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Loans and Allowance for Credit Losses	6 Months Ended
Loans and Allowance for Credit Losses	Jun. 30, 2023
Loans and Allowance for credit losses [Abstract]
Loans and Allowance for Credit Losses	Note 3: Loans and Allowance for Credit Losses The table below shows the loan portfolio composition including carrying value by segment as of the dates shown. The carrying value of loans is net of discounts, fees, costs, and fair value marks of $ 23 million and $ 24 million as of June 30, 2023 and December 31, 2022, respectively. Accrued interest of $ 26 million and $ 23 million at June 30, 2023 and December 31, 2022, respectively, presented in “interest receivable” on the consolidated statements of financial condition is excluded from the carrying value disclosed in the above table. The Company aggregates the loan portfolio by similar credit risk characteristics. Effective with the second quarter of 2023, we revised the reported loan segments to better reflect how management monitors the portfolio, assesses credit risk and evaluates the ACL. All prior period disclosures have been revised to reflect the changes to the loan segments. The loan segments are described in additional detail below: ● Commercial and Industrial - The category includes loans and lines of credit to commercial and industrial clients for use in property, plant, and equipment purchases, business operations, expansions and for working capital needs. Loan terms typically require amortizing payments that decrease the outstanding loan balance while the lines of credit typically require interest-only payments with maturities ranging from one- to three-years. Lines of credit allow the borrower to draw down and repay the line of credit based on the client’s cash flow needs. Repayment is primarily from the cash flow of a borrower’s principal business operation. Credit risk is driven by creditworthiness of a borrower and the economic conditions. ● Energy - The category includes loans to oil and natural gas customers for use in financing working capital needs, exploration and production activities, and acquisitions. The loans are repaid primarily from the conversion of crude oil and natural gas to cash. Credit risk is driven by creditworthiness of a borrower and the economic conditions that impact the cash flow stability from business operations. Energy loans are typically collateralized with the underlying oil and gas reserves. ● Commercial Real Estate – Owner-Occupied - The category includes relationships where we are usually the primary provider of financial services for the company and/or the principals and the primary source of repayment is through the cash flows generated by the borrowers’ business operations. Owner-occupied commercial real estate loans are typically secured by a first lien mortgage on real property plus assignments of all leases related to the properties. Credit risk may be impacted by the creditworthiness of a borrower, property values and the local economies in the borrower’s market areas. ● Commercial Real Estate – Non-Owner-Occupied - The category includes loans that typically involve larger principal amounts and repayment of these loans is generally dependent on the leasing income generated from tenants. These are viewed primarily as cash flow loans and secondarily as loans secured by real estate. Additionally, the category includes construction and land development loans that are based upon estimates of costs and estimated value of the completed project. Independent appraisals and a financial analysis of the developers and property owners are completed. Sources of repayment include secondary market permanent loans, sales of developed property or an interim loan commitment from the Company until permanent financing is obtained. These loans are higher risk than other real estate loans due to their ultimate repayment being sensitive to interest rate changes, general economic conditions, and the availability of long-term financing. The category also includes loans that are secured by multifamily properties. Repayment of these loans is primarily dependent on occupancy rates and rental income. Credit risk for non-owner occupied commercial real estate loans may be impacted by the creditworthiness of a borrower, property values and the local economies in the borrower’s market areas. ● Residential Real Estate - The category includes loans that are generally secured by owner-occupied 1-4 family residences. Repayment of these loans is primarily dependent on the personal income and credit rating of the borrowers. We also offer open - and closed-ended home equity loans, which are loans generally secured by second lien positions on residential real estate. Credit risk in these loans can be impacted by economic conditions within or outside the borrower’s market areas that