XML 25 R12.htm IDEA: XBRL DOCUMENT v3.22.2
Loans Held for Investment and Allowance for Credit Losses on Loans
 6 Months Ended
Jun. 30, 2022
Receivables [Abstract]  
Loans Held for Investment and Allowance for Credit Losses on Loans

(4) LOANS HELD FOR INVESTMENT AND ALLOWANCE FOR CREDIT LOSSES ON LOANS

 

Loans held for investment are summarized by portfolio segment as follows:

 

 

June 30, 2022

 

 

December 31, 2021

 

 

(Dollars in thousands)

 

  Real estate:

 

 

 

 

 

    Commercial real estate owner occupied

$

893,144

 

 

$

775,554

 

    Commercial real estate non-owner occupied

 

1,162,912

 

 

 

1,095,324

 

    Construction and development < 60 months

 

436,658

 

 

 

415,466

 

    Construction residential real estate < 60 months

 

285,090

 

 

 

254,524

 

    Residential real estate first lien

 

1,072,564

 

 

 

937,006

 

    Residential real estate all other

 

173,914

 

 

 

161,018

 

    Farmland

 

266,790

 

 

 

272,179

 

  Commercial and agricultural non-real estate (2)

 

1,399,702

 

 

 

1,416,093

 

  Consumer non-real estate

 

439,723

 

 

 

413,370

 

  Oil and gas

 

482,786

 

 

 

428,908

 

           Total (1)

$

6,613,283

 

 

$

6,169,442

 

(1) Excludes accrued interest receivable of $23.3 million at June 30, 2022 and $21.0 million at December 31, 2021, that is recorded in accrued interest receivable and other assets.

 

(2) Includes PPP loans held for investment of $3.2 million, net of unamortized processing fees of $0, at June 30, 2022 and $80.4 million, net of unamortized processing fees of $2.0 million, at December 31, 2021.

 

 

 

Loans that were designated as Other and consisted mainly of Small Business Administration (“SBA”) loans were moved to their more descriptive portfolio segment. Therefore, we no longer have an Other loan portfolio segment.

 

In April 2020, the Company began originating loans to qualified small businesses under the Paycheck Protection Program (“PPP”) administered by the SBA. Since PPP loans are fully guaranteed by the SBA, there is no expected credit loss related to these loans. The Company had processing fees, which were recognized as interest income related to the PPP loans totaling approximately $400,000 and $11.9 million during the three months ended June 30, 2022 and 2021, respectively and $2.1 million and $21.7 million during the six months ended June 30, 2022 and 2021, respectively.

The Company's loans are currently 83% held by BancFirst and 17% held by Pegasus and Worthington. In addition, approximately 65% of the Company's loans are secured by real estate. Credit risk on loans is managed through limits on amounts loaned to individual and related borrowers, underwriting standards and loan monitoring procedures. The amounts and types of collateral obtained, if any, to secure loans are based upon the Company’s underwriting standards and management’s credit evaluation. Collateral varies, but may include real estate, equipment, accounts receivable, inventory, livestock and securities. The Company’s interest in collateral is secured through filing mortgages and liens, and in some cases, by possession of the collateral.

 

The Company's portfolio segment descriptions and the weighted average remaining life of portfolio segments are disclosed in Note (5) to the Company's Annual Report on Form 10-K for the year ended December 31, 2021.

Troubled Debt Restructurings, Other Real Estate Owned and Repossessed Assets and Held for Sale Assets

The following is a summary of troubled debt restructurings and other real estate owned and repossessed assets:

 

 

 

 

 

 

 

 

 

 

June 30, 2022

 

 

December 31, 2021

 

 

 

(Dollars in thousands)

 

Troubled debt restructurings

 

$

2,174

 

 

$

3,665

 

Other real estate owned and repossessed assets

 

$

39,209

 

 

$

39,553

 

The Company charges interest on principal balances outstanding on troubled debt restructurings during deferral periods. The current and future financial effects of the recorded balance of loans considered to be troubled debt restructurings were not considered to be material.

Other real estate owned included a commercial real estate property recorded at approximately $29.7 million at June 30, 2022 and $29.5 million at December 31, 2021. At December 31, 2021, other real estate owned included approximately $2.4 million related to the Company's previous headquarters. The previous headquarters was sold during the second quarter of 2022.

During the six months ended June 30, 2022, the Company sold property held in other real estate owned for a total gain of $3.8 million, compared to a total loss of $105,000 in the six months ended June 30, 2021.

