Loans Held for Investment and Allowance for Loan Losses

9 Months Ended

Sep. 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 September 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):

	September 30,						December 31,
	2023			2022			2022
Commercial:
C&I*	$	1,108,240		$	871,335		$	917,317
Municipal		218,358			214,852			221,090
Total Commercial		1,326,598			1,086,187			1,138,407
Agricultural		81,876			76,937			76,947
Real Estate:
Construction & Development		929,570			938,051			959,426
Farm		341,052			268,139			306,322
Non-Owner Occupied CRE		828,900			717,738			732,089
Owner Occupied CRE		1,002,913			945,665			954,400
Residential		1,788,913			1,536,180			1,575,758
Total Real Estate		4,891,348			4,405,773			4,527,995
Consumer:
Auto		540,382			538,798			550,635
Non-Auto		154,492			147,793			147,884
Total Consumer		694,874			686,591			698,519
Total Loans		6,994,696			6,255,488			6,441,868
Less: Allowance for credit losses		(89,714	)		(74,108	)		(75,834	)
Loans, net	$	6,904,982		$	6,181,380		$	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 September 30, 2023 and 2022, and December 31, 2022, are net of unearned income, including net deferred loan fees.

At September 30, 2023, $2,600,103,000 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 September 30, 2023, this available line of credit was $2,538,345,000. At September 30, 2023, there was $45,000,000 used on the line advance for undisbursed commitments (letters of credit) used to secure public funds.

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

	September 30,				December 31,
	2023		2022		2022
Nonaccrual loans	$	38,812	$	24,604	$	24,325
Loans still accruing and past due 90 days or more		289		15		—
Total nonperforming loans (1)	$	39,101	$	24,619	$	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 $39,698,000, $24,619,000 and $24,325,000 in nonaccrual, past due 90 days or more and still accruing, and foreclosed assets at September 30, 2023 and 2022, and December 31, 2022, respectively. Nonaccrual loans at September 30, 2023 and 2022, and December 31, 2022, consisted of the following (dollars in thousands):

	September 30,				December 31,
	2023		2022		2022
Commercial:
C&I	$	3,365	$	5,966	$	5,057
Municipal		—		—		—
Total Commercial		3,365		5,966		5,057
Agricultural		838		338		324
Real Estate:
Construction & Development		3,295		1,696		1,567
Farm		5,534		91		85
Non-Owner Occupied CRE		8,407		2,406		2,321
Owner Occupied CRE		7,812		6,703		7,092
Residential		8,990		6,781		7,419
Total Real Estate		34,038		17,677		18,484
Consumer:
Auto		465		596		429
Non-Auto		106		27		31
Total Consumer		571		623		460
Total	$	38,812	$	24,604	$	24,325

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

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

Three-Months Ended September 30, 2023	C&I			Municipal			Agricultural		Construction & Development			Farm
Beginning balance	$	16,530		$	187		$	1,082	$	28,966		$	2,804
Provision for loan losses		(64	)		(2	)		53		(696	)		131
Recoveries		56			—			21		6			—
Charge-offs		(715	)		—			—		—			—
Ending balance	$	15,807		$	185		$	1,156	$	28,276		$	2,935

Three-Months Ended September 30, 2023 (continued)	Non-Owner Occupied CRE		Owner Occupied CRE		Residential			Auto			Non-Auto			Total
Beginning balance	$	13,471	$	12,572	$	9,767		$	829		$	333		$	86,541
Provision for loan losses		2,330		767		1,035			172			95			3,821
Recoveries		16		187		3			96			47			432
Charge-offs		—		—		(7	)		(235	)		(123	)		(1,080	)
Ending balance	$	15,817	$	13,526	$	10,798		$	862		$	352		$	89,714

