QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
(State or other jurisdiction of incorporation |
(I.R.S. Employer | |
or organization) |
Identification No.) |
Title of each class |
Trading Symbol(s) |
Name of each exchange on which registered | ||
Large accelerated filer |
☒ |
Accelerated filer |
☐ | |||||||||||
Non-accelerated filer |
☐ |
Smaller reporting company |
||||||||||||
Emerging growth company |
Class |
Outstanding at April 24, 2020 | |
Common Stock, $0.01 par value per share |
Item |
Page |
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1. |
2 |
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3 |
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4 |
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5 |
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6 |
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7 |
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8 |
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2. |
33 |
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3. |
52 |
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4. |
52 |
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PART II OTHER INFORMATION |
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1. |
54 |
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1A. |
54 |
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2. |
56 |
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3. |
56 |
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4. |
56 |
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5. |
56 |
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6. |
57 |
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59 |
Item 1. |
Financial Statements. |
March 31, |
December 31, |
|||||||||||
2020 |
2019 |
2019 |
||||||||||
(Unaudited) |
||||||||||||
ASSETS |
||||||||||||
CASH AND DUE FROM BANKS |
$ | $ | $ | |||||||||
FEDERAL FUNDS SOLD |
||||||||||||
INTEREST-BEARING DEPOSITS IN BANKS |
||||||||||||
Total cash and cash equivalents |
||||||||||||
INTEREST-BEARING TIME DEPOSITS IN BANKS |
— |
— |
||||||||||
SECURITIES AVAILABLE-FOR-SALE, at fair value |
||||||||||||
LOANS: |
||||||||||||
Held for investment |
||||||||||||
Less - allowance for loan losses |
( |
) | ( |
) | ( |
) | ||||||
Net loans held for investment |
||||||||||||
Held for sale ($ |
||||||||||||
Net loans |
||||||||||||
BANK PREMISES AND EQUIPMENT, net |
||||||||||||
INTANGIBLE ASSETS |
||||||||||||
OTHER ASSETS |
||||||||||||
Total assets |
$ | $ | $ | |||||||||
LIABILITIES AND SHAREHOLDERS’ EQUITY |
||||||||||||
NONINTEREST-BEARING DEPOSITS |
$ | $ | $ | |||||||||
INTEREST-BEARING DEPOSITS |
||||||||||||
Total deposits |
||||||||||||
DIVIDENDS PAYABLE |
||||||||||||
BORROWINGS |
||||||||||||
OTHER LIABILITIES |
||||||||||||
Total liabilities |
||||||||||||
COMMITMENTS AND CONTINGENCIES |
||||||||||||
SHAREHOLDERS’ EQUITY: |
||||||||||||
Common stock - ($ |
||||||||||||
Capital surplus |
||||||||||||
Retained earnings |
||||||||||||
Treasury stock (shares at cost: |
( |
) | ( |
) | ( |
) | ||||||
Deferred compensation |
||||||||||||
Accumulated other comprehensive earnings (loss) |
||||||||||||
Total shareholders’ equity |
||||||||||||
Total liabilities and shareholders’ equity |
$ | $ | $ | |||||||||
Three Months Ended March 31, |
||||||||
2020 |
2019 |
|||||||
INTEREST INCOME: |
||||||||
Interest and fees on loans |
$ | $ | ||||||
Interest on investment securities: |
||||||||
Taxable |
||||||||
Exempt from federal income tax |
||||||||
Interest on federal funds sold and interest-bearing deposits in banks |
||||||||
Total interest income |
||||||||
INTEREST EXPENSE: |
||||||||
Interest on deposits |
||||||||
Other |
||||||||
Total interest expense |
||||||||
Net interest income |
||||||||
PROVISION FOR LOAN LOSSES |
||||||||
Net interest income after provision for loan losses |
||||||||
NONINTEREST INCOME: |
||||||||
Trust fees |
||||||||
Service charges on deposit accounts |
||||||||
ATM, interchange and credit card fees |
||||||||
Real estate mortgage operations |
||||||||
Net gain on sale of available-for-sale securities (includes $ |
||||||||
Net gain on sale of foreclosed assets |
||||||||
Net gain on sale of assets |
||||||||
Interest on loan recoveries |
||||||||
Other |
||||||||
Total noninterest income |
||||||||
NONINTEREST EXPENSE: |
||||||||
Salaries and employee benefits |
||||||||
Net occupancy expense |
||||||||
Equipment expense |
||||||||
FDIC insurance premiums |
||||||||
ATM, interchange and credit card expenses |
||||||||
Professional and service fees |
||||||||
Printing, stationery and supplies |
||||||||
Operational and other losses |
||||||||
Software amortization and expense |
||||||||
Amortization of intangible assets |
||||||||
Other |
||||||||
Total noninterest expense |
||||||||
EARNINGS BEFORE INCOME TAXES |
||||||||
INCOME TAX EXPENSE |
||||||||
NET EARNINGS |
$ | $ | ||||||
EARNINGS PER SHARE, BASIC |
$ | $ | ||||||
EARNINGS PER SHARE, ASSUMING DILUTION |
$ | $ | ||||||
DIVIDENDS PER SHARE |
$ | $ | ||||||
Three Months Ended March 31, |
||||||||
2020 |
2019 |
|||||||
NET EARNINGS |
$ | $ | ||||||
OTHER ITEMS OF COMPREHENSIVE EARNINGS (LOSS): |
||||||||
Change in unrealized gain on investment securities available-for-sale, before income taxes |
||||||||
Reclassification adjustment for realized gains on investment securities included in net earnings, before income taxes |
( |
) | ||||||
Total other items of comprehensive earnings (loss) |
||||||||
Income tax benefit (expense) related to other items of comprehensive earnings |
( |
) | ( |
) | ||||
COMPREHENSIVE EARNINGS |
$ | $ | ||||||
Common Stock |
Capital Surplus |
Retained Earnings |
Treasury Stock |
Deferred Compensation |
Accumulated Other Comprehensive Earnings |
Total Shareholders’ Equity |
||||||||||||||||||||||||||||||
Shares |
Amount |
Shares |
Amounts |
|||||||||||||||||||||||||||||||||
Balances at December 31, 2018 |
$ | $ | $ | ( |
) | $ | ( |
) | $ | $ | $ | |||||||||||||||||||||||||
Net earnings (unaudited) |
— |
— |
— |
— |
— |
— |
— |
|||||||||||||||||||||||||||||
Stock option exercises (unaudited) |
— |
— |
— |
— |
— |
|||||||||||||||||||||||||||||||
Cash dividends declared, $ |
— |
— |
— |
( |
) | — |
— |
— |
— |
( |
) | |||||||||||||||||||||||||
Change in unrealized gain in investment securities available-for-sale, net of related income taxes (unaudited) |
— |
— |
— |
— |
— |
— |
— |
|||||||||||||||||||||||||||||
Shares purchased (redeemed) in connection with directors’ deferred compensation plan, net (unaudited) |
— |
— |
— |
— |
( |
) | — |
— |
||||||||||||||||||||||||||||
Stock option expense (unaudited) |
— |
— |
— |
— |
— |
— |
— |
|||||||||||||||||||||||||||||
Two-for-one stock spllit in the form of a |
— |
( |
) | ( |
) | — |
— |
— |
— |
|||||||||||||||||||||||||||
Balances at March 31, 2019 (unaudited) |
$ | $ | $ | ( |
) | $ | ( |
) | $ | $ | $ | |||||||||||||||||||||||||
Balances at December 31, 2019 |
$ | $ | $ | ( |
) | $ | ( |