might impact either property values or a borrower’s personal income. ● Consumer - The category includes personal lines of credit and various term loans such as automobile loans and loans for other personal purposes. Repayment is primarily dependent on the personal income and credit rating of the borrowers. Credit risk is driven by consumer economic factors (such as unemployment and general economic conditions in the borrower’s market area) and the creditworthiness of a borrower. Allowance for Credit Losses The Company’s CECL committee meets at least quarterly to oversee the ACL methodology. The committee estimates the ACL using relevant available information, from internal and external sources, relating to past events, current conditions, and reasonable and supportable forecasts. The ACL represents the Company’s current estimate of lifetime credit losses inherent in the loan portfolio at the statement of financial condition date. The ACL is adjusted for expected prepayments when appropriate and excludes expected extensions, renewals, and modifications. The ACL is the sum of three components: (i) asset specific / individual loan reserves; (ii) quantitative (formulaic or pooled) reserves; and (iii) qualitative (judgmental) reserves. Asset Specific - When unique qualities cause a loan’s exposure to loss to be inconsistent with the pooled reserves, the loan is individually evaluated. Individual reserves are calculated for loans that are risk-rated substandard and on non-accrual and loans that are risk-rated doubtful or loss that are greater than a defined dollar threshold . Reserves on asset specific loans may be based on collateral, for collateral-dependent loans, or on quantitative and qualitative factors, including expected cash flow, market sentiment, and guarantor support. Quantitative - The Company used the cohort method, which identifies and captures the balance of a pool of loans with similar risk characteristics as of a particular time to form a cohort. For example, the outstanding commercial and industrial loans and commercial and industrial lines of credit loan segments as of quarter -end are considered cohorts. The cohort is then tracked for losses over the remaining life of loans or until the pool is exhausted. The Company used a lookback period of approximately six-years to establish the cohort population. By using the historical data timeframe, the Company can establish a historical loss factor for each of its loan segments. Qualitative – The Company uses qualitative factors to adjust the historical loss factors for current conditions. The Company primarily uses the following qualitative factors: ◾ The nature and volume of changes in risk ratings; ◾ The volume and severity of past due loans; ◾ The volume of non-accrual loans; ◾ The nature and volume of the loan portfolio, including the existence, growth, and effect of any concentrations of credit; ◾ Changes in the Institute of Supply Management’s Purchasing Manager Indices (“PMI”) for services and manufacturing; ◾ Changes in collateral values; ◾ Changes in lending policies, procedures, and quality of loan reviews; ◾ Changes in lending staff; and ◾ Changes in competition, legal and regulatory environments In addition to the current condition qualitative adjustments, the Company uses the Federal Reserve’s unemployment forecast to adjust the ACL based on forward looking guidance. The Federal Reserve’s unemployment forecast extends three-years and is eventually reverted to the mean of six percent by year 10. Internal Credit Risk Ratings The Company uses a weighted average risk rating factor to adjust the historical loss factors for current events. Risk ratings incorporate the criteria utilized by regulatory authorities to describe criticized assets, but separate various levels of risk concentrated within the regulatory “Pass” category. Risk ratings are established for loans at origination and are monitored on an ongoing basis. The rating assigned to a loan reflects the risks posed by the borrower’s expected performance and the transaction’s structure. Performance metrics used to determine a risk rating include, but are not limited to, cash flow adequacy, liquidity, and collateral. A description of the loan risk ratings follows: Loan Grades ● Pass (risk rating 1-4) - The category includes loans that are considered satisfactory. The category includes borrowers that generally maintain good liquidity and financial condition, or the credit is currently protected with sales trends remaining flat or declining. Most ratios compare favorably with industry norms and Company policies. Debt is programmed and timely repayment is expected. ● Special Mention (risk rating 5) - The category includes borrowers that generally exhibit adverse trends in operations or an imbalanced position in their balance sheet that has not reached a point where repayment