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Loans Held for Investment and Allowance for Credit Losses on Loans
 12 Months Ended
Dec. 31, 2022
Receivables [Abstract]  
Loans Held for Investment and Allowance for Credit Losses on Loans

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

Loans that were designated as Other and consisted mainly of Small Business Administration (“SBA”) loans were reclassified to their more descriptive portfolio segment during the year. Therefore, we no longer have an Other loan portfolio segment. Each loan segment is made up of loan categories possessing similar risk characteristics. Management believes this accurately represents the risk profile of each loan segment. The prior period amounts have been revised to conform to the current period presentation. These reclassifications did not have a significant impact on the allowance for credit losses.

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

 

 

 

December 31,

 

 

 

2022

 

 

2021

 

 

 

(Dollars in thousands)

 

Real estate:

 

 

 

 

 

 

Commercial real estate owner occupied

 

$

906,461

 

 

$

775,554

 

Commercial real estate non-owner occupied

 

 

1,385,307

 

 

 

1,095,324

 

Construction and development < 60 months

 

 

481,070

 

 

 

415,466

 

Construction residential real estate < 60 months

 

 

304,432

 

 

 

254,524

 

Residential real estate first lien

 

 

1,119,706

 

 

 

937,006

 

Residential real estate all other

 

 

199,005

 

 

 

161,018

 

Farmland

 

 

261,518

 

 

 

272,179

 

Commercial and agricultural non-real estate (2)

 

 

1,376,375

 

 

 

1,416,093

 

Consumer non-real estate

 

 

447,039

 

 

 

413,370

 

Oil and gas

 

 

462,650

 

 

 

428,908

 

Total loans (1)

 

$

6,943,563

 

 

$

6,169,442

 

(1) Excludes accrued interest receivable of $30.6 million at December 31, 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 $1.1 million, net of unamortized processing fees of $0 at December 31, 2022 and $80.4 million, net of unamortized processing fees of $2.0 million at December 31, 2021.

 

 

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 $2.1 million and $36.4 million during the years ended December 31, 2022 and 2021, respectively.

 

The Company's loans are currently 82% held by BancFirst and 18% held by Pegasus and Worthington. In addition, approximately 67% 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 allowance for credit losses is measured on a collective (pool) basis when similar risk characteristics exist. The Company has identified the following portfolio segments, which includes the applicable weighted average remaining life, and measures the allowance for credit losses using the vintage loss analysis adjusted for qualitative factors:

 

Portfolio Segments

 

Life (in years)

 

  Real estate:

 

 

 

Commercial real estate owner occupied

 

 

9

 

Commercial real estate non-owner occupied

 

 

6

 

Construction and development < 60 months

 

 

3

 

Construction residential real estate < 60 months

 

 

1

 

Residential real estate first lien

 

 

14

 

Residential real estate all other

 

 

7

 

      Farmland

 

 

13

 

  Commercial and agricultural non-real estate

 

 

3

 

  Consumer non-real estate

 

 

4

 

  Oil and gas

 

 

2

 

 

 

 

 

 

 

These portfolio segments are separately identified because they exhibit distinctive risk characteristics, such as financial asset types, loan purpose, collateral, and industry of the borrower. A summary of our primary portfolio segments is as follows:

Commercial real estate owner occupied. Commercial real estate owner occupied are nonresidential property loans for which the primary source of repayment is the cash flow from the ongoing operations and activities conducted by the entity, or an affiliate of the entity, who owns the property. This category includes, among other loans, loans secured by office buildings, garden office buildings, manufacturing facilities, warehouse and flex warehouse facilities, hospitals, and car washes unless the property is owned by an investor who leases the property to the operator who, in turn, is not related to or affiliated with the investor.

Commercial real estate non-owner occupied. Commercial real estate non-owner occupied are nonresidential property loans where the primary source of repayment is derived from rental income associated with the property or the proceeds of the sale, refinancing, or permanent financing of the property. This category includes, among other loans, loans secured by shopping centers, office buildings, hotels/motels, nursing homes, assisted-living facilities, mini-storage warehouse facilities, and similar properties.

Construction and development < 60 months. Residential development loans include loans to develop raw land into a residential development. Advances on the loans typically include land costs, hard costs (grading, utilities, roads, etc.), soft costs (engineering fees, development fees, entitlement fees, etc.) and carrying costs until the development is completed. Upon completion of the development, the loan is typically repaid through the sale of lots to homebuilders.

Construction residential real estate < 60 months. Residential construction includes loans to builders for speculative or custom homes, as well as direct loans to individuals for construction of their personal residence. Custom construction and self-construction loans typically will have commitments in place for long-term financing at the completion of construction. Speculative construction loans generally will have periodic curtailment plans beginning after completion of construction and a reasonable time for sales to have occurred.

Residential real estate first lien. Residential real estate first lien loans includes all closed-end loans secured by first liens on 1-to-4 family residential properties. This category includes property containing 1-to-4 dwelling units (including vacation homes) or more than four dwelling units if each is separated from other units by dividing walls that extend from ground to roof. This category also includes individual condominium dwelling units and loans secured by an interest in individual cooperative housing units, even if in a building with five or more dwelling units.

Residential real estate all other. Residential real estate all other loans includes loans secured by junior (i.e., other than first) liens on 1-to-4 family residential properties. This category includes loans secured by junior liens even if the Company also holds a loan secured by a first lien on the same 1-to-4 family residential property.

Farmland. This category includes loans secured by all land known to be used or usable for agricultural purposes, such as crop and livestock production. Farmland includes grazing or pasture land, whether tillable or not and whether wooded or not.