) | $ | $ | $ | |||||||||||||||||||||||||
Stock issued in acquisition of TB&T Bancshares, Inc. (unaudited) |
— |
— |
— |
— |
— |
|||||||||||||||||||||||||||||||
Net earnings (unaudited) |
— |
— |
— |
— |
— |
— |
— |
|||||||||||||||||||||||||||||
Stock option exercises (unaudited) |
— |
— |
— |
— |
— |
|||||||||||||||||||||||||||||||
Restricted stock grant (unaudited) |
— |
— |
— |
— |
— |
— |
||||||||||||||||||||||||||||||
Cash dividends declared, $ |
— |
— |
— |
( |
) | — |
— |
— |
— |
( |
) | |||||||||||||||||||||||||
Change in unrealized gain in investment securities available-for-sale, net of related income taxes (unaudited) |
— |
— |
— |
— |
— |
— |
— |
|||||||||||||||||||||||||||||
Shares purchased (redeemed) in connection with directors’ deferred compensation plan, net (unaudited) |
— |
— |
— |
— |
( |
) | ( |
) | — |
— |
||||||||||||||||||||||||||
Stock option expense (unaudited) |
— |
— |
— |
— |
— |
— |
— |
|||||||||||||||||||||||||||||
Balances at March 31, 2020 (unaudited) |
$ | $ | $ | ( |
) | $ | ( |
) | $ | $ | $ | |||||||||||||||||||||||||
Three Months Ended March 31, |
||||||||
2020 |
2019 |
|||||||
CASH FLOWS FROM OPERATING ACTIVITIES: |
||||||||
Net earnings |
$ | |
$ | |
||||
Adjustments to reconcile net earnings to net cash provided by operating activities: |
||||||||
Depreciation and amortization |
|
|
||||||
Provision for credit loss expense |
|
|
||||||
Securities premium amortization, net |
|
|
||||||
Gain (loss) on sale of assets, net |
( |
) | |
|||||
Deferred federal income tax benefit |
|
|
||||||
Change in loans held-for-sale |
( |
) | |
|||||
Change in other assets |
( |
) | |
|||||
Change in other liabilities |
|
|
||||||
Total adjustments |
( |
) | |
|||||
Net cash provided by operating activities |
|
|
||||||
CASH FLOWS FROM INVESTING ACTIVITIES: |
||||||||
Cash received in acquisition of TB&T Bancshares, Inc. |
|
|
||||||
Activity in available-for-sale securities: |
||||||||
Sales |
|
|
||||||
Maturities |
|
|
||||||
Purchases |
( |
) | ( |
) | ||||
Net decrease (increase) in loans |
|
( |
) | |||||
Purchases of bank premises and equipment and other assets |
( |
) | ( |
) | ||||
Proceeds from sale of bank premises and equipment and other assets |
|
|
||||||
Net cash used in investing activities |
( |
) | ( |
) | ||||
CASH FLOWS FROM FINANCING ACTIVITIES: |
||||||||
Net increase (decrease) in noninterest-bearing deposits |
( |
) | |
|||||
Net increase in interest-bearing deposits |
|
|
||||||
Net increase (decrease) in borrowings |
|
( |
) | |||||
Common stock transactions: |
||||||||
Proceeds from stock issuances |
|
|
||||||
Dividends paid |
( |
) | ( |
) | ||||
Net cash provided by (used in) financing activities |
|
|
||||||
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS |
( |
) | |
|||||
CASH AND CASH EQUIVALENTS, beginning of period |
|
|
||||||
CASH AND CASH EQUIVALENTS, end of period |
$ | |
$ | |
||||
SUPPLEMENTAL INFORMATION AND NONCASH TRANSACTIONS: |
||||||||
Investment securities purchased but not yet settled |
$ | |
$ | |
||||
Investment securities sold but not yet settled |
|
— |
||||||
Interest paid |
|
|
||||||
Transfer of loans and bank premises to other real estate |
— |
|
Net Earnings (in thousands) |
Weighted Average Shares |
Per Share Amount |
||||||||||
For the three-months ended March 31, 2020: |
||||||||||||
Net earnings per share, basic |
$ | |
|
$ | |
|||||||
Effect of stock options and stock grants |
|
|
|
|||||||||
Net earnings per share, assuming dilution |
$ | |
|
$ | |
|||||||
For the three-ended March 31, 2019: |
||||||||||||
Net earnings per share, basic |
$ | |
|
$ | |
|||||||
Effect of stock options and stock grants |
|
|
— |
|||||||||
Net earnings per share, assuming dilution |
$ | |
|
$ | |
|||||||
March 31, 2020 |
||||||||||||||||
Amortized Cost Basis |
Gross Unrealized Holding Gains |
Gross Unrealized Holding Losses |
Estimated Fair Value |
|||||||||||||
U.S. Treasury securities |
$ | |
$ | |
$ | — |
$ | |
||||||||
Obligations of states and political subdivisions |
|
|
( |
) | |
|||||||||||
Corporate bonds and other |
|
|
( |
) | |
|||||||||||
Residential mortgage-backed securities |
|
|
( |
) | |
|||||||||||
Commercial mortgage-backed securities |
|
|
( |
) | |
|||||||||||
Total securities available-for-sale |
$ | |
$ | |
$ | ( |
) | $ | |
|||||||
March 31, 2019 |
||||||||||||||||
Amortized Cost Basis |
Gross Unrealized Holding Gains |
Gross Unrealized Holding Losses |
Estimated Fair Value |
|||||||||||||
U.S. Treasury securities |
$ | $ | $ | — |
$ | |||||||||||
Obligations of states and political subdivisions |
( |
) | ||||||||||||||
Corporate bonds and other |
— |
( |
) | |||||||||||||
Residential mortgage-backed securities |
( |
) | ||||||||||||||
Commercial mortgage-backed securities |
( |
) | ||||||||||||||
Total securities available-for-sale |
$ | $ | $ | ( |
) | $ | ||||||||||
December 31, 2019 |
||||||||||||||||
Amortized Cost Basis |
Gross Unrealized Holding Gains |
Gross Unrealized Holding Losses |
Estimated Fair Value |
|||||||||||||
U.S. Treasury securities |
$ | $ | $ | — |
$ | |||||||||||
Obligations of states and political subdivisions |
( |
) | ||||||||||||||
Corporate bonds and other |
— |
|||||||||||||||
Residential mortgage-backed securities |
( |
) | ||||||||||||||
Commercial mortgage-backed securities |
( |
) | ||||||||||||||
Total securities available-for-sale |
$ | $ | $ | ( |
) | $ | ||||||||||
Amortized Cost Basis |
Estimated Fair Value |
|||||||
Due within one year |
$ | $ | ||||||
Due after one year through five years |
||||||||
Due after five years through ten years |
||||||||
Due after ten years |
||||||||
Mortgage-backed securities |
||||||||
Total |
$ | $ | ||||||
Less than 12 Months |
12 Months or Longer |
Total |
||||||||||||||||||||||
March 31, 2020 |
Fair Value |
Unrealized Loss |
Fair Value |
Unrealized Loss |
Fair Value |
Unrealized Loss |
||||||||||||||||||
Obligations of states and political subdivisions |
$ | $ | $ | — |
$ | — |
$ | $ | ||||||||||||||||
Corporate bonds and other |
— |
— |
||||||||||||||||||||||
Residential mortgage-backed securities |
— |
|||||||||||||||||||||||
Commercial mortgage-backed securities |
||||||||||||||||||||||||
Total |
$ | $ | $ | $ | $ | $ | ||||||||||||||||||
Less than 12 Months |
12 Months or Longer |
Total |
||||||||||||||||||||||
March 31, 2019 |
Fair Value |
Unrealized Loss |
Fair Value |
Unrealized Loss |
Fair Value |
Unrealized Loss |
||||||||||||||||||
Obligations of states and political subdivisions |
$ | $ | $ | $ | $ | $ | ||||||||||||||||||
Corporate bonds and other |
— |
— |
||||||||||||||||||||||
Residential mortgage-backed securities |
||||||||||||||||||||||||
Commercial mortgage-backed securities |
— |
— |
||||||||||||||||||||||
Total |
$ | $ | $ | $ | $ | $ | ||||||||||||||||||
Less than 12 Months |
12 Months or Longer |
Total |
||||||||||||||||||||||
December 31, 2019 |
Fair Value |
Unrealized Loss |
Fair Value |
Unrealized Loss |
Fair Value |
Unrealized Loss |
||||||||||||||||||
