Loans Held for Investment and Allowance for Loan Losses

6 Months Ended

Jun. 30, 2023

Receivables [Abstract]

Loans Held for Investment and Allowance for Credit Losses

Note 3 – Loans Held-for-Investment and Allowance for Credit Losses

For the periods ended June 30, 2023 and 2022, and December 31, 2022, the following tables outline the Company’s loan portfolio by the ten portfolio segments where applicable.

Loans held-for-investment by portfolio segment are as follows (dollars in thousands):

	June 30,						December 31,
	2023			2022			2022
Commercial:
C&I*	$	1,021,863		$	839,928		$	917,317
Municipal		215,977			200,577			221,090
Total Commercial		1,237,840			1,040,505			1,138,407
Agricultural		82,032			90,420			76,947
Real Estate:
Construction & Development		915,221			928,644			959,426
Farm		335,644			250,028			306,322
Non-Owner Occupied CRE		811,347			636,432			732,089
Owner Occupied CRE		1,011,511			909,899			954,400
Residential		1,698,679			1,412,125			1,575,758
Total Real Estate		4,772,402			4,137,128			4,527,995
Consumer:
Auto		534,603			468,147			550,635
Non-Auto		150,693			142,382			147,884
Total Consumer		685,296			610,529			698,519
Total Loans		6,777,570			5,878,582			6,441,868
Less: Allowance for credit losses		(86,541	)		(71,932	)		(75,834	)
Loans, net	$	6,691,029		$	5,806,650		$	6,366,034

* All disclosures for the C&I loan segment include PPP loan balances, net of deferred fees and costs, as disclosed on the face of the consolidated balance sheet.

Outstanding loan balances at June 30, 2023 and 2022, and December 31, 2022, are net of unearned income, including net deferred loan fees.

At June 30, 2023, $4,717,880,000 in loans held by our bank subsidiary were subject to blanket liens as security for a line of credit with the Federal Home Loan Bank of Dallas ("FHLB"). At June 30, 2023, this available line of credit was $2,516,497,000. At June 30, 2023, there was no balance outstanding under this line of credit.

The Company’s nonaccrual loans and loans still accruing and past due 90 days or more are as follows (dollars in thousands):

	June 30,				December 31,
	2023		2022		2022
Nonaccrual loans	$	28,672	$	25,495	$	24,325
Loans still accruing and past due 90 days or more		552		22		—
Total nonperforming loans (1)	$	29,224	$	25,517	$	24,325

(1) With the adoption of ASU 2022-02, effective January 1, 2023, troubled debt restructuring ("TDR") accounting has been eliminated.

The Company had $29,249,000, $25,517,000 and $24,325,000 in nonaccrual, past due 90 days or more and still accruing, and foreclosed assets at June 30, 2023 and 2022, and December 31, 2022, respectively. Nonaccrual loans at June 30, 2023 and 2022, and December 31, 2022, consisted of the following (dollars in thousands):

	June 30,				December 31,
	2023		2022		2022
Commercial:
C&I	$	4,818	$	6,695	$	5,057
Municipal		—		—		—
Total Commercial		4,818		6,695		5,057
Agricultural		133		482		324
Real Estate:
Construction & Development		2,835		990		1,567
Farm		701		97		85
Non-Owner Occupied CRE		5,329		2,477		2,321
Owner Occupied CRE		7,308		6,823		7,092
Residential		6,769		7,512		7,419
Total Real Estate		22,942		17,899		18,484
Consumer:
Auto		649		389		429
Non-Auto		130		30		31
Total Consumer		779		419		460
Total	$	28,672	$	25,495	$	24,325

No significant additional funds are committed to be advanced in connection with nonaccrual loans as of June 30, 2023.

Summary information on the allowance for credit losses for the three and six-months ended June 30, 2023 and 2022, are outlined by portfolio segment in the following tables (dollars in thousands):

Three-Months Ended June 30, 2023	C&I			Municipal			Agricultural			Construction & Development		Farm
Beginning balance	$	16,083		$	1,067		$	1,214		$	28,627	$	1,937
Provision for loan losses		988			(880	)		(153	)		339		867
Recoveries		113			—			21			—		—
Charge-offs		(654	)		—			—			—		—
Ending balance	$	16,530		$	187		$	1,082		$	28,966	$	2,804

Three-Months Ended June 30, 2023 (continued)	Non-Owner Occupied CRE		Owner Occupied CRE		Residential			Auto			Non-Auto			Total
Beginning balance	$	9,051	$	11,948	$	9,702		$	857		$	332		$	80,818
Provision for loan losses		4,398		610		167			99			87			6,522
Recoveries		22		14		12			101			36			319
Charge-offs		—		—		(114	)		(228	)		(122	)		(1,118	)
Ending balance	$	13,471	$	12,572	$	9,767		$	829		$	333		$	86,541

Three-Months Ended June 30, 2022	C&I			Municipal			Agricultural			Construction & Development		Farm
Beginning balance	$	15,737		$	1,418		$	1,911		$	17,887	$	873
Provision for loan losses		2,521			(66	)		(832	)		3,198		133
Recoveries		402			—			92			—		—
Charge-offs		(71	)		—			(9	)		—		—
Ending balance	$	18,589		$	1,352		$	1,162		$	21,085	$	1,006

