Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934. |
Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934. |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |||||||
(Address of principal executive offices) | (Zip Code) |
Title of Each Class | Trading Symbol(s) | Name of Exchange on Which Registered | ||||||||||||
☒ | Accelerated Filer | ☐ | |||||||||||||||||||||
Non-Accelerated Filer | ☐ | (Do not check if a smaller reporting company) | |||||||||||||||||||||
Smaller Reporting Company | |||||||||||||||||||||||
Emerging Growth Company |
PART I. | |||||||||||
Item 1. | |||||||||||
Item 2. | |||||||||||
Item 3. | |||||||||||
Item 4. | |||||||||||
PART II. | |||||||||||
Item 1. | |||||||||||
Item 1A. | |||||||||||
Item 2 | |||||||||||
Item 3. | |||||||||||
Item 4. | |||||||||||
Item 5. | |||||||||||
Item 6. | |||||||||||
September 30, | December 31, | |||||||||||||
Assets | 2021 | 2020 | ||||||||||||
Cash and due from banks | $ | $ | ||||||||||||
Interest-bearing deposits in other banks | ||||||||||||||
Cash and cash equivalents | ||||||||||||||
Certificates of deposit held in other banks | ||||||||||||||
Securities available for sale, at fair value | ||||||||||||||
Loans held for sale (includes $ | ||||||||||||||
Loans, net of allowance for credit losses of $ | ||||||||||||||
Premises and equipment, net | ||||||||||||||
Other real estate owned | ||||||||||||||
Federal Home Loan Bank (FHLB) of Dallas stock and other restricted stock | ||||||||||||||
Bank-owned life insurance (BOLI) | ||||||||||||||
Deferred tax asset | ||||||||||||||
Goodwill | ||||||||||||||
Other intangible assets, net | ||||||||||||||
Other assets | ||||||||||||||
Total assets | $ | $ | ||||||||||||
Liabilities and Stockholders’ Equity | ||||||||||||||
Deposits: | ||||||||||||||
Noninterest-bearing | $ | $ | ||||||||||||
Interest-bearing | ||||||||||||||
Total deposits | ||||||||||||||
FHLB advances | ||||||||||||||
Other borrowings | ||||||||||||||
Junior subordinated debentures | ||||||||||||||
Other liabilities | ||||||||||||||
Total liabilities | ||||||||||||||
Commitments and contingencies | ||||||||||||||
Stockholders’ equity: | ||||||||||||||
Preferred stock ( | ||||||||||||||
Common stock ( | ||||||||||||||
Additional paid-in capital | ||||||||||||||
Retained earnings | ||||||||||||||
Accumulated other comprehensive income | ||||||||||||||
Total stockholders’ equity | ||||||||||||||
Total liabilities and stockholders’ equity | $ | $ |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||
2021 | 2020 | 2021 | 2020 | |||||||||||||||||||||||
Interest income: | ||||||||||||||||||||||||||
Interest and fees on loans | $ | $ | $ | $ | ||||||||||||||||||||||
Interest on taxable securities | ||||||||||||||||||||||||||
Interest on nontaxable securities | ||||||||||||||||||||||||||
Interest on interest-bearing deposits and other | ||||||||||||||||||||||||||
Total interest income | ||||||||||||||||||||||||||
Interest expense: | ||||||||||||||||||||||||||
Interest on deposits | ||||||||||||||||||||||||||
Interest on FHLB advances | ||||||||||||||||||||||||||
Interest on other borrowings | ||||||||||||||||||||||||||
Interest on junior subordinated debentures | ||||||||||||||||||||||||||
Total interest expense | ||||||||||||||||||||||||||
Net interest income | ||||||||||||||||||||||||||
Provision for credit losses | ( | |||||||||||||||||||||||||
Net interest income after provision for credit losses | ||||||||||||||||||||||||||
Noninterest income: | ||||||||||||||||||||||||||
Service charges on deposit accounts | ||||||||||||||||||||||||||
Investment management fees | ||||||||||||||||||||||||||
Mortgage banking revenue | ||||||||||||||||||||||||||
Gain on sale of loans | ||||||||||||||||||||||||||
Gain on sale of other real estate | ||||||||||||||||||||||||||
Gain on sale of securities available for sale | ||||||||||||||||||||||||||
(Loss) gain on sale and disposal of premises and equipment | ( | ( | ||||||||||||||||||||||||
Increase in cash surrender value of BOLI | ||||||||||||||||||||||||||
Other | ||||||||||||||||||||||||||
Total noninterest income | ||||||||||||||||||||||||||
Noninterest expense: | ||||||||||||||||||||||||||
Salaries and employee benefits | ||||||||||||||||||||||||||
Occupancy | ||||||||||||||||||||||||||
Communications and technology | ||||||||||||||||||||||||||
FDIC assessment | ||||||||||||||||||||||||||
Advertising and public relations | ||||||||||||||||||||||||||
Other real estate owned expenses, net | ( | |||||||||||||||||||||||||
Impairment of other real estate | ||||||||||||||||||||||||||
Amortization of other intangible assets | ||||||||||||||||||||||||||
Professional fees | ||||||||||||||||||||||||||
Acquisition expense, including legal | ||||||||||||||||||||||||||
Other | ||||||||||||||||||||||||||
Total noninterest expense | ||||||||||||||||||||||||||
Income before taxes | ||||||||||||||||||||||||||
Income tax expense | ||||||||||||||||||||||||||
Net income | $ | $ | $ | $ | ||||||||||||||||||||||
Basic earnings per share | $ | $ | $ | $ | ||||||||||||||||||||||
Diluted earnings per share | $ | $ | $ | $ |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||
2021 | 2020 | 2021 | 2020 | |||||||||||||||||||||||
Net income | $ | $ | $ | $ | ||||||||||||||||||||||
Other comprehensive (loss) income before tax: | ||||||||||||||||||||||||||
Change in net unrealized gains (losses) on available for sale securities during the period | ( | |||||||||||||||||||||||||
Reclassification for amount realized through sales of securities available for sale included in net income | ( | |||||||||||||||||||||||||
Change in net unrealized (losses) gains on cash flow hedges during the period | ( | |||||||||||||||||||||||||
Reclassification for amount realized through cash flow hedges included in net income | ( | ( | ||||||||||||||||||||||||
Other comprehensive (loss) income before tax | ( | ( | ||||||||||||||||||||||||
Income tax (benefit) expense | ( | ( | ||||||||||||||||||||||||
Other comprehensive (loss) income, net of tax | ( | ( | ||||||||||||||||||||||||
Comprehensive income | $ | $ | $ | $ |
Preferred Stock $ | Common Stock $ | Additional Paid in Capital | Retained Earnings | Accumulated Other Comprehensive Income | Total | ||||||||||||||||||||||||||||||||||||
Value | |||||||||||||||||||||||||||||||||||||||||
Shares | Amount | ||||||||||||||||||||||||||||||||||||||||
Three Months Ended | |||||||||||||||||||||||||||||||||||||||||
Balance, June 30, 2021 | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||
Net income | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||
Other comprehensive loss, net of tax | — | — | — | — | — | ( | ( | ||||||||||||||||||||||||||||||||||
Common stock repurchased | — | ( | ( | — | ( | — | ( | ||||||||||||||||||||||||||||||||||
Restricted stock forfeited | — | ( | — | — | — | — | |||||||||||||||||||||||||||||||||||
Restricted stock granted | — | — | — | ||||||||||||||||||||||||||||||||||||||
Stock based compensation expense | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||
Cash dividends ($ | — | — | — | — | ( | — | ( | ||||||||||||||||||||||||||||||||||
Balance, September 30, 2021 | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||
Three Months Ended | |||||||||||||||||||||||||||||||||||||||||
Balance, June 30, 2020 | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||
Net income | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||
Other comprehensive income, net of tax | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||
Common stock repurchased | — | ( | — | — | ( | — | ( | ||||||||||||||||||||||||||||||||||
Restricted stock forfeited | — | ( | — | — | — | — | |||||||||||||||||||||||||||||||||||
Restricted stock granted | — | ( | — | — | |||||||||||||||||||||||||||||||||||||
Stock based compensation expense | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||
Cash dividends ($ | — | — | — | — | ( | — | ( | ||||||||||||||||||||||||||||||||||
Balance, September 30, 2020 | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||
Preferred Stock $ | Common Stock $ | Additional Paid in Capital | Retained Earnings | Accumulated Other Comprehensive Income | Total | ||||||||||||||||||||||||||||||||||||
Value | |||||||||||||||||||||||||||||||||||||||||
Shares | Amount | ||||||||||||||||||||||||||||||||||||||||
Nine Months Ended | |||||||||||||||||||||||||||||||||||||||||
Balance, December 31, 2020 | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||
Cumulative effect of change in accounting principle | — | — | — | — | ( | — | ( | ||||||||||||||||||||||||||||||||||
Adjusted beginning balance | — | ||||||||||||||||||||||||||||||||||||||||
Net income | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||
Other comprehensive loss, net of tax | — | — | — | — | — | ( | ( | ||||||||||||||||||||||||||||||||||
Common stock repurchased | — | ( | ( | — | ( | — | ( | ||||||||||||||||||||||||||||||||||
Restricted stock forfeited | — | ( | — | — | — | — | |||||||||||||||||||||||||||||||||||
Restricted stock granted | — | ( | — | — | |||||||||||||||||||||||||||||||||||||
Stock based compensation expense | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||
Cash dividends ($ | — | — | — | — | ( | — | ( | ||||||||||||||||||||||||||||||||||
Balance, September 30, 2021 | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||
Nine Months Ended | |||||||||||||||||||||||||||||||||||||||||
Balance, December 31, 2019 | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||
Net income | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||
Other comprehensive income, net of tax | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||
Common stock repurchased | — | ( | — | ( | — | ( | |||||||||||||||||||||||||||||||||||
Restricted stock forfeited | — | ( | — | — | — | — | |||||||||||||||||||||||||||||||||||
Restricted stock granted | — | ( | — | — | |||||||||||||||||||||||||||||||||||||
Stock based compensation expense | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||
Cash dividends ($ | — | — | — | — | ( | — | ( | ||||||||||||||||||||||||||||||||||
Balance, September 30, 2020 | $ | $ | $ | $ | $ | $ |
Nine Months Ended September 30, | ||||||||||||||
2021 | 2020 | |||||||||||||
Cash flows from operating activities: | ||||||||||||||
Net income | $ | $ | ||||||||||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||||||||
Depreciation expense | ||||||||||||||
Accretion income recognized on acquired loans | ( | ( | ||||||||||||
Amortization of other intangibles assets | ||||||||||||||
Amortization of premium on securities, net | ||||||||||||||
Amortization of discount and origination costs on borrowings | ||||||||||||||
Stock based compensation expense | ||||||||||||||
Excess tax (benefit) expense on restricted stock vested | ( | |||||||||||||
FHLB stock dividends | ( | ( | ||||||||||||
Gain on sale of securities available for sale | ( | |||||||||||||
Loss (gain) on sale and disposal of premises and equipment | ( | |||||||||||||
Gain on sale of loans | ( | ( | ||||||||||||
Gain on sale of other real estate owned | ( | ( | ||||||||||||
Impairment of other real estate | ||||||||||||||
Impairment of other assets | ||||||||||||||
Deferred tax expense (benefit) | ( | |||||||||||||
Provision for credit losses | ( | |||||||||||||
Increase in cash surrender value of BOLI | ( | ( | ||||||||||||
Net gain on mortgage loans held for sale | ( | ( | ||||||||||||
Originations of loans held for sale | ( | ( | ||||||||||||
Proceeds from sale of loans held for sale | ||||||||||||||
Net change in other assets | ( | |||||||||||||
Net change in other liabilities | ( | ( | ||||||||||||
Net cash provided by operating activities | ||||||||||||||
Cash flows from investing activities: | ||||||||||||||
Proceeds from maturities, calls and paydowns of securities available for sale | ||||||||||||||
Proceeds from sale of securities available for sale | ||||||||||||||
Purchases of securities available for sale | ( | ( | ||||||||||||
Proceeds from maturities of certificates of deposit held in other banks | ||||||||||||||
Purchase of bank owned life insurance contracts | ( | |||||||||||||
Purchases of FHLB stock and other restricted stock | ( | ( | ||||||||||||
Proceeds from redemptions of FHLB stock and other restricted stock | ||||||||||||||
Proceeds from sale of loans | ||||||||||||||
Net loans originated held for investment | ( | |||||||||||||
Originations of mortgage warehouse purchase loans | ( | ( | ||||||||||||
Proceeds from pay-offs of mortgage warehouse purchase loans | ||||||||||||||
Additions to premises and equipment | ( | ( | ||||||||||||
Proceeds from sale of premises and equipment | ||||||||||||||
Proceeds from sale of other real estate owned | ||||||||||||||
Net cash provided by (used in) investing activities | ( |
Nine Months Ended September 30, | ||||||||||||||
2021 | 2020 | |||||||||||||
Cash flows from financing activities: | ||||||||||||||
Net increase in demand deposits, money market and savings accounts | ||||||||||||||
Net decrease in time deposits | ( | ( | ||||||||||||
Proceeds from FHLB advances | ||||||||||||||
Repayments of FHLB advances | ( | ( | ||||||||||||
Proceeds from other borrowings | ||||||||||||||
Repayments of other borrowings | ( | ( | ||||||||||||
Repurchase of common stock | ( | ( | ||||||||||||
Dividends paid | ( | ( | ||||||||||||
Net cash provided by financing activities | ||||||||||||||
Net change in cash and cash equivalents | ||||||||||||||
Cash and cash equivalents at beginning of period | ||||||||||||||
Cash and cash equivalents at end of period | $ | $ |
January 1, 2021 | ||||||||||||||||||||
Pre-Adoption Allowance | Impact of Adoption | Post-Adoption Allowance | ||||||||||||||||||
Assets: | ||||||||||||||||||||
Allowance for credit losses on Loans: | ||||||||||||||||||||
Commercial | $ | $ | $ | |||||||||||||||||
Commercial real estate, construction, land and land development | ||||||||||||||||||||
Residential real estate | ( | |||||||||||||||||||
Single-family interim construction | ||||||||||||||||||||
Agricultural | ( | |||||||||||||||||||
Consumer | ( | |||||||||||||||||||
Other | ( | |||||||||||||||||||
Unallocated | ( | |||||||||||||||||||
$ | $ | $ | ||||||||||||||||||
Liabilities: | ||||||||||||||||||||
Allowance for credit losses on off-balance-sheet credit exposures | $ | $ | $ | |||||||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||
Basic earnings per share: | |||||||||||||||||||||||
Net income | $ | $ | $ | $ | |||||||||||||||||||
Less: | |||||||||||||||||||||||
Undistributed earnings allocated to participating securities | |||||||||||||||||||||||
Dividends paid on participating securities | |||||||||||||||||||||||
Net income available to common shareholders | $ | $ | $ | $ | |||||||||||||||||||
Weighted average basic shares outstanding | |||||||||||||||||||||||
Basic earnings per share | $ | $ | $ | $ | |||||||||||||||||||
Diluted earnings per share: | |||||||||||||||||||||||
Net income available to common shareholders | $ | $ | $ | $ | |||||||||||||||||||
Total weighted average basic shares outstanding | |||||||||||||||||||||||
Add dilutive performance stock units | |||||||||||||||||||||||
Add dilutive participating securities | |||||||||||||||||||||||
Total weighted average diluted shares outstanding | |||||||||||||||||||||||
Diluted earnings per share | $ | $ | $ | $ | |||||||||||||||||||
Anti-dilutive participating securities |
Nine Months Ended September 30, | ||||||||||||||
2021 | 2020 | |||||||||||||
Cash transactions: | ||||||||||||||
Interest expense paid | $ | $ | ||||||||||||
Income taxes paid | $ | $ | ||||||||||||
Noncash transactions: | ||||||||||||||
Deferred dividend equivalents | $ | $ | ||||||||||||
Transfers of loans to other real estate owned | $ | $ | ||||||||||||
Loans to facilitate the sale of other real estate owned | $ | $ | ||||||||||||
Securities purchased, not yet settled | $ | $ | ||||||||||||
Right-of-use assets obtained in exchange for lease liabilities | $ | $ | ||||||||||||
Loans purchased, not yet settled | $ | $ | ||||||||||||
Amortized Cost (1) | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | |||||||||||||||||||||||
Securities Available for Sale | ||||||||||||||||||||||||||
September 30, 2021 | ||||||||||||||||||||||||||
U.S. treasuries | $ | $ | $ | ( | $ | |||||||||||||||||||||
Government agency securities | ( | |||||||||||||||||||||||||
Obligations of state and municipal subdivisions | ( | |||||||||||||||||||||||||
Corporate bonds | ( | |||||||||||||||||||||||||
Mortgage-backed securities guaranteed by FHLMC, FNMA and GNMA | ( | |||||||||||||||||||||||||
Other securities | ||||||||||||||||||||||||||
$ | $ | $ | ( | $ | ||||||||||||||||||||||
December 31, 2020 | ||||||||||||||||||||||||||
U.S. treasuries | $ | $ | $ | $ | ||||||||||||||||||||||
Government agency securities | ( | |||||||||||||||||||||||||
Obligations of state and municipal subdivisions | ( | |||||||||||||||||||||||||
Corporate bonds | ( | |||||||||||||||||||||||||
Mortgage-backed securities guaranteed by FHLMC, FNMA and GNMA | ( | |||||||||||||||||||||||||
Other securities | ||||||||||||||||||||||||||
$ | $ | $ | ( | $ |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||
2021 | 2020 | 2021 | 2020 | |||||||||||||||||||||||
Proceeds from sale | $ | $ | $ | $ | ||||||||||||||||||||||
Gross gains | $ | $ | $ | $ | ||||||||||||||||||||||
Gross losses | $ | $ | $ | $ |
September 30, 2021 | ||||||||||||||
Securities Available for Sale | ||||||||||||||
Amortized Cost (1) | Fair Value | |||||||||||||
Due in one year or less | $ | $ | ||||||||||||
Due from one year to five years | ||||||||||||||
Due from five to ten years | ||||||||||||||
Thereafter | ||||||||||||||
Mortgage-backed securities guaranteed by FHLMC, FNMA and GNMA | ||||||||||||||
$ | $ |
Less Than 12 Months | Greater Than 12 Months | Total | ||||||||||||||||||||||||||||||||||||||||||||||||
Description of Securities | Number of Securities | Estimated Fair Value | Unrealized Losses | Number of Securities | Estimated Fair Value | Unrealized Losses | Estimated Fair Value | Unrealized Losses | ||||||||||||||||||||||||||||||||||||||||||
Securities Available for Sale | ||||||||||||||||||||||||||||||||||||||||||||||||||
September 30, 2021 | ||||||||||||||||||||||||||||||||||||||||||||||||||
U.S. treasuries | $ | $ | ( | $ | $ | $ | $ | ( | ||||||||||||||||||||||||||||||||||||||||||
Government agency securities | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||
Obligations of state and municipal subdivisions | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||
Corporate bonds | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||
Mortgage-backed securities guaranteed by FHLMC, FNMA and GNMA | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||
$ | $ | ( | $ | $ | ( | $ | $ | ( | ||||||||||||||||||||||||||||||||||||||||||
December 31, 2020 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Government agency securities | $ | $ | ( | $ | $ | $ | $ | ( | ||||||||||||||||||||||||||||||||||||||||||
Obligations of state and municipal subdivisions | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||
Corporate bonds | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||
Mortgage-backed securities guaranteed by FHLMC, FNMA and GNMA | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||
$ | $ | ( | $ | $ | $ | $ | ( |
September 30, | December 31, | |||||||||||||
2021 | 2020 | |||||||||||||
Commercial | $ | $ | ||||||||||||
Real estate: | ||||||||||||||
Commercial | ||||||||||||||
Commercial construction, land and land development | ||||||||||||||
Residential | ||||||||||||||
Single-family interim construction | ||||||||||||||
Agricultural | ||||||||||||||
Consumer | ||||||||||||||
Total loans (1)(2) | ||||||||||||||
Deferred loan fees, net(1) | — | ( | ||||||||||||
