10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549   

FORM 10-Q

(Mark One)

☒ Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.

For the quarterly period ended September 30, 2021.

or

☐ Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.

For the transition period from                 to                    .

Commission file number 001-35854

Independent Bank Group, Inc.

(Exact name of registrant as specified in its charter)   

Texas	13-4219346
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
7777 Henneman Way
McKinney,
Texas	75070-1711
(Address of principal executive offices)	(Zip Code)

(972) 562-9004

(Registrant’s telephone number, including area code)

Not applicable

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class	Trading Symbol(s)	Name of Exchange on Which Registered
Common Stock, par value $0.01 per share	IBTX	NASDAQ Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or such shorter periods that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer	☒		Accelerated Filer	☐
Non-Accelerated Filer	☐	(Do not check if a smaller reporting company)
			Smaller Reporting Company	☐
			Emerging Growth Company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by a check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Applicable Only to Corporate Issuers

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practical date.

Common Stock, Par Value $0.01 Per Share – 42,936,460 shares as of October 26, 2021.

INDEPENDENT BANK GROUP, INC. AND SUBSIDIARIES

Form 10-Q

September 30, 2021

PART I.	Financial Information
Item 1.	Financial Statements
	Consolidated Balance Sheets-Unaudited	1
	Consolidated Statements of Income-Unaudited	2
	Consolidated Statements of Comprehensive Income-Unaudited	3
	Consolidated Statements of Changes in Stockholders’ Equity-Unaudited	4
	Consolidated Statements of Cash Flows-Unaudited	6
	Notes to Consolidated Financial Statements-Unaudited	8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	43
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	62
Item 4.	Controls and Procedures	63
PART II.	Other Information
Item 1.	Legal Proceedings	64
Item 1A.	Risk Factors	65
Item 2	Unregistered Sales of Equity Securities and Use of Proceeds	65
Item 3.	Defaults Upon Senior Securities	65
Item 4.	Mine Safety Disclosures	65
Item 5.	Other Information	66
Item 6.	Exhibits	67
Signatures

***

PART I

ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS

Independent Bank Group, Inc. and Subsidiaries

Consolidated Balance Sheets

September 30, 2021 (unaudited) and December 31, 2020

(Dollars in thousands, except share information)

	September 30,		December 31,
Assets	2021		2020
Cash and due from banks	$	248,603	$	250,485
Interest-bearing deposits in other banks	2,811,223		1,563,502
Cash and cash equivalents	3,059,826		1,813,987
Certificates of deposit held in other banks	3,245		4,482
Securities available for sale, at fair value	1,781,574		1,153,693
Loans held for sale (includes $27,331 and $71,769 carried at fair value, respectively)	31,471		82,647
Loans, net of allowance for credit losses of $150,281 and $87,820, respectively	12,291,233		12,978,238
Premises and equipment, net	262,766		249,467
Other real estate owned	—		475
Federal Home Loan Bank (FHLB) of Dallas stock and other restricted stock	21,541		20,305
Bank-owned life insurance (BOLI)	234,269		220,428
Deferred tax asset	22,659		3,933
Goodwill	994,021		994,021
Other intangible assets, net	78,635		88,070
Other assets	136,985		143,730
Total assets	$	18,918,225	$	17,753,476
Liabilities and Stockholders’ Equity
Deposits:
Noninterest-bearing	$	4,913,580	$	4,164,800
Interest-bearing	10,610,602		10,234,127
Total deposits	15,524,182		14,398,927
FHLB advances	350,000		375,000
Other borrowings	281,697		312,175
Junior subordinated debentures	54,171		54,023
Other liabilities	141,482		97,980
Total liabilities	16,351,532		15,238,105
Commitments and contingencies	—		—
Stockholders’ equity:
Preferred stock (0 and 0 shares outstanding, respectively)	—		—
Common stock (42,941,715 and 43,137,104 shares outstanding, respectively)	429		431
Additional paid-in capital	1,942,783		1,934,807
Retained earnings	600,987		543,800
Accumulated other comprehensive income	22,494		36,333
Total stockholders’ equity	2,566,693		2,515,371
Total liabilities and stockholders’ equity	$	18,918,225	$	17,753,476

See Notes to Consolidated Financial Statements

1

Independent Bank Group, Inc. and Subsidiaries

Consolidated Statements of Income

Three and Nine Months Ended September 30, 2021 and 2020 (unaudited)

(Dollars in thousands, except per share information)

	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Interest income:
Interest and fees on loans	$	134,540	$	144,138	$	412,312	$	434,648
Interest on taxable securities	6,059		4,507		16,068		14,499
Interest on nontaxable securities	2,077		2,126		6,207		6,359
Interest on interest-bearing deposits and other	1,356		1,027		3,021		3,938
Total interest income	144,032		151,798		437,608		459,444
Interest expense:
Interest on deposits	10,847		15,679		35,341		62,077
Interest on FHLB advances	463		714		1,533		3,629
Interest on other borrowings	3,640		2,928		11,743		8,408
Interest on junior subordinated debentures	437		470		1,320		1,710
Total interest expense	15,387		19,791		49,937		75,824
Net interest income	128,645		132,007		387,671		383,620
Provision for credit losses	—		7,620		(9,000)		39,122
Net interest income after provision for credit losses	128,645		124,387		396,671		344,498
Noninterest income:
Service charges on deposit accounts	2,619		2,173		7,130		6,881
Investment management fees	2,210		1,924		6,339		5,556
Mortgage banking revenue	5,982		14,722		18,714		27,726
Gain on sale of loans	—		—		26		647
Gain on sale of other real estate	63		—		63		37
Gain on sale of securities available for sale	—		—		—		382
(Loss) gain on sale and disposal of premises and equipment	(41)		34		(61)		311
Increase in cash surrender value of BOLI	1,282		1,335		3,841		4,007
Other	4,781		4,977		15,379		19,604
Total noninterest income	16,896		25,165		51,431		65,151
Noninterest expense:
Salaries and employee benefits	46,572		42,253		134,068		115,341
Occupancy	10,258		9,717		30,716		29,132
Communications and technology	5,479		5,716		16,596		17,193
FDIC assessment	1,327		1,597		4,499		5,338
Advertising and public relations	266		492		880		1,965
Other real estate owned expenses, net	(8)		43		4		459
Impairment of other real estate	—		46		—		784
Amortization of other intangible assets	3,145		3,175		9,435		9,526
Professional fees	4,546		2,871		11,972		9,266
Acquisition expense, including legal	—		47		—		16,225
Other	8,987		7,452		25,528		25,678
Total noninterest expense	80,572		73,409		233,698		230,907
Income before taxes	64,969		76,143		214,404		178,742
Income tax expense	12,629		16,068		43,841		35,807
Net income	$	52,340	$	60,075	$	170,563	$	142,935
Basic earnings per share	$	1.22	$	1.39	$	3.95	$	3.32
Diluted earnings per share	$	1.21	$	1.39	$	3.95	$	3.31

See Notes to Consolidated Financial Statements

2

Independent Bank Group, Inc. and Subsidiaries

Consolidated Statements of Comprehensive Income

Three and Nine Months Ended September 30, 2021 and 2020 (unaudited)

(Dollars in thousands)

	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
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	—		—		—		(382)
Change in net unrealized (losses) gains on cash flow hedges during the period	(127)		—		418		—
Reclassification for amount realized through cash flow hedges included in net income	(221)		—		(378)		—
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

See Notes to Consolidated Financial Statements

3

Independent Bank Group, Inc. and Subsidiaries

Consolidated Statements of Changes in Stockholders’ Equity

Three Months Ended September 30, 2021 and 2020 (unaudited)

(Dollars in thousands, except for par value, share and per share information)

	Preferred Stock $0.01 Par		Common Stock $0.01 Par Value			Additional Paid in Capital		Retained Earnings		Accumulated Other Comprehensive Income		Total
	Value 10 million shares authorized		100 million shares authorized
			Shares	Amount
Three Months Ended
Balance, June 30, 2021	$	—	43,180,607	$	432	$	1,940,360	$	579,585	$	22,508	$	2,542,885
Net income	—		—	—		—		52,340		—		52,340
Other comprehensive loss, net of tax	—		—	—		—		—		(14)		(14)
Common stock repurchased	—		(232,069)	(3)		—		(16,253)		—		(16,256)
Restricted stock forfeited	—		(12,495)	—		—		—		—		—
Restricted stock granted	—		5,672	—		—		—		—		—
Stock based compensation expense	—		—	—		2,423		—		—		2,423
Cash dividends ($0.34 per share)	—		—	—		—		(14,685)		—		(14,685)
Balance, September 30, 2021	$	—	42,941,715	$	429	$	1,942,783	$	600,987	$	22,494	$	2,566,693
Three Months Ended
Balance, June 30, 2020	$	—	43,041,119	$	430	$	1,930,722	$	454,878	$	38,930	$	2,424,960
Net income	—		—	—		—		60,075		—		60,075
Other comprehensive income, net of tax	—		—	—		—		—		186		186
Common stock repurchased	—		(291)	—		—		(13)		—		(13)
Restricted stock forfeited	—		(6,644)	—		—		—		—		—
Restricted stock granted	—		210,613	2		(2)		—		—		—
Stock based compensation expense	—		—	—		1,970		—		—		1,970
Cash dividends ($0.25 per share)	—		—	—		—		(10,805)		—		(10,805)
Balance, September 30, 2020	$	—	43,244,797	$	432	$	1,932,690	$	504,135	$	39,116	$	2,476,373

4

Independent Bank Group, Inc. and Subsidiaries

Consolidated Statements of Changes in Stockholders’ Equity (Continued)

Nine Months Ended September 30, 2021 and 2020 (unaudited)

(Dollars in thousands, except for par value, share and per share information)

	Preferred Stock $0.01 Par		Common Stock $0.01 Par Value			Additional Paid in Capital		Retained Earnings		Accumulated Other Comprehensive Income		Total
	Value 10 million shares authorized		100 million shares authorized
			Shares	Amount
Nine Months Ended
Balance, December 31, 2020	$	—	43,137,104	$	431	$	1,934,807	$	543,800	$	36,333	$	2,515,371
Cumulative effect of change in accounting principle	—		—	—		—		(53,880)		—		(53,880)
Adjusted beginning balance	—		43,137,104	431		1,934,807		489,920		36,333		2,461,491
Net income	—		—	—		—		170,563		—		170,563
Other comprehensive loss, net of tax	—		—	—		—		—		(13,839)		(13,839)
Common stock repurchased	—		(257,280)	(3)		—		(17,918)		—		(17,921)
Restricted stock forfeited	—		(34,822)	—		—		—		—		—
Restricted stock granted	—		96,713	1		(1)		—		—		—
Stock based compensation expense	—		—	—		7,977		—		—		7,977
Cash dividends ($0.96 per share)	—		—	—		—		(41,578)		—		(41,578)
Balance, September 30, 2021	$	—	42,941,715	$	429	$	1,942,783	$	600,987	$	22,494	$	2,566,693
Nine Months Ended
Balance, December 31, 2019	$	—	42,950,228	$	430	$	1,926,359	$	393,674	$	19,310	$	2,339,773
Net income	—		—	—		—		142,935		—		142,935
Other comprehensive income, net of tax	—		—	—		—		—		19,806		19,806
Common stock repurchased	—		(2,951)	—		—		(159)		—		(159)
Restricted stock forfeited	—		(7,270)	—		—		—		—		—
Restricted stock granted	—		304,790	2		(2)		—		—		—
Stock based compensation expense	—		—	—		6,333		—		—		6,333
Cash dividends ($0.75 per share)	—		—	—		—		(32,315)		—		(32,315)
Balance, September 30, 2020	$	—	43,244,797	$	432	$	1,932,690	$	504,135	$	39,116	$	2,476,373

See Notes to Consolidated Financial Statements

5

Independent Bank Group, Inc. and Subsidiaries

Consolidated Statements of Cash Flows

Nine Months Ended September 30, 2021 and 2020 (unaudited)

(Dollars in thousands) 

	Nine Months Ended September 30,
	2021		2020
Cash flows from operating activities:
Net income	$	170,563	$	142,935
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation expense	9,273		9,504
Accretion income recognized on acquired loans	(15,499)		(23,534)
Amortization of other intangibles assets	9,435		9,526
Amortization of premium on securities, net	3,507		2,028
Amortization of discount and origination costs on borrowings	670		497
Stock based compensation expense	7,977		6,333
Excess tax (benefit) expense on restricted stock vested	(647)		246
FHLB stock dividends	(96)		(547)
Gain on sale of securities available for sale	—		(382)
Loss (gain) on sale and disposal of premises and equipment	61		(311)
Gain on sale of loans	(26)		(647)
Gain on sale of other real estate owned	(63)		(37)
Impairment of other real estate	—		784
Impairment of other assets	124		462
Deferred tax expense (benefit)	4,393		(2,636)
Provision for credit losses	(9,000)		39,122
Increase in cash surrender value of BOLI	(3,841)		(4,007)
Net gain on mortgage loans held for sale	(17,379)		(26,636)
Originations of loans held for sale	(533,001)		(620,635)
Proceeds from sale of loans held for sale	601,556		595,510
Net change in other assets	6,960		(35,879)
Net change in other liabilities	(25,255)		(5,587)
Net cash provided by operating activities	209,712		86,109
Cash flows from investing activities:
Proceeds from maturities, calls and paydowns of securities available for sale	7,336,371		5,452,309
Proceeds from sale of securities available for sale	181		13,862
Purchases of securities available for sale	(7,959,831)		(5,416,037)
Proceeds from maturities of certificates of deposit held in other banks	1,237		1,238
Purchase of bank owned life insurance contracts	(10,000)		—
Purchases of FHLB stock and other restricted stock	(1,190)		(27,037)
Proceeds from redemptions of FHLB stock and other restricted stock	50		31,049
Proceeds from sale of loans	1,519		13,097
Net loans originated held for investment	204,066		(707,884)
Originations of mortgage warehouse purchase loans	(23,417,476)		(17,217,285)
Proceeds from pay-offs of mortgage warehouse purchase loans	23,893,473		16,685,589
Additions to premises and equipment	(22,744)		(11,127)
Proceeds from sale of premises and equipment	21		1,895
Proceeds from sale of other real estate owned	538		6,105
Net cash provided by (used in) investing activities	26,215		(1,174,226)

6

Independent Bank Group, Inc. and Subsidiaries

Consolidated Statements of Cash Flows (Continued)

Nine Months Ended September 30, 2021 and 2020 (unaudited)

(Dollars in thousands) 

	Nine Months Ended September 30,
	2021		2020
Cash flows from financing activities:
Net increase in demand deposits, money market and savings accounts	1,338,220		2,165,544
Net decrease in time deposits	(212,965)		(309,320)
Proceeds from FHLB advances	—		1,600,000
Repayments of FHLB advances	(25,000)		(1,550,000)
Proceeds from other borrowings	58,000		150,016
Repayments of other borrowings	(89,000)		(47,086)
Repurchase of common stock	(17,921)		(159)
Dividends paid	(41,422)		(32,315)
Net cash provided by financing activities	1,009,912		1,976,680
Net change in cash and cash equivalents	1,245,839		888,563
Cash and cash equivalents at beginning of period	1,813,987		565,170
Cash and cash equivalents at end of period	$	3,059,826	$	1,453,733

See Notes to Consolidated Financial Statements

7

Independent Bank Group, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (unaudited)

(Dollars in thousands, except for share and per share information)

Note 1. 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.

8

Independent Bank Group, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (unaudited)

(Dollars in thousands, except for share and per share information)

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.

9

Independent Bank Group, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (unaudited)

(Dollars in thousands, except for share and per share information)

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:

	January 1, 2021
	Pre-Adoption Allowance		Impact of Adoption		Post-Adoption Allowance
Assets:
Allowance for credit losses on Loans:
Commercial	$	27,311	$	17,103	$	44,414
Commercial real estate, construction, land and land development	50,123		59,683		109,806
Residential real estate	6,786		(2,115)		4,671
Single-family interim construction	2,156		7,179		9,335
Agricultural	337		(178)		159
Consumer	442		(110)		332
Other	242		(224)		18
Unallocated	423		(423)		—
	$	87,820	$	80,915	$	168,735
Liabilities:
Allowance for credit losses on off-balance-sheet credit exposures	$	—	$	1,113	$	1,113

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.

10

Independent Bank Group, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (unaudited)

(Dollars in thousands, except for share and per share information)

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.

11

Independent Bank Group, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (unaudited)

(Dollars in thousands, except for share and per share information)

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:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Basic earnings per share:
Net income	$	52,340	$	60,075	$	170,563	$	142,935
Less:
Undistributed earnings allocated to participating securities	324		512		1,246		849
Dividends paid on participating securities	126		112		399		248
Net income available to common shareholders	$	51,890	$	59,451	$	168,918	$	141,838
Weighted average basic shares outstanding	42,674,563		42,785,485		42,720,519		42,765,685
Basic earnings per share	$	1.22	$	1.39	$	3.95	$	3.32
Diluted earnings per share:
Net income available to common shareholders	$	51,890	$	59,451	$	168,918	$	141,838
Total weighted average basic shares outstanding	42,674,563		42,785,485		42,720,519		42,765,685
Add dilutive performance stock units	59,392		—		56,286		—
Add dilutive participating securities	—		—		—		24,391
Total weighted average diluted shares outstanding	42,733,955		42,785,485		42,776,805		42,790,076
Diluted earnings per share	$	1.21	$	1.39	$	3.95	$	3.31
Anti-dilutive participating securities	155,036		113,291		182,225		—

12

Independent Bank Group, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (unaudited)

(Dollars in thousands, except for share and per share information)

Note 2. 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:

	Nine Months Ended September 30,
	2021		2020
Cash transactions:
Interest expense paid	$	54,209	$	80,462
Income taxes paid	$	44,833	$	35,538
Noncash transactions:
Deferred dividend equivalents	$	156	$	—
Transfers of loans to other real estate owned	$	—	$	5,239
Loans to facilitate the sale of other real estate owned	$	—	$	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	$	—

13

Independent Bank Group, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (unaudited)

(Dollars in thousands, except for share and per share information)

Note 3. 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:

	Amortized Cost (1)		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Securities Available for Sale
September 30, 2021
U.S. treasuries	$	61,116	$	1,210	$	(41)	$	62,285
Government agency securities	463,613		2,254		(4,618)		461,249
Obligations of state and municipal subdivisions	386,333		17,401		(346)		403,388
Corporate bonds	29,992		957		(42)		30,907
Mortgage-backed securities guaranteed by FHLMC, FNMA and GNMA	811,763		15,153		(4,246)		822,670
Other securities	1,075		—		—		1,075
	$	1,753,892	$	36,975	$	(9,293)	$	1,781,574
December 31, 2020
U.S. treasuries	$	43,060	$	1,648	$	—	$	44,708
Government agency securities	247,764		3,169		(1,916)		249,017
Obligations of state and municipal subdivisions	373,017		20,168		(20)		393,165
Corporate bonds	21,496		608		(2)		22,102
Mortgage-backed securities guaranteed by FHLMC, FNMA and GNMA	421,916		21,678		(93)		443,501
Other securities	1,200		—		—		1,200
	$	1,108,453	$	47,271	$	(2,031)	$	1,153,693

____________

(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:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Proceeds from sale	$	—	$	—	$	181	$	13,862
Gross gains	$	—	$	—	$	—	$	385
Gross losses	$	—	$	—	$	—	$	3

14

Independent Bank Group, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (unaudited)

(Dollars in thousands, except for share and per share information)

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.

	September 30, 2021
	Securities Available for Sale
	Amortized Cost (1)		Fair Value
Due in one year or less	$	32,464	$	32,782
Due from one year to five years	131,110		136,335
Due from five to ten years	419,558		423,908
Thereafter	358,997		365,879
	942,129		958,904
Mortgage-backed securities guaranteed by FHLMC, FNMA and GNMA	811,763		822,670
	$	1,753,892	$	1,781,574

____________

(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:

	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	1	$	10,316	$	(41)	—	$	—	$	—	$	10,316	$	(41)
Government agency securities	35	235,996		(3,045)		11	58,413		(1,573)		294,409		(4,618)
Obligations of state and municipal subdivisions	10	35,951		(331)		1	1,008		(15)		36,959		(346)
Corporate bonds	2	4,458		(42)		—	—		—		4,458		(42)
Mortgage-backed securities guaranteed by FHLMC, FNMA and GNMA	59	324,855		(4,081)		1	4,778		(165)		329,633		(4,246)
	107	$	611,576	$	(7,540)	13	$	64,199	$	(1,753)	$	675,775	$	(9,293)
December 31, 2020
Government agency securities	20	$	112,897	$	(1,916)	—	$	—	$	—	$	112,897	$	(1,916)
Obligations of state and municipal subdivisions	2	3,786		(20)		—	—		—		3,786		(20)
Corporate bonds	1	998		(2)		—	—		—		998		(2)
Mortgage-backed securities guaranteed by FHLMC, FNMA and GNMA	10	41,344		(93)		—	—		—		41,344		(93)
	33	$	159,025	$	(2,031)	—	$	—	$	—	$	159,025	$	(2,031)

15

Independent Bank Group, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (unaudited)

(Dollars in thousands, except for share and per share information)

At September 30, 2021, management's review of all available for sale securities at an unrealized loss position determined that the losses resulted from factors not related to credit quality. This conclusion is based on management's analysis of the underlying risk characteristics, including credit ratings, and other qualitative factors for each security type in our portfolio. The unrealized losses are generally due to increases in market interest rates. Furthermore, the Company has the intent to hold these securities until maturity or a forecasted recovery, and it is more likely than not that the Company will not have to sell the securities before the recovery of their cost basis. As such, there is no allowance for credit losses on available for sale securities recognized as of September 30, 2021.

Note 4. Loans, Net and Allowance for Credit Losses on Loans

Loans, net, at September 30, 2021 and December 31, 2020, consisted of the following:

	September 30,		December 31,
	2021		2020
Commercial	$	2,999,980	$	3,902,496
Real estate:
Commercial	6,414,199		6,096,676
Commercial construction, land and land development	1,216,195		1,245,801
Residential	1,296,871		1,352,465
Single-family interim construction	350,112		326,575
Agricultural	82,278		85,014
Consumer	81,879		67,068
Total loans (1)(2)	12,441,514		13,076,095
Deferred loan fees, net(1)	—		(10,037)
Allowance for credit losses	(150,281)		(87,820)
Total loans, net(2)	$	12,291,233	$	12,978,238

____________

(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.

16

Independent Bank Group, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (unaudited)

(Dollars in thousands, except for share and per share information)

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 two 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.

17

Independent Bank Group, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (unaudited)

(Dollars in thousands, except for share and per share information)

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.

18

Independent Bank Group, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (unaudited)

(Dollars in thousands, except for share and per share information)

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.

19

Independent Bank Group, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (unaudited)

(Dollars in thousands, except for share and per share information)

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:

	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	$	46,957	$	67,696	$	27,842	$	3,638	$	8,129	$	86	$	443	$	—	$	154,791
Provision for credit losses	2,190		(6,212)		915		(1,293)		(66)		(18)		73		—		(4,411)
Charge-offs	(78)		—		—		—		—		—		(48)		—		(126)
Recoveries	17		—		—		—		—		—		10		—		27
Balance at end of period	$	49,086	$	61,484	$	28,757	$	2,345	$	8,063	$	68	$	478	$	—	$	150,281
Nine months ended September 30, 2021
Balance at beginning of period	$	27,311	$	36,698	$	13,425	$	6,786	$	2,156	$	337	$	684	$	423	$	87,820
Impact of adopting ASC 326	12,775		29,108		22,008		(2,255)		7,179		(178)		(334)		(423)		67,880
Initial allowance on loans purchased with credit deterioration	4,328		7,640		927		140		—		—		—		—		13,035
Provision for credit losses	8,466		(11,587)		(7,477)		(2,326)		(1,272)		(91)		256		—		(14,031)
Charge-offs	(3,832)		(375)		(126)		—		—		—		(173)		—		(4,506)
Recoveries	38		—		—		—		—		—		45		—		83
Balance at end of period	$	49,086	$	61,484	$	28,757	$	2,345	$	8,063	$	68	$	478	$	—	$	150,281
Three months ended September 30, 2020
Balance at beginning of period	$	25,498	$	32,944	$	12,932	$	5,911	$	1,998	$	379	$	431	$	(38)	$	80,055
Provision for credit losses	476		5,205		624		532		(152)		(31)		211		755		7,620
Charge-offs	(117)		—		—		—		—		—		(106)		—		(223)
Recoveries	16		4		—		—		—		—		19		—		39
Balance at end of period	$	25,873	$	38,153	$	13,556	$	6,443	$	1,846	$	348	$	555	$	717	$	87,491
Nine months ended September 30, 2020
Balance at beginning of period	$	12,844	$	24,371	$	8,714	$	3,678	$	1,606	$	332	$	231	$	(315)	$	51,461
Provision for credit losses	15,111		14,513		4,842		2,765		322		16		521		1,032		39,122
Charge-offs	(2,170)		(735)		—		—		(82)		—		(306)		—		(3,293)
Recoveries	88		4		—		—		—		—		109		—		201
Balance at end of period	$	25,873	$	38,153	$	13,556	$	6,443	$	1,846	$	348	$	555	$	717	$	87,491

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.

20

Independent Bank Group, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (unaudited)

(Dollars in thousands, except for share and per share information)

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:

	September 30, 2021				December 31, 2020
	Loan Balance - Amortized Cost Basis		Specific Allocations		Loan Balance - Recorded Investment		Specific Allocations
Commercial	$	43,038	$	19,365	$	39,298	$	8,281
Commercial real estate	40,235		1,955		21,848		243
Commercial construction, land and land development	1,365		581		32		—
Residential real estate	—		—		2,550		—
Single-family Interim construction	—		—		—		—
Agricultural	—		—		613		—
Consumer	—		—		42		—
	$	84,638	$	21,901	$	64,383	$	8,524

Nonperforming loans by loan class at September 30, 2021 (at amortized cost) and December 31, 2020 (at recorded investment), are summarized as follows:   

	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)	$	44,712	$	34,291	$	25	$	1,460	$	—	$	—	$	43	$	80,531
Loans past due 90 days and still accruing	77		—		—		201		—		—		2		280
Troubled debt restructurings (not included in nonaccrual or loans past due and still accruing)	—		1,738		—		165		—		—		—		1,903
	$	44,789	$	36,029	$	25	$	1,826	$	—	$	—	$	45	$	82,714
December 31, 2020 (2)
Nonaccrual loans	$	25,898	$	20,040	$	32	$	2,372	$	—	$	613	$	42	$	48,997
Loans past due 90 days and still accruing	433		—		—		—		—		—		—		433
Troubled debt restructurings (not included in nonaccrual or loans past due and still accruing)	—		1,808		—		178		—		—		—		1,986
	$	26,331	$	21,848	$	32	$	2,550	$	—	$	613	$	42	$	51,416

____________

(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.

21

Independent Bank Group, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (unaudited)

(Dollars in thousands, except for share and per share information)

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:

	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	2		—		—		—		—		—		1		3
Pre-restructuring outstanding recorded investment	$	1,789	$	—	$	—	$	—	$	—	$	—	$	6	$	1,795
Post-restructuring outstanding recorded investment	$	570	$	—	$	—	$	—	$	—	$	—	$	6	$	576
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	—		1		—		—		—		—		—		1
Pre-restructuring outstanding recorded investment	$	—	$	1,517	$	—	$	—	$	—	$	—	$	—	$	1,517
Post-restructuring outstanding recorded investment	$	—	$	1,517	$	—	$	—	$	—	$	—	$	—	$	1,517

22

Independent Bank Group, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (unaudited)

(Dollars in thousands, except for share and per share information)

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.

23

Independent Bank Group, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (unaudited)

(Dollars in thousands, except for share and per share information)

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):   

	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	$	704	$	31,792	$	32,496	$	2,967,484	$	2,999,980
Commercial real estate	19,706		16,540		36,246		6,377,953		6,414,199
Commercial construction, land and land development	868		—		868		1,215,327		1,216,195
Residential real estate	2,267		529		2,796		1,294,075		1,296,871
Single-family interim construction	269		—		269		349,843		350,112
Agricultural	595		—		595		81,683		82,278
Consumer	99		40		139		81,740		81,879
	$	24,508	$	48,901	$	73,409	$	12,368,105	$	12,441,514
December 31, 2020 (1)
Commercial	$	3,243	$	13,227	$	16,470	$	3,846,810	$	3,863,280
Commercial real estate	2,434		16,790		19,224		5,921,723		5,940,947
Commercial construction, land and land development	19		—		19		1,230,524		1,230,543
Residential real estate	5,169		1,028		6,197		1,341,587		1,347,784
Single-family interim construction	—		—		—		326,575		326,575
Agricultural	—		1		1		84,896		84,897
Consumer	86		41		127		67,156		67,283
	10,951		31,087		42,038		12,819,271		12,861,309
Acquired with deteriorated credit quality	624		3,219		3,843		210,943		214,786
	$	11,575	$	34,306	$	45,881	$	13,030,214	$	13,076,095

____________

(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.

24

Independent Bank Group, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (unaudited)

(Dollars in thousands, except for share and per share information)

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:

															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	$	500,792	$	205,018	$	127,779	$	102,993	$	107,046	$	173,621	$	1,589,766	$	4,971	$	2,811,986
Pass/Watch	405		3,171		761		14,267		10,224		7,398		26,533		3,538		66,297
Special Mention	1,852		1,404		11,620		767		4,371		15		3,684		—		23,713
Substandard	16,647		3,110		35,195		5,927		3,512		7,073		16,620		3		88,087
Doubtful	—		—		—		—		—		—		9,897		—		9,897
Total commercial	$	519,696	$	212,703	$	175,355	$	123,954	$	125,153	$	188,107	$	1,646,500	$	8,512	$	2,999,980
Commercial real estate
Pass	$	1,481,214	$	1,278,477	$	885,209	$	706,642	$	585,905	$	724,951	$	63,240	$	1,299	$	5,726,937
Pass/Watch	63,129		25,453		63,473		79,563		19,205		86,177		452		1,358		338,810
Special Mention	24,537		29,042		40,808		69,181		41,044		40,794		—		—		245,406
Substandard	24,042		31,148		2,338		11,910		1,571		30,968		1,069		—		103,046
Doubtful	—		—		—		—		—		—		—		—		—
Total commercial real estate	$	1,592,922	$	1,364,120	$	991,828	$	867,296	$	647,725	$	882,890	$	64,761	$	2,657	$	6,414,199
Commercial construction, land and land development
Pass	$	484,572	$	292,360	$	207,346	$	108,119	$	21,627	$	16,240	$	12,655	$	—	$	1,142,919
Pass/Watch	19,886		1,472		6,104		4,280		—		87		—		—		31,829
Special Mention	—		9,000		—		—		1,928		—		—		—		10,928
Substandard	15,379		—		417		12,741		29		1,953		—		—		30,519
Doubtful	—		—		—		—		—		—		—		—		—
Total commercial construction, land and land development	$	519,837	$	302,832	$	213,867	$	125,140	$	23,584	$	18,280	$	12,655	$	—	$	1,216,195
Residential real estate
Pass	$	310,811	$	290,780	$	212,659	$	127,857	$	97,097	$	179,412	$	56,588	$	2,309	$	1,277,513
Pass/Watch	1,684		497		1,409		411		2,433		4,321		169		—		10,924
Special Mention	659		462		—		130		253		1,059		231		—		2,794
Substandard	645		174		385		469		795		3,118		54		—		5,640
Doubtful	—		—		—		—		—		—		—		—		—
Total residential real estate	$	313,799	$	291,913	$	214,453	$	128,867	$	100,578	$	187,910	$	57,042	$	2,309	$	1,296,871

25

Independent Bank Group, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (unaudited)

(Dollars in thousands, except for share and per share information)

															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	$	231,771	$	102,697	$	12,021	$	329	$	—	$	—	$	3,294	$	—	$	350,112
Pass/Watch	—		—		—		—		—		—		—		—		—
Special Mention	—		—		—		—		—		—		—		—		—
Substandard	—		—		—		—		—		—		—		—		—
Doubtful	—		—		—		—		—		—		—		—		—
Total single-family interim construction	$	231,771	$	102,697	$	12,021	$	329	$	—	$	—	$	3,294	$	—	$	350,112
Agricultural
Pass	$	17,438	$	16,781	$	4,576	$	9,183	$	12,451	$	5,718	$	8,846	$	—	$	74,993
Pass/Watch	—		552		1,542		57		980		—		4,147		—		7,278
Special Mention	—		—		—		—		—		—		—		—		—
Substandard	—		—		—		—		—		7		—		—		7
Doubtful	—		—		—		—		—		—		—		—		—
Total agricultural	$	17,438	$	17,333	$	6,118	$	9,240	$	13,431	$	5,725	$	12,993	$	—	$	82,278
Consumer
Pass	$	10,072	$	10,553	$	2,991	$	878	$	440	$	219	$	56,614	$	46	$	81,813
Pass/Watch	—		—		—		—		2		—		—		—		2
Special Mention	—		—		—		—		—		—		—		—		—
Substandard	5		30		—		—		10		19		—		—		64
Doubtful	—		—		—		—		—		—		—		—		—
Total consumer	$	10,077	$	10,583	$	2,991	$	878	$	452	$	238	$	56,614	$	46	$	81,879

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:   

	Pass		Pass/ Watch		Special Mention		Substandard		Doubtful		Total
December 31, 2020
Commercial	$	3,700,856	$	55,960	$	38,186	$	97,403	$	10,091	$	3,902,496
Commercial real estate	5,379,801		306,884		317,580		92,411		—		6,096,676
Commercial construction, land and land development	1,125,132		46,026		43,383		31,260		—		1,245,801
Residential real estate	1,332,757		6,296		5,726		7,686		—		1,352,465
Single-family interim construction	323,800		2,775		—		—		—		326,575
Agricultural	76,951		6,194		1,205		664		—		85,014
Consumer	66,970		8		—		90		—		67,068
	$	12,006,267	$	424,143	$	406,080	$	229,514	$	10,091	$	13,076,095

26

Independent Bank Group, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (unaudited)

(Dollars in thousands, except for share and per share information)

Note 5. 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.

Note 6. 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:

	September 30,		December 31,
	2021		2020
Commitments to extend credit	$	2,717,859	$	2,268,216
Standby letters of credit	31,160		25,917
	$	2,749,019	$	2,294,133

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.

27

Independent Bank Group, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (unaudited)

(Dollars in thousands, except for share and per share information)

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:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Balance at beginning of period	$	1,733	$	—	$	—	$	—
Impact of CECL adoption	—		—		1,113		—
Provision for off-balance sheet credit exposure	4,411		—		5,031		—
Balance at end of period	$	6,144	$	—	$	6,144	$	—

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.

Note 7. Income Taxes

Income tax expense for the three and nine months ended September 30, 2021 and 2020 was as follows:

	Three Months Ended September 30,						Nine Months Ended September 30,
	2021			2020			2021			2020
Income tax expense for the period	$	12,629		$	16,068		$	43,841		$	35,807
Effective tax rate	19.4		%	21.1		%	20.4		%	20.0		%

The effective tax rates for 2021 and 2020 differ from the statutory federal tax rate of 21% largely due to tax exempt interest income earned on certain investment securities and loans, the nontaxable earnings on bank owned life insurance, nondeductible compensation, acquisition-related expenses, and state income tax. The lower effective tax rate for the three months ended September 30, 2021 was primarily a result of the prior year provision to return adjustment and current period adjustments related to state income taxes.

28

Independent Bank Group, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (unaudited)

(Dollars in thousands, except for share and per share information)

Note 8. 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.

29

Independent Bank Group, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (unaudited)

(Dollars in thousands, except for share and per share 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:   

			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	$	62,285	$	—	$	62,285	$	—
Government agency securities	461,249		—		461,249		—
Obligations of state and municipal subdivisions	403,388		—		403,388		—
Corporate bonds	30,907		—		30,907		—
Mortgage-backed securities guaranteed by FHLMC, FNMA and GNMA	822,670		—		822,670		—
Other securities	1,075		—		1,075		—
Loans held for sale, fair value option elected (1)	27,331		—		27,331		—
Derivative financial instruments:
Interest rate swaps - cash flow hedge	140		—		140		—
Interest rate lock commitments	1,566		—		1,566		—
Forward mortgage-backed securities trades	132		—		132		—
Loan customer counterparty	9,631		—		9,631		—
Financial institution counterparty	595		—		595		—
Liabilities:
Derivative financial instruments:
Interest rate swaps - cash flow hedge	210		—		210		—
Interest rate lock commitments	2		—		2		—
Forward mortgage-backed securities trades	44		—		44		—
Loan customer counterparty	577		—		577		—
Financial institution counterparty	10,064		—		10,064		—
December 31, 2020
Assets:
Investment securities available for sale:
U.S. treasuries	$	44,708	$	—	$	44,708	$	—
Government agency securities	249,017		—		249,017		—
Obligations of state and municipal subdivisions	393,165		—		393,165		—
Corporate bonds	22,102		—		22,102		—
Mortgage-backed securities guaranteed by FHLMC, FNMA and GNMA	443,501		—		443,501		—
Other securities	1,200		—		1,200		—
Loans held for sale, fair value option elected (1)	71,769		—		71,769		—
Derivative financial instruments:
Interest rate lock commitments	3,515		—		3,515		—
Loan customer counterparty	20,159		—		20,159		—
Liabilities:
Derivative financial instruments:
Forward mortgage-backed securities trades	568		—		568		—
Financial institution counterparty	21,306		—		21,306		—

__________

(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.

30

Independent Bank Group, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (unaudited)

(Dollars in thousands, except for share and per share information)

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.

31

Independent Bank Group, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (unaudited)

(Dollars in thousands, except for share and per share 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:   

			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	$	18,883	$	—	$	—	$	18,883	$	3,813
December 31, 2020
Assets:
Individually evaluated loans	$	16,903	$	—	$	—	$	16,903	$	13,041

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.

32

Independent Bank Group, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (unaudited)

(Dollars in thousands, except for share and per share information)

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:

					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	$	3,059,826	$	3,059,826	$	3,059,826	$	—	$	—
Certificates of deposit held in other banks	3,245		3,258		—		3,258		—
Loans held for sale, at cost	4,140		4,221		—		4,221		—
Loans, net	12,291,233		12,693,534		—		—		12,693,534
FHLB of Dallas stock and other restricted stock	21,541		21,541		—		21,541		—
Accrued interest receivable	51,438		51,438		—		51,438		—
Financial liabilities:
Deposits	15,524,182		15,537,308		—		15,537,308		—
Accrued interest payable	3,125		3,125		—		3,125		—
FHLB advances	350,000		334,631		—		334,631		—
Other borrowings	281,697		301,575		—		301,575		—
Junior subordinated debentures	54,171		44,330		—		44,330		—
Off-balance sheet assets (liabilities):
Commitments to extend credit	—		—		—		—		—
Standby letters of credit	—		—		—		—		—
December 31, 2020
Financial assets:
Cash and cash equivalents	$	1,813,987	$	1,813,987	$	1,813,987	$	—	$	—
Certificates of deposit held in other banks	4,482		4,595		—		4,595		—
Loans held for sale, at cost	10,878		11,138		—		11,138		—
Loans, net	12,978,238		13,093,698		—		—		13,093,698
FHLB of Dallas stock and other restricted stock	20,305		20,305		—		20,305		—
Accrued interest receivable	60,581		60,581		—		60,581		—
Financial liabilities:
Deposits	14,398,927		14,407,596		—		14,407,596		—
Accrued interest payable	7,397		7,397		—		7,397		—
FHLB advances	375,000		371,175		—		371,175		—
Other borrowings	312,175		327,150		—		327,150		—
Junior subordinated debentures	54,023		42,624		—		42,624		—
Off-balance sheet assets (liabilities):
Commitments to extend credit	—		—		—		—		—
Standby letters of credit	—		—		—		—		—

33

Independent Bank Group, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (unaudited)

(Dollars in thousands, except for share and per share information)

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.

34

Independent Bank Group, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (unaudited)

(Dollars in thousands, except for share and per share information)

Note 9. 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.

35

Independent Bank Group, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (unaudited)

(Dollars in thousands, except for share and per share information)

The following table provides the outstanding notional balances and fair values of outstanding derivative positions at September 30, 2021 and December 31, 2020:

	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	$	100,000	$	140	$	210
Derivatives not designated as hedging instruments:
Interest rate lock commitments	51,676		1,566		2
Forward mortgage-backed securities trades	48,000		132		44
Commercial loan interest rate swaps:
Loan customer counterparty	276,030		9,631		577
Financial institution counterparty	276,030		595		10,064
December 31, 2020
Derivatives not designated as hedging instruments:
Interest rate lock commitments	$	116,795	$	3,515	$	—
Forward mortgage-backed securities trades	104,000		—		568
Commercial loan interest rate swaps:
Loan customer counterparty	335,370		20,159		—
Financial institution counterparty	335,370		—		21,306

The commercial loan customer counterparty weighted average received and paid interest rates for interest rate swaps outstanding were as follows:

	Weighted Average Interest Rate
	September 30, 2021				December 31, 2020
	Received		Paid		Received		Paid
Loan customer counterparty	4.09	%	2.30	%	4.08	%	2.32	%

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.

36

Independent Bank Group, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (unaudited)

(Dollars in thousands, except for share and per share information)

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:

	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	$	215	$	—	$	369	$	—
Derivatives not designated as hedging instruments
Interest rate lock commitments	Mortgage banking revenue	(502)		1,517		(1,951)		4,262
Forward mortgage-backed securities trades	Mortgage banking revenue	148		192		656		(249)

Note 10. 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 one to five years. Performance stock units awarded have a three to four 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.

37

Independent Bank Group, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (unaudited)

(Dollars in thousands, except for share and per share information)

Restricted Stock Awards

The following table summarizes the activity in nonvested restricted stock awards for the nine months ended September 30, 2021 and 2020:

Restricted Stock Awards	Number of Shares	Weighted Average Grant Date Fair Value
Nonvested shares, December 31, 2020	468,800	$	49.01
Granted during the period	96,713	64.91
Vested during the period	(176,689)	51.43
Forfeited during the period	(34,822)	50.10
Nonvested shares, September 30, 2021	354,002	$	51.96
Nonvested shares, December 31, 2019	284,861	$	58.63
Granted during the period	304,790	43.38
Vested during the period	(112,914)	58.28
Forfeited during the period	(7,270)	51.97
Nonvested shares, September 30, 2020	469,467	$	48.91

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:

First year	158,055
Second year	116,569
Third year	75,303
Fourth year	4,075
Total nonvested shares	354,002

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.

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Independent Bank Group, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (unaudited)

(Dollars in thousands, except for share and per share information)

The following table summarizes the activity in nonvested performance stock units at target award level for the nine months ended September 30, 2021:

Performance-based Restricted Stock Units	Number of Shares	Weighted Average Grant Date Fair Value
Nonvested shares, December 31, 2020	89,300	$	38.29
Granted during the period	25,198	63.92
Nonvested shares, September 30, 2021	114,498	$	43.93

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.

39

Independent Bank Group, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (unaudited)

(Dollars in thousands, except for share and per share information)

Note 11. 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.

40

Independent Bank Group, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (unaudited)

(Dollars in thousands, except for share and per share information)

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.

	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	$	1,884,618	13.64	%	$	1,450,815	10.50	%	N/A		N/A
Bank	1,953,355		14.14		1,450,381		10.50		$	1,381,316	10.00	%
Tier 1 capital to risk weighted assets:
Consolidated	1,583,950		11.46		1,174,470		8.50		N/A		N/A
Bank	1,856,687		13.44		1,174,118		8.50		1,105,052		8.00
Common equity tier 1 to risk weighted assets:
Consolidated	1,528,350		11.06		967,210		7.00		N/A		N/A
Bank	1,856,687		13.44		966,921		7.00		897,855		6.50
Tier 1 capital to average assets:
Consolidated	1,583,950		8.94		708,732		4.00		N/A		N/A
Bank	1,856,687		10.48		708,581		4.00		885,726		5.00
December 31, 2020
Total capital to risk weighted assets:
Consolidated	$	1,825,661	13.32	%	$	1,438,939	10.50	%	N/A		N/A
Bank	1,864,240		13.61		1,438,385		10.50		$	1,369,891	10.00	%
Tier 1 capital to risk weighted assets:
Consolidated	1,471,841		10.74		1,164,855		8.50		N/A		N/A
Bank	1,776,420		12.97		1,164,407		8.50		1,095,913		8.00
Common equity tier 1 to risk weighted assets:
Consolidated	1,416,241		10.33		959,293		7.00		N/A		N/A
Bank	1,776,420		12.97		958,924		7.00		890,429		6.50
Tier 1 capital to average assets:
Consolidated	1,471,841		9.12		645,730		4.00		N/A		N/A
Bank	1,776,420		11.01		645,539		4.00		806,924		5.00

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.

41

Independent Bank Group, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (unaudited)

(Dollars in thousands, except for share and per share information)

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.

