans
IRLCs and forward mortgage-backed securities trades.
There were no transfers between Level 2 and Level 3 during the three and
six-months
ended June 30, 2021 and 2020, and the year ended December 31, 2020.
The following table summarizes the Company’s
securities, loans
and derivatives which are measured at fair value on a recurring basis, segregated by the level of the valuation inputs within the fair value hierarchy utilized to measure fair value (dollars in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Level 1
Inputs
|
|
|
Level 2
Inputs
|
|
|
Level 3
Inputs
|
|
|
Total Fair
Value
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Obligations of states and political subdivisions
|
|
$
|
—
|
|
|
$
|
2,615,087
|
|
|
$
|
—
|
|
|
$
|
2,615,087
|
|
|
|
|
—
|
|
|
|
33,318
|
|
|
|
—
|
|
|
|
33,318
|
|
Residential mortgage-backed securities
|
|
|
—
|
|
|
|
2,504,186
|
|
|
|
—
|
|
|
|
2,504,186
|
|
Commercial mortgage-backed securities
|
|
|
—
|
|
|
|
420,968
|
|
|
|
—
|
|
|
|
420,968
|
|
|
|
|
4,489
|
|
|
|
—
|
|
|
|
—
|
|
|
|
4,489
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
4,489
|
|
|
$
|
5,573,559
|
|
|
$
|
—
|
|
|
$
|
5,578,048
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
—
|
|
|
$
|
56,257
|
|
|
$
|
—
|
|
|
$
|
56,257
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
—
|
|
|
$
|
2,670
|
|
|
$
|
—
|
|
|
$
|
2,670
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Forward mortgage-backed securities trades liability
|
|
$
|
—
|
|
|
$
|
(376
|
)
|
|
$
|
—
|
|
|
$
|
(376
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Level 1
Inputs
|
|
|
Level 2
Inputs
|
|
|
Level 3
Inputs
|
|
|
Total Fair
Value
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
10,122
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
10,122
|
|
Obligations of states and political subdivisions
|
|
|
—
|
|
|
|
1,950,279
|
|
|
|
—
|
|
|
|
1,950,279
|
|
Residential mortgage-backed securities
|
|
|
—
|
|
|
|
1,571,673
|
|
|
|
—
|
|
|
|
1,571,673
|
|
Commercial mortgage-backed securities
|
|
|
—
|
|
|
|
582,220
|
|
|
|
—
|
|
|
|
582,220
|
|
|
|
|
4,569
|
|
|
|
—
|
|
|
|
—
|
|
|
|
4,569
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
14,691
|
|
|
$
|
4,104,172
|
|
|
$
|
—
|
|
|
$
|
4,118,863
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
—
|
|
|
$
|
63,293
|
|
|
$
|
—
|
|
|
$
|
63,293
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
—
|
|
|
$
|
5,037
|
|
|
$
|
—
|
|
|
$
|
5,037
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Forward mortgage-backed securities trades liability
|
|
$
|
—
|
|
|
$
|
(1,099
|
)
|
|
$
|
—
|
|
|
$
|
(1,099
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Level 1
Inputs
|
|
|
Level 2
Inputs
|
|
|
Level 3
Inputs
|
|
|
Total Fair
Value
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Obligations of state and political subdivisions
|
|
$
|
—
|
|
|
$
|
2,426,876
|
|
|
$
|
—
|
|
|
$
|
2,426,876
|
|
Residential mortgage-backed securities
|
|
|
—
|
|
|
|
1,472,280
|
|
|
|
—
|
|
|
|
1,472,280
|
|
Commercial mortgage-backed securities
|
|
|
—
|
|
|
|
489,316
|
|
|
|
—
|
|
|
|
489,316
|
|
|
|
|
4,557
|
|
|
|
—
|
|
|
|
—
|
|
|
|
4,557
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
4,557
|
|
|
$
|
4,388,472
|
|
|
$
|
—
|
|
|
$
|
4,393,029
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
—
|
|
|
$
|
79,585
|
|
|
$
|
—
|
|
|
$
|
79,585
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
—
|
|
|
$
|
4,618
|
|
|
$
|
—
|
|
|
$
|
4,618
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Forward mortgage-backed securities trades liability
|
|
$
|
—
|
|
|
$
|
(1,560
|
)
|
|
$
|
—
|
|
|
$
|
(1,560
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The following table summarizes the Company’s loans
at fair value and the net unrealized gains as of the balance sheet dates shown below (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30,
|
|
|
December 31,
|
|
|
|
2021
|
|
|
2020
|
|
|
2020
|
|
Unpaid principal balance on loans
|
|
$
|
54,542
|
|
|
$
|
60,432
|
|
|
$
|
76,602
|
|
Net unrealized gains on loans
|
|
|
1,715
|
|
|
|
2,861
|
|
|
|
2,983
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
56,257
|
|
|
$
|
63,293
|
|
|
$
|
79,585
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The following table summarizes the Company’s gains on sale and fees of mortgage loans for the three and six-months ended June 30, 2021 and 2020 (in thousand):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three-Months ended
June 30,
|
|
|
Six-Months
ended
June 30,
|
|
|
|
2021
|
|
|
2020
|
|
|
2021
|
|
|
2020
|
|
Realized gain on sale and fees on mortgage loans*
|
|
$
|
9,465
|
|
|
$
|
7,637
|
|
|
$
|
20,195
|
|
|
$
|
10,103
|
|
Change in fair value on loans
and IRLCs
|
|
|
2,008
|
|
|
|
3,937
|
|
|
|
(3,193
|
)
|
|
|
6,292
|
|
Change in forward mortgage-backed securities trades
|
|
|
(3,182
|
)
|
|
|
2,102
|
|
|
|
1,183
|
|
|
|
(946
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total gain on sale of mortgage loans
|
|
$
|
8,291
|
|
|
$
|
13,676
|
|
|
$
|
18,185
|
|
|
$
|
15,449
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
*
|
This includes gains on loans
carried under the fair value method and lower of cost or market.