Three-Months Ended June 30, 2022 (continued)	Non-Owner Occupied CRE			Owner Occupied CRE			Residential			Auto			Non-Auto			Total
Beginning balance	$	8,499		$	11,536		$	7,829		$	869		$	354		$	66,913
Provision for loan losses		(576	)		(809	)		466			64			4			4,103
Recoveries		487			13			12			102			83			1,191
Charge-offs		—			—			(3	)		(123	)		(69	)		(275	)
Ending balance	$	8,410		$	10,740		$	8,304		$	912		$	372		$	71,932

Six-Months Ended June 30, 2023	C&I			Municipal			Agricultural			Construction & Development		Farm
Beginning balance	$	16,129		$	1,026		$	1,041		$	26,443	$	1,957
Provision for loan losses		924			(839	)		(181	)		2,423		847
Recoveries		165			—			222			100		—
Charge-offs		(688	)		—			—			—		—
Ending balance	$	16,530		$	187		$	1,082		$	28,966	$	2,804

Six-Months Ended June 30, 2023 (continued)	Non-Owner Occupied CRE		Owner Occupied CRE		Residential			Auto			Non- Auto			Total
Beginning balance	$	9,075	$	9,928	$	9,075		$	845		$	315		$	75,834
Provision for loan losses		4,349		2,623		791			169			123			11,229
Recoveries		47		21		15			233			81			884
Charge-offs		—		—		(114	)		(418	)		(186	)		(1,406	)
Ending balance	$	13,471	$	12,572	$	9,767		$	829		$	333		$	86,541

Six-Months Ended June 30, 2022	C&I			Municipal		Agricultural			Construction & Development			Farm
Beginning balance	$	12,280		$	348	$	1,597		$	17,627		$	663
Provision for loan losses		5,976			1,004		(543	)		3,558			343
Recoveries		558			—		117			—			—
Charge-offs		(225	)		—		(9	)		(100	)		—
Ending balance	$	18,589		$	1,352	$	1,162		$	21,085		$	1,006

Six-Months Ended June 30, 2022 (continued)	Non-Owner Occupied CRE			Owner Occupied CRE			Residential			Auto			Non- Auto			Total
Beginning balance	$	10,722		$	10,828		$	8,133		$	896		$	371		$	63,465
Provision for loan losses		(2,854	)		(20	)		303			44			39			7,850
Recoveries		542			20			17			168			129			1,551
Charge-offs		—			(88	)		(149	)		(196	)		(167	)		(934	)
Ending balance	$	8,410		$	10,740		$	8,304		$	912		$	372		$	71,932

Additionally, the Company records a reserve for unfunded commitments in other liabilities which totaled $9,449,000, $8,718,000 and $12,323,000 at June 30, 2023 and 2022, and December 31, 2022, respectively. The provision for loan losses of $6,522,000 for the three-months ended June 30, 2023 is combined with the reversal of the provision for unfunded commitments of $949,000 and reported in the net aggregate of $5,573,000 under the provision for credit losses in the consolidated statement of earnings for the three-months ended June 30, 2023. The provision for loan losses of $11,229,000 for the six-months ended June 30, 2023 is combined with the reversal of the provision for unfunded commitments of $2,875,000 and reported in the net aggregate of $8,354,000 under the provision for credit losses in the consolidated statement of earnings for the six-months ended June 30, 2023.

The $4,103,000 provision for loan losses for the three-months ended June 30, 2022 above is combined with the provision for unfunded commitments of $1,247,000 and reported in the aggregate of $5,350,000 under the provision for credit losses for the three-months ended June 30, 2022. The $7,850,000 provision for loan losses for the six-months ended June 30, 2022 above is combined with the provision for unfunded commitments of $2,282,000 and reported in the aggregate of $10,132,000 under the provision for credit losses for the six-months ended June 30, 2022.

The Company’s loans that are individually evaluated for credit losses (both collateral and non-collateral dependent) and their related allowances as of June 30, 2023 and 2022, and December 31, 2022, are summarized in the following tables by loan segment (dollars in thousands):

June 30, 2023	Collateral Dependent Loans Individually Evaluated for Credit Losses Without an Allowance		Collateral Dependent Loans Individually Evaluated for Credit Losses With an Allowance		Non-Collateral Dependent Loans Individually Evaluated for Credit Losses		Total Loans Individually Evaluated for Credit Losses		Related Allowance on Collateral Dependent Loans		Related Allowance on Non-Collateral Dependent Loans		Total Allowance for Credit Losses on Loans Individually Evaluated for Credit Losses
Commercial:
C&I	$	610	$	4,208	$	23,282	$	28,100	$	2,780	$	5,671	$	8,451
Municipal		—		—		1,507		1,507		—		—		—
Total Commercial		610		4,208		24,789		29,607		2,780		5,671		8,451
Agricultural		—		133		1,855		1,988		37		517		554
Real Estate:
Construction & Development		2,672		163		21,787		24,622		15		2,194		2,209
Farm		578		123		7,038		7,739		18		1,117		1,135
Non-Owner Occupied CRE		2,062		3,267		27,112		32,441		421		2,502		2,923
Owner Occupied CRE		5,643		1,665		31,870		39,178		299		1,769		2,068
Residential		4,283		2,486		29,923		36,692		261		1,611		1,872
Total Real Estate		15,238		7,704		117,730		140,672		1,014		9,193		10,207
Consumer:
Auto		29		620		1,571		2,220		1		2		3
Non-Auto		—		130		522		652		—		1		1
Total Consumer		29		750		2,093		2,872		1		3		4
Total	$	15,877	$	12,795	$	146,467	$	175,139	$	3,832	$	15,384	$	19,216

