QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) | |
(Address of principal executive offices) |
(Zip Code) |
Title of each class |
Trading Symbol(s) |
Name of each exchange on which registered | ||
☒ | Accelerated filer | ☐ | ||||
Non-accelerated filer |
☐ | Smaller reporting company | ||||
Emerging growth company |
Class |
Outstanding at November 4, 2020 | |
Common Stock, $0.01 par value per share |
September 30, |
December 31, |
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2020 |
2019 |
2019 |
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(Unaudited) |
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ASSETS |
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CASH AND DUE FROM BANKS |
$ | $ | $ | |||||||||
FEDERAL FUNDS SOLD |
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INTEREST-BEARING DEMAND DEPOSITS IN BANKS |
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Total cash and cash equivalents |
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SECURITIES AVAILABLE-FOR-SALE, |
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LOANS: |
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Held-for-investment |
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Less - allowance for loan losses |
( |
) | ( |
) | ( |
) | ||||||
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Net loans held-for-investment |
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Held-for-sale ($ |
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Net loans |
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BANK PREMISES AND EQUIPMENT, net |
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GOODWILL AND INTANGIBLE ASSETS, net |
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OTHER ASSETS |
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Total assets |
$ | $ | $ | |||||||||
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LIABILITIES AND SHAREHOLDERS’ EQUITY |
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NONINTEREST-BEARING DEPOSITS |
$ | $ | $ | |||||||||
INTEREST-BEARING DEPOSITS |
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Total deposits |
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DIVIDENDS PAYABLE |
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BORROWINGS |
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OTHER LIABILITIES |
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Total liabilities |
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COMMITMENTS AND CONTINGENCIES |
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SHAREHOLDERS’ EQUITY: |
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Common stock - ($ |
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Capital surplus |
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Retained earnings |
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Treasury stock (shares at cost: |
( |
) | ( |
) | ( |
) | ||||||
Deferred compensation |
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Accumulated other comprehensive earnings, net of income taxes |
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Total shareholders’ equity |
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Total liabilities and shareholders’ equity |
$ | $ | $ | |||||||||
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Three - Months Ended |
Nine - MonthsEnded |
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2020 | 2019 | 2020 | 2019 | |||||||||||||
INTEREST INCOME: |
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Interest and fees on loans |
$ | $ | $ | $ | ||||||||||||
Interest on investment securities: |
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Taxable |
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Exempt from federal income tax |
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Interest on federal funds sold and interest-bearing demand deposits in banks |
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Total interest income |
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INTEREST EXPENSE: |
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Interest on deposits |
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Other |
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Total interest expense |
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Net interest income |
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PROVISION FOR CREDIT LOSSES |
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Net interest income after provision s for c lossesredit |
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NONINTEREST INCOME: |
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Trust fees |
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Service charges on deposit accounts |
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ATM, interchange and credit card fees |
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Gain on sale and fees on mortgage loans |
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Net gain on sale of available-for-sale - months ended September 30, 2020 and 2019, respectively, and $- months ended September 30, 2020 and 2019, respectively, related to accumulated other comprehensive earnings reclassifications) |
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Net gain on sale of foreclosed assets |
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Net gain (loss) on sale of assets |
( |
) | ||||||||||||||
Interest on loan recoveries |
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Other |
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Total noninterest income |
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NONINTEREST EXPENSE: |
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Salaries, commissions and employee benefits |
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Loss from partial settlement of pension plan |
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Net occupancy expense |
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Equipment expense |
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FDIC insurance premiums |
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ATM, interchange and credit card expenses |
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Professional and service fees |
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Printing, stationery and supplies |
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Operational and other losses |
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Software amortization and expense |
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Amortization of intangible assets |
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Other |
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Total noninterest expense |
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EARNINGS BEFORE INCOME TAXES |
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INCOME TAX EXPENSE -months ended September 30, 2020 and 2019, respectively, and $-months ended September 30, 2020 and 2019, respectively, related to income tax expense from reclassification items) |
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NET EARNINGS |
$ | $ | $ | $ | ||||||||||||
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EARNINGS PER SHARE, BASIC |
$ | $ | $ | $ | ||||||||||||
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EARNINGS PER SHARE, DILUTED |
$ | $ | $ | $ | ||||||||||||
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DIVIDENDS PER SHARE |
$ | $ | $ | $ | ||||||||||||
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FIRST FINANCIAL BANKSHARES, INC. AND SUBSIDIARIES |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE EARNINGS - (UNAUDITED) |
(Dollars in thousands) |
Three - Months September 30, |
Nine - Months EndedSeptember 30, |
|||||||||||||||
2020 | 2019 | 2020 | 2019 | |||||||||||||
NET EARNINGS |
$ | $ | $ | $ | ||||||||||||
OTHER ITEMS OF COMPREHENSIVE EARNINGS: |
||||||||||||||||
Change in unrealized gain on investment securities available-for-sale, |
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Reclassification adjustment for realized gains on investment securities included in net earnings, |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
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Total other items of comprehensive earnings |
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Income tax expense related to other items of comprehensive earnings |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
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COMPREHENSIVE EARNINGS |
$ | $ | $ | $ | ||||||||||||
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Accumulated |
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Other |
Total |
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Common Stock |
Capital Surplus |
Retained Earnings |
Treasury Stock |
Deferred Compensation |
Comprehensive Earnings |
Shareholders’ Equity |
||||||||||||||||||||||||||||||
Shares |
Amount |
Shares |
Amounts |
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Balances at June 30, 2019 (unaudited) |
$ | $ | $ | ( |
) | $ | ( |
) | $ | $ | $ | |||||||||||||||||||||||||
Net earnings (unaudited) |
— | — | — | — | — | — | — | |||||||||||||||||||||||||||||
Stock option exercises (unaudited) |
— | — | — | — | — | — | ||||||||||||||||||||||||||||||
Cash dividends declared, $ |
— | — | — | ( |
) | — | — | — | — | ( |
) | |||||||||||||||||||||||||
Change in unrealized gain in investment securities available-for-sale, |
— | — | — | — | — | — | — | |||||||||||||||||||||||||||||
Shares purchased in connection with directors’ deferred compensation plan, net (unaudited) |
— | — | — | — | ( |
) | — | — | ||||||||||||||||||||||||||||
Stock option expense (unaudited) |
— | — | — | — | — | — | — | |||||||||||||||||||||||||||||
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Balances at September 30, 2019 (unaudited) |
$ | $ | $ | ( |
) | $ | ( |
) | $ | $ | $ | |||||||||||||||||||||||||
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Balances at June 30, 2020 (unaudited) |
$ | $ | $ | ( |
) | $ | ( |
) | $ | $ | $ | |||||||||||||||||||||||||
Net earnings (unaudited) |
— | — | — | — | — | — | — | |||||||||||||||||||||||||||||
Stock option exercises (unaudited) |
— | — | — | — | — | |||||||||||||||||||||||||||||||
Cash dividends declared, $ |
— | — | — | ( |
) | — | — | — | — | ( |
) | |||||||||||||||||||||||||
Change in unrealized gain in investment securities available-for-sale, |
— | — | — | — | — | — | — | |||||||||||||||||||||||||||||
Shares purchased in connection with directors’ deferred compensation plan, net (unaudited) |
— | — | — | — | ( |
) | ( |
) | — | — | ||||||||||||||||||||||||||
Stock option expense (unaudited) |
— | — | — | — | — | — | — | |||||||||||||||||||||||||||||
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Balances at September 30, 2020 (unaudited) |
$ | $ | $ | ( |
) | $ | ( |
) | $ | $ | $ | |||||||||||||||||||||||||
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Common Stock | Capital | Retained | Treasury Stock | Deferred | Accumulated Other Comprehensive |
Total Shareholders’ |
||||||||||||||||||||||||||||||
Shares | Amount | Surplus | Earnings | Shares | Amounts | Compensation | Earnings | Equity | ||||||||||||||||||||||||||||
Balances at December 31, 2018 |
$ | $ | $ | ( |
) | $ | ( |
) | $ | $ | $ | |||||||||||||||||||||||||
Net earnings (unaudited) |
— | — | — | — | — | — | — | |||||||||||||||||||||||||||||
Stock option exercises (unaudited) |
— | — | — | — | — | |||||||||||||||||||||||||||||||
Restricted stock grant (unaudited) |
— | — | — | — | — | — | ||||||||||||||||||||||||||||||
Cash dividends declared, $ |
— | — | — | ( |
) | — | — | — | — | ( |
) | |||||||||||||||||||||||||
Change in unrealized gain in investment securities available-for-sale, |
— | — | — | — | — | — | — | |||||||||||||||||||||||||||||
Shares purchased in connection with directors’ deferred compensation plan, net (unaudited) |
— | — | — | — | ( |
) | — | — | ||||||||||||||||||||||||||||
Stock option expense (unaudited) |
— | — | — | — | — | — | — | |||||||||||||||||||||||||||||
Two-for-one (unaudited) |
— | ( |
) | ( |
) | — | — | — | — | |||||||||||||||||||||||||||
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Balances at September 30, 2019 (unaudited) |
$ | $ | $ | ( |
) | $ | ( |
) | $ | $ | $ | |||||||||||||||||||||||||
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Balances at December 31, 2019 |
$ | $ | $ | ( |
) | $ | ( |
) | $ | $ | $ | |||||||||||||||||||||||||
Stock issued in acquisition of TB&T Bancshares, Inc. (unaudited) |
— | — | — | — | — | |||||||||||||||||||||||||||||||
Net earnings (unaudited) |
— | — | — | — | — | — | — | |||||||||||||||||||||||||||||
Stock option exercises (unaudited) |
— | — | — | — | — | |||||||||||||||||||||||||||||||
Restricted stock grant (unaudited) |
— | — | — | — | — | — | ||||||||||||||||||||||||||||||
Cash dividends declared, $ |
— | — | — | ( |
) | — | — | — | — | ( |
) | |||||||||||||||||||||||||
Change in unrealized gain in investment securities available-for-sale, net of related income taxes (unaudited) |
— | — | — | — | — | — | — | |||||||||||||||||||||||||||||
Shares purchased in connection with directors’ deferred compensation plan, net (unaudited) |
— | — | — | — | ( |
) | ( |
) | — | — | ||||||||||||||||||||||||||
Stock option expense (unaudited) |
— | — | — | — | — | — | — | |||||||||||||||||||||||||||||
Shares repurchased under stock repurchase authorization (unaudited) |
( |
) | ( |
) | ( |
) | — | — | — | — | — | ( |
) | |||||||||||||||||||||||
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Balances at September 30, 2020 (unaudited) |
$ | $ | $ | ( |
) | $ | ( |
) | $ | $ | $ | |||||||||||||||||||||||||
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Nine-Months Ended September 30, |
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2020 |
2019 |
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CASH FLOWS FROM OPERATING ACTIVITIES: |
||||||||
Net earnings |
$ | $ | ||||||
Adjustments to reconcile net earnings to net cash provided by operating activities: |
||||||||
Depreciation and amortization |
||||||||
Provision for credit losses |
||||||||
Securities premium amortization, net |
||||||||
Discount accret ion on purchased loans |
|
|
( |
) |
|
|
( |
) |
Gain on sale of assets, net |
( |
) | ( |
) | ||||
Deferred federal income tax (expense) benefit |
||||||||
Change in loans held-for-sale |
( |
) | ( |
) | ||||
Change in other assets |
( |
) | ||||||
Change in other liabilities |
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Total adjustments |
( |
) | ||||||
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Net cash provided by operating activities |
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CASH FLOWS FROM INVESTING ACTIVITIES: |
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Cash received in acquisition of TB&T Bancshares, Inc. |
||||||||
Net decrease in interest-bearing time deposits in banks |
||||||||
Activity in available-for-sale |
||||||||
Sales |
||||||||
Maturities |
||||||||
Purchases |
( |
) | ( |
) | ||||
Net increase in loans held -for-investment |
( |
) | ( |
) | ||||
Purchases of bank premises and equipment |
( |
) | ( |
) | ||||
Proceeds from sale of bank premises and equipment and other assets |
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Net cash used in investing activities |
( |
) | ( |
) | ||||
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CASH FLOWS FROM FINANCING ACTIVITIES: |
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Net increase in noninterest-bearing deposits |
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Net increase in interest-bearing deposits |
||||||||
Net increase (decrease) in borrowings |
( |
) | ||||||
Common stock transactions: |
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Proceeds from stock option exercises |
||||||||
Dividends paid |
( |
) | ( |
) | ||||
Repurchase of stock |
( |
) | ||||||
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Net cash provided by financing activities |
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NET DE IN CASH AND CASH EQUIVALENTSCREASE |
( |
) | ( |
) | ||||
CASH AND CASH EQUIVALENTS, beginning of period |
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CASH AND CASH EQUIVALENTS, end of period |
$ | $ | ||||||
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SUPPLEMENTAL INFORMATION AND NONCASH TRANSACTIONS: |
|
|||||||
Interest paid |
$ | $ | ||||||
Federal income taxes paid |
||||||||
Transfer of loans and bank premises to other real estate |
||||||||
Investment securities purchased but not settled |
||||||||
Restricted stock grant to officers and directors |
||||||||
Stock issued in acquisition of TB&T Bancshares, Inc. |
Net | Weighted | |||||||||||
Earnings | Average | Per Share | ||||||||||
(in thousands) | Shares | Amount | ||||||||||
For the three-months ended September 30, 2020: |
||||||||||||
Net earnings per share, basic |
$ | |
$ | |
||||||||
Effect of stock options and stock grants |
||||||||||||
Net earnings per share, diluted |
$ | $ | ||||||||||
Net | Weighted | |||||||||||
Earnings | Average | Per Share | ||||||||||
(in thousands) | Shares | Amount | ||||||||||
Fo r the nine-month s ended September 30, 2020: |
||||||||||||
Net earnings per share, basic |
$ | |
$ | |
||||||||
Effect of stock options and stock grants |
||||||||||||
Net earnings per share, diluted |
$ | $ | ||||||||||
Net | Weighted | |||||||||||
Earnings | Average | Per Share | ||||||||||
(in thousands) | Shares | Amount | ||||||||||
For the three-months ended September 30, 2019 : |
||||||||||||
Net earnings per share, basic |
$ | |
$ | |
||||||||
Effect of stock options and stock grants |
— | |||||||||||
Net earnings per share, diluted |
$ | $ | ||||||||||
Net | Weighted | |||||||||||
Earnings | Average | Per Share | ||||||||||
(in thousands) | Shares | Amount | ||||||||||
For the nine-months ended Septe mber 30, 2019: |
||||||||||||
Net earnings per share, basic |
$ | |
$ | |
||||||||
Effect of stock options and stock grants |
— | |||||||||||
Net earnings per share, diluted |
$ | |
$ | |||||||||
September 30, 2020 | ||||||||||||||||
Gross | Gross | |||||||||||||||
Amortized | Unrealized | Unrealized | Estimated | |||||||||||||
Cost Basis | Holding Gains | Holding Losses | Fair Value | |||||||||||||
Obligations of states and political subdivisions |