 

Nonaccrual loans

The Company did not recognize any interest income on nonaccrual loans for either of the six months ended June 30, 2022 or 2021. In addition, there were no nonaccrual loans for which there is no related allowance for credit losses at both June 30, 2022 and December 31, 2021. Had nonaccrual loans performed in accordance with their original contractual terms, the Company would have recognized additional interest income of approximately $653,000 for the six months ended June 30, 2022 and approximately $1.2 million for the six months ended June 30, 2021.

Nonaccrual loans guaranteed by government agencies totaled approximately $2.2 million at June 30, 2022 and approximately $3.3 million at December 31, 2021.

The following table is a summary of amounts included in nonaccrual loans, segregated by portfolio segment.

 

 

 

June 30, 2022

 

 

December 31, 2021

 

 

 

(Dollars in thousands)

 

  Real estate:

 

 

 

 

 

 

Commercial real estate owner occupied

 

$

2,224

 

 

$

4,351

 

Commercial real estate non-owner occupied

 

 

—

 

 

 

407

 

Construction and development < 60 months

 

 

101

 

 

 

80

 

Construction residential real estate < 60 months

 

 

103

 

 

 

—

 

Residential real estate first lien

 

 

2,537

 

 

 

2,763

 

Residential real estate all other

 

 

111

 

 

 

280

 

Farmland

 

 

2,540

 

 

 

4,224

 

  Commercial and agricultural non-real estate

 

 

5,998

 

 

 

7,569

 

  Consumer non-real estate

 

 

98

 

 

 

148

 

  Oil and gas

 

 

—

 

 

 

1,070

 

Total

 

$

13,712

 

 

$

20,892

 

 

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 an age analysis of the Company's loans held for investment:

 

 

 

Age Analysis of Past Due Loans

 

 

 

30-59
Days
Past Due

 

 

60-89
Days
Past Due

 

 

90 Days
and
Greater

 

 

Total
Past Due
Loans

 

 

Current
Loans

 

 

Total Loans

 

 

Accruing
Loans 90
Days or
More
Past Due

 

 

 

(Dollars in thousands)

 

As of June 30, 2022

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  Real estate:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial real estate owner occupied

 

$

1,578

 

 

$

132

 

 

$

726

 

 

$

2,436

 

 

$

890,708

 

 

$

893,144

 

 

$

374

 

Commercial real estate non-owner occupied

 

 

—

 

 

 

—

 

 

 

36

 

 

 

36

 

 

 

1,162,876

 

 

 

1,162,912

 

 

 

36

 

Construction and development < 60 months

 

 

2,890

 

 

 

113

 

 

 

33

 

 

 

3,036

 

 

 

433,622

 

 

 

436,658

 

 

 

—

 

Construction residential real estate < 60 months

 

 

—

 

 

 

—

 

 

 

103

 

 

 

103

 

 

 

284,987

 

 

 

285,090

 

 

 

—

 

Residential real estate first lien

 

 

3,688

 

 

 

1,038

 

 

 

2,231

 

 

 

6,957

 

 

 

1,065,607

 

 

 

1,072,564

 

 

 

1,600

 

Residential real estate all other

 

 

644

 

 

 

65

 

 

 

637

 

 

 

1,346

 

 

 

172,568

 

 

 

173,914

 

 

 

618

 

Farmland

 

 

600

 

 

 

281

 

 

 

2,246

 

 

 

3,127

 

 

 

263,663

 

 

 

266,790

 

 

 

1,052

 

  Commercial and agricultural non-real estate

 

 

4,029

 

 

 

654

 

 

 

3,522

 

 

 

8,205

 

 

 

1,391,497

 

 

 

1,399,702

 

 

 

496

 

  Consumer non-real estate

 

 

2,542

 

 

 

561

 

 

 

526

 

 

 

3,629

 

 

 

436,094

 

 

 

439,723

 

 

 

512

 

  Oil and gas

 

 

—

 

 

 

159

 

 

 

83

 

 

 

242

 

 

 

482,544

 

 

 

482,786

 

 

 

83

 

Total

 

$

15,971

 

 

$

3,003

 

 

$

10,143

 

 

$

29,117

 

 

$

6,584,166

 

 

$

6,613,283

 

 

$

4,771

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As of December 31, 2021

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  Real estate:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial real estate owner occupied

 

$

2,046

 

 

$

223

 

 

$

1,465

 

 

$

3,734

 

 

$

771,820

 

 

$

775,554

 

 

$

18

 

Commercial real estate non-owner occupied

 

 

7,244

 

 

 

—

 

 

 

—

 

 

 

7,244

 

 

 