Commercial and agricultural non-real estate. Commercial and agricultural non-real estate represent loans for working capital, facilities acquisition or expansion, purchase of equipment and other needs of commercial customers primarily located within Oklahoma. Loans in this category include commercial and industrial, agriculture and state and political subdivisions.

Consumer non-real estate. Consumer loans are loans to individuals for household, family and other personal expenditures. Commonly, such loans are made to finance purchases of consumer goods, such as automobiles, boats, household goods, vacations and education.

Oil and gas. Oil and gas loans represent loans for producing oil and gas properties and any other mineral interests that may be pumped, mined, quarried or otherwise extracted from the earth. These loans also include upstream and midstream energy loans, and loans to companies that provide ancillary services to the energy industry, such as transportation, wellsite preparation contractors and equipment manufacturers.

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:

 

 

 

December 31,

 

 

 

2022

 

 

2021

 

 

 

(Dollars in thousands)

 

Troubled debt restructurings

 

$

2,234

 

 

$

3,665

 

Other real estate owned and repossessed assets

 

$

36,936

 

 

$

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 $29.4 million at December 31, 2022 and $29.5 million at December 31, 2021. Rental income for this property is included in other noninterest income on the consolidated statements of comprehensive income. Operating expense for this property is included in net expense from other real estate owned in the noninterest expense section on the consolidated statements of comprehensive income.

This property had the following rental income and operating expenses for the periods presented.

 

 

 

For the Twelve Months Ended December 31,

 

 

 

2022

 

 

2021

 

 

2020

 

 

 

(Dollars in thousands)

 

Rental income

 

$

10,340

 

 

$

9,975

 

 

$

—

 

Operating expense

 

$

9,863

 

 

$

8,727

 

 

$

—

 

At December 31, 2021, other real estate owned also included $2.4 million related to the Company's previous headquarters. The previous headquarters was sold during the second quarter of 2022.

During 2022, the Company sold property held in other real estate owned for a total gain of $4.2 million compared to gains of $618,000 in 2021 and $2.4 million in 2020.

During 2022, the Company wrote down property held in other real estate owned for a total of $3.7 million compared to write downs of $538,000 in 2021 and $558,000 in 2020.

Nonaccrual loans

The Company did not recognize any interest income on nonaccrual loans for any of the years ended December 31, 2022, 2021 or 2020. In addition, there were no nonaccrual loans for which there was no related allowance for credit losses at both December 31, 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 $1.3 million in 2022, $2.2 million in 2021 and $2.8 million in 2020.

 

Nonaccrual loans guaranteed by government agencies totaled $4.7 million at December 31, 2022 and $3.3 million at December 31, 2021.

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

 

 

 

December 31, 2022

 

 

December 31, 2021

 

 

 

(Dollars in thousands)

 

Real estate:

 

 

 

 

 

 

Commercial real estate owner occupied

 

$

1,795

 

 

$

3,220

 

Commercial real estate non-owner occupied

 

 

667

 

 

 

407

 

Construction and development < 60 months

 

 

93

 

 

 

80

 

Construction residential real estate < 60 months

 

 

430

 

 

 

—

 

Residential real estate first lien

 

 

1,947

 

 

 

2,763

 

Residential real estate all other

 

 

55

 

 

 

280

 

Farmland

 

 

1,462

 

 

 

4,224

 

Commercial and agricultural non-real estate

 

 

8,338

 

 

 

8,700

 

Consumer non-real estate

 

 

192

 

 

 

148

 

Oil and gas

 

 

320

 

 

 

1,070

 

Total

 

$

15,299

 

 

$

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 our 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)

 

December 31, 2022

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Real estate:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial real estate owner occupied

 

$

1,314

 

 

$

1,524

 

 

$

4,580

 

 

$

7,418

 

 

$

899,043

 

 

$

906,461

 

 

$

4,580

 

Commercial real estate non-owner occupied

 

 

6,237

 

 

 

—

 

 

 

42

 

 

 

6,279

 

 

 

1,379,028

 

 

 

1,385,307

 

 

 

43

 

Construction and development < 60 months

 

 

535

 

 

 

40

 

 

 

114

 

 

 

689

 

 

 

480,381

 

 

 

481,070

 

 

 

81

 

Construction residential real estate < 60 months

 

 

1,321

 

 

 

282

 

 

 

148

 

 

 

1,751

 

 

 

302,681

 

 

 

304,432

 

 

 

—

 

Residential real estate first lien

 

 

3,415

 

 

 

1,076

 

 

 

844

 

 

 

5,335

 

 

 

1,114,371

 

 

 

1,119,706

 

 

 

349

 

Residential real estate all other

 

 

265

 

 

 

37

 

 

 

185

 

 

 

487

 

 

 

198,518

 

 

 

199,005

 

 

 

166

 

Farmland

 

 

1,346

 

 

 

—

 

 

 

325

 

 

 

1,671

 

 

 

259,847

 

 

 

261,518

 

 

 

114

 

Commercial and agricultural non-real estate

 

 

3,500

 

 

 

2,176

 

 

 

4,712

 

 

 

10,388

 

 

 

1,365,987

 

 

 

1,376,375

 

 

 

1,285

 

Consumer non-real estate

 

 

2,591

 

 

 

648

 

 

 

585

 

 

 

3,824

 

 

 

443,215

 

 

 

447,039

 

 

 

467

 

Oil and gas

 

 

654

 

 

 

—

 

 

 

—

 

 

 

654

 

 

 

461,996

 

 

 

462,650

 

 

 

—

 

Total

 

$

21,178

 

 

$

5,783

 

 

$

11,535

 

 

$

38,496

 

 

$

6,905,067

 

 

$

6,943,563

 

 

$

7,085

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

Due to the impacts of the COVID-19 pandemic, the Company had $47.6 million in modified loans as of December 31, 2022 and $53.9 million in modified loans as of December 31, 2021, most of which were secured by commercial real estate. These modifications were undertaken in response to Section 4013 of the CARES Act and the regulatory intent outlined in the Interagency Statement on Loan Modifications by Financial Institutions Working with Customers Affected by the Coronavirus and to provide businesses financial flexibility until the economy has time to recover to a more normal level of activity. However, these modifications, which typically involve payment modifications and forbearance, also have the effect of delaying recognition of loans that may ultimately be permanently impaired. These modified loans are included in Current Loans in the table above.

