Loans and Allowance for Loan Losses | As of December 31, 2021 2020 (Dollars in thousands) Commercial $ 1,401,681 $ 1,338,757 Energy 278,860 345,233 Commercial real estate 1,281,095 1,179,534 Construction and land development 578,758 563,144 Residential and multifamily real estate 600,816 680,932 Paycheck Protection Program (“PPP”) 64,805 292,230 Consumer 63,605 55,270 Gross loans 4,269,620 4,455,100 Less: Allowance for loan losses 58,375 75,295 Less: Net deferred loan fees and costs 13,407 13,203 Net loans $ 4,197,838 $ 4,366,602 As of or For the Year Ended December 31, 2021 Commercial Energy Commercial Real Estate Construction and Land Development Residential and Multifamily Real Estate PPP Consumer Total (Dollars in thousands) Allowance for loan losses Beginning balance $ 24,693 $ 18,341 $ 22,354 $ 3,612 $ 5,842 $ — $ 453 $ 75,295 Provision 7,951 (8,109) (3,235) 137 (611) — (133) (4,000) Charge-offs (12,618) (1,003) — — — — (2) (13,623) Recoveries 326 — — — 367 — 10 703 Ending balance $ 20,352 $ 9,229 $ 19,119 $ 3,749 $ 5,598 $ — $ 328 $ 58,375 Period end allowance for loan losses allocated to: Individually evaluated for impairment $ 333 $ 2,100 $ 3,164 $ — $ — $ — $ — $ 5,597 Collectively evaluated for impairment $ 20,019 $ 7,129 $ 15,955 $ 3,749 $ 5,598 $ — $ 328 $ 52,778 Ending balance $ 20,352 $ 9,229 $ 19,119 $ 3,749 $ 5,598 $ — $ 328 $ 58,375 Allocated to loans: Individually evaluated for impairment $ 5,739 $ 16,204 $ 31,597 $ — $ 3,387 $ — $ — $ 56,927 Collectively evaluated for impairment $ 1,395,942 $ 262,656 $ 1,249,498 $ 578,758 $ 597,429 $ 64,805 $ 63,605 $ 4,212,693 Ending balance $ 1,401,681 $ 278,860 $ 1,281,095 $ 578,758 $ 600,816 $ 64,805 $ 63,605 $ 4,269,620 As of or For the Year Ended December 31, 2020 Commercial Energy Commercial Real Estate Construction and Land Development Residential and Multifamily Real Estate PPP Consumer Total (Dollars in thousands) Allowance for loan losses Beginning balance $ 35,864 $ 6,565 $ 8,085 $ 3,516 $ 2,546 $ — $ 320 $ 56,896 Provision 19,959 16,867 15,853 96 3,700 — 225 56,700 Charge-offs (31,205) (5,091) (1,584) — (445) — (104) (38,429) Recoveries 75 — — — 41 — 12 128 Ending balance $ 24,693 $ 18,341 $ 22,354 $ 3,612 $ 5,842 $ — $ 453 $ 75,295 Period end allowance for loan losses allocated to: Individually evaluated for impairment $ 1,115 $ 3,370 $ 5,048 $ — $ — $ — $ — $ 9,533 Collectively evaluated for impairment $ 23,578 $ 14,971 $ 17,306 $ 3,612 $ 5,842 $ — $ 453 $ 65,762 Ending balance $ 24,693 $ 18,341 $ 22,354 $ 3,612 $ 5,842 $ — $ 453 $ 75,295 Allocated to loans: Individually evaluated for impairment $ 44,678 $ 26,045 $ 44,318 $ — $ 6,329 $ — $ 244 $ 121,614 Collectively evaluated for impairment $ 1,294,079 $ 319,188 $ 1,135,216 $ 563,144 $ 674,603 $ 292,230 $ 55,026 $ 4,333,486 Ending balance $ 1,338,757 $ 345,233 $ 1,179,534 $ 563,144 $ 680,932 $ 292,230 $ 55,270 $ 4,455,100 As of or For the Year Ended December 31, 2019 Commercial Energy Commercial Real Estate Construction and Land Development Residential and Multifamily Real Estate PPP Consumer Total (Dollars in thousands) Allowance for loan losses Beginning balance $ 16,584 $ 10,262 $ 6,755 $ 2,475 $ 1,464 $ — $ 286 $ 37,826 Provision 27,219 (1,273) 1,771 1,041 1,090 — 52 29,900 Charge-offs (7,954) (3,000) (441) — (8) — (20) (11,423) Recoveries 15 576 — — — — 2 593 Ending balance $ 35,864 $ 6,565 $ 8,085 $ 3,516 $ 2,546 $ — $ 320 $ 56,896 As of December 31, 2021 Pass Special Mention Substandard Performing Substandard Nonperforming Doubtful Loss Total (Dollars in thousands) Commercial $ 1,356,883 $ 16,201 $ 23,739 $ 4,858 $ — $ — $ 1,401,681 Energy 184,269 73,196 5,246 13,595 2,554 — 278,860 Commercial real estate 1,172,323 86,768 11,782 10,222 — — 1,281,095 Construction and land development 578,758 — — — — — 578,758 Residential and multifamily real estate 593,847 257 6,508 204 — — 600,816 PPP 64,805 — — — — — 64,805 Consumer 63,605 — — — — — 63,605 Total $ 4,014,490 $ 176,422 $ 47,275 $ 28,879 $ 2,554 $ — $ 4,269,620 As of December 31, 2020 Pass Special Mention Substandard Performing Substandard Nonperforming Doubtful Loss Total (Dollars in thousands) Commercial $ 1,182,519 $ 66,142 $ 63,407 $ 26,124 $ 565 $ — $ 1,338,757 Energy 145,598 90,134 83,574 22,177 3,750 — 345,233 Commercial real estate 1,035,056 67,710 57,680 19,088 — — 1,179,534 Construction and land development 561,871 125 1,148 — — — 563,144 Residential and multifamily real estate 672,327 305 5,199 3,101 — — 680,932 PPP 292,230 — — — — — 292,230 Consumer 55,026 — — 244 — — 55,270 Total $ 3,944,627 $ 224,416 $ 211,008 $ 70,734 $ 4,315 $ — $ 4,455,100 As of December 31, 2021 30-59 Days Past Due 60-89 Days Past Due 90 Days or More Total Past Due Current Total Loans Receivable Loans >= 90 Days and Accruing (Dollars in thousands) Commercial $ 183 $ 499 $ 1,037 $ 1,719 $ 1,399,962 $ 1,401,681 $ 90 Energy — — 4,644 4,644 274,216 278,860 — Commercial real estate 85 992 — 1,077 1,280,018 1,281,095 — Construction and land development 966 117 — 1,083 577,675 578,758 — Residential and multifamily real estate 437 151 — 588 600,228 600,816 — PPP — — — — 64,805 64,805 — Consumer — 99 — 99 63,506 63,605 — Total $ 1,671 $ 1,858 $ 5,681 $ 9,210 $ 4,260,410 $ 4,269,620 $ 90 As of December 31, 2020 30-59 Days Past Due 60-89 Days Past Due 90 Days or More Total Past Due Current Total Loans Receivable Loans >= 90 Days and Accruing (Dollars in thousands) Commercial $ 8,497 $ 264 $ 11,236 $ 19,997 $ 1,318,760 $ 1,338,757 $ — Energy — — 7,173 7,173 338,060 345,233 372 Commercial real estate 63 7,677 4,825 12,565 1,166,969 1,179,534 — Construction and land development — — — — 563,144 563,144 — Residential and multifamily real estate 1,577 — 3,520 5,097 675,835 680,932 652 PPP — — — — 292,230 292,230 — Consumer — — — — 55,270 55,270 — Total $ 10,137 $ 7,941 $ 26,754 $ 44,832 $ 4,410,268 $ 4,455,100 $ 1,024 As of or For the Year Ended December 31, 2021 Recorded Balance Unpaid Principal Balance Specific Allowance Average Investment Impaired Loans Interest Income Recognized (Dollars in thousands) Loans without a specific valuation Commercial $ 4,659 $ 4,740 $ — $ 7,155 $ 75 Energy 3,509 7,322 — 4,548 5 Commercial real estate 1,729 1,729 — 1,800 18 Construction and land development — — — — — Residential and multifamily real estate 3,387 3,387 — 3,392 86 PPP — — — — — Consumer — — — — — Loans with a specific valuation Commercial 1,080 1,080 333 496 19 Energy 12,695 17,977 2,100 14,117 14 Commercial real estate 29,868 30,854 3,164 28,876 993 Construction and land development — — — — — Residential and multifamily real estate — — — — — PPP — — — — — Consumer — — — — — Total Commercial 5,739 5,820 333 7,651 94 Energy 16,204 25,299 2,100 18,665 19 Commercial real estate 31,597 32,583 3,164 30,676 1,011 Construction and land development — — — — — Residential and multifamily real estate 3,387 3,387 — 3,392 86 PPP — — — — — Consumer — — — — — $ 56,927 $ 67,089 $ 5,597 $ 1,210 As of or For the Year Ended December 31, 2020 Recorded Balance Unpaid Principal Balance Specific Allowance Average Investment Impaired Loans Interest Income Recognized (Dollars in thousands) Loans without a specific valuation Commercial $ 36,111 $ 50,245 $ — $ 29,591 $ 1,143 Energy 3,864 6,677 — 6,710 53 Commercial real estate 10,079 11,663 — 11,952 390 Construction and land development — — — — — Residential and multifamily real estate 6,329 6,585 — 6,315 145 PPP — — — — — Consumer 244 244 — 250 — Loans with a specific valuation Commercial 8,567 8,567 1,115 8,637 249 Energy 22,181 27,460 3,370 23,823 542 Commercial real estate 34,239 34,239 5,048 27,980 1,035 Construction and land development — — — — — Residential and multifamily real estate — — — — — PPP — — — — — Consumer — — — — — Total Commercial 44,678 58,812 1,115 38,228 1,392 Energy 26,045 34,137 3,370 30,533 595 Commercial real estate 44,318 45,902 5,048 39,932 1,425 Construction and land development — — — — — Residential and