Three-Months Ended September 30, 2022	C&I			Municipal			Agricultural			Construction & Development		Farm
Beginning balance	$	18,589		$	1,352		$	1,162		$	21,085	$	1,006
Provision for loan losses		(2,378	)		(33	)		(187	)		4,614		149
Recoveries		266			—			18			—		—
Charge-offs		(38	)		—			—			—		—
Ending balance	$	16,439		$	1,319		$	993		$	25,699	$	1,155

Three-Months Ended September 30, 2022 (continued)	Non-Owner Occupied CRE			Owner Occupied CRE			Residential		Auto			Non-Auto			Total
Beginning balance	$	8,410		$	10,740		$	8,304	$	912		$	372		$	71,932
Provision for loan losses		(498	)		(1,303	)		557		72			67			1,060
Recoveries		283			649			93		47			53			1,409
Charge-offs		—			—			—		(119	)		(136	)		(293	)
Ending balance	$	8,195		$	10,086		$	8,954	$	912		$	356		$	74,108

Nine-Months Ended September 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		860			(841	)		(128	)		1,727		978
Recoveries		221			—			243			106		—
Charge-offs		(1,403	)		—			—			—		—
Ending balance	$	15,807		$	185		$	1,156		$	28,276	$	2,935

Nine-Months Ended September 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		6,679		3,390		1,826			341			218			15,050
Recoveries		63		208		18			329			128			1,316
Charge-offs		—		—		(121	)		(653	)		(309	)		(2,486	)
Ending balance	$	15,817	$	13,526	$	10,798		$	862		$	352		$	89,714

Nine-Months Ended September 30, 2022	C&I			Municipal		Agricultural			Construction & Development			Farm
Beginning balance	$	12,280		$	348	$	1,597		$	17,627		$	663
Provision for loan losses		3,598			971		(730	)		8,172			492
Recoveries		824			—		135			—			—
Charge-offs		(263	)		—		(9	)		(100	)		—
Ending balance	$	16,439		$	1,319	$	993		$	25,699		$	1,155

Nine-Months Ended September 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		(3,352	)		(1,323	)		860			116			106			8,910
Recoveries		825			669			110			215			182			2,960
Charge-offs		—			(88	)		(149	)		(315	)		(303	)		(1,227	)
Ending balance	$	8,195		$	10,086		$	8,954		$	912		$	356		$	74,108

Additionally, the Company records a reserve for unfunded commitments in other liabilities which totaled $7,903,000, $10,879,000 and $12,323,000 at September 30, 2023 and 2022, and December 31, 2022, respectively. The provision for loan losses of $3,821,000 for the three-months ended September 30, 2023 is combined with the reversal of the provision for unfunded commitments of $1,545,000 and reported in the net aggregate of $2,276,000 under the provision for credit losses in the consolidated statement of earnings for the three-months ended September 30, 2023. The provision for loan losses of $15,050,000 for the nine-months ended September 30, 2023 is combined with the reversal of the provision for unfunded commitments of $4,419,000 and reported in the net aggregate of $10,631,000 under the provision for credit losses in the consolidated statement of earnings for the nine-months ended September 30, 2023.

The $1,060,000 provision for loan losses for the three-months ended September 30, 2022 above is combined with the provision for unfunded commitments of $2,161,000 and reported in the aggregate of $3,221,000 under the provision for credit losses for the three-months ended September 30, 2022. The $8,910,000 provision for loan losses for the nine-months ended September 30, 2022 above is combined with the provision for unfunded commitments of $4,443,000 and reported in the aggregate of $13,353,000 under the provision for credit losses for the nine-months ended September 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 September 30, 2023 and 2022, and December 31, 2022, are summarized in the following tables by loan segment (dollars in thousands):