June 30, 2022	Collateral Dependent Loans Individually Evaluated for Credit Losses Without an Allowance		Collateral Dependent Loans Individually Evaluated for Credit Losses With an Allowance		Non-Collateral Dependent Loans Individually Evaluated for Credit Losses		Total Loans Individually Evaluated for Credit Losses		Related Allowance on Collateral Dependent Loans		Related Allowance on Non-Collateral Dependent Loans		Total Allowance for Credit Losses on Loans Individually Evaluated for Credit Losses
Commercial:
C&I	$	1,224	$	5,471	$	25,674	$	32,369	$	2,794	$	6,797	$	9,591
Municipal		—		—		84		84		—		—		—
Total Commercial		1,224		5,471		25,758		32,453		2,794		6,797		9,591
Agricultural		178		304		270		752		146		214		360
Real Estate:
Construction & Development		441		549		9,622		10,612		34		352		386
Farm		—		97		1,565		1,662		3		43		46
Non-Owner Occupied CRE		2,391		86		32,225		34,702		7		2,836		2,843
Owner Occupied CRE		5,727		1,096		30,616		37,439		58		2,527		2,585
Residential		4,307		3,205		25,642		33,154		355		1,297		1,652
Total Real Estate		12,866		5,033		99,670		117,569		457		7,055		7,512
Consumer:
Auto		—		389		1,002		1,391		1		2		3
Non-Auto		—		30		473		503		—		1		1
Total Consumer		—		419		1,475		1,894		1		3		4
Total	$	14,268	$	11,227	$	127,173	$	152,668	$	3,398	$	14,069	$	17,467

December 31, 2022	Collateral Dependent Loans Individually Evaluated for Credit Losses Without an Allowance		Collateral Dependent Loans Individually Evaluated for Credit Losses With an Allowance		Non-Collateral Dependent Loans Individually Evaluated for Credit Losses		Total Loans Individually Evaluated for Credit Losses		Related Allowance on Collateral Dependent Loans		Related Allowance on Non-Collateral Dependent Loans		Total Allowance for Credit Losses on Loans Individually Evaluated for Credit Losses
Commercial:
C&I	$	—	$	5,057	$	24,325	$	29,382	$	3,513	$	4,885	$	8,398
Municipal		—		—		58		58		—		—		—
Total Commercial		—		5,057		24,383		29,440		3,513		4,885		8,398
Agricultural		116		209		354		679		122		276		398
Real Estate:
Construction & Development		577		990		4,873		6,440		193		112		305
Farm		—		85		1,578		1,663		2		34		36
Non-Owner Occupied CRE		2,062		259		36,037		38,358		16		2,341		2,357
Owner Occupied CRE		4,363		2,728		29,115		36,206		91		1,509		1,600
Residential		5,132		2,287		28,564		35,983		229		1,215		1,444
Total Real Estate		12,134		6,349		100,167		118,650		531		5,211		5,742
Consumer:
Auto		—		429		931		1,360		1		1		2
Non-Auto		—		31		538		569		—		1		1
Total Consumer		—		460		1,469		1,929		1		2		3
Total	$	12,250	$	12,075	$	126,373	$	150,698	$	4,167	$	10,374	$	14,541

The Company’s allowance for loans that are individually evaluated for credit losses and collectively evaluated for credit losses as of June 30, 2023 and 2022, and December 31, 2022, are summarized in the following table by loan segment (dollars in thousands). Allocation of a portion of the allowance to one category of loans does not preclude its availability to absorb losses in other categories.

June 30, 2023	C&I		Municipal		Agricultural		Construction & Development		Farm
Loans individually evaluated for credit losses	$	8,451	$	—	$	554	$	2,209	$	1,135
Loans collectively evaluated for credit losses		8,079		187		528		26,757		1,669
Total	$	16,530	$	187	$	1,082	$	28,966	$	2,804

June 30, 2023 (continued)	Non-Owner Occupied CRE		Owner Occupied CRE		Residential		Auto		Non-Auto		Total
Loans individually evaluated for credit losses	$	2,923	$	2,068	$	1,872	$	3	$	1	$	19,216
Loans collectively evaluated for credit losses		10,548		10,504		7,895		826		332		67,325
Total	$	13,471	$	12,572	$	9,767	$	829	$	333	$	86,541

June 30, 2022	C&I		Municipal		Agricultural		Construction & Development		Farm
Loans individually evaluated for credit losses	$	9,591	$	—	$	360	$	386	$	46
Loans collectively evaluated for credit losses		8,998		1,352		802		20,699		960
Total	$	18,589	$	1,352	$	1,162	$	21,085	$	1,006

June 30, 2022 (continued)	Non-Owner Occupied CRE		Owner Occupied CRE		Residential		Auto		Non-Auto		Total
Loans individually evaluated for credit losses	$	2,843	$	2,585	$	1,652	$	3	$	1	$	17,467
Loans collectively evaluated for credit losses		5,567		8,155		6,652		909		371		54,465
Total	$	8,410	$	10,740	$	8,304	$	912	$	372	$	71,932

December 31, 2022	C&I		Municipal		Agricultural		Construction & Development		Farm
Loans individually evaluated for credit losses	$	8,398	$	—	$	398	$	305	$	36
Loans collectively evaluated for credit losses		7,731		1,026		643		26,138		1,921
Total	$	16,129	$	1,026	$	1,041	$	26,443	$	1,957