Obligations of state and political subdivisions |
$ | $ | $ | $ | — |
$ | $ | |||||||||||||||||
Residential mortgage-backed securities |
||||||||||||||||||||||||
Commercial mortgage-backed securities |
||||||||||||||||||||||||
Total |
$ | $ | $ | $ | $ | $ | ||||||||||||||||||
March 31, |
December 31, |
|||||||||||
2020 |
2019 |
2019 |
||||||||||
Commercial |
$ | $ | $ | |||||||||
Agricultural |
||||||||||||
Real Estate |
||||||||||||
Consumer |
||||||||||||
Total |
$ | $ | $ | |||||||||
March 31, |
December 31, |
|||||||||||
2020 |
2019 |
2019 |
||||||||||
Non-accrual loans* |
$ | $ | $ | |||||||||
Loans still accruing and past due 90 days or more |
||||||||||||
Troubled debt restructured loans** |
||||||||||||
Total |
$ | $ | $ | |||||||||
* | Includes $ |
** | Troubled debt restructured loans of $ non-accrual loans at March 31, 2020 and 2019, and December 31, 2019, respectively. |
March 31, 2020 |
March 31, 2019 |
December 31, 2019 |
||||||||||||||||||||
Recorded Investment |
Valuation Allowance |
Recorded Investment |
Valuation Allowance |
Recorded Investment |
Valuation Allowance |
|||||||||||||||||
$ | $ | $ | $ | $ | $ | |||||||||||||||||
March 31, |
December 31, |
|||||||||||
2020 |
2019 |
2019 |
||||||||||
Commercial |
$ | $ | $ | |||||||||
Agricultural |
||||||||||||
Real Estate |
||||||||||||
Consumer |
||||||||||||
Total |
$ | $ | $ | |||||||||
March 31, 2020 |
Unpaid Contractual Principal Balance |
Recorded Investment With No Allowance* |
Recorded Investment With Allowance |
Total Recorded Investment |
Related Allowance |
Three- Month Average Recorded Investment |
||||||||||||||||||
Commercial |
$ | $ | $ | $ | $ | $ | ||||||||||||||||||
Agricultural |
||||||||||||||||||||||||
Real Estate |
||||||||||||||||||||||||
Consumer |
||||||||||||||||||||||||
Total |
$ | $ | $ | $ | $ | $ | ||||||||||||||||||
* | Includes $ |
March 31, 2019 |
Unpaid Contractual Principal Balance |
Recorded Investment With No Allowance* |
Recorded Investment With Allowance |
Total Recorded Investment |
Related Allowance |
Three- Month Average Recorded Investment |
||||||||||||||||||
Commercial |
$ | $ | $ | $ | $ | $ | ||||||||||||||||||
Agricultural |
||||||||||||||||||||||||
Real Estate |
||||||||||||||||||||||||
Consumer |
||||||||||||||||||||||||
Total |
$ | $ | $ | $ | $ | $ | ||||||||||||||||||
* | Includes $ |
December 31, 2019 |
Unpaid Contractual Principal Balance |
Recorded Investment With No Allowance* |
Recorded Investment With Allowance |
Total Recorded Investment |
Related Allowance |
Three- Month Average Recorded Investment |
||||||||||||||||||
Commercial |
$ | $ | $ | $ | $ | $ | ||||||||||||||||||
Agricultural |
||||||||||||||||||||||||
Real Estate |
||||||||||||||||||||||||
Consumer |
||||||||||||||||||||||||
Total |
$ | $ | $ | $ | $ | $ | ||||||||||||||||||
* | Includes |
March 31, 2020 |
Pass |
Special Mention |
Substandard |
Doubtful |
Total |
|||||||||||||||
Commercial |
$ | $ | $ | $ | — |
$ | ||||||||||||||
Agricultural |
— |
|||||||||||||||||||
Real Estate |
— |
|||||||||||||||||||
Consumer |
— |
|||||||||||||||||||
Total |
$ | $ | $ | $ | — |
$ | ||||||||||||||
March 31, 2019 |
Pass |
Special Mention |
Substandard |
Doubtful |
Total |
|||||||||||||||
Commercial |
$ | $ | $ | $ | — |
$ | ||||||||||||||
Agricultural |
— |
|||||||||||||||||||
Real Estate |
— |
|||||||||||||||||||
Consumer |
— |
|||||||||||||||||||
Total |
$ | $ | $ | $ | — |
$ | ||||||||||||||
December 31, 2019 |
Pass |
Special Mention |
Substandard |
Doubtful |
Total |
|||||||||||||||
Commercial |
$ | $ | $ | $ | — |
$ | ||||||||||||||
Agricultural |
— |
|||||||||||||||||||
Real Estate |
— |
|||||||||||||||||||
Consumer |
— |
|||||||||||||||||||
Total |
$ | $ | $ | $ | — |
$ | ||||||||||||||
March 31, 2020 |
15-59 Days Past Due* |
60-89 Days Past Due |
Greater Than 90 Days |
Total Past Due |
Current |
Total Loans |
90 Days Past Due Still Accruing |
|||||||||||||||||||||
Commercial |
$ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||
Agricultural |
— |
|||||||||||||||||||||||||||
Real Estate |
— |
|||||||||||||||||||||||||||
Consumer |
||||||||||||||||||||||||||||
Total |
$ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||
March 31, 2019 |
15-59 Days Past Due* |
60-89 Days Past Due |
Greater Than 90 Days |
Total Past Due |
Current |
Total Loans |
90 Days Past Due Still Accruing |
|||||||||||||||||||||
Commercial |
$ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||
Agricultural |
— |
|||||||||||||||||||||||||||
Real Estate |
||||||||||||||||||||||||||||
Consumer |
||||||||||||||||||||||||||||
Total |
$ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||
December 31, 2019 |
15-59 Days Past Due* |
60-89 Days Past Due |
Greater Than 90 Days |
Total Past Due |
Current |
Total Loans |
90 Days Past Due Still Accruing |
|||||||||||||||||||||
Commercial |
$ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||
Agricultural |
— |
|||||||||||||||||||||||||||
Real Estate |
— |
|||||||||||||||||||||||||||
Consumer |
||||||||||||||||||||||||||||
Total |
$ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||
* | The Company monitors commercial, agricultural and real estate loans after such loans are 15 days past due. Consumer loans are monitored after such loans are 30 days past due. |
March 31, 2020 |
Commercial |
Agricultural |
Real Estate |
Consumer |
Total |
|||||||||||||||
Loans individually evaluated for impairment |
$ | $ | $ | $ | $ | |||||||||||||||
Loans collectively evaluated for impairment |
||||||||||||||||||||
Total |
$ | $ | $ | $ | $ | |||||||||||||||
March 31, 2019 |
Commercial |
Agricultural |
Real Estate |
Consumer |
Total |
|||||||||||||||
Loans individually evaluated for impairment |
$ | $ | $ | $ | $ |
|||||||||||||||
Loans collectively evaluated for impairment |
||||||||||||||||||||
Total |
$ | $ | $ | $ | $ | |||||||||||||||
December 31, 2019 |
Commercial |
Agricultural |
Real Estate |
Consumer |
Total |
|||||||||||||||
Loans individually evaluated for impairment |
$ | $ | $ | $ | $ |
|||||||||||||||
Loans collectively evaluated for impairment |
||||||||||||||||||||
Total |
$ | $ | $ | $ | $ | |||||||||||||||
Three months ended March 31, 2020 |
Commercial |
Agricultural |
Real Estate |
Consumer |
Total |
|||||||||||||||
Beginning balance |
$ | $ | $ | $ | $ | |||||||||||||||
Provision for loan losses |
||||||||||||||||||||
Recoveries |
||||||||||||||||||||
Charge-offs |
( |
) | ( |
) | ( |
) | ( |
) | ( |
) | ||||||||||
Ending balance |
$ | $ | $ | $ | $ | |||||||||||||||
Three months ended March 31, 2019 |
Commercial |
Agricultural |
Real Estate |
Consumer |
Total |
|||||||||||||||
Beginning balance |
$ | $ | $ | $ | $ | |||||||||||||||
Provision for loan losses |
( |
) | ||||||||||||||||||
Recoveries |
||||||||||||||||||||
Charge-offs |
( |
) | — |
( |
) | ( |
) | ( |
) | |||||||||||
Ending balance |
$ | $ | $ | $ | $ | |||||||||||||||
March 31, 2020 |
Commercial |
Agricultural |
Real Estate |
Consumer |
Total |
|||||||||||||||