Note 12. 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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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Cautionary Note Regarding Forward Looking Statements

The Quarterly Report on Form 10-Q, our other filings with the SEC, and other press releases, documents, reports and announcements that we make, issue or publish may contain statements that we believe are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 that are subject to risks and uncertainties and are made pursuant to the safe harbor provisions of Section 27A of the Securities Act, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and other related federal security laws. These forward-looking statements include information about our possible or assumed future results of operations, including our future revenues, income, expenses, provision for taxes, effective tax rate, earnings per share and cash flows, our future capital expenditures and dividends, our future financial condition and changes therein, including changes in our loan portfolio and allowance for credit losses, our future capital structure or changes therein, the plan and objectives of management for future operations, our future or proposed acquisitions, the future or expected effect of acquisitions on our operations, results of operations and financial condition, our future economic performance and the statements of the assumptions underlying any such statement. Such statements are typically, but not exclusively, identified by the use in the statements of words or phrases such as “aim,” “anticipate,” “estimate,” “expect,” “goal,” “guidance,” “intend,” “is anticipated,” “is estimated,” “is expected,” “is intended,” “objective,” “plan,” “projected,” “projection,” “will affect,” “will be,” “will continue,” “will decrease,” “will grow,” “will impact,” “will increase,” “will incur,” “will reduce,” “will remain,” “will result,” “would be,” variations of such words or phrases (including where the word “could,” “may” or “would” is used rather than the word “will” in a phrase) and similar words and phrases indicating that the statement addresses some future result, occurrence, plan or objective. The forward-looking statements that we make are based on the Company's current expectations and assumptions regarding its business, the economy, and other future conditions. Because forward-looking statements relate to future results and occurrences, they are subject to inherent uncertainties, risks, and changes in circumstances that are difficult to predict. The Company’s actual results may differ materially from those contemplated by the forward looking statements, which are neither statements of historical fact nor guarantees or assurances of future performance. Many possible events or factors could affect our future financial results and performance and could cause those results or performance to differ materially from those expressed in the forward-looking statements. These possible events or factors include, but are not limited to:

•the disruption to local, regional, national and global economic activity caused by infectious disease outbreaks, including the recent outbreak of coronavirus, or COVID-19, and the significant impact that such outbreak has had and may have on our growth, operations, earnings and asset quality;

•our ability to sustain our current internal growth rate and total growth rate;

•changes in geopolitical, business and economic events, occurrences and conditions, including changes in rates of inflation or deflation, nationally, regionally and in our target markets, particularly in Texas and Colorado;

•worsening business and economic conditions nationally, regionally and in our target markets, particularly in Texas and Colorado, and the geographic areas in those states in which we operate;

•our dependence on our management team and our ability to attract, motivate and retain qualified personnel;

•the concentration of our business within our geographic areas of operation in Texas and Colorado;

•changes in asset quality, including increases in default rates on loans and higher levels of nonperforming loans and loan charge-offs generally, and specifically resulting from the economic dislocation caused by the COVID-19 pandemic;

•concentration of the loan portfolio of the Bank, before and after the completion of acquisitions of financial institutions, in commercial and residential real estate loans and changes in the prices, values and sales volumes of commercial and residential real estate;

•the ability of the Bank to make loans with acceptable net interest margins and levels of risk of repayment and to otherwise invest in assets at acceptable yields and presenting acceptable investment risks;

•inaccuracy of the assumptions and estimates that the managements of our Company and the financial institutions that we acquire make in establishing reserves for credit losses and other estimates generally, and specifically as a result of the effect of the COVID-19 pandemic;

•lack of liquidity, including as a result of a reduction in the amount of sources of liquidity we currently have;

•material increases or decreases in the amount of deposits held by the Bank or other financial institutions that we acquire and the cost of those deposits;

•our access to the debt and equity markets and the overall cost of funding our operations;

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•regulatory requirements to maintain minimum capital levels or maintenance of capital at levels sufficient to support our anticipated growth;

•changes in market interest rates that affect the pricing of the loans and deposits of each of the Bank and the financial institutions that we acquire and that affect the net interest income, other future cash flows, or the market value of the assets of each of the Bank and the financial institutions that we acquire, including investment securities;

•fluctuations in the market value and liquidity of the securities we hold for sale, including as a result of changes in market interest rates;

•effects of competition from a wide variety of local, regional, national and other providers of financial, investment and insurance services;

•changes in economic and market conditions, including the economic dislocation resulting from the COVID-19 pandemic, that affect the amount and value of the assets of the Bank and of financial institutions that we acquire;

•the institution and outcome of, and costs associated with, litigation and other legal proceedings against one or more of the Company, the Bank and financial institutions that we acquire or to which any of such entities is subject;

•the occurrence of market conditions adversely affecting the financial industry generally, including the economic dislocation resulting from the COVID-19 pandemic;

•the impact of recent and future legislative regulatory changes, including changes in banking, securities, and tax laws and regulations and their application by the Company’s regulators, and changes in federal government policies, as well as regulatory requirements applicable to, and resulting from regulatory supervision of, the Company and the Bank as a financial institution with total assets greater than $10 billion;

•changes in accounting policies, practices, principles and guidelines, as may be adopted by the bank regulatory agencies, the Financial Accounting Standards Board, the SEC and the Public Company Accounting Oversight Board, as the case may be; including changes resulting from the implementation of the new Current Expected Credit Loss accounting standard;

•governmental monetary and fiscal policies;

•changes in the scope and cost of FDIC insurance and other coverage;

•the effects of war or other conflicts, acts of terrorism (including cyber attacks) or other catastrophic events, including natural disasters such as storms, droughts, tornadoes, hurricanes and flooding, that may affect general economic conditions;

•our actual cost savings resulting from previous or future acquisitions are less than expected, we are unable to realize those cost savings as soon as expected, or we incur additional or unexpected costs;

•our revenues after previous or future acquisitions are less than expected;

•the liquidity of, and changes in the amounts and sources of liquidity available to, us, before and after the acquisition of any financial institutions that we acquire;

•deposit attrition, operating costs, customer loss and business disruption before and after our completed acquisitions, including, without limitation, difficulties in maintaining relationships with employees, may be greater than we expected;

•the effects of the combination of the operations of financial institutions that we have acquired in the recent past or may acquire in the future with our operations and the operations of the Bank, the effects of the integration of such operations being unsuccessful, and the effects of such integration being more difficult, time consuming, or costly than expected or not yielding the cost savings we expect;

•the impact of investments that the Company or the Bank may have made or may make and the changes in the value of those investments;

•the quality of the assets of financial institutions and companies that we have acquired in the recent past or may acquire in the future being different than we determined or determine in our due diligence investigation in connection with the acquisition of such financial institutions and any inadequacy of credit loss reserves relating to, and exposure to unrecoverable losses on, loans acquired;

•our ability to continue to identify acquisition targets and successfully acquire desirable financial institutions to sustain our growth, to expand our presence in our markets and to enter new markets;

•general business and economic conditions in our markets change or are less favorable than expected generally, and specifically as a result of the COVID-19 pandemic;

•changes occur in business conditions and inflation generally, and specifically as a result of the COVID-19 pandemic;

•an increase in the rate of personal or commercial customers’ bankruptcies generally, and specifically as a result of the COVID-19 pandemic;

•technology-related changes are harder to make or are more expensive than expected;

•attacks on the security of, and breaches of, the Company's and the Bank's digital information systems, the costs we or the Bank incur to provide security against such attacks and any costs and liability the Company or the Bank incurs in connection with any breach of those systems;

44

•the potential impact of technology and “FinTech” entities on the banking industry generally;

•the other factors that are described or referenced in Part I, Item 1A, of the Company’s Annual Report on Form 10-K filed with the SEC on March 1, 2021, under the caption “Risk Factors”; and

•other economic, competitive, governmental, regulatory, technological and geopolitical factors affecting the Company’s operations, pricing and services.

We urge you to consider all of these risks, uncertainties and other factors carefully in evaluating all such forward-looking statements made by us. As a result of these and other matters, including changes in facts and assumptions not being realized or other factors, the actual results relating to the subject matter of any forward-looking statement may differ materially from the anticipated results expressed or implied in that forward-looking statement. Any forward-looking statement made in this prospectus or made by us in any report, filing, document or information incorporated by reference in this prospectus, speaks only as of the date on which it is made. The Company undertakes no obligation to update any such forward-looking statement, whether as a result of new information, future developments or otherwise, except as may be required by law.

A forward-looking statement may include a statement of the assumptions or bases underlying the forward-looking statement. The Company believes that these assumptions or bases have been chosen in good faith and that they are reasonable. However, the Company cautions you that assumptions as to future occurrences or results almost always vary from actual future occurrences or results, and the differences between assumptions and actual occurrences and results can be material. Therefore, the Company cautions you not to place undue reliance on the forward-looking statements contained in this prospectus or incorporated by reference herein.

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Overview

This Management’s Discussion and Analysis (MD&A) of Financial Condition and Results of Operations analyzes the major elements of the Company’s financial condition and results of operation as reflected in the interim consolidated financial statements and accompanying notes appearing in this Quarterly Report on Form 10-Q. This section should be read in conjunction with the Company’s interim consolidated financial statements and accompanying notes included elsewhere in this report and with the consolidated financial statements included in the Annual Report on Form 10-K for the year ended December 31, 2020.

The Company was organized as a bank holding company in 2002. On January 1, 2009, the Company was merged with Independent Bank Group Central Texas, Inc., and, since that time, has pursued a strategy to create long-term shareholder value through organic growth of our community banking franchise in our market areas and through selective acquisitions of complementary banking institutions with operations in the Company’s market areas or in new market areas. On April 8, 2013, the Company consummated the initial public offering, or IPO, of its common stock which is traded on the Nasdaq Global Select Market.

As of September 30, 2021, the Company operated 93 full service banking locations in north, central and southeast Texas regions, and along the Colorado Front Range region, with 61 Texas locations and 32 Colorado locations.

The Company’s headquarters are located at 7777 Henneman Way, McKinney, Texas 75070 and its telephone number is (972) 562-9004. The Company’s website address is www.ifinancial.com. Information contained on the Company’s website is not incorporated by reference into this Quarterly Report on Form 10-Q and is not part of this or any other report.

The Company’s principal business is lending to and accepting deposits from businesses, professionals and individuals. The Company conducts all of the Company’s banking operations through its principal bank subsidiary. The Company derives its income principally from interest earned on loans and, to a lesser extent, income from securities available for sale. The Company also derives income from non-interest sources, such as fees received in connection with various deposit services, mortgage banking operations and investment advisory services. From time to time, the Company also realizes gains on the sale of assets. The Company’s principal expenses include interest expense on interest-bearing customer deposits, advances from the Federal Home Loan Bank of Dallas (FHLB) and other borrowings, operating expenses such as salaries, employee benefits, occupancy costs, communication and technology costs, expenses associated with other real estate owned, other administrative expenses, amortization of intangibles, acquisition expenses, provisions for credit losses and the Company’s assessment for FDIC deposit insurance.

Recent Developments

NEW ACCOUNTING STANDARD

As discussed in Note 1 - Summary of Significant Accounting Policies, the Company adopted ASU 2016-13, Financial Instruments - Credit Losses (Topic 326) (ASC 326): Measurement of Credit Losses on Financial Instruments on January 1, 2021, pursuant to the delayed adoption allowable under the CARES Act. Upon adoption of CECL, the Company recorded an increase of $80.9 million to the allowance for credit losses for loans and $1.1 million to the allowance for credit losses for unfunded commitments. In addition, the Company recognized a cumulative effect reduction to retained earnings totaling $53.9 million, net of a recorded deferred tax asset of $15.1 million, and reclassed $13.0 million of allowance for credit losses related to PCD loans that were previously classified as PCI under prior accounting guidance. See discussion in Note 1 - Summary of Significant Accounting Policies and Note 4 - Loans, Net and Allowance for Credit Losses for more details on the impact of CECL, including related accounting policies.

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COVID-19 Update

In 2021, restrictive measures related to the COVID-19 pandemic continued to ease, both on a national level and more specifically in the Company's markets of Texas and Colorado. Most businesses have reopened at full capacity, which has improved commercial and consumer activity but still has not returned to pre-pandemic levels. While the overall outlook has improved based on the availability of the vaccine to all adults and older children, there has been a recent rise in hospitalization and infection rates caused by the Delta variant, a rapidly spreading strain of coronavirus. Therefore, the risk of further resurgence and possible reimplementation of restrictions remains.

The Company continues to closely monitor the impact of COVID-19 on its employees, customers, the communities it serves and the economy as a whole; however, the extent to which the pandemic will continue to impact operations and financial results in 2021 and beyond is uncertain.

Discussion and Analysis of Results of Operations for the Three and Nine Months Ended September 30, 2021 and 2020

The following discussion and analysis of the Company's results of operations compares the operations for the three and nine months ended September 30, 2021 with the three and nine months ended September 30, 2020. The results of operations for the three and nine months ended September 30, 2021 are not necessarily indicative of the results of operations that may be expected for all of the year ending December 31, 2021.

Results of Operations

For the three months ended September 30, 2021, net income was $52.3 million ($1.21 per common share on a diluted basis) compared with net income of $60.1 million ($1.39 per common share on a diluted basis) for the three months ended September 30, 2020. The Company posted annualized returns on average equity of 8.10% and 9.73%, returns on average assets of 1.11% and 1.43% and efficiency ratios of 53.20% and 44.69% for the three months ended September 30, 2021 and 2020, respectively. The efficiency ratio is calculated by dividing total noninterest expense (which excludes the provision for credit losses and the amortization of other intangible assets) by net interest income plus noninterest income.

For the nine months ended September 30, 2021, net income was $170.6 million ($3.95 per common share on a diluted basis) compared with $142.9 million ($3.31 per common share on a diluted basis) for the nine months ended September 30, 2020. The Company posted annualized returns on average equity of 9.04% and 7.91%, returns on average assets of 1.25% and 1.19% and efficiency ratios of 51.07% and 49.33% for the nine months ended September 30, 2021 and 2020, respectively.

Net Interest Income

The Company’s net interest income is its interest income, net of interest expenses. Changes in the balances of the Company’s earning assets and its deposits, FHLB advances and other borrowings, as well as changes in the market interest rates, affect the Company’s net interest income. The difference between the Company’s average yield on earning assets and its average rate paid for interest-bearing liabilities is its net interest spread. Noninterest-bearing sources of funds, such as demand deposits and stockholders’ equity, also support the Company’s earning assets. The impact of the noninterest-bearing sources of funds is reflected in the Company’s net interest margin, which is calculated as annualized net interest income divided by average earning assets.

47

Net interest income was $128.6 million for the three months ended September 30, 2021, a decrease of $3.4 million, or 2.5%, from $132.0 million for the three months ended September 30, 2020. This decrease in net interest income was driven by decreased earnings on assets due to lower yields and accretion offset by overall decreased funding costs for the year over year period. Average interest earning assets increased $2.0 billion or 13.7%, to $17.0 billion for the three months ended September 30, 2021 compared to $14.9 billion for the three months ended September 30, 2020. The increase is primarily due to the continued growth of average interest bearing cash balances over the past year, increasing $1.7 billion from prior year and also due to continued increases in average taxable securities. Offsetting these changes is a net decrease in average loan balances, due primarily to the forgiveness of Paycheck Protection Program (PPP) loans. The yield on average interest earning assets decreased 67 basis points from 4.04% for the three months ended September 30, 2020 to 3.37% for the three months ended September 30, 2021. The decrease from the prior year was due to the increase in lower-yielding interest bearing cash balances mentioned above as well as lower loans and securities yields for the year over year period. The average cost of interest-bearing liabilities decreased 23 basis points to 0.54% for the three months ended September 30, 2021 compared to 0.77% for the three months ended September 30, 2020. The decrease is primarily due to lower rates offered on our deposit products as well as rate decreases on other borrowings and trust preferred securities. The aforementioned changes resulted in a 51 basis point decrease in the net interest margin for the three months ended September 30, 2021 at 3.01% compared to 3.52% for the three months ended September 30, 2020. The decrease was primarily due to lower asset yields, increased liquidity and a decrease of $3.2 million in loan accretion income offset by the lower cost of funds on interest bearing liabilities.

Net interest income was $387.7 million for the nine months ended September 30, 2021, an increase of $4.1 million, or 1.1%, from $383.6 million for the nine months ended September 30, 2020. The increase is due to a $2.2 billion increase, or 15.6%, in average interest-earning assets to $16.5 billion for the nine months ended September 30, 2021 compared to $14.3 billion for nine months ended September 30, 2020, as well as decreased funding costs due to a declining rate environment during the year over year period offset by decreased earnings on assets due to lower yields and accretion. The increase in average interest-earning assets is primarily related to the increases of $1.4 billion in average interest bearing deposits and $366.2 thousand in average taxable securities due to excess liquidity but also in part to increased average non-PPP loan balances due to organic growth. The average yield on interest earning assets decreased 75 basis points from 4.30% for the nine months ended September 30, 2020 to 3.55% for the nine months ended September 30, 2021 while the average rate paid on interest bearing liabilities decreased 42 basis points from 1.02% to 0.60% over the same period. The decrease from the prior year was primarily due to overall lower rates on interest-earning assets and liabilities due to the declining rate environment for the year over year period, as well as the significant increase in lower yielding interest bearing balances and lower loan accretion. The net interest margin for the nine months ended September 30, 2021 decreased 45 basis points to 3.14% compared to 3.59% for the nine months ended September 30, 2020 as a result of excess liquidity, decreased loan accretion and lower asset yields offset by lower rates paid on all interest bearing liabilities.

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Average Balance Sheet Amounts, Interest Earned and Yield Analysis.  The following table present average balance sheet information, interest income, interest expense and the corresponding average yields earned and rates paid for the three and nine months ended September 30, 2021 and 2020. The average balances are principally daily averages and, for loans, include both performing and nonperforming balances.

	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

49

	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

____________

(1) Average loan balances include nonaccrual loans.

(2) Net interest margins for the periods presented represent: (i) the difference between interest income on interest-earning assets and the interest expense on interest-bearing liabilities, divided by (ii) average interest-earning assets for the period.

(3) A tax-equivalent adjustment has been computed using a federal income tax rate of 21% for the three and nine months ended September 30, 2021 and 2020.

(4) Yield and rates for the three and nine month periods are annualized.

50

Provision for Credit Losses

As discussed in Note 1 - Summary of Significant Accounting Policies, the Company adopted the CECL accounting standard on January 1, 2021. The measurement of expected credit losses under the CECL methodology is applicable to financial assets measured at amortized cost, including loans and held-to-maturity debt securities, as well as off-balance sheet credit exposures. Provision for credit losses is determined by management as the amount to be added to the allowance for credit loss accounts for various types of financial instruments to bring the allowance to a level deemed appropriate by management to absorb expected credit losses over the lives of the respective financial instruments. Management actively monitors the Company’s asset quality and provides appropriate provisions based on such factors as historical loss experience, current conditions and reasonable and supportable forecasts.

Financial instruments are charged-off against the allowance for credit losses when appropriate. Although management believes it uses the best information available to make determinations with respect to the provision for credit losses, future adjustments may be necessary if economic conditions differ from the assumptions used in making the determination.

The Company recorded a $4.4 million negative provision for credit losses on loans for the three months ended September 30, 2021 compared to $7.6 million provision for credit losses for the comparable period in 2020. Provision expense for the nine months ended September 30, 2021 was negative $14.0 million compared to $39.1 million for the same period in 2020. Provision expense for loans is generally reflective of organic loan growth as well as charge-offs or specific reserves taken during the respective period. Provision expense will also be impacted by the economic outlook and changes in macroeconomic variables. The negative provisions recorded for the three and nine months ended September 30, 2021 were primarily related to improvements in the economic forecast, while the prior year provision for the same periods was elevated due to general provision expense incurred due to economic factors related to the COVID-19 crisis. Net charge-offs were $99 thousand and $184 thousand for the three months ended September 30, 2021 and 2020, respectively, and $4.4 million and $3.1 million for the nine months ended September 30, 2021 and 2020, respectively.

There was $4.4 million and $5.0 million provision for credit losses recorded on off-balance sheet credit exposures during the three and nine months ended September 30, 2021. The provision expense was elevated in the current period primarily due to higher remaining expected utilization on increased unfunded commitments related to growth in the Company's construction loan and energy portfolios.

Noninterest Income

The following table sets forth the components of noninterest income for the three and nine months ended September 30, 2021 and 2020 and the period-over-period variations in such categories of noninterest income:

	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)	%

____________

N/M - not meaningful

51

Total noninterest income decreased $8.3 million, or 32.9% and $13.7 million, or 21.1% for the three and nine months ended September 30, 2021 over same periods in 2020, respectively. Significant changes in the components of noninterest income are discussed below.

Mortgage banking revenue. Mortgage banking revenue decreased $8.7 million, or 59.4% and $9.0 million, or 32.5% for the three and nine months ended September 30, 2021, respectively, as compared to the same periods in 2020. The decrease was primarily reflective of lower volumes related to rate increases during the year over year periods. Revenue was also negatively impacted for the year over year period as there were losses on derivative hedging instruments of $1.0 million and $2.0 million for the three and nine months ended September 30, 2021 compared to gains of $982 thousand and $2.7 million for the same periods in 2020.

Other noninterest income. Other noninterest income decreased $196 thousand, or 3.9% and $4.2 million, or 21.6% for the three and nine months ended September 30, 2021, respectively, as compared to the same periods in 2020. The decrease for the nine month period was mainly due to the recovery of a $3.5 million contingency reserve on an acquired SBA loan in 2020 in addition to lower interchange fees due to the Durbin Amendment, which was effective July 2020 offset by higher mortgage warehouse fees and swap income during 2021.

Noninterest Expense

Noninterest expense increased $7.2 million, or 9.8% and increased $2.8 million, or 1.2% for the three and nine months ended September 30, 2021, respectively, as compared to the same periods in 2020. The following table sets forth the components of the Company’s noninterest expense for the three and nine months ended September 30, 2021 and 2020 and the period-over-period variations in such categories of noninterest expense:

	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	%

____________

N/M - not meaningful

52

Salaries and employee benefits. Salaries and employee benefits increased $4.3 million, or 10.2% and $18.7 million, or 16.2% for the three and nine months ended September 30, 2021, respectively, compared to the same periods in 2020. The increase for the three and nine months ended September 30, 2021 compared to the same periods in 2020 is primarily due to $4.3 million and $9.0 million, respectively, in higher salaries, bonus and insurance expense related to additional headcount in addition to $1.0 million and $3.0 million, respectively, in higher contract labor costs related to PPP and various ongoing departmental and bank-wide infrastructure projects. In addition, deferred salaries expense was $450 thousand and $6.3 million lower for the three and ninth month periods due to the PPP loans and other COVID-related modifications that occurred during 2020 and reduced overall salary expense for those periods. The three months ended September 30, 2021 is also reflective of $1.5 million lower mortgage commissions and incentives due to lower mortgage production for the year over year period. Additionally, stock grant amortization expense for the nine month period was $1.6 million higher than 2020 offset by $1.9 million lower severance and retention expense related departmental and business line restructurings in 2020.

Occupancy. Occupancy increased $541 thousand, or 5.6% and $1.6 million, or 5.4% for the three and nine months ended September 30, 2021, respectively, compared to the same periods in 2020. The increase for both periods is due to an increase in various non-capitalizable small furniture and equipment as well as increased building and equipment repairs and maintenance expenses.

Advertising and public relations. Advertising and public relations decreased $226 thousand, or 45.9% and $1.1 million or 55.2% for the three and nine months ended September 30, 2021, compared to the same periods in 2020. Advertising and public relations expenses were higher in the prior year periods primarily due to rebranding expenses which occurred in 2020 as well as advertising related to the COVID-19 pandemic.

Professional fees. Professional fees increased $1.7 million, or 58.3% and increased $2.7 million, or 29.2% for the three and nine months ended September 30, 2021, respectively, compared to the same periods in 2020. The change for both periods is due to increased consulting expenses related to the various infrastructure projects and PPP forgiveness.

Acquisition expense, including legal. Acquisition expense decreased $16.2 million for the nine months ended September 30, 2021, compared to the same period in 2020. The change is related to the merger termination in second quarter 2020.

Other noninterest expense. Other noninterest expense increased $1.5 million, or 20.6% and decreased $150 thousand, or 0.6% for the three and nine months ended September 30, 2021, respectively, compared to the same periods in 2020. The increase in other noninterest expense for the three month period is due to increases of $543 thousand in charitable contributions and $430 thousand in business meals, entertainment and travel expenses primarily due to returning to work in second quarter 2021.

Income Tax Expense

Income tax expense was $12.6 million and $43.8 million for the three and nine months ended September 30, 2021, respectively, and $16.1 million and $35.8 million for the same periods in 2020. The effective tax rates were 19.4% and 20.4% for the three and nine months ended September 30, 2021, respectively, compared to 21.1% and 20.0% for the same periods in 2020. The lower effective tax rate for the the three months ended September 30, 2021 was primarily a result of the 2020 provision to return adjustment and current period adjustments related to state income taxes.

Discussion and Analysis of Financial Condition

The following discussion and analysis of the Company’s financial condition summarizes the financial condition of the Company as of September 30, 2021 and certain changes from December 31, 2020.

Assets

The Company’s total assets increased by $1.2 billion, or 6.6%, to $18.9 billion as of September 30, 2021 from $17.8 billion at December 31, 2020. The increase is due primarily to an increase in interest-bearing deposits and investment securities resulting from increased liquidity due to deposit growth in 2021 offset by a decrease in loan balances.

53

Loan Portfolio

The Company’s loan portfolio is the largest category of the Company’s earning assets. The following table presents the balance and associated percentage of each major category in the Company's loan portfolio as of September 30, 2021 and December 31, 2020:

(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

____________

(1) Includes mortgage warehouse purchase loans of $977.8 million and $1.5 billion at September 30, 2021 and December 31, 2020, respectively.

(2) Includes SBA PPP loans of $243.9 million net of deferred loan fees of $6.5 million at September 30, 2021 and $804.4 million at December 31, 2020.

(3) Includes loans held for sale of $31.5 million and $82.6 million at September 30, 2021 and December 31, 2020, respectively.

(4) Includes SBA PPP net deferred loan fees of $9.8 million at December 31, 2020.

(5) Loan class amounts are shown at amortized cost, net of deferred loan fees of $11.3 million in accordance with CECL at September 30, 2021 and shown at recorded investment at December 31, 2020.

As of September 30, 2021 and December 31, 2020, total loans, net of allowance for credit losses and net deferred fees, totaled $12.3 billion and $13.1 billion, respectively, which is a decrease of 5.7% between the two periods. The decrease is primarily due to a decline in mortgage warehouse of $476.0 million due to lower volumes related to rate increases and shorter hold times, a decrease of $560.5 million in SBA PPP loans due the forgiveness of loans and the increase in the allowance for credit losses, primarily due to the day-one CECL adjustment of $67.9 million, net of the PCD reclassification, offset by organic growth of the loan portfolio.

Asset Quality

Nonperforming Assets. The Company has established procedures to assist the Company in maintaining the overall quality of the Company’s loan portfolio. In addition, the Company has adopted underwriting guidelines to be followed by the Company’s lending officers and require significant senior management review of proposed extensions of credit exceeding certain thresholds. When delinquencies exist, the Company rigorously monitors the levels of such delinquencies for any negative or adverse trends. The Company’s loan review procedures include approval of lending policies and underwriting guidelines by the Company’s board of directors, an annual independent loan review, approval of large credit relationships by the Bank’s Executive Loan Committee and loan quality documentation procedures. The Company, like other financial institutions, is subject to the risk that its loan portfolio will be subject to increasing pressures from deteriorating borrower credit due to general economic conditions.

54

The Company discontinues accruing interest on a loan when management of the Company believes, after considering the Company’s collection efforts and other factors, that the borrower’s financial condition is such that collection of interest of that loan is doubtful, as well as when required by regulatory provisions. Loans are placed on nonaccrual status or charged-off at an earlier date if collection of principal or interest is considered doubtful. All interest accrued but not collected for loans, including troubled debt restructurings, 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.

Placing a loan on nonaccrual status has a two-fold impact on net interest earnings. First, it may cause a charge against earnings for the interest which had been accrued in the current year but not yet collected on the loan. Second, it eliminates future interest income with respect to that particular loan from the Company’s revenues. Interest on such loans are not recognized until the entire principal is collected or until the loan is returned to performing status.

Real estate the Company has acquired as a result of foreclosure or by deed-in-lieu-of foreclosure is classified as other real estate owned until sold. The Company's policy is to initially record other real estate owned at fair value less estimated costs to sell at the date of foreclosure. After foreclosure, other real estate is carried at the lower of the initial carrying amount (fair value less estimated costs to sell or lease), or at the value determined by subsequent appraisals or internal valuations of the other real estate.

The Company obtains appraisals of real property that secure loans and may update such appraisals of real property securing loans categorized as nonperforming loans and potential problem loans, in each case as required by regulatory guidelines. In instances where updated appraisals reflect reduced collateral values, an evaluation of the borrower’s overall financial condition is made to determine the need, if any, for possible write-downs or appropriate additions to the allowance for credit losses.

The Company periodically modifies loans to extend the term or make other concessions to help a borrower with a deteriorating financial condition stay current on their loan and to avoid foreclosure. The Company generally does not forgive principal or interest on loans or modify the interest rates on loans to rates that are below market rates. Under applicable accounting standards, such loan modifications are generally classified as troubled debt restructurings.

As a result of the economic environment caused by the COVID-19 outbreak, the Company worked with its borrowers on an individual, one-on-one basis to assess and understand the impact of pandemic-related economic hardship on the borrowers and provide prudent modifications allowing for short-term payment deferrals or other payment relief where appropriate. The deferred payments along with interest accrued during the deferral period are due and payable on the maturity date. Under applicable accounting and regulatory guidance, such modifications are not considered troubled debt restructurings. It is possible that the Company’s asset quality measures could worsen at future measurement periods if the effects of COVID-19 are prolonged and/or if the borrower is not able to recover as the economy rebounds.

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.

55

The following table sets forth the allocation of the Company’s nonperforming assets among the Company’s different asset categories as of the dates indicated. The Company classifies nonperforming loans as nonaccrual loans, loans past due 90 days or more and still accruing interest or loans modified under restructurings as a result of the borrower experiencing financial difficulties. The balances of nonperforming loans reflect the net investment in these assets.

(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

____________

(1)     Nonaccrual loans include troubled debt restructurings of $1.1 million and $578 thousand at September 30, 2021 and December 31, 2020, respectively. Excludes loans acquired with deteriorated credit quality of $6.7 million as of December 31, 2020 presented under prior GAAP.

(2)    Due to the adoption of CECL, amounts are shown at amortized cost, net of deferred loan fees at September 30, 2021.

(3)    Excluding mortgage warehouse purchase loans of $977.8 million and $1.5 billion as of September 30, 2021 and December 31, 2020, respectively.

Nonaccrual loans increased to $80.5 million at September 30, 2021 from $49.0 million as of December 31, 2020. Troubled debt restructurings that were not on nonaccrual status totaled $1.9 million at September 30, 2021 and $2.0 million December 31, 2020. The increase in nonaccrual loans was primarily due to two commercial loan relationships totaling $17.8 million and one commercial real estate loan totaling $11.7 million, as well as the net addition of $7.1 million in purchased credit deteriorated (PCD) loans, which were excluded prior to CECL adoption, offset by payoffs and principal reductions as well as two charge-offs totaling $2.4 million during the period.

As of September 30, 2021, the Company had a total of 104 substandard and doubtful loans with an aggregate principal balance of $132.9 million that were not currently individually evaluated loans, nonaccrual loans, 90 days past due loans or troubled debt restructurings, but where the Company had information about possible credit problems of the borrowers that caused the Company’s management to have serious concerns as to the ability of the borrowers to comply with present loan repayment terms and that could result in those loans becoming nonaccrual loans, 90 days past due loans or troubled debt restructurings in the future.

56

The Company generally continues to use the classification of acquired loans classified as nonaccrual or 90 days and accruing as of the acquisition date. The Company does not classify acquired loans as troubled debt restructurings, or TDRs, unless the Company modifies an acquired loan subsequent to acquisition that meets the TDR criteria. Reported delinquency of the Company’s purchased loan portfolio is based upon the contractual terms of the loans.

Allowance for Credit Losses on Loans. As discussed elsewhere in this discussion and analysis, the Company adopted the CECL accounting standard on January 1, 2021 and has accounted for the allowance for credit losses under the CECL model for the three and nine months ended September 30, 2021. The Company applied the incurred loss methodology for estimating the allowance and applicable provision for all periods prior to 2021. The allowance is increased by provisions reported in the income statement as a component of provisions for credit losses. 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 collectibility of the principal is unlikely. Subsequent recoveries, if any, are credited to the allowance. As of September 30, 2021, the allowance for credit losses on loans totaled $150.3 million, or 1.31% of total loans held for investment, excluding mortgage warehouse purchase loans and loans held for sale, compared with $87.8 million, or 0.76% as of December 31, 2020. The dollar and percentage increases from year end is primarily due to the adoption of CECL, which increased the allowance for credit losses on loans by $80.9 million offset by negative provision of $14.0 million and net charge-offs of $4.4 million for the nine month period.

The allowance for credit losses on loans to nonperforming loans has increased from 170.80% at December 31, 2020 to 181.69% at September 30, 2021, due primarily to the adoption of CECL offset by the increase in nonperforming loans from $51.4 million at December 31, 2020 to $82.7 million at September 30, 2021.

Securities Available for Sale

The Company’s investment strategy aims to maximize earnings while maintaining liquidity in securities with minimal credit, interest rate and duration risk. The types and maturities of securities purchased are primarily based on the Company’s current and projected liquidity and interest rate sensitivity positions.

The Company recognized no gains on the sale of securities for the three and nine months ended September 30, 2021, respectively, and a net gain of $0 and $382 thousand on the sale of securities for the three and nine month ended September 30, 2020, respectively. Securities represented 9.4% and 6.5% of the Company’s total assets at September 30, 2021 and December 31, 2020, respectively.

Certain investment securities are valued at less than their amortized cost. At September 30, 2021, the Company's review of all available for sale securities at an unrealized loss position determined that the losses resulted from factors not related to credit quality. This conclusion is based on the Company's analysis of the underlying risk characteristics, including credit ratings, and other qualitative factors for each security type in the portfolio. The unrealized losses are generally due to increases in market interest rates. Furthermore, the Company has the intent to hold these securities until maturity or a forecasted recovery, and it is more likely than not that the Company will not have to sell the securities before the recovery of their cost basis. The fair value is expected to recover as the securities approach their maturity date. As such, there is no allowance for credit losses on available for sale securities recognized as of September 30, 2021.

Capital Resources and Regulatory Capital Requirements

Total stockholder’s equity was $2.6 billion at September 30, 2021, an increase of approximately $51.3 million from December 31, 2020. The increase was primarily due to net income of $170.6 million earned by the Company during the nine months ended September 30, 2021 and stock based compensation of $8.0 million, offset by the day-one CECL transition adjustment to retained earnings of $53.9 million, net of tax, a decrease of $13.8 million in unrealized gain on available for sale securities, common stock repurchased of $17.9 million and dividends of $41.6 million.

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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. As of September 30, 2021, the Company and the Bank exceeded the Basel III capital ratio requirements under prompt corrective action and other regulatory requirements, as detailed in the table below:  

	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

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 million 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 has repurchased an aggregate 351,069 shares at a total cost of $22.5 million including 241,521 shares repurchased during 2021 at a total cost of $16.9 million through October 26, 2021. 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. See Part II, Item 2 - Unregistered Sales of Equity and Use of Proceeds, in this report for additional information.

Liquidity Management

The Company continuously monitors the Company’s liquidity position to ensure that assets and liabilities are managed in a manner that will meet all of the Company’s short-term and long-term cash requirements. The Company manages the Company’s liquidity position to meet the daily cash flow needs of customers, while maintaining an appropriate balance between assets and liabilities to meet the return on investment objectives of the Company’s shareholders. The Company also monitors its liquidity requirements in light of interest rate trends, changes in the economy and the scheduled maturity and interest rate sensitivity of the investment and loan portfolios and deposits.

Liquidity risk management is an important element in the Company’s asset/liability management process. The Company’s short-term and long-term liquidity requirements are primarily to fund on-going operations, including payment of interest on deposits and debt, extensions of credit to borrowers, capital expenditures and shareholder dividends. These liquidity requirements are met primarily through cash flow from operations, redeployment of pre-paid and maturing balances in the Company’s loan and investment portfolios, debt financing and increases in customer deposits. The Company’s liquidity position is supported by management of liquid assets and liabilities and access to alternative sources of funds. Liquid assets include cash, interest-bearing deposits in banks, federal funds sold, securities available for sale and maturing or prepaying balances in the Company’s investment and loan portfolios. Liquid liabilities include core deposits, brokered deposits, federal funds purchased, securities sold under repurchase agreements and other borrowings. Other sources of liquidity include the sale of loans, the ability to acquire additional national market non-core deposits, the issuance of additional collateralized borrowings such as FHLB advances, the issuance of debt securities, borrowings through the Federal Reserve’s discount window and the issuance of equity securities. For additional information regarding the Company’s operating, investing and financing cash flows, see the Consolidated Statements of Cash Flows provided in the Company’s consolidated financial statements.

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In addition to the liquidity provided by the sources described above, the Company maintains correspondent relationships with other banks in order to sell loans or purchase overnight funds should additional liquidity be needed. As of September 30, 2021, the Company had established federal funds lines of credit with 11 unaffiliated banks totaling $400.0 million with no borrowings against the lines at that time. The Company also participates in an exchange that provides direct overnight borrowings with other financial institutions with a borrowing capacity of $819.0 million with none outstanding as of September 30, 2021. The Company has an unsecured line of credit totaling $100.0 million with an unrelated commercial bank with $15.5 million borrowings against the line as of September 30, 2021. Based on the values of stock, securities, and loans pledged as collateral, as of September 30, 2021, the Company had additional borrowing capacity with the FHLB of $3.9 billion. In addition, the Company maintains a secured line of credit with the Federal Reserve Bank with availability to borrow $796.3 million at September 30, 2021.

Contractual Obligations

In the ordinary course of the Company’s operations, the Company enters into certain contractual obligations, such as obligations for operating leases and other arrangements with respect to deposit liabilities, FHLB advances and other borrowed funds. The Company believes that it will be able to meet its contractual obligations as they come due through the maintenance of adequate cash levels. The Company expects to maintain adequate cash levels through profitability, loan and securities repayment and maturity activity and continued deposit gathering activities. The Company has in place various borrowing mechanisms for both short-term and long-term liquidity needs.

On July 20, 2021, the Company redeemed $40 million in subordinated debentures at a redemption price equal to 100% of the principal amount plus accrued and unpaid interest.

Other than normal changes in the ordinary course of business and the redemption above, there have been no significant changes in the types of contractual obligations or amounts due since December 31, 2020.

Off-Balance Sheet Arrangements

In the normal course of business, the Company enters into various transactions, which, in accordance with accounting principles generally accepted in the United States, are not included in the Company’s consolidated balance sheets. However, the Company has only limited off-balance sheet arrangements that have, or are reasonably likely to have, a current or future material effect on the Company’s financial condition, revenues, expenses, results of operations, liquidity, capital expenditures or capital resources. The Bank enters into these transactions to meet the financing needs of the Company’s customers. These transactions include commitments to extend credit and issue standby letters of credit, which involve, to varying degrees, elements of credit risk and interest rate risk in excess of the amounts recognized in the consolidated balance sheets.

Commitments to Extend Credit. The Bank enters into contractual commitments to extend credit, normally with fixed expiration dates or termination clauses, at specified rates and for specific purposes. Substantially all of the Bank’s commitments to extend credit are contingent upon customers maintaining specific credit standards at the time of loan funding. The Bank minimizes its exposure to loss under these commitments by subjecting them to credit approval and monitoring procedures.

Standby Letters of Credit. Standby letters of credit are written conditional commitments that the Bank issues to guarantee the performance of a customer to a third party. In the event that the customer does not perform in accordance with the terms of the agreement with the third party, the Bank would be required to fund the commitment. The maximum potential amount of future payments the Bank could be required to make is represented by the contractual amount of the commitment. If the commitment is funded, the customer is obligated to reimburse the Bank for the amount paid under this standby letter of credit.

Commitments to extend credit and outstanding standby letters of credit were $2.7 billion and $31.2 million, respectively, as of September 30, 2021. Since commitments associated with letters of credit and commitments to extend credit may expire unused, the amounts shown do not necessarily reflect the actual future cash funding requirements. The Company manages the Company’s liquidity in light of the aggregate amounts of commitments to extend credit and outstanding standby letters of credit in effect from time to time to ensure that the Company will have adequate sources of liquidity to fund such commitments and honor drafts under such letters of credit.

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Allowance for Credit Losses on Off-Balance Sheet Credit Exposures. The allowance for credit losses on off-balance sheet credit exposures is calculated under the CECL model, 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 below. 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. At September 30, 2021, the allowance for credit losses on off-balance sheet credit exposures was $6.1 million.

Critical Accounting Policies and Estimates

The preparation of the Company’s consolidated financial statements in accordance with U.S. generally accepted accounting principles, or GAAP, requires the Company to make estimates and judgments that affect the Company’s reported amounts of assets, liabilities, income and expenses and related disclosure of contingent assets and liabilities. The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under current circumstances, results of which form the basis for making judgments about the carrying value of certain assets and liabilities that are not readily available from other sources. The Company evaluates its estimates on an ongoing basis. Actual results may differ from these estimates under different assumptions or conditions.

Accounting policies, as described in detail in the notes to the Company’s audited consolidated financial statements, are an integral part of the Company’s financial statements. A thorough understanding of these accounting policies is essential when reviewing the Company’s reported results of operations and the Company’s financial position. The Company believes that the critical accounting policies and estimates discussed below require the Company to make difficult, subjective or complex judgments about matters that are inherently uncertain. Changes in these estimates, that are likely to occur from period to period, or the use of different estimates that the Company could have reasonably used in the current period, would have a material impact on the Company’s financial position, results of operations or liquidity.

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 PCD loans, or 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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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 by provisions reported in the income statement as a component of provisions for credit loss. 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 our 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.

Goodwill and Other Intangible Assets. The excess purchase price over the fair value of net assets from acquisitions, or goodwill, is evaluated for impairment at least annually and on an interim basis if an event or circumstance indicates that it is likely an impairment has occurred. The Company first assesses qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If, after assessing the totality of events or circumstances, the Company determines it is not more likely than not that the fair value of a reporting unit is less than its carrying amount, then performing a quantitative impairment test is unnecessary. If the Company concludes otherwise, then it is required to perform an impairment test by calculating the fair value of the reporting unit and comparing the fair value with the carrying amount of the reporting unit. The Company performs its impairment test annually as of December 31. There have been no circumstances since December 31, 2020 that would indicate any impairment has occurred, therefore, management does not believe goodwill is impaired as of September 30, 2021.

Determining the fair value of goodwill is considered a critical accounting estimate because the allocation of the fair value of goodwill to assets and liabilities requires significant management judgment and the use of subjective measurements. Variability in the market and changes in assumptions or subjective measurements used to allocate fair value are reasonably possible and may have a material impact on the Company’s financial position, liquidity or results of operations.

Core deposit intangibles and other acquired customer relationship intangibles lack physical substance but can be distinguished from goodwill because of contractual or other legal rights or because the asset is capable of being sold or exchanged either on its own or in combination with a related contract, asset, or liability. Other intangible assets are being amortized on a straight-line basis over their estimated useful lives ranging from ten to thirteen years. Other intangible assets are tested for impairment whenever events or changes in circumstances indicate the carrying amount of the assets may not be recoverable from future undiscounted cash flows. If impaired, the assets are recorded at fair value.

Recently Issued Accounting Pronouncements

The Company has evaluated new accounting pronouncements that have recently been issued and have determined that there are no new accounting pronouncements that should be described in this section that will materially impact the Company’s operations, financial condition or liquidity in future periods. Refer to Note 1 - Summary of Significant Accounting Policies, of the Company’s consolidated financial statements for a discussion of recent accounting pronouncements that have been adopted by the Company or that will require enhanced disclosures in the Company’s financial statements in future periods.

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The principal objective of the Company’s asset and liability management function is to evaluate the interest rate risk within the balance sheet and pursue a controlled assumption of interest rate risk while maximizing net income and preserving adequate levels of liquidity and capital. The Risk Oversight Committee of the Board of Directors has oversight of the asset and liability management function, which is managed by the Company's Treasurer. The Treasurer meets with our Chief Financial Officer and senior executive management team regularly to review, among other things, the sensitivity of the Company’s assets and liabilities to market interest rate changes, local and national market conditions and market interest rates. That group also reviews the liquidity, capital, deposit mix, loan mix and investment positions of the Company.

The Company's management and the Board of Directors are responsible for managing interest rate risk and employing risk management policies that monitor and limit the Company's exposure to interest rate risk. Interest rate risk is measured using net interest income simulations and market value of portfolio equity analyses. These analyses use various assumptions, including the nature and timing of interest rate changes, yield curve shape, prepayments on loans, securities and deposits, deposit decay rates, pricing decisions on loans and deposits, reinvestment and replacement of asset and liability cash flows.

Instantaneous parallel rate shift scenarios are modeled and utilized to evaluate risk and establish exposure limits for acceptable changes in net interest margin. These scenarios, known as rate shocks, simulate an instantaneous change in interest rates and use various assumptions, including, but not limited to, prepayments on loans and securities, deposit decay rates, pricing decisions on loans and deposits, reinvestment and replacement of asset and liability cash flows.

The Company also analyzes the economic value of equity as a secondary measure of interest rate risk. This is a complementary measure to net interest income where the calculated value is the result of the market value of assets less the market value of liabilities. The economic value of equity is a longer term view of interest rate risk because it measures the present value of the future cash flows. The impact of changes in interest rates on this calculation is analyzed for the risk to the Company's future earnings and is used in conjunction with the analyses on net interest income.

The Company conducts periodic analyses of its sensitivity to interest rate risks through the use of a third-party proprietary interest-rate sensitivity model. That model has been customized to the Company's specifications. The analyses conducted by use of that model are based on current information regarding the Company's actual interest-earnings assets, interest-bearing liabilities, capital and other financial information that it supplies. The Company uses the information in the model to estimate the its sensitivity to interest rate risk.

The Company's interest rate risk model indicated that it was in an asset sensitive position in terms of interest rate sensitivity as of September 30, 2021. The table below illustrates the impact of an immediate and sustained 200 and 100 basis point increase and a 100 basis point decrease in interest rates on net interest income based on the interest rate risk model as of September 30, 2021:

Hypothetical Shift in Interest Rates (in bps)	% Change in Projected Net Interest Income
200	15.46%
100	7.33
(100)	(3.71)

The Company's model indicates that its projected balance sheet at September 30, 2021 is more asset sensitive in comparison to its balance sheet as of December 31, 2020 and prior periods. The shift to a more asset sensitive position was primarily due to an increase in the relative proportion of interest bearing deposits (primarily amounts held in an interest-bearing account at the Federal Reserve). Interest-bearing deposits are more immediately impacted by changes in interest rates in comparison to our other categories of earning assets.

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These are good faith estimates and assume that the composition of the Company's interest sensitive assets and liabilities existing at each period-end and is based on future maturities and market pricing over the relevant twelve month measurement period and that changes in market interest rates are instantaneous and sustained across the yield curve regardless of duration of pricing characteristics of specific assets or liabilities. Also, this analysis does not contemplate any actions that the Company might undertake in response to changes in market interest rates. The Company believes these estimates are not necessarily indicative of what actually could occur in the event of immediate interest rate increases or decreases of this magnitude. As interest-bearing assets and liabilities re-price in different time frames and proportions to market interest rate movements, various assumptions must be made based on historical relationships of these variables in reaching any conclusion. Since these correlations are based on competitive and market conditions, the Company anticipates that our future results will likely be different from the foregoing estimates, and such differences could be material.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of disclosure controls and procedures. An evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this Quarterly Report on Form 10-Q was performed under the supervision and with the participation of management, including its Chief Executive Officer and Chief Financial Officer. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that the Company's disclosure controls and procedures are effective to provide reasonable assurance that information required to be disclosed by the Company in the reports that it files or submits under the Securities Exchange Act of 1934, as amended, is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure and are effective to provide reasonable assurance that such information is recorded, processed, summarized and reported within the time periods specified by the SEC's rules and forms.

All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation.