$ | $ | $ | ( |
) | $ | ||||||||||
Residential mortgage-backed securities |
( |
) |
||||||||||||||
Commercial mortgage-backed securities |
— | |||||||||||||||
Corporate bonds and other |
— | |||||||||||||||
Total securities available-for-sale |
$ | |
$ |
$ | ( |
) | $ |
|
||||||||
September 30, 2019 | ||||||||||||||||
Gross | Gross | |||||||||||||||
Amortized | Unrealized | Unrealized | Estimated | |||||||||||||
Cost Basis | Holding Gains | Holding Losses | Fair Value | |||||||||||||
U.S. Treasury securities |
$ | $ | $ | — | $ | |||||||||||
Obligations of states and political subdivisions |
( |
) | ||||||||||||||
Corporate bonds and other |
— | |||||||||||||||
Residential mortgage-backed securities |
( |
) | ||||||||||||||
Commercial mortgage-backed securities |
( |
) | ||||||||||||||
Total securities available-for-sale |
$ | $ | $ | ( |
) | $ | ||||||||||
December 31, 2019 | ||||||||||||||||
Gross | Gross | |||||||||||||||
Amortized | Unrealized | Unrealized | Estimated | |||||||||||||
Cost Basis | Holding Gains | Holding Losses | Fair Value | |||||||||||||
U.S. Treasury securities |
$ | $ | $ | — | $ | |||||||||||
Obligations of states and political subdivisions |
( |
) | ||||||||||||||
Corporate bonds and other |
— | |||||||||||||||
Residential mortgage-backed securities |
( |
) | ||||||||||||||
Commercial mortgage-backed securities |
( |
) | ||||||||||||||
Total securities available-for-sale |
$ | $ | $ | ( |
) | $ | ||||||||||
Amortized | Estimated | |||||||
Cost Basis | Fair Value | |||||||
Due within one year | $ | $ | ||||||
Due after one year through five years | ||||||||
Due after five years through ten years | ||||||||
Due after ten years | ||||||||
Mortgage-backed securities | ||||||||
Total |
$ | $ | ||||||
Less than 12 Months |
12 Months or Longer |
Total |
||||||||||||||||||||||
September 30, 2020 |
Fair Value |
Unrealized Loss |
Fair Value |
Unrealized Loss |
Fair Value |
Unrealized Loss |
||||||||||||||||||
Obligations of states and political subdivisions |
$ | |
$ | |
$ | — | $ | — | $ | |
$ | |
||||||||||||
Residential mortgage-backed securities |
||||||||||||||||||||||||
Total |
$ | $ | $ | |
$ | $ | $ | |||||||||||||||||
Less than 12 Months |
12 Months or Longer |
Total |
||||||||||||||||||||||
September 30, 2019 |
Fair Value |
Unrealized Loss |
Fair Value |
Unrealized Loss |
Fair Value |
Unrealized Loss |
||||||||||||||||||
Obligations of states and political subdivisions |
$ | $ | $ | $ | — | $ | $ | |||||||||||||||||
Residential mortgage-backed securities |
||||||||||||||||||||||||
Commercial mortgage-backed securities |
||||||||||||||||||||||||
Total |
$ | |
$ | |
$ | $ | |
$ | |
$ | |
|||||||||||||
Less than 12 Months |
12 Months or Longer |
Total |
||||||||||||||||||||||
December 31, 2019 |
Fair Value |
Unrealized Loss |
Fair Value |
Unrealized Loss |
Fair Value |
Unrealized Loss |
||||||||||||||||||
Obligations of state and political subdivisions |
$ | $ | |
$ | $ | — | $ | $ | ||||||||||||||||
Residential mortgage-backed securities |
||||||||||||||||||||||||
Commercial mortgage-backed securities |
||||||||||||||||||||||||
Total |
$ | |
$ | $ | |
$ | $ | |
$ | |
||||||||||||||
September 30, | December 31, | |||||||||||
2020 | 2019 | 2019 | ||||||||||
Commercial |
$ | |
$ | $ | ||||||||
Agricultural |
||||||||||||
Real estate |
||||||||||||
Consumer |
||||||||||||
|
|
|
|
|
|
|||||||
Total loans held-for-investment |
$ | $ | |
$ | ||||||||
|
|
|
|
|
|
September 30, |
December 31, |
|||||||||||
202 0 |
2019 |
2019 |
||||||||||
Non-accrual loans* |
$ |
$ | $ | |||||||||
Loans still accruing and past due 90 days or more |
||||||||||||
Troubled debt restructured loans still accruing** |
||||||||||||
|
|
|
|
|
|
|||||||
Total |
$ |
|
$ | |
$ | |
||||||
|
|
|
|
|
|
* | Includes $ |
** | Troubled debt restructured loans of $ non-accrual loans at September 30, 2020 and 2019, and December 31, 2019,respectively. |
September 30, |
December 31, |
|||||||||||
2020 |
2019 |
2019 |
||||||||||
Recorded Investment |
$ |
$ |
$ |
|||||||||
Valuation Allowance |
September 30, |
December 31, |
|||||||||||
2020 |
2019 |
2019 |
||||||||||
Commercial |
$ | $ | $ | |||||||||
Agricultural |
||||||||||||
Real estate |
||||||||||||
Consumer |
||||||||||||
|
|
|
|
|
|
|||||||
Total |
$ | |
$ |
|
$ | |
||||||
|
|
|
|
|
|
September 30, 2020 |
Unpaid Contractual Principal Balance |
Recorded Investment With No Allowance* |
Recorded Investment With Allowance |
Total Recorded Investment |
Related Allowance |
Year –to- date Average Recorded Investment |
Three- Month Average Recorded Investment |
|||||||||||||||||||||
Commercial |
$ | $ | $ | $ | $ | |
$ | $ | ||||||||||||||||||||
Agricultural |
||||||||||||||||||||||||||||
Real Estate |
||||||||||||||||||||||||||||
Consumer |
||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Total |
$ | |
$ | |
$ | |
$ | |
$ | $ | |
$ | |
|||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
* | Includes $ |
September 30, 2019 |
Unpaid Contractual Principal Balance |
Recorded Investment With No Allowance* |
Recorded Investment With Allowance |
Total Recorded Investment |
Related Allowance |
Year- to-date Average Recorded Investment |
Three- Month Average Recorded Investment |
|||||||||||||||||||||
Commercial |
$ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||
Agricultural |
||||||||||||||||||||||||||||
Real Estate |
||||||||||||||||||||||||||||
Consumer |
||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Total |
$ | |
$ | |
$ | |
$ | |
$ | |
$ | |
$ | |
||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
* | Includes $ |
December 31, 2019 |
Unpaid Contractual Principal Balance |
Recorded Investment With No Allowance* |
Recorded Investment With Allowance |
Total Recorded Investment |
Related Allowance |
Year-to-date Average Recorded Investment |
||||||||||||||||||
Commercial |
$ | $ | $ | $ | $ | $ | ||||||||||||||||||
Agricultural |
||||||||||||||||||||||||
Real Estate |
||||||||||||||||||||||||
Consumer |
||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Total |
$ | |
$ | |
$ | |
$ | |
$ | |
$ | |
||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
* | Includes $ |
September 30, 2020 |
Pass | Special Mention |
Substandard | Doubtful | Total | |||||||||||||||
Commercial |
$ | $ | $ | $ | — | $ | ||||||||||||||
Agricultural |
— | |||||||||||||||||||
Real Estate |
— | |||||||||||||||||||
Consumer |
— | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total |
$ | $ | $ | |
$ | — | $ | |||||||||||||
|
|
|
|
|
|
|
|
|
|
September 30, 2019 |
Pass | Special Mention |
Substandard | Doubtful | Total | |||||||||||||||
Commercial |
$ | $ | $ | $ | — | $ | ||||||||||||||
Agricultural |
— | |||||||||||||||||||
Real Estate |
— | |||||||||||||||||||
Consumer |
— | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total |
$ | $ | $ | |
$ | — | $ | |||||||||||||
|
|
|
|
|
|
|
|
|
|
December 31, 2019 |
Pass | Special Mention |
Substandard | Doubtful | Total | |||||||||||||||
Commercial |
$ | $ | $ | $ | — | $ | ||||||||||||||
Agricultural |
— | |||||||||||||||||||
Real Estate |
— | |||||||||||||||||||
Consumer |
— | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total |
$ | |
$ | $ | |
$ | — | $ | ||||||||||||
|
|
|
|
|
|
|
|
|
|
September 30, 2020 |
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 |
$ | $ | $ | $ | $ | |
$ | $ | — | |||||||||||||||||||
Agricultural |
— | |||||||||||||||||||||||||||
Real Estate |
||||||||||||||||||||||||||||
Consumer |
||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Total |
$ | $ | |
$ | |
$ | $ | $ | $ | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2019 |
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 |
$ | $ | $ | $ | $ | $ | $ | — | ||||||||||||||||||||
Agricultura l |
— | |||||||||||||||||||||||||||
Real Estate |
||||||||||||||||||||||||||||
Consumer |
||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Total |
$ | $ | |
$ | |
$ | $ | $ | $ | |
||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2019 |
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 |
$ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||
Agricultural |
— | |||||||||||||||||||||||||||
Real Estate |
— | |||||||||||||||||||||||||||
Consumer |
||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Total |
$ | $ | $ | $ | $ | $ | $ | |
||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
* | 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. |
September 30, 2020 |
Commercial | Agricultural | Real Estate | Consumer | Total | |||||||||||||||
Loans individually evaluated for impairment |
$ | $ | $ | $ |
$ | |||||||||||||||
Loans collectively evaluated for impairment |
||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total |
$ | |
$ | |
$ | |
$ | |
$ | |||||||||||
|
|
|
|
|
|
|
|
|
|
September 30, 2019 |
Commercial | Agricultural | Real Estate | Consumer | Total | |||||||||||||||
Loans individually evaluated for impairment |
$ | $ | $ | $ |
$ | |||||||||||||||
Loans collectively evaluated for impairment |
||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total |
$ | |
$ | |
$ | |
$ | |
$ | |||||||||||
|
|
|
|
|
|
|
|
|
|
December 31, 2019 |
Commercial | Agricultural | Real Estate | Consumer | Total | |||||||||||||||
Loans individually evaluated for impairment |
$ | $ | $ | $ |
$ | |||||||||||||||
Loans collectively evaluated for impairment |
||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total |
$ | $ | |
$ | |
$ | $ | |||||||||||||
|
|
|
|
|
|
|
|
|
|
Three - months endedSeptember 30, 2020 |
Commercial | Agricultural | Real Estate | Consumer | Total | |||||||||||||||
Beginning balance |
$ | $ | $ | $ | $ | |||||||||||||||
Provision for loan losses |
( |
) | ||||||||||||||||||
Recoveries |
||||||||||||||||||||
Charge-offs |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Ending balance |
$ | |
$ | |
$ | $ | |
$ | ||||||||||||
|
|
|
|
|
|
|
|
|
|
Three - months endedSeptember 30, 2019 |
Commercial | Agricultural | Real Estate | Consumer | Total | |||||||||||||||
Beginning balance |
$ | $ | $ | $ | $ |
|||||||||||||||
Provision for loan losses |
( |
) | ( |
) | ||||||||||||||||
Recoveries |
||||||||||||||||||||
Charge-offs |
( |
) | ( |
) | ( |
) | ( |
) | ( |
) | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Ending balance |
$ | |
$ | |
$ |
|
$ |
|
$ | |
||||||||||
|
|
|
|
|
|
|
|
|
|
Nine - months endedSeptember 30, 2020 |
Commercial | Agricultural | Real Estate | Consumer | Total | |||||||||||||||
Beginning balance |
$ | $ | $ | $ | $ |
|||||||||||||||
Provision for loan losses |
||||||||||||||||||||
Recoveries |
||||||||||||||||||||
Charge-offs |
( |
) | ( |
) | ( |
) | ( |
) | ( |
) | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Ending balance |
$ | |
$ | |
$ |
|
$ |
|
$ | |
||||||||||
|
|
|
|
|
|
|
|
|
|
Nine - months endedSeptember 30, 2019 |
Commercial | Agricultural | Real Estate | Consumer | Total | |||||||||||||||
Beginning balance |
$ | $ | $ | $ | $ |
|||||||||||||||
Provision for loan losses |
||||||||||||||||||||
Recoveries |
||||||||||||||||||||
Charge-offs |
( |
) | ( |
) | ( |
) | ( |
) | ( |
) | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Ending balance |
$ | |
$ | |
$ |
|
$ |
|
$ | |
||||||||||
|
|
|
|
|
|
|
|
|
|
September 30, 2020 |
Commercial | Agricultural | Real Estate | Consumer | Total | |||||||||||||||
Loans individually evaluated for impairment |
$ | $ | $ | $ | $ | |||||||||||||||
Loans collectively evaluated for impairment |
||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total |
$ | |
$ | |
$ | $ | |
$ | ||||||||||||
|
|
|
|
|
|
|
|
|
|
September 30, 2019 |
Commercial | Agricultural | Real Estate | Consumer | Total | |||||||||||||||
Loans individually evaluated for impairment |
$ | $ | $ | $ | $ | |||||||||||||||
Loans collectively evaluated for impairment |
||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total |
$ | |
$ | |
$ | $ | |
$ | ||||||||||||
|
|
|
|
|
|
|
|
|
|
December 31, 2019 |
Commercial | Agricultural | Real Estate | Consumer | Total | |||||||||||||||
Loans individually evaluated for impairment |
$ | $ | $ | $ | $ | |||||||||||||||
Loans collectively evaluated for impairment |
||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total |
$ | |
$ | |
$ | $ | |
$ | ||||||||||||
|
|
|
|
|
|
|
|
|
|
Three - Months Ended September 30, 2020 |
Nine - Months Ended September 30, 2020 |
|||||||||||||||||||||||
Pre- Modification |
Post- Modification |
Pre- Modification |
Post- Modification |
|||||||||||||||||||||
Recorded | Recorded | Recorded | Recorded | |||||||||||||||||||||
Number | Investment | Investment | Number | Investment | ||||||||||||||||||||
Commercial |
$ | $ | $ | $ |
||||||||||||||||||||
Agricultural |
— | — | — | |||||||||||||||||||||
Real Estate |
||||||||||||||||||||||||
Consumer |
— | — | — | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Total |
$ | $ | $ | $ | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
Three - Months Ended September 30, 2019 |
Nine - Months Ended September 30, 2019 |
|||||||||||||||||||||||
Pre- Modification |
Post- Modification |
Pre- Modification |
Post- Modification |
|||||||||||||||||||||
Recorded | Recorded | Recorded | Recorded | |||||||||||||||||||||
Number | Investment | Number | Investment | |||||||||||||||||||||
Commercial |
$ | $ | $ | $ | ||||||||||||||||||||
Agricultural |
— | — | — | |||||||||||||||||||||
Real Estate |
||||||||||||||||||||||||
Consumer |
— | — | — | — | — | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Total |
$ | $ | $ | $ | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
Three - Months Ended September 30, 2020 |
Nine - Months Ended September 30, 2020 |
|||||||||||||||||||||||
Adjusted Interest Rate |
Extended Maturity |
Combined Rate and Maturity |
Adjusted Interest Rate |
Extended Maturity |
Combined Rate and Maturity |
|||||||||||||||||||
Commercial |
$ | — | $ | $ | $ | — | $ | $ | ||||||||||||||||
Agricultural |
— | — | — | — | — | |||||||||||||||||||
Real Estate |
— | — | — | — | ||||||||||||||||||||
Consumer |
— | — | — | — | — | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Total |
$ | — | $ | $ | $ | — | $ | $ | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
Three - |
Nine - |
|||||||||||||||||||||||
Adjusted Interest Rate |
Extended Maturity |
Combined Rate and Maturity |
Adjusted Interest Rate |
Extended Maturity |
Combined Rate and Maturity |
|||||||||||||||||||
Commercial |
$ | — | $ | — | $ | $ | — | $ | $ | |||||||||||||||
Agricultural |
— | — | — | — | ||||||||||||||||||||
Real Estate |
— | — | — | |||||||||||||||||||||
Consumer |
— | — | — | — | — | — | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Total |
$ | — | $ | — | $ | $ | — | $ | $ | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2020: |
Outstanding Notional Balance |
Asset Derivative Fair Value |
Liability Derivative Fair Value |
|||||||||
IRLCs |
$ | $ | $ | — | ||||||||
Forward mortgage-backed securities trades |
— |
September 30, 2019: |
Outstanding Notional Balance |
Asset Derivative Fair Value |
Liability Derivative Fair Value |
|||||||||
IRLCs |
$ | |
$ | $ | — | |||||||
Forward mortgage-backed securities trades |
— |
December 31, 2019: |
Outstanding Notional Balance |
Asset Derivative Fair Value |
Liability Derivative Fair Value |
|||||||||
IRLCs |
$ | |
$ | |
$ | — | ||||||
Forward mortgage-backed securities trades |
— |
September 30, | December 31, | |||||||||||
2020 | 2019 | 2019 | ||||||||||
Securities sold under agreements with customers to repurchase |
$ |
$ | $ | |||||||||
Federal funds purchased |
||||||||||||
Advances from Federal Home Loan |
— | |||||||||||
Total |
$ | $ |
$ | |||||||||
• | Level 1 Inputs – Unadjusted quoted prices in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date. |
• | Level 2 Inputs – Inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. These include quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability (for example, interest rates, volatilities, prepayment speeds, loss severities, credit risks and default rates) or inputs that are derived principally from or corroborated by observable market data by correlation or other means. |
• | Level 3 Inputs – Significant unobservable inputs that reflect an entity’s own assumptions that market participants would use in pricing the assets or liabilities. |
Level 1 Inputs |
Level 2 Inputs |
Level 3 Inputs |
Total Fair Value |
|||||||||||||
Available-for-sale |
||||||||||||||||
Obligations of states and political subdivisions |
$ | — | $ | $ | — | $ | ||||||||||
Residential mortgage-backed securities |
— | — | ||||||||||||||
Commercial mortgage-backed securities |
— | — | ||||||||||||||
Other securities |
— | — | ||||||||||||||
Total |
$ | |
$ |
$ | — | $ |
||||||||||
Loans held-for-sale |
$ | — | $ | $ | — | $ | ||||||||||
IRLCs |
$ | — | $ | $ | — | $ | ||||||||||
Forward mortgage-backed securities trades |
$ | ( |
) | $ | — | $ | — | $ | ( |
) | ||||||
Level 1 Inputs |
Level 2 Inputs |
Level 3 Inputs |
Total Fair Value |
|||||||||||||
Available-for-sale |
||||||||||||||||
U.S. Treasury securities |
$ | $ | — | $ | — | $ | ||||||||||
Obligations of states and political subdivisions |
— | — | ||||||||||||||
Corporate bonds |
— | — | ||||||||||||||
Residential mortgage-backed securities |
— | — | ||||||||||||||
Commercial mortgage-backed securities |
— | — | ||||||||||||||
Other securities |
— | — | ||||||||||||||
Total |
$ |
$ |
$ | — | $ |
|||||||||||
Loans held-for-sale |
$ | — | $ | $ | — | $ | ||||||||||
IRLCs |
$ | — | $ | $ | — | $ | ||||||||||
Forward mortgage-backed securities trades |
$ | ( |
) | $ | — | $ | — | $ | ( |
) |
Level 1 Inputs |
Level 2 Inputs |
Level 3 Inputs |
Total Fair Value |
|||||||||||||
Available-for-sale |
||||||||||||||||
U.S. Treasury securities |
$ |
$ | — | $ | — | $ | ||||||||||
Obligations of states and political subdivisions |
— | |||||||||||||||
Corporate bonds |
— | — | ||||||||||||||
Residential mortgage-backed securities |
— | — | ||||||||||||||
Commercial mortgage -backed securities |
— | — | ||||||||||||||
Other securities |
— | — | ||||||||||||||
Total |
$ | $ | $ | — | $ |
|||||||||||
Loans held-for-sale |
$ | — | $ | $ | — | $ | ||||||||||
IRLCs |
$ | — | $ | $ | — | $ | ||||||||||
Forward mortgage-backed securities trades |
$ | ( |
) | $ | — | $ | — | $ | ( |
) | ||||||
September 30, |
December 31, |
|||||||||||
2020 |
2019 |
2019 |
||||||||||
Unpaid principal balance on loans held-for-sale |
$ |
$ |
$ |
|||||||||
Net unrealized gains on loans held-for-sale |
||||||||||||
Loans held-for-sale |
$ |
$ |
$ |
|||||||||