|
No residential mortgage loans
were 90 days or more past due or considered impaired as of June 30, 2021 or 2020, or December 31, 2020. No significant credit losses were recognized on residential mortgage loans
for the three or
six-months
ended June 30, 2021 and 2020.
Certain
non-financial
assets and
non-financial
liabilities measured at fair value on a nonrecurring basis include other real estate owned, goodwill and other intangible assets and other
non-financial
long-lived assets.
Non-financial
assets measured at fair value on a
non-recurring
basis during the three and
six-months
ended June 30, 2021 and 2020 include other real estate owned which, subsequent to their initial transfer to other real estate owned from loans, were
re-measured
at fair value through a write-down included in gain (loss) on sale of foreclosed assets. During the reported periods, all fair value measurements for foreclosed assets utilized Level 2 inputs based on observable market data, generally third-party appraisals, or Level 3 inputs based on customized discounting criteria. These appraisals are evaluated individually and discounted as necessary due to the age of the appraisal, lack of comparable sales, expected holding periods of property or special use type of the property. Such discounts vary by appraisal based on the above factors but generally range from 5% to 25% of the appraised value.
Re-evaluation
of other real estate owned is performed at least annually as required by regulatory guidelines or more often if particular circumstances arise. There were no other real estate owned properties that were
re-measured
subsequent to their initial transfer to other real estate owned during the three and
six-months
ended June 30, 2021 and 2020.
At June 30, 2021 and 2020, and December 31, 2020, other real estate owned totaled $283,000, $202,000 and $119,000, respectively.
The Company is required under current authoritative accounting guidance to disclose the estimated fair value of their financial instrument assets and liabilities including those subject to the requirements discussed above. For the Company, as for most financial institutions, substantially all of its assets and liabilities are considered financial instruments. Many of the Company’s financial instruments, however, lack an available trading market as characterized by a willing buyer and willing seller engaging in an exchange transaction.
The estimated fair value amounts of financial instruments have been determined by the Company using available market information and appropriate valuation methodologies. However, considerable judgment is required to interpret data to develop the estimates of fair value. Accordingly, the estimates presented herein are not necessarily indicative of the amounts the Company could realize in a current market exchange. The use of different market assumptions and/or estimation methodologies may have a material effect on the estimated fair value amounts.
In addition, reasonable comparability between financial institutions may not be likely due to the wide range of permitted valuation techniques and numerous estimates that must be made given the absence of active secondary markets for many of the financial instruments. This lack of uniform valuation methodologies also introduces a greater degree of subjectivity to these estimated fair values.
Cash and due from banks, federal funds sold, interest-bearing deposits and time deposits in banks and accrued interest receivable and payable are liquid in nature and considered Levels 1 or 2 of the fair value hierarchy.
Financial instruments with stated maturities have been valued using a present value discounted cash flow with a discount rate approximating current market for similar assets and liabilities and are considered Levels 2 and 3 of the fair value hierarchy. Financial instrument liabilities with no stated maturities have an estimated fair value equal to both the amount payable on demand and the carrying value and are considered Level 1 of the fair value hierarchy.
The carrying value and the estimated fair value of the Company’s contractual
off-balance-sheet
unfunded lines of credit, loan commitments and letters of credit, which are generally priced at market at the time of funding, are not material.
The estimated fair values and carrying values of all financial instruments under current authoritative guidance were as follows (in thousands).