December 31, 2022 (continued)	Non-Owner Occupied CRE		Owner Occupied CRE		Residential		Auto		Non-Auto		Total
Loans individually evaluated for credit losses	$	2,357	$	1,600	$	1,444	$	2	$	1	$	14,541
Loans collectively evaluated for credit losses		6,718		8,328		7,631		843		314		61,293
Total	$	9,075	$	9,928	$	9,075	$	845	$	315	$	75,834

The Company’s recorded investment in loans as of June 30, 2023 and 2022, and December 31, 2022, related to the balance in the allowance for credit losses follows below (dollars in thousands):

June 30, 2023	C&I		Municipal		Agricultural		Construction & Development		Farm
Loans individually evaluated for credit losses	$	28,100	$	1,507	$	1,988	$	24,622	$	7,739
Loans collectively evaluated for credit losses		993,763		214,470		80,044		890,599		327,905
Total	$	1,021,863	$	215,977	$	82,032	$	915,221	$	335,644

June 30, 2023 (continued)	Non-Owner Occupied CRE		Owner Occupied CRE		Residential		Auto		Non-Auto		Total
Loans individually evaluated for credit losses	$	32,441	$	39,178	$	36,692	$	2,220	$	652	$	175,139
Loans collectively evaluated for credit losses		778,906		972,333		1,661,987		532,383		150,041		6,602,431
Total	$	811,347	$	1,011,511	$	1,698,679	$	534,603	$	150,693	$	6,777,570

June 30, 2022	C&I		Municipal		Agricultural		Construction & Development		Farm
Loans individually evaluated for credit losses	$	32,369	$	84	$	752	$	10,612	$	1,662
Loans collectively evaluated for credit losses		807,559		200,493		89,668		918,032		248,366
Total	$	839,928	$	200,577	$	90,420	$	928,644	$	250,028

June 30, 2022 (continued)	Non-Owner Occupied CRE		Owner Occupied CRE		Residential		Auto		Non-Auto		Total
Loans individually evaluated for credit losses	$	34,702	$	37,439	$	33,154	$	1,391	$	503	$	152,668
Loans collectively evaluated for credit losses		601,730		872,460		1,378,971		466,756		141,879		5,725,914
Total	$	636,432	$	909,899	$	1,412,125	$	468,147	$	142,382	$	5,878,582

December 31, 2022	C&I		Municipal		Agricultural		Construction & Development		Farm
Loans individually evaluated for credit losses	$	29,382	$	58	$	679	$	6,440	$	1,663
Loans collectively evaluated for credit losses		887,935		221,032		76,268		952,986		304,659
Total	$	917,317	$	221,090	$	76,947	$	959,426	$	306,322

December 31, 2022 (continued)	Non-Owner Occupied CRE		Owner Occupied CRE		Residential		Auto		Non-Auto		Total
Loans individually evaluated for credit losses	$	38,358	$	36,206	$	35,983	$	1,360	$	569	$	150,698
Loans collectively evaluated for credit losses		693,731		918,194		1,539,775		549,275		147,315		6,291,170
Total	$	732,089	$	954,400	$	1,575,758	$	550,635	$	147,884	$	6,441,868

From a credit risk standpoint, the Company rates its loans in one of five categories: (i) pass, (ii) special mention, (iii) substandard, (iv) doubtful or (v) loss (which are charged-off).

The ratings of loans reflect a judgment about the risks of default and loss associated with the loan. The Company reviews the ratings on our credits as part of our ongoing monitoring of the credit quality of our loan portfolio. Ratings are adjusted to reflect the degree of risk and loss that are felt to be inherent in each credit as of each reporting period. Our methodology is structured so that specific allocations are increased in accordance with deterioration in credit quality (and a corresponding increase in risk and loss) or decreased in accordance with improvement in credit quality (and a corresponding decrease in risk and loss).

Credits rated special mention show clear signs of financial weaknesses or deterioration in credit worthiness, however, such concerns are not so pronounced that the Company generally expects to experience significant loss within the short-term. Such credits typically maintain the ability to perform within standard credit terms and credit exposure is not as prominent as credits rated more harshly.

Credits rated substandard are those in which the normal repayment of principal and interest may be, or has been, jeopardized by reason of adverse trends or developments of a financial, managerial, economic or political nature, or important weaknesses exist in collateral. A protracted workout on these credits is a distinct possibility. Prompt corrective action is therefore required to strengthen the Company’s position, and/or to reduce exposure and to assure that adequate remedial measures are taken by the borrower. Credit exposure becomes more likely in such credits and a serious evaluation of the secondary support to the credit is performed.

Credits rated doubtful are those in which full collection of principal appears highly questionable, and which some degree of loss is anticipated, even though the ultimate amount of loss may not yet be certain and/or other factors exist which could affect collection of debt. Based upon available information, positive action by the Company is required to avert or minimize loss. Credits rated doubtful are generally also placed on nonaccrual.