1,088,080

 

 

 

1,095,324

 

 

 

—

 

Construction and development < 60 months

 

 

136

 

 

 

—

 

 

 

—

 

 

 

136

 

 

 

415,330

 

 

 

415,466

 

 

 

—

 

Construction residential real estate < 60 months

 

 

2,264

 

 

 

—

 

 

 

—

 

 

 

2,264

 

 

 

252,260

 

 

 

254,524

 

 

 

—

 

Residential real estate first lien

 

 

3,351

 

 

 

567

 

 

 

2,817

 

 

 

6,735

 

 

 

930,271

 

 

 

937,006

 

 

 

1,704

 

Residential real estate all other

 

 

293

 

 

 

30

 

 

 

451

 

 

 

774

 

 

 

160,244

 

 

 

161,018

 

 

 

431

 

Farmland

 

 

253

 

 

 

37

 

 

 

2,077

 

 

 

2,367

 

 

 

269,812

 

 

 

272,179

 

 

 

139

 

  Commercial and agricultural non-real estate

 

 

2,506

 

 

 

546

 

 

 

7,118

 

 

 

10,170

 

 

 

1,405,923

 

 

 

1,416,093

 

 

 

2,418

 

  Consumer non-real estate

 

 

1,873

 

 

 

321

 

 

 

272

 

 

 

2,466

 

 

 

410,904

 

 

 

413,370

 

 

 

254

 

  Oil and gas

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

428,908

 

 

 

428,908

 

 

 

—

 

Total

 

$

19,966

 

 

$

1,724

 

 

$

14,200

 

 

$

35,890

 

 

$

6,133,552

 

 

$

6,169,442

 

 

$

4,964

 

 

Credit Quality Indicators

The Company considers credit quality indicators to monitor the credit risk in the loan portfolio including volume and severity of loan delinquencies, nonaccrual loans, internal grading of loans, historical credit loss experience and economic conditions. These indicators are reviewed and updated regularly throughout the year. An internal risk grading system is used to indicate the credit risk of loans. The loan grades used by the Company are for internal risk identification purposes and do not directly correlate to regulatory classification categories or any financial reporting definitions. The general characteristics of the risk grades and the table summarizing the Company’s gross loans held for investment by year of origination and internally assigned credit grades as of December 31, 2021, are disclosed in Note (5) to the Company’s Annual Report on Form 10-K for the year ended December 31, 2021.

The Company’s revolving loans that are converted to term loans are not material and therefore have not been presented.

The following table summarizes the Company’s gross loans held for investment by year of origination and internally assigned credit grades :

 

 

 

 

Term Loans Amortized Cost Basis by Origination Year

 

 

 

 

 

 

 

 

 

2022

 

 

2021

 

 

2020

 

 

2019

 

 

2018

 

 

Prior

 

 

Revolving Loans Amortized Cost Basis

 

 

Total

 

 

 

(Dollars in thousands)

 

As of June 30, 2022

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Commercial real estate owner occupied

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Grade 1

 

$

98,837

 

 

$

153,898

 

 

$

119,189

 

 

$

98,981

 

 

$

49,907

 

 

$

138,353

 

 

$

47,977

 

 

$

707,142

 

Grade 2

 

 

25,774

 

 

 

33,972

 

 

 

32,759

 

 

 

21,243

 

 

 

10,083

 

 

 

33,359

 

 

 

23,049

 

 

 

180,239

 

Grade 3

 

 

—

 

 

 

42

 

 

 

452

 

 

 

936

 

 

 

341

 

 

 

1,606

 

 

 

212

 

 

 

3,589

 

Grade 4

 

 

—

 

 

 

303

 

 

 

—

 

 

 

851

 

 

 

193

 

 

 

520

 

 

 

307

 

 

 

2,174

 

Total commercial real estate owner occupied

 

 

124,611

 

 

 

188,215

 

 

 

152,400

 

 

 

122,011

 

 

 

60,524

 

 

 

173,838

 

 

 

71,545

 

 

 

893,144

 

 Commercial real estate non-owner occupied

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Grade 1

 

 

86,546

 

 

 

238,973

 

 

 

183,794

 

 

 

112,077

 

 

 

38,979

 

 

 

104,280

 

 

 

28,735

 

 

 

793,384

 

Grade 2

 

 

58,327

 

 

 

54,276

 

 

 

45,985

 

 

 

49,899

 

 

 

32,181

 

 

 

86,252

 

 

 

29,344

 

 

 

356,264

 

Grade 3

 

 

6,996

 

 

 

—

 

 

 

—

 