is jeopardized. Credits are currently protected but, if left uncorrected, the potential weaknesses may result in deterioration of the repayment prospects for the credit or in the Company’s credit or lien position at a future date. These credits are not adversely classified and do not expose the Company to enough risk to warrant adverse classification. ● Substandard (risk rating 6) - The category includes borrowers that generally exhibit well-defined weakness(es) that jeopardize repayment. Credits are inadequately protected by the current worth and paying capacity of the obligor or of the collateral pledged. A distinct possibility exists that the Company will sustain some loss if deficiencies are not corrected. Loss potential, while existing in the aggregate amount of substandard assets, does not have to exist in individual assets classified substandard. Substandard loans include both performing and non-performing loans and are broken out in the table below. ● Doubtful (risk rating 7) - The category includes borrowers that exhibit weaknesses inherent in a substandard credit and characteristics that these weaknesses make collection or liquidation in full highly questionable or improbable based on existing facts, conditions, and values. Because of reasonably specific pending factors, which may work to the advantage and strengthening of the assets, classification as a loss is deferred until its more exact status may be determined. ● Loss (risk rating 8) - Credits which are considered uncollectible or of such little value that their continuance as a bankable asset is not warranted. The following tables present the credit risk profile of the Company’s loan portfolio based on internal rating categories and loan segments as of June 30, 2023 and December 31, 2022: Loan Portfolio Aging Analysis The following tables present the Company’s loan portfolio aging analysis as of June 30, 2023 and December 31, 2022: Non-accrual Loan Analysis Non-accrual loans are loans for which the Company does not record interest income. The accrual of interest on loans is discontinued at the time the loan is 90 days past due unless the credit is well secured and in process of collection. Past due status is based on contractual terms of the loan. In all cases, loans are placed on non-accrual or charged off at an earlier date, if collection of principal or interest is considered doubtful. 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 following tables present the Company’s non -accrual loans by loan segments at June 30, 2023 and December 31, 2022: Interest income recognized on non-accrual loans was $ 0.1 million and $ 0.3 million for the three- and six-months ended June 30, 2023, respectively. For the three-and six-months ended June 30, 2022, the interest income recognized on non-accrual loans was $ 0.3 million and $ 0.4 million, respectively. Allowance for Credit Losses The following table presents the activity in the allowance for credit losses and allowance for credit losses on off-balance sheet credit exposures by portfolio segment for the three- and six-months ended June 30, 2023: The ACL increased $ 2.4 million during the quarter. Provision expense of $ 3.0 million was driven primarily by loan growth, and was partially offset by $ 0.6 million in net charge-offs, primarily due to two commercial and industrial loans. The reserve on unfunded commitments decreased $ 0.4 million due to a decrease in unfunded commitments in the quarter. The ACL increased $ 5.8 million during the six-months ended June 30, 2023 and included provision of $ 8.0 million due to loan growth and changes in credit quality and economic factors and an increase in reserves on impaired loans of $ 0.8 million, partially offset by $ 2.2 million in net charge-offs. The reserve on unfunded commitments decreased $ 1.0 million due to a decrease in unfunded commitments. The following tables presents the Company’s gross charge-offs by year of origination for the three- and six-months ended June 30, 2023: Collateral Dependent Loans: Collateral dependent loans are loans for which the repayment is expected to be provided substantially through the operation or sale of the collateral and the borrower is experiencing financial difficulty. The following table presents the amortized cost balance of loans considered collateral dependent by loan segment and collateral type as of June 30, 2023 and December 31, 2022: Loan Modifications The Company considers loans to borrowers experiencing financial difficulties to be troubled loans. Effective January 1, 2023, the Company adopted ASU 2022-02, which eliminates the accounting guidance for troubled debt restructurings (“TDR”) and requires an entity evaluate whether loan modifications represent a new loan or a continuation of an existing loan. Such troubled debt modifications (“TDM”) may include principal