Changes in internal control over financial reporting. There were no changes in the Company’s internal control over financial reporting during the period covered by this report that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

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PART II

Item 1. LEGAL PROCEEDINGS

In the normal course of business, the Company and the Bank are named as defendants in various lawsuits. Management of the Company and the Bank, following consultation with legal counsel, do not expect the ultimate disposition of any, or a combination, of these matters to have a material adverse effect on the business of the Company or the Bank. 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 the Company's acquisition of BOH Holdings, Inc. and its subsidiary, Bank of Houston, or BOH, that was completed on April 15, 2014. Several entities related to R. A. Stanford, or the Stanford Entities, including Stanford International Bank, Ltd., or SIBL, had deposit accounts at BOH. Certain individuals who had purchased certificates of deposit from SIBL filed a class action lawsuit against several banks, including BOH, on November 11, 2009 in the U.S. District Court Northern District of Texas, Dallas Division, in a case styled Peggy Roif Rotstain, et al. on behalf of themselves and all others similarly situated, v. Trustmark National Bank, et al., Civil Action No. 3:09-CV-02384-N-BG. The suit alleges, among other things, that the plaintiffs were victims of fraud by SIBL and other Stanford Entities and seeks to recover damages and alleged fraudulent transfers by the defendant banks.

On May 1, 2015, the plaintiffs filed a motion requesting permission to file a Second Amended Class Action Complaint in this case, which motion was subsequently granted. The Second Amended Class Action Complaint presents previously unasserted claims, including aiding and abetting or participation in a fraudulent scheme based upon the large amount of deposits that the Stanford Entities held at BOH and the alleged knowledge of certain BOH officers. The plaintiffs seek recovery from the Bank and other defendants for their losses. The case was inactive due to a court-ordered discovery stay issued March 2, 2015 pending the Court’s ruling on plaintiff’s motion for class certification and designation of class representatives and counsel. On November 7, 2017, the Court issued an order denying the plaintiff’s motion. In addition, the Court lifted the previously ordered discovery stay. On January 11, 2018, the Court entered a scheduling order providing that the case be ready for trial on January 27, 2020. Due to agreed upon extensions of discovery on July 25, 2019, the Court amended the scheduling order to provide that the case be ready for trial on January 11, 2021. In light of additional agreed upon extensions of discovery deadlines, the Court entered a new scheduling order on March 9, 2020, which now provides that the case be ready for trial March 15, 2021. In light of delays in discovery associated with the COVID-19 pandemic, the parties agreed to amend the scheduling order with new ready for trial date of May 6, 2021. On September 10, 2020, Defendants filed a motion for suggestion of remand in order to remand the case to the Southern District of Texas. On March 11, 2021, Defendants filed a motion to amend the scheduling order, which was granted, effectively vacating the May 6, 2021 trial date, with a new trial date to be determined upon remand. On April 5, 2021, Defendants re-urged the motion for suggestion of remand, the outcome of which is still pending. In February 2021, the Bank filed its motion for summary judgment and also joined in on an omnibus motion for summary judgment on procedural issues common to all Defendants. In their reply brief, plaintiffs appear to have abandoned five of the seven causes of action against BOH. Parties are awaiting a ruling on the summary judgment briefing to determine the final causes of action to be addressed at trial. The Company has experienced an increase in legal fees associated with the defense of this claim and anticipates further increases in legal fees as the case proceeds to trial.

The Bank notified its insurance carriers of the claims made in the Second Amended Complaint. The insurance carriers have initially indicated that the claims are not covered by the policies or that a “loss” has not yet occurred. The Bank pursued insurance coverage as well as reimbursement of defense costs through the initiation of litigation and other means. On November 6, 2018, the Company settled claims under its Financial Institutions Select Policy pursuant to which the Company received payment of an amount which is not material to the operations of the Company. The Company did not settle any claims under its Financial Institution Bond Policy.

The Company believes that the claims made in this lawsuit are without merit and is vigorously defending this lawsuit. This is complex litigation involving a number of procedural matters and issues. As such, the Company is unable to predict when this matter may be resolved and, given the uncertainty of litigation, the ultimate outcome of, or potential costs or damages arising from, this case.

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Item 1A. RISK FACTORS

In evaluating an investment in the Company's common stock, investors should consider carefully, among other things, the risk factors previously disclosed in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2020,and in the information contained in this Quarterly Report on Form 10-Q and our other reports and registration statements.

Item 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Purchases of Equity Securities by the Issuer and Affiliated Purchasers

Share Repurchase Program. The Company established a share repurchase program which allows the Company to purchase its common stock in the open market or in privately negotiated transactions. In general, the share repurchase program allows the Company to proactively manage its capital position and return excess capital to shareholders. On October 22, 2020, the Company's board of directors authorized a $150.0 million 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 109,548 shares at a total cost of $5.7 million through 2020, and 217,772 shares at a total cost of $15.2 million during the nine months ended September 30, 2021.

The following table summarizes the Company's repurchase activity during the three months ended September 30, 2021:

	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

____________

(1) Includes 39,508 shares purchased to settle employee tax withholding related to vesting of restricted stock awards. These transactions are not considered part of the Company's repurchase program.

Item 3. DEFAULTS UPON SENIOR SECURITIES

None

Item 4. MINE SAFETY DISCLOSURES

Not applicable

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Item 5. OTHER INFORMATION

None

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Item 6. EXHIBITS

The following documents are filed as exhibits to this Quarterly Report on Form 10-Q:   

Exhibit 3.1*	Fifth Amended Restated Bylaws of Independent Bank Group, Inc.
Exhibit 10.1*	Employment Agreement by and between Independent Bank Group, Inc. and John G. Turpen dated July 15, 2021
Exhibit 31.1*	Chief Executive Officer Section 302 Certification
Exhibit 31.2*	Chief Financial Officer Section 302 Certification
Exhibit 32.1**	Chief Executive Officer Section 906 Certification
Exhibit 32.2**	Chief Financial Officer Section 906 Certification
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)

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Signatures

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

		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

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EX-3.1

Exhibit 3.1

FIFTH AMENDED AND RESTATED BYLAWS OF
INDEPENDENT BANK GROUP, INC.

Article I.
OFFICES

Section 1.Registered Office. The registered office of Independent Bank Group, Inc. (the “Corporation”) shall be located in the City of McKinney, County of Collin, State of Texas.

Section 2.Other Offices. The Corporation may also have an office or offices, and keep the books and records of the Corporation, except as may be required by law, at such other place or places, either within or without the State of Texas, as the board of directors of the Corporation (the “Board of Directors” or “Board”) may from time to time determine or as the business of the Corporation may require.

Article II.
MEETINGS OF SHAREHOLDERS

Section 1.Place of Meetings. All annual meetings of the shareholders of the Corporation shall be held either: (i) at the offices of the Corporation, or at such other place, within or without the State of Texas, as may be designated by the Board of Directors and stated in the notice of the meeting or in a duly executed waiver of notice thereof; or (ii) by means identified in Section 15 below. Special meetings of shareholders of the Corporation may be held either: (i) at such place, within or without the State of Texas, and at such time as shall be stated in the notice of the meeting or in a duly executed waiver of notice thereof; or (ii) by means identified in Section 15 below.

Section 2.Annual Meetings. Annual meetings of the shareholders of the Corporation shall be held annually on such date and at such time and place as shall be designated from time to time by the Board of Directors, at which the shareholders of the Corporation shall elect the class of the Board of Directors then up for election and transact such other business as may properly be brought before the meeting. Annual Meetings may take place by means identified in Section 15 below.

Section 3.Business at Annual Meetings. At an annual meeting of shareholders of the Corporation, only such business (including the nomination of directors) shall be conducted as shall have been properly brought before the meeting. To be properly brought before the annual meeting, business must (i) be specified in the notice of meeting (or in any supplement) given by or at the direction of the Board of Directors, (ii) be otherwise properly brought before the meeting by or at the direction of the Board of Directors or (iii) satisfy the notice requirements set forth below in this Article II and otherwise be properly brought before the meeting by a shareholder.

Section 4.Shareholder Nominations and Proposals. A notice of a shareholder to make a nomination of a person for election as a director of the Corporation or to bring any other matter before a meeting shall be made in writing and received by the Secretary of the

IBG Fifth Amended and Restated Bylaws    1

Exhibit 3.1

Corporation (i) in the event of an annual meeting of shareholders, not more than one hundred twenty (120) days and not less than ninety (90) days in advance of the anniversary date of the immediately preceding annual meeting; provided, however, that in the event that the annual meeting is called on a date that is not within thirty (30) days before or after such anniversary date, notice by the shareholder in order to be timely must be so received not later than the close of business on the fifteenth (15th) day following the day on which notice of the date of the annual meeting was mailed or public disclosure of the date of the annual meeting was made, whichever first occurs; or (ii) in the event of a special meeting of shareholders, such notice shall be received by the Secretary of the Corporation not later than the close of business on the fifteenth (15th) day following the day on which notice of the meeting is first mailed to shareholders or public disclosure of the date of the special meeting was made, whichever first occurs.

Every such notice by a shareholder shall set forth:

(i)the name and residence address of the shareholder of the Corporation who intends to make a nomination or proposal and the name and residence address of the beneficial owner, if any, on whose behalf the nomination or proposal, as applicable, is made, and the name and residence address of their respective affiliates or associates or others acting in concert therewith;

(ii)a representation that the shareholder is a holder of the Corporation's voting stock (indicating the class and number of shares owned) by such shareholder, such beneficial owner or any of their respective affiliates or associates or others acting in concert therewith) and a description of, as applicable, (A) any option, warrant, convertible security, stock appreciation right, or similar right with an exercise or conversion privilege or a settlement payment or mechanism at a price related to any class or series of stock of the Corporation or with a value derived in whole or in part from the value of any class or series of stock of the Corporation, or any derivative or synthetic arrangement having the characteristics of a long position in any class or series of stock of the Corporation, or any contract, derivative, swap or other transaction or series of transactions designed to produce economic benefits and risks that correspond substantially to the ownership of any class or series of stock of the Corporation, including due to the fact that the value of such contract, derivative, swap or other transaction or series of transactions is determined by reference to the price, value or volatility of any class or series of stock of the Corporation, whether or not such instrument, contract or right shall be subject to settlement in the underlying class or series of stock of the Corporation, through the delivery of cash or other property, or otherwise, and without regard to whether the shareholder of record, the beneficial owner, if any, or any affiliates or associates or others acting in concert therewith, may have entered into transactions that hedge or mitigate the economic effect of such instrument, contract or right, or any other direct or indirect opportunity to profit or share in any profit derived from any increase or decrease in the value of shares of the Corporation (any of the foregoing, a “Derivative Instrument”) directly or indirectly owned beneficially by such shareholder, the beneficial owner, if any, or any affiliates or associates or others acting in concert therewith, (B) any proxy, contract, arrangement, understanding, or relationship pursuant to which such shareholder, such beneficial owner or any of their respective affiliates or associates or others acting in concert therewith has any right to vote any class or

IBG Fifth Amended and Restated Bylaws    2

Exhibit 3.1

series of stock of the Corporation, (C) any agreement, arrangement, understanding, relationship or otherwise, including any repurchase or similar so-called “stock borrowing” agreement or arrangement, involving such shareholder, such beneficial owner or any of their respective affiliates or associates or others acting in concert therewith, directly or indirectly, the purpose or effect of which is to mitigate loss to, reduce the economic risk (of ownership or otherwise) of any class or series of the stock of the Corporation by, manage the risk of share price changes for, or increase or decrease the voting power of, such shareholder, such beneficial owner or any of their respective affiliates or associates or others acting in concert therewith with respect to any class or series of the stock of the Corporation, or which provides, directly or indirectly, the opportunity to profit or share in any profit derived from any decrease in the price or value of any class or series of the stock of the Corporation (any of the foregoing, a “Short Interest”), (D) any rights to dividends on the shares of the Corporation owned beneficially by such shareholder, such beneficial owner or any of their respective affiliates or associates or others acting in concert therewith that are separated or separable from the underlying shares of the Corporation, (E) any proportionate interest in shares of the Corporation or Derivative Instruments held, directly or indirectly, by a general or limited partnership in which such shareholder, such beneficial owner or any of their respective affiliates or associates or others acting in concert therewith is a general partner or, directly or indirectly, beneficially owns an interest in a general partner of such general or limited partnership, (F) any performance-related fees (other than an asset-based fee) that such shareholder, such beneficial owner or any of their respective affiliates or associates or others acting in concert therewith is entitled to based on any increase or decrease in the value of shares of the Corporation or Derivative Instruments, if any, including without limitation any such interests held by members of the immediate family sharing the same household of such shareholder, such beneficial owner and their respective affiliates or associates or others acting in concert therewith, (G) any significant equity interests or any Derivative Instruments or Short Interests in any principal competitor of the Corporation held by such shareholder, such beneficial owner or any of their respective affiliates or associates or others acting in concert therewith and (H) any direct or indirect interest of such shareholder, such beneficial owner and their respective affiliates or associates or others acting in concert therewith in any contract with the Corporation, any affiliate of the Corporation or any principal competitor of the Corporation (including, in any such case, any employment agreement, collective bargaining agreement or consulting agreement);

(iii)a representation that the shareholder intends to appear in person or by proxy at the meeting to make the nomination or bring up the matter specified in the notice ;

(iv)with respect to an intent to make a nomination for the election of a person as a director of the Corporation, a description of all direct and indirect compensation and other monetary agreements, arrangements or understandings among the shareholder and each nominee and any other person or persons (naming such person or persons) pursuant to which the nomination or nominations are to be made by the shareholder;

(v)with respect to the notice of an intent to make a nomination, such other information regarding each nominee proposed by such shareholder as would have been required to be included in a proxy statement filed pursuant to the proxy rules of the Securities

IBG Fifth Amended and Restated Bylaws    3

Exhibit 3.1

and Exchange Commission had each nominee been nominated by the Board of Directors of the Corporation; and

(vi)with respect to the notice of an intent to bring up any other matter, (A) a description of the matter, the reasons for bringing such a matter at the meeting, and any material interest of the shareholder in the matter, (B) the text of the proposal or business (including the text of any resolutions proposed for consideration and, in the event that such proposal or business includes a proposal to amend these Bylaws, the text of the proposed amendment), and (C) a description of all agreements, arrangements and understandings between the shareholder and any other person or persons in connection with the proposal of such business by such shareholder

Notice of intent to make a nomination of a person for election as a director of the Corporation shall be accompanied by (a) the written consent of each nominee to serve as director of the Corporation if so elected, (b) a confirmation or a certified representation or attestation of the applicable governmental authorities or other evidence satisfactory to the Board of Directors that the proposed nomination and election of such nominee would not violate any applicable state or federal laws, rules or regulations applicable to depository institutions or depository institution holding companies, including, but not limited to, the Bank Holding Company Act of 1956, the Change in Bank Control Act of 1978, the Texas Banking Act, and all rules and regulations promulgated thereunder (“Applicable Banking Laws”), (c) evidence satisfactory to the Board of Directors that all approvals, non-objections, and non-control determinations required under Applicable Banking Laws for the proposed nomination or election of such nominee to the Board of Directors have been obtained, and (d) an executed agreement, in a form deemed satisfactory by the Board of Directors, by each nominee that such nominee has read and agrees, if elected, to adhere to the Corporation’s Corporate Governance Guidelines, Code of Conduct and any other Corporation policies and guidelines applicable to directors.

At the meeting of shareholders, the Chairman shall declare out of order and disregard any nomination or other matter not presented in accordance with this section.

This Article II, Section 4 shall be the exclusive means for a shareholder to make nominations of persons for election as a director of the Corporation or provide notice of the shareholder’s intent to bring other business before a meeting of shareholders (other than proposals brought under Rule 14a-8 under the Securities Exchange Act of 1934, as amended, and included in the Corporation’s notice of meeting, which proposals are not governed by these Bylaws).

Section 5.Compliance with Procedures. Notwithstanding anything in these Fifth Amended and Restated Bylaws to the contrary, no business shall be conducted at an annual meeting except in accordance with the procedures set forth in this Article II. The Chairman of an annual meeting shall, if the facts warrant, determine and declare to the meeting that a matter of business was not properly brought before the annual meeting in accordance with the provisions of this Article II or otherwise, and if the Chairman should so determine, the Chairman shall so declare to the annual meeting and any such business not properly brought before the meeting shall not be transacted.

IBG Fifth Amended and Restated Bylaws    4

Exhibit 3.1

Section 6.Special Meetings. Except as otherwise required by law and subject to the rights of the holders of any class or series of stock having a preference over the common stock as to dividends upon liquidation, special meetings of the shareholders of the Corporation may be called only by (i) the Secretary of the Corporation at the request in writing by a majority of the entire Board of Directors, (ii) the Chairman of the Board or (iii) the holders of not less than twenty percent (20%) of all shares entitled to vote in the election of directors at the meeting. Special meetings of the shareholders may be called at such place or by means set forth in Section 15 below and on such date and at such time as fixed by the appropriate person calling such special meeting of the shareholders.

Section 7.Notice of Meetings. Except as otherwise required by law, written or printed notice stating the place, day and hour of the meeting, whether annual or special, and, in the case of a special meeting, the purpose or purposes for which the meeting is called, shall be delivered not less than ten (10) nor more than sixty (60) days before the day of the meeting, either personally by mail, or by “notice and access” as permitted under Rule 14a-16 of the Securities Exchange Act of 1934, as amended, at the direction of the Chief Executive Officer, the Secretary or the officer or person calling the meeting, to each shareholder of the Corporation of record entitled to vote at such meeting. If mailed, such notice shall be deemed to be delivered when deposited in the United States mail addressed to the shareholder at such shareholder’s address as it appears on the stock transfer books of the Corporation, with postage thereon prepaid. See also Article VII. Notice of any meeting of shareholders shall not be required to be given to any shareholder who shall attend such meeting in person or by proxy without protesting, at the commencement of the meeting, the lack of proper notice to such shareholder, or who shall waive notice thereof as provided in Article VII, Section 2, of these Bylaws.

Section 8.Business at Special Meetings. Only such business as is specified in the notice of any special meeting of the shareholders may come before such meeting.

Section 9.Quorum; Adjourned Meetings. Except as required by law or by the Amended and Restated Certificate of Formation of the Corporation (the “Amended and Restated Certificate”), the holders of a majority of the votes entitled to be cast by the shareholders entitled to vote, which if any vote is to be taken by classes shall mean the holders of a majority or the votes entitled to be cast by the shareholders of each such class, represented in person or by proxy, shall constitute a quorum at meetings of shareholders of the Corporation. If, however, a quorum shall not be present or represented at any meeting of the shareholders of the Corporation, the holders of a majority of the votes entitled to be cast by such shareholders, present in person or represented by proxy, shall have power to adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present or represented, if the time and place to which the meeting is adjourned are announced at such meeting, unless the adjournment is for more than thirty (30) days or, after adjournment, a new record date is fixed for the adjourned meeting. At such adjourned meeting at which a quorum shall be present or represented, any business may be transacted that might have been transacted at the meeting as originally notified and called.

IBG Fifth Amended and Restated Bylaws    5

Exhibit 3.1

Section 10.Voting. Except as otherwise provided by law or by the Amended and Restated Certificate, each shareholder of record of shares of any class or series of capital stock of the Corporation having a preference over the common stock of the Corporation as to dividends or upon liquidation shall be entitled on each matter submitted to a vote at each meeting of shareholders to such number of votes for each share of such stock as may be fixed in the Amended and Restated Certificate or in the resolution or resolutions adopted by the Board of Directors providing for the establishment of such stock, and each shareholder of record of common stock shall be entitled at each meeting of shareholders to one vote for each share of common stock, in each case, registered in such shareholder’s name on the books of the Corporation:

(a)on the date fixed pursuant to Section 6 of Article VIII of these Bylaws as the record date for the determination of shareholders entitled to notice of and to vote at such meeting; or

(b)if no such record date shall have been so fixed, then at the close of business on the day next preceding the day on which notice of such meeting is given, or, if notice is waived, at the close of business on the day next preceding the day on which the meeting is held.

A shareholder may vote in person or by proxy executed in writing by the shareholder or by such shareholder’s duly authorized attorney-in-fact. Each shareholder entitled to vote at any meeting of shareholders may authorize not in excess of three persons to act for such shareholder by a proxy signed by such shareholder or such shareholder’s attorney-in-fact. Any such proxy shall be delivered to the Secretary at or prior to the time designated for holding such meeting, but in any event not later than the time designated in the order of business for so delivering such proxies. No proxy shall be valid after eleven (11) months from the date of its execution. Each proxy shall be revocable unless expressly provided therein to be irrevocable, and unless otherwise made irrevocable by law. Each proxy shall be filed with the Secretary of the Corporation prior to or at the time of the meeting.

At each meeting of the shareholders at which a quorum is present or represented, all corporate actions to be taken by vote of the shareholders shall be authorized by a majority of the votes cast by the shareholders entitled to vote thereon, present in person or represented by proxy, and where a separate vote by class is required, a majority of the votes cast by the shareholders of such class, present in person or represented by proxy, shall be the act of such class, unless, in each case, as otherwise required by law and except as otherwise provided in the Amended and Restated Certificate or these Bylaws. Each vote of the shareholders shall be by written ballot. Each ballot shall be signed by the shareholders who are voting, or by such shareholder’s proxy, and shall state the number of shares voted.

Section 11.No Cumulative Voting. Cumulative voting in the election of directors is not allowed under the Amended and Restated Certificate.

Section 12.Order of Business. At each meeting of the shareholders, one of the following persons, in the order in which they are listed (and in the absence of the first, the next,

IBG Fifth Amended and Restated Bylaws    6

Exhibit 3.1

and so on), shall serve as chairman of the meeting, the Chairman of the Board, Vice Chairmen of the Board (in the order of their seniority if more than one), Chief Executive Officer, President, Vice Presidents (in the order of their seniority if more than one) and Secretary. The order of business at each such meeting shall be as determined by the chairman of the meeting. The chairman of the meeting shall have the right and authority, either before or during any meeting of shareholders, to prescribe such rules, regulations and procedures and to do all such acts and things as are necessary or desirable for the proper conduct of the meeting, including, without limitation, the establishment of procedures for the maintenance of order and safety, limitations on the time allotted to questions or comments on the affairs of the Corporation, restrictions on entry to such meeting, the opening and closing of the voting polls, the presentation, revocation and counting of proxies at the meeting with respect to issues to be presented, and all other aspects of any annual or special meeting of shareholders. The chairman’s determination of the rules and his interpretations thereof shall be in his reasonable discretion and shall be final, unless the Amended and Restated Certificate or these Bylaws, or resolution of the Board of Directors, or applicable law or regulation establishes rules governing a particular matter, in which case such provisions shall be dispositive.

Section 13.List of Shareholders. The officer or agent having charge of the stock transfer books shall make, at least ten (10) days before each meeting of the shareholders of the Corporation, a complete list of the shareholders entitled to vote at such meeting or any adjournment thereof, arranged in alphabetical order, with the address of and number of shares held by each, which list, for a period of ten (10) days prior to such meeting, shall be kept on file at the registered office of the Corporation and shall be subject to inspection by any shareholder of the Corporation at any time during normal business hours. Such list shall also be produced and kept open at the time and place of the meeting and shall be subject to the inspection by any shareholder during the whole time of the meeting and otherwise as required by law. The original stock transfer books of the Corporation shall be prima facie evidence as to the shareholders who are entitled to examine such list or transfer book or to vote at any such meeting of the shareholders of the Corporation.

Section 14.Inspectors. Either the Board of Directors or, in the absence of a designation of inspectors by the Board, the chairman of any meeting of shareholders may, in its or such person’s discretion, appoint two or more inspectors to act at any meeting of shareholders. Such inspectors shall perform such duties as shall be specified by the Board or the chairman of the meeting. Inspectors need not be shareholders. No director or nominee for the office of director shall be appointed such inspector.

Section 15.Participation in Meeting by Means of Communication Equipment. Shareholders may participate in and hold a meeting by means of conference telephone or similar communication equipment or another suitable electronic communications system (including, without limitation, video conferencing or the Internet), if the telephone or other equipment or system permits each person participating in the meeting to communicate with all other persons participating in the meeting. Participation in such a meeting shall constitute presence in person at the meeting, except where a person participates in the meeting for the express purpose of

IBG Fifth Amended and Restated Bylaws    7

Exhibit 3.1

objecting to the transaction of any business on the ground the meeting is not lawfully called or convened.

Article III.
BOARD OF DIRECTORS

Section 1.General Powers. The business and affairs of the Corporation shall be managed by or under the direction of the Board of Directors. In addition to the powers and authority in the Amended and Restated Certificate, in these Bylaws or by statute expressly conferred upon them, the directors of the Corporation are hereby empowered to exercise all such powers and do all such acts and things as may be exercised or done by the Corporation, subject to the provisions of the Texas Business Organizations Code (“TBOC”), the Amended and Restated Certificate and these Bylaws.

Section 2.Number of Directors. Except pursuant to the provisions of Article IV of the Amended and Restated Certificate relating to the rights of the holders of any class or series of stock having the right to elect a director by the vote solely of the holders of that class or series of stock, the number and class of directors of the Corporation shall be fixed from time to time by the affirmative vote of a majority of the entire Board of Directors or pursuant to these Bylaws.

Section 3.Classes. The directors, other than those who may be elected by the holders of shares of any class or series of stock having the right to elect a director by the vote solely of the holders of that class or series of stock pursuant to the terms of Article IV of the Amended and Restated Certificate or any resolution or resolutions providing for the establishment of such class or series of stock adopted by the Board of Directors, shall be divided into three classes, with respect to the time for which they severally hold office, designated Class I, Class II and Class III. Each class shall consist, as nearly as may be possible, of one-third of the total number of directors constituting the entire Board of Directors. The initial classifications and terms of the Board of Directors following the effective date of this Amended and Restated Certificate shall be as follows:

(a)the terms of the Class I directors will initially expire at the annual meeting of shareholders to be held in 2014;

(b)the terms of the Class II directors will initially expire at the annual meeting of shareholders to be held in 2015; and

(c)the terms of the Class III directors will initially expire at the annual meeting of shareholders to be held in fiscal year 2016.

Section 4.Advance Notice of Shareholder Nominations. Advance notice of shareholder nominations for the election of directors shall be given in the manner and to the extent provided in Article II, Section 4 of these Bylaws.

Section 5.Terms of Office. A director shall hold office until the annual meeting of shareholders for the year in which his or her respective term expires and until his or her

IBG Fifth Amended and Restated Bylaws    8

Exhibit 3.1

respective successor shall be elected and shall be qualified or until or her earlier death, resignation, retirement, disqualification or removal from office.

Section 6.Election of Directors. Subject to the rights of the holders of any class or series of capital stock having the right to elect a director by the vote solely of the holders of that class or series of stock, at each succeeding annual meeting of shareholders beginning in 2014, successors to the class of directors whose term expires at that meeting shall be elected for a three-year term. Subject to the rights of the holders of any class or series of capital stock having the right to elect a director by the vote solely of the holders of that class or series of stock, if the number of directors is changed, any increase or decrease shall be apportioned among the classes so as to maintain the number of directors in each class to as nearly as possible to one-third (⅓) of the total number of directors, but in no case will a decrease in the number of directors shorten the term of any incumbent director. As determined by the Board of Directors, the annual meeting of shareholders should be held each year, to the extent practicable, to ensure that the terms of office of each director shall be approximately three (3) complete years in length. Each director shall be at least twenty-one (21) years of age. Directors need not be shareholders of the Corporation.

Directors shall be elected by an affirmative majority of the votes cast by the shares entitled to vote who are present, in person or by proxy, and entitled to vote on the election of directors at any such meeting of shareholders at which a quorum is present. For purposes of the preceding sentence, a majority of the votes cast means that the number of shares voted “for” a director must exceed the number of shares “against” that director, with “abstentions” and “broker non-votes” not counted as votes cast with respect to the director. A director who does not receive a majority of votes cast and is therefore not elected shall tender his/her resignation as a director to the Corporate Governance and Nominating Committee. Notwithstanding the foregoing, in a contested election, the persons receiving a plurality of the votes cast shall be elected directors. An election shall be considered contested if the Secretary of the Corporation receives a timely notice that a shareholder has nominated a person for election to the Board of Directors in compliance with the advance notice requirements for shareholder nominees for director set forth in the Bylaws, and such nomination has not been withdrawn by such shareholder on or prior to the 10th day before the applicable shareholder meeting.

Section 7.Vacancies. Any vacancy on the Board of Directors occurring between annual meetings of shareholders, including up to two (2) newly created directorships, may be filled by a majority of the Board of Directors then in office, even if less than a quorum, or by a sole remaining director. Any director of any class elected to fill a vacancy resulting from an increase in the number of directors in such class shall hold office for a term ending with the next election of directors. Any director elected to fill a vacancy not resulting from an increase in the number of directors shall have the same remaining term as that of his or her predecessor.

Section 8.Removal of Directors. Subject to the rights of the holders of any class or series of capital stock having the right to elect a director by the vote solely of the holders of that class or series of stock, any director may be removed from office only for cause and only by the affirmative vote of the holders of a majority of the combined voting power of the then

IBG Fifth Amended and Restated Bylaws    9

Exhibit 3.1

outstanding shares of capital stock of all classes and series of the Corporation entitled to vote generally in the election of directors (“Voting Stock”), voting together as a single class.

Section 9.Place of Meeting. The Board of Directors may hold its meetings at such place or places within or without the State of Texas as the Board may from time to time determine or as shall be specified or fixed in the respective notices or waivers of notice thereof.

Section 10.Quorum and Manner of Acting. Except as otherwise provided by law, the Amended and Restated Certificate or these Bylaws, a majority of the entire Board of Directors shall constitute a quorum for the transaction of business at any meeting of the Board, and, except as otherwise provided, the vote of a majority of the directors present at any meeting at which a quorum is present shall be the act of the Board. In the absence of a quorum, a majority of the directors present may adjourn the meeting to another time and place. Notice of any adjourned meeting shall be given as set forth in Section 13 of this Article III. At any adjourned meeting at which a quorum is present, any business may be transacted which might have been transacted at the meeting as originally called and noticed.

Section 11.Regular Meetings. Regular meetings of the Board of Directors shall be held at such times and places, or as set forth in Section 15 below, as the Board shall from time to time agree upon. If any day fixed for a regular meeting shall be a legal holiday under the laws of the place where the meeting is to be held, the meeting that would otherwise be held on that day shall be held at the same hour on the next succeeding day not a legal holiday.

Section 12.Special Meetings. Special meetings of the Board of Directors shall be held whenever called by the Chairman of the Board or the Chief Executive Officer or by the Secretary upon the request of a majority of the directors. Special meetings of the Board of Directors may be called at such place or by means set forth in Section 15 below and on such date and at such time as fixed by the appropriate person calling such special meeting of the shareholders.

Section 13.Notice of Meetings. Notice of regular meetings of the Board of Directors or of any adjourned meeting thereof need not be given. Notice of each special meeting of the Board shall be mailed to each director, addressed to such director at such director’s residence or usual place of business, at least three (3) days before the day on which the meeting is to be held or shall be sent to such director at such place by electronic transmission (email) or be given personally or by telephone, not later than the day before the meeting is to be held, but notice need not be given to any director who shall, either before or after the meeting, submit a signed waiver of such notice or who shall attend such meeting without protesting, prior to or at its commencement, the lack of notice to such director. Every such notice shall state the time and place, but need not state the purpose of the meeting.

Section 14.Rules and Regulations. The Board of Directors may adopt such rules and regulations not inconsistent with the provisions of law, the Amended and Restated Certificate or these Bylaws for the conduct of its meetings and management of the affairs of the Corporation as the Board may deem proper.

IBG Fifth Amended and Restated Bylaws    10

Exhibit 3.1

Section 15.Participation in Meeting by Means of Communications Equipment. Any one or more members of the Board of Directors or any committee thereof may participate in any meeting of the Board or of any such committee by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear and converse with each other, and such participation in a meeting shall constitute presence in person at such meeting.

Section 16.Action Without a Meeting. Any action required or permitted to be taken at any meeting of the Board of Directors or any committee thereof may be taken without a meeting if all of the members of the Board or of any such committee consent thereto in writing and the writing or writings are filed with the minutes of proceedings of the Board or of such committee.

Section 17.Resignations. Any director of the Corporation may at any time resign by giving written notice to the Board of Directors, the Chairman of the Board, the Chief Executive Officer or the Secretary of the Corporation. Such resignation shall take effect at the time specified therein or, if the time be not specified, upon receipt thereof; and, unless otherwise specified therein, the acceptance of such resignation shall not be necessary to make it effective.

Article IV.
BOARD COMMITTEES

Section 1.Committees. The Board of Directors may, by resolution adopted by a majority of the entire Board, designate from among its members one or more committees and shall designate such committee as shall be required by applicable law or the listing requirements of any national securities exchange on which securities of the Corporation are listed for trading (the “Listing Rules”), each of which shall, except as otherwise prescribed by applicable law or the Listing Rules, have such authority of the Board as the Board may specify in the resolutions designating such committee or in the charter of such committee adopted by the Board. A majority of all the members of each such committee may determine its action and fix the time and place of its meetings, unless the Board shall otherwise provide. The Board or such committee, if so authorized by its charter, shall have power at any time to change the membership of, to increase or decrease the membership of, to fill all vacancies in and to discharge any such committee, or any member thereof, either with or without cause.

Section 2.Procedure; Meetings; Quorum. Regular meetings of any committee of the Board of Directors, of which no notice shall be necessary, may be held at such times and places as as agreed upon by a majority of the members thereof. Special meetings of any committee of the Board shall be called at the request of any member thereof. Notice of each special meeting of any committee of the Board shall be sent by mail, electronic transmission (email) or telephone, or be delivered personally to each member thereof not later than the day before the day on which the meeting is to be held, but notice need not be given to any member who shall, either before or after the meeting, submit a signed waiver of such notice or who shall attend such meeting without protesting, prior to or at its commencement, the lack of such notice to such member. Any special meeting of any committee of the Board shall be a legal meeting without any notice thereof having been given, if all the members thereof shall be present at such

IBG Fifth Amended and Restated Bylaws    11

Exhibit 3.1

meeting, unless a member attends the meeting for the purpose of protesting, prior to its commencement, that the meeting is not proper. Notice of any adjourned meeting of any committee of the Board need not be given. Each committee of the Board may adopt such rules and regulations not inconsistent with the provisions of law, the Amended and Restated Certificate or these Bylaws for the conduct of its meetings as such committee of the Board may deem proper. A majority of the members of each committee of the Board shall constitute a quorum for the transaction of business at any meeting, and the vote of a majority of the members thereof present at any meeting at which a quorum is present shall be the act of such committee. The Board may fill any vacancy on any committee. Each committee of the Board of Directors shall keep written minutes of its proceedings, a copy of which is to be filed with the Secretary of the Corporation, and such committee shall report on such proceedings to the Board.

Article V.
OFFICERS

Section 1.Number; Term of Office; Compensation. The officers of the Corporation shall be a Chairman of the Board, a Chief Executive Officer, a President, one or more Vice Chairmen, a Chief Risk Officer, a Chief Lending Officer, a Chief Financial Officer (who shall also be the Treasurer unless a separate office of Treasurer is later established by the Board), a Secretary, one or more Vice Presidents, any of which may be designated as Executive or Senior Vice President, or such other designation (such as Assistant Secretary or Assistant Treasurer) as deemed appropriate, from time to time, by the Board of Directors, and such other officers or agents with such titles and such duties as the Board of Directors may from time to time determine, each to have such authority, functions or duties as provided in these Bylaws or as the Board of Directors may from time to time determine, and each to hold office for such term as may be prescribed by the Board of Directors and as to those offices as determined to be mandatory under the provisions hereof until such person’s successor shall have been chosen and shall qualify, all until any of such person’s death or resignation or until such person’s removal in the manner hereinafter provided. The Chairman of the Board and the Chief Executive Officer shall be elected from among the directors. One person may hold the offices and perform the duties of any two or more of said officers; provided, however, that no officer shall execute, acknowledge or verify any instrument in more than one capacity if such instrument is required by law, the Amended and Restated Certificate or these Bylaws to be executed, acknowledged or verified by two or more officers. The Board may from time to time authorize any superior officer to appoint and remove any such other officers and agents and to prescribe their powers and duties. The Board may require any officer or agent to give security for the faithful performance of such person’s duties. The Board shall establish the salaries of the officers of the Corporation.

Section 2.Removal. Any officer may be removed, either with or without cause, by the Board of Directors at any meeting thereof, or, except in the case of the Chairman, Chief Executive Officer, or President by any committee of the Board or superior officer upon whom such power may be conferred by the Board.

Section 3.Resignation. Subject at all times to the right of removal as provided in Section 2 of this Article V, any officer may resign at any time by giving notice to the Board of

IBG Fifth Amended and Restated Bylaws    12

Exhibit 3.1

Directors, the Chief Executive Officer or the Secretary of the Corporation. Any such resignation shall take effect at the date of receipt of such notice or at any later date specified therein; provided that the Chief Executive Officer or, in the event of the resignation of the Chief Executive Officer, the Board of Directors may designate an effective date for such resignation that is earlier than the date specified in such notice, but which is not earlier than the date of receipt of such notice; and, unless otherwise specified therein, the acceptance of such resignation shall not be necessary to make it effective.

Section 4.Vacancies. A vacancy in any office because of death, resignation, retirement, removal or any other cause may be filled for the unexpired portion of the term in the manner prescribed in these Bylaws for election to such office.

Section 5.Chairman of the Board. The Chairman of the Board shall, if present, preside at meetings of the Board of Directors and, if present, and in the absence of the Chief Executive Officer, preside at meetings of the shareholders. The Chairman of the Board shall counsel with and advise the Chief Executive Officer and perform such other duties as the Chief Executive Officer or the Board may from time to time determine. The Chairman of the Board may sign and execute in the name of the Corporation deeds, mortgages, bonds, contracts or other instruments authorized by the Board or any committee thereof empowered to authorize the same.

Section 6.Chief Executive Officer. The Chief Executive Officer shall be the chief executive officer of the Corporation. As such, the Chief Executive Officer shall have general supervision and direction of the business and affairs of the Corporation and its subsidiaries, subject to the control of the Board of Directors and shall see that all orders and resolutions of the Board of Directors are carried into effect. The Chief Executive Officer shall, if present and in the absence of the Chairman of the Board, preside at meetings of the Board. The Chief Executive Officer shall perform such other duties as the Board may from time to time determine. The Chief Executive Officer may sign and execute in the name of the Corporation deeds, mortgages, bonds, contracts or other instruments authorized by the Board or any committee thereof empowered to authorize the same. The Chief Executive Officer, or his or the Board’s designee, shall vote all securities held by the Corporation.

Section 7.President. In the absence of the Chairman of the Board and the Chief Executive Officer, the President shall, if present, preside at meetings of the Board of Directors. When so acting, the President shall have the powers, and be subject to all the restrictions on, the Chairman of the Board. The President shall, when requested, counsel with and advise the Chief Executive Officer, the Chairman of the Board, and other officers of the Corporation and shall perform such other duties as may be agreed upon with them or as the Board may from time to time determine. The President may sign and execute in the name of the Corporation deeds, mortgages, bonds, contracts or other instruments authorized by the Board or any committee thereof empowered to authorize the same.

Section 8.Vice Chairman. Each Vice Chairman shall, when requested, counsel with and advise the Chairman of the Board, the Chief Executive Officer, the President and other officers of the Corporation and shall perform such other duties as may be agreed upon with them or as the Board may from time to time determine. Each Vice Chairman may sign and execute in

IBG Fifth Amended and Restated Bylaws    13

Exhibit 3.1

the name of the Corporation deeds, mortgages, bonds, contracts, or other instruments authorized by the Board or any committee thereof empowered to authorize the same.

Section 9.Chief Risk Officer. The Chief Risk Officer of the Corporation shall have general supervision over the risk profile, loan underwriting and credit administration and risk management of the Corporation and its subsidiaries, subject to the direction of the Chief Executive Officer, the Chairman of the Board or the Board of Directors. The Chief Risk Officer may sign and execute in the name of the Corporation deeds, mortgages, bonds, contracts or other instruments authorized by the Board or any committee thereof empowered to authorize the same.

Section 10.Chief Lending Officer. The Chief Lending Officer of the Corporation shall have general supervision over the lending operations, practices and procedures of the Corporation and its subsidiaries, subject to the direction of the Chief Executive Officer, the Chairman of the Board or the Board of Directors. The Chief Lending Officer may sign and execute in the name of the Corporation deeds, mortgages, bonds, contracts or other instruments authorized by the Board or any committee thereof empowered to authorize the same.

Section 11.Chief Financial Officer. The Chief Financial Officer of the Corporation shall have general supervision over the financial operations of the Corporation and its subsidiaries, subject to the direction of the Chief Executive Officer, the Chairman of the Board or the Board of Directors. The Chief Financial Officer shall also perform all duties incident to the office of Treasurer (unless a separate office of Treasurer is later established by the Board). The Chief Financial Officer may sign and execute in the name of the Corporation deeds, mortgages, bonds, contracts or other instruments authorized by the Board or any committee thereof empowered to authorize the same.

Section 12.Vice Presidents. Each Vice President shall have such powers and duties as shall be prescribed by the Chief Executive Officer, the Chairman of the Board or the Board of Directors. Any Vice President may sign and execute in the name of the Corporation deeds, mortgages, bonds, contracts or other instruments authorized by the Board or any committee thereof empowered to authorize the same.

Section 13.Secretary. It shall be the duty of the Secretary to act as secretary at all meetings of the Board of Directors and the shareholders and to attend and record the proceedings of such meetings in a book or books to be kept for that purpose; the Secretary shall see that all notices required to be given by the Corporation are duly given and served; the Secretary shall have the right to countersign documents and instruments and shall be custodian of the seal of the Corporation and shall affix the seal or cause to be affixed to all certificates of stock of the Corporation (unless the seal of the Corporation on such certificates shall be a facsimile, as hereinafter provided) and to all documents, the execution of which on behalf of the Corporation under its seal is duly authorized in accordance with the provision of these Bylaws. The Secretary shall have charge of the stock ledger and also of the other books, records and papers of the Corporation and shall see that the reports, statements and other documents required by law are properly kept and filed; and shall in general perform all the duties incident to the office of Secretary and such other duties as from time to time may be assigned to such person by the Chief Executive Officer, the Chairman of the Board or the Board of Directors.

IBG Fifth Amended and Restated Bylaws    14

Exhibit 3.1

Section 14.Assistant Treasurers and Assistant Secretaries. The Assistant Treasurers and the Assistant Secretaries shall perform such duties as shall be assigned to them by the Chief Financial Officer (who acts as the Treasurer) or Secretary, respectively, or by the Chief Executive Officer, the Chairman of the Board or the Board of Directors.

Article VI.
INDEMNIFICATION

Section 1.Mandatory Indemnification. At any time during which this Article VI and Article VI to the Amended and Restated Certificate are in effect, the Corporation shall indemnify any person who was, is, or is threatened to be made, a party to a proceeding (as hereinafter defined) by reason of the fact that he or she (i) is or was a director or officer of the Corporation or (ii) while a director or officer of the Corporation, is or was serving at the request of the Corporation as a director, officer, partner, manager, managing member, venturer, proprietor, trustee, employee, agent or similar functionary (each, a “Corporate Functionary”) of another foreign or domestic corporation, partnership, limited liability company, joint venture, sole proprietorship, trust, employee benefit plan or other enterprise, in each of those capacities, against all expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by such person in connection with such proceeding to the fullest extent permitted under the TBOC, the Amended and Restated Certificate and these Bylaws, as the same exist or may hereafter be amended (but, in the case of any such amendment, only to the extent that such amendment permits the Corporation to provide broader indemnification rights than such law permitted the Corporation to provide immediately prior to such amendment), and such indemnification shall continue as to a person who has ceased to be a director or officer of the Corporation or to serve in any of such other capacities at the time the indemnification or payment of expenses pursuant hereto is sought or at the time any proceeding relating thereto exists or is brought. As used in this Article VI, the term “proceeding” means any threatened, pending, or completed action, suit, or proceeding, whether civil, criminal, administrative, arbitrative, or investigative, any appeal in such an action, suit, or proceeding, any inquiry or investigation that could lead to such an action, suit, or proceeding.

Section 2.Permissive Indemnification. The Corporation may, in the sole and absolute discretion of the Board of Directors of the Corporation, also indemnify any employee or agent of the Corporation against all expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by such person in connection with a proceeding to the fullest extent permitted by the TBOC, the Amended and Restated Certificate and these Bylaws, as the same exist or may hereafter be amended.

Section 3.Advancement of Expenses. Each indemnitee under Section 1 of this Article VI shall have the right to be paid by the Corporation expenses (including, without limitation, attorneys’ fees) actually and reasonably incurred by such indemnitee in defending any proceeding in advance of its final disposition to the maximum extent permitted under the TBOC, the Amended and Restated Certificate and these Bylaws, as the same exist or may hereafter be amended (but, in the case of any such amendment, only to the extent that such amendment permits the Corporation to provide broader advancement of expenses than such law permitted the

IBG Fifth Amended and Restated Bylaws    15

Exhibit 3.1

Corporation to provide immediately prior to such amendment), subject only to such written affirmation or undertaking as may be required to be furnished by the claimant under the TBOC.

Section 4.Indemnitee Rights. The rights under this Article VI shall be contractual and as such shall inure to the benefit of any director or officer who is elected and accepts the position of director or officer of the Corporation or elects to continue to serve as a director or officer of the Corporation while this Article VI is in effect. In the event of the death of any person having a right of indemnification under the foregoing provisions, such right shall inure to the benefit of his or her heirs, executors, administrators and personal representatives. Notwithstanding the other provisions of this Article VI, to the extent that a director, officer or Corporate Functionary of the Corporation has been successful on the merits or otherwise in defense of any proceeding referred to in Section 1 of this Article VI, or in defense of any claim, issue or matter therein, such person shall be indemnified against expenses (including attorneys’ fees) actually and reasonably incurred by such person in connection therewith.

Section 5.Determination of Indemnification. Any indemnification under Section 1 or Section 2 of this Article VI (unless ordered by a court) shall be made by the Corporation only as authorized in the specific case upon a determination that indemnification of the director, officer, Corporate Functionary, employee or agent is proper in the circumstances because such person has met the applicable standard of conduct set forth in the TBOC. Such determination shall be made (i) by the Board of Directors or a committee thereof by a majority vote of a quorum consisting of directors who are disinterested and independent and were not parties to such proceeding, or (ii) if such a quorum is not obtainable, or, even if obtainable a quorum of disinterested and independent directors so directs, by independent legal counsel in a written opinion or (iii) by the shareholders. The Corporation shall not indemnify any persons enumerated in Section 1 of this Article VI against expenses, penalties or other payments incurred in respect of an administrative proceeding or action instituted by an appropriate bank regulatory agency if such proceeding or action results in a final order assessing civil money penalties or requiring affirmative action by an individual or individuals in the form of payments to the Corporation, except that in this instance, the Corporation may indemnify for reasonable expenses actually incurred in connection with such proceeding. In addition, no indemnification will be made of any person pursuant to this Article VI if any banking regulatory agency, in connection with a review of such indemnification, determines through appropriate administrative action that such indemnification shall not be made.

Section 6.Nonexclusivity. The rights conferred in this Article VI shall not be exclusive of any other right that any person may have or hereafter acquire under any statute, the Amended and Restated Certificate, these Bylaws, resolution of shareholders or disinterested directors, agreement or otherwise, both as to action in such person’s official capacity and as to action in another capacity while holding such office.