Loans individually evaluated for impairment |
$ | $ | $ | $ | $ | |||||||||||||||
Loans collectively evaluated for impairment |
||||||||||||||||||||
Total |
$ | $ | $ | $ | $ | |||||||||||||||
March 31, 2019 |
Commercial |
Agricultural |
Real Estate |
Consumer |
Total |
|||||||||||||||
Loans individually evaluated for impairment |
$ | $ | $ | $ | $ | |||||||||||||||
Loans collectively evaluated for impairment |
||||||||||||||||||||
Total |
$ | $ | $ | $ | $ | |||||||||||||||
December 31, 2019 |
Commercial |
Agricultural |
Real Estate |
Consumer |
Total |
|||||||||||||||
Loans individually evaluated for impairment |
$ | $ | $ | $ | $ | |||||||||||||||
Loans collectively evaluated for impairment |
||||||||||||||||||||
Total |
$ | $ | $ | $ | $ | |||||||||||||||
Three Months Ended March 31, 2020 |
Three Months Ended March 31, 2019 |
|||||||||||||||||||||||
Number |
Pre- Modification Recorded Investment |
Post- Modification Recorded Investment |
Number |
Pre- Modification Recorded Investment |
Post- Modification Recorded Investment |
|||||||||||||||||||
Commercial |
$ | $ | $ | $ | ||||||||||||||||||||
Agricultural |
||||||||||||||||||||||||
Real Estate |
— |
— |
— |
|||||||||||||||||||||
Consumer |
— |
— |
— |
|||||||||||||||||||||
Total |
$ | $ | $ | $ | ||||||||||||||||||||
Three Months Ended March 31, 2020 |
Three Months Ended March 31, 2019 |
|||||||||||||||||||||||
Adjusted Interest Rate |
Extended Maturity |
Combined Rate and Maturity |
Adjusted Interest Rate |
Extended Maturity |
Combined Rate and Maturity |
|||||||||||||||||||
Commercial |
$ | — |
$ | $ | $ | — |
$ | $ | — |
|||||||||||||||
Agricultural |
— |
— |
— |
|||||||||||||||||||||
Real Estate |
— |
— |
— |
— |
||||||||||||||||||||
Consumer |
— |
— |
— |
— |
— |
|||||||||||||||||||
Total |
$ | — |
$ | $ | $ | — |
$ | $ | ||||||||||||||||
March 31, 2020: |
Outstanding Notional Balance |
Asset Derivative Fair Value |
Liability Derivative Fair Value |
|||||||||
IRLCs |
$ | $ | $ | — |
||||||||
Forward mortgage-backed securities trades |
— |
March 31, 2019: |
Outstanding Notional Balance |
Asset Derivative Fair Value |
Liability Derivative Fair Value |
|||||||||
IRLCs |
$ | $ | $ | — |
||||||||
Forward mortgage-backed securities trades |
— |
|||||||||||
December 31, 2019: |
Outstanding Notional Balance |
Asset Derivative Fair Value |
Liability Derivative Fair Value |
|||||||||
IRLCs |
$ | $ | $ | — |
||||||||
Forward mortgage-backed securities trades |
— |
March 31, |
December 31, |
|||||||||||
2020 |
2019 |
2019 |
||||||||||
Securities sold under agreements with customers to repurchase |
$ | $ | $ | |||||||||
Federal funds purchased |
||||||||||||
Advances from Federal Home Loan Bank of Dallas |
— |
— |
||||||||||
Total |
$ | $ | $ | |||||||||
• | Level 1 Inputs – Unadjusted quoted prices in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date. |
• | Level 2 Inputs – Inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. These include quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability (for example, interest rates, volatilities, prepayment speeds, loss severities, credit risks and default rates) or inputs that are derived principally from or corroborated by observable market data by correlation or other means. |
• | Level 3 Inputs – Significant unobservable inputs that reflect an entity’s own assumptions that market participants would use in pricing the assets or liabilities. |
March 31, 2020 |
||||||||||||||||
Level 1 Inputs |
Level 2 Inputs |
Level 3 Inputs |
Total Fair Value |
|||||||||||||
Available-for-sale investment securities: |
||||||||||||||||
U.S. Treasury securities |
$ | $ | — |
$ | — |
$ | ||||||||||
Obligations of states and political subdivisions |
— |
— |
||||||||||||||
Corporate bonds |
— |
— |
||||||||||||||
Residential mortgage-backed securities |
— |
— |
||||||||||||||
Commercial mortgage-backed securities |
— |
— |
||||||||||||||
Other securities |
— |
— |
||||||||||||||
Total |
$ | $ | $ | — |
$ | |||||||||||
Loans held-for-sale |
$ | — |
$ | $ | — |
$ | ||||||||||
IRLCs |
$ | — |
$ | $ | — |
$ | ||||||||||
Forward mortgage-backed securities trades |
$ | — |
$ | ( |
) | $ | — |
$ | ( |
) | ||||||
March 31, 2019 |
||||||||||||||||
Level 1 Inputs |
Level 2 Inputs |
Level 3 Inputs |
Total Fair Value |
|||||||||||||
Available-for-sale investment securities: |
||||||||||||||||
U.S. Treasury securities |
$ | $ | — |
$ | — |
$ | ||||||||||
Obligations of states and political subdivisions |
— |
— |
||||||||||||||
Corporate bonds |
— |
— |
||||||||||||||
Residential mortgage-backed securities |
— |
— |
||||||||||||||
Commercial mortgage-backed securities |
— |
— |
||||||||||||||
Other securities |
— |
— |
||||||||||||||
Total |
$ | $ | $ | — |
$ | |||||||||||
Loans held-for-sale |
$ | — |
$ | $ | — |
$ | ||||||||||
IRLCs |
$ | — |
$ | $ | — |
$ | ||||||||||
Forward mortgage-backed securities trades |
$ | — |
$ | ( |
) | $ | — |
$ | ( |
) | ||||||
December 31, 2019 |
||||||||||||||||
Level 1 Inputs |
Level 2 Inputs |
Level 3 Inputs |
Total Fair Value |
|||||||||||||
Available-for-sale investment securities: |
||||||||||||||||
U.S. Treasury securities |
$ | $ | — |
$ | — |
$ |
||||||||||
Obligations of states and political subdivisions |
— |
|||||||||||||||
Corporate bonds |
— |
— |
||||||||||||||
Residential mortgage-backed securities |
— |
— |
||||||||||||||
Commercial mortgage-backed securities |
— |
— |
||||||||||||||
Other securities |
— |
— |
||||||||||||||
Total |
$ | $ | $ | — |
$ | |||||||||||
Loans held-for-sale |
$ | — |
$ | $ | — |
$ | ||||||||||
IRLCs |
$ | — |
$ | $ | — |
$ | ||||||||||
Forward mortgage-backed securities trades |
$ | — |
$ | ( |
) | $ | — |
$ | ( |
) | ||||||
March 31, |
December 31, |
|||||||||||||||||||||||||||
2020 |
2019 |
2019 |
||||||||||||||||||||||||||
Carrying Value |
Estimated Fair Value |
Carrying Value |
Estimated Fair Value |
Carrying Value |
Estimated Fair Value |
Fair Value Hierarchy |
||||||||||||||||||||||
Cash and due from banks |
$ | $ | $ | $ | $ | $ | Level 1 |
|||||||||||||||||||||
Federal Funds Sold |
— |
— |
Level 1 |
|||||||||||||||||||||||||
Interest-bearing deposits in banks |
Level 1 |
|||||||||||||||||||||||||||
Interest-bearing time deposits in banks |
— |
— |
— |
— |
Level 2 |
|||||||||||||||||||||||
Available-for-sale securities |
Levels 1 and 2 |
|||||||||||||||||||||||||||
Loans held for investment |
Level 3 |
|||||||||||||||||||||||||||
Loans held for sale |
Level 2 |
|||||||||||||||||||||||||||
Accrued interest receivable |
Level 2 |
|||||||||||||||||||||||||||
Deposits with stated maturities |
Level 2 |
|||||||||||||||||||||||||||
Deposits with no stated maturities |
Level 1 |
|||||||||||||||||||||||||||
Borrowings |
Level 2 |
|||||||||||||||||||||||||||
Accrued interest payable |
Level 2 |
|||||||||||||||||||||||||||
IRLCs |
Level 2 |
|||||||||||||||||||||||||||
Forward mortgage-backed securities trades |
Level 2 |
Fair value of consideration paid: |
||||
Common stock issued ( |
$ | |||