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 are as follows:

Grade 1 – Acceptable - Loans graded 1 represent reasonable and satisfactory credit risk which requires normal attention and supervision. Capacity to repay through primary and/or secondary sources is not questioned.

Grade 2 – Acceptable - Increased Attention - This category consists of loans that have credit characteristics deserving management’s close attention. These complexities or potential weaknesses could result in deterioration of the repayment prospects for the loan or the Company's credit position at some future date. Such credit characteristics include loans to highly leveraged borrowers in cyclical industries, adverse financial trends which could potentially weaken repayment capacity, loans that have fundamental structure complexity or deficiencies, loans lacking secondary sources of repayment where prudent, and loans with deficiencies in essential documentation, including financial information.

Grade 3 – Loans with Problem Potential - This category consists of performing loans which are considered to exhibit problem potential. Loans in this category would generally include, but not be limited to, borrowers with a weakened financial condition or poor performance history, past dues, loans restructured to reduce payments to an amount that is below market standards and/or loans with severe documentation problems. In general, these loans have no identifiable loss potential in the near future; however, the possibility of a loss developing is heightened.

Grade 4 - Problem Loans/Assets – Nonperforming - This category consists of nonperforming loans/assets which are considered to be problems. Nonperforming loans are described as being 90 days and over past due and still accruing, and loans that are nonaccrual. The government guaranteed portion of SBA loans is excluded.

Grade 5 - Loss Potential - This category consists of loans/assets which are considered to possess loss potential. While the loss may not occur in the current year, management expects that loans/assets in this category will ultimately result in a loss, unless substantial improvement occurs.

Grade 6 - Charge Off - This category consists of loans that are considered uncollectible and other assets with little or no value.

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

The following tables summarize our gross loans held for investment by year of origination and internally assigned credit grades as of the period indicated:

 

 

 

Term Loans Amortized Cost Basis by Origination Year

 

 

 

 

 

 

 

 

 

2022

 

 

2021

 

 

2020

 

 

2019

 

 

2018

 

 

Prior

 

 

Revolving Loans Amortized Cost Basis

 

 

Total

 

 

 

(Dollars in thousands)

 

December 31, 2022

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial real estate owner occupied

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Grade 1

 

$

171,615

 

 

$

145,317

 

 

$

106,803

 

 

$

91,892

 

 

$

44,086

 

 

$

119,755

 

 

$

53,026

 

 

$

732,494

 

Grade 2

 

 

34,800

 

 

 

34,283

 

 

 

27,153

 

 

 

18,072

 

 

 

8,528

 

 

 

29,077

 

 

 

14,737

 

 

 

166,650

 

Grade 3

 

 

235

 

 

 

1,718

 

 

 

387

 

 

 

1,334

 

 

 

332

 

 

 

1,161

 

 

 

62

 

 

 

5,229

 

Grade 4

 

 

40

 

 

 

269

 

 

 

—

 

 

 

1,110

 

 

 

180

 

 

 

489

 

 

 

—

 

 

 

2,088

 

Total commercial real estate owner occupied

 

 

206,690

 

 

 

181,587

 

 

 

134,343

 

 

 

112,408

 

 

 

53,126

 

 

 

150,482

 

 

 

67,825

 

 

 

906,461

 

Commercial real estate non-owner occupied

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Grade 1

 

 

350,425

 

 

 

239,477

 

 

 

170,415

 

 

 

108,095

 

 

 

23,754

 

 

 

66,564

 

 

 

45,172

 

 

 

1,003,902

 

Grade 2

 

 

115,372

 

 

 

50,573

 

 

 

29,031

 

 

 

46,904

 

 

 

24,877

 

 

 

70,686

 

 

 

31,928

 

 

 

369,371

 

Grade 3

 

 

7,677

 

 

 

—

 

 

 

153

 

 

 

2,733

 

 

 

64

 

 

 

1,318

 

 

 

—

 

 

 

11,945

 

Grade 4

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

42

 

 

 

47

 

 

 

—

 

 

 

89

 

Total commercial real estate non-owner occupied

 

 

473,474

 

 

 

290,050

 

 

 

199,599

 

 

 

157,732

 

 

 

48,737

 

 

 

138,615

 

 

 

77,100

 

 

 

1,385,307

 

Construction and development < 60 months

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Grade 1

 

 

169,189

 

 

 

92,988

 

 

 

40,187

 

 

 

5,721

 

 

 

3,467

 

 

 

5,071

 

 

 

40,474

 

 

 

357,097

 

Grade 2

 

 

36,042

 

 

 

20,273

 

 

 

1,513

 

 

 

14,368

 

 

 

1,648

 

 

 

774

 

 

 

47,988

 

 

 

122,606

 

Grade 3

 

 

967

 

 

 

—

 

 

 

141

 

 

 

—

 

 

 

—

 

 

 

8

 

 

 

158

 

 

 

1,274

 

Grade 4

 

 

—

 

 

 

—

 

 

 

33

 

 

 

47

 

 

 

—

 

 

 

13

 

 

 

—

 

 

 

93

 

Total construction and development < 60 months

 

 

206,198

 

 

 

113,261

 

 

 

41,874

 

 

 

20,136

 

 

 

5,115

 

 

 