Section 7.Claims for Indemnification: If a claim for indemnification or advancement of expenses hereunder or under the provision of Article VI of the Amended and Restated Certificate is not paid in full by the Corporation within sixty (60) days after a written claim has been received by the Corporation, the claimant may at any time thereafter bring suit

IBG Fifth Amended and Restated Bylaws    16

Exhibit 3.1

against the Corporation to recover the unpaid amount of the claim, and if successful in whole or in part, the claimant shall also be entitled to be paid the expenses of prosecuting such claim. It shall be a defense to any such action that such indemnification or advancement of costs of defense is not permitted under the TBOC or Section 5 of this Article VI, but the burden of proving such defense shall be on the Corporation. Neither the failure of the Corporation (including its Board of Directors or any committee thereof, independent legal counsel or shareholders) to have made its determination prior to the commencement of such action that indemnification of, or advancement of costs of defense to, the claimant is permissible in the circumstances nor any actual determination by the Corporation (including its Board of Directors or any committee thereof, independent legal counsel or shareholders) that such indemnification or advancement is not permissible shall be a defense to the action or create a presumption that such indemnification or advance is not permissible.

Section 8.Insurance. The Corporation may purchase or maintain insurance on behalf of any Corporate Functionary against any liability asserted against him or her and incurred by him or her in such a capacity or arising out of his or her status as a Corporate Functionary, whether or not the Corporation would have the power to indemnify him or her against the liability under the TBOC, the Amended and Restated Certificate or these Bylaws; provided, however, that if the insurance or other arrangement is with a person or entity that is not regularly engaged in the business of providing insurance coverage, the insurance or arrangement may provide for payment of a liability with respect to which the Corporation would not have the power to indemnify the person only if including coverage for the additional liability has been approved by the shareholders of the Corporation. Without limiting the power of the Corporation to procure or maintain any kind of insurance or arrangement, the Corporation may, for the benefit of persons indemnified by the Corporation, (i) create a trust fund, (ii) establish any form of self-insurance, (iii) secure its indemnification obligation by grant of any security interest or other lien on the assets of the Corporation, or (iv) establish a letter of credit, guaranty or surety arrangement. Any such insurance or other arrangement may be procured, maintained or established within the Corporation or its affiliates or with any insurer or other person deemed appropriate by the Board regardless of whether all or part of the stock or other securities thereof are owned in whole or in part by the Corporation. In the absence of fraud, the judgment of the Board as to the terms and conditions of such insurance or other arrangement and the identity of the insurer or other person participating in an arrangement shall be conclusive, and the insurance or arrangement shall not be voidable and shall not subject the directors approving the insurance or arrangement to liability, on any ground, regardless of whether directors participating in approving such insurance or other arrangement shall be beneficiaries thereof.

Section 9.Witnesses. Notwithstanding any other provisions of this Article VI, the Corporation shall pay or reimburse expenses incurred by any director, officer, employee or agent in connection with such person’s appearance as a witness or other participation in a proceeding at a time when such person is not a named defendant or respondent in such proceeding.

Section 10.Repeal or Amendment. Any amendment, modification, alteration or repeal of this Article VI that in any way diminishes, limits, restricts, adversely affects or eliminates any right of an officer, director or Corporate Functionary or his or her respective

IBG Fifth Amended and Restated Bylaws    17

Exhibit 3.1

successors to indemnification, advancement of expenses or otherwise shall be prospective only and shall not in any way diminish, limit, restrict, adversely affect or eliminate any such right with respect to any actual or alleged state of facts, occurrence, action or omission then or previously existing, or any proceeding previously or thereafter brought or threatened based in whole or in part upon any such actual alleged state of facts, occurrence, action or omission.

Section 11.Definitions of Certain Terms. For purposes of this Article VI, (a) references to the “Corporation” shall include, in addition to the resulting corporation, any constituent corporation (including any constituent of a constituent) absorbed in a consolidation or merger, which, if its separate existence had continued, would have had power and authority to indemnify its directors, officers, employees or agents, so that any person who is or was a director, officer, employee or agent of such constituent corporation, or is or was serving at the request of such constituent corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, shall stand in the same position under the provisions of this Article VI with respect to the resulting or surviving corporation as such person would have with respect to such constituent corporation if its separate existence had continued; (b) references to “other enterprises” shall include employee benefit plans; (c) references to “fines” shall include any excise taxes assessed on a person with respect to an employee benefit plan; and (d) references to “serving at the request of the Corporation” shall include any service as a director, officer, employee or agent of the Corporation that imposes duties on, or involves services by, such director, officer, employee or agent, including with respect to an employee benefit plan, its participants or beneficiaries.

Article VII.
NOTICES

Section 1.Whenever required by law, the Amended and Restated Certificate or these Bylaws, notice is to be given to any shareholder, director or committee member and if no provision is made as to how notice is to be given, notice may be given in writing, by mail, postage prepaid, addressed to the shareholder, director or committee member at the address that appears on the books of the Corporation or by any other method permitted by law. Any notice required or permitted to be given by mail will be deemed to be given at the time it is deposited in the United States mail with postage thereon prepaid. Notice to shareholders, directors or committee members may also be given by a nationally recognized overnight delivery or courier service and will be deemed delivered when the notice is received by the proper recipient, or, if earlier, one day after the notice is sent by the overnight delivery or courier service. Notice from the Corporation may also be given to any shareholder, director or committee member of the Corporation by electronic transmission. Such shareholder, director or committee member may specify the form of electronic transmission to be used to communicate notice. Notice by electronic transmission is deemed to be given when the notice is (i) transmitted to a facsimile number provided by such shareholder, director or committee member for the purpose of receiving notice; (ii) transmitted to an electronic mail address provided by the shareholder, director or committee member for the purpose of receiving notice; (iii) posted on an electronic network, and a message is sent to the shareholder, director or committee member at the address provided by the shareholder, director or committee member for the purpose of alerting the

IBG Fifth Amended and Restated Bylaws    18

Exhibit 3.1

shareholder, director or committee member of a posting; or (iv) communicated to the shareholder, director or committee member by any other form of electronic transmission consented to by the shareholder, director or committee member.

Section 2.Whenever any notice is required to be given to any shareholder, director or committee member of the Corporation as required by law, the Amended and Restated Certificate, or these Bylaws, a written waiver signed by the person or persons entitled to notice or a waiver by electronic transmission by the person entitled to notice, given before or after the time stated in the notice, will be equivalent to giving the notice. Attendance of a shareholder, director or committee member at a meeting will constitute a waiver of notice of that meeting, except when the shareholder, director or committee member attends for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business on the ground that the meeting has not been lawfully called or convened or, in the case of a shareholder, the lack of proper notice to the shareholders. Neither the business to be transacted at a regular or special meeting of the Corporation’s shareholders, the Board or a committee of the Board nor the purpose of such a meeting is required to be specified in a written waiver of notice or a waiver by electronic transmission unless required by the Amended and Restated Certificate or these Bylaws.

Article VIII.
CAPITAL STOCK

Section 1.Certificates for Shares. Certificates representing shares of stock of each class or series of stock of the Corporation, whenever authorized by the Board of Directors, shall be in such form as shall be approved by the Board. The certificates representing shares of stock of each class or series of stock shall be issued in consecutive order and shall be numbered in the order of their issue, shall be signed by, or in the name of, the Corporation by the Chairman of the Board or the Chief Executive Officer or a Vice President and by the Secretary or an Assistant Secretary or the Treasurer or an Assistant Treasurer of the Corporation, and may be sealed with the corporate seal of the Corporation, which may be by a facsimile thereof. Any or all such signatures may be facsimiles if countersigned by a transfer agent or registrar, which countersignature may be manual or facsimile. Although any officer, transfer agent or registrar whose manual or facsimile signature is affixed to such a certificate ceases to be such officer, transfer agent or registrar before such certificate has been issued, it may nevertheless be issued by the Corporation with the same effect as if such officer, transfer agent or registrar were still such at the date of its issue.

If the Corporation is authorized to issue shares of more than one class or series of stock, each certificate representing shares issued by the Corporation (i) shall conspicuously set forth on the face or back of the certificate a full statement of (A) all of the designations, preferences, limitations and relative rights of the shares of each class authorized to be issued and (B) if the Corporation is authorized to issue shares of any preferred or special class or series, the variations in the relative rights and preferences of the shares of each such series to the extent they have been fixed and determined and the authority of the Board of Directors to fix and determine the relative rights and preferences of subsequent series; or (ii) shall conspicuously state on the face or back of the certificate that (i)(A) the information required by clause (A) above is stated in the

IBG Fifth Amended and Restated Bylaws    19

Exhibit 3.1

Corporation’s governing documents and (B) the Corporation will furnish a copy of such information to the record holder of the certificate without charge on written request to the Corporation at its principal place of business or registered office.

The Board of Directors may authorize the issue of some or all of the shares without certificates. Within a reasonable time after the issue or transfer of shares without certificates, the Corporation shall send the shareholder a record containing the information required on certificates by the TBOC.

The stock ledger and blank share certificates shall be kept by the Secretary or by a transfer agent or by a registrar or by any other officer or agent designated by the Board.

The undersigned, being the duly elected and acting Secretary of the Independent Bank Group, Inc. (the “Corporation”) does hereby certify that (i) the above correction to Article II, Section 5 and (ii) the above clarification and amendment of Article VII, Section 1 of the Corporation’s Third Amended and Restated Bylaws was duly approved and adopted by the Board of Directors of the Corporation at a meeting duly called and held on April 18, 2013.

Section 2.Transfer of Shares. Stock of the Corporation shall be transferable in the manner prescribed by applicable law and in these Bylaws. Transfers of stock shall be made on the books of the Corporation, and in the case of certificated shares of stock, only by the person named in the certificate or by such person’s attorney lawfully constituted in writing and upon the surrender of the certificate therefor, properly endorsed for transfer and payment of all necessary transfer taxes; or, in the case of uncertificated shares of stock, upon receipt of proper transfer instructions from the registered holder of the shares and upon payment of all necessary transfer taxes and compliance with appropriate procedures for transferring shares in uncertificated form; provided, however, that such surrender and endorsement, compliance or payment of taxes shall not be required in any case in which the officers of the Corporation shall determine to waive such requirement. With respect to certificated shares of stock, every certificate exchanged, returned or surrendered to the Corporation shall be marked “Cancelled,” with the date of cancellation, by the Secretary or Assistant Secretary of the Corporation or the transfer agent thereof. No transfer of stock shall be valid as against the Corporation for any purpose until it shall have been entered in the stock records of the Corporation by an entry showing from and to who transferred.

Section 3.Addresses of Shareholders. Each shareholder shall designate to the Secretary or transfer agent of the Corporation an address at which notices of meetings and all other corporate notices may be served or mailed to such person, and, if any shareholder shall fail to designate such address, corporate notices may be served upon such person by mail directed to such person at such person’s post office address, if any, as the same appears on the share record books of the Corporation or at such person’s last known post office address.

Section 4.Lost, Destroyed and Mutilated Certificates. The holder of any share of stock of the Corporation shall immediately notify the Corporation of any loss, theft, destruction or mutilation of the certificate therefor; the Corporation may issue to such holder a new certificate or certificates for shares, upon the surrender of the mutilated certificate or, in the case of loss, theft or destruction of the certificate, upon satisfactory proof of such loss, theft or

IBG Fifth Amended and Restated Bylaws    20

Exhibit 3.1

destruction; the Board of Directors, or a committee designated thereby, or the transfer agents and registrars for the stock, may, in their discretion, require the owner of the lost, stolen or destroyed certificate, or such person’s legal representative, to give the Corporation a bond in such sum and with such surety or sureties as they may direct to indemnify the Corporation and said transfer agents and registrars against any claim that may be made on account of the alleged loss, theft or destruction of any such certificate or the issuance of such new certificate.

Section 5.Regulations. The Board of Directors may make such additional rules and regulations as it may deem expedient concerning the issue and transfer of certificates representing shares of stock of each class of the Corporation and may make such rules and take such action as it may deem expedient concerning the issue of certificates in lieu of certificates claimed to have been lost, destroyed, stolen or mutilated.

Section 6.Fixing Date for Determination of Shareholders of Record. In order that the Corporation may determine the shareholders entitled to notice of or to vote at any meeting of shareholders or any adjournments thereof, or entitled to receive payment of any dividend or other distribution or allotment or any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of stock or for the purpose of any other lawful action, the Board of Directors may fix, in advance, a record date, which shall not be more than sixty (60) nor less than ten (10) days before the date of such meeting, nor more than sixty (60) days prior to any other action. A determination of shareholders entitled to notice of or to vote at a meeting of the shareholders shall apply to any adjournment of the meeting, except where the determination has been made through the closing of stock transfer books and the stated period of closing has expired, in which case, that the Board of Directors may fix a new record date for the adjourned meeting. If no record date is fixed for the determination of shareholders of the Corporation entitled to notice of or to vote at a meeting of shareholders of the Corporation, or shareholders of the Corporation entitled to receive payment of a dividend on shares or of interest or principal on indebtedness, the close of business on the day next preceding the day on which notice of such meeting is given or, if notice is waived, at the close of business the day next preceding the day on which the meeting is held, or the date on which the resolutions of the Board of Directors declaring such dividend or authorizing such payment of principal or interest is adopted, as the case may be, shall be the record date for such determination of the shareholders of the Corporation.

Section 7.Fiscal Year. The fiscal year of the Corporation shall be fixed by resolution of the Board of Directors.

Section 8.Corporate Seal. The corporate seal shall have inscribed thereon the name of the Corporation, the year of its organization and the words “Corporate Seal, Texas.” The seal may be used by causing it or a facsimile thereof to be impressed or affixed or in any other manner reproduced. Unless otherwise provided in these Bylaws or by law, it shall not be mandatory that the corporate seal or its facsimile be impressed or affixed on any document executed on behalf of the Corporation.

IBG Fifth Amended and Restated Bylaws    21

Exhibit 3.1

Article IX.
AMENDMENT OF BYLAWS

Article X.ANY BYLAW (OTHER THAN THIS BYLAW) MAY BE ADOPTED, REPEALED, ALTERED OR AMENDED, AND NEW BYLAW PROVISIONS MAY BE ADOPTED, BY A MAJORITY OF THE ENTIRE BOARD OF DIRECTORS AT ANY MEETING THEREOF, PROVIDED THAT SUCH PROPOSED ACTION IN RESPECT THEREOF SHALL BE STATED IN THE NOTICE OF SUCH MEETING AND ANY SUCH ACTION BY THE BOARD OF DIRECTORS SHALL BE EFFECTIVE WITHOUT THE NECESSITY FOR ANY APPROVAL OR RATIFICATION BY THE SHAREHOLDERS OF THE CORPORATION. THE SHAREHOLDERS OF THE CORPORATION SHALL HAVE THE POWER TO AMEND, ALTER OR REPEAL ANY PROVISION OF THESE BYLAWS ONLY BY THE AFFIRMATIVE VOTE OF THE HOLDERS OF A MAJORITY OR MORE OF THE OUTSTANDING SHARES OF VOTING COMMON STOCK OF THE CORPORATION AT A MEETING OF THE SHAREHOLDERS CALLED FOR THIS PURPOSE (PROVIDED THAT NOTICE OF SUCH ADOPTION, REPEAL, ALTERATION OR AMENDMENT IS INCLUDED IN THE NOTICE OF SUCH MEETING.
MISCELLANEOUS

Section 1.Execution of Documents. In addition to the authority granted in these Bylaws, the Board of Directors shall designate the officers, employees and agents of the Corporation who shall have power to execute and deliver deeds, contracts, mortgages, bonds, debentures, checks, drafts and other orders for the payment of money and other documents for and in the name of the Corporation and may authorize such officers, employees and agents to delegate such power (including authority to redelegate) by written instrument to other officers, employees or agents of the Corporation. Such delegation may be by resolution or otherwise and the authority granted shall be general or confined to specific matters, all as the Board may determine. In the absence of such designation referred to in the first sentence of this Section, the officers of the Corporation shall have such power so referred to, to the extent incident to the normal performance of their duties.

Section 2.Deposits. All funds of the Corporation not otherwise employed shall be deposited from time to time to the credit of the Corporation or otherwise as the Board of Directors or any officer of the Corporation to whom power in that respect shall have been delegated by the Board shall select.

Section 3.Checks. All checks, drafts and other orders for the payment of money out of the funds of the Corporation, and all notes or other evidences of indebtedness of the Corporation, shall be signed on behalf of the Corporation in such manner as required in such instrument as shall from time to time be determined by resolution of the Board of Directors or of any committee thereof empowered to authorize the same.

Section 4.Dividends. the Board of Directors may declare and the Corporation may pay dividends on its outstanding shares in cash, property or its own shares pursuant to law and subject to the provisions of the Amended and Restated Certificate.

IBG Fifth Amended and Restated Bylaws    22

Exhibit 3.1

Section 5.Reserves. The Board of Directors may by resolution create a reserve or reserves out of earned surplus for any proper purpose or purposes, and may abolish any such reserve in the same manner.

Section 6.Proxies in Respect of Stock or Other Securities of Other Corporations. In addition to the designation made to the Chief Executive Officer in Article V, Section 6, the Board of Directors may designate officers of the Corporation who shall have authority from time to time to appoint an agent or agents of the Corporation to exercise in the name and on behalf of the Corporation the powers and rights which the Corporation may have as the holder of stock or other securities in any other corporation or other entity, and to vote or consent in respect of such stock or securities; such designated officers may instruct the person or persons so appointed as to the manner of exercising such powers and rights; and such designated officers may execute or cause to be executed in the name and on behalf of the Corporation and under its corporate seal, or otherwise, such written proxies, powers of attorney or other instruments as they may deem necessary or proper in order that the Corporation may exercise its said powers and rights.

Section 7.Invalid Provisions. If any part of these Bylaws is held invalid or inoperative for any reason, the remaining parts, so far as is possible and reasonable, shall remain valid and operative.

Section 8.Headings. The headings used in these Bylaws are for convenience only and do not constitute matter to be construed in the interpretation of these Bylaws.

Section 9.Facsimile Signatures. In addition to the provisions for the use of facsimile signatures elsewhere specifically authorized in these Bylaws, facsimile signatures of any officer or officers of the Corporation may be used whenever and as authorized by the Board of Directors.

Section 10.Reliance upon Books, Reports and Records. A member of the Board of Directors, or a member of any committee designated by the Board of Directors, shall, in the performance of such person’s duties, be protected to the fullest extent permitted by law in relying upon the records of the Corporation and upon information, opinion, reports or statements presented to the Corporation.

Section 11.Application of Bylaws. In the event that any provisions of these Bylaws is or may be in conflict with any law of the United States or the State of Texas or of any other governmental body or power having jurisdiction over this Corporation, or may apply, such provision of these Bylaws shall be inoperative to the extent only that the operation thereof unavoidably conflicts with such law, and shall in all other respects be in full force and effect.

(END OF BYLAWS)

IBG Fifth Amended and Restated Bylaws    23

Exhibit 3.1

These Bylaws were adopted by the Board of Directors of Independent Bank Group, Inc. on October 28, 2021, and to evidence such adoption of the Chief Executive Officer was ordered to execute same on behalf of the Corporation and the Secretary was ordered to Attest to the signature of the Chief Executive Officer.

INDEPENDENT BANK GROUP, INC.

By:    /s/ David R. Brooks            

David R. Brooks

Chairman and Chief Executive Officer

Attest:

/s/ Nicole R. Metcalf                    
Nicole R. Metcalf, Secretary

IBG Fifth Amended and Restated Bylaws    24

EX-10.1

Exhibit 10.1

EMPLOYMENT AGREEMENT

THIS EMPLOYMENT AGREEMENT (this “Agreement”) is entered into by and between Independent Bank Group, Inc., a Texas corporation (“IBTX”), which is the holding company of Independent Bank, McKinney, Texas (the “Bank”), (IBTX and the Bank are collectively referred to as the “Company”), and John G. Turpen (“Executive”) as of July 15, 2021.

WHEREAS, the Company wishes to employ Executive on the terms and conditions, and for the consideration, hereinafter set forth, and Executive desires to be employed by the Company on such terms and conditions and for such consideration.

NOW, THEREFORE, in consideration of the mutual covenants and agreements set forth below, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, it is hereby agreed as follows:

1.Employment Period. The Company hereby agrees to employ Executive, and Executive hereby agrees to be employed by the Company, subject to the terms and conditions of this Agreement, for the period commencing on July 26, 2021 (the “Effective Date”) and ending on the third (3rd) anniversary thereof (the “Employment Period”); provided, however, that commencing on the third (3rd) anniversary of the Effective Date, and on each annual anniversary thereafter (such date and each annual anniversary thereof shall be hereinafter referred to as the “Renewal Date”), unless previously terminated, the Employment Period shall be automatically extended so as to terminate one year from such Renewal Date, unless at least 90 days prior to the Renewal Date the Company shall give notice to Executive that the Employment Period shall not be so extended.

2.Terms of Employment.

(a)Position and Duties; Standard of Services; Location.

(i)Position and Duties. During the Employment Period, Executive shall serve as Executive Vice President, Chief Risk Officer of the Company, with such duties and authority as are customarily associated with such positions in public companies. Executive shall report solely and directly to the Chief Executive Officer of the Company.

(ii)Standard of Services. During the Employment Period, Executive agrees to devote his full business time, energy and skill to the performance of his duties, authorities and responsibilities to the Company and its affiliates and to use Executive’s best efforts to perform faithfully and efficiently such responsibilities. During the Employment Period, Executive may serve on civic, charitable or other not-for-profit boards or committees, deliver lectures, fulfill speaking engagements or teach at educational institutions, manage personal investments and, subject to the prior written approval of the Board of Directors of the Company (the “Board”) or a committee thereof, serve on boards of for-profit entities, in each case, so long as such activities do not

materially interfere with the performance of Executive’s duties and responsibilities or create a potential business or fiduciary conflict, and Executive complies with applicable provisions of any codes of business conduct and ethics of the Company and its affiliates, as in effect from time to time. For purposes of this Agreement, the term “affiliate” means an entity controlled by, controlling or under common control with the Company.

(iii)Location. Executive’s primary work location shall be at the Company’s corporate headquarters in McKinney, Texas, subject to reasonable business travel at the Company’s request.

(b)Compensation.

(i)Annual Base Salary. Commencing on the Effective Date and continuing through September 15, 2021, Executive shall receive an annual base salary equal to $212,500, payable in accordance with the Company’s regular payroll practices. Commencing on September 16, 2021 and continuing through the remainder of the Employment Period, Executive shall receive an annual base salary equal to at least $425,000 (as in effect from time to time, the “Annual Base Salary”), payable in accordance with the Company’s regular payroll practices. The Annual Base Salary shall be reviewed at least annually by the Board or an appropriate committee thereof (the Board or such committee, the “Committee”) for possible increase, as determined in the sole and absolute discretion of the Committee, pursuant to the normal performance review policies for senior executives of the Company. Once the Annual Base Salary has been increased hereunder, it shall not subsequently be decreased during the Employment Period.

(ii)Annual Incentive Bonus. For each fiscal year during the Employment Period commencing with fiscal year 2021, the Executive shall be eligible to receive an annual incentive bonus, based upon the Executive’s and the Company’s attainment of pre-established performance goals (the “Annual Incentive Bonus”). The performance goals upon which the Annual Incentive Bonus will be based shall be adopted at the beginning of each year by the Committee. For fiscal year 2021, the Executive’s Annual Incentive Bonus target amount shall be 150% of the Executive’s Base Salary (the “Annual Incentive Bonus Target Opportunity”). Notwithstanding the foregoing, for fiscal year 2021, the amount of the Executive’s Annual Incentive Bonus will be prorated based on the number of days Executive is employed by the Company in 2021, divided by 365.

(A)47.5% of the Annual Incentive Bonus shall be paid in cash, payable by the Company to the Executive at the same time the other senior executives of the Company receive annual bonus payments (but in no event later than March 15th of the calendar year following the year with respect to which the Annual Incentive Bonus was earned.

(B)52.5% of the Annual Incentive Bonus shall be payable in Awards of (I) restricted shares of IBTX common stock (“Restricted

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Shares”) granted pursuant to the Company’s 2013 Equity Incentive Plan or any successor plan (the “Plan”) and Restricted Stock Agreements as provided for in the Plan (the “RSAs”), and (II) restricted stock units in respect of shares of IBTX common stock (“RSUs”) granted pursuant to the Plan and Performance Restricted Stock Unit Agreements (the “RSU Agreements”), as provided for in the Plan (collectively, the Awards of Restricted Shares and RSUs are referred to as the “Annual Incentive Bonus Equity Awards”). 50% of the Annual Incentive Bonus Equity Awards shall be in the form of time based vesting Restricted Shares which shall vest in three (3) equal annual installments, and shall otherwise be subject to the terms of the applicable RSA, and 50% of the Annual Incentive Bonus Equity Awards shall be in the form of performance based vesting RSUs, which shall vest in full on the third (3rd) anniversary of the Effective Date based on the achievement of the applicable performance criteria developed by the Committee subject to the terms of the applicable RSU Agreement. Copies of the Plan, and templates of the RSA and RSU Agreement, have been provided to the Executive.

(C)The Annual Incentive Bonus Target Opportunity shall be reviewed at least annually by the Committee for possible increase, as determined in the sole and absolute discretion of the Committee, pursuant to the normal performance review policies for senior executives of the Company. The Annual Incentive Bonus Target Opportunity shall not be decreased during the Employment Period.

(iii)Sign On Bonus. On or as soon as reasonably practicable following the Effective Date (but in no event later than thirty (30) days following the Effective Date), in consideration of the Executive’s continued service to the Company and compliance with the covenants set forth in Section 5 hereof, the Company shall pay to Executive a one-time cash bonus in the amount of $140,000 (the “Sign On Bonus”). In the event that the Executive voluntarily resigns from his position with the Company without Good Reason (as defined below) or the Company terminates the employment of the Executive and this Agreement for Cause (as defined below) on or before the first anniversary of the Effective Date, the Executive shall repay 100% of the Sign On Bonus (in immediately available funds) to the Company within five business days following the date of such termination of employment. The Sign On Bonus shall not be considered Annual Incentive Bonus for any purpose of this Agreement or for purposes of any benefit plan.

(iv)Sign-On Equity Award. On or as soon as reasonably practicable following the Effective Date (but in no event later than thirty (30) days following the Effective Date), in consideration for Executive’s continued service to the Company and compliance with the covenants set forth in Section 5 hereof, the Company shall grant to Executive an award (the “Sign-On Equity Award”) in respect of 10,000 shares of common stock of the Company. The Sign-On Equity Award shall be composed of

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(A) 50% time-based Restricted Shares, which shall vest in four (4) equal annual installments on each of the first four (4) anniversaries of the Effective Date, subject to the terms of the applicable RSA, and (B) 50% performance-based RSUs, which shall vest in full on the fourth (4th) anniversary of the Effective Date based on the achievement of the applicable performance criteria developed by the Committee prior to the Effective Date, subject to the terms of the applicable RSU Agreement. Except as set forth above, the Sign-On Equity Award shall otherwise have terms and conditions consistent with the Company’s standard form of RSA and RSU Agreement.

(v)Other Benefits. During the Employment Period, Executive shall be eligible for participation in retirement, welfare and other benefit plans, practices, policies and programs of the Company, on terms no less favorable than those provided to other senior executives of the Company.

(vi)Expenses. During the Employment Period, Executive shall be entitled to receive reimbursement for all reasonable, documented business expenses incurred by Executive in accordance with the performance of Executive’s duties under this Agreement, subject to the Company’s policies with respect to expense reimbursement.

3.Termination of Employment.

(a)Death or Disability. Executive’s employment shall terminate automatically upon Executive’s death during the Employment Period. If the Company determines in good faith that the Disability (as defined below) of Executive has occurred during the Employment Period, it may provide Executive with written notice in accordance with Section 7(i) of its intention to terminate Executive’s employment. In such event, Executive’s employment with the Company shall terminate effective on the thirtieth (30th) day after receipt of such notice by Executive (the “Disability Effective Date”), provided that, within the thirty (30) days after such receipt, Executive shall not have returned to full-time performance of Executive’s duties. For purposes of this Agreement, “Disability” shall mean Executive’s inability to perform his employment duties due to his permanent and total disability as determined by a physician reasonably acceptable to the Company.

(b)Cause. The Company may terminate Executive’s employment during the Employment Period either with or without Cause. For purposes of this Agreement, “Cause” shall mean (i) Executive’s continued intentional failure or refusal to materially abide by the terms and conditions of this Agreement or perform substantially Executive’s assigned duties (other than as a result of total or partial mental or physical incapacity); (ii) Executive’s engagement in willful misconduct, including without limitation, fraud, embezzlement, theft or dishonesty, in the course of Executive’s employment with the Company; (iii) Executive’s conviction of, or plea of guilty or nolo contendere to a felony or a crime (other than a felony) that involves moral turpitude or a breach of trust or fiduciary duty owed to the Company or any of its affiliates; (iv) a material breach of the restrictive covenants in this Agreement; or (v) a material breach of the Company’s Code

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of Conduct or another policy of the Company applicable to Executive, that does, or could reasonably be expected to, result in material harm to the Company, including reputational harm; provided that no act or failure to act, on the part of Executive, will be considered “willful” or “intentional” unless it is done, or omitted to be done, by Executive in bad faith or without reasonable belief that Executive’s action or omission was in the best interests of the Company and its affiliates or if done based on the direction of the Board or on advice of counsel to the Company. If an action or omission constituting Cause is curable, Executive may be terminated under such clauses only if Executive has not cured such action or omission within thirty (30) days following written notice thereof from the Company.

(c)Good Reason. Executive’s employment may be terminated by Executive with or without Good Reason. For purposes of this Agreement, “Good Reason” shall mean in the absence of the prior written consent of Executive:

(i)the assignment to Executive of any duties or responsibilities inconsistent in any material respect with Executive’s position, status, office, title, reporting relationship, duties or responsibilities as set forth in this Agreement;

(ii)a reduction in the Annual Base Salary or Annual Incentive Bonus Target Opportunity;

(iii)a change by forty-five (45) miles or more in Executive’s principal work location at the Company’s corporate headquarters in McKinney, Texas;

(iv)the failure of the Board to appoint or re-elect Executive to any of the positions specifically provided for in this Agreement; or

(v)any other action or inaction that constitutes a material breach by the Company or any of its affiliates or any of their respective successors of its obligations to Executive under this Agreement;

provided, however, that Executive’s termination of employment shall not be deemed to be for Good Reason unless (A) Executive has notified the Company in writing describing the occurrence of one (1) or more Good Reason events within ninety (90) days after Executive first becomes aware of such occurrence (or should have become aware of such occurrence), (B) the Company fails to cure such Good Reason event within thirty (30) days after its receipt of such written notice and (C) the termination of employment occurs within thirty (30) days following such failure to cure.

(d)Notice of Termination. Any termination of employment by the Company for Cause, or by Executive for Good Reason, shall be communicated by Notice of Termination to the other party hereto given in accordance with Section 7(i). For purposes of this Agreement, the term “Notice of Termination” means a written notice that (i) indicates the specific termination provision in this Agreement relied upon, (ii) to the

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extent applicable, sets forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of Executive’s employment under the provision so indicated, and (iii) if the Date of Termination (as defined herein) is other than the date of receipt of such notice, specifies the Date of Termination (which Date of Termination shall be not more than thirty (30) days after the giving of such notice). The failure by Executive or the Company to set forth in the Notice of Termination any fact or circumstance that contributes to a showing of Good Reason or Cause shall not waive any right of Executive or the Company, respectively, hereunder or preclude Executive or the Company, respectively, from asserting such fact or circumstance in enforcing Executive’s or the Company’s respective rights hereunder.

(e)Date of Termination. For purposes of this Agreement, the term “Date of Termination” means (i) if Executive’s employment is terminated by the Company for Cause, or by Executive for Good Reason, the date of receipt of the Notice of Termination or such later date specified in the Notice of Termination, as the case may be, (ii) if Executive’s employment is terminated by the Company other than for Cause or Disability, the date on which the Company notifies Executive of such termination, (iii) if Executive resigns without Good Reason, the date on which Executive notifies the Company of such termination, or (iv) if Executive’s employment is terminated by reason of death or Disability, the date of Executive’s death or the Disability Effective Date, as the case may be. Notwithstanding the foregoing, in no event shall the Date of Termination occur until Executive experiences a “separation from service” within the meaning of Section 409A of the Internal Revenue Code of 1986, as amended, and the date on which such separation from service takes place shall be the “Date of Termination.”

4.Obligations of the Company upon Termination.

(a)By the Company other than for Cause; by Executive for Good Reason. If, during the Employment Period, the Company shall terminate Executive’s employment other than for Cause or Executive shall terminate employment for Good Reason:

(i)The Company shall pay to Executive the following amounts in a lump sum in cash within thirty (30) days after the Date of Termination: (A) Executive’s Annual Base Salary through the Date of Termination to the extent not theretofore paid, (B) any unpaid Annual Incentive Bonus from any prior completed calendar year, and (C) Executive’s business expenses that are reimbursable pursuant to Section 2(b)(vi) but have not been reimbursed by the Company as of the Date of Termination (the sum of the amounts described in the foregoing subclauses (A), (B), and (C), the “Accrued Obligations”);

(ii)Subject to Section 4(d) and Executive’s compliance with Section 5 (it being agreed that in the event that Executive does not comply with Section 5, Executive shall return any payments previously made pursuant to this Section 4(a)(ii)), Executive shall be entitled to:

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(A)a cash payment equal to the product of (I) the Severance Multiple (as defined below), multiplied by (II) the sum of (x) the Annual Base Salary and (y) the greater of (i) the Annual Incentive Bonus Target Opportunity and (ii) the average Annual Incentive Bonus actually paid to Executive (before any tax withholding) during the three (3) completed years prior to the Date of Termination, for the calendar year in which the Date of Termination occurs, which amount shall be paid not more than sixty (60) days after the Date of Termination (or in installments on such later date or dates as required by Section 409A of the Code) (the “Lump Sum Payment Benefit”);

(B)effective as of the Date of Termination, (I) accelerated vesting in full of any unvested time based-vesting Restricted Stock awards (other than the Sign-On Equity Award), (II) any performance based-vesting RSU awards for which the performance period is complete shall vest in full and any such awards for which the performance period is not complete shall be earned as provided in the applicable RSU Agreement and vest in full, and (III) any vested stock options or stock appreciation rights shall remain exercisable for the full remaining term (collectively, the “LTI Benefit”);

(C)any portion of the Sign-On Equity Award that is unvested as of the Date of Termination shall continue to vest on the regularly scheduled vesting dates subject to Executive’s continued compliance with Section 5;and

(D)a cash payment equal to eighteen (18) months of COBRA premiums for the health care coverage that Executive had in place for him and his dependents, as applicable, on the Date of Termination (the “COBRA Benefit”), which amount shall be paid not more than sixty (60) days after the Date of Termination;

(iii)To the extent not theretofore paid or provided, the Company shall timely pay or provide to Executive any other amounts or benefits required to be paid or provided or which Executive is eligible to receive under any plan, program, policy or practice or contract or agreement of the Company and its affiliates through the Date of Termination (such other amounts and benefits shall be hereinafter referred to as the “Other Benefits”), such Other Benefits to be paid or provided subject to and in accordance with the applicable terms of any such arrangements.

(iv)For purposes of this Section 4, the term “Severance Multiple” shall mean one (1); provided, however, if the Date of Termination is within two (2) years following a Change in Control (as defined in the Plan), then the Severance Multiple shall be two (2).

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(b)Due to Death or Disability. If, during the Employment Period, Executive’s employment shall terminate due to his death or Disability, subject to Section 4(d) and in the event of Executive’s Disability, Executive’s compliance with Section 5 (it being agreed that in the event that Executive does not comply with Section 5, Executive shall return any payments previously made pursuant to Section 4(a)(ii) and 4(a)(iii)), the Company shall pay to Executive or his estate, on the schedule contemplated by Section 4(a), the Accrued Obligations, the Lump Sum Payment Benefit, the LTI Benefit, the COBRA Benefit, and the Other Benefits. In addition, (i) upon a termination due to Disability, the unvested portion of the Sign-On Equity Award shall vest on the regularly scheduled vesting dates subject to Section 4(d) and the Executive’s continued compliance with Section 5 and, (ii) upon a termination due to death, the unvested portion of the Sign-On Equity Award shall vest in full on the date of Executive’s death.

(c)Cause; Other than for Good Reason. If, during the Employment Period, Executive’s employment shall be terminated for Cause or Executive terminates his employment other than for Good Reason, this Agreement shall terminate without further obligations to Executive other than the obligation to pay to Executive (i) the Accrued Obligations through the Date of Termination (excluding payment of any unpaid Annual Incentive Bonus from any prior completed calendar year) and (ii) Other Benefits, in each case to the extent theretofore unpaid. The Accrued Obligations shall be paid to Executive in a lump sum in cash within thirty (30) days of the Date of Termination.

(d)Separation Agreement and General Release. The Company’s obligations to make payments under this Section 4 shall be conditioned on (i) Executive (or, in the event of Executive’s death or Disability, his legal guardian or estate) executing and delivering (and not revoking) a separation agreement and general release (the “Release”) in the form attached as Exhibit A hereto (with such revisions as may be appropriate to reflect changes in law or the successors and assigns of the Company and its affiliates), which Release must become effective not later than sixty (60) days following the Date of Termination. In the event that Executive (or his legal guardian or estate) does not so execute and deliver such release, or in the event that Executive (or his legal guardian or estate) revokes such release, the Company may require Executive (or his legal guardian or estate) to repay any amounts previously provided to him pursuant to this Section 4.

(e)Full Settlement. The payments and benefits provided under this Section 4 shall be in full satisfaction of the obligations of the Company and its affiliates to Executive under this Agreement or any other plan, agreement, policy or arrangement of the Company and its Affiliates upon his termination of employment.

(f)No Mitigation. Executive shall have no obligation to mitigate any severance obligation of the Company under this Agreement by seeking new employment. The Company shall not be entitled to set off or reduce any severance payments owed to Executive under this Agreement by the amount of earnings or benefits received by Executive in future employment.

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(g)Expiration of the Employment Period. Following the end of the Employment Period, if Executive remains employed by the Company or its affiliates, Executive’s employment shall be at-will.

5.Executive Covenants.

(a)Confidentiality.

(i)Generally. Executive has and will have access to and participate in the development of or be acquainted with confidential or proprietary information and trade secrets related to the business of the Company and its subsidiaries and affiliates (collectively, the “Companies”), including but not limited to (A) business plans, operating plans, marketing plans, bid strategies, bid proposals, financial reports, operating data, budgets, wage and salary rates, pricing strategies and information, terms of agreements with suppliers or customers and others, customer lists and customer information, credit files, software programs, reports, correspondence, tapes, discs, tangible property and specifications owned by or used in the Companies’ businesses, operating strengths and weaknesses of the Companies’ officers, directors, employees, agents, suppliers and customers, (B) information pertaining to future developments such as, but not limited to, research and development, future marketing, products, distribution, delivery or merchandising plans or ideas, and potential new distribution or business locations, and (C) other tangible and intangible property, which are used in the business and operations of the Companies but not made publicly available (the “Confidential Information”); provided that the term Confidential Information shall not include information that is available or known to persons or entities outside of the Companies otherwise than as a result of a breach of a confidentiality agreement. Pursuant to his employment with the Companies, Executive agrees that he is or may be provided with access to Confidential Information to which he would not otherwise have access.

(ii)Assignment. Executive hereby assigns to the Companies, in consideration of his employment, all Confidential Information that may be developed by Executive at any time during his employment with the Companies, whether or not made or conceived during working hours, alone or with others, which related, directly or indirectly, to businesses or proposed businesses of the Companies, and Executive agrees that all such Confidential Information shall be the exclusive property of the Companies. Executive shall establish and maintain written records of all such Confidential Information with respect to inventions or similar intellectual property for the benefit of the Companies and shall execute and deliver to the Companies any specific assignments or other documents appropriate to vest title in such Confidential Information in the Companies or to obtain for the Companies legal protection for such Confidential Information.

(iii)Nondisclosure. Executive shall not disclose, use or make known for his or another’s benefit any Confidential Information of the Companies or use

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such Confidential Information in any way except in the best interests of the Companies in the performance of Executive’s duties under this Agreement.

(b)Return of Company’s Property. Immediately upon termination of Executive’s employment with the Company, Executive shall deliver to the Company all Confidential Information, documents, correspondence, notebooks, reports, computer programs, names of full-time and part-time employees and consultants, and all other materials and copies thereof (including computer discs and other electronic media) relating in any way to any business conducted by the Companies in any way obtained by Executive during the period of his employment or engagement with the Company. Immediately upon termination of Executive’s employment with the Company, Executive shall deliver to the Company all tangible property of Company in the possession of Executive, including without limitation, telephones, facsimile machines, computers, leased automobiles and credit cards.

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(c)Noncompetition and Nonsolicitation.

(i)Noncompete. In consideration for (A) the compensation provided to Executive by the Company under this Agreement and (B) the provision of Confidential Information, during the period of Executive’s employment with the Companies and for a period of one (1) year following the termination of Executive’s employment with the Companies for any reason (the “Restricted Period”), Executive shall not, directly or indirectly, without the written consent of the Board, own, manage, operate, control, be employed by in the same or in a similar manner to which Executive is employed by the Companies, consult with or participate in or be connected with any entity owning or having financial interest in, whether direct or indirect, a business entity which is in the same line or lines of business as and competes with any business of the Companies, if such business has a branch or other office of any kind located within fifteen (15) miles of any branch or office of the Companies, which the parties stipulate is a reasonable geographic area because of the scope of the Companies’ operations and Executive’s employment with the Companies. For purposes of this Section 5(c)(i), each of the following activities, without limitation, shall be deemed to constitute proscribed activities during the Restricted Period: to engage in, work with, have an interest in (other than interests of less than 1% in companies with securities traded on a nationally recognized stock exchange or interdealer quotation system), advise, consult, manage, operate, lend money to (other than interests of less than 1% in companies with securities traded on a nationally recognized stock exchange or interdealer quotation system), guarantee the debts or obligations of, or permit one’s name or any part thereof to be used in connection with an enterprise or endeavor, either individually, in partnership or in conjunction with any person or persons, firm, association, company or corporation, whether as principal, director, agent, shareholder, partner, employee, consultant or in any other manner whatsoever. Executive may not avoid the purpose and intent of this Section 5(c) by engaging in conduct within the geographically limited area from a remote location through means such as telecommunications, written correspondence, computer generated or assisted communications, or other similar methods.

(ii)Nonsolicitation. During the Restricted Period, Executive shall not, directly or indirectly, (A) solicit for employment, or advise or recommend any entity to employ or solicit for employment, any person who is, or at any time within the one (1)year period immediately prior to Executive’s last day of employment was, an employee of the Company, or (B) solicit the banking business of, or conduct any banking business with, any Restricted Customer of the Companies. For purposes of this Agreement, “Restricted Customer” means any individual, corporation, limited liability company, association, partnership, estate, trust, or any other entity or organization to which the Companies marketed, attempted to or actually promoted or provided products or services to at any time during the one (1)year period immediately prior to Executive’s last day of

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employment, and with respect to which Executive has participated in any efforts related to the marketing, negotiation or provision of products or services, had contact with or supervised employees who had contact with, or received Confidential Information about, within the one (1)year period immediately prior to Executive’s last day of employment. This Section 5(c)(ii) shall be geographically limited to wherever any Restricted Customer can be found or is available for solicitation or to do business with, which the parties stipulate is a reasonable geographic area because of the scope of the Companies’ operations and Executive’s employment with the Companies. Executive may not avoid the purpose and intent of this Section 5(c)(ii) by engaging in conduct within the geographically limited area from a remote location through means such as telecommunications, written correspondence, computer generated or assisted communications, or other similar methods.

(iii)Reasonable and Necessary. Executive agrees that the above covenants are reasonable and necessary agreements for the protection of the business interests covered in the fully enforceable, ancillary agreements set forth in this Agreement.

(d)Nondisparagement. From and following the Effective Date, Executive shall not make, either directly or by or through another person, any oral or written negative, disparaging or adverse statements or representations of or concerning the Companies, any of their clients or businesses or any of their current or former directors, officers or employees; provided, however, that, subject to Section 5(a), nothing herein shall prohibit Executive from disclosing truthful information if legally required (whether by oral questions, interrogatories, requests for information or documents, subpoena, civil investigative demand or similar process). In the event of Executive’s termination of employment, the Company shall instruct its senior executive officers not to make, either directly or by or through another person, any oral or written negative, disparaging or adverse statements or representations of or concerning Executive or any of his agents or related parties; provided, however, that nothing herein shall prohibit any such individuals from disclosing truthful information if legally required (whether by oral questions, interrogatories, requests for information or documents, subpoena, civil investigative demand or similar process).

(e)Cooperation. Executive agrees that following Executive’s termination of employment, upon the reasonable request of the Company or any of its affiliates, Executive shall use reasonable efforts to assist and cooperate with the Company or any of its affiliates in connection with the defense or prosecution of any claim that may be made against or by the Company or any of its affiliates, or in connection with any ongoing or future investigation or dispute or claim of any kind involving the Company or any of its affiliates, including any proceedings before any arbitral, administrative, regulatory, judicial, legislative or other body or agency; provided that the Company shall provide Executive with reasonable compensation for the time actually expended in such endeavors (at an hourly rate based on the Annual Base Salary) and shall reimburse Executive’s

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reasonable business expenses incurred in connection with such cooperation to the extent that such expenses would have been reimbursed under Section 2(b)(v) had they been incurred during the Employment Period.

(f)Trade Secrets; Whistleblower Rights. The Company hereby informs Executive that, notwithstanding any provision of this Agreement to the contrary, an individual may not be held criminally or civilly liable under any federal or state trade secret law for the disclosure of a trade secret that (i) is made in confidence to a federal, state, or local government official, either directly or indirectly, or to an attorney, and solely for the purpose of reporting or investigating a suspected violation of law, or (ii) is made in a complaint or other document that is filed under seal in a lawsuit or other proceeding. Further, an individual who files a lawsuit for retaliation by an employer for reporting a suspected violation of law may disclose the employer’s trade secrets to the attorney and use the trade secret information in the court proceeding if the individual files any document containing the trade secret under seal and does not disclose the trade secret, except pursuant to court order. In addition, notwithstanding anything in this Agreement to the contrary, nothing in this Agreement shall impair Executive’s rights under the whistleblower provisions of any applicable federal law or regulation or, for the avoidance of doubt, limit Executive’s right to receive an award for information provided to any government authority under such law or regulation.

(g)Acknowledgments and Remedies.

(i)Executive acknowledges that the Company and its affiliates have (A) expended and will continue to expend substantial amounts of time, money and effort to develop business strategies, employee, customer and other relationships and goodwill to build an effective organization, and (B) a legitimate business interest in and right to protect their Confidential Information, goodwill and employee, customer and other relationships.

