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Loans Held for Investment and Allowance for Credit Losses on Loans
 12 Months Ended
Dec. 31, 2023
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 held for investment are summarized by portfolio segment as follows:

 

 

 

December 31,

 

 

 

2023

 

 

2022

 

 

 

(Dollars in thousands)

 

Real estate:

 

 

 

 

 

 

Commercial real estate owner occupied

 

$

960,944

 

 

$

908,494

 

Commercial real estate non-owner occupied

 

 

1,486,420

 

 

 

1,383,150

 

Construction and development < 60 months

 

 

642,643

 

 

 

475,236

 

Construction residential real estate < 60 months

 

 

283,486

 

 

 

303,305

 

Residential real estate first lien

 

 

1,258,744

 

 

 

1,117,899

 

Residential real estate all other

 

 

244,696

 

 

 

196,198

 

Agriculture

 

 

427,139

 

 

 

408,037

 

Commercial non-real estate

 

 

1,289,452

 

 

 

1,241,454

 

Consumer non-real estate

 

 

476,467

 

 

 

446,756

 

Oil and gas

 

 

586,654

 

 

 

463,034

 

Total (1)

 

$

7,656,645

 

 

$

6,943,563

 

(1) Excludes accrued interest receivable of $39.4 million at December 31, 2023 and $30.6 million at December 31, 2022, that is recorded in accrued interest

 

receivable and other assets.

 

 

Certain loan segments for 2022 were reclassified to conform to the 2023 presentation. Each loan segment consists of loan categories possessing similar risk characteristics. The Company’s re-alignment of the segments primarily consisted of reclassifying farmland and agriculture related loans that were previously included in consumer-related and commercial-related loans to the agriculture category. Management believes this accurately represents the risk profile of each loan segment. These reclassifications did not have a significant impact on the allowance for credit losses.

 

The Company's loans are currently 84% held by BancFirst and 16% held by Pegasus and Worthington. In addition, approximately 69% 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

 

 

2

 

Residential real estate first lien

 

 

15

 

Residential real estate all other

 

 

8

 

Agriculture

 

 

9

 

  Commercial non-real estate

 

 

4

 

  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.

Agricultural. This category includes loans secured by all land known to be used or usable for agricultural purposes, such as crop and livestock production.

Commercial non-real estate. Commercial 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 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.

Loan Modifications, Other Real Estate Owned and Repossessed Assets and Held for Sale Assets

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

 

 

 

December 31,

 

 

 

2023

 

 

2022

 

 

 

(Dollars in thousands)

 

Other real estate owned and repossessed assets

 

$

34,200

 

 

$

36,936

 

As of both December 31, 2023 and December 31, 2022, other real estate owned included a larger commercial real estate property recorded at $29.4 million. 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 other noninterest expense 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,

 

 

 

2023

 

 

2022

 

 

2021

 

 

 

(Dollars in thousands)

 

Rental income

 

$

11,224

 

 

$

10,340

 

 

$

9,975

 

Operating expense

 

 

10,868

 

 

 

9,863

 

 

 

8,727

 

During 2023, the Company sold property held in other real estate owned for a total gain of $728,000 compared to gains of $4.2 million in 2022 and $618,000 in 2021.

During 2023, the Company wrote down property held in other real estate owned for a total of $5.2 million compared to write downs of $3.7 million in 2022 and $538,000 in 2021.

The Company charges interest on principal balances outstanding on modified loans during deferral periods. The current and future financial effects of the recorded balance of loans considered to be modified during the period were not considered to be material. The recorded balance of modified loans was approximately $5.3 million during the year ended December 31, 2023.

Nonaccrual loans

The Company did not recognize any interest income on nonaccrual loans for any of the years ended December 31, 2023, 2022 or 2021. In addition, there were no nonaccrual loans for which there is no related allowance for credit losses at both December 31, 2023 and December 31, 2022. Had nonaccrual loans performed in accordance with their original contractual terms, the Company would have recognized additional interest income of $1.6 million in 2023, $1.3 million in 2022 and $2.2 million in 2021.

 

Nonaccrual loans guaranteed by government agencies totaled $6.7 million at December 31, 2023 and $4.7 million at December 31, 2022.