5,866

 

 

 

88,620

 

 

 

481,070

 

Construction residential real estate < 60 months

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Grade 1

 

 

210,099

 

 

 

12,824

 

 

 

259

 

 

 

18

 

 

 

—

 

 

 

42

 

 

 

36,114

 

 

 

259,356

 

Grade 2

 

 

39,689

 

 

 

1,152

 

 

 

102

 

 

 

—

 

 

 

—

 

 

 

400

 

 

 

2,091

 

 

 

43,434

 

Grade 3

 

 

1,212

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

1,212

 

Grade 4

 

 

420

 

 

 

10

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

430

 

Total construction residential real estate < 60 months

 

 

251,420

 

 

 

13,986

 

 

 

361

 

 

 

18

 

 

 

—

 

 

 

442

 

 

 

38,205

 

 

 

304,432

 

Residential real estate first lien

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Grade 1

 

 

304,206

 

 

 

205,277

 

 

 

141,807

 

 

 

85,850

 

 

 

56,028

 

 

 

137,254

 

 

 

4,100

 

 

 

934,522

 

Grade 2

 

 

46,433

 

 

 

36,877

 

 

 

25,623

 

 

 

13,414

 

 

 

11,725

 

 

 

37,242

 

 

 

—

 

 

 

171,314

 

Grade 3

 

 

1,940

 

 

 

1,903

 

 

 

1,065

 

 

 

1,689

 

 

 

497

 

 

 

3,889

 

 

 

—

 

 

 

10,983

 

Grade 4

 

 

55

 

 

 

311

 

 

 

175

 

 

 

386

 

 

 

144

 

 

 

1,816

 

 

 

—

 

 

 

2,887

 

Total residential real estate first lien

 

 

352,634

 

 

 

244,368

 

 

 

168,670

 

 

 

101,339

 

 

 

68,394

 

 

 

180,201

 

 

 

4,100

 

 

 

1,119,706

 

Residential real estate all other

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Grade 1

 

 

31,762

 

 

 

11,012

 

 

 

10,696

 

 

 

5,458

 

 

 

3,607

 

 

 

11,198

 

 

 

42,629

 

 

 

116,362

 

Grade 2

 

 

5,657

 

 

 

1,887

 

 

 

1,744

 

 

 

1,589

 

 

 

1,237

 

 

 

2,574

 

 

 

64,231

 

 

 

78,919

 

Grade 3

 

 

381

 

 

 

186

 

 

 

71

 

 

 

50

 

 

 

201

 

 

 

786

 

 

 

1,828

 

 

 

3,503

 

Grade 4

 

 

—

 

 

 

18

 

 

 

28

 

 

 

32

 

 

 

39

 

 

 

53

 

 

 

51

 

 

 

221

 

Total residential real estate all other

 

 

37,800

 

 

 

13,103

 

 

 

12,539

 

 

 

7,129

 

 

 

5,084

 

 

 

14,611

 

 

 

108,739

 

 

 

199,005

 

Farmland

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Grade 1

 

 

47,211

 

 

 

33,771

 

 

 

29,454

 

 

 

18,693

 

 

 

10,038

 

 

 

29,724

 

 

 

6,126

 

 

 

175,017

 

Grade 2

 

 

16,140

 

 

 

14,294

 

 

 

6,536

 

 

 

8,855

 

 

 

5,428

 

 

 

14,373

 

 

 

11,281

 

 

 

76,907

 

Grade 3

 

 

2,196

 

 

 

111

 

 

 

2,090

 

 

 

63

 

 

 

141

 

 

 

2,023

 

 

 

1,926

 

 

 

8,550

 

Grade 4

 

 

660

 

 

 

37

 

 

 

55

 

 

 

—

 

 

 

81

 

 

 

211

 

 

 

—

 

 

 

1,044

 

Total farmland

 

 

66,207

 

 

 

48,213

 

 

 

38,135

 

 

 

27,611

 

 

 

15,688

 

 

 

46,331

 

 

 

19,333

 

 

 

261,518

 

Commercial and agricultural non-real estate

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Grade 1

 

 

303,340

 

 

 

215,247

 

 

 

72,246

 

 

 

53,808

 

 

 

15,410

 

 

 

42,842

 

 

 

316,942

 

 

 

1,019,835

 

Grade 2

 

 

100,010

 

 

 

54,656

 

 

 

20,423

 

 

 

12,914

 

 

 

16,187

 

 

 

3,832

 

 

 

126,503

 

 

 

334,525

 

Grade 3

 

 

6,332

 

 

 

826

 

 

 

1,682

 

 

 

816

 

 

 

1,745

 

 

 

797

 

 

 

5,070

 

 

 

17,268

 

Grade 4

 

 

240

 

 

 

599

 

 

 

1,099

 

 

 

825

 

 

 

410

 

 

 

1,111

 

 

 

199

 

 

 

4,483

 

Grade 5

 

 

—

 

 

 

—

 

 

 

—

 

 

 

264

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

264

 

Total commercial and agricultural non-real estate

 

 

409,922

 

 

 

271,328

 

 

 

95,450

 

 

 

68,627

 

 

 

33,752

 

 

 

48,582

 

 

 

448,714

 

 

 

1,376,375

 

Consumer non-real estate

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Grade 1

 

 

203,335

 

 

 

104,409

 

 

 

39,822

 

 

 

21,076

 

 

 

6,589

 

 

 

2,187

 

 

 

26,263

 

 

 

403,681

 

Grade 2

 

 

21,078

 

 

 

10,542

 

 

 

3,978

 

 

 

1,541

 

 

 

822

 

 

 

1,351

 

 

 

816

 

 

 

40,128

 

Grade 3

 

 

827

 

 

 

671

 

 

 

405

 