(ii)Executive understands that the covenants contained in this Section 5 may limit Executive’s ability to earn a livelihood in a business similar to the business of the Company, and Executive represents that his experience and capabilities are such that he has other opportunities to earn a livelihood and adequate means of support for himself and his dependents.

(iii)Any termination of (A) Executive’s employment, (B) the Employment Period or (C) this Agreement shall have no effect on the continuing obligations of Executive under this Section 5 or operation of this Section 5.

(iv)Executive acknowledges that a violation by Executive of any of the covenants contained in this Section 5 would cause irreparable damage to the Companies in an amount that would be material but not readily ascertainable, and that any remedy at law (including the payment of damages) would be inadequate. Accordingly, Executive agrees that, notwithstanding any provision of this Agreement to the contrary, in addition to any other damages it is able to show, in

13

the event of a material breach by Executive of any of the covenants contained in this Section 5, the Companies shall be entitled (without the necessity of showing economic loss or other actual damage) to (A) cease payment of the compensation and benefits contemplated by Section 4 to the extent not previously paid or provided (including ceasing vesting of outstanding equity awards), (B) the prompt return by Executive of any portion of such compensation and the value of such benefits previously paid or provided (including forfeiture of any equity awards that vested pursuant to Section 4 or the repayment of the value of any equity awards that vested pursuant to Section 4 that have been exercised or settled, as applicable) and (C) injunctive relief (including temporary restraining orders, preliminary injunctions and permanent injunctions), without posting a bond, in any court of competent jurisdiction for any actual or threatened breach of any of the covenants set forth in this Section 5 in addition to any other legal or equitable remedies they may have. The preceding sentence shall not be construed as a waiver of the rights that the Companies may have for damages under this Agreement or otherwise, and all such rights shall be unrestricted. The Restricted Period shall be tolled during (and shall be deemed automatically extended by) any period during which Executive is in violation of the provisions of Section 5(c) or (d), as applicable. In the event that a court of competent jurisdiction determines that any provision of this Section 5 is invalid or more restrictive than permitted under the governing law of such jurisdiction, then, only as to enforcement of this Section 5 within the jurisdiction of such court, such provision shall be interpreted and enforced as if it provided for the maximum restriction permitted under such governing law.

6.Treatment of Certain Payments

(a)Anything in this Agreement to the contrary notwithstanding, in the event the Accounting Firm (as defined below) shall determine that receipt of all Payments (as defined below) would subject Executive to the excise tax under Section 4999 of the Code, the Accounting Firm shall determine whether to reduce any of the Payments paid or payable pursuant to this Agreement (the “Agreement Payments”) so that the Parachute Value (as defined below) of all Payments, in the aggregate, equals the Safe Harbor Amount (as defined below). The Agreement Payments shall be so reduced only if the Accounting Firm determines that Executive would have a greater Net After-Tax Receipt (as defined below) of aggregate Payments if the Agreement Payments were so reduced. If the Accounting Firm determines that Executive would not have a greater Net After-Tax Receipt (as defined below) of aggregate Payments if the Agreement Payments were so reduced, Executive shall receive all of the Agreement Payments to which Executive is entitled hereunder.

(b)If the Accounting Firm determines that the aggregate Agreement Payments should be reduced so that the Parachute Value of all Payments, in the aggregate, equals the Safe Harbor Amount, the Company shall promptly give Executive notice to that effect and a copy of the detailed calculation thereof. All determinations

14

made by the Accounting Firm under this Section 6 shall be binding upon the Company and Executive and shall be made as soon as reasonably practicable following an Agreement Payment becoming due. For purposes of reducing the Agreement Payments so that the Parachute Value of all Payments, in the aggregate, equals the Safe Harbor Amount, only amounts payable under this Agreement (and no other Payments) shall be reduced. The reduction of the amounts payable hereunder, if applicable, shall be made by reducing the payments and benefits under the following sections in the following order: (i) cash payments that may not be valued under Treas. Reg. § 1.280G-1, Q&A-24(c) (“24(c)”), (ii) equity-based payments that may not be valued under 24(c), (iii) cash payments that may be valued under 24(c), (iv) equity-based payments that may be valued under 24(c) and (v) other types of benefits. With respect to each category of the foregoing, such reduction shall occur first (1st) with respect to amounts that are not “deferred compensation” within the meaning of Section 409A of the Code and next with respect to payments that are deferred compensation, in each case, beginning with payments or benefits that are to be paid the farthest in time from the Accounting Firm’s determination. All fees and expenses of the Accounting Firm shall be borne solely by the Company.

(c)To the extent requested by Executive, the Company shall cooperate with Executive in good faith in valuing, and the Accounting Firm shall take into account the value of, services provided or to be provided by Executive (including Executive’s agreeing to refrain from performing services pursuant to a covenant not to compete or similar covenant), before, on or after the date of a change in ownership or control of the Company (within the meaning of Q&A2(b) of the final regulations under Section 280G of the Code), such that payments in respect of such services may be considered reasonable compensation within the meaning of Q&A9 and Q&A40 to Q&A44 of the final regulations under Section 280G of the Code and/or exempt from the definition of the term “parachute payment” within the meaning of Q&A2(a) of the final regulations under Section 280G of the Code in accordance with Q&A5(a) of the final regulations under Section 280G of the Code.

(d)The following terms shall have the following meanings for purposes of this Section 6:

(i)“Accounting Firm” shall mean a nationally recognized certified public accounting firm or other professional organization that is a certified public accounting firm recognized as an expert in determinations and calculations for purposes of Section 280G of the Code that is selected by the Company prior to a Change in Control for purposes of making the applicable determinations hereunder and is reasonably acceptable to Executive, which firm shall not, without Executive’s consent, be a firm serving as accountant or auditor for the individual, entity or group effecting the Change in Control.

(ii)“Net After-Tax Receipt” shall mean the present value (as determined in accordance with Sections 280G(b)(2)(A)(ii) and 280G(d)(4) of the

15

Code) of a Payment net of all taxes imposed on Executive with respect thereto under Sections 1 and 4999 of the Code and under applicable state and local laws, determined by applying the highest marginal rate under Section 1 of the Code and under state and local laws which applied to Executive’s taxable income for the immediately preceding taxable year, or such other rate(s) as the Accounting Firm determines to be likely to apply to Executive in the relevant tax year(s).

(iii)“Parachute Value” of a Payment shall mean the present value as of the date of the change of control for purposes of Section 280G of the Code of the portion of such Payment that constitutes a “parachute payment” under Section 280G(b)(2) of the Code, as determined by the Accounting Firm for purposes of determining whether and to what extent the excise tax under Section 4999 of the Code will apply to such Payment.

(iv)“Payment” shall mean any payment or distribution in the nature of compensation (within the meaning of Section 280G(b)(2) of the Code) to or for the benefit of Executive, whether paid or payable pursuant to this Agreement or otherwise.

(v)“Safe Harbor Amount” shall mean 2.99 multiplied by Executive’s “base amount,” within the meaning of Section 280G(b)(3) of the Code.

7.Miscellaneous.

(a)Governing Law; Venue. This Agreement shall be governed by and construed in accordance with the laws of the State of Texas, without reference to principles of conflict of laws. The parties irrevocably submit to the jurisdiction of any state or federal court sitting in or for Collin County, Texas with respect to orders in aid or enforcement of arbitration awards and injunctive relief, and each party irrevocably agrees that all claims in respect of such dispute or proceeding shall be heard and determined in such courts. The parties hereby irrevocably waive, to the fullest extent permitted by law, any objection that they may now or hereafter have to the venue of any dispute arising out of or relating to this Agreement or the transactions contemplated hereby brought in such court or any defense of inconvenient forum for the maintenance of such dispute or proceeding. Each party agrees that a judgment in any such dispute may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law. THE PARTIES HEREBY WAIVE A TRIAL BY JURY IN ANY ACTION, PROCEEDING, CLAIM OR COUNTER CLAIM BROUGHT OR ASSERTED BY EITHER OF THE PARTIES HERETO AGAINST THE OTHER ON ANY MATTERS WHATSOEVER ARISING OUT OF OR IN ANY WAY RELATED TO THIS AGREEMENT.

(b)Dispute Resolutions. Any and all disputes that arise out of or relate to the provisions of this Agreement or the alleged breach thereof (other than orders in aid or enforcement of arbitration awards and injunctive relief) shall be resolved by arbitration in accordance with the Federal Arbitration Act and in accordance with the Employment Arbitration Rules of the American Arbitration Association (the “AAA”) before a single

16

arbitrator who shall be selected in accordance with the AAA rules. The arbitrator must have at least ten (10) years’ experience in employment matters. Arbitration will be conducted in Collin County, Texas. Judgment may be entered upon the final award of the arbitrator.

(c)Indemnification. The Company shall, to the maximum extent to which it is empowered by its governing documents and the laws of the State of Texas, defend, indemnify and hold harmless Executive from and against any and all demands, claims and causes of action made against Executive concerning or relating to his service, actions or omissions on behalf of the Company or its affiliates as an employee, director, officer, or agent, including, without limitation, holding Executive harmless for any losses, costs and expenses in connection with any such demand, claim, or cause of action. Executive shall be covered by directors and officers insurance that the Company provides from time to time to its directors and executives, on terms no less favorable than those provided to similarly situated executives, both during Executive’s employment by the Company and for such period thereafter that the Company provides insurance coverage to its similarly situated former executives.

(d)Interpretation. The captions of this Agreement are not part of the provisions hereof and shall have no force or effect. For purposes of this Agreement, the term “including” shall mean “including, without limitation” and the word “or” shall be understood to mean “and/or.”

(e)Amendments; No Waiver. This Agreement may not be amended or modified otherwise than by a written agreement executed by the parties hereto or their respective successors and legal representatives. Executive’s or the Company’s failure to insist upon strict compliance with any provision of this Agreement or the failure to assert any right Executive or the Company may have hereunder shall not be deemed to be a waiver of such provision or right or any other provision or right of this Agreement.

(f)Survival. The provisions of this Agreement that by their terms call for performance subsequent to the termination of either Executive’s employment or this Agreement (including the terms of Sections 4, 5, 6 and 7(c)) shall survive such termination.

(g)Invalidity. The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement.

(h)Successors. This Agreement is personal to Executive and without the prior written consent of the Company shall not be assignable by Executive otherwise than by will or the laws of descent and distribution. This Agreement shall inure to the benefit of and be enforceable by Executive’s legal representatives. This Agreement shall inure to the benefit of and be binding upon the Company and its successors and assigns. As used in this Agreement, “Company” shall mean the Company as hereinbefore defined and any

17

successor to its business and/or assets as aforesaid that assumes and agrees to perform this Agreement by operation of law, or otherwise.

(i)Notices. All notices and other communications hereunder shall be in writing and shall be given by hand delivery to the other party or by registered or certified mail, return receipt requested, postage prepaid, addressed as follows:

If to Executive:    At the most recent address
on file at the Company.

If to the Company:    Independent Bank Group, Inc.
7777 Henneman Way
McKinney, Texas 75070
Attention: Chief Executive Officer

or to such other address as either party shall have furnished to the other in writing in accordance herewith. Notice and communications shall be effective when actually received by the addressee.

(j)Tax Withholding. The Company may withhold from any amounts payable under this Agreement such federal, state, local or foreign taxes as shall be required to be withheld pursuant to any applicable law or regulation.

(k)Section 409A.

(i)General. It is intended that payments and benefits made or provided under this Agreement shall not result in penalty taxes or accelerated taxation pursuant to Section 409A of the Code. Any payments that qualify for the “short-term deferral” exception, the separation pay exception or another exception under Section 409A of the Code shall be paid under the applicable exception. For purposes of the limitations on nonqualified deferred compensation under Section 409A of the Code, each payment of compensation under this Agreement shall be treated as a separate payment of compensation. All payments to be made upon a termination of employment under this Agreement may only be made upon a “separation from service” under Section 409A of the Code to the extent necessary in order to avoid the imposition of penalty taxes on Executive pursuant to Section 409A of the Code. In no event may Executive, directly or indirectly, designate the calendar year of any payment under this Agreement, and to the extent required by Section 409A of the Code, any payment that may be paid in more than one (1) taxable year shall be paid in the later taxable year.

(ii)Reimbursements and In-Kind Benefits. Notwithstanding anything to the contrary in this Agreement, all reimbursements and in-kind benefits provided under this Agreement that are subject to Section 409A of the Code shall be made in accordance with the requirements of Section 409A of the Code, including, where applicable, the requirement that (A) any reimbursement is for

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expenses incurred during Executive’s lifetime (or during a shorter period of time specified in this Agreement); (B) the amount of expenses eligible for reimbursement, or in-kind benefits provided, during a calendar year may not affect the expenses eligible for reimbursement, or in-kind benefits to be provided, in any other calendar year; (C) the reimbursement of an eligible expense will be made no later than the last day of the calendar year following the year in which the expense is incurred; and (D) the right to reimbursement or in-kind benefits is not subject to liquidation or exchange for another benefit.

(iii)Delay of Payments. Notwithstanding any other provision of this Agreement to the contrary, if Executive is considered a “specified employee” for purposes of Section 409A of the Code (as determined in accordance with the methodology established by the Company and its affiliates as in effect on the Date of Termination), any payment that constitutes nonqualified deferred compensation within the meaning of Section 409A of the Code that is otherwise due to Executive under this Agreement during the six (6)-month period immediately following Executive’s separation from service on account of Executive’s separation from service shall instead be paid, with interest (based on the rate in effect for the month in which Executive’s separation from service occurs), on the first business day of the seventh (7th) month following his separation from service (the “Delayed Payment Date”), to the extent necessary to prevent the imposition of tax penalties on Executive under Section 409A of the Code. If Executive dies during the postponement period, the amounts and entitlements delayed on account of Section 409A of the Code shall be paid to the personal representative of his estate on the first to occur of the Delayed Payment Date or thirty (30) calendar days after the date of Executive’s death.

(l)Effective Date; Entire Agreement. This Agreement shall become effective as of the date hereof. This Agreement shall constitute the entire agreement between the parties and terminates and supersedes any and all prior agreements and understandings (whether written or oral) between the parties with respect to the subject matter of this Agreement ; provided, however, that the covenants set forth in Section 5 of this Agreement shall be in addition to, and shall not supersede, any restrictive covenants to which Executive is otherwise subject under any other plan, agreement or arrangement of the Companies.

(m)Counterparts. This Agreement may be executed in several counterparts, each of which shall be deemed to be an original but all of which together shall constitute one and the same instrument.

(n)Representations. Executive represents and warrants to the Company that Executive (i) is not violating and will not violate any contractual, legal, or fiduciary obligations or burdens to which Executive is subject by entering into this Agreement or by providing services for the Company; (ii) is under no contractual, legal, or fiduciary obligation or burden that will interfere with Executive’s ability to perform services for the

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Company; and (iii) has no previous convictions under any law, disputes with regulatory agencies, or other similar circumstances that would reasonably be expected to have an adverse effect on the Company. Executive shall not disclose to the Company or induce the Company to use any confidential or proprietary information or material belonging to any previous employer or others.

(o)Prohibition Against Certain Payments. Notwithstanding any other provision to the contrary herein, the Company shall not be required to make any payment to the Executive hereunder if such payment would be a “golden parachute payment” as defined in 12 CFR § 359 unless such payment can be made in compliance with such regulation.

[Remainder of Page Intentionally Left Blank]

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IN WITNESS WHEREOF, Executive has hereunto set Executive’s hand and, the Company has caused these presents to be executed in its name and on its behalf, all as of the day and year first above written.

INDEPENDENT BANK

By:    _/s/ David R. Brooks__________________

    David R. Brooks

    Chairman of the Board and CEO

INDEPENDENT BANK GROUP, INC.

By:    ___/s/ David R. Brooks_________________David R. Brooks

    Chairman of the Board and CEO

EXECUTIVE

_/s/ John G. Turpen________________________
John G. Turpen

[Signature Page to Employment Agreement]

Exhibit A

FORM OF RELEASE

THIS RELEASE (this “Release”) is entered into between John G. Turpen (“Executive”) and Independent Bank Group, Inc. (the “Company”) for the benefit of the Company and its affiliates. The entering into and non-revocation of this Release is a condition to Executive’s right to receive certain payments and benefits under Section 4 of the Employment Agreement entered into by and between Executive and the Company, dated as of July __, 2021 (the “Employment Agreement”). Capitalized terms used and not defined herein shall have the meaning provided in the Employment Agreement.

Accordingly, Executive and the Company agree as follows.

1.    General Release and Waiver of Claims. In consideration for the payments and other benefits provided to Executive by the Employment Agreement, to which Executive is not otherwise entitled, and the sufficiency of which Executive acknowledges, Executive represents and agrees, as follows:

(a)    Release. Executive, for himself, his heirs, administrators, representatives, executors, successors and assigns (collectively “Releasers”), hereby irrevocably and unconditionally releases, acquits and forever discharges and agrees not to sue the Company or any of its subsidiaries, divisions, affiliates and related entities and its current and former directors, officers, shareholders, trustees, employees, consultants, independent contractors, representatives, agents, servants, successors and assigns and all persons acting by, through or under or in concert with any of them (collectively “Releasees”), from any and all claims, rights and liabilities up to and including the date of this Release arising from or relating to Executive’s employment with, or termination of employment from, the Company, under the Employment Agreement and from any and all charges, complaints, claims, liabilities, obligations, promises, agreements, controversies, damages, actions, causes of actions, suits, rights, demands, costs, losses, debts and expenses of any nature whatsoever, known or unknown, suspected or unsuspected and any claims of wrongful discharge, breach of contract, implied contract, promissory estoppel, defamation, slander, libel, tortious conduct, employment discrimination or claims under any federal, state or local employment statute, law, order or ordinance, including any rights or claims arising under Title VII of the Civil Rights Act of 1964, as amended, the Age Discrimination in Employment Act of 1967, as amended, 29 U.S.C. § 621 et seq. (“ADEA”), or any other federal, state or municipal ordinance relating to discrimination in employment. Nothing contained herein shall restrict the parties’ rights to enforce the terms of this Release.

(b)    Proceedings; Whistleblower Rights. To the maximum extent permitted by law, Executive agrees that he has not filed, nor will he ever file, a lawsuit asserting any claims that are released by this Release, or to accept any benefit from any lawsuit that might be filed by another person or government entity based in whole or in part on any event, act, or omission that is the subject of this Release. Notwithstanding the foregoing, nothing in this Release shall impair Executive’s rights under the whistleblower provisions of any applicable federal law or regulation or, for the avoidance of doubt, limit Executive’s right to receive an award for information provided to any government authority under such law or regulation.

(c)    Exclusions. This Release specifically excludes Executive’s rights and the Company’s obligations under Section 4 of the Employment Agreement. Excluded from this Release are: (i) any claims that cannot be waived by law; (ii) Executive’s rights to receive any payments or benefits under Section 4 of the Employment Agreement; (iii) any rights Executive may have to receive vested amounts under any of the Company’s employee benefit plans and/or pension plans or programs; (iv) Executive’s rights in and to any equity or ownership interest that Executive continues to hold following his termination of employment; (v) Executive’s rights to medical benefit continuation coverage pursuant to federal law (COBRA); (vi) any rights or claims that the law does not allow to be released and/or waived by private agreement; (vii) any rights or claims that are based on events occurring after the date on which Executive signs this Release; or (viii) any claims to indemnification or insurance coverage, including but not limited to “D&O coverage”, that Executive may have with respect to any claims made or threatened against Executive in Executive’s capacity as a director, officer or employee of the Company or the Releasees. Nothing contained in this Release shall release Executive from his obligations, including any obligations to abide by the covenants set forth in Section 5 of the Employment Agreement and any other restrictive covenants applicable to Executive that continue or are to be performed following termination of employment.

(d)    EEOC Matters. The parties agree that this Release shall not affect the rights and responsibilities of the U.S. Equal Employment Opportunity Commission (the “EEOC”) to enforce ADEA and other laws. In addition, the parties agree that this Release shall not be used to justify interfering with Executive’s protected right to file a charge or participate in an investigation or proceeding conducted by the EEOC. The parties further agree that Executive knowingly and voluntarily waives all rights or claims (that arose prior to Executive’s execution of this Release) the Releasers may have against the Releasees, or any of them, to receive any benefit or remedial relief (including, but not limited to, reinstatement, back pay, front pay, damages, attorneys’ fees, experts’ fees) as a consequence of any investigation or proceeding conducted by the EEOC.

2.    Acknowledgements. Executive acknowledges that the Company has specifically advised him of the right to seek the advice of an attorney concerning the terms and conditions of this Release. Executive further acknowledges that he has been furnished with a copy of this Release, and he has been afforded [twenty-one (21)/forty-five (45)] days in which to consider the terms and conditions set forth above prior to this Release. By executing this Release, Executive affirmatively states that he has had sufficient and reasonable time to review this Release and to consult with an attorney concerning his legal rights prior to the final execution of this Release. Executive further agrees that he has carefully read this Release and fully understands its terms. Executive understands that he may revoke this Release within seven (7) days after signing this Release. Revocation of this Release must be made in writing and must be received by the General Counsel at the Company, 7777 Henneman Way, McKinney, Texas 75070 within the time period set forth above.

3.    Governing Law. This Release shall be governed by and construed in accordance with the laws of the state of Texas, without giving effect to any choice of law or conflicting provision or rule (whether of the state of Texas or any other jurisdiction) that would cause the laws of any jurisdiction other than the state of Texas to be applied. In furtherance of the foregoing, the internal law

A-2

of the state of Texas shall control the interpretation and construction of this Release, even if under such jurisdiction’s choice of law or conflict of law analysis, the substantive law of some other jurisdiction would ordinarily apply. The provisions of this Release are severable, and if any part or portion of it is found to be unenforceable, all other parts and provisions shall remain fully valid and enforceable.

4.    Effectiveness. This Release shall become effective and enforceable on the eighth day following its execution by Executive, provided that he does not exercise his right of revocation as described above. If Executive fails to sign and deliver this Release or revokes his signature, this Release shall be without force or effect, and Executive shall not be entitled to the payments and benefits of Section 4 of the Employment Agreement.

[Remainder of Page Intentionally Left Blank]

A-3

EXECUTIVE ACKNOWLEDGES THAT EXECUTIVE HAS READ THIS RELEASE AND THAT EXECUTIVE FULLY KNOWS, UNDERSTANDS AND APPRECIATES ITS CONTENTS, AND THAT EXECUTIVE HEREBY EXECUTES THE SAME AND MAKES THIS RELEASE AND THE RELEASE PROVIDED FOR HEREIN VOLUNTARILY AND OF EXECUTIVE’S OWN FREE WILL.

Date:	July 13, 2021	/s/ John G. Turpen
		John G. Turpen

A-4

EX-31.1

Exhibit 31.1

I, David R. Brooks, certify that:

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:

(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information related to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

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:

(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:	October 28, 2021	/s/ David R. Brooks
		David R. Brooks Chairman and Chief Executive Officer

EX-31.2

Exhibit 31.2

I, Michelle S. Hickox, certify that:

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:

(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information related to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

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:

(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:	October 28, 2021	/s/ Michelle S. Hickox
		Michelle S. Hickox Executive Vice President and Chief Financial Officer

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350 (AS ADOPTED

PURSUANT TO SECTION 906 OF THE

SARBANES-OXLEY ACT OF 2002)

In connection with the Quarterly Report of Independent Bank Group, Inc. (the “Company”) on Form 10-Q for the period ending September 30, 2021 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, David R. Brooks, Chairman and Chief Executive Officer of the Company, certify to my knowledge and in my capacity as an officer of the Company, pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company as of the dates and for the periods expressed in the Report.

IN WITNESS WHEREOF, the undersigned has executed this Certificate, effective as of October 28, 2021.

/s/ David R. Brooks

David R. Brooks

Chairman and Chief Executive Officer

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350 (AS ADOPTED

PURSUANT TO SECTION 906 OF THE

SARBANES-OXLEY ACT OF 2002)

In connection with the Quarterly Report of Independent Bank Group, Inc. (the “Company”) on Form 10-Q for the period ending September 30, 2021 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Michelle S. Hickox, Executive Vice President and Chief Financial Officer of the Company, certify to my knowledge and in my capacity as an officer of the Company, pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company as of the dates and for the periods expressed in the Report.

IN WITNESS WHEREOF, the undersigned has executed this Certificate, effective as of October 28, 2021.

/s/ Michelle S. Hickox

Michelle S. Hickox

Executive Vice President and Chief Financial Officer

XML

Cover - shares	9 Months Ended
	Sep. 30, 2021	Oct. 26, 2021
Cover [Abstract]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Sep. 30, 2021
Document Transition Report	false
Entity File Number	001-35854
Entity Registrant Name	Independent Bank Group, Inc.
Entity Incorporation, State or Country Code	TX
Entity Tax Identification Number	13-4219346
Entity Address, Address Line One	7777 Henneman Way
Entity Address, City or Town	McKinney,
Entity Address, State or Province	TX
Entity Address, Postal Zip Code	75070-1711
City Area Code	972
Local Phone Number	562-9004
Title of 12(b) Security	Common Stock, par value $0.01 per share
Trading Symbol	IBTX
Security Exchange Name	NASDAQ
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Large Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		42,936,460
Amendment Flag	false
Document Fiscal Year Focus	2021
Document Fiscal Period Focus	Q3
Entity Central Index Key	0001564618
Current Fiscal Year End Date	--12-31

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Consolidated Balance Sheets - USD ($) $ in Thousands	Sep. 30, 2021	Dec. 31, 2020
Assets
Cash and due from banks	$ 248,603	$ 250,485
Interest-bearing deposits in other banks	2,811,223	1,563,502
Cash and cash equivalents	3,059,826	1,813,987
Certificates of deposit held in other banks	3,245	4,482
Securities available for sale, at fair value	1,781,574	1,153,693
Loans held for sale (includes $27,331 and $71,769 carried at fair value, respectively)	31,471	82,647
Loans, net of allowance for credit losses of $150,281 and $87,820, respectively	12,291,233	12,978,238
Premises and equipment, net	262,766	249,467
Other real estate owned	0	475
Federal Home Loan Bank (FHLB) of Dallas stock and other restricted stock	21,541	20,305
Bank-owned life insurance (BOLI)	234,269	220,428
Deferred tax asset	22,659	3,933
Goodwill	994,021	994,021
Other intangible assets, net	78,635	88,070
Other assets	136,985	143,730
Total assets	18,918,225	17,753,476
Deposits:
Noninterest-bearing	4,913,580	4,164,800
Interest-bearing	10,610,602	10,234,127
Total deposits	15,524,182	14,398,927
FHLB advances	350,000	375,000
Other borrowings	281,697	312,175
Junior subordinated debentures	54,171	54,023
Other liabilities	141,482	97,980
Total liabilities	16,351,532	15,238,105
Commitments and contingencies	0	0
Stockholders’ equity:
Preferred stock (0 and 0 shares outstanding, respectively)	0	0
Common stock (42,941,715 and 43,137,104 shares outstanding, respectively)	429	431
Additional paid-in capital	1,942,783	1,934,807
Retained earnings	600,987	543,800
Accumulated other comprehensive income	22,494	36,333
Total stockholders’ equity	2,566,693	2,515,371
Total liabilities and stockholders’ equity	$ 18,918,225	$ 17,753,476

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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

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Consolidated Statements of Income - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020
Interest income:
Interest and fees on loans	$ 134,540	$ 144,138	$ 412,312	$ 434,648
Interest on taxable securities	6,059	4,507	16,068	14,499
Interest on nontaxable securities	2,077	2,126	6,207	6,359
Interest on interest-bearing deposits and other	1,356	1,027	3,021	3,938
Total interest income	144,032	151,798	437,608	459,444
Interest expense:
Interest on deposits	10,847	15,679	35,341	62,077
Interest on FHLB advances	463	714	1,533	3,629
Interest on other borrowings	3,640	2,928	11,743	8,408
Interest on junior subordinated debentures	437	470	1,320	1,710
Total interest expense	15,387	19,791	49,937	75,824
Net interest income	128,645	132,007	387,671	383,620
Provision for credit losses	0	7,620	(9,000)	39,122
Net interest income after provision for credit losses	128,645	124,387	396,671	344,498
Noninterest income:
Service charges on deposit accounts	2,619	2,173	7,130	6,881
Investment management fees	2,210	1,924	6,339	5,556
Mortgage banking revenue	5,982	14,722	18,714	27,726
Gain on sale of loans	0	0	26	647
Gain on sale of other real estate	63	0	63	37
Gain on sale of securities available for sale	0	0	0	382
(Loss) gain on sale and disposal of premises and equipment	(41)	34	(61)	311
Increase in cash surrender value of BOLI	1,282	1,335	3,841	4,007
Other	4,781	4,977	15,379	19,604
Total noninterest income	16,896	25,165	51,431	65,151
Noninterest expense:
Salaries and employee benefits	46,572	42,253	134,068	115,341
Occupancy	10,258	9,717	30,716	29,132
Communications and technology	5,479	5,716	16,596	17,193
FDIC assessment	1,327	1,597	4,499	5,338
Advertising and public relations	266	492	880	1,965
Other real estate owned expenses, net	(8)	43	4	459
Impairment of other real estate	0	46	0	784
Amortization of other intangible assets	3,145	3,175	9,435	9,526
Professional fees	4,546	2,871	11,972	9,266
Acquisition expense, including legal	0	47	0	16,225
Other	8,987	7,452	25,528	25,678
Total noninterest expense	80,572	73,409	233,698	230,907
Income before taxes	64,969	76,143	214,404	178,742
Income tax expense	12,629	16,068	43,841	35,807
Net income	$ 52,340	$ 60,075	$ 170,563	$ 142,935
Basic earnings per share (usd per share)	$ 1.22	$ 1.39	$ 3.95	$ 3.32
Diluted earnings per share (usd per share)	$ 1.21	$ 1.39	$ 3.95	$ 3.31

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Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020
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

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Consolidated Statements of Changes in Stockholders' Equity - USD ($) $ in Thousands	Total	Preferred Stock $0.01 Par	Common Stock $0.01 Par Value	Additional Paid in Capital	Retained Earnings	Accumulated Other Comprehensive Income	Cumulative effect of change in accounting principles	Cumulative effect of change in accounting principles Retained Earnings	Adjusted beginning balance	Adjusted beginning balance Common Stock $0.01 Par Value	Adjusted beginning balance Additional Paid in Capital	Adjusted beginning balance Retained Earnings	Adjusted beginning balance Accumulated Other Comprehensive Income
Beginning balance at Dec. 31, 2019	$ 2,339,773	$ 0	$ 430	$ 1,926,359	$ 393,674	$ 19,310
Beginning balance (shares) at Dec. 31, 2019			42,950,228
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	142,935				142,935
Other comprehensive income (loss), net of tax	19,806					19,806
Common stock repurchased (shares)			(2,951)
Common stock repurchased	(159)		$ 0		(159)
Restricted stock forfeited (shares)			(7,270)
Restricted stock forfeited	0
Restricted stock granted (shares)			304,790
Restricted stock granted	0		$ 2	(2)
Stock based compensation expense	6,333			6,333
Cash dividends ($0.34 and $0.96 per share for the three and nine months ended September 30, 2021 and $0.25 and $0.75 per share for the three and nine months ended September 30, 2020)	(32,315)				(32,315)
Ending balance at Sep. 30, 2020	2,476,373	0	$ 432	1,932,690	504,135	39,116
Ending balance (shares) at Sep. 30, 2020			43,244,797
Beginning balance at Jun. 30, 2020	2,424,960	0	$ 430	1,930,722	454,878	38,930
Beginning balance (shares) at Jun. 30, 2020			43,041,119
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	60,075				60,075
Other comprehensive income (loss), net of tax	186					186
Common stock repurchased (shares)			(291)
Common stock repurchased	(13)				(13)
Restricted stock forfeited (shares)			(6,644)
Restricted stock forfeited	0
Restricted stock granted (shares)			210,613
Restricted stock granted	0		$ 2	(2)
Stock based compensation expense	1,970			1,970
Cash dividends ($0.34 and $0.96 per share for the three and nine months ended September 30, 2021 and $0.25 and $0.75 per share for the three and nine months ended September 30, 2020)	(10,805)				(10,805)
Ending balance at Sep. 30, 2020	2,476,373	0	$ 432	1,932,690	504,135	39,116
Ending balance (shares) at Sep. 30, 2020			43,244,797
Beginning balance at Dec. 31, 2020	2,515,371	0	$ 431	1,934,807	543,800	36,333	$ (53,880)	$ (53,880)	$ 2,461,491	$ 431	$ 1,934,807	$ 489,920	$ 36,333
Beginning balance (shares) at Dec. 31, 2020			43,137,104							43,137,104
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	170,563				170,563
Other comprehensive income (loss), net of tax	(13,839)					(13,839)
Common stock repurchased (shares)			(257,280)
Common stock repurchased	(17,921)		$ (3)		(17,918)
Restricted stock forfeited (shares)			(34,822)
Restricted stock forfeited	0
Restricted stock granted (shares)			96,713
Restricted stock granted	0		$ 1	(1)
Stock based compensation expense	7,977			7,977
Cash dividends ($0.34 and $0.96 per share for the three and nine months ended September 30, 2021 and $0.25 and $0.75 per share for the three and nine months ended September 30, 2020)	(41,578)				(41,578)
Ending balance at Sep. 30, 2021	2,566,693	0	$ 429	1,942,783	600,987	22,494
Ending balance (shares) at Sep. 30, 2021			42,941,715
Beginning balance at Jun. 30, 2021	2,542,885	0	$ 432	1,940,360	579,585	22,508
Beginning balance (shares) at Jun. 30, 2021			43,180,607
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	52,340				52,340
Other comprehensive income (loss), net of tax	(14)					(14)
Common stock repurchased (shares)			(232,069)
Common stock repurchased	(16,256)		$ (3)		(16,253)
Restricted stock forfeited (shares)			(12,495)
Restricted stock forfeited	0
Restricted stock granted (shares)			5,672
Restricted stock granted	0		$ 0	0
Stock based compensation expense	2,423			2,423
Cash dividends ($0.34 and $0.96 per share for the three and nine months ended September 30, 2021 and $0.25 and $0.75 per share for the three and nine months ended September 30, 2020)	(14,685)				(14,685)
Ending balance at Sep. 30, 2021	$ 2,566,693	$ 0	$ 429	$ 1,942,783	$ 600,987	$ 22,494
Ending balance (shares) at Sep. 30, 2021			42,941,715

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Consolidated Statements of Changes in Stockholders' Equity (Parenthetical) - $ / shares	3 Months Ended		9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020	Dec. 31, 2020	Dec. 31, 2019
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

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Consolidated Statements of Cash Flows - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020
Cash flows from operating activities:
Net income	$ 170,563	$ 142,935
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation expense	9,273	9,504
Accretion income recognized on acquired loans	(15,499)	(23,534)
Amortization of other intangibles assets	9,435	9,526
Amortization of premium on securities, net	3,507	2,028
Amortization of discount and origination costs on borrowings	670	497
Stock based compensation expense	7,977	6,333
Excess tax (benefit) expense on restricted stock vested	(647)	246
FHLB stock dividends	(96)	(547)
Gain on sale of securities available for sale	0	(382)
Loss (gain) on sale and disposal of premises and equipment	61	(311)
Gain on sale of loans	(26)	(647)
Gain on sale of other real estate owned	(63)	(37)
Impairment of other real estate	0	784
Impairment of other assets	124	462
Deferred tax expense (benefit)	4,393	(2,636)
Provision for credit losses	(9,000)	39,122
Increase in cash surrender value of BOLI	(3,841)	(4,007)
Net gain on mortgage loans held for sale	(17,379)	(26,636)
Originations of loans held for sale	(533,001)	(620,635)
Proceeds from sale of loans held for sale	601,556	595,510
Net change in other assets	6,960	(35,879)
Net change in other liabilities	(25,255)	(5,587)
Net cash provided by operating activities	209,712	86,109
Cash flows from investing activities:
Proceeds from maturities, calls and paydowns of securities available for sale	7,336,371	5,452,309
Proceeds from sale of securities available for sale	181	13,862
Purchases of securities available for sale	(7,959,831)	(5,416,037)
Proceeds from maturities of certificates of deposit held in other banks	1,237	1,238
Purchase of bank owned life insurance contracts	(10,000)	0
Purchases of FHLB stock and other restricted stock	(1,190)	(27,037)
Proceeds from redemptions of FHLB stock and other restricted stock	50	31,049
Proceeds from sale of loans	1,519	13,097
Net loans originated held for investment	204,066	(707,884)
Originations of mortgage warehouse purchase loans	(23,417,476)	(17,217,285)
Proceeds from pay-offs of mortgage warehouse purchase loans	23,893,473	16,685,589
Additions to premises and equipment	(22,744)	(11,127)
Proceeds from sale of premises and equipment	21	1,895
Proceeds from sale of other real estate owned	538	6,105
Net cash provided by (used in) investing activities	26,215	(1,174,226)
Cash flows from financing activities:
Net increase in demand deposits, money market and savings accounts	1,338,220	2,165,544
Net decrease in time deposits	(212,965)	(309,320)
Proceeds from FHLB advances	0	1,600,000
Repayments of FHLB advances	(25,000)	(1,550,000)
Proceeds from other borrowings	58,000	150,016
Repayments of other borrowings	(89,000)	(47,086)
Repurchase of common stock	(17,921)	(159)
Dividends paid	(41,422)	(32,315)
Net cash provided by financing activities	1,009,912	1,976,680
Net change in cash and cash equivalents	1,245,839	888,563
Cash and cash equivalents at beginning of period	1,813,987	565,170
Cash and cash equivalents at end of period	$ 3,059,826	$ 1,453,733

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Summary of Significant Accounting Policies

9 Months Ended

Sep. 30, 2021

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:

	January 1, 2021
	Pre-Adoption Allowance		Impact of Adoption		Post-Adoption Allowance
Assets:
Allowance for credit losses on Loans:
Commercial	$	27,311	$	17,103	$	44,414
Commercial real estate, construction, land and land development	50,123		59,683		109,806
Residential real estate	6,786		(2,115)		4,671
Single-family interim construction	2,156		7,179		9,335
Agricultural	337		(178)		159
Consumer	442		(110)		332
Other	242		(224)		18
Unallocated	423		(423)		—
	$	87,820	$	80,915	$	168,735
Liabilities:
Allowance for credit losses on off-balance-sheet credit exposures	$	—	$	1,113	$	1,113

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:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Basic earnings per share:
Net income	$	52,340	$	60,075	$	170,563	$	142,935
Less:
Undistributed earnings allocated to participating securities	324		512		1,246		849
Dividends paid on participating securities	126		112		399		248
Net income available to common shareholders	$	51,890	$	59,451	$	168,918	$	141,838
Weighted average basic shares outstanding	42,674,563		42,785,485		42,720,519		42,765,685
Basic earnings per share	$	1.22	$	1.39	$	3.95	$	3.32
Diluted earnings per share:
Net income available to common shareholders	$	51,890	$	59,451	$	168,918	$	141,838
Total weighted average basic shares outstanding	42,674,563		42,785,485		42,720,519		42,765,685
Add dilutive performance stock units	59,392		—		56,286		—
Add dilutive participating securities	—		—		—		24,391
Total weighted average diluted shares outstanding	42,733,955		42,785,485		42,776,805		42,790,076
Diluted earnings per share	$	1.21	$	1.39	$	3.95	$	3.31
Anti-dilutive participating securities	155,036		113,291		182,225		—

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Statement of Cash Flows

9 Months Ended

Sep. 30, 2021

Supplemental Cash Flow Elements [Abstract]

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:

	Nine Months Ended September 30,
	2021		2020
Cash transactions:
Interest expense paid	$	54,209	$	80,462
Income taxes paid	$	44,833	$	35,538
Noncash transactions:
Deferred dividend equivalents	$	156	$	—
Transfers of loans to other real estate owned	$	—	$	5,239
Loans to facilitate the sale of other real estate owned	$	—	$	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	$	—

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Securities Available for Sale

9 Months Ended

Sep. 30, 2021

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:

	Amortized Cost (1)		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Securities Available for Sale
September 30, 2021
U.S. treasuries	$	61,116	$	1,210	$	(41)	$	62,285
Government agency securities	463,613		2,254		(4,618)		461,249
Obligations of state and municipal subdivisions	386,333		17,401		(346)		403,388
Corporate bonds	29,992		957		(42)		30,907
Mortgage-backed securities guaranteed by FHLMC, FNMA and GNMA	811,763		15,153		(4,246)		822,670
Other securities	1,075		—		—		1,075
	$	1,753,892	$	36,975	$	(9,293)	$	1,781,574
December 31, 2020
U.S. treasuries	$	43,060	$	1,648	$	—	$	44,708
Government agency securities	247,764		3,169		(1,916)		249,017
Obligations of state and municipal subdivisions	373,017		20,168		(20)		393,165
Corporate bonds	21,496		608		(2)		22,102
Mortgage-backed securities guaranteed by FHLMC, FNMA and GNMA	421,916		21,678		(93)		443,501
Other securities	1,200		—		—		1,200
	$	1,108,453	$	47,271	$	(2,031)	$	1,153,693

____________

(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:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Proceeds from sale	$	—	$	—	$	181	$	13,862
Gross gains	$	—	$	—	$	—	$	385
Gross losses	$	—	$	—	$	—	$	3

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.

	September 30, 2021
	Securities Available for Sale
	Amortized Cost (1)		Fair Value
Due in one year or less	$	32,464	$	32,782
Due from one year to five years	131,110		136,335
Due from five to ten years	419,558		423,908
Thereafter	358,997		365,879
	942,129		958,904
Mortgage-backed securities guaranteed by FHLMC, FNMA and GNMA	811,763		822,670
	$	1,753,892	$	1,781,574

____________

(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:

	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	1	$	10,316	$	(41)	—	$	—	$	—	$	10,316	$	(41)
Government agency securities	35	235,996		(3,045)		11	58,413		(1,573)		294,409		(4,618)
Obligations of state and municipal subdivisions	10	35,951		(331)		1	1,008		(15)		36,959		(346)
Corporate bonds	2	4,458		(42)		—	—		—		4,458		(42)
Mortgage-backed securities guaranteed by FHLMC, FNMA and GNMA	59	324,855		(4,081)		1	4,778		(165)		329,633		(4,246)
	107	$	611,576	$	(7,540)	13	$	64,199	$	(1,753)	$	675,775	$	(9,293)
December 31, 2020
Government agency securities	20	$	112,897	$	(1,916)	—	$	—	$	—	$	112,897	$	(1,916)
Obligations of state and municipal subdivisions	2	3,786		(20)		—	—		—		3,786		(20)
Corporate bonds	1	998		(2)		—	—		—		998		(2)
Mortgage-backed securities guaranteed by FHLMC, FNMA and GNMA	10	41,344		(93)		—	—		—		41,344		(93)
	33	$	159,025	$	(2,031)	—	$	—	$	—	$	159,025	$	(2,031)

At September 30, 2021, management's review of all available for sale securities at an unrealized loss position determined that the losses resulted from factors not related to credit quality. This conclusion is based on management's analysis of the underlying risk characteristics, including credit ratings, and other qualitative factors for each security type in our portfolio. The unrealized losses are generally due to increases in market interest rates. Furthermore, the Company has the intent to hold these securities until maturity or a forecasted recovery, and it is more likely than not that the Company will not have to sell the securities before the recovery of their cost basis. As such, there is no allowance for credit losses on available for sale securities recognized as of September 30, 2021.