Allowance for credit losses | ( | ( | ||||||||||||
Total loans, net(2) | $ | $ |
Commercial | Commercial Real Estate | Commercial Construction, Land and Land Development | Residential Real Estate | Single-Family Interim Construction | Agricultural | Consumer | Unallocated | Total | |||||||||||||||||||||||||||||||||||||||||||||
Three months ended September 30, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance at beginning of period | $ | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||||
Provision for credit losses | ( | ( | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||
Charge-offs | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||
Recoveries | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance at end of period | $ | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||||
Nine months ended September 30, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance at beginning of period | $ | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||||
Impact of adopting ASC 326 | ( | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||||
Initial allowance on loans purchased with credit deterioration | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Provision for credit losses | ( | ( | ( | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||
Charge-offs | ( | ( | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||
Recoveries | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance at end of period | $ | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||||
Three months ended September 30, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance at beginning of period | $ | $ | $ | $ | $ | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||||||||||||||||||
Provision for credit losses | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||
Charge-offs | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||
Recoveries | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance at end of period | $ | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||||
Nine months ended September 30, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance at beginning of period | $ | $ | $ | $ | $ | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||||||||||||||||||
Provision for credit losses | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Charge-offs | ( | ( | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||
Recoveries | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance at end of period | $ | $ | $ | $ | $ | $ | $ | $ | $ |
September 30, 2021 | December 31, 2020 | |||||||||||||||||||||||||
Loan Balance - Amortized Cost Basis | Specific Allocations | Loan Balance - Recorded Investment | Specific Allocations | |||||||||||||||||||||||
Commercial | $ | $ | $ | $ | ||||||||||||||||||||||
Commercial real estate | ||||||||||||||||||||||||||
Commercial construction, land and land development | ||||||||||||||||||||||||||
Residential real estate | ||||||||||||||||||||||||||
Single-family Interim construction | ||||||||||||||||||||||||||
Agricultural | ||||||||||||||||||||||||||
Consumer | ||||||||||||||||||||||||||
$ | $ | $ | $ |
Commercial | Commercial Real Estate | Commercial Construction, Land and Land Development | Residential Real Estate | Single-Family Interim Construction | Agricultural | Consumer | Total | |||||||||||||||||||||||||||||||||||||||||||
September 30, 2021 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Nonaccrual loans (1) | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||
Loans past due 90 days and still accruing | ||||||||||||||||||||||||||||||||||||||||||||||||||
Troubled debt restructurings (not included in nonaccrual or loans past due and still accruing) | ||||||||||||||||||||||||||||||||||||||||||||||||||
$ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||
December 31, 2020 (2) | ||||||||||||||||||||||||||||||||||||||||||||||||||
Nonaccrual loans | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||
Loans past due 90 days and still accruing | ||||||||||||||||||||||||||||||||||||||||||||||||||
Troubled debt restructurings (not included in nonaccrual or loans past due and still accruing) | ||||||||||||||||||||||||||||||||||||||||||||||||||
$ | $ | $ | $ | $ | $ | $ | $ |
Commercial | Commercial Real Estate | Commercial Construction, Land and Land Development | Residential Real Estate | Single-Family Interim Construction | Agricultural | Consumer | Total | |||||||||||||||||||||||||||||||||||||||||||
Troubled debt restructurings during the three months ended September 30, 2021 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Number of contracts | ||||||||||||||||||||||||||||||||||||||||||||||||||
Pre-restructuring outstanding recorded investment | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||
Post-restructuring outstanding recorded investment | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||
Troubled debt restructurings during the nine months ended September 30, 2021 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Number of contracts | ||||||||||||||||||||||||||||||||||||||||||||||||||
Pre-restructuring outstanding recorded investment | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||
Post-restructuring outstanding recorded investment | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||
Troubled debt restructurings during the three months ended September 30, 2020 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Number of contracts | ||||||||||||||||||||||||||||||||||||||||||||||||||
Pre-restructuring outstanding recorded investment | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||
Post-restructuring outstanding recorded investment | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||
Troubled debt restructurings during the nine months ended September 30, 2020 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Number of contracts | ||||||||||||||||||||||||||||||||||||||||||||||||||
Pre-restructuring outstanding recorded investment | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||
Post-restructuring outstanding recorded investment | $ | $ | $ | $ | $ | $ | $ | $ |
Loans 30-89 Days Past Due | Loans 90 Days or More Past Due | Total Past Due Loans | Current Loans | Total Loans | ||||||||||||||||||||||||||||
September 30, 2021 | ||||||||||||||||||||||||||||||||
Commercial | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
Commercial real estate | ||||||||||||||||||||||||||||||||
Commercial construction, land and land development | ||||||||||||||||||||||||||||||||
Residential real estate | ||||||||||||||||||||||||||||||||
Single-family interim construction | ||||||||||||||||||||||||||||||||
Agricultural | ||||||||||||||||||||||||||||||||
Consumer | ||||||||||||||||||||||||||||||||
$ | $ | $ | $ | $ | ||||||||||||||||||||||||||||
December 31, 2020 (1) | ||||||||||||||||||||||||||||||||
Commercial | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
Commercial real estate | ||||||||||||||||||||||||||||||||
Commercial construction, land and land development | ||||||||||||||||||||||||||||||||
Residential real estate | ||||||||||||||||||||||||||||||||
Single-family interim construction | ||||||||||||||||||||||||||||||||
Agricultural | ||||||||||||||||||||||||||||||||
Consumer | ||||||||||||||||||||||||||||||||
Acquired with deteriorated credit quality | ||||||||||||||||||||||||||||||||
$ | $ | $ | $ | $ |
Revolving Loans Converted to Term Loans | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Term Loans by Year of Origination or Renewal | Revolving Loans | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
September 30, 2021 | 2021 | 2020 | 2019 | 2018 | 2017 | Prior | Total | |||||||||||||||||||||||||||||||||||||||||||||||||
Commercial | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Pass | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||
Pass/Watch | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Special Mention | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Substandard | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Doubtful | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total commercial | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||
Commercial real estate | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Pass | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||
Pass/Watch | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Special Mention | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Substandard | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Doubtful | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total commercial real estate | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||
Commercial construction, land and land development | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Pass | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||
Pass/Watch | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Special Mention | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Substandard | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Doubtful | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total commercial construction, land and land development | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||
Residential real estate | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Pass | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||
Pass/Watch | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Special Mention | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Substandard | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Doubtful | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total residential real estate | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||
Revolving Loans Converted to Term Loans | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Term Loans by Year of Origination or Renewal | Revolving Loans | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
September 30, 2021 | 2021 | 2020 | 2019 | 2018 | 2017 | Prior | Total | |||||||||||||||||||||||||||||||||||||||||||||||||
Single-family interim construction | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Pass | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||
Pass/Watch | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Special Mention | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Substandard | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Doubtful | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total single-family interim construction | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||
Agricultural | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Pass | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||
Pass/Watch | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Special Mention | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Substandard | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Doubtful | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total agricultural | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||
Consumer | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Pass | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||
Pass/Watch | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Special Mention | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Substandard | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Doubtful | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total consumer | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||
Pass | Pass/ Watch | Special Mention | Substandard | Doubtful | Total | |||||||||||||||||||||||||||||||||
December 31, 2020 | ||||||||||||||||||||||||||||||||||||||
Commercial | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||
Commercial real estate | ||||||||||||||||||||||||||||||||||||||
Commercial construction, land and land development | ||||||||||||||||||||||||||||||||||||||
Residential real estate | ||||||||||||||||||||||||||||||||||||||
Single-family interim construction | ||||||||||||||||||||||||||||||||||||||
Agricultural | ||||||||||||||||||||||||||||||||||||||
Consumer | ||||||||||||||||||||||||||||||||||||||
$ | $ | $ | $ | $ | $ |
September 30, | December 31, | |||||||||||||
2021 | 2020 | |||||||||||||
Commitments to extend credit | $ | $ | ||||||||||||
Standby letters of credit | ||||||||||||||
$ | $ |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||
2021 | 2020 | 2021 | 2020 | |||||||||||||||||||||||
Balance at beginning of period | $ | $ | $ | $ | ||||||||||||||||||||||
Impact of CECL adoption | ||||||||||||||||||||||||||
Provision for off-balance sheet credit exposure | ||||||||||||||||||||||||||
Balance at end of period | $ | $ | $ | $ |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||
Income tax expense for the period | $ | $ | $ | $ | |||||||||||||||||||
Effective tax rate | % | % | % | % |
Fair Value Measurements at Reporting Date Using | ||||||||||||||||||||||||||
Assets/ Liabilities Measured at Fair Value | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | |||||||||||||||||||||||
September 30, 2021 | ||||||||||||||||||||||||||
Assets: | ||||||||||||||||||||||||||
Investment securities available for sale: | ||||||||||||||||||||||||||
U.S. treasuries | $ | $ | $ | $ | ||||||||||||||||||||||
Government agency securities | ||||||||||||||||||||||||||
Obligations of state and municipal subdivisions | ||||||||||||||||||||||||||
Corporate bonds | ||||||||||||||||||||||||||
Mortgage-backed securities guaranteed by FHLMC, FNMA and GNMA | ||||||||||||||||||||||||||
Other securities | ||||||||||||||||||||||||||
Loans held for sale, fair value option elected (1) | ||||||||||||||||||||||||||
Derivative financial instruments: | ||||||||||||||||||||||||||
Interest rate swaps - cash flow hedge | ||||||||||||||||||||||||||
Interest rate lock commitments | ||||||||||||||||||||||||||
Forward mortgage-backed securities trades | ||||||||||||||||||||||||||
Loan customer counterparty | ||||||||||||||||||||||||||
Financial institution counterparty | ||||||||||||||||||||||||||
Liabilities: | ||||||||||||||||||||||||||
Derivative financial instruments: | ||||||||||||||||||||||||||
Interest rate swaps - cash flow hedge | ||||||||||||||||||||||||||
Interest rate lock commitments | ||||||||||||||||||||||||||
Forward mortgage-backed securities trades | ||||||||||||||||||||||||||
Loan customer counterparty | ||||||||||||||||||||||||||
Financial institution counterparty | ||||||||||||||||||||||||||
December 31, 2020 | ||||||||||||||||||||||||||
Assets: | ||||||||||||||||||||||||||
Investment securities available for sale: | ||||||||||||||||||||||||||
U.S. treasuries | $ | $ | $ | $ | ||||||||||||||||||||||
Government agency securities | ||||||||||||||||||||||||||
Obligations of state and municipal subdivisions | ||||||||||||||||||||||||||
Corporate bonds | ||||||||||||||||||||||||||
Mortgage-backed securities guaranteed by FHLMC, FNMA and GNMA | ||||||||||||||||||||||||||
Other securities | ||||||||||||||||||||||||||
Loans held for sale, fair value option elected (1) | ||||||||||||||||||||||||||
Derivative financial instruments: | ||||||||||||||||||||||||||
Interest rate lock commitments | ||||||||||||||||||||||||||
Loan customer counterparty | ||||||||||||||||||||||||||
Liabilities: | ||||||||||||||||||||||||||
Derivative financial instruments: | ||||||||||||||||||||||||||
Forward mortgage-backed securities trades | ||||||||||||||||||||||||||
Financial institution counterparty |
Fair Value Measurements at Reporting Date Using | ||||||||||||||||||||||||||||||||
Assets Measured at Fair Value | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | Period Ended Total Losses | ||||||||||||||||||||||||||||
September 30, 2021 | ||||||||||||||||||||||||||||||||
Assets: | ||||||||||||||||||||||||||||||||
Individually evaluated loans | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
December 31, 2020 | ||||||||||||||||||||||||||||||||
Assets: | ||||||||||||||||||||||||||||||||
Individually evaluated loans | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
Fair Value Measurements at Reporting Date Using | ||||||||||||||||||||||||||||||||
Carrying Amount | Estimated Fair Value | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | ||||||||||||||||||||||||||||
September 30, 2021 | ||||||||||||||||||||||||||||||||
Financial assets: | ||||||||||||||||||||||||||||||||
Cash and cash equivalents | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
Certificates of deposit held in other banks | ||||||||||||||||||||||||||||||||
Loans held for sale, at cost | ||||||||||||||||||||||||||||||||
Loans, net | ||||||||||||||||||||||||||||||||
FHLB of Dallas stock and other restricted stock | ||||||||||||||||||||||||||||||||
Accrued interest receivable | ||||||||||||||||||||||||||||||||
Financial liabilities: | ||||||||||||||||||||||||||||||||
Deposits | ||||||||||||||||||||||||||||||||
Accrued interest payable | ||||||||||||||||||||||||||||||||
FHLB advances | ||||||||||||||||||||||||||||||||
Other borrowings | ||||||||||||||||||||||||||||||||
Junior subordinated debentures | ||||||||||||||||||||||||||||||||
Off-balance sheet assets (liabilities): | ||||||||||||||||||||||||||||||||
Commitments to extend credit | ||||||||||||||||||||||||||||||||
Standby letters of credit | ||||||||||||||||||||||||||||||||
December 31, 2020 | ||||||||||||||||||||||||||||||||
Financial assets: | ||||||||||||||||||||||||||||||||
Cash and cash equivalents | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
Certificates of deposit held in other banks | ||||||||||||||||||||||||||||||||
Loans held for sale, at cost | ||||||||||||||||||||||||||||||||
Loans, net | ||||||||||||||||||||||||||||||||
FHLB of Dallas stock and other restricted stock | ||||||||||||||||||||||||||||||||
Accrued interest receivable | ||||||||||||||||||||||||||||||||
Financial liabilities: | ||||||||||||||||||||||||||||||||
Deposits | ||||||||||||||||||||||||||||||||
Accrued interest payable | ||||||||||||||||||||||||||||||||
FHLB advances | ||||||||||||||||||||||||||||||||
Other borrowings | ||||||||||||||||||||||||||||||||
Junior subordinated debentures | ||||||||||||||||||||||||||||||||
Off-balance sheet assets (liabilities): | ||||||||||||||||||||||||||||||||
Commitments to extend credit | ||||||||||||||||||||||||||||||||
Standby letters of credit |
Outstanding Notional Balance | Asset Derivative Fair Value | Liability Derivative Fair Value | ||||||||||||||||||
September 30, 2021 | ||||||||||||||||||||
Derivatives designated as hedging instruments: | ||||||||||||||||||||
Interest rate swaps - cash flow hedge | $ | $ | $ | |||||||||||||||||
Derivatives not designated as hedging instruments: | ||||||||||||||||||||
Interest rate lock commitments | ||||||||||||||||||||
Forward mortgage-backed securities trades | ||||||||||||||||||||
Commercial loan interest rate swaps: | ||||||||||||||||||||
Loan customer counterparty | ||||||||||||||||||||
Financial institution counterparty | ||||||||||||||||||||
December 31, 2020 | ||||||||||||||||||||
Derivatives not designated as hedging instruments: | ||||||||||||||||||||
Interest rate lock commitments | $ | $ | $ | |||||||||||||||||
Forward mortgage-backed securities trades | ||||||||||||||||||||
Commercial loan interest rate swaps: | ||||||||||||||||||||
Loan customer counterparty | ||||||||||||||||||||
Financial institution counterparty |
Weighted Average Interest Rate | ||||||||||||||||||||||||||
September 30, 2021 | December 31, 2020 | |||||||||||||||||||||||||
Received | Paid | Received | Paid | |||||||||||||||||||||||
Loan customer counterparty | % | % | % | % |
Income Statement Location | Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||||||||||
2021 | 2020 | 2021 | 2020 | |||||||||||||||||||||||||||||