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30,
|
|
|
December 31,
|
|
|
|
|
|
|
2021
|
|
|
2020
|
|
|
2020
|
|
|
|
|
|
|
Carrying
Value
|
|
|
Estimated
Fair Value
|
|
|
Carrying
Value
|
|
|
Estimated
Fair Value
|
|
|
Carrying
Value
|
|
|
Estimated
Fair Value
|
|
|
Fair Value
Hierarchy
|
|
|
|
$
|
190,061
|
|
|
$
|
190,061
|
|
|
$
|
188,373
|
|
|
$
|
188,373
|
|
|
$
|
211,113
|
|
|
$
|
211,113
|
|
|
|
Level 1
|
|
Interest-bearing demand deposits in banks
|
|
|
654,531
|
|
|
|
654,531
|
|
|
|
196,426
|
|
|
|
196,426
|
|
|
|
517,971
|
|
|
|
517,971
|
|
|
|
Level 1
|
|
|
|
|
5,578,048
|
|
|
|
5,578,048
|
|
|
|
4,118,863
|
|
|
|
4,118,863
|
|
|
|
4,393,029
|
|
|
|
4,393,029
|
|
|
|
Levels 1
and 2
|
|
Loans
held-for-investment,
net of allowance for credit losses
|
|
|
5,242,464
|
|
|
|
5,273,264
|
|
|
|
5,184,120
|
|
|
|
5,174,126
|
|
|
|
5,104,499
|
|
|
|
5,109,885
|
|
|
|
Level 3
|
|
|
|
|
61,802
|
|
|
|
61,969
|
|
|
|
66,370
|
|
|
|
66,630
|
|
|
|
83,969
|
|
|
|
84,233
|
|
|
|
Level 2
|
|
Accrued interest receivable
|
|
|
54,128
|
|
|
|
54,128
|
|
|
|
45,801
|
|
|
|
45,801
|
|
|
|
53,433
|
|
|
|
53,433
|
|
|
|
Level 2
|
|
Deposits with stated maturities
|
|
|
470,481
|
|
|
|
471,857
|
|
|
|
466,122
|
|
|
|
468,819
|
|
|
|
475,542
|
|
|
|
477,218
|
|
|
|
Level 2
|
|
Deposits with no stated maturities
|
|
|
9,311,213
|
|
|
|
9,311,213
|
|
|
|
7,691,520
|
|
|
|
7,691,520
|
|
|
|
8,200,275
|
|
|
|
8,200,275
|
|
|
|
Level 1
|
|
|
|
|
549,969
|
|
|
|
549,969
|
|
|
|
449,224
|
|
|
|
449,224
|
|
|
|
430,093
|
|
|
|
430,093
|
|
|
|
Level 2
|
|
|
|
|
316
|
|
|
|
316
|
|
|
|
541
|
|
|
|
541
|
|
|
|
377
|
|
|
|
377
|
|
|
|
Level 2
|
|
|
|
|
2,670
|
|
|
|
2,670
|
|
|
|
5,037
|
|
|
|
5,037
|
|
|
|
4,618
|
|
|
|
4,618
|
|
|
|
Level 2
|
|
Forward mortgage-backed securities trades liability
|
|
|
(376
|
)
|
|
|
(376
|
)
|
|
|
(1,099
|
)
|
|
|
(1,099
|
)
|
|
|
(1,560
|
)
|
|
|
(1,560
|
)
|
|
|
Level 2
|
|
On September 19, 2019, we entered into an agreement and plan of reorganization to acquire TB&T Bancshares, Inc. and its wholly-owned bank subsidiary, The Bank & Trust of Bryan/College Station, Texas. On January 1, 2020, the transaction was completed. Pursuant to the agreement, we issued 6,275,574 shares of the Company’s common stock in exchange for all of the outstanding shares of TB&T Bancshares, Inc. In addition, TBT Bancshares, Inc. made a $1,920,000 special dividend to its shareholders prior to closing of the transaction.
At closing, a wholly-owned subsidiary of the Company merged into TB&T Bancshares, Inc. and immediately thereafter TB&T Bancshares, Inc. was merged into the Company and The Bank & Trust of Bryan/College Station, Texas, was merged into First Financial Bank, N.A., a wholly-owned subsidiary of the Company. The primary purpose of the acquisition was to expand the Company’s market share near the Houston market. Factors that contributed to a purchase price resulting in goodwill include its record of earnings, strong management and board of directors, strong local economic environment and opportunity for growth. The results of operations from this acquisition are included in the consolidated earnings of the Company commencing January 1, 2020.
The following table presents the final amounts recorded on the consolidated balance sheet on the acquisition date (dollars in thousands):
|
|
|
|
|
Fair value of consideration paid:
|
|
|
|
|
Common stock issued (6,275,574 shares)
|
|
$
|
220,273
|
|
|
|
|
|
|
Fair value of identifiable assets acquired:
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
61,028
|
|
|
|
|
93,967
|
|
|
|
|
447,702
|
|
Identifiable intangible assets
|
|
|
4,798
|
|
|
|
|
25,377
|
|
|
|
|
|
|
Total identifiable assets acquired
|
|
$
|
632,872
|
|
|
|
|
|
|
Fair value of liabilities assumed:
|
|
|
|
|
|
|
$
|
549,125
|
|
|
|
|
5,397
|
|
|
|
|
|
|
Total liabilities assumed
|
|
$
|
554,522
|
|
|
|
|
|
|
Fair value of net identifiable assets acquired
|
|
|
78,350
|
|
|
|
|
|
|
Goodwill resulting from acquisition
|
|
$
|
141,923
|
|
|
|
|
|
|
Goodwill recorded in the acquisition was accounted for in accordance with the authoritative business combination guidance. Accordingly, goodwill will not be amortized but will be tested for impairment annually. The goodwill recorded is not deductible for federal income tax purposes.
The fair value of total loans acquired was $447,702,000 at acquisition compared to contractual amounts of $455,181,000.