Fair value of identifiable assets acquired: |
||||
Cash and cash equivalents |
||||
Securities available-for-sale |
||||
Loans |
||||
Identifiable intangible assets |
||||
Other assets |
||||
Total identifiable assets acquired |
||||
Fair value of liabilities assumed: |
||||
Deposits |
||||
Other liabilities |
||||
Total liabilities assumed |
||||
Fair value of net identifiable assets acquired |
||||
Goodwill resulting from acquisition |
$ | |||
Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
• | general economic conditions, including local, state, national and international, and the impact they may have on us and our customers; |
• | effect of the coronavirus (COVID-19) on our Company, the communities where we have our branches, the state of Texas and the United States, related to the economy and overall financial stability; |
• | government on regulatory responses to the COVID-19 pandemic; |
• | effect of severe weather conditions, including hurricanes, tornadoes, flooding and droughts; |
• | volatility and disruption in national and international financial and commodity markets; |
• | government intervention in the U.S. financial system including the effects of recent legislative, tax, accounting and regulatory actions and reforms, including the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”), the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”), the Jumpstart Our Business Startups Act, the Consumer Financial Protection Bureau, the capital ratios of Basel III as adopted by the federal banking authorities and the Tax Cuts and Jobs Act; |
• | political instability; |
• | the ability of the Federal government to address the national economy; |
• | changes in our competitive environment from other financial institutions and financial service providers; |
• | the effects of and changes in trade, monetary and fiscal policies and laws, including interest rate policies of the Board of Governors of the Federal Reserve System (the “Federal Reserve Board”); |
• | the effect of changes in accounting policies and practices, as may be adopted by the regulatory agencies, as well as the Public Company Accounting Oversight Board, the Financial Accounting Standards Board and other accounting standard setters; |
• | the effect of changes in laws and regulations (including laws and regulations concerning taxes, banking, securities and insurance) with which we and our subsidiaries must comply; |
• | changes in the demand for loans; |
• | fluctuations in the value of collateral securing our loan portfolio and in the level of the allowance for loan losses; |
• | potential risk of environmental liability associated with lending activities; |
• | the accuracy of our estimates of future loan losses; |
• | the accuracy of our estimates and assumptions regarding the performance of our securities portfolio; |
• | soundness of other financial institutions with which we have transactions; |
• | inflation, interest rate, market and monetary fluctuations; |
• | changes in consumer spending, borrowing and savings habits; |
• | changes in commodity prices (e.g., oil and gas, cattle and wind energy); |
• | our ability to attract deposits and increase market share; |
• | changes in our liquidity position; |
• | changes in the reliability of our vendors, internal control system or information systems; |
• | cyber attacks on our technology information systems, including fraud from our customers and external third party vendors; |
• | our ability to attract and retain qualified employees; |
• | acquisitions and integration of acquired businesses; |
• | the possible impairment of goodwill associated with our acquisitions; |
• | consequences of continued bank mergers and acquisitions in our market area, resulting in fewer but much larger and stronger competitors; |
• | expansion of operations, including branch openings, new product offerings and expansion into new markets; |
• | changes in our compensation and benefit plans; |
• | acts of God, pandemic, war or terrorism; and |
• | our success at managing the risk involved in the foregoing items. |
• | We have addressed the safety of our 78 branches, following the guidelines of the Center for Disease Control, and while the branches generally remain open to customers, we have taken steps, and continue to evaluate, to push as much traffic and transactions as possible to our motor banks; |
• | We hold executive meetings three times weekly to address issues that change rapidly; |
• | We have moved our Annual Shareholders’ Meeting from a physical meeting to a virtual meeting. The date and time are unchanged but Shareholders that wish to participate may access portals and live streams of the Annual Shareholders’ Meeting; |
• | Provided extensions and deferrals to loan customers effected by COVID-19 provided such customers were not 30 days past due at December 31, 2019; and |
• | We have chosen to participate in the CARES Act Paycheck Protection Program that will provide government guaranteed and forgivable loans to our customers. Through April 23, 2020, we have completed over 4,900 applications and funded over $640 million of such loans. We believe these loans and our participation in the program is good for our customers and the communities we serve. |
• | Duration, extent and severity of COVID-19; |
• | Effect of government assistance; |
• | Unemployment and effect on economies and markets; |
• | Price of oil and gas and effect on economy; and |
• | Effect of our TB&T Bancshares, Inc. acquisition on our combined loan portfolio. |
Three Months Ended March 31, 2020 Compared to Three Months Ended March 31, 2019 |
||||||||||||
Change Attributable to |
Total Change |
|||||||||||
Volume |
Rate |
|||||||||||
Short-term investments |
$ | 689 |
$ | (553 |
) | $ | 136 |
|||||
Taxable investment securities |
2,337 |
(971 |
) | 1,366 |
||||||||
Tax-exempt investment securities (1) |
1,107 |
(1,186 |
) | (79 |
) | |||||||
Loans (1) (2) |
9,356 |
433 |
9,789 |
|||||||||
Interest income |
13,489 |
(2,277 |
) | 11,212 |
||||||||
Interest-bearing deposits |
1,222 |
(1,204 |
) | 18 |
||||||||
Short-term borrowings |
92 |
(301 |
) | (209 |
) | |||||||
Interest expense |
1,314 |
(1,505 |
) | (191 |
) | |||||||
Net interest income |
$ | 12,175 |
$ | (772 |
) | $ | 11,403 |
|||||
(1) | Computed on a tax-equivalent basis assuming a marginal tax rate of 21%. |
(2) | Non-accrual loans are included in loans. |
Three Months Ended March 31, |
||||||||||||||||||||||||
2020 |
2019 |
|||||||||||||||||||||||
Average Balance |
Income/ Expense |
Yield/ Rate |
Average Balance |
Income/ Expense |
Yield/ Rate |
|||||||||||||||||||
Assets |
||||||||||||||||||||||||
Short-term investments (1) |
$ | 223,618 |
$ | 755 |
1.36 |
% | $ | 105,152 |
$ | 619 |
2.39 |
% | ||||||||||||
Taxable investment securities (2) |
2,263,329 |
14,655 |
2.59 |
1,924,863 |
13,289 |
2.76 |
||||||||||||||||||
Tax-exempt investment securities (2)(3) |
1,346,842 |
11,200 |
3.33 |