Derivatives designated as hedging instruments | ||||||||||||||||||||||||||||||||
Interest rate swaps - cash flow hedges | Interest and fees on loans | $ | $ | $ | $ | |||||||||||||||||||||||||||
Derivatives not designated as hedging instruments | ||||||||||||||||||||||||||||||||
Interest rate lock commitments | Mortgage banking revenue | ( | ( | |||||||||||||||||||||||||||||
Forward mortgage-backed securities trades | Mortgage banking revenue | ( |
Restricted Stock Awards | Number of Shares | Weighted Average Grant Date Fair Value | ||||||||||||
Nonvested shares, December 31, 2020 | $ | |||||||||||||
Granted during the period | ||||||||||||||
Vested during the period | ( | |||||||||||||
Forfeited during the period | ( | |||||||||||||
Nonvested shares, September 30, 2021 | $ | |||||||||||||
Nonvested shares, December 31, 2019 | $ | |||||||||||||
Granted during the period | ||||||||||||||
Vested during the period | ( | |||||||||||||
Forfeited during the period | ( | |||||||||||||
Nonvested shares, September 30, 2020 | $ |
First year | ||||||||
Second year | ||||||||
Third year | ||||||||
Fourth year | ||||||||
Total nonvested shares |
Performance-based Restricted Stock Units | Number of Shares | Weighted Average Grant Date Fair Value | ||||||||||||
Nonvested shares, December 31, 2020 | $ | |||||||||||||
Granted during the period | ||||||||||||||
Nonvested shares, September 30, 2021 | $ |
Actual | Minimum Capital Required - Basel III | To Be Well Capitalized Under Prompt Corrective Action Provisions | ||||||||||||||||||||||||||||||||||||
Amount | Ratio | Amount | Ratio | Amount | Ratio | |||||||||||||||||||||||||||||||||
September 30, 2021 | ||||||||||||||||||||||||||||||||||||||
Total capital to risk weighted assets: | ||||||||||||||||||||||||||||||||||||||
Consolidated | $ | % | $ | % | N/A | N/A | ||||||||||||||||||||||||||||||||
Bank | $ | % | ||||||||||||||||||||||||||||||||||||
Tier 1 capital to risk weighted assets: | ||||||||||||||||||||||||||||||||||||||
Consolidated | N/A | N/A | ||||||||||||||||||||||||||||||||||||
Bank | ||||||||||||||||||||||||||||||||||||||
Common equity tier 1 to risk weighted assets: | ||||||||||||||||||||||||||||||||||||||
Consolidated | N/A | N/A | ||||||||||||||||||||||||||||||||||||
Bank | ||||||||||||||||||||||||||||||||||||||
Tier 1 capital to average assets: | ||||||||||||||||||||||||||||||||||||||
Consolidated | N/A | N/A | ||||||||||||||||||||||||||||||||||||
Bank | ||||||||||||||||||||||||||||||||||||||
December 31, 2020 | ||||||||||||||||||||||||||||||||||||||
Total capital to risk weighted assets: | ||||||||||||||||||||||||||||||||||||||
Consolidated | $ | % | $ | % | N/A | N/A | ||||||||||||||||||||||||||||||||
Bank | $ | % | ||||||||||||||||||||||||||||||||||||
Tier 1 capital to risk weighted assets: | ||||||||||||||||||||||||||||||||||||||
Consolidated | N/A | N/A | ||||||||||||||||||||||||||||||||||||
Bank | ||||||||||||||||||||||||||||||||||||||
Common equity tier 1 to risk weighted assets: | ||||||||||||||||||||||||||||||||||||||
Consolidated | N/A | N/A | ||||||||||||||||||||||||||||||||||||
Bank | ||||||||||||||||||||||||||||||||||||||
Tier 1 capital to average assets: | ||||||||||||||||||||||||||||||||||||||
Consolidated | N/A | N/A | ||||||||||||||||||||||||||||||||||||
Bank |
Three Months Ended September 30, | ||||||||||||||||||||||||||||||||||||||
2021 | 2020 | |||||||||||||||||||||||||||||||||||||
(dollars in thousands) | Average Outstanding Balance | Interest | Yield/ Rate (4) | Average Outstanding Balance | Interest | Yield/ Rate (4) | ||||||||||||||||||||||||||||||||
Interest-earning assets: | ||||||||||||||||||||||||||||||||||||||
Loans (1) | $ | 12,358,349 | $ | 134,540 | 4.32 | % | $ | 12,586,647 | $ | 144,138 | 4.56 | % | ||||||||||||||||||||||||||
Taxable securities | 1,300,953 | 6,059 | 1.85 | 705,918 | 4,507 | 2.54 | ||||||||||||||||||||||||||||||||
Nontaxable securities | 354,661 | 2,077 | 2.32 | 351,759 | 2,126 | 2.40 | ||||||||||||||||||||||||||||||||
Interest bearing deposits and other | 2,959,653 | 1,356 | 0.18 | 1,287,320 | 1,027 | 0.32 | ||||||||||||||||||||||||||||||||
Total interest-earning assets | 16,973,616 | 144,032 | 3.37 | 14,931,644 | 151,798 | 4.04 | ||||||||||||||||||||||||||||||||
Noninterest-earning assets | 1,792,728 | 1,782,251 | ||||||||||||||||||||||||||||||||||||
Total assets | $ | 18,766,344 | $ | 16,713,895 | ||||||||||||||||||||||||||||||||||
Interest-bearing liabilities: | ||||||||||||||||||||||||||||||||||||||
Checking accounts | $ | 6,179,715 | $ | 5,764 | 0.37 | % | $ | 4,619,454 | $ | 5,512 | 0.47 | % | ||||||||||||||||||||||||||
Savings accounts | 722,493 | 278 | 0.15 | 631,862 | 270 | 0.17 | ||||||||||||||||||||||||||||||||
Money market accounts | 2,508,767 | 3,392 | 0.54 | 2,471,550 | 4,361 | 0.70 | ||||||||||||||||||||||||||||||||
Certificates of deposit | 1,226,854 | 1,413 | 0.46 | 1,590,734 | 5,536 | 1.38 | ||||||||||||||||||||||||||||||||
Total deposits | 10,637,829 | 10,847 | 0.40 | 9,313,600 | 15,679 | 0.67 | ||||||||||||||||||||||||||||||||
FHLB advances | 351,359 | 463 | 0.52 | 594,022 | 714 | 0.48 | ||||||||||||||||||||||||||||||||
Other borrowings | 285,473 | 3,640 | 5.06 | 209,532 | 2,928 | 5.56 | ||||||||||||||||||||||||||||||||
Junior subordinated debentures | 54,154 | 437 | 3.20 | 53,955 | 470 | 3.47 | ||||||||||||||||||||||||||||||||
Total interest-bearing liabilities | 11,328,815 | 15,387 | 0.54 | 10,171,109 | 19,791 | 0.77 | ||||||||||||||||||||||||||||||||
Noninterest-bearing checking accounts | 4,772,525 | 3,991,014 | ||||||||||||||||||||||||||||||||||||
Noninterest-bearing liabilities | 101,018 | 94,349 | ||||||||||||||||||||||||||||||||||||
Stockholders’ equity | 2,563,986 | 2,457,423 | ||||||||||||||||||||||||||||||||||||
Total liabilities and equity | $ | 18,766,344 | $ | 16,713,895 | ||||||||||||||||||||||||||||||||||
Net interest income | $ | 128,645 | $ | 132,007 | ||||||||||||||||||||||||||||||||||
Interest rate spread | 2.83 | % | 3.27 | % | ||||||||||||||||||||||||||||||||||
Net interest margin (2) | 3.01 | 3.52 | ||||||||||||||||||||||||||||||||||||
Net interest income and margin (tax equivalent basis) (3) | $ | 129,623 | 3.03 | $ | 132,978 | 3.54 | ||||||||||||||||||||||||||||||||
Average interest-earning assets to interest-bearing liabilities | 149.83 | 146.80 |
Nine Months Ended September 30, | ||||||||||||||||||||||||||||||||||||||
2021 | 2020 | |||||||||||||||||||||||||||||||||||||
(dollars in thousands) | Average Outstanding Balance | Interest | Yield/ Rate (4) | Average Outstanding Balance | Interest | Yield/ Rate (4) | ||||||||||||||||||||||||||||||||
Interest-earning assets: | ||||||||||||||||||||||||||||||||||||||
Loans (1) | $ | 12,571,334 | $ | 412,312 | 4.39 | % | $ | 12,142,159 | $ | 434,648 | 4.78 | % | ||||||||||||||||||||||||||
Taxable securities | 1,106,501 | 16,068 | 1.94 | 740,252 | 14,499 | 2.62 | ||||||||||||||||||||||||||||||||
Nontaxable securities | 352,159 | 6,207 | 2.36 | 343,233 | 6,359 | 2.47 | ||||||||||||||||||||||||||||||||
Interest bearing deposits and other | 2,465,740 | 3,021 | 0.16 | 1,041,217 | 3,938 | 0.51 | ||||||||||||||||||||||||||||||||
Total interest-earning assets | 16,495,734 | 437,608 | 3.55 | 14,266,861 | 459,444 | 4.30 | ||||||||||||||||||||||||||||||||
Noninterest-earning assets | 1,787,176 | 1,790,569 | ||||||||||||||||||||||||||||||||||||
Total assets | $ | 18,282,910 | $ | 16,057,430 | ||||||||||||||||||||||||||||||||||
Interest-bearing liabilities: | ||||||||||||||||||||||||||||||||||||||
Checking accounts | $ | 5,830,177 | $ | 17,765 | 0.41 | % | $ | 4,434,686 | $ | 22,529 | 0.68 | % | ||||||||||||||||||||||||||
Savings accounts | 698,591 | 811 | 0.16 | 593,646 | 795 | 0.18 | ||||||||||||||||||||||||||||||||
Money market accounts | 2,573,510 | 10,955 | 0.57 | 2,276,036 | 16,714 | 0.98 | ||||||||||||||||||||||||||||||||
Certificates of deposit | 1,310,788 | 5,810 | 0.59 | 1,704,720 | 22,039 | 1.73 | ||||||||||||||||||||||||||||||||
Total deposits | 10,413,066 | 35,341 | 0.45 | 9,009,088 | 62,077 | 0.92 | ||||||||||||||||||||||||||||||||
FHLB advances | 367,033 | 1,533 | 0.56 | 693,248 | 3,629 | 0.70 | ||||||||||||||||||||||||||||||||
Other borrowings | 300,665 | 11,743 | 5.22 | 196,305 | 8,408 | 5.72 | ||||||||||||||||||||||||||||||||
Junior subordinated debentures | 54,105 | 1,320 | 3.26 | 53,906 | 1,710 | 4.24 | ||||||||||||||||||||||||||||||||
Total interest-bearing liabilities | 11,134,869 | 49,937 | 0.60 | 9,952,547 | 75,824 | 1.02 | ||||||||||||||||||||||||||||||||
Noninterest-bearing checking accounts | 4,530,594 | 3,597,192 | ||||||||||||||||||||||||||||||||||||
Noninterest-bearing liabilities | 93,499 | 92,646 | ||||||||||||||||||||||||||||||||||||
Stockholders’ equity | 2,523,948 | 2,415,045 | ||||||||||||||||||||||||||||||||||||
Total liabilities and equity | $ | 18,282,910 | $ | 16,057,430 | ||||||||||||||||||||||||||||||||||
Net interest income | $ | 387,671 | $ | 383,620 | ||||||||||||||||||||||||||||||||||
Interest rate spread | 2.95 | % | 3.28 | % | ||||||||||||||||||||||||||||||||||
Net interest margin (2) | 3.14 | 3.59 | ||||||||||||||||||||||||||||||||||||
Net interest income and margin (tax equivalent basis) (3) | $ | 390,579 | 3.17 | $ | 386,476 | 3.62 | ||||||||||||||||||||||||||||||||
Average interest-earning assets to interest-bearing liabilities | 148.14 | 143.35 |
Three Months Ended September 30, | Variance | Nine Months Ended September 30, | Variance | ||||||||||||||||||||||||||||||||||||||||||||
(dollars in thousands) | 2021 | 2020 | 2021 v. 2020 | 2021 | 2020 | 2021 v. 2020 | |||||||||||||||||||||||||||||||||||||||||
Noninterest Income | |||||||||||||||||||||||||||||||||||||||||||||||
Service charges on deposit accounts | $ | 2,619 | $ | 2,173 | $ | 446 | 20.5 | % | $ | 7,130 | $ | 6,881 | $ | 249 | 3.6 | % | |||||||||||||||||||||||||||||||
Investment management fees | 2,210 | 1,924 | 286 | 14.9 | 6,339 | 5,556 | 783 | 14.1 | % | ||||||||||||||||||||||||||||||||||||||
Mortgage banking revenue | 5,982 | 14,722 | (8,740) | (59.4) | 18,714 | 27,726 | (9,012) | (32.5) | % | ||||||||||||||||||||||||||||||||||||||
Gain on sale of loans | — | — | — | — | 26 | 647 | (621) | N/M | |||||||||||||||||||||||||||||||||||||||
Gain on sale of other real estate | 63 | — | 63 | N/M | 63 | 37 | 26 | N/M | |||||||||||||||||||||||||||||||||||||||
Gain on sale of securities available for sale | — | — | — | — | — | 382 | (382) | N/M | |||||||||||||||||||||||||||||||||||||||
(Loss) gain on sale and disposal of premises and equipment | (41) | 34 | (75) | N/M | (61) | 311 | (372) | N/M | |||||||||||||||||||||||||||||||||||||||
Increase in cash surrender value of BOLI | 1,282 | 1,335 | (53) | (4.0) | 3,841 | 4,007 | (166) | (4.1) | % | ||||||||||||||||||||||||||||||||||||||
Other | 4,781 | 4,977 | (196) | (3.9) | 15,379 | 19,604 | (4,225) | (21.6) | % | ||||||||||||||||||||||||||||||||||||||
Total noninterest income | $ | 16,896 | $ | 25,165 | $ | (8,269) | (32.9) | % | $ | 51,431 | $ | 65,151 | $ | (13,720) | (21.1) | % |
Three Months Ended September 30, | Variance | Nine Months Ended September 30, | Variance | ||||||||||||||||||||||||||||||||||||||||||||
(dollars in thousands) | 2021 | 2020 | 2021 v. 2020 | 2021 | 2020 | 2021 v. 2020 | |||||||||||||||||||||||||||||||||||||||||
Noninterest Expense | |||||||||||||||||||||||||||||||||||||||||||||||
Salaries and employee benefits | $ | 46,572 | $ | 42,253 | $ | 4,319 | 10.2 | % | $ | 134,068 | $ | 115,341 | $ | 18,727 | 16.2 | % | |||||||||||||||||||||||||||||||
Occupancy | 10,258 | 9,717 | 541 | 5.6 | 30,716 | 29,132 | 1,584 | 5.4 | |||||||||||||||||||||||||||||||||||||||
Communications and technology | 5,479 | 5,716 | (237) | (4.1) | 16,596 | 17,193 | (597) | (3.5) | |||||||||||||||||||||||||||||||||||||||
FDIC assessment | 1,327 | 1,597 | (270) | (16.9) | 4,499 | 5,338 | (839) | (15.7) | |||||||||||||||||||||||||||||||||||||||
Advertising and public relations | 266 | 492 | (226) | (45.9) | 880 | 1,965 | (1,085) | (55.2) | |||||||||||||||||||||||||||||||||||||||
Other real estate owned expenses, net | (8) | 43 | (51) | N/M | 4 | 459 | (455) | N/M | |||||||||||||||||||||||||||||||||||||||
Impairment of other real estate | — | 46 | (46) | N/M | — | 784 | (784) | N/M | |||||||||||||||||||||||||||||||||||||||
Amortization of other intangible assets | 3,145 | 3,175 | (30) | (0.9) | 9,435 | 9,526 | (91) | (1.0) | |||||||||||||||||||||||||||||||||||||||
Professional fees | 4,546 | 2,871 | 1,675 | 58.3 | 11,972 | 9,266 | 2,706 | 29.2 | |||||||||||||||||||||||||||||||||||||||
Acquisition expense, including legal | — | 47 | (47) | N/M | — | 16,225 | (16,225) | N/M | |||||||||||||||||||||||||||||||||||||||
Other | 8,987 | 7,452 | 1,535 | 20.6 | 25,528 | 25,678 | (150) | (0.6) | |||||||||||||||||||||||||||||||||||||||
Total noninterest expense | $ | 80,572 | $ | 73,409 | $ | 7,163 | 9.8 | % | $ | 233,698 | $ | 230,907 | $ | 2,791 | 1.2 | % |
(dollars in thousands) | September 30, 2021 | December 31, 2020 | |||||||||||||||||||||
Amount | % of Total | Amount | % of Total | ||||||||||||||||||||
Commercial (1)(2) | $ | 2,999,980 | 24.1 | % | $ | 3,902,496 | 29.7 | % | |||||||||||||||
Real estate: | |||||||||||||||||||||||
Commercial | 6,414,199 | 51.4 | 6,096,676 | 46.3 | |||||||||||||||||||
Commercial construction, land and land development | 1,216,195 | 9.8 | 1,245,801 | 9.5 | |||||||||||||||||||
Residential (3) | 1,328,342 | 10.5 | 1,435,112 | 10.9 | |||||||||||||||||||
Single-family interim construction | 350,112 | 2.8 | 326,575 | 2.5 | |||||||||||||||||||
Agricultural | 82,278 | 0.7 | 85,014 | 0.6 | |||||||||||||||||||
Consumer | 81,879 | 0.7 | 67,068 | 0.5 | |||||||||||||||||||
Total loans (5) | 12,472,985 | 100.0 | % | 13,158,742 | 100.0 | % | |||||||||||||||||
Deferred loan fees (4)(5) | — | (10,037) | |||||||||||||||||||||
Allowance for credit losses | (150,281) | (87,820) | |||||||||||||||||||||
Total loans, net | $ | 12,322,704 | $ | 13,060,885 |
(dollars in thousands) | September 30, 2021 | December 31, 2020 | ||||||||||||
Nonaccrual loans | ||||||||||||||
Commercial | $ | 44,712 | $ | 25,898 | ||||||||||
Real estate: | ||||||||||||||
Commercial real estate | 34,291 | 20,040 | ||||||||||||
Commercial construction, land and land development | 25 | 32 | ||||||||||||
Residential real estate | 1,460 | 2,372 | ||||||||||||
Agricultural | — | 613 | ||||||||||||
Consumer | 43 | 42 | ||||||||||||
Total nonaccrual loans (1) | 80,531 | 48,997 | ||||||||||||
Loans delinquent 90 days or more and still accruing | ||||||||||||||
Commercial | 77 | 433 | ||||||||||||
Real estate: | ||||||||||||||
Residential real estate | 201 | — | ||||||||||||
Consumer | 2 | — | ||||||||||||
Total loans delinquent 90 days or more and still accruing | 280 | 433 | ||||||||||||
Troubled debt restructurings, not included in nonaccrual loans | ||||||||||||||
Real estate: | ||||||||||||||
Commercial real estate | 1,738 | 1,808 | ||||||||||||
Residential real estate | 165 | 178 | ||||||||||||
Total troubled debt restructurings, not included in nonaccrual loans | 1,903 | 1,986 | ||||||||||||
Total nonperforming loans (2) | 82,714 | 51,416 | ||||||||||||
Other real estate owned and other repossessed assets: | ||||||||||||||
Real estate: | ||||||||||||||
Single family interim construction | — | 475 | ||||||||||||
Consumer | 115 | 114 | ||||||||||||
Total other real estate owned and other repossessed assets | 115 | 589 | ||||||||||||
Total nonperforming assets | $ | 82,829 | $ | 52,005 | ||||||||||
Ratio of nonperforming loans to total loans held for investment (3) | 0.72 | % | 0.44 | % | ||||||||||
Ratio of nonperforming assets to total assets | 0.44 | 0.29 |
As of September 30, 2021 | |||||||||||||||||||||||
Actual Consolidated | Actual Bank | Required minimum capital - Basel III | Required to be considered well capitalized (Bank only) | ||||||||||||||||||||
Ratio | Ratio | Ratio | Ratio | ||||||||||||||||||||
Tier 1 capital to average assets ratio | 8.94 | % | 10.48 | % | 4.00 | % | ≥5.00% | ||||||||||||||||
Common equity tier 1 capital to risk weighted assets ratio | 11.06 | 13.44 | 7.00 | ≥6.50 | |||||||||||||||||||
Tier 1 capital to risk weighted assets ratio | 11.46 | 13.44 | 8.50 | ≥8.00 | |||||||||||||||||||
Total capital to risk weighted assets ratio | 13.64 | 14.14 | 10.50 | ≥10.00 |
Hypothetical Shift in Interest Rates (in bps) | % Change in Projected Net Interest Income | |||||||
200 | 15.46% | |||||||
100 | 7.33 | |||||||
(100) | (3.71) |
Total Number of Shares Purchased (1) | Average Price Paid Per Share | Total Number of Shares Purchased as Part of Publicly Announced Repurchase Plan | Maximum Dollar Value of Shares that May Yet Be Purchased Under the Plan (thousands) | |||||||||||||||||||||||
Total first quarter 2021 | 22,835 | $ | 65.17 | — | $ | 144,344 | ||||||||||||||||||||
Total second quarter 2021 | 2,376 | 74.77 | — | 144,344 | ||||||||||||||||||||||
July 2021 | 56,714 | 70.78 | 43,785 | 141,281 | ||||||||||||||||||||||
August 2021 | 174,999 | 69.77 | 173,987 | 129,143 | ||||||||||||||||||||||
September 2021 | 356 | 67.80 | — | 129,143 | ||||||||||||||||||||||
Total third quarter 2021 | 232,069 | 70.02 | 217,772 | 129,143 | ||||||||||||||||||||||
Total 2021 year-to-date | 257,280 | $ | 69.63 | 217,772 | $ | 129,143 |
Exhibit 3.1* | ||||||||
Exhibit 10.1* | ||||||||
Exhibit 31.1* | ||||||||
Exhibit 31.2* | ||||||||
Exhibit 32.1** | ||||||||
Exhibit 32.2** | ||||||||
Exhibit 101.INS * | XBRL Instance Document-the XBRL Instance Document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. | |||||||
Exhibit 101.SCH * | XBRL Taxonomy Extension Schema Document | |||||||
Exhibit 101.CAL * | XBRL Taxonomy Extension Calculation Linkbase Document | |||||||
Exhibit 101.DEF * | XBRL Taxonomy Extension Definition Linkbase Document | |||||||
Exhibit 101.LAB * | XBRL Taxonomy Extension Label Linkbase Document | |||||||
Exhibit 101.PRE * | XBRL Taxonomy Extension Presentation Linkbase Document | |||||||
Exhibit 104 | Cover page from the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2021 is formatted as Inline XBRL and contained within Inline XBRL Instance Document in Exhibit 101. |
* | Filed herewith. |
** | Furnished herewith (such certification shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, except to the extent that the Company specifically incorporates it by reference) |
Independent Bank Group, Inc. | |||||||||||
Date: | October 28, 2021 | By: /s/ David R. Brooks | |||||||||
David R. Brooks | |||||||||||
Chairman and Chief Executive Officer |
Date: | October 28, 2021 | By: /s/ Michelle S. Hickox | |||||||||
Michelle S. Hickox | |||||||||||
Executive Vice President | |||||||||||
Chief Financial Officer |
Date: | July 13, 2021 | /s/ John G. Turpen | ||||||||||||
John G. Turpen |
1. | I have reviewed this Quarterly Report on Form 10-Q of Independent Bank Group, Inc. (the “registrant”); |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors: |
Date: | October 28, 2021 | /s/ David R. Brooks | ||||||
David R. Brooks Chairman and Chief Executive Officer |
1. | I have reviewed this Quarterly Report on Form 10-Q of Independent Bank Group, Inc. (the “registrant”); |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors: |
Date: | October 28, 2021 | /s/ Michelle S. Hickox | ||||||
Michelle S. Hickox Executive Vice President and Chief Financial Officer |
/s/ David R. Brooks | ||
David R. Brooks | ||
Chairman and Chief Executive Officer |
/s/ Michelle S. Hickox | ||
Michelle S. Hickox | ||
Executive Vice President and Chief Financial Officer |
Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands |
Sep. 30, 2021 |
Dec. 31, 2020 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Loans held for sale, fair value option | $ 27,331 | $ 71,769 |
Allowance for credit losses | $ 150,281 | $ 87,820 |