The following summarizes the Company’s internal ratings of its loans held-for-investment, including the year of origination, by portfolio segments, at June 30, 2023 (dollars in millions):

June 30,	2023		2022		2021		2020		2019		Prior		Revolving Loans Amortized Cost Basis		Total
C&I
Risk rating:
Pass	$	333	$	468	$	105	$	44	$	18	$	26	$	—	$	994
Special mention		8		1		—		—		1		—		—		10
Substandard		3		7		4		2		—		2		—		18
Doubtful		—		—		—		—		—		—		—		—
Total	$	344	$	476	$	109	$	46	$	19	$	28	$	—	$	1,022
Year-to-Date Gross Charge-Offs	$	—	$	—	$	1	$	—	$	—	$	—	$	—	$	1

June 30,	2023		2022		2021		2020		2019		Prior		Revolving Loans Amortized Cost Basis		Total
Municipal
Risk rating:
Pass	$	11	$	84	$	17	$	14	$	1	$	87	$	—	$	214
Special mention		—		—		—		—		1		—		—		1
Substandard		—		—		1		—		—		—		—		1
Doubtful		—		—		—		—		—		—		—		—
Total	$	11	$	84	$	18	$	14	$	2	$	87	$	—	$	216
Year-to-Date Gross Charge-Offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—

June 30,	2023		2022		2021		2020		2019		Prior		Revolving Loans Amortized Cost Basis		Total
Agricultural
Risk rating:
Pass	$	30	$	42	$	5	$	2	$	1	$	—	$	—	$	80
Special mention		—		1		—		—		—		—		—		1
Substandard		—		1		—		—		—		—		—		1
Doubtful		—		—		—		—		—		—		—		—
Total	$	30	$	44	$	5	$	2	$	1	$	—	$	—	$	82
Year-to-Date Gross Charge-Offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—

June 30,	2023		2022		2021		2020		2019		Prior		Revolving Loans Amortized Cost Basis		Total
Construction & Development
Risk rating:
Pass	$	242	$	498	$	103	$	24	$	11	$	12	$	—	$	890
Special mention		8		4		—		—		—		—		—		12
Substandard		4		8		1		—		—		—		—		13
Doubtful		—		—		—		—		—		—		—		—
Total	$	254	$	510	$	104	$	24	$	11	$	12	$	—	$	915
Year-to-Date Gross Charge-Offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—

June 30,	2023		2022		2021		2020		2019		Prior		Revolving Loans Amortized Cost Basis		Total
Farm
Risk rating:
Pass	$	63	$	126	$	78	$	26	$	9	$	26	$	—	$	328
Special mention		—		—		—		5		—		—		—		5
Substandard		—		1		1		—		—		1		—		3
Doubtful		—		—		—		—		—		—		—		—
Total	$	63	$	127	$	79	$	31	$	9	$	27	$	—	$	336
Year-to-Date Gross Charge-Offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—

June 30,	2023		2022		2021		2020		2019		Prior		Revolving Loans Amortized Cost Basis		Total
Non-Owner Occupied CRE
Risk rating:
Pass	$	101	$	234	$	185	$	125	$	46	$	88	$	—	$	779
Special mention		—		5		1		—		11		2		—		19
Substandard		—		1		4		1		2		5		—		13
Doubtful		—		—		—		—		—		—		—		—
Total	$	101	$	240	$	190	$	126	$	59	$	95	$	—	$	811
Year-to-Date Gross Charge-Offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—

June 30,	2023		2022		2021		2020		2019		Prior		Revolving Loans Amortized Cost Basis		Total
Owner Occupied CRE
Risk rating:
Pass	$	67	$	321	$	240	$	121	$	68	$	156	$	—	$	973
Special mention		—		—		—		—		6		1		—		7
Substandard		2		5		1		1		6		17		—		32
Doubtful		—		—		—		—		—		—		—		—
Total	$	69	$	326	$	241	$	122	$	80	$	174	$	—	$	1,012
Year-to-Date Gross Charge-Offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—

June 30,	2023		2022		2021		2020		2019		Prior		Revolving Loans Amortized Cost Basis		Total
Residential
Risk rating:
Pass	$	228	$	461	$	335	$	172	$	73	$	255	$	138	$	1,662
Special mention		—		2		3		2		—		3		1		11
Substandard		1		6		4		3		2		8		2		26
Doubtful		—		—		—		—		—		—		—		—
Total	$	229	$	469	$	342	$	177	$	75	$	266	$	141	$	1,699
Year-to-Date Gross Charge-Offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—

June 30,	2023		2022		2021		2020		2019		Prior		Revolving Loans Amortized Cost Basis		Total
Auto
Risk rating:
Pass	$	110	$	265	$	99	$	39	$	16	$	4	$	—	$	533
Special mention		—		—		—		—		—		—		—		—
Substandard		—		1		1		—		—		—		—		2
Doubtful		—		—		—		—		—		—		—		—
Total	$	110	$	266	$	100	$	39	$	16	$	4	$	—	$	535
Year-to-Date Gross Charge-Offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—

June 30,	2023		2022		2021		2020		2019		Prior		Revolving Loans Amortized Cost Basis		Total
Non-Auto
Risk rating:
Pass	$	41	$	63	$	29	$	6	$	2	$	1	$	8	$	150
Special mention		—		—		—		—		—		—		—		—
Substandard		—		—		—		—		—		—		—		—
Doubtful		—		—		—		—		—		—		—		—
Total	$	41	$	63	$	29	$	6	$	2	$	1	$	8	$	150
Year-to-Date Gross Charge-Offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—

June 30,	2023		2022		2021		2020		2019		Prior		Revolving Loans Amortized Cost Basis		Total
Total Loans
Risk rating:
Pass	$	1,226	$	2,562	$	1,196	$	573	$	245	$	655	$	146	$	6,603
Special mention		16		13		4		7		19		6		1		66
Substandard		10		30		17		7		10		33		2		109
Doubtful		—		—		—		—		—		—		—		—
Total	$	1,252	$	2,605	$	1,217	$	587	$	274	$	694	$	149	$	6,778
Year-to-Date Gross Charge-Offs	$	—	$	—	$	1	$	—	$	—	$	—	$	—	$	1