September 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	$	310	$	3,055	$	20,476	$	23,841	$	2,025	$	4,651	$	6,676
Municipal		—		—		1,377		1,377		—		—		—
Total Commercial		310		3,055		21,853		25,218		2,025		4,651		6,676
Agricultural		215		623		1,278		2,116		58		594		652
Real Estate:
Construction & Development		2,678		617		19,912		23,207		139		1,887		2,026
Farm		553		4,981		2,225		7,759		1,070		133		1,203
Non-Owner Occupied CRE		1,991		6,416		28,127		36,534		889		2,665		3,554
Owner Occupied CRE		5,473		2,339		34,988		42,800		400		1,635		2,035
Residential		6,059		2,931		29,453		38,443		281		1,865		2,146
Total Real Estate		16,754		17,284		114,705		148,743		2,779		8,185		10,964
Consumer:
Auto		—		465		1,858		2,323		1		3		4
Non-Auto		—		106		599		705		—		2		2
Total Consumer		—		571		2,457		3,028		1		5		6
Total	$	17,279	$	21,533	$	140,293	$	179,105	$	4,863	$	13,435	$	18,298

September 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	$	334	$	5,632	$	20,844	$	26,810	$	4,094	$	4,345	$	8,439
Municipal		—		—		71		71		—		—		—
Total Commercial		334		5,632		20,915		26,881		4,094		4,345		8,439
Agricultural		116		222		412		750		103		247		350
Real Estate:
Construction & Development		919		777		5,461		7,157		207		384		591
Farm		—		91		1,616		1,707		2		39		41
Non-Owner Occupied CRE		2,230		176		32,959		35,365		12		2,317		2,329
Owner Occupied CRE		5,700		1,003		30,136		36,839		103		1,958		2,061
Residential		4,129		2,652		26,057		32,838		293		1,347		1,640
Total Real Estate		12,978		4,699		96,229		113,906		617		6,045		6,662
Consumer:
Auto		—		596		1,096		1,692		1		2		3
Non-Auto		—		27		461		488		—		1		1
Total Consumer		—		623		1,557		2,180		1		3		4
Total	$	13,428	$	11,176	$	119,113	$	143,717	$	4,815	$	10,640	$	15,455

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 September 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.

September 30, 2023	C&I		Municipal		Agricultural		Construction & Development		Farm
Loans individually evaluated for credit losses	$	6,676	$	—	$	652	$	2,026	$	1,203
Loans collectively evaluated for credit losses		9,131		185		504		26,250		1,732
Total	$	15,807	$	185	$	1,156	$	28,276	$	2,935

September 30, 2023 (continued)	Non-Owner Occupied CRE		Owner Occupied CRE		Residential		Auto		Non-Auto		Total
Loans individually evaluated for credit losses	$	3,554	$	2,035	$	2,146	$	4	$	2	$	18,298
Loans collectively evaluated for credit losses		12,263		11,491		8,652		858		350		71,416
Total	$	15,817	$	13,526	$	10,798	$	862	$	352	$	89,714

September 30, 2022	C&I		Municipal		Agricultural		Construction & Development		Farm
Loans individually evaluated for credit losses	$	8,439	$	—	$	350	$	591	$	41
Loans collectively evaluated for credit losses		8,000		1,319		643		25,108		1,114
Total	$	16,439	$	1,319	$	993	$	25,699	$	1,155

September 30, 2022 (continued)	Non-Owner Occupied CRE		Owner Occupied CRE		Residential		Auto		Non-Auto		Total
Loans individually evaluated for credit losses	$	2,329	$	2,061	$	1,640	$	3	$	1	$	15,455
Loans collectively evaluated for credit losses		5,866		8,025		7,314		909		355		58,653
Total	$	8,195	$	10,086	$	8,954	$	912	$	356	$	74,108

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 September 30, 2023 and 2022, and December 31, 2022, related to the balance in the allowance for credit losses follows below (dollars in thousands):

September 30, 2023	C&I		Municipal		Agricultural		Construction & Development		Farm
Loans individually evaluated for credit losses	$	23,841	$	1,377	$	2,116	$	23,207	$	7,759
Loans collectively evaluated for credit losses		1,084,399		216,981		79,760		906,363		333,293
Total	$	1,108,240	$	218,358	$	81,876	$	929,570	$	341,052