Preferred stock, shares outstanding (shares) | 0 | 0 |
Common stock, shares outstanding (shares) | 42,941,715 | 43,137,104 |
Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
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Sep. 30, 2021 |
Sep. 30, 2020 |
Sep. 30, 2021 |
Sep. 30, 2020 |
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Statement of Comprehensive Income [Abstract] | ||||
Net income | $ 52,340 | $ 60,075 | $ 170,563 | $ 142,935 |
Other comprehensive (loss) income before tax: | ||||
Change in net unrealized gains (losses) on available for sale securities during the period | 330 | 235 | (17,558) | 25,063 |
Reclassification for amount realized through sales of securities available for sale included in net income | 0 | 0 | 0 | (382) |
Change in net unrealized (losses) gains on cash flow hedges during the period | (127) | 0 | 418 | 0 |
Reclassification for amount realized through cash flow hedges included in net income | (221) | 0 | (378) | 0 |
Other comprehensive (loss) income before tax | (18) | 235 | (17,518) | 24,681 |
Income tax (benefit) expense | (4) | 49 | (3,679) | 4,875 |
Other comprehensive (loss) income, net of tax | (14) | 186 | (13,839) | 19,806 |
Comprehensive income | $ 52,326 | $ 60,261 | $ 156,724 | $ 162,741 |
Consolidated Statements of Changes in Stockholders' Equity (Parenthetical) - $ / shares |
3 Months Ended | 9 Months Ended | ||||
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Sep. 30, 2021 |
Sep. 30, 2020 |
Sep. 30, 2021 |
Sep. 30, 2020 |
Dec. 31, 2020 |
Dec. 31, 2019 |
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Statement of Stockholders' Equity [Abstract] | ||||||
Preferred stock par value (usd per share) | $ 0.01 | $ 0.01 | $ 0.01 | $ 0.01 | $ 0.01 | $ 0.01 |
Preferred stock shares authorized (shares) | 10,000,000 | 10,000,000 | 10,000,000 | 10,000,000 | 10,000,000 | 10,000,000 |
Common stock par value (usd per share) | $ 0.01 | $ 0.01 | $ 0.01 | $ 0.01 | $ 0.01 | $ 0.01 |
Common stock shares authorized (shares) | 100,000,000 | 100,000,000 | 100,000,000 | 100,000,000 | 100,000,000 | 100,000,000 |
Dividends paid (usd per share) | $ 0.34 | $ 0.25 | $ 0.96 | $ 0.75 |
Summary of Significant Accounting Policies |
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Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Significant Accounting Policies | Summary of Significant Accounting Policies Nature of operations: Independent Bank Group, Inc. (IBG) through its subsidiary, Independent Bank, a Texas state banking corporation, doing business as Independent Financial, (Bank) (collectively known as the Company), provides a full range of banking services to individual and corporate customers in the North, Central and Southeast, Texas areas and along the Colorado Front Range, through its various branch locations in those areas. The Company is engaged in traditional community banking activities, which include commercial and retail lending, deposit gathering, investment and liquidity management activities. The Company’s primary deposit products are demand deposits, money market accounts and certificates of deposit and its primary lending products are commercial business and real estate, real estate mortgage and consumer loans. Basis of presentation: The accompanying consolidated financial statements include the accounts of IBG and all other entities in which IBG has controlling financial interest. All material intercompany transactions and balances have been eliminated in consolidation. In addition, the Company wholly-owns nine statutory business trusts that were formed for the purpose of issuing trust preferred securities and do not meet the criteria for consolidation. The consolidated interim financial statements are unaudited, but include all adjustments, which, in the opinion of management, are necessary for a fair presentation of the results of the periods presented. All such adjustments were of a normal and recurring nature. These financial statements should be read in conjunction with the financial statements and the notes thereto in the Company's Annual Report on Form 10-K for the year ended December 31, 2020. The consolidated balance sheet at December 31, 2020 has been derived from the audited financial statements as of that date, but does not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. Accounting standards codification: The Financial Accounting Standards Board's (FASB) Accounting Standards Codification (ASC) is the officially recognized source of authoritative U.S. generally accepted accounting principles (GAAP) applicable to all public and non-public non-governmental entities. Rules and interpretive releases of the SEC under the authority of federal securities laws are also sources of authoritative GAAP for SEC registrants. All other accounting literature is considered non-authoritative. Citing particular content in the ASC involves specifying the unique numeric path to the content through the Topic, Subtopic, Section and Paragraph structure. Segment reporting: The Company has one reportable segment. The Company’s chief operating decision-maker uses consolidated results to make operating and strategic decisions. Reclassifications: Certain prior period financial statement and disclosure amounts have been reclassified to conform to current period presentation. The reclassifications have no effect on net income or stockholders' equity as previously reported. Use of estimates: The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect certain reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Accordingly, actual results could differ from those estimates. The material estimates included in the financial statements relate to the allowance for credit losses, the valuation of goodwill and valuation of assets and liabilities acquired in business combinations. Accounting changes: On January 1, 2020, ASU 2016-13, Financial Instruments - Credit Losses (Topic 326) (ASC 326): Measurement of Credit Losses on Financial Instruments (ASU 2016-13), as amended, became effective for the Company. ASU 2016-13 replaces the incurred loss methodology 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 held-to-maturity debt securities. It also applies to off-balance-sheet credit exposures not accounted for as insurance (loan commitments, standby letters of credit, financial guarantees, and other similar instruments). The CECL model requires the measurement of all expected credit losses on applicable financial assets based on historical experience, current conditions, and reasonable and supportable forecasts. In addition, ASU 2016-13 includes certain changes to the accounting for available-for-sale securities such as requiring credit-related impairments to be recognized as an allowance for credit losses rather than as a direct write-down of the securities amortized cost basis when management does not intend to sell or believes that it is more likely than not they will be required to sell securities prior to recovery of the securities amortized cost basis. 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 financial institutions to delay the implementation of ASU 2016-13 until the earlier of the termination date of the national emergency declaration by the President or December 31, 2020. On December 27, 2020, the Consolidated Appropriations Act, 2021 (Act 2021), was signed into law which further extended the implementation date of CECL to the earlier of the first day of the entity’s fiscal year that begins after the date on which the COVID-19 national emergency terminates or January 1, 2022. Under this option, the Company elected to delay implementation of ASU 2016-13 and calculated and recorded its provision for loan losses under the incurred loss model that existed prior to ASU 2016-13 for the year ended December 31, 2020. With regard to Act 2021 amendments, the SEC staff indicated it would not object to a registrant early adopting on December 31, 2020, retrospective to January 1, 2020, or January 1, 2021, effective as of January 1, 2021. Under this guidance, the Company elected to adopt ASU 2016-13 with an effective implementation date of January 1, 2021. The Company adopted ASU 2016-13 using the modified retrospective method for all financial assets measured at amortized cost and off-balance sheet credit exposures. As a result of this adoption, the Company recognized a cumulative effect reduction to retained earnings totaling $53,880, net of a recorded deferred tax asset of $15,113, and reclassed $13,035 of allowance for credit loss related to financial assets purchased with credit deterioration (PCD) that were previously classified as purchased credit impaired (PCI) and accounted for under ASC 310-30 as discussed below. Results for periods beginning after January 1, 2021 are presented in accordance with ASU 2016-13 while prior period amounts continue to be reported in accordance with previously applicable GAAP. The Company adopted ASU 2016-13 using the prospective transition approach for PCD assets. In accordance with the standard, management did not reassess whether PCI assets met the criteria of PCD assets as of the date of adoption. On January 1, 2021, the amortized cost basis of the PCD assets were adjusted to reflect the addition of the allowance for credit losses. The remaining noncredit discount (based on the adjusted amortized cost basis) will be accreted into interest income at the effective interest rate as of January 1, 2021. The following table illustrates the impact of ASU 2016-13 on the allowances for credit losses as of January 1, 2021, the date of adoption:
In connection with the adoption of ASC 326, the Company revised certain accounting policies and implemented certain accounting policy elections. The revised accounting policies are described below. Securities: Securities classified as available for sale are those debt securities that the Company intends to hold for an indefinite period of time, but not necessarily to maturity. Any decision to sell a security classified as available for sale would be based on various factors, including significant movements in interest rates, changes in the maturity mix of the Company's assets and liabilities, liquidity needs, regulatory capital considerations and other similar factors. Securities available for sale are reported at fair value with unrealized gains or losses reported as a separate component of other comprehensive income, net of tax. The amortization of premiums and accretion of discounts, computed by the interest method generally over their contractual lives, are recognized in interest income. Premiums on callable securities are amortized to their earliest call date. Realized gains or losses, determined on the basis of the cost of specific securities sold, are included in earnings on the trade date. Allowance for credit losses - available-for-sale securities: For available-for-sale securities in an unrealized loss position, the Company first assesses whether it intends to sell or it is more-likely-than-not that we will be required to sell the securities before recovery of the amortized cost basis. If either of these criteria is met, the securities amortized cost basis is written down to fair value as a current period expense. If either of the above criteria is not met, the Company evaluates whether the decline in fair value is the result of credit losses or other factors. In making this assessment, management may consider various factors including the extent to which fair value is less than amortized cost, performance of any underlying collateral 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 are compared to the amortized cost basis of the security and any excess of the amortized cost basis over the present value of expected cash flows is recorded as an allowance for credit loss, limited to the amount by which the fair value is less than the amortized cost basis. Any impairment not recorded through an allowance for credit loss is recognized in other comprehensive income as a non credit-related impairment. Management has made a policy election to exclude accrued interest receivable on available-for-sale securities from the estimate of credit losses and report accrued interest separately in other assets in the consolidated balance sheets. Changes in the allowance for credit losses are recorded as provision for (or reversal of) credit losses. Available-for-sale 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. Acquired loans: Loans acquired in connection with a business combination 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. For PCD loans, an initial allowance is established on the acquisition date using the same methodology as other loans held for investment and combined with the fair value of the loan to arrive at acquisition date amortized cost. Accordingly, no provision for credit losses is recognized on PCD loans at the acquisition date. Subsequent to the acquisition date, changes to the allowance are recognized in the provision for credit losses. Non-PCD loans are pooled into segments together with originated held for investment 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. 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 January 1, 2021, 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. Loans, net: Loans that management has the intent and ability to hold for the foreseeable future or until maturity or pay-off are reported at their outstanding principal balance, net of unearned interest, purchase premiums and discounts, deferred loan fees or costs and an allowance for credit losses. Loan origination fees, net of direct origination costs, are deferred and recognized as an adjustment to the related loan yield using the effective interest method without anticipating prepayments. Further information regarding the Company's accounting policies related to past due loans, non-accrual loans, collateral dependent loans and troubled debt restructurings is presented in Note 4 - Loans, Net and Allowance for Credit Losses on Loans. Allowance for credit losses on loans: In accordance with ASC 326, the allowance for credit losses on loans is a valuation account that is deducted from the amortized cost basis of loans to present management's best estimate of the net amount expected to be collected on the loans. Loans are charged against the allowance for credit losses when management believes that collectability of the principal is unlikely. Subsequent recoveries, if any, are credited to the allowance. The allowance is increased (decreased) by provisions (or reversals of) reported in the income statement as a component of provision for credit losses. Management has made the accounting policy election to exclude accrued interest receivable on loans from the estimate of credit losses and reports accrued interest separately in other assets in the consolidated balance sheets. Further information regarding Company policies and methodology used to estimate the allowance for credit losses on loans is presented in Note 4 - Loans, Net and Allowance for Credit Losses on Loans. Allowance for credit losses on off-balance-sheet credit exposures: 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 the Company is exposed to credit risk resulting from a contractual obligation to extend credit. No allowance is recognized if we have the unconditional right to cancel the obligation. The allowance is reported as a component of other liabilities in the consolidated balance sheets. Adjustments to the allowance are reported in the income statement as a component of provision for credit losses. Further information regarding Company policies and methodology used to estimate the allowance for credit losses on off-balance-sheet credit exposures is presented in Note 6 - Off-Balance Sheet Arrangements, Commitments and Contingencies. Subsequent events: Companies are required to evaluate events and transactions that occur after the balance sheet date but before the date the financial statements are issued. They must recognize in the financial statements the effect of all events or transactions that provide additional evidence of conditions that existed at the balance sheet date, including the estimates inherent in the financial statement preparation process. Entities shall not recognize the impact of events or transactions that provide evidence about conditions that did not exist at the balance sheet date but arose after that date. The Company has evaluated subsequent events through the date of filing these financial statements with the Securities and Exchange Commission (SEC) and noted no subsequent events requiring financial statement recognition or disclosure, except as disclosed in Note 12. Earnings per share: Basic earnings per common share is calculated as net income available to common shareholders divided by the weighted average number of common shares outstanding during the period. The unvested share-based payment awards that contain rights to nonforfeitable dividends are considered participating securities for this calculation. Diluted earnings per common share includes the dilutive effect of additional potential common shares issuable under participating nonvested restricted stock awards as well as performance stock units (PSUs). The participating nonvested restricted stock awards were not included in dilutive shares as they were anti-dilutive for the three and nine months ended September 30, 2021 and for the three months ended September 30, 2020. Proceeds from the assumed exercise of dilutive participating nonvested restricted stock awards and PSUs are assumed to be used to repurchase common stock at the average market price. The following table presents a reconciliation of net income available to common shareholders and the number of shares used in the calculation of basic and diluted earnings per common share:
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Statement of Cash Flows |
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Statement of Cash Flows | Statement of Cash Flows As allowed by the accounting standards, the Company has chosen to report, on a net basis, its cash receipts and cash payments for time deposits accepted and repayments of those deposits, and loans made to customers and principal collections on those loans. The Company uses the indirect method to present cash flows from operating activities. Other supplemental cash flow information is presented below:
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Securities Available for Sale |
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Debt Securities, Available-for-sale [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Securities Available for Sale | Securities Available for Sale Securities available for sale have been classified in the consolidated balance sheets according to management’s intent. The amortized cost of securities and their approximate fair values at September 30, 2021 and December 31, 2020 are as follows:
____________ (1) Excludes accrued interest receivable of $6,480 and $6,242 at September 30, 2021 and December 31, 2020, respectively, that is recorded in other assets on the accompanying consolidated balance sheets. Securities with a carrying amount of approximately $945,512 and $738,519 at September 30, 2021 and December 31, 2020, respectively, were pledged primarily to secure deposits. Proceeds from sale of securities available for sale and gross gains and gross losses for the three and nine months ended September 30, 2021 and 2020 were as follows:
The amortized cost and estimated fair value of securities available for sale at September 30, 2021, by contractual maturity, are shown below. Maturities of mortgage-backed securities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.