forgiveness, interest rate reductions, other-than-insignificant-payment delays, term extensions or any combination thereof. The Company adopted this accounting standard on a prospective basis. During the three- and six-months ended June 30, 2023, the Company modified three loans with an amortized cost basis of $ 4.7 million to facilitate repayment that are considered TDMs. The following table presents, by loan segment, the amortized cost basis as of the date shown for modified loans to borrowers experiencing financial difficulty: The following schedule presents the payment status, by loan class, as of June 30, 2023, of the amortized cost basis of loans that have been modified since January 1, 2023: The Company had no TDMs that were modified and had defaulted on their modified terms during the six-months ended June 30, 2023. For purposes of this disclosure, the Company considers “default” to mean 90 days or more past due on principal or interest. The allowance for credit losses related to TDMs on non-accrual status is determined by individual evaluation, including collateral adequacy, using the same process as loans on non-accrual status which are not classified as TDMs. The following schedule presents the financial effect of the modifications made to borrowers experiencing financial difficulty as of June 30, 2023: Troubled Debt Restructurings Prior to the adoption of ASU 2022-02, TDRs were extended to borrowers who were experiencing financial difficulty and who had been granted a concession, excluding loan modifications as a result of the COVID-19 pandemic. The modification of terms typically included the extension of maturity, reduction or deferment of monthly payment, or reduction of the stated interest rate. The outstanding balance of TDRs recognized prior to the adoption of ASU 2022-02 was $ 28.4 million and $ 30.5 million as of June 30, 2023 and December 31, 2022, respectively. Allowance for Credit Losses on Off-Balance Sheet Credit Exposures The Company estimates expected credit losses for off-balance sheet credit exposures unless the obligation is unconditionally cancellable by the Company. The ACL on off-balance sheet credit exposures is adjusted as a provision for credit loss expense. The estimate is calculated for each loan segment and includes consideration of the likelihood that funding will occur and an estimate of the expected credit losses on commitments expected to be funded over its estimated life. For each pool of contractual obligations expected to be funded, the Company uses the reserve rate established for the related loan pools. The $ 8 million and $ 9 million allowance for credit losses on off-balance sheet credit exposures at June 30, 2023 and December 31, 2022, respectively, are included in “interest payable and other liabilities” on the statements of financial condition. The following categories of off-balance sheet credit exposures have been identified: Loan commitments – include revolving lines of credit, non-revolving lines of credit, and loans approved that are not yet funded. Risks inherent to revolving lines of credit often are related to the susceptibility of an individual or business experiencing unpredictable cash flow or financial troubles, thus leading to payment default. The primary risk associated with non-revolving lines of credit is the diversion of funds for other expenditures. Letters of credit – are primarily established to provide assurance to the beneficiary that the applicant will perform certain obligations arising out of a separate transaction between the beneficiary and applicant. If the obligation is not met, it gives the beneficiary the right to draw on the letter of credit. June 30, 2023 December 31, 2022 Amount % of Loans Amount % of Loans (Dollars in thousands) Commercial and industrial $ 2,057,912 36 % $ 1,974,932 37 % Energy 232,863 4 173,218 3 Commercial real estate - owner-occupied 542,827 9 437,119 8 Commercial real estate - non-owner-occupied 2,480,282 42 2,314,600 43 Residential real estate 439,434 8 439,367 8 Consumer 43,281 1 33,493 1 Loans, net of unearned fees 5,796,599 100 % 5,372,729 100 % Less: allowance for credit losses on loans (67,567) (61,775) Loans, net of the allowance for credit losses on loans $ 5,729,032 $ 5,310,954 As of June 30, 2023 Amortized Cost Basis by Origination Year and Internal Risk Rating Amortized Cost Basis 2023 2022 2021 2020 2019 2018 and Prior Revolving Loans Revolving Loans converted to Term Loans Total (Dollars in thousands) Commercial and industrial Pass $ 283,048 $ 306,846 $ 207,224 $ 60,219 $ 44,139 $ 43,384 $ 946,803 $ 37,305 $ 1,928,968 Special mention 11,750 5,809 16,002 2,310 758 305 34,185 6,785 77,904 Substandard - accrual 1,419 64 67 157 983 844 20,303 17,610 41,447 Substandard - non- accrual - - (8) 57 - - 8,511 1,033 9,593 Doubtful - - - - - - - - - Total $ 296,217 $ 312,719 $ 223,285 $ 