The following summarizes the Company’s internal ratings of its loans held-for-investment, including the year of origination, by portfolio segments, at June 30, 2022 (dollars in millions):

June 30,	2022		2021		2020		2019		2018		Prior		Revolving Loans Amortized Cost Basis		Total
C&I
Risk rating:
Pass	$	342	$	317	$	79	$	28	$	20	$	22	$	—	$	808
Special mention		4		1		—		2		—		—		—		7
Substandard		11		5		3		3		3		—		—		25
Doubtful		—		—		—		—		—		—		—		—
Total	$	357	$	323	$	82	$	33	$	23	$	22	$	—	$	840

June 30,	2022		2021		2020		2019		2018		Prior		Revolving Loans Amortized Cost Basis		Total
Municipal
Risk rating:
Pass	$	49	$	21	$	14	$	5	$	21	$	91	$	—	$	201
Special mention		—		—		—		—		—		—		—		—
Substandard		—		—		—		—		—		—		—		—
Doubtful		—		—		—		—		—		—		—		—
Total	$	49	$	21	$	14	$	5	$	21	$	91	$	—	$	201

June 30,	2022		2021		2020		2019		2018		Prior		Revolving Loans Amortized Cost Basis		Total
Agricultural
Risk rating:
Pass	$	39	$	41	$	4	$	3	$	1	$	1	$	—	$	89
Special mention		—		—		—		—		—		—		—		—
Substandard		1		—		—		—		—		—		—		1
Doubtful		—		—		—		—		—		—		—		—
Total	$	40	$	41	$	4	$	3	$	1	$	1	$	—	$	90

June 30,	2022		2021		2020		2019		2018		Prior		Revolving Loans Amortized Cost Basis		Total
Construction & Development
Risk rating:
Pass	$	330	$	440	$	104	$	22	$	11	$	11	$	—	$	918
Special mention		—		4		—		—		—		—		—		4
Substandard		2		5		—		—		—		—		—		7
Doubtful		—		—		—		—		—		—		—		—
Total	$	332	$	449	$	104	$	22	$	11	$	11	$	—	$	929

June 30,	2022		2021		2020		2019		2018		Prior		Revolving Loans Amortized Cost Basis		Total
Farm
Risk rating:
Pass	$	63	$	104	$	35	$	13	$	8	$	26	$	—	$	249
Special mention		—		—		—		—		—		—		—		—
Substandard		—		—		—		—		—		1		—		1
Doubtful		—		—		—		—		—		—		—		—
Total	$	63	$	104	$	35	$	13	$	8	$	27	$	—	$	250

June 30,	2022		2021		2020		2019		2018		Prior		Revolving Loans Amortized Cost Basis		Total
Non-Owner Occupied CRE
Risk rating:
Pass	$	130	$	203	$	109	$	52	$	24	$	83	$	—	$	601
Special mention		—		—		1		11		—		7		—		19
Substandard		6		—		1		2		1		6		—		16
Doubtful		—		—		—		—		—		—		—		—
Total	$	136	$	203	$	111	$	65	$	25	$	96	$	—	$	636

June 30,	2022		2021		2020		2019		2018		Prior		Revolving Loans Amortized Cost Basis		Total
Owner Occupied CRE
Risk rating:
Pass	$	240	$	218	$	122	$	88	$	71	$	133	$	—	$	872
Special mention		—		2		2		1		—		1		—		6
Substandard		1		4		2		3		11		11		—		32
Doubtful		—		—		—		—		—		—		—		—
Total	$	241	$	224	$	126	$	92	$	82	$	145	$	—	$	910

June 30,	2022		2021		2020		2019		2018		Prior		Revolving Loans Amortized Cost Basis		Total
Residential
Risk rating:
Pass	$	277	$	399	$	188	$	94	$	70	$	239	$	112	$	1,379
Special mention		1		2		2		1		—		4		—		10
Substandard		2		3		2		2		2		8		4		23
Doubtful		—		—		—		—		—		—		—		—
Total	$	280	$	404	$	192	$	97	$	72	$	251	$	116	$	1,412

June 30,	2022		2021		2020		2019		2018		Prior		Revolving Loans Amortized Cost Basis		Total
Auto
Risk rating:
Pass	$	168	$	171	$	77	$	36	$	11	$	4	$	—	$	467
Special mention		—		—		—		—		—		—		—		—
Substandard		—		—		—		1		—		—		—		1
Doubtful		—		—		—		—		—		—		—		—
Total	$	168	$	171	$	77	$	37	$	11	$	4	$	—	$	468

June 30,	2022		2021		2020		2019		2018		Prior		Revolving Loans Amortized Cost Basis		Total
Non-Auto
Risk rating:
Pass	$	54	$	56	$	15	$	5	$	2	$	2	$	7	$	141
Special mention		1		—		—		—		—		—		—		1
Substandard		—		—		—		—		—		—		—		—
Doubtful		—		—		—		—		—		—		—		—
Total	$	55	$	56	$	15	$	5	$	2	$	2	$	7	$	142

June 30,	2022		2021		2020		2019		2018		Prior		Revolving Loans Amortized Cost Basis		Total
Total Loans
Risk rating:
Pass	$	1,692	$	1,970	$	747	$	346	$	239	$	612	$	119	$	5,725
Special mention		6		9		5		15		—		12		—		47
Substandard		23		17		8		11		17		26		4		106
Doubtful		—		—		—		—		—		—		—		—
Total	$	1,721	$	1,996	$	760	$	372	$	256	$	650	$	123	$	5,878