 

 

3,158

 

 

 

93

 

 

 

2,814

 

 

 

—

 

 

 

13,061

 

Grade 4

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

203

 

 

 

—

 

 

 

—

 

 

 

203

 

Total commercial real estate non-owner occupied

 

 

151,869

 

 

 

293,249

 

 

 

229,779

 

 

 

165,134

 

 

 

71,456

 

 

 

193,346

 

 

 

58,079

 

 

 

1,162,912

 

 Construction and development < 60 months

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Grade 1

 

 

60,042

 

 

 

136,104

 

 

 

42,114

 

 

 

37,833

 

 

 

3,629

 

 

 

5,887

 

 

 

40,046

 

 

 

325,655

 

Grade 2

 

 

18,223

 

 

 

28,205

 

 

 

1,799

 

 

 

14,816

 

 

 

1,733

 

 

 

1,277

 

 

 

43,436

 

 

 

109,489

 

Grade 3

 

 

1,198

 

 

 

—

 

 

 

103

 

 

 

—

 

 

 

—

 

 

 

2

 

 

 

111

 

 

 

1,414

 

Grade 4

 

 

—

 

 

 

—

 

 

 

33

 

 

 

52

 

 

 

—

 

 

 

15

 

 

 

—

 

 

 

100

 

Total construction and development < 60 months

 

 

79,463

 

 

 

164,309

 

 

 

44,049

 

 

 

52,701

 

 

 

5,362

 

 

 

7,181

 

 

 

83,593

 

 

 

436,658

 

 Construction residential real estate < 60 months

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Grade 1

 

 

119,503

 

 

 

94,469

 

 

 

3,821

 

 

 

26

 

 

 

—

 

 

 

44

 

 

 

31,831

 

 

 

249,694

 

Grade 2

 

 

18,089

 

 

 

14,076

 

 

 

347

 

 

 

—

 

 

 

—

 

 

 

413

 

 

 

1,855

 

 

 

34,780

 

Grade 3

 

 

513

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

513

 

Grade 4

 

 

—

 

 

 

103

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

103

 

Total construction residential real estate < 60 months

 

 

138,105

 

 

 

108,648

 

 

 

4,168

 

 

 

26

 

 

 

—

 

 

 

457

 

 

 

33,686

 

 

 

285,090

 

 Residential real estate first lien

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Grade 1

 

 

181,536

 

 

 

234,262

 

 

 

162,322

 

 

 

94,607

 

 

 

61,203

 

 

 

157,490

 

 

 

6,396

 

 

 

897,816

 

Grade 2

 

 

23,461

 

 

 

39,031

 

 

 

25,983

 

 

 

14,136

 

 

 

12,264

 

 

 

44,323

 

 

 

—

 

 

 

159,198

 

Grade 3

 

 

1,521

 

 

 

1,492

 

 

 

1,050

 

 

 

1,701

 

 

 

1,826

 

 

 

3,800

 

 

 

—

 

 

 

11,390

 

Grade 4

 

 

—

 

 

 

199

 

 

 

184

 

 

 

525

 

 

 

987

 

 

 

2,265

 

 

 

—

 

 

 

4,160

 

Total residential real estate first lien

 

 

206,518

 

 

 

274,984

 

 

 

189,539

 

 

 

110,969

 

 

 

76,280

 

 

 

207,878

 

 

 

6,396

 

 

 

1,072,564

 

 Residential real estate all other

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Grade 1

 

 

16,908

 

 

 

13,021

 

 

 

12,762

 

 

 

6,836

 

 

 

4,343

 

 

 

13,031

 

 

 

33,925

 

 

 

100,826

 

Grade 2

 

 

1,990

 

 

 

1,849

 

 

 

1,944

 

 

 

1,761

 

 

 

1,206

 

 

 

2,820

 

 

 

58,388

 

 

 

69,958

 

Grade 3

 

 

185

 

 

 

211

 

 

 

91

 

 

 

67

 

 

 

243

 

 

 

890

 

 

 

589

 

 

 

2,276

 

Grade 4

 

 

—

 

 

 

31

 

 

 

177

 

 

 

—

 

 

 

38

 

 

 

218

 

 

 

390

 

 

 

854

 

Total residential real estate all other

 

 

19,083

 

 

 

15,112

 

 

 

14,974

 

 

 

8,664

 

 

 

5,830

 

 

 

16,959

 

 

 

93,292

 

 

 

173,914

 

 Farmland

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Grade 1

 

 

26,555

 

 

 

40,429

 

 

 

32,947

 

 

 

21,399

 