____________ (1) Excludes accrued interest receivable of $6,480 at September 30, 2021 that is recorded in other assets on the accompanying consolidated balance sheets. The number of securities, unrealized losses and fair value, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, as of September 30, 2021 and December 31, 2020, are summarized as follows:
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Loans, Net and Allowance for Credit Losses on Loans |
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Receivables [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Loans, Net and Allowance for Loan Losses | Loans, Net and Allowance for Credit Losses on Loans Loans, net, at September 30, 2021 and December 31, 2020, consisted of the following:
____________ (1) Loan class amounts are shown at amortized cost, net of deferred loan fees of $11,336, in accordance with ASC 326 at September 30, 2021 and shown at recorded investment at December 31, 2020. (2) Excludes accrued interest receivable of $44,953 and $54,328 at September 30, 2021 and December 31, 2020, respectively, that is recorded in other assets on the accompanying consolidated balance sheets. Loans with carrying amounts of $6,842,932 and $6,743,350 at September 30, 2021 and December 31, 2020, respectively, were pledged to secure Federal Home Loan Bank borrowing capacity and Federal Reserve Bank discount window borrowing capacity. The Company has certain lending policies and procedures in place that are designed to maximize loan income within an acceptable level of risk. Management reviews and approves these policies and procedures on a regular basis. A reporting system supplements the review process by providing management with frequent reports related to loan production, loan quality, concentrations of credit, loan delinquencies and nonperforming and potential problem loans. Commercial loans are underwritten after evaluating and understanding the borrower’s ability to operate profitably and prudently expand its business. The Company’s management examines current and projected cash flows to determine the ability of the borrower to repay their obligations as agreed. Commercial loans are primarily made based on the identified cash flows of the borrower and secondarily on the underlying collateral provided by the borrower. These cash flows, however, may not be as expected and the value of collateral securing the loans may fluctuate. Most commercial loans are secured by the assets being financed or other business assets such as accounts receivable or inventory and may incorporate a personal guarantee; however, some short term loans may be made on an unsecured basis. Additionally, our commercial loan portfolio includes loans made to customers in the energy industry, which is a complex, technical and cyclical industry. Experienced bankers with specialized energy lending experience originate our energy loans. Companies in this industry produce, extract, develop, exploit and explore for oil and natural gas. Loans are primarily collateralized with proven producing oil and gas reserves based on a technical evaluation of these reserves. At September 30, 2021 and December 31, 2020, there were approximately $280,277 and $205,496, of energy related loans outstanding, respectively. The Company has a mortgage warehouse purchase program providing mortgage inventory financing for residential mortgage loans originated by mortgage banker clients across a broad geographic scale. Proceeds from the sale of mortgages are the primary source of repayment for warehouse inventory financing via approved investor takeout commitments. These loans typically have a very short duration ranging between a few days to 15 days. In some cases, loans to larger mortgage originators may be financed for up to 60 days. These loans are reported as commercial loans since the loans are secured by notes receivable, not real estate. As of September 30, 2021 and December 31, 2020, mortgage warehouse purchase loans outstanding totaled $977,800 and $1,453,797, respectively. With the passage of the CARES Act Paycheck Protection Program (PPP), administered by the Small Business Administration (SBA), the Company has participated in originating loans to its customers through the program. PPP loans have terms of to five years and earn interest at 1%. In return for processing and funding loans, the SBA paid the lenders a processing fee tiered by the size of the loan. At September 30, 2021 and December 31, 2020, there were approximately $243,919 and $804,397 in PPP loans outstanding included in the commercial loan portfolio, respectively. In addition, the Company has recorded net deferred fees associated with PPP loans of $6,521 and $9,770 as of September 30, 2021 and December 31, 2020, respectively. Based on published program guidelines, these loans funded through the PPP are fully guaranteed by the U.S. government. Management believes that the majority of these loans will ultimately be forgiven by the SBA in accordance with the terms of the program with any remaining balances, after the forgiveness of any amounts, still fully guaranteed by the SBA. Commercial real estate loans are subject to underwriting standards and processes similar to commercial loans. These loans are viewed primarily as cash flow loans and secondarily as loans secured by real estate. Commercial real estate lending typically involves higher loan principal amounts, and the repayment of these loans is generally largely dependent on the successful operation of the property or the business conducted on the property securing the loan. Commercial real estate loans may be more adversely affected by conditions in the real estate markets or in the general economy. The properties securing the Company’s commercial real estate portfolio are diverse in terms of type and geographic location. Management monitors the diversification of the portfolio on a quarterly basis by type and geographic location. Management also tracks the level of owner occupied property versus non-owner occupied property. At September 30, 2021, the portfolio consisted of approximately 27% of owner occupied property. Land and commercial land development loans are underwritten using feasibility studies, independent appraisal reviews and financial analysis of the developers or property owners. Generally, borrowers must have a proven track record of success. Commercial construction loans are generally based upon estimates of cost and value of the completed project. These estimates may not be accurate. Commercial construction loans often involve the disbursement of substantial funds with the repayment dependent on the success of the ultimate project. Sources of repayment for these loans may be pre-committed permanent financing or sale of the developed property. The loans in this portfolio are geographically diverse and due to the increased risk are monitored closely by management and the board of directors on a quarterly basis. Residential real estate and single-family interim construction loans are underwritten primarily based on borrowers’ credit scores, documented income and minimum collateral values. Relatively small loan amounts are spread across many individual borrowers, which minimizes risk in the residential portfolio. In addition, management evaluates trends in past dues and current economic factors on a regular basis. Agricultural loans are collateralized by real estate and/or agricultural-related assets. Agricultural real estate loans are primarily comprised of loans for the purchase of farmland. Loan-to-value ratios on loans secured by farmland generally do not exceed 80% and have amortization periods limited to twenty years. Agricultural non-real estate loans are generally comprised of term loans to fund the purchase of equipment, livestock and seasonal operating lines to grain farmers to plant and harvest corn and soybeans. Specific underwriting standards have been established for agricultural-related loans including the establishment of projections for each operating year based on industry developed estimates of farm input costs and expected commodity yields and prices. Operating lines are typically written for one year and secured by the crop and other farm assets as considered necessary. Agricultural loans carry significant credit risks as they involve larger balances concentrated with single borrowers or groups of related borrowers. In addition, repayment of such loans depends on the successful operation or management of the farm property securing the loan or for which an operating loan is utilized. Farming operations may be affected by adverse weather conditions such as drought, hail or floods that can severely limit crop yields. Consumer loans represent less than 1% of the outstanding total loan portfolio. Collateral consists primarily of automobiles and other personal assets. Credit score analysis is used to supplement the underwriting process. Most of the Company’s lending activity occurs within the State of Texas, primarily in the north, central and southeast Texas regions and the State of Colorado, specifically along the Front Range area. As of September 30, 2021, loans in the Colorado region represented about 24% of the total portfolio. A large percentage of the Company’s portfolio consists of commercial and residential real estate loans. As of September 30, 2021 and December 31, 2020, there were no concentrations of loans related to a single industry in excess of 10% of total loans. On January 1, 2021, the Company adopted ASU 2016-13, Financial Instruments - Credit Losses (Topic 326) (ASC 326). Under ASC 326, the allowance for credit losses is a valuation account that is deducted from the amortized cost basis of loans to present the net amount expected to be collected on the loans. Loans, or portions thereof, are charged off against the allowance when they are deemed uncollectible. Expected recoveries do not exceed the aggregate of amounts previously charged-off and expected to be charged-off. The amount of the allowance represents management's best estimate of current expected credit losses on loans considering available information relevant to assessing collectibility over the loans' contractual terms, adjusted for expected prepayments when appropriate. The contractual term excludes expected extensions, renewals and modifications unless either of the following applies: management has a reasonable expectation that a troubled debt restructuring will be executed with an individual borrower, or the extension or renewal options are included in the borrower contract and are not unconditionally cancellable by the Company. The Company's allowance balance is estimated using relevant available information, from internal and external sources, relating to past events, current conditions and reasonable and supportable forecasts. Historical credit loss experience provides the basis for the estimation of expected credit losses. Adjustments to historical loss information are made for differences in current loan-specific risk characteristics such as differences in underwriting standards, portfolio mix, credit quality, or term as well as for changes in environmental conditions, such as changes in unemployment rates, gross domestic product, property values or other relevant factors. The Company utilizes Moody’s Analytics economic forecast scenarios and assigns probability weighting to those scenarios which best reflect management’s views on the economic forecast. Management continually evaluates the allowance for credit losses based upon the factors noted above. Should any of the factors considered by management change, the Company’s estimate of credit losses could also change and would affect the level of future provision for credit losses. Portions of the allowance may be allocated for specific credits; however, the entire allowance is available for any credit that, in management’s judgment, should be charged off. While the calculation of the allowance for credit losses utilizes management’s best judgment and all the information available, the adequacy of the allowance for credit losses is dependent on a variety of factors beyond the Company’s control, including, among other things, the performance of the entire loan portfolio, the economy, changes in interest rates and the view of regulatory authorities towards loan classifications. The allowance for credit losses is measured on a collective basis for portfolios of loans when similar risk characteristics exist. Loans that do not share risk characteristics are evaluated for expected credit losses on an individual basis and excluded from the collective evaluation. For determining the appropriate allowance for credit losses on a collective basis, the loan portfolio is segmented into pools based upon similar risk characteristics and a lifetime loss-rate model is utilized. For modeling purposes, loan pools include: commercial and industrial, energy, commercial real estate - construction/land development, commercial real estate - owner occupied, commercial real estate - non-owner occupied, agricultural, residential real estate, HELOCs, single-family interim construction, and consumer. Management periodically reassesses 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. The measurement of expected credit losses is impacted by loan/borrower attributes and certain macroeconomic variables. Management has determined that they are reasonably able to forecast the macroeconomic variables used in the modeling processes with an acceptable degree of confidence for a total of two years then encompassing a reversion process whereby the forecasted macroeconomic variables are reverted to their historical mean utilizing a rational, systematic basis. Management qualitatively adjusts model results for risk factors that are not considered within the modeling processes but are nonetheless relevant in assessing the expected credit losses within the 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. Loans exhibiting unique risk characteristics and requiring an individual allowance are generally identified at the servicing officer level based on review of weekly past due reports and/or the loan officer’s communication with borrowers. In addition, the status of past due loans are routinely discussed within each lending region as well as credit committee meetings to determine if classification is warranted. The Company’s internal loan review department has implemented an internal risk-based loan review process to identify potential internally classified loans that supplements the independent external loan review. External loan reviews cover a wide range of the loan portfolio, including large lending relationships, specifically targeted loan types, and if applicable recently acquired loan portfolios. As such, the external loan review generally covers loans exceeding $3,000. These reviews include analysis of borrower’s financial condition, payment histories, review of loan documentation and collateral values to determine if a loan should be internally classified. Generally, once classified, an analysis is completed by the credit department to determine the amount of allocated allowance for credit loss required. Expected credit losses for collateral dependent loans, including loans where the borrower is experiencing financial difficulty but foreclosure is not probable, are based on the fair value of the collateral at the reporting date, adjusted for selling costs as appropriate. Prior to the adoption of ASU 2016-13, the allowance for credit losses on loans was a contra-asset valuation account established through a provision for loan losses charged to expense, which represented management’s best estimate of inherent losses that had been incurred within the existing portfolio of loans. The allowance for credit losses on loans included allowance allocations calculated in accordance with ASC Topic 310, Receivables, and allowance allocations calculated in accordance with ASC Topic 450, Contingencies. Following unprecedented declines caused by the pandemic and volatile energy prices, the Texas economy, specifically in the Company’s lending areas of north, central and southeast Texas economy continued to expand at a solid pace into the third quarter of 2021, though surging COVID-19 cases added uncertainty to outlooks. The Colorado economy grew at a moderate pace. The stronger sectors of the economy of late include manufacturing, transportation, nonfinancial services and residential real estate, while other sectors of the economy where growth slowed were those constrained by supply disruptions and labor shortages. Energy activity and agricultural conditions improved further. Activity in the single-family housing market moderated during the reporting period and sales were mostly solid but not as abundant as earlier in the year, partly due to seasonality. Overall, the economy is being impacted by the surging Delta variant, persistent labor and supply shortages, and rising costs, which are expected to dampen the recovery. Previous forecasts for a strong return of business travel and events this fall have been adjusted downward by the pandemic resurgence. The pandemic crisis has been impactful and the timing and magnitude of recovery cannot be predicted. The risk of loss associated with all segments of the portfolio could increase due to these factors. The economy and other risk factors are minimized by the Company’s underwriting standards, which include the following principles: 1) financial strength of the borrower including strong earnings, high net worth, significant liquidity and acceptable debt to worth ratio, 2) managerial business competence, 3) ability to repay, 4) loan to value, 5) projected cash flow and 6) guarantor financial statements, as applicable. The following is a summary of the activity in the allowance for credit losses on loans by class for the three and nine months ended September 30, 2021 and 2020:
The Company will charge-off that portion of any loan which management considers a loss. Commercial and real estate loans are generally considered for charge-off when exposure beyond collateral coverage is apparent and when no further collection of the loss portion is anticipated based on the borrower’s financial condition. The following table presents loans that were evaluated for expected credit losses on an individual basis and the related specific credit loss allocations, by loan class as of September 30, 2021 and December 31, 2020:
Nonperforming loans by loan class at September 30, 2021 (at amortized cost) and December 31, 2020 (at recorded investment), are summarized as follows:
____________ (1) There are $552 in loans on nonaccrual without an allowance for credit loss as of September 30, 2021. Additionally, no interest income was recognized on nonaccrual loans. No significant amounts of accrued interest was reversed during the three and nine months ended September 30, 2021. (2) Excluded loans acquired with deteriorated credit quality under prior GAAP. The accrual of interest is discontinued on a loan when management believes that, after considering collection efforts and other factors, the borrower's financial condition is such that collection of interest is doubtful, as well as when required by regulatory provisions. Regulatory provisions would typically require the placement of a loan on non-accrual status if 1) 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 2) full payment of principal and interest is not expected. All interest accrued but not collected for loans that are placed on nonaccrual status or charged-off is reversed against interest income. Cash collections on nonaccrual loans are generally credited to the loan receivable balance, and no interest income is recognized on those loans until the principal balance has been collected. Loans are returned to accrual status when all the principal and interest amounts contractually due are brought current and future payments are reasonably assured. The restructuring of a loan is considered a “troubled debt restructuring” (TDR) if both 1) the borrower is experiencing financial difficulties and 2) the creditor has granted a concession. Concessions may include interest rate reductions or below market interest rates, principal forgiveness, extending amortization and other actions intended to minimize potential losses. Modifications primarily relate to extending the amortization periods of the loans and interest rate concessions. The modifications during the reported periods did not materially impact the Company’s determination of the allowance for credit losses. The amortized cost basis and recorded investment in troubled debt restructurings, including those on nonaccrual, was $2,971 and $2,564 as of September 30, 2021 and December 31, 2020, respectively. Following is a summary of loans modified under troubled debt restructurings during the three and nine months ended September 30, 2021 and 2020:
At September 30, 2021 and 2020, there were no loans modified under troubled debt restructurings during the previous twelve month period that subsequently defaulted during the three and nine months ended September 30, 2021 and 2020, respectively. At September 30, 2021 and 2020, the Company had no commitments to lend additional funds to any borrowers with loans whose terms have been modified under troubled debt restructurings. Under ASC Subtopic 310-40 and federal banking agencies interagency guidance, certain short-term loan modifications made on a good faith basis in response to COVID-19 (as defined by the guidance) are not considered TDRs. Additionally, under section 4013 of the CARES Act, and as amended, banks may elect to suspend the requirement for certain loan modifications to be categorized as a TDR. In response to the COVID-19 pandemic, the Company has implemented prudent modifications allowing for primarily short-term payment deferrals or other payment relief to borrowers with pandemic-related economic hardships, where appropriate, that complies with the above guidance. As such, the Company's TDR loans noted above do not include loans that are modifications to borrowers impacted by COVID-19. As of September 30, 2021, the amount of loans remaining in COVID-19 related deferment was not significant. Loans are considered past due if the required principal and interest payments have not been received as of the date such payments were due. The following table presents information regarding the aging of past due loans by loan class as of September 30, 2021 (at amortized cost) and as of December 31, 2020 (at recorded investment):
____________ (1) Presented under prior GAAP. The Company’s internal classified report is segregated into the following categories: 1) Pass/Watch, 2) Special Mention, 3) Substandard and 4) Doubtful. The loans placed in the Pass/Watch category reflect the Company’s opinion that the loans reflect potential weakness that requires monitoring on a more frequent basis. The loans in the Special Mention category reflect the Company’s opinion that the credit contains weaknesses which represent a greater degree of risk and warrant extra attention. These loans are reviewed monthly by officers and senior management to determine if a change in category is warranted. The loans placed in the Substandard category are considered to be potentially inadequately protected by the current debt service capacity of the borrower and/or the pledged collateral. These credits, even if apparently protected by collateral value, have shown weakness related to adverse financial, managerial, economic, market or political conditions, which may jeopardize repayment of principal and interest and may be considered impaired. There is a possibility that some future loss could be sustained by the Company if such weakness is not corrected. The Doubtful category includes loans that are in default or principal exposure is probable and the possibility of loss is extremely high. Management considers the guidance in ASC 310-20 when determining whether a modification, extension or renewal of a loan constitutes a current period origination. Generally, current period renewals of credit are re-underwritten at the point of renewal and considered current period originations for purposes of the table below. The following summarizes the amortized cost basis of loans by year of origination/renewal and credit quality indicator by class of loan as of September 30, 2021:
A summary of loans at recorded investment by credit quality indicator by class presented under prior GAAP as of December 31, 2020, is as follows:
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Other Borrowings |
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Sep. 30, 2021 | |
Debt Disclosure [Abstract] | |
Other Borrowings | Other Borrowings Other borrowings totaled $281,697 and $312,175 at September 30, 2021 and December 31, 2020, respectively. On July 20, 2021, the Company redeemed $40,000 of its outstanding 5.75% fixed-to-floating rate subordinated debentures due July 20, 2026. There were $15,500 borrowings outstanding as of September 30, 2021 and $6,500 as of December 31, 2020 against the Company's revolving line of credit with an unrelated commercial bank.
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Off-Balance Sheet Arrangements, Commitments and Contingencies |
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Commitments and Contingencies Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Off-Balance Sheet Arrangements, Commitments and Contingencies | Off-Balance Sheet Arrangements, Commitments and Contingencies Financial Instruments with Off-Balance Sheet Risk The Company is a party to financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of its customers. The commitments involve, to varying degrees, elements of credit and interest rate risk in excess of the amount recognized in the balance sheet. The Company’s exposure to credit loss in the event of nonperformance by the other party to the financial instrument for commitments to extend credit is represented by the contractual amount of this instrument. The Company uses the same credit policies in making commitments and conditional obligations as it does for on-balance sheet instruments. At September 30, 2021 and December 31, 2020, the approximate amounts of these financial instruments were as follows:
Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Since many of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. The Company evaluates each customer’s credit worthiness on a case-by-case basis. The amount of collateral obtained if deemed necessary by the Company upon extension of credit is based on management’s credit evaluation of the counterparty. Collateral held varies but may include accounts receivable, inventory, farm crops, property, plant and equipment and income-producing commercial properties. Letters of credit are written conditional commitments used by the Company to guarantee the performance of a customer to a third party. The Company’s policies generally require that letter of credit arrangements contain security and debt covenants similar to those contained in loan arrangements. In the event the customer does not perform in accordance with the terms of the agreement with the third party, the Company would be required to fund the commitment. The maximum potential amount of future payments the Company could be required to make is represented by the contractual amount shown in the table above. If the commitment is funded, the Company would be entitled to seek recovery from the customer. Allowance For Credit Losses on Off-Balance Sheet Credit Exposures The allowance for credit losses on off-balance-sheet credit exposures is calculated under ASC 326, representing expected credit losses over the contractual period for which the Company is exposed to credit risk resulting from a contractual obligation to extend credit. Off-balance sheet credit exposures primarily consist of amounts available under outstanding lines of credit and letters of credit detailed in the table above. The allowance for credit losses on off-balance sheet credit exposures is estimated by loan segment at each balance sheet date using the same methodologies as portfolio loans, taking into consideration the likelihood that funding will occur based on historical utilization rates. The allowance is included in other liabilities on the Company’s consolidated balance sheets. The allowance for credit losses on off-balance sheet commitments were as follows:
Litigation The Company is involved in certain legal actions arising from normal business activities. Management believes that the outcome of such proceedings will not materially affect the financial position, results of operations or cash flows of the Company. A legal proceeding that the Company believes could become material is described below. The Bank is a party to a legal proceeding inherited in connection with its acquisition of BOH Holdings, Inc. and its subsidiary, Bank of Houston (BOH). The plaintiffs in the case are alleging that the Bank aided and abetted or participated in a fraudulent scheme. The Bank is pursuing insurance coverage for these claims, including reimbursement for defense costs. The Company believes the claims made in this lawsuit are without merit and is vigorously defending the lawsuit. The Company is unable to predict when the matter will be resolved, the ultimate outcome or potential costs or damages to be incurred.
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Income Taxes |
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Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Taxes | Income Taxes Income tax expense for the three and nine months ended September 30, 2021 and 2020 was as follows:
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Fair Value Measurements |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Measurements | Fair Value Measurements The fair value of an asset or liability is the price that would be received to sell that asset or paid to transfer that liability in an orderly transaction occurring in the principal market (or most advantageous market in the absence of a principal market) for such asset or liability. In estimating fair value, the Company utilizes valuation techniques that are consistent with the market approach, the income approach and/or the cost approach. Such valuation techniques are consistently applied. Inputs to valuation techniques include the assumptions that market participants would use in pricing an asset or liability. ASC Topic 820, Fair Value Measurements and Disclosures, 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 might 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 (such as interest rates, volatilities, prepayment speeds, credit risks, etc.) or inputs that are derived principally from or corroborated by market data by correlation or other means. Level 3 Inputs – Unobservable inputs for determining the fair values of assets or liabilities that reflect an entity’s own assumptions about the assumptions that market participants would use in pricing the assets or liabilities. The Company elected the fair value option for certain residential mortgage loans held for sale in accordance with ASC 825, Financial Instruments. This election allows for a more effective offset of the changes in fair values of the loans and the derivative instruments used to economically hedge them without the burden of complying with the requirements for hedge accounting under ASC 815, Derivatives and Hedging. The Company has not elected the fair value option for other residential mortgage loans held for sale primarily because they are not economically hedged using derivative instruments. See below and Note 9, Derivative Financial Instruments, for additional information. Assets and Liabilities Measured on a Recurring Basis The following table represents assets and liabilities reported on the consolidated balance sheets at their fair value on a recurring basis as of September 30, 2021 and December 31, 2020 by level within the ASC Topic 820 fair value measurement hierarchy:
(1) At September 30, 2021 and December 31, 2020, loans held for sale for which the fair value option was elected had an aggregate outstanding principal balance of $26,244 and $68,670, respectively. There were no mortgage loans held for sale under the fair value option that were 90 days or greater past due or on nonaccrual at September 30, 2021. A description of the valuation methodologies used for instruments measured at fair value, as well as the general classification of such instruments pursuant to the valuation hierarchy, is set forth below. Investment securities Securities classified as available for sale are reported at fair value utilizing Level 1 and Level 2 inputs. Securities are classified within Level 1 when quoted market prices are available in an active market. Inputs include securities that have quoted prices in active markets for identical assets. For securities utilizing Level 2 inputs, the Company obtains fair value measurements from an independent pricing service. The fair value measurements consider observable data that may include dealer quotes, market spreads, cash flows, the U.S. Treasury and other yield curves, live trading levels, trade execution data, market consensus prepayment speeds, credit information and the security’s terms and conditions, among other things. Loans held for sale Certain mortgage loans held for sale are measured at fair value on a recurring basis due to the Company's election to adopt fair value accounting treatment for those loans originated for which the Company has entered into certain derivative financial instruments as part of its mortgage banking and related risk management activities. These instruments include interest rate lock commitments and mandatory forward commitments to sell these loans to investors known as forward mortgage-backed securities trades. This election allows for a more effective offset of the changes in fair values of the assets and the mortgage related derivative instruments used to economically hedge them without the burden of complying with the requirements for hedge accounting under ASC 815, Derivatives and Hedging. Mortgage loans held for sale, for which the fair value option was elected, which are sold on a servicing released basis, are valued using a market approach by utilizing either: (i) the fair value of 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 to 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. For mortgage loans held for sale for which the fair value option was elected, the earned current contractual interest payment is recognized in interest income, loan origination costs and fees on fair value option loans are recognized in earnings as incurred and not deferred. The Company has no continuing involvement in any residential mortgage loans sold. Derivatives The Company utilizes interest rate swaps to hedge exposure to interest rate risk and variability of cash flows associated to changes in the underlying interest rate of the hedged item. These hedging interest rate swaps are classified as a cash flow hedge. The Company utilizes a third-party vendor for derivative valuation purposes. These vendors determine the appropriate fair value based on a net present value calculation of the cash flows related to the interest rate swaps using primarily observable market inputs such as interest rate yield curves (Level 2 inputs). The estimated fair values of interest rate lock commitments utilize 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). The fair value of interest rate lock commitments 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, as the valuations are based on observable market inputs. Forward mortgage-backed securities trades are exchange-traded or traded within highly active dealer markets. In order to determine the fair value of these instruments, the Company utilized the exchange price or dealer market price for the particular derivative contract; therefore these contracts are classified as Level 2. The estimated fair values are subject to change primarily due to changes in interest rates. The Company also enters into certain interest rate derivative positions that are not designated as hedging instruments. The estimated fair value of these commercial loan interest rate swaps are obtained from a pricing service that provides the swaps' unwind value (Level 2 inputs). See Note 9, Derivative Financial Instruments, for more information. Assets and Liabilities Measured on a Nonrecurring Basis In accordance with ASC Topic 820, certain assets and liabilities are measured at fair value on a nonrecurring basis; that is, the assets and liabilities are not measured at fair value on an ongoing basis but are subject to fair value adjustments in certain circumstances (for example, when there is evidence of impairment). The following table presents the assets carried on the consolidated balance sheet by caption and by level in the fair value hierarchy at September 30, 2021 and December 31, 2020, for which a nonrecurring change in fair value has been recorded:
Individually evaluated loans, which are collateral dependent, are measured at an observable market price (if available) or at the fair value of the loan’s underlying collateral. Fair value of the loan’s collateral is determined by appraisals or independent valuation, which is then adjusted for the estimated costs related to liquidation of the collateral. Management’s ongoing review of appraisal information may result in additional discounts or adjustments to valuation based upon more recent market sales activity or more current appraisal information derived from properties of similar type and/or locale. In addition, management's discounting criteria may vary for loans secured by non-real estate collateral such as inventory, oil and gas reserves, accounts receivable, equipment or other business assets. Therefore, the Company has categorized its individually evaluated loans as Level 3. Other real estate owned is measured at fair value on a nonrecurring basis (upon initial recognition or subsequent impairment). Other real estate is classified within Level 3 of the valuation hierarchy. When transferred from the loan portfolio, other real estate owned is adjusted to fair value less estimated selling costs and is subsequently carried at the lower of carrying value or fair value less estimated selling costs. The fair value is determined using an external appraisal process, discounted based on internal criteria. Therefore, the Company has categorized its other real estate as Level 3. There was no other real estate owned remeasured during the nine months ended September 30, 2021 and the year ended December 31, 2020. In addition, mortgage loans held for sale not recorded under the fair value option are required to be measured at the lower of cost or fair value. The fair value of these loans is based upon binding quotes or bids from third party investors. As of September 30, 2021 and December 31, 2020, all mortgage loans held for sale not recorded under the fair value option were recorded at cost. Fair Value of Financial Instruments not Recorded at Fair Value The carrying amount, estimated fair value and the level of the fair value hierarchy of the Company’s financial instruments that are reported at amortized cost on the Company's consolidated balance sheets were as follows at September 30, 2021 and December 31, 2020:
The methods and assumptions used by the Company in estimating fair values of financial instruments as disclosed herein in accordance with ASC Topic 825, Financial Instruments, other than for those measured at fair value on a recurring and nonrecurring basis discussed above, are as follows: Cash and cash equivalents: The carrying amounts of cash and cash equivalents approximate their fair value. Certificates of deposit held in other banks: The fair value of certificates of deposit held in other banks is based upon current market rates. Loans held for sale, at cost: The fair value of loans held for sale is determined based upon commitments on hand from investors. Loans: A discounted cash flow model is used to estimate the fair value of the loans. The discounted cash flow approach models the credit losses directly in the projected cash flows, applying various assumptions regarding credit, interest and prepayment risks for the loans based on loan types, payment types and fixed or variable classifications. Federal Home Loan Bank of Dallas and other restricted stock: The carrying value of restricted securities such as stock in the Federal Home Loan Bank of Dallas and Independent Bankers Financial Corporation approximates fair value. Deposits: The fair values disclosed for demand deposits are, by definition, equal to the amount payable on demand at the reporting date (that is their carrying amounts). The carrying amounts of variable-rate certificates of deposit (CDs) approximate their fair values at the reporting date. Fair values for fixed-rate CDs are estimated using a discounted cash flow calculation that applies interest rates currently being offered on certificates to a schedule of aggregated expected monthly maturities on time deposits. Federal Home Loan Bank advances, line of credit and federal funds purchased: The fair value of advances maturing within 90 days approximates carrying value. Fair value of other advances is based on the Company’s current borrowing rate for similar arrangements. Other borrowings: The estimated fair value approximates carrying value for short-term borrowings. The fair value of private subordinated debentures are based upon prevailing rates on similar debt in the market place. The subordinated debentures that are publicly traded are valued based on indicative bid prices based upon market pricing observations in the current market. Junior subordinated debentures: The fair value of junior subordinated debentures is estimated using discounted cash flow analyses based on the published Bloomberg US Financials BB rated corporate bond index yield. Accrued interest: The carrying amounts of accrued interest approximate their fair values. Off-balance sheet instruments: Fair values for off-balance sheet, credit-related financial instruments are based on fees currently charged to enter into similar agreements, taking into account the remaining terms of the agreements and the counterparties' credit standing. The fair value of commitments is not material.