1,226,457 |
11,279 |
3.68 |
||||||||||||||||||
Loans (3)(4) |
4,667,436 |
63,323 |
5.46 |
3,973,108 |
53,534 |
5.46 |
||||||||||||||||||
Total earning assets |
8,501,225 |
$ | 89,933 |
4.25 |
% | 7,229,580 |
$ | 78,721 |
4.42 |
% | ||||||||||||||
Cash and due from banks |
204,220 |
187,546 |
||||||||||||||||||||||
Bank premises and equipment, net |
140,295 |
134,198 |
||||||||||||||||||||||
Other assets |
88,548 |
64,381 |
||||||||||||||||||||||
Goodwill and other intangible assets, net |
318,445 |
174,530 |
||||||||||||||||||||||
Allowance for loan losses |
(59,076 |
) | (52,287 |
) | ||||||||||||||||||||
Total assets |
$ | 9,193,657 |
$ | 7,737,948 |
||||||||||||||||||||
Liabilities and Shareholders’ Equity |
||||||||||||||||||||||||
Interest-bearing deposits |
$ | 4,904,087 |
$ | 6,680 |
0.55 |
% | $ | 4,144,091 |
$ | 6,662 |
0.65 |
% | ||||||||||||
Short-term borrowings |
460,605 |
517 |
0.45 |
408,641 |
726 |
0.72 |
||||||||||||||||||
Total interest-bearing liabilities |
5,364,692 |
$ | 7,197 |
0.54 |
% | 4,552,732 |
$ | 7,388 |
0.66 |
% | ||||||||||||||
Noninterest-bearing deposits |
2,291,535 |
2,082,719 |
||||||||||||||||||||||
Other liabilities |
56,950 |
33,361 |
||||||||||||||||||||||
Total liabilities |
7,713,177 |
6,668,812 |
||||||||||||||||||||||
Shareholders’ equity |
1,480,480 |
1,069,136 |
||||||||||||||||||||||
Total liabilities and shareholders’ equity |
$ | 9,193,657 |
$ | 7,737,948 |
||||||||||||||||||||
Net interest income |
$ | 82,736 |
$ | 71,333 |
||||||||||||||||||||
Rate Analysis: |
||||||||||||||||||||||||
Interest income/earning assets |
4.25 |
% | 4.42 |
% | ||||||||||||||||||||
Interest expense/earning assets |
(0.34 |
) | (0.42 |
) | ||||||||||||||||||||
Net interest margin |
3.91 |
% | 4.00 |
% | ||||||||||||||||||||
(1) | Short-term investments are comprised of Fed Funds sold, interest-bearing deposits in banks and interest-bearing time deposits in banks. |
(2) | Average balances include unrealized gains and losses on available-for-sale securities. |
(3) | Computed on a tax-equivalent basis assuming a marginal tax rate of 21%. |
(4) | Non-accrual loans are included in loans. |
Three Months Ended March 31, |
||||||||||||
2020 |
Increase (Decrease) |
2019 |
||||||||||
Trust fees |
$ | 7,437 |
$ | 458 |
$ | 6,979 |
||||||
Service charges on deposit accounts |
5,915 |
739 |
5,176 |
|||||||||
ATM, interchange and credit card fees |
7,400 |
560 |
6,840 |
|||||||||
Real estate mortgage operations |
3,852 |
378 |
3,474 |
|||||||||
Net gain on sale of available-for-sale securities |
2,062 |
2,062 |
— |
|||||||||
Net gain (loss) on sale of foreclosed assets |
1 |
(68 |
) | 69 |
||||||||
Net gain (loss) on sale of assets |
116 |
116 |
— |
|||||||||
Interest on loan recoveries |
265 |
(73 |
) | 338 |
||||||||
Other: |
||||||||||||
Check printing fees |
62 |
22 |
40 |
|||||||||
Safe deposit rental fees |
193 |
(1 |
) | 194 |
||||||||
Credit life fees |
172 |
(22 |
) | 194 |
||||||||
Brokerage commissions |
385 |
39 |
346 |
|||||||||
Miscellaneous income |
872 |
85 |
787 |
|||||||||
Total other |
1,684 |
123 |
1,561 |
|||||||||
Total Noninterest Income |
$ | 28,732 |
$ | 4,295 |
$ | 24,437 |
||||||
Three Months Ended March 31, |
||||||||||||
2020 |
Increase (Decrease) |
2019 |
||||||||||
Salaries |
$ | 22,703 |
$ | 3,027 |
$ | 19,676 |
||||||
Medical |
2,697 |
202 |
2,495 |
|||||||||
Profit sharing |
972 |
(519 |
) | 1,491 |
||||||||
Pension |
— |
(23 |
) | 23 |
||||||||
401(k) match expense |
839 |
114 |
725 |
|||||||||
Payroll taxes |
1,815 |
218 |
1,597 |
|||||||||
Stock option and stock grant expense |
616 |
99 |
517 |
|||||||||
Loss from partial settlement of pension plan |
— |
(900 |
) | 900 |
||||||||
Total salaries and employee benefits |
29,642 |
2,218 |
27,424 |
|||||||||
Net occupancy expense |
3,027 |
264 |
2,763 |
|||||||||
Equipment expense |
2,075 |
(378 |
) | 2,453 |
||||||||
FDIC assessment fees |
45 |
(493 |
) | 538 |
||||||||
ATM, interchange and credit card expense |
2,985 |
602 |
2,383 |
|||||||||
Professional and service fees |
2,594 |
762 |
1,832 |
|||||||||
Printing, stationery and supplies |
566 |
200 |
366 |
|||||||||
Operational and other losses |
576 |
310 |
266 |
|||||||||
Software amortization and expense |
2,024 |
427 |
1,597 |
|||||||||
Amortization of intangible assets |
509 |
240 |
269 |
|||||||||
Other: |
||||||||||||
Data processing fees |
423 |
8 |
415 |
|||||||||
Postage |
301 |
(134 |
) | 435 |
||||||||
Advertising |
320 |
(564 |
) | 884 |
||||||||
Correspondent bank service charges |
204 |
33 |
171 |
|||||||||
Telephone |
963 |
4 |
959 |
|||||||||
Public relations and business development |
875 |
111 |
764 |
|||||||||
Directors’ fees |
625 |
168 |
457 |
|||||||||
Audit and accounting fees |
444 |
2 |
442 |
|||||||||
Legal fees |
294 |
(3 |
) | 297 |
||||||||
Regulatory exam fees |
276 |
(15 |
) | 291 |
||||||||
Travel |
312 |
(27 |
) | 339 |
||||||||
Courier expense |
216 |
16 |
200 |
|||||||||
Other real estate owned |
40 |
30 |
10 |
|||||||||
Other miscellaneous expense |
5,982 |
4,170 |
1,812 |
|||||||||
Total other |
11,275 |
3,799 |
7,476 |
|||||||||
Total Noninterest Expense |
$ | 55,318 |
$ | 7,951 |
$ | 47,367 |
||||||
March 31, |
December 31, |
|||||||||||
2020 |
2019 |
2019 |
||||||||||
Commercial |
$ | 869,450 |
$ | 826,886 |
$ | 856,326 |
||||||
Agricultural |
99,582 |
91,336 |
103,640 |
|||||||||
Real Estate |
3,249,249 |
2,684,207 |
2,823,372 |
|||||||||
Consumer |
421,108 |
386,731 |
411,631 |
|||||||||
Total |
$ | 4,639,389 |
$ | 3,989,160 |
$ | 4,194,969 |
||||||
March 31, |
December 31, |
|||||||||||
2020 |
2019 |
2019 |
||||||||||
Oil and gas related loans |
$ | 117,223 |
$ | 107,335 |
$ | 119,789 |
||||||
Oil and gas related loans as a % of total loans |
2.50 |
% | 2.68 |
% | 2.84 |
% | ||||||
Classified oil and gas related loans |
$ | 22,032 |
$ | 4,255 |
$ | 7,041 |
||||||
Non-accrual oil and gas related loans |
3,477 |
669 |
481 |
|||||||||
Net charge-offs for oil and gas related loans |
606 |
— |
— |
|||||||||
Allowance for oil and gas related loans as a % of oil and gas loans |
4.46 |
% | 3.22 |
% | 2.54 |
% |
March 31, |
December 31, |
|||||||||||
2020 |
2019 |
2019 |
||||||||||
Non-accrual loans* |
$ | 39,226 |
$ | 28,508 |
$ | 24,582 |
||||||
Loans still accruing and past due 90 days or more |
209 |
97 |
153 |
|||||||||
Troubled debt restructured loans** |
26 |
472 |
26 |
|||||||||
Nonperforming Loans |
39,461 |
29,077 |
24,761 |
|||||||||
Foreclosed assets |
983 |
647 |
1,009 |
|||||||||
Total nonperforming assets |
$ | 40,444 |
$ | 29,724 |
$ | 25,770 |
||||||
As a % of loans and foreclosed assets |
0.86 |
% | 0.74 |
% | 0.61 |
% | ||||||
As a % of total assets |
0.42 |
0.37 |
0.31 |
* | Includes $7.77 million, $859 thousand and $251 thousand of purchased credit impaired loans as of March 31, 2020 and 2019, and December 31, 2019, respectively. |