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

 

 

 

December 31, 2023

 

 

December 31, 2022

 

 

 

(Dollars in thousands)

 

Real estate:

 

 

 

 

 

 

Commercial real estate owner occupied

 

$

1,686

 

 

$

1,795

 

Commercial real estate non-owner occupied

 

 

874

 

 

 

667

 

Construction and development < 60 months

 

 

800

 

 

 

93

 

Construction residential real estate < 60 months

 

 

638

 

 

 

430

 

Residential real estate first lien

 

 

3,336

 

 

 

1,947

 

Residential real estate all other

 

 

899

 

 

 

55

 

Agriculture

 

 

3,662

 

 

 

2,734

 

Commercial non-real estate

 

 

10,101

 

 

 

7,066

 

Consumer non-real estate

 

 

449

 

 

 

192

 

Oil and gas

 

 

2,128

 

 

 

320

 

Total

 

$

24,573

 

 

$

15,299

 

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)

 

December 31, 2023

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Real estate:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial real estate owner
   occupied

 

$

1,386

 

 

$

26

 

 

$

5,598

 

 

$

7,010

 

 

$

953,934

 

 

$

960,944

 

 

$

4,377

 

Commercial real estate non-owner
   occupied

 

 

2,224

 

 

 

7,371

 

 

 

1,786

 

 

 

11,381

 

 

 

1,475,039

 

 

 

1,486,420

 

 

 

913

 

Construction and development <60
   months

 

 

198

 

 

 

158

 

 

 

800

 

 

 

1,156

 

 

 

641,487

 

 

 

642,643

 

 

 

—

 

Construction residential real estate
   < 60 months

 

 

1,542

 

 

 

206

 

 

 

405

 

 

 

2,153

 

 

 

281,333

 

 

 

283,486

 

 

 

332

 

Residential real estate first lien

 

 

3,879

 

 

 

1,204

 

 

 

1,849

 

 

 

6,932

 

 

 

1,251,812

 

 

 

1,258,744

 

 

 

731

 

Residential real estate all other

 

 

757

 

 

 

190

 

 

 

613

 

 

 

1,560

 

 

 

243,136

 

 

 

244,696

 

 

 

549

 

Agriculture

 

 

1,694

 

 

 

724

 

 

 

1,227

 

 

 

3,645

 

 

 

423,494

 

 

 

427,139

 

 

 

579

 

Commercial non-real estate

 

 

1,501

 

 

 

436

 

 

 

10,028

 

 

 

11,965

 

 

 

1,277,487

 

 

 

1,289,452

 

 

 

1,714

 

Consumer non-real estate

 

 

3,248

 

 

 

1,090

 

 

 

594

 

 

 

4,932

 

 

 

471,535

 

 

 

476,467

 

 

 

347

 

Oil and gas

 

 

—

 

 

 

—

 

 

 

92

 

 

 

92

 

 

 

586,562

 

 

 

586,654

 

 

 

—

 

Total

 

$

16,429

 

 

$

11,405

 

 

$

22,992

 

 

$

50,826

 

 

$

7,605,819

 

 

$

7,656,645

 

 

$

9,542

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

$

901,076

 

 

$

908,494

 

 

$

4,580

 

Commercial real estate non-owner
   occupied

 

 

6,237

 

 

 

—

 

 

 

42

 

 

 

6,279

 

 

 

1,376,871

 

 

 

1,383,150

 

 

 

43

 

Construction and development <60
   months

 

 

535

 

 

 

40

 

 

 

114

 

 

 

689

 

 

 

474,547

 

 

 

475,236

 

 

 

81

 

Construction residential real estate
   < 60 months

 

 

1,320

 

 

 

282

 

 

 

148

 

 

 

1,750

 

 

 

301,555

 

 

 

303,305

 

 

 

—

 

Residential real estate first lien

 

 

3,415

 

 

 

1,076

 

 

 

844

 

 

 

5,335

 

 

 

1,112,564

 

 

 

1,117,899

 

 

 

349

 

Residential real estate all other

 

 

265

 

 

 

37

 

 

 

185

 

 

 

487

 

 

 

195,711

 

 

 

196,198

 

 

 

166

 

Agriculture

 

 

2,357

 

 

 

34

 

 

 

2,265

 

 

 

4,656

 

 

 

403,381

 

 

 

408,037

 

 

 

1,054

 

Commercial non-real estate

 

 

2,490

 

 

 

2,142

 

 

 

2,772

 

 

 

7,404

 

 

 

1,234,050

 

 

 

1,241,454

 

 

 

345

 

Consumer non-real estate

 

 

2,591

 

 

 

648

 

 

 

585

 

 

 

3,824

 

 

 

442,932

 

 

 

446,756

 

 

 

467

 

Oil and gas

 

 

654

 

 

 

—

 

 

 

—

 

 

 

654

 

 

 

462,380

 

 

 

463,034

 

 

 

—

 

Total

 

$

21,178

 

 

$

5,783

 

 

$

11,535

 

 

$

38,496

 

 

$

6,905,067

 

 

$

6,943,563

 

 

$

7,085

 

 

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 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

 

 

Revolving Loans

 

 

 

 

 

 

2023

 

 

2022

 

 

2021

 

 

2020

 

 

2019

 

 

Prior

 

 

Amortized Cost Basis

 

 

Total

 

 

 

(Dollars in thousands)

 

December 31, 2023

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial real estate owner occupied

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Grade 1

 