 

 

11,001

 

 

 

32,232

 

 

 

6,702

 

 

 

171,265

 

Grade 2

 

 

8,434

 

 

 

16,653

 

 

 

7,470

 

 

 

13,116

 

 

 

6,084

 

 

 

17,368

 

 

 

12,121

 

 

 

81,246

 

Grade 3

 

 

2,267

 

 

 

1,954

 

 

 

1,862

 

 

 

1,778

 

 

 

70

 

 

 

2,409

 

 

 

1,923

 

 

 

12,263

 

Grade 4

 

 

—

 

 

 

1,125

 

 

 

379

 

 

 

—

 

 

 

58

 

 

 

222

 

 

 

232

 

 

 

2,016

 

Total farmland

 

 

37,256

 

 

 

60,161

 

 

 

42,658

 

 

 

36,293

 

 

 

17,213

 

 

 

52,231

 

 

 

20,978

 

 

 

266,790

 

 Commercial and agricultural non-real estate

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Grade 1

 

 

160,548

 

 

 

271,247

 

 

 

100,081

 

 

 

71,623

 

 

 

22,808

 

 

 

71,498

 

 

 

337,631

 

 

 

1,035,436

 

Grade 2

 

 

46,899

 

 

 

69,950

 

 

 

28,657

 

 

 

17,177

 

 

 

26,250

 

 

 

7,737

 

 

 

145,827

 

 

 

342,497

 

Grade 3

 

 

2,368

 

 

 

2,451

 

 

 

2,144

 

 

 

1,219

 

 

 

1,937

 

 

 

806

 

 

 

7,019

 

 

 

17,944

 

Grade 4

 

 

—

 

 

 

679

 

 

 

234

 

 

 

907

 

 

 

499

 

 

 

1,237

 

 

 

269

 

 

 

3,825

 

Total commercial and agricultural non-real estate

 

 

209,815

 

 

 

344,327

 

 

 

131,116

 

 

 

90,926

 

 

 

51,494

 

 

 

81,278

 

 

 

490,746

 

 

 

1,399,702

 

 Consumer non-real estate

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Grade 1

 

 

112,598

 

 

 

141,806

 

 

 

55,814

 

 

 

30,229

 

 

 

10,829

 

 

 

3,970

 

 

 

35,949

 

 

 

391,195

 

Grade 2

 

 

13,357

 

 

 

14,002

 

 

 

5,298

 

 

 

4,529

 

 

 

1,395

 

 

 

2,042

 

 

 

5,233

 

 

 

45,856

 

Grade 3

 

 

296

 

 

 

767

 

 

 

405

 

 

 

294

 

 

 

127

 

 

 

97

 

 

 

2

 

 

 

1,988

 

Grade 4

 

 

64

 

 

 

286

 

 

 

87

 

 

 

182

 

 

 

64

 

 

 

1

 

 

 

—

 

 

 

684

 

Total consumer non-real estate

 

 

126,315

 

 

 

156,861

 

 

 

61,604

 

 

 

35,234

 

 

 

12,415

 

 

 

6,110

 

 

 

41,184

 

 

 

439,723

 

 Oil and gas

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Grade 1

 

 

115,020

 

 

 

101,947

 

 

 

18,040

 

 

 

4,468

 

 

 

1,798

 

 

 

326

 

 

 

152,151

 

 

 

393,750

 

Grade 2

 

 

9,301

 

 

 

5,414

 

 

 

3,681

 

 

 

13,581

 

 

 

17,777

 

 

 

250

 

 

 

30,898

 

 

 

80,902

 

Grade 3

 

 

45

 

 

 

4,733

 

 

 

8

 

 

 

—

 

 

 

—

 

 

 

199

 

 

 

2,080

 

 

 

7,065

 

Grade 4

 

 

—

 

 

 

1,000

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

69

 

 

 

1,069

 

Total oil and gas

 

 

124,366

 

 

 

113,094

 

 

 

21,729

 

 

 

18,049

 

 

 

19,575

 

 

 

775

 

 

 

185,198

 

 

 

482,786

 

Total loans held for investment

 

$

1,217,401

 

 

$

1,718,960

 

 

$

892,016

 

 

$

640,007

 

 

$

320,149

 

 

$

740,053

 

 

$

1,084,697

 

 

$

6,613,283

 

 

 

Allowance for Credit Losses Methodology

 

The Company determines its provision for credit losses and allowance for credit losses using the expected loss methodology that is referred to as the CECL model. The allowance for credit losses is measured on a collective (pool) basis when similar risk characteristics exist.