 

 

282

 

 

 

134

 

 

 

63

 

 

 

4

 

 

 

2,386

 

Grade 4

 

 

229

 

 

 

351

 

 

 

54

 

 

 

141

 

 

 

56

 

 

 

13

 

 

 

—

 

 

 

844

 

Total consumer non-real estate

 

 

225,469

 

 

 

115,973

 

 

 

44,259

 

 

 

23,040

 

 

 

7,601

 

 

 

3,614

 

 

 

27,083

 

 

 

447,039

 

Oil and gas

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Grade 1

 

 

24,938

 

 

 

125,209

 

 

 

16,482

 

 

 

682

 

 

 

1,678

 

 

 

246

 

 

 

199,610

 

 

 

368,845

 

Grade 2

 

 

7,610

 

 

 

10,668

 

 

 

766

 

 

 

23,040

 

 

 

3,167

 

 

 

327

 

 

 

45,240

 

 

 

90,818

 

Grade 3

 

 

2,117

 

 

 

47

 

 

 

5

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

498

 

 

 

2,667

 

Grade 4

 

 

—

 

 

 

320

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

320

 

Total oil and gas

 

 

34,665

 

 

 

136,244

 

 

 

17,253

 

 

 

23,722

 

 

 

4,845

 

 

 

573

 

 

 

245,348

 

 

 

462,650

 

Total loans held for investment

 

$

2,264,479

 

 

$

1,428,113

 

 

$

752,483

 

 

$

541,762

 

 

$

242,342

 

 

$

589,317

 

 

$

1,125,067

 

 

$

6,943,563

 

 

 

 

 

Term Loans Amortized Cost Basis by Origination Year

 

 

 

 

 

 

 

 

 

2021

 

 

2020

 

 

2019

 

 

2018

 

 

2017

 

 

Prior

 

 

Revolving Loans Amortized Cost Basis

 

 

Total

 

 

 

(Dollars in thousands)

 

December 31, 2021

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial real estate owner occupied

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Grade 1

 

$

153,887

 

 

$

130,835

 

 

$

113,830

 

 

$

59,163

 

 

$

37,647

 

 

$

102,438

 

 

$

25,128

 

 

$

622,928

 

Grade 2

 

 

35,475

 

 

 

33,198

 

 

 

21,570

 

 

 

8,397

 

 

 

9,936

 

 

 

29,191

 

 

 

9,152

 

 

 

146,919

 

Grade 3

 

 

—

 

 

 

275

 

 

 

605

 

 

 

261

 

 

 

465

 

 

 

1,071

 

 

 

62

 

 

 

2,739

 

Grade 4

 

 

337

 

 

 

600

 

 

 

890

 

 

 

445

 

 

 

—

 

 

 

371

 

 

 

325

 

 

 

2,968

 

Total commercial real estate owner occupied

 

 

189,699

 

 

 

164,908

 

 

 

136,895

 

 

 

68,266

 

 

 

48,048

 

 

 

133,071

 

 

 

34,667

 

 

 

775,554

 

Commercial real estate non-owner occupied

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Grade 1

 

 

252,718

 

 

 

204,892

 

 

 

114,429

 

 

 

51,440

 

 

 

37,305

 

 

 

118,264

 

 

 

29,257

 

 

 

808,305

 

Grade 2

 

 

53,548

 

 

 

51,206

 

 

 

50,912

 

 

 

38,850

 

 

 

19,466

 

 

 

36,808

 

 

 

24,335

 

 

 

275,125

 

Grade 3

 

 

7,095

 

 

 

—

 

 

 

3,254

 

 

 

121

 

 

 

234

 

 

 

656

 

 

 

—

 

 

 

11,360

 

Grade 4

 

 

407

 

 

 

—

 

 

 

—

 

 

 

35

 

 

 

—

 

 

 

92

 

 

 

—

 

 

 

534

 

Total commercial real estate non-owner occupied

 

 

313,768

 

 

 

256,098

 

 

 

168,595

 

 

 

90,446

 

 

 

57,005

 

 

 

155,820

 

 

 

53,592

 

 

 

1,095,324

 

Construction and development < 60 months

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Grade 1

 

 

173,384

 

 

 

34,351

 

 

 

57,729

 

 

 

9,276

 

 

 

1,953

 

 

 

4,181

 

 

 

32,294

 

 

 

313,168

 

Grade 2

 

 

37,275

 

 

 

7,511

 

 

 

13,161

 

 

 

4,526

 

 

 

803

 

 

 

510

 

 

 

37,153

 

 

 

100,939

 

Grade 3

 

 

1,273

 

 

 

—

 

 

 

—

 

 

 

6

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

1,279

 

Grade 4

 

 

—

 

 

 

—

 

 

 

56

 

 

 

6

 

 

 

18

 

 

 

—

 

 

 

—

 

 

 

80

 

Total construction and development < 60 months

 

 

211,932

 

 

 

41,862

 

 

 

70,946

 

 

 

13,814

 

 

 

2,774

 

 

 

4,691

 

 

 

69,447

 

 

 

415,466

 

Construction residential real estate < 60 months

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Grade 1

 

 

193,311

 

 

 

7,786

 

 

 

41

 

 

 

—

 

 

 

18

 

 

 

29

 

 

 

16,247

 

 

 

217,432

 

Grade 2

 

 

28,170

 

 

 

2,564

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

425

 

 

 

5,455

 

 

 

36,614

 

Grade 3

 

 

478

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

478

 

Total construction residential real estate < 60 months

 

 

221,959

 

 

 

10,350

 

 

 

41

 

 

 

—

 

 

 

18

 

 

 

454

 

 

 

21,702

 

 

 

254,524

 

Residential real estate first lien

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Grade 1

 

 