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Derivative Financial Instruments |
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Financial Instruments | Derivative Financial Instruments The Company enters into certain derivative financial instruments as part of its hedging strategy. The Company accounts for its derivative financial instruments in accordance with ASC Topic 815 which requires all derivative instruments to be carried at fair value on the balance sheet. The Company has designated certain derivative instruments used to manage interest rate risk as hedge relationships with certain assets, liabilities or cash flows being hedged. Certain derivatives used for interest rate risk management are not designated in a hedge relationship and are used for asset and liability management related to the Company's mortgage banking activities and commercial customers' financing needs. All derivatives are carried at fair value in either other assets or other liabilities. Derivative instruments designated in a hedge relationship to mitigate exposure to changes in the fair value of an asset, liability, or firm commitment attributable to a particular risk, such as interest rate risk, are considered fair value hedges. Derivative instruments designated in a hedge relationship to mitigate exposure to variability in expected future cash flows, or other types of forecasted transactions, are considered cash flow hedges. The Company's objectives in using interest rate derivatives are to add stability to interest income and to manage its exposure to interest rate movements. To accomplish this objective, the Company uses interest rate swaps as part of its interest rate risk management strategy. Interest rate swaps designated as cash flow hedges involve the receipt of fixed-rate amounts from a counterparty in exchange for the Company making variable-rate payments over the life of the agreements without exchange of the underlying notional amount. During the second quarter of 2021, the Company entered into two interest rate swap derivatives with an aggregated notional amount of $100,000 that were designated as cash flow hedges. The derivatives are intended to hedge the variable cash flows associated with certain existing variable-interest rate loans. For derivatives designated and that qualify as cash flow hedges of interest rate risk, the gain or loss on the derivative is recorded in accumulated other comprehensive income and subsequently reclassified into interest income in the same period that the hedged transaction affects earnings. Amounts reported in accumulated other comprehensive income related to derivatives will be reclassified to interest income as interest payments are received on the Company’s variable-rate loans. During the next twelve months, the Company estimates that $853 will be reclassified as an increase to interest income. Through the normal course of business, the Company enters into interest rate lock commitments with consumers to originate mortgage loans at a specified interest rate. 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 manages the changes in fair value associated with changes in interest rates related to interest rate lock commitments by using forward sold commitments known as forward mortgage-backed securities trades. These instruments are typically entered into at the time the interest rate lock commitment is made. The Company offers certain derivatives products, primarily interest rate swaps, directly to qualified commercial banking customers to facilitate their risk management strategies. The interest rate swap derivative positions relate to transactions in which the Company enters into an interest rate swap with a customer, while at the same time entering into an offsetting interest rate swap with another financial institution. An interest rate swap transaction allows customers to effectively convert a variable rate loan to a fixed rate. In connection with each swap, the Company agrees to pay interest to the customer on a notional amount at a variable interest rate and receive interest from the customer on a similar notional amount at a fixed interest rate. At the same time, the Company agrees to pay another financial institution the same fixed interest rate on the same notional amount and receive the same variable interest rate on the same notional amount. The following table provides the outstanding notional balances and fair values of outstanding derivative positions at September 30, 2021 and December 31, 2020:
The commercial loan customer counterparty weighted average received and paid interest rates for interest rate swaps outstanding were as follows:
The credit exposure related to interest rate swaps is limited to the net favorable value of all swaps by each counterparty, which was approximately $10,366 at September 30, 2021. In some cases collateral may be required from the counterparties involved if the net value of the derivative instruments exceeds a nominal amount. Collateral levels are monitored and adjusted on a regular basis for changes in interest rate swap values. At September 30, 2021, cash of $20,757 and securities of $3,250 were pledged as collateral for these derivatives. The Company has entered into credit risk participation agreements with financial institution counterparties for interest rate swaps related to loans in which the Company is either a participant or a lead bank. Risk participation agreements entered into as a participant bank provide credit protection to the financial institution counterparty should the borrower fail to perform on its interest rate derivative contract with that financial institution. The Company is party to one risk participation agreement as a participant bank having a notional amount of $5,251 at September 30, 2021. Risk participation agreements entered into as the lead bank provide credit protection to the Company should the borrower fail to perform on its interest rate derivative contract. The Company is party to one risk participation agreement as the lead bank having a notional amount of $9,414 at September 30, 2021. The changes in the fair value of interest rate lock commitments and the forward sales of mortgage-backed securities are recorded in mortgage banking revenue. These gains and losses were not attributable to instrument-specific credit risk. For commercial interest rate swaps, because the Company acts as an intermediary for our customer, changes in the fair value of the underlying derivative contracts substantially offset each other and do not have a material impact on the results of operations. A summary of derivative activity and the related impact on the consolidated statements of income for the three and nine months ended September 30, 2021 and 2020 is as follows:
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Stock Awards |
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Share-based Payment Arrangement [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock Awards | Stock Awards The Company grants common stock awards to certain employees of the Company. In connection with the Company's initial public offering in April 2013, the Board of Directors adopted the 2013 Equity Incentive Plan (2013 Plan). All stock awards issued under expired plans prior to 2013 are fully vested. Under the 2013 Plan, the Compensation Committee may grant awards to certain employees of the Company in the form of restricted stock, restricted stock rights, restricted stock units, qualified and nonqualified stock options, performance share awards and other equity-based awards. The 2013 Plan, as amended, has 2,300,000 reserved shares of common stock to be awarded by the Company’s compensation committee. As of September 30, 2021, there were 1,088,726 shares remaining available for grant for future awards. The shares currently issued under the 2013 Plan are restricted stock awards and performance stock units. Restricted stock awarded to employees vest evenly over the required employment period, generally ranging from to five years. Performance stock units awarded have a to year cliff vesting period. As defined in the plan, outstanding awards may immediately vest upon a change-in-control in the Company. Restricted stock granted under the 2013 Plan are issued at the date of grant and receive dividends. Performance stock units are eligible to receive dividend equivalents as such dividends are declared on the Company's common stock during the performance period. Equivalent dividend payments are based upon the number of shares issued under each performance award and are deferred until such time that the units vest and the shares are issued. Restricted Stock Awards The following table summarizes the activity in nonvested restricted stock awards for the nine months ended September 30, 2021 and 2020:
Compensation expense related to these awards is recorded based on the fair value of the award at the date of grant and totaled $2,087 and $6,613 for the three and nine months ended September 30, 2021, respectively, and $1,970 and $6,333 for the three and nine months ended September 30, 2020, respectively. Compensation expense is recorded in salaries and employee benefits in the accompanying consolidated statements of income. At September 30, 2021, future compensation expense is estimated to be $13,743 and will be recognized over a remaining weighted average period of 2.21 years. The fair value of common stock awards that vested during the nine months ended September 30, 2021 and 2020 was $12,019 and $5,469, respectively. The Company has recorded $421 and $647 in excess tax benefit on vested restricted stock to income tax expense for the three and nine months ended September 30, 2021, respectively, and $44 and $246 in excess tax expense for the three and nine months ended September 30, 2020, respectively. There were no modifications of stock agreements during the nine months ended September 30, 2021 and 2020 that resulted in significant additional incremental compensation costs. At September 30, 2021, the future vesting schedule of the nonvested restricted stock awards is as follows:
Performance Stock Units Performance stock units represent shares potentially issuable in the future. The number of shares issued is based upon the measure of the Company's achievement of its relative adjusted return on average tangible common equity, as defined by the Company, over the award's performance period as compared to an identified peer group's achievement over the same performance period. The number of shares issuable under each performance award is the product of the award target and the award payout percentage for the given level of achievement which ranges from 0% to 150% of the target. The following table summarizes the activity in nonvested performance stock units at target award level for the nine months ended September 30, 2021:
Compensation expense related to performance stock units is estimated each period based on the fair value of the target stock unit at the grant date and the most probable level of achievement of the performance condition, adjusted for the passage of time within the vesting periods of the awards. Compensation expense related to these awards was $336 and $1,364 for the three and nine months ended September 30, 2021, respectively. As of September 30, 2021, the unrecognized compensation expense assuming the target attainment is estimated to be $3,666, while the estimated maximum payout rate is $6,181. The remaining performance period over which the expense will be recognized is 2.74 years.
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Regulatory Matters |
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Regulated Operations [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Regulatory Matters | Regulatory Matters Under banking law, there are legal restrictions limiting the amount of dividends the Bank can declare. Approval of the regulatory authorities is required if the effect of dividends declared would cause the regulatory capital of the Bank to fall below specified minimum levels. For state banks, subject to regulatory capital requirements, payment of dividends is generally allowed to the extent of net profits. The Company (on a consolidated basis) and the Bank are subject to various regulatory capital requirements administered by federal and state banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the Company’s consolidated financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Company and the Bank must meet specific capital guidelines that involve quantitative measures of assets, liabilities and certain off-balance sheet items as calculated under regulatory accounting practices. The capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings and other factors. Tier 2 capital for the Company includes permissible portions of the Company's subordinated notes. The permissible portion of qualified subordinated notes decreases 20% per year during the final five years of the term of the notes. The Company is subject to the Basel III regulatory capital framework (the Basel III Capital Rules). The Basel III Capital Rules require that the Company maintain a 2.5% capital conservation buffer above the minimum risk-based capital adequacy requirements. The capital conservation buffer is designed to absorb losses during periods of economic stress and requires increased capital levels for the purpose of capital distributions and other payments. Failure to meet the full amount of the buffer will result in restrictions on the Company's ability to make capital distributions, including dividend payments and stock repurchases and to pay discretionary bonuses to executive officers. As discussed in Note 1 - Summary of Significant Accounting Policies, in connection with the adoption of ASC 326, the Company recognized an after-tax cumulative effect reduction to retained earnings of $53,880 on January 1, 2021. In February 2019, the federal bank regulatory agencies issued a final rule that revised certain capital regulations under CECL and included a transition option that allows banking organizations to phase in, over a three-year period, the day-one adverse effects of CECL on their regulatory capital ratios (three-year transition option). The Company elected to adopt the three-year transition option and the deferral has been applied in the September 30, 2021 capital ratios presented below. Quantitative measures established by regulation to ensure capital adequacy require the Company and the Bank to maintain minimum amounts and ratios (set forth in the table below) of total, Common Equity Tier 1 (CET1) and Tier 1 capital (as defined in the regulations) to risk weighted assets (as defined), and of Tier 1 capital (as defined) to average assets (as defined). Management believes, as of September 30, 2021 and December 31, 2020, the Company and the Bank meet all capital adequacy requirements to which they are subject, including the capital buffer requirement. As of September 30, 2021 and December 31, 2020, the Bank’s capital ratios exceeded those levels necessary to be categorized as “well capitalized” under the regulatory framework for prompt corrective action. To be categorized as “well capitalized,” the Bank must maintain minimum total risk based, CET1, Tier 1 risk based and Tier 1 leverage ratios as set forth in the table. There are no conditions or events that management believes have changed the Bank’s category. The following table presents actual capital amounts and required ratios under Basel III Capital Rules for the Company and Bank as of September 30, 2021 and December 31, 2020.
Stock repurchase program: From time to time, the Company's board of directors has authorized stock repurchase programs which allow the Company to purchase its common stock generally over a one-year period at various prices in the open market or in privately negotiated transactions. On October 22, 2020, the Company's board of directors authorized a $150,000 stock repurchase program allowing the Company to purchase shares of its common stock through October 31, 2021. On August 26, 2021, the Company extended the stock repurchase program through December 31, 2021. Under this program, the Company repurchased 217,772 shares at a total cost of $15,207 for the three and nine months ended September 30, 2021. There were no shares repurchased for the three and nine months ended September 30, 2020. In July 2019, the federal bank regulators adopted final rules that, among other things, eliminated the standalone prior approval requirement for any repurchase of common stock. However, the Company remains subject to a Federal Reserve Board guideline that requires consultation with the Federal Reserve regarding plans for share repurchases. The Company’s repurchases of its common stock may be subject to a prior approval or notice requirement under other regulations, policies or supervisory expectations of the Federal Reserve Board. The Federal Reserve Board has approved share repurchases through the remainder of 2021. Company stock repurchased to settle employee tax withholding related to vesting of stock awards totaled 14,297 and 39,508 shares at a total cost of $1,049 and $2,714 for the three and nine months ended September 30, 2021, respectively, and 291 and 2,951 shares at a total cost of $13 and $159 for the three and nine months ended September 30, 2020, respectively, and were not included under the repurchase program.
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Subsequent Event |
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Sep. 30, 2021 | |
Subsequent Events [Abstract] | |
Subsequent Event | Subsequent Event Declaration of Dividends On October 28, 2021, the Company declared a quarterly cash dividend in the amount of $0.36 per share of common stock to the stockholders of record on November 11, 2021. The dividend will be paid on November 24, 2021.
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Summary of Significant Accounting Policies (Policies) |
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Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Basis of presentation | Basis of presentation: The accompanying consolidated financial statements include the accounts of IBG and all other entities in which IBG has controlling financial interest. All material intercompany transactions and balances have been eliminated in consolidation. In addition, the Company wholly-owns nine statutory business trusts that were formed for the purpose of issuing trust preferred securities and do not meet the criteria for consolidation. The consolidated interim financial statements are unaudited, but include all adjustments, which, in the opinion of management, are necessary for a fair presentation of the results of the periods presented. All such adjustments were of a normal and recurring nature. These financial statements should be read in conjunction with the financial statements and the notes thereto in the Company's Annual Report on Form 10-K for the year ended December 31, 2020. The consolidated balance sheet at December 31, 2020 has been derived from the audited financial statements as of that date, but does not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. Accounting standards codification: The Financial Accounting Standards Board's (FASB) Accounting Standards Codification (ASC) is the officially recognized source of authoritative U.S. generally accepted accounting principles (GAAP) applicable to all public and non-public non-governmental entities. Rules and interpretive releases of the SEC under the authority of federal securities laws are also sources of authoritative GAAP for SEC registrants. All other accounting literature is considered non-authoritative. Citing particular content in the ASC involves specifying the unique numeric path to the content through the Topic, Subtopic, Section and Paragraph structure.
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Segment reporting | Segment reporting: The Company has one reportable segment. The Company’s chief operating decision-maker uses consolidated results to make operating and strategic decisions. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Reclassifications | Reclassifications: Certain prior period financial statement and disclosure amounts have been reclassified to conform to current period presentation. The reclassifications have no effect on net income or stockholders' equity as previously reported. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Use of estimates | Use of estimates: The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect certain reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Accordingly, actual results could differ from those estimates. The material estimates included in the financial statements relate to the allowance for credit losses, the valuation of goodwill and valuation of assets and liabilities acquired in business combinations. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
New accounting standard | Accounting changes: On January 1, 2020, ASU 2016-13, Financial Instruments - Credit Losses (Topic 326) (ASC 326): Measurement of Credit Losses on Financial Instruments (ASU 2016-13), as amended, became effective for the Company. ASU 2016-13 replaces the incurred loss methodology 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 held-to-maturity debt securities. It also applies to off-balance-sheet credit exposures not accounted for as insurance (loan commitments, standby letters of credit, financial guarantees, and other similar instruments). The CECL model requires the measurement of all expected credit losses on applicable financial assets based on historical experience, current conditions, and reasonable and supportable forecasts. In addition, ASU 2016-13 includes certain changes to the accounting for available-for-sale securities such as requiring credit-related impairments to be recognized as an allowance for credit losses rather than as a direct write-down of the securities amortized cost basis when management does not intend to sell or believes that it is more likely than not they will be required to sell securities prior to recovery of the securities amortized cost basis. 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 financial institutions to delay the implementation of ASU 2016-13 until the earlier of the termination date of the national emergency declaration by the President or December 31, 2020. On December 27, 2020, the Consolidated Appropriations Act, 2021 (Act 2021), was signed into law which further extended the implementation date of CECL to the earlier of the first day of the entity’s fiscal year that begins after the date on which the COVID-19 national emergency terminates or January 1, 2022. Under this option, the Company elected to delay implementation of ASU 2016-13 and calculated and recorded its provision for loan losses under the incurred loss model that existed prior to ASU 2016-13 for the year ended December 31, 2020. With regard to Act 2021 amendments, the SEC staff indicated it would not object to a registrant early adopting on December 31, 2020, retrospective to January 1, 2020, or January 1, 2021, effective as of January 1, 2021. Under this guidance, the Company elected to adopt ASU 2016-13 with an effective implementation date of January 1, 2021. The Company adopted ASU 2016-13 using the modified retrospective method for all financial assets measured at amortized cost and off-balance sheet credit exposures. As a result of this adoption, the Company recognized a cumulative effect reduction to retained earnings totaling $53,880, net of a recorded deferred tax asset of $15,113, and reclassed $13,035 of allowance for credit loss related to financial assets purchased with credit deterioration (PCD) that were previously classified as purchased credit impaired (PCI) and accounted for under ASC 310-30 as discussed below. Results for periods beginning after January 1, 2021 are presented in accordance with ASU 2016-13 while prior period amounts continue to be reported in accordance with previously applicable GAAP. The Company adopted ASU 2016-13 using the prospective transition approach for PCD assets. In accordance with the standard, management did not reassess whether PCI assets met the criteria of PCD assets as of the date of adoption. On January 1, 2021, the amortized cost basis of the PCD assets were adjusted to reflect the addition of the allowance for credit losses. The remaining noncredit discount (based on the adjusted amortized cost basis) will be accreted into interest income at the effective interest rate as of January 1, 2021. The following table illustrates the impact of ASU 2016-13 on the allowances for credit losses as of January 1, 2021, the date of adoption:
In connection with the adoption of ASC 326, the Company revised certain accounting policies and implemented certain accounting policy elections. The revised accounting policies are described below.