$

125,041

 

 

$

144,429

 

 

$

124,113

 

 

$

85,619

 

 

$

77,400

 

 

$

135,064

 

 

$

23,004

 

 

$

714,670

 

Grade 2

 

 

39,735

 

 

 

61,879

 

 

 

28,506

 

 

 

22,473

 

 

 

19,617

 

 

 

24,199

 

 

 

33,304

 

 

 

229,713

 

Grade 3

 

 

140

 

 

 

3,580

 

 

 

4,262

 

 

 

644

 

 

 

1,432

 

 

 

1,051

 

 

 

2,450

 

 

 

13,559

 

Grade 4

 

 

399

 

 

 

90

 

 

 

—

 

 

 

352

 

 

 

656

 

 

 

1,016

 

 

 

150

 

 

 

2,663

 

Grade 5

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

339

 

 

 

—

 

 

 

—

 

 

 

339

 

Total commercial real estate owner occupied

 

 

165,315

 

 

 

209,978

 

 

 

156,881

 

 

 

109,088

 

 

 

99,444

 

 

 

161,330

 

 

 

58,908

 

 

 

960,944

 

Commercial real estate non-owner occupied

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Grade 1

 

 

221,014

 

 

 

271,637

 

 

 

172,291

 

 

 

113,676

 

 

 

56,831

 

 

 

68,576

 

 

 

44,878

 

 

 

948,903

 

Grade 2

 

 

82,206

 

 

 

139,982

 

 

 

79,204

 

 

 

53,154

 

 

 

63,331

 

 

 

72,075

 

 

 

28,844

 

 

 

518,796

 

Grade 3

 

 

2,135

 

 

 

6,666

 

 

 

1,715

 

 

 

—

 

 

 

6,207

 

 

 

251

 

 

 

—

 

 

 

16,974

 

Grade 4

 

 

200

 

 

 

632

 

 

 

349

 

 

 

—

 

 

 

—

 

 

 

566

 

 

 

—

 

 

 

1,747

 

Total commercial real estate non-owner occupied

 

 

305,555

 

 

 

418,917

 

 

 

253,559

 

 

 

166,830

 

 

 

126,369

 

 

 

141,468

 

 

 

73,722

 

 

 

1,486,420

 

Construction and development < 60 months

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Grade 1

 

 

124,218

 

 

 

133,254

 

 

 

65,472

 

 

 

5,828

 

 

 

3,392

 

 

 

5,019

 

 

 

76,831

 

 

 

414,014

 

Grade 2

 

 

95,138

 

 

 

43,884

 

 

 

28,772

 

 

 

6,625

 

 

 

13,406

 

 

 

2,146

 

 

 

34,559

 

 

 

224,530

 

Grade 3

 

 

2,051

 

 

 

893

 

 

 

101

 

 

 

235

 

 

 

—

 

 

 

19

 

 

 

—

 

 

 

3,299

 

Grade 4

 

 

—

 

 

 

800

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

800

 

Total construction and development < 60 months

 

 

221,407

 

 

 

178,831

 

 

 

94,345

 

 

 

12,688

 

 

 

16,798

 

 

 

7,184

 

 

 

111,390

 

 

 

642,643

 

Construction residential real estate < 60 months

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Grade 1

 

 

158,161

 

 

 

7,551

 

 

 

1,421

 

 

 

100

 

 

 

105

 

 

 

467

 

 

 

49,284

 

 

 

217,089

 

Grade 2

 

 

57,172

 

 

 

2,365

 

 

 

27

 

 

 

12

 

 

 

—

 

 

 

—

 

 

 

98

 

 

 

59,674

 

Grade 3

 

 

5,457

 

 

 

387

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

5,844

 

Grade 4

 

 

673

 

 

 

206

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

879

 

Total construction residential real estate <60 months

 

 

221,463

 

 

 

10,509

 

 

 

1,448

 

 

 

112

 

 

 

105

 

 

 

467

 

 

 

49,382

 

 

 

283,486

 

Residential real estate first lien

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Grade 1

 

 

294,363

 

 

 

226,557

 

 

 

174,325

 

 

 

115,055

 

 

 

71,941

 

 

 

149,836

 

 

 

6,047

 

 

 

1,038,124

 

Grade 2

 

 

51,619

 

 

 

39,146

 

 

 

35,226

 

 

 

24,738

 

 

 

12,591

 

 

 

39,264

 

 

 

—

 

 

 

202,584

 

Grade 3

 

 

2,175

 

 

 

2,187

 

 

 

2,630

 

 

 

773

 

 

 

1,140

 

 

 

4,009

 

 

 

—

 

 

 

12,914

 

Grade 4

 

 

759

 

 

 

122

 

 

 

1,144

 

 

 

651

 

 

 

355

 

 

 

2,091

 

 

 

—

 