256,834

 

 

 

174,718

 

 

 

99,082

 

 

 

64,949

 

 

 

45,211

 

 

 

128,898

 

 

 

3,928

 

 

 

773,620

 

Grade 2

 

 

44,080

 

 

 

26,073

 

 

 

15,719

 

 

 

12,612

 

 

 

10,926

 

 

 

38,230

 

 

 

—

 

 

 

147,640

 

Grade 3

 

 

1,151

 

 

 

1,266

 

 

 

2,054

 

 

 

1,930

 

 

 

1,155

 

 

 

3,523

 

 

 

—

 

 

 

11,079

 

Grade 4

 

 

64

 

 

 

489

 

 

 

479

 

 

 

1,247

 

 

 

915

 

 

 

1,473

 

 

 

—

 

 

 

4,667

 

Grade 5

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

Total residential real estate first lien

 

 

302,129

 

 

 

202,546

 

 

 

117,334

 

 

 

80,738

 

 

 

58,207

 

 

 

172,124

 

 

 

3,928

 

 

 

937,006

 

Residential real estate all other

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Grade 1

 

 

16,376

 

 

 

13,320

 

 

 

8,691

 

 

 

5,609

 

 

 

4,101

 

 

 

12,386

 

 

 

30,840

 

 

 

91,323

 

Grade 2

 

 

2,183

 

 

 

2,941

 

 

 

1,919

 

 

 

1,500

 

 

 

895

 

 

 

2,202

 

 

 

55,000

 

 

 

66,640

 

Grade 3

 

 

250

 

 

 

98

 

 

 

112

 

 

 

232

 

 

 

702

 

 

 

309

 

 

 

538

 

 

 

2,241

 

Grade 4

 

 

156

 

 

 

180

 

 

 

—

 

 

 

38

 

 

 

12

 

 

 

84

 

 

 

344

 

 

 

814

 

Total residential real estate all other

 

 

18,965

 

 

 

16,539

 

 

 

10,722

 

 

 

7,379

 

 

 

5,710

 

 

 

14,981

 

 

 

86,722

 

 

 

161,018

 

Farmland

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Grade 1

 

 

47,485

 

 

 

39,216

 

 

 

23,627

 

 

 

15,180

 

 

 

12,579

 

 

 

29,457

 

 

 

6,946

 

 

 

174,490

 

Grade 2

 

 

16,063

 

 

 

8,702

 

 

 

23,688

 

 

 

5,488

 

 

 

4,159

 

 

 

10,848

 

 

 

10,455

 

 

 

79,403

 

Grade 3

 

 

3,587

 

 

 

4,021

 

 

 

1,514

 

 

 

74

 

 

 

1,293

 

 

 

1,316

 

 

 

3,386

 

 

 

15,191

 

Grade 4

 

 

1,109

 

 

 

379

 

 

 

—

 

 

 

1,121

 

 

 

109

 

 

 

145

 

 

 

232

 

 

 

3,095

 

Total farmland

 

 

68,244

 

 

 

52,318

 

 

 

48,829

 

 

 

21,863

 

 

 

18,140

 

 

 

41,766

 

 

 

21,019

 

 

 

272,179

 

Commercial and agricultural non-real estate

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Grade 1

 

 

445,864

 

 

 

121,786

 

 

 

95,379

 

 

 

44,593

 

 

 

32,169

 

 

 

43,750

 

 

 

307,361

 

 

 

1,090,902

 

Grade 2

 

 

85,920

 

 

 

30,568

 

 

 

25,097

 

 

 

9,680

 

 

 

2,735

 

 

 

10,821

 

 

 

105,700

 

 

 

270,521

 

Grade 3

 

 

2,995

 

 

 

2,185

 

 

 

1,347

 

 

 

11,479

 

 

 

1,291

 

 

 

599

 

 

 

27,716

 

 

 

47,612

 

Grade 4

 

 

870

 

 

 

221

 

 

 

1,337

 

 

 

654

 

 

 

573

 

 

 

1,109

 

 

 

2,294

 

 

 

7,058

 

Total commercial and agricultural non-real estate

 

 

535,649

 

 

 

154,760

 

 

 

123,160

 

 

 

66,406

 

 

 

36,768

 

 

 

56,279

 

 

 

443,071

 

 

 

1,416,093

 

Consumer non-real estate

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Grade 1

 

 

201,893

 

 

 

80,616

 

 

 

43,793

 

 

 

17,587

 

 

 

5,723

 

 

 

2,048

 

 

 

20,600

 

 

 

372,260

 

Grade 2

 

 

19,349

 

 

 

7,551

 

 

 

6,119

 

 

 

2,167

 

 

 

816

 

 

 

1,342

 

 

 

996

 

 

 

38,340

 

Grade 3

 

 

1,146

 

 

 

307

 

 

 

551

 

 

 

203

 

 

 

86

 

 

 

31

 

 

 

4

 

 

 

2,328

 

Grade 4

 

 

62

 

 

 

90

 

 

 

199

 

 

 

69

 

 

 

14

 

 

 

8

 

 

 

—

 

 

 

442

 

Total consumer non-real estate

 

 

222,450

 

 

 

88,564

 

 

 

50,662

 

 

 

20,026

 

 

 

6,639

 

 

 

3,429

 

 

 

21,600

 

 

 

413,370

 

Oil and gas

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Grade 1

 

 

188,072

 

 

 

26,090

 

 

 

6,579

 

 

 

1,257

 

 

 

89

 

 

 

73

 

 

 

139,687

 

 

 

361,847

 

Grade 2

 

 

17,150

 

 

 

9,774

 

 

 

13,909

 

 

 

2,657

 

 

 

170

 

 

 

215

 

 

 

13,186

 

 

 

