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Loans and Allowance for Credit Losses
 12 Months Ended
Dec. 31, 2021
Receivables [Abstract]  
Loans and Allowance for Credit Losses LOANS AND ALLOWANCE FOR CREDIT LOSSES
At December 31, 2021, the Company’s loan portfolio was $12.01 billion, compared to $12.90 billion at December 31, 2020. The various categories of loans are summarized as follows: 
(In thousands)20212020
Consumer:  
Credit cards$187,052 $188,845 
Other consumer168,318 202,379 
Total consumer355,370 391,224 
Real estate:
Construction and development1,326,371 1,596,255 
Single family residential2,101,975 1,880,673 
Other commercial5,738,904 5,746,863 
Total real estate9,167,250 9,223,791 
Commercial:
Commercial1,992,043 2,574,386 
Agricultural168,717 175,905 
Total commercial2,160,760 2,750,291 
Other329,123 535,591 
Total loans$12,012,503 $12,900,897 

The above table presents total loans at amortized cost. The difference between amortized cost and unpaid principal balance is primarily premiums and discounts associated with acquisition date fair value adjustments on acquired loans as well as net deferred origination fees totaling $21.5 million and $57.3 million at December 31, 2021 and 2020, respectively.

Accrued interest on loans, which is excluded from the amortized cost of loans held for investment, totaled $39.8 million and $54.4 million at December 31, 2021 and 2020, respectively, and is included in interest receivable on the consolidated balance sheets.

Loan Origination/Risk Management – The Company seeks to manage its credit risk by diversifying its loan portfolio, determining that borrowers have adequate sources of cash flow for loan repayment without liquidation of collateral; obtaining and monitoring collateral; providing an adequate allowance for credit losses by regularly reviewing loans through the internal loan review process. The loan portfolio is diversified by borrower, purpose and industry. The Company seeks to use diversification within the loan portfolio to reduce its credit risk, thereby minimizing the adverse impact on the portfolio if weaknesses develop in either the economy or a particular segment of borrowers. Collateral requirements are based on credit assessments of borrowers and may be used to recover the debt in case of default.
 
Consumer – The consumer loan portfolio consists of credit card loans and other consumer loans. Credit card loans are diversified by geographic region to reduce credit risk and minimize any adverse impact on the portfolio. Although they are regularly reviewed to facilitate the identification and monitoring of creditworthiness, credit card loans are unsecured loans, making them more susceptible to economic downturns resulting in increasing unemployment. Other consumer loans include direct and indirect installment loans and account overdrafts. Loans in this portfolio segment are sensitive to unemployment and other key consumer economic measures.
 
Real estate – The real estate loan portfolio consists of construction and development loans (“C&D”), single family residential loans and commercial loans. C&D and commercial real estate (“CRE”) loans can be particularly sensitive to valuation of real estate. CRE cycles are inevitable. The long planning and production process for new properties and rapid shifts in business conditions and employment create an inherent tension between supply and demand for commercial properties. While general economic trends often move individual markets in the same direction over time, the timing and magnitude of changes are determined by other forces unique to each market. CRE cycles tend to be local in nature and longer than other credit cycles. Factors influencing the CRE market are traditionally different from those affecting residential real estate markets; thereby making predictions for one market based on the other difficult. Additionally, submarkets within CRE – such as office, industrial, apartment, retail and hotel – also experience different cycles, providing an opportunity to lower the overall risk through diversification across types of CRE loans. Management realizes that local demand and supply conditions will also mean that different geographic areas will experience cycles of different amplitude and length. The Company monitors these loans closely. 
Commercial – The commercial loan portfolio includes commercial and agricultural loans, representing loans to commercial customers and farmers for use in normal business or farming operations to finance working capital needs, equipment purchases or other expansion projects. Paycheck Protection Program (“PPP”) loans are also included in the commercial loan portfolio. Collection risk in this portfolio is driven by the creditworthiness of the underlying borrowers, particularly cash flow from customers’ business or farming operations. The Company continues its efforts to keep loan terms short, reducing the negative impact of upward movement in interest rates. Term loans are generally set up with one or three year balloons, and the Company has instituted a pricing mechanism for commercial loans. It is standard practice to require personal guaranties on commercial loans for closely-held or limited liability entities.

Paycheck Protection Program Loans - The Company originated loans pursuant to multiple PPP appropriations of the CARES Act which provided 100% federally guaranteed loans for small businesses to cover up to 24 weeks of payroll costs and assist with mortgage interest, rent and utilities. Notably, these small business loans may be forgiven by the SBA if borrowers maintain their payrolls and satisfy certain other conditions. PPP loans have a zero percent risk-weight for regulatory capital ratios. As of December 31, 2021 and 2020, the total outstanding balance of PPP loans was $116.7 million and $904.7 million, respectively.