62,743 $ 45,880 $ 44,533 $ 1,009,802 $ 62,733 $ 2,057,912 Energy Pass $ - $ 7,278 $ 105 $ 192 $ - $ - $ 224,677 $ 143 $ 232,395 Special mention - - - - - - - - - Substandard - accrual - - - - - - - - - Substandard - non- accrual - - - - - - - - - Doubtful - - - - - - 468 - 468 Total $ - $ 7,278 $ 105 $ 192 $ - $ - $ 225,145 $ 143 $ 232,863 Commercial real estate - owner-occupied Pass $ 43,160 $ 77,915 $ 134,076 $ 59,154 $ 49,994 $ 37,095 $ 72,630 $ 39,009 $ 513,033 Special mention 10,311 5,847 5,905 431 1,196 5,267 - - 28,957 Substandard - accrual 65 - 203 407 89 73 - - 837 Substandard - non- accrual - - - - - - - - - Doubtful - - - - - - - - - Total $ 53,536 $ 83,762 $ 140,184 $ 59,992 $ 51,279 $ 42,435 $ 72,630 $ 39,009 $ 542,827 As of June 30, 2023 Amortized Cost Basis by Origination Year and Internal Risk Rating Amortized Cost Basis 2023 2022 2021 2020 2019 2018 and Prior Revolving Loans Revolving Loans converted to Term Loans Total (Dollars in thousands) Commercial real estate - non-owner- occupied Pass $ 292,061 $ 915,099 $ 298,948 $ 147,121 $ 79,500 $ 80,385 $ 535,380 $ 89,707 $ 2,438,201 Special mention - - 7,528 137 16,398 4,154 - 33 28,250 Substandard - accrual 10,092 365 - - - 314 439 - 11,210 Substandard - non- accrual - - 2,448 173 - - - - 2,621 Doubtful - - - - - - - - - Total $ 302,153 $ 915,464 $ 308,924 $ 147,431 $ 95,898 $ 84,853 $ 535,819 $ 89,740 $ 2,480,282 Residential real estate Pass $ 19,066 $ 76,723 $ 86,898 $ 115,256 $ 39,976 $ 67,055 $ 26,962 $ - $ 431,936 Special mention 253 - 3,560 165 210 - - - 4,188 Substandard - accrual - - - 3,125 - - - - 3,125 Substandard - non- accrual - - - - - - - 185 185 Doubtful - - - - - - - - - Total $ 19,319 $ 76,723 $ 90,458 $ 118,546 $ 40,186 $ 67,055 $ 26,962 $ 185 $ 439,434 Consumer Pass $ 8,007 $ 6,360 $ 621 $ 113 $ 245 $ 123 $ 27,776 $ - $ 43,245 Special mention - - - - - 7 - - 7 Substandard - accrual - - - 29 - - - - 29 Substandard - non- accrual - - - - - - - - - Doubtful - - - - - - - - - Total $ 8,007 $ 6,360 $ 621 $ 142 $ 245 $ 130 $ 27,776 $ - $ 43,281 As of June 30, 2023 Amortized Cost Basis by Origination Year and Internal Risk Rating Amortized Cost Basis 2023 2022 2021 2020 2019 2018 and Prior Revolving Loans Revolving Loans converted to Term Loans Total (Dollars in thousands) Total Pass $ 645,342 $ 1,390,221 $ 727,872 $ 382,055 $ 213,854 $ 228,042 $ 1,834,228 $ 166,164 $ 5,587,778 Special mention 22,314 11,656 32,995 3,043 18,562 9,733 34,185 6,818 139,306 Substandard - accrual 11,576 429 270 3,718 1,072 1,231 20,742 17,610 56,648 Substandard - non- accrual - - 2,440 230 - - 8,511 1,218 12,399 Doubtful - - - - - - 468 - 468 Total $ 679,232 $ 1,402,306 $ 763,577 $ 389,046 $ 233,488 $ 239,006 $ 1,898,134 $ 191,810 $ 5,796,599 As of December 31, 2022 Amortized Cost Basis by Origination Year and Internal Risk Rating Amortized Cost Basis 2022 2021 2020 2019 2018 2017 and Prior Revolving Loans Revolving Loans converted to Term Loans Total (Dollars in thousands) Commercial and industrial Pass $ 465,963 $ 281,166 $ 55,934 $ 50,445 $ 48,595 $ 20,648 $ 890,109 $ 19,089 $ 1,831,949 Special mention 2,531 23,055 14,573 2,951 4,947 86 49,861 41 98,045 Substandard - accrual 290 677 1,647 1,330 740 299 10,805 21,166 36,954 Substandard - non- accrual - 104 - 6 1,383 - 6,479 - 7,972 Doubtful - - - - - - - - - Loss - - - - - 12 - - 12 Total $ 468,784 $ 305,002 $ 72,154 $ 54,732 $ 55,665 $ 21,045 $ 957,254 $ 40,296 $ 1,974,932 Energy Pass $ 7,585 $ 306 $ 228 $ - $ - $ - $ 162,834 $ 171 $ 171,124 Special mention - - - - - - - - - Substandard - accrual - - - - - - 1,476 - 1,476 Substandard - non- accrual - - - - - - - - - Doubtful - - - - - - 618 - 618 Loss - - - - - - - - - Total $ 7,585 $ 306 $ 228 $ - $ - $ - $ 164,928 $ 171 $ 173,218 Commercial real estate - owner-occupied Pass $ 79,695 $ 127,489 $ 56,607 $ 49,620 $ 28,143 $ 20,299 $ 28,814 $ 14,024 $ 404,691 Special mention 17,292 6,603 452 1,330 98 2,486 - 2,469 30,730 Substandard - accrual - - 403 - - 1,295 - - 1,698 Substandard - non- accrual - - - - - - - - - Doubtful - - - - - - - - - Loss - - - - - - - - - Total $ 96,987 $ 134,092 $ 57,462 $ 50,950 $ 28,241 $ 24,080 $ 28,814 $ 16,493 $ 437,119 As of December 31, 2022 Amortized Cost Basis by Origination Year and Internal Risk Rating Amortized Cost Basis 2022 2021 2020 2019 2018 2017 and Prior Revolving Loans Revolving Loans converted to Term Loans Total (Dollars in thousands) Commercial real estate - non-owner-occupied Pass $ 827,420 $ 442,176 $ 200,090 $ 101,827 $ 49,834 $ 73,940 $ 458,297 $ 111,322 $ 2,264,906 Special mention 5,931 7,727 114 - 6,460 1,853 2,429 9,852 34,366 Substandard - accrual 10,545 310 607 82 60 253 - 992 12,849 Substandard - non- accrual - 2,479 - - - - - - 2,479 Doubtful - - - - - - - - - Loss - - - - - - - - - Total $ 843,896 $ 452,692 $ 200,811 $ 101,909 $ 56,354 $ 76,046 $ 460,726 $ 122,166 $ 2,314,600 