** | Other troubled debt restructured loans of $4.73 million, $4.57 million and $4.79 million, whose interest collection, after considering economic and business conditions and collection efforts, is doubtful are included in non-accrual loans at March 31, 2020 and 2019, and December 31, 2019, respectively. |
Three Months Ended March 31, |
||||||||
2020 |
2019 |
|||||||
Allowance for credit losses at period-end |
$ | 60,440 |
$ | 51,585 |
||||
Loans held for investment at period-end |
4,639,389 |
3,989,160 |
||||||
Average loans for period |
4,667,436 |
3,973,108 |
||||||
Net charge-offs/average loans (annualized) |
0.16 |
% | 0.06 |
% | ||||
Allowance for loan losses/period-end loans |
1.29 |
% | 1.29 |
% | ||||
Allowance for loan losses/non-accrual loans, past due 90 days still accruing and restructured loans |
153.16 |
% | 177.41 |
% |
Maturing |
||||||||||||||||||||||||||||||||||||||||
One Year or Less |
After One Year Through Five Years |
After Five Years Through Ten Years |
After Ten Years |
Total |
||||||||||||||||||||||||||||||||||||
Available-for-Sale: |
Amount |
Yield |
Amount |
Yield |
Amount |
Yield |
Amount |
Yield |
Amount |
Yield |
||||||||||||||||||||||||||||||
U.S. Treasury securities |
$ | 10,113 |
2.04 |
% | $ | — |
— |
% | $ | — |
— |
% | $ | — |
— |
% | $ | 10,113 |
2.04 |
% | ||||||||||||||||||||
Obligations of states and political subdivisions |
137,871 |
4.72 |
653,897 |
4.10 |
1,013,634 |
3.36 |
2,269 |
5.66 |
1,807,671 |
3.74 |
||||||||||||||||||||||||||||||
Corporate bonds and other securities |
4,532 |
2.21 |
219 |
2.65 |
— |
— |
— |
— |
4,751 |
2.23 |
||||||||||||||||||||||||||||||
Mortgage-backed securities |
112,829 |
2.62 |
1,417,009 |
2.72 |
% | 701,445 |
2.52 |
53,251 |
2.70 |
2,284,534 |
2.65 |
|||||||||||||||||||||||||||||
Total |
$ | 265,345 |
3.69 |
% | $ | 2,071,125 |
3.15 |
% | $ | 1,715,079 |
3.02 |
% | $ | 55,520 |
2.82 |
% | $ | 4,107,069 |
3.13 |
% | ||||||||||||||||||||
Three Months Ended March 31, |
||||||||||||||||
2020 |
2019 |
|||||||||||||||
Average Balance |
Average Rate |
Average Balance |
Average Rate |
|||||||||||||
Noninterest-bearing deposits |
$ | 2,291,535 |
— |
% | $ | 2,082,719 |
— |
% | ||||||||
Interest-bearing deposits: |
||||||||||||||||
Interest-bearing checking |
2,446,031 |
0.53 |
2,057,381 |
0.72 |
||||||||||||
Savings and money market accounts |
1,983,701 |
0.46 |
1,646,340 |
0.55 |
||||||||||||
Time deposits under $100,000 |
199,754 |
0.80 |
191,673 |
0.55 |
||||||||||||
Time deposits of $100,000 or more |
274,601 |
1.14 |
248,697 |
0.84 |
||||||||||||
Total interest-bearing deposits |
4,904,087 |
0.55 |
% | 4,144,091 |
0.65 |
% | ||||||||||
Total average deposits |
$ | 7,195,622 |
$ | 6,226,810 |
||||||||||||
Actual |
Minimum Capital Required-Basel III Fully Phased-In* |
Required to be Considered Well- Capitalized |
||||||||||||||||||||||
As of March 31, 2020: |
Amount |
Ratio |
Amount |
Ratio |
Amount |
Ratio |
||||||||||||||||||
Total Capital to Risk-Weighted Assets: |
||||||||||||||||||||||||
Consolidated |
$ | 1,156,657 |
20.65 |
% | $ | 588,194 |
10.50 |
% | $ | 560,185 |
10.00 |
% | ||||||||||||
First Financial Bank, N.A |
$ | 1,026,860 |
18.37 |
% | $ | 586,949 |
10.50 |
% | $ | 558,999 |
10.00 |
% | ||||||||||||
Tier 1 Capital to Risk-Weighted Assets: |
||||||||||||||||||||||||
Consolidated |
$ | 1,095,409 |
19.55 |
% | $ | 476,157 |
8.50 |
% | $ | 336,111 |
6.00 |
% | ||||||||||||
First Financial Bank, N.A |
$ | 965,612 |
17.27 |
% | $ | 475,149 |
8.50 |
% | $ | 447,200 |
8.00 |
% | ||||||||||||
Common Equity Tier 1 Capital to Risk-Weighted Assets: |
||||||||||||||||||||||||
Consolidated |
$ | 1,095,409 |
19.55 |
% | $ | 392,129 |
7.00 |
% | — |
N/A |
||||||||||||||
First Financial Bank, N.A |
$ | 965,612 |
17.27 |
% | $ | 391,300 |
7.00 |
% | $ | 363,350 |
6.50 |
% | ||||||||||||
Leverage Ratio: |
||||||||||||||||||||||||
Consolidated |
$ | 1,095,409 |
12.49 |
% | $ | 350,764 |
4.00 |
% | — |
N/A |
||||||||||||||
First Financial Bank, N.A |
$ | 965,612 |
11.05 |
% | $ | 349,495 |
4.00 |
% | $ | 436,869 |
5.00 |
% |
* | At March 31, 2020, the capital conservation buffer under Basel III has been fully phased-in. |
Actual |
Minimum Capital Required-Basel III Fully Phased-In* |
Required to be Considered Well- Capitalized |
||||||||||||||||||||||
As of March 31, 2019: |
Amount |
Ratio |
Amount |
Ratio |
Amount |
Ratio |
||||||||||||||||||
Total Capital to Risk-Weighted Assets: |
||||||||||||||||||||||||
Consolidated |
$ | 966,100 |
21.00 |
% | $ | 482,971 |
10.50 |
% | $ | 459,972 |
10.00 |
% | ||||||||||||
First Financial Bank, N.A |
$ | 860,244 |
18.75 |
% | $ | 481,796 |
10.50 |
% | $ | 458,854 |
10.00 |
% | ||||||||||||
Tier 1 Capital to Risk-Weighted Assets: |
||||||||||||||||||||||||
Consolidated |
$ | 913,706 |
19.86 |
% | $ | 390,976 |
8.50 |
% | $ | 275,983 |
6.00 |
% | ||||||||||||
First Financial Bank, N.A |
$ | 807,850 |
17.61 |
% | $ | 390,026 |
8.50 |
% | $ | 367,083 |
8.00 |
% | ||||||||||||
Common Equity Tier 1 Capital to Risk-Weighted Assets: |
||||||||||||||||||||||||
Consolidated |
$ | 913,706 |
19.86 |
% | $ | 321,981 |
7.00 |
% | — |
N/A |
||||||||||||||
First Financial Bank, N.A |
$ | 807,850 |
17.61 |
% | $ | 321,198 |
7.00 |
% | $ | 298,255 |
6.50 |
% | ||||||||||||
Leverage Ratio: |
||||||||||||||||||||||||
Consolidated |
$ | 913,706 |
12.08 |
% | $ | 302,502 |
4.00 |
% | — |
N/A |
||||||||||||||
First Financial Bank, N.A |
$ | 807,850 |
10.72 |
% | $ | 301,375 |
4.00 |
% | $ | 376,719 |
5.00 |
% |
Actual |
Minimum Capital Required Under Basel III Phase-In |
Required to be Considered Well- Capitalized |
||||||||||||||||||||||
As of December 31, 2019: |
Amount |
Ratio |
Amount |
Ratio |
Amount |
Ratio |
||||||||||||||||||
Total Capital to Risk-Weighted Assets: |
||||||||||||||||||||||||
Consolidated |
$ | 1,051,029 |
21.13 |
% | $ | 522,275 |
10.50 |
% | $ | 497,405 |
10.00 |
% | ||||||||||||
First Financial Bank, N.A |
$ | 908,778 |
18.31 |
% | $ | 521,081 |
10.50 |
% | $ | 496,268 |
10.00 |
% | ||||||||||||
Tier 1 Capital to Risk-Weighted Assets: |
||||||||||||||||||||||||
Consolidated |
$ | 997,721 |
20.06 |
% | $ | 422,794 |
8.50 |
% | $ | 298,443 |
6.00 |
% | ||||||||||||
First Financial Bank, N.A |
$ | 855,470 |
17.24 |
% | $ | 421,828 |
8.50 |
% | $ | 397,014 |
8.00 |
% | ||||||||||||
Common Equity Tier 1 Capital to Risk-Weighted Assets: |
||||||||||||||||||||||||
Consolidated |
$ | 997,721 |
20.06 |
% | $ | 348,184 |
7.00 |
% | — |
N/A |
||||||||||||||
First Financial Bank, N.A |
$ | 855,470 |
17.24 |
% | $ | 347,388 |
7.00 |
% | $ | 322,574 |
6.50 |
% | ||||||||||||
Leverage Ratio: |
||||||||||||||||||||||||
Consolidated |
$ | 997,721 |
12.60 |
% | $ | 316,850 |
4.00 |
% | — |
N/A |
||||||||||||||
First Financial Bank, N.A |
$ | 855,470 |
10.84 |
% | $ | 315,570 |
4.00 |
% | $ | 394,463 |
5.00 |
% |
Total Notional Amounts Committed |
||||
Unfunded lines of credit |
$ | 795,126 |
||
Unfunded commitments to extend credit |
572,093 |
|||
Standby letters of credit |
35,597 |
|||
Total commercial commitments |
$ | 1,402,816 |
||
Item 3. |