Three-Months ended September 30, |
Nine-Months ended September 30, |
|||||||||||||||
2020 |
2019 |
2020 |
2019 |
|||||||||||||
Realized gain on sale and fees on mortgage loans* |
$ |
$ |
$ |
$ |
||||||||||||
Change in fair value on loans held-for-sale |
||||||||||||||||
Change in forward mortgage-backed securities trades |
( |
) |
||||||||||||||
Total gain on sale of mortgage loans |
$ |
$ |
$ |
$ |
||||||||||||
* | This includes gains on loans held-for-sale lower |
September 30, | December 31, | |||||||||||||||||||||||||||
2020 | 2019 | 2019 | ||||||||||||||||||||||||||
Carrying Value |
Estimated Fair Value |
Carrying Value |
Estimated Fair Value |
Carrying Value |
Estimated Fair Value |
Fair Value Hierarchy | ||||||||||||||||||||||
Cash and due from banks |
$ | $ | $ | $ | $ | $ | Level 1 | |||||||||||||||||||||
Federal funds sold |
— | — | — | — | Level 1 | |||||||||||||||||||||||
Interest-bearing demand deposits in banks |
Level 1 | |||||||||||||||||||||||||||
Available-for-sale securities |
Levels 1 and 2 | |||||||||||||||||||||||||||
Loans held-for-investment, net of allowance for loan losses |
Level 3 | |||||||||||||||||||||||||||
Loans - for- sale |
Level 2 | |||||||||||||||||||||||||||
Accrued interest receivable |
Level 2 | |||||||||||||||||||||||||||
Deposits with stated maturities |
Level 2 | |||||||||||||||||||||||||||
Deposits with no stated maturities |
Level 1 | |||||||||||||||||||||||||||
Borrowings |
Level 2 | |||||||||||||||||||||||||||
Accrued interest payable |
Level 2 | |||||||||||||||||||||||||||
IRLCs |
Level 2 | |||||||||||||||||||||||||||
Forward mortgage-backed securities trades |
( |
) | ( |
) | ( |
) | ( |
) | ( |
) | ( |
) | Level 1 |
Fair value of consideration paid: |
||||
Common stock issued ( |
$ | |||
Fair value of identifiable assets acquired: |
||||
Cash and cash equivalents |
$ |
|||
Securities available-for-sale |
||||
Loans |
||||
Identifiable intangible assets |
||||
Other assets |
||||
Total identifiable assets acquired |
$ |
|||
Fair value of liabilities assumed: |
||||
Deposits |
$ |
|||
Other liabilities |
||||
Total liabilities assumed |
$ |
|||
Fair value of net identifiable assets acquired |
||||
Goodwill resulting from acquisition |
$ | |||
Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
• | general economic conditions, including local, state, national and international, and the impact they may have on us and our customers; |
• | effect of the coronavirus (COVID-19) on our Company, the communities where we have our branches, the state of Texas and the United States, related to the economy and overall financial stability; |
• | impact of reduction in interchange fees if assets exceed $10 billion; |
• | government and regulatory responses to the COVID-19 pandemic; |
• | effect of severe weather conditions, including hurricanes, tornadoes, flooding and droughts; |
• | volatility and disruption in national and international financial and commodity markets and oil and gas prices; |
• | government intervention in the U.S. financial system including the effects of recent legislative, tax, accounting and regulatory actions and reforms, including the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”), the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”), the Jumpstart Our Business Startups Act, the Consumer Financial Protection Bureau, the capital ratios of Basel III as adopted by the federal banking authorities and the Tax Cuts and Jobs Act; |
• | political instability; |
• | the ability of the Federal government to address the national economy; |
• | changes in our competitive environment from other financial institutions and financial service providers; |
• | the effects of and changes in trade, monetary and fiscal policies and laws, including interest rate policies of the Board of Governors of the Federal Reserve System (the “Federal Reserve Board”); |
• | the effect of changes in accounting policies and practices, as may be adopted by the regulatory agencies, as well as the Public Company Accounting Oversight Board, the Financial Accounting Standards Board and other accounting standard setters; |
• | the effect of changes in laws and regulations (including laws and regulations concerning taxes, banking, securities and insurance) with which we and our subsidiaries must comply; |
• | changes in the demand for loans; |
• | fluctuations in the value of collateral securing our loan portfolio and in the level of the allowance for loan losses; |
• | potential risk of environmental liability associated with lending activities; |
• | the accuracy of our estimates of future loan losses; |
• | the accuracy of our estimates and assumptions regarding the performance of our securities portfolio; |
• | soundness of other financial institutions with which we have transactions; |
• | inflation, interest rate, market and monetary fluctuations; |
• | changes in consumer spending, borrowing and savings habits; |
• | changes in commodity prices (e.g., oil and gas, cattle and wind energy); |
• | our ability to attract deposits and increase market share; |
• | changes in our liquidity position; |
• | changes in the reliability of our vendors, internal control system or information systems; |
• | cyber attacks on our technology information systems, including fraud from our customers and external third party vendors; |
• | our ability to attract and retain qualified employees; |
• | acquisitions and integration of acquired businesses; |
• | the possible impairment of goodwill and other intangibles associated with our acquisitions; |
• | consequences of continued bank mergers and acquisitions in our market area, resulting in fewer but much larger and stronger competitors; |
• | expansion of operations, including branch openings, new product offerings and expansion into new markets; |
• | changes in our compensation and benefit plans; |
• | acts of God, pandemic, war or terrorism; and |
• | our success at managing the risk involved in the foregoing items. |
• | We have addressed the safety of our 78 branches and other locations, following the guidelines of the Center for Disease Control, and while the branches have remained open to customers, we have taken steps, and continue to evaluate, to push as much traffic and transactions as possible to our motor banks and our online services; |
• | We have held executive meetings weekly or as needed to address issues that are changing rapidly; |
• | We moved our Annual Shareholders’ Meeting from a physical meeting to a virtual meeting; |
• | Provided extensions and deferrals to loan customers effected by COVID-19 provided such customers were not 30 days past due at December 31, 2019; |
• | We chose to participate in the CARES Act Paycheck Protection Program (PPP) that provided government guaranteed and forgivable loans to our customers. Through September 30, 2020, we completed approximately 6,500 loans and funded $703.73 million of such loans. We believe these loans and our participation in the program was good for our customers and the communities we serve; and |
• | We chose to participate in the Federal Reserve’s Main Street Lending Program to provide ongoing loans for our customers. One loan has been funded as of September 30, 2020 under this program. |
• | duration, extent and severity of COVID-19; |
• | utilization of unfunded commitments; |
• | effects of government assistance; |
• | unemployment and the corresponding effects on the economy; |
• | volatility of oil and gas prices; |
• | value of real estate; and |
• | the effect of our TB&T Bancshares, Inc. acquisition on our combined loan portfolio. |
Three-Months Ended September 30, 2020 Compared to Three-Months Ended September 30, 2019 |
Nine-Months Ended September 30, 2020 Compared to Nine-Months Ended September 30, 2019 |
|||||||||||||||||||||||
Change Attributable to |
Total Change |
Change Attributable to |
Total Change |
|||||||||||||||||||||
Volume |
Rate |
Volume |
Rate |
|||||||||||||||||||||
Short-term investments |
$ | 949 | $ | (1,269 | ) | $ (320) | $ 3,081 | $ | (3,845 | ) | $ (764) | |||||||||||||
Taxable investment securities |
24 | (2,253 | ) | (2,229 | ) | 4,531 | (5,288 | ) | (757 | ) | ||||||||||||||
Tax-exempt investment securities (1) |
8,237 | (2,575 | ) | 5,662 | 15,235 | (5,533 | ) | 9,702 | ||||||||||||||||
Loans (1) (2) |
17,388 | (8,124 | ) | 9,264 | 43,301 | (14,033 | ) | 29,268 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Interest income |
26,598 | (14,221 | ) | 12,377 | 66,148 | (28,699 | ) | 37,449 | ||||||||||||||||
Interest-bearing deposits |
1,908 | (6,967 | ) | (5,059 | ) | 4,746 | (14,524 | ) | (9,778 | ) | ||||||||||||||
Short-term borrowings |
202 | (933 | ) | (731 | ) | 1,450 | (2,650 | ) | (1,200 | ) | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Interest expense |
2,110 | (7,900 | ) | (5,790 | ) | 6,196 | (17,174 | ) | (10,978 | ) | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Net interest income |
$ | 24,488 | $ | (6,321 | ) | $ | 18,167 | $ | 59,952 | $ | (11,525 | ) | $ | 48,427 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
Three-Months Ended September 30, |
||||||||||||||||||||||||
2020 |
2019 |
|||||||||||||||||||||||
Average Balance |
Income/ Expense |
Yield/ Rate |
Average Balance |
Income/ Expense |
Yield/ Rate |
|||||||||||||||||||
Assets |
||||||||||||||||||||||||
Short-term investments (1) |
$ | 225,113 | $ | 62 | 0.11 | % | $ | 64,471 | $ | 382 | 2.35 | % | ||||||||||||
Taxable investment securities (2) |
2,187,547 | 12,063 | 2.21 | 2,183,930 | 14,292 | 2.62 | ||||||||||||||||||
Tax-exempt investment securities (2)(3) |
2,058,032 | 15,737 | 3.06 | 1,132,279 | 10,075 | 3.56 | ||||||||||||||||||
Loans (3)(4) |
5,334,174 | 66,681 | 4.97 | 4,094,235 | 57,417 | 5.56 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Total earning assets |
9,804,866 | $ | 94,543 | 3.84 | % | 7,474,915 | $ | 82,166 | 4.36 | % | ||||||||||||||
Cash and due from banks |
186,177 | 165,868 | ||||||||||||||||||||||
Bank premises and equipment, net |
139,758 | 133,191 | ||||||||||||||||||||||
Other assets |
98,261 | 68,519 | ||||||||||||||||||||||
Goodwill and other intangible assets, net |
319,059 | 174,005 | ||||||||||||||||||||||
Allowance for loan losses |
(71,881 | ) | (52,137 | ) | ||||||||||||||||||||
|
|
|
|
|||||||||||||||||||||
Total assets |
$ | 10,476,240 | $ | 7,964,361 | ||||||||||||||||||||
|
|
|
|
|||||||||||||||||||||
Liabilities and Shareholders’ Equity |
||||||||||||||||||||||||
Interest-bearing deposits |
$ | 5,270,600 | $ | 2,064 | 0.16 | % | $ | 4,156,850 | $ | 7,123 | 0.68 | % | ||||||||||||
Short-term borrowings |
482,555 | 99 | 0.08 | 388,235 | 830 | 0.85 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Total interest-bearing liabilities |
5,753,155 | $ | 2,163 | 0.15 | % | 4,545,085 | $ | 7,953 | 0.69 | % | ||||||||||||||
Noninterest-bearing deposits |
3,016,700 | 2,180,200 | ||||||||||||||||||||||
Other liabilities |
106,295 | 57,262 | ||||||||||||||||||||||
|
|
|
|
|||||||||||||||||||||
Total liabilities |
8,876,150 | 6,782,547 | ||||||||||||||||||||||
Shareholders’ equity |
1,600,090 | 1,181,814 | ||||||||||||||||||||||
|
|
|
|
|||||||||||||||||||||
Total liabilities and shareholders’ equity |
$ | 10,476,240 | $ | 7,964,361 | ||||||||||||||||||||
|
|
|
|
|||||||||||||||||||||
Net interest income |
$ | 92,380 | $ | 74,213 | ||||||||||||||||||||
|
|
|
|
|||||||||||||||||||||
Rate Analysis: |
||||||||||||||||||||||||
Interest income/earning assets |
3.84 | % | 4.36 | % | ||||||||||||||||||||
Interest expense/earning assets |
(0.09 | ) | (0.42 | ) | ||||||||||||||||||||
|
|
|
|
|||||||||||||||||||||
Net interest margin |
3.75 | % | 3.94 | % | ||||||||||||||||||||
|
|
|
|
Nine-Months Ended September 30, |
||||||||||||||||||||||||
2020 |
2019 |
|||||||||||||||||||||||
Average Balance |
Income/ Expense |
Yield/ Rate |
Average Balance |
Income/ Expense |
Yield/ Rate |
|||||||||||||||||||
Assets |
||||||||||||||||||||||||
Short-term investments (1) |
$ | 269,704 | $ | 903 | 0.45 | % | $ | 93,997 | $ | 1,667 | 2.37 | % | ||||||||||||
Taxable investment securities (2) |
2,283,064 | 40,748 | 2.38 | 2,058,380 | 41,505 | 2.69 | ||||||||||||||||||
Tax-exempt investment securities (2)(3) |
1,736,250 | 41,670 | 3.20 | 1,175,863 | 31,968 | 3.62 | ||||||||||||||||||
Loans (3)(4) |
5,084,136 | 196,255 | 5.16 | 4,037,243 | 166,987 | 5.53 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Total earning assets |
9,373,154 | $ | 279,576 | 3.98 | % | 7,365,483 | $ | 242,127 | 4.40 | % | ||||||||||||||
Cash and due from banks |
188,241 | 173,647 | ||||||||||||||||||||||
Bank premises and equipment, net |
139,600 | 133,886 | ||||||||||||||||||||||
Other assets |
91,324 | 65,525 | ||||||||||||||||||||||
Goodwill and other intangible assets, net |
318,902 | 174,264 | ||||||||||||||||||||||
Allowance for loan losses |
(64,742 | ) | (52,143 | ) | ||||||||||||||||||||
|
|
|
|
|||||||||||||||||||||
Total assets |
$ | 10,046,479 | $ | 7,860,662 | ||||||||||||||||||||
|
|
|
|
|||||||||||||||||||||
Liabilities and Shareholders’ Equity |
||||||||||||||||||||||||
Interest-bearing deposits |
$ | 5,104,096 | $ | 11,293 | 0.30 | % | $ | 4,165,735 | $ | 21,071 | 0.68 | % | ||||||||||||
Short-term borrowings |
606,291 | 1,030 | 0.23 | 391,680 | 2,230 | 0.76 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Total interest-bearing liabilities |
5,710,387 | $ | 12,323 | 0.29 | % | 4,557,415 | $ | 23,301 | 0.68 | % | ||||||||||||||
Noninterest-bearing deposits |
2,714,173 | 2,133,418 | ||||||||||||||||||||||
Other liabilities |
82,670 | 44,994 | ||||||||||||||||||||||
|
|
|
|
|||||||||||||||||||||
Total liabilities |
8,507,230 | 6,735,827 | ||||||||||||||||||||||
Shareholders’ equity |
1,539,249 | 1,124,835 | ||||||||||||||||||||||
|
|
|
|
|||||||||||||||||||||
Total liabilities and shareholders’ equity |
$ | 10,046,479 | $ | 7,860,662 | ||||||||||||||||||||
|
|
|
|
|||||||||||||||||||||
Net interest income |
$ | 267,253 | $ | 218,826 | ||||||||||||||||||||
|
|
|
|
|||||||||||||||||||||
Rate Analysis: |
||||||||||||||||||||||||
Interest income/earning assets |
3.98 | % | 4.40 | % | ||||||||||||||||||||
Interest expense/earning assets |
(0.17 | ) | (0.43 | ) | ||||||||||||||||||||
|
|
|
|
|||||||||||||||||||||
Net interest margin |
3.81 | % | 3.97 | % | ||||||||||||||||||||
|
|
|
|
(1) | Short-term investments are comprised of federal funds sold, interest-bearing deposits in banks and interest-bearing time deposits in banks. |
(2) | Average balances include unrealized gains and losses on available-for-sale |
(3) | Computed on a tax-equivalent basis assuming a marginal tax rate of 21%. |
(4) | Non-accrual loans are included in loans. |
Three-Months Ended September 30, |
Nine-Months Ended September 30, |
|||||||||||||||||||||||
2020 |
Increase (Decrease) |
2019 |
2020 |
Increase (Decrease) |
2019 |
|||||||||||||||||||
Trust fees |
$ | 7,461 | $ | 410 | $ | 7,051 | $ | 21,859 | $ | 802 | $ | 21,057 | ||||||||||||
Service charges on deposit accounts |
5,009 | (620 | ) | 5,629 | 15,242 | (937 | ) | 16,179 | ||||||||||||||||
ATM, interchange and credit card fees |
8,644 | 916 | 7,728 | 24,093 | 2,173 | 21,920 | ||||||||||||||||||
Gain on sale and fees on mortgage loans |
15,228 | 9,495 | 5,733 | 32,756 | 18,828 | 13,928 | ||||||||||||||||||
Net gain on sale of available-for-sale |
36 | (16 | ) | 52 | 3,610 | 2,882 | 728 | |||||||||||||||||
Net gain on sale of foreclosed assets |
19 | (52 | ) | 71 | 72 | (121 | ) | 193 | ||||||||||||||||
Net gain (loss) on sale of assets |
(2 | ) | (237 | ) | 235 | 90 | (151 | ) | 241 | |||||||||||||||
Interest on loan recoveries |
202 | (373 | ) | 575 | 621 | (1,194 | ) | 1,815 | ||||||||||||||||
Other: |
||||||||||||||||||||||||
Check printing fees |
55 | — | 55 | 177 | 34 | 143 | ||||||||||||||||||
Safe deposit rental fees |
185 | 70 | 115 | 555 | 126 | 429 | ||||||||||||||||||
Credit life fees |
130 | (54 | ) | 184 | 696 | (102 | ) | 798 | ||||||||||||||||
Brokerage commissions |
301 | (105 | ) | 406 | 1,020 | (149 | ) | 1,169 | ||||||||||||||||
Miscellaneous income |
1,307 | 472 | 835 | 3,435 | 954 | 2,481 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Total other |
1,978 | 383 | 1,595 | 5,883 | 863 | 5,020 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Total Noninterest Income |
$ | 38,575 | $ | 9,906 | $ | 28,669 | $ | 104,226 | $ | 23,145 | $ | 81,081 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
Three-Months Ended September 30, |
Nine-Months Ended September 30, |
|||||||||||||||||||||||
2020 |
Increase (Decrease) |
2019 |
2020 |
Increase (Decrease) |
2019 |
|||||||||||||||||||
Salaries and commissions |
$ | 26,470 | $ | 4,273 | $ | 22,197 | $ | 72,443 | $ | 10,003 | $ | 62,440 | ||||||||||||
Medical |
2,461 | 360 | 2,101 | 7,442 | 558 | 6,884 | ||||||||||||||||||
Profit sharing |
1,545 | 25 | 1,520 | 4,495 | (400 | ) | 4,895 | |||||||||||||||||
Pension |
— | (31 | ) | 31 | — | (73 | ) | 73 | ||||||||||||||||
401(k) match expense |
840 | 172 | 668 | 2,576 | 482 | 2,094 | ||||||||||||||||||
Payroll taxes |
1,570 | 216 | 1,354 | 5,100 | 735 | 4,365 | ||||||||||||||||||
Stock option and stock grant expense |
763 | 84 | 679 | 2,049 | 332 | 1,717 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Total salaries and employee benefits |
33,649 | 5,099 | 28,550 | 94,105 | 11,637 | 82,468 | ||||||||||||||||||
Loss from partial settlement of pension plan |
— | — | — | — | (900 | ) | 900 | |||||||||||||||||
Net occupancy expense |
3,193 | 363 | 2,830 | 9,321 | 949 | 8,372 | ||||||||||||||||||
Equipment expense |
2,157 | (68 | ) | 2,225 | 6,242 | (767 | ) | 7,009 | ||||||||||||||||
FDIC assessment fees |
587 | 572 | 15 | 1,095 | 4 | 1,091 | ||||||||||||||||||
ATM, interchange and credit card expense |
2,829 | 202 | 2,627 | 8,424 | 987 | 7,437 | ||||||||||||||||||
Professional and service fees |
2,237 | 335 | 1,902 | 7,327 | 1,606 | 5,721 | ||||||||||||||||||
Printing, stationery and supplies |
615 | 135 | 480 | 1,714 | 366 | 1,348 | ||||||||||||||||||
Operational and other losses |
621 | 114 | 507 | 1,925 | 672 | 1,253 | ||||||||||||||||||
Software amortization and expense |
2,265 | 498 | 1,767 | 6,299 | 1,152 | 5,147 | ||||||||||||||||||
Amortization of intangible assets |
490 | 244 | 246 | 1,507 | 729 | 778 | ||||||||||||||||||
Other: |
||||||||||||||||||||||||
Data processing fees |
367 | (39 | ) | 406 | 1,234 | 60 | 1,174 | |||||||||||||||||
Postage |
377 | (30 | ) | 407 | 1,062 | (186 | ) | 1,248 | ||||||||||||||||
Advertising |