57,061

 

Grade 3

 

 

6,641

 

 

 

10

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

255

 

 

 

2,024

 

 

 

8,930

 

Grade 4

 

 

1,000

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

70

 

 

 

1,070

 

Total oil and gas

 

 

212,863

 

 

 

35,874

 

 

 

20,488

 

 

 

3,914

 

 

 

259

 

 

 

543

 

 

 

154,967

 

 

 

428,908

 

Total loans held for investment

 

$

2,297,658

 

 

$

1,023,819

 

 

$

747,672

 

 

$

372,852

 

 

$

233,568

 

 

$

583,158

 

 

$

910,715

 

 

$

6,169,442

 

 

 

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 Company elected to utilize a methodology known as vintage loss analysis for BancFirst, Pegasus, and Worthington Bank. Vintage loss analysis measures impairment based on the age of the accounts and the historical asset performance of assets with similar risk characteristics. Vintage loss analysis determines expected losses by allowing the Company to calculate the cumulative loss rates of a given loan pool and in so doing, determine the loan pool’s lifetime expected loss experience relative to the appropriate type of financial assets that share similar risk characteristics. Vintage loss analysis uses different “vintages” analyzed by year of origination through the weighted average maturity of each loan pool. The key quantitative inputs used in the Company’s estimate of the allowance for credit losses include 1) all available loan data tracked by year of origination, 2) total charge-offs for each specific loan pool recorded since year of origination, 3) recovery rate calculated by the average recovery over the previous seven years across all loan pools, and 4) a weighting factor biased to more recent loss experience. The quantitative expected credit loss is calculated by dividing each year’s net charge-offs by the original balance. The respective vintage’s original balance remains the denominator in each annual calculation, as it references the specific vintage’s initial balance. The loss experience of this original balance is tracked annually and summed over the life of the loan for each separate loan pool, leaving a cumulative life of credit loss rate based on historic averages weighted towards more recent loss experience. These key quantitative inputs change from period to period as new loans are originated, and charge-offs and recoveries are recognized. The recovery rate is revised on an annual basis, taking into consideration the most recent seven years. The weighting factor percentages remain static, however, the most recent year receives the highest weighting percentage.

The BancFirst Senior Loan Committee (“the SLC”) sets BancFirst qualitative adjustments. In setting the qualitative adjustments, they consider several factors, including external economic information, peer bank comparisons and experience with the loan portfolio. The SLC also considers Moody’s Analytics dataset. From this dataset, BancFirst selects a range of 3 probability scenarios from two economic forecasts. To determine the appropriate correlation to our loss experience, BancFirst compares the economic indicators over the past ten years of charge-off history to arrive at a correlation factor. BancFirst then applies the correlation factor to the change in the forecast of the aforementioned economic indicators over the next 18-24 months, which is driven by management’s judgment of a reasonable and supportable forecast period to arrive at a percentage range of qualitative loss adjustment attributable to economic forecasts. The SLC establishes a qualitative adjustment for each loan pool using these factors. For periods beyond which BancFirst is able to make or obtain reasonable and supportable forecasts of expected credit losses, BancFirst reverts to historical loss information.

In some cases, management may determine a loan to be collateral dependent. A loan is considered collateral-dependent when the repayment is expected to be provided substantially through the operation or sale of the collateral when the borrower is experiencing financial difficulty based on the Company's assessment as of the reporting date. For collateral dependent loans, the standard allows institutions to use, as a practical expedient, the fair value of the collateral to measure expected credit losses on collateral-dependent financial assets. This amount is included in the allowance for credit losses.

The increase in allowance for credit losses during 2022 was related to the purchase of loans without credit deterioration during the year along with loan growth. The decrease in the allowance for credit losses 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 losses within the loan portfolio. This reduction during 2021 was partially offset by additional allowance for credit losses required for newly acquired loans. The allowance for credit losses for the oil and gas category was reduced during 2021 due to the increases in oil and gas commodity prices contributing to a more stable and profitable energy industry; however this decrease was offset by an increase in allowance for credit losses 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 credit losses on loans

 

 

Balance at
end of
period

 

 

 

(Dollars in thousands)

 

Year ended December 31, 2022

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Real estate:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial real estate owner occupied

 

$

7,568

 

 

$

—

 

 

$

(20

)

 

$

507

 

 

$

487

 

 

$

(1,643

)

 

$

6,412

 

Commercial real estate non-owner occupied

 

 

16,987

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

13,205

 

 

 

30,192

 

Construction and development < 60 months

 

 

3,490

 

 

 

—

 

 

 

(93

)

 

 

12

 

 

 

(81

)

 

 

369

 

 

 

3,778

 

Construction residential real estate < 60 months

 

 

1,092

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

2,184

 

 

 

3,276

 

Residential real estate first lien

 

 

3,076

 

 

 

2

 

 

 

(106

)

 

 

87

 

 

 

(19

)

 

 

1,039

 

 

 

4,098

 

Residential real estate all other

 

 

2,104

 

 

 

—

 

 

 

(38

)

 

 

405

 

 

 

367

 

 

 

(626

)

 

 

1,845

 

Farmland

 

 

4,822

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(1,312

)

 

 

3,510

 

Commercial and agricultural non-real estate

 

 

28,085

 

 

 

44

 

 

 

(1,756

)

 

 

222

 

 

 

(1,534

)

 

 

716

 

 

 

27,311

 

Consumer non-real estate

 

 

3,734

 

 

 

25

 

 

 

(768

)

 

 

193

 

 

 

(575

)

 

 

951

 

 

 

4,135

 

Oil and gas

 

 

12,978

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(4,807

)

 

 

8,171

 

Total

 

$

83,936

 

 

$

71

 

 

$

(2,781

)

 