Quantitative and Qualitative Disclosures About Market Risk |
Item 4. |
Controls and Procedures |
Item 1. |
Legal Proceedings |
Item 1A. |
Risk Factors |
• | Credit Risk COVID-19 has caused and is likely to continue to cause business shutdowns, limitations on commercial activity and financial transactions, labor shortages, supply chain interruptions, increased unemployment and commercial property vacancy rates, reduced profitability and ability for property owners to make mortgage payments, and overall economic and financial market instability, all of which may cause our customers to be unable to make scheduled loan payments. If the effects of COVID-19 result in widespread and sustained repayment shortfalls on loans in our portfolio, we could incur significant delinquencies, foreclosures and credit losses, particularly if the available collateral is insufficient to cover our exposure. The future effects of COVID-19 on economic activity could negatively affect the collateral values associated with our existing loans, the ability to liquidate the real estate collateral securing our residential and commercial real estate loans, our ability to maintain loan origination volume and to obtain additional financing, the future demand for or profitability of our lending and services, and the financial condition and credit risk of our customers. Further, in the event of delinquencies, regulatory changes and policies designed to protect borrowers may slow or prevent us from making our business decisions or may result in a delay in our taking certain remediation actions, such as foreclosure. In addition, we have unfunded commitments to extend credit to customers. During a challenging economic environment like now, our customers are more dependent on our credit commitments and increased borrowings under these commitments could adversely impact our liquidity. Furthermore, in an effort to support our communities during the pandemic, we are participating in the Paycheck Protection Program (“PPP”) under the CARES Act whereby loans to |
small businesses are made and those loans are subject to the regulatory requirements that would require forbearance of loan payments for a specified time or that would limit our ability to pursue all available remedies in the event of a loan default. If the borrower under the PPP loan fails to qualify for loan forgiveness, we are at the heightened risk of holding these loans at unfavorable interest rates as compared to the loans to customers that we would have otherwise extended credit. |
• | Strategic Risk COVID-19 pandemic has significantly increased economic and demand uncertainty and has led to disruption and volatility in the global capital markets. Furthermore, many of the governmental actions have been directed toward curtailing household and business activity to contain COVID-19. These actions have been rapidly expanding in scope and intensity. For example, in many of our markets, local governments have acted to temporarily close or restrict the operations of most businesses. The future effects of COVID-19 on economic activity could negatively affect the future banking products we provide, including a decline in originating of loans. |
• | Operational Risk COVID-19, we have modified our business practices with a portion of our employees working remotely from their homes to have our operations uninterrupted as much as possible. Further, technology in employees’ homes may not be as robust as in our offices and could cause the networks, information systems, applications, and other tools available to employees to be more limited or less reliable than in our offices. The continuation of these work-from-home measures also introduces additional operational risk, including increased cybersecurity risk. These cyber risks include greater phishing, malware, and other cybersecurity attacks, vulnerability to disruptions of our information technology infrastructure and telecommunications systems for remote operations, increased risk of unauthorized dissemination of confidential information, limited ability to restore the systems in the event of a systems failure or interruption, greater risk of a security breach resulting in destruction or misuse of valuable information, and potential impairment of our ability to perform critical functions, including wiring funds, all of which could expose us to risks of data or financial loss, litigation and liability and could seriously disrupt our operations and the operations of any impacted customers. |
• | Interest Rate Risk COVID-19. In March 2020, the Federal Reserve lowered the target range for the federal funds rate to a range from 0 to 0.25 percent, citing concerns about the impact of COVID-19 on markets and stress in the energy sector. A prolonged period of extremely volatile and unstable market conditions would likely increase |
our funding costs and negatively affect market risk mitigation strategies. Higher income volatility from changes in interest rates and spreads to benchmark indices could cause a loss of future net interest income and a decrease in current fair market values of our assets. Fluctuations in interest rates will impact both the level of income and expense recorded on most of our assets and liabilities and the market value of all interest-earning assets and interest-bearing liabilities, which in turn could have a material adverse effect on our net income, operating results, or financial condition. |
Item 2. |
Unregistered Sales of Equity Securities and Use of Proceeds |
Item 3. |
Defaults Upon Senior Securities |
Item 4. |
Mine Safety Disclosures |
Item 5. |
Other Information |
Item 6. |
Exhibits |
2.1 |
— |
|||||
2.2 |
— |
|||||
3.1 |
— |
|||||
4.1 |
— |
|||||
4.2 |
— |
|||||
10.1 |
— |
|||||
10.2 |
— |
|||||
10.3 |
— |
|||||
10.4 |
— |
|||||
10.5 |
— |
|||||
10.6 |
— |
|||||
10.7 |
— |
|||||
10.8 |
— |
|||||
31.1 |
— |
|||||
31.2 |
— |
|||||
32.1 |
— |
|||||
32.2 |
— |
|||||
101.INS |
— |
|||||
101.SCH |
— |
XBRL Taxonomy Extension Schema Document.* |
101.CAL |
— |
XBRL Taxonomy Extension Calculation Linkbase Document.* | ||||
101.DEF |
— |
XBRL Taxonomy Extension Definition Linkbase Document.* | ||||
101.LAB |
— |
XBRL Taxonomy Extension Label Linkbase Document.* | ||||
101.PRE |
— |
XBRL Taxonomy Extension Presentation Linkbase Document.* |
* | Filed herewith |
+ | Furnished herewith. This Exhibit shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, or otherwise subject to the liability of that section, and shall not be deemed to be incorporated into any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934. |
++ | Management contract or compensatory plan on arrangement. |
FIRST FINANCIAL BANKSHARES, INC. | ||||||
Date: April 24, 2020 |
By: |
/s/ F. Scott Dueser | ||||
F. Scott Dueser | ||||||
President and Chief Executive Officer |
Date: April 24, 2020 |
By: |
/s/ J. Bruce Hildebrand | ||||
J. Bruce Hildebrand | ||||||
Executive Vice President and Chief Financial Officer |