Residential real estate Pass $ 77,416 $ 84,158 $ 121,078 $ 45,265 $ 37,395 $ 34,852 $ 31,892 $ - $ 432,056 Special mention 253 3,272 187 226 - - - - 3,938 Substandard - accrual 34 - 3,148 - - - - - 3,182 Substandard - non- accrual - - - - - - - 191 191 Doubtful - - - - - - - - - Loss - - - - - - - - - Total $ 77,703 $ 87,430 $ 124,413 $ 45,491 $ 37,395 $ 34,852 $ 31,892 $ 191 $ 439,367 Consumer Pass $ 7,917 $ 1,347 $ 2,611 $ 265 $ 129 $ 6 $ 21,173 $ - $ 33,448 Special mention - - - - 8 - - - 8 Substandard - accrual - - 32 - 5 - - - 37 Substandard - non- accrual - - - - - - - - - Doubtful - - - - - - - - - Loss - - - - - - - - - Total $ 7,917 $ 1,347 $ 2,643 $ 265 $ 142 $ 6 $ 21,173 $ - $ 33,493 As of December 31, 2022 Amortized Cost Basis by Origination Year and Internal Risk Rating Amortized Cost Basis 2022 2021 2020 2019 2018 2017 and Prior Revolving Loans Revolving Loans converted to Term Loans Total (Dollars in thousands) Total Pass $ 1,465,996 $ 936,642 $ 436,548 $ 247,422 $ 164,096 $ 149,745 $ 1,593,119 $ 144,606 $ 5,138,174 Special mention 26,007 40,657 15,326 4,507 11,513 4,425 52,290 12,362 167,087 Substandard - accrual 10,869 987 5,837 1,412 805 1,847 12,281 22,158 56,196 Substandard - non- accrual - 2,583 - 6 1,383 - 6,479 191 10,642 Doubtful - - - - - - 618 - 618 Loss - - - - - 12 - - 12 Total $ 1,502,872 $ 980,869 $ 457,711 $ 253,347 $ 177,797 $ 156,029 $ 1,664,787 $ 179,317 $ 5,372,729 As of June 30, 2023 Amortized Cost Basis by Origination Year and Past Due Status Amortized Cost Basis 2023 2022 2021 2020 2019 2018 and Prior Revolving loans Revolving loans converted to term loans Total (Dollars in thousands) Commercial and industrial 30-59 days $ - $ - $ 2 $ - $ - $ - $ 2,946 $ 152 $ 3,100 60-89 days - 31 80 - - - 1,536 843 2,490 Greater than 90 days - 7 - 205 - - 7,293 - 7,505 Total past due - 38 82 205 - - 11,775 995 13,095 Current 296,217 312,681 223,203 62,538 45,880 44,533 998,027 61,738 2,044,817 Total $ 296,217 $ 312,719 $ 223,285 $ 62,743 $ 45,880 $ 44,533 $ 1,009,802 $ 62,733 $ 2,057,912 Greater than 90 days and accruing $ - $ 7 $ - $ 148 $ - $ - $ 242 $ - $ 397 Energy 30-59 days $ - $ - $ - $ - $ - $ - $ - $ - $ - 60-89 days - - - - - - - - - Greater than 90 days - - - - - - 468 - 468 Total past due - - - - - - 468 - 468 Current - 7,278 105 192 - - 224,677 143 232,395 Total $ - $ 7,278 $ 105 $ 192 $ - $ - $ 225,145 $ 143 $ 232,863 Greater than 90 days and accruing $ - $ - $ - $ - $ - $ - $ - $ - $ - As of June 30, 2023 Amortized Cost Basis by Origination Year and Past Due Status Amortized Cost Basis 2023 2022 2021 2020 2019 2018 and Prior Revolving loans Revolving loans converted to term loans Total (Dollars in thousands) Commercial real estate - owner-occupied 30-59 days $ - $ - $ 203 $ - $ - $ - $ - $ - $ 203 60-89 days - - - - - - - - - Greater than 90 days - - - - - - - - - Total past due - - 203 - - - - - 203 Current 53,536 83,762 139,981 59,992 51,279 42,435 72,630 39,009 542,624 Total $ 53,536 $ 83,762 $ 140,184 $ 59,992 $ 51,279 $ 42,435 $ 72,630 $ 39,009 $ 542,827 Greater than 90 days and accruing $ - $ - $ - $ - $ - $ - $ - $ - $ - Commercial real estate - non-owner-occupied 30-59 days $ - $ - $ - $ - $ - $ - $ - $ - $ - 60-89 days - - 6,029 - - - - - 6,029 Greater than 90 days - - - - - - - - - Total past due - - 6,029 - - - - - 6,029 Current 302,153 915,464 302,895 147,431 95,898 84,853 535,819 89,740 2,474,253 Total $ 302,153 $ 915,464 $ 308,924 $ 147,431 $ 95,898 $ 84,853 $ 535,819 $ 89,740 $ 2,480,282 Greater than 90 days and accruing $ - $ - $ - $ - $ - $ - $ - $ - $ - Residential real estate 30-59 days $ - $ - $ - $ - $ - $ - $ 176 $ - $ 176 60-89 days - - 1,320 - - - - - 1,320 Greater than 90 days - - - - - - - - - Total past due - - 1,320 - - - 176 - 1,496 Current 19,319 76,723 89,138 118,546 40,186 67,055 26,786 185 437,938 Total $ 19,319 $ 76,723 $ 90,458 $ 118,546 $ 40,186 $ 67,055 $ 26,962 $ 185 $ 439,434 Greater than 90 days and accruing $ - $ - $ - $ - $ - $ - $ - $ - $ - As of June 30, 2023 Amortized Cost Basis by Origination Year and Past Due Status Amortized Cost Basis 2023 2022 2021 2020 2019 2018 and Prior Revolving loans Revolving loans converted to term loans Total (Dollars in thousands) Consumer 30-59 days $ - $ - $ - $ - $ - $ - $ - $ - $ - 60-89 days - - 1 14 - - - - 15 Greater than 90 days - 36 - - - - - - 36 Total past due - 36 1 14 - - - - 51 Current 8,007 6,324 620 128 245 130 27,776 - 43,230 Total $ 8,007 $ 6,360 $ 621 $ 142 $ 245 $ 130 $ 27,776 $ - $ 43,281 Greater than 90 days and accruing $ - $ 36 $ - $ - $ - $ - $ - $ - $ 36 Total 30-59 days $ - $ - $ 205 $ - $ - $ - $ 3,122 $ 152 $ 3,479 60-89 days - 31 7,430 14 - - 1,536 843 9,854 Greater than 90 days - 43 - 205 - - 7,761 - 8,009 Total past due - 74 7,635 219 - - 12,419 995 21,342 Current 679,232 1,402,232 755,942 388,827 233,488 239,006 1,885,715 190,815 5,775,257 