Nonaccrual and Past Due Loans – Loans are considered past due if the required principal and interest payments have not been received as of the date such payments were due. Loans are placed on nonaccrual status when, in management’s opinion, the borrower may be unable to meet payment obligations as they become due, as well as when required by regulatory provisions. Loans may be placed on nonaccrual status regardless of whether or not such loans are considered past due. When interest accrual is discontinued, all unpaid accrued interest is reversed. Interest income is subsequently recognized only to the extent cash payments are received in excess of principal due. Loans are returned to accrual status when all the principal and interest amounts contractually due are brought current and future payments are reasonably assured.

The amortized cost basis of nonaccrual loans segregated by class of loans are as follows: 

(In thousands)20212020
Consumer:  
Credit cards$377 $301 
Other consumer381 1,219 
Total consumer758 1,520 
Real estate:
Construction and development2,296 3,625 
Single family residential19,268 28,062 
Other commercial26,953 24,155 
Total real estate48,517 55,842 
Commercial:
Commercial18,774 65,244 
Agricultural152 273 
Total commercial18,926 65,517 
Other3 — 
Total$68,204 $122,879 

As of December 31, 2021 and 2020, nonaccrual loans for which there was no related allowance for credit losses had an amortized cost of $14.5 million and $16.8 million, respectively. These loans are individually assessed and do not hold an allowance due to being adequately collateralized under the collateral-dependent valuation method.
An age analysis of the amortized cost basis of past due loans, including nonaccrual loans, segregated by class of loans is as follows:

(In thousands)Gross
30-89 Days
Past Due		90 Days
or More
Past Due		Total
Past Due		CurrentTotal
Loans		90 Days
Past Due &
Accruing
December 31, 2021      
Consumer:      
Credit cards$847 $413 $1,260 $185,792 $187,052 $247 
Other consumer1,149 130 1,279 167,039 168,318 — 
Total consumer1,996 543 2,539 352,831 355,370 247 
Real estate:
Construction and development114 504 618 1,325,753 1,326,371 — 
Single family residential11,313 9,398 20,711 2,081,264 2,101,975 102 
Other commercial2,474 12,268 14,742 5,724,162 5,738,904 — 
Total real estate13,901 22,170 36,071 9,131,179 9,167,250 102 
Commercial:
Commercial4,812 10,074 14,886 1,977,157 1,992,043 — 
Agricultural13 117 130 168,587 168,717 — 
Total commercial4,825 10,191 15,016 2,145,744 2,160,760 — 
Other— 3 3 329,120 329,123 — 
Total$20,722 $32,907 $53,629 $11,958,874 $12,012,503 $349 
December 31, 2020      
Consumer:      
Credit cards$708 $256 $964 $187,881 $188,845 $256 
Other consumer2,771 302 3,073 199,306 202,379 13 
Total consumer3,479 558 4,037 387,187 391,224 269 
Real estate:
Construction and development1,375 3,089 4,464 1,591,791 1,596,255 — 
Single family residential23,726 14,339 38,065 1,842,608 1,880,673 253 
Other commercial2,660 9,586 12,246 5,734,617 5,746,863 — 
Total real estate27,761 27,014 54,775 9,169,016 9,223,791 253 
Commercial:
Commercial7,514 7,429 14,943 2,559,443 2,574,386 56 
Agricultural226 187 413 175,492 175,905 — 
Total commercial7,740 7,616 15,356 2,734,935 2,750,291 56 
Other92 — 92 535,499 535,591 — 
Total$39,072 $35,188 $74,260 $12,826,637 $12,900,897 $578 
 

When the Company restructures a loan to a borrower that is experiencing financial difficulty and grants a concession that it would not otherwise consider, a “troubled debt restructuring” (“TDR”) results and the Company classifies the loan as a TDR. The Company grants various types of concessions, primarily interest rate reduction and/or payment modifications or extensions, with an occasional forgiveness of principal.