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Loans, Net and Allowance for Credit Losses on Loans

9 Months Ended

Sep. 30, 2021

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:

	September 30,		December 31,
	2021		2020
Commercial	$	2,999,980	$	3,902,496
Real estate:
Commercial	6,414,199		6,096,676
Commercial construction, land and land development	1,216,195		1,245,801
Residential	1,296,871		1,352,465
Single-family interim construction	350,112		326,575
Agricultural	82,278		85,014
Consumer	81,879		67,068
Total loans (1)(2)	12,441,514		13,076,095
Deferred loan fees, net(1)	—		(10,037)
Allowance for credit losses	(150,281)		(87,820)
Total loans, net(2)	$	12,291,233	$	12,978,238

____________

(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 two 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:

	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	$	46,957	$	67,696	$	27,842	$	3,638	$	8,129	$	86	$	443	$	—	$	154,791
Provision for credit losses	2,190		(6,212)		915		(1,293)		(66)		(18)		73		—		(4,411)
Charge-offs	(78)		—		—		—		—		—		(48)		—		(126)
Recoveries	17		—		—		—		—		—		10		—		27
Balance at end of period	$	49,086	$	61,484	$	28,757	$	2,345	$	8,063	$	68	$	478	$	—	$	150,281
Nine months ended September 30, 2021
Balance at beginning of period	$	27,311	$	36,698	$	13,425	$	6,786	$	2,156	$	337	$	684	$	423	$	87,820
Impact of adopting ASC 326	12,775		29,108		22,008		(2,255)		7,179		(178)		(334)		(423)		67,880
Initial allowance on loans purchased with credit deterioration	4,328		7,640		927		140		—		—		—		—		13,035
Provision for credit losses	8,466		(11,587)		(7,477)		(2,326)		(1,272)		(91)		256		—		(14,031)
Charge-offs	(3,832)		(375)		(126)		—		—		—		(173)		—		(4,506)
Recoveries	38		—		—		—		—		—		45		—		83
Balance at end of period	$	49,086	$	61,484	$	28,757	$	2,345	$	8,063	$	68	$	478	$	—	$	150,281
Three months ended September 30, 2020
Balance at beginning of period	$	25,498	$	32,944	$	12,932	$	5,911	$	1,998	$	379	$	431	$	(38)	$	80,055
Provision for credit losses	476		5,205		624		532		(152)		(31)		211		755		7,620
Charge-offs	(117)		—		—		—		—		—		(106)		—		(223)
Recoveries	16		4		—		—		—		—		19		—		39
Balance at end of period	$	25,873	$	38,153	$	13,556	$	6,443	$	1,846	$	348	$	555	$	717	$	87,491
Nine months ended September 30, 2020
Balance at beginning of period	$	12,844	$	24,371	$	8,714	$	3,678	$	1,606	$	332	$	231	$	(315)	$	51,461
Provision for credit losses	15,111		14,513		4,842		2,765		322		16		521		1,032		39,122
Charge-offs	(2,170)		(735)		—		—		(82)		—		(306)		—		(3,293)
Recoveries	88		4		—		—		—		—		109		—		201
Balance at end of period	$	25,873	$	38,153	$	13,556	$	6,443	$	1,846	$	348	$	555	$	717	$	87,491

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:

	September 30, 2021				December 31, 2020
	Loan Balance - Amortized Cost Basis		Specific Allocations		Loan Balance - Recorded Investment		Specific Allocations
Commercial	$	43,038	$	19,365	$	39,298	$	8,281
Commercial real estate	40,235		1,955		21,848		243
Commercial construction, land and land development	1,365		581		32		—
Residential real estate	—		—		2,550		—
Single-family Interim construction	—		—		—		—
Agricultural	—		—		613		—
Consumer	—		—		42		—
	$	84,638	$	21,901	$	64,383	$	8,524

Nonperforming loans by loan class at September 30, 2021 (at amortized cost) and December 31, 2020 (at recorded investment), are summarized as follows:   

	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)	$	44,712	$	34,291	$	25	$	1,460	$	—	$	—	$	43	$	80,531
Loans past due 90 days and still accruing	77		—		—		201		—		—		2		280
Troubled debt restructurings (not included in nonaccrual or loans past due and still accruing)	—		1,738		—		165		—		—		—		1,903
	$	44,789	$	36,029	$	25	$	1,826	$	—	$	—	$	45	$	82,714
December 31, 2020 (2)
Nonaccrual loans	$	25,898	$	20,040	$	32	$	2,372	$	—	$	613	$	42	$	48,997
Loans past due 90 days and still accruing	433		—		—		—		—		—		—		433
Troubled debt restructurings (not included in nonaccrual or loans past due and still accruing)	—		1,808		—		178		—		—		—		1,986
	$	26,331	$	21,848	$	32	$	2,550	$	—	$	613	$	42	$	51,416

____________

(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:

	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	2		—		—		—		—		—		1		3
Pre-restructuring outstanding recorded investment	$	1,789	$	—	$	—	$	—	$	—	$	—	$	6	$	1,795
Post-restructuring outstanding recorded investment	$	570	$	—	$	—	$	—	$	—	$	—	$	6	$	576
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	—		1		—		—		—		—		—		1
Pre-restructuring outstanding recorded investment	$	—	$	1,517	$	—	$	—	$	—	$	—	$	—	$	1,517
Post-restructuring outstanding recorded investment	$	—	$	1,517	$	—	$	—	$	—	$	—	$	—	$	1,517

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):   

	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	$	704	$	31,792	$	32,496	$	2,967,484	$	2,999,980
Commercial real estate	19,706		16,540		36,246		6,377,953		6,414,199
Commercial construction, land and land development	868		—		868		1,215,327		1,216,195
Residential real estate	2,267		529		2,796		1,294,075		1,296,871
Single-family interim construction	269		—		269		349,843		350,112
Agricultural	595		—		595		81,683		82,278
Consumer	99		40		139		81,740		81,879
	$	24,508	$	48,901	$	73,409	$	12,368,105	$	12,441,514
December 31, 2020 (1)
Commercial	$	3,243	$	13,227	$	16,470	$	3,846,810	$	3,863,280
Commercial real estate	2,434		16,790		19,224		5,921,723		5,940,947
Commercial construction, land and land development	19		—		19		1,230,524		1,230,543
Residential real estate	5,169		1,028		6,197		1,341,587		1,347,784
Single-family interim construction	—		—		—		326,575		326,575
Agricultural	—		1		1		84,896		84,897
Consumer	86		41		127		67,156		67,283
	10,951		31,087		42,038		12,819,271		12,861,309
Acquired with deteriorated credit quality	624		3,219		3,843		210,943		214,786
	$	11,575	$	34,306	$	45,881	$	13,030,214	$	13,076,095

____________

(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:

															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	$	500,792	$	205,018	$	127,779	$	102,993	$	107,046	$	173,621	$	1,589,766	$	4,971	$	2,811,986
Pass/Watch	405		3,171		761		14,267		10,224		7,398		26,533		3,538		66,297
Special Mention	1,852		1,404		11,620		767		4,371		15		3,684		—		23,713
Substandard	16,647		3,110		35,195		5,927		3,512		7,073		16,620		3		88,087
Doubtful	—		—		—		—		—		—		9,897		—		9,897
Total commercial	$	519,696	$	212,703	$	175,355	$	123,954	$	125,153	$	188,107	$	1,646,500	$	8,512	$	2,999,980
Commercial real estate
Pass	$	1,481,214	$	1,278,477	$	885,209	$	706,642	$	585,905	$	724,951	$	63,240	$	1,299	$	5,726,937
Pass/Watch	63,129		25,453		63,473		79,563		19,205		86,177		452		1,358		338,810
Special Mention	24,537		29,042		40,808		69,181		41,044		40,794		—		—		245,406
Substandard	24,042		31,148		2,338		11,910		1,571		30,968		1,069		—		103,046
Doubtful	—		—		—		—		—		—		—		—		—
Total commercial real estate	$	1,592,922	$	1,364,120	$	991,828	$	867,296	$	647,725	$	882,890	$	64,761	$	2,657	$	6,414,199
Commercial construction, land and land development
Pass	$	484,572	$	292,360	$	207,346	$	108,119	$	21,627	$	16,240	$	12,655	$	—	$	1,142,919
Pass/Watch	19,886		1,472		6,104		4,280		—		87		—		—		31,829
Special Mention	—		9,000		—		—		1,928		—		—		—		10,928
Substandard	15,379		—		417		12,741		29		1,953		—		—		30,519
Doubtful	—		—		—		—		—		—		—		—		—
Total commercial construction, land and land development	$	519,837	$	302,832	$	213,867	$	125,140	$	23,584	$	18,280	$	12,655	$	—	$	1,216,195
Residential real estate
Pass	$	310,811	$	290,780	$	212,659	$	127,857	$	97,097	$	179,412	$	56,588	$	2,309	$	1,277,513
Pass/Watch	1,684		497		1,409		411		2,433		4,321		169		—		10,924
Special Mention	659		462		—		130		253		1,059		231		—		2,794
Substandard	645		174		385		469		795		3,118		54		—		5,640
Doubtful	—		—		—		—		—		—		—		—		—
Total residential real estate	$	313,799	$	291,913	$	214,453	$	128,867	$	100,578	$	187,910	$	57,042	$	2,309	$	1,296,871

															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	$	231,771	$	102,697	$	12,021	$	329	$	—	$	—	$	3,294	$	—	$	350,112
Pass/Watch	—		—		—		—		—		—		—		—		—
Special Mention	—		—		—		—		—		—		—		—		—
Substandard	—		—		—		—		—		—		—		—		—
Doubtful	—		—		—		—		—		—		—		—		—
Total single-family interim construction	$	231,771	$	102,697	$	12,021	$	329	$	—	$	—	$	3,294	$	—	$	350,112
Agricultural
Pass	$	17,438	$	16,781	$	4,576	$	9,183	$	12,451	$	5,718	$	8,846	$	—	$	74,993
Pass/Watch	—		552		1,542		57		980		—		4,147		—		7,278
Special Mention	—		—		—		—		—		—		—		—		—
Substandard	—		—		—		—		—		7		—		—		7
Doubtful	—		—		—		—		—		—		—		—		—
Total agricultural	$	17,438	$	17,333	$	6,118	$	9,240	$	13,431	$	5,725	$	12,993	$	—	$	82,278
Consumer
Pass	$	10,072	$	10,553	$	2,991	$	878	$	440	$	219	$	56,614	$	46	$	81,813
Pass/Watch	—		—		—		—		2		—		—		—		2
Special Mention	—		—		—		—		—		—		—		—		—
Substandard	5		30		—		—		10		19		—		—		64
Doubtful	—		—		—		—		—		—		—		—		—
Total consumer	$	10,077	$	10,583	$	2,991	$	878	$	452	$	238	$	56,614	$	46	$	81,879

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:   

	Pass		Pass/ Watch		Special Mention		Substandard		Doubtful		Total
December 31, 2020
Commercial	$	3,700,856	$	55,960	$	38,186	$	97,403	$	10,091	$	3,902,496
Commercial real estate	5,379,801		306,884		317,580		92,411		—		6,096,676
Commercial construction, land and land development	1,125,132		46,026		43,383		31,260		—		1,245,801
Residential real estate	1,332,757		6,296		5,726		7,686		—		1,352,465
Single-family interim construction	323,800		2,775		—		—		—		326,575
Agricultural	76,951		6,194		1,205		664		—		85,014
Consumer	66,970		8		—		90		—		67,068
	$	12,006,267	$	424,143	$	406,080	$	229,514	$	10,091	$	13,076,095

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Other Borrowings

9 Months Ended

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

9 Months Ended

Sep. 30, 2021

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:

	September 30,		December 31,
	2021		2020
Commitments to extend credit	$	2,717,859	$	2,268,216
Standby letters of credit	31,160		25,917
	$	2,749,019	$	2,294,133

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:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Balance at beginning of period	$	1,733	$	—	$	—	$	—
Impact of CECL adoption	—		—		1,113		—
Provision for off-balance sheet credit exposure	4,411		—		5,031		—
Balance at end of period	$	6,144	$	—	$	6,144	$	—

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

9 Months Ended

Sep. 30, 2021

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:

	Three Months Ended September 30,						Nine Months Ended September 30,
	2021			2020			2021			2020
Income tax expense for the period	$	12,629		$	16,068		$	43,841		$	35,807
Effective tax rate	19.4		%	21.1		%	20.4		%	20.0		%

The effective tax rates for 2021 and 2020 differ from the statutory federal tax rate of 21% largely due to tax exempt interest income earned on certain investment securities and loans, the nontaxable earnings on bank owned life insurance, nondeductible compensation, acquisition-related expenses, and state income tax. The lower effective tax rate for the three months ended September 30, 2021 was primarily a result of the prior year provision to return adjustment and current period adjustments related to state income taxes.

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Fair Value Measurements

9 Months Ended

Sep. 30, 2021

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:   

			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	$	62,285	$	—	$	62,285	$	—
Government agency securities	461,249		—		461,249		—
Obligations of state and municipal subdivisions	403,388		—		403,388		—
Corporate bonds	30,907		—		30,907		—
Mortgage-backed securities guaranteed by FHLMC, FNMA and GNMA	822,670		—		822,670		—
Other securities	1,075		—		1,075		—
Loans held for sale, fair value option elected (1)	27,331		—		27,331		—
Derivative financial instruments:
Interest rate swaps - cash flow hedge	140		—		140		—
Interest rate lock commitments	1,566		—		1,566		—
Forward mortgage-backed securities trades	132		—		132		—
Loan customer counterparty	9,631		—		9,631		—
Financial institution counterparty	595		—		595		—
Liabilities:
Derivative financial instruments:
Interest rate swaps - cash flow hedge	210		—		210		—
Interest rate lock commitments	2		—		2		—
Forward mortgage-backed securities trades	44		—		44		—
Loan customer counterparty	577		—		577		—
Financial institution counterparty	10,064		—		10,064		—
December 31, 2020
Assets:
Investment securities available for sale:
U.S. treasuries	$	44,708	$	—	$	44,708	$	—
Government agency securities	249,017		—		249,017		—
Obligations of state and municipal subdivisions	393,165		—		393,165		—
Corporate bonds	22,102		—		22,102		—
Mortgage-backed securities guaranteed by FHLMC, FNMA and GNMA	443,501		—		443,501		—
Other securities	1,200		—		1,200		—
Loans held for sale, fair value option elected (1)	71,769		—		71,769		—
Derivative financial instruments:
Interest rate lock commitments	3,515		—		3,515		—
Loan customer counterparty	20,159		—		20,159		—
Liabilities:
Derivative financial instruments:
Forward mortgage-backed securities trades	568		—		568		—
Financial institution counterparty	21,306		—		21,306		—

__________

(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:   

			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	$	18,883	$	—	$	—	$	18,883	$	3,813
December 31, 2020
Assets:
Individually evaluated loans	$	16,903	$	—	$	—	$	16,903	$	13,041

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:

					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	$	3,059,826	$	3,059,826	$	3,059,826	$	—	$	—
Certificates of deposit held in other banks	3,245		3,258		—		3,258		—
Loans held for sale, at cost	4,140		4,221		—		4,221		—
Loans, net	12,291,233		12,693,534		—		—		12,693,534
FHLB of Dallas stock and other restricted stock	21,541		21,541		—		21,541		—
Accrued interest receivable	51,438		51,438		—		51,438		—
Financial liabilities:
Deposits	15,524,182		15,537,308		—		15,537,308		—
Accrued interest payable	3,125		3,125		—		3,125		—
FHLB advances	350,000		334,631		—		334,631		—
Other borrowings	281,697		301,575		—		301,575		—
Junior subordinated debentures	54,171		44,330		—		44,330		—
Off-balance sheet assets (liabilities):
Commitments to extend credit	—		—		—		—		—
Standby letters of credit	—		—		—		—		—
December 31, 2020
Financial assets:
Cash and cash equivalents	$	1,813,987	$	1,813,987	$	1,813,987	$	—	$	—
Certificates of deposit held in other banks	4,482		4,595		—		4,595		—
Loans held for sale, at cost	10,878		11,138		—		11,138		—
Loans, net	12,978,238		13,093,698		—		—		13,093,698
FHLB of Dallas stock and other restricted stock	20,305		20,305		—		20,305		—
Accrued interest receivable	60,581		60,581		—		60,581		—
Financial liabilities:
Deposits	14,398,927		14,407,596		—		14,407,596		—
Accrued interest payable	7,397		7,397		—		7,397		—
FHLB advances	375,000		371,175		—		371,175		—
Other borrowings	312,175		327,150		—		327,150		—
Junior subordinated debentures	54,023		42,624		—		42,624		—
Off-balance sheet assets (liabilities):
Commitments to extend credit	—		—		—		—		—
Standby letters of credit	—		—		—		—		—

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

9 Months Ended

Sep. 30, 2021

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:

	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	$	100,000	$	140	$	210
Derivatives not designated as hedging instruments:
Interest rate lock commitments	51,676		1,566		2
Forward mortgage-backed securities trades	48,000		132		44
Commercial loan interest rate swaps:
Loan customer counterparty	276,030		9,631		577
Financial institution counterparty	276,030		595		10,064
December 31, 2020
Derivatives not designated as hedging instruments:
Interest rate lock commitments	$	116,795	$	3,515	$	—
Forward mortgage-backed securities trades	104,000		—		568
Commercial loan interest rate swaps:
Loan customer counterparty	335,370		20,159		—
Financial institution counterparty	335,370		—		21,306

The commercial loan customer counterparty weighted average received and paid interest rates for interest rate swaps outstanding were as follows:

	Weighted Average Interest Rate
	September 30, 2021				December 31, 2020
	Received		Paid		Received		Paid
Loan customer counterparty	4.09	%	2.30	%	4.08	%	2.32	%

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:

	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	$	215	$	—	$	369	$	—
Derivatives not designated as hedging instruments
Interest rate lock commitments	Mortgage banking revenue	(502)		1,517		(1,951)		4,262
Forward mortgage-backed securities trades	Mortgage banking revenue	148		192		656		(249)

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Stock Awards

9 Months Ended

Sep. 30, 2021

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 one to five years. Performance stock units awarded have a three to four 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:

Restricted Stock Awards	Number of Shares	Weighted Average Grant Date Fair Value
Nonvested shares, December 31, 2020	468,800	$	49.01
Granted during the period	96,713	64.91
Vested during the period	(176,689)	51.43
Forfeited during the period	(34,822)	50.10
Nonvested shares, September 30, 2021	354,002	$	51.96
Nonvested shares, December 31, 2019	284,861	$	58.63
Granted during the period	304,790	43.38
Vested during the period	(112,914)	58.28
Forfeited during the period	(7,270)	51.97
Nonvested shares, September 30, 2020	469,467	$	48.91

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:

First year	158,055
Second year	116,569
Third year	75,303
Fourth year	4,075
Total nonvested shares	354,002

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:

Performance-based Restricted Stock Units	Number of Shares	Weighted Average Grant Date Fair Value
Nonvested shares, December 31, 2020	89,300	$	38.29
Granted during the period	25,198	63.92
Nonvested shares, September 30, 2021	114,498	$	43.93

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

9 Months Ended

Sep. 30, 2021

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.

	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	$	1,884,618	13.64	%	$	1,450,815	10.50	%	N/A		N/A
Bank	1,953,355		14.14		1,450,381		10.50		$	1,381,316	10.00	%
Tier 1 capital to risk weighted assets:
Consolidated	1,583,950		11.46		1,174,470		8.50		N/A		N/A
Bank	1,856,687		13.44		1,174,118		8.50		1,105,052		8.00
Common equity tier 1 to risk weighted assets:
Consolidated	1,528,350		11.06		967,210		7.00		N/A		N/A
Bank	1,856,687		13.44		966,921		7.00		897,855		6.50
Tier 1 capital to average assets:
Consolidated	1,583,950		8.94		708,732		4.00		N/A		N/A
Bank	1,856,687		10.48		708,581		4.00		885,726		5.00
December 31, 2020
Total capital to risk weighted assets:
Consolidated	$	1,825,661	13.32	%	$	1,438,939	10.50	%	N/A		N/A
Bank	1,864,240		13.61		1,438,385		10.50		$	1,369,891	10.00	%
Tier 1 capital to risk weighted assets:
Consolidated	1,471,841		10.74		1,164,855		8.50		N/A		N/A
Bank	1,776,420		12.97		1,164,407		8.50		1,095,913		8.00
Common equity tier 1 to risk weighted assets:
Consolidated	1,416,241		10.33		959,293		7.00		N/A		N/A
Bank	1,776,420		12.97		958,924		7.00		890,429		6.50
Tier 1 capital to average assets:
Consolidated	1,471,841		9.12		645,730		4.00		N/A		N/A
Bank	1,776,420		11.01		645,539		4.00		806,924		5.00

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

9 Months Ended

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)

9 Months Ended

Sep. 30, 2021

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.

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:

	January 1, 2021
	Pre-Adoption Allowance		Impact of Adoption		Post-Adoption Allowance
Assets:
Allowance for credit losses on Loans:
Commercial	$	27,311	$	17,103	$	44,414
Commercial real estate, construction, land and land development	50,123		59,683		109,806
Residential real estate	6,786		(2,115)		4,671
Single-family interim construction	2,156		7,179		9,335
Agricultural	337		(178)		159
Consumer	442		(110)		332
Other	242		(224)		18
Unallocated	423		(423)		—
	$	87,820	$	80,915	$	168,735
Liabilities:
Allowance for credit losses on off-balance-sheet credit exposures	$	—	$	1,113	$	1,113

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: 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 - 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.

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.

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.

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.

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.

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Receivables, Loans, Notes Receivable, and Others (Policies)

9 Months Ended

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)

9 Months Ended

Sep. 30, 2021

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:

	January 1, 2021
	Pre-Adoption Allowance		Impact of Adoption		Post-Adoption Allowance
Assets:
Allowance for credit losses on Loans:
Commercial	$	27,311	$	17,103	$	44,414
Commercial real estate, construction, land and land development	50,123		59,683		109,806
Residential real estate	6,786		(2,115)		4,671
Single-family interim construction	2,156		7,179		9,335
Agricultural	337		(178)		159
Consumer	442		(110)		332
Other	242		(224)		18
Unallocated	423		(423)		—
	$	87,820	$	80,915	$	168,735
Liabilities:
Allowance for credit losses on off-balance-sheet credit exposures	$	—	$	1,113	$	1,113

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:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Basic earnings per share:
Net income	$	52,340	$	60,075	$	170,563	$	142,935
Less:
Undistributed earnings allocated to participating securities	324		512		1,246		849
Dividends paid on participating securities	126		112		399		248
Net income available to common shareholders	$	51,890	$	59,451	$	168,918	$	141,838
Weighted average basic shares outstanding	42,674,563		42,785,485		42,720,519		42,765,685
Basic earnings per share	$	1.22	$	1.39	$	3.95	$	3.32
Diluted earnings per share:
Net income available to common shareholders	$	51,890	$	59,451	$	168,918	$	141,838
Total weighted average basic shares outstanding	42,674,563		42,785,485		42,720,519		42,765,685
Add dilutive performance stock units	59,392		—		56,286		—
Add dilutive participating securities	—		—		—		24,391
Total weighted average diluted shares outstanding	42,733,955		42,785,485		42,776,805		42,790,076
Diluted earnings per share	$	1.21	$	1.39	$	3.95	$	3.31
Anti-dilutive participating securities	155,036		113,291		182,225		—

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Statement of Cash Flows (Tables)

9 Months Ended

Sep. 30, 2021

Supplemental Cash Flow Elements [Abstract]

Other Supplemental Cash Flow Information

Other supplemental cash flow information is presented below:

	Nine Months Ended September 30,
	2021		2020
Cash transactions:
Interest expense paid	$	54,209	$	80,462
Income taxes paid	$	44,833	$	35,538
Noncash transactions:
Deferred dividend equivalents	$	156	$	—
Transfers of loans to other real estate owned	$	—	$	5,239
Loans to facilitate the sale of other real estate owned	$	—	$	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	$	—

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Securities Available for Sale (Tables)

9 Months Ended

Sep. 30, 2021

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:

	Amortized Cost (1)		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Securities Available for Sale
September 30, 2021
U.S. treasuries	$	61,116	$	1,210	$	(41)	$	62,285
Government agency securities	463,613		2,254		(4,618)		461,249
Obligations of state and municipal subdivisions	386,333		17,401		(346)		403,388
Corporate bonds	29,992		957		(42)		30,907
Mortgage-backed securities guaranteed by FHLMC, FNMA and GNMA	811,763		15,153		(4,246)		822,670
Other securities	1,075		—		—		1,075
	$	1,753,892	$	36,975	$	(9,293)	$	1,781,574
December 31, 2020
U.S. treasuries	$	43,060	$	1,648	$	—	$	44,708
Government agency securities	247,764		3,169		(1,916)		249,017
Obligations of state and municipal subdivisions	373,017		20,168		(20)		393,165
Corporate bonds	21,496		608		(2)		22,102
Mortgage-backed securities guaranteed by FHLMC, FNMA and GNMA	421,916		21,678		(93)		443,501
Other securities	1,200		—		—		1,200
	$	1,108,453	$	47,271	$	(2,031)	$	1,153,693

____________

(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.

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:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Proceeds from sale	$	—	$	—	$	181	$	13,862
Gross gains	$	—	$	—	$	—	$	385
Gross losses	$	—	$	—	$	—	$	3

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.

	September 30, 2021
	Securities Available for Sale
	Amortized Cost (1)		Fair Value
Due in one year or less	$	32,464	$	32,782
Due from one year to five years	131,110		136,335
Due from five to ten years	419,558		423,908
Thereafter	358,997		365,879
	942,129		958,904
Mortgage-backed securities guaranteed by FHLMC, FNMA and GNMA	811,763		822,670
	$	1,753,892	$	1,781,574

____________

(1) Excludes accrued interest receivable of $6,480 at September 30, 2021 that is recorded in other assets on the accompanying consolidated balance sheets.

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:

	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	1	$	10,316	$	(41)	—	$	—	$	—	$	10,316	$	(41)
Government agency securities	35	235,996		(3,045)		11	58,413		(1,573)		294,409		(4,618)
Obligations of state and municipal subdivisions	10	35,951		(331)		1	1,008		(15)		36,959		(346)
Corporate bonds	2	4,458		(42)		—	—		—		4,458		(42)
Mortgage-backed securities guaranteed by FHLMC, FNMA and GNMA	59	324,855		(4,081)		1	4,778		(165)		329,633		(4,246)
	107	$	611,576	$	(7,540)	13	$	64,199	$	(1,753)	$	675,775	$	(9,293)
December 31, 2020
Government agency securities	20	$	112,897	$	(1,916)	—	$	—	$	—	$	112,897	$	(1,916)
Obligations of state and municipal subdivisions	2	3,786		(20)		—	—		—		3,786		(20)
Corporate bonds	1	998		(2)		—	—		—		998		(2)
Mortgage-backed securities guaranteed by FHLMC, FNMA and GNMA	10	41,344		(93)		—	—		—		41,344		(93)
	33	$	159,025	$	(2,031)	—	$	—	$	—	$	159,025	$	(2,031)

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Loans, Net and Allowance for Credit Losses on Loans (Tables)

9 Months Ended

Sep. 30, 2021

Receivables [Abstract]

Compositions of Loans

Loans, net, at September 30, 2021 and December 31, 2020, consisted of the following:

	September 30,		December 31,
	2021		2020
Commercial	$	2,999,980	$	3,902,496
Real estate:
Commercial	6,414,199		6,096,676
Commercial construction, land and land development	1,216,195		1,245,801
Residential	1,296,871		1,352,465
Single-family interim construction	350,112		326,575
Agricultural	82,278		85,014
Consumer	81,879		67,068
Total loans (1)(2)	12,441,514		13,076,095
Deferred loan fees, net(1)	—		(10,037)
Allowance for credit losses	(150,281)		(87,820)
Total loans, net(2)	$	12,291,233	$	12,978,238

____________

(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.

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:

	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	$	46,957	$	67,696	$	27,842	$	3,638	$	8,129	$	86	$	443	$	—	$	154,791
Provision for credit losses	2,190		(6,212)		915		(1,293)		(66)		(18)		73		—		(4,411)
Charge-offs	(78)		—		—		—		—		—		(48)		—		(126)
Recoveries	17		—		—		—		—		—		10		—		27
Balance at end of period	$	49,086	$	61,484	$	28,757	$	2,345	$	8,063	$	68	$	478	$	—	$	150,281
Nine months ended September 30, 2021
Balance at beginning of period	$	27,311	$	36,698	$	13,425	$	6,786	$	2,156	$	337	$	684	$	423	$	87,820
Impact of adopting ASC 326	12,775		29,108		22,008		(2,255)		7,179		(178)		(334)		(423)		67,880
Initial allowance on loans purchased with credit deterioration	4,328		7,640		927		140		—		—		—		—		13,035
Provision for credit losses	8,466		(11,587)		(7,477)		(2,326)		(1,272)		(91)		256		—		(14,031)
Charge-offs	(3,832)		(375)		(126)		—		—		—		(173)		—		(4,506)
Recoveries	38		—		—		—		—		—		45		—		83
Balance at end of period	$	49,086	$	61,484	$	28,757	$	2,345	$	8,063	$	68	$	478	$	—	$	150,281
Three months ended September 30, 2020
Balance at beginning of period	$	25,498	$	32,944	$	12,932	$	5,911	$	1,998	$	379	$	431	$	(38)	$	80,055
Provision for credit losses	476		5,205		624		532		(152)		(31)		211		755		7,620
Charge-offs	(117)		—		—		—		—		—		(106)		—		(223)
Recoveries	16		4		—		—		—		—		19		—		39
Balance at end of period	$	25,873	$	38,153	$	13,556	$	6,443	$	1,846	$	348	$	555	$	717	$	87,491
Nine months ended September 30, 2020
Balance at beginning of period	$	12,844	$	24,371	$	8,714	$	3,678	$	1,606	$	332	$	231	$	(315)	$	51,461
Provision for credit losses	15,111		14,513		4,842		2,765		322		16		521		1,032		39,122
Charge-offs	(2,170)		(735)		—		—		(82)		—		(306)		—		(3,293)
Recoveries	88		4		—		—		—		—		109		—		201
Balance at end of period	$	25,873	$	38,153	$	13,556	$	6,443	$	1,846	$	348	$	555	$	717	$	87,491

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:

	September 30, 2021				December 31, 2020
	Loan Balance - Amortized Cost Basis		Specific Allocations		Loan Balance - Recorded Investment		Specific Allocations
Commercial	$	43,038	$	19,365	$	39,298	$	8,281
Commercial real estate	40,235		1,955		21,848		243
Commercial construction, land and land development	1,365		581		32		—
Residential real estate	—		—		2,550		—
Single-family Interim construction	—		—		—		—
Agricultural	—		—		613		—
Consumer	—		—		42		—
	$	84,638	$	21,901	$	64,383	$	8,524

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:   

	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)	$	44,712	$	34,291	$	25	$	1,460	$	—	$	—	$	43	$	80,531
Loans past due 90 days and still accruing	77		—		—		201		—		—		2		280
Troubled debt restructurings (not included in nonaccrual or loans past due and still accruing)	—		1,738		—		165		—		—		—		1,903
	$	44,789	$	36,029	$	25	$	1,826	$	—	$	—	$	45	$	82,714
December 31, 2020 (2)
Nonaccrual loans	$	25,898	$	20,040	$	32	$	2,372	$	—	$	613	$	42	$	48,997
Loans past due 90 days and still accruing	433		—		—		—		—		—		—		433
Troubled debt restructurings (not included in nonaccrual or loans past due and still accruing)	—		1,808		—		178		—		—		—		1,986
	$	26,331	$	21,848	$	32	$	2,550	$	—	$	613	$	42	$	51,416

____________

(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.

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:

	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	2		—		—		—		—		—		1		3
Pre-restructuring outstanding recorded investment	$	1,789	$	—	$	—	$	—	$	—	$	—	$	6	$	1,795
Post-restructuring outstanding recorded investment	$	570	$	—	$	—	$	—	$	—	$	—	$	6	$	576
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	—		1		—		—		—		—		—		1
Pre-restructuring outstanding recorded investment	$	—	$	1,517	$	—	$	—	$	—	$	—	$	—	$	1,517
Post-restructuring outstanding recorded investment	$	—	$	1,517	$	—	$	—	$	—	$	—	$	—	$	1,517

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):   

	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	$	704	$	31,792	$	32,496	$	2,967,484	$	2,999,980
Commercial real estate	19,706		16,540		36,246		6,377,953		6,414,199
Commercial construction, land and land development	868		—		868		1,215,327		1,216,195
Residential real estate	2,267		529		2,796		1,294,075		1,296,871
Single-family interim construction	269		—		269		349,843		350,112
Agricultural	595		—		595		81,683		82,278
Consumer	99		40		139		81,740		81,879
	$	24,508	$	48,901	$	73,409	$	12,368,105	$	12,441,514
December 31, 2020 (1)
Commercial	$	3,243	$	13,227	$	16,470	$	3,846,810	$	3,863,280
Commercial real estate	2,434		16,790		19,224		5,921,723		5,940,947
Commercial construction, land and land development	19		—		19		1,230,524		1,230,543
Residential real estate	5,169		1,028		6,197		1,341,587		1,347,784
Single-family interim construction	—		—		—		326,575		326,575
Agricultural	—		1		1		84,896		84,897
Consumer	86		41		127		67,156		67,283
	10,951		31,087		42,038		12,819,271		12,861,309
Acquired with deteriorated credit quality	624		3,219		3,843		210,943		214,786
	$	11,575	$	34,306	$	45,881	$	13,030,214	$	13,076,095

____________

(1) Presented under prior GAAP.

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:

															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	$	500,792	$	205,018	$	127,779	$	102,993	$	107,046	$	173,621	$	1,589,766	$	4,971	$	2,811,986
Pass/Watch	405		3,171		761		14,267		10,224		7,398		26,533		3,538		66,297
Special Mention	1,852		1,404		11,620		767		4,371		15		3,684		—		23,713
Substandard	16,647		3,110		35,195		5,927		3,512		7,073		16,620		3		88,087
Doubtful	—		—		—		—		—		—		9,897		—		9,897
Total commercial	$	519,696	$	212,703	$	175,355	$	123,954	$	125,153	$	188,107	$	1,646,500	$	8,512	$	2,999,980
Commercial real estate
Pass	$	1,481,214	$	1,278,477	$	885,209	$	706,642	$	585,905	$	724,951	$	63,240	$	1,299	$	5,726,937
Pass/Watch	63,129		25,453		63,473		79,563		19,205		86,177		452		1,358		338,810
Special Mention	24,537		29,042		40,808		69,181		41,044		40,794		—		—		245,406
Substandard	24,042		31,148		2,338		11,910		1,571		30,968		1,069		—		103,046
Doubtful	—		—		—		—		—		—		—		—		—
Total commercial real estate	$	1,592,922	$	1,364,120	$	991,828	$	867,296	$	647,725	$	882,890	$	64,761	$	2,657	$	6,414,199
Commercial construction, land and land development
Pass	$	484,572	$	292,360	$	207,346	$	108,119	$	21,627	$	16,240	$	12,655	$	—	$	1,142,919
Pass/Watch	19,886		1,472		6,104		4,280		—		87		—		—		31,829
Special Mention	—		9,000		—		—		1,928		—		—		—		10,928
Substandard	15,379		—		417		12,741		29		1,953		—		—		30,519
Doubtful	—		—		—		—		—		—		—		—		—
Total commercial construction, land and land development	$	519,837	$	302,832	$	213,867	$	125,140	$	23,584	$	18,280	$	12,655	$	—	$	1,216,195
Residential real estate
Pass	$	310,811	$	290,780	$	212,659	$	127,857	$	97,097	$	179,412	$	56,588	$	2,309	$	1,277,513
Pass/Watch	1,684		497		1,409		411		2,433		4,321		169		—		10,924
Special Mention	659		462		—		130		253		1,059		231		—		2,794
Substandard	645		174		385		469		795		3,118		54		—		5,640
Doubtful	—		—		—		—		—		—		—		—		—
Total residential real estate	$	313,799	$	291,913	$	214,453	$	128,867	$	100,578	$	187,910	$	57,042	$	2,309	$	1,296,871

															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	$	231,771	$	102,697	$	12,021	$	329	$	—	$	—	$	3,294	$	—	$	350,112
Pass/Watch	—		—		—		—		—		—		—		—		—
Special Mention	—		—		—		—		—		—		—		—		—
Substandard	—		—		—		—		—		—		—		—		—
Doubtful	—		—		—		—		—		—		—		—		—
Total single-family interim construction	$	231,771	$	102,697	$	12,021	$	329	$	—	$	—	$	3,294	$	—	$	350,112
Agricultural
Pass	$	17,438	$	16,781	$	4,576	$	9,183	$	12,451	$	5,718	$	8,846	$	—	$	74,993
Pass/Watch	—		552		1,542		57		980		—		4,147		—		7,278
Special Mention	—		—		—		—		—		—		—		—		—
Substandard	—		—		—		—		—		7		—		—		7
Doubtful	—		—		—		—		—		—		—		—		—
Total agricultural	$	17,438	$	17,333	$	6,118	$	9,240	$	13,431	$	5,725	$	12,993	$	—	$	82,278
Consumer
Pass	$	10,072	$	10,553	$	2,991	$	878	$	440	$	219	$	56,614	$	46	$	81,813
Pass/Watch	—		—		—		—		2		—		—		—		2
Special Mention	—		—		—		—		—		—		—		—		—
Substandard	5		30		—		—		10		19		—		—		64
Doubtful	—		—		—		—		—		—		—		—		—
Total consumer	$	10,077	$	10,583	$	2,991	$	878	$	452	$	238	$	56,614	$	46	$	81,879

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:   

	Pass		Pass/ Watch		Special Mention		Substandard		Doubtful		Total
December 31, 2020
Commercial	$	3,700,856	$	55,960	$	38,186	$	97,403	$	10,091	$	3,902,496
Commercial real estate	5,379,801		306,884		317,580		92,411		—		6,096,676
Commercial construction, land and land development	1,125,132		46,026		43,383		31,260		—		1,245,801
Residential real estate	1,332,757		6,296		5,726		7,686		—		1,352,465
Single-family interim construction	323,800		2,775		—		—		—		326,575
Agricultural	76,951		6,194		1,205		664		—		85,014
Consumer	66,970		8		—		90		—		67,068
	$	12,006,267	$	424,143	$	406,080	$	229,514	$	10,091	$	13,076,095

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Off-Balance Sheet Arrangements, Commitments and Contingencies (Tables)

9 Months Ended

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:

	September 30,		December 31,
	2021		2020
Commitments to extend credit	$	2,717,859	$	2,268,216
Standby letters of credit	31,160		25,917
	$	2,749,019	$	2,294,133

Commitments Off Balance Sheet Allowance for Credit Losses

The allowance for credit losses on off-balance sheet commitments were as follows:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Balance at beginning of period	$	1,733	$	—	$	—	$	—
Impact of CECL adoption	—		—		1,113		—
Provision for off-balance sheet credit exposure	4,411		—		5,031		—
Balance at end of period	$	6,144	$	—	$	6,144	$	—

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Income Taxes (Tables)

9 Months Ended

Sep. 30, 2021

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:

	Three Months Ended September 30,						Nine Months Ended September 30,
	2021			2020			2021			2020
Income tax expense for the period	$	12,629		$	16,068		$	43,841		$	35,807
Effective tax rate	19.4		%	21.1		%	20.4		%	20.0		%

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Fair Value Measurements (Tables)

9 Months Ended

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:   

			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	$	62,285	$	—	$	62,285	$	—
Government agency securities	461,249		—		461,249		—
Obligations of state and municipal subdivisions	403,388		—		403,388		—
Corporate bonds	30,907		—		30,907		—
Mortgage-backed securities guaranteed by FHLMC, FNMA and GNMA	822,670		—		822,670		—
Other securities	1,075		—		1,075		—
Loans held for sale, fair value option elected (1)	27,331		—		27,331		—
Derivative financial instruments:
Interest rate swaps - cash flow hedge	140		—		140		—
Interest rate lock commitments	1,566		—		1,566		—
Forward mortgage-backed securities trades	132		—		132		—
Loan customer counterparty	9,631		—		9,631		—
Financial institution counterparty	595		—		595		—
Liabilities:
Derivative financial instruments:
Interest rate swaps - cash flow hedge	210		—		210		—
Interest rate lock commitments	2		—		2		—
Forward mortgage-backed securities trades	44		—		44		—
Loan customer counterparty	577		—		577		—
Financial institution counterparty	10,064		—		10,064		—
December 31, 2020
Assets:
Investment securities available for sale:
U.S. treasuries	$	44,708	$	—	$	44,708	$	—
Government agency securities	249,017		—		249,017		—
Obligations of state and municipal subdivisions	393,165		—		393,165		—
Corporate bonds	22,102		—		22,102		—
Mortgage-backed securities guaranteed by FHLMC, FNMA and GNMA	443,501		—		443,501		—
Other securities	1,200		—		1,200		—
Loans held for sale, fair value option elected (1)	71,769		—		71,769		—
Derivative financial instruments:
Interest rate lock commitments	3,515		—		3,515		—
Loan customer counterparty	20,159		—		20,159		—
Liabilities:
Derivative financial instruments:
Forward mortgage-backed securities trades	568		—		568		—
Financial institution counterparty	21,306		—		21,306		—

__________

(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.

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:   

			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	$	18,883	$	—	$	—	$	18,883	$	3,813
December 31, 2020
Assets:
Individually evaluated loans	$	16,903	$	—	$	—	$	16,903	$	13,041

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:

					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	$	3,059,826	$	3,059,826	$	3,059,826	$	—	$	—
Certificates of deposit held in other banks	3,245		3,258		—		3,258		—
Loans held for sale, at cost	4,140		4,221		—		4,221		—
Loans, net	12,291,233		12,693,534		—		—		12,693,534
FHLB of Dallas stock and other restricted stock	21,541		21,541		—		21,541		—
Accrued interest receivable	51,438		51,438		—		51,438		—
Financial liabilities:
Deposits	15,524,182		15,537,308		—		15,537,308		—
Accrued interest payable	3,125		3,125		—		3,125		—
FHLB advances	350,000		334,631		—		334,631		—
Other borrowings	281,697		301,575		—		301,575		—
Junior subordinated debentures	54,171		44,330		—		44,330		—
Off-balance sheet assets (liabilities):
Commitments to extend credit	—		—		—		—		—
Standby letters of credit	—		—		—		—		—
December 31, 2020
Financial assets:
Cash and cash equivalents	$	1,813,987	$	1,813,987	$	1,813,987	$	—	$	—
Certificates of deposit held in other banks	4,482		4,595		—		4,595		—
Loans held for sale, at cost	10,878		11,138		—		11,138		—
Loans, net	12,978,238		13,093,698		—		—		13,093,698
FHLB of Dallas stock and other restricted stock	20,305		20,305		—		20,305		—
Accrued interest receivable	60,581		60,581		—		60,581		—
Financial liabilities:
Deposits	14,398,927		14,407,596		—		14,407,596		—
Accrued interest payable	7,397		7,397		—		7,397		—
FHLB advances	375,000		371,175		—		371,175		—
Other borrowings	312,175		327,150		—		327,150		—
Junior subordinated debentures	54,023		42,624		—		42,624		—
Off-balance sheet assets (liabilities):
Commitments to extend credit	—		—		—		—		—
Standby letters of credit	—		—		—		—		—

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Derivative Financial Instruments (Tables)

9 Months Ended

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:

	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	$	100,000	$	140	$	210
Derivatives not designated as hedging instruments:
Interest rate lock commitments	51,676		1,566		2
Forward mortgage-backed securities trades	48,000		132		44
Commercial loan interest rate swaps:
Loan customer counterparty	276,030		9,631		577
Financial institution counterparty	276,030		595		10,064
December 31, 2020
Derivatives not designated as hedging instruments:
Interest rate lock commitments	$	116,795	$	3,515	$	—
Forward mortgage-backed securities trades	104,000		—		568
Commercial loan interest rate swaps:
Loan customer counterparty	335,370		20,159		—
Financial institution counterparty	335,370		—		21,306

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:

	Weighted Average Interest Rate
	September 30, 2021				December 31, 2020
	Received		Paid		Received		Paid
Loan customer counterparty	4.09	%	2.30	%	4.08	%	2.32	%

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:

	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	$	215	$	—	$	369	$	—
Derivatives not designated as hedging instruments
Interest rate lock commitments	Mortgage banking revenue	(502)		1,517		(1,951)		4,262
Forward mortgage-backed securities trades	Mortgage banking revenue	148		192		656		(249)

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Stock Awards (Tables)

9 Months Ended

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:

Restricted Stock Awards	Number of Shares	Weighted Average Grant Date Fair Value
Nonvested shares, December 31, 2020	468,800	$	49.01
Granted during the period	96,713	64.91
Vested during the period	(176,689)	51.43
Forfeited during the period	(34,822)	50.10
Nonvested shares, September 30, 2021	354,002	$	51.96
Nonvested shares, December 31, 2019	284,861	$	58.63
Granted during the period	304,790	43.38
Vested during the period	(112,914)	58.28
Forfeited during the period	(7,270)	51.97
Nonvested shares, September 30, 2020	469,467	$	48.91

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:

First year	158,055
Second year	116,569
Third year	75,303
Fourth year	4,075
Total nonvested shares	354,002

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:

Performance-based Restricted Stock Units	Number of Shares	Weighted Average Grant Date Fair Value
Nonvested shares, December 31, 2020	89,300	$	38.29
Granted during the period	25,198	63.92
Nonvested shares, September 30, 2021	114,498	$	43.93

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Regulatory Matters (Tables)

9 Months Ended

Sep. 30, 2021

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.