The increase in allowance for credit loss during 2022 was primarily related to the purchase of loans without credit deterioration during the year. The decrease in the allowance for credit loss during 2021 was driven by a reversal of a pandemic-related provision during 2021 based on sustained improvements in the economy, both nationally and in the Company's markets, which reduced the amount of expected credit loss within the loan portfolio. This reduction was partially offset by additional allowance for credit loss required for newly acquired loans. The allowance for credit loss for the oil and gas category was reduced due to the increases in oil and gas commodity prices contributing to a more stable and profitable energy industry; however this decrease was entirely offset by an increase in allowance for credit loss for the commercial real estate non-owner occupied category due to ongoing uncertainty regarding the pandemic's long-term impact on the office and retail sectors.

The following table details activity in the allowance for credit losses on loans for the period presented. Allocation of a portion of the allowance to one category of loans does not preclude its availability to absorb losses in other categories.

 

 

 

Allowance for Credit Losses

 

 

 

Balance at
beginning of
period

 

 

Initial allowance on loans purchased with credit deterioration

 

 

Charge-
offs

 

 

Recoveries

 

 

Net
charge-offs

 

 

Provision for /(benefit from) credit losses on loans

 

 

Balance at
end of
period

 

 

 

(Dollars in thousands)

 

Three Months Ended June 30, 2022

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  Real estate:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial real estate owner occupied

 

$

8,281

 

 

$

—

 

 

$

(4

)

 

$

30

 

 

$

26

 

 

$

(1,362

)

 

$

6,945

 

Commercial real estate non-owner occupied

 

 

20,674

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

2,263

 

 

 

22,937

 

Construction and development < 60 months

 

 

3,309

 

 

 

—

 

 

 

—

 

 

 

2

 

 

 

2

 

 

 

417

 

 

 

3,728

 

Construction residential real estate < 60 months

 

 

2,164

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

128

 

 

 

2,292

 

Residential real estate first lien

 

 

3,421

 

 

 

—

 

 

 

(5

)

 

 

6

 

 

 

1

 

 

 

(39

)

 

 

3,383

 

Residential real estate all other

 

 

2,107

 

 

 

—

 

 

 

(36

)

 

 

—

 

 

 

(36

)

 

 

(20

)

 

 

2,051

 

Farmland

 

 

4,383

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(18

)

 

 

4,365

 

  Commercial and agricultural non-real estate

 

 

27,724

 

 

 

—

 

 

 

(717

)

 

 

30

 

 

 

(687

)

 

 

796

 

 

 

27,833

 

  Consumer non-real estate

 

 

3,771

 

 

 

—

 

 

 

(153

)

 

 

42

 

 

 

(111

)

 

 

434

 

 

 

4,094

 

  Oil and gas

 

 

11,405

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(2,098

)

 

 

9,307

 

Total

 

$

87,239

 

 

$

—

 

 

$

(915

)

 

$

110

 

 

$

(805

)

 

$

501

 

 

$

86,935

 

Six Months Ended June 30, 2022

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  Real estate:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial real estate owner occupied

 

$

7,568

 

 

$

—

 

 

$

(20

)

 

$

78

 

 

$

58

 

 

$

(681

)

 

$

6,945

 

Commercial real estate non-owner occupied

 

 

16,987

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

5,950

 

 

 

22,937

 

Construction and development < 60 months

 

 

3,490

 

 

 

—

 

 

 

—

 

 

 

5

 

 

 

5

 

 

 

233

 

 

 

3,728

 

Construction residential real estate < 60 months

 

 

1,092

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

1,200

 

 

 

2,292

 

Residential real estate first lien

 

 

3,076

 

 

 

2

 

 

 

(49

)

 

 

13

 

 

 

(36

)

 

 

341

 

 

 

3,383

 

Residential real estate all other

 

 

2,104

 

 

 

—

 

 

 

(36

)

 

 

402

 

 

 

366

 

 

 

(419

)

 

 

2,051

 

Farmland

 

 

4,822

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(457

)

 

 

4,365

 

  Commercial and agricultural non-real estate

 

 

28,085

 

 

 

48

 

 

 

(899

)

 

 

143

 

 

 

(756

)

 

 

456

 

 

 

27,833

 

  Consumer non-real estate

 

 

3,734

 

 

 

28

 

 

 

(233

)

 

 

80

 

 

 

(153

)

 

 

485

 

 

 

4,094

 

  Oil and gas

 

 

12,978

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(3,671

)

 

 

9,307

 

Total

 

$

83,936

 

 

$

78

 

 