Once an obligation has been restructured because of such credit problems, it continues to be considered a TDR until paid in full; or, if an obligation yields a market interest rate and no longer has any concession regarding payment amount or amortization, then it is not considered a TDR at the beginning of the calendar year after the year in which the improvement takes place. The Company returns TDRs to accrual status only if (1) all contractual amounts due can reasonably be expected to be repaid within a prudent period, and (2) repayment has been in accordance with the contract for a sustained period, typically at least six months.
The provisions in the CARES Act included an election to not apply the guidance on accounting for TDRs to loan modifications, such as extensions or deferrals, related to COVID-19 made between March 1, 2020 and the earlier of (i) December 31, 2020 or (ii) 60 days after the President terminates the COVID-19 national emergency declaration. In March 2020, the federal financial institution regulatory agencies issued an interagency statement encouraging financial institutions to work constructively with borrowers affected by COVID-19 and provided information regarding loan modifications. The relief can only be applied to modifications for borrowers that were not more than 30 days past due as of December 31, 2019. The Company elected to adopt these provisions of the CARES Act. In response to the concerns related to the expiration of the applicable period for which the election to not apply the guidance on accounting for TDRs to loan modifications, the CARES Act was amended in late fourth quarter of 2020 to extend COVID-19 relief related to loan modifications from the earlier of (i) January 1, 2022 or (ii) 60 days after the President terminates the COVID-19 national emergency declaration. As of December 31, 2021, the Company had 51 COVID-19 loan modifications outstanding in the amount of $8.6 million, compared to 3,729 modifications outstanding in the amount of $2.99 billion as of December 31, 2020. The majority of COVID-19 loan modifications have returned to performing status or paid off.

TDRs are individually evaluated for expected credit losses. The Company assesses the exposure for each modification, either by the fair value of the underlying collateral or the present value of expected cash flows, and determines if a specific allowance for credit losses is needed.

The following table presents a summary of TDRs segregated by class of loans. 

 Accruing TDR LoansNonaccrual TDR LoansTotal TDR Loans
(Dollars in thousands)NumberBalanceNumberBalanceNumberBalance
December 31, 2021      
Real estate:      
Single-family residential28 $3,087 14 $1,196 42 $4,283 
Other commercial1 766 2 48 3 814 
Total real estate29 3,853 16 1,244 45 5,097 
Commercial:
Commercial2 436 2 1,406 4 1,842 
Total commercial2 436 2 1,406 4 1,842 
Total31 $4,289 18 $2,650 49 $6,939 
December 31, 2020      
Real estate:      
Single-family residential28 2,463 18 2,736 46 5,199 
Other commercial1 49 1 12 2 61 
Total real estate29 2,512 19 2,748 48 5,260 
Commercial:
Commercial3 626 3 1,627 6 2,253 
Total commercial3 626 3 1,627 6 2,253 
Total32 $3,138 22 $4,375 54 $7,513 
The following table presents loans that were restructured as TDRs during the years ended December 31, 2021 and 2020 segregated by class of loans.

    Modification Type 
(Dollars in thousands)Number of
Loans		Balance Prior
to TDR		Balance at December 31,Change in
Maturity
Date		Change in
Rate		Financial Impact
on Date of
Restructure
Year Ended December 31, 2021      
Real estate:
Single-family residential3 274 197 — 197 — 
Other commercial1 784 766 — 766 — 
Total real estate4 $1,058 $963 $— $963 $— 
Year Ended December 31, 2020      
Real estate:      
Single-family residential5 $1,948 $1,896 $1,896 $— $— 
Total real estate5 $1,948 $1,896 $1,896 $— $— 
 
During the year ended December 31, 2021, the Company modified four loans with a recorded investment of $1,058,000 prior to modification which were deemed troubled debt restructuring. The restructured loans were modified by deferring amortized principal payments, changing the maturity dates and requiring interest-only payments for a period of up to 12 months. A specific reserve of $5,129 was determined necessary for these loans as of December 31, 2021. Additionally, there was no immediate financial impact from the restructuring of these loans as it was not considered necessary to charge-off interest or principal on the date of restructure. During the year ended December 31, 2021, nine of the previously restructured loans with prior balances of $1,002,874 were paid off.
 
During the year ended December 31, 2020, the Company modified five loans with a recorded investment of $1,948,000 prior to modification which were deemed troubled debt restructuring. The restructured loans were modified by deferring amortized principal payments, changing the maturity dates and requiring interest-only payments for a period of up to 12 months. Based upon the fair value of the collateral, a specific reserve of $51,300 was determined as necessary for these loans as of December 31, 2020. Also, there was no immediate financial impact from the restructuring of these loans, as it was not considered necessary to charge-off interest or principal on the date of restructure. During the year ended December 31, 2020, six of the previously restructured loans with prior balances of $837,265 were paid off.
 
There was no loans considered TDRs for which a payment default occurred during the year ended December 31, 2021. During the year ended December 31, 2020, there was one commercial loan with an outstanding balance of $2.1 million considered a TDR for which a payment default occurred. The Company defines a payment default as a payment received more than 90 days after its due date.
 
The Company had no TDRs with pre-modification loan balances for which OREO was received in full or partial satisfaction of the loans during the years ended December 31, 2021 and 2020. At December 31, 2021 and 2020, the Company had $1,806,000 and $7,182,000, respectively, of consumer mortgage loans secured by residential real estate properties for which formal foreclosure proceedings are in process. At December 31, 2021 and 2020, the Company had $831,000 and $3,172,000, respectively, of OREO secured by residential real estate properties.