Total $ 679,232 $ 1,402,306 $ 763,577 $ 389,046 $ 233,488 $ 239,006 $ 1,898,134 $ 191,810 $ 5,796,599 Greater than 90 days and accruing $ - $ 43 $ - $ 148 $ - $ - $ 242 $ - $ 433 As of December 31, 2022 Amortized Cost Basis by Origination Year and Past Due Status Amortized Cost Basis 2022 2021 2020 2019 2018 2017 and Prior Revolving loans Revolving loans converted to term loans Total (Dollars in thousands) Commercial and industrial 30-59 days $ 20 $ 4,784 $ - $ - $ - $ 1,049 $ 2,814 $ - $ 8,667 60-89 days - 55 - - - - 980 430 1,465 Greater than 90 days - 143 7 6 1,383 12 7,063 - 8,614 Total past due 20 4,982 7 6 1,383 1,061 10,857 430 18,746 Current 468,764 300,020 72,147 54,726 54,282 19,984 946,397 39,866 1,956,186 Total $ 468,784 $ 305,002 $ 72,154 $ 54,732 $ 55,665 $ 21,045 $ 957,254 $ 40,296 $ 1,974,932 Greater than 90 days and accruing $ - $ 39 $ 7 $ - $ - $ - $ 584 $ - $ 630 Energy 30-59 days $ - $ - $ - $ - $ - $ - $ - $ - $ - 60-89 days - - - - - - - - - Greater than 90 days - - - - - - 618 - 618 Total past due - - - - - - 618 - 618 Current 7,585 306 228 - - - 164,310 171 172,600 Total $ 7,585 $ 306 $ 228 $ - $ - $ - $ 164,928 $ 171 $ 173,218 Greater than 90 days and accruing $ - $ - $ - $ - $ - $ - $ - $ - $ - Commercial real estate - owner-occupied 30-59 days $ - $ - $ - $ - $ - $ - $ - $ - $ - 60-89 days - - - - - - - - - Greater than 90 days - - - - - - - - - Total past due - - - - - - - - - Current 96,987 134,092 57,462 50,950 28,241 24,080 28,814 16,493 437,119 Total $ 96,987 $ 134,092 $ 57,462 $ 50,950 $ 28,241 $ 24,080 $ 28,814 $ 16,493 $ 437,119 Greater than 90 days and accruing $ - $ - $ - $ - $ - $ - $ - $ - $ - As of December 31, 2022 Amortized Cost Basis by Origination Year and Past Due Status Amortized Cost Basis 2022 2021 2020 2019 2018 2017 and Prior Revolving loans Revolving loans converted to term loans Total (Dollars in thousands) Commercial real estate - non-owner-occupied 30-59 days $ 4,293 $ - $ - $ 1,180 $ - $ - $ - $ - $ 5,473 60-89 days - - - - - - - - - Greater than 90 days - - - - - - - - - Total past due 4,293 - - 1,180 - - - - 5,473 Current 839,603 452,692 200,811 100,729 56,354 76,046 460,726 122,166 2,309,127 Total $ 843,896 $ 452,692 $ 200,811 $ 101,909 $ 56,354 $ 76,046 $ 460,726 $ 122,166 $ 2,314,600 Greater than 90 days and accruing $ - $ - $ - $ - $ - $ - $ - $ - $ - Residential real estate 30-59 days $ - $ 3,867 $ - $ 10 $ - $ - $ 30 $ - $ 3,907 60-89 days - - - - - - - - - Greater than 90 days - 120 - - - - - - 120 Total past due - 3,987 - 10 - - 30 - 4,027 Current 77,703 83,443 124,413 45,481 37,395 34,852 31,862 191 435,340 Total $ 77,703 $ 87,430 $ 124,413 $ 45,491 $ 37,395 $ 34,852 $ 31,892 $ 191 $ 439,367 Greater than 90 days and accruing $ - $ 120 $ - $ - $ - $ - $ - $ - $ 120 Consumer 30-59 days $ - $ - $ - $ - $ - $ - $ - $ - $ - 60-89 days - - 2 - 5 - - - 7 Greater than 90 days - - - - - - - - - Total past due - - 2 - 5 - - - 7 Current 7,917 1,347 2,641 265 137 6 21,173 - 33,486 Total $ 7,917 $ 1,347 $ 2,643 $ 265 $ 142 $ 6 $ 21,173 $ - $ 33,493 As of December 31, 2022 Amortized Cost Basis by Origination Year and Past Due Status Amortized Cost Basis 2022 2021 2020 2019 2018 2017 and Prior Revolving loans Revolving loans converted to term loans Total (Dollars in thousands) Total 30-59 days $ 4,313 $ 8,651 $ - $ 1,190 $ - $ 1,049 $ 2,844 $ - $ 18,047 60-89 days - 55 2 - 5 - 980 430 1,472 Greater than 90 days - 263 7 6 1,383 12 7,681 - 9,352 Total past due 4,313 8,969 9 1,196 1,388 1,061 11,505 430 28,871 Current 1,498,559 971,900 457,702 252,151 176,409 154,968 1,653,282 178,887 5,343,858 Total $ 1,502,872 $ 980,869 $ 457,711 $ 253,347 $ 177,797 $ 156,029 $ 1,664,787 $ 179,317 $ 5,372,729 Greater than 90 days and accruing $ - $ 159 $ 7 $ - $ - $ - $ 584 $ - $ 750 As of June 30, 2023 Amortized Cost Basis by Origination Year and On Non-accrual Amortized Cost Basis 2023 2022 2021 2020 2019 2018 and Prior Revolving loans Revolving loans converted to term loans Total Non- accrual Loans Non-accrual Loans with no related Allowance (Dollars in thousands) Commercial and industrial $ - $ - $ - $ 57 $ - $ - $ 8,503 $ 1,033 $ 9,593 $ 6,991 Energy - - - - - - 468 - 468 468 Commercial real estate - owner-occupied - - - - - - - - - - Commercial real estate - non-owner-occupied - - 2,448 173 - - - - 2,621 2,621 Residential real estate - - - - - - - 185 185 185 Consumer - - - - - - - - - - Total $ - $ - $ 2,448 $ 230 $ - $ - $ 8,971 $ 1,218 $ 12,867 $ 10,265 As of December 31, 2022 Amortized Cost Basis by Origination Year and On Non-accrual Amortized Cost Basis 2022 2021 2020 2019 2018 2017 and Prior Revolving loans Revolving loans converted to term loans Total Non- accrual Loans Non-accrual Loans with no related Allowance (Dollars in thousands) Commercial and industrial $ - $ 104 $ - $ 6 $ 1,383 $ 12 $ 6,479 $ - $ 7,984 $ 7,984 Energy - - - - - - 618 - 