$

1,426

 

 

$

(1,355

)

 

$

10,076

 

 

$

92,728

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Year ended December 31, 2021

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Real estate:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial real estate owner occupied

 

$

8,470

 

 

$

1,080

 

 

$

(38

)

 

$

74

 

 

$

36

 

 

$

(2,018

)

 

$

7,568

 

Commercial real estate non-owner occupied

 

 

12,318

 

 

 

824

 

 

 

(803

)

 

 

67

 

 

 

(736

)

 

 

4,581

 

 

 

16,987

 

Construction and development < 60 months

 

 

2,723

 

 

 

173

 

 

 

—

 

 

 

12

 

 

 

12

 

 

 

582

 

 

 

3,490

 

Construction residential real estate < 60 months

 

 

726

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

366

 

 

 

1,092

 

Residential real estate first lien

 

 

2,822

 

 

 

126

 

 

 

(87

)

 

 

55

 

 

 

(32

)

 

 

160

 

 

 

3,076

 

Residential real estate all other

 

 

2,236

 

 

 

—

 

 

 

(521

)

 

 

52

 

 

 

(469

)

 

 

337

 

 

 

2,104

 

Farmland

 

 

3,153

 

 

 

395

 

 

 

(889

)

 

 

1

 

 

 

(888

)

 

 

2,162

 

 

 

4,822

 

Commercial and agricultural non-real estate

 

 

34,643

 

 

 

5,663

 

 

 

(4,643

)

 

 

219

 

 

 

(4,424

)

 

 

(7,797

)

 

 

28,085

 

Consumer non-real estate

 

 

3,542

 

 

 

38

 

 

 

(864

)

 

 

326

 

 

 

(538

)

 

 

692

 

 

 

3,734

 

Oil and gas

 

 

20,733

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(7,755

)

 

 

12,978

 

Total

 

$

91,366

 

 

$

8,299

 

 

$

(7,845

)

 

$

806

 

 

$

(7,039

)

 

$

(8,690

)

 

$

83,936

 

 

 

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 purchased credit-deteriorated loans for the period are as follows:

 

 

 

 

 

 

 

 

 

 

 

Loans acquired with deteriorated credit quality

 

 

 

(Dollars in thousands)

 

For the year ended December 31, 2022

 

 

 

Purchase price of loans at acquisition

 

$

668

 

Allowance for credit losses at acquisition

 

 

71

 

Par value of acquired loans at acquisition

 

$

739

 

 

 

 

 

For the year ended December 31, 2021

 

 

 

Purchase price of loans at acquisition

 

$

39,284

 

Allowance for credit losses at acquisition

 

 

8,299

 

Par value of acquired loans at acquisition

 

$

47,583

 

 

 

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 years ended December 31, 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

 

As of December 31, 2022

 

(Dollars in thousands)

 

 

 

 

 

 

 

Real estate:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial real estate owner occupied

 

$

2,213

 

 

$

—

 

 

$

—

 

 

$

—

 

 

$

2,213

 

 

$

870

 

Commercial real estate non-owner occupied

 

 

1,263

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

1,263

 

 

 

333

 

Construction and development < 60 months

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

Construction residential real estate < 60 months

 

 

420

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

420

 

 

 

45

 

Residential real estate first lien

 

 

481

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

481

 

 

 

207

 

Residential real estate all other

 

 

9

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

9

 

 

 

9

 

Farmland

 

 

3,447

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

3,447

 

 

 

831

 

Commercial and agricultural non-real estate

 

 

—

 

 

 

6,625

 

 

 

—

 

 

 

3,596

 

 

 

10,221

 

 

 

4,221

 

Consumer non-real estate

 

 

—

 

 

 

—

 

 

 

—

 

 

 

117

 

 

 

117

 

 

 

81

 

Oil and gas

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

Total collateral-dependent loans held for investment

 

$

7,833

 

 

$

6,625

 

 

$

—

 

 

$

3,713

 

 

$

18,171

 

 

$

6,597

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Collateral Type

 

 

 

 

 

 

 

 

 

Real Estate

 

 

Business Assets

 

 

Energy Reserves

 

 

Other Assets

 

 

Total

 

 

Specific Allocation

 

As of December 31, 2021

 

(Dollars in thousands)

 

 

 

 

 

 

 

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, repossessed assets, and other assets are non-cash transactions, and are not included in the consolidated statements of cash flow.

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

 

 

 

Year ended December 31,

 

 

 

2022

 

 

2021

 

 

2020

 

 

 

(Dollars in thousands)

 

Other real estate owned

 

$

2,563

 

 

$

12,651

 

 

$

32,093

 

Repossessed assets

 

 

1,040

 

 

 

844

 

 

 

1,418

 

Other assets

 

 

1,943

 

 

 

—

 

 

 

11,105

 

Total

 

$

5,546

 

 

$

13,495

 

 

$

44,616

 

 

Related Party Loans

The Company has made loans in the ordinary course of business to the executive officers and directors of the Company and to certain affiliates of these executive officers and directors. Management believes that all such loans were made on substantially the same terms as those prevailing at the time for comparable transactions with other persons and do not represent more than a normal risk of collectability or present other unfavorable features. A summary of these loans is as follows:

 

Year Ended December 31,

 

Balance
Beginning
of the
Period

 

 

Additions

 

 

Collections/ Terminations

 

 

Balance
End of the
Period

 

 

 

(Dollars in thousands)

 

2022

 

$

28,292

 

 

$

46,124

 

 

$

(51,249

)

 

$

23,167

 

2021

 

 

22,057

 

 

 

31,574

 

 

 

(25,339

)

 

 

28,292

 

2020

 

 

20,281

 

 

 

19,682

 

 

 

(17,906

)

 

 

22,057