Credit Quality Indicators – As part of the on-going monitoring of the credit quality of the Company’s loan portfolio, management tracks certain credit quality indicators including trends related to (i) the weighted-average risk rating of commercial and real estate loans, (ii) the level of classified commercial and real estate loans, (iii) net charge-offs, (iv) non-performing loans (see details above) and (v) the general economic conditions of the Company’s local markets.

The Company utilizes a risk rating matrix to assign a risk rate to each of its commercial and real estate loans. Risk ratings are updated on an ongoing basis and are subject to change by continuous loan monitoring processes including lending management monitoring, executive management and board committee oversight, and independent credit review. A description of the general characteristics of the risk ratings is as follows:
 
•Pass (Excellent) – This category includes loans which are virtually free of credit risk. Borrowers in this category represent the highest credit quality and greatest financial strength.
•Pass (Good) - Loans under this category possess a nominal risk of default. This category includes borrowers with strong financial strength and superior financial ratios and trends. These loans are generally fully secured by cash or equivalents (other than those rated “excellent”).
•Pass (Acceptable – Average) - Loans in this category are considered to possess a normal level of risk. Borrowers in this category have satisfactory financial strength and adequate cash flow coverage to service debt requirements. If secured, the perfected collateral should be of acceptable quality and within established borrowing parameters.
•Pass (Monitor) - Loans in the Watch (Monitor) category exhibit an overall acceptable level of risk, but that risk may be increased by certain conditions, which represent “red flags”. These “red flags” require a higher level of supervision or monitoring than the normal “Pass” rated credit. The borrower may be experiencing these conditions for the first time, or it may be recovering from weakness, which at one time justified a higher rating. These conditions may include: weaknesses in financial trends; marginal cash flow; one-time negative operating results; non-compliance with policy or borrowing agreements; poor diversity in operations; lack of adequate monitoring information or lender supervision; questionable management ability/stability.
•Special Mention - A loan in this category has potential weaknesses that deserve management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the asset or in the institution’s credit position at some future date. Special Mention loans are not adversely classified (although they are “criticized”) and do not expose an institution to sufficient risk to warrant adverse classification. Borrowers may be experiencing adverse operating trends or an ill-proportioned balance sheet. Non-financial characteristics of a Special Mention rating may include management problems, pending litigation, a non-existent or ineffective loan agreement or other material structural weakness, and/or other significant deviation from prudent lending practices.
•Substandard - A Substandard loan is inadequately protected by the current sound worth and paying capacity of the borrower or of the collateral pledged, if any. Loans so classified must have a well-defined weakness, or weaknesses, that jeopardize the liquidation of the debt. The loans are characterized by the distinct possibility that the Company will sustain some loss if the deficiencies are not corrected. This does not imply ultimate loss of the principal, but may involve burdensome administrative expenses and the accompanying cost to carry the loan.
•Doubtful - A loan classified Doubtful has all the weaknesses inherent in a substandard loan except that the weaknesses make collection or liquidation in full (on the basis of currently existing facts, conditions, and values) highly questionable and improbable. Doubtful borrowers are usually in default, lack adequate liquidity or capital, and lack the resources necessary to remain an operating entity. The possibility of loss is extremely high, but because of specific pending events that may strengthen the asset, its classification as loss is deferred. Pending factors include: proposed merger or acquisition; liquidation procedures; capital injection; perfection of liens on additional collateral; and refinancing plans. Loans classified as Doubtful are placed on nonaccrual status.
•Loss - Loans classified Loss are considered uncollectible and of such little value that their continuance as bankable assets is not warranted. This classification does not mean that the loans has absolutely no recovery or salvage value, but rather it is not practical or desirable to defer writing off this basically worthless loan, even though partial recovery may be affected in the future. Borrowers in the Loss category are often in bankruptcy, have formally suspended debt repayments, or have otherwise ceased normal business operations. Loans should be classified as Loss and charged-off in the period in which they become uncollectible.
The Company monitors credit quality in the consumer portfolio by delinquency status. The delinquency status of loans is updated daily. A description of the delinquency credit quality indicators is as follows:

•Current - Loans in this category are either current in payments or are under 30 days past due. These loans are considered to have a normal level of risk.
•30-89 Days Past Due - Loans in this category are between 30 and 89 days past due and are subject to the Company’s loss mitigation process. These loans are considered to have a moderate level of risk.
•90+ Days Past Due - Loans in this category are 90 days or more past due and are placed on nonaccrual status. These loans have been subject to the Company’s loss mitigation process and foreclosure and/or charge-off proceedings have commenced.
Effective April 2021, the Company implemented an expanded, dual risk rating scale that utilizes quantitative models and qualitative factors (“score cards”) to assist in determining the appropriate risk rating for its commercial loans. This dual risk rating methodology incorporates a “probability of default” analysis which utilizes quantified metrics such as loan terms and financial performance, as well as a “loss given default” analysis which utilizes collateral values and economics of the market, among other attributes. Model outputs are reviewed and analyzed to ensure the projected risk levels are commensurate with underwriting and credit leader expectations. The expanded risk rating scale includes Probability of Default levels of 1 – 16 and Loss Given Default levels of A – I. The expanded scale allows for more granular recognition of risk and diversification of grading among traditional Pass grades. Implementation of the expanded risk rating scale did not have a material impact on the results of the allowance for credit losses calculation.