248 | (659 | ) | 907 | 1,053 | (1,616 | ) | 2,669 | ||||||||||||||||
Correspondent bank service charges |
235 | 64 | 171 | 666 | 148 | 518 | ||||||||||||||||||
Telephone |
912 | (6 | ) | 918 | 2,788 | (53 | ) | 2,841 | ||||||||||||||||
Public relations and business development |
548 | (290 | ) | 838 | 1,949 | (404 | ) | 2,353 | ||||||||||||||||
Directors’ fees |
547 | 23 | 524 | 1,783 | 314 | 1,469 | ||||||||||||||||||
Audit and accounting fees |
565 | 208 | 357 | 1,779 | 497 | 1,282 | ||||||||||||||||||
Legal fees |
339 | (17 | ) | 356 | 1,037 | 99 | 938 | |||||||||||||||||
Regulatory exam fees |
276 | (22 | ) | 298 | 829 | (52 | ) | 881 | ||||||||||||||||
Travel |
220 | (144 | ) | 364 | 732 | (507 | ) | 1,239 | ||||||||||||||||
Courier expense |
217 | (4 | ) | 221 | 634 | 23 | 611 | |||||||||||||||||
Other real estate owned |
18 | (19 | ) | 37 | 89 | (20 | ) | 109 | ||||||||||||||||
Other |
2,081 | 124 | 1,957 | 10,639 | 4,912 | 5,727 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Total other |
6,950 | (811 | ) | 7,761 | 26,274 | 3,215 | 23,059 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Total Noninterest Expense |
$ | 55,593 | $ | 6,683 | $ | 48,910 | $ | 164,233 | $ | 19,650 | $ | 144,583 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
September 30, |
December 31, 2019 |
|||||||||||
2020 |
2019 |
|||||||||||
Commercial |
$ | 1,488,345 | $ | 836,644 | $ | 856,326 | ||||||
Agricultural |
93,972 | 102,054 | 103,640 | |||||||||
Real estate |
3,287,605 | 2,749,552 | 2,823,372 | |||||||||
Consumer |
423,757 | 412,066 | 411,631 | |||||||||
|
|
|
|
|
|
|||||||
Total loans held-for-investment |
$ | 5,293,679 | $ | 4,100,316 | $ | 4,194,969 | ||||||
|
|
|
|
|
|
September 30, |
December 31, 2019 |
|||||||||||
2020 |
2019 |
|||||||||||
Oil and gas related loans, excluding PPP loans |
$ | 118,567 | $ | 122,908 | $ | 119,789 | ||||||
Oil and gas related loans as a % of total loans held-for-investment, |
2.58 | % | 3.00 | % | 2.86 | % | ||||||
Classified oil and gas related loans |
$ | 26,823 | $ | 7,953 | $ | 7,041 | ||||||
Nonaccrual oil and gas related loans |
6,800 | 519 | 481 | |||||||||
Net charge-offs for oil and gas related loans for quarter/year then ended |
— | — | — | |||||||||
Allowance for oil and gas related loans as a % of oil and gas loans |
8.01 | % | 2.87 | % | 2.54 | % |
September 30, |
June 30, |
|||||||
2020 |
2020 |
|||||||
Retail loans |
$ | 229,386 | $ | 216,244 | ||||
Restaurant loans |
39,523 | 46,418 | ||||||
Hotel loans |
63,273 | 51,957 | ||||||
Other hospitality loans |
26,041 | 23,230 | ||||||
Travel loans |
801 | 908 | ||||||
|
|
|
|
|||||
Total Retail/Restaurant/Hospitality loans, excluding PPP loans |
$ | 359,024 | $ | 338,757 | ||||
|
|
|
|
|||||
Retail/Restaurant/Hospitality loans as a % of total loans held-for-investment , excluding PPP loans |
7.82 | % | 7.45 | % | ||||
Classified Retail/Restaurant/Hospitality loans |
$ | 28,171 | $ | 15,837 | ||||
Nonaccrual Retail/Restaurant/Hospitality loans |
5,689 | 5,752 | ||||||
Net Charge-Offs for Retail/Restaurant/Hospitality loans |
26 | 178 |
September 30, |
December 31, 2019 |
|||||||||||
2020 |
2019 |
|||||||||||
Nonaccrual loans* |
$ | 42,673 | $ | 25,717 | $ | 24,582 | ||||||
Loans still accruing and past due 90 days or more |
23 | 104 | 153 | |||||||||
Troubled debt restructured loans** |
25 | 27 | 26 | |||||||||
|
|
|
|
|
|
|||||||
Nonperforming loans |
42,721 | 25,848 | 24,761 | |||||||||
Foreclosed assets |
331 | 1,364 | 1,009 | |||||||||
|
|
|
|
|
|
|||||||
Total nonperforming assets |
$ | 43,052 | $ | 27,212 | $ | 25,770 | ||||||
|
|
|
|
|
|
|||||||
As a % of loans held-for-investment |
0.81 | % | 0.66 | % | 0.61 | % | ||||||
As a % of total assets |
0.41 | 0.34 | 0.31 |
* | Includes $5.98 million, $342 thousand and $251 thousand of purchased credit impaired loans as of September 30, 2020 and 2019, and December 31, 2019, respectively. |
** | Other troubled debt restructured loans of $4.48 million, $3.98 million and $4.79 million, whose interest collection, after considering economic and business conditions and collection efforts, is doubtful are included in non-accrual loans at September 30, 2020 and 2019, and December 31, 2019, respectively. |
Three-Months Ended September 30, |
Nine-Months Ended September 30, |
|||||||||||||||
2020 |
2019 |
2020 |
2019 |
|||||||||||||
Allowance for loan losses at period-end |
$ | 76,038 | $ | 51,889 | $ | 76,038 | $ | 51,889 | ||||||||
Loans held-for-investment period-end |
5,293,679 | 4,100,316 | 5,293,679 | 4,100,316 | ||||||||||||
Average loans for period |
5,334,174 | 4,094,235 | 5,084,136 | 4,037,243 | ||||||||||||
Net charge-offs/average loans (annualized) |
0.03 | % | 0.04 | % | 0.07 | % | 0.04 | % | ||||||||
Allowance for loan losses/period-end loans held-for-investment |
1.44 | % | 1.27 | % | 1.44 | % | 1.27 | % | ||||||||
Allowance for loan losses/non-accrual loans, past due 90 days still accruing and restructured loans |
177.99 | % | 200.75 | % | 177.99 | % | 200.75 | % |
Maturing by Contractual Maturity |
||||||||||||||||||||||||||||||||||||||||
One Year or Less |
After One Year Through Five Years |
After Five Years Through Ten Years |
After Ten Years |
Total |
||||||||||||||||||||||||||||||||||||
Available-for-Sale: |
Amount |
Yield |
Amount |
Yield |
Amount |
Yield |
Amount |
Yield |
Amount |
Yield |
||||||||||||||||||||||||||||||
Obligations of states and political subdivisions |
$ | 115,637 | 4.80 | % | $ | 669,407 | 4.03 | % | $ | 1,536,734 | 2.90 | % | $ | 45,711 | 2.24 | % | $ | 2,367,489 | 3.30 | % | ||||||||||||||||||||
Mortgage-backed securities |
174,409 | 2.19 | 1,693,861 | 2.36 | 190,952 | 1.98 | — | — | 2,059,222 | 2.31 | ||||||||||||||||||||||||||||||
Other securities |
4,569 | 1.96 | — | — | — | — | — | — | 4,569 | 1.96 | ||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Total |
$ | 294,615 | 3.21 | % | $ | 2,363,268 | 2.83 | % | $ | 1,727,686 | 2.80 | % | $ | 45,711 | 2.24 | % | $ | 4,431,280 | 2.84 | % | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three-Months Ended September 30, |
||||||||||||||||
2020 |
2019 |
|||||||||||||||
Average Balance |
Average Rate |
Average Balance |
Average Rate |
|||||||||||||
Noninterest-bearing deposits |
$ | 3,016,700 | — | % | $ | 2,180,200 | — | % | ||||||||
Interest-bearing deposits: |
||||||||||||||||
Interest-bearing checking |
2,498,641 | 0.10 | 2,046,792 | 0.69 | ||||||||||||
Savings and money market accounts |
2,301,920 | 0.12 | 1,679,684 | 0.58 | ||||||||||||
Time deposits under $100,000 |
193,991 | 0.35 | 184,843 | 0.79 | ||||||||||||
Time deposits of $100,000 or more |
276,048 | 0.81 | 245,531 | 1.15 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total interest-bearing deposits |
5,270,600 | 0.16 | % | 4,156,850 | 0.68 | % | ||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total average deposits |
$ | 8,287,300 | $ | 6,337,050 | ||||||||||||
|
|
|
|
|||||||||||||
Total cost of deposits |
0.10 | % | 0.45 | % | ||||||||||||
|
|
|
|
Nine-Months Ended September 30, |
||||||||||||||||
2020 |
2019 |
|||||||||||||||
Average Balance |
Average Rate |
Average Balance |
Average Rate |
|||||||||||||
Noninterest-bearing deposits |
$ | 2,714,173 | — | % | $ | 2,133,418 | — | % | ||||||||
Interest-bearing deposits: |
||||||||||||||||
Interest-bearing checking |
2,477,034 | 0.26 | 2,052,943 | 0.73 | ||||||||||||
Savings and money market accounts |
2,156,907 | 0.24 | 1,677,181 | 0.57 | ||||||||||||
Time deposits under $100,000 |
196,627 | 0.49 | 188,210 | 0.68 | ||||||||||||
Time deposits of $100,000 or more |
273,528 | 0.96 | 247,401 | 1.01 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total interest-bearing deposits |
5,104,096 | 0.30 | % | 4,165,735 | 0.68 | % | ||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total average deposits |
$ | 7,818,269 | $ | 6,299,153 | ||||||||||||
|
|
|
|
|||||||||||||
Total cost of deposits |
0.19 | % | 0.45 | % | ||||||||||||
|
|
|
|
Actual |
Minimum Capital Required-Basel III Fully Phased-In* |
Required to be Considered Well- Capitalized |
||||||||||||||||||||||
As of September 30, 2020: |
Amount |
Ratio |
Amount |
Ratio |
Amount |
Ratio |
||||||||||||||||||
Total Capital to Risk-Weighted Assets: |
||||||||||||||||||||||||
Consolidated |
$ | 1,231,395 | 21.82 | % | $ | 592,680 | 10.50 | % | $ | 564,457 | 10.00 | % | ||||||||||||
First Financial Bank, N.A |
$ | 1,102,365 | 19.57 | % | $ | 591,382 | 10.50 | % | $ | 563,221 | 10.00 | % | ||||||||||||
Tier 1 Capital to Risk-Weighted Assets: |
||||||||||||||||||||||||
Consolidated |
$ | 1,160,742 | 20.56 | % | $ | 479,788 | 8.50 | % | $ | 338,674 | 6.00 | % | ||||||||||||
First Financial Bank, N.A |
$ | 1,031,864 | 18.32 | % | $ | 478,738 | 8.50 | % | $ | 450,577 | 8.00 | % | ||||||||||||
Common Equity Tier 1 Capital to Risk-Weighted Assets: |
||||||||||||||||||||||||
Consolidated |
$ | 1,160,742 | 20.56 | % | $ | 395,120 | 7.00 | % | — | N/A | ||||||||||||||
First Financial Bank, N.A |
$ | 1,031,864 | 18.32 | % | $ | 394,255 | 7.00 | % | $ | 366,094 | 6.50 | % | ||||||||||||
Leverage Ratio: |
||||||||||||||||||||||||
Consolidated |
$ | 1,160,742 | 11.65 | % | $ | 398,660 | 4.00 | % | — | N/A | ||||||||||||||
First Financial Bank, N.A |
$ | 1,031,864 | 10.39 | % | $ | 397,410 | 4.00 | % | $ | 496,763 | 5.00 | % |
* | At September 30, 2020, the capital conservation buffer under Basel III has been fully phased-in. |
Actual |
Minimum Capital Required-Basel III Fully Phased-In* |
Required to be Considered Well- Capitalized |
||||||||||||||||||||||
As of September 30, 2019: |
Amount |
Ratio |
Amount |
Ratio |
Amount |
Ratio |
||||||||||||||||||
Total Capital to Risk-Weighted Assets: |
||||||||||||||||||||||||
Consolidated |
$ | 1,023,229 | 21.14 | % | $ | 508,149 | 10.50 | % | $ | 483,951 | 10.00 | % | ||||||||||||
First Financial Bank, N.A |
$ | 905,495 | 18.75 | % | $ | 506,957 | 10.50 | % | $ | 482,816 | 10.00 | % | ||||||||||||
Tier 1 Capital to Risk-Weighted Assets: |
||||||||||||||||||||||||
Consolidated |
$ | 970,532 | 20.05 | % | $ | 411,359 | 8.50 | % | $ | 290,371 | 6.00 | % | ||||||||||||
First Financial Bank, N.A |
$ | 852,798 | 17.66 | % | $ | 410,394 | 8.50 | % | $ | 386,253 | 8.00 | % | ||||||||||||
Common Equity Tier 1 Capital to Risk-Weighted Assets: |
||||||||||||||||||||||||
Consolidated |
$ | 970,532 | 20.05 | % | $ | 338,766 | 7.00 | % | — | N/A | ||||||||||||||
First Financial Bank, N.A |
$ | 852,798 | 17.66 | % | $ | 337,971 | 7.00 | % | $ | 313,830 | 6.50 | % | ||||||||||||
Leverage Ratio: |
||||||||||||||||||||||||
Consolidated |
$ | 970,532 | 12.58 | % | $ | 308,675 | 4.00 | % | — | N/A | ||||||||||||||
First Financial Bank, N.A |
$ | 852,798 | 11.10 | % | $ | 307,442 | 4.00 | % | $ | 384,302 | 5.00 | % |
Actual |
Minimum Capital Required Under Basel III Phase-In |
Required to be Considered Well- Capitalized |
||||||||||||||||||||||
As of December 31, 2019: |
Amount |
Ratio |
Amount |
Ratio |
Amount |
Ratio |
||||||||||||||||||
Total Capital to Risk-Weighted Assets: |
||||||||||||||||||||||||
Consolidated |
$ | 1,051,029 | 21.13 | % | $ | 522,275 | 10.50 | % | $ | 497,405 | 10.00 | % | ||||||||||||
First Financial Bank, N.A |
$ | 908,778 | 18.31 | % | $ | 521,081 | 10.50 | % | $ | 496,268 | 10.00 | % | ||||||||||||
Tier 1 Capital to Risk-Weighted Assets: |
||||||||||||||||||||||||
Consolidated |
$ | 997,721 | 20.06 | % | $ | 422,794 | 8.50 | % | $ | 298,443 | 6.00 | % | ||||||||||||
First Financial Bank, N.A |
$ | 855,470 | 17.24 | % | $ | 421,828 | 8.50 | % | $ | 397,014 | 8.00 | % | ||||||||||||
Common Equity Tier 1 Capital to Risk-Weighted Assets: |
||||||||||||||||||||||||
Consolidated |
$ | 997,721 | 20.06 | % | $ | 348,184 | 7.00 | % | — | N/A | ||||||||||||||
First Financial Bank, N.A |
$ | 855,470 | 17.24 | % | $ | 347,388 | 7.00 | % | $ | 322,574 | 6.50 | % | ||||||||||||
Leverage Ratio: |
||||||||||||||||||||||||
Consolidated |
$ | 997,721 | 12.60 | % | $ | 316,850 | 4.00 | % | — | N/A | ||||||||||||||
First Financial Bank, N.A |
$ | 855,470 | 10.84 | % | $ | 315,570 | 4.00 | % | $ | 394,463 | 5.00 | % |
Total Notional Amounts Committed |
||||
Unfunded lines of credit |
$ | 814,963 | ||
Unfunded commitments to extend credit |
719,677 | |||
Standby letters of credit |
36,992 | |||
|
|
|||
Total commercial commitments |
$ | 1,571,632 | ||
|
|
Period |
(a) Total number of shares purchased |
(b) Average price paid per share |
(c) Total number of shares purchased as part of publicly announced plans or programs |
(d) Maximum number of shares that may yet be purchased under the plans or programs |
||||||||||||
April 1, 2020 through April 30, 2020 |
324,802 | $ | 24.7530 | 324,802 | 3,675,198 | |||||||||||
May 1, 2020 through May 31, 2020 |
— | — | — | 3,675,198 | ||||||||||||
June 1, 2020 through June 30, 2020 |
— | — | — | 3,675,198 | ||||||||||||
July 1, 2020 through July 31, 2020 |
— | — | — | 3,675,198 | ||||||||||||
August 1, 2020 through August 31, 2020 |
— | — | — | 3,675,198 | ||||||||||||
September 1, 2020 through September 30, 2020 |
— | — | — | 3,675,198 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total |
324,802 | $ | 24.7530 | 324,802 | 3,675,198 | |||||||||||
|
|
|
|
|
|
|
|
101.DEF | — | XBRL Taxonomy Extension Definition Linkbase Document.* | ||
101.LAB | — | XBRL Taxonomy Extension Label Linkbase Document.* |
* | Filed herewith |
+ | Furnished herewith. This Exhibit shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, or otherwise subject to the liability of that section, and shall not be deemed to be incorporated into any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934. |
++ | Management contract or compensatory plan on arrangement. |
FIRST FINANCIAL BANKSHARES, INC. | ||||
Date: November 4, 2020 |
By: |
/s/ F. Scott Dueser | ||
F. Scott Dueser | ||||
President and Chief Executive Officer | ||||
Date: November 4, 2020 |
By: |
/s/ James R. Gordon | ||
James R. Gordon | ||||
Executive Vice President and | ||||
Chief Financial Officer |
Exhibit 31.1
Certification of
Chief Executive Officer
of First Financial Bankshares, Inc.
I, F. Scott Dueser, President and Chief Executive Officer of First Financial Bankshares, Inc., certify that:
1. I have reviewed this Form 10-Q of First Financial Bankshares, Inc.;
2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrants other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f), for the registrant and have:
a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c. Evaluated the effectiveness of the registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d. Disclosed in this report any change in the registrants internal control over financial reporting that occurred during the registrants most recent fiscal quarter (the registrants fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting; and
5. The registrants other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrants auditors and the audit committee of the registrants board of directors (or persons performing the equivalent functions):
a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrants ability to record, process, summarize and report financial information; and
b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal control over financial reporting.
Date: November 4, 2020
By: | /s/ F. SCOTT DUESER | |
F. Scott Dueser | ||
President and Chief Executive Officer |
Exhibit 31.2
Certification of
Chief Financial Officer
of First Financial Bankshares, Inc.
I, James R. Gordon, Executive Vice President and Chief Financial Officer of First Financial Bankshares, Inc., certify that:
1. I have reviewed this Form 10-Q of First Financial Bankshares, Inc.;
2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrants other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f), for the registrant and have:
a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c. Evaluated the effectiveness of the registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d. Disclosed in this report any change in the registrants internal control over financial reporting that occurred during the registrants most recent fiscal quarter (the registrants fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting; and
5. The registrants other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrants auditors and the audit committee of the registrants board of directors (or persons performing the equivalent functions):
a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrants ability to record, process, summarize and report financial information; and
b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal control over financial reporting.
Date: November 4, 2020
By: | /s/ James R. Gordon | |
James R. Gordon | ||
Executive Vice President and Chief | ||
Financial Officer |
Exhibit 32.1
Certification of
Chief Executive Officer
of First Financial Bankshares, Inc.
This certification is provided pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code) and accompanies the quarterly report on Form 10-Q (the Form 10-Q) for the quarter ended September 30, 2020 of First Financial Bankshares, Inc. (the Company).
I, F. Scott Dueser, the President and Chief Executive Officer of the Company, certify that:
1. the Form 10-Q fully complies with the requirements of section 13(a) or section 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m(a) or 78o(d)); and
2. the information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of the Company.
Dated: November 4, 2020
By: | /s/ F. SCOTT DUESER | |
F. Scott Dueser | ||
Chief Executive Officer |
Subscribed and sworn to before me this 4th day of November, 2020.
/s/ Melissa Ann Fenton |
Melissa Ann Fenton |
Notary Public |
My commission expires: October 11, 2024
Exhibit 32.2
Certification of
Chief Financial Officer
of First Financial Bankshares, Inc.
This certification is provided pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code) and accompanies the quarterly report on Form 10-Q (the Form 10-Q) for the quarter ended September 30, 2020 of First Financial Bankshares, Inc. (the Company).
I, James R. Gordon, the Executive Vice President and Chief Financial Officer of the Company, certify that:
1. the Form 10-Q fully complies with the requirements of section 13(a) or section 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m(a) or 78o(d)); and
2. the information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of the Company.
Dated: November 4, 2020
By: | /s/ James R. Gordon | |
James R. Gordon | ||
Chief Financial Officer |
Subscribed and sworn to before me this 4th day of November, 2020.