	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	$	1,884,618	13.64	%	$	1,450,815	10.50	%	N/A		N/A
Bank	1,953,355		14.14		1,450,381		10.50		$	1,381,316	10.00	%
Tier 1 capital to risk weighted assets:
Consolidated	1,583,950		11.46		1,174,470		8.50		N/A		N/A
Bank	1,856,687		13.44		1,174,118		8.50		1,105,052		8.00
Common equity tier 1 to risk weighted assets:
Consolidated	1,528,350		11.06		967,210		7.00		N/A		N/A
Bank	1,856,687		13.44		966,921		7.00		897,855		6.50
Tier 1 capital to average assets:
Consolidated	1,583,950		8.94		708,732		4.00		N/A		N/A
Bank	1,856,687		10.48		708,581		4.00		885,726		5.00
December 31, 2020
Total capital to risk weighted assets:
Consolidated	$	1,825,661	13.32	%	$	1,438,939	10.50	%	N/A		N/A
Bank	1,864,240		13.61		1,438,385		10.50		$	1,369,891	10.00	%
Tier 1 capital to risk weighted assets:
Consolidated	1,471,841		10.74		1,164,855		8.50		N/A		N/A
Bank	1,776,420		12.97		1,164,407		8.50		1,095,913		8.00
Common equity tier 1 to risk weighted assets:
Consolidated	1,416,241		10.33		959,293		7.00		N/A		N/A
Bank	1,776,420		12.97		958,924		7.00		890,429		6.50
Tier 1 capital to average assets:
Consolidated	1,471,841		9.12		645,730		4.00		N/A		N/A
Bank	1,776,420		11.01		645,539		4.00		806,924		5.00

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Summary of Significant Accounting Policies - Additional Information (Details) $ in Thousands	9 Months Ended
	Sep. 30, 2021 USD ($) segment business_trust	Jun. 30, 2021 USD ($)	Jan. 01, 2021 USD ($)	Dec. 31, 2020 USD ($)	Sep. 30, 2020 USD ($)	Jun. 30, 2020 USD ($)	Dec. 31, 2019 USD ($)
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Number of wholly owned statutory business trusts | business_trust	9
Number of reportable segments | segment	1
Cumulative effect reduction to retained earnings	$ (2,566,693)	$ (2,542,885)		$ (2,515,371)	$ (2,476,373)	$ (2,424,960)	$ (2,339,773)
Deferred Tax Assets, Allowance for Credit Losses			$ 15,113
Allowance for loan losses on PCI loans			87,820
Accounting Standards Update 2016-13 | Acquired with deteriorated credit quality
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Allowance for loan losses on PCI loans			13,035
Cumulative effect of change in accounting principles
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Cumulative effect reduction to retained earnings				53,880
Allowance for loan losses on PCI loans			$ 80,915
Retained Earnings
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Cumulative effect reduction to retained earnings	$ (600,987)	$ (579,585)		(543,800)	$ (504,135)	$ (454,878)	$ (393,674)
Retained Earnings | Cumulative effect of change in accounting principles
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Cumulative effect reduction to retained earnings				$ 53,880

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Summary of Significant Accounting Policies - CECL (Details) - USD ($) $ in Thousands	Sep. 30, 2021	Jun. 30, 2021	Jan. 01, 2021	Dec. 31, 2020	Sep. 30, 2020	Jun. 30, 2020	Dec. 31, 2019
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Allowance for Credit Loss			$ 87,820
Allowance for credit losses on off-balance-sheet credit exposures	$ 6,144	$ 1,733	0	$ 0	$ 0	$ 0	$ 0
Commercial
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Allowance for Credit Loss			27,311
Real estate | Commercial Construction, Land and Land Development
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Allowance for Credit Loss			50,123
Real estate | Residential Real Estate
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Allowance for Credit Loss			6,786
Real estate | Single-family interim construction
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Allowance for Credit Loss			2,156
Agricultural
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Allowance for Credit Loss			337
Consumer
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Allowance for Credit Loss			442
Other
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Allowance for Credit Loss			242
Unallocated
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Allowance for Credit Loss			423
Cumulative effect of change in accounting principles
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Allowance for Credit Loss			80,915
Allowance for credit losses on off-balance-sheet credit exposures	$ 0		1,113	$ 1,113	$ 0		$ 0
Cumulative effect of change in accounting principles | Commercial
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Allowance for Credit Loss			17,103
Cumulative effect of change in accounting principles | Real estate | Commercial Construction, Land and Land Development
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Allowance for Credit Loss			59,683
Cumulative effect of change in accounting principles | Real estate | Residential Real Estate
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Allowance for Credit Loss			(2,115)
Cumulative effect of change in accounting principles | Real estate | Single-family interim construction
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Allowance for Credit Loss			7,179
Cumulative effect of change in accounting principles | Agricultural
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Allowance for Credit Loss			(178)
Cumulative effect of change in accounting principles | Consumer
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Allowance for Credit Loss			(110)
Cumulative effect of change in accounting principles | Other
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Allowance for Credit Loss			(224)
Cumulative effect of change in accounting principles | Unallocated
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Allowance for Credit Loss			(423)
Adjusted beginning balance
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Allowance for Credit Loss			168,735
Allowance for credit losses on off-balance-sheet credit exposures			1,113
Adjusted beginning balance | Commercial
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Allowance for Credit Loss			44,414
Adjusted beginning balance | Real estate | Commercial Construction, Land and Land Development
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Allowance for Credit Loss			109,806
Adjusted beginning balance | Real estate | Residential Real Estate
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Allowance for Credit Loss			4,671
Adjusted beginning balance | Real estate | Single-family interim construction
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Allowance for Credit Loss			9,335
Adjusted beginning balance | Agricultural
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Allowance for Credit Loss			159
Adjusted beginning balance | Consumer
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Allowance for Credit Loss			332
Adjusted beginning balance | Other
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Allowance for Credit Loss			18
Adjusted beginning balance | Unallocated
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Allowance for Credit Loss			$ 0

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Summary of Significant Accounting Policies - EPS (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020
Basic earnings per share:
Net income	$ 52,340	$ 60,075	$ 170,563	$ 142,935
Less: Undistributed earnings allocated to participating securities	324	512	1,246	849
Less: Dividends paid on participating securities	126	112	399	248
Net income available to common shareholders	$ 51,890	$ 59,451	$ 168,918	$ 141,838
Weighted average basic shares outstanding (shares)	42,674,563	42,785,485	42,720,519	42,765,685
Basic earnings per share (usd per share)	$ 1.22	$ 1.39	$ 3.95	$ 3.32
Diluted earnings per share:
Total weighted average diluted shares outstanding (shares)	42,733,955	42,785,485	42,776,805	42,790,076
Diluted earnings per share (usd per share)	$ 1.21	$ 1.39	$ 3.95	$ 3.31
Anti-dilutive participating securities (shares)	155,036	113,291	182,225	0
Performance stock units
Diluted earnings per share:
Add dilutive (shares)	59,392	0	56,286	0
Participating Securities
Diluted earnings per share:
Add dilutive (shares)	0	0	0	24,391

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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

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Securities Available for Sale - Amortized Cost of Securities and Approximate Fair Values (Details) - USD ($) $ in Thousands	Sep. 30, 2021	Dec. 31, 2020
Debt Securities, Available-for-sale [Line Items]
Amortized Cost	$ 1,753,892	$ 1,108,453
Gross Unrealized Gains	36,975	47,271
Gross Unrealized Losses	(9,293)	(2,031)
Fair Value	1,781,574	1,153,693
Accrued Interest	6,480	6,242
U.S. treasuries
Debt Securities, Available-for-sale [Line Items]
Amortized Cost	61,116	43,060
Gross Unrealized Gains	1,210	1,648
Gross Unrealized Losses	(41)	0
Fair Value	62,285	44,708
Government agency securities
Debt Securities, Available-for-sale [Line Items]
Amortized Cost	463,613	247,764
Gross Unrealized Gains	2,254	3,169
Gross Unrealized Losses	(4,618)	(1,916)
Fair Value	461,249	249,017
Obligations of state and municipal subdivisions
Debt Securities, Available-for-sale [Line Items]
Amortized Cost	386,333	373,017
Gross Unrealized Gains	17,401	20,168
Gross Unrealized Losses	(346)	(20)
Fair Value	403,388	393,165
Corporate bonds
Debt Securities, Available-for-sale [Line Items]
Amortized Cost	29,992	21,496
Gross Unrealized Gains	957	608
Gross Unrealized Losses	(42)	(2)
Fair Value	30,907	22,102
Mortgage-backed securities guaranteed by FHLMC, FNMA and GNMA
Debt Securities, Available-for-sale [Line Items]
Amortized Cost	811,763	421,916
Gross Unrealized Gains	15,153	21,678
Gross Unrealized Losses	(4,246)	(93)
Fair Value	822,670	443,501
Other securities
Debt Securities, Available-for-sale [Line Items]
Amortized Cost	1,075	1,200
Gross Unrealized Gains	0	0
Gross Unrealized Losses	0	0
Fair Value	$ 1,075	$ 1,200

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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

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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

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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

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Securities Available for Sale - Summary of Unrealized Losses and Fair Value of Securities in Continuous Unrealized Loss Positions (Details) $ in Thousands	Sep. 30, 2021 USD ($) security	Dec. 31, 2020 USD ($) security
Debt Securities, Available-for-sale [Line Items]
Less than 12 months: number of securities | security	107	33
Less than 12 months: estimated fair value	$ 611,576	$ 159,025
Less than 12 months: unrealized losses	$ (7,540)	$ (2,031)
Greater than 12 months: number of securities | security	13	0
Greater than 12 months: estimated fair value	$ 64,199	$ 0
Greater than 12 months: unrealized losses	(1,753)	0
Total: estimated fair value	675,775	159,025
Total: unrealized losses	$ (9,293)	$ (2,031)
U.S. treasuries
Debt Securities, Available-for-sale [Line Items]
Less than 12 months: number of securities | security	1
Less than 12 months: estimated fair value	$ 10,316
Less than 12 months: unrealized losses	$ (41)
Greater than 12 months: number of securities | security	0
Greater than 12 months: estimated fair value	$ 0
Greater than 12 months: unrealized losses	0
Total: estimated fair value	10,316
Total: unrealized losses	$ (41)
Government agency securities
Debt Securities, Available-for-sale [Line Items]
Less than 12 months: number of securities | security	35	20
Less than 12 months: estimated fair value	$ 235,996	$ 112,897
Less than 12 months: unrealized losses	$ (3,045)	$ (1,916)
Greater than 12 months: number of securities | security	11	0
Greater than 12 months: estimated fair value	$ 58,413	$ 0
Greater than 12 months: unrealized losses	(1,573)	0
Total: estimated fair value	294,409	112,897
Total: unrealized losses	$ (4,618)	$ (1,916)
Obligations of state and municipal subdivisions
Debt Securities, Available-for-sale [Line Items]
Less than 12 months: number of securities | security	10	2
Less than 12 months: estimated fair value	$ 35,951	$ 3,786
Less than 12 months: unrealized losses	$ (331)	$ (20)
Greater than 12 months: number of securities | security	1	0
Greater than 12 months: estimated fair value	$ 1,008	$ 0
Greater than 12 months: unrealized losses	(15)	0
Total: estimated fair value	36,959	3,786
Total: unrealized losses	$ (346)	$ (20)
Corporate bonds
Debt Securities, Available-for-sale [Line Items]
Less than 12 months: number of securities | security	2	1
Less than 12 months: estimated fair value	$ 4,458	$ 998
Less than 12 months: unrealized losses	$ (42)	$ (2)
Greater than 12 months: number of securities | security	0	0
Greater than 12 months: estimated fair value	$ 0	$ 0
Greater than 12 months: unrealized losses	0	0
Total: estimated fair value	4,458	998
Total: unrealized losses	$ (42)	$ (2)
Mortgage-backed securities guaranteed by FHLMC, FNMA and GNMA
Debt Securities, Available-for-sale [Line Items]
Less than 12 months: number of securities | security	59	10
Less than 12 months: estimated fair value	$ 324,855	$ 41,344
Less than 12 months: unrealized losses	$ (4,081)	$ (93)
Greater than 12 months: number of securities | security	1	0
Greater than 12 months: estimated fair value	$ 4,778	$ 0
Greater than 12 months: unrealized losses	(165)	0
Total: estimated fair value	329,633	41,344
Total: unrealized losses	$ (4,246)	$ (93)

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Loans, Net and Allowance for Credit Losses on Loans - Composition of Loans (Details) - USD ($) $ in Thousands	Sep. 30, 2021	Jun. 30, 2021	Dec. 31, 2020	Sep. 30, 2020	Jun. 30, 2020	Dec. 31, 2019
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans	$ 12,441,514
Loans, before deferred fees			$ 13,076,095
Deferred loan fees, net	(11,336)		(10,037)
Allowance for credit losses	(150,281)	$ (154,791)	(87,820)	$ (87,491)	$ (80,055)	$ (51,461)
Total loans, net	12,291,233		12,978,238
Accrued Interest Receivable	44,953		54,328
Commercial
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans	2,999,980
Loans, before deferred fees			3,902,496
Allowance for credit losses	(49,086)	(46,957)	(27,311)	(25,873)	(25,498)	(12,844)
Real estate | Commercial Real Estate
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans	6,414,199
Loans, before deferred fees			6,096,676
Allowance for credit losses	(61,484)	(67,696)	(36,698)	(38,153)	(32,944)	(24,371)
Real estate | Commercial Construction, Land and Land Development
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans	1,216,195
Loans, before deferred fees			1,245,801
Allowance for credit losses	(28,757)	(27,842)	(13,425)	(13,556)	(12,932)	(8,714)
Real estate | Residential
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans	1,296,871
Loans, before deferred fees			1,352,465
Allowance for credit losses	(2,345)	(3,638)	(6,786)	(6,443)	(5,911)	(3,678)
Real estate | Single-family interim construction
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans	350,112
Loans, before deferred fees			326,575
Allowance for credit losses	(8,063)	(8,129)	(2,156)	(1,846)	(1,998)	(1,606)
Agricultural
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans	82,278
Loans, before deferred fees			85,014
Allowance for credit losses	(68)	(86)	(337)	(348)	(379)	(332)
Consumer
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans	81,879
Loans, before deferred fees			67,068
Allowance for credit losses	$ (478)	$ (443)	$ (684)	$ (555)	$ (431)	$ (231)

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Loans, Net and Allowance for Credit Losses on Loans - Additional Information (Details)	3 Months Ended		9 Months Ended
	Sep. 30, 2021 USD ($) modified_loan	Sep. 30, 2020 USD ($) modified_loan	Sep. 30, 2021 USD ($) modified_loan	Sep. 30, 2020 USD ($) modified_loan	Dec. 31, 2020 USD ($)
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans pledged	$ 6,842,932,000		$ 6,842,932,000		$ 6,743,350,000
Commercial Loans	12,291,233,000		12,291,233,000		12,978,238,000
Troubled debt restructuring modification recorded investment	$ 2,971,000		$ 2,971,000		2,564,000
Number of loans modified under troubled debt restructurings that subsequently defaulted | modified_loan	0	0	0	0
Commitments to lend	$ 0	$ 0	$ 0	$ 0
Commercial | Paycheck Protection Program
Accounts, Notes, Loans and Financing Receivable [Line Items]
PPP interest rate	1.00%		1.00%
PPP loans outstanding	$ 243,919,000		$ 243,919,000		804,397,000
PPP deferred loan fees	6,521,000		$ 6,521,000		9,770,000
Customer Concentration Risk | Consumer | Loans and Leases, Net
Accounts, Notes, Loans and Financing Receivable [Line Items]
Percentage of the portfolio			1.00%
Geographic Concentration Risk | Loans and Leases, Net | Colorado
Accounts, Notes, Loans and Financing Receivable [Line Items]
Percentage of the portfolio			24.00%
Maximum | Commercial | Paycheck Protection Program
Accounts, Notes, Loans and Financing Receivable [Line Items]
PPP term			5 years
Minimum
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans requiring external review (greater than)			$ 3,000,000
Minimum | Commercial | Paycheck Protection Program
Accounts, Notes, Loans and Financing Receivable [Line Items]
PPP term			2 years
Energy Related Loans | Commercial
Accounts, Notes, Loans and Financing Receivable [Line Items]
Commercial Loans	280,277,000		$ 280,277,000		205,496,000
Warehouse Loans | Commercial
Accounts, Notes, Loans and Financing Receivable [Line Items]
Commercial Loans	$ 977,800,000		$ 977,800,000		$ 1,453,797,000
Duration of the loans to larger mortgage originators			60 days
Warehouse Loans | Maximum | Commercial
Accounts, Notes, Loans and Financing Receivable [Line Items]
Duration of the loans to mortgage bankers			15 days
Owner Occupied | Customer Concentration Risk | Loans and Leases, Net
Accounts, Notes, Loans and Financing Receivable [Line Items]
Percentage of the portfolio			27.00%
Real Estate Loan | Agricultural
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loan to value ratio (percent)	80.00%		80.00%
Loan, amortization period			20 years
Non-Real Estate Loan | Agricultural
Accounts, Notes, Loans and Financing Receivable [Line Items]
Period of operating lines			1 year

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Loans, Net and Allowance for Credit Losses on Loans - Rollforward of Activity in Credit Losses (Details) - USD ($) $ in Thousands		3 Months Ended		9 Months Ended
	Jan. 01, 2021	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020
Allowance for Credit Loss [Roll Forward]
Balance at beginning of period	$ 87,820	$ 154,791	$ 80,055	$ 87,820	$ 51,461
Provision for credit losses		(4,411)	7,620	(14,031)	39,122
Charge-offs		(126)	(223)	(4,506)	(3,293)
Recoveries		27	39	83	201
Balance at end of period		150,281	87,491	150,281	87,491
Cumulative effect of change in accounting principles
Allowance for Credit Loss [Roll Forward]
Impact of adopting ASC 326	67,880
Initial allowance on loans purchased with credit deterioration	13,035
Commercial
Allowance for Credit Loss [Roll Forward]
Balance at beginning of period	27,311	46,957	25,498	27,311	12,844
Provision for credit losses		2,190	476	8,466	15,111
Charge-offs		(78)	(117)	(3,832)	(2,170)
Recoveries		17	16	38	88
Balance at end of period		49,086	25,873	49,086	25,873
Commercial | Cumulative effect of change in accounting principles
Allowance for Credit Loss [Roll Forward]
Impact of adopting ASC 326	12,775
Initial allowance on loans purchased with credit deterioration	4,328
Real estate | Commercial Real Estate
Allowance for Credit Loss [Roll Forward]
Balance at beginning of period	36,698	67,696	32,944	36,698	24,371
Provision for credit losses		(6,212)	5,205	(11,587)	14,513
Charge-offs		0	0	(375)	(735)
Recoveries		0	4	0	4
Balance at end of period		61,484	38,153	61,484	38,153
Real estate | Commercial Real Estate | Cumulative effect of change in accounting principles
Allowance for Credit Loss [Roll Forward]
Impact of adopting ASC 326	29,108
Initial allowance on loans purchased with credit deterioration	7,640
Real estate | Commercial Construction, Land and Land Development
Allowance for Credit Loss [Roll Forward]
Balance at beginning of period	13,425	27,842	12,932	13,425	8,714
Provision for credit losses		915	624	(7,477)	4,842
Charge-offs		0	0	(126)	0
Recoveries		0	0	0	0
Balance at end of period		28,757	13,556	28,757	13,556
Real estate | Commercial Construction, Land and Land Development | Cumulative effect of change in accounting principles
Allowance for Credit Loss [Roll Forward]
Impact of adopting ASC 326	22,008
Initial allowance on loans purchased with credit deterioration	927
Real estate | Residential Real Estate
Allowance for Credit Loss [Roll Forward]
Balance at beginning of period	6,786	3,638	5,911	6,786	3,678
Provision for credit losses		(1,293)	532	(2,326)	2,765
Charge-offs		0	0	0	0
Recoveries		0	0	0	0
Balance at end of period		2,345	6,443	2,345	6,443
Real estate | Residential Real Estate | Cumulative effect of change in accounting principles
Allowance for Credit Loss [Roll Forward]
Impact of adopting ASC 326	(2,255)
Initial allowance on loans purchased with credit deterioration	140
Real estate | Single-family interim construction
Allowance for Credit Loss [Roll Forward]
Balance at beginning of period	2,156	8,129	1,998	2,156	1,606
Provision for credit losses		(66)	(152)	(1,272)	322
Charge-offs		0	0	0	(82)
Recoveries		0	0	0	0
Balance at end of period		8,063	1,846	8,063	1,846
Real estate | Single-family interim construction | Cumulative effect of change in accounting principles
Allowance for Credit Loss [Roll Forward]
Impact of adopting ASC 326	7,179
Initial allowance on loans purchased with credit deterioration	0
Agricultural
Allowance for Credit Loss [Roll Forward]
Balance at beginning of period	337	86	379	337	332
Provision for credit losses		(18)	(31)	(91)	16
Charge-offs		0	0	0	0
Recoveries		0	0	0	0
Balance at end of period		68	348	68	348
Agricultural | Cumulative effect of change in accounting principles
Allowance for Credit Loss [Roll Forward]
Impact of adopting ASC 326	(178)
Initial allowance on loans purchased with credit deterioration	0
Consumer
Allowance for Credit Loss [Roll Forward]
Balance at beginning of period	684	443	431	684	231
Provision for credit losses		73	211	256	521
Charge-offs		(48)	(106)	(173)	(306)
Recoveries		10	19	45	109
Balance at end of period		478	555	478	555
Consumer | Cumulative effect of change in accounting principles
Allowance for Credit Loss [Roll Forward]
Impact of adopting ASC 326	(334)
Initial allowance on loans purchased with credit deterioration	0
Unallocated
Allowance for Credit Loss [Roll Forward]
Balance at beginning of period	423	0	(38)	423	(315)
Provision for credit losses		0	755	0	1,032
Charge-offs		0	0	0	0
Recoveries		0	0	0	0
Balance at end of period		$ 0	$ 717	$ 0	$ 717
Unallocated | Cumulative effect of change in accounting principles
Allowance for Credit Loss [Roll Forward]
Impact of adopting ASC 326	(423)
Initial allowance on loans purchased with credit deterioration	$ 0

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Loans, Net and Allowance for Credit Losses on Loans - Individually Evaluated Loans by Loan Class (Details) - USD ($) $ in Thousands	Sep. 30, 2021	Dec. 31, 2020
Financing Receivable, Impaired [Line Items]
Individually evaluated loans	$ 84,638	$ 64,383
Specific allocations of individually evaluated loans	21,901	8,524
Commercial
Financing Receivable, Impaired [Line Items]
Individually evaluated loans	43,038	39,298
Specific allocations of individually evaluated loans	19,365	8,281
Real estate | Commercial Real Estate
Financing Receivable, Impaired [Line Items]
Individually evaluated loans	40,235	21,848
Specific allocations of individually evaluated loans	1,955	243
Real estate | Commercial Construction, Land and Land Development
Financing Receivable, Impaired [Line Items]
Individually evaluated loans	1,365	32
Specific allocations of individually evaluated loans	581	0
Real estate | Residential Real Estate
Financing Receivable, Impaired [Line Items]
Individually evaluated loans	0	2,550
Specific allocations of individually evaluated loans	0	0
Real estate | Single-family interim construction
Financing Receivable, Impaired [Line Items]
Individually evaluated loans	0	0
Specific allocations of individually evaluated loans	0	0
Agricultural
Financing Receivable, Impaired [Line Items]
Individually evaluated loans	0	613
Specific allocations of individually evaluated loans	0	0
Consumer
Financing Receivable, Impaired [Line Items]
Individually evaluated loans	0	42
Specific allocations of individually evaluated loans	$ 0	$ 0

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Loans, Net and Allowance for Credit Losses on Loans - Summary of Non Performing Loans by Loan Class (Details) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2021	Dec. 31, 2020
Accounts, Notes, Loans and Financing Receivable [Line Items]
Troubled debt restructurings (not included in nonaccrual or loans past due and still accruing)	$ 2,971	$ 2,564
Nonaccrual, No Allowance	552
Financing Receivable, Nonaccrual, Interest Income	0
Nonperforming Financial Instruments
Accounts, Notes, Loans and Financing Receivable [Line Items]
Nonaccrual Loans	80,531	48,997
Loans past due 90 days and still accruing	280	433
Troubled debt restructurings (not included in nonaccrual or loans past due and still accruing)	1,903	1,986
Total nonperforming loans	82,714	51,416
Nonperforming Financial Instruments | Commercial
Accounts, Notes, Loans and Financing Receivable [Line Items]
Nonaccrual Loans	44,712	25,898
Loans past due 90 days and still accruing	77	433
Troubled debt restructurings (not included in nonaccrual or loans past due and still accruing)	0	0
Total nonperforming loans	44,789	26,331
Nonperforming Financial Instruments | Real estate | Commercial Real Estate
Accounts, Notes, Loans and Financing Receivable [Line Items]
Nonaccrual Loans	34,291	20,040
Loans past due 90 days and still accruing	0	0
Troubled debt restructurings (not included in nonaccrual or loans past due and still accruing)	1,738	1,808
Total nonperforming loans	36,029	21,848
Nonperforming Financial Instruments | Real estate | Commercial Construction, Land and Land Development
Accounts, Notes, Loans and Financing Receivable [Line Items]
Nonaccrual Loans	25	32
Loans past due 90 days and still accruing	0	0
Troubled debt restructurings (not included in nonaccrual or loans past due and still accruing)	0	0
Total nonperforming loans	25	32
Nonperforming Financial Instruments | Real estate | Residential Real Estate
Accounts, Notes, Loans and Financing Receivable [Line Items]
Nonaccrual Loans	1,460	2,372
Loans past due 90 days and still accruing	201	0
Troubled debt restructurings (not included in nonaccrual or loans past due and still accruing)	165	178
Total nonperforming loans	1,826	2,550
Nonperforming Financial Instruments | Real estate | Single-family interim construction
Accounts, Notes, Loans and Financing Receivable [Line Items]
Nonaccrual Loans	0	0
Loans past due 90 days and still accruing	0	0
Troubled debt restructurings (not included in nonaccrual or loans past due and still accruing)	0	0
Total nonperforming loans	0	0
Nonperforming Financial Instruments | Agricultural
Accounts, Notes, Loans and Financing Receivable [Line Items]
Nonaccrual Loans	0	613
Loans past due 90 days and still accruing	0	0
Troubled debt restructurings (not included in nonaccrual or loans past due and still accruing)	0	0
Total nonperforming loans	0	613
Nonperforming Financial Instruments | Consumer
Accounts, Notes, Loans and Financing Receivable [Line Items]
Nonaccrual Loans	43	42
Loans past due 90 days and still accruing	2	0
Troubled debt restructurings (not included in nonaccrual or loans past due and still accruing)	0	0
Total nonperforming loans	$ 45	$ 42

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Loans, Net and Allowance for Credit Losses on Loans - Summary of Troubled Debt Restructurings (Details) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2021 USD ($) contract	Sep. 30, 2020 USD ($) contract	Sep. 30, 2021 USD ($) contract	Sep. 30, 2020 USD ($) contract
Financing Receivable, Troubled Debt Restructuring [Line Items]
Number of loans modified under troubled debt restructuring | contract	0	0	3	1
Pre-restructuring outstanding recorded investment	$ 0	$ 0	$ 1,795	$ 1,517
Post-restructuring outstanding recorded investment	$ 0	$ 0	$ 576	$ 1,517
Commercial
Financing Receivable, Troubled Debt Restructuring [Line Items]
Number of loans modified under troubled debt restructuring | contract	0	0	2	0
Pre-restructuring outstanding recorded investment	$ 0	$ 0	$ 1,789	$ 0
Post-restructuring outstanding recorded investment	$ 0	$ 0	$ 570	$ 0
Real estate | Commercial Real Estate
Financing Receivable, Troubled Debt Restructuring [Line Items]
Number of loans modified under troubled debt restructuring | contract	0	0	0	1
Pre-restructuring outstanding recorded investment	$ 0	$ 0	$ 0	$ 1,517
Post-restructuring outstanding recorded investment	$ 0	$ 0	$ 0	$ 1,517
Real estate | Commercial Construction, Land and Land Development
Financing Receivable, Troubled Debt Restructuring [Line Items]
Number of loans modified under troubled debt restructuring | contract	0	0	0	0
Pre-restructuring outstanding recorded investment	$ 0	$ 0	$ 0	$ 0
Post-restructuring outstanding recorded investment	$ 0	$ 0	$ 0	$ 0
Real estate | Residential Real Estate
Financing Receivable, Troubled Debt Restructuring [Line Items]
Number of loans modified under troubled debt restructuring | contract	0	0	0	0
Pre-restructuring outstanding recorded investment	$ 0	$ 0	$ 0	$ 0
Post-restructuring outstanding recorded investment	$ 0	$ 0	$ 0	$ 0
Real estate | Single-family interim construction
Financing Receivable, Troubled Debt Restructuring [Line Items]
Number of loans modified under troubled debt restructuring | contract	0	0	0	0
Pre-restructuring outstanding recorded investment	$ 0	$ 0	$ 0	$ 0
Post-restructuring outstanding recorded investment	$ 0	$ 0	$ 0	$ 0
Agricultural
Financing Receivable, Troubled Debt Restructuring [Line Items]
Number of loans modified under troubled debt restructuring | contract	0	0	0	0
Pre-restructuring outstanding recorded investment	$ 0	$ 0	$ 0	$ 0
Post-restructuring outstanding recorded investment	$ 0	$ 0	$ 0	$ 0
Consumer
Financing Receivable, Troubled Debt Restructuring [Line Items]
Number of loans modified under troubled debt restructuring | contract	0	0	1	0
Pre-restructuring outstanding recorded investment	$ 0	$ 0	$ 6	$ 0
Post-restructuring outstanding recorded investment	$ 0	$ 0	$ 6	$ 0

XML

Loans, Net and Allowance for Credit Losses on Loans - Aging of Past Due Loans by Loan Class (Details) - USD ($) $ in Thousands	Sep. 30, 2021	Dec. 31, 2020
Financing Receivable, Past Due [Line Items]
Loans	$ 12,441,514
Loans, before deferred fees		$ 13,076,095
Acquired with deteriorated credit quality
Financing Receivable, Past Due [Line Items]
Loans, before deferred fees		214,786
Commercial
Financing Receivable, Past Due [Line Items]
Loans	2,999,980
Loans, before deferred fees		3,902,496
Real estate | Commercial Real Estate
Financing Receivable, Past Due [Line Items]
Loans	6,414,199
Loans, before deferred fees		6,096,676
Real estate | Commercial Construction, Land and Land Development
Financing Receivable, Past Due [Line Items]
Loans	1,216,195
Loans, before deferred fees		1,245,801
Real estate | Residential Real Estate
Financing Receivable, Past Due [Line Items]
Loans	1,296,871
Loans, before deferred fees		1,352,465
Real estate | Single-family interim construction
Financing Receivable, Past Due [Line Items]
Loans	350,112
Loans, before deferred fees		326,575
Agricultural
Financing Receivable, Past Due [Line Items]
Loans	82,278
Loans, before deferred fees		85,014
Consumer
Financing Receivable, Past Due [Line Items]
Loans	81,879
Loans, before deferred fees		67,068
Loans 30-89 Days Past Due
Financing Receivable, Past Due [Line Items]
Loans	24,508
Loans, before deferred fees		11,575
Loans 30-89 Days Past Due | Acquired with deteriorated credit quality
Financing Receivable, Past Due [Line Items]
Loans, before deferred fees		624
Loans 30-89 Days Past Due | Commercial
Financing Receivable, Past Due [Line Items]
Loans	704
Loans 30-89 Days Past Due | Real estate | Commercial Real Estate
Financing Receivable, Past Due [Line Items]
Loans	19,706
Loans 30-89 Days Past Due | Real estate | Commercial Construction, Land and Land Development
Financing Receivable, Past Due [Line Items]
Loans	868
Loans 30-89 Days Past Due | Real estate | Residential Real Estate
Financing Receivable, Past Due [Line Items]
Loans	2,267
Loans 30-89 Days Past Due | Real estate | Single-family interim construction
Financing Receivable, Past Due [Line Items]
Loans	269
Loans 30-89 Days Past Due | Agricultural
Financing Receivable, Past Due [Line Items]
Loans	595
Loans 30-89 Days Past Due | Consumer
Financing Receivable, Past Due [Line Items]
Loans	99
Loans 90 Days or More Past Due
Financing Receivable, Past Due [Line Items]
Loans	48,901
Loans, before deferred fees		34,306
Loans 90 Days or More Past Due | Acquired with deteriorated credit quality
Financing Receivable, Past Due [Line Items]
Loans, before deferred fees		3,219
Loans 90 Days or More Past Due | Commercial
Financing Receivable, Past Due [Line Items]
Loans	31,792
Loans 90 Days or More Past Due | Real estate | Commercial Real Estate
Financing Receivable, Past Due [Line Items]
Loans	16,540
Loans 90 Days or More Past Due | Real estate | Commercial Construction, Land and Land Development
Financing Receivable, Past Due [Line Items]
Loans	0
Loans 90 Days or More Past Due | Real estate | Residential Real Estate
Financing Receivable, Past Due [Line Items]
Loans	529
Loans 90 Days or More Past Due | Real estate | Single-family interim construction
Financing Receivable, Past Due [Line Items]
Loans	0
Loans 90 Days or More Past Due | Agricultural
Financing Receivable, Past Due [Line Items]
Loans	0
Loans 90 Days or More Past Due | Consumer
Financing Receivable, Past Due [Line Items]
Loans	40
Total Past Due Loans
Financing Receivable, Past Due [Line Items]
Loans	73,409
Loans, before deferred fees		45,881
Total Past Due Loans | Acquired with deteriorated credit quality
Financing Receivable, Past Due [Line Items]
Loans, before deferred fees		3,843
Total Past Due Loans | Commercial
Financing Receivable, Past Due [Line Items]
Loans	32,496
Total Past Due Loans | Real estate | Commercial Real Estate
Financing Receivable, Past Due [Line Items]
Loans	36,246
Total Past Due Loans | Real estate | Commercial Construction, Land and Land Development
Financing Receivable, Past Due [Line Items]
Loans	868
Total Past Due Loans | Real estate | Residential Real Estate
Financing Receivable, Past Due [Line Items]
Loans	2,796
Total Past Due Loans | Real estate | Single-family interim construction
Financing Receivable, Past Due [Line Items]
Loans	269
Total Past Due Loans | Agricultural
Financing Receivable, Past Due [Line Items]
Loans	595
Total Past Due Loans | Consumer
Financing Receivable, Past Due [Line Items]
Loans	139
Current Loans
Financing Receivable, Past Due [Line Items]
Loans	12,368,105
Loans, before deferred fees		13,030,214
Current Loans | Acquired with deteriorated credit quality
Financing Receivable, Past Due [Line Items]
Loans, before deferred fees		210,943
Current Loans | Commercial
Financing Receivable, Past Due [Line Items]
Loans	2,967,484
Current Loans | Real estate | Commercial Real Estate
Financing Receivable, Past Due [Line Items]
Loans	6,377,953
Current Loans | Real estate | Commercial Construction, Land and Land Development
Financing Receivable, Past Due [Line Items]
Loans	1,215,327
Current Loans | Real estate | Residential Real Estate
Financing Receivable, Past Due [Line Items]
Loans	1,294,075
Current Loans | Real estate | Single-family interim construction
Financing Receivable, Past Due [Line Items]
Loans	349,843
Current Loans | Agricultural
Financing Receivable, Past Due [Line Items]
Loans	81,683
Current Loans | Consumer
Financing Receivable, Past Due [Line Items]
Loans	$ 81,740
Receivables, excluding receivables acquired with deteriorated credit quality
Financing Receivable, Past Due [Line Items]
Loans, before deferred fees		12,861,309
Receivables, excluding receivables acquired with deteriorated credit quality | Commercial
Financing Receivable, Past Due [Line Items]
Loans, before deferred fees		3,863,280
Receivables, excluding receivables acquired with deteriorated credit quality | Real estate | Commercial Real Estate
Financing Receivable, Past Due [Line Items]
Loans, before deferred fees		5,940,947
Receivables, excluding receivables acquired with deteriorated credit quality | Real estate | Commercial Construction, Land and Land Development
Financing Receivable, Past Due [Line Items]
Loans, before deferred fees		1,230,543
Receivables, excluding receivables acquired with deteriorated credit quality | Real estate | Residential Real Estate
Financing Receivable, Past Due [Line Items]
Loans, before deferred fees		1,347,784
Receivables, excluding receivables acquired with deteriorated credit quality | Real estate | Single-family interim construction
Financing Receivable, Past Due [Line Items]
Loans, before deferred fees		326,575
Receivables, excluding receivables acquired with deteriorated credit quality | Agricultural
Financing Receivable, Past Due [Line Items]
Loans, before deferred fees		84,897
Receivables, excluding receivables acquired with deteriorated credit quality | Consumer
Financing Receivable, Past Due [Line Items]
Loans, before deferred fees		67,283
Receivables, excluding receivables acquired with deteriorated credit quality | Loans 30-89 Days Past Due
Financing Receivable, Past Due [Line Items]
Loans, before deferred fees		10,951
Receivables, excluding receivables acquired with deteriorated credit quality | Loans 30-89 Days Past Due | Commercial
Financing Receivable, Past Due [Line Items]
Loans, before deferred fees		3,243
Receivables, excluding receivables acquired with deteriorated credit quality | Loans 30-89 Days Past Due | Real estate | Commercial Real Estate
Financing Receivable, Past Due [Line Items]
Loans, before deferred fees		2,434
Receivables, excluding receivables acquired with deteriorated credit quality | Loans 30-89 Days Past Due | Real estate | Commercial Construction, Land and Land Development
Financing Receivable, Past Due [Line Items]
Loans, before deferred fees		19
Receivables, excluding receivables acquired with deteriorated credit quality | Loans 30-89 Days Past Due | Real estate | Residential Real Estate
Financing Receivable, Past Due [Line Items]
Loans, before deferred fees		5,169
Receivables, excluding receivables acquired with deteriorated credit quality | Loans 30-89 Days Past Due | Real estate | Single-family interim construction
Financing Receivable, Past Due [Line Items]
Loans, before deferred fees		0
Receivables, excluding receivables acquired with deteriorated credit quality | Loans 30-89 Days Past Due | Agricultural
Financing Receivable, Past Due [Line Items]
Loans, before deferred fees		0
Receivables, excluding receivables acquired with deteriorated credit quality | Loans 30-89 Days Past Due | Consumer
Financing Receivable, Past Due [Line Items]
Loans, before deferred fees		86
Receivables, excluding receivables acquired with deteriorated credit quality | Loans 90 Days or More Past Due
Financing Receivable, Past Due [Line Items]
Loans, before deferred fees		31,087
Receivables, excluding receivables acquired with deteriorated credit quality | Loans 90 Days or More Past Due | Commercial
Financing Receivable, Past Due [Line Items]
Loans, before deferred fees		13,227
Receivables, excluding receivables acquired with deteriorated credit quality | Loans 90 Days or More Past Due | Real estate | Commercial Real Estate
Financing Receivable, Past Due [Line Items]
Loans, before deferred fees		16,790
Receivables, excluding receivables acquired with deteriorated credit quality | Loans 90 Days or More Past Due | Real estate | Commercial Construction, Land and Land Development
Financing Receivable, Past Due [Line Items]
Loans, before deferred fees		0
Receivables, excluding receivables acquired with deteriorated credit quality | Loans 90 Days or More Past Due | Real estate | Residential Real Estate
Financing Receivable, Past Due [Line Items]
Loans, before deferred fees		1,028
Receivables, excluding receivables acquired with deteriorated credit quality | Loans 90 Days or More Past Due | Real estate | Single-family interim construction
Financing Receivable, Past Due [Line Items]
Loans, before deferred fees		0
Receivables, excluding receivables acquired with deteriorated credit quality | Loans 90 Days or More Past Due | Agricultural
Financing Receivable, Past Due [Line Items]
Loans, before deferred fees		1
Receivables, excluding receivables acquired with deteriorated credit quality | Loans 90 Days or More Past Due | Consumer
Financing Receivable, Past Due [Line Items]
Loans, before deferred fees		41
Receivables, excluding receivables acquired with deteriorated credit quality | Total Past Due Loans
Financing Receivable, Past Due [Line Items]
Loans, before deferred fees		42,038
Receivables, excluding receivables acquired with deteriorated credit quality | Total Past Due Loans | Commercial
Financing Receivable, Past Due [Line Items]
Loans, before deferred fees		16,470
Receivables, excluding receivables acquired with deteriorated credit quality | Total Past Due Loans | Real estate | Commercial Real Estate
Financing Receivable, Past Due [Line Items]
Loans, before deferred fees		19,224
Receivables, excluding receivables acquired with deteriorated credit quality | Total Past Due Loans | Real estate | Commercial Construction, Land and Land Development
Financing Receivable, Past Due [Line Items]
Loans, before deferred fees		19
Receivables, excluding receivables acquired with deteriorated credit quality | Total Past Due Loans | Real estate | Residential Real Estate
Financing Receivable, Past Due [Line Items]
Loans, before deferred fees		6,197
Receivables, excluding receivables acquired with deteriorated credit quality | Total Past Due Loans | Real estate | Single-family interim construction
Financing Receivable, Past Due [Line Items]
Loans, before deferred fees		0
Receivables, excluding receivables acquired with deteriorated credit quality | Total Past Due Loans | Agricultural
Financing Receivable, Past Due [Line Items]
Loans, before deferred fees		1
Receivables, excluding receivables acquired with deteriorated credit quality | Total Past Due Loans | Consumer
Financing Receivable, Past Due [Line Items]
Loans, before deferred fees		127
Receivables, excluding receivables acquired with deteriorated credit quality | Current Loans
Financing Receivable, Past Due [Line Items]
Loans, before deferred fees		12,819,271
Receivables, excluding receivables acquired with deteriorated credit quality | Current Loans | Commercial
Financing Receivable, Past Due [Line Items]
Loans, before deferred fees		3,846,810
Receivables, excluding receivables acquired with deteriorated credit quality | Current Loans | Real estate | Commercial Real Estate
Financing Receivable, Past Due [Line Items]
Loans, before deferred fees		5,921,723
Receivables, excluding receivables acquired with deteriorated credit quality | Current Loans | Real estate | Commercial Construction, Land and Land Development
Financing Receivable, Past Due [Line Items]
Loans, before deferred fees		1,230,524
Receivables, excluding receivables acquired with deteriorated credit quality | Current Loans | Real estate | Residential Real Estate
Financing Receivable, Past Due [Line Items]
Loans, before deferred fees		1,341,587
Receivables, excluding receivables acquired with deteriorated credit quality | Current Loans | Real estate | Single-family interim construction
Financing Receivable, Past Due [Line Items]
Loans, before deferred fees		326,575
Receivables, excluding receivables acquired with deteriorated credit quality | Current Loans | Agricultural
Financing Receivable, Past Due [Line Items]
Loans, before deferred fees		84,896
Receivables, excluding receivables acquired with deteriorated credit quality | Current Loans | Consumer
Financing Receivable, Past Due [Line Items]
Loans, before deferred fees		$ 67,156