618 618 Commercial real estate - owner-occupied - - - - - - - - - - Commercial real estate - non-owner-occupied - 2,479 - - - - - - 2,479 2,479 Residential real estate - - - - - - - 191 191 191 Consumer - - - - - - - - - - Total $ - $ 2,583 $ - $ 6 $ 1,383 $ 12 $ 7,097 $ 191 $ 11,272 $ 11,272 For the Three Months Ended June 30, 2023 Commercial and Industrial Energy Commercial Real Estate - Owner- occupied Commercial Real Estate - Non-owner- occupied Residential Real Estate Consumer Total (Dollars in thousands) Allowance for Credit Losses: Beginning balance $ 27,660 $ 4,679 $ 5,610 $ 23,807 $ 3,265 $ 109 $ 65,130 Charge-offs (738) - - - - (5) (743) Recoveries 3 137 - - - - 140 Provision 2,004 98 751 174 3 10 3,040 Ending balance $ 28,929 $ 4,914 $ 6,361 $ 23,981 $ 3,268 $ 114 $ 67,567 Allowance for Credit Losses on Off-Balance Sheet Credit Exposures: Beginning balance $ 461 $ 541 $ 226 $ 6,819 $ 59 $ 7 $ 8,113 Provision (release) (12) (45) (21) (323) 8 (7) (400) Ending balance $ 449 $ 496 $ 205 $ 6,496 $ 67 $ - $ 7,713 For the Six Months Ended June 30, 2023 Commercial and Industrial Energy Commercial Real Estate - Owner- occupied Commercial Real Estate - Non-owner- occupied Residential Real Estate Consumer Total (Dollars in thousands) Allowance for Credit Losses: Beginning balance $ 26,803 $ 4,396 $ 5,214 $ 21,880 $ 3,333 $ 149 $ 61,775 Charge-offs (2,380) - - - - (5) (2,385) Recoveries 4 137 - - - - 141 Provision (release) 4,502 381 1,147 2,101 (65) (30) 8,036 Ending balance $ 28,929 $ 4,914 $ 6,361 $ 23,981 $ 3,268 $ 114 $ 67,567 Allowance for Credit Losses on Off-Balance Sheet Credit Exposures: Beginning balance $ 319 $ 787 $ 221 $ 7,323 $ 35 $ 3 $ 8,688 Provision (release) 130 (291) (16) (827) 32 (3) (975) Ending balance $ 449 $ 496 $ 205 $ 6,496 $ 67 $ - $ 7,713 For the Quarter Ended June 30, 2023 Gross Charge-offs by Origination Year Gross Charge-offs 2023 2022 2021 2020 2019 2018 and Prior Revolving loans Revolving loans converted to term loans Gross Charge- offs (Dollars in thousands) Commercial and industrial $ 6 $ - $ 2 $ - $ - $ 11 $ 569 $ 150 $ 738 Energy - - - - - - - - - Commercial real estate - owner-occupied - - - - - - - - - Commercial real estate - non-owner-occupied - - - - - - - - - Residential real estate - - - - - - - - - Consumer - - - - - 5 - - 5 Total $ 6 $ - $ 2 $ - $ - $ 16 $ 569 $ 150 $ 743 For the Six Months Ended June 30, 2023 Gross Charge-offs by Origination Year Gross Charge-offs 2023 2022 2021 2020 2019 2018 and Prior Revolving loans Revolving loans converted to term loans Gross Charge- offs (Dollars in thousands) Commercial and industrial $ 6 $ - $ 72 $ - $ - $ 1,358 $ 569 $ 375 $ 2,380 Energy - - - - - - - - - Commercial real estate - owner-occupied - - - - - - - - - Commercial real estate - non-owner-occupied - - - - - - - - - Residential real estate - - - - - - - - - Consumer - - - - - 5 - - 5 Total $ 6 $ - $ 72 $ - $ - $ 1,363 $ 569 $ 375 $ 2,385 As of June 30, 2023 Loan Segment and Collateral Description Amortized Cost of Collateral Dependent Loans Related Allowance for Credit Losses Amortized Cost of Collateral Dependent Loans with no related Allowance (Dollars in thousands) Commercial and industrial All business assets $ 7,984 $ 883 $ 6,065 Energy Oil and natural gas properties 468 - 468 Commercial real estate - owner-occupied Commercial real estate properties - - - Commercial real estate - non-owner- occupied Commercial real estate properties - - - Residential real estate Residential real estate properties - - - Consumer Vehicles & other personal assets - - - $ 8,452 $ 883 $ 6,533 As of December 31, 2022 Loan Segment and Collateral Description Amortized Cost of Collateral Dependent Loans Related Allowance for Credit Losses Amortized Cost of Collateral Dependent Loans with no related Allowance (Dollars in thousands) Commercial and industrial All business assets $ 7,981 $ - $ 7,981 Energy Oil and natural gas properties 618 - 618 Commercial real estate - owner-occupied Commercial real estate properties - - - Commercial real estate - non-owner- occupied Commercial real estate properties 92 - 92 Residential real estate Residential real estate properties - - - Consumer Vehicles & other personal assets 39 22 - $ 8,728 $ 22 $ 8,689 June 30, 2023 Term Extension Amortized Cost Basis % of Loan Class (Dollars in thousands) Commercial and industrial $ 4,607 0.2 % Commercial real estate - owner-occupied 65 0.0 Total Loans $ 4,672 June 30, 2023 Current (Dollars in thousands) Commercial and industrial $ 4,607 Commercial real estate - owner-occupied 65 Total Loans $ 4,672 June 30, 2023 Financial Effect Term Extension Commercial and industrial Added a weighted average 1.2 years to the life of loan, which reduced monthly payment amounts Commercial real estate - owner-occupied Added a weighted average 0.6 years to the life of loan, which reduced monthly payment amounts