 

 

5,122

 

Total residential real estate first lien

 

 

348,916

 

 

 

268,012

 

 

 

213,325

 

 

 

141,217

 

 

 

86,027

 

 

 

195,200

 

 

 

6,047

 

 

 

1,258,744

 

Residential real estate all other

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Grade 1

 

 

44,475

 

 

 

24,861

 

 

 

8,381

 

 

 

8,122

 

 

 

3,753

 

 

 

12,827

 

 

 

46,479

 

 

 

148,898

 

Grade 2

 

 

4,244

 

 

 

5,819

 

 

 

1,415

 

 

 

1,652

 

 

 

1,308

 

 

 

2,527

 

 

 

74,388

 

 

 

91,353

 

Grade 3

 

 

355

 

 

 

262

 

 

 

198

 

 

 

40

 

 

 

23

 

 

 

391

 

 

 

1,942

 

 

 

3,211

 

Grade 4

 

 

119

 

 

 

24

 

 

 

—

 

 

 

—

 

 

 

55

 

 

 

89

 

 

 

947

 

 

 

1,234

 

Total residential real estate all other

 

 

49,193

 

 

 

30,966

 

 

 

9,994

 

 

 

9,814

 

 

 

5,139

 

 

 

15,834

 

 

 

123,756

 

 

 

244,696

 

Agriculture

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Grade 1

 

 

52,934

 

 

 

51,099

 

 

 

34,840

 

 

 

26,603

 

 

 

17,863

 

 

 

33,052

 

 

 

46,981

 

 

 

263,372

 

Grade 2

 

 

28,829

 

 

 

20,931

 

 

 

18,245

 

 

 

9,826

 

 

 

8,207

 

 

 

15,833

 

 

 

41,018

 

 

 

142,889

 

Grade 3

 

 

9,516

 

 

 

1,185

 

 

 

789

 

 

 

2,570

 

 

 

296

 

 

 

2,372

 

 

 

2,454

 

 

 

19,182

 

Grade 4

 

 

265

 

 

 

633

 

 

 

55

 

 

 

131

 

 

 

370

 

 

 

241

 

 

 

1

 

 

 

1,696

 

Total agriculture

 

 

91,544

 

 

 

73,848

 

 

 

53,929

 

 

 

39,130

 

 

 

26,736

 

 

 

51,498

 

 

 

90,454

 

 

 

427,139

 

Commercial non-real estate

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Grade 1

 

 

252,112

 

 

 

176,013

 

 

 

159,470

 

 

 

39,097

 

 

 

36,907

 

 

 

33,824

 

 

 

277,740

 

 

 

975,163

 

Grade 2

 

 

95,590

 

 

 

35,955

 

 

 

19,519

 

 

 

6,591

 

 

 

6,456

 

 

 

8,071

 

 

 

127,800

 

 

 

299,982

 

Grade 3

 

 

2,206

 

 

 

2,598

 

 

 

1,011

 

 

 

109

 

 

 

121

 

 

 

164

 

 

 

1,779

 

 

 

7,988

 

Grade 4

 

 

1,181

 

 

 

1,691

 

 

 

400

 

 

 

686

 

 

 

309

 

 

 

154

 

 

 

1,425

 

 

 

5,846

 

Grade 5

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

473

 

 

 

—

 

 

 

—

 

 

 

473

 

Total commercial non-real estate

 

 

351,089

 

 

 

216,257

 

 

 

180,400

 

 

 

46,483

 

 

 

44,266

 

 

 

42,213

 

 

 

408,744

 

 

 

1,289,452

 

Consumer non-real estate

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Grade 1

 

 

211,028

 

 

 

105,365

 

 

 

55,079

 

 

 

18,529

 

 

 

8,939

 

 

 

3,301

 

 

 

22,184

 

 

 

424,425

 

Grade 2

 

 

19,085

 

 

 

14,919

 

 

 

6,764

 

 

 

2,062

 

 

 

702

 

 

 

910

 

 

 

2,085

 

 

 

46,527

 

Grade 3

 

 

941

 

 

 

1,424

 

 

 

932

 

 

 

326

 

 

 

299

 

 

 

156

 

 

 

11

 

 

 

4,089

 

Grade 4

 

 

361

 

 

 

452

 

 

 

409

 

 

 

117

 

 

 

72

 

 

 

10

 

 

 

5

 

 

 

1,426

 

Total consumer non-real estate

 

 

231,415

 

 

 

122,160

 

 

 

63,184

 

 

 

21,034

 

 

 

10,012

 

 

 

4,377

 

 

 

24,285

 

 

 

476,467

 

Oil and gas

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Grade 1

 

 

147,902

 

 

 

29,658

 

 

 

72,127

 

 

 

13,898

 

 

 

1,553

 

 

 

15,015

 

 

 

180,321

 

 