The following is a reconciliation between the expanded risk rating scale and the Company’s traditional risk rating segments utilized within the commercial loan classes presented in the credit quality indicator tables.

•Pass - Includes loans with an expanded risk rating of 1 through 11. Loans with a risk rating of 10 and 11 equate to loans included on management’s “watch list” and is intended to be utilized on a temporary basis for pass grade borrowers where a significant risk-modifying action is anticipated in the near term.
•Special Mention - Includes loans with an expanded risk rating of 12.
•Substandard - Includes loans with an expanded risk rating of 13 and 14.
•Doubtful and loss - Includes loans with an expanded risk rating of 15 and 16.
The following table presents a summary of loans by credit quality indicator, as of December 31, 2021 segregated by class of loans.
Term Loans Amortized Cost Basis by Origination Year
(In thousands)202120202019201820172016 and PriorLines of Credit (“LOC”) Amortized Cost BasisLOC Converted to Term Loans Amortized Cost BasisTotal
Consumer - credit cards
Delinquency:
Current$— $— $— $— $— $— $185,792 $— $185,792 
30-89 days past due— — — — — — 847 — 847 
90+ days past due— — — — — — 413 — 413 
Total consumer - credit cards— — — — — — 187,052 — 187,052 
Consumer - other
Delinquency:
Current97,830 21,885 11,712 6,756 5,416 3,833 19,607 — $167,039 
30-89 days past due265 121 164 49 219 156 175 — 1,149 
90+ days past due23 23 28 21 13 22 — — 130 
Total consumer - other98,118 22,029 11,904 6,826 5,648 4,011 19,782 — 168,318 
Real estate - C&D
Risk rating:
Pass74,813 83,729 28,803 17,349 8,505 9,319 1,074,617 20,285 $1,317,420 
Special mention— — 270 — — 47 — — 317 
Substandard191 77 16 54 324 423 5,598 1,951 8,634 
Doubtful and loss— — — — — — — — — 
Total real estate - C&D75,004 83,806 29,089 17,403 8,829 9,789 1,080,215 22,236 1,326,371 
Real estate - SF residential
Delinquency:
Current419,605 335,788 185,190 260,037 193,110 421,957 256,155 9,422 $2,081,264 
30-89 days past due1,061 883 1,662 791 1,077 4,360 1,479 — 11,313 
90+ days past due27 561 507 1,199 1,358 5,104 570 72 9,398 
Total real estate - SF residential420,693 337,232 187,359 262,027 195,545 431,421 258,204 9,494 2,101,975 
Real estate - other commercial
Risk rating:
Pass1,349,746 807,701 375,824 267,696 476,029 537,493 1,409,099 164,856 5,388,444 
Special mention28,151 30,981 2,799 6,650 39,361 4,801 38,638 1,608 152,989 
Substandard28,137 10,186 5,243 10,806 30,060 27,107 53,860 32,072 197,471 
Doubtful and loss— — — — — — — — — 
Total real estate - other commercial1,406,034 848,868 383,866 285,152 545,450 569,401 1,501,597 198,536 5,738,904 
Commercial
Risk rating:
Pass455,499 187,517 80,486 57,437 36,529 57,099 1,004,971 41,885 1,921,423 
Special mention670 2,482 1,066 189 261 2,770 8,500 10,499 26,437 
Substandard3,436 18,381 4,397 1,196 578 850 8,242 7,103 44,183 
Doubtful and loss— — — — — — — — — 
Total commercial459,605 208,380 85,949 58,822 37,368 60,719 1,021,713 59,487 1,992,043 
Commercial - agriculture
Risk rating:
Pass32,780 20,230 10,253 3,646 2,364 459 98,245 327 168,304 
Special mention— — — — — — — — — 
Substandard191 25 27 53 22 3 23 69 413 
Doubtful and loss— — — — — — — — — 
Total commercial - agriculture32,971 20,255 10,280 3,699 2,386 462 98,268 396 168,717 
Other
Delinquency:
Current24,247 4,740 1,236 22,438 6,692 5,578 264,189 — 329,120 
30-89 days past due— — — — — — — — — 
90+ days past due— — — — — 3 — — 3 
Total other24,247 4,740 1,236 22,438 6,692 5,581 264,189 — 329,123 
Total$2,516,672 $1,525,310 $709,683 $656,367 $801,918 $1,081,384 $4,431,020 $290,149 $12,012,503 
The following table presents a summary of loans by credit quality indicator, as of December 31, 2020 segregated by class of loans.