September 30, 2023 (continued)	Non-Owner Occupied CRE		Owner Occupied CRE		Residential		Auto		Non-Auto		Total
Loans individually evaluated for credit losses	$	36,534	$	42,800	$	38,443	$	2,323	$	705	$	179,105
Loans collectively evaluated for credit losses		792,366		960,113		1,750,470		538,059		153,787		6,815,591
Total	$	828,900	$	1,002,913	$	1,788,913	$	540,382	$	154,492	$	6,994,696

September 30, 2022	C&I		Municipal		Agricultural		Construction & Development		Farm
Loans individually evaluated for credit losses	$	26,810	$	71	$	750	$	7,157	$	1,707
Loans collectively evaluated for credit losses		844,525		214,781		76,187		930,894		266,432
Total	$	871,335	$	214,852	$	76,937	$	938,051	$	268,139

September 30, 2022 (continued)	Non-Owner Occupied CRE		Owner Occupied CRE		Residential		Auto		Non-Auto		Total
Loans individually evaluated for credit losses	$	35,365	$	36,839	$	32,838	$	1,692	$	488	$	143,717
Loans collectively evaluated for credit losses		682,373		908,826		1,503,342		537,106		147,305		6,111,771
Total	$	717,738	$	945,665	$	1,536,180	$	538,798	$	147,793	$	6,255,488

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 September 30, 2023 (dollars in millions):

September 30,	2023		2022		2021		2020		2019		Prior		Revolving Loans Amortized Cost Basis		Total
C&I
Risk rating:
Pass	$	524	$	386	$	94	$	40	$	16	$	24	$	—	$	1,084
Special mention		7		1		—		—		1		—		—		9
Substandard		2		5		3		2		1		2		—		15
Doubtful		—		—		—		—		—		—		—		—
Total	$	533	$	392	$	97	$	42	$	18	$	26	$	—	$	1,108
Year-to-Date Gross Charge-Offs	$	—	$	—	$	1	$	—	$	—	$	—	$	—	$	1

September 30,	2023		2022		2021		2020		2019		Prior		Revolving Loans Amortized Cost Basis		Total
Municipal
Risk rating:
Pass	$	20	$	83	$	16	$	14	$	2	$	82	$	—	$	217
Special mention		—		—		—		—		—		—		—		—
Substandard		—		—		1		—		—		—		—		1
Doubtful		—		—		—		—		—		—		—		—
Total	$	20	$	83	$	17	$	14	$	2	$	82	$	—	$	218
Year-to-Date Gross Charge-Offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—

September 30,	2023		2022		2021		2020		2019		Prior		Revolving Loans Amortized Cost Basis		Total
Agricultural
Risk rating:
Pass	$	42	$	30	$	5	$	2	$	1	$	—	$	—	$	80
Special mention		—		—		—		—		—		—		—		—
Substandard		1		1		—		—		—		—		—		2
Doubtful		—		—		—		—		—		—		—		—
Total	$	43	$	31	$	5	$	2	$	1	$	—	$	—	$	82
Year-to-Date Gross Charge-Offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—

September 30,	2023		2022		2021		2020		2019		Prior		Revolving Loans Amortized Cost Basis		Total
Construction & Development
Risk rating:
Pass	$	373	$	401	$	94	$	22	$	10	$	7	$	—	$	907
Special mention		7		4		—		—		—		—		—		11
Substandard		8		3		1		—		—		—		—		12
Doubtful		—		—		—		—		—		—		—		—
Total	$	388	$	408	$	95	$	22	$	10	$	7	$	—	$	930
Year-to-Date Gross Charge-Offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—