 

460,474

 

Grade 2

 

 

66,080

 

 

 

4,851

 

 

 

1,019

 

 

 

402

 

 

 

279

 

 

 

177

 

 

 

50,201

 

 

 

123,009

 

Grade 3

 

 

1,758

 

 

 

132

 

 

 

225

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

323

 

 

 

2,438

 

Grade 4

 

 

313

 

 

 

83

 

 

 

166

 

 

 

—

 

 

 

10

 

 

 

161

 

 

 

—

 

 

 

733

 

Total oil and gas

 

 

216,053

 

 

 

34,724

 

 

 

73,537

 

 

 

14,300

 

 

 

1,842

 

 

 

15,353

 

 

 

230,845

 

 

 

586,654

 

Total loans held for investment

 

$

2,201,950

 

 

$

1,564,202

 

 

$

1,100,602

 

 

$

560,696

 

 

$

416,738

 

 

$

634,924

 

 

$

1,177,533

 

 

$

7,656,645

 

 

 

 

 

Term Loans Amortized Cost Basis by Origination Year

 

 

Revolving Loans

 

 

 

 

 

 

2022

 

 

2021

 

 

2020

 

 

2019

 

 

2018

 

 

Prior

 

 

Amortized Cost Basis

 

 

Total

 

 

 

(Dollars in thousands)

 

December 31, 2022

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial real estate owner occupied

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Grade 1

 

$

173,596

 

 

$

145,425

 

 

$

106,285

 

 

$

91,892

 

 

$

44,086

 

 

$

119,755

 

 

$

53,026

 

 

$

734,065

 

Grade 2

 

 

34,774

 

 

 

34,283

 

 

 

27,153

 

 

 

17,999

 

 

 

8,528

 

 

 

29,638

 

 

 

14,737

 

 

 

167,112

 

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

 

 

208,645

 

 

 

181,695

 

 

 

133,825

 

 

 

112,335

 

 

 

53,126

 

 

 

151,043

 

 

 

67,825

 

 

 

908,494

 

Commercial real estate non-owner occupied

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Grade 1

 

 

349,333

 

 

 

239,369

 

 

 

170,186

 

 

 

107,983

 

 

 

24,075

 

 

 

66,546

 

 

 

45,372

 

 

 

1,002,864

 

Grade 2

 

 

115,372

 

 

 

50,573

 

 

 

29,031

 

 

 

46,870

 

 

 

24,877

 

 

 

69,601

 

 

 

31,928

 

 

 

368,252

 

Grade 3

 

 

7,677

 

 

 

—

 

 

 

153

 

 

 

2,733

 

 

 

64

 

 

 

1,318

 

 

 

—

 

 

 

11,945

 

Grade 4

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

42

 

 

 

47

 

 

 

—

 

 

 

89

 

Total commercial real estate non-owner occupied

 

 

472,382

 

 

 

289,942

 

 

 

199,370

 

 

 

157,586

 

 

 

49,058

 

 

 

137,512

 

 

 

77,300

 

 

 

1,383,150

 

Construction and development < 60 months

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Grade 1

 

 

164,865

 

 

 

92,595

 

 

 

39,819

 

 

 

5,558

 

 

 

3,146

 

 

 

4,993

 

 

 

40,474

 

 

 

351,450

 

Grade 2

 

 

36,090

 

 

 

20,273

 

 

 

1,413

 

 

 

14,248

 

 

 

1,648

 

 

 

774

 

 

 

47,973

 

 

 

122,419

 

Grade 3

 

 

967

 

 

 

—

 

 

 

141

 

 

 

—

 

 

 

—

 

 

 

8

 

 

 

158

 

 

 

1,274

 

Grade 4

 

 

—

 

 

 

—

 

 

 

33

 

 

 

47

 

 

 

—

 

 

 

13

 

 

 

—

 

 

 

93

 

Total construction and development < 60 months

 

 

201,922

 

 

 

112,868

 

 

 

41,406

 

 

 

19,853

 

 

 

4,794

 

 

 

5,788

 

 

 

88,605

 

 

 

475,236

 

Construction residential real estate < 60 months

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Grade 1

 

 

209,699

 

 

 

12,612

 

 

 

259

 

 

 

18

 

 

 

—

 

 

 

42

 

 

 

36,114

 

 

 

258,744

 

Grade 2

 

 

39,174

 

 

 

1,152

 

 

 

102

 

 

 

—

 

 

 

—

 

 

 

400

 

 

 

2,091

 

 

 

42,919

 

Grade 3

 

 

1,212

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

1,212

 

Grade 4

 

 

420

 

 

 

10

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

430

 

Total construction residential real estate < 60 months

 

 

250,505

 

 

 

13,774

 

 

 

361

 

 

 

18

 

 

 

—

 

 

 

442

 

 

 

38,205

 