Term Loans Amortized Cost Basis by Origination Year
(In thousands)202020192018201720162015 and PriorLines of Credit (“LOC”) Amortized Cost BasisLOC Converted to Term Loans Amortized Cost BasisTotal
Consumer - credit cards
Delinquency:
Current$— $— $— $— $— $— $187,881 $— $187,881 
30-89 days past due— — — — — — 708 — 708 
90+ days past due— — — — — — 256 — 256 
Total consumer - credit cards— — — — — — 188,845 — 188,845 
Consumer - other
Delinquency:
Current69,334 44,215 27,525 21,995 19,023 2,530 14,684 — $199,306 
30-89 days past due234 441 327 658 689 84 338 — 2,771 
90+ days past due79 58 25 80 40 12 8 — 302 
Total consumer - other69,647 44,714 27,877 22,733 19,752 2,626 15,030 — 202,379 
Real estate - C&D
Risk rating:
Pass165,990 35,989 31,279 15,960 9,233 4,807 1,272,870 23,251 $1,559,379 
Special mention2,728 344 259 2,107 19 — 9,613 — 15,070 
Substandard294 2,069 404 449 342 320 17,914 14 21,806 
Doubtful and loss— — — — — — — — — 
Total real estate - C&D169,012 38,402 31,942 18,516 9,594 5,127 1,300,397 23,265 1,596,255 
Real estate - SF residential
Delinquency:
Current473,340 209,810 297,308 235,429 183,229 236,395 196,505 10,592 $1,842,608 
30-89 days past due6,300 2,258 2,593 2,610 2,058 6,050 1,781 76 23,726 
90+ days past due557 1,853 2,735 2,582 832 3,852 1,928 — 14,339 
Total real estate - SF residential480,197 213,921 302,636 240,621 186,119 246,297 200,214 10,668 1,880,673 
Real estate - other commercial
Risk rating:
Pass1,563,245 525,750 375,303 518,534 372,679 284,098 1,445,428 181,949 5,266,986 
Special mention100,085 4,346 10,738 19,943 26,245 10,608 63,305 23,435 258,705 
Substandard66,737 9,418 24,380 14,067 3,744 11,158 52,182 39,486 221,172 
Doubtful and loss— — — — — — — — — 
Total real estate - other commercial1,730,067 539,514 410,421 552,544 402,668 305,864 1,560,915 244,870 5,746,863 
Commercial
Risk rating:
Pass1,168,085 154,740 110,383 65,757 35,198 45,568 803,751 56,648 2,440,130 
Special mention5,707 342 465 972 54 — 12,318 22,546 42,404 
Substandard23,227 4,495 1,586 730 276 334 53,682 7,522 91,852 
Doubtful and loss— — — — — — — — — 
Total commercial1,197,019 159,577 112,434 67,459 35,528 45,902 869,751 86,716 2,574,386 
Commercial - agriculture
Risk rating:
Pass36,128 19,144 10,014 4,671 1,916 340 101,238 1,560 175,011 
Special mention— 79 13 299 — 6 34 — 431 
Substandard86 101 64 47 12 10 68 75 463 
Doubtful and loss— — — — — — — — — 
Total commercial - agriculture36,214 19,324 10,091 5,017 1,928 356 101,340 1,635 175,905 
Other
Delinquency:
Current125 4,260 27,256 6,489 2,628 6,065 488,676 — 535,499 
30-89 days past due59 — — — 33 — — — 92 
90+ days past due— — — — — — — — — 
Total other184 4,260 27,256 6,489 2,661 6,065 488,676 — 535,591 
Total$3,682,340 $1,019,712 $922,657 $913,379 $658,250 $612,237 $4,725,168 $367,154 $12,900,897 
Allowance for Credit Losses
 
Allowance for Credit Losses – The allowance for credit losses is a reserve established through a provision for credit losses charged to expense, which represents management’s best estimate of lifetime expected losses based on reasonable and supportable forecasts, historical loss experience, and other qualitative considerations. The allowance, in the judgment of management, is necessary to reserve for expected loan losses and risks inherent in the loan portfolio. The Company’s allowance for credit loss methodology includes reserve factors calculated to estimate current expected credit losses to amortized cost balances over the remaining contractual life of the portfolio, adjusted for the effective interest rate used to discount prepayments, in accordance with ASC Topic 326-20, Financial Instruments - Credit Losses. Accordingly, the methodology is based on the Company’s reasonable and supportable economic forecasts, historical loss experience, and other qualitative adjustments.