/s/ Melissa Ann Fenton |
Melissa Ann Fenton |
Notary Public |
My commission expires: October 11, 2024
Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands |
Sep. 30, 2020 |
Dec. 31, 2019 |
Sep. 30, 2019 |
---|---|---|---|
Statement of Financial Position [Abstract] | |||
Loans held-for-sale, fair value | $ 94,666 | $ 23,076 | $ 39,735 |
Common stock, par value | $ 0.01 | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 200,000,000 | 200,000,000 | 200,000,000 |
Common stock, shares issued | 142,121,595 | 135,891,755 | 135,822,456 |
Treasury stock, shares | 934,859 | 927,408 | 928,287 |
Consolidated Statements of Earnings (Parenthetical) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2020 |
Sep. 30, 2019 |
Sep. 30, 2020 |
Sep. 30, 2019 |
|
Income Statement [Abstract] | ||||
Reclassifications adjustment for realized gains on investment securities included in net earnings (loss), before income tax | $ 36 | $ 52 | $ 3,610 | $ 728 |
Income tax expense from reclassification items | $ 8 | $ 11 | $ 758 | $ 153 |
Consolidated Statements of Comprehensive Earnings - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2020 |
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Statement of Comprehensive Income [Abstract] | ||||
NET EARNINGS | $ 52,857 | $ 43,080 | $ 143,558 | $ 123,424 |
OTHER ITEMS OF COMPREHENSIVE EARNINGS: | ||||
Change in unrealized gain on investment securities available-for-sale, before income taxes | 1,083 | 16,446 | 110,644 | 88,517 |
Reclassification adjustment for realized gains on investment securities included in net earnings, before income taxes | (36) | (52) | (3,610) | (728) |
Total other items of comprehensive earnings | 1,047 | 16,394 | 107,034 | 87,789 |
Income tax expense related to other items of comprehensive earnings | (220) | (3,444) | (22,477) | (18,437) |
COMPREHENSIVE EARNINGS | $ 53,684 | $ 56,030 | $ 228,115 | $ 192,776 |
Consolidated Statements of Shareholders' Equity (Parenthetical) - $ / shares |
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Sep. 30, 2019 |
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Cash dividend per share | $ 0.13 | $ 0.12 | $ 0.38 | $ 0.35 |
Common Stock Dividend Percentage | 100.00% | |||
Retained Earnings [Member] | ||||
Cash dividend per share | $ 0.13 | $ 0.12 | $ 0.38 | $ 0.35 |
Summary of Significant Accounting Policies |
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Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Significant Accounting Policies | 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Nature of Operations First Financial Bankshares, Inc. (a Texas corporation) (“Company,” “we” or “us”) is a financial holding company which owns all of the capital stock of one bank with 78 locations located in Texas as of September 30, 2020. The Company’s subsidiary bank is First Financial Bank, N. A. The Company’s primary source of revenue is providing loans and banking services to consumers and commercial customers in the market area in which First Financial Bank, N.A., is located. In addition, the Company also owns First Financial Trust & Asset Management Company, National Association, First Financial Insurance Agency, Inc., and First Technology Services, Inc. A summary of significant accounting policies of the Company and its subsidiaries applied in the preparation of the accompanying consolidated financial statements follows. The accounting principles followed by the Company and the methods of applying them are in conformity with both United States generally accepted accounting principles (“GAAP”) and prevailing practices of the banking industry. The Company evaluated subsequent events for potential recognition through the date the consolidated financial statements were issued. Use of Estimates in Preparation of Financial Statements The preparation of financial statements in conformity with generally accepted accounting principles (U.S. GAAP) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. The Company’s significant estimates include its allowance for loan losses and its valuation of financial instruments. Consolidation The accompanying consolidated financial statements include the accounts of the Company and its subsidiaries, all of which are wholly-owned. All significant intercompany accounts and transactions have been eliminated. Stock Split and Increase in Authorized Shares On April 23, 2019, the Company’s Board of Directors declared a two-for-one stock split of the Company’s outstanding common shares in the form of a 100% stock dividend effective on June 3, 2019. In addition, the shareholders of the Company approved an amendment to the Amended and Restated Certificate of Formation to increase the number of authorized shares to 200,000,000. All per share amounts in this report have been restated to reflect this stock split. An amount equal to the par value of the additional common shares issued pursuant to the stock split was reflected as a transfer from retained earnings to common stock in the consolidated financial statements as of and for the nine-months ended September 30, 2019.Stock Repurchase On March 12, 2020, the Company’s Board of Directors authorized the repurchase of up to 4,000,000 common shares through September 30, 2021. Previously, the Board of Directors had authorized the repurchase of up to 2,000,000 common shares through September 30, 2020. The stock repurchase plan authorizes management to repurchase and ret ire the stock at such time as repurchases a are considered beneficial to the Company and stockholders. Any repurchase of stock will be made through the open market, block trades or in privately negotiated transactions in accordance with applicable laws and regulations. Under the repurchase plan, there is no minimum number of shares that the Company is required to repurchase. Through September 30, 2020, 324,802 shares were repurchased totaling $8,008,000 under this repurchase plan. Subsequent to September 30, 2020 and through nd retirem ents November 4 ,2020 no additional shares were repurchased. , Acquisition On January 1, 2020, the Company acquired 100% of the outstanding capital stock of TB&T Bancshares, Inc. through the merger of a wholly-owned subsidiary with and into TB&T Bancshares, Inc. Following such merger, TB&T Bancshares, Inc. and its wholly-owned subsidiary, The Bank & Trust of Bryan/College Station, Texas were merged into the Company and First Financial Bank, N.A respectively. The results of operations of TB&T Bancshares, Inc. subsequent to the acquisition date, are included in the consolidated earnings of the Company. See note 11 for additional information. . , Status of New Accounting Standard for Accounting for Allowance for Credit Losses On January 1, 2020, ASU 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments off-balance sheet credit exposures not accounted for as insurance (loan commitments, standby letters of credit, financial guarantees, and other similar instruments). In addition, ASU 2016-13 made changes to the accounting for available-for-sale available-for-sale On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) was signed by the President of the United States that included an option for entities to delay the implementation of ASU 2016-13 until the earlier of the termination date of the national emergency declaration by the President or December 31, 2020. The Company elected to delay its implementation of ASU 2016-13 and has calculated and recorded its provision for loan losses under the incurred loss model that existed prior to ASU 2016-13 for the three and nine-months ended September 30, 2020. Prior to the CARES Act being signed and our election to delay the implementation of CECL, we were completing our CECL implementation plan with our cross-functional working group, under the direction of our Chief Credit Officer along with our Chief Accounting Officer, Chief Lending Officer and Chief Financial Officer. The working group also included individuals from various functional areas including credit, risk management, accounting and information technology, among others. Our implementation plan included assessment and documentation of processes, internal controls and data sources; model development, documentation and validation; and system configuration, among other things. We contracted with a third-party vendor to assist us in the implementation of CECL. Currently we expect to adopt CECL during the fourth quarter of 2020 with retroactive application to January 1, 2020 which may require adjustments to the amounts for provision for credit losses for the three and nine-months ended September 30, 2020. Other Recently Issued and Effective Authoritative Accounting Guidance ASU 2016-02, “Leases.”2016-02 amended current lease accounting to require lessees to recognize (i) a lease liability, which is a lessee’s obligation to make lease payments arising from a lease, measured on a discounted basis, and (ii) a right-of-use 2016-02 did not significantly change lease accounting requirements applicable to lessors; however, certain changes were made to align, where necessary, lessor accounting with the lessee accounting model. The amended guidance was effective in the first quarter of 2019 and required transition using a modified retrospective approach for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements. The Company evaluated the provision of the new lease standard and, due to the small dollar amounts and number of lease agreements, all considered operating leases, the effect for the Company on January 1, 2019 was not significant. ASU 2017-08, “Receivables – Nonrefundable Fees and Other CostsPremium Amortization on Purchased Callable Debt Securities.” 2017-08 addressed the amortization method for all callable bonds purchased at a premium to par. Under the revised guidance, entities are required to amortize premiums on callable bonds to the earliest call date. ASU 2017-08 was effective in 2019 although early adoption was permitted. The Company elected to early adopt ASU 2017-08 in the first quarter of 2017. The adoption of this guidance did not have a material impact on the Company’s financial statements. ASU 2017-04, “Intangibles – Goodwill and Other.”2017-04 amended and simplified current goodwill impairment testing to eliminate Step 2 from the current provisions. Under the new guidance, an entity should perform the goodwill impairment test by comparing the fair value of a reporting unit with its carrying value and recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value. An entity still has the option to perform the qualitative assessment for a reporting unit to determine if a quantitative impairment test is necessary. ASU 2017-04 became effective for the Company on January 1, 2020 and did not have a significant impact on the Company’s financial statements. ASU 2018-13, “Fair Value Measurement (Topic 820). – Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement.”2018-13 modified the disclosure requirements on fair value measurements in Topic 820. The amendments in ASU 2018-13 remove disclosures that no longer are considered cost beneficial, modify/clarify the specific requirements of certain disclosures, and add disclosure requirements identified as relevant. ASU 2018-13 became effective on January 1, 2020 and did not have a significant impact on the Company’s financial statements. ASU 2019-12, “Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes.”2019-12, simplifies the accounting for income taxes by eliminating certain exceptions related to the approach for intraperiod tax aspects of the accounting for franchise taxes and enacted changes in tax laws or rates and clarifies the accounting for transactions that result in a step-up in the tax basis of goodwill. ASU 2019-12 is effective for the Company for annual reporting periods after December 15, 2020, and interim periods within. Adoption of ASU 2019-12 is not expected to have a material impact on the Company’s financial statements. Investment Securities Management classifies debt and equity securities as held-to-maturity, available-for-sale, held-to-maturity held-to-maturity available-for-sale Available-for-sale available-for-sale The Company records its available-for-sale When the fair value of a debt security is below its amortized cost, and depending on the length of time the condition exists and the extent the fair value is below amortized cost, additional analysis is performed to determine whether an other-than-temporary impairment condition exists. Available-for-sale held-to-maturity The Company’s investment portfolio currently consists of obligations of state and political subdivisions, mortgage pass-through securities, corporate bonds and general obligation or revenue based municipal bonds. Pricing for such securities is generally readily available and transparent in the market. The Company utilizes independent third-party pricing services to value its investment securities, which the Company reviews as well as the underlying pricing methodologies for reasonableness and to ensure such prices are aligned with pricing matrices. The Company validates prices supplied by the independent pricing services by comparison to prices obtained from other third-party sources on a quarterly basis. Loans Held-for-Investment Loans held-for-investment The allowance for loan losses is an amount which represents management’s best estimate of probable losses that are inherent in the Company’s loan portfolio as of the balance sheet date. The allowance for loan losses is comprised of three elements: (i) specific reserves determined based on probable losses on specific classified loans; (ii) a historical valuation reserve component that considers historical loss rates and estimated loss emergence periods; and (iii) qualitative reserves based upon general economic conditions and other qualitative risk factors both internal and external to the Company. The allowance for loan losses is increased by charges to income and decreased by charge-offs (net of recoveries). Management’s periodic evaluation of the appropriateness of the allowance is based on general economic conditions, the financial condition of borrowers, the value and liquidity of collateral, delinquency, prior loan loss experience, and the results of periodic reviews of the portfolio. For purposes of determining our historical valuation reserve, the loan portfolio, less cash secured loans, government guaranteed loans and classified loans, is multiplied by the Company’s historical loss rate adjusted for the estimated loss emergence period. Specific allocations are increased or decreased in accordance with deterioration or improvement in credit quality and a corresponding increase or decrease in risk of loss on a particular loan. In addition, we adjust our allowance for loan losses for qualitative factors such as current local economic conditions and trends, including, without limitations, unemployment, oil and gas prices, drought conditions, changes in lending staff, policies and procedures, changes in credit concentrations, changes in the trends and severity of problem loans and changes in trends in volume and terms of loans. This qualitative reserve serves to estimate for additional areas of losses inherent in our portfolio that are not reflected in our historic loss factors. Although we believe we use the best information available to make loan loss allowance determinations, future adjustments could be necessary if circumstances or economic conditions differ substantially from the assumptions used in making our initial determinations. A decline in the economy could result in increased levels of non-performing assets and charge-offs, increased loan provisions and reductions in income. Additionally, bank regulatory agencies periodically review our allowance for loan losses and methodology and could require, in accordance with U.S. GAAP, additional provisions to the allowance for loan losses based on their judgment of information available to them at the time of their examination as well as changes to our methodology. Accrual of interest is discontinued on a loan and payments are applied to principal when management believes, after considering economic and business conditions and collection efforts, the borrower’s financial condition is such that collection of interest is doubtful. Except consumer loans, generally all loans past due greater than 90 days, based on contractual terms, are placed on nonaccrual. Loans are returned to accrual status when all the principal and interest amounts contractually due are brought current and future payments are reasonably assured. Consumer loans are generally charged-off when a loan becomes past due 90 days. For other loans in the portfolio, facts and circumstances are evaluated in making charge-off decisions.Loans are considered impaired when, based on current information and events, management determines that it is probable we will be unable to collect all amounts due in accordance with the loan agreement, including scheduled principal and interest payments. If a loan is impaired, a specific valuation allowance is allocated, if necessary. Interest payments on impaired loans are typically applied to principal unless collectability of the principal amount is reasonably assured, in which case interest is recognized on a cash basis. Impaired loans, or portions thereof, are charged off when deemed uncollectable. The Company’s policy requires measurement of the allowance for an impaired, collateral dependent loan based on the fair value of the collateral less cost to sell. Other loan impairments for non-collateral dependent loans are measured based on the present value of expected future cash flows or the loan’s observable market price. At September 30, 2020 and 2019 and December 31, 2019, all significant impaired loans have been determined to be collateral dependent and the allowance for loss has been measured utilizing the estimated fair value of the collateral less cost to sell. From time to time, the Company modifies its loan agreement with a borrower. A modified loan is considered a troubled debt restructuring when two conditions are met: (i) the borrower is experiencing financial difficulty and (ii) concessions are made by the Company that would not otherwise be considered for a borrower with similar credit risk characteristics. Modifications to loan terms may include a lower interest rate, a reduction of principal, or a longer term to maturity. For all impaired loans, including the Company’s troubled debt restructurings, the Company performs a periodic, well-documented credit evaluation of the borrower’s financial condition and prospects for repayment to assess the likelihood that all principal and interest payments required under the terms of the agreement will be collected in full. When doubt exists about the ultimate collectability of principal and interest, the troubled debt restructuring remains on non-accrual status and payments received are applied to reduce principal to the extent necessary to eliminate such doubt. This determination of accrual status is judgmental and is based on facts and circumstances related to each troubled debt restructuring. Each of these loans is individually evaluated for impairment and a specific reserve is recorded based on probable losses, taking into consideration the related collateral, modified loan terms and cash flow. As of September 30, 2020 and 2019, and December 31, 2019, substantially all of the Company’s troubled debt restructured loans were on non-accrual. The provisions of the CARES Act included an election to not apply the guidance on accounting for troubled debt restructurings to loan modifications, such as extensions or deferrals, related to COVID-19 made between March 1, 2020 and the earlier of (i) December 31, 2020 or (ii) 60 days after the end of the COVID-19 national emergency. The relief can only be applied to modifications for borrowers that were not more than 30 days past due as of December 31, 2019. The Company elected to adopt these provisions of the CARES Act. Loans acquired, including loans acquired in a business combination, are initially recorded at fair value with no valuation allowance. Acquired loans are segregated between those considered to be credit impaired and those deemed performing. To make this determination, management considers such factors as past due status, non-accrual status and credit risk ratings. The fair value of acquired performing loans is determined by discounting expected cash flows, both principal and interest, at prevailing market interest rates. The difference between the fair value and principal balances at acquisition date, the fair value discount, is accreted into interest income over the estimated life of the acquired portfolio. Purchased credit impaired loans are those loans that showed evidence of deterioration of credit quality since origination and for which it is probable, at acquisition, that the Company will be unable to collect all amounts contractually owed. Their acquisition fair value, which includes a credit component at the acquisition date, was based on the estimate of cash flows, both principal and interest, expected to be collected or estimated collateral values if cash flows are not estimable, discounted at prevailing market rates of interest. The difference between the discounted cash flows expected at acquisition and the investment in the loan is recognized as interest income on a level-yield method over the life of the loan, unless management was unable to reasonably forecast cash flows in which case the loans were placed on nonaccrual. Subsequent to the acquisition date, increases in expected cash flows will generally result in a recovery of any previously recorded allowance for loan loss, to the extent applicable, and/or a reclassification from the non-accretable difference to accretable yield, which will be recognized prospectively. Decreases in expected cash flows subsequent to acquisition are recognized as impairment. Valuation allowances on these impaired loans reflect only losses incurred after the acquisition. The carrying amount of purchased credit impaired loans at September 30, 2020 and 2019 and December 31, 2019 were $5,978,000, $342,000 and $251,000, respectively, compared to a contractual balance of $8,469,000, $605,000 and $345,000, respectively. Other purchased credit impaired loan disclosures have been omitted due to immateriality.Other Real Estate Other real estate owned is foreclosed property held pending disposition and is initially recorded at fair value, less estimated costs to sell. At foreclosure, if the fair value of the real estate, less estimated costs to sell, is less than the Company’s recorded investment in the related loan, a write-down is recognized through a charge to the allowance for loan losses. Any subsequent reduction in value is recognized by a charge to income. Operating and holding expenses of such properties, net of related income, and gains and losses on their disposition are included in net gain (loss) on sale of foreclosed assets as incurred. Bank Premises and Equipment Bank premises and equipment are stated at cost less accumulated depreciation and amortization. Depreciation and amortization are computed principally on a straight-line basis over the estimated useful lives of the related assets. Leasehold improvements are amortized over the life of the respective lease or the estimated useful lives of the improvements, whichever is shorter. Business Combinations, Goodwill and Other Intangible Assets The Company accounts for all business combinations under the purchase method of accounting. Tangible and intangible assets and liabilities of the acquired entity are recorded at fair value. Intangible assets with finite useful lives represent the future benefit associated with the acquisition of the core deposits and are amortized over seven years, utilizing a method that approximates the expected attrition of the deposits. Goodwill with an indefinite life is not amortized, but rather tested annually for impairment as of June 30 each year. There was no impairment recorded for the three and nine-months ended September 30, 2020 or 2019, respectively. Securities Sold Under Agreements To Repurchase Securities sold under agreements to repurchase, which are classified as borrowings, generally mature within one to four days from the transaction date. Securities sold under agreements to repurchase are reflected at the amount of the cash received in connection with the transaction. The Company may be required to provide additional collateral based on the estimated fair value of the underlying securities. Segment Reporting The Company has determined that its banking regions meet the aggregation criteria of the current authoritative accounting guidance since each of its banking regions offer similar products and services, operate in a similar manner, have similar customers and report to the same regulatory authority, and therefore operate one line of business (community banking) located in a single geographic area (Texas). Statements of Cash Flows For purposes of reporting cash flows, cash and cash equivalents includes cash on hand, amounts due from banks, including interest-bearing deposits in banks with original maturity of 90 days or less, and federal funds sold. Accumulated Other Comprehensive Earnings (Loss) Unrealized net gains on the Company’s available-for-sale e s ) totaling $152,063,000, $73,521,000 and $67,506,000 September 30, 2020 and 2019a t and December 31, 2019 respectively, and the minimum pension liability (after applicable income tax benefit) totaling ($1,324,000) at September 30, 2019, are included in accumulated other comprehensive , earnings . There were no amounts under the minimum pension liability at September 30, 2020 or December 31, 2019 (see note 9).Income Taxes The Company’s provision for income taxes is based on income before income taxes adjusted for permanent differences between financial reporting and taxable income. Deferred tax assets and liabilities are determined using the liability (or balance sheet) method. Under this method, the net deferred tax asset or liability is determined based on the tax effects of the temporary differences between the book and tax bases of the various balance sheet assets and liabilities and gives current recognition to changes in tax rates and laws. Stock Based Compensation The Company grants stock options for a fixed number of shares to employees with an exercise price equal to the fair value of the shares at the grant date. The Company recorded stock option expense totaling $344,000 and $431,000 for the three-months ended September 30, 2020 and 2019, respectively. The Company recorded stock option expense totaling $1,033,000 and $1,056,000 for the nine-months ended September 30, 2020 and 2019, respectively. The Company also grants restricted stock for a fixed number of shares. The Company recorded expenses associated with its director and officer restricted stock grants totaling $569,000 and $433,000, for the three-months ended September 30, 2020 and 2019, respectively. The Company recorded expenses associated with its director and officer restricted stock grants totaling $1,501,000 and $1,116,000 for the nine-months ended September 30, 2020 and 2019, respectively. See note 8 for further information. Advertising Costs Advertising costs are expensed as incurred. Per Share Data Net earnings per share (“EPS”) are computed by dividing net earnings by the weighted average number of common shares outstanding during the period. The Company calculates dilutive EPS assuming all outstanding stock options to purchase common shares and unvested restricted stock shares have been exercised and/or vested at the beginning of the year (or the time of issuance, if later.) The dilutive effect of the outstanding options and restricted stock is reflected by application of the treasury stock method, whereby the proceeds from the exercised options and unearned compensation for restricted stock are assumed to be used to purchase common shares at the average market price during the respective period. Anti-dilutive shares for the three and nine-months ended September 30, 2020 were approximately and 15,000 respectively, and The following table reconciles the computation of basic EPS to dilutive EPS:were excluded from the computation of EPS. shares .
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Securities |
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Cash and Cash Equivalents [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Securities | Note 2 - Securities A summary of the Company’s available-for-sale
The Company invests in mortgage-backed securities that have expected maturities that differ from their contractual maturities. These differences arise because borrowers may have the right to call or prepay obligations with or without a prepayment penalty. These securities include collateralized mortgage obligations (CMOs) and other asset backed securities. The expected maturities of these securities at September 30, 2020 were computed by using scheduled amortization of balances and historical prepayment rates. The amortized cost and estimated fair value of available-for-sale
The following tables disclose the Company’s investment securities that have been in a continuous unrealized-loss position for less than 12 months and for 12 or more months (in thousands):
The number of investments in an unrealized loss position totaled 80 at September 30, 2020. We do not believe these unrealized losses are “other-than-temporary” as (i) we do not have the intent to sell our securities prior to recovery and/or maturity and (ii) it is more likely than not that we will not have to sell our securities prior to recovery and/or maturity. In making this determination, we also consider the length of time and extent to which fair value has been less than cost and the financial condition of the issuer. The unrealized losses noted are interest rate related due to the level of interest rates at September 30, 2020 compared to the time of purchase. We have reviewed the ratings of the issuers and have not identified any issues related to the ultimate repayment of principal as a result of credit concerns on these securities. Our mortgage related securities are backed by GNMA, FNMA and FHLMC or are collateralized by securities backed by these agencies. At September 30, 2020, 80.94% of our available-for-sale At September 30, 2020, $2,884,337,000 of the Company’s securities were pledged as collateral for public or trust fund deposits, repurchase agreements, a borrowing line with the Federal Reserve Bank of Dallas and for other purposes required or permitted by law. During the three - months ended September 30, 2020 and 2019, sales of investment securities that were classified as available-for-sale During the nine - months ended September 30, 2020 and 2019, sales of investment securities classified as available-for-sale The specific identification method was used to determine cost in order to compute the realized gains and losses. |
Loans Held for Investment and Allowance for Loan Losses |
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Receivables [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Loans Held for Investment and Allowance for Credit Losses | Note 3 – Loans Held-for-Investment Loans held-for-investment
Our subsidiary bank has established a line of credit with the Federal Home Loan Bank of Dallas (FHLB) to provide liquidity and meet pledging requirements for those customers eligible to have securities pledged to secure certain uninsured deposits. At September 30, 2020, $3,150,534,000 in loans held by our bank subsidiary were subje c t to blanket liens as security for this line of credit. At September 30, 2020, there was $30,000,000 outstanding under this line of credit. The Company’s non-accrual loans, loans still accruing and past due 90 days or more and restructured loans are as follows (in thousands):
The Company’s recorded investment in impaired loans and the related valuation allowance are as follows (in thousands):
The Company had $43,052,000, $27,212,000 and $25,770,000 in non-accrual, past due 90 days or more and still accruing, restructured loans and foreclosed assets at September 30, 2020 and 2019, and December 31, 2019, respectively. Non-accrual loans at September 30, 2020 and 2019, and December 31, 2019, consisted of the following by class of financing receivables (in thousands):
No significant additional funds are committed to be advanced in connection with impaired loans as of September 30, 2020. The Company’s impaired loans and related allowance are summarized in the following tables by class of financing receivables (in thousands). No interest income was recognized on impaired loans subsequent to their classification as impaired.
The Company recognized interest income on impaired loans prior to being recognized as impaired of approximately $750,000 during the year ended December 31, 2019. Such amounts for the three-month and nine-month periods ended September 30, 2020 and 2019 were not significant. 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 on-going 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 non-accrual. The following summarizes the Company’s internal ratings of its loans held-for-investment
The Company’s past due loans are as follows (in thousands):
Changes in the allowance for loan losses are summarized as follows by portfolio segment (in thousands):
Additionally , the Company records a reserve for unfunded commitments in other liabilities which totaled $2,300,000 at September 30, 2020 and $800,000 at September 30, 2019 and December 31, 2019. The increase is the result of a $1,500,000 provision for unfunded commitments during the three-months ended September 30, 2020. The provision for loan losses above is combined with the provision for unfunded commitments and reported as provision for credit losses in the statement of earnings. The Company’s recorded investment in loans related to the balance in the allowance for loan losses on the basis of the Company’s impairment methodology is as follows (in thousands). Purchased credit impaired loans of $5,978,000, $342,000 and $251,000 at September 30, 2020 and 2019, and December 31, 2019, respectively, are included in loans individually evaluated for impairment .