The following summarizes the Company’s internal ratings of its loans held-for-investment, including the year of origination, by portfolio segments, at December 31, 2022 (dollars in millions):

December 31,	2022		2021		2020		2019		2018		Prior		Revolving Loans Amortized Cost Basis		Total
C&I
Risk rating:
Pass	$	627	$	157	$	52	$	22	$	16	$	13	$	—	$	887
Special mention		4		1		2		1		—		—		—		8
Substandard		13		5		2		1		1		—		—		22
Doubtful		—		—		—		—		—		—		—		—
Total	$	644	$	163	$	56	$	24	$	17	$	13	$	—	$	917

December 31,	2022		2021		2020		2019		2018		Prior		Revolving Loans Amortized Cost Basis		Total
Municipal
Risk rating:
Pass	$	79	$	19	$	15	$	4	$	20	$	84	$	—	$	221
Special mention		—		—		—		—		—		—		—		—
Substandard		—		—		—		—		—		—		—		—
Doubtful		—		—		—		—		—		—		—		—
Total	$	79	$	19	$	15	$	4	$	20	$	84	$	—	$	221

December 31,	2022		2021		2020		2019		2018		Prior		Revolving Loans Amortized Cost Basis		Total
Agricultural
Risk rating:
Pass	$	60	$	9	$	3	$	2	$	1	$	1	$	—	$	76
Special mention		—		—		—		—		—		—		—		—
Substandard		—		1		—		—		—		—		—		1
Doubtful		—		—		—		—		—		—		—		—
Total	$	60	$	10	$	3	$	2	$	1	$	1	$	—	$	77

December 31,	2022		2021		2020		2019		2018		Prior		Revolving Loans Amortized Cost Basis		Total
Construction & Development
Risk rating:
Pass	$	638	$	218	$	70	$	13	$	8	$	7	$	—	$	954
Special mention		1		—		—		—		—		—		—		1
Substandard		4		1		—		—		—		—		—		5
Doubtful		—		—		—		—		—		—		—		—
Total	$	643	$	219	$	70	$	13	$	8	$	7	$	—	$	960

December 31,	2022		2021		2020		2019		2018		Prior		Revolving Loans Amortized Cost Basis		Total
Farm
Risk rating:
Pass	$	147	$	85	$	32	$	11	$	8	$	21	$	—	$	304
Special mention		—		—		—		—		—		—		—		—
Substandard		1		—		—		—		—		1		—		2
Doubtful		—		—		—		—		—		—		—		—
Total	$	148	$	85	$	32	$	11	$	8	$	22	$	—	$	306

December 31,	2022		2021		2020		2019		2018		Prior		Revolving Loans Amortized Cost Basis		Total
Non-Owner Occupied CRE
Risk rating:
Pass	$	258	$	191	$	100	$	49	$	21	$	75	$	—	$	694
Special mention		—		1		1		11		—		7		—		20
Substandard		8		1		1		2		1		5		—		18
Doubtful		—		—		—		—		—		—		—		—
Total	$	266	$	193	$	102	$	62	$	22	$	87	$	—	$	732

December 31,	2022		2021		2020		2019		2018		Prior		Revolving Loans Amortized Cost Basis		Total
Owner Occupied CRE
Risk rating:
Pass	$	316	$	224	$	128	$	74	$	63	$	113	$	—	$	918
Special mention		1		—		1		8		—		1		—		11
Substandard		1		2		1		2		9		10		—		25
Doubtful		—		—		—		—		—		—		—		—
Total	$	318	$	226	$	130	$	84	$	72	$	124	$	—	$	954

December 31,	2022		2021		2020		2019		2018		Prior		Revolving Loans Amortized Cost Basis		Total
Residential
Risk rating:
Pass	$	513	$	355	$	173	$	82	$	64	$	214	$	139	$	1,540
Special mention		1		3		2		—		—		3		1		10
Substandard		6		3		2		2		1		9		3		26
Doubtful		—		—		—		—		—		—		—		—
Total	$	520	$	361	$	177	$	84	$	65	$	226	$	143	$	1,576

December 31,	2022		2021		2020		2019		2018		Prior		Revolving Loans Amortized Cost Basis		Total
Auto
Risk rating:
Pass	$	331	$	131	$	55	$	25	$	6	$	2	$	—	$	550
Special mention		—		—		—		—		—		—		—		—
Substandard		—		—		1		—		—		—		—		1
Doubtful		—		—		—		—		—		—		—		—
Total	$	331	$	131	$	56	$	25	$	6	$	2	$	—	$	551

December 31,	2022		2021		2020		2019		2018		Prior		Revolving Loans Amortized Cost Basis		Total
Non-Auto
Risk rating:
Pass	$	85	$	41	$	9	$	3	$	1	$	1	$	7	$	147
Special mention		—		—		—		—		—		—		—		—
Substandard		—		1		—		—		—		—		—		1
Doubtful		—		—		—		—		—		—		—		—
Total	$	85	$	42	$	9	$	3	$	1	$	1	$	7	$	148

December 31,	2022		2021		2020		2019		2018		Prior		Revolving Loans Amortized Cost Basis		Total
Total Loans
Risk rating:
Pass	$	3,054	$	1,430	$	637	$	285	$	208	$	531	$	146	$	6,291
Special mention		7		5		6		20		—		11		1		50
Substandard		33		14		7		7		12		25		3		101
Doubtful		—		—		—		—		—		—		—		—
Total	$	3,094	$	1,449	$	650	$	312	$	220	$	567	$	150	$	6,442