multifamily real estate 6,329 6,585 — 6,315 145 PPP — — — — — Consumer 244 244 — 250 — $ 121,614 $ 145,680 $ 9,533 $ 3,557 As of December 31, 2021 2020 (Dollars in thousands) Commercial $ 4,858 $ 26,691 Energy 16,148 25,927 Commercial real estate 10,222 19,088 Construction and land development — — Residential and multifamily real estate 204 3,101 PPP — — Consumer — 244 Total non-accrual loans $ 31,432 $ 75,051 For the Year Ended December 31, 2021 2020 (Dollars in thousands) Commercial - Debt forgiveness $ — $ 17,297 - Reduction of monthly payment — 1,224 - Interest rate reduction 1,000 3,171 Energy - Reduction of monthly payment — 7,825 - Extension of maturity date — 2,340 Commercial real estate - Deferred payment — 21,210 - Interest rate reduction 3,750 — Total troubled debt restructurings $ 4,750 $ 53,067 For the Year Ended December 31, 2021 2020 Number of Loans Outstanding Balance Balance 90 Days Past Due at Any Time During Previous 12 Months (1) Number of Loans Outstanding Balance Balance 90 Days Past Due at Any Time During Previous 12 Months (1) (Dollars in thousands) Commercial 1 $ 910 $ 4,899 7 $ 22,759 $ 2,776 Energy 4 10,118 7,825 4 11,053 2,713 Commercial real estate 5 26,158 — 4 26,038 — Construction and land development — — — — — — Residential and multifamily real estate 1 3,183 89 2 3,245 — PPP — — — — — — Consumer — — — — — — Total troubled debt restructured loans 11 $ 40,369 $ 12,813 17 $ 63,095 $ 5,489 (1) Default is considered to mean 90 days or more past due as to interest or principal. Note 4: Categories of loans at December 31, 2021 and 2020 include: The following tables summarize the activity in the allowance for loan losses by portfolio allocation in one portfolio segment does not preclude its availability to absorb Credit Risk Profile The Company analyzes its loan portfolio based on internal rating categories develop the associated ALLL. A Loan Grades • sales trends remaining flat or declining. Most ratios compare favorably expected. • where repayment is jeopardized. Credits are currently protected but, for the credit or in the Company’s credit or lien position at a future date. These credits are not warrant adverse classification. • Substandard (risk rating 6) and paying capacity of the obligor or of the collateral pledged. A distinct possibility exists that the Company will sustain some loss if deficiencies are not corrected. Loss potential, while existing in the aggregate amount of substandard assets, does not have performing and nonperforming loans and are broken out in the table below. • Doubtful (risk rating 7) - Credits which exhibit weaknesses inherent in a substandard credit with the added liquidation in full highly questionable or improbable based on existing the advantage and strengthening of the assets, classification as a loss is deferred • Loss (risk rating 8) - Credits which are considered uncollectible or of such little value that their continuance Loan Portfolio Segments • flow of a borrower’s principal business operation. Credit risk is driven by from business operations. • Energy repaid primarily from the conversion of crude oil and natural gas to cash. the cash flow stability from business operations. Energy loans are typically collateralized • Commercial Real Estate property securing the loan or the business conducted on the property securing real estate. Credit risk may be impacted by the creditworthiness of a borrower, property • Construction and Land Development reviews and a financial analysis of the developers and property owners. Sources of repayment commitment from the Company until permanent financing is obtained. These loans are higher sensitive to interest rate changes, general economic conditions and the borrower, property values and the local economies in the borrower’s market • Residential and Multifamily Real Estate - The loans are generally secured by owner-occupied 1-4 family residences or multifamily loans is primarily dependent on the personal