The Company’s loans that were modified and considered troubled debt restructurings are as follows (in thousands):
During the three and nine- months ended September 30, 2020, no loans were modified as a troubled debt restructured loan within the previous 12 months and for which there was a payment default. During the three and nine-months ended September 30, 2019, two loans totaling $28,000 were modified as a troubled debt restructured loan within the previous 12 months and for which there was a payment default. A default for purposes of this disclosure is a troubled debt restructured loan in which the borrower is 90 days past due or more or results in the foreclosure and repossession of the applicable collateral. As of September 30, 2020, the Company has no commitments to lend additional funds to loan customers whose terms have been modified in troubled debt restructurings. As discussed in note 1 to these financial statements, the CARES Act provided banks an option to elect to not account for certain loan modifications related to COVID-19 as troubled debt restructurings as long as the borrowers were not more than 30 days past due as of December 31, 2019. The above disclosed troubled debt restructurings were not related to COVID-19 modifications.Beginning in
mid-March of 2020, the Company began offering deferral and modification of principle and/or interest payments, for varying periods but typically no more than 90 days, case-by-case At September 30, 2020, the Company had approximately 122 loans totaling $18,650,000 in outstanding loans subject to deferral and modification agreements, representing 0.41% of outstanding loans held-for-investment, |
Loans Held for Sale |
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Sep. 30, 2020 | |
Debt Disclosure [Abstract] | |
Loans Held for Sale | Note 4 - Loans Held-for-Sale Loans held-for-sale totaled $101,055,000, $40,499,000 and $28,228,000 at September 30, 2020 and 2019, and December 31, 2019, respectively. At September 30, 2020 and 2019, and December 31, 2019, $6,389,000, $764,000 and $5,152,000 are valued at the lower of cost or fair value, and the remaining amounts are valued under the fair value option. The change to the fair value option for loans held-for-sale was effective at June 30, 2018 and was done in conjunction with the Company’s move to mandatory delivery in the secondary market and the purchase of forward mortgage-backed securities to manage the changes in fair value (see note 5 for additional information). These loans, which are sold on a servicing released basis, are valued using a market approach by utilizing either: (i) the fair value of the securities backed by similar mortgage loans, adjusted for certain factors to approximate the fair value of a whole mortgage loan, including the value attributable to mortgage servicing and credit risk, (ii) current commitments to purchase loans or (iii) recent observable market trades for similar loans, adjusted for credit risk and other individual loan characteristics. As these prices are derived from market observable inputs, the Company classifies these valuations as Level 2 in the fair value disclosures (see note 10). Interest income on mortgage loans held for sale is recognized based on the contractual rates and reflected in interest income on loans in the consolidated statements of earnings. The Company has no continuing ownership in any residential mortgage loans sold . The Company originates certain mortgage loans for sale in the secondary market. The mortgage loan sales contracts contain indemnification clauses should the loans default, generally in the first three to six months, or if documentation is determined not to be in compliance with regulations. The Company’s historic losses as a result of these indemnities have been insignificant. |
Derivative Financial Instruments |
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Financial Instruments | Note 5 - Derivative Financial Instruments The Company enters into interest rate lock commitments (“IRLCs”) with customers to originate residential mortgage loans at a specific interest rate that are ultimately sold in the secondary market. These commitments, which contain fixed expiration dates, offer the borrower an interest rate guarantee provided the loan meets underwriting guidelines and closes within the timeframe established by the Company. The Company purchases forward mortgage-backed securities contracts to manage the changes in fair value associated with changes in interest rates related to a portion of the IRLCs. These instruments are typically entered into at the time the IRLC is made in the aggregate. These financial instruments are not designated as hedging instruments and are used for asset and liability management needs. All derivatives are carried at fair value in either other assets or other liabilities, through earnings in the statement of earnings. The fair values of IRLCs are based on current secondary market prices for underlying loans and estimated servicing value with similar coupons, maturity and credit quality, subject to the anticipated loan funding probability (pull-through rate) net of estimated costs to originate the loan. The fair value of IRLCs is subject to change primarily due to changes in interest rates and the estimated pull-through rate. These commitments are classified as Level 2 in the fair value disclosures (see note 10), as the valuations are based on observable market inputs. Forward mortgage-backed securities contracts are exchange-traded or traded within highly active dealer markets. In order to determine the fair value of these instruments, the Company utilizes the exchange price or dealer market price for the particular derivative contract and these instruments are therefore classified as Level 1 in the fair value disclosures (see note 10). The estimated fair values are subject to change primarily due to changes in interest rates. The impact of these forward contracts is included in gain on sale and fees on mortgage loans in the statement of earnings. The following table provides the outstanding notional balances and fair values of outstanding derivative positions (dollars in thousands):
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Borrowings |
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Debt Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Borrowings | Note 6 - Borrowings Borrowings consisted of the following (dollars in thousands):
Securities sold under repurchase agreements are generally with significant customers of the Company that require short-term liquidity for their funds for which the Company pledges certain securities that have a fair value equal to at least the amount of the borrowings. The agreements mature daily and therefore the risk arising from a decline in the fair value of the collateral pledged is minimal. The securities pledged are mortgage-backed securities. These agreements do not include “right of
set-off” provisions and therefore the Company does not offset such agreements for financial reporting purposes. |
Income Taxes |
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Sep. 30, 2020 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Note 7 - Income Taxes Income tax expense was $10,335,000 for the third quarter of 2020 as compared to $8,867,000 for the same period in 2019. The Company’s effective tax rates on pretax income were 16.35% and 17.07% for the third quarters of 2020 and 2019, respectively. Income tax expense was $28,233,000 for the nine - months ended September 30, 2020 as compared to $24,827,000 for the same period in 2019. The Company’s effective tax rates on pretax income were 16.43% and 16.75% for the nine- months ended September 30, 2020 and 2019, respectively. The effective tax rates differ from the statutory federal tax rate of 21% primarily due to tax exempt interest income earned on certain investment securities and loans, the deductibility of dividends paid to our employee stock ownership plan and excess tax benefits related to our directors’ deferred compensation plan. |
Stock Option Plan and Restricted Stock Plan |
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Sep. 30, 2020 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Stock Option Plan and Restricted Stock Plan | Note 8 - Stock Option Plan and Restricted Stock Plan The Company grants incentive stock options for a fixed number of shares with an exercise price equal to the fair value of the shares at the date of grant to employees. On June 26, 2019, the Company granted 398,850 incentive stock options with an exercise price of $29.70 per share. The fair value of the options was $7.31 per option and was estimated using the Black-Scholes options pricing model with the following weighted average assumptions: risk free interest rate of 1.83%; expected dividend yield of 1.62%; expected life of 6.64 years; and expected volatility of 26.69%. On January 28, 2020, the Company granted 11,250 incentive stock options with an exercise price of $34.55 per share. Other stock option disclosures for this grant have not been provided due to insignificance. The Company recorded stock option expense totaling $344,000 and $431,000 for the three-month periods ended September 30, 2020 and 2019, respectively. The Company recorded stock option expense totaling $1,033,000 and $1,056,000 for the nine - months ended September 30, 2020 and 2019, respectively. The additional disclosure requirements under authoritative accounting guidance have been omitted due to the amounts being insignificant.On April 24, 2018, upon re-election of nine of the existing directors, 21,420 restricted shares with a total value of $540,000 were granted to these non-employee directors and were expensed over the period from grant date to April 23, 2019, the date of the next annual shareholders’ meeting at which the directors’ term expired. On April 23, 2019, upon re-election of nine of the existing directors and two new directors, 21,714 restricted shares with a total value of $660,000 were granted to these non-employee directors and was expensed over the period from the grant date to April 28, 2020, the date of the next annualnon-employee director and was expensed over the period from the grant date to April 28, 2020, the date of the next annual shareholders’ meeting at which the director term expired. On April 28, 2020, upon the re-election of ten of the existing directors, 21,560 restricted shares with a total value of $600,000 were granted to these non-employee directors and will be expensed over the period from the grant date to April 27, 2021, the Company’s next annual shareholders’ meeting at which the directors’ term expires. The Company recorded director expense related to these restricted share grants of $150,000 and $185,000 for the three-month periods ended September 30, 2020 and 2019, respectively. The Company recorded director expense related to these restricted stock grants of $485,000 and $455,000 for the nine- months ended September 30, 2020 and 2019, respectively.On October 24, 2017, the Company granted 28,382 restricted shares with a total value of $655,000 to certain officers that are being expensed over the vesting period of to three years. On October 23, 2018, the Company granted 52,042 restricted shares with a total value of $1,440,000 to certain officers that are being expensed over a vesting period. On June 26, 2019, the Company granted 23,428 restricted shares with a total value of $695,000 to certain officers that are being expensed over the vesting period of three years. On October 22, 2019, the Company granted 22,188 restricted shares with a total value of $785,000 to certain officers that will be expensed over a vesting period. On January 28, 2020, the Company granted 2,979 restricted shares with a total value of $103,000 to certain officers that will be expensed over a vesting period. On May 18, 2020, the Company granted 7,176 restricted shares with a total value of $200,000 to an officer that will be expensed over a vesting period. The Company recorded restricted stock expense for officers of $419,000 and $248,000 for the three-month periods ended September 30, 2020 and 2019, respectively. The Company recorded restricted stock expense for officers of $1,016,000 and $661,000 for the nine-month periods ended September 30, 2020 and 2019, respectively. |
Pension Plan |
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Sep. 30, 2020 | |
Retirement Benefits [Abstract] | |
Pension Plan | Note 9 - Pension Plan The Company had a defined benefit pension plan that was frozen effective January 1, 2004, whereby no new participants were added to the Plan and no additional years of service accrued to participants. The pension plan covered substantially all of the Company’s employees at the time. In December 2018, the Company determined it was in the best interest of its shareholders to work toward terminating its pension obligation. The Company annuitized approximately 53% of the pension benefit obligation at that time and recorded a loss on settlement totaling $1,546,000 for the year ended December 31, 2018. In 2019, the Company continued to take steps to completely settle and terminate its remaining pension obligation and recorded loss associated with the final termination of $2,673,000. The loss incurred included unrealized loss previously recorded in other comprehensive income and refunding to remaining participants for funding balance overages offset by a gain on hedging instrument entered into to minimize interest rate movement during the termination period. At December 31, 2019, all balances in the pension plan were zero and the Company’s obligation has been extinguished. For the three and nine-month periods ended September 30, 2019, the Company recorded pension related expense totaling $31,000 and $973,000, respectively. |
Fair Value Disclosures |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures | Note 10 - Fair Value Disclosures The authoritative accounting guidance for fair value measurements defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. A fair value measurement assumes that the transaction to sell the asset or transfer the liability occurs in the principal market for the asset or liability or, in the absence of a principal market, the most advantageous market for the asset or liability. The price in the principal (or most advantageous) market used to measure the fair value of the asset or liability shall not be adjusted for transaction costs. An orderly transaction is a transaction that assumes exposure to the market for a period prior to the measurement date to allow for marketing activities that are usual and customary for transactions involving such assets and liabilities; it is not a forced transaction. Market participants are buyers and sellers in the principal market that are (i) independent, (ii) knowledgeable, (iii) able to transact, and (iv) willing to transact. The authoritative accounting guidance requires the use of valuation techniques that are consistent with the market approach, the income approach and/or the cost approach. The market approach uses prices and other relevant information generated by market transactions involving identical or comparable assets and liabilities. The income approach uses valuation techniques to convert future amounts, such as cash flows or earnings, to a single present amount on a discounted basis. The cost approach is based on the amount that currently would be required to replace the service capacity of an asset (replacement costs). Valuation techniques should be consistently applied. Inputs to valuation techniques refer to the assumptions that market participants would use in pricing the asset or liability. Inputs may be observable, meaning those that reflect the assumptions market participants would use in pricing the asset or liability developed based on market data obtained from independent sources, or unobservable, meaning those that reflect the reporting entity’s own assumptions about the assumptions market participants would use in pricing the asset or liability developed based on the best information available in the circumstances. In that regard, the authoritative guidance establishes a fair value hierarchy for valuation inputs that gives the highest priority to quoted prices in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. The fair value hierarchy is as follows:
A description of the valuation methodologies used for assets and liabilities measured at fair value, as well as the general classification of such instruments pursuant to the valuation hierarchy, is set forth below. In general, fair value is based upon quoted market prices, where available. If such quoted market prices are not available, fair value is based upon internally developed models that primarily use, as inputs, observable market-based parameters. Valuation adjustments may be made to ensure that financial instruments are recorded at fair value. While management believes the Company’s valuation methodologies are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different estimate of fair value at the reporting date. Securities classified as available-for-sale reported at fair value utilizing Level 1 and Level 2 inputs. For these securities, the Company obtains fair value measurements from an independent pricing service. The fair value measurements consider observable data that may include market spreads, cash flows, the United States Treasury yield curve, live trading levels, trade execution data, dealer quotes, market consensus prepayments speeds, credit information and the security’s terms and conditions, among other items. See notes 4 and 5 related to the determination of fair value for loans held-for-sale, and forward mortgage-backed securities trades. There were no transfers between Level 1 and Level 2 or Level 2 and Level 3 during the three and nine-months ended September 30, 2020 and 2019, and the year ended December 31, 2019. The following table summarizes the Company’s available-for-sale held-for-sale, September 30, 2020
September 30, 2019
December 31, 2019
The following table summarize s the Company’s loans held-for-sale show n below (in thousands):
The following table summarize the Company’s gains on sale and fees of mortgage loans for the three and nine- months ended September 30, 2020 and 2019 (in thousand):
No residential mortgage loans held-for-sale held-for-sale three and nine month periods ended September 30, 2020 and 2019.Certain financial assets and financial liabilities are measured at fair value on a nonrecurring basis, that is, the instruments are not measured at fair value on an ongoing basis but are subject to fair value adjustments in certain circumstances (for example, when there is evidence of impairment). Impaired loans are reported at the fair value of the underlying collateral less selling costs if repayment is expected solely from the collateral. Collateral values are estimated using Level 2 inputs based on observable market data. At September 30, 2020, impaired loans with a carrying value of $20,583,000 were reduced by specific valuation reserves totaling $3,241,000 resulting in a net fair value of $17,342,000.Certain non-financial assets and non-financial liabilities measured at fair value on a non-recurring basis include other real estate owned, goodwill and other intangible assets and other non-financial long-lived assets. Non-financial assets measured at fair value on a non-recurring basis during the three and nine-months ended September 30, 2020 and 2019 include other real estate owned which, subsequent to their initial transfer to other real estate owned from loans, were re-measured at fair value through a write-down included in gain (loss) on sale of foreclosed assets. During the reported periods, all fair value measurements for foreclosed assets utilized Level 2 inputs based on observable market data, generally third-party appraisals, or Level 3 inputs based on customized discounting criteria. These appraisals are evaluated individually and discounted as necessary due to the age of the appraisal, lack of comparable sales, expected holding periods of property or special use type of the property. Such discounts vary by appraisal based on the above factors but generally range from 5% to 25% of the appraised value. Re-evaluation of other real estate owned is performed at least annually as required by regulatory guidelines or more often if particular circumstances arise. There were no other real estate owned properties that were re-measured subsequent to their initial transfer to other real estate owned during the three and nine-months ended September 30, 2020 and 2019.At September 30, 2020 and 2019, and December 31, 2019, other real estate owned totaled $157,000, $1,329,000 and $982,000, respectively. The Company is required under current authoritative accounting guidance to disclose the estimated fair value of their financial instrument assets and liabilities including those subject to the requirements discussed above. For the Company, as for most financial institutions, substantially all of its assets and liabilities are considered financial instruments. Many of the Company’s financial instruments, however, lack an available trading market as characterized by a willing buyer and willing seller engaging in an exchange transaction. The estimated fair value amounts of financial instruments have been determined by the Company using available market information and appropriate valuation methodologies. However, considerable judgment is required to interpret data to develop the estimates of fair value. Accordingly, the estimates presented herein are not necessarily indicative of the amounts the Company could realize in a current market exchange. The use of different market assumptions and/or estimation methodologies may have a material effect on the estimated fair value amounts. In addition, reasonable comparability between financial institutions may not be likely due to the wide range of permitted valuation techniques and numerous estimates that must be made given the absence of active secondary markets for many of the financial instruments. This lack of uniform valuation methodologies also introduces a greater degree of subjectivity to these estimated fair values. Cash and due from banks, federal funds sold, interest-bearing deposits and time deposits in banks and accrued interest receivable and payable are liquid in nature and considered Levels 1 or 2 of the fair value hierarchy. Financial instruments with stated maturities have been valued using a present value discounted cash flow with a discount rate approximating current market for similar assets and liabilities and are considered Levels 2 and 3 of the fair value hierarchy. Financial instrument liabilities with no stated maturities have an estimated fair value equal to both the amount payable on demand and the carrying value and are considered Level 1 of the fair value hierarchy. The carrying value and the estimated fair value of the Company’s contractual off-balance-sheet unfunded lines of credit, loan commitments and letters of credit, which are generally priced at market at the time of funding, are not material.The estimated fair values and carrying values of all financial instruments under current authoritative guidance were as follows (in thousands).