September 30,	2023		2022		2021		2020		2019		Prior		Revolving Loans Amortized Cost Basis		Total
Farm
Risk rating:
Pass	$	83	$	116	$	75	$	25	$	9	$	25	$	—	$	333
Special mention		—		—		—		—		—		—		—		—
Substandard		—		1		1		5		—		1		—		8
Doubtful		—		—		—		—		—		—		—		—
Total	$	83	$	117	$	76	$	30	$	9	$	26	$	—	$	341
Year-to-Date Gross Charge-Offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—

September 30,	2023		2022		2021		2020		2019		Prior		Revolving Loans Amortized Cost Basis		Total
Non-Owner Occupied CRE
Risk rating:
Pass	$	134	$	240	$	182	$	116	$	45	$	75	$	—	$	792
Special mention		—		4		1		—		11		2		—		18
Substandard		1		1		1		7		2		7		—		19
Doubtful		—		—		—		—		—		—		—		—
Total	$	135	$	245	$	184	$	123	$	58	$	84	$	—	$	829
Year-to-Date Gross Charge-Offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—

September 30,	2023		2022		2021		2020		2019		Prior		Revolving Loans Amortized Cost Basis		Total
Owner Occupied CRE
Risk rating:
Pass	$	81	$	320	$	228	$	118	$	64	$	149	$	—	$	960
Special mention		1		—		5		—		3		—		—		9
Substandard		3		6		4		—		5		16		—		34
Doubtful		—		—		—		—		—		—		—		—
Total	$	85	$	326	$	237	$	118	$	72	$	165	$	—	$	1,003
Year-to-Date Gross Charge-Offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—

September 30,	2023		2022		2021		2020		2019		Prior		Revolving Loans Amortized Cost Basis		Total
Residential
Risk rating:
Pass	$	368	$	443	$	325	$	165	$	70	$	241	$	139	$	1,751
Special mention		—		2		2		2		—		3		1		10
Substandard		4		5		4		3		2		8		2		28
Doubtful		—		—		—		—		—		—		—		—
Total	$	372	$	450	$	331	$	170	$	72	$	252	$	142	$	1,789
Year-to-Date Gross Charge-Offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—

September 30,	2023		2022		2021		2020		2019		Prior		Revolving Loans Amortized Cost Basis		Total
Auto
Risk rating:
Pass	$	168	$	237	$	86	$	32	$	13	$	2	$	—	$	538
Special mention		—		—		—		—		—		—		—		—
Substandard		—		1		1		—		—		—		—		2
Doubtful		—		—		—		—		—		—		—		—
Total	$	168	$	238	$	87	$	32	$	13	$	2	$	—	$	540
Year-to-Date Gross Charge-Offs	$	—	$	1	$	—	$	—	$	—	$	—	$	—	$	1

September 30,	2023		2022		2021		2020		2019		Prior		Revolving Loans Amortized Cost Basis		Total
Non-Auto
Risk rating:
Pass	$	60	$	54	$	26	$	5	$	1	$	1	$	7	$	154
Special mention		—		—		—		—		—		—		—		—
Substandard		1		—		—		—		—		—		—		1
Doubtful		—		—		—		—		—		—		—		—
Total	$	61	$	54	$	26	$	5	$	1	$	1	$	7	$	155
Year-to-Date Gross Charge-Offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—

September 30,	2023		2022		2021		2020		2019		Prior		Revolving Loans Amortized Cost Basis		Total
Total Loans
Risk rating:
Pass	$	1,853	$	2,310	$	1,131	$	539	$	231	$	606	$	146	$	6,816
Special mention		15		11		8		2		15		5		1		57
Substandard		20		23		16		17		10		34		2		122
Doubtful		—		—		—		—		—		—		—		—
Total	$	1,888	$	2,344	$	1,155	$	558	$	256	$	645	$	149	$	6,995
Year-to-Date Gross Charge-Offs	$	—	$	1	$	1	$	—	$	—	$	—	$	—	$	2