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Securities | Securities: Securities classified as available for sale are those debt securities that the Company intends to hold for an indefinite period of time, but not necessarily to maturity. Any decision to sell a security classified as available for sale would be based on various factors, including significant movements in interest rates, changes in the maturity mix of the Company's assets and liabilities, liquidity needs, regulatory capital considerations and other similar factors. Securities available for sale are reported at fair value with unrealized gains or losses reported as a separate component of other comprehensive income, net of tax. The amortization of premiums and accretion of discounts, computed by the interest method generally over their contractual lives, are recognized in interest income. Premiums on callable securities are amortized to their earliest call date. Realized gains or losses, determined on the basis of the cost of specific securities sold, are included in earnings on the trade date.
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Allowance for Credit Losses - AFS Securities | Allowance for credit losses - available-for-sale securities: For available-for-sale securities in an unrealized loss position, the Company first assesses whether it intends to sell or it is more-likely-than-not that we will be required to sell the securities before recovery of the amortized cost basis. If either of these criteria is met, the securities amortized cost basis is written down to fair value as a current period expense. If either of the above criteria is not met, the Company evaluates whether the decline in fair value is the result of credit losses or other factors. In making this assessment, management may consider various factors including the extent to which fair value is less than amortized cost, performance of any underlying collateral 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 are compared to the amortized cost basis of the security and any excess of the amortized cost basis over the present value of expected cash flows is recorded as an allowance for credit loss, limited to the amount by which the fair value is less than the amortized cost basis. Any impairment not recorded through an allowance for credit loss is recognized in other comprehensive income as a non credit-related impairment. Management has made a policy election to exclude accrued interest receivable on available-for-sale securities from the estimate of credit losses and report accrued interest separately in other assets in the consolidated balance sheets. Changes in the allowance for credit losses are recorded as provision for (or reversal of) credit losses. Available-for-sale 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. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Acquired Loans | Acquired loans: Loans acquired in connection with a business combination 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. For PCD loans, an initial allowance is established on the acquisition date using the same methodology as other loans held for investment and combined with the fair value of the loan to arrive at acquisition date amortized cost. Accordingly, no provision for credit losses is recognized on PCD loans at the acquisition date. Subsequent to the acquisition date, changes to the allowance are recognized in the provision for credit losses. Non-PCD loans are pooled into segments together with originated held for investment 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. 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 January 1, 2021, 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.
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Loans, Net | Loans, net: Loans that management has the intent and ability to hold for the foreseeable future or until maturity or pay-off are reported at their outstanding principal balance, net of unearned interest, purchase premiums and discounts, deferred loan fees or costs and an allowance for credit losses. Loan origination fees, net of direct origination costs, are deferred and recognized as an adjustment to the related loan yield using the effective interest method without anticipating prepayments. Further information regarding the Company's accounting policies related to past due loans, non-accrual loans, collateral dependent loans and troubled debt restructurings is presented in Note 4 - Loans, Net and Allowance for Credit Losses on Loans. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Allowance for Credit Losses on Loans | Allowance for credit losses on loans: In accordance with ASC 326, the allowance for credit losses on loans is a valuation account that is deducted from the amortized cost basis of loans to present management's best estimate of the net amount expected to be collected on the loans. Loans are charged against the allowance for credit losses when management believes that collectability of the principal is unlikely. Subsequent recoveries, if any, are credited to the allowance. The allowance is increased (decreased) by provisions (or reversals of) reported in the income statement as a component of provision for credit losses. Management has made the accounting policy election to exclude accrued interest receivable on loans from the estimate of credit losses and reports accrued interest separately in other assets in the consolidated balance sheets. Further information regarding Company policies and methodology used to estimate the allowance for credit losses on loans is presented in Note 4 - Loans, Net and Allowance for Credit Losses on Loans. The Company's allowance balance is estimated using relevant available information, from internal and external sources, relating to past events, current conditions and reasonable and supportable forecasts. Historical credit loss experience provides the basis for the estimation of expected credit losses. Adjustments to historical loss information are made for differences in current loan-specific risk characteristics such as differences in underwriting standards, portfolio mix, credit quality, or term as well as for changes in environmental conditions, such as changes in unemployment rates, gross domestic product, property values or other relevant factors. The Company utilizes Moody’s Analytics economic forecast scenarios and assigns probability weighting to those scenarios which best reflect management’s views on the economic forecast. Management continually evaluates the allowance for credit losses based upon the factors noted above. Should any of the factors considered by management change, the Company’s estimate of credit losses could also change and would affect the level of future provision for credit losses. Portions of the allowance may be allocated for specific credits; however, the entire allowance is available for any credit that, in management’s judgment, should be charged off. While the calculation of the allowance for credit losses utilizes management’s best judgment and all the information available, the adequacy of the allowance for credit losses is dependent on a variety of factors beyond the Company’s control, including, among other things, the performance of the entire loan portfolio, the economy, changes in interest rates and the view of regulatory authorities towards loan classifications. The allowance for credit losses is measured on a collective basis for portfolios of loans when similar risk characteristics exist. Loans that do not share risk characteristics are evaluated for expected credit losses on an individual basis and excluded from the collective evaluation. For determining the appropriate allowance for credit losses on a collective basis, the loan portfolio is segmented into pools based upon similar risk characteristics and a lifetime loss-rate model is utilized. For modeling purposes, loan pools include: commercial and industrial, energy, commercial real estate - construction/land development, commercial real estate - owner occupied, commercial real estate - non-owner occupied, agricultural, residential real estate, HELOCs, single-family interim construction, and consumer. Management periodically reassesses 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. The measurement of expected credit losses is impacted by loan/borrower attributes and certain macroeconomic variables. Management has determined that they are reasonably able to forecast the macroeconomic variables used in the modeling processes with an acceptable degree of confidence for a total of two years then encompassing a reversion process whereby the forecasted macroeconomic variables are reverted to their historical mean utilizing a rational, systematic basis. Management qualitatively adjusts model results for risk factors that are not considered within the modeling processes but are nonetheless relevant in assessing the expected credit losses within the 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.
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Allowance For Credit Losses on Off-Balance-Sheet Credit Exposures | Allowance for credit losses on off-balance-sheet credit exposures: 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 the Company is exposed to credit risk resulting from a contractual obligation to extend credit. No allowance is recognized if we have the unconditional right to cancel the obligation. The allowance is reported as a component of other liabilities in the consolidated balance sheets. Adjustments to the allowance are reported in the income statement as a component of provision for credit losses. Further information regarding Company policies and methodology used to estimate the allowance for credit losses on off-balance-sheet credit exposures is presented in Note 6 - Off-Balance Sheet Arrangements, Commitments and Contingencies. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Subsequent events | Subsequent events: Companies are required to evaluate events and transactions that occur after the balance sheet date but before the date the financial statements are issued. They must recognize in the financial statements the effect of all events or transactions that provide additional evidence of conditions that existed at the balance sheet date, including the estimates inherent in the financial statement preparation process. Entities shall not recognize the impact of events or transactions that provide evidence about conditions that did not exist at the balance sheet date but arose after that date. The Company has evaluated subsequent events through the date of filing these financial statements with the Securities and Exchange Commission (SEC) and noted no subsequent events requiring financial statement recognition or disclosure, except as disclosed in Note 12. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings per share | Earnings per share: Basic earnings per common share is calculated as net income available to common shareholders divided by the weighted average number of common shares outstanding during the period. The unvested share-based payment awards that contain rights to nonforfeitable dividends are considered participating securities for this calculation. Diluted earnings per common share includes the dilutive effect of additional potential common shares issuable under participating nonvested restricted stock awards as well as performance stock units (PSUs). The participating nonvested restricted stock awards were not included in dilutive shares as they were anti-dilutive for the three and nine months ended September 30, 2021 and for the three months ended September 30, 2020. Proceeds from the assumed exercise of dilutive participating nonvested restricted stock awards and PSUs are assumed to be used to repurchase common stock at the average market price. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Loan charge-off amounts | The Company will charge-off that portion of any loan which management considers a loss. Commercial and real estate loans are generally considered for charge-off when exposure beyond collateral coverage is apparent and when no further collection of the loss portion is anticipated based on the borrower’s financial condition. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Nonaccrual loan and lease status | The accrual of interest is discontinued on a loan when management believes that, after considering collection efforts and other factors, the borrower's financial condition is such that collection of interest is doubtful, as well as when required by regulatory provisions. Regulatory provisions would typically require the placement of a loan on non-accrual status if 1) 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 2) full payment of principal and interest is not expected. All interest accrued but not collected for loans that are placed on nonaccrual status or charged-off is reversed against interest income. Cash collections on nonaccrual loans are generally credited to the loan receivable balance, and no interest income is recognized on those loans until the principal balance has been collected. Loans are returned to accrual status when all the principal and interest amounts contractually due are brought current and future payments are reasonably assured. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Troubled debt restructuring | The restructuring of a loan is considered a “troubled debt restructuring” (TDR) if both 1) the borrower is experiencing financial difficulties and 2) the creditor has granted a concession. Concessions may include interest rate reductions or below market interest rates, principal forgiveness, extending amortization and other actions intended to minimize potential losses. Modifications primarily relate to extending the amortization periods of the loans and interest rate concessions. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Loans past due | Loans are considered past due if the required principal and interest payments have not been received as of the date such payments were due. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair value measurements | The fair value of an asset or liability is the price that would be received to sell that asset or paid to transfer that liability in an orderly transaction occurring in the principal market (or most advantageous market in the absence of a principal market) for such asset or liability. In estimating fair value, the Company utilizes valuation techniques that are consistent with the market approach, the income approach and/or the cost approach. Such valuation techniques are consistently applied. Inputs to valuation techniques include the assumptions that market participants would use in pricing an asset or liability. ASC Topic 820, Fair Value Measurements and Disclosures, 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 might 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 (such as interest rates, volatilities, prepayment speeds, credit risks, etc.) or inputs that are derived principally from or corroborated by market data by correlation or other means. Level 3 Inputs – Unobservable inputs for determining the fair values of assets or liabilities that reflect an entity’s own assumptions about the assumptions that market participants would use in pricing the assets or liabilities. The Company elected the fair value option for certain residential mortgage loans held for sale in accordance with ASC 825, Financial Instruments. This election allows for a more effective offset of the changes in fair values of the loans and the derivative instruments used to economically hedge them without the burden of complying with the requirements for hedge accounting under ASC 815, Derivatives and Hedging. The Company has not elected the fair value option for other residential mortgage loans held for sale primarily because they are not economically hedged using derivative instruments. See below and Note 9, Derivative Financial Instruments, for additional information. Investment securities Securities classified as available for sale are reported at fair value utilizing Level 1 and Level 2 inputs. Securities are classified within Level 1 when quoted market prices are available in an active market. Inputs include securities that have quoted prices in active markets for identical assets. For securities utilizing Level 2 inputs, the Company obtains fair value measurements from an independent pricing service. The fair value measurements consider observable data that may include dealer quotes, market spreads, cash flows, the U.S. Treasury and other yield curves, live trading levels, trade execution data, market consensus prepayment speeds, credit information and the security’s terms and conditions, among other things. Loans held for sale Certain mortgage loans held for sale are measured at fair value on a recurring basis due to the Company's election to adopt fair value accounting treatment for those loans originated for which the Company has entered into certain derivative financial instruments as part of its mortgage banking and related risk management activities. These instruments include interest rate lock commitments and mandatory forward commitments to sell these loans to investors known as forward mortgage-backed securities trades. This election allows for a more effective offset of the changes in fair values of the assets and the mortgage related derivative instruments used to economically hedge them without the burden of complying with the requirements for hedge accounting under ASC 815, Derivatives and Hedging. Mortgage loans held for sale, for which the fair value option was elected, which are sold on a servicing released basis, are valued using a market approach by utilizing either: (i) the fair value of 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 to 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. For mortgage loans held for sale for which the fair value option was elected, the earned current contractual interest payment is recognized in interest income, loan origination costs and fees on fair value option loans are recognized in earnings as incurred and not deferred. The Company has no continuing involvement in any residential mortgage loans sold. Derivatives The Company utilizes interest rate swaps to hedge exposure to interest rate risk and variability of cash flows associated to changes in the underlying interest rate of the hedged item. These hedging interest rate swaps are classified as a cash flow hedge. The Company utilizes a third-party vendor for derivative valuation purposes. These vendors determine the appropriate fair value based on a net present value calculation of the cash flows related to the interest rate swaps using primarily observable market inputs such as interest rate yield curves (Level 2 inputs). The estimated fair values of interest rate lock commitments utilize 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). The fair value of interest rate lock commitments 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, as the valuations are based on observable market inputs. Forward mortgage-backed securities trades are exchange-traded or traded within highly active dealer markets. In order to determine the fair value of these instruments, the Company utilized the exchange price or dealer market price for the particular derivative contract; therefore these contracts are classified as Level 2. The estimated fair values are subject to change primarily due to changes in interest rates. The Company also enters into certain interest rate derivative positions that are not designated as hedging instruments. The estimated fair value of these commercial loan interest rate swaps are obtained from a pricing service that provides the swaps' unwind value (Level 2 inputs). See Note 9, Derivative Financial Instruments, for more information. Assets and Liabilities Measured on a Nonrecurring BasisIn accordance with ASC Topic 820, certain assets and liabilities are measured at fair value on a nonrecurring basis; that is, the assets and liabilities are not measured at fair value on an ongoing basis but are subject to fair value adjustments in certain circumstances (for example, when there is evidence of impairment).Individually evaluated loans, which are collateral dependent, are measured at an observable market price (if available) or at the fair value of the loan’s underlying collateral. Fair value of the loan’s collateral is determined by appraisals or independent valuation, which is then adjusted for the estimated costs related to liquidation of the collateral. Management’s ongoing review of appraisal information may result in additional discounts or adjustments to valuation based upon more recent market sales activity or more current appraisal information derived from properties of similar type and/or locale. In addition, management's discounting criteria may vary for loans secured by non-real estate collateral such as inventory, oil and gas reserves, accounts receivable, equipment or other business assets. Therefore, the Company has categorized its individually evaluated loans as Level 3. Other real estate owned is measured at fair value on a nonrecurring basis (upon initial recognition or subsequent impairment). Other real estate is classified within Level 3 of the valuation hierarchy. When transferred from the loan portfolio, other real estate owned is adjusted to fair value less estimated selling costs and is subsequently carried at the lower of carrying value or fair value less estimated selling costs. The fair value is determined using an external appraisal process, discounted based on internal criteria. Therefore, the Company has categorized its other real estate as Level 3. There was no other real estate owned remeasured during the nine months ended September 30, 2021 and the year ended December 31, 2020. In addition, mortgage loans held for sale not recorded under the fair value option are required to be measured at the lower of cost or fair value. The fair value of these loans is based upon binding quotes or bids from third party investors.The methods and assumptions used by the Company in estimating fair values of financial instruments as disclosed herein in accordance with ASC Topic 825, Financial Instruments, other than for those measured at fair value on a recurring and nonrecurring basis discussed above, are as follows: Cash and cash equivalents: The carrying amounts of cash and cash equivalents approximate their fair value. Certificates of deposit held in other banks: The fair value of certificates of deposit held in other banks is based upon current market rates. Loans held for sale, at cost: The fair value of loans held for sale is determined based upon commitments on hand from investors. Loans: A discounted cash flow model is used to estimate the fair value of the loans. The discounted cash flow approach models the credit losses directly in the projected cash flows, applying various assumptions regarding credit, interest and prepayment risks for the loans based on loan types, payment types and fixed or variable classifications. Federal Home Loan Bank of Dallas and other restricted stock: The carrying value of restricted securities such as stock in the Federal Home Loan Bank of Dallas and Independent Bankers Financial Corporation approximates fair value. Deposits: The fair values disclosed for demand deposits are, by definition, equal to the amount payable on demand at the reporting date (that is their carrying amounts). The carrying amounts of variable-rate certificates of deposit (CDs) approximate their fair values at the reporting date. Fair values for fixed-rate CDs are estimated using a discounted cash flow calculation that applies interest rates currently being offered on certificates to a schedule of aggregated expected monthly maturities on time deposits. Federal Home Loan Bank advances, line of credit and federal funds purchased: The fair value of advances maturing within 90 days approximates carrying value. Fair value of other advances is based on the Company’s current borrowing rate for similar arrangements. Other borrowings: The estimated fair value approximates carrying value for short-term borrowings. The fair value of private subordinated debentures are based upon prevailing rates on similar debt in the market place. The subordinated debentures that are publicly traded are valued based on indicative bid prices based upon market pricing observations in the current market. Junior subordinated debentures: The fair value of junior subordinated debentures is estimated using discounted cash flow analyses based on the published Bloomberg US Financials BB rated corporate bond index yield. Accrued interest: The carrying amounts of accrued interest approximate their fair values. Off-balance sheet instruments: Fair values for off-balance sheet, credit-related financial instruments are based on fees currently charged to enter into similar agreements, taking into account the remaining terms of the agreements and the counterparties' credit standing. The fair value of commitments is not material.
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Derivatives | Through the normal course of business, the Company enters into interest rate lock commitments with consumers to originate mortgage loans at a specified interest rate. 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 manages the changes in fair value associated with changes in interest rates related to interest rate lock commitments by using forward sold commitments known as forward mortgage-backed securities trades. These instruments are typically entered into at the time the interest rate lock commitment is made. The Company offers certain derivatives products, primarily interest rate swaps, directly to qualified commercial banking customers to facilitate their risk management strategies. The interest rate swap derivative positions relate to transactions in which the Company enters into an interest rate swap with a customer, while at the same time entering into an offsetting interest rate swap with another financial institution. An interest rate swap transaction allows customers to effectively convert a variable rate loan to a fixed rate. In connection with each swap, the Company agrees to pay interest to the customer on a notional amount at a variable interest rate and receive interest from the customer on a similar notional amount at a fixed interest rate. At the same time, the Company agrees to pay another financial institution the same fixed interest rate on the same notional amount and receive the same variable interest rate on the same notional amount.