$

(1,237

)

 

$

721

 

 

$

(516

)

 

$

3,437

 

 

$

86,935

 

 

 

 

 

Allowance for Credit Losses

 

 

 

Balance at
beginning of
period

 

 

Initial allowance on loans purchased with credit deterioration

 

 

Charge-
offs

 

 

Recoveries

 

 

Net
charge-offs

 

 

Provision for /(benefit from) credit losses on loans

 

 

Balance at
end of
period

 

 

 

(Dollars in thousands)

 

Three Months Ended June 30, 2021

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  Real estate:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial real estate owner occupied

 

$

6,505

 

 

$

987

 

 

$

—

 

 

$

1

 

 

$

1

 

 

$

805

 

 

$

8,298

 

Commercial real estate non-owner occupied

 

 

19,115

 

 

 

633

 

 

 

(758

)

 

 

—

 

 

 

(758

)

 

 

(3,952

)

 

 

15,038

 

Construction and development < 60 months

 

 

2,943

 

 

 

173

 

 

 

—

 

 

 

2

 

 

 

2

 

 

 

(23

)

 

 

3,095

 

Construction residential real estate < 60 months

 

 

1,092

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(94

)

 

 

998

 

Residential real estate first lien

 

 

2,937

 

 

 

117

 

 

 

(9

)

 

 

12

 

 

 

3

 

 

 

(136

)

 

 

2,921

 

Residential real estate all other

 

 

1,880

 

 

 

—

 

 

 

(30

)

 

 

1

 

 

 

(29

)

 

 

112

 

 

 

1,963

 

Farmland

 

 

3,088

 

 

 

643

 

 

 

—

 

 

 

1

 

 

 

1

 

 

 

(5

)

 

 

3,727

 

  Commercial and agricultural non-real estate

 

 

35,439

 

 

 

4,711

 

 

 

(3,442

)

 

 

125

 

 

 

(3,317

)

 

 

(2,523

)

 

 

34,310

 

  Consumer non-real estate

 

 

3,421

 

 

 

8

 

 

 

(209

)

 

 

86

 

 

 

(123

)

 

 

175

 

 

 

3,481

 

  Oil and gas

 

 

14,440

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(4,308

)

 

 

10,132

 

Total

 

$

90,860

 

 

$

7,272

 

 

$

(4,448

)

 

$

228

 

 

$

(4,220

)

 

$

(9,949

)

 

$

83,963

 

Six Months Ended June 30, 2021

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  Real estate:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial real estate owner occupied

 

$

8,470

 

 

$

987

 

 

$

—

 

 

$

1

 

 

$

1

 

 

$

(1,160

)

 

$

8,298

 

Commercial real estate non-owner occupied

 

 

12,318

 

 

 

633

 

 

 

(796

)

 

 

—

 

 

 

(796

)

 

 

2,883

 

 

 

15,038

 

Construction and development < 60 months

 

 

2,723

 

 

 

173

 

 

 

—

 

 

 

5

 

 

 

5

 

 

 

194

 

 

 

3,095

 

Construction residential real estate < 60 months

 

 

726

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

272

 

 

 

998

 

Residential real estate first lien

 

 

2,822

 

 

 

117

 

 

 

(52

)

 

 

27

 

 

 

(25

)

 

 

7

 

 

 

2,921

 

Residential real estate all other

 

 

2,236

 

 

 

—

 

 

 

(46

)

 

 

4

 

 

 

(42

)

 

 

(231

)

 

 

1,963

 

Farmland

 

 

3,153

 

 

 

643

 

 

 

—

 

 

 

1

 

 

 

1

 

 

 

(70

)

 

 

3,727

 

  Commercial and agricultural non-real estate

 

 

34,643

 

 

 

4,711

 

 

 

(3,598

)

 

 

152

 

 

 

(3,446

)

 

 

(1,598

)

 

 

34,310

 

  Consumer non-real estate

 

 

3,542

 

 

 

8

 

 

 

(622

)

 

 

198

 

 

 

(424

)

 

 

355

 

 

 

3,481

 

  Oil and gas

 

 

20,733

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(10,601

)

 

 

10,132

 

Total

 

$

91,366

 

 

$

7,272

 

 

$

(5,114

)

 

$

388

 

 

$

(4,726

)

 

$

(9,949

)

 

$

83,963

 

 

 

Purchased Credit Deteriorated Loans

 

The Company has purchased loans, for which there was, at acquisition, evidence of more than insignificant deterioration of credit quality since origination. The credit-deteriorated loans purchased during the six-month periods ended June 30, 2022 and June 30, 2021 were as follows:

 

 

 

Loans acquired
with deteriorated
credit quality

 

 

 

(Dollars in thousands)

 

For the period ended June 30, 2022

 

 

 

Purchase price of loans at acquisition

 

$

661

 

Allowance for credit losses at acquisition

 

 

78

 

Par value of acquired loans at acquisition

 

$

739

 

 

 

 

 

For the period ended June 30, 2021

 

 

 

Purchase price of loans at acquisition

 

$

26,779

 

Allowance for credit losses at acquisition

 

 

7,272

 

Par value of acquired loans at acquisition

 

$

34,051

 

 

 

Collateral Dependent Loans

A loan is considered collateral-dependent when the borrower is experiencing financial difficulty and repayment is expected to be provided substantially through the operation or sale of the collateral. During the six months ended June 30, 2022 and 2021, no material amount of interest income was recognized on collateral-dependent loans subsequent to their classification as collateral-dependent. The following table summarizes collateral-dependent gross loans held for investment by collateral type and the related specific allocation as follows:

 

 

 

Collateral Type

 

 

 

 

 

 

 

 

 

Real Estate

 

 

Business Assets

 

 

Energy Reserves

 

 

Other Assets

 

 

Total

 

 

Specific Allocation

 

 

 

(Dollars in thousands)

 

 

 

 

 

 

 

As of June 30, 2022

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  Real estate:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial real estate owner occupied

 

$

1,671

 

 

$

—

 

 

$

—

 

 

$

—

 

 

$

1,671

 

 

$

555

 

Commercial real estate non-owner occupied

 

 

1,146

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

1,146

 

 

 

214

 

Construction and development < 60 months

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

Construction residential real estate < 60 months

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

Residential real estate first lien

 

 

734

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

734

 

 

 

107

 

Residential real estate all other

 

 

34

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

34

 

 

 

15

 

Farmland

 

 

6,341

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

6,341

 

 

 

1,157

 

  Commercial and agricultural non-real estate

 

 

—

 

 

 

4,441

 

 

 

—

 

 

 

5,344

 

 

 

9,785

 

 

 

3,837

 

  Consumer non-real estate

 

 

—

 

 

 

—

 

 

 

—

 

 

 

39

 

 

 

39

 

 

 

35

 

  Oil and gas

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

Total collateral-dependent loans held for investment

 

$

9,926

 

 

$

4,441

 

 

$

—

 

 

$

5,383

 

 

$

19,750

 

 

$

5,920

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Collateral Type

 

 

 

 

 

 

 

 

 

Real Estate

 

 

Business Assets

 

 

Energy Reserves

 

 

Other Assets

 

 

Total

 

 

Specific Allocation

 

 

 

(Dollars in thousands)

 

 

 

 

 

 

 

As of December 31, 2021

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  Real estate:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial real estate owner occupied

 

$

1,952

 

 

$

—

 

 

$

—

 

 

$

—

 

 

$

1,952

 

 

$

576

 

Commercial real estate non-owner occupied

 

 

1,404

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

1,404

 

 

 

263

 

Construction and development < 60 months

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

Construction residential real estate < 60 months

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

Residential real estate first lien

 

 

871

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

871

 

 

 

143

 

Residential real estate all other

 

 

199

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

199

 

 

 

178

 

Farmland

 

 

8,703

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

8,703

 

 

 

1,805

 

  Commercial and agricultural non-real estate

 

 

—

 

 

 

6,472

 

 

 

—

 

 

 

5,202

 

 

 

11,674

 

 

 

4,938

 

  Consumer non-real estate

 

 

—

 

 

 

—

 

 

 

—

 

 

 

54

 

 

 

54

 

 

 

20

 

  Oil and gas

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

Total collateral-dependent loans held for investment

 

$

13,129

 

 

$

6,472

 

 

$

—

 

 

$

5,256

 

 

$

24,857

 

 

$

7,923

 

Non-Cash Transfers from Loans and Premises and Equipment

Transfers from loans and premises and equipment to other real estate owned and repossessed assets are non-cash transactions, and are not included in the statements of cash flow.

Transfers from loans and premises and equipment to other real estate owned and repossessed assets during the periods presented are summarized as follows:

 

 

 

Six Months Ended June 30,

 

 

 

2022

 

 

2021

 

 

 

(Dollars in thousands)

 

Other real estate owned

 

$

4,065

 

 

$

9,438

 

Repossessed assets

 

 

503

 

 

 

427

 

Total

 

$

4,568

 

 

$

9,865