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Acquisition |
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Acquisition | Note 11 - Acquisition On September 19, 2019, we entered into an agreement and plan of reorganization to acquire TB&T Bancshares, Inc. and its wholly-owned bank subsidiary, The Bank & Trust of Bryan/College Station, Texas. On January 1, 2020, the transaction was completed. Pursuant to the agreement, we issued 6,275,574 shares of the Company’s common stock in exchange for all of the outstanding shares of TB&T Bancshares, Inc. In addition, TBT Bancshares, Inc. made a $1,920,000 special dividend to its shareholders prior to closing of the transaction. At closing, a wholly-owned subsidiary of the Company merged into TB&T Bancshares, Inc. and immediately thereafter TB&T Bancshares, Inc. was merged into the Company and The Bank & Trust of Bryan/College Station, Texas, was merged into First Financial Bank, N.A., a wholly-owned subsidiary of the Company. The primary purpose of the acquisition was to expand the Company’s market share near the Houston market. Factors that contributed to a purchase price resulting in goodwill include their record of earnings, strong management and board of directors, strong local economic environment and opportunity for growth. The results of operations from this acquisition are included in the consolidated earnings of the Company commencing January 1, 2020. The following table presents the preliminary amounts recorded on the consolidated balance sheet on the acquisition date (dollars in thousands):
Goodwill recorded in the acquisition was accounted for in accordance with the authoritative business combination guidance. Accordingly, goodwill will not be amortized but will be tested for impairment annually. The goodwill recorded is not deductible for federal income tax purposes. The fair value of total loans acquired was $447,702,000 at acquisition compared to contractual amounts of $455,181,000. The fair value of purchased credit impaired loans at acquisition was $7,517,000 compared to contractual amounts of $10,061,000. Additional purchased credit impaired loan disclosures were omitted due to immateriality. All other acquired loans were considered performing loans. |
Summary of Significant Accounting Policies (Policies) |
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Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Nature of Operations | Nature of Operations First Financial Bankshares, Inc. (a Texas corporation) (“Company,” “we” or “us”) is a financial holding company which owns all of the capital stock of one bank with 78 locations located in Texas as of September 30, 2020. The Company’s subsidiary bank is First Financial Bank, N. A. The Company’s primary source of revenue is providing loans and banking services to consumers and commercial customers in the market area in which First Financial Bank, N.A., is located. In addition, the Company also owns First Financial Trust & Asset Management Company, National Association, First Financial Insurance Agency, Inc., and First Technology Services, Inc. A summary of significant accounting policies of the Company and its subsidiaries applied in the preparation of the accompanying consolidated financial statements follows. The accounting principles followed by the Company and the methods of applying them are in conformity with both United States generally accepted accounting principles (“GAAP”) and prevailing practices of the banking industry. The Company evaluated subsequent events for potential recognition through the date the consolidated financial statements were issued. |
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Use of Estimates in Preparation of Financial Statements | Use of Estimates in Preparation of Financial Statements The preparation of financial statements in conformity with generally accepted accounting principles (U.S. GAAP) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. The Company’s significant estimates include its allowance for loan losses and its valuation of financial instruments. |
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Consolidation | Consolidation The accompanying consolidated financial statements include the accounts of the Company and its subsidiaries, all of which are wholly-owned. All significant intercompany accounts and transactions have been eliminated. |
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Stock Split and Increase in Authorized Shares | Stock Split and Increase in Authorized Shares On April 23, 2019, the Company’s Board of Directors declared a two-for-one stock split of the Company’s outstanding common shares in the form of a 100% stock dividend effective on June 3, 2019. In addition, the shareholders of the Company approved an amendment to the Amended and Restated Certificate of Formation to increase the number of authorized shares to 200,000,000. All per share amounts in this report have been restated to reflect this stock split. An amount equal to the par value of the additional common shares issued pursuant to the stock split was reflected as a transfer from retained earnings to common stock in the consolidated financial statements as of and for the
nine-months ended September 30, 2019. |
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Stock Repurchase | Stock Repurchase On March 12, 2020, the Company’s Board of Directors authorized the repurchase of up to 4,000,000 common shares through September 30, 2021. Previously, the Board of Directors had authorized the repurchase of up to 2,000,000 common shares through September 30, 2020. The stock repurchase plan authorizes management to repurchase and ret ire the stock at such time as repurchases a are considered beneficial to the Company and stockholders. Any repurchase of stock will be made through the open market, block trades or in privately negotiated transactions in accordance with applicable laws and regulations. Under the repurchase plan, there is no minimum number of shares that the Company is required to repurchase. Through September 30, 2020, 324,802 shares were repurchased totaling $8,008,000 under this repurchase plan. Subsequent to September 30, 2020 and through nd retirem ents November 4 ,2020 no additional shares were repurchased. , |
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Acquisition | Acquisition On January 1, 2020, the Company acquired 100% of the outstanding capital stock of TB&T Bancshares, Inc. through the merger of a wholly-owned subsidiary with and into TB&T Bancshares, Inc. Following such merger, TB&T Bancshares, Inc. and its wholly-owned subsidiary, The Bank & Trust of Bryan/College Station, Texas were merged into the Company and First Financial Bank, N.A respectively. The results of operations of TB&T Bancshares, Inc. subsequent to the acquisition date, are included in the consolidated earnings of the Company. See note 11 for additional information. . , |
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Status of New Accounting Standard for Accounting for Allowance for Credit Losses | Status of New Accounting Standard for Accounting for Allowance for Credit Losses On January 1, 2020, ASU 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments off-balance sheet credit exposures not accounted for as insurance (loan commitments, standby letters of credit, financial guarantees, and other similar instruments). In addition, ASU 2016-13 made changes to the accounting for available-for-sale available-for-sale On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) was signed by the President of the United States that included an option for entities to delay the implementation of ASU 2016-13 until the earlier of the termination date of the national emergency declaration by the President or December 31, 2020. The Company elected to delay its implementation of ASU 2016-13 and has calculated and recorded its provision for loan losses under the incurred loss model that existed prior to ASU 2016-13 for the three and nine-months ended September 30, 2020. Prior to the CARES Act being signed and our election to delay the implementation of CECL, we were completing our CECL implementation plan with our cross-functional working group, under the direction of our Chief Credit Officer along with our Chief Accounting Officer, Chief Lending Officer and Chief Financial Officer. The working group also included individuals from various functional areas including credit, risk management, accounting and information technology, among others. Our implementation plan included assessment and documentation of processes, internal controls and data sources; model development, documentation and validation; and system configuration, among other things. We contracted with a third-party vendor to assist us in the implementation of CECL. Currently we expect to adopt CECL during the fourth quarter of 2020 with retroactive application to January 1, 2020 which may require adjustments to the amounts for provision for credit losses for the three and nine-months ended September 30, 2020. |
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Other Recently Issued and Effective Authoritative Accounting Guidance | Other Recently Issued and Effective Authoritative Accounting Guidance ASU 2016-02, “Leases.”2016-02 amended current lease accounting to require lessees to recognize (i) a lease liability, which is a lessee’s obligation to make lease payments arising from a lease, measured on a discounted basis, and (ii) a right-of-use 2016-02 did not significantly change lease accounting requirements applicable to lessors; however, certain changes were made to align, where necessary, lessor accounting with the lessee accounting model. The amended guidance was effective in the first quarter of 2019 and required transition using a modified retrospective approach for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements. The Company evaluated the provision of the new lease standard and, due to the small dollar amounts and number of lease agreements, all considered operating leases, the effect for the Company on January 1, 2019 was not significant. ASU 2017-08, “Receivables – Nonrefundable Fees and Other CostsPremium Amortization on Purchased Callable Debt Securities.” 2017-08 addressed the amortization method for all callable bonds purchased at a premium to par. Under the revised guidance, entities are required to amortize premiums on callable bonds to the earliest call date. ASU 2017-08 was effective in 2019 although early adoption was permitted. The Company elected to early adopt ASU 2017-08 in the first quarter of 2017. The adoption of this guidance did not have a material impact on the Company’s financial statements. ASU 2017-04, “Intangibles – Goodwill and Other.”2017-04 amended and simplified current goodwill impairment testing to eliminate Step 2 from the current provisions. Under the new guidance, an entity should perform the goodwill impairment test by comparing the fair value of a reporting unit with its carrying value and recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value. An entity still has the option to perform the qualitative assessment for a reporting unit to determine if a quantitative impairment test is necessary. ASU 2017-04 became effective for the Company on January 1, 2020 and did not have a significant impact on the Company’s financial statements. ASU 2018-13, “Fair Value Measurement (Topic 820). – Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement.”2018-13 modified the disclosure requirements on fair value measurements in Topic 820. The amendments in ASU 2018-13 remove disclosures that no longer are considered cost beneficial, modify/clarify the specific requirements of certain disclosures, and add disclosure requirements identified as relevant. ASU 2018-13 became effective on January 1, 2020 and did not have a significant impact on the Company’s financial statements. ASU 2019-12, “Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes.”2019-12, simplifies the accounting for income taxes by eliminating certain exceptions related to the approach for intraperiod tax aspects of the accounting for franchise taxes and enacted changes in tax laws or rates and clarifies the accounting for transactions that result in a step-up in the tax basis of goodwill. ASU 2019-12 is effective for the Company for annual reporting periods after December 15, 2020, and interim periods within. Adoption of ASU 2019-12 is not expected to have a material impact on the Company’s financial statements. |
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Investment Securities | Investment Securities Management classifies debt and equity securities as held-to-maturity, available-for-sale, held-to-maturity held-to-maturity available-for-sale Available-for-sale available-for-sale The Company records its available-for-sale When the fair value of a debt security is below its amortized cost, and depending on the length of time the condition exists and the extent the fair value is below amortized cost, additional analysis is performed to determine whether an other-than-temporary impairment condition exists. Available-for-sale held-to-maturity The Company’s investment portfolio currently consists of obligations of state and political subdivisions, mortgage pass-through securities, corporate bonds and general obligation or revenue based municipal bonds. Pricing for such securities is generally readily available and transparent in the market. The Company utilizes independent third-party pricing services to value its investment securities, which the Company reviews as well as the underlying pricing methodologies for reasonableness and to ensure such prices are aligned with pricing matrices. The Company validates prices supplied by the independent pricing services by comparison to prices obtained from other third-party sources on a quarterly basis. |
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Loans Held-for-Investment and Allowance for Loan Losses | Loans Held-for-Investment Loans held-for-investment The allowance for loan losses is an amount which represents management’s best estimate of probable losses that are inherent in the Company’s loan portfolio as of the balance sheet date. The allowance for loan losses is comprised of three elements: (i) specific reserves determined based on probable losses on specific classified loans; (ii) a historical valuation reserve component that considers historical loss rates and estimated loss emergence periods; and (iii) qualitative reserves based upon general economic conditions and other qualitative risk factors both internal and external to the Company. The allowance for loan losses is increased by charges to income and decreased by charge-offs (net of recoveries). Management’s periodic evaluation of the appropriateness of the allowance is based on general economic conditions, the financial condition of borrowers, the value and liquidity of collateral, delinquency, prior loan loss experience, and the results of periodic reviews of the portfolio. For purposes of determining our historical valuation reserve, the loan portfolio, less cash secured loans, government guaranteed loans and classified loans, is multiplied by the Company’s historical loss rate adjusted for the estimated loss emergence period. Specific allocations are increased or decreased in accordance with deterioration or improvement in credit quality and a corresponding increase or decrease in risk of loss on a particular loan. In addition, we adjust our allowance for loan losses for qualitative factors such as current local economic conditions and trends, including, without limitations, unemployment, oil and gas prices, drought conditions, changes in lending staff, policies and procedures, changes in credit concentrations, changes in the trends and severity of problem loans and changes in trends in volume and terms of loans. This qualitative reserve serves to estimate for additional areas of losses inherent in our portfolio that are not reflected in our historic loss factors. Although we believe we use the best information available to make loan loss allowance determinations, future adjustments could be necessary if circumstances or economic conditions differ substantially from the assumptions used in making our initial determinations. A decline in the economy could result in increased levels of non-performing assets and charge-offs, increased loan provisions and reductions in income. Additionally, bank regulatory agencies periodically review our allowance for loan losses and methodology and could require, in accordance with U.S. GAAP, additional provisions to the allowance for loan losses based on their judgment of information available to them at the time of their examination as well as changes to our methodology. Accrual of interest is discontinued on a loan and payments are applied to principal when management believes, after considering economic and business conditions and collection efforts, the borrower’s financial condition is such that collection of interest is doubtful. Except consumer loans, generally all loans past due greater than 90 days, based on contractual terms, are placed on Loans are considered impaired when, based on current information and events, management determines that it is probable we will be unable to collect all amounts due in accordance with the loan agreement, including scheduled principal and interest payments. If a loan is impaired, a specific valuation allowance is allocated, if necessary. Interest payments on impaired loans are typically applied to principal unless collectability of the principal amount is reasonably assured, in which case interest is recognized on a cash basis. Impaired loans, or portions thereof, are charged off when deemed uncollectable. nonaccrual. Loans are returned to accrual status when all the principal and interest amounts contractually due are brought current and future payments are reasonably assured. Consumer loans are generally charged-off when a loan becomes past due 90 days. For other loans in the portfolio, facts and circumstances are evaluated in making charge-off decisions.The Company’s policy requires measurement of the allowance for an impaired, collateral dependent loan based on the fair value of the collateral less cost to sell. Other loan impairments for non-collateral dependent loans are measured based on the present value of expected future cash flows or the loan’s observable market price. At September 30, 2020 and 2019 and December 31, 2019, all significant impaired loans have been determined to be collateral dependent and the allowance for loss has been measured utilizing the estimated fair value of the collateral less cost to sell. From time to time, the Company modifies its loan agreement with a borrower. A modified loan is considered a troubled debt restructuring when two conditions are met: (i) the borrower is experiencing financial difficulty and (ii) concessions are made by the Company that would not otherwise be considered for a borrower with similar credit risk characteristics. Modifications to loan terms may include a lower interest rate, a reduction of principal, or a longer term to maturity. For all impaired loans, including the Company’s troubled debt restructurings, the Company performs a periodic, well-documented credit evaluation of the borrower’s financial condition and prospects for repayment to assess the likelihood that all principal and interest payments required under the terms of the agreement will be collected in full. When doubt exists about the ultimate collectability of principal and interest, the troubled debt restructuring remains on non-accrual status and payments received are applied to reduce principal to the extent necessary to eliminate such doubt. This determination of accrual status is judgmental and is based on facts and circumstances related to each troubled debt restructuring. Each of these loans is individually evaluated for impairment and a specific reserve is recorded based on probable losses, taking into consideration the related collateral, modified loan terms and cash flow. As of September 30, 2020 and 2019, and December 31, 2019, substantially all of the Company’s troubled debt restructured loans were on non-accrual. The provisions of the CARES Act included an election to not apply the guidance on accounting for troubled debt restructurings to loan modifications, such as extensions or deferrals, related to COVID-19 made between March 1, 2020 and the earlier of (i) December 31, 2020 or (ii) 60 days after the end of the COVID-19 national emergency. The relief can only be applied to modifications for borrowers that were not more than 30 days past due as of December 31, 2019. The Company elected to adopt these provisions of the CARES Act. Loans acquired, including loans acquired in a business combination, are initially recorded at fair value with no valuation allowance. Acquired loans are segregated between those considered to be credit impaired and those deemed performing. To make this determination, management considers such factors as past due status, non-accrual status and credit risk ratings. The fair value of acquired performing loans is determined by discounting expected cash flows, both principal and interest, at prevailing market interest rates. The difference between the fair value and principal balances at acquisition date, the fair value discount, is accreted into interest income over the estimated life of the acquired portfolio. Purchased credit impaired loans are those loans that showed evidence of deterioration of credit quality since origination and for which it is probable, at acquisition, that the Company will be unable to collect all amounts contractually owed. Their acquisition fair value, which includes a credit component at the acquisition date, was based on the estimate of cash flows, both principal and interest, expected to be collected or estimated collateral values if cash flows are not estimable, discounted at prevailing market rates of interest. The difference between the discounted cash flows expected at acquisition and the investment in the loan is recognized as interest income on a level-yield method over the life of the loan, unless management was unable to reasonably forecast cash flows in which case the loans were placed on nonaccrual. Subsequent to the acquisition date, increases in expected cash flows will generally result in a recovery of any previously recorded allowance for loan loss, to the extent applicable, and/or a reclassification from the non-accretable difference to accretable yield, which will be recognized prospectively. Decreases in expected cash flows subsequent to acquisition are recognized as impairment. Valuation allowances on these impaired loans reflect only losses incurred after the acquisition. The carrying amount of purchased credit impaired loans at September 30, 2020 and 2019 and December 31, 2019 were $5,978,000, $342,000 and $251,000, respectively, compared to a contractual balance of $8,469,000, $605,000 and $345,000, respectively. Other purchased credit impaired loan disclosures have been omitted due to immateriality. |
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Other Real Estate | Other Real Estate Other real estate owned is foreclosed property held pending disposition and is initially recorded at fair value, less estimated costs to sell. At foreclosure, if the fair value of the real estate, less estimated costs to sell, is less than the Company’s recorded investment in the related loan, a write-down is recognized through a charge to the allowance for loan losses. Any subsequent reduction in value is recognized by a charge to income. Operating and holding expenses of such properties, net of related income, and gains and losses on their disposition are included in net gain (loss) on sale of foreclosed assets as incurred. |
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Bank Premises and Equipment | Bank Premises and Equipment Bank premises and equipment are stated at cost less accumulated depreciation and amortization. Depreciation and amortization are computed principally on a straight-line basis over the estimated useful lives of the related assets. Leasehold improvements are amortized over the life of the respective lease or the estimated useful lives of the improvements, whichever is shorter. |
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Business Combinations, Goodwill and Other Intangible Assets | Business Combinations, Goodwill and Other Intangible AssetsThe Company accounts for all business combinations under the purchase method of accounting. Tangible and intangible assets and liabilities of the acquired entity are recorded at fair value. Intangible assets with finite useful lives represent the future benefit associated with the acquisition of the core deposits and are amortized over seven years, utilizing a method that approximates the expected attrition of the deposits. Goodwill with an indefinite life is not amortized, but rather tested annually for impairment as of June 30 each year. There was no impairment recorded for the three and nine-months ended September 30, 2020 or 2019, respectively.
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Securities Sold Under Agreements To Repurchase | Securities Sold Under Agreements To Repurchase Securities sold under agreements to repurchase, which are classified as borrowings, generally mature within one to four days from the transaction date. Securities sold under agreements to repurchase are reflected at the amount of the cash received in connection with the transaction. The Company may be required to provide additional collateral based on the estimated fair value of the underlying securities. |
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Segment Reporting | Segment Reporting The Company has determined that its banking regions meet the aggregation criteria of the current authoritative accounting guidance since each of its banking regions offer similar products and services, operate in a similar manner, have similar customers and report to the same regulatory authority, and therefore operate one line of business (community banking) located in a single geographic area (Texas). |
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Statements of Cash Flows | Statements of Cash Flows For purposes of reporting cash flows, cash and cash equivalents includes cash on hand, amounts due from banks, including interest-bearing deposits in banks with original maturity of 90 days or less, and federal funds sold. |
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Accumulated Other Comprehensive Earnings (Loss) | Accumulated Other Comprehensive Earnings (Loss) Unrealized net gains on the Company’s
available-for-sale e s ) totaling $152,063,000, $73,521,000 and $67,506,000 September 30, 2020 and 2019a t and December 31, 2019 respectively, and the minimum pension liability (after applicable income tax benefit) totaling ($1,324,000) at September 30, 2019, are included in accumulated other comprehensive , earnings . There were no amounts under the minimum pension liability at September 30, 2020 or December 31, 2019 (see note 9). |
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Income Taxes | Income Taxes The Company’s provision for income taxes is based on income before income taxes adjusted for permanent differences between financial reporting and taxable income. Deferred tax assets and liabilities are determined using the liability (or balance sheet) method. Under this method, the net deferred tax asset or liability is determined based on the tax effects of the temporary differences between the book and tax bases of the various balance sheet assets and liabilities and gives current recognition to changes in tax rates and laws. |
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Stock Based Compensation | Stock Based Compensation The Company grants stock options for a fixed number of shares to employees with an exercise price equal to the fair value of the shares at the grant date. The Company recorded stock option expense totaling $344,000 and $431,000 for the three-months ended September 30, 2020 and 2019, respectively. The Company recorded stock option expense totaling $1,033,000 and $1,056,000 for the nine-months ended September 30, 2020 and 2019, respectively. The Company also grants restricted stock for a fixed number of shares. The Company recorded expenses associated with its director and officer restricted stock grants totaling $569,000 and $433,000, for the three-months ended September 30, 2020 and 2019, respectively. The Company recorded expenses associated with its director and officer restricted stock grants totaling $1,501,000 and $1,116,000 for the nine-months ended September 30, 2020 and 2019, respectively. |
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Advertising Costs | Advertising Costs Advertising costs are expensed as incurred. |
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Per Share Data | Per Share Data Net earnings per share (“EPS”) are computed by dividing net earnings by the weighted average number of common shares outstanding during the period. The Company calculates dilutive EPS assuming all outstanding stock options to purchase common shares and unvested restricted stock shares have been exercised and/or vested at the beginning of the year (or the time of issuance, if later.) The dilutive effect of the outstanding options and restricted stock is reflected by application of the treasury stock method, whereby the proceeds from the exercised options and unearned compensation for restricted stock are assumed to be used to purchase common shares at the average market price during the respective period. Anti-dilutive shares for the three and nine-months ended September 30, 2020 were approximately and 15,000 respectively, and The following table reconciles the computation of basic EPS to dilutive EPS:were excluded from the computation of EPS. shares .
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Summary of Significant Accounting Policies (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Computation of Basic EPS to Dilutive EPS | The following table reconciles the computation of basic EPS to dilutive EPS:
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Securities (Tables) |
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Cash and Cash Equivalents [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Available-for-Sale Securities | A summary of the Company’s available-for-sale
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Amortized Cost and Estimated Fair Value of Available-for-Sale Securities | The amortized cost and estimated fair value of available-for-sale
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Continuous Unrealized-Loss Position of Available-for-Sale Securities | The following tables disclose the Company’s investment securities that have been in a continuous unrealized-loss position for less than 12 months and for 12 or more months (in thousands):
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Loans Held for Investment and Allowance for Loan Losses (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Receivables [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Loans Held-for-Investment by Class of Financing Receivables | Loans held-for-investment
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Non-Accrual Loans, Loans Still Accruing and Past Due 90 Days or More and Restructured Loans | The Company’s non-accrual loans, loans still accruing and past due 90 days or more and restructured loans are as follows (in thousands):
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Recorded Investment in Impaired Loans and Related Valuation Allowance | The Company’s recorded investment in impaired loans and the related valuation allowance are as follows (in thousands):
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Schedule of Non-Accrual Loans | Non-accrual loans at September 30, 2020 and 2019, and December 31, 2019, consisted of the following by class of financing receivables (in thousands):
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Schedule of Impaired Loans and Related Allowance | The Company’s impaired loans and related allowance are summarized in the following tables by class of financing receivables (in thousands). No interest income was recognized on impaired loans subsequent to their classification as impaired.
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Schedule of Internal Ratings of Loans | The following summarizes the Company’s internal ratings of its loans held-for-investment
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Schedule of Past Due Loans | The Company’s past due loans are as follows (in thousands):
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Schedule of Allowance for Loan Losses by Portfolio Segment | The following table details the allowance for loan losses by portfolio segment (in thousands). There were no allowances for purchased credit impaired loans at September 30, 2020 and 2019, and December 31, 2019. Allocation of a portion of the allowance to one category of loans does not preclude its availability to absorb losses in other categories.