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Share repurchase program | Stock repurchase program: From time to time, the Company's board of directors has authorized stock repurchase programs which allow the Company to purchase its common stock generally over a one-year period at various prices in the open market or in privately negotiated transactions. On October 22, 2020, the Company's board of directors authorized a $150,000 stock repurchase program allowing the Company to purchase shares of its common stock through October 31, 2021. On August 26, 2021, the Company extended the stock repurchase program through December 31, 2021. Under this program, the Company repurchased 217,772 shares at a total cost of $15,207 for the three and nine months ended September 30, 2021. There were no shares repurchased for the three and nine months ended September 30, 2020. In July 2019, the federal bank regulators adopted final rules that, among other things, eliminated the standalone prior approval requirement for any repurchase of common stock. However, the Company remains subject to a Federal Reserve Board guideline that requires consultation with the Federal Reserve regarding plans for share repurchases. The Company’s repurchases of its common stock may be subject to a prior approval or notice requirement under other regulations, policies or supervisory expectations of the Federal Reserve Board. The Federal Reserve Board has approved share repurchases through the remainder of 2021. |
Receivables, Loans, Notes Receivable, and Others (Policies) |
9 Months Ended |
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Sep. 30, 2021 | |
Receivables [Abstract] | |
Allowance for Credit Losses on Loans | Allowance for credit losses on loans: In accordance with ASC 326, the allowance for credit losses on loans is a valuation account that is deducted from the amortized cost basis of loans to present management's best estimate of the net amount expected to be collected on the loans. Loans are charged against the allowance for credit losses when management believes that collectability of the principal is unlikely. Subsequent recoveries, if any, are credited to the allowance. The allowance is increased (decreased) by provisions (or reversals of) reported in the income statement as a component of provision for credit losses. Management has made the accounting policy election to exclude accrued interest receivable on loans from the estimate of credit losses and reports accrued interest separately in other assets in the consolidated balance sheets. Further information regarding Company policies and methodology used to estimate the allowance for credit losses on loans is presented in Note 4 - Loans, Net and Allowance for Credit Losses on Loans. The Company's allowance balance is estimated using relevant available information, from internal and external sources, relating to past events, current conditions and reasonable and supportable forecasts. Historical credit loss experience provides the basis for the estimation of expected credit losses. Adjustments to historical loss information are made for differences in current loan-specific risk characteristics such as differences in underwriting standards, portfolio mix, credit quality, or term as well as for changes in environmental conditions, such as changes in unemployment rates, gross domestic product, property values or other relevant factors. The Company utilizes Moody’s Analytics economic forecast scenarios and assigns probability weighting to those scenarios which best reflect management’s views on the economic forecast. Management continually evaluates the allowance for credit losses based upon the factors noted above. Should any of the factors considered by management change, the Company’s estimate of credit losses could also change and would affect the level of future provision for credit losses. Portions of the allowance may be allocated for specific credits; however, the entire allowance is available for any credit that, in management’s judgment, should be charged off. While the calculation of the allowance for credit losses utilizes management’s best judgment and all the information available, the adequacy of the allowance for credit losses is dependent on a variety of factors beyond the Company’s control, including, among other things, the performance of the entire loan portfolio, the economy, changes in interest rates and the view of regulatory authorities towards loan classifications. The allowance for credit losses is measured on a collective basis for portfolios of loans when similar risk characteristics exist. Loans that do not share risk characteristics are evaluated for expected credit losses on an individual basis and excluded from the collective evaluation. For determining the appropriate allowance for credit losses on a collective basis, the loan portfolio is segmented into pools based upon similar risk characteristics and a lifetime loss-rate model is utilized. For modeling purposes, loan pools include: commercial and industrial, energy, commercial real estate - construction/land development, commercial real estate - owner occupied, commercial real estate - non-owner occupied, agricultural, residential real estate, HELOCs, single-family interim construction, and consumer. Management periodically reassesses 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. The measurement of expected credit losses is impacted by loan/borrower attributes and certain macroeconomic variables. Management has determined that they are reasonably able to forecast the macroeconomic variables used in the modeling processes with an acceptable degree of confidence for a total of two years then encompassing a reversion process whereby the forecasted macroeconomic variables are reverted to their historical mean utilizing a rational, systematic basis. Management qualitatively adjusts model results for risk factors that are not considered within the modeling processes but are nonetheless relevant in assessing the expected credit losses within the 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.
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Summary of Significant Accounting Policies (Tables) |
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Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounting Standards Update and Change in Accounting Principle | The following table illustrates the impact of ASU 2016-13 on the allowances for credit losses as of January 1, 2021, the date of adoption:
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Earning Per Share | The following table presents a reconciliation of net income available to common shareholders and the number of shares used in the calculation of basic and diluted earnings per common share:
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Statement of Cash Flows (Tables) |
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Supplemental Cash Flow Elements [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Supplemental Cash Flow Information | Other supplemental cash flow information is presented below:
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Securities Available for Sale (Tables) |
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Debt Securities, Available-for-sale [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Amortized Cost of Securities and Approximate Fair Values | The amortized cost of securities and their approximate fair values at September 30, 2021 and December 31, 2020 are as follows:
____________ (1) Excludes accrued interest receivable of $6,480 and $6,242 at September 30, 2021 and December 31, 2020, respectively, that is recorded in other assets on the accompanying consolidated balance sheets.
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Proceeds from Sale of Available for Sale Securities | Proceeds from sale of securities available for sale and gross gains and gross losses for the three and nine months ended September 30, 2021 and 2020 were as follows:
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Amortized Cost and Estimated Fair Value of Securities Available for Sale by Contractual Maturity | The amortized cost and estimated fair value of securities available for sale at September 30, 2021, by contractual maturity, are shown below. Maturities of mortgage-backed securities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.
____________ (1) Excludes accrued interest receivable of $6,480 at September 30, 2021 that is recorded in other assets on the accompanying consolidated balance sheets.
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Summary of Unrealized Losses and Fair Value Securities in Continuous Unrealized Loss Position | The number of securities, unrealized losses and fair value, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, as of September 30, 2021 and December 31, 2020, are summarized as follows:
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Loans, Net and Allowance for Credit Losses on Loans (Tables) |
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Sep. 30, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Receivables [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Compositions of Loans | Loans, net, at September 30, 2021 and December 31, 2020, consisted of the following:
____________ (1) Loan class amounts are shown at amortized cost, net of deferred loan fees of $11,336, in accordance with ASC 326 at September 30, 2021 and shown at recorded investment at December 31, 2020. (2) Excludes accrued interest receivable of $44,953 and $54,328 at September 30, 2021 and December 31, 2020, respectively, that is recorded in other assets on the accompanying consolidated balance sheets.
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Summary of Activity in Allowance for Credit Losses by Loan Class | The following is a summary of the activity in the allowance for credit losses on loans by class for the three and nine months ended September 30, 2021 and 2020:
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Individually Evaluated Loans | The following table presents loans that were evaluated for expected credit losses on an individual basis and the related specific credit loss allocations, by loan class as of September 30, 2021 and December 31, 2020:
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Summary of Nonperforming Loans by Loan Class | Nonperforming loans by loan class at September 30, 2021 (at amortized cost) and December 31, 2020 (at recorded investment), are summarized as follows:
____________ (1) There are $552 in loans on nonaccrual without an allowance for credit loss as of September 30, 2021. Additionally, no interest income was recognized on nonaccrual loans. No significant amounts of accrued interest was reversed during the three and nine months ended September 30, 2021. (2) Excluded loans acquired with deteriorated credit quality under prior GAAP.
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Summary of Troubled Debt Restructurings | Following is a summary of loans modified under troubled debt restructurings during the three and nine months ended September 30, 2021 and 2020:
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Aging of Past Due Loans by Loan Class | The following table presents information regarding the aging of past due loans by loan class as of September 30, 2021 (at amortized cost) and as of December 31, 2020 (at recorded investment):
____________ (1) Presented under prior GAAP.
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Summary of Loans by Credit Quality Indicator by Class | The following summarizes the amortized cost basis of loans by year of origination/renewal and credit quality indicator by class of loan as of September 30, 2021:
A summary of loans at recorded investment by credit quality indicator by class presented under prior GAAP as of December 31, 2020, is as follows:
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Off-Balance Sheet Arrangements, Commitments and Contingencies (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2021 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commitments and Contingencies Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commitments and Contingencies | At September 30, 2021 and December 31, 2020, the approximate amounts of these financial instruments were as follows:
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Commitments Off Balance Sheet Allowance for Credit Losses | The allowance for credit losses on off-balance sheet commitments were as follows:
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Income Taxes (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Income Tax Expense | Income tax expense for the three and nine months ended September 30, 2021 and 2020 was as follows:
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Fair Value Measurements (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Assets at Fair Value on Recurring Basis | The following table represents assets and liabilities reported on the consolidated balance sheets at their fair value on a recurring basis as of September 30, 2021 and December 31, 2020 by level within the ASC Topic 820 fair value measurement hierarchy:
(1) At September 30, 2021 and December 31, 2020, loans held for sale for which the fair value option was elected had an aggregate outstanding principal balance of $26,244 and $68,670, respectively. There were no mortgage loans held for sale under the fair value option that were 90 days or greater past due or on nonaccrual at September 30, 2021.
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Assets and Liabilities at Fair Value on Nonrecurring Basis | The following table presents the assets carried on the consolidated balance sheet by caption and by level in the fair value hierarchy at September 30, 2021 and December 31, 2020, for which a nonrecurring change in fair value has been recorded:
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Carrying Amount and Estimated Fair Value of Financial Instruments | The carrying amount, estimated fair value and the level of the fair value hierarchy of the Company’s financial instruments that are reported at amortized cost on the Company's consolidated balance sheets were as follows at September 30, 2021 and December 31, 2020:
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Derivative Financial Instruments (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2021 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Notional Balances and Fair Values of Outstanding Positions | The following table provides the outstanding notional balances and fair values of outstanding derivative positions at September 30, 2021 and December 31, 2020:
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Schedule of Weighted Average Interest Rate Received and Paid | The commercial loan customer counterparty weighted average received and paid interest rates for interest rate swaps outstanding were as follows:
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Income on Derivatives | A summary of derivative activity and the related impact on the consolidated statements of income for the three and nine months ended September 30, 2021 and 2020 is as follows:
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Stock Awards (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2021 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-based Payment Arrangement [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Nonvested Shares Activity | The following table summarizes the activity in nonvested restricted stock awards for the nine months ended September 30, 2021 and 2020:
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Schedule of Future Vesting of Restricted Stock Award | At September 30, 2021, the future vesting schedule of the nonvested restricted stock awards is as follows:
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Nonvested performance stock units | The following table summarizes the activity in nonvested performance stock units at target award level for the nine months ended September 30, 2021:
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Regulatory Matters (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Regulated Operations [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Compliance with Regulatory Capital Requirements | The following table presents actual capital amounts and required ratios under Basel III Capital Rules for the Company and Bank as of September 30, 2021 and December 31, 2020.
|
Statement of Cash Flows - Other Supplemental Cash Flow Information (Details) - USD ($) $ in Thousands |
9 Months Ended | |
---|---|---|
Sep. 30, 2021 |
Sep. 30, 2020 |
|
Cash transactions: | ||
Interest expense paid | $ 54,209 | $ 80,462 |
Income taxes paid | 44,833 | 35,538 |
Noncash transactions: | ||
Deferred dividend equivalents | 156 | 0 |
Transfers of loans to other real estate owned | 0 | 5,239 |
Loans to facilitate the sale of other real estate owned | 0 | 1,564 |
Securities purchased, not yet settled | 25,667 | 17,782 |
Right-of-use assets obtained in exchange for lease liabilities | 4,371 | 108 |
Loans purchased, not yet settled | $ 32,902 | $ 0 |
Securities Available for Sale - Additional Information (Details) - USD ($) $ in Thousands |
Sep. 30, 2021 |
Dec. 31, 2020 |
---|---|---|
Debt Securities, Available-for-sale [Abstract] | ||
Carrying value of securities pledged | $ 945,512 | $ 738,519 |
Available-for-sale, Allowance for Credit Loss | $ 0 |
Securities Available for Sale - Proceeds, Gross Gains and Gross Losses from Sale (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2021 |
Sep. 30, 2020 |
Sep. 30, 2021 |
Sep. 30, 2020 |
|
Debt Securities, Available-for-sale [Abstract] | ||||
Proceeds from sale | $ 0 | $ 0 | $ 181 | $ 13,862 |
Gross gains | 0 | 0 | 0 | 385 |
Gross losses | $ 0 | $ 0 | $ 0 | $ 3 |
Securities Available for Sale - Amortized Cost and Estimated Fair Value of Securities Available for Sale by Contractual Maturity (Details) - USD ($) $ in Thousands |
Sep. 30, 2021 |
Dec. 31, 2020 |
---|---|---|
Amortized Cost (1) | ||
Due in one year or less | $ 32,464 | |
Due from one year to five years | 131,110 | |
Due from five to ten years | 419,558 | |
Thereafter | 358,997 | |
Total | 942,129 | |
Mortgage-backed securities guaranteed by FHLMC, FNMA and GNMA | 811,763 | |
Amortized Cost | 1,753,892 | $ 1,108,453 |
Fair Value | ||
Due in one year or less | 32,782 | |
Due from one year to five years | 136,335 | |
Due from five to ten years | 423,908 | |
Thereafter | 365,879 | |
Total | 958,904 | |
Mortgage-backed securities guaranteed by FHLMC, FNMA and GNMA | 822,670 | |
Fair Value | 1,781,574 | 1,153,693 |
Accrued Interest | $ 6,480 | $ 6,242 |
Other Borrowings (Details) - USD ($) $ in Thousands |
Jul. 20, 2021 |
Sep. 30, 2021 |
Dec. 31, 2020 |
---|---|---|---|
Debt Instrument [Line Items] | |||
Other borrowings | $ 281,697 | $ 312,175 | |
5.75% Subordinated Debenture Notes Due July 20, 2026 | |||
Debt Instrument [Line Items] | |||
Repayments of Subordinated Debt | $ 40,000 | ||
Stated interest rate (percent) | 5.75% | ||
Revolving Line of Credit | Line of Credit | Line of Credit | |||
Debt Instrument [Line Items] | |||
Borrowings against line of credit | $ 15,500 | $ 6,500 |
Off-Balance Sheet Arrangements, Commitments and Contingencies (Details) - USD ($) $ in Thousands |
Sep. 30, 2021 |
Dec. 31, 2020 |
---|---|---|
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items] | ||
Financial instruments with off-balance sheet risk | $ 2,749,019 | $ 2,294,133 |
Commitments to extend credit | ||
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items] | ||
Financial instruments with off-balance sheet risk | 2,717,859 | 2,268,216 |
Standby letters of credit | ||
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items] | ||
Financial instruments with off-balance sheet risk | $ 31,160 | $ 25,917 |
Off-Balance Sheet Arrangements, Commitments and Contingencies - Allowance for Off-Balance Sheet Credit Exposure (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2021 |
Sep. 30, 2020 |
Sep. 30, 2021 |
Sep. 30, 2020 |
|
Off-Balance Sheet, Credit Loss, Liability [Roll Forward] | ||||
Balance at beginning of period | $ 1,733 | $ 0 | $ 0 | $ 0 |
Provision for off-balance sheet credit exposure | 4,411 | 0 | 5,031 | 0 |
Balance at end of period | 6,144 | 0 | 6,144 | 0 |
Cumulative effect of change in accounting principles | ||||
Off-Balance Sheet, Credit Loss, Liability [Roll Forward] | ||||
Balance at beginning of period | 1,113 | 0 | ||
Balance at end of period | $ 0 | $ 0 | $ 0 | $ 0 |
Income Taxes (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2021 |
Sep. 30, 2020 |
Sep. 30, 2021 |
Sep. 30, 2020 |
|
Income Tax Disclosure [Abstract] | ||||
Income tax expense for the period | $ 12,629 | $ 16,068 | $ 43,841 | $ 35,807 |
Effective tax rate (percent) | 19.40% | 21.10% | 20.40% | 20.00% |
Derivative Financial Instruments - Additional Information (Details) - USD ($) |
Sep. 30, 2021 |
Jun. 30, 2021 |
---|---|---|
Derivative [Line Items] | ||
Cash collateral pledged for derivatives | $ 20,757,000 | |
Securities collateral pledged for derivatives | 3,250,000 | |
Interest rate swaps - cash flow hedges | Loan customer counterparty | ||
Derivative [Line Items] | ||
Credit exposure limited to the net favorable value of all swaps | $ 10,366,000 | |
Risk Participation Agreements Participant Bank | ||
Derivative [Line Items] | ||
Number of risk participation agreements | 1 | |
Credit risk participation | $ 5,251,000 | |
Risk Participation Agreements Lead Bank | ||
Derivative [Line Items] | ||
Number of risk participation agreements | 1 | |
Credit risk participation | $ 9,414,000 | |
Designated as Hedging Instrument | Interest rate swaps - cash flow hedges | ||
Derivative [Line Items] | ||
Outstanding Notional Balance | 100,000,000 | $ 100,000,000 |
Interest Rate Cash Flow Hedge Gain (Loss) to be Reclassified During Next 12 Months, Net | $ 853,000 |
Derivative Financial Instruments - Schedule of Weighted Average Interest Rates (Details) - Commercial Loan - Not designated as hedging - Loan customer counterparty - Interest rate swaps - cash flow hedges |
Sep. 30, 2021 |
Dec. 31, 2020 |
---|---|---|
Interest Rate Received | ||
Derivative [Line Items] | ||
Derivative, Average Fixed Interest Rate | 4.09% | 4.08% |
Interest Rate Paid | ||
Derivative [Line Items] | ||
Derivative, Average Variable Interest Rate | 2.30% | 2.32% |
Derivative Financial Instruments - Income (Loss) on Derivatives (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2021 |
Sep. 30, 2020 |
Sep. 30, 2021 |
Sep. 30, 2020 |
|
Interest rate swaps - cash flow hedges | Designated as Hedging Instrument | ||||
Derivative [Line Items] | ||||
Derivative, Gain (Loss) on Derivative | $ 215 | $ 0 | $ 369 | $ 0 |
Interest rate lock commitments | Not designated as hedging | ||||
Derivative [Line Items] | ||||
Derivative, Gain (Loss) on Derivative | (502) | 1,517 | (1,951) | 4,262 |
Forward mortgage-backed securities trades | Not designated as hedging | ||||
Derivative [Line Items] | ||||
Derivative, Gain (Loss) on Derivative | $ 148 | $ 192 | $ 656 | $ (249) |
Stock Awards - Nonvested Restricted Stock Awards Activity (Details) - Restricted Stock - $ / shares |
9 Months Ended | |
---|---|---|
Sep. 30, 2021 |
Sep. 30, 2020 |
|
Number of Shares | ||
Nonvested shares, beginning balance (shares) | 468,800 | 284,861 |
Granted during the period (shares) | 96,713 | 304,790 |
Vested during the period (shares) | (176,689) | (112,914) |
Forfeited during the period (shares) | (34,822) | (7,270) |
Nonvested shares, ending balance (shares) | 354,002 | 469,467 |
Weighted Average Grant Date Fair Value | ||
Nonvested shares, beginning balance (usd per share) | $ 49.01 | $ 58.63 |
Granted during the period (usd per share) | 64.91 | 43.38 |
Vested during the period (usd per share) | 51.43 | 58.28 |
Forfeited during the period (usd per share) | 50.10 | 51.97 |
Nonvested shares, ending balance (usd per share) | $ 51.96 | $ 48.91 |
Stock Awards - Future Vesting Schedule of Nonvested Shares (Details) |
Sep. 30, 2021
shares
|
---|---|
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Nonvested shares (shares) | 354,002 |
First year | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Nonvested shares (shares) | 158,055 |
Second year | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Nonvested shares (shares) | 116,569 |
Third year | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Nonvested shares (shares) | 75,303 |
Fourth year | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Nonvested shares (shares) | 4,075 |
Stock Awards - Schedule of Nonvested Restricted Stock Awards (Details) - Performance stock units |
9 Months Ended |
---|---|
Sep. 30, 2021
$ / shares
shares
| |
Number of Shares | |
Nonvested shares, beginning balance (shares) | shares | 89,300 |
Granted during the period (shares) | shares | 25,198 |
Nonvested shares, ending balance (shares) | shares | 114,498 |
Weighted Average Grant Date Fair Value | |
Nonvested shares, beginning balance (usd per share) | $ / shares | $ 38.29 |
Granted during the period (usd per share) | $ / shares | 63.92 |
Nonvested shares, ending balance (usd per share) | $ / shares | $ 43.93 |
Subsequent Event (Details) |
Oct. 28, 2021
$ / shares
|
---|---|
Subsequent Event | |
Subsequent Event [Line Items] | |
Dividends declared (usd per share) | $ 0.36 |
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