Loans with similar risk characteristics such as loan type, collateral type, and internal risk ratings are aggregated into homogeneous segments for assessment. Reserve factors are based on estimated probability of default and loss given default for each segment. The estimates are determined based on economic forecasts over the reasonable and supportable forecast period based on projected performance of economic variables that have a statistical relationship with the historical loss experience of the segments. For contractual periods that extend beyond the one-year forecast period, the estimates revert to average historical loss experiences over a one-year period on a straight-line basis.

The Company also includes qualitative adjustments to the allowance based on factors and considerations that have not otherwise been fully accounted for. Qualitative adjustments include, but are not limited to:

•Changes in asset quality - Adjustments related to trending credit quality metrics including delinquency, non-performing loans, charge-offs, and risk ratings that may not be fully accounted for in the reserve factor.
•Changes in the nature and volume of the portfolio - Adjustments related to current changes in the loan portfolio that are not fully represented or accounted for in the reserve factors.
•Changes in lending and loan monitoring policies and procedures - Adjustments related to current changes in lending and loan monitoring procedures as well as review of specific internal policy compliance metrics.
•Changes in the experience, ability, and depth of lending management and other relevant staff - Adjustments to measure increasing or decreasing credit risk related to lending and loan monitoring management.
•Changes in the value of underlying collateral of collateralized loans - Adjustments related to improving or deterioration of the value of underlying collateral that are not fully captured in the reserve factors.
•Changes in and the existence and effect of any concentrations of credit - Adjustments related to credit risk of specific industries that are not fully captured in the reserve factors.
•Changes in regional and local economic and business conditions and developments - Adjustments related to expected and current economic conditions at a regional or local-level that are not fully captured within the Company’s reasonable and supportable forecast.
•Data imprecisions due to limited historical loss data - Adjustments related to limited historical loss data that is representative of the collective loan portfolio.

Loans that do not share similar risk characteristics are evaluated on an individual basis. These evaluations are typically performed on loans with a deteriorated internal risk rating or are classified as a troubled debt restructuring. The allowance for credit loss is determined based on several methods including estimating the fair value of the underlying collateral or the present value of expected cash flows.

For a collateral dependent loan, the Company’s evaluation process includes a valuation by appraisal or other collateral analysis adjusted for selling costs, when appropriate. This valuation is compared to the remaining outstanding principal balance of the loan. If a loss is determined to be probable, the loss is included in the allowance for credit losses as a specific allocation. If the loan is not collateral dependent, the measurement of loss is based on the difference between the expected and contractual future cash flows of the loan.

Loans for which the repayment is expected to be provided substantially through the operation or sale of collateral and where the borrower is experiencing financial difficulty had an amortized cost of $47.1 million and $70.0 million as of December 31, 2021 and 2020, respectively, as further detailed in the table below. The collateral securing these loans consist of commercial real estate properties, residential properties, other business assets, and secured energy production assets.
(In thousands)Real Estate CollateralEnergyOther CollateralTotal
December 31, 2021
Construction and development$2,489 $— $— $2,489 
Single family residential1,838 — — 1,838 
Other commercial real estate32,849 — — 32,849 
Commercial— — 9,913 9,913 
Total$37,176 $— $9,913 $47,089 
December 31, 2020
Construction and development$1,539 $— $— $1,539 
Single family residential6,950 — — 6,950 
Other commercial real estate— 40,703 5,741 46,444 
Commercial15,065 — — 15,065 
Total$23,554 $40,703 $5,741 $69,998 

The following table details activity in the allowance for credit losses by portfolio segment for the years ended December 31, 2021, 2020 and 2019. Allocation of a portion of the allowance to one category of loans does not preclude its availability to absorb losses in other categories. 