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Changes in Allowance for Loan Losses | Changes in the allowance for loan losses are summarized as follows by portfolio segment (in thousands):
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Schedule of Investment in Loans Related to Balance in Allowance for Loan Losses on Basis of Company's Impairment Methodology | The Company’s recorded investment in loans related to the balance in the allowance for loan losses on the basis of the Company’s impairment methodology is as follows (in thousands). Purchased credit impaired loans of $5,978,000, $342,000 and $251,000 at September 30, 2020 and 2019, and December 31, 2019, respectively, are included in loans individually evaluated for impairment
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Schedule of Loans Modified and Considered Troubled Debt Restructurings | The Company’s loans that were modified and considered troubled debt restructurings are as follows (in thousands):
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Schedule of How Loans Were Modified as Troubled Debt Restructured Loans | The balances below provide information as to how the loans were modified as troubled debt restructured loans (in thousands):
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Derivative Financial Instruments (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Outstanding Notional Balances and Fair Values of Outstanding Derivative Positions | The following table provides the outstanding notional balances and fair values of outstanding derivative positions (dollars in thousands):
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Borrowings (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2020 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Borrowings | Borrowings consisted of the following (dollars in thousands):
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Fair Value Disclosures (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Fair Value Disclosures [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Financial Assets and Financial Liabilities Measured at Fair Value on Recurring Basis | The following table summarizes the Company’s available-for-sale held-for-sale, September 30, 2020
September 30, 2019
December 31, 2019
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Summary of Loans Held-for-Sale at Fair Value | The following table summarize s the Company’s loans held-for-sale show n below (in thousands):
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Summary of Gain Loss on Sale of Mortgage Loans | The following table summarize the Company’s gains on sale and fees of mortgage loans for the three and nine- months ended September 30, 2020 and 2019 (in thousand):
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Schedule of Estimated Fair Values and Carrying Values of All Financial Instruments | The estimated fair values and carrying values of all financial instruments under current authoritative guidance were as follows (in thousands).
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Acquisition (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2020 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Preliminary Estimated Fair Value Amounts Assigned to Major Asset and Liability Categories at Acquisition Date | The following table presents the preliminary amounts recorded on the consolidated balance sheet on the acquisition date (dollars in thousands):
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Summary of Significant Accounting Policies - Computation of Basic EPS to Dilutive EPS (Detail) - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2020 |
Sep. 30, 2019 |
Sep. 30, 2020 |
Sep. 30, 2019 |
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Earnings Per Share [Abstract] | ||||
Net earnings | $ 52,857 | $ 43,080 | $ 143,558 | $ 123,424 |
Effect of stock options and stock grants, Net Earnings | 0 | 0 | 0 | 0 |
Net earnings per share, diluted, Net Earnings | $ 52,857 | $ 43,080 | $ 143,558 | $ 123,424 |
Net earnings per share, basic, Weighted Average Shares | 141,980,707 | 135,693,901 | 142,023,930 | 135,613,646 |
Effect of stock options and stock grants, Weighted Average Shares | 548,535 | 675,427 | 495,518 | 660,696 |
Net earnings per share, diluted, Weighted Average Shares | 142,529,242 | 136,369,328 | 142,519,448 | 136,274,342 |
Net earnings per share, basic, Per Share Amount | $ 0.37 | $ 0.32 | $ 1.01 | $ 0.91 |
Effect of stock options and stock grants, Per Share Amount | 0 | 0 | ||
Net earnings per share, diluted, Per Share Amount | $ 0.37 | $ 0.32 | $ 1.01 | $ 0.91 |
Loans Held for Investment and Allowance for Loan Losses - Loans Held-for-Investment by Class of Financing Receivables (Detail) - USD ($) $ in Thousands |
Sep. 30, 2020 |
Dec. 31, 2019 |
Sep. 30, 2019 |
---|---|---|---|
Loans and Leases Receivable Disclosure [Line Items] | |||
Total loans held-for-investment | $ 5,293,679 | $ 4,194,969 | $ 4,100,316 |
Commercial [Member] | |||
Loans and Leases Receivable Disclosure [Line Items] | |||
Total loans held-for-investment | 1,488,345 | 856,326 | 836,644 |
Agriculture [Member] | |||
Loans and Leases Receivable Disclosure [Line Items] | |||
Total loans held-for-investment | 93,972 | 103,640 | 102,054 |
Real Estate [Member] | |||
Loans and Leases Receivable Disclosure [Line Items] | |||
Total loans held-for-investment | 3,287,605 | 2,823,372 | 2,749,552 |
Consumer [Member] | |||
Loans and Leases Receivable Disclosure [Line Items] | |||
Total loans held-for-investment | $ 423,757 | $ 411,631 | $ 412,066 |
Loans Held for Investment and Allowance for Loan Losses - Non-Accrual Loans, Loans Still Accruing and Past Due 90 Days or More and Restructured Loans (Detail) - USD ($) $ in Thousands |
Sep. 30, 2020 |
Dec. 31, 2019 |
Sep. 30, 2019 |
||||
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Receivables [Abstract] | |||||||
Non-accrual loans | [1] | $ 42,673 | $ 24,582 | $ 25,717 | |||
Loans still accruing and past due 90 days or more | 23 | 153 | 104 | ||||
Troubled debt restructured loans still accruing | [2] | 25 | 26 | 27 | |||
Total | $ 42,721 | $ 24,761 | $ 25,848 | ||||
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Loans Held for Investment and Allowance for Loan Losses - Non-Accrual Loans, Loans Still Accruing and Past Due 90 Days or More and Restructured Loans (Parenthetical) (Detail) - USD ($) |
Sep. 30, 2020 |
Dec. 31, 2019 |
Sep. 30, 2019 |
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Loans and Leases Receivable Disclosure [Line Items] | |||||||
Non-accrual loans | [1] | $ 42,673,000 | $ 24,582,000 | $ 25,717,000 | |||
Troubled debt restructured loans | [2] | 25,000 | 26,000 | 27,000 | |||
Doubtful [Member] | |||||||
Loans and Leases Receivable Disclosure [Line Items] | |||||||
Troubled debt restructured loans | 4,478,000 | 4,791,000 | 3,983,000 | ||||
Purchased Credit Impaired Loans [Member] | |||||||
Loans and Leases Receivable Disclosure [Line Items] | |||||||
Non-accrual loans | $ 5,978,000 | $ 251,000 | $ 342,000 | ||||
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Loans Held for Investment and Allowance for Loan Losses - Recorded Investment in Impaired Loans and Related Valuation Allowance (Detail) - USD ($) |
Sep. 30, 2020 |
Dec. 31, 2019 |
Sep. 30, 2019 |
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Receivables [Abstract] | |||||
Recorded Investment | [1] | $ 42,673,000 | $ 24,582,000 | $ 25,717,000 | |
Valuation Allowance | $ 3,241,000 | $ 3,228,000 | $ 4,194,000 | ||
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Loans Held for Investment and Allowance for Loan Losses - Schedule of Non-Accrual Loans (Detail) - USD ($) $ in Thousands |
Sep. 30, 2020 |
Dec. 31, 2019 |
Sep. 30, 2019 |
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Financing Receivable, Recorded Investment, Past Due [Line Items] | |||||
Non-accrual loans | [1] | $ 42,673 | $ 24,582 | $ 25,717 | |
Commercial [Member] | |||||
Financing Receivable, Recorded Investment, Past Due [Line Items] | |||||
Non-accrual loans | 6,915 | 3,093 | 8,802 | ||
Agriculture [Member] | |||||
Financing Receivable, Recorded Investment, Past Due [Line Items] | |||||
Non-accrual loans | 967 | 1,376 | 1,502 | ||
Real Estate [Member] | |||||
Financing Receivable, Recorded Investment, Past Due [Line Items] | |||||
Non-accrual loans | 34,318 | 19,787 | 15,095 | ||
Consumer [Member] | |||||
Financing Receivable, Recorded Investment, Past Due [Line Items] | |||||
Non-accrual loans | $ 473 | $ 326 | $ 318 | ||
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Loans Held for Investment and Allowance for Loan Losses - Schedule of Impaired Loans and Related Allowance (Detail) - USD ($) |
3 Months Ended | 9 Months Ended | 12 Months Ended | ||
---|---|---|---|---|---|
Sep. 30, 2020 |
Sep. 30, 2019 |
Sep. 30, 2020 |
Sep. 30, 2019 |
Dec. 31, 2019 |
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Financing Receivable, Impaired [Line Items] | |||||
Unpaid Contractual Principal Balance | $ 56,997,000 | $ 34,930,000 | $ 56,997,000 | $ 34,930,000 | $ 33,949,000 |
Recorded Investment With No Allowance | 22,090,000 | 10,443,000 | 22,090,000 | 10,443,000 | 8,369,000 |
Recorded Investment With Allowance | 20,583,000 | 15,274,000 | 20,583,000 | 15,274,000 | 16,213,000 |
Total Recorded Investment | 42,673,000 | 25,717,000 | 42,673,000 | 25,717,000 | 24,582,000 |
Related Allowance | 3,241,000 | 4,194,000 | 3,241,000 | 4,194,000 | 3,228,000 |
Average Recorded Investment | 46,961,000 | 26,795,000 | 47,280,000 | 28,448,000 | 27,307,000 |
Commercial [Member] | |||||
Financing Receivable, Impaired [Line Items] | |||||
Unpaid Contractual Principal Balance | 8,226,000 | 10,250,000 | 8,226,000 | 10,250,000 | 4,511,000 |
Recorded Investment With No Allowance | 967,000 | 5,885,000 | 967,000 | 5,885,000 | 630,000 |
Recorded Investment With Allowance | 5,948,000 | 2,917,000 | 5,948,000 | 2,917,000 | 2,463,000 |
Total Recorded Investment | 6,915,000 | 8,802,000 | 6,915,000 | 8,802,000 | 3,093,000 |
Related Allowance | 1,234,000 | 1,448,000 | 1,234,000 | 1,448,000 | 1,042,000 |
Average Recorded Investment | 7,293,000 | 9,263,000 | 8,403,000 | 9,586,000 | 3,488,000 |
Agriculture [Member] | |||||
Financing Receivable, Impaired [Line Items] | |||||
Unpaid Contractual Principal Balance | 1,195,000 | 1,701,000 | 1,195,000 | 1,701,000 | 1,603,000 |
Recorded Investment With No Allowance | 378,000 | 406,000 | 378,000 | 406,000 | 658,000 |
Recorded Investment With Allowance | 589,000 | 1,096,000 | 589,000 | 1,096,000 | 718,000 |
Total Recorded Investment | 967,000 | 1,502,000 | 967,000 | 1,502,000 | 1,376,000 |
Related Allowance | 100,000 | 247,000 | 100,000 | 247,000 | 235,000 |
Average Recorded Investment | 1,026,000 | 1,609,000 | 1,114,000 | 1,707,000 | 1,644,000 |
Real Estate [Member] | |||||
Financing Receivable, Impaired [Line Items] | |||||
Unpaid Contractual Principal Balance | 46,973,000 | 22,535,000 | 46,973,000 | 22,535,000 | 27,366,000 |
Recorded Investment With No Allowance | 20,739,000 | 4,143,000 | 20,739,000 | 4,143,000 | 7,081,000 |
Recorded Investment With Allowance | 13,579,000 | 10,952,000 | 13,579,000 | 10,952,000 | 12,706,000 |
Total Recorded Investment | 34,318,000 | 15,095,000 | 34,318,000 | 15,095,000 | 19,787,000 |
Related Allowance | 1,905,000 | 2,314,000 | 1,905,000 | 2,314,000 | 1,950,000 |
Average Recorded Investment | 38,128,000 | 15,577,000 | 37,216,000 | 16,739,000 | 21,726,000 |
Consumer [Member] | |||||
Financing Receivable, Impaired [Line Items] | |||||
Unpaid Contractual Principal Balance | 603,000 | 444,000 | 603,000 | 444,000 | 469,000 |
Recorded Investment With No Allowance | 6,000 | 9,000 | 6,000 | 9,000 | 0 |
Recorded Investment With Allowance | 467,000 | 309,000 | 467,000 | 309,000 | 326,000 |
Total Recorded Investment | 473,000 | 318,000 | 473,000 | 318,000 | 326,000 |
Related Allowance | 2,000 | 185,000 | 2,000 | 185,000 | 1,000 |
Average Recorded Investment | $ 514,000 | $ 346,000 | $ 547,000 | $ 416,000 | $ 449,000 |
Loans Held for Investment and Allowance for Loan Losses - Schedule of Impaired Loans and Related Allowance (Parenthetical) (Detail) - USD ($) |
Sep. 30, 2020 |
Dec. 31, 2019 |
Sep. 30, 2019 |
---|---|---|---|
Financing Receivable, Impaired [Line Items] | |||
Recorded Investment With No Allowance | $ 22,090,000 | $ 8,369,000 | $ 10,443,000 |
Purchased Credit Impaired Loans [Member] | |||
Financing Receivable, Impaired [Line Items] | |||
Recorded Investment With No Allowance | $ 5,978,000 | $ 251,000 | $ 342,000 |
Loans Held for Investment and Allowance for Loan Losses - Changes in Allowance for Loan Losses (Detail) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2020 |
Sep. 30, 2019 |
Sep. 30, 2020 |
Sep. 30, 2019 |
|
Financing Receivable, Allowance for Credit Losses [Line Items] | ||||
Beginning balance | $ 68,947 | $ 51,820 | $ 52,499 | $ 51,202 |
Provision for loan losses | 7,500 | 450 | 26,050 | 2,015 |
Recoveries | 444 | 386 | 1,464 | 1,964 |
Charge-offs | (853) | (767) | (3,975) | (3,292) |
Ending balance | 76,038 | 51,889 | 76,038 | 51,889 |
Commercial [Member] | ||||
Financing Receivable, Allowance for Credit Losses [Line Items] | ||||
Beginning balance | 18,572 | 13,899 | 12,122 | 11,948 |
Provision for loan losses | 1,955 | (1,174) | 9,571 | 439 |
Recoveries | 200 | 90 | 890 | 1,163 |
Charge-offs | (536) | (349) | (2,392) | (1,084) |
Ending balance | 20,191 | 12,466 | 20,191 | 12,466 |
Agriculture [Member] | ||||
Financing Receivable, Allowance for Credit Losses [Line Items] | ||||
Beginning balance | 2,544 | 1,360 | 1,206 | 1,446 |
Provision for loan losses | (214) | (32) | 1,096 | 10 |
Recoveries | 1 | 85 | 31 | 92 |
Charge-offs | 0 | (166) | (2) | (301) |
Ending balance | 2,331 | 1,247 | 2,331 | 1,247 |
Real Estate [Member] | ||||
Financing Receivable, Allowance for Credit Losses [Line Items] | ||||
Beginning balance | 42,623 | 30,799 | 33,974 | 32,342 |
Provision for loan losses | 4,416 | 1,531 | 13,806 | 998 |
Recoveries | 138 | 100 | 272 | 250 |
Charge-offs | (52) | (94) | (927) | (1,254) |
Ending balance | 47,125 | 32,336 | 47,125 | 32,336 |
Consumer [Member] | ||||
Financing Receivable, Allowance for Credit Losses [Line Items] | ||||
Beginning balance | 5,208 | 5,762 | 5,197 | 5,466 |
Provision for loan losses | 1,343 | 125 | 1,577 | 568 |
Recoveries | 105 | 111 | 271 | 459 |
Charge-offs | (265) | (158) | (654) | (653) |
Ending balance | $ 6,391 | $ 5,840 | $ 6,391 | $ 5,840 |
Loans Held for Sale - Additional Information (Detail) - USD ($) |
Sep. 30, 2020 |
Dec. 31, 2019 |
Sep. 30, 2019 |
---|---|---|---|
Loans Receivables Held For Sale Net [Abstract] | |||
Loans held for sale | $ 101,055,000 | $ 28,228,000 | $ 40,499,000 |
Loans held-for-sale at the lower of cost or fair value | $ 6,389,000 | $ 5,152,000 | $ 764,000 |
Derivative Financial Instruments - Summary of Outstanding Notional Balances and Fair Values of Outstanding Derivative Positions (Detail) - USD ($) $ in Thousands |
Sep. 30, 2020 |
Dec. 31, 2019 |
Sep. 30, 2019 |
---|---|---|---|
IRLCs [Member] | |||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | |||
Outstanding Notional Balance | $ 247,751 | $ 47,415 | $ 82,330 |
Asset Derivative Fair Value | 5,967 | 886 | 1,320 |
Forward Mortgage-Backed Securities Trades [Member] | |||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | |||
Outstanding Notional Balance | 232,000 | 78,500 | 126,500 |
Liability Derivative Fair Value | $ 872 | $ 152 | $ 41 |
Borrowings - Schedule of Borrowings (Detail) - USD ($) |
Sep. 30, 2020 |
Dec. 31, 2019 |
Sep. 30, 2019 |
---|---|---|---|
Debt Disclosure [Abstract] | |||
Securities sold under agreements with customers to repurchase | $ 468,913,000 | $ 375,106,000 | $ 358,155,000 |
Federal funds purchased | 4,250,000 | 6,250,000 | 7,000,000 |
Advances from Federal Home Loan Bank of Dallas | 30,000,000 | 35,000,000 | |
Total | $ 503,163,000 | $ 381,356,000 | $ 400,155,000 |
Income Taxes - Additional Information (Detail) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2020 |
Sep. 30, 2019 |
Sep. 30, 2020 |
Sep. 30, 2019 |
|
Income Taxes [Line Items] | ||||
Federal statutory tax rate | 21.00% | |||
Income tax expense | $ 10,335 | $ 8,867 | $ 28,233 | $ 24,827 |
Effective tax rates on pre-tax income | 16.35% | 17.07% | 16.43% | 16.75% |
Pension Plan - Additional Information (Detail) - USD ($) |
3 Months Ended | 9 Months Ended | 12 Months Ended | |
---|---|---|---|---|
Sep. 30, 2019 |
Sep. 30, 2019 |
Dec. 31, 2019 |
Dec. 31, 2018 |
|
Defined Benefit Plan Disclosure [Line Items] | ||||
Defined benefit plan pension obligation retirement benefit percentage | 53.00% | |||
Defined benefit plan pension obligation, loss on settlement | $ 2,673,000 | $ 1,546,000 | ||
Net periodic benefit costs, total | $ 31,000 | $ 973,000 |
Fair Value Disclosures - Summary of Loans Held-for-Sale at Fair Value (Detail) - USD ($) $ in Thousands |
Sep. 30, 2020 |
Dec. 31, 2019 |
Sep. 30, 2019 |
---|---|---|---|
Fair Value Measurements Loans Held For Sale [Abstract] | |||
Unpaid principal balance on loans held-for-sale | $ 91,091 | $ 22,340 | $ 38,647 |
Net unrealized gains on loans held-for-sale | 3,575 | 736 | 1,088 |
Loans held-for-sale at fair value | $ 94,666 | $ 23,076 | $ 39,735 |
Fair Value Disclosures - Schedule Of Gain Loss On Sale Of Mortgage Loans (Detail) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||||
---|---|---|---|---|---|---|
Sep. 30, 2020 |
Sep. 30, 2019 |
Sep. 30, 2020 |
Sep. 30, 2019 |
|||
Schedule Of Gain Loss On Sale Of Mortgage Loans [Abstract] | ||||||
Realized gain on sale and fees on mortgage loans | [1] | $ 13,494 | $ 5,336 | $ 25,676 | $ 12,789 | |
Change in fair value on loans held-for-sale and IRLCs | 1,508 | 184 | 7,800 | 776 | ||
Change in forward mortgage-backed securities trades | 226 | 213 | (720) | 363 | ||
Total gain on sale of mortgage loans | $ 15,228 | $ 5,733 | $ 32,756 | $ 13,928 | ||
|
Acquisition - Schedule of Amounts Recorded on Consolidated Balance Sheet on Acquisition Date (Detail) $ in Thousands |
Sep. 19, 2019
USD ($)
|
---|---|
FBC Bancshares, Inc. and First Bank, N.A. [Member] | |
Business Acquisition [Line Items] | |
Common stock issued (6,275,574 shares) | $ 220,273 |
Acquisition - Schedule of Amounts Recorded on Consolidated Balance Sheet on Acquisition Date (Parenthetical) (Detail) |
Sep. 19, 2019
shares
|
---|---|
FBC Bancshares, Inc. and First Bank, N.A. [Member] | |
Business Acquisition [Line Items] | |
Common stock issued shares | 6,275,574 |
Acquisition - Schedule of Preliminary Estimated Fair Value Amounts Assigned to Major Asset and Liability Categories at Acquisition Date (Detail) $ in Thousands |
Sep. 30, 2020
USD ($)
|
---|---|
Business Acquisition [Line Items] | |
Cash and cash equivalents | $ 61,028 |
Securities available-for-sale | 93,967 |
Loans | 447,702 |
Identifiable intangible assets | 4,798 |
Other assets | 25,377 |
Total identifiable assets acquired | 632,872 |
Deposits | 549,125 |
Other liabilities | 5,397 |
Total liabilities assumed | 554,522 |
Fair value of net identifiable assets acquired | 78,350 |
Goodwill resulting from acquisition | $ 141,923 |
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