 

 

303,305

 

Residential real estate first lien

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Grade 1

 

 

303,369

 

 

 

205,377

 

 

 

141,752

 

 

 

85,850

 

 

 

55,631

 

 

 

136,776

 

 

 

4,242

 

 

 

932,997

 

Grade 2

 

 

46,751

 

 

 

36,453

 

 

 

25,623

 

 

 

13,414

 

 

 

11,687

 

 

 

37,167

 

 

 

—

 

 

 

171,095

 

Grade 3

 

 

1,940

 

 

 

1,903

 

 

 

1,065

 

 

 

1,689

 

 

 

497

 

 

 

3,826

 

 

 

—

 

 

 

10,920

 

Grade 4

 

 

55

 

 

 

311

 

 

 

175

 

 

 

386

 

 

 

144

 

 

 

1,816

 

 

 

—

 

 

 

2,887

 

Total residential real estate first lien

 

 

352,115

 

 

 

244,044

 

 

 

168,615

 

 

 

101,339

 

 

 

67,959

 

 

 

179,585

 

 

 

4,242

 

 

 

1,117,899

 

Residential real estate all other

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Grade 1

 

 

31,741

 

 

 

11,012

 

 

 

10,696

 

 

 

5,458

 

 

 

3,607

 

 

 

11,198

 

 

 

41,653

 

 

 

115,365

 

Grade 2

 

 

5,683

 

 

 

1,887

 

 

 

1,744

 

 

 

1,589

 

 

 

1,237

 

 

 

2,574

 

 

 

62,395

 

 

 

77,109

 

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

 

 

37,805

 

 

 

13,103

 

 

 

12,539

 

 

 

7,129

 

 

 

5,084

 

 

 

14,611

 

 

 

105,927

 

 

 

196,198

 

Agriculture

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Grade 1

 

 

73,722

 

 

 

44,037

 

 

 

35,684

 

 

 

22,094

 

 

 

12,064

 

 

 

31,517

 

 

 

42,542

 

 

 

261,660

 

Grade 2

 

 

28,351

 

 

 

22,773

 

 

 

9,638

 

 

 

10,548

 

 

 

6,025

 

 

 

15,233

 

 

 

33,844

 

 

 

126,412

 

Grade 3

 

 

6,435

 

 

 

476

 

 

 

3,427

 

 

 

140

 

 

 

320

 

 

 

2,703

 

 

 

4,452

 

 

 

17,953

 

Grade 4

 

 

660

 

 

 

221

 

 

 

498

 

 

 

80

 

 

 

144

 

 

 

393

 

 

 

16

 

 

 

2,012

 

Total agriculture

 

 

109,168

 

 

 

67,507

 

 

 

49,247

 

 

 

32,862

 

 

 

18,553

 

 

 

49,846

 

 

 

80,854

 

 

 

408,037

 

Commercial non-real estate

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Grade 1

 

 

282,252

 

 

 

205,516

 

 

 

67,229

 

 

 

50,725

 

 

 

13,780

 

 

 

40,989

 

 

 

280,774

 

 

 

941,265

 

Grade 2

 

 

88,017

 

 

 

46,604

 

 

 

17,420

 

 

 

11,447

 

 

 

15,628

 

 

 

3,582

 

 

 

105,783

 

 

 

288,481

 

Grade 3

 

 

2,093

 

 

 

461

 

 

 

346

 

 

 

738

 

 

 

1,566

 

 

 

180

 

 

 

2,544

 

 

 

7,928

 

Grade 4

 

 

240

 

 

 

415

 

 

 

656

 

 

 

745

 

 

 

348

 

 

 

929

 

 

 

183

 

 

 

3,516

 

Grade 5

 

 

—

 

 

 

—

 

 

 

—

 

 

 

264

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

264

 

Total commercial non-real estate

 

 

372,602

 

 

 

252,996

 

 

 

85,651

 

 

 

63,919

 

 

 

31,322

 

 

 

45,680

 

 

 

389,284

 

 

 

1,241,454

 

Consumer non-real estate

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Grade 1

 

 

203,238

 

 

 

104,380

 

 

 

39,779

 

 

 

21,035

 

 

 

6,589

 

 

 

2,187

 

 

 

26,263

 

 

 

403,471

 

Grade 2

 

 

21,011

 

 

 

10,538

 

 

 

3,978

 

 

 

1,541

 

 

 

822

 

 

 

1,340

 

 

 

825

 

 

 

40,055

 

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

 

 

225,305

 

 

 

115,940

 

 

 

44,216

 

 

 

22,999

 

 

 

7,601

 

 

 

3,603

 

 

 

27,092

 

 

 

446,756

 

Oil and gas

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Grade 1

 

 

24,303

 

 

 

125,209

 

 

 

16,482

 

 

 

682

 

 

 

1,678

 