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

September 30,	2022		2021		2020		2019		2018		Prior		Revolving Loans Amortized Cost Basis		Total
C&I
Risk rating:
Pass	$	495	$	226	$	65	$	24	$	18	$	16	$	—	$	844
Special mention		1		—		—		1		—		—		—		2
Substandard		11		7		3		1		3		—		—		25
Doubtful		—		—		—		—		—		—		—		—
Total	$	507	$	233	$	68	$	26	$	21	$	16	$	—	$	871

September 30,	2022		2021		2020		2019		2018		Prior		Revolving Loans Amortized Cost Basis		Total
Municipal
Risk rating:
Pass	$	67	$	21	$	16	$	5	$	20	$	86	$	—	$	215
Special mention		—		—		—		—		—		—		—		—
Substandard		—		—		—		—		—		—		—		—
Doubtful		—		—		—		—		—		—		—		—
Total	$	67	$	21	$	16	$	5	$	20	$	86	$	—	$	215

September 30,	2022		2021		2020		2019		2018		Prior		Revolving Loans Amortized Cost Basis		Total
Agricultural
Risk rating:
Pass	$	46	$	21	$	4	$	3	$	1	$	1	$	—	$	76
Special mention		—		—		—		—		—		—		—		—
Substandard		—		1		—		—		—		—		—		1
Doubtful		—		—		—		—		—		—		—		—
Total	$	46	$	22	$	4	$	3	$	1	$	1	$	—	$	77

September 30,	2022		2021		2020		2019		2018		Prior		Revolving Loans Amortized Cost Basis		Total
Construction & Development
Risk rating:
Pass	$	504	$	317	$	78	$	15	$	8	$	9	$	—	$	931
Special mention		—		2		—		—		—		—		—		2
Substandard		4		1		—		—		—		—		—		5
Doubtful		—		—		—		—		—		—		—		—
Total	$	508	$	320	$	78	$	15	$	8	$	9	$	—	$	938

September 30,	2022		2021		2020		2019		2018		Prior		Revolving Loans Amortized Cost Basis		Total
Farm
Risk rating:
Pass	$	101	$	89	$	33	$	12	$	8	$	23	$	—	$	266
Special mention		—		—		—		—		—		—		—		—
Substandard		1		—		—		—		—		1		—		2
Doubtful		—		—		—		—		—		—		—		—
Total	$	102	$	89	$	33	$	12	$	8	$	24	$	—	$	268

September 30,	2022		2021		2020		2019		2018		Prior		Revolving Loans Amortized Cost Basis		Total
Non-Owner Occupied CRE
Risk rating:
Pass	$	223	$	200	$	108	$	51	$	22	$	79	$	—	$	683
Special mention		—		1		—		11		—		7		—		19
Substandard		5		1		1		2		1		6		—		16
Doubtful		—		—		—		—		—		—		—		—
Total	$	228	$	202	$	109	$	64	$	23	$	92	$	—	$	718

September 30,	2022		2021		2020		2019		2018		Prior		Revolving Loans Amortized Cost Basis		Total
Owner Occupied CRE
Risk rating:
Pass	$	280	$	223	$	134	$	81	$	67	$	124	$	—	$	909
Special mention		—		1		2		4		—		1		—		8
Substandard		1		2		1		3		11		11		—		29
Doubtful		—		—		—		—		—		—		—		—
Total	$	281	$	226	$	137	$	88	$	78	$	136	$	—	$	946

September 30,	2022		2021		2020		2019		2018		Prior		Revolving Loans Amortized Cost Basis		Total
Residential
Risk rating:
Pass	$	433	$	382	$	183	$	87	$	68	$	224	$	126	$	1,503
Special mention		—		2		3		—		—		3		—		8
Substandard		4		3		3		2		1		9		3		25
Doubtful		—		—		—		—		—		—		—		—
Total	$	437	$	387	$	189	$	89	$	69	$	236	$	129	$	1,536