At June 30, 2023 and 2022, and December 31, 2022, the Company’s past due loans are as follows (dollars in thousands):

June 30, 2023	15-59 Days Past Due*		60-89 Days Past Due		Greater Than 90 Days		Total Past Due		Current		Total Loans		90 Days Past Due Still Accruing
Commercial:
C&I	$	3,734	$	722	$	1,651	$	6,107	$	1,015,756	$	1,021,863	$	3
Municipal		215		—		—		215		215,762		215,977		—
Total Commercial		3,949		722		1,651		6,322		1,231,518		1,237,840		3
Agricultural		580		1,024		15		1,619		80,413		82,032		—
Real Estate:
Construction & Development		14,390		2,062		—		16,452		898,769		915,221		—
Farm		776		205		372		1,353		334,291		335,644		—
Non-Owner Occupied CRE		1,395		—		2,988		4,383		806,964		811,347		—
Owner Occupied CRE		3,356		3,818		—		7,174		1,004,337		1,011,511		—
Residential		7,265		2,210		1,301		10,776		1,687,903		1,698,679		520
Total Real Estate		27,182		8,295		4,661		40,138		4,732,264		4,772,402		520
Consumer:
Auto		574		118		14		706		533,897		534,603		—
Non-Auto		135		18		65		218		150,475		150,693		29
Total Consumer		709		136		79		924		684,372		685,296		29
Total	$	32,420	$	10,177	$	6,406	$	49,003	$	6,728,567	$	6,777,570	$	552

June 30, 2022	15-59 Days Past Due*		60-89 Days Past Due		Greater Than 90 Days		Total Past Due		Current		Total Loans		90 Days Past Due Still Accruing
Commercial:
C&I	$	3,240	$	2,704	$	1,470	$	7,414	$	832,514	$	839,928	$	—
Municipal		—		—		—		—		200,577		200,577		—
Total Commercial		3,240		2,704		1,470		7,414		1,033,091		1,040,505		—
Agricultural		432		30		27		489		89,931		90,420		—
Real Estate:
Construction & Development		2,841		734		—		3,575		925,069		928,644		—
Farm		1,005		—		—		1,005		249,023		250,028		—
Non-Owner Occupied CRE		569		—		107		676		635,756		636,432		—
Owner Occupied CRE		4,061		495		1,292		5,848		904,051		909,899		—
Residential		5,387		92		596		6,075		1,406,050		1,412,125		2
Total Real Estate		13,863		1,321		1,995		17,179		4,119,949		4,137,128		2
Consumer:
Auto		292		104		30		426		467,721		468,147		14
Non-Auto		161		—		7		168		142,214		142,382		6
Total Consumer		453		104		37		594		609,935		610,529		20
Total	$	17,988	$	4,159	$	3,529	$	25,676	$	5,852,906	$	5,878,582	$	22

December 31, 2022	15-59 Days Past Due*		60-89 Days Past Due		Greater Than 90 Days		Total Past Due		Current		Total Loans		90 Days Past Due Still Accruing
Commercial:
C&I	$	3,924	$	297	$	1,646	$	5,867	$	911,450	$	917,317	$	—
Municipal		76		783		—		859		220,231		221,090		—
Total Commercial		4,000		1,080		1,646		6,726		1,131,681		1,138,407		—
Agricultural		243		—		—		243		76,704		76,947		—
Real Estate:
Construction & Development		3,751		—		175		3,926		955,500		959,426		—
Farm		668		—		—		668		305,654		306,322		—
Non-Owner Occupied CRE		1,444		160		—		1,604		730,485		732,089		—
Owner Occupied CRE		1,151		—		—		1,151		953,249		954,400		—
Residential		8,720		707		266		9,693		1,566,065		1,575,758		—
Total Real Estate		15,734		867		441		17,042		4,510,953		4,527,995		—
Consumer:
Auto		779		30		—		809		549,826		550,635		—
Non-Auto		50		—		—		50		147,834		147,884		—
Total Consumer		829		30		—		859		697,660		698,519		—
Total	$	20,806	$	1,977	$	2,087	$	24,870	$	6,416,998	$	6,441,868	$	—

* The Company monitors commercial, agricultural and real estate loans after such loans are 15 days past due. Consumer loans are monitored after such loans are 30 days past due.

Modifications of receivables to debtors experiencing financial difficulty

On January 1, 2023, the Company adopted the accounting guidance in ASU 2022-02, which eliminates the recognition and measurement of a TDR. Due to the removal of the TDR designation, the Company evaluates all loan restructurings according to the accounting guidance for loan modifications to determine if the restructuring results in a new loan or a continuation of the existing loan. Loan modifications to borrowers experiencing financial difficulty that result in a direct change in the timing or amount of contractual cash flows include situations where there is principal forgiveness, term extensions, interest rate reduction, and combinations of the listed modifications. Therefore, the disclosures related to loan restructurings are only for modifications that directly affect cash flows.

An assessment of whether a borrower is experiencing financial difficulty is made on the date of a modification. Because the effect of most modifications made to borrowers experiencing financial difficulty is already included in the allowance for credit losses due to the measurement methodologies used to estimate the allowance, a change to the allowance for credit losses is generally not recorded upon modification. During the six-months ended June 30, 2023, loan modifications made to borrowers experiencing financial difficulty was insignificant.