income and credit rating of the borrowers or underlying conditions within or outside the borrower’s market areas that might impact • PPP - The loans were established by the CARES Act which authorized forgivable loans to small businesses to pay their employees program requires all loan terms to be the same for everyone. The loans are 100% guaranteed flow or SBA repayment approval. • Consumer - The loan portfolio consists of revolving lines of credit and various term loans such primarily dependent on the personal income and credit rating of the borrowers. economic conditions in the borrower’s market area) and the creditworthiness Loans by Risk Rating The following tables present the credit risk profile of the Company’s loan portfolio Loan Portfolio Aging The following tables present the Company’s loan portfolio aging analysis of Impaired Loans A loan is considered impaired, in accordance with the impairment accounting guidance (ASC 310-10-35-16), when Company will be unable to collect all amounts due from the borrower in accordance include loans modified in troubled debt restructurings where concessions maximize collection. Groups of loans with similar risk characteristics are collectively evaluated for impairment conditions and other relevant factors that affect repayment of the loans. The following formerly restructured loans, for the periods ended December 31, 2021 Non-accrual Loans Non-accrual loans are loans for which the Company does not record interest unless the credit is well secured and in process of collection. Past due status is based on an earlier date, if collection of principal or interest is considered doubtful. All interest accrued but not collected for loans that are placed on non-accrual on the cash basis or cost-recovery method, until qualifying for return brought current and future payments are reasonably assured. The following table presents the Company’s Troubled Debt Restructurings (“TDR”) Restructured loans are those extended to borrowers who are experiencing result of the COVID-19 pandemic as permitted by the CARES Act (as extended by the Consolidated Appropriations Act of 2021). A TDR may also exist if the borrower transfers to the Bank: (i) receivables for third parties; (ii) real estate; (iii) other assets; or granting of an equity position to the Bank to fully or partially satisfy a debt unless the equity position. Once an obligation has been restructured, the loan continues to be considered modified terms for at least 12 consecutive months, the loan has a market rate, determination of whether the loan would remain on accrual status depends demonstrated performance under the previous terms; and (iii) the Bank’s credit Loans identified as TDRs are evaluated for impairment using the present value of the expected dependent. The fair value is determined, when possible, by an appraisal of the property less estimated adjusted for current market conditions. Adjustments to reflect the present value of the expected cash flows or the estimated in determining an appropriate allowance, and as such, may result in increases or The table below presents loans restructured during the years ended concession made: As of December 31, 2021, the modifications related to the troubled debt impaired and evaluated on an individual basis or sufficient collateral was obtained. For the year ended December 31, 2021 and 2020, the TDRs outstanding resulted in 0 26 81 0 , respectively. No TDRs modified within the past 12 months defaulted in 2021. The restructured loans had a total specific valuation 4 respectively. The balance of restructured loans and the balance of those loans that are During the year ended December 31, 2021, $ 2 40 accordance with their original terms and had been outstanding throughout December 31, 2021 would have been $ 3 During the year ended December 31, 2020, $ 1 63 accordance with their original terms and had been outstanding throughout December 31, 2020 would have been $ 2 |