 

 

880

 

 

 

199,995

 

 

 

369,229

 

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

 

 

34,030

 

 

 

136,244

 

 

 

17,253

 

 

 

23,722

 

 

 

4,845

 

 

 

1,207

 

 

 

245,733

 

 

 

463,034

 

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

 

 

 

The following tables summarize the Company’s gross charge-offs by year of origination for the periods indicated:

 

 

 

Term Loans Amortized Cost Basis by Origination Year

 

 

Revolving Loans

 

 

 

 

 

 

2023

 

 

2022

 

 

2021

 

 

2020

 

 

2019

 

 

Prior

 

 

Amortized Cost Basis

 

 

Total

 

 

 

(Dollars in thousands)

 

Year ended December 31, 2023

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Commercial real estate owner occupied

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current-period gross charge-offs

 

$

174

 

 

$

196

 

 

$

26

 

 

$

203

 

 

$

165

 

 

$

158

 

 

$

—

 

 

$

922

 

 Commercial real estate non-owner occupied

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current-period gross charge-offs

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

3

 

 

 

—

 

 

 

3

 

 Construction and development < 60 months

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current-period gross charge-offs

 

 

—

 

 

 

3

 

 

 

—

 

 

 

2

 

 

 

—

 

 

 

1

 

 

 

—

 

 

 

6

 

 Construction residential real estate < 60 months

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current-period gross charge-offs

 

 

—

 

 

 

94

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

94

 

 Residential real estate first lien

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current-period gross charge-offs

 

 

—

 

 

 

—

 

 

 

91

 

 

 

44

 

 

 

5

 

 

 

25

 

 

 

—

 

 

 

165

 

 Residential real estate all other

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current-period gross charge-offs

 

 

—

 

 

 

4

 

 

 

19

 

 

 

—

 

 

 

1

 

 

 

36

 

 

 

—

 

 

 

60

 

 Agriculture

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current-period gross charge-offs

 

 

—

 

 

 

154

 

 

 

9

 

 

 

317

 

 

 

14

 

 

 

2

 

 

 

—

 

 

 

496

 

 Commercial non-real estate

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current-period gross charge-offs

 

 

390

 

 

 

351

 

 

 

111

 

 

 

22

 

 

 

51

 

 

 

160

 

 

 

—

 

 

 

1,085

 

 Consumer non-real estate

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current-period gross charge-offs

 

 

312

 

 

 

632

 

 

 

261

 

 

 

45

 

 

 

41

 

 

 

40

 

 

 

19

 

 

 

1,350

 

 Oil and gas

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current-period gross charge-offs

 

 

57

 

 

 

2

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

59

 

Total current-period gross charge-offs

 

$

933

 

 

$

1,436

 

 

$

517

 

 

$

633

 

 

$

277

 

 

$

425

 

 

$

19

 

 

$

4,240

 

 

Allowance for Credit Losses Methodology

 

The Company determines its provision for credit losses and allowance for credit losses using the current expected credit loss methodology that is referred to as the current expected credit loss ("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. 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 4 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 2023 was related to loan growth during the year. 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 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

 

 

Charge-
offs

 

 

Recoveries

 

 

Net
charge-offs

 

 

Provision
for/(benefit from) credit losses on loans

 

 

Balance at
end of
period

 

 

 

(Dollars in thousands)

 

Year ended December 31, 2023

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Real estate:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial real estate owner occupied

 

$

6,416

 

 

$

(922

)

 

$

68

 

 

$

(854

)

 

$

1,921

 

 

$

7,483

 

Commercial real estate non-owner occupied

 

 

30,190

 

 

 

(3

)

 

 

—

 

 

 

(3

)

 

 

2,893

 

 

 

33,080

 

Construction and development < 60 months

 

 

3,778

 

 

 

(6

)

 

 

11

 

 

 

5

 

 

 

167

 

 

 

3,950

 

Construction residential real estate < 60 months

 

 

3,275

 

 

 

(94

)

 

 

—

 

 

 

(94

)

 

 

233

 

 

 

3,414

 

Residential real estate first lien

 

 

4,092

 

 

 

(165

)

 

 

15

 

 

 

(150

)

 

 

972

 

 

 

4,914

 

Residential real estate all other

 

 

1,418

 

 

 

(60

)

 

 

5

 

 

 

(55

)

 

 

283

 

 

 

1,646

 

Agriculture

 

 

6,217

 

 

 

(496

)

 

 

127

 

 

 

(369

)

 

 

289

 

 

 

6,137

 

Commercial non-real estate

 

 

25,106

 

 

 

(1,085

)

 

 

446

 

 

 

(639

)

 

 

(1,722

)

 

 

22,745

 

Consumer non-real estate

 

 

4,132

 

 

 

(1,350

)

 

 

182

 

 

 

(1,168

)

 

 