September 30,	2022		2021		2020		2019		2018		Prior		Revolving Loans Amortized Cost Basis		Total
Auto
Risk rating:
Pass	$	284	$	149	$	64	$	29	$	8	$	3	$	—	$	537
Special mention		—		—		—		—		—		—		—		—
Substandard		—		—		1		1		—		—		—		2
Doubtful		—				—		—		—		—		—		—
Total	$	284	$	149	$	65	$	30	$	8	$	3	$	—	$	539

September 30,	2022		2021		2020		2019		2018		Prior		Revolving Loans Amortized Cost Basis		Total
Non-Auto
Risk rating:
Pass	$	73	$	48	$	13	$	4	$	2	$	1	$	7	$	148
Special mention		—		—		—		—		—		—		—		—
Substandard		—		—		—		—		—		—		—		—
Doubtful		—		—		—		—		—		—		—		—
Total	$	73	$	48	$	13	$	4	$	2	$	1	$	7	$	148

September 30,	2022		2021		2020		2019		2018		Prior		Revolving Loans Amortized Cost Basis		Total
Total Loans
Risk rating:
Pass	$	2,506	$	1,676	$	698	$	311	$	222	$	566	$	133	$	6,112
Special mention		1		6		5		16		—		11		—		39
Substandard		26		15		9		9		16		27		3		105
Doubtful		—		—		—		—		—		—		—		—
Total	$	2,533	$	1,697	$	712	$	336	$	238	$	604	$	136	$	6,256

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

September 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	$	5,111	$	390	$	1,388	$	6,889	$	1,101,351	$	1,108,240	$	109
Municipal		481		—		—		481		217,877		218,358		—
Total Commercial		5,592		390		1,388		7,370		1,319,228		1,326,598		109
Agricultural		187		—		550		737		81,139		81,876		32
Real Estate:
Construction & Development		10,037		169		1,986		12,192		917,378		929,570		—
Farm		706		—		205		911		340,141		341,052		—
Non-Owner Occupied CRE		2,748		—		—		2,748		826,152		828,900		—
Owner Occupied CRE		1,867		—		476		2,343		1,000,570		1,002,913		—
Residential		9,049		1,658		2,067		12,774		1,776,139		1,788,913		148
Total Real Estate		24,407		1,827		4,734		30,968		4,860,380		4,891,348		148
Consumer:
Auto		339		176		32		547		539,835		540,382		—
Non-Auto		217		2		9		228		154,264		154,492		—
Total Consumer		556		178		41		775		694,099		694,874		—
Total	$	30,742	$	2,395	$	6,713	$	39,850	$	6,954,846	$	6,994,696	$	289

September 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	$	5,422	$	73	$	1,515	$	7,010	$	864,325	$	871,335	$	—
Municipal		—		—		—		—		214,852		214,852		—
Total Commercial		5,422		73		1,515		7,010		1,079,177		1,086,187		—
Agricultural		290		93		—		383		76,554		76,937		—
Real Estate:
Construction & Development		2,958		600		—		3,558		934,493		938,051		—
Farm		822		150		—		972		267,167		268,139		—
Non-Owner Occupied CRE		536		—		—		536		717,202		717,738		—
Owner Occupied CRE		1,138		37		—		1,175		944,490		945,665		—
Residential		4,834		252		15		5,101		1,531,079		1,536,180		15
Total Real Estate		10,288		1,039		15		11,342		4,394,431		4,405,773		15
Consumer:
Auto		267		76		33		376		538,422		538,798		—
Non-Auto		66		10		—		76		147,717		147,793		—
Total Consumer		333		86		33		452		686,139		686,591		—
Total	$	16,333	$	1,291	$	1,563	$	19,187	$	6,236,301	$	6,255,488	$	15

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 nine-months ended September 30, 2023, loan modifications made to borrowers experiencing financial difficulty was insignificant.