(In thousands)CommercialReal
Estate		Credit
Card		Other
Consumer
and Other		Total
December 31, 2021     
Beginning balance, January 1, 2021$42,093 $182,868 $7,472 $5,617 $238,050 
Acquisition adjustment for PCD loans3,349 10,101 — 1 13,451 
Provision for credit loss expense(22,031)(7,918)(908)(352)(31,209)
Charge-offs(10,613)(10,691)(3,625)(2,053)(26,982)
Recoveries4,660 4,910 1,048 1,404 12,022 
Net charge-offs(5,953)(5,781)(2,577)(649)(14,960)
Ending balance, December 31, 2021$17,458 $179,270 $3,987 $4,617 $205,332 
December 31, 2020     
Beginning balance, January 1, 2020 - prior to adoption of CECL$22,863 $39,161 $4,051 $2,169 $68,244 
Impact of CECL adoption22,733 114,314 2,232 12,098 151,377 
Provision for credit loss expense42,017 42,276 4,288 (6,093)82,488 
Charge-offs(48,736)(13,788)(4,113)(4,022)(70,659)
Recoveries3,216 905 1,014 1,465 6,600 
Net charge-offs(45,520)(12,883)(3,099)(2,557)(64,059)
Ending balance, December 31, 2020$42,093 $182,868 $7,472 $5,617 $238,050 
December 31, 2019
Beginning balance, January 1, 2019$20,514 $29,838 $3,923 $2,419 $56,694 
Provision for credit loss expense24,434 12,714 3,692 2,400 43,240 
Charge-offs(23,352)(3,892)(4,585)(5,007)(36,836)
Recoveries1,267 501 1,021 2,357 5,146 
Net charge-offs(22,085)(3,391)(3,564)(2,650)(31,690)
Ending balance, December 31, 2019$22,863 $39,161 $4,051 $2,169 $68,244 
As of December 31, 2021, the Company’s allowance for credit losses was considered sufficient based upon expected loan level cash flows that were supported by economic forecasts. Provision expense was recaptured during the year based upon improved asset credit quality metrics combined with improved Moody’s economic modeling scenarios. The Company updated credit loss forecasts using multiple Moody’s economic scenarios published in December 2021. The baseline economic forecast was weighted 65% by the Company, while the downside scenario of S-2 was weighted 17% and the upside scenario of S-1 was weighted 18%. The weighting of the forecasts is characterized by, among others, continual increase of CRE prices, increasing market rates and declining national unemployment rates. While forecasts in various sectors have improved as of December 31, 2021 when compared with the prior year, the Company continues to closely monitor the scenarios as the economy emerges from the pandemic.
The primary driver for the provision for credit losses for the year ended December 31, 2020 was related to concern over the economic stresses related to COVID-19. Additionally, specific provisions were made for two energy credits that were previously identified as problem loans that were impacted by the sharp decline in commodity pricing. Four energy credits within the Commercial segment were charged off during 2020 for a total of $32.6 million.
Reserve for Unfunded Commitments
 
In addition to the allowance for credit losses, the Company has established a reserve for unfunded commitments, classified in other liabilities. This reserve is maintained at a level management believes to be sufficient to absorb losses arising from unfunded loan commitments. The reserve for unfunded commitments was $22.4 million, as of December 31, 2021 and 2020 respectively. The adequacy of the reserve for unfunded commitments is determined quarterly based on methodology similar to the methodology for determining the allowance for credit losses. No adjustment was made to the reserve for unfunded commitments during 2021 as it was considered sufficient to cover any loss expectations.

Provision for Credit Losses

Provision for credit losses is determined by the Company as the amount to be added to the allowance for credit loss accounts for various types of financial instruments including loans, securities and off-balance-sheet credit exposure after net charge-offs have been deducted to bring the allowance to a level which, in management's best estimate, is necessary to absorb expected credit losses over the lives of the respective financial instruments.

The components of provision for credit losses for the years ended December 31 were as follows:

(In thousands)202120202019
Provision for credit losses related to:   
Loans$(31,209)$82,488 $43,240 
Unfunded commitments— (10,000)— 
Securities - HTM(1,183)2,546 — 
Securities - AFS(312)(61)— 
Total$(32,704)$74,973 $43,240 

Provision for credit losses in 2019 was calculated under the prior incurred loss accounting methodology. Furthermore, provision for credit losses related to unfunded commitments was previously reported as a component of other non-interest expense.

Purchased Credit Deteriorated Loans

Purchased loans that reflect a more-than-insignificant deterioration of credit from origination are considered PCD. For PCD loans, the initial estimate of expected credit losses is recognized in the allowance for credit loss on the date of acquisition using the same methodology as discussed in the Allowance for Credit Losses section included above.
The following table provides a summary of loans purchased as part of the Landmark acquisition with credit deterioration at acquisition:
(In thousands)CommercialReal
Estate		Credit
Card		Other
Consumer
and Other		Total
Unpaid principal balance11,046 55,549 — 67 66,662 
PCD allowance for credit loss at acquisition(350)(2,008)— (1)(2,359)
Non-credit related discount(160)(2,415)— (2)(2,577)
Fair value of PCD loans10,536 51,126 — 64 61,726 

The following table provides a summary of loans purchased as part of the Triumph acquisition with credit deterioration at acquisition:
(In thousands)CommercialReal
Estate		Credit
Card		Other
Consumer
and Other		Total
Unpaid principal balance40,466 80,803 — 15 121,284 
PCD allowance for credit loss at acquisition(2,999)(8,093)— — (11,092)
Non-credit related discount(279)(1,314)— (1)(1,594)
Fair value of PCD loans37,188 71,396 — 14 108,598