1,437

 

 

 

4,401

 

Oil and gas

 

 

8,104

 

 

 

(59

)

 

 

—

 

 

 

(59

)

 

 

985

 

 

 

9,030

 

Total

 

$

92,728

 

 

$

(4,240

)

 

$

854

 

 

$

(3,386

)

 

$

7,458

 

 

$

96,800

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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)

 

Year ended December 31, 2022

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Real estate:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial real estate owner occupied

 

$

7,550

 

 

$

—

 

 

$

(20

)

 

$

507

 

 

$

487

 

 

$

(1,621

)

 

$

6,416

 

Commercial real estate non-owner occupied

 

 

16,807

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

13,383

 

 

 

30,190

 

Construction and development < 60 months

 

 

3,454

 

 

 

—

 

 

 

(93

)

 

 

12

 

 

 

(81

)

 

 

405

 

 

 

3,778

 

Construction residential real estate
   < 60 months

 

 

1,051

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

2,224

 

 

 

3,275

 

Residential real estate first lien

 

 

3,048

 

 

 

2

 

 

 

(106

)

 

 

87

 

 

 

(19

)

 

 

1,061

 

 

 

4,092

 

Residential real estate all other

 

 

1,567

 

 

 

—

 

 

 

(38

)

 

 

405

 

 

 

367

 

 

 

(516

)

 

 

1,418

 

Agriculture

 

 

8,392

 

 

 

—

 

 

 

(205

)

 

 

13

 

 

 

(192

)

 

 

(1,983

)

 

 

6,217

 

Commercial non-real estate

 

 

25,565

 

 

 

44

 

 

 

(1,551

)

 

 

209

 

 

 

(1,342

)

 

 

839

 

 

 

25,106

 

Consumer non-real estate

 

 

3,694

 

 

 

25

 

 

 

(768

)

 

 

193

 

 

 

(575

)

 

 

988

 

 

 

4,132

 

Oil and gas

 

 

12,808

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(4,704

)

 

 

8,104

 

Total

 

$

83,936

 

 

$

71

 

 

$

(2,781

)

 

$

1,426

 

 

$

(1,355

)

 

$

10,076

 

 

$

92,728

 

 

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 Company did not purchase credit-deteriorated loans during the year ended December 31, 2023. The credit-deteriorated loans purchased during the year ended December 31, 2022 were 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

 

 

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, 2023 and 2022, 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, 2023

 

(Dollars in thousands)

 

 

 

 

 

 

 

Real estate:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial real estate owner occupied

 

$

—

 

 

$

—

 

 

$

—

 

 

$

—

 

 

$

—

 

 

$

—

 

Commercial real estate non-owner occupied

 

 

632

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

632

 

 

 

250

 

Construction and development < 60 months

 

 

800

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

800

 

 

 

225

 

Construction residential real estate < 60 months

 

 

638

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

638

 

 

 

134

 

Residential real estate first lien

 

 

189

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

189

 

 

 

62

 

Residential real estate all other

 

 

140

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

140

 

 

 

140

 

Agriculture

 

 

1,841

 

 

 

593

 

 

 

—

 

 

 

15

 

 

 

2,449

 

 

 

1,386

 

Commercial non-real estate

 

 

—

 

 

 

6,090

 

 

 

—

 

 

 

241

 

 

 

6,331

 

 

 

1,867

 

Consumer non-real estate

 

 

—

 

 

 

—

 

 

 

—

 

 

 

147

 

 

 

147

 

 

 

88

 

Oil and gas

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

Total collateral-dependent loans held for investment

 

$

4,240

 

 

$

6,683

 

 

$

—

 

 

$

403

 

 

$

11,326

 

 

$

4,152

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

Agriculture

 

 

3,447

 

 

 

701

 

 

 

—

 

 

 

3,592

 

 

 

7,740

 

 

 

3,114

 

Commercial non-real estate

 

 

—

 

 

 

5,924

 

 

 

—

 

 

 

4

 

 

 

5,928

 

 

 

1,938

 

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

 

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,

 

 

 

2023

 

 

2022

 

 

2021

 

 

 

(Dollars in thousands)

 

Other real estate owned

 

$

3,459

 

 

$

2,563

 

 

$

12,651

 

Repossessed assets

 

 

2,019

 

 

 

1,040

 

 

 

844

 

Other assets

 

 

—

 

 

 

1,943

 

 

 

—

 

Total

 

$

5,478

 

 

$

5,546

 

 

$

13,495

 

 

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)

 

2023

 

$

23,167

 

 

$

106,819

 

 

$

(45,722

)

 

$

84,264

 

2022

 

 

28,292

 

 

 

46,124

 

 

 

(51,249

)

 

 

23,167

 

2021

 

 

22,057

 

 

 

31,574

 

 

 

(25,339

)

 

 

28,292