XML

Loans, Net and Allowance for Credit Losses on Loans - Loans held for investment by year of origination and internally assigned credit grade (Details) $ in Thousands	Sep. 30, 2021 USD ($)
Financing Receivable, Credit Quality Indicator [Line Items]
Total Loans	$ 12,441,514
Commercial
Financing Receivable, Credit Quality Indicator [Line Items]
Term Loans by Year of Origination, 2021	519,696
Term Loans by Year of Origination, 2020	212,703
Term Loans by Year of Origination, 2019	175,355
Term Loans by Year of Origination, 2018	123,954
Term Loans by Year of Origination, 2017	125,153
Term Loans by Year of Origination, Prior	188,107
Revolving Loans	1,646,500
Revolving Loans Converted to Term Loans	8,512
Total Loans	2,999,980
Commercial | Pass
Financing Receivable, Credit Quality Indicator [Line Items]
Term Loans by Year of Origination, 2021	500,792
Term Loans by Year of Origination, 2020	205,018
Term Loans by Year of Origination, 2019	127,779
Term Loans by Year of Origination, 2018	102,993
Term Loans by Year of Origination, 2017	107,046
Term Loans by Year of Origination, Prior	173,621
Revolving Loans	1,589,766
Revolving Loans Converted to Term Loans	4,971
Total Loans	2,811,986
Commercial | Pass/ Watch
Financing Receivable, Credit Quality Indicator [Line Items]
Term Loans by Year of Origination, 2021	405
Term Loans by Year of Origination, 2020	3,171
Term Loans by Year of Origination, 2019	761
Term Loans by Year of Origination, 2018	14,267
Term Loans by Year of Origination, 2017	10,224
Term Loans by Year of Origination, Prior	7,398
Revolving Loans	26,533
Revolving Loans Converted to Term Loans	3,538
Total Loans	66,297
Commercial | Special Mention
Financing Receivable, Credit Quality Indicator [Line Items]
Term Loans by Year of Origination, 2021	1,852
Term Loans by Year of Origination, 2020	1,404
Term Loans by Year of Origination, 2019	11,620
Term Loans by Year of Origination, 2018	767
Term Loans by Year of Origination, 2017	4,371
Term Loans by Year of Origination, Prior	15
Revolving Loans	3,684
Revolving Loans Converted to Term Loans	0
Total Loans	23,713
Commercial | Substandard
Financing Receivable, Credit Quality Indicator [Line Items]
Term Loans by Year of Origination, 2021	16,647
Term Loans by Year of Origination, 2020	3,110
Term Loans by Year of Origination, 2019	35,195
Term Loans by Year of Origination, 2018	5,927
Term Loans by Year of Origination, 2017	3,512
Term Loans by Year of Origination, Prior	7,073
Revolving Loans	16,620
Revolving Loans Converted to Term Loans	3
Total Loans	88,087
Commercial | Doubtful
Financing Receivable, Credit Quality Indicator [Line Items]
Term Loans by Year of Origination, 2021	0
Term Loans by Year of Origination, 2020	0
Term Loans by Year of Origination, 2019	0
Term Loans by Year of Origination, 2018	0
Term Loans by Year of Origination, 2017	0
Term Loans by Year of Origination, Prior	0
Revolving Loans	9,897
Revolving Loans Converted to Term Loans	0
Total Loans	9,897
Real estate | Commercial Real Estate
Financing Receivable, Credit Quality Indicator [Line Items]
Term Loans by Year of Origination, 2021	1,592,922
Term Loans by Year of Origination, 2020	1,364,120
Term Loans by Year of Origination, 2019	991,828
Term Loans by Year of Origination, 2018	867,296
Term Loans by Year of Origination, 2017	647,725
Term Loans by Year of Origination, Prior	882,890
Revolving Loans	64,761
Revolving Loans Converted to Term Loans	2,657
Total Loans	6,414,199
Real estate | Commercial Real Estate | Pass
Financing Receivable, Credit Quality Indicator [Line Items]
Term Loans by Year of Origination, 2021	1,481,214
Term Loans by Year of Origination, 2020	1,278,477
Term Loans by Year of Origination, 2019	885,209
Term Loans by Year of Origination, 2018	706,642
Term Loans by Year of Origination, 2017	585,905
Term Loans by Year of Origination, Prior	724,951
Revolving Loans	63,240
Revolving Loans Converted to Term Loans	1,299
Total Loans	5,726,937
Real estate | Commercial Real Estate | Pass/ Watch
Financing Receivable, Credit Quality Indicator [Line Items]
Term Loans by Year of Origination, 2021	63,129
Term Loans by Year of Origination, 2020	25,453
Term Loans by Year of Origination, 2019	63,473
Term Loans by Year of Origination, 2018	79,563
Term Loans by Year of Origination, 2017	19,205
Term Loans by Year of Origination, Prior	86,177
Revolving Loans	452
Revolving Loans Converted to Term Loans	1,358
Total Loans	338,810
Real estate | Commercial Real Estate | Special Mention
Financing Receivable, Credit Quality Indicator [Line Items]
Term Loans by Year of Origination, 2021	24,537
Term Loans by Year of Origination, 2020	29,042
Term Loans by Year of Origination, 2019	40,808
Term Loans by Year of Origination, 2018	69,181
Term Loans by Year of Origination, 2017	41,044
Term Loans by Year of Origination, Prior	40,794
Revolving Loans	0
Revolving Loans Converted to Term Loans	0
Total Loans	245,406
Real estate | Commercial Real Estate | Substandard
Financing Receivable, Credit Quality Indicator [Line Items]
Term Loans by Year of Origination, 2021	24,042
Term Loans by Year of Origination, 2020	31,148
Term Loans by Year of Origination, 2019	2,338
Term Loans by Year of Origination, 2018	11,910
Term Loans by Year of Origination, 2017	1,571
Term Loans by Year of Origination, Prior	30,968
Revolving Loans	1,069
Revolving Loans Converted to Term Loans	0
Total Loans	103,046
Real estate | Commercial Real Estate | Doubtful
Financing Receivable, Credit Quality Indicator [Line Items]
Term Loans by Year of Origination, 2021	0
Term Loans by Year of Origination, 2020	0
Term Loans by Year of Origination, 2019	0
Term Loans by Year of Origination, 2018	0
Term Loans by Year of Origination, 2017	0
Term Loans by Year of Origination, Prior	0
Revolving Loans	0
Revolving Loans Converted to Term Loans	0
Total Loans	0
Real estate | Commercial Construction, Land and Land Development
Financing Receivable, Credit Quality Indicator [Line Items]
Term Loans by Year of Origination, 2021	519,837
Term Loans by Year of Origination, 2020	302,832
Term Loans by Year of Origination, 2019	213,867
Term Loans by Year of Origination, 2018	125,140
Term Loans by Year of Origination, 2017	23,584
Term Loans by Year of Origination, Prior	18,280
Revolving Loans	12,655
Revolving Loans Converted to Term Loans	0
Total Loans	1,216,195
Real estate | Commercial Construction, Land and Land Development | Pass
Financing Receivable, Credit Quality Indicator [Line Items]
Term Loans by Year of Origination, 2021	484,572
Term Loans by Year of Origination, 2020	292,360
Term Loans by Year of Origination, 2019	207,346
Term Loans by Year of Origination, 2018	108,119
Term Loans by Year of Origination, 2017	21,627
Term Loans by Year of Origination, Prior	16,240
Revolving Loans	12,655
Revolving Loans Converted to Term Loans	0
Total Loans	1,142,919
Real estate | Commercial Construction, Land and Land Development | Pass/ Watch
Financing Receivable, Credit Quality Indicator [Line Items]
Term Loans by Year of Origination, 2021	19,886
Term Loans by Year of Origination, 2020	1,472
Term Loans by Year of Origination, 2019	6,104
Term Loans by Year of Origination, 2018	4,280
Term Loans by Year of Origination, 2017	0
Term Loans by Year of Origination, Prior	87
Revolving Loans	0
Revolving Loans Converted to Term Loans	0
Total Loans	31,829
Real estate | Commercial Construction, Land and Land Development | Special Mention
Financing Receivable, Credit Quality Indicator [Line Items]
Term Loans by Year of Origination, 2021	0
Term Loans by Year of Origination, 2020	9,000
Term Loans by Year of Origination, 2019	0
Term Loans by Year of Origination, 2018	0
Term Loans by Year of Origination, 2017	1,928
Term Loans by Year of Origination, Prior	0
Revolving Loans	0
Revolving Loans Converted to Term Loans	0
Total Loans	10,928
Real estate | Commercial Construction, Land and Land Development | Substandard
Financing Receivable, Credit Quality Indicator [Line Items]
Term Loans by Year of Origination, 2021	15,379
Term Loans by Year of Origination, 2020	0
Term Loans by Year of Origination, 2019	417
Term Loans by Year of Origination, 2018	12,741
Term Loans by Year of Origination, 2017	29
Term Loans by Year of Origination, Prior	1,953
Revolving Loans	0
Revolving Loans Converted to Term Loans	0
Total Loans	30,519
Real estate | Commercial Construction, Land and Land Development | Doubtful
Financing Receivable, Credit Quality Indicator [Line Items]
Term Loans by Year of Origination, 2021	0
Term Loans by Year of Origination, 2020	0
Term Loans by Year of Origination, 2019	0
Term Loans by Year of Origination, 2018	0
Term Loans by Year of Origination, 2017	0
Term Loans by Year of Origination, Prior	0
Revolving Loans	0
Revolving Loans Converted to Term Loans	0
Total Loans	0
Real estate | Residential Real Estate
Financing Receivable, Credit Quality Indicator [Line Items]
Term Loans by Year of Origination, 2021	313,799
Term Loans by Year of Origination, 2020	291,913
Term Loans by Year of Origination, 2019	214,453
Term Loans by Year of Origination, 2018	128,867
Term Loans by Year of Origination, 2017	100,578
Term Loans by Year of Origination, Prior	187,910
Revolving Loans	57,042
Revolving Loans Converted to Term Loans	2,309
Total Loans	1,296,871
Real estate | Residential Real Estate | Pass
Financing Receivable, Credit Quality Indicator [Line Items]
Term Loans by Year of Origination, 2021	310,811
Term Loans by Year of Origination, 2020	290,780
Term Loans by Year of Origination, 2019	212,659
Term Loans by Year of Origination, 2018	127,857
Term Loans by Year of Origination, 2017	97,097
Term Loans by Year of Origination, Prior	179,412
Revolving Loans	56,588
Revolving Loans Converted to Term Loans	2,309
Total Loans	1,277,513
Real estate | Residential Real Estate | Pass/ Watch
Financing Receivable, Credit Quality Indicator [Line Items]
Term Loans by Year of Origination, 2021	1,684
Term Loans by Year of Origination, 2020	497
Term Loans by Year of Origination, 2019	1,409
Term Loans by Year of Origination, 2018	411
Term Loans by Year of Origination, 2017	2,433
Term Loans by Year of Origination, Prior	4,321
Revolving Loans	169
Revolving Loans Converted to Term Loans	0
Total Loans	10,924
Real estate | Residential Real Estate | Special Mention
Financing Receivable, Credit Quality Indicator [Line Items]
Term Loans by Year of Origination, 2021	659
Term Loans by Year of Origination, 2020	462
Term Loans by Year of Origination, 2019	0
Term Loans by Year of Origination, 2018	130
Term Loans by Year of Origination, 2017	253
Term Loans by Year of Origination, Prior	1,059
Revolving Loans	231
Revolving Loans Converted to Term Loans	0
Total Loans	2,794
Real estate | Residential Real Estate | Substandard
Financing Receivable, Credit Quality Indicator [Line Items]
Term Loans by Year of Origination, 2021	645
Term Loans by Year of Origination, 2020	174
Term Loans by Year of Origination, 2019	385
Term Loans by Year of Origination, 2018	469
Term Loans by Year of Origination, 2017	795
Term Loans by Year of Origination, Prior	3,118
Revolving Loans	54
Revolving Loans Converted to Term Loans	0
Total Loans	5,640
Real estate | Residential Real Estate | Doubtful
Financing Receivable, Credit Quality Indicator [Line Items]
Term Loans by Year of Origination, 2021	0
Term Loans by Year of Origination, 2020	0
Term Loans by Year of Origination, 2019	0
Term Loans by Year of Origination, 2018	0
Term Loans by Year of Origination, 2017	0
Term Loans by Year of Origination, Prior	0
Revolving Loans	0
Revolving Loans Converted to Term Loans	0
Total Loans	0
Real estate | Single-family interim construction
Financing Receivable, Credit Quality Indicator [Line Items]
Term Loans by Year of Origination, 2021	231,771
Term Loans by Year of Origination, 2020	102,697
Term Loans by Year of Origination, 2019	12,021
Term Loans by Year of Origination, 2018	329
Term Loans by Year of Origination, 2017	0
Term Loans by Year of Origination, Prior	0
Revolving Loans	3,294
Revolving Loans Converted to Term Loans	0
Total Loans	350,112
Real estate | Single-family interim construction | Pass
Financing Receivable, Credit Quality Indicator [Line Items]
Term Loans by Year of Origination, 2021	231,771
Term Loans by Year of Origination, 2020	102,697
Term Loans by Year of Origination, 2019	12,021
Term Loans by Year of Origination, 2018	329
Term Loans by Year of Origination, 2017	0
Term Loans by Year of Origination, Prior	0
Revolving Loans	3,294
Revolving Loans Converted to Term Loans	0
Total Loans	350,112
Real estate | Single-family interim construction | Pass/ Watch
Financing Receivable, Credit Quality Indicator [Line Items]
Term Loans by Year of Origination, 2021	0
Term Loans by Year of Origination, 2020	0
Term Loans by Year of Origination, 2019	0
Term Loans by Year of Origination, 2018	0
Term Loans by Year of Origination, 2017	0
Term Loans by Year of Origination, Prior	0
Revolving Loans	0
Revolving Loans Converted to Term Loans	0
Total Loans	0
Real estate | Single-family interim construction | Special Mention
Financing Receivable, Credit Quality Indicator [Line Items]
Term Loans by Year of Origination, 2021	0
Term Loans by Year of Origination, 2020	0
Term Loans by Year of Origination, 2019	0
Term Loans by Year of Origination, 2018	0
Term Loans by Year of Origination, 2017	0
Term Loans by Year of Origination, Prior	0
Revolving Loans	0
Revolving Loans Converted to Term Loans	0
Total Loans	0
Real estate | Single-family interim construction | Substandard
Financing Receivable, Credit Quality Indicator [Line Items]
Term Loans by Year of Origination, 2021	0
Term Loans by Year of Origination, 2020	0
Term Loans by Year of Origination, 2019	0
Term Loans by Year of Origination, 2018	0
Term Loans by Year of Origination, 2017	0
Term Loans by Year of Origination, Prior	0
Revolving Loans	0
Revolving Loans Converted to Term Loans	0
Total Loans	0
Real estate | Single-family interim construction | Doubtful
Financing Receivable, Credit Quality Indicator [Line Items]
Term Loans by Year of Origination, 2021	0
Term Loans by Year of Origination, 2020	0
Term Loans by Year of Origination, 2019	0
Term Loans by Year of Origination, 2018	0
Term Loans by Year of Origination, 2017	0
Term Loans by Year of Origination, Prior	0
Revolving Loans	0
Revolving Loans Converted to Term Loans	0
Total Loans	0
Agricultural
Financing Receivable, Credit Quality Indicator [Line Items]
Term Loans by Year of Origination, 2021	17,438
Term Loans by Year of Origination, 2020	17,333
Term Loans by Year of Origination, 2019	6,118
Term Loans by Year of Origination, 2018	9,240
Term Loans by Year of Origination, 2017	13,431
Term Loans by Year of Origination, Prior	5,725
Revolving Loans	12,993
Revolving Loans Converted to Term Loans	0
Total Loans	82,278
Agricultural | Pass
Financing Receivable, Credit Quality Indicator [Line Items]
Term Loans by Year of Origination, 2021	17,438
Term Loans by Year of Origination, 2020	16,781
Term Loans by Year of Origination, 2019	4,576
Term Loans by Year of Origination, 2018	9,183
Term Loans by Year of Origination, 2017	12,451
Term Loans by Year of Origination, Prior	5,718
Revolving Loans	8,846
Revolving Loans Converted to Term Loans	0
Total Loans	74,993
Agricultural | Pass/ Watch
Financing Receivable, Credit Quality Indicator [Line Items]
Term Loans by Year of Origination, 2021	0
Term Loans by Year of Origination, 2020	552
Term Loans by Year of Origination, 2019	1,542
Term Loans by Year of Origination, 2018	57
Term Loans by Year of Origination, 2017	980
Term Loans by Year of Origination, Prior	0
Revolving Loans	4,147
Revolving Loans Converted to Term Loans	0
Total Loans	7,278
Agricultural | Special Mention
Financing Receivable, Credit Quality Indicator [Line Items]
Term Loans by Year of Origination, 2021	0
Term Loans by Year of Origination, 2020	0
Term Loans by Year of Origination, 2019	0
Term Loans by Year of Origination, 2018	0
Term Loans by Year of Origination, 2017	0
Term Loans by Year of Origination, Prior	0
Revolving Loans	0
Revolving Loans Converted to Term Loans	0
Total Loans	0
Agricultural | Substandard
Financing Receivable, Credit Quality Indicator [Line Items]
Term Loans by Year of Origination, 2021	0
Term Loans by Year of Origination, 2020	0
Term Loans by Year of Origination, 2019	0
Term Loans by Year of Origination, 2018	0
Term Loans by Year of Origination, 2017	0
Term Loans by Year of Origination, Prior	7
Revolving Loans	0
Revolving Loans Converted to Term Loans	0
Total Loans	7
Agricultural | Doubtful
Financing Receivable, Credit Quality Indicator [Line Items]
Term Loans by Year of Origination, 2021	0
Term Loans by Year of Origination, 2020	0
Term Loans by Year of Origination, 2019	0
Term Loans by Year of Origination, 2018	0
Term Loans by Year of Origination, 2017	0
Term Loans by Year of Origination, Prior	0
Revolving Loans	0
Revolving Loans Converted to Term Loans	0
Total Loans	0
Consumer
Financing Receivable, Credit Quality Indicator [Line Items]
Term Loans by Year of Origination, 2021	10,077
Term Loans by Year of Origination, 2020	10,583
Term Loans by Year of Origination, 2019	2,991
Term Loans by Year of Origination, 2018	878
Term Loans by Year of Origination, 2017	452
Term Loans by Year of Origination, Prior	238
Revolving Loans	56,614
Revolving Loans Converted to Term Loans	46
Total Loans	81,879
Consumer | Pass
Financing Receivable, Credit Quality Indicator [Line Items]
Term Loans by Year of Origination, 2021	10,072
Term Loans by Year of Origination, 2020	10,553
Term Loans by Year of Origination, 2019	2,991
Term Loans by Year of Origination, 2018	878
Term Loans by Year of Origination, 2017	440
Term Loans by Year of Origination, Prior	219
Revolving Loans	56,614
Revolving Loans Converted to Term Loans	46
Total Loans	81,813
Consumer | Pass/ Watch
Financing Receivable, Credit Quality Indicator [Line Items]
Term Loans by Year of Origination, 2021	0
Term Loans by Year of Origination, 2020	0
Term Loans by Year of Origination, 2019	0
Term Loans by Year of Origination, 2018	0
Term Loans by Year of Origination, 2017	2
Term Loans by Year of Origination, Prior	0
Revolving Loans	0
Revolving Loans Converted to Term Loans	0
Total Loans	2
Consumer | Special Mention
Financing Receivable, Credit Quality Indicator [Line Items]
Term Loans by Year of Origination, 2021	0
Term Loans by Year of Origination, 2020	0
Term Loans by Year of Origination, 2019	0
Term Loans by Year of Origination, 2018	0
Term Loans by Year of Origination, 2017	0
Term Loans by Year of Origination, Prior	0
Revolving Loans	0
Revolving Loans Converted to Term Loans	0
Total Loans	0
Consumer | Substandard
Financing Receivable, Credit Quality Indicator [Line Items]
Term Loans by Year of Origination, 2021	5
Term Loans by Year of Origination, 2020	30
Term Loans by Year of Origination, 2019	0
Term Loans by Year of Origination, 2018	0
Term Loans by Year of Origination, 2017	10
Term Loans by Year of Origination, Prior	19
Revolving Loans	0
Revolving Loans Converted to Term Loans	0
Total Loans	64
Consumer | Doubtful
Financing Receivable, Credit Quality Indicator [Line Items]
Term Loans by Year of Origination, 2021	0
Term Loans by Year of Origination, 2020	0
Term Loans by Year of Origination, 2019	0
Term Loans by Year of Origination, 2018	0
Term Loans by Year of Origination, 2017	0
Term Loans by Year of Origination, Prior	0
Revolving Loans	0
Revolving Loans Converted to Term Loans	0
Total Loans	$ 0

XML

Loans, Net and Allowance for Credit Losses on Loans - Summary of Loans by Credit Quality Indicator (Details) $ in Thousands	Dec. 31, 2020 USD ($)
Financing Receivable, Credit Quality Indicator [Line Items]
Loans	$ 13,076,095
Pass
Financing Receivable, Credit Quality Indicator [Line Items]
Loans	12,006,267
Pass/ Watch
Financing Receivable, Credit Quality Indicator [Line Items]
Loans	424,143
Special Mention
Financing Receivable, Credit Quality Indicator [Line Items]
Loans	406,080
Substandard
Financing Receivable, Credit Quality Indicator [Line Items]
Loans	229,514
Doubtful
Financing Receivable, Credit Quality Indicator [Line Items]
Loans	10,091
Commercial
Financing Receivable, Credit Quality Indicator [Line Items]
Loans	3,902,496
Commercial | Pass
Financing Receivable, Credit Quality Indicator [Line Items]
Loans	3,700,856
Commercial | Pass/ Watch
Financing Receivable, Credit Quality Indicator [Line Items]
Loans	55,960
Commercial | Special Mention
Financing Receivable, Credit Quality Indicator [Line Items]
Loans	38,186
Commercial | Substandard
Financing Receivable, Credit Quality Indicator [Line Items]
Loans	97,403
Commercial | Doubtful
Financing Receivable, Credit Quality Indicator [Line Items]
Loans	10,091
Real estate | Commercial Real Estate
Financing Receivable, Credit Quality Indicator [Line Items]
Loans	6,096,676
Real estate | Commercial Real Estate | Pass
Financing Receivable, Credit Quality Indicator [Line Items]
Loans	5,379,801
Real estate | Commercial Real Estate | Pass/ Watch
Financing Receivable, Credit Quality Indicator [Line Items]
Loans	306,884
Real estate | Commercial Real Estate | Special Mention
Financing Receivable, Credit Quality Indicator [Line Items]
Loans	317,580
Real estate | Commercial Real Estate | Substandard
Financing Receivable, Credit Quality Indicator [Line Items]
Loans	92,411
Real estate | Commercial Real Estate | Doubtful
Financing Receivable, Credit Quality Indicator [Line Items]
Loans	0
Real estate | Commercial Construction, Land and Land Development
Financing Receivable, Credit Quality Indicator [Line Items]
Loans	1,245,801
Real estate | Commercial Construction, Land and Land Development | Pass
Financing Receivable, Credit Quality Indicator [Line Items]
Loans	1,125,132
Real estate | Commercial Construction, Land and Land Development | Pass/ Watch
Financing Receivable, Credit Quality Indicator [Line Items]
Loans	46,026
Real estate | Commercial Construction, Land and Land Development | Special Mention
Financing Receivable, Credit Quality Indicator [Line Items]
Loans	43,383
Real estate | Commercial Construction, Land and Land Development | Substandard
Financing Receivable, Credit Quality Indicator [Line Items]
Loans	31,260
Real estate | Commercial Construction, Land and Land Development | Doubtful
Financing Receivable, Credit Quality Indicator [Line Items]
Loans	0
Real estate | Residential Real Estate
Financing Receivable, Credit Quality Indicator [Line Items]
Loans	1,352,465
Real estate | Residential Real Estate | Pass
Financing Receivable, Credit Quality Indicator [Line Items]
Loans	1,332,757
Real estate | Residential Real Estate | Pass/ Watch
Financing Receivable, Credit Quality Indicator [Line Items]
Loans	6,296
Real estate | Residential Real Estate | Special Mention
Financing Receivable, Credit Quality Indicator [Line Items]
Loans	5,726
Real estate | Residential Real Estate | Substandard
Financing Receivable, Credit Quality Indicator [Line Items]
Loans	7,686
Real estate | Residential Real Estate | Doubtful
Financing Receivable, Credit Quality Indicator [Line Items]
Loans	0
Real estate | Single-family interim construction
Financing Receivable, Credit Quality Indicator [Line Items]
Loans	326,575
Real estate | Single-family interim construction | Pass
Financing Receivable, Credit Quality Indicator [Line Items]
Loans	323,800
Real estate | Single-family interim construction | Pass/ Watch
Financing Receivable, Credit Quality Indicator [Line Items]
Loans	2,775
Real estate | Single-family interim construction | Special Mention
Financing Receivable, Credit Quality Indicator [Line Items]
Loans	0
Real estate | Single-family interim construction | Substandard
Financing Receivable, Credit Quality Indicator [Line Items]
Loans	0
Real estate | Single-family interim construction | Doubtful
Financing Receivable, Credit Quality Indicator [Line Items]
Loans	0
Agricultural
Financing Receivable, Credit Quality Indicator [Line Items]
Loans	85,014
Agricultural | Pass
Financing Receivable, Credit Quality Indicator [Line Items]
Loans	76,951
Agricultural | Pass/ Watch
Financing Receivable, Credit Quality Indicator [Line Items]
Loans	6,194
Agricultural | Special Mention
Financing Receivable, Credit Quality Indicator [Line Items]
Loans	1,205
Agricultural | Substandard
Financing Receivable, Credit Quality Indicator [Line Items]
Loans	664
Agricultural | Doubtful
Financing Receivable, Credit Quality Indicator [Line Items]
Loans	0
Consumer
Financing Receivable, Credit Quality Indicator [Line Items]
Loans	67,068
Consumer | Pass
Financing Receivable, Credit Quality Indicator [Line Items]
Loans	66,970
Consumer | Pass/ Watch
Financing Receivable, Credit Quality Indicator [Line Items]
Loans	8
Consumer | Special Mention
Financing Receivable, Credit Quality Indicator [Line Items]
Loans	0
Consumer | Substandard
Financing Receivable, Credit Quality Indicator [Line Items]
Loans	90
Consumer | Doubtful
Financing Receivable, Credit Quality Indicator [Line Items]
Loans	$ 0

XML

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

XML

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

XML

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

XML

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%

XML

Fair Value Measurements - Assets and Liabilities at Fair Value on Recurring Basis (Details) - USD ($)	Sep. 30, 2021	Dec. 31, 2020
Fair Value, Assets and Liabilities Measured on Recurring Basis
Securities available for sale	$ 1,781,574,000	$ 1,153,693,000
Loans held for sale, fair value option	27,331,000	71,769,000
Aggregate principal balance of loans held for sale	26,244,000	68,670,000
Loans held for sale, 90 days or greater past due	0
Loans held for sale, non-accrual	0
Designated as Hedging Instrument | Interest rate swaps - cash flow hedges
Fair Value, Assets and Liabilities Measured on Recurring Basis
Derivative financial instruments - Assets	140,000
Derivative financial instruments - Liabilities	210,000
Designated as Hedging Instrument | Interest rate swaps - cash flow hedges | Fair Value, Measurements, Recurring
Fair Value, Assets and Liabilities Measured on Recurring Basis
Derivative financial instruments - Assets	140,000
Derivative financial instruments - Liabilities	210,000
Designated as Hedging Instrument | Interest rate swaps - cash flow hedges | Quoted Prices in Active Markets for Identical Assets (Level 1) | Fair Value, Measurements, Recurring
Fair Value, Assets and Liabilities Measured on Recurring Basis
Derivative financial instruments - Assets	0
Derivative financial instruments - Liabilities	0
Designated as Hedging Instrument | Interest rate swaps - cash flow hedges | Significant Other Observable Inputs (Level 2) | Fair Value, Measurements, Recurring
Fair Value, Assets and Liabilities Measured on Recurring Basis
Derivative financial instruments - Assets	140,000
Derivative financial instruments - Liabilities	210,000
Designated as Hedging Instrument | Interest rate swaps - cash flow hedges | Significant Unobservable Inputs (Level 3) | Fair Value, Measurements, Recurring
Fair Value, Assets and Liabilities Measured on Recurring Basis
Derivative financial instruments - Assets	0
Derivative financial instruments - Liabilities	0
Not designated as hedging | Fair Value, Measurements, Recurring
Fair Value, Assets and Liabilities Measured on Recurring Basis
Loans held for sale, fair value option	27,331,000	71,769,000
Not designated as hedging | Quoted Prices in Active Markets for Identical Assets (Level 1) | Fair Value, Measurements, Recurring
Fair Value, Assets and Liabilities Measured on Recurring Basis
Loans held for sale, fair value option	0	0
Not designated as hedging | Significant Other Observable Inputs (Level 2) | Fair Value, Measurements, Recurring
Fair Value, Assets and Liabilities Measured on Recurring Basis
Loans held for sale, fair value option	27,331,000	71,769,000
Not designated as hedging | Significant Unobservable Inputs (Level 3) | Fair Value, Measurements, Recurring
Fair Value, Assets and Liabilities Measured on Recurring Basis
Loans held for sale, fair value option	0	0
Not designated as hedging | Interest rate lock commitments
Fair Value, Assets and Liabilities Measured on Recurring Basis
Derivative financial instruments - Assets	1,566,000	3,515,000
Derivative financial instruments - Liabilities	2,000	0
Not designated as hedging | Interest rate lock commitments | Fair Value, Measurements, Recurring
Fair Value, Assets and Liabilities Measured on Recurring Basis
Derivative financial instruments - Assets	1,566,000	3,515,000
Derivative financial instruments - Liabilities	2,000
Not designated as hedging | Interest rate lock commitments | Quoted Prices in Active Markets for Identical Assets (Level 1) | Fair Value, Measurements, Recurring
Fair Value, Assets and Liabilities Measured on Recurring Basis
Derivative financial instruments - Assets	0	0
Derivative financial instruments - Liabilities	0
Not designated as hedging | Interest rate lock commitments | Significant Other Observable Inputs (Level 2) | Fair Value, Measurements, Recurring
Fair Value, Assets and Liabilities Measured on Recurring Basis
Derivative financial instruments - Assets	1,566,000	3,515,000
Derivative financial instruments - Liabilities	2,000
Not designated as hedging | Interest rate lock commitments | Significant Unobservable Inputs (Level 3) | Fair Value, Measurements, Recurring
Fair Value, Assets and Liabilities Measured on Recurring Basis
Derivative financial instruments - Assets	0	0
Derivative financial instruments - Liabilities	0
Not designated as hedging | Forward mortgage-backed securities trades
Fair Value, Assets and Liabilities Measured on Recurring Basis
Derivative financial instruments - Assets	132,000	0
Derivative financial instruments - Liabilities	44,000	568,000
Not designated as hedging | Forward mortgage-backed securities trades | Fair Value, Measurements, Recurring
Fair Value, Assets and Liabilities Measured on Recurring Basis
Derivative financial instruments - Assets	132,000
Derivative financial instruments - Liabilities	44,000	568,000
Not designated as hedging | Forward mortgage-backed securities trades | Quoted Prices in Active Markets for Identical Assets (Level 1) | Fair Value, Measurements, Recurring
Fair Value, Assets and Liabilities Measured on Recurring Basis
Derivative financial instruments - Assets	0
Derivative financial instruments - Liabilities	0	0
Not designated as hedging | Forward mortgage-backed securities trades | Significant Other Observable Inputs (Level 2) | Fair Value, Measurements, Recurring
Fair Value, Assets and Liabilities Measured on Recurring Basis
Derivative financial instruments - Assets	132,000
Derivative financial instruments - Liabilities	44,000	568,000
Not designated as hedging | Forward mortgage-backed securities trades | Significant Unobservable Inputs (Level 3) | Fair Value, Measurements, Recurring
Fair Value, Assets and Liabilities Measured on Recurring Basis
Derivative financial instruments - Assets	0
Derivative financial instruments - Liabilities	0	0
Not designated as hedging | Interest rate swaps - cash flow hedges | Loan customer counterparty | Fair Value, Measurements, Recurring
Fair Value, Assets and Liabilities Measured on Recurring Basis
Derivative financial instruments - Assets	9,631,000	20,159,000
Derivative financial instruments - Liabilities	577,000
Not designated as hedging | Interest rate swaps - cash flow hedges | Loan customer counterparty | Quoted Prices in Active Markets for Identical Assets (Level 1) | Fair Value, Measurements, Recurring
Fair Value, Assets and Liabilities Measured on Recurring Basis
Derivative financial instruments - Assets	0	0
Derivative financial instruments - Liabilities	0
Not designated as hedging | Interest rate swaps - cash flow hedges | Loan customer counterparty | Significant Other Observable Inputs (Level 2) | Fair Value, Measurements, Recurring
Fair Value, Assets and Liabilities Measured on Recurring Basis
Derivative financial instruments - Assets	9,631,000	20,159,000
Derivative financial instruments - Liabilities	577,000
Not designated as hedging | Interest rate swaps - cash flow hedges | Loan customer counterparty | Significant Unobservable Inputs (Level 3) | Fair Value, Measurements, Recurring
Fair Value, Assets and Liabilities Measured on Recurring Basis
Derivative financial instruments - Assets	0	0
Derivative financial instruments - Liabilities	0
Not designated as hedging | Interest rate swaps - cash flow hedges | Financial institution counterparty | Fair Value, Measurements, Recurring
Fair Value, Assets and Liabilities Measured on Recurring Basis
Derivative financial instruments - Assets	595,000
Derivative financial instruments - Liabilities	10,064,000	21,306,000
Not designated as hedging | Interest rate swaps - cash flow hedges | Financial institution counterparty | Quoted Prices in Active Markets for Identical Assets (Level 1) | Fair Value, Measurements, Recurring
Fair Value, Assets and Liabilities Measured on Recurring Basis
Derivative financial instruments - Assets	0
Derivative financial instruments - Liabilities	0	0
Not designated as hedging | Interest rate swaps - cash flow hedges | Financial institution counterparty | Significant Other Observable Inputs (Level 2) | Fair Value, Measurements, Recurring
Fair Value, Assets and Liabilities Measured on Recurring Basis
Derivative financial instruments - Assets	595,000
Derivative financial instruments - Liabilities	10,064,000	21,306,000
Not designated as hedging | Interest rate swaps - cash flow hedges | Financial institution counterparty | Significant Unobservable Inputs (Level 3) | Fair Value, Measurements, Recurring
Fair Value, Assets and Liabilities Measured on Recurring Basis
Derivative financial instruments - Assets	0
Derivative financial instruments - Liabilities	0	0
U.S. treasuries
Fair Value, Assets and Liabilities Measured on Recurring Basis
Securities available for sale	62,285,000	44,708,000
U.S. treasuries | Fair Value, Measurements, Recurring
Fair Value, Assets and Liabilities Measured on Recurring Basis
Securities available for sale	62,285,000	44,708,000
U.S. treasuries | Quoted Prices in Active Markets for Identical Assets (Level 1) | Fair Value, Measurements, Recurring
Fair Value, Assets and Liabilities Measured on Recurring Basis
Securities available for sale	0	0
U.S. treasuries | Significant Other Observable Inputs (Level 2) | Fair Value, Measurements, Recurring
Fair Value, Assets and Liabilities Measured on Recurring Basis
Securities available for sale	62,285,000	44,708,000
U.S. treasuries | Significant Unobservable Inputs (Level 3) | Fair Value, Measurements, Recurring
Fair Value, Assets and Liabilities Measured on Recurring Basis
Securities available for sale	0	0
Government agency securities
Fair Value, Assets and Liabilities Measured on Recurring Basis
Securities available for sale	461,249,000	249,017,000
Government agency securities | Fair Value, Measurements, Recurring
Fair Value, Assets and Liabilities Measured on Recurring Basis
Securities available for sale	461,249,000	249,017,000
Government agency securities | Quoted Prices in Active Markets for Identical Assets (Level 1) | Fair Value, Measurements, Recurring
Fair Value, Assets and Liabilities Measured on Recurring Basis
Securities available for sale	0	0
Government agency securities | Significant Other Observable Inputs (Level 2) | Fair Value, Measurements, Recurring
Fair Value, Assets and Liabilities Measured on Recurring Basis
Securities available for sale	461,249,000	249,017,000
Government agency securities | Significant Unobservable Inputs (Level 3) | Fair Value, Measurements, Recurring
Fair Value, Assets and Liabilities Measured on Recurring Basis
Securities available for sale	0	0
Obligations of state and municipal subdivisions
Fair Value, Assets and Liabilities Measured on Recurring Basis
Securities available for sale	403,388,000	393,165,000
Obligations of state and municipal subdivisions | Fair Value, Measurements, Recurring
Fair Value, Assets and Liabilities Measured on Recurring Basis
Securities available for sale	403,388,000	393,165,000
Obligations of state and municipal subdivisions | Quoted Prices in Active Markets for Identical Assets (Level 1) | Fair Value, Measurements, Recurring
Fair Value, Assets and Liabilities Measured on Recurring Basis
Securities available for sale	0	0
Obligations of state and municipal subdivisions | Significant Other Observable Inputs (Level 2) | Fair Value, Measurements, Recurring
Fair Value, Assets and Liabilities Measured on Recurring Basis
Securities available for sale	403,388,000	393,165,000
Obligations of state and municipal subdivisions | Significant Unobservable Inputs (Level 3) | Fair Value, Measurements, Recurring
Fair Value, Assets and Liabilities Measured on Recurring Basis
Securities available for sale	0	0
Corporate bonds
Fair Value, Assets and Liabilities Measured on Recurring Basis
Securities available for sale	30,907,000	22,102,000
Corporate bonds | Fair Value, Measurements, Recurring
Fair Value, Assets and Liabilities Measured on Recurring Basis
Securities available for sale	30,907,000	22,102,000
Corporate bonds | Quoted Prices in Active Markets for Identical Assets (Level 1) | Fair Value, Measurements, Recurring
Fair Value, Assets and Liabilities Measured on Recurring Basis
Securities available for sale	0	0
Corporate bonds | Significant Other Observable Inputs (Level 2) | Fair Value, Measurements, Recurring
Fair Value, Assets and Liabilities Measured on Recurring Basis
Securities available for sale	30,907,000	22,102,000
Corporate bonds | Significant Unobservable Inputs (Level 3) | Fair Value, Measurements, Recurring
Fair Value, Assets and Liabilities Measured on Recurring Basis
Securities available for sale	0	0
Mortgage-backed securities guaranteed by FHLMC, FNMA and GNMA
Fair Value, Assets and Liabilities Measured on Recurring Basis
Securities available for sale	822,670,000	443,501,000
Mortgage-backed securities guaranteed by FHLMC, FNMA and GNMA | Fair Value, Measurements, Recurring
Fair Value, Assets and Liabilities Measured on Recurring Basis
Securities available for sale	822,670,000	443,501,000
Mortgage-backed securities guaranteed by FHLMC, FNMA and GNMA | Quoted Prices in Active Markets for Identical Assets (Level 1) | Fair Value, Measurements, Recurring
Fair Value, Assets and Liabilities Measured on Recurring Basis
Securities available for sale	0	0
Mortgage-backed securities guaranteed by FHLMC, FNMA and GNMA | Significant Other Observable Inputs (Level 2) | Fair Value, Measurements, Recurring
Fair Value, Assets and Liabilities Measured on Recurring Basis
Securities available for sale	822,670,000	443,501,000
Mortgage-backed securities guaranteed by FHLMC, FNMA and GNMA | Significant Unobservable Inputs (Level 3) | Fair Value, Measurements, Recurring
Fair Value, Assets and Liabilities Measured on Recurring Basis
Securities available for sale	0	0
Other securities
Fair Value, Assets and Liabilities Measured on Recurring Basis
Securities available for sale	1,075,000	1,200,000
Other securities | Fair Value, Measurements, Recurring
Fair Value, Assets and Liabilities Measured on Recurring Basis
Securities available for sale	1,075,000	1,200,000
Other securities | Quoted Prices in Active Markets for Identical Assets (Level 1) | Fair Value, Measurements, Recurring
Fair Value, Assets and Liabilities Measured on Recurring Basis
Securities available for sale	0	0
Other securities | Significant Other Observable Inputs (Level 2) | Fair Value, Measurements, Recurring
Fair Value, Assets and Liabilities Measured on Recurring Basis
Securities available for sale	1,075,000	1,200,000
Other securities | Significant Unobservable Inputs (Level 3) | Fair Value, Measurements, Recurring
Fair Value, Assets and Liabilities Measured on Recurring Basis
Securities available for sale	$ 0	$ 0

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Fair Value Measurements - Assets and Liabilities at Fair Value on Nonrecurring Basis (Details) - USD ($) $ in Thousands	9 Months Ended	12 Months Ended
	Sep. 30, 2021	Dec. 31, 2020
Fair Value, Assets and Liabilities Measured on Nonrecurring Basis [Line Items]
Individually evaluated loans	$ 84,638	$ 64,383
Fair Value, Measurements, Nonrecurring
Fair Value, Assets and Liabilities Measured on Nonrecurring Basis [Line Items]
Individually evaluated loans	18,883	16,903
Other real estate owned	0	0
Fair Value, Measurements, Nonrecurring | Individually evaluated loans
Fair Value, Assets and Liabilities Measured on Nonrecurring Basis [Line Items]
Period Ended Total Losses	3,813	13,041
Fair Value, Measurements, Nonrecurring | Quoted Prices in Active Markets for Identical Assets (Level 1)
Fair Value, Assets and Liabilities Measured on Nonrecurring Basis [Line Items]
Individually evaluated loans	0	0
Fair Value, Measurements, Nonrecurring | Significant Other Observable Inputs (Level 2)
Fair Value, Assets and Liabilities Measured on Nonrecurring Basis [Line Items]
Individually evaluated loans	0	0
Fair Value, Measurements, Nonrecurring | Significant Unobservable Inputs (Level 3)
Fair Value, Assets and Liabilities Measured on Nonrecurring Basis [Line Items]
Individually evaluated loans	$ 18,883	$ 16,903

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Fair Value Measurements - Carrying Amount and Estimated Fair Value of Financial Instruments (Details) - USD ($) $ in Thousands	Sep. 30, 2021	Dec. 31, 2020
Off-balance sheet assets (liabilities):
Financial instruments with off-balance sheet risk	$ 2,749,019	$ 2,294,133
Commitments to extend credit
Off-balance sheet assets (liabilities):
Financial instruments with off-balance sheet risk	2,717,859	2,268,216
Standby letters of credit
Off-balance sheet assets (liabilities):
Financial instruments with off-balance sheet risk	31,160	25,917
Quoted Prices in Active Markets for Identical Assets (Level 1)
Financial assets:
Cash and cash equivalents	3,059,826	1,813,987
Certificates of deposit held in other banks	0	0
Loans held for sale, at cost	0	0
Loans, net	0	0
FHLB of Dallas stock and other restricted stock	0	0
Accrued interest receivable	0	0
Financial liabilities:
Deposits	0	0
Accrued interest payable	0	0
FHLB advances	0	0
Other borrowings	0	0
Junior subordinated debentures	0	0
Quoted Prices in Active Markets for Identical Assets (Level 1) | Commitments to extend credit
Off-balance sheet assets (liabilities):
Financial instruments with off-balance sheet risk	0	0
Quoted Prices in Active Markets for Identical Assets (Level 1) | Standby letters of credit
Off-balance sheet assets (liabilities):
Financial instruments with off-balance sheet risk	0	0
Significant Other Observable Inputs (Level 2)
Financial assets:
Cash and cash equivalents	0	0
Certificates of deposit held in other banks	3,258	4,595
Loans held for sale, at cost	4,221	11,138
Loans, net	0	0
FHLB of Dallas stock and other restricted stock	21,541	20,305
Accrued interest receivable	51,438	60,581
Financial liabilities:
Deposits	15,537,308	14,407,596
Accrued interest payable	3,125	7,397
FHLB advances	334,631	371,175
Other borrowings	301,575	327,150
Junior subordinated debentures	44,330	42,624
Significant Other Observable Inputs (Level 2) | Commitments to extend credit
Off-balance sheet assets (liabilities):
Financial instruments with off-balance sheet risk	0	0
Significant Other Observable Inputs (Level 2) | Standby letters of credit
Off-balance sheet assets (liabilities):
Financial instruments with off-balance sheet risk	0	0
Significant Unobservable Inputs (Level 3)
Financial assets:
Cash and cash equivalents	0	0
Certificates of deposit held in other banks	0	0
Loans held for sale, at cost	0	0
Loans, net	12,693,534	13,093,698
FHLB of Dallas stock and other restricted stock	0	0
Accrued interest receivable	0	0
Financial liabilities:
Deposits	0	0
Accrued interest payable	0	0
FHLB advances	0	0
Other borrowings	0	0
Junior subordinated debentures	0	0
Significant Unobservable Inputs (Level 3) | Commitments to extend credit
Off-balance sheet assets (liabilities):
Financial instruments with off-balance sheet risk	0	0
Significant Unobservable Inputs (Level 3) | Standby letters of credit
Off-balance sheet assets (liabilities):
Financial instruments with off-balance sheet risk	0	0
Carrying Amount
Financial assets:
Cash and cash equivalents	3,059,826	1,813,987
Certificates of deposit held in other banks	3,245	4,482
Loans held for sale, at cost	4,140	10,878
Loans, net	12,291,233	12,978,238
FHLB of Dallas stock and other restricted stock	21,541	20,305
Accrued interest receivable	51,438	60,581
Financial liabilities:
Deposits	15,524,182	14,398,927
Accrued interest payable	3,125	7,397
FHLB advances	350,000	375,000
Other borrowings	281,697	312,175
Junior subordinated debentures	54,171	54,023
Carrying Amount | Commitments to extend credit
Off-balance sheet assets (liabilities):
Financial instruments with off-balance sheet risk	0	0
Carrying Amount | Standby letters of credit
Off-balance sheet assets (liabilities):
Financial instruments with off-balance sheet risk	0	0
Estimated Fair Value
Financial assets:
Cash and cash equivalents	3,059,826	1,813,987
Certificates of deposit held in other banks	3,258	4,595
Loans held for sale, at cost	4,221	11,138
Loans, net	12,693,534	13,093,698
FHLB of Dallas stock and other restricted stock	21,541	20,305
Accrued interest receivable	51,438	60,581
Financial liabilities:
Deposits	15,537,308	14,407,596
Accrued interest payable	3,125	7,397
FHLB advances	334,631	371,175
Other borrowings	301,575	327,150
Junior subordinated debentures	44,330	42,624
Estimated Fair Value | Commitments to extend credit
Off-balance sheet assets (liabilities):
Financial instruments with off-balance sheet risk	0	0
Estimated Fair Value | Standby letters of credit
Off-balance sheet assets (liabilities):
Financial instruments with off-balance sheet risk	$ 0	$ 0

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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

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Derivative Financial Instruments - Notional Balances and Fair Values of Outstanding Positions (Details) - USD ($) $ in Thousands	Sep. 30, 2021	Jun. 30, 2021	Dec. 31, 2020
Designated as Hedging Instrument | Interest rate swaps - cash flow hedges
Derivative [Line Items]
Outstanding Notional Balance	$ 100,000	$ 100,000
Asset Derivative Fair Value	140
Liability Derivative Fair Value	210
Not designated as hedging | Interest rate swaps - cash flow hedges | Commercial Loan | Loan customer counterparty
Derivative [Line Items]
Outstanding Notional Balance	276,030		$ 335,370
Asset Derivative Fair Value	9,631		20,159
Liability Derivative Fair Value	577		0
Not designated as hedging | Interest rate swaps - cash flow hedges | Commercial Loan | Financial institution counterparty
Derivative [Line Items]
Outstanding Notional Balance	276,030		335,370
Asset Derivative Fair Value	595		0
Liability Derivative Fair Value	10,064		21,306
Not designated as hedging | Interest rate lock commitments
Derivative [Line Items]
Outstanding Notional Balance	51,676		116,795
Asset Derivative Fair Value	1,566		3,515
Liability Derivative Fair Value	2		0
Not designated as hedging | Forward mortgage-backed securities trades
Derivative [Line Items]
Outstanding Notional Balance	48,000		104,000
Asset Derivative Fair Value	132		0
Liability Derivative Fair Value	$ 44		$ 568

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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%

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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)

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Stock Awards - Additional Information (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020	Apr. 30, 2013
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Compensation expense	$ 2,087,000	$ 1,970,000	$ 6,613,000	$ 6,333,000
Estimated future compensation expense	13,743,000		$ 13,743,000
Period for recognition			2 years 2 months 15 days
Fair value of common stock awards vested			$ 12,019,000	5,469,000
Stock based compensation expense			7,977,000	6,333,000
Restricted Stock
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Excess tax expense (benefits) on vested restricted stock	(421,000)	$ 44,000	$ (647,000)	$ 246,000
Performance stock units
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Period for recognition			2 years 8 months 26 days
Unrecognized compensation expense	3,666,000		$ 3,666,000
Stock based compensation expense	336,000		1,364,000
Maximum | Performance stock units
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Unrecognized compensation expense	$ 6,181,000		$ 6,181,000
2013 Equity Incentive Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares reserved for future issuance (shares)					2,300,000
Remaining available for grant for future awards (shares)	1,088,726		1,088,726
2013 Equity Incentive Plan | Minimum | Restricted Stock
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Common stock vesting period			1 year
2013 Equity Incentive Plan | Minimum | Performance stock units
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Common stock vesting period			3 years
Stock based compensation, award vesting percentage			0.00%
2013 Equity Incentive Plan | Maximum | Restricted Stock
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Common stock vesting period			5 years
2013 Equity Incentive Plan | Maximum | Performance stock units
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Common stock vesting period			4 years
Stock based compensation, award vesting percentage			150.00%

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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

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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

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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

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Regulatory Matters - Additional Information (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020	Jun. 30, 2021	Dec. 31, 2020	Oct. 22, 2020	Jun. 30, 2020	Dec. 31, 2019
Regulatory Assets [Line Items]
Cumulative effect reduction to retained earnings	$ (2,566,693,000)	$ (2,476,373,000)	$ (2,566,693,000)	$ (2,476,373,000)	$ (2,542,885,000)	$ (2,515,371,000)		$ (2,424,960,000)	$ (2,339,773,000)
Common stock repurchased	$ 16,256,000	$ 13,000	$ 17,921,000	$ 159,000
Common stock purchased to settle employee tax withholding related to vesting of stock awards (shares)	14,297	291	39,508	2,951
Common stock purchased to settle employee tax withholding related to vesting of stock awards	$ 1,049,000	$ 13,000	$ 2,714,000	$ 159,000
October 2020 Share Repurchase Program
Regulatory Assets [Line Items]
Share repurchase program authorized amount							$ 150,000,000
Common stock repurchased (shares)	217,772		217,772
Common stock repurchased	$ 15,207,000		$ 15,207,000
Cumulative effect of change in accounting principles
Regulatory Assets [Line Items]
Cumulative effect reduction to retained earnings						53,880,000
Retained Earnings
Regulatory Assets [Line Items]
Cumulative effect reduction to retained earnings	(600,987,000)	(504,135,000)	(600,987,000)	(504,135,000)	$ (579,585,000)	(543,800,000)		$ (454,878,000)	$ (393,674,000)
Common stock repurchased	$ 16,253,000	$ 13,000	$ 17,918,000	$ 159,000
Retained Earnings | Cumulative effect of change in accounting principles
Regulatory Assets [Line Items]
Cumulative effect reduction to retained earnings						$ 53,880,000

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Regulatory Matters - Actual Capital Amounts and Ratios (Details) $ in Thousands	Sep. 30, 2021 USD ($)	Dec. 31, 2020 USD ($)
Consolidated
Total capital to risk weighted assets:
Actual Amount	$ 1,884,618	$ 1,825,661
Actual Ratio (percent)	0.1364	0.1332
Minimum for Capital Required - Basel III Amount	$ 1,450,815	$ 1,438,939
Minimum for Capital Required - Basel III Ratio (percent)	0.1050	0.1050
Tier 1 capital to risk weighted assets:
Tier One Risk Based Capital	$ 1,583,950	$ 1,471,841
Actual Ratio (percent)	0.1146	0.1074
Minimum for Capital Required - Basel III Amount	$ 1,174,470	$ 1,164,855
Minimum for Capital Required - Basel III (percent)	0.0850	0.0850
Common equity tier 1 to risk weighted assets:
Actual amount	$ 1,528,350	$ 1,416,241
Actual ratio (percent)	0.1106	0.1033
Minimum for Capital Required - Basel III Amount	$ 967,210	$ 959,293
Minimum for Capital Required - Basel III (percent)	0.0700	0.0700
Tier 1 capital to average assets:
Actual Amount	$ 1,583,950	$ 1,471,841
Actual Ratio (percent)	0.0894	0.0912
Minimum for Capital Required - Basel III Amount	$ 708,732	$ 645,730
Minimum for Capital Required - Basel III Ratio (percent)	0.0400	0.0400
Bank
Total capital to risk weighted assets:
Actual Amount	$ 1,953,355	$ 1,864,240
Actual Ratio (percent)	0.1414	0.1361
Minimum for Capital Required - Basel III Amount	$ 1,450,381	$ 1,438,385
Minimum for Capital Required - Basel III Ratio (percent)	0.1050	0.1050
To Be Well Capitalized Under Prompt Corrective Action Provisions Amount	$ 1,381,316	$ 1,369,891
To Be Well Capitalized Under Prompt Corrective Action Provisions Ratio (percent)	0.1000	0.1000
Tier 1 capital to risk weighted assets:
Tier One Risk Based Capital	$ 1,856,687	$ 1,776,420
Actual Ratio (percent)	0.1344	0.1297
Minimum for Capital Required - Basel III Amount	$ 1,174,118	$ 1,164,407
Minimum for Capital Required - Basel III (percent)	0.0850	0.0850
To Be Well Capitalized Under Prompt Corrective Action Provisions Amount	$ 1,105,052	$ 1,095,913
To Be Well Capitalized Under Prompt Corrective Action Provisions Ratio (percent)	0.0800	0.0800
Common equity tier 1 to risk weighted assets:
Actual amount	$ 1,856,687	$ 1,776,420
Actual ratio (percent)	0.1344	0.1297
Minimum for Capital Required - Basel III Amount	$ 966,921	$ 958,924
Minimum for Capital Required - Basel III (percent)	0.0700	0.0700
To Be Well Capitalized Under Prompt Corrective Action Provisions Amount	$ 897,855	$ 890,429
To Be Well Capitalized Under Prompt Corrective Action Provisions Ratio (percent)	0.0650	0.0650
Tier 1 capital to average assets:
Actual Amount	$ 1,856,687	$ 1,776,420
Actual Ratio (percent)	0.1048	0.1101
Minimum for Capital Required - Basel III Amount	$ 708,581	$ 645,539
Minimum for Capital Required - Basel III Ratio (percent)	0.0400	0.0400
To Be Well Capitalized Under Prompt Corrective Action Provisions Amount	$ 885,726	$ 806,924
To Be Well Capitalized Under Prompt Corrective Action Provisions Ratio (percent)	0.0500	0.0500

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Subsequent Event (Details)	Oct. 28, 2021 $ / shares
Subsequent Event
Subsequent Event [Line Items]
Dividends declared (usd per share)	$ 0.36